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 49th Annual General Meeting (AGM) of HUDCO. Your presence is a reflection of your keen involvement in your Company's progress. The Annual Report for the financial year ending 31st March 2019 together with the Director's Report Audited Financial Statements and the Auditor's Report of your Company have already been circulated.
It is indeed a proud privilege to share that your Company has completed 49 successful and glorious years of business operations. I am happy to inform that your Company has demonstrated another year of outstanding operational and financial performance. Your Company has achieved disbursement of ? 31009 crore which is a growth of 87% over disbursements of 2017-18 and is the highest achieved in the history of 49 years of HUDCO's existence. The loan outstanding of the company has seen a quantum jump of 48% to ? 73325 crore in 2018-19. The net NPA as on 31st March 2019 of your Company was 0.50% of the net loan outstanding which is among the lowest in the sector.
HUDCO's operational performance during the year clearly depicts that your Company is on the path of growth. I would like to share the highlights of HUDCO's performance during 2018-19 the economic environment challenges faced and future outlook of the Company.
1. Economic Environment
During the year 2018-19 India continues to be the fastest growing major economy in the world with a GDP growth of 6.8% against the world output growth of only 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 rate during 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 Construction sector has shown a growth rate of 8.7% as against previous year's growth rate of 5.6%. The Consumer Price Index (CPI) has shown a rise of 3.4% in respect of all commodities while the Wholesale Price Index (WPI) has grown by 4.3% during 2018-19.
On the monetary policy front during the year 2018-19 the Reserve Bank of India (RBI) after increasing the policy repo rate twice had reduced the repo-rate once during the 6th bi-monthly policy meeting held in February 2019 by 25 basis points from 6.50% to 6.25%. As per RBI data for 2018-19 on sectoral deployment of Gross Bank Credit (GBC) housing sector registered a growth rate of 19% whereas infrastructure sector achieved a growth of 18.50%.
The Indian economy will become a USD 3 trillion Economy during the year 2019-20. It is now the 6th largest economy in the world and aims to grow into a USD 5 trillion economy by 2024-25 which will make India the 3rd largest economy in the World. The International Monetary Fund (IMF) in its 'World Economic Outlook' (July 2019) has projected a growth rate of 7% in 2019-20 and 7.2% in 2020-21 for India.
2. Sectoral Overview and Government Policy Initiatives
The Union Budget 2019-20 has laid a special focus on Affordable Housing and Infrastructure Sectors. The Government intends to invest ? 100 lakh crore over the next five years.
The Government will carry out restructuring of National Highway Programme to ensure that the National Highway Grid of desirable length and capacity is created using financeable model. The Government has ensured power availability to states at affordable rates through One Nation One Grid model. Pradhan Mantri Awas Yojana aims to achieve the objective of Housing for All by 2022 i.e. when India commemorates its 75 years of independence. For affordable housing in rural areas 1.95 crore housing units are proposed to be provided to the eligible beneficiaries during the period 2019-2022. The Government of India will introduce a new model tenancy law to boost the rental housing market. To promote affordable housing tax incentive of ? 1.50 lakh has been proposed on loans borrowed upto 31st March 2020 for purchase of affordable house of cost upto ? 45 lakh.
A major rate reduction in GST rates for real estate developers has been announced earlier during this year. The GST rates have been reduced to 1% (without input tax credit) for the construction of affordable houses having carpet area upto 60 sq.m in metropolitan regions and 90 sqm in non-metropolitan regions having cost upto ? 45 lakhs.
3. Emerging Issues in Housing and Urban Infrastructure
The requirement of housing is growing in the context of rapid pace of urbanization increasing level of migration from rural areas to urban areas for livelihood. With growing urbanization the challenges associated with housing availability and infrastructure needs have become a serious concern in India. The fast-paced urbanisation in the country which is linked to the economic progress of the country has led the urban areas to encounter some serious challenges on the socio-economic front such as unemployment as well as excess-load on existing infrastructure in cities like housing sanitation 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 current trend of urbanisation the number of Indians living in urban areas is expected to reach 543 million by 2025. With increasing urbanisation the demand for upgrading the housing and urban development needs in the country will increase providing a huge potential for business operations for HUDCO.
HUDCO shall continue to support implementation of various Government of India flagship programmes and make all efforts to reduce the demand-supply gap in the sectors of Housing and Urban Infrastructure.
4. Operational and Financial Performance
HUDCO since inception in April 1970 upto March 2019 has sanctioned a total of 17197 housing and urban infrastructure projects with a total loan component of ? 195138 crore and made a cumulative disbursement of ? 161110 crore. HUDCO so far sanctioned 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 sanctioned projects with a loan amount of ? 27256 crore.
b) During the year 2018-19 HUDCO sanctioned urban infrastructure projects with a total loan amount of ? 7196 crore.
c) Your Company posted Profit After Tax (PAT) of ? 1180.15 crore during the year 2018-19 a growth of 17% over 2017-18.
d) The total Net-Worth of the company now grown by 10% to ? 10956 crore as on 31.3.2019 as against ? 9943 crore as on 31.3.2018.
e) Interim dividend pay-out for the financial year 2018-19 is ? 162.91 crore including dividend distribution tax of ? 27.78 crore.
f) At the end of the financial year 2018-19 HUDCO reported Gross NPA and Net NPA of ? 3286.59 crore and ? 354.28 crore respectively which constituted 4.48% to total 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 in HUDCO's operations. A significant emphasis is given particularly to housing requirements of weaker sections of the society with a lower interest rate higher extent of unit cost extended as loan and with a longer repayment-period. During the year 2018-19 HUDCO funded more than 20.68 lakh housing units out of which about 94.42% has been for EWS and LIG categories.
6. Credit Rating of HUDCO
The domestic debt instrument(s) & Banking Sector Loan(s)/facilities of 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 a Long-Term Foreign Currency Issuer Rating of Baa2 & BBB- from two International Rating Agencies namely Moody's Investors Services and FITCH Ratings respectively.
7. HUDCO's Role in Implementation of Government of India flagship programmes- for promoting Housing for All & Urban Development
To keep pace with the increasing housing and infrastructure demand in the country and towards achieving the ambitious plan of providing affordable housing under Pradhan Mantri Awas Yojana-`Housing for All' (Urban) programme and sustainable urban development of human settlements; the Government of India from time to time has encouraged and supported Social Housing and Infrastructure programmes benefiting the urban poor and weaker sections of the society.
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. are some of the flagship programmes of Government of India.
HUDCO actively participates in implementations of Government programmes by providing financial assistance by way of viability- gap funding for States/UTs and ULB share as per the requirements. Other services offered by HUDCO are consultancy project appraisal/scrutiny propagation and dissemination of scheme details monitoring and site inspections organizing awareness programmes organizing capacity building programmes for the Government/State/ULB functionaries and handholding support to State Government for preparation of Detailed Project Reports (DPRs).
During 2018-19 HUDCO undertook Site Inspection and DPR scrutiny of 125 projects with a total project cost of ? 8362.59 crore having a Central Share of ? 3057.12 crore 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 ? 2.64 crore.
The Credit Linked Subsidy Scheme (CLSS) component of the Pradhan Mantri Awas Yojana (PMAY-U) envisages expanding institutional credit flow to the housing needs of the 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 CLSS scheme of Housing for All (Urban) Programme. Upto March 2019 HUDCO has signed 86 MoUs for EWS/LIG category and 80 MoUs for MIG category with Primary Lending Institutions (PLIs). During the Financial Year 2018-19 a total of ? 341.95 crore of subsidy 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 ? 2147.48 crore to Kerala and Andaman & Nicobar offering a total loan of ? 1064.46 crore for construction of 50555 housing units.
HUDCO up to 31st March 2019 has conducted site inspections of 551 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 successfully completed the consultancy services for one of its most prestigious projects i.e. Office building for Archaeological Survey of India at Tilak Marg New Delhi which was inaugurated 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 on contemporary issues of Housing and Urban Development HSMI continues to work in the field of human settlements at international national and state levels by organizing and participating in exchange programmes and other information and experience sharing events. A total of 16 Training Programmes including 3 international programmes fully- sponsored by the Ministry of External Affairs under its ITEC programme have been conducted during the year 2018-19 imparting capacity building training to more than 500 urban specialists.
During the year 2018-19 HSMI has organized 6 research seminars for presentation of research study reports. 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 on competitive basis.
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. During the year 2018-19 HSMI organised a 2-day training programme with CITYNET Indian national Chapter members on Sustainable Waste 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 Finance and Law disciplines etc. To sustain in this competitive dynamic market the company regularly arranges capacity-building programmes for its employees under various functional areas. A total of 301 employees were imparted training during the year 2018-19 in different spheres of company's activities. As on 31st March 2019 HUDCO has a total strength of employees as 827 which comprises 29.86% of the women employees in tune with the policies of Beti Bachao - Beti Padhao for women development.
A major initiative of implementing (Enterprise Resource Planning) ERP system including the HR Module has been initiated during 2018-19. ERP will benefit in improving productivity improving reporting & planning increased efficiencies decreased costs and streamlined processes. This will also bring-in more professionalism in the working of HR besides automating various HR processes and will enhance overall business performance of HUDCO. The company also imparts training to its employees on team-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 ? 9.30 crore has been committed out of which an amount of ? 1.02 crore has been released to various agencies for implementation of socially beneficial proposals. In line with the thrust areas of HUDCO's CSR Policy some of the key sectors funded during the year were sanitation education social welfare forest & environment and rural development. During the year HUDCO has also committed support for construction of houses for the families who were severely affected by floods in Kerala. Further an amount of ? 3.56 crore 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 received several awards & accolades in recognition of its services: -
a. 6th Annual Greentech CSR Award 2018 - Gold Category in service sector for outstanding achievement in Corporate Social Responsibility (CSR) activities.
b. Technology Sabha Awards 2019 in category of Enterprise Applications.
c. Digital Leader Award for Excellence under the `Enterprise Applications' and `Unified Communications' categories for successful PAN-India implementation of these initiatives.
12. Corporate Governance
Corporate Governance deals with determining ways to take effective strategic decisions. HUDCO is fully committed in promoting and establishing a fair transparent and ethical system of Corporate Governance. HUDCO ensures transparency in all its operations with special emphasis on financial prudence accountability and ensuring customers/stake-holder's satisfaction.
13. Future Outlook
Government of India has taken several initiatives to boost affordable housing and to revitalise the Urban Sector. HUDCO has potential to participate in the Government programmes in terms of lending as well as fee-based/consultancy income. Government is expected to invest huge amount in the infrastructure sector mainly in highways renewable energy and urban transport. The Government has given a push to connectivity through industrial corridors dedicated-freight corridors Bhartamala and Sagarmala projects Jal Marg Vikas and UDAN Schemes.
The urban housing demand in India is being addressed through Pradhan Mantri Awas Yojana (PMAY)-Urban as well as Gramin. The Government of India's Housing for All initiative is expected to bring USD 1.3 trillion investments in the housing sector by 2025.
Considering the above investments there is substantial opportunity for funding Housing and Urban Infrastructure in the country. HUDCO with its vast experience in providing consultancy services and financial assistance for implementation of affordable housing projects could play an important role in supporting various government housing programmes.
HUDCO is facing stiff competition from Commercial Banks/Financial Institutions in financing the housing and urban infrastructure projects. HUDCO has to keep-up pace with the current market dynamics to continue business with various State Government Agencies.
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 Public Enterprises (DPE) Department of Investment and Public Asset Management (DIPAM) National Housing Bank (NHB) Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs.
Also I wish to thank our investors lenders and borrowers specially the State Governments Housing Boards Development Authorities Municipal/ Local Bodies and other parastatal institutions for reposing their trust in HUDCO. I place on record my special thanks to all the stakeholders of the company for extending their valuable support and cooperation.
Last but not the least I am thankful to all the employees of the Company for their untiring efforts. With the level of performance collectively portrayed I am confident that the dedicated efforts of the Company will make us grow to newer heights in the ensuing years.
Thank you for your kind support.
|Place : New Delhi||Dr. M. Ravi Kanth [IAS KL: 86]|
|Date : 19th August 2019||Chairman & Managing Director|