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Housing & Urban Development Corporation Ltd.

BSE: 540530 | NSE: HUDCO |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE031A01017 | SECTOR: Construction & Contracting - Real Estate

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  • Bid Price (Qty.)

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Annual Report

For Year :
2018 2017 2010

Auditor's Report

Report on the Standalone Financial Statements

We have audited the accompanying Standalone Financial Statements of Housing and Urban Development Corporation Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred to as “standalone financial statements”).

Management’s Responsibility for the Standalone financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility for the Standalone Financial Statements

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2018, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the Standalone financial statements:

i) The company has recognised interest income on ‘No Lien AGP Account’ amounting to Rs.26.24 crore [Rs.23.40 crore for the previous year ended 31st March, 2017] for the year ended 31st March, 2018. The same has been shown in Note 21 (Other Income) under head ‘Interest on Construction Project.

The balance outstanding as at the end of the year is Rs.398.12 crore (debit) in “No Lien AGP Account”. The company is in discussion with MoHUA for recovery /reimbursement of outstanding amount as well as booking of expenses. [Refer Para 2 of Note 26]

ii) In case of one of the Borrower, the loan was categorized as sub-standard by the company on 15th April, 2015. However, in view of Hon’ble High Court of Madras Order and legal opinion of law wing with respect to asset classification, the loan asset has been reclassified from sub-standard to standard. However, keeping in view the prudent accounting, the interest income of Rs.121.81 crore has not been recognized in the accounts and the company has earmarked provision of Rs.193.03 crore in the additional provision of Rs.284 crore as on 31sl March, 2018 to meet such exigency.[Refer Para 6 of Note 26].

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure-’A”, a Statement on the matters specified in the paragraphs 3 and 4 of the said Order.

2. We are enclosing our report in terms of Section 143 (5) of the Act, on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in the Annexure ‘B’ on the directions and sub-directions issued by the Comptroller and Auditor General of India.

3. As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the regional offices not visited by us;

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) We are informed that the provisions of Section 164(2) in respect of disqualification of directors of the Companies Act, 2013 are not applicable to the Company being Government Company in terms of notification no. G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure ‘C’; and

g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone financial statements — [Refer Para 1 (a) of Note 26]

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; [Refer Para 43 (d) of Note 26]

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; [Refer Para 25 of Note 26]

NHB DIRECTIVES

4. The company is complying with National Housing Bank’s (NHB) credit concentration norms in respect of loans to private sector agencies. However, in case of loans to State Governments / State Governments agencies, the said norms have been relaxed by NHB vide various letters (Refer table given in para no. 22 of Note no. 26); the same is complied with except in case of investment in equity shares of Housing Finance Company lndbank Housing Limited (investee company) where investment in 25 % of equity capital of investee company has been made instead of prescribed limit of 15%. [Refer para no. 22 of Note no. 26].

ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S REPORT

(Annexure referred to in paragraph “1” under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of Housing and Urban Development Corporation Limited on the Standalone Financial Statements for the year ended March 31s1, 2018)

(i) In respect of fixed assets:

a. The Company has generally maintained proper records showing full particulars, including quantitative details and situation of fixed assets. However, we suggest that location of fixed assets should be updated regularly.

b. As per information and explanation given to us, there is a regular programme of physical verification of all fixed assets once every year which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In our opinion and as per the information given by the Management, the discrepancies observed were not material and have been appropriately accounted in the books.

c. The title/ lease deeds of the immovable properties are held in the name of the Company except in case of Leasehold Land/ flats / buildings measuring 11521.53 square meters having cost of Rs.33.99 crore and Freehold Land / flats / buildings measuring 5718.03 square meters having cost of Rs.6.51 crore, of which title / lease deeds are pending for execution in the name of the Company.

(ii) The nature of business of the company does not require it to have any inventory. Hence, the requirement of clause (ii) of paragraph 3 of the said Order, are not applicable to the company.

(iii) According to the information and explanation given to us, the company has not granted any loans, secured or unsecured to any companies, firms, limited liability partnerships or other parties covered in the register required to be maintained under section 189 of the Companies Act, 2013 (‘the Act’). Hence Clause (iii) (a), (iii) (b) and (iii)(c) are not applicable.

(iv) According to the information and explanations given to us, the Company, being a Housing Finance Company, is exempted from the provisions of section 186 (2) as it is engaged in the business of providing financial assistance for housing and infrastructure facilities as provided under Schedule-VI of the Companies Act, 2013. However, we have been informed that the company has complied with provisions of section 186 (1) of the Companies Act, 2013. In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a Company in which the Director is interested to which provisions of Section 185 of the Companies Act, 2013 apply.

(v) The company has accepted deposits from the public. In our opinion and according to the information and explanations given to us, the company, during the year, has complied with the directives issued by the National Housing Bank under the Housing Finance Companies (NHB) Directions, 2010 with regard to deposits accepted from the public and the rules framed thereunder; and the provisions of Section 73 to 76 and other relevant provisions of the Companies Act, 2013, and the rules framed there under.

(vi) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under sub section (1) of section 148 of the Companies Act, 2013, in respect of the business of the company.

(vii) (a) According to the information and explanations given to us and according to the records produced before us for verification, the company has generally been regular in depositing with appropriate authorities, the undisputed statutory dues including provident fund, income tax, wealth tax, service tax and any other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales/ Value added Tax, Service Tax and any other material statutory dues were in arrears as at 31sl March 2018 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the income tax, wealth tax and service tax dues which are pending on account of dispute are as under:

Name of Statute

Nature of Dues

Amount (in Rs. crore)

Period to which amount relates

Forum where dispute is pending

Income-tax Act 1961

Disputed Income-tax demand

74.53#

AY 2004-05,AY 2006-07, AY 2013-14 and AY 2015-16

CIT(A)

Income-tax Act 1961

Disputed Income-tax demand

84.46#

AY 1999-2000, AY 2007-08, AY 2010-11 to AY 2012-13 and AY 2014-15

ITAT

Income-tax Act 1961

Disputed Income-tax demand

29.72#

AY 1996-97 and AY 1998-99

High Court

Income-tax Act 1961

Disputed Income-tax demand

22.17#

AY 1997-98, AY 2002-03 and AY 2003-04

Addl. CIT

Income-tax Act 1961

Disputed Income-tax demand

26.03#

AY 2008-09 and AY 2009-10

Addl. CIT and CIT(A)

Income-tax Act 1961

Disputed Income-tax demand

38.32#

AY 2005-06

CIT (A) and ITAT

Income-tax Act 1961

Disputed Income-tax demand

49.73#

AY 2000-01 and AY 2001-02

Addl. CIT and ITAT

Wealth Tax Act, 1957

Disputed Wealth Tax

0.01@

AY 1995-96

Addl. CIT

Service tax- Finance Act, 1994

Disputed Service Tax demand

4.22*

FY 2005-06 to 2009-10

CESTAT

Service tax.- Finance Act, 1994

Disputed Service Tax demand

0.19*

FY 2008-09 to FY 201011 and FY 2012-13 to FY 2015-16

Commissioner-Service Tax

Service tax- Finance Act, 1994

Demand cum Show Cause under Service Tax

0.11*

FY 2008-09 to FY 2010-11 FY 2011-12 to 2014-15

Assistant/Deputy/ Joint Commissioner of Service Tax

TOTAL

329.49

# against disputed income tax demand, Rs.320.19 crores has been adjusted by authorities or paid by the Company under protest from time to time and remaining Rs.4.77 crores has not been paid.

@ Wealth tax amounting to Rs.0.01 crore paid under Protest by company.

* against disputed Service tax, Rs.0.14 crores has been paid by the company under protest and remaining Rs.4.38 crores has not been paid.

d) According to the information and explanations given to us, the amount which was required to be transferred to Investor Education and Protection Fund in accordance with sub section (5) of section 125 of the Companies Act, 2013 has been transferred. The unclaimed amount lying in current liabilities includes interest of Rs.0.37 crore as on March, 31st 2018, which have lapsed 7 years from the respective due dates of interest payment and not transferred to IEPF, since 7 years from the maturity date of bonds/ deposits/ debentures has not been completed yet.(Refer Para 25 of Note 26)

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks, and Government or debenture holders.

(ix) According to the information and explanations given to us, the Company has raised the money through bonds issue, and term loan. The proceeds of such bonds issue, and term loan have been utilised for the purposes for which they were raised. Under the Disinvestment programme of Government of India, the President of India acting through the Ministry of Housing and Urban Poverty Alleviation (Selling Shareholder) sold 10.193% of its equity shareholding (i.e. 204,058,747 equity shares of face value of Rs.10/each) in Housing and Urban Development Corporation Ltd. (HUDCO) through an Initial Public Offer (IPO) at a price of Rs.60/- per equity share vide allotment dated 17.05.2017. As the offer comprised solely of the offer for sale by the selling shareholder and with HUDCO not raising any fresh equity capital through the offer, no proceeds of the offer have been received by HUDCO. The equity shares of HUDCO got listed on 19th May, 2017.

(x) According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company and in accordance with Generally Accepted Auditing Practices in India, no case of frauds by the Company or on the company by its officers or employees has been noticed or reported during the year.

(xi) The provisions of Section 197 relating to managerial remuneration are not applicable to the Company, being a Government Company, in terms of MCA Notification no. G.S.R. 463 (E) dated 5th June 2015.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company and hence the requirement of Clause 3 (xii) of the order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us, transactions during the year with the related parties were approved by the Audit Committee and are in compliance with section 177 of the Companies Act, 2013 where applicable and since the said transactions were in the ordinary course of business of the company and were at.arm’s length basis, the provisions of section 188 are not applicable, and the details have been disclosed in the Standalone Financial Statements, as required by the applicable accounting standards;

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. However, the company being a Housing Finance Company, is registered with National Housing Bank vide Registration No. 01.0016.01 by which NHB has granted status of Housing Finance Company (HFC) to the Company on 31st July, 2001.

For Prem Gupta & Company

Chartered Accountants

(firm Regn No. 000425N)

Sd/-

Place of Signature : New Delhi Prem behari Gupta

Date : 30lh May, 2018 Partner

(Membership No.: 080245)