HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying Standalone Financial Statements of Housing and Urban Development Corporation Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2023 and the Statement of Profit and Loss (including other Comprehensive Income), the statement of changes in equity and the Statement of Cash Flows for the year then ended, and notes to the Standalone financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Standalone Financial Statements”).
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2023, and its profit including other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
3. We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
Emphasis of Matter:
4. We draw attention to the following matter in the Notes to the Standalone financial statements:
The company has recognized interest income on “No Lien AGP Account” amounting to Rs.28.51crore [Rs.28.02crore for the previous year ended 31st March, 2022] for the year ended 31st March 2023. The same has been shown in Note 28 (Other Income) under head ‘Interest on Construction Project'.
The balance outstanding as at the end of the year is Rs.558.97crore (debit) (Rs.526.27crore for the previous year ended 31st March 2022) in “No Lien AGP Account”. The company is in discussion with MoHUA for recovery/reimbursement of outstanding amount including interest as well as expenses being booked. [Refer Para 3 of Note 40]
Our opinion is not modified in respect of this matter.
Key Audit Matters
5. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our reports:
|
Sr.
No.
|
Key Audit Matter
|
Auditor’s Response
|
|
1.
|
Ind AS 109 on Financial Instruments establishes a comprehensive framework for determining expected credit losses, accuracy of classification, recognition, de-recognition and measurement requirements for all the financial assets and liabilities. Considering the materiality of the amounts involved, possible effect from the pandemic Covid-19, the significant management judgment required in estimating the expected credit losses as well as measuring Financial Assets and Financial Liabilities and such estimates and
|
Principal Audit Procedures
Our procedures included, but were not limited to the following:
Our Audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
|
| |
judgments being inherently subjective, this matter has
|
Obtained an understanding of the systems, processes
|
| |
been identified as a key audit matter for the current
|
and controls implemented by management for
|
| |
year audit.
|
recording and calculating Expected credit losses
|
| |
(Refer Notes : 6, 7, 8, 9, 10, 11, 15, 16, 17, 18, 19, 33,
|
(ECL), recognition, de-recognition and measurement of
|
| |
36, 37 and 40 to standalone financial statements)
|
Financial Assets and Financial Liabilities, for classifying financial assets portfolio into stages based on credit risk.
• Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the expected credit losses and measuring Financial Assets and Financial Liabilities.
• Selected the sample and tested the operating effectiveness of the internal control, relating to recognition, measurement and de-recognition of, financial assets and financial liabilities and calculation of ECL. We carried out a combination of procedures involving enquiry and observation, performance and inspection of evidence in respect of operation of these controls.
• Tested the relevant information technology systems access and change management controls relating to contracts and related information used in recording financial assets/ liabilities and calculation of ECL in accordance with the said Ind AS.
• Tested the appropriate staging of assets basis, their days past due and other loss indicators on sample basis.
|
Other Information
6. The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's Annual Report, but does not include the standalone financial statements and our auditor's report thereon. The Annual report for the year ending 31st March 2023 is expected to be made available to us after the date of this auditor's report. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other Comprehensive income, Changes in Equity, and Cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian accounting Standards (Ind ASs) specified under Section 133 of the Act with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33, Regulation 52 and Regulation 54 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Board of Directors either intend to liquidate the company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements.
10. Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.
11. As Part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of Internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the Standalone Financial Statements, including the disclosures, and whether the standalone financial statements representing the underlying transactions and events in a manner that achieves fair presentation.
• Perform procedures in accordance with the circular issued by the SEBI under Regulation 33(8) of the Listing Regulations to the extent applicable.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the company and of its associate to express an opinion on the consolidated financial statements. For the other entities included in the Annual Consolidated Financial Results, which have been audited by the other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion-
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our Independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our Auditor's Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by the Companies (Auditor's Report) Order, 2020 (“the Order”) issued by the Central Government of India
in terms of Sub section (11) of Section 143 of the Act, we give in the Annexure-“A”, a statement on the matters specified in
Paragraph 3 and 4 of the said Order, to the extent applicable.
16. We are enclosing our report in terms of Section 143(5) of the Act, on the basis of such checks of the books and records of the
Company as we considered appropriate and according to the information and explanations given to us, in the Annexure “B”,
on the directions issued by the Comptroller and Auditor General of India.
17. As required by section 143(3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appears from our examination of those books.
c) The Standalone Balance Sheet, the Statement of Profit and loss [including Other Comprehensive income], Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standard (“Ind-As”) specified under Section 133 of the Act;
e) The provisions of section 164(2) of the Companies Act, 2013 in respect of disqualifications of directors are not applicable to the Company being Government Company in terms of notification no. G.S.R. 463(E) dated 5th June 2015 issued by the Ministry of Corporate affairs.
f) With respect of the adequacy of the Internal Financial Controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure ‘C’; and
g) As per notification number G.S.R 463(E) dated June 5, 2015 issued by Ministry of Corporate Affairs, Section 197 of the Act regarding remuneration to Director is not applicable to the Company, since it is a Government Company; and
h) With respect to the other matters to be included in the Auditor's Report in with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on financial position on its Standalone financial statements; (Refer Para 2(a) of Note no. 40 to standalone financial statements)
ii. The Company does not have any material foreseeable losses on long terms contracts including derivative contracts; (Refer Para 40(d) of Note no. 40 to standalone financial statements)
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; (Refer Para 17 of Note no. 40 to standalone financial statements)
iv. a) The management has represented that, to the best of its knowledge and belief, as disclosed in management
representations, no funds have been advanced or loaned invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any persons or entities, including foreign entities (the intermediaries'), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (the Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b) The management has represented that, to the best of its knowledge and belief, as disclosed in management representations, no funds have been received by the Company from any persons or entities, including foreign entities (the Funding Parties'), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under Sub-clauses (a) and (b) above contain any material misstatement.
v. As stated in Note no. 40 (29) to the Standalone Financial Statements:
a) The final dividend proposed for the previous year, declared and paid by the company during the year is in compliance with section 123 of the companies Act,2013, as applicable.
b) The interim dividend declared and paid by the company during the year and until the date of this report is in compliance with section 123 of the companies Act, 2013.
c) . The Board of director of the company have proposed final dividend for the year which is subject to the approval
of the member at the ensuing Annual General Meeting. The amount of the dividend proposed is in accordance with section 123 of the companies Act, 2013, as applicable.
vi. Proviso to Rule 3(1) of the companies (Accounts) Rules, 2014 for maintaining books of accounts using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the company with effect from April 1,2023, and accordingly, reporting under Rule 11(g) of the companies (Audit and Auditors) Rule, 2014 is not applicable for the financial year ended March, 2023.
NHB/RBI Directions
18. The Company is complying with National Housing Bank’s (NHB)/Reserve Bank of India’s (RBI) credit concentration norms in respect of loans to private sector agencies. However, in case of loans to State Governments/State Government Agencies/ Central Government Agencies, the said norms have been relaxed by the NHB/RBI vide various letters (Refer Para no.15 of Note No.40); the same is complied with except in case of Investment in equity shares of Housing Finance Company Indbank Housing Limited (Investee company) where investment in 25% of equity capital of investee company has been made instead of prescribed limit of 15%.
For A P R A & Associates LLP Chartered Accountants (Firm Registration No. 011078N / N500064)
Sd/-Arun Kumar Gupta Partner
Place : New Delhi
u (Membership No.089657)
Date : 26th May, 2023
UDIN: 23089657BGUFSE9913
|