CEO Speak
Dear Shareholder,
Housing is one of the three basic needs for all human beings across the income
spectrum. Housing is twice blessed–at the individual level, in terms of improving
their quality of life and at the macro level in terms of capital formation by boosting
household savings, backward and forward linkages with other sectors. Home ownership has
emerged as an individual and a social goal in our country. Housing brings financial
security constituting as it does for low and middle income Indians their most valuable
asset. In addition, it generates emotional and psychological well being. As it is said, housing
is a verb and not a noun.
Housing is a basic necessity. Yet a large number of households do not have access to
decent housing, particularly in a developing country like ours. In view of the importance
of housing, a key element of public policy in many countries has been to encourage house
ownership largely through fiscal incentives and better availability of housing finance.
While development of housing finance in advanced countries has a long history, the
expansion of housing finance by the formal financial sector in India is relatively of a
recent origin.
The major focus at Sahara Housingfina Corporation Limited (SHCL) has been to provide
home loans to individuals and families for purchase, construction, extension, repair and
renovation of houses. The Company has also developed loan products for the families in the
self-employed category where formal income proofs are not easily available and the
repayment capacity of such families are appraised based on their cash flows. The Company
has devised loan products to cater to the varying needs of its customers including those
of urban poor; a growing community of borrowers across the industry.
During the year ended March 31, 2013, your Company recorded a gross total income of Rs.
2152.22 lacs, Profit Before Tax (PBT) of Rs. 264.55 lacs and Profit After Tax (PAT) of Rs.
200.51 lacs. The Net Owned Fund (NOF) & Assets under Management (AUM) of the Company
as on March 31, 2013 stood at Rs. 2890.52 lacs and Rs. 15729.89 lacs, respectively.
Earnings Per Share (EPS) as on that date was Rs. 2.86. It is important to mention that
despite more than 100% increase in the business during the year (incremental loans), the
Company’s PAT and consequently the EPS declined marginally in comparison to previous
financial year as a result of additional provisions on Standard Loan Assets to the tune of
Rs. 61.16 lacs as regulatorily prescribed. There is clearly still a long way to go before
the company can be said to be fulfilling its potential.
The Company continues to face challenges like resource mobilisation to generate new
business, and other common challenges facing the Industry like managing higher cost of
funds, maturity mismatches (asset-liability mismatches), containing non-performing assets
(NPAs), rising interest rates, thinning profit margins and fierce competition despite a
robust demand.
Keeping in view the demand-supply gap, our favourable demography, increasing
urbanisation and better growth prospects, the demand for housing finance will continue to
grow. The challenge, therefore, is expansion of housing finance to a wider section of the
population with the necessary safeguards to preserve financial stability.
With the trust and confidence of our valued customers and investors and the support of
the Regulator and the lending institutions, SHCL will be surely able to establish itself
as a prominent player in the Housing Finance sector in India.
D. J. Bagchi
Chief Executive Officer