Dewan Housing Finance Corporation Ltd Management Discussions.

GLOBAL ECONOMIC OVERVIEW

Global economy has been impacted by various factors including COVID-19. As per the World Economic Outlook, Global growth is projected at -4.9% in 2020, COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated and the recovery is projected to be more gradual than previously forecast. In 2021, global growth is projected at 5.4%. Overall, this would leave 2021 GDP around 6.5% lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.

Effective policies are essential to forestall worse outcomes. Necessary measures to reduce contagion and protect lives will take a short-term toll on economic activity but should also be seen as an important investment in long-term human and economic health. The immediate priority is to contain the fallout from the COVID-19 outbreak, especially by increasing health care expenditures to strengthen the capacity and resources of the health care sector while adopting measures that reduce contagion. Economic policies will also need to cushion the impact of the decline in activity on people, firms, and the financial system; reduce persistent scarring effects from the unavoidable severe slowdown and ensure that the economic recovery can begin quickly once the pandemic fades.

INDIAN ECONOMY AND INDIAN FINANCIAL SECTOR

India has emerged as one of the fastest growing major economy in world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

As per the provisional estimates of Central Statistics Organisation (CSO), the growth of Indias real GDP during financial year 2020 is estimated at 4.2%, as compared to 6.1% in financial year 2019. Further, COVID-19 outbreak has raised fresh challenges for the Indian economy, causing severe disruptive impact on both demand and supply side elements.

Indias GDP is expected to reach US$ 5 trillion by financial year 2025 and achieve upper-middle income status on the back of digitization, globalization, favorable demographics, and reforms.

India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior and expenditure pattern, according to a Boston Consulting Group (BCG) report. It is estimated to surpass USA to become the second largest economy in terms of Purchasing Power Parity (PPP) by 2040 as per a report by Price Waterhouse Coopers.

The Indian Economy also has been adversely affected due to the effects of COVID-19. It is evident that the economic slowdown is real, consumer confidence is declining. Lending has been the most topsy-turvy space in the financial services in India. Even the most prudent ones, barring a few backed by large corporate groups, had to manage their books, capital & fund raising plans.

The Government has taken a series of measures to generate demand and ease the liquidity by ensuring public sector banks lend further to Non-Banking Financial Companies (NBFCs), introducing partial credit guarantee scheme, etc. Outlook for the financial year 2020-21 right now is cautious from an industry point of view.

OVERVIEW OF HOUSING FINANCE SECTOR

Housing finance market has seen a steady growth over the years with the overall share of outstanding individual housing loans of banks and Housing Finance Companies (HFCs) to GDP (at market prices) having increased from 6.6% in financial year 2010-11 to 9.6% in financial year 2019-20.

The Housing Finance industry has been under stress since September 2018 and continued to suffer on account of lack of credit availability, muted investor confidence, sluggish real estate demand and rising NPAs. During first half of the financial year 2020, most NBFCs / HFCs were not able to raise funds from the banks and mutual funds. The credit off-take improved in second half and banks actively participated in entering into securitization transactions with high rated HFCs / NBFCs having good track record and better portfolio quality.

The Government of India announced a partial credit guarantee scheme for first loss of up to 10% for 6 months to public sector banks to buy high rated pooled assets of NBFCs and HFCs of up to Rs 1,00,000 crore to enable funding.

During the financial year 2019-20, Reserve Bank of India (RBI) vide its press release dated August 13, 2019, had announced transfer of regulation of HFCs from National Housing Bank (NHB) to RBI. Pursuant to the said Press Release, RBI had stated that RBI would carry out a review of the extant regulatory framework applicable to the HFCs and come out with revised regulations in due course and till such time, HFCs shall continue to comply with the directions and instructions issued by the NHB and that NHB will continue to carry out supervision of HFCs and HFCs will continue to submit various returns to NHB as hitherto. RBI vide Press Release dated June 17, 2020, further stated that RBI has undertaken the said review and has identified a few changes which are proposed to be prescribed for HFCs and had placed a draft framework on its website for public comments by July 15, 2020, for consideration before issuing the final guidelines. Also, with banks transitioning to external benchmark linked pricing of loans, there would be greater transparency in pricing of home-loans across various providers of finance to home loan buyers. In order to provide a growth impetus to the housing sector, multiple policy measures were announced, some of which were reduced GST on certain category of housing, income tax relief for home loan customers and developers of affordable housing, measures to introduce liquidity for home loan providers like relaxation of on-lending guidelines, relaxation of minimum holding periods in securitisation/assignment guidelines and NHBs Liquidity infusion facility.

The Government of India further announced a slew of wide- ranging reforms across varied sectors amidst a comprehensive package aggregating Rs 20 lakh crore or approximately 10% of nominal GDP which covered among others direct cash transfers and food security for vulnerable sections of society; collateral free loans and concessional credit to farmers and street vendors; enhancement of systemic liquidity by the RBI; special liquidity and partial credit guarantee scheme to provide liquidity to NBFCs, HFCs, Micro Finance Institutions and mutual funds; 100% credit guarantee scheme for aggregate of Rs 3 lakh crore of emergency credit lines by banks and NBFCs to their Micro, Small and Medium Enterprises (MSMEs) borrowers, and subordinated debt and equity support to MSMEs. The Government has also initiated compliance relief measures across various regulatory requirements. The RBI has initiated several measures like reduction in policy rates, monetary transmission, credit flows to the economy and providing relief on debt servicing.

To ease liquidity pressure on NBFCs and HFCs, the RBI has taken multiple actions, including a Targeted Long-Term Repo Operation (TLTRO) for the sector of Rs 50,000 crore and a special financing window through SIDBI, NABARD and NHB of another Rs 50,000 crore to enable financing NBFCs and HFCs.

OPPORTUNITIES AND RECENT DEVELOPMENTS IN HOUSING FINANCE INDUSTRY

The Government of India, along with the governments of respective states, have taken several initiatives as follows which are expected to encourage the development in the sector.

In order to revive around 1,600 stalled housing projects across the top cities in the country, the Union Cabinet has approved the setting up of Rs 25,000 crore (US$ 3.58 billion) Alternative Investment Fund (AIF).

Under Pradhan Mantri Awas Yojana (Urban) [PMAY (U)] 1.12 crore houses have been sanctioned in urban areas creating 1.20 crore jobs.

The Government has also extended the deadline for first time home buyers to avail additional Rs 1,50,000 interest deduction on home loans by a year till March 31,2021 apart from making more homes available under affordable housing by extending benefit under Section 80-IBA of the Income Tax Act for one more year i.e., upto March 31,2021 for affordable housing projects.

Pradhan Mantri Awas Yojana (PMAY) scheme has also been continued with subsidy benefit to the eligible Home Loan borrowers.

THREATS FOR HOUSING FINANCE SECTOR

The credit growth of HFCs is likely to be lower at 9-12% in financial year 2020-21, vis-a-vis last three years compounded annual growth rate of 16% in the backdrop of the COVID-19 outbreak, according to ICRA. The credit rating agency opined that people will defer home purchases and home improvement/ extension decisions till they are able to achieve stability in income levels / resumption of business activities. ICRA cautioned that asset quality of all segments of housing loans could be impacted, and within housing, the asset quality in the affordable and self- employed segment could worsen, compared to the salaried segment.

COVID-19 will impact demand for home loans and further accentuate the Application Lifecycle Management challenges of the HFC sector. The RBIs moratorium measures for customers are likely to put additional stress on many HFCs. The COVID-19 pandemic is also expected to result in a deterioration in the asset quality of the financial sector. HFCs too will face similar pressures. Early indicators of non-delinquent customers opting for moratoriums reflect a considerable level of anxiety from customers. It remains to be seen how this anxiety eases when economic activities resume. A long-drawn lockdown or frequent lockdowns of economic activities may require RBI to frame forbearance schemes for impacted customers without impacting asset classification.

BUSINESS AND OPERATIONAL OVERVIEW

Your Company is a Housing Finance Company (HFC) with a pan India presence catering mainly to lower and middle income customer segments in Tier II and Tier III towns of India, with a focus on providing housing finance and related products for the underserved majority, primarily through home loans provided to the Low and middle Income (LMI) segment in India. Your Company provides finance primarily to individuals, partnership firms and companies for the purchase, self-construction, improvement and extension of homes, new and resale flats, commercial properties and plots. Your Company also provides other non-housing loan products including loans against property, lease rental discounting, loans to SMEs and loans to finance the construction of residential and commercial projects.

While in major part of the financial year under review the business of your Company was minuscule at a low level, by February 2020 the retail lending operations were recommenced primarily to cater to the Lower and Middle Income segment, however, the same also got impacted due to the COVID-19 pandemic and consequent extended lockdown.

Material Impact of COVID-19 on Company

The COVID-19 pandemic outbreak and the resultant lockdown in the country had impacted various functions of your Company including Head Office and branch operations, collections and field visits and also new disbursements. During the initial phases of lockdown till about May 31, 2020, wherein strict restrictions on mobility were in force, your Companys Head Office and branches, micro-branches remained shut and could not function, in compliance with the Government guidelines. Due to swift adaption of alternate technology, Work from Home (WFH) enablement and other functional and connectivity support, a large number of employees of your Company were able to carry on with the day-to-day operations even during the lockdown.

In the month of April 2020 and May 2020, about 32% and 36% of the retail borrowers respectively, availed moratorium. During this period, the retail collections of your Company were impacted on account of the moratorium availed by the borrowers and due to the restricted movement of collections and field officers. In the month of April 2020, your Companys team contacted about 60% of its retail borrowers who had availed moratorium facility to explain them about the impact of moratorium on their loan accounts and also encouraged them to make the regular payments as per the monthly EMI payment cycle. In June 2020 even while the moratorium was extended to the customers, extensive awareness and collections campaign helped your Company reduce its under-moratorium borrower position from 36% in May 2020 to 27% in June 2020 in terms of count.

During the lockdown period, your Company also undertook an exercise to identify potentially stressed accounts and follow-up was ensured. With comprehensive efforts to improve collections, your Company has been able to significantly reduce the quantum of its overdue (irregular) retail accounts.

The retail disbursement process of your Company, which was commenced in the end of February 2020, was impacted during the lockdown owing to the restriction on conducting field visits for due-diligence and other verification processes. The outsourced call centre activities of your Company were affected during the lockdown, however, the agency was able to revive the operations with WFH enablement within 10 days and the teams commenced the operations in limited way and gradually scaled to near full level by end of May 2020.

Your Company has been closely monitoring the prevalent situation and would continue to take all necessary steps as required to maximise the value of your Company and continue the organisation as a going concern.

Inter-Creditor Agreement

RBI on June 7, 2019 had issued “Prudential Framework for Resolution of Stressed Assets” for early resolution of stressed assets in a transparent and time-bound manner, giving complete discretion to lenders with regard to design and implementation of resolution plans. As your Company was under stress due to liquidity issue of the industry as well its own, and also due to various adverse media reports on the functioning of your Company, the lenders initiated appropriate action.

As per this framework, lenders shall undertake a prima facie review of the borrower account within thirty days from such default (Review Period). During this Review Period of thirty days, lenders may decide on the resolution strategy, including the nature of the Resolution Plan (RP), the approach for implementation of the RP, etc. In cases where RP is to be implemented, all lenders shall enter into an Inter Creditor Agreement (ICA), during the above-said Review Period, to provide for ground rules for finalization and implementation of the RP. RP shall be implemented within 180 days from the end of Review Period. The ICA shall provide that any decision agreed by lenders representing 75% by value of total outstanding and 60% of lenders by number shall be binding upon all the lenders. The RP may involve any action / plan / reorganization including, but not limited to, regularization of the account by payment of all overdues by the borrower entity, sale of the exposures to other entities / investors, change in ownership and restructuring.

Your Company which was already working with creditors for a restructuring plan with possible stake sale to strategic investors, was brought under the new guidelines of RBI and an ICA process was set into motion. By July 5, 2019, all major banks signed the ICA and RP process could be initiated immediately thereafter. 27 banks including all term lending banks and banks holding Non Convertible Debentures (NCDs), NHB, LIC and NABARD signed the ICA in due course of time. Your Company and lenders, each appointed leading RP advisors to help draft the Plan. All key processes for drafting RP, including valuation / liquidation valuation, legal due diligence and rating process for RP rating were undertaken. Over the next 90 days during July and September 2019 multiple sittings were organized with ICA members. Joint Lenders Forum (JLF) including NCD and Fixed Deposit (FD) holders were held to explain the RP framework under consideration. Voting process was undertaken to obtain mandate from NCD holders through the Trustee. Enabling a change in the management control was a key aspect of the RP in making, including a possible lenders led stake buy out as an interim arrangement, were kept open as options to be explored.

Considering the large investors base under NCD, obtaining mandate from 60% of investors by numbers proved challenging. First round of voting by NCD holders could garner only 28% in favor from public investors. Mutual Funds (MFs) too could not sign ICA reportedly due to the requirement to set aside your Company bonds in a side pocket prior to the default date, a condition which many MFs could not meet.

The ICA members and JLF however remained on consultative mode to find an acceptable solution to different class of investors; a flexibility which ICA offered. Multiple RP models were carved out towards this end and to secure the mandate from the requisite majority of lenders. Early September 2019, saw a leading MF moving Honble High Court of Bombay restraining your Company from making any payments to any creditors. This was followed by various litigations against your Company which impeded the ICA work from moving in an environment of coordinated approach. Consultative process came to halt. The option was to go for a court led process.

With the introduction of Section 227 of the IBC on November 15, 2019 by the Central Government bringing Financial Institutions under the ambit of IBC process, the action shifted with RBI moving in and taking control of the affairs of your Company with the supersession of the Board of Directors of your Company and appointment of Administrator as stated in detail in the Boards Report (Report of Advisory Committee Chaired by the Administrator). Currently, your Company is going through CIRP.

FINANCIAL OVERVIEW

The standalone and consolidated financial statements of your Company have been prepared as per the applicable provisions of Companies Act, 2013 and Indian Accounting Standards. The same form a part of this Annual Report.

The summary of your Companys financial statements as at March 31,2020 is as under:

Balance Sheet

Particulars

Standalone

Consolidated

March 2020 March 2019 March 2020 March 2019
Assets
Financial assets
Cash and cash equivalents 6,848.61 1,260.08 6,849.28 1,260.12
Bank Balances other than above 870.64 1,771.48 870.64 1,771.48
Derivative Financial Instruments - 171.13 - 171.13
Receivables 2.75 4.76 2.75 4.76
Housing and Other loans:
At Amortised Cost 35,470.37 66,349.97 35,470.37 66,349.97
At Fair Value 30,732.31 31,628.15 30,732.31 31,628.15
Investments 3,880.51 2,361.31 3,880.51 2,498.31
Other Financial Assets 1,483.55 1,048.07 1,483.57 1,048.09
Total Financial Assets 79,288.74 1,04,594.95 79,289.43 1,04,731.99
Non-Financial assets
Current Tax Assets (Net) 330.23 370.20 330.23 370.20
Deferred Tax Assets 5,052.15 442.81 5,043.30 433.96
Property, Plant and Equipment 853.61 782.93 853.61 782.93
Intangible Assets Under Development 105.17 104.01 105.17 104.01
Other Intangible Assets 66.69 81.75 66.69 81.75
Other Non-Financial Assets 141.24 98.60 141.24 97.14
Total Non-Financial Assets 6,549.09 1,880.30 6,540.24 1,869.99
Total Assets 85,837.83 1,06,475.25 85,829.67 1,06,601.98
Liabilities and Equity
Liabilities
Financial Liabilities
Derivative Financial Instruments - 302.51 - 302.51
Trade Payables:
(i) total outstanding dues of micro enterprises and small enterprises 0.34 - 0.34 -
(ii) total outstanding dues of creditors other than micro enterprises and small enterprises 120.88 102.05 120.88 102.05
Debt Securities 45,428.29 47,821.51 45,428.29 48,112.89
Borrowings (Other than Debt Securities) 38,410.77 40,659.95 38,410.77 40,659.93
Deposits 5,278.89 6,826.77 5,278.89 6,826.77
Subordinated Liabilities 1,294.30 1,212.51 1,294.30 1,212.51
Other financial liabilities 695.40 1,274.49 695.44 1,274.55
Total financial liabilities 91,228.87 98,199.79 91,228.91 98,491.23
Non-Financial Liabilities
Provisions 7.53 10.15 7.53 10.15
Other non-financial liabilities 139.37 163.25 139.37 163.25
Total non-financial liabilities 146.90 173.40 146.90 173.40
Total liabilities 91,375.77 98,373.19 91,375.81 98,664.63

 

Particulars

Standalone

Consolidated

March 2020 March 2019 March 2020 March 2019
EQUITY
Equity Share Capital 313.82 313.82 313.82 313.82
Other Equity (5,851.76) 7,788.24 (5,859.96) 7,623.53
Total Equity (5,537.94) 8,102.06 (5,546.14) 7,937.35
Total Equity and Liabilities 85,837.83 1,06,475.25 85,829.67 1,06,601.98

Profit and Loss Statement

Particulars

Standalone

Consolidated

March 2020 March 2019 March 2020 March 2019
Revenue from Operations
a) Interest Income 9,232.25 12,307.84 9,232.16 12,307.71
b) Dividend Income - 12.35 - 10.74
c) Fees and Commission Income 2.83 275.47 2.83 275.47
d) Net Gain on Fair Value Changes - - - -
e) Net Gain on Derecognition of Financial Instruments under Amortised Cost Category 23.97 205.83 23.97 205.83
f) Other Operating Revenue 63.18 82.39 299.00 82.39
Total Revenue from Operations 9,322.23 12,883.88 9,557.96 12,882.14
Other Income 20.89 18.64 20.89 29.52
Total Income 9,343.12 12,902.52 9,578.85 12,911.66
Expenses
Finance Costs 5,725.18 9,392.85 5,736.21 9,416.91
Net Loss on Fair Value Changes 14,996.48 2,458.37 15,034.71 2,458.37
Impairment on Financial Instruments 6,241.13 1,084.98 6,242.13 1,008.97
Employee Benefit Expense 283.29 485.33 283.29 485.33
Depreciation and Amortisation Expense 79.41 51.15 79.41 51.15
Other Expenses 265.62 594.82 265.62 594.94
Total Expenses 27,591.11 14,067.50 27,641.37 14,015.67
(Loss)/Profit Before Tax (18,247.99) (1,164.98) (18,062.52) (1,104.01)
Tax expense
Current tax - 536.40 - 536.40
Earlier Years Adjustments (11.33) 1.92 (11.33) 1.92
Deferred Tax (4,624.34) (667.25) (4,624.34) (658.40)
Total tax Expense (4,635.67) (128.93) (4,635.67) (120.08)
Net (Loss)/Profit After tax (13,612.32) (1,036.05) (13,426.85) (983.93)
Share of net profits of associates and joint ventures - - (28.96) 18.02
Other comprehensive income
(A) Items that will not be reclassified to profit or loss
(i) Remeasurements of the defined employee benefit plans (1.54) 1.29 (1.54) 1.29
(iii) Share of other comprehensive income of associates and joint ventures " - " (0.05)

 

Particulars

Standalone

Consolidated

March 2020 March 2019 March 2020 March 2019
(ii) Income tax relating to items that will not be reclassified to profit or loss 0.39 (0.36) 0.39 (0.36)
Subtotal (A) (1.15) 0.93 (1.15) 0.88
(B) Items that will be reclassified to profit or loss
(i) Cash flow hedge 53.20 25.06 53.20 25.06
(ii) Income tax relating to items that will be reclassified to profit or loss (14.88) (7.01) (14.88) (7.01)
Subtotal (B) 38.32 18.05 38.32 18.05
Other Comprehensive Income (A + B) 37.17 18.98 37.17 18.93
Total comprehensive income (13,575.15) (1,017.07) (13,418.64) (946.98)

Significant changes in key financial ratios

Particulars For the financial year 2019-20 For the financial year 2018-19
Interest Coverage Ratio -2.19 0.88
Current Ratio 0.73 0.97
Debt Equity Ratio -16.50 12.14
Operating Profit margin -134.0% 63.8%
Net Profit margin -145.7% -8.0%
Return on Net Worth -1061.8% -12%

The changes in the aforesaid ratios are largely on account of the loss suffered by your Company during the financial year 2019-20 and adverse business circumstances as detailed in this Report.

RISK MANAGEMENT

During thefinancial year under review, as per the NHB requirement, your Company appointed the Chief Risk Officer (CRO) in July 2019 and set-up the Enterprise Risk team in September 2019.

Your Companys Risk management setup was strengthened and made effective with the commencement of CIRP.

Your Company has a Risk Management Committee (RMC), which post commencement of the CIRP has been revived with the approval of the Advisory Committee. CRO was made to report to the Chief Executive Officer and directed to establish Operational Risk Management Committee (ORMC), Credit Risk Management Committee (CRMC) and Information Security Committee that comprises of members of its senior management team and these were established during CIRP. These committees meet on a periodic basis to assess the risk management system and the emergent risks your Company is exposed to.

Your Company is striving to manage its risk in a proactive manner and has adopted structured and disciplined approach to risk management by developing and implementing risk management framework. With a view to manage its risk effectively, your Company has put in place an Enterprise Risk Management Policy which covers a formalized Risk Management Structure, along with other aspects of Risk Management i.e. Credit Risk Management, Operational Risk Management and Fraud Risk Management. The Risk Management Committee of your Company, on periodic basis, assess the risk management systems, processes and minimization procedures of your Company. During the financial year under review, during the CIRP period, the risk management policy of your Company was revised to align the same with the changing business environment.

INTERNAL CONTROL SYSTEMS

With commencement of CIRP, your Company has put in place a system of internal controls for business processes, operations, financial reporting, fraud control, and compliance with applicable laws and regulations, among others. These internal control and systems are devised as part of the principles of governance.

Your Company has an Internal Audit Department, which provides comprehensive audit coverage of functional areas and operations of your Company to examine the adequacy of and compliance with policies, procedures, statutory and regulatory requirements. Annual audit plan is placed before the Audit Committee / Advisory Committee and adherence to the plan is reported quarterly to the Audit Committee / Advisory Committee.

Compliance status of audit observations and follow up actions thereon are reported to the Audit Committee / Advisory Committee. The Audit Committee / Advisory Committee reviews and evaluates adequacy and effectiveness of your Companys internal control environment and monitors the implementation of audit recommendations.

Internal audit also assists the management in identifying operational risks for revenue leakage and opportunities for cost savings and revenue enhancements; ensures working within the regulatory and statutory framework and facilitates early detection and prevention of frauds.

The Internal Audit function continues to report to the CRO as an interim arrangement during the presently ongoing CIRR

Internal Audit function is accountable to the Board of Directors through the Chairman of the Audit Committee / Advisory Committee through the Administrator.

However, during the CIRP period it is observed that internal audit effectiveness was lacking during the earlier period and its independence is being established now with a view to prevent the lapses identified by the transaction avoidance auditor.

HUMAN RESOURCES

Human Resources are the most important asset of any financial services organization. In the backdrop of the crisis that your Company was in, your Company faced increased attrition during the first half of the financial year. While the challenges ensued, your Company conducted various restructuring activities internally to manage the people crisis. The erstwhile management was unable to fill up the KMPs and the positions vacated by the senior management who left your Company in the first half of the financial year. During the CIRP, your Company was also able to attract talent, through lateral hiring, to fill key management positions which have enabled your Company to bring in best industry practices of governance and compliance.

Your Company also undertook proactive measures to ring- fence critical talent through a Deferred Incentive Plan which was initiated during the ICA process and effectively finalized during the CIRP. This has helped your Company to reduce attrition significantly, and also had a positive impact on business operations and continuity.

Your Company also actively encouraged cross utilization of resources to avoid the need of hiring from the market, and also to nurture multi-tasking skills in employees. This ensured that all employees of your Company were productively employed, and also helped your Company save on hiring costs and wherever necessary strengthened its hiring process to ensure economical quality hires.

While being cost conscious during the CIRP period, your Company implemented projects through cross functional teams to help it move into the next phase of leadership and strategic partnership. This ensures the system and its machinery to remain active for the business continuity and growth. Furthermore, your Company has also drawn out its succession plans to maintain business readiness for the next stages of change.

During this period, your Company re-assessed all its internal policies and practices and brought in measures to make them more compliant as well as mitigate risks that it was being exposed to.

During the end of the fiscal your Company, along with the entire globe, faced an unprecedented situation of a pandemic.

Business Continuity and Employee Safety Plan was activated to ensure compliance with all national and local guidelines, at the same time maintaining continuity of business operations, specific functional guidelines were designed. Continuity of all functions was ensure without any downtime through a robust BCP strategy and collaborative cross-functional efforts.

Engagement through effective communication:

Your Company also enhanced its internal communication channels to ensure effective two-way communication for information to reach the last mile.

With the commencement of CIRP the continuous engagement with the entire workforce through Webinar/ Townhall meetings was initiated to ensure constant flow of information and keep the morale of the workforce high and reduce attrition.

With the various interventions, throughout the functions your Company saw a sharp decrease in attrition. As on March 31, 2020, your Companys total workforce was 2,179 as against 3,320 on March 31, 2019. The manpower is in line with your Companys operations and geographical reach, especially in Tier II and Tier III cities, towns and peripheral suburbs.

Learning and Development

The Learning and Development (L&D) departments role is to align employee goals and performance with that of your Companys. The department is responsible for identifying skill gaps among employees and teams and then develop training modules and deliver them to bridge those gaps basis the organizations learning strategy.

The department operates on the foundation that your Companys employees are the greatest asset. The department plays a critical role liaising with cross functional teams to identify employee learning needs, ensure the employees are able to meet the challenges of their jobs and that they are aligned to the business goals of your Company. It has been working closely with the learners to ensure the training interventions improve productivity and motivate them to perform with renewed vigor and zeal. The L&D team is evolving to constantly upgrade their skills and knowledge and utilize the knowledge and expertise of Subject Matter Experts from the different functions to meet your Companys goal. The team has utilized their in-house capability to develop content and train the employees on their online learning management system, classroom and virtually through the webex platform. The L&D team has been constantly training the employees on the changes in the policies and documentation process to ensure all operate with the new plans.

In the last financial year training was imparted to 2,100 on roll employees and 2,543 off roll employees, covering all Mandatory Modules which ensures the employees are aware and updated on important policy guidelines namely Information Security, Know Your Customer & Anti Money Laundering, Prevention of Sexual Harassment, and Code of Business Ethics.

The Mandatory Induction Program for the new joinees is conducted Online as part of the employee on boarding, it provides an overall view of your Companys vision and mission, ensures the new joinee is aware of the important policy guidelines namely Information Security, Know Your Customer and Anti Money Laundering, Prevention of Sexual Harassment and Code of Business Ethics.

In keeping with its importance and in compliance with National Housing Bank norms, trainings on Know Your Customer and Anti Money Laundering, with a total coverage of 2,075 employees were also imparted at all levels within your Company.

Taking concrete steps based on the study findings is helping your Company in building a stronger and more engaged workforce. Customer focus remains at the core of all L&D initiatives.

Your Companys Human Resources initiatives and L&D systems are designed to ensure an active employee engagement process, leading to better organizational capability and vitality for maintaining a competitive edge and in pursuing its ambitious growth plans.

To further enable insurance product solicitation, procuring and servicing on behalf of your Company, 203 employees were identified across Branch Network of your Company to be the ‘Insurance - Specified Person(s), who were sponsored post commencement of CIRP to undergo Insurance Regulatory and Development Authority of India (IRDAI) prescribed mandatory 75 Hours of Training and Examination to fulfill requirements of obtaining Certificate of Registration with IRDAI.

Outlook

With regard to the future operations of your Company, as the Corporate Insolvency Resolution Process (CIRP) is in progress, your Companys future is linked to the outcome of the Resolution Plan as may be approved by the Committee of Creditors and to be submitted to Honble National Company Law Tribunal for its approval.

The Administrator and the Advisory Committee set up by the RBI to assist the Administrator in discharge of their duties, exercise oversight on the operations of your Company apart from running the CIRP process in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (the Code) and rules framed undertheCode. The present management has undertaken various steps and several initiatives recently including various efforts to strengthen the financial policies and processes, functioning of the IT system, loan / security documentation, legal audit, internal financial controls and updating risk control matrices, risk and fraud risk management, through in- house resources and engagement of external professional experts/consultants. The management team has also initiated steps for comprehensive compliance of various applicable rules and regulations within your Company. The betterment process is a continuous effort and the same is impacted due to the COVID-19 situation and the resultant lockdown. The present management team believes that these initiatives will strengthen your Companys overall governance structure and control environment. On conclusion and implementation of all such initiatives, it is believed that the operational efficiency will improve and operational issues will get addressed.

On the back of a disruption in the economy as a result of widespread outbreak of the COVID-19, financial year 2020-21 is likely to be a year of consolidation rather than growth. However, we expect that a major fall in new housing unit sale will not affect your Companys turnaround prospects. Your Company had taken many cost-cutting steps. A close introspection of the business of your Company will infer that more focus is needed on expanding revenue base. Your Company is looking to continuously optimize its credit policy, making the relevant amendments and evolve the market-specific policies to attract customers.

Your Company will be strengthening its digital platform to maximise value addition. Your Company will be laying emphasis on restructuring the collections strategy via utilizing crossfunctional expertise and using digital methods of payments to collect overdue amounts. Your Company continuously working on using this interface effectively and efficiently. Despite the challenges induced by the lockdown your Company is prepared to deal with the evolving business scenario.