TO THE MEMBERS
Your directors are pleased to present the forty-first annual report of your Corporation
with the audited accounts for the year ended March 31, 2018.
||For the year ended March 31, 2018
||For the year ended March 31. 2017
||( Rs. in crore)
||( Rs. in crore)
|Profit Before Exceptional Items & Tax
|Profit before Tax
|Profit after Tax
|Surplus in the Statement of Profit & Loss Opening Balance
|Profit for the Year
|Amount Available for Appropriations Appropriations:
|Special Reserve No. II
|Statutory Reserve (under Section 29C of the National Housing Bank Act, 1987)
|Shelter Assistance Reserve
|Interim Dividend ( Rs. 3.50 per equity share of Rs. 2 each) & Tax on Interim
|Final Dividend & Tax on Dividend for FY17
|Additional Tax on Dividend written back
|Dividend & tax pertaining to previous year paid during the year
|Surplus in the Statement of Profit &
In March 2018, your directors declared an interim dividend of Rs. 3.50 per equity share
of Rs. 2 each as compared to Rs. 3.00 per equity share in the previous financial year.
The interim dividend was paid in March 2018.
Your directors recommend payment of final dividend for the financial year ended March
31, 2018 of Rs. 16.50 per equity share of Rs. 2 each compared to
Rs. 15 per equity share for the previous year.
The total dividend for the year is Rs. 20 per equity share as against Rs. 18 per equity
share for the previous year.
The dividend pay-out ratio excluding exceptional items for the year ended March 31,
2018 is 46.2%.
The dividend declared/recommended is in accordance with the principles and criteria as
set out in the Dividend Distribution Policy which has been approved by the Board of
Directors. The policy is placed on the Corporation's website, www.hdfc.com .
Management Discussion and Analysis Report, Report of the Directors on Corporate
Governance, Business Responsibility Report & Integrated Report
In accordance with the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (Listing Regulations) and directions issued by
the National Housing Bank (NHB), the Management Discussion and Analysis Report and the
Report of the Directors on Corporate Governance form part of this report.
In accordance with the Listing Regulations, the Business Responsibility Report (BRR)
has been placed on the Corporation's website. Members who wish to receive a physical copy
of the BRR are requested to write to the Corporation. The policy on Business
Responsibility is also placed on the Corporation's website.
In accordance with SEBI's circular on Integrated Reporting by Listed Entities, the
Corporation has prepared a report based on the guiding principles of the International
Integrated Reporting Council. This has been done on a voluntary basis and the report is
placed on the Corporation's website.
Increase in the Authorised Share Capital
During the year, the authorised share capital of the Corporation increased from Rs. 350
crore to Rs. 457.61 crore. This includes the increase pursuant to the merger of Windermere
Properties Private Limited, Haddock Properties Private Limited, Grandeur Properties
Private Limited, Winchester Properties Private Limited and Pentagram Properties Private
Limited, wholly- owned subsidiaries of the Corporation, into and with the Corporation as
approved by the National Company Law Tribunal (NCLT), Mumbai Bench vide its order dated
March 28, 2018.
Issue of Equity Shares on a Preferential and Qualified Institutions Placement Basis
Pursuant to receipt of approval of the members through postal ballot in February 2018,
the Corporation issued 6,43,29,882 equity shares of Rs. 2 each at an issue price of Rs.
1,726.05 per equity share on preferential basis in accordance with the provisions of
Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
(SEBI ICDR Regulations). The Corporation also issued 1,03,89,041 equity shares at an issue
price of Rs. 1,825 per equity share to qualified institutional buyers on a qualified
institutions placement basis in accordance with the provisions of Chapter VIII of the SEBI
ICDR Regulations. The Corporation raised an aggregate amount of Rs. 13,000 crore from both
The key objective of raising capital is to participate in the proposed preferential
issue of HDFC Bank Limited for an amount not exceeding Rs. 8,500 crore.
The Corporation is also exploring inorganic opportunities in the health insurance
sector in conjunction with its subsidiary, HDFC ERGO General Insurance Company Limited and
is evaluating opportunities in the acquisition and resolution of stressed assets in the
real estate sector. The Corporation will also need capital to sponsor funds it has set up
to invest in the equity and mezzanine debt of affordable housing projects, support capital
requirements of its subsidiary companies as and when required and capitalise on organic
and inorganic growth opportunities in the affordable housing finance space.
Conversion of Warrants
In October 2015, the Corporation had issued 3.65 crore Warrants at an issue price of
Rs. 14 per Warrant with a right exercisable by the Warrant holder to exchange each Warrant
for one equity share of Rs. 2 each of the Corporation at any time on or before October 5,
2018, at a Warrant exercise price of Rs. 1,475 per equity share, to be paid by the Warrant
holder at the time of exchange of the Warrants. The Warrants are listed on the BSE Limited
(BSE) and National Stock Exchange of India Limited (NSE).
As at March 31, 2018, 5,14,600 Warrants have been exercised and exchanged into 5,14,600
equity shares of Rs. 2 each of the Corporation. The equity shares so issued rank pari
passu with the existing equity shares of the Corporation.
The Corporation is a housing finance company registered with the National Housing Bank
(NHB) and is engaged in financing the purchase and construction of residential houses,
real estate and certain other purposes in India. All other activities of the Corporation
revolve around the main business.
The Assets Linder Management (AUM) as at March 31, 2018 was Rs. 3,99,511 crore as
compared to Rs. 3,38,478 crore in the previous year.
On an AUM basis, the growth in the individual loan book was 18% and the non-individual
loan book was 17%. The growth in the total loan book on an AUM basis was 18%.
During the year, the Corporation's loan book increased from Rs. 2,96,472 crore to Rs.
3,59,442 crore in March 2018, representing a growth of 21%. In addition, total loans
securitised and/or assigned by the Corporation and outstanding as at March 31, 2018
amounted to Rs. 40,069 crore.
Further details of lending operations are provided in the Management Discussion and
The Corporation is in compliance with the provisions of the Housing Finance Companies
Issuance of Non- Convertible Debentures on private placement basis (NHB) Directions, 2014
and has been regular in making payment of principal and interest on the non-convertible
debentures. Details of market borrowings are provided in the Management Discussion and
Deposits outstanding as at March 31, 2018 amounted to Rs. 92,242 crore. There has been
no default in repayment of deposits or payment of interest during the year. All the
deposits accepted by the Corporation are in compliance with the requirements of Chapter V
of the Companies Act, 2013.
As of March 31, 2018, public deposits amounting to Rs. 696 crore had not been claimed
by 43,895 depositors. Since then, 9,467 depositors have claimed or renewed deposits of Rs.
231 crore. Depositors were intimated regarding the maturity of deposits with a request to
either renew or claim their deposits. Where the deposit remains unclaimed, reminder
letters are sent to depositors periodically and follow up action is initiated through the
concerned agent or branch.
Deposits remaining unclaimed for a period of seven years from the date they became due
for payment have to be transferred to the Investor Education and Protection Fund (IEPF)
established by the central government. The concerned depositor can claim the deposit from
the IEPF. During the year, an amount of Rs. 1.45 crore was transferred to the IEPF.
Capital Adequacy Ratio
The Corporation's capital adequacy ratio (CAR) stood at 19.2%, of which Tier I capital
was 17.3% and Tier II capital was 1.9%. Deferred tax liability on Special Reserve and the
investment in HDFC Bank has been considered as a deduction in the computation of Tier I
capital. Further, the proposed final dividend and tax thereon for the year ended March 31,
2018 has been considered in determining the net owned funds in the computation of the
capital adequacy ratio.
As per regulatory norms, the minimum requirement for the capital adequacy ratio and
Tier I capital is 12% and 6% respectively.
The Corporation has complied with the Housing Finance Companies (NHB) Directions, 2010
and other directions prescribed by NHB regarding deposit acceptance, accounting standards,
prudential norms for asset classification, income recognition, provisioning, capital
adequacy, credit rating, corporate governance, concentration of investments and capital
market exposure norms.
Corporate Social Responsibility (CSR)
The Corporation contributed directly and through H T Parekh Foundation to identified
social sectors in urban and rural areas in sectors such as education, water &
sanitation, skilling & livelihoods, healthcare, community development, differently
abled persons, child welfare and environmental sustainability.
Further details on the prescribed CSR spend under Section 135 of the Companies Act,
2013 and the amount committed and disbursed during the year under review are provided in
the Annual Report on CSR activities annexed to this report.
In accordance with the provisions of Section 136 of the Companies Act, 2013, the annual
report of the Corporation, the annual financial statements and the related documents of
the Corporation's subsidiary companies are placed on the website of the Corporation.
Shareholders may download the annual financial statements and detailed information on
the subsidiary companies from the Corporation's website or may write to the Corporation
for the same. Further, the documents shall be available for inspection by the shareholders
at the registered office of the Corporation.
During the year, the NCLT and the Insurance Regulatory and Development Authority of
India (IRDAI) granted their approval for
the merger of HDFC ERGO General Insurance Company Limited with HDFC General Insurance
Limited (formerly L&T General Insurance Company Limited). Subsequent to the merger,
HDFC General Insurance Limited was renamed HDFC ERGO General Insurance Company Limited.
In November 2017, the Corporation offered for sale 9.52% of the paid- up and issued
equity share capital of HDFC Standard Life Insurance Company Limited (HDFC Life), a
subsidiary of the Corporation in the Initial Public Offer (IPO) of HDFC Life. HDFC Life's
equity shares were listed on BSE and NSE on November 17, 2017. As at March 31, 2018, the
Corporation's shareholding in HDFC Life stood at 51.6%.
In January 2018, the Corporation sold its entire stake in its wholly- owned subsidiary
companies, HDFC Developers Limited and HDFC Realty Limited, to Quikr India Private
Limited. Consequently, HDFC Realty Limited and HDFC Developers Limited ceased to be
subsidiaries of the Corporation with effect from January 24, 2018.
During the year, the Corporation has approved offering of up to 4.08% of the paid-up
and issued equity share capital of HDFC Asset Management Company Limited (HDFC AMC), a
subsidiary of the Corporation for sale in the IPO of HDFC AMC. The IPO is expected to be
in the first half of FY 2018-19, subject to regulatory approvals and market conditions.
The Board of Directors at its earlier meeting had approved the scheme of amalgamation
of five of its wholly- owned subsidiaries, Windermere Properties Private Limited, Haddock
Properties Private Limited, Grandeur Properties Private Limited, Winchester Properties
Private Limited and Pentagram Properties Private Limited with itself. The applications for
the proposed merger were filed with the NCLT, Mumbai bench and in March 2018, the scheme
of amalgamation was approved by the NCLT. The order was filed with the Registrar of
Companies, Mumbai on April 27, 2018. Accordingly, the Corporation has considered the
operations of the said subsidiaries from April 1, 2016, as its own operations and
accounted for the same in its books of accounts after making necessary adjustments.
The Corporation has not made any loans or advances in the nature of loans to any of its
subsidiary or associate company or companies in which its directors are deemed to be
interested, other than in the ordinary course of business.
The Corporation has obtained a certificate from its statutory auditors that it is in
compliance with the provisions of Foreign Exchange Management Act, 1999 with respect to
downstream investments made in/by its subsidiaries and in other companies during the year
A review of the key subsidiary and associate companies of the Corporation form part of
the Management Discussion and Analysis Report which forms part of this report.
Particulars of Employees
HDFC had 2,575 employees as of March 31, 2018. During the year, 8 employees employed
throughout the year were in receipt of remuneration of Rs. 1.02 crore or more per annum
and 1 employee employed for the part of the year was in receipt of remuneration of Rs. 8.5
lac or more per month.
In accordance with the provisions of Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and
particulars of the top ten employees in terms of remuneration drawn and of the aforesaid
employees are set out in the annex to the Directors' Report. In terms of the provisions of
Section 136(1) of the Companies Act, 2013 read with the rule, the Directors' Report is
being sent to all shareholders of the Corporation excludingthe annex. Any shareholder
interested in obtaining a copy of the annex may write to the Corporation.
Further disclosures on managerial remuneration are annexed to this report.
Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace
The Corporation has a policy on prevention, prohibition and redressal of sexual
harassment at the workplace. Members of the Internal Complaints Committee constituted by
the Corporation are responsible for reporting and conducting inquiries pertaining to such
complaints. The Corporation on a regular basis sensitises all employees on prevention of
sexual harassment at the workplace through workshops, group meetings, online training
modules and awareness programmes. During the year, one complaint was received by the
committee. The case has been reviewed and appropriately closed and thus there were no
pending complaints with the committee as at March 31, 2018.
Particulars of Loans, Guarantees or Investments
Since the Corporation is a housing finance company, the disclosures regarding
particulars of the loans given, guarantees given and security provided is exempt under the
provisions of Section 186(11) of the Companies Act, 2013.
As regards investments made by the Corporation, the details of the same are provided
under notes 16 and 18 in the financial statements of the Corporation for the year ended
March 31, 2018.
Particulars of Contracts or Arrangements with Related Parties
The particulars of contracts or arrangements with related parties as prescribed in Form
No. AOC-2 of the Companies (Accounts) Rules, 2014, is annexed to this report. Details of
related party transactions are given in the notes to the financial statements.
The Related Party Transactions policy of the Corporation ensures proper approval and
reporting of the concerned transactions between the Corporation and related parties. The
policy on Related Party Transactions is set out elsewhere in the Annual Report and is also
placed on the Corporation's website.
Particulars Regarding Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo
The particulars regarding foreign exchange earnings and expenditure appear under notes
24.5 and 27.4 in the financial statements.
The Corporation is in the business of housing finance and hence its operations are not
energy intensive. The Corporation is cognisant of the importance of imbibing measures
towards optimum energy utilisation and conservation.
Employees Stock Option Scheme (ESOS)
Presently, stock options granted to the employees operate under the following schemes -
ES0S-07, ES0S-08, ESOS-11, ESOS-14 and ESOS-17. There has been no material variation in
the terms of the options granted under any of these schemes and all the schemes are in
compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The
disclosures as required under the regulations have been placed on the website of the
During the year, the Corporation approved the grant of 4,28,45,977 stock options
representing 4,28,45,977 equity shares of Rs. 2 each to eligible employees and directors
of the Corporation under ESOS-17. The exercise price was determined in accordance with the
pricing formula approved by the members i.e. at the latest available closing price of the
equity share on the NSE, prior to the date of the meetings of the Nomination &
Remuneration Committee at which the options were granted.
The options are exercisable over a period of five years from the date of their
respective vesting. None of the options granted have vested during the year and
consequently, no options have been exercised under ESOS-17. Further details are disclosed
on the website of the Corporation.
Unclaimed Dividend and Shares
As at March 31, 2018, dividend amounting to Rs. 25.15 crore had not been claimed by
shareholders of the Corporation. The Corporation takes various initiatives to reduce the
quantum of unclaimed dividend and has been periodically intimating the concerned
shareholders, requesting them to encash their dividend before it becomes due for transfer
to the Investor Education and Protection Fund (IEPF).
Unclaimed dividend amounting to Rs. 1.31 crore for FY 2009-10 was transferred to the
IEPF on September 11, 2017. Further, in compliance with the Investor Education and
Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended,
the Corporation transferred 14,15,471 equity shares of Rs. 2 each (corresponding to the
dividend for the FY 2009-10 remaining unclaimed for a continuous period of 7 years) in
favour of the IEPF on November 28, 2017. However, the concerned shareholders may claim the
unclaimed dividend and shares from IEPF, the procedure for which is detailed in the
Shareholders' Information section.
The unclaimed dividend in respect of FY 2010-11 must be claimed by shareholders on or
before August 8, 2018, failing which the Corporation will be transferring the unclaimed
dividend and the corresponding shares to the IEPF within a period of 30 days from the said
Dr. S. A. Dave, independent director of the Corporation resigned with effect from
August 10, 2017. The board placed on record its appreciation for the invaluable guidance
and service rendered by him during his association with the Corporation.
With effect from April 30, 2018, non-executive directors of the Corporation, Mr. D. N.
Ghosh and Mr. D. M. Sukthankar resigned from the board. The board placed on record its
sincere appreciation for their invaluable contribution to the board over the years.
The board appointed Mr. U. K. Sinha and Mr. Jalaj Dani as independent directors of the
Corporation for a term of 5 years with effect from April 30, 2018, subject to the approval
of members at the ensuing Annual General Meeting (AGM).
At its meeting on April 30, 2018, the board re-appointed Mr. Keki M. Mistry as the
Managing Director (designated as Vice-Chairman & Chief Executive Officer) of the
Corporation for a period of three years, with effect from November 14, 2018, subject to
the approval of members at the ensuing AGM.
In accordance with the provisions of the Companies Act, 2013 and the Articles of
Association of the Corporation, Mr. Deepak S. Parekh is liable to retire by rotation at
the ensuing AGM. He is eligible for reappointment.
The necessary resolutions for the appointment/re-appointment of the above mentioned
directors and their brief profiles have been included in the notice convening the ensuing
All the directors of the Corporation have confirmed that they satisfy the fit and
proper criteria as prescribed under the applicable regulations and that they are not
disqualified from being appointed as directors in terms of Section 164(2) of the Companies
The details on number of board/ committee meetings held are provided in the Report of
the Directors on Corporate Governance, which forms part of this report.
At the 40th AGM of the Corporation, the members had appointed Messrs B S R
& Co. LLP, Chartered Accountants, (firm registration number 101248W/W-100022) as the
statutory auditors for a term of 5 consecutive years and to hold office until the
conclusion of the 45th AGM.
The Auditors' Report annexed to the financial statements for the year under review does
not contain any qualifications.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Corporation has
appointed Messrs Vi nod Kothari & Company, practicing company secretaries to undertake
the secretarial audit of the Corporation. The Secretarial Audit Report is annexed to this
report and does not contain any qualifications.
Significant and Material Orders Passed by Regulators
During the year, no significant or material orders were passed by any regulators
against the Corporation other than that disclosed separately in the notes to the financial
statements and in the Report of the Directors on Corporate Governance.
Directors' Responsibility Statement
In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013 and
based on the information provided by the management, your directors state that:
a) In the preparation of annual accounts, the applicable accounting standards have been
b) Accounting policies selected have been applied consistently. Reasonable and prudent
judgements and estimates have been made so as to give a true and fair view of the state of
affairs of the Corporation as at March 31, 2018 and of the profit of the Corporation for
the year ended on that date;
c) Proper and sufficient care has been taken for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 2013 for safeguarding the
assets of the Corporation and for preventing and detecting frauds and other
d) The annual accounts of the Corporation have been prepared on a going concern basis;
e) Internal financial controls have been laid down to be followed by the Corporation
and such internal financial controls are adequate and operating effectively; and
f) Systems to ensure compliance with the provisions of all applicable laws are in place
and were adequate and operating effectively.
Internal Financial Control
The Corporation has put in place adequate policies and procedures to ensure that the
system of internal financial control is commensurate with the size and nature of the
Corporation's business. These systems provide a reasonable assurance in respect of
providing financial and operational information, complying with applicable statutes,
safeguarding of assets of the Corporation, prevention and detection of frauds, accuracy
and completeness of accounting records and ensuring compliance with corporate policies.
Extract of Annual Return - Form No. MGT-9
The details forming part of the extract of the Annual Return in Form No. MGT-9 is
annexed to this report.
Material changes and commitment, if any, affecting the financial position of the
Corporation from the financial year end till the date of this report
There are no material changes and commitments affecting the financial position of the
Corporation which have occurred after March 31, 2018 till the date of this report.
The directors place on record their gratitude for the support of various regulatory
authorities including National Housing Bank, Reserve Bank of India, Securities and
Exchange Board of India, Insurance Regulatory and Development Authority of India, Pension
Fund Regulatory and Development Authority, Ministry of Housing and Urban Affairs, Ministry
of Corporate Affairs, Registrar of Companies, Financial Intelligence Unit (India), the
stock exchanges and the depositories.
The Corporation acknowledges the role of all its key stakeholders - shareholders,
borrowers, channel partners, depositors, deposit agents and lenders for their continued
support to the Corporation.
Your directors place on record their appreciation for the hard work and dedication of
all the employees of the Corporation.
On behalf of the Board of Directors
||DEEPAK S. PAREKH
|April 30, 2018