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G. Madhan

CAN FIN Homes fixed deposit scheme is open for fresh investment. Being a housing finance company, it is eligible for a tax break under Section 80L of the IT Act. However, the interest rates are lower than housing finance companies such as Sundaram Home.

An investment up to three years can be considered. However, considering the flat trend in revenues and disbursements, longer tenors can be avoided, as the incremental returns are not attractive enough to warrant a long exposure.

Schemes and features: Can Fin Homes has revised its interest rates effective from June 1, 2003 (see table for rates). It offers cumulative and non-cumulative fixed deposit schemes. Under the non-cumulative scheme, there are monthly, quarterly, half-yearly and yearly income schemes.

Interest for cumulative deposit is compounded at monthly intervals and the yield for one-year, two-year and three-year tenors is 6.43 per cent, 6.92 per cent and 7.46 per cent respectively. A special cumulative deposit scheme `Abhivridhi', which increases the amount invested by 60 per cent in 77 months, offers an interest rate of 7.35 per cent (yield of 9.35 per cent). The minimum deposit across the schemes stands at Rs 5,000. Further details can be got from the registered office at No 29/1, Sir M. N. Krishna Rao Road, Basavangudi, Bangalore - 4.

Business prospects and financials: 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, corporate sector staff and workers housing schemes. Given the increase in demand for housing, the company has good prospects for growth. But this may not necessarily lead to a likely 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.

For the year ending March 2003, the company's net sales stood at 139.8 crore, at about the same level as that of the previous year.

However, the net profit rose 9 per cent to Rs 21.6 crore during the period. The net profit margin also rose to 15.4 per cent from the prior period's 14.2 per cent. The company's disbursements for the period stood at Rs 366 crore marginally up from the previous fiscal's Rs 354 crore. The capital adequacy for the year ending March 2002 was at 13.6 per cent against the minimum stipulated 12 per cent.

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