LIC HOUSING FINANCE LTD - ANNUAL REPORT FOR FY 2012 - Summary - EXPECTED TO DO WELL IN FY 2013

LIC HOUSING FINANCE LIMITED

ANNUAL REPORT FOR FY 2012

Summary

 

Financial results

The profit before tax is Rs 1230.91 Cr after writing off bad debts of Rs 0.03 Cr and considering the  amount of Rs 4.82 Cr recovered out of earlier write off and taking  into account all expenses, including depreciation and prior period  items.

Provision for income tax (net of deferred tax) is Rs 316.72  Cr including Rs 7.00 Cr in respect of earlier year.

The Profit  after tax for the year is Rs 914.20 Cr.

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

Considering the performance during the year 2011-12, LICHSG FIN has recommended a dividend of Rs 3.6 per equity share of Rs 2/- each (180 per cent), for the year ended under review.

Performance

Income and profit

Profit before tax and after tax stood at Rs 1230.91 Cr and Rs 914.20 Cr as against Rs 1294.16 Cr and Rs 974.49 Cr respectively, for the previous year.

Profit before tax decreased by 4.89 %over the previous year while profit after tax decreased by 6.19 %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 Cr, registering an increase of 27.65 per cent. The percentage of administrative expenses to the housing loans, which was 0.45 %in the previous year, has decreased to 0.38 %during the year 2011-12.

Lending operations

Individual loans:

The main thrust continues on individual housing loans with a disbursement growth of 17.52 %during the year.  However, project loan has shown a negative growth of 62.10 %over previous year.

During the year, the Company sanctioned 1,32,935 individual housing loans for Rs 20,751.98 Cr and disbursed 1,34,668 loans for Rs 19,117.50 Cr.  Housing loan to Individual i.e., retail loans constitute 94.17 %of the total sanctions and 95.45 %of the total disbursements for the year 2011-12 compared to 89.48 %and 87.14 %respectively during the year 2010-11.  The gross retail loan portfolio grew by over 28.11 %from Rs 46,800.27 Cr as on 31st March, 2011 to Rs 59,958.20 Cr as on 31^st  March, 2012.

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

 Amount sanctioned:   Rs 1,02,069.33 Cr

 Amount disbursed:     Rs 92,074.86 Cr

 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 Cr and Rs 909.57 Cr 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 NPAs as on 31st March, 2012 was Rs 265.22 Cr, which is equivalent to 0.42 % of the housing loan portfolio of the Company, as against Rs 241.96 Cr i.e. 0.47 % of the housing loan portfolio as on 31st March, 2011.

The net NPA as on 31st March 2012 has increased to Rs 84.85 Cr i.e. 0.14 %  of the housing loan portfolio vis-a-vis Rs 39.76 Cr i.e. 0.08 % 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 Cr as against Rs 483.73 Cr in the previous year. During the  year, the Company has written off Rs 0.03 Cr of housing loan portfolio as against Rs 0.63 Cr during the previous year.

Fund raising

The Company raised funds aggregating to Rs 21,036.01 Cr through term  loans from banks, Non-Convertible Debentures (NCD), commercial paper,  NHB refinance and Public Deposit. 

 Allotment of Equity Shares on preferential basis

The Company had issued 3,00,00,000 (three Cr) equity shares on a preferential basis to promoter of the Company namely LIC of India.

Regulatory Compliance

 The Company has been following guidelines, circulars and directions issued by National Housing Bank (NHB) from time to time.

It has been maintaining capital adequacy as prescribed by the NHB. The capital adequacy was 16.69 %(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.

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 Cr. 

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

 Management perspective about future :

 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/- Cr 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/- Cr for overcoming this massive housing shortage and, therefore, the management reasonably foresees good potential for growth in the business of the Company.

Subsidiaries and group companies

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 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 Cr 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. It earned a profit after tax of Rs 2.02 Cr for the financial year 2011-12 and recommended dividend @10% for FY 2011-12. The Company during the year 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.

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.  It has received more than Rs 240 Cr commitments. It is expected to achieve final closure soon.

4.  LICHFL Asset Management Company Limited:

This Company was incorporated on 14^th February, 2008. It 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 Cr commitments.

COMMENTS :

LIC HSG FINANCE is improving and expanding its operations very fast – and can reward investors well in future. It is a GOOD BET for investment, for medium to long term Investors.

It s Q1 FY13 results are due on 25^th, July,2012.

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