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LIC Housing Finance Directors Report, LIC Housing Fin Reports by Directors
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LIC Housing Finance

BSE: 500253|NSE: LICHSGFIN|ISIN: INE115A01026|SECTOR: Finance - Housing
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Directors Report Year End : Mar '16    « Mar 15
The Directors are pleased to present the Twenty Seventh Annual Report
 together with the Audited Financial Statements for the year ended 31st
 March, 2016 of LIC Housing Finance Limited (''the Company'').
 
 Financial results
 
                                                         (Rs. In crore)
 
                                           For the year    For the year
                                           ended           ended
                                           31st March,     31st March,
                                           2016            2015
 
 Profit before Tax                           2,563.55        2,101.94
 
 Tax Expense                                   902.76          715.75
 
 Profit after Tax                            1,660.79        1,386.19
 
 Appropriations
 
 Special Reserve & Statutory                   500.00          385.00
 Reserve u/s 29C of NHB Act, 1987
 
 General Reserve                               400.00          300.00
 
 Proposed Dividend                             277.56          252.33
 
 Tax on Dividend                                55.68           49.90
 
 Balance carried forward                       427.55          398.96
 to next year
 
                                             1,660.79        1,386.19
 
 Dividend
 
 Considering the performance during the financial year 2015-16, your
 Directors recommend payment of dividend for the financial year ended
 31st March, 2016 of Rs. 5.50 per equity share of face value of Rs. 2
 per equity share i.e. @ 275 percent, as against Rs. 5 per equity share
 of face value of Rs. 2 per equity share for the previous year i.e. @
 250 percent. The total dividend outgo for the current year would amount
 to Rs. 333.25 crore including Dividend Distribution Tax of Rs. 55.68
 crore which is 20.06 percent of Profit After Tax, as against Rs. 302.23
 crore including dividend distribution tax of Rs. 49.90 crore, for the
 previous year, which was 21.80 percent of Profit After Tax.
 
 Performance
 
 Income and profit
 
 The Company earned total revenue of Rs. 12,485.46 crore, registering an
 increase of 15.62 percent. The percentage of administrative expenses to
 the housing loans, which was 0.34 percent in the previous year, has
 marginally increased to 0.366 percent during the financial year
 2015-16.
 
 Profit before tax and after tax stood at Rs. 2,563.55 crore and Rs.
 1,660.79 crore respectively as against Rs. 2,101.94 crore and Rs.
 1,386.19 crore, respectively, for the previous year. Profit before tax
 increased by 21.96 percent over the previous year while profit after
 tax showed growth of 19.81 percent over that of the previous year.
 
 Lending operations
 
 Individual loans:
 
 The main thrust continues on individual housing loans with a
 disbursement growth of 18.03 percent during the financial year. During
 the financial year, the Company sanctioned 1,73,950 individual housing
 loans for Rs. 36,024.82 crore and disbursed 1,73,038 loans for Rs.
 34,529.33 crore. Housing loan to Individual i.e. retail loans
 constitute 94.05 percent of the total sanctions and 96.60 percent of
 the total disbursements for the financial year 2015-16 as compared to
 92.48 percent and 96.46 percent respectively during the financial year
 2014-15. The gross retail loan portfolio grew by over 15.25 percent
 from Rs. 1,05,742.16 crore as on 31st March, 2015 to Rs. 1,21,872.89
 crore as on 31st March, 2016.
 
 The cumulative sanctions and disbursements since incorporation, in
 respect of individual housing loans are:
 
 Amount sanctioned : Rs. 2,14,250.26 crore
 
 Amount disbursed : Rs. 2,03,440.90 crore
 
 More than 20,30,098 customers have been serviced by the Company up to
 31st March, 2016 since inception.
 
 Project loans:
 
 The project loans sanctioned and disbursed by the Company during the
 financial year were Rs. 3,075.25 crore and Rs. 1,621.60 crore
 respectively. Corresponding figures for the previous year were Rs.
 2,386.15 crore and Rs. 1,071.41 crore. These loans are generally for
 short durations, giving better yields as compared to individual housing
 loans.
 
 Awards and Recognitions:
 
 During the year under review, the Company was awarded on various counts
 by renowned institutions and some of the awards presented to the
 Company are listed below:
 
 - Best CEO Award by Business Today;
 
 - Most Respected Company Award by Business World;
 
 - Best Housing Finance Company by Outlook Money;
 
 - Best Housing Finance Company by ABP News;
 
 - Best Data Quality by CIBIL;
 
 - Asia Pacific Entrepreneurship Award;
 
 - Power Brands Award by Franchise India.
 
 Marketing and Distribution
 
 During the year under review, efforts were taken to further strengthen
 the distribution network. The distribution network of the Company
 consists of 135 Area Offices (AO), 91 Business Centres (BC), 7
 Extension Counters (EC), 1 Customer Service Point. The distribution
 network also includes 38 offices of LICHFL Financial Services Ltd.,
 wholly owned subsidiary company engaged in distribution of various
 financial products including housing loan. The Company has
 representative offices in Dubai and Kuwait.
 
 Repayments
 
 During the financial year 2015-16, Rs. 18,398.85 crore was received by
 way of schedule repayment of principal through monthly instalments as
 well as prepayment of principal ahead of schedule, as compared to Rs.
 12,158.76 crore received last year.
 
 Non-Performing Assets and Provisions
 
 The amount of gross Non-Performing Assets (NPA) as at 31st March, 2016
 was Rs. 567.82 crore, which is 0.45 percent of the housing loan
 portfolio of the Company, as against Rs. 494.68 crore i.e. 0.46 percent
 of the housing loan portfolio as at 31st March, 2015. The net NPA as at
 31st March, 2016 was Rs. 270.48 crore i.e. 0.22 percent of the housing
 loan portfolio vis-ΰ-vis Rs. 234.43 crore i.e. 0.22 percent of the
 housing loan portfolio as at 31st March, 2015. The total cumulative
 provision towards housing loan portfolio including provision for
 standard assets as at 31st March, 2016 is Rs. 820.30 crore as against
 Rs. 704.25 crore in the previous year. During the financial year, the
 Company has written of Rs. 34.58 crore of housing loan portfolio as
 against Rs. 29.68 crore during the previous year.
 
 Resource Mobilisation
 
 During the financial year, the Company raised funds aggregating to Rs.
 44,975.81 crore through Non-Convertible Debentures (NCD), term
 loans/Foreign Currency Non Resident (FCNR)(B) loan / Line of Credit
 (LoC) / Working Capital Demand Loan (WCDL) from banks, NHB refinance,
 Commercial Paper and Public Deposits.
 
 Non Convertible Debentures (NCD)
 
 During the financial year, the Company issued NCD amounting to Rs.
 26,412 crore on a private placement basis which have been listed on
 Wholesale Debt Segment of National Stock Exchange of India Ltd. The
 NCDs have been assigned highest rating of ''CRISIL AAA/Stable'' by CRISIL
 & ''CARE AAA'' by CARE. As at 31st March, 2016, NCDs amounting to Rs.
 85,803 crore were outstanding. The Company has been regular in making
 payment of principal and interest on the NCDs.
 
 As at 31st March, 2016, there were no NCDs which have not been claimed
 by the Investors or not paid by the Company after the date on which the
 said NCDs became due for redemption.  Hence the amount of NCD remaining
 unclaimed or unpaid beyond due date is Nil.
 
 Subordinate Bonds & Upper Tier II Bonds
 
 During the financial year, the Company has not issued any Subordinate
 Bonds and Upper Tier II Bonds. As at 31st March, 2016, the outstanding
 Subordinate Bonds and Upper Tier II Bonds stood at Rs. 2,500 crore.
 Considering the balance term of maturity as at 31st March, 2016, Rs.
 1,500 crore of the book value of the Subordinate Bonds and Upper Tier
 II Bonds is considered as Tier II Capital as per the guidelines issued
 by NHB for the purpose of Capital Adequacy.
 
 Term Loans, FCNR (B) loan from Banks / LOC / WCDL, Refinance from NHB
 
 The total loans / LOC outstanding from the Banks as at 31st March, 2016
 are Rs. 14,051.65 crore as compared to Rs. 17,454.03 crore as at 31st
 March, 2015.  The Refinance from NHB as at 31st March, 2016 stood at
 Rs. 3,038.21 crore as against Rs.  3,428.93 crore as at 31st March,
 2015. During the financial year, the Company has availed Rs. 250 crore
 Refinance from NHB under regular refinance scheme.
 
 The Company''s long term loan facilities have been assigned the highest
 rating of ''CRISIL AAA/STABLE'' and short term loan has been assigned
 rating of ''CRISIL A1 '' signifying highest safety for timely servicing
 of debt obligations.
 
 Public deposits
 
 As at 31st March, 2016, the outstanding amount on account of public
 deposits was Rs. 3,820.26 crore as against Rs. 2,421.91 crore in the
 previous year. During the financial year 2015-16 the number of
 depositors has increased from 24,990 to 30,397 and Rs. 2,112.10 crore
 has been collected as public deposits.
 
 CRISIL has for the tenth consecutive year, re-affirmed a rating of
 CRISIL FAAA/Stable for the company''s deposits which indicates highest
 degree of safety regarding 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 in mobilization of deposits and making the product most preferred
 investment for individual households and others.
 
 310 deposits amounting to Rs. 4.99 crore which were due for repayment
 on or before 31st March, 2016 were not claimed by the depositors till
 that date. Since then, 26 depositors have claimed or renewed deposits
 of Rs. 0.24 crore. Depositors are appropriately intimated for renewal /
 claim of their deposits through an authorised agency. Further, adequate
 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 interest thereon remaining unclaimed for a period of seven
 years from the date they became due for payment have to be transferred
 to the Investor Education and Protection Fund (IEPF) established by the
 Central Government, accordingly, as on date Rs. 2,068/- against
 unclaimed interest on deposits has been transferred to IEPF.
 
 Being a housing finance company registered with the National Housing
 Bank established under the National Housing Bank Act, 1987, the
 disclosures as per Rule 8(5)(v)&(vi) of the Companies (Accounts) Rules,
 2014 read with section 73 and 74 of the Companies Act, 2013 are not
 applicable to the Company.
 
 Regulatory Compliance
 
 The Company has been following guidelines, circulars and directions
 issued by National Housing Bank (NHB) from time to time.
 
 Your Company has been maintaining capital adequacy as prescribed by the
 NHB. The capital adequacy was 17.04 per cent (as against 12 percent
 prescribed by the NHB) as at 31st March, 2016 after considering the
 loan to value ratio for deciding risk weightage.
 
 The Company has adopted Know Your Customer (KYC) Guidelines, Anti Money
 Laundering Standards, Fair Practices Code, Model Code of Conduct for
 Direct Selling Agents and Guidelines for Recovery Agents engaged by the
 Company as prescribed by NHB from time to time. The Company has been
 complying with the NHB''s requirement of issuing ''Most Important Terms
 and Conditions'' of housing loans, with the objective of ensuring a
 better understanding of the major terms and conditions of the loan
 agreed upon between the Company and its borrowers.
 
 The Company also has been following directions / guidelines / circulars
 issued by SEBI from time to time, applicable to a listed company.
 
 Statutory Auditors
 
 Pursuant to Sections 139, 141, 142 and other applicable provisions, if
 any, of the Companies Act, 2013 and the Companies (Audit and Auditors)
 Rules, 2014, including any statutory modification, or re-enactment
 thereof, Messrs Chokshi & Chokshi, LLP, Chartered Accountants, Mumbai
 (Firm Registration No.:101872W / W100045) and Messrs Shah Gupta & Co.,
 Chartered Accountants, Mumbai (Firm Registration No.:109574W), are
 recommended to be appointed as Joint Statutory Auditors of the Company
 for a term of three years i.e., from the conclusion of the Twenty
 Seventh Annual General Meeting (AGM) until the conclusion of the
 Thirtieth AGM. The Company has received a confirmation from them to the
 effect that their re-appointment, if made at the ensuing AGM would be
 in terms of Section 139 and 141 of the Companies Act, 2013 and Rules
 made thereunder.
 
 The Board recommends the appointment of Messrs Chokshi & Chokshi, LLP,
 Chartered Accountants, Mumbai (Firm Registration No.:101872W / W100045)
 and Messrs Shah Gupta & Co., Chartered Accountants, Mumbai (Firm
 Registration No.:109574W) as Joint Statutory Auditors of the Company to
 hold the office from the conclusion of this Twenty Seventh AGM until
 the conclusion of the Thirtieth AGM on a remuneration to be determined
 by the Board of Directors in consultation with them and applicable
 taxes / cess on the said remuneration, for the purpose of audit of the
 Company''s accounts at the Corporate Office as well as at Back Offices.
 
 Corporate Governance
 
 A certificate from Mr. P. S. Gupchup, Practising Company Secretary
 (Membership No.: ACS 4631 and Certificate of Practice No.:9900),
 regarding compliance of the conditions of Corporate Governance as
 stipulated under SEBI (Listing Obligations and Disclosure Requirements)
 Regulations, 2015 is attached to the Corporate Governance Report.
 
 Your Company has been complying with the principles of good Corporate
 Governance over the years. The Board of Directors supports the broad
 principles of Corporate Governance. In addition to the basic governance
 issues, the Board lays strong emphasis on transparency, accountability
 and integrity. The report on Corporate Governance is appended as a
 separate section in this Annual Report.
 
 Management Discussion and Analysis Report
 
 Management Discussion and Analysis Report for the year under review, as
 stipulated under SEBI (Listing Obligations and Disclosure Requirements)
 Regulations, 2015 is presented 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
 Disclosure Requirements) Regulations, 2015, the top 500 listed
 entities, based on the market capitalization (calculated as on 31st
 March of every financial year), business responsibility report
 describing the initiatives taken by these listed entities from an
 environmental, social and governance perspective, in the format as
 specified by SEBI from time to time be included as part of the Annual
 Report. Accordingly, Business Responsibility Report is presented in a
 separate section forming part of the Annual Report.
 
 Depository system
 
 For transaction of its shares in dematerialised form, the Company has
 entered into an agreement with Central Depository Services (India) Ltd.
 (CDSL) and National Securities Depository Ltd.  (NSDL). The
 shareholders have a choice to select the Depository Participant. As at
 31st March, 2016, 9,398 members of the Company continue to hold 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 therefore, members are requested to convert
 their holdings to dematerialised form.
 
 Auditors'' observations
 
 No adverse remark or observation has been given by the Joint Statutory
 Auditors in their report dated 18th April, 2016.
 
 The Company has an in-house mechanism for Internal Audit of all its
 back offices by the team of in-house auditors. The Company maintains an
 exhaustive checklist for the purpose of Audit. The Company also
 appoints Chartered Accountant firm as Internal Auditor for audit of its
 Corporate Office.
 
 Systems and procedures are being upgraded from time to time to provide
 checks and alerts for avoiding fraud arising out of misrepresentation
 made by borrower/s while availing the housing loans.
 
 Outlook for 2016-17
 
 The initiatives taken by the Company during the financial year 2015-16
 are expected to improve its operational and financial performance.
 During financial year 2016-17, the Company proposes:
 
 - To grow business qualitatively by consolidating position and
 strengthening the competitiveness on service delivery.
 
 - To create brand LIC HFL as a source of trusted partner exuding
 consumer confidence.
 
 - 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 competition
 effectively.
 
 - 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 for improving productivity.
 
 - Raising funds through loans at attractive terms.
 
 - Making efforts towards reducing overall cost of funds.
 
 - Steps to improve the recovery ratio and ensuring lowest NPA level.
 Improving receivable management through support system.
 
 - Timely review of credit appraisal system to improve the loan asset
 quality.
 
 - Continuous efforts to upgrade Information Technology platform to
 ensure prompt and effective service to the clientele.
 
 - Swift, appropriate and competitive pricing of its existing loan
 schemes to attract new customers.
 
 The management perspective about future of the Company
 
 In view of the huge shortage in urban housing units in the country, the
 Union government has been providing continued support to make the
 sector attractive and giving its due recognition. The agenda of housing
 for all is a key component of the government''s strategy for making
 Indian cities inclusive and productive. While rapid urbanization and
 growing cities provide various opportunities, there is fallout in terms
 of proliferation of slums, high prices of land and building materials
 which render houses unaffordable for the segment at the bottom of the
 pyramid. The technical committee constituted by the Ministry of Housing
 and Urban Poverty Alleviation has estimated housing shortage at 18.78
 million units during the 12th Five Year Plan period of which over 95
 percent is estimated in the Economically Weaker Sections (EWS) and Low
 Income Group (LIG) categories.
 
 With increasing urban population it is estimated that it would generate
 unprecedented demand for quality real estate and infrastructure.
 Housing for All scheme in India is a vision of Prime Minister of India
 where all facilities will be provided in a place. As many as 2,508
 cities in 26 states have been selected under ''Pradhan Mantri Awas
 Yojana''(PMAY) for providing afordable houses to the urban poor.
 
 As per the scheme guidelines, the houses under the PMAY (U) mission
 would be designed and constructed to meet the requirement of structural
 safety against earthquakes, food, cyclone, landslide etc. conforming to
 the National Building Code and other relevant Bureau of Indian
 Standards Codes.
 
 The mission also includes a technology sub-mission to facilitate state
 technologies for adoption of layout designs and building plans suitable
 for various geo-climatic zones and to deploy disaster resistant and
 environment friendly technologies.
 
 The target beneficiaries of the scheme would be poor and people living
 under EWS and LIG categories in urban establishments of the country
 
 Housing loan growth is set for a major appreciation in the current
 financial year 2016-17 as government''s focus on housing for all scheme
 i.e. PMAY and in view of favourable current budgetary provision, with a
 focus on housing, has led to enhanced disposal income in the hands of
 people, which ultimately lead to more purchasing power and thereby
 could surge demand for housing.
 
 Compliance under Companies Act, 2013
 
 Pursuant to section 134 of the Companies Act, 2013 read with the
 Companies (Accounts) Rules, 2014, the Company complied with the
 compliance requirements and the detail of compliances 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 as on 31st March, 2016 is attached as
 Annexure 1 to this Report.
 
 Board Meetings held during the year:
 
 During the year under review, 8 Board meetings were held.  Detailed
 information on the meetings of the Board are included in the Report on
 Corporate Governance which forms part of this Annual Report.
 
 Directors'' Responsibility Statement:
 
 In accordance with the provisions of Section 134(3)(c) of the Companies
 Act, 2013, and based on the information provided by the management,
 your Directors state that:
 
 (a) in the preparation of the annual accounts, the applicable
 accounting standards had been followed and there are no material
 departures;
 
 (b) the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the company at the end of the financial year and of the profit of
 the company for that period;
 
 (c) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 
 (d) the Directors have prepared the annual accounts on a going concern
 basis; and
 
 (e) the Directors have laid down internal financial controls to be
 followed by the company and that such Internal Financial controls are
 adequate and were operating effectively. Note on Internal Financial
 control is attached as Annexure 2 to this Report.
 
 (f) the Directors had devised proper systems to ensure compliance with
 the provisions of 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
 been obtained from each of the Independent Director.
 
 Company''s policy on Directors'' appointment and remuneration including
 criteria:
 
 The Company''s policy for selection and appointment of Directors and
 there remuneration is based on its Remuneration Policy which, inter
 alia, deals with the manner of selection of the Board of Directors and
 such other matters as provided under section 178(3) of the Companies
 Act, 2013 and SEBI (LODR) Regulations, 2015. The performance of the
 Members of the Board, and the Board as a whole were evaluated at the
 meeting of Independent Directors held on 23rd February, 2016.
 
 In terms of the provisions of section 149 of the Companies Act, 2013
 and SEBI (LODR) Regulations, 2015, a company shall have atleast one
 Woman Director on the Board of the Company. The Company has Ms. Savita
 Singh as Director on the Board since 25th May, 2012 and Ms. Sunita
 Sharma as Managing Director & CEO since 5th November, 2013. Further,
 Ms. Usha Sangwan has been inducted on the board of the Company with
 effect from 23rd June, 2016.
 
 Qualification, reservation or adverse remark or disclaimer made by
 Joint Statutory Auditors and Secretarial Auditor:
 
 No adverse remark or reservation or qualification has been made by
 Joint Statutory Auditors 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 or security provided by a housing finance company in
 the ordinary course of its business are exempted from disclosure in the
 Annual Report.
 
 Particulars of contracts or arrangements with related parties referred
 to Section in 188(1) read with Rule 8(2) of Companies (Accounts) Rules,
 2014:
 
 All Related Party Transaction that were entered during the financial
 year were in the ordinary course of the business of the Company and
 were on arm''s length basis. There were no materially significant
 related party transaction entered by the Company with Promoters,
 Directors, key managerial personnel or other persons which may have a
 potential conflict with the interest of the Company. Considering the
 nature of the industry in which the Company operates, transactions with
 related parties of the Company are in the ordinary course of business
 which are also on arm''s length basis. All such Related Party
 Transactions are placed before the Audit committee for approval,
 wherever applicable. Prior approval as per SEBI (LODR) Regulations,
 2015 is also obtained from Audit Committee for the Related Party
 Transactions which are of repetitive nature as well as for ordinary
 course of business.
 
 The Related Party Transactions Policy and Procedures as reviewed by
 Audit Committee and approved by Board of Directors is uploaded on the
 website of the Company and the link for the same is
 (http://www.lichousing.com/policies codes/ Policy Dete Mate Subd.php).
 
 Form AOC-2 is annexed as Annexure 3 to this report.
 
 State of the company''s affairs:
 
 The year 2015-16 was a significant year in Company''s lifecycle.  The
 Company earned total revenue of Rs. 12,485.46 crore, registering an
 increase of 15.62 percent. The percentage of administrative expenses to
 the housing loans, which was 0.34 percent in the previous year, has
 marginally increased to 0.366 percent during the year 2015-16.
 
 Profit before tax and after tax stood at Rs. 2,563.55 crore and Rs.
 1,660.79 crore respectively as against Rs. 2,101.94 crore and Rs.
 1,386.18 crore, respectively, for the previous year. Profit before tax
 increased by 21.96 percent over the previous year while profit after
 tax showed growth of 19.81 percent over that of the previous year.
 
 Amounts, if any which it proposes to carry to any reserves:
 
 The Company has transferred Rs. 500 crore to Special Reserve and
 Statutory reserve u/s 29C of NHB Act, and an amount of Rs. 400 crore to
 General Reserve.
 
 Amount, if any, which it recommends should be paid by way of dividend:
 
 Rs. 277.56 crore is proposed to be paid by way of dividend to
 shareholders of the Company i.e. Rs. 5.50 per equity share of face
 value of Rs. 2 per equity share.
 
 Material changes and commitments, if any, affecting the financial
 position of the company:
 
 There are no material changes and commitments affecting the financial
 position of the Company which has occurred between the end of the
 financial year of the Company i.e. March 31, 2016 and the date of the
 Directors'' Report i.e. 15th July, 2016.
 
 Conservation of energy, technology absorption, foreign exchange
 earnings and outgo:
 
 A.  Conservation of energy –
 
 (i) The steps taken or impact on conservation of energy- The Company
 has replaced models of computers, printers, and other equipment which
 were consuming between 50 to 90 percent more energy than energy-
 efficient models. This has ensured reduction in energy consumption and
 resultant saving in costs.
 
 Electronics such as computers and copy machines are plugged out at the
 end of day or after office hours in order to save energy as mere
 turning of or shutting down does not save energy completely.
 
 Air conditioning equipment is cleaned and serviced on routine basis
 thereby saving energy and costs and giving required cooling.
 
 The office has LED lights and after office hours, only the required
 lights and air conditioning 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 development or import substitution – Not applicable.
 
 (iii) In case of imported technology (imported during the last three
 years reckoned from 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 reason thereof – 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 foreign outgo during
 the year in terms of actual outflows.
 
 During the year ended 31st March, 2016, the Company earned Rs. 22.68
 lakh and spent Rs. 149.44 in foreign currency.  This does not include
 foreign currency cash flows in derivatives and foreign currency
 exchange transactions.
 
 Risk Management:
 
 The Board of the Company has formed a Risk Management Committee to
 frame, implement, monitor, review risk management policy; review of the
 current status on the outer limits prescribed in the Risk Management
 policy and report to the Board; review the matters on risk management.
 Risks faced by the Company are identified and assessed. For each of the
 risks identified, corresponding controls are assessed and policies and
 procedure are in place for monitoring, mitigating and reporting risk on
 a periodic basis. In the opinion of the Board, none of the risks faced
 by the Company threaten its existence.
 
 Corporate Social Responsibility (CSR):
 
 In compliance with Section 135 of the Companies Act, 2013 read with the
 Companies (Corporate Social Responsibility Policy) Rules, 2014, the
 Company has established Corporate Social Responsibility Committee and
 statutory disclosures with respect to the CSR Committee and an Annual
 Report on CSR activities is annexed as Annexure 4 to this report.
 
 Composition of the Corporate Social Responsibility Committee is as
 follows:
 
 Shri S. B. Mainak*        Ex-Chairman    Director
 
 Shri Jagdish Capoor       Member         Independent Director
 
 Dr. Dharmendra            Member         Independent Director
 Bhandari**
 
 Ms. Sunita Sharma         Member         Managing Director & CEO
 
 *Ceased to be Director w.e.f. 29.02.2016 on account of attainment of
 superannuation from services of LIC of India.  
 
 **Appointed as Member w.e.f. 20.07.2015
 
 Annual evaluation made by the Board of its own performance:
 
 As part of good governance and Board process and also in accordance of
 the requirement of the Companies Act, 2013 and SEBI (LODR) Regulations,
 2015, the Board of Directors carried out an annual evaluation of its
 own performance, Board committees and Individual Directors pursuant to
 the provisions of the Act and the Corporate governance requirements as
 prescribed by SEBI (Listing Obligations and Disclosure Requirements)
 Regulations, 2015, at the meeting of Independent Directors held on 23rd
 February, 2016.
 
 The performance of the Board was evaluated by the Board after seeking
 inputs from all the Directors on the basis of criteria such as the
 Board composition and structure, effectiveness of Board process,
 information and functioning, process of disclosure and communication,
 access to timely, accurate and relevant information etc.
 
 The performance of the committee was evaluated by the Board after
 seeking inputs from the committee members on the basis of criteria such
 as the composition of committee, effectiveness of committee meeting,
 functioning, etc.
 
 The Board and the Nomination and Remuneration Committee reviewed the
 performance of the Individual Directors on the basis of the criteria
 such as the contribution of the Individual Director to the Board and
 committee meetings like preparedness on the issues to be discussed,
 meaningful and constructive contribution and inputs in meetings,
 presented views convincingly, resolute in holding views etc. In
 addition, the Chairman was also evaluated on the key aspects of his
 role.
 
 In a separate meeting of Independent Directors, performance of
 Non-Independent Directors, performance of the board as a whole and
 performance of Chairman was evaluated, taking into account the views of
 Executive Directors and Non-Executive Directors. The same was discussed
 in the Board meeting that followed the meeting of the independent
 directors, at which the performance of the Board, its committees and
 Individual Directors was also discussed.
 
 Report on the performance and financial position of each of the
 subsidiaries, associates and joint venture companies included in the
 consolidated financial statement:
 
 Pursuant to Section 129 of the Companies Act, 2013, the Company has
 prepared a consolidated financial statement of the Company and also of
 its subsidiaries, in the same form and manner as that of the Company
 which shall be laid before the ensuing Twenty Seventh Annual General
 Meeting of the Company alongwith the laying of the Company''s Financial
 Statement under sub-section (2) of Section 129 i.e.  Standalone
 Financial Statement of the Company. Further, pursuant to the provisions
 of Accounting Standard (''AS'') 21, Consolidated Financial Statements
 notified under Section 133 of the Companies Act, 2013 read together
 with Rule 7 of the Companies (Accounts) Rules, 2014, issued by the
 Ministry of Corporate Affairs, the Consolidated Financial Statements of
 the Company alongwith its subsidiaries for the year ended 31st March,
 2016 form part of this Annual Report.
 
 There has been no change in the nature of business of the Company for
 the year under review.
 
 Directors:
 
 The Company has ten Directors consisting of six Independent Directors,
 three Non-Executive Directors including Chairman; and Managing Director
 & CEO as Executive Director as on the date of approval of this revised
 report ie 15.07.2016.
 
 Appointments / Resignations of Directors:
 
 Shri Ameet Patel was appointed as Additional Director of the Company by
 the Board with effect from 19th August, 2015 after AGM. As required
 under Section 160 of the Companies Act, 2013, a Notice has been
 received from a member proposing the name of Shri Ameet Patel for the
 office of a Director. Shri Ameet Patel has submitted a declaration
 under Section 149(7) of the Companies Act, 2013 confirming that he
 meets the criteria prescribed for Independent Director under Section
 149(6) of the said Act. In the opinion of the Board, Shri Ameet Patel
 fulfils the conditions specified in the Act, for such appointment.
 
 The proposal for appointment of Shri Ameet Patel as Independent
 Director is being placed before the shareholders for approval, the
 relevant details are forming part of the Notice of the Annual General
 Meeting.
 
 Ms. Usha Sangwan was appointed as Additional Director of the Company by
 the Board with effect from 23rd June, 2016 in terms of nomination
 received from Life Insurance Corporation of India, subject to approval
 of shareholders at the forthcoming AGM. As required under section 160
 of the Companies Act, 2013, a Notice has been received from a Member
 proposing the name of Ms.  Usha Sangwan for the office of a Director.
 
 All the Directors of the Company have confirmed that they are not
 disqualified from being appointed as Directors in terms of Section
 164(2) of the Companies Act, 2013.
 
 Shri B. N. Shukla ceased to be Director of the Company on account of
 completion of extended term of office of Director and Shri S. B. Mainak
 ceased to be the Director of the Company on account of attainment of
 superannuation from services of LIC of India.
 
 Director Retiring by Rotation:
 
 Ms. Savita Singh, Director, retires by rotation at the ensuing Annual
 General Meeting and is eligible for re-appointment.
 
 Appointments / Resignation of the Key Managerial Personnel:
 
 Ms. Sunita Sharma, Managing Director & CEO, Mr. Nitin K. Jage, General
 Manager & Company Secretary and Mr. P. Narayanan, Chief Financial
 Officer are the Key Managerial Personnel as per the provisions of the
 Companies Act, 2013.
 
 Committees of the Board:
 
 The Company has various committees which have been established as a
 part of the best corporate governance practices and are in compliance
 with the requirements of the relevant provisions of applicable laws and
 statutes.
 
 The Company has following Committees of the Board:
 
 - Audit Committee
 
 - Stakeholders Relationship Committee
 
 - Nomination and Remuneration Committee
 
 - Corporate Social Responsibility Committee
 
 - Risk Management Committee
 
 - Executive Committee
 
 - Debenture Allotment Committee
 
 - HR Committee
 
 Composition of Audit Committee is as follows:
 
 Shri Debabrata Sarkar*    Chairman   Independent Director
 
 Shri T. V. Rao            Member     Independent Director
 
 Shri Ameet Patel**        Member     Independent Director
 
 Shri S. Ravi ^            Chairman   Independent Director
 
 Shri B. N. Shukla ^^      Member     Independent Director
 
 *Appointed as Chairman w.e.f. 20.07.2015
 
 ** Appointed as Member w.e.f. 23.02.2016
 
 ^Ceased to be Director w.e.f. 25.06.2015 on account of completion of
 term of office of Directorship.
 
 ^^ Ceased to be Director w.e.f. 23.01.2016 on account of completion of
 term of office of Directorship.
 
 There has not been any instance during the year when recommendations of
 Audit Committee were not accepted by the Board.
 
 The details with respect to the compositions, powers, roles, terms of
 reference etc. of relevant committees are given in detail in the Report
 on Corporate Governance which forms part of this Annual Report.
 
 Subsidiaries and group companies
 
 As on 31st March, 2016, the Company has four Subsidiaries namely,
 LICHFL Care Homes Limited, LICHFL Asset Management Company Limited,
 LICHFL Trustee Company Private Limited and LICHFL Financial Services
 Limited. The Consolidated financial statements incorporating the
 results of all the subsidiaries of the Company for the year ended 31st
 March, 2016, are attached along with the statement pursuant to Section
 129 of the Companies Act, 2013, with respect to the said subsidiaries.
 Brief write up including performance and financial position of each of
 the subsidiaries is provided as under:
 
 1. LICHFL Care Homes Limited:
 
 LICHFL Care Homes Ltd., a wholly owned subsidiary of LIC housing
 Finance Ltd., was incorporated on 11th September, 2001 with an
 authorised share capital of Rs. 25 crore. The basic purpose of
 establishing the Company was to establish and operate assisted
 community living centers for the senior citizens.
 
 During the fiscal 2015-16, the Company earned a Profit Before Tax of
 Rs. 28.29 lakh and Profit After Tax of Rs. 15.29 lakh.
 
 The project at Bangalore Phase II has been completed and handing over
 of the keys was done on August 12, 2013. The Company is at present
 implementing a project at Bhubaneswar and the same is expected to be
 completed at an early date.
 
 With life expectancy is going up and number of elderly citizens rising
 year after year, the Company is set on a growth trajectory keeping LIC
 and LIC HFL''s vision for fulflment 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 for undertaking the business of managing, advising,
 administering venture/mutual funds, unit trusts, investment trusts set
 up, formed or established in India or abroad and to act as financial
 and investment advisor.
 
 The Company has been appointed as Investment Manager to raise and
 manage the maiden Fund LICHFL Urban Development Fund. The Company has
 successfully raised total amount of Rs. 529.35 crore in LICHFL Urban
 Development Fund through Banks, Financial Institutions, Corporates and
 HNIs as against the targeted size of Rs. 500 crore. 30th March, 2013
 was announced as Final Closure Date of the Fund. Fund with a focus on
 Real Estate considers investment in Portfolio Companies engaged in
 development & acquisition of housing and related infrastructure,
 industrial and IT Parks, SEZ, Warehouses, Schools, Hospitals. Ten
 Investment deals have been tied up so far with Portfolio Companies
 developing residential projects across Pune, Bangalore and Chennai.
 
 3. LICHFL Trustee Company Private Limited.
 
 LICHFL Trustee Company Private Limited was incorporated on 5th March,
 2008 for undertaking the business of trusteeship.  In the year 2010 the
 Company has registered LICHFL Urban Development 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 successfully garnering fund raising of
 Rs. 529.35 crore as against the target of Rs. 500 crore. LICHFL Asset
 Management Company Ltd. is the Investment Manager for the fund. The
 Fund has closed ten investment deals upto 31st March, 2016.
 
 4. LICHFL Financial Services Limited
 
 LICHFL Financial Services Limited, a wholly owned subsidiary of LIC
 Housing Finance Limited was incorporated on 31st October, 2007, for
 marketing of housing loans, insurance products (Life and General
 Insurance), mutual funds, fixed deposits, credit cards and National
 Pension System etc. It has become operational in March, 2008 and at
 present has 38 offices all over the country, spread over 14 states.
 
 The vision of the Company is SARVESHAM POORNAM BHAVATU - to provide
 complete financial solutions to secure not only the present but also
 the future of the customer and his family. In this endeavour, the
 marketing officials assist at every step - from financial planning to
 manage every aspect of right investment, both for the short & long
 term.
 
 At present, the Company distributes Life Insurance products of LIC of
 India, Home Loans & Fixed Deposits of LIC Housing Finance Limited,
 Mutual Funds of various fund houses, General Insurance products of
 United India Insurance Company Limited, Credit Cards of LIC Cards
 Services Limited and National Pension System (NPS). More business
 verticals will be added depending on market opportunities and customer
 needs.
 
 For the financial year 2015-16, the Company has earned a Profit Before
 Tax of Rs. 5.73 crore and Profit After Tax stood at Rs. 3.89 crore. The
 company recommended dividend @ 15 percent for FY 2015-16, which is 5
 percent higher than last financial year.
 
 Financial Highlights for FY 2015-16 in comparison with last year:
 
 Sr.  Particulars                 FY 2015-16      FY 2014-15
 No                               in Rs. (lakhs)  in Rs. (lakhs)
 
 1    Total Income                1,917.68        1,291.27
 
 2    Profit Before Tax             572.72          378.18
 
 3    Profit After Tax              388.72          250.20
 
 4    Dividend (Declared)           142.50           95.00
 
 The Company has consolidated its'' home loan business during the
 financial year 2015-16, which is the major revenue earning vertical for
 the company. The systematic approach along with the new initiatives
 taken during the year is expected to drive the revenue growth and
 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, 2016, the Company has one associate company, namely
 LIC Nomura Mutual Fund Asset Management Company Limited.
 
 The Annual Report which consists of the financial statements of the
 Company on standalone as well as consolidated financial statements of
 the group for the year ended 31st March, 2016 has been sent to all the
 members of the Company. It does not contain Annual Reports of Company''s
 subsidiaries. The Company will make available Annual Report of all
 subsidiaries upon request by any member of the Company. These Annual
 Reports will also be available on Company''s website viz
 www.lichousing.com.
 
 No significant and material orders were passed by the regulators or
 courts or tribunals impacting 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 and that such internal financial controls are adequate and
 operating effectively. Note on Internal 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 to raise concerns relating to reportable matters as defined in
 the policy. The mechanism adopted by the Company encourages the whistle
 blower to report genuine concerns or grievances and provides for
 adequate safeguards against victimisation of whistle blower who avails
 of such mechanism and also provides for direct access to the Chairman
 of the Audit 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 Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of
 the Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014 are given below:
 
 a The ratio of the remuneration of each director to the median
 remuneration of the employees of the Company for the financial year:
 
 Non Executive Directors (including             Ratio to median
 Independent Directors)*                        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 Officer, Chief Financial Officer, Company Secretary in the
 financial year:
 
 Non Executive Directors (including     % increase in 
 Independent Directors)                   remuneration in the 
                                          financial year
 
 Nil                                             N.A.
 
 *No remuneration is paid to Non Executive Directors (including
 Independent Directors)
 
 Executive Director & KMP              % increase in remuneration in 
                                         the financial year
 
 Executive Director (MD&CEO)^                 23.00%
 
 Company Secretary                             3.57%
 
 Chief Financial Officer#                     34.94%*
 
 Remuneration of MD&CEO includes arrears payment ofRs. 3,28,771.00 for
 F.Y.2015-16 #Remuneration of CFO includes arrears payment of Rs.
 2,30,593.00 for F.Y. 2015-16 * Value of perks in respect of staff lease
 accommodation provided to Chief Financial Officer was applicable for
 F.Y. 2015-16 only.
 
 c.  The percentage increase in the median remuneration of employees in
 the financial year: 4.22%.
 
 d.  The number of permanent employees on the rolls of the Company:
 1,726.
 
 e.  Percentage increase over decrease in the market quotations of the
 shares of the Company in comparison to the rate at which the Company
 came out with the last public offer:
 
 Particulars                 31 March,     15 November,     % 
                             2016          1994             Change
 
 (IPO)
 
 Market Price (in Rs.)        490.40**         12*         3986.66
 
 *Adjusted face value on account of sub-division 
 
 ** BSE-Clg.Pri 490.40
 
 f.  Average percentile increase already made in the salaries of
 employees other than managerial personnel in the financial year and its
 comparison with the percentile increase in the managerial remuneration
 and justification thereof and point out if there are any exceptional
 circumstances for increase in the managerial remuneration:
 
 Increase in managerial remuneration for the year was 23.00%. The
 average annual increase in the salaries of the employees other than
 managerial personnel during the year was 17% 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 financial year, the Company has not engaged any employee
 drawing remuneration exceeding the 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 (i) of the Companies Act, 2013 read with the
 Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
 Personnel) Rules, 2014. the Directors'' Report is being sent to all the
 shareholders of the Company excluding the annexure containing names of
 the top ten employees in terms of remuneration drawn. Any shareholder
 interested in obtaining a copy of the said annexure may write to the
 Company at the address mentioned; The Company Secretary, LIC Housing
 Finance Limited, Corporate Office, 131 Maker Towers, ''F'' Premises, 13th
 Floor, Cufe Parade, Mumbai - 400005.
 
 Secretarial Auditor and Secretarial Audit Report:
 
 Pursuant to section 204 of the Companies Act, 2013, the Company had
 appointed M/s. N. L. Bhatia & Associates, Practicing Company Secretary
 as its Secretarial Auditor to conduct the secretarial audit of the
 Company for the financial year 2015-16. The Company provided all
 assistance and facilities to the Secretarial Auditor for conducting
 their audit.  Report of the Secretarial Auditor for the financial year
 2015-16 in Form MR-3 is annexed to this report as Annexure 6.
 
 No significant and material orders were passed by the regulators or
 courts or tribunals impacting the going concern status and Company''s
 operations in future.
 
 Number of cases fled, if any, and their disposal under section 22 of
 the Sexual Harassment of Women at Workplace (Prevention, Prohibition
 and Redressal) Act, 2013:
 
 The Company has Zero tolerance towards any action on the part of any
 executive / staff which may fall under the ambit of ''Sexual Harassment''
 at workplace, and is fully committed to uphold and maintain the dignity
 of every women executive / staff working in the company.
 
 Human resources
 
 The Company aims to align HR practices with business goals, motivate
 people for higher performance and build a competitive working
 environment. Productive high performing employees are vital to the
 Company''s success. The Board values and appreciates the contribution
 and commitment of the employees towards performance of your Company
 during the year. To create the leadership bench and for sustainable
 competitive advantage, the company inducted / promoted employees during
 the year. In pursuance of the Company''s commitment to develop and
 retain the best available talent, the Company had organised various
 training programmes for upgrading skill and knowledge of its employees
 in different operational areas. Apart from fixed salaries and
 perquisites, the Company also has in place performance-linked
 incentives which reward outstanding performers who meet certain
 performance targets. It has been sponsoring its employees for training
 programmes / seminars / conferences organised by reputed professional
 institutions.
 
 Employee relations remained cordial and the work atmosphere remained
 congenial during the year.
 
 Acknowledgments
 
 The Directors place on record their appreciation for the advice,
 guidance and support given by Life Insurance Corporation of India,
 National Housing Bank and all the bankers of the Company. The Directors
 also place on record their sincere thanks to the Company''s clientele,
 lenders and members for their patronage. The Directors express their
 appreciation for the dedicated services of the employees and their
 contribution to the growth of the Company.
 
                         For and on behalf of the Board of Directors
 
                         Sunita Sharma        Jagdish Capoor
 
                         Managing Director    Director
                         & CEO
 
 Date : 15th July, 2016
 
 Place: Mumbai
Source : Dion Global Solutions Limited
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