Ladies & Gentlemen
On behalf of the Board of Directors and on my own behalf I extend a very warm andhearty welcome to you all on the occasion of the 47th Annual General Meeting (AGM) of yourCompany.
Under the disinvestment programme of Government of India your Companys went fora maiden Public Offer of 204058747 equity shares being 10.19% of equity shareholdingof President of India in the month of May 2017. The Initial Public Offer got aoverwhelming response from investors as the issue received over 20 lakh applications andwas over-subscribed to the extent of 79.60 times as per the bid book of BSE & NSE. TheCompanys equity shares were listed on BSE Limited and National Stock Exchange ofIndia Limited on 19th May 2017. The entire proceeds collected in the offer went directlyto the President of India being the selling shareholder; as such the Company did notreceive any proceeds from the offer. After the IPO the shareholding of the Government ofIndia has reduced from 100% to 89.81% the balance being 10.19% being held by the Public.On behalf of the Board I extend my gratitude to the investing community includingQualified Institutional Buyers and High Net worth individuals and other intermediaryagencies involved in the IPO.
This is an occasion to share the highlights of HUDCOs performance during 2016-17business environment issues and future outlook for the Company. The operational andfinancial highlights of HUDCO depict an ascending growth path in all respects. TheDirectors Report the audited financial statements of the Company for the periodended March 2017 along with the Auditors Report thereon have already been providedto you.
1. Economic Environment
As per the data released by the Central Statistics Organisation (CSO) GDP growthrate was placed at 7.1% in 2016-17 compared to 7.9% in 2015-16 pointing towards a slowdownin the pace of growth. The RBI data on sectoral deployment of bank credit reflected aslowdown in the credit growth in Retail Housing and Infrastructure Sectors. The CPI basedinflation started falling since second half of 2016 following which RBI had effectedreduction in policy repo rate by 25 basis points twice during the year - in April andOctober 2016. In November 2016 the Government announced the demonetisation measures. Inthe aftermath of demonetization the banking sector witnessed a surge in deposits whichled to an increase in liquidity of the banking system. As a result banks reduced theirinterest rates and the other institutions followed the suit.
2. Sectoral Overview and Government Policy Initiatives
On the policy front Government announced certain policy measures for the housingsector in the Union Budget 2017-18. Affordable Housing was granted InfrastructureStatus. With infrastructure status affordable housing developers would be eligiblefor several government incentives subsidies tax benefits and institutional funding.Further under the scheme for profit-linked income tax deduction for promotion ofaffordable housing area statement was changed from built up area to carpet area. Apartfrom these Government in December 2016 announced a scheme for interest subsidy for theMIG segment of the population named Credit Linked Subsidy Scheme-II for Middle IncomeGroup (MIG). All these had a favourable effect on the housing and urban infrastructuresectors.
3. Emerging Issues in Housing and Urban Infrastructure
Rapid pace of urbanization population growth huge housing shortage and inadequateinfrastructure are the key growth drivers for the housing and urban infrastructure sectorsin India. The urban housing shortage was estimated at 18.8 million units by the TechnicalGroup on Urban Housing Shortage (2012-17) of which 95.6% is in Economically WeakerSection (EWS) / Low Income Group (LIG) segments requiring huge financial investments. Asper the High Powered Expert Committee (HPEC) fund requirement for urban infrastructurethe period 2012-31 has been estimated at Rs. 39.2 lakh crore. The Government has beentrying to address the housing and urban infrastructure gaps by launching several schemessuch as Pradhan Mantri Awas Yojna (PMAY - urban and rural) Smart Cities Atal Mission forRejuvenation and Urban Transformation (AMRUT) Heritage City Development &Augmentation Yojana (HRIDAY) and such other schemes. Under PMAY HUDCO has been identifiedas one of the Central Nodal Agencies (CNA) alongwith NHB to channelize the subsidy andalso monitor the progress of the scheme. There existssignificantopportunities for anincreased level of business under the Credit-linked subsidy scheme (CLSS) component ofPMAY. Further extension of CLSS to MIG (I) and MIG (II) segments would increase thenumber of beneficiaries as well as the quantum of loan.
4. Operational and Financial Performance
The year 2016-17 was a very challenging year because of the difficult economic andmarket scenario in various sectors especially the financial sector. Against thisbackground it is a matter of great pride that HUDCO has achieved the highest ever loansanctions since inception i.e. Rs. 31862 crore and has made the highest ever annualdisbursement of Rs. 9095 crore. On both sanction and disbursement HUDCO has surpassedthe MoU targets for 2016-17. On a cumulative basis till March 2017 HUDCO has sanctioneda total of 17087 housing and urban infrastructure projects with a loan component of Rs.166151 crore of which an amount of Rs. 118672 crore has been disbursed. CumulativelyHUDCO has sanctioned more than 16.49 million houses in the country in both rural and urbanareas so far.
a) In respect of housing during the year 2016-17 HUDCO has sanctioned 29 housingprojects with a loan amount of Rs. 7571 crore.
b) In respect of urban infrastructure during the year 2016-17 HUDCO has sanctioned149 projects with a total loan amount of Rs. 24291 crore.
c) HUDCO has achieved all the targets as per Memorandum of Understanding for thefinancial year 2015-16 at the Excellent level and thus gaining the full 100%score for all round performance. Based on the continued consistent performance HUDCO islikely to be accorded Excellent Rating by the Department of PublicEnterprises (DPE) for sixth year in a row as HUDCO has surpassed the Rs.Excellentlevel as fixed in the MoU targets on all the 14 parameters as per MoU for 2016-17 aswell.
d) Your Company has Posted Profit after Tax (PAT) ofRs. 841.81 crore during 2016-17highest ever since inception (previous year Rs. 783.79 crore) recording a growth of7.40%. e) The total Net Worth of the company stood at Rs. 9167.25 crore as on March 312017 as against Rs. 8445.81 crore as on March 31 2016. f) Total dividend pay-out for thefinancial year 2016-17 will beRs. 110.02 crore excluding dividend distribution tax of Rs.22.40 crore. g) During 2016-17 HUDCO has reported Gross NPA of Rs. 2386.23 croreconstituting 6.02% to total loan portfolio and Net NPA of Rs. 433.53 crore constituting1.15% to Net loan outstanding. Through persistent efforts HUDCO has been able to reducethe project loan defaults to the tune of Rs. 396.16 crore during 2016-17. The Total loandefault stood at 15.33% of loan outstanding as on 31st March 2017.
5. Social Orientation of HUDCOs business
A significant emphasis is laid in HUDCO operations on addressing the housingrequirements of weaker sections of the society.
HUDCO offers loan assistance to the Economically Weaker Sections (EWS) and Low Incomegroups (LIG) at a comparatively lower rate of interest. Such loans are offered for alonger duration as well. HUDCO also does not charge application fee or front end fee forthe EWS and LIG category housing projects. During the year 2016-17 including retaillending portfolio 53.68% of the housing sanctions has been for the EWS and LIG categoryand 81.69% of the housing disbursement has gone for EWS and LIG category beneficiaries.During the year 2016-17 as part of project lending HUDCO sanctioned a total of 259829units for EWS and LIG category beneficiaries.
6. Credit Rating of HUDCO
HUDCO continues to enjoy AAA rating (outlook- stable) the highestrating on standalone basis in respect of domestic debt instruments assigned by threecredit rating agencies namely M/s India Ratings & Research Private Limited (Fitchgroup) M/s Care Ratings and ICRA Limited.
7. HUDCOs Role in Government of India schemes - for promoting housing forall & urban development
HUDCO has always been actively supporting in the implementation of Action PlanSchemes of Government of India. Under Pradhan Mantri Awas Yojana - Urban (PMAY-U) HUDCOhas been appointed as an appraisal agency for the three components i.e. in-situ slumredevelopment (using land as a resource) Affordable Housing in Partnership (AHP) andBeneficiary Led Construction (BLC) projects. During the year 2016-17 HUDCO has appraised92 projects with a total project cost of Rs. 5240.82 crore and central share of Rs.2232.07 crore for construction of 1.50 lakh dwelling units covering 83 cities/towns.HUDCO has also supported effective implementation of the PMAY (Urban) programme byproviding loan assistance to meet the State/ULB share of the project cost. During the year2016-17 HUDCO had sanctioned a total of 5 projects in 4 States namely Tamil NaduJharkhand Uttarakhand and Andhra Pradesh a total loan assistance of Rs.2748.60 crore fortaking up 201446 housing units. Of the sanctioned loan an amount of Rs.820 crore hasbeen disbursed in 2016-17 itself.
The Credit Linked Subsidy Scheme (CLSS) component of the Pradhan Mantri Awas Yojana(PMAY-Urban) envisages expanding institutional credit flow to the housing needs of theurban poor as a demand side intervention. HUDCO has been designated as one of the CentralNodal Agencies (CNA) under CLSS to channelize the subsidy. Till March 2017 HUDCO hassigned 53 MoUs for EWS/LIG and 22 MoUs for MIG category with Primary Lending Institutions(PLIs) viz Banks. A total of Rs.11.66 crore of subsidy has been disbursed to 759beneficiaries for EWS/LIG category. In fact continuing the emphasis till 21st August2017 HUDCO as a CNA has signed MoUs with 108 PLIs (of which 62 for EWS/LIG and 46 forMIG category) and HUDCO is making all out efforts for increased level of disbursement ofsubsidy for a larger number of beneficiaries under the CLSS programme. HUDCO wouldcontinue its efforts to explore funding and consultancy assignments underDevelopment of 100 Smart Cities Atal Mission for Rejuvenation and UrbanTransformation (AMRUT) for 500 cities and Heritage City Development &Augmentation Yojana (HRIDAY) as well as under Swachch Bharat Mission.
Major initiatives in 2016-17
Based on the vigorous efforts to improve lending activities in the North Easternregion HUDCO has sanctioned a major housing scheme with a loan amount of Rs. 361 crorefor upgradation of 3000 houses for rural poor households in Sikkim. HUDCOs effortsto support the successful implementation of PMAY(Urban) has yielded fruits through thelarger quantum of loan sanctions accorded for meeting the States/ULBs share of projectcost under PMAY (Urban) programme. During the year 2016-17 in addition to PMAY
(Urban) HUDCO has also been actively engaged for evolving strategies and methods forproviding a larger support for successful implementation of the urban missions of SmartCities AMRUT HRIDAY SBM and NULM. As a part of business development initiative HUDCOhas executed an agreement in May 2016 with Madhya Pradesh Housing & InfrastructureDevelopment Board (MPHIDB) whereby HUDCO would provide its consultancy services foridentified projects.
8. Human Settlement Management Institute (HSMI)
HSMI the Research & Training wingofHUDCOintensifiedits efforts to providecapacity building to the professionals engaged in housing & urban developmentincluding HUDCOs borrowing agencies Urban Local Bodies (ULBs) and HUDCOs ownfunctionaries. A total of 32 training programmes were organised imparting training to1008 national and international professionals. The training programmes included capacitybuilding programmes for ULBs International and in-house training programmes.
HUDCO Award for Best Practices was given to agencies in various fields to improveliving environment. Further under its collaborative research activities HSMI sanctionedeight new research projects in 2016-17 encompassing various issues like Rental housingoptions in India Study on shelters and livelihood of Delhis homeless Institutionalhousing finance for urban poor and informal sector etc.
HUDCO being an associate member of CITYNET since 1993 HSMI has been engaged withCITYNET through research and training activities. A Research study was undertaken on"Transit Corridor Development" under the CITYNET National Chapter.
9. Human Resource Management
HUDCO is endowed with a highly talented dedicated and committed team ofprofessionals at all levels. The Company duly acknowledges that high employee engagementlevels are one of the key factors in attaining the goals of the organization and inmaintaining its consistent growth. With a view to maximise the potential capacity of eachemployee HUDCO relies on upgrading the skills of employees in tune with the changingmarket dynamics through the tool of training programmes. During the year 2016-17 256employees were imparted training in India and abroad in various strategic functional andbehavioural areas. Further HUDCO accomplished a major task of infusing fresh talent intothe company which shall be a vital resource to invigorate the organisation. In the year2016-17 56 Trainee Officers with specialisation in areas like projects finance lawarchitecture urban planning have been inducted.
10. Corporate Social Responsibility (CSR)
During the year 2016-17 HUDCO has extended support for the projects of NightShelters for shelterless for the marginalised sections of the society in urban areas ofvarious states sanitation projects skill training and maintenance of publicspaces/facilities etc. in various states/cities. HUDCO has released a total of Rs. 5.70crore towards implementation of proposals such as construction of toilets solid wastemanagement under Swachh Bharat skill training under Skill India renewable energyprojects such as LED and solar lighting and construction of night shelters
11. Awards and Accolades
I am delighted to convey that during the year HUDCO has received several awards inrecognition of its services in various fields like:
a) GEM of India Award/ Arch of Excellence Award (Individual Category)
b) Bureaucracy Today CSR Excellence Award 2016 aimed at honoring the efforts of CPSEsfor effective Corporate Social Responsibility
c) Governance Now PSU Award 2016 - the value growth award was conferred onHUDCO for being a growth-oriented company
d) Kalinga Khordha Samman of Khordha Zilla Lok Utsav 2016
12. Corporate Governance
Your Company is fully committed to adopt and implement best practices on CorporateGovernance. HUDCO believes in total transparency in all its operations with specialemphasis on financial prudence accountability and enhancing customers satisfactionby safeguarding stakeholders interest & maximizing their wealth.
13. Future Outlook
With its long standing and experience in the housing and urban infrastructure sectorHUDCO can reap benefits from the Governments programme of Pradhan Mantri AwasYojna. Development of 100 smart cities will also open additional opportunities inlending as well as consultancy business for HUDCO. Other urban sector Government schemeslike Swachh Bharat Mission (SBM) Atal Mission for Rejuvenation & Urban Transformation(AMRUT) National Heritage City Development and Augmentation Yojna (HRIDAY) would alsoopen up business opportunities for HUDCO. All these programmes are likely to catalyse hugeinvestment flow in the urban housing and infrastructure sector. With the huge magnitude ofinvestment requirements in the Indias infrastructure and housing sector HUDCO canplay a key role in these sectors.
Banks and Financial Institutions are offering stiff competition to HUDCO in projectfinancing over time. The rates offered by Banks & Financial Institution are verycompetitive. The Financial sector is also witnessing high level of NPAs. The risingNPAs/Defaults would require additional provisioning which would have impact onprofitability.
On behalf of the Board of Directors I am grateful for the co-operation guidanceand support extended by the Government of India particularly the Ministry of Housing andUrban Affairs Ministry of Rural Development Department of Investment and Public AssetManagement (DIPAM) - Ministry of Finance National Housing Bank Securities and ExchangeBoard of India (SEBI) and Ministry of Corporate Affairs. I am also thankful to the StateGovernments Housing Boards Development Authorities Municipal/Local Bodies and otherBorrowers for their continued support and valuable suggestions. I also place on record myspecial thanks to all the stakeholders of the company for extending their valuable supportand cooperation.
I am also thankful to all the employees of the Company at all levels for theirdedication and commitment to achieve the excellent performance year after year and wishfor their continued support in future as well.
Thank you for your kind support.
| ||Sd/- |
|Place : New Delhi ||Dr. M. Ravi Kanth IAS (r) KL:86 |
|Date : 25th August 2017 ||Chairman & Managing Director |