Ravi's friend moves towards his house from the main post office, i.e. he moves towards South. So, the reference point chosen here is the Main Post Office.
To reach Ravi's house, the friend needs to travel 1 km. to the south. Hence :
distance travelled = 1 km
displacement = 1 km (towards south of the P.O.)
NOTE : Direction needs to be specified when describing a vector quantity.