NOTES TO ACCOUNTS
1. a) Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs, 55.44 Lakhs (Previous year Rs, 54.25 Lakhs).
b) Other Commitments: Uncalled liability of Rs, 316.00 Lakhs (Previous Year Rs, 663.50 Lakhs) in respect of commitment made for contribution to LICHFL Urban Development Fund by subscription of 50,000 units (previous year 50,000 units) of Rs, 10,000/- face value each, paid up value being Rs, 7,287.40/-(previous year Rs, 7,848.32/-) each.
2. Contingent liabilities in respect of :
a) Claims against the Company not acknowledged as debts Rs, 51.02 Lakhs (Previous Year Rs, 130.19 Lakhs).
b) On completion of income tax assessment, the Company had received a demand of Rs, 347.76 Lakhs- (including interest of Rs, 20.39 Lakhs) for A.Y. 2003-04, Rs, 2,217.31Lakhs (including interest of Rs, 721.90Lakhs) for A.Y. 2004-05 against which the Company received refund of Rs, 220.38 Lakhs, Rs, 3,571.94 Lakhs (including interest of Rs, 667.94 Lakhs) against which Rs, 1,951.62 Lakhs was paid under protest for A.Y. 2005-06, Rs, 2,385.58 Lakhs (including interest of Rs, 138.71 Lakhs) against which the Company received refund of Rs, 137.47 Lakhs for A.Y. 2006-07 and Rs, 1,503.40 Lakhs (including interest of Rs, 633.94 Lakhs ) for A.Y. 2007-08. The said amounts are disputed and the Company has preferred an appeal against the same. The amounts for the respective years have been paid to the credit of the Central Govt. under protest.
3. (i) Retail / Project Loans are secured by any or all of the following as applicable, based on their categorization :
a) Equitable / Registered Mortgage of Property.
b) Assignment of Life Insurance Policies, NSC, KVP, FD of Nationalized Bank.
c) Assignment of Lease Rent Receivables.
d) Company Guarantees or Personal Guarantees.
e) Negative lien
f) Undertaking to create a security.
(ii) Loans to employees other than for Housing are secured by lien over Provident Fund balances and / or Hypothecation of Vehicles.
4. Housing Loans include loans amounting to Rs, 4,138.11 Lakhs (Previous year Rs, 4,198.16 Lakhs) against which the company has taken possession of the properties under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and held such properties for disposal. The value of assets possessed against the loan is Rs, 5,735.38 Lakhs (Previous year Rs, 5,897.10 Lakhs), being lower of the fair value of the asset possessed and the outstanding as at March 31, 2017.
Disclosure regarding provisions made for substandard, doubtful and loss assets as per the Prudential Norms contained in the Housing Finance Companies (NHB) Directions, 2010 as amended are as under:
a. Details of Single Borrower Limit ( SGL) / Group Borrower Limit (GBL ) exceeded by the HFC:
As per NHB Direction Housing Finance Company shall not lend more than 15% of its owned fund to Single borrower and 25% of its owned fund to any single group of borrowers. The Company has not exceeded prudential exposure limits during the year.
(a) Interest Rate Swaps for hedging underlying liability aggregate to Rs, 99,600.00 Lakhs (Previous Year Rs, 119,600.00 Lakhs).
(b) For underlying liability of '''' 65,000.00 Lakhs (Previous Year '''' 65,000.00 Lakhs), Coupon Swap has been entered into which remains unheeded in respect of movement in respective currencies affecting the coupon amount.
(c) Foreign currency exposure in respect of coupon linked with LIBOR that are not hedged by derivative instruments as on March 31, 2017 amount to Rs, 5.05 Lakhs (Previous Year Rs, 2.83 Lakhs).
Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure
The exposure of LICHFL to Derivatives contracts is in the nature of interest Rate Swaps and currency swaps to manage risk associated with interest rate movement and fluctuation in currency exchange rate.
Derivative policy of the Company specifies the exposure norms with respect to single counterparty and the total underlying amount at the time of entering into the new derivative contract.
The Asset Liability Management Committee (ALCO) of the Company oversees efficient management of risk associated with derivative transactions. Company identifies, measures, monitors the exposure associated with derivative transaction. For effective mitigation of risk it has an internal mechanism to conduct regular review of the outstanding contracts which is reported to the ALCO & Risk Management Committee of the Board which in turn reports to the Audit Committee and to the Board of Directors. The gain realized on early termination of swap is to be amortized over the balance tenor of the swap or underlying liability whichever is less. Loss if any on early termination is to be charged to revenue in the same year. The carry difference, between coupon rate liability and the swap contract rate is to be accounted quarterly on accrual basis
9. Fixed Deposits with Banks includes earmarked deposits created in favor of trustees for depositors towards maintaining Statutory Liquid Ratio amounting to Rs, 25,300 Lakhs (Previous Year Rs, 8,190.20 Lakhs). The Company has beneficial interest on the income earned from these deposits.
10. Miscellaneous income includes Rs, 4.06 Lakhs (Previous Year Rs, 4.18 Lakhs) being interest income on staff loans/advances, Rs, 196.87 Lakhs (Previous Year Rs, 381.37 Lakhs) being gain on unwinding of Interest rate SWAP, Rs, 117.06 Lakhs (Previous Year Rs, 80.45 Lakhs) being old outstanding and unclaimed amounts written back, (-)353.19 Lakhs (Previous year Rs, Nil) being the reversal of interest on income tax refund.
11. Temporary Book Overdraft of Rs, 573,975.61 Lakhs (Previous Year Rs, 385,305.58 Lakhs) represents cheques issued towards disbursements to borrowers for Rs, 572,827.36 Lakhs (Previous Year Rs, 383,975.90 Lakhs) and cheques issued for payment of expenses of Rs, 1,148.25 Lakhs (Previous Year Rs, 1,329.68 Lakhs), but not encased as at March 31, 2017.
12. Proposed Dividend
The Board has recommended a dividend of Rs, 6.20 per share of Rs, 2/- each (310%) subject to approval of the members of the Company at the forthcoming Annual General Meeting.
13. The Company had requested its suppliers to confirm the status as to whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. The disclosure relating to unpaid amount as at the year end together with interest paid / payable as required under the said Act have been given to the extent such parties could be identified on the basis of the information available with the company regarding the status of suppliers under MSMED Act, 2006. No interest has been paid/payable by the Company during the current year to the parties covered under the Micro, Small and Medium Enterprises Development Act, 2006.
14. Disclosure in respect of Employee Benefits:
In accordance with the Accounting Standard on (AS-15) - "Employee Benefits" the following disclosures have been made:
Provident Fund and Pension Fund Liability
The Company has recognized Rs, 1,596.70 Lakhs (Previous year Rs, 860.99 Lakhs) in the Statement of Profit and Loss towards contribution to Provident fund in respect of company employees. In respect of LIC employees on deputation who have opted for pension, Rs, 42.67 Lakhs (previous year Rs, 92.55 Lakhs) have been contributed towards LIC of India (Employees) Pension Rules, 1995.
The estimates of future salary increases, considered in actuarial valuation, include inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The above information is certified by the actuary and relied upon by the Auditors.
*Exclusive of Amount Rs, 0.68 Lakhs (previous year Rs, 28.34 Lakhs) towards additional provision made for LIC employees.
The Company has recognized Rs, 264.37 Lakhs (Previous year Rs, 161.00 Lakhs) in the Statement of Profit and Loss towards sick leave in respect of company employees.
15. In accordance with the Payment of Bonus (Amendment) Act, 2015, due to increase in the eligibility and ceiling limit, provision of Rs, 31.16 (Previous Year Rs, 65.02 Lakhs) has been provided for the year ended March 31, 2017.
16. Segment Reporting:
The Company is engaged in the business of providing loans for purchase, construction, repairs and renovation etc. of houses / flats to Individuals, Corporate Bodies, Builders and Co-operative Housing Societies and has its operations within India. Accordingly, there are no separate reportable segments, as per the Accounting Standard on ''''Segment Reporting'''' (AS
17) notified under the relevant provisions of the Act.
18 Related Party Disclosure:
a) Related Party Policy:
Related Party Policy is uploaded on the website of the Company and annexed to the Director Report.
b) Names of related parties:
(i) Enterprise having significant influence Life Insurance Corporation of India
LICHFL Care Homes Limited LICHFL Financial Services Limited
LICHFL Asset Management Company Limited (Formerly known as LICHFL Asset Management Company Private Limited)
LICHFL Trustee Company Private Limited
(iii) Entity over which control exists LICHFL Urban Development Fund
LIC Mutual Fund Asset Management Limited (Formerly known as LIC Nomura Mutual Fund Asset Management Company Limited)
LIC Mutual Fund Trustee Private Limited (Formerly known as LIC Nomura Mutual Fund Trustee Company Private Limited)
(v) Key Management Personnel
Ms. Sunita Sharma, MD and Chief Executive Officer (Till April 11, 2017)
Mr. Vinay Sah, MD and Chief Executive Officer (From April 12, 2017)
19. Current Tax:
Provision for current tax is made on the basis of accounting practices consistently followed by the Company, including method of accounting for interest on housing loans and is after availing deduction under section 36(1)(viii) of the Income Tax Act, 1961. For the purpose of determining the quantum of deduction available under section 36(1)(viii), the methodology applied for the bifurcation of income and expenses for long term housing finance has been relied upon by the auditors.
20. Corporate Social Responsibility
Establishment and Other expenses includes Rs, 1,684.72 Lakhs for the year ended March 31, 2017 (Previous year Rs, 1,423.82 Lakhs) for contribution towards Corporate Social Responsibility(CSR) in accordance with Companies Act, 2013.
Details of CSR expenditure during the financial year
a) Gross amount required to be spent by the company during the year is Rs, 4,334.43 Lakhs (Previous Year Rs, 3,540.00 Lakhs).
b) Amount spent during the year:
Figures in bracket are in respect of the Previous Year
c) Details of related party transactions as per Accounting Standard (AS-18), "Related Party Disclosures" - Nil
d) No provision has been made for CSR expenditure by the company as on March 31, 2017 (Previous Year Rs, 343.76 Lakhs).
21. Concentration of Public Deposits, Advances, Exposures and NPAs
22 Concentration of Public Deposits (for Public Deposit taking/holding HFCs)
* Net of Provisions
** Net of Investment diminutions and G-Sec taken at face value.
*** Commercial Paper & Zero Coupon Bond taken at face value.
23. Disclosure regarding penalty or adverse comments as per Housing Finance Companies (NHB) Directions, 2010 during the current year:
a. The Company has paid penalty of Rs,2,000/- to National Housing Bank (NHB) for contravention of Policy Circular No. 30.
b. Observations of National Housing Bank (NHB) made in their Inspection Report with reference to the Company’s position as on 31/03/2015 and 31/03/2016 have been suitably addressed and compliance has been reported to NHB.
24. Draw Down from Reserves
Special Reserve has been created over the years in terms of Section 36(1)(viii) of the Income-tax Act, 1961, out of the distributable profits of the Company. Special Reserve No. I relates to the amounts transferred upto the Financial Year 199697, whereas Special Reserve No. II relates to the amounts transferred thereafter. In the current financial year Rs,56,999.00 Lakhs (Previous year Rs,49,999.00 Lakhs) has been transferred to Special Reserve No. II in terms of Section 36(1)(viii) of the Income tax Act, 1961 and an amount of Rs,1.00 Lakhs (Previous Year Rs,1.00 Lakhs) to Statutory Reserve under Section 29C the NHB Act.
As per National Housing Bank''''s (NHB) circular vide circular NHB(ND)/DRS/Pol. 62/2014 dated 27th May, 2014, the Company has adjusted the opening balance of reserves for creation of Deferred Tax Liability (DTL) on the Special Reserve as at 1st April, 2014 created under Section 36(1)(viii) of the Income tax Act, 1961.
25. The additional information pursuant to NHB Notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016 - "Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016" are either Nil or Not Applicable.
27 Registration obtained from other financial sector regulators:
The Company was incorporated under the Companies Act, 1956 on 19th June, 1989 and is governed by Companies Act,
2013. It is regulated by NHB and registered under section 29A of the NHB Act, 1987. Apart from this , the Company is not registered under any other financial regulators.
28 Rating assigned by Credit Rating Agencies and migration of rating during the year:
"CRISIL AAA/ Stable" by CRISIL & "CARE AAA" by CARE. This rating indicates the highest degree of safety regarding timely payment of interest and principal. There is no change in rating during the year.
29 Remuneration of Directors.
The Independent Directors of the Company receive only sitting fees for attending the Board / Committee meetings and they do not have any other material or pecuniary relationships or transaction with the Company, its Promoters, its Directors, Management, Subsidiaries or Associate.
The details of sitting fees paid to Non-Executive Directors (other than LIC Nominee Directors) has been mentioned in Corporate Governance Report forming part of the Annual Report.
Management Discussion and Analysis report containing Industry structure and developments, opportunities and threats, segment-wise or product-wise performance, outlook, risks and concerns, internal control systems and their adequacy, discussion on financial performance with respect to operational performance, material developments in HR/Industrial Relations including number of people employed, etc., forming part of a separate section of the Annual Report.
31 Revenue Recognition
Revenue recognition is as per the Accounting Policy mentioned under Significant Accounting Policies.
32 Accounting Standard 21 - Consolidated Financial Statements (CFS)
The Consolidated Financial Statements is prepared in accordance with Accounting Standard 21 "Consolidated Financial Statements" issued by ICAI and notified under the relevant Provision of the Companies Act, 2013.
The detailed note is included under Significant Accounting Policies and Notes to Accounts of the Consolidated Financial Statements.
33. The additional Information pursuant to Schedule III to the Companies Act, 2013 are either Nil or Not Applicable.
34 The previous year figures have been reclassified / regrouped / restated to conform to