You are here » Home » Companies » Company Overview » LIC Housing Finance Ltd

LIC Housing Finance Ltd.

BSE: 500253 Sector: Financials
BSE 10:42 | 25 Jun 495.10 -2.60






NSE 10:34 | 25 Jun 494.95 -2.45






OPEN 499.00
52-Week high 777.75
52-Week low 463.40
P/E 12.56
Mkt Cap.(Rs cr) 24,985
Buy Price 494.45
Buy Qty 152.00
Sell Price 494.95
Sell Qty 606.00
OPEN 499.00
CLOSE 497.70
52-Week high 777.75
52-Week low 463.40
P/E 12.56
Mkt Cap.(Rs cr) 24,985
Buy Price 494.45
Buy Qty 152.00
Sell Price 494.95
Sell Qty 606.00

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 Eighth Annual Report together with theAudited Financial Statements for the year ended 31st March 2017 of LIC Housing FinanceLimited ('the Company').

Financial results

(Rs. In crore)
For the year ended 31st March 2017 For the year ended 31st March 2016
Profit before Tax 2955.77 2563.55
Tax Expense 1024.72 902.76
Profit after Tax 1931.05 1660.79
Special Reserve & Statutory Reserve u/s 29C of NHB Act 1987 570.00 500.00
General Reserve 500.00 400.00
Proposed Dividend 312.89 277.56
Tax on Dividend 63.00 55.68
Balance carried forward to next year 485.16 427.55
1931.05 1660.79


Considering the performance during the financial year 201617 your Directors recommendpayment of dividend for the financial year ended 31st March 2017 of '6.20 per equityshare of face value of '2/- per share i.e. @ 310 percent as against ' 5.50/- per equityshare of face value of '2/- per share for the previous year i.e. @ 275 percent. The totaldividend outgo for the current year would amount to '375.89 crore including DividendDistribution Tax of '63.00 crore as against '333.25 crore including dividend distributiontax of '55.68 crore for the previous year.

Performance Income and profit

The Company earned total revenue of '14080.35 crore registering an increase of 12.77percent over the previous year. The percentage of administrative expenses to the housingloans which was 0.37 percent in the previous year has marginally increased to 0.42percent during the financial year 2016-17.

Profit before tax and after tax stood at '2955.77 crore and '1931.05 crorerespectively as against '2563.55 crore and '1660.79 crore respectively for theprevious year. Profit before tax increased by 15.30 percent over the previous year whileprofit after tax showed growth of 16.27 percent over that of the previous year.

Lending operations Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of11.02 percent over the previous year. During the year the Company sanctioned 178636individual housing loans for '39458.74 crore and disbursed 179035 loans for '38334.13crore. Housing loan to Individuals i.e. retail loans constitute 90.55 percent of the totalsanctions and 92.28 percent of the total disbursements for the year 2016-17 as compared to92.14 percent and 95.51 percent respectively during the year 2015-16. The gross retailloan portfolio grew by over 14.23 percent from '121872.89 crore as on 31st March 2016to '139210.71 crore as on 31st March 2017.

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

Amount sanctioned : '253005.98 crore
Amount disbursed : '241775.04 crore

More than 2189000 customers have been serviced by the Company up to 31st March 2017since inception.

Project loans:

The project loans sanctioned and disbursed by the Company during the year were'4116.55 crore and '3207.06 crore respectively. Corresponding figures for the previousyear were '3075.25 crore and '1621.60 crore. These loans are generally for shortdurations 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:

• Housing Finance company of the year- ABP news

• Best Data Quality in HFC- CIBIL Data Quality Awards

• Most Recognizable Brand of India origin- Power Brand Glam by Franchise India

• Best Brands 2016- Economic Times

• Featured in Forbes India's Super 50 Companies

• Featured in The Top 40 CEOs BFSI- Business Today

• Housing Finance Company of the year-Award by OUTLOOK money

• India's Leading Housing Finance Company -by Dun & Bradstreet

• Best HR of the year-By ABP news

• CEO with HR orientation-By ABP news

• Award of Gratitude to LICHFL presented by LJN HMOTKARSH NMV.

• Certificate of Achievement to MD & CEO - APEA 2016

• Top Performer of India Inc.- Seasonal Magazine Corporate Award 2016.

• NSE awarded LIC HFL for Successful Inaugural Issue on the NSE Electronic BiddingPlatform.

• Best Home Loan Provider- Outlook Money.

Marketing and Distribution

During the year under review efforts were taken to further strengthen the distributionnetwork. The distribution network of the Company consists of 240 Marketing Offices 21Back Offices to conduct the credit appraisal and administrative functions & 1 CustomerService Point. The distribution network also includes 42 offices of LICHFL FinancialServices Ltd. wholly owned subsidiary engaged in distribution of various financialproducts including housing loan. The Company also has representative offices in Dubai andKuwait.


During the F.Y. 2016-17 '19579.42 crore was received by way of schedule repayment ofprincipal through monthly instalments as well as prepayment of principal ahead ofschedule as compared to '18398.85 crore received last year.

Non-Performing Assets and Provisions

The amount of gross Non-Performing Assets (NPA) as at 31st March 2017 was '627.06crore which is 0.43 percent of the housing loan portfolio of the Company as against'567.82 crore i.e. 0.45 percent of the housing loan portfolio as at 31st March 2016. Thenet NPA as at 31st March 2017 was '205.29 crore i.e. 0.14 percent of the housing loanportfolio vis-a-vis '270.48 crore i.e. 0.22 percent of the housing loan portfolio as at31st March 2016. The total cumulative provision towards housing loan portfolio includingprovision for standard assets as at 31st March 2017 is '1038.18 crore as against '820.30crore in the previous year. During the year the Company has written off '50.42 crore ofhousing loan portfolio as against '34.58 crore during the previous year.

Resource Mobilisation

During the year the Company raised funds aggregating to '54611.75 crore throughNon-Convertible Debentures (NCD) term loans/Foreign Currency Non Resident (FCNR)(B) loan/ Line of Credit (LoC) / Working Capital Demand Loan (WCDL) from banks NHB refinancecommercial paper and Public Deposits.

Non Convertible Debentures (NCD)

During the year the Company issued NCD amounting to '26874/- crore on a privateplacement 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 2017 NCDs amounting to '99307/-crore were outstanding. The Company has been regular in making payment of principal andinterest on the NCDs.

As at 31st March 2017 there were no NCDs which have not been claimed by the Investorsor not paid by the Company after the date on which the said NCDs became due forredemption. Hence the amount of NCD remaining unclaimed or unpaid beyond due date is Nil.

Subordinate Bonds & Upper Tier II Bonds

During the year the Company has not issued any Subordinate Bonds and Upper Tier IIBonds. As at 31st March 2017 the outstanding Subordinate Bonds and Upper Tier II Bondsstood at '2500/- crore. Considering the balance term of maturity as at 31st March 2017'1500/- crore of the book value of the Subordinate Bonds and Upper Tier II Bonds isconsidered as Tier II Capital as per the Guidelines issued by NHB for the purpose ofCapital 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 2017 are '11477.44crore as compared to '14051.65 crore as at 31st March 2016. The Refinance from NHB as at31st March 2017 stood at '3744.06 crore as against '3038.21/- crore as at 31st March2016. During the year the Company has availed '1230 crore Refinance from NHB underregular 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 2017 the outstanding amount on account of public deposits was'6321.38 crore as against '3820.26 crore in the previous year. During F.Y. 2016-17 thenumber of depositors has increased from 30397 to 38638 and '4112.01 crore has beencollected as public deposits.

CRISIL has for the eleventh 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.

572 deposits amounting to '8.99 crore which were due for repayment on or before 31stMarch 2017 were not claimed by the depositors till that date. Since then 98 depositorshave claimed or renewed deposits amounting to '14627000/-. Depositors are appropriatelyintimated for renewal / claim of their deposits through an authorised agency. Furtheradequate follow-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 of report '149820/-against unclaimed interest 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 15.64 percent (as against 12 percent prescribed by the NHB) as at31st March 2017 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. During the year NHB has prescribed that HFCs shall provide 'Most Important Termsand Conditions' of housing loans which the Company has implemented with the objective ofensuring a better understanding of the major terms and conditions of the loan agreed uponbetween the Company and its borrowers.

The Company also has been following directions / guidelines / circulars issued by SEBIMCA from 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) wereappointed by the shareholders at the Twenty Seventh Annual General Meeting to hold theoffice for a term of three years i.e. from the conclusion of the Twenty Seventh AnnualGeneral Meeting until the conclusion of the Thirtieth Annual General Meeting on aremuneration to be determined by the Board of Directors in consultation with them andapplicable taxes / cess on the said remuneration for the purpose of audit of theCompany's accounts at the Corporate Office as well as at all Back Offices subject toratification by shareholders at each Annual General Meeting. The Company has received aconfirmation from the Joint Statutory Auditors to the effect that they are eligible tocontinue as Joint Statutory Auditors of the Company in terms of Section 139 and 141 of theCompanies Act 2013 and Rules made thereunder.

The Board recommend to the Members for approval at Twenty Eighth AGM the ratificationof appointment of Messrs Chokshi & Chokshi LLP Chartered Accountants Mumbai (FirmRegistration No.:101872W / W100045) and Messrs Shah Gupta & Co. CharteredAccountants Mumbai (Firm Registration No.:109574W) as Joint Statutory Auditors of theCompany to hold the office from the conclusion of the Twenty Eighth Annual General Meetinguntil the conclusion of the Twenty Ninth Annual General Meeting on a remuneration to bedetermined by the Board of Directors in consultation with them and applicable taxes / cesson the said remuneration for the purpose of audit of the Company's accounts at theCorporate Office as well as at all Back Offices.

Corporate Governance

A certificate from Mr. P. S. Gupchup Company Secretary in practice (Membership No.:ACS 4631 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 appendedin 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

Business Responsibility Report is presented in a separate section forming part of theAnnual Report.

Depository system

For transactions of the Company's shares in dematerialised form the Company hasentered into an agreement with Central Depository Services (India) Ltd. (CDSL) andNational Securities Depository Ltd. (NSDL). The shareholders have a choice to select theDepository Participant. As at 31st March 2017 9066 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 25th April 2017.

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 CA firm as Internal Auditor for audit of its CorporateOffice.

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 2016-17 are expected toimprove its operational and financial performance. During F.Y. 2017-18 the Companyproposes:

• 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 various sources 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 IT 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.

Ensuring a decent house for all the people by 2022 is one of the key initiatives ofUnion Government. It is the most fundamental aspiration of any country and under thePradhan Mantri Awas Yojana (PMAY) it forms the cornerstone for inclusive housing andrapid economic development. Under the PMAY the ministry has approved the construction of1.17 lakh houses for the urban poor. The infrastructure status granted to the affordablehousing sector will enable developers operating in this segment to raise loans at acheaper rate. Profits from affordable housing have been exempted from income tax and 20incentives have been announced by the government for affordable housing alone.

In the evaluation of sustainability of the housing market the absorption of officespace is the prime indicator across the world. After all it is the economic activity andemployment quotient of the area that fuel the demand for new houses. Housing loan growthis set for a major appreciation in the current financial year 2017-18 as government'sfocus on housing for all scheme i.e. PMAY 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 details 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 2017 is attached as Annexure 1 to this Report.

Board Meetings held during the year:

During the year under review 6 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 hasbeen 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;

(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 Reportand

(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 Nomination and Remuneration Committee had laid down criteria for determiningDirectors Qualification positive attributes and independence of a Director remunerationof Directors Key Managerial Personnel and also criteria for evaluation of DirectorsChairperson Non-Executive Directors and Board as a whole and also the evaluation processof the same.

The performance of the members of the Board and the Board as a whole were evaluated atthe meeting of Independent Directors held on 23rd February 2017.

In terms of the provisions of section 149 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a company shall have atleastone Woman Director on the Board of the Company. The Company has Ms. Savita Singh asDirector on the Board since 25th May 2012 and Ms. Usha Sangwan since 23rd June 2016. Ms.Sunita Sharma has been Managing Director & CEO since 5th November 2013. On herelevation to Managing Director of LIC of India on 11th April 2017 Ms. Sunita Sharmatendered her resignation as Managing Director & CEO with effect from 11th April 2017.Shri Vinay Sah has been appointed as Managing Director & CEO with effect from 12thApril 2017.

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 to Section 186(11) of the Companies Act 2013 loans made guarantee given orsecurity provided by a housing finance company in the ordinary course of its business areexempted from 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) is also obtained from Audit Committee for the RelatedParty Transactions which are of repetitive nature as well as for ordinary course ofbusiness.

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 is annexed asAnnexure 3 to this report.

Form AOC-2 is annexed as Annexure 4 to this report.

State of the Company's affairs:

The year 2016-17 was a significant year in Company's lifecycle. The Company earnedtotal revenue of '14080.35 crore registering an increase of 12.77 percent. Thepercentage of administrative expenses to the housing loans which was 0.37 percent in theprevious year has marginally increased to 0.42 percent during the financial year 2016-17.

Profit before tax and after tax stood at '2955.77 crore and '1931.05 crorerespectively as against '2563.55 crore and '1660.79 crore respectively for theprevious year. Profit before tax increased by 15.30 percent over the previous year whileprofit after tax showed growth of 16.27 percent over that of the previous year.

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

The Company has transferred '570 crore to Special Reserve and Statutory reserve u/s 29Cof NHB Act and an amount of '500 crore to General Reserve.

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

'312.89 crore is proposed to be paid by way of dividend to shareholders of the Companyi.e. '6.20 per equity share of face value of '2/- per 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 have occurred between the end of the financial year of the Company i.e. 31stMarch 2017 and the date of the Board's Report i.e. 25th April 2017.

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 foreignexchange outgo during the year in terms of actual outflows.

During the year ended 31st March 2017 the Company earned '18.69 lakh and spent '214.69lakh in foreign currency. This does not include foreign currency cash flows in derivativesand foreign currency exchange transactions.

Risk Management Policy for the Company:

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) Policy:

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 5 to thisreport.

Composition of the Corporate Social Responsibility Committee is as follows

Ms. Usha Sangwan* Chairperson Director
Shri Jagdish Capoor Member Independent Director
Dr. Dharmendra Bhandari Member Independent Director
Shri Vinay SahA Member Managing Director & CEO
Ms. Sunita Sharma** Member Managing Director & CEO

*Appointed as Member w.e.f. 23.06.2016 **Ceased to be member w.e.f 11.04.2017 AAppointedw.e.f.12.04.2017

Annual evaluation made by the Board of its own performance:

The Nomination and Remuneration Committee had recommended criteria for evaluation ofDirectors Chairperson Non-Executive Directors Board level committee and Board as awhole and also the evaluation process of the same.

The Board of Directors carried out an annual evaluation of its own performance Boardcommittees and Individual Directors pursuant to the provisions of the Act and theCorporate Governance requirements as prescribed by SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 at the meeting of Independent Directors heldon 23rd February 2017.

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 meetingspresentation of views convincingly resoluteness in holding views etc. In addition theChairman was also evaluated 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 andassociates in the same form and manner as that of the Company which shall be laid beforethe ensuing Twenty Eighth Annual General Meeting of the Company alongwith 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 and associates for the year ended 31st March 2017 form part ofthis Annual Report.

There has been no change in the nature of business of the Company during 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 report.

Appointments / Resignations of Directors:

Shri Vinay Sah was appointed as Additional Director and Managing Director & CEO ofthe Company by the Board with effect from 12th April 2017. As required under Section 160of the Companies Act 2013 a Notice has been received from a member proposing the name ofShri Vinay Sah for the office of a Director. The proposal for appointment of Shri JagdishCapoor as Independent Director and Ms. Savita Singh as NonExecutive Director is beingplaced before the members for approval the relevant details are forming part of theNotice of the Annual General Meeting.

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.

The term of Shri Jagdish Capoor as Independent Director has been extended for a periodof five (5) years with effect from 24th May 2017 and he shall not be liable to retire byrotation. Ms. Savita Singh's term as Non-Executive Director has been extended for a periodof five (5) years with effect from 24th May 2017 and she will be liable to retire byrotation.

Ms. Sunita Sharma ceased to be Managing Director & CEO of the Company with effectfrom 11th April 2017 on account of elevation to the post of Managing Director of LIC ofIndia.

Director Retiring by Rotation:

Ms. Usha Sangwan retires by rotation at the ensuing Annual General Meeting and iseligible for re-appointment.

Appointments / Resignation of the Key Managerial Personnel:

Shri Vinay Sah Managing Director & CEO Mr. Nitin K. Jage General Manager &Company Secretary and Mr. P. Narayanan CFO are the Key Managerial Personnel as per theprovisions 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

• Investment 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

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 2017 the Company has four Subsidiaries namely LICHFL Care HomesLimited LICHFL Asset Management Company Limited LICHFL Trustee Company Private Limitedand LICHFL Financial Services Limited. The Consolidated financial statements incorporatingthe results of all the subsidiaries of the Company for the year ended 31st March 2017are attached along with the statement pursuant to Section 129 of the Companies Act 2013with respect to the said subsidiaries. Brief write up including performance and financialposition of each of the subsidiaries is provided as under:

1. LICHFL Care Homes Limited:

LICHFL Care Homes Limited a wholly owned subsidiary of LIC Housing Finance Limitedwas incorporated on 11th September 2001 with an authorised share capital of ' 25 crore.The basic purpose of establishing the Company was to establish & operate assistedliving community centers for the senior citizens.

During the fiscal 2016 - 17 the Company earned a Profit Before Tax (PBT) of '2.55 Lakhand Profit After Tax (PAT) after adjustment of excess provisions of tax of earlier yearcomes to ' 82.50 Lakh.

The project at Bangalore Phase II has been completed and handing over of the keys wasdone on 12th August 2013. The Company is at present implementing a project at Bhubaneswarand the same is expected to be completed at an early date. The Company is launchinganother Senior Living Care Homes project at Vasind in Thane district of Maharashtra incollaboration with TATA Value Homes Limited. The project is at its approval stage withconcerned authorities.

The Company is also exploring possibilities to start Senior Living Care Homes projectat Bhopal Jaipur Hyderabad and Aluva subject to viability of the projects.

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

2. LICHFL Asset Management Company Limited.

LICHFL Asset Management Company Limited was incorporated on 14th February 2008 forundertaking the business of managing advising administering venture/mutual funds unittrusts investment trusts set up formed or established in India or abroad and to act asfinancial 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 commitmentsof ' 529.35 crore to LICHFL Urban Development Fund through Banks Financial InstitutionsCorporates and HNIs as against the targeted size of '500 crore. 30th March 2013 wasannounced as Final Closure Date of the Fund. Fund with a focus on Real Estate considersinvestment in Portfolio Companies engaged in development & acquisition of housing andrelated infrastructure industrial and IT Parks SEZ Warehouses Schools Hospitals. TenInvestment deals have been closed so far with Portfolio Companies developing residentialprojects across Pune Bangalore Punjab Hyderabad Mumbai and Chennai

During the year 2017-18 it is proposed to manage LICHFL Housing and Infrastructure Fundhaving focus on Property backed Infrastructure sectors and Affordable Housing whichinclude Education Institutions; Hospitals; Industrial Parks & Warehouses; BudgetHotels and Highway facilities and Affordable Housing. The expected fund size would be '750 Crore with a green shoe option of ' 250 Crore.

3. LICHFL Trustee Company Private Limited.

LICHFL Trustee Company Private Limited was incorporated on 5th March 2008 forundertaking the business of trusteeship. In the year 2010 the Company had registeredLICHFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds)Regulations 1996. The Fund launched its maiden Scheme LICHFL Urban Development Fund (Fund)and 30th March 2013 was declared as Final Closure Date of the Fund after successfullygarnering fund raising of ' 529.35 crore as against the target of ' 500 crore. The Fund ismanaged by LICHFL Asset Management Company Ltd. as Investment Manager. The Fund has closedten investment deals up to 31st March 2017. During 2017-18 it is proposed to registerLICHFL Housing and Infrastructure Trust for launch of a fund under Category I of SEBI(Alternative Investment Funds) Regulation 2012.

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 loan insuranceproducts (Life and General Insurance) mutual funds fixed deposits credit cards. Itbecame operational in March 2008 and at present has 46 offices spread across the country.During the FY 2016-17 eight new offices were opened. With these new openings the Companyis having its presence in almost all the major locations.

The vision of the Company is "SARVESHAM POORNAM BHAVATU" - to providecomplete financial solutions" to secure not only the present but also the future ofthe customer and his family. In this endeavour the marketing officials assist at everystep - from financial planning to manage every aspect of right investment both for theshort & 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 and Tata AIG GeneralInsurance Company Limited Credit Cards of LIC Cards Services Limited and Point ofPresence for National Pension System (NPS). More business verticals will be addeddepending on market opportunities and customer needs.

The Company has earned a Profit Before Tax (PBT) of ' 1634.32 lakhs and Profit AfterTax (PAT) stood at ' 1051.76 lakhs for the FY 2016-17 and recommended dividend @ 25 % forFY 2016-17.

Financial Highlights for FY 2016-17 in comparison with last year:

Particulars FY 2016-17 (In Rs. lakhs) FY 2015-16 (In Rs. lakhs)
Total Income 4095.82 1917.68
Profit Before Tax 1634.32 572.72
Profit After Tax 1051.76 388.72


237.50 142.50

The Company has consolidated its home loan business during the financial year 2016-17which is the major revenue earning vertical for the company. The systematic approach alongwith the new initiatives taken during the year are expected to drive the revenue growthand improve 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 31st March 2017 the Company has two associate companies namely LIC Mutual FundAsset Management Company Limited and LIC Mutual Fund Trustee Company Private 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 ended31st March 2017 has been sent to all the members of the Company. It does not containAnnual Reports of Company's subsidiaries. The Company will make available Annual Report ofall subsidiaries upon request by any member of the Company. These Annual Reports will alsobe available on Company's website viz www.

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 Executive OfficerChief Financial Officer Company Secretary in the financial year:

Non Executive Directors % increase in remuneration in
(including Independent Directors)* the financial year
Nil N.A.
*No remuneration is paid to Non Executive Directors (including Independent Directors) % increase in remuneration in the financial year
Executive Director (MD&CEO) 15.32%
Company Secretary 27.60%*
Chief Financial Officer 9.84%

*Remuneration of Company Secretary excludes arrears payment of '1253573.00 forF.Y.2016-17

c. The percentage increase in the median remuneration of employees in the financialyear: 32.23%

d. The number of permanent employees on the rolls of the Company:1833

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 2017 15 -November 1994 (IPO) % Change
Market Price (in ') 615.65** 12* 5030.42

*Adjusted face value on account of sub-division **BSE-clg.Pri 615.65

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 15.32%. The average annualincrease in the salaries of the employees other than managerial personnel during the yearwas 32.23% on account of new recruitment and promotion.

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

The Company affirms remuneration is as per the Remuneration policy of the Company.

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

In terms of Section 136(1) of the Companies Act 2013 read with the Rule 592) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board'sReport is being sent to all the shareholders of the Company excluding the annexurecontaining names of the top ten employees in terms of remuneration drawn. Any shareholderinterested in obtaining a copy of the said annexure may write to the Company at theaddress mentioned as : The Company Secretary LIC Housing Finance Limited CorporateOffice 131 Maker Towers 'F' Premises 13th Floor Cuffe Parade Mumbai - 400 005.

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 2016-17. The Company provided all assistance and facilities to the SecretarialAuditor for conducting their audit. Report of the Secretarial Auditor for the FinancialYear 2016-17 in Form MR-3 is annexed to this report as Annexure 7.

No significant and material orders were passed by the regulators or courts or tribunalsimpacting 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. No complaint was filed during the year in this regard.

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's commitment to develop and retain the best available talent theCompany had organised various training programmes for upgrading skill and knowledge of itsemployees in different operational areas. Apart from fixed salaries and perquisites theCompany also has in place performance-linked incentives which reward outstandingperformers who meet certain performance targets. It has been sponsoring its employees fortraining programmes / seminars / conferences organised by reputed professionalinstitutions.

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


Place: Mumbai

Date: 25th April 2017