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LIC Housing Finance Ltd.

BSE: 500253 Sector: Financials
NSE: LICHSGFIN ISIN Code: INE115A01026
BSE 00:00 | 27 Jan 385.80 -4.25
(-1.09%)
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388.65

HIGH

391.10

LOW

379.80

NSE 00:00 | 27 Jan 386.30 -3.70
(-0.95%)
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390.50

HIGH

391.60

LOW

379.70

OPEN 388.65
PREVIOUS CLOSE 390.05
VOLUME 69134
52-Week high 443.50
52-Week low 291.75
P/E 6.81
Mkt Cap.(Rs cr) 21,221
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 388.65
CLOSE 390.05
VOLUME 69134
52-Week high 443.50
52-Week low 291.75
P/E 6.81
Mkt Cap.(Rs cr) 21,221
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

LIC Housing Finance Ltd. (LICHSGFIN) - Auditors Report

Company auditors report

To the Members of LIC Housing Finance Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the Standalone Financial Statements of LIC HousingFinance Limited (hereinafter referred to as "the Company") which comprise theStandalone Balance Sheet as at March 31 2022 the Standalone Statement of Profit and Loss(including Other Comprehensive Income) the Standalone Statement of Changes in Equity andStandalone Cash Flow Statement for the year then ended and notes to the StandaloneFinancial Statements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2022and profit total comprehensive income changes in equity and its cash flows for the yearthen ended.

Basis of Opinion

We conducted our audit in accordance with the Standards on Auditingspecified under sub-section (10) of section 143 of the Act ("the SAs"). Ourresponsibilities under those SAs are further described in the Auditor's Responsibilitiesfor the Audit of the Standalone Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ("the ICAI") together with the ethicalrequirements that are relevant to our audit of the Standalone Financial Statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the Standalone Financial Statementsof the current period. These matters were addressed in the context of our audit of theStandalone Financial Statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.

Key Audit Matter How the matter was addressed in our audit
Expected Credit Loss - Impairment of carrying value of loans and advances We performed audit procedures set out below
Under Ind AS 109 Expected Credit Loss (ECL) is required to be determined for recognising impairment loss on financial assets which are stated at amortised cost i.e. the loan portfolio of the Company. The calculation of impairment loss or ECL is based on significant management judgement and considers the historical default and loss ratios of the loan portfolio and to the extent possible forward-looking analysis. We understood and assessed the Company's process on timely recognition of impairment in the loan portfolio both retail loans and project loans. This included assessing the accuracy of the system generated reports of ageing and defaults.
The significant areas in the calculation of ECL where management estimates and judgements are required as under: We also performed a test check of the design and implementation of key internal financial controls over loan impairment process used to calculate the impairment charge and management review controls over measurement of impairment allowances and disclosures in the Standalone Financial Statements.
1. Judgements about credit risk characteristics taking into account class of borrowers credit risk ratings date of initial recognition remaining term to maturity property valuations time taken for recovery of stressed loans industry scenario and other relevant factors for collective evaluation of impairment under various stages of ECL. We have discussed with the management and the external specialists to test the working of the ECL model and reasonableness of assumptions used
2. Loan staging criteria. We performed substantive procedures over validating completeness and correctness of the data and reasonableness of assumptions used in the ECL model including capturing of PD and LGD in line with historical trends of the portfolio and evaluation of whether the results support the appropriateness of the PDs at the portfolio level.;
3. Calculation of probability of default and loss given default. We performed cut off procedures on a sample basis relating to recoveries at year end that would impact staging of loans;
4. Consideration of probability weighted scenarios and forward looking macro-economic factors. We test checked the basis of collateral valuation in the determination of ECL provision.
5. For Project loans assessment based on a borrower's financial performance solvency liquidity and industry outlook. We have relied upon the work done by other experts like Independent Valuers Lawyers Legal Experts and other such professionals who have rendered services to the company
6. Potential impact of Covid-19 pandemic We have also obtained management representations wherever considered necessary
The Company has also appointed a domain specialist to assist it in arriving at the ECL provisions required to be recognised.
In our opinion this is considered as a Key Audit Matter in view of the criticality of the item to the Standalone Financial Statements and the complex nature of assumptions and judgements exercised by the management.
Refer Note 2.14 A(f) "Impairment of Financial Assets" and Note 38.4.2.3 "Impairment Assessment" and 38.4.2.4 "ECL model and assumptions considered in the ECL model" to the Standalone Financial Statements.
Refer Note 3.1 "Determination of Expected Credit Loss" to the Standalone Financial Statements and Refer Note 9 "Loans" to the Standalone Financial Statements.

IT Systems and controls

The Company has separate software applications for management of itsloan portfolio from origination to servicing and closure and for the routine accounting.Transfer of data from / to these softwares is critical for accurate compilation offinancial information. Adequate supervision over these IT controls is required to ensurethat these IT applications process data as expected updates and changes are made in anappropriate manner and confidentiality availability and integrity is maintained. Suchcontrols mitigate the risk of incorrect financial reporting. Our audit outcome isdependent on the effective functioning of such IT controls.

We have carried out the following procedures to verify theeffectiveness of IT controls:

a. We have planned designed and carried out the desired auditprocedures and sample checks. We have also assessed if these have a bearing on thefinancial reporting.

b. In addition we have relied on IS and other related audit reportsprovided by the management wherever available.

c. We also tested key automated and manual business cycle controls andlogic for system generated reports relevant to the audit and performed alternateprocedures to assess whether there were any unaddressed IT risks that would materiallyimpact the Standalone Financial Statements.

d. We have also obtained management representations wherever considerednecessary.

Information Other than the Standalone Financial Statements andAuditor?s Report Thereon

The Company's management and Board of Directors are responsible for thepreparation of the other information. The other information comprises the informationincluded in the Annual Report but does not include the Standalone Financial Statementsconsolidated financial statements and our auditor's report thereon. The other informationis expected to be made available to us after the date of this auditor's report.

Our opinion on the Standalone Financial Statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the Standalone Financial Statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors and management are responsible for thematters stated in sub-section (5) of Section 134 of the Act with respect to thepreparation of these Standalone Financial Statements that give a true and fair view of thefinancial position financial performance total comprehensive income changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting standards specified under section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the Standalone Financial Statements management and Boardof Directors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor?s Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of theseStandalone Financial Statements.

As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

i. I dentify and assess the risks of material misstatement of

the Standalone Financial Statements whether due to fraud or errordesign and perform audit procedures responsive to those risks and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk

of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.

ii. Obtain an understanding of internal controls relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Under thesection 143(3) (i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

iii. Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

iv. Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theability of the Company to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

v. Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the StandaloneFinancial Statements of the financial year ended March 31 2022 and are therefore the

key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order

2020 ("the Order") issued by the Central Government

of India in terms of sub-section (11) of Section 143 of the

Act we give in "Annexure A" a statement on the matters

specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act we report that:

i. we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

ii. i n our opinion proper books of account as required by law havebeen kept by the Company so far as appears from our examination of those books;

iii. the Balance Sheet the Statement of Profit and Loss the Cash FlowStatement and Statement of Changes in Equity dealt with by this Report are in agreementwith the books of account;

iv. in our opinion the aforesaid Standalone Financial Statementscomply with the Accounting Standards specified under Section 133 of the Act read withrelevant rules issued thereunder;

v. on the basis of written representations received from the directorsas on March 31 2022 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2022 from being appointed as a director in terms of Section164(2) of the Act;

vi. with respect to the adequacy of the internal financial controlswith reference to Standalone Financial Statements of the Company and the operatingeffectiveness of such controls refer to our separate report in "Annexure B";

vii. with respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

a. the Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Financial Statements - Refer Note 41(a) to theStandalone Financial Statements.

b. the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

c. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

d. In respect of Rule 11(e) of the Companies (Audit and Auditors)Rules 2014

a. The management has represented that to the best of its knowledgeand belief no funds (which are material either individually or in the aggregate) havebeen advanced or loaned or invested (either from borrowed funds or share premium or anyother sources or kind of funds) by the company to or in any other person(s) orentity(ies) including foreign entities ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shallwhether directly or indirectly lend or invest in other persons or entities identified inany 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.

b. Further the management has represented that no funds (which arematerial either individually or in the aggregate) have been received by the company fromany person(s) or entity(ies) including foreign entities ("Funding Parties")with the understanding whether recorded in writing or otherwise that the company shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Funding Party ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries.

c. Based on such audit procedures that were considered reasonable andappropriate in the circumstances nothing has come

to our notice that has caused us to believe that the representationsunder sub-clause (a) and (b) above contain any material misstatement.

d. The final dividend paid by the Company during the year in respect ofthe same declared for the previous year is in accordance with section 123 of the CompaniesAct 2013 to the extent it applies to payment of dividend. As stated in note 47 to thefinancial statements the

Board of Directors of the Company have proposed final dividend for theyear which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The dividend declared is in accordance with section 123 of the Act to the extentit applies to declaration of dividend.

3. I n our opinion and to the best of our information and according tothe explanations giventous theremuneration paid by the Company to its directors duringthe yearis in accordance with the provisions of Section 197 of the Act.

For Gokhale & Sathe For M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 103264W Firm Regn. No. 101851W
Rahul Joglekar Ashutosh Pednekar
Partner Partner
Membership No.: 129389 Membership No.: 041037
UDIN: 22129389AJERNR7856 UDIN: 22041037AJERIU6565
Place: Mumbai Place: Mumbai
Date: May 18 2022 GN=?RIGHT?>Date: May 18 2022

ANNEXURE A

TO INDEPENDENT AUDITOR?S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal andRegulatory Requirements? section of our report to the Members of LIC Housing FinanceLimited of even date)

(i) (a) The Company has maintained proper records

showing full particulars including quantitative details and situationof Property Plant and Equipment including intangible assets.

(b) The Company has a regular programme of physical verification ofproperty plant and equipment under which property plant and equipment are verifiedannually. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. No material discrepancieswere noticed on such verification during the year.

(c) According to the information and explanations given to us and therecords examine by us and based on the examination of the registered sale deed/ transferdeed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and acquired buildings which are freehold are held in thename of the Company as at the balance sheet date.

In respect of immovable properties of buildings that have been taken onlease and disclosed as property plant and equipment in the Standalone FinancialStatements the lease agreements are in the name of the Company where the Company is thelessee in the agreement.

(d) The Company has not revalued any of its Property Plant andEquipment (including right-of-use assets) and intangible assets during the year.

(e) According to the information and explanations given to us noproceedings have been initiated during the year or are pending against the Company as atMarch 31 2022 for holding any benami property under the Benami Transactions (Prohibition)Act 1988 (as amended in 2016) and rules made thereunder.

(ii) (a) The nature of the Company's business is such that

it is not required to hold any inventories and hence reporting underparagraph 3(ii) of the order is not applicable to the Company.

(b) The Company has been sanctioned working capital limits in excess of' 5 crore in aggregate from banks and financial institutions on the basis of security ofcurrent assets. The company is not required

to filed any quarterly returns to such banks and financialinstitutions.

i) (a) Since the Company is a Housing Finance Company whose principalbusiness is to give loans paragraph 3(iii)(a) of the Order is not applicable to theCompany.

(b) In our opinion the investments made and the terms and conditionsof the grant of loans during the year are prima facie not prejudicial to the Company'sinterest.

(c) I n respect of loans and advances in the nature of loans (togetherreferred to as "loan assets") the schedule of repayment of principal andpayment of interest has been stipulated. Note 38.4.2.3 to the financial statementsexplains the Company's accounting policy relating to impairment of financial assets whichinclude loans assets. In accordance with that policy loan assets with balances as at theyear end aggregating ' 11616.40 crore were categorised as credit impaired ("Stage3") and ' 7665.50 crore were categorised as those where the credit risk hasincreased significantly since initial recognition ("Stage 2"). Disclosures inrespect of such loans have been provided in Note 38.4.2.3 to the financial statements.Additionally out of loans and advances in the nature of loans with balances as at theyear-end aggregating ' 231837.84 crore where credit risk has not significantlyincreased since initial recognition (categorised as "Stage 1"). Having regard tothe nature of the Company's business and the volume of information involved it is notpracticable to provide an itemised list of loan assets where delinquencies in therepayment of principal and interest have been identified.

(d) The total overdue amount for more than 90 days as on March 31 2022is provided below:

No. of cases Principal amount overdue (' Lakhs) Interest overdue (' Lakhs) Total overdue (' Lakhs)
31538 318721.13 243077.97 561799.10

I n our opinion the Company has taken reasonable steps for therecovery of principal and interest.

(e) Since the Company is a Housing Finance Company whose principalbusiness is to give loans paragraph 3(iii)(e) of the Order is not applicable to theCompany.

ANNEXURE A

TO INDEPENDENT AUDITOR?S REPORT

(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repayment.

(iv) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the provisions of Section 185of the Companies Act 2013 are not applicable to the Company. The Company has compliedwith the provisions of Section 186 of the Companies Act 2013 in respect of investmentsmade or loans or guarantee or security provided to the parties covered under Section 186.

(v) As per the Ministry of Corporate Affairs notification dated March31 2014 the provisions of Sections 73 to 76 or any other relevant provisions of the Actand the Companies (Acceptance of Deposits) Rules 2014 as amended with regard to thedeposits accepted are not applicable to the Company and hence reporting under Clause3(v) of the Order is not applicable.

(vi) According to the information and explanations given to us and tothe best of our knowledge the Central Government has not prescribed the maintenance ofcost records under sub-section 1 of section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 as amended for the services of theCompany and hence reporting under paragraph 3 (vi) of the order is not applicable tothe Company.

(vii) (a) According to the information and explanations given

to us and on the basis of examination of the books of account of thecompany examined by us in our opinion the Company is regular in depositing with theappropriate authorities undisputed statutory dues including provident fund employees'state insurance income tax sales-tax goods and service tax cess and other materialstatutory dues applicable to it. According to information and explanations given to us noundisputed amounts payable were outstanding at the year end for a period of more thansix months from the date they became payable.

(b) According to the information and explanations given to us thereare no dues of income tax sales tax goods and service tax cess and other materialstatutory dues which have not been deposited with the appropriate authorities on accountof any dispute.

(viii) According to the information and explanations given to us therewere no transactions relating to previously unrecorded income that have been surrenderedor disclosed as income during the year in the tax assessments under the Income Tax Act1961 (43 of 1961).

(ix) (a) The Company has not defaulted in repayment of

loans or other borrowings or in the payment of interest thereon to anylender during the year.

(b) The Company has not been declared a wilful defaulter by any bank orfinancial institution or other lender.

(c) The Company has utilized the money raised by way of terms loansduring the year for the purpose for which they were raised.

(d) On an overall examination of the financial statements of theCompany funds raised on short term basis have prima facie not been used during the yearfor long-term purposes by the Company.

(e) The company has not taken any funds from any entity or person onaccount of or to meet the obligations of its subsidiaries or associates.

(f) The company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries or associate companies.

(x) (a) The Company has not raised moneys by way of initial

public offer or further public offer (including debt instruments)during the year and hence reporting under clause 3(x)(a) of the Order is not applicable.

(b) During the year the Company has made preferential allotment ofshares and requirement of section 42 and section 62 of the Companies Act 2013 have beencomplied with and the funds raised have been used for the purposes for which the fundswere raised.

(xi) (a) During the course of our examination of the

books and records of the Company carried out in accordance with thegenerally accepted auditing practices in India and according to the information andexplanations given to us we have not come across any instance of material fraud by or onthe Company noticed or reported during the year nor have we been informed of such caseby management.

(b) No report under sub-section (12) of section 143 of the CompaniesAct has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government during the year and upto the date ofthis report.

(c) As represented to us by the management there are no whistle blowercomplaints received by the Company during the year.

(xii) The Company is not a Nidhi Company and hence reporting underparagraph 3 (xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and onthe basis of our examination of the records the Company is in compliance with Section 177and 188 of the Act where applicable for all transactions with the related parties and thedetails of related party transactions have been disclosed in the Standalone FinancialStatements as required by the applicable accounting standards.

(xiv) (a) In our opinion the Company has an adequate internal

audit system commensurate with the size and the nature of its businessexcept with regard to closure of the internal audit reports.

(b) We have considered the internal audit reports for the year underaudit issued to the Company during the year and till date in determining the naturetiming and extent of our audit procedures.

(xv) According to the information and explanations given to us and onthe basis of our examination of the records the Company has not entered into any non-cashtransactions with directors or persons connected with directors. Hence reporting underparagraph 3(xv) of the Order is not applicable.

(xvi) (a) The Company is not required to be registered under

Section 45- IA of the Reserve Bank of India Act 1934 (2 of 1934).

(b) The Company is a Housing Finance Company and it holds a validCertificate of Registration (CoR) from the National Housing Bank issued under Section29A(2) of the National Housing Bank Act 1987 for conducting housing finance business.Prior to 9th August 2019 the power of registration of Housing FinanceCompanies was vested with the National Housing Bank and not the Reserve Bank of India.

(c) In our opinion the Company is not a Core Investment Company andthere is no other Core Investment

Company within the Group (as defined in the Core Investment Companies(Reserve Bank) Directions 2016) and accordingly reporting under clause 3(xvi) (c) and (d)of the Order is not applicable.

(xvii) The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.

(xviii) There has been no resignation of the auditor during the yearhence there is no requirement to report under this clause.

(xix) On the basis of the financial ratios ageing and expected datesof realisation of financial assets and payment of financial liabilities other informationaccompanying the financial statements and our knowledge of the Board of Directors andManagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report indicating that Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and it should notbe construed as a guarantee or assurance that all liabilities falling due within a periodof one year from the balance sheet date will get discharged by the Company as and whenthey fall due.

(xx) (a) In respect of other than ongoing projects there are no

unspent amounts that are required to be transferred to a Fund specifiedin Schedule VII to the Companies Act in compliance with second proviso to sub-section (5)of Section 135 of the said Act.

(b) In respect of ongoing projects the Company has transferred theunspent amount to a Special Account in compliance with the provisions of sub-section (6)of section 135 of the Act.

For Gokhale & Sathe For M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 103264W Firm Regn. No. 101851W
Rahul Joglekar Ashutosh Pednekar
Partner Partner
Membership No.: 129389 Membership No.: 041037
UDIN: 22129389AJERNR7856 UDIN: 22041037AJERIU6565
Place: Mumbai Place: Mumbai
Date: May 18 2022 Date: May 18 2022

ANNEXURE B

TO INDEPENDENT AUDITOR?S REPORT

(Referred to in paragraph 2(f) under ‘Report on Other Legal andRegulatory Requirements? section of our report to the Members of LIC HOUSING FINANCELIMITED of even date) Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of sub-section (3) of Section143 of Companies Act 2013 (the ‘Act?)

We have audited the internal financial controls with reference tofinancial statements of LIC Housing Finance Limited (hereinafter referred to as "theCompany") as of March 31 2022 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.

Management?s Responsibility for Internal Financial Controls

The Company's management and Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal financialcontrols with reference to financial statements (the 'Guidance Note') issued by theInstitute of Chartered Accountants of India. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor?s Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements of the Company based on ouraudit. We conducted our audit in accordance with the Guidance Note issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed undersub-section (10) of Section 143 of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlssystem over financial reporting.

Meaning of Internal financial controls with reference to financialstatements

A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the standalonefinancial statements.

Inherent Limitations of Internal financial controls with reference tofinancial statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control over financial reporting may become inadequate becauseof changes in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls with reference to standalone financial statements and such internalfinancial controls were operating effectively as at March 31 2022 based on the internalfinancial controls with reference to standalone financial statements criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.

For Gokhale & Sathe For M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 103264W Firm Regn. No. 101851W
Rahul Joglekar Ashutosh Pednekar
Partner Partner
Membership No.: 129389 Membership No.: 041037
UDIN: 22129389AJERNR7856 UDIN: 22041037AJERIU6565
Place: Mumbai Place: Mumbai
Date: May 18 2022 Date: May 18 2022

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