Profit & Loss Account for the year ended 31st March, 2005 (Rs. in Lacs) INCOME : Income from Operations Other Income Total EXPENDITURE : Interest & Other Charges Payment to and Provision For Employees Operational & Other Expenses Provision for contingencies Less : Transferred from General Reserve (Refer Note - B-7, Schedule - R') Depreciation Total
Schedule
31.03.2005
31.03.2004
L
16,104.79 277.65 16,382.44
14,421.37 267.19 14,688.56
M
10,591.13
9,704.76
N O J
821.31 1,216.25
673.53 1,079.50
254.70
Profit before tax Less : Provision for Taxation Profit after tax Add : Balance B/F from previous year Profit Available for Appropriation APPROPRIATIONS : Special Reserve under Section 36(l)(viii) of the Income Tax Act 1961 Transfer to General Reserve Proposed Equity dividend 20th Anniversary Special Equity Dividend Interim Dividend Paid on Preference Share Tax On Dividend Balance carried to Balance Sheet Total Earnings Per Share (Rs.) Balance Sheet Abstract & Company Profile Significant Accounting Policies and Notes to Accounts
520.52
406.27
265.82
406.27
111.29 13,005.80
83.69 11,947.75
3,376.64 666.20 2,710.44
2,740.81 500.89 2,239.92
59.58 2,770.02
114.97 2,354.89
1,050.00 450.00 1,002.26
810.00 425.00 536.93
357.95
39.70 136.16 91.90 2,770.02
45.00 120.43 59.58 2,354.89
7.05
6.12
P Q R
Schedules referred herein above and annexed hereto form part of the Profit & Loss Account. This is the Profit & Loss Account referred to in our report of even date For B. M. CHATURVEDI & CO. Chartered Accountants B. M. Chaturvedi ICAI M. No.17607
Rakesh Kumar Wadhawan Chairman
K. T. Thacker Company Secretary
Kapil Wadhawan Managing Director
Sarang Wadhawan Ashok Kumar Gupta R. P. Khosla M. S. Sundara Rajan R. S. Hugar G. P. Kohli Directors
Place : Mumbai Dated : 13th May, 2005 Annual Report 2004-05
DHFLAccounts
Schedules annexed to and forming part of the Balance Sheet as at 31st March, 2005 31.03.2005
(Rs.in Lacs )
31.03.2004
J' CURRENT LIABILITIES AND PROVISIONS Current Liabilities Interest Accrued but not due Sundry Creditors & Other Liabilities Advance received Unclaimed Dividend Provisions For Taxation (Net of Advance & TDS) For Proposed Equity Dividend For Proposed 20th Anniversary Special Dividend For Tax On Dividend
531.44 1,491.71 135.96 21.87
(63.73) 1,002.26
19.66 536.93
130.97
357.95 120.43
Provision for Contigencies including provision for diminution in Investment As per last Balance sheet Add : Provision during the year Less : Utilised During the year Balance Provision at the end of the year Less : Shown as diminution in Investment separately Total
2,180.98
435.17 1,208.99 94.04 15.10
1,069.50
484.29
506.57
520.52 1,004.81
406.27 912.84
464.45 540.36
428.55 484.29
77.63
462.73 3,713.21
140.27
1,753.30
1,034.97
344.02 3,132.29
K' MISCELLANEOUS EXPENDITURE
Annual Report 2004-05
DHFLAccounts
Schedules annexed to and forming part of the Profit & Loss account for the year ended 31st March, 2005
(Rs.in Lacs )
31.03.2005 L' INCOME FROM OPERATION Interest - Loans Interest - Deposits and Bonds (Tax deducted at source Rs.48.69 lacs (Rs. 63.92 lacs) Fees & Other Charges Total
31.03.2004
14,801.65 468.68
13,308.77 325.31
834.46 16,104.79
787.29 14,421.37
8,068.84 908.15 1,614.14 10,591.13
7,163.68 1,287.71 1,253.37 9,704.76
686.18 97.83
570.99 74.32
37.30 821.31
28.22 673.53
157.98 8.14 71.63 106.69 53.48 153.25 44.10 150.37 152.18 44.01 39.88 7.65 75.31 4.01 16.80 22.38 94.68 13.71 1,216.25
95.94 10.98 46.10 94.43 45.81 149.28 30.81 158.23 115.61 37.19 41.00 3.15 89.73 7.02 16.80 24.87 95.13 17.42 1,079.50
2,710.44 39.70 5.19 2,665.55 50,113,219 37,834,990 10.00 7.05
2,239.92 45.00 5.77 2,189.15 35,795,156 35,795,156 10.00 6.12
M' INTEREST AND OTHER CHARGES On Loans On Deposits On Debentures Total N' PAYMENTS TO AND PROVISIONS FOR EMPLOYEES Salaries and Bonus Staff Welfare Expenses Contribution to Provident Fund & Other Funds Total O' OPERATIONAL & OTHER EXPENSES Rent Rates & Taxes Conveyance & Motor Car Expenses Travelling Expenses Printing & Stationery Advertisement & Business Promotion Insurance Legal & Professional Charges Postage, Telephone & Telegram General Repairs & Maintenance Electricity Charges Directors Sitting Fees Brokerage Loss On Sale Of Assets Commission to Directors Credit Rating Charges Expenses under Miscellaneous Heads Miscellaneous Share/ NCD Expenses written off Total P' EARNING PER SHARE Net Profit Attributable to Equity Shareholders Profit after tax Less : Preference Share dividend Tax on above Net Profit attributable to equity shareholders No. of Equity shares (Number) Weighted Average No. of Equity Shares Nominal value of Equity Shares (Rs.) Earning Per Share (Rs.)
Annual Report 2004-05
DHFLAccounts
Schedules annexed and forming part of the Accounts for the year ended 31st March, 2005 Q' BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE Information pursuant to Part IV of Schedule VI of the Companies Act, 1956. I.
Registration Details Registration No. 1 1
II.
-
3 2 6 3
9
State Code
1
1
Capital raised during the year ( Amount in Rs. Lacs ) Public Issue N I
0 3
2 0 0 5
Rights Issue
L
5 0 1 1
Bonus Issue N I
Balance Sheet Date 3 1
.
3 2
.
1 9
Private Placement L
N I
L
III. Position of Mobilisation and Deployment of Funds ( Amount in Rs. Lacs ) Total Liabilities Total Assets 1 7 5 6 1 6
. 1 9
1 7 5 6
1 6
Sources of Funds Paid up Capital
Reserves & Surplus
5 0 1 1
. 6 1
1 3 9 4 7
Secured Loans
. 5
1
Unsecured Loans
1 3 7 5 7 9
. 8 1
1 9 0
7 7
.
2 6
1 8 .
0 4
Application of Funds Net Fixed Assets
Investments
3 0 0 9
. 9 5
Net Current Assets 7 7 2 0
. 1 5
1 2 0
Misc. Expenditure 5 6
Accumulated Losses
.
8 9
Housing Loans & Other Loans
N I L
1 5 2 9
2 7 .
1 9
Deffered Tax Liability 1 1 6 0
. 0 3
IV. Performance of Company ( Amount in Rs. Lacs ) Turnover 1 6 3 8 2
Total Expenditure
. 4 4
1 3 0 0 5 .
Profit/Loss before tax 3 3 7 6
Profit/Loss after tax . 6 4
2 7
Earning per Share (in Rs.) 7 V.
8 0
1 0
.
4 4
Dividend Rate %
. 0 5
2 0
Generic Names of Three Principal Products / Services of Company ( as per monetary terms ) Product Description Item Code No. i)
Housing Finance
NO T
A P P L
I C A B L
E
ii) Lease Financing
NO T
A P P L
I C A B L
E
iii) Housing Development
NO T
A P P L
I C A B L
E
Annual Report 2004-05
DHFLAccounts
Schedule forming part of accounts for the year ended 31st March, 2005. R' NOTES TO ACCOUNTS A. Significant Accounting Policies 1.
Basis of preparation of financial statements: a)
The financial statements have been prepared under the historical cost convention, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 and Housing Finance Companies, (NHB) Directions 2001. Accounting Standards (AS) referred to in the notes are as issued by the Institute of Chartered Accountants of India.
b)
Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the company.
2.
Interest on housing loans: Repayment of housing loans is by way of Equated Monthly Instalments (EMI) comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Company's financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre-EMI interest is payable.
3.
Interest & other related borrowing cost: Interest accrued on cumulative fixed deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme. Interest and related expenses being part of borrowing cost are recognized as an expense in the period for which they are incurred as specified in Accounting Standard (AS 16) on Borrowing Costs.
4.
Revenue Recognition: a) Interest on performing assets is recognized on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. b)
Dividend income on investments and penal interest income on delayed EMI/PEMI are recognised on receipt basis
5.
Foreign Exchange Transactions: Transactions in foreign currencies are recorded at the rates prevailing on the dates of the transactions. Monitory items denominated in foreign currency are stated at contracted rates as those are covered by forward contracts. Premium for forward contracts is recognized as expenditure over the life of the contract.
6.
Provision for Contingencies: Provision for Contingencies has been made for diminution in investment value and on non-performing housing loans and other assets as per the Prudential Norms prescribed by the National Housing Bank.
7.
Investments: All Investments, other than Investments in mutual funds, are in the nature of long term Investments and are valued at cost as per Accounting Standard (AS 13) on Accounting for Investments and the guidelines issued by the National Housing Bank. However full provisions for diminution in the value of said Investments is made.
8.
Fixed Assets: Fixed Assets are capitalised at cost inclusive of expenses incidental thereto. Depreciation on fixed assets is provided on straight-line method at the rates prescribed under Schedule XIV to the Companies Act, 1956.
9.
Share and NCD issue expenses: Expenses in connection with issue of shares have been amortised in accordance with Section 35(D) of the Income Tax Act, 1961 and expenses relating to issue of non-convertible debentures have been amortised over the period for which they have been issued.
Annual Report 2004-05
DHFLAccounts
NOTES TO ACCOUNTS (contd.) 10.
Brokerage paid on Fixed Deposits: Brokerage paid on long term fixed deposits mobilised during the year has been treated as revenue expense only for the period relating to the year ended 31.03.2005 and balance is treated as prepaid expenses to be adjusted on prorata basis in the future accounting years.
11.
Employees Retirement Benefits: a) Company's contribution to Government provident fund is charged to Profit & Loss Account. b) Gratuity & Leave encashment payable at the time of retirement are charged to Profit & Loss Account on the basis of actuarial valuation.
12.
Earnings per share The earnings per share has been computed as per Schedule P in accordance with Accounting Standard (AS-20) on, Earnings per share and is also shown in the profit & loss account.
13.
Income Tax: Income tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS-22) on Accounting for Taxes on Income. The Deferred tax assets and liabilities for the year, arising out of timing difference, are reflected in the profit and loss account. The cumulative effect thereof is shown in the Balance sheet. The deferred tax assets are recognised only if there is a reasonable certainty that the assets will be realized in future.
B.
OTHER NOTES: -
1.
Non Convertible Debentures amounting to Rs. 18298.66 lacs (Rs 11809.33 lacs ) are secured / to be secured by way of first charge as per note B-2 here in below and are redeemable at par, in one or more instalments, on various dates with the earliest redemption being 26th September, 2005 and the last being 25th November, 2010.
2.
Secured term loans from the National Housing Bank, other Banks, International Finance Corporation (IFC Washington), Asian Development Bank (ADB, Manila), Financial Institutions and Secured Non Convertible Debenture are secured/to be secured by way of first charge to and in favour of the participating banks, Institutions, National housing bank and Debenture Trustees jointly ranking pari passu inter-se, on the company's whole of the present and future book debts outstanding, investments including all the receivable of the company and other movable assets wherever situated. They are further secured / to be secured on pari passu basis by constructive delivery of various title deeds of certain immovable properties, to the Union Bank of India, acting for itself and as an agent of other participating lenders and Debenture trustees, and are also guaranteed by three directors of the company.
3.
The unsecured loans received by the company from banks are guaranteed by the three directors of the company and backed by the Demand Promissory Notes issued by the company.
4.
Term loans includes short-term foreign currency loan of Rs5803.69 Lacs (Rs10053.62 lacs) received from banks, which are secured on pari passu basis with other term loans. The foreign currency loans are fully covered with foreign exchange risk management arrangement whereby it is fully protected from foreign exchange fluctuation. The long terms secured loans including secured NCD due for repayments / redemptions include Rs. 15433.32 Lacs (Rs 18667 lacs) payable within one year. Secured loan from bank includes Rs 1829.44 lacs as cash credit and Rs 445.71 lacs as bank overdraft from consortium leader additionally secured by way of pledge of fixed deposits with the same bank of aggregate value of Rs 438.81lacs.
5.
As certified by the management, loans given by the company are secured by equitable mortgage/ registered mortgage of the property and assets financed and/or assignment of Life Insurance Policies and/or personal guarantees and/or undertaking to create a security and are considered good.
6.
Interest Income on loans includes income of Rs.482.96 Lacs (Rs365.04 lacs) being income from Securitisation of individual housing loans
Annual Report 2004-05
DHFLAccounts
NOTES TO ACCOUNTS (contd.) 7.
In terms of the requirement of National Housing Bank (NHB), the Company is required to provide for contingency of Rs. 540.36 lacs (Rs. 484.29 Lacs) in respect of Non Performing Assets as on the date of balance sheet. The Company has written off certain NPAs of Rs. 464.45 lacs (Rs. 428.55 lacs) during the year by utilizing contingency provision which includes accumulated unrealised penal interest recognized as income in earlier years along with other short OTS recoveries. The NHB requires the Company to write off such unrealised income on NPA accounts, for those NPA write offs related to earlier years, the Company has withdrawn equivalent amount of Rs. 254.70 lacs from General Reserve by crediting Profit & Loss Account. During the year, company has transferred Rs. 520.52 Lacs (Rs 406.27 lacs) from the Profit & Loss account which includes Rs. 45.89 lacs (Rs. 117 lacs) provision for diminution of investments debited to Profit & Loss Account. The above utilisation of Contingency Provision includes Rs. 108.53 lacs (Rs. 135.04 lacs) utilised on disposal of such investments diminution.
8.
The company has changed the method and terms of recognizing non-performing assets during the year in line with the revised directions of NHB in this respect and therefore provision for the non-performing assets in respect of housing and real estate loan assets where payment of EMI/PEMI were overdue for more than 90 days was made, instead of 6 months overdue under the old NHB norms. As per the new norms, the Company has provided Rs.172 .76 lacs for contingency on the sub-standard assets and Rs.289.97 lacs on doubtful assets.
9.
The de-recognized interest income, during the year, on non performing assets is Rs. 273.17 lacs (Rs. 170.38 lacs). The company has changed the method of identification of NPA based on the revised guidelines of NHB from due of more than six months to new norm of 90 days overdue. Had the company followed the same method, its NPA provisions for the year would have been lower by Rs. 173.10 lacs and the profit for the year higher by the same amount. Similarly, interest de-recognition would also have been lower by further Rs. 79.72 lacs and profit for the year higher by the same amount.
10.
As per Accounting Standard (AS-18) on Related Party Disclosures the disclosure of transactions with related parties as defined therein are given below:
A) 1.
List of related parties with whom transactions have taken place and relationship: Companies (i)
Subsidiary Company DHFL Vysya Housing Finance Corporation Ltd.
(ii)
2.
Associate Companies a.
DHFL Insurance Services Ltd.
b.
DHFL Property Services Ltd.
c.
Inter Active Multi Media Technology Pvt. Ltd.
d.
DHFL Assets Reconstruction Corporation Ltd.
e.
Wadhawan Holdings Pvt. Ltd.
Key Management Personnel (i) Shri Kapil Wadhawan (ii) Shri Sarang Wadhawan (iii) Shri Bikrum Sen
3.
Relatives of Key Management Personnel (i)
4.
Shri Rakesh Kumar Wadhawan
Others Rajesh Kumar Wadhawan Education Trust
Annual Report 2004-05
DHFLAccounts
NOTES TO ACCOUNTS (contd.) B)
Transactions during the year with related parties: Nature of Transaction
Investment Advances Recoverable in cash or kind Balance as at 1st April 2004
Subsidiary Company
Remuneration Directors sitting fee Donation
Others
63.96 (30.98) 18.32 (37.36) 0.10 (4.38) 82.18 (63.96)
61.81 (49.45) 38.31
1.48 (3.02)
2150.00
Expenditure Professional charges
Relatives of Key Management Personnel
Recovered during the year
Interest
Key Management Personnel
2950.00
Income Dividend
Associate Companies
1667.28 (1667.28)
Advance during the year
Balance as at 31st March 2005
(Rs.in lacs)
800.00
43.94 (33.99)
0.77 (0.66) 1.59 (0.65)
5.00 (10.00)
11.
The Company has issued during the year 1,43,18,063 equity share of Rs. 10 each for cash at a premium of Rs. 25/- per share aggregating to Rs. 5011.32 lacs on rights basis to the existing equity shareholders of the Company in the ratio of 4 equity share for every 10 equity shares held. The money raised as above was utilised for the purpose for which it was raised in terms of letter of offer.
12.
The Company has redeemed its 9% Cumulative Redeemable Preference shares aggregating to Rs. 500 lacs out of the proceeds of a fresh issue of capital as mentioned in note B-11 hereinabove in terms of letter of offer issued for raising such equity capital.
13.
The main business of the company is to provide loans for the purchase or construction of residential houses and all other activities of the company revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS-17) on Segment Reporting, which needs to be reported.
14.
There are no amounts payable to any small-scale industrial undertaking.
15.
As required under section 205 (C) of the Companies Act, 1956, the company has transferred Rs. 2.20 lacs (Rs. 2.25 lacs) to the Investor Education & Protection Fund (IEPF) during the year. There were no amounts due for transfer to IEPF on the date of balance sheet.
16.
Contingent liability in respect of guarantee provided by the company aggregated to Rs 175.06 lacs (Rs 230 lacs)
Annual Report 2004-05
DHFLAccounts
NOTES TO ACCOUNTS (contd.) 17.
Managerial Remuneration (Rs. in lacs) 2004-05 Salaries and Commission
2003-04
28.08
28.08
Contribution to Provident Fund
1.30
1.30
Perquisites
5.81
4.61
Computation of Net Profit in accordance with Section 349 read with sections 309 (5) and 198 of Companies Act, 1956. Profit for the year before tax Add:
Depreciation as per books
Sitting Fees to Directors Remuneration to whole-time Directors Commission to Directors Loss on Sale of Fixed Assets Less: Depreciation u/s 350 Net Profit i) Commission payable to Whole time Directors @ 2.5% of the Net Profit. Restricted to ii) Commission payable to other Directors @ 1.0% of the Net Profit. Restricted to
3376.64 111.29 7.65 35.19 6.00 4.01
164.14 240.64 3300.14 82.50 10.80
30.00 6.00
18.
Other Income includes dividend of Rs. 61.81 lacs (Rs. 49.45 lacs) received from subsidiary company, other dividend of Rs. 7.27 lacs (Rs. 1.91 lacs) on other investment and Rs 208.57 lacs (Rs. 215.83 lacs) from profit on sale of investments including mutual fund dividend. Interest on deposits and bonds includes Rs. 260.55 lacs (Rs. 143.28 lacs) in respect of bank FDRs, Rs 38.31 lacs (Nil) received from subsidiary company and Rs 169.82 lacs (Rs 182.03 lacs) from others.
19.
The Company's Income-tax and interest tax assessment has been completed up to the financial year ending 31-03-2002. The Income-tax department has raised additional demands of Rs 690.11 lacs in aggregate for assessment year 97-98 to assessment year 2002-2003 against which the company has preferred appeal with the appropriate authorities. Based on the legal position and decided cases, the company has been legally advised that the said demand would be set aside and accordingly no additional provisions need to be made and hence no further provision has been made for the same. However company has paid Rs 473.41 lacs against the above additional demands till date. Deferred tax liability of Rs 69.98 lacs for current year is included in the provision for taxes and debited to P & L account.
Annual Report 2004-05
DHFLAccounts
NOTES TO ACCOUNTS (contd.) 20.
Auditors Remuneration (*) (Rs. in lacs) 2004-05 Audit Fees Tax Audit Fees
2003-04
16.18
15.43
1.70
1.11
17.88
16.54
(*) Includes payments to Branch Auditors, reimbursement of actual out of pocket expenses. 21.
Expenditure in foreign currency 2004-05 Foreign Travelling
8.44
22.
Figures for the previous year have been regrouped wherever necessary.
23.
Figures in brackets represent previous year's figures.
2003-04 2.78
In terms of our report of even date
For B. M. CHATURVEDI & CO. Chartered Accountants
B. M. Chaturvedi ICAI M. No.17607
Rakesh Kumar Wadhawan Chairman
K. T. Thacker Company Secretary
Kapil Wadhawan Managing Director
Sarang Wadhawan Ashok Kumar Gupta R. P. Khosla M. S. Sundara Rajan R. S. Hugar G. P. Kohli Directors
Place : Mumbai Dated : 13th May, 2005
Annual Report 2004-05
DHFLAccounts
