Mar 31, 2023
BOARDâS REPORT
To the Members of LIC Housing Finance Limited
Your Directors are pleased to present the Thirty Fourth Annual
Report together with the Audited Financial Statements
(standalone and consolidated) for the year ended 31st March,
2023 of LIC Housing Finance Limited (âthe Companyâ).
Particulars |
For the year |
For the year |
Profit before Tax |
3557.00 |
2778.15 |
Tax Expense |
(665.97) |
(490.87) |
Profit after Tax |
2891.03 |
2287.28 |
Other Comprehensive |
5.03 |
(4.72) |
Total Comprehensive |
2896.06 |
2282.56 |
Appropriations |
||
Special Reserve u/s |
984.99 |
859.99 |
Statutory Reserve u/s |
0.01 |
0.01 |
General Reserve |
850.00 |
700.00 |
Impairment Reserve |
- |
92.72 |
Dividend |
467.55 |
467.55 |
Balance carried |
593.51 |
162.29 |
2896.06 |
2282.56 |
The Company has transferred '' 984.99 crore to Special Reserve
u/s 36(1)(viii) of the Income-tax, Act., 1961 excluding ''0.01 crore
to the Statutory Reserve u/s 29C of NHB Act; and an amount of
''850 crore to General Reserve.
Hence, the total amount transferred to special reserve is '' 985
crore (including '' 0.01 crore to Statutory Reserve u/s 29C of
NHB Act) and '' 850 crore to General Reserves.
The Company has in place a Dividend Distribution Policy
formulated in accordance with the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015, which intends to ensure that a rationale
decision is taken, with regard to the amount to be distributed
to the shareholders as dividend, after retaining sufficient funds
for the Company''s growth, to meet its long-term objective and
other purposes. The Policy also lays down various parameters to
be considered by the Board of Directors of the Company before
recommendation of dividend to the Members of the Company.
Considering the performance of the Company during the
financial year 2022-2023, the Board of Directors felt the need
to strike a balance between being prudent and conserving
capital in the Company, while at the same time catering to
the expectations of shareholders, and also considering the
Dividend Distribution Policy and in terms of RBI Circular No.
DOR.ACC.REC.No.23/21.02.067/2021-22 dated 24th June, 2021 ,
have recommended payment of dividend for the financial year
ended 31st March, 2023 of '' 8.50 per equity share of face value
of ''2/- per share i.e., @ 425 percent . The total dividend outgo, if
declared by the shareholder at the 34th Annual General Meeting,
for the current year would amount to '' 467.55 crore, same as for
the previous year. The dividend payable shall be subject to the
approval of the Members of the Company at the ensuing Annual
General Meeting.
The dividend declared by the Company for the financial
year ended 31st March, 2023 is in compliance with the
Dividend Distribution Policy of the Company. The Dividend
Distribution Policy is available on the website of the Company
at https://www.lichousing.com/static-assets/pdf/
DIVIDEND%20DISTRIBUTION%20POLICY%202021.
pdf?crafterSite=lichfl-corporate-website-cms&embedded=true
and link of the same is provided in Annexure 5.
The Company has complied with the applicable Indian
Accounting Standards (Ind AS) notified by the Ministry of
Corporate Affairs under Section 133 of the Companies Act, 2013.
The financial statements for the year have been prepared in
accordance with Schedule III to the Companies Act, 2013.
The Company earned total revenue of '' 22674.20 crore for
the FY 2022-23 as compared to '' 19953.02 crore in the FY
2021- 2022, registering an increase of 13.64 percent, as compared
to previous year. The percentage of administrative expenses
to the housing loans, which was 0.40 percent in the previous
year, has reduced to 0.36 percent during the financial year
2022- 2023, mainly due to arrears of wages given in the previous
year which were included in employee benefits expenses.
Profit before tax and after tax for FY 2022-23 stood at '' 3557.00
crore and '' 2891.03 crore respectively as against '' 2778.15 crore
and '' 2287.28 respectively, for the previous year. The variance
was on account of increase in Interest income due to increase
in LHPLR by 2.10% till December 2022 which has impacted the
Interest Income during the Quarter. Most of the Loans given are
at Floating rate.
The Company is a Housing Finance Company registered
with National Housing Bank (NHB) and is mainly engaged in
financing purchase / construction of residential flats / houses
to individuals and project finance to developers, Loan against
Property (LAP), Lease Rental Discounting (LRD) etc. All other
activities revolve around the main business of the Company.
As at 31st March, 2023 the loan book consisted of 83.15 per cent
of IHL, 2.61 per cent of NHC, 9.97 per cent of NHI & 4.27 per cent
of project portfolio (As per IND-AS).
During the year the main thrust continued on individual
housing loans. The Company has sanctioned 1,94,398 Individual
Housing Loans (IHL) amounting to '' 53,140.33 crore and
disbursed 2,00,459 loans aggregating to '' 53,458.5 crore
during FY 2022-23. IHL constitute 82.92 percent of the total
sanctions and 83.38 percent of the total disbursements for the
FY 2022-23 as compared to 86.61 percent and 86.76 percent
respectively during the FY 2021-22. The gross IHL portfolio grew
by 12 percent from '' 2,04,230* crore as on 31st March, 2022 to
'' 2,28,730* crore as on 31st March, 2023.
The company has sanctioned 31,089 Non-Housing Individual
Loan (NHI) amounting to '' 7,298.54 crore and disbursed
31,975 loans amounting to '' 7,458.91 crore during the FY
2022-23. NHI constitute 11.39 percent of the total sanctions and
11.63 percent of the total disbursement for the FY 2022-23 as
compared to 9.93 percent and 10.57 percent respectively during
FY 2021-22. The gross NHI portfolio grew by 7.41 percent from
'' 25,519 crore as on 31st March, 2022 to '' 27,411 crore as on
31st March, 2023.
The company has sanctioned 75 Non-Housing Corporate
Loan (NHC) amounting to '' 547.44 crore and disbursed 80
loans amounting to '' 500.57 crore during the FY 2022-23.
NHC constitute 0.85 percent of the total sanctions and 0.78
percent of the total disbursement for the FY 2022-23 as
compared to 1.01 percent and 0.54 percent respectively during
FY 2021-22. The gross NHC portfolio decreased by 14.60 percent
from '' 8,393 crore as on 31st March, 2022 to '' 7,168 crore as on
31st March, 2023.
The cumulative sanctions and disbursements since incorporation,
in respect of IHL, NHI and NHC are:
Amount sanctioned: '' 5,74,305.18 crore
Amount disbursed: '' 5,52,270.11 crore
Since inception 35,07,395 customers have been serviced by the
Company up to 31st March, 2023. The number of live customers
on 31st March, 2023 were 15,19,771.
The project loans sanctioned and disbursed by the Company
during the year were amounting to '' 3,097 crore and '' 2,697
crore respectively. Corresponding figures for the previous year
were '' 1,563 crore and '' 1,311 crore. These loans are generally
for short durations, giving better yields as compared to the
individual housing loans.
⢠Winner of "Financial Inclusion & Future of Financial Services
in India - Vision 2030â Award under Large NBFC class
at the 17th Annual Summit & Awards Banking & Financial
Sector Lending Companies by ASSOCHAM
⢠Winner of "Best Housing Finance Company (Large)â at
PMAY Empowering India Awards 2022
⢠Kendriya Sainik Board felicitated the Company for CSR
contribution towards education of Veer Naaris & Single
Parent Children.
⢠Hon. Ramesh Bais, Governor of Maharashtra, accorded
Best Rural Development Project to Shri Y Viswanatha
Gowd, MD & CEO of the Company
⢠Indian Chamber of Commerce 5th Social Impact Awards
2022 bestowed to the Company for Empowering the Rural
Population across India.
During the year under review, efforts were taken to further
strengthen the distribution network. The distribution network
of the Company consists of 281 Marketing Offices and Customer
Service Points. The distribution network also includes 48 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.
During the F.Y. 2022-2023, '' 38,778.33 crore was received by
way of scheduled repayment of principal through monthly
instalments as well as prepayment of principal ahead of schedule,
as compared to '' 38,927.64 crore received in the previous year.
The amount of gross Non-Performing Assets (NPAs) as of
31st March, 2023 was '' 12,124.74 crore, which is 4.41 percent of
the loan portfolio of the Company, as against '' 11,616.40 crore
i.e., 4.64 percent of the loan portfolio as of 31st March, 2022.
The net NPA as of 31st March, 2023 was '' 6,743.52 crore i.e.
2.50 percent of the loan portfolio vis-a-vis '' 6596.73 crore i.e.
2.69 percent of the loan portfolio as at 31st March, 2022. The total
cumulative provision towards housing loan portfolio including
provision for standard assets as at 31st March, 2023 is '' 7,230.29
crore as against '' 5,839.12 crore in the previous year.
Company has written off '' 544.71 crore during the FY 2022-23,
in comparison to the amount of '' 23.03 crore which has been
written off in the previous year.
During the year, the Company mobilised funds aggregating to
'' 1,06,992.66 crore by way of the Non-Convertible Debentures
(NCD), Term Loans / Line of Credit (LoC) / Working Capital
Demand Loan (WCDL) from Banks, NHB refinance, Commercial
Paper and Public Deposits. The Company has availed refinance
of '' 2975 crore from NHB under affordable housing scheme at
very low rate. The following is a brief about the various sources
of fund mobilised during FY 2022-23:
During the year, the Company issued NCD amounting to
'' 29,555.50 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
âCRISIL AAA/Stable'' by CRISIL & ''CARE AAA/Stable'' by CARE.
As at 31st March, 2023, NCDs amounting to ''1,23,446.40 crore
were outstanding. The Company has been regular in making
repayment of principal and payment of interest on the NCDs.
As at 31st March, 2023, 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.
Accordingly, the amount of NCD remaining unclaimed or unpaid
beyond due date is Nil.
As at 31st March, 2023, the outstanding Tier II Bonds stood at
''1795.77 crore. Considering the balance term of maturity as at
31st March, 2023, ''1795.77 crore of the book value of Tier II Bonds
is considered as Tier II Capital as per the Guidelines issued by
NHB for the purpose of Capital Adequacy.
The total Term / LOC outstanding from the Banks as at 31st March,
2023 were '' 83,089.07 crore as compared to '' 68,143.04 crore
as at 31st March, 2022. The Refinance from NHB as at 31st March,
2023 stood at ''11,303.18 crore as against '' 8,304.18 crore as
at 31st March, 2022. During the year, the Company has availed
'' 5,200 crore Refinance from NHB under various refinance
schemes. As at 31st March, 2023, Commercial Paper amounting
to '' 13,513.59 crore were outstanding as compared to '' 8,364.22
crore for corresponding previous year. During the year
2022-23, the Company issued Commercial Paper amounting to
'' 17,668.89 crore from market as compared to '' 11,646.42 crore
for the previous year.
The Company''s long term loan facilities have been assigned the
highest rating of âCRISIL AAA/STABLE'' and short-term debt
has been assigned rating of âCRISIL A1 & ICRA A1 '' signifying
highest safety for timely servicing of debt obligations.
As at 31st March, 2023, the outstanding amount on account of
Public Deposits was ''3505.27 crore as against '' 4595.48 crore
in the previous year and outstanding amount on account of
Corporate Deposits was '' 8120.94 crore as against '' 13478.02
crore in the previous year. During F.Y. 2022-23, the number
of depositors has reduced for public deposit from 26156 to
21197 and for Corporate Deposit the same number reduced
from 1831 to 1180.
''957.85 crore has been collected as Public Deposits while
''5243.83 crore was collected as Corporate Deposits.
Total aggregate amount collected was ''6201.68 crore.
CRISIL has, for the sixteenth consecutive year, re-affirmed a
rating of "CRISIL AAA/Stableâ 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 mobilisation of deposits and making
the product a preferred investment avenue for individual
households and others.
Pursuant to the provisions of Sections 124 and 125 of the
Companies Act, 2013, rules made thereunder and Investor
Education and Protection Fund Authority (Accounting, Audit,
Transfer and Refund) Rules, 2016 read with the relevant
circulars and amendments thereto, the amount of dividend /
deposits remaining unclaimed for a period of seven years from
the date of transfer to unpaid dividend account is required to be
transferred to IEPF as constituted by the Central Government.
Further, as per the provisions of Section 124(6) of the Companies
Act, 2013 read with the Investor Education & Protection Fund
Authority (Accounting, Audit, Transfer & Refund) Rules 2016,
the shares in respect of which the dividend has not been claimed
for seven consecutive years are required to be transferred by
the Company to the designated demat account of the IEPF
Authority. The details of the unclaimed dividend/deposits and
the shares transferred to the IEPF, are uploaded on the website
of the Company, as per the requirements. Link for the same is
https://www.lichousing.com/investors-education
During the financial year under review, after giving due notice
to the members, your Company has transferred unclaimed
dividend of '' 1.30 crore pertaining to the financial year 2014-15
to the IEPF, established by the Central Government, on expiry of
seven years from the date of transfer to unpaid dividend account.
Pursuant to the provisions of Section 124(6) of the Companies
Act, 2013 and the Rules made thereunder, the Company has
transferred in aggregate 66,758 equity shares of ''2/- each to
IEPF in respect of which the dividend remained unclaimed for
a period of seven consecutive years i.e., from 2014-15 till the
due date of 29th September, 2022 in respect of which, individual
notice had also been sent to concerned Shareholders.
UNCLAIMED DEPOSITS
In total 610 Nos. of Fixed deposits amounting to ''53.62 crore
(out of which 589 are public deposits amounting to '' 18.51 crore)
which were due for repayment on or before 31st March, 2023
were not claimed by the depositors. Since then, 110 depositors
have claimed or renewed deposits of ''19.21 crore (out of which
103 are public deposits amounting to '' 4.86 crore) as on
30th June, 2023. Depositors were appropriately intimated for
renewal / claim of their deposits. Further, adequate follow-up
is initiated in respect of those cases where Fixed 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 30th June,2023 ''7.73 lakhs against unclaimed Principal
and ''12.78 lakhs against unclaimed interest on deposits has
been transferred to IEPF. Concerned depositors can claim their
refunds from the IEPF authority.
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.
Any person who is entitled to claim unclaimed dividend or
deposits etc. that have been transferred to IEPF, can claim the
same by making an application directly to IEPF in the prescribed
form under the IEPF Rules which is available on the website of
IEPF i.e., www.iepf.gov.in
REGULATORY COMPLIANCE
Following the amendment in the Finance Act, 2019 and the
subsequent notification by the Reserve Bank of India (RBI) in
August 2019, HFCs are being treated as one of the categories
of Non-Banking Financial Companies (NBFCs) for regulatory
purposes and accordingly come under RBI''s direct oversight.
The NHB, however, would continue to carry out supervision
of HFCs. In this regard Master Direction - Non-Banking
Financial Company - Housing Finance Company (Reserve
Bank) Directions, 2021 was notified on 17th February, 2021 in
supersession of the regulations/ directions as given in Chapter
XVII of these directions.
The Company has been following guidelines, circulars
and directions issued by the RBI/ NHB, from time to time.
The Company has complied with the Master Direction-Non¬
Banking Financial Company - Housing Finance Company
(Reserve Bank) Directions, 2021 and other directions/guidelines
prescribed by RBI regarding deposit acceptance, accounting
standards, prudential norms, capital adequacy, credit rating,
corporate governance, liquidity, information technology
framework, fraud monitoring, concentration of investments,
risk management, capital market exposure norms, Know
Your Customer, Anti-Money Laundering and the Company
also adopted the guidelines on maintenance of Liquidity
Coverage Ratio with effect from 1st December, 2021, as per RBI
master directions.
Your Company has been maintaining capital adequacy ratio
as prescribed by the RBI. The capital adequacy ratio was
18.23 percent as at 31st March, 2023, as against 18.08 percent
as at 31st March, 2021 (as against the regulatory minimum
of 15 percent).
The Company also has been following Directions / Guidelines /
Circulars issued by SEBI, MCA, NHB and RBI from time to time,
as applicable to a Listed Company.
During the year, the SBR guidelines have come into effect on
and from 1st October, 2022 and as per the RBI Circular DoR.FIN.
S4252/03.10.001/2022-23 dated 4th October, 2022. The Board
of the Company was required to ensure that the stipulations
prescribed in the SBR framework are adhered to within a
maximum time-period of 24 months from the date of the RBI
Press Release. Since the press release wherein the RBI had
released the list of NBFCs in the Upper Layer under the SBR
Regulations was issued on 30th September, 2022, which includes
the name of the Company, the maximum time period available
to the Board is 30th September, 2024. Accordingly, the Board
have already the year already adopted certain mandatory
policies prescribed under the SBR framework. Going forward
the Company under the SBR framework the Company is
required to implement Internal Capital Adequacy Assessment
Process (ICAAP) pursuant to which the Company is required to
assess the economic capital in addition to the CRAR through
an internal assessment which shall be on similar lines as ICAAP
prescribed for commercial banks under Pillar 2 (Master Circular
- Basel III Capital Regulations dated 01st July, 2015).
DISCLOSURE UNDER HOUSING FINANCE COMPANIES
FOR ISSUANCE OF NON-CONVERTIBLE DEBENTURES
ON PRIVATE PLACEMENT BASIS (NHB) DIRECTIONS,
2014 READ WITH MASTER DIRECTION - NON BANKING
FINANCIAL COMPANY - HOUSING FINANCE COMPANY
(RESERVE BANK) DIRECTIONS, 2021.
During the financial year under review, the Non-Convertible
Debentures issued on private placement basis, were repaid /
redeemed by the Company on their respective due dates and
there were no instances of any Non-Convertible Debentures
which have not been claimed by the investors or not paid by
the Company after the date on which the Non-Convertible
Debentures became due for redemption.
As per the guidelines for appointment of Statutory Central
Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks
(excluding RRBs), UCBs and NBFCs (including HFCs) issued by
the RBI vide ref. no. DoS.CO.ARG/SEC.01/08.91.001/2021-22
dated 27th April, 2021, the Company is required to appoint
the statutory auditors for a continuous period of three years,
subject to the firms satisfying the eligibility norms (to be
confirmed by the firms in Form B) each year and also to inform
RBI (i.e. Central Office of RBI (Department of Supervision))
about the appointment of SCAs/SAs for each year by way of
a certificate in Form A within one month of such appointment.
Accordingly, the Company has appointed the statutory auditors
namely M/s. SGCO & CO LLP, Chartered Accountants (Firm
Registration No.: 112081W/W100184) and M/s. Khandelwal Jain
& Co, Chartered Accountants (Firm Registration No.: 105049W)
as Joint Statutory Auditors of the Company (Hereinafter
collectively referred to as ''Joint Statutory Auditors'' / JSAs)
for a term of 3 consecutive years at Thirty Third AGM held on
29th September, 2022, to hold office until the conclusion of
the Thirty Sixth Annual General Meeting to be held in the year
2025. The intimation regarding the same was also given to the
NHB, RBI & MCA.
The Auditors'' Report for FY 2022-23 does not contain any
qualification, reservation or adverse remark on the financial
statements for the year ended 31st March, 2023. The notes on
financial statements referred to in the Auditors'' Report are
self-explanatory and do not call for any further comments.
The Joint Statutory Auditors'' Report dated 16th May, 2023 for the
financial year 2022-23 is enclosed with the financial statements
in this Annual Report
The RBI has vide Circular No. RBI/2021-22/53-DoS.
CO. PPG.SEC/03/11.01.005/2021-22 dated 11th June, 2021 made
the Risk Based Internal Audit (RBIA) Framework applicable to
the Company and the Company is required to put in place a
RBIA framework by 30th June, 2022, in accordance with the
provisions of the aforesaid circular. Accordingly, company has
put in place a RBIA policy and implemented RBIA.
The Company has an in-house mechanism for Internal Audit of
all its back offices which are the nodal offices looking after the
accounting, sanction and disbursement functions. Such Audit
is conducted by the team(s) of in-house officials of audit
department. The Company maintains an exhaustive checklist/
questionnaire for the purpose of such Audit and the same is
updated regularly. The in-house internal audit team(s) submit
quarterly reports in respect of the Back offices assigned to them
and such reports are periodically reviewed by the Internal Audit
Committee at Corporate Office, which is a management level
Committee at the Corporate Office. Detailed deliberations take
place in respect of key points related to Internal Audit Reports
and the same are also placed before the Audit Committee of the
Board for their information and guidance.
M/s. Borkar & Muzumdar, Chartered Accountants, Mumbai are
Internal Auditors for Internal Audit of the Corporate Office for
financial year 2022-23.
Going forward, the Management has decided to develop
capabilities internally for the RBIA Internal Audit of Corporate
Office from financial year 2023-24.
Currently, The Company has developed an in-house mechanism
for Internal Audit of Corporate Office. From FY 23-24 and
onwards the audit will be conducted by in-house officials of
audit department except certain specific areas which requires
special domain expertise. The appointment of such experts shall
be made with prior approval of audit committee.
Pursuant to the provisions of Section 204 of the Companies Act,
2013 and the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, M/s. N. L. Bhatia & Associates,
Practicing Company Secretaries, undertook the Secretarial
Audit of the Company for the financial year 2022-23.
The Secretarial Auditor''s Report for the financial year 2022-23
does not contain any qualification, reservation or adverse
remark. Report of the Secretarial Auditor for the financial year
2022-23 in Form MR-3 is annexed to this report as Annexure 6.
A certificate from M/s. N. L. Bhatia & Associates, Practicing
Company Secretaries, Mumbai (UIN: P1996MH055800),
regarding compliance of the conditions of Corporate
Governance as stipulated under the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 is attached to
the Corporate Governance Report, which does not contain any
qualification, reservation or adverse remark.
Maintenance of cost records and requirement of cost audit
as prescribed under the provisions of Section 148(1) of the
Companies Act, 2013 is not applicable for the business activities
carried out by the Company.
Corporate Governance
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. The said Report covers in detail
the Company''s philosophy on code of governance, board
composition, its appointments, membership criteria, declaration
by Independent Directors, Board evaluation, familiarisation
programme, vigil mechanism, etc.
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 and Sustainability Reporting by
listed entities
The Securities and Exchange Board of India (SEBI) introduced
new requirements for sustainability reporting by listed
entities. The new reporting called the Business Responsibility
and Sustainability Report (BRSR) has replaced the earlier
Business Responsibility Report (BRR). In terms of the aforesaid
amendment, with effect from the financial year 2022 -2023,
filing of BRSR is mandatory for the top 1000 listed companies
(by market capitalisation) and has replaced the existing BRR.
The Company has designated the CSR-ESG Committee* of
the Board to oversee the implementation of the Principles and
Policies of Business Responsibility and Sustainability Report
in the Company and delegated the powers to the CSR-ESG
Committee to perform all the acts, deeds and things for
implementation of the same. BRSR 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.
*Note: Considering the enhanced regulatory provision for
Environmental Social and Governance matters, a separate ESG
Committee was constituted and CSR-ESG Committee was
renamed as CSR Committee with effect from 07th June, 2023 on
approval at 236th Meeting of Board of Directors.
Depository system
For transaction of the Company''s 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, 2023, 4300
members of the Company continue to hold shares in physical
form. As per the SEBI circular, the Company''s shares have to be
transacted in dematerialised form and therefore, members are
requested to convert their physical holdings to dematerialised
form. Members may contact the R&T Agent for any assistance
in the said process of converting physical shares into DEMAT.
For the purpose of various compliances under the SEBI
Regulations, NSDL is the designated depository of the Company.
During the FY 2023-2024 the focus, resources and logistics of
the Company would be directed towards the following activities:
⢠Growing portfolio and increasing the share of high-margin
products - non-Core products and Griha Suvidha
⢠Tapping into newer markets not presently covered by
recruiting marketing intermediaries/connectors and
holding camp offices
⢠Solidifying the base of Direct Marketing Executive (DME)
/ Direct Marketing Intermediaries (DMIs) Channel by
recruiting new market intermediaries and individuals and
increasing the share of business from this channel
⢠Reach out to new customers not covered under regular
norms with differentiated products backed by mortgage
insurance cover to improve yields
⢠Customising products to tap into niche segments like HNI
and Millennials/Gen Z segments of customers
⢠Implementing additional initiatives under Project RED to
drive automation in processing leading to improvement in
turn-around time
⢠Leveraging technology to ease customer onboarding,
streamline processes and expand scope of business
potential mapping
⢠Adopting digital transformation processes to bring
personalisation in customer servicing and enhancing
customer experience throughout loan journey
⢠Strengthening digital processes through
e-appraisal and PLO
⢠Making HomY application more effective and further easing
the customer onboarding process and endeavouring to
maximise the customer outreach
⢠Digital onboarding by more than 50%
(including through HomY)
⢠Making use of data and analytics for segment driven
customer acquisition
⢠Increasing the use of cloud-based office automation and
collaboration tool
⢠Modernising technology in line with growing business
needs and automation
⢠Increasing the emphasis on marketing activities in smart
cities to increase business share
⢠Implementing and stabilising Lending and
Accounting solutions
⢠Imparting continuous training to intermediaries and
marketing officials to increase productivity
⢠Cross-selling insurance products by exploring the role of
corporate agency and earning fee-based income
⢠Assessing Risk-Reward relationship in credit decision
making in view of the overall profitability
⢠Explore strategic tie-ups which may increase
customer touchpoints and also enable LIC HFL to offer
value-added services.
⢠Increasing presence in social media and augmenting
about customer engagement programs to increase
brand visibility.
The improving macro-economic environment and the rapid
pace of urbanisation and affordable mortgages spurred growth
of the Indian housing finance market. Inspite of the peaking
interest rates home loan industry showed its resilience, and
due to various price discounts and aggressive marketing
strategies adopted by the builder community as well as by the
Banks and Financial Institutions, the demand for real estate
increased and customers returned to the home loan market, the
Company fortified its market presence, enhanced profitability
and improved asset quality. The efforts of the Marketing
Intermediaries was also crucial in increasing the demand of
the home loans. The Company''s 10,000 strong active agency
force is the best among the financial institutions in India with the
widest reach to every nook and corner of the country.
During the year, the Company has always maintained its rate
of interest in line with the market dynamics. Its motto of Home
Delivery of Home Loans improved the customer experience
and delighted them with doorstep services. It maintains focus
on designing products that address the emerging needs of
customers. During the year, 4 new products were launched to
address the needs of customers in the non-core segment.
As it consolidated its position as the largest housing finance
player, the Company ramped up its presence across Tier 2&3
and smart cities by expanding its reach and tap the increasing
potential with the addition of areas offices. It also expanded
presence in new geographies, increased focus on high-yielding
loan against property and intensified the recovery efforts. It also
plans to strengthen its distribution network with more Direct
Marketing Executives (DMEs), and is working on enhancing
the business through digital connectors and strategic tie-ups.
It will continue with its journey of Home Distribution of
Home Loan (HDHL).
Known for its strong asset quality, the Company is further
strengthening its underwriting procedures and improving
operational flexibility, strengthening digital outreach and
focusing on customer contact. It continuously tracks and
analyses the performance of its loan portfolio to identify
potential areas of concern and takes corrective actions.
The Company has adopted an aggressive approach towards
recovery activities, with several follow-up mechanisms such
as tele calling, contacting borrowers, SMS, e-mails and other
communication on a regular basis. For chronic cases, action
under SARFAESI / NCLT is initiated to recover the loan.
The Company bolstered its digital initiatives to counter
competition and rolled out key business expansion strategies,
and is making effective use of data and analytics for
segment-driven customer acquisition. In recent past various
new technology-based initiatives were launched internally
as part of Project RED to enhance customer experience and
to drive automation in processing leading to improvement in
turn-around time. It also leverages technology to further ease
customer onboarding, streamline processes and expand the
scope of business potential mapping. Efforts are being taken to
make the HomY app even more effective and maixmise digital
onboarding go more than 50%. These efforts are helping the
Company improve upon TAT considerably.
Moving ahead, the Company plans to continue growing in the
individual home loan category. Further, it will also promote
its flagship products like Griha Varishta and Griha Suvidha,
serving the requirements of senior individuals covered under
the Defined Pension Benefit Scheme (DPBS). It will also serve
the segment with self-employed customers with less than 600
CIBIL score, with backing of the guarantee of Indian Mortgage
Guarantee Corporation (IMGC).
The Company ensures judicious management of treasury
and other aspects of operations to ensure co-ordinated and
result-oriented efforts in its business and to increase market
share. As far as borrowing is concerned, the Company would
endeavor to churn its borrowings to maintain minimum cost
of borrowing and have a better impact on the Net Interest
Margin. The Company has also been working on reducing its
delinquencies and bringing down non-performing assets as well
as fast-tracking recovery and monitoring. Through constant
review and upgradation of compliance initiatives, it endeavours
to put in place the best corporate governance practices.
To further expand its reach and deliver value to its shareholders,
it ensures judicious management of treasury and other aspects
of operations to ensure co-ordinated and result-oriented efforts
in its business and to increase market share.
Pursuant to section 134 of the Companies Act, 2013 read with
the Companies (Accounts) Rules, 2014, the Company has
complied with the compliance requirements and the details of
compliances under Companies Act, 2013 are enumerated below:
Pursuant to Section 92(3) read with Section 134(3)(a) of the
Companies Act, 2013, the Annual Return as on 31st March, 2023
is available on the website of the Company in the following link
(Please download the document and then try to view):
https://www.lichousing.com/annual-report-companies-act
Under Section 143(12) of the Companies Act, 2013, during the
year under review, neither the Joint Statutory Auditors nor
the Secretarial Auditor has reported to the Audit Committee,
any instances of fraud committed against the Company by
its officers or employees, outsiders, the details of which was
required to be mentioned in the Board''s report.
The Company complies with all applicable mandatory
Secretarial Standards issued by the Institute of Company
Secretaries of India.
CRISIL had reaffirmed its outstanding rating as ''CRISIL AAA/
Stable'' rating to the non-convertible debentures issue of LIC
Housing Finance Limited and has also reaffirmed its ''CRISIL
AAA/Stable/CRISIL A1 '' ratings on other debt instruments,
bank facilities and fixed deposit programme of the company.
Total Bank Loan Facilities Rated |
''130085.88 crore |
Long Term Rating |
CRISIL AAA/Stable |
Short Term Rating |
CRISIL A1 (Reaffirmed) |
''30000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Assigned) |
''6929 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''11705 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''199 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''15000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''15000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''15000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''5000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''10000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''15000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''25000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''25000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''25000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''25000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''25000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''5000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''5976 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''20000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
''4750 crore Tier II Bond |
CRISIL AAA/Stable |
Fixed Deposits Programme |
CRISIL AAA/Stable |
''17500 crore Commercial Paper |
CRISIL A1 (Reaffirmed) |
CARE had reaffirmed its outstanding rating as ''CARE AAA/
Stable'' rating to the non-convertible debentures and Tier II
Bond issue of LIC Housing Finance Limited.
''41000 crore Non¬ |
CARE AAA / Stable (Assigned) |
''212441 crore Non¬ |
CARE AAA / Stable (Reaffirmed) |
''3000 crore Tier II Bond |
CARE AAA / Stable (Reaffirmed) |
ICRA Limited had reaffirmed ICRA A1 rating to the ''17,500 crore
commercial paper issue of LIC Housing Finance Limited and has
reaffirmed its ICRA A1 which is one notch higher than [ICRA]A1.
During the year under review, nine (9) Board meetings were
held. Detailed information on the meetings of the Board as well
as Committee meetings, their composition and attendance
record of the members of respective Committees of the Board
are included in the Report on Corporate Governance which
forms part of this Annual Report.
The financial statements are prepared in accordance with
Indian Accounting Standards (Ind As) under the historical
cost convention on accrual basis except for certain financial
instruments, which are measured at fair values, the provisions
of the Companies Act, 2013 (to the extent modified), guidelines
issued by the SEBI, guidelines issued by the NHB and the RBI
(Collectively referred to as ''the Previous GAAP'').
The Ind AS are prescribed under Section 133 of the Companies
Act, 2013 read with Companies (Indian Accounting Standards)
Rules, 2015, as amended from time to time, and other accounting
principles generally accepted in India. Accounting policies
have been consistently applied except where a newly issued
accounting standard is initially adopted or a revision to an
existing accounting standard requires change in the accounting
policy hitherto in use.
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 had 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 as
at 31st March, 2023 and of the profit of the Company for the
year ended on that period;
(c) the Directors had 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 had prepared the annual accounts on a
going concern basis;
(e) the Directors had laid down internal financial controls to be
followed by the Company and that such internal financial
controls are adequate and are operating effectively.
Note on internal financial control is attached as Annexure 1
to this Report and
(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:
The Company has received necessary declaration from each
Independent Director under Section 149(7) of the Companies
Act, 2013 that he / she meets the criteria of independence
laid down in Section 149(6) of the Companies Act, 2013 and
Regulation 16(1)(b) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015.
COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT
AND REMUNERATION INCLUDING CRITERIA:
The Company endeavours to have an appropriate mix of
executive, non-executive and independent directors to maintain
the independence of the Board and separate its functions
of governance and management. As of 31st March, 2023, the
Board had Eleven (11) members, consisting of two (2) Executive
Directors nominated by LIC of India (''The Promoter'') which
includes the Managing Director & CEO and Chief Operating
Officer (''COO'')1; two (2) Non-Executive and Non-Independent
Directors, while the remaining seven (7) were Independent
Directors including one Independent woman director.
The Nomination and Remuneration Committee had laid down
Criteria for determining Director''s 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 9th February, 2023.
We affirm that except Nominee Director (Chairman, LIC Director,
Managing Director & CEO and COO), sitting fees were paid to all
the other Directors for Board and Committee Meetings attended
by them. However, Managing Director & CEO and COO were
paid remuneration as applicable to an Officer in the cadre of
Zonal Manager (Selection Scale) of LIC of India and PLI as per
the terms laid out in the Nomination and Remuneration Policy
of the Company.
QUALIFICATION, RESERVATION OR ADVERSE
REMARK OR DISCLAIMER MADE BY JOINT STATUTORY
AUDITORS AND SECRETARIAL AUDITOR:
There has not been any observations, qualification, reservation
or adverse remark in the Joint Statutory Auditors'' Report dated
16th May, 2023 for the financial year 2022-23.
The management accepts responsibility for establishing
and maintaining internal controls and have evaluated the
effectiveness of some internal control system of the Company
which have been disclosed to the Auditors and the Audit
Committee, the deficiencies, of which the management is aware
of, in the design or operation of the internal control systems and
have taken the steps to rectify these deficiencies.
PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS:
Pursuant to Section 186(11) of the Companies Act, 2013, loans
made, guarantee given or security provided by the HFC 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) OF THE COMPANIES ACT, 2013 READ WITH
RULE 8(2) OF COMPANIES (ACCOUNTS) RULES, 2014:
Considering the nature of the industry in which the Company
operates, all Related Party Transactions that were entered during
the financial year were in the ordinary course of the business of
the Company and were on an arm''s length basis. There were no
materially significant related party transactions 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. All such Related Party Transactions
are placed before the Audit committee and Board of Directors
for approval, wherever applicable. Prior omnibus approval as
per SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 were obtained from Audit Committee for the
Related Party Transactions of repetitive nature as well as in the
ordinary course of business.
The Related Party Transactions Policy and Procedures,
as amended from time to time, as reviewed by the Audit
Committee and approved by Board of Directors is uploaded
on the website of the Company and the link of the same is
provided in Annexure 5.
The particulars of contracts or arrangements with the ''Related
Parties'' referred to in sub-section (1) of Section 188 of the Act,
are furnished in Note No. 49 of the Notes forming part of the
Standalone Financial Statements and Note No. 50 of the Notes
forming part of the Consolidated Financial Statements for FY
2022-23, forming a part of the Annual Report. This apart the
same is also referred in Annexure 3 which forms part of the
Board''s Report.
Form AOC-2 pursuant to clause (h) of sub-section (3) of Section
134 of the Companies Act, 2013 and Rule 8(2) of the Companies
(Accounts) Rules, 2014 is annexed as Annexure 2 to this report.
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. 31st March, 2023
and the date of the Board''s Report i.e. 24th July, 2023.
Since the Company is engaged in financial services activities, its
operations are not energy intensive nor does it require adoption
of specific technology and hence information in terms of Section
134(3)(m) of the Act read with the Companies (Accounts) Rules,
2014 is not provided in this Board''s Report.
(i) The efforts made towards technology absorption
- Various initiatives under Project RED got
implemented. Among them is the most crucial, core
lending system. The new lending system will enable
an integrated approach towards digital lending
with many peripheral applications being part of it.
Other implementations include:
⢠Treasury automation
⢠Customer servicing using digital channels like
Bots, whatsapp etc.
⢠Deposits automation
⢠Compliance to regulatory framework like
AML & KYC
(ii) The benefits derived like product improvement,
efforts to reduce cost of fund, product development or
import substitution - The benefits are mainly towards:
⢠Reduced TAT for customer onboarding
⢠Digital lending and STP process
⢠Phygital journey enables lesser
paper consumption
⢠Online payment services
(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
The foreign exchange earned in terms of actual inflows
during the year and the foreign exchange outgo during the
year in terms of actual outflows.
During the year ended 31st March, 2023, the Company does
not have any foreign exchange earnings and the foreign
exchange outgo was ''1.42 crore. This does not include
foreign currency cash flows in derivatives and foreign
currency exchange transactions.
The Board of Directors of the Company has constituted 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.
Under risk management mechanism, 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.
The Company has appointed Chief Risk Officer as per the
relevant NHB Circular. With effect from 01st May, 2023 Company
appointed Mr. J Sangameswar as the Chief Risk Officer in place
of Mr. K Ramesh.
The Company has a Risk Management Policy in place.
During the financial year under review, the Risk Management
Policy of the Company was reviewed and put up to the Board of
Directors. The same was approved in the Board Meeting dated
02nd March, 2023.
The Company framed the Remuneration Policy in order to align
with various provisions under SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and RBI Circular
DOR.GOV.REC.No.29/18.10.002/2022-23 dated 29th April, 2022.
The Remuneration policy relating to the remuneration
of Directors, Key Managerial Personnel and other
employees is as below:
The Non-Executive Directors would be paid such amount of
sitting fees as decided from time to time for every Board and
Committee Meeting they attend. Apart from sitting fees no
other remuneration / commission would be payable to them.
In future, if Company decides to pay any remuneration /
commission to Non-Executive Independent Directors, then the
same will be in compliance with Regulation 17(6) of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations,
2015 as amended from time to time.
The Non-Executive Nominee Directors would not be paid any
sitting fees for the Board and Committee Meetings they attend.
The Non-Executive Nominee Directors are not paid any salary
and / or other benefits by the Company.
The Executive Nominee Directors who are designated as
Managing Director & CEO and COO are paid remuneration as
applicable to an Officer in the cadre of Executive Director of
LIC of India. This apart, the Executive Nominee Directors are
entitled for PLI as per criteria approved by the Nomination and
Remuneration Committee of the Board.
As and when there is any revision in the pay scales of the
Executive Nominee Director as per the charter decided by the
LIC of India, then the same is made applicable to the Executive
Nominee Director at par with those of the officials in the similar
cadre. Further, tenure and terms and conditions of appointment
of Executive Nominee Director are as decided by LIC of India
from time to time and as approved by the Board of Directors
of the Company.
However, the remuneration payable to Executive Nominee
Director at any point of time shall be within the limits specified
as per Regulation 17(6) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 as amended
from time to time , read with the applicable provisions of the
Companies Act, 2013.
In the present set up of the Company, Key Managerial Personnel,
other than Managing Director & CEO, are Company Secretary
and Chief Financial Officer. Remuneration payable to Company
Secretary, Chief Financial Officer and other employees is as
decided by the Board of Directors as per Service Terms, Conduct
Rules 1990 as amended from time to time.
Except Managing Director & CEO who is a whole time Executive
Director, none of the Directors of the Company is paid any other
remuneration or any elements of remuneration package under
major groups, such as salary, benefits, bonuses, stock options,
pension, performance linked incentive etc.
In compliance with Section 135 of the Companies Act, 2013 read
with the Companies (Corporate Social Responsibility Policy)
Rules, 2014, as amended from time to time, the Company has
established Corporate Social Responsibility Committee and the
statutory disclosures with respect to the CSR Committee and
an Annual Report on CSR activities is annexed as Annexure 4
to this report.
Shri Akshay Rout |
Chairman |
Non-executive Director |
Shri Y.Viswanatha Gowd |
Member |
Managing Director & CEO |
Ms J. Jayanthi |
Member |
Independent Director |
The Nomination and Remuneration Committee had
recommended Criteria for evaluation of Directors, Chairperson,
Non-Executive Directors, Board level committee and Board of
Directors as a whole and the evaluation process of the same.
The Board of Directors, other than the independent directors,
carried out an annual evaluation of its performance, board level
committees and Individual Directors pursuant to the provisions
of the Companies Act, 2013 and the Corporate Governance
requirements as prescribed by the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 through circulation.
At the Independent Directors meeting held on 9th February 2023,
the Independent directors carried out the evaluation of the
performance of the rest of the Board Members.
The performance of the Board was evaluated after seeking
inputs from all the Directors based on 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 various Board Committee was
evaluated by the Board after seeking inputs from the respective
committee members, on the basis of criteria such as the
composition of committee, effectiveness of committee meeting,
functioning, etc.
The Board 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 the Chairman were evaluated.
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 along with its subsidiaries and associates, in the
same form and manner as that of the Company which shall be
laid before the ensuing Thirty Fourth Annual General Meeting
of the Company along with the Company''s Financial Statement
under sub-section (2) of Section 129 i.e. Standalone Financial
Statement. Further, pursuant to the provisions of Indian
Accounting Standard (Ind AS) 110, Consolidated Financial
Statements notified under Section 133 of the Companies Act,
2013 read with Rule 7 of the Companies (Accounts) Rules, 2014,
issued by the Ministry of Corporate Affairs, the Consolidated
Financial Statements of the Company along with its subsidiaries
and associates for the year ended 31st March, 2023 form part of
this Annual Report.
In accordance with the provisions of Section 136 of the
Companies Act, 2013, the Annual Report of the Company, the
Annual Financial Statements and the related documents of the
Company''s subsidiary and associate companies are hosted on
the website of the Company.
THERE HAS BEEN NO CHANGE IN THE NATURE OF
BUSINESS OF THE COMPANY DURING THE YEAR
UNDER REVIEW.
Directors:
As on 31st March, 2023, the Board had Eleven members,
consisting of two executive Directors nominated by the
promoter, LIC of India which includes the Managing Director
& CEO, Shri Y. Viswanatha Gowd, and the COO Shri Ashwani
Ghai(#) . Apart from these two (2) Nominee Directors, there
are two (2) Non-Executive and Non-Independent Directors
namely Shri P Koteswara Rao, and Shri Akshay Kumar
Rout. Other seven (7) Board Members are Independent
Directors including one Independent Woman Director namely
Ms. Jagennath Jayanthi. The other Independent Directors are
viz., Dr. Dharmendra Bhandari, Shri Ameet N Patel, Shri V.
K. Kukreja , Shri Kashi Prasad Khandelwal, Shri Ravi Krishan
Takkar and Shri Sanjay Kumar Khemani(2).
Shri M. R. Kumar, Chairman and Shri Raj Kumar, Non-Executive
Nominee Director resigned from the Board of the Company
on 13th March, 2023 and 09th February, 2023 respectively,
consequent upon their superannuation from the services to LIC
of India. The LIC of India nominated Shri Siddhartha Mohanty as
Chairman and Shri M Jagannath as Non-Executive Director with
effect from 05th April, 2023.
(#) Shri Ashwani Ghai resigned w.e.f 13th June, 2023 on account
of his transfer as Additional director to MDC Mumbai by LIC India.
Succession Planning:
In order to ensure stability and effective implementation of
long-term business strategies and for smooth transition at MD
& CEO level, the Board decided that new MD & CEO should
be posted in advance, say 4-6 months prior to his/her taking
charge as MD&CEO, as (Chief Operating Officer (COO) who
would subsequently take over as MD & CEO on retirement /
elevation / transfer of the existing MD & CEO.
In terms of Article 138(b) of the Articles of Association of
Company, LIC of India is entitled to nominate up to one third
of the total number of Directors of the Company and therefore,
the Board after consideration, approved posting of senior
official from LIC of India as Nominee of LIC of India for the
post of COO as part of succession plan for MD & CEO with a
view to ensuring stability and effective implementation , within
reasonable time (generally 4 to 6 months) prior to the exit of
the serving MD&CEO, of long term business strategies. . LIC of
India had posted Shri Ashwani Ghai as COO of the Company
with effect from 5th September, 2022 (date of Joining LICHFL
being 7th September, 2022) and subsequently was appointed as
Whole Time Director on 1st November, 2022 whose appointment
have been approved by the Members through Postal Ballot.
Further on account of transfer of Shri Ashwani Ghai on
13th June, 2023, LIC of India had posted Shri T Adhikari as COO
of the Company with effect from 22nd June, 2023 who will be
appointed as the Managing Director & CEO of the company in
place of Shri Yerur Viswanatha Gowd who will superannuate
from the Company on 31st July, 2023
Further, in terms of the Regulation 17 (4) of the SEBI (LODR),
2015 the Company has adopted a succession planning policy
for its Key Managerial and senior management personnel
which has been hosted on the website of the Company
on the below mentioned link:https://www.lichousing.
com/static-assets/pdf/Policy_on_Succession_Planning.
pdf?crafterSite=lichfl-corporate-website-cms&embedded=true
APPOINTMENTS / RESIGNATIONS OF DIRECTORS:
Appointments:
Shri Siddhartha Mohanty (DIN 08058830)
On the resignation of Shri M. R. Kumar (DIN 03628755) from
the Chairmanship of the Board of the Company, the Nomination
and Remuneration Committee in terms of ''Fit and Proper''
criteria adopted by the Board, after having undertaken process
of due diligence, and after considering Shri Siddhartha Mohanty
(DIN 08058830) suitable and eligible based on evaluation,
qualification, expertise, track record, integrity and ''fit and
proper'' criteria, recommended his appointment to the Board
and the Board appointed him as Chairman, Additional Director
in the capacity of Non-Executive Nominee Director of the
Company with effect from 05th April, 2023. Being appointed
as an Additional Director under Articles 143 of the Articles of
Association of the Company pursuant to the provisions of
Section 152, 161 and other applicable provisions, if any, of the
Companies Act, 2013 and the Rules made thereunder, SEBI
Listing Regulations, Master Direction - Non-Banking Financial
Company - Housing Finance Company (Reserve Bank)
Directions, 2021 including any amendment, modification,
variation or re-enactment thereof, for the time being in force
and in terms of Articles 141, 143 of the Articles of Association
of the Company, the appointment was put for approval of
members for voting through postal ballot. On approval of
shareholders through postal ballot, Shri Siddhartha Mohanty
was appointed as Chairman, Director of the Company with
effect from 28th June, 2023.
Shri Jagannath Mukkavilli (DIN 10090437)
On resignation of Shri Raj Kumar (DIN 06627311) as
Non-Executive Nominee Director of the Board of the Company,
The Nomination and Remuneration Committee in terms of
''Fit and Proper'' criteria adopted by the Board after having
undertaken process of due diligence, and after considering
Shri Jagannath Mukkavilli (DIN 10090437) suitable and
eligible based on evaluation, qualification, expertise, track
record, integrity and ''fit and proper'' criteria, recommended
his appointment to the Board and the Board appointed him as
Additional Director in the capacity of Non-Executive Nominee
Director of the Company with effect from 05th April, 2023.
Being appointed as an Additional Director under Articles 143
of the Articles of Association of the Company pursuant to the
provisions of Section 152, 161 and other applicable provisions, if
any of the Companies Act, 2013 and the Rules made thereunder,
SEBI Listing Regulations, Master Direction - Non-Banking
Financial Company - Housing Finance Company (Reserve
Bank) Directions, 2021 including any amendment, modification,
variation or re-enactment thereof, for the time being in force
and in terms of Articles 141, 143 of the Articles of Association
of the Company, the appointment as Director liable to retire
by rotation, under the provisions of Articles of Association
of the Company through a resolution to be passed through
postal ballot was put for consideration. On approval of the
shareholders through postal ballot, Shri Jagannath Mukkavilli
(DIN 10090437) was appointed as Non-Executive Nominee
Director of the Company with effect from 28th June, 2023.
Shri Ashwani Ghai (DIN 09733798)
Based on the evaluation, qualification, expertise, track record,
integrity, due diligence and the satisfaction of the ''fit and
proper criteria'', Nomination and Remuneration committee
recommended and thereby Board appointed Shri Ashwani Ghai
as Chief Operating Officer of the Company with effect from
05th September, 2022. He was inducted on Board of Directors
with effect from 01st November, 2022 as Additional Director
in the capacity of Whole Time Director. Subsequently, the
appointment was approved by the shareholders through postal
ballot on 18th December, 2022.
Shri Ravi Krishan Takkar (DIN 07734571)
As per the recommendation of the Nomination & Remuneration
Committee, which undertook process of due diligence, and
considered the candidature to be suitable and eligible based
on evaluation, qualification, expertise, track record, integrity
and ''fit and proper'' criteria, the Board at its meeting held
on 25th July, 2022, approved the appointment of Shri Ravi
Krishan Takkar (DIN 07734571), as an Additional Director
(Non Executive-Independent) for a period of five consecutive
years, not liable to retire by rotation. The Shareholders of
the Company approved his appointment in the 33rd Annual
General Meeting (AGM).
Shri M R Kumar (DIN 05190124) had tendered his resignation
from Directorship of the Company with effect from 13th March,
2023 on attainment of superannuation from the services
of LIC of India.
Shri Raj Kumar
Shri Raj (DIN 06627311) had tendered his resignation from
Directorship of the Company with effect from 09th February,
2023 on attainment of superannuation from the services
of LIC of India.
Shri Jagdish Capoor
The second term of Shri Jagdish Capoor (DIN 00002516)
as Independent Director of the Company came to an end on
23rd May, 2022 in terms of terms of the provisions of Section 149
(10) and (11) of the Companies Act, 2013.
Resignation of Shri Ashwani Ghai (DIN 09733798)
Shri Ashwani Ghai resigned as the COO and Whole Time Director
of the company with effect from 13th June, 2023 on account of
his transfer and appointment as Additional Director to MDC
Mumbai by LIC India.
Shri Akshay Kumar Raut who have been longest in office would
be retiring by rotation at the ensuing Annual General Meeting
and is eligible for re-appointment.
Shri Yerur Viswanatha Gowd, Managing Director & CEO,
Mr. Sudipto Sil, Chief Financial Officer and Ms. Varsha Hardasani,
Company Secretary & Compliance Officer, are the Key Managerial
Personnel (KMP) as per the provisions of the Companies Act, 2013.
During the financial year the following changes took place in the
positions of the KMPs:
Superannuation of Shri Nitin K Jage
Shri Nitin K Jage, General Manager (Taxation) & Company
Secretary (Membership no. FCS8084), superannuated on
31st May, 2022 after completing almost 27 years of service.
Appointment of Ms. Varsha Hardasani
Ms. Varsha Hardasani (Membership no. ACS50448), who possess
around 12 years of experience in Secretarial Compliances, Legal
Matters, Accountancy and Finance field across different sectors
and who apart from being a Company Secretary is also a Law
and Commerce Graduate and also possesses a Masters in
Accountancy & Finance, took charge as Company Secretary &
Compliance officer of the Company w.e.f. 1st June, 2022.
Resignation of Shri Ashwani Ghai (DIN 09733798)
Shri Ashwani Ghai resigned as the COO and Whole Time Director
of the company with effect from 13th June, 2023 on account of
his transfer and appointment as Additional Director to MDC
Mumbai by LIC India.
The Company has various Committees which have been
constituted 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:
I) Audit Committee
II) Stakeholders Relationship Committee
III) Nomination and Remuneration Committee
IV) CSR Committee*
V) Risk Management Committee
VI) Executive Committee
VII) Debenture Allotment Committee
VIII) Strategic Investment Committee
IX) IT Strategy Committee
X) Preferential Allotment Committee**
XI) Investment Committee***
XII) Committee for approval of issuance of Duplicate Share
Certificate(s)****
XIII) ESG Committee*
*Note: Considering the enhanced regulatory provision for Environmental
Social and Governance matters, a separate ESG Committee which earlier
was part of CSR-ESG Committee was formed and CSR-ESG Committee
was renamed as CSR Committee with effect from 07th June, 2023 on
approval at 236th Meeting of Board of Directors.
** Note: The Preferential Allotment Committee is an event based
Committee which had been constituted for the limited purpose of
allotment of the Equity Shares on private placement basis to the
promotors on 8th September, 2021.
***Note: The Investment Committee is an event based Committee which
has been constituted to meet only in case any investment proposals
needs to be considered. During the year there were two meetings of the
said Committee which were held.
****Note: Committee for approval of issuance of Duplicate Share
Certificate(s) has only been constituted to sign and approve the request
for issuance of Duplicate Share Certificate(s). The approval takes
place through circulation of the relevant documents to the signing
authorities based on their availability, no physical meeting of the said
Committee is held.
Composition of Audit Committee is as follows:
⢠Shri Kashi Prasad |
Chairman Independent Director |
|
⢠Shri Sanjay Kumar |
Member |
Independent Director |
⢠Smt Jagennath Jayanti |
Member |
Independent Director |
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 Report.
As on 31st March, 2023, 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, 2023, 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:
LICHFL Care Homes Limited, a wholly owned subsidiary
of LIC Housing Finance Limited, was incorporated on
11th September, 2001 with an authorised share capital of ''75
crore. The basic purpose of incorporating the Company
was to establish and operate ''assisted living community
centres'' for the senior citizens.
During the FY 2022-23, the Company reported Losses
before Tax of ''26.57 crore and Losses after Tax stood
at ''21.31 crore.
The Company has successfully completed a project at
Bangalore in two Phases and Jeevan Anand Project
at Bhubaneswar.
Further, the Company is in process to develop new Care
homes project at Jaipur, Rajasthan and Aluva, Kerala.
The Company is also in process to purchase land at
various locations across the Country. Going forward, these
projects are likely to further improve the overall operations
and stability of the Company.
The Company was incorporated on 14th February 2008.
The Company is in the business of managing, advising,
administering Private Equity Funds including Venture
Capital Fund (VCF) and Alternate Investment Fund (AIF)
The Company was appointed as Investment Manager in
2010 to raise and manage the LICHFL Sponsored, LICHFL
Urban Development Fund (LUDF). The Company has
raised total commitments of ''529.35 crore from Banks,
Financial Institutions, Corporates and HNIs as against
the targeted size of ''500 crore and announced financial
closure on 30th March, 2013. The Company has deployed
INR 461.30 crore in 9 Portfolio Companies, acquisition or
operation of affordable / mid income housing, related
infrastructure and Hospitals. With receipts from 7 exits, the
Fund has so far achieved an IRR of 25.34%.
The Company also launched a new Alternative Investment
Fund (AIF) namely LICHFL Housing & Infrastructure
Fund (LHIF), with a total corpus of ''1000 crore including
Green Shoe Option (GSO) of ''250 crore and the focus of
the Fund is on Affordable Housing and Property backed
Infrastructure in sectors which include Educational
Institutions, Hospitals, Industrial Parks & Warehouses.
As on 31st March 2022, the total Contribution Agreements
signed in respect of LICHFL Housing & Infrastructure Fund
is ''812 crore of which the drawable amount is ''765 crore.
The Company has recently registered a New Fund with
SEBI - LICHFL Real Estate Debt Opportunities Fund
- I on 30th March, 2021 under AIF Category II of SEBI
Alternate Investment Fund Regulations 2012 (AIF).
The Fund is having a target corpus of ''3,000 Cr (Base
corpus of ''2,000 Cr plus ''1,000 Cr as green shoe option).
The Fund is envisaged to be raised from both Domestic
and Overseas Investors. The focus sector of the Fund is
Housing. The Fund has received commitment of 300 crore
from LIC of India, 450 crore from LIC Housing Finance
Limited, 65 crore from Indian Bank and IDBI Bank.
During the FY 2022-23, the Company earned a Profit before
Tax (PBT) of ''10 crore and Profit after Tax (PAT) stood at
''7.55 crore. The Company has recommended dividend @
30% for FY 2022-23 on its paid up share capital.
3. LICHFL Trustee Company Private Limited
The Company was incorporated on 5th March, 2008.
The Company is undertaking the business of trusteeship
services for Venture Capital Funds (VCFs) and Alternative
Investment Funds (AIFs).
The Company was appointed as Trustee in 2010 for LICHFL
Fund and further appointed LICHFL Asset Management
Company Limited (LICHFL AMC) as Investment Manager
for the Fund. In 2010 the Company had registered LICHFL
Fund with SEBI as Venture Capital Fund (VCF) under
the SEBI (Venture Capital Funds) Regulations, 1996.
LICHFL Urban Development Fund achieved its financial
closure with ''529.35 crore on 30th March, 2013.
The Company was appointed as Trustee in 2017 for LICHFL
Housing & Infrastructure Trust (LHIT) and further appointed
LICHFL AMC Ltd. as Investment Manager for LICHFL
Housing and Infrastructure Fund (LHIF). The Company had
received registration for LHIF on October 2017 from SEBI
under Alternative Investment Fund Regulations, 2012 as
Category - I Infrastructure. LICHFL AMC launched LICHFL
Housing & Infrastructure Fund (LHIF) in October 2017
and achieved initial closing on 31st March, 2018. The Fund
announced its final closing on 31st March, 2021.
The Company is recently appointed as Trustee on
30th March, 2021 for a New Fund registered with SEBI
- LICHFL Real Estate Debt Opportunities Fund - I on
30th March, 2021 and appointed LICHFL AMC Ltd.
as Investment Manager for the Fund.
During the FY 2022-23, the Company earned a Profit
before Tax (PBT) of ''0.18 crore and Profit after Tax (PAT)
stood at ''0.16 crore.
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 loan, insurance products (Life and General
Insurance), mutual funds, fixed deposits, credit cards.
It became operational in March, 2008 and at present has
48 offices spread across the country.
The vision of the Company is "SARVESHAM POORNAM
BHAVATUâ - to provide complete financial solutionsâ
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 - right from financial planning
to manage every aspect of 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, Tata AIG General Insurance
Company Limited and HDFC ERGO General Insurance
Company Ltd., Health Insurance products of Aditya Birla
Health Insurance Co. Ltd. and Star Health and Allied
Insurance Co. Ltd., Credit Cards of LIC Cards Services
Limited and Point of Presence for National Pension System
(NPS). More business verticals will be added depending on
market opportunities and customer needs.
The Company has earned a Profit before Tax (PBT) of
''22.23 crore and Profit after Tax (PAT) stood at ''16.34
crore for the FY 2022-23 and recommended dividend @
30% for FY 2022-23 on paid up share capital of ''9.50 crore.
The Company is striving to improve its Performance across
all Business verticals in the coming years.
Name/s of Company/ies which have ceased / become
subsidiary/joint venture/associate: None
AS ON 31st MARCH, 2023, THE COMPANY HAS TWO
ASSOCIATE COMPANIES NAMELY LIC MUTUAL FUND
ASSET MANAGEMENT COMPANY LIMITED AND LIC
MUTUAL FUND TRUSTEE COMPANY PRIVATE 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 2023, has
been sent to all the members of the Company. It does not contain
Annual Reports of Company''s subsidiaries. The Company will
provide Annual Report of all subsidiaries upon request by any
member of the Company. These Annual Reports are 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
Subsidiary Company''s operations in future.
1. LIC Mutual Fund Asset Management Company
Limited (LICMFAMC)
LIC Mutual Fund was established on 20th April 1989 by
LIC of India. LIC Housing Finance Limited holds 39.30
% equity in this entity. Being an associate company of
India''s premier and most trusted brand, LIC Mutual Fund
is one of the well-known players in the asset management
sphere. With a systematic investment discipline coupled
with a high standard of financial ethics and corporate
governance, LIC Mutual Fund is emerging as a preferred
Investment Manager amongst the investor fraternity.
LIC Mutual Fund endeavours to create value for its investors
by adopting innovative and robust investment strategies,
catering to all segments of investors. LIC Mutual Fund
believes in providing delight to its customers and partners
by way of superior investment experience and unparalleled
service thereby truly bring them Khushiyaan, Zindagi Ki.
For the FY 2022-23 both the Profit before Tax (PBT) as
well as Profit after Tax (PAT) of LICMFAMC stood at ''1.08
crore, as there was no tax expense.
2. LIC Mutual Fund Trustee Company Private Limited
LIC Mutual Fund Trustee Private Limited (Trustee Company)
is the Trustee to the Mutual Fund, LICMFAMC. LIC Housing
Finance Limited holds 35.30 % equity in this entity. LIC of
India is the Sponsor of the Mutual Fund. The AMC either
directly or through third party service providers engaged
by the AMC (Service Providers) such as the Registrar and
Transfer agents collects, receives, possesses, stores, deals
or handles information received from investors/client/
customers whether existing or prospective.
The Company has earned a Profit before Tax (PBT) of
''1.59 lakhs and Profit after Tax (PAT) stood at ''1 lakhs for
the FY 2022-23.
FINANCIAL DETAILS OF SUBSIDIARIES
Pursuant to the provisions of Section 129(3) of the Companies
Act, 2013 (''the Act''), a statement containing salient features
of the financial statements of subsidiaries, joint venture and
associate companies in Form AOC-1 is attached to the financial
statements. The separate financial statements of the subsidiaries
are available on the website of the Company and can be
accessed at https://www.lichousing.com/subsidiary-financials.
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 1 is attached to this report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy in place which provides
whistle blowers an opportunity 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. The Vigil
Mechanism / Whistle Blower Policy is reviewed annually or
as and when the regulators amendments are required to be
incorporated therein, as the case may be.
During the period under review there was no concerns
or grievances reported under Vigil Mechanism/
Whistle Blower Policy.
EMPLOYEE STOCK OPTION:
The company does not have any Employee stock option scheme.
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:
Executive Director |
Ratio to median |
Shri Yerur Vishwanatha Gowd |
5:1 |
Shri Ashwani Ghai (WTD&COO) |
3:1 |
b. The percentage increase in remuneration of each
director, Chief Executive Officer, Chief Financial
Officer, Company Secretary in the financial year:
Non-Executive Directors |
% increase in |
(including Independent |
remuneration in the |
Directors)* |
financial year |
KMP |
% Increase in remuneration |
in the financial year |
|
MD&CEO |
9.22% |
WTD&COO |
N.A. |
Chief Financial Officer** |
28.21% |
Company Secretary*** |
N.A. |
c. The percentage increase in the median
remuneration of employees in the financial year:
15.33%
d. The number of permanent employees on the rolls
of the Company:
2462
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 |
31st March, |
15th November |
% |
2023 |
1994 (IPO) |
Change |
|
Market Price (in '') |
328.70** |
12* |
2639.17 |
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
9.22%. The average annual Increase in the salaries of the
employees other than managerial personnel during the
year was 15.33%.
g. Affirmation that remuneration is as per the
Remuneration Policy of the Company:
The Company affirms that the remuneration is as per the
Remuneration Policy of 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.
In terms of Section 136(1) of the Companies Act, 2013
read with the Rule 5(2) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014,
the Board''s 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 Company
Secretary, LIC Housing Finance Limited, Corporate Office,
131 Maker Towers, ''F'' Premises, 13th Floor, Cuffe Parade,
Mumbai - 400 005.
Prevention, Prohibition & Redressal of Sexual
Harassment of women at workplace:
As per the requirements of the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013, your Company has in place a Policy on
Prevention, Prohibition & Redressal of Sexual Harassment
of Women at Workplace and has a robust mechanism to
redress the complaints reported thereunder. An Internal
Committee has been constituted, which comprises of
internal members who have experience in the subject field.
Pursuant to the provisions of Section 22 of the Sexual
Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013, the complaints
received thereunder and the details relating thereto
are as follows:
(a) Number of complaints received in the year: Nil
(b) Number of complaints disposed of during the year: Nil
(c) Number of cases pending more than ninety days: Nil
(d) Number of workshops or awareness programme
against sexual harassment carried out: Nil
(e) Nature of action taken by the employer or
district officer: Nil
Your Company on a regular basis sensitises its employees
on prevention of sexual harassment through various
workshops, awareness programmes.
It may be mentioned here that 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 working in the Company.
The Company has received the notice for delay of compliance
under Regulation 57(1), 60(2), 17(1), 50(1) and 52(7)/(7A) of
Listing Regulations from Stock Exchanges total amounting
to '' 8,27,820/- against which waiver application has been
filed as the deviations were beyond the control of the
Company. The matter is presently under consideration of the
Stock Exchange(s).
Pursuant to the letter from RBI dated 31/10/2022, in relation
to non-compliance to provisions of relevant directions under
Sub-sections (1) & (2) of section 29 B of the NHB Act. the Company
was levied a penalty of '' 5,00,000/-. The Company has paid the
penalty on 07th November ,2022.
The Company confirms that these are not significant or
material in nature.
The Company aims to align HR practices with business goals,
increase productivity of Human resources by enhancing
knowledge, skills and to provide a conducive work environment
to develop a sense of ownership amongst employees.
Productive high performing employees are vital to the
Company''s success. The contribution and commitment of the
employees towards the performance of the Company during
the year were valued and appreciated. The Company recruited
employees during the year for various positions and promoted
employees to take up higher responsibilities. Apart from fixed
salaries, perquisites and benefits, the Company also has in
place performance-linked incentives which reward outstanding
performers, who meet certain performance targets. In pursuance
of the Company''s commitment to develop and retain the best
available talent, the Company had organised and sponsored
various training programmes / seminars / conferences for
upgrading skill and knowledge of its employees in different
operational areas.
Employee relations remained cordial, and the work atmosphere
remained congenial during the year.
The Directors place on record their appreciation for the advice,
guidance and support given by the Life Insurance Corporation
of India, the National Housing Bank, the Reserve Bank of India
and all the bankers of the Company. The Directors also place on
record their sincere thanks to the Company''s clientele, lenders,
investors 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: 24th July, 2023
Mar 31, 2022
Your Directors are pleased to present the Thirty Third Annual Report together with the Audited Financial Statements for the year ended March 31, 2022 of LIC Housing Finance Limited (''the Company'').
('' in crore) |
||
Particulars |
For the |
For the |
year ended |
year ended |
|
March 31, 2022 |
March 31, 2021 |
|
Profit before Tax |
2,778.15 |
3,348.57 |
Tax Expense |
(490.87) |
(614.23) |
Profit after Tax |
2,287.28 |
2,734.34 |
Other Comprehensive Income |
(4.72) |
(2.40) |
Total Comprehensive Income |
2,282.56 |
2,731.94 |
Appropriations |
||
Special Reserve u/s 36(1)(viii) of the Income Tax Act,1961 |
859.99 |
829.99 |
Statutory Reserve u/s 29C of NHB Act,1987 |
0.01 |
0.01 |
General Reserve |
700.00 |
700.00 |
Dividend |
467.55 |
403.73 |
Balance carried forward to next year |
255.01 |
798.21 |
2282.56 |
2731.94 |
The Company has in place a Dividend Distribution Policy formulated in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which intends to ensure that a rationale decision is taken, with regard to the amount to be distributed to the shareholders as dividend, after retaining sufficient funds for the Company''s growth, to meet its long-term objective and other purposes. The Policy also lays down various parameters to be considered by the Board of Directors of the Company before recommendation of dividend to the Members of the Company.
Considering the performance of the Company during the financial year 2021-2022, the Board of Directors felt the need to strike a balance between being prudent and conserving capital in the Company, while at the same time catering to the expectations of shareholders, also considering the Dividend Distribution Policy , have recommended payment of dividend for the financial year ended March 31, 2022 of '' 8.50 per equity share of face value of '' 2/- per share i.e. @ 425 percent . The total
dividend outgo for the current year would amount to '' 467.55 crore, same as for the previous year. The dividend payable shall be subject to the approval of the Members of the Company at the ensuing Annual General Meeting.
Further, pursuant to the requirements of SEBI Circular no. SEBI/LAD-NRO/GN/2016-17/008 dated July 8, 2016 the Dividend Distribution Policy is available on the website of the Company at https://www.lichousing.com/static-assets/ pdf/DIVIDEND%20DISTRIBUTION%20POLICY%202021. pdf?crafterSite=lichfl-corporate-website-cms&embedded=true and forms part of this Board''s report as Annexure - 7.
The Company has complied with the applicable Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs under Section 133 of the Companies Act, 2013. The financial statements for the year have been prepared in accordance with Schedule III to the Companies Act, 2013.
The Company earned total revenue of '' 19,953.02 crore for the FY 2021-22 as compared to '' 19,847.69 crore, registering an increase of 0.53 percent which is marginally higher in the FY 2020-21 than the previous year. The percentage of administrative expenses to the housing loans, which was 0.30 percent in the previous year, has increased to 10 bps to 0.40 percent during the financial year 2021-22 , mainly due to the onetime expenses on account of the arrears paid to the employees pursuant to the wage revision approved by the Board, which was due from August 2017 and has been paid in the month of July, 2021.
Profit before tax and after tax stood at '' 2,778.15 crore and '' 2,287.28 crore respectively as against '' 3,348.57 crore and '' 2,734.34 crore, respectively, for the previous year. The variance was on account of higher ECL provisioning made by the Company as compared to the previous year.
LIC Housing Finance Limited is a Housing Finance Company registered with National Housing Bank (NHB) and is mainly engaged in financing purchase / construction of residential flats / houses to individuals and project finance to developers, Loan against Property (LAP), Lease Rental Discounting (LRD) etc. All other activities revolve around the main business of the Company.
As at March 31, 2022 the loan book constituted of 94.83 per cent of retail portfolio and 5.17 per cent of project portfolio. (As per IND-AS)
During the year the main thrust continues on individual housing loans. The Company has sanctioned 242,382 Retail loans amounting to '' 62,507.58 crore and disbursed 243,951 loans aggregating to '' 60,536.10 crore during FY 2021-22. Retail loans constitute 97.56 percent of the total sanctions and 97.88 percent of the total disbursements for the FY 2021-22 as compared to 96.77 percent and 94.54 percent respectively during the FY 2020-21. The gross retail loan portfolio grew by 10.23% percent from '' 2,16,047* crore as on March 31, 2021 to '' 2,38,142* crore as on March 31, 2022.
(* IND-AS Portfolio of retail loans)
The cumulative sanctions and disbursements since incorporation, in respect of Retail loans are:
Amount sanctioned: '' 5,12,841.78 crore
Amount disbursed: '' 4,91,116.77 crore
32,50,274 customers have been serviced by the Company up to March 31, 2022 since inception. The number of live customers on March 31, 2022 were 14,34,207.
The project loans sanctioned and disbursed by the Company during the year were amounting to '' 1,563.79 crore and '' 1,311.70 crore respectively. Corresponding figures for the previous year were '' 2,096.77 crore and '' 3,011.25 crore. These loans are generally for short durations, giving better yields as compared to individual housing loans.
The Company adopted a cautious approach in the sanction and disbursement of Project Loans, as due to the impact of COVID, there was dip in the launch of the new projects , sharp decline in the profitability of the existing projects and delay in the completion of projects.
Global CSR, Excellence & Leadership Award 2021-22
Recognized as one of the "The Best Organization for Womenâ by Economic Times
Economic Times awarded LIC HFL as one of the "Best Brands for 2021â
Recognized by Kendriya Sainik board for Valuable contribution in the past to Veer Naaris
During the year under review, opening of 2 new offices were initiated and 2565 of new Marketing Intermediaries were recruited to further strengthen the distribution network. The distribution network of the Company consists of 282 Marketing Offices and 1 Customer Service Point. The distribution network also includes 50 offices of LICHFL Financial Services Ltd., wholly owned subsidiary company engaged in distribution of various financial products including housing loan. The Company has representative office in Dubai.
During the F.Y. 2021-2022, '' 38,927.64 crore was received by way of scheduled repayment of principal through monthly instalments as well as prepayment of principal ahead of schedule, as compared to '' 32,151.50 crore received in the previous year.
The amount of gross Non-Performing Assets (NPAs) as at March 31, 2022 was '' 11,616.40 crore, which is 4.64 percent of the loan portfolio of the Company, as against '' 9,659.13 crore i.e., 4.16 percent of the loan portfolio as at March 31, 2021. The net NPA as at March 31, 2022 was '' 6,596.73 crore i.e. 2.63 percent of the loan portfolio vis-a-vis '' 5,913.93 crore i.e. 2.55 percent of the loan portfolio as at March 31, 2021. The total cumulative provision towards housing loan portfolio including provision for standard assets as at March 31, 2022 is '' 3,332.16 crore as against '' 2,758.93 crore in the previous year.
During the year, the Company has written off '' 23.03 crore, no amount had been written off in the previous year.
During the year, the Company mobilised funds aggregating to '' 95,249.50 crore by way of the Non-Convertible Debentures (NCDs), Term Loans / Line of Credit (LoC) / Working Capital Demand Loan (WCDL) from banks, NHB refinance, Commercial Paper and Fixed Deposits. The Company raised an amount of '' 2,335 crore''s through issue of equity share on preferential basis to LIC of India. The following is a brief about the various sources of fund mobilised during FY 2021-2022:
During the year, the Company issued NCDs amounting to '' 24,322 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 âCRISIL AAA/Stable'' by CRISIL & ''CARE AAA/Stable'' by CARE. As at March 31, 2022, NCDs amounting to '' 1,18,977.76 crore were outstanding. The Company has been regular in making repayment of principal and payment of interest on the NCDs.
As at March 31, 2022, 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. Accordingly, the amount of NCD remaining unclaimed or unpaid beyond due date is Nil.
As at March 31, 2022, the outstanding Tier II Bonds stood at '' 1,795.44 crore. Considering the balance term of maturity as at March 31, 2022, '' 1,795.44 crore of the book value of Tier II
Bonds is considered as Tier II Capital as per the Guidelines issued by NHB for the purpose of Capital Adequacy.
The total loans / LOC outstanding from the Banks and Other Financial institution as at March 31, 2022 are '' 68,143.04 crore
as compared to '' 52,013.20 crore as at March 31, 2021. The Refinance from NHB as at March 31, 2022 stood at '' 8,304.18 crore as against '' 10,119.54 crore as at March 31, 2021. During the year, the Company has availed '' 3,310 crore Refinance from NHB under various refinance schemes. As at March 31, 2022, Commercial Paper amounting to '' 8,364.22 crore were outstanding as compared to '' 12,230.25 crore for corresponding previous year. During the year 2021-22, the Company issued Commercial Paper amounting to '' 11,646.42 crore from market as compared to '' 12,758.59 crore for the previous year.
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 & ICRA A1 '' signifying highest safety for timely servicing of debt obligations.
Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, rules made thereunder and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 read with the relevant circulars and amendments thereto, the amount of dividend / deposits remaining unclaimed for a period of seven years from the date of transfer to unpaid dividend account is required to be transferred to the Investor Education and Protection Fund (IEPF) as constituted by the Central Government. Further, as per the provisions of Section 124(6) of the Companies Act, 2013 read with the Investor Education & Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016, the shares in respect of which the dividend has not been claimed for seven consecutive years are required to be transferred by the Company to the designated demat account of the IEPF Authority. The details of the unclaimed dividend/deposits and the shares transferred to the IEPF, are uploaded as per the requirements, on the website of the Company.
During the financial year under review, your Company has transferred unclaimed dividend of '' 1.25 crore, after giving due notice to the members, pertaining to the financial year 2013-14 to the Investor Education and Protection Fund (IEPF), established by the Central Government, on expiry of seven years from the date of transfer to unpaid dividend account.
Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 and the Rules made thereunder, the Company has transferred in aggregate 1,55,374 equity shares of '' 2/- each to IEPF in respect of which the dividend remained unclaimed for a period of seven consecutive years i.e. from 2013-14 till the due date of September 29, 2021 in respect of which, individual notice had also been sent to concerned Shareholders.
Any person who is entitled to claim unclaimed dividend or deposits etc. that have been transferred to IEPF, can claim the same by making an application directly to IEPF in the prescribed
form under the IEPF Rules which is available on the website of IEPF i.e. www.iepf.gov.in
As at March 31, 2022, the outstanding amount on account of Public Deposits was '' 4,595.48 crore as against '' 7,510.52 crore in the previous year and outstanding amount on account of Corporate Deposits was '' 13,478.02 crore as against '' 10,825.15 crore in the previous year. During F.Y. 2021-22, the number of depositors has reduced for Public Deposit from 37804 to 26156 and for Corporate Deposit the same number reduced from 1856 to 1831.
'' 1,165.34 crore has been collected as Public Deposits, while '' 12,523.27 crore was as collected Corporate Deposits. Total aggregate amount collected was '' 13,688.61 crore.
CRISIL has, for the fifteenth consecutive year, re-affirmed a rating of "CRISIL AAA/Stableâ 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 a preferred investment avenue for individual households and others.
In total 958 Nos. of Fixed Deposits amounting to '' 396.57 crore (out of which 908 are public deposits amounting to '' 67.15 crore) which were due for repayment on or before March 31, 2022, were not claimed by the depositors. Since then, 331 depositors have claimed or renewed deposits of '' 350.34 crore (out of which 295 are public deposits amounting to '' 47.26 crore) as on July 31, 2022. Depositors are appropriately intimated for renewal / claim of their deposits. Further, adequate follow-up is made in respect of those cases where Fixed 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 June 30, 2022, '' 7.75 lakhs against unclaimed Principal and '' 7.48 lakhs 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.
Following the amendment in the Finance Act, 2019 and the subsequent notification by the Reserve Bank of India (RBI) in August 2019, HFCs are being treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory
purposes and accordingly comes under RBI''s direct oversight. The National Housing Bank (NHB), however, would continue to carry out supervision of HFCs. In this regard Master Direction -Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 was notified on February 17, 2021 in supersession of the regulations/ directions as given in Chapter XVII of these directions.
The Company has been following guidelines, circulars and directions issued by the Reserve Bank of India (RBI)/the National Housing Bank (NHB), from time to time. The Company has complied with the Master Direction-Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 and other directions/guidelines prescribed by RBI regarding deposit acceptance, accounting standards, prudential norms, capital adequacy, credit rating, corporate governance, liquidity, information technology framework, fraud monitoring, concentration of investments, risk management, capital market exposure norms, Know Your Customer, Anti-Money Laundering and the Company also adopted the guidelines on maintenance of Liquidity Coverage Ratio with effect from December 1, 2021, as per RBI master directions.
Your Company has been maintaining capital adequacy ratio as prescribed by the RBI. The capital adequacy ratio was 18.08 percent (as against the regulatory minimum of 15 percent) as at March 31, 2022, as against 15.28 percent as at March 31, 2021 (as against the regulatory minimum of 14 percent).
The Company also has been following Directions / Guidelines / Circulars issued by SEBI, MCA, NHB and RBI from time to time, applicable to a Listed Company.
DISCLOSURE UNDER HOUSING FINANCE COMPANIES ISSUANCE OF NON-CONVERTIBLE DEBENTURES ON PRIVATE PLACEMENT BASIS (NHB) DIRECTIONS, 2014 READ WITH MASTER DIRECTION - NON BANKING FINANCIAL COMPANY - HOUSING FINANCE COMPANY (RESERVE BANK) DIRECTIONS, 2021.
During the financial year under review, the Non-Convertible Debentures issued on private placement basis, were repaid / redeemed by the Company on their respective due dates and there were no instances of any Non-Convertible Debentures which have not been claimed by the investors or not paid by the Company after the date on which the Non-Convertible Debentures became due for redemption.
AUDIT REPORTS AND AUDITORS
Audit Reports and observations
Statutory Audit, Auditor and Statutory Audit Report
The statutory auditors namely M/s. Gokhale & Sathe, Chartered Accountants, Mumbai (Firm Registration No.: 103264W) and M/s. M. P. Chitale & Co., Chartered Accountants, Mumbai (Firm Registration No.: 101851W) were appointed as Joint Statutory Auditors of the Company (Hereinafter collectively referred to as ''Joint Statutory Auditors'' / JSAs) for a term of 5 consecutive years at thirtieth AGM held on August 28, 2019, to hold office
until the conclusion of the Thirty Fifth Annual General Meeting to be held in the year 2024. However, as per the guidelines for appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) issued by the Reserve Bank of India vide ref. no.DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, the Company was to appoint the statutory auditors for a continuous period of three years, subject to the firms satisfying the eligibility norms (to be confirmed by the firms in Form B) each year and also to inform RBI (i.e. Central Office of RBI (Department of Supervision)) about the appointment of SCAs/SAs for each year by way of a certificate in Form A within one month of such appointment. Accordingly, the Company obtained the Certificate in Form B, re-appointed the JSAs as the joint Statutory Central Auditors of the Company for a period of 3 (three) years to hold office from the conclusion of the 32nd Annual General Meeting until the conclusion of the 33rdAnnual General Meeting (as their appointment took place in the 30th AGM held on August 28, 2019 and as such they could remain as JSAs only for 3 years as per the RBI Directions). The intimation regarding the same was also given to the MCA. Accordingly, in the ensuing 33rd AGM the term of the existing JSAs namely, M/s. Gokhale & Sathe, Chartered Accountants and M/s. M. P. Chitale & Co., Chartered Accountants would end and new JSAs would be appointed. As on the date of finalisation of this report the Company has already initiated the process in order to enable the Board to recommend a new set of JSAs to the members for their approval in the ensuing AGM. (For the names and other particulars of the proposed JSAs including their proposed remuneration please refer to the Agenda item pertaining to the Appointment of the new JSAs in the Notice of the 33rd AGM of the Company scheduled to be held on September 29, 2022 and the Explanatory statements in this regard.)
Based on the approval of the Shareholders in the 32nd Annual General Meeting, the remuneration payable to the Joint Statutory Auditors was '' 65,72,700/- per annum plus applicable taxes / cess and out of pocket expenses on actual basis (being '' 32,86,350/- per annum per firm plus applicable taxes/ cess and out of pocket expenses on actual basis ) for F.Y. 2021-22, and until the end of their term, and the fees in respect of any other certification was '' 30,000 (Plus applicable taxes) per certificate (i.e. '' 15,000 per firm plus applicable taxes). (For the names and other particulars of the proposed JSAs including their proposed remuneration please refer to the Agenda item pertaining to the Appointment of the new JSAs in the Notice of the 33rd AGM of the Company scheduled to be held on September 29, 2022 and the Explanatory statements in this regard.)
The remuneration of the proposed Statutory Central Auditors (SCAs) would be decided in the ensuing 33rd Annual General Meeting.
There was no qualification, reservation or adverse remark in the Joint Statutory Auditors'' Report dated May 18, 2022 for the financial year 2021-22 the same is enclosed with the financial statements in this Annual Report.
Internal Audit, Auditor and Audit Report Internal Audit of Back Offices
The Company has an in-house mechanism for Internal Audit of all its back offices. which are the nodal offices looking after the accounting, sanction and disbursement functions. Such Audit is conducted by the team(s) of in-house officials of audit department. The Company maintains an exhaustive checklist/ questionnaire for the purpose of such Audit and the same is updated regularly. The In-house internal audit team(s) submit quarterly reports in respect of the Back offices assigned to them and such reports are periodically reviewed by the Internal Audit Committee at Corporate Office, which is a management level Committee at the Corporate Office. Detailed deliberations take place in respect of key points related to Internal Audit Reports and the same is also placed before the Audit Committee of the Board for their information and guidance.
Internal Audit of Corporate Office
M/s. Borkar & Muzumdar, Chartered Accountants, Mumbai are Internal Auditors for Internal Audit of the Corporate Office for financial year, 2021-2022 and would remain as Internal Auditors of the Corporate Office for FY 2022-23 as well. No adverse remark or observation has been cited by them in their four (4) quarterly Audit Reports for the financial year 2021-22.
Systems and procedures are being upgraded from time to time to provide checks and alerts for avoiding fraud arising out of misrepresentation, if any, made by borrower/s while availing the housing loans and non-housing loans.
Risk Based Internal Audit
The RBI has vide circular Circular No. RBI/2021-22/53-DoS. CO. PPG.SEC/03/11.01.005/2021-22 dated June 11, 2021 made the Risk Based Internal Audit (RBIA) Framework applicable to the Company and the Company was required to put in place a RBIA framework by June 30, 2022, in accordance with the provisions of the aforesaid circular. Accordingly, the Board of the Company have adopted the Risk based Internal Audit Policy on May 18, 2022 and implemented the RBIA from the prescribed date.
Secretarial Audit, Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. N. L. Bhatia & Associates, Practicing Company Secretaries, undertook the Secretarial Audit of the Company for the financial year 2021-22.
The Secretarial Auditor''s Report for the financial year 2021-22 does not contain any qualification, reservation or adverse remark. Report of the Secretarial Auditor for the financial year 2021-22 in Form MR-3 is annexed to this report as Annexure 9.
A certificate from M/s. N. L. Bhatia & Associates, Practicing Company Secretaries, Mumbai (UIN: P1996MH055800), regarding compliance of the conditions of Corporate Governance as stipulated under the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 is attached to the Corporate Governance Report, which does not contain any qualification, reservation or adverse remark.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.
Corporate Governance
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(2)(f) of the SEBI(Listing Obligation and Disclosure Requirements) Regulations, 2015, the top 1000 listed entities, based on the market capitalization (calculated as on March 31 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, has been included as part of the Annual Report. Accordingly, Business Responsibility Report in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business released by the Ministry of Corporate Affairs, Govt. of India., is presented in a separate section forming part of the Annual Report.
Business Responsibility and Sustainability Reporting by listed entities
The Securities and Exchange Board of India (SEBI) introduced new requirements for sustainability reporting by listed entities. The new reporting called the Business Responsibility and Sustainability Report (BRSR) will replace the existing Business Responsibility Report (BRR). In terms of the aforesaid amendment, with effect from the financial year 2022 -2023, filing of BRSR shall be mandatory for the top 1000 listed companies (by market capitalization) and shall replace the existing BRR. Filing of BRSR is voluntary for the financial year 2021-22.
The Company has already initiated the process of implementing the BRSR from financial year 2022 -2023 and has designated
the CSR Committee of the Board as the authority to oversee the implementation of the Principles and Policies of Business Responsibility and Sustainability Report, in the Company and delegated the powers to the CSR Committee to perform all the acts, deeds and things for implementation of the same. Accordingly, the CSR Committee of the Board was renamed as the ''CSR-ESG Committee.
Depository system
For transaction of the Company''s 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 March 31, 2022, 4730 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 physical holdings to dematerialised form. Members may contact the R&T Agent for any assistance in the said process of converting physical shares into DEMAT.
Achievement of portfolio growth of around 15% by adding 3 lakhs new customers.
Increasing the share of high yielding products like non-housing and project finance to around 20% to enhance margins.
In addition to the existing base of the Marketing Intermediaries (MIs) the Company intends to strengthen the distribution network by adding atleast 3000 new MIs.
Increasing the contribution of business from alternate channels to around 15%.
Strengthening the base of Direct Marketing Executive (DME) / Direct Marketing Intermediaries (DMIs) Channel by way of additional recruitment of 1000 Nos. and increase the share of business from this channel to 15%.
Tap into newer markets not presently covered by recruiting marketing intermediaries/connectors and holding camp offices.
Thrust on marketing activities in smart cities and increase the business share.
Reach out to new customer base who are not covered under regular norms with differentiated product backed by mortgage insurance cover that will improve yields.
Leveraging technology to ease customer onboarding, streamline processes and expand scope of business potential mapping.
Explore strategic tie-ups which may increase customer touchpoints and also enable LIC HFL to offer value added services.
Adoption of digital transformation processes with the aim of personalization in customer servicing and enhance customer experience throughout the loan journey.
Bringing customization in products to tap into niche segments like HNI and Millennials/Gen Z segments of customers.
Enhancing our presence in social media and bring about customer engagement programs to increase brand visibility.
Implementation of various initiatives under Project RED to drive automation in processing leading to improvement in turn-around time.
The Company has covered good ground all across. Around 230 out of 282 marketing offices achieved the targets. After the economy bounced back, real estate added impetus to the economy and driving upon the demand for real estate created due to the competitive interest rate situation, the Company was able to add up new customers.
The Company intends to continue with its journey of Home Distribution of Home Loan (HDHL) and continue with the stride which it has taken towards a partly digital business model and thus the Company intends to further improve its digital infrastructure. Through these efforts the Company would endeavour it''s improve upon its TAT considerably.
While the Company intends to continue to grow more in the individual home loan category , it also intends to promote its flagship products like Griha Varishta and Griha Suvidha where it intends to the requirements of some specific segments of the population namely senior individuals who are covered under the Defined Pension Benefit Scheme (DPBS) and also to a segment where lesser known self-employed customers, who are specific category of borrowers, having CIBIL score of below 600 are being given loans, with the guarantee of Indian Mortgage Guarantee Corporation (IMGC).
The Company also intends to strengthen its distribution network by encouraging more and more Direct Marketing Executives (DMEs), who are home grown MIs, enhance the business through digital connectors and strategic tie-ups and also add on to its traditional MIs.
In the Coming years as well the trends are expected to be very positive and the Company would be targeting to increase its high yielding portfolio (Project Loans, non-core loans) so that to have better margins and also would be targeting the Gen-Z population.
Reducing the delinquencies and fast tracking the recovery and monitoring operations would remain a focal point.
Given the existing uptrend in the interest rates, the Company would be closely monitoring its interest rate offering vis-a-vis the market and the industry trends and review its lending rates accordingly. On the borrowing front with regard to deposits and other borrowing the Company intends to churn its borrowings so that to maintain the minimum cost of borrowing and have a better impact on the Net Interest Margin.
The Company also recognizes the support of its administrative functions to complement its overall digital outlook, the ultimate aim of which would be to reduce the TAT, enhance the customer experience, reduction of cost and enhancing of internal controls. In this regard the Company intends to carry out path breaking changes by adopting new platforms that would ease the operational landscape.
With the dynamic regulatory and compliance environment in which the Company operates, the management would endeavour to put in place all the best governance practices through constant review and upgradations of its compliance initiatives, judicious management of its treasury and other aspects of its operations for ensuring co-ordinated and result oriented efforts in its business as well as in expanding its reach, market share as well as market capitalization in order to ensure shareholders value maximization.
Pursuant to section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the Company complied with the compliance requirements and the details of compliances under Companies Act, 2013 are enumerated below:
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 the Annual Return as on March 31, 2021 is available on the website of the Company in the following link (Please download the document and then try to view):
https://www.lichousing.com/static-assets/pdf/Annual_ Return_FY_2020_21.pdf?crafterSite = lichfl-corporate-website-cms&embedded=true
During the year under review, neither the Joint Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee, under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against the Company by its officers or employees, outsiders the details of which was required to be mentioned in the Board''s report.
The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.
CRISIL had reaffirmed its outstanding rating as ''CRISIL AAA/ Stable'' rating to the non-convertible debentures issue of LIC
Housing Finance Limited and has also reaffirmed its ''CRISIL AAA/Stable/CRISIL A1 '' ratings on other debt instruments, bank facilities and fixed deposit programme of the company.
Total Bank Loan Facilities Rated |
'' 75,085.88 crore |
Long Term Rating |
CRISIL AAA/Stable (Reaffirmed) |
Short Term Rating |
CRISIL A1 (Reaffirmed) |
'' 25,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 3,000 crore Tier II Bond |
CRISIL AAA/Stable (Reaffirmed) |
'' 25,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 25,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 25,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 5,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 15,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 10,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 5,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 5,976 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 15,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 15,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 20,000 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 33,833 crore Non-Convertible |
CRISIL AAA/Stable |
Debentures |
(Reaffirmed) |
'' 1,600 crore Upper Tier II Bond |
CRISIL AAA/Stable (Reaffirmed) |
'' 1,750 crore Tier II Bond |
CRISIL AAA/Stable (Reaffirmed) |
Fixed Deposits (Including Public |
CRISIL AAA/Stable |
Deposit) |
(Reaffirmed) |
'' 17,500 crore Commercial Paper |
CRISIL A1 (Reaffirmed) |
CARE had reaffirmed its outstanding rating as ''CARE AAA/ Stable'' rating to the non-convertible debentures and Tier II Bonds issue of LIC Housing Finance Limited. |
|
'' 35000 crore CARE AAA / Stable (Reaffirmed) |
|
Non-Convertible Debentures |
|
'' 35000 crore CARE AAA / Stable (Reaffirmed) |
|
Non-Convertible Debentures |
|
'' 3000 crore Tier II Bond CARE AAA / Stable (Reaffirmed) |
|
'' 3000 crore Tier II Bond CARE AAA / Stable (Reaffirmed) |
|
ICRA Limited had reaffirmed ICRA A1 rating to the '' 17,500 crore commercial paper issue of LIC Housing Finance Limited and has reaffirmed its ICRA A1 which is one notch higher than [ICRA]A1. |
During the year under review, nine (9) Board meetings were held. Detailed information on the meetings of the Board as well as Committee meetings, their composition and attendance record of the members of respective Committees of the Board are included in the Report on Corporate Governance which forms part of this Annual Report.
The financial statements are prepared in accordance with Indian Accounting Standards (Ind As) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Companies Act, 2013 (to the extent modified), guidelines issued by the Securities and Exchange Board of India (SEBI) , guidelines issued by the National Housing Bank (''NHB'') and the Reserve Bank of India (''RBI'') (Collectively referred to as ''the Previous GAAP'').
The Ind AS are prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other accounting principles generally accepted in India. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in the accounting policy hitherto in use.
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) i n the preparation of the annual accounts, the applicable accounting standards has 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 as at March 31, 2022 and of the profit of the company for the year ended on 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;
(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 1 to this Report and
(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.
The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Company endeavours to have an appropriate mix of executive, non-executive and independent Directors to maintain the independence of the Board, and separate its functions of governance and management. As of March 31, 2022, the Board had Twelve (12) members, consisting of three (3) Nominee Directors nominated by LIC of India (''The Promoter'') including two (2) non-executive directors which includes the Chairman, and another LICI Director and one executive Director also from LICI, who is the Managing Director & CEO; three non-executive and non-independent Directors, while the remaining six are independent Directors including one independent woman directors.
The Nomination and Remuneration Committee had laid down Criteria for determining Director''s 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 March 8, 2022.
We affirm that except Nominee Director (Chairman, LIC Director and Managing Director & CEO) , Sitting Fees is paid to all the other directors for Board and Committee Meetings attended by them. It may be mentioned here that w.r.t Corporate Social Responsibility Committee Meetings, earlier the sitting fees was not being paid, however as decided by the Board the Sitting Fees is being paid , in this regard, w.e.f January 27, 2022. However, Managing Director & CEO is being paid remuneration as applicable to an Officer in the cadre of Zonal Manager of LIC of India and PLI as per the terms laid out in the Nomination and Remuneration Policy of the Company.
There has not been any observations, qualification, reservation or adverse remark in the Joint Statutory Auditors'' Report dated May 18, 2022 for the financial year 2021-22.
The management accepts responsibility for establishing and maintaining internal controls and have evaluated the effectiveness of some internal control system of the Company which have been disclosed to the auditors and the Audit
Committee, the deficiencies, of which the management is aware of, in the design or operation of the internal control systems and have taken the steps to rectify these deficiencies.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
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) OF THE COMPANIES ACT, 2013 READ WITH RULE 8(2) OF COMPANIES (ACCOUNTS) RULES, 2014:
Considering the nature of the industry in which the Company operates, all Related Party Transactions 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 transactions 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. All such Related Party Transactions are placed before the Audit committee and Board of Directors for approval, wherever applicable. Prior omnibus approval as per SEBI (LODR) is also obtained from Audit Committee for the Related Party Transactions which are of repetitive nature as well as in the ordinary course of business.
The Related Party Transactions Policy and Procedures, as amended from time to time, as reviewed by Audit Committee and approved by Board of Directors is uploaded on the website of the Company and is annexed as Annexure 2 to this report.
Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act, and Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed as Annexure 3 to this report.
AMOUNTS, IF ANY WHICH IT PROPOSES TO CARRY TO ANY RESERVES:
The Company has transferred '' 859.99 crore to Special Reserve u/s 36(1)(viii) of the Income-tax, Act., 1961 excluding '' 0.01 crore to the Statutory Reserve u/s 29C of NHB Act; and an amount of '' 700 crore to General Reserve.
Hence, total amount transferred to special reserve-'' 860 crore (including '' 0.01 crore to Statutory Reserve u/s 29C of NHB Act) and to General Reserve-'' 700 crore.
AMOUNT, IF ANY, WHICH IT RECOMMENDS SHOULD BE PAID BY WAY OF DIVIDEND:
'' 467.55 crore is proposed to be paid by way of dividend to shareholders of the Company i.e. '' 8.50 per equity share of face value of '' 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, 2022 and the date of the Board''s Report i.e. August 4, 2022 except as reported herein.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
A. Conservation of energy -
(i) The steps taken and impact on conservation of energy-
The Company has 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.
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 equipment-
None
B. Technology absorption -
(i) The efforts made towards technology absorption - Initiated a digital transformation Project RED to automate and digitize various processes of the company. Also, implemented online services for customer on boarding etc.
(ii) The benefits derived like product improvement, efforts to reduce cost of fund, product development or import substitution - The benefits are :
Reduced TAT for customer on boarding
Online payment services
Online rewriting
(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.
The foreign exchange earned in terms of actual inflows during the year and the foreign exchange outgo during the year in terms of actual outflows.
During the year ended March 31, 2022, the Company does not have any foreign exchange earnings and the foreign exchange outgo was '' 1.39 crore. This does not include foreign currency cash flows in derivatives and foreign currency exchange transactions.
The Board of the Company has constituted 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. The Company has appointed Chief Risk Officer as per the relevant NHB Circular. On May 31, 2022, the erstwhile Chief Risk Officer (CRO) of the Company Ms. Purti Samant superannuated and on and from June 1, 2022, Shri K Ramesh, was appointed as the new CRO.
The Company has a Risk Management Policy in place. During the financial year under review, the Risk Management Policy of the Company was reviewed and put up to the Board. The same was approved in the Board Meeting dated March 11, 2022.
The Company framed the Remuneration Policy in order to align with various provisions under "SEBI LODR REGULATIONSâ vide its circular no.CIR/CFD/Policy Cell/2/2014 dated April 17, 2014 and circular no.CIR/CFD/Policy Cell/7/2014 dated September 15, 2014.
The Nomination & Remuneration Committee recommends to the Board a policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees as per sub-section (3) of Section 178 and based on the functions of the Board of Directors as indicated under Schedule IV (as per section 149) annexed to the Companies Act, 2013 and the Rules made thereunder.
Accordingly, the Remuneration policy relating to the remuneration of Directors, Key Managerial personnel and other employees is as below:
The Non-Executive Directors would be paid such amount of sitting fees as decided from time to time for every Board and Committee Meeting they attend. Apart from sitting fees no other remuneration / commission would be payable to them.
In future if Company decides to pay any remuneration / commission to Non-Executive Independent Directors, then the same will be in compliance with Regulation 17(6)(ca) of the "SEBI LODR REGULATIONSâ as amended from time to time.
The Non-Executive Nominee Directors would not be paid any sitting fees for the Board and Committee Meetings they attend. The Non-Executive Nominee Directors are not paid any salary and / or other benefits by the Company.
The Executive Nominee Director who is designated as Managing Director & CEO is paid remuneration as applicable to an Officer in the cadre of Executive Director of LIC of India. This apart, the Executive Nominee Director is entitled for PLI as per criteria approved by the Nomination and Remuneration Committee of the Board.
As and when there is any revision in the pay scales of the Executive Nominee Director as per the charter decided by the LIC of India, then the same is made applicable to the Executive Nominee Director at par with those of the officials in the similar cadre. Further, tenure and terms and conditions of appointment of Executive Nominee Director are as decided by LIC of India from time to time and as approved by the Board of Directors of the Company.
However, the remuneration payable to Executive Nominee Director at any point of time shall be within the limits specified as per Regulation 17(6)(e) of the "SEBI LODR REGULATIONSâ ("LODR REGULATIONSâ) as amended from time to time.
In the present set up of the Company, key managerial personnel, other than Managing Director & CEO, are Company Secretary and Chief Financial Officer. Remuneration payable to Company Secretary, Chief Financial Officer and other employees is as decided by the Board of Directors as per Service Terms, Conduct Rules 1990 as amended from time to time.
Except Managing Director & CEO who is a whole time Executive Director, none of the Directors of the Company is paid any other remuneration or any elements of remuneration package under major groups, such as salary, benefits, bonuses, stock options, pension, performance linked incentive etc.
In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy)
Rules, 2014 as amended from time to time, 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 FOII OWS-
Shri Jagdish Capoor* |
Chairman |
Independent Director |
Dr. Dharmendra Bhandari** |
Member |
Independent Director |
Shri Akshay Rout |
Member |
Non-executive Director |
Shri Y.Viswanatha Gowd |
Member |
Managing Director & CEO |
Ms J. Jayanthi*** |
Member |
Independent Director |
* Shri Jagdish Capoor, Independent Director completed his second term on May 23, 2022.
** Dr Bhandari was a member of the CSR Committee until September 15, 2021, thereafter the CSR Committee had been reconstituted.
*** Ms J. Jayanthi and Shri Akshay Rout was inducted in the Committee w.e.f September 15, 2021.
ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE-
The Nomination and Remuneration Committee at its meeting had recommended 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, other than the independent directors, carried out an annual evaluation of its performance, Board level committees and Individual Directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, through circulation. At the Independent Directors meeting held on March 8, 2022, the Independent directors carried out the evaluation of the performance of the rest of the Board Members.
The performance of the Board was evaluated 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 various Board Committee was evaluated by the Board after seeking inputs from the respective committee members, on the basis of criteria such as the composition of committee, effectiveness of committee meeting, functioning, etc.
The Board 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 the Chairman were evaluated.
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 subsidiaries and associates, in the same form and manner as that of the Company which shall be laid before the ensuing Thirty Third Annual General Meeting of the Company along with the Company''s Financial Statement under sub-section (2) of Section 129 i.e. Standalone Financial Statement. Further, pursuant to the provisions of Indian Accounting Standard (Ind AS) 110, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Company along with its subsidiaries and associates for the year ended March 31, 2022 form part of this Annual Report.
In accordance with the provisions of Section 136 of the Companies Act, 2013, the Annual Report of the Company, the Annual Financial Statements and the related documents of the Company''s subsidiary and associate companies are hosted on the website of the Company.
THERE HAS BEEN NO CHANGE IN THE NATURE OF BUSINESS OF THE COMPANY DURING THE YEAR UNDER REVIEW.
DIRECTORS:
As on March 31, 2022, the Board had Twelve members, consisting of two non-executive Directors nominated by the promoter, LIC of India which includes the Chairman, Shri M. R. Kumar and Director Raj Kumar. The Managing Director & CEO, Shri Y. Viswanatha Gowd, who is the only Executive Director on the Board is also a Nominee of the LIC of India. Apart from these three (3) Nominee Directors, there are three (3) Non-Executive and Non-Independent Directors namely Shri P Koreswara Rao, Shri Sanjay Kumar Khemani and Shri Akshay Kumar Rout. Other 6 Board Members are Independent Directors including one independent woman Director namely Ms. Jagennath Jayanthi. The other Independent Directors are viz., Shri Jagdish Capoor, Dr. Dharmendra Bhandari, Shri Ameet N Patel, Shri V. K. Kukreja, Shri Kashi Prasad Khandelwal. The term of Shri Jagdish Capoor, Independent Director came to an end on May 23, 2022 after completing two terms of 5 years each as on the said date. Thereafter, w.e.f July 25, 2022 Shri Ravi Krishan Takkar, has been inducted to
the Board as a Independent Director. His appointment is being placed for the approval of the members of the Company in the ensuing 33rd AGM.
In order to ensure stability and effective implementation of long term business strategies and for smooth transition at MD & CEO level, the Board decided that new MD & CEO should be posted in advance, say 4-6 months prior to his/her taking charge as MD&CEO, as Chief Operating Officer (COO) who would subsequently take over as MD & CEO on retirement / elevation / transfer of the existing MD & CEO.
In terms of Article 138(b) of the Articles of Association of Company, LIC of India is entitled to nominate up to one third of the total number of Directors of the Company and therefore, the Board after consideration, approved posting of senior official from LIC of India as Nominee of LIC of India for the post of COO as part of succession plan for MD & CEO, within reasonable time (generally 4 to 6 months) prior to the exit of the serving MD&CEO, with a view to ensuring stability and effective implementation of long term business strategies.
Further, in terms of the Regulation 17 (4) of the SEBI (LODR), 2015 the Company has adopted a succession planning policy for its Key Managerial and senior management personnel which has been hosted on the website of the Company on the below mentioned link:
https://www.lichousing.com/static-assets/pdf/Policy_
on_Succession_Planning.pdf?crafterSite=lichfl-corporate-
Ms. Jagennath Jayanthi (DIN 09053493)
Ms. Jagennath Jayanthi (DIN 09053493), who fulfils the criteria of Independence prescribed under Section 149(6) of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and in terms of ''Fit and Proper'' criteria adopted by the Board on March 10, 2017, pursuant to NHB notification No.NHB.HFC. CG-DIR.1/MD&CEO/2016 dated February 9, 2017, whom the Nomination & Remuneration Committee (NRC), after having undertaken process of due diligence, has considered suitable and eligible based on evaluation, qualification, expertise, track record, integrity and ''fit and proper'' criteria and has also recommended for appointment, was appointed as an Independent Director, of the Company by obtaining the approval of the Shareholders, for a period of five consecutive years, with effect from February 5, 2021.
Shri Akshay Kumar Rout
The appointment of Shri Akshay Kumar Rout (DIN- 08858134), who was appointed as an Additional Director in the category of Non-Executive Non-Independent Director of the Company, liable to retire by rotation, by the Board of Directors with
effect from September 24, 2020, was confirmed by the approval of the Shareholders, through a resolution passed by the Shareholders in the 32nd Annual General Meeting of the Company held on September 27, 2021. The Company has received a Notice in writing from a Member pursuant to Section 160(1) of the Companies Act, 2013 proposing his candidature for the office of Director.
Shri Raj Kumar
The Nomination and Remuneration Committee in terms of ''Fit and Proper'' criteria adopted by the Board on after having undertaken process of due diligence, and after considering Shri Raj Kumar suitable and eligible based on evaluation, qualification, expertise, track record, integrity and ''fit and proper'' criteria, recommended the appointment of Shri Raj Kumar (DIN 06627311) to the Board and the Board appointed Shri Raj Kumar as Additional Director of the Company with effect from August 13, 2021 in the capacity of Non-Executive Nominee. Being appointed as an additional Director under Section 161(1) of the Companies Act, 2013, Shri Raj Kumar held office upto the date of the 32nd Annual General Meeting and after receiving a Notice in writing from a Member pursuant to Section 160 of the Companies Act, 2013, proposing his candidature for the office of Director, Shri Raj Kumar was appointed as Non-Executive Nominee Director of the Company liable to retire by rotation, under the provisions of Articles of Association of the Company through a resolution passed by the Shareholders in the 32nd Annual General Meeting of the Company held on September 27, 2021.
Shri Yerur Viswanatha Gowd
The appointment of Shri Yerur Viswanatha Gowd (DIN 09048488), as Managing Director & CEO of the Company was confirmed by the approval of the Shareholders in the 32nd Annual General Meeting held on September 27, 2021 for such period until which he remains deputed in the Company as a Nominee Director of LIC of India, subject to a maximum period up to 5 years, from the date of his Appointment i.e. February 1, 2021, on payment of such remuneration as decided by the Board of LIC Housing Finance Limited on the recommendation of Nomination and Remuneration Committee in terms of the pay-scale applicable to his cadre as per the service rules of LIC of India and the Company, subject to the limit prescribed under the Companies Act, 2013 for the aforesaid period.
Shri Ravi Krishan Takkar
As per the recommendation of the Nomination & Remuneration Committee, which has after having undertaken process of due diligence, and after considering the candidature have found it suitable and eligible based on evaluation, qualification, expertise, track record, integrity and ''fit and proper'' criteria, the Board at its meeting held on July 25, 2022, has approved the appointment of Shri Ravi Krishan Takkar (DIN 07734571), as an Additional Director (Independent Category) for a period of five consecutive years, not liable to retire by rotation, subject
to the approval of the Shareholders of the Company in the forthcoming 33rd Annual General Meeting (AGM).
Shri Vipin Anand (DIN 05190124) had tendered his resignation from Directorship of the Company with effect from July 30, 2021 on attainment of superannuation from the services of LIC of India.
Shri Jagdish Capoor
The second term of Shri Jagdish Capoor (DIN 00002516) as Independent Director of the Company came to an end on May 23, 2022 in terms of the provisions of Section 149 (10) and (11) of the Companies Act, 2013.
Thus, as on July 28, 2022, the Board of Directors of the Company consists of twelve members, five of them are Non-Executive Directors including Chairman and one LIC Director, while other three are Non-Executive Non-Independent Directors. Managing Director & CEO is executive whole time director. Remaining Six (6) Directors are Independent Directors including one Independent Woman Director and another Director Shri Ravi Krishan Takkar, who has been appointed as an Additional Director by the Board at its Meeting held on July 25, 2022 and the Board have also recommended him to the Shareholders, to be appointed as an Independent Director and such appointment would be subject to the approval if the Shareholders in the ensuing AGM.
Shri Sanjay Kumar Khemani who have been longest in office would be retiring by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.
Shri Yerur Viswanatha Gowd, Managing Director & CEO, Mr. Sudipto Sil, Chief Financial Officer and Ms. Varsha Hardasani , Company Secretary & Compliance Officer, are the Key Managerial Personnel (KMP) as per the provisions of the Companies Act, 2013.
During the financial year the following changes took place in the positions of the KMPs:
Superannuation of Shri Nitin K Jage
Shri Nitin K Jage, General Manager (Taxation) & Company Secretary, superannuated on May 31, 2022 after completing almost 27 years of service.
Appointment of Ms. Varsha Hardasani
Ms. Varsha Hardasani (Membership no. ACS50448), who possess around about 12 years of experience in Secretarial Compliances, Legal Matters, Accountancy and Finance field across different sectors and who apart from being a Company Secretary is also a Law and Commerce Graduate and also possesses a Masters in Accountancy & Finance, took charge as Company Secretary & Compliance officer w.e.f June 1, 2022.
The Company has various Committees which have been constituted 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:
I) Audit Committee
II) Stakeholders Relationship Committee
III) Nomination and Remuneration Committee
IV) CSR-ESG Committee*
V) Risk Management Committee
VI) Executive Committee
VII) Debenture Allotment Committee
VIII) Strategic Investment Committee
IX) IT Strategy Committee
X) Preferential Allotment Committee**
XI) Investment Committee***
XII) Committee for approval of issuance of Duplicate Share Certificate(s)****
*Note: Earlier it was Corporate Social Responsibility Committee, the Board while adopting the Principles and Policies of Business Responsibility and Sustainability Report, expanded the scope of the CSR Committee and renamed it as CSR-ESG Committee.
** Note: The Preferential Allotment Committee is an event based Committee which had been constituted for the limited purpose of allotment of the Equity Shares on private placement basis to the promotors on September 8, 2021.
***Note: The Investment Committee is an event based Committee which has been constituted to meet only in case any investment proposals needs to be considered. During the year there were two meetings of the said Committee which were held.
****Note: Committee for approval of issuance of Duplicate Share Certificate(s) has only been constituted to sign and approve the request for issuance of Duplicate Share Certificate(s). The approval takes place through circulation of the relevant documents to the signing authorities based on their availability, no physical meeting of the said Committee is held.
Composition of Audit Committee is as follows:
Shri Jagdish Capoor* Chairman Independent Director
Dr. Dharmendra Bhandari Member Independent Director
Shri Ameet Patel Member Independent Director
Shri Kashi Prasad Khandelwal Member Independent Director
Shri Sanjay Kumar Khemani** Member Non-Executive Director
* Shri Jagdish Capoor, Independent Director has completed his second term on May 23, 2022.
** Shri Sanjay Kumar Khemani was inducted in the Committee w.e.f 15.09.2021.
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 Report.
As on March 31, 2022, 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 March 31, 2022, 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:
LICHFL Care Homes Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on September 11, 2001 with an authorised share capital of '' 75 crore. The basic purpose of incorporating the Company was to establish and operate ''assisted living community centres'' for the senior citizens.
During the FY 2021-22, the Company reported Losses before Tax of '' 17.24 crore and Losses after Tax stood at '' 17.25 crore.
The Company has successfully completed a project at Bangalore in two Phases and Jeevan Anand Project at Bhubaneswar.
Further, the Company is in process to develop new Carehomes project at Jaipur, Rajasthan and Aluva, Kerala.
The Company was incorporated on February 14, 2008. The Company is in the business of managing, advising, administering Private Equity Funds including Venture Capital Fund (VCF) and Alternate Investment Fund (AIF)
The Company was appointed as Investment Manager in 2010 to raise and manage the LICHFL Sponsored, LICHFL Urban Development Fund (LUDF). The Company has raised total commitments of '' 529.35 crore from Banks, Financial Institutions, Corporates and HNIs as against the targeted size of '' 500 crore and announced financial closure on March 30, 2013. The Company has deployed INR 461.30 crore in 9 Portfolio Companies, acquisition or operation of affordable / mid income housing, related infrastructure and Hospitals. With receipts from 7 exits, the Fund has so far achieved an IRR of 25.34%.
The Company also launched a new Alternative Investment Fund (AIF) namely LICHFL Housing & Infrastructure Fund (LHIF), with a total corpus of '' 1,000 crore including Green Shoe Option (GSO) of '' 250 crore and the focus of the
Fund is on Affordable Housing and Property backed Infrastructure in sectors which include Educational Institutions, Hospitals, Industrial Parks & Warehouses. As on March 31, 2022, the total Contribution Agreements signed in respect of LICHFL Housing & Infrastructure Fund is '' 812 crore of which the drawable amount is '' 765 crore.
The Company has recently registered a New Fund with SEBI - LICHFL Real Estate Debt Opportunities Fund - I on March 30, 2021 under AIF Category II of SEBI Alternate Investment Fund Regulations 2012 (AIF). The Fund is having a target corpus of '' 3,000 crore (Base corpus of '' 2,000 crore plus '' 1,000 crore as green shoe option). The Fund is envisaged to be raised from both Domestic and Overseas Investors. The focus sector of the Fund is Housing.
During the FY 2021-22, the Company earned a Profit before Tax (PBT) of '' 8.54 crore and Profit after Tax (PAT) stood at '' 6.59 crore. The Company has recommended dividend @ 27.50% for FY 2021-22 on its paid up share capital.
3. LICHFL Trustee Company Private Limited
The Company was incorporated on March 5, 2008. The Company is undertaking the business of trusteeship services for Venture Capital Funds (VCFs) and Alternative Investment Funds (AIFs).
The Company was appointed as Trustee in 2010 for LICHFL Fund and further appointed LICHFL Asset Management Company Limited (LICHFL AMC) as Investment Manager for the Fund. In 2010 the Company had registered LICHFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds) Regulations, 1996. LICHFL Urban Development Fund achieved its financial closure with '' 529.35 crore on March 30, 2013.
The Company was appointed as Trustee in 2017 for LICHFL Housing & Infrastructure Trust (LHIT) and further appointed LICHFL AMC Ltd. as Investment Manager for LICHFL Housing and Infrastructure Fund (LHIF). The Company had received registration for LHIF on October 2017 from SEBI under Alternative Investment Fund Regulations, 2012 as Category - I Infrastructure. LICHFL AMC launched LICHFL Housing & Infrastructure Fund (LHIF) in October 2017 and achieved initial closing on March 31, 2018. The Fund announced its final closing on March 31, 2021.
The Company is recently appointed as Trustee on March 30, 2021 for a New Fund registered with SEBI - LICHFL Real Estate Debt Opportunities Fund - I on March 30, 2021 and appointed LICHFL AMC Ltd. as Investment Manager for the Fund.
During the FY 2021-22, the Company earned a Profit before Tax (PBT) of '' 0.15 crore and Profit after Tax (PAT) stood at '' 0.11 crore.
4. LICHFL Financial Services Limited
LICHFL Financial Services Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on October 31, 2007, for marketing of housing loan, insurance products (Life and General Insurance), mutual funds, fixed deposits, credit cards. It became operational in March, 2008 and at present has 48 offices spread across the country.
The vision of the Company is "SARVESHAM POORNAM BHAVATUâ - to provide complete financial solutionsâ 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 - right from financial planning to manage every aspect of 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, Tata AIG General Insurance Company Limited and HDFC ERGO General Insurance Company Ltd., Health Insurance products of Aditya Birla Health Insurance Co. Ltd. and Star Health and Allied Insurance Co. Ltd., Credit Cards of LIC Cards Services Limited and Point of Presence for National Pension System (NPS). More business verticals will be added depending on market opportunities and customer needs.
The Company has earned a Profit before Tax (PBT) of '' 21.69 crore and Profit after Tax (PAT) stood at '' 16.11 crore for the FY 2021-22 and recommended dividend @ 30% for FY 2021-22 on paid up share capital of '' 9.50 crore.
The Company is striving to improve its Performance across all Business verticals in the coming years.
Name/s of Company/ies which have ceased / become subsidiary/joint venture/associate: None
AS ON MARCH 31, 2022, THE COMPANY HAS TWO ASSOCIATE COMPANIES NAMELY LIC MUTUAL FUND ASSET MANAGEMENT COMPANY LIMITED AND LIC MUTUAL FUND TRUSTEE COMPANY PRIVATE LIMITED.
LIC Mutual Fund Asset Management Company Limited (LICMFAMC)
LIC Mutual Fund was established on April 20, 1989 by LIC of India. LIC Housing Finance Limited holds 39.30 % equity in this entity. Being an associate company of India''s premier and most trusted brand, LIC Mutual Fund is one of the well known players in the asset management sphere. With a systematic investment discipline coupled with a high standard of financial ethics and corporate governance, LIC Mutual Fund is emerging as a preferred Investment Manager amongst the investor fraternity.
LIC Mutual Fund endeavours to create value for its investors by adopting innovative and robust investment strategies,
catering to all segments of investors. LIC Mutual Fund believes in providing delight to its customers and partners by way of superior investment experience and unparalleled service thereby truly bring them Khushiyaan, Zindagi Ki.
For the FY 2021-22 both the Profit before Tax (PBT) as well as Profit after Tax (PAT) of LICMFAMC stood at '' 1.82 crore, as there was no tax expense.
LIC Mutual Fund Trustee Company Private Limited
LIC Mutual Fund Trustee Private Limited (Trustee Company) is the Trustee to the Mutual Fund, LICMFAMC. LIC Housing Finance Limited holds 35.30 % equity in this entity. LIC of India is the Sponsor of the Mutual Fund. The AMC either directly or through third party service providers engaged by the AMC (Service Providers) such as the Registrar and Transfer agents collects, receives, possesses, stores, deals or handles information received from investors/client/customers whether existing or prospective.
The Company has earned a Profit before Tax (PBT) of '' 6.23 lakhs and Profit after Tax (PAT) stood at '' 4.63 lakhs for the FY 2021-22.
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 March 31, 2022, has been sent to all the members of the Company. It does not contain Annual Reports of Company''s subsidiaries. The Company will provide Annual Report of all subsidiaries upon request by any member of the Company. These Annual Reports are 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 Subsidiary 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 1 is attached to this report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy in place which provides whistle blowers opportunity 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. The Vigil Mechanism / Whistle Blower Policy is reviewed annually or as and when the regulators amendments are required to be incorporated therein as the case may be.
c. The percentage increase in the median remuneration of employees in the financial year:
76.79%. (The steep rise which is evident , when compare to the previous year''s figure i.e. 11.37%, is on account of the arrears paid to the employees due to the wage revision, which was due from August 2017 and has been paid in the month of July ,2021)
Particulars |
March 31, 2022 |
November 15, 1994 (IPO) |
% Change |
Market Price (in '') |
358.95** |
12* |
2891.25 |
*Adjusted Issue price on account of sub-division **BSE-closing Price '' 358.95 |
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 Independent Directors)* |
Ratio to median remuneration |
Nil |
N.A. |
âRemuneration is not paid to Non-Executive Directors (including Independent Directors) |
|
Executive Director (MD&CEO) |
Ratio to median remuneration |
Shri Yerur Viswanatha Gowd |
5:1 |
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 Independent Directors)* |
% increase in remuneration in the financial year |
Nil |
N.A. |
*No remuneration is paid to Non-Executive Directors (including Independent Directors) |
|
KMP |
% increase in remuneration in the financial year |
Executive Director (MD&CEO)* |
42.53% |
Company Secretary** |
64.08% |
Chief Financial Officer** |
67.39% |
"Remuneration of MD & CEO includes Salary for F. Y. 2021-22 , PLLI 2020-21 and wage revision arrear w.e.f. Aug 2017. "Remuneration of Company Secretary & CFO includes Salary for F. Y 2021-22, PLLI 2020-21 and wage revision arrear w.e.f. Aug 2017 |
d. The number of permanent employees on the rolls of the Company:
2467
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:
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 42.55%. The average annual Increase in the salaries of the employees other than managerial personnel during the year was 76.39% on account of wage revision arrear payment w.e.f. Aug- 2017, increase in DA and scale at which new recruitment at officer level was made.
g. Affirmation that remuneration is as per the Remuneration Policy of the Company:
The Company affirms that the remuneration is as per the Remuneration Policy of 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.
In terms of Section 136(1) of the Companies Act, 2013 read with the Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board''s 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 Company Secretary, LIC Housing Finance Limited, Corporate Office, 131 Maker Towers, ''F'' Premises, 13th Floor, Cuffe Parade, Mumbai - 400 005 or at [email protected].
Prevention, Prohibition & Redressal of Sexual Harassment of women at workplace:
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place a Policy on Prevention, Prohibition & Redressal of Sexual Harassment
of Women at Workplace and has a robust mechanism to redress the complaints reported thereunder. An Internal Committee has been constituted, which comprises of internal members who have experience in the subject field.
Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the complaints received thereunder and the details relating thereto are as follows:
(a) Number of complaints received in the year: Nil
(b) Number of complaints disposed of during the year: Nil
(c) Number of cases pending more than ninety days: Nil
(d) Number of workshops or awareness programme against sexual harassment carried out: Nil
Your Company on a regular basis sensitizes its employees on prevention of sexual harassment through various workshops, awareness programmes.
(e) Nature of action taken by the employer or district officer: Nil
I t may be mentioned here that 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 working in the company.
The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year:
HUMAN RESOURCES
The Company aims to align HR practices with business goals, increase productivity of Human Resource by enhancing knowledge, skills and to provide conducive work environment for develop a sense of ownership amongst employees. 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 the Company during the year. The Company inducted employees during the year for various positions and also promoted employees to take up higher responsibilities. Apart from fixed salaries, perquisites and benefits, the Company also has in place performance-linked incentives which reward outstanding performers, who meet certain performance targets. In pursuance of the Company''s commitment to develop and retain the best available talent, the Company had organised and sponsored various training programmes / seminars / conferences for upgrading skill and knowledge of its employees in different operational areas.
Employee relations remained cordial and the work atmosphere remained congenial during the year.
The Directors place on record their appreciation for the advice, guidance and support given by the Life Insurance Corporation of India, the National Housing Bank, the Reserve Bank of India and all the bankers of the Company. The Directors also place on record their sincere thanks to the Company''s clientele, lenders, investors 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: August 04, 2022
Mar 31, 2021
Your Directors are pleased to present the Thirty Second Annual Report together with the Audited Financial Statements for the year ended 31st March, 2021 of LIC Housing Finance Limited (''the Company'').
FINANCIAL RESULTS
('' in crore) |
||
Particulars |
For the year ended 31st March, 2021 |
For the year ended 31st March, 2020 |
Profit before Tax |
3,348.57 |
3,268.99 |
Tax Expense |
614.23 |
867.15 |
Profit after Tax |
2,734.34 |
2,401.84 |
Other Comprehensive Income |
(2.40) |
(6.85) |
Total Comprehensive Income |
2,731.94 |
2,394.99 |
Appropriations |
||
Special Reserve u/s 36(1)(viii) of the Income Tax Act,1961 |
829.99 |
749.99 |
Statutory Reserve u/s 29C of NHB Act,1987 |
0.01 |
0.01 |
General Reserve |
700.00 |
600.00 |
Dividend |
403.73 |
383.54 |
Final Tax on Dividend pertaining to the previous year paid during the year |
77.61 |
|
Balance carried forward to next year |
798.21 |
583.83 |
2,734.34 |
2,401.84 |
The Board of Directors has assessed the performance of the Company during the year under review and also taken cognisance of the impact of the coronavirus disease (COVID-19) which has been declared as a pandemic. As the COVID-19 continues to spread around the world, many companies are facing unprecedented challenges which have adversely impacted their operations. Consequently, there is a great deal of uncertainty and it has affected global economy, financial markets, lives and livelihoods and the resultant impact has been felt by the Company.
The Company has in place a Dividend Distribution Policy formulated in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which intends to ensure that a rational decision is taken, with regard to the amount to be distributed to the shareholders as dividend, after retaining sufficient funds for the Company''s growth, to meet its long-term objective and
other purposes. The Policy also lays down various parameters to be considered by the Board of Directors of the Company before recommendation of dividend to the Shareholders of the Company.
Considering the performance of the Company during the financial year 2020-2021, the Board of Directors felt the need to strike a balance between being prudent and conserving capital in the Company, while at the same time catering to the expectations of shareholders, also considering the Dividend Distribution Policy and also after assessing the capital buffers and liquidity levels of the Company, have recommended payment of dividend for the financial year ended 31st March, 2021 of '' 8.50 per equity share of face value of '' 2/- per share i.e. @ 425 percent, as against '' 8.00 per equity share of face value of '' 2/- per share for the previous year i.e. @ 400 percent. The total dividend outgo for the current year would amount to '' 428.96 crore, as against '' 403.73 crore for the previous year. The dividend payable shall be subject to the approval of the Members of the Company at the ensuing Annual General Meeting.
Following the amendment in the Finance Act, 2020, the imposition of the Dividend Distribution Tax has been abolished. Accordingly, the dividend amount received by the shareholders of the Company, for the financial year ended 31st March, 2020, onwards is taxable in the hands of the shareholders for which the Company is required to deduct tax at source under Section 194K from dividend paid to the shareholders at the prescribed rates.
The Dividend Distribution Policy is available on the website of the Company at https://www.lichousing.com/downloads/ DIVIDEND%20DISTRIBUTION%20POLICY%202021.pdf and
forms part of this Board''s report as Annexure - 8.
The Company has complied with the applicable Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate Affairs under Section 133 of the Companies Act, 2013. The financial statements for the year have been prepared in accordance with Schedule III to the Companies Act, 2013.
The Company earned total revenue of '' 19,847.69 crore, marginally higher than the previous year. The percentage of administrative expenses to the housing loans, which was 0.29 percent in the previous year, has slightly increased to 0.30 percent during the financial year 2020-21.
Profit before tax and after tax stood at '' 3,348.57 crore and '' 2,734.34 crore respectively as against '' 3,268.99 crore and '' 2,401.84 crore, respectively, for the previous year. Profit before tax increased by 2.43 percent over the previous year while profit after tax showed an increase of 13.84 percent over that of the previous year.
LIC Housing Finance Limited is a housing finance company registered with National Housing Bank (NHB) and is mainly engaged in financing purchase / construction of residential flats / houses to individuals and project finance to developers, Loan against Property (LAP), Lease Rental Discounting (LRD) etc. All other activities revolve around the main business of the Company. The business of the Company was impacted in the first half of the financial year due to the imposition of a strict national lockdown. The growth trajectory improved gradually as restrictions were lifted and from September 2020 onwards, growth trends normalised. Subsequently, the demand for home loans surpassed expectations. These factors impacted the overall performance of the loan book.
As at 31st March, 2021 the loan book constituted of 93.12 per cent of retail portfolio and 6.88 per cent of project portfolio.
During the year the main thrust continues on individual housing loans. The Company has sanctioned 245,543 individual housing loans for '' 62,869.21 crore and disbursed 222,285 loans for '' 52,211.91 crore (inclusive of Non Core Non-Housing Individual) during FY 2020-21. Housing loan to Individual i.e. retail loans constitute 96.77 percent of the total sanctions and 94.54 percent of the total disbursements for the FY 2020-21 as compared to 92.92 percent and 94.42 percent respectively during the FY 2019-20. The gross retail loan portfolio grew by over 10.17 percent from '' 1,96,340 crore as on 31st March, 2020 to '' 2,16,047 crore as on 31st March, 2021.
The cumulative sanctions and disbursements since incorporation, in respect of individual housing loans are:
Amount sanctioned: '' 4,51,461.39 crore
Amount disbursed: '' 4,30,198.80 crore
30,38,002 customers have been serviced by the Company up to 31st March, 2021 since inception.
The project loans sanctioned and disbursed by the Company during the year amounted to '' 2,096.77 crore and '' 3,011.25 crore respectively. Corresponding figures for the previous year were '' 3,693.19 crore and '' 2,618.35 crore. These loans are generally for short durations, giving better yields as compared to individual housing loans.
Featured amongst ''India''s Top 500 Companies 2020'' by Dun & Bradstreet
Awarded ''Top Home Loan Provider'' at Times Real Estate Icon Awards .
During the year under review, efforts were taken to further strengthen the distribution network. The distribution network
of the Company consists of 282 Marketing Offices and 1 Customer Service Point. The distribution network also includes 50 offices of LICHFL Financial Services Ltd., a wholly owned subsidiary of the Company, engaged in distribution of various financial products including housing loans. The Company has representative offices in Dubai and Kuwait.
repayments
During the F.Y. 2020-2021, '' 32,151.50 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 '' 28,895.38 crore received in the previous year.
non-performing assets and provisions
The amount of gross Non-Performing Assets (NPA) as at 31st March, 2021 was '' 9,659.13 crore, which is 4.23 percent of the loan portfolio of the Company, as against '' 6,316.16 crore i.e., 3.04 percent of the loan portfolio as at 31st March, 2020. The net NPA as at 31st March 2021 was '' 5,913.94 crore i.e. 2.59 percent of the loan portfolio vis-a-vis '' 3703.96 crore i.e. 1.78 percent of the loan portfolio as at 31st March, 2020. The total cumulative provision towards housing loan portfolio including provision for standard assets as at 31st March, 2021 is '' 2758.93 crore as against '' 2631.62 crore in the previous year.
During the year, the Company has written off '' 356.91 crore provision as against an amount of '' 35.05 crore, provision written off in respect of retail & non retail during the previous year.
During the year, the Company mobilised funds aggregating to '' 1,32,946.17 crore by way of the Non-Convertible Debentures (NCD), Term Loans / Line of Credit (LoC) / Working Capital Demand Loan (WCDL) from banks, NHB refinance, Commercial Paper and Public Deposits. The Company raised an amount of '' 1,800 crore through issuance of Tier II Bonds, which would enable the company to increase its Capital Adequacy Ratio. Funds were also mobilised from NHB under its refinancing facilities. The following is a brief about the various sources of fund mobilised during FY 2020-2021:
During the year, the Company issued NCD amounting to '' 18,760 crore on a private placement basis which have been listed on Wholesale Debt Segment of National Stock Exchange of India Ltd. The NCD have been assigned highest rating of ''CRISIL AAA/Stable'' by CRISIL & ''CARE AAA/Stable'' by CARE. As at 31st March, 2021, NCD amounting to '' 1,13,367.71 crore were outstanding. The Company has been regular in making repayment of principal and payment of interest on the NCD.
As at 31st March, 2021, there were no NCD which have not been claimed by the Investors or not paid by the Company after the date on which the said NCD became due for redemption. Accordingly, the amount of NCD remaining unclaimed or unpaid beyond due date is Nil.
TRANSFER OF SHARES TO IEpF
Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 and the Rules made thereunder, the Company has transferred in aggregate 1,62,502 equity shares of '' 2/- each to IEPF in respect of which the dividend remained unclaimed for a period of seven consecutive years i.e. from 2012-13 till the due date of 4th September, 2020 after following the prescribed procedure.
Any person who is entitled to claim unclaimed dividend or deposits etc. that have been transferred to IEPF, can claim the same by making an application directly to IEPF in the prescribed form under the IEPF Rules which is available on the website of IEPF i.e. www.iepf.gov.in
public deposits
As at 31st March, 2021, the outstanding amount on account of Public Deposits was '' 7,510.52 crore as against '' 6,384.09 crore in the previous year and outstanding amount on account of corporate deposits was '' 10,825.15 crore as against '' 6,224.91 crore in the previous year. During F.Y. 2020-21, the number of depositors has reduced for public deposit from 42427 to 37804 and for corporate deposit increased from 1099 to 1856.
'' 3,381.15 crore has been collected as public deposits while '' 8,86.61 crore was as corporate deposits. Total aggregate amount collected '' 12,167.76 crore.
CRISIL has for the fourteenth consecutive year, re-affirmed a rating of "CRISIL FAAA/Stableâ 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.
1,065 deposits amounting to '' 198.57 Crore which were due for repayment on or before 31st March, 2021 were not claimed by the depositors. Since then, 209 depositors have claimed or renewed amounting to deposits of '' 40.43 crore as on 20th August, 2021 of this report. 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 20th August, 2021''6,64,000/- against unclaimed principal and '' 4,81,207/- against unclaimed interest on deposits have 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
During the year, the Company has issued Tier II Bonds amounting to '' 1,800 crore. As at 31st March, 2021, the outstanding Tier II Bonds stood at '' 1,795.12/- crore. Considering the balance term of maturity as at 31st March, 2021, '' 1,795.12/- crore of the book value of Tier II Bonds is considered as Tier II Capital as per the Guidelines issued by NHB for the purpose of Capital Adequacy.
The total loans / LOC outstanding from the Banks and Other Financial institution as at 31st March, 2021 are '' 52,013.20 crore as compared to '' 43,188.28 crore as at 31st March, 2020. The Refinance from NHB as at 31st March, 2021 stood at '' 10,119.54 Crore as against '' 1,882.17 Crore as at 31st March, 2020. During the year, the Company has availed '' 9,600 crores Refinance from NHB under various refinance schemes. As at 31st March, 2021, Commercial Paper amounting to '' 12,230.25 Crore were outstanding as compared to '' 7628.71 Crore for corresponding previous year. During the year 2020-21, the Company issued Commercial Paper amounting to '' 12,758.59 Crore from market as compared to '' 19,152.23 Crore for the previous year.
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 & ICRA A1 '' signifying highest safety for timely servicing of debt obligations.
Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, rules made thereunder and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 read with the relevant circulars and amendments thereto, the amount of dividend / deposits remaining unclaimed for a period of seven years from the date of transfer to unpaid dividend account is required to be transferred to the Investor Education and Protection Fund (IEPF) as constituted by the Central Government. Further, as per the provisions of Section 124(6) of the Companies Act, 2013 read with the Investor Education & Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016, the shares in respect of which the dividend has not been claimed for seven consecutive years are required to be transferred by the Company to the designated demat account of the IEPF Authority. The details of the unclaimed dividend/deposits and the shares transferred to the IEPF, are uploaded as per the requirements, on the website of the Company i.e. www.lichousing.com.
unpaid/unclaimed dividend
During the financial year under review, your Company has transferred unclaimed dividend of '' 1,07,35,998 /- pertaining to the financial year 2012-13 to the Investor Education and Protection Fund (IEPF), established by the Central Government, on expiry of seven years from the date of transfer to unpaid dividend account.
(Accounts) Rules, 2014 read with section 73 and 74 of the Companies Act, 2013 are not applicable to the Company.
REGULATORY COMPLIANCE
Following the amendment in the Finance Act, 2019 and the subsequent notification by the Reserve Bank of India (RBI) in August 2019, HFCs would be treated as one of the categories of non-banking financial companies (NBFCs) for regulatory purposes and accordingly would come under RBI''s direct oversight. NHB, however, would continue to carry out supervision of HFCs. In this regard Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 has been notified on February 17, 2021 in supersession of the regulations/ directions as given in Chapter XVII of these directions.
The Company has been following guidelines, circulars and directions issued by National Housing Bank (NHB) from time to time. In fact, the Company has complied with the Housing Finance Companies (NHB) Directions, 2010 and other directions/ guidelines prescribed by NHB regarding deposit acceptance, accounting standards, prudential norms, capital adequacy, credit rating, corporate governance, information technology framework, fraud monitoring, concentration of investments, risk management, capital market exposure norms and Know Your Customer and Anti-Money Laundering and thereafter with the Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 which has been notified on February 17, 2021 in supersession of the regulations/ directions as given in Chapter XVII of these directions.
Your Company has been maintaining capital adequacy as prescribed by the NHB. The capital adequacy was 15.28 percent as at 31st March, 2021, after considering the loan to value ratio for deciding risk weightage.
The Company also has been following directions / guidelines / circulars issued by SEBI and MCA from time to time, applicable to a listed company.
DISCLOSURE UNDER HOUSING FINANCE COMPANIES ISSUANCE OF NON-CONVERTIBLE DEBENTURES ON PRIVATE pLACEMENT BASIS (NHB) Directions, 2014 READ WITH MASTER DIRECTION - NON BANKING FINANCIAL COMPANY - HOUSING FINANCE COMPANY (RESERVE BANK) DIRECTIONS, 2021.
During the financial year under review, the Non-Convertible Debentures issued on private placement basis, were repaid / redeemed by the Company on their respective due dates and there were no instances of any Non-Convertible Debentures which have not been claimed by the investors or not paid by the Company after the date on which the Non-Convertible Debentures became due for redemption.
AUDIT REPORTS AND AUDITORS
Audit Reports and observations
Statutory Audit, Auditor and Statutory Audit Report
The statutory auditors namely M/s. Gokhale & Sathe, Chartered Accountant (Firm Registration No.: 103264W) and
M/s. M. P. Chitale & Co., Chartered Accountant (Firm Registration No.: 101851W) were appointed as Joint Statutory Auditors of the Company for a term of 5 consecutive years at 30th AGM and to hold office until the conclusion of the Thirty Fifth Annual General Meeting to be held in the year 2024. However as per the guidelines for appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) issued by the Reserve Bank of India vide ref. no. DoS.CO.ARG/ SEC.01/08.91.001/2021-22 dated 27th April, 2021, the Statutory Auditors are required to be appointed on annual basis and the intimation of the appointment has to be given to RBI for every year, accordingly the Board proposes and recommends to the members of the Company, the appointment of Statutory Auditors till the conclusion of 33rd Annual General Meeting (AGM) of the Company to be held in the year 2022.
M/s. Gokhale & Sathe, Chartered Accountant (Firm Registration No.: 103264W) and M/s. M. P. Chitale & Co., Chartered Accountant (Firm Registration No.: 101851W) have confirmed to the Company that they continue to satisfy the eligibility criteria as mentioned in Section 141 of the Companies Act, 2013.
The remuneration payable to each of the Joint Statutory Auditors will be '' 65,72,700/- per annum plus applicable taxes / cess and out of pocket expenses on actual basis (being '' 32,86,350/- per annum per firm plus applicable taxes / cess and out of pocket expenses on actual basis ) for financial year 2021-22 as determined by the Board of Directors in consultation with them for the purpose of audit of the Company''s accounts at the Corporate Office along with consolidated accounts as well as at all Back Offices to be allotted equally between them in consultation with the management subject to approval of the members of the Company at an ensuing AGM.
In terms of the guidelines issued by RBI vide circular No.DoS. CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, the Joint Statutory Auditors continue to satisfy the eligibility norms as prescribed and have submitted their eligibility certificate in the prescribed manner to the Company.
For qualification, reservation or adverse remark it may be referred to the Joint Statutory Auditors'' Report dated 15th June, 2021 for the financial year 2020-21 alongwith Annexure B note on IFC and the same is enclosed with the financial statements in this Annual Report.
Internal Audit, Auditor and Audit Report Internal Audit of Back Offices
The Company has an in-house mechanism for Internal Audit of all its back offices, which are the nodal offices looking after the accounting, sanction and disbursement functions. Such Audit is conducted by the team(s) of in-house officials of audit department. The Company maintains an exhaustive checklist/ questionnaire for the purpose of such Audit and the same is updated regularly. The In-house internal audit team(s) submit quarterly reports in respect of the back offices, assigned to them and such reports are periodically reviewed by the Internal Audit Committee at Corporate Office, which is a management level
Committee at the Corporate Office. Detailed deliberations take place in respect of key points related to Internal Audit Reports and the same is also placed before the Audit Committee of the Board for their information and guidance.
internal Audit of Corporate Office
M/s. Borkar & Muzumdar, Chartered Accountants, Mumbai are Internal Auditors for Internal Audit of the Corporate Office for financial year 2020-21 and their term was further extended for two year for FY 2021-22 and FY 2022-23. No adverse remark or observation has been cited by them in their four (4) quarterly Audit Reports for the financial year 2020-21.
Systems and procedures are being upgraded from time to time to provide checks and alerts for avoiding fraud arising out of misrepresentation, if any, made by borrower/s while availing the housing loans and non-housing loans.
Secretarial Audit, Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. N. L. Bhatia & Associates, Practicing Company Secretaries conducted the secretarial audit of the Company for the financial year 2020-21.
The Secretarial Auditor''s Report for the financial year 2020-21 does not contain any qualification, reservation or adverse remark. Report of the Secretarial Auditor for the financial year 2020-21 in Form MR-3 is annexed to this report as Annexure 9.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.
Corporate Governance
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.
A certificate from Shri Bhaskar Upadhyay (FCS 8663 and Certificate of Practice No.:9625), Partner of M/s. N. L. Bhatia & Associates, Practicing Company Secretaries, Mumbai (UIN: P1996MH055800), regarding compliance of the conditions of Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the Corporate Governance Report, which does not contain any qualification, reservation or adverse remark.
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(2)(f) of the SEBI(Listing Obligation and Disclosure Requirements) Regulations, 2015, the top 1000 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, has been included as part of the Annual Report. Accordingly, Business Responsibility Report in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the National Voluntary guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business released by the Ministry of Corporate Affairs, Govt. of India., is presented in a separate section forming part of the Annual Report.
depository system
For transaction of the Company''s 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, 2021, 5108 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.
outlook for 2021-2022
Focus on growth of Retail Home Loans, along with that of Non Housing Loans for better margins.
Continued focus on PMAY-CLSS in alignment with Government Initiatives "Housing for all by 2022â from time to time & thus ensuring achievement of targets in numbers since it being last year of subsidy scheme.
Augmentation of distribution network and activation in line with the initiative of Paradigm Shift.
Penetration into under-represented geographies by utilizing connector model.
Making use of builders / developers as distribution channel / Connectors.
Continuous relation building with Builders and synergy between project and retail loans.
To create brand LICHFL as a source of trusted partner exuding consumer confidence.
Understanding the inherent risks to the business and managing it effectively.
Widespread market studies assisting modelling of loan products to suit customer needs.
Making use of information provided by marketing offices about ground market conditions.
Continued focus on Business Potential Mapping for sustained business growth.
Focus on Advance Processing Facility (APF) approvals as a core activity to generate bulk business.
Leveraging alternate business channels viz., Direct Marketing Executive (DME) channel, LICHFL Financial Services Ltd. for generating additional business.
Making Homy App / Online loan application more effective.
Adoption of e-Appraisal for minimizing Turn Around Time (TAT).
Implementation of various initiatives under Project RED
Achievement of Term Targets- Monthly, Quarterly by all Units.
Overseas Offices to be made more effective and productive.
Continuous ''Training'' to intermediaries and Marketing Officials to increase productivity.
Monitoring of TAT at different levels.
Training / workshops for Project Finance Teams at ROs.
Identification of 22 centres apart from Metros to have business contribution in Project Finance segment.
Introduction of the concept of Digital Office to achieve competitiveness and tap into millennial customers.
Tie up with various lead aggregators and property portals for business.
Outreach to customers by strengthening the Camp Office concept for Sanction & Disbursement at select locations.
Positioning as a thought leader in industry through placement of related articles across media including digital.
While the recent times have been tough due to the onslaught of the second wave of the COVID-19 pandemic, due to various unlock initiatives by the Government, the local authorities, the lives seems to have been returning to normalcy. Further, the various initiatives by the Reserve Bank of India including that of providing the One Time Restructuring for the stressed loans have immensely helped both the lenders as well as the borrowers to come out of the stressed times and recover from the same. Also the infusion of liquidity by the RBI and other development banks have eased the liquidity situation and have made lending cheaper. While all these remains supply side interventions, it is expected that there would be more initiatives, going forward, to boost the demand for housing loans. The return of the migrated labour force to their work places has also kept the
construction activities rolling and slowly as the vaccination initiatives further picks up, the economic activities are expected to return in full swing.
Although, the Company has experienced a surge in the delinquencies in the recent times and had restrictions in carrying out the business activities in full capacity, the Company has developed parallel alternatives through digitization of its processes and workflows by its digitization initiative under project RED. The initiatives such as E-KYC, V-KYC, Penny Drop, Video PD etc., have contributed towards continuance of the Company''s business activities even during the period where travel restrictions were in force. The management would continue to focus on digitization of its processes while augmenting the same with the efficient, motivated and trained work force, so that to convert this adverse situation to the advantage of the Company through its re-engineered business processes.
The Company not only intends to focus on underwriting and disbursement activities but it very well understand the need of being agile in the fronts of loan servicing, monitoring and recovery. All these fronts are constantly being reviewed in the light of the digitised initiatives.
The Company in order to make best use of its operational advantages, intends to synergise its customer base by connecting the builders/developers with property buyers by creating a property market place though web portal and is working towards introducing this initiative and for making it a profitable venture.
With the dynamic regulatory and compliance environment in which the Company operates, the management would endeavour to put in place all the best governance practices through constant review and upgradations of its compliance initiatives, judicious management of its treasury and other aspects of its operations for ensuring co-ordinated and result oriented efforts in its business as well as in expanding its reach, market share as well as market capitalization in order to ensure maximum Shareholders wealth.
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:
annual return:
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 the Annual Return as on 31st March, 2020 is available on the website of the Company in the following link: www.lichousing.com/annual_general_meeting.php.
reporting OF frauds by auditors:
During the year under review, neither the joint statutory auditors nor the secretarial auditor has reported to the Audit Committee, under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against the Company by its
officers or employees, the details of which was required to be mentioned in the Board''s report.
SECRETARIAL STANDARDS:
The Company complies with all applicable mandatory secretarial standards issued by The Institute of Company Secretaries of India.
RATING RATIONALE:
CRISIL had reaffirmed its outstanding rating as ''CRISIL AAA/ Stable'' rating to the non-convertible debentures issue of LIC Housing Finance Limited and has also reaffirmed its ''CRISIL AAA/ FAAA/Stable/CRISIL A1 '' ratings on other debt instruments, bank facilities and fixed deposit programme of the company.
Total Bank Loan Facilities Rated |
'' 40059.88 crore |
Long Term Rating |
CRISIL AAA/ Stable (Reaffirmed) |
Short Term Rating |
CRISIL A1 (Reaffirmed) |
'' 25000 Crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Assigned) |
'' 3000 Crore Tier II Bond |
CRISIL AAA/ Stable (Reaffirmed) |
'' 25000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 25000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 25000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 5000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 15000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 10000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 5000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 5976 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 15000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 15000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 20000 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 33833 crore |
CRISIL AAA/ |
Non-Convertible Debentures |
Stable (Reaffirmed) |
'' 1600 crore Upper Tier II Bond |
CRISIL AAA/ Stable (Reaffirmed) |
'' 1750 crore Tier II Bond |
CRISIL AAA/ Stable (Reaffirmed) |
Fixed Deposits Programme |
FAAA/ Stable (Reaffirmed) |
'' 17500 crore Commercial Paper |
CRISIL A1 (Reaffirmed) |
CARE Ratings had reaffirmed its ''CARE AAA; Stable'' rating '' 35.842.90 crore for non-convertible debenture issue of LIC Housing Finance Limited.
Also, CARE Ratings had assigned its ''CARE AAA; Stable'' rating to the tune of '' 3,000 crore for Tier II Bonds issue of LIC Housing Finance Limited and reaffirmed its ''CARE AAA; Stable''. The unutilised amount as on 28.07.2021 was '' 1,200 crore.
ICRA Limited had reaffirmed ICRA A1 rating to the '' 17,500 crore commercial paper issue of LIC Housing Finance Limited and has reaffirmed its ICRA A1 which is one notch higher than [ICRA]A1.
During the year under review, 7 Board meetings were held. Detailed information on the meetings of the Board as well as Committee meetings, their composition and attendance record of the members of respective Committees of the Board are included in the Report on Corporate Governance which forms part of this Annual Report.
The financial statements are prepared in accordance with Indian Accounting Standards (Ind As) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Companies Act, 2013 (to the extent modified), guidelines issued by the Securities and Exchange Board of India (SEBI) , guidelines issued by the National Housing Bank (''NHB'') and the Reserve Bank of India (''RBI'') (Collectively referred to as ''the Previous GAAP'').
The Ind AS are prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other accounting principles generally accepted in India. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in the accounting policy hitherto in use.
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) i n the preparation of the annual accounts, the applicable accounting standards has 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;
(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 1 to this Report and
(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:
The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
COMPANYâS POLiCY ON DiRECTORSâ APPOiNTMENT AND REMUNERATiON iNCLUDiNG CRiTERiA:
It is an endeavour of the Company to have an appropriate mix of executive, non-executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As of 31st March, 2021, the Board had Twelve members, consisting of two non-executive directors nominated by LIC of India including Chairman and one executive director who is Managing Director & CEO nominated by LIC of India; three non-executive and non-independent directors, while rest six are independent directors including one independent woman director.
The Nomination and Remuneration Committee at its meeting 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 1st March, 2021.
We affirm that except nominee director (Chairman, LIC Director and Managing Director & CEO) were paid sitting fees for Board and Committee (other than for Corporate Social Responsibility Committee) meetings attended by them. However, Managing
Director & CEO is paid remuneration as applicable to an Officer in the cadre of Executive Director of LIC of India and PLI as per the terms laid out in the Nomination and Remuneration Policy of the Company.
QUALiFiCATiON, RESERVATiON OR ADVERSE REMARK OR Disclaimer MADE By JOiNT STATuTORY AUDiTORS AND SECRETARiAL AUDiTOR:
For qualification, reservation or adverse remark it may be referred to the Joint Statutory Auditors'' Report dated 15th June, 2021 for the financial year 2020-21 alongwith Annexure B note on IFC.
The management accepts responsibility for establishing and maintaining internal controls and have evaluated the effectiveness of some internal control system of the Company which have been disclosed to the auditors and the Audit Committee, the deficiencies, of which the management is aware of, in the design or operation of the internal control systems and have taken the steps to rectify these deficiencies.
particulars OF LOANS, GuARANTEES OR iNvESTMENTS:
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) OF THE COMPANIES ACT, 2013 READ wiTH RuLE 8(2) OF COMPANIES (ACCOuNTS) RuLES, 2014:
Considering the nature of the industry in which the Company operates, 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. All such Related Party Transactions are placed before the Audit committee for approval, wherever applicable. Prior omnibus approval as per SEBI (LODR) is also obtained from Audit Committee for the Related Party Transactions which are of repetitive nature as well as in ordinary course of business.
The Related Party Transactions Policy and Procedures as reviewed by Audit Committee and approved by Board of Directors are uploaded on the website of the Company and is annexed as Annexure 2 to this report.
Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act, and Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed as Annexure 3 to this report.
The Company has transferred '' 829.99 crore to Special Reserve u/s 36(1)(viii) of the Income-tax, Act, 1961 and '' 0.01 crore to the Statutory reserve u/s 29C of NHB Act; and an amount of '' 700 crore to General Reserve.
'' 428.96 crore is proposed to be paid by way of dividend to shareholders of the Company i.e. '' 8.50 per equity share of face value of '' 2/- each.
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. 31st March, 2021 and the date of the Board''s Report i.e. 20th August, 2021
conservation of energy, technology absorption,
(i) The steps taken and 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.
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
(i) The efforts made towards technology absorption - Initiated a digital transformation Project RED to automate and digitize various processes of the company. Also, implemented online services for customer on boarding etc.
(ii) The benefits derived like product improvement, efforts to reduce cost of fund, product development or import substitution - The benefits are mainly towards:
Reduced TAT for customer onboarding
Online payment services
Online rewriting
(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.
The foreign exchange earned in terms of actual inflows and the foreign exchange outgo during the year in terms of actual outflows.
During the year ended 31st March, 2021, the Company does not have any foreign currency earning and the foreign currency spent is '' 1.98 crore. This does not include foreign currency cash flows in derivatives and foreign currency exchange transactions.
The Board of the Company has constituted 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.
The Company has a Risk Management Policy in place. During the financial year under review, the Risk Management Policy of the Company was reviewed and put up to the Board in the Board Meeting dated 3rd March, 2021.
The Company framed the Remuneration Policy in order to align with various provisions under "SEBI LODR REGULATIONSâ vide its circular no.CIR/CFD/Policy Cell/2/2014 dated
ANNUAL EvALUATION MADE BY THE BOARD OF ITS OwN pERFORMANCE:
The Nomination and Remuneration Committee at its meeting had recommended 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 carried out an annual evaluation of its performance, Board level committees and Individual Directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, at the meeting of Independent Directors held on 1st March, 2021.
The performance of the Board was evaluated 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 various Board Committee was evaluated by the Board after seeking inputs from the respective committee members, on the basis of criteria such as the composition of committee, effectiveness of committee meeting, functioning, etc.
The Board 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.
17th April 2014 and circular no.CIR/CFD/Policy Cell/7/2014 dated 15th September 2014.
The Nomination & Remuneration Committee recommends to the Board a policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees as per sub-section (3) of Section 178 and based on the functions of the Board of Directors as indicated under Schedule IV (as per section 149) annexed to the Companies Act, 2013 and the Rules made thereunder.
Accordingly, the Remuneration policy relating to the remuneration of Directors, Key Managerial personnel and other employees is as below:
The Non-Executive Directors would be paid such amount of sitting fees as decided from time to time for every Board and Committee Meeting they attend. Apart from sitting fees no other remuneration / commission would be payable to them.
In future if Company decides to pay any remuneration / commission to Non-Executive Independent Directors, then the same will be in compliance with Regulation 17(6)(ca) of the "SEBI LODR REGULATIONSâ as amended from time to time.
The Non-Executive Nominee Directors would not be paid any sitting fees for the Board and Committee Meetings they attend. The Non-Executive Nominee Directors are not paid any salary and / or other benefits by the Company.
The Executive Nominee Director who is designated as Managing Director & CEO is paid remuneration as applicable to an Officer in the cadre of Executive Director of LIC of India. This apart, the Executive Nominee Director is entitled for PLI as per criteria approved by the Nomination and Remuneration Committee of the Board.
As and when there is any revision in the pay scales of the Executive Nominee Director as per the charter decided by the LIC of India, then the same is made applicable to the Executive Nominee Director at par with those of the officials in the similar cadre. Further, tenure and terms and conditions of appointment of Executive Nominee Director are as decided by LIC of India from time to time and as approved by the Board of Directors of the Company.
However, the remuneration payable to Executive Nominee Director at any point of time shall be within the limits specified as per Regulation 17(6)(e) of the "SEBI LODR REGULATIONSâ LODR REGULATIONSâ) as amended from time to time.
In the present set up of the Company, key managerial personnel, other than Managing Director & CEO, are Company Secretary
and Chief Financial Officer. Remuneration payable to Company Secretary, Chief Financial Officer and other employees is as decided by the Board of Directors as per Service Terms, Conduct Rules 1990 as amended from time to time.
Except Managing Director & CEO who is a whole time Executive Director, none of the Directors of the Company is paid any other remuneration or any elements of remuneration package under major groups, such as salary, benefits, bonuses, stock options, pension, performance linked incentive etc.
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.
Shri Jagdish Capoor |
Chairman |
Independent Director |
Dr. Dharmendra Bhandari |
Member |
Independent Director |
Shri Y.Viswanatha Gowd |
Member |
Managing Director & CEO |
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.
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 and associates, in the same form and manner as that of the Company which shall be laid before the ensuing Thirty Second Annual General Meeting of the Company alongwith the Company''s Financial Statement under sub-section (2) of Section 129 i.e. Standalone Financial Statement. Further, pursuant to the provisions of Accounting Standard (''AS'') 21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Company alongwith its subsidiaries and associates for the year ended 31st March, 2021 form part of this Annual Report.
In accordance with the provisions of Section 136 of the Companies Act, 2013, the annual report of the Company, the annual financial statements and the related documents of the Company''s subsidiary and associate companies are hosted on the website of the Company.
DIRECTORs:
As of 31st March, 2021, the Board had Twelve members, consisting of two non-executive directors nominated by the promoter, LIC of India which includes the Chairman, Shri M.R Kumar and Director Shri Vipin Anand. The Managing Director & CEO, Shri Y.Viswanatha Gowd, who is the only executive director in the Board is also a Nominee of the LIC of India. Apart from these three (3) nominee directors there are three (3) non-executive and non-independent directors namely Shri P Koreswara Rao, Shri Sanjay Kumar Khemani and Shri Akshay Kumar Rout. Other 6 board members are independent directors including one independent woman director namely Ms. Jagennath Jayanthi. The other independent Directors are Shri Jagdish Capoor, Dr. Dharmendra Bhandari, Shri Ameet N Patel, Shri V. K. Kukreja, Shri Kashi Prasad Khandelwal.
succession planning:
In order to ensure stability and effective implementation of long term business strategies and for smooth transition at MD & CEO level, the Board decided that new MD & CEO should be posted in advance, say 4-6 months as COO who would subsequently take over as MD & CEO on retirement / elevation / transfer of the existing MD & CEO.
In terms of Article 138(b) of the Articles of Association of Company, LIC of India is entitled to nominate upto one third of the total number of directors of the Company and therefore, the Board after consideration, approved posting of senior official from LIC of India as Nominee of LIC of India for the post of COO as part of succession plan for MD & CEO with a view to ensure stability and effective implementation of long term business strategies.
appointments / resignations of directors:
Nomination and Remuneration Committee after considering the profile, qualifications, etc., of Shri Akshay Rout (DIN-08858134) and in terms of ''Fit and Proper'' criteria adopted by the Board on 10th March, 2017 pursuant to NHB notification No.NHB. HFC.CG-DIR.1/MD&CEO/2016 dated 9th February, 2017 also in accordance with the SEBI(LODR) Regulations, 2015 as well as after undertaking the process of due diligence, recommended to the Board of Directors of the Company, Shri Akshay Rout (DIN-08858134), to be suitable and eligible for the appointment of Non-Executive Non Independent Director of the Company with effect from 28th September, 2020 liable to retire by rotation. Based on the recommendation of Nomination and Remuneration Committee, the Board considered and after having thought fit pursuant to the provisions of the SEBI(LODR) Regulations, 2015, Sections 152, 161 and other applicable provisions, if any of the Companies Act, 2013 and the Rules made thereunder, including any amendment, modification, variation or re-enactment thereof read with Schedule IV to the Companies Act, 2013, for the time being in force, and ''fit and proper'' criteria adopted by the Board, approved the appointment of Shri Akshay Rout (DIN-08858134) as Additional Non Executive Director of the Company, liable to retire by rotation.
Nomination and Remuneration Committee after considering the profile, qualifications, etc., of Ms Jagennath Jayanthi (DIN 09053493), and in terms of ''Fit and Proper'' criteria adopted by the Board on 10th March, 2017 pursuant to NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9th February, 2017 also in accordance with the SEBI(LODR) Regulations, 2015 as well as after undertaking the process of due diligence, recommended to the Board of Directors of the Company, Ms Jagennath Jayanthi (DIN 09053493), to be suitable and eligible for the appointment of Additional Non-Executive Independent Director of the Company for a period of five consecutive years with effect from 5th February, 2021 not liable to retire by rotation, subject to the approval of the shareholders in the forthcoming 32nd Annual General Meeting (AGM). Based on the recommendation by Nomination and Remuneration Committee, the Board considered and after having thought fit pursuant to the provisions of the SEBI(LODR) Regulations, 2015, Sections 149, 152, 161 and other applicable provisions of the Companies Act, 2013 the Rules made thereunder, including any amendment, modification, variation or re-enactment thereof read with Schedule IV to the Companies Act, 2013, Article 141 of the Articles of Association of the Company, Ms Jagennath Jayanthi (DIN 09053493) as an Additional Non-Executive Independent Director of the Company for a period of five consecutive years with
effect from 5th February, 2021 not liable to retire by rotation, subject to the approval of the shareholders in the forthcoming 32nd Annual General Meeting (AGM).
On the recommendation of the Nomination and Remuneration Committee, the Board considered and accorded its consent in its Board Meeting held on 2nd February, 2021 and further recommended the appointment of Shri Yerur Viswanatha Gowd (DIN 09048488), Managing Director and Chief Executive Officer (MD & CEO) as a Director and MD & CEO as also Key Managerial Personnel (KMP) for a period of 3 years and beyond, maximum upto 5 years effective from 1st February, 2021 or as decided by LIC of India from time to time on payment of remuneration and PLI for the aforesaid period to the shareholders / members of the Company for approval in the forthcoming Annual General Meeting of the company based on terms of Notification No.NHB. HFC.CG-DIR.1/MD&CEO/2016 dated 09.02.2017 issued by NHB and other applicable provisions of the Companies Act, 2013 and SEBI (LODR), 2015, NHB Directions and any other notification(s),circular(s),order(s) etc. made under the said statute(s) and considering the process of due diligence and scrutiny of the declarations undertaken by the Nomination and Remuneration Committee. The appointment of Shri Yerur Viswanatha Gowd (DIN 09048488) as MD & CEO and also as Key Managerial Personnel (KMP) is pursuant to the provisions of Sections 2(78), 2(94), 196, 197, 203 and other applicable provisions, if any, of the Companies Act, 2013, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and any other Rules framed thereunder read with Schedule V to the Companies Act, 2013 including any amendment, modification, variation or re-enactment thereof for the time being in force and the Articles 138, 161 and 194(c) of Articles of Association of the Company, subject to approval of the members in the 32nd Annual General Meeting and such other consents and permission as may be necessary, and subject to such modifications, variations as may be approved and acceptable to the appointee, the consent of the Board of Directors be and is hereby accorded for the appointment of Shri Yerur Viswanatha Gowd (DIN 09048488) as Managing Director & CEO as also KMP of the Company for a period of 3 years and beyond, maximum upto 5 years effective from 1st February, 2021 or as decided by LIC of India from time time, on payment of remuneration and PLI for the aforesaid period.
The terms and conditions of his service shall be determined from time to time by LIC of India and the Board of LIC Housing Finance Limited and that, the remuneration payable to him shall be within the limit as per the Companies Act, 2013. His appointment as Managing Director & CEO as also Key Managerial Personnel shall be without prejudice to his continuing service in LIC of India.
The Nomination and Remuneration Committee after considering the profile, qualifications, etc., of Shri Raj Kumar (DIN: 06627311) and in terms of ''Fit and Proper'' criteria adopted by the Board on 10th March, 2017, pursuant to NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9th February, 2017, also in accordance with "SEBI LODR REGULATIONSâ
as well as after undertaking the process of due diligence, recommended to the Board of Directors of the Company, Shri Raj Kumar (DIN: 06627311), to be suitable and eligible for the appointment of Non-Executive Non Independent (Nominee) Director of the Company with effect from 13th August, 2021 liable to retire by rotation. Based on such recommendation, the Board considered and after having thought fit, pursuant to the provisions of the "SEBI LODR REGULATIONSâ, Sections 152, 161 of the Companies Act, 2013 and read with Schedule IV, approved appointment of Shri Raj Kumar (DIN: 06627311) as Additional Non Executive (Nominee) Director of the Company liable to retire by rotation.
Ms. Savita Singh (DIN 01585328), Independent director had tendered her resignation from Directorship of the Company with effect from 9th November, 2020, on account of personal reason.
Shri Siddhartha Mohanty (DIN: 08058830), Executive - Nominee Director had tendered his resignation from Directorship of the Company with effect from 1st February, 2021 on account of repatriation to LIC of India.
Shri Vipin Anand (DIN 05190124) had tendered his resignation from Directorship of the Company with effect from 30th July, 2021 on attainment of superannuation from the services of LIC of India.
Thus as on 13st August, 2021, the Board of Directors of the Company consists of twelve members, five of them are non-executive directors including Chairman and one LIC Director, while other three are non-executive non-independent directors. Managing Director & CEO is executive whole time director. Remaining six directors are independent directors including one independent woman director.
Shri Pottimutyala Koteswara Rao, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment
Shri Yerur Viswanatha Gowd, Managing Director & CEO, Mr. Nitin K. Jage, General Manager & Company Secretary and Mr. Sudipto Sil, CFO are the Key Managerial Personnel (KMP) as per the provisions of the Companies Act, 2013.
During the Financial year 2020-2021 Shri Yerur Viswanatha Gowd had been appointed in the place of Shri Siddhartha Mohanty who had been transferred back to LIC of India with effect from 1st February, 2021.
The Company has various committees which have been constituted 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 Strategic Investment Committee IT Strategy Committee
Composition of Audit Committee is as follows:
Shri Jagdish Capoor Chairman Independent Director
Dr. Dharmendra Bhandari Member Independent Director Shri Ameet Patel Member Independent Director
Shri Kashi Prasad Khandelwal Member Independent Director
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 Report.
As on 31st March, 2021, 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, 2021, 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:
LICHFL CHL, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 11th September, 2001. Authorised share capital of the Company is '' 75 Crore. The basic purpose of incorporating the Company was to establish and operate ''assisted living community centres'' for the senior citizens.
During the FY 2020-2021, the Company earned a Profit before Tax (PBT) of '' 38.05 Lakhs and Profit after Tax (PAT) stood at '' 37.29 Lakhs.
The Company has successfully completed a project at Bangalore in two Phases and Jeevan Anand Project at Bhubaneswar.
Further, the Company is in process to develop new Carehomes project at Jaipur, Rajasthan and Aluva, Kerala. The Company is also in process to purchase land at various locations across the Country. Going forward, these projects are likely to further improve the overall operations and stability of the Company.
With life expectancy going up and number of elderly citizens rising year after year, the Company is set on a growth trajectory keeping LIC & LIC HFLs'' vision for fulfilment of Corporate Social Responsibility at the forefront.
LICHFL AMC was incorporated on 14th February 2008. The Company is in the business of managing, advising, administering Private Equity Funds including Venture Capital Fund (VCF) and Alternate Investment Fund (AIF)
The Company was appointed as Investment Manager in 2010 to raise and manage the LICHFL Sponsored, LICHFL Urban Development Fund (LUDF). The Company has raised total commitments of '' 529.35 Crore from Banks, Financial Institutions, Corporates and HNIs as against the targeted size of '' 500 Crore and announced financial closure on 30th March, 2013. The Company has deployed '' 461.30 Crore in 9 Portfolio Companies, acquisition or operation of affordable / mid income housing, related infrastructure and Hospitals. With receipts from 6 exits, the Fund has so far achieved an IRR of 27.29%.
The Company also launched a new Alternative Investment Fund (AIF) namely LICHFL Housing & Infrastructure Fund (LHIF), with a total corpus of '' 1,000 Crore including Green Shoe Option (GSO) of '' 250 Crore and the focus of the Fund is on Affordable Housing and Property backed Infrastructure in sectors which include Educational Institutions, Hospitals, Industrial Parks & Warehouses. As on 31st March 2021, the Company has already received total Commitment of '' 812 crore out of which Contribution Agreement was signed.
The Company has recently registered a New Fund with SEBI - LICHFL Real Estate Debt Opportunities Fund - I on 30th March 2021 under AIF Category II of SEBI Alternate Investment Fund Regulations 2012 (AIF). The Fund is having a target corpus of '' 3,000 crore (Base corpus of '' 2,000 crore plus '' 1,000 crore as green shoe option). The Fund is envisaged to be raised from both Domestic and Overseas Investors. The focus sector of the Fund is Housing.
During the FY 2020-21, the Company earned a Profit before Tax (PBT) of '' 1,136.52 Lakh and Profit after Tax (PAT) stood at '' 769.47 Lakh. The Company has
recommended dividend @ 27.50% for FY 2020-21 on its paid up share capital.
LICHFL TCPL was incorporated on 5th March, 2008. The Company is undertaking the business of trusteeship services for Venture Capital Funds (VCFs) and Alternative Investment Funds (AIFs).
The Company was appointed as Trustee in 2010 for LICHFL Fund and further appointed LICHFL Asset Management Company Limited (LICHFL AMC) as Investment Manager for the Fund. In 2010 the Company had registered LICHFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds) Regulations, 1996. LICHFL Urban Development Fund achieved its financial closure with '' 529.35 Crore on 30th March, 2013.
The Company was appointed as Trustee in 2017 for LICHFL Housing & Infrastructure Trust (LHIT) and further appointed LICHFL AMC Ltd. as Investment Manager for LICHFL Housing and Infrastructure Fund (LHIF). The Company had received registration for LHIF on October 2017 from SEBI under Alternative Investment Fund Regulations, 2012 as Category - I Infrastructure. LICHFL AMC launched LICHFL Housing & Infrastructure Fund (LHIF) in October 2017 and achieved initial closing on 31st March 2018. The Fund announced its final closing on 31st March 2021.
The Company is recently appointed as Trustee on 30th March 2021 for a New Fund registered with SEBI - LICHFL Real Estate Debt Opportunities Fund - I and appointed LICHFL AMC Ltd. as Investment Manager for the Fund.
During the FY 2020-21, the Company earned a Profit before Tax (PBT) of '' 15.21 Lakh and Profit after Tax (PAT) of '' 11.56 Lakh.
LICHFL FSL, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 31st October, 2007, for marketing of housing loan, insurance products (Life and General Insurance), mutual funds, fixed deposits, credit cards. It became operational in March, 2008 and at present has 47 offices spread across the country.
The vision of the Company is "SARVESHAM POORNAM BHAVATUâ - to provide complete financial solutionsâ 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 - right from financial planning to manage every aspect of 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, Tata AIG General Insurance Company Limited and HDFC ERGO General Insurance Company Ltd., Health Insurance products of Aditya Birla Health Insurance Co. Ltd. and Star Health and Allied Insurance Co. Ltd., Credit Cards of LIC Cards Services Limited and Point of Presence for National Pension System (NPS). More business verticals will be added depending on market opportunities and customer needs.
The Company has earned a Profit before Tax (PBT) of '' 1,892.97 Lakh and Profit after Tax (PAT) of '' 1,295.90 Lakh for the FY 2020-21 and recommended dividend @ 25% for FY 2020-21 on paid up share capital of '' 9.50 Crores.
The Company is striving to improve its Performance across all Business verticals in the coming years.
Name/s of company/ies which have ceased / become subsidiary/joint venture/associate: None
As on 31st March, 2021, the company has two associate companies namely Lic Mutual Fund asset Management company Limited and Lic Mutual Fund trustee company private 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, 2021, has been sent to all the members of the Company. It does not contain Annual Reports of Company''s subsidiaries. The Company will provide Annual Report of subsidiaries upon request by any member of the Company. These Annual Reports are 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 1 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.
Mar 31, 2019
BOARDâS REPORT
To the Members of LIC Housing Finance Limited
The Directors are pleased to present the Thirtieth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2019 of LIC Housing Finance Limited (''the Company'').
FINANCIAL RESULTS
(Rs, in crore)
Particulars |
For the year ended 31st March, 2019 |
For the year ended 31st March, 2018 |
Profit before Tax |
3,379.55 |
2,765.50 |
Tax Expense |
948.58 |
763.00 |
Profit after Tax |
2,430.97 |
2,002.50 |
Other Comprehensive Income |
(0.46) |
2.62 |
Total Comprehensive Income |
2,430.51 |
2,005.12 |
Appropriations |
||
Special Reserve & Statutory Reserve u/s 29C of NHB Act, 1987 |
750.00 |
560.00 |
General Reserve |
600.00 |
500.00 |
Dividend |
343.17 |
312.89 |
Tax on Dividend |
69.25 |
63.00 |
Balance carried forward to next year |
668.09 |
569.23 |
2,430.97 |
2,002.50 |
DIVIDEND
The Company has in place a Dividend Distribution Policy formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which intends to ensure that a rationale decision is taken with regard to the amount to be distributed to the shareholders as dividend after retaining sufficient funds for the Company''s growth, to meet its long-term objective and other purposes. The Policy also lays down various parameters to be considered by the Board of Directors of the Company before declaration / recommendation of dividend to the Members of the Company.
Considering the performance during the financial year 201819, your Directors, in terms of the Dividend Distribution Policy have recommended payment of dividend for the financial year ended 31st March, 2019 of 7.60 per equity share of face value of Rs,2/- per share i.e. @ 380 percent, as against Rs,6.80/- per equity share of face value of Rs,2/- per share for the previous year i.e. @ 340 percent. The total dividend outgo for the current year would amount to Rs,461.15 crore including Dividend Distribution Tax of Rs,77.61 crore, as against Rs,412.42 crore including dividend distribution tax of Rs,69.25 crore, for the previous year. The dividend payable shall be subject to the approval of the Members of the Company at the ensuing Annual General Meeting.
The Dividend Distribution Policy is available on the website of the Company at http://www.lichousing.com/dividend_dist_ policy.php and forms part of this Board''s report as Annexure - 8.
INDIAN ACCOUNTING STANDARDS
The Company has adopted Indian Accounting Standards (''Ind AS'') notified by the Ministry of Corporate Affairs (MCA) vide its notification published in the Official Gazette on 16th February, 2015 applicable to certain classes of companies under Section 133 of the Companies Act 2013 (''the Act'') read with the Companies (Indian Accounting Standards) Rules, 2015 from April 01, 2018 and the effective date of transition is April 01, 2017. The said transition has been carried out from the erstwhile Accounting Standards notified under the Act, read with relevant rules issued there under and guidelines issued by the National Housing Bank (''NHB'') (Collectively referred to as ''the Previous GAAP'').
Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.
PERFORMANCE Income and profit
The Company earned total revenue of Rs,17,361.72 crore, registering an increase of 17 percent. The percentage of administrative expenses to the housing loans, which was 0.26 percent in the previous year, has come down to 0.24 percent during the financial year 2018-19.
Net Profit before tax and after tax stood at Rs,3,379.55 crore and Rs,2,430.97 crore respectively as against Rs,2,765.50 crore and Rs,2,002.50 crore, respectively, for the previous year. Profit before tax increased by 22.20 percent over the previous year while profit after tax showed growth of 21.40 percent over that of the previous year.
LENDING OPERATIONS Individual loans:
The main thrust continues on individual housing loans with a disbursement growth of 6.82 percent during the year. The Company has sanctioned 2,05,702 individual housing loans for Rs,50,276.67 crore and disbursed 2,04,690 loans for Rs,48,187.40 crore during FY 2018-19. Housing loan to Individuals i.e. retail loans constitute 84.60 percent of the total sanctions and 87.11 percent of the total disbursements for the FY 2018-19 as compared to 84.23 percent and 91.37 percent respectively during the FY 2017-18. The gross retail loan portfolio grew by over 13.94 percent from Rs,1,59,350.29 crore as on 31st March, 2018 to Rs,1,81,569.21 crore as on 31st March, 2019.
The cumulative sanctions and disbursements since incorporation, in respect of individual housing loans are:
Amount sanctioned: Rs,3,48,571.20 crore Amount disbursed: Rs,3,35,074.98 crore 26,14,593 customers have been serviced by the Company up to 31st March, 2019 since inception.
PROJECT LOANS:
The project loans sanctioned and disbursed by the Company during the year amount to Rs,9,154 crore and Rs,7,128 crore respectively. Corresponding figures for the previous year were Rs,8,736 crore and Rs,4,266 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 some of which are listed below:
- Best Private Issuer on Electronic Bidding Platform by NSE;
- Awarded ''Outstanding Global Leadership AwardRs,2018 by The Institute of Economic Studies (IES);
- ''Best Housing Finance Company'' at Banking Financial Services & Insurance Awards by ABP News;
- Awarded ''Brand of the Decade 2019'' by BARC Asia.
- Recognized as one of the ''The Economic Times Best Brands 2019''
MARKETING AND DISTRIBUTION
During the year under review, efforts were taken to further strengthen the distribution network. The distribution network of the Company consists of 273 Marketing Offices and 1 Customer Service Point. These marketing offices work through Direct Sales Agents, Home Loan Agents and dedicated Team of Direct Marketing Executives, totaling more than 13500. The distribution network also includes 50 offices of LICHFL Financial Services Ltd., wholly owned subsidiary company engaged in distribution of various financial products including housing loans. The Company has representative offices in Dubai and Kuwait.
REPAYMENTS
During F.Y. 2018-19, Rs,26,242.99 crore was received by way of scheduled repayment of principal through monthly installments as well as prepayment of principal, as compared to Rs,25,851.01 crore received during the previous year
NON-PERFORMING ASSETS AND PROVISIONS
The amount of gross Non-Performing Assets (NPA) as at 31st March, 2019 was Rs,2,971.69 crore, which is 1.54 percent of the housing loan portfolio of the Company, as against Rs,1,303.61 crore i.e. 0.78 percent of the housing loan portfolio as at 31st March, 2018. The net NPA as at 31st March 2019 was Rs,2,081.20 crore i.e. 1.08 percent of the housing loan portfolio vis-a-vis Rs,711.66 crore i.e. 0.43 percent of the housing loan portfolio as at 31st March, 2018. The total cumulative provision towards housing loan portfolio including provision for standard assets as at 31st March, 2018 is Rs,1,693.89 crore as against Rs,1,248.80 crore in the previous year. During the year, the Company has written off Rs,265.66 crore of housing loans which includes nonretail loan as against Rs,23.29 crore during the previous year
The aforesaid figures are as per IGAAP. As per IND-AS, the provision as per ECL is Rs,1,659.48 crore as at 31st March, 2019 as against Rs,1,309.13 crore as at 31st March, 2018.
RESOURCE MOBILISATION
During the year, the Company raised long term funds aggregating to Rs,45,913.12 crore through Non - Convertible Debentures (NCDs), Term Loans and Deposits in addition to short term borrowings.
NON-CONVERTIBLE DEBENTURES (NCDs)
During the year, the Company issued NCDs amounting to Rs,35,112.10/- 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 and ''CARE AAA/ Stable'' by CARE. As at 31st March, 2019, NCDs amounting to Rs,1,27,475.56/- crore were outstanding. The Company has been regular in making repayment of principal and payment of interest on the NCDs. Also the amounts of NCDs were utilized for the purposes for which these were raised.
As at 31st March, 2019, 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 NCDs remaining unclaimed or unpaid beyond due date is ''Nil''.
SUBORDINATE BONDS AND UPPER TIER II BONDS
During the year, the Company has not issued any Subordinate Bonds and Upper Tier II Bonds. As at 31st March, 2019, the outstanding Subordinate Bonds and Upper Tier II Bonds stood at Rs,2,000/- crore. Considering the balance term of maturity as at 31st March, 2019, 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 / OTHER FINANCIAL INSTITUTIONS / COMMERCIAL PAPER
The total loans / LOC outstanding from the Banks as at 31st March, 2019 were Rs,24,873.23 crore as compared to Rs,14,358.81 crore as at 31st March, 2018. Loans and advances outstanding from Other Financial Institutions were Rs,200 crore as at 31st March, 2019 and 31stMarch, 2018. The Refinance from NHB as at 31st March, 2019 stood at Rs,1,310.68 crore as against Rs,1,958.24 Crore as at 31st March, 2018. During the year, the Company has not availed any Refinance from NHB under regular Refinance scheme. As at 31st March, 2019, Commercial Paper amounting to Rs,7,140.11 crore were outstanding as compared to Rs,4,050.22 crore for the previous year. During the year 2018-19, the Company issued Commercial Paper amounting to Rs,38,339.48 crore as compared to Rs,17,976 crore for the corresponding previous year.
The Company''s long term loan facilities have been assigned the highest rating of ''CRISIL AAA/STABLE'' and short term loan facilities have been assigned a rating of ''CRISIL A1 & ICRA A1 '' signifying highest safety for timely servicing of debt obligations.
TRANSFER OF UNCLAIMED DIVIDEND / DEPOSITS AND SHARES TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, rules made there under and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 read with the relevant circulars and amendments thereto, the amount of dividend / deposits including interest thereon remaining unclaimed for a period of seven years from the due date is required to be transferred to the Investor Education and Protection Fund (IEPF) as constituted by the Central Government. Further, as per the provisions of Section 124(6) of the Companies Act, 2013 read with the Investor Education & Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016, the shares in respect of which the dividend has not been claimed for seven consecutive years are required to be transferred by the Company to the designated demat account of the IEPF Authority. The details of the unclaimed dividend/deposits and the shares transferred to the IEPF, are uploaded as per the requirements, on the website of the Company i.e. www.lichousing.com.
UNPAID/UNCLAIMED DIVIDEND
During the financial year under review, your Company has transferred unclaimed dividend of Rs,82,10,045/- pertaining to the financial year 2010-11 to the Investor Education and Protection Fund (IEPF) established by the Central Government, after the expiry of seven years from the date of transfer to unpaid dividend account.
TRANSFER OF SHARES TO IEPF
Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 and the Rules made thereunder, the Company has transferred in aggregate 97,169 equity shares of Rs,2/- each to Investor Education and Protection Fund (IEPF) established by the Central Government in respect of which the dividend remained unclaimed for a period of seven consecutive years i.e. from 2010-11 till the due date of 30th August, 2018 after following the prescribed procedures.
Any person who is entitled to unclaimed dividend or deposits etc. that have been transferred to IEPF, can claim the same by making an application directly to IEPF in the prescribed form under the IEPF Rules which is available on the website of IEPF
i.e. www.iepf.gov.in
PUBLIC DEPOSITS
As at 31st March, 2019, the outstanding amount on account of public deposits was Rs,3,932.17 crore as against Rs,3,430.83 crore in the previous year and outstanding amount on account of corporate deposits was Rs,3,735.26 crore as against Rs,3,340.84 crore in the previous year. During F.Y. 2018-19, the number of depositors for public deposits has decreased from 35528 to 35005 and increased for Corporate deposits from 521 to 567 Rs,1,370.51 crore has been collected as public deposits and Rs,3,085.51 crore as corporate deposits. Total aggregate amount collected was Rs,4,455.71 crore.
CRISIL has for the twelfth consecutive year, re-affirmed a rating of âCRISIL FAAA/Stableâ 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. 1,083 deposits amounting to Rs,86.15 crore which were due for repayment on or before 31st March, 2019 were not claimed by the depositors. Since then, 152 depositors have claimed or renewed deposits of Rs,38.61 crore as on date of this report. Depositors are appropriately intimated about renewal / claim of their deposits through an authorized 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,1,79,000/- against unclaimed principal and Rs,2,58,624/- 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 Sections 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. Which was 14.36 percent (as against 12 percent prescribed by the NHB) as at 31st March, 2019 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'' (MITC) 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 and MCA from time to time, applicable to a listed company.
DISCLOSURE UNDER HOUSING FINANCE COMPANIES ISSUANCE OF NON-CONVERTIBLE DEBENTURES ON PRIVATE PLACEMENT BASIS (NHB) DIRECTIONS, 2014
During the financial year under review, Non-Convertible Debentures issued on private placement basis, were repaid / redeemed by the Company on their respective due dates and there were no instances of any Non-Convertible Debentures which have not been claimed by the investors or not paid by the Company after the date on which the Non-Convertible Debentures became due for redemption.
AUDIT REPORTS AND AUDITORS Audit Reports
The Auditors'' Report for the financial year 2018-19 does not contain any qualification, reservation or adverse remark. The Auditors'' Report is enclosed with the financial statements in this Annual Report.
The Secretarial Auditor''s Report for the financial year 201819 does not contain any qualification, reservation or adverse remark. Report of the Secretarial Auditor for the financial Year 2018-19 in Form MR-3 is annexed to this report as Annexure 10.
A certificate from Shri. P. S. Gupchup, Practising Company Secretary, Mumbai (Membership No.: ACS 4631 and Certificate of Practice No.:9900), regarding compliance of the conditions of Corporate Governance as stipulated under SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 is attached to the Corporate Governance Report which does not contain any qualification, reservation or adverse remark.
AUDITORS Statutory Auditors
Under Section 139 of the Companies Act, 2013 and the Rules made thereunder, it is mandatory to rotate the statutory auditors on completion of the maximum term permitted under the said Section . The present Joint Statutory Auditors complete their term as per the said Section. The Audit Committee of the Company has proposed and on 1st July, 2019, the Board of Directors of the Company has recommended the appointment of M/s. Gokhale & Sathe, Chartered Accountant (Firm Registration No.: 103264W) and M/s. M. P. Chitale & Co., Chartered Accountant (Firm Registration No.: 101851W) as Joint Statutory Auditors of the Company and they will hold office for a period of five consecutive years from the conclusion this Thirtieth Annual General Meeting of the Company scheduled to be held on 28th August, 2019 till the conclusion of the Thirty Fifth Annual General Meeting to be held in the year 2024, subject to the approval of the shareholders of the Company. The second quarterly limited review for financial year 2019-20 as on 30th September, 2019 will be done by the proposed Joint Statutory Auditors. The first year of audit for the proposed Joint Statutory Auditors will be for the year ending 31st March, 2020.
The remuneration payable to each of the proposed Joint Statutory Auditors will be Rs,26,20,000/- as 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 along with consolidated accounts as well as at all Back Offices to be allotted equally between them in consultation with the management.
The Board recommend to the Members for approval at the Thirtieth Annual General Meeting, the appointment of M/s. Gokhale & Sathe, Chartered Accountant (Firm Registration No.: 103264W) and M/s. M. P. Chitale & Co., Chartered Accountant (Firm Registration No.: 101851W) as Joint Statutory Auditors of the Company to hold the office from the conclusion of this Thirtieth Annual General Meeting until the conclusion of the Thirty Fifth Annual General Meeting subject to ratification by the members of the Company at each subsequent Annual General Meeting on a remuneration as mentioned above and applicable taxes / cess on the said remuneration, for the purpose of audit of the Company''s accounts at the Corporate Office along with consolidated accounts at all Back Offices to be allotted equally between them in consultation with the management.
SECRETARIAL AUDITOR:
Pursuant to Section 204 of the Companies Act, 2013, the Company had appointed M/s. N. L. Bhatia & Associates, Practicing Company Secretary as its Secretarial Auditor to conduct the secretarial audit of the Company for the Financial Year 2018-19. The Company has provided all assistance and facilities to the Secretarial Auditor for conducting their audit.
COST RECORDS AND COST AUDIT:
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.
CORPORATE GOVERNANCE
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 shall be included as part of the Annual Report. Accordingly, Business Responsibility Report is presented in a separate section forming part of this Annual Report.
DEPOSITORY SYSTEM
For transaction of the Company''s shares in dematerialized 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, 2019, 6176 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 dematerialized form only and therefore, such members are requested to convert their holdings to dematerialized form.
AUDITORSâ OBSERVATIONS
No adverse remark or observation has been made by the Joint Statutory Auditors in their report dated 4th May, 2019.
The Company has an in-house mechanism for Internal Audit of all its back offices conducted by the team of in-house auditors. The Company maintains an exhaustive checklist for the purpose of Audit. The Company has also appointed M/s. Borkar & Muzumdar, Chartered Accountants, as Internal Auditor for Internal Audit of its Corporate Office for financial year 2019-20 to financial year 2020-21.
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 and non-housing loans.
OUTLOOK FOR 2019-20
The initiatives taken by the Company during the financial year 2018-19 are expected to improve its operational and financial performance. During F.Y. 2019-20, the Company proposes:
- Focus on growth of Retail Housing Loans to continue at all levels.
- PMAY-CLSS to be given additional thrust and marketing activities to be in alignment with Government Initiatives from time to time and thus ensuring achievement of targets in both numbers and amount.
- Direct Marketing Executive (DME) channel to be made a separate unit. Business Development Center (BDCs) to be opened at all BO centers. Metro centers like Mumbai, Pune, Delhi, Hyderabad, Chennai, Bangalore, Kolkata, Lucknow to have minimum 2 BDCs. In other major cities having more than 2 area offices, one office to be converted as BDC.
- Leveraging our relationship with the Builders to whom Project Finance has been provided, for retail business as well. DME channel to be given responsibility of procuring retail housing loans from these projects.
- Creation of separate cell at Regional Offices (ROs) to handle high value loans of more than Rs,10 crore with post disbursement monitoring. This cell will be on similar lines to Project Finance Department in ROs.
- Creation of cluster of area offices (say 5 area offices) within (BO) jurisdiction to handle sanction and disbursement with the aim to reduce Turn Around Time (TAT).
- Business Potential Mapping exercise to procure more and more retail business
- Advance Processing Facility (APF) approval to be made core activity at Area Office levels
- Corporate tie ups with builders for mass business procurement
- Making use of builders / developers as distribution channel.
- Making online loan application more effective and enhance its contribution towards the incremental business.
- Ensuring achievement of Term Targets- Monthly, Quarterly by all Units.
- Strengthening of new area offices opened in FY 2018-19 by bringing their performance achievement in alignment with to budget and Growth above Region''s average.
- To make both the Overseas Offices more effective and productive and increasing their share to the Company''s Business.
- To come up with new Incentive or privilege schemes for Intermediaries and Marketing Officials as additional tool of motivation.
- Continuous ''training'' to intermediaries and Marketing Officials to increase productivity
- 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 centers.
- Increase its distribution by appointing new agents and activating more agents. Explore new avenues of distribution channel.
- Incentivizing and motivating the marketing intermediaries systematically for improving productivity and imbibing a sense of loyalty, professionalism.
- Raising funds through various sources at attractive terms.
- Making efforts towards reducing overall cost of funds.
- Steps to improve the recovery ratio and ensuring lowest NPA level. Improving receivable management through IT support system.
- Timely review of credit appraisal system to improve the loan asset quality.
- Continuous efforts to upgrade Information Technology platform to ensure prompt and effective service to the clientele.
- Ensuring achievement of term targets - monthly, quarterly by all units.
- Procurement of business under Pradhan Mantri Awas Yojana / Affordable housing and to have a continuous focus in alignment with Government initiatives from time to time.
THE MANAGEMENT PERSPECTIVE ABOUT FUTURE OF THE COMPANY
The convergence of on-going reforms and political stability have led to growth in the residential real estate market in the first half of 2019 and with the continuity of erstwhile political regime ensuring an undeterred process of reforms and speedy infrastructure growth, markets are set to continue along path of growth. During the first quarter of current year, the government lowered Goods and Services Tax (GST) rates on affordable homes to 1% from the earlier 8%, without input tax credit. GST on projects under construction, which are not under the affordable housing segment, was reduced to 5% from 12%. Real Estate (Regulation and Development) Act 2016 (RERA) have now been notified in most states and union territories. Though much is yet to be done in terms of implementation, the Act has definitely ensured greater transparency and efficiency in residential markets. Apart from regulatory reforms, the government has focused on enhancing economic growth and improving liquidity (the RBI has cut interest rates thrice since the beginning of 2019). The home buyer has benefitted from both - ongoing reforms as well as lowering of borrowing costs.
It may be mentioned here that there is a liquidity challenge in the market, driven more by a crisis of confidence in the Non-Banking Finance Companies (NBFC) more specifically Housing Finance Companies ecosystem, rather than an actual impairment on balance sheets. In the last three years, debt mutual funds had become the de-facto bankers to the fast-growing NBFCs. They accounted for the bulk of the industry''s growth capital as public sector banks pulled away from lending due to lack of capital. As a result a number of NBFCs started facing liquidity crunch after a sharp rise in interest cost, thereby resulting a hit in their repayment ability. Housing Finance Companies (HFCs) though regulated by National Housing Bank (NHB) are basically NBFCs which are India''s shadow banking sector, well known for aggressive lending practices, especially for small and medium enterprises, home buyers and real estate developers, who have difficulty in borrowing from banks. Credit from the NBFC sector grew by 21 per cent year-on-year in the financial year 2018, when bank credit growth was around 10 per cent. But the inherent problem with NBFCs has been their reliance on short-term funding routes like commercial papers and resorting to rollovers to meet their long-term lending requirements.
The problems with the NBFC sector began in September
2018 when the infrastructure finance company namely, IL&FS Ltd defaulted on repayments to banks, mutual funds, term deposits and failed to meet the commercial paper redemption obligations. It caused panic in the markets as it impacted banks, mutual funds as well as retail investors. Since then, the source of funding for NBFCs has been drying up and they are finding it increasingly difficult to service repayment of existing obligations. Asset quality is viewed seriously and fund managers are no more chasing only numbers and therefore, the availability of liquidity may go down.
In India, there is an estimated shortage of around 4 crore houses (urban and rural). In addition, population growth of 1.3 percent per annum, favorable demographics, ''nuclearisation'' of families, migration to urban areas, fiscal benefits, rising income / aspirations, all that could lead to another one crore per annum demand for houses. Affordability to buy houses has increased over the past three years (especially in urban areas), even as property prices have remain flat, incomes have risen and mortgage interest rates have fallen by around 250 bps from five-year peak leading to 15 percent reduction in EMI payments.
With developers focusing on delivery of already launched projects, new launches of residential units decreased by 11% on a y-o-y basis across the top seven cities (Delhi NCR, Bengaluru, Mumbai, Kolkata, Chennai, Hyderabad and Pune). With the General Elections in H1 2019, developers also adopted a wait and watch approach and focused on clearing their unsold inventory. Apart from Mumbai and Delhi NCR, all other cities saw a dip in new launches during the H1 2019. Mumbai, Delhi NCR and Bengaluru continued to dominate launches and formed three-fourth of the overall launches during this period. Interestingly, since 2016 Pune which is merely 1/4th the size of Delhi NCR in terms of population witnessed a higher new launches declining by 11% on a y-o-y basis. Going ahead, new unit launches across the seven cities are expected to remain modest as developers realign their product mix to suit market demand.
COMPLIANCE UNDER COMPANIES ACT, 2013
Pursuant to section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the Company complied with the compliance requirements and the details 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, 2019 is attached as Annexure 1 to this Report.
Extract of Annual Return is also displayed at Company''s website at the given link - www.lichousing.com/annual_ general_meeting.php.
REPORTING OF FRAUDS BY AUDITORS:
During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee, under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s report.
SECRETARIAL STANDARDS:
The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.
RATING RATIONALE:
CRISIL had assigned its outstanding rating as ''CRISIL AAA/ Stable'' rating to the Rs,25000 crore non-convertible issue of LIC Housing Finance Limited and has reaffirmed its ''CRISIL AAA/ FAAA/Stable/CRISIL A1 '' ratings on other debt instruments, bank facilities and fixed deposit programme of the Company.
Total Bank Loan Facilities |
Rs,40059.88 crore |
Rated |
|
Long Term Rating |
CRISIL AAA/Stable |
(Reaffirmed) |
|
Short Term Rating |
CRISIL A1 (Reaffirmed) |
Rs,25000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Assigned) |
Rs,25000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,25000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,5000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,15000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,10000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,5000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,5976 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,15000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,15000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,20000 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,33833 crore Non- |
CRISIL AAA/Stable |
Convertible Debentures |
(Reaffirmed) |
Rs,1600 crore Upper Tier II |
CRISIL AAA/Stable |
Bond |
(Reaffirmed) |
Rs,1750 crore Tier II Bond |
CRISIL AAA/Stable |
(Reaffirmed) |
|
Fixed Deposits Programme |
FAAA/Stable (Reaffirmed) |
Rs,17500 crore Commercial |
CRISIL A1 (Reaffirmed) |
Paper |
CARE Ratings had assigned its ''CARE AAA; Stable'' rating to the Rs,25000 crore Non-Convertible Debenture issue of LIC Housing Finance Limited and reaffirmed its ''CARE AAA; Stable''. The unutilized amount as on 30.04.2019 was Rs,9477.90 crore.
ICRA Limited had assigned ICRA A1 rating to the Rs,17,500 crore commercial paper issue of LIC Housing Finance Limited and has reaffirmed its ICRA A1 rating.
BOARD MEETINGS HELD DURING THE YEAR:
During the year under review, 6 Board meetings were held. Detailed information on the meetings of the Board are included in the Report on Corporate Governance which forms part of this Annual Report.
DIRECTORSâ RESPONSIBILITY STATEMENT:
The financial statements are prepared in accordance with Indian Accounting Standards (Ind As) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Act (to the extent modified), guidelines issued by the Securities and Exchange Board of India (SEBI) and guidelines issued by the National Housing Bank (''NHB'') (Collectively referred to as ''the Previous GAAP'').
The Company has adopted Indian Accounting Standards (''Ind AS'') notified under Section 133 of the Companies Act 2013 (''the Act'') read with the Companies ( Indian Accounting Standards) Rules, 2015 from April 01, 2018 and the effective date of transition is April 01, 2017. The said transition has been carried out from the erstwhile Accounting Standards notified under the Act, read with relevant rules issued there under and guidelines issued by the National Housing Bank (''NHB'') (Collectively referred to as ''the Previous GAAP'') and the adoption was carried out in accordance with applicable transition guidance.
The Ind AS are prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Amendment Rules, 2016. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in the accounting policy hitherto in use.
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 has 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;
(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 and
(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:
The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION INCLUDING CRITERIA:
It is Endeavour of the Company to have an appropriate mix of executive, non-executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As of 31st March, 2019, the Board had nine members, two of them are non-executive directors including Chairman and one LIC Director, one executive director who is Managing Director & CEO, one non-executive and no independent director, while rest five are independent directors including one independent woman director
The Nomination and Remuneration Committee at its meeting had laid down Criteria for determining Directors Qualifications, 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 28th March, 2019.
We affirm that except Chairman, LIC Director and Managing Director & CEO all other Directors were paid sitting fees for Board and Committee (other than Corporate Social Responsibility Committee) meetings attended by them. However, Managing Director & CEO is paid remuneration as applicable to an Officer in the cadre of Executive Director of LIC of India and is as per the terms laid out in the Nomination and Remuneration Policy of the Company.
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:
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. All such Related Party Transactions are placed before the Audit committee for approval, wherever applicable. Prior omnibus approval as per SEBI (LODR) is also obtained from Audit Committee for such transactions which are of repetitive nature as well as in the 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 is annexed as Annexure 3 to this report.
Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act, and Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed as Annexure 4 to this report.
STATE OF THE COMPANYâS AFFAIRS:
The Company earned total revenue of Rs,17,362 crore, registering an increase of 17 percent. The percentage of administrative expenses to the housing loans, which was 0.26 percent in the previous year, has come down to 0.24 percent during the financial year 2018-19.
Net Profit before tax and after tax stood at Rs,3379.55 crore and Rs,2430.97 crore respectively as against Rs,2,765.50 crore and Rs,2,002.50 crore, respectively, for the previous year. Profit before tax increased by 22.20 percent over the previous year while profit after tax showed growth of 21.40 percent over that of the previous year.
AMOUNTS, IF ANY, WHICH IT PROPOSES TO CARRY TO ANY RESERVES:
The Company has transferred Rs,750 crore to Special Reserve and Statutory reserve u/s 29C of NHB Act, and Rs,600 crore to General Reserve.
AMOUNT, IF ANY, WHICH IT RECOMMENDS SHOULD BE PAID BY WAY OF DIVIDEND:
Rs,383.54 crore is proposed to be paid by way of dividend to shareholders of the Company i.e. Rs,7.60 per equity share of face value of Rs,2/- per share.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year i.e. 31st March, 2019 and the date of the Board''s Report i.e. 1st July, 2019.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: A. Conservation of energy -
(i) The steps taken and impact on conservation of energy-
The Company has 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 regular basis thereby saving energy and costs and giving required cooling.
The office have 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, efforts to reduce cost of fund, 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 exchange outgo during the year in terms of actual outflows.
During the year ended 31st March, 2019, the Company earned Rs,25.11 lakh and spent Rs,243.94 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 has constituted 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.
The Risk Management Policy of the Company is in accordance with the directives issued by National Housing Bank. During the financial year under review, the Risk Management Policy of the Company was reviewed by the Risk Management Committee and put up to the Board. The same was approved in the Board Meeting dated 5th March, 2019.
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY:
In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has 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 5 to this report.
COMPOSITION OF THE CORPORATE SOCIAL RESPONSIBILITY COMMITTEE IS AS FOLLOWS:
Shri Jagdish |
Member |
Independent |
Capoor |
Director |
|
Dr. Dharmendra |
Member |
Independent |
Bhandari |
Director |
|
Shri Vinay Sah |
Member |
Managing Director |
& CEO |
ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE:
The Nomination and Remuneration Committee had recommended 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 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 28th March, 2019.
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 Board committees 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 and associates, in the same form and manner as that of the Company which shall be laid before the ensuing Thirtieth Annual General Meeting alongwith the Company''s Financial Statement under subsection (2) of Section 129 i.e. Standalone Financial Statement. Further, pursuant to the provisions of Accounting Standard (''AS'') 21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements alongwith its subsidiaries and associates for the year ended 31st March, 2019 form part of this Annual Report.
THERE HAS BEEN NO CHANGE IN THE NATURE OF BUSINESS OF THE COMPANY DURING THE YEAR UNDER REVIEW.
DIRECTORS:
As of 31st March, 2019, the Board had nine members, two of them are non-executive directors including Chairman and one LIC Director, one executive director who is Managing Director & CEO, one non-executive and non-independent director, while rest five are independent directors including one independent woman director.
SUCCESSION PLANNING:
In order to ensure stability and effective implementation of long term business strategies and for smooth transition at MD & CEO level, the Board decided that new MD & CEO should be posted in advance, say 4-6 months as Chief Operating Officer (COO) who would subsequently take over as MD & CEO on retirement / elevation / transfer of the existing MD & CEO. This would form part of succession planning.
In terms of Article 138(b) of the Articles of Association of Company, LIC of India is entitled to nominate up to one third of the total number of directors of the Company and therefore, the Board after consideration, approved posting of senior official from LIC of India as Nominee of LIC of India for the post of COO as part of succession plan for MD & CEO with a view to ensure stability and effective implementation of long term business strategies. LIC of India has posted Shri Siddhartha Mohanty as COO of the Company.
APPOINTMENTS / RESIGNATIONS OF DIRECTORS:
Shri M.R. Kumar was appointed as Additional Director and Chairman of the Company by the Board with effect from 25th March, 2019 under Sections 161 of the Companies Act, 2013, and holds Office up to the date of the Thirtieth Annual General Meeting of the Company. The Company has received from Shri M.R. Kumar his consent to act as Director. As required under Section 160 of the Companies Act, 2013, a notice has been received from a member of the Company proposing the name of Shri M.R. Kumar for the office of a Director
The terms and conditions of his appointment shall be determined from time to time by LIC of India and the Board subject to limit as prescribed by the Companies Act, 2013. His appointment as Chairman shall be without prejudice to his continuing service in LIC of India.
In terms of Article 176(a) & (b) of the Articles of Association of the Company read with Article 138(a) & (b) which authorizes LIC of India to nominate Directors and one of such director has to be appointed as Chairman of the Company. Accordingly, LIC of India had nominated Shri Hemant Bhargava, in addition to, he being Managing Director of LIC of India, to the Board of LIC Housing Finance Limited as Director. Thus, the Board of the Company had appointed Shri Hemant Bhargava, Ex-Chairman (Additional In-Charge), of LIC of India and Director on the Board of LIC Housing Finance Limited as Chairman of the Board of LIC Housing Finance Limited in place of Shri V. K. Sharma with effect from 7th January, 2019 till the period as decided by LIC of India i.e. till the period Shri M.R. Kumar was appointed as Additional Director and Chairman of the Company by the Board of Directors with effect from 25th March, 2019.
The Nomination and Remuneration Committee which had considered the performance evaluation report of Dr. Dharmendra Bhandari (DIN-00041829 and ''Fit and Proper'' criteria adopted by the Board on 10th March, 2017 as per NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9th February, 2017, had undertaken process of due diligence in the case of Dr. Dharmendra Bhandari (DIN-00041829) and found Dr. Bhandari to be suitable and eligible based on evaluation, qualification, expertise, track record, integrity ''fit and proper'' criteria, for recommendation to the Board to continue Dr. Bhandari as Independent Director of the Company for a further period of five consecutive years with effect from 19th August, 2019 not liable to retire by rotation. Based on the recommendation of the Nomination and Remuneration Committee, the Board considered and after having thought fit pursuant to the provisions of the Sections 149, 152, 161 of the Companies Act, 2013 and the Rules made thereunder, read with Schedule IV, approved appointment of Dr. Bhandari as Independent Director of the Company to hold office for a period of five consecutive years, not liable to retire by rotation.
The Nomination and Remuneration Committee after considering the profile, qualifications, etc., of Shri Kashi Prasad Khandelwal (DIN-00748523) and in terms of ''Fit and Proper'' criteria adopted by the Board on 10th March, 2017 pursuant to NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9th February, 2017 also in accordance with SEBI(LODR) Regulations, 2015 as well as after undertaking the process of due diligence, recommended to the Board of Directors of the Company, Shri Kashi Prasad Khandelwal (DIN-00748523), to be suitable and eligible for the appointment of Independent Director of the Company for a period of five consecutive years with effect from 1st July, 2019 not liable to retire by rotation. Based on the recommendation by Nomination and Remuneration Committee, the Board considered and after having thought fit pursuant to the provisions of the SEBI(LODR) Regulations, 2015, Sections 149, 152, 161 of the Companies Act, 2013 and the Rules made thereunder, read with Schedule IV and ''fit and proper'' criteria adopted by the Board, approved appointment of Shri Khandelwal as Additional Independent Director of the Company to hold office for a period of five consecutive years, not liable to retire by rotation.
Similarly, the Nomination and Remuneration Committee after considering the profile, qualifications, etc., of Shri Sanjay Kumar Khemani (DIN-00072812) and in terms of ''Fit and Proper'' criteria adopted by the Board on 10th March, 2017 pursuant to NHB notification No.NHB.HFC.CG-DIR.1/MD&CEO/2016 dated 9th February, 2017 also in accordance with SEBI(LODR) Regulations, 2015 as well as after undertaking the process of due diligence, recommended to the Board of Directors of the Company, Shri Khemani, to be suitable and eligible for the appointment as Non-Executive Non Independent Director of the Company effect from 1st July, 2019 liable to retire by rotation. Based on the recommendation by Nomination and Remuneration Committee, the Board considered and after having thought fit pursuant to the provisions of the SEBI(LODR) Regulations, 2015, Sections 152, 161 of the Companies Act, 2013 and the Rules made hereunder, read with Schedule IV and ''fit and proper'' criteria adopted by the Board, approved appointment of Shri Khemani as Additional Non Independent Director of the Company to hold office, liable to retire by rotation.
Shri V.K. Sharma had tendered his resignation from Chairmanship as well as Directorship of the Company with effect from 31st December, 2018 on attainment of superannuation from the services of LIC of India.
Ms Usha Sangwan, Director of the Company had tendered her resignation from Directorship of the Company on attainment of superannuation from the services of LIC of India. Consequent upon resignation of Ms Usha Sangwan, the Board of the Company had appointed Shri Hemant Bhargava, Managing Director, LIC of India, as Additional Director (Non-Executive) of the Company in place of Ms. Usha Sangwan with effect from 4th October, 2018 till the period he took over as Chairman of the Company from 7th January, 2019.
Shri Debabrata Sarkar, Director of the Company and Chairman of the Audit Committee had tendered his resignation from Directorship of the Company with effect from 12th November, 2018, on account of his other professional commitments.
On completion of term of office of five years, Shri T V Rao tendered his resignation with effect from 31st July 2018.
Thus as on the date of this report, the Board of Directors of the Company consists of eleven members, four of them are nonexecutive directors including Chairman and one LIC Director, while other two are non-executive non-independent Directors. Managing Director & CEO is executive whole time Directors. Remaining six Directors are Independent Directors including one Independent Woman Director..
CONTINUANCE OF DIRECTORSHIP OF SHRI JAGDISH CAPOOR, NON-EXECUTIVE INDEPENDENT DIRECTOR OF THE COMPANY AGED ABOVE 75 YEARS
Pursuant to the provisions of Regulation 17(1A) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 (Amendment Regulations) and other applicable provisions, if any, of the Companies Act, 2013 consent of the Members was sought by way of Postal Ballot and remote e-Voting which was duly assented by Members on 20th February, 2019 with requisite majority for continuance of the Directorship of Shri Jagdish Capoor, as Non-Executive Independent Director of the Company, who is above the age of 75 years and is aged about 80 years at present, till the expiry of his term i.e., 23rd May, 2022 in the office of Director of the Company on the existing terms and conditions, subject to provisions, rules and regulations of the Act and / or Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and / or any other appropriate authorities , as may be applicable, from the effective date of the said Amendment Regulations i.e., April 01, 2019.
CHANGE IN DESIGNATION:
The Board considered and thought fit to approve change in the designation of Ms. Savita Singh with effect from 1st April, 2019, from Non-Executive Non Independent Director to Non-Executive Independent Director in order to align with the Regulation 17(1)(a) of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2015 inserted vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 dated 9th May, 2018, not liable to retire by rotation with effect from 1st April, 2019.
Similarly, the Board also considered change in the designation of Shri P. Koteswara Rao, from Non-Executive Independent Director to Non-Executive Non Independent Director liable to retire by rotation with effect from 4th May, 2019 in order to comply with the provisions of Section 152(6)(a) of the Companies Act, 2013.
DIRECTOR RETIRING BY ROTATION:
Shri P. Koteswara Rao, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.
APPOINTMENTS / RESIGNATION OF THE KEY MANAGERIAL PERSONNEL:
Shri Vinay Sah, Managing Director & CEO, Mr. Nitin K. Jage, General Manager & Company Secretary and Mr. Sudipto Sil, CFO are the Key Managerial Personnel as per the provisions of the Companies Act, 2013.
Shri P Narayanan tendered his resignation as CFO and Key Managerial Personnel w.e.f. 10th May, 2019 consequent upon his transfer to LIC of India and in his place Mr. Sudipto Sil was appointed as CFO and Key Managerial Personnel of the Company with effect from 10thMay, 2019 until the Board considers it fit.
COMMITTEES OF THE BOARD:
The Company has various committees which have been established as a part of the best corporate governance practices and is 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
- Strategic Investment Committee
- IT Strategy Committee
Composition of Audit Committee is as follows:
- |
Shri Jagdish Capoor |
Chairman |
Independent Director |
- |
Dr |
Member |
Independent |
Dharmendra |
Director |
||
Bhandari |
|||
- |
Shri Ameet |
Member |
Independent |
Patel |
Director |
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 Report.
SUBSIDIARIES AND GROUP COMPANIES
As on 31st March, 2019, 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, 2019, 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 Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 11th September, 2001 having an authorized share capital of Rs,75 Crore. The basic purpose of establishing the Company was to establish & operate assisted living community centres for the senior citizens.
During the fiscal 2018-19, the Company earned a Profit Before Tax (PBT) of Rs,0.86 crore and Profit After Tax (PAT) of Rs,0.63 crore.
The Company has successfully completed a project at Bangalore in two Phases and its project at Bhubaneswar is at near completion stage. The Company is also exploring possibilities to develop Senior Living Care Homes project at Aluva, Kerala and Jaipur subject to viability of the projects.
Further, the Company is also in process to evaluate Senior Living Care Homes projects at various locations across the Country With life expectancy going up and number of elderly citizens rising year after year, 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 ASSET MANAGEMENT COMPANY LIMITED.
The Company is in the business of managing, advising, administering Venture Capital and Alternative Investment Funds.
The Company was appointed as Investment Manager in 2010 to raise and manage the LICHFL Sponsored LICHFL Urban Development Fund (LUDF). The Company has raised total commitments of Rs,529.35 Crore from Banks, Financial Institutions, Corporate and HNIs as against the targeted size of Rs,500 Crore and announced financial closure on 30th March, 2013. The Company has deployed Rs,461.3 Crore in 9 Portfolio Companies engaged in development, acquisition or operation of affordable / mid income housing, related infrastructure and Hospitals. With receipt from 6 exits, the Fund has so far achieved a multiple of 1.66X on investments with an IRR of 26.43%.
The Company also launched a new Alternative Investment Fund namely LICHFL Housing & Infrastructure Fund (LHIF) with a total corpus of Rs,1,000 crore including Green Shoe Option of Rs,250 crore and the focus of the Fund is on Affordable Housing and Property backed Infrastructure in sectors which include Educational Institutions, Hospitals, Industrial Parks & Warehouses. The Company has already received total Commitment of Rs,700 crore out of which Contribution Agreement was signed for Rs,650 crore as on 31st March, 2019.
3. LICHFL TRUSTEE COMPANY PRIVATE LIMITED.
The Company is in the business of undertaking the business of trusteeship services for Venture Capital Funds and Alternative Investment Funds.
The Company was appointed as Trustee in 2010 for LICHFL Fund and further appointed LICHFL Asset Management Company Limited (LICHFL AMC) as Investment Manager for the Fund. In 2010 the Company had registered LICHFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds) Regulations, 1996.LICHFL Urban Development Fund achieved its financial closure with Rs,529.35 crore on 30th March, 2013.
The Company was appointed as Trustee in 2017 for LICHFL Housing & Infrastructure Trust (LHIT) and further appointed LICHFL AMC Ltd. as Investment Manager for LICHFL Housing and Infrastructure Fund (LHIF). The Company had received registration for LHIF on October 2017 from SEBI under Alternative Investment Fund Regulations, 2012 as Category
- I Infrastructure. LICHFL AMC launched LICHFL Housing & Infrastructure Fund (LHIF) in October 2017 and achieved initial closing on 31st March 2018.
4. LICHFL FINANCIAL SERVICES LIMITED
LICHFL Financial Services Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 31st October, 2007, for marketing of housing loan, insurance products (Life and General Insurance), mutual funds, fixed deposits, credit cards. It became operational in March, 2008 and at present has 50 offices spread across the country
The vision of the Company is âSARVESHAM POORNAM BHAVATUâ - 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 and long term.
At present, the Company distributes Life Insurance products of LIC of India, Home Loans and Fixed Deposits of LIC Housing Finance Limited, Mutual Funds of various fund houses, General Insurance products of United India Insurance Company Limited and Tata AIG General Insurance Company Limited, Credit Cards of LIC Cards Services Limited and Point of Presence for National Pension System (NPS). More business verticals will be added depending on market opportunities and customer needs.
The Company has earned a Profit Before Tax (PBT) of Rs,19.01 crore and Profit After Tax (PAT) stood at Rs,13.10 crore for the FY 2018-19 and recommended dividend @ 40 % for FY 2018-19. FINANCIAL HIGHLIGHTS FOR FY 2018-19 IN COMPARISON WITH PREVIOUS YEAR:
Sr. No. |
Particulars |
FY 2018-19 in Rs, (crore) |
FY 2017-18 in Rs, (crore) |
1. |
Total Income |
52.82 |
52.95 |
2. |
Profit Before Tax |
19.01 |
24.14 |
3. |
Profit After Tax |
13.10 |
17.25 |
4. |
Dividend (Declared) |
3.80 |
4.28 |
The Company is striving to improve its performance across all business verticals in the coming years.
Name/s of Company/ies which have ceased / become subsidiary/joint venture/associate: None
As on 31st March, 2019, the Company has two associate companies namely LIC Mutual Fund Asset Management Company Limited and LIC Mutual Fund Trustee Company Private 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, 2019 has been sent to all the members of the Company. It does not contain Annual Reports of Company''s subsidiaries. The Company will provide Annual Report of all subsidiaries upon request by any member of the Company. These Annual Reports are 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 annexed 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 victimization of whistle blower who avails of such mechanism and also provides for direct access to the Chairman of the Audit Committee.
EMPLOYEE STOCK OPTIONS:
No stock options were issued to the Directors or any employees of the Company.
EMPLOYEE REMUNERATION:
Disclosure pertaining to remuneration and other details as required under 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 |
N.A. |
*No remuneration is paid to Non-Executive Directors (including Independent Directors)
Executive Director |
Ratio to median |
(MD&CEO) |
remuneration |
Shri Vinay Sah |
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 Independent Directors)* |
% increase in remuneration in the financial year |
Nil |
N.A. |
*No remuneration is paid to Non-Executive Directors (including Independent Directors) |
|
Executive Director and Key Managerial Personnel |
% increase in remuneration in the financial year |
Executive Director (MD&CEO) |
16.39% |
Company Secretary |
24.63%(on account of perquisite in respect of lease accommodation) |
Chief Financial Officer |
-0.48% |
c. The percentage increase in the median remuneration of employees in the financial year:
-6.23%
d. The number of permanent employees on the rolls of the Company:
2,309
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 |
% Change |
2019 |
1994 (IPO) |
||
Market Price |
558.85** |
12* |
4557.08 |
(in Rs, ) |
âAdjusted Issue price value on account of sub-division **BSE-closing. price
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 16.93%. The average annual decrease in the salaries of the employees other than managerial personnel during the year was -6.23% on account of new recruitment at lower cadre.
g. Affirmation that remuneration is as per the Remuneration policy of the Company:
The Company affirms that the remuneration is as per the Remuneration Policy of 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.
In terms of Section 136(1) of the Companies Act, 2013 read with the Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board''s 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 Company Secretary, LIC Housing Finance Limited, Corporate Office, 131 Maker Towers, ''F'' Premises, 13thFloor, Cuffe Parade, Mumbai - 400 005.
SIGNIFICANT AND MATERIAL ORDERS:
There are no significant and material orders passed by the regulator or courts or tribunals impacting the going concern status and the Company''s operations in future.
PREVENTION, PROHIBITION & REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place a Policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace and has a robust mechanism to redress the complaints reported hereunder. An Internal Committee has been constituted, which comprises of internal members who have experience in the subject field.
Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the complaints received hereunder and the details relating thereto are as follows:
(a) Number of complaints received in the year: Nil
(b) Number of complaints disposed of during the year: Nil
(c) Number of cases pending more than ninety days: Nil
(d) Number of workshops or awareness programme against sexual harassment carried out: Your Company on a regular basis sensitizes its employees on prevention of sexual harassment through various workshops, awareness programmes.
(e) Nature of action taken by the employer or district officer: Nil
It may be mentioned here that the Company has zero tolerance towards any action on the part of any executive / staff which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to upholding and maintaining the dignity of every women executive / staff working in the Company.
HUMAN RESOURCES
The Company aims to align HR practices with business goals, increase productivity of Human Resource by enhancing knowledge, skills and to provide conducive work environment to develop a sense of ownership amongst employees. 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. The Company inducted employees for various positions and also promoted employees to take up higher responsibilities during the year. Apart from fixed salaries, perquisites and benefits, the Company also has in place performance-linked incentives which reward outstanding performers who meet certain performance targets. In pursuance of the Company''s commitment to develop and retain the best available talent, the Company had organized and sponsored various training programmes / seminars / conferences for upgrading skill and knowledge of its employees in different operational areas.
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 express their sincere thanks to the Company''s clientele, lenders, investors and members for their patronage. The Directors appreciate the dedicated services of the employees and their contribution to the growth of the Company.
For and on behalf of the Board
Place: Mumbai Chairman
Date: July 1, 2019
Mar 31, 2018
Board's Report
To the Members of LIC Housing Finance Limited
Your Directors are pleased to present the Twenty Ninth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2018 of LIC Housing Finance Limited ('the Company').
Financial results
                                                                                                              (Rs, In Crore)
Particulars |
For the year ended 31st March, 2018 |
For the year ended 31 st March, 2017 |
Profit before Tax |
3,061.87 |
2,955.77 |
Tax Expense |
1,072.28 |
1,024.72 |
Profit after Tax |
1,989.59 |
1,931.05 |
Appropriations |
||
Special Reserve &Â Statutory Reserve u/s 29C of NHB Act, 1987 |
560.00 |
570.00 |
General Reserve |
500.00 |
500.00 |
Proposed Dividend |
343.17 |
312.89 |
Tax on Dividend |
69.25 |
63.00 |
Balance carried forward to next year |
517.17 |
485.16 |
 |
1,989.59 |
1,931.05 |
Dividend
The Company has in place a Dividend Distribution Policy formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which intends to ensure that a rationale decision is taken with regard to the amount to be distributed to the shareholders as dividend after retaining sufficient funds for the Company's growth, to meet its long-term objective and other purposes. The Policy also lays down various parameters to be considered by the Board of Directors of the Company before declaration / recommendation of dividend to the Members of the Company.
Considering the performance during the financial year 2017
18, your Directors, in terms of the Dividend Distribution Policy, have recommended payment of dividend for the financial year ended 31st March, 2018 of Rs,6.80 per equity share of face value of Rs,2/- per share i.e. @ 340 percent, as against Rs, 6.20/- per equity share of face value of Rs, 2/- per share for the previous year i.e. @ 310 percent. The total dividend outgo for the current year would amount to Rs,412.42 Crore including Dividend Distribution Tax of Rs,69.25 Crore, as against Rs,375.89 Crore including Dividend Distribution Tax of Rs,63.00 Crore, for the previous year. The dividend payable shall be subject to the approval of the Members of the Company at the ensuing Annual General Meeting which is scheduled to be held on Monday, 20th August, 2018.
The Dividend Distribution Policy is available on the website of the Company in the given link http://www.lichousing.com/ dividend_dist_policy.php and forms part of this Board's report as Annexure - 8.
Performance Income and profit
The Company earned total revenue of Rs,15,072.90 Crore, registering an increase of 7.05 percent. The percentage of administrative expenses to the housing loans, which was 0.42 percent in the previous year, has remained the same at 0.42 percent during the financial year 2017-18.
Profit before tax and after tax stood at Rs,3,061.87 Crore and Rs, 1,989.59 Crore respectively as against Rs, 2,955.77 Crore and Rs,1,931.05 Crore, respectively, for the previous year. Profit before tax increased by 3.59 percent over the previous year while profit after tax showed growth of 3.03 percent over that of the previous year.
Lending operations Individual loans:
The main thrust continues on individual housing loans with a disbursement growth of 17.68 percent during the year. The Company has sanctioned 1,99,490 individual housing loans for Rs, 46,700.80 Crore and disbursed 1,98,402 loans for Rs, 45,112.54 Crore during FY 2017-18. Housing loan to Individual i.e. retail loans constitute 84.23 percent of the total sanctions and 91.37 percent of the total disbursements for the FY 2017-18 as compared to 90.55 percent and 92.28 percent respectively during the FY 2016-17. The gross retail loan portfolio grew by over 13.84 percent from Rs,1,39,210.71 Crore as on 31st March, 2017 to Rs,1,58,472.25 Crore as on 31st March, 2018.
The cumulative sanctions and disbursements since incorporation, in respect of individual housing loans are:
Amount sanctioned : Rs,2,99,106.51 Crore Amount disbursed : Rs,2,86,887.58 Crore 24,08,439 customers have been serviced by the Company up to 31st March, 2018 since inception.
Project loans:
The project loans sanctioned and disbursed by the Company during the year were Rs,8,736 Crore and Rs,4,266 Crore respectively. Corresponding figures for the previous year were Rs,4,117 Crore and Rs, 3,207 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 profiled in India's leading BFSI Companies 2018 by Dunn and Bradstreet.
Amendment to the Articles of Association
During the year under review, in order to comply with the provisions of SEBI circular no. CIR/IMD/DF-1/67/2017 dated June 30, 2017 and pursuant to, and in terms of the provisions of Section 14 of the Companies Act, 2013, the Members of the Company vide a Special Resolution passed by means of postal ballot on 9th March, 2018 approved the amendment in the Articles of Association of the Company by way of insertion of a new article for enabling consolidation and re-issuance of debt securities subject to the provisions of the Companies Act, 2013 and the applicable SEBI Regulations.
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 249 Marketing Offices &Â 1 Customer Service Point. The distribution network also includes 49 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 FY 2017-18, Rs,25,851.01 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,19,579.42 Crore received during the previous year.
Non-Performing Assets and Provisions
The amount of gross Non-Performing Assets (NPA) as at 31st March, 2018 was Rs, 1,303.61 Crore, which is 0.78 percent of the housing loan portfolio of the Company, as against Rs, 627.06 Crore i.e. 0.43 percent of the housing loan portfolio as at 31st March, 2017. The net NPA as at 31st March 2018 was Rs, 711.66 Crore i.e. 0.43 percent of the housing loan portfolio vis-a-vis Rs,205.29 Crore i.e. 0.14 percent of the housing loan portfolio as at 31st March, 2017. The total cumulative provision towards housing loan portfolio including provision for standard assets as at 31st March, 2018 is Rs, 1,248.80 Crore as against Rs, 1,038.18 Crore in the previous year. During the year, the Company has written off Rs, 23.29 Crore of housing loan portfolio as against Rs, 50.42 Crore during the previous year.
Resource Mobilisation
During the year, the Company raised funds aggregating to Rs, 73,688.56 Crore through Non-Convertible Debentures (NCD), Term loans / 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, 28,777/- 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 &Â 'CARE AAA' by CARE. As at 31st March, 2018, NCDs amounting to Rs, 1,15,471/- Crore were outstanding. The Company has been regular in making repayment of principal and payment of interest on the NCDs.
As at 31st March, 2018, 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 &Â Upper Tier II Bonds
During the year, the Company has not issued any Subordinate Bonds and Upper Tier II Bonds. As at 31st March, 2018, 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, 2018, 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 / Other Financial Institutions / Commercial Paper
The total loans / LOC outstanding from the Banks as at 31st March, 2018 are Rs,14,358.81 Crore as compared to Rs,11,977.44 Crore as at 31st March, 2017. Loans and advances outstanding from Other Financial Institutions is Rs, 200 Crore as at 31st March, 2018 and 31st March, 2017. The Refinance from NHB as at 31st March, 2018 stood at Rs, 1,958.24 Crore as against Rs,3,744.06 Crore as at 31st March, 2017. During the year, the Company has not availed any Refinance from NHB under regular refinance scheme. As at 31st March, 2018, Commercial Paper amounting to Rs,4,025/- Crore were outstanding as compared to Rs,2,267 Crores for corresponding previous year. During the year 2017-18, the Company issued Commercial Paper amounting to Rs, 17,976/- Crore from market as compared to Rs, 8,091 Crores for corresponding previous year.
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 + &Â ICRA A1+' signifying highest safety for timely servicing of debt obligations.
Transfer of Unclaimed Dividend / Deposits and Shares to Investor Education &Â Protection Fund (IEPF)
Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, rules made there under and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 read with the relevant circulars and amendments thereto, the amount of dividend / deposits remaining unclaimed for a period of 7 (seven) years from the due date is required to be transferred to the Investor Education and Protection Fund (IEPF) as constituted by the Central Government. Further, as per the provisions of Section 124(6) of the Companies Act, 2013 read with the Investor
Education &Â Protection Fund Authority (Accounting, Audit, Transfer &Â Refund) Rules 2016, the shares in respect of which the dividend has not been claimed for 7 (seven) consecutive years are required to be transferred by the Company to the designated demat account of the IEPF Authority. The details of the unclaimed dividend/deposits and the shares transferred to the IEPF, are uploaded as per the requirements, on the website of the Company i.e. www.lichouisng.com.
Unpaid/Unclaimed Dividend
During the financial year under review, your Company has transferred unclaimed dividend of Rs,66,30,765/- pertaining to the financial year 2009-10 to the Investor Education and Protection Fund (IEPF) established by the Central Government, after the expiry of seven years from the date of transfer to unpaid dividend account.
Transfer of Shares to IEPF
Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 and the Rules made thereunder, the Company has transferred in aggregate 7,39,192 equity shares of Rs,2/- each to Investor Education and Protection Fund (IEPF) established by the Central Government in respect of which the dividend remained unclaimed for a period of seven consecutive years
i.e. from 2009-10 till the due date of 29th November, 2017 after following the prescribed procedure.
Any person who is entitled to unclaimed dividend or deposits etc. that have been transferred to IEPF, he / she can claim the same by making an application directly to IEPF in the prescribed form under the IEPF Rules which is available on the website of IEPF i.e. www.iepf.gov.in
Public deposits
As at 31st March, 2018, the outstanding amount on account of public deposits was Rs, 3,474.33 Crore as against Rs, 3,167.40 Crore in the previous year and outstanding amount on account of corporate deposits was Rs, 3,351.70 Crore as against Rs, 3,154.27 Crore in the previous year. During FY 2017-18, the number of depositors has decreased for public deposit from 38,210 to 35,528 and increased for Corporate deposit from 425 to 521. Rs,862.16 Crore has been collected as public deposits while Rs,2,937.68 Crore was as corporate deposits. Total aggregate amount collected Rs, 3,799.84 Crore.
CRISIL has for the twelfth 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.
774 depositors amounting to Rs,36.32 Crore which were due for repayment on or before 31st March, 2018 were not claimed by the depositors. Since then, 325 depositors have claimed or renewed deposits of Rs, 26,02,90,000/- as on date of this report. Depositors are appropriately intimated for renewal / claim of their deposits through an authorized 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, 1,41,390/- 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 15.49 percent (as against 12 percent prescribed by the NHB) as at 31st March, 2018 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' (MITC) 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, MCA from time to time, applicable to a listed company.
Disclosure under Housing Finance Companies issuance of Non-Convertible Debentures on Private Placement Basis (NHB) Directions, 2014
During the financial year under review, the Non-Convertible Debentures issued on private placement basis, were repaid / redeemed by the Company on their respective due dates and there were no such instances of any Non-Convertible Debentures which have not been claimed by the investors or not paid by the Company after the date on which the Non Convertible Debentures became due for redemption.
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 &Â Chokshi, LLP, Chartered Accountants, Mumbai (Firm Registration No.:101872W / W100045) and Messrs Shah Gupta &Â Co., Chartered Accountants, Mumbai (Firm Registration No.:109574W), were appointed by the shareholders at the Twenty Seventh Annual General Meeting to hold the office for a term of three years i.e., from the conclusion of the Twenty Seventh Annual General Meeting until the conclusion of the Thirtieth Annual General Meeting 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 all Back Offices subject to ratification by shareholders at each Annual General Meeting. The Company has received a confirmation from the Joint Statutory Auditors to the effect that they are eligible to continue as Joint Statutory Auditors of the Company in terms of Section 139 and 141 of the Companies Act, 2013 and Rules made there under.
The Board recommend to the Members for approval at the Twenty Ninth AGM, the ratification of appointment of Messrs Chokshi &Â Chokshi, LLP, Chartered Accountants, Mumbai (Firm Registration No.:101872W / W100045) and Messrs Shah Gupta &Â Co., Chartered Accountants, Mumbai (Firm Registration No.:109574W) as Joint Statutory Auditors of the Company to hold the office from the conclusion of the Twenty Ninth Annual General Meeting until the conclusion of the Thirtieth Annual General Meeting 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 all Back Offices.
Corporate Governance
A certificate from Shri. N. L. Bhatia, (FCS: 1176, CoP: 422), Managing Partner, M/s. N. L. Bhatia &Â Associates, Practicing Company Secretaries (UIN:P1996MH055800), 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 shall 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 the Company's shares in dematerialized 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, 2018, 7266 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 dematerialized form and therefore, members are requested to convert their holdings to dematerialized form.
Auditors' observations
No adverse remark or observation has been cited by the Joint Statutory Auditors in their report dated 23rd April, 2018.
The Company has an in-house mechanism for Internal Audit of all its back offices conducted 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 Internal 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 and non-housing loans.
Outlook for 2018-19
The initiatives taken by the Company during the financial year 2017-18 are expected to improve its operational and financial performance. During FY 2018-19, the Company proposes:
- Â Â Â To grow business qualitatively by consolidating position and strengthening the competitiveness on service delivery.
- Â Â Â To create brand LIC HFL as a source of trusted partner exuding consumer confidence.
- Â Â Â Understand the inherent risks to the business and managing it effectively.
- Â Â Â Focus on winning and retaining customers.
- Â Â Â Pursue new skills and expand knowledge aimed at managing competition effectively.
- Â Â Â Expand its operations by establishing new business centres.
- Â Â Â Increase its distribution by appointing new agents and activating more agents. Explore new avenues of distribution channel.
- Â Â Â Incentivizing and motivating the marketing intermediaries systematically for improving productivity, imbibe a sense of loyalty, professionalism.
- Â Â Â Raising funds through various sources at attractive terms.
- Â Â Â Making efforts towards reducing overall cost of funds.
- Â Â Â Steps to improve the recovery ratio and ensuring lowest NPA level. Improving receivable management through IT support system.
- Â Â Â Timely review of credit appraisal system to improve the loan asset quality.
- Â Â Â Continuous efforts to upgrade Information Technology platform to ensure prompt and effective service to the clientele.
- Â Â Â Swift, appropriate and competitive pricing of its existing loan schemes to attract new customers.
- Â Â Â Ensuring achievement of term targets - monthly, quarterly by all units.
- Â Â Â Procurement of business under Pradhan Mantri Awas Yojana / Affordable housing and to have a continuous focus in alignment with Government initiatives from time to time.
The management perspective about future of the Company
As most ofus are aware,'Housing for All by 2022'is a Government of India initiative under which, the erstwhile Indira Awas Yojana was renamed as Pradhan Mantri Awas Yojana Grameen and another scheme as Pradhan Mantri Awas Yojana Urban was launched in 2015. Under both these schemes a total of 50 million houses were targeted to be built by financial year 2022. The government's budgetary support for these schemes has risen from Rs,11,600 Crore in FY 2016 to Rs, 29,043 Crore in FY 2018. In India, there is an estimated shortage of around 4 Crore houses (urban and rural). In addition, population growth of 1.3 percent per annum, favourable demographics, 'nuclearisation' of families, migration to urban areas, fiscal benefits and rising income / aspirations, all these could lead to another one Crore per annum demand for houses. Affordability to buy houses has increased over the past three years (especially in urban areas), even as property prices have remain flat, incomes have risen and mortgage rates have fallen by around 250 bps from five-year peak leading to 15 percent reduction in EMI payments.
The middle-class Indian living in cities has long been dreaming of buying his / her own home and usually, ends up striving to realize this dream. Affordability is a major hindrance that prevents them from attaining the goal. In the 2018-19 union budget, the government of India has now made this struggle easier by setting up the Affordable Housing Fund (AFH). The AHF is huge step as the government will provide each buyer linked credit worth Rs,1 lakh to Rs,2.30 lakh; this loan will be provided at an interest rate of 6.5 percent against the current market housing interest which is hovering around 8.35% to 8.70%.
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, 2018 is attached as Annexure 1 to this Report.
Extract of Annual Returns is also displayed at Company's Website: www.lichousing.com/annual_general_meeting.php
Board Meetings held during the year:
During the year under review, 6 (six) 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) Â Â Â in the preparation of the annual accounts, the applicable accounting standards has been followed and there are no material departures;
(b) Â Â Â 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) Â Â Â 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) Â Â Â the Directors have prepared the annual accounts on a going concern basis;
(e) Â Â Â 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 and
(f) Â Â Â 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) &Â (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 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 23rd March, 2018.
In terms of the provisions of section 149 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) 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. Usha Sangwan since 23rd June, 2016. Shri Vinay Sah is Managing Director &Â CEO of the Company.
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 omnibus approval as per SEBI (LODR) 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 is annexed as Annexure 3 to this report.
Form AOC-2 is annexed as Annexure 4 to this report.
State of the company's affairs:
The Company earned total revenue of Rs,15,072.90 Crore, registering an increase of 7.05 percent. The percentage of administrative expenses to the housing loans, which was 0.42 percent in the previous year, has remained the same at 0.42 percent during the financial year 2017-18.
Profit before tax and after tax stood at Rs,3,061.87 Crore and Rs, 1,989.59 Crore respectively as against Rs, 2,955.77 Crore and Rs,1,931.05 Crore, respectively, for the previous year. Profit before tax increased by 3.59 percent over the previous year while profit after tax showed growth of 3.03 percent over that of the previous year.
Amounts, if any which it proposes to carry to any reserves:
The Company has transferred Rs, 560 Crore to Special Reserve and Statutory reserve u/s 29C of NHB Act, and an amount of Rs, 500 Crore to General Reserve.
Amount, if any, which it recommends should be paid by way of dividend:
Rs,343.17 Crore is proposed to be paid by way of dividend to shareholders of the Company i.e. Rs,6.80 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. 31st March, 2018 and the date of the Board's Report i.e. 11th June, 2018.
Conservation of energy, technology absorption, foreign exchange earnings and outgo:
A. Â Â Â Conservation of energy -
(i) Â Â Â 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) Â Â Â 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) Â Â Â The capital investment on energy conservation equipments-
None
B. Â Â Â Technology absorption -
(i) Â Â Â The efforts made towards technology absorption - Not applicable.
(ii) Â Â Â The benefits derived like product improvement, efforts to reduce cost of fund, product development or import substitution - Not applicable.
(iii) Â Â Â In case of imported technology (imported during the last three years reckoned from the beginning of financial year)- Not applicable.
(a) Â Â Â The details of technology imported - Not applicable.
(b) Â Â Â The year of import - Not applicable.
(c) Â Â Â Whether the technology has been fully absorbed -Not applicable
(d) Â Â Â If not fully absorbed areas where absorption has not taken place and the reason thereof - Not applicable.
(iv) Â Â Â The expenditure incurred on Research and Development
- Not applicable.
C. Â Â Â Foreign Exchange Earnings and Outgo-
The foreign exchange earned in terms of actual inflows during the year and the foreign exchange outgo during the year in terms of actual outflows.
During the year ended 31st March, 2018, the Company earned '184.93 lakh and spent '13.60 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 constituted 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.
During the financial year under review, the risk management policy of the Company was amended in accordance with the notification issued by National Housing Bank.
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 5 to this report.
Composition of the Corporate Social Responsibility Committee is as follows:
Ms. Usha Sangwan |
Chairperson |
Director |
Shri Jagdish Capoor |
Member |
Independent Director |
Dr. Dharmendra Bhandari |
Member |
Independent Director |
Shri Vinay Sah |
Member |
Managing Director &Â CEO |
Annual evaluation made by the Board of its own performance:
The Nomination and Remuneration Committee at its meeting had recommended 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 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 March, 2018.
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 and associates, in the same form and manner as that of the Company which shall be laid before the ensuing Twenty Ninth Annual General Meeting of the Company along with 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 and associates for the year ended 31st March, 2018 form part of this Annual Report.
There has been no change in the nature of business of the Company during the year under review. Directors:
The Company has eleven Directors consisting of seven Independent Directors, three Non-Executive Directors including Chairman; and Managing Director &Â CEO as Executive Director, as on the date of approval of this report.
Appointments / Resignations of Directors:
Shri P. Koteswara Rao was appointed as Additional Independent Director of the Company by the Board with effect from 11th June, 2018. As required under Section 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of Shri P. Koteswara Rao for the office of a Director. Shri P. Koteswara 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 P. Koteswara Rao fulfils the conditions specified in the Act, for such appointment. The proposal for appointment of Shri P. Koteswara Rao as Independent Director is being placed before the members for approval and the relevant details are forming part of the Notice of the Annual General Meeting.
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.
Director Retiring by Rotation:
Ms. Savita Singh, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.
Appointments / Resignation of the Key Managerial Personnel:
Shri Vinay Sah, Managing Director &Â CEO, Mr. Nitin K. Jage, General Manager &Â Company Secretary and Mr. P. Narayanan, CFO are the Key Managerial Personnel as per the provisions of the Companies Act, 2013. There is no change in the appointment / resignation of Key Managerial Personnel during the year under review.
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:
- Â Â Â Audit Committee
- Â Â Â Stakeholders Relationship Committee
- Â Â Â Nomination and Remuneration Committee
- Â Â Â Corporate Social Responsibility Committee
- Â Â Â Risk Management Committee
- Â Â Â Executive Committee
- Â Â Â Debenture Allotment Committee
- Â Â Â HR Committee
- Â Â Â Investment 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
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, 2018, 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, 2018, 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 Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 11th September, 2001 having an authorized share capital of Rs,75 Crore. The basic purpose of establishing the Company was to establish &Â operate assisted living community centers for the senior citizens.
During the fiscal 2017 - 18, the Company earned a Profit Before Tax (PBT) of Rs, 144.63 Lakh and Profit After Tax (PAT) stood at Rs,80.09 Lakh. The Company has recommended dividend of Rs, 0.10/- per equity shares for FY 2017-18.
The project at Bangalore Phase II was completed and handing over of the keys were done on August 12, 2013. The Company is at present implementing a project at Bhubaneswar and the same is expected to be completed at the earliest. The Company is planning / proposing to launch another Senior Living Care Homes project at Vasind in Thane district of Maharashtra in collaboration with TATA Value Homes Limited. The project is subject to approval of concerned authorities. The Company is in process to develop a Senior Living Care Homes project at Chhavar Ka Vas in Jaipur district of Rajasthan. The project is at its approval stage with concerned authorities. During the current financial year the Company has also acquired a land parcel at Aluva, Kerala to develop a Senior Living Care Homes project. The Company will develop the project as per suitable model considering the demand, prevailing rules &Â regulations in the state and demographic &Â cultural prospective.
The Company is also exploring possibilities to start Senior Living Care Homes project in Bhopal and Hyderabad subject to viability of the projects.
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 &Â LIC HFLs' vision for fulfillment of Corporate Social Responsibility at the main focus.
2. Â Â Â LICHFL Asset Management Company Limited:
The Company is in the business of managing, advising, administering Venture Capital and Alternative Investment Funds.
The Company was appointed as Investment Manager in 2010 to raise and manage the maiden Fund, LICHFL Urban Development Fund (LUDF). The Company has raised total commitments of '529.35 Crore from Banks, Financial Institutions, Corporate and HNIs as against the targeted size of Rs, 500 Crore and announced financial closure on 30th March, 2013. The Company has deployed Rs,448 Crore in 9 Portfolio Companies engaged in development, acquisition or operation of affordable / mid income housing, related infrastructure and Hospitals across 5 cities and 3 towns in India. The Company has achieved full exits in 3 Portfolio Companies, partial exit in 1 Portfolio Company and receipts of Rs,280 Crore.
The Company has been appointed as Investment Manager in 2017 to raise and manage LICHFL Housing &Â Infrastructure Fund (LHIF) with focus on Affordable Housing and Property backed Infrastructure in sectors which include Educational Institutions; Hospitals; Industrial Parks &Â Warehouses. The Company launched LHIF in October 2017 with a total corpus of Rs,1000 Crore (Base corpus of Rs,750 Crore with green shoe option of Rs,250 Crore). On 31st March 2018, the Company has successfully achieved initial closing for LHIF and received commitments of Rs, 562 Crore.
3. Â Â Â LICHFL Trustee Company Private Limited:
The Company is in the business of undertaking the business of trusteeship services for Venture Capital and Alternative Investment Funds.
The Company was appointed as Trustee in 2010 for LICHFL Fund and further appointed LICHFL Asset Management Company Limited (LICHFL AMC) as Investment Manager for the Fund. In 2010 the Company had registered LICHFL Fund with SEBI as Venture Capital Fund (VCF) under the SEBI (Venture Capital Funds) Regulations, 1996. LICHFL AMC launched its maiden Scheme, LICHFL Urban Development Fund and achieved financial closure with Rs, 529.35 Crore on 30th March, 2013.
The Company was appointed as Trustee in 2017 for LICHFL Housing &Â Infrastructure Trust (LHIT) and further appointed LICHFL AMC as Investment Manager for LHIT. The Company had received registration for LHIT on October 2017 from SEBI under Alternative Investment Fund Regulations, 2012 as Category - I Infrastructure. LICHFL AMC launched LICHFL Housing &Â Infrastructure Fund (LHIF) in October 2017 and achieved initial closing on 31st March 2018.
4. LICHFL Financial Services Limited:
LICHFL Financial Services Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 31st October, 2007, for marketing of housing loan, insurance products (Life and General Insurance), mutual funds, fixed deposits and credit cards. It became operational in March, 2008 and at present has 49 offices spread across the country. During the FY 2017-18, three new offices were opened. With these new openings, the Company is having its presence in almost all the major locations.
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 &Â long term.
At present, the Company distributes Life Insurance products of LIC of India, Home Loans &Â Fixed Deposits of LIC Housing Finance Limited, Mutual Funds of various fund houses, General Insurance products of United India Insurance Company Limited and Tata AIG General Insurance Company Limited, Credit Cards of LIC Cards Services Limited and Point of Presence for National Pension System (NPS). More business verticals will be added depending on market opportunities and customer needs.
The Company has earned a Profit Before Tax (PBT) of Rs, 2,412.12 lakhs and Profit After Tax (PAT) stood at Rs, 1,722.55 lakhs for the FY 2017-18 and recommended dividend @ 45 % for FY 2017-18.
Financial Highlights for FY 2017-18 in comparison with last year:
Sr. No. |
Particulars |
FY 2017-18 in Rs, (lakhs) |
FY 2016-17 in Rs, (lakhs) |
1. |
Total Income |
5,294.23 |
4,095.82 |
2. |
Profit Before Tax |
2,412.12 |
1,634.32 |
3. |
Profit After Tax |
1,722.55 |
1,051.76 |
4. |
Dividend (Declared) |
427.50 |
237.50 |
The Company has consolidated its home loan business during the financial year 2017-18, 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, 2018, the Company has two associate companies namely LIC Mutual Fund Asset Management Company Limited and LIC Mutual Fund Trustee Company Private 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, 2018 has been sent to all the members of the Company. It does not contain Annual Reports of Company's subsidiaries. The Company will provide Annual Report of all subsidiaries upon request by any member of the Company. These Annual Reports are 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 victimization 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 Independent Directors)1 |
Ratio to median remuneration |
Nil |
N.A. |
*No remuneration is paid to Non Executive Directors (including Independent Directors) |
|
Executive Director (MD&CEO) |
Ratio to median remuneration |
Shri. Vinay Sah* |
7:1 |
*Remuneration of MD and CEO includes PLI which was given during FY 2017-18 to then MD &Â CEO who is repatriated to LIC of India.
b. The percentage increase in remuneration of each director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:
Non Executive Directors |
% increase in remuneration in |
(including Independent |
the financial year |
Directors)* |
 |
Nil |
N.A. |
*No remuneration is paid to Non Executive Directors |
|
(including Independent Directors) |
|
 |
% increase in remuneration in |
 |
the financial year |
Executive Director |
0.34% (Excluding PLI) |
(MD&CEO) |
 |
Company Secretary |
22.81%(on account of |
 |
perquisite in respect of lease |
 |
accommodation) |
Chief Financial Officer |
7.70% |
c. Â Â Â The percentage increase in the median remuneration of employees in the financial year:
-13.55%
d. Â Â Â The number of permanent employees on the rolls of the Company: 2,103
e. Â Â Â 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:
f. Â Â Â 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 0.34%. The average annual decrease in the salaries of the employees other than managerial personnel during the year was -13.55% on account of new recruitment at lower cadre.
g. Â Â Â Affirmation that the remuneration is as per the Remuneration policy of the Company:
The Company affirms that the 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.
In terms of Section 136(1) of the Companies Act, 2013 read with the Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board's 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 Company Secretary, LIC Housing Finance Limited, Corporate Office, 131 Maker Towers, 'F' Premises, 13th Floor, Cuffe Parade, Mumbai - 400 005.
Secretarial Auditor and Secretarial Audit Report:
Pursuant to Section 204 of the Companies Act, 2013, the Company had appointed M/s. N. L. Bhatia &Â Associates, Practicing Company Secretary as its Secretarial Auditor to conduct the secretarial audit of the Company for the Financial Year 2017-18. The Company has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. Report of the Secretarial Auditor for the Financial Year 2017-18 in Form MR-3 is annexed to this report as Annexure 10.
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.
Particulars |
31 March, |
15 -November |
% |
 |
2018 |
1994 (IPO) |
Change |
Market Price |
565.252 |
12* |
4,610.42 |
(in ') |
 |  |  |
Prevention, Prohibition &Â Redressal of Sexual Harassment of women at workplace:
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place a Policy on Prevention, Prohibition &Â Redressal of Sexual Harassment of Women at Workplace and has a robust mechanism to redress the complaints reported there under. An Internal Committee has been constituted, which comprises of internal members who have experience in the subject field.
Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the complaints received there under and the details relating thereto are as follows:
(a) Â Â Â Number of complaints received in the year: 1
(b) Â Â Â Number of complaints disposed of during the year: 1
(c) Â Â Â Number of cases pending more than ninety days: Nil
(d) Â Â Â Number of workshops or awareness programme against sexual harassment carried out: Your Company on a regular basis sensitizes its employees on prevention of sexual harassment through various workshops, awareness programmes.
(e) Â Â Â Nature of action taken by the employer or district officer: Penalty of censure has been imposed on the employee as per service rules.
It may be mentioned here that 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 organized 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 organized 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: 11th June, 2018
Â
Mar 31, 2017
The Directors are pleased to present the Twenty Eighth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2017 of LIC Housing Finance Limited (''the Company'').
Financial results
(Rs,In crore)
For the year ended 31st March, 2017 |
For the year ended 31st March, 2016 |
|
Profit before Tax |
2,955.77 |
2,563.55 |
Tax Expense |
1,024.72 |
902.76 |
Profit after Tax |
1,931.05 |
1,660.79 |
Appropriations |
||
Special Reserve & Statutory Reserve u/s 29C of NHB Act, 1987 |
570.00 |
500.00 |
General Reserve |
500.00 |
400.00 |
Proposed Dividend |
312.89 |
277.56 |
Tax on Dividend |
63.00 |
55.68 |
Balance carried forward to next year |
485.16 |
427.55 |
1,931.05 |
1,660.79 |
Dividend
Considering the performance during the financial year 201617, your Directors recommend payment of dividend for the financial year ended 31st March, 2017 of ''6.20 per equity share of face value of ''2/- per share i.e. @ 310 percent, as againstRs,5.50/- per equity share of face value of ''2/- per share for the previous year i.e. @ 275 percent. The total dividend outgo for the current year would amount to ''375.89 crore including Dividend Distribution Tax of ''63.00 crore, as against ''333.25 crore including dividend distribution tax of ''55.68 crore, for the previous year.
Performance Income and profit
The Company earned total revenue of ''14,080.35 crore, registering an increase of 12.77 percent over the previous year. The percentage of administrative expenses to the housing loans, which was 0.37 percent in the previous year, has marginally increased to 0.42 percent during the financial year 2016-17.
Profit before tax and after tax stood at ''2,955.77 crore and ''1,931.05 crore respectively as against ''2,563.55 crore and ''1,660.79 crore, respectively, for the previous year. Profit before tax increased by 15.30 percent over the previous year while profit after tax showed growth of 16.27 percent over that of the previous year.
Lending operations Individual loans:
The main thrust continues on individual housing loans with a disbursement growth of 11.02 percent over the previous year. During the year, the Company sanctioned 1,78,636 individual housing loans for ''39,458.74 crore and disbursed 1,79,035 loans for ''38,334.13 crore. Housing loan to Individuals i.e. retail loans constitute 90.55 percent of the total sanctions and 92.28 percent of the total disbursements for the year 2016-17 as compared to 92.14 percent and 95.51 percent respectively during the year 2015-16. The gross retail loan portfolio grew by over 14.23 percent from ''1,21,872.89 crore as on 31st March, 2016 to ''1,39,210.71 crore as on 31st March, 2017.
The cumulative sanctions and disbursements since incorporation, in respect of individual housing loans are:
Amount sanctioned : ''2,53,005.98 crore Amount disbursed : ''2,41,775.04 crore
More than 21,89,000 customers have been serviced by the Company up to 31st March, 2017 since inception.
Project loans:
The project loans sanctioned and disbursed by the Company during the year were ''4,116.55 crore and ''3,207.06 crore respectively. Corresponding figures for the previous year were ''3,075.25 crore and ''1,621.60 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:
- Housing Finance company of the year- ABP news
- Best Data Quality in HFC- CIBIL Data Quality Awards
- Most Recognizable Brand of India origin- Power Brand Glam by Franchise India
- Best Brands 2016- Economic Times
- Featured in Forbes India''s Super 50 Companies
- Featured in The Top 40 CEOs BFSI- Business Today
- Housing Finance Company of the year-Award by OUTLOOK money
- India''s Leading Housing Finance Company -by Dun & Bradstreet
- Best HR of the year-By ABP news
- CEO with HR orientation-By ABP news
- Award of Gratitude to LICHFL presented by LJN HMOTKARSH NMV.
- Certificate of Achievement to MD & CEO - APEA 2016
- Top Performer of India Inc.- Seasonal Magazine Corporate Award 2016.
- NSE awarded LIC HFL for Successful Inaugural Issue on the NSE Electronic Bidding Platform.
- Best Home Loan Provider- Outlook Money.
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 240 Marketing Offices, 21 Back Offices to conduct the credit appraisal and administrative functions & 1 Customer Service Point. The distribution network also includes 42 offices of LICHFL Financial Services Ltd., wholly owned subsidiary engaged in distribution of various financial products including housing loan. The Company also has representative offices in Dubai and Kuwait.
Repayments
During the F.Y. 2016-17, Rs,19,579.42 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,18,398.85 crore received last year.
Non-Performing Assets and Provisions
The amount of gross Non-Performing Assets (NPA) as at 31st March, 2017 was Rs,627.06 crore, which is 0.43 percent of the housing loan portfolio of the Company, as against Rs,567.82 crore i.e. 0.45 percent of the housing loan portfolio as at 31st March, 2016. The net NPA as at 31st March 2017 was Rs,205.29 crore i.e. 0.14 percent of the housing loan portfolio vis-a-vis Rs,270.48 crore i.e. 0.22 percent of the housing loan portfolio as at 31st March, 2016. The total cumulative provision towards housing loan portfolio including provision for standard assets as at 31st March, 2017 is Rs,1,038.18 crore as against Rs,820.30 crore in the previous year. During the year, the Company has written off Rs,50.42 crore of housing loan portfolio as against Rs,34.58 crore during the previous year.
Resource Mobilization
During the year, the Company raised funds aggregating to Rs,54,611.75 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,26,874/- 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, 2017, NCDs amounting to ''99,307/- crore were outstanding. The Company has been regular in making payment of principal and interest on the NCDs.
As at 31st March, 2017, 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, 2017, the outstanding Subordinate Bonds and Upper Tier II Bonds stood at ''2500/- crore. Considering the balance term of maturity as at 31st March, 2017, ''1500/- 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, 2017 are ''11,477.44 crore as compared to ''14,051.65 crore as at 31st March, 2016. The Refinance from NHB as at 31st March, 2017 stood at ''3,744.06 crore as against ''3,038.21/-crore as at 31st March, 2016. During the year, the Company has availed ''1,230 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, 2017, the outstanding amount on account of public deposits was ''6,321.38 crore as against ''3,820.26 crore in the previous year. During F.Y. 2016-17 the number of depositors has increased from 30,397 to 38,638 and ''4,112.01 crore has been collected as public deposits.
CRISIL has for the eleventh 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.
572 deposits amounting to Rs,8.99 crore which were due for repayment on or before 31st March, 2017 were not claimed by the depositors till that date. Since then, 98 depositors have claimed or renewed deposits amounting to Rs,1,46,27,000/-. Depositors are appropriately intimated for renewal / claim of their deposits through an authorized 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 of report Rs,1,49,820/- 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 15.64 percent (as against 12 percent prescribed by the NHB) as at 31st March, 2017 after considering the loan to value ratio for deciding risk weight age.
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, MCA 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), were appointed by the shareholders at the Twenty Seventh Annual General Meeting to hold the office for a term of three years i.e., from the conclusion of the Twenty Seventh Annual General Meeting until the conclusion of the Thirtieth Annual General Meeting 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 all Back Offices subject to ratification by shareholders at each Annual General Meeting. The Company has received a confirmation from the Joint Statutory Auditors to the effect that they are eligible to continue as Joint Statutory Auditors of the Company in terms of Section 139 and 141 of the Companies Act, 2013 and Rules made there under.
The Board recommend to the Members for approval at Twenty Eighth AGM the ratification of 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 the Twenty Eighth Annual General Meeting until the conclusion of the Twenty Ninth Annual General Meeting 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 all Back Offices.
Corporate Governance
A certificate from Mr. P. S. Gupchup, Company Secretary in practice (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 in 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 transactions of the Company''s shares in dematerialized 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, 2017, 9,066 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 dematerialized form and therefore, members are requested to convert their holdings to dematerialized form.
Auditors'' observations
No adverse remark or observation has been given by the Joint Statutory Auditors in their report dated 25th April, 2017.
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 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 2016-17
The initiatives taken by the Company during the financial year 2016-17 are expected to improve its operational and financial performance. During F.Y. 2017-18, 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 centreâs.
- Increase its distribution by appointing new agents and activating more agents.
- Incentivizing and motivating the marketing intermediaries systematically for improving productivity.
- Raising funds through various sources at attractive terms.
- Making efforts towards reducing overall cost of funds.
- Steps to improve the recovery ratio and ensuring lowest NPA level. Improving receivable management through support IT 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.
Ensuring a decent house for all the people by 2022 is one of the key initiatives of Union Government. It is the most fundamental aspiration of any country and under the Pradhan Mantri Awas Yojana (PMAY), it forms the cornerstone for inclusive housing and rapid economic development. Under the PMAY, the ministry has approved the construction of 1.17 lakh houses for the urban poor. The infrastructure status granted to the affordable housing sector will enable developers operating in this segment, to raise loans at a cheaper rate. Profits from affordable housing have been exempted from income tax and 20 incentives have been announced by the government for affordable housing alone.
In the evaluation of sustainability of the housing market, the absorption of office space is the prime indicator across the world. After all, it is the economic activity and employment quotient of the area that fuel the demand for new houses. Housing loan growth is set for a major appreciation in the current financial year 2017-18 as government''s focus on housing for all scheme i.e. PMAY 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 details 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, 2017 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 has 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;
(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 and
(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 Nomination and Remuneration Committee had laid down criteria for determining Directors 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 23rd February, 2017.
In terms of the provisions of section 149 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a company shall have at least 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. Usha Sangwan since 23rd June, 2016. Ms. Sunita Sharma has been Managing Director & CEO since 5th November, 2013. On her elevation to Managing Director of LIC of India on 11th April, 2017, Ms. Sunita Sharma tendered her resignation as Managing Director & CEO with effect from 11th April, 2017. Shri Vinay Sah has been appointed as Managing Director & CEO with effect from 12th April, 2017.
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) 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 is annexed as Annexure 3 to this report.
Form AOC-2 is annexed as Annexure 4 to this report.
State of the Company''s affairs:
The year 2016-17 was a significant year in Company''s lifecycle. The Company earned total revenue of Rs,14,080.35 crore, registering an increase of 12.77 percent. The percentage of administrative expenses to the housing loans, which was 0.37 percent in the previous year, has marginally increased to 0.42 percent during the financial year 2016-17.
Profit before tax and after tax stood at Rs,2,955.77 crore and Rs,1,931.05 crore respectively as against Rs,2,563.55 crore and Rs,1,660.79 crore, respectively, for the previous year. Profit before tax increased by 15.30 percent over the previous year while profit after tax showed growth of 16.27 percent over that of the previous year.
Amounts, if any which it proposes to carry to any reserves:
The Company has transferred Rs,570 crore to Special Reserve and Statutory reserve u/s 29C of NHB Act, and an amount of Rs,500 crore to General Reserve.
Amount, if any, which it recommends should be paid by way of dividend:
Rs,312.89 crore is proposed to be paid by way of dividend to shareholders of the Company i.e. Rs,6.20 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 have occurred between the end of the financial year of the Company i.e. 31st March, 2017 and the date of the Board''s Report i.e. 25th April, 2017.
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 exchange outgo during the year in terms of actual outflows.
During the year ended 31st March, 2017 the Company earned Rs,18.69 lakh and spent Rs,214.69 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. 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 5 to this report.
Composition of the Corporate Social Responsibility Committee is as follows
Ms. Usha Sangwan* |
Chairperson |
Director |
Shri Jagdish Capoor |
Member |
Independent Director |
Dr. Dharmendra Bhandari |
Member |
Independent Director |
Shri Vinay SahA |
Member |
Managing Director & CEO |
Ms. Sunita Sharma** |
Member |
Managing Director & CEO |
*Appointed as Member w.e.f. 23.06.2016 **Ceased to be member w.e.f 11.04.2017 A Appointed w.e.f.12.04.2017
Annual evaluation made by the Board of its own performance:
The Nomination and Remuneration Committee had recommended 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 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, 2017.
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, presentation of views convincingly, resoluteness 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 and associates, in the same form and manner as that of the Company which shall be laid before the ensuing Twenty Eighth Annual General Meeting of the Company along with 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 and associates for the year ended 31st March, 2017 form part of this Annual Report.
There has been no change in the nature of business of the Company during 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 report.
Appointments / Resignations of Directors:
Shri Vinay Sah was appointed as Additional Director and Managing Director & CEO of the Company by the Board with effect from 12th April, 2017. As required under Section 160 of the Companies Act, 2013, a Notice has been received from a member proposing the name of Shri Vinay Sah for the office of a Director. The proposal for appointment of Shri Jagdish Capoor as Independent Director and Ms. Savita Singh as Non Executive Director is being placed before the members for approval, the relevant details are forming part of the Notice of the Annual General Meeting.
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.
The term of Shri Jagdish Capoor as Independent Director has been extended for a period of five (5) years with effect from 24th May 2017 and he shall not be liable to retire by rotation. Ms. Savita Singh''s term as Non-Executive Director has been extended for a period of five (5) years with effect from 24th May 2017 and she will be liable to retire by rotation.
Ms. Sunita Sharma ceased to be Managing Director & CEO of the Company with effect from 11th April, 2017 on account of elevation to the post of Managing Director of LIC of India.
Director Retiring by Rotation:
Ms. Usha Sangwan, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.
Appointments / Resignation of the Key Managerial Personnel:
Shri Vinay Sah, Managing Director & CEO, Mr. Nitin K. Jage, General Manager & Company Secretary and Mr. P. Narayanan, CFO 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
- Investment 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
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, 2017, 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, 2017, 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 Limited, a wholly owned subsidiary of LIC Housing Finance Limited, was incorporated on 11th September, 2001 with an authorised share capital ofRs,25 crore. The basic purpose of establishing the Company was to establish & operate assisted living community centers for the senior citizens.
During the fiscal 2016 - 17, the Company earned a Profit Before Tax (PBT) of ''2.55 Lakh and Profit After Tax (PAT) after adjustment of excess provisions of tax of earlier year comes toRs,82.50 Lakh.
The project at Bangalore Phase II has been completed and handing over of the keys was done on 12th August, 2013. The Company is at present implementing a project at Bhubaneswar and the same is expected to be completed at an early date. The Company is launching another Senior Living Care Homes project at Vasind in Thane district of Maharashtra in collaboration with TATA Value Homes Limited. The project is at its approval stage with concerned authorities.
The Company is also exploring possibilities to start Senior Living Care Homes project at Bhopal, Jaipur, Hyderabad and Aluva subject to viability of the projects.
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 & LIC HFLs'' vision for fulfillment 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 commitments ofRs,529.35 crore to LICHFL Urban Development Fund through Banks, Financial Institutions, Corporate and HNIs as against the targeted size of ''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 closed so far with Portfolio Companies developing residential projects across Pune, Bangalore, Punjab, Hyderabad, Mumbai and Chennai
During the year 2017-18 it is proposed to manage LICHFL Housing and Infrastructure Fund having focus on Property backed Infrastructure sectors and Affordable Housing which include Education Institutions; Hospitals; Industrial Parks & Warehouses; Budget Hotels and Highway facilities and Affordable Housing. The expected fund size would beRs,750 Crore with a green shoe option ofRs,250 Crore.
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 had 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 (Fund) and 30th March, 2013 was declared as Final Closure Date of the Fund after successfully garnering fund raising of '' 529.35 crore as against the target of '' 500 crore. The Fund is managed by LICHFL Asset Management Company Ltd. as Investment Manager. The Fund has closed ten investment deals up to 31st March, 2017. During 2017-18 it is proposed to register LICHFL Housing and Infrastructure Trust for launch of a fund under Category I of SEBI (Alternative Investment Funds) Regulation 2012.
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 loan, insurance products (Life and General Insurance), mutual funds, fixed deposits, credit cards. It became operational in March, 2008 and at present has 46 offices spread across the country. During the FY 2016-17, eight new offices were opened. With these new openings, the Company is having its presence in almost all the major locations.
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 and Tata AIG General Insurance Company Limited, Credit Cards of LIC Cards Services Limited and Point of Presence for National Pension System (NPS). More business verticals will be added depending on market opportunities and customer needs.
The Company has earned a Profit Before Tax (PBT) of Rs, 1,634.32 lakhs and Profit After Tax (PAT) stood at Rs, 1,051.76 lakhs for the FY 2016-17 and recommended dividend @ 25 % for FY 2016-17.
Financial Highlights for FY 2016-17 in comparison with last year:
Sr. Particulars |
FY 2016-17 |
FY 2015-16 |
No. |
in Rs, (lakhs) |
in Rs, (lakhs) |
1. Total Income |
4,095.82 |
1,917.68 |
2. Profit Before Tax |
1,634.32 |
572.72 |
3. Profit After Tax |
1,051.76 |
388.72 |
4. Dividend |
237.50 |
142.50 |
(Declared) |
The Company has consolidated its home loan business during the financial year 2016-17, which is the major revenue earning vertical for the company. The systematic approach along with the new initiatives taken during the year are 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, 2017, the Company has two associate companies namely LIC Mutual Fund Asset Management Company Limited and LIC Mutual Fund Trustee Company Private 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, 2017 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 victimization 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 remuneration |
(including Independent |
Directors)1 |
Nil N.A. |
*No remuneration is paid to Non Executive Directors |
(including Independent Directors) |
Executive Director Ratio to median remuneration |
(MD&CEO) |
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 Independent Directors)* |
% increase in remuneration in the financial year |
Nil |
N.A. |
*No remuneration is paid to Non Executive Directors |
|
(including Independent Directors) |
|
% increase in remuneration in |
|
the financial year |
|
Executive Director |
15.32% |
(MD&CEO) |
|
Company Secretary |
27.60%* |
Chief Financial Officer |
9.84% |
c. The percentage increase in the median remuneration of employees in the financial year: 32.23%
d. The number of permanent employees on the rolls of the Company:1833
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 |
% |
2017 |
1994 (IPO) |
Change |
|
Market Price |
615.652 |
12* |
5030.42 |
(in '') |
*Adjusted face value on account of sub-division **BSE-clg.Pri 615.65
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 15.32%. The average annual increase in the salaries of the employees other than managerial personnel during the year was 32.23% 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 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(1) of the Companies Act, 2013 read with the Rule 592) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board''s 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 as : The Company Secretary, LIC Housing Finance Limited, Corporate Office, 131 Maker Towers, ''F'' Premises, 13th Floor, Cuffe Parade, Mumbai - 400 005.
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 2016-17. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. Report of the Secretarial Auditor for the Financial Year 2016-17 in Form MR-3 is annexed to this report as Annexure 7.
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 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. No complaint was filed during the year in this regard.
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 organized 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 organized 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: 25th April, 2017
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-Ã -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 Â
(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 Â
(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-Ã -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" Â 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, 2011
The Directors have great pleasure in presenting the Twenty Second
Annual Report together with the audited accounts for the year ended
31st March, 2011.
Financial results
The Profit and Loss Account shows a profit before tax of Rs.1294.16
crore after writing off bad debts of Rs.0.63 crore and considering the
amount recovered of Rs.6.69 crore out of earlier write off and taking
into account all expenses, including depreciation and prior period
items. The provision for income tax (net of deferred tax) is Rs.319.67
crore and the profit after tax for the year is Rs. 974.49 crore.
Taking into account the balance of Rs.361.40 crore being brought
forward from the previous year, the distributable profit is Rs.1335.89
crore.
(Rs. in crore)
For the For the
year ended year ended
31st March, 2011 31st March, 2010
Appropriations:
Special reserve 262.00 160.00
General reserve 350.00 200.00
Proposed dividend 166.13 142.39
Tax on dividend 26.93 24.20
Balance carried 530.83 361.41
forward to next year
1335.89 888.00
Dividend
Considering the good performance during the year 2010-11, your
Directors have recommended a dividend of Rs.3.5 per Equity Share of
Rs.2/- each (175%), for the year ended under review. The total dividend
outgo for the current year would amount to Rs.193.05 crore including
Dividend Distribution Tax of Rs.26.93 crore, as against Rs166.59 crore
including dividend distribution tax of Rs.24.20 crore, for the previous
year.
Performance
Income and profit
Profit before tax and after tax stood at Rs.1294.16 crore and Rs.974.49
crore as against Rs.911.27 crore and Rs.662.18 crore, respectively, for
the previous year. Profit before tax increased by 42.02% over the
previous year while profit after tax increased by 47.16% as compared to
that of previous year.
The Company earned a total income of Rs.4868.72 crore, registering an
increase of 40.34%. The percentage of administrative expenses to the
housing loans, which was
0.48% in the previous year, has decreased to 0.45% during the year
2010-11.
Lending operations
Individual loans:
The main thrust continues on individual loans with a disbursement
growth of 41% during the year. However, project loans were also given
due weightage resulting in an overall disbursement growth of 34% over
previous year. During the year, the Company sanctioned 1,32,707
individual Housing loans for Rs.20,227.35 crore and disbursed 1,61,466
loans for Rs.17,512.36 crore. Housing Loan to Individual i.e., retail
loans constitute 89.49% of the total sanctions and 87.95% of the total
disbursements for the year 2010-11 compared to the last yearÃs figure
of 78.43% and 83.81% respectively. The gross retail loan portfolio grew
by over 37.52% from Rs.34,031.64 crore as on 31st March, 2010 to
Rs.46,800.27 crore as on 31st March, 2011.
The cumulative sanctions and disbursements since the incorporation, in
respect of individual loans are:
Amount sanctioned: Rs.81,317.35 crore
Amount disbursed: Rs.72,957.36 crore
More than 12,00,000 customers have been serviced by the Company up to
31st March, 2011 since its inception.
Project loans:
Growth in profit has been attributed amongst other factors to the
growing portfolio of project loans. The Company sanctioned/ disbursed
project loans to select builders/developers after proper analysis and
sanction by the Executive Committee. The project loans sanctioned and
disbursed by the Company during the year were Rs.2,375.57 crore and
Rs.2,400.03 crore, respectively. These loans are generally for short
durations, giving better yields as compared to individual loans.
Non-Performing Assets and provisions
The amount of gross Non-Performing Assets (NPA) as on 31st March, 2011
was Rs.241.96 crores, which is equivalent to 0.52% of the housing loan
portfolio of the Company, as against Rs.263.15 crore i.e. 0.69% of the
housing loan portfolio as on 31st March, 2010. The net NPA as on 31st
March 2011 is reduced to Rs.15 crore i.e. 0.03% of the housing loan
portfolio vis-a-vis Rs.46.36 crore i.e. 0.12% of the housing loan
portfolio as on 31st March, 2010. The total cumulative provision
towards housing loan as on 31st March, 2011 is Rs.483.73 crore as
against Rs.216.79 crore in the previous year. During the year, the
Company has written off Rs.0.63 crore of housing loan portfolio as
against Rs.0.77 crore during the previous year.
Fund raising
The Company raised funds aggregating to Rs.18,873.87 crore through term
loans from banks, Non-Convertible Debentures
(NCD), upper tier II Bonds, commercial paper, NHB refinance and Public
Deposit. The CompanyÃs NCD & Upper Tier II subordinate Bond issue and
bank loans were rated ÃAAA/Stableà and Public Deposit was rated as
FAAA/STABLE by CRISIL.
Sub-Division of Equity Shares
With a view to increase the liquidity of the shares in the stock market
and to make it more affordable to the retail investors at large and
also to have better comparability with share prices of other companies,
the Company after taking membersà consent through postal ballot,
sub-divided the nominal face value of existing one equity share of
Rs.10/- into 5 equity shares of Rs.2/- each.
Auditors
Statutory auditors M/s. Chokshi & Chokshi, Chartered Accountants,
Mumbai and M/s. Shah Gupta & Co., Chartered Accountants, Mumbai retire
at the conclusion of the forthcoming Annual General Meeting (AGM). The
Company has received the requisite certificate from them to the effect
that their appointment, if made would be within the limits specified
under section 224(1B) of the Companies Act, 1956.
The Board of Directors recommend appointment of M/s. Chokshi & Chokshi,
Chartered Accountants, Mumbai and M/s. Shah Gupta & Co., Chartered
Accountants, Mumbai, as Joint Statutory Auditors of the Company for
financial year 2011-12.
Directors
Shri Dhananjay Mungale, Director and Shri S. Ravi, Director retire by
rotation at the ensuing AGM and are eligible for reappointment.
The Directors recommend their reappointment / appointment.
Corporate Governance
A certificate from the Joint Statutory Auditors of the Company
regarding compliance of the conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement with Stock
Exchanges is attached to the Corporate Governance Report.
Your Company has been complying with the principles of good Corporate
Governance over the years. The Board of Directors support the broad
principles of Corporate Governance. In addition to the basic governance
issues, the Board lays strong emphasis on transparency, accountability
and integrity.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as
stipulated under clause 49 of the Listing Agreement with Stock
Exchanges is presented in a separate section forming part of the Annual
Report.
Regulatory Compliance
The Company has been following guidelines, circulars and directions
issued by National Housing Bank (NHB) from time to time.
Your Company has been maintaining capital adequacy as prescribed by the
NHB from time to time. The capital adequacy was 14.88% (as against 12%
prescribed by the NHB) as on 31st March, 2011 after considering the
loan to value ratio for deciding risk weightage.
The Company also has been following directions / guidelines / circulars
issued by SEBI from time to time applicable to the listed company.
Depository system
The Company has signed an agreement with the Central Depository
Services (India) Limited (CDSL) for transactions of its shares in
dematerialised form, in addition to the National Securities Depository
Limited (NSDL), to give a choice to shareholders in selecting
depository participant. As on 31st March, 2011, 12,444 members of the
Company continue to hold shares in physical form. As per the Securities
and Exchange Board of IndiaÃs (SEBI) instructions, the CompanyÃs shares
have to be transacted in dematerialised form and therefore, members are
requested to convert their holdings to dematerialised form.
Public deposits
During 2007-08, the Company started accepting deposits from the public.
As on 31st March, 2011, the outstanding amount on account of public
deposits was Rs.261.20 crore. 97 deposits amounting to Rs.15.41 crore
which were due for repayment on or before 31st March, 2011 were not
claimed by the depositors till that date. As on the date of this
report, 30 deposits amounting to Rs.9.62 crore thereof have been
claimed and paid. The interest due on the public deposits has been paid
on time.
The Company through Registrar & Transfer Agent namely M/s. Link Intime
India Pvt. Ltd. has been sending reminders on periodical basis to the
depositors who have not claimed the maturity proceeds.
Exemption from provision of section 58A (2)(a) & (b)
In exercise of the powers under sub-section 8 of section 58A of the
Companies Act, 1956, read with Companies (Amendment) Act, 1977, the
Central Government has granted exemption to the public deposit scheme
of the Company from provisions of section 58A(2) (a) & (b) of the
Companies Act, 1956 on following conditions:
i. Abridged advertisement shall refer to the statutory advertisement
published.
ii. Abridged advertisement shall be issued during the validity of
statutory advertisement.
iii. Abridged advertisement shall be filed with the Registrar of
Companies, Maharashtra, within 15 days of its publication.
iv. The exemption will not affect any legal rights available to any
deposit holder or any shareholder or creditor as per law enforced in
respect of recovery of any amount which has become due for repayment.
Statutory information
The Company does not own any manufacturing facility. Hence the
particulars relating to the conservation of energy and technology
absorption stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988, are not applicable.
The particulars of foreign currency expenditure and foreign currency
earnings during 2010-11 are given at item No.16 and No.17 in the Notes
to the Accounts. There are no employees covered by Section 217 (2A) of
the Companies Act, 1956, read with the Companies (Particulars of
Employees) Rules, 1975, as amended.
Auditorsà observations
No adverse remark or observation is given by the statutory auditors.
The Company has an in house internal audit system for back offices
conducted by the audit department personnel and a reputed firm of
Chartered Accountants as internal auditor for Corporate Office.
Continuous efforts are made to further strengthen the internal audit
system to make it commensurate with the size and the nature of
business.
Systems and procedures are being upgraded from time to time to provide
checks and alerts for avoiding fraud arising out of misrepresentation
given by borrower/s while availing the housing loans.
Outlook for 2011-12
The initiatives taken by the Company during the year are expected to
improve its operational and financial performance. Major initiatives
taken by the Company include:
- Expanding its operations by establishing new business centres.
- Increasing its distribution by appointing new agents and activising
more agents.
- Incentivising and motivating the marketing intermediaries
systematically for improving productivity.
- Raising funds through loans at attractive rate of interest and terms.
- Strengthening and upgrading the existing Risk Management System.
- Maintaining good relations with lenders for reducing overall cost of
funds.
- Steps to improve the recovery ratio and ensuring lowest NPA level.
Improving receivable management through support system.
- Reviewing the existing lending rates at regular quarterly intervals
in view of the change in interest rate scenario, thereby insulating the
stakeholders of risk of interest fluctuation and passing on the
benefits as applicable to the customer.
- Timely review of credit appraisal system to improve the loan asset
quality.
- Initiating steps to upgrade Information Technology platform to ensure
prompt and effective service to the clientele.
- Initiating brand building measures to generate general awareness and
improve the image of the Company and also increase the overall market
share.
- Swift, appropriate and competitive pricing of its existing loan
schemes to attract new customers.
The management perspective about future of the Company
In view of the huge shortage in urban housing units in the country, the
Union government has been providing continued support to make the
sector attractive and giving it due recognition in the last three Union
budgets. The government said the country needs investment to the tune
of Rs.3,61,000/- crore to meet the shortage of nearly 25 million
housing units. There was approximately housing shortage of 24.7
million dwelling units at the beginning of the 11th five year plan. The
investment requirements would be close to Rs.3,61,000/- crore for
overcoming this massive housing shortage and, therefore, the management
reasonably foresees good potential for growth in the business of the
Company.
Directorsà Responsibility Statement pursuant to Section 217 (2AA) of
the Companies Act, 1956
In accordance with the provisions of Section 217 (2AA) of the Companies
Act, 1956, and based on the information provided by the management,
your Directors state that:
- In the preparation of the annual accounts, the applicable accounting
standards have been followed.
- Accounting policies were applied consistently. Reasonable and
prudent judgement and estimates were made so as to give true and fair
view of the state of affairs of the Company as at the end of 31st
March, 2011 and profit of the Company for the year ended on that date.
- Proper and sufficient care has been taken for maintenance of
accounting records in accordance with the provisions of the Companies
Act, 1956, for safeguarding the assets of the Company and for
preventing/detecting fraud and other irregularities.
- The annual accounts are prepared on a going concern basis.
Human resources
The Company aims to align HR practices with business goals, motivate
people for higher performance and build a competitive working
environment. Productive high performing employees are vital to the
companyÃs 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 CompanyÃs commitment to develop and
retain the best available talent, the Company had organised various
training programmes for upgrading the skill and knowledge of its
employees in different operational areas. Apart from fixed salaries and
perquisites, we also have in place performance-linked incentives which
reward outstanding performers that meet certain performance
targets. It has been sponsoring its employees for training
programmes/seminars/conference organised by reputed professional
institutions.
Employee relations remained cordial and the work atmosphere remained
congenial during the year.
Subsidiaries and group companies
The Consolidated financial statements incorporating the results of the
CompanyÃs wholly owned subsidiaries namely LICHFL Care Homes Limited,
LICHFL Financial Services Limited, LICHFL Trustee Company Private
Limited and LICHFL Asset Management Company Limited for the year ended
31st March, 2011, are attached along with the statement pursuant to
Section 212 of the Companies Act, 1956, with respect to the said
subsidiaries. The review of performance of the subsidiaries are as
under:
1. LICHFL Care Homes Limited:
LICHFL Care Homes Limited was incorporated on 11th September, 2001. To
address the crying need of housing for the senior citizens of the
country, the Company had promoted LICHFL Care Homes Limited, to
establish and operate assisted community living centres.
The Company is on the threshold of commencing its construction and also
sale of flats at Bhubaneswar à the foundation stone for which has been
laid by the Chairman of LIC of India.
The tendering process for construction at Bhubaneswar project having
been completed, the environmental clearance obtained and the market
survey for sale revealing a healthy outlook, the company is poised for
turnaround in the current year 2011-12.
The Company is also in the process of getting the land converted for
land purchased at Jaipur and start phase II of Bangalore project
besides exploring the possibility of tie-ups for joint ventures / joint
development.
2. LICHFL Financial Services Limited :
LICHFL Financial Services Limited was incorporated on 31st October,
2007 for undertaking non fund based activities like marketing of
housing loans, insurance products, credit card, mutual fund, personal
loan etc. It has become operational in March 2009 and has already
opened 33 offices across the country. The Company earned profit after
tax Rs.1.85 crore and declared second dividend @10% for F.Y. 2010-11.
The Company during the year under review got 37 offices operational in
various parts of the country. The initiatives taken by the Company
during the year are expected to improve its operational and financial
performance. The Company has plans to expand in new locations and
increase its marketing team strength. There is good potential for
growth of business in home loan and insurance sector. Distribution of
these products is expected to generate good revenue for the Company.
The Company has
plans to expand its lines of business and would evaluate right
opportunities for growth, profitability and value addition to
shareholders.
3. LICHFL Trustee Company Private Limited :
LICHFL Trustee Company Private Limited was incorporated on 5th March,
2008 for undertaking the business of trustees of venture capital trust,
funds à in India and offshore.
The Company has been appointed as trustee for LICHFL Fund on 27th
August, 2010. The Company has appointed LICHFL Asset Management Company
Limited as Investment Manager on 27th August, 2010 and it is reported
that the Fund is registered with SEBI vide Registration Certificate
No.IN/VCF/10-11/0193. The Investment Manager has commenced the
marketing of the fund ÃLICHFL Urban Development Fundà in February 2011
and it is expected that fund would achieve closure around June, 2011.
4. LICHFL Asset Management Company Limited:
LICHFL Asset Management Company Limited was incorporated on 14th
February, 2008 for undertaking the business of managing, advising,
administering venture funds, unit trust, investment trust in India as
well as abroad.
The Company has been appointed as the Investment Manager by LICHFL
Trustee Company Private Limited on 27th August, 2010 and has since
obtained SEBI registration of Fund and started marketing of LICHFL
Urban Development Fund initially to Banks and Financial Institutions in
the first stage. Marketing to others investors, HNI will commence with
the appointment of Distributors for this purpose which is expected by
May 2011. The response from Banks and some insurance companies has been
encouraging and their commitments are expected shortly and closure of
the fund is expected by end of June 2011. As banks and housing finance
companies reduce their exposure to real estate sector due to tightening
of RBI norms, developers have started to reach Private Equity Investors
for funding. Budget for the year 2011-12 is also encouraging for
affordable housing segment.
Acknowledgments
The Directors place on record their appreciation for the advice,
guidance and support given by the Life Insurance Corporation of India
and the NHB and all the bankers of the Company. The Directors also
place on record their sincere thanks to the CompanyÃs clientele and
members for their patronage. The Directors also record their
appreciation for the dedicated services of the employees and their
contribution to the growth of the Company.
For and on behalf of the Board
Chairman
Mumbai
28th April, 2011
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