Future Ready. Future Bright
I am proud to say that the vision our Founder Chairman Late Shri Rajesh Kumar Wadhawanlaid out three decades ago and DHFL's current business direction are in sync with theGovernment's larger goal of financial inclusion for the weaker sections of society anddwelling ownership for every Indian. At the centre of our Honourable PM Shri NarendraModi's clarion call for Sabka Saath Sabka Vikas is our valued Lower and Middle Income(LMI) customers.
Last year witnessed interesting developments across the global economy. After a longspell of stagnation andde-growthgreenshootsofeconomic upswing are appearing for the worldeconomy. According to the International Monetary Fund global economic activity led byemerging markets and developing economies should pick up pace in FY 2017 and FY 2018.Asian economies led by India are picking up speed as policy and consumption-led tailwindshave given businesses a positive fillip. Indeed India with a 7. growth rate in FY 2016-17along with China's growth rate of 6.7% for 2016 and promising to continue the trend intoFY 2017-18 will remain the epicentre of action. In India a fundamental premise ofoptimism stemmed from its strong socio-economic reforms that were peppered with eventsthat will reset our country's economic direction in a transformational manner. This milieuenabled us to deliver yet another year of sustainable yet profitable growth.
In the face of challenges to domestic growth accross countries doubts on the veryconcept of globalization have surfaced. This has led to demand for reversing progresstowards a barrier free world trade.The new world however has come a long way underglobalisation and collaboration and have redefined the modern economy. Technology hasdropped the barriers irreversibly and disruption through innovation is the norm which isrewriting the very rules of conducting business. Businesses which leverage innovation todeliver the best solution in the ever-changing global arena will triumph.
In this backdrop relentless pursuit of sustainable and inclusive growth andredistribution of wealth are of critical importance if the destination of a global villagethat the world embarked under globalisation is to be met. We at DHFL will remaincommitted to promoting inclusiveness and sustainability in our business and play apositive role as a corporate citizen.
I am proud to say that the vision our Founder Chairman Late Shri Rajesh Kumar Wadhawanlaid out three decades ago and DHFL's current business direction are in sync with theGovernment's larger goal of financial inclusion for the weaker sections of society anddwelling ownership for every Indian. At the centre of our Honourable PM Shri NarendraModi's clarion call for Sabka Saath Sabka Vikas is our valued Lower and Middle Income(LMI) customers. GST too will usher in federated revenue collection uniformity and driveIndia towards a single formal economy.
DEMONETISATION TO DIGITISATION
Demonetisation has been one of the boldest moves taken by the Government in recenttimes. I believe it will prove to be a positive development bringing a greater share offinancial transactions to the formal system strengthening credit growth and enablingwider financial inclusion. The financial services sector has a tremendous upside tocapture from the move especially for businesses like DHFL that focuses on providingfinancial credit to the unbanked. Given DHFL's robust presence in Tier II & Tier IIIcities and towns and deep network in rural India we are best suited to service theadditional demand from borrowers entering the formal financial system for the first time.
Digitisation initiatives introduced after Demonetisation has had significant havingbuilt a robust proprietary understanding of fiscal creditworthiness of the largeunderserved segments. Digitisation will ensure that a vast population will step into theofficial banking circuit. This has opened additional opportunities for DHFL to attract newcustomers having already established last-mile
The affordable housing finance sector has gained central focus owing to theGovernment's vision of housing for all by 2022. With the Government grantinginfrastructure status to companies providing affordable housing this sector has become anattractive investment opportunity.
Connectivity to reach underserved and unbanked Indians both physically and digitally.
A HOME TO OWN FOR EVERY INDIAN- ENABLING LANDSCAPE
The affordable housing finance sector has gained central focus owing to theGovernment's vision of housing for all by 2022. With the Government grantinginfrastructure status to companies providing affordablehousing this sector has become anattractive investment opportunity. According to a report since the Pradhan Mantri AwasYojana (PMAY) aims to provide 20 million houses in three phases over FY 16-22 this willdirectly benefit the economy by around INR 15 trillion over a 7-year timeframe; 95% of thetotal demand deficit is coming from Economically Weaker Sections benefits; [EWS] and LIG(Lower Income Group) & MIG segments. Your Company stands to benefit from theGovernment's Smart City mission that will create additional demand for urban affordablehousing loans.
The policy prescriptions of the Government validate our belief andFounder'svisionofbuildingabusinesson the foundation of social empowerment. According toGovernment data PMAY has so far received over 9 lakh applications and I am happy to sharewith you the fact that a majority of the customers we source will qualify for thegovernment's interest subsidy for affordable home loans. Indeed DHFL is proud tocontribute to nation building in a purposeful yet profitable way.
Besides addressing demand recent policy decisions strategically reinforce supply sideas well. With foreign participation (FDI) made easier in affordable housing reputedglobal investors have joined domestic players in evincing interest in this sector. Ourinvestors are now able to participate in India's LMI housing growth story in a meaningfulyet sure manner.
Another step of significance in building consumer confidence is the implementation ofthe Real Estate (Regulation and Development) Act 2016 (RERA). This has led to a morecustomer-focused approach and time bound delivery in the housing sector. This will lead toprofessionalization of the affordable housing sector.
BUILDING A CUSTOMER-CENTRIC PHYGITAL ORGANISATION
We believe digital disruption in the fintech space is a great opportunity for us. Likea whole generation of Indians who bypassed the land phone and the PC era to leapfrog tomobile Internet technology-led innovations help us bypass physical infrastructure-ledtraditional growth models to reach customers. Smart technology will complement ourintuitive and inventive organisation culture that drives us to do things differently. AtDHFL we are moving towards becoming a Phygital' customer-centric organisation. Weare creating a unique integrated ecosystem of digital and physical consumer touch pointsfor our customers to seamlessly interact with us in their preferred environment.
Our people form the backbone of our business. Today the DHFL franchise is serving as acommon platform for our integrated financial offerings different segments of our society.such a scenario professional talent is crucial to sustain our momentum. During the yearwe continued to reinforce and build a healthy leadership pipeline across junior middleand senior level employees. My belief that an organization is as good as its people willhold good for ever in any fast-changing environment. As we grow in size businesslines and across geographies we want to build a unified culture that iscustomer-centric and conducts itself with simplicity entrepreneurial zeal and serves thelarger cause of the Nation.
For the BFSI sector fintech driven innovations are a key learning experience.Futuristic technologies like Artificial Intelligence (AI) predictive analytics bot-basedcustomer services and mobile apps are set to transform traditional business models andcustomer touch points. Across our various businesses of lending investments protectionand new business areas a single-customer dataset can help us mine data and reach out togarner a larger share of the customer wallet in a cost-effective speedier way.
THE NEXT STEP
We are today not only a leading player among HFCs but also one of the largest insecuritisation of home loan portfolios to banks and other financial institutions.
We would like to build on the strength of our people process and technology in thehome loan origination and emerge as the largest home loan Originator. We will harness thegrowing potentials of the affordable home loan segment in this strategy which is ourforte.
PREDICTABLE PERFORMANCE PURPOSEFUL PROFITS
During the year DHFL retained CARE's highest AAA (Triple A) credit rating and ourasset base is fast growing towards Rs 1 lac crore . Despite various macroeconomicchallenges your Company delivered a robust performance with a 21.33% revenue growth ofRs. 1557.24 crore for the year ending March 31 2017. Profit before tax and exceptionalitem stood at Rs. 1402.39 crore an increase of 27.24% on a YoY basis. More importantlyour loan portfolio grew at a healthy 20% to Rs. 83559.92 crore as on March 31 2017.
UNLOCKING VALUE TO STAKE HOLDERS
Our decision to sell the entire equity stake in the Joint Venture entity DHFL PramericaLife Insurance Co. Limited to our wholly owned subsidiary was aimed at value creation forall stake holders. It added to DHFL's net worth and book value; and will ensure all ourexpansion plans are capitalized fairly. The enthusiastic response to the two public issuesof Non-Convertible Debenture (NCDs) of Rs. 14000 crore oversubscribed on the very firstacross all three segments of Retail High Networth Individuals (HNI) and QualifiedInstitutional Buyers (QIB) is testimony to the trust we enjoy among our stakeholders.
Our strategy has always been to invest in ventures that bear fruit in the long run.DHFL has been consistently investing in avenues which have similar potential to createvalue. With access to more efficient source of funds invaluable customer trust betterfinancial performance and best-in-class management standards we are building DHFL into apreferred financial services brand. We continue to look for synergies with complementarybusinesses like micro-finance asset reconstruction fintech platforms and similarenablers that will help us expand our retail reach and provide integrated financialsolutions to customer segments for a variety of needs under one roof.
Today we encompass the entire financial life cycle of the consumer and not just partof his personal borrowing journey (lending) for affordable housing. Thus financialservices for protection (insurance) higher studies (education loans) wealth creation(asset management) and entrepreneurship (SME loans) are part of our bouquet of offeringsthis in turn will create significant value for the company.
COLLECTIVE LEADERSHIP THROUGH WGC
DHFL is the flagship Company of the Group with growing ambition in financial servicessector domestically and in the global arena. Wadhawan Global Capital Pvt Ltd. ourPromoter Group entity is set up to harness our collective business strength andleadership. At a group level we manage around $18.6 Billion of Assets (AUM) through ourlending Asset Management and Insurance businesses. We have also partnered with leadingfinancial institutions such as International Finance Corporation Washington andPrudential Financial Inc. United States in transforming the lives of millions ofcustomers across the world.
INVESTING IN IMPACT-LED CHANGE- THE CSR WAY
With its Changing Rules Changing Lives' motto DHFL has picked up the gauntletto impact the lives of the less fortunate. Our focus is equally on Corporate SocialResponsibility (CSR) programmes with clear objectives that deliver sustainable socialoutcomes. Our CSR work in early childhood care skill development drought mitigation andfinancial literacy is delivering impactful results at the ground level. We are partneringto upgrade the infrastructure at Anganwadis that provide quality preprimaryeducationcoupledwithnutrition safe drinking water and sanitation facilities toover 30000 mothers and children across 1000 units . Our skill development programme isaligned to the Government's Skill India Mission to impart hands-on training in industrialskills to young people. We have enabled gainful access to employment to nearly 1000 youthin BSFI and Construction industries in just one year. We are also involved in droughtmitigation efforts to solve the water scarcity problem in rural India. Our CSR effortsremain an integral part of our ethos fulfillingcritical societal needs with measurableoutcomes.
TOWARDS FINANCIAL EMPOWERMENT
I would like to thank each one of you for contributing to our Founder's vision andbuilding DHFL into a successful and meaningful entity. With the Government makingfinancial inclusion and housing a priority your Company will continue to deliverprofitable growth and contribute to nation building by aligning to the larger cause of thecountry. With smart technology professional business conduct world class partners andthe resolve to enable financial access to the most vulnerable sections of society yourCompany is well poised for future growth.
I firmly believe that the developments of the past year will change the wayIndians spend and live in the future.' This will lead to an accelerated evolution and atransformational business landscape wherein DHFL will continue its contribution in thecountry's march towards shared prosperity.
Chairman & Managing Director