Motilal Oswal Home Finance Limited Shares

Annual Report Summary

A New Dawn symbolizes a new beginning, hope, and optimism for Motilal Oswal Home Finance (MOHFL). In FY2023, the company achieved its highest-ever profitability, increased disbursement, loan book growth, and improved asset quality. It is committed to evolving and improving to achieve its full potential.

Corporate Information: The annual report provides corporate information for Motilal Oswal Home Finance Limited for the fiscal year 2022-23. Key personnel include Motilal Oswal (Chairman & Interim Managing Director), Raamdeo Agarawal (Non-Executive Director), and Divya Momaya and P. H. Ravikumar (Independent Directors). Shalibhadra Shah is the Chief Financial Officer, and Ritin Mawani is the Company Secretary & Compliance Officer. M/s. Singhi & Co. are the Statutory Auditors. Link Intime India Private Limited serves as the Registrar & Transfer Agent. Addresses for the registered and registered offices are provided. Several committees oversee key aspects of the company's operations, including the Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee, Asset Liability Management Committee, and IT Strategy Committee. Details of committee members are provided. The document also lists the various bankers and lenders, as well as debenture and security trustees.

Chairman's Message: Motilal Oswal, Chairman, reports FY2023 as a growth year despite economic headwinds. India's retail inflation reached an 8-year high of 7.79% in April 2022, prompting the RBI to raise repo rates by 250 bps to 6.5%. However, these measures helped decrease retail inflation to 5.66% by March 2023. He highlights the highest-ever PAT of ₹136 crore, a 44% YoY increase, and improved ROA and ROE. Disbursements increased by 57% YoY to ₹1,007 crore. The company now operates in 12 states/UTs with 109 branches and serves 47,350+ families. ICRA upgraded the long-term rating to AA/Stable. The company partnered with the U.S. International Development Finance Corporation (DFC) and secured a USD 50 million commitment. The cost of borrowings decreased by 24 bps YoY to 8.0%. GNPA stood at 1.1% and NNPA at 0.5%. Digital initiatives are underway, including mobile apps for sales, credit, and collection, and the MOHFL Parivar app for customers.

Board of Directors/KMP Profiles: Brief profiles are presented for each member of the Board of Directors and Key Management Personnel, highlighting their qualifications, experience, and roles within the Motilal Oswal group.

Key Highlights (FY2023):

• Highest ever PAT of ₹136 crore, up 44% YoY.
• Disbursements grew by 57% YoY to ₹1,007 crore.
• ICRA upgraded long-term credit rating from AA- to AA (stable).
• Independent sales, credit, collection, and operations teams.
• Cost of borrowing down 24 bps YoY to 8.0%.
• Raised ₹1,052 crore at 7.5% in FY2023.
• New book (post-April 2018) contributes 48% of loan book with GNPA <1%.
• Strong liability mobilization from banks & institutions.
• Collection efficiency of 100.1% in FY2023.
• Loan book stood at ₹3,772 crore.
• Net worth of ₹1,148 crore.
• NIM of 7.7% and spread of 5.9%.
• GNPA of 1.1% and NNPA of 0.5%.
• Stage 3 provision coverage of 49%.
• Net debt to equity of 2.2x.
• Capital adequacy of 51%.

Loan Book & Borrowing Analysis: The report analyzes the loan book composition by state, customer type (self-employed vs. salaried), and product type (new purchase, self-construction, etc.). It also provides a borrowing mix breakdown (term loan, NCD, NHB, securitization, ECB).

ESG Initiatives: The company details its Environmental, Social, and Governance initiatives.

• Environmental: Responsible lending practices, funding environment-friendly projects, judicial use of funds, focus on affordable housing in tier 2 & 3 cities, encouraging solar panel installation, tree planting, energy-efficient lighting, water conservation, and digitalized processes.
• Social: Promoting housing to underpenetrated segments, hiring from premier campuses, talent development programs, offering concessional rates to women borrowers, customer service department, paid leave, focus on employee wellbeing, fire drills, engagement activities, and learning app.
• Governance: Diversified board, regulatory compliance, remuneration policy, IT strategy committee, risk management framework, policy on prevention of sexual harassment, prohibition of insider trading, and corporate governance policy.

Our Journey: A chronological timeline highlights key milestones from 2014 (commencement of business) to 2023 (highest ever PAT).

Key Strategic Initiatives: The strategic initiatives include growing the loan book, robust teams, improving TAT, geographic expansion, self-construction loans, completed properties, extending product bouquet, focus on self-employed and salaried borrowers, strengthening credit structure, on-boarding MO Partners, and reducing cost of funds.

Our Presence: MOHFL has 109 locations across 12 States/UTs.

Management Discussion & Analysis: The Management Discussion and Analysis provides an overview of the Indian economy, housing finance industry, and MOHFL's performance. It discusses the macroeconomic environment, inflation, interest rate trends, GDP growth, and the impact of the Russia-Ukraine war. It covers the regulatory landscape, including RBI's guidelines for HFCs, IRAC norms, PMAY, and the Co-Lending Model. Key aspects of MOHFL's operations are highlighted, including:

• Loan approval process
• The importance of strong collections
• Sound liability management practices
• Risk management framework
• Internal controls
• Business continuity plan
• Digital initiatives
• Human resources
• Opportunities and threats.

Board's Report: The Board's Report provides a summary of the company's performance, financial results, dividend policy (no dividend declared), and state of affairs. It covers:

• Environment, Social and Governance Initiatives
• Share Capital
• Fund Raising/Sources of Funds: Refinance from NHB, external commercial borrowing, loans from banks/financial institutions, and securitization.
• Commercial Papers & Non-Convertible Debentures
• Credit Ratings
• Public Deposits
• Regulatory Compliance
• Capital Adequacy Ratio, Statutory Reserve, Non-Performing Assets and Provisions for Contingency
• Risk Management Framework
• Holding/Subsidiary Company
• Board of Directors and Key Managerial Personnel (KMP): Discusses the composition of the board, performance evaluation, and remuneration policy.
• Employee Stock Option Scheme
• Corporate Social Responsibility
• The Board's report includes annexures pertaining to share capital, employee stock option scheme, CSR activities, and a policy on materiality and dealing with related party transactions. It also details credit ratings, disbursements, regulatory compliance, public deposits, and risk management.

Financial Statements: The report contains detailed financial statements, including the Balance Sheet, Statement of Profit and Loss, Statement of Cash Flows, and Statement of Changes in Equity, along with accompanying notes. Key areas covered include:

• Loans and advances
• Financial assets and liabilities
• Equity share capital and other equity
• Impairment on financial instruments
• Borrowings, debt securities, and other financial liabilities
• Revenue from operations and finance costs
• Income tax expense and deferred tax assets/liabilities
• Employee benefits and share-based payments
• Earnings per share and other comprehensive income
• Related party transactions
• Segment reporting and a range of financial ratios.

The Independent Auditor's Report provides an unqualified opinion on the financial statements. Detailed annexures provide supplementary information on significant financial items.