Canfin retains FD rating

ICRA has retained the MAA rating, indicating high safety, assigned to the fixed deposit programme of Canfin Homes (CFHL). During 1999-2000, CFHL's housing loan sanctions witnessed a growth of 50 per cent to Rs. 259 crores from Rs. 172 crores in 1998-99, while its disbursements during the period grew by 42 per cent from Rs. 151 crores to Rs. 215 crores.

The growth in disbursements was spurred by the individual segment on account of fall in housing loan interest rates, fiscal concessions and also the marketing efforts of the company.

CFHL as a conscious policy has been reducing its exposure to the high risk builder segment. The company also made recoveries from builder NPA accounts resulting in decline in NPA levels as on March 31, 2000.

During 1999-2000, the company's profitability margin at the net level showed a marginal decline on account of decline in housing loan interest rates. ICRA expects this trend to continue in the medium term as the company plans to focus more on the competitive individual segment. However, the rating agency expects the company to compensate for the decline in margins through higher disbursements.

The entry of banks and financial institutions has intensified the competition in the housing finance industry. However, the HFCs with long track record, such as CFHL, are expected to withstand this competition by virtue of their understanding of the business and superior service level.

The rating also takes into account the company's parentage, experienced management, comfortable gearing, the unutilised lines of credit and the steady outlook on the operational front.

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Section  : Business
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