2.8 Provisions
Provisions are recognised when the
Company has a present obligation (legal or
constructive) as a result of a past event, it is
probable that the Company will be required
to settle the obligation, and a reliable
estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the
best estimate of the consideration required
to settle the present obligation at the end
of the reporting period, taking into account
the risks and uncertainties surrounding the
obligation. When a provision is measured
using the cash flows estimated to settle
the present obligation, its carrying amount
is the present value of those cash flows
(when the effect of the time value of money
is material, provisions are discounted using
a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability).
When discounting is used, the increase in
the provision due to the passage of time is
recognised as a finance cost.
When some or all of the economic benefits
required to settle a provision are expected to
be recovered from a third party, a receivable
is recognised as an asset if it is virtually
certain that reimbursement will be received,
and the amount of the receivable can be
measured reliably. The expense relating to
a provision is presented in the statement of
profit and loss net of any reimbursement.
.9 Assets held for Sale
Assets acquired by the Company under
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest
Act, 2002 has been classified as assets held
for sale, as their carrying amounts will be
recovered principally through a sale of asset.
This assets are recognised on obtaining
physical possession of the assets which
are in the nature of residential properties. In
accordance with Ind AS 105, the assets held
for sale are measured at the lower of their
carrying amount and the fair value less costs
to sell.
.10 Cash flow statement
Cash flows are reported using the indirect
method, whereby profit / (loss) before tax
is adjusted for the effects of transactions
of non-cash nature and any deferrals or
accruals of past or future cash receipts or
payments.
.10.1 Cash and cash equivalents
Cash comprises cash on hand and demand
deposits with banks. Cash equivalents
are short-term balances (with an original
maturity of three months or less from the
date of acquisition), highly liquid investments
that are readily convertible into known
amounts of cash and which are subject to
insignificant risk of changes in value.
2.11 Earnings per share ("EPS")
Basic earnings per share is computed
by dividing the profit / (loss) after tax by
the weighted average number of equity
shares outstanding during the year. Diluted
earnings per share is computed by dividing
the profit / (loss) after tax as adjusted for
dividend, interest and other charges to
expense or income (net of any attributable
taxes) relating to the dilutive potential equity
shares, by the weighted average number
of equity shares considered for deriving
basic earnings per share and the weighted
average number of equity shares which
could have been issued on the conversion of
all dilutive potential equity shares. Potential
equity shares are deemed to be dilutive only
if their conversion to equity shares would
decrease the net profit per share from
continuing ordinary operations. Potential
dilutive equity shares are deemed to be
converted as at the beginning of the period,
unless they have been issued at a later
date. The dilutive potential equity shares
are adjusted for the proceeds receivable
had the shares been actually issued at fair
value. Dilutive potential equity shares are
determined independently for each period
presented. The number of equity shares
and potentially dilutive equity shares are
adjusted for share splits / reverse share splits
and bonus shares, as appropriate. Partly
paid equity shares are treated as a fraction
of an equity share to the extent that they are
entitled to participate in dividends relative to
a fully paid equity share during the reporting
period.
2.12 Segment Reporting
Ind AS 108 establishes standards for the
way that public business enterprises report
information about operating segments
and related disclosures about products
and services, geographic areas, and major
customers. Based on the 'management
approach' as defined in Ind AS 108, the
Chief Operating Decision Maker ("CODM")
evaluates the Company's performance
based on an analysis of various performance
indicators by business segments and
geographic segments.
As per the requirements of Ind AS 108
'Operating Segments', based on evaluation
of financial information for allocation of
resources and assessing performance, the
Company has identified a single segment,
viz. "providing long term housing finance,
loans against property and refinance
loans". Accordingly, there are no separate
reportable segments as per Ind AS 108.
2.13 Determination of Fair value
Fair value is the price that would be received
to sell an asset or paid to transfer a liability
in an orderly transaction between market
participants at the measurement date. The
fair value measurement is based on the
presumption that the transaction to sell
the asset or transfer the liability takes place
either:
? In the principal market for the asset or
liability, or
? In the absence of a principal market, in
the most advantageous market for the
asset or liability
The principal or the most advantageous
market must be accessible by the Company.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when pricing
the asset or liability, assuming that market
participants act in their economic best
interest.
A fair value measurement of a non¬
financial asset takes into account a market
participant's ability to generate economic
benefits by using the asset in its highest and
best use or by selling it to another market
participant that would use the asset in its
highest and best use.
The Company uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximising the use of
relevant observable inputs and minimising
the use of unobservable inputs.
In order to show how fair values have been
derived, financial instruments are classified
based on a hierarchy of valuation techniques,
as summarised below:
? Level 1 financial instruments -Those
where the inputs used in the valuation are
unadjusted quoted prices from active
markets for identical assets or liabilities
that the Company has access to at
the measurement date. The Company
considers markets as active only if there
are sufficient trading activities with
regards to the volume and liquidity of the
identical assets or liabilities and when
there are binding and exercisable price
quotes available on the balance sheet
date.
? Level 2 financial instruments-Those
where the inputs that are used for
valuation and are significant, are derived
from directly or indirectly observable
market data available over the entire
period of the instrument's life. Such inputs
include quoted prices for similar assets
or liabilities in active markets, quoted
prices for identical instruments in inactive
markets and observable inputs other
than quoted prices such as interest rates
and yield curves, implied volatilities, and
credit spreads. In addition, adjustments
may be required for the condition or
location of the asset or the extent to which
it relates to items that are comparable to
the valued instrument. However, if such
adjustments are based on unobservable
inputs which are significant to the entire
measurement, the Company will classify
the instruments as Level 3.
? Level 3 financial instruments -Those that
include one or more unobservable input
that is significant to the measurement as
whole.
For assets and liabilities that are recognised
in the financial statements on a recurring
basis, the Company determines whether
transfers have occurred between levels in
the hierarchy by re-assessing categorisation
(based on the lowest level input that is
significant to the fair value measurement as
a whole) at the end of each reporting period.
The Company evaluates the levelling at
each reporting period on an instrument-by¬
instrument basis and reclassifies instruments
when necessary based on the facts at the
end of the reporting period.
3A Significant accounting judgements,
estimates and assumptions
The preparation of the Company's financial
statements requires management to make
judgements, estimates and assumptions
that affect the reported amount of revenues,
expenses, assets and liabilities, and the
accompanying disclosures, as well as
the disclosure of contingent liabilities.
Uncertainty about these assumptions and
estimates could result in outcomes that
require a material adjustment to the carrying
amount of assets or liabilities affected in
future period
In the process of applying the Company's
accounting policies, management has made
the following judgements/estimates, which
have a significant risk of causing a material
adjustment to the carrying amounts of
assets and liabilities within the next financial
year.
3A 1. De-recognition of Financial instruments
The Company enters into securitisation
transactions where financial assets are
transferred to a structured entity for
a consideration. The financial assets
transferred qualify for derecognition only
when substantial risk and rewards are
transferred.
This assessment includes judgements
reflecting all relevant evidence including
the past performance of the assets
transferred and credit risk that the
Company has been exposed to. Based on
this assessment, the Company believes
that the credit enhancement provided
pursuant to the transfer of financial assets
under securitisation are higher than the
loss incurred on the similar portfolios of the
Company hence it has been concluded that
securitisation transactions entered by the
Company does not qualify for de-recognition
since substantial risk and rewards of the
ownership has not been transferred. The
transactions are treated as financing
arrangements and the sale consideration
received is treated as borrowings.
3A 2. Fair value of financial instruments
The fair value of financial instruments is
the price that would be received to sell
an asset or paid to transfer a liability in an
orderly transaction in the principal (or most
advantageous) market at the measurement
date under current market conditions (i.e.,
an exit price) regardless of whether that
price is directly observable or estimated
using another valuation technique. When the
fair values of financial assets and financial
liabilities recorded in the balance sheet
cannot be derived from active markets,
they are determined using a variety of
valuation techniques that include the use
of valuation models. The inputs to these
models are taken from observable markets
where possible, but where this is not feasible,
estimation is required in establishing fair
values. Judgements and estimates include
considerations of liquidity and model inputs
related to items such as credit risk (both
own and counterparty), funding value
adjustments, correlation and volatility.
For further details about determination
of fair value please see Fair value note in
Accounting policy
3A 3. Impairment of financial asset
The measurement of impairment losses
across all categories of financial assets
requires judgement, in particular, the
estimation of the amount and timing of
future cash flows and collateral values when
determining impairment losses and the
assessment of a significant increase in credit
risk. These estimates are driven by a number
of factors, changes in which can result in
different levels of allowances.
The Company's ECL calculations are
outputs of complex models with a number
of underlying assumptions regarding
the choice of variable inputs and their
interdependencies. Elements of the ECL
models that are considered accounting
estimates include:
? The Company's criteria for assessing if
there has been a significant increase in
credit risk and so allowances for financial
assets should be measured on a LTECL
basis and the qualitative assessment
? The segmentation of financial assets
when their ECL is assessed on a collective
basis
? Development of ECL models, including
the various formulas and the choice of
inputs
? Determination of temporary adjustments
as qualitative adjustment or overlays
based on broad range of forward looking
information as economic inputs
It has been the Company's policy to regularly
review its models in the context of actual loss
experience and adjust when necessary.
3A 4. Provisions and other contingent
liabilities
When the Company can reliably measure
the outflow of economic benefits in relation
to a specific case and considers such
outflows to be probable, the Company
records a provision against the case. Where
the probability of outflow is considered to be
remote, or probable, but a reliable estimate
cannot be made, a contingent liability is
disclosed.
Given the subjectivity and uncertainty of
determining the probability and amount of
losses, the Company takes into account a
number of factors including legal advice, the
stage of the matter and historical evidence
from similar incidents. Significant judgement
is required to conclude on these estimates.
20.2 Nature and purpose of reserves:
20.2.1 Securities premium
Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for
limited purposes in accordance with the provisions of the Companies Act, 2013. During the year ended
March 31, 2025, Securities premium was utilised to the extent of Rs. Nil (March 31, 2024 -Nil on account of
expenses incurred for the issue of Equity shares, in line with Section 52 of the Companies Act 2013).
20.2.2 Employee Stock Options Reserve
The amount represents reserve created to the extent of granted options based on the Employees Stock
Option Schemes. Under Ind AS 102, fair value of the options granted is to be expensed out over the life
of the vesting period as employee compensation costs reflecting period of receipt of service. Also refer
note 41.
20.2.3 Statutory Reserve under Section 29C of National Housing Bank (NHB) Act, 1987
As per Section 29C(1) of the National Housing Bank Act, 1987, the Company is required to transfer at least
20% of its net profit after tax every year to a reserve before any dividend is declared. For this purpose,
any Special Reserve created by the Company under Section 36(1)(viii) of the Income-tax Act, 1961, is
considered to be an eligible transfer. During the year ended March 31, 2025, the company has transferred
Rs. 9,970.64 lakhs (March 31, 2024 - Rs. 7,505.05 lakhs ) in terms of section 36(1)(viii) to the Special Reserve.
The Company has transferred an amount of Rs. 1,537.77 lakhs during the year ended March 31, 2025
(March 31, 2024 - Rs. 2,108.60 lakhs ) to Statutory Reserve u/s 29C of the National Housing Bank Act, 1987.
Total amount clearly earmarked for the purposes of Statutory Reserve u/s 29C is Rs. 50,893.92 lakhs
(March 31, 2024 - Rs. 39,385.51 lakhs ) out of which Rs. 9,305.55 lakhs (March 31, 2024 - Rs. 7,767.78 lakhs)
is distinctly identifiable above and the balance of Rs. 41,588.57 lakhs (March 31, 2024 - Rs. 31,617.73 lakhs )
is included in the Special Reserve created u/s 36(1)(viii) of the Income-tax Act, 1961.
The Company has resolved not to make withdrawals from the Special reserve created under Section
36(1)(viii) of the Income-tax Act, 1961.
20.2.4 Impairment Reserve
IntermsoftherequirementasperRBInotificationno.RBI/2020-21/100DOR.FIN.HFC.CC.No.120/03.10.136/2020-21
dated 17 February 2021, Housing Finance Companies (HFCs) are required to create an impairment reserve
for any shortfall in impairment allowances under Ind AS 109 and Income Recognition, Asset Classification
and Provisioning (IRACP) norms (including provision on standard assets). The overall impairment
provision made under Ind AS is higher than the prudential floor (including the provision requirement
specified in the notification referred to in Note 6) prescribed by RBI.
20.2.5 Retained earnings
Retained earnings are the profits that the Company has earned till date less any transfer to statutory
reserves, general reserves and dividend distributed to shareholders.
The Board of Directors had declared two interim dividend of Rs. 2.5 & Rs. 2 each per share respectively
for equity share of face value of Rs. 2 at their meetings held on 03rd May 2024, 05th Nov 2024 and paid
subsequently on 23rd May 2024, 22nd Nov 2024 respectively.
28.1 Contingent liabilities as per Ind AS 37 and commitments
i) Matters wherein management has concluded the Company's liability to be probable have
accordingly been provided for in the books. Also refer note 17.
ii) Matters wherein management has concluded the Company's liability to be possible have accordingly
been disclosed under Note 28.2 Contingent liabilities below.
iii) Matters wherein management is confident of succeeding in these litigations and have concluded
the Company's liability to be remote. This is based on the relevant facts of judicial precedents and
as advised by legal counsel which involves various legal proceedings and claims, in different stages
of process.
30 Sharing of Costs
The Company and its subsidiary share certain costs / service charges. These costs have been recovered
by the Company from its subsidiary on a basis mutually agreed by both the entities, which has been
relied upon by the Auditors.
Disclosures under Accounting Standards
31 Employee benefit plans
31.1 Defined contribution plans
The Company makes Provident Fund contributions for qualifying employees to the Regional Provident
Fund Commissioner. Under the Scheme, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognized Rs. 760.21 lakhs (March 31, 2024 -
Rs. 664.95 lakhs) for provident fund contributions in the Statement of Profit and Loss. The contributions
payable to the scheme by the Company are at rates specified in the rules of the scheme.
31.2 Defined benefit plans
The Company provides for gratuity, a defined benefit plan (the "gratuity plan") covering eligible
employees in accordance with the Payment of Gratuity Act, 1972. The gratuity plan provides a lump sum
payment to vested employees at retirement or termination of employment based on the respective
employee's last drawn salary and years of employment with the Company. The Company does not have
a funded gratuity scheme for its employees.
The Company is exposed to various risks in providing the above gratuity benefit such as: interest rate
risk, longetivity risk and salary risk.
Interest risk: A decrease in the bond interest rate will increase the plan liability.
Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best
estimate of the mortality of plan participants both during and after their employment. An increase in the
life expectancy of the plan participants will increase the plan's liability.
Salary escalation risk: The present value of the defined benefit plan liability is calculated by reference
to the future salaries of plan participants. As such, an increase in the salary of the plan participants will
increase the plan's liability.
Gratuity provision has been made based on the actuarial valuation done as at the year end using the
Projected Unit Credit method. The details of actuarial valuation as provided by the Independent Actuary
is as follows:
31.4 The date on which the Code on Social Security, 2020 (the "Code") relating to employee benefits shall become
effective is yet to be notified and the related rules are yet to be finalized. The Company will evaluate the
code and its rules, assess the impact, if any, and account for the same when they become effective.
32 Segment Reporting:
The Executive Chairman of the Company takes decision in respect of allocation of resources and assesses
the performance basis the report/ information provided by functional heads and are thus considered to
be Chief Operating Decision Maker (""CODM"").
The Company operates under the principal business segment viz. ""providing long term housing finance,
loans against property and refinance loans"". CODM views and monitors the operating results of its single
business segment for the purpose of making decisions about resource allocation and performance
assessment. Accordingly, there are no separate reportable segments in accordance with the requirements
of Ind AS 108 'Operating segment' and hence, there are no additional disclosures to be provided other
than those already provided in the consolidated financial statements. The Company's operations are
predominantly confined in India.
33 Earnings and Expenditure in foreign currency - Rs. Nil (March 31, 2024: Rs. Nil)
Note:
* As the future liabilities of gratuity and leave encashment are provided on actuarial basis for the Company as
a whole, the amounts pertaining to key managerial personnel is not separately ascertainable and therefore not
included above.
# Includes Investment in subsidiary arising out of financial guarantee obligations.
35 Financial Instruments
35.1 Capital management
The Company actively manages its capital to meet regulatory norms and current and future business
needs, considering the risks in its businesses, expectations of rating agencies, shareholders and investors,
and the available options of raising capital. Its capital management framework is administered by the
risk committee of Company. During the current year, there has been no change in objectives, policies or
processes for managing capital.
The Company is subject to the capital adequacy requirements of the National Housing Bank ('NHB') /
Reserve Bank of India ('RBI'). As per the Master Direction - Non-Banking Financial Company - Housing
Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021, the Company is required to
maintain a minimum ratio of total capital to risk adjusted assets as determined by a specified formula,
at least half of which must be Tier 1 capital, which is generally shareholders' equity.
The Company has complied with all regulatory requirements related to regulatory capital and capital
adequacy ratios as prescribed by NHB / RBI.
The company sets the amount of capital in proportion to its overall financing structure, i.e. equity and
financial liabilities.
Below is the Capital Risk Adequacy Ratio maintained and calculated as per NHB/RBI guidelines in the
respective year by the Company and as per regulatory return filed with NHB in the respective years.
35.1.1 The Company's capital management strategy is to effectively determine, raise and deploy capital to
cover risk inherent in business and meeting the capital adequacy requirements of the Reserve Bank
of India (RBI). The same is done through a combination of equity and/ or short term/ long term debt
as may be appropriate. The Company determines the amount of capital required on the basis of
operations and capital expenditure. The adequacy of the Company's capital is monitored using, among
other measures, the regulations issued by the RBI. The capital structure is monitored on the basis of net
debt to equity and maturity profile of overall debt portfolio. The Company's policy is in line with Master
Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions,
2021 which currently permits HFCs to borrow up to 12 times of their net owned funds ("NOF")
35.3 Fair Value Measurements
Fair Value hierarchy
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 value disclosure are required 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 accounting standard.
(b) Fair value of financial instruments not measured at fair value
Valuation methodologies of financial instruments not measured at fair value
Below are the methodologies and assumptions used to determine fair values for the above
financial instruments which are not recorded and measured at fair value in the Company's financial
statements. These fair values were calculated for disclosure purposes only. The below methodologies
and assumptions relate only to the instruments in the above tables and, as such, may differ from
the techniques and assumptions.
Short-term financial assets and liabilities
For financial assets and financial liabilities that have a short-term maturity (less than twelve
months), the carrying amounts, which are net of impairment, are a reasonable approximation of
their fair value. Such instruments include: cash and cash equivalents, bank balances other than
cash and cash equivalents, other financial assets, trade payables and other financial liabilities
without a specific maturity. Such amounts have been classified as Level 3 except for cash and cash
equivalents and bank balances other than cash and cash equivalents which have been classified
as Level 1.
Loans
The fair values of loans and receivables are estimated by discounted cash flow models that
incorporate assumptions for credit risks, probability of default and loss given default estimates.
Where such information is not available, the Company uses historical experience and other
information used in its collective impairment models.
Fair values of lending portfolios are calculated using a portfolio-based approach. The Company
then calculates and extrapolates the fair value to the entire portfolio, using discounted cash flow
models that incorporate interest rate estimates considering all significant characteristics of the
loans. The credit risk is applied as a top-side adjustment based on the collective impairment model
incorporating probability of defaults and loss given defaults
Debt securities & Borrowings (other than debt securities)
The fair values of Debt Securities and Borrowings (other than Debt securities) are estimated by
discounted cash flow models that incorporate interest cost estimates considering all significant
characteristics of the borrowing. They are classified as Level 3 fair values in the fair value hierarchy
due to the use of unobservable inputs.
Set out below is a comparison, by class, of the carrying amounts and fair values of the Company's
financial instruments that are not carried at fair value in the financial statements. This table does
not include the fair values of non-financial assets and non-financial liabilities.
35.4 Market risk management
Market Risk is the risk of loss in on-balance sheet and off-balance sheet positions arising from movements
in market place, in particular, changes in interest rates, exchange rates and equity. In line with the
regulatory requirements, the Company has in place a Board approved Market Risk Management and
Asset Liability Management ("ALM") policy in place. The Policy provides the framework for assessing
market risk, in particular, tracking of events happening in market place, changes in policies / guidelines
of government and regulators, exchange rate movement, equity market movements, money market
movements etc.
35.5 Interest rate risk management
Interest rate risk is managed through ALM policy framed by the Company. The ALM policy is administered
through the ALCO (Asset Liability Management Committee) which monitors the following on a monthly
basis:
- Borrowing cost of the Company as on a particular date
- Interest rate scenario existing in the market
- Gap in cash flows at the prevalent interest rates
- Effect of Interest rate changes on the Gap in the cash flows
- Fixing appropriate interest rate to be charged to the customer based on the above factors
35.6 Credit risk
Credit risk in the Company arises due to
default by customers on their contractual
obligations which results to financial
losses. Credit Risk is a major risk in the
Company and the Company's asset base
comprises loans for affordable housing and
loans against property. Credit Risk in the
Company stems from outright default due
to inability or unwillingness of a customer to
meet commitments in relation to lending,
settlement and other financial transactions.
The essence of credit risk assessment in the
Company pivots around the early assessment
of stress, either in a portfolio or an account,
and taking appropriate measures.
35.6.1 Credit risk management
Credit risk in the Company is managed
through a framework that sets out policies
and procedures covering the measurement
and management of credit risk. There is
a clear segregation of duties between
transaction originators in the business
function and approvers in the credit risk
function. Board approved credit policies
and procedures mitigate the Company's
prime risk which is the default risk. There is
a Credit Risk Management Committee in
the Company for the review of the policies,
process and products on an ongoing basis,
with approval secured from the Board as
and when required. There is a robust Credit
Risk Management set-up in the Company at
various levels.
1. There are Credit teams to ensure
implementation of various policies and
processes through random customer
visits and assessment, training of branch
staff on application errors, liaison with
other institutions to obtain necessary
information/loan closure documents,
as the case may be, and highlight
early warning signals and industry
developments enabling pro-active field
risk management.
2. The credit sanction is done through
a delegation matrix where credit
sanctioning powers are defined for
respective levels.
3. Portfolio analysis and reporting is used to
identify and manage credit quality and
concentration risks.
4. Credit risk monitoring for the Company is
broadly done at two levels: account level
and portfolio level. Account monitoring
aims to identify weak accounts at an
incipient stage to facilitate corrective
action. Portfolio monitoring aims towards
managing risk concentration in the
portfolio as well as identifying stress in
certain occupations, markets and states.
35.6.2 Significant increase in credit risk
The Company monitors all financial assets
that are subject to impairment requirements
to assess whether there has been a significant
increase in credit risk since initial recognition.
If there has been a significant increase
in credit risk, the Company measures the
loss allowance based on lifetime rather
than Stage 1 (12-month) Expected Credit
Loss (ECL). Pending the adoption of scoring
models to assess the change in credit status
at an account level and at portfolio level,
the Company has adopted SICR (Significant
Increase in Credit risk) criteria based on Days
Past Due (DPD). The following table lists the
staging criteria used in the Company: Staging
Criterion
Stage-1: 0 up to 30 days past due
Stage-2: 31 up to 90 days past due
Stage-3: 90 and above days past due
Stage 2 follows the rebuttable presumption
stated in Ind AS 109, that credit risk has
increased significantly since initial recognition
no later than when contractual payments are
more than 30 days past due.
The Company also considers other qualitative
factors and repayment history and considers
guidance issued by the Institute of Chartered
accountants of India (ICAI) for staging of
advances to which moratorium benefit has
been extended under the COVID regulatory
package issued by RBI and as approved by
the Board.
35.6.3 Measurement of ECL
The key inputs used for measuring ECL on
term loans issued by the Company are:
Probability of default (PD): The PD is an
estimate of the likelihood of default over a
given time horizon (12 Month). It is estimated
as at a point in time. To compute Expected
Credit Loss (ECL) the portfolio is segregated
into 3 stages viz. Stage 1, Stage 2 and Stage 3
on the basis of Days Past Dues. The Company
uses 12 month PD for the stage 1 borrowers
and lifetime PD for stage 2 and 3 to compute
the ECL.
Loss given default (LGD): LGD is an estimation
of the loss arising on default. It is based on
the difference between the contractual cash
flows due and those that the lender would
expect to receive, taking into account cash
flows from eligible collateral.
Exposure at default (EAD): EAD is an estimate
of the exposure at a future default date,
taking into account expected changes in the
exposure after the reporting date including
expected drawdowns on committed facilities.
Probability of Default
To arrive at Probability of Default, 'Vintage
Analysis' was done considering monthly
defaults of borrower since origination.
The analysis considered Monthly Default
Rates starting from inception until the end
of observation period i.e. December 2024
to calculate default rates for each vintage
month. Cumulative PD was calculated from
the marginal PDs for each vintage month.
Simple Average and Weighted Average
PD was computed for each Month on Book
(MOB) period starting from MOB 0 until MOB
"n" (end of observation period). The Company
has used Simple average to eliminate the
bias that can be possible due to weighted
average effect.
Loss Given Default
LGD was calculated using First time NPA (FTN)
date and recovery data for each of these FTN
dates. FTN date was taken from inception until
the latest period. For each pool, recovery data
was mapped to the subsequent months until
current period from the respective default
month i.e. recovery data was retrieved and
plotted against the flow of month i.e. Months
on Book MOB 0, MOB 1, MOB 2, MOB 3 till MOB
(n) against each default month. Considering
time value of money, recoveries in each
month was discounted to arrive at the
value as of FTN date. Average Interest Rates
charged for each disbursement year was
used as the Effective Interest Rates (EIR) for
the loans.
Marginal Recovery rates was computed for
each month as Discounted Recovery amount
for a given month divided by the total
outstanding amount for the given FTN date.
Cumulative recovery rates were computed
for each FTN date and LGD for corresponding
FTN date was computed by using the formula
(1- Recovery Rate). Weighted average LGD
was computed for the entire observation period, weights being the total outstanding amount for each
FTN date.
Exposure at Default :
EAD is the total outstanding balance at the reporting date including principal and accrued interests at
the reporting date. EAD calculation for all portfolios is as under:
Stage 1 Assets:
• [(The total outstanding balance drawn) (Undrawn Portion*CCF undrawn)].
Stage 2 Assets:
• [(The total outstanding balance drawn) (Undrawn Portion*CCF undrawn)].
Stage 3 Assets:
• [(The total outstanding balance drawn) (Undrawn Portion*CCF undrawn)].
Credit Conversion Factor (CCF) for undrawn portion has been taken at 100% based on historical
experience and other information available with the Company.
The Company measures ECL as the product of PD, LGD and EAD estimates for its Ind AS 109 specified
financial obligations.
Credit Risk Concentrations
In order to manage concentration risk, the Company, considering the regulatory limits, focuses on
maintaining a diversified portfolio across housing loans and loans against property. An analysis of the
Company's credit risk concentrations is provided in the following tables which represent gross carrying
amounts of each class.
35.6.6 Offsetting financial assets and financial liabilities
The Company has not recognised any financial asset or liability on a net basis.
35.6.7 Financial Guarantee
The Company has issued Corporate Guarantees of Rs. 45,906.49 lakhs (March 31, 2024 -Rs. 63,130.60
lakhs) to Banks and external lenders on behalf of the subsidiary - Aptus Finance India Private Limited.
Based on the financial performance of the subsidiary, the Company does not expect the guarantee
liability to devolve on the Company.
35.7 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities
when they are due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to its reputation.
Exposure to liquidity risk
The Company manages and measures liquidity risk as per its ALM policy and the ALCO (Asset Liability
Management Committee of the Company) is responsible for managing the liquidity risk. The Company
not only measures its current liquidity position on an ongoing basis but also forecasts how liquidity
position may emerge under different assumptions. The liquidity position is tracked through maturity or
cash flow mismatches across buckets spanning all maturities.
35.8Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and system
or from external events. Operational risk is associated with human error, system failures and inadequate
procedures and controls. It is the risk of loss arising from the potential that inadequate information system;
technology failures, breaches in internal controls, fraud, unforeseen catastrophes, or other operational
problems may result in unexpected losses or reputation problems. Operational risk exists in all products
and business activities.
The Company recognizes that operational risk event types that have the potential to result in substantial
losses includes Internal fraud, External fraud, employment practices and workplace safety, clients, products
and business practices, business disruption and system failures, damage to physical assets, and finally
execution, delivery and process management.
The Company cannot expect to eliminate all operational risks, but it endeavours to manage these risks
through a control framework and by monitoring and responding to potential risks. Controls include effective
segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment
processes, such as the use of internal audit.
35.9Divergence in Asset Classication and Provisioning
There is no Divergence in Asset Classisification and Provisioning during current and previous financial year.
36 Earnings per share
Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by
the weighted average number of Equity shares outstanding during the year after considering the share
split.
Diluted EPS is calculated by dividing the profit attributable to equity holders of the Company (after adjusting
for interest on the convertible preference shares, if any) 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 conversion of all the dilutive potential Equity shares into Equity shares after considering the share split
mentioned.
42 Disclosure pursuant to RBI notification no. RBl/2020-21/60 DOR.NBFC (HFC).CC.No.118/03.10.136/2020-21
dated October 22, 2020 and RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated March 13,
2020 on Implementation of Indian Accounting Standards
RBI has issued Notification no. RBl/2020-21/60 DOR.NBFC (HFC).CC.No.118/03.10.136/2020-21 dated October
22, 2020 and RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated March 13, 2020 in respect of
recognition of impairment on financial instruments starting from financial year 2020-21 for Housing Finance
Companies. The Company has complied with the requirements of Ind AS and the guidelines and policies
approved by the Board in this regard.
Any shortfall in ECL provision compared to the requirements as per IRAC norms are apportioned by the
Company to Impairment Reserve at reporting periods. Such balance can be utilised / withdrawn by the
Company only with prior permission of the Reserve Bank of India as per the said Circular. The shortfall in
ECL provision compared to IRACP requirement as at March 31, 2025 is Rs. Nil (As at March 31, 2024 Rs. Nil). The
balance in the impairment reserve as at March 31, 2025 is Rs. 610.36 lakhs (As at March 31, 2024 Rs. 610.36
lakhs) (Refer Note 20.1 and Note 20.2.4).
46 Disclosure as required by National Housing Bank
The following disclosures have been given in terms of National Housing Bank's notification no. NHB.
HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017 and in terms of the circular no. NHB/ND/DRS/Pol-
No.35/2010-11 dated October 11, 2010. Further, the disclosures which are for regulatory and supervisory
purpose, have been made so as to comply with NHB's Policy Circular No. NHB(ND)/DRS/Policy Circular
No. 89/2017-18 dated June 14, 2018 which requires Housing Finance Companies to continue to follow the
extant provisions of National Housing Bank Act, 1987 and Housing Finance Companies (NHB) Directions
2010 including framework on prudential norms and other related circulars issued in this regards by
NHB from time to time and the same have been compiled by the Management in accordance with
Accounting Standards prescribed under section 133 of the Companies Act, read with the Companies
(Accounting Standards) Rules, 2006, as amended (Indian GAAP) and relied upon by the auditors.
(f) Institutional set-up for liquidity risk management
The Board of Directors of the Company have adopted a Risk Management Policy. The Board adopted policy
contains the framework and guidelines for Risk management. The changes brought in the Liquidity Risk
Management Framework vide its Circular No. RBI/2019-20/88 DOR.NBFC (pd) CC. No.102/03.10.001/2019-20
November 04, 2019 are also being covered as part of the Risk Management Policy which will be reviewed
by the Board periodically for compliance and implementation.
The Board shall have the overall responsibility for management of liquidity risk by reviewing the
implementation of the Risk Management Policy. The Company has also constituted Risk Management
Committee and Asset-Liability Management Committee (ALCO) to carry out the functions as listed out
in the said circular.
46.32 The Company has adopted all the norms issued under 'Prudential norms on Income recognition, Asset
classification, and provisioning pertaining to advances - clarifications' issued by the Reserve Bank of
India (RBI) vide circular no.DOR.STR.REC.68/21.04.048/2021-22 dated November 12, 2021. Such alignment
has resulted in the transition of sub 90 DPD assets as additional non-performing assets as of March 31,
2025, and provided as per norms.
46.33 The listed Non-Convertible Debentures of the Company secured by way of specific charge on assets
under hypothecation and specified immovable property. The total asset cover is more than one hundred
percent of the principal amount of the said debentures.
46.34 Disclosure pursuant to RBI notification dated September 24, 2021 on "Transfer of Loan Exposures" are
given below:
(a) Details of transfer through assignment in respect of loans not in default during the quarter and year
ended March 31, 2025.
(b) The Company has not acquired, any loans
not in default during the quarter ended &
year ended March 31, 2025.
(c) The Company has not transferred or
acquired, any stressed loans during the
quarter ended & year ended March 31,
2025.
46.35 Remuneration of Directors - Pecuniary
relationship of Non-executive Directors.
Remuneration paid to Directors is reflected in
Note no.34 "Related Party Transactions". There
is no pecuniary relationship or transactions of
Non-Executive Directors with the Compnay or
its Directors., Senior Management or Group
Companies
46.36 Disclosure pursuant to Reserve Bank
of India Circular No.DOR.FIN.HFC.
CC.No.120/03.10.136/2020-21 dated February 17,
2021 and DOR.NBFC (PD) CC. No.102/03.10.001
/2019-20 dated November 4, 2019 pertaining
to Liquidity Risk Management Framework for
Non-Banking Financial Companies.
As per the Guidelines on Liquidity Risk
Management Framework for NBFCs issued by
RBI vide notification no. RBl/2019-20/88 DOR.
NBFC (PD) CC. No.102/03.10.001/2019-20, HFCs
are required to maintain Liquidity Coverage
Ratio (LCR) from December 1, 2020. Under the
said guidelines, all non-deposit taking HFCs
with asset size of INR 5,000 crore and above
but less than INR 10,000 crore are required to
maintains a minimum LCR of 60%.
The Company has implemented the
guidelines on Liquidity Risk Management
Framework prescribed by the Reserve Bank
of India requiring maintenance of Liquidity
Coverage Ratio (LCR), which aim to ensure
that a HFC maintains an adequate level of
unencumbered High Quality Liquid Assets
(HQLA) that can be converted into cash to
meet its liquidity needs for a 30 calendar
day time horizon under a significantly severe
liquidity stress scenario. Compliance with LCR
is monitored by Asset Liability Management
Committee (ALCO) of the Company.
Qualitative Information:
Main drivers to the LCR numbers :
All significant outflows and inflows determined
in accordance with RBI guidelines are
included in the prescribed LCR computation.
Composition of HQLA:
The HQLA maintained by the Company
comprises cash balance maintained in
current account and callable fixed deposits
with Scheduled Commercial Banks.
Concentration of funding sources:
The Company maintains diversified sources of
funding comprising term loans, Securitisation
loans and NCDs. The funding pattern is
reviewed regularly by the management.
Other inflows and outflows in the LCR
calculation that are not captured in the LCR
common template but which the institution
considers to be relevant for its liquidity profile
Ni
47 Registration obtained from other financial sector
regulators
The Company is registered with RBI and has all
its operations in India. The Company is acting
as a corporate agent and is registered with the
Insurance Regulatory and Development Authority
of India (IRDAl) vide registration number CA 1013
48 The Company has not advanced or loaned or
invested (either from borrowed funds or share
premium or any other sources or other kind
of funds) to or in any other person or entity,
including foreign entity ("intermediaries"), with
the understanding, whether recorded in writing or
otherwise, that the intermediary shall, 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 provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries;
The Company has not received any funds (which
are material either individually or in the aggregate)
from any person or entity, including foreign entity
("Funding Parties"), with the understanding,
whether recorded in writing or otherwise, that
the Company shall, directly or indirectly lend or
invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Funding
Parties ("Ultimate Beneficiaries") or provide any
guarantee, security or the like on behalf of the
Ultimate Beneficiaries;
49 Breach of covenant of loan availed or debt
securities issued - Nil
50 The disclosure on the following matters required
under Schedule III as amended are not made, as
the same are not applicable or relevant for the
Company.
a) The Company has not traded or invested in
crypto currency or virtual currency during the
financial year.
b) No proceedings have been initiated or are
pending against the Company for holding
any benami property under the Benami
Transactions (Prohibition) Act 1988 (45 of 1988)
and rules made thereunder.
c) The Company has not been declared willful
defaulter by any bank or financial institution
or Government or any other Government
authority.
d) The Company has not entered into any
scheme of arrangement.
e) No satisfaction of charges are pending to be
filed with the ROC.
f) There are no transactions which are not
recorded in the books of account which have
been surrendered or disclosed as income
during the year in the tax assessments under
the Income-tax Act, 1961.
g) The Company has no transactions with
Companies struck off under section 248 of
the Companies Act, 2013 or section 560 of the
Companies Act, 1956.
h) The Company does not possess any
immovable property (other than properties
where the Company is the lessee and the
lease agreements are duly executed in favour
of the lessee) whose title deeds are not held in
the name of the company during the financial
year ended March 31, 2025 and March 31, 2024.
i) The Group has complied with the number of
layers prescribed under clause (87) of section
2 of the Act read with Companies (Restriction
on number of Layers) Rules, 2017 for the
financial years ended March 31, 2025 and
March 31, 2024.
51. Previous year's figures have been regrouped /
reclassified wherever necessary to correspond
with the current year classification / presentation.
As per our report of even date
For Sundaram & Srinivasan For and on behalf of the Board of Directors of
Chartered Accountants Aptus Value Housing Finance India Limited
Firm's Registration No. 004207S (CIN : L65922TN2009PLC073881)
S Usha M Anandan P Balaji
Partner Executive Chairman Managing Director
Membership No: 211785 DIN: 00033633 DIN: 07904681
John Vijayan Rayappa Sanin Panicker
Chief Financial Officer Company Secretary
Membership No: A32834
Place : Chennai Place : Chennai
Date : May 06, 2025 Date : May 06, 2025
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