Dear Stakeholders,
The year 2022 began on a note of cautious optimism. After nearly two
years, the virulence of the Covid-19 virus is ebbing, and while India and the world are
still not out of the woods, the Indian Government's speedy rollout and robust
implementation of the vaccination drive, coupled with greater public awareness of
sanitisation and safeguard measures, all point towards brighter times ahead.
The Indian economy, while buffeted by the Covid-19 headwinds, continues
to demonstrate encouraging resilience and the green shoots of an eventual return to
normalcy are visible. The IMF predicts that India's GDP will grow faster than most other
economies and projects a growth rate of 8.2% in FY 2023 and 6.9% in FY 2024.
The Union Budget for FY 2023 addressed the issue of boosting the
consumption cycle by increasing Government investment in capital expenditure and the
outlay is budgeted to rise from 3.1% in FY 2022 to 14.5% in FY 2023. A Reserve Bank of
India (RBI) study estimated that a Rs1 increase in capital expenditure by the Central
Government leads to a Rs3.25 increase in output. This increased outlay is expected to
provide a fillip to India's growth over the near and medium term.
The outlook for the Indian housing finance industry continues to be a
favourable one. The demand for homes is estimated to cross 100 million units with 95% of
the requirement coming from lower-income and economically weaker sections of society.
Macro factors like rapid urbanisation, rising disposable incomes, low mortgage penetration
of ~11% to GDP, and the demographic dividend remain intact. Demand for housing in India,
particularly in the low income segment is a multidecade story. The demand is not confined
only to few cities but spreading fast across tier - 2,3,4,5 locations. CRISIL expects
housing credit to grow at 11% between FY 2021 and FY 2025 as government impetus under the
Pradhan Mantri Awas Yojana (PMAY), tax incentives for home buyers, reduction of the stamp
duty in Maharashtra, RERA implementation and the NHB refinance scheme further stimulate
growth in the home loan market.
I am pleased to state that despite the Covid-19 triggered challenging
economic environment, Aadhar Housing leveraging the strength of its customer-centric
business model, continues to hold onto its leadership position in the low-income housing
market. As on 31st March 2022, Gross Assets under Management (AUMs) stood at
Rs14,778 Crs and total disbursements at Rs3,992 Crs. The number of live accounts stood at
2,04,000+ compared to 1,82,000+ live accounts as on 31st March 2021. The
company is predominantly focused on the low income housing segment with 80% loans by
value, to beneficiaries from Economically Weaker Section (EWS)/ Low Income Group (LIG).
During the year, the Company consolidated and built on the specialised domain expertise
acquired over the years in its micro-markets, enabling superior credit checks and a robust
review of fund sources for repayment of its loans. Paired with its constantly improving
technological systems and processes, the Company now can identify local opportunities
promptly, segment customers more accurately, disburse loans faster and track the status of
collections, all in real-time.
The Company's extensive and diversified on-ground presence is a key
differentiator, helping it maintain superior service standards and optimum loan sourcing.
As on 31st March 2022, there were 341 branches and offices across India
covering 20 states and UTs, including adequate representation in the 10 states which
generate 79% of all the outstanding housing loans focussed on the low-income housing
segment.
The Company continues to invest in information technology with a view
to enhancing service standards and efficiency levels and facilitating objective
decision-making. The TCS enterprise-wide technology-led Lending and Securitisation
platform, which went live across our branches in October 2021, has brought on digitisation
of the entire loan life-cycle management process from onboarding and origination to
servicing and collections. The Company expects it to also result in enhanced customer
engagement and better data analytics. Both these are important components of the Digital
Transformation programme, which the Company embarked on a couple of years back.
To deepen the Company's distribution network and diversify its funds
base, the Company signed a strategic co-lending agreement with UCO Bank, taking advantage
of RBI's recently revised Co-Lending Model framework. Tie ups for co-lending with few
other banks are in process This will enable Aadhar Housing to service a much wider
customer base, utilising the larger balance sheet of the partner bank and its access to
cheaper funds. We have also worked on our overall borrowing mix; the percentage of NHB
refinance in our overall borrowing mix has increased, which has also helped in reducing
our overall borrowing costs.
The Company's average cost of borrowing has come down to 7.23% on 31st
March 2022 from 10.09% on 31st March 2019, which is a testament to the
Company's business model and financial performance. The Company aims further improve the
weighted average tenure of its outstanding borrowings, which stood on 31st
March 2022 at 105 months., This was achieved by targeting varied and alternative pools of
capital and adhering to stringent asset liability management policies. In June 2022,
International Finance Corporation (IFC) has sanctioned NCD investments of $90 million.
Despite the prevailing macro headwinds, the Company's Retail AUM grew
to Rs14,777 Crs as of 31st March 2022 from Rs13,325 Crs as on 31st
March 2021. During the year, the Company recorded a robust performance with PAT at Rs445
Crs, compared to Rs340 Crs as of 31st March 2021. The overall gross NPA on AUM
stood at 1.46 % as of 31st March 2022, against a figure of 1.07% in FY 2021.
Gross NPA as of March 2022 was with the implementation of RBI circular of November 2021,
impact of which was 0.27% on 31st March 2022 out of the total GNPA of 1.46%.
Collection efficiencies post September 2021 have been 95-100% for housing loans.
As part of Blackstone with a total AUM of $915 billion, the Company
continues to benefit from its parent's global capital market expertise, international
relationships, adherence to the highest corporate governance standards, and deep domain
knowledge in areas like real estate, private equity, public debt and equity and real
assets, and secondary funds.
Going ahead, the significant investments in digital technology and
processes outlined earlier married with the deep insights and domain understanding gained
over the years through extensive feet-on-the-ground will enable the Company to continue
offering superior and smart loan products aligned with contemporary needs that help
customers own their dream homes.
I take this opportunity to extend my warmest appreciation and thanks to
promoters, RBI, SEBI, IRDA, NHB, Banks, IFC, MCA, BSE, Tax authorities, credit rating
agencies, Financial Institutions, and all clients, partners, creditors and sponsors for
their unstinting support and encouragement. The Company's employees are its bedrock, and I
am truly appreciative to all of them and their families spread across the country, for
their dedication and service. Transforming customer dreams into reality is the foundation
on which this Company is built, and I thank them for their continued support and best
wishes.