Micro Housing Finance Corporation (“MHFC”), a housing finance company that is focused on providing housing loans to financially excluded urban lower income families, announced its HYE Sep 30, 2011 unaudited results. The company has made its first half yearly profit, and looks on course to wipe out its start up losses by FYE Mar 31, 2012.
Specifically, Income from Operations was Rs 205 lakhs as against Rs 54 lakhs in the corresponding period last year, and after expenses, the company declared a profit for the first time of Rs 65 lakhs as against a loss of Rs 28 lakhs in the corresponding period last year. This is after setting aside 1% (Rs 21 lakhs) on its standard assets (previous period NIL), which is higher than the NHB directive to all housing finance companies of 0.4%.
Housing loans outstanding as on Sep 30, 2011 was Rs 21.2 cr, a 700% increase over the corresponding figure of Rs 2.9 cr in the previous year. In terms of cumulative housing loans sanctioned, this is at Rs 41.5 cr, as against Rs 11.4 cr in the previous corresponding period. Over 1,000 families, mostly employed in the informal sector, ranging from self employed vegetable vendors and barbers to salaried employees like housemaids, drivers and security guards, have now bought homes with housing assistance from MHFC. The company continues to have NIL non performing assets.
For the full year 3/2012, the company expects to touch Rs 80 cr in cumulative loan sanctions and Rs 40 cr in loan disbursals. It has approx Rs 37 cr in equity and has also raised debt financing commitments from financial institutions, including its regulator, the National Housing Bank and the premier housing finance institution, HDFC Ltd.
According to Madhusudhan Menon, Chairman of MHFC, “It is immensely satisfying when efforts over three years finally start paying off. We have come a long way in better understanding our customers, and have stabilized our systems to process large volumes of disbursals and collections. Over 6,000 people living in unhygienic conditions have found housing solutions with our help. Although escalating construction costs and financing costs continue to be matters of concern, with more projects in various stages of completion and customer repayments continuing to be on track, there is reason to look forward with optimism.”
MHFC received its license from the National Housing Bank in February 2009 and began operations in June 2009. Its loan amounts are usually around Rs 5 lakhs (not exceeding 80% of the cost of the house) for a period not exceeding 15 years, with the house serving as security for the loan. Its rate of interest is currently between 12% and 14% per annum.
It has a project-led approach and ties up with developers, both public and private, who have a similar focus on urban affordable housing (as defined as being in a price range not exceeding Rs 10 lakhs). Partnerships include tie-ups with builders like Tata Housing, Poddar Developers and Usha-Breco Realty in Mumbai. MHFC also has an active presence in Pune, Ahmedabad, Surat, Nagpur, Indore and Kolkata, and is currently operational in over 40 low-income housing projects across the country.