The Directors are pleased to present the 25th Annual Report of the
business and operations of the Company together with the audited
accounts for the year ended March 31, 2012, the Silver Jubilee Year of
The financial performance for fiscal 2012 is summarised here below:
year ended For the
2012 March 31,
(Rs in lakh) (Rs in lakh)
Profit before Tax & Provisions 6830.88 5997.11
Less: Provision for Standard Assets 1100.00 -
Provision for Doubtful Debts - Housing Loans (361.16) 145.58
Prior Period adjustments (5.53) _
PROFIT BEFORE TAX 6097.57 5851.53
(a) Provision for Tax - Current Year 1780.00 1725.00
(b) Deferred Taxation (58.42) (75.07)
PROFIT AFTER TAX 4375.99 4201.60
Balance brought forward from previous year 936.89 480.50
Transfer to Special Reserve u/s.36(1)(viii) 1350.00 1150.00
of the Income Tax Act, 1961
Transfer to General Reserve 2700.00 2000.00
Proposed Dividend 614.62 512.13
Tax on Distributed Profits 99.71 83.08
Provision for Contingencies - -
Balance carried forward 548.55 936.89
During the year, the housing loans and other loans sanctioned were to
the extent of Rs1105.41 crore registering a growth of 102.63% over the
previous year. The cumulative loan sanctions since inception of the
Company, as at the end of the financial year 2011 -12, was Rs7822.59
During the year, the loans disbursed were to the extent of T859.07
crore registering an increase of 81.71% over the previous year. The
cumulative loan disbursements since inception of the Company as at the
end of the financial year 2011-12 stood at Rs6661.06 crore.
The cumulative loan(s) outstanding at the end of the year was Rs2674.39
crore as compared to Rs2207.51 crore (including the loan under
Securitised Assets of Rs3.92 crore, repaid during 2011-12) in the
previous year registering an increase of 21.15%.
NON PERFORMING ASSET (NPA)
During the year, your Company has reduced the gross NPA from T23.47
crore to Rs19.01 crore (a reduction of 19%) and the net NPA continued to
be Nil (provision conversion ratio: 100%). Your Company has recovered
Rs2.14 crore out of long pending core NPA accounts by way of one time
Your directors are pleased to inform that during the year under review
your Company has recorded a Profit Before Tax (PBT) of T60.98 crore as
against Rs58.52 crore during 2010-11 and Profit After Tax (PAT) of
Rs43.76 crore after making provision for standard assets for Rs11 crore
at a time as per the Directions of NHB. Excluding the provision for
standard assets, the year-on-year growth of net profit for the year is
Your directors have discussed the subject in detail with specific
reference to the present minimum required level of Capital Adequacy
Ratio (CAR) at 12%, the additional requirement of funds to meet CAR as
per the Guidelines/ Directions issued by the Regulators from time to
time, future requirement of funds/capital for incremental business
projected, further expansion of business and other relevant factors.
Considering the above and in the long-term interest of the Company, it
is considered prudent and expedient to conserve profits of the Company
to the extent possible.
Appreciating the confidence reposed by the members in the Company and
their continued support, the Board of Directors of your Company have
recommended a dividend of Rs2.50 per equity share (25%) and being the
Silver Jubilee Year, an additional dividend of Rs0.50 per equity share
(5%) for the year ended March 31, 2012, aggregating to 30%. The tax on
distributed profits u/s.115-0 of the Income Tax Act, 1961, at 16.22% is
being paid by the Company.
BRANCH NETWORK EXPANSION
With a view to reach out to a large section of customers in need of
housing as well as non-housing finance and to increase business
performance level, your Company opened 18 new branches in different
parts of the Country and the total branch network of the Company at the
end of the financial year stood at 52 (previous year 41), 59 branches
as of date, located in major cities of the Country. Your Company
envisages to increase the number of branches to 70 by March 31, 2013.
SAVE GREEN EFFORTS
In recognition and support to the green initiative taken by the
Ministry of Corporate Affairs (MCA), Government of India, your Company
has been sending the annual reports including report of directors,
report on corporate governance, general information to shareholders of
the Company to the registered e-mail IDs of the shareholders. Other
initiatives taken by your Company include ECS facility for repayment of
loans, paperless banking, sending official communications by way of
scanned images and harnessing solar energy for lighting and computer
operations at Karur, Madurai, Salem and RN.Palayam branches of the
SILVER JUBILEE CELEBRATIONS
Your Company commenced year-long Silver Jubilee Year celebrations from
December 27, 2011. As a part of customer initiatives your Company has
launched three new products viz., Loans for Rural Housing (LRH) with
housing loans at 9.75% rate of interest, Loans for Commercial Property
(LCP) and Loans to Childrens Education (LCE), introduction of ECS
facility, establishing Document Storage Centres (DSC) at Bangalore and
Gurgaon for safe keeping of loan documents. The state-of-the-art IBS
system is devised so as to provide data security. The ambience of
branches are being enhanced and media coverage and customers'' meet
are being held.
FINANCIAL RESOURCES DEPOSITS
The deposits outstanding (inclusive of interest accrued, but not due)
as of March 31, 2012 were Rs143.89 crore as against Rs149.76 crore as at
the end of the previous year.
As at March 31, 2012 a sum of Rs9.99 crore relating to 2057 accounts
(Rs10.44 crore as at March 31, 2011 relating to 2148 accounts) was
unclaimed. Out of the same, a sum of Rs3.25 crore relating to 506
accounts was claimed and renewed/settled as of date. The remaining
depositors have been informed individually by the respective branches
either to renew or claim their deposit amounts.
The Ministry of Corporate Affairs, Government of India, New Delhi, vide
order F.NO.07/07/2009-CLA/I dated July 12, 2010 has granted an
exemption to the Company from the applicability of the provisions of
(a) and (b) of the Companies Act, 1956 (the Act) for a period of
3 years with effect from October 22, 2009, which enables the Company to
publish abridged deposit advertisement(s) only during the period of
validity of the Statutory Advertisement. The said approval is granted
subject to certain conditions mentioned vide Paragraph nos. (i) to
(vii) of the said Order viz., mentioning reference to the statutory
advertisements published by the Company with date and name of the news
paper, filing of the said abridged advertisement with the Registrar of
Companies in Karnataka, within 15 days of its publication, that the
exemption granted would be without prejudice to any legal rights
available to any depositor or any share holder or creditor as per law
in force in respect of recovery of any amount which has become due for
repayment and the exemption granted does not convey approval of Central
Government under any other provisions of the Act. The statutory
requirements, as applicable, are being complied with periodically.
RATING OF DEPOSITS
The deposit schemes of the Company continued to be rated as MAA
(pronounced M double A plus) by the credit rating agency viz., ICRA
Ltd., indicating high-credit-quality and the rated deposit programme
carries low credit risk. The high credit quality rating takes into
account the strong ownership, low operating cost structure, superior
capital adequacy, its favourable liquidity position and comfortable
asset quality indicators. The outlook on the rating has also been
re-affirmed as Stable.
LONG TERM FINANCIAL RESOURCES
REFINANCE FROM NATIONAL HOUSING BANK (NHB)
With the continued support by the NHB, during the year your Company
availed refinance amounting to Rs280 crore against Rs253 crore availed
during 2010-11 under the NHB''s Refinance Scheme to Housing Finance
Companies. The cumulative borrowings from NHB as of March 31, 2012 was
Rs595.18 crore compared to Rs560.11 crore as at the end of the previous
MORTGAGE BACKED SECURITIES (MBS)
Your Company did not 30 in for fresh securitisation during the year or
during the previous year considering its cost and funds available
through alternative sources.
The entire amount of securitised outstanding as of March 31, 2011
amounting to Rs3.92 crore was paid in full to the investors as per the
schedule of re-payment and the account was closed. As such there was no
securitised assets outstanding as of March 31, 2012 (refer si.no.4 of
Note no.21 on ''Notes on Accounts'').
The Company had no outstanding on account of debentures as of March 31,
BORROWINGS FROM BANKS
Your Company borrowed Rs595 crore from banks during the year compared to
Rs414 crore during the previous year. The aggregate of term loans from
various banks outstanding at the end of the financial year stood at
Rs1544.59 crore as against Rs1193.92 crore during the previous year and
there were no short-term loans.
RATING OF TERM LOANS
During the year a Rating for the borrowings by the Company by way of
Term Loans was obtained from CARE Ltd., and the Rating of CARE AA
(Double A Plus) was assigned for long-term bank facilities indicating
high safety for timely servicing of debt obligations. The above Rating
was obtained by the Company as per Basel-ll requirements.
COMPLIANCE WITH DIRECTIONS/GUIDELINES OF NATIONAL HOUSING BANK (NHB)
AND OTHER STATUTES
During the year, the National Housing Bank vide their letter dated
August 05, 2011 issued Directions to the Housing Finance Companies for
making a provision for Standard Assets at 0.40% of the standard assets
outstanding (which was applicable only to the non-housing loans
outstanding during the previous year). In view of the above and keeping
in view the anticipated requirements for making a provision for
standard assets, your Company has made a provision of Rs11 crore as of
March 31, 2012, against the requirement of Rs10.62 crore.
Your Company has complied with the Guidelines and Directions issued by
the NHB on asset classification of Credit/ Investments, Credit Rating,
Fair Practices Code, Know Your Customer (KYC), Deposits and Anti Money
Laundering Guidelines, Accounting Standards issued by the ICAI, New
Delhi and the like.
The Capital Adequacy Ratio (CAR) maintained by your Company has been
above the minimum required level of 12% prescribed by the National
Housing Bank (NHB). During the year under review, the Risk Weight on
housing loans sanctioned to individuals secured by mortgage of
immovable property and classified as standard assets was modified. The
Capital Adequacy Ratio of the Company as at March 31, 2012 was 17.44%
as against 19.14% as at the end of the previous year.
RECOVERY ACTION UNDER SECURITISATION G> RECONSTRUCTION OF FINANCIAL
ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)
The SARFAESI Act 2002, the proceedings under which are summary in
nature has been made applicable to the housing finance companies from
the year 2003. Your Company has been initiating action under the said
Act for recovery of dues and could recover Rs1.35 crore out of 14
accounts that were classified as non-performing assets, by selling the
secured assets (security), without intervention of Hon''ble Courts.
PARTICULARS OF EMPLOYEES
There are no such particulars to be furnished under the provisions of
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules, 1975.
LISTING OF SECURITIES
The equity shares of the Company continue to be listed on the Bangalore
Stock Exchange Ltd., (Bg.SE), Bangalore, Bombay Stock Exchange Ltd.,
(BSE), Mumbai and the National Stock Exchange of India Ltd., (NSE),
The Listing Fee payable to the above Stock Exchanges has been paid
before the due dates.
The securities of the Company are actively traded on the BSE and NSE.
The other related particulars are provided to the Members in the Report
on Corporate Governance.
MAN POWER - HUMAN RESOURCES DEVELOPMENT
Your Company had 251 employees (excluding the Managing Director on
deputation from Canara Bank) as of March 31, 2012 as against 223
employees (215 employees of the Company and 8 officers on deputation
from Canara Bank) as at the end of the previous year. During the year,
training was imparted to all the employees of the Company, including
orientation training to the new recruits, by internal and external
In order to upgrade knowledge in the fast changing scenario, to enhance
employee competencies and up- gradation of skills, all the employees at
various levels were nominated for various external training programmes
on subjects related to housing finance, taxation, information security,
corporate governance, risk management and other related topics of
80 Probationary Officers were appointed during the year. In recognition
of the performance and as a motivational measure 55 eligible
employees/Officers/Executives were promoted and incentive schemes like
Employees Suggestion Scheme and education tour etc. were introduced.
TRANSFER OF UNCLAIMED AND UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND
PROTECTION FUND (IEPF)
In terms of Section 205C of the Companies Act, 1956, the amounts
(dividends, deposits etc.) that remained unclaimed and unpaid for more
than 7 years from the date they became first due for payment, should be
transferred to IEPF. In terms of the said Section no claim would lie
against the Company or the IEPF after such transfer.
As an investor friendly measure, your Company has been intimating the
respective shareholders/depositors/ investors to encash their dividend
warrant/lodge their claim for payment due, if any, from time to time
and claims made are settled. Certain amount still remains unclaimed
despite constant and sincere efforts by the Company to pay such
unclaimed amounts to the investors.
(i) UNCLAIMED DIVIDENDS
As of March 31, 2012 dividends aggregating to Rs53.85 lakh (previous
year Rs51.81 lakh), relating to dividend declared during 2004-05 to
2010-11, of which Rs9.92 lakh related to dividend for the year 2011, had
not been claimed by the shareholders of the Company. The Company has
been intimating the shareholders to lodge their claim for dividend from
time to time and the related details are being provided in annual
reports every year.
The dividend pertaining to the financial year 2003-04 which remained
unclaimed/unpaid amounting to Rs5.61 lakh (in respect of 1,308
shareholders) was transferred to IEPF during August 2011, after
settlement of claims received in response to the individual reminder
letters sent by the Company to the respective shareholders).
The dividend pertaining to the financial year 2004-05 remaining
unclaimed and unpaid amounting to Rs7.32 lakh (in respect of 1680
shareholders) as at the end of the financial year would be transferred
to IEPF during July 2012 after settlement of the claims received upto
the date of completion of 7 years, The Company has sent individual
reminder letters to the respective shareholders during April 2012 and
with a request to submit their claim forms within a prescribed date.
(H) UNCLAIMED DEPOSITS
During the year, in terms of Section 205C of the Companies Act, 1956,
the unclaimed and unpaid deposits with interest for the year 2004-05
amounting to Rs7,62 lakh (previous year Rs2.14 lakh) that remained
unclaimed and unpaid for a period of 7 years were transferred to IEPF.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
The requirement relating to providing the particulars relating to
conservation of energy and technology absorption stipulated in the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988 required '' to be furnished u/s.217 (1) (e) of
the Companies Act, 1956 are not applicable since the Company is a
housing finance Company and does not own any manufacturing facility.
During the year, your Company did not earn any income or incur any
expenditure in foreign currency.
Your directors wish to report that Mr.Ashok Kumar Jain, director
vacated his office with effect from January 19, 2012, by virtue of
Section 283(1 Xg) of the Companies Act, 1956 and Mr.RR.Yagnik, director
and Chairman of the Board of Directors resigned as a director with
effect from January 30, 2012.
Your directors wish to place on record their appreciation for the
services rendered and contribution made by Mr.Ashok Kumar Jain during
his tenure as a director and Mr.P.R.Yagnik, during his tenure as a
director and Chairman of the Board and certain Committees of Directors.
The Board of Directors appointed Mr.RB.Santhanakrishnan FCA, a
Practising Chartered Accountant as an Additional Director with effect
from February 16, 2012. Further particulars relating to
Mr.RB.Santhanakrishnan are provided in the explanatory statement for
the related agenda forming part of the notice of the ensuing annual
general '' meeting.
In terms of the applicable provisions of Section 260 and all other
applicable provisions, if any, of the Companies Act, 1956 and Article
22 of the Articles of Association of the Company,
Mr.RB.Santhanakrishnan, director holds office as such only upto the
date of the ensuing Annual General Meeting. Your Company has received a
notice in writing from a shareholder, under Section 257 and all other
applicable provisions, if any, of the Companies Act, 1956 proposing the
appointment of Mr.RB.Santhanakrishnan, as a director at the ensuing
Annual General Meeting.
Your directors are of the opinion that the appointment of
Mr.RB.Santhanakrishnan, as a director would be in the best interest of
DIRECTOR(S) RETIRING BY ROTATION
In terms of the provisions of Section 256 and other applicable
provisions, if any, of the Companies Act, 1956 and the Articles of
Association of the Company, Mr.Anil Kumar Nayyar, Director, retires by
rotation at the ensuing Annual General Meeting and being eligible,
offers himself for re-appointment. The particulars relating to Mr.Anil
Kumar Nayyar are mentioned in the Report on Corporate Governance. Your
directors recommend the re-appointment of , Mr.Anil Kumar Nayyar as a
The agenda relating to re-appointment of MrAnii Kumar Nayyar is
included in the notice convening the ensuing Annual General Meeting.
All the directors of the Company have confirmed that they are not
disqualified from being appointed as directors in terms of Section
274(1 )(g) of the Act.
Ws.K.RRao S'' Co., Chartered Accountants, Bangalore, Statutory
Auditors of the Company having Registration No.003135S and also the
branch auditors for branches in the States of Karnataka, Kerala, Goa,
Gujarat, Maharashtra and the new branches, if any, to be opened during
2011 -12 and the Auditors for the other branches viz., M/s.L.U.Krishnan
S'' Co, Chartered Accountants, Chennai, M/s.K.RRao Associates,
Chartered Accountants, Hyderabad and M/s.H.K.Chaudhry S'' Co.,
Chartered Accountants, New Delhi, hold office until the conclusion of
the ensuing Annual General Meeting and are eligible for re-appointment.
The Company has received confirmation from M/s.K.P.Rao & Co., Statutory
auditors to the effect that their proposed appointment, if made, would
be within the limits prescribed under Section 224(1 B) of the Companies
Your directors recommend the re-appointment of the M/s.K.RRao S'' Co.,
as the statutory auditors. The resolutions seeking approval of the
members for appointment of Statutory Auditors and fixation of their
remuneration and authorisation to the Board of Directors for
appointment of Branch Auditors and fixation of their remuneration have
been included in the notice convening the ensuing Annual General
Meeting. The above said appointment attracts the provisions of Section
224A, 228 and all other applicable provisions, if any, of the Act.
DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956 and based on the information provided by the Management, the
Board of Directors report that:
(a) In the preparation of annual accounts, the applicable Accounting
Standards have been followed along with proper explanation relating to
material departures, if any;
(b) The Accounting Policies selected were applied consistently.
Reasonable and prudent judgements and estimates were made so as to give
a true and fair view of the state of affairs of the Company as at the
end of March 31, 2012 and of the profit of the Company for the year
ended on that date;
(c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
(d) The annual accounts have been prepared on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of the Clause 49 of the listing agreement, the Management
Discussion and Analysis Report forms part of this report.
The Auditors Certificate on Corporate Governance issued by the
Statutory Auditors of the Company for the year under review as required
under the Act and in pursuance of Clause 49 of the Listing
Agreements is annexed to the Report of the Directors on Corporate
OUTLOOK FOR 2012-13
The Indian economy is one of the fastest growing economies in the world
and the GDP growth is expected to improve in 2012-13. The real estate
sector witnessed a robust growth in the last few years. The demand for
commercial property is being driven by the economic growth of the
Country. The housing sector alone contributes to about 5-6 per cent of
the Country''s GDR
The demand for real estate is expected to grow at a Compounded Annual
Growth Rate (CAGR) of 19% between 2010 and 2014. Urbanisation and
growing household income are a few factors influencing the demand for
residential accommodation and growth in the retail sector.
As such, a sharp increase in demand for residential units and
commercial real estate are foreseen.
Your Company would continue to give a more focussed attention for
lending to individual loan segment, project loans and non-housing loans
with an emphasis to further enhance its market share in the housing
With a view to sustain and enhance its performance level your Company
is offering housing as well as non-housing products, with more emphasis
on marketing and customer oriented business relationship.
Your Company expects to maintain a sustained growth in its performance
levels during 2012-13 and has put in place a well drawn vision
document. However, given the indications about the likely changes in
cost of funds and expectations of borrowers for availing loans at
reasonably lesser rates, the margins are expected to be under pressure.
Your directors wish to place on record with thanks the role of Canara
Bank for their consistent support and guidance.
Your directors would like to thank all its stakeholders viz., the
shareholders, depositors, borrowers and others for their continued
support to the Company and the confidence and faith that they have
always reposed in the Company.
Your directors acknowledge and appreciate the guidance and co-operation
extended by various regulatory authorities including National Housing
Bank (NHB), Securities Exchange Board of India (SEBI), Ministry of
Corporate Affairs, Registrar of Companies, Karnataka, the Stock
Exchanges and the Depositories.
Your directors thank the Credit Rating Agencies, Government(s),
local/statutory authorities, the Registrars and Share Transfer Agents
of the Company and all others for their wholehearted support during the
year and look forward to their continued support in the years ahead.
Your directors appreciate and acknowledge the professionalism displayed
and the contributions made by the employees whose efforts have kept the
CanFin Homes flag flying high.
For and on behalf of the Board of Directors
Place: Bangalore S.R.IYER
Date: June 12,2012 Chairman