Dewan Housing Finance Corporation Ltd. (DHFL) was founded in 1984 by late Shri Rajesh Kumar Wadhawan with a vision to provide financial access to the lower and middle income segment of the society. DHFL is one of India’s leading private housing finance companies with presence in over 180 captive locations in country and representative offices in London and Dubai. Headquartered in Mumbai, it has a nationwide distribution with 75 branches, 80 service centres and 35 camp locations across India. It has 110,000 customers with the average loan size of Rs. 6 lakh.The company also has a strategic tie-up with the UAE Exchange to offer hassle free home loans to NRIs wishing toinvest in property in India. DHFL acquired Vysya Housing Finance from ING Vysya Bank in 2003-04
Mr. Kapil Wadhawan has been elevated to the post of Chairman & Managing Director w.e.f from 28th July, 2009, by the company's Board. He took over the reins of this company in October 2000. Before taking over as the Managing Director, he was the Executive Director on the board of DHFL since 1996. He has an MBA (Finance) degree from Edith Cowan University at Perth, Australia.
In a telephonic one-on-one conversation with Hemant P. Maradia of India Infoline Ltd., Mr. Wadhawan says: "For now, there is expectation that inflation will move up by the middle of next year."
What is your reaction to the RBI’s policy announcement?
It was on expected lines. We were not expecting any change in the key policy rates. There is sufficient liquidity in the banking system today. The RBI wants to maintain a stable interest rate policy environment over the next couple of quarters.
Do you think interest rates have bottomed out?
It is very difficult to say, though I believe rates depend on the cost of funding - what rate one is able to raise the money from the markets. For now, there is expectation that inflation will move up by the middle of next year. Therefore, one can say that given the present situation, interest rates may have bottomed out.
How is DHFL positioned right now?
We are very well placed both on the lending and the borrowing side. On the borrowing side, the interest rates are stable. There is enough liquidity in the system. We have been borrowing from banks as well as from the markets at a very effective rate of interest. The same benefit continues to accrue to the DHFL borrowers as well.
However, the interest subsidy scheme that the Government has announced on Monday is also a positive step towards ensuring affordability of homes to the low to middle income groups. The low to middle income group is our target audience and will continue to be so in future also. We are awaiting the guidelines from the National HousingBank (NHB) as we understand that it will be the nodal agency.
Which are the regions that you will be looking at for future growth?
South and West we have been pretty active. We currently have 180 offices. Predominantly, these are in the Tier II Tier III markets. So, North and North East are clearly going to be the key focus area going forward, besides the pockets that we are not present in the West and South.
What are your plans on affordable housing segment?
We have aggressive plans on affordable housing segment. We do direct lending to the individuals and also through our property services where we take up projects for marketing. We will continue to focus on this segment. Affordability as an acronym cannot be used to describe low-cost housing. Affordability depends on the income levels of individuals/household. If somebody is earning Rs75,000, his affordability will depend on the amount he can spend based on his income credentials. I believe every segment of income earners depends on its own affordability. We also look at lending to the self-employed segment, though salaried class continues to account for the largest proportion of our total lending. It is not that we don’t lend in Mumbai, Bangalore, Hyderabad, Delhi and other metro cities. We do service these segments through our regional centers. We do not differentiate between lower income and higher income groups.
You recently raised money via QIP? Can you throw more light on this?
We raised it very successfully, and in the nick of time I believe. Total money raised in this capital expansion was Rs300 crores. Institutional investors contributed Rs226 crores came through the promoters as their contribution through a preferential allotment. Post the issue, our capital adequacy has moved up significantly, and it now stands at around 22%.
Comment on your First-Quarter Results?
The financial results for the first quarter have been very encouraging, whether you look at approvals, sanctions, and on various other financial parameters. Total income has moved up by 50%. Profit After Tax (PAT) has moved up by 59%. Loan sanctions are up almost 100% over the same period last year. Loan disbursements are up 60% plus.
What is the outlook going forward?
Looking at the first quarter, which is usually very sublime to the balance three, the numbers are a good base for the coming quarters. A growth rate of 35-40% for the year is on the cards.
Tell us about the internal group reorganisation?
This has happened over the last couple of days. Rakesh Kumar Wadhawan, who is the non-executive chairman and Sarang Wadhawan, who is promoter director on the DHFL board as well as A.K. Gupta have resigned. There has been an elevation to the chairman’s position for myself. At the same time, certain board committees have also been reconstituted. Myself and my younger brother, Dheeraj Wadhawan, who were on the board of directors of HDIL, have also tendered our resignation.
What are your plans for other group firms?
We would like to go slow and steady as far as the retail and hospitality businesses are concerned. We don’t want to be over zealous on this front. But, surely over a period of time, this business too will shape up well, like DHFL has over the last 25 years. On the whole, the plans for these businesses continue to be on track.
What is the current level of NPAs and NIM?
Our net NPA is 1.06% and gross NPA is 1.49%. Our net NPA this quarter was down by almost 37 basis points over the preceding quarter. Net Interest Margin (NIM) has been maintained at 3%. We plan to maintain NIM at this level in future also a few basis points here and there. We are also trying to boost our other income. We have started a couple of new verticals for insurance selling, property selling and project managementadvisory. We are leveraging the infrastructure that we have to support cross selling.