Indiabulls Housing Finance Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2023
Hedging activities and derivatives
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are interest rate risk and foreign currency risk.
Derivatives not designated as hedging instruments
The Company uses interest rate swaps to manage its interest rate risk arising from Rs. denominated borrowings . The interest rate swaps are not designated in a hedging relationship and are entered into for periods consistent with exposure of the underlying transactions.
Derivatives designated as hedging instrumentsa. Cash flow hedges
The foreign currency and interest rate risk on borrowings have been actively hedged through a combination of forward contracts, principal only swaps and interest rate swaps.
The Company is exposed to interest rate risk arising from its foreign currency borrowings amounting to $ 27,00,00,000 (Previous Year $ 320,000,000). Interest on the borrowing is payable at a floating rate linked to USD LIBOR. The Company economically hedged the interest rate risk arising from the debt with a ''receive floating pay fixed'' interest rate swap (''swap'').
The Company uses Interest Rate Swaps (IRS) Contracts (Floating to Fixed) to hedge its risks associated with interest rate fluctuations relating interest rate risk arising from foreign currency loans / external commercial borrowings. The Company designates such IRS contracts in a cash flow hedging relationship by applying the hedge accounting principles as per IND AS 109. These IRS contracts are stated at fair value at each reporting date. Changes in the fair value of these IRS contracts that are designated and effective as hedges of future cash flows are recognised directly in "Cash Flow Hedge Reserve" under Reserves and surplus and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
The Company also hedges foreign currency risk arising from its fixed rate foreign currency bond by entering into the Forward Contracts and Principal Only Swaps. There is an economic relationship between the hedged item and the hedging instrument as the terms of the Forward contracts/Principal Only Swaps match that of the foreign currency borrowing (notional amount, interest payment dates, principal repayment date etc.). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the Forward contracts/Cross currency swap are identical to the hedged risk components.
The Company uses IRS instruments to convert a proportion of its fixed rate debt to floating rates in order to hedge the interest rate risk arising, principally, from issue of non-convertible debentures. Company designates these as fair value hedges of interest rate risk. Changes in the fair values of derivatives designated as fair value hedges and changes in fair value of the related hedged item are recognised directly in Statement of Profit and Loss thus ineffective portion being recognised in the Statement of Profit and Loss.
# includes redemption premium accrued on zero coupon bond for Rs 1,722.31 crore (Previous year Rs. 1,154.10 crore), which will become due and payable upon maturity only. The accounting of the redemption premium shall in no way whatsoever, be considered as the credit of the premium to the account of the Company nor create an enforceable right in favour of the Company on any date prior to redemption.
@ includes interest accrued on units of AIF amounting to Rs. 147.32 crore (Previous year Rs. 317.80 crore), which will become due and payable upon maturity only.
(2) Secured Loans and Other Credit Facilities given to customers are secured / partly secured by :
(a) Equitable mortgage of property and / or,
(b) Pledge of shares / debentures, units, other securities, assignment of life insurance policies and / or,
(c) Hypothecation of assets and / or,
(d) Company guarantees and / or,
(e) Personal guarantees and / or,
(f) Negative lien and / or Undertaking to create a security.
(3) (a) Includes Loan to Subsidiary for Rs. 995 crore (March 31, 2022 Rs. 1,486 crore).
(b) Includes Loan to Subsidiary for Rs. 67.30 crore (March 31, 2022 Rs. 67.30 crore).
(4) Impairment allowance for loans and advances to customers
IHFL''s Analytics Department has designed and operates its Internal Rating Model. The model is tested and calibrated periodically. The model grades loans on a four-point grading scale, and incorporates both quantitative as well as qualitative information on the loans and the borrowers. The model uses historical empirical data to arrive at factors that are indicative of future credit risk and segments the portfolio on the basis of combinations of these parameters into smaller homogenous portfolios from the perspective of credit behaviour. Some of the factors that the internal risk based model may consider are:
a) Loan to value
b) Type of collateral
c) Cash-flow and income assessment of the borrower
d) Interest and debt service cover
e) Repayment track record of the borrower
f) Vintage i.e. months on books and number of paid EMIs
g) Project progress in case of project finance
In addition to information specific to the borrower and the performance of the loan, the model may also utilise supplemental external information that could affect the borrower''s behaviour. The model is also calibrated to incorporate external inputs such as GDP growth rate, unemployment rate and factors specific to the sector/industry of the borrower.
The Company''s impairment assessment and measurement approach is set out in the notes below. It should be read in conjunction with the Summary of significant accounting policies.
The Company considers a loan as defaulted and classified it as Stage 3 (credit-impaired) for ECL calculations typically when the borrowers become 90 days past due on contract payments.
Classification of loans into Stage 2 is done on a conservative basis and typically accounts where contractual repayments are more than 30 days past due are classified in Stage 2. Accounts typically go over 30 days past due owing to temporary mismatch in timing of borrower''s or his/her business'' underlying cashflows, and are usually quickly resolved. The Company may also classify a loan in Stage 2 if there is significant deterioration in the loans collateral, deterioration in the financial condition of the borrower or an assessment that adverse market conditions may have a disproportionately detrimental effect on loan repayment. Thus as a part of the qualitative assessment of whether an instrument is in default, the Company also considers a variety of instances that may indicate delay in or non-repayment of the loan. When such event occurs, the Company carefully considers whether the event should result in treating the borrower as defaulted and therefore assessed as Stage 3 for ECL calculations or whether Stage 2 is appropriate.
It is the Company''s policy to consider a financial instrument as ''cured'' and therefore re-classified out of Stage 3 when none of the default criteria are present. The decision whether to classify an asset as Stage 2 or Stage 1 once cured depends on the updated credit grade once the account is cured, and whether this indicates there has been a significant reduction in credit risk.
(ii) Internal rating model and PD Estimation process
IHFL''s Analytics Department has designed and operates its Internal Rating Model which factors in both quantitative as well as qualitative information about the loans and the borrowers. Both Lifetime ECL and 12 months ECL are calculated either on individual basis or a collective basis, depending on the nature of the underlying loan portfolio. In addition to information specific to the borrower and the performance of the loan, the model may also utilise supplemental external information that could affect the borrower''s behaviour. The model is also calibrated to incorporate external inputs such as GDP growth rate, unemployment rate and factors specific to the sector/industry of the borrower.
The outstanding balance as at the reporting date is considered as EAD by the Company. Considering that PD determined above factors in amount at default, there is no separate requirement to estimate EAD.
The Company uses historical loss data for identified homogenous pools for the purpose of calculating LGD. The estimated recovery cash flows are discounted such that the LGD calculation factors in the NPV of the recoveries.
(v) Significant increase in credit risk
The internal rating model evaluates the loans on an ongoing basis. The rating model also assesses if there has been a significant increase in credit risk since the previously assigned risk grade One key factor that indicates significant increase in credit risk is when contractual payments are more than 30 days past due.
6. Inputs to the ECL model for forward looking economic scenarios
The internal rating model also provides for calibration to reflect changes in macroeconomic parameters and industry specific factors.
The Company is in the business of extending secured loans mainly backed by mortgage of property (residential or commercial).
In addition to the above mentioned collateral, the Company holds other types of collateral and credit enhancements, such as cross-collateralisation on other assets of the borrower, share pledge, guarantees of parent/holding companies, personal guarantees of promoters/proprietors, hypothecation of receivables via escrow account, hypothecation of receivables in other bank accounts etc.
In its normal course of business, the Company does not physically repossess properties or other assets, but recovery efforts are made on delinquent loans through on-rolls collection executives, along with legal means to recover due loan repayments. Once contractual loan repayments are more than 90 days past due, repossession of property may be initiated under the provisions of the SARFAESI Act 2002. Re-possessed property is disposed of in the manner prescribed in the SARFAESI Act to recover outstanding debt.
The Company did not hold any financial instrument for which no loss allowance is recognised because of collateral at March 31, 2023. There was no change in the Company''s collateral policy during the year.
8. As at the year end the Company has undrawn loan commitments (after applying credit conversion factor) of Rs. 984.25 crore (Previous Year Rs. 729.62 crore).
(1) The Company''s investments in the Equity Share capital of Indiabulls Insurance Advisors Limited, Indiabulls Holdings Limited and Indiabulls Capital Services Limited, being its wholly owned subsidiaries, are considered as strategic and long term in nature and are held at a cost of Rs. 0.05 crore, Rs. 0.15 crore and Rs. 5.00 crore respectively. Based on the audited financial statements as at and for the year ended March 31, 2023 of these subsidiary companies, the value of investments held in these companies has been eroded as the operations in these subsidiary companies have not yet commenced / are in the process of being set up. Accordingly, the Company has provided for Rs. 5.20 crore in respect of diminution in the carrying value of such investments.
(2) On December 13, 2010 the Erstwhile Holding Company (IBFSL) had sold 26% shares held by it in Indian Commodity Exchange Limited (ICEX) to Reliance Exchange Next Limited (R-Next) for a total consideration of Rs. 47.35 crore against a proportionate cost of Rs. 26.00 crore. As a result thereof, the stake of IBFSL in ICEX reduced from 40% to 14% and the same was reclassified as a long term investment from the earlier classification of being an Associate. MMTC Limited (MMTC) filed a petition before the National Company Law Tribunal (NCLT) (Earlier known as Company Law Board)) against ICEX, R-Next and IBFSL alleging that the transfer is null and void in terms of the Shareholders Agreement in view of the Forward Markets Commission (FMC) guidelines. IBFSL contends that such view of MMTC is based on the old FMC guidelines and without considering the amended FMC Guidelines dated June 17, 2010 wherein the transfer norms were relaxed. IBFSL had filed its objections on maintainability of the petition which is pending adjudication before the NCLT.
(3) During the financial year ended March 31, 2022, the Company has sold 11,500,000 Equity Shares of Indian Commodity Exchange Limited for a total consideration of Rs. 2.85 crore at a loss of Rs. 4.05 crore. During the year ended March 31, 2023, the Company has sold 18,500,000 Equity Shares of Indian Commodity Exchange Limited for a total consideration of Rs. 1.85 crore. With this, the Company had sold its entire stake in Indian Commodity Exchange Limited.
(4) During the financial year ended March 31, 2022 the Company has sold 4,985,000 nos. of Equity shares held of Oaknorth Holdings Limited for a consideration of Rs. 293.42 crore and realised a gain of Rs. 253.03 crore. With this, the Company has sold its entire stake in Oaknorth Holdings Limited.
(5) During the financial year ended March 31, 2022, the Company has subscribed 6,950,000 Equity Shares of face value Rs. 10/- per share for a total consideration of Rs. 6.95 crore, issued by wholly owned subsidiary namely Indiabulls Investment Management Limited (Formerly Indiabulls Venture Capital Management Company Limited).
(6) The Company along with its wholly owned subsidiary companies Indiabulls Asset Management Company Limited (IAMCL) and Indiabulls Trustee Company Limited, Trustee of IAMCL, (ITCL) had executed definitive transaction document with Nextbillion Technology Private Limited (hereinafter referred to as "Nextbillion"), to divest its entire stake in the business of managing mutual fund, being carried out by IAMCL & ITCL to Nextbillion. subject to necessary approvals, as may be required in this regard. The Company has received all necessary approvals in relation to the transaction and the Company has received the entire consideration of Rs.175.62 crore on May 02, 2023 (the "Closing Date"). Consequent to the above, the Company does not have any control or shareholding in IAMCL and ITCL subsequent to the Closing Date.
(7) Investment in mutual funds of Rs. 88.62 crore (March 31, 2022 Rs. 179.01 crore) under lien / provided as credit enhancement in respect of assignment deal for loans.
(8) On January 27, 2023, Indiabulls Holdings Limited, a wholly owned subsidiary of the Company had suo-moto filed application under Section 248(2) of the Companies Act 2013, for striking off the name of the Company from the Register of Companies maintained by the RoC.
(a) No amount was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.
(b) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.
(c) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006
(d) No interest was accrued and unpaid at the end of the accounting year.
(e) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006
The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have
been identified on the basis of information available with the Company. This has been relied upon by the Auditors.
(i) (a) As at March 31, 2023 542,505 (Previous Year 567,505) GDR''s were outstanding and were eligible for conversion into
Equity Shares. The Company does not have information with respect to holders of these GDR''s. Holders of Global Depository Receipts (GDRs) will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs will not have voting rights with respect to the Deposited Shares. The GDRs may not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
(b) As at March 31, 2023 23,000,000 (Previous Year 23,000,000) shares were held by the Pragati Employee Welfare Trust (PEWT). PEWT will be entitled to receive dividends, as the holders of Equity Shares but will not be having voting rights with respect to the Shares held by it.
As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
Shares held by promoters at the end of the financial year 2023:
Pursuant to and in terms of BSE & NSE approvals dated February 22, 2023, the erstwhile promoters of the Company, namely, Mr. Sameer Gehlaut, Inuus Infrastructure Private Limited and Sameer Gehlaut IBH Trust, have been reclassified as Public Shareholders. Therefore, effective from February 22, 2023, the shareholding of Promoters and Promoter Group is shown as NIL and their existing shareholding has been added to the Public shareholder.
Note 1: Became part of Promoter Group during the FY 2021-22
*During the financial year 2021-22, Mr. Sameer Gehlaut (the Promoter) resigned from the office of Non-Executive Director of the Company. The Company also received requests from currently belonging to the ''Promoter and Promoter Group'' category of the Company ("Outgoing Promoters"), for their reclassification from ''Promoter and Promoter Group'' to ''Public'' category, which shall be subject to all requisite approvals.
(ii) Employees Stock Options Schemes:Grants During the Year:
1. The Nomination and Remuneration Committee of the Company has, at its meeting held on April 26, 2022, granted under the "Indiabulls Housing Finance Limited Employees Stock Option Scheme - 2013 or IHFL ESOS - 2013", 10,800,000 Stock Options representing an equal number of equity shares of face value of Rs. 2 each at an exercise price of Rs. 152.85 per share, which is the latest available closing market price on the National Stock Exchange of India Limited, as on April 25, 2022. The Stock Options so granted, shall vest within 1 year beginning from April 27, 2023 or thereafter, as may be decided by Nomination and Remuneration Committee of the Company.
2. The Nomination and Remuneration Committee of the Company has, at its meeting held on July 19, 2022, granted under the "Indiabulls Housing Finance Limited Employees Stock Option Scheme - 2013 or IHFL ESOS - 2013", 15,500,000 Stock Options representing an equal number of equity shares of face value of Rs. 2 each at an exercise price of Rs. 96 per share (against Rs. 95.70, which is the latest available closing market price on the National Stock Exchange of India Limited, as on July 18, 2022). These options shall vest on July 20, 2023 or thereafter, as may be decided by Nomination and Remuneration Committee of the Company.
3. The Nomination and Remuneration Committee of the Company has, at its meeting held on October 13, 2022, granted under the "Indiabulls Housing Finance Limited Employees Stock Option Scheme - 2013 or IHFL ESOS - 2013", 6,400,000 Stock Options representing an equal number of equity shares of face value of Rs. 2 each at an exercise price of Rs. 130 per share (against Rs. 129.70, which is the latest available closing market price on the National Stock Exchange of India Limited, as on October 12, 2022). These options shall vest on October 14, 2023 or thereafter, as may be decided by Nomination and Remuneration Committee of the Company.
(iii) Employee Stock Benefit Scheme 2019 ("Scheme").
The Scheme has been adopted and approved pursuant to: (a) a resolution of the Board of Directors of INDIABULLS HOUSING FINANCE LIMITED at its meeting held on November 6, 2019; and (b) a special resolution of the shareholders'' of the Company passed through postal ballot on December 23, 2019, result of which were declared on December 24, 2019.
This Scheme comprises:
a. INDIABULLS HOUSING FINANCE LIMITED Employees Stock Option Plan 2019 ("ESOP Plan 2019")
b. INDIABULLS HOUSING FINANCE LIMITED Employees Stock Purchase Plan 2019 ("ESP Plan 2019")
c. INDIABULLS HOUSING FINANCE LIMITED Stock Appreciation Rights Plan 2019 ("SARs Plan 2019")
In accordance with the ESOP Regulations, the Company had set up Pragati Employee Welfare Trust(formerly known as Indiabulls Housing Finance Limited Employee Welfare Trust) (Trust) for the purpose of implementation of ESOP Scheme. The Scheme is administered through ESOP Trust, whereby shares held by the ESOP Trust are transferred to the employees, upon exercise of stock options as per the terms of the Scheme
(b) The Company has established the "Pragati Employee Welfare Trust" ("Pragati - EWT") (earlier known as Indiabulls Housing Finance Limited - Employees Welfare Trust" (IBH - EWT) ("Trust") for the implementation and management of its employees benefit scheme viz. the "Indiabulls Housing Finance Limited - Employee Stock Benefit Scheme - 2019" (Scheme), for the benefit of the employees of the Company and its subsidiaries.
Pursuant to Regulation 3(12) of the SEBI (Share Based Employee Benefits) Regulations, 2014, the shares in Trust have been appropriated towards the Scheme for grant of Share Appreciations Rights (SARs) to the employees of the Company and its subsidiaries as permitted by SEBI. The Company will treat these SARs as equity and accounting has been done accordingly. The other disclosures in respect of the SARs are as under:-
(v) 31,753,777 Equity Shares of Rs. 2 each (Previous Year : 22,008,616) are reserved for issuance towards Employees Stock options as granted.
(vi) The weighted average share price at the date of exercise of these options was Rs. N.A. per share (Previous Year Rs. 215.82 per share).
(vii) (a) During the year 2020-21, the Company has issued 4.50% secured foreign currency convertible bonds due 2026 (''FCCBs'')
of USD 150 Million at par, convertible into fully paid-up equity shares of face value of 2/- each of the Company at an initial conversion price of Rs. 242 per equity share ("conversion price"), on or after April 21, 2021 and up to the close of business hours on February 20, 2026, at the option of the FCCB holders. FCCBs, which are not converted to equity shares during such specified period, will be redeemable on March 4, 2026. The Conversion price is subject to adjustment w.r.t issuance of bonus share, free issuance of shares, division, consolidation and reclassification of shares, declaration of dividend or any other condition as mentioned in offering circular, but cannot be below the floor price which is Rs. 227.09.
Pursuant to the applicable provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and pursuant to receipt of notice for conversion of FCCBs, for a principle value USD 20,500,000, the Company during the year 2021-22, issued and allotted 6,207,952 (Sixty Two Lakh Seven Thousand Nine Hundred and Fifty Two) Fully Paid Equity shares of face value Rs. 2/- each, (a) at a conversion price of Rs. 230.14 (including a premium of Rs. 228.14) per Equity Share for 157,700 Equity Shares under FCCB1, and (b) at a conversion price of Rs. 243.05 (including a premium of Rs. 241.05) per Equity Share for 60,50,252 Equity Shares under FCCB2, to the holder of such FCCBs. Consequent to the said allotment, the paid-up Equity Share Capital of the Company stands increased to Rs. 937,143,008 divided into 468,571,504 Fully Paid Equity Shares of face value Rs. 2/- each and outstanding principal value of FCCBs, as listed at Singapore Exchange Securities Trading Limited under (a) FCCB1, ISIN XS2301133943, stands reduced from USD 150,000,000 to USD 149,500,000 and (b) FCCB2, ISIN XS2377720839, stands reduced from USD 165,000,000 to USD 145,000,000.
(b) Pursuant to the applicable provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and on receipt of notice for conversion of FCCBs, for a principal value USD 10,000,000, the Company during the current financial year, issued and allotted 3,025,126 (Thirty Lakh Twenty Five Thousand One Hundred and Twenty Six) Fully Paid Equity shares of face value Rs. 2/- each, at a conversion price of Rs. 243.05 (including a premium of Rs. 241.05) per Equity Share, to the holder of such FCCBs. Consequent to the said allotment, the paid-up Equity Share Capital of the Company stands increased to Rs. 943,193,260 divided into 471,596,630 Fully Paid Equity Shares of face value Rs. 2/- each and outstanding principal value of FCCBs, as listed at Singapore Exchange Securities Trading Limited under ISIN XS2377720839 stands reduced from USD 145,000,000 to USD 135,000,000.
(1) Capital reserve is created on receipt of non refundable debenture warrants exercise price.
(2) Capital redemption reserve is created on redemption of preference shares.
(3) Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
(4) The Companies Act, 2013 requires that where a Company issues debentures, it shall create a debenture redemption reserve out of profits of the Company available for payment of dividend. The Company is required to maintain a Debenture Redemption Reserve of 25% of the value of debentures issued by a public issue. The amounts credited to the debenture redemption reserve may not be utilised by the Company except to redeem debentures.
(5) Stock Compensation Adjustment is created as required by Ind AS 102 ''Share Based Payments'' on the Employee Stock Option Scheme operated by the Company for employees of the Group.
(6) This pertains to reserve created under section 36(1)(viii) of the Income Tax Act, 1961, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to the Company under the Scheme of Arrangement during the year ended March 31, 2013.
(7) Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised in accordance with the requirements of Companies Act, 2013.
(8) In terms of Section 29C of the National Housing Bank ("NHB") Act, 1987, the Company is required to transfer at least 20% of its Profit after tax to a Reserve Fund before any dividend is declared. Transfer to a Reserve Fund in terms of Section 36(1)(viii) of the Income Tax Act, 1961 is also considered as an eligible transfer as transfer to Special Reserve
under Section 29C of the National Housing Bank ("NHB") Act, 1987. The Company has transferred an amount of Rs. Nil crore (Previous Year Rs. Nil crore) to reserve created in terms of Section 36(1)(viii) of the Income Tax Act, 1961 termed as "Reserve (III)" and also transferred an amount of Rs. 163.83 crore (Previous Year Rs. 139.22 crore) to the Reserve in terms of Section 29C of the National Housing Bank ("NHB") Act, 1987 as at the year end. Further an additional amount of Rs. 610 crore (Previous Year Rs. 525 crore) has been set apart by way of transfer to Additional Reserve Fund in excess of the statutory minimum requirement as specified under Section 29C pursuant to Circular no. NHB(ND)/DRS/Pol-No. 03/2004-05 dated August 26, 2004 issued by the National Housing Bank. The additional amount so transferred may be utilised in the future for any business purpose.
(10) This pertains to reserve created under section 45-IC of the Reserve Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to the Company under the Scheme of Arrangement during the year ended March 31, 2013.
(11) The Companies Act 2013 till August, 2019 required companies that issued debentures to create a debenture redemption reserve from annual profits until such debentures are redeemed. The Company was required to transfer a specified percentage (as provided in the Companies Act, 2013) of the outstanding redeemable debentures to debenture redemption reserve. The amounts credited to the debenture redemption reserve may not be utilised except to redeem debentures. On redemption of debentures, the amount may be transferred from debenture redemption reserve to General Reserve. The Ministry of Corporate Affairs (MCA) has amended the Companies (Share Capital and Debenture) Rules, 2014, doing away with creation of debenture redemption reserve by NBFCs/HFCs with respect to issue of non convertible debentures (NCDs). Vide the said amendment, now NBFCs/HFCs are required on or before 30 April of each year to invest or deposit in prescribed securities, a sum not less than 15 per cent of the debentures maturing during the year ending on 31 March of the next year. Accordingly, during the year ended March 31, 2022, the Company has transferred Rs. 827.74 crore to the General Reserve in respect of Debenture Redemption Reserve no longer required.
(12) Other comprehensive income includes fair value gain/(loss) on equity instruments and Derivative instruments in Cash flow hedge relationship.
(13) Retained earnings represents the surplus in Profit and Loss Account and appropriations.
(14) Debenture premium account is used to record the premium on issue of debenture.
(3) Additional Disclosures as required in terms of Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021, RBI/2020-21/73 DOR.FIN.HFC.CC.No.120/03.10.136/2020-21, 17 February, 2021 for Clause 3.4 for Derivatives are as follows:-
3.4.3. (A) Qualitative Disclosure:-
The Company''s activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses derivative contracts such as foreign exchange forward, cross currency contracts, interest rate swaps, foreign currency futures, options and swaps to hedge its exposure to movements in foreign exchange and interest rates. The use of these derivative contracts reduce the risk or cost to the Company and the Company does not use those for trading or speculation purposes.
The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The Board constituted Risk Management Committee (RMC) of the Company manages risk on the Company''s derivative portfolio. The officials authorized by the board to enter into derivative transactions for the Company are kept separate from the authorized signatories to confirm the derivative transactions. All derivative transactions that are entered into by the Company are reported to the board, and the mark-to-market on its portfolio is monitored regularly by the senior management. The Company uses Bloomberg to monitor and value its derivative portfolio to ascertain its hedge effectiveness vis-a-vis the underlying.
To hedge its risks on the principal and/ or interest amount for foreign currency borrowings on its balance sheet, the Company has currently used cross currency derivatives, forwards and principal only swaps. Additionally, the Company has entered into Interest Rate Swaps (IRS) to hedge its basis risk on fixed rate borrowings and LIBOR risk on its foreign currency borrowings.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date. Derivatives are classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair value is negative (negative marked to market value). Derivative assets and liabilities are recognized on the balance sheet at fair value. Fair value of derivatives is ascertained from the mark to market and accrual values received from the counterparty banks. These values are cross checked against the valuations done internally on Bloomberg. Changes in the fair value of derivatives other than those designated as hedges are recognized in the Statement of Profit and Loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge accounting or the Company chooses to end the hedging relationship.
(1) Employee Benefits - Provident Fund, ESIC, Gratuity and Compensated Absences disclosures as per Indian Accounting Standard (IndAS) 19 - Employee Benefits:
Contributions are made to Government Provident Fund and Family Pension Fund, ESIC and other statutory funds which cover all eligible employees under applicable Acts. Both the employees and the Company make predetermined contributions to the Provident Fund and ESIC. The contributions are normally based on a certain proportion of the employee''s salary. The Company has recognised an amount of Rs. 6.25 crore (Previous year Rs. 4.89 crore) in the Statement of Profit and Loss towards Employers contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for all employees is based upon actuarial valuations carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Pursuant to the issuance of the Indian Accounting Standard (IndAS) 19 on ''Employee Benefits'', commitments are actuarially determined using the ''Projected Unit Credit'' Method. Gains and losses on changes in actuarial assumptions are accounted for in Statement of Profit and Loss for Compensated absences and for Gratuity in Other Comprehensive Income.
(vi) During the year, the Company has bought back non-convertible debenture having face value of Rs. 1,269.60 crore (Previous Year Rs.182.70 crore), thereby earning a loss of Rs. 0.001 crore (Previous Year profit Rs.1.59 crore) which is clubbed under net gain on derecognition of financial instruments under amortized cost category.
(vii) The Citizens Whistle Blower Forum has filed a Public Interest Litigation ("PIL") before the Delhi High Court wherein certain allegations have been made against the Indiabulls group. The Company has vehemently denied the frivolous allegations that have been made without basic research or inquiry. The Company has also filed a perjury application wherein notice has been issued. The Management has concluded that the allegations made in the Writ Petition has no merit and no impact on the financial statements. The matter is sub judice and pending with the Delhi High Court.
(viii) The Company does not have any charges which are yet to be registered with the Registrar of Companies beyond the statutory period. In some cases, the Company has fully redeemed certain secured debentures and External Commercial Borrowing aggregating to Rs. 7,671.93 crore in respect of which the Company is in the process of preparation and submission of necessary forms for satisfaction of such charges and expects to complete the process in due course.
(33) Contingent Liabilities and Commitments:
The Company is involved in certain appellate and judicial proceedings (including those described below) concerning matters arising in the normal course of business including claims from revenue authorities, customers. The proceedings in respect of these matters are in various stages. Management has assessed the possible obligations arising from such claims against the Company, in accordance with the requirements of Indian Accounting Standard (Ind AS) 37 and based on judicial precedents, consultation with lawyers or based on its historical experiences. Accordingly, Management is of the view that based on currently available information no provision in addition to that already recognised in its financial statements is considered necessary in respect of the above.
Given below are amounts in respect of claims asserted by revenue authorities and others a) Demand pending under the Income Tax Act, 1961
(i) For Rs. 1.23 crore with respect to FY 2008-09 (Previous Year Rs. 1.23 crore) against disallowances under Income Tax Act, 1961,against which appeal is pending before The Supreme Court.
(ii) For Rs. 1.27 crore with respect to FY 2010-11 (Previous Year Rs. 1.27 crore) against disallowances under Income Tax Act, 1961, against which the department has filed appeal before The High Court.
(iii) For Rs. NIL with respect to FY 2010-11 (Previous Year Rs. 0.05 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(iv) For Rs. NIL with respect to FY 2011-12 (Previous Year Rs. 0.00 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before ITAT.
(v) For Rs. NIL with respect to FY 2012-13 (Previous Year Rs. 0.11 crore) against disallowances under Income Tax Act, 1961 against which departmental appeal is pending before ITAT.
(vi) For Rs. 14.16 crore with respect to FY 2013-14 (Previous Year Rs. 14.16 crore) against disallowances under Income Tax Act, 1961 against which departmental appeal is pending before ITAT.
(vii) For Rs. 13.81 crore with respect to FY 2014-15 (Previous Year Rs. 13.81 crore) against disallowances under Income Tax Act, 1961 against which departmental appeal is pending before ITAT.
(viii) For Rs 20.54 crore with respect to FY 2015-16 (Previous Year Rs. 20.54 crore) against disallowances under Income Tax Act, 1961 against which departmental appeal is pending before ITAT.
(ix) For Rs. 48.66 crore with respect to FY 2016-17 (Previous Year Rs. 48.66 crore) against disallowances under Income Tax Act, 1961 against which departmental appeal is pending before ITAT.
(x) For Rs. NIL with respect to FY 2010-11 (Previous Year Rs. 0.05 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before ITAT.
(xi) For Rs. NIL with respect to FY 2011-12 (Previous Year Rs. 0.00 crore) against disallowances under Income Tax Act, 1961 against which departmental appeal is pending before ITAT.
(xii) For Rs. 9.65 crore with respect to FY 2017-18 (Previous Year Rs. 166.75 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before ITAT.
(xiii) For Rs. 1.30 crore with respect to FY 2017-18 (Previous Year Rs. 1.30 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(xiv) For Rs. 64.15 crore with respect to FY 2018-19 (Previous Year Rs. 57.24 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(xv) For Rs. 28.04 crore with respect to FY 2019-20 (Previous Year Rs. 28.04 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(xvi) For Rs. 0.23 crore with respect to FY 2020-21 (Previous Year Rs. 0.23 crore) against disallowances under Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(xvii) For Rs. 0.58 crore with respect to FY 2020-21 (Previous Year Rs. NIL) against disallowances under Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(b) (i) Demand pending u/s of 25, 55,56 & 61 of The Rajasthan Value Added Tax Act, 2003 (Including interest & Penalty)
has been waived in favour of the Company with respect to FY 2007-08 to FY 2012-13 (Previous Year Rs. 1.45 crore) under the Amnesty Scheme-2022 brought by Commercial Tax Department, Rajasthan opted by the Company with the non-refund of tax, interest and penalty for Rs. (0.62 0.21) crore (Previous Year Rs. 0.62 0.21 crore) which were paid under protest by the Company and appeal pending before Rajasthan High Court has been withdrawn by the Company to comply with the conditions of Amnesty Scheme-22
(ii) Demand pending u/s 73 of CGST Act, 2017 for Rs.0.08 crore (Previous year Rs. Nil) (including Interest & Penalty) with respect to FY 2018-19 against which appeal has been filed before Joint Commissioner (Appeals). The Company has paid tax as a pre-deposit of Rs. 0.00 crore (Previous Year N.A.) required for the purpose of filing an appeal under GST law. The appeal is pending before the Appellate Authority.
(iii) The Company has filed an appeal before the Commissioner (Appeals-II) under section 85 of the Finance Act, 1994 (32 of 1994), against the order in original no. 08/VS/JC/CGST/DSC/2022-23 dated 15.11.2022 passed by Joint Commissioner, CGST, Delhi South Commissionerate, Bhikaji Cama Place, New Delhi-110066 for disputed amount w.r.t. penalty u/s 78 for Rs. 0.51 crore (Previous Year N.A.) and penalty u/s 77 for Rs. 0.00 crore (Previous Year N.A.). In compliance of section 35F of Central Excise Act, 1944, the Company has paid an amount of Rs.0.04 crore (Previous Year N.A.) as pre-deposit amount for filing an appeal. The appeal has since been decided in favour of Company with Nil Demand after balance sheet date vide order no 01/2023-24 dated 11th April 2023 of Commissioner (Appeals-II). However, statutory period for filing the appeal by the Service Tax department against the order of Commissioner (Appeals-II) has not yet expired.
(c) Capital commitments for acquisition of fixed assets at various branches as at the year end (net of capital advances paid)
Rs. 23.44 crore (Previous Year Rs. 32.63 crore).
(d) Corporate guarantees provided to Unique Identification Authority of India for Aadhaar verification of loan applications for Rs. 0.25 crore (Previous Year Rs. 0.25 crore).
(e) Bank guarantees provided against court case for Rs. 0.05 crore (Previous Year Rs. 0.05 crore).
(f) Corporate guarantees provided to NABARD for loan taken by Indiabulls Commercial Credit Limited for Rs. 381.07 crore (Previous Year Rs. 561.50 crore)
The Company is mainly engaged in the housing finance and mortgage-backed lending business, and all other activities revolve around this main business of the Company. Further, all activities are conducted within India and as such there is no separate reportable segment, as per the Ind AS 108 - "Operating Segments" specified under Section 133 of the Act.
(xxi) The Company is mainly engaged in the housing finance and mortgage-backed lending business, and all other activities revolve around this main business of the Company. Further, all activities are conducted within India and as such there is no separate reportable segment, as per the Ind AS 108 - "Operating Segments" specified under Section 133 of the Act.
As an outcome of its asset-light business model, which has gained significant traction in the last two years, the Company retains on its balance sheet only a small portion of the housing loans disbursed by it. Consequently, in its present structure, the Company does not meet the Principal Business Criteria for Housing Finance Companies as laid out in para 5.3 of the Master Direction - Non Banking Financial Company - Housing Finance Company ("NBFC-HFC") (Reserve Bank) Directions, 2021 ("Master Directions"). With its long-term commitment to the asset-light business model, the Company has confirmed to the RBI that it is working on a plan for reorganization of the Company structure, and submitted to the RBI a board-approved plan to this effect. Subject to the requisite regulatory and statutory approvals, the reorganisation plan would entail consolidation of the Company''s various entities into a larger NBFC-ICC. The RBI has given the Company time till September 30, 2023, to implement the board-approved
plan for conversion of the Company into a Non-Banking Financial Company - Investment and Credit Company (NBFC-ICC). The Company has been advised by the National Housing Bank [NHB] to continue compliance with the Master Directions and other circulars issued by RBI as applicable to HFCs, and the Supervisory circulars issued by NHB.
(xxii) Disclosure of Unsecured Portfolio: Please refer note 8
(xxiii) Disclosure of Related party transactions and Group Structure : Please refer note 35
(xxiv) Disclosures on liquidity coverage ratio:
(c) Committees of the Board and their composition
(i) Name of the committee of the Board : Audit Committee
Summarized terms of reference- To oversee the financial reporting process and disclosure of financial information;
- To review with management, quarterly, half yearly and annual financial statements and ensure their accuracy and correctness before submission to the Board;
- To review with management and internal auditors, the adequacy of internal control systems, approving the internal audit plans/ reports and reviewing the efficacy of their function, discussion and review of periodic audit reports including findings of internal investigations;
- To recommend the appointment of the internal and statutory auditors and their remuneration;
- To review and approve required provisions to be maintained as per IRAC norms and write off decisions;
- To hold discussions with the Statutory and Internal Auditors;
- Review and monitoring of the auditor''s independence and performance, and effectiveness of audit process;
- Examination of the auditors'' report on financial statements of the Company (in addition to the financial statements) before submission to the Board;
- Approval or any subsequent modification of transactions of the Company with related parties;
- Scrutiny of inter-corporate loans and investments;
- Review of Credit Concurrent Audit Report/ Concurrent Audit Report of Treasury;
- Valuation of undertakings or assets of the Company, wherever it is necessary;
- Monitoring the end use of funds raised through public offers and related matters as and when such funds are raised and also reviewing with the management the utilization of the funds so raised, for purposes other than those stated in the relevant offer document, if any and making appropriate recommendations to the Board in this regard;
- Evaluation of the risk management systems (in addition to the internal control systems);
- Review and monitoring of the performance of the statutory auditors and effectiveness of the audit process;
- To hold post audit discussions with the auditors to ascertain any area of concern;
- To review the functioning of the whistle blower mechanism;
- Approval to the appointment of the CFO after assessing the qualifications, experience and background etc. of the candidate;
- Approval of Bad Debt Write Off in terms of the Policy;
- Review of information system audit of the internal systems and processes to assess the operational risks faced by the Company and also ensures that the information system audit of internal systems and processes is conducted periodically; and
- Reviewing the utilization of loans and/or advances and/or investment by the Company to its subsidiary companies, exceeding rupees 100 crore or 10% of the assets side of the respective subsidiary companies, whichever is lower, including existing loans / advances / investment existing as on April 1, 2019.
(ii) Name of the committee of the Board : Nomination & Remuneration Committee Summarised terms of reference- Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board of directors a policy relating to, the remuneration of the directors, key managerial personnel and other employees;
- Formulation of criteria for evaluation of performance of independent directors and the board of directors;
- Devising a policy on diversity of board of directors;
- Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the board of directors their appointment and removal;
- Whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors;
- To ensure ''fit and proper'' status of proposed/ existing directors;
- To recommend to the Board all remuneration, in whatever form, payable to Directors, KMPs and senior management;
- Framing suitable policies and systems to ensure that there is no violation, by an employee of any applicable laws in India or overseas, including:
> The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; or
> The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 1995; and
- Perform such functions as are required to be performed by the Nomination & Remuneration Committee under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
- To oversee all matters encompassing the shareholders'' / investors'' related issues;
- Resolving the grievances of the security holders of the Company, including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc.
- Review of measures taken for effective exercise of voting rights by shareholders.
- Review of adherence to the service standards adopted by the Company in respect of various services being rendered by the Registrar & Share Transfer Agent.
- Review of the various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the Company.
(ii) Disclosure on refund of Interest on Interest amount : Pursuant to the Notification Vide: RBI/2021-22/17 DOR.STR. REC.4/21.04.048/2021-22 dated April 7, 2021, during the financial year 2020-21 the Company has refunded/adjusted amount of Rs. 75.02 Crs to its borrowers, which was initially charged as Interest on Interest amount during the moratorium Period of March 1, 2020 to August 31, 2020.
(iii) The Company has setup an Asset Liability Management Committee (ALCO), to handle liquidity risk management. ALCO committee reviews our asset and liability positions and gives directions to our finance and treasury teams in managing the same. Our risk management committee approves, reviews, monitors and modifies our credit and operation policy from time to time, reviews regulatory requirements and implements appropriate mechanisms and guidelines related to risk Management.
(42) Fair value measurement42.1 Valuation principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions , regardless of whether that price is directly observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.
The Company''s process to determine fair values is part of its periodic financial close process. The Audit Committee exercises the overall supervision over the methodology and models to determine the fair value as part of its overall monitoring of financial close process and controls. The responsibility of ongoing measurement resides with business units . Once submitted, fair value estimates are also reviewed and challenged by the Risk and Finance functions.
Debt securities, Commercial papers and government debt securities
Fair value of these instruments is derived based on the indicative quotes of price and yields prevailing in the market as at reporting date and are classified as Level 2.
Equity instruments in non-listed entities are initially recognised at transaction price and re-measured and valued on a case-by-case and classified as Level 2. Fair value is the price of recent transaction as there has not been a significant lapse of time since the last transaction took place.
Open ended mutual funds are valued at NAV declared by respective fund house and are classified under Level 1. Interest rate swaps, Currency swaps and Forward rate contracts
The fair value of Interest rate swaps is calculated as the present value of estimated cash flows based on observable yield curves. The fair value of Forward foreign exchange contracts and currency swaps is determined using observable foreign exchange rates and yield curves at the balance sheet date.
42.5 There have been no transfers between Level 1, Level 2 and Level 3 for the year ended March 31, 2023 and March 31, 2022.
42.6 Fair value of financial instruments not measured at fair value
Set out below is a comparison, by class, of the carrying amounts and fair values of the Company''s financial instruments that are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets and non-financial liabilities.
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables.
Debt Securities & Subordinated liabilities
These includes Subordinated debt, secured debentures, unsecured debentures. The fair values of such liabilities are estimated using a discounted cash flow model based on contractual cash flows using actual or estimated yields and discounting by yields incorporating the credit risk. These instrument are classified in Level 2.
*Assets and Liabilities other than above
The carrying value of assets and liabilities other than investments at amortised cost, debt securities and subordinated liabilities represents a reasonable approximation of fair value.
(43) Transfers of financial assetsTransfers of financial assets that are not derecognised in their entirety
Securitisations: The Company uses securitisations as a source of finance. Such transaction resulted in the transfer of contractual cash flows from portfolios of financial assets to holders of issued debt securities. Such deals resulted in continued recognition of the securitised assets since the Company retains substantial risks and rewards.
During the year ended March 31, 2023, the Company has sold some loans and advances measured at amortised cost as per assignment deals, as a source of finance. As per the terms of deal, since the derecognition criteria as per IND AS 109, including transfer of substantially all the risks and rewards relating to assets being transferred to the buyer being met, the assets have been derecognised.
The management has evaluated the impact of the assignment transactions done during the year for its business model. Based on the future business plans, the Company''s business model
Mar 31, 2022
7.1 Hedging activities and derivatives
The Group is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are interest rate risk and foreign currency risk.
7.1.1 Derivatives not designated as hedging instruments
The Group uses interest rate swaps to manage its interest rate risk arising from INR denominated borrowings . The interest rate swaps are not designated in a hedging relationship and are entered into for periods consistent with exposure of the underlying transactions.
7.1.2 Derivatives designated as hedging instrumentsa. Cash flow hedges
The foreign currency and interest rate risk on borrowings have been actively hedged through a combination of forward contracts, principal only swaps and interest rate swaps
The Group is exposed to interest rate risk arising from its foreign currency borrowings amounting to $ 320,000,000 (Previous Year $ 520,000,000). Interest on the borrowing is payable at a floating rate linked to USD LIBOR. The Group economically hedged the interest rate risk arising from the debt with a ''receive floating pay fixed'' interest rate swap (''swap'').
The Group uses Interest Rate Swaps (IRS) Contracts (Floating to Fixed) to hedge its risks associated with interest rate fluctuations relating interest rate risk arising from foreign currency loans / external commercial borrowings. The Group designates such IRS contracts in a cash flow hedging relationship by applying the hedge accounting principles as per IND AS 109. These IRS contracts are stated at fair value at each reporting date. Changes in the fair value of these IRS contracts that are designated and effective as hedges of future cash flows are recognised directly in "Cash Flow Hedge Reserve" under Reserves and surplus and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
The Group also hedges foreign currency risk arising from its fixed rate foreign currency bond by entering into the Forward Contracts and Principal Only Swaps. There is an economic relationship between the hedged item and the hedging instrument as the terms of the Forward contracts/Principal Only Swaps match that of the foreign currency borrowing (notional amount, interest payment dates, principal repayment date etc.). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the Forward contracts/Cross currency swap are identical to the hedged risk components.
The Group uses IRS instruments to convert a proportion of its fixed rate debt to floating rates in order to hedge the interest rate risk arising, principally, from issue of non-convertible debentures. Group designates these as fair value hedges of interest rate risk. Changes in the fair values of derivatives designated as fair value hedges and changes in fair value of the related hedged item are recognised directly in the Statement of Profit and Loss thus ineffective portion being recognised in the Statement of Profit and Loss.
*Includes credit substitutes
# includes redemption premium accrued on zero coupon bond for Rs 1,154.10 Crore (Previous year Rs. 398.23 crore), which will become due and payable upon maturity only. The accounting of the redemption premium shall in no way whatsoever, be considered as the credit of the premium to the account of the Group nor create an enforceable right in favour of the Group on any date prior to redemption.
@ includes interest accrued on units of AIF amounting to Rs. 376.14 Crore (Previous year Rs. 116.13 Crore), which will become due and payable upon maturity only.
(2) Secured Loans and Other Credit Facilities given to customers are secured / partly secured by :
(a) Equitable mortgage of property and / or
(b) Pledge of shares / debentures, units, other securities, assignment of life insurance policies and / or
(c) Hypothecation of assets and / or
(d) Company guarantees and / or
(e) Personal guarantees and / or
(f) Negative lien and / or Undertaking to create a security.
(3) Impairment allowance for loans and advances to customers
Group''s Analytics Department has designed and operates its Internal Rating Model. The model is tested and calibrated periodically. The model grades loans on a four-point grading scale, and incorporates both quantitative as well as qualitative information on the loans and the borrowers. The model uses historical empirical data to arrive at factors that are indicative of future credit risk and segments the portfolio on the basis of combinations of these parameters into smaller homogenous portfolios from the perspective of credit behaviour. Some of the factors that the internal risk based model may consider are:
a) Loan to value
b) Type of collateral
c) Cash-flow and income assessment of the borrower
d) Interest and debt service cover
e) Repayment track record of the borrower
f) Vintage i.e. months on books and number of paid EMIs
g) Project progress in case of project finance
In addition to information specific to the borrower and the performance of the loan, the model may also utilise supplemental external information that could affect the borrower''s behaviour. The model is also calibrated to incorporate external inputs such as GDP growth rate, unemployment rate and factors specific to the sector/industry of the borrower.
The Internal Rating Model is dynamic and is calibrated periodically; the choice of parameters and division into smaller homogenous portfolios is thus also dynamic.
The Group''s impairment assessment and measurement approach is set out in the notes below. It should be read in conjunction with the Summary of significant accounting policies.
The Group considers a loan as defaulted and classified it as Stage 3 (credit-impaired) for ECL calculations typically when the borrowers become 90 days past due on contract payments.
Classification of loans into Stage 2 is done on a conservative basis and typically accounts where contractual repayments are more than 30 days past due are classified in Stage 2. Accounts usually go over 30 days past due owing to temporary mismatch in timing of borrower''s or his/her business'' underlying cashflows, and are usually quickly resolved. The Group may also classify a loan in Stage 2 if there is significant deterioration in the loans collateral, deterioration in the financial condition of the borrower or an assessment that adverse market conditions may have a disproportionately detrimental effect on the loan repayment. Thus as a part of the qualitative assessment of whether an instrument is in default, the Group also considers a variety of instances that may indicate delay in or non-repayment of the loan. When such event occurs, the Group carefully considers whether the event should result in treating the borrower as defaulted and therefore assessed as Stage 3 for ECL calculations or whether Stage 2 is appropriate.
It is the Group''s policy to consider a financial instrument as ''cured'' and therefore re-classified out of Stage 3 when none of the default criteria are present. The decision whether to classify an asset as Stage 2 or Stage 1 once cured depends on the updated credit grade once the account is cured, and whether this indicates there has been a significant reduction in credit risk.
(ii) Internal rating model and PD Estimation process
Group''s Analytics Department has designed and operates its Internal Rating Model that factors in both quantitative as well as qualitative information on the loans and the borrowers. Both Lifetime ECL and 12 months ECL are calculated either on individual basis or a collective basis, depending on the nature of the underlying loan portfolio. In addition to information specific to the borrower and the performance of the loan, the model may also utilise supplemental external information that could affect the borrower''s behaviour. The model is also calibrated to incorporate external inputs such as GDP growth rate, unemployment rate and factors specific to the sector/industry of the borrower.
The outstanding balance as at the reporting date is considered as EAD by the Group. Considering that PD determined above factors in amount at default, there is no separate requirement to estimate EAD.
The Group uses historical loss data for identified homogenous pools for the purpose of calculating LGD. The estimated recovery cash flows are discounted such that the LGD calculation factors in the NPV of the recoveries.
(v) Significant increase in credit risk
The internal rating model evaluates the loans on an ongoing basis. The rating model also assesses if there has been a significant increase in credit risk since the previously assigned risk grade One key factor that indicates significant increase in credit risk is when contractual payments are more than 30 days past due.
5. Inputs to the ECL model for forward looking economic scenarios
The internal rating model also provides for calibration to reflect changes in macroeconomic parameters and industry specific factors.
The Group is in the business of extending secured loans mainly backed by mortgage of property (residential or commercial).
In addition to the above mentioned collateral, the Group holds other types of collateral and credit enhancements, such as cross-collateralisation on other assets of the borrower, share pledge, guarantees of parent/holding companies, personal guarantees of promoters/proprietors, hypothecation of receivables via escrow account, hypothecation of receivables in other bank accounts etc.
In its normal course of business, the Group does not physically repossess properties or other assets, but recovery efforts are made on delinquent loans through on-rolls collection executives, along with legal means to recover due loan repayments. Once contractual loan repayments are more than 90 days past due, repossession of property may be initiated under the provisions of the SARFAESI Act 2002. Re-possessed property is disposed of in the manner prescribed in the SARFAESI act to recover outstanding debt.
The Group did not hold any financial instrument for which no loss allowance is recognised because of collateral as at March 31, 2022. There was no change in the Group''s collateral policy during the year.
7. As at the year end the Group has undrawn loan commitments (after applying credit conversion factor) of Rs. 825.43 Crore (Previous Year Rs. 1,045.90 Crore).
(1) On December 13, 2010 the Erstwhile Holding Company (IBFSL) had sold 26% shares held by it in Indian Commodity Exchange Limited (ICEX) to Reliance Exchange Next Limited (R-Next) for a total consideration of Rs. 47.35 Crore against a proportionate cost of Rs. 26.00 Crore. As a result thereof, the stake of IBFSL in ICEX reduced from 40% to 14% and the same was reclassified as a long term investment from the earlier classification of being an Associate. MMTC Limited (MMTC) filed a petition before the National Company Law Tribunal (NCLT) (Earlier known as Company Law Board)) against ICEX, R-Next and IBFSL alleging that the transfer is null and void in terms of the Shareholders Agreement in view of the Forward Markets Commission (FMC) guidelines. IBFSL contends that such view of MMTC is based on the old FMC guidelines and without considering the amended FMC Guidelines dated June 17, 2010 wherein the transfer norms were relaxed. IBFSL had filed its objections on maintainability of the petition which is pending adjudication before the NCLT.
(2) During the current financial year ended March 31, 2022, the Group has sold 11,500,000 Equity Shares of Indian Commodity Exchange Limited for a total consideration of Rs. 2.85 Crores at a loss of Rs. 4.05 Crores. Subsequent to the year ended March 31, 2022, the Group has sold 18,500,000 Equity Shares of Indian Commodity Exchange Limited for a total consideration of Rs. 1.85 Crore. With this, the Group had sold its entire stake in Indian Commodity Exchange Limited.
(3) During the current financial year the Group has sold 4,985,000 nos. of Equity shares held of Oaknorth Holdings Limited for a consideration of Rs. 293.42 crores and realised a gain of Rs. 253.03 crores. With this, the Group has sold its entire stake in Oaknorth Holdings Limited.
(4) Investment in mutual funds of Rs. 237.70 crores (March 31, 2021 Rs. 125.74 crores) under lien / provided as credit enhancement in respect of securitisation deal for loans.
(a) An amount of Nil and Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.
(b) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.
(c) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006
(d) No interest was accrued and unpaid at the end of the accounting year.
(e) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Group. This has been relied upon by the Auditors.
(1) In respect of amounts as mentioned under Section 124 of the Companies Act, 2013, there were no dues (Previous Year Rs. Nil) required to be credited to the Investor Education and Protection Fund as on March 31, 2022, except in the Holding Company, an amount of Rs. 2,280 (Rupees Two thousand two hundred Eighty only) which were issued to certain shareholders against revalidation cases for the payment of unpaid/unclaimed interim dividend could not be encashed by them and were again credited back to the Holding Company''s unpaid dividend account. The same has been deposited subsequent to the year end to Investor Education and Protection fund.
As at March 31, 2022 567,505 (Previous Year 617,505) GDR''s were outstanding and were eligible for conversion into Equity Shares. The Company does not have information with respect to holders of these GDR''s. Holders of Global Depository Receipts (GDRs) will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs will not have voting rights with respect to the Deposited Shares. The GDRs may not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
Note 2: Of the 2,300,000 equity shares in the Company acquired by Mr. Sameer Gehlaut on 26th March, 2020 from open market, one share short received in payout got credited to his demat account subsequent to 31st March, 2020. In addition, 2,400,000 equity shares in the Company acquired by him on 31st March, 2020 from open market, got credited to his demat account subsequent to 31st March, 2020. Hence, 2,400,001 equity shares are not included in his shareholding as on 31st March, 2020.
*During the current year, Mr. Sameer Gehlaut (the Promoter) resigned from the office of Non-Executive Director of the Company. The Company also received requests from currently belonging to the ''Promoter and Promoter Group'' category of the Company ("Outgoing Promoters"), for their reclassification from ''Promoter and Promoter Group'' to ''Public'' category, which shall be subject to all requisite approvals.
(ii) Employees Stock Options Schemes:
Grants During the Year:
There have been no new grants during the year.
(iii) Employee Stock Benefit Scheme 2019 ("Scheme")
The Scheme has been adopted and approved pursuant to: (a) a resolution of the Board of Directors of INDIABULLS HOUSING FINANCE LIMITED at its meeting held on November 6, 2019; and (b) a special resolution of the shareholders'' of the Group passed through postal ballot on December 23, 2019, result of which were declared on December 24, 2019.
This Scheme comprises:
a. INDIABULLS HOUSING FINANCE LIMITED Employees Stock Option Plan 2019 ("ESOP Plan 2019")
b. INDIABULLS HOUSING FINANCE LIMITED Employees Stock Purchase Plan 2019 ("ESP Plan 2019")
c. INDIABULLS HOUSING FINANCE LIMITED Stock Appreciation Rights Plan 2019 ("SARs Plan 2019")
In accordance with the ESOP Regulations, the Group had set up Pragati Employee Welfare Trust (formerly known as Indiabulls Housing Finance Limited Employee Welfare Trust) (Trust) for the purpose of implementation of ESOP Scheme. The Scheme is administered through ESOP Trust, whereby shares held by the ESOP Trust are transferred to the employees, upon exercise of stock options as per the terms of the Scheme.
(b) The Group has established the "Pragati Employee Welfare Trust" ("Pragati - EWT") (earlier known as Indiabulls Housing Finance Limited - Employees Welfare Trust" (IBH - EWT) ("Trust") for the implementation and management of its employees benefit scheme viz. the "Indiabulls Housing Finance Limited - Employee Stock Benefit Scheme - 2019" (Scheme), for the benefit of the employees of the Company and its subsidiaries.
22,008,616 Equity Shares of Rs. 2 each (Previous Year : 26,253,933) are reserved for issuance towards Employees Stock options as granted.
The weighted average share price at the date of exercise of these options was Rs. 215.82 per share(Previous Year Rs. N.A. per share).
During the financial year 2020-21, the Company under the provisions of Chapter VI of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended, and Sections 42 and 62 of the Companies Act, 2013, as amended, including the rules made thereunder, has concluded Qualified Institutions Placement (QIP), by issuing 34,774,811 equity shares at a price of Rs. 196.37 per equity share aggregating Rs. 682.87 Crores, on September 15, 2020. Share issue expenses amounting to Rs. 20.56 Crores (incurred in respect of this issuance) has been adjusted against the Securities Premium Account.
(viii) (a) Pursuant to the applicable provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and pursuant to receipt of notice for conversion of FCCBs, for a principle value USD 20,500,000, the Company during the current financial year, issued and allotted 6,207,952 (Sixty Two Lakh Seven Thousand Nine Hundred and Fifty Two) Fully Paid Equity shares of face value INR 2/- each, (a) at a conversion price of INR 230.14 (including a premium of INR 228.14) per Equity Share for 157,700 Equity Shares under FCCB1, and (b) at a conversion price of INR 243.05 (including a premium of INR 241.05) per Equity Share for 60,50,252 Equity Shares under FCCB2, to the holder of such FCCBs. Consequent to the said allotment, the paid-up Equity Share Capital of the Company stands increased to INR 937,143,008 divided into 468,571,504 Fully Paid Equity Shares of face value INR 2/- each and outstanding principal value of FCCBs, as listed at Singapore Exchange Securities Trading Limited under (a) FCCB1, ISIN XS2301133943, stands reduced from USD 150,000,000 to USD 149,500,000 and (b) FCCB2, ISIN XS2377720839, stands reduced from USD 165,000,000 to USD 145,000,000.
(b) During the current financial year, the Company has issued 4.50% secured foreign currency convertible bonds due 2026 (''FCCBs'') of USD 165 Million, convertible into fully paid-up equity shares of face value of 2/- each of the Company at an initial conversion price of Rs. 243.05 per equity share ("conversion price"), on and after November 08, 2021 up to the close of business on the 10th day prior to the Maturity Date, at the option of the FCCB holders. FCCBs, which are not converted to equity shares during such specified period, will be redeemable on September 28, 2026. The Conversion price is subject to adjustment w.r.t issuance of bonus share, free issuance of shares, division, consolidation and reclassification of shares, declaration of dividend or any other condition as mentioned in offering circular, but cannot be below the floor price which is Rs. 231.48.
(1) Capital reserve is created on receipt of non refundable debenture warrants exercise price.
(2) Capital redemption reserve is created on redemption of preference shares.
(3) Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
(4) Debenture premium account is used to record the premium on issue of debenture.
(5) Stock Compensation Adjustment is created as required by Ind AS 102 ''Share Based Payments'' on the Employee Stock Option Scheme operated by the Company for employees of the Group.
(6) This includes reserve created under section 36(1)(viii) of the Income Tax Act, 1961, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to IBHFL under the Scheme of Arrangement during the year ended March 31, 2013.
(7) Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
(8) In terms of Section 29C of the National Housing Bank ("NHB") Act, 1987, the Holding Company is required to transfer at least 20% of its Profit after tax to a Reserve Fund before any dividend is declared. Transfer to a Reserve Fund in terms of Section 36(1)(viii) of the Income Tax Act, 1961 is also considered as an eligible transfer as transfer to Special Reserve under Section 29C of the National Housing Bank ("NHB") Act, 1987. The Holding Company has transferred an amount of Rs. Nil (Previous Year Rs. Nil) to reserve created in terms of Section 36(1)(viii) of the Income Tax Act, 1961 termed as "Reserve (III)" and also transferred an amount of Rs. 139.22 Crore (Previous Year Rs. 211.69 Crore)
to the Reserve in terms of Section 29C of the National Housing Bank ("NHB") Act, 1987 as at the year end. Further an additional amount of Rs. 525.00 (Previous Year Rs. 825.00 Crore) has been set apart by way of transfer to Additional Reserve Fund in excess of the statutory minimum requirement as specified under Section 29C pursuant to Circular no. NHB(ND)/DRS/Pol-No. 03/2004-05 dated August 26, 2004 issued by the National Housing Bank. The additional amount so transferred may be utilised in the future for any business purpose.
(9) This includes reserve created under section 45-IC of the Reserve Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to IBHFL under the Scheme of Arrangement during the year ended March 31, 2013.
(10) The Companies Act 2013 till August, 2019 required companies that issued debentures to create a debenture redemption reserve from annual profits until such debentures are redeemed. The Company was required to transfer a specified percentage (as provided in the Companies Act, 2013) of the outstanding redeemable debentures to debenture redemption reserve. The amounts credited to the debenture redemption reserve may not be utilised except to redeem debentures. On redemption of debentures, the amount may be transferred from debenture redemption reserve to General Reserve. The Ministry of Corporate Affairs (MCA) has amended the Companies (Share Capital and Debenture) Rules, 2014, doing away with creation of debenture redemption reserve by NBFCs/HFCs with respect to issue of non convertible debentures (NCDs). Vide the said amendment, now NBFCs/HFCs are required on or before 30 April of each year to invest or deposit in prescribed securities, a sum not less than 15 per cent of the debentures maturing during the year ending on March 31 of the next year. Accordingly, during the year ended March 31, 2022, the Company has transferred Rs. 827.74 crores to the General Reserve in respect of Debenture Redemption Reserve no longer required.
(11) Retained earnings represents the surplus in Profit and Loss Account and appropriations.
(12) Other comprehensive income includes fair value gain/(loss) on equity instruments and Derivative instruments in Cash flow hedge relationship.
(13) Reserve arising on conversion of Foreign currency in INR of wholly owned subsidiary.
(14) Interim dividend received by Pragati Employee Welfare Trust on equity shares of the Holding Company.
(15) Adjustment on account of amount invested in excess of face value on 6,000,000 Equity Shares (Previous Year 8,600,000 Equity Shares) of the Holding Company purchased from the open market during the year by Pragati Employee Welfare Trust for the purpose of allotment of SARs to the eligible employees.
(i) In respect of Indiabulls Asset Management Company Limited, a subsidiary company, managerial remuneration paid for the financial year ended March 31, 2022, in excess of the limits specified under Section 197 and 198 of the Companies Act, 2013 was approved by the members of such subsidiary Company at their extra-ordinary general meeting held on May 06, 2022.
*Provision for employee benefits in the form of Gratuity and Compensated Absences in respect of two subsidiary companies which have a few employees during the year ended March 31, 2022, is determined on an accrual basis under the assumption that such benefits are payable at year end, as permitted under INDAS 19. Accordingly, such subsidiary companies have provided for Rs. 0.09 crore (Previous year Rs. 0.13 crore) on account of provision for gratuity and Rs. 0.03 crore (Previous year Rs. 0.02 crore) on account of provision for compensated absences on accrual basis in the Consolidated Balance Sheet as at March 31, 2022 and have provided for Rs. 0.00 crore (Previous year Rs. 0.00 crore) on account of provision for gratuity and provision for compensated absences on accrual basis in the Consolidated Statement of Profit and Loss for the year ended March 31, 2022.
(1) Employee Benefits - Provident Fund, ESIC, Gratuity and Compensated Absences disclosures as per Indian Accounting Standard (IndAS) 19 - Employee Benefits:
Contributions are made to Government Provident Fund and Family Pension Fund, ESIC and other statutory funds which cover all eligible employees under applicable Acts. Both the employees and the Company make predetermined contributions to the Provident Fund and ESIC. The contributions are normally based on a certain proportion of the employee''s salary. The Group has recognised an amount of Rs. 5.24 Crore (Previous year Rs. 4.44 Crore) in the Statement of Profit and Loss towards Employers contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for all employees is based upon actuarial valuations carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Pursuant to the issuance of the Indian Accounting Standard (IndAS) 19 on ''Employee Benefits'', commitments are actuarially determined using the ''Projected Unit Credit'' Method. Gains and losses on changes in actuarial assumptions are accounted for in Statement of Profit and Loss for Compensated absences and for Gratuity in Other Comprehensive Income.
(v) During the year, the Holding Company has bought back non-convertible debenture having face value of Rs. 182.70 Crores (Previous Year Rs. 3,588.62 crores), thereby earning a loss of Rs. 1.59 Crores (Previous Year profit Rs.15.93 crores) which is clubbed under net gain on derecognition of financial instruments under amortized cost category.
(vi) The Citizens Whistle Blower Forum has filed a Public Interest Litigation ("PIL") before the Delhi High Court wherein certain allegations have been made against the Indiabulls group. The Company has vehemently denied the frivolous allegations that have been made without basic research or inquiry. The company has also filed a perjury application wherein notice has been issued. The Management has concluded that the allegations made in the Writ Petition has no merit and no impact on the consolidated financial statements. The matter is sub judice and pending with the Delhi High Court.
(vii) The Holding Company along with its wholly owned subsidiary companies i.e. Indiabulls Asset Management Company Limited (IAMCL) and Indiabulls Trustee Company Limited, Trustee of IAMCL, (ITCL) has executed definitive transaction document with Nextbillion Technology Private Limited (hereinafter referred to as "Nextbillion"), to divest its entire stake in the business of managing mutual fund, being carried out by IAMCL & ITCL to Nextbillion at an aggregate purchase consideration of INR 175 crores (including cash and cash equivalents of INR 100 Crore, as on closing date) ("Transaction") subject to necessary approvals, as may be required in this regard.
(viii) During the year ended 31st March, 2022, the Enforcement Directorate (ED) had sought certain information from the Holding Company emanating from an FIR complaint lodged in village Wada, Palghar, Maharashtra in April, 2021. The Company and its officials have provided required information to the Enforcement Directorate. On May 4, 2022, subsequent to the Balance Sheet date, the Honourable Bombay High court has upheld the company''s appeal against the said FIR and has quashed the compliant/FIR forming the basis of the ED''s action.
Recently, on May 5, 2022, in a case [J Sekar Reddy v. Directorate of Enforcement] similar to the Company''s case, the Hon''ble Supreme Court quashed the ECIR on the basis that there is no scheduled offence as the FIR with respect to the scheduled offence had been quashed by the High Court. In view of this, the ECIR against the Company is also likely to be quashed by the Hon''ble Delhi High Court since in the Company''s case also, the FIR in this case has been quashed by the Hon''ble Bombay High Court.
(ix) The Holding Company does not have any charges which are yet to be registered with the Registrar of Companies beyond the statutory period. In some cases, the Holding Company has fully redeemed certain secured debentures and External Commercial Borrowing aggregating to Rs. 14,992 crores in respect of which the Holding Company is in the process of preparation and submission of necessary forms for satisfaction of such charges and expects to complete the process in due course and in respect of subsidiary companies, there are no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period during the year ended March 31, 2022 (Previous year Rs. Nil).
(xi) The Holding Company is mainly engaged in the housing finance business and all other activities revolve around the main business of the Holding Company. As an outcome of its asset-light business model and the high levels of liquidity on the balance sheet, as on March 31, 2022, the Holding Company is not meeting the principal business criteria as laid out in circular No. DOR.NBFC (HFC). CCNo.118/03.10.136/2020-21 dated October 22, 2020 issued by the RBI. As per timelines prescribed in para 5.3 of the said RBI Circular, the Holding Company will submit to the RBI necessary business plan with a roadmap to achieve compliance with principal business criteria by March 31, 2024.
(34) Contingent Liability and Commitments:
The Group is involved in certain appellate and judicial proceedings (including those described below) concerning matters arising in the normal course of business including claims from revenue authorities and customers. The proceedings in respect of these matters are in various stages. Management has assessed the possible obligations arising from such claims against the Company, in accordance with the requirements of Indian Accounting Standard (Ind AS) 37 and based on judicial precedents, consultation with lawyers or based on its historical experiences. Accordingly, Management is of the view that based on currently available information no provision in addition to that already recognised in its financial statements is considered necessary in respect of the above.
Given below are amounts in respect of claims asserted by revenue authorities and others
(a) Demand pending under the Income Tax Act,1961
(i) In respect of Subsidiary Company, For Rs. Nil with respect to FY 2007-08 (Year ended March 31, 2021 Rs. 0.82 Crore) against disallowances under Income Tax Act,1961, against which appeal is pending before Hon''ble Jurisdictional High Court.
(ii) In respect of Subsidiary Company, For Rs. 1.17 Crores with respect to FY 2007-08 (Year ended March 31, 2021 Rs. 1.17 Crores) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(iii) In respect of Holding Company, For Rs. 1.23 Crores with respect to FY 2008-09 (Year ended March 31, 2021 Rs. 1.23 Crores) against disallowances under Income Tax Act,1961, against which the appeal is pending before Hon''ble Supreme Court.
(iv) In respect of Holding Company, For Rs. 1.27 Crores with respect to FY 2010-11 (Year ended March 31, 2021 Rs. 1.27 Crores) against disallowances under Income Tax Act, 1961, against which the department has filed appeal before Hon''ble Jurisdictional High Court.
(v) In respect of Holding Company, For Rs. 0.05 Crore with respect to FY 2010-11 (Year ended March 31, 2021 Rs. 0.05 Crore) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(vi) In respect of Holding Company, For Rs. 0.05 Crore with respect to FY 2010-11 (Year ended March 31, 2021 Rs. 0.05 Crore) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(vii) In respect of Subsidiary Company, For Rs. 1.75 Crores with respect to FY 2011-12 (Year ended March 31, 2021 Rs. 1.75 Crores) against disallowances under Income Tax Act,1961,against which the appeal is pending before Hon''ble Jurisdictional High Court.
(viii) In respect of Holding Company, For Rs. 0.00 Crore with respect to FY 2011-12 (Year ended March 31, 2021 Rs. 0.00 Crore) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(ix) In respect of Holding Company, For Rs. 0.00 Crore with respect to FY 2011-12 (Year ended March 31, 2021 Rs. 0.00 Crore) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(x) In respect of Holding Company, For Rs. Rs. 0.11 Crore with respect to FY 2012-13 (Year ended March 31, 2021 Rs. 0.11 Crore) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xi) In respect of Holding Company, For Rs. 14.16 Crores with respect to FY 2013-14 (Year ended March 31, 2021 Rs. 14.16 Crores) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xii) In respect of Holding Company, For Rs. Rs. 13.81 Crores with respect to FY 2014-15 (Year ended March 31, 2021 Rs. 13.81 Crores) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xiii) In respect of Holding Company, For Rs. 20.54 Crores with respect to FY 2015-16 (Year ended March 31, 2021 Rs. 20.54 Crores) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xiv) In respect of Holding Company, For Rs. 48.66 Crores with respect to FY 2016-17 (Year ended March 31, 2021 Rs. 48.66 Crores) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xv) In respect of Holding Company, For Rs. 168.05 Crores with respect to FY 2017-18 (Year ended March 31, 2021 Rs. Nil) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xvi) In respect of Holding Company, For Rs. 57.24 Crores with respect to FY 2018-19 (Year ended March 31, 2021 Rs. Nil) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xvii) In respect of Holding Company, For Rs. 28.04 Crores with respect to FY 2019-20 (Year ended March 31, 2021 Rs. Nil) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xviii) In respect of Subsidiary Company, For Rs. 0.08 Crores with respect to FY 2019-20 (Year ended March 31, 2021 Rs. Nil) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xix) In respect of Subsidiary Company, For Rs. 0.29 Crores with respect to FY 2019-20 (Year ended March 31, 2021 Rs. Nil) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(xx) In respect of Holding Company, For Rs. 0.23 Crores with respect to FY 2020-21 (Year ended March 31, 2021 Rs. Nil) against disallowances under Income Tax Act,1961 against which appeal is pending before CIT (Appeals).
(b) Demand pending u/s of 25, 55 , 56 & 61 of The Rajasthan Value Added Tax Act, 2003 for Rs. 1.45 Crore (Including interest & Penalty) with respect to FY 2007-08 to FY 2012-13 (Previous Year Rs. 1.45 Crore) against which appeal was pending before Rajasthan High Court. The Company has paid tax along with interest for Rs. 0.62 Crore (Previous Year Rs. 0.62 Crore) under protest. Further the company has deposited Rs. 0.21 Crore on May 30, 2016. Further ,the company has opted for New Amnesty Scheme 2016 and accordingly deposited 25% of the disputed demand amount and withdrawn appeal before the Hon''ble High Court.
(c) Capital commitments for acquisition of PPE at various branches as at the year end (net of capital advances paid) Rs. 32.63 Crores (Year ended March 31, 2021 Rs. 3.15 Crores).
(d) Corporate guarantees provided to Unique Identification Authority of India for Aadhaar verification of loan applications for Rs. 0.25 Crore (Year ended March 31, 2021 Rs. 0.25 Crore).
(e) Bank guarantees provided against court case for Rs. 0.05 Crore (Year ended March 31, 2021 Rs. 0.05 Crore).
The Group''s main business is financing by way of loans for purchase or construction of residential houses, commercial
real estate and certain other purposes in India. All other activities of the Group revolve around the main business.
Accordingly, there are no separate reportable segments as per IND-AS 108 dealing with Operating Segment.
(38) Earnings Per Equity Share
Earnings Per Equity Share (EPS) as per Indian Accounting Standard (IndAS)-33 "Earnings Per Share",:
The basic earnings per share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential diluted Equity Shares are adjusted for potential dilutive effect of Employee Stock Option Plan as appropriate.
(39) Fair value measurement39.1 Valuation principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions , regardless of whether that price is directly observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.
The Group''s process to determine fair values is part of its periodic financial close process. The Audit Committee exercises the overall supervision over the methodology and models to determine the fair value as part of its overall monitoring of financial close process and controls. The responsibility of ongoing measurement resides with business units . Once submitted, fair value estimates are also reviewed and challenged by the Risk and Finance functions.
39.4 Valuation techniquesDebt securities, Commercial papers and government debt securities
Fair value of these instruments is derived based on the indicative quotes of price and yields prevailing in the market as at reporting date and are classified as Level 2.
Equity instruments in non-listed entities are initially recognised at transaction price and re-measured and valued on a case-by-case and classified as Level 2. Fair value is the price of recent transaction as there has not been a significant lapse of time since the last transaction took place.
Open ended mutual funds are valued at NAV declared by respective fund house and are classified under Level 1.
Interest rate swaps, Currency swaps and Forward rate contracts
The fair value of Interest rate swaps is calculated as the present value of estimated cash flows based on observable yield curves. The fair value of Forward foreign exchange contracts and currency swaps is determined using observable foreign exchange rates and yield curves at the balance sheet date.
39.5 There have been no transfers between Level 1, Level 2 and Level 3 for the year ended March 31, 2022 and March 31, 2021.
39.7 Valuation methodologies of financial instruments not measured at fair value
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Group''s financial statements. These fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables.
Debt Securities & Subordinated liabilities
These includes Subordinated debt, secured debentures, unsecured debentures. The fair values of such liabilities are estimated using a discounted cash flow model based on contractual cash flows using actual or estimated yields and discounting by yields incorporating the credit risk. These instrument are classified in Level 2.
Investments - at amortised cost
These includes Government Securities and Corporate Bonds which are held for maturity. Fair value of these instruments is derived based on the indicative quotes of price and are classified under level 2.
*Assets and Liabilities other than above
The carrying value of assets and liabilities other than investments at amortised cost, debt securities and subordinated liabilities represents a reasonable approximation of fair value.
(40) Transfers of financial assets
Transfers of financial assets that are not derecognised in their entirety
Securitisations: The Group uses securitisations as a source of finance. Such transaction resulted in the transfer of contractual cash flows from portfolios of financial assets to holders of issued debt securities. Such deals resulted in continued recognition of the securitised assets since the Group retains substantial risks and rewards.
The table below outlines the carrying amounts and fair values of all financial assets transferred that are not derecognised in their entirety and associated liabilities.
During the year ended 31st March 2022, the Group has sold some loans and advances measured at amortised cost as per assignment deals, as a source of finance. As per the terms of deal, since the derecognition criteria as per IND AS 109, including transfer of substantially all the risks and rewards relating to assets being transferred to the buyer being met, the assets have been derecognised.
The management has evaluated the impact of the assignment transactions done during the year for its business model. Based on the future business plans, the Group''s business model remains to hold the assets for collecting contractual cash flows.
Since the group transferred the above financial asset in a transfer that qualified for derecognition in its entirety therefore the whole of the interest spread ( over the expected life of the asset) is recognised on the date of derecognition itself as interest-only strip receivable ("Receivables on assignment of loan") and correspondingly recognised as profit on derecognition of financial asset.
Transfers of financial assets that are not derecognised in their entirety
During the year ended 31st March 2021, the Group has sold some loans and advances measured at amortised cost as per assignment deals, as a source of finance. As per the terms of the respective deals, since the derecognition criteria as per IND AS 109, including transfer of substantially all the risks and rewards relating to assets being transferred to the buyer not being met, the assets have not been derecognised in their entirety.
Sale of Investments measured at amortised cost
The Group had derecognised investment in bonds measured at Amortised cost having carrying value of Rs. Nil (Previous year : Rs. 1,541.15 crores) due to sale of these investments, resulting in a profit of Rs. Nil (Previous year loss: Rs. 24.45 crores). The sale of such Investments is infrequent and was made due to the unanticipated funding needs and thus this sale does not impact the hold to collect objective of the Group and the asset portfolio continues to be classified and measured at amortised cost.
For the purpose of the Group''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Group. The primary objective of the Group''s capital management is to maximise the shareholder value. The Holding Company monitors capital using a capital adequacy ratio as prescribed by the NHB guidelines and ICCL monitors capital using a capital adequacy ratio as prescribed by the RBI guidelines.
(42) Risk Management Introduction and risk profile
Indiabulls Housing Finance Limited (IBHFL) is a housing finance company in India and is regulated by the National Housing Bank (NHB) and Indiabulls Commercial Credit Limited (ICCL) (wholly owned subsidiary of IBHFL) is a non banking finance company in India and is regulated by the Reserve Bank of India (RBI). In view of the intrinsic nature of operations, the Group is exposed to a variety of risks, which can be broadly classified as credit risk, market risk, liquidity risk and operational risk. It is also subject to various regulatory risks.
Risk management structure and policies
As a lending institution, Group is exposed to various risks that are related to lending business and operating environment. The Principal Objective in Group ''s risk management processes is to measure and monitor the various risks that Group is subject to and to follow policies and procedures to address such risks. Group ''s risk management framework is driven by Board and its subcommittees including the Audit Committee, the Asset Liability Management Committee and the Risk Management Committee. Group gives due importance to prudent lending practices and have implemented suitable measures for risk mitigation, which include verification of credit history from credit information bureaus, personal verification of a customer''s business and residence, technical and legal verifications, conservative loan to value, and required term cover for insurance. The major types of risk Group face in businesses are liquidity risk, credit risk, interest rate risk and equity price risk.
Liquidity risk is the potential for loss to the Group arising from either its inability to meet its obligations or to fund increases in assets as they fall due without incurring unacceptable cost or losses.
The Group manages liquidity risk by maintaining sufficient cash and cash equivalents (including marketable securities) to meet its obligations at all times. It also ensures having access to funding through an adequate amount of committed credit lines. The Group''s treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management and the management regularly monitors the position of cash and cash equivalents vis-a-vis projections. Assessment of maturity profiles of financial assets and financial liabilities including debt financing plans and maintenance of Balance Sheet liquidity ratios are considered while reviewing the liquidity position.
Credit Risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such obligation is impaired resulting in economic loss to the Group. Group''s Credit Risk Management framework is categorized into following main components:
- Board and senior management oversight
- Organization structure
- Systems and procedures for identification, acceptance, measurement, monitoring and controlling risks.
It is the overall responsibility of the board appointed Risk Management Committee to approve the Group''s credit risk strategy and lending policies relating to credit risk and its management. The policies are based on the Group''s overall business strategy and the same is reviewed periodically.
The Board of Directors constituted Risk Management Committee keeps an active watch on emerging risks the Group is exposed to. The Risk Management Committee defines loan sanctioning authorities, including process of vetting by credit committees for various types/values of loans. The RMC approves credit policies, reviews regulatory requirements, and also periodically reviews large ticket loans and overdue accounts from this pool.
The Risk Management Committee approves the ''Credit Authority Matrix'' that defines the credit approval hierarchy and the approving authority for each group of approving managers/ committees in the hierarchy.
To maintain credit discipline and to enunciate credit risk management and control process there is a separate Risk Management department independent of loan origination function. The Risk Management department performs the function of Credit policy formulation, credit limit setting, monitoring of credit exceptions / exposures and review /monitoring of documentation.
Derivative financial Instruments
Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet. With gross-settled derivatives, the Group is also exposed to a settlement risk, being the risk that the Group honours its obligation, but the counterparty fails to deliver the counter value.
Analysis of risk concentration
The Group''s concentrations of risk for loans are managed by counterparty and type of loan (i.e. Housing and NonHousing as defined by NHB). Housing and Non housing loans are given to both individual and corporate borrowers. The table below shows the concentration of risk by type of loan.
Market Risk is the risk that the value of on and off-balance sheet positions of a financial institution will be adversely affected by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and/or commodity prices resulting in a loss to earnings and capital.
Financial institutions may be exposed to Market Risk in variety of ways. Market risk exposure may be explicit in portfolios of securities / equities and instruments that are actively traded. Conversely it may be implicit such as interest rate risk due to mismatch of loans and deposits. Besides, market risk may also arise from activities categorized as off-balance sheet item. Therefore market risk is potential for loss resulting from adverse movement in market risk factors such as interest rates, forex rates, equity and commodity prices.
The Group''s exposure to market risk is primarily on account of interest rate risk and Foreign exchange risk.
Interest rate risk arises when there is a mismatch between positions, which are subject to interest rate adjustment within a specified period. The Group''s lending, funding and investment activities give rise to interest rate risk. The immediate impact of variation in interest rate is on the Group''s net interest income, while a long term impact is on the Group''s net worth since the economic value of the assets, liabilities and off-balance sheet exposures are affected. While assessing interest rate risks, signals given to the market by RBI and government departments from time to time and the financial industry''s reaction to them shall be continuously monitored.
Due to the very nature of housing finance, the Group is exposed to moderate to higher Interest Rate Risk. This risk has a major impact on the balance sheet as well as the income statement of the Group. Interest Rate Risk arises due to:
i) Changes in Regulatory or Market Conditions affecting the interest rate
ii) Short term volatility
iii) Prepayment risk translating into a reinvestment risk
iv) Real interest rate risk.
In short run, change in interest rate affects Group''s earnings (measured by NII or NIM) and in long run it affects Market Value of Equity (MVE) or net worth. It is essential for the Group to not only quantify the interest rate risk but also to manage it proactively. The Group mitigates its interest rate risk by keeping a balanced portfolio of fixed and variable rate loans and borrowings. Further Group carries out Earnings at risk analysis and maturity gap analysis at quarterly intervals to quantify the risk.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Group''s exposure to the risk of changes in foreign exchange rates relates primary to the foreign currency borrowings taken from banks through the FCNR route and External Commercial Borrowings (ECB).
The Group follows a conservative policy of hedging its foreign currency exposure through Forwards and / or Currency Swaps in such a manner that it has fixed determinate outflows in its function currency and as such there would be no significant impact of movement in foreign currency rates on the Group''s profit before tax (PBT) and equity.
(iii) Equity Price Risk
Equity price risk is the risk that the fair value of equities decreases as the result of changes in the level of equity indices and individual stocks. The non-trading equity price risk exposure arises from equity securities classified as FVOCI. A 10 per cent increase in the value of the company''s FVOCI equities at March 31, 2022 would have increased equity by Rs. 0.46 Crore (Previous Year Rs. 23.19 Crore). An equivalent decrease would have resulted in an equivalent but opposite impact.
(D) Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and system or from external events. Operational risk is associated with human error, system failures and inadequate procedures and controls. It is the risk of loss arising from the potential that inadequate information system; technology failures, breaches in internal controls, fraud, u
Mar 31, 2018
(1) CORPORATE INFORMATION:
The Company is engaged in the business to provide finance and to undertake all lending and finance to any person or persons, co-operative society, association of persons, body of individuals, companies, institutions, firms, builders, developers, contractors, tenants and others either at interest or without and / or with or
without any security for construction, erection, building, repair, remodeling, development, improvement, purchase of houses, apartments, flats, bungalows, rooms, huts, townships and / or other buildings and real estate of all descriptions or convenience there on and to equip the same or part thereof with all or any amenities or conveniences, drainage facility, electric, telephonic, television, and other installations, either in total or part thereof and / or to purchase any free hold or lease hold lands, estate or interest in any property and such other activities as may be permitted under the Main Objects of the Memorandum of Association of the Company.
The Board of Directors of Indiabulls Housing Finance Limited (100% subsidiary of âIBFSLâ) and Indiabulls Financial Services Limited (âIBFSLâ, âErstwhile Holding Companyâ) at their meeting held on April 27, 2012 had approved the Scheme of Arrangement involving the reverse merger of IBFSL with the Company in terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 (the âScheme of Arrangementâ). The Appointed Date of the proposed merger fixed under the Scheme of Arrangement was April 1, 2012. The Honâ ble High Court of Delhi, vide its Order dated December 12, 2012, received by the Company on February 8, 2013, approved the Scheme of Arrangement. In terms of the Court approved Scheme of Arrangement, with the filing of the copy of the Order, on March 8, 2013, with the office of ROC, NCT of Delhi & Haryana (the Effective Date), IBFSL, as a going concern, stands amalgamated with IBHFL with effect from the Appointed Date, being April 1, 2012.
Indiabulls Financial Services Limited (âIBFSLâ) was incorporated on January 10, 2000 as a Private Limited Company. On March 30, 2001, the Company was registered under Section 45-IA of the Reserve Bank of India (RBI) Act, 1934 to carry on the business of a Non-Banking Financial Company. The Company was converted into a public limited Company pursuant to Section 44 of the Companies Act, 1956 on February 03, 2004.
Indiabulls Housing Finance Limited (âthe Companyâ) (âIBHFLâ) was incorporated on May 10, 2005. On December 28, 2005 the Company was registered under Section 29A of the National Housing Bank Act, 1987 to commence / carry on the business of a Housing Finance Institution without accepting public deposits. The Company is required to comply with provisions of the National Housing Bank Act, 1987, the Housing Finance Companies (NHB) Directions, 2010 and other guidelines/ instructions / circulars issued by the National Housing Bank from time to time.
(I) Indiabulls Financial Services Limited (âErstwhile Holding Companyâ) had issued Global Depository Receipts (GDRâs) which were transferred under the Scheme of Arrangement in financial year 2012-13. As at March 31, 2018 2,597,042 (Previous Year 3,199,409) GDRâ s were outstanding and were eligible for conversion into Equity Shares. The Company does not have information with respect to holders of these GDRâs. Holders of Global Depository Receipts (GDRs) will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs will not have voting rights with respect to the Deposited Shares. The GDRs may not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
(II) 312,511,167 (Previous Year 312,511,167) equity Shares outstanding were allotted by the Company, for consideration other than cash to the shareholders of Erstwhile Holding Company pursuant to and in terms of the Scheme of Arrangement, approved by the Honâ ble High Court of Delhi vide its Order dated December 12, 2012, which came into effect on March 8, 2013 from the Appointed Date April 1, 2012.(Refer Note 39)
(III) Employees Stock Options Schemes:
(a) Indiabulls Financial Services Limited (âErstwhile Holding Companyâ)(Refer Note 39) and its erstwhile subsidiary, Indiabulls Credit Services Limited (âICSLâ) had announced ESOS / ESOP schemes for its employees and the employees of itâs group companies wherein each option represents one Equity Share of the Company. The Company has adopted the ESOS / ESOP schemes in respect of its employees. A Compensation Committee constituted by the Board of Directors administers each of the plans.
(b) Indiabulls Housing Finance Limited Employees Stock Option Scheme-2013
The members of the Company at their Meeting dated March 6, 2013 approved the IBHFL ESOS - 2013 scheme consisting of 39,000,000 stock options representing 39,000,000 fully paid up Equity Shares of Rs.2 each of the Company to be issued in one or more tranches to eligible employees of the Company or to eligible employees of the subsidiaries / step down subsidiaries of the Company. The Compensation Committee constituted by the Board of Directors of the Company has, at its meeting held on October 11, 2014, granted, 10,500,000 Stock Options representing an equal number of equity shares of face value of Rs.2 each at an exercise price of Rs.394.75, being the then latest available closing market price on the National Stock Exchange of India Ltd. as on October 10, 2014. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same following the intrinsic method of accounting as is prescribed in the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employees Share Based Payments (â the Guidelinesâ). These options vest with effect from the first vesting date i.e. October 11, 2015, and thereafter on each vesting date as per the vesting schedule provided in the Scheme.
During the current financial year the Compensation Committee constituted by the Board of Directors of the Company has, at its meeting held on August 10, 2017, granted, 10,500,000 Stock Options representing an equal number of equity shares of face value of Rs.2 each at an exercise price of Rs.1,156.50, being the then latest available closing market price on the National Stock Exchange of India Ltd. as on August 10, 2017. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same following the intrinsic method of accounting as is prescribed in the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employees Share Based Payments (â the Guidelinesâ). These options vest with effect from the first vesting date i.e. August 12, 2018, and thereafter on each vesting date as per the vesting schedule provided in the Scheme.
During the current financial year the Compensation Committee constituted by the Board of Directors of the Company has, at its meeting held on March 24, 2018, granted, 100,000 Stock Options representing an equal number of equity shares of face value of Rs.2 each at an exercise price of Rs.1,200.40, being the then latest available closing market price on the National Stock Exchange of India Ltd. as on March 23, 2018. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same following the intrinsic method of accounting as is prescribed in the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employees Share Based Payments (â the Guidelinesâ). These options vest with effect from the first vesting date i.e. March 25, 2019, and thereafter on each vesting date as per the vesting schedule provided in the Scheme.
(VI) During the year ended March 31, 2013, pursuant to the Scheme of Arrangement the Authorised Capital of the Company has been rearranged to Rs.16,000,000,000 divided into 3,000,000,000 Equity Shares of Rs.2 each and 1,000,000,000 Preference Shares of Rs.10 each.
(V) 15,690,847 Equity Shares of Rs.2 each (Previous year 7,785,523) are reserved for issuance towards Employees Stock options as granted.
(1) Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates, the Company has exercised the option as per para 46A inserted in the said Standard for all long term monetary assets and liabilities. Consequently an amount of Rs. Nil (Previous Year Rs.1,091,272) representing translation difference on foreign currency loans is carried forward in the Foreign Currency Monetary Item Translation Difference Account as on March 31, 2018.
(2) In terms of Section 29C of the National Housing Bank (âNHBâ) Act, 1987, the Company is required to transfer at least 20% of its Profit after tax to a Reserve Fund before any dividend is declared. Transfer to a Reserve Fund in terms of Section 36(1)(viii) of the Income Tax Act, 1961 is also considered as an eligible transfer as transfer to Special Reserve under Section 29C of the National Housing Bank (âNHBâ) Act, 1987. The Company has transferred an amount of Rs.4,400,000,000 (Previous Year Rs.3,350,000,000) to reserve created in terms of Section 36(1)(viii) of the Income Tax Act, 1961 termed as âReserve (III)â and also transferred an amount of Rs.2,733,048,019 (Previous Year Rs.2,334,765,396) to the Reserve in terms of Section 29C of the National Housing Bank (âNHBâ) Act, 1987 as at the year end. Further an additional amount of Rs.1,500,000,000 (Previous Year Rs.2,500,000,000) has been set apart by way of transfer to Additional Reserve Fund in excess of the statutory minimum requirement as specified under Section 29C pursuant to Circular no. NHB(ND) / DRS / Pol-No. 03 / 2004-05 dated August 26, 2004 issued by the National Housing Bank. The additional amount so transferred may be utilised in the future for any business purpose.
(3) Disclosure in terms of Circular No. NHB(ND) / DRS / Pol.Circular.61 / 2013-14 dated April 7, 2014 and NHB notification No. NHB.HFC.CG-DIR.1 / MD&CEO / 2016 dated February 9, 2017:-
(4) This pertains to reserve created under section 45-IC of the Reserve Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to the Company under the Scheme of Arrangement during the year ended March 31, 2013.(Refer Note 39)
(5) In terms of transitional provisions of Guidance note on Derivative Contracts issued by the Institute of Chartered Accountants of India, effective April 1, 2016, Cumulative impact of mark to market profit on all outstanding derivative contracts as on the effective date has been adjusted in the opening balance of Surplus in Statement of Profit and Loss of previous year.
(6) This pertains to reserve created under section 36(1)(viii) of the Income Tax Act, 1961, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to the Company under the Scheme of Arrangement during the year ended March 31, 2013.(Refer Note 39)
(7) During the year, in addition to the charge of Rs.1,839,294,988 (Previous Year Rs.1,957,279,755) towards provision for loan assets and standard assets to the Statement of Profit and Loss, an amount of Rs.2,602,240,000 (net of Deferred Tax of Rs.1,397,760,000) [(Previous Year âNil) (net of deferred tax of Rs. Nil)], for provision for standard assets and counter cyclical provisions has been transferred from Additional Reserve created as per Section 29C of the National Housing Bank Act, 1987 pursuant to Circular No. NHB(ND) / DRS / Pol- 03 / 2004-05 dated August 26, 2004. As on March 31, 2018, the Company is carrying counter cyclical provision of Rs.4,000,000,000 (Previous Year Rs.750,000,000).
(2) During the current financial year, the Company has raised Rs.3,150,000,000 (Previous year Rs.13,300,000,000) by issue of secured rupee denominated masala bonds having a tenor of 3 Years (Previous Year Masala Bonds Tenure is 3 Years 1 month).
These bonds in the nature of debentures are listed on Singapore Stock Exchange (SGX-ST). Debenture issue expenses amounting to Rs. Nil (previous year Rs.94,710,222) (incurred in respect of this issuance) has been adjusted against the Securities Premium Account (Includes Rs. Nil (Previous Year Rs.8,620,000) paid to Statutory Auditors including service tax).
(3) DEFERRED TAX LIABILITIES (NET)
Pursuant to Accounting Standard (AS) - 22 âAccounting for Taxes on Incomeâ, the Company debited an amount of Rs.1,443,882,801 (Previous Year Rs.371,126,452) as deferred tax charge (net) to the Statement of Profit and Loss arising on account of timing differences. The breakup of deferred tax into major components as at March 31, 2018 is as under:
(1) Provision for Contingencies includes provision against standard assets and other contingencies. As per National Housing Bank Circular No. NHB / HFC / DIR.3 / CMD / 2011 dated August 5, 2011 and NHB / HFC / DIR.9 / CMD / 2013 dated September 6, 2013, in addition to provision for non performing assets, all housing finance companies are required to carry a general provision. (i) at the rate of 2% on housing loans disbursed at comparatively lower rate of interest in the initial few years, after which rates are reset at higher rates; (ii) at the rate of 0.75% of Standard Assets in respect of Commercial Real Estates (Residential Housing):, (iii) at the rate of 1.00% of Standard Assets in respect of other Commercial Real Estates and (iv) at the rate of 0.40% of the total outstanding amount of loans which are Standard Assets other than (i), (ii) & (iii) above. Accordingly, the Company is carrying a provision of Rs.7,950,000,000 (Previous Year Rs.6,100,000,000) towards standard assets (included in Provisions for Contingencies), which is over the required minimum provision as per the NHB Guidelines.
* Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006:
(a) An amount of Nil and Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.
(b) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.
(c) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006.
(d) No interest was accrued and unpaid at the end of the accounting year.
(e) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.
(1) As at March 31, 2018, the Company holds 100% of the Equity Share capital of Indiabulls Insurance Advisors Limited and Indiabulls Capital Services Limited are considered as strategic and long term in nature and are held at a cost of Rs.500,000 and Rs.50,000,000 respectively. Based on the audited financials of these companies, as at March 31, 2018, there has been an erosion in the value of investment made in these companies as the operations in this company have not yet commenced / are in the process of being set up. During the financial year 2016-17 provision of Rs.50,500,000 for diminution in the carrying value was made in the books of account for these compnies in the books of accounts.
(2) During the current financial year, the Company has sold its entire investment in Indiabulls Life Insurance Company Limited for a consideration of Rs.500,000.
(3) On December 13, 2010 the Erstwhile Holding Company (IBFSL) had sold 26% shares held by it in Indian Commodity Exchange Limited (ICEX) to Reliance Exchange Next Limited (R-Next) for a total consideration of Rs.473,500,000 against a proportionate cost of Rs.260,000,000. As a result thereof, the stake of IBFSL in ICEX has been reduced from 40% to 14% and the same has been reclassified as a long term investment from the earlier classification of being an Associate. MMTC filed a petition before the Company Law Board (CLB) against ICEX, R-Next and IBFSL alleging that the transfer is null and void in terms of the Shareholders Agreement in view of the Forward Markets Commission (FMC) guidelines. IBFSL contends that such view of MMTC is based on the old FMC guidelines and without considering the amended FMC Guidelines dated June 17, 2010 wherein the transfer norms were relaxed. IBFSL had filed its objections on maintainability of the petition which is pending adjudication before the CLB.
(4) During the financial year 2016-17, the Company has invested Rs.70,000,000 by subscribing to 7,000,000 Equity Shares of face value Rs.5 per share, issued by Indian Commodity Exchange Limited through Rights issue.
(5) During the financial year 2015-16, the Company has invested Rs.6,633,121,000 in OakNorth Holdings Limited by subscribing to 818,615 of face value of GBP 0.59 per share for 39.76% stake. OakNorth Bank- a licensed UK commercial bank is a wholly owned subsidiary of OakNorth Holdings Limited. As on March 31, 2017 the Company had a stake of 38.73%. During the current financial year the Company has sold 277,000 shares from its stake in Acorn OakNorth Holdings Limited for Rs.7,677,815,561 and recorded a gross gain on sale of investment of Rs.5,433,323,929.
(6) During the current financial year, the Company has invested Rs.2,500,000,572 (Previous Year Rs. Nil) by subscribing to 17,745,113 (Previous Year Nil) Equity Shares of face value Rs.10 per share, issued by Indiabulls Commercial Credit Limited.
(7) During the current financial year, the Company has invested Rs.1,000,000,000 (Previous Year Rs. Nil) by subscribing to 100,000,000 (Previous Year Nil) Equity Shares of face value Rs.10 per share, issued by Indiabulls Asset Management Company Limited.
(1) Employee Benefits - Provident Fund, ESIC, Gratuity and Compensated Absences disclosures as per Accounting Standard (AS) 15 (Revised) - Employee Benefits:
Contributions are made to Government Provident Fund and Family Pension Fund, ESIC and other statutory funds which cover all eligible employees under applicable Acts. Both the employees and the Company make predetermined contributions to the Provident Fund and ESIC. The contributions are normally based on a certain proportion of the employeeâs salary. The Company has recognised an amount of Rs.97,658,441 (Previous year Rs.55,124,863) in the Statement of Profit and Loss towards Employers contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for all employees is based upon actuarial valuations carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Pursuant to the issuance of the Accounting Standard (AS) 15 (Revised) on âEmployee Benefitsâ, commitments are actuarially determined using the âProjected Unit Creditâ Method. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.
(1) During the year, the Company has recognized Premium on principal only swaps on foreign currency loans amounting to Rs.648,127,912 (Previous Year Rs.648,127,912) included in Interest on Loans and unrealised marked to market loss towards derivatives which are not designated as hedges amounting to Rs.110,988,120 (Previous Year marked to market profit of Rs.183,184,405) and unrealised marked to market profit towards derivatives which are designated as hedges amounting to Rs.425,184,394 (Previous Year Rs.262,968,179) which has been included under Bank / Finance Charges. Derivative instruments that are outstanding as at March 31, 2018 is as given below:-
I. Cross Currency Swaps entered for hedging purposes outstanding as at March 31, 2018 for Principal had a value of USD 246,235,124 (Previous Year USD 367,702,517) swapped for of Rs.15,434,750,000 (Previous Year Rs.23,434,750,000) for a total of 8 outstanding Contracts (Previous Year 9 Contracts).
II. INR Interest Rate Swaps (Fixed to Floating) for Notional Principal of Rs.133,750,000,000 outstanding as at March 31, 2018 (Previous Year Rs.66,000,000,000) for a total of 87 outstanding contracts (Previous Year 53 contracts).
III. USD Interest Rate Swaps (Floating to Fixed / Floating to Floating) for Notional Principal INR of Rs.32,052,012,500 against USD 496,455,647 (Previous Year Notional Principal INR of Rs.29,007,787,500 against USD 447,685,108) for a total of 18 contracts outstanding as at March 31, 2018 (Previous Year 19 contracts) against fluctuations in USD Libor.
IV. Forward Contract entered for hedging purposes outstanding as at March 31, 2018 for USD 854,087,158 (Previous Year USD 457,782,202) against cross currency of Rs.55,537,815,176 (Previous Year Rs.30,733,653,531) for a total of 55 Contracts outstanding (Previous Year 18 Contracts).
(2) During the year the Company has credited an amount of Rs.108,388,506 (Previous year Rs.359,526,532) on account of Net Revaluation on Foreign Currency Loans, which is included in Interest on loans above.
(3) Additional disclosure for Hedge Accounting:-
i) The company has credited Rs.172,533,938 (Net) (Previous Year debited Rs.172,533,938) in statement of profit and loss account against which accounting of fair value hedge has been adopted.
ii) During the year, the company has credited an amount of Rs.50,514,962 (Previous Year debited Rs.42,817,255) to Cash flow Hedge Reserve. During the year Rs.26,804,755 (Previous Year Rs. Nil) is recycled from the hedge reserve and debited to the statement of profit and loss.
4.1.1 (A) Qualitative Disclosure:-
The Companyâ s activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses derivate contracts such as foreign exchange forward, cross currency contracts, interest rate swaps, foreign currency futures, options and swaps to hedge its exposure to movements in foreign exchange and interest rates. The use of these derivative contracts reduce the risk or cost to the Company and the Company does not use those for trading or speculation purposes.
The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The Board constituted Risk Management Committee (RMC) of the company manages risk on the companyâs derivative portfolio. The officials authorized by the board to enter into derivative transactions for the company are kept separate from the authorized signatories to confirm the derivative transactions. All derivative transactions that are entered into by the company are reported to the board, and the mark-to-market on its portfolio is monitored regularly by the senior management. The company uses Bloomberg to monitor and value its derivative portfolio to ascertain its hedge effectiveness vis-a-vis the underlying.
To hedge its risks on the principal and / or interest amount for foreign currency borrowings on its balance sheet, the company has currently used cross currency derivatives, forwards and principal only swaps. Additionally, the company has entered into Interest Rate Swaps (IRS) to hedge its basis risk on fixed rate borrowings and LIBOR risk on its foreign currency borrowings.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date. Derivatives are classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair value is negative (negative marked to market value). Derivative assets and liabilities are recognized on the balance sheet at fair value. Fair value of derivatives is ascertained from the mark to market and accrual values received from the counterparty banks. These values are cross checked against the valuations done internally on Bloomberg. Changes in the fair value of derivatives other than those designated as hedges are recognized in the Statement of Profit and Loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge accounting or the Company chooses to end the hedging relationship.
(5) CONTINGENT LIABILITY AND COMMITMENTS:
(a) Demand pending U/s 143(3) of the Income Tax Act, 1961
(i) For Rs. Nil with respect to FY 2007-08 (Previous Year Rs.2,414,210) against disallowance U/s 14A of the Income Tax Act,1961, against which appeal is pending before High Court.
(ii) For Rs.12,301,239 with respect to FY 2008-09 (Previous Year Rs.12,301,239/-) against disallowance U/s 14A of the Income Tax Act, 1961, against which appeal is pending before Supreme Court.
(iii) For Rs.12,737,519 with respect to FY 2010-11 (Previous Year Rs.12,737,519/-) against disallowance U/s 14A of the Income Tax Act, 1961, against which the department has filed appeal before High Court.
(iv) For Rs.764,126 with respect to FY 2012-13 (Previous Year Rs.764,126) against disallowances U/s 14A and 32 (1) of the Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(b) (i) Demand pending U/s of 25, 55, 56 & 61 of The Rajasthan Value Added Tax Act, 2003 for Rs.14,505,873 (Including interest & Penalty) with respect to FY 2007-08 to FY 2012-13 (Previous Year Rs.14,505,873) against which appeal was pending before Rajasthan High Court. The Company has paid tax along with interest for Rs.6,231,069 (Previous Year Rs.6,231,069) under protest. Further the company has deposited Rs.2,068,701 on May 30, 2016. Further, the company has opted for New Amnesty Scheme 2016 and accordingly deposited 25 % of the disputed demand amount and withdrawn appeal before the Honâble High Court.
(c) Corporate counter guarantees outstanding in respect of securitisation / assignment agreements entered by the Company with different assignees as at March 31, 2018 is Rs.400,209,407 (Previous Year Rs.1,879,775,887) against which collateral deposit of Rs.64,383,634 (Previous Year Rs.87,150,746) for the year ended March 31, 2018 is being provided to the assignees by the Company in the form of Fixed Deposit Receipts. The Company does not anticipate any losses on account of the said corporate guarantees, in the event of the rights under guarantee being exercised by the assignees.
(d) The Company in the ordinary course of business, has various cases pending in different courts, however, the management does not expect any unfavourable outcome resulting in material adverse effect on the financial position of the Company.
(e) Capital commitments for acquisition of fixed assets at various branches as at the year end (net of capital advances paid) Rs.705,019,163 (Previous Year Rs.639,100,865).
(f) Corporate guarantees provided to Unique Identification Authority of India for Aadhaar verification of loan applications for Rs.2,500,000 (Previous Year Rs. Nil).
(g) Corporate guarantees provided against court case for Rs.13,912,748 (Previous Year Rs. Nil).
# Includes Dividend Income on units of Mutual Fund, Dividend Income from Subsidiary Company, Gain on Mutual Fund Investments and Profit on sale of current investments included in other income.
(b) The Company operates solely in one Geographic segment namely âWithin Indiaâ and hence no separate information for Geographic segment wise disclosure is required.
(c) The Companyâs primary business segment is reflected based on principal business activities carried on by the Company. The Companyâs primary business comprises of investing and financing related activities (investing in various subsidiaries, financing of loans and credit activities) and fee income which mainly comprises of financial service related fee from services income, commission on insurance and other fee based activities.
(d) Segment revenue, results, assets and liabilities include amounts identifiable to each segment and amounts allocated on a reasonable basis.
(e) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparation of financial information as disclosed in Significant Accounting Policies (Refer Note 1) above.
(6) EARNINGS PER EQUITY SHARE
Earnings Per Equity Share (EPS) as per Accounting Standard (AS)-20 âEarnings Per Shareâ,:
The basic earnings per share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential diluted Equity Shares are adjusted for potential dilutive effect of Employee Stock Option Plan as appropriate. Potential dilutive Equity Shares on account of Share warrants are not adjusted being anti dilutive in nature.
(7) In respect of amounts as mentioned under Section 124 of the Companies Act, 2013, there were no dues (Previous Year Rs. Nil) required to be credited to the Investor Education and Protection Fund as on March 31, 2018.
(8) (1) Disclosures required by the NHB notification No. NHB.HFC.CG-DIR.1/MD & CEO/2016 dated February 9, 2017:
(i) Disclosure for Capital to Risk Assets Ratio (CRAR)*:
(9) The Company has entered into various agreements for the assignment/securitisation of loans with assignees, wherein it has assigned/securitised a part of its secured loan portfolio amounting to Rs.239,873,022,871 upto March 31, 2018 (Rs.181,515,208,581 upto March 31, 2017), being the principal value outstanding as on the date of the deals that are outstanding as on the Balance Sheet date.
The Company assigned/securitized various loan portfolios to banks and/or other institutions which are derecognised in the books of accounts of the Company in terms of accounting policy mentioned in Significant Accounting policies in Note 1 (v) above and residual income on these Loans is being recognised over the life of the underlying loans and not on an upfront basis.
Additional disclosures required by the NHB notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017 for Securitisation are as follows:-
(10) The Board of Directors at their meeting held on April 27, 2012 had approved the Scheme of Arrangement involving the merger of Indiabulls Financial Services Limited (IBFSL, the Holding Company) with the Company in terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 (the âScheme of Arrangementâ). The Appointed Date of the proposed merger fixed under the Scheme of Arrangement was April 1, 2012. The Honâ ble High Court of Delhi, vide its Order dated December 12, 2012, received by the Company on February 8, 2013, approved the Scheme of Arrangement (Order). In terms of the Court approved Scheme of Arrangement, with the filing of the copy of the Order, on March 8, 2013 with the office of ROC, NCT of Delhi & Haryana (the Effective Date), IBFSL, as a going concern, stands amalgamated with IBHFL with effect from the Appointed Date, being April 1, 2012 (Under the Accounting Standard 14 - Pooling of interest method). Consequent to the Scheme of Arrangement becoming effective, the Board of Directors of the Company, at their meeting held on March 25, 2013, issued and allotted -
i) 312,511,167 Equity Shares of Rs.2 each of the Company,
ii) 27,500,000 Warrants of the Company (against the listed warrants of IBFSL), and
iii) 20,700,000 Warrants of the Company (against the unlisted warrants of IBFSL held by certain promoter group entities and Key Management Personnel of IBFSL) to the Equity Shareholders / Warrants holders of IBFSL, against their holdings in such Equity Shares / Warrants, as on March 20, 2013 i.e. the record date fixed by IBFSL in this regard. The issue of Equity Shares / warrants by the Company was in terms of the share exchange ratio as mentioned in the Court approved Scheme of Arrangement. The Companyâs Shares and Warrants (issued in lieu of listed warrants of IBFSL) got listed with National Stock Exchange of India Limited and BSE Limited w.e.f. July 23, 2013.
(11) The Company has complied with the NHB Directions, 2010 including Prudential Norms and as amended from time to time.
(12) Previous Yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification / disclosures.
Mar 31, 2017
(1) CORPORATE INFORMATION:
The Company is engaged in the business to provide finance and to undertake all lending and finance to any person or persons, co-operative society, association of persons, body of individuals, companies, institutions, firms, builders, developers, contractors, tenants and others either at interest or without and/or with or without any security for construction, erection, building, repair, remodeling, development, improvement, purchase of houses, apartments, flats, bungalows, rooms, huts, townships and/or other buildings and real estate of all descriptions or convenience there on and to equip the same or part thereof with all or any amenities or conveniences, drainage facility, electric, telephonic, television, and other installations, either in total or part thereof and /or to purchase any free hold or lease hold lands, estate or interest in any property and such other activities as may be permitted under the Main Objects of the Memorandum of Association of the Company.
The Board of Directors of Indiabulls Housing Finance Limited (100% subsidiary of âIBFSLâ) and Indiabulls Financial Services Limited (âIBFSLâ, âErstwhile Holding Companyâ) at their meeting held on April 27, 2012 had approved the Scheme of Arrangement involving the reverse merger of IBFSL with the Company in terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 (the âScheme of Arrangementâ). The Appointed Date of the proposed merger fixed under the Scheme of Arrangement was April 1, 2012. The Honâble High Court of Delhi, vide its Order dated December 12, 2012, received by the Company on February 8, 2013, approved the Scheme of Arrangement. In terms of the Court approved Scheme of Arrangement, with the filing of the copy of the Order, on March 8, 2013, with the office of ROC, NCT of Delhi & Haryana (the Effective Date), IBFSL, as a going concern, stands amalgamated with IBHFL with effect from the Appointed Date, being April 1, 2012.
Indiabulls Financial Services Limited (âIBFSLâ) was incorporated on January 10, 2000 as a Private Limited Company. On March 30, 2001, the Company was registered under Section 45-IA of the Reserve Bank of India (RBI) Act, 1934 to carry on the business of a Non-Banking Financial Company. The Company was converted into a public limited Company pursuant to Section 44 of the Companies Act, 1956 on February 03, 2004.
Indiabulls Housing Finance Limited (âthe Companyâ) (âIBHFLâ) was incorporated on May 10, 2005. On December 28, 2005 the Company was registered under Section 29A of the National Housing Bank Act, 1987 to commence / carry on the business of a Housing Finance Institution without accepting public deposits. The Company is required to comply with provisions of the National Housing Bank Act, 1987, the Housing Finance Companies (NHB) Directions, 2010 and other guidelines / instructions / circulars issued by the National Housing Bank from time to time.
(I) Indiabulls Financial Services Limited (âErstwhile Holding Companyâ) had issued Global Depository Receipts (GDRâs) which were transferred under the Scheme of Arrangement in financial year 2012-13. As at March 31, 2017 3,199,409 (Previous Year 3,019,521) GDRâs were outstanding and were eligible for conversion into Equity Shares. The Company does not have information with respect to holders of these GDRâs. Holders of Global Depository Receipts (GDRs) will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs will not have voting rights with respect to the Deposited Shares. The GDRs may not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
(II) 312,511,167 (Previous Year 312,511,167) equity Shares were allotted by the Company, for consideration other than cash to the shareholders of Erstwhile Holding Company pursuant to and in terms of the Scheme of Arrangement, approved by the Honâble High Court of Delhi vide its Order dated December 12, 2012, which came into effect on March 8, 2013 from the Appointed Date April 1, 2012.(Refer Note 39)
(III) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the financial year:-
* Includes 2,564,078 (Previous Year 2,149,424) Equity Shares of Rs.2 each issued during the year, under various ESOP Schemes aggregating to Rs.5,128,156 (Previous Year Rs.4,298,848), Nil (Previous Year 6,643,700) Equity Shares of Rs.2 each issued during the year to eligible warrant holders (Refer Note 5(i)) against outstanding Share warrants aggregating to Rs.Nil (Previous Year Rs.13,287,400) and Nil Equity Shares Rs.2 each issued during the year (Previous Year Rs.56,934,372) under Qualified Institutions Placement (Refer Note 5(ii)) aggregating to Rs.Nil (Previous Year Rs.113,868,744).
(IV) Shares held by Shareholders holding more than 5% shares
(V) Employees Stock Options Schemes:
(a) Indiabulls Financial Services Limited (âErstwhile Holding Companyâ) (Refer Note 39) and its erstwhile subsidiary, Indiabulls Credit Services Limited (âICSLâ) had announced ESOS / ESOP schemes for its employees and the employees of itâs group companies wherein each option represents one Equity Share of the Company. The Company has adopted the ESOS / ESOP schemes in respect of its employees. A Compensation Committee constituted by the Board of Directors administers each of the plans.
* The name of the schemes have been revised by the approval of the Shareholders of the Company in the 8th Annual General Meeting held on July 1, 2013.
(b) Indiabulls Housing Finance Limited Employees Stock Option Scheme-2013
The members of the Company at their Meeting dated March 6, 2013 approved the IBHFL ESOS - 2013 scheme consisting of 39,000,000 stock options representing 39,000,000 fully paid up Equity Shares of Rs.2 each of the Company to be issued in one or more tranches to eligible employees of the Company or to eligible employees of the subsidiaries / step down subsidiaries of the Company. The Compensation Committee constituted by the Board of Directors of the Company has, at its meeting held on October 11, 2014, granted, 10,500,000 Stock Options representing an equal number of equity shares of face value of Rs.2 each at an exercise price of Rs.394.75, being the then latest available closing market price on the National Stock Exchange of India Ltd. as on October 10, 2014 following the intrinsic method of accounting as is prescribed in the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employees Share Based Payments (âthe Guidelinesâ). As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. These options vest with effect from the first vesting date i.e. October 11, 2015, whereby the options vest on each vesting date as per the vesting schedule provided in the Scheme.
(c) The other disclosures in respect of the ESOS / ESOP Schemes are as under:-
Fair Value Methodology:
As all the other plans were issued based on the fair value of the options on the date of the grant, there is no impact of the same on the net profit and earnings per share. The IBHFL - IBFSL Employees Stock Option Plan - 2008 (including re-grant) and IBHFL ESOS - 2013, were issued at the Intrinsic value of the options on the date of the grant. Had the compensation cost for the stock options granted under 2006 (Regrant) IBHFL - IBFSL Employees Stock Option Plan -2008 (including re-grant) and IBHFL ESOS - 2013, been determined based on the fair value approach, the Companyâs net profit and earnings per share would have been as per the pro forma amounts indicated below:-
(VI) During the year ended March 31, 2013, pursuant to the Scheme of Arrangement the Authorised Capital of the Company has been rearranged to Rs.16,000,000,000 divided into 3,000,000,000 Equity Shares of Rs.2 each and 1,000,000,000 Preference Shares of Rs.10 each.
(VII) 7,785,523 Equity Shares of Rs.2 each (Previous year 10,527,452) are reserved for issuance towards Employees Stock options as granted.
(1) Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates, the Company has exercised the option as per para 46A inserted in the said Standard for all long term monetary assets and liabilities. Consequently an amount of Rs.1,091,272 (Previous Year Rs.712,390,036) representing translation difference on foreign currency loans is carried forward in the Foreign Currency Monetary Item Translation Difference Account as on March 31, 2017.
(2) In terms of Section 29C of the National Housing Bank (âNHBâ) Act, 1987, the Company is required to transfer at least 20% of its Profit after tax to a Reserve Fund before any dividend is declared. Transfer to a Reserve Fund in terms of Section 36(1)(viii) of the Income Tax Act, 1961 is also considered as an eligible transfer as transfer to Special Reserve under Section 29C of the National Housing Bank (âNHBâ) Act, 1987. The Company has transferred an amount of Rs.3,350,000,000 (Previous Year Rs.2,620,000,000) to reserve created in terms of Section 36(1)(viii) of the Income Tax Act, 1961 termed as âReserve (III)â and also transferred an amount of Rs.2,334,765,396 (Previous Year Rs.1,968,247,713) to the Reserve in terms of Section 29C of the National Housing Bank (âNHBâ) Act, 1987 as at the year end. Further an additional amount of Rs.2,500,000,000 (Previous Year Rs.Nil) has been set apart by way of transfer to Additional Reserve Fund in excess of the statutory minimum requirement as specified under Section 29C pursuant to Circular no. NHB(ND)/DRS/Pol-No. 03/2004-05 dated August 26, 2004 issued by the National Housing Bank. The additional amount so transferred may be utilised in the future for any business purpose.
(3) Disclosure in terms of Circular No. NHB(ND)/ DRS/ Pol.Circular.61/ 2013-14 dated April 7, 2014 and NHB notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017:-
(4) This pertains to reserve created under section 45-IC of the Reserve Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to the Company under the Scheme of Arrangement during the year ended March 31, 2013. (Refer Note 39)
(5) In terms of transitional provisions of Guidance note on Derivative Contracts issued by the Institute of Chartered Accountants of India, effective April 1, 2016, Cumulative impact of marked to market profit on all outstanding derivative contracts as on the effective date has been adjusted in the opening balance of Surplus in Statement of Profit and Loss.
(6) This pertains to reserve created under section 36(1)(viii) of the Income Tax Act, 1961, by the Erstwhile Holding Company Indiabulls Financial Services Limited, which has been transferred to the Company under the Scheme of Arrangement during the year ended March 31, 2013. (Refer Note 39)
(5) (i) During the financial year 2009-10, in terms of Chapter VIII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 in respect of the issue of the Secured Non Convertible Debentures of the Company to QIBs under Qualified Institutions Placement , the erstwhile Holding Company issued 27,500,000 Share Warrants being issued at a Warrant Issue Price of Rs.5 per Share Warrant, with a right exercisable by the Warrant holder to exchange each Warrant with one equity share of the Company of face value Rs.2 each, any time before the expiry of 60 months from the date of allotment of the Warrants, at a Warrant Exercise Price of Rs.225 per equity share. During the financial year 2015-16 the company has issued and allotted 6,643,700(previous Year 20,856,300) equity shares of face value of Rs.2 each at an exercise price of Rs.225 per equity share to the eligible warrant holders.(Refer Note 39)
(ii) During the financial year 2015-16, the Company in terms of SEBI ICDR Regulations, has concluded Qualified Institutions Placement (QIP), by issuing 56,934,372 equity shares at a price of Rs.702 per equity share aggregating to Rs.39,967,929,144 on September 15, 2015. Share issue expenses amounting to Rs.676,209,687 (incurred in respect of this issuance) has been adjusted against the Securities Premium Account.(Includes Rs.12,840,000 paid to Auditors including service tax).
(iii) During the current year, the Company successfully raised Rs.13,300,000,000 by issue of secured rupee denominated masala bonds having a tenor of 3 years and 1 month. These bonds in the nature of debentures are listed on Singapore Stock Exchange (SGX-ST). Debenture issue expenses amounting to Rs.94,710,222 (incurred in respect of this issuance) has been adjusted against the Securities Premium Account (Includes Rs.8,620,000 paid to Auditors including service tax).
(iv) During the current year, the Company successfully raised Rs.70,000,000,000 by way of public issue of secured (Rs.68,011,384,000) and unsecured (Rs.1,988,616,000) NCDs having a face value of INR 1,000 each. The said NCDs are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). Debenture issue expenses amounting to Rs.661,118,216 (incurred in respect of this issuance) has been adjusted against the Securities Premium Account (Includes Rs.12,930,000 paid to Statutory Auditors including service tax). Pro rata Debenture Redemption Reserve has been created on account of this issue of Non Convertible Debentures as at the year ended March 31, 2017.
(7) DEFERRED TAX LIABILITIES (NET)
Pursuant to Accounting Standard (AS) - 22 âAccounting for Taxes on Incomeâ, the Company debited an amount of Rs.371,126,452 (Previous Year Rs.788,411,255) as deferred tax charge (net) to the Statement of Profit and Loss arising on account of timing differences. The breakup of deferred tax into major components as at March 31, 2017 is as under:
(1) Provision for Contingencies includes Contingent provision against standard assets and other contingencies. As per National Housing Bank Circular No. NHB/HFC/DIR.3/CMD/2011 dated August 5, 2011 and NHB/HFC/DIR.9/CMD/2013 dated September 6, 2013, in addition to provision for non performing assets, all housing finance companies are required to carry a general provision. (i) at the rate of 2% on housing loans disbursed at comparatively lower rate of interest in the initial few years, after which rates are reset at higher rates; (ii) at the rate of 0.75% of Standard Assets in respect of Commercial Real Estates (Residential Housing):, (iii) at the rate of 1.00% of Standard Assets in respect of other Commercial Real Estates and (iv) at the rate of 0.40% of the total outstanding amount of loans which are Standard Assets other than (i), (ii) & (iii) above. Accordingly, the Company is carrying a provision of Rs.6,100,000,000 (Previous Year Rs.4,150,000,000) towards standard assets (included in Provisions for Contingencies), which is over the required minimum provision as per the NHB Guidelines.
* Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006:
(a) An amount of Nil and Nil was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.
(b) No interest was paid during the year in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 and no amount was paid to the supplier beyond the appointed day.
(c) No amount of interest is due and payable for the period of delay in making payment but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006.
(d) No interest was accrued and unpaid at the end of the accounting year.
(e) No further interest remaining due and payable even in the succeeding years for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.
(1) As at March 31, 2017, the Company holds 100% of the Equity Share capital of Indiabulls Insurance Advisors Limited, Indiabulls Life Insurance Company Limited and Indiabulls Capital Services Limited are considered as strategic and long term in nature and are held at a cost of Rs.500,000, Rs.500,000 and Rs.50,000,000 respectively. Based on the audited financials of these companies, as at March 31, 2017, there has been an erosion in the value of investment made in these companies as the operations in this company have not yet commenced / are in the process of being set up. During the current financial year provision of Rs.51,000,000 (Previous year Rs.Nil) for diminution in the carrying value has been made in the books of account.
(2) During the current financial year, the Company has sold its entire investment in Indiabulls Asset Reconstruction Company Limited for a consideration of Rs.12,250,000(Previous year N.A.).
(3) The Board of Directors of Indiabulls Finance Company Private Limited (âIFCPLâ) and Indiabulls Commercial Credit Limited (âICCLâ) (formerly Indiabulls Infrastructure Credit Limited) (both being wholly owned subsidiaries of the Company)) at their meeting held on April 16, 2015 had approved, the merger of IFCPL, on an ongoing basis, into ICCL, pursuant to and in terms of the provisions of Section 391 - 394 of the Companies Act, 1956, as amended from time to time. The appointed date of the proposed merger fixed under the Scheme was April 01, 2015. The Honâble High Court of Delhi, vide its order dated March 15, 2016, received by the Company on March 31, 2016, approved the Scheme (Order). In terms of the court approved Scheme, with the filing of the copy of the Order, on March 31, 2016 with the office of ROC, NCT of Delhi & Haryana (the Effective Date), the Scheme came into effect and IFCPL, as a going concern, stands amalgamated with ICCL with effect from the Appointed Date, being April 01, 2015. Subsequently the Board of Directors of ICCL, on March 31, 2016, issued and allotted 32,826,288 Equity Shares of Rs.10 each of ICCL to the Company against its holding of 10,942,096 fully paid Equity Shares of Rs.10/- each of IFCPL, in the ratio of 3:1 i.e the Share Exchange Ratio, fixed under the Scheme.
(4) On December 13, 2010 the Erstwhile Holding Company (IBFSL) had sold 26% shares held by it in Indian Commodity Exchange Limited (ICEX) to Reliance Exchange Next Limited (R-Next) for a total consideration of Rs.473,500,000 against a proportionate cost of Rs.260,000,000. As a result thereof, the stake of IBFSL in ICEX has been reduced from 40% to 14% and the same has been reclassified as a long term investment from the earlier classification of being an Associate. MMTC filed a petition before the Company Law Board (CLB) against ICEX, R-Next and IBFSL alleging that the transfer is null and void in terms of the Shareholders Agreement in view of the Forward Markets Commission (FMC) guidelines. IBFSL contends that such view of MMTC is based on the old FMC guidelines and without considering the amended FMC Guidelines dated June 17, 2010 wherein the transfer norms were relaxed. IBFSL had filed its objections on maintainability of the petition which is pending adjudication before the CLB.
(5) During the current financial year, the Company has invested Rs.70,000,000 (Previous Year Rs.Nil) by subscribing to 7,000,000 (Previous year Nil) Equity Shares of face value Rs.5 per share, issued by Indian Commodity Exchange Limited through Rights issue.
(6) During the financial year 2015-16, the Company has invested Rs.6,633,121,000 in OakNorth Holdings Limited by subscribing to 818,615 of face value of GBP 0.59 per share for 39.76% stake. OakNorth Bank- a licensed UK commercial bank is a wholly owned subsidiary of OakNorth Holdings Limited. As at on March 31, 2017 the Company has a stake of 38.73%.
(1) Secured Loans and Other Credit Facilities given to customers amounting to Rs.712,079,767,507 (Previous Year Rs.522,745,629,584) are secured / partly secured by :
(a) Equitable mortgage of property and / or
(b) Pledge of shares / debentures, units, other securities, assignment of life insurance policies and / or
(c) Hypothecation of assets and / or
(d) Company guarantees and / or
(e) Personal guarantees and / or
(f) Negative lien and / or Undertaking to create a security.
(2) Includes Home loan to director for Rs.22,454,320(Previous year N.A.)
(3) Movement in Provision for Loan Assets is as under :
(4) Includes Rs 683,174,252 (being 57% of total cost(excluding taxes) (Previous year N.A.) paid under construction linked plan for purchase of 179,649 sq ft office space @Rs6,580 / sqft.
(1) Secured Loans and Other Credit Facilities given to customers amounting to Rs.77,620,592,429 (Previous Year Rs.68,698,951,346) are secured / partly secured by :
(a) Equitable mortgage of property and / or
(b) Pledge of shares / debentures, units, other securities, assignment of life insurance policies and / or
(c) Hypothecation of assets and / or
(d) Company guarantees and / or
(e) Personal guarantees and / or
(f) Negative lien and / or Undertaking to create a security.
(2) Includes Home loan to director for Rs.1,065,228(Previous Year N.A.).
(3) Includes Rs.1,258,363,568(Previous year N.A.) receivables on account of hedging of interest rate swaps contract.
(2) EMPLOYEE BENEFITS EXPENSE
(1) Employee Benefits - Provident Fund, ESIC, Gratuity and Compensated Absences disclosures as per Accounting Standard (AS) 15 (Revised) - Employee Benefits:
Contributions are made to Government Provident Fund and Family Pension Fund, ESIC and other statutory funds which cover all eligible employees under applicable Acts. Both the employees and the Company make predetermined contributions to the Provident Fund and ESIC. The contributions are normally based on a certain proportion of the employeeâs salary. The Company has recognised an amount of Rs.55,124,863 (Previous year Rs.35,035,247) in the Statement of Profit and Loss towards Employers contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for all employees is based upon actuarial valuations carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Pursuant to the issuance of the Accounting Standard (AS) 15 (Revised) on âEmployee Benefitsâ, commitments are actuarially determined using the âProjected Unit Creditâ Method. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.
1) During the year, the Company has recognized Premium on forward contract & principal only swaps on foreign currency loans amounting to Rs.1,310,998,974 (Previous Year Rs.1,061,188,724) included in Interest on Loans and unrealised marked to market profit towards derivatives which are not designated as hedges amounting to Rs.183,184,405 (Previous Year loss Rs.140,446,781) and unrealised marked to market profit towards derivatives which are designated as hedges amounting to Rs.262,968,179 (Previous Year N.A.) which has been included under Bank / Finance Charges. Derivative instruments that are outstanding as at March 31, 2017 is as given below:-
I. Cross Currency Swaps entered for hedging purposes outstanding as at March 31, 2017 for USD 367,702,517 (Previous Year USD 255,084,236) against cross currency of Rs.23,434,750,000 (Previous Year Rs.16,034,750,000) for a total of 9 outstanding Contracts (Previous Year 9 Contracts).
II. INR Interest Rate Swaps (Fixed to Floating) for Notional Principal of Rs.66,000,000,000 outstanding as at March 31, 2017(Previous Year Rs.9,250,000,000) for a total of 53 outstanding contracts (Previous Year 11 contracts).
III. USD Interest Rate Swaps (Floating to Fixed/ Floating to Floating) for Notional Principal INR of Rs.29,007,787,500 against USD 447,685,108 (Previous Year Notional Principal INR of Rs.15,622,250,000 against USD 249,299,717) for a total of 19 contracts outstanding as at March 31, 2017 (Previous Year 18 contracts) against fluctuations in USD Libor.
IV. Forward Contract entered for hedging purposes outstanding as at March 31, 2017 for USD 457,782,202 (Previous Year USD 108,204,333) against cross currency of Rs.30,733,653,531 (Previous Year Rs.7,015,965,407) for a total of 18 Contracts outstanding (Previous Year 13 Contracts).
2) During the year the Company has credited an amount of Rs.359,526,532 (Previous year debited Rs.183,194,578) on account of Net Revaluation on Foreign Currency Loans, which is included in Interest on loans above.
3) Additional disclosure for Hedge Accounting:-
i) The company has debited Rs.172,533,938 (Net) in statement of profit and loss account against which accounting of fair value hedge has been adopted.
ii) During the year, the company has recognised an amount of Rs.42,817,255 to Cash flow Hedge Reserve. There is no amount recycled from the hedge reserve and reported in statement of profit and loss, as this is the first year of adoption of Hedge accounting.
iii) Disclosure of Foreign Currency Exposures:-
4) Additional disclosures required by the NHB notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017 Clause 3.4 for Derivatives are as follows:-
3.1.1 (A) Qualitative Disclosure:-
The Companyâs activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses derivate contracts such as foreign exchange forward, cross currency contracts, interest rate swaps, foreign currency futures, options and swaps to hedge its exposure to movements in foreign exchange and interest rates. The use of these derivative contracts reduce the risk or cost to the Company and the Company does not use those for trading or speculation purposes.
The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The Board constituted Risk Management Committee (RMC) of the company manages risk on the companyâs derivative portfolio. The officials authorized by the board to enter into derivative transactions for the company are kept separate from the authorized signatories to confirm the derivative transactions. All derivative transactions that are entered into by the company are reported to the board, and the mark-to-market on its portfolio is monitored regularly by the senior management. The company uses Bloomberg to monitor and value its derivative portfolio to ascertain its hedge effectiveness vis-a-vis the underlying.
To hedge its risks on the principal and/ or interest amount for foreign currency borrowings on its balance sheet, the company has currently used cross currency derivatives, forwards and principal only swaps. Additionally, the company has entered into Interest Rate Swaps (IRS) to hedge its basis risk on fixed rate borrowings and LIBOR risk on its foreign currency borrowings.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each reporting date. Derivatives are classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair value is negative (negative marked to market value). Derivative assets and liabilities are recognized on the balance sheet at fair value. Fair value of derivatives is ascertained from the mark to market and accrual values received from the counterparty banks. These values are cross checked against the valuations done internally on Bloomberg. Changes in the fair value of derivatives other than those designated as hedges are recognized in the Statement of Profit and Loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge accounting or the Company chooses to end the hedging relationship.
(4) OTHER EXPENSES
(1) The Company has taken office premises on Lease and Leave & License basis at various locations in India. Lease rent/ License fees aggregating to Rs.406,220,106 (Previous Year Rs.351,742,791) in respect of the same have been charged to the Statement of Profit and Loss. The agreements are executed for periods ranging from 11 months to 12 years with a renewable clause. In many cases, the agreements also provide for termination at will by either party by giving a prior notice period between 30 to 90 days. The minimum lease rentals outstanding as at March 31, 2017, are as under:
(2) Contingent Provision against standard Assets / Provision for Loan assets / Bad Debts Written Off(Net of Recoveries) includes;
Net of Bad Debt Recovery of Rs.13,410,848 (Netted of by Bad Debt /advances written off of Rs.168,662,106) (Previous Year Inclusive of Net Bad Debts /Advances written off of Rs.566,981,259 (netted of by Bad Debt Recovery of Rs.379,881,376).
(3) In respect of Corporate Social Responsibility activities, gross amount required to be spent by the Company during the year was Rs.367,493,798 (Previous Year Rs.318,210,932) and Company has spent Rs.367,494,000 (Previous Year Rs.318,211,000).
(5) CONTINGENT LIABILITY AND COMMITMENTS:
(a) Demand pending u/s 143(3) of the Income Tax Act,1961
(i) For Rs.2,414,210 with respect to FY 2007-08 (Previous Year Rs.2,414,210) against disallowance U/s 14A of the Income Tax Act,1961, against which appeal is pending before High Court.
(ii) For Rs.12,301,239 with respect to FY 2008-09 (Previous Year Rs.12,301,239/-) against disallowance u/s 14A of the Income Tax Act,1961, against which appeal is pending before Supreme Court.
(iii) For Rs.12,737,519 with respect to FY 2010-11 (Previous Year Rs.12,737,519/-) against disallowance U/s 14A of the Income Tax Act,1961, against which the department has filed appeal before the ITAT against the order of CIT (Appeal).
(iv) For Rs.Nil with respect to FY 2011-12 (Previous Year Rs.11,625,706) against disallowances u/s 14A and 32(1) of the Income Tax Act, 1961 against which appeal was pending before CIT (Appeal).
(v) For Rs.764,126 with respect to FY 2012-13 (Previous Year Rs.Nil) against disallowances u/s 14A and 32(1) of the Income Tax Act, 1961 against which appeal is pending before CIT (Appeal).
(b) (i) Demand pending u/s of 25, 55, 56 & 61 of The Rajasthan Value Added Tax Act, 2003 for Rs.14,505,873 (Including interest & Penalty) with respect to FY 2007-08 to FY 2012-13 (Previous Year Rs.14,505,873) against which appeal was pending before Rajasthan High Court. .The Company has paid tax along with interest for Rs.6,231,069 (Previous Year Rs.6,231,069) under protest. Further the company has deposited Rs.2,068,701/- (Previous Year Rs.Nil) on May 30, 2016. Further, the company has opted for New Amnesty Scheme 2016 and accordingly deposited 25% of the disputed demand amount and withdrawn appeal before the Honâble High Court.
(ii) Demand pending u/s of 25, 55 & 61 of The Rajasthan Value Added Tax Act, 2003 for Rs.Nil (Including interest & Penalty) with respect to FY 2012-13 to FY 2014-15 (Previous Year Rs.1,240,200) against which appeal was pending before The Appellate Authority-II , Commercial Taxes, Jaipur. The Company has paid tax along with interest for Rs.Nil (Previous Year Rs.472,200 under protest). Further, the company has opted for New Amnesty Scheme 2016 and accordingly deposited 25% of the disputed demand amount for Rs.192,000 (previous Year Rs.Nil) and withdrawn our appeal before the Appellate Authority-II.
(c) Corporate counter guarantees outstanding in respect of securitisation/ assignment agreements entered by the Company with different assignees as at March 31, 2017 is Rs.1,879,775,887 (Previous Year Rs.1,879,775,887) against which collateral deposit of Rs.87,150,746 (Previous Year Rs.81,059,574) for the year ended March 31, 2017 is being provided to the assignees by the Company in the form of Fixed Deposit Receipts. The Company does not anticipate any losses on account of the said corporate guarantees, in the event of the rights under guarantee being exercised by the assignees.
(d) The Company in the ordinary course of business, has court cases pending, however, the management does not expect any unfavourable outcome resulting in material adverse effect on the financial position of the Company.
(e) Capital commitments for acquisition of fixed assets at various branches as at the year end (net of capital advances paid) Rs.639,100,865 (Previous Year Rs.74,153,763).
(f) Contingent liability with respect to Security deposit to the Bombay Stock Exchange(Representing 1% of the public issue amount i.e. Rs.700,000,000) against which security deposit provided by the company to the exchange is Rs.30,000,000 and the balance is in the form of a bank guarantee).
(6) SEGMENT REPORTING:
Segment information for the year ended March 31, 2017, as per Accounting Standard (AS)-17 âSegment Reportingâ :
(a) Primary segment information (by business segments)
(Figures in respect of previous years are stated in italics)
# Includes Dividend Income on units of Mutual Fund, Dividend Income from Subsidiary Company, Gain on Mutual Fund Investments and Profit on sale of current investments included in other income.
b) The Company operates solely in one Geographic segment namely âWithin Indiaâ and hence no separate information for Geographic segment wise disclosure is required.
c) The Companyâs primary business segment is reflected based on principal business activities carried on by the Company. The Companyâs primary business comprises of investing and financing related activities (investing in various subsidiaries, financing of loans and credit activities) and fee income which mainly comprises of financial service related fee from services income, commission on insurance and other fee based activities.
d) Segment revenue, results, assets and liabilities include amounts identifiable to each segment and amounts allocated on a reasonable basis.
e) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparation of financial information as disclosed in Significant Accounting Policies (Refer Note 1) above.
Earnings Per Equity Share (EPS) as per Accounting Standard (AS)-20 âEarnings Per Shareâ,:
The basic earnings per share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential diluted Equity Shares are adjusted for potential dilutive effect of Employee Stock Option Plan as appropriate. Potential dilutive Equity Shares on account of Share warrants are not adjusted being anti dilutive in nature.
(7) In respect of amounts as mentioned under Section 124 of the Companies Act, 2013 there were no dues(Previous Year Rs.Nil) required to be credited to the Investor Education and Protection Fund as on March 31, 2017.
(8) (1) Disclosures required by the NHB notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017:
(i) Disclosure for Capital to Risk Assets Ratio (CRAR)* :-
(ii) Exposure to Real Estate Sector:-
(iii) Exposure to Capital Market
(iv) Asset Liability Management
Note: In computing the above information certain estimates, assumptions and adjustments have been made by the Management for its regulatory submission which have been relied upon by the auditors.
(Figures in respect of previous years are stated in italics)
(2) Capital to Risk Assets Ratio (CRAR)(Proforma)
CRAR (Proforma)(considering Nil risk weightage on Mutual fund investments):-
(xi) Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the HFC
The Company has not exceeded the limits for SGL / GBL.
(xii) Disclosure of Penalties imposed by NHB and other regulators
No penalties has been imposed on the Company by any regulators.
(9) The Company has entered into various agreements for the assignment/securitisation of loans with assignees, wherein it has assigned/securitised a part of its secured loan portfolio amounting to Rs.181,515,208,581 upto March 31, 2017 (Rs.145,912,932,121 upto March 31, 2016), being the principal value outstanding as on the date of the deals that are outstanding as on the Balance Sheet date.
The Company assigned/securitized various loan portfolios to banks and/or other institutions which are derecognised in the books of accounts of the Company in terms of accounting policy mentioned in Significant Accounting policies in Note 1 (v) above and residual income on these Loans is being recognised over the life of the underlying loans and not on an upfront basis.
Additional disclosures required by the NHB notification No. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017 for Securitisation are as follows:-
10.1.1 Outstanding amount of securitised assets as per books of the SPVs sponsored by the HFC and total amount of exposures retained by the HFC as on the date of balance sheet towards the Minimum Retention Requirements (MRR).
(11) The Board of Directors at their meeting held on April 27, 2012 had approved the Scheme of Arrangement involving the merger of Indiabulls Financial Services Limited (IBFSL, the Holding Company) with the Company in terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 (the âScheme of Arrangementâ). The Appointed Date of the proposed merger fixed under the Scheme of Arrangement was April 1, 2012. The Honâble High Court of Delhi, vide its Order dated December 12, 2012, received by the Company on February 8, 2013, approved the Scheme of Arrangement (Order). In terms of the Court approved Scheme of Arrangement, with the filing of the copy of the Order, on March 8, 2013 with the office of ROC, NCT of Delhi & Haryana (the Effective Date), IBFSL, as a going concern, stands amalgamated with IBHFL with effect from the Appointed Date, being April 1, 2012 (Under the Accounting Standard 14 - Pooling of interest method). Consequent to the Scheme of Arrangement becoming effective, the Board of Directors of the Company, at their meeting held on March 25, 2013, issued and allotted -
i) 312,511,167 Equity Shares of Rs.2 each of the Company,
ii) 27,500,000 Warrants of the Company (against the listed warrants of IBFSL), and
iii) 20,700,000 Warrants of the Company (against the unlisted warrants of IBFSL held by certain promoter group entities and Key Management Personnel of IBFSL) to the Equity Shareholders / Warrants holders of IBFSL, against their holdings in such Equity Shares / Warrants, as on March 20, 2013 i.e. the record date fixed by IBFSL in this regard. The issue of Equity Shares / warrants by the Company was in terms of the share exchange ratio as mentioned in the Court approved Scheme of Arrangement. The Companyâs Shares and Warrants (issued in lieu of listed warrants of IBFSL) got listed with National Stock Exchange of India Limited and BSE Limited w.e.f. July 23, 2013.
(12) Disclosures in respect of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as required vide Notification No. G.S.R. 308(E) dated 30th March, 2017 issued by the Ministry of Corporate Affairs:
(1) details of denomination for amount aggregating to Rs.108,662 is not clearly legible from the bank deposit slips available with the Company.
(2) includes withdrawal from bank aggregating to Rs.1,250,000.
(3) amounts aggregating to Rs.4,242,367 have been directly deposited by customers into the Companyâs bank accounts towards the repayment of their outstanding amounts for which details of denomination (SBNâs / Other denomination notes) is not available with the Management.
(13) The Company has complied with the NHB Directions, 2010 including Prudential Norms and as amended from time to time.
(14) Previous Yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification / disclosures.
Mar 31, 2015
1. Indiabulls Financial Services Limited ("Erstwhile Holding Company")
had issued Global Depository Receipts (GDR's) which were transferred
under the Scheme of Arrangement in financial year 2012-13. As at March
31, 2015 723,461 (Previous Year 3,100,273) GDR's were outstanding and
were eligible for conversion into Equity Shares. The Company does not
have information with respect to holders of these GDR's. Holders of
Global Depository Receipts (GDRs) will be entitled to receive
dividends, subject to the terms of the Deposit Agreement, to the same
extent as the holders of Equity Shares, less the fees and expenses
payable under such Deposit Agreement and any Indian tax applicable to
such dividends. Holders of GDRs will not have voting rights with
respect to the Deposited Shares. The GDRs may not be transferred to any
person located in India including Indian residents or ineligible
investors except as permitted by Indian laws and regulations.
2. 312,511,167 (Previous Year 312,511,167) equity Shares were
allotted by the Company, for consideration other than cash to the
shareholders of Erstwhile Holding Company pursuant to and in terms of
the Scheme of Arrangement, approved by the Hon'ble High Court of Delhi
vide its Order dated December 12, 2012, which came into effect on March
8, 2013 from the Appointed Date April 1, 2012.(Refer Note 40)
3.(1) To impart greater focus and undivided accountability at the
leadership level and to rationalize operations of the diverse
businesses of the Indiabulls group, so as to put the Company firmly on
the growth path, the promoters, during the year, had mutually decided
to reorganize the management control of different group companies
amongst themselves. As part of the restructuring, Mr. Sameer Gehlaut,
Chairman of the Company and the entities promoted by him, namely,
Orthia Land Development Private Limited, Orthia Developers Private
Limited, Cleta Properties Private Limited, Cleta Buildtech Private
Limited, Inuus Infrastructure Private Limited and Inuus Land
Development Private Limited have continued as Promoters / Promoter
Group / Persons acting in Concert with the promoters of the Company.
Further, with effect from July 18, 2014, Mr. Rajiv Rattan and the
entities promoted by him, namely, Priapus Properties Private Limited,
Priapus Real Estate Private Limited, Priapus Developers Private
Limited, Priapus Constructions Private Limited and Mr. Saurabh Kumar
Mittal and the entities promoted by him, namely, Hespera Infrastructure
Private Limited, Hespera Properties Private Limited, Hespera Real
Estate Private Limited, Hespera Realty Private Limited and Hespera
Realcon Private Limited, have ceased to be the Promoters / Promoter
Group / PACs with the promoters of the Company.
4. Employees Stock Options Schemes:
(a) Indiabulls Financial Services Limited ("Erstwhile Holding Company")
(Refer Note 40) and its erstwhile subsidiary, Indiabulls Credit
Services Limited ("ICSL") had announced ESOS / ESOP schemes for its
employees and the employees of it's group companies wherein each option
represents one Equity Share of the Company. The Company has adopted
the ESOS / ESOP schemes in respect of its employees. A Compensation
Committee constituted by the Board of Directors administers each of the
plans.
(b) Indiabulls Housing Finance Limited Employees Stock Option
Scheme-2013
The members of the Company at their Meeting dated March 6, 2013
approved the IHFL ESOS - 2013 scheme consisting of 39,000,000 stock
options representing 39,000,000 fully paid up Equity Shares of Rs. 2
each of the Company to be issued in one or more tranches to eligible
employees of the Company or to eligible employees of the subsidiaries /
step down subsidiaries of the Company. The Compensation Committee
constituted by the Board of Directors of the Company has, at its
meeting held on October 11,2014, granted, 10,500,000 Stock Options
representing an equal number of equity shares of face value of Rs. 2
each at an exercise price of Rs. 394.75, being the then latest
available closing market price on the National Stock Exchange of India
Ltd. as on October 10, 2014 following the intrinsic method of
accounting as is prescribed in the Guidance Note issued by the
Institute of Chartered Accountants of India on Accounting for Employees
Share Based Payments ("the Guidelines"). As the options have been
granted at intrinsic value, there is no employee stock compensation
expense on account of the same. These options vest with effect from the
first vesting date i.e. October 11, 2015, whereby the options vest on
each vesting date as per the vesting schedule provided in the Scheme.
(VI) During the year ended March 31, 2013, pursuant to the Scheme of
Arrangement the Authorised Capital of the Company has been rearranged
to Rs.16,000,000,000 divided into 3,000,000,000 Equity Shares of Rs. 2
each and 1,000,000,000 Preference Shares of Rs. 10 each.
(1) Vide Circular NHB(ND)/DRS/Pol. 62/2014 dated May 27, 2014, the
National Housing Bank (NHB) has directed Housing Finance Companies to
provide for deferred tax liability in respect of the balance in the
"Special Reserve" created under Section 36(1)(viii) of the Income Tax
Act, 1961. NHB has clarified that the deferred tax liability in respect
of the opening balance in the Special Reserve as at April 1, 2014, may
be created by adjusting the opening reserves as of that date.
Accordingly, the Company has adjusted its opening reserves as at April
1, 2014, with the amount of deferred tax liability in respect of the
opening balance in the Special Reserve as of that date.
(2) Pursuant to the notification dated December 29, 2011 issued by the
Ministry of Corporate Affairs amending Accounting Standard 11 - The
Effects of Changes in Foreign Exchange Rates, the Company has exercised
the option as per para 46A inserted in the said Standard for all long
term monetary assets and liabilities. Consequently an amount of Rs.
84,395,733 (Previous Year Rs. Nil) representing translation difference
on foreign currency loans is carried forward in the Foreign Currency
Monetary Item Translation Difference Account as on March 31, 2015.
(3) In terms of Section 29C of the National Housing Bank ("NHB") Act,
1987, the Company is required to transfer at least 20% of its Profit
after tax to a Reserve Fund before any dividend is declared. Transfer
to a Reserve Fund in terms of Section 36(1)(viii) of the Income Tax
Act, 1961 is also considered as an eligible transfer as transfer to
Special Reserve under Section 29C of the National Housing Bank ("NHB")
Act, 1987. The Company has transferred an amount of Rs. 1,860,000,000
(Previous Year Rs. 1,500,000,000) to reserve created in terms of
Section 36(1)(viii) of the Income Tax Act, 1961 termed as "Special
Reserve (III)" and also transferred an amount of Rs. 2,096,454,752
(Previous Year Rs. 1,519,996,370) to the Reserve in terms of Section
29C of the National Housing Bank ("NHB") Act, 1987 Fund as at the year
end. Further an additional amount of Rs. 1,500,000,000 (Previous Year
Rs. 1,000,000,000) has been set apart by way of transfer to Additional
Reserve Fund in excess of the statutory minimum requirement as
specified under Section 29C pursuant to Circular no.
NHB(ND)/DRS/Pol-No. 03/2004-05 dated August 26, 2004 issued by the
National Housing Bank. The additional amount so transferred may be
utilised in the future for any business purpose.
(5) This pertains to reserve created under section 45-IC of the Reserve
Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls
Financial Services Limited, which has been transferred to the Company
under the Scheme of Arrangement during the year ended March 31,
2013.(Refer Note 40)
(6) Due to change in the method of calculating depreciation, on account
of change in depreciation rate based on useful life of the assets in
terms of schedule II of the Companies Act, 2013, the opening balance of
accumulated depreciation as at April 1, 2014, has been recalculated.
The remaining depreciation has been amortised over the balance useful
life of the assets. The impact on account of change in method of
calculating the depreciation has been debited (net of tax benefit) to
the opening balance of Statement of Profit and Loss.
(5) (i) In terms of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009, the erstwhile Holding Company during the financial
year 2012-13, upon receipt of Shareholders approval, has on June 9,
2012, issued and allotted an aggregate of 20,700,000 warrants, to
certain Promoter group entities and Key Management Personnel, at a
conversion price of Rs. 218 per Equity Share, 25% of which amounting
to Rs. 1,128,150,000 had already been received by the Erstwhile
Holding Company from the respective Allottee's as upfront amount as at
the Year ended March 31,2013. These warrants were convertible into an
equivalent number of Equity Shares of face value Rs. 2 each, in the
Company, upon receipt of balance conversion price, within a period of
eighteen months from the date of allotment. During the year 2013-14 the
Company has received from the warrant holders the balance amount of 75%
amounting to Rs. 3,384,450,000 upon exercise of the rights to convert
the warrants into equity shares.(Refer Note 40)
(ii) During the financial year 2009-10, in terms of Chapter VIII of the
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
in respect of the issue of the Secured Non Convertible Debentures of
the Company to QIBs under Qualified Institutions Placement , the
erstwhile Holding Company issued 27,500,000 Share Warrants being issued
at a Warrant Issue Price of Rs.5 per Share Warrant, with a right
exercisable by the Warrant holder to exchange each Warrant with one
equity share of the Company of face value Rs.2 each, any time before
the expiry of 60 months from the date of allotment of the Warrants, at
a Warrant Exercise Price of Rs.225 per equity share. During the current
financial year the company has issued and allotted 20,856,300 equity
shares of face value of Rs. 2 each at an exercise price of Rs.225 per
equity share to the eligible warrant holders.(Refer Note 40)
(1) Provision for Contingencies includes Contingent provision against
standard assets and other contingencies. As per National Housing Bank
Circular No. NHB/HFC/DIR.3/CMD/2011 dated August 5, 2011 and
NHB/HFC/DIR.9/ CMD/2013 dated September 6, 2013, in addition to
provision for non performing assets, all housing finance companies are
required to carry a general provision. (i) at the rate of 2% on housing
loans disbursed at comparatively lower rate of interest in the initial
few years, after which rates are reset at higher rates; (ii) at the
rate of 0.75% of Standard Assets in respect of Commercial Real Estates
(Residential Housing):, (iii) at the rate of 1.00% of Standard Assets
in respect of other Commercial Real Estates and (iv) at the rate of
0.40% of the total outstanding amount of loans which are Standard
Assets other than (i), (ii) & (iii) above. Accordingly, the Company is
carrying a provision of Rs. 3,000,000,000 (Previous Year Rs.
2,500,000,000) towards standard assets (included in Provisions for
Contingencies), which is well over the required minimum provision as
per the NHB Guidelines.
(b) No interest was paid during the year in terms of Section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006 and no amount
was paid to the supplier beyond the Appointed Day.
(c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
(3) In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as on March 31, 2015.
(1) Investments by the Company in the Equity Share capital of
Indiabulls Insurance Advisors Limited and Indiabulls Capital Services
Limited are considered as strategic and long term in nature and are
held at a cost of Rs. 500,000 and Rs. 50,000,000 respectively. The
Company considers the losses suffered by these subsidiaries as
temporary in nature and accordingly no provision for diminution in
value has been made in the books of account.
As at March 31,2015, the Company holds 100% of the Equity capital of
Indiabulls Asset Holding Company Limited and Indiabulls Life Insurance
Company Limited at a cost of Rs. 500,000 each. Based on the audited
financials of these companies, as at March 31, 2015, there has been an
erosion in the value of investment made in those companies as the
operations in those companies have not yet commenced / are in the
process of being set up. As the Management considers the investment in
these companies as strategic and long term in nature, the
Company considers the losses suffered by these subsidiaries as
temporary in nature and accordingly no provision for diminution in
their carrying values has been made in the books of account.
(2) The Company was holding 57.50% of the capital of Indiabulls Finance
Company Private Limited (IFCPL), which has become a subsidiary of the
Company pursuant to the Scheme of Arrangement. The balance 42.50% or
3,233,696 Equity Shares were held by Amaprop Limited (Amaprop), vide a
Share Subscription and Shareholders Agreement (SHA) entered into
between the erstwhile Holding Company[Indiabulls Financial Services
Limited(IBFSL)], IFCPL and Amaprop.
During the year 2013-14, the Company has purchased the remaining 42.50%
or 3,233,696 Equity Shares, which were earlier held by Amaprop Limited
at a consideration of Rs. 2,616,891,255. Post this transaction IFCPL is
a wholly owned subsidiary of the Company.
During the current financial year, the Company has further invested Rs.
1,000,020,000 by subscribing to 3,333,400 Equity Shares of face value
Rs. 10 per share at a premium of Rs. 290 per equity share.
(3) During the financial year 2012-13, the Company has invested Rs.
2,025,000,000 by subscribing to 22,500,000 Compulsorily Convertible
Cumulative Preference Shares of face value Rs. 10 per share, issued by
its wholly owned subsidiary namely Indiabulls Commercial Credit
Limited((formerly known as Indiabulls Infrastructure Credit Limited).
(4) On December 13, 2010 the Erstwhile Holding Company (IBFSL) had sold
26% shares held by it in Indian Commodity Exchange Limited (ICEX) to
Reliance Exchange Next Limited (R-Next) for a total consideration of
Rs. 473,500,000 against a proportionate cost of Rs. 260,000,000. As a
result thereof, the stake of IBFSL in ICEX has been reduced from 40% to
14% and the same has been reclassified as a long term investment from
the earlier classification of being an Associate. MMTC filed a petition
before the Company Law Board (CLB) against ICEX, R-Next and IBFSL
alleging that the transfer is null and void in terms of the
Shareholders Agreement in view of the Forward Markets Commission (FMC)
guidelines. IBFSL contends that such view of MMTC is based on the old
FMC guidelines and without considering the amended FMC Guidelines dated
June 17, 2010 wherein the transfer norms were relaxed. IBFSL had filed
its objections on maintainability of the petition which is pending
adjudication before the CLB.
(5) During the current financial year, the Company has invested Rs.
490,000,000 (Previous Year Rs. 60,000,000) by subscribing to 49,000,000
(Previous year 6,000,000) Equity Shares of face value Rs. 10 per share,
issued by its wholly owned subsidiary namely Indiabulls Asset
Management Company Limited.
(6) During the previous financial year 2013-14 the Company had advanced
a sum of Rs. 49,400,000 by way of loan to its wholly owned subsidiary
Indiabulls Life Insurance Company Limited. The subsidiary was not able
to pursue the business and the resulted in losses. Based upon the
availability of resources with the subsidiary as at the financial year
end to repay this loan, the Company had written off loan given as bad
loans /advances written off.
(1) Employee Benefits - Provident Fund, ESIC, Gratuity and Compensated
Absences disclosures as per Accounting Standard (AS) 15 (Revised) -
Employee Benefits:
Contributions are made to Government Provident Fund and Family Pension
Fund, ESIC and other statutory funds which cover all eligible employees
under applicable Acts. Both the employees and the Company make
predetermined contributions to the Provident Fund and ESIC. The
contributions are normally based on a certain proportion of the
employee's salary. The Company has recognised an amount of Rs.
18,529,706 (Previous year Rs. 7,509,939) in the Statement of Profit and
Loss towards Employers contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for all
employees is based upon actuarial valuations carried out at the end of
every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Pursuant to
the issuance of the Accounting Standard (AS) 15 (Revised) on 'Employee
Benefits', commitments are actuarially determined using the 'Projected
Unit Credit' Method. Gains and losses on changes in actuarial
assumptions are accounted for in the Statement of Profit and Loss.
II. INR Interest Rate Swaps (Fixed to Floating) for Notional Principal
of Rs. 750,000,000 (Previous Year Rs. 750,000,000) for a total of 3
contracts (Previous Year 3 contracts) against fluctuations in interest
rate changes.
III. USD Interest Rate Swaps (Floating to Fixed) for Notional
Principal INR of Rs. 5,148,475,000 against USD 82,802,351.54 (Previous
Year Rs. Nil) for a total of 6 contracts (Previous Year Nil contracts)
against fluctuations in USD Libor.
5. Contingent Liability and Commitment:
(a) Demand pending u/s 143(3) of the Income Tax Act,1961
(i) For Rs. 2,414,210 with respect to FY 2007-08 (Previous Year Rs.
2,414,210) against disallowance U/s 14A of the Income Tax Act,1961,
against which appeal is pending before ITAT.
(ii) For Rs. 12,301,239 with respect to FY 2008-09 ( Previous Year Rs.
NIL ) against disallowance u/s 14A of the Income Tax Act,1961,against
which the department has filed appeal before the ITAT against the order
of CIT (Appeal ).
(iii) For Rs.Nil with respect to FY 2009-10 (Previous Year
Rs.17,807,253) against disallowance U/s 14A of the Income Tax Act,1961,
against which appeal is pending before CIT ( Appeals).
(iv) For Rs. 11,625,706 with respect to FY 2011-12 ( Previous Year Rs.
NIL ) against disallowances u/s 14A and 32 (1 ) of the Income Tax
Act,1961 against which appeal is pending before CIT ( Appeal ).
(b) Demand pending u/s of 25, 55,56 & 61 of The Rajasthan Value Added
Tax Act, 2003 for Rs. 14,505,873 (Including interest & Penalty) with
respect to FY 2007-08 to FY 2012-13 (Previous Year Rs. 14,505,873)
against which appeal is pending before Rajasthan Tax Board, Ajmer. The
Company has paid tax along with interest for Rs. 6,231,069(Previous
Year Rs. 6,231,069) under protest.
(c) Corporate counter guarantees outstanding in respect of
securitisation/ assignment agreements entered by the Company with
different assignees as at March 31, 2015 is Rs. 1,879,775,887 (
Previous Year Rs.3,044,792,269) against which collateral deposit of Rs.
63,516,470 (Previous Year Rs. 172,908,806 for the period ended March
31, 2015 is being provided to the assignees by the Company in the form
of Fixed Deposit Receipts. The Company does not anticipate any losses
on account of the said corporate guarantees, in the event of the rights
under guarantee being exercised by the assignees.
(d) The Company in the ordinary course of business, has court cases
pending, however, the management does not expect any unfavourable
outcome resulting in material adverse effect on the financial position
of the Company.
(e) Capital commitments for acquisition of fixed assets at various
branches as at the year end (net of capital advances paid) Rs.
2,109,736,611 (Previous Year Rs. 2,052,467,864 ).
6. Segment Reporting:
b) The Company operates solely in one Geographic segment namely "Within
India" and hence no separate information for Geographic segment wise
disclosure is required.
c) The Company's primary business segment is reflected based on
principal business activities carried on by the Company. The Company's
primary business comprises of investing and financing related
activities (investing in various subsidiaries, financing of loans and
credit activities) and fee income which mainly comprises of financial
service related fee from services income, commission on insurance and
other fee based activities.
d) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
e) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in Significant Accounting Policies (Refer Note
1) above.
7. Disclosures in respect of Related Parties as per Accounting
Standard (AS) - 18 'Related Party Disclosures'.
Nature of relationship Related party
(a) Related party where
control exists:
Subsidiary Companies Indiabulls Asset Reconstruction
Company Limited
(Subsidiary of Indiabulls Advisory
Services Limited)
Indiabulls Finance Company Private
Limited
Indiabulls Commercial Credit Limited
(formerly Indiabulls Infrastructure
Credit Limited)
Indiabulls Insurance Advisors Limited
Indiabulls Life Insurance Company
Limited
Indiabulls Capital Services Limited
Indiabulls Collection Agency Limited
Ibulls Sales Limited
Indiabulls Advisory Services Limited
Nilgiri Financial Consultants Limited
(Subsidiary of Indiabulls Insurance
Advisors Limited)
Indiabulls Asset Holding Company
Limited
Indiabulls Asset Management Company
Limited
Indiabulls Trustee Company Limited
Indiabulls Holdings Limited
Indiabulls Venture Capital Management
Company Limited
(Subsidiary of Indiabulls Holdings
Limited)
Indiabulls Venture Capital Trustee
Company Limited
(Subsidiary of Indiabulls Holdings
Limited)
Key Management Personnel Mr. Sameer Gehlaut, Chairman &
Executive Director
Mr. Gagan Banga, CEO & Managing
Director
Mr. Ashwini Omprakash Kumar, Deputy
Managing Director
Mr. Ajit Kumar Mittal, Executive
Director
Mr. Rajiv Rattan, Non -Executive
Director(upto July 18, 2014)
Mr. Saurabh Kumar Mittal, Non -
Executive Director(upto July 18, 2014)
8. Earnings Per Equity Share
Earnings Per Equity Share (EPS) as per Accounting Standard (AS)-20
"Earnings Per Share",:
The basic earnings per share is computed by dividing the net profit
attributable to Equity Shareholders for the year by the weighted
average number of Equity Shares outstanding during the year. Diluted
earnings per share are computed using the weighted average number of
Equity Shares and also the weighted average number of Equity Shares
that could have been issued on the conversion of all dilutive potential
Equity Shares. The dilutive potential Equity Shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value.
9. In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as on March 31, 2015.
10. An amount of Rs. 1,000/- has been levied as penalty by National
Housing Bank in terms of provisions of paragraph 29(5) of the Housing
Finance Companies(NHB) Directions, 2010 on account of delay in
submission of filing of Short Term Dynamic Statement for position as on
September 30, 2014.
11. As per the Housing Finance Companies (NHB) Directions 2010,
non-performing assets are recognised on the basis of ninety days and
above overdue of interest/installment. The Company has made the
Provision for Loans and Other Credit Facilities in respect of Housing
and Non-Housing Loans in terms of paragraph 28 of the Housing Finance
Companies (NHB) Directions 2010 and NHB Notification No.
NHB.HFC.DIR.3/CMD/2011 dated August 05, 2011 and NHB.HFC.DIR.4/CMD/2012
dated January 19, 2012. The same is disclosed in terms of paragraph
29(2) of the Housing Finance Companies (NHB) Directions, 2010 and NHB
Circular No. NHB(ND)/DRS/Pol.No.41/2010-11 dated September 26, 2011.
Further as at March 31,2015 , the Company has additional provision of
Rs 15.84 Crore (Previous Year Rs.69.77 Crore) and Rs 198.13 Crore
(Previous Year Rs. 111.70 Crore) for Standard Assets/other
contingencies and for non standard assets (including Doubtful and loss
assets) respectively.
The balance loan outstanding as at March 31, 2015 for standard assets
is Rs. 43,415.12 Crore (Previous Year Rs. 33,523.18 Crore) out of which
housing loan is Rs 31,244.16 Crore (Previous Year Rs 22,776.40 Crore)
and Non housing loan is Rs 12,170.95 Crore (Previous Year Rs 10,746.78
Crore).
The balance loan outstanding as at March 31, 2015 for sub-standard
assets is Rs. 191.02 Crore (Previous Year Rs. 255.46 Crore) out of
which housing loan is Rs 122.06 Crore (Previous Year Rs 27.59 Crore)
and Non housing loan is Rs 68.97 Crore (Previous Year Rs 227.87 Crore).
The balance loan outstanding as at March 31, 2015 for doubtful assets
upto one year category is Rs. 174.43 Crore (Previous Year Rs 4.43 Crore
) out of which housing loan is Rs 5.22 Crore (Previous Year Rs 1.22
Crore) and Non housing loan is Rs 169.21 Crore (Previous Year Rs. 3.21
Crore).
The balance loan outstanding as at March 31,2015 for doubtful assets
one to three years category is Rs. 7.18 Crore (Previous Year Rs. 59.57
Crore) out of which housing loan is Rs. 2.22 Crore (Previous Year Rs
2.40 Crore ) and Non housing loan is Rs 4.96 Crore (Previous Year
Rs.57.17 Crore).
The balance outstanding as at March 31,2015 for doubtful assets more
than three years category is Rs. 21.41 Crore (Previous Year Rs. 3.73
Crore) out of which housing loan is Rs 1.90 Crore (Previous Year Rs
0.44 Crore ) and Non housing loan is Rs 19.51 Crore (Previous Year Rs.
3.29 Crore ).
Provision for contingencies on standard assets and loan assets as on
March 31, 2015 amounting to Rs. 597.67 Crore (Previous Year Rs. 494.66
Crore ) includes provisions for non-performing assets, standard assets
and all other contingencies.
12. The Company has entered into various agreements for the
assignment/securitisation of loans with assignees, wherein it has
assigned/securitised a part of its secured loan portfolio amounting to
Rs. 114,059,975,916 upto March 31, 2015 (Rs. 93,398,990,025 upto March
31, 2014), being the principal value outstanding as on the date of the
deals that are outstanding as on the Balance Sheet date.
The Company assigned/securitized various loan portfolios to banks
and/or other institutions which are derecognised in the books of
accounts of the Company in terms of accounting policy mentioned in
Significant Accounting policies in Note 1 (v) above and residual income
on these Loans is being recognised over the life of the underlying
loans and not on an upfront basis.
13. The Board of Directors at their meeting held on April 27, 2012 had
approved the Scheme of Arrangement involving the merger of Indiabulls
Financial Services Limited (IBFSL, the Holding Company) with the
Company in terms of the provisions of Sections 391 to 394 of the
Companies Act, 1956 (the "Scheme of Arrangement"). The Appointed Date
of the proposed merger fixed under the Scheme of Arrangement was April
1,2012. The Hon'ble High Court of Delhi, vide its Order dated December
12, 2012, received by the Company on February 8, 2013, approved the
Scheme of Arrangement (Order). In terms of the Court approved Scheme of
Arrangement, with the filing of the copy of the Order, on March 8, 2013
with the office of ROC, NCT of Delhi & Haryana (the Effective Date),
IBFSL, as a going concern, stands amalgamated with IBHFL with effect
from the Appointed Date, being April 1, 2012 (Under the Accounting
Standard 14 - Pooling of interest method). Consequent to the Scheme
of Arrangement becoming effective, the Board of Directors of the
Company, at their meeting held on March 25, 2013, issued and
allotted -
i) 312,511,167 Equity Shares of Rs. 2 each of the Company,
ii) 27,500,000 Warrants of the Company (against the listed warrants of
IBFSL), and
iii) 20,700,000 Warrants of the Company (against the unlisted warrants
of IBFSL held by certain promoter group entities and Key Management
Personnel of IBFSL) to the Equity Shareholders / Warrants holders of
IBFSL, against their holdings in such Equity Shares / Warrants, as on
March 20, 2013 i.e. the record date fixed by IBFSL in this regard. The
issue of Equity Shares / warrants by the Company was in terms of the
share exchange ratio as mentioned in the Court approved Scheme of
Arrangement. The Company's Shares and Warrants (issued in lieu of
listed warrants of IBFSL) got listed with National Stock Exchange of
India Limited and BSE Limited w.e.f. July 23, 2013.
14. The Company has complied with the NHB Directions, 2010 including
Prudential Norms and as amended from time to time.
15. Previous Year's figures have been regrouped / reclassified
wherever necessary to correspond with the current year's classification
/ disclosures.
Mar 31, 2014
(1) Corporate Information:
The Board of Directors of Indiabulls Housing Finance Limited (100%
subsidiary of "IBFSL") and Indiabulls Financial Services Limited
("IBFSL", "Erstwhile Holding Company") at their meeting held on April
27, 2012 had approved the Scheme of Arrangement involving the reverse
merger of IBFSL with the Company in terms of the provisions of Sections
391 to 394 of the Companies Act, 1956 (the "Scheme of Arrangement").
The Appointed Date of the proposed merger fixed under the Scheme of
Arrangement was April 1, 2012. The Hon''ble High Court of Delhi, vide
its Order dated December 12, 2012, received by the Company on February
8, 2013, approved the Scheme of Arrangement. In terms of the Court
approved Scheme of Arrangement, with the filing of the copy of the
Order, on March 8, 2013, with the office of ROC, NCT of Delhi & Haryana
(the Effective Date), IBFSL, as a going concern, stands amalgamated
with IBHFL with effect from the Appointed Date, being April 1, 2012.
Accordingly, Earnings Per Share and previous year figures are not
comparable.
Indiabulls Financial Services Limited ( "IBFSL") was incorporated on
January 10, 2000 as a Private Limited Company. On March 30, 2001, the
Company was registered under Section 45-IA of the Reserve Bank of India
(RBI) Act, 1934 to carry on the business of a Non-Banking Financial
Company. The Company was converted into a public limited Company
pursuant to Section 44 of the Companies Act, 1956 on February 03, 2004.
Indiabulls Housing Finance Limited ("the Company") ("IBHFL") was
incorporated on May 10, 2005. On December 28, 2005 the Company was
registered under Section 29A of the National Housing Bank Act, 1987 to
commence / carry on the business of a Housing Finance Institution
without accepting public deposits. The Company is required to comply
with provisions of the National Housing Bank Act, 1987, the Housing
Finance Companies (NHB) Directions, 2010 and other guidelines /
instructions / circulars issued by the National Housing Bank from time
to time.
The Company is engaged in the business to provide finance and to
undertake all lending and finance to any person or persons,
co-operative society, association of persons, body of individuals,
companies, institutions, firms, builders, developers, contractors,
tenants and others either at interest or without and/or with or without
any security for construction, erection, building, repair, remodeling,
development, improvement, purchase of houses, apartments, flats,
bungalows, rooms, huts, townships and/or other buildings and real
estate of all descriptions or convenience there on and to equip the
same or part thereof with all or any amenities or conveniences,
drainage facility, electric, telephonic, television, and other
installations, either in total or part thereof and /or to purchase any
free hold or lease hold lands, estate or interest in any property and
such other activities as may be permitted under the Main Objects of the
Memorandum of Association of the Company.
(I) Indiabulls Financial Services Limited ("Erstwhile Holding Company")
had issued Global Depository Receipts (GDR''s) which were transferred
under the Scheme of Arrangement in financial year 2012-13. As at March
31, 2014 3,100,273 (Previous Year 5,608,131) GDR''s were outstanding and
were eligible for conversion into Equity Shares. The Company does not
have information with respect to holders of these GDR''s. Holders of
Global Depository Receipts (GDRs) will be entitled to receive
dividends, subject to the terms of the Deposit Agreement, to the same
extent as the holders of Equity Shares, less the fees and expenses
payable under such Deposit Agreement and any Indian tax applicable to
such dividends. Holders of GDRs will not have voting rights with
respect to the Deposited Shares. The GDRs may not be transferred to any
person located in India including Indian residents or ineligible
investors except as permitted by Indian laws and regulations.
(II) 312,511,167(Previous Year 312,511,167) Equity Shares were allotted
by the Company, for consideration other than cash to the shareholders
of Erstwhile Holding Company pursuant to and in terms of the Scheme of
Arrangement, approved by the Hon''ble High Court of Delhi vide its Order
dated December 12, 2012, which came into effect on March 8, 2013 from
the Appointed Date April 1, 2012.(Refer Note 39)
(III) Reconciliation of the number of shares and amount outstanding at
the beginning and at the end of the financial year:-
*Includes 706,596 Equity Shares of Rs. 2 each issued during the year,
under various ESOP Schemes by the Erstwhile Holding Company aggregating
to Rs. 1,413,192.
**Includes 831,276 Equity Shares of Rs. 2 each issued during the year,
under various ESOP Schemes aggregating to Rs. 1,662,552 and 20,700,000
Equity Shares of Rs. 2 each issued during the year to certain promoter
entities and Key Management Personnel''s against outstanding Share
warrants aggregating to Rs. 41,400,000.
(V) Employees Stock Options Schemes:
Indiabulls Financial Services Limited ("Erstwhile Holding Company")
(Refer Note 39) and its erstwhile subsidiary, Indiabulls Credit
Services Limited ("ICSL") had announced ESOS / ESOP schemes for its
employees and the employees of it''s group companies wherein each option
represents one Equity Share of the Company. The Company has adopted the
ESOS / ESOP schemes in respect of its employees. A Compensation
Committee constituted by the Board of Directors administers each of the
plans.
(a) Stock option schemes of the erstwhile Holding Company including
schemes in lieu of stock options schemes of erstwhile fellow subsidiary
Indiabulls Credit Services Limited transferred under the Court approved
Scheme of Arrangement (Refer Note 39) :
*The name of the schemes have been revised by the approval of the
Shareholders of the Company in the 8th Annual General Meeting held on
July 1, 2013.
(b) IHFL ESOS - 2013
The members of the Company at their Meeting dated March 6, 2013
approved the IHFL ESOS - 2013 scheme consisting of 39,000,000 stock
options representing 39,000,000 fully paid up Equity Shares of Rs. 2
each of the Company to be issued in one or more tranches to eligible
employees of the Company or to eligible employees of the subsidiaries /
step down subsidiaries of the Company. The same has not yet been
granted till March 31, 2014.
The Fair value of the options as determined by an Independent firm of
Chartered Accountants, which has been regranted by the Erstwhile
Holding Company under the respective plans using the Black-Scholes
Merton Option Pricing Model based on the following parameters are as
under:-
*The expected volatility was determined based on historical volatility
data.
Fair Value Methodology:
As all the other plans were issued based on the fair value of the
options on the date of the grant, there is no impact of the same on the
net profit and earnings per share. The IHFL - IBFSL Employees Stock
Option Plan  2008 (including re-grant) were issued at the Intrinsic
value of the options on the date of the grant. Had the compensation
cost for the stock options granted under IHFL - IBFSL Employees Stock
Option Plan  2008 (including re-grant) been determined based on the
fair value approach, the Company''s net profit and earnings per share
would have been as per the pro forma amounts indicated below:-
(VI) During the year ended March 31, 2013, pursuant to the Scheme of
Arrangement the Authorised Capital of the Company has been rearranged
to Rs.16,000,000,000 divided into 3,000,000,000 Equity Shares of Rs. 2
each and 1,000,000,000 Preference Shares of Rs. 10 each.
(VII) 30,909,521 Equity Shares of Rs. 2 each (Previous year 52,587,066)
are reserved for issuance as follows:- (a) 3,409,521 Equity shares of
Rs. 2 each (Previous Year 4,387,066) towards Employees Stock options as
granted. (b) 27,500,000 Equity shares of Rs. 2 each (Previous Year
48,200,000) towards outstanding share warrants.
(1) During the year ended March 31, 2013, the difference between the
carrying amount of Investment in Indiabulls Housing Finance Limited
held by Indiabulls Financial Services Limited, and amount of Capital
issued earlier has been debited to Securities Premium account as per
Scheme of Arrangement on cancellation of said investment.
(2) Pursuant to the notification dated December 29, 2011 issued by the
Ministry of Corporate Affairs amending Accounting Standard 11 - The
Effects of Changes in Foreign Exchange Rates, as notified by the
Companies (Accounting Standards) Rules, 2006, as amended, the Company
has exercised the option as per para 46A inserted in the said Standard
for all long term monetary assets and liabilities. Consequently an
amount of Rs. Nil (Previous Year Rs. 27,523,476) representing
translation difference on foreign currency loans is carried forward in
the Foreign Currency Monetary Item Translation Difference Account as on
March 31, 2014.
(3) In terms of Section 29C of the National Housing Bank ("NHB") Act,
1987, the Company is required to transfer at least 20% of its Profit
after tax to a Reserve Fund before any dividend is declared. Such a
Reserve Fund is also considered as an eligible transfer in terms of
Section 36(1)(viii) of the Income Tax Act, 1961. The Company has
transferred an amount of Rs. 3,019,996,370 (Previous Year Rs.
2,455,813,911) to the Reserve Fund as at the year end. Further an
additional amount of Rs. 1,000,000,000 (Previous Year Rs.
2,000,000,000) has been set apart by way of transfer to Additional
Reserve Fund in excess of the statutory minimum requirement as
specified under Section 29C pursuant to Circular no.
NHB(ND)/DRS/Pol-No. 03/2004-05 dated August 26, 2004 issued by the
National Housing Bank. The additional amount so transferred may be
utilised in the future for any business purpose.
(4) Disclosure in terms of Circular No. NHB(ND)/ DRS/ Pol.Circular.61/
2013-14 dated April 7, 2014:-
(5) This pertains to reserve created under section 45-IC of the Reserve
Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls
Financial Services Limited, which has been transferred to the Company
under the Scheme of Arrangement during the year ended March 31, 2013.
(6) During the year, in addition to the charge of Rs. 1,284,555,172
(Previous Year Rs. 547,181,041 ) towards provision for loan assets and
standard assets to the Statement of Profit and Loss, an amount of Rs.
Nil (net of Deferred Tax of Rs. Nil ) [(Previous Year Rs.
1,320,200,000) (net of deferred tax of Rs. 679,800,000)], being one
time charge of provision for standard assets and other contingencies
due to merger between the Company and the Erstwhile Holding Company
(Refer note 39) and changes in the provisioning requirements by the
National Housing Bank vide Circulars no. NHB.HFC.DIR.4/CMD/2012 dated
January 19, 2012 has been transferred from Additional Reserve created
as per Section 29C of the National Housing Bank Act, 1987 pursuant to
Circular No. NHB(ND)/DRS/Pol- 03/2004-05 dated August 26, 2004 as
under:
(5) In terms of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009, the erstwhile Holding Company during the financial
year 2012-13, upon receipt of Shareholders approval, has on June 9,
2012, issued and allotted an aggregate of 20,700,000 warrants, to
certain Promoter group entities and Key Management Personnel, at a
conversion price of Rs. 218 per Equity Share, 25% of which amounting to
Rs. 1,128,150,000 had already been received by the Erstwhile Holding
Company from the respective Allottee''s as upfront amount as at the Year
ended March 31, 2013. These warrants were convertible into an
equivalent number of Equity Shares of face value Rs. 2 each, in the
Company, upon receipt of balance conversion price, within a period of
eighteen months from the date of allotment. During the Current
financial year the Company has received from the warrant holders the
balance amount of 75% amounting to Rs. 3,384,450,000 upon excercise of
the rights to convert the warrants into equity shares.(Refer Note 39)
(1) Provision for Contingencies includes Contingent provision against
standard assets and other contingencies. As per National Housing Bank
Circular No. NHB/HFC/DIR.3/CMD/2011 dated August 5, 2011 and
NHB/HFC/DIR.9/CMD/ 2013 dated September 6, 2013, in addition to
provision for non performing assets, all housing finance companies are
required to carry a general provision. (i) at the rate of 2% on housing
loans disbursed at comparatively lower rate of interest in the initial
few years, after which rates are reset at higher rates; (ii) at the
rate of 0.75% of Standard Assets in respect of Commercial Real Estates
(Residential Housing):, (iii) at the rate of 1.00% of Standard Assets
in respect of other Commercial Real Estates and (iv) at the rate of
0.40% of the total outstanding amount of loans which are Standard
Assets other than (i), (ii) & (iii) above. Accordingly, the Company is
carrying a provision of Rs. 2,500,000,000 (Previous Year Rs.
2,500,000,000) towards standard assets (included in Provisions for
Contingencies), which is well over the required minimum provision as
per the NHB Guidelines.
* Secured by hypothecation of Loan Receivables (Current and Future) /
Current Assets / Cash and Cash Equivalents of the Company.
** Redeemable Non-Convertible Debentures are secured against Immovable
Property / Current Assets and pool of
Current and Future Loan Receivables of the Company. *** Maximum
balance outstanding during the year Rs. 58,790,000,000 (Previous year
Rs. 29,880,000,000).
# As at the year end, the Company was in the process of creating the
charge / security on assets against Redeemable, Non Convertible
Debentures of Rs. 6,000,000,000(Previous Year Rs. Nil).
(a) An amount of Rs. Nil and Rs. Nil was due and outstanding to
suppliers as at the end of the accounting year on account of Principal
and Interest respectively.
(b) No interest was paid during the year in terms of Section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006 and no amount
was paid to the supplier beyond the Appointed Day.
(c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information regarding to Micro and Small Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the Company.
(3) Amount payable on assigned loans is net of amount receivable from
related parties amounting to Rs. Nil (Previous Year Rs 18,460,081).
(4) In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as on March 31, 2014.
(1) Investments by the Company in the Equity Share capital of
Indiabulls Insurance Advisors Limited and Indiabulls Capital Services
Limited are considered as strategic and long term in nature and are
held at a cost of Rs. 500,000 and Rs. 50,000,000 respectively. The
Company considers the losses suffered by these subsidiaries as
temporary in nature and accordingly no provision for diminution in
value has been made in the books of account.
As at March 31, 2014, the Company holds 100% of the Equity capital of
Indiabulls Asset Holding Company Limited and Indiabulls Life Insurance
Company Limited at a cost of Rs. 500,000 each. Based on the audited
financials of these companies, as at March 31, 2014, there has been an
erosion in the value of investment made in those companies as the
operations in those companies have not yet commenced / are in the
process of being set up. As the Management considers the investment in
these companies as strategic and long term in nature, the Company
considers the losses suffered by these subsidiaries as temporary in
nature and accordingly no provision for diminution in their carrying
values has been made in the books of account.
(2) The Company was holding 57.50% of the capital of Indiabulls Finance
Company Private Limited (IFCPL), which has become a subsidiary of the
Company pursuant to the Scheme of Arrangement. The balance 42.50% or
3,233,696 Equity Shares were held by Amaprop Limited (Amaprop), vide a
Share Subscription and Shareholders Agreement (SHA) entered into
between the erstwhile Holding Company[Indiabulls Financial Services
Limited(IBFSL)], IFCPL and Amaprop.
During the Current financial year, the Company has purchased the
remaining 42.50% or 3,233,696 Equity Shares, which were earlier held by
Amaprop Limited at a consideration of Rs. 2,616,891,255. Post this
transaction IFCPL is a wholly owned subsidiary of the Company.
(3) During the financial year 2012Â13, the Company has invested Rs.
2,025,000,000 by subscribing to 22,500,000 Compulsorily Convertible
Cumulative Preference Shares of face value Rs. 10 per share, issued by
its wholly owned subsidiary namely Indiabulls Infrastructure Credit
Limited.
(4) On December 13, 2010 the Erstwhile Holding Company (IBFSL) had sold
26% shares held by it in Indian Commodity Exchange Limited (ICEX) to
Reliance Exchange Next Limited (RÂNext) for a total consideration of
Rs. 473,500,000 against a proportionate cost of Rs. 260,000,000. As a
result thereof, the stake of IBFSL in ICEX has been reduced from 40% to
14% and the same has been reclassified as a long term investment from
the earlier classification of being an Associate. MMTC filed a petition
before the Company Law Board (CLB) against ICEX, RÂNext and IBFSL
alleging that the transfer is null and void in terms of the
Shareholders Agreement in view of the Forward Markets Commission (FMC)
guidelines. IBFSL contends that such view of MMTC is based on the old
FMC guidelines and without considering the amended FMC Guidelines dated
June 17, 2010 wherein the transfer norms were relaxed. IBFSL had filed
its objections on maintainability of the petition which is pending
adjudication before the CLB.
(5) During the year ended March 31, 2013, investment in subsidiaries
were transferred from Indiabulls Financial Services Limited under the
Scheme of Arrangement. (Refer Note 39)
(6) During the current financial year, the Company has invested Rs.
60,000,000 by subscribing to 6,000,000 Equity Shares of face value Rs.
10 per share, issued by its wholly owned subsidiary namely Indiabulls
Asset Management Company Limited.
(7) During the financial year 2012Â13, Indiabulls Advisory Services
Limited (IASL), a wholly owned subsidiary of the Company has invested
Rs. 26,000,000 by purchasing 2,600,000 Equity Shares of face value Rs.
10 each per Equity Share from the earlier shareholders of Indiabulls
Asset Reconstruction Company Limited (IARCL), an associate of the
Company. After this purchase, the stake in IARCL has increased from
24.02% to 75.00% (together with IASL) and then IARCL has become a
subsidiary of the Company from the earlier classification of being an
Associate.
(8) During the financial year 2012Â13, the Company has written off its
investment in Indiabulls Alternative Asset Management Private Limited,
as the Company was struck off from the records of Accounting And
Corporate Regulatory Authority of Singapore, on February 7, 2013.
(15) Deferred tax assets (Net)
Pursuant to Accounting Standard (AS) Â 22 ''Accounting for Taxes on
Income'' as notified by the Companies (Accounting Standards) Rules,
2006, as amended, the Company has credited an amount of Rs. 162,272,004
(Previous Year debited Rs. 142,616,472) as deferred tax charge (net) to
the Statement of Profit and Loss arising on account of timing
differences. Further Deferred Tax Asset of Rs. Nil (Previous Year Rs.
679,800,000) (Included in Provision for loan assets and contingent
provision against standard assets below) has been recognised against
the utilisation of Additional Reserve u/s 29C (Refer Note. 4(6)). The
breakup of deferred tax into major components as at March 31, 2014 is
as under:
(1) Secured Loans and Other Credit Facilities given to customers
amounting to Rs. 293,296,569,746 (Previous Year Rs. 262,200,912,305)
are secured / partly secured by :
(a) Equitable mortgage of property and / or
(b) Pledge of shares / debentures, units, other securities, assignment
of life insurance policies and / or
(c) Hypothecation of assets and / or
(d) Company guarantees or personal guarantees and / or
(e) Negative lien and / or Undertaking to create a security.
(1) Deposits accounts with bank of Rs.12,412,688 (Previous Year Rs.
3,977,205) are under lien. The Company has the complete beneficial
interest on the income earned from these deposits. # includes Rs.
24,186,444 (Previous Year Rs. 19,287,496) in designated unclaimed
dividend accounts.
(1) Secured Loans and Other Credit Facilities given to customers
amounting to Rs. 43,772,598,454 (Previous Year Rs. 34,221,462,013) are
secured / partly secured by :
(a) Equitable mortgage of property and / or
(b) Pledge of shares / debentures, units, other securities, assignment
of life insurance policies and / or
(c) Hypothecation of assets and / or
(d) Company guarantees or personal guarantees and / or
(e) Negative lien and / or Undertaking to create a security.
(1) Employee Benefits  Provident Fund, ESIC, Gratuity and Compensated
Absences disclosures as per Accounting Standard (AS) 15 (Revised) Â
Employee Benefits as notified by the Companies (Accounting Standards)
Rules, 2006, as amended:
Contributions are made to Government Provident Fund and Family Pension
Fund, ESIC and other statutory funds which cover all eligible employees
under applicable Acts. Both the employees and the Company make
predetermined contributions to the Provident Fund and ESIC. The
contributions are normally based on a certain proportion of the
employee''s salary. The Company has recognised an amount of Rs.
7,509,939 (Previous year Rs. 8,295,159) in the Statement of Profit and
Loss towards Employers contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for all
employees is based upon actuarial valuations carried out at the end of
every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Pursuant to
the issuance of the Accounting Standard (AS) 15 (Revised) on ''Employee
Benefits'', as notified by the, Companies (Accounting Standards) Rules,
2006, as amended, commitments are actuarially determined using the
''Projected Unit Credit'' Method. Gains and losses on changes in
actuarial assumptions are accounted for in the Statement of Profit and
Loss.
The actuarial calculations used to estimate commitments and expenses in
respect of unfunded Gratuity, Compensated absences and Superannuation
(Pension & Medical coverage) are based on the following assumptions
which if changed, would affect the commitment''s size, funding
requirements and expenses:
The employer''s best estimate of contributions expected to be paid
during the annual period beginning after the Balance Sheet date,
towards Gratuity, Compensated Absences and Superannuation is Rs.
27,306,579 (Previous Year Rs. 28,452,477) Rs. 11,888,995 (Previous Year
Rs. 9,557,623) and Rs. 92,101,824 (Previous Year Rs. 55,346,782)
respectively.
(1) During the year, the Company has recognised Premium on Options
Contracts amounting to Rs. 121,398,049 (Previous Year Rs. 20,085,000)
included in Interest on Loans and unrealised marked to market loss
towards derivatives (Interest Rate Swaps) amounting to Rs. Nil
(Previous Year Rs. 439,933) which has been included under Bank /
Finance Charges . Derivative instruments that are outstanding as at
March 31, 2014 is as given below:Â
I. Forward Options contracts entered for hedging purposes as at March
31, 2014 for USD Nil (Previous Year USD 37,277,984 (Buy)) against cross
currency of Rs. Nil (Previous Year Rs. 2,000,000,000).
II. Interest Rate Swaps for Notional Principal of Rs. 750,000,000
(Previous Year Rs. 4,000,000,000) for a total of 3 contracts (Previous
Year 8 contracts) against fluctuations in interest rate changes.
(1) The Company has taken office premises on Lease and Leave & License
basis at various locations in India. Lease rent / License fees
aggregating to Rs. 302,193,145 (Previous Year Rs. 349,980,322 ) in
respect of the same have been charged to the Statement of Profit and
Loss. The agreements are executed for periods ranging from 11 months to
9 years with a renewable clause. In many cases, the agreements also
provide for termination at will by either party by giving a prior
notice period between 30 to 90 days. The minimum lease rentals
outstanding as at March 31, 2014, are as under:
(2) During the year, in addition to the charge of Rs. 1,284,555,172
(Previous Year Rs. 547,181,041 ) towards provision for loan assets and
standard assets to the Statement of Profit and Loss, an amount of Rs.
Nil (net of Deferred Tax of Rs. Nil ) [(Previous Year Rs.
1,320,200,000) (net of deferred tax of Rs. 679,800,000)], being one
time charge of provision for standard assets and other contingencies
due to merger between the Company and the erstwhile Holding
company(Refer note 39) and changes in the provisioning requirements by
the National Housing Bank vide Circulars no. NHB.HFC.DIR.4/CMD/2012
dated January 19, 2012 has been transferred from Additional Reserve
created as per Section 29C of the National Housing Bank Act, 1987
pursuant to Circular No. NHB(ND)/DRS/Pol 03/2004Â05 dated August 26,
2004 as under;
(1) Current Maturity of Long Term Non Convertible Debentures as at
March 31, 2014
(2) Current Maturity of Long Term Non Convertible Debentures as at
March 31, 2013
(3) Redeemable at premium
*Redeemable NonÂConvertible Debentures are secured against Immovable
Property / Current Assets and pool of Current and Future Loan
Receivables of the Company.
** As at the year end, the Company was in the process of creating the
charge / security on assets.
(1) Loan taken other than from banks
(2) Includes Loan taken other than from banks for Rs. 2,999,999,999
*Secured by hypothecation of Loan Receivables(Current and Future) /
Current Assets / Cash and Cash Equivalents of the Company.
(1) Loan taken other than from banks for Rs. 1,635,000,000
(2) Includes Loan taken other than from banks for Rs. 2,999,999,999
*Secured by hypothecation of Loan Receivables(Current and Future) /
Current Assets / Cash and Cash Equivalents of the Company.
(29) Contingent Liability not provided for in respect of:
(a) Contingent Liabilities not provided for in respect of Capital
commitments for acquisition of fixed assets at various branches as at
the year end (net of capital advances paid) Rs. 2,052,467,864 (Previous
Year Rs. 3,004,174,116 ).
(b) Demand pending u/s 143(3) of the Income Tax Act,1961 in relation to
the merged company Indiabulls Financial Services Limited("IBFSL")
(i) For Rs. 2,414,210 with respect to FY 2007Â08 (Previous Year Rs.
2,414,210) against disallowance U/s 14A of the Income Tax Act,1961,
against which appeal is pending before ITAT.
(ii) For Rs.17,807,253 with respect to FY 2009Â10 (Previous Year
Rs.17,807,253) against disallowance U/s 14A of the Income Tax Act,1961,
against which appeal is pending before CIT ( Appeals)
(c) Demand pending u/s of 25, 55 , 56 & 61 of The Rajasthan Value Added
Tax Act, 2003 in relation to the merged company IBFSL for Rs.
14,505,873 (Including Interest & Penalty) with respect to FY 2007Â08 to
FY 2012Â13 (Previous Year Rs. 14,505,873) against which appeal is
pending before Rajasthan Tax Board, Ajmer. The company has paid tax
along with interest for Rs. 6,231,069(Previous Year Rs. 6,231,069)
under protest.
(d) Arbitration award passed by the international arbitrator against
merged company Indiabulls Financial Services Limited("IBFSL") for Rs.
Nil (Previous Year Rs. 1,920,007,000) for purchase of 42.50% stake in
Indiabulls Finance Company Private Limited (IFCPL), which is disputed
by the Company. (Refer Note 14(2)).
(e) Corporate counter guarantees outstanding in respect of
securitisation/ assignment agreements entered by the Company with
different assignees as at March 31, 2014 is Rs.3,044,792,269 (Previous
Year Rs.3,044,792,269) against which collateral deposit of Rs.
172,908,806 (Previous Year Rs. 172,908,806) for the year ended March
31, 2014 is being provided to the assignees by the Company in the form
of Fixed Deposit Receipts. The Company does not anticipate any losses
on account of the said corporate guarantees, in the event of the rights
under guarantee being exercised by the assignees.
(30) Segment Reporting:
Segment information for the year ended March 31, 2014, as per
Accounting Standard (AS)Â17 "Segment Reporting", as notified by the
Companies (Accounting Standards) Rules, 2006, as amended.
#Includes Dividend Income on units of Mutual Fund, Profit on
Appreciation of Mutual Fund Investments and Profit on sale of current
investments included in other income.
b) The Company operates solely in one Geographic segment namely "Within
India" and hence no separate information for Geographic segment wise
disclosure is required.
c) The Company''s primary business segment is reflected based on
principal business activities carried on by the Company. The Company''s
primary business comprises of investing and financing related
activities (investing in various subsidiaries, financing of loans and
credit activities) and fee income which mainly comprises of financial
service related fee based advisory services income, commission on
insurance and other fee based activities.
d) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
e) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in Significant Accounting Policies (Refer Note
1) above.
(31) Disclosures in respect of Related Parties as per Accounting
Standard (AS) Â 18 ''Related Party Disclosures'' as notified by the
Companies (Accounting Standards) Rules, 2006, as amended. Nature of
relationship Related party
(a) Related party where control exists: Subsidiary Companies
Key Management Personnel
Indiabulls Asset Reconstruction Company Limited
(Associate upto January 10, 2013)(Subsidiary of
Indiabulls Advisory Services Limited)
Indiabulls Finance Company Private Limited
Indiabulls Infrastructure Credit Limited
Indiabulls Insurance Advisors Limited
Indiabulls Life Insurance Company Limited
Indiabulls Capital Services Limited
Indiabulls Collection Agency Limited
Ibulls Sales Limited
Indiabulls Advisory Services Limited
Nilgiri Financial Consultants Limited
(Subsidiary of Indiabulls Insurance Advisors Limited)
Indiabulls Asset Holding Company Limited
Indiabulls Asset Management Company Limited
Indiabulls Trustee Company Limited
Indiabulls Holdings Limited
Indiabulls Alternative Asset Management Private
Limited (upto February 7, 2013)
Indiabulls Venture Capital Management Company Limited
(Subsidiary of Indiabulls Holdings Limited)
Indiabulls Venture Capital Trustee Company Limited
(Subsidiary of Indiabulls Holdings Limited)
Mr. Sameer Gehlaut, Chairman & Executive Director
Mr. Gagan Banga, CEO & Managing Director
Mr. Ashwini Omprakash Kumar, Deputy Managing Director
Mr. Ajit Kumar Mittal, Executive Director
Mr. Rajiv Rattan, Non ÂExecutive Director
Mr. Saurabh Kumar Mittal, Non ÂExecutive Director
Mr. Sachin Chaudhary (CEOÂExecutive Director upto March 19, 2013
(33) Earnings Per Equity Share
Earnings Per Equity Share (EPS) as per Accounting Standard (AS)-20
"Earnings Per Share", as notified by the Companies (Accounting
Standards) Rules, 2006, as amended:
The basic earnings per share is computed by dividing the net profit
attributable to Equity Shareholders for the year by the weighted
average number of Equity Shares outstanding during the year. Diluted
earnings per share are computed using the weighted average number of
Equity Shares and also the weighted average number of Equity Shares
that could have been issued on the conversion of all dilutive potential
Equity Shares. The dilutive potential Equity Shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value.
Dilutive potential Equity Shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of Equity Shares and potential diluted Equity Shares are
adjusted for potential dilutive effect of Employee Stock Option Plan as
appropriate. Potential dilutive Equity Shares on account of Share
warrants are not adjusted being anti dilutive in nature.
(34) In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as on March 31, 2014.
(35) Disclosures in terms of Circular no. NHB/ND/DRS/PolÂNo. 35/2010Â11
dated October 11, 2010: (i) Disclosure for Capital to Risk Asset Ratio
(CRAR) :Â
(iii) Asset Liability Management
(36) As per the Housing Finance Companies (NHB) Directions 2010,
non-performing assets are recognised on the basis of ninety days and
above overdue of interest/installment. The Company has made the
Provision for Loans and Other Credit Facilities in respect of Housing
and Non-Housing Loans in terms of paragraph 28 of the Housing Finance
Companies (NHB) Directions 2010 and NHB Notification No.
NHB.HFC.DIR.3/CMD/2011 dated August 05, 2011 and NHB.HFC.DIR.4/CMD/2012
dated January 19, 2012. The same is disclosed in terms of paragraph
29(2) of the Housing Finance Companies (NHB) Directions, 2010 and NHB
Circular No. NHB(ND)/DRS/Pol.No.41/2010-11 dated September 26, 2011.
Further as at March 31, 2014 , the Company has additional provision of
Rs 69.77 Crore (Previous Year Rs.64.51 Crore) and Rs 111.70 Crore
(Previous Year Rs. 82.23 Crore) for Standard Assets/other contingencies
and for non standard assets ( including Doubtful and loss assets)
respectively.
The balance loan outstanding as at March 31, 2014 for standard assets
is Rs. 33,523.18 Crore (Previous Year Rs. 29,809.25 Crore) out of
which housing loan is Rs 22,776.40 Crore (Previous Year Rs 18,462.76
Crore) and Non housing loan is Rs 10,746.78 Crore (Previous Year Rs
11,346.48 Crore).
The balance loan outstanding as at March 31, 2014 for sub-standard
assets is Rs. 255.46 Crore (Previous Year Rs. 152.09 Crore) out of
which housing loan is Rs 27.59 Crore (Previous Year Rs 23.27 Crore) and
Non housing loan is Rs 227.87 Crore (Previous Year Rs 128.82 Crore).
The balance loan outstanding as at March 31, 2014 for doubtful assets
upto one year category is Rs. 4.43 Crore (Previous Year Rs 92.97 Crore
) out of which housing loan is Rs 1.22 Crore (Previous Year Rs 1.36
Crore) and Non housing loan is Rs 3.21 Crore (Previous Year Rs. 91.61
Crore).
The balance loan outstanding as at March 31, 2014 for doubtful assets
one to three years category is Rs. 59.57 Crore (Previous Year Rs. 23.47
Crore) out of which housing loan is Rs. 2.40 Crore (Previous Year Rs
2.12 Crore ) and Non housing loan is Rs 57.17 Crore (Previous Year
Rs.21.35 Crore).
The balance outstanding as at March 31, 2014 for doubtful assets more
than three years category is Rs. 3.73 Crore (Previous Year Rs. 2.27
Crore) out of which housing loan is Rs 0.44 Crore (Previous Year Rs Nil
) and Non housing loan is Rs 3.29 Crore (Previous Year Rs. 2.27 Crore
).
Provision for contingencies on standard assets and loan assets as on
March 31, 2014 amounting to Rs. 494.66 Crore (Previous Year Rs. 4,59.16
Crore ) includes provisions for nonÂperforming assets, standard assets
and all other contingencies.
(37) The Company has entered into various agreements for the
assignment/securitisation of loans with assignees, wherein it has
assigned/securitised a part of its secured loan portfolio amounting to
Rs. 93,398,990,025 (Previous Year Rs. 56,291,685,659) upto March 31,
2014, being the principal value outstanding as on the date of the deals
that are outstanding as on the Balance Sheet date.
The Company assigned/securitised various loan portfolios to banks
and/or other institutions which are derecognised in the books of
accounts of the Company in terms of accounting policy mentioned in
Significant Accounting policies in Note 1 (v) above and residual income
on these Loans is being recognised over the life of the underlying
loans and not on an upfront basis.
(38) The Company being a HFC has to follow the concentration of Credit
Norms as per the NHB guidelines. Post merger of Indiabulls Financial
Services Limited (the holding company ) with the Company, the company
has followed these norms based on the combined Balance sheet of the
Company as merged with the Holding company from March 8, 2013 being the
effective date of the merger as per the Order of the Hon''ble High Court
of Delhi.
(39) The Board of Directors at their meeting held on April 27, 2012 had
approved the Scheme of Arrangement involving the merger of Indiabulls
Financial Services Limited (IBFSL, the Holding Company) with the
Company in terms of the provisions of Sections 391 to 394 of the
Companies Act, 1956 (the "Scheme of Arrangement"). The Appointed Date
of the proposed merger fixed under the Scheme of Arrangement was April
1, 2012. The Hon''ble High Court of Delhi, vide its Order dated December
12, 2012, received by the Company on February 8, 2013, approved the
Scheme of Arrangement (Order). In terms of the Court approved Scheme of
Arrangement, with the filing of the copy of the Order, on March 8, 2013
with the office of ROC, NCT of Delhi & Haryana (the Effective Date),
IBFSL, as a going concern, stands amalgamated with IBHFL with effect
from the Appointed Date, being April 1, 2012 (Under the
Accounting Standard 14 - Pooling of interest method). Consequent to the
Scheme of Arrangement becoming effective, the Board of Directors of the
Company, at their meeting held on March 25, 2013, issued and allotted Â
i) 312,511,167 Equity Shares of Rs. 2 each of the Company,
ii) 27,500,000 Warrants of the Company (against the listed warrants of
IBFSL), and
iii) 20,700,000 Warrants of the Company (against the unlisted warrants
of IBFSL held by certain promoter group entities and Key Management
Personnel of IBFSL) to the Equity Shareholders / Warrants holders of
IBFSL, against their holdings in such Equity Shares / Warrants, as on
March 20, 2013 i.e. the record date fixed by IBFSL in this regard. The
issue of Equity Shares / warrants by the Company was in terms of the
share exchange ratio as mentioned in the Court approved Scheme of
Arrangement. The Company is in the process of getting its Shares and
Warrants (issued in lieu of listed warrants of IBFSL) listed with
National Stock Exchange of India Limited and BSE Limited, for which the
necessary applications are being finalised to be filed with the Stock
Exchanges.
(2) The Company has complied with the NHB Directions, 2010 including
Prudential Norms and as amended from time to time.
(3) Previous Year''s figures have been regrouped / reclassified
wherever necessary to correspond with the current year''s classification
/ disclosures.
Mar 31, 2013
(1) Corporate Information:
The Board of Directors of Indiabulls Housing Finance Limited (100%
subsidiary of "IBFSL") and Indiabulls Financial Services Limited
("IBFSL") at their meeting held on April 27, 2012 had approved the
Scheme of Arrangement involving the reverse merger of IBFSL with the
Company in terms of the provisions of Sections 391 to 394 of the
Companies Act, 1956 (the "Scheme of Arrangement"). The Appointed Date
of the proposed merger fixed under the Scheme of Arrangement was April
1, 2012. The
Hon''ble High Court of Delhi, vide its Order dated December 12, 2012,
received by the Company on February 8, 2013, approved the Scheme of
Arrangement. In terms of the Court approved Scheme of Arrangement, with
the filing of the copy of the Order, on March 8, 2013, with the office
of ROC, NCT of Delhi & Haryana (the Effective Date), IBFSL, as a going
concern, stands amalgamated with IBHFL with effect from the Appointed
Date, being April 1, 2012. Accordingly, Earnings Per Share and
previous year figures are not comparable. Indiabulls Financial
Services Limited ( "IBFSL") was incorporated on January 10, 2000 as a
Private Limited Company. On March 30, 2001, the Company was registered
under Section 45-IA of the Reserve Bank of India (RBI) Act, 1934 to
carry on the business of a Non-Banking Financial Company. The Company
was converted into a public limited Company pursuant to Section 44 of
the Companies Act, 1956 on February 03, 2004. Indiabulls Housing
Finance Limited ("the Company") ("IBHFL") was incorporated on May 10,
2005. On December 28, 2005 the Company was registered under Section 29A
of the National Housing Bank Act, 1987 to commence/ carry on the
business of a Housing Finance Institution without accepting public
deposits.
The Company is required to comply with provisions of the National
Housing Bank Act, 1987, the Housing Finance Companies (NHB) Directions,
2010 and other guidelines / instructions / circulars issued by the
National Housing Bank from time to time. The Company is engaged in the
business to provide finance and to undertake all lending and finance to
any person or persons, co-operative society, association of persons,
body of individuals, companies, institutions, firms, builders,
developers, contractors, tenants and others either at interest or
without and/or with or without any security for construction, erection,
building, repair, remodeling, development, improvement, purchase of
houses, apartments, flats, bungalows, rooms, huts, townships and/or
other buildings and real estate of all descriptions or convenience
there on and to equip the same or part thereof with all or any
amenities or conveniences, drainage facility, electric, telephonic,
television, and other installations, either in total or part thereof
and /or to purchase any free hold or lease hold lands, estate or
interest in any property and such other activities as may be permitted
under the Main Objects of the Memorandum of Association of the Company.
(2) Pursuant to the notification dated December 29, 2011 issued by the
Ministry of Corporate Affairs amending Accounting Standard 11 Â The
Effects of Changes in Foreign Exchange Rates, as notified by the
Companies (Accounting Standards) Rules, 2006, as amended, the Company
has exercised the option as per para 46A inserted in the said Standard
for all long term monetary assets and liabilities. Consequently an
amount of Rs. 27,523,476 representing translation difference on foreign
currency loans is carried forward in the Foreign Currency Monetary Item
Translation Difference Account as on March 31, 2013. This amount is to
be amortised over the balance period of such monetary liabilities.
(3) In terms of Section 29C of the NHB Act, 1987, the Company is
required to transfer at least 20% of its Profit after tax to a Reserve
Fund before any dividend is declared. Such a Reserve Fund is also
considered as an eligible transfer in terms of Section 36(1)(viii) of
the Income Tax Act, 1961. The Company has transferred an amount of Rs.
2,455,813,911 (Previous Year Rs. 499,974,672) to the Reserve Fund as at
the year end. Further an additional amount of Rs. 2,000,000,000
(Previous Year Rs. 1,980,000,000) has been set apart by way of transfer
to Additional Reserve Fund in excess of the statutory minimum
requirement as specified under Section 29C pursuant to Circular no.
NHB(ND)/DRS/Pol-No. 03/2004-05 dated August 26, 2004 issued by the
National Housing Bank. The additional amount so transferred may be
utilised in the future for any business purpose.
(4) This pertains to reserve created under section 45-IC of the Reserve
Bank of India Act 1934, by the Erstwhile Holding Company Indiabulls
Financial Services Limited, which has been transferred to the Company
under the Scheme of Arrangement.
(5) During the year, in addition to the charge of Rs. 547,181,041
(Previous Year Rs. 109,022,196) towards provision for loan assets and
standard assets to the Statement of Profit and Loss, an amount of Rs.
1,320,200,000 (net of Deferred Tax of Rs. 679,800,000) [(Previous Year
Rs. 190,447,091) (net of deferred tax of Rs. Nil)], being one time
charge of provision for standard assets and other contingencies due to
merger between the Company and the Erstwhile Holding Company (Refer
note 39) and changes in the provisioning requirements by the National
Housing Bank vide Circulars no. NHB.HFC.DIR.4/CMD/ 2012 dated January
19, 2012 has been transferred from Additional Reserve created as per
Section 29C of the National Housing Bank Act, 1987 pursuant to Circular
No. NHB(ND)/DRS/Pol- 03/2004-05 dated August 26, 2004 as under;
(5) In terms of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009, the erstwhile Holding Company during the current
financial year, upon receipt of Shareholders approval, has on June 9,
2012, issued and allotted an aggregate of 20,700,000 warrants, to
certain Promoter group entities and Key Management Personnel, at a
conversion price of Rs. 218 per Equity Share, 25% of which amounting to
Rs. 1,128,150,000 has already been received by the Erstwhile Holding
Company from the respective allottees as upfront amount. These warrants
are convertible into an equivalent number of Equity Shares of face
value Rs. 2 each, in the Company, upon receipt of balance conversion
price, within a period of eighteen months from the date of allotment.
In the event the warrants are not converted into shares within the said
period, the Company is eligible to forfeit the amount received towards
the warrants.(Refer Note 39)
(1) Contingent Liability not provided for in respect of:
(a) Contingent Liabilities not provided for in respect of Capital
commitments for acquisition of fixed assets at various branches as at
the year end (net of capital advances paid) Rs. 3,004,174,116 (Previous
Year Rs.202,372 ).
(b) Demand pending u/s 143(3) of the Income Tax Act,1961 in relation to
the merged company Indiabulls Financial Services Limited("IBFSL")
(i) For Rs. 2,414,210 with respect to FY 2007-08 against disallowance
U/s 14A of the Income Tax
Act,1961, against which appeal is pending before ITAT. (ii) For
Rs.17,807,253 with respect to FY 2009-10 against disallowance U/s 14A
of the Income Tax Act,1961, against which appeal is pending before CIT
( Appeals)
(c) Demand pending u/s of 25, 55 , 56 & 61 of Rajasthan Sales Tax Act,
2003 in relation to the merged company IBFSL for Rs. 14,505,873
(Including interest & Penalty) with respect to FY 2007-08 to FY 2012-13
against which appeal is pending before DC( Appeals).The company has
paid tax alongwith interest for Rs. 6,231,069 under protest.
(d) Arbitration award passed by the international arbitrator against
IBFSL for Rs. 1,920,007,000 (Previous Year Rs. N.A.) for purchase of
42.50% stake in Indiabulls Finance Company Private Limited (IFCPL),
which is disputed by the Company. The Company currently holds 57.50%
Equity stake in IFCPL. (Refer
Note 2(2))
(e) Corporate counter guarantees outstanding in respect of
securitisation/ assignment agreements entered by the Company with
different assignees as at March 31,2013 is Rs.3,044,792,269 (Previous
Year Rs.302,366,480) against which collateral deposit of Rs 172,908,806
(Previous Year Rs. 19,048,758) for the year ended March 31, 2013 is
being provided to the assignees by the Company in the form of Fixed
Deposit Receipts. The Company does not anticipate any losses on account
of the said corporate guarantees, in the event of the rights under
guarantee being exercised by the assignees.
(3) Segment Reporting:
Segment information for the year ended March 31, 2013, as per
Accounting Standard (AS)-17 "Segment Reporting", as notified by the
Companies (Accounting Standards) Rules, 2006, as amended. (a) Primary
segment information (by business segments)
b) The Company operates solely in one Geographic segment namely "Within
India" and hence no separate information for Geographic segment wise
disclosure is required.
c) The Company''s primary business segment is reflected based on
principal business activities carried on by the Company. The Company''s
primary business comprises of investing and financing related
activities (investing in various subsidiaries, financing of loans and
credit activities) and fee income which mainly comprises of financial
service related fee based advisory services income, commission on
insurance and other fee based activities.
d) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
e) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in Significant Accounting Policies (Refer Note
1) above.
(4) Disclosures in respect of Related Parties as per Accounting
Standard (AS) - 18 ''Related Party Disclosures'' as notified by the
Companies (Accounting Standards) Rules, 2006, as amended. Nature of
relationship Related party
(a) Related party where control exists:
Holding Company Indiabulls Financial Services Limited
(upto March 31, 2012)(Refer Note. 39) Subsidiary Companies Indiabulls
Asset Reconstruction Company Limited
(Associate upto January 10, 2013) (Subsidiary of Indiabulls Advisory
Services Limited) Indiabulls Finance Company Private Limited Indiabulls
Infrastructure Credit Limited Indiabulls Insurance Advisors Limited
Indiabulls Life Insurance Company Limited Indiabulls Capital Services
Limited Indiabulls Collection Agency Limited Ibulls Sales Limited
Indiabulls Advisory Services Limited Nilgiri Financial Consultants
Limited (Subsidiary of Indiabulls Insurance Advisors Limited)
Indiabulls Asset Holding Company Limited Indiabulls Asset Management
Company Limited Indiabulls Trustee Company Limited Indiabulls Holdings
Limited Indiabulls Alternative Asset Management Private Limited (upto
February 7, 2013) Indiabulls Venture Capital Management Company Limited
(Subsidiary of Indiabulls Holdings Limited) Indiabulls Venture Capital
Trustee Company Limited (Subsidiary of Indiabulls Holdings Limited)
Key Management Personnel Mr. Sameer Gehlaut, Chairman & Executive
Director
Mr. Gagan Banga, CEO & Managing Director (Non Executive Chairman upto
March 19, 2013) Mr. Ashwini Omprakash Kumar, Deputy Managing Director
(Managing Director upto March 19, 2013) Mr. Sachin Chaudhary
(CEO-Executive Director upto March 19, 2013) Mr. Ajit Kumar Mittal,
Executive Director (Non Executive Chairman upto March 19, 2013) Mr.
Rajiv Rattan, Non -Executive Director Mr. Saurabh Kumar Mittal, Non
-Executive Director
(5) Earnings Per Equity Share
Earnings Per Equity Share (EPS):
The basic earnings per share is computed by dividing the net profit
attributable to Equity Shareholders for the year by the weighted
average number of Equity Shares outstanding during the year. Diluted
earnings per share are computed using the weighted average number of
Equity Shares and also the weighted average number of Equity Shares
that could have been issued on the conversion of all dilutive potential
Equity Shares. The dilutive potential Equity Shares are adjusted for
the proceeds receivable, had the shares been actually issued at fair
value.
Dilutive potential Equity Shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of Equity Shares and potential diluted Equity Shares are
adjusted for potential dilutive effect of Employee Stock Option Plan as
appropriate. Potential dilutive Equity Shares on account of Share
warrants are not adjusted being anti dilutive in nature.
(6) In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as on March 31, 2013.
(7) As per the Housing Finance Companies (NHB) Directions 2010,
non-performing assets are recognised on the basis of ninety days and
above overdue of interest/installment. The Company has made the
Provision for Loans and Other Credit Facilities in respect of Housing
and Non-Housing Loans in terms of paragraph 28 of the Housing Finance
Companies (NHB) Directions 2010 and NHB Notification No.
NHB.HFC.DIR.3/CMD/2011 dated August 05, 2011 and NHB.HFC.DIR.4/CMD/2012
dated January 19, 2012. The same is disclosed in terms of paragraph
29(2) of the Housing Finance Companies (NHB) Directions, 2010 and NHB
Circular No. NHB(ND)/DRS/Pol.No.41/2010-11 dated September 26, 2011.
Further the Company has made an additional provision as at March 31,
2013 of Rs. 822,349,495 (Previous Year Rs. 31,480,057)
The balance loan outstanding as at March 31, 2013 for sub-standard
assets is Rs. 1,520,889,853 (Previous Year Rs. 119,971,406) out of
which housing loan is Rs 233,697,149 (Previous Year Rs 23,110,915) and
Non housing loan is Rs 1,288,192,704 (Previous Year Rs 96,860,491).
The balance loan outstanding as at March 31, 2013 for doubtful assets
upto one year category is Rs. 929,664,370 (Previous Year Rs 69,090,578)
out of which housing loan is Rs 13,578,721 (Previous Year Rs
19,224,515) and Non housing loan is Rs 916,085,649 (Previous Year Rs.
49,866,063).
The balance loan outstanding as at March 31, 2013 for doubtful assets
one to three years category is Rs. 234,670,779 (Previous Year Rs.
203,382,674) out of which housing loan is Rs. 21,185,529 (Previous Year
Rs 6,016,765) and Non housing loan is Rs 213,485,250 (Previous Year
Rs.197,365,908).
The balance outstanding as at March 31, 2013 for doubtful assets more
than three years category is Rs. 22,668,634 (Previous Year Rs. Nil) out
of which housing loan is Rs Nil (Previous Year Rs Nil) and Non housing
loan is Rs 22,688,634 (Previous Year Rs. Nil).
Provision for contingencies on standard assets and loan assets as on
March 31, 2013 amounting to Rs. 4,591,598,678 (Previous Year Rs.
510,459,152) includes provisions for non-performing assets, standard
assets and all other contingencies.
(8) The Company has entered into various agreements for the
assignment/securitisation of loans with assignees, wherein it has
assigned/securitised a part of its secured loan portfolio amounting to
Rs. 56,291,685,659 (Previous Year Rs. 37,237,447,576) upto March 31,
2013, being the principal value outstanding as on the date of the deals
that are outstanding as on the Balance Sheet date.
The Company assigned/securitised various loan portfolios to banks
and/or other institutions which are derecognised in the books of
accounts of the Company in terms of accounting policy mentioned in
Significant Accounting policies in Note 1 (v) above and residual income
on these Loans is being recognised over the life of the underlying
loans and not on an upfront basis.
(9) The Company being a HFC has to follow the concentration of Credit
Norms as per the NHB guidelines. Post merger of Indiabulls Financial
Services Limited (the holding company) with the Company , the company
has followed these norms based on the combined Balance sheet of the
Company as merged with the Holding company from March 8, 2013 being the
effective date of the merger as per the Order of the Hon''ble High Court
of Delhi.
(10) The Board of Directors at their meeting held on April 27, 2012 had
approved the Scheme of Arrangement involving the merger of Indiabulls
Financial Services Limited (IBFSL, the Holding Company) with the
Company in terms of the provisions of Sections 391 to 394 of the
Companies Act, 1956 (the "Scheme of Arrangement"). The Appointed Date
of the proposed merger fixed under the Scheme of Arrangement was April
1, 2012. The Hon''ble High Court of Delhi, vide its Order dated December
12, 2012, received by the Company on February 8, 2013, approved the
Scheme of Arrangement (Order). In terms of the Court approved Scheme of
Arrangement, with the filing of the copy of the Order, on March 8, 2013
with the office of ROC, NCT of Delhi & Haryana (the Effective Date),
IBFSL, as a going concern, stands amalgamated with IBHFL with effect
from the Appointed Date, being April 1, 2012 (Under the Accounting
Standard 14 Â Pooling of interest method). Consequent to the Scheme of
Arrangement becoming effective, the Board of Directors of the Company,
at their meeting held on March 25, 2013, issued and allotted -
i) 312,511,167 Equity Shares of Rs. 2 each of the Company,
ii) 27,500,000 Warrants of the Company (against the listed warrants of
IBFSL), and
iii) 20,700,000 Warrants of the Company (against the unlisted warrants
of IBFSL held by certain promoter group entities and Key Management
Personnel of IBFSL) to the Equity Shareholders / Warrants holders of
IBFSL, against their holdings in such Equity Shares / Warrants, as on
March 20, 2013 i.e. the record date fixed by IBFSL in this regard. The
issue of Equity Shares / warrants by the Company was in terms of the
share exchange ratio as mentioned in the Court approved Scheme of
Arrangement. The Company is in the process of getting its Shares and
Warrants (issued in lieu of listed warrants of IBFSL) listed with
National Stock Exchange of India Limited and BSE Limited, for which the
necessary applications are being finalised to be filed with the Stock
Exchanges.
(11) The Company has complied with the NHB Directions, 2010 including
Prudential Norms and as amended from time to time.
(12) On account of merger as mentioned in Note No. 39, the Earnings Per
Equity Share and the figures in respect of the current year are not
comparable with the previous comparable year presented.
(13) Previous Year''s figures have been regrouped / reclassified
wherever necessary to correspond with the current year''s classification
/ disclosures.
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Indiabulls Housing Finance Ltd. குறித்த கூடுதல் தகவல்களை
-
Indiabulls Housing Finance Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Indiabulls Housing Finance Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- உரிமை
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
Indiabulls Housing Finance Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Indiabulls Housing Finance Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Indiabulls Housing Finance Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Indiabulls Housing Finance Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Indiabulls Housing Finance Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
