Notes to Accounts of Housing and Urban Development Corporation Ltd.

Mar 31, 2025

4.22 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a
provision is presented in the statement of profit and loss.

Reimbursements expected in respect of expenditure required to settle a provision is recognized only when it is
virtually certain that the reimbursement will be received.

4.23 Contingent liabilities and assets

The Company does not recognize a contingent liability but discloses its existence in the financial statements
Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will be
required to settle the obligation

• A present obligation arising from past events, when no reliable estimate is possible

• A possible obligation arising from past events, unless the probability of outflow of resources is remote.

• Contingent assets are not recognised. A contingent asset is disclosed, as required by Ind AS 37, where an
inflow of economic benefits is probable.

4.24 “Materiality of Events / Information”

“Financial impact of events / information relating to prior years identified in the current year which are not
material are accounted for in the current year and are not corrected retrospectively through restatement
of comparative amounts. Events or information are considered to be material if they could, individually or
collectively, influence the economic decisions of the users of the financial statements and on the basis of
governing laws, rules, regulations or recommendations issued by competent authorities.”

4.25 Earnings per Share

The basic earnings per share is computed by dividing the net profit after tax by the weighted average number
of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing adjusted net profit after tax by the aggregate of weighted
average number of equity shares and dilutive potential equity shares outstanding during the year. The number
of equity shares and potentially dilutive equity shares are adjusted for share splits /reverse share splits and
bonus shares, as appropriate.

Significant accounting judgements, estimates and assumptions.

• The preparation of Standalone financial statements in conformity with Ind AS requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of the reporting period.

• Management believes that the estimates used in the preparation of financial statement are prudent and reasonable.
Future result could differ from these estimates. Any revision to accounting estimate is recognized prospectively in
current and future period.

Judgements

In the process of applying the company''s accounting policies, management has made the following judgements, which
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
Financial Year.

5.1 Business model assessment

• Classification and measurement of financial assets depends on the results of the SPPI and the business
model test. The Company determines the business model at a level that reflects how Companies of financial
assets are managed together to achieve a particular business objective. This assessment includes judgement
reflecting all relevant evidence including how the performance of the assets is evaluated and their performance
measured, the risks that affect the performance of the assets and how these are managed and how the
managers of the assets are compensated. The Company monitors financial assets measured at amortised cost
or fair value through other comprehensive income that are derecognised prior to their maturity to understand
the reason for their disposal and whether the reasons are consistent with the objective of the business for
which the asset was held. Monitoring is part of the Company''s continuous assessment of whether the business
model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate
whether there has been a change in business model and so a prospective change to the classification of those
assets.

Estimates and Assumptions

• The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next Financial Year, are described below. The Company based its assumptions and estimates on
parameters available when the financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising that are
beyond the control of the company. Such changes are reflected in the assumptions when they occur

5.2 Fair value of financial instruments

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date
under current market conditions (i.e., an exit price) regardless of whether that price is directly observable or
estimated using another valuation technique. When the fair values of financial assets and financial liabilities
recorded in the balance sheet cannot be derived from active markets, they are determined using a variety
of valuation techniques that include the use of valuation models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, estimation is required in establishing fair
values. Judgements and estimates include considerations of liquidity and model inputs related to items such
as credit risk (both own and counterparty), correlation and volatility.

5.3 Effective Interest Rate (EIR) method

The company''s EIR methodology recognises interest income / expense using a rate of return that represents
the best estimate of a constant rate of return over the expected behavioral life of loans given / taken and
recognises the effect of potentially different interest rates at various stages and other characteristics of the
product life cycle (including prepayments and penalty interest and charges).

This estimation, by nature, requires an element of judgement regarding the expected behaviour and life-cycle
of the instruments, as well expected changes to India''s base rate and other fee income/expense that are
integral parts of the instrument.

5.4 Impairment of financial asset

The measurement of impairment losses across all categories of financial assets requires judgement, in
particular, the estimation of the amount and timing of future cash flows and collateral values when determining
impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a
number of factors, changes in which can result in different levels of allowances.

The company''s ECL calculations are outputs of complex models with a number of underlying assumptions
regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are
considered accounting judgements and estimates include:

- The Company''s grading model, which assigns PDs to the individual grades

- The Company''s criteria for assessing if there has been a significant increase in credit risk and so allowances
for financial assets should be measured on a LTECL basis and the qualitative assessment

- The segmentation of financial assets when their ECL is assessed on a collective basis - Development of
ECL models, including the various formulas and the choice of inputs

- Determination of associations between macroeconomic scenarios and, economic inputs, such as
unemployment levels and collateral values, and the effect on PDs, EADs and LGDs.

- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the
economic inputs into the ECL models

It has been the Company''s policy to regularly review its models in the context of actual loss experience and
adjust when necessary.

5.5 Provisions and other contingent liabilities

The Company operates in a regulatory and legal environment that, by nature, has a heightened element of
litigation risk inherent to its operations. As a result, it is involved in various litigation, arbitration and regulatory
investigations and proceedings in the ordinary course of the Company''s business.

Given the subjectivity and uncertainty of determining the probability and amount of losses, the Company takes
into account a number of factors including legal advice, the stage of the matter and historical evidence from
similar incidents. Significant judgement is required to conclude on these estimates.

5.6 Revenue from contract with Customers

The Company''s contracts with customers include promises to transfer services to a customer. The Company
assesses the services promised in a contract and identifies performance obligation involves judgement to
determine the deliverables and the ability of the customer to benefit independently from such deliverables.

The Company exercises judgement in determining whether the performance obligation is satisfied at a point in
time or over a period of time. The Company considers indicators such as how customer benefits as services
are rendered or who controls the asset as it is being created or existence of enforceable right to payment for
performance to date and alternate use of such product or services, transfer of significant risks and rewards to
the customer, etc.

5.7 Leases

Ind AS-116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted
with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company
makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or terminate the contract will be exercised. The lease term
in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Company also used judgement in determining the low value assets as given under the Ind AS-116.

5.8 Income Taxes

Significant estimates are involved in determining the provision for income taxes, including amount expected to
be paid/recovered for uncertain tax positions and in respect of expected future profitability to assess deferred
tax asset.

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.

- The Company''s definition and assessment of default and cure.

- How the Company defines, calculates and monitors the probability of default, exposure at default and loss given default.

- When the Company considers there has been a significant increase in credit risk of an exposure.

- The Company''s policy of segmenting financial assets where ECL is assessed on a collective basis.

- The details of the ECL calculations for Stage 1, Stage 2 and Stage 3 assets.

NOTE: 10(a)(4)(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 90 days past due on its contractual payments.

NOTE: 10(a)(4)(ii) Probability of default

The estimation of Probability of Default (PD) shall be carried out in accordance with the following principles:

a. Through-the-Cycle PD (TTC-PD): TTC-PD shall be calculated using an incremental Non-Performing Asset (NPA) approach.
In cases where there is limited default history for a specific portfolio, a credit rating-based default study shall be utilized to
derive the TTC-PD.

b. Point-in-Time PD (PiT-PD): Through-the-Cycle Probability of Default (TTC-PD) shall be converted into Point-in-Time
Probability of Default (PiT-PD) using a forward-looking model. This model shall incorporate portfolio-specific macroeconomic
variables to ensure that the estimate reflects current and anticipated economic conditions relevant to the portfolio.

c. Stage-II Loans - Lifetime PD: For loans classified under Stage-II, Lifetime Probability of Default shall be estimated using
survival analysis techniques over the remaining contractual tenure of the loans.

d. Stage-III Loans: Loans classified under Stage-III shall be assigned a Probability of Default of 100%.

NOTE: 10(a)(4)(iii) 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 borrower''s ability to increase its exposure while approaching default and potential early
repayments too.

NOTE: 10(a)(4)(iv) Loss given default

The Company segments its lending products into smaller, homogeneous portfolios to facilitate accurate estimation of credit
risk parameters. For all portfolios except Government Loans Backed by Government Guarantee, the Loss Given Default
(LGD) is estimated based on historical recovery experience, taking into account actual recoveries observed over time. In the
case of Government Loans Backed by Government Guarantee, a bucket-level LGD approach is adopted. These buckets are
defined using state-level fiscal deficit data, which serves as a proxy for the fiscal strength of each state and the corresponding
credit risk associated with the guarantees provided.

NOTE: 10(a)(4)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio
of instruments is subject to 12mECL 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 ECLs 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.

NOTE: 10(a)(4)(vi) Grouping financial assets measured on a collective basis

The Company calculates ECLs on collective basis for all Stage I and II Loans and on an individual basis for Stage III Loans

NOTE 34: Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other
equity reserves attributable to the equity holders of the Company. The primary objectives of the Company''s capital management
are safety and security of share capital and maximize the shareholders'' wealth.

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital
adequacy requirements of the regulator viz., RBI. The adequacy of the Company''s capital is monitored using, among other
measures, the regulations issued by RBI.

Company has complied in full with all its externally imposed capital requirements over the reporting period.

Capital to Risk-weighted Assets Ratio (CRAR)

RBI vide letter dated August 23, 2024 granted Certificate of Registration (CoR) as NBFC-IFC to HUDCO. Accordingly,
Company being a NBFC-IFC now, is complying with the Capital Adequacy requirements as prescribed by the Master Directions
- Reserve Bank of India (Non-Banking Financial Company- Scale Based Regulations) Directions, 2023 dated October 19,
2023 and updated from time to time.

Being an NBFC-IFC, HUDCO is required to maintain Capital Adequacy Ratio or Capital to Risk Weighted Assets Ratio
(CRAR) of 15% (with a minimum Tier I Capital of 10%), computed by dividing company''s Tier-I and Tier-II capital by Risk
Weighted Assets.

Dividend Distribution Policy

BoD monitors the dividend pay-out to the shareholders of the Company. Dividend distribution policy of the Company focuses
on various factors including but not limited to the present & future capital requirements, profits earned during the Financial
Year, Capital to Risk-weighted Assets Ratio (CRAR), cost of raising funds from alternate sources, cash flow position and
applicable taxes if any and net worth of the Company, subject to the applicable circulars/ guidelines issued by RBI, DIPAM
etc. as applicable from time to time.

As per the extant guidelines issued by DIPAM, Government of India, Company is required to pay a minimum annual dividend
of 30% of PAT or 5% of the net-worth, whichever is higher.

Though the Company endeavors to declare the dividend as per these guidelines, the Company may propose lower dividend
after analysis of various financial parameters, cash flow position and funds required for future growth.

Other Policies

The Company has also adopted various policies for the management of the Company which inter-alia include Comprehensive
Risk Management Policy, Whistle Blower Policy, Code of Conduct for Regulating, Monitoring & Reporting of Trading by
Designated Persons & their Immediate Relatives and for Fair Disclosure, Policy for prevention of Fraud, The Code of Business
Conduct and Ethics for Board Members and Senior Management, Fair Practices Code, Internal Guidelines on Corporate

Governance, Policy on ''fit & proper'' criteria of Directors etc.

36.1. Valuation principles

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price),
regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, Financial Instruments are classified based on a hierarchy of
valuation techniques.

36.2. Valuation governance

The Company''s Fair Value methodology and the governance over its models include a number of controls and other
procedures to ensure enough safeguards and maintain its quality and adequacy. All new product initiatives (including
their valuation methodologies) are as per the approved policy of the Company. The ongoing measurement on fair value
estimates is reviewed by the appropriate functional department of the Risk management and related finance functions.

36.3. Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value
hierarchy:

36.4. Valuation techniques
Mutual Fund

Mutual Funds are valued at the Net Asset Value (NAV) declared by the respective Mutual Fund in respect of each
particular Scheme and is classified as Level 2

Equity Instruments

Equity Instruments, which are not actively traded on public stock exchanges but the active prices on a regular basis are
available, such instruments are classified as Level 2. Other equity instruments are fair valued based on the average
of the Discounted Cash Flow (DCF) method and Net Assets Value (NAV) (as provided by independent valuer). It is
classified as Level 3.

Interest Rate Swaps, Currency Swaps and Forward Rate Contracts

The most frequently applied Valuation techniques include Forward Pricing and Swap Models and Forward Contract
using Present Value calculations by estimating future cash flows and discounting them with the appropriate yield curves
incorporating funding costs relevant for the position. These contracts are classified under Level 2.

Investment Property

The Company obtains independent valuations for its investment properties annually. The fair values of investment
property are determined by an independent registered valuer and the valuation technique adopted are Income approach,
Market Approach and Composite Approach. All resulting fair value estimates for investment property are included in
Level 2 (refer 14A).

36.5. Transfer between level 1 and level 2

There have been no transfers between Level 1 and Level 2 for the year ended 31^st March, 2024 and 31^st March,2025.

36.6. Movements in Level 3 Financial Instruments measured at Fair Value

The following tables show a reconciliation of the opening and closing amounts of Level 3 financial assets and liabilities
which are recorded at fair value. The Company requires significant unobservable inputs to calculate their fair value.

36.7. Key assumptions and range of inputs

(a) Net Asset Value (NAV) Method:

The Net Asset Value Method represents the value with reference to historical cost of assets owned by the company and
the attached liabilities on the valuation date.

(b) Discounted Projected Cash Flow:

Discounted Projected Cash Flow valuation technique is used to calculate Impact on fair value of level 3 financial
instruments measured at fair value using the following unobservable input such as Discount Rate, Recovery rates,
Interest Rate and Revenue from operations to ascertain the change.

(c) To arrive at fair value of unquoted investments average of Net Asset Value (NAV) and Discounted Projected Cash flow
as on 31^st March, 2025 is taken.

The range of values indicates the highest and lowest level input used in the valuation technique and, as such, only
reflects the characteristics of the instruments as opposed to the level of uncertainty to their valuation.

36.8. Quantitative analysis of Significant Unobservable inputs
Interest rate volatility

Interest Rate volatility measures the expected future variability of a market price. It is generally quoted as a percentage;
a higher number represents a more volatile instrument, for which larger swings in price (or interest rate) are expected.
Volatility is a key input used to estimate the future prices for the underlying instrument (equity share). Interest rate
volatility varies from time to time and therefore, it is not viable to make reliable and meaningful general statements about
volatility levels.

Discount Rates

Discount rates are used for calculating the present value of future cash flows. In discounted cash flow models, discount
rates are used as the direct reflection of the expected rate of return of the investments made by the company in the
due course of the business. Hence, these rates reflect the net present value of an asset. They generally reflect the
premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by
the uncertainty of the cash flows caused by the credit quality of the asset. They can be implied from market prices and
are usually unobservable for illiquid or complex instruments.

Recovery Rates

Recovery rates reflect the estimated loss that the company will suffer given expected defaults (Non-performing Assets).
The recovery rate is given as a percentage and reflects the opposite of loss severity (i.e., 100% recovery reflects 0%
loss severity). In line with the operation of the Company, probability of non-performing assets to loss assets plays
an important role to ascertain the recovery rates. Higher loss severity levels / lower recovery rates indicate lower
expected cash flows upon the default of the instruments. Recovery rates for complex, less liquid instruments are usually
unobservable and are estimated based on historical data.

Revenue from operations

Revenue is the value of all sales of goods and services recognized by a company in a period. Revenue (also referred to
as Sales, Turnover, or Income) forms the beginning of a company''s Income Statement and often considered the “Top
Line” of a business. Growth in revenue from operation directly impacts the profitability of the company, as operation
expenses are deducted from a company''s revenue to arrive at its profit.

36.9. Sensitivity of Fair Value measurements to changes in unobservable market data

Sensitivity of fair value measurements to changes in unobservable market data cannot be ascertained due to potential
off-sets from economic or accounting hedge relationships in place.

36.10. Carrying amount and Fair value of financial instruments

The following table indicates the carrying amounts and fair values of the Company''s financial instruments, by class, that
are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets
and non-financial liabilities.

Trade Receivable, Other Receivables and Trade Payables and Other Payables are carried at Carrying amount which
equals fair values, these are not carried at fair value in the financial statements.

36.11 Valuation Methodology of Financial Instruments not measured at Fair Value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which
are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated
for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above
tables and, as such, may differ from the techniques and assumptions explained in Note 36.4.

Short-term Financial Assets and Liabilities

For financial assets and financial liabilities, that have a short-term maturity (less than twelve months), the carrying
amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include:
Trade receivables and trade payables without a specific maturity.

Loans and advances to customers

The carrying amount of fixed interest rate bearing loans and floating interest rate bearing loans are taken as fair values.
Financial asset at amortised cost

The fair values of financial assets at amortised cost are the carrying amount of the financial asset.

Debt Securities

Fair value of traded bonds is market price of the bonds as on the balance sheet date or close to balance sheet date. In
case of Commercial Paper which is Current Liability i.e., short term maturity (less than or equal to twelve months), the
face value of outstanding commercial paper is considered as fair value.

Borrowing other than debt securities

The carrying amount of fixed interest rate bearing borrowings and floating interest rate bearing borrowings are taken as
fair values, since these are reasonable approximation of their fair value.

NOTE 37: RISK MANAGEMENT

37.1. Introduction and risk management structure

The Company being an Infrastructure Finance Company is exposed to various types of risks like credit risk, operational
risk, liquidity risk, market risk, foreign currency risk etc. The Company is fully committed to manage these risks in an
effective and proactive manner, for which HUDCO has in place a Comprehensive Risk Management Policy and Risk
Register cum Early Warning Signals aligned with its objectives covering both the internal and external environment.

The Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management
framework. With a view to minimize the impact of various risks to which the company is exposed to , HUDCO has
in place a Board level Committee i.e. ''Risk Management Committee'' (RMC) which reviews various suggestions/
recommendations/reports and action taken by the sub-committees namely :

• Credit & Operational Risk Management Sub-Committee (CORMSC); and

• Assets & Liabilities Management Committee (ALCO)

The Credit & Operational Risk Management Sub-Committee (CORMSC) oversees and ensures that the institution''s
credit policies are complied with and the laid down procedures are being consistently applied. The CORMSC also
oversees and ensures the implementation of operational risk framework to explicitly manage each and every source of
operational risk including Technology risk, Employee risk, Customer risk, Capital Assets risk and External risk.

Assets and Liabilities Management Committee (ALCO) reviews the liquidity and market risks and ensures management
of mismatches through liquidity gap analysis, interest rate sensitivity analysis as per RBI guidelines. It is ensured that
the ALM risks, if any, are managed within the permissible limits.

37.2. Credit Risk

For managing credit risk in the business at different levels including at appraisal, disbursement and post- disbursement,
the Company has in place a strong and effective credit appraisal mechanism containing comprehensive appraisal
techniques/ guidelines, and Comprehensive Risk Management Policy and Risk Register cum Early Warning Signals to
identify and mitigate stress in the credit portfolio.

37.2.1. Derivative Financial Instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on
the balance sheet.

With gross-settled derivatives, the Company is also exposed to a settlement risk, being the risk that the company honours its
obligation, but the counterparty fails to deliver the counter value.

37.2.2. Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was
? 1,24,340.71 Crore and ? 91,365.05 Crore as of 31^st March,2025 and 31^st March, 2024 respectively, being the total of the
carrying amount of balances with loans.

37.4.4. Equity Price Risk

Equity Price Risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices
and individual stocks. At increase in the value of the Company''s Equities at 31^st March, 2025 would have increased
Equity by ? 28.17Crore. An equivalent decrease would have resulted in an equivalent but opposite impact and would
cause a potential impairment, which would reduce profit before tax by approximately by ? 28.17Crore.

37.4.5. Operational Risk

Operational Risk Management Framework covers managing each and every source of Operational Risk as a distinct risk
to the Company''s safety and soundness. In order to mitigate the Operational Risk(s) of the organization, both internal
as well as external, including Technology Risk, Cyber Security Risk, Employee Risk, Capital Asset Risk, Compliance
Risks, Fraud Risk ,Legal Risk, etc. the Company has established a strong reporting and monitoring mechanism.

To manage the operational risks effectively, the Company has implemented a Comprehensive Risk Management Policy
and Risk Register cum Early Warning Signals, through which all operational risks are measured and categorised as
high, moderate or low and necessary steps are taken to manage these risks.

NOTE 38: HEDGE ACCOUNTING

1. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective

effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging
instrument.

The Company has used hypothetical derivative method for effectiveness assessment. Under this method, the hedged
risk is modelled as a derivative called the hypothetical derivative which has the same terms as the hedged item. The
hypothetical derivative approach compares the change in fair value of the hedging instrument with the change in the fair
value of the hypothetical derivative. Prospective hedge effectiveness testing has been performed using the sensitivity
analysis approach. Under this approach, the impact of a uniform /- 5% shock on the forward curve has been performed
to assess the effectiveness of the hedge.

The currency swap and option contracts are denominated in the same currency as the highly probable future foreign
currency principal and interest payments, therefore the hedge ratio is 1:1.

NOTE 40: Ind AS-116 Leases

a. Company as a Lessee

The Company has Lease Contracts for the Office Building, which are cancellable by the both the lessor and lessee.
The Company has some Contracts, which are cancellable by the either lessor and lessee and at present, there is no
estimation by the Company to continue or discontinue the same. Further amount of that leases are not material for the
Company and therefore Company is not creating ROU on that asset based on the materiality as per the guidance given
under the Indian Accounting Standard. Besides Company used hindsight in determining the Lease Term, where the
Contract contained options to extend or terminate the lease and therefore its leases are covered under the Short-Term
Leases as per the guidance under the Ind AS-116.

Amounts recognised in Statement of Profit and Loss relating to Short Term Leases is ? 1.81 Crore during the year 2024¬
25 and in the previous year 2023-24 is ?1.73 Crore.

b. Company as a Lessor

The Company has given its Assets on the leases, details of the same are given under the “Note No-14A Investment
Property”.

Lease Rental recognized as Income during the year 2024-25 is ? 56.29 Crore and in the Previous year 2023-24 is ?
54.76 Crore.

NOTE 41: EXPLANATORY NOTES TO ACCOUNTS

1) The financial statements for the Financial Year ended 31^st March, 2025 have been drawn up on the basis of Ind-AS that
are applicable to the Company based on MCA Notification G. S. R. 111 (E) and G. S. R. 365 (E) dated 16^th February,
2015 and 30^th March, 2016 respectively as amended from time to time. Any guidance/ clarifications issued by RBI or
other regulators are adopted/ implemented as and when they are issued/ applicable. The results have been prepared
based on the Division III of Schedule III for Non-Banking Financial Companies as per Notification G.S.R. 1022 (E)
issued by the Ministry of Corporate Affairs on 11^th October, 2018 and as amended from time to time.

3) (A) - Andrews Ganj Project

i. HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of the then Ministry of Urban Development,
(MoUD) in the year 1989-90.

ii. As per minutes of the meeting held on 7^th September, 1995, it has been agreed to pay interest @ 17% p.a. (simple) on
the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

iii. As per Perpetual Lease Deed dated 4^th July, 1997, the Company is liable to make available “Net Resources” from the
development and disposal of properties of the AGP to then MoUD and accordingly the Company was crediting interest
on Net Resources generated on the project upto 3^rd November, 2004. Subsequently, a separate “No Lien AGP Account”
has been opened under the name of “HUDCO AGP Account”, in which the surplus lying to the credit of the then MoUD
was credited and interest accrued/ earned on “No Lien AGP Account” was also credited to that account.

iv. HUDCO contends that as per minutes of the meeting held on 7^th September, 1995 and in terms of Perpetual Lease
Deed dated 4^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is that it is working
as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA-GOI (erstwhile MoUD) and
there is no financial liability of HUDCO in respect of AGP. This has been upheld by learned Shri GE Vahanvati, the then
Solicitor General of India, vide his opinion dated 12^th April, 2005. This opinion was re-confirmed by learned Shri GE
Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009. The opinion was also duly endorsed
by the then Law Secretary and Law Minister of Government of India.

v. Keeping this position in view and in accordance with HUDCO''s Board decision in 459^th meeting dated 24^th August,
2009, HUDCO has been making payments / settling claims on Ministry''s behalf and accounting them in “No Lien AGP
Account” being separately maintained by HUDCO. As on 31^st March, 2025, this account has a deficit in the form of
debit balance of ? 626.51 Crore, recoverable from MoHUA (erstwhile MoUD). This represents amount paid by HUDCO
on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above the recoveries and
the accumulated interest amounting to ? 350.28 Crore charged @ 10.75% p.a. (simple), on excess of expenditure
over recoveries. The MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO
shall continue to implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall
be looked into for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that
HUDCO as a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court
orders in cases related to the project. The company vide its letter dated 30^th September, 2015, conveyed its reservation

to accept the decision for bearing the liabilities of Andrews Ganj project as HUDCO is acting as an agent of MoHUA,
Government of India, for AGP, in terms of perpetual lease deed conditions and other agreed terms.

vi. The Ministry has been informed specifically of the above facts and figures on various occasions through correspondence
as also in the meetings. A communication was received from Dy. L&DO vide letter dated 22^nd March, 2016 wherein
Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj project and manage “No Lien AGP
Account” in line with the terms and conditions as stipulated in the Perpetual Lease Deed dated 4^th July, 1997. The
Ministry again informed in specific vide Dy L&DO letter dated 31^st May, 2018 that HUDCO as a lessee is permitted to
incur/book maintenance and legal expenditure in respect to Andrews Ganj Project from “No Lien AGP Account”. Like
earlier years, in-line with the minutes of meeting dated 7^th September, 1995, the perpetual lease deed dated 4^th July,
1997, income of ? 29.46 Crore on account of interest accrued on AGP Project has been credited to Statement of Profit
and Loss for the period year ended 31^st March, 2025.

vii. As decided by HUDCO Board in its 596^th meeting held on 14^th June, 2018, Ministry of Housing and Urban Affairs
has been requested vide letter dated 9^th July, 2018 to consider taking over the Andrews Ganj project with assets
and liabilities and pay the amount incurred / to be incurred by HUDCO, towards implementing the project. It has also
been conveyed that “till the project is taken over by Ministry”, HUDCO shall be continuing implementing the project
as per existing arrangements and continue booking maintenance and legal expenses, interest @ 10.75% p.a. and
administrative charges @1.5% in “No Lien AGP Account”.

viii. The company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession of real
estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient
to recover aforesaid amount of ? 626.51 Crore, as on 31^st March, 2025.

ix. MoHUA was requested vide letter dated 13^th January, 2021 to make arrangement towards reimbursement of the amount
recoverable endorsement for settling the same from the project proceeds as and when the same are realized, which is
also in line with the Lease agreement and well settled and agreed.

In reply to the same, Ministry vide letter dated 10^th March, 2021 had requested for certain additional information including
the breakup details of principal amount and interest amount as contained in the “No Lien AGP Account” to process
HUDCO''s request.

Ministry vide letter dated 28^th June, 2021 had stated that the “HUDCO''s proposal is under examination in consultation
with IFD, MoHUA. Till the proposal of HUDCO vide their letter dated 13^th January, 2021 is approved, the existing
arrangement may be continued as conveyed vide this office letter dated 22^nd March, 2016 and 31^st May, 2018”.

In the review meeting held by JS (L&E), MoHUA on 19^th March 2025 it was desired to lower the applicable Rate of
Interest charged by HUDCO on outstanding balance of ''No lien AGP account''. Pursuant thereto, HUDCO vide letter
dated 28^th March 2025 to Ministry has suggested 8.75% rate of interest with prospective effect from 1^st April 2025; the
confirmation on the same by the Ministry is awaited.

HUDCO vide letter dated 13^th March 2025 informed the Ministry about the Judgement and order dated 13^th February
2025 of the Hon''ble Supreme Court, which has been noted by the Ministry vide its letter dated 24^th April 2025.

Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account
and any expenditure related thereof. In case of any liability by virtue of any court order or otherwise, the same shall be
in the account of ''No lien AGP Account'', based on the facts and documents and the legal opinions obtained by HUDCO.

(B) Litigation Status

i. Tomorrowland Technologies Exports Ltd.

The Company had allotted a hotel site including car parking space to M/s Tomorrowland Technologies Exports
Ltd. i.e., TTEL (formerly known as M/s. M S Shoes East Limited). Due to default in payment of instalments by
TTEL, the Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid
by TTEL in terms of the allotment letter.

TTEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment
letter by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 3^rd July, 2010 against
HUDCO. HUDCO filed first appeal against the Order dated 3.07.2010 of Sr. Civil Judge before the Additional
District Judge (ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and
passed the judgment in favour of TTEL. HUDCO filed Regular Second Appeal (RSA) before the Hon''ble High
Court of Delhi which vide its judgement dated 3^rd June, 2016 allowed the second appeal of HUDCO and upheld
the cancellation of allotment by HUDCO w.r.t. Hotel Site & car Parking slots. TTEL challenged the High Court
Order dated 3.06.2016 by filing SLP (C) No.: 34338 / 2016 before the Hon''ble Supreme Court of India. The
Hon''ble Supreme Court vide its judgment and order dated 13.02.2025 has decided the said SLP and has directed

for refund of the forfeited amount of Rs.28,11,31,939/- to TTEL within three months from the date of the order,
failing which, TTEL shall be entitled to interest @ 6% per annum till the date of payment.

The allotment of 9 blocks of guest houses, restaurants, kitchens, and shops, which were allotted to TTEL,
was cancelled due to default in payment of instalment by TTEL and amount of first instalment paid by TTEL
was forfeited as per terms of allotment letter. TTEL filed civil suit challenging the cancellation of allotment, for
permanent injunction and possession, against HUDCO & Union of India. The Hon''ble High Court, vide Order
dated 10^th August, 2016, directed that HUDCO & Union of India should consider the proposal given by TTEL for
refund of entire amount deposited by way of 1^st instalment by it with HUDCO along with interest at such rate which
may be deemed appropriate by Court.

In view of Hon''ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on
23^rd August, 2016 resolved to approve the proposal to refund first instalment forfeited by HUDCO excluding
earnest money & the interest for delayed payment paid thereof by TTEL for guest house blocks after adjusting the
commercial losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of
completion of project and subject to necessary approval / NOC of MoUD, Govt. of India.

The Hon''ble High Court passed a decree dated 13^th January, 2017 for refund of the first instalment excluding the
earnest money to TTEL along-with interest @ 6% p.a., w.e.f. 30^th January, 1995 till date of payment and directed
HUDCO to refund the interest paid by TTEL (?0.99 Crore) on the delayed period of payment of 1^st instalment (from
30^th November, 1994 till 30^th January, 1995). If the entire amount is not paid on or before 31^st December, 2017,
the rate of interest would then stand enhanced to 11% p.a. However, the decree was made in-executable till 30^th
June, 2017. Both HUDCO and TTEL challenged the said decree dated 13.01.2017.

TTEL filed Review Petition in the month of May, 2017, before Hon''ble High Court of Delhi for review of the Decree
dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% p.a. on quarterly
rests. Subsequently, Review Petition filed by TTEL was disposed off by the High Court on 12^th December, 2017.
Thereafter, TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Hon''ble Supreme Court against
the Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December, 2017. The same have
been disposed off by the Hon''ble Supreme Court of India vide its Order dated 10.12.2024 and referred them to
Delhi High Court where they are listed as Regular First Appeal No. 1/2025 & 2/2025 of TTEL. The said two RFAs
of TTEL are listed with the RFA No. 79/2018 of HUDCO and are currently pending.

The Company also filed application for recalling the Hon''ble High Court Order dated 13^th January, 2017, in view
of the Review Petition filed by TTEL and directions of Govt. of India. The matter was listed on 28^th August, 2018,
after hearing all parties, Hon''ble High Court dismissed the “Recall Application” of HUDCO. HUDCO filed SLP in
Supreme Court challenging the High Court Order dated 28^th August, 2018 and 13^th January, 2017. Vide Order
dated 18^th September,2018, the Hon''ble Supreme Court dismissed the SLP as withdrawn, with liberty to HUDCO
to file all legal objections regarding the executability of the decree in the executing Court.

Further, TTEL also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by
TTEL on 23^rd December, 2017. Thereafter, TTEL has filed Revised Execution Petition, making Govt. of India also
a party and claiming rate of interest @ 11% p.a. as per the decree dated 13^th January, 2017.The matter was listed
on 3^rd May, 2018, wherein the Hon''ble High Court first directed for attachment of HUDCO Property i.e. HUDCO
Bhawan, IHC, Lodhi Road, New Delhi. However, after hearing the submission of HUDCO, vide the same order,
Hon''ble High Court kept the attachment order of HUDCO Property in abeyance till the next date and also directed
that HUDCO will not sell the property at Andrews Ganj, Delhi.

Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO''s consent to
perform the terms of the Order dated 13^th January, 2017 was conditional on UOI''s support and in the event any
liability is indeed ascribed to HUDCO, the same should then be recoverable from the UOI”.

In view of the Supreme Court''s Order dated 18^th September, 2018, HUDCO filed objection in the Execution
Petition, pending in Delhi High Court. The matter was listed on 29^th October, 2018. After hearing the submission
of HUDCO''s Counsel, the Hon''ble Court dismissed the objections. HUDCO filed two appeals in Delhi High Court
as under:

1. Regular first Appeal (RFA 79/2018) against the final order/ decree 13^th January, 2017 and order dated 28^th
August, 2018 (Dismissal of Recall application by High Court). The said Regular First Appeal of HUDCO is
currently pending.

2. Execution First Appeal (EFA No 19/2018) against the order dated 29^th October, 2018, wherein objections of
HUDCO in execution petition were dismissed. The matter was listed on 27^th November, 2018. After hearing the
matter, the Hon ble Court stayed the execution proceeding pending in Delhi High Court till the next date. The
matter was listed again on the application of the M/s TTEL for vacation of stay on 8^th July, 2020 before Division
Bench, Delhi High Court, after hearing the matter, the Hon''ble Court directed that Execution First Appeal (EFA)
19/2018) shall be adjourned sine die and will be listed after the final disposal of the Regular First appeal (RFA
79/2018). The parties are at liberty to move the application for revival of EFA after final disposal of RFA 79/2018.
Till the further order, the stay on the Execution proceedings shall be continued. Both the cases are pending.

TTEL filed SLP in Supreme Court, against the High Court Order dated 27^th November, 2018, wherein High
Court stayed the execution proceedings. However, the same has been withdrawn by TTEL on 14^th January,
2019.

(ii) M/s. Ansal Properties and Industries Ltd. (APIL)

The arbitrator had passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to
?8.84 Crore along with interest @ 18% p.a. on 28^th July, 2005 in respect of the property leased to APIL at AGP.
The Arbitrator had also allowed the counter claim of HUDCO amounting to approximately ?0.85 Crore along with
interest @ 18% p.a. on account of maintenance charges w.e.f. 1^st January, 2001 up-to 31^st July, 2005. HUDCO
challenged the award before the Hon''ble High Court of Delhi and, as per the directions of the court, deposited a
sum of ?7.99 Crore in the court out of “No Lien AGP Account”.

APIL invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the
arbitrator pronounced the award on 21^st July, 2006 holding therein that APIL is not liable to pay the ground rent
up to October, 1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The
amount of ?3.93 Crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent
payment dues w.e.f. November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO filed petition
challenging the award before the Hon''ble High Court of Delhi. The Hon''ble High Court on 10^th May, 2012 set
aside the arbitration award dated 21^st July, 2006. APIL filed an appeal against the above-mentioned order before
Division Bench of Hon''ble High Court, Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL
appeal and upheld the Arbitrators award. HUDCO filed SLP on 10^th May, 2013 before Hon''ble Supreme Court
against this order which is currently pending.

On the last day of hearing, i.e., 5^th January,2023, APIL''s counsel informed the court that vide Order dated 16^th
November 2022, APIL was declared insolvent by NCLT and therefore, now the APIL is under Moratorium. Hence
as per the law, all the proceedings pending against APIL are automatically stayed by virtue of law. Further, HUDCO
filed its total claims due against APIL before the Resolution Professional appointed for the above purpose. The
claim of HUDCO was not considered as the matter was related to specific property only.

Recently, application of the IL&FS under Section 7 of the IBC, 2016 was admitted by the NCLT, New Delhi against
Ansal Properties & Infrastructure Ltd. (APIL) on 25.02.2025 and Sh. Navneet Kumar Gupta appointed as the IRP.
As moratorium is also imposed, all the proceedings pending against APIL are now under moratorium. IRP issued
a public notice on 28.02.2025 for filing of claim by the claimants of APIL on or before 11.03.2025. Accordingly,
HUDCO has filed claim of Rs. 401.54 Crore (till 25^th Feb 2025) on APIL in the stipulated timeline. The matter is
pending.

4) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi
to EPFO on Long Term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and ?0.35 Crore
is recoverable from EPFO.

6) The receipts from the agencies in the loan accounts is appropriated as per loan agreement in the following order:

a. Other dues/ expenses recoverable

b. Penal interest

c. Normal interest

d. Principal

The appropriation stated above is apportioned vertically amongst the above components of the loan overdue, in order

stated above at borrower level. In the event of excess payment, the same is adjusted towards principal.,

HUDCO has Board approved Technical Write off Policy.

7) In terms of the settlement under Insolvency and Bankruptcy Code (IBC) proceedings/ One time settlement (OTS)/

Restructuring, the company has written off loans amounting to Rs. 35.17 Crores (Previous Year Rs.46.58 Crores). The

details of write-offs are as below:

a) During the Current Year (a) During the FY 2024-25, the company has implemented settlement plan in case of
Coastal Energen Private Limited with principal outstanding Rs. 243.92 Crore, as per NCLT order. As per the order
the account was settled by payment of Rs. 208.75 Crore, and balance principal amount of Rs. 35.17 Crores have
been written off.

b) During the Previous Year (a) During the FY 2023-24, the company has implemented restructuring plan in case of
Pipavav Defense and Offshore Engineering Co. Ltd with principal outstanding Rs. 84.03 Crore, as per NCLT order.
As per the order part of the outstanding loan was converted into a debt of Rs. 34.40 Crore, with an upfront payment
of Rs. 3.05 Crore and balance principal amount of Rs. 46.58 Crores have been written off.

8) HUDCO had earned dividend income of ? 7.38 Crore (Previous Year: ? 5.89 Crore) during the Financial Year 2024¬
2025.

9) The company has elected to continue with the carrying value of all its property, plant and equipment and intangible
assets and use that carrying value as the deemed co

---

Mar 31, 2024

4.22 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of profit and loss.

Reimbursements expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

4.23 Contingent liabilities and assets

The Company does not recognize a contingent liability but discloses its existence in the financial statements Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation

• A present obligation arising from past events, when no reliable estimate is possible

• A possible obligation arising from past events, unless the probability of outflow of resources is remote.

• Contingent assets are not recognised. A contingent asset is disclosed, as required by Ind AS 37, where an inflow of economic benefits is probable.

4.24 “Materiality of Events / Information “

“Financial impact of events / information relating to prior years identified in the current year which are not material are accounted for in the current year and are not corrected retrospectively through restatement of comparative amounts. Events or information are considered to be material if they could, individually or collectively, influence the economic decisions of the users of the financial statements and on the basis of governing laws, rules, regulations or recommendations issued by competent authorities.”

4.25 Earnings per Share

The basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares outstanding during the year. The number of equity shares and potentially dilutive equity shares are adjusted for share splits /reverse share splits and bonus shares, as appropriate

Significant accounting judgements, estimates and assumptions.

• The preparation of Standalone financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period.

• Management believes that the estimates used in the preparation of financial statement are prudent and reasonable. Future result could differ from these estimates. Any revision to accounting estimate is recognized prospectively in current and future period.

Judgements

In the process of applying the company''s accounting policies, management has made the following judgements, which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

5.1 Business model assessment

• Classification and measurement of financial assets depends on the results of the SPPI and the business model test. The Company determines the business model at a level that reflects how Companies of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Company monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Company''s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.

Estimates and Assumptions

• The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur

5.2 Fair value of financial instruments

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. Judgements and estimates include considerations of liquidity and model inputs related to items such as credit risk (both own and counterparty), correlation and volatility.

5.3 Effective Interest Rate (EIR) method

The company''s EIR methodology recognises interest income / expense using a rate of return that represents the best estimate of a constant rate of return over the expected behavioral life of loans given / taken and recognises the effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges).

This estimation, by nature, requires an element of judgement regarding the expected behaviour and life-cycle of the instruments, as well expected changes to India''s base rate and other fee income/expense that are integral parts of the instrument.

5.4 Impairment of financial asset

The measurement of impairment losses across all categories of financial assets requires judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

The company''s ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgements and estimates include:

- The Company''s grading model, which assigns PDs to the individual grades

- The Company''s criteria for assessing if there has been a significant increase in credit risk and so allowances for financial assets should be measured on a LTECL basis and the qualitative assessment

- The segmentation of financial assets when their ECL is assessed on a collective basis - Development of ECL models, including the various formulas and the choice of inputs

- Determination of associations between macroeconomic scenarios and, economic inputs, such as unemployment levels and collateral values, and the effect on PDs, EADs and LGDs

- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into the ECL models

It has been the Company''s policy to regularly review its models in the context of actual loss experience and adjust when necessary.

5.5 Provisions and other contingent liabilities

The Company operates in a regulatory and legal environment that, by nature, has a heightened element of litigation risk inherent to its operations. As a result, it is involved in various litigation, arbitration and regulatory investigations and proceedings in the ordinary course of the Company''s business.

Given the subjectivity and uncertainty of determining the probability and amount of losses, the Company takes into account a number of factors including legal advice, the stage of the matter and historical evidence from similar incidents. Significant judgement is required to conclude on these estimates.

5.6 Revenue from contract with Customers

The Company''s contracts with customers include promises to transfer services to a customer. The Company assesses the services promised in a contract and identifies performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.

The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or services, transfer of significant risks and rewards to the customer, etc.

5.7 Leases

Ind AS-116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. Company also used judgement in determining the low value assets as given under the Ind AS-116.

5.8 Income Taxes

Significant estimates are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions and in respect of expected future profitability to assess deferred tax asset.

NOTE: 10(a)(3) Impairment assessment

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.

- The Company''s definition and assessment of default and cure.

- How the Company defines, calculates and monitors the probability of default, exposure at default and loss given default.

- When the Company considers there has been a significant increase in credit risk of an exposure.

- The Company''s policy of segmenting financial assets where ECL is assessed on a collective basis.

- The details of the ECL calculations for Stage 1, Stage 2 and Stage 3 assets.

NOTE: 10(a)(4)(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 90 days past due on its contractual payments.

NOTE: 10(a)(4)(ii) Probability of default

The 12-month probability of default is calculated using incremental NPA approach in respect of Stage-I loan portfolio. For Stage-II loan portfolio, it is necessary to derive the Life Time Probability of Default, the same is worked out for each loan account falling under Stage-II, by extrapolating the 12 months PD over the residual maturity of the loan. In respect of the loans falling under Stage-III, the Probability of Default is considered as 100%.

NOTE: 10(a)(4)(iii) 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 too.

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12mECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments.

NOTE: 10(a)(4)(iv) Loss given default

The Company segments its lending products into smaller homogeneous portfolios (Government - Housing,Government -Urban Infrastructure,Non Government and Retail), 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) as well as borrower characteristics.

NOTE: 10(a)(4)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments is subject to 12mECL or life time 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 ECLs 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.

NOTE: 10(a)(4)(vi) Grouping financial assets measured on a collective basis

As explained in Note 4.17, the Company calculates ECLs on collective or individual basis .

The Company calculates ECLs on collective basis on following asset classes:

- Government - Housing

- Government - Urban Infrastructure

- Non Government

- Retail

The Company calculates ECLs on individual basis on all Stage 3 assets of Non Government portfolio.

NOTE 34: Capital

Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objectives of the Company''s capital management are safety and security of share capital and maximize the shareholders'' wealth.

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the regulator viz., RBI/NHB. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI/NHB.

Company has complied in full with all its externally imposed capital requirements over the reporting period.

Capital to Risk-weighted Assets Ratio

The Company is complying with the Capital Adequacy requirements as prescribed by the Master Direction-Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021. Being an NBFC-Housing Finance Company (NBFC-HFC), HUDCO is required to maintain Capital Adequacy Ratio or Capital to Risk Weighted Assets Ratio (CRAR) of 15% (with a minimum Tier I Capital of 10%), computed by dividing company''s Tier-I and Tier-II capital by Risk Weighted Assets.

NOTE 36: Fair Value Measurement

36.1. Valuation principles

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, Financial Instruments are classified based on a hierarchy of valuation techniques.

36.2. Valuation governance

The Company''s Fair Value methodology and the governance over its models include a number of controls and other procedures to ensure enough safeguards and maintain its quality and adequacy. All new product initiatives (including their valuation methodologies) are as per the approved policy of the Company. The ongoing measurement on fair value estimates is reviewed by the appropriate functional department of the Risk management and related finance functions.

36.3. Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value hierarchy:

36.4. Valuation techniques Mutual Fund

Mutual Funds are valued at the Net Asset Value (NAV) declared by the respective Mutual Fund in respect of each particular Scheme and is classified as Level 2

Equity Instruments

Equity Instruments, which are not actively traded on public stock exchanges but the active prices on a regular basis are available, such instruments are classified as Level 2. Other equity instruments are fair valued based on the average of the Discounted Cash Flow (DCF) method and Net Assets Value (NAV) (as provided by independent valuer). It is classified as Level 3.

Interest Rate Swaps, Currency Swaps and Forward Rate Contracts

The most frequently applied Valuation techniques include Forward Pricing and Swap Models and Forward Contract using Present Value calculations by estimating future cash flows and discounting them with the appropriate yield curves

incorporating funding costs relevant for the position. These contracts are classified under Level 2.

Investment Property

The Company obtains independent valuations for its investment properties annually. The fair values of investment property are determined by an independent registered valuer and the valuation technique adopted are Income approach, Market Approach and Composite Approach. All resulting fair value estimates for investment property are included in Level 2 (refer 14A).

36.5. Transfer between level 1 and level 2

There have been no transfers between Level 1 and Level 2 for the year ended 31^st March, 2023 and 31^st March,2024.

36.6. Movements in Level 3 Financial Instruments measured at Fair Value

The following tables show a reconciliation of the opening and closing amounts of Level 3 financial assets and liabilities which are recorded at fair value. The Company requires significant unobservable inputs to calculate their fair value.

36.7. Key assumptions and range of inputs

(a) Net Asset Value (NAV) Method:

The Net Asset Value Method represents the value with reference to historical cost of assets owned by the company and the attached liabilities on the valuation date.

(b) Discounted Projected Cash Flow:

Discounted Projected Cash Flow valuation technique is used to calculate Impact on fair value of level 3 financial instruments measured at fair value using the following unobservable input such as Discount Rate, Recovery rates, Interest Rate and Revenue from operations to ascertain the change.

(c) To arrive at fair value of unquoted investments average of Net Asset Value (NAV) and Discounted Projected Cash flow as on 31^st March, 2024 is taken.

The range of values indicates the highest and lowest level input used in the valuation technique and, as such, only reflects the characteristics of the instruments as opposed to the level of uncertainty to their valuation.

All changes in the fair market value would be reflected in the Statement of profit and loss based on the classification FVTPL.

The table summarises the valuation techniques together with the significant unobservable inputs used to calculate the fair value of the Company''s Level 3 assets and liabilities.

36.8. Quantitative analysis of Significant Unobservable inputs Interest rate volatility

Interest Rate volatility measures the expected future variability of a market price. It is generally quoted as a percentage; a higher number represents a more volatile instrument, for which larger swings in price (or interest rate) are expected. Volatility is a key input used to estimate the future prices for the underlying instrument (equity share). Interest rate volatility varies from time to time and therefore, it is not viable to make reliable and meaningful general statements about volatility levels.

Discount Rates

Discount rates are used for calculating the present value of future cash flows. In discounted cash flow models, discount rates are used as the direct reflection of the expected rate of return of the investments made by the company in the due course of the business. Hence, these rates reflect the net present value of an asset. They generally reflect the premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by the uncertainty of the cash flows caused by the credit quality of the asset. They can be implied from market prices and are usually unobservable for illiquid or complex instruments.

Recovery Rates

Recovery rates reflect the estimated loss that the company will suffer given expected defaults (Non-performing Assets). The recovery rate is given as a percentage and reflects the opposite of loss severity (i.e., 100% recovery reflects 0% loss severity). In line with the operation of the Company, probability of non-performing assets to loss assets plays an important role to ascertain the recovery rates. Higher loss severity levels / lower recovery rates indicate lower expected cash flows upon the default of the instruments. Recovery rates for complex, less liquid instruments are usually unobservable and are estimated based on historical data.

Revenue from operations

Revenue is the value of all sales of goods and services recognized by a company in a period. Revenue (also referred to as Sales, Turnover, or Income) forms the beginning of a company''s Income Statement and often considered the “Top Line” of a business. Growth in revenue from operation directly impacts the profitability of the company, as operation expenses are deducted from a company''s revenue to arrive at its profit.

36.9. Sensitivity of Fair Value measurements to changes in unobservable market data

Sensitivity of fair value measurements to changes in unobservable market data cannot be ascertained due to potential off-sets from economic or accounting hedge relationships in place.

36.10. Fair Value of Financial Instruments not measured at Fair Value

The following table indicates the carrying amounts and fair values of the Company''s financial instruments, by class, that are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets and non-financial liabilities.

36.11.1. Valuation Methodology of Financial Instruments not measured at Fair Value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables and, as such, may differ from the techniques and assumptions explained in Note 36.4.

Short-term Financial Assets and Liabilities

For financial assets and financial liabilities, that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and cash equivalents, Trade receivables, balances other than cash and cash equivalents and trade payables without a specific maturity.

Loans and advances to customers

The carrying amount of fixed interest rate bearing loans and floating interest rate bearing loans are taken as fair values. Financial asset at amortised cost

The fair values of financial assets at amortised cost are the carrying amount of the financial asset.

Debt Securities

Fair value of traded bonds is market price of the bonds as on the balance sheet date or close to balance sheet date. In case of Commercial Paper which is Current Liability i.e., short term maturity (less than or equal to twelve months), the face value of outstanding commercial paper is considered as fair value.

Borrowing other than debt securities

The carrying amount of fixed interest rate bearing borrowings and floating interest rate bearing borrowings are taken as fair values, since these are reasonable approximation of their fair value

NOTE 37: RISK MANAGEMENT

37.1. Introduction and risk management structure

The Company, being a Housing Finance Company, is exposed to various types of risks like credit risk, operational risk, liquidity risk, market risk and foreign currency risk. Company is fully committed to manage these risks in an effective and proactive manner, for which HUDCO has in place a Risk Management Policy and Operating Manual in line with its objectives covering both the internal and external environment. With a view to minimize the impact of various risks to which Company is exposed to, Company has in place a Board level Committee namely ''Risk Management Committee of the Board''(RMCB) which reviews various suggestions/ recommendations/reports and action taken by three subcommittees namely:

• Assets & Liabilities Management Committee (ALCO);

• Credit Risk Management Committee (CRMC); and

• Operational Risk Management Committee (ORMC)

HUDCO has effective Assets and Liabilities Management system. ALCO reviews the risks relating to Assets and Liabilities and ensures management of mismatches through liquidity gap analysis, interest rate sensitivity analysis as per NHB guidelines. It is ensured that the ALM risks, if any, are managed within the permissible limits.

The Credit Risk Management Committee (CRMC) oversees and ensures that the institution''s credit policies are complied with and the procedures are being consistently applied.

The Operational Risk Management Committee (ORMC) oversees and ensures the implementation of operational risk framework to explicitly manage each and every source of operational risk including Technology risk, Employee risk, Customer risk, Capital Asset risk and External risk.

37.2. Credit Risk

For management of credit risks in an effective manner, Company has established a strong appraisal mechanism containing comprehensive appraisal techniques/ guidelines in order to ensure timely repayments of principal & interest amount

37.2.1. Derivative Financial Instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet.

With gross-settled derivatives, the Company is also exposed to a settlement risk, being the risk that the company honours its obligation, but the counterparty fails to deliver the counter value.

37.2.2. Exposure to Credit Risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was '' 91,365.05 crore and '' 79,236.97 crore as of 31^st March, 2024 and 31^st March, 2023 respectively, being the total of the carrying amount of balances with loans.

37.2.3. Analysis of risk concentration

HUDCO takes into consideration NHB/RBI norms for risk categorisation and the norms adopted for extending loan under HUDCO Niwas. Higher LTV is permissible for lower loan amounts while LTV reduces with the higher loan amounts. (Refer Note:10A)

37.4.3. Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument, denominated in currency other than functional currency, will fluctuate because of changes in foreign exchange rates.

(i) Foreign currency risk monitoring and management

Foreign Currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency i.e. INR. The company has overseas foreign currency borrowings and is exposed to foreign exchange risk primarily with respect to the USD and JPY. In order to mitigate the risks associated with foreign currency fluctuations, Company has a Foreign Currency Risk Management policy. It uses a combination of currency swaps and options to hedge its exposure to foreign currency risk. These derivative transactions are done for hedging purpose and not for trading or speculative purpose. The policy lays down the appropriate systems and controls to identify, measure and monitors, the currency risk for reporting to the Management.

(ii) Foreign currency exposure

The Company is exposed to foreign currency risk mainly on its borrowings denominated in foreign currency. The carrying amount of the Company''s foreign currency denominated borrowings is as follows:

37.4.4. Equity Price Risk

Equity Price Risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices and individual stocks. At 10 per cent increase in the value of the Company''s Equities at 31^st March, 2024 would have increased Equity by ? 27.24 crore. An equivalent decrease would have resulted in an equivalent but opposite impact and would cause a potential impairment, which would reduce profit before tax by approximately ? 27.24 crore.

37.4.5. Operational Risk

In order to mitigate the Operational Risk(s) associated with the operations of the organization, both internal as well as external, including Technology Risk, Employee Risk, Capital Asset Risk, External Risk, Compliance Risks viz. External Fraud, Legal Risk, etc, the Company has established a strong reporting and monitoring mechanism.

Operational Risk Management Framework covers managing each and every source of Operational Risk as a distinct risk to the institution''s safety and soundness. The requisite information on the Operational Risk is obtained through quarterly reports of “Operational Risk Factors and Key Risk Indicators (KRIs)” from Regional Offices/Departments, which are further reviewed and analysed for mitigation of Operational Risk.

NOTE 38: HEDGE ACCOUNTING

The hedging instruments which meets the qualifying criteria for hedge accounting are designated as cash flow hedge. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in Other Comprehensive Income. The change in intrinsic value of hedging instruments is recognised in ''Effective Portion of Gain/(Losses) in Cash Flow Hedge''. The amounts recognised in such reserve are reclassified to the Statement of Profit or Loss when the hedged item affects profit or loss. Further, the change in fair value of the time value of a hedging instrument is recognised in ''Cost of Hedging Reserve''. The amounts recognised in such reserve are amortised to the Statement of Profit and Loss on a systematic basis.

Hedge accounting is discontinued when the hedging instrument expires, or terminated, or exercised, or when it no longer qualifies for hedge accounting.

(i) Hedge Effectiveness and Hedge Ratio

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.

The Company has used hypothetical derivative method for effectiveness assessment. Under this method, the hedged risk is modelled as a derivative called the hypothetical derivative which has the same terms as the hedged item. The hypothetical derivative approach compares the change in fair value of the hedging instrument with the change in the fair value of the hypothetical derivative. Prospective hedge effectiveness testing has been performed using the sensitivity analysis approach. Under this approach, the impact of a uniform /- 5% shock on the forward curve has been performed to assess the effectiveness of the hedge.

The currency swap and option contracts are denominated in the same currency as the highly probable future foreign currency principal and interest payments, therefore the hedge ratio is 1:1.

NOTE 39: (B) Ind AS-116 Leases

a. Company as a Lessee

The Company has Lease Contracts for the Office Building, which are cancellable by the both the lessor and lessee. The Company has some Contracts, which are cancellable by the either lessor and lessee and at present, there is no estimation by the Company to continue or discontinue the same. Further amount of that leases are not material for the Company and therefore Company is not creating ROU on that asset based on the materiality as per the guidance given under the Indian Accounting Standard. Besides Company used hindsight in determining the Lease Term, where the Contract contained options to extend or terminate the lease and therefore its leases are covered under the Short-Term Leases as per the guidance under the Ind AS-116.

Amounts recognised in Statement of Profit and Loss relating to Short Term Leases is ?1.73 crore during the year 202324 and in the previous year 2022-23 is ?1.56 crore.

b. Company as a Lessor

The Company has given its Assets on the leases; details of the same are given under the “Note No-14A Investment Property”.

Lease Rental recognized as income during the year 2023-24 is ?54.76 Crore and in the Previous year 2022-23 is '' 54.18 crore.

NOTE 40: EXPLANATORY NOTES TO ACCOUNTS

1) The financial results for the Financial Year ended 31^st March, 2024 have been drawn up on the basis of Ind-AS that are applicable to the Company based on MCA Notification G. S. R. 111 (E) and G. S. R. 365 (E) dated 16^th February, 2015 and 30^th March, 2016 respectively as amended from time to time. Any guidance/ clarifications issued by NHB/RBI or other regulators are adopted/ implemented as and when they are issued/ applicable. The results have been prepared based on the Division III of Schedule III for Non-Banking Financial Companies as per Notification G.S.R. 1022 (E) issued by the Ministry of Corporate Affairs on 11^th October, 2018 and as amended vide notification GSR (E) dated 24^th March, 2021.

3) Andrews Ganj Project

(a) (i) HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of the then Ministry of Urban

Development, (MoUD) in the year 1989-90.

(ii) As per minutes of the meeting held on 7^th September, 1995, it has been agreed to pay interest @ 17% p.a. (simple) on the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

(iii) As per Perpetual Lease Deed dated 04th July, 1997, the Company is liable to make available “Net Resources” from the development and disposal of properties of the AGP to then MoUD and accordingly the Company was crediting interest on Net Resources generated on the project upto 03^rd November, 2004. Subsequently, a separate “No Lien AGP Account” has been opened under the name of “HUDCO AGP Account”, in which the surplus lying to the credit of the then MoUD was credited and interest accrued/ earned on “No Lien AGP Account” was also credited to that account.

(iv) HUDCO contends that as per minutes of the meeting held on 07^th September, 1995 and in terms of Perpetual Lease Deed dated 04^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA-GOI (erstwhile MoUD) and there is no financial liability of HUDCO in respect of AGP. This has been upheld by learned Shri GE Vahanvati, the then Solicitor General of India, vide his opinion dated 12^th April, 2005. This opinion was re-confirmed by learned Shri GE Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009. The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India.

(v) Keeping this position in view and in accordance with HUDCO''s Board decision in 459^th meeting dated 24^th August, 2009, HUDCO has been making payments / settling claims on Ministry''s behalf and accounting them in “No Lien AGP Account” being separately maintained by HUDCO. As on 31^st March, 2024, this account has a deficit in the form of debit balance of ?592.74 crore, recoverable from MoHUA (erstwhile MoUD). This represents amount paid by HUDCO on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above the recoveries and the accumulated interest amounting to ? 320.82 crore charged @ 10.75% p.a. (simple), on excess of expenditure over recoveries. The MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO shall continue to implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall be looked into for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that HUDCO as a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court orders in cases related to the project. The company vide its letter dated 30^th September, 2015, conveyed its reservation to accept the decision for bearing the liabilities of Andrews Ganj project as HUDCO is acting as an agent of MoHUA, Government of India, for AGP, in terms of perpetual lease deed conditions and other agreed terms.

(vi) The Ministry has been informed specifically of the above facts and figures on various occasions through correspondence as also in the meetings. A communication was received from Dy. L&DO vide letter dated 22^nd

March, 2016 wherein Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj project and manage “No Lien AGP Account” in line with the terms and conditions as stipulated in the Perpetual Lease Deed dated 04^th July, 1997. The Ministry again informed in specific vide Dy L&DO letter dated 31^st May, 2018 that HUDCO as a lessee is permitted to incur/book maintenance and legal expenditure in respect to Andrews Ganj Project from “No Lien AGP Account”. Like earlier years, in-line with the minutes of meeting dated 07^th September, 1995, the perpetual lease deed dated 04^th July, 1997, income of ? 29.01 crore on account of interest accrued on AGP Project has been credited to Statement of Profit and Loss for the period year ended 31^st March, 2024.

(vii) As decided by HUDCO Board in its 596^th meeting held on 14^th June, 2018, Ministry of Housing and Urban affairs has been requested vide letter dated 09^th July, 2018 to consider taking over the Andrews Ganj project with assets and liabilities and pay the amount incurred / to be incurred by HUDCO, towards implementing the project. It has also been conveyed that “till the project is taken over by Ministry”, HUDCO shall be continuing implementing the project as per existing arrangements and continue booking maintenance and legal expenses, interest @ 10.75% p.a. and administrative charges @1.5% in “No Lien AGP Account”. The decision on the same from the Ministry is awaited.

(viii) The company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient to recover aforesaid amount of ? 592.74 crore, as on 31^st March, 2024.

(ix) MoHUA was requested vide letter dated 13^th January, 2021 to make arrangements towards reimbursement of the amount recoverable endorsement for settling the same from the project proceeds as and when the same are realized, which is also in line with the Lease agreement and well settled and agreed.

In reply to the same, Ministry vide letter dated 10^th March, 2021 has requested for certain additional information including the breakup details of principal amount and interest amount as contained in the “No Lien AGP Account” to process HUDCO''s request.

Ministry vide letter dated 28^th June, 2021 has stated that the “HUDCO''s proposal is under examination in consultation with IFD, MoHUA. Till the proposal of HUDCO vide their letter dated 13^th January, 2021 is approved, the existing arrangement may be continued as conveyed vide this office letter dated 22^nd March, 2016 and 31^st May, 2018”.

(b) (1) Litigation Status 1. Tomorrowland Technologies Exports Ltd.

The Company had allotted a hotel site including car parking space to M/s Tomorrowland Technologies Exports Ltd. i.e., TTEL (formerly known as M/s. M S Shoes East Limited). Due to default in payment of instalments by TTEL, the Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by TTEL in terms of the allotment letter.

TTEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment letter by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 03^rd July, 2010 against HUDCO. HUDCO filed first appeal against the Order of Sr. Civil Judge Before Additional District Judge (ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and passed the judgment in favour of TTEL. HUDCO filed Regular Second Appeal (RSA) with Hon''ble High Court of Delhi which passed the final judgment on 03^rd July, 2016 in favour of HUDCO. TTEL challenged the High Court Order by filing SLP NO: 34338/2016 in the Supreme Court. The matter is currently in pendency before Hon''ble Supreme Court.

The allotment of 9 blocks of guest houses, restaurants, kitchens, and shops, which were allotted to TTEL, was cancelled due to default in payment of instalment by TTEL and amount of first instalment paid by TTEL was forfeited as per terms of allotment letter. TTEL filed a civil suit for permanent injunction and possession against HUDCO & Union of India. The Hon''ble High Court, vide Order dated 10^th August, 2016, directed that HUDCO & Union of India should consider the proposal given by TTEL for refund of entire amount deposited by way of 1st instalment by it with HUDCO along with interest at such rate which may be deemed appropriate by Court.

In view of Hon''ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on 23^rd August, 2016 resolved to approve the proposal to refund first instalment forfeited by HUDCO excluding earnest money & the interest for delayed payment paid thereof by TTEL for guest house blocks after adjusting the commercial losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of completion of project subject to necessary approval / NOC of MoUD, Govt. of India.

The Hon''ble High Court passed a decree dated 13^th January, 2017 for payment of 1^st installment of ?35.75 crore to TTEL along-with interest @ 6% p.a., w.e.f. 30^th January, 1995 till date of payment and directed HUDCO to refund the interest paid by TTEL (?0.99 crore) on the delayed period of payment of 1^st installment (from 30^th November, 1994 till 30^th January, 1995). If the entire amount is not paid on or before 31^st December, 2017, the rate of interest would then stand enhanced to 11% p.a. However, the decree was made in-executable till 30th June, 2017.

TTEL filed Review Petition in the month of May, 2017, before Hon''ble High Court of Delhi for review of the Decree dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% p.a. on quarterly rests. Subsequently, Review Petition filed by TTEL was disposed off by the High Court on 12^th December, 2017. Thereafter, TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Hon''ble Supreme Court against the Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December, 2017. The Company filed application for recalling the Hon''ble High Court Order dated 13^th January, 2017, in view of the Review Petition filed by TTEL and directions of Govt. of India. The matter was listed on 28^th August, 2018, after hearing all parties, Hon''ble High Court dismissed the “Recall Application” of HUDCO. HUDCO filed SLP in Supreme Court challenging the High Court Order dated 28^th August, 2018 and 13^th January, 2017. Vide Order dated 18^th September,2018, the Hon''ble Supreme Court has dismissed the SLP as withdrawn, with liberty to HUDCO to file all legal objections regarding the executability of the decree in the executing Court.

Further, TTEL also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by TTEL on 23^rd December, 2017. Thereafter, TTEL has filed Revised Execution Petition, making Govt. of India also a party and claiming rate of interest @ 11% p.a. as per the decree dated 13^th January, 2017.The matter was listed on 3^rd May, 2018, wherein the Hon''ble High Court first directed for attachment of HUDCO Property i.e. HUDCO Bhawan, IHC, Lodhi Road, New Delhi. However, after hearing the submission of HUDCO vide the same order, Hon''ble High Court kept the attachment order of HUDCO Property in abeyance till the next date and also directed that HUDCO will not sell the property at Andrews Ganj, Delhi. Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO''s consent to perform the terms of the Order dated 13^th January, 2017 was conditional on UOI''s support and in the event any liability is indeed ascribed to HUDCO, the same should then be recoverable from the UOI”.

In view of the Supreme Court''s Order dated 18^th September, 2018, HUDCO filed objection in the Execution Petition, pending in Delhi High Court. The matter was listed on 29^th October, 2018. After hearing the submission of HUDCO''s Counsel, the Hon''ble Court dismissed the objections. HUDCO filed two appeals in Delhi High Court as under:

(a.) Regular first Appeal (RFA 79/2018) against the final order/ decree 13^th January, 2017 and order dated 28^th August, 2018 (Dismissal of Recall application by High Court). Notices have been issued.

(b.) Execution First Appeal (EFA No 19/2018) against the order dated 29^th October, 2018, wherein objections of HUDCO in execution petition were dismissed. The matter was listed on 27^th November, 2018. After hearing the matter, the Hon''ble Court stayed the execution proceeding pending in Delhi High Court till the next date. The matter was listed again on the application of the M/s TTEL for vacation of stay on 08^th July, 2020 before Division Bench, Delhi High Court, after hearing the matter, the Hon''ble Court directed that Execution First Appeal (EFA) 19/2018) shall be adjourned sine die and will be listed after the final disposal of the Regular First appeal (RFA 79/2018). The parties are at liberty to move the application for revival of EFA after final disposal of RFA 79/2018. Till the further order, the stay on the Execution proceedings shall be continued. Both the cases are pending. TTEL filed SLP in Supreme Court, against the High Court Order dated 27^th November, 2018, wherein High Court stayed the execution proceedings. However, the same has been withdrawn by TTEL on 14^th January, 2019.

TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Supreme Court against Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December, 2017. The SLP filed by TTEL is currently pending in Hon''ble Supreme Court. Further, in the SLP No 10752/53 of 2018, the Union of India has filed an affidavit denying its liability on this account. The said affidavit, was placed before the Board of Directors of HUDCO and as per the decision, the company has also filed a reply/ affidavit to the affidavit of Union of India denying its liabilities on account of the same bases on perpetual Lease Deed 04^th July, 1997 and Record Note of discussion dated 07^th September, 1995.

The order dated 09/04/2024 in Hotel site case SLP NO. 34338/2016 impressed upon counsels of HUDCO and UoI to coordinate and resolve rival submissions and clear as to whether the dispute can be amicably resolved in terms of the observation made by this Court on 31.01.2017, accordingly after due discussions and deliberations at highest levels, HUDCO and UoI filed supplementary affidavits requesting the matter to be considered on merits, and the matter is currently pending before the Hon''ble Supreme Court of India.

Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account and any expenditure related thereof. In case of any liability by virtue of any court order or otherwise, the same shall be in the account of “No Lien AGP Account” of MoUD, based on the facts and documents and the legal opinions obtained by HUDCO.

(2) M/s. Ansal Properties and Industries Ltd. (APIL)

The arbitrator has passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to ?8.84 crore along with interest @ 18% p.a. on 28^th July, 2005 in respect of the property leased to APIL at AGP. The Arbitrator has also allowed the counter claim of HUDCO amounting to approximately ?0.85 crore along with interest @ 18% p.a. on account of maintenance charges w.e.f. 1^st January, 2001 up-to 31^st July, 2005. HUDCO has challenged the award before the Hon''ble High Court of Delhi and, as per the directions of the court, has deposited a sum of ?7.99 crore in the court out of “No Lien AGP Account”.

APIL has invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator has pronounced the award on 21^stJuly, 2006 holding therein that APIL is not liable to pay the ground rent up to October, 1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The amount of ?3.93 crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f. November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO has filed petition challenging the award before the Hon''ble High Court of Delhi. The Hon''ble High Court on 10^th May, 2012 has set aside the arbitration award dated 21^st July, 2006. APIL filed an appeal against the above-mentioned order before Division Bench of Hon''ble High Court, Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL appeal and upheld the Arbitrators award. HUDCO filed SLP on 10^th May, 2013 before Hon''ble Supreme Court against this order which is currently pending.

On the last day of hearing, i.e., 5^th January,2023, APIL''s counsel has informed the court that vide Order dated 16^th November 2022, APIL has been declared insolvent by NCLT and therefore, now the APIL is under Moratorium. Hence as per the law, all the proceedings pending against APIL are automatically stayed by virtue of law. Further, HUDCO has filed its total claims due against APIL before the Resolution Professional appointed for the above purpose.

4) HUDCO had received loans and grants from Kreditanstalt fur Wiederaufbau (KfW) or the Bank of Reconstruction Germany under “Indo German Cooperation Programme on Human Settlements” in 6 different tranches, primarily for financing of Housing Stock pertaining to economically weaker sections of society in India. In respect of tranche I to III, there were no balances however, in respect of tranche IV to VI, though these schemes were closed, there were balances in respect of these loans/grants amounting to Rs 107.42 crores .The financing agreements in respect of these schemes were valid for a period of 15 years and the amounts were not refundable as the agreement period had already elapsed and HUDCO had fulfilled all the conditions stipulated in the agreements, and thus the liability had got extinguished , the matter for final settlement was taken up with KfW , and the agency stated that it had no objection to the derecognition of the amounts lying against Tranche 1V to V1 in HUDCO books, thus, the amount of Rs. 107.42 Crore (Rs 9.87 crores as interest on loans out of tranche-KfW-VI and Rs 97.55 crores as repayment of loans out of tranche KfW-V-VI) have been routed through profit and loss account with consequential positive impact on reserves and surplus of the company as on 31-03-2024.

5) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO on Long Term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and ?0.35 crore is recoverable from EPFO.

6) (a) The Company has a procedure for seeking confirmation of outstanding balances at each quarter end from all the borrowers except cases under litigation. In case of receipt of balance confirmation from the agency for any Quarter of the year, the same is treated as confirmed during the year. Confirmation of balances covering approximately 97.74% received up to 10^th May 2024 (Previous Year:99.16% received upto 11^th May 2023) in value of the total project loan outstanding (excluding Litigation cases) have been received from the borrowers.

(b) The Company has impairment provision on Project loans including staff loans (as per ECL approach) of ? 2222.70 crore as on 31^st March 2024 and ?2,431.06 crore as on 31^st March, 2023 as per Ind-AS requirement.

(c) As per RBI notification no. RBI/2019-20/170 Circular DOR (NBFC). CC.PD.No.109/ 22.10.106/2019-20 dated 13^th March, 2020 on implementation of Indian Accounting Standards, Housing Finance Companies are required to create an Impairment Reserve for any shortfall in impairment allowances under Ind-AS 109 and IRACP norms (including provision on standard assets). The impairment allowance under Ind-AS 109 made by the company is lower than the total provision required under IRACP as at 31^st March, 2024 and accordingly, impairment reserve of ?173.44 crore has been created.

In the event of excess payment, the same is adjusted towards principal.

However, in respect of default cases, repayments are first adjusted towards liquidation of the oldest default by following above order and after appropriation of default, the balance, if any, is adjusted as per the normal practice as above pertaining to subsequent period.

8) During the FY 2023-24, the company has implemented restructuring plan in case of Pipavav Defence and Offshore Engineering Co. Ltd. with principal outstanding ? 84.03 crore, as per NCLT order. As per the order part of the outstanding loan was converted into a debt of ? 34.40 crore (current Outstanding), with an upfront payment of ? 3.05 crores and balance principal amount of Rs. 46.58 crores have been written off with

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Mar 31, 2023

NOTE: 10(a)(3) Impairment assessment

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.

- The Company''s definition and assessment of default and cure.

- How the Company defines, calculates and monitors the probability of default, exposure at default and loss given default.

- When the Company considers there has been a significant increase in credit risk of an exposure.

- The Company''s policy of segmenting financial assets where ECL is assessed on a collective basis.

- The details of the ECL calculations for Stage 1, Stage 2 and Stage 3 assets.

NOTE: 10(a)(4)(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 90 days past due on its contractual payments.

NOTE: 10(a)(4)(ii) Probability of default

The 12 month probability of default is calculated using incremental NPA approach.

NOTE: 10(a)(4)(iii) 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 too.

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12mECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments.

NOTE: 10(a)(4)(iv) Loss given default

The Company segments its lending products into smaller homogeneous portfolios (Government - Housing,Government -Urban Infrastructure,Non Government and Retail), 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) as well as borrower characteristics.

NOTE: 10(a)(4)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments is subject to 12mECL or life time 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 ECLs 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.

NOTE: 10(a)(4)(vi) Grouping financial assets measured on a collective basis

As explained in Note 4.17, the Company calculates ECLs on collective or individual basis .

The Company calculates ECLs on collective basis on following asset classes:

- Government - Housing

- Government - Urban Infrastructure

- Non Government

- Retail

The Company calculates ECLs on individual basis on all Stage 3 assets of Non Government portfolio.

Note 24 (b) Rights attached to Equity Shares :

The shareholders of the Company are entitled to receive dividend as and when declared by the company and enjoy proportionate voting rights in case any resolution is put to vote. Further, the shareholders have all such rights, as may be available to the shareholders of a listed company, under the Companies Act, 2013 and rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Memorandum of Association and Articles of Association of the Company.

NOTE 34: Capital

Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objectives of the Company''s capital management are safety and security of share capital and maximize the shareholder wealth.

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the regulator Viz., RBI/NHB. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI/NHB.

Company has complied in full with all its externally imposed capital requirements over the reported period.

Capital to Risk-weighted Assets Ratio

The Company is complying with the Capital Adequacy requirements as prescribed by the National Housing Bank. Being an NBFC - Housing Finance Company (NBFC-HFC), HUDCO is required to maintain a Capital Adequacy Ratio or Capital to Risk Weighted Assets Ratio (CRAR) of 15% (with a minimum Tier I Capital of 10%), computed by dividing company''s Tier-I and Tier-II capital by Risk Weighted Assets.

NOTE 36: Fair Value Measurement

36.1. Valuation principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

36.2. Valuation governance

The Company''s fair value methodology and the governance over its models include a number of controls and other procedures to ensure enough safeguards and maintain its quality and adequacy. All new product initiatives (including their valuation methodologies) are as per the approved policy of the Company. The ongoing measurement on fair value estimates is reviewed by the appropriate functional department of the Risk management and related finance functions.

36.3. Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value hierarchy:

36.4. Valuation techniques Mutual fund

Mutual funds are valued at the net asset value (NAV) declared by the mutual fund in respect of each particular scheme and is classified as Level 2.

Equity instruments

Equity instruments which are not actively traded on public stock exchanges but the active prices on a regular basis are available. Such instruments are classified as Level 2. Other equity instruments are fair valued based on the average of the discounted cash flow method and Net assets value (as provided by independent valuer). It is classified as Level 3.

Interest rate swaps, Currency swaps and Forward rate contracts

The most frequently applied valuation techniques include forward pricing and swap models and forward contract using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are classified under Level 2.

Investment Property

The Company obtains independent valuations for its investment properties annually. The fair values of investment property are determined by an independent registered valuer and the valuation technique adopted are Income approach, Market Approach and Composite Approach. All resulting fair value estimates for investment property are included in Level 2 (refer 14A).

36.5. Valuation adjustments and other inputs and considerations Credit Valuation Adjustments (CVA)

The Company calculates CVA on a counterparty basis over the entire life of the exposure.

The Company applies CVA to all relevant (not fully collateralised) over-the-counter positions with the exception of positions settled through central clearing houses. Based on regular assessment of the extent of the adjustments, the Company concluded that these adjustments were not significant to the levelling classification of the relevant instruments in 2022-23 and 2021-22.

36.7. Transfer between level 1 and level 2

There have been no transfers between Level 1 and Level 2 for the year ended 31^st March, 2022 and 31^st March,2023.

36.8. Movements in Level 3 financial instruments measured at fair value

The following tables show a reconciliation of the opening and closing amounts of Level 3 financial assets and liabilities which are recorded at fair value. The Company requires significant unobservable inputs to calculate their fair value.

36.9. Key assumptions and range of inputs

(a) Net Asset Value (NAV) Method:

The Net Asset Value Method represents the value with reference to historical cost of assets owned by the company and the attached liabilities on the valuation date.

(b) Discounted Projected Cash Flow:

Discounted Projected Cash Flow valuation technique is used to calculate Impact on fair value of level 3 financial instruments measured at fair value using the following unobservable input such as Discount Rate, Recovery rates, Interest Rate and Revenue from operations to ascertain the change.

(c) To arrive at fair value of unquoted investments average of Net Asset Value (NAV) and Discounted Projected Cash flow as on 31^st March, 2023 is taken.

The range of values indicates the highest and lowest level input used in the valuation technique and, as such, only reflects the characteristics of the instruments as opposed to the level of uncertainty to their valuation.

All changes in the fair market value would be reflected in the Statement of profit and loss based on the classification FVTPL.

The table summarises the valuation techniques together with the significant unobservable inputs used to calculate the fair value of the Company''s Level 3 assets and liabilities.

36.10. Quantitative analysis of significant unobservable inputs Interest rate volatility

Interest Rate volatility measures the expected future variability of a market price. It is generally quoted as a percentage; a higher number represents a more volatile instrument, for which larger swings in price (or interest rate) are expected. Volatility is a key input used to estimate the future prices for the underlying instrument (equity share). Interest rate volatility varies from time to time and therefore, it is not viable to make reliable and meaningful general statements about volatility levels.

Discount Rates

Discount rates are used for calculating the present value of future cash flows. In discounted cash flow models, discount rates are used as the direct reflection of the expected rate of return of the investments made by the company in the due course of the business. Hence, these rates reflect the net present value of an asset. They generally reflect the premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by the uncertainty of the cash flows caused by the credit quality of the asset. They can be implied from market prices and are usually unobservable for illiquid or complex instruments.

Recovery Rates

Recovery rates reflect the estimated loss that the company will suffer given expected defaults (Non-performing Assets). The recovery rate is given as a percentage and reflects the opposite of loss severity (i.e., 100% recovery reflects 0% loss severity). In line with the operation of the Company, probability of non-performing assets to loss assets plays an important role to ascertain the recovery rates. Higher loss severity levels / lower recovery rates indicate lower expected cash flows upon the default of the instruments. Recovery rates for complex, less liquid instruments are usually unobservable and are estimated based on historical data.

Revenue from operations

Revenue is the value of all sales of goods and services recognized by a company in a period. Revenue (also referred to as Sales, Turnover, or Income) forms the beginning of a company''s Income Statement and often considered the “Top Line” of a business. Growth in revenue from operation directly impacts the profitability of the company, as operation expenses are deducted from a company''s revenue to arrive at its profit.

36.11. Sensitivity of fair value measurements to changes in unobservable market data

Sensitivity of fair value measurements to changes in unobservable market data cannot be ascertained due to potential off-sets from economic or accounting hedge relationships in place.

36.12. Fair value of financial instruments not measured at fair value

Set out a comparison, by class, of the carrying amounts and fair values of the Company''s financial instruments that are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets and nonfinancial liabilities.

36.12.1. Valuation Methodology of financial instruments not measured at fair value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables and, as such, may differ from the techniques and assumptions explained in Note 36.4.

Short-term financial assets and liabilities

For financial assets and financial liabilities, that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and cash equivalents, Trade receivables, bank balances other than cash and cash equivalents and trade payables without a specific maturity.

Loans and advances to customers

The carrying amount of fixed interest rate bearing loans and floating interest rate bearing loans are taken as fair values. Financial asset at amortised cost

The fair values of financial assets at amortised cost are the carrying amount of the financial asset.

Debt Securities

Fair value of traded bonds is market price of the bonds as on the balance sheet date or close to balance sheet date. In case of Commercial Paper which is Current Liability i.e., short term maturity (less than or equal to twelve months), the face value of outstanding commercial paper is considered as fair value.

Borrowing other than debt securities

The carrying amount of fixed interest rate bearing borrowings and floating interest rate bearing borrowings are taken as fair values, since these are reasonable approximation of their fair value.

37. RISK MANAGEMENT

37.1. Introduction and risk management structure

The Company, being a Housing Finance Company, is exposed to various types of risks like credit risk, operational risk, liquidity risk, market risk and foreign currency risk. Company is fully committed to manage these risks in an effective and proactive manner, for which HUDCO has in place a Risk Management Policy and Operating Manual in line with its objectives covering both the internal and external environment. With a view to minimize the impact of various risks to which Company is exposed to, Company has in place a Board level Committee namely ‘Risk Management Committee of the Board''(RMCB) which reviews various suggestions/ recommendations/reports and action taken by three sub-committees namely:

• Assets & Liabilities Management Committee (ALCO);

• Credit Risk Management Committee (CRMC); and

• Operational Risk Management Committee (ORMC)

HUDCO has effective Assets and Liabilities Management system. ALCO reviews the risks relating to Assets and Liabilities and ensures management of mismatches through liquidity gap analysis, interest rate sensitivity analysis as per NHB guidelines. It is ensured that the ALM risks, if any, are managed within the permissible limits.

The Credit Risk Management Committee (CRMC) oversees and ensures that the institution''s credit policies are complied with and the procedures are being consistently applied.

The Operational Risk Management Committee (ORMC) oversees and ensures the implementation of operational risk framework to explicitly manage each and every source of operational risk including Technology risk, Employee risk, Customer risk, Capital Asset risk and External risk.

37.2. Credit risk

For management of credit risks in an effective manner, Company has established a strong appraisal mechanism containing comprehensive appraisal techniques/ guidelines in order to ensure timely repayments of principal & interest amount

37.2.1. Derivative financial instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet.

With gross-settled derivatives, the Company is also exposed to a settlement risk, being the risk that the company honours its obligation, but the counterparty fails to deliver the counter value.

37.2.2. Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was '' 79,236.97 crore and '' 76,989.92 crore as of 31^st March,2023 and 31^st March, 2022 respectively, being the total of the carrying amount of balances with loans.

37.2.3. Analysis of risk concentration

HUDCO takes into consideration NHB/RBI norms for risk categorisation and the norms adopted for extending loan under HUDCO Niwas. Higher LTV is permissible for lower loan amounts while LTV reduces with the higher loan amounts. (Refer Note:10A)

To manage the liquidity risk, Company has in place an effective Asset Liability Management System. The liquidity risk is being monitored with the help of liquidity gap analysis. Further, the funds are mobilized at competitive rates through various strategies viz. bonds, public deposits, term loans etc.

The Company maintains a pool of liquid assets which represents the primary source of liquidity in stress scenarios. Its composition is subject to limits designed to reduce concentration risks which are monitored on an on-going basis.

37.4. Market risk

In order to mitigate the risks arising from fluctuations in interest rates and foreign currency exchange rates, Company periodically reviews and determines its lending rates based on its cost of funds and the market scenario. Further, the interest rate risk is being monitored with the help of interest rate sensitivity analysis under the Asset Liability Management System

The interest rate risk is being monitored with the help of interest rate sensitivity analysis under the Asset Liability Management System.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all other variables being constant) of the Company''s statement of profit and loss and equity.

The sensitivity of the statement of profit and loss is the effect of the assumed changes in interest rates on the profit or loss for a year, based on the floating rate non-trading financial assets and financial liabilities held at 31^st March, 2023 and 31^st March, 2022.

37.4.3. Currency risk

In order to mitigate the risks associated with Foreign Currency Fluctuations, Company has a Foreign Currency Risk Management policy.

The table below indicates the currencies to which the Company had significant exposure at the end of the reported periods. The analysis calculates the effect of a reasonably possible movement of the currency rate against the INR (all other variables being constant) on the statement of profit and loss (due to the fair value of currency sensitive monetary assets and liabilities). A negative amount in the table reflects a potential net reduction in the statement of profit and loss or equity, while a positive amount reflects a net potential increase. An equivalent decrease in each of the currencies below against the INR would have resulted in an equivalent but opposite impact.

37.4.4. Equity price risk

Equity price risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices and individual stocks. At 10 per cent increase in the value of the Company''s equities at 31^st March, 2023 would have increased equity by 18.58 crore. An equivalent decrease would have resulted in an equivalent but opposite impact and would cause a potential impairment, which would reduce profit before tax by approximately 18.58 crore.

In order to mitigate the operational risk(s) associated with the operations of the organization both internal as well as external including technology risk, employee risk, capital asset risk, external risk, compliance risks viz. external fraud, legal risk, etc, Company has established a strong reporting and monitoring mechanism.

Operational Risk Management framework covers managing each and every source of Operational Risk as a distinct risk to the institution''s safety and soundness. The requisite information on the Operational risk is obtained through quarterly reports of ‘Operational Risk Factors and Key Risk Indicators (KRIs)'' from Regional Offices/ departments which are further reviewed and analysed for mitigation of operational risk.

39. Ind AS-116 Leases-

a. Company as a Lessee

Company has lease contracts for the office building which are cancellable by the both the lessor and lessee. Company has some contracts which are cancellable by the either lessor and lessee and at present there is no estimation by the company to continue or discontinue the same, further amount of that leases is not material for the company and therefore company is not creating ROU on that asset based on the materiality as per the guidance given under the Indian accounting standard. Further company used hindsight in determining the lease term where the contract contained options to extend or terminate the lease and therefore its leases are covered under the short-term leases as per the guidance under the Ind AS-116.

Amounts recognised in Statement of Profit and Loss relating to short term leases is 1.56 crore during the year 2022-23 and in the previous year 2021-22 is 1.55 crore.

b. Company as a Lessor

The Company has given its Assets on the leases; details of the same are given under the Note No-14A Investment Property. Lease Rental recognized as income during the year 2022-23 is ?54.18 Crore and in the Previous year 2021-22 is '' 49.04 crore.

1) The financial results for the Financial Year ended 31^st March, 2023 have been drawn up on the basis of Ind-AS that are applicable to the Company based on MCA Notification G. S. R. 111 (E) and G. S. R. 365 (E) dated 16^th February, 2015 and 30^th March, 2016 respectively as amended from time to time. Any guidance/ clarifications issued by NHB/RBI or other regulators are adopted/ implemented as and when they are issued/ applicable. The results have been prepared based on the Schedule III for Non-Banking Financial Companies as per Notification G.S.R. 1022 (E) issued by the Ministry of Corporate Affairs on 11^th October, 2018 and as amended vide notification GSR (E) dated 24^th March, 2021.

2) Contingent Liabilities & other commitments not provided for and counter guarantees issued by the Company: (a) Contingent Liabilities: (?in Crore)
			Particulars				2022-23		2021-22
	i.	Demand (including penalty) on account of payment of guarantee fee on SLR debentures guaranteed by Government of India					31.61		31.61
	ii.	Disputed Income tax demands against which Company has gone in appeal. The Company has paid a cumulative amount up to 31st March, 2023 of 101.70 crore (previous year 179.80 crore) under protest. (This does not include un-quantified demands pertaining to interest/ penalties which may be levied after the finalization of appeals)					320.69		297.73
	iii.	TDS demands as per TRACES Portal					0.05		0.12
	iv.	Disputed service tax demands against which Company has gone in appeal. The Company has paid a cumulative amount upto 31st March, 2023 of 1.92 crore (previous year 114 crore) under protest. (This does not include un-quantified demands pertaining to interest/penalties which may be levied after the finalisation of appeals).					6.87		7.07
	v.	Levy of Fine by Stock Exchanges (NSE & BSE) due to Non-Compliance with Corporate Governance requirements: NSE: 17,99,260/-, BSE: ?49,12,340/- for the period 30th September. 2019 to 31st December 2022					1.34		1.37
(b)	Capital commitments not provided for (?in Crore)
			Particular				2022-23		2021-22
	i.	Estimated amount of commitments remaining to be executed on capital account					167.82		167.82
(c)	Finance Lease Commitments: The finance lease commitments are in respect of properties at Plot No. A2, Sector 62, NOIDA-201309 and at Paryavas Bhawan, Bhopal (in ''
	Particulars			31st March, 2023		31st March, 2022
				Minimum lease payments	Present value of MLP	Minimum lease payments		Present value of MLP
	Within one year			23,532	21,693*	23,532		2,206
	After one year but not more than five years			-	-	23,532		2,033
	Total minimum lease payments			23,532	21,693	47,064		4,239
	Less amounts representing finance charges			-	-	-		-
	Present value of minimum lease payments			23,532	21,693	47,064		4,239
	*Present Value for the MLP @8.50% as on 31.03.2023 has been considered.

The above does not include any contingent liability in respect of Andrews Ganj Project (AGP), arising on account of various court cases/arbitration/allottees'' claims against cancellation of allotment etc., as in this case, HUDCO is only working as an agent being project executed on behalf of Govt. of India. As such, liability (if any) whenever ascertained/ finalized shall be passed on to MoHUA, Govt. of India and met out of AGP (No Lien AGP Account), being maintained separately, in line with the directions of the then MoUD

3) Andrews Ganj Project

(a) (i) HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of the then Ministry of Urban Development, (MoUD) in the year 1989-90.

(ii) As per minutes of the meeting held on 7^th September, 1995, it has been agreed to pay interest @ 17% p.a. (simple) on the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

(iii) As per Perpetual Lease Deed dated 04^th July, 1997, the Company is liable to make available “Net Resources” from the development and disposal of properties of the AGP to then MoUD and accordingly the Company was crediting interest on Net Resources generated on the project upto 03^rd November, 2004. Subsequently, a separate “No Lien AGP Account” has been opened under the name of “HUDCO AGP Account”, in which the surplus lying to the credit of the then MoUD was credited and interest accrued/ earned on “No Lien AGP Account” was also credited to that account.

(iv) HUDCO contends that as per minutes of the meeting held on 07^th September, 1995 and in terms of Perpetual Lease Deed dated 04^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA-GOI (erstwhile MoUD) and there is no financial liability of HUDCO in respect of AGP This has been upheld by learned Shri GE Vahanvati, the then Solicitor General of India, vide his opinion dated 12^th April, 2005. This opinion was re-confirmed by learned Shri GE Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009. The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India.

(v) Keeping this position in view and in accordance with HUDCO''s Board decision in 459^th meeting dated 24^th August, 2009, HUDCO has been making payments / settling claims on Ministry''s behalf and accounting them in “No Lien AGP Account” being separately maintained by HUDCO. As on 31^st March, 2023, this account has a deficit in the form of debit balance of ?558.97 crore, recoverable from MoHUA (erstwhile MoUD). This represents amount paid by HUDCO on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above the recoveries and the accumulated interest amounting to '' 291.81 crore charged @ 10.75% p.a. (simple), on excess of expenditure over recoveries. The MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO shall continue to implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall be looked into for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that HUDCO as a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court orders in cases related to the project. The company vide its letter dated 30^th September, 2015, conveyed its reservation to accept the decision for bearing the liabilities of Andrews Ganj project as HUDCO is acting as an agent of MoHUA, Government of India, for AGP, in terms of perpetual lease deed conditions and other agreed terms.

(vi) The Ministry has been informed specifically of the above facts and figures on various occasions through correspondence as also in the meetings. A communication was received from Dy. L&DO vide letter dated 22^nd March, 2016 wherein Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj project and manage “No Lien AGP Account” in line with the terms and conditions as stipulated in the Perpetual Lease Deed dated 04^th July, 1997. The Ministry again informed in specific vide Dy L&DO letter dated 31^st May, 2018 that HUDCO as a lessee is permitted to incur/book maintenance and legal expenditure in respect to Andrews Ganj Project from “No Lien AGP Account”. Like earlier years, in-line with the minutes of meeting dated 07^th September, 1995, the perpetual lease deed dated 04th July, 1997, income of '' 28.51 crore on account of interest accrued on AGP Project has been credited to Statement of Profit and Loss for the period year ended 31^st March, 2023.

(vii) As decided by HUDCO Board in its 596^th meeting held on 14^th June, 2018, Ministry of Housing and Urban affairs has been requested vide letter dated 09^th July, 2018 to consider taking over the Andrews Ganj project with assets and liabilities and pay the amount incurred / to be incurred by HUDCO, towards implementing the project. It has also been conveyed that “till the project is taken over by Ministry”, HUDCO shall be continuing implementing the project as per existing arrangements and continue booking maintenance and legal expenses, interest @ 10.75% p.a. and administrative charges @1.5% in “No Lien AGP Account”. The decision on the same from the Ministry is awaited.

(viii) The company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient to recover aforesaid amount of '' 558.97 crore, as on 31^st March, 2023.

(ix) MoHUA was requested vide letter dated 13^th January, 2021 to make arrangements towards reimbursement of the

amount recoverable endorsement for settling the same from the project proceeds as and when the same are realized, which is also in line with the Lease agreement and well settled and agreed.

In reply to the same, Ministry vide letter dated 10^th March, 2021 has requested for certain additional information including the breakup details of principal amount and interest amount as contained in the “No Lien AGP Account” to process HUDCO''s request.

Ministry vide letter dated 28 ^th June, 2021 has stated that the “HUDCO''s proposal is under examination in consultation with IFD, MoHUA. Till the proposal of HUDCO vide their letter dated 13^th January, 2021 is approved, the existing arrangement may be continued as conveyed vide this office letter dated 22^nd March, 2016 and 31^st May, 2018”.

(b) (i) The Company had allotted a hotel site including car parking space to M/s Tomorrowland Technologies Exports Ltd. i.e.,

TTEL (formerly known as M/s. M S Shoes East Limited). Due to default in payment of installments by TTEL, the Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by TTEL in terms of the allotment letter.

(ii) TTEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment letter by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 03^rd July, 2010 against HUDCO. HUDCO filed first appeal against the Order of Sr. Civil Judge Before Additional District Judge (ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and passed the judgment in favour of TTEL. HUDCO filed Regular Second Appeal (RSA) with Hon''ble High Court of Delhi which passed the final judgment on 03^rd July, 2016 in favour of HUDCO. TTEL challenged the High Court Order by filing SLP NO: 34338/2016 in the Hon''ble Supreme Court. The matter is currently in pendency before Hon''ble Supreme Court.

(iii) The allotment of 9 blocks of guest houses, restaurants, kitchens and shops, which were allotted to TTEL, was cancelled due to default in payment of installment by TTEL and amount of first installment paid by TTEL was forfeited as per terms of allotment letter. TTEL filed a civil suit for permanent injunction and possession against HUDCO & Union of India. The Hon''ble High Court, vide Order dated 10^th August, 2016, directed that HUDCO &Union of India should consider the proposal given by TTEL for refund of entire amount deposited by way of 1st installment by it with HUDCO along with interest at such rate which may be deemed appropriate by Court.

In view of Hon''ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on 23^rd August, 2016 resolved to approve the proposal to refund first installment forfeited by HUDCO excluding earnest money & the interest for delayed payment paid thereof by TTEL for guest house blocks after adjusting the commercial losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of completion of project subject to necessary approval/NOC of MoUD, Govt. of India.

The Hon''ble High Court passed a decree dated 13^th January, 2017 for payment of 1^st installment of ?35.75 crore to TTEL along-with interest @ 6% p.a., w.e.f. 30^th January, 1995 till date of payment and directed HUDCO to refund the interest paid by TTEL (?0.99 crore) on the delayed period of payment of 1stinstallment (from 30^th November, 1994 till 30th January, 1995). If the entire amount is not paid on or before 31^st December, 2017, the rate of interest would then stand enhanced to 11% p.a. However, the decree was made in-executable till 30^th June, 2017.

TTEL filed Review Petition in the month of May, 2017, before Hon''ble High Court of Delhi for review of the Decree dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% p.a. on quarterly rests. Subsequently, Review Petition filed by TTEL was disposed off by the High Court on 12^th December, 2017. Thereafter, TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Hon''ble Supreme Court against the Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12th December, 2017. The Company filed application for recalling the Hon''ble High Court Order dated 13^th January, 2017, in view of the Review Petition filed by TTEL and directions of Govt. of India. The matter was listed on 28^th August, 2018, after hearing all parties, Hon''ble High Court dismissed the “Recall Application” of HUDCO. HUDCO filed SLP in Supreme Court challenging the High Court Order dated 28^th August, 2018 and 13^th January, 2017. Vide Order dated 18^th September, 2018, the Hon''ble Supreme Court has dismissed the SLP as withdrawn, with liberty to HUDCO to file all legal objections regarding the executability of the decree in the executing Court.

Further, TTEL also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by TTEL on 23^rd December, 2017. Thereafter, TTEL has filed Revised Execution Petition, making Govt. of India also a party and claiming rate of interest @ 11% p.a. as per the decree dated 13^th January, 2017.The matter was listed on 3^rd May, 2018, wherein the Hon''ble High Court first directed for attachment of HUDCO Property i.e. HUDCO Bhawan, IHC, Lodhi Road, New Delhi. However, after hearing the submission of HUDCO vide the same order, Hon''ble High Court kept the attachment order of HUDCO Property in abeyance till the next date and also directed that HUDCO will not sell the property at Andrews Ganj, Delhi. Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO''s consent to perform the terms of the Order dated 13^th January, 2017 was conditional on UOI''s support

and in the event, any liability is indeed ascribed to HUDCO, the same should then be recoverable from the UOI”.

In view of the Supreme Court''s Order dated 18^th September, 2018, HUDCO filed objection in the Execution Petition, pending in Delhi High Court. The matter was listed on 29^th October, 2018. After hearing the submission of HUDCO''s Counsel, the Hon''ble Court dismissed the objections. HUDCO filed two appeals in Delhi High Court as under:

(a.) Regular first Appeal (RFA 79/2018) against the final order/ decree dated 13^th January, 2017 and order dated 28^th August, 2018 (Dismissal of Recall application by High Court). Notices have been issued.

(b.) Execution First Appeal (EFA No 19/2018) against the order dated 29^th October, 2018, wherein objections of HUDCO in execution petition were dismissed. The matter was listed on 27^th November, 2018. After hearing the matter, the Hon''ble Court stayed the execution proceeding pending in Delhi High Court till the next date. The matter was listed again on the application of the M/s TTEL for vacation of stay on 08^th July, 2020 before Division Bench, Delhi High Court, after hearing the matter, the Hon''ble Court directed that Execution First Appeal (EFA) 19/2018) shall be adjourned sine die and will be listed after the final disposal of the Regular First appeal (RFA 79/2018). The parties are at liberty to move the application for revival of EFA after final disposal of RFA 79/2018. Till the further order, the stay on the Execution proceedings shall be continued. Both the cases are pending.

TTEL filed SLP in Supreme Court, against the High Court Order dated 27^th November, 2018, wherein High Court stayed the execution proceedings. However, the same has been withdrawn by TTEL on 14th January, 2019.

TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Supreme Court against Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12thDecember,2017. The SLP filed by TTEL is currently pending in Hon''ble Supreme Court. Further, in the SLP No 10752/53 of 2018, the Union of India has filed an affidavit denying its liability on this account. The said affidavit, was placed before the Board of Directors of HUDCO and as per the decision, the company has also filed a reply/affidavit to the affidavit of Union of India denying its liabilities on account of the same bases on perpetual Lease Deed 04^th July, 1997 and Record Note of discussion dated 07^th September, 1995. The matter is currently pending before Hon''ble Supreme Court of India.

Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account and any expenditure related thereof. In case of any liability by virtue of any court order or otherwise, the same shall be in the account of “No Lien AGP Account” of MoUD, based on the facts and documents and the legal opinions obtained by HUDCO.

(c) The arbitrator has passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to ?8.84 crore along with interest @ 18% p.a. on 28^th July, 2005 in respect of the property leased to APIL at AGP. The Arbitrator has also allowed the counter claim of HUDCO amounting to approximately '' 0.85 crore along with interest @ 18% p.a. on account of maintenance charges w.e.f. 1^st January, 2001 up-to 31^st July, 2005. HUDCO has challenged the award before the Hon''ble High Court of Delhi and, as per the directions of the court, has deposited a sum of ?7.99 crore in the court out of “No Lien AGP Account”.

APIL has invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator has pronounced the award on 21^st July, 2006 holding therein that APIL is not liable to pay the ground rent up to October, 1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The amount of ?3.93 crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f. November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO has filed petition challenging the award before the Hon''ble High Court of Delhi. The Hon''ble High Court on 10^th May, 2012 has set aside the arbitration award dated 21^st July, 2006. APIL filed an appeal against the above-mentioned order before Division Bench of Hon''ble High Court, Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL appeal and upheld the Arbitrators award. HUDCO filed SLP on 10^th May, 2013 before Hon''ble Supreme Court against this order which is currently pending. On the last day of hearing, i.e., 5^th January,2023, APIL''s counsel has informed the court that vide Order dated 16^th November 2022, APIL has been declared insolvent by NCLT and therefore, now the APIL is under Moratorium. Hence as per the law, all the proceedings pending against APIL are automatically stayed by virtue of law. Further, HUDCO has filed its total claims due against APIL before the Resolution Professional appointed for the above purpose.

4) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO on Long Term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and ?0.35 crore is recoverable from EPFO.

5) (a) The Company has a procedure for seeking confirmation of outstanding balances at each quarter end from all the

borrowers except cases under litigation. In case of receipt of balance confirmation from the agency for any Quarter of the year, the same is treated as confirmed during the year. Confirmation of balances covering approximately 99.16% received up to 11^th May 2023 (Previous Year: 92.63% received upto 11^th May 2022) in value of the total project loan outstanding (excluding Litigation cases) have been received from the borrowers.

(b) The Company has impairment provision on loans (as per ECL approach) of ?2,431.06 crore as on 31⁸¹ March 2023 and ?2,504.23 crore as on 31^st March, 2022 as per Ind-AS requirement.

(c) As per RBI notification no. RBI/2019-20/170 Circular DOR (NBFC). CC.PD.No.109/ 22.10.106/2019-20 dated 13^th March, 2020 on implementation of Indian Accounting Standards, Housing Finance Companies are required to create an Impairment Reserve for any shortfall in impairment allowances under Ind-AS 109 and IRACP norms (including provision on standard assets). The impairment allowance under Ind-AS 109 made by the company is lower than the total provision required under IRACP as at 31^st March, 2023 and accordingly, impairment reserve of ?67.88 crore has been created

6) The receipts from the agencies in the loan accounts is appropriated as per loan agreement in the following order:

a) Other dues/ expenses recoverable

b) Penal interest

c) Normal interest

d) Principal

In the event of excess payment, the same is adjusted towards principal.

However, in respect of default cases, repayments are first adjusted towards liquidation of the oldest default by following above order and after appropriation of default, the balance, if any, is adjusted as per the normal practice as above.

7) During the FY 2022-23, the company has implemented restructuring plan in case of M/s VS Lignite Power Private Limited in March 2023 from the date of order of NCLT, Hyderabad, dated 16^th March 2021, with principal outstanding of ?78.75 crore. As per the restructuring plan, 10.14 crore of the principal outstanding will be paid by M/s VS Lignite Power Private Limited to HUDCO, out of the same 1.66 crore as upfront and remaining 17.48 crore is to be repaid as Term loan repayable over 5 years. The balance principal amount of ?48.61 crores to be written off with the reversal of the corresponding ECL allowance thereof. As per NHB norms, the same will kept as NPA under watch period for next one year. The Principal Outstanding as on 31.03.2023 is 10.61 crore

8) HUDCO had earned dividend income of 106 Crore (Previous Year: 108 Crore) during the Financial Year 2022-2023.

9) The Company had made Long Term Investments at a total cost of 19.86 crore which represents Investment in Equity Shares, Infrastructure Debt Fund, Debts Instruments and Investments in Associates. As per the applicable Ind AS, Investments as on 31^st March, 2023 are being shown at fair value through profit or loss of 161.68 crore.

10) HUDCO had invested as equity of 12.85 Crores in Cochin International Airport Ltd (CIAL). CIAL came out with rights issue in March 2023. HUDCO Board in its 652^nd Board meeting held on 24^th March, 2023 approved for applying in rights entitlement for 31,42,207 shares and for additional 7,85,552 shares in the event of non-subscription of rights issue by other existing shareholders, with issue price of 10/- per share (Including premium of ?40/- per share) for a total value of 19.64 crore. CIAL Board approved allotment of rights issue in 5^th May 2023, accordingly HUDCO was allotted 36,09,547/- shares (Rights entitlement of 31,42,207 shares and additional 4,67,340 shares) amounting to 18.05 crore. HUDCO has got refund of 1.59 crores in 10^th May 2023 towards the balance amount.

11) Loans granted by the company directly to individuals and bulk loans under HUDCO Niwas Scheme are secured fully/partly by:

(i) Equitable Mortgage of the property and /or

(ii) Undertaking to create security through execution of Tripartite Agreement between the Company, borrower, and the Developing Authority / Developer;

(iii) Hypothecation of Distribution Assets of the borrower Company.

(iv) Negative Lien on the assets of the borrower Company. Assets of the Company include the book debts and future receivable.

(v) Government Guarantee, first charge on the assets of the housing finance company or First Pari-Passu charge on the outstanding loans or Exclusive Charge/ First Pari-Passu charge on the present and future receivables/ Book Debts, Escrow mechanism, postdated cheques or ECS or RTGS, First Pari-Passu charge on immovable property/ Undertakings, Demand promissory note and irrevocable Power of Attorney in favour of HUDCO to recover the money from individual borrowers.

In addition to (i) and (ii) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained.

12) The Company has adopted Ind AS-19 ‘Employee Benefits''. Defined employee benefit schemes are as follows:

(a) The Company has a separate trust to manage provident fund scheme and provides interest guarantee as per Employees'' Provident Fund Scheme, 1952. The Company pays fixed contribution of provident fund at a predetermined rate to the trust, which invests the funds in permitted securities. The trust is required to pay a minimum notified rate of interest on contribution to the members of the trust and the provident fund scheme additionally requires the company to guarantee the payment of interest at rates notified by the EPFO from time to time under the Employees'' Provident Fund Scheme,

1952 and recognizes such deficiency as an expense in the year it is determined.

In view of the interest rate guarantee by the Company, the plan although being a defined contribution plan is being treated as defined benefit plan for the purpose of disclosure as per Ind AS 19, since as per Section 17 of the Employees Provident Funds (EPF) Act, 1952, the company has to guarantee the interest rate as announced by the EPFO from time to time. Accordingly, the actuarial valuer has done valuation to the extent of interest rate guarantee and details of the same have been disclosed as given below.

o The fair value of the plan assets of the Provident Fund and the accumulated members'' corpus is ?415.90 crore and ?411.57 crore respectively (Previous year ?338.93 crore and ?377.44 crore respectively). The fair value of the assets of the provident fund as at 31^st March, 2023 is higher than the obligation under the defined contribution plan. Provision of (?4.33) crore (Previous year ?38.51 crore) is outstanding based on actuarial valuation. o The total employee benefit expense for the valuation period is ?4.85 crore. The amount for Other Comprehensive Income is (?36.45) crore.

The actuarial assumptions include discount rate of 7.27% (Previous year 6.81%) and an average expected future period of 6.38 years (Previous year 6.85 years). The Company recognized ''11.09 crore (Previous year ?10.62 crore) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to this plan by the Company are at rates specified in the rules of the schemes.

(b) The Company has a defined benefit gratuity plan. Every employee is entitled to gratuity as per the provisions of the payment of Gratuity Act, 1972. The scheme is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company.

The estimates of future salary increase on account of inflation, promotions and other relevant factors have been considered in actuarial valuation.

$ It represents the amount to be recognized in the Statement of Profit & loss as per actuarial valuation. However, since the scheme is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company, so the premium paid is debited to the Statement of Profit & Loss.

# The scheme of Gratuity is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company. Further, the schemes of Leave Encashment and Post-Retirement medical benefits are unfunded.

Note:-

a) The Company expects to contribute '' 1.62 crore (Previous year '' 1.24 crore) to the Gratuity Fund in the next financial year. The weighted average duration of the defined benefit obligation as at 31^st March, 2023 is 6.20 years (Previous year 6.85 years).

b) The Company expects to contribute '' 8.30 crore (Previous year '' 7.34 crore) to the Medical Benefit Fund in the next financial year. The weighted average duration of the defined benefit obligation as at 31^st March, 2023 is 21.21 years (Previous year 21.43 years).

14) a. The Govt. of India through its Notification dated 9^th August, 2019 had made Reserve Bank of India (RBI) as the regulator for HFCs and the supervision part continued to remain with NHB.

RBI has issued notification dated 22^nd October, 2020, on regulatory framework for HFCs, by which the definition of HFC has undergone a change. HFCs which are unable to fulfill the criteria shall be treated as NBFC - Investment and Credit Companies (NBFC-ICC).

Since, HUDCO does not fulfil the criteria of HFC as per the new definition, RBI was requested vide letter dated 16^th

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Mar 31, 2022

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.

- The Company''s definition and assessment of default and cure.

- How the Company defines, calculates and monitors the probability of default, exposure at default and loss given default.

- When the Company considers there has been a significant increase in credit risk of an exposure.

- The Company''s policy of segmenting financial assets where ECL is assessed on a collective basis.

- The details of the ECL calculations for Stage 1, Stage 2 and Stage 3 assets.

NOTE: 10(a)(4)(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 90 days past due on its contractual payments.

NOTE: 10(a)(4)(ii) Probability of default

The 12 month probability of default is calculated using incremental NPA approach.

NOTE: 10(a)(4)(iii) 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 too.

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the 12mECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments.

NOTE: 10(a)(4)(iv) Loss given default

The Company segments its lending products into smaller homogeneous portfolios (Government - Housing,Government -Urban Infrastructure,Non Government and Retail), 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) as well as borrower characteristics.

NOTE: 10(a)(4)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments is subject to 12mECL or life time 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 ECLs 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.

NOTE: 10(a)(4)(vi) Grouping financial assets measured on a collective basis

As explained in Note 4.17, the Company calculates ECLs on collective or individual basis .

The Company calculates ECLs on collective basis on following asset classes:

- Government - Housing

- Government - Urban Infrastructure

- Non Government

- Retail

The Company calculates ECLs on individual basis on all Stage 3 assets of Non Government portfolio.

Note: The company has only amortised cost category to present this schedule.

* Secured by lien over Certificate of Deposits for US$2.14 million (Previous year US $ 3.73 million) placed under swap arrangement with Bank of India, Cayman Islands Branch, New York. The deposits are co-terminus with the maturity schedule of the underlying ADB loans (repayable from 10.12.2002 to 10.06.2022)

** Secured by Bank guarantee for an amount of? 600 crore ( previous year ? 600.00 crore ) [ being 25% of loan amount of ? 2,400 crore ( previous year? 2,400 crore ) sanctioned/ disbursed by NHB and repayable upto 01.07.2027] and negative lien on all properties, assets, receivables etc. of HUDCO both present and future, except those on which the first exclusive charge is created in favour of the trustees to the secured tax free bonds of ? 5,000 crore mobilised during 2011-12, T 2,401.3526 crore mobilised during 2012-13, ? 4,987.12 crore mobilised during 2013-14 and ? 5,000 crore mobilised during 2015-16.

$$ ? 1,294 crore availed on 19.03.2020 @6.57% p.a. (Fixed) payable quarterly, for a period of 3 years i.e. repayable on 19.03.2023 by way of bullet repayment.

# Principal only Swap for US $ 4.50 million (Outstanding US $ 0.50 million as on 31.03.2022) with ICICI Bank was executed on 16.07.2018 effective from 18.07.2018 (for 4.5 years upto 14.09.2022 at spot rate of? 68.68 and swap premium of 4.2479%, payable semi-annually.

## Under the swap arrangement with EXIM Bank, HUDCO has remitted US $ 10 million to EXIM Bank against which EXIM Bank has subscribed to 12.75% HUDCO Special Infrastructure Bonds (II) (rate of interest for the next 7 years reset to 12.50% w.e.f. 23.09.2020) amounting to ? 43.60 crore which are co-terminus with the loan maturity schedule of the underlying USAID guaranteed loan.

### Guaranteed by Central Government as to the repayment of principal and interest.

^A HUDCO had availed a loan of US $ 100 million from Asian Development Bank (ADB) (US $ 50 million during the years 1997-98 and 1998-99 and the balance US $ 50 million during 1999-2000). These loans are guaranteed by the Government of India and repayable in half yearly installments by June 2022.

^A These dollar funds were placed as deposits with Bank of India, Cayman Island Branch, USA (US $ 50 million) and EXIM Bank (US $ 50 million) in terms of agreements with these Banks. The deposits are co-terminus with the loan maturity schedule of the underlying ADB loan. In lieu of the USD deposit of US $ 20 million, Bank of India has subscribed to 12.00% Special Priority Sector Bonds (I) for ? 100 crore (rate of interest to be reset on annual basis @ 1 year G-Sec plus 350 bps, presently @ 7.28%), outstanding as on 31.03.2022, being ? 4.20 crore. Further, in lieu of USD deposit of US $ 30 million, Bank of India has extended a loan of ? 150 crore (rate of interest to be reset on annual basis @ 1 year G-Sec plus 340 bps, presently @ 7.21 %), outstanding as on 31.03.2022, being ? 6.36 crore. Similiarly, in lieu of the balance US $ deposit of USD 50 million, Exim Bank has subscribed to 12.75% Special Priority Sector Bonds (II) (rate of interest for the next 7 years reset to 12.50% w.e.f. 15.12.2013) for? 217 crore (? 9.27 crore as on 31.03.2022), which are co-terminus with the loan maturity schedule of the underlying ADB loan.

Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objectives of the Company''s capital management are safety and security of share capital and maximize the shareholder wealth.

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the regulator Viz., RBI/NHB. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI/NHB.

Company has complied in full with all its externally imposed capital requirements over the reported period.

36.1. Valuation principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

36.2. Valuation governance

The Company''s fair value methodology and the governance over its models include a number of controls and other procedures to ensure enough safeguards and maintain its quality and adequacy. All new product initiatives (including their valuation methodologies) are as per the approved policy of the Company. The ongoing measurement on fair value estimates is reviewed by the appropriate functional department of the Risk management and related finance functions.

36.3. Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value hierarchy:

36.4. ''Valuation techniques

Mutual fund

Mutual funds are valued at the net asset value declared by the mutual fund in respect of each particular scheme.

Equity instruments

Equity instruments which are not actively traded on public stock exchanges but the active prices on a regular basis are available. Such instruments are classified as Level 2. Other equity instruments are fair valued based on the average of the discounted cash flow method and Net assets value (as provided by independent valuer). It is classified as Level 3.

Interest rate swaps, Currency swaps and Forward rate contracts

The most frequently applied valuation techniques include forward pricing and swap models and forward contract using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are classified under Level 2.

36.5. Valuation adjustments and other inputs and considerations Credit Valuation Adjustments (CVA)

The Company calculates CVA on a counterparty basis over the entire life of the exposure.

The Company applies CVA to all relevant (not fully collateralised) over-the-counter positions with the exception of positions settled through central clearing houses. Based on regular assessment of the extent of the adjustments, the Company concluded that these adjustments were not significant to the levelling classification of the relevant instruments in 2021-22 and 2020-21.

36.9. Changes in key assumptions and range of inputs

(a) Net Asset Value (NAV) Method:

The Net Asset Value Method represents the value with reference to historical cost of assets owned by the company and the attached liabilities on the valuation date.

(b) Discounted Projected Cash Flow:

Discounted Projected Cash Flow valuation technique is used to calculate Impact on fair value of level 3 financial instruments measured at fair value using the following unobservable input such as Discount Rate, Recovery rates, Interest Rate and Revenue from operations to ascertain the change.

(c) To arrive at fair value of unquoted investments average of Net Asset Value(NAV) and Discounted Projected Cash flow as on 31⁸¹ March, 2022 is taken.

The range of values indicates the highest and lowest level input used in the valuation technique and, as such, only reflects the characteristics of the instruments as opposed to the level of uncertainty to their valuation.

All changes in the fair market value would be reflected in the Statement of profit and loss based on the classification FVTPL.

The table summarises the valuation techniques together with the significant unobservable inputs used to calculate the fair value of the Company''s Level 3 assets and liabilities.

36.10. Quantitative analysis of significant unobservable inputs Interest rate volatility

Interest Rate volatility measures the expected future variability of a market price. It is generally quoted as a percentage; a higher number represents a more volatile instrument, for which larger swings in price (or interest rate) are expected. Volatility is a key input used to estimate the future prices for the underlying instrument (equity share). Interest rate volatility varies from time to time and therefore, it is not viable to make reliable and meaningful general statements about volatility levels.

Discount Rates

Discount rates are used for calculating the present value of future cash flows. In discounted cash flow models, discount rates are used as the direct reflection of the expected rate of return of the investments made by the company in the due course of the business. Hence, these rates reflect the net present value of an asset. They generally reflect the premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by the uncertainty of the cash flows caused by the credit quality of the asset. They can be implied from market prices and are usually unobservable for illiquid or complex instruments.

Recovery Rates

Recovery rates reflect the estimated loss that the company will suffer given expected defaults (Non-performing Assets). The recovery rate is given as a percentage and reflects the opposite of loss severity (i.e. 100% recovery reflects 0% loss severity). In line with the operation of the Company, probability of Non-performing assets to loss assets plays an important role to ascertain the recovery rates. Higher loss severity levels / lower recovery rates indicate lower expected cash flows upon the default of the instruments. Recovery rates for complex, less liquid instruments are usually unobservable and are estimated based on historical data.

Revenue from operations

Revenue is the value of all sales of goods and services recognized by a company in a period. Revenue (also referred to as Sales, Turnover, or Income) forms the beginning of a company''s Income Statement and often considered the “Top Line” of a business. Growth in revenue from operation directly impacts the profitability of the company, as operation expenses are deducted from a company''s revenue to arrive at its profit.

36.11. Sensitivity of fair value measurements to changes in unobservable market data

Sensitivity of fair value measurements to changes in unobservable market data cannot be ascertained due to potential off-sets from economic or accounting hedge relationships in place.

36.12. Fair value of financial instruments not measured at fair value

Set out a comparison, by class, of the carrying amounts and fair values of the Company''s financial instruments that are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets and nonfinancial liabilities

36.12.1. Valuation Methodology of financial instruments not measured at fair value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables and, as such, may differ from the techniques and assumptions explained in Note 36.4.

Short-term financial assets and liabilities

For financial assets and financial liabilities, that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and cash equivalents, Trade receivables, balances other than cash and cash equivalents, trade payables and contract liability without a specific maturity. Such amounts have been classified as Level 2 on the basis that no adjustments have been made to the balances in the balance sheet.

Loans and advances to customers

The carrying amount of fixed interest rate bearing loans and floating interest rate bearing loans are taken as fair values. It is classified under Level 3.

Financial asset at amortised cost

The fair values of financial assets at amortised cost are the carrying amount of the financial asset. It is classified under Level-3. Debt Securities

Fair value of traded bonds is market price of the bonds as on the balance sheet date or close to balance sheet date. It is classified as Level 2 since it is not actively traded. Fair value of non-traded bonds is calculated based on discounted cash flow method (income approach) and it is classified as Level 3.

In case of Commercial Paper which is Current Liability i.e. short term maturity (less than or equal to twelve months), the face value of outstanding commercial paper is considered as fair value and is classified as Level 3

Borrowing other than debt securities

The carrying amount of fixed interest rate bearing borrowings and floating interest rate bearing borrowings are taken as fair values, since these are reasonable approximation of their fair value. It is classified under Level 3.

NOTE 37: Risk Management

37.1. Introduction and risk management structure

Company, being a Housing Finance Company is exposed to various types of risks like credit risk, operational risk, liquidity risk, market risk and foreign currency risk. Company is fully committed to manage these risks in an effective and proactive manner, for which HUDCO has in place a Risk Management Policy and Operating Manual in line with its objectives covering both the internal and external environment. With a view to minimize the impact of various risks to which Company is exposed to, Company has in place a Board level Committee namely ‘Risk Management Committee of the Board''(RMCB) which reviews various suggestions/ recommendations/reports and action taken by three sub-committees namely:

• Assets & Liabilities Management Committee (ALCO);

• Credit Risk Management Committee (CRMC); and

• Operational Risk Management Committee (ORMC)

HUDCO has effective Assets and Liabilities Management system. ALCO reviews the risks relating to Assets and Liabilities and ensures management of mismatches through liquidity gap analysis, interest rate sensitivity analysis as per NHB guidelines. It is ensured that the ALM risks, if any, are managed within the permissible limits.

The Credit Risk Management Committee (CRMC) oversees and ensures that the institution''s credit policies are complied with and the procedures are being consistently applied.

The Operational Risk Management Committee (ORMC) oversees and ensures the implementation of operational risk framework to explicitly manage each and every source of operational risk including Technology risk, Employee risk, Customer risk, Capital Asset risk and External risk.

37.2. Credit risk

For management of credit risks in an effective manner, Company has established a strong appraisal mechanism containing comprehensive appraisal techniques/ guidelines in order to ensure timely repayments of principal & interest amount

37.2.1. Derivative financial instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet.

With gross-settled derivatives, the Company is also exposed to a settlement risk, being the risk that the company honours its obligation, but the counterparty fails to deliver the counter value.

37.2.2. Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was ?76,989.92 crore and ?74,291.89 crore as of 31^st March, 2022 and 31^st March, 2021 respectively, being the total of the carrying amount of balances with loans.

37.2.3 Analysis of risk concentration

HUDCO takes into consideration NHB/RBI norms for risk categorisation and the norms adopted for extending loan under HUDCO Niwas. Higher LTV is permissible for lower loan amounts while LTV reduces with the higher loan amounts. (Refer Note:10A)

To manage the liquidity risk, Company has in place an effective Asset Liability Management System. The liquidity risk is being monitored with the help of liquidity gap analysis. Further, the funds are mobilized at competitive rates through various strategies viz. bonds, public deposits, term loans etc.

The Company maintains a pool of liquid assets which represents the primary source of liquidity in stress scenarios. Its composition is subject to limits designed to reduce concentration risks which are monitored on an on-going basis.

In order to mitigate the risks arising from fluctuations in interest rates and foreign currency exchange rates, Company periodically reviews and determines its lending rates based on its cost of funds and the market scenario. Further, the interest rate risk is being monitored with the help of interest rate sensitivity analysis under the Asset Liability Management System.

37.4.2. Interest rate risk

The interest rate risk is being monitored with the help of interest rate sensitivity analysis under the Asset Liability Management System.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all other variables being constant) of the Company''s statement of profit and loss and equity.

The sensitivity of the statement of profit and loss is the effect of the assumed changes in interest rates on the profit or loss for a year, based on the floating rate non-trading financial assets and financial liabilities held at 31^st March, 2021 and 31^st March, 2022.

In order to mitigate the risks associated with Foreign Currency Fluctuations, Company has a Foreign Currency Risk Management policy.

The table below indicates the currencies to which the Company had significant exposure at the end of the reported periods. The analysis calculates the effect of a reasonably possible movement of the currency rate against the INR (all other variables being constant) on the statement of profit and loss (due to the fair value of currency sensitive monetary assets and liabilities). A negative amount in the table reflects a potential net reduction in the statement of profit and loss or equity, while a positive amount reflects a net potential increase. An equivalent decrease in each of the currencies below against the INR would have resulted in an equivalent but opposite impact.

37.4.4. Equity price risk

Equity price risk is the risk that the fair value of equities decreases as a result of changes in the level of equity indices and individual stocks. At 10 per cent increase in the value of the Company''s equities at 31st March, 2022 would have increased equity by ?18.02 crore. An equivalent decrease would have resulted in an equivalent but opposite impact and would cause a potential impairment, which would reduce profit before tax by approximately ?18.02 crore.

37.4.5. Operational Risk

In order to mitigate the operational risk(s) associated with the operations of the organization both internal as well as external including technology risk, employee risk, capital asset risk, external risk, compliance risks viz. external fraud, legal risk, etc, Company has established a strong reporting and monitoring mechanism.

Operational Risk Management framework covers managing each and every source of Operational Risk as a distinct risk to the institution''s safety and soundness. The requisite information on the Operational risk is obtained through quarterly reports of ‘Operational Risk Factors and Key Risk Indicators (KRIs)'' from Regional Offices/ departments which are further reviewed and analysed for mitigation of operational risk.

The Company adopted Ind AS 116 using the modified retrospective method of adoption with the date of initial application of 01^st April, 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company elected to use the transition practical expedient not to reassess whether contract is or contains lease at 01^st April, 2019. Instead, the Company applied the standards only to contracts that were previously identified as leases applying Ind AS 17.

Before the adoption of Ind AS 116, the Company classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. Upon adoption of Ind AS 116, the company applied a single recognition and measurement approach for all leases except for short-term leases.

Leases previously classified as finance leases

The Company did not change the initial carrying amounts of recognized assets at the date of initial application for leases previously classified as finance leases.

Leases previously accounted for as operating leases

Company has lease contracts for the office building which are cancellable by the both the lessor and lessee. Company has some contracts which are cancellable by the either lessor and lessee and at present there is no estimation by the company to continue or discontinue the same, further amount of that leases is not material for the company and therefore company is not creating ROU on that assets based on the materiality as per the guidance given under the Indian accounting standard. Further company used hindsight in determining the lease term where the contract contained options to extend or terminate the lease and therefore its leases are covered under the short-term leases as per the guidance under the Ind AS-116.

Amounts recognised in Statement of Profit and Loss relating to short term leases is ?1.55 crore during the year 2021-22 and in the previous year 2020-21 is ?1.59 crore.

b) Company as a Lessor

The Company has given its Assets on the leases; details of the same are given under the Note No-14A Investment Property. Lease Rental recognized as income during the year 2021-22 is ?49.04 Crore and in the Previous year 2020-21 is ?40.60 crore.

NOTE 40: EXPLANATORY NOTES TO ACCOUNTS

1) The financial results for the Financial Year ended 31^st March, 2022 have been drawn up on the basis of Ind-AS that are applicable to the Company based on MCA Notification G. S. R. 111 (E) and G. S. R. 365 (E) dated 16^th February, 2015 and 30^th March, 2016 respectively as amended from time to time. Any guidance/ clarifications issued by NHB/RBI or other regulators are adopted/ implemented as and when they are issued/ applicable. The results have been prepared based on the Schedule III for Non-Banking Financial Companies as per Notification G.S.R. 1022 (E) issued by the Ministry of Corporate Affairs on 11^th October, 2018 and as amended vide notification GSR ( E) dated 24^th March, 2021.

2) Contingent Liabilities & other commitments not provided for and counter guarantees issued by the Company:

(a) Contingent Liabilities:

(?in Crore)
	Particulars	2021-22	2020-21
i.	Demand (including penalty) on account of payment of guarantee fee on SLR debentures guaranteed by Government of India	31.61	31.61
ii.	Disputed Income tax and Interest tax demands against which Company has gone in appeal. The Company has paid a cumulative amount up to 31st March, 2022 of ?279.80 crore (previous year ?279.80 crore) under protest. (This does not include un-quantified demands pertaining to interest/ penalties which may be levied after the finalization of appeals)	297.73	284.02
iii.	TDS demands as per TRACES Portal	0.12	0.21

		Particulars				2021-22		2020-21
	iv.	Disputed service tax demands against which Company has gone in appeal. The Company has paid a cumulative amount upto 31st March, 2022 of 114 crore (previous year 1.14 crore) under protest. (This does not include un-quantified demands pertaining to interest/penalties which may be levied after the finalisation of appeals).				7.07		4.23
	v.	Levy of Fine by Stock Exchanges (NSE & BSE) due to Non-Compliance with Corporate Governance requirements: (NSE: 17,99,260) BSE: (Rs.49,12,340) for the period 30th September. 2019 to 31st December 2021				1.37		-
(b) Capital commitments not provided for (?in Crore)
		Particular				2021-22		2020-21
	i.	Estimated Amount of commitments remaining to be executed on capital account				167.82		19.57
(c)	Finance Lease Commitments: (in '')
	Particulars		31st March, 2022		31st March, 2021
			Minimum lease payments	Present value of MLP	Minimum lease payments		Present value of MLP
	Within one year		23,532	2,206	23,532		2,394
	After one year but not more than five years		23,532	2,033	47,064		4,239
	Total minimum lease payments		47,064	4,239	70,596		6,632
	Less amounts representing finance charges		-	-	63,964		-
	Present value of minimum lease payments		47,064	4,239	6,632		6,632

The above does not include any contingent liability in respect of Andrews Ganj Project (AGP), arising on account of various court cases/ arbitration/ allottees'' claims against cancellation of allotment etc., as in this case, HUDCO is only working as an agent being project executed on behalf of Govt. of India. As such, liability (if any) whenever ascertained / finalized shall be passed on to MoHUA, Govt. of India and met out of AGP (No Lien AGP Account), being maintained separately, in line with the directions of the then MoUD.

3) Andrews Ganj Project

i) HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of the then Ministry of Urban Development, (MoUD) in the year 1989-90.

ii) As per minutes of the meeting held on 7^th September, 1995, it has been agreed to pay interest @ 17% p.a. (simple) on the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

iii) As per Perpetual Lease Deed dated 04^th July, 1997, the Company is liable to make available “Net Resources” from the development and disposal of properties of the AGP to then MoUD and accordingly the Company was crediting interest on Net Resources generated on the project upto 03^rd November, 2004. Subsequently, a separate “No Lien AGP Account” has been opened under the name of “HUDCO AGP Account”, in which the surplus lying to the credit of the then MoUD was credited and interest accrued/ earned on “No Lien AGP Account” was also credited to that account.

iv) HUDCO contends that as per minutes of the meeting held on 07^th September, 1995 and in terms of Perpetual Lease Deed dated 04^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA-GOI (erstwhile MoUD) and there is no financial liability of HUDCO in respect of AGP. This has been upheld by learned Shri GE

Vahanvati, the then Solicitor General of India, vide his opinion dated 12^th April, 2005. This opinion was re-confirmed by learned Shri GE Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009. The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India.

v) Keeping this position in view and in accordance with HUDCO''s Board decision in 459^th meeting dated 24^th August, 2009, HUDCO has been making payments / settling claims on Ministry''s behalf and accounting them in “No Lien AGP Account” being separately maintained by HUDCO. As on 31^th March, 2022, this account has a deficit in the form of debit balance of ?526.27 crore, recoverable from MoHUA(erstwhile MoUD). This represents amount paid by HUDCO on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above the recoveries and the accumulated interest amounting to ?263.30 crore charged @ 10.75% p.a. (simple), on excess of expenditure over recoveries. The MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO shall continue to implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall be looked into for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that HUDCO as a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court orders in cases related to the project. The company vide its letter dated 30^th September, 2015, conveyed its reservation to accept the decision for bearing the liabilities of Andrews Ganj project as HUDCO is acting as an agent of MoHUA, Government of India, for AGP, in terms of perpetual lease deed conditions and other agreed terms.

vi) The Ministry has been informed specifically of the above facts and figures on various occasions through correspondence as also in the meetings. A communication was received from Dy. L&DO vide letter dated 22^nd March, 2016 wherein Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj project and manage “No Lien AGP Account” in line with the terms and conditions as stipulated in the Perpetual Lease Deed dated 04^th July, 1997. The Ministry again informed in specific vide Dy L&DO letter dated 31^st May, 2018 that HUDCO as a lessee is permitted to incur/book maintenance and legal expenditure in respect to Andrews Ganj Project from “No Lien AGP Account”. Like earlier years, in-line with the minutes of meeting dated 07^th September, 1995, the perpetual lease deed dated 04^th July, 1997, income of '' 28.02 crore on account of interest accrued on AGP Project has been credited to Statement of Profit and Loss for the period year ended 31^st March, 2022.

vii) As decided by HUDCO Board in its 596^th meeting held on 14^th June, 2018, Ministry of Housing and Urban affairs has been requested vide letter dated 09^th July, 2018 to consider taking over the Andrews Ganj project with assets and liabilities and pay the amount incurred / to be incurred by HUDCO, towards implementing the project. It has also been conveyed that “till the project is taken over by Ministry”, HUDCO shall be continuing implementing the project as per existing arrangements and continue booking maintenance and legal expenses, interest @ 10.75% p.a. and administrative charges @1.5% in “No Lien AGP Account”. The decision on the same from the Ministry is awaited.

viii) The company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient to recover aforesaid amount of '' 526.27 crore, as on 31^st March, 2022.

ix) MoHUA was requested vide letter dated 13^th January, 2021 to make arrangements towards reimbursement of the amount recoverable endorsement for settling the same from the project proceeds as and when the same are realized, which is also in line with the Lease agreement and well settled and agreed.

In reply to the same, Ministry vide letter dated 10^th March, 2021 has requested for certain additional information including the breakup details of principal amount and interest amount as contained in the “No Lien AGP Account” to process HUDCO''s request.

Ministry vide letter dated 28^th June, 2021 has stated that the “HUDCO''s proposal is under examination in consultation with IFD, MoHUA. Till the proposal of HUDCO vide their letter dated 13^th January, 2021 is approved, the existing arrangement may be continued as conveyed vide this office letter dated 22^nd March, 2016 and 31^st May, 2018”.

(c) i) The Company had allotted a hotel site including car parking space to M/s .Tomorrowland Technologies Exports Ltd.

i.e. TTEL (formerly known as M/s. M S Shoes East Limited). Due to default in payment of installments by TTEL, the Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by TTEL in terms of the allotment letter.

TTEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment letter by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 03^rd July, 2010 against HUDCO. HUDCO filed first appeal against the Order of Sr. Civil Judge Before Additional District Judge (ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and passed the judgment in favour of

TTEL. HUDCO filed Regular Second Appeal (RSA) with Hon''ble High Court of Delhi which passed the final judgment on 03^rd July, 2016 in favour of HUDCO. TTEL challenged the High Court Order by filing SLP NO: 34338/2016 in the Supreme Court. The matter is currently in pendency before Hon''ble Supreme Court.

ii) The allotment of 9 blocks of guest houses, restaurants, kitchens and shops, which were allotted to TTEL, was cancelled

due to default in payment of installment by TTEL and amount of first installment paid by TTEL was forfeited as per terms of allotment letter. TTEL filed a civil suit for permanent injunction and possession against HUDCO & Union of India. The Hon''ble High Court, vide Order dated 10^th August, 2016, directed that HUDCO &Union of India should consider the proposal given by TTEL for refund of entire amount deposited by way of 1^st installment by it with HUDCO along with interest at such rate which may be deemed appropriate by Court.

In view of Hon''ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on 23^rd August, 2016 resolved to approve the proposal to refund first installment forfeited by HUDCO excluding earnest money & the interest for delayed payment paid thereof by TTEL for guest house blocks after adjusting the commercial losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of completion of project subject to necessary approval/NOC of MoUD, Govt. of India.

The Hon''ble High Court passed a decree dated 13^th January, 2017 for payment of 1^st installment of ?35.75 crore to TTEL along-with interest @ 6% p.a., w.e.f. 30^th January, 1995 till date of payment and directed HUDCO to refund the interest paid by TTEL (?0.99 crore) on the delayed period of payment of 1stinstallment (from 30^th November, 1994 till 30^th January, 1995). If the entire amount is not paid on or before 31^th December, 2017, the rate of interest would then stand enhanced to 11% p.a. However, the decree was made in-executable till 30^th June, 2017.

TTEL filed Review Petition in the month of May, 2017, before Hon''ble High Court of Delhi for review of the Decree dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% p.a. on quarterly rests. Subsequently, Review Petition filed by TTEL was disposed off by the High Court on 12^th December, 2017. Thereafter, TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Hon''ble Supreme Court against the Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December, 2017. The Company filed application for recalling the Hon''ble High Court Order dated 13^th January, 2017, in view of the Review Petition filed by TTEL and directions of Govt. of India. The matter was listed on 28^th August, 2018, after hearing all parties, Hon''ble High Court dismissed the “Recall Application” of HUDCO. HUDCO filed SLP in Supreme Court challenging the High Court Order dated 28^th August, 2018 and 13^th January, 2017. Vide Order dated 18^th September, 2018, the Hon''ble Supreme Court has dismissed the SLP as withdrawn, with liberty to HUDCO to file all legal objections regarding the executability of the decree in the executing Court.

Further, TTEL also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by TTEL on 23^rd December, 2017. Thereafter, TTEL has filed Revised Execution Petition, making Govt. of India also a party and claiming rate of interest @ 11% p.a. as per the decree dated 13^th January, 2017.The matter was listed on 3^rd May, 2018, wherein the Hon''ble High Court first directed for attachment of HUDCO Property i.e. HUDCO Bhawan, IHC, Lodhi Road, New Delhi. However, after hearing the submission of HUDCO vide the same order, Hon''ble High Court kept the attachment order of HUDCO Property in abeyance till the next date and also directed that HUDCO will not sell the property at Andrews Ganj, Delhi. Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO''s consent to perform the terms of the Order dated 13^th January, 2017 was conditional on UOI''s support and in the event any liability is indeed ascribed to HUDCO, the same should then be recoverable from the UOI”.

In view of the Supreme Court''s Order dated 18^th September, 2018, HUDCO filed objection in the Execution Petition, pending in Delhi High Court. The matter was listed on 29^th October, 2018. After hearing the submission of HUDCO''s Counsel, the Hon''ble Court dismissed the objections. HUDCO filed two appeals in Delhi High Court as under: -

i) Regular first Appeal (RFA 79/2018) against the final order/ decree 13^th January, 2017 and order dated 28^th August, 2018 (Dismissal of Recall application by High Court). Notices have been issued.

ii) Execution First Appeal (EFA No 19/2018) against the order dated 29^th October, 2018, wherein objections of HUDCO in execution petition were dismissed. The matter was listed on 27^th November, 2018. After hearing the matter, the Hon''ble Court stayed the execution proceeding pending in Delhi High Court till the next date. The matter was listed again on the application of the M/s TTEL for vacation of stay on 08^th July, 2020 before Division Bench, Delhi High Court, after hearing the matter, the Hon''ble Court directed that Execution First Appeal (EFA) 19/2018) shall be adjourned sine die and will be listed after the final disposal of the Regular First appeal (RFA 79/2018). The parties are at liberty to move the application for revival of EFA after final disposal of RFA 79/2018. Till the further order, the stay on the Execution

proceedings shall be continued. Both the cases are pending.

TTEL filed SLP in Supreme Court, against the High Court Order dated 27^th November, 2018, wherein High Court stayed the execution proceedings. However, the same has been withdrawn by TTEL on 14^th January, 2019.

TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Supreme Court against Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December,2017. The SLP filed by TTEL is currently pending in Hon''ble Supreme Court. Further, in the SLP No 10752/53 of 2018, the Union of India has filed an affidavit denying its liability on this account. The said affidavit, was placed before the Board of Directors of HUDCO and as per the decision, the company has also filed a reply/affidavit to the affidavit of Union of India denying its liabilities on account of the same bases on perpetual Lease Deed 04^th July, 1997 and Record Note of discussion dated 07^th September, 1995. The matter is currently pending before Hon''ble Supreme Court of India.

Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account and any expenditure related thereof. In case of any liability by virtue of any court order or otherwise, the same shall be in the account of “No Lien AGP Account” of MoUD, based on the facts and documents and the legal opinions obtained by HUDCO.

(d) The arbitrator has passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to ?8.84 crore along with interest @ 18% p.a. on 28^th July, 2005 in respect of the property leased to APIL at AGP. The Arbitrator has also allowed the counter claim of HUDCO amounting to approximately ?0.85 crore along with interest @ 18% p.a. on account of maintenance charges w.e.f. 1^st January, 2001 up-to 31^st July, 2005. HUDCO has challenged the award before the Hon''ble High Court of Delhi and, as per the directions of the court, has deposited a sum of ?7.99 crore in the court out of “No Lien AGP Account”. Now, the case is listed before Registrar General, Hon''ble High Court for further proceedings.

APIL has invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator has pronounced the award on 21^st July, 2006 holding therein that APIL is not liable to pay the ground rent up to October, 1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The amount of ?3.93 crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f. November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO has filed petition challenging the award before the Hon''ble High Court of Delhi. The Hon''ble High Court on 10^thMay, 2012 has set aside the arbitration award dated 21^st July, 2006. APIL filed an appeal against the above-mentioned order before Division Bench of Hon''ble High Court, Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL appeal and upheld the Arbitrators award. HUDCO filed SLP on 10^th May, 2013 before Hon''ble Supreme Court against this order which is currently pending.

) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO on

Long Term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and ?0.35 crore is recoverable from EPFO.

i) (a) The Company has a procedure for seeking confirmation of outstanding balances at each quarter end from all the

borrowers except cases under litigation. In case of receipt of balance confirmation from the agency for any Quarter of the year, the same is treated as confirmed during the year. Confirmation of balances covering approximately 92.63% received upto 11^th May 2022 (previous year 89.65% received upto 14^th June 2021) in value of the total project loan outstanding (excluding Litigation cases) have been received from the borrowers.

(b) The Company has impairment provision on loans (as per ECL approach) of ?2,504.23 crore as on 31^st March, 2022 and ?2,753.78 crore as on 31^st March, 2021 as per Ind-AS requirement.

(c) As per RBI notification no. RBI/2019-20/170 Circular DOR (NBFC).CC.PD.No.109/ 22.10.106/2019-20 dated 13^th March, 2020 on implementation of Indian Accounting Standards, Housing Finance Companies are required to create an Impairment Reserve for any shortfall in impairment allowances under Ind-AS 109 and IRAC norms (including provision on standard assets). The impairment allowance under Ind-AS 109 made by the company is lower than the total provision required under IRAC as at 31^th March, 2022 and accordingly, impairment reserve of ?60.18 crore has been created.

6) The receipts from the agencies in the loan accounts is appropriated as per loan agreement in the following order:

a) Other dues/ expenses recoverable

b) Penal interest

c) Normal interest

d) Principal

In the event of excess payment, the same is adjusted towards principal.

However, in respect of default cases, repayments are first adjusted towards liquidation of the oldest default by following above order and after appropriation of default, the balance, if any, is adjusted as per the normal practice as above.

7) During the FY 2020-21, the company has implemented restructuring plan in case of RKM Powergen Pvt Limited in December, 2020, with principal outstanding ?482.57 crore, as per RBI Circular dated 7^th June, 2019 on “Prudential Framework for

Resolution of Stressed Assets”. As per the restructured plan part of the outstanding loan was converted into a Sustainable Debt of ?297.12 crore and as per NHB norms, the same was kept as Sub-standard under watch period for one year. Now, after completion of period of one year and on regular servicing of the dues, the said account has been upgraded to Standard Asset and the corresponding ECL allowance has been reversed during the current year.

8) Our country has experienced waves of Covid-19 pandemic following the discovery of new mutant variants. Temporary localised regional lockdowns were imposed, which were subsequently lifted. Improved coverage of vaccination programme and growing immunity against the disease has resulted in witnessing recovery of demand. As HUDCO operates in the space of providing financial assistance for Housing and Urban development projects of Government and Government agencies, the company has strong credit profile with stable assets class, smooth liquidity access and availability of contingency buffers. The company has no reason to believe that Covid-19 crisis will have any significant impact on its operations including the going concern assessment. However, the impact will continue to depend on uncertain future developments of further variants and their severity.

9) The Company had made Long Term Investments at a total cost of ?99.86 crore which represents Trade Investment in Equity Shares, Investments in Associates, Infrastructure Debt Fund and bonds. As per the applicable Ind AS, Investments as on 31^st March, 2022 are being shown at fair value through profit or loss of ?253.94 crore.

10) Loans granted by the company directly to individuals and bulk loans under HUDCO Niwas Scheme are secured fully/partly by:

(i) Equitable Mortgage of the property and /or

(ii) Undertaking to create security through execution of Tripartite Agreement between the Company, borrower and the Developing Authority / Developer;

(iii) Hypothecation of Distribution Assets of the borrower Company.

(iv) Negative Lien on the assets of the borrower Company. Assets of the Company include the book debts and future receivable.

(v) Government Guarantee, first charge on the assets of the housing finance company or First Pari-Passu charge on the outstanding loans or Exclusive Charge/ First Pari-Passu charge on the present and future receivables/ Book Debts, Escrow mechanism, postdated cheques or ECS or RTGS, First Pari-Passu charge on immovable property/ Undertakings, Demand promissory note and irrevocable Power of Attorney in favour of HUDCO to recover the money from individual borrowers.

In addition to (i) and (ii) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained.

11) The Company has adopted Ind AS-19 ‘Employee Benefits''. Defined employee benefit schemes are as follows:

(a) The Company has a separate trust to manage provident fund scheme and provides interest guarantee as per Employees'' Provident Fund Scheme, 1952. The Company pays fixed contribution of provident fund at a predetermined rate to the trust, which invests the funds in permitted securities. The trust is required to pay a minimum notified rate of interest on contribution to the members of the trust and the provident fund scheme additionally requires the company to guarantee the payment of interest at rates notified by the Central Government from time to time under the Employees'' Provident Fund Scheme, 1952 and recognizes such deficiency as an expense in the year it is determined.

In view of the interest rate guarantee by the Company, the plan although being a defined contribution plan is being treated as defined benefit plan for the purpose of disclosure as per Ind AS 19, since as per Section 17 of the Employees Provident Funds (EPF) Act, 1952, the company has to guarantee the interest rate as announced by the EPFO from time to time. Accordingly, the actuarial valuer has done valuation to the extent of interest rate guarantee and details of the same have been disclosed as given below.

The fair value of the plan assets of the Provident Fund and the accumulated members'' corpus is ?338.93 crore and ?377.44 crore respectively (Previous year - ?328.88 crore and ?364.09 crore respectively). The fair value of the assets of the provident fund as at 31^st March, 2022 is lower than the obligation under the defined contribution plan. Provision of ?38.51crore (Previous year ?35.21 crore) is outstanding based on actuarial valuation.

The charge to Profit and loss Account for the valuation period is ''11.31 crore. The amount for Other Comprehensive Income is ?2.58 crore.

The actuarial assumptions include discount rate of 6.81% (Previous year - 6.55%) and an average expected future

period of 6.85 years (Previous year 8.39 years). The Company recognized ?10.62 crore (Previous year - ?9.44 crore) for Provident Fu

---

Mar 31, 2021

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.

- The Company''s definition and assessment of default and cure.

- How the Company defines, calculates and monitors the probability of default, exposure at default and loss given default.

- When the Company considers there has been a significant increase in credit risk of an exposure.

- The Company''s policy of segmenting financial assets where ECL is assessed on a collective basis.

- The details of the ECL calculations for Stage 1, Stage 2 and Stage 3 assets.

NOTE: 10(a)(4)(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 90 days past due on its contractual payments.

NOTE: 10(a)(4)(ii) Probability of default

The 12 month probability of default is calculated using incremental NPA approach.

NOTE: 10(a)(4)(iii) 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 too.

To calculate the EAD for a Stage 1 loan, the Company assesses the possible default events within 12 months for the calculation of the

12mECL. For Stage 2 and Stage 3 financial assets, the exposure at default is considered for events over the lifetime of the instruments. NOTE: 10(a)(4)(iv) Loss given default

The Company segments its lending products into smaller homogeneous portfolios (Government - Housing,Government - Urban Infra-structure,Non Government and Retail), 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) as well as borrower characteristics.

NOTE: 10(a)(4)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments is subject to 12mECL or life time 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 ECLs 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.

NOTE: 10(a)(4)(vi) Grouping financial assets measured on a collective basis

As explained in Note 4.17, the Company calculates ECLs on collective or individual basis .

The Company calculates ECLs on collective basis on following asset classes:

- Government - Housing

- Government - Urban Infrastructure

- Non Government

- Retail

The Company calculates ECLs on individual basis on all Stage 3 assets of Non Government portfolio.

The Company has only amortised cost category to present this schedule.

Secured by lien over Certificate of Deposits for US $ 3.73 million (Previous year US $ 6.04 million) placed under swap arrangement with Bank of India, Cayman Islands Branch, New York. The deposits are co-terminus with the maturity schedule of the underlying ADB loans (repayable from 10.12.2002 to 10.06.2022) Secured by Bank guarantee for an amount of? 600 crore ( previous year ? 1,175.00 crore ) [ being 25% of loan amount of? 2,400 crore ( previous year ? 4,700 crore ) sanctioned/disbursed by NHB and repayable upto 01.07.2027] and negative lien on all properties, assets, receivables etc. of HUDCO both present and future, except those on which the first exclusive charge is created in favour of the trustees to the secured tax free bonds of ? 5,000 crore mobilised during 2011-12, ? 2,401.3526 crore mobilised during 2012-13, ? 4,987.12 crore mobilised during 2013-14 and ? 5,000 crore mobilised during 2015-16.

? 1,294 crore availed on 19.03.2020 @6.57% p.a. (Fixed) payable quarterly, for a period of 3 years i.e. repayable on 19.03.2023 by way of bullet repayment.

Principal only Swap for US $ 4.50 million (Outstanding US $ 1.50 million as on 31.03.2021) with ICICI Bank was executed on 16.07.2018 effective from 18.07.2018 (for 4.5 years upto 14.09.2022) at spot rate of ? 68.68 and swap premium of 4.2479%, payable semi-annually.

Under the swap arrangement with EXIM Bank, HUDCO has remitted US $ 10 million to EXIM Bank against which EXIM Bank has subscribed to 12.75% HUDCO Special Infrastructure Bonds (II) (rate of interest for the next 7 years reset to 12.50% w.e.f. 23.09.2020) amounting to ? 43.60 crore which are co-terminus with the loan maturity schedule of the underlying USAID guaranteed loan.

Guaranteed by Cental Government as to the repayment of principal and interest.

HUDCO had availed a loan of US $ 100 million from Asian Development Bank (ADB) (US $ 50 million during the years 1997-98 and 1998-99 and the balance US $ 50 million during 1999-2000). These loans are guaranteed by the Government of India and repayable in half yearly installments by June 2022.

These dollar funds were placed as deposits with Bank of India, Cayman Island Branch, USA (US $ 50 million) and EXIM Bank (US $ 50 million) in terms of agreements with these Banks. The deposits are co-terminus with the loan maturity schedule of the underlying ADB loan. In lieu of the USD deposit of US $ 20 million, Bank of India has subscribed to 12.00% Special Priority Sector Bonds (I) for ? 100 crore (rate of interest to be reset on annual basis @ 1 year G-Sec plus 350 bps, presently @ 7.23%), outstanding as on 31.03.2021, being ? 12.40 crore. Further, in lieu of USD deposit of US $ 30 million, Bank of India has extended a loan of? 150 crore (rate of interest to be reset on annual basis @ 1 year G-Sec plus 340 bps, presently @ 7.13%), outstanding as on 31.03.2021, being ? 18.64 crore. Similiarily, in lieu of the balance US $ deposit of USD 50 million, Exim Bank has subscribed to 12.75% Special Priority Sector Bonds (II) (rate of interest for the next 7 years reset to 12.50% w.e.f. 15.12.2013) for? 217 crore (? 26.99 crore as on 31.03.2021), which are co-terminus with the loan maturity schedule of the underlying ADB loan. Also refer Note 18(A)(1)(a), Note 17(A)(l)(a)(ii) and (A)(l)(b)(iii).

36.1. Valuation principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

36.2. Valuation governance

The Company''s fair value methodology and the governance over its models include a number of controls and other procedures to ensure enough safeguards and maintain its quality and adequacy. All new product initiatives (including their valuation methodologies) are as per the approved policy of the Company. The ongoing measurement on fair value estimates is reviewed by the appropriate functional department of the Risk management and related finance functions.

36.3. Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value hierarchy:

36.4. Valuation techniques Mutual fund

Mutual funds are valued at the net asset value declared by the mutual fund in respect of each particular scheme.

Equity instruments

Equity instruments which are not actively traded on public stock exchanges but the active prices on a regular basis are available. Such instruments are classified as Level 2. Other equity instruments are fair valued based on the average of the discounted cash flow method and Net assets value (as provided by independent valuer). It is classified as Level 3.

Interest rate swaps, Currency swaps and Forward rate contracts

The most frequently applied valuation techniques include forward pricing and swap models and forward contract using present value calculations by estimating future cash flows and discounting them with the appropriate yield curves incorporating funding costs relevant for the position. These contracts are classified under Level 2.

36.5. Valuation adjustments and other inputs and considerations Credit Valuation Adjustments (CVA)

The Company calculates CVA on a counterparty basis over the entire life of the exposure.

The Company applies CVA to all relevant (not fully collateralised) over-the-counter positions with the exception of positions settled through central clearing houses. Based on regular assessment of the extent of the adjustments, the Company concluded that these adjustments were not significant to the levelling classification of the relevant instruments in 2020-21 and 2019-20.

36.6. Impact of valuation adjustments and other inputs

The following table shows the amount recorded in the statement of profit and loss:

(b) Discounted Projected Cash Flow:

Discounted Projected Cash Flow valuation technique is used to calculate Impact on fair value of level 3 financial instruments measured at fair value using the following unobservable input such as Discount Rate, Recovery rates, Interest Rate and Revenue from operations to ascertain the change.

(c) To arrive at fair value of unquoted investments average of Net Asset Value(NAV) and Discounted Projected Cash flow as on 31^st March, 2021 is taken.

The range of values indicates the highest and lowest level input used in the valuation technique and, as such, only reflects the characteristics of the instruments as opposed to the level of uncertainty to their valuation.

All changes in the fair market value would be reflected in the Statement of profit and loss based on the classification FVTPL.

The table summarises the valuation techniques together with the significant unobservable inputs used to calculate the fair value of the Company''s Level 3 assets and liabilities.

36.10. Quantitative analysis of significant unobservable inputs

Interest rate volatility

Interest Rate volatility measures the expected future variability of a market price. It is generally quoted as a percentage; a higher number represents a more volatile instrument, for which larger swings in price (or interest rate) are expected. Volatility is a key input used to estimate the future prices for the underlying instrument (equity share). Interest rate volatility varies from time to time and therefore, it is not viable to make reliable and meaningful general statements about volatility levels.

Discount Rates

Discount rates are used for calculating the present value of future cash flows. In discounted cash flow models, discount rates are used as the direct reflection of the expected rate of return of the investments made by the Company in the due course of the business. Hence, these rates reflect the net present value of an asset. They generally reflect the premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by the uncertainty of the cash flows caused by the credit quality of the asset. They can be implied from market prices and are usually unobservable for illiquid or complex instruments.

Recovery Rates

Recovery rates reflect the estimated loss that the Company will suffer given expected defaults (Non-performing Assets). The recovery rate is given as a percentage and reflects the opposite of loss severity (i.e. 100% recovery reflects 0% loss severity). In line with the operation of the Company, probability of Non-performing assets to loss assets plays an important role to ascertain the recovery rates. Higher loss severity levels / lower recovery rates indicate lower expected cash flows upon the default of the instruments. Recovery rates for complex, less liquid instruments are usually unobservable and are estimated based on historical data.

Revenue from operations

Revenue is the value of all sales of goods and services recognized by a Company in a period. Revenue (also referred to as Sales, Turnover, or Income) forms the beginning of a Company''s Income Statement and often considered the “Top Line” of a business. Growth in revenue from operation directly impacts the profitability of the Company, as operation expenses are deducted from a Company''s revenue to arrive at its profit.

36.11. Sensitivity of fair value measurements to changes in unobservable market data

Sensitivity of fair value measurements to changes in unobservable market data cannot be ascertained due to potential off-sets from economic or accounting hedge relationships in place.

36.12. Fair value of financial instruments not measured at fair value

Set out a comparison, by class, of the carrying amounts and fair values of the Company''s financial instruments that are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets and non-financial liabilities

36.12.1. Valuation Methodology of financial instruments not measured at fair value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above tables and, as such, may differ from the techniques and assumptions explained in Note 36.4.

Short-term financial assets and liabilities

For financial assets and financial liabilities, that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and cash equivalents, Trade receivables, balances other than cash and cash equivalents, trade payables and contract liability without a specific maturity. Such amounts have been classified as Level 2 on the basis that no adjustments have been made to the balances in the balance sheet.

Loans and advances to customers

The carrying amount of fixed interest rate bearing loans and floating interest rate bearing loans are taken as fair values. It is classified under Level 3.

Financial asset at amortised cost

The fair values of financial assets at amortised cost are the carrying amount of the financial asset. It is classified under Level 3. Debt Securities

Fair value of traded bonds is market price of the bonds as on the balance sheet date or close to balance sheet date. It is classified as Level 2 since it is not actively traded. Fair value of non traded bonds is calculated based on discounted cashflow method (income approach) and it is classified as Level 3.

In case of Commercial Paper which is Current Liability i.e. short term maturity (less than or equal to twelve months), the face value of outstanding commercial paper is considered as fair value and is classified as Level 3.

Borrowing other than debt securities

The carrying amount of fixed interest rate bearing borrowings and floating interest rate bearing borrowings are taken as fair values, since these are reasonable approximation of their fair value.It is classified under Level 3.

NOTE 37: RISK MANAGEMENT

37.1. Introduction and risk management structure

Company, being a Housing Finance Company is exposed to various types of risks like credit risk, operational risk, liquidity risk, market risk and foreign currency risk. Company is fully committed to manage these risks in an effective and proactive manner, for which

HUDCO has in place a Risk Management Policy and Operating Manual in line with its objectives covering both the internal and external environment. With a view to minimize the impact of various risks to which Company is exposed to, Company has in place a Board level Committee namely ‘Risk Management Committee of the Board'' (RMCB) which reviews various suggestions/ recommendations/reports and action taken by three sub-committees namely:

• Assets & Liabilities Management Committee (ALCO);

• Credit Risk Management Committee (CRMC); and

• Operational Risk Management Committee (ORMC)

HUDCO has effective Assets and Liabilities Management system. ALCO reviews the risks relating to Assets and Liabilities and ensures management of mismatches through liquidity gap analysis, interest rate sensitivity analysis as per NHB guidelines. It is ensured that the ALM risks, if any, are managed within the permissible limits.

The Credit Risk Management Committee (CRMC) oversees and ensures that the institution''s credit policies are complied with and the procedures are being consistently applied.

The Operational Risk Management Committee (ORMC) oversees and ensures the implementation of operational risk framework to explicitly manage each and every source of operational risk including Technology risk, Employee risk, Customer risk, Capital Asset risk and External risk.

37.2. Credit risk

For management of credit risks in an effective manner, Company has established a strong appraisal mechanism containing comprehensive appraisal techniques/ guidelines in order to ensure timely repayments of principal & interest amount.

37.2.1. Derivative financial instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as recorded on the balance sheet.

With gross-settled derivatives, the Company is also exposed to a settlement risk, being the risk that the Company honours its obligation, but the counterparty fails to deliver the counter value.

37.2.2. Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was ''74,291.89 crore and ''74,267.92 crore as of 31^st March, 2021 and 31^st March, 2020 respectively, being the total of the carrying amount of balances with loans.

37.2.3. Analysis of risk concentration

HUDCO takes into consideration NHB/RBI norms for risk categorisation and the norms adopted for extending loan under HUDCO Niwas. Higher LTV is permissible for lower loan amounts while LTV reduces with the higher loan amounts. (Refer Note:10A)

The Company adopted Ind AS 116 using the modified retrospective method of adoption with the date of initial application of 01 ^stApril, 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. The Company elected to use the transition practical expedient not to reassess whether contract is or contains lease at 01 ^stApril, 2019. Instead, the Company applied the standards only to contracts that were previously identified as leases applying Ind AS 17.

Before the adoption of Ind AS 116, the Company classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. Upon adoption of Ind AS 116, the Company applied a single recognition and measurement approach for all leases except for short-term leases.

Leases previously classified as finance leases

The Company did not change the initial carrying amounts of recognised assets at the date of initial application for leases previously classified as finance leases.

Leases previously accounted for as operating leases

Company has lease contracts for the office building which are cancellable by the both the lessor and lessee. Company has some contracts which are cancellable by the either lessor and lessee and at present there is no estimation by the Company to continue or discontinue the same, further amount of that leases is not material for the Company and therefore Company is not creating ROU on that assets based on the materiality as per the guidance given under the Indian accounting standard. Further Company used hindsight in determining the lease term where the contract contained options to extend or terminate the lease and therefore its leases are covered under the short-term leases as per the guidance under the Ind AS-116.

Amounts recognised in Statement of Profit and Loss relating to short term leases is '' 1.59 crore during the year 2020-21 and in the previous year 2019-20 is '' 1.18 crore.

b) Company as a Lessor

The Company has given its Assets on the leases; details of the same are given under the Note No-14A Investment Property. Lease Rental recognized as income during the year 2020-21 is '' 40.60 crore and in the Previous year 2019-20 is '' 35.54 crore.

NOTE 40: EXPLANATORY NOTES TO ACCOUNTS

1) The financial results for the Financial Year ended 31⁵¹ March, 2021 have been drawn up on the basis of Ind-AS that are applicable to the Company based on MCA Notification G. S. R. 111 (E) and G. S. R. 365 (E) dated 16^th February, 2015 and 30^th March, 2016 respectively. Any guidance/ clarifications issued by NHB/RBI or other regulators are adopted/ implemented as and when they are issued/ applicable. The results have been prepared based on the Schedule III for Non-Banking Financial Companies as per Notification G.S.R. 1022 (E) issued by the Ministry of Corporate Affairs on 11^th October, 2018.

3) Andrews Ganj Project

i) HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of the then Ministry of Urban Development, (MoUD) in the year 1989-90.

ii) As per minutes of the meeting held on 07^th September, 1995, it has been agreed to pay interest @ 17% p.a. (simple) on the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

iii) As per Perpetual Lease Deed dated 04^th July, 1997, the Company is liable to make available “Net Resources” from the development and disposal of properties of the AGP to then MoUD and accordingly the Company was crediting interest on Net Resources generated on the project upto 03^rd November, 2004. Subsequently, a separate “No Lien AGP Account” has been opened under the name of “HUDCO AGP Account”, in which the surplus lying to the credit of the then MoUD was credited and interest accrued/ earned on “No Lien AGP Account” was also credited to that account.

iv) HUDCO contends that as per minutes of the meeting held on 07^th September, 1995 and in terms of Perpetual Lease Deed dated 04^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA-GOI (erstwhile MoUD) and there is no financial liability of HUDCO in respect of AGP. This has been upheld by learned Shri GE Vahanvati, the then Solicitor General of India, vide his opinion dated 12^th April, 2005. This opinion was re-confirmed by learned Shri GE Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009. The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India.

v) Keeping this position in view and in accordance with HUDCO''s Board decision in 459^th meeting dated 24^th August, 2009, HUDCO has been making payments / settling claims on Ministry''s behalf and accounting them in “No Lien AGP Account” being separately maintained by HUDCO. As on 31^st March, 2021, this account has a deficit in the form of debit balance of '' 493.33 crore, recoverable from MoHUA (erstwhile MoUD). This represents amount paid by HUDCO on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above the recoveries and the accumulated interest amounting to '' 235.28 crore charged @ 10.75% p.a. (simple), on excess of expenditure over recoveries. The MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO shall continue to implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall be looked into for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that HUDCO as a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court orders in cases related to the project. The Company vide its letter dated 30^th September, 2015, conveyed its reservation to accept the decision for bearing the liabilities of Andrews Ganj project as HUDCO is acting as an agent of MoHUA, Government of India, for AGP, in terms of perpetual lease deed conditions and other agreed terms.

vi) The Ministry has been informed specifically of the above facts and figures on various occasions through correspondence as also in the meetings. A communication was received from Dy. L&DO vide letter dated 22^nd March, 2016 wherein Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj project and manage “No Lien AGP Account” in line with the terms and conditions as stipulated in the Perpetual Lease Deed dated 04^th July, 1997. The Ministry again informed in specific vide Dy L&DO letter dated 31^st May, 2018 that HUDCO as a lessee is permitted to incur/book maintenance and legal expenditure in respect to Andrews Ganj Project from “No Lien AGP Account”. Like earlier years, in-line with the minutes of meeting dated 07^th September, 1995, the perpetual lease deed dated 04^th July, 1997, income of '' 27.59 crore on account of interest accrued on AGP Project has been credited to Statement of Profit and Loss for the period year ended 31^st March, 2021.

vii) As decided by HUDCO Board in its 596^th meeting held on 14^th June, 2018, Ministry of Housing and Urban affairs has been requested vide letter dated 09^th July, 2018 to consider taking over the Andrews Ganj project with assets and liabilities and pay the amount incurred / to be incurred by HUDCO, towards implementing the project. It has also been conveyed that “till the project is taken over by Ministry”, HUDCO shall be continuing implementing the project as per existing arrangements and continue booking maintenance and legal expenses, interest @ 10.75% p.a. and administrative charges @1.5% in “No Lien AGP Account”. The decision on the same from the Ministry is awaited.

viii) The Company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient to recover aforesaid amount of '' 493.33 crore, as on 31^st March, 2021.

ix) MoHUA was requested vide letter dated 13^thJanuary, 2021 to make arrangements towards reimbursement of '' 462.63 crore (outstanding as on 31^st March, 2020) endorsement for settling the same from the project proceeds as and when the same are realized, which is also in line with the Lease agreement and well settled and agreed.

In reply to the same, Ministry vide letter dated 10^th March, 2021 has requested for certain additional information including the breakup details of principal amount and interest amount as contained in the “No Lien AGP Account” to process HUDCO''s request.

The requisite clarification was furnished to Ministry vide HUDCO''s letter dated 06^th April, 2021 with a request to expedite its decision. The matter is being followed up with Ministry on regular basis. However, in view of the outbreak of Covid-19 pandemic beginning from March 2021, decision of Ministry is being held up. Ministry vide letter dated 28^th June, 2021 has stated that the “HUDCO''s proposal is under examination in consultation with IFD, MoHUA. Till the proposal of HUDCO vide their letter dated 13^th January, 2021 is approved, the existing arrangement may be continued as conveyed vide this office letter dated 22^nd March, 2016 and 31^st May, 2018”.

(c) i) The Company had allotted a hotel site including car parking space to M/s.Tomorrowland Technologies Exports Ltd. i.e. TTEL (formerly known as M/s. M S Shoes East Limited). Due to default in payment of installments by TTEL, the Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by TTEL in terms of the allotment letter.

TTEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment letter by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 03^rd July, 2010 against HUDCO. HUDCO filed first appeal against the Order of Sr. Civil Judge before Additional District Judge (ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and passed the judgment in favour of TTEL. HUDCO filed Regular Second Appeal (RSA) with Hon''ble High Court of Delhi which passed the final judgment on 03^rd July, 2016 in favour of HUDCO. TTEL challenged the High Court Order by filing SLP NO: 34338/2016 in the Supreme Court. The matter is currently in pendency before Hon''ble Supreme Court.

ii) The allotment of 9 blocks of guest houses, restaurants, kitchens and shops, which were allotted to TTEL, was cancelled due to default in payment of installment by TTEL and amount of first installment paid by TTEL was forfeited as per terms of allotment letter. TTEL filed a civil suit for permanent injunction and possession against HUDCO & Union of India. The Hon''ble High Court, vide Order dated 10^th August, 2016, directed that HUDCO & Union of India should consider the proposal given by TTEL for refund of entire amount deposited by way of 1^st installment by it with HUDCO along with interest at such rate which may be deemed appropriate by Court.

In view of Hon''ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on 23^rd August, 2016 resolved to approve the proposal to refund first installment forfeited by HUDCO excluding earnest money & the interest for delayed payment paid thereof by TTEL for guest house blocks after adjusting the commercial losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of completion of project subject to necessary approval/NOC of MoUD, Govt. of India.

The Hon''ble High Court passed a decree dated 13^th January, 2017 for payment of 1^st installment of '' 35.75 crore to TTEL along-with interest @ 6% p.a. w.e.f. 30^th January, 1995 till date of payment and directed HUDCO to refund the interest paid by TTEL ('' 0.99 crore) on the delayed period of payment of 1^st installment (from 30^th November, 1994 till 30^th January, 1995). If the entire amount is not paid on or before 31^st December, 2017, the rate of interest would then stand enhanced to 11% p.a. However, the decree was made in-executable till 30^th June, 2017.

TTEL filed Review Petition in the month of May, 2017, before Hon''ble High Court of Delhi for review of the Decree dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% p.a. on quarterly rests. Subsequently, Review Petition filed by TTEL was disposed off by the High Court on 12^th December, 2017. Thereafter, TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Hon''ble Supreme Court against the Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December, 2017. The Company filed application for recalling the Hon''ble High Court Order dated 13^th January, 2017, in view of the Review Petition filed by TTEL and directions of Govt. of India. The matter was listed on 28^th August, 2018, after hearing all parties, Hon''ble High Court dismissed the “Recall Application” of HUDCO. HUDCO filed SLP in Supreme Court challenging the High Court Order dated 28^th August, 2018 and 13^th January, 2017. Vide Order dated 18^th September,2018, the Hon''ble Supreme Court has dismissed the SLP as withdrawn, with liberty to HUDCO to file all legal objections regarding the executability of the decree in the executing Court.

Further, TTEL also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by TTEL on 23^rd December, 2017. Thereafter, TTEL has filed Revised Execution Petition, making Govt. of India also a party and claiming rate of interest @ 11% p.a. as per the decree dated 13^th January, 2017.The matter was listed on 3^rd May, 2018, wherein the Hon''ble High Court first directed for attachment of HUDCO Property i.e. HUDCO Bhawan, IHC, Lodhi Road, New Delhi. However, after hearing the submission of HUDCO vide the same order, Hon''ble High Court kept the attachment order of HUDCO Property in abeyance till the next date and also directed that HUDCO will not sell the property at Andrews Ganj, Delhi. Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO''s consent to perform the terms of the Order dated 13^th January, 2017 was conditional on UOI''s support and in the event any liability is indeed ascribed to HUDCO, the same should then be recoverable from the UOI”.

In view of the Supreme Court''s Order dated 18^th September 2018, HUDCO filed objection in the Execution Petition, pending in Delhi High Court. The matter was listed on 29^th October, 2018. After hearing the submission of HUDCO''s Counsel, the Hon''ble Court dismissed the objections. HUDCO filed two appeals in Delhi High Court as under:-

i) Regular first Appeal (RFA 79/2018) against the final order/ decree 13^th January, 2017 and order dated 28^th August, 2018 (Dismissal of Recall application by High Court).Notices have been issued.

ii) Execution First Appeal (EFA No 19/2018) against the order dated 29^th October, 2018, wherein objections of HUDCO in execution petition were dismissed. The matter was listed on 27^th November, 2018. After hearing the matter, the Hon''ble Court stayed the execution proceeding pending in Delhi High Court till the next date. The matter was listed again on the application of the M/s TTEL for vacation of stay on 08^th July, 2020 before Division Bench, Delhi High Court, after hearing the matter, the Hon''ble Court directed that Execution First Appeal (EFA) 19/2018) shall be adjourned sine die and will be listed after the final disposal of the Regular First appeal (RFA 79/2018). The parties are at liberty to move the application for revival of EFA after final disposal of RFA 79/2018. Till the further order, the stay on the Execution proceedings shall be continued. Both the cases are pending.

TTEL filed SLP in Supreme Court, against the High Court Order dated 27^th November, 2018, wherein High Court stayed the execution proceedings. However, the same has been withdrawn by TTEL on 14^th January, 2019.

TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Supreme Court against Decree dated 13^th January, 2017 and Hon''ble High Court Order dated 12^th December, 2017. The SLP filed by TTEL is currently pending in Hon''ble Supreme Court. Further, in the SLP No 10752/53 of 2018, the Union of India has filed an affidavit denying its liability on this account. The said affidavit, was placed before the Board of Directors of HUDCO and as per the decision, the Company has also filed a reply/affidavit to the affidavit of Union of India denying its liabilities on account of the same bases on perpetual Lease Deed 04^th July, 1997 and Record Note of discussion dated 07^th September, 1995. The matter is currently pending before Hon''ble Supreme Court of India.

Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account and any expenditure related thereof. In case of any liability by virtue of any court order or otherwise, the same shall be in the account of “No Lien AGP Account” of MoUD, based on the facts and documents and the legal opinions obtained by HUDCO.

(d) The arbitrator has passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to '' 8.84 crore along with interest @ 18% p.a. on 28^th July, 2005 in respect of the property leased to APIL at AGP. The Arbitrator has also allowed the counter claim of HUDCO amounting to approximately '' 0.85 crore along with interest @ 18% p.a. on account of maintenance charges w.e.f. 1^stJanuary, 2001 up-to 31^st July, 2005. HUDCO has challenged the award before the Hon''ble High Court of Delhi and, as per the directions of the court, has deposited a sum of '' 7.99 crore in the court out of “No Lien AGP Account”. Now, the case is listed before Registrar General, Hon''ble High Court for further proceedings.

APIL has invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator has pronounced the award on 21^st July, 2006 holding therein that APIL is not liable to pay the ground rent up to October, 1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The amount of '' 3.93 crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f. November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO has filed petition challenging the award before the Hon''ble High Court of Delhi. The Hon''ble High Court on 10^th May, 2012 has set aside the arbitration award dated 21^st July, 2006. APIL filed an appeal against the above-mentioned order before Division Bench of Hon''ble High Court, Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL appeal and upheld the Arbitrators award. HUDCO filed SLP on 10^th May, 2013 before Hon''ble Supreme Court against this order which is currently pending.

4) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO on Long term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and '' 0.35 crore is recoverable from EPFO.

5) (a) The Company has a procedure for seeking confirmation of outstanding balances at each quarter end from all the borrowers except

cases under litigation. In case of receipt of balance confirmation from the agency for any Quarter of the year, the same is treated as confirmed during the year. Confirmation of balances covering approximately 89.65% received upto 14^th June 2021 (previous year 89.14% received upto 16^th June 2020) in value of the total project loan outstanding (excluding Litigation cases) have been received from the borrowers.

(b) The Company has made impairment provision on loans (as per ECL approach) of '' 2,753.78 crore as on 31^st March, 2021 and '' 2,939.67 crore as on 31^st March, 2020 as per Ind-AS requirement.

(c) As per RBI notification no. RBI/2019-20/170 Circular DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13^th March, 2020 on implementation of Indian Accounting Standards, Housing Finance Companies are required to create an Impairment Reserve for any shortfall in impairment allowances under Ind-AS 109 and IRAC norms (including provision on standard assets). The impairment allowance under Ind-AS 109 made by the Company is lower than the total provision required under IRAC as at 31^st March, 2021 and accordingly, impairment reserve of '' 161.81 crore has been created.

However, in respect of default cases, repayments are first adjusted towards liquidation of the oldest default by following above order and after appropriation of default, the balance, if any, is adjusted as per the normal practice as above.

7) During the FY 2020-21, the Company has implemented restructuring plan in case of RKM Powergen Pvt Limited, principal outstanding ? 482.57 crore, as per RBI Circular dated 7^th June, 2019 on “Prudential Framework for Resolution of Stressed Assets” and resolution plan in case of M/s Dighi Port Limited, principal outstanding '' 44.29 crore, as approved by NCLT under IBC Act 2016 as per following details:

(a) In case of RKM Powergen Pvt Limited, Master Debt Restructuring Agreement (MDRA) executed among 8 consortium lenders, the outstanding loan has been converted into a Sustainable Debt of '' 297.12 crore and balance Principal amount of '' 185.45 crore have been considered as Unsustainable Debt. Equity and Optionally Convertible Debentures have been issued at value of '' 1/- each towards Unsustainable debt. The Unsustainable debt has been written off with the reversal of the corresponding ECL allowance thereof.

(b) In the case of M/s Dighi Port Limited, the NCLT under IBC Act 2016 has approved a resolution plan which has been implemented by the Company. As per the NCLT order, '' 24.89 crore has been received and balance of '' 19.40 crore has been written off with the reversal of the corresponding ECL allowance thereof.

8) Disclosure of material impact of COVID-19 pandemic under Listing Obligations and Disclosure Requirements (LODR) of SEBI-Financial Statement

(a) Disclosure of Covid-19 Impact during the Year 2020-21

The financial year ended 31^st March, 2021 marked a full year since the World Health Organisation declared the outbreak of COVID-19 as a pandemic. Countries across the globe continued to face drastic economic and social disruptions along with tragic loss of lives and livelihoods. Eruptions of new waves and variants of the virus necessitated restrictions and lockdowns.

In accordance with RBI guidelines on Covid-19 Regulatory package dated 27^th March, 2020, 17^th April, 2020 and 23^rd May, 2020, the Company had offered Moratorium on the payment of installments falling due between 01^st March, 2020 to 31^st August, 2020 to eligible borrowers whose account is Standard and not in default as per Board approved guidelines.

The extent to which the Covid-19 pandemic shall impact the Company''s future results shall depend on developments, which are highly uncertain, including among other things, any new information concerning the severity of the Covid-19 pandemic and any action to contain its spread or mitigate its impact. The Company shall continue to closely monitor any material changes to future economic conditions. However, operating in the Govt. Guarantee as security with most of the Govt. borrowers additionally supported with budgetary provision of the Govt. or Mortgage as Security, we believe that we hold a much stable asset class and better borrower profile, which can withstand the pandemic relatively better.

In April 2021, India witnessed a second wave of infections. However, HUDCO''s operations will not be impacted due to the reasons as mentioned in the foregoing para.

(b) Ex-gratia payment of difference between compound and simple interest on Retail Loan Portfolio

In view of the unprecedented and extreme COVID-19 situation, Government of India, Ministry of Finance, Department of Financial Services vide letter No., F. No. 2/12/2020-BoA.I dated 23^rd October, 2020 announced ex-gratia payment of difference between compound interest and simple interest by ways of relief for the period from 1^st March, 2020 to 31^st August, 2020 to borrowers in specified loan accounts. In compliance of the said Circular, the Reserve Bank of India vide letter dated 26^th October, 2020 advised all specified lending institutions to be guided by the provisions of the Scheme and instructed to take necessary action within the stipulated timeline. Since the scheme provided for giving ex-gratia for loans upto '' 2 crore and HUDCO being HFC, the said guidelines were applicable to home loans given by HUDCO.

In compliance to the said Circular, claim amount of '' 0.09 crore as ex-gratia payment was given to all borrowers, as per guidelines, which was duly credited in the loan accounts of all the existing borrowers and by remittance in saving accounts in all closed loan cases and claim amount was lodged with State Bank of India and the said amount has been recovered on 31^st March, 2021.

(c) As per RBI Circular No. RBI/2021-22/17DOR.STR.REC.4/21.04.048/2021-22 dated 07^th April, 2021 and IBA letter dated 19^th April, 2021 on methodology for calculation of interest on interest and penal interest, the Board has approved a policy for refund of interest on interest and penal interest charged during the moratorium period from 01^st March, 2020 to 31^st August, 2020. Thus, the Company has made a provision in the financial statements for the year ended 31^st March, 2021 equivalent to '' 17.60 crore which is to be refunded/adjusted in the borrowers account. Accordingly, Interest income for the year ended 31^st March, 2021 has been reduced by '' 17.60 crore.

9) The Company had made Long Term Investments at a total cost of '' 99.86 crore which represents Trade Investment in Equity Shares, Investments in Associates, Infrastructure Debt Fund and bonds. As per the applicable Ind AS, Investments as on 31^st March, 2021 are being shown at fair value through profit or loss of '' 241.28 crore.

10) Loans granted by the Company directly to individuals and bulk loans under HUDCO Niwas Scheme are secured fully/partly by:

(i) Equitable Mortgage of the property and /or

(ii) Undertaking to create security through execution of Tripartite Agreement between the Company, borrower and the Developing Authority / Developer ;

(iii) Hypothecation of Distribution Assets of the borrower Company.

(iv) Negative Lien on the assets of the borrower Company. Assets of the Company include the book debts and future receivable.

(v) Government Guarantee, First charge on the assets of the housing finance Company or First Pari-Passu charge on the outstanding loans or Exclusive Charge/ First Pari-Passu charge on the present and future receivables/ Book Debts, Escrow mechanism, postdated cheques or ECS or RTGS, First Pari-Passu charge on immovable property/ Undertakings, Demand promissory note and irrevocable Power of Attorney in favour of HUDCO to recover the money from individual borrowers.

In addition to (i) and (ii) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained.

11) The Company has adopted Ind AS-19 ‘Employee Benefits’. Defined employee benefit schemes are as follows:

(a) The Company has a separate trust to manage provident fund scheme and provides interest guarantee as per Employees'' Provident Fund Scheme, 1952. The Company pays fixed contribution of provident fund at a predetermined rate to the trust, which invests the funds in permitted securities. The trust is required to pay a minimum notified rate of interest on contribution to the members of the trust and the provident fund scheme additionally requires the Company to guarantee the payment of interest at rates notified by the Central Government from time to time under the Employees'' Provident Fund Scheme, 1952 and recognizes such deficiency as an expense in the year it is determined.

In view of the interest rate guarantee by the Company, the plan although being a defined contribution plan is being treated as defined benefit plan for the purpose of disclosure as per Ind AS 19, since as per Section 17 of the Employees Provident Funds (EPF) Act, 1952, the Company has to guarantee the interest rate as announced by the EPFO from time to time. Accordingly, the actuarial valuer has done valuation to the extent of interest rate guarantee and details of the same have been disclosed as given below.

The fair value of the plan assets of the Provident Fund and the accumulated members'' corpus is '' 328.88 crore and '' 364.09 crore respectively (Previous year - '' 313.76 crore and '' 330.20 crore respectively). The fair value of the assets of the provident fund as at 31^st March, 2021 is lower than the obligation under the defined contribution plan. Accordingly, a provision of '' 35.21 crore based on actuarial valuation has been made in current year.

The charge to Profit and loss Account for the valuation period is '' 11.59 crore. The amount for Other Comprehensive Income is '' 17.65 crore.

The actuarial assumptions include discount rate of 6.55% (Previous year - 6.60%) and an average expected future period of 8.39 years (Previous year- 9.17 years). The Company recognized '' 9.44 crore (Previous year - '' 9.34 crore) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to this plan by the Company are at rates specified in the rules of the schemes.

(b) The Company has a defined benefit gratuity plan. Every employee is entitled to gratuity as per the provisions of the payment of Gratuity Act, 1972. The scheme is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company.

(c) The summarized position of various defined benefit schemes recognised in the Statement of Profit & Loss, Balance Sheet and the funded status are as under:

$ It represents the amount to be recognised in the Statement of Profit & loss as per actuarial valuation. However, since the scheme is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company, so the premium paid is debited to the Statement of Profit & Loss.

# The scheme of Gratuity is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company. Further, the schemes of Leave Encashment and Post-Retirement medical benefits are unfunded.

* The Company expects to contribute '' 2.49 crore (Previous year '' 2.14 crore) to the Gratuity Fund in the next financial year. The weighted average duration of the defined benefit obligation as at 31^st March, 2021 is 6.29 years (Previous year 6.62 years).

The Company expects to contribute '' 5.45 crore (Previous year '' 4.30 crore) to the Medical Benefit Fund in the next financial year. The weighted average duration of the defined benefit obligation as at 31^st March, 2021 is 22.48 years (Previous year 22.81 years).

13) The Govt. of India through its Notification dated 9^th August, 2019 had made Reserve Bank of India (RBI) as the regulator for HFCs and the supervision part continued to remain with NHB.

RBI has issued notification dated 22^nd October, 2020, on regulatory framework for HFCs, by which the definition of HFCs has undergone a change. As per the notification, HFC shall mean a Company incorporated under the Companies Act, 2013 which inter-alia, fulfils the following conditions:

1. (a) The financial assets, in the business of providing finance for housing constitute at least 60% of its total assets and (b) Out of the total assets not less than 50% should be by way of housing finance for individuals.

HFCs which are unable to fulfil the criteria shall be treated as NBFC - Investment and Credit Companies (NBFC-ICC).

HUDCO qualifies as a HFC as per Para 1(a) of the RBI circular, but the condition of 50% financing to Individuals is not met out, as mentioned in point no. 1(b) above. Accordingly, in view of the non fulfilment of the above condition, HUDCO requested RBI vide letter dated 16^th December, 2020 for special dispensation to HUDCO for granting exemption from the clause pertaining to 50% lending to individuals and treat HUDCO as HFC.

The RBI in its reply letter dated 10^th February, 2021 has informed its inability to accede to HUDCO''s request for exemption and accordingly suggested to submit a Board approved plan to fulfil the principal business criteria for HFC or to convert into a NBFC-ICC.

In the meantime as per RBI''s Master Directions issued vide Notification dated 17^th February, 2021 for NBFC-HFC, certain circulars issued by NHB have been repealed. As HFC status is ruled out by the RBI, the decision to convert HUDCO into NBFC- Investment and Credit Company (ICC) or Infrastructure Finance Company (IFC) from the present HFC status, requires detailed analysis to be carried out on various pros and cons. RBI was requested vide letter dated 8^th March, 2021 to grant six months'' time for transition to NBFC and to retain the status of HFC and to continue operations with the special dispensations/ relaxations given earlier with regard to credit concentration norms/ exposure norms permitted by NHB/ RBI.

In response to HUDCO''s request, RBI vide letter dated 26^th March, 2021 has granted six months'' time to submit Board approved plan for conversion to NBFC. RBI has further advised that the exemptions from concentration/exposure norms granted previously by NHB/RBI would continue to apply at present subject to the conditions specified while granting such exemptions.

2. RBI has issued Master Directions for NBFC-HFC vide their Notification dated 17^th February, 2021. RBI''s credit concentration

norms state that a Housing Finance Company''s lending exposure to any single borrower or investment in the shares of another Company should not exceed 15% of its owned funds and lending exposure to any single group of borrowers or investment in the shares of single group of companies should not exceed 25% of its owned funds. As per the said circular, Investment of a Housing Finance Company (HFC) in the shares of another HFC shall not exceed 15% of the Equity Capital of the investee Company.

The Company is complying with RBI''s credit concentration norms except in one case of investment in another HFC viz., Indbank Housing Ltd. (IBHL), a subsidiary of Indian Bank in which HUDCO has invested 25% capital of investee.

HUDCO had invested '' 2.50 crore, even before guidelines were applicable, in the Equity Shares of IBHL, whose total paid-up capital is '' 10 crore resulting in investment to the extent of 25% of the equity.

IBHL through their letter has informed that the earlier decision for merger of IBHL with the parent bank was taken by the IBHL Board on account of the then situation prevailing at that point of time. IBHL took various steps towards revival of housing finance business. The authorized capital of the Company was increased from '' 50 crore to '' 150 crore. The Company initiated steps for restructuring of capital by converting loan liabilities of Indian Bank into Compulsory Convertible Preference shares (CCPS) carrying 0.01% rate for '' 130 crore. However, the required permission of RBI was not forthcoming and hence conversion of loan liability to CCPS could not be carried out.

NHB/ RBI, from time to time, has given certain relaxations from credit concentration norms considering the role envisaged for HUDCO. However, vide its letter No. NHB(ND)/ DRS/ SUP/ 3911/ 2018 dated 2^nd April, 2018, NHB capped the credit concentration (Exposure) limit for Government/Public agencies as follows:

(a) The individual exposure limit of HUDCO to Government/Public Agencies (inclusive of the exposure limit of upto 30% for infrastructure/ non-housing related activities) shall be capped at 50% of its NOF.

(b) The exposure limit of HUDCO for State Government (under group exposure) shall be capped at 150% of its NOF in respect of State of Telangana and 100% of NOF for all other States. HUDCO is required to take suitable steps to bring down the group exposure in respect of State of Telangana also to 100% within a maximum period of 3 years. The conditions relating to compliance by the concerned State with the FRBM limits

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Mar 31, 2018

Note 1 (a) Reconciliation of the number of outstanding equity shares :

The reconciliation of the number of shares outstanding and the amount of the share capital as at the beginning and at the end of the year.

Note 1 (b) Rights attached to Equity Shares :

The shareholders of the Company are entitled to receive dividend as and when declared by the company and enjoy proportionate voting rights in case any resolution is put to vote. Further, the shareholders have all such rights, as may be available to the shareholders of a listed company, under the Companies Act, 2013 and rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Memorandum of Association and Articles of Association of the Company.

2) (a) The above does not include any contingent liabilities in respect of Andrews Ganj Project (AGP), arising on account of various court cases/ arbitration/ allottees’ claims against cancellation of allotment etc., as in this case, HUDCO is only working as an agent being project executed on behalf of Govt. of India. As such, liability (if any) whenever ascertained / finalised shall be passed on to MoHUA, Govt. of India and met out of AGP (No Lien AGP Account), being maintained separately, in line with the directions of the then MoUD.

(b) i) HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of the then Ministry of Urban Development, (MoUD) in the year 1989-90.

ii) As per minutes of the meeting held on 7^th September, 1995, it has been agreed to pay interest @ 17% p.a. (simple) on the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

iii) As per Perpetual Lease Deed dated 4^th July, 1997, the Company is liable to make available “Net Resources” from the development and disposal of properties of the AGP to then MoUD and accordingly the Company was crediting interest on Net Resources generated on the project upto 3^rd November, 2004. Subsequently, a separate “No Lien AGP Account” has been opened under the name of “HUDCO AGP Account”, in which the surplus lying to the credit of then MoUD was credited and interest accrued/ earned on “No Lien AGP Account” was also credited to that account.

iv) HUDCO contends that as per minutes of the meeting held on 7^th September, 1995 and in terms of Perpetual Lease Deed dated 4^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA (erstwhile MoUD) and there is no financial liability of HUDCO in respect of AGP. This has been upheld by the opinion dated 12^th April, 2005 as opined by learned Shri GE Vahanvati, the then Solicitor General of India. This opinion was re-confirmed by learned Shri G.E Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009. The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India. Moreover, the Hon’ble Supreme Court of India (in the case of HUDCO vs MCD) has also held that HUDCO is an agent of MoHUA (erstwhile MoUD), in respect of AGP and AGP belongs to Government of India.

v) Keeping this position in view and in accordance with HUDCO’s Board decision in 459^th meeting dated 24^th August, 2009, HUDCO has been making payments / settling claims on Ministry’s behalf and accounting them in “No Lien AGP Account” being separately maintained by HUDCO. As on 31^st March, 2018 this account has a deficit in the form of debit balance of Rs.398.12 crore, recoverable from MoHUA (erstwhile MoUD). This represents amount paid by HUDCO on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above the recoveries and the accumulated interest amounting to Rs.153.87 crore charged @ 10.75% p.a. (simple), on excess of expenditure over recoveries. The MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO shall continue to implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall be looked into for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that HUDCO as a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court orders in cases related to the project. The company vide its letter dated 30^th September, 2015, conveyed its reservation to accept the decision for bearing the liabilities of Andrews Ganj Project as HUDCO is acting as an agent of MoHUA, Government of India, for AGP, in terms of Perpetual Lease Deed conditions and other agreed terms.

vi) The Ministry has been informed in specific of the above facts and figures on various occasions through correspondence as also in the meetings. A communication was received from Dy. L&DO vide letter dated 22^nd March, 2016 wherein Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj Project and manage “No Lien AGP Account” in line with the terms and conditions as stipulated in the Perpetual Lease Deed dated 04^th July, 1997. Like in earlier years, in-line with the Perpetual Lease Deed and letter dated 22^nd March, 2016 of Dy. L&DO, an income of Rs.26.24 crore on account of interest accrued on AGP Project has been credited to Statement of Profit and Loss for the period ended 31^st March, 2018.

Dy. L&DO MoHUA (erstwhile MoUD) vide minutes of the meeting held on 21^st September, 2017 has communicated that HUDCO will not book any expenditure from “No Lien AGP Account’’. Further, MoHUA vide its letter dated 23^rd February, 2018 has stated that (i) “No permission for expenditure from “No Lien AGP Account” can be granted and (ii) Conduct audit of No Lien AGP account through JS&FA, MoHUA”.

The Board of Directors in its 593^rd meeting held on 20^th March, 2018 directed that, Ministry may be approached for early audit of “No Lien AGP Account”, reimbursement of outstanding amount as on 31^sl March, 2018 and also to grant permission/ book expenses on essential maintenance activity from “No Lien AGP Account”.

The Company has been reiterating its consistent stand to operate the project in terms of Perpetual Lease Deed dated 4^th July, 1997 & minutes of meeting held on 7^th September, 1995 and as per the opinion of Attorney General of India, that Company being agent of MoHUA (erstwhile MoUD), hence, all the expenses are to be booked to “No Lien AGP Account”.

In view of the above, matter has been taken up with MoHUA to re-consider its decision taken during the meeting held on 21^st September, 2017 and allow HUDCO to book all expenses on Andrews Ganj Project in “No Lien AGP Account”.

vii) The company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient to recover aforesaid amount of Rs.398.12 crore, as on 31^st March, 2018.

(c) i) An amount of Rs.17.98 crore (50% of the total property tax claimed by Municipal Corporation of Delhi (MCD)) was initially deposited by HUDCO with MCD on account of property tax of Andrews Ganj Project for the period from 2^nd July, 1990 to 4^th July, 1997, though the property belongs to Govt. of India.

The Hon’ble Supreme Court vide its judgement dated 13^th December, 2000 stated that the entire amount along with interest is recoverable from SDMC (erstwhile MCD) on finality along-with interest @ 12%. Accordingly, an amount of Rs.11.45 crore was refunded by SDMC on 30^th September, 2005. Initially, the amount refunded by SDMC was adjusted towards the interest, however MCD has clarified vide letter no. Tax/HQ/GRP/D-429/678 dated 24.10.2012 that the refund included Rs.6.98 crore towards amount paid by the Company on 31^sl March, 2000 to MCD and ‘4.47 crore towards interest @12% p.a.

In view of the SDMC’s Property Tax Amnesty Scheme 2016-17 and as per directions of MoHUA (erstwhile MoUD), payment of Rs.25,30,96,388/- (Rs.32,30,96,388 less ‘7,00,00,000 paid by HUDCO in terms of Orders passed by Hon’ble High Court of Delhi in Writ Petition No. 467/2013 filed by HUDCO in 2013) was made by HUDCO to SDMC towards property tax/ service charges payable for the period from 2^nd July, 1990 to 31^sl March, 2017 and the same was booked in the “No Lien AGP Account”. The payment made was based on the calculations agreed between HUDCO and SDMC for property tax/ service charge payable which was computed without any penalty and interest and also after adjusting the amount already refunded/ adjusted by SDMC to HUDCO in terms of the Hon’ble Supreme Court Judgement dated 13^th December, 2000.

An Execution Petition, earlier filed by HUDCO in Hon’ble Supreme Court, to recover the balance amount in terms of their Judgement dated 13^th December, 2000, was dismissed by the court on 7^th May, 2018, as the amount claimed by HUDCO through said Execution Petition has been adjusted while calculating the Property tax/ service charges payable from 2^nd July, 1990 to 31^st March, 1997, under Amnesty Scheme 2016-17. The amount receivable from SDMC (erstwhile MCD) having been adjusted in the Amnesty Scheme is therefore no more recoverable from SDMC. Necessary corrective action entries have been passed by the Company based on the above said facts considering the finality of the matter.

(d) i) The Company had allotted a hotel site including car parking space to M/s. M S Shoes East Limited (MSSEL). Due to default in payment of installments by MSSEL, the Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by MSSEL in terms of the allotment letter.

MSSEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment letter by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 3^rd July, 2010 against HUDCO. HUDCO filed first appeal against the Order of Sr. Civil Judge before Additional District Judge (ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and passed the judgment in favour of MSSEL. HUDCO filed Regular Second Appeal (RSA) with Hon’ble High Court of Delhi which passed the final judgment on 3^rd July, 2016 in favour of HUDCO in response to RSA. MSSEL challenged the High Court Order by filing SLP in the Supreme Court. The matter is currently in pendency before Hon’ble Supreme Court.

ii) The allotment of 9 blocks of guest houses, restaurants, kitchens and shops, which were allotted to MSSEL, was cancelled and amount of first installment paid by MSSEL was forfeited as per terms of allotment letter. MSSEL filed a civil suit for permanent injunction and possession against HUDCO & Union of India. The Hon’ble High Court, vide Order dated 10^th August, 2016, directed that HUDCO & Union of India should consider the proposal given by MSSEL for refund of entire amount deposited by way of 1^st installment by it with HUDCO along with interest at such rate which may be deemed appropriate by Court.

In view of Hon’ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on 23^rd August, 2016 resolved to approve the proposal to refund first installment forfeited by HUDCO excluding earnest money & the interest for delayed payment paid thereof by MSSEL for guest house blocks after adjusting the commercial losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of completion of project subject to necessary approval/NOC of MoUD.

The Hon’ble High Court passed a decree dated 13^th January, 2017 for payment of 1^st installment of Rs.35.75 crore to MSSEL along-with 6% interest till date of payment and directed HUDCO to refund the interest paid by MSSEL (Rs.0.99 crore) on the delayed period of payment of 1^st installment (from 30^th November, 1994 till 30^th January, 1995). If the entire amount is not paid on or before 31^st December, 2017, the rate of interest shall then stand enhanced to 11% p.a. However, the decree was made in-executable till 30^th June 2017.

MSSEL filed Review Petition in the month of May, 2017, before Hon’ble High Court of Delhi for review of the Decree dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% on quarterly rests. Subsequently, Review Petition filed by MSSEL was disposed off by the High Court on 12^th December, 2017. Thereafter, MSSEL has filed Special Leave Petition (SLP) in Hon’ble Supreme Court against the Decree dated 13^th January, 2017 and Hon’ble High Court Order dated 12^th December, 2017. The SLP filled by MSSEL is currently pending in Hon’ble Supreme Court.

MSSEL has also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by MSSEL on 23^rd December, 2017. Thereafter, MSSEL has filed Revised Execution Petition, making Govt. of India also a party and claiming rate of interest @ 11% as per the decree dated 13^th January, 2017 and the matter was listed on 3^rd May, 2018, wherein the Hon’ble High Court first directed for attachment of HUDCO Property i.e. HUDCO Bhawan, IHC, Lodi Road, New Delhi. However, after hearing the submission of HUDCO vide the same order, Hon’ble High Court has kept the attachment order of HUDCO Property in abeyance till the next date and also directed that HUDCO will not sell the property at Andrews Ganj, Delhi. As per the legal opinion of Learned Justice V.N. Khare, former Chief Justice of India, “It is clear that very act of issuance of order of attachment has been kept in abeyance, the warrant of attachment as directed has not yet seen the light of the day and is yet to be issued”. The Company has already filed application for recalling the Hon’ble High Court Order dated 13^th January, 2017, in view of the Review Petition filed by MSSEL and directions of Govt. of India. Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO’s consent to perform the terms of the Order dated 13^th January 2017 was conditional on UOI’s support and in the event any liability is indeed ascribed to HUDCO the same should then be recoverable from the UOI”. The matter is listed for hearing on 4^th July, 2018. Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account and any expenditure related thereof.

(e) i) The arbitrator has passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to Rs.8.84 crore along with interest @ 18% with respect to issues related to external electrification, provision of scrubber, refund of interest etc. on 28^th July, 2005 in respect of the property leased to APIL under AGP. The Arbitrator has also allowed the counter claim of HUDCO amounting to approximately Rs.0.85 crore along with interest @ 18% on account of maintenance charges w.e.f. 1^st January, 2001 up-to 31^st July, 2005. HUDCO has challenged the award before the Hon’ble High Court of Delhi and, as per the directions of the court, has deposited a sum of Rs.7.99 crore in the court out of “No Lien AGP Account”. Now, the case is listed before Registrar General, Hon’ble High Court for further proceedings.

APIL has invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator has pronounced the award on 21^st July, 2006 holding therein that APIL is not liable to pay the ground rent up to October, 1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The amount of Rs.3.93 crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f. November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO has filed petition challenging the award before the Hon’ble High Court of Delhi. The Hon’ble High Court on 10^th May, 2012 has set aside the arbitration award dated 21^st July, 2006. APIL filed an appeal against the above-mentioned order before Division Bench of Hon’ble High Court, Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL appeal and upheld the Arbitrators award. HUDCO filed SLP on 10^th May, 2013 before Supreme Court against this order which is currently pending.

3) Under the Disinvestment programme of Government of India, the President of India acting through the Ministry of Housing and Urban Affairs (erstwhile Ministry of Housing and Urban Poverty Alleviation) (Selling Shareholder) sold 10.193% of its equity shareholding (i.e. 204,058,747 equity shares of face value of Rs.10/- each) in Housing and Urban Development Corporation Ltd. (HUDCO) through an Initial Public Offer (IPO) at a price of Rs.60/- per equity share. As the offer comprised solely of the offer for sale by the selling shareholder and with the Company not raising any fresh equity capital through the offer, no proceeds of the offer have been received by the Company. The equity shares of the Company got listed on 19^th May, 2017.

4) (a) The Company has procedure for seeking confirmation of outstanding balances at each quarter end from all the borrowers except cases under litigation. In case of receipt of balance confirmation from the agency for any Quarter of the year, the same is treated as confirmed during the year. Confirmation of balances covering approximately 79.34% received up to 25^th May, 2018 (previous year 89.24%) in value of the total project loan outstanding (excluding Litigation cases) have been received from the borrowers.

(b) The Company has made provision on loans of Rs.2,692.87 crore as on 31^st March, 2018 as against the provision of Rs.2,408.87 crore required as per NHB norms. Hence, the Company has additional provision of Rs.284 crore (including the earmark provision amounting Rs.193.03 crore with respect to borrower RKM Powergen Pvt. Ltd.) as on 31^st March, 2018 (Rs.330 crore as on 31^sl March, 2017) as per accounting policy of the Company. (Refer sub-Note No. 6 below)

5) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO on Long term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and Rs.0.35 crore is recoverable from EPFO.

6) In case of RKM Powergen Private Ltd., the loan asset was categorized as sub-standard by the Company on 15^th April, 2015. However, in view of Hon’ble High Court of Madras Order, the Company after seeking legal opinion with respect to asset classification, the loan asset has been re-classified from sub-standard to standard asset category. Had the account been classified as NPA, Company would be required to make a provision amounting to Rs.193.03 crore (Previous year Rs.120.64 crore) against the principal outstanding of Rs.482.57 crore) as on 31^st March, 2018. In view of prudent accounting, the interest income of Rs.121.81 crore (Previous year Rs.101.58 crore) has not been recognized in the Statement of Profit & Loss and further, the Company has earmarked provision of Rs.193.03 crore in the additional provision of Rs.284 crore as on 31^sl March, 2018 to meet such exigency.

7) The Company had sanctioned a loan of Rs.46 crore (curtailed) to M/s Dighi Port Ltd. under Consortium Funding arrangement. An amount of Rs.44.87 crore was disbursed against the sanctioned loan and the principal outstanding as on 31^st March, 2018 is Rs.44.29 crore. The account has been classified as NPA since June, 2014 and the Company has made a provision of 40% on the outstanding loan as on 31^st March, 2018. A Corporate Resolution Process (CRP) has been initiated on 25^th March, 2018 against the borrower and the same has been admitted in National Company Law Tribunal (NCLT), Mumbai on 6^th April, 2018. HUDCO has filed a claim of Rs.98.21 crore with the Interim Resolution Professional (IRP).

8) The Company had sanctioned a loan of Rs.360 crore to KVK Nilachal Power Private Ltd. under Consortium Funding arrangement. An amount of Rs.349.40 crore was disbursed against the sanctioned loan and the principal outstanding as on 31^st March, 2018 is Rs.348.71 crore. The account has been classified as NPA since June, 2015 and the Company has made a provision of Rs.175.61 crore on the outstanding loan as on 31^st March, 2018. In the Joint Lenders Forum (JLF) meeting held on 2^nd February 2018, the lenders have agreed to engage an IRP for initiating CRP in the NCLT.

9) The Company had sanctioned a loan of Rs.90 crore to Visa Steel Ltd. under Consortium Funding arrangement. An amount of Rs.81.25 crore was disbursed against the sanctioned loan and the principal outstanding as on 31^sl March, 2018 is Rs.61.76 crore. The account has been classified as NPA since June, 2015 and the Company has made a provision of Rs.29.51 crore on the outstanding loan as on 31^st March, 2018. The lead bank has approached NCLT, Kolkata under IBC, 2016 and the matter is posted for 12^th July, 2018.

10) The Company had sanctioned a loan of Rs.295 crore to M/s Electrosteels Steel Limited (ESL) under Consortium Funding arrangement. An amount of Rs.295 crore was disbursed against the sanctioned loan and the principal outstanding as on 31^st March, 2018 is Rs.245.83 crore. The account has been classified as NPA since September, 2015 and the company has made a provision of Rs.98.33 crore as on 31^sl March, 2018.

The NCLT, Kolkata vide its order dated 17^th April, 2018 has approved the resolution plan involving the payment of Rs.5,320 crore (being the sustainable debt to be paid to the financial creditor against the admitted claim of Rs.13,175.15 crore). However, the decision of NCLT approving Resolution Plan of Vedanta Ltd. has been challenged before National Company Law Appellate Tribunal (NCLAT) by Renaissance Steel India Pvt. Ltd., one of the unsuccessful Resolution Applicants, where NCLAT has vide order dt. 1^st May, 2018 ordered to maintain status quo.

In case, NCLAT upholds the order of NCLT, Kolkata approving the Resolution Plan of Vedanta Ltd., the Company is likely to receive an amount of Rs.154.73 crore, as against net NPA of Rs.147.50 crore as on 31^st March, 2018.

11) The Company had sanctioned a loan of Rs.250 crore to Coastal Energen Private Ltd., under Consortium Funding arrangement. An amount of Rs.250 crore was disbursed against the sanctioned loan and the principal outstanding as on 31^st March, 2018 is Rs.250 crore. The account has been classified as NPA since December, 2013 and the Company has already made full provision (100%) against the outstanding loan. A Revised Resolution Plan outside the Insolvency & Bankruptcy Code (IBC) has since been initiated by the lenders with 1^st March, 2018 as the reference date. In the event of failure to conclude the plan within the stipulated period or otherwise, the lenders have the right to initiate the Resolution Process under the IBC.

12) The Company had sanctioned a loan of Rs.350 crore to Nagarjuna Oil Corporation Limited (NOCL) under Consortium Funding arrangement. An amount of Rs.350 crore was disbursed against the sanctioned loan and the principal outstanding as on 31^st March, 2018 is Rs.349.88 crore. The account has been classified as NPA since June, 2013 and the Company has already made full provision (100%) against the outstanding loan. A Corporate Insolvency Resolution Process (CIRP), initiated by an Operational Creditor, was admitted in NCLT, Chennai on 25^th July, 2017. The Committee of Creditors (CoC) in their meeting held on 19^th April, 2018 has recommended for liquidation of NOCL, based on which the Resolution Professional (RP) had filed intimation before NCLT on 20^th April, 2018.

13) The Company had sanctioned a loan of Rs.366.11 crore to Lanco Teesta Hydro Power Pvt. Ltd. (LTHPL) under Consortium Funding arrangement. An amount of Rs.366.11 Crore was disbursed against the sanctioned loan and the principal outstanding as on 31^st March, 2018 is Rs.366.11 crore. The account has been classified as NPA in June, 2017 and the Company has made a provision of 15% on the outstanding loan as on 31^st March, 2018. The Corporate Insolvency Resolution Process (CIRP) has been admitted in NCLT, Hyderabad on 16^th March, 2018. The Company shall be making further additional provision @ 10% of the outstanding loan during the quarter ending 30^th June, 2018, as per the NHB provisioning norms.

14) The Company had sanctioned a loan of Rs.50 crore to M/s Kerala State Cooperative Hospital & Centre for Advanced Medical Sciences Ltd., against which Rs.46.50 crore was disbursed to the agency. The account is in NPA since June 1999 and the company has already made full provision (100%) against the outstanding loan of Rs.46.36 crore.

After prolonged litigation and finally as per directions of the Hon’ble High Court of Kerala, Govt. of Kerala vide Government Order (GO) dated 28^th September, 2017 had approved the package for the settlement of dues of Rs.266.48 crore to be paid in 8 installments from 30^th June, 2017 to 31^st March, 2019 together with interest thereon and has paid Rs.116.16 crore till 31^st March, 2018.

15) The Company had sanctioned and disbursed a loan of Rs.100 crore to Himachal Sorang Power Pvt. Ltd. under Consortium Funding arrangement. The account has been classified as NPA since June, 2016 and the Company has made a provision of 25% on the outstanding loan of Rs.82.50 crore as on 31^st March, 2018.

As per the existing practice the valuation was required to be done in respect of loans & advances classified under “Doubtful” category, once during the period of 3 years. However, with the introduction of new valuation policy, the valuation is required to be done once in a year and accordingly, the valuation will be got done during the financial year 2018-19.

16) The Company had sanctioned and disbursed a loan of Rs.75.07 crore to Maharaji Educational Trust. The account has been classified as NPA since March, 1997 and full provision has already been made against the outstanding loan of Rs.74.26 crore as on 31^st March, 2018. The total amount recoverable from the borrower as on 31^st March, 2018 is Rs.469.38 crore.

After prolonged litigation, the Company has been able to dispose a part of the mortgaged land at a consideration of Rs.342 crore, out of which Rs.25 crore was received in February, 2018 and balance amount of Rs.317 crore on 25^th May, 2018. The same will be booked as income in the FY 2018-19.

17) Loans granted by the company directly to individuals and bulk loans under HUDCO Niwas Scheme are secured fully/ partly by:

(i) Equitable Mortgage of the property and /or

(ii) Undertaking to create security through execution of Tripartite Agreement between the Company, borrower and the Developing Authority / Developer

(iii) Hypothecation of Distribution Assets of the borrower Company.

(iv) Negative Lien on the assets of the borrower Company. Assets of the Company include the book debts and future receivable.

(v) Government Guarantee, First charge on the assets of the housing finance company or First Pari-Passu charge on the outstanding loans or Exclusive Charge/ First Pari-Passu charge on the present and future receivables/ Book Debts, Escrow Mechanism, postdated cheques or ECS or RTGS, First Pari-Passu charge on immovable property/ Undertakings, Demand Promissory Note and Irrevocable Power of Attorney in favour of HUDCO to recover the money from individual borrowers.

In addition to (i) and (ii) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained.

18) DPE vide its O.M. dated 3^rd August, 2017 had issued the guidelines for revision of the pay of the employees of the CPSEs effective from 1^st January 2017. The revised pay scales of the employees of the Company have been implemented during the financial year 2017-18 consequent to receipt of Presidential Directive from MoHUA vide its letter dated 25^th January, 2018.

19) The Company has adopted AS-15 (revised 2005) ‘Employee Benefits’. Defined Employee Benefit Schemes are as follows:

(a) The Company has a separate Trust to manage provident fund scheme and provides interest guarantee as per Employees’ Provident Fund Scheme, 1952. The Company pays fixed contribution of provident fund at a predetermined rate to the Trust, which invests the funds in permitted securities. The Trust is required to pay a minimum notified rate of interest on contribution to the members of the trust and the provident fund scheme additionally requires the company to guarantee the payment of interest at rates notified by the Central Government from time to time under the Employees’ Provident Fund Scheme, 1952 and recognizes such deficiency as an expense in the year it is determined.

In view of the interest rate guarantee by the Company, the plan although being a defined contribution plan is being treated as defined benefit plan for the purpose of disclosure as per AS 15, since as per Section 17 of the Employees Provident Funds (EPF) Act, 1952, the company has to guarantee the interest rate as announced by the EPFO from time to time. Accordingly, the actuarial valuer has done valuation to the extent of interest rate guarantee and details of the same have been disclosed as given below.

The fair value of the assets of the Provident Fund and the accumulated members’ corpus is Rs.262.54 crore and Rs.261.34 crore respectively (Previous Year Rs.240.18 crore and Rs.206.57 crore respectively). The fair value of the assets of the provident fund as at 31^st March, 2018 is higher than the obligation under the Defined Contribution Plan. Accordingly, no provision is required to be made based on actuarial valuation during the year 2017-18.

The actuarial assumptions include discount rate of 7.60% (previous year 7.50%) and an average expected future period of 10.04 years (previous year 11.41 years). The Company recognized Rs.8.68 crore (previous year Rs.6.65 crore) for Provident Fund Contributions in the Statement of Profit and Loss. The contributions payable to this plan by the Company are at rates specified in the rules of the schemes.

(b) The Company has a Defined Benefit Gratuity Plan. Every employee is entitled to gratuity as per the provisions of the payment of Gratuity Act, 1972. The scheme is managed by a separate Trust through LIC Policy and the premium paid by the Trust is funded by the Company.

(c) The summarized position of various defined benefit schemes recognised in the Statement of Profit & Loss, Balance Sheet and the funded status are as under:

$ It represents the amount to be recognised in the Statement of Profit & Loss as per actuarial valuation. However, since the scheme is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the Company, so the premium paid is debited to the Statement of Profit & Loss.

# The scheme of Gratuity is managed by a separate Trust through LIC Policy and the premium paid by the Trust is funded by the Company. Further, the schemes of Leave Encashment and Post-Retirement medical benefits are unfunded.

* The Assets of Rs.0.23 crore (previous year Rs.4.00 crore) on Gratuity has not been recognised in the Balance Sheet, since the fair value of plan assets is more than the present value of defined benefit obligations as on 31.03.2018.

20) The amount of Rs.66.56 crore available in Welfare Reserve as on 1^sl April, 2015 was invested in Fixed Deposit in the name of the Company during the year 2015-16, pending operationalization of approved guidelines. The said Fixed Deposit got matured in August 2017 and the amount has been utilized for HUDCO’s operations.

21) National Housing Bank’s Credit Concentration Norms states that a Housing Finance company’s agency wise exposure should not exceed 15% of its Net Owned Funds. Further, as per NHB’s circular dated 21.03.13, investment of a Housing Finance Company (HFC) in the shares of another HFC shall not exceed 15% of the Equity Capital of the investee company.

The Company is complying with National Housing Bank’s Credit Concentration Norms except in one case of investment in another HFC viz., Indbank Housing Ltd. (IBHL) in which HUDCO has invested 25% capital of investee.

HUDCO had invested Rs.2.50 crore, even before guidelines were applicable, in the Equity Shares of IBHL, whose total paid-up capital is Rs.10 crore resulting in investment to the extent of 25% of the equity.

IBHL through their letter dated 1^st August, 2017 has informed that the earlier decision for merger of IBHL with the parent Bank was taken by the IBHL Board on account of the then situation prevailing at that point of time. Now, Board of Indian Bank has accorded approval for revival of IBHL and a road map was drawn to make IBHL a viable company by Deep Restructuring of term loan, Conversion of entire restructured term loan in to non-cumulative CCPS, Extending line of credit to IBHL as a hand holding measure and Rights issue of share to the existing shareholders of IBHL.

NHB has given certain relaxations from credit concentration norms considering the role envisaged for HUDCO as given below:

NHB vide its letter No. NHB(ND)/ DRS/ SUP/ 3911/ 2018 dated 02.04.2018 capped the credit concentration (Exposure) limit Government/Public agencies as follows:

a) The individual exposure limit of HUDCO to Government/ Public Agencies (inclusive of the above exposure limit of upto 30% for infrastructure/ non-housing related activities) shall be capped at 50% of its NOF.

b) The exposure limit of HUDCO for State Government (under group exposure) shall be capped at 150% of its NOF in respect of State of Telangana and 100% of NOF for all other States. HUDCO is required to take suitable steps to bring down the group exposure in respect of State of Telangana also to 100% within a maximum period of 3 years. The conditions relating to compliance by the concerned State with the FRBM limits shall continue to be ensured by HUDCO.

The matter was placed before the Board of Directors of HUDCO in its 594^th meeting held on 19^th April, 2018 and directed that “ in view of the commitment already made by HUDCO to the various borrowing agencies by sanctioning of particularly in the States of Andhra Pradesh, Telangana, Uttar Pradesh and Madhya Pradesh, NHB be again requested to expeditiously review its decision communicated vide its letter dated 2^nd April, 2018 and permit HUDCO to continue on the already approved pattern of credit concentration norms communicated by NHB vide its letters from time to time”.

NHB vide its letter No.NHB(ND)DRS/ SUP/ 5355/2018 dated 21^st May, 2018 informed that the request of HUDCO for restoration of exposure norms permitted to the Company prior to the revisions advised vide letter No. NHB(ND)/ DRS/ SUP/ 3911/ 2018 dated 2^nd April, 2018 is under examination at our end.

22) Valuation of investment

a) The Company had invested Rs.2.50 crore in the shares of the Indbank Housing Ltd. (IBHL) around 20 years back. Considering the fact that IBHL has highly negative Net Worth and meager volume of trading in the share of the company, even though market price of the share as on 31.03.2018 is Rs.45.35 per share (previous year Rs.28.05 per share), HUDCO continues to reflect the investment of Rs.2.50 crore in IBHL at diminished value of Rs.1 only (since the FY 2006-07) as on 31.03.2018.

b) The Company had invested in 1 lac equity shares, amounting to Rs.0.10 crore, in the Sri K.P.R. Industries Ltd. (erstwhile, Bhagyanagar Wood Plast Ltd.) around 20 years back. The market price of share of the company is Rs.28.00 per share as on 31^st March, 2018 (previous year Rs.22.55 per share). Considering the meager volume of trading in the share of the company, HUDCO has not revised the provision of Rs.0.03 crore made in the earlier years.

* NHB has granted status of Housing Finance Company (HFC) to HUDCO on 31^st July, 2001. The Company is operating in India and does not have any subsidiary including overseas subsidiary.

23) In respect of Bonds/ Deposits/ Debentures, the Company in terms of section 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 notified on 5^th September, 2016 is presently transferring unclaimed principal and/ or interest, or both (if any), which are paid on due dates as per the terms of the Bonds/ Debentures/ Public Deposit Scheme, after 7 years from the maturity date of the Bonds/ Deposits/ Debentures to Investor Education and Protection Fund (IEPF). The unclaimed amount lying in current liability includes interest of Rs.0.37 crore as on 31^st March, 2018 (previous year Rs.0.20 crore), which have lapsed 7 years from the respective due dates of interest payment and not transferred to IEPF, since 7 years from the maturity date of the Bonds/ Deposits/ Debentures has not been completed yet.

24) The disclosure relating to unpaid amount as at the year-end together with interest paid / payable as required under the MSMED Act, 2006 have been given to the extent such parties could be identified on the basis of the information available with the company regarding the status of suppliers under MSMED Act, 2006. No interest has been paid/ payable by the Company during the current year to the parties covered under the Micro, Small and Medium Enterprises Development Act, 2006.

25) The Company is engaged in the business of providing loans/finance for Housing/ Infrastructure projects and all other activities of the Company revolve around the main business within India. Accordingly, there are no separate reportable segments, as per the Accounting Standard on ‘Segment Reporting’ (AS 17) and as revised thereon.

26) Provision of Impairment loss as required under Accounting Standard AS-28 “Impairment of Assets” is complied with. In the opinion of management, there is no impairment of assets during the year.

27) The Company makes full provision on doubtful debtors/ receivables and advances which are outstanding for more than three years.

28) The Company has paid an interim dividend of Rs.110.10 crore at the rate of Rs.0.55 per share of Rs.10/- each, to its shareholders, during the year 2017-18 after approval of the HUDCO Board in its meeting held on 28^th February, 2018.

29) The Company has taken various office premises on cancellable operating lease basis for periods which range from 1 to 30 years or for any other longer period with an option to renew the lease by mutual consent on mutually agreeable terms. The aggregate lease rentals payable is charged as office rent under Note No. 24 of the Statement of Profit & Loss. Further, there is no financial lease as Company’s leasing arrangement does not transfer substantially all other risks & rewards incidental to the ownership of an asset.

30) Earnings Per Share:

Earnings per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year as under:

Non-performing asset (“NPA”) means: (i) an asset, in respect of which, interest has remained overdue for a period of more than ninety days. (ii) a term loan inclusive of unpaid interest, when the instalment is overdue for a period of more than ninety days or on which interest amount remained overdue for a period of more than ninety days. Interest on loans assets classified as NPA is recognised only on actual receipt.

31) The receipts from the agencies in the loan accounts is appropriated as per loan agreement in the following order:

a) Other dues/ expenses recoverable

b) Penal interest

c) Normal interest

d) Principal

In the event of excess payment, the same is adjusted towards principal.

However, in respect of default cases, repayments are first adjusted towards liquidation of the oldest default by following above order and after appropriation of default, the balance, if any, is adjusted as per the normal practice as above.

32) In the opinion of the management, the current assets, loans and advances appearing in the balance sheet have a value equivalent to the amount stated therein if realized during the ordinary course of business and all known liabilities have been provided.

33) Disclosure regarding provisions made for loans and depreciation in investments as per National Housing Bank Guidelines on prudential norms applicable to Housing Finance Companies.

* Provision @ 0.4% on unquoted Bonds of Rs.270 crore of A P Power Finance Corporation Ltd., being Standard Assets. As per NHB Directions 2010, Unquoted debentures is treated as term loans or other type of credit facilities depending upon the tenure of such debentures for the purpose of income recognition and asset classification.

34) Exit from JV Companies:

(a) Signa Infrastructure India Ltd. (SIIL)

HUDCO Board has approved the exit from the Joint Venture Company (Signa Infrastructure India Ltd.-SIIL) with Marg Construction Ltd. In pursuance of the Board’s approval, the valuer was appointed by the JV Company i.e. SIIL and indicated the value of the shares (Rs.10 each) at Rs.76.22 per share. HUDCO has made an offer to the JV Partner to purchase HUDCO shares in SIIL. The same is under consideration of the JV partner. HUDCO is regularly pursuing with them to sort out the issue.

(b) Pragati Social Infrastructure & Development Ltd.

HUDCO Board has approved the exit from the Joint Venture Company (Pragati Social Infrastructure & Development Ltd.-PSIDL) with Pragati 47. PSIDL is not providing any financial information for the purpose of valuation of shares because of Court injunction. Further, HUDCO has also filled petition to National Company Law Tribunal (NCLT).

(c) Shristi Urban Infrastructure Development Ltd.

HUDCO Board has approved the exit from the Joint Venture Company (Shristi Urban Infrastructure Development Ltd.-SUIDL) with Shristi Infrastructure Development Corporation Ltd. In pursuance of the Board’s approval, the valuer was appointed by the JV Company i.e. SUIDL and has submitted the valuation report. The valuation report furnished by the valuer is under consideration by the Company.

35) Related parties Disclosure :

(a) Joint Ventures

(1) Shristi Urban Infrastructure Development Ltd.

(2) Pragati Social Infrastructure & Development Ltd.

(3) Signa Infrastructure India Ltd.

(d) Transactions with Key Management Personnel:

(i) Shri N. L. Manjoka, Director Corporate Planning has taken a vehicle loan of Rs.0.03 crore (interest bearing) from the Company in January, 2014, in the ordinary course of business. The service of providing such loans is extended by the Company to all of its employees. The balance outstanding as on 31^st March, 2018 is Rs.0.0005 crore including interest accrued Rs.0.0005 crore (maximum outstanding is Rs.0.02 crore during the year 2017-18).

Shri N. L. Manjoka, Director Corporate Planning has also taken a festival loan of Rs.0.0084 crore (interest free) from the Company in April, 2017, in the ordinary course of business. The service of providing such loans is extended by the Company to all of its employees. The balance outstanding as on 31^st March, 2018 is ‘ Nil (maximum outstanding is Rs.0.0084 crore during the year 2017-18).

(ii) Shri Rakesh Kumar Arora, Director Finance, has taken a vehicle loan of Rs.0.08 crore (interest bearing) from the Company in April, 2017, in the ordinary course of business. The service of providing such loans is extended by the Company to all of its employees. The balance outstanding as on 31^st March, 2018 is Rs.0.05 crore including interest accrued Rs.0.0028 crore (maximum outstanding is Rs.0.08 crore during the year 2017-18).

(iii) Shri. Harish Sharma, Company Secretary has taken a House Building Advance loan of Rs.0.22 crore (interest bearing) from the Company which was released in two tranches of Rs.0.11 crore in December, 2016 and Rs.0.11 crore in March, 2018 in the ordinary course of business. The service of providing such loans is extended by the Company to all of its employees. The balance outstanding as on 31^st March, 2018 is Rs.0.18 crore including interest accrued Rs.0.0071 crore (maximum outstanding is Rs.0.18 crore during the year 2017-18).

(f) As per DPE letter dated 21^st January, 2013, the Chairman and Managing Director and Whole Time Directors are entitled to use staff car for private use upto 1,000 km. per month against payment of Rs.2,000/- per month.

36) Information in relation to the interest of the company in Associates as required under AS - 23.

a) Details of Associates

b) Share in Net Assets and Income:

Information in respect of Investments in Associate entity namely Indbank Housing Limited has not been incorporated as HUDCO has provided for full diminution in the value of investment.

Information in respect of Investment in Joint Venture namely Pragati Social Infrastructure & Development Ltd. has not been incorporated as HUDCO has decided to exit from the JV and has provided for full diminution in the value of investment.

Further, Information in respect of Investment in Joint Venture namely M/s. Signa Infrastructure India Ltd. has not been incorporated as HUDCO has decided to exit from the JV and has provided for full diminution in the value of investment.

37) (a) The Company has formulated a CSR Policy in line with the guidelines issued by Department of Public Enterprises (DPE) vide its Office Memorandum No. CSR- 15/0008/2014-Dir (CSR) dated 1^sl August, 2016 and provisions of CSR in the Companies Act, 2013 with the approval of HUDCO’s Board on the recommendations of CSR Committee of Board.

As per Companies Act, 2013, HUDCO’s Board approved allocation for CSR Budget for the FY 2017-18, equivalent to 2% of the average profit (Profit before Tax) of immediately preceding three financial years amounting to Rs.22.89 crore.

As per HUDCO’s approved CSR Policy, 1^st installment of CSR assistance is released on completion of documentation and the subsequent installments are released on receipt of utilization certificate and after achieving physical/ financial progress in the proposal. There has been a couple of cases where even after sanction of CSR and Sustainability Fund by HUDCO, documentation formalities were not completed by the agency and therefore the 1^st installment could not be released, as envisaged. In some of the cases, the agencies concerned could not achieve required physical/ financial progress and the utilisation certificate for the CSR assistance released was not submitted by agencies. These factors result in delay/ time gap in incurring CSR expenditure.

(b) The Company has formulated a Research & Development (R&D) Policy in line with the guidelines issued by the Department of Public Enterprises vide Office Memorandum No. 3(9)/ 2010-DPE (MoU) dated 20.09.2011.

As per the R&D guidelines of DPE, a minimum of 0.5% of PAT of the previous year has to be allocated for R&D projects / activities, accordingly, an amount of Rs.4.21 crore for the FY 2017-18 has been earmarked. During the financial year 2017-18, an amount of Rs.1.04 crore has been spent on R&D activities and balance amount of Rs.3.17 crore has been kept as non-lapsable budget.

iii) Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure 0 Qualitative Disclosure

a) The Company has Risk Management Policy duly approved by the Board. The Policy covers the currency risk (including interest rate risk) of the Company. This policy provides the guiding parameters within which the Company can take decisions for managing the Currency Risk that it is exposed to on account of foreign currency loans. The purpose of the policy is to provide a framework to the company for management of its foreign currency risk.

0 Risk Management Structure:

a) The Company enters into derivatives viz. Principal only Swaps, Currency and Interest Rate Swaps for hedging the interest/ exchange rate risk in foreign currency liabilities. An Asset Liability Management Committee (ALCO) is currently functioning under the chairmanship of Director Finance with Head of Resources, Head of Operations, Head of Loan accounts, Head of General Accounts, Head of Economic Cell, Head of Risk Management as Member Secretary, or any other officer nominated as by ALCO Chairman as its members. ALCO monitors effectiveness of existing and new hedging instruments/ strategies being used/ to be used for management of the Currency risk and also for taking stock of the market movements. The decisions of the ALCO are reviewed by the Risk Management Committee (RMC) for managing the risks. The decisions taken by the RMC are subsequently reported to the Board of Directors.

b) These derivative transactions are done for hedging purpose and not for trading or speculative purpose. These are accounted for on accrual basis and are not marked to market as per accounting policy. The mark to market positions mentioned is those as informed by the counterparties.

c) Reference may be drawn to s.no. 9 to Note 1 Significant Accounting Policies for relevant accounting policy on foreign exchange transactions.

* Swap arrangement entered into with Bank of India and Exim Bank in respect of foreign currency loans availed from ADB and USAID have not been considered as Currency derivatives. Only the Principal only Swap (PoS) entered into by the Company in respect of FCTL(s) availed from Axis Bank, FCNR(B) loan availed from ICICI Bank, Forward contracts entered into with Punjab National Bank and Full Currency Swap entered into with SBI in respect of USAID-II loan have been considered as Currency Derivatives.

** Includes Coupon only Swap in respect of FCTL/ FCNR(B) loan(s) availed from Axis Bank and ICICI Bank.

*** The mark to market positions mentioned above are those as informed by the counterparties.

iii) Details of financing of parent company products : Not Applicable

h) Disclosure of Penalties imposed by NHB and other regulators: Nil

i) Rating assigned by Credit Rating Agencies and migration of rating during the year

The domestic debt instrument of HUDCO continued “AAA” rating - the highest rating on Standalone basis assigned by the three credit rating agencies namely M/s India Ratings and Research Private Ltd, M/s CARE Ratings and ICRA Ratings.

j) Change in accounting policies

During the year 2017-18, nine of the accounting policies have been modified wherein some clarificatory changes have been made and a new accounting policy on ‘Use of Estimates’ has been incorporated as per following details:

38) As notified by the Ministry of Corporate Affairs, the Company shall be implementing Indian Accounting standards (Ind-AS) from Financial Year 2018-19 onwards.

39) (a) Figures of the previous year have been regrouped / rearranged/ re-casted wherever considered necessary to make them comparable with figures for current year.

(b) Figures in rupees have been rounded off to crore without decimals except where specifically indicated.

---

Mar 31, 2017

1) Contingent Liabilities & other commitments not provided for and counter guarantees issued by the company :

(a) Contingent Liabilities:

* Counter claims of the company is Rs.0.63 crore as on 31.03.2017 (previous year Rs.0.63 crore) against the claim of contractors not acknowledged as debts.

(b) Capital commitments not provided for:

(c) CSR commitments not provided for:

(d) Counter guarantees issued by the company:

2) (a) The above does not include contingent liabilities in respect of Andrews Ganj Project (AGP) executed on behalf of Government of India, arising on account of various court cases / arbitration / allottees claims against cancellation of allotment etc., because in this case, HUDCO is only working as an agent. As such, liability (if any) whenever ascertained / finalised shall be passed on to Govt. of India and met out of AGP (No Lien Account), being maintained separately.

(b) i) HUDCO had initiated execution of Andrews Ganj Project (AGP) on behalf of Ministry of Urban Development, MoUD in the year 1989-90.

ii) As per minutes dated 07.09.1995, it has been agreed to pay interest @ 17% p.a. on the expenditure incurred on AGP along with 1.5% of project cost as administrative charges.

iii) As per Perpetual Lease Deed dated 04.07.1997, the company is liable to make available “Net Resources” from the development and disposal of properties of the AGP to MoUD and accordingly the company was crediting interest on Net Resources generated on the project upto 03.11.2004. After this date, a separate “No Lien account” has been opened under the name of “HUDCO AGP Account”, into which the surplus lying to the credit of MoUD was credited and interest accrued / earned on No Lien Account was also credited to that account.

iv) HUDCO contends that as per minute dated 07.09.1995 and lease deed dated 04.07.1997, the status of the company is “Agent of MoUD”. The contention of HUDCO is that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoUD and there is no financial liability of HUDCO in respect of AGP. This has been upheld by the opinion dated 12.04.2005 of Shri G.E. Vahanvati, the then Solicitor General of India. This opinion was further confirmed by Shri G.E Vahanvati as Attorney General of India vide his opinion dated 19.08.2009. The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India. Moreover the Hon’ble Supreme court (in the case HUDCO Vs MCD) has also held that HUDCO is an agent of MoUD, in respect of AGP and AGP belongs to Government.

v) Keeping this position in view and in accordance with HUDCO’s Board decision in 459^th meeting dated 24.08.2009, HUDCO has been making payments / settling claims on Ministry’s behalf and accounting them in “No Lien AGP Account” being maintained by HUDCO. As on 31.03.2017 this account has a debit balance of Rs.370.38 crore, which represents amounts paid by HUDCO on behalf of MoUD for the capital and revenue expenditures on above project over and above the recoveries and the cumulative interest on excess of expenditure over recoveries amounting to Rs.127.63 crore. This amount is recoverable from the MoUD out of AGP. The MoUD on 27.04.2015 have also asserted that HUDCO shall continue to implement the AGP in terms of perpetual lease deed and all the pending issues shall be looked into for resolution by MoUD.

vi) The Ministry has been informed in specific of the above facts and figures on various occasions through correspondence as also in the meetings. A communication has been received from Dy. L&DO on 22.03.2016 wherein Dy. L&DO has conveyed that HUDCO may continue to implement Andrews ganj project and manage No Lien AGP Account in line with the terms and conditions as stipulated in the perpetual lease deed signed on 04.07.1997. Like in earlier years, inline with the perpetual lease deed and letter dated 22.03.2016 of Dy. L&DO, an income of Rs.23.40 crore on account of interest on AGP Project has been credited to Statement of Profit and Loss.

L&DO has communicated that MoUD is not liable for any payment that HUDCO may be required to make and the same cannot be booked to ‘No Lien AGP Account’’. However, Board of Directors of the Company have reiterated its stand to operate the project in terms of lease deed dated 4^th July, 1997 & minutes of meeting dated 7^th September 1995 and as per the opinion of Solicitor General of India, that Company being agent of MoUD, all the expenses are to be booked to “No Lien AGP Account”.

vii) HUDCO is raising its demands mentioned in point (v) above from time to time to MoUD and MoUD has never contested the claims of HUDCO.

viii) The company, in its aforesaid capacity of agent to the MoUD, is in possession of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market value sufficient to recover aforesaid amount of Rs.370.38 crore.

(c) i) An amount of Rs.17.98 crore (50% of the total property tax claimed by Municipal Corporation of Delhi (MCD) was initially deposited by HUDCO with MCD on account of property tax of Andrews Ganj Project for the period from 02.07.1990 to 04.07.1997, although the property belongs to Union of India. The Hon’ble Supreme Court decided the case in favour of HUDCO as such the entire amount along with interest is recoverable from MCD. However, only Rs.11.46 crore has been refunded by MCD on 03.10.2005 out of the above amount, which has been adjusted against interest. As per opinion of Solicitor General of India, no property tax for period before 04/07/1997 is payable by HUDCO as the land is owned by the Government of India.

The company has filed execution petition in Hon’ble Delhi High Court on 31.05.2014 against South Delhi Municipal Corporation (SDMC), for recovery of the balance amount with interest and the matter is currently pending. HUDCO is crediting the interest on the amount recoverable from SDMC in “NO LIEN AGP ACCOUNT”

ii) The SDMC, vide notice dated 24.12.2012 and 02.01.2013, has again raised the demand of service charges for the period from 02.07.1990 till 04.07.1997 and also property tax for the period from 04.07.1997 till 02.01.2013 against HUDCO amounting to Rs.84.28 crore including interest for the delayed payment @12% p.a. as per the provisions of Delhi Municipal Corporation Act, for Andrews Ganj Properties in possession of HUDCO on behalf of MoUD. HUDCO filed writ petition in Delhi High Court against SDMC and Union of India challenging the demand of property tax and service charges amounting to Rs.84.28 crore on the ground that HUDCO is the agent of Union of India (as inferred from lease deed dated 04.07.1997, Judgement of the Hon’ble Apex Court, opinion of Solicitor General of India and Attorney General of India and Law Ministry).

iii) Further, the Hon’ble High Court have stayed the operation of the impugned demand of SDMC and directed HUDCO to deposit Rs.7.00 crore with SDMC, without prejudice to the rights and contentions of both the parties. The amount of Rs.7.00 crore has since been deposited on 26.02.2013 with SDMC.

iv) The Hon’ble High Court vide its order dated 20.07.2016, has observed that since it is a dispute involving Govt. bodies, it would be expedient if the Sr. Authorized representatives of all the parties have a co-joint meeting, to be held in the office of MoUD and SDMC will initiate action for the above mentioned meeting. Accordingly, a meeting was held on 09.09.2016 amongst MoUD, SDMC & HUDCO officials for resolving the issue of Property Tax & Service Charges. After examining the minutes of the meeting dated 09.09.16, HUDCO has raised certain objections, which have been conveyed to MOUD for consideration. Further, MoUD decided to make payment of Rs.32,30,96,388/- vide their several letters and directed HUDCO on 10/03/2017 to make the payment of Rs.25,30,96,388/- (Rs.32,30,96,388/- less Rs.7,00,00,000/- deposited earlier by HUDCO as per Court’s order). Accordingly, the matter was considered by HUDCO Board in its meeting held on 17^th March, 2017 and as per decision of the Board ^25,30,96,388/- has been paid to SDMC and the same has been booked in the “No lien AGP account” of MoUD being maintained by HUDCO. This amount covers the property tax payable upto 31^st March 2017, as per the SDMC’s Property Tax Amnesty Scheme 2016-17.

(d) i) The company had allotted a hotel site including car parking space to M/s. M S Shoes East Limited (MSSEL). Due to default in payment of installments by MSSEL, the company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by MSSEL in terms of the allotment letter. MSSEL started litigation regarding hotel site.

The matter was decided in favour of HUDCO. However, MSSEL filed a SLP in the Hon’ble Supreme Court. The matter was heard by the Hon’ble Supreme Court on 31^st January 2017 and has afforded an opportunity to HUDCO for considering the plea of MSSEL for refund of the first call money of MSSEL forfeited by HUDCO in 1996. The case is yet to come up for further hearing.

ii) The allotment of 9 blocks of guest houses, restaurants, kitchens and shops, which were allotted to MSSEL, was cancelled and amount of first installment paid by MSSEL was forfeited as per terms of allotment letter. Against this, MSSEL filed a civil suit for permanent injunction and possession against HUDCO & Union of India. Hon’ble High Court of Delhi on the petition of MSSEL has passed final order on 13.01.2017 directing HUDCO to refund above referred first installment of Rs.35.75 crore and delayed interest paid thereon amounting to Rs.0.99 crore paid by MSSEL and further interest @ 6% p.a. with effect from 30^th January, 1995 till the date of payment. The matter is under consideration of HUDCO and MoUD.

(e) i) The arbitrator has passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to Rs.8.84 crore along with interest @18% with respect to issues related to external electrification, provision of scrubber, refund of interest etc. on 28.07.2005 in respect of the property leased to APIL under AGP. The Arbitrator has also allowed the counter claim of HUDCO amounting to approximately Rs.0.85 crore along with interest @18% on account of maintenance charges w.e.f. 01.01.2001 upto 31.07.2005. HUDCO has challenged the award before the Hon’ble High Court of Delhi and as per the directions of the Court, has deposited a sum of Rs.7.99 crore in the Court out of HUDCO AGP Account. Now, the case is listed before Registrar General, High Court for further proceedings.

ii) APIL has invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator has pronounced the award on 21.07.2006 holding therein that APIL is not liable to pay the ground rent up to October 1999 i.e. till the shopping arcade was constructed and become operational in October 1999. The amount of Rs.3.93 crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f. November 1999 alongwith Interest @ 7% p.a. for delayed payment. HUDCO has filed petition challenging the award before the Hon’ble High Court of Delhi. The Learned High Court on 10.05.2012 has set aside the arbitration award dated 21.07.2006. APIL filed an appeal against the above mentioned order before Division Bench of High Court, Delhi. Division Bench vide order dated 24.01.2013, allowed APIL appeal and upheld the Arbitrators award. HUDCO filed SLP on 10.05.2013 before Supreme Court against this order which is currently pending.

3) Under the Disinvestment programme of Government of India, the President of India acting through the Ministry of Housing and Urban Poverty Alleviation (Selling Shareholder) sold 10.193% of its equity shareholding (i.e. 204,058,747 equity shares of face value of Rs.10/- each) in Housing and Urban Development Corporation Ltd. (HUDCO) through an Initial Public Offer (IPO) at a price of Rs.60/- per equity share. As the offer comprised solely of the offer for sale by the selling shareholder and with HUDCO not raising any fresh equity capital through the offer, no proceeds of the offer have been received by HUDCO. The equity shares of HUDCO got listed on 19^th May, 2017.

4) The details of Specified Bank Notes (SBN) held and transacted during the period from 8^th November, 2016 to 30^th December, 2016 as per MCA Notification dated 30^th March, 2017 are as given below:

5) (a) The company has procedure for seeking confirmation of outstanding balances at each quarter end from all the borrowers except cases under litigation. In case of receipt of balance confirmation from the agency for any Quarter of the year, the same is treated as confirmed during the year. Confirmation of balances covering approximately 89.24% received up to 20.05.2017 (previous year 86.51%) in value of the total project loan outstanding (excluding Litigation cases) have been received from the borrowers.

(b) The Company has made provision on loans of Rs.2,126.27 crore as on 31.03.2017 as against the provision of Rs.1,796.27 crore required as per NHB norms. Hence, the Company has additional provision of Rs.330 crore as on 31.03.2017 (Rs.115 crore as on 31.03.2016) as per accounting policy of the company.

6) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO on Long term Sub-lease basis. The Sub-lease in favour of EPFO is yet to be executed and Rs.0.35 crore is recoverable from EPFO.

7) In case of RKM Powergen Private Ltd., the loan asset was categorized as sub-standard by the company on 15.04.2015. However, in view of Hon’ble High Court of Madras Order, the company after seeking legal opinion with respect to asset classification, the loan asset has been re-classified from sub-standard to standard asset category. Had the account been classified as NPA, Company would be required to make a provision amounting to Rs.120.64 crore as on 31^sl March, 2017. Further, keeping in view the prudent accounting, the interest income of Rs.101.58 crore has not been recognized in the Statement of Profit & loss. In this regard, the Company also has additional provision to meet any exigency.

8) In case of M/s Lanco Teesta Hydro Power Pvt. Ltd, the interest due is not being paid in cash since March 2013 and is being recovered by adjusting Interest during construction period (IDCP) as per HUDCO guidelines, which was accounted for as interest income till financial year (FY) 2014-15 in the Statement of Profit and Loss. However, during the FY 2015-16, as a conservative measure interest income (although debited to borrower account) of Rs.47.83 crore was not taken to Statement of Profit & Loss. With the introduction of Income Computation and Disclosure Standards (ICDS) - Taxation Accounting Standards, non-booking of interest income on standard assets is not appropriate. Accordingly, interest income on the above said account amounting to Rs.98.84 crore (including interest income of Rs.47.83 crore for the year 2015-16) has now been accounted for as an interest income in the statement of Profit and Loss like it was being done in the past. This borrower account has also been considered under the Strategic Debt Restructuring (SDR) in terms of SDR regulations issued by RBI by some of the lenders consortium, wherein HUDCO has not participated.

9) The company had sanctioned & disbursed loans to the State Electricity Boards. Some of these erstwhile SEBs (HUDCO’s existing agencies) were restructured by the respective State Governments and new entities were formed. Consequently, the liabilities of these erstwhile SEBs were transferred to new entities.

However, in case of Tamil Nadu Electricity Board (TNEB), during the unbundling of the said Electricity Board, three agencies were formed namely; TNEB, TANTRANSCO and TANGEDCO. As per the Government Order issued by the Government of Tamil Nadu, TANGEDCO will be responsible for all repayments to HUDCO till such time all the assets and liabilities are apportioned between three entities. After the apportionment of assets and liabilities, transfer agreement will be executed with HUDCO for transferring the loan liability. The Government of Tamil Nadu has issued notification vide GO(MS) No.49- Energy(B1) department dated 13.08.2015. TANGEDCO has executed the Loan Transfer Agreement on 03.11.2016 for schemes allotted to them and TANTRANSCO have taken time extension from HUDCO till 31.03.2017 for effecting the transfer of assets and liabilities for the 3 schemes allotted to them. Subsequently, TANGENDCO has pre-closed their schemes by paying the entire dues of UDAY Funds. Meanwhile, TANTRANSCO vide its letter dated 31.03.2017 has further requested for extension of time upto 30.06.2017 for execution of Loan transfer agreements, which is under process.

10) Loans granted by the company directly to individuals and bulk loans under HUDCO Niwas Scheme are secured fully/partly by :

(i) Equitable Mortgage of the property and /or

(ii) Undertaking to create security through execution of Tripartite Agreement between the company, borrower and the Developing Authority / Developer ;

(iii) Hypothecation of Distribution Assets of the Company.

(iv) Negative Lien on the assets of the Company. Assets of the Company include the book debts and future receivable.

(v) Government Guarantee, First charge on the assets of the Housing Finance Company or First Pari-Passu charge on the outstanding loans or Exclusive Charge/ First Pari-Passu charge on the present and future receivables/ Book Debts, Escrow mechanism, post dated cheques or ECS or RTGS, First Pari-Passu charge on immovable property/ Undertakings, Demand Promissory Note and irrevocable Power of Attorney in favour of HUDCO.

In addition to (i) and (ii) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained.

11) The pay revision of the employees of the Corporation is due w.e.f.1^sl January, 2017. Pending implementation of pay revision & fixation of revised pay scales as shall be notified by DPE, Govt. of India, an adhoc provision (on an estimated basis on average salary) amounting to Rs.3 crore for a period of three months from 01.01.2017 to 31.03.2017 has been made towards pay revision.

12) The company has adopted AS-15 (revised 2005) ‘Employees Benefits’. Defined employee benefit schemes are as follows:

(a) The company has a separate trust to manage provident fund scheme and provides interest guarantee as per Employees’ Provident Fund Scheme, 1952. The company pays fixed contribution of provident fund at a predetermined rate to the trust, which invests the funds in permitted securities. The trust is required to pay a minimum notified rate of interest on contribution to the members of the trust and the provident fund scheme additionally requires the company to guarantee the payment of interest at rates notified by the Central Government from time to time under the Employees’ Provident Fund Scheme, 1952 and recognizes such deficiency as an expense in the year it is determined.

In view of the interest rate guarantee by the company, the plan although being a Defined Contribution Plan is being treated as Defined Benefit Plan for the disclosure under AS 15, since as per Section 17 of the Employees Provident Fund (EPF) Act, 1952, the company has to guarantee the interest rate as announced by the EPFO from time to time. Accordingly, the actuarial Valuer has done valuation to the extent of interest rate guarantee and details of the same have been disclosed as given below.

The fair value of the assets of the Provident Fund and the accumulated members’ corpus is Rs.240.18 crore and Rs.206.57 crore respectively (Previous Year Rs.205.06 crore and Rs.202.48 crore respectively). The fair value of the assets of the provident fund as at 31.03.2017 is higher than the obligation under the Defined Contribution Plan. Accordingly, no provision is required to be made based on actuarial valuation during the year 2016-17.

The actuarial assumptions include discount rate of 7.50% (Previous year 7.80%) and an average expected future period of 11.41 years (Previous year 11.07 years). The Company recognized Rs.6.65 crore (Previous Year Rs.6.22 crore) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to this plan by the Company are at rates specified in the rules of the schemes.

(b) The company has a Defined Benefit Gratuity Plan. Every employee is entitled to gratuity as per the provisions of the payment of Gratuity Act, 1972. The scheme is managed by a separate trust through LIC Policy and the premium paid by the Trust is funded by the company.

(c) The summarized position of various defined benefit schemes recognised in the Statement of Profit & Loss, Balance Sheet and the funded status are as under:

13) Details of Short Term and Long Term Provisions

14) Pending operationalization of approved guidelines, the amount of Rs.66.56 crore available in Welfare Reserve as on 01/04/2015 has been invested, in the name of the company, in fixed deposit during the year 2015-16. The net interest amount earned during the year 2016-17 has been appropriated to the Welfare Reserve.

15) National Housing Bank’s credit concentration norms states that a Housing Finance Company’s agency wise exposure should not exceed 15% of its net owned funds. Further, as per NHB’s latest circular dated 21.03.13, investment of a Housing Finance Company (HFC) in the shares of another HFC shall not exceed 15% of the Equity Capital of the investee company.

The company is complying with National Housing Bank’s credit concentration norms except in one case of investment in another HFC viz., Indbank Housing Ltd. (IBHL) in which HUDCO has invested 25% capital of investee.

HUDCO had invested Rs.2.50 crore, even before guidelines were applicable, in the Equity Shares of IBHL, whose total paid-up capital is Rs.10 crore resulting in investment to the extent of 25% of the equity. HUDCO’s Board in the meeting held on 25^th September, 2014 has approved the proposal of merger of IBHL into “Indian Bank”, the promoter of IBHL, which has been conveyed to the IBHL. The matter is yet to be finally concluded along with swap ratio of shares. Once the merger is effected, the investment will be as per NHB Norms.

NHB has given certain relaxations from credit concentration norms considering the role envisaged for HUDCO as given below:

16) Valuation of investment:

a) The company had invested Rs.2.50 crore in the shares of the Indbank Housing Ltd. (IBHL) around 20 years back. Considering the fact that IBHL has highly negative Net Worth and meager volume of trading in the share of the company, even though market price of the share as on 31.03.2017 is Rs.28.05 per share (previous year Rs.10.99 per share), HUDCO continues to reflect the investment of Rs.2.50 crore in IBHL at diminished value of Rs.1 only (since the FY 2006-07) as on 31.03.2017. Further, merger of IBHL in Indian Bank is also under process and the swap ratio and other modalities are yet to be worked out.

b) The company had invested in 1 lac equity shares, amounting to Rs.0.10 crore, in the Sri K.P.R. Industries Ltd. (erstwhile, Bhagyanagar Wood Plast Ltd.) around 20 years back. The market price of share of the company is Rs.22.55 per share as on 31.03.2017 (previous year Rs.20.00 per share). Considering the meager volume of trading in the share of the company, HUDCO has not revised the provision of Rs.0.03 crore made in the earlier years.

17) Details of Registration Number obtained from financial sector regulators:

* NHB has granted status of Housing Finance Company (HFC) to HUDCO on 31^st July, 2001.

18) (a) Income Tax as applicable in respect of Interest accrued on bonds / debentures which are not listed on recognized Stock Ex change, is deducted at source at the time of actual payment of interest to the bondholders / debenture holders since bonds / debentures are transferable by endorsement & delivery.

(b) In respect of Bonds/ Deposits/ Debentures, the company is presently transferring unclaimed principal and/or interest, or both (if any), which are paid on due dates as per the terms of the Bonds/ Debentures/ Public Deposit Scheme, after 7 years from the maturity date of the Bonds/ Deposits/ Debentures to IEPF. The unclaimed amount lying in current liability includes interest of Rs.0.20 crore as on 31.03.2017 (previous year Rs.0.20 crore), which have lapsed 7 years from the respective due dates of interest payment and not transferred to IEPF, since 7 years from the maturity date of the Bonds/ Deposits/ Debentures has not been completed yet.

19) The details of amount payable to parties registered under “Micro, Small and Medium Enterprises Development Act, 2006” have been shown separately in the accounts and there is no interest paid or payable towards them during the year 2016-17.

20) There are no separate business / geographical reportable segments as per the Accounting Standard AS-17 “Segment Reporting” since the main business of the company is to provide finance for Housing / Infrastructure projects and all other activities of the company revolve around the main business.

21) Provision of Impairment loss as required under Accounting Standard AS-28 “Impairment of Assets” is complied with. In the opinion of management, there is no impairment of assets during the year.

22) The company has written off assets of Kohima Regional Office having Written Down Value (WDV) of Rs.0.03 crore (purchase cost Rs.0.52 crore less accumulated depreciation of Rs.0.49 crore) as the Kohima Regional Office was set ablaze during the civil unrest in Nagaland in February 2017. The Company has filed insurance claim of Rs.0.31 crore and the same is yet to be settled by the insurance company.

23) The company makes full provision on doubtful debtors/ receivables and advances which are outstanding for more than three years.

24) The company has paid an interim dividend of Rs.100.01 crore at the rate of Rs.0.50 per share of Rs.10/- each, to Government of India, during the year 2016-17 after approval of the HUDCO Board in its meeting held on 24.03.2017. The company has proposed final dividend of Rs.10.01 crore at the rate of Rs.0.05 per share of Rs.10/- each, subject to approval of same by shareholders in the ensuing Annual General Meeting. In terms of revised Accounting Standards (AS), AS-4 “Contingencies and Events Occurring after the Balance Sheet date” as notified by the Ministry of Corporate Affairs, through amendments to the companies (Accounting Standards) Rules, 2016, the Company has not appropriated the proposed final dividend (including dividend tax) from the Statement of Profit & Loss.

25) The company’s significant leasing arrangements are in respect of operating leases for office premises. These leasing arrangements which are not non-cancelable range between 1 and 30 years generally or longer and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as office rent under Note No. 24 of the Statement of Profit & Loss. Further, there is no financial lease as company’s leasing arrangement does not transfer substantially all other risks & rewards incidental to the ownership of an asset.

26) Details of Expenditure / Earnings in foreign currency :

27) Earning Per Share:

28) The company makes provision on loans as per NHB norms as stated hereunder:-

Non-performing asset (“NPA”) means:- (i) an asset, in respect of which, interest has remained overdue for a period of more than ninety days. (ii) a term loan inclusive of unpaid interest, when the instalment is overdue for a period of more than ninety days or on which interest amount remained overdue for a period of more than ninety days. Interest on loans assets classified as NPA is recognised only on actual receipt.

29) The receipts from the agencies in the loan accounts is appropriated as per loan agreement in the following order:

a) Other dues/ expenses recoverable

b) Penal interest

c) Normal interest

d) Principal

In the event of excess payment, the same is adjusted towards principal.

However, in respect of default cases, repayments are first adjusted towards liquidation of the oldest default by following above order and after appropriation of default, the balance, if any, is adjusted as per the normal practice as above.

30) In the opinion of the management, the current assets, loans and advances appearing in the balance sheet have a value equivalent to the amount stated therein if realized during the ordinary course of business and all known liabilities have been provided.

31) Disclosure regarding provisions made for loans and depreciation in investments as per National Housing Bank Guidelines on prudential norms applicable to Housing Finance Companies.

32) As per DPE letter dated 21.01.2013, the Chairman and Managing Director and Whole time Directors are entitled to use staff car for private use upto 1,000 km. per month against payment of Rs.2,000/- per month.

33) Exit from JV Companies:

(a) MCM Infrastructure Pvt. Ltd. (MCMI)

HUDCO Board approved the exit from the Joint Venture Company (MCM Infrastructure Pvt. Ltd.-MCMI) with MCM Services Pvt. Ltd. In pursuance of the Board’s approval, the valuer was appointed by the JV Company i.e. MCMI and indicated the value of the shares (Rs.10 each) at Rs.5.25 per share. HUDCO has received Rs.0.14 crore against the HUDCO’s investment of Rs.0.26 crore for the exit from Joint Venture after approval of the Board.

(b) Signa Infrastructure India Ltd. (SIIL)

HUDCO Board has approved the exit from the Joint Venture Company (Signa Infrastructure India Ltd.-SIIL) with Marg Construction Ltd. In pursuance of the Board’s approval, the valuer was appointed by the JV Company i.e. SIIL and indicated the value of the shares (Rs.10 each) at Rs.76.22 per share. HUDCO has made an offer to the JV Partner to purchase HUDCO shares in SIIL. Hence, investment in shares of Signa Infrastructure Ltd. are being treated as Current Investments. The same is under consideration of the JV partner.

(c) Pragati Social Infrastructure & Development Ltd.

HUDCO Board has approved the exit from the Joint Venture Company (Pragati Social Infrastructure & Development Ltd.-PSIDL) with Pragati 47. PSIDL is not providing any financial information for the purpose of valuation of shares because of Court injunction. Further, HUDCO has also filed petition to Company Law Board u/sec 397 and 398 of the Companies Act.

(d) Shristi Urban Infrastructure Development Ltd.

HUDCO Board has approved the exit from the Joint Venture Company (Shristi Urban Infrastructure Development Ltd.-SUIDL) with Shristi Infrastructure Development Corporation Ltd. In pursuance of the Board’s approval, the valuer was appointed by the JV Company i.e. SUIDL and has submitted the valuation report. The valuation report furnished by the valuer is under consideration by the Company.

34) Related parties Disclosure :

(a) Joint Ventures

(1) Shristi Urban Infrastructure Development Ltd.

(2) Pragati Social Infrastructure & Development Ltd.

(3) Signa Infrastructure India Ltd.

(b) Key Management Personnel during the year 2016 - 17 :

(c) Transactions with Joint Ventures:

(i) Investment in Joint Venture

(d) Transactions with Key Management Personnel:

(i) Dr. M. Ravi Kanth, CMD had taken a festival loan of Rs.0.0012 crore (interest free) from the company in July, 2015, in the ordinary course of business. The same was repaid fully on 19th April, 2016. During the year 2016-17, fresh festival loan of Rs.0.0084 crore (interest free) was taken in April, 2016, in the ordinary course of business. The service of providing such loans is extended by the company to all of its employees. The balance outstanding as on 31.03.2017 is Rs.Nil (maximum outstanding is Rs.0.0084 crore during the year 2016-17).

(ii) Shri N. L. Manjoka, DCP has taken a vehicle loan of Rs.0.03 crore (interest bearing) from the company in January, 2014, in the ordinary course of business. The service of providing such loans is extended by the company to all of its employees. The balance outstanding as on 31.03.2017 is Rs.0.01 crore including interest accrued Rs.0.01 crore (maximum outstanding is Rs.0.02 crore during the year 2016-17).

Shri N. L. Manjoka, DCP has also taken a festival loan of Rs.0.0082 crore (interest free) from the company in April, 2016, in the ordinary course of business. The service of providing such loans is extended by the company to all of its employees. The balance outstanding as on 31.03.2017 is Rs.Nil (maximum outstanding is Rs.0.0082 crore during the year 2016-17).

(iii) Sh. Harish Sharma, Company Secretary has taken a House Building Advance loan of Rs.0.11 crore (interest bearing) from the company in December, 2016 in the ordinary course of business. The service of providing such loans is extended by the company to all of its employees. The balance outstanding as on 31.03.2017 is Rs.0.10 crore including interest accrued Rs.0.0014 crore (maximum outstanding is Rs.0.11 crore during the year 2016-17).

(e) Managerial Remuneration :

35) Information in relation to the interest of the company in Associates as required under AS - 23.

a) Details of Associates

b) Share in Net Assets and Income:

Information in respect of Investments in Associate entity namely Indbank Housing Limited has not been incorporated as HUDCO has provided for full diminution in the value of investment.

36) Information in relation to the interest of the company in Joint Ventures as required under AS - 27.

a) Details of Joint Ventures

b) The company’s share in the assets & Liabilities, Contingent Liabilities and capital commitment as at 31.03.2017 and Income & Expenditure for the year 2016-17:

Information in respect of Investment in Joint Venture namely Pragati Social Infrastructure & Development Ltd. has not been incorporated as HUDCO has decided to exit from the JV and has provided for full diminution in the value of investment.

Further, Information in respect of Investment in Joint Venture namely M/s. Signa Infrastructure India Ltd. has not been incorporated as HUDCO has decided to exit from the JV and the Offer to Buy, HUDCO’s share is under active consideration of JV Partner.

37) (a) The company has formulated a CSR policy in line with the guidelines issued by Department of Public Enterprise (DPE) vide its Office Memorandum No. CSR- 15/0008/2014-Dir (CSR) dated 1^st August, 2016 with the approval of HUDCO’s Board.

As per Companies Act, 2013, HUDCO’s Board approved allocation for CSR budget for the FY 2016-17, equivalent to 2% of the average profit (Profit before Tax) of immediately preceding three financial years amounting to Rs.22.36 crore.

As per HUDCO’s approved CSR Policy, 1^st installment of CSR assistance is released on completion of documentation and the subsequent installments are released on receipt of utilization certificate and after achieving physical/ financial progress in the proposal. There has been a couple of cases where even after sanction of CSR by HUDCO, documentation formalities were not completed by the agencies and therefore the 1^st installment could not be released, as envisaged. In some of the cases, the agencies concerned could not achieve required physical/ financial progress and the utilisation certificate for the CSR assistance released was not submitted by agencies. These factors result in delay/ time gap in incurring CSR expenditure.

(b) The company has formulated a Research & Development (R&D) policy in line with the guidelines issued by the Department of Public Enterprises vide Office Memorandum No. 3(9)/2010-DPE (MoU) dated 20.09.2011.

As per the R&D guidelines of DPE, a minimum of 0.5% of PAT of the previous year has to be allocated for R&D projects / activities, accordingly, an amount of Rs.3.92 crore for the FY 2016-17 has been earmarked. During the financial year 2016-17, an amount of Rs.1.53 crore has been spent on R&D activities and balance amount of Rs.2.39 crore has been kept as non-lapsable budget.

38) Additional Disclosure requirement as per NHB Directions

a) Capital to Risk Assets Ratio (CRAR)

b) Reserve Fund u/s 29C of NHB Act, 1987

c) Investments

d) Derivatives:

i) Forward Rate Agreement (FRA) / Interest Rate Swap (IRS)

ii) Exchange Traded Interest Rate (IR) Derivative

iii) Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure

- Qualitative Disclosure

a) The company has Risk Management Policy duly approved by the Board. The Policy covers the currency risk (including interest rate risk) of the company. This policy provides the guiding parameters within which the Company can take decisions for managing the Currency Risk that it is exposed to on account of foreign currency loans. The purpose of the policy is to provide a framework to the Company for management of its foreign currency risk.

- Risk Management Structure:

a) The Company enters into derivatives viz. Principal only Swaps, Currency and Interest Rate Swaps for hedging the interest/ exchange rate risk in foreign currency liabilities. An Asset Liability Management Committee (ALCO) is currently functioning under the chairmanship of Director Finance with Head of Resources, Head of Operations, Head of Loan accounts, Head of General Accounts, Head of Economic Cell, Head of Risk Management as Member Secretary, or any other officer nominated as by ALCO Chairman as its members. ALCO monitors effectiveness of existing and new hedging instruments/ strategies being used/ to be used for management of the Currency risk and also for taking stock of the market movements. The decisions of the ALCO are reviewed by the Risk Management Committee (RMC) for managing the risks. The decisions taken by the RMC are subsequently reported to the Board of Directors.

b) These derivative transactions are done for hedging purpose and not for trading or speculative purpose. These are accounted for on accrual basis and are not marked to market as per accounting policy. The mark to market positions mentioned is those as informed by the counterparties.

* Swap arrangement entered into with Bank of India and Exim Bank in respect of foreign currency loans availed from ADB and USAID have not been considered as Currency derivatives. Only the Principal only Swap (PoS), Currency and Interest Rate Swap (CIRS) entered into by the Company in respect of JBIC loan and USAID-II loan have been considered as Currency Derivatives.

** The mark to market positions mentioned are those as informed by the counterparties.

e) Securitisation:

i) Outstanding Amount of Securitised assets for originating HFCs

ii) Details of Financial Assets sold to Securitisation/ Reconstruction Company for Asset Reconstruction

iii) Details of Assignment transactions undertaken by HFCs

iv) Details of non-performing financial assets purchased / sold

f) Assets Liability Management (Maturity pattern of certain items of Assets and Liabilities)

i) Exposure to Real Estate Sector

ii) Exposure to Capital Market

iii) Details of financing of parent company products : Not Applicable

h) Disclosure of Penalties imposed by NHB and other regulators: Nil

i) Rating assigned by Credit Rating Agencies and migration of rating during the year

The domestic debt instrument of HUDCO continued “AAA” rating - the highest rating on Standalone basis assigned by the three credit rating agencies namely M/s India Ratings and Research Private Ltd, M/s CARE Ratings and ICRA Ratings.

j) Change in accounting policies

During the Year 2016-17, five of the accounting policies have been modified wherein some clarificatory changes have been made, one accounting policy on ‘Cost of Mobile phones reimbursed to employees upfront.....’ has been deleted and a new accounting policy clarifying the position of charging depreciation on the Books has been incorporated. All the said changes are clarificatory in nature and have no financial impact.

k) Provisions and Contingencies

l) Concentration of Public Deposits, Advances, Exposures and NPAs

i) Concentration of Public Deposits

ii) Concentration of Loans & Advances

iii) Concentration of all Exposure (including off-balance sheet exposure)

iv) Concentration of NPAs

v) Sector wise NPAs

m) Movement of NPAs

n) Overseas Assets

o) Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting Norms)

p) Customers Complaints

39) As notified by the Ministry of Corporate Affairs, the Company shall be implementing Indian Accounting standards (Ind-AS) from Financial Year 2018-19 onwards.

40) (a) Figures of the previous year have been regrouped / rearranged/ re-casted wherever considered necessary to make them comparable with figures for current year.

(b) Figures in rupees have been rounded off to crore without decimals except where specifically indicated.

---

Mar 31, 2010

* Secured by lien over Certificate of Deposit for US $ 23.91 million (Previous year US $ 25.01 million) placed under swap arrangement with Bank of India, Cayman Island* 8ranch, New York. The deposits are co-terminus with the loan maturity schedule of the underlying ADS loen.

** Bonds secured by lien over Certificate of Deposit for US $ 15.94 million (Previous year US S 15.67 million) placed under swap arrangement with Bank of India, Cayman Islands Branch, New York. The deposits are co-terminus with the loan maturity schedule of the underlying ADB loan. :

# Repayable from 10.12.2002 to 10.06.2022. ;

## The repayment dates for SPS bonds series B and C is semiannual for Series 8 from 10.12.2008 to 10.06.2015 and for series C from 10.12.2015 to 10.06.2022.

Guaranteed by Central Government it''s to the repayment of principal and Interest. & Hudco has face Wake a loan of US J 100 million from ADB out of which US $ 50 million (received during (he years 1997-96 and 1999-99) has been placed as deposit as per with Sank of India, Cayman Island* Branch, USA. The deposits are co-terminus with the Ison maturity schedule of the underlying ADB loan. The , balance US J 50 millers (received during the year 1999-00) has been swapped with EXIM Bonk and under try arrangement EXIM flank has subscribed to 12.73% Special Priority Sector Bonds (II) (rale of interest for the next 7 years repot to 12.50% w;e,f. 15.12.2006) for Rs. 217 crore which are co-terminus with the loan maturity 1 schedule of the underlying ADB loan. Repayment of the above ADB loan and redemption of the corresponding , deposit / swap hee started w.e.f. 1 S.12.2002 ae per the amortisation schedule).

Under the swap arrangement; with EXIM Bank. HUDCO has remitted J3 S 10 million to Bank against which EXIM Bank has subscribed to 12.75% Hudco Special infrastructure Bonds (II) (rate of interest for the next 7 years reset to 12.50% w.e.f. 23.09.2006) amounting to Rs. 43.SO crore which are co-terminus with the loan maturity schedule of the underlying USAID guaranteed loan.

Covered by Irrevocable power of attorney in favour of lenders / trustee and further Loans from Banking Sector are covered by irrevocable Power of Attorney to the extent of Rs. 152.33 crore (Previous year Rs. 504.92 crore).

## Swapped with SBI In one trench Of JPY 3792.90 million (Previous year JPY 3792.90 million) (for 10 years upto 16.10.2010) against Rupee funds of Rs. 162.00 crore Q) PLR 0.63% p.a.

**M Debentures and bonds are redeemable at par.

##*# Principal only swap amounting to JPY 1746.13 million (Previous year JPY 1746.13 million) entered Into with ICICI Bank Ltd. on 23.04.2007 (SH years (approx.) up to 20.01.2013) against Rupee fund of Rs. 61.54 crore at PoS premium of 7.65% p.a, $ Put and call option ether end of 3 year from the date of allotment, .

Put and call option at the end of 5 year from the date.

SO Put and call option at the end at 1 year from the date of allotment.

Includes Rs. 100.48 crore (US $ 33.33 million) (previous year Re. 094.33 orore (US $ 177.D1 million)) ae loans from banka against PCNR Deposits.

A Converted to Tier II Capital on 30.03.2004 from 10.15% Taxable 2002 (SD - It) bonds repayable on 27.03.2012.

** Repayable from 15,12.2002 to 15.06.2022.

* Liability toward* Investor* Caption and Protection Fund under Section 205C of the Companies Act, 1956 well be determined on the respective due dates.

** Includes Principal overdue & Interest overdue as on 31.03.2010 amounting to Rs. 4.63 crore {previous yew Rs. 4.61 crore) and Rs. 3,75 cror* (previous year Rs. 2.78 crwe) respectively.

$ Includes Rs. 7.85 crore (previous year Rs. 6.95 crore) (n«j of refunds) as on 31.03.2010 received on account of various Grants / Subsidy. Cumulative Grants I Subsidies received as on 31.03.2010 is Rs. 1456.07 crore (previous year Rs. 1462.37 core) out of which Rs. 1490.22 crore (previous year Rs. 1418.71 crore) has been released. The Utilisation Certificates to the extent of Rs.1*63.64 crore has been received and for balance amount of Utilisation Certificates are being followed up.

1) Contingent Liabilities not provided for:

(Rs. in crore) 2009-2010 2008-2009

A Claims of Contractors not acknowledged as 10.32 8.93 debt

Counter claims of the Company 1.06 0.75

B Demand (including penalty) on account of 28.99 31.50 payment of guarantee fee on SLR debentures guaranteed by Government of India

C Disputed Income tax and Interest tax demands 256.31 233.31 against which Company has gone in appeal. Out of this, the Company has deposited Rs. 223.88 crore (previous year Rs. 217.99 crore) under protest

D Disputed Service tax demands against which 4.15 1.37 Company has gone in appeal. The Company has paid Rs. 0.04 crore (previous year Rs.31,117 )

E Counter claims of various parties for damages 142.51 309.22 against Company''s claim before various Debt Recovery Tribunals

F Estimated amount of commitments remaining 15.89 2.08 to be executed on capital account

2) (a) The above does not include contingent liabilities in respect of Andrews Ganj Project (AGP) executed on behalf of Government of India, arising on account of various court cases / arbitration / allotters claims against cancellation of allotment etc. As such, liability whenever ascertained / finalized shall be met out of AGP project surplus funds.

(b) The Company has undertaken Andrews Ganj Project (AGP) on behalf *, of the then Ministry of Urban Affairs (MOUA). As per perpetual lease deed, the Company is liable to make available net resources from the development and disposal of properties of the project to the Ministry and accordingly the Company was paying interest on net resources generated on the project upto 3.11.£004 and thereafter a separate no lien account has been opened under the name of HUDCO AGP Surplus Account into which the surplus lying to their credit had been deposited and interest accrued / earned on no lien account is being credited to that account. MOUD has intimated that the Company cannot pass oh the financial liability to the Government on account of disputes. However, the Company has represented that as per perpetual lease deed, the Company is liable to make available "net resources generated" from the development and disposal of properties of the project to the Ministry which means that all out-goings on the project including those on litigation & arbitration expenses and award / decree etc., in respect of disputes have to be debited to this project and as such there is no liability of the Company.

(c) An amount of Rs. 17.98 crore was Initially deposited with Municipal Corporation of Delhi (MCD) on account of property tax of Andrews Ganj Project for the period up to 4.7.1997 i.e. up to the execution of perpetual lease deed although there was no liability of property tax on HUDCO. The Humble Supreme Court decided in favor of HUDCO and the entire amount of Rs.17.98 crore along with interest amounting to Rs. 22.30 crore is recoverable from MCD upto 31.3.2010, out of which an amount of Rs. 11,46 crore has been refunded by MCD on 3.10.2005 which has been adjusted against interest. No demand has been raised by MCD for payment of property tax for the period after 4.7.1997. In case of any demand from MCD after 4.7.1997, the same will be met out of the AGP Surplus Account. Moreover as per opinion of Solicitor General of India no property tax is payable on the land owned by Government of India. Further, HUDCO filed Contempt i petition against MCD in Supreme Court. MCD vide their counter affidavit has pleaded a set off of Rs. 27.92 crore as against Rs. 25.06 crore (payable as on 30.6.2008) demanded by HUDCO. HUDCO has filed rejoinder affidavit to the counter affidavit filed by MCD. The matter is now fixed for final hearing on 1.9.2010.

(d) The Company had allotted a hotel site including car parking space to M/s. M S Shoes East Limited (MSSEL). Due to default in payment of installments, the Company had cancelled the allotment of hotel site including car parking space and forfeited the first installment paid by MSSEL in terms of the allotment letter. The hotel site including car parking space was subsequently re-allotted to M/s. Leela, Hotel Ltd. (LHL) erstwhile (M/s. Leela Hotel arid Convention Center)'' now known as Hotel Leela Venture Ltd. subject to the final outcome of the decision of Hornsby Additional District Judge on the suit filed by MSSEL. At present, the matter is sub-judice before Tis Hazari Court, Delhi. The possession of the hotel site and car parking space, which was handed over to LHLt has been taken back by the Company because of cancellation as per allotment terms due to non-payment of 3rd and final Installment by LHL. On 12.7.1999, 50 percent of the amount deposited, by LHL was forfeited and balance amount of Rs. 67.53 crore was refunded to LHL after adjusting the overdue ground rent and property . tax dues. LHL, against this cancellation, sought arbitration wherein the Learned Arbitrator has passed an award directing the Company to huriaa refund the amount forfeited along with interest The award has been '' upheld by the Single Bench of Humble High Court of Delhi and the amount of Rs. 89.78 crore, being balance principal amount, was deposited by HUDCO in the Humble High Court of Delhi as per Court (fractions. The payment was made out of AGP Surplus and has since even released by Humble High Court of Delhi to LHL. The Company''s . appeal against the Order of Single Bench before the Double Bench of Humble High Court of Delhi has also been dismissed. The Company has filed SLR before the Humble Supreme Court against the oraers of Double Bench. The Humble Supreme Court has admitted HUDCO''s SLR and has stayed the recovery of interest amount. However, the Humble Supreme Court has directed the Company to deposit 50% of the balance decreed amount consisting of interest in the executing court i.e. Humble High Court of Delhi. The Company has accordingly deposited Rs. 59.61 crore In the Humble High Court of Delhi on 23.3.2006 out of HUDCO AGP Surplus Account and amount has been released by the High Court to Leela Hotels on furnishing of bank Guarantee on 12.10.2006. The case came up for final arguments on 12,2.2008 before Supreme Court of India. The Hornsby Supreme Court of India upheld the award dated 25.6.2002 passed by the Justice R.S. Pathak (ex-Chief Justice of India) except for the interest for pre-award period which has now been reduced by Hon''ble Supreme Court of India from 20% p a. to 18% p.a. and dismissed the SLP filed by HUDCO.

LHL has filed execution petition No, 48 of 2006 before High Court of Delhi. HUDCO calculated the balance amount payable to LHL as Rs. 48.09 crore and filed an application before the Executing Court for the payment. The said amount has been paid to LHL as per Court Order on 12.5.2008. As per calculation of HUDCO, nothing remains '' payable after the last payment of Rs. 48.09 crore. The amount paid by HUDCO has been calculated by HUDCO by adjusting the amount first towards principal and then towards interest. However, LHL have calculated the amount payable by HUDCO after adjusting the payments first towards interest and then towards principal.

The issue of adjustment of amount paid by HUDCO came up for I hearing before the Single Judge Bench of the High Court of Delhi {i.e. Executing Court) on 19.11.2008. High Court has ordered that HUDCO should make the payment by adjusting the amount paid towards interest first then towards the principal and that HUDCO should, make the payment as per calculation of decree holder and Conciliation Act challenging the- award before the Humble High < Court of Delhi. Further, the Humble High Court of Delhi has directed ARIL to pay the overdue Ground Rent from October 1999 to 1 October 2003 in 24 monthly: installments starting from September 2005. APtL has paid the same monthly installment of Rs. 0.49 crore and same has been deposited with L&DO as per lease conditions. HUDCO has again; filed the Company Petition u/s. 433 & 434 of the Companies Act against ARIL for winding up before the Humble High Court of Delhi due to non-payment of Ground Rent and interest thereof by APIL; from October, 2003 onwards. Company Petition filed in May, 2006; Other miscellaneous petitions '' are pending in High Court which is likely to come up for hearing in due course of time. Company Petition u/s. 433 & 434 of Companies Act filed by HUDCO is coming up for hearing on 27.9.2010. HUDCO''s Advocate has filed written synopsis in the matter.

3) Debentures / Bonds / PDS aggregating to Rs. 32.84 crore towards interest and principal (Previous Year Rs. 46.14 crore) were due and unclaimed as on 31,3.2010. An amount of Rs. NIL crore (Previous Year Rs. 0.016 crore) {excluding sub-judice amount of Rs. 1.13 crore, (Previous Year Rs. 1.13 crore)} which is unclaimed for a period of seven years from the due date of interest payment has since been deposited in "Investor Education and Protection Fund".

4) As against the total FCNR (B) / FCTL loan of Rs. 150.45 crore (USD 33.33 million) outstanding as on 31.3.2010 (Previous Year Rs. 894.33 crore / USD 177.51 million), forward contracts have been taken for Rs. NIL crore / USD NIL million as on 31.3.2010 (Previous Year Rs. 59.90 crore / USD 13.74 million).

5) (a) Letters seeking confirmation of outstanding balances at each quarter end have been sent to all the borrowers except cases under litigation. Confirmation in some cases is awaited. In some of the cases where agencies have informed different balances, reconciliation is underway.

During the year ihe Company has made a provision of Rs. 600 crore (Previous Year Rs. 180 crore) which is over and above NHB Norms. This is considered prudent keeping in view the potential NPA pertaining to Government agencies.

(c) At the instance of Government of Kerala the Company had granted a Default Resolution Package to M/s. Cochin International Airport Ltd. (CIAL) and entered into an agreement dated 7.3.2003, according to which, CIAL had agreed to allot equity shares of Rs. 52 crore (being 26% of equity share capital of CIAL) at par value of Rs. 10/- per equity share. CIAL instead of allotting the shares of Rs. 52 crore sent repayment of the entire balance loan together with interest up to 15.9,2004 vide its letter dated 16.9.2004 amounting to Rs. 63.49 crore as per their calculation, which was not accepted by the Company.

Since the CIAL did not agree to the Company''s demand of allotting equity shares worth Rs. 52 crore (equivalent to 26% of the capital at par) to the Company, the Company filed a case before Debt Recovery Tribunal (DRT) at New Delhi. Stay has been obtained as an interim order dated 27.4.2006 restraining CIAL from creating any third party interest in Rs. 52 crore worth, 26% of the CIAL equity shares agreed to be issued to the Company. Against this, the agency has filed two interim applications before DRT, Delhi challenging the jurisdiction of DRT, Delhi and getting the stay vacated. CIAL has also deposited an amount of Rs. 73.31 crore with Registrar, DRT-I Delhi Account indicating the same as their liability as per their calculations. However, the Company has not withdrawn the money. Interim Application for jurisdiction was dismissed. Against the dismissal of jurisdiction petition agency has filed writ petition before High Court, Delhi wherein the Humble High Court vide order dated 23.12.2009 has disposed off the Writ Petition against HUDCO. Aggrieved by the Order of Humble Division Bench of Delhi High Coun, HUDCO preferred SLP (No. 3836 / 2010) before Humble Supreme Court thereby challenging the said order of Delhi High Court mainly on the ground that the High Court has not considered the Law laid down by the Apex Court i.e. the definition of "debt" shall be taken in its widest amplitude to mean any liability. However, the* Humble Supreme Court has not admitted the aforesaid SLP filed by HUDCO.

Upon dismissal of SLP by Humble Supreme Court, HUDCO, as per the legal advice has now filed the Review Application before High Court of Delhi on 15.3.2010 in Civil Writ Petition No. 6531 / 2008 with prayers to review/modify the judgment/order dated 23.12.2009 to the extent that prayer 6(b) and 6(c) regarding alternate prayer for money decree of Rs. 780 crore being the market value of the shares and money decree of Rs. 2.28 crore being the balance loan dues respectively and other prayers made in OA No, 10 / 2006 will remain pending and be adjudicated by DRT in accordance with law and also direct the DRT to immediately pay / release the aforesaid balance loan amount of along with further interest thereon out Pf the amount lying deposited by CIAL with DRT.

The aforesaid Review Application is to be listed on 23.7.2010 for hearing.

An application was also made to CIAL and Government of Kerala under the Right to Information Act-2005, for getting information relating to increase in share capital which was denied by -agency;, Accordingly, a complaint is also filed before State Information Commission against CIAL.

The matter is being followed up with State Government and CIAL for issue of equity shares pending which the total outstanding as on 31.3.2010 is being shown against CIAL as a loan till allotment of shares by CIAL to the Company to the extent of Rs. 52 crore (equivalent to 26% of the equity capital of CIAL) during intrequnum period.

Till the conclusion of the DRT preceding the loan has been classified as NPA and necessary provision has been made as per NHB norms.

6) Housing Loans granted by the Company under HUDCO Niwas Scheme are secured fully / partly by :

(a) Equitable Mortgage of the property and / or ''

(b) Undertaking to create security through execution of Tripartite Agreement between the Company, borrower and the Developing Authority / Developer;

In addition to (a) & (b) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained in certain cases.

7) The Company has continued the practice of restating monetary assets / liabilities at the exchange rate as on the date of Balance Sheet. Accordingly a foreign currency fluctuation profit of on account of interest payments / provision as on 31.3.2010 is Rs. 75.16 crore (Actual Rs. 38.84 crore and notional Rs. 36.32 crore). In the previous year there was a Foreign currency fluctuation loss of Rs, 246,30 crores (Actual Rs. 46.47 crores and notional Rs. 199.83 crores).

8) The Company has adopted AS-15 (revised 2005) ''Employees Benefits''.

Defied employee benefit schemes are as follows:

(a) Company pays fixed contribution of Provident Fund at a predetermined to a separate trust, which invests the funds in permitted securities.

The trust is required to pay a minimum notified rate of interest on contribution to the members of the trust. The fair value of the assets of tie Provident ;Fund including the returns of the assets thereof, as at 31.3.2010 is greater than the obligation under the defined contribution plan.

(b) The Company has a defined benefit gratuity plan. Every employee is entitled to gratuity as per the provision of the payment of Graluity Act, 1972. The scheme is funded by the Company and is managed by a separate trust. The liability of Gratuity is recognized on the tasis of actuarial valuation as at the year end.

c) Department of Public Enterprises (DPE) has introduced Performance Related Pay (PRP) for declaring6 performance related incentive as against payment of productivity linked incentive. The scheme is yet to be introduced / finalised in the Company as on 31.3.2010, pending this Company has made an adhoc provision of Rs. 12.50 crore towards PRP in the accounts for the year.

9) The Company is not able to comply with National Housing Bank''s credit concentration norms in respect of lending to some State Government / Government Agencies, which state that a Housing Finance Company''s agency wise exposure should not exceed 15% of its net owned funds.

10) Income Tax as applicable in respect of Interest accrued on bonds / debentures which are not listed on recognized Stock Exchange, is . deducted at source at the time of actual payment of interest to the bondholders / debenture holders since bonds / debentures are transferable by endorsement & delivery.

11) The Company has not received information from vendors / suppliers regarding their status under the "Micro, Smelt and Medium Enterprises Development Act, 2006" and hence disclosure relating to amount unpaid at the yearend together with interest paid or payable under this Act has not been given.

12) There are no separate business / geographical reportable segments as per the Accounting Standard AS-17 "Segment Reporting" since the main business of the Company is to provide finance for Housing / Infrastructure projects and all other activities of the Company revolve around the main business.

13) Provision of Impairment loss as required under Accounting Standard AS-28 "Impairment of Assets" is not necessary, as in the opinion of management; there is no impairment of assets during the year.

14) The Company was having accounting policy of deferring borrowing costs such as brokerage charges, arranger''s fees, stamp duty etc. to be amortized over the period of borrowings. During the year the company has changed its policy to treat these expenditure in the financial year in which they are incur ; Because of this change in Accounting Policy, the profit for the year is lo jy Rs, 14.10 crore.

15) The Board vide their meeting held on 22.2.2010 has approved a special non - lapsable budget of 3.% of the net ''profit which would be used for Corporate Governance Social Responsibility (CSR) activities. The Company has not incurred any expenditure on CSR activities till! 313,2010. The Company would maintain a Memorandum Account for the CSR budget and expenses thereon.

16) The Company''s significant leasing arrangements are in respect of operating '' , leases for office premises. These leasing arrangements which are not non-cancelable range between 1 and 30 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Office'' Rent under Schedule-Q of the Profit & Loss Account.

17) Disclosure regarding provisions made for loans and depreciation in investments as per National Housing Bank Guidelines on prudential norms applicable to Housing Finance Companies.

18) The Chairman and Managing Director and Who! j time Directors are entitled to use staff car for private use upto 1,000 km. rsr month against payment of Rs. 520/- per month. ,

19) Related parties Disclosure :

(a)1 Joint Ventures

(1) Shristi Urban Infrastructure Development Ltd.

(2) Pragati Social Infrastructure & Development Ltd,

(3) MCM Infrastructure Pvt. Ltd.

(4) Signa Infrastructure India Ltd.

(d) Transactions with Key Management Personnel:

Repayment of staff loan and interest of Rs. 0.31 lakhs (Previous Year Rs. 0.31 lakhs) to the Company by Sh. K. L. Dhingra, Chairman & Managing Director.

20) (a) Figures of the prevfous year have been regrouped / rearranged wherever necessary to make them .comparable with figures for the current year. ,

(b) Figures in rupees have been rounded off to thousands without decimals except where specifically indicated.

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Mar 31, 2007

1) Contingent liabilities not provided for : (Rs. in crore) 2006-2007 2005-2006

A Claims of Contractors against the Company not 18.55 15.23 counter claims of the company 0.92 0.88 B Brokerage claim for public deposit scheme 0.95 0.89 C Demands from SSCO towards property tax being 2.21 2.21 contested by the Company D Demand of maintenance changes & reserve fund in 0.21 0.19 respect of offices premisss. E Demand (tncluding penalty) on account of payment 30.09 29.31 of guarantee fee on SLR (debentures guaranteed by Government of India. F Disputed Income tax and Interest tax demands. The 179.89 164.17 Company has paid Rs. 172.00 crore (previous year Rs. 164.14 aore) agaiist the Company has in appeal G Counter claims of various paries for damages 293.10 24.05 against Companys dam before various Debt Recovery H Estimated amount of remaining to be 8.55 14.03 executed on capital account respect on balances of 0.60 3.66 Bankingg Sector Loans {Refer Note 4 (b) J The Company is also in respect of some Amount Amount cases and other matters

# Does not include contingent liabilities in respect of Andrews - account of varirus court cases/ claims against cancellation of allotment etc keeping in view that amounts when ever sha!8 be met out of AGP project surplus funds and as such there is no Babifity of the Company. {Refer Note 10}

2) Public deposits aggregating to Rs. 31,75 crore m respect of 551 cases (Previous Year Rs. 5.32 crore in respect of 680 cases) and interest thereon of Rs. 30.34 era® (Previous Year Rs. 1.95 crore) were due and unda&ned as on 31th tech 2007.

3) Debentuer/Bonds 10.69 crore towards interest and Year Rs.4.28 crore) ware due and on 31st March 2007. An amount of Rs. 0,10 crore (excluding sub-judroe amount of Rs. 1.13 crore), which is unclaimed for a period of seven years from the due date of interest payment has been deposited in Investor Education and Protection Fund".

4) (a) As against the total FCNR (B) / FCTL loan of Rs.387.29 crore

(USD 88.84 million) outstanding as on 31.03.2007 (Previous Year Rs. 495 crore/ USD 111.64 million), forward contracts have been taken for Rs.59.90 crore (USD 13.74 million) (Previous Year Rs. 119.53 crore / USD 27.48 million).

(b) In respect of banking sector loans (Schedule- C & D - Secured & Unsecured loans) amounting to Rs. 6,902.33 crore (Previous Year Rs. 7,380.10 crore}, confirmation of balances has been obtained from all the 38 banks (Previous Year 45 banks). Out of this, outstanding balance of Rs. 424.27 crore (Previous Year Rs. 455.98 crore) of 6 Banks (Previous Year 6 banks) have difference (due to debit by banks) of Rs. 0.60 crore (Previous Year Rs. 3.66 crore) and the amount is under reconciliation. Outstanding balance of Rs. 2,530.56 crore (Previous Year Rs.6,584.00 crore) of 10 banks (Previous Year 12 banks) have difference (due to credit by banks) of Rs. 0.43 crore (Previous Year Rs.9.48 crore) and the amount is under reconciliation. Till the matter is resolved the amount of Rs. 0.60 crore has been shown as Contingent Liability.

5) The secured and unsecured loans in Schedule-C and D include a sum of Rs. 4,391.73 crore (previous year Rs. 4,609.99 crore) towards repayments due within next 12 months (April 2007 to March 2008).

6) Details of various grants/subsidies (net of refunds) as at 31.3.2007 are as under:

7) The lease (sub-lease)/ conveyance deeds in respect of certain properties of the value of Rs. 47.91 crore (previous year Rs. 47.91 crore) are yet to be executed.

8) (a) Letters seeking confirmation of year end outstanding balances have been sent to ail the borrowers except cases in litigations. Confirmation in some cases is awaited. In some of the cases where agencies have informed different balances, reconciliation is underway.

(b) In some Loan Accounts, the appropriation of receipts till the financial year 2002-2003 was done based on the details provided by the agencies as against the then accounting practices. Necessary adjustments have been made on reconciliation except in respect of City Industrial Development Corporation, Tamil Nadu Housing Board and Lucknow Development Authority where reconciliation is underway.

(c) During the year the Company has made an additional provision of Rs. 175 crore (previous year Rs. 75 crore) beyond NHB Norms on loans.

(d) The Company has undertaken valuation for mortgaged properties in respect of doubtful assets (loans) from the year 2004-2005, through independent Valuers. Valuation Reports of properties covering approximately 99.26 % (previous year 89%) of the value have been received. In 4 cases, (previous year 4 cases), an additional provision of Rs. 2.38 crore (previous year Rs. 3.77 crore) has been made to cover the shortfall. In balance three cases i.e. Saumaya Medicare International Limited (A.P.), Mohini Oracles (Mah.) and Lakshmi Raghuramaia Cooperative Society (A.P.) where valuation report is awaited, action, if any, shall be taken on receipt of the reports.

(e) At the instance of Government of Kerala the Company had granted a Defaulf Resolution Package to Ms. Cochin Ihlerhatipnal Airport Ltd. (CIAL) and entered into an agreement dated 7.3.2003, according to which, CIAL had agreed to allot equity shares of Rs.52 crore (being 26% of equity share capital of CIAL) at par value of Rs.10V- per equity share. CIAL instead of allotting the shares of Rs.52 crore sent repayment of the entire balance loan together with interest upto 15th September, 2004 vide its letter dated 16.9.2004 amounting to Rs.63.49 crore as per their calculation, which was not accepted by the Company.

Since the CIAL did not equity shares worth Rs.52 crore to 26% the capital at par) to the Company, the Company filed a case before Debt Recovery Tribunal (DRT) at New Delhi as OA No. 10 of 2008. Stay has been obtained as an interim order dated 27.4.2006 restraining CIAL from creating any third party interest in Rs.52 crore worth, 26% of the CIAL equity shares agreed to be issued to the Company. Against this, the agency has filed two interim applications before DRT, Delhi challenging the jurisdiction of DRT, Delhi and getting the stay vacated. CIAL has also deposited an amount of Rs.73.31 crore with Registrar, DRT-I Delhi Account indicating the same as their liability as per their calculations. However, the Company has not withdrawn the money.

An application was also made to CIAL and Government of Kerala under the Right to Information Act-2005, for getting information relating to increase in share capital which was denied by agency. Accordingly, a complaint is also filed before State Information Commission against CIAL

A contempt petition was also filed in February, 2007 against CIAL and others for increasing the authorized share capital of CIAL and thereby violating the DRTs injunction order dated 27.4.2006. The contempt petition filed by HUDCO against the Managing Director and others for violating the said interim order dated 27.4.2006 was dismissed. HUDCO has filed an appeal against the order of DRT in Debt Recovery Appellate Tribunal. The matter is being followed up with State Government and CIAL for issue of equity shares pending which the total outstanding as on 31.3.2007 is being shown against CIAL as a loan till allotment of shares by CIAL to the Company to the extent of Rs.52 crore (equivalent to 26% of the equity capital of CIAL) during intrequnum period. The loan has been classified as NPA and necessary provision has been made as per NHB norms.

9) Housing Loans granted by the Company under HUDCO Niwas Scheme are secured fully/partly by:

(a) Equitable Mortgage of the property and/or

(b) Undertaking to create security through execution of Tripartite Agreejnent between the Company, borrower and the Developing Authority/ Developer;

In addition to (a) & (b) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed Deposits, etc. are also obtained in certain cases.

10) (a) The Company has undertaken Andrews Ganj Project (AGP) on

behalf of the then Ministry of Urban Affairs (MOUA). As per perpetual lease deed, the Company is liable to make available net resources from the development and disposal of properties of the project to the Ministry and resources generated on the prpjecl upto 3.11. 2004 and there after a separate no lien account has been opened under the name of HUDCO AGP Surplus Account into which the surplus lying to their credit had been deposited and interest accrued/earned on no lien account is being credited to that account MOUD has intimated that the Company cannot pass on the financial liahility to the Government on account of disputes.

However, the Company has represented that as per perpetual lease deed, the Company Is liable to make available "net resources generated from the development and disposal of properties of the project to the Ministry which means that all out-goings on the project including those on litigation & arbitration expenses and award/decree etc., in respect of disputes have to be debited to this project and as such there is no liability of the Company.

(b) An amount of Rs. 17.98 crora was initially deposited with Municipal Corporation of Delhi (MCD) on account of property tax of Andrews Ganj Project for the period upto 4th July, 1997 i.e. upto the execution of perpetual lease deed although there was no liability of property tax on HUDCO. The Honble Supreme Court decided in favour of HUDCO and the entire amount of Rs. 17.98 crore alongwith interest amounting to Rs. 13.68 crore is recoverable from MCD, out of which an amount of Rs. 11.46 crore has been refunded by MCD on 3.10.2005 which has been adjusted against interest No demand has been raised by MCD for payment of property tax for the period after 4th July, 1997. In case of any demand from MCD after 4th July, 1997, the same will be met out of the AGP Surplus Account Moreover as per opinion of Solicitor General of India no property tax is payable on land owned by the Government of India.

(c) The Company had allotted a hotel site including car parking space to M/s. M S Shoes East Limited (MSSEL). Due to default in payment of instalments, the Company had cancelled the allotment of hotel site including car parking space and forfeited the first instalment paid by MSSEL in terms of the allotment letter. The hotel site including car parking space was subsequently re-allotted to M/s. Leela Hotel Ltd. (LHL) erstwhile (M/s. Leela Hotel and Convention Center) now known as Hotel Leela Venture Ltd. subject to the final outcome of the decision Honble Additional District Judge on the suit filed by MSSEL At preset, the .matter is Hazan . The possession of the site and car parking space was handed over to LHL, has been taken back by the Company because of cancellation as per allotment terms due to non-payment of 3rd and final instalment by LHL. On 12.7.99,50 percent of the amount deposited, by M/s. LHL was forfeited and balance amount of Rs. 67.53 crore was refunded to LHL after adjusting the overdue ground rent and property tax dues. LHL, against this cancellation, sought arbitration wherein the Learned Arbitrator has passed an award directing the Company to refund the amount forfeited alongwrth interest The award has been upheld by the Single Bench of Honble High Court of Delhi and the amount of Rs .

Deposited by HUDCOin the Honble high court of delhias per court directions. The payment was made out of AGPSurplus and has since been released by Honble High Court of Delhi to LHL The Companys appeal against the Order of Single Bench before the Double Bench of Honble High Court of Delhi has also been dismissed. The Company has filed SLP before the Honble Supreme Court against the orders of

Double Bench. The Honble Supreme Court has admitted HUDCCs SLP and has stayed the recovery of interest amount. However, the Honble Supreme Court has directed the Company to deposit 50% of the balance decreed amount consisting of interest in the executing court i.e. Honble High Court of Delhi. The Company has accordingly deposited Rs. 59.61 crore in the Honble High Court of Delhi on 23.3.2006 out of HUDCO AGP Surplus Account and amount has been released by the High Court to Leela Hotels on furnishing of bank Guarantee on 12.10.2006.

(d) The allotment of 9 blocks of guest houses and restaurants, kitchens and shops, which were allotted to MSSEL, was cancelled and first installment paid by MSSEL was forfeited as per terms of allotment letter. MSSEL filed suit in the Honble District Court Delhi. Further on an appeal filed by HUDCO against the interim order of Honble District Court, Delhi, the Honble High Court of Delhi has transferred the case to itself by directing the MSSEL to pay the ad-valorem court fee on the suit amount which has since been paid by MSSEL. At present, the case is pending with Honble High Court of Delhi.

(e) The arbitrator has passed an award in respect of allotment of site in Shopping Arcade to M/s. Ansal Properties and Industries Ltd. (APIL) on 28.7.2005 in favour of APIL directing HUDCO to pay Rs. 8.84 crore and further interest @18% p.a. from 1.8.2005 till payment. Arbitrator has allowed the counter claim of HUDCO and directed APIL to pay approximately Rs. 0.85 crore maintenance charges as billed by M/s. Habitat Services Centre (HSC) w.e.f. 1.1.2001 upto 31.7.2005 within 3 months from the date of award failing which APIL shall have to pay interest thereon @18% p.a. HUDCO has challenged the award before the Honble High Court of Delhi and, as per the directions of the Court, has deposited a sum of Rs. 7.99 crore in the Court out of HUDCO AGP Surplus Account to save future interest liability which has since been released to APIL by the court against the security of Bank Guarantee.

(f) APIL has invoked arbitration for refund of ground rent paid by it from the date of handing over the possession i.e. November, 1995 to the date of commercial use of the shopping arcade by APIL i.e. October, 1999 and the arbitrator has pronounced the award on 21.07.2006 holding therein that APIL is not liable to pay the ground rent up to October 1999 till meaningful possession was given to APIL i.e. till the shopping arcade was constructed and become operational in October 1999. The amount of Rs.3.93 crore deposited by APIL earlier has been directed to be adjusted towards the future ground rent payment due payment has also been awarded by the arbitrator w.e .f.Nov 1999 HUDCO has filed petition u/s. 34 of Arbitration and Conciliation Act challenging the award before the Honble High Court of Delhi. Further, the Honble High Court of Delhi has directed APIL to pay the overdue Ground Rent from October 1999 to October 2003 in 24 monthly instalments starting from September, 2005.

APIL has been paying the monthly instalment of Rs. 0.49 crore regularly. HUDCO has again filed the Company Petition u/s. 433 & 434 of the Companies Act against APIL for winding up before the Honble High Court of Delhi due to non payment of Ground Rent and interest thereof by APIL from October, 2003 onwards. APIL has filed the reply.

11) (a) In accordance with Employees Provident Fund Organisation circular dated 22.8.2005, leave encashment paid on or after 1.10.94 is liable for Provident Fund deductions. However, vide their subsequent letter dated 12.9.2005 action on recovery upto 30.4.2005 has been kept in abeyance and the Company started deducting Employees Provident Fund on leave encashment w.e.f. 1.5.2005. Since the above clarification was received in the month of September, 2005 the Company is paying deductions of Provident Fund on Leave Encashment from 1.11.2005 on regular basis and the payment of arrears for the period from 1.5.2005 to 31.10.2005 has been made in the year 2007-2008.

(b) The pay revision of Public Sector executives was due w.e.f. 1.1.2007 and a pay revision committee has been appointed by Government of India, the report of which is pending. An adhoc provision of Rs.1.60 crore has been made for pay revision in the accounts of the year 2006- 2007.

12) Expenditure on leave travel concession to employees is accounted for in the year it is availed/ encashed.

13) The Ministry of Housing & Urban Poverty Alleviation vide their DO letter No. 1-10412/7/2004- dated 18th July, 2006 has clarified that Special Reserve created by HUDCO under section 36(1)(viii) of Income Tax Act should be treated as Statutory Reserve and should be deducted from the net profit to arrive at distributable profit for the purpose of giving productivity linked incentive to the employees, the clarification received from the Ministry has; been considered in the accounts for the year

14) The Company is not able to comply with National Housing Banks Credit concentration norms which states that a Housing Finance Companys agency wise exposure should not exceed 15% of its net owned funds. HUDCO is not able to comply with these norms in respect of tendings to some State Governments/ Government agencies. The Company had requested NHB for relaxation in complying with credit concentration norms which was declined by the NHB. The Company has again represented the case to NHB, for their consideration.

15) Income fax as applicable in respect of Interest accrued oh bonds/ debentures is deducted at source at the time of actual payment of interest to the bondholders/ debenture holders since bonds/ debentures are transferable by endorsement & delivery.

16) In compliance.to the opinion of the expert advisory commitee of the Institute of Chartered Accountants of India (SCA1) in terms of Accounting Standard AS-22 the Company created Deferred Tax liability (DTL) for Special Reserve under section 36(1){vtl) of Income Tax Act during the year 2004-05 for the first time Accordingly In terms of the Transitional Provisions of litis AS, out of accumulated DTL of Rs. 315.21 crore for trie period up to financial year 2003- 04, Rs. 267.53 crore were charged to Genera! Reserve and Rs. 47.68 crore deferred tax pjoviswn from feiancial year 2004-05 craaiards is bemg charged to the Pro® & Loss Accoart of that year. Further as per of SCAI, outof atoresaid Rs. 267.53 crore, Rs. 136.76 cram only were to be charged, to General Reserve sM balance Rs. 130.77. crore were to be accounted- for by credltmg General Reserve and debiting Pro!! & Loss Account with & disclosure as a prior period item durmg the year of impEemsntaicm Le. 2004-2005. Out of aforesaid Rs. 130.77 crore, the net shortfall now is Rs. 120.97 crore after adjustmg Rs. 9.80 crore towards excess - - DTL created m previous year on excess Special Reserve where Income Tax assessments are complete. One of the PSUs has represented to tie expert advisory committee of SCAB agamst above opnon covering HUDCOs case as vsbEL Suftabfe action shai be tafcen by the Company on receipt of opinion on the above subject

17) There are no disss to micro, smaf and medium entities, as defiled in §Scro, SmaS? and ft/Jedaim Enterprises Devetoprnent Act, 2008 as at 31s1 March, 2007.

18) There are no separate business/ geographical reportebtesegjrr«nts as per the Accounting Standard AS-17 Segment Reporting" since the mam business of the Company is to provide finance for Housing/ infrastructure projects and all other activities of the Company revolve around the main business.

19)- Provision of Impairment toss as reqired under Accounting Standard AS-28 of Assets is not necessary, as in the opinion of management there is no

20) Change in accounting policies/pracces:

(a) The Company has changed its accounting policy of recognising front end fee, app&affion fee, administrative fees and processing fees on loans on accrual to realisation bass. Consequent upon the change, the profit for tie year is tower by Rs. 1.28 crore.

(b) The Company has changed its accounting policy of providing providing depreciation @"df 45% pA on method retrospectively. Further, after 2 years residual value of 10% is recovered from employees. Consequent upon the change, the profit for the year is lower by Rs. 0.03 crore.

(c) The Company has changed its accounting policy of recognising diminution in the value of long term investments. As per the new policy where them is a decline other than temporary, in the value of a long term investment, the carrying amount is reduced to recognise the decline. Consequent to the change, the profit for the year is -tower by Rs. 2.50 crore.

As a result of the above changes in accounting policies the profit for the year is lower by Rs. 3.81 crore with a corresponding effect on reserves and surpte account

21) The Companys leasing arrangements are in respect of operating teases for office premises. These teasing arrangements which sure not non- carccefebJa range between 1 and 30 years generally. or longer, and are usuaiy renewable by mutual consent on mutuaBy agreeable terms. The aggregate lease rentals payabJ© are charged as Office Rent under Schedute-Q of the Profit; & Loss Account

22) The Company has constituted Audit Committee In coriipriarK» off section 292A of the Companies Ad, 1956. During the financial year 2008-07, the constitution of the Audit Committee was not in conformity with clause 49/2.18 of the listing provisions. These listing provisions were applicable on HUDCO because off issuance of Pubic Issue of infrastructure Bonds Series in 1997. On 24th Aprl 2007, the said Infrastructure Bond Series was redeemed and the fisting provisions governing Audit Committee are no longer applicable on HUDCO. However, OPE guidelines for Audit Committee are applicable on HUDCO and the same are not complied since HUDCO is not having sufficient number of Independent Directors on its Board. The company is pursuing the issue of appointment of Independent Directors with the Ministry of Housing & Urban Poverty .

23) As per One Time Settlement (OTS) package approved by the Company in the year 2002 .for" - Corpcratkm, the Maharashtra Jeewart Pratiarars a agency norrinated by Government- of Maharashtra was to issue Bonds which were due for maturity on 1.1.2007. These bonds have not been issued W the date of ther maturity. However, the repayment of principal & interest on bonds has been received except last Instalment which was due on 1.1.2007.

24) Other liabilities shown under Schedufe-L mckide net of Rs. 0.15 crore (credit of Rs. 0.44 crore and debit of Rs. 0.29 crore) lying in Suspense Account Necessary adjustments m& be made on recondliafon.

29) The Chairman and Managing Director use staff car for upto 1,000 KMper month against payment of RS.520/-Per month

30) Related Parties Disclosucre: (a) Joint Ventures

(1) Urban Infrastructure Development Ltd.

(2) Pragati Social infrastructure & Development Ltd

(3) MCW Infrastructure Pvt Ltd.

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Mar 31, 1999

Notes on Secured Loans:

* Secured by first floating charge on entire undertaking, all property, asset & assignments, both present & future, including any uncalled capital & interest in mortgage or any State Government or other guarantees, ranking pari-passu named as "Charged Properties".

General Notes

1. (a) Assets and liabilities are recorded at historical costs. These costs are not adjusted to reflect the changing value in he purchasing power of money.

(b) Previous year's figures have been regrouped/rearranged wherever necessary to make them comparable with figures for the current year.

(c) The notes to accounts are to be read alongwith the Accounting Policies given in Schedule S.

2. (a) In terms of guidelines issued by the Government of India, the Debenture Redemption Reserve has been created on all debentures/bonds issued by the Corporation to the extent of available profits after making appropriation of Rs.57.15 crore to the Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961 and Rs.5 crore to Reserve for Bad and Doubtful Debts u/s 36(1)(vii)(a)(c) of the Income Tax Act, 1961. The shortfall in the Debenture Redemption Reserve after considering balance in Special Reserve (which is in line with the clarification from SEBI) is to the extent of Rs.735.08 crore as on 31.03.1999.

(b) Keeping in view the legal opinion, the Corporation has appropriated an amount of Rs. 19.15 crores in the current year which was short appropriated in 1995-96 in addition to the prescribed requirements of Rs. 38 crore towards Special Reserve under Section 36(1)(viii) of the Income Tax Act, 1961.

(c) The Company during the year has not proposed any dividend in view of shortfall in Debenture Redemption Reserve as stated above which is to be created as per guidelines issued by Securities and Exchange Board of India (SEBI) on 11.6.1992 for the protection of interest of debentures/bond holders.

3. Estimated amount of commitments remaining to be executed on capital account and not provided for are Rs. 75.48 lacs (Previous year Rs. 18.62 lacs).

4. Rent agreement in respect of Office at Mint Road, Mumbai is yet to be executed.

5. Lease/sub-lease/conveyance deeds in respect of some of flats/land & buildings are yet to be executed.

6. In the management of building projects, HUDCO has been procuring turnkey services for planning, designing, construction, quality control etc. from Construction Management Consultant. The in-house staff of HUDCO plays only a coordinators role.

7. Letters for confirmation of balances were sent to borrowing agencies stating that in case confirmation is not received within a period of 15 days from the date of the letter, then the balances as intimated by HUDCO would be taken as confirmed.

8. Keeping in view the agreements with the borrowing agencies, the credits in the loan cards have been given on the actual date of credits given by the banks.

9. As per the generally accepted principle, the Corporation is showing the advances to the contractors/suppliers which are adjustable/recoverable from their subsequent bills under the head "Loans and Advances-Others" in Schedule - K.

10. During the year, HUDCO has accepted deposits from public. As on 31.3.1999, the outstanding unclaimed public deposits were Rs. 4,60,000/- (Previous Year Rs. 1,05,176/-).

11. Provision for Income Tax includes provision for Wealth Tax as applicable under the Wealth Tax Act.

12. The Chairman and Managing Director and the Whole time Directors are entitled to use staff car for private use upto 1000 km. with reimbursement of Rs. 250/- per month.

13. In the opinion of the Board, Current Assets & Loans and Advances are stated in value at which it will be realised in the ordinary course of business.

14. The Company is in the process of ensuring Y2K compliance in respect of its computer based systems.

15. An amount of Rs. 294.42 crore and Rs. 27.56 crore was over due from M/s CANFINA and M/s ABFSL (wholly owned subsidiary of Canara Bank and Andhra Bank) respectively as on 31.03.98. In view of the decision taken in the joint meeting held on 12.8.1998 in the Office of Special Secretary (Banking), Ministry of Finance, an agreement has been executed with M/s Canbank Financial Services Limited on 30.09.98 wherein it has been agreed that they would pay simple interest @ 12% p.a. from the due date till 31.12.95 and no interest would accrue thereafter and the total amount thus arrived at, would be paid in eight annual instalments, the first instalment equivalent to 20% of total amount including interest payable on or before 30.09.98 and balance in 7 annual equal instalment due on 30th September each year. Accordingly, the first instalment of Rs. 81.20 crore has been received/adjusted on 30.09.98, out of which an amount of Rs. 21.58 crore has been treated as interest income during the year 1998-99 on proportionate basis. Further full amount outstanding from M/s ABFSL has been received in April 1999. The balance amount of Rs. 238.44 crore due from M/s CANFINA have been shown under "Loans and Advances" in Schedule - K. Keeping in view of above fact, no provision has been made for CANFINA & ABFSL.

16. The Corporation has undertaken construction of commercial space in Plot No. 14 and 25 at Bhikaji Cama Place, New Delhi, as per Ministry of Urban Development's (MOUD) letters, which were to be disposed off and leased out after construction. Out of the above surplus generated funds, the payment for construction of 7776 sqmt. (Plot No. 26) built up space for MOUD and 3200 sqmt. for National Institute of Urban Affairs (NIUA) and Delhi Urban Art Commission (DUAC) in India Habitat Centre (IHC) is to be made. The completed portion of EPFO in Plot No. 14 for which the possession is yet to be handed over has been accounted for on cost basis and shown under "Other Current Assets" of Schedule-J. The cost incurred on completed projects i.e. Plot 14, Plot 26 and NIUA & DUAC has been considered based on amounts paid from time to time plus settled provisions as on 31.3.1999, which has been adjusted against amount received from allottees of Plot No.14, miscellaneous projected cost receipts and cost of completed portion of EPFO in Plot No. 14 for which possession is yet to be handed over and the remaining balance of above has been adjusted against previously total recognized profit on unsold properties. Cost incurred on Plot No. 25, total common expenditure and remaining unadjusted excess profit booked in previous years has been shown under "Work-in-Progress". However no adjustment for balance excess profit has been made during the year. The approval of Expenditure Finance Committee is awaited. As per condition of allotment letter, the ground rent is to be revised after five years from the date of allotment and is to be calculated on prevailing market value. However, the prevailing market value is yet to be informed by MOUD, in absence of which the payment/provision of Rs. 66.97 lacs has been made on the rate as done in previous years.

17. The Ministry of Urban Development (MOUD) vide its letter no. L.II - (974)/96/115 dated 19.3.1996 has allotted land to HUDCO at Pinjrapole near Andrews Ganj, New Delhi on the following terms:

(a) 17.6 acres for Community Centre will be leased on payment of token premium of Rupee one and annual ground rent of Rupee one per acre for a period of 99 years. The land will be utilized for development as per urban design and the resources generated on disposal of these properties will be utilized for construction of maximum permissible number of houses/flats on 25 acres of residential land as stated in (b) below and on other locations as necessary.

(b) 25 acres of Residential Land for a period of 10 years on payment of token premium of Rupee one and annual ground rent of Rupee one per acre. After the expiry of this period, the land alongwith structures to be erected by HUDCO thereon will revert to the MOUD. The Government will take these flats on a token rent of Rupee one for the entire residential complex. The cost of mainte-nance, services and municipal taxes etc. will be paid by the Government on actual basis.

(c) 18 acres of land is entrusted to HUDCO without payment of any fee for care and maintenance as Zonal Green. HUDCO will develop this area and maintain it till further directions from the Government. The cost of development and maintenance of Zonal Green will be charged by HUDCO to the accounts of the Community Centre as stated in (a) above.

(d) No diversion of net resources obtained from development of Community Centre is permitted for HUDCO's normal operations.

Keeping above in view, the expenditure incurred on survey works at Lodi Estate Bungalow, Kidwa Nagar and Pataudi House amounting to Rs. 25,370/-, Rs. 16,046/- and Rs. 3,43,281/- respectively alongwith on Community Centre, Zonal Green and Residential Land except for Type VI houses has been booked under "Work-in-progress" and has been shown under the head "Other Current Assets" in Schedule - J. The total net cost of Type VI houses which has been completed has been adjusted from the amount received from allottees of Andrews Ganj Project (AGP). Further keeping in view the decision in the meeting with MOUD held on 7-9-1995, interest recoverable by HUDCO on funds deployed by it has been provided @ 17% p.a. since beginning till 28.2.95 on monthly average basis. Thereafter in view of surplus with HUDCO w.e.f. 01.03.95 onwards, interest payable on surplus funds available with HUDCO has been provided at the maximum deposit rate for fixed deposits till 31.03.97 and at deposit rate of upto one year, with Board's approval w.e.f 01.04.97 onwards, with State Bank of India offered by them from time to time. Moreover, provision for administrative overheads @ 1.5 percent of the work done has also been made as per the decision in the aforesaid meeting. Further, there is no diversion of funds. The lease deed in respect of Community Centre has been executed on 4.7.97.

18. HUDCO has executed interior work for National Institute of Urban Affairs (NIUA) & Delhi Urban Art Commission (DUAC) at India Habitat Centre (IHC) as per the directions of the Ministry of Urban Affairs & Employment (MOUA&E). As per letter No. HUDCO/MOU/ECP/95/1166 dated 18.4.95; the expenditure was to be met out of the surplus from Andrews Ganj Project (AGP). The MOUA&E has further vide their letter no. J-13026/5/97-LD dated 9.7.97 informed to meet it out of the surplus created from Bhikaji Cama Place Project. However based on Board approvals, from time to time, the adjustment of expenditure out of surplus from Andrews Ganj Project was referred to MOUA&E which has not been accepted by them. Later on Committee of Directors (COD) in its meeting held on 27.3.98 again decided that the expenditure will be met out of the surplus of AGP and reference to the Ministry should be further followed up in the context of the decision taken in the MOUA&E under the chairmanship of Secretary, Urban Development. However pending confirmation from the MOUA&E, the net expenditure of Rs. 65.83 lacs (after adjustment of Rs. 5.50 lacs received from DUAC) has been booked under "Amount recoverable from Ministry of Urban Affairs and Employment".

19. HUDCO had allotted Hotel site including.car parking space, guesthouses, restaurants and shops to M/s M S Shoes East Limited (MSSL). M/s MSSL paid only first instalment and defaulted in payment of further instalments even during extended time as granted by Hon'ble Court. Consequently HUDCO cancelled the allotment and forfeited the first instalment paid by M/s MSSL as per terms of the allotment letter. Subsequent to cancellation of allotment of Guest Houses/Restaurant/Shops, M/s MSSL filed a suit in the Delhi High Court, which was later on withdrawn by them. However a fresh suit in the Court of Additional Distt. Judge (ADJ) was filed by them and stay order against HUDCO has been given by Hon'ble Court which has been further appealed in Delhi High Court by HUDCO. At present, the matter is sub-judice.

Further on cancellation of allotment of Hotel site/Car Parking space, HUDCO decided to re-allot these to the highest bidder i.e. M/s Leela Hotel and Conventional Centre (LHCC). However, before the allotment, M/s MSSL filed suit with ADJ for status quo. The Hon'ble ADJ directed the company to maintain status quo, which was vacated later on. On vacation of the status-quo order by ADJ, HUDCO allotted the site to M/s LHCC vide letter dated 31.3.97, subject to the final outcome of the decision of ADJ on the suit filed by M/s MSSL. M/s MSSL also filed an appeal in Delhi High Court against the vacation of the status quo. The final decision of Court cases is yet to be received. The possession of the land was handed over to M/s LHCC who also paid first and second instalments. Moreover, the allotment to M/s LHCC has also been cancelled on 30.6.99 due to non-payment of third instalment by them. Further as per the terms of the allotment, 50% of the instalment amount received has been refunded on 13.07.99 and the possession of site has also been received back by HUDCO on same day. At present the matter is under arbitration with M/s LHCC. No accountal of interest/penal interest and refund/forfeiture of amount has been made, since the cases are sub-judice/under arbitration.

20. M/s Ansal Properties and Industries Ltd. (APIL) were allotted a site in shopping arcade at Andrews Ganj Project (AGP). They paid first instalment in time. Although the possession was given on 10.11.95, the payment of 2nd and 3rd instalments were not paid in time by M/s APIL as per allotment letter due to delay in sanction/regularization of the plans of the car parking space. Since the plans for shopping arcade to be built by M/s APIL were not accepted by Municipal Corporation of Delhi (MCD) for processing and consequent approval, initial extension of both the instalments for 6 months and further extension of 4 months and 8 days for payment of IInd instalment and 2 months and 4 days for payment of IIIrd instalment were granted by HUDCO to M/s APIL after its approval by the Board. The Board also decided to refer the matter of further extension to Government for approval, which was accordingly referred. The Government vide their letter No. J-13014/6/90-LD dated 28.9.98 has conveyed the approval of extension of time to M/s APIL for payment of IInd instalment from 9.9.96 to 17.12.96 without any interest and with interest @ 16.48% from 18.12.96 to 17.4.97 and payment of 3rd instalment from 9.3.97 to 13.5.97 without any interest and with interest @ 16.48% from 14.5.97 to 13.8.97 alongwith furnishing of a disclaimer by them for all their claims for damages or otherwise on account of alleged delay on the part of HUDCO which may have occurred and make payment of ground rent from the date of possession i.e. 10.11.95. The 2nd and 3rd instalments have since been paid by M/s APIL. The ground rent has also been paid by M/s APIL considering the period from 11.7.96 to 10.7.97.

M/s APIL vide their letter dated 5.2.1999 intimated HUDCO that the decision of the Government of India communicated to them for levy of interest amounting to Rs. 69.16 lacs for the period from 18.12.96 to 17.1.97 @ 16.48% on the amount of IInd instalment is not justified and they are not liable for the same. They have requested HUDCO that these matters may be adjudicated through arbitrator along with ground rent matter which is already under arbitration. HUDCO has refuted all the contentions of M/s APIL and has requested Government to advise further action in the matter. Pending final decision, no provision for interest payable to M/s APIL has been made for delay in handing over of the site.

21. No provision for amount recoverable of Rs. 45.05 lacs has been made from M/s Ultimate on whose risk and cost the balance interior work of HUDCO Bhawan was got done from M/s Nuchem. The matter is under arbitration.

22. Details of overdue on account of principal, interest and additional interest recoverable from borrowing agencies of HUDCO are as given below :-

(Rupees in crore)

1997-98

No. of Default as Subsequent Agencies of 31.3.98 recoveries

Principal 360 294.54 59.10

Interest 338 273.77 87.87

Addl. Interest 305 3.77 0.18

Total 572.08 147.15



(Rupees in crore)

1998-99

No. of Default as Subsequent Agencies of 31.03.99 recoveries

Principal 398 410.44 15.41

Interest 334 389.19 65.96

Addl. Interest 277 4.96 0.87

Total 804.59 82.24

In compliance of the observations of Member, Audit Board (C&AG), upto date receipt towards principal/interest have been taken into account.

23. In some cases, the Company is releasing first and subsequent instalment of loan against schemes proposed to be covered by State Government Guarantees based on the receipt of Government order/letter indicating its commitment to stand guarantee. Accordingly, loans released under this category have been classified as "Government Guaranteed Loans".

24. Government of Uttar Pradesh has issued a bond certificate carrying an interest rate of 10% per annum payable half yearly for Rs 43.71 crore favouring HUDCO by converting the overdue loan and interest dues outstanding from Ghaziabad Development Authority, Meerut Development Authority and Allahabad Development Authority. Accordingly a sum of Rs. 32.95 crore has been appropriated towards interest income, Rs. 1.22 crore towards additional interest and balance Rs. 9.54 crore towards principal outstanding.

25. An amount of Rs. 336.40 lacs (previous year Rs. 542.60 lacs) shown as "EWS Float Refundable" under "Current Liabilities" represents the levy of two/one percent on sale price given in loan application submitted to HUDCO for various housing schemes other than EWS schemes. This float amount is to be given as a grant to the concerned agencies for the implementation of EWS schemes anywhere in the State.

26. As on 31.3.1999, a sum of Rs. 1431.36 lacs and Rs. 193.33 lacs have been shown towards interest and additional interest in excess respectively under "Current Liabilities". These accounts are under reconciliation and shall be adjusted in subsequent years.

27. On the decision of National Housing Bank (NHB), a sum of Rs. 9.33 crore has been adjusted during the year against income from interest on Loans & Advances being unrealised interest accounted for upto 31.3.1997 on Loans and Advances guaranteed by State Government which were in default towards principal/interest for more than 6 months.

28. The company is liable to pay guarantee fee on the outstanding amount of SLR Debentures guaranteed by Government of India, which the Company has been complying with for SLR Debenture issued during 1990-91 and onwards. Since no additional demand has been received from Government of India, no provision for payment of Government guarantee fee of Rs. 10.53 crore (Current Year Rs. 0.88 crore and Prior Year Rs. 9.65 crore) on outstanding amount of SLR Debentures issued prior to 1990-91 and penalty, if any, has been made.

29. Pending issue of Stamp Duty exemption orders by the Government of India in respect of HBS X Series, SPS Bonds and 12.30% Debentures 2008 and notification by Central Board of Direct Taxes in respect of HBS VI and VIII Series, the bond certificates have not been issued.

30. An amount of Rs. 6.41 lacs (including Rs. 0.29 lacs pertains to previous year) has been paid to the Ministry of Urban Development towards interest on loan of Rs. 851.15 lacs out of Line of Credit from OECF for 22 days for the period from 31.3.98 to 21.4.98 as the loan was released by the Ministry through cheque dated 31.03.98 but was credited in HUDCO's account on 22.04.98.

31. (a) An amount of JPY 2,505,304,643 (Rs. 82.48 crore) has been received upto 31.3.1999 against loan from OECF. An amount of JPY 1,530,000,000 (Rs. 48.00 crore) has been swapped with State Bank of India for Rupee funds for covering exchange fluctuation risks. JPY 944,059,756 (equivalent to Rs. 33.37 crore) is lying in interest bearing foreign deposit account with Bank of India Tokyo, out of which JPY 943,706,395 (Rs. 33.36 crore) was received on 31.3.1999. The remaining JPY were utilised for servicing the interest of OECF loan.

(b) HUDCO has received US $50 million from ADB upto 31st March 1999 which has been kept in deposit with Bank of India Cayman Islands Branch, USA for a period co-terminus with ADB loan. The bank has given Rupee loan of Rs 150 crore and has also subscribed to SPS HUDCO Bonds for Rs 100 crore.

32. An amount of Rs. 66.61 lacs (Previous Year Rs. 41.29 lacs) has been provided for on account of Government guarantee fee on OECF loan (No. ID-P 110) @ 1.2% on the outstanding loan amount as per the terms of guarantee fee agreement. The payment of above guarantee fee is pending for final decision of the Ministry of Finance where reference has been made for reduction of the fee charged.

33. Receipt and payment account of various grants is as under :-

(Rupees in Lacs)

Opening Received Adjusted/ Closing balance during the released balance year during the year

i) KFW Grant 2756.62 3641.66 3865.77 2532.51

ii) Improved Chullahas 15.94 -- -- 15.94

iii) Central Assistance 36.57 -- -- 36.57 for urban water supply

iv) Building Centre (-) 10.48 400 198.01 191.51

Total 2798.65 4041.66 4063.78 2776.53

As per our Accounting Policy, the balance amount of Rs. 2776.53 lacs (Previous year Rs. 2809.14 lacs) has been shown under Schedule - L (Current Liabilities and Provision) and Rs. NIL (Previous year Rs. 10.48 lacs) under Schedule- K (Loans and Advances)

34. A sum of Rs. 7.07 lacs (previous year Rs. 2.09 lacs) has been shown under "Current Liabilities" in Schedule L payable to borrowing agencies on loans identified as Banking Sector Schemes meant for Scheduled Castes/Scheduled Tribes on account of differential interest as on 31.3.1999.

35. Some of the outstanding entries in (a) Advance against expenditure (b) Misc. Recovery others, (c) Sundry debtors could not be adjusted for want of certain details. Accordingly, a provision of Rs. 33.53 lacs, upto 31.3.1999, has been made against the amounts lying unadjusted for more than 3 years. Follow up action has already been initiated for recovery/adjustment.

36. An amount of Rs. 181 crore received from the Government of India during the year has been shown under "Share Application Money". These shares have been allotted on 23.4.99.

37. The Risk Fund equivalent to 2 % of the net profit and 2 % out of KFW interest income is not being created in view of shortfall in creation of Debenture Redemption Reserve (DRR) and non receipt of approval from KFW respectively. However risk charges amounting to Rs 2.70 crore on negative lien recovered from the agencies as per Board's approval have been transferred to the Risk Fund.

38. Pending finalization of pay scales of executives, the provision of Rs. 3.96 crore has been made by the Corporation on estimated basis during the year towards the pay revision arrears in respect of its executives. In addition a sum of Rs. 1.90 crore paid as interim relief to all employees has been considered as expenditure during the year. No provision in respect of pay revision arrears of non-executives has been made since the amount is unascertainable in view of non-receipt of instructions from administrative Ministry till date. Further gratuity payments to LIC and provision for leave encashment based on actuarial valuation has been done based on existing pay scales.

39. There are no outstanding dues owed to any Small Scale Industrial Undertaking for a sum of Rs. 1 Lac or more for more than 30 days.

40. The Company has short term surplus funds which has been invested in Fixed deposit/Call deposits. The interest earned on these deposits are below the average borrowing cost.

42. Contingent Liabilities not provided for: (Rupees in lacs)

1998-99

A (i) Contractor's claim against the Company not acknowledged as debts 1380.74 *

* Interest pendentelite @ 24% on Rs 1304.58 lacs & @ 18% on Rs 53.19 lacs.

(ii) Counter claims of HUDCO 906.08 **

** Cost of arbitration and interest pendentelite @ 24% on Rs. 870.18 lacs & @ 18% on Rs. 35.90 lacs.

B Award by arbitrators in favour of contractor but challenged in Courts. 334.03 $

$ Excluding interest as per the award.

C Demands from MCD towards property tax for which either case is being contested or is pending in 1163.71 @ courts.

@ Demand for property tax for 1998-99 has not been received.

D Payment of transfer duty to MCD. 6.63

E Demands from Income-tax authorities for earlier assessment years disputed in appeal in view of various 3446.63 decisions/legal opinions in favour of HUDCO.

F Demand of balance lease rent in respect of one-office premises. 6.31

G Payment of Stamp Duty, which is pending due to non-receipt of, correct demand. 1.50

H Liability in respect of pending Court case by an ex-employee against his removal and in those cases Unascertainable where there is no privity of contract between HUDCO & Plaintiff.

I Interest claim of allottees on delayed possession. 1766.68

---

Mar 31, 1998

1. Assets and liabilities are recorded at historical costs. These costs are not adjusted to reflect the changing value in the purchasing power of money.

2. RESERVES & SURPLUS - SPECIAL RESERVES AND OTHERS :

a. In terms of guidelines issued by the Government of India, the Debenture Redemption Reserve has been created on all debentures/bonds issued by the Corporation to the extent of available profits after making appropriation of Rs. 31.78 crores to the special reserve under section 36(1)(viii) of the Income Tax Act, 1961 and Rs. 4.18 crores to Reserve for Bad and Doubtful debts under section 36(1)(vii)(a)(c) of Income Tax Act, 1961. The shortfall in the Debenture Redemption Reserve after considering balance in Special Reserve (which is in line with the clarification from SEBI) is to the extent of Rs. 618.65 crores as on 31.03.1998.

b. The Company during the year appropriated NIL amount to Research & Development Reserve and proposed No Dividend in compliance with terms of Guidelines issued by Securities and Exchange Board of India (SEBI) on 11.6.1992 for the protection of interest of Debentures/Bond Holders.

3. a. Due to change in the Accounting Policy regarding treatment of unclaimed debentures/bonds and interest thereon remaining unclaimed for more than three years from the date of redemption, the profit for the year is lower by Rs. 13.15 lacs.

b. Due to change in the Accounting Policy regarding treatment of rent receipt on cash basis, the profit for the year is lower by Rs. 8.21 lacs.

c. Due to change in the Accounting Policy regarding amortisation of cost of lease hold land over the period on lease, the profit for the year is lower by Rs. 4.33 lacs (prior period expenditure of Rs. 2.97 lacs).

d. Due to change in the Accounting Policy regarding treatment of deferred service charges, profit for the year is higher by Rs. 89.84 lacs.

4. Estimated amount of commitments remaining to be executed on capital account and not provided for Rs. 18.62 lacs (Previous year Rs. 13.79 lacs).

5. Rent agreement in respect of office at Mint Road Bombay is yet to be executed.

6. Lease/sub-lease deeds/conveyance deeds in respect of the following are to be executed :-

i. Land allotted to HUDCO by the Government of India on perpetual lease for construction of an Integrated Office Complex, Lodhi Road, New Delhi.

ii. HIG Flat purchased on 99 years lease at Chandigarh from Chandigarh Housing Board.

iii. 7 Flats purchased from Bombay Housing and Area Development Board at Mumbai on 90 years lease.

iv. 24 flats purchased at Asian Games Village Complex from Delhi Development Authority and conversion charges paid for conversion to freehold from leasehold.

v. Office premises at Madras on 99 years lease purchased from Madras Metropolitan Development Authority.

vi. 4 flats purchased from Tamil Nadu Housing Board.

vii. 3 plots on 99 years lease purchased at Jaipur from Jaipur Development Authority.

viii. Office Accommodation purchased from Calcutta Municipal Corporation at New Market Area, Calcutta on licence for 30 years.

ix. Plots allotted at Bhikaji Cama Place by Delhi Development Authority.

x. Plot at Ahmedabad acquired from Ahmedabad Municipal Corporation on 99 years lease.

xi. Flat at Patna from The Bihar State Housing Coop. Fed. on 66 years lease.

xii. Flat at Lucknow from Lucknow Development Authority on 90 years lease.

xiii. Plots at Vaishali and Kaushambi Ghaziabad acquired from Ghaziabad Development Authority on 90 years lease.

xiv. Office accommodation purchased from India Habitat Centre, New Delhi.

xv. Office premises purchased from M P Housing Board at Bhopal.

xvi. 3 MIG flats purchased from Assam State Cooperative Housing Finance Society Ltd.

xvii. 6 flats purchased from HPL at Jangpura Extn., New Delhi.

xviii. Office building at Jaipur.

7. In "loans and advances", an amount of Rs. 321.97 crores represents overdue inter-corporate deposits including interest thereon amounting to Rs. 2.06 crores with M/s. Canbank Financial Services Limited and M/s Andhra Bank Financial Services Ltd. (wholly owned subsidiaries of Canara Bank and Andhra Bank). Out of total outstanding, Rs. 125 crores was due for repayment since July 1992, Rs. 2.00 crores since 21st August, 1992 and Rs. 194.97 crores since February, 1993. The interest recognition on these deposits beyond the due dates of deposits has not been considered. Regarding overdue deposits with Andhra Bank Financial Services Ltd., the company has informed that they propose to pay entire principal and interest upto the maturity date in exchange of transfer of bonds withheld by HUDCO. HUDCO's acceptance has been conveyed but payment awaited from ABFSL. During the year 1997-98, an amount of Rs. 3.64 crores has been adjusted against amounts recoverable from Canbank Financial Services Limited on account of redemption of Bonds by HUDCO, interest payable in respect of other Series of Bonds (interest warrants were in the custody of HUDCO), amounts payable against marketing of Capgain Debentures of HUDCO and repayment made by CANFINA. HUDCO is withholding transfer of Bonds of Rs. 116.99 crores and unpaid interest warrants of Rs. 53.995 crores. The repayment schedule for balance overdue deposits from Canbank Financial Services Ltd. is under consideration with Govt. of India. In view of the decision taken in a joint meeting held on 12.08.98 in the office of Special Secretary (Banking), Ministry of Finance with Chairman of CANFINA and CMD of Canara Bank and others, the first instalment in the case of CANFINA is likely to be received shortly.

8. The Corporation has undertaken construction of commercial space in Plot No. 14 and 25 at Bhikaji Cama Place, New Delhi as per Ministry of Urban Development (now Ministry of Urban Affairs and Employment (MOUA & E) letter No. J-13012/2/81-LD dated 19.5.1988 and allotment letter No. J-13012/2/81-LD dated 8th November, 1990 and Letter No. L-II-I(979)/92 dated 16.4.1992 which will be disposed off and leased out after construction and out of the surplus generated funds, the payment for construction of 7776 Sqmt. (Plot No. 26) built up space for MOUA & E and 3200 Sqmt. for National Institute of Urban Affairs (NIUA) and Delhi Urban Art Commission (DUAC) in India Habitat Centre is to be made. Expenditure incurred alongwith "Estimated profit on uncompleted project" has been booked to "Work-in-progress" and has been shown under "Current Assets". The Approval of Expenditure Finance Committee is in progress. As per condition of allotment letter, the ground rent is to be revised after 5 years from the date of allotment and is to be calculated on prevailing market value. However, the prevailing market value is yet to be informed by MOUA & E. In the absence of information, the payment/provision has been made as done in previous year on earlier rate.

Keeping in view the opinion from Institute of Chartered Accountants of India regarding recognizing profit on unsold properties, the estimated profit charged till 1994-95 was in excess. However, no adjustment for excess profit has been made during the year for the profit till 1994-95.

9. The Ministry of Urban Affairs and Employment (MOUA & E) vide its letter No. L.II-(974)/96/115 dated 19.3.1996 has allotted land to HUDCO at Pinjrapole near Andrews Ganj, New Delhi on the following terms :

a. 17.6 acres for Community Centre will be leased on payment of a token premium of rupee one and annual ground rent of rupee one per acre for a period of 99 years. The land will be utilised for development as per Urban Design and the resources generated on disposal of these properties will be utilised for construction of Maximum permissible number of houses/flats on 25 acres of residential land as stated in (b) below and on other locations as necessary.

b. 25 acres of residential land for a period of 10 years on payment of a token premium of rupee one and annual ground rent of rupee one per acre. After the expiry of this period, the land alongwith structures to be erected by HUDCO thereon will revert to the MOUA & E. These flats will be taken by the Government on a token rent of rupee one for the entire residential complex. The cost of maintenance, services and municipal taxes etc. will be paid by the Government on actual basis.

c. 18 acres of land is entrusted to HUDCO without payment of any fee for care and maintenance as Zonal Green. HUDCO will develop this area and maintain it till further directions from the Government. The cost of development and maintenance of Zonal Green will be charged by HUDCO to the accounts of the Community Centre as stated in (a) above.

d. No diversion of net resources obtained from development of Community Centre is permitted for HUDCO's normal operations.

Keeping above in view, the expenditure incurred on survey works at Lodhi Estate Bunglow, Kidwai Nagar and Pataudi House amounting to Rs. 25,370/-, Rs. 16,046/- and Rs. 3,43,281/- respectively alongwith on Community centre, Residential Land and Zonal Green has been booked under "Work-in-progress" and has been shown under "Current Assets". Further keeping in view the decision in the meeting with MOUA & E held on 7.9.1995, interest recoverable by HUDCO on funds deployed by it has been provided @17% p.a. since beginning till 28.2.95 on monthly average basis. Thereafter in view of surplus with Hudco w.e.f. 01.3.95 onwards, interest payable on surplus funds available with HUDCO has been provided at the maximum deposit rate for fixed deposits till 31.3.97 and at deposit rate of upto one year with Boards' approval w.e.f. 1.04.97 onwards with State Bank of India offered by them from time to time. Moreover, provision for administrative overheads @1.5 percent of the work done has also been made as per the decision in the aforesaid meeting. Further, there is no diversion of funds.

The lease deed for above space has been executed. The Memorandum of Understanding with MOUA & E is yet to be executed. Further neither separate books of accounts have been maintained nor the surplus has been invested separately, although required as per aforesaid allotment letter but has been subsequently clarified to the MOUA & E stating that these are not possible.

10. In the management of building projects, HUDCO has been procuring turn-key services for planning, designing, construction, quality control etc. from Construction Management Consultant. The in-house staff of HUDCO plays only a coordinator's role.

11. Hudco had allotted hotel site including car parking space, Guest Houses, Restaurants and Shops to M/s. M S Shoes East Limited (MSSL). M/s MSSL paid only first instalment and defaulted in payment of further instalments even during extended time as granted by Hon'ble Court. Consequently Hudco cancelled the allotment and forfeited the first instalment paid by M/s MSSL as per terms of the allotment letter.

Subsequent to cancellation of allotment of Guest Houses/Restaurant/Shops, M/s MSSL filed a suit in the High Court which was later on withdrawn by them. However a fresh suit in the Court of Additional Distt. Judge (ADJ) was filed by them and stay order against HUDCO has been given by Hon'ble court which has been further appealed in Delhi High Court by Hudco. The matter is subjudice.

Further on cancellation of allotment of Hotel site/Car Parking space, Hudco decided to reallot these to the highest bidder i.e. M/s Leela Hotel and Conventional Centre (LHCC). However, before the allotment, M/s MSSL filed suit with ADJ for status-quo. The Hon'ble ADJ directed the company to maintain status-quo, which was vacated later on. On vacation of the status-quo order by ADJ, Hudco allotted the site to M/s LHCC vide letter dated 31.3.97 which is subject to the final outcome of the decision of ADJ on the suit filed by M/s MSSL. M/s MSSL also filed an appeal in Delhi High Court against the vacation of the status-quo. The final decision of Court cases are yet to be received. Further, the possession of the land has been handed over to M/s LHCC and it has also paid first and second instalments.

No accountal of interest/penal interest and refund/forfeiture of amount received from M/s M.S. Shoes East Ltd. (MSSL) has been made, since the cases are subjudice.

12. M/s Ansal Properties and Industries Ltd. (APIL) was allotted a site in shopping arcade at Andrews Ganj Project (AGP). First instalment was paid by them in time. Although the possession was given on 10.11.95, the payment of IInd and IIIrd instalments were not paid in time by M/s APIL as per allotment letter due to delay in Sanction/regularisation of the plans of the car parking space. Since the plans for shopping arcade to be build by M/s APIL were not entertained by Municipal Corporation of Delhi (MCD) for processing and consequent approval, initial extension of both the instalments for 6 months and further extension of 4 months and 8 days for payment of IInd instalment and 2 months and 4 days for payment of IIIrd instalment were granted by HUDCO to M/s APIL after its approval by the Board. The Board also decided to refer the matter of further extension to Government for approval which was accordingly referred. While the matter was under consideration of the Government, legal opinion from Solicitor General of India was taken and in view of the legal opinion, the Company decided to communicate to M/s. APIL the Board's decision of extension of IInd and IIIrd instalments by 4 months 8 days and 2 months 4 days respectively which is subject to the approval of the Government of India and is still awaited. The IInd and IIIrd instalments have since been paid by M/s. APIL. The ground rent has also been paid by M/s. APIL considering the period of 11.7.96 to 10.7.97. However M/s APIL has gone in arbitration for payment of ground rent. The decision of arbitration is pending.

No provision for interest payable to M/s. APIL has been made for delay in handing over of the site.

13. Letters for confirmation of balances had been sent to borrowing agencies stating that in case confirmation is not received within a period of 15 days from the date of the letter, then balances as intimated by HUDCO will be taken as confirmed.

15. Keeping in view the agreements with the borrowing agencies, the credits in the loan cards have been given on the actual dates of credits given by banks.

16. As per the accepted principle, the Corporation is showing the advances to the contractors/suppliers which are adjustable/recoverable from their subsequent bills under the head "Loans and Advances-others".

17. HUDCO has followed guidelines circulated by National Housing Bank regarding prudential norms for Income Recognition etc. in respect of both Non Government guaranteed and Government guaranteed loans except as per following details :

a) No provision has been made for amounts recoverable from CANFINA and ABFSL since repayment plan for CANFINA is under consideration of the Government of India. Similarly, ABFSL has offered to repay the entire principal amount along with interest upto due dates in exchange of Bonds withheld by HUDCO for transfer in their favour. No interest income has, however, been accounted for after maturity dates of deposits outstanding with CANFINA and ABFSL. The total amount outstanding from CANFINA and ABFSL is Rs. 321.97 crores (principal Rs. 319.91 crores and interest Rs. 2.06 crores). HUDCO is withholding transfer of Bonds of Rs. 100.99 crores from Canara Bank and CANFINA, unpaid interest on bonds (interest warrants withheld) of Rs. 53.995 crores and Bonds for Rs. 16 crores received from ABFSL. Accordingly, the provision not made by HUDCO works out to Rs. 150.985 crores.

b. Pending receipt of approval/directions on the request made by the Company to NHB to write off over a period of 5 years w.e.f. 1.04.98, the interest income of Rs. 27.49 crores accounted for upto 31.03.97, on accrual basis on loans and advance guaranteed by State Government which are in default for more than 6 months, continued to be shown under "Loans and Advances" and not provided for.

18. During the year, HUDCO has accepted deposits from public. As on 31.3.1998, the outstanding unclaimed public deposits was Rs. 1,05,176/-.

19. Provision for income tax includes provision for wealth tax as applicable under the Wealth Tax Act.

20. The Chairman and Managing Director and the Wholetime Directors are entitled to use staff car for private use upto 1000 kms. with reimbursment of Rs. 250/- per month.

23. The company is liable to pay guarantee fee on the outstanding amount of SLR Debentures guaranteed by Government of India. The Company has paid Government guarantee fee upto the year 1997-98 for SLR Debenture issued during 1990-91 and onwards. No additional demand received from Government of India for outstanding amount pertaining to years prior to 1990-91 and consequently no provision for payment of Government guarantee fee of Rs. 11.10 crores (Current Year Rs. 1.00 crores and Prior Year Rs. 10.10 crores) and penalty, if any, for SLR Debentures prior to 1990-91 has been made.

24. No provision has been made for payment of Ex-gratia (in lieu of Bonus) for 1997-98 in the absence of Government orders for its payment.

25. HUDCO has executed Interior works for NIUA & DUAC at IHC as per the directions of the Ministry of Urban Affairs & Employment (MOUA&E). As per letter No. HUDCO/MOU/ECP/95/1166 dated 18.4.95, the expenditure was to be met out of surplus from Andrews Ganj Project. The MOUA&E has further vide their letter No. J-13026/5/97-LD dated 9.7.97 informed to meet it out of the surplus created from Bhikaji Cama Place Project. However based on Board approvals, from time to time, the adjustment of expenditure out of surplus from Andrews Ganj Project was referred to MOUA&E which has not been accepted by them. Further COD in its meeting held on 27.3.98 decided that the expenditure will be met out of the surplus of AGP and reference to the Ministry should be further followed up in the context of the decision taken in the MOUA&E under the chairmanship of Secretary, Urban Development.

However pending confirmation from the MOUA&E, the net expenditure of Rs. 65.83 lacs (after adjustment of Rs. 5.50 lakhs received from DUAC) has been booked under "Amount recoverable from Ministry of Urban Affairs and Employment".

26. In respect of investment made in equity shares of M/s AEC Cements and Construction Ltd aggregating to Rs. 10.00 lacs, no provision has been made for fall in value of shares since M/s Ahmedabad Electricity Company Ltd. has proposed to take over the entire equity at cost. The Board has accepted the proposal. The matter is still under process and necessary adjustment will be made after finalisation.

27. The Company is releasing first and subsequent instalment of loan against schemes proposed to be covered by State Government Guarantees based on the receipt of Government order/letter indicating its commitment to stand guarantee. Accordingly, loans released under this category have been classified as "Government Guaranteed Loans".

28. Provisions towards bad and doubtful debts for the year 1997-98 is Rs. 29.83 crores, of which Rs. 26.77 crores has been appropriated/utilised during the year from the Special Reserve created under section 36 (1)(viii) of the Income Tax Act, 1961, in accordance with the guidelines issued by Reserve Bank of India applicable to Financial Institutions and Rs. 3.06 crores has been shown under provision for debts, loans and advances.

29. In terms of Govt. directive conveyed vide letter No. O-17024/47/97-HI dated 16th March, 1998 received from the Ministry of Urban Affairs and Employment stating that the President of India is pleased to direct that interest on loans disbursed by HUDCO for reconstruction/repairs of EWS/LIG houses by the victims of Earthquake Victims Schemes of Jabalpur and its adjoining areas will be waived for the first three years. Further, the Ministry vide its letter No. N-14013/1/92-HI dated 3rd April, 1998 conveyed that the funds on account of interest differential will be released during 1998-99. Accordingly, an amount of Rs. 65.57 lacs has been shown as receivable from Government of India on account of Jabalpur Earthquake Victims scheme for the year 1997-98. Ministry of Urban Affairs and Employment has provided for interest subsidy of Rs. 2.50 crores to Hudco in respect of areas affected by natural calamities in the Budget of 1998-99.

30. Pending issue of Stamp Duty exemption orders by the Government of India and issue of notification by Central Board of Direct Taxes, Bond Certificates have not been issued in respect of Bonds (Series VI, VII, VIII, IX, X and SPS) and 12.30% Debentures-2008 issued by HUDCO.

31. An amount of Rs. 2.91 lacs (including Rs. 0.26 lacs pertains to previous year) has been paid to the Ministry of Urban Affairs and Employment towards interest on loan of Rs. 772.18 lacs for 11 days for the period from 31.3.97 to 10.4.97 as the loan was released by Ministry through Cheque No. 303633 dated 31.03.97, the above cheque was credited in Hudco's account on 11.04.97.

32. No. provision for amount recoverable of Rs. 45.05 lacs has been made from M/s Ultimate on whose risk and cost the balance interior work of Hudco Bhawan was got done from M/s Nuchem. The matter is under arbitration.

34. a. An amount of Rs. 79 lacs has been converted into interest free loan recoverable from Meerut Development Authority over a period of seven years in equal quarterly instalments. Accordingly, penal charges for the year 1995-96 amounting to Rs. 53 lacs has been taken as interest income during the year. Further, a sum of Rs. 12 lakhs has been recovered during the year.

b. An amount of Rs. 2.51 crores on account of penal charges for the year 1995-96 in respect of Ghaziabad Development Authority has been converted into interest free loan recoverable over a period of 7 years in equal quarterly instalments. Accordingly, during the year an amount of Rs. 2.51 crores is taken as interest income.

35. A sum of Rs. 2.09 lakhs (previous year Rs. 1.57 lakhs) shown on account of differential interest as on 31.3.1998 payable to borrowing agencies, on loans identified as banking sector schemes meant for Scheduled Castes/Scheduled Tribes (SC/ST) has been made.

36. An amount of Rs. 542.60 lakhs (previous year Rs. 628.68 lakhs) shown as "EWS Float Refundable" under current liabilities represents the levy of two percent/one percent on sale price given in loan application submitted to HUDCO for various housing schemes other than EWS schemes. This float amount is to be given as a grant to the concerned agencies for the implementation of EWS schemes anywhere in the State.

37. As on 31.3.1998, a sum of Rs. 1116.94 lacs and Rs. 79.71 lacs as interest and additional interest in excess respectively has been shown under current liabilities. These accounts are under reconciliation and shall be adjusted in subsequent years.

38. No provision has been made for liability in respect of arrears of pay of employees which are to be revised based on the recommendations of BPE, since the amount is unascertainable.

39. Some of the outstanding entries in (a) misc. advance, (b) advance against expenditure, (c) misc. recovery others and staff, (d) sundry debtors (e) staff loans, could not be adjusted for want of certain details. Follow up action has already been initiated for recovery/adjustment. However, a provision of Rs. 36.30 lacs has been made against the amounts lying unadjusted for more than 3 years.

40. An amount of Rs. 11 crores is received from the Government of India, Ministry of Urban Affairs & Employment vide letter No. N-12012/1/90-HI dated 4/6.02.98 as advance against equity pending increase in the authorised share capital.

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Mar 31, 1997

Not available.