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LIC Housing Finance Ltd.

BSE: 500253 Sector: Financials
NSE: LICHSGFIN ISIN Code: INE115A01026
BSE 00:00 | 01 Apr 232.90 -2.30
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NSE 00:00 | 01 Apr 233.00 -2.30
(-0.98%)
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OPEN 236.00
PREVIOUS CLOSE 235.20
VOLUME 235062
52-Week high 586.80
52-Week low 186.00
P/E 4.40
Mkt Cap.(Rs cr) 11,753
Buy Price 231.00
Buy Qty 3.00
Sell Price 234.00
Sell Qty 3.00
OPEN 236.00
CLOSE 235.20
VOLUME 235062
52-Week high 586.80
52-Week low 186.00
P/E 4.40
Mkt Cap.(Rs cr) 11,753
Buy Price 231.00
Buy Qty 3.00
Sell Price 234.00
Sell Qty 3.00

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 Thirtieth Annual Report together with theAudited Financial Statements for the year ended 31st March 2019 of LIC HousingFinance Limited (‘the Company').

FINANCIAL RESULTS

(Rs. in crore)
Particulars For the year ended 31st March 2019 For the year ended 31st March 2018
Profit before Tax 3379.55 2765.50
Tax Expense 948.58 763.00
Profit after Tax 2430.97 2002.50
Other Comprehensive Income (0.46) 2.62
Total Comprehensive Income 2430.51 2005.12
Appropriations
Special Reserve & Statutory Reserve u/s 29C of NHB Act 1987 750.00 560.00
General Reserve 600.00 500.00
Dividend 343.17 312.89
Tax on Dividend 69.25 63.00
Balance carried forward to next year 668.09 569.23
2430.97 2002.50

DIVIDEND

The Company has in place a Dividend Distribution Policy formulated in accordance withSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 which intends to ensure that a rationale decision is taken with regardto the amount to be distributed to the shareholders as dividend after retaining sufficientfunds for the Company's growth to meet its long-term objective and other purposes. ThePolicy also lays down various parameters to be considered by the Board of Directors of theCompany before declaration / recommendation of dividend to the Members of the Company.

Considering the performance during the financial year 2018-19 your Directors in termsof the Dividend Distribution Policy have recommended payment of dividend for thefinancial year ended 31st March 2019 of 7.60 per equity share of face value ofRs. 2/- per share i.e. @ 380 percent as against Rs. 6.80/- per equity share of face valueof Rs. 2/- per share for the previous year i.e. @ 340 percent. The total dividend outgofor the current year would amount to Rs. 461.15 crore including Dividend Distribution Taxof Rs. 77.61 crore as against Rs. 412.42 crore including dividend distribution tax of Rs.69.25 crore for the previous year. The dividend payable shall be subject to the approvalof the Members of the Company at the ensuing Annual General Meeting.

The Dividend Distribution Policy is available on the website of the Company athttp://www.lichousing.com/dividend_dist_ policy.php and forms part of this Board's reportas Annexure - 8.

INDIAN ACCOUNTING STANDARDS

The Company has adopted Indian Accounting Standards (‘Ind AS') notified by theMinistry of Corporate Affairs (MCA) vide its notification published in the OfficialGazette on 16th February 2015 applicable to certain classes of companies underSection 133 of the Companies Act 2013 (‘the Act') read with the Companies (IndianAccounting Standards) Rules 2015 from April 01 2018 and the effective date of transitionis April 01 2017. The said transition has been carried out from the erstwhile AccountingStandards notified under the Act read with relevant rules issued thereunder andguidelines issued by the National Housing Bank (‘NHB') (Collectively referred to as‘the Previous GAAP').

Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of theCompanies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

PERFORMANCE

Income and profit

The Company earned total revenue of Rs. 17361.72 crore registering an increase of 17percent. The percentage of administrative expenses to the housing loans which was 0.26percent in the previous year has come down to 0.24 percent during the financial year2018-19.

Net Profit before tax and after tax stood at Rs. 3379.55 crore and Rs. 2430.97 crorerespectively as against Rs. 2765.50 crore and Rs. 2002.50 crore respectively for theprevious year. Profit before tax increased by 22.20 percent over the previous year whileprofit after tax showed growth of 21.40 percent over that of the previous year.

LENDING OPERATIONS

Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of6.82 percent during the year. The Company has sanctioned 205702 individual housing loansfor Rs. 50276.67 crore and disbursed 204690 loans for Rs. 48187.40 crore during FY2018-19. Housing loan to Individuals i.e. retail loans constitute 84.60 percent of thetotal sanctions and 87.11 percent of the total disbursements for the FY 2018-19 ascompared to 84.23 percent and 91.37 percent respectively during the FY 2017-18. The grossretail loan portfolio grew by over 13.94 percent from Rs. 159350.29 crore as on 31stMarch 2018 to Rs. 181569.21 crore as on 31st March 2019.

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

Amount sanctioned: Rs. 348571.20 crore

Amount disbursed: Rs. 335074.98 crore

2614593 customers have been serviced by the Company up to 31st March 2019since inception.

PROJECT LOANS:

The project loans sanctioned and disbursed by the Company during the year amount to Rs.9154 crore and Rs. 7128 crore respectively. Corresponding figures for the previous yearwere Rs. 8736 crore and Rs. 4266 crore. These loans are generally for short durationsgiving 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 some of which are listed below:

• Best Private Issuer on Electronic Bidding Platform by NSE;

• Awarded ‘Outstanding Global Leadership Award' 2018 by The Institute ofEconomic Studies (IES);

• ‘Best Housing Finance Company' at Banking Financial Services &Insurance Awards by ABP News;

• Awarded ‘Brand of the Decade 2019' by BARC Asia.

• Recognized as one of the ‘The Economic Times Best Brands 2019'

MARKETING AND DISTRIBUTION

During the year under review efforts were taken to further strengthen the distributionnetwork. The distribution network of the Company consists of 273 Marketing Offices and 1Customer Service Point. These marketing offices work through Direct Sales Agents HomeLoan Agents and dedicated Team of Direct Marketing Executives totalling more than 13500.The distribution network also includes 50 offices of LICHFL Financial Services Ltd.wholly owned subsidiary company engaged in distribution of various financial productsincluding housing loans. The Company has representative offices in Dubai and Kuwait.

REPAYMENTS

During F.Y. 2018-19 Rs. 26242.99 crore was received by way of scheduled repayment ofprincipal through monthly instalments as well as prepayment of principal as compared toRs. 25851.01 crore received during the previous year.

NON-PERFORMING ASSETS AND PROVISIONS

The amount of gross Non-Performing Assets (NPA) as at 31st March 2019 wasRs. 2971.69 crore which is 1.54 percent of the housing loan portfolio of the Company asagainst Rs. 1303.61 crore i.e. 0.78 percent of the housing loan portfolio as at 31stMarch 2018. The net NPA as at 31st March 2019 was Rs. 2081.20 crore i.e. 1.08percent of the housing loan portfolio vis--vis Rs. 711.66 crore i.e. 0.43 percentof the housing loan portfolio as at 31st March 2018. The total cumulativeprovision towards housing loan portfolio including provision for standard assets as at 31stMarch 2018 is Rs. 1693.89 crore as against Rs. 1248.80 crore in the previous year.During the year the Company has written off Rs. 265.66 crore of housing loans whichincludes non-retail loan as against Rs. 23.29 crore during the previous year.

The aforesaid figures are as per IGAAP. As per IND-AS the provision as per ECL is Rs.1659.48 crore as at 31st March 2019 as against Rs. 1309.13 crore as at 31stMarch 2018.

RESOURCE MOBILISATION

During the year the Company raised long term funds aggregating to Rs. 45913.12 crorethrough Non – Convertible Debentures (NCDs) Term Loans and Deposits in addition toshort term borrowings.

NON-CONVERTIBLE DEBENTURES (NCDs)

During the year the Company issued NCDs amounting to Rs. 35112.10/- 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 ‘CRISILAAA/Stable' by CRISIL and ‘CARE AAA/ Stable' by CARE. As at 31st March2019 NCDs amounting to Rs. 127475.56/- crore were outstanding. The Company hasbeen regular in making repayment of principal and payment of interest on the NCDs. Alsothe amounts of NCDs were utilised for the purposes for which these were raised.

As at 31st March 2019 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 NCDs remaining unclaimed or unpaid beyond due date is‘Nil'.

SUBORDINATE BONDS AND UPPER TIER II BONDS

During the year the Company has not issued any Subordinate Bonds and Upper Tier IIBonds. As at 31st March 2019 the outstanding Subordinate Bonds and Upper TierII Bonds stood at Rs. 2000/- crore. Considering the balance term of maturity as at 31stMarch 2019 Rs. 1500/- crore of the book value of the Subordinate Bonds and Upper TierII Bonds is considered as Tier II Capital as per the Guidelines issued by NHB for thepurpose of Capital Adequacy.

TERM LOANS FCNR (B) LOAN FROM BANKS / LOC / WCDL REFINANCE FROM NHB / OTHER FINANCIALINSTITUTIONS / COMMERCIAL PAPER

The total loans / LOC outstanding from the Banks as at 31st March 2019 wereRs. 24873.23 crore as compared to Rs. 14358.81 crore as at 31st March 2018.Loans and advances outstanding from Other Financial Institutions were Rs. 200 crore as at31st March 2019 and 31st March 2018. The Refinance from NHB as at31st March 2019 stood at Rs. 1310.68 crore as against Rs. 1958.24 Crore asat 31st March 2018. During the year the Company has not availed any Refinancefrom NHB under regular Refinance scheme. As at 31st March 2019 CommercialPaper amounting to Rs. 7140.11 crore were outstanding as compared to Rs. 4050.22 crorefor the previous year. During the year 2018-19 the Company issued Commercial Paperamounting to Rs. 38339.48 crore as compared to Rs. 17976 crore for the correspondingprevious year.

The Company's long term loan facilities have been assigned the highest rating of‘CRISIL AAA/STABLE' and short term loan facilities have been assigned a rating of‘CRISIL A1+ & ICRA A1+' signifying highest safety for timely servicing of debtobligations.

TRANSFER OF UNCLAIMED DIVIDEND / DEPOSITS AND SHARES TO INVESTOR EDUCATION &PROTECTION FUND (IEPF)

Pursuant to the provisions of Sections 124 and 125 of the Companies Act 2013 rulesmade thereunder and Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 read with the relevant circulars and amendments theretothe amount of dividend / deposits including interest thereon remaining unclaimed for aperiod of seven years from the due date is required to be transferred to the InvestorEducation and Protection Fund (IEPF) as constituted by the Central Government. Further asper the provisions of Section 124(6) of the Companies Act 2013 read with the InvestorEducation & Protection Fund Authority (Accounting Audit Transfer & Refund) Rules2016 the shares in respect of which the dividend has not been claimed for sevenconsecutive years are required to be transferred by the Company to the designated demataccount of the IEPF Authority. The details of the unclaimed dividend/deposits and theshares transferred to the IEPF are uploaded as per the requirements on the website ofthe Company i.e. www.lichousing.com.

UNPAID/UNCLAIMED DIVIDEND

During the financial year under review your Company has transferred unclaimed dividendof Rs. 8210045/- pertaining to the financial year 2010-11 to the Investor Education andProtection Fund (IEPF) established by the Central Government after the expiry of sevenyears from the date of transfer to unpaid dividend account.

TRANSFER OF SHARES TO IEPF

Pursuant to the provisions of Section 124(6) of the Companies Act 2013 and the Rulesmade thereunder the Company has transferred in aggregate 97169 equity shares of Rs. 2/-each to Investor Education and Protection Fund (IEPF) established by the CentralGovernment in respect of which the dividend remained unclaimed for a period of sevenconsecutive years i.e. from 2010-11 till the due date of 30th August 2018after following the prescribed procedures.

Any person who is entitled to unclaimed dividend or deposits etc. that have beentransferred to IEPF can claim the same by making an application directly to IEPF in theprescribed form under the IEPF Rules which is available on the website of IEPF i.e.www.iepf.gov.in

PUBLIC DEPOSITS

As at 31st March 2019 the outstanding amount on account of public depositswas Rs. 3932.17 crore as against Rs. 3430.83 crore in the previous year and outstandingamount on account of corporate deposits was Rs. 3735.26 crore as against Rs. 3340.84crore in the previous year. During F.Y. 2018-19 the number of depositors for publicdeposits has decreased from 35528 to 35005 and increased for Corporate deposits from 521to 567.

Rs. 1370.51 crore has been collected as public deposits and Rs. 3085.51 croreas corporate deposits. Total aggregate amount collected was Rs. 4455.71 crore.

CRISIL has for the twelfth consecutive year re-afirmed 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.

1083 deposits amounting to Rs. 86.15 crore which were due for repayment on or before31st March 2019 were not claimed by the depositors. Since then 152 depositorshave claimed or renewed deposits of Rs. 38.61 crore as on date of this report. Depositorsare appropriately intimated about renewal / claim of their deposits through an authorisedagency. Further adequate follow-up is made in respect of those cases where deposits arelying 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 dateRs. 179000/- againstunclaimed principal and Rs. 258624/- against unclaimed interest on deposits has beentransferred 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 Sections 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. Which was14.36 percent (as against 12 percent prescribed by the NHB) as at 31st March2019 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 ImportantTerms and Conditions' (MITC) of housing loans which the Company has implemented with theobjective of ensuring a better understanding of the major terms and conditions of the loanagreed upon between the Company and its borrowers.

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

DISCLOSURE UNDER HOUSING FINANCE COMPANIES ISSUANCE OF NON-CONVERTIBLE DEBENTURES ONPRIVATE PLACEMENT BASIS (NHB) DIRECTIONS 2014

During the financial year under review Non-Convertible Debentures issued on privateplacement basis were repaid / redeemed by the Company on their respective due dates andthere were no instances of any Non-Convertible Debentures which have not been claimed bythe investors or not paid by the Company after the date on which the Non-ConvertibleDebentures became due for redemption.

AUDIT REPORTS AND AUDITORS Audit Reports

The Auditors' Report for the financial year 2018-19 does not contain any qualificationreservation or adverse remark. The Auditors' Report is enclosed with the financialstatements in this Annual Report.

The Secretarial Auditor's Report for the financial year 2018-19 does not contain anyqualification reservation or adverse remark. Report of the Secretarial Auditor for thefinancial Year 2018-19 in Form MR-3 is annexed to this report as Annexure 10.

A certificate from Shri. P. S. Gupchup Practising Company Secretary Mumbai(Membership No.: ACS 4631 and Certificate of Practice No.:9900) regarding compliance ofthe conditions of Corporate Governance as stipulated under SEBI (Listing

Obligations and Disclosure Requirements) Regulations 2015 is attached to the CorporateGovernance Report which does not contain any qualification reservation or adverse remark.

AUDITORS

Statutory Auditors

Under Section 139 of the Companies Act 2013 and the Rules made thereunder it ismandatory to rotate the statutory auditors on completion of the maximum term permittedunder the said Section . The present Joint Statutory Auditors complete their term as perthe said Section. The Audit Committee of the Company has proposed and on 1stJuly 2019 the Board of Directors of the Company has recommended the appointment of M/s.Gokhale & Sathe Chartered Accountant (Firm Registration No.: 103264W) and M/s. M. P.Chitale & Co. Chartered Accountant (Firm Registration No.: 101851W) as JointStatutory Auditors of the Company and they will hold office for a period of fiveconsecutive years from the conclusion this Thirtieth Annual General Meeting of the Companyscheduled to be held on 28th August 2019 till the conclusion of the ThirtyFifth Annual General Meeting to be held in the year 2024 subject to the approval of theshareholders of the Company. The second quarterly limited review for financial year2019-20 as on 30th September 2019 will be done by the proposed Joint StatutoryAuditors. The first year of audit for the proposed Joint Statutory Auditors will be forthe year ending 31st March 2020.

The remuneration payable to each of the proposed Joint Statutory Auditors will be Rs.2620000/- as 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 alongwith consolidated accounts as well as atall Back Offices to be allotted equally between them in consultation with the management.

The Board recommend to the Members for approval at the Thirtieth Annual GeneralMeeting the appointment of M/s. Gokhale & Sathe Chartered Accountant (FirmRegistration No.: 103264W) and M/s. M. P. Chitale & Co. Chartered Accountant (FirmRegistration No.: 101851W) as Joint Statutory Auditors of the Company to hold the officefrom the conclusion of this Thirtieth Annual General Meeting until the conclusion of theThirty Fifth Annual General Meeting subject to ratification by the members of the Companyat each subsequent Annual General Meeting on a remuneration as mentioned above andapplicable taxes / cess on the said remuneration for the purpose of audit of theCompany's accounts at the Corporate Office alongwith consolidated accounts at all BackOffices to be allotted equally between them in consultation with the management.

SECRETARIAL AUDITOR:

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 2018-19. The Companyhas provided all assistance and facilities to the Secretarial Auditor for conducting theiraudit.

COST RECORDS AND COST AUDIT:

Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable for thebusiness activities carried out by the Company.

CORPORATE GOVERNANCE

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 shall be included as part of the Annual Report. Accordingly BusinessResponsibility Report is presented in a separate section forming part of this AnnualReport.

DEPOSITORY SYSTEM

For transaction of the Company's shares in dematerialised form the Company has enteredinto an agreement with Central Depository Services (India) Ltd. (CDSL) and NationalSecurities Depository Ltd. (NSDL). The shareholders have a choice to select the DepositoryParticipant. As at 31st March 2019 6176 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 only andtherefore such members are requested to convert their holdings to dematerialised form.

AUDITORS' OBSERVATIONS

No adverse remark or observation has been made by the Joint Statutory Auditors in theirreport dated 4th May 2019.

The Company has an in-house mechanism for Internal Audit of all its back officesconducted by the team of in-house auditors. The Company maintains an exhaustive checklistfor the purpose of Audit. The Company has also appointed M/s. Borkar & MuzumdarChartered Accountants as Internal Auditor for Internal Audit of its Corporate Office forfinancial year 2019-20 to financial year 2020-21.

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 and non-housing loans.

OUTLOOK FOR 2019-20

The initiatives taken by the Company during the financial year 2018-19 are expected toimprove its operational and financial performance. During F.Y. 2019-20 the Companyproposes:

• Focus on growth of Retail Housing Loans to continue at all levels.

• PMAY-CLSS to be given additional thrust and marketing activities to be inalignment with Government Initiatives from time to time and thus ensuring achievement oftargets in both numbers and amount.

• Direct Marketing Executive (DME) channel to be made a separate unit. BusinessDevelopment Center (BDCs) to be opened at all BO centers. Metro centers like Mumbai PuneDelhi Hyderabad Chennai Bangalore Kolkata Lucknow to have minimum 2 BDCs. In othermajor cities having more than 2 area offices one office to be converted as BDC.

• Leveraging our relationship with the Builders to whom Project Finance has beenprovided for retail business as well. DME channel to be given responsibility of procuringretail housing loans from these projects.

• Creation of separate cell at Regional Offices (ROs) to handle high value loansof more than Rs. 10 crore with post disbursement monitoring. This cell will be on similarlines to Project Finance Department in ROs.

• Creation of cluster of area offices (say 5 area offices) within (BO)jurisdiction to handle sanction and disbursement with the aim to reduce Turn Around Time(TAT).

• Business Potential Mapping exercise to procure more and more retail business

• Advance Processing Facility (APF) approval to be made core activity at AreaOffice levels

• Corporate tie ups with builders for mass business procurement

• Making use of builders / developers as distribution channel.

• Making online loan application more effective and enhance its contributiontowards the incremental business.

• Ensuring achievement of Term Targets- Monthly Quarterly by all Units.

• Strengthening of new area offices opened in FY 2018-19 by bringing theirperformance achievement in alignment with to budget and Growth above Region's average.

• To make both the Overseas Offices more effective and productive and increasingtheir share to the Company's Business.

• To come up with new Incentive or privilege schemes for Intermediaries andMarketing Officials as additional tool of motivation.

• Continuous ‘training' to intermediaries and Marketing Officials to increaseproductivity.

• 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.Explore new avenues of distribution channel.

• Incentivising and motivating the marketing intermediaries systematically forimproving productivity and imbibing a sense of loyalty professionalism.

• 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 IT 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.

• Ensuring achievement of term targets – monthly quarterly by all units.

• Procurement of business under Pradhan Mantri Awas Yojana / Affordable housingand to have a continuous focus in alignment with Government initiatives from time to time.

THE MANAGEMENT PERSPECTIVE ABOUT FUTURE OF THE COMPANY

The convergence of on-going reforms and political stability have led to growth in theresidential real estate market in the first half of 2019 and with the continuity oferstwhile political regime ensuring an undeterred process of reforms and speedyinfrastructure growth markets are set to continue along path of growth. During the firstquarter of current year the government lowered Goods and Services Tax (GST) rates onaffordable homes to 1% from the earlier 8% without input tax credit. GST on projectsunder construction which are not under the affordable housing segment was reduced to 5%from 12%. Real Estate (Regulation and Development) Act 2016 (RERA) have now been notifiedin most states and union territories. Though much is yet to be done in terms ofimplementation the Act has definitely ensured greater transparency and efficiency inresidential markets. Apart from regulatory reforms the government has focused onenhancing economic growth and improving liquidity (the RBI has cut interest rates thricesince the beginning of 2019). The home buyer has benefitted from both - ongoing reforms aswell as lowering of borrowing costs.

It may be mentioned here that there is a liquidity challenge in the market driven moreby a crisis of confidence in the Non-Banking Finance Companies (NBFC) more specificallyHousing Finance Companies ecosystem rather than an actual impairment on balance sheets.In the last three years debt mutual funds had become the de-facto bankers to thefast-growing NBFCs. They accounted for the bulk of the industry's growth capital as publicsector banks pulled away from lending due to lack of capital. As a result a number ofNBFCs started facing liquidity crunch after a sharp rise in interest cost therebyresulting a hit in their repayment ability. Housing Finance Companies (HFCs) thoughregulated by National Housing Bank (NHB) are basically NBFCs which are India's shadowbanking sector well known for aggressive lending practices especially for small andmedium enterprises home buyers and real estate developers who have difficulty inborrowing from banks. Credit from the NBFC sector grew by 21 per cent year-on-year in thefinancial year 2018 when bank credit growth was around 10 per cent. But the inherentproblem with NBFCs has been their reliance on short-term funding routes like commercialpapers and resorting to rollovers to meet their long-term lending requirements.

The problems with the NBFC sector began in September 2018 when the infrastructurefinance company namely IL&FS Ltd defaulted on repayments to banks mutual funds termdeposits and failed to meet the commercial paper redemption obligations. It caused panicin the markets as it impacted banks mutual funds as well as retail investors. Since thenthe source of funding for NBFCs has been drying up and they are finding it increasinglydifficult to service repayment of existing obligations. Asset quality is viewed seriouslyand fund managers are no more chasing only numbers and therefore the availability ofliquidity may go down.

In India there is an estimated shortage of around 4 crore houses (urban and rural). Inaddition population growth of 1.3 percent per annum favourable demographics‘nuclearisation' of families migration to urban areas fiscal benefits risingincome / aspirations all that could lead to another one crore per annum demand forhouses. Affordability to buy houses has increased over the past three years (especially inurban areas) even as property prices have remain flat incomes have risen and mortgageinterest rates have fallen by around 250 bps from five-year peak leading to 15 percentreduction in EMI payments.

With developers focusing on delivery of already launched projects new launches ofresidential units decreased by 11% on a y-o-y basis across the top seven cities (DelhiNCR Bengaluru Mumbai Kolkata Chennai Hyderabad and Pune). With the General Electionsin H1 2019 developers also adopted a wait and watch approach and focused on clearingtheir unsold inventory. Apart from Mumbai and Delhi NCR all other cities saw a dip in newlaunches during the H1 2019. Mumbai Delhi NCR and Bengaluru continued to dominatelaunches and formed three-fourth of the overall launches during this period.Interestingly since 2016 Pune which is merely 1/4th the size of Delhi NCR interms of population witnessed a higher new launches declining by 11% on a y-o-y basis.Going ahead new unit launches across the seven cities are expected to remain modest asdevelopers realign their product mix to suit market demand.

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 2019 is attached as Annexure 1 to this Report.

Extract of Annual Return is also displayed at Company's website at the given link– www.lichousing.com/annual_ general_meeting.php.

REPORTING OF FRAUDS BY AUDITORS:

During the year under review neither the statutory auditors nor the secretarialauditor has reported to the Audit Committee under Section 143(12) of the Companies Act2013 any instances of fraud committed against the Company by its officers or employeesthe details of which would need to be mentioned in the Board's report.

SECRETARIAL STANDARDS:

The Company complies with all applicable mandatory secretarial standards issued by theInstitute of Company Secretaries of India.

RATING RATIONALE:

CRISIL had assigned its outstanding rating as ‘CRISIL AAA/ Stable' rating to theRs. 25000 crore non-convertible issue of LIC Housing Finance Limited and has reaffirmedits ‘CRISIL AAA/ FAAA/Stable/CRISIL A1+' ratings on other debt instruments bankfacilities and fixed deposit programme of the Company.

Total Bank Loan Facilities Rated Rs. 40059.88 crore
Long Term Rating CRISIL AAA/Stable (Reaffirmed)
Short Term Rating CRISIL A1+ (Reaffirmed)
Rs. 25000 crore Non- Convertible Debentures CRISIL AAA/Stable (Assigned)
Rs. 25000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 25000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 5000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 15000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 10000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 5000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 5976 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 15000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 15000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 20000 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 33833 crore Non- Convertible Debentures CRISIL AAA/Stable (Reaffirmed)
Rs. 1600 crore Upper Tier II Bond CRISIL AAA/Stable (Reaffirmed)
Rs. 1750 crore Tier II Bond CRISIL AAA/Stable (Reaffirmed)
Fixed Deposits Programme FAAA/Stable (Reaffirmed)
Rs. 17500 crore Commercial Paper CRISIL A1+ (Reaffirmed)

CARE Ratings had assigned its ‘CARE AAA; Stable' rating to the Rs. 25000 croreNon-Convertible Debenture issue of LIC Housing Finance Limited and reaffirmed its‘CARE AAA; Stable'. The unutilised amount as on 30.04.2019 was Rs. 9477.90 crore.

ICRA Limited had assigned ICRA A1+ rating to the Rs. 17500 crore commercial paperissue of LIC Housing Finance Limited and has reaffirmed its ICRA A1+ rating.

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:

The financial statements are prepared in accordance with Indian Accounting Standards(Ind As) under the historical cost convention on accrual basis except for certainfinancial instruments which are measured at fair values the provisions of the Act (tothe extent modified) guidelines issued by the Securities and Exchange Board of India(SEBI) and guidelines issued by the National Housing Bank (‘NHB') (Collectivelyreferred to as ‘the Previous GAAP').

The Company has adopted Indian Accounting Standards (‘Ind AS') notified underSection 133 of the Companies Act 2013 (‘the Act') read with the Companies (IndianAccounting Standards) Rules 2015 from April 01 2018 and the effective date of transitionis April 01 2017. The said transition has been carried out from the erstwhile AccountingStandards notified under the Act read with relevant rules issued thereunder andguidelines issued by the National Housing Bank (‘NHB') (Collectively referred to as‘the Previous GAAP') and the adoption was carried out in accordance with applicabletransition guidance.

The Ind AS are prescribed under Section 133 of the Companies Act 2013 read with Rule 3of the Companies (Indian Accounting Standards) Amendment Rules 2016. Accounting policieshave been consistently applied except where a newly issued accounting standard isinitially adopted or a revision to an existing accounting standard requires change in theaccounting policy hitherto in use.

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:

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that he / she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA:

It is endeavour of the Company to have an appropriate mix of executive non-executiveand independent directors to maintain the independence of the Board and separate itsfunctions of governance and management. As of 31st March 2019 the Board hadnine members two of them are non-executive directors including Chairman and one LICDirector one executive director who is Managing Director & CEO one non-executive andnon-independent director while rest five are independent directors including oneindependent woman director.

The Nomination and Remuneration Committee at its meeting had laid down Criteria fordetermining Directors Qualifications positive attributes and independence of a Directorremuneration of Directors Key Managerial Personnel and also criteria for evaluation ofDirectors Chairperson Non-Executive Directors and Board as a whole and also theevaluation process of 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 28th March 2019.

We afirm that except Chairman LIC Director and Managing Director & CEO all otherDirectors were paid sitting fees for Board and Committee (other than Corporate SocialResponsibility Committee) meetings attended by them. However Managing Director & CEOis paid remuneration as applicable to an Officer in the cadre of Executive Director of LICof India and is as per the terms laid out in the Nomination and Remuneration Policy of theCompany.

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:

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. All such Related Party Transactions are placed beforethe Audit committee for approval wherever applicable. Prior omnibus approval as per SEBI(LODR) is also obtained from Audit Committee for such transactions which are of repetitivenature as well as in the ordinary course 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 is annexed asAnnexure 3 to this report.

Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the CompaniesAct and Rule 8(2) of the Companies (Accounts) Rules 2014 is annexed as Annexure 4 tothis report.

STATE OF THE COMPANY'S AFFAIRS:

The Company earned total revenue of Rs. 17362 crore registering an increase of 17percent. The percentage of administrative expenses to the housing loans which was 0.26percent in the previous year has come down to 0.24 percent during the financial year2018-19.

Net Profit before tax and after tax stood at Rs. 3379.55 crore and Rs. 2430.97 crorerespectively as against Rs. 2765.50 crore and Rs. 2002.50 crore respectively for theprevious year. Profit before tax increased by 22.20 percent over the previous year whileprofit after tax showed growth of 21.40 percent over that of the previous year.

AMOUNTS IF ANY WHICH IT PROPOSES TO CARRY TO ANY RESERVES:

The Company has transferred Rs. 750 crore to Special Reserve and Statutory reserve u/s29C of NHB Act and Rs. 600 crore to General Reserve.

AMOUNT IF ANY WHICH IT RECOMMENDS SHOULD BE PAID BY WAY OF DIVIDEND:

Rs. 383.54 crore is proposed to be paid by way of dividend to shareholders of theCompany i.e. Rs. 7.60 per equity share of face value of Rs. 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 i.e. 31stMarch 2019 and the date of the Board's Report i.e. 1st July 2019.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

A. Conservation of energy –

(i) The steps taken and impact on conservation of energy- The Company has replacedmodels of computers printers and other equipment which were consuming between 50 to 90percent more energy than energy-efficient models. This has ensured reduction in energyconsumption 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 regular basis thereby savingenergy and costs and giving required cooling.

The office have 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- TheCompany 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 efforts to reduce cost of fundproduct development or 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 2019 the Company earned Rs. 25.11 lakhand spent Rs. 243.94 lakh in foreign currency. This does not include foreign currency cashflows in derivatives and foreign currency exchange transactions.

RISK MANAGEMENT POLICY FOR THE COMPANY:

The Board has constituted a Risk Management Committee to frame implement monitorreview risk management policy; review of the current status on the outer limits prescribedin the Risk Management policy and report to the Board; review the matters on riskmanagement. Risks faced by the Company are identified and assessed. For each of the risksidentified corresponding controls are assessed and policies and procedure are in placefor monitoring mitigating and reporting risk on a periodic basis. In the opinion of theBoard none of the risks faced by the Company threaten its existence.

The Risk Management Policy of the Company is in accordance with the directives issuedby National Housing Bank. During the financial year under review the Risk ManagementPolicy of the Company was reviewed by the Risk Management Committee and put up to theBoard. The same was approved in the Board Meeting dated 5th March 2019.

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:

Shri Jagdish Capoor Member Independent Director
Dr. Dharmendra Bhandari Member Independent Director
Shri Vinay Sah Member Managing Director & CEO

The performance of the Board committees was evaluated by the Board after seeking inputsfrom the 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 andassociates in the same form and manner as that of the Company which shall be laid beforethe ensuing Thirtieth Annual General Meeting alongwith the Company's Financial Statementunder subsection (2) of Section 129 i.e. Standalone Financial Statement. Further pursuantto the provisions of Accounting Standard (‘AS') 21 Consolidated Financial Statementsnotified under Section 133 of the Companies Act 2013 read with Rule 7 of the Companies(Accounts) Rules 2014 issued by the Ministry of Corporate Affairs the ConsolidatedFinancial Statements alongwith its subsidiaries and associates for the year ended 31stMarch 2019 form part of this Annual Report.

THERE HAS BEEN NO CHANGE IN THE NATURE OF BUSINESS OF THE COMPANY DURING THE YEAR UNDERREVIEW.

DIRECTORS:

As of 31st March 2019 the Board had nine members two of them arenon-executive directors including Chairman and one LIC Director one executive directorwho is Managing Director & CEO one non-executive and non-independent director whilerest five are independent directors including one independent woman director.

SUCCESSION PLANNING:

In order to ensure stability and effective implementation of long term businessstrategies and for smooth transition at MD & CEO level the Board decided that new MD& CEO should be posted in advance say 4-6 months as Chief Operating Officer (COO) whowould subsequently take over as MD & CEO on retirement / elevation / transfer of theexisting MD & CEO. This would form part of succession planning.

In terms of Article 138(b) of the Articles of Association of Company LIC of India isentitled to nominate upto one third of the total number of directors of the Company andtherefore the Board after consideration approved posting of senior official from LIC ofIndia as Nominee of LIC of India for the post of COO as part of succession plan for MD& CEO with a view to ensure stability and effective implementation of long termbusiness strategies. LIC of India has posted Shri Siddhartha Mohanty as COO of theCompany.

APPOINTMENTS / RESIGNATIONS OF DIRECTORS:

Shri M.R. Kumar was appointed as Additional Director and Chairman of the Company by theBoard with effect from 25th March 2019 under Sections 161 of the CompaniesAct 2013 and holds Office upto the date of the Thirtieth Annual General Meeting of theCompany. The Company has received from Shri M.R. Kumar his consent to act as Director. Asrequired under Section 160 of the Companies Act 2013 a notice has been received from amember of the Company proposing the name of Shri M.R. Kumar for the office of a Director.

The terms and conditions of his appointment shall be determined from time to time byLIC of India and the Board subject to limit as prescribed by the Companies Act 2013. Hisappointment as Chairman shall be without prejudice to his continuing service in LIC ofIndia.

In terms of Article 176(a) & (b) of the Articles of Association of the Company readwith Article 138(a) & (b) which authorizes LIC of India to nominate Directors and oneof such director has to be appointed as Chairman of the Company. Accordingly LIC of Indiahad nominated Shri Hemant Bhargava in addition to he being Managing Director of LIC ofIndia to the Board of LIC Housing Finance Limited as Director. Thus the Board of theCompany had appointed Shri Hemant Bhargava Ex-Chairman (Additional In-Charge) of LIC ofIndia and Director on the Board of LIC Housing Finance Limited as Chairman of the Board ofLIC Housing Finance Limited in place of Shri V. K. Sharma with effect from 7thJanuary 2019 till the period as decided by LIC of India i.e. till the period Shri M.R.Kumar was appointed as Additional Director and Chairman of the Company by the Board ofDirectors with effect from 25th March 2019.

The Nomination and Remuneration Committee which had considered the performanceevaluation report of Dr. Dharmendra Bhandari (DIN-00041829 and ‘Fit and Proper'criteria adopted by the Board on 10th March 2017 as per NHB notificationNo.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9th February 2017 had undertakenprocess of due diligence in the case of Dr. Dharmendra Bhandari (DIN-00041829) and foundDr. Bhandari to be suitable and eligible based on evaluation qualification expertisetrack record integrity ‘fit and proper' criteria for recommendation to the Board tocontinue Dr. Bhandari as Independent Director of the Company for a further periodof five consecutive years with effect from 19th August 2019 not liable toretire by rotation. Based on the recommendation of the Nomination and RemunerationCommittee the Board considered and after having thought fit pursuant to the provisions ofthe Sections 149 152 161 of the Companies Act 2013 and the Rules made thereunder readwith Schedule IV approved appointment of Dr. Bhandari as Independent Director of theCompany to hold office for a period of five consecutive years not liable to retire byrotation.

The Nomination and Remuneration Committee after considering the profilequalifications etc. of Shri Kashi Prasad Khandelwal (DIN-00748523) and in terms of‘Fit and Proper' criteria adopted by the Board on 10th March 2017pursuant to NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9thFebruary 2017 also in accordance with SEBI(LODR) Regulations 2015 as well as afterundertaking the process of due diligence recommended to the Board of Directors of theCompany Shri Kashi Prasad Khandelwal (DIN-00748523) to be suitable and eligible for theappointment of Independent Director of the Company for a period of five consecutive yearswith effect from 1st July 2019 not liable to retire by rotation. Based on therecommendation by Nomination and Remuneration Committee the Board considered and afterhaving thought fit pursuant to the provisions of the SEBI(LODR) Regulations 2015Sections 149 152 161 of the Companies Act 2013 and the Rules made thereunder read withSchedule IV and ‘fit and proper' criteria adopted by the Board approved appointmentof Shri Khandelwal as Additional Independent Director of the Company to hold office for aperiod of five consecutive years not liable to retire by rotation.

Similarly the Nomination and Remuneration Committee after considering the profilequalifications etc. of Shri Sanjay Kumar Khemani (DIN-00072812) and in terms of‘Fit and Proper' criteria adopted by the Board on 10th March 2017pursuant to NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9thFebruary 2017 also in accordance with SEBI(LODR) Regulations 2015 as well as afterundertaking the process of due diligence recommended to the Board of Directors of theCompany Shri Khemani to be suitable and eligible for the appointment as Non-ExecutiveNon Independent Director of the Company effect from 1st July 2019 liable toretire by rotation. Based on the recommendation by Nomination and Remuneration Committeethe Board considered and after having thought fit pursuant to the provisions of theSEBI(LODR) Regulations 2015 Sections 152 161 of the Companies Act 2013 and the Rulesmade thereunder read with Schedule IV and ‘fit and proper' criteria adopted by theBoard approved appointment of Shri Khemani as Additional Non Independent Director of theCompany to hold office liable to retire by rotation.

Shri V.K.Sharmahad tendered his resignation from Chairmanship as well as Directorshipof the Company with effect from 31st December 2018 on attainment ofsuperannuation from the services of LIC of India.

Ms Usha Sangwan Director of the Company had tendered her resignation from Directorshipof the Company on attainment of superannuation from the services of LIC of India.Consequent upon resignation of Ms Usha Sangwan the Board of the Company had appointedShri Hemant Bhargava Managing Director LIC of India as Additional Director(Non-Executive) of the Company in place of Ms. Usha Sangwan with effect from 4thOctober 2018 till the period he took over as Chairman of the Company from 7thJanuary 2019.

Shri Debabrata Sarkar Director of the Company and Chairman of the Audit Committee hadtendered his resignation from Directorship of the Company with effect from 12thNovember 2018 on account of his other professional commitments.

On completion of term of office of five years Shri T V Rao tendered his resignationwith effect from 31st July 2018.

Thus as on the date of this report the Board of Directors of the Company consists ofeleven members four of them are non-executive directors including Chairman and one LICDirector while other two are non-executive non-independent Directors. Managing Director& CEO is executive whole time Directors. Remaining six Directors are IndependentDirectors including one Independent Woman Director..

CONTINUANCE OF DIRECTORSHIP OF SHRI JAGDISH CAPOOR NON-EXECUTIVE INDEPENDENT DIRECTOROF THE COMPANY AGED ABOVE 75 YEARS

Pursuant to the provisions of Regulation 17(1A) of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018(Amendment Regulations) and other applicable provisions if any of the Companies Act2013 consent of the Members was sought by way of Postal Ballot and remote e-Voting whichwas duly assented by Members on 20th February 2019 with requisite majority forcontinuance of the Directorship of Shri Jagdish Capoor as Non-Executive IndependentDirector of the Company who is above the age of 75 years and is aged about 80 years atpresent till the expiry of his term i.e. 23rd May 2022 in the office ofDirector of the Company on the existing terms and conditions subject to provisions rulesand regulations of the Act and / or Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 and / or any other appropriateauthorities as may be applicable from the effective date of the said AmendmentRegulations i.e. April 01 2019.

CHANGE IN DESIGNATION:

The Board considered and thought fit to approve change in the designation of Ms. SavitaSingh with effect from 1st April 2019 from Non-Executive Non IndependentDirector to Non-Executive Independent Director in order to align with the Regulation17(1)(a) of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment)Regulations 2015 inserted vide SEBI (Listing Obligations and Disclosure Requirements)(Amendment) Regulations 2018 dated 9th May 2018 not liable to retire byrotation with effect from 1st April 2019.

Similarly the Board also considered change in the designation of Shri P. KoteswaraRao from Non-Executive Independent Director to Non-Executive Non Independent Directorliable to retire by rotation with effect from 4th May 2019 in order to complywith the provisions of Section 152(6)(a) of the Companies Act 2013.

DIRECTOR RETIRING BY ROTATION:

Shri P. Koteswara Rao 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. Sudipto Sil CFO are the Key Managerial Personnel as per theprovisions of the Companies Act 2013.

Shri P Narayanan tendered his resignation as CFO and Key Managerial Personnel w.e.f. 10thMay 2019 consequent upon his transfer to LIC of India and in his place Mr. Sudipto Silwas appointed as CFO and Key Managerial Personnel of the Company with effect from 10thMay 2019 until the Board considers it fit.

COMMITTEES OF THE BOARD:

The Company has various committees which have been established as a part of the bestcorporate governance practices and is 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

• Strategic Investment Committee

• IT Strategy Committee

Composition of Audit Committee is as follows:

• Shri Jagdish Capoor Chairman Independent Director
• Dr Dharmendra Bhandari 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 Report.

SUBSIDIARIES AND GROUP COMPANIES

As on 31st March 2019 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 2019 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 Limited a wholly owned subsidiary of LIC Housing Finance Limitedwas incorporated on 11th September 2001 having an authorised share capital ofRs. 75 Crore. The basic purpose of establishing the Company was to establish & operateassisted living community centres for the senior citizens.

During the fiscal 2018-19 the Company earned a Profit Before Tax (PBT) of Rs. 0.86crore and Profit After Tax (PAT) of Rs. 0.63 crore.

The Company has successfully completed a project at Bangalore in two Phases and itsproject at Bhubaneswar is at near completion stage. The Company is also exploringpossibilities to develop Senior Living Care Homes project at Aluva Kerala and Jaipursubject to viability of the projects.

Further the Company is also in process to evaluate Senior Living Care Homes projectsat various locations across the Country.

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

2. LICHFL ASSET MANAGEMENT COMPANY LIMITED.

The Company is in the business of managing advising administering Venture Capital andAlternative Investment Funds.

The Company was appointed as Investment Manager in 2010 to raise and manage the LICHFLSponsored LICHFL Urban Development Fund (LUDF). The Company has raised total commitmentsof Rs. 529.35 Crore from Banks Financial Institutions Corporates and HNIs as against thetargeted size of Rs. 500 Crore and announced financial closure on 30th March2013. The Company has deployed Rs. 461.3 Crore in 9 Portfolio Companies engaged indevelopment acquisition or operation of affordable / mid income housing relatedinfrastructure and Hospitals. With receipt from 6 exits the Fund has so far achieved amultiple of 1.66X on investments with an IRR of 26.43%.

The Company also launched a new Alternative Investment Fund namely LICHFL Housing &Infrastructure Fund (LHIF) with a total corpus of Rs. 1000 crore including Green ShoeOption of Rs. 250 crore and the focus of the Fund is on Affordable Housing and Propertybacked Infrastructure in sectors which include Educational Institutions HospitalsIndustrial Parks & Warehouses. The Company has already received total Commitment ofRs. 700 crore out of which Contribution Agreement was signed for Rs. 650 crore as on 31stMarch 2019.

3. LICHFL TRUSTEE COMPANY PRIVATE LIMITED.

The Company is in the business of undertaking the business of trusteeship services forVenture Capital Funds and Alternative Investment Funds.

The Company was appointed as Trustee in 2010 for LICHFL Fund and further appointedLICHFL Asset Management Company Limited (LICHFL AMC) as Investment Manager for the Fund.In 2010 the Company had registered LICHFL Fund with SEBI as Venture Capital Fund (VCF)under the SEBI (Venture Capital Funds) Regulations 1996.LICHFL Urban Development Fundachieved its financial closure with Rs. 529.35 crore on 30th March2013.

The Company was appointed as Trustee in 2017 for LICHFL Housing & InfrastructureTrust (LHIT) and further appointed LICHFL AMC Ltd. as Investment Manager for LICHFLHousing and Infrastructure Fund (LHIF). The Company had received registration for LHIF onOctober 2017 from SEBI under Alternative Investment Fund Regulations 2012 as Category - IInfrastructure. LICHFL AMC launched LICHFL Housing & Infrastructure Fund (LHIF) inOctober 2017 and achieved initial closing on 31st March 2018.

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 loaninsurance products (Life and General Insurance) mutual funds fixed deposits creditcards. It became operational in March 2008 and at present has 50 offices spread acrossthe country.

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 theshort and long term.

At present the Company distributes Life Insurance products of LIC of India Home Loansand 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 Rs. 19.01 crore and Profit AfterTax (PAT) stood at Rs. 13.10 crore for the FY 2018-19 and recommended dividend @ 40 % forFY 2018-19.

FINANCIAL HIGHLIGHTS FOR FY 2018-19 IN COMPARISON WITH PREVIOUS YEAR:

Sr. No. Particulars FY 2018-19 in Rs. (crore) FY 2017-18 in Rs. (crore)
1. Total Income 52.82 52.95
2. Profit Before Tax 19.01 24.14
3. Profit After Tax 13.10 17.25
4. Dividend (Declared) 3.80 4.28

The Company is striving to improve its performance across all business verticals in thecoming years.

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

As on 31st March 2019 the Company has two associate companies namely LICMutual Fund Asset Management Company Limited and LIC Mutual Fund Trustee Company PrivateLimited.

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 2019 has been sent to all the members of the Company. It does not contain AnnualReports of Company's subsidiaries. The Company will provide Annual Report of allsubsidiaries upon request by any member of the Company. These Annual Reports are also beavailable on Company's website viz. www.lichousing. com.

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 annexed 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 OPTIONS:

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
Shri Vinay Sah 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 (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 and Key Managerial Personnel % increase in remuneration in the financial year
Executive Director (MD&CEO) 16.39%
Company Secretary 24.63%(on account of perquisite in respect of lease accommodation)
Chief Financial Officer -0.48%

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

-6.23%

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

2309 e. Percentage increase over decrease in the market quotations of the shares ofthe Company in comparison to the rate at which the Company came out with the last publicoffer:

Particulars 31 March 2019 15 November 1994 (IPO) % Change
Market Price (in Rs.) 558.85** 12* 4557.08

*Adjusted Issue price value on account of sub-division **BSE-closing.price

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 16.93%. The average annualdecrease in the salaries of the employees other than managerial personnel during the yearwas -6.23% on account of new recruitment at lower cadre.

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

The Company affirms that the remuneration is as per the Remuneration Policy of theCompany.

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 5(2) 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: TheCompany Secretary LIC Housing Finance Limited Corporate Office 131 Maker Towers‘F' Premises 13th Floor Cuffe Parade Mumbai – 400 005.

SIGNIFICANT AND MATERIAL ORDERS:

There are no significant and material orders passed by the regulator or courts ortribunals impacting the going concern status and the Company's operations in future.

PREVENTION PROHIBITION & REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

As per the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 your Company has in place a Policy on PreventionProhibition & Redressal of Sexual Harassment of Women at Workplace and has a robustmechanism to redress the complaints reported thereunder. An Internal Committee has beenconstituted which comprises of internal members who have experience in the subject field.

Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the complaints received thereunder andthe details relating thereto are as follows:

(a) Number of complaints received in the year: Nil

(b) Number of complaints disposed of during the year: Nil

(c) Number of cases pending more than ninety days: Nil

(d) Number of workshops or awareness programme against sexual harassment carried out:Your Company on a regular basis sensitizes its employees on prevention of sexualharassment through various workshops awareness programmes.

(e) Nature of action taken by the employer or district officer: Nil

It may be mentioned here that the Company has zero tolerance towards any action on thepart of any executive / staff which may fall under the ambit of ‘Sexual Harassment'at workplace and is fully committed to upholding and maintaining the dignity of everywomen executive / staff working in the Company.

HUMAN RESOURCES

The Company aims to align HR practices with business goals increase productivity ofHuman Resource by enhancing knowledge skills and to provide conducive work environment todevelop a sense of ownership amongst employees. Productive high performing employees arevital to the Company's success. The Board values and appreciates the contribution andcommitment of the employees towards performance of your Company during the year. TheCompany inducted employees for various positions and also promoted employees to take uphigher responsibilities during the year. Apart from fixed salaries perquisites andbenefits the Company also has in place performance-linked incentives which rewardoutstanding performers who meet certain performance targets. In pursuance of the Company'scommitment to develop and retain the best available talent the Company had organised andsponsored various training programmes / seminars / conferences for upgrading skill andknowledge of its employees in different operational areas.

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

ACKNOWLEDGMENTS

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 express their sincere thanks to the Company's clientelelenders investors and members for their patronage. The Directors appreciate the dedicatedservices of the employees and their contribution to the growth of the Company.

For and on behalf of the Board
Place: Mumbai Chairman
Date: July 1 2019