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G. Madhan

INVESTORS can park their money in the one-year option of the fixed deposit programme of Dewan Housing Finance (DHFL). The company's fundamentals are strong. The interest rate on offer is on a par with those such as Sundaram Home Finance but higher than that of HDFC and Can Fin Homes. The interest income from the deposit is also eligible for tax deduction under Section 80L of the I-T Act.

Longer tenures, however, can be avoided considering the fluid interest rate scenario and the interest spread compression that is under way in the housing finance industry.

Schemes and features: DHFL offers cumulative and non-cumulative schemes over one-seven years. Under the latter, the interest (see interest rates table) is paid monthly, quarterly, half-yearly and yearly. Senior citizens get an additional 0.5 per cent over the prevailing rates.

The interest rate for the cumulative scheme is 6.25 per cent for one year, 6.5 per cent for two years and 6.75 per cent for three. Since the cumulative scheme is compounded at half-year intervals, the yield for the same stands at 6.35 per cent for one year, 6.82 per cent for two years and 7.35 per cent for three years.

The minimum deposit amount is Rs 2,000 for the cumulative scheme, Rs 20,000 for the monthly scheme and Rs 10,000 for other non-cumulative scheme.

Further details can be had from the registered office at Warden House, Sir P. M. Road, Fort, Mumbai-400 001.

Business prospects and financials: DHFL, a non-banking finance company, provides home loans and related services to individuals, co-operative societies and corporate bodies. The company took over the home loan arm of ING Vysya Bank last year and disbursed loans of Rs 470 crore (against Rs 419 crore in 2002-03). It is also looking for acquiring companies with healthy portfolios.

DHFL's net sales in 2003-04 grew 12 per cent to Rs 144.2 crore over the previous year. The post-tax profit rose 14 per cent to Rs 22.4 crore. Its NPA level is below one per cent.

Considering the continued buoyancy in demand for housing, the company has good growth prospects as far as disbursements go. But this may not necessarily lead to growth in the earnings and profitability, owing to the intense competition in this sector.

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