AFFLUENCE

THE 44th DIRECTORS’ REPORT

 Dear Shareholders,

Housing & Urban Development Corporation Limited

Your Directors take pleasure in presenting the 44th Annual Report on the business, operations and achievements of the Company together with the audited financial statements for the financial year ended 31st March, 2014.

Your Company was incorporated in the year 1970 and during its journey of 44 years; your Company has achieved remarkable progress in all the fields. It has its presence all over the Country having 31 offices comprising of 20 Regional Offices and 11 Development Offices with a total strength of 916 employees. From Rs. 11 lakh profit in 1971-72 to over Rs. 726 crore in 2013-14, the organisation has created a niche for itself through immense contribution to the society while maintaining its profitability. 

Your Company has been upgraded from Schedule-B to Schedule-A in the year 2002 and further has been conferred the status of Mini Ratna in the year 2004. HUDCO has been affirmed “AA+” rating by M/s India Rating (Fitch group) and M/s Care Ratings, showing high degree of safety regarding timely servicing of financial obligations and has been assigned “Excellent” rating for the second consecutive year as per Memorandum of Understanding targets set by Ministry of Housing & Urban Poverty Alleviation, Govt. of India. 

During the year, HUDCO’s primary stress was on social housing, provision of basic utility infrastructure through financing of sewerage/drainage, water supply, road and transport, social infrastructure & commercial infrastructure. HUDCO is determined to support inclusive and sustainable habitats and work towards better living conditions for all, especially the marginalized sections of the society, through its sustained efforts and its innovative approaches. 1.   FINANCIALS

Your Company had completed yet another successful year of operations in the service of the Nation. Despite overall recessionary trends in the economy during the financial year 2013-14, HUDCO earned Profit before tax (PBT) and Profit after tax (PAT) of Rs. 1094.35 crore and Rs. 726.34 crore, as against Rs. 1061.70 crore and Rs.700.56 crore during the previous year

All these have been achieved due to robust project funding operations, efficient funds management and the prudent policies adopted by the management.

Resource Mobilisation/Borrowings 

During the year, your company mobilized total resources amounting to Rs.8034.61 crore, including Rs. 5,687.12 crore raised through issue of bonds. Owing to inflationary pressures and volatility in foreign exchange rates, the economy continued to witness high interest rates during the financial year 2013-14, as well.  However, despite high interest rates, HUDCO was able to mobilize resources at a weighted average incremental borrowing cost of 8.77% (i.e. 7 bps below 10 year Fixed Income Money Market and Derivatives Association of India (FIMMDA)         G-Sec, as on 31.03.2014).

During the year, your Company successfully mobilized Rs. 4987.12 crore through issue of Taxfree bonds in the nature of secured, redeemable, non-convertible debentures, having benefits under section 10(15)(iv)(h) of the Income Tax Act for 10, 15 and 20 years, out of which Rs. 4796.32 crore was mobilized though Public Issue(s), while the balance amount of Rs. 190.80 crore was mobilized through a Private placement issue.  The tax-free bonds mobilized though Public Issue(s) are listed on BSE Limited, whereas, the tax-free bonds issued on private placement basis are listed on the National Stock Exchange of India Limited.

HUDCO also availed refinance assistance of Rs. 1000 crore from National Housing Bank (NHB) under its Rural Housing Fund scheme in two tranches of        Rs. 500 crore each at fixed rate of 6.75% and 8.00%, respectively, for a tenure of  7 years.  Further, a Term Loan of Rs. 120 crore was availed from Banking Sector.

With an objective to promote efficient funds management and meet its day-to-day operational requirements, the Company also raised resources through Cash Credit/Overdraft facilities available from various banks and issue(s) of Commercial paper at competitive rates.  The Cash Credit/Overdraft facilities outstanding as on 31.03.2014 were Rs. 960.71 crore.  In addition, an amount of Rs. 266.78 crore was mobilized through HUDCO’s Public deposit scheme.

Credit Rating

HUDCO’s surveillance rating for long term instruments was reaffirmed ‘AA+’ by M/s India Ratings & Research Private Limited (Fitch group) and M/s Care Ratings. M/s India Ratings & Research Private Limited (Fitch group) and M/s CARE Ratings have further affirmed ‘A1+’ rating for HUDCO’s short term instruments, which is the highest rating on standalone basis. During the year, India Ratings & Research Private Limited also upgraded the outlook on HUDCO’s Rating from ‘Stable’ to ‘Positive’.

Your Company also enjoys long-term foreign currency rating of ‘BBB-’ with ‘Stable’ outlook from international rating agency, M/s Fitch Ratings, which is at par with the sovereign rating of India.

Dividend

Your Directors are pleased to recommend a dividend of Rs.100.01 crore for the financial year 2013-14, subject to approval of the shareholders at the ensuing Annual General Meeting. Accordingly, a provision of Rs. 17 crore has been made towards tax on dividend.

 Reserves and Surplus

During the financial year under review, your Company has transferred Rs. 628.32 crore to the reserves comprising of Bonds/Debentures Redemption Reserve Rs.378.17 crore, Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961, Rs.250 crore and General Reserve of Rs.0.15 crore.

 Net Worth and Debt Equity Ratio       

The net worth of your Company as on 31st March, 2014 stood at Rs. 7056.77 crore as against Rs. 6427.11 crore as on 31st March, 2013. The borrowings from all sources stood at Rs.21304.75 crore as on 31st March, 2014 (previous year    Rs.18, 867.43 crore). The Debt Equity ratio of the Company as on 31st March, 2014 works out to 3.02:1 (previous year 2.94:1).

 Unclaimed Deposits

As mandated under the Housing Finance Companies (NHB) Directions, 2010, it is disclosed that the unclaimed deposits with respect to Debentures/Bonds/PDS (Principal and Interest amount), due and unclaimed as on 31st March, 2014 aggregated to Rs. 18.11 crore (previous year Rs. 35.25 crore). As per the procedure, HUDCO is taking all necessary actions including letters, emails, etc, for following up with its depositors. The amount remaining unclaimed for more than seven years has been transferred to the Investors Education & Protection Fund (IEPF) as required under the provisions of the Companies Act, 1956.

Stressed Assets Management

Your Company is meticulously pursuing with the defaulting agencies for effective recoveries and taking recourses available under the Negotiable Instruments Act, 1881 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 besides filing recovery applications in Debts Recovery Tribunals. The Gross NPA as on 31st March, 2014 stood at 6.76% (previous year 5.69%) and Net NPA as on 31st March, 2014 is 2.52% (Previous year 0.83%). Your Company has also created sufficient additional provision as a matter of abundant precaution. The overdues have been reduced by 12.81% as on 31st March, 2014.

Risk Management

HUDCO has in place a Risk Management Policy and Operating Manual for management of the various risks to which HUDCO is exposed viz. credit risk, market risk, interest rate risk, liquidity risk and operational risk. The Policy aims at establishing the company's risk management strategy in line with the goals of the organization and the internal and external environment.

The Company has a prudent and efficient risk management framework. There is a Risk Management Committee of the Board (RMCB) to review various reports and actions taken by Sub-Committees, such as Assets & Liabilities Management Committee (ALCO), Credit Risk Management Committee (CRMC) and Operational Risk Management Committee (ORMC). The recommendations of the RMCB are submitted to the Board of Directors. During the year 2013-14, four meetings of RMCB were held. HUDCO has in place an effective Asset Liability Management System and has constituted an Asset Liability Management Committee (ALCO). The liquidity risk and interest rate risk are being monitored with the help of liquidity gap analysis and interest rate sensitivity analysis. During the year 2013-14, four meetings of ALCO were held.

HUDCO also has in place a Currency Risk Management policy to manage risks associated with foreign currency borrowings. Forex Consultant appointed by HUDCO reviews and opines on the matters regarding scenario of international markets, foreign currency costs, hedging, and options of further borrowings/ repayments etc., which are also deliberated in RMCB meetings.

Foreign Currency Risk Management

Your Company has in place a Currency Risk Management (CRM) Policy to manage risks associated with foreign currency borrowings. The Company enters into hedging transactions to cover exchange rate and interest rate risk through various instruments like currency forward, options, principal only swap, interest rate swap and full Currency swaps. As on March 31, 2014, the total foreign currency liabilities are USD 81.763 million and JPY 3831.012 million. On an overall basis, as on 31st March, 2014, the currency exchange rate risk is covered to the extent of 74.40% through hedging instruments.

Cost Reduction Measures

During the year, costly loans were identified and foreclosed or prepayment option was exercised in respect of outstanding loans amounting to Rs. 133.33 crore. It would be imperative to highlight that by virtue of term loan agreement executed with the respective lender(s), no prepayment penalty in respect of loans foreclosed have been paid.

2.   OPERATIONS

During the year under review, HUDCO has recorded excellent results on the operational front and has surpassed majority of targets set as per Memorandum of Understanding signed by the Company with Ministry of Housing & Urban Poverty Alleviation, Government of India both in terms of sanctions, releases and other related parameters. HUDCO has recorded an overall sanction of Rs. 17,491 crore against MoU target of Rs. 15,000 crore registering an increase of 16.61%. Further, on the release front, it has released sum of Rs. 7438 crore against the MoU target of Rs. 6602 crore with an increase of 12.66%  

Memorandum of Understanding

Based on the provisional data/information available, performance of your Company, in terms of Memorandum of Understanding (MoU) signed with the Ministry of Housing & Urban Poverty Alleviation, Government of India, is expected to be rated as ‘excellent’ for the year 2013-14. 

Further, HUDCO and the Ministry of Housing & Urban Poverty Alleviation have entered into a MoU for the year 2014-15, in regard to various operational performance parameters like disbursement, sanctions, gross operating margin, cost of borrowing, gross NPA, etc. and also for various non-financial parameters like Human Resource Development (HRD), Corporate Social Responsibility (CSR), capacity building programmes, financing EWS & LIG housing, etc. The MoU for 2014-15 envisages a significant growth in the operations of HUDCO in the housing and urban development sectors with proposed sanctions of Rs.16100 crore and disbursements of Rs. 7300 crore during the year, with exclusive focus on social housing and core infrastructure.

As per the MoU, MoHUPA would facilitate HUDCO to achieve its projected growth by supporting the Corporation to increase its creditworthiness and enable it to achieve its social objectives by providing the necessary policy support. The Ministry would also support HUDCO in mobilizing resources at lower costs.

Housing for all – “Affordable Abode”

Food, Clothing and Housing are the three basic needs of human being, and among three, housing being the costliest and has become beyond the reach of a common man. HUDCO endeavors to make this costly component of human life as an ‘affordable abode’ to all. HUDCO is committed to fulfill its mandate of supporting the development of housing sector in the Country.

During the year 2013-14, housing sanctions were Rs.9643 crore (55% of total sanctions) and housing releases were Rs.2841 crore (38% of total releases). During the year 2013-14, 64% (Rs.6267 crore) of housing sanctions and 74%        (Rs. 2110 crore) of housing releases were made for affordable housing including, EWS & LIG.

During the year, HUDCO financed 14,34,102 housing units, out of which 14,11,962 units belong to Economically weaker and Low Income Group category i.e. 98.46 % of the total sanctioned housing units, which is in sync with HUDCO’s motto of “Profitability with Social Justice”.

HUDCO also sanctioned 3.125 lacs dwelling units (DUs) of EWS category in the State of Andhra Pradesh, 1.6 lacs rural units in Haryana State under Priyadarshni Awas Yojana, 5000 DUs for Schedule Tribes and 1.228 lac DUs under Indira Awas Yojna (IAY) in the State of Kerala and Tamil Nadu respectively and 2.71 lac dwelling units each in SC/ST & general category in State of Karnataka under the Basava Grameena Vasathi. In addition to the above, HUDCO has also supported construction of police housing in various States viz. Madhya Pradesh, Karnataka, Tamil Nadu and Uttar Pradesh.

Urban Infrastructures – “Foundation for stronger India”

Towards fulfilling its strong commitment to provide an adequate and effective core infrastructure in the Country, in line with its motto of – “Foundation for stronger India”, HUDCO continued extending its financial support to various urban infrastructure projects.

During the financial year 2013-14, HUDCO has sanctioned a total of 72 schemes with its financial assistance of Rs.7,848 crore to various sectors like Water Supply, Sewerage, Drainage, Social Infrastructure, Commercial Infrastructure, Power and Road & Transport. An amount of Rs. 4,596 crore loan was disbursed for urban Infrastructure projects.

HUDCO is one of the few financial institutions in the market to cater to the needs of Core urban infrastructure sectors (water supply, drainage, sanitation, solid waste management, transport including metro, buses, roads, social infrastructure like schools, hospitals etc.). These sectors form the foundation of city level infrastructure and play a significant role in enhancing the quality of life in cities. During the year 2013-14, HUDCO sanctioned Rs 5322 crore (68 % of total UI sanctions) and released Rs. 3,494 crore (76% of UI releases) for Core Urban Infrastructure.

 Social Infrastructure

The major thrust of HUDCO has been on providing housing and social infrastructure to the poor, as an integral part of the urban growth and harmonious development. During 2013-14, HUDCO has funded 20 schemes under this category for a total loan assistance of Rs. 153.98 crore to the States of Jharkhand, Nagaland, Odisha and Puducherry. These schemes include construction of Workshops, Govt. buildings, etc.

Sewerage and Drainage & Solid Waste Management

Rapid urbanization and growth of a large number of cities requires laying of sewerage and drainage systems. To meet the growing demand, HUDCO during 2013-14 has funded 11 schemes with a total loan assistance of Rs. 1764.27 crore to the States of Gujarat, Karnataka, Maharashtra, Madhya Pradesh, Odisha and Puducherry. These projects would enable provision of comprehensive sewerage system with treatment facilities, which would benefit a large number of people in these areas.

Water Supply

Potable water shortage is becoming one of the major problems in the country. Rapid growth of towns/cities in India put more demands for water supply to the inhabitants. Keeping in view the growing demand of potable water, HUDCO during 2013-14, has sanctioned financial assistance to 5 schemes under this category for a total loan assistance of Rs. 1812.19 crore to the States of Gujarat, Maharashtra, Odisha and Tamil Nadu.

Road and Transport

Road and Transport Infrastructures are necessary for any economy to function properly. India’s growing economy has witnessed a rise in demand for transport infrastructure and services. HUDCO during the year 2013-14, has sanctioned 20 projects under this category for a total loan assistance of Rs. 2120.72 crore in the States of Bihar, Gujarat, Himachal Pradesh, Kerala, Karnataka, Maharashtra, Madhya Pradesh, Nagaland, Punjab and Uttar Pradesh. During the year, an amount of Rs. 1159.74 crore has been disbursed under this category.

Power Sector

Power has multiple knock-on effects on development of the country. Without it, development stalls. Nothing can be moved without power. Development in the country will be very hard to thrive unless there are reliable source of power. During the year 2013-14, in development of this sector, HUDCO has sanctioned 5 schemes in the States Maharashtra, Rajasthan, Uttar Pradesh, Uttarakhand & Assam, for a total HUDCO loan of Rs. 1145.50 crore.  During the year, an amount of Rs. 615.34 crore has been disbursed under this category.

HUDCO’s Projects in the North Eastern Region

HUDCO continued its special thrust towards developments of the Seven Sister States in North Eastern Region. During the year, HUDCO has sanctioned 7 housing schemes with a loan amount assistance of Rs. 26 crore to the North-Eastern Region. This would support taking up of 140 housing units in the State of Mizoram and Nagaland. Beside this, HUDCO has also sanctioned 14 infrastructure projects with a loan assistance of Rs. 24.92 crore in the State of Nagaland and Assam. These projects include construction of government institutional buildings, commercial buildings, etc.

Building Material Industries

HUDCO has extended financial support through equity and term loan to the building material industries for manufacturing building materials products and components, which are innovative and alternates to the conventional options. These alternate building materials utilize agricultural and industrial wastes and thus are energy efficient and environmentally appropriate options. A major thrust is to support fly-ash based building material industries and also alternates to timber in different parts of the country. Till date, 30 building material industrial units have been supported with HUDCO assistance of Rs.29.48 crore.

Committee for the Rejuvenation and strengthening of Building Centres

HUDCO has taken the initiative to set up a Committee under the Chairmanship of architect Shri Kirtee Shah with representation from NGOs, private sector, R & D bodies as well as HUDCO and BMTPC with a mandate to suggest a plan of action for the revival of the Building Centres as an important tool for the development and propagation of green technologies and as an effective response to the contemporary needs of the sector. 

Model Villages and Model Bastis

HUDCO has extended support for development of model village and model bastis throughout the country, out of interest accrued from HUDCO-KfW IV & V grant. 

The selected villages/slums, which predominantly cover low-income population, have been provided with grant assistance up to Rs 70 lacs each for a village/basti. Matching contribution has been waived off in the natural calamity hit areas, whereas for other areas, it is kept as 80:20 ratio (80% HUDCO-KfW: 20% agency/state Govt. share). 20% contribution may be met by the State Governments/Union Territories/Implementing agencies by dovetailing other resources of Central/ State Government schemes with a convergence approach, to provide community buildings and public utilities infrastructure facilities.

In the financial year 2013-14, HUDCO has sanctioned 10 model villages and model bastis in the natural calamity hit areas of Uttarakhand under HUDCO-KfW grant–in-assistance of Rs 70 lac each i.e. Rs. 7 crore and 5 model village and model bastis in the cyclone hit areas of Odisha State of Rs. 70 lac each i.e.          Rs. 3.50 crore. Thus, HUDCO has sanctioned a total grant–in-aid-assistance of Rs. 10.50 crore for the natural calamity hit areas in the year 2013-14. The proposals are at various stages of implementation.

3.     HUDCO NIWAS – INDIVIDUAL HOUSING LOAN SCHEME  

HUDCO Niwas is working through a network of 20 Regional Offices throughout the Country and offers individual Housing Loans for construction/ purchase of a house/flat/extending or improvement of the existing house/ flat and re-financing of existing housing loans. HUDCO Niwas also offers bulk loan to State Government/Para Statals of the State Government/Profit making PSUs and other Housing Finance Companies.

During the year, an amount of Rs. 65.58 crore has been sanctioned and Rs.297.88 crore has been released, which include release of Rs. 284 crore to PNBHFL, a Housing Finance Company promoted by Punjab National Bank. Further, cumulatively, till March, 2014, an amount of Rs. 4923.26 crore has been sanctioned and Rs. 4348 crore has been released under HUDCO Niwas portfolio.

4. EMERGING SECTOR, INCLUDING INDUSTRIAL INFRASTRUCTURE  

Towards Industrial and economic growth of the country, HUDCO plays vital role by financing Industrial Infrastructure Projects, Industrial Estates and Special Economic Zones (SEZs) for land acquisition and Land Development, Water Supply, Access/Circulation Roads, Residential Townships, Street Lighting, Jetties, Bus Terminals/Stops and Community Centres etc. During the year 2013-14, HUDCO has funded 10 such schemes with a total loan assistance of Rs. 832.19 crore; namely City Gas distribution project in Gujarat, Establishment of new Industrial Growth Centre at Vidisha, Dewas and Sagar and Up-gradation of Industrial Growth Centre at Bhopal, Indore, Jabalpur and Mandla, in Madhya Pradesh. During the year an amount of Rs. 485.17 crore has been disbursed under this category.

5.   NEW INITIATIVES 

Extending HUDCO’s reach to the new clients

During the year under review, HUDCO has entered into Memorandum of Understanding with various organisations like:

·         National Commission for Women (NCW) under CSR for improving the living conditions of widows at Vrindavan, Mathura.

·         National Building Construction Corporation Limited (NBCC) for joint development of projects.

·         School of Planning & Architecture (SPA) for research relating activities.

·         National Culture Fund (NCF) for conservation of heritage sites/ buildings.

·         Construction Industry Development Council (CIDC) for creation of skills required in the building construction industry.

Laying stress on acquiring business from Government agencies, HUDCO extended funding to 135 new Urban Local Bodies, who have borrowed from HUDCO for the first time during the current year. This initiative will provide vast opportunities in future for funding a large number of small and medium towns/cities in the country, which need to develop quality infrastructure for the growing population.

HUDCO Nav Nagar Yojana (HuNNY)

HUDCO, as a pioneering techno-financial institution in the housing and urban development sector, proposes to facilitate Urban Local Bodies (ULBs)and other Government agencies in developing integrated townships/layouts/ colonies, to meet the increasing requirement of planned housing for its citizens. It offers a comprehensive solution to the growing cities/towns from 'Planning to Financing' the sustainable habitats. HUDCO will provide technical and financial support for developing potential sites as planned urban extensions to meet the requirements of the ever growing population. The programme operates at three stages:

·      advisory service on conceptualization and feasibility of the proposed development;

·      consultancy assistance on fee basis, for architectural and engineering designs;

·      providing funds required for development of sites and services as well as housing, including land acquisition.

HUDCO would provide technical assistance for integrated development of such identified sites covering housing, infrastructure as well as commercial areas. The assistance would enable location specific optimal development, covering all categories of households with commensurate infrastructure facilities. Comprehensive planning would be undertaken in consultation with the ULB as well as other stake holders.

The HuNNY programme is open to all the willing ULBs, Urban Development Authorities, Housing Boards or any other Government Corporation or Agency that may like to foster collaboration with HUDCO towards planned growth and expansion of the city/town. This will help the ULB in meeting the emerging requirements with special reference to affordable housing segment. Private Developers for projects approved by the Central/State Governments for subsidy under the Affordable Housing in Partnership scheme of the Ministry of Housing and Urban Poverty Alleviation are also eligible.

HUDCO has sanctioned Inderlok Housing Scheme for construction of 822 dwelling units (DUs) consisting of LIG & HIG houses to Haridwar Development Authority for a financial assistance of Rs. 125 crore. The project envisages planned development in the industrial area of State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd.  

Rent–to–Own Scheme

HUDCO has been striving to make “Housing for All' a reality. One of the sections of the society, which finds it very difficult to own a house in the career span is the salaried public/government sector employees, especially at the lower rung. Towards improving access to housing for this section of the society, HUDCO has conceived the “Rent-to-Own” Scheme. Broadly, this scheme facilitates an agency to initially avail loan from HUDCO on behalf of its employee. The agency would allot the houses to its employees initially on rental basis. The employee would become the 'owner' of the house as and when the full cost of the house is paid to the agency. This would help the agency to improve the satisfaction level of employees.

6.            CONSULTANCY INITIATIVES

HUDCO’s contribution as the premier techno-financial institution in the country is not limited to housing finance alone but includes various other initiatives to contribute to the cause of sustainable urban development. Utilising its inherent strength of technical personnel, long experience and expertise in the fields of Architecture and Planning, a distinct thrust has been extended to the fee based consultancy. During the financial year, HUDCO has been involved in showcasing various facets of consultancy services, thereby contributing to the overall image building of HUDCO.

During the year, HUDCO has signed an agreement with Srinagar Development Authority for preparation of a detailed project report for housing colony at Bemina, Srinagar. HUDCO is also undertaking the preparation of Draft Master Plans of two towns in Madhya Pradesh namely, Khargone and Jhabua for the State Institute of Town Planning. The Final report for the Slum Free City Plan of Gangtok, has also been submitted. Further, HUDCO is also in the process of signing consultancy agreements with Andhra Pradesh State Housing Corporation Limited for providing consultancy services for preparation of Comprehensive Development Plan and with Siliguri Jalpaiguri Development Authority for providing consultancy services for preparation of a Detailed Project Report for Affordable Housing in Siliguri Jalpaiguri Planning Area. Apart from this, HUDCO is likely to sign an agreement with the Planning and Development Authority, Manipur, for providing consultancy services for preparation of DPRs for Market-cum-Office Complexes at various locations in Manipur.

7.     HUDCO DESIGN AWARDS

HUDCO has always been associated in improving the habitat conditions, use of effective technologies and designs, especially of the urban poor. In keeping with this tradition, HUDCO instituted ‘HUDCO Design Awards’ to give recognition and felicitate innovative ideas and initiatives that contribute to make our cites inclusive, live able and environmentally sustainable. The Award has five different categories and is expected to encourage professionals in the field of Architecture, Planning and Engineering and sensitize decision makers regarding utility and applicability of innovative design solutions. HUDCO Design Awards 2013 were conferred to the awardees by Hon’ble Minister of Housing & Urban Poverty Alleviation, Govt. of India on 17th February, 2014 at New Delhi. HUDCO also published a book titled “HUDCO Design Awards 2013” which is a compilation of all the award winning entries for dissemination of information regarding these innovative and inspiring projects.

8.     CUSTOMER SATISFACTION

HUDCO is an organization, committed to develop products and provide services that meet the requirements of its customers i.e. its borrowing agencies, investors, etc. to ensure that they have attained full satisfaction in transacting with HUDCO. Systems have been created to ensure that customer requirements are determined and services and products are developed taking into consideration features/ requirements specific to the sector and fulfilled at each applicable function and level with the aim of continually enhancing their satisfaction. It is a culture of HUDCO to treat its customers aspirations as a priority and support them by facilitating them for example, assistance through the entire life cycle of the loan or assistance to the investors to get their interest payments at the right time. 

During the year 2013-14, Regional Offices of HUDCO organized 15 customer feedback meets with the borrowing agencies to gauge their satisfaction level. Another key measure to enhance customer satisfaction is the redressal of complaints in a time-bound manner. All complaints received during the year were redressed well in time i.e. within 25 days.

The time taken to process the loan releases is a good indicator of efficient and effective delivery of services and this goes a long way in enhancing the customer’s satisfaction level. In 2013-14, the process time for releases in government and private sector schemes is 6.39 days and 2.2 days respectively.

 9.   HUDCO – AN ISO 9001:2008 CERTIFIED COMPANY

HUDCO has recertified an ISO 9001:2008 Company for Quality Management for the full range of its activities covering providing project and retail financing services, resource mobilization for funding consultancy and joint ventures and training, research and networking in Human Settlement Planning & Management, from Indian Register Quality Scheme (IRQS) on 30th September, 2012. The certificate is valid till 29th September, 2015. The Surveillance Audit for continuance of the ISO certificate was carried out by IRQS in August 2013 at the Regional Offices at Kolkata, Chennai, Dehradun, HSMI and HUDCO Head Office and gave their recommendation for continuation of certificate.

10.   HUDCO BUILD-TECH 2013HUDCO organized HUDCO Build-tech 2013 – an exposition on cost effective and environmentally friendly building materials and technologies as a part of India International Trade Fair held from 14th to 27th November, 2013 at Pragati Maidan. A large scale display was put up for visitors in around 2126 Sqm area, showcasing various HUDCO activities and areas of operation. The event, which also included a grand display of cost-effective and environmentally friendly building materials and technologies, by way of construction of a dwelling unit, received much appreciation from the general public.

11. JAWAHARLAL NEHRU NATIONAL URBAN RENEWAL MISSION    (JNNURM) AND RAJIV AWAS YOJANA (RAY)

HUDCO has been mandated to play a significant role in the successful implementation of the Government of India’s flagship programme of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awas Yojana (RAY). The Government of India launched the 7 years JNNURM programme on 3rd December, 2005 for provision of basic amenities to the urban poor, which was extended upto March 2015, for implementation of the programme. Ministry of Housing & Urban Poverty Alleviation has appointed HUDCO as an appraisal agency for appraisal of Basic Service for the poor (BSUP) and Integrated Housing & Slum Development Programme (IHSDP) projects and as one of the Central Monitoring Agency for monitoring of BSUP/IHSDP projects and review of Third Party Inspection & Monitoring Agencies (TPIMA) Reports. As on 31st March, 2014, HUDCO has appraised 1239 projects with Project Cost of Rs 24,434 crore and central assistance of Rs 13,745 crore for the construction/upgradation of 9.81 lac dwelling units across 870 cities/towns in the Country. HUDCO supported 15 ‘viability gap funding’ schemes under JNNURM to projects under BSUP, IHSDP, gap-funding for Sewerage network, water supply, solid waste management and purchase of buses etc.

Rajiv Awas Yojana (RAY) was announced in June, 2009 for creating ‘Slum Free India’. Preparatory phase of RAY concluded on 2ndJune, 2013. During the preparatory phase, the States were required to draw up Slum-free Plans of Action (SFCP) for proceeding towards the goal of Slum-free Cities/States. In the preparatory phase, the State Governments prepared pilot projects with an aim of evolving, demonstrating and establishing models for scalability and replicability.  Implementation phase of RAY was launched on 3rd September 2013. HUDCO with its social mandate of providing housing to economically weaker sections, has appraised 83 RAY projects as on 31st March 2014, with Project Cost of Rs. 3160 crore and central assistance of Rs. 1570 crore for the construction/ upgradation of 62,202 dwelling units. In addition, 3 Affordable Housing in Partnership (AHP) projects with project cost of Rs. 56 crore covering 992 dwelling units for the State of Karnataka were also appraised by HUDCO.

Against the MoU targets for ‘Fee based income from Action Plan Scheme’ for the year 2013-14 of Rs. 2.50 crore, HUDCO has raised fee based income of Rs. 3.01 crore against appraisal of JNNURM & RAY projects, monitoring and analysis of TPIMA reports.

12.   HUMAN RESOURCES 

HUDCO is an treasure trove of expertize with its multi-disciplinary strength of professionals. During the year, HUDCO Board has approved HUDCO Employees Superannuation Pension Scheme as per DPE Guidelines, for which approval of the Government of India has been received. As a next step Trust has been constituted and further action is being taken. The guidelines for the utilisation of Employees’ Welfare Reserve have been approved by the Board. An Employee Welfare Committee has been constituted for overall management of Welfare Fund and to implement the welfare measures. The benefits under the Social Security Scheme have been broadened for larger coverage of facilities. With a view to hone the skills of employees, capability development was taken up in various strategic, functional and behavioural areas for the employees. 370 employees have been nominated for 133 different training programmes out of which 10 were International Training Programmes.

As per the MoU Targets for the Company for the Financial Year 2013-14, HRMA Wing was given targets with a weightage of 5 points. The parameters were: (i) for restructuring of supervisory level of executives, Board approval was obtained on 20th November,2013 and restructuring has already been done; (ii) a  Voluntary Retirement scheme (VRS) for the Company employees was approved by the Board on 23rd April, 2013, (iii) implementation of Bell Curve has been adhered        to (iv) as infusion of fresh talent and ideas is a must for the growth of the company, a plan of recruitment at entry level was approved by the Board on                           12th September,  2013.

Human Settlement Management Institute (HSMI)

Human Settlement Management Institute (HSMI) is the Research & Training Wing of HUDCO and its activities are supported by a multi-disciplinary group of professionals. The Institute continued its capacity building efforts for the professionals engaged in the housing and urban development sector including HUDCO’s borrowing agencies and HUDCO’s own functionaries.

During the year, 51 training programs were conducted, covering 1869 Indian professionals from different sectors. Besides, HSMI also organised two International training programmes: one supported by Ministry of External Affairs on the theme of “Planning of Equitable and Prosperous Cities”; and one International Refresher Course jointly organised with Institute for Housing & Urban Development Studies (I.H.S.), Rotterdam on the theme of “A Right Based Approach to Resettlement (Inter-National) Standards and Local Practice” for the Alumni located in South-East Asian Countries.  Further, as Anchor Institution, HSMI organised a Joint Working Group meeting of IBSA-HS (India, Brazil, South Africa on Human Settlements) in May, 2013.

Keeping in view HUDCO’s emphasis on strengthening and working through local bodies and supporting these agencies for taking up projects funded by HUDCO, the Institute organised 15 Capacity Building Programmes for Urban Local Bodies (ULBs). HSMI also organized 17 In-house programmes for HUDCO officers, in the disciplines of Law, Finance, and Projects, achieving training 1261 man-days during the year. 

Further, to create a culture of Innovation in HUDCO to achieve ‘Mission Five Ones’ goals, HSMI organised Orientation and Synergy Building Workshop for “Innovation Officers of HUDCO” during the month of July, 2013. 

HUDCO Chair activities supporting 18 reputed institutions to undertake research and training activities in the habitat sector have been operationalized.

HUDCO/HSMI also sanctioned research grants for 14 research proposals during the financial year 2013-2014 under the five areas i.e. (i) Affordable Housing and Financing Options; (ii) Urbanisation and Urban Poverty – A Geo-Demographic Approach; (iii) Project Development and Management for PPP Project; (iv) Environmental Improvement Planning in Cities;  (v) Governance and use of IT for Urban Development.  Out of these 14 proposals, 11 proposals were awarded before 31st December, 2013 to reputed institutions. The total R&D expenditure incurred in financial year 2013-2014 amounts to Rs.353.48 lakh.  Nine Best Practices Awards have also been given to agencies, which have undertaken unique/novel projects/schemes after recognising their potential for replication and adaptation by other agencies in the country.

HSMI is one of the National Nodal Resource Centres of the Ministry of Housing & Urban Poverty Alleviation, Govt. of India, for undertaking training and documentation activities in support of implementing Action Plan Programmes of the Ministry. The activities are supported through funds earmarked for IEC (Information, Education & Communication) component of the programmes, which include National Urban Livelihood Mission (NULM) and Rajiv Awas Yojana (RAY). HSMI also organised nine training programmes as support to Action Plan Programmes of the GoI & MoHUPA including six training programmes on RAY as well as one ToT programme on RAY.

HSMI is also the nodal agency for implementing the ‘Challenge Fund’ concept instituted by the Ministry of Housing & Urban Poverty Alleviation with the assistance of international agencies. Four projects have been approved for grant funding under this project.

CITYNET – National Chapter India

HUDCO is an Associate Member of ClTYNET since 1993. The purpose of ClTYNET is to promote exchange of information, experience and skills through various research and training activities among members of CITYNET. HUDCO has established an India chapter of CITYNET, so that more Indian cities could benefit from HUDCO's vast experience in the area of common interest. HUDCO/ HSMI also organised the CITYNET – National Chapter India – First Meeting of the Expert Group was held on 16th December, 2013.

13.  CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABLE DEVELOPMENT (SD) ACTIVITIES

In line with the revised guidelines issued by Department of Public Enterprises (DPE) on CSR and Sustainable Development effective from 01.04.2013, HUDCO Board of Directors has approved the revised CSR and Sustainability Policy and has also provided a budget of Rs. 10.51 crore (1.5% of profit after tax for the year 2012-13) for the CSR and SD activities. In line with the annual plan approved by the Board in its meeting held in July, 2013 and thrust areas identified in the HUDCO CSR and Sustainability Policy, HUDCO has sanctioned financial assistance of Rs.15.33 crore for 39 proposals and disbursed an amount of Rs. 12.49 crore (including proposals sanctioned in the previous years) for implementation of various proposals. 

During the year, HUDCO has supported Construction/Renovation and Extension of 6 Nos. Night Shelters/Community Toilets – (2 nos each at Ahmedabad and Haridwar and 1 no. each at Alwar and Mussoorie) and 4 number of the proposals of Renewable Sources of Energy - Solar Lighting at BSUP School Site, Vijayawada, Ukhimath, Uttarkashi in Uttarakhand, Deshpriyo Park in Kolkata, West Bengal and for setting up of Wind Mill for generation of Power at Naya Raipur. The first instalment equivalent to 25% of Project Cost/CSR assistance has been also disbursed to the implementing agencies for implementation of the proposals.

HUDCO has also extended support for Conservation of Sunderwala Mahal (protected monument) Sunder Nursery, Delhi through National Culture Fund (Project cost/CSR assistance of Rs. 38.51 lacs) and Construction of Community/Pay & Use Toilets at 3 locations In Kapasan Town, Chittorgarh District, Rajasthan, a Backward district identified by the Planning Commission under BRGF scheme (Project cost/ CSR assistance of Rs 41.76 lacs) and first instalment of 25% of Project cost/CSR assistance has been already disbursed to the agencies before end of December’ 2013 for implementation of proposal.

Employment Oriented Skill Training Programme in construction trades to more than 115 beneficiaries in the States of Orissa and Rajasthan has been also completed and KUDUMBASHREE has also completed training in construction trade for 70 slum women in Kerala.  

HUDCO has also contributed an amount of Rs. 25 lacs and Rs. 15 lacs to the Chief Minister’s Relief Fund, Uttarakhand and Himachal Pradesh respectively for flood and land slide victims. In addition, HUDCO has also made a contribution of Rs. 12.55 lacs to the Chief Minister’s Relief Fund, Orissa for Cyclone “Phalin” affected area.

Besides, HUDCO has also extended support for Construction of toilets in the various schools of Unakoti Distt. in Tripura, Completion of Kala Bhawan at Chikkaballapur in Karnataka, Construction of Skill Training Centre in Cuttack in Orissa and Tezpur in Assam, Purchase of 4 Ambulances in the state of Goa and Cesspool cleaners in state of Nagaland and also taken up/completed the Rain Water harvesting in its Regional office Building at Jhalana Dongri, Jaipur through CPWD at a cost of Rs 4.50 lacs.

HUDCO’S Role in Disaster Mitigation

HUDCO has always been on the forefront of disaster mitigation efforts in Indiaand always extended its helping hand in times of crisis due to natural calamities like earthquakes, landslides, cyclone, flooding, sea erosion and tsunami etc in various parts of the country. Consequent these natural calamities, substantial damage to property and assets take place, rendering large number of families homeless. HUDCOhas played an active role in the rehabilitation/reconstruction of housing and other amenities for natural calamity affected areas. Recently HUDCO has supported natural calamity hit areas of Uttarakhand, Himachal Pradesh and OdishaState through CSR and HUDCO’s KfW grant assistance.

14.    OFFICIAL LANGUAGE

HUDCO continued its efforts to implement the official language policy of Govt. of India in all its offices and motivating the employees at all levels to achieve the targets set in the annual official language programme issued by Govt. of India. In order to promote use of Hindi in HUDCO, ‘Rajbhasha Month’ was celebrated in September 2013 and various competitions were organized both at Corporate Office, as well as in Regional Offices and during the month. Officials from Official Language Department of Corporate Office participated in Regional Offices meetings and programmes and a special Hindi workshop was also organized in Thiruvananthapuram for Hindi Nodal Officers and Nodal Assistants. Further, officials of HUDCO were sent for Hindi Training Programme organized by various Officials Language Institutes.

During the year, Committee of Parliament on Official Language inspected HUDCO’s Guwahati and Patna Regional Offices and the official Language implementation in these Regional Offices was appreciated by the Parliamentary Committee. Official language inspection was also conducted by Hindi Department, Corporate Office at Mumbai, Guwahati, Jaipur, Hyderabad, Thiruvananthapuram, Jammu, Bhopal, Lucknow and NCR Regional Offices and the Corporate Office departments viz. Human Settlement Management Institute, Public Relations, Audit, Company Secretary, Administration, Human Relations and General Accounts.

In recognition of HUDCO’s efforts towards progressive use of Hindi, “NARAKAS” awarded special appreciation award – “Rajbhasa Shield” to HUDCO and also appreciated HUDCO for organizing “Doha Path Pratiyogita” for the employees of PSUs, Delhi under NARAKAS. Two of our officials were also awarded for participating in Hindi competitions by NARAKAS, Delhi. Our Thiruvananthapuram Regional Office and one of the officials of our Jammu Regional Office were also awarded appreciation award for Official Language implementation.

15.     VIGILANCE

The Corporate Vigilance Department (CVD) continued to strive for improving the systems and procedures in the working of the company, in line with CVC’s directions issued from time to time. Several steps were initiated as part of preventive vigilance by putting in place the modes of creating general awareness amongst all officials, particularly towards vigilance related issues, with special emphasis on implementation of e-governance by the concerned wings of the Company and Regional Offices.

The steps taken/being taken towards preventive vigilance and the efforts made to deal with the third party in a transparent manner include online applications, tenders accessible to the general public/vendors, information on payments made to them from time to time. In compliance of CVC’s instructions, all the Regional Offices of HUDCO have been advised to ensure the maintenance of quality standards in construction activities by the borrowing agencies in the projects financed by HUDCO. Another initiative taken by HUDCO towards reducing the volume of physical documents at Head Office includes digitization of records which has been taken up on a pilot basis.

Further, inspection of Regional Offices at Hyderabad and Ahmedabad were carried out during the year and officials were detailed about preventive aspects of vigilance. The points emerged out of inspections have been apprised to the concerned ROs for follow-up action. Vigilance Awareness Week was observed by the Corporation from 28th October to 2nd November, 2013 at the Head Office as well as at all the Regional Offices with focus on ‘Promoting Good Governance–Positive Contribution of Vigilance’. Shri PRK Naidu, IPS (Jharkhand 1987) has joined HUDCO as Chief Vigilance Officer with effect from 6th March, 2014.

16.   MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis Report covering the requisite information as required by the DPE guidelines is annexed with the Directors Report.

17. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Conservation of Energy

HUDCO is not a manufacturing Company and does not own any manufacturing unit; hence the disclosure of particulars regarding Conservation of Energy is not applicable. However, efforts are made for conservation of energy in the office(s) of HUDCO by use of energy efficient machines/ equipments/ lights while replacing the existing ones. Rain water harvesting methods are also adopted, wherever possible.

 Technological Absorption

HUDCO has taken various measures in the field of technology absorption by extending financial assistance to the building material industries manufacturing building materials and other components, through the latest technology, which are innovative, cost effective and alternates to the conventional mode of manufacturing. Foreign Exchange Earnings and Outgo

During the year, inflow on account of foreign exchange transaction was amounted to Rs.1.73 crore (previous year Rs. 2.28 crore) while out go was amounted to     Rs 6.89 crore (previous year Rs. 8.92 crore).           

18.  DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Directors of your Company confirm:   

19.     DIRECTORS

Shri KBS Sidhu, IAS, Joint Secretary (Housing), Ministry of Housing & Urban Poverty Alleviation, Government of India was appointed as Government Nominee Director on the Board of HUDCO with effect from 30th August, 2013 in place of Shri Susheel Kumar.

Further, Dr. M. Ravi Kanth, IAS(r), has been appointed as Chairman & Managing Director of HUDCO with effect from 11th April, 2014 in place of Shri VP Baligar, IAS, who ceased to be Chairman & Managing Director with effect from 10th April, 2014 on completion of his term.

Smt. Jhanja Tripathy, IRAS, Joint Secretary & Financial Advisor, Ministry of Housing & Urban Poverty Alleviation, Government of India was appointed as Government Nominee Director on the Board of HUDCO with effect from 3rd May, 2014 in place of Shri Naresh Salecha.

Your Directors extend a warm welcome to Shri KBS Sidhu, Dr. M. Ravi Kanth and Smt. Jhanja Tripathy for being part of HUDCO. Your Directors also place on record its appreciation for the valuable contribution made by Shri Susheel Kumar, Shri VP Baligar and Shri Naresh Salecha, during their tenure on the Board of HUDCO.

20.    PARTICULARS OF EMPLOYEES

There is no employee, in receipt of remuneration in excess of limit prescribed under section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended.

 21.     AUDIT COMMITTEE

Your Company has an Audit Committee in compliance to the provisions of Section 292A of the Companies Act, 1956 and the guidelines issued by Department of Public Enterprises (DPE) applicable to Central Public Sector Enterprises. The complete detail with respect to the Audit Committee as required to be given under the Companies Act, 1956 and DPE guidelines is given in the ‘Corporate Governance Report’.

22.    AUDITORS & AUDITORS’ REPORT

M/s Dhawan & Co., Chartered Accountants, the Statutory Auditors, who were appointed by the Comptroller & Auditor General of India (C&AG) for the financial year 2013-2014, had conducted the statutory audit of your Company. The review of Annual accounts of your Company for the year ended 31st March, 2014 by the C&AG under section 143(6) of the Companies Act, 2013 forms part of this report and the same is annexed hereto. 23.     BUY-BACK OF SHARES

There was no buy back of shares as per provisions of section 77A of the Companies Act, 1956.

 24.     EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the year, no Employee Stock Option Scheme has been offered to the employees by the Company.

25.     LISTING OF SECURITIES

The entire equity share of the Company is held by Government of India; hence the same is not listed on the Stock Exchanges. However, the bonds issued by the Company are listed at the following stock exchanges as on 31st March, 2014:

1.    National Stock Exchange of India Ltd. (NSE)

2.    Bombay Stock Exchange (BSE)

3.    Delhi Stock Exchange (DSE)

26.   APPRECIATION  AND GRATITUDE

Your Directors acknowledge with gratitude the valuable guidance, support and co-operation extended by various Ministries of the Government of India including the Ministries of Housing & Urban Poverty Alleviation, Urban Development, Rural Development, Finance, External Affairs, Planning Commission, Reserve Bank of India, National Housing Bank, Bankers, Financial Institutions, Credit Rating agencies, Comptroller & Auditor General of India, Statutory Auditors and other Governments’ Agencies/Departments. Your directors also appreciate the continued support provided by the International Finance Institutions, such as Kreditanstalt fur Wideraufbau (KfW), Japan Bank of International Cooperation (JBIC), Asian Development Bank (ADB), USAID, etc.

Your Directors also acknowledge their gratitude to various State Governments, Housing Boards, Development Authorities, Municipal/Local Bodies and other Institutions for their continued support and confidence reposed in your Company and for their valuable suggestions.

Your Directors also place on record its appreciation to the debenture/bond holders, depositors and other investors/ stakeholders for their unstinted support and confidence reposed in the organization and their continued support has been a source of inspiration and strength to the Company.

Your Directors also take this opportunity to place on record its appreciation to the hard work, dedication, commitment and unstinted efforts put in by all the members of HUDCO family.