Moneycontrol
SENSEX NIFTY
you are here:

Housing Development Finance Corporation Ltd.

BSE: 500010 | NSE: HDFC |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE001A01036 | SECTOR: Finance - Housing

BSE Live

Jul 10, 12:30
1887.00 -55.00 (-2.83%)
Volume
AVERAGE VOLUME
5-Day
157,108
10-Day
304,267
30-Day
290,465
72,852
  • Prev. Close

    1942.00

  • Open Price

    1906.00

  • Bid Price (Qty.)

    1886.00 (1)

  • Offer Price (Qty.)

    1886.60 (20)

NSE Live

Jul 10, 12:30
1885.90 -55.95 (-2.88%)
Volume
AVERAGE VOLUME
5-Day
4,650,082
10-Day
5,272,832
30-Day
6,587,399
2,217,837
  • Prev. Close

    1941.85

  • Open Price

    1915.00

  • Bid Price (Qty.)

    1885.50 (1)

  • Offer Price (Qty.)

    1885.85 (66)

Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Chairman's Speech

Dear Shareholders, ''Steady Always. Cruising Ahead'' is the theme of our Annual Report this year. To many the theme may appear incongruous in an environment where global economic recovery has remained elusive. Markets have been short on confidence with the prolonged Eurozone debt crisis and the resultant looming recession. In the US, housing and employment data have remained weak, undermining hopes of a sustained recovery. Averting a hard landing for China depends on how effectively it reduces export dependence and boosts domestic demand without triggering inflation. As for India, unfortunately, most of its problems in the recent period have been self induced - lack of fiscal rectitude, uncompromising coalition partners, inability to gain consensus on crucial legislation, stalled reforms, corruption scandals and a sense of apathy towards foreign investment. Despite this, India has managed a GDP growth rate of 6.5% in FY 2012. In relative terms, compared to most countries, India''s growth rate is still impressive. The disappointment is that India''s performance is significantly below its potential. Alarm bells have been ringing with deteriorating macro-economic parameters. Inflation has remained stubbornly high and the rupee has been volatile, having depreciated sharply in the recent period. Muted capital flows and higher oil and gold imports has widened the current account deficit. An increasing entitlement and subsidy driven regime has resulted in a ballooning fiscal deficit. With reforms having come to a grinding halt, there is a sense of wariness in the investment climate. Globally too, the economic outlook is grim. In short, investors are forced to cope with volatility. In such an environment, there is a tendency to be blinkered by pessimism. No doubt, business confidence in India has sunk to a low ebb. Fortunately, the same is not the case with consumer confidence. It is ironic to see the coexistence of falling business confidence but rising consumer confidence. But herein lies India''s vibrancy and perhaps its true strength. India''s demographics have always been a strong attraction for investors. This unique advantage, however, may be lost if sufficient jobs are not created. The most radical, structural change in recent times in India is the growing power of its middle class. Better job opportunities, higher disposable incomes, a ''wanting-more'' consumer mind-set and an ambitious and optimistic outlook on life characterises this group. The middle class is consuming most of what India produces and is demanding more at a frenetic pace. India''s future lies in how effectively it can push households upwards into the middle class segment. The rapid growth in consumer goods, housing and other retail loans, mobile phones, cars and budget hotels amongst several other sectors all point towards the voracious consumption of the middle class. India and China are markets rightly termed as ''the buying power by the billion''. Given the sheer size of these two markets, companies with global aspirations recognise they cannot afford to bypass these markets. As a result of the self-inflicted traumas that India has brought upon itself, some companies are caught in the dilemma of giving up the ''billion opportunity''. India has always been a country where investors need patience, but the rewards have been visible. Though there are deepening doubts about India''s ability to manage its future, companies with a long-term vision still believe that the risk of not being in India is greater than the risk of being in India. Economic hardships can always be overcome. What India needs to do to set itself back on course is known to all. Legislations that can re-instill confidence into the markets are ready and waiting for the requisite nod from parliament. The only thing holding India back at this juncture is lack of political will to ensure a better future for the country. Investors can no longer be placated by saying that the long term fundamentals of the country are still intact. It is equally important for investors to recognise that India is not a ''top-down'' story - it never was and perhaps never will be. From an investor''s perspective, India has always been a ''micro'' story. It is a select group of companies that have constantly strived to meet world class standards which has attracted global investors. For us, it is an honour that HDFC along with its group companies are amongst this privileged group. HDFC @ 35 ''Steady Always. Cruising Ahead'' is a mirror image of what we have done during the past thirty-five years of our existence. We have consciously grown at a pace we believe is sustainable to ensure that there is no compromise on our asset quality. There have been many instances where irrational competition invaded the Indian housing finance market. Yet through all these years, HDFC has always maintained that market share has never been its priority, but being profitable is. In a country where mortgage penetration is so low, gaining market share is perhaps the easiest thing to do. Earning the goodwill of a customer requires much greater effort, and this was the very premise on which HDFC was set up. Through various economic and business cycles, HDFC has realised that a steady pace of growth has held it in good stead. Perhaps we may have foregone some short-term upside on growth, but in the long run, our cautious approach has been our rudder. This is also reflected in our consistently low non-performing assets. Many bad financial decisions are made in good times and it is easy to succumb to market exuberance. It is, however, important to recognise that a housing loan is different from other loans - it is long-term, it is the single largest investment a person makes in his or her lifetime and while the asset acquired per se does not generate any income, a home creates a deep sense of security and well being. A responsible home loan lender has to ensure that a customer not only acquires a home but is also able to remain in that home. Since inception, HDFC has taken its role of being a responsible lender very seriously. The global financial crisis which had housing at the epicentre also reaffirmed that being conservative pays in the long run. Urbanisation: The Next Implosion? Growing economic prosperity and urbanisation are inextricably linked. Rising urbanisation generally translates into better jobs, increased incomes and a higher standard of living. India''s urban population is projected to increase from 31% presently to 40% by 2030 and by 2050, more than two-thirds of Indians will be living in urban areas. The key question is: are we at all prepared to manage India''s urban transition? Evidently the answer is no. A comparison of BRIC nations, (Brazil, Russia, India and China) reveals that India''s pace of urbanisation ranks the lowest. Cities are centres of growth, employment generation and innovation, and yet India spends barely 0.1% of its GDP on urban development, whereas the minimum requirement is 0.25% of GDP per year. The Report on Indian Urban Infrastructure and Services (2011), estimates that India will require Rs 39.2 lakh crore (~US$ 700 billion) for investment in urban infrastructure over the next 20 years. The government presently has just one key flagship programme on urbanisation and its seven year track record has been dismal. 70% of India''s GDP and 7 out of every 10 jobs are expected to be created in urban India in the next 20 years. This should be a compelling enough reason for the government to give more thought on how future urban infrastructure requirements may be funded. It is certainly not enough to say that the PPP model will take care of all funding needs. Even municipal and urban local bodies have not been provided with a conducive environment to make them financially autonomous and raise their own resources. The skewness of urban lands is evident in these current statistics: - The top 10 Indian cities are estimated to produce 15% of the GDP with 8% of the population who occupy just 0.1% of the land area; and, - The top 100 largest Indian cities produce 43% of the GDP with 16% of the population, occupying just 0.24% of the land area. Unfortunately, the Land Acquisition, Rehabilitation and Resettlement Bill, has turned into a long saga, having lapsed twice and gone through umpteen committees. The underlying principles are clear - land has to be acquired for development, the compensation has to be fair and the role of the government cannot be eliminated given that the land markets in India are not sophisticated. Collusion and vested interests of a few have distorted our land markets, but it is inaction and uncertainty that is most detrimental for investment projects. Urban living conditions are abysmal. The inevitable urban influx will only exacerbate the situation. Where are these people going to live and how many more slums will spring up? We hear of plans but no implementation of rental housing schemes for slum dwellers. Further, without transit accommodation existing slums cannot be rebuilt into formal housing units. With such a looming crisis, it is inexplicable why authorities are not giving serious attention to urban planning. If cities are allowed to decay and more people are homeless, it gives rise to civil strife. If any headway is to be made on affordable housing then some rethinking has to be done on the Floor Space Index (FSI). Given the pace of growth of Indian cities, there is no option but to go vertical. Yet, we consider it sacrosanct to restrict FSI. Certainly, prudent norms are necessary when raising the FSI, but this can easily be done by ensuring strict building code standards and ring fencing funds to be utilised only for the upgradation of the surrounding infrastructure. Similarly, there has to be a mindset change on land reclamation. Globally, world class cities have been expanded through reclamation and without damage to the environment. Affordable housing projects have to be fast tracked through a single window approval mechanism - only then will developers be sufficiently incentivised to build for this segment. Lastly, bringing in order, discipline and transparency through a real estate regulator must not be allowed to be thwarted by lobbies with vested interests. Time and again solutions to urban housing problems have been given, only to fall on deaf ears. To conclude, we have to work towards creating new cities. Yes, there are many roadblocks but the risk of inaction is far greater. The late Prof. C. K. Prahalad had rightly said, India needs to create 500 new cities to accommodate a better quality of life, otherwise every existing city will become a slum when India turns 75 in 2022. India''s defining moment has arrived and we should not miss out on the economic opportunities that urbanisation brings. A few bold policy measures will go a long way in changing the lives of a billion Indians.