Annual Report: 2024
Expanding Horizons. Empowering Lives.
About the Report:
This 2023-24 Annual Report offers a comprehensive evaluation of HDB Financial Services' (HDBFS) financial and non-financial performance and significant initiatives undertaken to serve the wider community. It provides stakeholders with a comprehensive view of the company’s value-creation ability, competitive advantages, operating context, performance highlights, future prospects, risks, opportunities, governance structure, and approach towards long-term sustainability. The report covers the period from April 1, 2023, to March 31, 2024, and has been reviewed and approved by senior management and the Board of Directors to ensure accuracy, completeness, and relevance. The Board of Directors provides assurance regarding the accuracy and reliability of the information presented, affirming that the report reflects the company's performance, financial position, and strategic endeavors.
Company Overview:
HDBFS is a prominent Non-Banking Financial Company (NBFC) in India, established in 2007. It is renowned for its proficiency in loan origination, underwriting, and a broad product range, offering diverse financial products and services, including enterprise lending, asset financing, consumer loans, fee-based products, and business process outsourcing (BPO) services. As of 2023-24, the company has 1,682 branches across 31 states/UTs. HDBFS holds a ‘CARE AAA/Stable’ rating by CARE Ratings Limited and ‘CRISIL AAA/Stable’ rating by CRISIL Ratings Limited for Long-Term Debt, Bank Facilities, Subordinated Debt, and Perpetual Bonds.
Values, Vision and Mission:
HDBFS ensures the highest standard of professional conduct in every corner of the organization, defining how business is conducted and people are treated. The company is committed to transparency and ethical practices, ensuring honesty and fairness in all conclusions. HDBFS’s vision is to be India's most admired NBFC; through great execution, driving simplicity, and developing humility, while its mission is to deliver innovative products and services to cater to the growing needs of an aspirational India, serving both individual and business clients.
Message from the Chairman (Arijit Basu):
The Chairman communicates optimism regarding India's economic resilience and adaptability amidst global challenges. He notes that the global economy is projected to expand, while India's GDP growth has consistently exceeded 7% since FY 2021-22. He also highlights the significant role of Micro, Small and Medium Enterprises (MSMEs) and the Digital India program in India's economic transformation. For achievements in FY 2023-24, HDBFS expanded its branch network to 1,682 branches, expanded reach across 31 states/UTs, and achieved 28.75% growth in Assets Under Management (AUM).
Message from the MD & CEO (Ramesh G.):
The MD & CEO emphasizes HDBFS's commitment to excellence, strengthening its position as a leading NBFC. They report a healthy AUM growth of 28.75% and expansion of the branch network to 1,682 branches, improving accessibility to underserved areas. Asset quality remained robust, with a GNPA ratio of 1.90% and NNPA ratio of 0.63% as of March 31, 2024. Total revenue grew by 14.26% to ₹14,171 Crore, and profit after tax rose by 25.59% to ₹2,461 Crore. They also focus on sustainable growth and profitability while maintaining asset quality, diversification of product suite and broad geographic presence, risk management and regulatory compliance. They discuss technological integration for enhanced operating efficiency, including the HDB on-the-go mobile app, WhatsApp bot, and Chatbot.
Expanding Horizons over the Last Five Years:
HDBFS navigated the evolving financial landscape with consistent growth and profitability. Over the past five years, the total revenue has grown from ₹10,756 Crore in FY 2019-20 to ₹14,171 Crore in FY 2023-24. Profit before tax has grown from ₹1,464 Crore in FY 2019-20 to ₹3,305 Crore in FY 2023-24. Profit after tax has grown from ₹1,005 Crore in FY 2019-20 to ₹2,461 Crore in FY 2023-24. Assets under management have grown from ₹58,833 Crore in FY 2019-20 to ₹90,235 Crore in FY 2023-24. Shareholder’s funds have grown from ₹8,018 Crore in FY 2019-20 to ₹13,743 Crore in FY 2023-24. Borrowings have grown from ₹49,804 Crore in FY 2019-20 to ₹74,331 Crore in FY 2023-24. Earnings per share has grown from ₹12.78 in FY 2019-20 to ₹31.08 in FY 2023-24. Book value per share has grown from ₹101.80 in FY 2019-20 to ₹173.28 in FY 2023-24.
Empowering Lives through Diverse Range of Offerings:
HDBFS aims to empower individuals and businesses through diverse financial solutions. These include consumer loans (consumer durable loans, digital product loans, lifestyle product loans, personal loans, auto loans, two-wheeler loans, gold loans), enterprise loans (unsecured business loan, enterprise business loan, loan against property, loan against lease rental, loan against securities), asset finance (commercial vehicle loan, construction equipment loan, tractor loan), micro lending, fee-based products/insurance services, and BPO services (collection services, back-office and sales support).
Creating Value for Customers and Empowering Lives:
HDBFS's value creation process involves leveraging financial capital (strong equity, robust assets, prudent borrowings) and manufactured capital (branch network, corporate office) to offer consumer loans, enterprise loans, asset finance, micro lending, and fee-based products/services. Output includes financial capital metrics (28.75% AUM growth, ₹2,461 Crores net profit, ₹31.08 EPS, 3.03% ROA, 19.55% ROE) and manufactured capital metrics (1,682 branch presence, 31 State/UTs presence). There is a dedicated employee base; employee benefits; learning and development opportunities; and employee engagement initiatives. The company is also committed to compliance with regulatory framework. Social and relationship capital includes expanding customer base; CSR beneficiaries; strategic partners; investors/lenders/rating agencies; and compliance with regulatory framework. HDBFS values integrity, excellence, collaboration, respect, simplicity, and agility. Human capital includes 9.75 per person hours training, 21% of women employees, and 32,45,570 ESOPs granted. Social and relationship capital includes 1,34,000 CSR beneficiaries and AAA/Stable ratings (CARE and CRISIL) for Long-Term Debt & Bank Facilities and A1+ (CARE and CRISIL) Ratings for Commercial Papers.
Understanding the Operating Environment for Better Growth:
The financial sector's growth is influenced by various factors, including demographic shifts, increased access to financial services, and government policies. The Indian economy is expected to grow by 7.6% in FY 2023-24, due to robust domestic demand. The Company's mobile apps and online platforms provide seamless credit access promoting financial inclusion. HDBFS strives to enhance service delivery and customer experience by embracing digital transformation and technological capabilities. The Company is also committed to supporting economic development through accessible financial solutions. HDBFS has established a strong presence in urban, semi-urban and rural areas of India, enabling it to understand and cater to the diverse needs of its customers. The company has also aligned its operations and risk management practices to comply with regulatory requirements for categorization.
Competitive Strengths:
NBFCs have emerged as a crucial source of finance for a large segment of the population. HDBFS implements automated loan application processes and uses tools like CRM, Rule Engine, and Bureau Integration. HDBFS is able to cater to the needs of aspirational India with substantial endeavors to expand its reach. HDBFS stands out for delivering streamlined and effective financial solutions customized to address the distinct needs of its customers and various stakeholders. 84% Distribution Beyond Top 20 Cities. The company has 88,824 employees. GNPA 1.90%; NNPA 0.63%; PCR 66.82%. To maintain this HDBFS focuses on maintaining robust asset quality, underpinned by its prudent risk management practices and stringent credit evaluation processes. HDBFS uses data-driven marketing techniques such as personalized campaigns based on customer segments and predictive analytics. The company has seen 97% Of Applications Processed Digitally.
Digital Transformation:
HDBFS aims to continually evolve as an organization, utilizing cutting-edge technology to efficiently address customer needs, strengthening its position as a leading NBFC. Several digital offerings have been launched for commercial and retail segments to provide integrated solutions and simplify the borrowing process. These include an improved 'HDB on-the-go' mobile app, which has had over 8 million customers use it. Their CRM implementation has enabled efficient serving of customer needs.
Environmental Stewardship:
HDBFS prioritizes eco-friendly practices, with the aim of minimizing its environmental footprint and paving the way for a greener future. To achieve this, LED lights are extensively used across all offices and light sensors are strategically placed to save energy. Efficient waste and e-waste management are key priorities for HDBFS.
Corporate Social Responsibility:
The company firmly believes that the true measure of success goes beyond profits and it is committed to fostering positive change and recognizes the important role of businesses in shaping the societal landscape. In FY 2023-24, HDBFS was engaged in a range of CSR initiatives with the objective of contributing towards building a better India. The company's initiatives were rolled out across 129 districts spanning 22 states and 2 union territories. Initiatives were run in areas that include Transport Aarogyam Kendra, Project SNEHA, WASH initiative, Water conservation, Skill development center and Mission Million Trees.
Board of Directors:
The Company benefits from a distinguished Board of Directors who offer invaluable guidance, enabling it to navigate diverse challenges and capitalize on opportunities for growth. As of 2023-24, Arijit Basu serves as the Part-Time Non-Executive Chairman and Independent Director; Ramesh G. is the Managing Director and Chief Executive Officer; and Venkatraman Srinivasan, Jimmy Tata, Jayesh Chakravarthi, Smita Affinwalla, Arundhati Mech, and Amla Samanta serve as the Independent Directors.
Awards and Accolades:
HDBFS has been featured in India's Best Workplaces in BFSI 2024 and has been certified as a Great Place to Work and For the third consecutive year, HDBFS has been honoured with the ABECA 2024 – Ambition Box Employee Choice Award as one of the Top Rated Financial Services Companies.
Statutory Reports:
The provided legal notice outlines the upcoming 17th Annual General Meeting (AGM) of HDB Financial Services Limited, scheduled for June 27, 2024. The meeting will be conducted via video conferencing and other audio-visual means. The notice details the agenda, including the adoption of audited standalone and consolidated financial statements, the declaration of a final dividend of Re. 1/- per equity share, the appointment of a director in place of Mr. Jimmy Tata, and the appointment of Joint Statutory Auditors, Kalyaniwala & Mistry LLP and GD Apte & Co. Additionally, special business items include the re-appointment of Mr. Adayapalam Kumaraswamy (AK) Viswanathan as an Independent Director, and the approval for selling/assigning/securitising receivables/book debts up to ₹9,000 Crore. It provides information on dividend distribution, remote e-voting, communication means, contact information for queries, and the process for registering email addresses.
Financial Statements:
As of March 31, 2024, HDB Financial Services (HDBFS) reported total assets of ₹92,556.51 Crore, compared to ₹70,050.39 Crore the previous year. Cash and cash equivalents amounted to ₹647.85 Crore (₹395.90 Crore in 2023). Revenue from operations increased to ₹14,171.12 Crore from ₹12,402.88 Crore. Key financial highlights:
The company is in compliance with Reserve Bank of India (RBI) regulations and other legal requirements. Total No. of branches stood at 1682.
Going Forward:
HDBFS is strategically positioned for sustained growth, maintaining robust asset quality and customer engagement. With increasing financialization, digitalization, and shifting demographics, the company remains dedicated to serving India's growing financial needs while fostering inclusive development.
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