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LIC Housing Finance Ltd.

BSE: 500253 Sector: Financials
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OPEN 653.00
VOLUME 95571
52-Week high 794.10
52-Week low 470.00
P/E 16.13
Mkt Cap.(Rs cr) 32,144
Buy Price 636.95
Buy Qty 6.00
Sell Price 0.00
Sell Qty 0.00
OPEN 653.00
CLOSE 648.65
VOLUME 95571
52-Week high 794.10
52-Week low 470.00
P/E 16.13
Mkt Cap.(Rs cr) 32,144
Buy Price 636.95
Buy Qty 6.00
Sell Price 0.00
Sell Qty 0.00

LIC Housing Finance Ltd. (LICHSGFIN) - Director Report

Company director report

To the Members of LIC Housing Finance Limited

Your Directors are pleased to present the Twenty Seventh Annual Report together withthe Audited Financial Statements for the year ended 31st March 2016 of LICHousing Finance Limited ('the Company').

Financial results

(' In crore)

For the year ended 31st March 2016 For the year ended 31st March 2015
Profit before Tax 2563.55 2101.94
Tax Expense 902.76 715.75
Profit after Tax 1660.79 1386.19
Special Reserve & Statutory Reserve u/s 29C of NHB Act 1987 500.00 385.00
General Reserve 400.00 300.00
Proposed Dividend 277.56 252.33
Tax on Dividend 55.68 49.90
Balance carried forward to next year 427.55 398.96
1660.79 1386.19


Considering the performance during the financial year 2015-16 your Directors recommendpayment of dividend for the financial year ended 31st March 2016 of ' 5.50 perequity share of face value of ' 2 per equity share i.e. @ 275 percent as against ' 5 perequity share of face value of ' 2 per equity share for the previous year i.e. @ 250percent. The total dividend outgo for the current year would amount to ' 333.25 croreincluding Dividend Distribution Tax of ' 55.68 crore which is 20.06 percent of ProfitAfter Tax as against ' 302.23 crore including dividend distribution tax of ' 49.90 crorefor the previous year which was 21.80 percent of Profit After Tax.

Performance Income and profit

The Company earned total revenue of ' 12485.46 crore registering an increase of 15.62percent. The percentage of administrative expenses to the housing loans which was 0.34percent in the previous year has marginally increased to 0.366 percent during thefinancial year 2015-16.

Profit before tax and after tax stood at ' 2563.55 crore and ' 1660.79 crorerespectively as against ' 2101.94 crore and ' 1386.19 crore respectively for theprevious year. Profit before tax increased by 21.96 percent over the previous year whileprofit after tax showed growth of 19.81 percent over that of the previous year.

Lending operations

Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of18.03 percent during the financial year. During the financial year the Company sanctioned173950 individual housing loans for ' 36024.82 crore and disbursed 173038 loans for '34529.33 crore. Housing loan to Individual i.e. retail loans constitute 94.05 percent ofthe total sanctions and 96.60 percent of the total disbursements for the financial year2015-16 as compared to 92.48 percent and 96.46 percent respectively during the financialyear 2014-15. The gross retail loan portfolio grew by over 15.25 percent from '105742.16 crore as on 31st March 2015 to ' 121872.89 crore as on 31stMarch 2016.

The cumulative sanctions and disbursements since incorporation in respect ofindividual housing loans are:

Amount sanctioned : ' 214250.26 crore
Amount disbursed : ' 203440.90 crore

More than 2030098 customers have been serviced by the Company up to 31stMarch 2016 since inception.

Project loans:

The project loans sanctioned and disbursed by the Company during the financial yearwere ' 3075.25 crore and ' 1621.60 crore respectively. Corresponding figures for theprevious year were ' 2386.15 crore and ' 1071.41 crore. These loans are generally forshort durations giving better yields as compared to individual housing loans.

Awards and Recognitions:

During the year under review the Company was awarded on various counts by renownedinstitutions and some of the awards presented to the Company are listed below:

• Best CEO Award by Business Today;

• Most Respected Company Award by Business World;

• Best Housing Finance Company by Outlook Money;

• Best Housing Finance Company by ABP News;

• Best Data Quality by CIBIL;

• Asia Pacific Entrepreneurship Award;

• Power Brands Award by Franchise India.

Marketing and Distribution

During the year under review efforts were taken to further strengthen the distributionnetwork. The distribution network of the Company consists of 135 Area Offices (AO) 91Business Centres (BC) 7 Extension Counters (EC) 1 Customer Service Point. Thedistribution network also includes 38 offices of LICHFL Financial Services Ltd. whollyowned subsidiary company engaged in distribution of various financial products includinghousing loan. The Company has representative offices in Dubai and Kuwait.


During the financial year 2015-16 ' 18398.85 crore was received by way of schedulerepayment of principal through monthly instalments as well as prepayment of principalahead of schedule as compared to ' 12158.76 crore received last year.

Non-Performing Assets and Provisions

The amount of gross Non-Performing Assets (NPA) as at 31st March 2016 was '567.82 crore which is 0.45 percent of the housing loan portfolio of the Company asagainst ' 494.68 crore i.e. 0.46 percent of the housing loan portfolio as at 31stMarch 2015. The net NPA as at 31st March 2016 was ' 270.48 crore i.e. 0.22percent of the housing loan portfolio vis-a-vis ' 234.43 crore i.e. 0.22 percent of thehousing loan portfolio as at 31st March 2015. The total cumulative provisiontowards housing loan portfolio including provision for standard assets as at 31stMarch 2016 is ' 820.30 crore as against ' 704.25 crore in the previous year. During thefinancial year the Company has written off ' 34.58 crore of housing loan portfolio asagainst ' 29.68 crore during the previous year.

Resource Mobilisation

During the financial year the Company raised funds aggregating to ' 44975.81 crorethrough Non-Convertible Debentures (NCD) term loans/Foreign Currency Non Resident(FCNR)(B) loan / Line of Credit (LoC) / Working Capital Demand Loan (WCDL) from banks NHBrefinance Commercial Paper and Public Deposits.

Non Convertible Debentures (NCD)

During the financial year the Company issued NCD amounting to ' 26412 crore on aprivate placement basis which have been listed on Wholesale Debt Segment of National StockExchange of India Ltd. The NCDs have been assigned highest rating of 'CRISIL AAA/Stable'by CRISIL & 'CARE AAA' by CARE. As at 31st March 2016 NCDs amounting to '85803 crore were outstanding. The Company has been regular in making payment of principaland interest on the NCDs.

As at 31st March 2016 there were no NCDs which have not been claimed bythe Investors or not paid by the Company after the date on which the said NCDs became duefor redemption. Hence the amount of NCD remaining unclaimed or unpaid beyond due date isNil.

Subordinate Bonds & Upper Tier II Bonds

During the financial year the Company has not issued any Subordinate Bonds and UpperTier II Bonds. As at 31st March 2016 the outstanding Subordinate Bonds andUpper Tier II Bonds stood at ' 2500 crore. Considering the balance term of maturity as at31st March 2016 ' 1500 crore of the book value of the Subordinate Bonds andUpper Tier II Bonds is considered as Tier II Capital as per the guidelines issued by NHBfor the purpose of Capital Adequacy.

Term Loans FCNR (B) loan from Banks / LOC / WCDL Refinance from NHB

The total loans / LOC outstanding from the Banks as at 31st March 2016 are' 14051.65 crore as compared to ' 17454.03 crore as at 31st March 2015. TheRefinance from NHB as at 31st March 2016 stood at ' 3038.21 crore as against' 3428.93 crore as at 31st March 2015. During the financial year the Companyhas availed ' 250 crore Refinance from NHB under regular refinance scheme.

The Company's long term loan facilities have been assigned the highest rating of'CRISIL AAA/STABLE' and short term loan has been assigned rating of 'CRISIL A1+'signifying highest safety for timely servicing of debt obligations.

Public deposits

As at 31st March 2016 the outstanding amount on account of public depositswas ' 3820.26 crore as against ' 2421.91 crore in the previous year. During thefinancial year 2015-16 the number of depositors has increased from 24990 to 30397 and '2112.10 crore has been collected as public deposits.

CRISIL has for the tenth consecutive year re-affirmed a rating of "CRISILFAAA/Stable" for the company's deposits which indicates highest degree of safetyregarding timely servicing of financial obligations and carries the lowest credit risk.

The support of the agents and their commitment to the Company has been vital inmobilization of deposits and making the product most preferred investment for individualhouseholds and others.

310 deposits amounting to ' 4.99 crore which were due for repayment on or before 31stMarch 2016 were not claimed by the depositors till that date. Since then 26 depositorshave claimed or renewed deposits of ' 0.24 crore. Depositors are appropriately intimatedfor renewal / claim of their deposits through an authorised agency. Further adequatefollow-up is made in respect of those cases where deposits are lying unclaimed.

As per the provisions of Section 125 of the Companies Act 2013 deposits and interestthereon remaining unclaimed for a period of seven years from the date they became due forpayment have to be transferred to the Investor Education and Protection Fund (IEPF)established by the Central Government accordingly as on date ' 2068/- against unclaimedinterest on deposits has been transferred to IEPF.

Being a housing finance company registered with the National Housing Bank establishedunder the National Housing Bank Act 1987 the disclosures as per Rule 8(5)(v)&(vi) ofthe Companies (Accounts) Rules 2014 read with section 73 and 74 of the Companies Act2013 are not applicable to the Company.

Regulatory Compliance

The Company has been following guidelines circulars and directions issued by NationalHousing Bank (NHB) from time to time.

Your Company has been maintaining capital adequacy as prescribed by the NHB. Thecapital adequacy was 17.04 per cent (as against 12 percent prescribed by the NHB) as at 31stMarch 2016 after considering the loan to value ratio for deciding risk weightage.

The Company has adopted Know Your Customer (KYC) Guidelines Anti Money LaunderingStandards Fair Practices Code Model Code of Conduct for Direct Selling Agents andGuidelines for Recovery Agents engaged by the Company as prescribed by NHB from time totime. The Company has been complying with the NHB's requirement of issuing 'Most ImportantTerms and Conditions' of housing loans with the objective of ensuring a betterunderstanding of the major terms and conditions of the loan agreed upon between theCompany and its borrowers.

The Company also has been following directions / guidelines / circulars issued by SEBIfrom time to time applicable to a listed company.

Statutory Auditors

Pursuant to Sections 139 141 142 and other applicable provisions if any of theCompanies Act 2013 and the Companies (Audit and Auditors) Rules 2014 including anystatutory modification or re-enactment thereof Messrs Chokshi & Chokshi LLPChartered Accountants Mumbai (Firm Registration No.:101872W / W100045) and Messrs ShahGupta & Co. Chartered Accountants Mumbai (Firm Registration No.:109574W) arerecommended to be appointed as Joint Statutory Auditors of the Company for a term of threeyears i.e. from the conclusion of the Twenty Seventh Annual General Meeting (AGM) untilthe conclusion of the Thirtieth AGM. The Company has received a confirmation from them tothe effect that their re-appointment if made at the ensuing AGM would be in terms ofSection 139 and 141 of the Companies Act 2013 and Rules made thereunder.

The Board recommends the appointment of Messrs Chokshi & Chokshi LLP CharteredAccountants Mumbai (Firm Registration No.:101872W / W100045) and Messrs Shah Gupta &Co. Chartered Accountants Mumbai (Firm Registration No.:109574W) as Joint StatutoryAuditors of the Company to hold the office from the conclusion of this Twenty Seventh AGMuntil the conclusion of the Thirtieth AGM on a remuneration to be determined by the Boardof Directors in consultation with them and applicable taxes / cess on the saidremuneration for the purpose of audit of the Company's accounts at the Corporate Officeas well as at Back Offices.

Corporate Governance

A certificate from Mr. P. S. Gupchup Practising Company Secretary (Membership No.: ACS4631 and Certificate of Practice No.:9900) regarding compliance of the conditions ofCorporate Governance as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is attached to the Corporate Governance Report.

Your Company has been complying with the principles of good Corporate Governance overthe years. The Board of Directors supports the broad principles of Corporate Governance.In addition to the basic governance issues the Board lays strong emphasis ontransparency accountability and integrity. The report on Corporate Governance is appendedas a separate section in this Annual Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review as stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ispresented in a separate section forming part of the Annual Report.

Business Responsibility Report

In terms of Regulations 34(1)(f) of the SEBI(Listing Obligation and DisclosureRequirements) Regulations 2015 the top 500 listed entities based on the marketcapitalization (calculated as on 31st March of every financial year) businessresponsibility report describing the initiatives taken by these listed entities from anenvironmental social and governance perspective in the format as specified by SEBI fromtime to time be included as part of the Annual Report. Accordingly BusinessResponsibility Report is presented in a separate section forming part of the AnnualReport.

Depository system

For transaction of its shares in dematerialised form the Company has entered into anagreement with Central Depository Services (India) Ltd. (CDSL) and National SecuritiesDepository Ltd. (NSDL). The shareholders have a choice to select the DepositoryParticipant. As at 31st March 2016 9398 members of the Company continue tohold shares in physical form. As per the Securities and Exchange Board of India's (SEBI)circular the Company's shares have to be transacted in dematerialised form and thereforemembers are requested to convert their holdings to dematerialised form.

Auditors' observations

No adverse remark or observation has been given by the Joint Statutory Auditors intheir report dated 18th April 2016.

The Company has an in-house mechanism for Internal Audit of all its back offices by theteam of in-house auditors. The Company maintains an exhaustive checklist for the purposeof Audit. The Company also appoints Chartered Accountant firm as Internal Auditor foraudit of its Corporate Office.

Systems and procedures are being upgraded from time to time to provide checks andalerts for avoiding fraud arising out of misrepresentation made by borrower/s whileavailing the housing loans.

Outlook for 2016-17

The initiatives taken by the Company during the financial year 2015-16 are expected toimprove its operational and financial performance. During financial year 2016-17 theCompany proposes:

• To grow business qualitatively by consolidating position and strengthening thecompetitiveness on service delivery.

• To create brand LIC HFL as a source of trusted partner exuding consumerconfidence.

• Understand the inherent risks to the business and managing it effectively.

• Focus on winning and retaining customers.

• Pursue new skills and expand knowledge aimed at managing competitioneffectively.

• Expand its operations by establishing new business centres.

• Increase its distribution by appointing new agents and activising more agents.

• Incentivising and motivating the marketing intermediaries systematically forimproving productivity.

• Raising funds through loans at attractive terms.

• Making efforts towards reducing overall cost of funds.

• Steps to improve the recovery ratio and ensuring lowest NPA level. Improvingreceivable management through support system.

• Timely review of credit appraisal system to improve the loan asset quality.

• Continuous efforts to upgrade Information Technology platform to ensure promptand effective service to the clientele.

• Swift appropriate and competitive pricing of its existing loan schemes toattract new customers.

The management perspective about future of the Company

In view of the huge shortage in urban housing units in the country the Uniongovernment has been providing continued support to make the sector attractive and givingits due recognition. The agenda of housing for all is a key component of the government'sstrategy for making Indian cities inclusive and productive. While rapid urbanization andgrowing cities provide various opportunities there is fallout in terms of proliferationof slums high prices of land and building materials which render houses unaffordable forthe segment at the bottom of the pyramid. The technical committee constituted by theMinistry of Housing and Urban Poverty Alleviation has estimated housing shortage at 18.78million units during the 12th Five Year Plan period of which over 95 percent is estimatedin the Economically Weaker Sections (EWS) and Low Income Group (LIG) categories.

With increasing urban population it is estimated that it would generate unprecedenteddemand for quality real estate and infrastructure.

Housing for All scheme in India is a vision of Prime Minister of India where allfacilities will be provided in a place. As many as 2508 cities in 26 states have beenselected under 'Pradhan Mantri Awas Yojana'(PMAY) for providing affordable houses to theurban poor.

As per the scheme guidelines the houses under the PMAY (U) mission would be designedand constructed to meet the requirement of structural safety against earthquakes floodcyclone landslide etc. conforming to the National Building Code and other relevant Bureauof Indian Standards Codes.

The mission also includes a technology sub-mission to facilitate state technologies foradoption of layout designs and building plans suitable for various geo-climatic zones andto deploy disaster resistant and environment friendly technologies.

The target beneficiaries of the scheme would be poor and people living under EWS andLIG categories in urban establishments of the country Housing loan growth is set for amajor appreciation in the current financial year 2016-17 as government's focus on housingfor all scheme i.e. PMAY and in view of favourable current budgetary provision with afocus on housing has led to enhanced disposal income in the hands of people whichultimately lead to more purchasing power and thereby could surge demand for housing.

Compliance under Companies Act 2013

Pursuant to section 134 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 the Company complied with the compliance requirements and the detail ofcompliances under Companies Act 2013 are enumerated below:

Extract of Annual Return:

Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 an extract of Annual Return in Form MGT-9 ason 31st March 2016 is attached as Annexure 1 to this Report.

Board Meetings held during the year:

During the year under review 8 Board meetings were held. Detailed information on themeetings of the Board are included in the Report on Corporate Governance which forms partof this Annual Report.

Directors' Responsibility Statement:

In accordance with the provisions of Section 134(3)(c) of the Companies Act 2013 andbased on the information provided by the management your Directors state that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures;

(b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit of the company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis; and

(e) the Directors have laid down internal financial controls to be followed by thecompany and that such Internal Financial controls are adequate and were operatingeffectively. Note on Internal Financial control is attached as Annexure 2 to this Report.

(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Statement on Declaration from Independent Directors:

A declaration under section 149(6) & (7) of the Companies Act 2013 has beenobtained from each of the Independent Director.

Company's policy on Directors' appointment and remuneration including criteria:

The Company's policy for selection and appointment of Directors and there remunerationis based on its Remuneration Policy which inter alia deals with the manner of selectionof the Board of Directors and such other matters as provided under section 178(3) of theCompanies Act 2013 and SEBI (LODR) Regulations 2015. The performance of the Members ofthe Board and the Board as a whole were evaluated at the meeting of Independent Directorsheld on 23rd February 2016.

In terms of the provisions of section 149 of the Companies Act 2013 and SEBI (LODR)Regulations 2015 a company shall have atleast one Woman Director on the Board of theCompany. The Company has Ms. Savita Singh as Director on the Board since 25thMay 2012 and Ms. Sunita Sharma as Managing Director & CEO since 5thNovember 2013. Further Ms. Usha Sangwan has been inducted on the board of the Companywith effect from 23rd June 2016.

Qualification reservation or adverse remark or disclaimer made by Joint StatutoryAuditors and Secretarial Auditor:

No adverse remark or reservation or qualification has been made by Joint StatutoryAuditors or Secretarial Auditor.

Particulars of loans guarantees or investments under Section 186: Pursuant toSection 186(11) of the Companies Act 2013 loans made guarantee given or securityprovided by a housing finance company in the ordinary course of its business are exemptedfrom disclosure in the Annual Report.

Particulars of contracts or arrangements with related parties referred to Section in188(1) read with Rule 8(2) of Companies (Accounts) Rules 2014:

All Related Party Transaction that were entered during the financial year were in theordinary course of the business of the Company and were on arm's length basis. There wereno materially significant related party transaction entered by the Company with PromotersDirectors key managerial personnel or other persons which may have a potential conflictwith the interest of the Company. Considering the nature of the industry in which theCompany operates transactions with related parties of the Company are in the ordinarycourse of business which are also on arm's length basis. All such Related PartyTransactions are placed before the Audit committee for approval wherever applicable.Prior approval as per SEBI (LODR) Regulations 2015 is also obtained from Audit Committeefor the Related Party Transactions which are of repetitive nature as well as for ordinarycourse of business.

The Related Party Transactions Policy and Procedures as reviewed by Audit Committee andapproved by Board of Directors is uploaded on the website of the Company and the link forthe same is ( Policy_Dete_Mate_Subd.php).

Form AOC-2 is annexed as Annexure 3 to this report.

State of the company's affairs:

The year 2015-16 was a significant year in Company's lifecycle. The Company earnedtotal revenue of ' 12485.46 crore registering an increase of 15.62 percent. Thepercentage of administrative expenses to the housing loans which was 0.34 percent in theprevious year has marginally increased to 0.366 percent during the year 2015-16.

Profit before tax and after tax stood at ' 2563.55 crore and ' 1660.79 crorerespectively as against ' 2101.94 crore and ' 1386.18 crore respectively for theprevious year. Profit before tax increased by 21.96 percent over the previous year whileprofit after tax showed growth of 19.81 percent over that of the previous year.

Amounts if any which it proposes to carry to any reserves:

The Company has transferred ' 500 crore to Special Reserve and Statutory reserve u/s29C of NHB Act and an amount of ' 400 crore to General Reserve.

Amount if any which it recommends should be paid by way of dividend:

' 277.56 crore is proposed to be paid by way of dividend to shareholders of the Companyi.e. ' 5.50 per equity share of face value of ' 2 per equity share.

Material changes and commitments if any affecting the financial position of thecompany:

There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. March312016 and the date of the Directors' Report i.e. 15th July 2016.

Conservation of energy technology absorption foreign exchange earnings and outgo:

A. Conservation of energy -

(i) The steps taken or impact on conservation of energy-

The Company has replaced models of computers printers and other equipment which wereconsuming between 50 to 90 percent more energy than energy- efficient models. This hasensured reduction in energy consumption and resultant saving in costs.

Electronics such as computers and copy machines are plugged out at the end of day orafter office hours in order to save energy as mere turning off or shutting down does notsave energy completely.

Air conditioning equipment is cleaned and serviced on routine basis thereby savingenergy and costs and giving required cooling.

The office has LED lights and after office hours only the required lights and airconditioning is used thereby saving energy and minimizing energy wastage.

(ii) The steps taken by the Company for utilizing alternate sources of energy-

The Company is in the process of exploring use of alternate source of energy.

(iii) The capital investment on energy conservation equipments - None

B. Technology absorption -

(i) The efforts made towards technology absorption - Not applicable.

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution - Not applicable.

(iii) In case of imported technology (imported during the last three years reckonedfrom the beginning of financial year)- Not applicable.

(a) The details of technology imported - Not applicable.

(b) The year of import - Not applicable.

(c) Whether the technology has been fully absorbed - Not applicable

(d) If not fully absorbed areas where absorption has not taken place and the reasonthereof - Not applicable.

(iv) The expenditure incurred on Research and Development - Not applicable.

C. Foreign Exchange Earnings and Outgo-

The foreign exchange earned in terms of actual inflows during the year and the foreignoutgo during the year in terms of actual outflows.

During the year ended 31st March 2016 the Company earned ' 22.68 lakh andspent ' 149.44 in foreign currency. This does not include foreign currency cash flows inderivatives and foreign currency exchange transactions.

Risk Management:

The Board of the Company has formed a Risk Management Committee to frame implementmonitor review risk management policy; review of the current status on the outer limitsprescribed in the Risk Management policy and report to the Board; review the matters onrisk management. Risks faced by the Company are identified and assessed. For each of therisks identified corresponding controls are assessed and policies and procedure are inplace for monitoring mitigating and reporting risk on a periodic basis. In the opinion ofthe Board none of the risks faced by the Company threaten its existence.

Corporate Social Responsibility (CSR):

In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has establishedCorporate Social Responsibility Committee and statutory disclosures with respect to theCSR Committee and an Annual Report on CSR activities is annexed as Annexure 4 to thisreport.

Composition of the Corporate Social Responsibility Committee is as follows:

Shri S. B. Mainak* Ex-Chairman Director
Shri Jagdish Capoor Member Independent Director
Dr. Dharmendra Bhandari** Member Independent Director
Ms. Sunita Sharma Member Managing Director & CEO

*Ceased to be Director w.e.f. 29.02.2016 on account of attainment of superannuationfrom services of LIC of India.

"Appointed as Member w.e.f. 20.07.2015

Annual evaluation made by the Board of its own performance:

As part of good governance and Board process and also in accordance of the requirementof the Companies Act 2013 and SEBI (LODR) Regulations 2015 the Board of Directorscarried out an annual evaluation of its own performance Board committees and IndividualDirectors pursuant to the provisions of the Act and the Corporate governance requirementsas prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015at the meeting of Independent Directors held on 23rd February 2016.

The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of criteria such as the Board composition and structureeffectiveness of Board process information and functioning process of disclosure andcommunication access to timely accurate and relevant information etc.

The performance of the committee was evaluated by the Board after seeking inputs fromthe committee members on the basis of criteria such as the composition of committeeeffectiveness of committee meeting functioning etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of theIndividual Directors on the basis of the criteria such as the contribution of theIndividual Director to the Board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings presentedviews convincingly resolute in holding views etc. In addition the Chairman was alsoevaluated on the key aspects of his role.

In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the board as a whole and performance of Chairman was evaluatedtaking into account the views of Executive Directors and Non-Executive Directors. The samewas discussed in the Board meeting that followed the meeting of the independent directorsat which the performance of the Board its committees and Individual Directors was alsodiscussed.

Report on the performance and financial position of each of the subsidiariesassociates and joint venture companies included in the consolidated financial statement:

Pursuant to Section 129 of the Companies Act 2013 the Company has prepared aconsolidated financial statement of the Company and also of its subsidiaries in the sameform and manner as that of the Company which shall be laid before the ensuing TwentySeventh Annual General Meeting of the Company alongwith the laying of the Company'sFinancial Statement under sub-section (2) of Section 129 i.e. Standalone FinancialStatement of the Company. Further pursuant to the provisions of Accounting Standard('AS') 21 Consolidated Financial Statements notified under Section 133 of the CompaniesAct 2013 read together with Rule 7 of the Companies (Accounts) Rules 2014 issued by theMinistry of Corporate Affairs the Consolidated Financial Statements of the Companyalongwith its subsidiaries for the year ended 31st March 2016 form part ofthis Annual Report.

There has been no change in the nature of business of the Company for the year underreview.


The Company has ten Directors consisting of six Independent Directors threeNon-Executive Directors including Chairman; and Managing Director & CEO as ExecutiveDirector as on the date of approval of this revised report ie 15.07.2016.

Appointments / Resignations of Directors:

Shri Ameet Patel was appointed as Additional Director of the Company by the Board witheffect from 19th August 2015 after AGM. As required under Section 160 of theCompanies Act 2013 a Notice has been received from a member proposing the name of ShriAmeet Patel for the office of a Director. Shri Ameet Patel has submitted a declarationunder Section 149(7) of the Companies Act 2013 confirming that he meets the criteriaprescribed for Independent Director under Section 149(6) of the said Act. In the opinionof the Board Shri Ameet Patel fulfils the conditions specified in the Act for suchappointment.

The proposal for appointment of Shri Ameet Patel as Independent Director is beingplaced before the shareholders for approval the relevant details are forming part of theNotice of the Annual General Meeting.

Ms. Usha Sangwan was appointed as Additional Director of the Company by the Board witheffect from 23rd June 2016 in terms of nomination received from Life InsuranceCorporation of India subject to approval of shareholders at the forthcoming AGM. Asrequired under section 160 of the Companies Act 2013 a Notice has been received from aMember proposing the name of Ms. Usha Sangwan for the office of a Director.

All the Directors of the Company have confirmed that they are not disqualified frombeing appointed as Directors in terms of Section 164(2) of the Companies Act 2013.

Shri B. N. Shukla ceased to be Director of the Company on account of completion ofextended term of office of Director and Shri S. B. Mainak ceased to be the Director of theCompany on account of attainment of superannuation from services of LIC of India.

Director Retiring by Rotation:

Ms. Savita Singh Director retires by rotation at the ensuing Annual General Meetingand is eligible for re-appointment.

Appointments / Resignation of the Key Managerial Personnel:

Ms. Sunita Sharma Managing Director & CEO Mr. Nitin K. Jage General Manager& Company Secretary and Mr. P. Narayanan Chief Financial Officer are the KeyManagerial Personnel as per the provisions of the Companies Act 2013.

Committees of the Board:

The Company has various committees which have been established as a part of the bestcorporate governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Stakeholders Relationship Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

• Executive Committee

• Debenture Allotment Committee

• HR Committee

Composition of Audit Committee is as follows:

Shri Debabrata Sarkar* Chairman Independent Director
Shri T. V. Rao Member Independent Director
Shri Ameet Patel** Member Independent Director
Shri S. Ravi a Chairman Independent Director
Shri B. N. Shukla aa Member Independent Director

*Appointed as Chairman w.e.f. 20.07.2015 ** Appointed as Member w.e.f. 23.02.2016

ACeased to be Director w.e.f. 25.06.2015 on account of completion of term ofoffice of Directorship.

aa Ceased to be Director w.e.f. 23.01.2016 on account of completion of term of officeof Directorship.

There has not been any instance during the year when recommendations of Audit Committeewere not accepted by the Board.

The details with respect to the compositions powers roles terms of reference etc. ofrelevant committees are given in detail in the Report on Corporate Governance which formspart of this Annual Report.

Subsidiaries and group companies

As on 31st March 2016 the Company has four Subsidiaries namely LICHFLCare Homes Limited LICHFL Asset Management Company Limited LICHFL Trustee CompanyPrivate Limited and LICHFL Financial Services Limited. The Consolidated financialstatements incorporating the results of all the subsidiaries of the Company for the yearended 31st March 2016 are attached along with the statement pursuant toSection 129 of the Companies Act 2013 with respect to the said subsidiaries. Brief writeup including performance and financial position of each of the subsidiaries is provided asunder:

1. LICHFL Care Homes Limited:

LICHFL Care Homes Ltd. a wholly owned subsidiary of LIC housing Finance Ltd. wasincorporated on 11th September 2001 with an authorised share capital of ' 25crore. The basic purpose of establishing the Company was to establish and operate assistedcommunity living centers for the senior citizens.

During the fiscal 2015-16 the Company earned a Profit Before Tax of ' 28.29 lakh andProfit After Tax of ' 15.29 lakh.

The project at Bangalore Phase II has been completed and handing over of the keys wasdone on August 12 2013. The Company is at present implementing a project at Bhubaneswarand the same is expected to be completed at an early date.

With life expectancy is going up and number of elderly citizens rising year after yearthe Company is set on a growth trajectory keeping LIC and LIC HFL's vision for fulfilmentof Corporate Social Responsibility at the main focus.

2. LICHFL Asset Management Company Limited.

LICHFL Asset Management Company Limited was incorporated on 14th February2008 for undertaking the business of managing advising administering venture/mutualfunds unit trusts investment trusts set up formed or established in India or abroad andto act as financial and investment advisor.

The Company has been appointed as Investment Manager to raise and manage the maidenFund LICHFL Urban Development Fund. The Company has successfully raised total amount of '529.35 crore in LICHFL Urban Development Fund through Banks Financial InstitutionsCorporates and HNIs as against the targeted size of ' 500 crore. 30th March2013 was announced as Final Closure Date of the Fund. Fund with a focus on Real Estateconsiders investment in Portfolio Companies engaged in development & acquisition ofhousing and related infrastructure industrial and IT Parks SEZ Warehouses SchoolsHospitals. Ten Investment deals have been tied up so far with Portfolio Companiesdeveloping residential projects across Pune Bangalore and Chennai.

3. LICHFL Trustee Company Private Limited.

LICHFL Trustee Company Private Limited was incorporated on 5th March 2008for undertaking the business of trusteeship. In the year 2010 the Company has registeredLICHFL Urban Development Fund with SEBI as Venture Capital Fund (VCF) under the SEBI(Venture Capital Funds) Regulations 1996. The Fund launched its maiden Scheme LICHFLUrban Development Fund (Fund) and 30th March 2013 was declared as FinalClosure Date of the Fund after successfully garnering fund raising of ' 529.35 crore asagainst the target of ' 500 crore. LICHFL Asset Management Company Ltd. is the InvestmentManager for the fund. The Fund has closed ten investment deals upto 31st March2016.

4. LICHFL Financial Services Limited

LICHFL Financial Services Limited a wholly owned subsidiary of LIC Housing FinanceLimited was incorporated on 31st October 2007 for marketing of housing loansinsurance products (Life and General Insurance) mutual funds fixed deposits creditcards and National Pension System etc. It has become operational in March 2008 and atpresent has 38 offices all over the country spread over 14 states.

The vision of the Company is "SARVESHAM POORNAM BHAVATU" - to providecomplete financial solutions to secure not only the present but also the future of thecustomer and his family. In this endeavour the marketing officials assist at every step -from financial planning to manage every aspect of right investment both for the short& long term.

At present the Company distributes Life Insurance products of LIC of India Home Loans& Fixed Deposits of LIC Housing Finance Limited Mutual Funds of various fund housesGeneral Insurance products of United India Insurance Company Limited Credit Cards of LICCards Services Limited and National Pension System (NPS). More business verticals will beadded depending on market opportunities and customer needs.

For the financial year 2015-16 the Company has earned a Profit Before Tax of ' 5.73crore and Profit After Tax stood at ' 3.89 crore. The company recommended dividend @ 15percent for FY 2015-16 which is 5 percent higher than last financial year.

Financial Highlights for FY 2015-16 in comparison with last year:

Particulars FY 2015-16 FY 2014-15
in ' (lakhs) in ' (lakhs)
1 Total Income 1917.68 1291.27
2 Profit Before Tax 572.72 378.18
3 Profit After Tax 388.72 250.20
4 Dividend (Declared) 142.50 95.00

The Company has consolidated its' home loan business during the financial year 2015-16which is the major revenue earning vertical for the company. The systematic approach alongwith the new initiatives taken during the year is expected to drive the revenue growth andimprove the operational and financial performance in the coming years.

Name/s of Company/ies which have ceased / become subsidiary/joint venture/associate:None

As on 31s' March 2016 the Company has one associate company namely LICNomura Mutual Fund Asset Management Company Limited.

The Annual Report which consists of the financial statements of the Company onstandalone as well as consolidated financial statements of the group for the year ended 31stMarch 2016 has been sent to all the members of the Company. It does not contain AnnualReports of Company's subsidiaries. The Company will make available Annual Report of allsubsidiaries upon request by any member of the Company. These Annual Reports will also beavailable on Company's website viz

No significant and material orders were passed by the regulators or courts or tribunalsimpacting the going concern status and Company's operations in future.

Internal Financial Control Systems and their Adequacy:

The Company had laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and operating effectively. Note onInternal financial control as Annexure 2 is attached to this report.

Vigil Mechanism / Whistle Blower Policy:

The Company has a Whistle Blower Policy in place which provides whistle blowers toraise concerns relating to reportable matters as defined in the policy. The mechanismadopted by the Company encourages the whistle blower to report genuine concerns orgrievances and provides for adequate safeguards against victimisation of whistle blowerwho avails of such mechanism and also provides for direct access to the Chairman of theAudit Committee.

Employee stock option:

No stock options were issued to the Directors or any employees of the company.

Employee Remuneration:

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below:

a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Non Executive Directors (including Independent Directors)* Ratio to median remuneration
Nil N.A.

*No remuneration is paid to Non Executive Directors (including Independent Directors)

Executive Director (MD & CEO) Ratio to median remuneration
Ms. Sunita Sharma 7:1

b. The percentage increase in remuneration of each director Chief ExecutiveOfficer Chief Financial Officer Company Secretary in the financial year:

Non Executive Directors (including Independent Directors)* % increase in remuneration in the financial year
Nil N.A.

*No remuneration is paid to Non Executive Directors (including Independent Directors)

Executive Director & KMP % increase in remuneration in the financial year
Executive Director (MD&CEO)A 23.00%
Company Secretary 3.57%
Chief Financial Officer# 34.94%*

ARemuneration of MD&CEO includes arrears payment of ' 328771.00 forF.Y.2015-16 #Remuneration of CFO includes arrears payment of ' 230593.00 for F.Y.2015-16 * Value of perks in respect of staff lease accommodation provided to ChiefFinancial Officer was applicable for F.Y. 2015-16 only.

c. The percentage increase in the median remuneration of employees in the financialyear: 4.22%.

d. The number of permanent employees on the rolls of the Company: 1726.

e. Percentage increase over decrease in the market quotations of the shares of theCompany in comparison to the rate at which the Company came out with the last publicoffer:

Particulars 31 March 2016 15 November 1994 % Change
Market Price (in ' 490.40** 12* 3986.66

*Adjusted face value on account of sub-division ** BSE-Clg.Pri 490.40

f. Average percentile increase already made in the salaries of employees other thanmanagerial personnel in the financial year and its comparison with the percentile increasein the managerial remuneration and justification thereof and point out if there are anyexceptional circumstances for increase in the managerial remuneration:

Increase in managerial remuneration for the year was 23.00%. The average annualincrease in the salaries of the employees other than managerial personnel during the yearwas 17% on account of new recruitment and promotion.

g. Affirmation that remuneration is as per the Remuneration policy of the Company: TheCompany affirms remuneration is as per the Remuneration policy of the Company.

During the financial year the Company has not engaged any employee drawingremuneration exceeding the limit specified under Section 197(12) read with Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

In terms of Section 136 (i) of the Companies Act 2013 read with the Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. theDirectors' Report is being sent to all the shareholders of the Company excluding theannexure containing names of the top ten employees in terms of remuneration drawn. Anyshareholder interested in obtaining a copy of the said annexure may write to the Companyat the address mentioned; The Company Secretary LIC Housing Finance Limited CorporateOffice 131 Maker Towers'F' Premises 13th Floor Cuffe Parade Mumbai - 400005.

Secretarial Auditor and Secretarial Audit Report:

Pursuant to section 204 of the Companies Act 2013 the Company had appointed M/s. N.L. Bhatia & Associates Practicing Company Secretary as its Secretarial Auditor toconduct the secretarial audit of the Company for the financial year 2015-16. The Companyprovided all assistance and facilities to the Secretarial Auditor for conducting theiraudit. Report of the Secretarial Auditor for the financial year 2015-16 in Form MR-3 isannexed to this report as Annexure 6.

No significant and material orders were passed by the r eg u l at o rs o r c ou rts ortribunals impacting the going concern status and Company's operations in future.

Number of cases filed if any and their disposal under section 22 of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013:

The Company has Zero tolerance towards any action on the part of any executive / staffwhich may fall under the ambit of 'Sexual Harassment' at workplace and is fully committedto uphold and maintain the dignity of every women executive / staff working in thecompany.

Human resources

The Company aims to align HR practices with business goals motivate people for higherperformance and build a competitive working environment. Productive high performingemployees are vital to the Company's success. The Board values and appreciates thecontribution and commitment of the employees towards performance of your Company duringthe year. To create the leadership bench and for sustainable competitive advantage thecompany inducted / promoted employees during the year. In pursuance of the Company'scommitment to develop and retain the best available talent the Company had organisedvarious training programmes for upgrading skill and knowledge of its employees indifferent operational areas. Apart from fixed salaries and perquisites the Company alsohas in place performance-linked incentives which reward outstanding performers who meetcertain performance targets. It has been sponsoring its employees for training programmes/ seminars / conferences organised by reputed professional institutions.

Employee relations remained cordial and the work atmosphere remained congenial duringthe year.


The Directors place on record their appreciation for the advice guidance and supportgiven by Life Insurance Corporation of India National Housing Bank and all the bankers ofthe Company. The Directors also place on record their sincere thanks to the Company'sclientele lenders and members for their patronage. The Directors express theirappreciation for the dedicated services of the employees and their contribution to thegrowth of the Company.

For and on behalf of the Board of Directors

Sunita Sharma Jagdish Capoor
Managing Director & CEO Director
Date : 15th July 2016
Place: Mumbai