New Delhi: State-run Housing & Urban Development Corporation (HUDCO) is looking at resolving its stressed assets in the next 18 months, chairman and managing director (CMD) Sanjay Kulshrestha told Mint in an interview.
Kulshrestha also said the government-owned lender aims to expand its urban development footprint and become a comprehensive solution provider in the space. On these lines, it plans to set up a dedicated ‘urban development single-window solution’ in collaboration with multilateral financial institutions and development finance institutions (DFI), he said.
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“Our foremost priority is the complete resolution of HUDCO’s NPAs (non-performing assets), which current stand at about ₹2,000 crore with a provisioning coverage ratio of around 86%. We have set an ambitious internal target to achieve full resolution within 18 months from 1 April, despite ongoing litigation in forums such as the NCLT (National Company Law Tribunal) and DRT (Debt Recovery Tribunal),” Kulshrestha said. He added that the lender has not added any new stressed assets in the past three years.
Urban footprint
The company, which marked its 55th foundation day on 25 April, plans to increase its footprint in the urban infrastructure ecosystem, including waste management, water supply, sewage and drainage among other things. It plans to set up a project management unit for this, which will also help arrange finances for projects in collaboration with multilateral organisations such as the World Bank and Asian Development Bank.
To further empower states and urban local bodies (ULBs), HUDCO will help prepare detailed project reports, secure approvals, reduce financing costs, and offer training and system planning support. “We also intend to promote public-private partnerships (PPPs), streamline the waste management value chain, and develop bankable projects, he said.
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“Looking ahead, we plan to establish a dedicated urban development single window solution in collaboration with multilateral institutions and DFIs, supported by a project management unit to deliver integrated, end-to-end project support and position HUDCO as a leading urban development catalyst,” he added.
Cutting finance costs
Speaking about the company’s recent measures to reduce finance costs, Kulshrestha said HUDCO had embarked on a comprehensive cost management and fundraising strategy aimed at reducing the cost of capital and strengthening its funding base.
He said a key component of this approach has been the expansion of its international fundraising, including through the external commercial borrowings (ECB) route. The company has so far tapped the Japanese market and raised yen-denominated loans. It is evaluating other regions to further diversify its sources of funding.
“Currently, about 20% of our total borrowings are denominated in foreign currency, and this share may increase to 25% depending on prevailing market conditions, both domestic and global. As a cost-conscious organisation, we remain committed to optimising our borrowing structure while staying agile in response to market dynamics.”
Capital gains bonds
The government’s recent decision to allow HUDCO to issue 54EC capital gains bonds will also help its raise funds at a lower cost, he said. Under Section 54EC of the Income Tax Act, any long-term capital gains from the sale of immovable assets such as land and house are exempt if the money is invested in certain public sector companies. Power Finance Corporation (PFC) and REC Ltd are the other companies that can issue these bonds.
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Kulshrestha said, “With the full financial year ahead of us, we are in the process of designing a strategic and operational framework to maximise the potential of this instrument. These initiatives have already begun to yield results. Our weighted average cost of borrowing has dropped from 7.10% last year to 6.75%. The government has also permitted HUDCO to raise funds via zero-coupon bonds, which, based on market trends, are expected to offer further cost advantages over conventional borrowing tools.”
HUDCO borrowed ₹51,000 crore in FY25, taking its cumulative outstanding borrowings to around ₹1 trillion, against its plan to borrow ₹55,000 crore. “For the ongoing fiscal (FY26), the target has been increased to ₹65,000 crore in line with our disbursement and funding needs,” he added.
New Delhi: State-run Housing & Urban Development Corporation (HUDCO) is looking at resolving its stressed assets in the next 18 months, said its chairman and managing director (CMD) Sanjay Kulshrestha.
In an interview to Mint, the CMD also said that going ahead the government-owned lender aims to expand its urban development footprint and become a comprehensive solution provider in that space. In these lines, it plans to set up a dedicated Urban Development Single Window Solution in collaboration with multilateral financial institutions and development finance institutions (DFI), he said.
“Our foremost priority is the complete resolution of HUDCO’s NPAs, currently standing at approximately ₹2,000 crore with a provisioning coverage ratio of around 86%. We have set an ambitious internal target to achieve full resolution within 18 months from 1 April, despite ongoing litigation in forums like the NCLT (National Company ) and DRT,” Kulshrestha said.
He also added that the lender has not added new stressed assets in the past three years.
The company which observed its 55th foundation day on 25 April plans to increase its footprint in the urban infrastructure ecosystem including waste management, water supply, sewage, drainage among others, and would set up a project management unit for the same which would also help in arranging finances for projects in collaboration with multilateral organization like World Bank and Asian Development Bank.
To further empower states and Urban Local Bodies (ULB), HUDCO will assist in preparing DPRs (detailed project report), securing approvals, reducing financing costs, and offering training and system planning support. We also intend to promote public-private partnerships (PPPs), streamline the waste management value chain, and develop bankable projects, he said.
“Looking ahead, we plan to establish a dedicated Urban Development Single Window Solution, in collaboration with Multilateral Institutions and DFIs, supported by a project management unit (PMU), to deliver integrated, end-to-end project support and position HUDCO as a leading urban development catalyst,” the CMD said.
Speaking of the company’s recent measures towards reducing finance cost, Kulshrestha said that HUDCO has embarked on a comprehensive cost management and fundraising strategy aimed at reducing the cost of capital and strengthening its funding base.
He said that a key component of this approach has been the expansion of our international fund raising, including external commercial borrowings (ECB) route. The company has so far tapped into the Japanese market and raised Yes-denominated loans and is evaluating other geographies to further diversify its sources of funding.
“Currently, approximately 20% of our total borrowings are denominated in foreign currency, and this share may increase to 25% depending on prevailing market conditions, both domestic and global. As a cost-conscious organization, we remain committed to optimizing our borrowing structure while staying agile in response to market dynamics.”
Government’s recent move of designating HUDCO as an eligible entity to issue 54EC capital gains bonds would also help its raise funds at lower cost, he said. Under Section 54EC of the Income Tax Act, any long-term capital gains arising from the sale of immovable assets such as land and house are exempt if the money is invested in public sector companies notified under the section. Power Finance Corporation (PFC) and REC Ltd are the other companies allowed to issue these bonds.
“With the full financial year ahead of us, we are in the process of designing a strategic and operational framework to maximize the potential of this instrument. These initiatives have already begun to yield results—our weighted average cost of borrowing has reduced from 7.10% last year to 6.75% currently. Additionally, the government has permitted HUDCO to raise funds via zero-coupon bonds, which, based on market trends, are expected to offer further cost advantages over conventional borrowing tools,” he said.
In FY25, HUDCO borrowed ₹51,000 crore, taking its cumulative outstanding borrowings to around ₹1 trillion, against the plan of ₹55,000 crore borrowing. For the ongoing fiscal (FY26), the target has been increased to ₹65,000 crore in line with our its disbursement and funding needs, he said.
Source:https://www.livemint.com/companies/news/hudco-stressed-assets-hudco-npa-resolution-hudco-urban-development-sanjay-kulshrestha-interview-urban-development-11746089665215.html