INTRODUCTION
Global Overview
During the year, the global economy continued to face shocks emanating from deepening
geopolitical tensions, fragmented supply chains and rising inflationary pressures
resulting in a cost-of-living crisis. Towards the end of the financial year in March 2023,
increased headwinds stemmed from the banking turmoil in some advanced economies. This
triggered concerns of potential risks of contagion, which in turn resulted in increased
turbulence across global markets
As per the International Monetary Fund (IMF), global headline inflation stood at 8.7%
in 2022. To anchor spiraling inflation, major central banks across the world resorted to
monetary policy tightening. In the current upward interest rate cycle, as of date, the US
Federal Reserve had cumulatively raised interest rates by 500 basis points (bps), the Bank
of England by 415 bps and the European Central Bank by 350 bps. The Reserve Bank of India
(RBI) increased the policy repo rate by a relatively lower amount of 250 bps. Globally,
the elevated consumer price inflation levels were well above the targeted inflation rates
of most central banks.
As per the IMFs World Economic Outlook, global GDP growth for the calendar year 2022
was 3.4%, of which GDP of advanced economies was 2.7% and emerging markets and developing
economies was 4.0%
India Overview :
The Indian economy staged a broad-based recovery from the pandemic induced slowdown.
Despite global headwinds, domestic economic activity was resilient. Most high frequency
indicators, including those that were impacted during the pandemic recorded positive
growth. As per the second advance estimates by the National Statistical Office (NSO), the
Indian economy is estimated to grow by 7% in FY23. India has continued to be the fastest
growing major economy. The Consumer Price Index (CPI) inflation for FY23 remained at
elevated levels for most parts of the year under review, aggravated by rising commodity
prices and adverse supply shocks. In the month of March 2023, with lower food and fuel
prices, the CPI eased to 5.7%, marking a 15-month low. During the year, to anchor
inflationary pressures, the RBI undertook a series of calibrated repo rate increases -
40 bps in May 2022, 50 bps each in June, August and September 2022, 35 bps in December
2022 and 25 bps in February 2023. In April 2023, the RBI kept the repo rate unchanged, but
continued with its withdrawal of accommodation policy stance. As at March 31, 2023,
year-on-year bank credit growth was robust at 15.0%, though deposits growth lagged at
9.6%. Owing to global macroeconomic risks and geo-political tensions, during the year,
foreign portfolio investors were net sellers of equity to the tune of 40,413 crore. The
Indian equity markets, however, were strongly supported by domestic institutional
investors - largely mutual funds and insurance companies who were net buyers amounting to
2.5 lac crore.
Housing and Real Estate Market
FY23 marked a year of sustained growth for the Indian real estate sector. Residential
markets saw strong traction in both, new launches and sales across the metros, tier II and
tier III cities. Despite rising costs of construction and labour, real estate prices at a
pan-India level recorded modest increases, though certain pockets, particularly in the
higher-end luxury segment saw sharper increases in prices during the year. The strong
momentum in the residential market was also evident from the fact that across the top
metro cities, the unsold inventory stood at the lowest level in the past five years.
Despite rising interest rates, the inherent demand for home loans continued on the back of
rising disposable incomes, increased urbanisation and continued fiscal incentives. The
demand for home loans was predominantly in the mid-income and premium segments. Indias
net absorption of commercial office space during the year surpassed the five year
pre-pandemic average rate. This showed the continued resilience in the India office space,
despite certain companies opting for hybrid/ flexible work models. In addition, demand for
commercial space is arising from logistics, warehousing
The Company
IHLL offers retail home loan product for affordable housing segment. Under this
product, loans are offered to the customers for Purchase of home, home improvement, home
extension and for construction of a dwelling unit on an owned plot of land. India Home
Loan Limited formerly known as (MHFCL) Manoj Housing Finance Company Ltd which was
incorporated on 19th Dec 1990 under the Companies Act, 1956 in Maharashtra.
During 2008-09, Mr. Mahesh Pujara and Associates took over this company and subsequently,
the name of Manoj Housing Finance Company Ltd has been changed to India Home Loan Limited.
India Home Loan Limited is a BSE listed company. IHLL specializes on loans to families in
the self-employed category where formal income proofs arent easily available and their
repayment capacity is appraised based on their cash flows IHLL started full scale
operations in February 2018. IHLL offers following products to its customers: (i) home
loans; (ii) loan against property; (iii) developer financing. IHLL has started offering
affordable housing loans on a pilot basis in FY2022. IHLL focuses on low risk segments
across its portfolio. Individual housing loans, a low risk segment, contribute to more
than 70% of the portfolio. Even within the low risk individual housing loans segment,
nearly 95% of AUM consists of loans given to salaried and self-employed professionals.
Going forward, it intends to increase its presence in self-employed and affordable housing
segment with a calibrated risk strategy to cover full spectrum of housing loan market.
IHLL is committed to building an optimal mix of housing and nonhousing loan portfolio to
balance risk and returns. IHLL has created a prudent and differentiated developer
financing model with an immaculate portfolio performance. Going forward, IHLL plans to: i)
deepen relationship with existing developers; ii) expand reach to new developers with
granular exposure strategy; iii) expand its developer financing offerings to new
geographies; and iv) create presence with the large developers. IHLL offers highest
standards of engagement and service to its retail and corporate customers. IHLL is
continuously investing in creating frictionless processes to provide seamless and
consistent experience to its customer throughout the loan lifecycle. The Company ended the
year with a capital-to-risk weighted asset ratio (CRAR) of 53.63% as on 31st
march 23 which is well above the regulatory limits specified by the regulator
IHLL closed FY2023 with an AUM of 101.70 crore.
As on 31 March 2023, IHLLs borrowings stood at 90.83 crore
Using its robust risk management and portfolio monitoring framework, IHLL continued to
take enhanced credit costs based on emerging trends across its different portfolios.
IHLLs Gross and Net NPA as at 31 March 2023 stood at 4.60% and 3.02% respectively.
The performance highlights for FY2023 are given in below.
IHLLs Performance Highlights, FY2023
• Assets under management (AUM): 101.70 crore.
• Total income: 23.18 crores
• Net interest income (NII): decrease by 32.15 % to 8.44 crores.
• Profit before tax (PBT): decreased by 75.25 % to 0.98 crores.
• Profit after tax (PAT): decreased by 68.06 % to 0.61 crores.
• Capital adequacy ratio as of 31 March 2023 was 53.63 %, which is well above the
RBI norms.
Business Update
Home Loans
IHLL offers home loans for ready to move in homes as well as those under construction
across Maharashtra, Gujarat and Rajasthan locations in India with an average loan value of
5 to 10 lakhs. It follows a micro- market presence strategy using a mix of direct and
indirect channels.
As at the end of FY2023, the home loans business had AUM of 89.24 crores
Loan Against Property
IHLL offers Loans Against Property (LAP) to against mortgage of their properties. The
LAP business is operational in Maharashtra, Gujarat and Rajasthan locations across India
with an average loan value of 5 to 15_lakhs It ended FY2023 with AUM of 7.87 crore
Developer Loans
IHLL offers construction finance to small and mid-size developers with strong track
records of timely delivery of projects and loan repayments. It is present in Maharashtra
and Gujarat locations across the country. Developer relationships enable IHLL to acquire
retail customers for home loans.
Its AUM from developer loans was 4.58 crores
Assets Under Management (AUM): A Snapshot
Table 2 breaks down the AUM across the major business verticals.
Table 2 (a): Assets Under Management
( in crores)
| AUM |
FY2023 |
FY 2022 |
Growth |
AUM Mix |
| Housing loan |
89.24 |
131.76 |
(42.52) |
87.76% |
| Loan against property |
7.87 |
10.74 |
(2.87) |
7.74% |
| Other loans |
4.58 |
18.39 |
(13.81) |
4.50% |
| Total |
101.69 |
160.90 |
|
100% |
Financial Performance
( in crores)
| Particulars |
FY 2023 |
FY 2022 |
Change |
| Interest Income |
21.27 |
28.53 |
(7.26) |
| Interest and finance charges |
12.83 |
16.09 |
(3.26) |
| Net interest income |
8.44 |
12.44 |
(4.00) |
| Other Income |
1.91 |
1.94 |
(0.03) |
| Total operating expenses |
7.09 |
6.21 |
0.88 |
| Pre-provisioning operating profit |
3.26 |
8.17 |
(4.91) |
| Loan losses and provisions |
2.28 |
4.21 |
(193) |
| Profit before tax (PBT) |
0.98 |
3.96 |
(2.98) |
| Profit after tax (PAT) |
0.61 |
1.91 |
(13) |
| Other comprehensive income/ (expenses) |
0.04 |
0.03 |
0.01 |
| Total comprehensive income |
0.65 |
1.94 |
(1.29) |
| Earnings per share (EPS) basic, in |
0.42 |
1.34 |
|
Risk Management and Portfolio Quality
As a Housing Finance Company (HFC), IHLL is exposed to credit, liquidity, and interest
rate risk. It continues to invest in talent, processes, and emerging technologies for
building advanced risk and underwriting capabilities.
IHLL has a well-defined risk governance structure which provides for identification,
assessment, and management of risks. Risk management involves making decisions and
establishing governance systems that embed and support effective risk process, as well as
building an organizational culture that supports agility. The Company has a Risk
Management Committee (RMC)
IHLLs balanced approach to portfolio management coupled with a rigorous portfolio
review mechanism has enabled it to pick up early warning signals and take corrective
actions. IHLLs loan portfolio continues to remain healthy and in the growth mode.
A robust governance framework ensures that board committees approve risk strategies and
delegates credit authorities, and robust underwriting practices coupled with continuous
risk monitoring ensure that portfolios stays within acceptable risk levels. IHLL follows
RBI / NHB prudential norms for asset classifications and Expected Credit Loss (ECL) model
prescribed under Ind AS for provisioning.
HLL calibrates its risk policies and underwriting norms periodically to promptly
respond to the changing market scenario.
IHLLs Gross and Net NPA as at 31 March 2023 stood at 4.60% and 3.02% respectively.
Asset Liability Management (ALM)
IHLLs total borrowings stood at 90.83 crore as of 31 March 2023. IHLLs Asset
Liability Committee (ALCO) meets as and when required to i) monitor asset-liability
mismatches; ii) ensure that there are no imbalances on either side of the balance sheet;
and iii) ensure that adequate level of liquidity is maintained.
IHLL has Asset Liability Committee (ALCO) to monitor its asset liability management.
Borrowings of the Company are guided by Board approved resource raising policy.
ALCO reviews macroeconomic conditions affecting the housing finance business, liquidity
situation and interest rate environment and provides direction to treasury on resource
mobilization and fund planning.
The ALM position of the Company is based on the maturity buckets as per the guidelines
issued by the regulator from time to time. IHLL assesses behavioralised maturity pattern
of its assets and liabilities and maintains adequate liquidity for its business
Customer Service
Mortgages is a long duration product and a high involvement buying decision for the
customer - which involves frequent and regular interactions. To enable a transparent,
convenient and hassle-free customer experience, our dedicated team of customer service
supported with transparent operations and strong technology infrastructure, helps us to be
responsive to our customers thereby maintaining high standards of customer service.
Digital communication, continuous customer feedback and transparency remain key focus
areas of the Company while engaging with customers.
The Company strives towards improving and strengthening its customer experience by
transitioning from query / complaint resolution to first time right delivery to customers.
To uphold highest standards of transparency, IHLL has implemented an end to end proactive
communication framework through life stages of customer journey. IHLL continues to
leverage technology to gauge the unstated and emerging service needs of customers.
Human Resources
At IHLL, employees are the most valuable assets. In IHLL, employees performance
enhancement, well- being, skill development, growth and engagement remains a key focus
area. IHLL fosters a culture of productive empowerment to build an outcome focused
organization.
As on 31 March 2023, IHLL had 53 employees.
Internal Control Systems and their Adequacy
IHLL has instituted adequate internal control systems commensurate with the nature of
its business and the size of its operations. Internal audit is carried out by external
agency to evaluate the adequacy of all internal controls and processes. All significant
audit observations and follow-up actions thereon are reported to the Audit Committee. The
Audit committee reviews the internal audit reports and the adequacy and effectiveness of
internal control.
Fulfilment of the RBI and NHBs norms and standards
IHLL fulfils and often exceeds norms and standards laid down by the RBI as well as NHB
relating to the recognition and provisioning of non-performing assets and capital
adequacy, etc. The capital adequacy ratio of the Company was 53.63 % as of 31 March 2023,
which is well above the regulatory norms
The Reserve Bank of India, vide circular dated 22 October 2020, mandated housing
finance companies to have minimum 60% of its assets towards housing finance and 50% of
total assets towards housing finance for individuals, in a phased manner by 34 31 March
2024. As on 31 March 2023, the Company has 90.93% of its loans towards housing finance and
86.41 % of total loans towards housing finance for individuals.
Key Ratios
| Ratios |
FY 2023 |
FY 2022 |
| Net interest income to average loans |
8.30% |
7.73% |
| Total operating expenses to NII |
0.84 |
0.50 |
| Return on equity (ROE) |
4.24% |
13.41% |
| Capital to risk-weighted assets ratio (CRAR) |
|
|
| Tier I |
42.02 |
39.37 |
| Tier II |
11.61 |
8.33 |
| Gross NPA |
4.60% |
4.25% |
| Net NPA |
3.02% |
3.05% |
| Provisioning coverage ratio (PCR) |
15.22 |
29.07 |
| EPS - Basic (?) |
0.42 |
1.34 |
| Diluted (?) |
0.42 |
1.34 |
Cautionary Statement Some statements in this Management Discussion and Analysis
describing the Companys objectives, projections, estimates and expectations may be
forward looking within the meaning of applicable laws and regulations. Actual results
may differ from those expressed or implied.
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