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Can Fin Homes

BSE: 511196|NSE: CANFINHOME|ISIN: INE477A01020|SECTOR: Finance - Housing
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Mar 16
Chairman's Speech (Can Fin Homes) Year : Mar '17

DEAR SHAREHOLDERS,

Our Company was incorporated in the year 1987, which was declared by the United Nations as ''The International Year of Shelter for the Homeless’. The main objective of setting up the company was promoting home ownership and increasing the housing stock in the country, a noble objective indeed. Over the past three decades, CFHL has constantly endeavored to provide homes to families for whom owning a home has always remained a dream. In these three decades, India’s population has expanded, skylines of urban India have transformed to touch the skies and our country has emerged as the fastest growing economy in the world. With each decade, housing finance landscape changed, challenges and opportunities evolved and so did we.

We now stand at the threshold of our fourth decade with the same excitement as our founders, drawing inspiration, passion and excellence to take our company to new frontiers. As we recall our past laurels and review our accomplishments for the year FY16-17, we have our focus clearly on the opportunities ahead of us, with our most precious assets, i.e., our team members, to build a bigger and stronger Can Find Homes in the decades to come.

REVIEW OF 2016-17

The Country’s economy is expected to register a GDP growth of 7.1% in the current fiscal. The year 2016-17 remained significant for the Housing Finance sector as well as the Real Estate sector The Government’s initiative for ''Housing For All by 2022’ and ''Pradhan Mantri Awas Yojana’ (PMAY) are the much awaited triggers to boost the housing sector in the country. Interest subvention of up to a maximum of Rs, 2.67 Lakh under Credit Linked Subsidy Scheme (CLSS) is available to the first time home buyers from the Economically Weaker Sections and Low Income Groups seeking housing loans. The subsidy scheme has now been extended to MIG category of borrowers as well, with incomes of up to Rs, 1.50 Lakh per month; the initiative augurs well for real estate and housing finance sector.

Being at the helm of affairs of this organization during such exciting times is indeed an opportunity to cherish. I’m pleased to report that we continued to uphold commitment levels, register record profitability, drive operational efficiency, invest in people, products, infrastructure and increase our business with focus on ''growth with quality’.

PERFORMANCE REVIEW

Our loan approvals grew at 23%, disbursements at 22% and loan outstanding at 25% on a YOY basis, even as demonetization slowed down real estate off take in the second half of the year. We have been able to show a steady growth of loan book and reach a size of Rs, 13,313 Crore. Our CAGR of 38% over FY12-17 compares favorably with the industry average of 18%.

While our Assets under Management (AUM) has shown an impressive growth Year-on-Year, our profitability was not left behind. Our operating profit grew by 42%, net profit showed an increase of 50% and NII grew by 40% YOY. The easing liquidity position helped us rejig our borrowing basket resulting in reduction of borrowing cost from 8.75% to 8.35%. NIM grew from 3.24% to 3.54%. The cost to income ratio was contained at 17.02% as compared to 18.67% for the previous year. Our gross NPA, at 0.21%, is one of the lowest in the industry and the Net NPA remained Nil for the 8th consecutive year. The Company is well capitalized with a CRAR of 18% and Tier I ratio of 16.01% as against regulatory requirement of 12%. The ROE of 21.86% and ROA of 1.97% are aligned with our overall performance and recognizing this, the market capitalization crossed the mark of Rs, 7,000 Crore.

OPERATIONAL REVIEW

Our strong financials are a result of our resilient operating performance. We continued to expand our branch network delving deeper into our stronghold of southern states while we have made significant inroads in to newer geographies with potential. As on March 31, 2017, we had a branch network of 170 offices spread across 19 States & Union Territories, including 10 Affordable Housing Loan Centers (AHLCs) opened during the last quarter of the year FY16-17. The AHLCs were opened in upcountry locations to cater especially to the affordable housing segment, in line with the Government’s thrust to the sector. CFHL has been the first HFI to open such exclusive centre’s for granting loans under the affordable housing loan category. During the FY17-18, CFHL has plans to open 22 offices (12 branches and 10 Satellite Offices). The Company will also open 20 more AHLCs, taking the number of such exclusive outlets for affordable housing loans to 30, to commemorate its 30th year of operations.

The Company was operating in a 2 tier system since inception, which has now been changed to a 3 tier system for better growth, control and oversight. Five clusters have been formed, one each at Bangalore, Hyderabad, Chennai, New Delhi and Mumbai, with Senior Executives heading the clusters and overseeing 30-35 branches each. This has helped achieve operational efficiency in the Company.

Increasing urbanization, rise in employment, higher disposable incomes and benefits offered to the sector in the Union Budget 2017 is expected to result in higher real estate off take. Of the total loan approvals for the year, 88% were for housing loans and 12 % were for no housing loans with an average ticket size of Rs, 18 Lakh for housing and Rs, 10 Lakh for non-housing segments respectively.

Of the total loan book of CFHL, 75.5% comprise salaried and professional category of borrowers. 96% of the total approvals were for borrowers, in the income bracket of up to Rs, 18 Lakh per annum, the re-defined limit eligible for affordable housing loan subsidy. The niche borrower segment, the strong clientele base of over a Lakh retail customers, the fast track approval systems and the efficient underwriting skills of our officers has instilled confidence in us to target a larger and wider clientele when the Nation is advancing towards Housing For All by 2022.

Our stock has marked its presence in the NIFTY 500 index as well as entered into the Futures and Options category. The year also witnessed the entry of M/s Caladium Investments Pte Ltd (an affiliate of GIC Singapore) as one of our stakeholders. They have acquired 13.45% stake from Canara Bank through a bidding process conducted by the Bank. The entry of such marque investor is a significant value addition in terms of confidence that the investors put on us.

While business was our main focus, as a responsible corporate citizen, we have fulfilled our Corporate Social obligations by disbursing H 3.36 Crore towards infrastructure improvement in 123 schools across the country and Rs, 1 Crore towards the Prime Minister’s National Relief Fund.

JOURNEY AHEAD

After three decades, we now stand at a pivotal moment in the history of our Company. With our glorified past and the achievements today as major sources of inspiration and with our enthusiastic, passionate and dedicated team members we are committed to continue the growth story of Can Find Homes. Your company had drawn up a vision document that envisages a loan book size of Rs, 35,000 Crore by 2020, which keeps motivating us.

Our journey this far would not have been possible without the unstinting support and guidance of National Housing Bank, our regulator; Canara Bank, our parent institution; the Board of Directors, customers, stakeholders, Lenders, Lawyers, Valuers, Direct Selling Agents, Auditors and the Rating Agencies.

Best wishes

S K HOTA

Managing Director

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