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Can Fin Homes

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Mar 04
Chairman's Speech (Can Fin Homes) Year : Mar '16
Dear Shareholders,
 
 As far as the economic strength of India is concerned, the year under
 review has been quite promising. India''s GDP grew by 7.6% in the
 current financial year. As on April 2016, the CPI inflation rate stood
 at 5.39%, which has justifiably complemented the nation''s economic
 growth as well as reduced bank interest rates. In the recent budget,
 the Indian government has planned to maintain fiscal deficit at 3.9% of
 GDP for the Fy 16-17.
 
 Housing Finance Companies (HFCs) have been successful at escalating
 their market share while narrowing the difference with banks, assisted
 by low NPAs and competitive lending rates. As per the vision of
 ''Housing for All by 2022'', the government has been aiming to supply
 affordable homes to majority of the population. In addition to that,
 the Real Estate Regulatory Act, that has been passed by both the houses
 at the end of this financial year has also brought forward the scope
 for development of the sector. In the upcoming years, certain long term
 goals and initiatives of the government are likely to raise demand for
 houses thereby eventually raising the demand for home loans.
 
 When compared against such evolving scenarios as the backdrop, the Fy
 15-16 has been reasonably good for us. We expanded our presence to
 wider areas and in the process, also achieved some significant
 milestones. We stuck to our long-standing philosophy of empowering
 lives of people and promoting ownership of homes by following the
 strategy to expand our business as well as strengthen our liquidity.
 While we grew our disbursements at 17% y-o-y, the operating profit
 growth was a benchmark, as it surged 80% to Rs.273.26 Crore in the 
 current year, compared to Rs.  151.70 Crore in Fy 14-15. This was 
 backed by our fundamental  strengths in business - prudent lending, 
 vigilant credit mechanism and effective collection system.
 
 While the operating profit claimed the position of our biggest
 highlight of the year, we also witnessed growth on various other
 financial parameters. Our sanctions grew y-o-y by 20% to Rs.4,418 Crore;
 outstanding under non-housing loans has increased H by 39% over last
 year and we maintained our Capital Adequacy Ratio (CAR) at 20.69% (well
 above the industry benchmark).  Striking the right balance across all
 financial parameters has helped us strengthen our investors''confidence
 in the company.  Incidentally our share price increased to 1,154 in
 March 2016 from Rs. 607 during the same period last year.
 
 These positive financial numbers were also a result of high operational
 excellence. We continued our branch expansions, taking the count of our
 total branches to 110 as on March 31, 2016. Of these, a total of 76%
 branches are in South India and 17% of branches are in Bengaluru city.
 Our target customer segment continues to be salaried professionals who
 aspire to have their own homes. Urbanisation continues its upward
 trajectory in this region, and with our easy finance mechanisms in
 place, we believe we are perfectly striding towards our ambitious
 ''Vision 2020''goals.
 
 Along with growing our disbursements, we also managed to grow our
 customer base with diverse financing requirements. We reduced our
 average ticket size to Rs.17.36 Lakh, of which 95% of the loans were
 granted in the affordable housing segment.  Our stringent credit
 mechanism has helped us maintain Non- Performing Assets (NPA) for the
 Fy 15-16 at 0.19% - which is well below the industry average of 0.70%.
 This, in turn, helped us strengthen our margin levels as we increased
 our Return on Equity (ROE), Return on Assets (ROA) and Net Interest
 Margin (NIM) to 17.89%, 1.69% and 3.24% respectively.
 
 Margins were improved as we continued to diversify our borrowings,
 thereby increasing the proportion of our borrowings through money
 market instruments such as Commercial Papers (CP) & Non-Convertible
 Debentures (NCD). This has substantially reduced our cost of borrowing,
 which stood at 8.75% by the end of the March 2016 from 8.99% as on
 December 2015. We further expect to scale down the borrowing cost and
 strengthen the margin levels as we progress. This will be backed by the
 combination of strict cost management and cost reduction programmes,
 started by us in the current financial year which resulted in high
 profit and margin levels.
 
 As we continue to make progress towards our ''Vision 2020'' targets, we
 have come to realise that the current market conditions are inevitably
 concentrating on the risks that exist within the Indian economy. It is,
 however, important to recognise yet again the unbeatable resilience
 that our business model and balance sheet strength provide, which will
 undoubtedly help us maintain sustainability in our performance.
 
 We stride towards the next fiscal with the clear strategy of creating
 long-term value backed by our core competencies. Our competent employee
 force and management team went the extra mile, consistently, throughout
 the previous fiscal to meet the demands placed on them by our
 customers, regulators and investors. I would like to put on record the
 Board''s appreciation for that commitment and sincerity and our
 gratitude for all that they have achieved.
 
 In the end, I wish all the best to Mr. Hota who has taken over the
 charge from me w.e.f. May 19, 2016, for pursuing quality growth in
 future.
 
 Best Wishes
 
 C. Ilango
 
 Managing Director
Source :
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