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Directors Report of LIC Housing Finance Ltd.

Mar 31, 2016

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-à-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


Mar 31, 2015

Dear Members,

The Directors are pleased to present the Twenty Sixth Annual Report together with the audited financial statements for the year ended 31st March, 2015 of LIC Housing Finance Limited (''the Company'').

Financial results

(Rs. in crore)

For the year For the year ended 31st ended 31st March, 2015 March, 2014

Profit before Tax 2,101.94 1,825.50

Tax Expense 715.75 508.32

Profitafter Tax 1,386.19 1,317.18

Appropriations:

Special reserve & Statutory 385.00 370.00 reserve u/s 29C of NHB Act

General reserve 300.00 200.00

Proposed dividend 252.33 227.10

Tax on dividend 49.90 38.48

Balance carried forward to 398.96 481.60 next year

1386.19 1317.18

Dividend

Considering the performance during the financial year 2014- 15, your Directors recommend payment of dividend for the financial year ended 31st March, 2015 of Rs.5/- per equity share of face value of Rs.2/- per share i.e. @ 250 percent, as against Rs.4.50/- per equity share of face value of Rs.2/- per share for the previous year i.e. @ 225 percent. The total dividend outgo for the current year would amount to Rs.302.23 crore including Dividend Distribution Tax of Rs.49.90 crore which is 21.80 percent of PAT, as against Rs.265.58 crore including dividend distribution tax of Rs.38.48 crore, for the previous year, which was 20.16 percent of PAT.

Performance

Income and profit

The Company earned total revenue of Rs.10,798.66 crore, registering an increase of 15.68 percent. The percentage of administrative expenses to the housing loans, which was 0.33 percent in the previous year, has marginally increased to 0.34 percent during the year 2014-15.

Profit before tax and aftertax stood at Rs.2101.94 crore and Rs.1386.19 crore respectively as against Rs.1,825.50 crore and Rs.1,317.18 crore, respectively, for the previous year.

Profit before tax increased by 15.14 percent over the previous year while profit aftertax showed growth of 5.24 percent over that of the previous year. The increase of 40.80% on account of tax expenses is attributed to creation of deferred tax liability in respect of special reserve amount appropriated during the period under review has been charged to the Statement of Profit & Loss. The creation of deferred tax liability in respect of transfer to Special Reserve has been introduced during the year.

Lending operations

Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of 20.45 percent during the year. During the year, the Company sanctioned 1,52,102 individual housing loans for Rs.29,326.75 crore and disbursed 1,61,791 loans for Rs.29,255.91 crore. Housing loan to Individual i.e. retail loans constitute 92.48 percent of the total sanctions and 96.46 percent of the total disbursements for the year 2014-15 as compared to 95.24 percent and 96.12 percent respectively during the year 2013-14. The gross retail loan portfolio grew by over 19.29 percent from Rs.88,645.99 crore as on 31st March, 2014 to Rs.1,05,742.16 crore as on 31st March, 2015.

The cumulative sanctions and disbursements since inception, in respect of individual housing loans are:

Amount sanctioned : Rs.1,81,676.12 crore

Amount disbursed : Rs.1,68,851.77 crore

More than 20,97,489 customers have been serviced by the Company up to 31st March, 2015 since inception.

Project loans:

The project loans sanctioned and disbursed by the Company during the year were Rs.2,386.15 crore and Rs.1,071.41 crore respectively. Corresponding figures for the previous year were Rs.1,271 crore and Rs.981.50 crore pertaining to sanction and disbursement respectively. 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 in various ways / by various institutions and some of the awards presented to the Company are listed below:

* ''Best Data Quality'' in Housing Finance Companies by CIBIL.

* ''Best Housing Finance Company by BFSI Awards for second consecutive year.

* ''Best Housing Finance Company by IBFA and by Realty Plus Excellence.

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 16 Back Offices (BO), 132 Area Offices (AO), 80 Business Centres (BC), 7 Extension Counters (EC), 1 Customer Service Point, 4 Property Service Division (PSD) where role of Property Service Division includes all activities involved in enabling a prospective home buyer select the property upto taking the possession of the same. Basically, it is one-stop-shop solution for all the advisory services. The distribution network also includes 38 offices of LIC HFL 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 FY 2014-15, Rs.12,158.76 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.10,884.43 crore received last year.

Non-Performing Assets and Provisions

The amount of gross Non-Performing Assets (NPA) as at 31st March, 2015 was Rs.494.68 crore, which is 0.46 percent of the housing loan portfolio of the Company, as against Rs.609.00 crore i.e. 0.67 percent of the housing loan portfolio as at 31st March, 2014. The net NPA as at 31st March 2015 was Rs.234.43 crore i.e. 0.22 percent of the housing loan portfolio vis-a-vis Rs.353.58 crore i.e. 0.39 percent of the housing loan portfolio as at 31st March, 2014. The total cumulative provision towards housing loan portfolio including provision for standard assets as at 31st March, 2015 was Rs.704.25 crore as against Rs.706.81 crore in the previous year. During the year, the Company has written off Rs.29.68 crore of housing loan portfolio as against Rs.0.0039 crore during the previous year.

Resource Mobilisation

The Company raised funds aggregating to Rs.33,719.59 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 year, the Company issued NCD amounting to Rs.24,791 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, 2015, NCDs amounting to Rs.70,117/- crore were outstanding. The Company has been regular in making payment of principal and interest on the NCDs.

As at 31st March, 2015, 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 year, the Company has not issued any Subordinate Bonds and Upper Tier II Bonds. As at 31st March, 2015, the outstanding Subordinate Bonds and Upper Tier II Bonds stood at Rs.3,000/- crore. Considering the balance term of maturity as at 31st March, 2015, Rs.2,300/- 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, 2015 are Rs.17,454.03 crore as compared to Rs.20,241.41 crore as at 31st March, 2014. The Refinance from NHB as at 31st March, 2015 stood at Rs.3,428.93 crore as against Rs.3,384.72/- crore as at 31st March, 2014. During the year, the Company has availed Rs.765.50 crore Refinance from NHB under Rural Housing Fund, Urban Housing Fund and Refinance scheme for Women.

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, 2015, the outstanding amount on account of public deposits was Rs.2,421.91 crore as against Rs.1,193.97 crore in the previous year. During the FY 2014- 15 amount of Rs.1,609.94 crore is collected in the Public Deposite Scheme. The number of depositors has increased from 16,401 to 24,990.

CRISIL has for the ninth consecutive year, re-affirmed a rating of "CRISIL FAAA/Stable" for the company''s deposits which indicates highest degree of safety regarding timely servicing offinancial 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.

313 deposits amounting to Rs.8.95 crore which were due for repayment on or before 31st March, 2015 were not claimed by the depositors till that date. Since then, 152 depositors have claimed or renewed deposits of Rs.4.26 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 15.30 percent (as against 12 percent prescribed by the NHB) as at 31st March, 2015 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. During the year, NHB has prescribed that HFCs shall provide ''Most Important Terms and Conditions'' of housing loans, which the Company has implemented 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 (Registration No.:101872W) and Messrs Shah Gupta & Co., Chartered Accountants, Mumbai (Registration No.:109574W), shall hold office until the conclusion of the forthcoming Annual General Meeting (AGM) and are eligible for re-appointment. 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 re-appointment of Messrs Chokshi & Chokshi, LLP, Chartered Accountants, Mumbai (Registration No.:101872W) and Messrs Shah Gupta & Co., Chartered Accountants, Mumbai (Registration No.:109574W) as Joint Statutory Auditors of the Company to hold the office from the conclusion of this Twenty Sixth Annual General Meeting until the conclusion of the Twenty Seventh Annual General Meeting on a remuneration to be determined by the Board of Directors in consultation with them (plus applicable service tax), for the purpose of audit of the Company''s accounts at the Corporate Office as well as at 10 Back Offices to be selected in consultation with the Joint Statutory Auditors.

During the year, Messrs Chokshi & Chokshi, converted itself into a Limited Liability Partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008 and is now known as Messrs Chokshi & Chokshi LLP, in terms of General Circular No.9/2013 dated 30th April, 2013 of the Ministry of Corporate Affairs, if a firm of CAs, being an auditor in a company under the Companies Act, 1956, is converted into an LLP, then such an LLP would be deemed to be the auditor of the said company. The Board of Directors of the Company has taken due note of this change.

Corporate Governance

A certificate from Mr. N. L. Bhatia, Company Secretary (Membership No.: FCS 1176) Partner, Messrs N. L. Bhatia & Associates, Practising Company Secretaries 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 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 clause 49 of the Equity Listing Agreement with Stock Exchanges is presented in a separate section forming part of the Annual Report.

Business Responsibility Report

The Securities and Exchange Board of India through its circular CIR/CFD/DIL/8/2012 dated August 13th, 2012, had mandated the top 100 listed entities, based on the market capitalization on Bombay Stock Exchange Limited and National Stock Exchange of India Limited as at March 31st, 2012, to include the Business Responsibility Report 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, 2015, 9,946 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, 2015.

The Company has an in-house mechanism for 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 CA 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 2015-16

The initiatives taken by the Company during the financial year 2014-15 are expected to improve its operational and financial performance. During FY 2015-16, 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 it 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. Approximately 123 million of urban population by 2020 is likely to require professional assistance for construction of houses. This would lead to a whopping 95 billion square feet of potential demand of real estate space across residential, retail, commercial, industrial and civil amenities over 2010-20. This would mean an average demand of 8.7 billion square feet which potentially needs to be built every year.

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, 2015 is attached as Annexure 1 to this Report.

Board Meetings held during the year:

During the year under review, 6 Board meetings were held. Detailed information on 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 have 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 Nomination and Remuneration Committee at its meeting held on 25th July, 2014 and the Board of Directors at its meeting held on 16th March, 2015 respectively, had laid down Criteria for determining Director Qualification, positive attributes and independence of a Director, remuneration of directors, key managerial personnel and also criteria for evaluation of directors, chairperson, non-executive directors and Board as a whole and also the evaluation process of the same.

The performance of the members of the Board, and the Board as a whole were evaluated at the meeting of Independent Directors held on 16th March, 2015.

In terms of the provisions of section 149 of the Companies Act, 2013 and clause 49 of the Listing Agreement, 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.

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 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 2014-15 was a significant year in Company''s lifecycle. The Company earned total revenue of Rs.10,798.65 crore, registering an increase of 15.68 percent. The percentage of administrative expenses to the housing loans, which was 0.33 percent in the previous year, has marginally increased to 0.34 percent during the year 2014-15.

Profit before tax and after tax stood at Rs.2,101.94 crore and Rs.1,386.19 crore respectively as against Rs.1,825.50 crore and Rs.1,317.18 crore, respectively, for the previous year. Profit before tax increased by 15.14 percent over the previous year while profit after tax showed growth of 5.24 percent over that of the previous year. The increase of 40.80 percent on account of tax expenses is attributed to creation of deferred tax liability in respect of Special Reserve amount appropriated during the period under review has been charged to the Statement of Profit & Loss. The creation of deferred tax liability in respect of transfer to Special Reserve has been introduced during the year.

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

The Company has transferred Rs.385 crore to Special Reserve and Statutory reserve u/s 29C of NHB Act and an amount of Rs.300 crore to General Reserve.

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

Rs.252.33 crore is proposed to be paid by way of dividend to shareholders of the Company i.e. Rs.5/- per equity share of face value of Rs.2/- per 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, 2015 and the date of the Directors'' Report i.e. 30th June, 2015.

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 off 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 March 31st, 2015, the Company earned Rs.17.30 lakh and spent Rs.102.38 lakh in foreign currency. This does not include foreign currency cash flows in derivatives and foreign currency exchange transactions.

Risk Management Policy for the Company:

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. The details of risk is provided in the Management Discussion and Analysis Report. In the opinion of the Board, none of the risks faced by the Company threaten its existence.

Corporate Social Responsibility (CSR) Policy:

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has 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 Chairman Director

Ms. Sunita Sharma Member Managing Director & CEO

Shri Jagdish Capoor Member Independent Director

Shri T V. Rao Member Independent Director

Annual evaluation made by the Board of its own performance:

The Nomination and Remuneration Committee at its meeting held on 25th July, 2014 and the Board of Directors at its meeting held on 16th March, 2015 respectively, had laid down Criteria for evaluation of directors, chairperson, non- executive directors, Board level committee and Board as a whole and also the evaluation process of the same.

The Board of Directors had 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 Securities and Exchange Board of India (SEBI) under clause 49 of the Listing Agreement at the meeting of Independent Directors held on 16th March, 2015.

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 wholeand performanceofChairmanwasevaluated,takinginto 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 Sixth Annual General Meeting of the Company along with 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 along with its subsidiaries for the year ended 31st March, 2015 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 eleven Directors consisting of seven Independent Directors, three Non-Executive Directors including Chairman; and Managing Director & CEO as Executive Director as on the date of adoption of this report.

Appointments / Resignations of Directors:

Dr. Dharmendra Bhandari was appointed as Additional Director of the Company by the Board with effect from

19th August, 2014. As required under Section 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of Dr. Dharmendra Bhandari for the office of a Director. Dr. Dharmendra Bhandari 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, Dr. Dharmendra Bhandari fulfils the conditions specified in the Act, for such appointment.

The proposal for appointment of Dr. Dharmendra Bhandari as Independent Director is being placed before the shareholders for approval, the relevant details are forming part of the Notice of the AGM.

Shri Debabrata Sarkar was appointed as Additional Director of the Company by the Board with effect from 30th June, 2015. As required under Sections 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of Shri Debabrata Sarkar for the office of a Director. Shri Debabrata Sarkar 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 Debabrata Sarkar fulfils the conditions specified in the Act, for such appointment.

The proposal for appointment of Shri Debabrata Sarkar as Independent Director is being placed before the shareholders for approval, the relevant details are forming part of the Notice of the AGM.

Shri V. K. Kukreja was appointed as Additional Director of the Company by the Board with effect from 30th June, 2015. As required under Section 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of Shri V. K. Kukreja for the office of a Director. Shri V. K. Kukreja 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 V. K. Kukreja fulfils the conditions specified in the Act, for such appointment.

The proposal for appointment of Shri V. K. Kukreja as an Independent Director is being placed before the shareholders for approval, the relevant details are forming part of the Notice of the AGM.

Taking into account the invaluable contribution, suggestions, advice given by Dr. B. N. Shukla during his tenure in the various meetings of the Board / Committees held, the Board extended the term of office of Dr. B. N. Shukla, Non-Executive Independent Director by a period of one year beyond the total term of office of nine years.

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 S. Ravi and Shri K. Narasimha Murthy have ceased to be directors of the Company on account of completion of extended term of one year of office of Director.

Director Retiring by Rotation:

Shri S. B. Mainak, Director, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

Appointment / Resignation of the Key Managerial Personnel:

Ms. Sunita Sharma, Managing Director & CEO, Mr. Nitin K. Jage, General Manager & Company Secretary and Mr. P Narayanan, CFO are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 of which Managing Director & CEO and General Manager & Company Secretary was already in office before the commencement of the Companies Act, 2013 and their appointment as Key Managerial Personnel were formalised.

Further, Mr. N. K. Mittal, who was CFO of the Company till 27th November, 2014 was also Key Managerial Personnel as per the provisions of the Companies Act, 2013 and were already in office before the commencement of the Companies Act, 2013. Consequent upon his transfer to LIC of India, he tendered his resignation as CFO and in his place Mr. P Narayanan was appointed as CFO with effect from 28th November, 2014.

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

* Executive Committee

* Stakeholders Relationship Committee

* Debenture Allotment Committee

* Nomination and Remuneration Committee

* Risk Management Committee

* Corporate Social Responsibility Committee

* HR Committee

Composition of Audit Committee is as follows:

Shri S. Ravi* Chairman Independent Director

Dr. B. N. Shukla Member Independent Director

Shri T V. Rao Member Independent Director

*Ceased to be Director w.e.f. 25th June, 2015 on account of completion of term of office of Directorship.

There has not been any instances 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, 2015, 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 the Company''s all subsidiaries for the year ended 31st March, 2015, are attached along with the statement pursuant to Section 129 of the Companies Act, 2013, with respect to the said subsidiaries. Brief write up / performance and financial position of each of the subsidiaries are 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 promoting the Company was to establish and operate assisted community living centers for the senior citizens.

The Company had a brief turnaround in the financial year2011 -12 making a profit of Rs.241.71 lakh. Though for fiscal 2013-14, there was a loss of Rs.276.43 lakh, the Company has posted profit of Rs.583.22 lakh for the financial year 2014 -15.

The project in Bangalore Phase II has been completed and handing over of the keys was done on 12th August, 2013.

With life expectancy going up and number of elderly citizens rising year after year, it is expected that demand for care-homes would also increase. As a result, the Company is set on a growth trajectory keeping LIC & LIC HFLs'' vision for fulfillment of Corporate Social Responsibility as 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 to 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. Seven Investment deals have been tied up so far with Portfolio Companies developing residential projects across Pune, Bangalore and Chennai.

During the year, the Company has earned a Net profit of Rs.5.66 crore compared to Rs.6.10 crore that of previous year.

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 seven investment deals upto 31st March, 2015.

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 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 is a Corporate Agent for LIC of India and earned revenue of Rs.44.50 lakh from it. As a Corporate Agent for LICHFL for the Home Loan products, it earned revenue of Rs.600.88 lakhs from it. The revenue from General Insurance Business was Rs.15.61 lakh. The retail income from Mutual Funds, Public Deposits, Credit cards and NPS was Rs.18.25 lakh.

The company provides complete financial solution 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 term and for longer terms.

The Company has earned a Profit after Tax of Rs.2.50 crore for the financial year 2014-15 and recommended dividend @ 10 percent for FY 2014-15, for the fifth straight year. The Company during the year under review consolidated its'' operations in 38 locations across the country. The systematic approach along with the new initiatives taken during the earlier years are expected to drive the revenues in a positive direction and improve the operational and financial performance.

The Company has plans to expand on a selective basis and concentrate on strengthening the strong areas in the area of distribution of Home Loans and Life Insurance. The Company has started to make an impact in certain locations in the generation of revenue from the Home Loans. The Company will also focus on expanding the client base in the other verticals. The Company would evaluate the right opportunities for growth, profitability and value addition to its shareholders.

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

As on 31st March, 2015, 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, 2015 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 were 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 where whistle blowers can 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 Ratio to median (including Independent remuneration Directors)*

Nil Nil

*No remuneration is paid to Non Executive Directors (including Independent Directors)

Executive Director Ratio to median (MD&CEO) remuneration

Ms. Sunita Sharma 6:1

b. The percentage increase in remuneration of each director, CEO, CFO, CS in the financial year:

Non Executive Directors % increase in remuneration (including Independent in the financial year Directors)*

Nil Nil

*No remuneration is paid to Non Executive Directors (including Independent Directors)

% increase in remuneration in the financial year

Executive Director 3.17 (MD&CEO)

Company Secretary# 17.95

Chief Financial Officer 3.97

#car wdv amount and foreign LTC is included in the income.

c. The percentage increase in the median remuneration of employees in the financial year: 14.43 percent

d. The number of permanent employees on the rolls of the Company : 1588

e. The explanation on the relationship between average increase in remuneration and Company performance:

The Company''s profit before tax has increased by 15.14 percent during the year.

f. Comparison of the remuneration of the key managerial personnel against the performance of the Company:

0.055% ofthe net profit for the year.

g. Variations in the market capitalisation of the Company,

price earnings ratio as at the closing date of the current financial year and previous financial year:

Particulars 31 March, 31 March, % 2015 2014 Change

Market 22066.39 11894.91 85.51 capitalisation (Rs.in crore)

Price Earnings 15.92 9.03 76.30 Ratio

h. 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 15 % March, November, Change 2015 1994 (IPO)

Market Price (in Rs.) 437.25 12* 3543.75

*Adjusted face value on account of sub-division

i. 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 3.17%. The average annual increase in the salaries of the employees other than managerial personnel during the year was 14.40% on account of new recruitment and promotion.

j. Comparison of each remuneration of the key managerial personnel against the performance of the Company:

Particulars % of Net Profit After tax for F.Y. 2014-15

MD & CEO 0.025%

CS 0.017%

CFO 0.013%

k. The key parameters for any variable component of remuneration availed by the directors:

The annual performance review based on the key result area, profitability ofthe Company.

l. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year:

None.

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

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

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

Secretarial Auditor and Secretarial Audit Report:

Pursuant to section 204 of the Companies Act, 2013, the Company had appointed P S Gupchup, Practicing Company Secretary as its Secretarial Auditor to conduct the secretarial audit of the Company for the F.Y 2014-15. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. Report of the Secretarial Auditor for the F.Y 2014-15 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 filed, if any, and their disposal under section 22 ofthe 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 Chairman

Place: Mumbai Date: 30th June, 2015


Mar 31, 2014

To the members of LIC Housing Finance Limited.

The Directors are pleased to present the Twenty Fifth Annual Report together with the audited financial statements for the year ended 31st March, 2014.

Financial results

(Rs. in crore)

For the year For the year

ended 31st ended 31st

March, 2014 March, 2013

Profit before Tax 1,825.50 1,373.56

Tax Expense 508.32 350.36

Profit after Tax 1317.18 1023.21

Appropriations:

Special reserve & 370.00 270.00

Statutory reserve u/s 29Cof NHB Act

General reserve 200.00 400.00

Proposed dividend 227.10 191.77

Tax on dividend 38.48 32.35

Balance carried forward 481.60 129.09

to next year

1317.18 1023.21

Silver Jubilee Year

On 20th June, 2013 LIC Housing Finance Limited commenced its Silver Jubilee Year. The Company has over these years demonstrated the viability and importance of retail housing finance withstanding various ups and downs in the business cycle. LIC HFL has been one of the major players in the retail housing finance market in India and despite a number of new entrants in the industry, your Company continues to be one of the key player.

The Board of Directors sincerely acknowledges and appreciates the valuable support and guidance given by the shareholders, customers, financiers, employees and every other stakeholder who has been supporting the Company over the successful twenty-five years.

Dividend

Considering the performance during the year 2013-14, your Directors recommend payment of dividend for the financial year ended 31st March, 2014 of Rs. 4.50 per equity share of face value of Rs. 2/- per share (225 percent including special dividend of 25 percent, being commemoration of stepping into 25th illustrious year of operation), as against Rs. 3.80 per equity share of face value of Rs. 2/- per share for the previous

year. The total dividend outgo for the current year would amount to Rs. 265.58 crore including Dividend Distribution Tax of Rs. 38.48 crore, as Against Rs. 224.12 crore including dividend distribution tax of Rs. 32.35 crore, for the previous year.

Performance

Income and profit

The Company earned total revenue of Rs. 9,334.66 crore, registering an increase of 21.88 percent. The percentage of administrative expenses to the housing loans, which was 0.36 percent in the previous year, has come down to 0.34 percent during the year 2013-14.

Profit before tax and after tax stood at Rs. 1,825.50 crore and Rs. 1,317.18 crore respectively as against Rs. 1,373.56 crore and Rs. 1,023.21 crore, respectively, for the previous year. Profit before tax increased by 33 percent over the previous year while profit after tax showed same growth of 29 percent as compared to that of previous year.

Lending operations

Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of 4.56 percent during the year mainly due to overall slowdown in the economy. During the year, the Company sanctioned 1,37,753 individual housing loans for Rs. 25,437.20 crore and disbursed 1,41,107 loans for Rs. 24,289.73 crore. Housing loan to Individual i.e., retail loans constitute 95.24 percent of the total sanctions and 96.12 percent of the total disbursements for the year 2013-14 as compared to 93.82 percent and 95.36 percent respectively during the year 2012-13. The gross retail loan portfolio grew by over 17.85 percent from Rs. 75,147.46 crore as on 31st March, 2013 to Rs. 88,558.58 crore as on 31st March, 2014.

The cumulative sanctions and disbursements since incorporation, in respect of individual housing loans are:

Amount sanctioned : Rs. 1,52,349.37 crore

Amount disbursed : Rs. 1,39,594.86 crore

More than 16.80 lac customers have been serviced by the Company up to 31st March, 2014 since its inception.

Project loans:

The project loans sanctioned and disbursed by the Company during the year were Rs. 1,271 crore and Rs. 981.50 crore respectively. These loans are generally for short durations, giving better yields as compared to individual loans. The project loan which had shown a positive growth of 24.03 percent in the previous year has achieved a negative growth of 13 percent in the year under review.

Marketing and Distribution

During the year under review, efforts were undertaken to further strengthen the distribution network. The distribution network of the Company consists of 131 Area Offices (AO), 72 Business Centres (BC), 1 Extension Counter (EC) and 40 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 F. Y. 2013-2014, Rs. 10,884.43 crore was received by way of schedule repayment of principal through monthly installments as well as prepayment of principal ahead of schedule, as compared to Rs. 7,978.99 crore received last year.

Non-Performing Assets and Provisions

The amount of gross Non-Performing Assets (NPA) as at 31st March, 2014 was Rs. 609.00 crore, which is 0.67 percent of the housing loan portfolio of the Company, as against Rs. 471.22 crore i.e. 0.61 percent of the housing loan portfolio as at 31st March, 2013. The net NPA as at 31st March 2014 was Rs. 353.58 crore i.e. 0.39 percent of the housing loan portfolio vis-à-vis Rs. 275.94 crore i.e. 0.36 percent of the housing loan portfolio as at 31st March, 2013. The total cumulative provision towards housing loan portfolio as at 31st March, 2014 is Rs. 706.81 crore as against Rs. 694.55 crore in the previous year. During the year, the Company has written off Rs. 0.00385 crore of housing loan portfolio as against Rs. 31.37 crore during the previous year.

Resource Mobilisation

The Company raised funds aggregating to Rs. 29,931.27 crore through term loans from banks, Non-Convertible Debentures (NCD), NHB refinance and Public Deposits.

Non Convertible Debentures (NCD)

During the year, the Company issued NCD amounting to Rs. 21,000/- 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, 2014, NCDs amounting to Rs. 54,004/- crore were outstanding. The Company has been regular in making payment of principal and interest on the NCDs.

As at 31st March, 2014, there are 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 year, the Company has not issued any Subordinate Bonds and Upper Tier II Bonds. As at 31st March, 2014, the outstanding Subordinate Bonds and Upper Tier II Bonds

stood at Rs. 3,000/- crore. Considering the balance term of maturity as at 31st March, 2014, Rs. 2,500/- crore of the book value of the Subordinate Bond 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 Loan from Banks / LOC, Refinance from NHB

The total loans / LOC outstanding from the Banks as at 31st March, 2014 are Rs. 20,241.41 crore as compared to Rs. 20,482.14 crore as at 31st March, 2013. The Refinance from NHB as at 31st March, 2014 stood at Rs. 3,384.72 crore as against Rs. 2,470.18/- crore as at 31st March, 2013. During the year, the Company has availed Rs. 1,458.70 crore Refinance from NHB under Golden Jubilee Rural Housing Scheme, Rural Housing Fund, Energy Efficient Housing Refinance Scheme, Urban Housing Fund and Refinance for Women.

The Company''s long term loan facilities have been assigned the highest rating of ''CRISILAAA/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, 2014, the outstanding amount on account of public deposits was Rs. 1193.97 crore as against Rs. 773.60 crore in the previous year. The deposit base has increased from 10,038 to 16,401.

CRISIL has for the eighth 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.

158 deposits amounting to Rs. 4.52 crore which were due for repayment on or before 31st March, 2014 were not claimed by the depositors till that date. Since then, 29 depositors have claimed or renewed deposits of Rs. 1.01 crore. Depositors were intimidated through Company''s agency for Public Deposits namely Link Intime India Pvt. Ltd., regarding the maturity of deposits with a request to either renew or claim their deposits. Where the deposit remains unclaimed, reminder letters are sent to depositors periodically and follow up action is initiated through the respective agent.

As per the provisions of Section 205C of the Companies Act, 1956, deposits 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, though as on date no amount has become due for transfer to IEPF. The depositors are requested to claim their deposit amount and interest thereon as and when due or renew the same without delay.

Exemption from provision of Section 73(1) of the Companies Act, 2013.

In exercise of the powers under sub-section 1 of Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposits) Rules, 2014, the Central Government has granted exemption to the public deposit scheme of a Housing Finance Company registered with the National Housing Bank established under the National Housing Bank Act, 1987 (No. 53 of 1987).

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 16.38 percent (as against 12 percent prescribed by the NHB) as at 31st March, 2014 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 HFCs as prescribed by NHB from time to time. During the year NHB has prescribed that HFCs shall provide ''Most Important Terms and Conditions'' of housing loans which the Company has implemented 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.

Auditors

Joint Statutory Auditors M/s. Chokshi & Chokshi, Chartered Accountants, Mumbai having Registration No.101872W and M/s. Shah Gupta & Co., Chartered Accountants, Mumbai having Registration No.109574W hold office until the conclusion of the forthcoming Annual General Meeting (AGM) and are eligible for appointment. The Company has received a confirmation from them to the effect that their appointment, if made at the ensuing AGM would be in terms of Section 139 and 141 of the Companies Act, 2013 and Rules made there under.

The Board proposes to appoint M/s. Chokshi & Chokshi and M/s. Shah Gupta & Co. as Joint Statutory Auditors of the Company for financial year 2014-15.

Directors

Shri Dhananjay Mungale, Director resigned from the Board of Directors of the Company with effect from 1st August, 2013 on completion of directorship for nine years in terms of Code of Conduct for Board of Directors and Senior Management, adopted by the Company. The Board places on record its

appreciation of his valuable contributions, commitment and guidance made during his tenure.

Ms. Savita Singh, Director, retires by rotation at the ensuing AGM and is eligible for reappointment.

Shri S. K. Roy was appointed as Chairman of the Company by the Board with effect from 1st August, 2013 consequent upon Shri D. K. Mehrotra relinquishing his Directorship and Chairmanship on attaining superannuation. The Board places on record its appreciation of valuable contributions, commitment and guidance made by Shri D. K. Mehrotra during his tenure.

Shri V. K. Sharma on being elevated to the post of Managing Director of LIC of India, relinquished the post of Managing Director & CEO of the Company. The Board places on record its appreciation of his valuable contributions, commitment and guidance made during his tenure.

Ms. Sunita Sharma was appointed by the Board of the Company as Additional Director and Managing Director & CEO with effect from 5th November, 2013 for a period of three years in terms of nomination received from Life Insurance Corporation of India, subject to approval of shareholders at the forthcoming Annual Genral Meeting. As required under section 160 of the Companies Act, 2013, a Notice has been received from a Member proposing the name of Ms. Sunita Sharma for the office of a Director.

Shri T. V. Rao was appointed as Additional Director of the Company by the Board with effect from 1st August, 2013. As required under section 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of Shri T. V. Rao for the office of a Director. Shri T. V. Rao 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 T. V. Rao fulfils the conditions specified in the Act, for such appointment.

Shri S. B. Mainak was appointed as Additional Director of the Company by the Board with effect from 3rd July, 2014 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 Shri S. B. Mainak for the office of a Director.

All the above 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.

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 Equity 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 supports the broad principles of Corporate Governance. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity.

Corporate Social Responsibility

In accordance with the provision of Section 135 of the Companies Act, 2013, the Company is required to constitute a Corporate Social Responsibility (CSR) Committee of Directors comprising atleast three Directors including an Independent Director.

The Board at its meeting held on 16th January, 2014 constituted the CSR Committee. The CSR Committee will monitor the implementation of the CSR Policy and apprise the Board accordingly.

The Company has identified the fields it would like to focus its energy on Education Health, Livelihood, Infrastructure development and Social Development.

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review, as stipulated under clause 49 of Equity the Listing Agreement with Stock Exchanges is presented in a separate section forming part of the Annual Report.

Business Responsibility Report

In accordance with the provisions of Clause 55 of the Equity Listing Agreement, the Business Responsibility Report (BRR) is presented in a separate section forming part of the Annual Report.

Depository system

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 at 31st March, 2014, 10,558 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.

Particulars Regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

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 2013-14 are given at item No.12 and No.13 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 has been given by the Joint Statutory Auditors.

The Company has an in-house internal audit system for Back Offices conducted by the Audit department 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 made by borrower/s while availing the housing loans.

Outlook for 2014-15

The initiatives taken by the Company during the year are expected to improve its operational and financial performance. During FY 2014-15, the Company proposes:

- To grow business qualitatively by consolidating our 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 our business and managing it effectively.

- Focus on winning and retaining customers.

- Pursue new skills and expand knowledge in other departments or on competition without being limited by past practices.

- 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 rates of interest and 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 it due recognition. The technical committee constituted by the Ministry of Housing and Urban Poverty Alleviation has estimated housing shortage at 18.78 million during the 12th Five Year Plan period of which over 95 percent of housing shortage is estimated in the Economically Weaker Sections and Low Income Group categories. 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 31 st March, 2014 and of 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 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.

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, 2014, 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 promoting the Company was to establish and operate assisted community living centers for the senior citizens.

The Company had a brief turnaround in the financial year 2011 - 12 making a profit of Rs. 241.71 lac. Though for the fiscal 2013-14, there was a loss of Rs. 276.43 lac. However the Company is confident of posting profit during financial year 2014-15.

The project in Bangalore Phase II has been completed and handing over of the keys for Phase II was done on 12th August, 2013. The Bhubaneswar project is going ahead at full stream and we expect its completion within a year.

With life expectancy going up and number of elderly citizens rising year after year, it is expected that demand for care-homes would also increase. As a result, the Company is set on a growth trajectory keeping LIC & LIC HFLs'' vision for fulfillment of Corporate Social Responsibility at the main focus.

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 40 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.

LIC HFL FSL has forayed into the field of Pension after The Pension Fund Regulatory Authority of India (PFRDA) on 23rd July, 2013 granted the Certificate of Registration and Commencement of Business as Points of Presence (POP) for NPS, i.e, National Pension System. This new vertical started operations on 11th October, 2013.

The Company is a Corporate Agent for LIC of India and earned revenue of Rs. 56.02 Lac from it. As a Corporate Agent for LIC HFL for the Home Loan products, it earned revenue of Rs. 473.13 Lac from it. The revenue from General Insurance Business was Rs. 14.25 lac. The retail income from Mutual Funds, Public Deposits, Credit cards and NPS was Rs. 10.25 lac.

The company provides complete financial solution 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 term and for longer terms.

The Company has earned a Profit after Tax of Rs. 2.27 Crore for the financial year 2013-14 and recommended dividend @ 7 percent for FY 2013-14, for the fifth straight year. The Company during the year under review consolidated it operations in 40 locations across the country. The systematic approach along with the new initiatives taken during the earlier years are expected to drive the revenues in a positive direction and improve the operational and financial performance.

The Company has plans to expand on a selective basis and concentrate on strengthening the strong areas in the area of distribution of Home Loans and Life Insurance. The Company has started to make an impact in certain locations in the generation of revenue from the Home Loans. The Company will also focus on expanding the client base in the other verticals. The Company would evaluate the right opportunities for growth, profitability and value addition to its share holders.

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 LIC HFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds) Regulations, 1996. The Fund launched its maiden Scheme viz. LIC HFL 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. The Fund is managed by LICHFL Asset Management Company Ltd. as Investment Manager. The Fund has started investing in the Investee Companies at the project level.

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 etc. 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 viz. LICHFL Urban Development Fund. The Company has successfully raised total commitments of Rs. 529.35 crore to LICHFL Urban Development Fund through Banks, Financial Institutions, Corporate and HNIs as against the targeted size of Rs. 500 crore. 30th March, 2013 was announced as Final Closure Date of the Fund. Investment proposals of Rs. 136 crore have been approved so far and based on milestone achievement Rs. 86 crore has been invested till 31st March, 2014 across four portfolio companies in Bangalore and Pune. The second drawdown of Rs. 46.04 core (8.70 percent of aggregate capital commitment) has been drawn during 2013-14.

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 express 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 to the growth of the Company.

For and on behalf of the Board

Chairman

Place : Mumbai

Date : 3rd July, 2014


Mar 31, 2013

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.

Financial results

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

Appropriations:

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

1712.14 1445.03

Dividend

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 previous year.

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, 2013.

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. 1,15,305.13 crore

More than 15.56 lakh customers have been serviced by the Company up to 31st March, 2013 since its inception.

Project loans:

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.

Fund raising

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 FAAA/ STABLE.

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 Placement.

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(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.

Directors

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.

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. 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.

Depository system

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.

Public deposits

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 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 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.

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 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 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.

- 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 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.

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, 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 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 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 due course.

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 holders.

REVENUE RATIO YEAR WISE FOR CORPORATE AND RETAIL FROM 2009 TO 2013

(in lakhs)

Income Expense

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

REVENUE RATIO

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 activities.

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 investment advisor.

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.

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, 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

Chairman

Place : Mumbai

Date : 26.04.2013


Mar 31, 2012

To the members of LIC Housing Finance Limited.

The Directors have great pleasure in presenting the Twenty Third Annual Report together with the audited accounts for the year ended 31st March, 2012.

Financial results

The Profit and Loss Account shows a profit before tax of Rs 1230.91 crore after writing off bad debts of Rs 0.03 crore and considering the amount of Rs 4.82 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 316.72 crore including Rs 7.00 crore in respect of earlier year and the profit after tax for the year is Rs 914.20 crore.

Taking into account the balance of Rs 530.83 crore being brought forward from the previous year, the distributable profit is Rs 1445.03 crore.

(Rs in crore)

For the year For the year ended 31st ended 31st March, 2012 March, 2011

Appropriations:

Special reserve 245.00 262.00

General reserve 300.00 350.00

Proposed dividend 181.68 166.13

Tax on dividend 29.42 26.93

Balance carried 688.93 530.83 forward to next year

1445.03 1335.89

Dividend

Considering the performance during the year 2011-12, your Directors have recommended a dividend of Rs 3.6 per equity share of Rs 2/- each (180 per cent), for the year ended under review. The total dividend outgo for the current year would amount to Rs 211.10 crore including dividend distribution tax of Rs 29.42 crore, as against Rs193.06 crore including dividend distribution tax of Rs 26.93 crore, for the previous year.

Performance

Income and profit

Profit before tax and after tax stood at Rs 1230.91 crore and Rs 914.20 crore as against Rs 1294.16 crore and Rs 974.49 crore respectively, for the previous year. Profit before tax decreased by 4.89 per cent over the previous year while profit after tax decreased by 6.19 per cent as compared to that of previous year. The fall in profit is mainly on account of reduction in other income being, sale of stake in associate companies during the previous year.

The Company earned total revenue of Rs 6215.12 crore, registering an increase of 27.65 per cent. The percentage of administrative expenses to the housing loans, which was 0.45 per cent in the previous year, has decreased to 0.38 per cent during the year 2011-12.

Lending operations Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of 17.52 per cent during the year. However, project loan has shown a negative growth of 62.10 per cent over previous year. During the year, the Company sanctioned 1,32,935 individual housing loans for Rs 20,751.98 crore and disbursed 1,34,668 loans for Rs 19,117.50 crore. Housing loan to Individual i.e., retail loans constitute 94.17 per cent of the total sanctions and 95.45 per cent of the total disbursements for the year 2011-12 compared to 89.48 per cent and 87.14 per cent respectively during the year 2010-11. The gross retail loan portfolio grew by over 28.11 per cent from Rs 46,800.27 crore as on 31st March, 2011 to Rs 59,958.20 crore as on 31st March, 2012.

The cumulative sanctions and disbursements since the incorporation, in respect of individual housing loans are:

Amount sanctioned: Rs 1,02,069.33 crore

Amount disbursed: Rs 92,074.86 crore

More than 13.30 lakh customers have been serviced by the Company up to 31st March, 2012 since its inception.

Project loans:

The project loans sanctioned and disbursed by the Company during the year were Rs 1282.52 crore and Rs 909.57 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, 2012 was Rs 265.22 crore, which is equivalent to 0.42 per cent of the housing loan portfolio of the Company, as against Rs 241.96 crore i.e. 0.47 per cent of the housing loan portfolio as on 31st March, 2011. The net NPA as on 31st March 2012 has increased to Rs 84.85 crore i.e. 0.14 per cent of the housing loan portfolio vis-a-vis Rs 39.76 crore i.e. 0.08 per cent of the housing loan portfolio as on 31st March, 2011. The total cumulative provision towards housing loan as on 31st March, 2012 is Rs 644.56 crore as against Rs 483.73 crore in the previous year. During the year, the Company has written off Rs 0.03 crore of housing loan portfolio as against Rs 0.63 crore during the previous year.

Fund raising

The Company raised funds aggregating to Rs 21,036.01 crore through term loans from banks, Non-Convertible Debentures (NCD), commercial paper, 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 FAAA/STABLE and commercial paper was rated 'CRISIL A1 ' by CRISIL.

Allotment of Equity Shares on preferential basis

The Company had issued 3,00,00,000 (three crore) equity shares on a preferential basis to promoter of the Company namely LIC of India. The Allotment money for full issue price of equity shares was received before the actual date of allotment and accordingly, necessary resolution for allotment of equity shares to LIC of India with all required provisions applicable under Companies Act, 1956, pursuant to provision of Memorandum and Articles of Association of the Company, listing agreements entered into between the Company and the concerned Stock Exchanges and Securities and Exchange Board of India's (SEBI) Regulations, was passed.

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 2012-13.

Directors

Shri Y B. Desai, Director, Shri Thomas Mathew T, Managing Director and Shri. A. S. Narayanamoorthy, Director resigned from the Board of Directors of the Company. The Board places on record its appreciation for their valuable contributions made by them during their tenure as members of the Board.

Shri K. Narasimha Murthy, Director and Shri B. N. Shukla, Director retire by rotation at the ensuing AGM and are eligible for reappointment.

Shri Sushobhan Sarker has been appointed by the Board of the Company as Managing Director in terms of nomination received from Life Insurance Corporation of India, subject to approval of shareholders at the forthcoming Annual General Meeting.

Shri Jagdish Capoor and Ms. Savita Singh have been appointed on the Board of the Company as Additional directors with effect from 25th May, 2012 subject to approval of shareholders at the forthcoming Annual General Meeting.

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. The capital adequacy was 16.69 per cent (as against 12 per cent prescribed by the NHB) as on 31st March, 2012 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 had 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 its shareholders in selecting depository participant. As on 31st March, 2012, 11,546 members of the Company continue to hold shares in physical form. As per the 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, 2012, the outstanding amount on account of public deposits was Rs 276.44 crore. 227 deposits amounting to Rs 7.21 crore which were due for repayment on or before 31st March, 2012 were not claimed by the depositors till that date. As on 30th April, 2012, 100 deposits amounting to Rs 1.47 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 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 2011-12 are given at item No.14 and No.15 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 2012-13

The initiatives taken by the Company during the year are expected to improve its operational and financial performance. During F.Y 2012-13, the Company proposes:

- 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.

- 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 also to 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 24.71 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, 2012 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, 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/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 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, 2012, 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 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 Directors had in the previous year foreseen a turnaround in the year 2011-12 and it did materialize in a big way.

From a loss of Rs 32.44 lakh in the previous year (2010-11) the Company did make a huge turn-around in the fiscal 2011-12,making profit of Rs 363.71 lakh before tax and Rs 241.71 lakh after tax.

With the demand for care-homes for elderly booming, the company is set on a growth trajectory keeping LIC's vision for fulfilment of Corporate Social Responsibility in the main frame.

The outlook for 2012-13 is indeed very promising with a profit of Rs 10 crore plus and a few projects set to take-off.

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 (life insurance and general insurance), credit cards, mutual funds, fixed deposits etc. It became operational in March 2009 and at present has got 38 offices all over the country. The Company earned a profit after tax of Rs 2.02 crore for the financial year 2011-12 and recommended dividend @10% for FY 2011-12. 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 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 line of business and would evaluate right opportunities for growth, profitability and value addition to share holders.

3. LICHFL Trustee Company Private Limited :

LICHFL Trustee Company Private Limited was incorporated on 5th March, 2008 for carrying on activities as a trustee to venture capital trusts and funds. The Company has registered LICHFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds) Regulations 1996.

The maiden scheme "LICHFL URBAN DEVELOPMENT FUND" has been launched and the first closure was announced in December 2011. The Company has appointed LICHFL Asset Management Company Ltd. as Investment Manager. The Fund has received more than Rs 240 crore commitments. With the positive response from institutional and non-institutional investors, it is expected to achieve final closure of the Fund soon.

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 investment advisor.

The Company has been appointed as Investment Manager to raise and manage the "LICHFL Urban Development Fund". The fund raising activities were started last year with positive response from the investors and the first closure of the Fund was announced in December 2011. The Company has approached Banks, Financial institutions, Corporate and HNIs and garnered more than Rs 240 crore commitments. The response from financial institutions and HNIs has been positive and more commitments are expected shortly. Final closure of the fund is expected soon. Demand for housing especially in mid income and affordable segments, continues to be driven by favourable demographics, rising disposable income and growing urbanization. There are opportunities available in the market for deployment of funds and the Company is in the process of evaluating the investment opportunities.

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, lenders 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

Place : Mumbai

Date : 25.05.2012


Mar 31, 2010

The Directors have great pleasure in presenting the Twenty First Annual Report together with the audited accounts for the year ended 31s March, 2010.

Financial results

The profit and loss account shows a profit before tax of Rs.911.26 crore after writing off bad loans of Rs.0.77 crore and considering the amount recovered of Rs.5.76 crore out of earlier write off and taking into account all expenses, including depreciation and prior period items, the profit before tax is Rs.911.26 crore. The provision for income tax, (net of deferred tax) is Rs.249.09 crore and the profit after tax for the year is Rs.662.18 crore.

Taking into account the balance of Rs.225.82 crore being brought forward from the previous year, the distributable profit is Rs.888.00 crore.

(Rs. in crore)

For the year For the year ended ended 31st March, 2010 31st March, 2009

Appropriations.

Special reserve 160.00 128.00

General reserve 200.00 150.00

Proposed dividend 142.39 110.41

Tax on dividend 24.20 18.76

Baiance carried for- 361.41 225.83 ward to next year

888.00 633.00

Dividend

Considering the good performance during the year 2009-10, your Directors have recommended a dividend of Rs.15 per equity share (150 percent), for the year ended under review, as against Rs.13 per equity share (130 percent) for the previous year 2008- 09. The total dividend outgo for the current year would amount to Rs.166.59 crore including Dividend Distribution Tax of Rs.24.20 crore, as against Rs.129 17 crore including dividend distribution tax of Rs.18.76 crore, in the previous year.

Performance

Income and profit

Profit before tax and after tax stood at Rs.911.26 crore and Rs.662.18 crore as against Rs.726.42 crore and Rs.531.62 crore, respectively, for the previous year. Profit before tax and profit after tax both increased by 25 percent as compared to that of previous year.

The Company earned a total income of Rs.3469.73 crore, registering an increase of 19.51 percent. The percentage of administrative expenses to the housing loans, which was 0.54 percent in the previous year, has decreased to 0.48 percent during the year 2009-10.

Lending operations

Individual loans:

The main thrust continues on individual loans with a disbursement growth of 69 percent as against 25 percent in the previous year. However, project loans were also given due weightage resulting in an overall disbursement growth of 70 percent over previous year. During the year, the Company sanctioned 1,01,828 individual loans for Rs.14,151.12 crore and disbursed 97,863 loans for Rs.12,447.73 crore during 2009-10. Housing Loan to Individual i.e.. retail loans constitute 78.43 percent of the total sanctions and 83.81 percent of the total disbursements for the year 2009- 10 compared to the last years figure of 75.11 percent and 83.94 percent respectively. The retail loan portfolio grew by over 34 percent from Rs.25,252.87 crore as on 31s1 March, 2009 to Rs.33,948.87 crore as on 31si March, 2010.

The cumulative sanctions and disbursements since the incorporation, in respect of individual loans are:

Amount sanctioned: Rs.61,090 crore

Amount disbursed: Rs.55,445 crore

More than 10,00,000 customers have been serviced by the Company up to 31st March, 2010 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. The project loans sanctioned and disbursed by the Company during the year were Rs.3,892.05 crore and Rs.2,405.20 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 31s March. 2010 was Rs.263 crore, which is equivalent to 0.69 percent of the housing loan portfolio of the Company, as against Rs.297 crore i.e. 1.07 percent of the housing loan portfolio as on 31st March, 2009. The net NPA as on 31s: March, 2010 is reduced to Rs.46.36 crore i.e. 0.12 percent of the housing loan portfolio vis-a- vis Rs.57 crore i.e. 0.21 percent of the housing loan portfolio as on 31st March, 2009. The total cumulative provision towards housing loan as on 31st March, 2010 is Rs.216.79 crore. During the year, the Company has written off Rs.0.77 crore of housing loan portfolio as against Rs.5.40 crore during the previous year.

Fund raising

The Company raised funds aggregating to Rs.17,004.35 crore through term loans from banks, Non-Convertible Debentures (NCD), upper tier II Bonds, commercial paper, NHB refinance and Public Deposit. The Companys NCD & Upper Tier II subordinate Bond issue and bank loans were rated AAA/Stable and Public Deposit was rated as FAAA/STABLE by CRISIL. The Company mobilised Rs.658 crore by private placement of equity through Qualified Institutional Placement.

Qualified Institutional Placement

To meet the growing needs, the Company raised funds through a Qualified Institutional Placement (QIP) of 10 million equity shares amounting to Rs.658 crore (US$ 137.10 million).

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 with 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 2010-11.

Directors

Shri B. N. Shukla, Director and Shri Y. B. Desai, Director retire by rotation at the ensuing Annual General Meeting 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 14.89 percent (as against 12 percent prescribed by the NHB) as on 31st March. 2010 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 31sl March, 2010. 14,046 members of the Company continue to hold shares in physical form. As per the Securities and Exchange Board of Indias (SEBI) instructions, the Companys 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 315t March, 2010, the outstanding amount on account of public deposits was Rs.326,19,37,820/-. 25 deposits amounting to Rs.65,14,500/- which were due for repayment on or before 31st March, 2010 were not claimed by the depositors till that date. As on the date of this report, 9 deposits amounting to Rs.5,50,000/- thereof have been claimed and paid. The interest due on the public deposits has been paid on time.

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 2009-10 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 interna! audit system which is being conducted inhouse instead of outside agency. Efforts are being continued to further strengthen the internal audit system to make it commensurate with the size and ihe nature of the business.

Systems and procedures are being upgraded to provide checks and alerts for avoiding fraud arising out of misrepresentation given by borrower/s while availing the housing loans

Outlook tor 2010-11

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.

- Supplementing its distribution channel by operationalising a new company LICHFL Financial Services Limited

- Incentivising and motivating the marketing intermediaries systematically for improving productivity.

- Raising funds through loans at attractive rate of interest and terms.

- Maintaining good relations with lenders for reducing overall cost of funds.

- 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.

Following the governments policy to provide shelter to a large number of people, the government offers a number of incentives to boost housing and housing finance activities. Some ot these are listed below:

1. The Union Budget 2010-11, continues with the tax concessions in respect of interest paid on loan raised for buying / construction of house property.

2. Rebate for repayment of housing loan under Section 80C of the Income-tax Act, 1961, of Rs.1,00.000/- is also continued for the year 2010-11

Base for tax rates of 10 percent, 20 percent and 30 percent have been widened and the maximum marginal rate of 30 percent is now applicable above Rs.8 lakh which was applicable above Rs.5 lakh foi AY 2C10-11 resulting in increased disposable income.

3. No change in the corporate income tax and cess rates. however, the rate of surcharge on corporate has been reduced to 7.5 percent from existing rate of 10 percent.

4. In the definition of the taxable services Construction of Complex service [(section 65 (105)(zzzh)] and Commercial or industrial construction service [section 65(105)(zzq)]. it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder / promoter / developer to the prospective buyer and the service tax would be charged accordingly.

5. Provisions of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. 2002. (SARFAESI Act) continue which help housing finance companies to foreclose bad loans without the intervention of the court and thereby improve NPA position.

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 clue 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./ million dwelling units at the beginning of the 11!h 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 judgment 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 31s1 March, 2010 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 buiid a competitive working environment. Productive high performing employees are vital to the Companys 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 Companys 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. The Company rewarded its employees with revision of remuneration and certain other terms and conditions of service. Apart from fixed salaries and perquisites, we also have in place performance-linked incentives which reward outstanding performers that meet certain performance targets. It had 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 financial statements along with the Report of the Directors of the Companys wholly owned subsidiaries namely LICHFL Care Homes Limited, LICHFL Financial Services Limited, LICHFL Trustee Company Private Limited and LICHFL Asset Management Company Private Limited for the year ended 31s March, 2010, 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 has pioneered the corporatised initiative in the sector of elder care in India by providing assisted community living centres to senior citizens. The Company launched its eco-friendly pilot project in Bangalore with cost-effective independent cottages and all other on-campus amenities, fully structured and self- contained to address every possible need of residents. It has library, community centre, home theatre, meditation centre, and doctors on call and ambulance to take the ailing to the nearest city Medicare centre - all that would make the lives of senior citizens comfortable and satisfying. Apart from this project, the Company has already purchased land for its new project at Bhubaneshwar and Jaipur. In respect of project at Bhubaneshwar, necessary approval are being obtained for implementation of the project and construction activities for the same will be initiated very soon. In respect of Jaipur project, effective step to obtain the approval from the authority has been initiated.

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 upto March 2010. The Company earned profit after tax Rs.78.19 lakh and declared first dividend @ 5 percent for FY 2009-10. The Company plans to open more offices in a phased manner.

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 fund. The Company plans to launch its first real estate venture fund by September 2010.

4. LICHFL Asset Management Company Private Limited:

LICHFL Asset Management Company Private Limited was incorporated on 14tn 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 selected Chief Executive Officer and would launch its operations very soon.

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 Companys 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

Date :2nd April, 2010

 
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