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G. Madhan

THE fixed deposit programme of Can Fin Homes is open for investment. The interest rates on the cumulative scheme is on a par with the industry major HDFC, but higher (by 50-75 basis points) than banks. Being a housing finance company, it is eligible for a tax break under Section 80L of the IT Act. An investment up to one year can be considered. Longer tenures, however, can be avoided, given the flat trend in revenue and disbursements and to retain the option of reviewing the investment later.

Schemes and features: Can Fin Homes offers cumulative and non-cumulative schemes. Under the latter, monthly, quarterly, half-yearly and yearly options are available (see table for rates). As the former is compounded at monthly rests, the effective annual yields are 6.17 per cent for one year, 6.64 per cent for two years and 7.16 per cent for three years. The minimum deposit for both the schemes is the same, at Rs 5,000. Details can be got from the registered office at No 32, Shanti Kutir, 2nd Floor, Race Course Road, Bangalore - 560001.

Business prospects: Promoted by the Canara Bank, Can Fin Homes provides housing finance for the purchase or construction of residential houses or flats by individuals, co-operative societies, associations of individuals, and corporate sector staff and for workers' housing schemes. Given the increase in demand for housing, the company has good prospects for growth. However, this may not necessarily lead to a growth in earnings due to pressures on profitability from increasing competition witnessed by this segment. A soft interest rate regime will also be a cause for concern.

Financials: On the back of frequent reduction in interest rates and stiff competition in the housing finance industry, the company's margins appear to have come under pressure. The company's disbursements and the operating income for the year ending March 2003 have remained flat. However, the net profit registered a modest growth. For the quarter ending June 2003, the company's income from operations fell 12 per cent to Rs 31 crore, from the corresponding previous period. The net profit was down to Rs 3.8 crore (Rs 4.5 crore). The net profit margin also dropped to 12.2 per cent (12.7 per cent). The capital adequacy ratio as on March 31 was 21.37 per cent, higher than the minimum requirement of 12 per cent.

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