Dear Shareholders Ladies & Gentlemen
On behalf of the Board of Directors and on my own behalf it gives meimmense pleasure to welcome you all on the occasion of the 49th Annual GeneralMeeting (AGM) of HUDCO. Your presence is a reflection of your keen involvement in yourCompany's progress. The Annual Report for the financial year ending 31st March2019 together with the Director's Report Audited Financial Statements and the Auditor'sReport of your Company have already been circulated.
It is indeed a proud privilege to share that your Company hascompleted 49 successful and glorious years of business operations. I am happy to informthat your Company has demonstrated another year of outstanding operational and financialperformance. Your Company has achieved disbursement of र 31009 crore which is a growth of87% over disbursements of 2017-18 and is the highest achieved in the history of 49 yearsof HUDCO's existence. The loan outstanding of the company has seen a quantum jump of 48%to र 73325 crore in 2018
19. The net NPA as on 31st March 2019 of your Company was0.50% of the net loan outstanding which is among the lowest in the sector.
HUDCO's operational performance during the year clearly depicts thatyour Company is on the path of growth. I would like to share the highlights of HUDCO'sperformance during 2018-19 the economic environment challenges faced and future outlookof the Company.
1. Economic Environment
During the year 2018-19 India continues to be the fastest growingmajor economy in the world with a GDP growth of 6.8% against the world output growth ofonly 3.6%. India maintained its macroeconomics stability by containing inflation within 4%and by maintaining a manageable Current Account Deficit to GDP ratio. The growth rateduring the year 2018-19 for the sector 'Financial Real Estate and Professional Services'is estimated at 7.4% as against previous year's growth rate of 6.2%. The Constructionsector has shown a growth rate of 8.7% as against previous year's growth rate of 5.6%. TheConsumer Price Index (CPI) has shown a rise of 3.4% in respect of all commodities whilethe Wholesale Price Index (WPI) has grown by 4.3% during 2018-19.
On the monetary policy front during the year 2018-19 the Reserve Bankof India (RBI) after increasing the policy repo rate twice had reduced the repo-rate onceduring the 6th bi-monthly policy meeting held in February 2019 by 25 basispoints from 6.50% to 6.25%. As per RBI data for 2018-19 on sectoral deployment of GrossBank Credit (GBC) housing sector registered a growth rate of 19% whereas infrastructuresector achieved a growth of 18.50%.
The Indian economy will become a USD 3 trillion Economy during the year2019-20. It is now the 6th largest economy in the world and aims to grow into aUSD 5 trillion economy by 2024-25 which will make India the 3rd largesteconomy in the World. The International Monetary Fund (IMF) in its 'World EconomicOutlook' (July 2019) has projected a growth rate of 7% in 2019-20 and 7.2% in 2020-21 forIndia.
2. Sectoral Overview and Government Policy Initiatives
The Union Budget 2019-20 has laid a special focus on Affordable Housingand Infrastructure Sectors. The Government intends to invest र 100 lakh crore over thenext five years.
The Government will carry out restructuring of National HighwayProgramme to ensure that the National Highway Grid of desirable length and capacity iscreated using financeable model. The Government has ensured power availability to statesat affordable rates through "One Nation One Grid" model. Pradhan Mantri AwasYojana aims to achieve the objective of "Housing for All" by 2022 i.e. whenIndia commemorates its 75 years of independence. For affordable housing in rural areas1.95 crore housing units are proposed to be provided to the eligible beneficiaries duringthe period 2019-2022. The Government of India will introduce a new model tenancy law toboost the rental housing market. To promote affordable housing tax incentive of र 1.50lakh has been proposed on loans borrowed upto 31st March 2020 for purchase ofaffordable house of cost upto र 45 lakh.
A major rate reduction in GST rates for real estate developers has beenannounced earlier during this year. The GST rates have been reduced to 1% (without inputtax credit) for the construction of affordable houses having carpet area upto 60 sq.m inmetropolitan regions and 90 sqm in non-metropolitan regions having cost upto र 45 lakhs.
3. Emerging Issues in Housing and Urban Infrastructure
The requirement of housing is growing in the context of rapid pace ofurbanization increasing level of migration from rural areas to urban areas forlivelihood. With growing urbanization the challenges associated with housing availabilityand infrastructure needs have become a serious concern in India. The fast-pacedurbanisation in the country which is linked to the economic progress of the country hasled the urban areas to encounter some serious challenges on the socio-economic front suchas unemployment as well as excess-load on existing infrastructure in cities like housingsanitation transportation health education utilities etc.
As per Census of India 2011 about 377 million population i.e. 31%constitute urban and about 833 million i.e. 69% reside in rural areas. With the currenttrend of urbanisation the number of Indians living in urban areas is expected to reach543 million by 2025. With increasing urbanisation the demand for upgrading the housingand urban development needs in the country will increase providing a huge potential forbusiness operations for HUDCO.
HUDCO shall continue to support implementation of various Government ofIndia flagship programmes and make all efforts to reduce the demand-supply gap in thesectors of Housing and Urban Infrastructure.
4. Operational and Financial Performance
HUDCO since inception in April 1970 upto March 2019 has sanctioned atotal of 17197 housing and urban infrastructure projects with a total loan component ofर 195138 crore and made a cumulative disbursement of र 161110 crore. HUDCO so farsanctioned more than 19.34 million houses in the country in both rural and urban areas.
a) In respect of housing during the year 2018-19 HUDCO sanctionedprojects with a loan amount of र 27256 crore.
b) During the year 2018-19 HUDCO sanctioned urban infrastructureprojects with a total loan amount of र 7196 crore.
c) Your Company posted Profit After Tax (PAT) of र 1180.15 crore duringthe year 2018-19 a growth of 17% over 2017-18.
d) The total Net-Worth of the company now grown by 10% to र 10956crore as on 31.3.2019 as against र 9943 crore as on 31.3.2018.
e) Interim dividend pay-out for the financial year 2018-19 is र 162.91crore including dividend distribution tax of र 27.78 crore.
f) At the end of the financial year 2018-19 HUDCO reported Gross NPAand Net NPA of र 3286.59 crore and र 354.28 crore respectively which constituted 4.48% tototal loan portfolio and 0.50% to net loan outstanding respectively.
5. Social Orientation of HUDCO's business
Since inception Social Housing has been a priority portfolio inHUDCO's operations. A significant emphasis is given particularly to housing requirementsof weaker sections of the society with a lower interest rate higher extent of unit costextended as loan and with a longer repayment-period. During the year 2018-19 HUDCO fundedmore than 20.68 lakh housing units out of which about 94.42% has been for EWS and LIGcategories.
6. Credit Rating of HUDCO
The domestic debt instrument(s) & Banking Sector Loan(s)/facilitiesof the Company continued to enjoy "AAA" rating (Long Term) & "A1+"rating (Short Term) assigned by three Credit rating agencies namely M/s India Rating& Research Pvt. Limited (IRRPL) M/s CARE Ratings and M/s ICRA Limited.
HUDCO for its international Borrowing Programme was assigned aLong-Term Foreign Currency Issuer Rating of "Baa2" & "BBB-" fromtwo International Rating Agencies namely Moody's Investors Services and FITCH Ratingsrespectively.
7. HUDCO's Role in Implementation of Government of India flagshipprogrammes- for promoting "Housing for All" & "Urban Development"
To keep pace with the increasing housing and infrastructure demand inthe country and towards achieving the ambitious plan of providing affordable housingunder Pradhan Mantri Awas Yojana-Housing for All' (Urban) programme and sustainableurban development of human settlements; the Government of India from time to time hasencouraged and supported Social Housing and Infrastructure programmes benefiting the urbanpoor and weaker sections of the society.
PMAY (Urban) and PMAY (Gramin) development of 100 Smart Cities AtalMission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities Heritage CityDevelopment & Augmentation Yojana (HRIDAY) Swachh Bharat Mission National UrbanLivelihood Mission (NULM) etc. are some of the flagship programmes of Government ofIndia.
HUDCO actively participates in implementations of Government programmesby providing financial assistance by way of viability- gap funding for States/UTs and ULBshare as per the requirements. Other services offered by HUDCO are consultancy projectappraisal/scrutiny propagation and dissemination of scheme details monitoring and siteinspections organizing awareness programmes organizing capacity building programmes forthe Government/State/ULB functionaries and handholding support to State Government forpreparation of Detailed Project Reports (DPRs).
During 2018-19 HUDCO undertook Site Inspection and DPR scrutiny of 125projects with a total project cost of र 8362.59 crore having a Central Share of र 3057.12crore for the construction of 2.06 lakh housing units in 20 States/Union Territories.This activity has resulted in generating a fee-based income of र 2.64 crore.
The Credit Linked Subsidy Scheme (CLSS) component of the Pradhan MantriAwas Yojana (PMAY-U) envisages expanding institutional credit flow to the housing needs ofthe Urban Poor as a demand side intervention. HUDCO is a Central Nodal Agency (CNA)notified by Ministry of Housing and Urban Affairs for channelizing the subsidy under CLSSscheme of "Housing for All" (Urban) Programme. Upto March 2019 HUDCO hassigned 86 MoUs for EWS/LIG category and 80 MoUs for MIG category with Primary LendingInstitutions (PLIs). During the Financial Year 2018-19 a total of र 341.95 crore ofsubsidy has been disbursed to 15675 number of beneficiaries under EWS/LIG/MIG category.
During 2018-19 HUDCO sanctioned viability-gap financing to 2 PMAY(Urban) projects with a total project cost of र 2147.48 crore to Kerala and Andaman &Nicobar offering a total loan of र 1064.46 crore for construction of 50555 housingunits.
HUDCO up to 31st March 2019 has conducted site inspectionsof 551 Night Shelters under Shelter for Urban Homeless (SUH) component of DeendayalAntyodaya Yojna - National Urban Livelihood Mission (DAY- NULM) in respect of 20States/UTs across the country.
Further as part of fee-based consultancy initiatives HUDCOsuccessfully completed the consultancy services for one of its most prestigious projectsi.e. Office building for Archaeological Survey of India at Tilak Marg New Delhi which wasinaugurated by Hon'ble Prime Minister of India on 12th July 2018.
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 oncontemporary issues of Housing and Urban Development HSMI continues to work in the fieldof human settlements at international national and state levels by organizing andparticipating in exchange programmes and other information and experience sharing events.A total of 16 Training Programmes including 3 international programmes fully- sponsoredby the Ministry of External Affairs under its ITEC programme have been conducted duringthe year 2018-19 imparting capacity building training to more than 500 urban specialists.
During the year 2018-19 HSMI has organized 6 research seminars forpresentation of research study reports. As part of HUDCO Best Practices Awards to improvethe living environment in the Habitat Sector 10 Best Practices' Awards and 6"Certificates of Appreciation' were given to agencies on competitive basis.
HUDCO being an Associate Member of CITYNET since 1993 HSMI has beenengaged with CITYNET through research and training activities. HUDCO has also establishedan India chapter of CITYNET so that more Indian cities could benefit from HUDCO's vastexperience in the area of common interest. During the year 2018-19 HSMI organised a 2-daytraining programme with CITYNET Indian national Chapter members on "SustainableWaste Management Practices".
9. Human Resources Management
Human Resources are an integral part of every successful organization.Your Company has a multi-disciplinary talent pool of professionals from Projects Financeand Law disciplines etc. To sustain in this competitive dynamic market the companyregularly arranges capacity-building programmes for its employees under various functionalareas. A total of 301 employees were imparted training during the year 2018-19 indifferent spheres of company's activities. As on 31st March 2019 HUDCO has atotal strength of employees as 827 which comprises 29.86% of the women employees in tunewith the policies of Beti Bachao - Beti Padhao for women development.
A major initiative of implementing (Enterprise Resource Planning) ERPsystem including the HR Module has been initiated during 2018-19. ERP will benefit inimproving productivity improving reporting & planning increased efficienciesdecreased costs and streamlined processes. This will also bring-in more professionalism inthe working of HR besides automating various HR processes and will enhance overallbusiness performance of HUDCO. The company also imparts training to its employees onteam-building and work-life balance for enhancing employee's productivity.
10. Corporate Social Responsibility (CSR)
During the year 2018-19 a total of 21 projects with an amount of र9.30 crore has been committed out of which an amount of र 1.02 crore has been releasedto various agencies for implementation of socially beneficial proposals. In line with thethrust areas of HUDCO's CSR Policy some of the key sectors funded during the year weresanitation education social welfare forest & environment and rural development.During the year HUDCO has also committed support for construction of houses for thefamilies who were severely affected by floods in Kerala. Further an amount of र 3.56crore has been released for the 12 ongoing projects sanctioned in the previous years.
11. Awards and Accolades
I am delighted to convey that during the year HUDCO has receivedseveral awards & accolades in recognition of its services: -
a. "6th Annual Greentech CSR Award 2018 - GoldCategory" in service sector for outstanding achievement in Corporate SocialResponsibility (CSR) activities.
b. "Technology Sabha Awards 2019" in category of EnterpriseApplications.
c. "Digital Leader Award for Excellence" under theEnterprise Applications' and Unified Communications' categories forsuccessful PAN-India implementation of these initiatives.
12. Corporate Governance
Corporate Governance deals with determining ways to take effectivestrategic decisions. HUDCO is fully committed in promoting and establishing a fairtransparent and ethical system of Corporate Governance. HUDCO ensures transparency in allits operations with special emphasis on financial prudence accountability and ensuringcustomers/stake-holder's satisfaction.
13. Future Outlook
Government of India has taken several initiatives to boost affordablehousing and to revitalise the Urban Sector. HUDCO has potential to participate in theGovernment programmes in terms of lending as well as fee-based/consultancy income.Government is expected to invest huge amount in the infrastructure sector mainly inhighways renewable energy and urban transport. The Government has given a push toconnectivity through industrial corridors dedicated-freight corridors Bhartamala andSagarmala projects Jal Marg Vikas and UDAN Schemes.
The urban housing demand in India is being addressed through PradhanMantri Awas Yojana (PMAY)-Urban as well as Gramin. The Government of India's "Housingfor All" initiative is expected to bring USD 1.3 trillion investments in the housingsector by 2025.
Considering the above investments there is substantial opportunity forfunding Housing and Urban Infrastructure in the country. HUDCO with its vast experiencein providing consultancy services and financial assistance for implementation ofaffordable housing projects could play an important role in supporting various governmenthousing programmes.
HUDCO is facing stiff competition from Commercial Banks/FinancialInstitutions in financing the housing and urban infrastructure projects. HUDCO has tokeep-up pace with the current market dynamics to continue business with various StateGovernment Agencies.
On behalf of the Board of Directors I am indeed grateful for theco-operation guidance and support extended by the Government of India particularlyMinistry of Housing and Urban Affairs Ministry of Rural Development Department of PublicEnterprises (DPE) Department of Investment and Public Asset Management (DIPAM) NationalHousing Bank (NHB) Securities and Exchange Board of India (SEBI) and Ministry ofCorporate Affairs.
Also I wish to thank our investors lenders and borrowers speciallythe State Governments Housing Boards Development Authorities Municipal/ Local Bodiesand other parastatal institutions for reposing their trust in HUDCO. I place on record myspecial thanks to all the stakeholders of the company for extending their valuable supportand cooperation.
Last but not the least I am thankful to all the employees of theCompany for their untiring efforts. With the level of performance collectively portrayedI am confident that the dedicated efforts of the Company will make us grow to newerheights in the ensuing years.
Thank you for your kind support.
| ||Sd/- |
|Place : New Delhi ||Dr. M. Ravi Kanth [IAS KL: 86] |
|Date : 19th August 2019 ||Chairman & Managing Director |