Click it and Unblock the Notifications
Notes to Accounts of Reliance Home Finance Ltd.
Mar 31, 2023
1. Current year, the Company does not have any Fixed deposits. However, during the previous year, Fixed deposit rate of interest was between 2.90% to 3.50% & placed for less than 3 months.
2. Refer note no. 58 relating to Implementation of Resolution Plan and Business Transfer Agreement.
1. Fixed deposits with bank held as Credit enhancement towards securitisation transaction kept as Nil (March 31, 2022 - '' 332.59 crore). During the previous year, Fixed deposits rate of interest was between 3.90% to 6.50% & placed for more than 3 months.
2. Refer note no. 58 relating to Implementation of Resolution Plan and Business Transfer Agreement.
1. Refer note no. 58 relating to Implementation of Resolution Plan and Business Transfer Agreement.
2. An analysis of changes in gross carrying amount and corresponding expected credit loss in relation to the lending is as follows.
15 Derivative financial instruments
The Company enters into derivatives for risk management purposes. Derivatives held for risk management purposes include hedges that either meet the hedge accounting requirements or hedges that are economic hedges, but the Company has elected not to apply hedge accounting requirements.
Disclosure of amounts payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based onthe information available with the Company regarding the status of registration of such vendors under the said Act. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date.
1. Refer note no. 58 relating to Implementation of Resolution Plan and Business Transfer Agreement.
Prior to execution of Business Transfer Agreement, the Listed Secured Redeemable Non-Convertible Debentures of the Company were secured by way of first pari-passu legal mortgage and charge on the Company''s immovable property and additional pari-passu charge by way of hypothecation on present and future book debts / receivables, outstanding money (loan book), receivable claims of the Company with other secured lenders, except those book debts and receivables charged / to be charged in favour of National Housing Bank for refinance availed / to be availed from them.
Subsequent to transfer of business undertaking, the Listed Secured Redeemable Non-Convertible Debentures of the Company aggregating to '' 0.95 crore as on March 31, 2023 are secured by way of a lien marked fixed deposit amounting to '' 1.60 crore in favour of IDBI Trusteeship Services Limited (Debenture Trustees) placed by Reliance Commercial Finance Limited, a wholly-owned subsidiary of Authum Investment & Infrastructure Limited (Resolution Applicant).The asset cover is above hundred percent of outstanding debentures.
(a) Equity shares held by holding company: Not Applicable
(b) Rights, Preferences and Restrictions:
i) In respect of Equity shares:
The Company has one class of equity shares having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder.
ii) In respect of Preference shares:
3,10,35,980, 8% Cumulative Non-Convertible Redeemable Preference Shares of '' 10 each issued and alloted on August 9,2017 for a term of five years, without payment being received in cash were unredeemed, in view of Company''s current financial position.
a) Debenture redemption reserve
(1) Pursuant to Section 71 of the Companies Act, 2013 and circular 04/2013, read with notification issued date June 19, 2016 issued by Ministry of Corporate Affairs, the Company is required to transfer 25% of the value of the outstanding debentures issued through public issue as per the present SEBI (Issue and Listing of Debt Securities) Regulation, 2008 to Debenture redemption reserve (DRR) and no DRR is required in case of privately placed debenture.
(2) As per the notification G.S.R. 574(E) dated August 16, 2019, the Ministry of Corporate Affairs has amended the Companies (Share Capital & Debentures) Rules, DRR need not be created for debentures issued by a Non-Banking Finance Company subsequent to the notification date. The Company being a housing finance company registered with the National Housing Bank, is not required to transfer to DRR in respect of debentures in terms of Rule 18(7) of the Companies (Share Capital and Debentures) Rules, 2014.
(3) On redemption of the debentures for which the DRR is created, the amounts no longer necessary to be retained in this account need to be transferred to the retained earnings.
b) Securities premium
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
c) Reserve fund
The Reserve fund created as per Section 29C of the NHB Act, 1987, qualifies for deduction as specified u/s 36(1)(viii) of the Income Tax Act, 1961 and accordingly Company has been availing tax benefits for such transfer. An amount equivalent to 20% of the profits is transferred to special reserve fund as per Prudential Norms of NHB.
d) Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to statutory reserve, general reserve and dividend distributed to shareholders.
e) Employee stock option scheme
The Employee stock option scheme is used to recognise the grant date fair value of options issued to employees under share based.
Basic earnings per share (EPS) is calculated by dividing the net profit for the year attributable to equity holders of Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is calculated by dividing the net profit for the year attributable to equity holders of Company (after adjusting for interest on the convertible preference shares and interest on the convertible bond, in each case, net of tax) by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares;
Information on maturity pattern is based on the reasonable assumptions made by the Management.
a) Valuation principle
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, as explained in significant accounting policies of the year ended March 31, 2023.
Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
⢠Listed equity investments (other than subsidiaries and associates) - Quoted bid price on stock exchange
⢠Mutual fund - net asset value of the scheme
⢠Debentures or bonds - based on market yield for instruments with similar risk / maturity, etc.
⢠Interest rate swaps - the present value of the estimated future cash flows based on observable yield curves
⢠Private equity investment fund - price to book value method and
⢠Other financial instruments - discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, a contingent consideration receivable and certain derivative contracts, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
For remaining financial assets and liabilities that are measured at amortised cost, the carrying amounts are same as fair values.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Ind AS. An explanation of each level follows underneath the table.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
There are no transfers between levels 1, 2 and 3 during the year. For transfers in and out of level 3 measurements.
37. Financial risk management Introduction
The Company has operations in India. Whilst risk is inherent in the company''s activities, it is managed through and integrated risk management framework, including ongoing identification, measurement and monitoring, subject to risk limit and other controls. The company is exposed to credit risk, liquidity risk and market risk.It is also subject to various operation and regulatory risks. Hence this process of risk management is critical to the Company''s continuing profitability and each individual witin the company is accountable for the risk exposures relating to his or her responsibilities.
The company''s risk management is carried out by Risk Management Committe under policies approved by the board of directors. The board provides written principles for overall risk management, as well as policies covering specific area.
In order to bring collective knowledge in decision making, the Company has undertaken a Committee approach to deal with the major risk arising in the organisation.
Risk Management Committee of Board
The Company has a Risk Management Committee. The Committee comprises of Directors of the Company. The composition and terms of reference of Risk Management Committee is in compliance with the provisions of the Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021and other applicable laws.
The Committee is authorised to discharge its responsibilities as follows:
1. Overseeing and approving the risk management, internal compliance and control policies and procedures of the Company;
2. Overseeing the design and implementation of the risk management and internal control systems (including reporting and internal audit systems), in conjunction with existing business processes and systems, to manage the Company''s material business risks;
3. Review and monitor the risk management plan, cyber security and related risks;
4. Setting reporting guidelines for management;
5. Establishing policies for the monitoring and evaluation of risk management systems to assess the effectiveness of those systems in minimizing risks that may impact adversely on the business objectives of the Company;
6. Oversight of internal systems to evaluate compliance with corporate policies;
7. Providing guidance to the Board on making the Company''s risk management policies.
8. Formulating a detailed risk management policy which shall include:
a. A framework for identification of internal and external risks specifically faced by the listed entity, in particular including
financial, operational, sectoral, sustainability (particularly, ESG related risks), information, cyber security risks or any other risk as may be determined by the Committee.
b. Measures for risk mitigation including systems and processes for internal control of identified risks.
c. Business continuity plan.
9. Ensuring that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company;
10. Monitoring and overseeing implementation of the risk management policy, including evaluating the adequacy of risk management systems;
11. Periodically reviewing the risk management policy, at least once in two years, including by considering the changing industry dynamics and evolving complexity;
12. Keeping the board of directors informed about the nature and content of its discussions, recommendations and actions to be taken;
13. Reviewing the appointment, removal and terms of remuneration of the Chief Risk Officer (if any).
14. Coordinate Committee activities with other committees, in instances where there is any overlap with activities of such committees, as per the framework laid down by the Board of Directors.
Credit Risk Management Committee (CRMC), Operation Risk Management Committee (ORMC) and Information Security Risk Management Committee (ISRMC)
The Company has an Internal Credit Risk Management Committee, Operation Risk Management Committee and Information Security Risk Management Committee whose major function include review of Product Policies, assessment of risks in the Company and suggesting control/mitigation measures thereof, protecting information by mitigating information risks.
Credit risk is the risk of suffering financial loss, should any of the Company''s customers, clients or market counterparties fail to fulfil their contractual obligations to the Company. Credit risk arises mainly from loans and advances, and loan commitments arising from such lending activities.
Credit risk is the single largest risk for the Company''s business; management therefore carefully manages its exposure to credit risk. The credit risk management and control are centralised in a credit risk management team which reports regularly to the Board of Directors.
(a) Loans and advances (incl. loan commitments and guarantees)
The estimation of credit exposure for risk management purposes is complex and requires the use of models, as the exposure varies with changes in market conditions, expected cash flows and the passage of time. The assessment of credit risk of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, of the associated loss ratios and of default correlations between counterparties. The Company measures credit risk using Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD). This is similar to the approach used for the purposes of measuring Expected Credit Loss (ECL) under Ind AS 109.
2) Expected credit loss measurement
Ind AS 1 09 outlines a ''three-stage'' model for impairment based on changes in credit quality since initial recognition as summarised below:
A financial instrument that is not credit-impaired on initial recognition is classified in ''Stage 1'' and has its credit risk continuously monitored by the Company.
If a significant increase in credit risk (''SICR'') since initial recognition is identified, the financial instrument is moved to ''Stage 2'' but is not yet deemed to be credit-impaired.
If the financial instrument is credit-impaired, the financial instrument is then moved to ''Stage 3''.
Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of lifetime expected credit losses that result from default events possible within the next 12 months. Instruments in Stages 2 or 3 have their ECL measured based on expected credit losses on a lifetime basis.
3) Significant increase in credit risk (SICR)
The approach provides a principle based framework to compute expected credit losses (ECL). It requires an entity to evaluate the credit risk in a financial asset as on each reporting date. In case, there is no significant increase in credit risk, asset is classified as a Stage 1 asset and an amount equal to 12-month expected credit losses is provided for. However, in case there is a significant increase in credit risk, the asset is classified as a Stage 2 asset and the entity is required to provide for an amount equal to the lifetime expected credit losses. Already impaired assets are classified as Stage 3 assets and the entity is required to provide for an amount equal to the lifetime expected credit losses.
As mentioned above, under IND AS 109 all assets are further classified into three stages based on the change in credit risk since inception. These three stages are described below:
Stage 1 includes financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date. For these assets, 12-month expected credit losses (''ECL'') are recognized.
Stage 2 includes financial instruments that have had a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that do not have objective evidence of impairment. For these assets, lifetime ECL are recognized.
Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. For these assets, lifetime ECL is recognized.
Staging can be done basis qualitative and quantitative criteria with DPD as a backstop arrangement.
Quantitative criteria:
Financial instruments that have had a significant increase in credit risk since initial recognition to where DPD status is greater than 30 DPD and less than or equal to 90 DPD (unless they have low credit risk at the reporting date) but that do not have objective evidence of NPA. For these assets, lifetime ECL are recognized. Lifetime ECL are the expected credit losses that result from all possible default events over the expected life of the financial instrument.
These thresholds have been determined separately for Home Loan, LAP, Construction finance and Other products by assessing how the Lifetime PD moves prior to an instrument becoming delinquent. The Lifetime PD movements on instruments which do not subsequently become delinquent have also been assessed, to identify the "natural" movement in Lifetime PD which is not considered indicative of a significant increase in credit risk.
Qualitative criteria:
For Construction Finance portfolios, if the borrower meets one or more of the following criteria:
⢠Delay in project due to approval issue
⢠Slow down in unit sales
⢠Slow down in collections from customers
The assessment of SICR incorporates forward-looking information and is performed on a quarterly basis at a portfolio level for all Retail & Construction Finance instruments held by the Company.
The above approach is quantitatively modelled using following formula
ECL = Probability of default (PD) x Exposure at default (EAD) x Loss given default (LGD)
This model defines these parameters based on historical data and suitable regulatory assumptions.
⢠Probability of default: It defines the probability of a borrower to default in its commitment over a time of the asset. In IND AS 109 context, PD is calculated for two time horizon. 12 Months PD and life time PD. ^12 Months PD: likelihood of default in 12 months for an asset â¢Life time PD: likelihood of default in the lifetime of an asset.
⢠Exposure At default: It is the total amount of an asset the entity is exposed to at the time of default. EAD is defined based on the characteristics of the asset. Here EAD can be considered as principal plus accrued interest. EAD can be alternatively arrived at by discounting contractual cash flows with EIR. For current computations, we are following the first definition of principal plus accrued interest that is slightly more conservative approach. For example in a loan portfolio, EAD is dependent on the outstanding exposure of an asset, sanctioned amount of a loan and credit conversion factor for non-funded exposures. Amortization schedule may be considered for EAD in future, though for the purpose of this project EAD does not consider amortization schedule which is on a conservative basis.
⢠Loss Given Default (LGD): It is the part of an asset that is lost provided the asset default. The recovery rate is derived as a ratio of discounted value of recovery cash flows (incorporating the recovery time) to total exposure amount at the time of default. Recovery rate is calculated for each segment separately. Loss given default is computed as (1 - recovery rate) in percentage terms.LGD is measured in a way that reflects the time value of money. This means that cash shortfalls associated with default are required to be discounted back to the default date. However note that for LGD, the historical data points will be subsequently retained to ensure the data richness that is important for LGD computations.
4) Definition of default and credit-impaired assets
The Company defines a financial instrument as in default, which is fully aligned with the definition of credit impaired, when it meets one or more of the following criteria:
Quantitative criteria
An account is classified as a default if it''s DPD > 90 i.e. the account has failed to make it contractual payments for more than 90 days.
Qualitative criteria
The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. These are instances where:
⢠The borrower is in long-term forbearance
⢠The borrower is deceased
⢠The borrower is insolvent
⢠The borrower committed fraud
⢠The borrower is in breach of financial covenant(s)
⢠An active market for that financial asset has disappeared because of financial difficulties
⢠Concessions have been made by the lender relating to the borrower''s financial difficulty
⢠It is becoming probable that the borrower will enter bankruptcy
⢠Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.
The criteria above have been applied to all financial instruments held by the Company and are consistent with the definition of default used for internal credit risk management purposes. The default definition has been applied consistently to model the Probability of Default (PD), Exposure at Default (EAD) and Loss given Default (LGD) throughout the Company''s expected loss calculations.
5) ECL Model Development process
a) Segmentation
As discussed previously the first step in the model development process is segmentation / pooling. This is especially important to treat similar type of loans reflecting homogeneous risk characteristics in a consistent manner. The segmentation scheme is based on the amount of data available and historic performance. It was observed that the entire portfolio had sufficient population distribution under Affordable Housing (AH), Housing Loan (HL), Loan against Property (LAP) & Construction Finance (CF). Due to insufficient number of accounts on SME, MF & Infra portfolios they are merged into a single sub portfolio "Others" post discussion with management. However, going forward depending upon availability of data, size of the portfolio the segmentation can be reviewed.
It is observed that the even though Construction Finance has a relatively small number of accounts compared to the other major portfolios it has the highest share in terms of sanctioned amount amongst all the other portfolios. This indicates that the average ticket size under CF is substantially bigger compared to other portfolios. Affordable Housing has the largest share in terms of the number of accounts and the lowest in terms of sanctioned amount among the large. Meanwhile, SME, Infra & MF combined constitute the smallest pool ("Others") with the least number of accounts and combined sanctioned amount.
b) Staging & Historical Default Rates
In order to compute the probability of default a snapshot approach was adopted in order to observe the transition of accounts into different "pools" on a yearly basis (Ian to Jan, year-on-year). Year on year delinquent and non- delinquent information at account level for the period of 2012-2018 was used for analyzing transition of accounts into defined DPD (days-past-due) buckets. These DPD buckets are defined as:
|
Stage Classification |
DPD Buckets |
|
Stage 1 |
Bucket 0 (DPD 0) |
|
Bucket 1 (DPD 1-30) |
|
|
Stage 2 |
Bucket 2 (DPD 31-60) |
|
Bucket 3 (DPD 61-90) |
|
|
Stage 3 |
Bucket 4 (DPD 90 ) |
Upon observing the yearly default rates across the years, it was noted that these rate varied randomly against macroeconomic variables due to fewer number of data points as well as defaults , while there was been no drastic change in macroeconomic conditions over the last few years. Considering this, we have computed forward looking PD basis weighted average of last 4 years default rate in the ratio 1:2:3:4, with 4 being assigned to the most recent year. Going ahead, with sufficient data points available, other approaches can be tested. Hence in order to compute the Point-in-Time (PiT) PDs as expected in IFRS 9 standard a weighted average of the probability of defaults were taken for the last 4 years with higher weights for more recent years.
c) Lifetime Probablitiy of Default (PD)
The remaining maturity is calculated initially by comparing maturity date with reporting date which forms the basis of probability of default over the lifetime of assets.
Note that if an account has already matured before the reporting date then the remaining life is assumed to be 1 year to ensure that the computation is on conservative side to avoid negative tenure coming into picture.
Lifetime PD is the probability of a default when assessed over the entire lifetime of a financial asset. It is also referred as cumulative PD.
For all the portfolios, using the projected 12 Months PD and Long term Default rates, lifetime PD is calculated using survival logic for each asset type and each pool for the remaining lifetime of the assets.
The underlying assumption of this method is that is considers the same macroeconomic scenario for following year as that of first year. Hence, marginal PD for all the following years will be same as that of first year. Also the PD has been computed at borrower level and not facility level. In case a borrower has multiple facilities, we have taken DPD status of the latest facility of the borrower in order to compute the transition matrix.
We have taken for the Lifetime PD maturity up to 10 years for AH, HL, LAP Others and 6 years for CF on the basis historical observations.
Exposure at default is the total value an entity is exposed to when a loan defaults. It is the predicted amount of exposure that an entity may be exposed to when a debtor defaults on a loan. The outstanding principal and accrued interest reported as of the reporting date for computation of ECL is used as the EAD for all the portfolios. This is a conservative approach compared to the one where amortization schedule is used to arrive at EAD. Also prepayment is not considered, which is again a conservative approach. Any form of cash collateral would be directly adjusted to EAD. Also securitization considered under loan book and ECL is calculated as per procedure laid down in this document.
e) Loss given default (LGD)
Historical recovery has been considered to calculate Loss Given Default (LGD). For all closed NPA cases (fully recovered, fully written off, partial write off) which defaulted between January 2012 and March 2021 are considered while arriving at historical LGD. The computation was done base on the time value recovery on sale of the underlying collaterals in these NPA Assets. The assumptions taken by the management includes the discounted recovery value is based on Customer IRR. Recovery has been computed for 60 months from the date of NPA basis analysis done on historical recovery data. We have capped the discounted recovery to the EAD as of NPA date.
f) ECL computation
The Final ECL computation is done based on the weighted multiplies on the lifetime PD value, Exposure at default and the historical loss given default values. However prudent additional provision are made in stressed accounts where the management had seen deterioration in the security values.
7) Collateral and other credit enhancements
The Company employs a range of policies and practices to mitigate credit risk. The most common of these is accepting collateral for funds advanced. The Company has internal policies on the acceptability of specific classes of collateral or credit risk mitigation.
The Company prepares a valuation of the collateral obtained as part of the loan origination process. The principal collateral types for loans and advances are:
⢠Mortgages over residential properties;
⢠Charges over business assets such as premises, inventory and accounts receivable; and
⢠Longer-term finance and lending to corporate entities are generally secured.
The Company closely monitors collateral held for financial assets considered to be credit-impaired, as it becomes more likely that the Company will take possession of collateral to mitigate potential credit losses.
The following table shows the distribution of LTV ratios for the Company''s mortgage portfolio:
The Company writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include (i) ceasing enforcement activity and (ii) where the Company''s recovery method is foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation of recovering in full.
9) Modification of financial assets
The Company sometimes modifies the terms of loans provided to customers due to commercial renegotiations, or for distressed loans, with a view to maximising recovery.
Such restructuring activities include extended payment term arrangements, payment holidays and payment forgiveness. Restructuring policies and practices are based on indicators or criteria which, in the judgement of management, indicate that payment will most likely continue. These policies are kept under continuous review. Restructuring is most commonly applied to term loans.
The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original asset. The Company monitors the subsequent performance of modified assets. The Company may determine that the credit risk has significantly improved after restructuring, so that the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1 (12-month ECL). This is only the case for assets which have performed in accordance with the new terms for twelve consecutive months or more.
The Company continues to monitor if there is a subsequent significant increase in credit risk in relation to such assets through the use of specific models for modified assets.
38 Liquidity risk and funding management
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.
ALCO committee monitors rolling forecasts of the Company liquidity position (comprising of the undrawn facilities), maturities of the financial assets(both loan and investment) and cash / cash equivalents. In addition, the Company''s liquidity management policy involves projecting cash flows in major timeframe buckets and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. Also behavioural analysis of the pre-payments of loan assets is undertaken based on past statistical occurances and incorporated in the cash flow projections. The ALCO committee is also appraised of the sensitivity variables that effects the projected cash flows and the best & worst case scenerios are appraised for any change in these variables.
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR.
b) Analysis of financial assets and liabilities by remaining contractual maturities
The table below summarises the maturity profile of the undiscounted cash flows of the Company''s financial assets and liabilities as at March 31. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Market the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates and equity prices.
2) Cash flow and fair value interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company policy is to hedge its interest rate risk by means of disbursing only floating rate loans and any increase in borrowing cost is subsequently passed on to the loan customers.
The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
During the year ended March 31, 2023 and March 31, 2022, there were no Assignment deals are undertaken by Company.
3) Transferred financial assets that are derecognised in their entirety but where the Company has continuing involvement
The Company has not transferred any assets that are derecognised in their entirety where the Company continues to have continuing involvement.
The Company is mainly engaged in the housing finance business and all other activities revolve around the main business of the Company. Further, all activities are conducted within India and as such there is no separate reportable segment, as per the Ind AS 108 - "Operating Segments" specified under Section 133 of the Act.
For the purpose of the Company''s capital management, capital includes issued capital and other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company, when managing capital, is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure, so as to maximize shareholders'' value.
As at 31st March, 2023, the Company has only one class of equity shares and has Debts & subordinate Liabilities. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or reinvestments into business based on its long term financial plans
The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI''s capital adequacy guidelines, the Company is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier I and Tier II capital, shall not be less than 15 percent of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet. The Tier I capital, at any point of time, shall not be less than 10%. The Company has complied with all regulatory requirements related capital and capital adequacy ratios as prescribed by RBI.
"Tier I Capital" means owned fund as reduced by investment in shares of other non-banking financial companies and in shares, debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding, in aggregate, ten per cent of the owned fund.
"Owned Fund" means paid up equity capital, preference shares which are compulsorily convertible into equity, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, as reduced by accumulated loss balance, book value of intangible assets and deferred revenue expenditure, if any
Tier II capital" includes the following -
a. preference shares other than those which are compulsorily convertible into equity;
b. revaluation reserves at discounted rate of fifty five percent;
c. General provisions (including that for Standard Assets) and loss reserves to the extent these are not attributable to actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses, to the extent of one and one fourth percent of risk weighted assets.
d. hybrid debt capital instruments; and
e. subordinated debt; to the extent the aggregate does not exceed Tier I capital Aggregate Risk Weighted Assets -
Under RBI Guidelines, degrees of credit risk expressed as percentage weightages have been assigned to each of the on-balance sheet assets and off- balance sheet assets. Hence, the value of each of the on-balance sheet assets and off- balance sheet assets requires to be multiplied by the relevant risk weights to arrive at risk adjusted value of assets. The aggregate shall be taken into account for reckoning the minimum capital ratio.
i) The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.
ii) General Descriptions of significant defined plans:
Gratuity Plan:
Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement, in terms of the provisions of the Payment of Gratuity Act 1972 or as per the Company''s Scheme whichever is more beneficial.
iii) The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occusing at the end reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumtions would occur in isolation of one another as some of the assumtions may be corelated.
Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit meathod at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.
iv) Characteristics of defined benefit plan
The entity has a defined benefit gratuity plan in India (funded). The entity''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.
The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.
v) Risks associated with defined benefit plan
Gratuity is a defined benefit plan and company is exposed to the following risks:
Interest Rate Risk: A fall in the discount rate which is linked to the government securities, rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, increase in the salary of the members more than assumed level will increase the plan''s liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to the market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of the Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality Risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.
Gratuity is a defined benefit plan and entity is exposed to the Following Risks:
c) Other Employee Benefit
Phantom Stock Option
As a long-term incentive plan to employees, the Company has initiated Phantom Stock Option Plan which are cash settlement rights where the employees are entitled to get cash compensation based on agreed formulae. The employees are entitled to receive cash payment equivalent to appreciation in the value over the defined base price of the shares. The present value of the obligation under such plan is determined based on actuarial valuation.
II. Terms and conditions of the Scheme Date of grant
Details of vesting schedule and condition: Phantom stock granted under the scheme would vest within not less than 1 year and not more than 5 years from the last date of vesting of such Phantom stock option. Vesting of Phantom stock option would be subject to continued employment with the Company and the Phantom stock option would vest on passage of time.
Appreciation as per Phantom stock option: Excess of fair market of share on the date of exercise determined in terms of Phantom stock option scheme over the base price.
Exercise Period
In case of continuation of employment: Vested Phantom stock option can be exercised any time Upto 3 years from the date of last vesting of Phantom stock options and
In case of cessation of employment: Different periods depending on kind of cessation as per provision of the Phantom stock option scheme
Settlement of Phantom Stock Option: Within 90 days from the date of exercise by cash
III. Fair value of the Option granted was estimated on the date of grant based on the following assumptions
Discount rate - 6.96% per annum Expected life - 4 years
IV. The Company''s liability toward the Phantom stock option is accounted for on the basis of an independent actuarial valuation done at the year end. As per the valuation the liability for the year is '' Nil (Previous year Nil) which is debited to Statement of profit and loss account and the liability is shown in the Balance sheet under the head Other current liabilities and clubbed under Other payables.
1 Figures in bracket indicate previous year figures
2 The current year and previous year figures are excluding GST/service tax
3 Expenses incurred towards public utilities services such as telephone and electricity charges and any provisional expenses have not been considered for related party transaction.
4 Amount of '' 0.00 denotes less than '' 50,000/-
5 The above disclosed transactions entered during the period of existence of related party relationship. The balances and transactions are not disclosed before existence of related party relationship and after cessation of related party relationship.
i) Forward Rate Agreement (FRA) / Interest Rate Swap (IRS)
The Company has not entered into any Forward Rate Agreement/Interest Rate Swap transactions during the current financial year and in the previous financial year. Hence disclosures relating to Forward Rate Agreement/Interest Rate Swap are not applicable.
ii) Exchange Traded Interest Rate (IR) Derivative
The Company has not entered into any Exchange Traded Interest Rate (IR) Derivatives transactions during the current financial year and in the previous financial year. Hence disclosures relating to Exchange Traded Interest Rate (IR) Derivatives are not applicable.
iii) Disclosures on Risk Exposure in Derivatives
The Company had Board approved risk management policy for capital market exposure including derivatives contract trading. Trading in derivates were primarily for the Market Linked Debentures (MLD) portfolio. Risk Management Team independently calculate sensitivities and revalues portfolio on daily basis and ensures that risk limits are adhered on daily basis. Market risk limits have been established at portfolio level.
The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards there are no foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts (Refer "Significant Accounting Policy" point 1). Post successful implementation of Debt resolution plan, the Company is left with no Debts on account of MLD''s & hence capital market exposure won''t be applicable.
8 Details of Financing of the Parent Company Product
There is no financing of parent company products.
9 Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the Company
The Company does not have any exposure to group companies and others & therfore single borrower Limit / Group borrower limit is not applicable.
Refer note no. 58 relating to Implementation of Resolution Plan and Business Transfer Agreement.
The Company has unsecured advances of '' Nil. (Previous Year '' 20.32 crore). The Company has not financed any unsecured advances against intangible securities such as rights, licenses, authority, etc. as collateral security.
11 Exposure to group companies engaged in real estate business
The Company has no exposure to group companies engaged in real estate business in current and previous year.
The Company has not paid any remuneration to any director of the Company except sitting fees of '' 0.56 crore (previous year '' 0.51 crore) paid to the directors.
Refer to the Management Discussion and Analysis report for the relevant disclosures.
h. Net Profit or Loss for the period, prior period items and changes in accounting policies
During the year there are no changes in the Accounting policies and no prior period items. Accordingly there is no impact on profit / loss of the Company.
i. Revenue Recognition
The Company has not postponed recognition of revenue on account of any pending resolution of significant uncertainties.
j. Indian Accounting Standard 110 -Consolidated Financial Statements (CFS)
The Company does not have any subsidiary and/or any associate & therefore Ind As, 110 is not applicable.
Refer note no. 58 relating to Implementation of Resolution Plan and Business Transfer Agreement.
2 Divergence in Asset Classification and Provisioning
The RBI/NHB has neither assessed any additional provisioning requirements in excess of 5 percent of the reported profits before tax and impairment loss on financial instruments for the financial year ended March 31, 2023, nor identified any additional Gross NPAs in excess of 5% of the reported Gross NPAs for the said period.
49 During the year, the Company has not reclassified / restructured any loan given to parties. Therefore, the disclosures in relation to restructure of loan required as per circulars issued by Reserve Bank of India (RBI) are not required.
5. Details of non-performing financial assets purchased/soldi. Details of non-performing financial assets purchased:
The Company has not purchased non-performing financial assets in the current and previous year.
ii. Details of non-performing financial assets sold:
The Company has not sold non-performing financial assets in the current and previous year.
55 Disclosure pursuant to Schedule V of Clause A.2 of Regulation 34 (3) and Regulation 53(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Company does not have any subsidiary or associate company.
56 Additional Regulatory Information As Per Division iii Schedule iii Of Companies Act, 20131 Title deeds of Immovable Properties
The Company does not have any Immovable properties as at March 31, 2023.
2 Valuation of property, plant and equipment
The Company does not have any property, plant and equipment as at March 31, 2023.
3 Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties
The Company has not granted any loans to promoters, directors, KMP & other related parties during year.
4 Details of Benami Property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1 988 (45 of 1 988) and Rules made thereunder.
5 Borrowings from banks or financial institutions on the basis of security of current asset
During the year, the Company has not borrowed any funds from banks or financial institutions.
The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.
7 Relationship with Struck off Companies
The Company does not have any transactions with the companies struck off under Section 248 of Companies Act, 2013 during the year ended March 31, 2023 and March 31, 2022. Such disclosure has been given on the basis of relevant information compiled by the Company on best effort basis.
8 Registration of charges or satisfaction with Registrar of Companies (ROC)
The Company is yet to file the forms relating to the satisfaction of charges with the Ministry of Corporate Affairs for the charges created in favour of ICA lenders and Debenture Trustees for debenture holders who have been repaid in terms of Resolution Plan.
11 Compliance with approved Scheme(s) of Arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
12 Utilisation of Borrowed funds and share premium
A. During the year, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
B. During the year, the Company has not received any fund from any person(s) or entity(ies),
Mar 31, 2018
Notes:
1 Cash Credit facility of Rs, 567.62 crore (Previous year Rs, 50.00 crore), are secured by pari-passu first charge by hypothecation of all the standard book debts and receivables of the Company, both present and future, except for those book debts and receivables charged / to be charged in favour of National Housing Bank for refinance availed / to be availed, if any, from them, against security not exceeding Rs, 573.86 crore (Previous year Rs, 55.02 crore).
2 In respect of Commercial Papers referred above, maximum face value amount outstanding during the year was Rs, 2,200 crore (Previous year Rs, 2,225 crore).
Note:
Disclosure of amounts payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the Company regarding the status of registration of such vendors under the said Act. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous year.
3 Security clause, maturity profile & rate of interest in respect of Secured Non-Convertible Debentures
(a) Listed Secured Redeemable Non-Convertible Debentures ("Secured NCDs") amounting to Rs, 6,216 crore are secured by way of first pari-passu legal mortgage and charge over the premises situated at Bharuch and additional pari-passu charge by way of hypothecation on the present and future book debts / receivables, outstanding money (loan book), receivable claims of the Company with other secured lenders for an amount of Rs, 5,509 crore, except those book debts and receivables charged / to be charged in favour of National Housing Bank for refinance availed / to be availed from them, of Home Finance Business subject to maintenance of minimum asset coverage of 100% of issue amount and security amounting to Rs, 707 crore is provided by way of first pari-passu hypothecation charge on all present and future book debts and business receivables of Company''s holding company viz. Reliance Capital Limited (except security created / to be created towards securing term loans and cash credit limits). Business receivables include current assets and investments.
(b) Unsecured NCDs amounting to Rs, 773.71 crore (Previous year Rs, 773.71 crore) are in respect to Tier II Subordinate Debts.
* Intra-day transaction considered on gross basis and not net derivatives expiring considered as being traded to arrive at notional principal traded.
iii) Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure
The Company has Board approved risk management policy for capital market exposure including derivatives contract trading. Trading in derivative are primarily for the Market Linked Debentures (MLD) portfolio. Risk Management Team independently calculate sensitivities and revalues portfolio on daily basis and ensures that risk limits are adhered on daily basis. Market risk limits have been established at portfolio level.
The Company has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards has been made in the books of accounts and there are no foreseeable losses on such long-term contracts (including derivative contracts) (Refer "Significant Accounting Policy" point 2(o)).
The Company has chosen to account for the Scheme by the Intrinsic Value Method. The total expense recognised for the period arising from Scheme as per Intrinsic Value Method is Rs, Nil (Previous year Rs, Nil). Had the Company adopted fair value method the net results for the year would have been lower by Rs, 1.46 crore (Previous year Rs, Nil) [net of tax saving Rs, 0.97 crore (Previous year Rs, Nil)] and accordingly EPS (Both Basic and Diluted) would have been lower by Rs, 0.03 (Previous year Rs, Nil).
b) Leave plan
Encashment of leave can be availed by the employee for balance in the earned account as on January 1, 2009. All carry forward earned leaves with a maximum limit of 10 days, are available for availment but not for encashment.
II. Terms and conditions of the Scheme Date of grant
Details of vesting schedule and condition Phantom stock granted under the scheme would vest within not less
than 1 year and not more than 5 years from the date of grant of such Phantom stock option. Vesting of Phantom stock option would be subject to continued employment with the Company and the Phantom stock option would vest on passage of time Appreciation as per Phantom Stock Option Excess of fair market of share on the date of exercise determined in Scheme terms of Phantom stock option scheme over the base price.
Exercise Period In case of continuation of employment :
Vested Phantom stock option can be exercised any time Upto 3 years from the date of last vesting of Phantom stock options and
In case of cessation of employment :
Different periods depending on kind of cessation as per provision of the Phantom stock option scheme Settlement of Phantom Stock Option Within 90 days from the date of exercise by cash
IV. The Company''s liability toward the Phantom stock option is accounted for on the basis of an independent actuarial valuation done at the year end. As per the valuation the liability for the year is Rs, 0.27 crore (Previous year Rs, 0.21 crore) which is debited to Statement of Profit and Loss and the liability is shown in the Balance sheet under the head Other current liabilities and clubbed under Other payables.
4 Segment reporting
The Company is mainly engaged in the housing finance business, all other activities revolve around the main business of the Company, as such there is no separate reportable segment and Company''s all operations are conducted within India, hence there is no separate reportable geographical segment, under Accounting Standard -17 (AS-17), on "Segment Reporting" notified by the Companies (Accounts) Rules, 2014.
5 Related party disclosures
A. List of Related Parties and their relationship:
i) Holding Company
Reliance Capital Limited
ii) Major Investing Party
Reliance Inceptum Private Limited (w.e.f. September 7, 2017)
iii) Subsidiaries of Holding Company / Fellow Subsidiaries
1 Reliance Capital Trustee Co. Limited 13 Reliance Money Precious Metals Private Limited
2 Reliance Nippon Life Insurance Company Limited 14 Reliance Exchangenext Limited
3 Reliance Capital Pension Fund Limited 15 Reliance Corporate Advisory Services Limited
4 Reliance Capital AIF Trustee Company Private Limited 16 Quant Capital Private Limited
5 Reliance General Insurance Company Limited 17 Quant Broking Private Limited
6 Reliance Health Insurance Limited 18 Quant Securities Private Limited (w.e.f. May 4, 2017)
7 Reliance Commercial Finance Limited 19 Quant Investment Services Private Limited
8 Reliance Securities Limited 20 Reliance Nippon Life Asset Management Limited*
9 Reliance Commodities Limited 21 Reliance Asset Management (Singapore) Pte. Limited*
10 Reliance Financial Limited 22 Reliance Asset Management (Mauritius) Limited*
11 Reliance Wealth Management Limited 23 Reliance AIF Management Company Limited*
12 Reliance Money Solutions Private Limited
* ceased w.e.f. July 3, 2017
iv) Key Managerial Personnel
Mr. Ravindra Sudhalkar Executive Director & CEO (w.e.f. October 1, 2016)
Mr. Amit Bapna Director & CFO (w.e.f. April 24, 2017)
Ms. Parul Jain Company Secretary & Compliance Officer (w.e.f. December 6, 2016)
Mr. Sandip Parikh Chief Financial Officer (ceased w.e.f. September 8, 2017)
Mr. Amrish Shah Chief Financial Officer (ceased w.e.f. December 6, 2016)
Ms. Ekta Thakurel Company Secretary (ceased w.e.f. December 6, 2016)
Notes:
1 Figures in bracket indicate Previous year figures.
2 The current year and Previous year figures are excluding GST / service tax.
3 Expenses incurred towards public utilities services such as telephone and electricity charges have not been considered for related party transaction.
4 The above disclosed transactions entered during the period of existence of related party relationship. The balances and transactions are not disclosed before existence of related party relationship and after cessation of related party relationship.
5 *For transactions pursuant to the Scheme of Arrangement, please Refer Note No. 41 of the Financial Statements.
During the current year the company had no specified bank notes or no other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 30, 201 7.
6 Scheme of Arrangement between the Company and India Debt Management Private Limited
The Board of Directors of the Company at their meeting held on June 20, 2016 had considered and approved a Scheme of Arrangement between the Company and India Debt Management Private Limited ("the Demerged Company" or "IDMPL") and their Shareholders. The Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1 956 ("the Scheme") for demerger of Credit Business of IDMPL into the Company has been sanctioned by the National Company Law Tribunal, Mumbai Bench vide Order dated April 5, 2017. The Scheme has become effective on April 21, 2017 upon filing with the Registrar of Companies, Maharashtra at Mumbai with effect from March 31, 2016 i.e. Appointed Date. Pursuant to the Scheme, the Company has issued and allotted 3,10,35,980 8% Cumulative Non-Convertible Redeemable Preference Shares to the equity shareholders of IDMPL on August 9, 2017.
7 Scheme of Arrangement between the Company and Reliance Capital Limited
The Board of Directors of the Company at their meeting held on October 28, 201 6 had considered and approved a Scheme of Arrangement between the Company and its holding company viz. Reliance Capital Limited ("the Demerged Company" or "RCap") and their respective Shareholders and Creditors. The Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1 956 (the ''Scheme'') for demerger of Real Estate Lending Business of RCap into the Company has been sanctioned by the National Company Law Tribunal, Mumbai Bench vide Order dated August 1 0, 201 7. The Scheme has become effective on September 5, 2017 upon filing with the Registrar of Companies, Maharashtra at Mumbai with effect from April 1, 2017 i.e. Appointed Date.
Pursuant to the Scheme, the Real Estate Lending Business of RCap has been transferred to the Company. Hence in accordance with the Scheme:
(i) On Scheme becoming effective with effect from Appointed Date, the Company has recorded all the assets and liabilities as appearing in the books of the Demerged Undertaking of RCap related to Real Estate Lending Business at their respective book value as on Appointed Date. The following assets and liabilities pertaining to the Demerged Undertaking of RCap were transferred to RHFL and shares of the Company were issued to the shareholders of RCap:
(ii) The Company has issued and allotted 1 1,65,49,188 equity shares of Rs, 10 each at a premium of Rs, 22 per equity share to its holding company viz. RCap on September 4, 2017 on rights basis.
(iii) The Company has issued and allotted 25,26,89,630 equity shares of Rs, 10 each to the shareholders of RCap in the ratio of 1:1 on September 7, 2017.
(iv) The Assets and Liabilities of Rs, 663 crore and Rs, 590 crore, respectively, were transferred as on the Appointed Date and have been recorded at their respective book values. The excess of consideration paid by the Company over the net assets acquired by the Company has been accounted as Goodwill, which is being amortised over a period of ten years.
Figures in bracket indicate previous year figures.
8Corporate Social Responsibility Expenditure
As per Section 135 of the Act the Company is under obligation to incur Rs, 2.75 crore (Previous year Rs, 2.04 crore) and has incurred the same in cash, being 2% of the average net profit during the three immediately preceding financial years, calculated in the manner as stated in the Act towards Corporate Social Responsibility through the non-profit centre(s) engaged in the provision of health care and education for the purpose other than construction / acquisition of asset.
Mar 31, 2017
1 Background
Reliance Home Finance Limited (âthe Companyâ) was incorporated on June 5, 2008 with Registrar of Companies, Maharashtra at Mumbai. The Company is principally engaged in housing finance business and registered with National Housing Bank (âNHBâ) as a housing finance company (HFC), without accepting public deposits, as defined under section 29A of the National Housing Bank Act, 1987.
2 In the opinion of management, all the Assets other than Non-Current Investments are approximately of the value stated if realised in the ordinary course of business.
3 Security clause, Maturity profile & Rate of interest in respect of Non convertible Debentures
(a) Listed Secured Redeemable Non-Convertible Debentures (âSecured NCDsâ) amounting to Rs.3,834.87 crore are secured by way of first pari passu legal mortgage and charge over the premises situated at Bharuch and additional pari passu charge by way of hypothecation on the present and future book debts/ receivables, outstanding money (loan book), receivable claims of the Company with other secured lenders for an amount of Rs.3,127.77 crore, except those book debts and receivables charged/ to be charged in favour of National Housing Bank for refinance availed / to be availed from them, of Home Finance Business subject to maintenance of minimum asset coverage of 1 00% of issue amount and security amounting to Rs.707.1 0 crore is provided by way of first pari passu hypothecation charge on all present and future book debts and business receivables of Companyâs holding company viz. Reliance Capital Limited (except security created / to be created towards securing term loans and cash credit limits). Business receivables includes current assets and investments.
(b) Maturity profile of Non-Convertible Debentures are as set out below:
4 Security clause & Maturity profile in respect to secured loans from banks
Term loans from Banks [Refered in Note No. 5] and current maturity of long term debts [Refer Note No. 11 (a)(ii)] includes :
a Term loans Rs.3,405.66 crore (Previous year Rs.3,412.45 crore) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs.3,759.49 crore (Previous year Rs.3,765.42 crore).
b Term loans Rs.551.59 crore (Previous year Rs.1,344.89 crore) secured by pari passu first charge in favor of the lender on all the standard book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs.611.46 crore (Previous year Rs.1,489.83 crore).
c Term loans Rs. Nil (Previous year Rs.179.96 crore) secured by hypothecation of book-debts/receivables (standard only) of the Company on pari-passu basis with other secured lenders, against security not exceeding Rs. Nil (Previous year Rs.199.07 crore).
d Term loans Rs.109.86 crore (Previous year Rs.33.41 crore) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, against security not exceeding Rs.121.41 crore (Previous year Rs.40.09 crore).
e Maturity profile of Secured Term Loans from banks are as set out below;
5 As on April 26, 201 0 the Company had entered into Business Transfer Agreements (âBTAâ) with its holding company i.e. Reliance Capital Limited (âRCLâ) to transfer the RCLâs home finance business to the Company at book value, such that the entire economic risk and reward of the RCLâs home finance business passes to the Company from the commencement of business on the value date i.e. April 1, 2010. As on January 31, 2011 the BTA further amended between the Company and Reliance Capital Limited and as per the amended BTA with RCL:
a) The RCL holds loan assets of Rs.2.82 crore (Previous year Rs.4.41 crore) of the Company in the capacity of trust as on March 31, 2017.
b) During the year the Company has taken the following assets, income and expenses from RCL :
i) Interest & other income of Rs.0.52 crore (Previous year Rs.0.62 crore)
ii) Interest & other expenses of Rs.0.57 crore (Previous year Rs.1.46 crore)
6 Disclosures pursuant to Para 5 (II) of the Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016 vide National Housing Bank (âNHBâ) Notification No. NHB.HFC.CG-DIR.1/ MD&CEO/ 2016, as applicable to the Company
7 Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the Company
There are no Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the Company,
8 Additional Disclosures
Disclosures pursuant to Para 5 of Annex 4 of the Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016 vide National Housing Bank (âNHBâ) Notification No. NHB.HFC.CG-DIR.1 / MD&CEO/ 2016, as applicable to the Company
9. Overseas Assets (for those with joint Ventures and Subsidiaries abroad)
There are no Overseas Assets.
10. Off- balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)
There are no Off-balance Sheet SPVs sponsored by the Company which are required to be consolidated as per accounting norms.
11 Segment reporting
The Company is mainly engaged in the housing finance business, all other activities revolve around the main business of the Company, as such there is no separate reportable segment and Companyâs all operations are conducted within India, hence there is no separate reportable geographical segment, under Accounting Standard -17 (AS-17), on âSegment Reportingâ notified by the Companies (Accounts) Rules, 2014.
12 Related party disclosures
A. List of Related Parties and their relationship:
i) Holding Company
Reliance Capital Limited
ii) Subsidiaries of Holding Company / Fellow Subsidaries
1 Reliance Nippon Life Asset Management Limited (formerly Reliance Capital Asset Management Limited)
2 Reliance Asset Management (Singapore) Pte. Limited
3 Reliance Asset Management (Mauritius) Limited
4 Reliance Capital Asset Management (UK) Limited (dissolved w.e.f. June 14, 2016)
5 Reliance Capital Pension Fund Limited
6 Reliance AIF Management Company Limited
7 Reliance Capital AIF Trustee Company Private Limited
8 Reliance Capital Trustee Co. Limited
9 Reliance General Insurance Company Limited
10 Reliance Nippon Life Insurance Company Limited (formerly Reliance Life Insurance Company Limited)
11 Reliance Commercial Finance Limited (formerly Reliance Gilts Limited)
12 Reliance Exchange next Limited
13 Reliance Corporate Advisory Services Limited (formerly Reliance Spot Exchange Infrastructure Limited)
14 Reliance Securities Limited
15 Reliance Commodities Limited
16 Reliance Financial Limited
17 Reliance Money Express Limited (ceased w.e.f, February 7, 2017)
18 Reliance Money Precious Metals Private Limited
19 Reliance Money Solutions Private Limited
20 Reliance Wealth Management Limited
21 Quant Capital Private Limited
22 Quant Broking Private Limited
23 Quant Securities Private Limited
24 Quant Commodity Broking Private Limited (ceased from August 18, 2016)
25 Quant Capital Finance and Investments Private Limited (ceased from July 7, 2016)
26 Quant Investment Services Private Limited
iii) Key Managerial Personnel
Shri Ravindra Sudhalkar Chief Executive Officer (w.e.f. October 1, 2016 )
Shri Sandip Parikh Manager (upto September 30, 201 6 )
Shri Sandip Parikh Chief Financial Officer (w.e.f. December 6, 2016 )
Shri Amrish Shah Chief Financial Officer (upto December 6, 2016 )
Kum. Roopa Joshi Chief Financial Officer (Till May 7, 2015)
Ms. Parul Jain Company Secretary & Compliance Officer (w.e.f. December 6, 2016 )
Ms. Ekta Thakurel Company Secretary (upto December 6, 2016 )
Kum. Deepali Bhatt Company Secretary (From May 7, 2015 till July 30, 201 5)
B. List of other related parties under common control with whom transactions have taken place during the year:
Enterprise over which individual described in clause A (ii) above has control or significant influence.
1 Reliance Communications Infrastructure Limited 2 Reliance Infocomm Infrastructure Limited
13 Scheme of Arrangement between Company and Reliance Capital Limited (RCL)
The Board of Directors of the Company at their meeting held on October 28, 201 6 has approved a Scheme of Arrangement for demerger of Real Estate Lending Business of Reliance Capital Limited (RCL) into the Company with effect from April 1, 201 7, the Appointed Date, subject to requisite approvals, including the sanction of National Company Law Tribunal. Upon the demerger getting approved, the Company shall issue and allot, at par, to all equity shareholders of RCL, 1 (One) fully paid Equity Share of the Company for every 1 (One) equity share of Rs.10 each fully paid-up held in RCL. The Company will list its equity shares on the Stock Exchanges.
For the year ended March 31, 201 7 there is no impact on the financial statements of the Company on account of above Scheme.
14 Scheme of Arrangement between Company and India Debt Management Private Limited (IDMPL)
The Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 between India Debt Management Private Limited (âthe Demerged Companyâ) and Reliance Home Finance Limited (âthe Companyâ) has been sanctioned by the National Company Law Tribunal, Mumbai Bench vide Order dated April 5, 201 7 to acquire the âentire credit businessâ (âDemerged Undertakingâ) of the Demerged Company. The Scheme became effective on April 21, 2017 on filing with the Registrar of Companies, Maharashtra at Mumbai with effect from March 31, 2016 i.e. Appointed Date.
Pursuant to the Scheme, the entire credit business of India Debt Management Private Limited (IDMPL) has been transferred to the Company.
Hence, in accordance with the Scheme:-
i. On Scheme becoming effective with effect from Appointed Date, the Company has recorded all the assets i.e. Investment and Cash & Bank Balance aggregating to Rs.240.60 crore and liabilities i.e. Provision for Diminution in the Value of Long Term Investments aggregating to Rs.240.55 crore as appearing in the books of IDMPLâs related to credit business at their respective book value as on Appointed Date. The net assets taken over include:
ii Upon the Scheme becoming effective and in consideration of transfer and vesting of the undertaking of the IDMPLâs entire credit business, the Company will issue and allot, at par, to all equity shareholders of the IDMPL, whose name appears in the register of members of IDMPL as on the effective date, 94 (âNinety Fourâ) 8% Cumulative Non Convertible Redeemable Preference Shares of Rs.10 each fully paid-up for every one equity share of Rs.10 each fully paid-up held by the equity shareholders of IDMPL.
Accordingly 3,10,35,980, 8% Cumulative Non Convertible Redeemable Preference Shares of Rs.10 each fully paid-up at par are to be allotted to the equity share holders of IDMPL. Pending issue and allotment of shares as at the balance sheet date Rs.31.04 crore has been credited to Share Suspense Account.
iii There are no inter-company balances and transactions between the Company and IDMPL on appointed date.
iv The Company has recognised deferred tax asset amounting to Rs.1 05.85 crore on the unabsorbed business losses pertaining to demerged undertaking.
v Pursuant to the Scheme approved by National Company Law Tribunal, the difference between value of assets and liabilities of IDMPLâs entire credit business and the value of the shares allotted to the shareholders of IDMPL, amounting to Rs.30.99 crore has been recorded as goodwill.
vi As the financial statements for previous year ended March 31, 201 6 have been already approved by the shareholders of the Company, the previous year accounts have not been reopened and all the relevant accounting entries with respect to the Scheme have been accounted during the current financial year.
Figures in bracket indicate previous year figures.
15 Corporate Social Responsibility Expenditure
As per Section 135 of the Companies Act, 2013 (the âActâ), the Company is under obligation to incur Rs.2.04 crore (Previous Year Rs.1.39 crore) and has incurred the same in cash, being 2% of the average net profit during the three immediately preceding financial years, calculated in the manner as stated in the Act towards Corporate Social Responsibility through the non-profit centre(s) engaged in the provision of health care and education for the purpose other than construction / acquisition of asset.
16 After considering the losses suffered by the credit business of IDMPL, being the business acquired on demerger of IDMPL, and the accounting of such losses and of corresponding provisions made by IDMPL for the year ended March 31, 201 7, the Company is advised that no income tax is payable both as per normal computation of income, and the MAT computation. Hence, no provision is considered in the books of accounts for the year ended March 31, 2017.
17 The Board of Directors have recommended a dividend of 5 per cent (Rs.0.50 per equity share) for the year subject to the approval of the members of the Company at the ensuing Annual General Meeting. In terms of revised Accounting Standard (AS) 4 âContingencies and Events Occurring after the Balance sheet dateâ as notified by the Ministry of Corporate Affairs through Amendments to the Companies (Accounting Standards) Amendment, Rules 2016 dated March 30, 2016, Company has not accounted for proposed dividend as a liabilities as at March 31, 201 7. Accordingly, the proposed dividend of Rs.5.79 crore and tax thereon Rs.1.18 crore are not recognised as liability in the financial statements for the year ended March 31, 2017.
18 During the year, the Company has received debenture application money of Rs.2,987.62 crore directly and Rs.66.36 crore through ASBA process in terms of Shelf Prospectus and Tranche 1 Prospectus both dated December 15, 2016 (âProspectusâ) of public issue of âSecured and Unsecured Redeemable Non-Convertible Debenturesâ (NCD). The NCD issue was open from December 22, 201 6 to December 23, 201 6 and the Company has allotted NCD amounting to Rs.3,053.98 crore on January 3, 201 7. NCDs were listed on BSE Limited and National Stock Exchange of India Limited on January 6, 201 7. As on March 31, 201 7 the proceeds have been utilised as per the Objects of the Issue as under:
19 During the year, the Company had reported to National Housing Bank (NHB) a fraud in disbursal of housing loans amounting to Rs.1.95 crore. As on March 31, 2017, the entire amount has been written off by the Company
20 Previous year figures has been regrouped /reclassified wherever necessary
The figures for current year includes figures of Credit Business of India Debt Management Private Limited (IDMPL) which is demerged with the Company with effect from March 31, 201 6 i.e. the Appointed Date and therefore to that extent not strictly comparable to that of previous yearâs figures.
Mar 31, 2015
1 Voting Rights :
In case of equity Shares w.e.f. April 1, 2011, all the equity share holders of the Company have voting rights only and no rights toward dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
2 Dividends:
The Company has amended its Articles of Association effective from April 1, 2011 to insert a new Article 5A to the effect that the Company shall not declare and /or pay dividend on any of its Share Capital.
3. Security clause, Maturity profile & Rate of interest in respect of Non convertible Debentures
a Secured Non convertible Debentures referred above are secured by way of first pari passu legal mortgage and charge over the premises situated at Bharuch and additional pari passu charge by way of hypothecation on the present and future books debts/receivables, outstanding money (loan book), receivable claims of the Company with other secured lenders, except those book debts and receivables charged/ to be charged in favour of National Housing Bank for refinance availed/ to be availed from them, of Home Finance Business subject to maintenance of minimum asset coverage of 100% of issue amount
# Zero Coupon Deep Discount Non- Convertible Debentures MLD = Market Link Non- Convertible Debentures
4. Security clause & Maturity profile in respect to sccured loans from banks
Term loans from Banks referred in Note "5" and current maturity of long term debts (Refer Note â11 (a)(ii)) includes :
a Term loans Rs.25,954,350,152 (Previous year Rs. 18,586,085,053) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs.28,637,958,913 (Previous year Rs. 20,569,887,703).
b Term loans Rs.1,000,000,000 (Previous year Rs. 1,500,000,000) secured by pari passu first charge in favor of the lender on all the standard book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs.l,110,000,000 (Previous year Rs. 1,665,000,000).
c Term loans Rs. 2,499,515,795 (Previous year Rs. 2,124,573,410) secured by hypothecation of book-debts/receivables (standard only) of the Company on pari-passu basis with other secured lenders, against security not exceeding Rs. 2,766,112,013 (Previous year Rs. 2,353,676,016).
d Term loans Rs. 866,831,177 (Previous year Rs. 1,399,665,868 ) secured secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, against security not exceeding Rs. 1,040,197,413 (Previous year Rs, 1,679,599,042).
27. As on April 26, 2010 the Company had entered into Business Transfer Agreements (''BTA'') with its holding company i.e. Reliance Capital Limited (''RCL'') to transfer the RCL''s home finance business to the Company at book value, such that the entire economic risk and reward of the RCL''s home finance business passes to the Company from the commencement of business on the value date i.e. April 1, 2010. As on January 31, 2011 the BTA further amended between the Company and Reliance Capital Limited, as per the amended BTA with RCL:
a) The RCL holds loan assets of Rs. 46,246,178 (Previous year Rs. 84,167,495) of the Company in the capacity of trust as on March 31, 2015.
b) During the year the Company has taken the following assets, income and expenses from the RCL:
i) Interest & other income of Rs. 9,027,789 (Previous year Rs. 11,980,612)
ii) Interest & other expenses of Rs. 15,486,531 (Previous year Rs. 19,176,242)
The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.
5. Segment Reporting: .
The Company is mainly engaged in the housing finance business, all other activities revolve around the mam business or the Company and as such there is no separate reportable segment as specified in Accounting Standard (AS-17) on "Segment Reporting", notified by the Companies (Accounting Standards) Rules, 2006.
33. Related Party Disclosures:
a) List of the Related Parties and their relationship:
Name of the Party__Relationship________
Reliance Innoventures Private Limited Ultimate Holding Company__________
Reliance Capital Limited ~ Holding company_____
Reliance General Insurance Company Limited Fellow Subsidiary _________
Reliance Money Solutions Private Limited__Fellow Subsidiary ______________
Reliance Securities Limited__Fellow Subsidiary _______
Shri K. Suresh Kumar ____Key Managerial Personnel (Manager) up to March 28, 2015_
Kum. Roopa Ravinath Joshi__Key Managerial Personnel (Chief Financial Officer)___
Ms. Neena Parelkar Singarpure Key Managerial Personnel (Company Secretary) up to December ___28, 2014.___________
Note:
The above disclosed transactions entered during the period of existence of related party relationship. The balances and transactions are not disclosed before existence of related party relationship and after cessation of related party relationship.
6. Basic and Diluted Earnings Per Share:
For the purpose of calculation of Basic & Diluted Earnings per Share the following amounts have been considered:
7. Disclosure of details as required by Para 29 of the Housing Finance Companies (NHB) Directions, 2010. (As certified by the management).
a) The total provisions made for substandard, doubtful and loss assets and depreciation in investments carried by the Company in terms of paragraph 29(2) and (3) of the Housing Finance Companies (NHB) Directions, 2010 and NHB Circular NHB.HFC.DIR-3/CMD/2011 dated August 5,2011 in respect of Housing and Non Housing Loans is as follows:
Note:
i) Figures in bracket represent previous year''s figures.
ii) Substandard provision on non housing finance includes Rs. 40,521 (previous year Rs. Nil) related to Minimum Retention Requirement (MRR) pools related to Securitization for which loans outstanding not in the books.
b) Disclosure regarding penalty or adverse comments in terms of paragraph 29(5) of the Housing Finance Companies (NHB) Directions, 2010 is as follows:
i) During the year there is no penalty imposed by National Housing Bank.
ii) During the year no inspection has been conduct by The National Housing Bank under section 34 of the National Housing Bank Act, 1987
8. Disclosure regarding provision made for Asset Liability Management (ALM) system for the Housing Finance Companies as per NHB Circular NHB/ND/DRS/Pol-No.35/2010-11 dated October 11,2010.
Notes:
(i) The direct exposure given in (i) & (ii) represents loans & advances outstanding at the year end, without netting off the Provision for NPA & Doubtful Debts.
(ii) The bifurcation of investments in Mortgage Backed Securities (MBS) and other securitized exposures between residential and commercial is based on nature of underlying loan assets. The same has been relied upon by auditors.
Notes:
i) In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.
ii) The above maturity pattern of assets and liabilities has been prepared by the Company after taking into consideration guidelines for assets-liabilities management (ALM) system for housing finance companies issued by NHB, best practices and best estimate of the Assets-Liability Committee / management with regard to the timing of various cash flows, which has been relied upon by the auditors. The classification of Assets and.non-current is carried out based on their residual maturity profile as per requirement of Act, 2013.
iii) Figures in bracket represent previous year''s figures. .
39. Till March 31, 2014 all the tangible assets are depreciated as per written down value basis at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956. Pursuant to the provisions of the Companies Act, 2013 ("the Act"), with effect from April 1, 2014 the Company has provided depreciation on all tangible assets as per straight line method as per the provision of Schedule II of the Act. Accordingly, the current year depreciation is short by Rs. 4,950 for the year and effect relating to the period prior to April 1, 2014 is a net credit of Rs. 52,505 is included in the current year depreciation.
Had the Company continued to use the earlier method of depreciation, the profit after tax for the current year would have been lower by Rs. 57,455.
9. As per the provision of Section 203 of the Companies Act, 2013, as on March 31, 2015, the Company was in the process of appointing a manager and company secretary.
42. During the year, gross amount required to be spent by the company was Rs. 97,30,000 and the company has spent Rs.98,00,000 towards Corporate Social Responsibility (CSR) activities under section 135 of the Companies Act, 2013 by contributing towards corpus of Mandke Foundation, for Rural outreach initiative to provide cancer care to the communities of interior parts of Maharashtra.
10, Previous year''s figures have been regrouped / restated where necessary, to confirm to the presentation of current year''s financial statements.
Mar 31, 2014
1 Background
The Company is registered with National Housing Bank as Housing Finance Company without accepting public deposit. The Company is principally engaged in housing finance business.
a) Rights, Preferences and Restrictions :
1 Voting Rights:
In case of equity Shares w.e.f. April 1, 2011, all the equity share holders of the Company have voting rights only and no rights toward dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
In case of Preference Shares :
Preference Share holders have a right to vote only on resolutions which directly affect the rights attached to Preference Shares.
2 Dividends:
The Company has amended its Articles of Association effective from April 1, 2011 to insert a new Article 5A to the effect that the Company shall not declare and / or pay dividend on any of its Share Capital.
b) Terms for Conversion & Repayment of Preference Share Capital
In case of 0% Optionally Convertible / Redeemable Preference Shares of Rs. 10 each :
(i) Each of the Preference Shares shall be converted into Equity Share of the Company in such fraction or number(s) and in such manner as may be decided by the Board of directors at their sole discretion, in one or more tranches, at any time on or before the expiry of 6 (Six) years from the date of issue of the Preference Shares by giving a notice of l(one) month in writing to the preference shareholders and upon such conversion shall rank pari-passu in all respects with the existing equity shares of the Company.
(ii) At the time, conversion of each of the Preference Shares into equity Share of the Company is proposed by the Board, an option would be given to the preference shareholder to redeem the preference share at a Premium to be decided by the Board and intimated to the preference shareholder by giving a notice of l(one) month in writing.
(iii) As on July 28, 2012 the Company has taken approval from its existing preference share holders and accordingly as on September 10, 2012 converted its existing 29,10,000, 0% optionally convertible / Redeemable preference Shares into equivalent number of equity shares of the Company in the ratfo of 1:1. Out of the above preference shares 910,000 preference shares were issued on March 30, 2009,17,50,000 preference shares were issued on March 25,2010 and balance 2,50,000 preference shares were issued on June 29, 2011 by the Company.
c) Out of the above equity shares 32,910,000 equity shares (Previous Year 32,910,000 equity shares) were allotted as fully paid-up bonus shares to its existing equity share holders in the financial year 2012-13.
Notes:
1 Cash credit referred above are secured by pari passu first charge on all standard assets portfolio of present and future book debts, receivable, bills, claims and loan assets of the Company against security not exceeding Rs. 1,100,000,000 (Previous year Rs.550,000,000).
2 In respect of Commercial Papers referred above, maximum amount outstanding during the year was Rs.2,850,000,000 (Previous year Rs.450,000,000).
2. Security clause, Maturity profile & Rate of interest in respect of Non convertible Debentures a Secured Non convertible Debentures referred above are secured by way of first pari passu legal mortgage and charge over the premises situated at Bharuch and additional pari passu charge by way of hypothication on the present and future books debts/receivables, outstanding money (loan book), receivable claims of the Company with other secured lenders, except those book debts and receivables charged/ to be charged in favour of National Housing Bank for refinance availed/ to be availed from them, of Home Finance Business subject to maintenance of minimum asset coverage of 100% of issue amount.
3. Security clause & Maturity profile in respect to secured loans from banks
Term loans from Banks referred in Note â5â and current maturity of long term debts (Refer Note â10 (a)(ii)) includes:
a Term loan Rs. 18,586,085,053 (Previous year Rs. 16,949,393,533) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs. 20,569,887,703 (Previous year Rs. 18,797,220,163).
b Term loan Rs. 1,500,000,000 (Previous year Rs. 1,000,000,000) secured by pari passu first charge in favor of the lender on all the standard book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs. 1,665,000,000 (Previous year Rs. 1,100,000,000).
c Term loan Rs.2,124,573,410 (Previous year Rs. 1,875,098,264) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, against security not exceeding Rs. 2,353,676,016 (Previous year Rs. 2,062,608,090).
d Term loan Rs. 1,399,665,868 (Previous year Rs. 1,600,000,000 ) secured secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, against security not exceeding Rs. 1,679,599,042 (Previous year Rs. 1,920,000,000).
4. As on April 26, 2010 the Company had entered into Business Transfer Agreements (âBTAâ) with its holding company i.e. Reliance Capital Limited (âRCLâ) to transfer the RCLâs home finance business to the Company at book value, such that the entire economic risk and reward of the RCLâs home finance business passes to the Company from the commencement of business on the value date i.e. April 1, 2010. As on January 31, 2011 the BTA further amended between the Company and Reliance Capital Ltd. As per the amended BTA with RCL:
a) The RCL holds loan assets of Rs. 84,167,495 (Previous year Rs. 105,591,590) of the Company in the capacity of trust as on March 31,2014.
b) During the year the Company has taken the following assets, income and expenses from the RCL:
i) Unamortized DSA Commission of Rs. Nil (Previous year Rs. 7,50,750)
ii) Interest & other income of Rs. 11,980,612 (Previous year Rs. 30,091,932)
iii) Interest & other expenses of Rs. 19,176,242 (Previous year Rs. 31,811,133)
iv) DSA commission expense of Rs. Nil (Previous year Rs. Nil)
5. a) During the year the Company sold loans through securitisation and direct assignment.
The information related to securitisation and assignment made by the Company, as an originator is given below:
6. In the opinion of management, all assets other than fixed asset and non-current investments are approximately of the value stated if realised in the ordinary course of business.
7. Employee Benefits:
a) Defined contribution plan
Contribution to Defined Contribution Plans, recognised as expense for the year is as under:
b) Defined Benefit plans
The following table summarise the components of the net employee benefit expenses recognized in the Statement of Profit and Loss, the fund status and amount recognised in the balance sheet for the gratuity benefit plan and leave encashment plan. The said information is based on certificates provided by the actuary.
8. Segment Reporting:
The Company is mainly engaged in the housing finance business, all other activities revolve around the main business of the Company and as such there is no separate reportable segment as specified in Accounting Standard (AS-17) on âSegment Reportingâ, notified by the Companies (Accounting Standards) Rules, 2006.
9. Related Party Disclosures:
a) List of the Related Parties and their relationship:
10. Basic and Diluted Earnings Per Share:
For the purpose of calculation of Basic & Diluted Earnings per Share the following amounts have been considered:
11. Disclosure of details as required by Para 29 of the Housing Finance Companies (NHB) Directions, 2010. (As certified by the management).
a) The total provisions made for substandard, doubtful and loss assets and depreciation in investments carried by the Company in terms of paragraph 29(2) and (3) of the Housing Finance Companies (NHB) Directions, 2010 is as follows:
Note:
i) Provision for substandard assets lying in housing finance as well as Non Housing Finance loans & advances includes Rs.NIL (previous year Rs. 2,939,941/-) related to loans & advances, which were transferred under securitisation /assignment deals.
ii) Figures in bracket represent previous yearâs figures.
b) Disclosure regarding penalty or adverse comments in terms of paragraph 29(5) of the Housing Finance Companies (NHB) Directions, 2010 is as follows :
i) During the year there is no penalty imposed by National Housing Bank.
ii) The Company has received the inspection report under section 34 of the National Housing Bank Act, 1987 from National Housing Bank (NHB) with reference to position as on March 31, 2013, vide its letter no. NHB (ND)/DRS/SUP/2599/2014 dated February 24, 2014 in which NHB has drawn certain contraventions to the provisions and Directions/Guidelines issued by the NHB under the NHB Act, 1987 from time to time and also other deficiencies in the functioning of the Company. The Company will place the replies before the board meeting and the same will be sent to NHB.
12. Disclosure regarding provision made for Asset Liability Management (ALM) system for the Housing Finance Companies as per NHB Circular NHB/ND/DRS/Pol-No.35/2010-11 dated October 11,2010.
(I) Capital to Risk Asset Ratio (CRAR)
(II) Exposure to real estate sector, both direct and indirect:
Notes:
(i) The direct exposure given in (i) & (ii) represents loans & advances outstanding at the year end, without netting off the Provision for NPA & Doubtful Debts.
(ii) The bifurcation of investments in Mortgage Backed Securities (MBS) and other securitised exposures between residential and commercial is based on nature of underlying loan assets. The same has been relied upon by auditors.
(Ill) Maturity Patterns of Items of Assets & Liabilities
Notes:
i) In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.
ii) The above maturity pattern of assets and liabilities has been prepared by the Company after taking into consideration guidelines for assets-liabilities management (ALM) system for housing finance companies issued by NHB, best practices and best estimate of the Assets-Liability Committee / management with regard to the timing of various cash flows, which has been relied upon by the auditors. The classification of Assets and Liabilities into current and non-current is carried out based on their residual maturity profile as per requirement of Revised Schedule VI to the Companies Act, 1956.
iii) Figures in bracket represent previous yearâs figures.
13. Previous yearâs figures have been regrouped / restated where necessary, to confirm to the presentation of current yearâs financial statements.
Mar 31, 2013
1 Background
The Company is registered with National Housing Bank as Housing Finance Company without accepting public deposit. The Company is principally engaged in housing finance business.
Notes:
1 In terms of the approval of the shareholders obtained at the Extra Ordinary General Meeting of the Company held on January 29, 2013 the Company has reclassified its Authorised Share Capital from Rs.125,000,000 (50,000,000 Equity Shares of Rs. 10 each and 75,000,000 Preference Shares of Rs. 10 each) to 125,000,000 (75,000,000 Equity Shares of Rs. 10 each and 50,000,000 Preference Shares of Rs. 10 each).
2 In terms of the approval of the shareholders obtained at the Extra Ordinary General Meeting of the Company held on January 29, 2013 the Company has issued 3,29,10,000 bonus share to its existing equity share holders in the ratio 1:1. These bonus shares have been issued by capitalising the Securities Premium Account.
a) Rights, Preferences and Restrictions:
1 Voting Rights:
In case of Equity Shares w.e.f. April 1, 2011, all the equity share holders of the Company have voting rights only and no rights toward dividend.
In case of Preference Shares :
Preference Share holders have a right to vote only on resolutions which directly affect the rights attached to Preference Shares.
2 Dividends:
The Company has amended its Articles of Association effective from April 1,2011 to insert a new Article 5A to the effect that the Company shall not declare and/or pay dividend on any of its share capital.
b) Terms for Conversion & Repayment of Preference Share Capital
In case of 0% Optionally Convertible / Redeemable Preference Shares of Rs. 10 each :
(i) Each of the Preference Shares shall be converted into Equity Share of the Company in such fraction or number(s) and in such manner as may be decided by the Board of Directors at their sole discretion, in one or more tranches, at any time on or before the expiry of 6 (Six) years from the date of issue of the Preference Shares by giving a notice of l(one) month in writing to the preference shareholders and upon such conversion shall rank pari-passu in all respects with the existing equity shares of the Company.
(ii) At the time, conversion of each of the Preference Shares into Equity Share of the Company is proposed by the Board, an option would be given to the preference shareholder to redeem the preference share at a premium to be decided by the Board and intimated to the preference shareholder by giving a notice of l(one) month in writing.
(iii) As on July 28, 2012 the Company has taken approval from its existing preference share holders and accordingly as on September 10, 2012 converted its existing 29,10,000, 0% Optionally Convertible / Redeemable preference Shares into equivalent number of equity shares of the Company in the ratio of 1:1. Out of the above preference shares 910,000 preference shares were issued on March 30, 2009, 17,50,000 preference shares were issued on March 25, 2010 and balance 2,50,000 preference shares were issued on June 29, 2011 by the Company.
2. Security clause, Maturity Profile & Rate of interest in respect of Non Convertible Debentures a Secured Non Convertible Debentures referred above are secured by way of first pari passu legal mortgage and charge over the premises situated at Bharuch and additional pari passu charge by way of hypothication on the present and future books debts/receivables, outstanding money (loan book), receivable claims of the Company with other secured lenders, except those book debts and recievables charged/ to be charged in favour of National Housing Bank for refinance availed/ to be availed from them, of Home Finance Business subject to maintenance of minimum asset coverage of 100% of issue amount.
a Maturity profile of Non Convertible Debentures are as set out below;
3. Security clause & Maturty Profile in respect to secured loans from banks
Term loans referred in Note â5â and current matuirty of long term debts (Refer Note â10 (a)â) includes :
a Term loan Rs. 16,949,393,533 (Previous year Rs. 15,248,766,808) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, except for those book debts/ receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs. 18,797,220,163 (Previous year Rs. 17,076,616,884).
b Term loan Rs. 1,000,000,000 (Previous year Rs. 1,000,000,000) secured by pari passu first charge in favor of the lender on all the standard book debts, outstanding moneys, receivable claims of the Company, except for those book debts/receivables to be charged in favor of National Housing Bank for refinance to be availed, if any, from them, against security not exceeding Rs. 1,100,000,000 (Previous year Rs. 1,100,000,000).
c Term loan Rs. 1,875,098,264 (Previous year Rs. 2,500,000,000) secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, against security not exceeding Rs. 2,062,608,090 (Previous year Rs. 2,750,000,000).
d Term loan Rs. 1,600,000,000 (Previous year Rs. 1,800,321,917) secured secured by pari passu first charge in favor of the lender on all the book debts, outstanding moneys, receivable claims of the Company, against security not exceeding Rs. 1,920,000,000 (Previous year Rs. 2,160,386,300).
e Maturity profile of Secured term loans from banks are as set out below;
4. As on April 26, 2010 the Company had entered into Business Transfer Agreements (âBTAâ) with its holding company i.e. Reliance Capital Limited (âRCLâ) to transfer the RCLâs home finance business to the Company at book value, such that the entire economic risk and reward of the RCLâs home finance business passes to the Company from the commencement of business on the value date i.e. April 1, 2010. As on January 31, 2011 the BTA further amended between the Company and Reliance Capital Ltd. As per the amended BTA with RCL:
a) The RCL holds loan assets of Rs. 105,591,590 (Previous year Rs. 424,026,006) of the Company in the capacity of trust as on March 31,2013.
b) During the year the Company has taken the following assets, income and expenses from the RCL :
i) Unamortized DSA Commission of Rs. 7,50,750 (Previous year Rs. 1,596,221)
ii) Interest & other income of Rs. 30,091,932 (Previous year Rs. 109,561,344)
iii) Interest & other expenses of Rs. 31,811,133 (Previous year Rs. 92,075,551)
iv) DSA commission expense of Rs. Nil (Previous year Rs. 133,805)
5. a) During the year the Company has entered into one agreement on August 1, 2012 (Previous year one agreement on October 7, 2011) with its holding company i.e. Reliance Capital Limited (RCL) for loans assignment from RCL. As per deed of assignment, for loans aggregating to Rs. 253,055,124 (Previous year Rs. 492,614,734) the Company has been assigned the right to future receivables along with a power of attorney authorizing the Company, inter-alia, to obtain possession of the property in case of default. The above loans are secured against mortgage of Housing property.
b) During the year the Company has entered into Nil agreements on various dates (Previous year six agreements on various dates) with RCL for loans assignment to RCL. As per deed of assignment, Rs. Nil (Previous year Rs. 7,034,907,193) the Company assigned the right to future receivables along with a power of attorney authorizing the Company, inter-alia, to obtain possession of the property in case of default.
6. During the year the Company sold loans through securitisation and direct assignment.
a) The information related to securitisation and assignment made by the Company, as an originator is given below:
b) Disclosures for Securitisation Transactions :
7. In the opinion of management, all assets other than fixed asset and non-current investments are approximately of the value stated if realised in the ordinary course of business.
8. Employee Benefits:
a) Defined contribution plan
Contribution to Defined Contribution Plans, recognised as expense for the year is as under:
b) Defined Benefit plans
The following table summarise the components of the net employee benefit expenses recognised in the Statement of Profit and Loss, the fund status and amount recognised in the balance sheet for the gratuity benefit plan and leave encashment plan. The said information is based on certificates provided by the actuary.
9. Segment Reporting:
The Company is mainly engaged in the housing finance business, all other activities revolve around the main business of the Company and as such there is no separate reportable segment as specified in Accounting Standard (AS-17) on âSegment Reportingâ, notified by the Companies (Accounting Standards) Rules, 2006.
10. Related Party Disclosures:
a) List of the Related Parties and their relationship:
b) Transactions during the year with related parties
Note:
The above disclosed transactions entered during the period of existence of related party relationship. The balances and transactions are not disclosed before existence of related party relationship and after cessation of related party relationship.
11. Basic and Diluted Earnings Per Share:
For the purpose of calculation of Basic & Diluted Earnings per Share the following amounts have been considered:
Note:
The weighted average number of equity shares for the year 2011-12 have been change on account of bonus shares issued by the Company during the year. .
12. Disclosure of details as required by Para 29 of the Housing Finance Companies (NHB) Directions, 2010. (As certified by the management).
a) The total provisions made for substandard, doubtful and loss assets and depreciation in investments carried by the Company in terms of paragraph 29(2) and (3) of the Housing Finance Companies (NHB) Directions, 2010 is as follows:
Note:
i) Provision for substandard assets lying in housing finance as well as Non Housing Finance loans & advances includes Rs.2,939,941 related to loans & advances, which were transferred under securitisation /assignment deals.
ii) Figures in bracket represent previous yearâs figures.
b) Disclosure regarding penalty or adverse comments in terms of paragraph 29(5) of the Housing Finance Companies (NHB) Directions, 2010 is as follows:
During the year there is no penalty imposed by National Housing Bank.
13. Disclosure regarding provision made for Asset Liability Management (ALM) system for the Housing Finance Companies as per NHB Circular NHB/ND/DRS/Pol-No.35/2010-11 dated October 11,2010.
(I) Capital to Risk Asset Ratio ( CRAR)
(II) Exposure to real estate sector, both direct and indirect:
Notes:
(i) The direct exposure given in (i) & (ii) represents loans & advances outstanding at the year end, without netting off the Provision for NPA & Doubtful Debts.
(ii) The bifurcation of investments in Mortgage Backed Securities (MBS) and other securitised exposures between residential and commercial is based on nature of underlying loan assets. The same has been relied upon by auditors.
(Ill) Maturity Patterns of Items of Assets & Liabilities
Notes:
i) In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.
ii) The above maturity pattern of assets and liabilities has been prepared by the Company after taking into consideration guidelines for assets-liabilities management (ALM) system for housmg finance companies issued by NHB, best practices and best estimate of the Assets-Liability Committee / management with regard to the timing of various cash flows, which has been relied upon by the auditors. The classification of Assets and Liabilities into current and non-current is carried out based on their residual maturity profile as per requirement of Revised Schedule VI to the Companies Act, 1956.
iii) Figures in bracket represent previous yearâs figures.
14. As on July 28, 2012, all the existing 29,10,000 0% Optionally Convertible / Redeemable Preference Shares of Rs. 10 each were converted into equity shares. As per the terms & conditions of preference shares, the preference shares holders were entitled to receive accumulated dividend at the time of conversion resultants as on February 15, 2013 the Company has paid accumulated dividend amounting to Rs. 28,56,000 for the financial year 2009 -10 and 2010 -11 to the preference share holders.
15. Disclosure of loans/advances and investments in its subsidiaries, associates etc. in terms of the Listing Agreement of Debt Securities with the Stock Exchanges. (As certified by the management)
16. Contingent Liabilities/Commitments: (As certified by the management)
17. Foreign Currency Expenditures:
18. Previous yearâs figures have been regrouped / restated where necessary, to confirm to the presentation of current yearâs financial statements.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Reliance Home Finance Ltd.
-
Reliance Home Finance Ltd. Tools
- Bulk Deals
-
Reliance Home Finance Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
Reliance Home Finance Ltd. Key Financial Ratios
- Ratios
-
Reliance Home Finance Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Reliance Home Finance Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Reliance Home Finance Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Reliance Home Finance Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
-
ഓഹരി വിപണി 11 മാസത്തെ താഴ്ചയില്, നിഫ്റ്റി, സെന്സെക്സ് കൂപ്പുകുത്തി, കാരണങ്ങളറിയാം -
പശ്ചിമേഷ്യന് സംഘര്ഷം; ഇന്ത്യന് ഓഹരി വിപണിയ്ക്ക് എന്ത് സംഭവിക്കും, എസ്ഐപി നിര്ത്തേണ്ടതുണ്ടോ? -
ഇന്ത്യന് ഓഹരി വിപണി വെള്ളിയാഴ്ച കൂപ്പുകുത്തി, കാരണങ്ങളും ഭാവി സൂചനകളും അറിയാം -
എയ്ഞ്ചല് വണ് ഓഹരി ഒറ്റ സെഷനില് നേരിട്ടത് 90 ശതമാനം ഇടിവ്? എന്താണ് സംഭവിച്ചതെന്നറിയാം -
590 കോടി രൂപയുടെ തട്ടിപ്പ്, ഐഡിഎഫ്സി ഫസ്റ്റ്ബാങ്ക് ഓഹരി കൂപ്പുകുത്തി, നിക്ഷേപകര് എന്തു ചെയ്യണം? -
1:2 ഓഹരി വിഭജനം, 1:2 ബോണസ് ഇഷ്യു, മൂന്നാംപാദ ഫലങ്ങള്: കുതിപ്പ് നടത്തി ടെക്സ്റ്റൈല് ഓഹരി -
ഇന്ത്യന് ഓഹരി വിപണിയില് കനത്ത ഇടിവ്, നിക്ഷേപകര്ക്ക് നഷ്ടം 6.5 ലക്ഷം കോടി രൂപ; കാരണങ്ങളും സാധ്യതകളുമറിയാം -
മുത്തൂറ്റ് ഫിനാന്സ് ഓഹരി കുറഞ്ഞ വിലയില്; ഇപ്പോള് വാങ്ങിയാല് ബംപര് നേട്ടം, ബ്രോക്കറേജ് നിര്ദ്ദേശങ്ങള് -
ഈ ഓഹരികള് ഇപ്പോള് വാങ്ങിയാല് ബംപര് ആദായം കീശയിലാക്കാം -
ഇന്ത്യയ്ക്കെതിരായ തീരുവ യുഎസ് കുറച്ചു: ഓഹരി വിപണിയില് കുതിപ്പ്, ഈ ഓഹരികള് നേട്ടമുണ്ടാക്കും -
കേന്ദ്രബജറ്റ് സെഷന് 2026: ഇടിവോടെ തുടങ്ങി നിഫ്റ്റിയും സെന്സെക്സും, നിക്ഷേപകര് പ്രതീക്ഷിക്കുന്നതെന്ത്? -
9 മാസത്തില് 314 ശതമാനം ഉയര്ന്ന് ഹിന്ദുസ്ഥാന് കോപ്പര് ഓഹരി, ഭാവി സാധ്യതകള് -
മികച്ച നേട്ടവുമായി നിഫ്റ്റിയും സെന്സെക്സും; നാളെ എന്ത് പ്രതീക്ഷിക്കാം -
1065 പോയിന്റ് ഇടിഞ്ഞ് സെന്സെക്സ്, നിഫ്റ്റി 25250 ന് താഴെ; ഭാവി പ്രവണതകള് -
2025 ലെ മികച്ച ഓഹരി; കുതിപ്പ് തുടരാൻ ശ്രീറാം ഫിനാൻസ്; ലക്ഷ്യവില ഇങ്ങനെ -
തളരുന്ന രൂപയും കൊഴിയുന്ന വിദേശ നിക്ഷേപവും: നിഫ്റ്റിക്ക് മുന്നേറ്റമോ? ഈ ആഴ്ച സ്വാധീനിക്കുന്ന ഘടകങ്ങൾ
-
Block for 8 hours
-
Block for 12 hours
-
Block for 24 hours
-
Don't block
Sign in with Google- Male
- Female
- Others
- Under 18
- 18 to 25
- 26 to 35
- 36 to 45
- 45 to 55
- 55+