The Directors have great pleasure in presenting the Twenty Second
 Annual Report together with the audited accounts for the year ended
 31st March, 2011.
 
 Financial results
 
 The Profit and Loss Account shows a profit before tax of Rs.1294.16
 crore after writing off bad debts of Rs.0.63 crore and considering the
 amount recovered of Rs.6.69 crore out of earlier write off and taking
 into account all expenses, including depreciation and prior period
 items. The provision for income tax (net of deferred tax) is Rs.319.67
 crore and the profit after tax for the year is Rs. 974.49 crore.
 
 Taking into account the balance of Rs.361.40 crore being brought
 forward from the previous year, the distributable profit is Rs.1335.89
 crore.
 
                                                    (Rs. in crore)
 
                                      For the              For the
                                   year ended           year ended
                             31st March, 2011     31st March, 2010
 
 Appropriations:
 
 Special reserve                       262.00               160.00
 
 General reserve                       350.00               200.00
 
 Proposed dividend                     166.13               142.39
 
 Tax on dividend                        26.93                24.20
 
 Balance carried                       530.83               361.41 
 forward to next year
 
                                      1335.89               888.00
 
 Dividend
 
 Considering the good performance during the year 2010-11, your
 Directors have recommended a dividend of Rs.3.5 per Equity Share of
 Rs.2/- each (175%), for the year ended under review. The total dividend
 outgo for the current year would amount to Rs.193.05 crore including
 Dividend Distribution Tax of Rs.26.93 crore, as against Rs166.59 crore
 including dividend distribution tax of Rs.24.20 crore, for the previous
 year.
 
 Performance
 
 Income and profit
 
 Profit before tax and after tax stood at Rs.1294.16 crore and Rs.974.49
 crore as against Rs.911.27 crore and Rs.662.18 crore, respectively, for
 the previous year. Profit before tax increased by 42.02% over the
 previous year while profit after tax increased by 47.16% as compared to
 that of previous year.
 
 The Company earned a total income of Rs.4868.72 crore, registering an
 increase of 40.34%. The percentage of administrative expenses to the
 housing loans, which was
 
 0.48% in the previous year, has decreased to 0.45% during the year
 2010-11.
 
 Lending operations
 
 Individual loans:
 
 The main thrust continues on individual loans with a disbursement
 growth of 41% during the year. However, project loans were also given
 due weightage resulting in an overall disbursement growth of 34% over
 previous year. During the year, the Company sanctioned 1,32,707
 individual Housing loans for Rs.20,227.35 crore and disbursed 1,61,466
 loans for Rs.17,512.36 crore. Housing Loan to Individual i.e., retail
 loans constitute 89.49% of the total sanctions and 87.95% of the total
 disbursements for the year 2010-11 compared to the last year’s figure
 of 78.43% and 83.81% respectively. The gross retail loan portfolio grew
 by over 37.52% from Rs.34,031.64 crore as on 31st March, 2010 to
 Rs.46,800.27 crore as on 31st March, 2011.
 
 The cumulative sanctions and disbursements since the incorporation, in
 respect of individual loans are:
 
 Amount sanctioned: Rs.81,317.35 crore
 
 Amount disbursed: Rs.72,957.36 crore
 
 More than 12,00,000 customers have been serviced by the Company up to
 31st March, 2011 since its inception.
 
 Project loans:
 
 Growth in profit has been attributed amongst other factors to the
 growing portfolio of project loans. The Company sanctioned/ disbursed
 project loans to select builders/developers after proper analysis and
 sanction by the Executive Committee.  The project loans sanctioned and
 disbursed by the Company during the year were Rs.2,375.57 crore and
 Rs.2,400.03 crore, respectively. These loans are generally for short
 durations, giving better yields as compared to individual loans.
 
 Non-Performing Assets and provisions
 
 The amount of gross Non-Performing Assets (NPA) as on 31st March, 2011
 was Rs.241.96 crores, which is equivalent to 0.52% of the housing loan
 portfolio of the Company, as against Rs.263.15 crore i.e. 0.69% of the
 housing loan portfolio as on 31st March, 2010. The net NPA as on 31st
 March 2011 is reduced to Rs.15 crore i.e. 0.03% of the housing loan
 portfolio vis-a-vis Rs.46.36 crore i.e. 0.12% of the housing loan
 portfolio as on 31st March, 2010. The total cumulative provision
 towards housing loan as on 31st March, 2011 is Rs.483.73 crore as
 against Rs.216.79 crore in the previous year. During the year, the
 Company has written off Rs.0.63 crore of housing loan portfolio as
 against Rs.0.77 crore during the previous year.
 
 Fund raising
 
 The Company raised funds aggregating to Rs.18,873.87 crore through term
 loans from banks, Non-Convertible Debentures
 
 (NCD), upper tier II Bonds, commercial paper, NHB refinance and Public
 Deposit. The Company’s NCD & Upper Tier II subordinate Bond issue and
 bank loans were rated ‘AAA/Stable’ and Public Deposit was rated as
 FAAA/STABLE by CRISIL.
 
 Sub-Division of Equity Shares
 
 With a view to increase the liquidity of the shares in the stock market
 and to make it more affordable to the retail investors at large and
 also to have better comparability with share prices of other companies,
 the Company after taking members’ consent through postal ballot,
 sub-divided the nominal face value of existing one equity share of
 Rs.10/- into 5 equity shares of Rs.2/- each.
 
 Auditors
 
 Statutory auditors M/s. Chokshi & Chokshi, Chartered Accountants,
 Mumbai and M/s. Shah Gupta & Co., Chartered Accountants, Mumbai retire
 at the conclusion of the forthcoming Annual General Meeting (AGM). The
 Company has received the requisite certificate from them to the effect
 that their appointment, if made would be within the limits specified
 under section 224(1B) of the Companies Act, 1956.
 
 The Board of Directors recommend appointment of M/s. Chokshi & Chokshi,
 Chartered Accountants, Mumbai and M/s. Shah Gupta & Co., Chartered
 Accountants, Mumbai, as Joint Statutory Auditors of the Company for
 financial year 2011-12.
 
 Directors
 
 Shri Dhananjay Mungale, Director and Shri S. Ravi, Director retire by
 rotation at the ensuing AGM and are eligible for reappointment.
 
 The Directors recommend their reappointment / appointment.
 
 Corporate Governance
 
 A certificate from the Joint Statutory Auditors of the Company
 regarding compliance of the conditions of Corporate Governance as
 stipulated under Clause 49 of the Listing Agreement with Stock
 Exchanges 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 support the broad
 principles of Corporate Governance. In addition to the basic governance
 issues, the Board lays strong emphasis on transparency, accountability
 and integrity.
 
 Management Discussion and Analysis Report
 
 Management Discussion and Analysis Report for the year under review, as
 stipulated under clause 49 of the Listing Agreement with Stock
 Exchanges is presented in a separate section forming part of the Annual
 Report.
 
 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 from time to time. The capital adequacy was 14.88% (as against 12%
 prescribed by the NHB) as on 31st March, 2011 after considering the
 loan to value ratio for deciding risk weightage.
 
 The Company also has been following directions / guidelines / circulars
 issued by SEBI from time to time applicable to the listed company.
 
 Depository system
 
 The Company has signed an agreement with the Central Depository
 Services (India) Limited (CDSL) for transactions of its shares in
 dematerialised form, in addition to the National Securities Depository
 Limited (NSDL), to give a choice to shareholders in selecting
 depository participant. As on 31st March, 2011, 12,444 members of the
 Company continue to hold shares in physical form. As per the Securities
 and Exchange Board of India’s (SEBI) instructions, the Company’s shares
 have to be transacted in dematerialised form and therefore, members are
 requested to convert their holdings to dematerialised form.
 
 Public deposits
 
 During 2007-08, the Company started accepting deposits from the public.
 As on 31st March, 2011, the outstanding amount on account of public
 deposits was Rs.261.20 crore.  97 deposits amounting to Rs.15.41 crore
 which were due for repayment on or before 31st March, 2011 were not
 claimed by the depositors till that date. As on the date of this
 report, 30 deposits amounting to Rs.9.62 crore thereof have been
 claimed and paid. The interest due on the public deposits has been paid
 on time.
 
 The Company through Registrar & Transfer Agent namely M/s. Link Intime
 India Pvt. Ltd. has been sending reminders on periodical basis to the
 depositors who have not claimed the maturity proceeds.
 
 Exemption from provision of section 58A (2)(a) & (b)
 
 In exercise of the powers under sub-section 8 of section 58A of the
 Companies Act, 1956, read with Companies (Amendment) Act, 1977, the
 Central Government has granted exemption to the public deposit scheme
 of the Company from provisions of section 58A(2) (a) & (b) of the
 Companies Act, 1956 on following conditions:
 
 i. Abridged advertisement shall refer to the statutory advertisement
 published.
 
 ii. Abridged advertisement shall be issued during the validity of
 statutory advertisement.
 
 iii. Abridged advertisement shall be filed with the Registrar of
 Companies, Maharashtra, within 15 days of its publication.
 
 iv. The exemption will not affect any legal rights available to any
 deposit holder or any shareholder or creditor as per law enforced in
 respect of recovery of any amount which has become due for repayment.
 
 Statutory information
 
 The Company does not own any manufacturing facility. Hence the
 particulars relating to the conservation of energy and technology
 absorption stipulated in the Companies (Disclosure of Particulars in
 the Report of the Board of Directors) Rules, 1988, are not applicable.
 The particulars of foreign currency expenditure and foreign currency
 earnings during 2010-11 are given at item No.16 and No.17 in the Notes
 to the Accounts.  There are no employees covered by Section 217 (2A) of
 the Companies Act, 1956, read with the Companies (Particulars of
 Employees) Rules, 1975, as amended.
 
 Auditors’ observations
 
 No adverse remark or observation is given by the statutory auditors.
 
 The Company has an in house internal audit system for back offices
 conducted by the audit department personnel and a reputed firm of
 Chartered Accountants as internal auditor for Corporate Office.
 Continuous efforts are made to further strengthen the internal audit
 system to make it commensurate with the size and the nature of
 business.
 
 Systems and procedures are being upgraded from time to time to provide
 checks and alerts for avoiding fraud arising out of misrepresentation
 given by borrower/s while availing the housing loans.
 
 Outlook for 2011-12
 
 The initiatives taken by the Company during the year are expected to
 improve its operational and financial performance.  Major initiatives
 taken by the Company include:
 
 - Expanding its operations by establishing new business centres.
 
 - Increasing 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 rate of interest and terms.
 
 - Strengthening and upgrading the existing Risk Management System.
 
 - Maintaining good relations with lenders for reducing overall cost of
 funds.
 
 - Steps to improve the recovery ratio and ensuring lowest NPA level.
 Improving receivable management through support system.
 
 - Reviewing the existing lending rates at regular quarterly intervals
 in view of the change in interest rate scenario, thereby insulating the
 stakeholders of risk of interest fluctuation and passing on the
 benefits as applicable to the customer.
 
 - Timely review of credit appraisal system to improve the loan asset
 quality.
 
 - Initiating steps to upgrade Information Technology platform to ensure
 prompt and effective service to the clientele.
 
 - Initiating brand building measures to generate general awareness and
 improve the image of the Company and also increase the overall market
 share.
 
 - 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 it due recognition in the last three Union
 budgets. The government said the country needs investment to the tune
 of Rs.3,61,000/- crore to meet the shortage of nearly 25 million
 housing units.  There was approximately housing shortage of 24.7
 million dwelling units at the beginning of the 11th five year plan. The
 investment requirements would be close to Rs.3,61,000/- crore for
 overcoming this massive housing shortage and, therefore, the management
 reasonably foresees good potential for growth in the business of the
 Company.
 
 Directors’ Responsibility Statement pursuant to Section 217 (2AA) of
 the Companies Act, 1956
 
 In accordance with the provisions of Section 217 (2AA) of the Companies
 Act, 1956, and based on the information provided by the management,
 your Directors state that:
 
 - In the preparation of the annual accounts, the applicable accounting
 standards have been followed.
 
 - Accounting policies were applied consistently.  Reasonable and
 prudent judgement and estimates were made so as to give true and fair
 view of the state of affairs of the Company as at the end of 31st
 March, 2011 and profit of the Company for the year ended on that date.
 
 - Proper and sufficient care has been taken for maintenance of
 accounting records in accordance with the provisions of the Companies
 Act, 1956, for safeguarding the assets of the Company and for
 preventing/detecting fraud and other irregularities.
 
 - The annual accounts are prepared on a going concern basis.
 
 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 the skill and knowledge of its
 employees in different operational areas. Apart from fixed salaries and
 perquisites, we also have in place performance-linked incentives which
 reward outstanding performers that meet certain performance
 
 targets. It has been sponsoring its employees for training
 programmes/seminars/conference organised by reputed professional
 institutions.
 
 Employee relations remained cordial and the work atmosphere remained
 congenial during the year.
 
 Subsidiaries and group companies
 
 The Consolidated financial statements incorporating the results of the
 Company’s wholly owned subsidiaries namely LICHFL Care Homes Limited,
 LICHFL Financial Services Limited, LICHFL Trustee Company Private
 Limited and LICHFL Asset Management Company Limited for the year ended
 31st March, 2011, are attached along with the statement pursuant to
 Section 212 of the Companies Act, 1956, with respect to the said
 subsidiaries. The review of performance of the subsidiaries are as
 under:
 
 1.  LICHFL Care Homes Limited:
 
 LICHFL Care Homes Limited was incorporated on 11th September, 2001. To
 address the crying need of housing for the senior citizens of the
 country, the Company had promoted LICHFL Care Homes Limited, to
 establish and operate assisted community living centres.
 
 The Company is on the threshold of commencing its construction and also
 sale of flats at Bhubaneswar – the foundation stone for which has been
 laid by the Chairman of LIC of India.
 
 The tendering process for construction at Bhubaneswar project having
 been completed, the environmental clearance obtained and the market
 survey for sale revealing a healthy outlook, the company is poised for
 turnaround in the current year 2011-12.
 
 The Company is also in the process of getting the land converted for
 land purchased at Jaipur and start phase II of Bangalore project
 besides exploring the possibility of tie-ups for joint ventures / joint
 development.
 
 2.  LICHFL Financial Services Limited :
 
 LICHFL Financial Services Limited was incorporated on 31st October,
 2007 for undertaking non fund based activities like marketing of
 housing loans, insurance products, credit card, mutual fund, personal
 loan etc. It has become operational in March 2009 and has already
 opened 33 offices across the country. The Company earned profit after
 tax Rs.1.85 crore and declared second dividend @10% for F.Y. 2010-11.
 The Company during the year under review got 37 offices operational in
 various parts of the country. The initiatives taken by the Company
 during the year are expected to improve its operational and financial
 performance. The Company has plans to expand in new locations and
 increase its marketing team strength. There is good potential for
 growth of business in home loan and insurance sector.  Distribution of
 these products is expected to generate good revenue for the Company.
 The Company has
 
 plans to expand its lines of business and would evaluate right
 opportunities for growth, profitability and value addition to
 shareholders.
 
 3.  LICHFL Trustee Company Private Limited :
 
 LICHFL Trustee Company Private Limited was incorporated on 5th March,
 2008 for undertaking the business of trustees of venture capital trust,
 funds – in India and offshore.
 
 The Company has been appointed as trustee for LICHFL Fund on 27th
 August, 2010. The Company has appointed LICHFL Asset Management Company
 Limited as Investment Manager on 27th August, 2010 and it is reported
 that the Fund is registered with SEBI vide Registration Certificate
 No.IN/VCF/10-11/0193. The Investment Manager has commenced the
 marketing of the fund “LICHFL Urban Development Fund” in February 2011
 and it is expected that fund would achieve closure around June, 2011.
 
 4.  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 funds, unit trust, investment trust in India as
 well as abroad.
 
 The Company has been appointed as the Investment Manager by LICHFL
 Trustee Company Private Limited on 27th August, 2010 and has since
 obtained SEBI registration of Fund and started marketing of LICHFL
 Urban Development Fund initially to Banks and Financial Institutions in
 the first stage. Marketing to others investors, HNI will commence with
 the appointment of Distributors for this purpose which is expected by
 May 2011. The response from Banks and some insurance companies has been
 encouraging and their commitments are expected shortly and closure of
 the fund is expected by end of June 2011. As banks and housing finance
 companies reduce their exposure to real estate sector due to tightening
 of RBI norms, developers have started to reach Private Equity Investors
 for funding. Budget for the year 2011-12 is also encouraging for
 affordable housing segment.
 
 Acknowledgments
 
 The Directors place on record their appreciation for the advice,
 guidance and support given by the Life Insurance Corporation of India
 and the NHB and all the bankers of the Company.  The Directors also
 place on record their sincere thanks to the Company’s clientele and
 members for their patronage. The Directors also record 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 
                                                          Chairman
 
 Mumbai
 28th April, 2011