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MD's Desk

Chairman, Indiabulls Group
S K HOTA
Managing Director

It is a matter of pride for us at Can Fin that we celebrated three successful decades of existence in the last fiscal year. Our eventful journey from humble beginnings, with the twin objectives of promoting home ownership and increasing the housing stock in the country, has now helped us transform into a prominent housing finance company in the country. The ever increasing demand for housing on account of burgeoning population and rapid urbanization makes the housing finance market more relevant than ever.

While we look back with fulfillment over our rich legacy, our focus remains on the exciting and challenging future lying ahead. Among the many, one of our strengths has been addressing the customer needs with transparency. Our business expertise, attention to detail, faster turnaround time and high governance standards has positioned us as a trusted and preferred housing finance company in the market.

The implementation of demonetization, RERA and GST will have a positive effect on the economy in the long run. Though initially, the implementation has shown a knee jerk reaction in a negative manner, we are confident that with the passage of time, the positive effects of these reforms will result in a healthy and sustainable growth in the housing sector.

While demonetization has helped in normalization of prices by discouraging the cash deals, RERA offers the much needed protection to the genuine home buyers. Now that the Indian Real Estate industry has got its first regulator, confidence of average home buyer as well as Financial Institutions have got a boost. Implementation of RERA by various states and the increasing traction in affordable housing segment have led to revival of growth in most of the geographies.

 

Government’s initiative of ‘Housing for all by 2022’ and the consequent incentives to the sector, i.e., extended coverage of MIG under Pradhan Mantri Awas Yojana (PMAY) Credit Linked Subsidy Scheme, increase in carpet area norm for eligibility under CLSS, rationalization of GST rates in favour of affordable housing etc., are going to be the key drivers of growth in ensuing years.

We were the first housing finance company to have introduced Affordable Housing Loan Centres (AHLCs) to lend exclusively in the peripheral areas of Tier-I, Tier-II and Tier-III cities. During the year we opened 10 more AHLCs, taking the number to 20 and have plans to increase it to 30 shortly. Since the land and building values are more affordable in these areas, lending under the New Gruhalakshmi Rural Housing / Urban Housing (New GRHS / LUH) and the Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) are being focused as potential growth segments.

With new loan approvals of H5,760 Crore and disbursements of H5,207 Crore during the year, our loan book grew by 18.30% to H15,743 Crore as on March 31, 2018. Asset Under Management (AUM) of the Company has grown over the last 5 years with a CAGR of 31%.

The year witnessed your Company surpass the milestones of H15,000 Crore under Loan book, H500 Crore of Net Interest Income and H300 Crore of PAT for the first time ever.

We maintained our profitability levels by recording a 28% increase in net profit and a steady Net Interest Margin (NIM) of 3.53%. Backed by strong AAA rating for our borrowings/NCDs & A1+ for CPs and a healthy mix of borrowings from Banks, NHB & money market, your Company enjoys one of the finest cost of funds. A significant portion of our short and medium term funds are raised from money market while the long term funds are sourced from Banks & NHB. This is an optimal method currently being followed and we are always on the lookout for cost effective alternate sources of borrowings to sustain the margins & profitability

Our robust culture of professionalism and proactive risk management helped us deliver greater value for our stakeholders. We recorded a steady ROE of 24.91% and ROA of 2.09% for FY17-18. Cost to income ratio improved significantly to 15.21% from 17.02% a year ago, aided by an improved branch/ employee productivity and significant cost control at various operational levels.

While industry experts remain apprehensive about vulnerability of small ticket affordable housing loans to higher delinquency levels, at Can Fin we have always been consciously conservative in our lending approach. With 89.50% of the loan book coming from housing loans and 73% of the portfolio comprising of salaried and professional borrowers, your Company has been able to return one of the best in industry asset quality with gross NPA level of 0.43% as at March 2018.

We remain buoyant with regard to our market expansion to potential geographies beyond our home turf and covered 8 new cities / towns under our network in the last fiscal. We have plans to open about 20 new branches during the current fiscal. We also acquired license from the IRDA and began insurance agency business from January 2018. The insurance business adds to our business competitiveness and widens our service portfolio.

We have always believed in value creation for stakeholders at large. As we make steady progress on our business front, we continue to make contributions towards the society and individuals that need assistance. During the year under review, we spent H3.38 Crore in empowering lives of the underprivileged towards education, infrastructure development and women empowerment.

In closing, I remain optimistic for India’s economic growth in the ensuing years, backed by positive reforms and rising market demands in the real estate industry. As we step into our fourth decade, we look forward to the times ahead with more enthusiasm than ever before. The encouraging reforms and incentives by the government will only boost the ‘home ownership’ aspirations among people. Your Company remains committed to pursue excellence in business growth backed by strong corporate governance and able risk management framework.

I take this opportunity to express my gratitude to the Board of Directors for their sound advice, consistent support and guidance over the years. I also wish to express my deep appreciation towards our management and staff members for their continuing commitment and dedication.

As we step into a ‘New Era’ with ‘New Possibilities’ we have already put in place a platform in the last three decades to achieve sustainable growth in profitability and stakeholder wealth. I thank the National Housing Bank, Canara Bank and other stakeholders for partnering in these three eventful decades of our journey. Our vision of achieving loan book of H40,000 Crore by FY 2022 will keep us motivated as we continue to expand our business, notwithstanding the pitfalls and hurdles ahead in view of the ever changing and challenging economic scenario. Our diversified workforce and understanding of the financial needs of our borrowers will only help us reach greater scales of success. My team and I look ahead to another exciting year of new possibilities and a new journey!