Defying Sceptics

Updated: Jan 22 2003, 05:30am hrs
Housing Development Finance Corporation (HDFC) has put up an enviable performance that defies constant predictions of a slowdown amid intense competitive pressures. Notwithstanding the adverse recommendations of the Kelkar Committee and the fact that HDFC charges nearly 25 basis points more than some of its rivals, growth in approvals and disbursals simply refuses to slow down. Approvals and disbursals during the nine-month period to December 2002 rose 30 per cent to Rs 8,005 crore and 31 per cent to Rs 6,491 crore. Similarly, individual approvals and disbursals rose 36 and 37 per cent respectively. Contrast this with bank credit that is up 23 per cent and non-food credit, up 25 per cent y-o-y during the same period .

Incessant demand for housing loans has been driving the HDFC success story. During the quarter to December 2002, its topline was up nearly 11 per cent at Rs 737.4 crore, while bottomline was higher by 21 per cent at Rs 146.7 crore. It has maintained its spreads on its home loan portfolio at above two per cent inspite of severe competition from banks and other players.

HDFC has rewarded its shareholders with a 1:1 bonus and consequently, equity base has expanded to Rs 260 crore. HDFCs general insurance venture with Chubb Corporation adds to its formidable portfolio that offers an entire gamut of financial services.

The domestic general insurance business is expected to grow at 15 per cent per annum and has a lot of potential in the long-term since the market is in a nascent stage.

Though these new segments, insurance in particular, involve long breakeven periods and are unlikely to yield major gains in the short run, investors are not complaining as long as the mortgage business maintains its robust growth.

Bharti Tele-Ventures
Bharti Tele-Ventures (BTVL) has come out with a strong show during the third quarter to December 2002, aided by a growing customer base. Its efforts to become an integrated telecom player has brought it closer to breakeven point. Consoli-dated revenue has more than doubled to Rs 847 crore. Operating profit soared by 98 per cent to Rs 240 crore. Although, the company reported Rs 7.1 crore net loss, it is substantially lower than Rs 129 crore during the same quarter of last year.

BTVL cashed in on a strategy of lower tariff rates coupled with various schemes designed to lure customers. Earlier, the company introduced free SMS in order to get a foothold in the Mumbai region. This strategy helped it in attaining a continuous rise in revenue on a sequential basis. In the latest quarter its revenue grew 29 per cent, a commendable feat in the face of mounting competition and price-cutting wars among telecom players. More so, the rate cut has become intense since Reliances entry into limited mobility service.

Currently, BTVL charges Rs 1.50 per SMS. BTVL had started price war by slashing long distance call tariffs upto 50 per cent. BSNL followed the suit with more than 60 per cent cut in STD call rates. BTVL has brought down mobile to mobile STD rate to as low as Rs 2.99 per minute. In this segment, the company continues to be a market leader with market share of 26.5 per cent.

BTVL has doubled its customer base to 30.9 lakh, consisting of 27.7 lakh mobile and 3.2 lakh fixed line customers, during nine-months to December 2002. It offers mobile services in 15 out of 22 circles in the country.

According to Cellular Operators Association of India, approximately 93 per cent of total mobile subscribers reside in BTVLs mobile circles. BTVL has recently launched its fixed-line services in the license areas of Haryana, Delhi, TN and Karnataka thus becoming the first private sector fixed-line services provider in all its licensed areas.

Sachchidanand Shukla & Laxmikant Khanvilkar