Housing and Urban Development Corporation Limited May 24, 2018 Ratings Instruments Long-term/ Short-term Bank Facilities Fixed Deposit Programme Commercial Paper Long-term Bonds (18-19) (including sub-limit of Rs.4,000 crore as subordinated debt) Details of instruments/facilities in Annexure-1 Amount 15,000 (enhanced from 10,000 ) (Rupees Fifteen thousand crore only) 2,000 (reduced from 3,000) (Rupees Two Thousand crore only) 8,500 (enhanced from 6,500) (Rupees Eight Thousand Five Hundred crore only) 40,000 (Rupees Forty Thousand crore only) Ratings1 CARE / CARE (Triple A; Outlook: / A One Plus) CARE AAA ; [Triple A (Fixed Deposit); Outlook: ] CARE (A One Plus) CARE (Triple A; Outlook: ) Remarks Assigned Detailed Rationale & Key Rating Drivers The ratings assigned to the various instruments of Housing and Urban Development Corporation Ltd (HUDCO) continue to derive strength from it being a majority Government of India (GoI) owned entity, its strategic importance to GoI and GoI support as reflected by its Mini Ratna status, healthy business growth with incremental lending to Government sector borrowers, which have witnessed good asset quality profile and no incremental lending to private sector, which has witnessed weaker asset quality profile, diversified resource profile, healthy capitalisation and adequate liquidity profile. Going forward, the ability of HUDCO to maintain its asset quality and sustain profitable business growth while maintaining its liquidity and capital adequacy position would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Majority Government ownership, demonstrated Government support and strategic importance to GoI: HUDCO is majority owned by GoI, with an implicit support from the government. In May 2017, the government diluted 10.19% of their stake from the earlier 100% stake by way of an IPO of Rs. 1200 crore. HUDCO also has access to refinance assistance of NHB and foreign currency lines from ADB, JBIC (both guaranteed by GoI) and USAID (not guaranteed by GoI) etc. HUDCO is a strategically important entity for GoI and has played a significant role in the implementation of its various initiatives in urban infrastructure and low cost housing. Business growth with incremental lending to low risk Government sector: The loan book of HUDCO registered a growth of 13.32% during 9M FY18 to Rs.44,946 cr from Rs.39,661 crore as on March 31, 2017. HUDCO disbursed Rs.8,490 cr and sanctioned Rs.24,085 cr during 9M FY18 as compared to disbursement of Rs. 9,095 crore and sanction of Rs. 31,862 crore in FY17. Incrementally HUDCO has been lending only to the government sector borrowers and no fresh lending to private sector borrowers and as result share of lending to government sector entities increased to 92% of loan book as on December 31, 2017, balance 8% is the loan portfolio outstanding to private sector entities in the past. Diversified resource profile: HUDCO has a diversified funding profile wherein it has raised funds through Bonds (Tax free and Taxable), Bank loans, commercial papers, refinance lines from NHB, Public Deposits and others. As on March 31, 2017, out of total borrowing of Rs.28,432.43 crore, tax free bonds constituted 61.2%, NHB refinance: 10.5%, taxable bonds: 16%, public deposits: 3.2%, Commercial Paper: 5.10%, Foreign currency loans: 2% and Bank Loan: 2%. Healthy capitalisation and adequate liquidity profile: HUDCO s capitalization profile is comfortable as reflected in capital adequacy level at 58.55% as on March 31, 2017 (63.85% as on March 31, 2016) well above the regulatory minimum requirement of 12%. The capital adequacy ratio remains healthy at 49.93% as on September 30, 2017. HUDCO s gearing was 3.32 times as on December 31, 2017. HUDCO s is expected to maintain comfortable liquidity profile on the back of its 1Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications. 1 CARE Ratings Limited
diversified funding profile, good financial flexibility and adequate unutilized bank lines. HUDCO has unutilized line of credit of Rs.9,000 crore from various banks to plug any temporary mismatches. Going forward, the ability of HUDCO to maintain its asset quality and sustain profitable business growth while maintaining its liquidity and capital adequacy position would be the key rating sensitivities. Analytical approach: Standalone Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE s Policy on Default Recognition Rating Methodology - Infrastructure Sector Ratings Financial ratios Non-Financial Sector About the Company HUDCO set up in 1970, is a majority GoI-owned (89.81% as on March 31, 2018) developmental financial institution mandated to provide long-term finance for social housing & core urban infrastructure development in the country. It is a central public sector undertaking and a public financial institution within the meaning of Clause (72) of section 2 of the Companies Act, 2013. Furthermore, HUDCO is also a housing finance company registered with National Housing Bank (NHB). The corporation was conferred Mini Ratna status in August 2004 resulting in greater operational and financial flexibility. HUDCO is also a Central Nodal Agency, along with NHB, for the implementation and monitoring of the Pradhan Mantri Awas Yojna Housing for All by 2022 scheme to be implemented over the period 2015-2022. HUDCO s lending is mainly focused towards state undertakings in the housing or urban infrastructure segment with majority of loans backed by state government guarantees and/or budgetary allocation through state sponsored programmes. Presently, HUDCO operates through a corporate office along with 21 regional offices and 11 development offices. The company has an experienced board comprising of 10 Directors (three functional, two government nominee and five independent directors) with rich experience in Government administration & private sector which aids efficient decision making and management of the company. HUDCO is equipped with an experienced Senior Management Team and a Large Pool of Skilled and Professional Employees. Brief Financials FY16 (A) FY17 (A) Total operating income 3,302 3,585 PAT 784 842 Interest coverage (times) 1.63 1.72 Total Assets 35,878 39,322 Net NPA (%) 2.06 1.15 ROTA (%) 2.27 2.24 A: Audited Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History for last three years: Please refer Annexure-2 Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to care@careratings.com for any clarifications. Analyst Contact: Name: Puneet Maheshwari Tel: 011-45333251 Mobile: 9871799127 Email: p.maheshwari@careratings.com **For detailed Rationale Report and subscription information, please contact us at www.careratings.com 2 CARE Ratings Limited
About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. Disclaimer CARE s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. Annexure-1: Details of Instruments/Facilities Name of the Instrument LT/ST Fund-based/Nonfund-based-EPC / PCFC / FBP / FBD / WCDL / OD / BG / SBLC Date of Issuance Coupon Rate Maturity Date Size of the Issue Rating assigned along with Rating Outlook - - - 15000.00 CARE / CARE Bonds - - - 40000.00 CARE Fixed Deposit - - - 2000.00 CARE AAA ; Commercial Paper - - - 8500.00 CARE Annexure-2: Rating History of last three years Sr. No. Name of the Instrument/Bank Facilities 1. Bonds-Unsecured Reedemable 2. Short Term Instruments-CP/STD Type Current Ratings Amount Rating Outstanding assigned in 2018-2019 2017-2018 LT - - - 1)Withdrawn ST - - - 1)Withdrawn 3. Fixed Deposit LT 2000.00 CARE AAA ; - ; Rating history 2016-2017 ; 3)CARE (31-May-16) ; 2015-2016 3 CARE Ratings Limited
4. Bonds-Unsecured Reedemable 5. LT/ST Fundbased/Non-fundbased-EPC / PCFC / FBP / FBD / WCDL / OD / BG / SBLC LT - - - - 1)Withdrawn LT/ST 15000.00 CARE / CARE 6. Bonds LT 5000.00 CARE 7. Fund-based - ST- Term loan - ; / CARE - ; ST - - - 1)Withdrawn ; ; 8. Bonds LT 2401.35 CARE 9. Bonds LT 5687.12 CARE 10. Commercial Paper ST 8500.00 CARE - ; - ; - ; ; 3)CARE (31-May-16) 11. Bonds LT - - - - - 1)Withdrawn 12. Debt-Subordinate Debt LT - - - - - 1)Withdrawn 13. Bonds LT 1500.00 CARE - ; 14. Bonds LT 3500.00 CARE 15. Bonds LT 3865.00 CARE 16. Bonds LT 12000.00 CARE - ; - ; - ; ; ; ; (26-Oct-15) 3)CARE AAA (26-Oct-15) - - 4 CARE Ratings Limited -
CONTACT Head Office Mumbai Ms. Meenal Sikchi Mr. Ankur Sachdeva Cell: + 91 98190 09839 Cell: + 91 98196 98985 E-mail: meenal.sikchi@careratings.com E-mail: ankur.sachdeva@careratings.com Ms. Rashmi Narvankar Mr. Saikat Roy Cell: + 91 99675 70636 Cell: + 91 98209 98779 E-mail: rashmi.narvankar@careratings.com E-mail: saikat.roy@careratings.com CARE Ratings Limited (Formerly known as Credit Analysis & Research Ltd.) Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022 Tel: +91-22-6754 3456 Fax: +91-22-6754 3457 E-mail: care@careratings.com AHMEDABAD Mr. Deepak Prajapati 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015 Cell: +91-9099028864 Tel: +91-79-4026 5656 E-mail: deepak.prajapati@careratings.com BENGALURU Unit No. 1101-1102, 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore - 560 001. Cell: +91 98407 54521 Tel: +91-80-4115 0445, 4165 4529 CHANDIGARH Mr. Anand Jha SCF No. 54-55, First Floor, Phase 11, Sector 65, Mohali - 160062 Chandigarh Cell: +91 85111-53511/99251-42264 Tel: +91-0172-490-4000/01 Email: anand.jha@careratings.com CHENNAI Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002. Cell: +91 98407 54521 Tel: +91-44-2849 7812 / 0811 COIMBATORE T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore - 641 037. Tel: +91-422-4332399 / 4502399 JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur - 302 016. Cell: +91 95490 33222 Tel: +91-141-402 0213 / 14 E-mail: nikhil.soni@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata - 700 071. Cell: +91-98319 67110 Tel: +91-33- 4018 1600 E-mail: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Cell: +91-98117 45677 Tel: +91-11-4533 3200 E-mail: swati.agrawal@careratings.com PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: +91-98361 07331 Tel: +91-20- 4000 9000 E-mail: pratim.banerjee@careratings.com CIN - L67190MH1993PLC071691 HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, 3-6-502, Himayat Nagar, Hyderabad - 500 029. Cell : + 91 90520 00521 Tel: +91-40-4010 2030 E-mail: ramesh.bob@careratings.com 5 CARE Ratings Limited