Chairman and Managing Director’s Foreword
Dear Members, A Year of Fulfillment
FY 2017-18 was a defining year for DHFL both in terms of financial performance and strategic growth. To
all our stakeholders, crossing the Rs, 1 lakh crore mark in Assets Under Management (AUM) is a matter of
immense pride and a great milestone to recognize and celebrate. Looking back at the journey that began 34
years ago, a humble beginning mounted on a profound vision of the Founder to enable homeownership for every
needy Indian, translated into a fulfilling achievement. Needless to say, very few Institutions share such an
accomplishment of building scale on small value loans. This accomplishment has lent us a new strength that
has set us on the path of a larger vision of making the DHFL Brand a household name.
We are committed to further strengthening our capabilities that allow us to serve various financial needs
of our customers - offering not only home loans but also protection and security for a better future.
Building on our Founder Late Shri Rajesh Kumar Wadhawan’s Vision, we stay committed to enabling
inclusive growth as a thrust of our business objectives and thus contribute to a more equitable world.
The Indian Economy
Indian businesses have successfully coped with numerous policy-led realignments and the financial
services sector has been witnessing regulatory-led credit quality changes which will enable a secured future
for the market.
Compared to the global scenario, the India story remains buoyant and holds significant potential. Firm
government reforms, businesses adjusting to transformational policy changes like demonetization, GST, RERA,
etc. and increased spending on welfare and infrastructure needs gels well with the revival of India’s
growth theme. In FY 2017-18, India grew by 6.7 percent and the IMF growth forecast is 7.4 percent for FY
2018-19 and 7.8 percent in FY 2019-20. It is noteworthy that China’s growth in FY 2018-19 will be 6.8
percent making India regain the crown of the fastest growing country among emerging economies.
The World Economy Gathering Speed
According to the International Monetary Fund (IMF), the world economy is gathering speed. To make this
gain sustainable, shared priorities across economies, which include structural reforms and working towards
inclusive growth models, need to be implemented. The IMF report mentions that 2017 saw the best global growth
in seven years, having grown by 3.7 percent. While the growth is broad-based, notable upward surprises in
Europe and Asia contributed to the record numbers.
Events around the world in the past year demonstrate a growing willingness of the political leadership to
solve geopolitical and trade-related conflicts through debate and dialogue. This approach of world leaders
across politics, businesses and regulatory affairs, to find solutions to systemic macro-economic imbalances
by sitting across the table bodes well for a more equal world. That said, there are sporadic threats to the
world economic order due to country-led populist measures, ambitions of regional dominance and imbalanced
growth within and across economies.
In the financial sector, global growth is showing signs of picking up with enhanced consumer sentiment.
The year also saw global financial institutions spending increased time either on meeting risk and
governance-led regulatory demands, or consolidating or shedding divisions for operational efficiency.
Simultaneously, new-age fintech start-ups are disrupting traditional forms of financial services delivery.
The Indian growth story, especially in the housing finance sector, remains robust.
Affordable Homes Create an Equitable World
Uneven economic growth results in increased human conflicts, creating an undercurrent of larger social
unrest. As urban growth is an integral part of the anticipated global progression, six out of 10 people will
reside in urban areas by 2030. By that time, the World Bank estimates, our world will need 300 million new
housing units.
Governments, policymakers and businesses like ours should not look at this merely as an economic
opportunity but also as a social value-addition that will create a more equitable society. Indeed, lop-sided
development lets the gap between the wealthy and the poor increase, which will only foster societal conflicts
and impede growth momentums.
Research has shown that (affordable) homeownership yields four distinct measurable social benefits, viz.,
better health for homeowners and their children, reduced crime rates, investment in education due to
disciplined savings and increased community-based civic engagement. This is reason enough for us to ensure
that homeownership becomes a priority for the civil society. This is also the core thought behind the theme
for this fiscal’s Annual Report - ‘Giving India A Home’, driving the need to create a
better India by expanding financial inclusion.
Globally, 93 percent of home-seeking adults do not have access to formal housing finance options. For
DHFL, this has been at the core of our foundation and business strategy, as facilitating homeownership to
marginalized sections through affordable finance helps create a society that is more equal, fair and
civil.
Housing for All by 2022
India accounts for 20 percent of the global house construction target. We are set to witness the largest
urban transformation of the 21st century under the guidance of our honorable Prime Minister Shri
Narendra Modi’s Pradhan Mantri Awas Yojana (PMAY). The scheme aims to build about 60 million housing
units to provide homes to all Indians by 2022.
Urbanization opens up job opportunities and helps reduce inequality Urbanization cannot be overlooked in
the quest for development, although it is imperative that we strike the right balance between agrarian
reforms, rural enterprises and urban growth to achieve a sustainable transition to urban-led growth. By 2030,
40.76 percent of India’s population is likely to live in cities and by 2050 the country will lead the
global urbanisation surge along with China, Indonesia, Nigeria and the United States. Since half a billion of
these new consumers will need to have a roof over their heads, it has become critical to re-engineer
socioeconomic fabric with special emphasis on safeguarding relegated communities and promoting semi-urban
regions.
Globally, 93 percent of would-be homeowners do not have access to formal housing finance options. In
India, the situation has improved significantly since the introduction of PMAY in 2015. At DHFL, we have
always aimed at implementing transparent, effective and humane credit appraisal measures which ensure that
the marginalized sections with no presence in the formal banking system, have access to finance for owning a
home.
Measures like the dedicated Affordable Housing Fund (AHF) in National Housing Bank that will be funded
from the priority sector lending shortfall and fully-serviced bonds authorized by the Centre, are
encouraging. Further, in March 2018, the Union Cabinet approved the creation of the National Urban Housing
Fund (NUHF) of Rs, 60,000 crore to fast-track the implementation of PMAY (Urban).
These initiatives point towards the Government’s earnestness to ensure the success of the
‘Housing for All by 2022’ mission. Your Company’s market leadership will ensure that we
stand to gain from the wide spectrum of opportunities supported by the Government’s proactive policies
that will optimize our cost of funds.
HFCs - Financing India’s Housing Infrastructure
Recent events in the Indian banking and financial sector have seen a strong push by the Government,
judiciary and regulators to clean up the system. Armed with the IBC Act (2016), banks and lenders in our
country are going through a testing time. After banks faced setbacks for lending to the realty and allied
businesses, finance for these sectors have dried up. While return of banks as the key player in the credit
delivery system is essential, non-banking finance companies (NBFCs) and Housing Finance Companies (HFCs) have
taken the lead to ensure that finance is available both on the supply and demand side for infrastructure
projects like affordable housing. I firmly believe that the recent measures will result in a robust and
healthy credit culture.
Though this short-term pain was inevitable, these events have proved that NBFCs are vital for the Indian
formal lending setup. The combination of the inherited structural strength of Indian
NBFCs, along with the entrepreneurial approach to business, has evolved them into trusted yet accountable
lending entities. It is estimated that the contribution of NBFCs in the total retail lending will increase to
17.1 percent in FY 2018-19, as compared to 13.1 percent in FY 2014-15 and 9.4 percent in FY 2005-06.
With DHFL being a prominent HFC in the country focussed on affordable housing finance, it is a matter of
pride and satisfaction that we are contributing to building India’s infrastructure dream. Our Founder,
Late Shri Rajesh Kumar Wadhawan instituted DHFL on the premise that homeownership gave people deep roots,
strong wings and the freedom to pursue their dreams. His vision today has assumed a priority focus of
national scale and has evolved into a paradigm for social and economic development. Through our business
conduct, DHFL is helping to build more depth into the financial system by creating more mortgage service
businesses and generating more liquidity in the capital market, thus in a way promoting a more secured social
environment.
Building a Leadership Brand with Trust, Transparency and Technology
In today’s world of real-time reportage, social media amplification and low consumer trust in
brands for the safekeeping of their confidential data, we want to conduct ourselves in a manner that builds
stakeholders’ trust. Let me assure you that we are building an organization of committed leaders across
the hierarchy. Integrity, ethics and empathy are embedded in every member of our professional team, which is
passionate yet purposeful in its conduct.
We want our organizational platform to become an enabler that nurtures and grows future leaders from
within the ranks.
We want to attract the best talent to our Company where entrepreneurial freedom and a professional work
environment are provided in equal measure.
Today, customer-centricity has a new meaning. Recent examples of data breach of user information have
created global political crisis, making businesses vulnerable to unintentional misuse. We want to leverage
technology as a key enabler to serve customers in a more efficient, quick and non-intrusive manner. We want
to use the insights garnered from behavioral economics and big data to build long-term customer
relationships.
Similarly, we want to use technology to build a backend system that ensures a high level of credit
evaluation and monitoring, risk practices and safety of our consumers’ data. The establishment of
Central Processing Units at Mumbai and Hyderabad were key events in this direction. In my previous letter, I
had spoken about a ‘phygital’ approach -the best of Physical and Technology mix in reaching and
serving customers. We have made considerable progress in this direction and are now equipped to serve them
through an omni-channel strategy of online and branch networks.
The biggest opportunity and risk to our business today is technology-led disruption. With the millennial
joining the workforce, we must build an organization that is agile. According to a report by Boston
Consulting Group, more than half of all new Internet users will be in rural communities and they will
constitute about half of all Indian Internet users by 2020. Where traditional organizations will have to
retreat, we will need to move forward with digital financial inclusion to cater to digitally native consumers
who have leapfrogged to the forefront of digital finance.
We are continuously looking at fintech innovations that will help us serve customers with speed, surety,
safety and security. We want to become an organization where the customer is at the centre of our growth
trajectory, surrounded by prudent business practices, humane ethos and sustainable action towards the
environment and society. And with over 9,500-plus employees, we aim to be a preferred employer brand.
DHFL’s investment in Fintech brand ‘Early Salary’ - a technology platform for lending
to salaried class to draw down against future salary is a significant step in building synergy with the new
world of technology-based lending.
Sustainable and Prudent Performance
Currently, we have more than 5,90,000 (this figure excludes FD customers) customers and more than '' 1
trillion AUM. This achievement reinforces our position among the top two housing finance companies in India.
We will continue to focus on bringing down our cost of funds in the coming years.
During the year, your Company retained CARE’s highest AAA (Triple-A) credit rating. We delivered a
robust performance yet again, registering 18.15 percent revenue growth of Rs, 10,464.45 crore for the year
ending March 31, 2018. Profit before tax and exceptional items stood at Rs, 1,756.62 crore, an increase of
25.26 percent on a Y-o-Y basis. Our loan portfolio witnessed growth at 27.51 percent to Rs, 91,932.32 crore
as on March 31, 2018.
In our endeavour towards furthering our Founder’s vision and facilitating the Government’s
national mission, we were acknowledged by ‘My Liveable City’ and knowledge partner
‘National Housing Bank’ as the ‘Best Performing Primary Lending Institution’ under
Credit-Linked Subsidy Scheme (CLSS) for Middle Income Groups (MIG) for highest number of credit subsidies
under PMAY This accomplishment is truly a tribute to our Founder’s noble vision.
Over the past three decades, we have nurtured the DHFL brand with diligence. Today, DHFL enjoys
significant trust and recognition among our customers and peers. Our Insurance (Life and General), Mutual
Fund and Education Finance are rapidly scaling up, and we are open to synergistic business evaluations in the
micro-finance and other similar sectors.
As conveyed in my opening remarks, we are embarking on a larger mission of making DHFL a partner in every
household need, financial and beyond, in line with our mission to ‘Giving India a Home’, with many
reasons to smile and celebrate.
WGC - Taking our Learnings to the World, Learning from the World
WGC (Wadhawan Global Capital Ltd.), our Promoter Group entity, continues to build on the Group’s
synergies and looks at the global arena for new, disruptive business opportunities in the fintech sector. The
aim of the parent platform is two-fold - first, being able to consolidate learning’s, customer insights,
process efficiencies and people leadership across various group companies. It will also act as a knowledge-led
strategy think-tank to share best practices and build group competencies.
Today, the Group’s leading businesses and new-age investments ensure a
contemporary growth strategy and approach. With a group AUM of USD 22 billion, we have recently forayed
into the wealth management space.
Empowering Communities through Compassionate Conduct
DHFL’s business model has empathy ingrained in its conduct, to empower the marginalized to become
part of the mainstream through respect and achievement of homeownership. Our CSR efforts continue to be
aligned with the same principle of making a real on ground impact. To widen the canvas further, enlist
partnerships and build sustainable models through research and innovation, we constituted a Section 8 Company
- DHFL Changing Lives Foundation - with a key focus on ECCE (Early Childhood Care and Education). Alongside,
we will continue our CSR work in the areas of skill development, financial literacy, rural development and
sports.
While education is a key CSR focus area for Indian corporate, not many programmes are dedicated to the
implementation of the National ECCE policy despite the segment being recognized as a high-priority area by
the Government. Through DHFL Changing Lives Foundation, we aim to bridge this gap with a focus on the core
areas of education, nutrition, child-friendly anganwadi infrastructure and stakeholder empowerment. We have
partnered with various governmental agencies and private entities in pursuit of these objectives.
During the last fiscal, our skill development centres across 23 Tier II and III locations provided
training to 6,000 youth in 12 job roles. As part of our village transformation mission, we have introduced
a tobacco control programme to make these villages tobacco free. Our financial literacy programmes have
reached out to 40,000 households to aid transition from informal to formal housing, create livelihood
linkages and linkages with Government welfare schemes. Additionally, the programme promotes the
Government’s PMAY scheme.
Building an Equitable Society
With gap between the segments amongst the population widening, any development that bridges this gap is
considered a step towards a sustainable future. As an organization, we will continue to conduct ourselves
with prudence, while we strive towards benefiting our customers, maximizing stakeholder wealth and thus,
building a world that is equal, fair and democratic for every citizen. It is indeed a proud moment for all of
us to be associated with an organization that helps bridge this gap and contributes towards building a more
equitable world.
In our mission which we call ‘Giving India a Home’, our Endeavour is to widen the compass of
our homeownership initiatives to drive financial inclusion in a manner that is designed to carve a more
equitable society.
I would like to thank all our stakeholders including employees, customers, regulators, financial
institutions, vendors, etc. for making this journey memorable and worthwhile. I am confident that with your
continued support and cooperation, we shall succeed in leading our mission to a successful conclusion,
committed in line with the Government’s mission of ‘Housing for All by 2022’.
Thanking you,
With Best Wishes,
Kapil Wadhawan
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