Dear Shareholders, Ladies & Gentlemen,
On behalf of the Board of Directors and on my own behalf, it gives me immense pleasure to welcome you all on the occasion of the 48th Annual General Meeting (AGM) of HUDCO. The annual report for the financial year ending 31st March, 2018, along with the Director’s Report, Audited Annual Accounts and the Auditor’s Report of your Company have already been provided to you.
I take great pride in informing you that your Company for the year 2017-18, has registered a landmark performance in its operations. Your Company has achieved the highest ever annual disbursement and sanctions in its chequered history of 48 years of existence. The sanctions accorded have been for a total loan amount of Rs.38,648 crore and the disbursement made has been Rs.16,565 crore. I am happy to inform that your Company, after the successful maiden Public offer of 20,40,58,747 equity shares, being 10.19% of equity share holder of President of India, has got listed on BSE Limited and National Stock Exchange of India Ltd on 19th May, 2017. On behalf of the Board, I thank the entire investing community, including Qualified Institutional Buyers and High Net worth Individuals and other inter-mediary agencies involved in the IPO for the confidence reposed in HUDCO.
HUDCO’s operational performance during the year clearly depicts that your Company is on the path of setting higher performance standards for itself. I would like to share the highlights of HUDCO’s performance during 2017-18, the business environment, challenges faced and future outlook of the Company.
1. Economic Environment
Macroeconomic developments in 2017-18 have been marked by many swings. As per the Economic Survey 2017-18, while in the first half, India’s economy temporarily “decoupled,” decelerating as the rest of the world accelerated, in the second half of the year, the economy witnessed robust signs of revival especially in the last quarter, when GDP grew by an impressive 7.7%. As per the provisional estimates of GDP released by Central Statistics Office (CSO), for the year 2017-18 as a whole, the GDP grew by 6.7%. Reflecting the cumulative efforts to improve the business climate, India jumped 30 spots on the World Bank’s ‘Ease of Doing Business’ rankings.
The consumer price index based inflation or the retail inflation stayed lower during the initial months of the FY but rose gradually later on, to reach a peak of 5.21% in December 2017 and subsequently levelled off thereafter to 4.28% in March 2018. On the monetary policy front, the Reserve Bank of India (RBI) reduced the policy repo rate once during the financial year in August 2017 by 25 basis points from 6.25% to 6.00%. The RBI data on sectoral deployment of bank credit revealed a somewhat slower credit growth in retail housing sector by the banks compared to the previous fiscal.
Going forward, economic activity is expected to gather further pace in 2018-19, benefitting from a conducive domestic and global environment. The International Monetary Fund (IMF), in its ‘World Economic Outlook’ (July 2018) has projected a growth rate of 7.3 percent in 2018-19 and 7.5 percent in 2019-20 for India.
2. Sectoral Overview and Government Policy Initiatives
The Union Budget 2018-19 has exhibited the continued thrust being laid by the Government on Affordable housing sector. There has been a major increase in budgetary allocation for almost all the flagship programmes of the Government in the urban sector. This has been further complemented by the Government by announcing timely and much-needed policy measures, such as, bringing out a convergence of the Priority Sector Lending (PSL) guidelines for housing loans with the PMAY guidelines by raising the housing loan limits for eligibility under PSL and also raising the existing family income limits in line with PMAY guidelines, creation of a National Urban Housing Fund of Rs.60,000 crore to finance the PMAY scheme, enlarging the areal coverage under CLSS by incorporating notified areas/industrial areas and also increasing the eligible carpet area under MIG category of beneficiary households, etc. Efforts to enlist the vacant land of PSUs for affordable housing is another major initiative that is expected to facilitate affordable housing delivery. The ongoing initiative to chart out a new urbanisation policy in tandem with the changing times would go a long way in providing a direction for urbanisation, for their integrated development and to gainfully harness the positive benefits of urbanisation for the welfare of citizens at large.
3. Emerging Issues in Housing and Urban Infrastructure
Urbanization is a key indicator of economic development and should be seen as a positive factor for overall development. The economic surge in the country has largely been driven by India’s urban centres, leading to an exponential growth of the cities, especially in the last decade. As per Census of India 2011, about 377.10 million population (31.2%) constitute urban and about 833.40 million (68.8%) reside in rural areas. At current rate of growth, urban population in India is estimated to reach a staggering 575 million by 2030 and 875 million by 2050 (MoHUA, annual report 2017-18). This transition needs to be accompanied by a commensurate increase in the supply of basic urban services, necessitating huge investments in infrastructure development. The increasing requirement of funding to improve the housing and urban infrastructure conditions provide a huge scope for HUDCO’s lending operations. With a number of flagship programmes such as PMAY, Smart Cities, AMRUT, HRIDAY, etc., on active mode of implementation, HUDCO’s role and contribution in providing techno-financial support would continue to rise.
4. Operational and Financial Performance
During the financial year 2017-18, HUDCO has once again demonstrated its ability to mould its efforts and activities in line with emerging market challenges and trends registering an excellent performance consistently. Since its inception in April, 1970 and till March 2018, HUDCO has sanctioned a total of 17,168 housing and urban infrastructure projects, with a total loan component of Rs.1,91,905 crore and has made a cumulative disbursement of Rs.1,35,233 crore. HUDCO has sanctioned more than 18.02 million houses in the country in both rural and urban areas so far.
a) In respect of housing, during the year 2017-18, HUDCO has sanctioned 24 housing projects, with a loan amount of Rs.15,770 crore.
b) In respect of urban infrastructure, during the year 2017-18, HUDCO has sanctioned 92 projects, with a total loan amount of Rs.22,878 crore.
c) Your Company has Posted Profit after Tax (PAT) of Rs.799 crore during 2017-18.
d) The total Net Worth of the company stood at Rs.9,821.74 crore as on March 31, 2018 as against Rs.9,167.25 crore as on March 31, 2017.
e) Interim dividend pay-out for the financial year 2017-18 will be Rs.110.10 crore excluding dividend distribution tax of Rs.22.42 crore.
f) At the end of the financial year 2017-18, ending on 31st March, 2018, HUDCO reported Gross NPA and Net NPA of Rs.3,127.47 crore and Rs.674.63 crore, which constituted 6.28% to total loan portfolio and 1.42% to net loan outstanding respectively.
5. Social Orientation of HUDCO’s business
A significant emphasis is laid in HUDCO operations on addressing the housing requirements of weaker sections of the society. HUDCO offers loan assistance to the State Government/State Government Agencies for fulfilling housing needs of Economically Weaker Sections (EWS) and Low Income groups (LIG) at a comparatively lower rate of interest. Such loans are offered for a longer duration as well. During the year 2017-18, of the total 15,48,387 number of housing units were sanctioned by HUDCO as part of project lending operations (excluding individual loans), about 99.94% has been for EWS and LIG category households.
6. Credit Rating of HUDCO
The domestic debt instruments of the Company continued to enjoy ‘AAA’ rating- the highest rating assigned by three Credit rating agencies, namely, M/s India Rating & Research Pvt. Limited (IRRPL), M/s CARE Ratings and M/s ICRA Limited.
7. HUDCO’s Role in Government of India schemes - for promoting housing for all & urban development
Towards achieving the objective of ‘Housing for All by 2022’ and sustainable development of human settlements, Government of India has promoted programmes on mission mode in the housing and urban development sector. This include the PMAY (Urban) and PMAY (Gramin), development of 100 Smart Cities, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities, Heritage City Development & Augmentation Yojana (HRIDAY), Swachh Bharat Mission, National Urban Livelihood Mission (NULM), etc.
HUDCO is providing a significant support for the implementation of these programmes. In respect of PMAY (Urban), HUDCO is already offering its services for project appraisal, propagation and dissemination of scheme details, monitoring and site inspections, organizing awareness programmes on Government Schemes, organizing capacity building programmes for the Government/ State/ULB officials and handholding support to State Government for preparation of Detailed Project Reports (DPRs), besides providing loan as viability gap funding for projects, as required.
During 2017-18, HUDCO has undertaken Site Inspection and DPR scrutiny of 136 number of projects with a total project cost of Rs.18,252.17 crore, having a Central Share of Rs.4,550.37 crore, for construction of 3.09 lakh housing units in 27 States/Union Territories. This activity has resulted in generating a fee-based income of Rs.2.26 crore during financial year 2017-18.
The Credit Linked Subsidy Scheme (CLSS) component of the Pradhan Mantri Awas Yojna (PMAY-Urban) envisages expanding institutional credit flow to the housing needs of the Urban Poor, as a demand side intervention. HUDCO has been designated as one of the Central Nodal Agencies (CNA) under CLSS to channelize the subsidy. Till March, 2018, HUDCO has signed 80 MoUs with Primary Lending Institutions (PLIs). During the Financial Year 2017-18, a total of Rs.50.74 crore of subsidy has been disbursed to 2605 number of beneficiaries for EWS/LIG/MIG category.
During 2017-18, HUDCO has sanctioned viability-gap funding to 4 PMAY (Urban) projects with a total project cost of Rs.14,008.80 crore in the States of Uttar Pradesh, Telangana and Uttarakhand, offering a total loan of Rs.4,219.50 crore for construction of 2.63 lakh housing units.
HUDCO, up to 31st March, 2018 has conducted site inspections of 547 Night Shelters under Shelter for Urban Homeless (SUH) component of Deendayal Antyodaya Yojna - National Urban Livelihood Mission (DAY - NULM) in respect of 20 States/UTs across the country.
Further, as part of fee based consultancy initiatives, HUDCO has undertaken Third Party Inspection monitoring in respect of 10 Delhi Police projects, out of the 18 Delhi Police Projects awarded.
8. Human Settlement Management Institute (HSMI)
Human Settlement Management Institute (HSMI) is HUDCO’s Research & Training wing. Having established itself as an eminent institution to focus on contemporary issues of housing and urban development, HSMI continues its capacity building and best practices propagation role in the sector. A total of 23 Training Programmes have been conducted during the year 2017-18, imparting capacity building training to 902 professionals, with a total of 4921 mandays.
During the year 2017-18, HSMI organized 11 research seminars for presentation of research study reports. Further, as part of HUDCO Chair activities, HUDCO’s HSMI supported 18 reputed institutions to undertake research and training activities in the habitat sector. As part of HUDCO Best Practices Awards to improve the living environment in the Habitat Sector, 10 ‘Best Practices Awards’ and 6 Certificates of Appreciation’ were given to agencies during the year.
The Ministry of Housing and Urban Affairs has identified HSMI as Anchor Institution for carrying IBSA-HS activities as well as Nodal Resource Centre for undertaking various training and other activities for implementing action plan programmes of the Ministry. Besides, HUDCO, being an Associate Member of CITYNET since 1993, HSMI has been engaged with CITYNET through research and training activities. HUDCO has also established an India chapter of CITYNET, so that more Indian cities could benefit from HUDCO’s vast experience in the area of common interest.
9. Human Resources Management
The backbone of any organisation is its human resources. Your Company has a high performing and motivated workforce equipped to deliver the results. The multi-disciplinary nature of composition of its talent pool makes it unique and underscores the collective actions and consistent contribution that makes our company’s endeavours a grand success. The company grooms its employees by regularly imparting training covering a wide range of functional areas. As on 31st March, 2018, HUDCO has a total strength of employees as 869 against 875 in the previous year, which comprises of 253 women employees, representing 29 % of the total workforce. The newly recruited trainee officers have undergone extensive multi-departmental training in various activities during the year.
Besides, the pay scales of Board level and below Board level Executives and Non-Executives have been revised with effect from 1st January 2017, as per the guidelines issued by Department of Public Enterprises (DPE) and the total financial implication towards the same is Rs.27.89 crore. Such timely interventions and alertness to actions indeed keep the morale of the employees high, and enables sustaining high performance levels consistently.
10. Corporate Social Responsibility (CSR)
In line with the thrust areas, during the year 2017-18, HUDCO has extended support for the sanitation projects contributing to Swachch Bharat, Night Shelter for the Shelterless in urban areas, skill training and education, etc., in various cities. Besides, disbursement of CSR assistance was also extended for the proposals sanctioned in the earlier years in line with the guidelines issued by Department of Public Enterprises for CPSEs on CSR & Sustainability for their implementation. During the year 2017-18, an amount of Rs.18.21 crore has been committed against which an amount of Rs.8.00 crore has been spent through contribution to Swachh Bharat Kosh. Further, an amount of Rs.4.29 crore has been spent for the ongoing projects of earlier years.
11. Awards and Accolades
I am delighted to convey that during the year HUDCO has received ‘Rajbhasha Kirti Puraskar’ from Hon’ble President of India on 14th September, 2017 for outstanding work in promoting Official Language. HUDCO has also received ‘Technology Sabha Award’ for its successful pan-India implementation of video conferencing solutions, under ‘Unified Communication’ category.
12. Corporate Governance
Good corporate Governance practices and ethical business conduct remain at the core of HUDCO’s value system. Fully committed to adopt and implement the best practices on Corporate Governance, HUDCO ensures transparency in its activities with special emphasis on accountability, financial prudence, ensuring stake-holders satisfaction and safeguarding investor’s interests. HUDCO’s corporate governance, with timely disclosure, transparent accounting policies as well as positive & proactive Board.
13. Future Outlook
HUDCO continues to be among the leading institutions in the public sector supporting the housing and infrastructure development initiatives in the country. With major missions under implementation by Government of India in the housing and urban development sector, it is only logical that HUDCO’s role, contribution and associated financial strength would continue to strengthen in the coming years. In addition to the support and association for successful implementation of PMAY (Urban), HUDCO also envisages a major funding opportunity under the other flagship programmes such as development of 100 smart cities, Swachh Bharat Mission (SBM), Atal Mission for Rejuvenation & Urban Transformation-AMRUT, National Heritage City Development and Augmentation Yojana (HRIDAY), etc., in the coming years.
HUDCO’s ability to provide comprehensive support for technical appraisal/ scrutiny, taking up site-inspection, wherever required, and providing loan assistance as viability gap funding to States and their agencies to meet the State/ULB share of project cost together make it a unique NBFC for comprehensive support for programmes’ implementation.
As part of Government’s initiative for making the new India by 2022’, through changes in technology and processes, HUDCO is embarking an ambitious Enterprise Resource Planning (ERP) project for comprehensively integrating and synergising multi-farious activities of the organisation under a digital format for enabling faster decision making and improving efficiency & effectiveness.
Competition from Commercial banks, financial institutions in financing the infrastructure and housing sector is increasing, and banks have also access to low cost funds. HUDCO has to keep up with the challenges in the current market scenario and continue business with various central/state government agencies. HUDCO would continue to utilise its core strength of techno-financing capability to retain its pre-eminent position in the housing and urban development sector lending.
On behalf of the Board of Directors, I am indeed grateful for the co-operation, guidance and support extended by the Government of India particularly Ministry of Housing and Urban Affairs, Ministry of Rural Development, Department of Investment and Public Asset Management (DIPAM) - Ministry of Finance, National Housing Bank, Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs. I am also thankful to the partners in our development endeavours - the State Governments, Housing Boards, Development Authorities, Municipal/Local Bodies and other para-statal institutions for their continuous support and valuable suggestions. I also place on record my special thanks to all the stakeholders of the company for extending their valuable support and cooperation.
I extend my special thanks to all the employees of the Company at all levels for their consistent dedication and commitment for achieving ‘excellent’ level of performance year after year, and wish for their continued support in future as well. With the level of performance collectively portrayed, it once again goes to prove that the strong team spirit among its employees would continue to drive HUDCO successfully in the coming years.
Thank you for your kind support.
Place : New Delhi Dr. M. Ravi Kanth IAS (r) KL:86
Date : 8th August, 2018 Chairman & Managing Director