6.3 There were no loans given against the collateral of gold jewellery and hence the percentage of such loans to the total outstanding asset is Nil (31 March, 2023: Nil).
6.4 Loans sanctioned but undisbursed amount to ' 42,834.11 Lacs as on 31 March, 2024 (31 March, 2023: ' 26,789.44 Lacs ).
6.5 The Company has balance of securitised assets amounting to ' 7,877.25 Lacs (31 March, 2023: 10,652.34 Lacs ). These loan assets have not been de-recognised from the loan portfolio of the Company as these does not meet the de-recognition criteria. The Company is responsible for collection and servicing of this loan portfolio on behalf of buyers/investors. In terms of the said securitisation agreements, the Company pays to buyer/investor on monthly basis the prorated collection amount as per the respective agreement terms.
6.6 During the financial year 2023-24, the Company has assigned pools of certain loans amounting to ' 45,066.42 Lacs (31 March, 2023: 44,091.16 Lacs) by way of a direct assignment transactions. These loans have been de-recognised from the loan portfolio of the Company as the sale of loan assets is an absolute assignment and transfer on a 'no-recourse' basis. The Company continues to act as a servicer to the assignment transaction on behalf of assignee. In terms of the assignment agreements, the Company pays to assignees, on a monthly basis, the pro-rata collection amounts.
6.7 During the financial year 2023-24, The Company also undertaken co-lending arrangement with Bank, whereby loans are co-originated by both the entities in 20:80 ratio (Company:Bank). As at March, 31,2024, outstanding amount of bank's share is ' 14,552.05 Lacs (31 March, 2023: 59.76 Lacs ). The said arrangement is carried post disbursement of loans by the Company and the folios under the same are picked by the Bank. These loans have been de-recognised from the loan portfolio of the Company.
6.8 EXPECTED CREDIT LOSS
Expected credit loss is a calculation of the present value of the amount expected not to be recovered on a financial asset, for financial reporting purposes. Credit risk is the potential that the obligor and counterparty will fail to meet its financial obligations to the lender. This reguires an effective assessment and management of the credit risk at both individual and portfolio level.
The references below show where the Company's impairment assessment and measurement approach is set out in these notes. It should be read in conjunction with the Summary of significant accounting policies.
(i) Definition of default
The Company considers a financial instrument as defaulted and considered it as Stage 3 (credit-impaired) for ECL calculations in all cases, when the borrower becomes more than 90 days past due on its contractual
payments or classified as NPA as per RBI directions. The Probability of Default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed year, if the facility has not been previously derecognised and is still in the portfolio.
ii) Exposure at default
The exposure at default (EAD) represents the gross carrying amount of the financial instruments subject to the impairment calculation, addressing both the client's ability to increase its exposure while approaching default and potential early repayments
iii) Loss given default
The Company segments its retail lending products into homogeneous portfolios, based on key characteristics that are relevant to the estimation of future cash flows. The data applied is collected loss data and involves a wider set of transaction characteristics (e.g., product type, wider range of collateral types, loan to value (LTV) ratio, expected realisation rate, etc.) as well as borrower characteristics.
iv) Significant increase in credit risk
The Company continuously monitors all assets subject to ECL. In order to determine whether an instrument or a portfolio of instruments is subject to 12 month ECL or lifetime ECL, the Company assesses whether there has been a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly increased in credit risk when contractual payments are more than 30 days past due.
When estimating ECL on a collective basis for a group of similar assets, the Company applies the same principles for assessing whether there has been a significant increase in credit risk since initial recognition..
v) Delinquency buckets have been considered as the basis for the staging of all loans with:
- Stage 3 are those accounts which are classified as NPA
- Stage 2 are those accounts wherein there is significant increase in credit risk
- Stage 1 are those accounts wherein DPD is 0-30 days and not considered in Stage 2 and Stage 3
vi) Macro economic factors
Macro-economic variables relevant to the underlying loan portfolio such as Gross Domestic Product, Inflation, Housing Price Index and 10 year bond yield were analysed for their correlation. Based on the analysis of trend, the Company has considered the 10 year bond yield as relevant macro-economic factor as
it shows relatively better correlation with the portfolio performance.
vii) Credit quality of asset
The Company has classified all individual loans as amortised cost and has assessed it at the collective pool level. The individual loan book has been divided into the housing and nonhousing (Loan against property) sub portfolios.
The vintage analysis methodology has been used to create the PD term structure which incorporates both 12 month (Stage 1 Loans) and lifetime PD (Stage 2 Loans). The vintage analysis captures a vintage default experience across a particular portfolio by tracking
the yearly slippages from advances originating in a particular year. The vintage slippage experience/ default rate is then used to build the PD term structure.
The workout methodology has been used to determine LGD wherein the recoveries of loans defaulted in past are tracked and discounted to the date of default using the effective interest rate. The worked out LGD for loans has been bucketed into various levels of collateral cover. LGD based on collateral cover has been applied to each loan in the portfolio based on specific collateral cover adjusted for the expected fall in valuation. The Company has used the forward looking LGD basis the management expectation on property prices basis the market enviornment.
I) 300 (31 March, 2023: 300), @ 11% (31 March, 2023: 10.15%) Secured listed non-convertible debentures of face (NCD) value ' 10,00,000 each aggregating to ' 3,000 Lacs repayable on 31 August, 2026. The date of allotment of NCD was 31 August, 2021. The amount outstanding as at 31 March, 2024'3,000 Lacs (31 March, 2023: ' 3,000 Lacs).
(These NCD are secured by way of a first ranking exclusive and continuing charge created pursuant to the deed of hypothecation over certain Identified receivables of the Issuer. A security cover of 1.10 times of the value of the aggregate principal amount outstanding on the NCD and Interest accrued thereon (If any) shall be maintained at all times until the redemption of these NCD).
II) Nil (31 March, 2023: 5000), @ 8.68% Secured listed non-convertible debentures (NCD) of face value ' 1,00,000 each aggregating to ' 5,000 Lacs repaid on 27 December, 2023. The date of allotment Is 22 June, 2021. The amount outstanding as 31 March, 2024 Nil (31 March, 2023: ' 5,000 Lacs).
(These NCD having exclusive first charge floating via a deed of hypothecation over specific standard asset portfolio of receivables to the extent egual to an amount aggregating to the total outstanding such that the value of security shall be egual of 1.28 times),
iii) Nil (31 March, 2023: 500), @ 9.29% Secured listed non-convertible debentures of face (NCD) value ' 10,00,000 each aggregating to ' 5,000 Lacs repaid on 18 March, 2024. The date of allotment of NCD was 23 November, 2021. The amount outstanding as 31 March, 2024 Nil (31 March, 2023: ' 5,000 Lacs ).
(These NCD are secured by way of a first ranking exclusive and continuing charge created pursuant to the deed of hypothecation over certain identified receivables of the Issuer. A security cover of 1.10 times of the value of the aggregate principal amount outstanding on the NCD and interest accrued thereon (if any) shall be maintained at all times until the redemption of these NCD).
iv) Nil (31 March, 2023: 150), @ 10.25% Secured listed non-convertible debentures (NCD) of face value ' 10,00,000 each aggregating to ' 1,500 Lacs repaid on 12 June, 2023 . The date of allotment was 12 June, 2020. The amount outstanding as on 31 March, 2024 Nil (31 March, 2023: ' 1,500 Lacs).
(These NCD having exclusive first charge floating via a deed of hypothecation over specific standard asset portfolio of receivables to the extent egual to an amount aggregating to the total outstanding such that the value of security shall be egual of 1.10 times).
v) Nil (31 March, 2023: 350), @ 9.25% Secured listed non-convertible debentures of face (NCD) value '10,00,000 each aggregating to ' 3,500 Lacs repaid on 24 August, 2023. The date of allotment of NCD was 15 September, 2021. The amount outstanding as 31 March, 2024 Nil (31 March, 2023: ' 3,500 Lacs).
(These NCD are secured by way of a first ranking exclusive and continuing charge created pursuant to the deed of hypothecation over certain identified receivables of the Issuer. A security cover of 1.28 times of the value of the aggregate principal amount outstanding on the NCD and interest accrued thereon (if any) shall be maintained at all times until the redemption of these NCD).
iii) During the year the Company has borrowed ' 16,370.00 Lacs eguivalent to 200 Lacs USD (31 March, 2023: ' 7,981.00 Lacs eguivalent to 100 Lacs USD) under the External Commercial Borrowing (ECB). The ECB loan is secured by hypothecation (exclusive charge) of certain loans given by the Company. The same is hedged by derivative instrumnent throiugh cross currency swaps. The derivative instrument is for hedging the underlying ECB transaction as per applicable RBI guidelines and not for any speculative purpose.
iv) The Company is not a declared willful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India, during the year ended 31 March, 2024 and 31 March, 2023.
v) The Company has borrowings from banks and financial institutions on the basis of security of loans and the Quarterly details filed by the Company with the banks and financial institutions are in accordance with the books of accounts of the Company for the respective Quarters.
vi) The Company has not defaulted in the repayment of debt securities, borrowings(other than debt securities) and interest thereon for the year ended 31 March, 2024 and 31 March, 2023.
i) Secured term loans from National Housing Bank carry rate of interest in the range of 2.80% to 8.40% p.a (31 March, 2023: 2.80% to 7.90%). The loans are having tenure of 5 to 15 years (31 March, 2023: 5 to 15 years) from the date of disbursement and are repayable in Quarterly or yearly installments. These loans are secured by hypothecation (exclusive charge) of certain loans given by the Company.
ii) Secured term loans from banks and financial institutions include loans from various banks and financial institutions and carry rate of interest (including hedge cost in case of external commercial borrowing) in the range of 8.40% to 10.75% p.a (31 March, 2023: 7.55% to 12.35% ). The loans are having tenure of 24 to 108 months (31 March, 2023: 34 to 180 months) from the date of disbursement and are repayable in monthly or Quarterly installments. These loans are secured by hypothecation (exclusive charge) of certain loans given by the Company.
The Board of Directors of the Company in its meeting held on 12 July, 2023 and shareholders in the Extraordinary General Meeting held on 18 July, 2023 approved the sub-division of shares from ' 10 per share to ' 5 per share (Also refer Note 57).
(e) Issue of shares
During the year ended 31 March, 2024, the Company has allotted 3,55,000 eguity shares of face value of ' 10/- to Mr. Anil Mehta on account of exercise of Rights to Subscribe at a premium of ' 73.20 per Share. The said allotment has been approved by the Board of Directors vide circular resolution dated 20 July, 2023
The Board of Directors of the Company in its meeting held on 12 July, 2023 has made the first and final call of ' 349.60 per share on the 1,35,000 eguity shares allotted to Mr. Anil Mehta.
(f) The Company has made an Initial Public Offer (IPO), during the year ended 31 March 2024 for 24,340,768 eguity shares of ' 5 each, comprising a fresh issue of 16,227,180 eguity shares of the Company and 8,113,588 eguity shares offered for sale by selling shareholders. The eguity shares were issued at a price of ' 493 per eguity share (including a Share Premium of ' 488 per eguity share). Pursuant to the aforesaid allotment of eguity shares, the issued, subscribed and paid-up capital of the Company stands increased to ' 5,352.56 Lakhs (107,051,136 Eguity shares of ' 5 each). The Company's eguity shares were listed on National Stock Exchange of India Limited (NSE) and on Bombay Stock Exchange (BSE) on 20th December, 2023.
(g) Terms and conditions of the main features of each class of shares
The Company has only one class of eguity shares having a face value of ' 5 per share. Each shareholder is entitled to one vote per share. The Company will pay dividend as and when declared. The dividend as and when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liguidation, the eguity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts in proportion to shareholding.
(j) Shares reserved for issue under options and contracts/commitments for the sale of shares
The Company has reserved 74,09,492 of face value INR 5 per share (31 March, 2023: 35,67,347 of Face value of INR 10 per share) number of shares for grant of employee stock options to equity shares representing 6.47% (31 March, 2023: 7.52%) of fully diluted share capital for the benefit of employees on such terms and conditions as determined by the Investors and Board of Directors.
(k) The Company (except disclosed above) has not allotted any shares for consideration other than cash, bonus shares and shares bought back for the five years immediately preceding the reporting date.
(l) The Board of Directors have not proposed any dividend for the year ended 31 March, 2024 and 31 March, 2023.
Nature and purpose of other reserve Securities premium
Securities premium represents premium received on issue of shares. The amount is utilised in accordance with the provisions of the Companies Act, 2013.
Statutory reserve
This reserve is created as per the provision of Section 29C of the National Housing Bank Act, 1987 (read with Section 36(1 )(viii) of the Income-tax Act, 1961).
The Company transfers amount at least 20% of the total comprehensive income after tax to Statutory reserve.
Employee share based payment reserve
This reserve is used to recognise the fair value of the options issued to employees of the Company under Company's employee stock option plan.
Retained earnings
Retained earnings represents the amount of accumulated earnings of the Company.
Re-measurements of defined benefit plans
Represents the cumulative actuarial gains/(losses) arising on defined benefit plans classified under Other Comprehensive income. Effective portion of cash flow hedge reserve
Represents the cumulative gains/(losses) arising on revaluation of the derivative instruments and underlying financial instrument designated as cash flow hedges through OCI.
C3I SEGMENT REPORTING
The Company is a housing finance company registered with the National Housing Bank predominantly engaged in a single business segment i.e. providing housing loans and loan against properties in India only, which has similar nature of products and services, type/ class of customers and the nature of the regulatory environment, risks and returns and accordingly there are no separately reportable business or geographical segments as per the Indian Accounting Standard ('Ind AS') 108 on Operating Segments.
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B3H CONTINGENT LIABILITIES AND COMMITMENTS
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|
Particulars
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For the year ended 31 March, 2024
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For the year ended 31 March, 2023
|
|
a) Contingent liabilities
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|
|
- Income tax matters
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660.03
|
660.03
|
|
- Goods and Service tax
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12.50
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-
|
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b) Commitments
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|
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- Loan financing
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42,834.11
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26,789.44
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c) Bank guarantees
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925.00
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25.00
|
(I) The Company received income tax notice under section 143(3) of the Income Tax Act ,1961 (the Act) dated 25 December, 2019 for tax demand amounting to ' 445.23 Lacs on account of unexplained credit under Section 68 of the Act for assessment year 2017-18. In response to such notice, the Company has filed an appeal before Commissioner of Income Tax (Appeals). The Company has deposited ' 89.05 Lacs under protest. The legal proceeding when ultimately concluded will not, In the opinion of the management, have a material effect on the financial position of the Group.
(II) The Company received an Income tax notice under section 143(1 )(a) of the Income Tax Act, 1961 on 4 March, 2020, for the assessment year 2019-20, for tax demand of ' 214.80 Lacs, on account of disallowance of Interest payable on NCD Issued to mutual fund under section 43B of the Income Tax Act, 1961. The said amount has been adjusted against the refund due for the assessment year 2019-20 The Company has filed an appeal before the National Faceless Appeal Centre, New Delhi.
(III) The Company has received a demand order of ' 12.50 Lacs for contravention of Section 34(2) of CGST Act 2017 for 2019-20 dated 27 September, 2023. The Company has filled the appeal with the relevant authorities. Above amount does not Include the contingencies, the likelihood of which Is remote.
(Iv) Bank guarantees amounting to INR 900 lacs given to National Stock Exchange as security deposit for Initial Public Offer.
B) Defined benefit plans Gratuity
These plans typically expose the Company to actuarial risks such as: Investment risk, Interest rate risk, longevity risk and salary risk. Investment risk
The present value of the defined benefit plan liability (denominated In Indian Rupee) Is calculated using a discount rate which Is determined by reference to market yields at the end of the reporting period on government bonds.
Interest risk
The plan exposes the Company to the risk of fall In Interest rates. A fall In Interest rates will result In an Increase In the ultimate cost of providing the above benefit and will thus result In an Increase In the value of the liability.
Longevity risk
The present value of the defined benefit plan liability Is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An Increase In the life expectancy of the plan participants will Increase the plan's liability.
Salary risk
The present value of the defined benefit plan liability Is calculated with the assumption of salary Increase rate of plan participants In future. Deviation In the rate of Increase of salary In future for plan participants from the rate of Increase In salary used to determine the present value of obligation will have a bearing on the plan's liability.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at 31 March, 2024 by Mr. Ashok Kumar Garg (FIAI M.No. 00057), Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost, were measured using the projected unit credit method.
Sensitivity analysis
Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase, mortality, etc. The sensitivity analysis below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
- If the discount rate is 100 basis points higher (lower), the defined benefit obligation would decrease by ' 22.42 Lacs (increase by ' 24.76 Lacs) [31 March, 2023: 15.59 Lacs (increase by ' 16.85 Lacs)].
- If the expected salary growth increases (decreases) by 100 basis points, the defined benefit obligation would increase by ' 23.20 Lacs (decrease by ' 21.38 Lacs) [31 March, 2023: increase by ' 16.14 Lacs (decrease by ' 15.25 Lacs)].
Sensitivities due to change in mortality rate and change in withdrawal rate are not expected to be material and hence impact of such change is not calculated.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
E9I FINANCIAL INSTRUMENTS39.1 CAPITAL MANAGEMENT Capital
The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adeguacy reguirements of the National Housing Bank (NHB) and Reserve Bank of India (RBI). The adeguacy of the Company's capital is monitored using, among other measures, the regulations issued by NHB and RBI.
Capital management
The capital management objectives of the Company are:
- to ensure that the Company complies with externally imposed capital reguirements, if any and maintains strong credit ratings and healthy capital ratios
- to ensure the ability to continue as a going concern
- to provide an adeguate return to shareholders
Management assesses the capital reguirements of the Company in order to maintain an efficient overall financing structure. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends, return on capital to shareholders, issue new shares, or sell assets to reduce debt.
39.3 FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES
Fair value hierarchy
Assets and liabilities are measured at fair value in the financial statements and are grouped into three levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:
• Level 1: Quoted prices (unadjusted) for identical instruments in an active markets;
• Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and
• Level 3: Inputs which are not based on observable market data (unobservable inputs).
The following table shows the levels within the hierarchy of assets measured at fair value on a recurring basis:
The management is of view that the fair value of bank balances and cash and cash equivalents, other bank balances, loans, other financial assets, trade payables, borrowings including debt securities and other financial liabilities that are being carried at amortised cost, approximates to their respective net carrying value.
Valuation methodologies of financial instruments measured at fair value
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are recorded and measured at fair value in the Company's financial statements:
a) Mutual funds - Units held in Mutual funds are valued based on their published Net asset value (NAV) and such instruments are classified under Level 1.
b) Asset held for sale - Assets held for sale valuation are basis independent valuations by a specialist in valuing these type of assets. The best estimate of fair value is current prices in an active market for similar assets.
39.4 Fair value of instruments measured at amortised cost
Fair value of instruments measured at amortised cost for which fair value is disclosed is as follows, these fair values are calculated using Level 3 inputs:
The Board has the overall responsibility of risk management - there are two committees of the Board which takes care of managing overall risk in the organisation. In accordance with the RBI and NHB guidelines to enable Housing Finance Companies to adopt best practices and greater transparency in their operations, the Board of Directors of the Company has constituted a Risk Management Committee to review risk management in relation to various risks, namely, market risk, credit risk, and operational risk, and an Asset Liability Management Committee (ALCO).
a) Credit risk
Credit risk is the risk of loss that may occur from the failure of any party to abide by the terms and conditions of any contract, principally the failure to makerequired payments ofamounts due to the Company. In itslending operations, the Companyis principally exposedto credit risk. The credit risk is governed by various product policies. The product policies outlines the type of products that can be offered, customer categories, the targeted customer profile and the credit approval process and limits. The Company measures, monitors and manages credit risk at an individual borrower level. The credit risk for individual borrowers is being managed at portfolio level for both Housing Loans and Non-housing Loans. The Company has a structured and standardised credit approval process, which includes a well-established procedure of comprehensive credit appraisal.
b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Management of the Company monitors forecast of liquidity position and cash and cash equivalents on the basis of expected cash flows. The Asset Liability Management Policy aims to align market risk management with overall strategic objectives, articulate current interest rate view and determine pricing, mix and maturity profile of assets and liabilities. The asset liability management policy involves preparation and analysis of liquidity gap reports and ensuring preventive and corrective measures. It also addresses the interest rate risk by providing for duration gap analysis and control by providing limits to the gaps.
The tables below analyse the financial assets and liabilities of the Company into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows except EIS receivables on direct assignment included in other financial assets. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Credit risk management
The Company assesses and manages credit risk based on internal credit rating system and external ratings.
Cash and cash equivalents and bank deposits
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.
Loans
The customers are primarily low and middle -income, salaried and self-employed individuals.The credit officers evaluate credit proposals on the basis of active credit policies as on the date of approval. The criteria typically include factors such as the borrower's income and obligations, the loan-to-value ratio and demographic parameters subject to regulatory guidelines. Any deviations need to be approved at the designated levels. The various process controls such as PAN Number Check, CERSAI database scrubbing, Credit Bureau Report analysis are undertaken prior to approval of a loan. Individual loans are secured by the mortgage of the borrowers property.
Investments
Investments are generally made in mutual funds and high rated debt securities. Credit risk related to these investments is managed by monitoring the recoverability of such amounts continuously.
Other financial assets measured at amortised cost
Other financial assets measured at amortised cost includes security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously.
Disclosure on Liquidity Coverage Ratio (LCR) as on 31 March, 2024 in accordance with RBI circular No. RBI/2020-21/73 DOR.FIN. HFC.CC.No.102 /03.10.136/2020-21 dated 17 February, 2021 and RBI circular No. RBI/DNBR/2016-17/45 Master Direction DNBR.PD.008/03.10.119/ 2016-17 dated 01 September, 2016
Public disclosure on Liquidity Risk of India Shelter Finance Corporation Limited in accordance with RBI circular No. RBI/2019-20/88 DOR.NBFC(PD) CC. No.102/03.10.001 /2019-20dated 04 November, 2019 on Liquidity RiskManagement Framework for Non-Banking Financial Companies (NBFCs) including Core Investment Companies and RBI circular No. RBI/2020-21/60 DOR.NBFC(HFC).CC.No.118/ 03.10.136/2020-21 dated 22 October, 2020 for regulatory framework for Housing Finance Companies (HFCs).
The RBI vide Circular No. RBI/2020-21/73 DOR.FIN.HFC.CC.No.120/03.10.136/2020-21 dated 17 February, 2021 issued guidelines on maintenance of Liquidity Coverage Ratio (LCR) for HFCs. The guidelines required all non-deposit taking HFC with an asset size of ' 5,000 crore and above, but less than ' 10,000 crore, to maintain LCR of 30% as at 31 December 2021, to be gradually increased to 100% by December 2025.
The objective of the LCR is to promote resilience in the liquidity risk profile of HFCs. This is done by ensuring that the Company has an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily and immediately into cash to meet its liquidity needs for a 30 calendar day liquidity stress scenario.
The total assets of the Company has crossed ' 5,000 crores as at 31 December, 2023, the Company has presented the LCR related disclosures for position as on 31 December 2023 and for the quarter ended 31 March 2024 only i.e. the period for which the guideline became applicable to the Company.
The Company regularly reviews the maturity position of assets and liabilities and liquidity buffers, and ensures maintainance of sufficient quantum of High Quality Liquid Assets, most of which is in the form of government securities as at 31 March, 2024.
c) Market riskInterest rate risk Liabilities
The policy of the Company is to minimise interest rate cash flow risk exposures on long-term loans and borrowings. As at 31 March, 2024, the Company is exposed to changes in market interest rates through loans and bank borrowings at variable interest rates.
d) Currency 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 Company's exposure to the risk of changes in foreign exchange rates relates primarily to External Commercial Borrowings (ECB).
(i) The Company has hedged its foreign currency exposure through Cross Currency Swaps in such a manner that it has fixed determinate outflows in its functional currency and as such there would be no significant impact of movement in foreign currency rates on the Company's profit before tax (PBT).
Note 1: The KMPs are covered under the Company's gratuity policy, compensated absences policy and ESOP scheme along with other eligible employees of the Company. Proportionate amount of gratuity expenses, provision for compensated absences and ESOP expenses are not included in the aforementioned disclosures as it cannot be separately ascertained.
Note 2: During the current year, the Company has allotted 3,55,000 eguity shares of face value of ' 10/- to Mr. Anil Mehta on account of exercise of Rights to Subscribe at a premium of ' 73.20 per share. The said allotment has been approved by the Board of Directors vide circular resolution dated 20 July, 2023.
The Board of Directors of the Company alloted 3,87,500 eguity shares to Mr. Rupinder Singh, 1,90,000 eguity shares to Mr. Ashish Gupta and 40,000 eguity shares to Ms. Mukti Chaplot of face value of ' 10/- per share.
Note 3: During the year ended 31 March, 2023, the Company has allotted 1,35,000 partly paid-up eguity shares of face value of ' 10/- per share at a premium of ' 427 per share on preferential basis to Mr. Anil Mehta (Promotor). Shares are paid-up to the extent of ' 2 towards face value and ' 85.4 towards premium. The said allotment has been approved by the Board of Directors vide circular resolution dated 19 November, 2022. Balance amount on partly paid shares were called by the Board on 12th July, 2023.
ESI LEASE RELATED DISCLOSURES
The Company has leases for office building, branches and related facilities and cars. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right-of-use assets. The Company classifies its right-of-use assets in a consistent manner to its property, plant and eguipment.
Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublease the asset to another party, the right-of-use asset can only be used by the Company. Some leases contain an option to extend the lease for a further term.
The risk free interest rates are determined based on the Government bond yields with maturity equal to the expected term of the option. Volatility calculation is based on historical stock prices of relvant index using standard deviation of daily change in index price, The historical period is taken into account to match the expected life of the option, Dividend yield has been considered taking into account the historical and expected rate of dividend on equity share price as on grant date,
The Board of Directors of the Company in its meeting held on 12 July, 2023 and shareholders in the Extraordinary General Meeting held on 18 July, 2023 approved the sub-division of shares from ' 10 per share to ' 5 per share (Also refer Note 57),
F4I DISCLOSURES REQUIRED BY RESERVE BANK OF INDIA('RBI')
Additional disclosures 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 dated 17 February, 2021 and Notification No, RBI/2022-23/26 DOR,ACC,REC,No,20/21,04,018/2022-23 dated April, 19, 2022 issued by RBI,
44.04 Derivatives
1 The Company does not have any Forward Rate Agreement/lnterest rate Swaps as at 31 March, 2024 and 31 March, 2023
2 Exchange traded Interest Rate (IR) Derivative
The Company has not entered into any Exchange traded interest rate (IR) derivative during the current as well as previous financial year, hence the disclosure under this clause is not applicable,
Disclosures on Risk Exposure in Derivatives
i) Qualitative Disclosure
Structure and organisation for management of risk in derivatives trading:
The Board of Directors, the Asset Liability Management Committee (ALCO) and the Risk Management Committee (RMC) are entrusted with the management of market risks and derivatives booked to hedge the same, if any, The philosophy and framework for the hedging through derivative is laid out in theRisk Management policy approved by Board, The Risk Management Committee reviews all risks periodically, The monitoring and measurement of risk is carried out by the Risk Department headed by Chief Risk Officer which is independent of the Treasury Front office and back office,
Scope and nature of risk measurement, risk reporting and risk monitoring systems:
As per the risk framework, derivatives are being used only for hedging purpose and not speculating purposes, Company has undertaken Cross Currency swap to hedge the foreign exchange exposure on its ECB liability, Hedge effectiveness of this transaction is assessed on periodic basis,
Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants:
The Risk management Policy and Accounting Policy details the hedging strategies, hedging processes, accounting treatment, documentation requirements and effectiveness testing for hedges, Hedges are monitored for effectiveness periodically, in accordance with the Policy,
Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation:
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subseguently remeasured to their fair value at each balance sheet date. The resulting gain/loss is recognised in the statement of profit and loss immediately unless the derivative is designated and is effective as a hedging instrument, in which event the timing of the recognition in the statement of profit and loss depends on the nature of the hedge relationship.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with its external commercial borrowings arising from changes in exchange rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges: When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the other eguity under 'effective portion of cash flows hedges'. The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in fair value of the derivative is recognised immediately in profit or loss. The Company designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash flow hedge relationships. The change in fair value of the forward element of the forward exchange contracts ('forward points') is separately accounted for as cost of hedging and recognised separately within eguity. If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively.
The Compay periodically review the counterparty exposure and limits. Additional margins paid, if any, are shown under Other financial assets.
4 There were no unhedged foreign currency transaction during current year. Refer Mote no 39.05 for policies to manage currency induced risk.
5 As on 31 March, 2024, the Company has not financed any product of the parent Company (31 March, 2023: Mil).
6 The Company did not have any outstanding unsecured loans and advances as on 31 March, 2024 and 31 March, 2023. Further, the Company did not have any loans and advances against intangible securities such as charge over the rights, licenses, authority, etc. as on 31 March, 2024 and 31 March, 2023.
As on 31 March, 2024, the Company has not exceeded the prudential exposure limit prescribed by the RBI for single borrower or group of borrowers (31 March, 2023: Mil).
8 As on 31 March, 2024, no group Company is engaged in the business of real estate.(31 March, 2023: Mil)
44.08 Disclosure of penalties imposed by National Housing Bank (NHB) and other regulators
During the year, the Company was levied a penalty of IMR 0.24 lacs with applicable taxes each from both the Stock exchanges, National Stock Exchange of India Limited and BSE Limited for Mon-compliance with the provisions of composition of Nomination and Remuneration Committee under Regulation 19(1)/ 19(2) of SEBI (Listing Obligations and Disclosure Reguirements) Regulations, 2015.
Previous Year- Mil.
44.11 Remuneration of Directors
Remuneration of Directors has been disclosed in annual report
44.12 Breach of covenant:-
There was no instance of breach of covenant by the Company of loan availed or debt securities issued by it.
44.13 Divergence in Asset Classification and Provisioning
There is no Divergence in Asset Classisification and Provisioning during current and previous financial year.
44.15 Management
Management discussion and Analysis report shall form part of Board of Directors' report.
44.16 During the year, no expense was accounted which was related to prior period (31 March, 2023: 'Nil).
44.17 During the year, no item of revenue recognition has been postponed except as disclosed in accounting policy for revenue recognition.
44.18 The Company has a wholly owned Subsidiary and the Consolidated financial statements is prepared in accordance with Ind AS 110.
44.22 CONCENTRATION OF PUBLIC DEPOSITS (FOR PUBLIC DEPOSIT TAKING/HOLDING HFCS)
During the year ended 31 March, 2024 and 31 March, 2023, in accordance with the conditions of its Certificate of Registration and the resolution passed by its Board of Directors in the meeting held on 09 May, 2023 and 12 May, 2022, the Company has neither accepted any public deposits nor has any public deposits outstanding.
*As defined in Section 3(7) of the insolvency and Bankruptcy Code, 2016
($) Principal outstanding (including capitalised interest) is for live restructured accounts classified as standard as on September, 30, 2023. (#) Principal outstanding (including capitalised interest) is for live restructured accounts (including sub-standard accounts as on Sep 30, 2023) classified as standard as on March, 31,2024 **Personal loans includes housing loan & non housing loan.
49. The Company does not hold any immovable property other than disclosed in Note 11 as on 31 March, 2024 and 31 March, 2023. All the lease agreements are duly executed in favour of the Company for properties where the Company is the lessee.
50. No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March, 2024 and 31 March, 2023.
51. The Company does not have any transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March, 2024 and 31 March, 2023.
52. The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds as at 31 March, 2024 are held by the Company in the form of short term deposits/investments till the time the utilisation is made subseguently.
53. There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March, 2024 and 31 March, 2023, in the tax assessments under the income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March, 2024 and 31 March, 2023.
54. i) The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March, 2024 and 31
March, 2023.
ii) The Company has not entered into any scheme of arrangement.
iii) The Company has complied with the number of layers prescribed under clause(87) of section 2 of the Act read with Companies(Restriction on number of layers) Rules, 2017 for the financial years ended 31 March, 2024 and 31 March, 2023.
55. The Company, as part of its normal business, grants loans and advances, makes investment, provides guarantees to and accept from its customers, other entities and persons. These transactions are part of Company's normal business, which is conducted ensuring adherence to all regulatory reguirements.
Other than the transactions described above, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("intermediaries") with the understanding, whether recorded in writing or otherwise, that the intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate beneficiaries). The Company has also not received any fund from any parties (Funding party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the funding party ("Ultimate beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
56. All charges or satisfaction are registered with ROC within the statutory period for the financial years ended 31 March, 2024 and 31 March, 2023. No charges or satisfactions are yet to be registered with ROC beyond the statutory period.
57. The Board of Directors of the Company in its meeting held on 12 July, 2023 and shareholders in the Extraordinary General Meeting held on 18 July, 2023 approved the sub-division of shares from ' 10 per share to ' 5 per share. The number of shares used for the calculation of earnings per share, and the earnings per share in Note 41 (including that in the comparative periods), have been adjusted for pursuant to Paragraph 64 of ind AS 33 - "Earnings Per Share", prescribed under Section 133 of the Companies Act, 2013. No other adjustments are made in the financial statements on account of the share split.
58. The figures of previous year have been rearranged/ regrouped to conform to the current year.
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