To the members of LIC Housing Finance Limited.
The Directors have great pleasure in presenting the Twenty Fourth
Annual Report together with the audited accounts for the year ended
31st March, 2013.
The profit and loss account shows a profit before tax of Rs. 1373.57
crore after writing off bad debts of Rs.31.37 crore and considering the
amount of Rs. 2.50 crore recovered 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. 350.36
crore and the profit after tax for the year is Rs.1023.21 crore.
Taking into account the balance of Rs.688.93 crore being brought forward
from the previous year, the distributable profit isRs. 1712.14 crore.
(Rs. in crore)
For the year For the year
ended 31 st ended 31 st
March, 2013 March, 2012
Special reserve 270.00 245.00
General reserve 400.00 300.00
Proposed dividend 191.77 181.68
Tax on dividend 32.35 29.42
Balance carried 818.02 688.93
forward to next year
Considering the performance during the year 2012-13, your Directors
have recommended a dividend of X 3.8 per Equity Share of Rs. 2/- each
(190 per cent), for the year ended 31st March, 2013. The total dividend
outgo for the current year would amount to Rs. 224.12 crore including
Dividend Distribution Tax of X 32.35 crore, as against t 211.10 crore
including dividend distribution tax of Rs. 29.42 crore, for the
Performance Income and profit
Profit before tax and after tax stood at Rs. 1373.57 crore and 7
1023.21 crore respectively as against Rs. 1230.91 crore and X 914.20
crore, respectively, for the previous year. Profit before tax increased
by 12 per cent over the previous year while profit after tax showed
same growth of 12 per cent as compared to that of previous year.
The Company earned total revenue of Rs. 7658.88 crore, registering an
increase of 23.23 per cent. The percentage of administrative expenses
to the housing loans, which was 0.38 per cent in the previous year, has
decreased to 0.36 per cent during the year 2012-13.
Lending operations Individual loans:
The main thrust continues on individual housing loans with a
disbursement growth of 21.51 per cent during the year. The project
loan which had shown a negative growth of 62.10 per cent in the
previous year has achieved a growth of 24.03 per cent in the year under
review. During the year, the Company sanctioned 1,43,811 individual
housing loans for Rs. 24,842.84 crore and disbursed 1,44,480 loans for
Rs. 23,230.27 crore. Housing loan to Individual i.e., retail loans
constitute 93.82 per cent of the total sanctions and 95.36 per cent of
the total disbursements for the year 2012-13 as compared to 94.17 per
cent and 95.45 per cent respectively during the year 2011-12. The gross
retail loan portfolio grew by over 25.49 per cent from Rs. 59,958.20
crore as on 31st March, 2012 to t 75,238.76 crore as on 31st March,
The cumulative sanctions and disbursements since the incorporation, in
respect of individual housing loans are:
Amount sanctioned : Rs. 1,26,912.17 crore Amount disbursed : Rs.
More than 15.56 lakh customers have been serviced by the Company up to
31st March, 2013 since its inception.
The''project loans sanctioned and disbursed by the Company during the
year were Rs. 1634.43 crore and Rs. 1128.16 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) a&on 31 st March, 2013
was Rs. 471.22 crore, which is 0.61 per cent of the housing loan
portfolio of the Company, as against Rs. 265.22 crore i.e. 0.42 per
cent of the housing loan portfolio as on 31st March, 2012. The net NPA
as on 31 st March 2013 was Rs. 275.94 crore i.e.0.36 per cent of the
housing loan portfolio vis-a-vis Rs. 84.85 crore i.e. 0.14 per cent of
the housing loan portfolio as on 31st March, 2012. The total cumulative
provision towards housing loan as on 31st March, 2013 is Rs. 694.55
crore as against Rs. 644.56 crore in the previous year. During the
year, the Company has written off Rs. 31.37 crore of housing loan
portfolio as against X 0.03 crore during the previous year.
The Company raised funds aggregating to Rs. 23,254.78 crore through
term loans from banks, Non-Convertible Debentures (NCD), NHB refinance
and Public Deposit. The Company''s NCD issues were rated ''CRISIL
AAA/Stable'' by CRISIL & ''CARE AAA'' by CARE, bank loans were rated
''CRISIL AAA/ Stable \ CRISIL A1 '', Public Deposit was rated as
In view of comfortable capital adequacy ratio as a result of
preferential allotment of equity shares to the promoters and
development in issue of new banking licence by RBI, the Company decided
to defer the raising of equity capital through Qualified Institutional
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(1 B) 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 2013-14.
Shri A. S. Narayanamoorthy, Director resigned from the Board of
Directors of the Company with effect from 23.05.2012. The Board places
on record its appreciation for his valuable contributions made by him
during his tenure as member of the Board.
Shri S. Ravi and Shri Jagdish Capoor, Directors retire by rotation at
the ensuing AGM and are eligiblefor reappointment.
Shri V. K. Sharma has been appointed by the Board of the Company as
Managing Director & CEO with effect from 19.03.2013 in terms of
nomination received from Life Insurance Corporation of India, subject
to approval of shareholders at the forthcoming Annual General Meeting.
Consequently, Shri Sushobhan Sarker relinquished the post of Managing
Director of the Company, however, he continues to be Director on the
board in a non executive capacity as nominee director of LIC of India.
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
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
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 16.54 per cent (as against 12 per cent
prescribed by the NHB) as on 31st March, 2013 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.
The Company has 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 its shareholders in selecting depository
participant. As on 31st March, 2013, 10,964 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.
During 2007-08, the Company started accepting deposits from the public.
As on 31st March, 2013, the outstanding amount on account of public
deposits was Rs. 773.60 crore. 97 deposits amounting to Rs. 2.15 crore
which were due for repayment on or before 31st March, 2013 were not
claimed by the depositors till that date. As on 26th April, 2013,14
deposits amounting to Rs. 0.42 crore thereof have been claimed and
paid. The interest due on the public deposits has been paid on time.
The Company through Registrar to the Public Deposit scheme i.e. 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
ii. Abridged advertisement shall be issued during the validity of
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.
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 2012-13 are given at item No.13 and No.14 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.
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
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 2013-14
The initiatives taken by the Company during the year are expected to
improve its operational and financial performance. During F.Y.
2013-14, the Company proposes:
- Expanding its operations by establishing new business centres.
- Increasing its distribution by appointing new agents and activising
- Incentivising and motivating the marketing intermediaries
systematically for improving productivity.
- Raising funds through loans at attractive rate of interest and
- Strengthening and upgrading the existing Risk Management System.
- 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
- Continuous effort to upgrade Information Technology platform to
ensure prompt and effective service to the clientele.
- Brand building measures to improve general awareness and the image
of the Company and to 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. According to the government 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 25 million
dwelling units at the beginning of the 11th five year plRs.pK 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, 2013 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.
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, the Company also have in place performance- linked
incentives which reward outstanding performers who meet certain
performance targets. It has been sponsoring its employees for training
programmes/seminars/conference organised by reputed professional
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 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,
2013, 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 is as under:
1. LICHFL Care Homes Limited:
LICHFL Care Homes Limited, a wholly owned subsidiary of LIC Housing
Finance Limited, was incorporated on 11th September, 2001 with an
authorised 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.
The Company had a turnaround in the year 2011 - 12 making a profit of X
241.71 lakh (profit after tax) and continued its journey in the profit
path in the following year as well.
In fiscal 2012 - 13, the Company has made a Profit before tax (PBT) of
X 2783.08 lakh and a Profit after tax (PAT) of X 1812.80 lakh, above
the expectations. The project in Bangalore Phase II is likely to be
completed in a month''s time whereas the Bhubaneswar Project may take
another year for completion. The Company is looking forward to making
its presence in Kolkata and Pune this year and in other major cities in
With demand for care-homes for elderly increasing day by day, the
Company is set on a growth trajectory keeping LIC''s vision for
fulfilment of Corporate Social Responsibility in the main frame.
2. LICHFL Financial Services Limited :
LICHFL Financial Services Limited, a wholly owned subsidiary of LIC
Housing Finance Limited was incorporated on 31st October 2007, for
undertaking non fund based activities like marketing of housing loans,
insurance products (life insurance and general insurance), credit
cards, mutual funds, fixed deposits etc. It has become operational in
March 2009 and at present has got 38 offices all over the country
spread over 10 states.
SARVESHAM POORNAM BHAVATU - the vision of the company is to
provide complete financial solutions to Customers. Towards this, the
company began distribution of Life Insurance Products of LIC of India,
Housing Loans of LIC Housing Finance Limited, Mutual Funds of all fund
houses, General Insurance of United India Insurance Company Limited,
Credit Cards of LIC Cards Services Limited and Fixed Deposits of LIC
Housing Finance Limited. More business verticals will be added
depending on market opportunities and customer needs.
The company earned a profit after tax of X 1.32 crore for the financial
year 2012-13 and recommended dividend @6% for FY 2012-13 for the fourth
consecutive year. The Company during the year under review has got all
the 38 offices operational in various parts of the country. The
initiatives taken up by the company and the aggression in the marketing
of the products during the financial year are expected to improve its
operational and financial performance. The Company provides complete
financial solution to secure not only the present but also the future
of the customers 3nd their family. In this the marketing officials
assist at every step - from financial planning to manage every aspect
of right investment.
The company has plans to expand in new locations and increase its
marketing team strength. There is good potential for growth of business
in all verticals especially in home loans and insurance sector.
Distribution of these products and increase in sale 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 share
REVENUE RATIO YEAR WISE FOR CORPORATE AND RETAIL FROM 2009 TO 2013
Year Corporate Retail Total Corporate Retail Total
2009-10 685.95 104.43 790.38 289.24 413.29 702.52
2010-11 842.66 262.17 1104.83 280.38 541.60 821.98
2011-12 888.02 351.96 1238.98 261.89 690.67 952.56
2012-13 617.07 434.55 1051.62 245.29 577.65 822.94
Year Corporate Retail Total
2009-10 237% 25% 113%
2010-11 301% 48% 134%
2011-12 339% 51% 130%
2012-13 252% 75% 128%
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 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 and
successfully garnered fund to the tune of Rs. 529.35 crore as against
the target of Rs. 500 crore. The Fund is being managed by LICHFL Asset
Management Company Ltd. as Investment Manager. Final Closure Date of
the Fund was 30th March, 2013. The Fund has initiated its investment
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/mutual funds, unit trusts, investment trusts set
up formed or established in India or abroad and to act as financial and
The Company has been appointed as Investment Manager to raise and
manage the maiden Fund LICHFL Urban Development Fund. Against
challenging economic conditions, the Company has successfully secured
total commitments of Rs. 529.35 crore to LICHFL
Urban Development Fund through Banks, Financial Institutions,
Corporates and HNIs, as against the targeted size of Rs. 500 crore. As
stated earlier the final closure date of the fund was 30th March, 2013.
The Company has initiated investment activities during the year and it
is expected that the momentum of current reforms would be further
accelerated which would have favourable impact on real estate sector
and particularly the affordable housing.
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,
lenders and members for their patronage. The Directors also record
their appreciation for the dedicated services of the employees and
their contribution tb the growth of the Company.
For and on behalf of the Board
Place : Mumbai
Date : 26.04.2013