icici home finance company ltd Management discussions

ICICI HOME FINANCE COMPANY LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY OVERVIEW: During the year there has been a huge demand-supply gap in the housing sector. The trend is towards urbanization and smaller households, which will further push up the demand for urban housing. The housing requirement in India as per the National Housing Bank survey is estimated to be 26.53 million houses in urban India and 47.43 million houses in rural India during the period 2007-2011. Cities with more than 1 million population are set to grow from 35 in 2001 to 72 by 2011. However, the high interest rates coupled with the increase in the property prices in 2007-2008 have resulted in slow down in the demand as compared to previous years. The immediate market situation notwithstanding the growth of mortgage finance is expected to be sustained over the next decade. In the last few years the property market in India has undergone a major transformation, and in some ways aligned itself with global standards. The developer community has become more professional, ensuring better quality and timely delivery. Real estate developers are now using new sources of finance like IPO, Private Equity, AIM listing, SPVs, REITs, etc. At the same time there is an increase in investor interest in the sector. OPERATIONAL REVIEW: Your Company continued to serve as the focal point for marketing, distribution and servicing of home loan products. In addition, your company keenly looks at every step in the entire value chain of real estate, which starts as a land transaction and culminates in an end user moving into a property, as a business opportunity for the Company. Retail housing customers expect greater transparency, reliability, professional standards and convenience in the process of searching for their homes. The Company has made significant gains in the business of retail property services through the brand ICICI Home Search. The Company also made significant progress in the commercial real estate space and provided advisory services to corporate and developers in the aforesaid segment. This has driven growth in fee income. The Company has started a separate business vertical that shall focus on sourcing ICICI HFC Fixed Deposits. The objective is to optimize cost of resources. ICICI HFC Fixed Deposits have received the highest credit ratings of AAA by CARE and MAAA by ICRA.