Housing remains a basic need that provides a place to 'rest & roost' to theindividual. It also simultaneously serves as a valuable collateral enabling access tocredit from the financial market.
India is witnessing constant increase in urban population. Nearly 30 per cent of thecountry's population lives in cities and urban areas - double the level of urbanization atthe time of Independence in 1947 and projected to reach 50 per cent in 2030. Within theurban population, the ability to borrow from the formal market of the rapidly growinginformal sector is not adequately recognized resulting in a new challenge for thepolicymakers and financiers. Although there has been continued deepening and broadening ofthe financial system, through a series of comprehensive financial reforms, the outstandinghousing loans account for only 7.25 per cent of India's GDP, when compared with China (12per cent), Thailand (17 per cent), and Malaysia (29 per cent).
Housing finance sector in India has experienced buoyant growth over the past severalyears. Though there is no lack of demand for housing, there is shortage of credit flow.New initiatives towards building an appropriate market infrastructure would support thegrowth and development of an efficient and transparent demand driven housing market in thecountry, particularly for the low and moderate income households. Financial penetration inthese market segments is still low. The need to develop the right business model isclearly recognized by the policymakers, regulators and the industry. This will addressvarious aspects of affordability such as efficient financing, risk mitigation, creditenhancement and specialist approach that can result in more innovative products. Parallelintervention on the supply side by way of better land governance, infrastructuremanagement, new innovative technologies in construction etc. are already engaging theattention of the planners and the Policy institutions.
During the year ended March 31, 2012, your Company recorded a total income of Rs.2017.51 lacs, Profit Before Tax (PBT) of Rs. 299.26 lacs and Profit After Tax (PAT) of Rs.221.72 lacs. The Net Owned Fund (NOF)/ Shareholders' Equity & Assets under Management(AUM) balance of the Company as on March 31, 2012 stood at Rs. 2738.51 lacs & Rs.14612.13 lacs, respectively. Earnings Per Share (EPS) as on that date was Rs. 3.17. Thedip in Company's performance, albeit marginal, was attributed inter alia mainly toinsufficiency of funds, rise in loan foreclosures/pre-payments and abolishment offoreclosure/prepayment levies on housing loans. There is clearly a long way to go beforethe company can be said to be fulfilling its potential.
The Company today faces the challenges of resource mobilisation to generation of newbusiness, apart from the other common challenges facing the Housing Finance Industry likemanaging higher cost of funds, maturity mismatches (asset-liability mismatches),containing non-performing assets (NPAs), rising interest rates, thinning profit marginsamidst fierce competition.
I am confident that with the trust and confidence of our customers, investors and thelending institutions, SHCL will be able to establish itself as a prominent player in theHousing Finance sector in India in the foreseeable future.
On behalf of the Board, the Executive Management and the entire SHCL team I thank youfor your valuable trust and seek your continued interest and support.
D. J. Bagchi
Chief Executive Officer