March 2017 - Housing and Urban Development Corporation to... · This presentation (the ...

March 2017

HUDCO

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Table of contents

1. Company Overview 2

2. Key Growth Drivers 12

3. Key Strengths 13

4. Financial Performance 17

5. Experienced Board & Management 21

6. Strategy 23

Appendix

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Housing and Urban Development Corporation Limited (“HUDCO” or the “Company”) is proposing, subject to receipt of requisite approvals, market conditions and other considerations, to undertake an initial public offering of its equity

shares (the “Equity Shares”) in India by way of an offer for sale (the “IPO”) and has filed a draft red herring prospectus (“DRHP”) with the Securities and Exchange Board of India (“SEBI”).

This presentation (the “Document”) has been prepared by the Company solely for informational purposes and is not and should not be construed as an offer letter, offering circular, offering document, draft red herring prospectus, red

herring prospectus, invitation, advertisement or prospectus as defined under the Companies Act, 2013 as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as

amended, or any other applicable law in India.

The contents of the Document have not been reviewed by any regulatory authority in any jurisdiction.

The information contained in the Document is not intended to, nor should it, form the basis of any investment decision. The Document does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or

purchase any securities in any jurisdiction, and nothing contained herein shall form basis of any investment decision, contract or commitment whatsoever. It does not constitute a recommendation to invest in any securities.

The Document is being furnished to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person, in whole or in part, for any purpose.

The distribution of the Document in certain jurisdictions may be restricted by law, and the recipients into whose possession the Document come should inform themselves about and observe such restrictions. In particular, neither the

Document nor any copy hereof may be, directly or indirectly, taken or transmitted into or distributed in Canada, the People’s Republic of China, Japan or any other jurisdiction which prohibits the same except in compliance with applicable

securities laws.

Any potential investor should note that investment in equity and equity-related securities involve a high degree of risk. Any decision on whether to invest in the Equity Shares described in the DRHP may be made only after a red herring

prospectus has been registered with the Registrar of Companies, National Territory of Delhi & Haryana (the “Red Herring Prospectus”) and must be made solely on the basis of the Red Herring Prospectus (if you are in India) as there

may be material changes in the Red Herring Prospectus. Potential investors are advised to read the section titled "Risk Factors" in the Red Herring Prospectus carefully before making an investment decision in the IPO.

The contents of the Document have not been independently verified. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any

information, including any projections, estimates, targets and opinions contained herein, and no responsibility or liability whatsoever is accepted as to any errors, omissions or misstatements contained herein and, accordingly, none of the

Company or its affiliates, shareholders, directors, advisors, representatives or any such person's officers or employees (collectively, “Representatives”) accepts any responsibility or liability whatsoever (in negligence or otherwise,

including any third party liability) for any loss or damage (including consequential loss or damage) howsoever arising directly or indirectly from the use, distribution or reliance of the Document or its contents or otherwise arising in

connection with the Document.

The Document is a summary only and it is not the intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the financial position or prospects of the Company. The past

performance portrayed in the Document may not be indicative of the future performance of the Company. Neither the delivery of the Document nor any further discussions with any of the recipients shall, under any circumstance, create

any implication that there has been no change in the affairs of the Company and neither the Company nor any of the Representatives are under an obligation to update, revise or affirm the information in the Document.

The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “U.S. Securities Act”), and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction

not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. The Company is an “investment company” (as defined in the U.S. Investment Company Act of 1940, as amended, and the related

rules (the “U.S. Investment Company Act”) and has not been and will not be registered under the U.S. Investment Company Act. Accordingly, any offer or sale of the Equity Shares will be made (a) to persons in the United States and to

U.S. persons (as defined in Regulation S (“Regulation S”) under the U.S. Securities Act) who are both (i) “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act) and (ii) “qualified purchasers” (as

defined in Section 2(a)(51) of the U.S. Investment Company Act) pursuant to Rule 144A under the U.S. Securities Act and Section 3(c)(7) of the U.S. Investment Company and (b) to persons outside the United States who are non-U.S.

persons pursuant to Regulation S.

The Book Running Lead Managers to the IPO (“BRLMs”)are acting for the Company and not the recipient of the Document and the receipt of the Document is not to be taken as constituting the giving of investment advice by the BRLMs

to the recipient nor to constitute a customer or client relationship between the recipient and the BRLMs. Accordingly, the BRLMs will not be responsible to the recipient for providing protections afforded to customers or clients or advising

the recipient.

The DRHP is available on the website of SEBI at www.sebi.gov.in and the respective websites of the BRLMs. Potential investors should not rely on the DRHP filed with SEBI in making any investment decision.

Disclaimer

1

Company Overview

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10.81% 11.01%

9.81% 10.07%

8.43% 7.91% 7.70% 7.97%

FY14 FY15 FY16 9M FY17

Average yield on average interest-earning assets

Average cost of interest bearing liabilities

2.37% 3.10%

2.11% 2.09%

4.59% 5.18%

4.11% 4.26%


HUDCO is a wholly-owned Government company with more than 46 years experience

in providing loans for housing and urban infrastructure projects in India

Plays a key role in various Government’s schemes to develop the Indian housing and

urban infrastructure sectors

89.93%1 of total loan portfolio were to State Governments and their agencies

HUDCO's total outstanding loan portfolio was INR363,858mn1

Housing Finance Loans: INR112,281mn1 (30.86%, of total outstanding loan

portfolio)

Urban Infrastructure Finance loans and project-linked bonds: INR251,577mn1

(69.14%)

Housing finance loans are classified into

Social housing

Residential real estate

Retail finance (branded as HUDCO Niwas)

With respect to urban infrastructure finance, HUDCO gives loans for projects relating

to water supply, roads and transport, power, among others

Company Overview

Average Yield on Average Interest Earning Assets, Average

Cost on Average Interest-Bearing Liabilities and Spread2,3,4

Net interest margin5

HUDCO at a Glance

For particulars relating to income, profit before tax, profit after tax, share capital, reserves, earnings per share, dividends and book value per share of the Company for the last three years (based on the restated

financial statements of the Company), please refer to slides 17 – 20.

1. As of December 31, 2016.

2. The average yield on average interest-earning assets is the ratio of interest income and income that is directly attributable to income on loans and advances (such as loan application fees and front-end fees

payable by the borrower prior to sanction/disbursement of the loan) on interest earning assets to Average interest-earning assets for the year or period, as applicable

3. Average cost on average interest-bearing liabilities is the ratio of interest expense and other borrowing costs to average interest-bearing liabilities for the year or period, as applicable

4. Spread refers to difference between average yield and average cost of interest bearing liabilities

5. Net interest margin (“NIM”), for any given period represents the ratio of net interest income to the average of interest-earning assets, expressed as a percentage

6. Annualized figures based on actual figures for nine months ended December 31, 2016.

6

6

2

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HUDCO at a Glance (Cont’d)

Gross and Net Non Performing Assets (“NPAs”) to Total Loan Portfolio

Provision Coverage Ratio1

6.76% 6.25%

6.68% 6.80%

2.52%

1.59% 2.06%

1.51%


Gross NPAs to Total Loan Portfolio Net NPAs to Total Loan Portfolio

64.41%

75.75% 70.56%

78.98%

FY14 FY15 FY16 9M FY17For particulars relating to income, profit before tax, profit after tax, share capital, reserves, earnings per share, dividends and book value per share of the Company for the last three years (based on the restated


1. Provision coverage ratio reflects the ratio of provisions created for NPAs for loans to gross NPAs for loans. 3

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Water Supply 34%

Roads and Transport

24%

Power 21%

Emerging Sectors 8%

Commercial Infrastructure and

Others 6%

Social Infrastructure and Area Development

4%

Sewerage and Drainage

3%

State governments and

their agencies 86.56%

Private sector entities 13.44%




Individuals 0.37%




Individuals 1.17%

Average Loan Size INR543.4mn

Average Residual Tenor 8.05 years

NIM 4.25%

Gross NPA as a % of

total loan portfolio 5.85%

Average Loan Size INR575mn


NIM 4.26%

Gross NPA as a % of total loan

portfolio 0.95%

Average Loan Size INR552.8mn


NIM 4.25%

Gross NPA as a % of total

loan portfolio 6.80%


financial statements of the Company), please refer to slides 17 – 20. PSU: Public Sector Undertakings; HFC: Housing Finance Companies. EWS: Economically Weaker Sections; LIG: Lower Income Group

1. As of December 31, 2016.

Overview: Financing Products

Total Outstanding Loan Portfolio c.INR364bn1

Housing Finance (“HF”)

c.INR112bn (30.86% of total loan portfolio)1

Urban Infrastructure Finance

c.INR252bn (69.14% of total loan portfolio)1

Loans for projects relating to water supply; roads and transport; power; among others

Urban Infrastructure Loan Portfolio

Financing to individuals directly

Bulk loans to State

governments, their agencies

and PSUs for on-lending to

their employees

HFCs for on-lending to the

general public

Loan Portfolio:

– Bulk Retail Loans (77% of

HUDCO Niwas loan

portfolio)

– Individual Retail Loans

(23%)

Social Housing

(c.INR79bn) (70% of HF)

Residential Real Estate


HUDCO Niwas


Lending to State governments

and their agencies and private

sector entities, who, in turn,

extend the finance to or utilise

the finance for the ultimate

individual beneficiaries

Ultimate beneficiaries of

financing are borrowers

belonging to the EWS and LIG

(i.e households with income of

less than INR0.6mn)

Lending to State governments

and their agencies and private

sector entities, who, in turn,

extend the finance to or utilise

the finance for the ultimate

individual beneficiaries

Ultimate beneficiaries are

public and private sector

borrowers for housing and

commercial real estate projects

which typically cater to middle /

high income group

Borrower Type

Borrower Type Borrower Type

4

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Overview: Financing Products (Cont’d)

Housing Finance Urban Infrastructure Finance

Loan to Value (LTV) Up to

State governments and public sector agencies 90% of project cost

Private sector 70%

Individuals

Property with market value of <INR3mn 90%

Property with market value of INR3.0-7.5mn 80%

Property with market value of >INR7.5mn 75%

Tenor Up to

Social housing 15 years

Residential real estate 15 years

HUDCO Niwas 25 years

Security


public sector agencies Government guarantee, bank guarantee, mortgage

Private sector Mortgage of the project property, escrow of the

receivables and hypothecation of the assets

Security Coverage 125%-150% of the loan outstanding

Loan to Value (LTV) Up to

State governments and public sector agencies 90% of project cost

Private sector (Power and transport projects) 90%

Private sector (All other projects) 70%

Tenor Up to 5-15 years

Security


public sector agencies Government guarantee, bank guarantee, mortgage

Private sector

Mortgage of the project property, escrow of the

receivables, bank guarantee and hypothecation of

the assets

Security Coverage At least 125% of the loan outstanding

5

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Sanctions by Business Category

Sanctions by Borrower Category

Details of Sanctions

6

2014 2014 2015 2015 2016 2016 9M 2017 9M 2017

(amount) (% of total Loan

Portfolio)


Portfolio)


Portfolio)


Portfolio)

Housing Finance 96,431 55% 76,693 36% 187,904 61% 24,618 12%

Urban Infrastructure Finance 78,479 45% 134,262 64% 119,840 39% 176,384 88%

Total Sanctions 174,910 100% 210,955 100% 307,744 100% 201,002 100%

Particulars

As at March 31,

(INRmn, except percentages)

2014 2014 2015 2015 2016 2016 9M 2017 9M 2017

(amount) (% of total) (amount) (% of total) (amount) (% of total) (amount) (% of total)

State Governments and their agencies 174,774 99.92% 210,814 99.93% 307,650 99.97% 200,862 99.93%

Individuals 136 0.08% 141 0.07% 94 0.03% 140 0.07%

Total Loans Disbursed in the Period 174,910 100% 210,955 100% 307,744 100% 201,002 100%

Particulars

As at March 31,


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B=219

Disbursements by Business Category

Disbursements by Borrower Category

Details of Disbursements

1. Disbursements in respect of drawdowns by borrowers for projects sanctioned prior to 2013.

1

7

2014 2014 2015 2015 2016 2016 9M 2017 9M 2017


Housing Finance 28,366 38% 30,757 39% 31,327 38% 4,951 13%


Total Disbursements 74,334 100% 79,730 100% 82,481 100% 37,482 100%

Particulars

As at March 31,


2014 2014 2015 2015 2016 2016 9M 2017 9M 2017



Private sector entities 1,085 1.46% 2,483 3.11% 548 0.66% 114 0.30%

Individuals 139 0.19% 88 0.11% 80 0.10% 373 0.99%

Total Loans Disbursed in the Period 74,334 100% 79,730 100% 82,481 100% 37,482 100%

Particulars

As at March 31,


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B=73

R=65

G=180

B=219

Loan Portfolio by Business Category

Loan Portfolio by Borrower Category

Details of Loan Portfolio

8

2014 2014 2015 2015 2016 2016 9M 2017 9M 2017


Housing Finance 78,752 26% 96,614 29% 116,959 33% 112,282 31%


Total Outstanding Loans and Advances 300,118 100% 331,349 100% 356,649 100% 363,859 100%

Particulars

As at March 31,


2014 2014 2015 2015 2016 2016 9M 2017 9M 2017


Housing Finance 78,752 100% 96,614 100% 116,959 100% 112,282 100%

State Governments and their agencies 73,830 94% 92,605 96% 113,479 97% 108,933 97%

Private sector entities 3,026 4% 2,345 2% 2,072 2% 2,033 2%

Individuals 1,896 2% 1,664 2% 1,408 1% 1,316 1%




Individuals - 0% - 0% - 0% - 0%

Total Outstanding Loans and Advances 300,118 100% 331,349 100% 356,649 100% 363,859 100%



Individuals 1,896 1% 1,664 1% 1,408 0% 1,316 0%

Particulars

As at March 31,


R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219 Secured 78.92%

Unsecured 21.08%

Overview: Borrowing

India Ratings (Fitch Group), ICRA and CARE have assigned a rating of ‘AAA’ to HUDCO’s long-term bonds,

long-term bank facilities and fixed deposit programme

Borrower Type (By Outstanding Loan Portfolio)1 Details

Borrowings 1

NCDs (Includes tax free bonds)

67.6%

Taxable Bonds 13.2%

Refinance assistance from

NHB 8.0%

Public deposits 4.0%

Foreign currency loans

2.0%

Commercial Paper 2.0%

Other term loans 0%

Borrowing

Type

Amount

(INRbn)

Average Maturity

Period (From

date of allotment)

Residual Maturity Interests Rate

Range

Tax Free Bonds 173.88 10-20 years 4.83-17.25 years 7.00%-9.01%

Taxable Bonds 34.40 Upto 10 years 0.75-5.50 years 6.80%-8.14%

Refinance

Assistance from

NHB

21.2 7-10 years 1.83-8.08 years 6.25%-8.00%

Other Term

Loans 0.61 24 years 5.50 years 10.54%

Public Deposits 9.48 12-84 months 12-24 months 7.00%-9.55%

ECB 4.89 25-30 years 6.58-13.75 years

Fixed: 2.10%

Floating – USD 6M

LIBOR + (18-

40bps)



1. As of December 31, 2016. On standalone basis. 9

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Details of Borrowings

Details of Borrowings

In INRmn FY14 % of Total FY15 % of Total FY16 % of Total 9M FY17 % of Total

Tax-free bonds 123,885 58% 123,885 53% 173,885 68% 173,885 69%

Taxable bonds 35,182 17% 33,082 14% 19,992 8% 34,000 14%

Refinance assistance from NHB 14,776 7% 28,202 12% 23,504 9% 21,154 9%

Public deposits 12,146 6% 14,327 6% 16,557 6% 9,483 4%

International Borrowings 6,381 3% 5,719 2% 5,354 2% 4,892 2%

Others 20,678 10% 29,461 13% 16,798 7% 5,013 2%

Total 213,048 100% 234,677 100% 256,090 100% 248,428 100%

10

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B=73

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B=219

2014 2014 2015 2015 2016 2016 9M 2017 9M 2017


Housing Finance 4,147 1.38% 3,585 1.08% 3,816 1.07% 3,459 0.95%


Private sector entities 1,809 0.60% 1,603 0.48% 2,062 0.58% 2,033 0.56%

Individuals 311 0.10% 319 0.10% 259 0.07% 240 0.07%

Urban Infrastructure Finance 16,155 5.38% 17,111 5.16% 20,009 5.61% 21,287 5.85%



Individuals - 0.00% - 0.00% - 0.00% - 0.00%

Total NPA Gross 20,302 6.76% 20,696 6.25% 23,825 6.68% 24,745 6.80%



Individuals 311 0.10% 319 0.10% 259 0.07% 239 0.07%

Gross NPA 20,302 20,696 23,825 24,745

Total Provision made ( excluding provision on

Standard Assest) 13,076 15,677 16,811 19,544

Gross NPA (%) 6.76% 6.25% 6.68% 6.80%

Net NPA (%) 2.52% 1.59% 2.06% 1.51%

Provision Coverage Ratio (%) 64.41% 75.75% 70.56% 78.98%

Particulars

As at March 31,


Details of NPA

Details of NPA

11

Key Growth Drivers

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Urban population in India is expected to double from 410mn

(32%) in 2014 to 814mn (50%) by 2050

India ranks 2nd in the world in terms of urban population size

32% 53% 54% 74% 79% 85%

India Indonesia China Russia Mexico Brazil

Key Growth Drivers

1. ICRA Research, RBI.

Note: NHAI: National Highway Authority of India, PFC: Power Finance Corporation, REC: Rural Electrification Corporation, IREDA: Indian Renewable Energy Development Agency Limited, NABARD: National Bank for

Agriculture and Rural Development, IWA: Inland Water Authority.

Increasing Urbanization & Population growth

As per Govt.’s High Powered Expert Committee (“HPEC”),

c.US$640bn needed until 2031 for investment in urban

infrastructure

8 major sectors requiring investment: roads, transport, traffic

support, street lighting, water supply, sewerage, among others

HPEC estimates funding deficit at 0.15-0.39% of GDP p.a. for

2012–2031, which amounts to a funding gap of US$80-110bn

Increased Infrastructure spending

Housing finance sector expected to grow at 18-20% in FY17

Indian Housing Finance Market1

Shortage in housing is expected to increase significantly as the rate

of urbanization increases

Study by MoRD highlighted access tofinance as a critical and

fundamental pre-requisite for habitat development

19mn Shortage in

urban housing

from FY12-17

Shortage of Housing

Steady increase in mortgage penetration levels as a % of GDP

Growth in the housing finance industry supported by

favourable demographics, with a large proportion of Indian

population being below the age of 30 years

7% 9%

Mar-07 Jun-16

Increase in Mortgage Penetration Levels

Trends in Housing Credit Growth in India (INRtrn)

3.1 3.8 4.5 4.7 5.7 6.6 7.9 8.1

Mar-14 Mar-15 Mar-16 Jun-16

HFC and NBFC SCB

Housing credit as a % of GDP

Low Urbanization Ratio compared to other economies

44mn Shortage in

rural housing

from FY12-17

Launched “Housing for all by

2022” in Jun 2015, with a

focus on 500 Class I cities

over 7 years

Government Initiatives

Other programmes to promote

affordable housing include:

Rajiv Awas Yojana

National Urban Livelihoods Mission

Credit Risk Guarantee Fund

Scheme for Low Income Housing

Smart Cities Mission

Indira Awas Yojana

In May 2016, introduced The

Real Estate (Regulation and

Development) Act to improve

transparency & accountability

in the sector

12

Key Strengths

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Key Role in Various Government’s Schemes

Highest Credit Ratings, Access To Diversified and Lower-cost Funding

Pan-India Presence and Strong Relationships with State Governments

Financial Strength and Profitability Since Inception

Experienced Senior Management Team and a Large Pool of Skilled and Professional Employees

1

2

3

4

5

Key Strengths

13

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DAY-NULM: Deendayal Antyodaya Yojana-National Urban Livelihoods Mission, JNNURM: Jawaharlal Nehru National Urban Renewal Mission, PMAY-HFA: Pradhan Mantri Awas Yojana - Housing for All.

HUDCO has a strong relationship with State Governments, reflected in higher participation in government

housing and urban infrastructure programmes such as DAY-NULM, JNNURM and PMAY-HFA

Key Role in Various Government’s Schemes

Analysis of NPAs by Borrower Type

1.17% 0.89% 0.71% 0.75%

5.50% 5.26% 5.90% 5.98%

0.10% 0.10% 0.07% 0.07%


State Governments and their agencies Private sector entities Individuals

As % of Total Loan Portfolio

99.92% 99.93%

99.97%

99.93%

FY14 FY15 FY16 9MFY17

Sanctions to State Government and their agencies Sanctions to Others

Sanctions to State Governments and Agencies as a Percentage

of Total Sanctions

1

In March 2013, HUDCO Board decided to cease sanctioning of new

Housing Finance loans to the private sector

Further, the HUDCO Management decided to cease sanctioning

new Urban Infrastructure Finance loans to private sector entities

Risk of NPAs is lesser in case of State Governments and their

agencies

Gross NPAs for loans made to the private sector were 61.62%

compared to 0.84% for loans made to State Governments and their

agencies

14

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G=161

B=73

R=65

G=180

B=219



Note: HFC: Housing Finance Companies, NHB: National Housing Bank.

Highest credit rating and strong relationships with government enables access to funds for a long-term

duration, lower cost of borrowing and from a diversified lender base

Highest Credit Ratings, Access to

Diversified and Lower-Cost Funding

8.43%

7.91%

7.70%

7.97%


Decreasing Average Cost of Interest-bearing Liabilities

Other Term

Loans Debentures / NCDs

Refinance

Assistance from NHB

Commercial

Paper Cash Credit

Public

Deposits

External Commercial

Borrowings

From time to time, GoI

has permitted issuance

of tax-free bonds

carrying a lower rate of

interest

NHB offers refinance

assistance to HFCs for

loans given for housing

under various

refinance schemes

Enables sourcing of

foreign currency loans

from bi-lateral & multi-

lateral agencies

Diversified lender base with support from government

Rating of AAA for Long Term Debt

Sources of funding

CARE ICRA India Ratings

& Research

2

15

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G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

North: Chandigarh (Union Territory), Delhi, Himachal Pradesh, Haryana, Jammu & Kashmir, Punjab, Rajasthan, Uttarakhand and Uttar Pradesh. South: Andhra Pradesh, Andaman & Nicobar, Goa, Karnataka,

Kerala, Puducherry, Tamil Nadu and Telangana. East: Arunachal Pradesh, Assam, Bihar, Jharkhand, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura and West Bengal. West: Chhattisgarh, (Union

Territory), Gujarat, Madhya Pradesh and Maharashtra.

Pan-India presence has helped develop strong relationships with state governments and their agencies

Pan-India Presence and Strong

Relationships with State Governments

North 22.00%

South 54.00%

East 8.00%

West 16.00%

HUDCO’s Presence HUDCO Office Locations

Hudco’s Corporate Office Hudco’s Regional Office Hudco’s Development Office

Hudco’s Human Settlement Management Institute (HSMI)

3

Total Outstanding Loan Portfolio – Geographical Breakdown

Presence in capital city of each State (except for Gujarat and Andhra Pradesh,

where HUDCO has an office in Ahmedabad and Vijaywada, respectively) and some

other cities and union territories

As of Dec 31, 2016, Company has 21 regional offices and 11 development offices

in addition to the registered and corporate office and research and training wing in

New Delhi

– Regional offices are responsible for developing business, monitoring progress of

projects and are able to sanction loans up to a certain limit

– Development offices are also responsible for developing business and monitoring

progress of projects but they are not permitted to sanction loans

16

Financial Performance

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

March Year Ending (INRmn) FY12 FY13 FY14 FY15 FY16 9M 2017

Interest on Loans (Less: Penal Interest w aived off) 24,748 26,710 28,221 32,558 31,568 25,707

(+) Interest on Bonds 1,233 1,073 540 540 229 165

(+) Interest on Loan against Public Deposits 0 0 1 1 2 1

(+) Interest on Fixed Deposits 1,016 489 477 19 554 124

(-) Interest Expense 16,291 15,670 17,017 17,754 19,073 15,086

Total Interest Income (Net of Interest Expense) 10,707 12,603 12,222 15,365 13,280 10,911

Other Income on Loans 218 261 207 269 134 124

(+) Consultancy, Trusteeship and Consortium 153 93 61 78 40 9

(+) Other Income 419 587 522 813 974 650

Non-interest income 789 941 790 1,160 1,148 783

Total Income 11,496 13,543 13,012 16,525 14,428 11,694

Summary Standalone P&L (Restated)


1. Other income on loans includes application fees, front-end fees, deferment charges, additional interest, admin fees & charges, interest subsidy income & commitment charges

2. Others primarily includes dividend income, rental income, interest on income tax refund & interest on construction project.

3. For the nine months ended December 31, 2016.

Primarily due to fall in average yield on average loans

to 9.67% in FY16 from 11.14% in FY15

Decrease in average yield on average bonds to 4.87%

in FY16 from 8.06% in FY15

Decrease in average bonds to INR4,700mn in FY16

from INR 6,700mn in FY15

Due to movement of average fixed deposits from

INR2.1bn to INR1.6bn to INR3.1bn in FY14, FY15 &

FY16, respectively

Average borrowings increasing by c.INR19bn, or

9.17%, in FY16

Partially offset by average cost of borrowing

decreasing to 7.49% in FY16 from 7.85% in FY15

3

1

2

4

Decrease in receipt of additional interest (prepayment

charges))

Adjustment of reset charges for one of the borrowers

5

2

2

4

1 5

Net gain in foreign currency translation of INR131mn in

FY15 as against a loss of INR52mn in FY14

Increase in interest on income tax refund by INR95mn

for the same period

Renting out more property and escalation in the rent

6

6

3

4

1

17

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219


Increase in the average loans

Increase in average yield on loans

Net gain in foreign currency translation

Increase in interest on income tax refund

Creation of INR 284mn provision for pensions from Jan

1, 2007 to Mar 31, 2015

23.52% increase in salaries, allowances and other

amenities

FY16: Fall due to writing back INR2,750mn on provision

on loans

FY15: Decrease in provision on loans due to resolution

of NPA cases in FY15. Overall increase due to

additional provision on loans of INR1,700mn compared

with writing back INR1,600mn on provision on loans in

FY14

FY16: Realized a payment of INR52mn from

Employees' Provident Fund Organisation (“EPFO”)

FY15: Reversed the opening balance of CSR & SD

Reserve of INR203mn & created a provision for the

same in FY14

- Shown as an expense under exceptional items while

restating the accounts in FY15

3

1

2

4

4

3

2

1

Summary Standalone P&L (Restated) 4

March Year Ending (INRmn) FY12 FY13 FY14 FY15 FY16 9M 2017

Total Interest Income (Net of Interest Expense) 10,707 12,603 12,222 15,365 13,280 10,911

Non-interest income 789 941 790 1,160 1,148 783

Total Income 11,496 13,543 13,012 16,525 14,428 11,694

% growth 17.8% (3.9%) 27.0% (12.7%)

Employee Benefits Expense 1,105 1,223 1,048 1,614 1,404 1,153

Depreciation and Amortisation 46 49 42 54 45 32

Other Expenses 300 408 474 388 434 274

Corporate Social Responsibilities Expenditure 209 102 105 32 47 23

Operating expenses 1,659 1,782 1,670 2,088 1,930 1,482

Pre-Provision Operating Profit 9,836 11,761 11,343 14,437 12,498 10,212

% margin 85.6% 86.8% 87.2% 87.4% 86.6% 87.3%

Provisions 439 1,354 92 2,738 1,292 2,806

Exceptional Items 0 199 (203) 0 52 3

Profit Before Tax 9,397 10,606 11,048 11,699 11,258 7,410

% of total income 81.7% 78.3% 84.9% 70.8% 78.0% 63.4%

Tax Expense 3,182 3,609 3,708 4,016 3,151 2,447

Profit After Tax 6,216 6,997 7,340 7,683 8,107 4,963

% of total income 54.1% 51.7% 56.4% 46.5% 56.2% 42.4%

18

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

Summary Standalone Balance Sheet (Restated)

Summary Standalone Balance Sheet

(Restated) 4

March Year Ending (INRmn) FY12 FY13 FY14 FY15 FY16 9M FY17

Share Capital 20,019 20,019 20,019 20,019 20,019 20,019

Reserves and Surplus 39,888 45,130 51,300 57,786 64,700 69,663

Net Worth 59,907 65,149 71,319 77,805 84,719 89,682

Borrow ings 199,666 188,675 213,048 234,678 256,090 248,428

Provisions 4,285 4,474 4,063 4,509 4,670 4,079

Deferred Tax Liability (Net) 3,504 4,164 4,951 5,069 4,857 4,559

Other Liabilities 7,590 7,027 8,864 9,077 8,480 14,228

Total Liabilities 274,952 269,489 302,244 331,137 358,816 360,976

Loans and Advances 226,788 247,621 282,143 310,431 338,051 342,877

Investments (including current / non-current) 12,240 6,840 7,539 7,557 3,685 3,685

Cash and Bank Balances 27,788 6,968 2,719 2,849 5,901 3,872

Fixed Assets 852 887 949 995 1,009 1,036

Other Assets 7,284 7,174 8,895 9,305 10,170 9,505

Total Assets 274,952 269,489 302,244 331,137 358,816 360,975

Gross Loan Portfolio FY12 FY13 FY14 FY15 FY16 9M FY17

Housing Loans 78,752 96,614 116,959 112,282

Social housing 47,208 67,217 82,007 77,552

Residential real estate 24,450 25,612 28,758 28,976

HUDCO Niw as 7,093 3,785 6,195 5,754

Individual Retail Loans 1,896 1,664 1,408 1,316

Bulk Retail Loans 5,197 2,121 4,787 4,437

Urban Infrastructure 221,367 234,734 239,690 251,577

Water supply 37,518 56,375 72,837 84,851

Roads and transport 60,741 60,413 60,409 61,425

Pow er 76,262 71,381 53,798 52,256

Emerging sectors 16,363 19,319 18,141 21,266

Commercial infrastructure and others 12,242 11,346 16,624 14,110

Social infrastructure and area development 12,332 9,434 10,333 10,446

Sew erage and drainage 5,908 6,466 7,548 7,223

Total Loan Portfolio 300,118 331,349 356,649 363,859

Loan Mix

Housing share 26% 29% 33% 31%

Urban Infrastructure share 74% 71% 67% 69%

Social Housing share (as a % of total hosusing) 60% 70% 70% 69%

19

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

1. Dividend pay-out ratio refers to ratio of total dividend (including dividend distribution tax) to profits after tax.

2. Return on equity is calculated by dividing the profit after tax for the period by average shareholders’ equity at the end of the period, expressed as a percentage.

3. Return on average assets (after tax) is calculated by dividing the profit after tax for the period by the average total assets for the period.

Balance Sheet Highlights

Dividend and Dividend Pay-out Ratio1

Return on Equity2

Average Shareholders’ Funds as % of Average Total Assets

15.9% 15.7% 15.5%

FY14 FY15 FY16

12.1% 12.9%

13.7% 13.1%


23.9% 23.5% 23.6% 24.2%


Cost to Income Ratio

Return on Average Assets (After Tax)3

Long-term Debt to Equity Ratio

10.8% 10.3% 10.0% 7.6%


2.6% 2.4% 2.3% 1.8%


2.9x 2.7x 3.0x 2.8x


4

Basic / Diluted Earning Per Share of INR10/- each

3.7 3.8 4.0 2.5

FY14 FY15 FY16 9MFY17

Net Asset Value per Equity Share

35.3 38.6 42.0 44.5


1,170 1,205 1,204 Dividend

(INRmn)

20

Experienced Board & Management

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

Experienced Board of Directors

Name On HUDCO

Board since Bio

Ravi Kanth Medithi

Chairman and

Managing Director

2014

Retired Indian Administrative Service Officer

29+ years of experience in public administration

Previously, served Projects and Development

India Limited as its Chairman and Managing

Director and Nuclear Fuel Complex, Department

of Atomic Energy as its Deputy Chief Executive

Nand Lal Manjoka

Director – Corporate

Planning

2013

33+ years of experience in construction, planning,

business development, and operations

Associate Member, Institute of Engineers, India

Previously, associated with Container Corporation

of India as its ED – Planning and Business

Development

Rakesh Kumar

Arora

Director – Finance &

Chief Financial

Officer

2015

32+ years of relevant industry experience

Fellow member of the Institute of Chartered

Accountants of India & Associate member of

Institute of Company Secretaries of India

Previously, worked with Rural Electrification

Corporation Limited as ED – Finance

Jhanja Tripathy

Government

Nominee Director

2014

30+ years of experience in finance, vigilance and

administrative functions

Previously held various positions with various

ministries of the Government of India

Name On HUDCO

Board since Bio

Rajiv Ranjan Mishra

Government Nominee

Director

2015

Indian Administrative Service Officer

29+ years of experience with various ministries

and government departments

Previously, served as Principal Secretary,

Infrastructure and Investment Department and

Ex-Officio Mission Director, National Mission for

Clean Ganga

Mukesh Maganbhai

Arya

Independent Director

2016

35+ years of experience in public administration

Independent Member of the World Health

Organisation Advisory Committee

Director and Treasurer of Association of Certified

Fraud Examiners (India chapter)

Chetan Vamanrao

Vaidya


2016

Director, School of Planning and Architecture,

New Delhi

Former Chairman of the All India Council of

Technical Education

Amarishkumar

Govindlal Patel


2016

Business experience in the trade of chemicals, in

the state of Gujarat

Former member of Gujarat Legislative Assembly

5

21

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

Human Resources

1. Includes IT, Eco., OL, PS, PR, CS, etc.

2. Includes CMD, DCP, DF & CVO (Additional Charge)

With an objective to infuse fresh talent, HUDCO has initiated process of recruitment of 65 Officer Trainees in various

disciplines (i.e. Finance, Technical and Legal)

HUDCO is equipped with a multi disciplinary Human Resources Team comprising of 75% executives, of which 32% are women employees

As at January 31, 2017, Company has 845 full-time employees with diverse qualifications in areas such as finance, economics, architecture, engineering, law, planning

and designing, and sociology. This large and diverse pool of talent enables HUDCO to better appraise loan applications, monitor and recover loans and raise funds

Members of the senior management team, which includes Senior Management Personnel, have an average of 23 years’ experience in the finance industry and have been

associated with the Company for an average of 21 years

Overview of Human Resources

Category–wise breakdown of total employees

175

425 39

206

214

631

Non-Executives Executives

Male Female

111

154

39 67

260

Finance Project /Technical

Law HR &Administration

Others

Discipline–wise breakdown of executive employees

2

849 full-time employees

1

25%

75% 18% 24% 6% 11% 41%

% of total employees % of total executive employees

22

Strategy

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

Strategy

Grow Loan Portfolio with a

focus on Housing Finance

and Social Housing

Focus on housing finance loans which offers (i) better NIM (4.26%1 for housing v/s 4.25%1 for urban infrastructure) (ii)

lower gross NPA (3.08%1 for housing v/s 8.46%1 for urban infrastructure)

Benefit from State government initiatives to help build new dwellings for the LIG, EWS & rural population

1

Focus on sanctioning Loans

to State Governments and

their Agencies

Focus on sanctioning loans to State Governments to avoid credit risk of private sector entities

Sanctions to State Govt. and their Agencies represent 99.93%1 of total sanctions

Gross NPAs for loans made to the private sector were 61.62% compared to 0.84% for loans made to State

Governments and their agencies

Although HUDCO’s Board only ceased the sanctioning of new Housing Finance loans to private sector, the

management has decided to cease sanctioning new Urban Infrastructure Finance loans to private sector entities

2

Increasing Geographical

Reach to Smaller Cities Increase geographical footprint in smaller cities to cater to increasing financing requirements in these cities 3

Government Housing and

Urban Infrastructure

Programmes

Continue to participate in the implementation of government housing and urban infrastructure programmes such as

DAY-NULM, JNNURM and PMAY-HFA (Urban), among others 4

Decrease Interest Rate and

Liquidity Risks

Since Sep 2015, have been incentivizing State Governments and their agencies to avail fixed interest rate loans (for all

loans except HUDCO Niwas) by keeping the fixed interest rates lower than floating interest rates 5

Raise Funds from Diverse

Sources

Approaching the Government of India to issue more tax free bonds and approaching NHB for additional refinancing which

are low cost sources of funding 6

1. As of December 31, 2016. 23

Appendix

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

Details of Interest Earning Assets and

Interest Bearing Liabilities

Interest-earning Assets1 Interest-bearing Liabilities1

339,374 346,114 2,700

3,567 473

Loans Investments Fixed deposits Others Total interest-earning assets

(INRmn)

25,831 26,136 165

124 16


(INRmn)

10.15% 8.17%

4.62% 4.62%

10.07%


Average Balance

Interest Income

Average Yield2

239,239 252,259 13,020

Borrowings Deposits Total interest-earningliabilities

(INRmn)

14,172 15,086 914


(INRmn)

7.90%

9.35%

7.97%


Average Balance

Interest Expense

Average Cost2



1. As of December 31, 2016. 2. Annualized basis. 3. Others include staff advances and loan against public deposits accepted by HUDCO.

3

24

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

108,821 37 3,173 248

227,592 1,423 19,826 38 2,700 363,858

29.91% 0.01% 7.88% 0.07%

62.55% 0.39% 5.45% 0.01% 0.75% 100%

Standard Substandard Doubtful Loss Standard Substandard Doubtful Loss Standard Total LoanPortfolio

Standard Substandard Doubtful Loss Total Loan Portfolio

Classification and Provisioning

Requirements under HFC Directions

Housing finance loans Urban infrastructure finance loans Urban

infrastructure finance

project-linked bonds

Amount (INRmn)

Asset classification Period of default Provisioning

required

Standard assets <=90 days 0.40%

Standard assets (with respect to

commercial real estate) <=90 days 0.75%

Standard assets (with respect to

other commercial real estate) <=90 days 1.00%

Substandard assets 91 days – 1 year 15.00%

Doubtful assets

1 – 2 years

2 – 3 years

>3 years

25.00%

40.00%

100.00%

Loss assets N.A. 100.00%



Note: Loans and advances to HUDCO employees and other loans that are not part of one of HUDCO business sectors are not included in the above chart. As at December 31, 2016, these other loans and advances

totaled INR656.1mn net of provisions.

Percentages represent % of

total loan portfolio

25

R=42

G=72

B=129

R=211

G=76

B=137

R=232

G=92

B=39

R=109

G=35

B=39

R=8

G=161

B=73

R=65

G=180

B=219

Thank You

26

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