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'''').
For the year ended 31st March, 2017
For the year ended 31st March, 2016
Profit before Tax
Profit after Tax
Special Reserve & Statutory Reserve u/s 29C of NHB Act, 1987
Tax on Dividend
Balance carried forward to next year
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 centre’s.
- 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*
Shri Jagdish Capoor
Dr. Dharmendra Bhandari
Shri Vinay SahA
Managing Director & CEO
Ms. Sunita Sharma**
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
- Shri T. V. Rao Member
- Shri Ameet Patel Member
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:
in Rs, (lakhs)
in Rs, (lakhs)
1. Total Income
2. Profit Before Tax
3. Profit After Tax
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.
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
*No remuneration is paid to Non Executive Directors
(including Independent Directors)
Executive Director 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 Independent Directors)*
% increase in remuneration in the financial year
*No remuneration is paid to Non Executive Directors
(including Independent Directors)
% increase in remuneration in
the financial year
Chief Financial Officer
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:
*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.
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.
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
Date: 25th April, 2017