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Can Fin Homes Ltd.

BSE: 511196 Sector: Financials
BSE 00:00 | 13 Jul 328.90 -4.95






NSE 00:00 | 13 Jul 330.00 -2.55






OPEN 334.65
VOLUME 55034
52-Week high 649.80
52-Week low 325.45
P/E 14.51
Mkt Cap.(Rs cr) 4,379
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 334.65
CLOSE 333.85
VOLUME 55034
52-Week high 649.80
52-Week low 325.45
P/E 14.51
Mkt Cap.(Rs cr) 4,379
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Can Fin Homes Ltd. (CANFINHOME) - Director Report

Company director report


The financial performance for the FY17-18 is summarised here below:

Rs in lakhs
Particulars Year ended March 31 2018 Year ended March 31 2017
Profit before Tax & Provisions 48015.56 38838.06
Less: Provision for Standard Assets 210.00 1065.00
Provision for Doubtful Debts (Written Back) 2000.00 815.38
Prior Period adjustments 0.00 (58.85)
Profit before Tax 45805.56 37016.53
Less: Tax expenses:
(a) Provision for Tax - Current Year 13203.00 11513.00
- Previous Year (334.38) 0.00
(b) Deferred Taxation 2759.52 1977.65
Profit after Tax 30177.43 23525.88
Balance brought forward from previous year 35.20 114.58
30212.63 23640.46
Transfer to Special Reserve u/s.36(1)(viii) of the Income Tax Act 1961 8300.00 6400.00
Transfer to General Reserve 12000.00 9200.00
Additional Reserve (u/s.29C of the NHB Act) 6100.00 4800.00
Proposed Dividend # - -
Tax on Distributed Profits - -
Balance carried forward to balance sheet 3812.63 3240.46
30212.63 23640.46

#The proposed dividend of Rs 2/- per equity share and tax thereon are not recognised asliability in the annual accounts as at March 31 2018 (in compliance of para 8.5 of AS 4 -contingencies and events occuring after the Balance sheet date). The same will beconsidered as liability on approval of shareholders at the 31st Annual General Meeting.


Rs in lakhs
Particulars Year ended March 31 2018 Year ended March 31 2017
Earning Per Share (EPS) (Rs) 22.67 17.68
Dividend Rate 100% 100%
Market Price of shares (Rs)* 484.50 424.29
Market Capitalisation (Rs in Crore) 6451.13 5643.03

*The face value of shares have been sub-divided into shares of Rs 2/- each w.e.f.October 13 2017. As at March 31 2017 the market price of eq. shares of RS 10/- each wasRs 2121.45 (NSE).


a. Sanctions

During the year the Company has sanctioned loans amounting to H 5760 Crore as comparedto H5451 Crore in the previous year recording a growth of 6%. Inspite of continuedsluggishness in the real estate market post demonetization teething troubles of RERA andGST implementation your Company managed to show a slender margin of positive growth inapprovals during 2017-18.

During the year as in the previous year thrust was given to retail (housing andnon-housing) loan segment. 89.50% of fresh loan approvals during the year were for housingand 10.50% were for non-housing loans. The cumulative loan sanctions since inception ofyour Company stood at H32122 Crore at the end of the FY18. Average ticket size ofincremental housing loans and non-housing loans are RS 18.08 Lakh and H8.73 Lakhrespectively.

b. Disbursements

During the year the Company has disbursed loans amounting to H5207 Crore as comparedto H4792 Crore in the previous year recording a growth of 9%. The cumulative loandisbursements from inception to the end of the FY18 was Rs 28290 Crore.

c. Loans outstanding (Loan Book)

Your Directors are pleased to report that the total loan outstanding as at March 312018 was RS 15743 Crore recording a growth of 18% over last year (previous year RS 13313Crore).

During the year non-housing loan portfolio has increased from RS 1546 Crore to RS 1654Crore indicating a growth rate of 7% which constitutes 10.50% of total portfolio.

d. Non-Performing Asset (NPA)

The Gross NPA of your Company as on March 31 2018 was contained at H67.49 Crore(previous year Rs 27.91 Cr.). The net

NPA as on date was H31.62 Crore with the NPA provision Coverage Ratio at 63% duringthe year. The gross NPA percentage as on March 31 2018 stood at 0.43% compared to 0.21%as on March 31 2017.

During the year under review your Company could make a cash recovery of H9.10 Crore(previous year H4.08 Cr.) in respect of accounts which were Non Performing Assets.

e. Profits

Your Directors are happy to inform that during the year under review your Companyrecorded an Operating Profit of H480.16 Crore (previous year H388.38 Crore) Profit Before

Tax (PBT) of H458.06 Crore (previous year H370.17 Crore) and Profit After Tax (PAT) ofH301.77 Crore (previous year Rs 235.26 Crore) registering a Year-on-Year increase of 24%24% and 28% respectively. During the year Company has made provisions for standard assetsamounting to Rs 2.10 Crore (previous year RS 10.65 Crore) provisions for Non-performingassets amounting to Rs 20.00 Crore (previous year H8.15 Crore) provisions for Taxationand Deferred Tax Liability amounting to RS 156.28 Crore (previous year RS 134.91 Crore).

f. Dividend

Your Company has been paying dividends continuously. Your directors after giving dueconsideration to Capital Adequacy requirements projected business plan for the yeardeferred tax liability and the dividend policy are happy to recommend a dividend of Rs2/- per equity share (100%) for the third successive year for the financial year endedMarch 31 2018. The amount of dividend recommended for payment for the year under reviewis Rs 26.63 Crore. The tax on dividends u/s.115-O of the Income Tax Act 1961 at about20.36% (H5.42 Crore) is being paid to the Government by your Company. The DividendDistribution Policy as required under regulation 43A has been provided as Annexure-4 tothis report.


Your Company has been continuously expanding its network of branches. Though ourpresence in Southern states is predominant new branches and satellite offices have beenopened in various parts of the country after examining the potential on the basis ofsurveys conducted.

During FY18 9 new branches and 4 satellite offices were opened and 10 Satelliteoffices were upgraded to Affordable Housing Loan Centres (AHLCs) which exclusivelyprovide smaller ticket size Loans under Credit Linked Subsidy Scheme (CLSS)(Pradhan MantriAwas Yojana) Loans under Urban Housing (LUH) and Loans under Rural Housing (LRH) schemes.Under this initiative the second tranche of 10 AHLCs were opened during FY18 by upgradingexisting satellite offices. As at the end of FY18 your Company has an expanded network of173 outlets spread across 19 states comprising 133 branches 20 AHLCs and 20 SatelliteOffices.

During the FY19 your Company has plans to open 20 more branches / AHLCs taking thetotal number of outlets to about 190. The Branches of your Company as well as theRegistered Office are operating in spacious premises situated in good and accessiblelocalities with the objective of providing pleasant environment and convenient amenitiesto our customers.


All the branches and the Registered Office are linked through a core-banking platform(Integrated Business Suite) under the Application Service Provider (ASP) Model. TheCompany is in advanced phase for implementation of MPLS links through BSNL for a higherbandwidth and dedicated uptime.

In order to improve operational efficiency your Company embarked on technologyinitiatives like implemention of C-KYC (Central KYC) solution. The CKYC will act ascentralized repository of KYC records of customers in the financial sector with uniformKYC norms and inter-usability of the KYC records across the sector. Your Company is inprocess to revamp the existing website to make it interactive and more user friendly.

Your Company has introduced online Application Module in its website and a customerportal to access account statements/ certificates and online money transfer. Your Companyalso provides SMS alerts and missed call facility to provide information on loan balances.

The Company has set up a in-house team of IT professionals drawn from reputedinstitutions / firms to enhance IT capabilities.


The Company continues to follow transparent fair and impartial practices which engulfall the customers across branches. Information related to our Company products schemesand charges are made available in the website of the Company. As per NHB directions theFair Practices Code (FPC) and Most Important Terms and Conditions (MITC) are regularlyupdated and uploaded in the Company's website for disseminating the information to ourcustomers clients and general public.

All their respective accounts related information can also be accessed by the borrowerson the Customer Portal.

As a customer friendly initiative under CSR activities our branches are providingtree saplings along with tree pots and guards.


a. Refinance from National Housing Bank (NHB) and borrowings from Banks

During the year your Company had availed fresh refinance amounting to H90.00 Crore(previous year H441.21 Crore) under the NHB refinance scheme. The cumulative NHBborrowings as on March 31 2018 were Rs 2083.10 Crore (previous year H3375.03 Crore)with the overall cost of borrowing (including the loans under Rural Housing and UrbanHousing Schemes) of 7.57% p.a. as on March 31 2018.

Borrowings from Banks

During the year borrowings were diversified through a combination of short-term andlong-term loans considering the asset liability management position to derive the maximumbenefit of competitive interest rates. The lenders included State Bank of India LakshmiVilas Bank Federal Bank and HDFC Bank apart from Canara Bank the principal bankers tothe Company. The aggregate bank borrowings (term loans plus overdraft) at the end of thefinancial year stood at H4635.74 Crore (previous year Rs 2247.65 Crore); the overallborrowings are within regulatory ceiling of 16 times of net owned funds.

The overall cost of borrowings from banks was 8.03% p.a. as on March 31 2018. Duringthe year the long-term ‘rating' of the Company for term loans was ‘[ICRA] AAA'(pronounced ICRA triple A) with a negative outlook signifying the highest degree of safetywith regard to the timely servicing of financial obligations.

b. Debentures

(i) Secured Non-Convertible Debentures

In its continuing efforts to reduce funds cost your Company issued Secured RedeemableNon-Convertible Non-Cumulative Taxable Debentures (SRNCD) aggregating RS 1400 Crore(previous year RS 1862 Crore) in different tranches through private placement with acoupon rate range of 7.32% to 7.89%. The debentures were secured by way of a floatingcharge on the assets i.e. loan receivables specifically earmarked for the purpose infavour of the Debenture Trustees. Most investors in these debentures comprised majorinsurance companies public sector banks corporates and investors of repute indicatingtheir safety perception in your Company's fundamentals and prospects.

The tenure of debentures is range bound for two to five years. The interest on thesedebentures was serviced regularly. The aggregate borrowings by way of Secured NCDs as onMarch 31 2018 was H4802 Crore (previous year H3602 Crore) while the overall cost was8.14% p.a.

The debentures were rated ‘IND AAA' (Outlook Negative) by India Ratings andResearch Pvt. Ltd (FITCH) CARE AAA' (Under credit watch with developing implications) byCARE Limited and ‘[ICRA] AAA' (Outlook Negative) by ICRA Limited. These debentureswere listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange ofIndia Limited.

Your Company plans to raise Non- Convertible Debentures up to a maximum H6000 Croresubject to cost benefit and asset liability management requirements and with the approvalof members at ensuing Annual General Meeting.

(ii) Unsecured Non-Convertible Debentures

During FY14-15 your Company had issued 8.94% Unsecured Non-Convertible Debentures inthe nature of Tier II Bonds aggregating RS 100 Crore for a tenure of 10 years. Thesedebentures are subordinated to present and future senior indebtedness of the Company andqualify as Tier II Capital under the National Housing Bank (NHB) guidelines for assessingCapital Adequacy Requirements. These Tier II Bonds were rated ‘IND AAA' (OutlookNegative) long-term rating by India Rating & Research Pvt Limited (FITCH) CARE AAA'(Under credit watch with developing implications) by CARE Limited and ‘[ICRA] AAA'(Outlook Negative) by ICRA Ltd. Your Company has serviced the interest on the abovedebentures on the due date.

c. Commercial Paper

Your Company mobilises funds through commercial paper (CP). The outstanding at the endof the March 2018 was Rs 2075.62 Crore (previous year Rs 2320.62 Crore). The effectivecost of funds was 6.59% p.a. The CP issue by your Company was rated at the maximum [ICRA]A1+ rating by ICRA Ltd. and CARE A1+' (Under credit watch with developing implications)by CARE Limited indicating ‘Instruments with this rating are considered to have verystrong degree of safety regarding timely payment of financial obligations'.

d. Deposits

During the year your Company accepted deposits of RS 122.71 Crore (Previous year RS149.93 Crore). The outstanding balance of deposits (including interest accrued but notdue) as of March 31 2018 was Rs 228.30 Crore (previous year Rs 226.65 Crore). The rate ofinterest on public deposits ranged from 7.00% to 7.75% while the overall cost (average)of deposits was 8.46% p.a. as on March 31 2018.

As on March 31 2018 a sum of H8.81 Crore relating to 762 accounts of public deposits(H20.09 Crore as on March 31 2017 relating to 1020 accounts) remained unclaimed/overdue. Of this amount a sum of RS 1.86 Crore relating to 67 accounts (previous year H2.29 Crore relating to 140 accounts) were claimed and renewed/settled upto May 15 2018.Your Company has not defaulted in repayment of deposits or interest during the year. TheCompany has complied with the requirements under Chapter V of the Companies Act 2013 tothe extent applicable.

During the year the deposit schemes of your Company have been rated ‘MAAA'(pronounced as M Triple A) with a negative outlook by ICRA Ltd. indicating ‘highestcredit-quality' and that the rated deposit programme carried the lowest credit risk. YourCompany being a housing finance Company registered with National Housing Bank (NHB) hascomplied with the Directions/Guidelines issued by the NHB with regard to depositacceptance and renewal. Your Company is exempted from the applicability of the Companies(Acceptance of Deposits) Rules 2014.

e. Mortgage-backed securities

Your Company did not opt for any securitisation during the year under review or duringthe previous year. There were no securitised assets outstanding as on March 31 2018.


(a) Compliance with Directions/ Guidelines of National Housing Bank (NHB) and otherstatutes

Your Company adhered to the prudential guidelines for non-performing assets (NPAs) asper the National Housing Bank (NHB) Directions 2010 as amended from time to time. YourCompany complied with the guidelines and directions issued by NHB on withdrawal ofpre-closure charges for all loans. The Guidelines/ norms for asset classification ofcredit/ investments credit rating acceptance of deposits Fair Practices Code (FPC)Most Important Terms and Conditions (MITC) Customer Complaints Redressal Mechanism KnowYour Customer (KYC) Anti-Money Laundering (AML) Guidelines Asset Liability ManagementCapital Adequacy Ratio (CAR) norms Customer Redressal Mechanism and other relatedinstructions issued by the National Housing Bank (NHB) were implemented in letter andspirit with an explicit notification on the website of your Company.

As per the National Housing Bank Circulars NHB.HFC.DIR.4/ CMD/2012 dated January 192012 NHB.HFC.DIR.9/CMD/2013 dated September 06 2013 and NHB.HFC.DIR.18/MD & CEO/2017dated August 02 2017 your Company has made a general provision @:

(i) 1% of Standard Assets in respect of Commercial Real Estates other than ResidentialHousing

(ii) 0.75% of Standard Assets in respect of Commercial Real Estate – ResidentialHousing and

(iii) 0.25% of the total outstanding amount of loans which are Standard Assets otherthan (i) and (ii) above.

Loans to individuals for third dwelling unit onwards are treated as Commercial RealEstate (CRE) exposure. A provision of Rs 2.10 Crore was made in the books as on March 312018 and the cumulative provision in that regard stood at H64.75 Crore as on the abovedate. The recognition of income and provision for all assets was made in the books as perthe Guidelines on Prudential Norms applicable as of March 31 2018.

During the year the NHB has issued new directions for Housing Finance Companies viz

i) Implementation of Indian Accounting Standards (Ind AS)

National Housing Bank (NHB) has clarified in terms of paragraph 24 of the HousingFinance Companies (NHB) Directions 2010 ("Directions") on Indian AccountingStandards that the Accounting Standards and Guidance

Notes issued by the Institute of Chartered Accountants of India shall be followed in sofar as they are not inconsistent with any of the Directions. Accordingly HFCs aredirected to follow the extant directions on Prudential Norms including on assetclassification provisioning etc. issued by the NHB. With regards to the implementation ofInd AS HFCs are advised to be guided by the extant provisions of Ind AS including thedate of implementation.

ii) Acceptance of public deposits - Amendments to Para 6 and 12 of the HousingFinance Companies (NHB) Directions 2010 (principal Directions) w.e.f. December 08 2017.

The National Housing Bank (NHB) vide its Notification No. NHB.HFC. DIR.20/ MD&CEO/2017 dated December 08 2017 has amended the following:

1. Para 6 of the principal Directions which has come into effect from December 082017 for public deposits of individuals for auto renewal of deposits by takingdepositor's consent in the deposit application itself.

2. Para 12 of the principal Directions which has come into effect from December 082017 for premature payment to the survivor nominee legal heirs at their request at thecontracted rate for the period run after submission of proof of death.

Your Company has taken steps to comply with the requirements of all the applicableprovisions of the above Directions for FY18 including implementation of Ind AS.

In terms of the Directions the Company has given the Related Party Transactions Policyas Annexure 5 to this Report.

Your Company has complied with requirements as per Para 29 of the Housing FinanceCompanies (NHB) Directions 2010 except for one instance detailed below:

National Housing Bank (NHB) in its regulatory Audit conducted during the FY 16-17 forFY 14-15 & FY 15-16 has raised an issue on procedure followed by the Company sinceinception on the valuation of Government securities under HTM category invested for SLRpurpose. NHB vide its letter NHB (ND)/DRS/ SUP/9349/2017 dated 19/09/2017 has imposedaggregate penalty of Rs 2862708.00 under the provisions of Section 29B of the NationalHousing Bank Act 1987 for the period 01/04/2014 to 27/07/2016 and the same is paid.

The NHB had conducted Audit of 2015-16 and 2016-17 during the previous year and yourCompany has complied with the observations and has submitted the final replies to NHB.

Your Company has complied with the Accounting Standards issued by the ICAI New Delhiand other related statutory Guidelines/Directions as applicable to the Company from timeto time. Compliance of all Regulatory guidelines of NHB/other statutes are periodicallyreviewed at Audit Committee/Board.

(b) IRDA Compliance

During the year the Company has registered itself with IRDAI for carrying on theInsurance Agency Business and has complied with the applicable compliances under InsuranceRegulatory and Development Act 1999 and IRDAI (Registration of Corporate Agent)Regulations 2015 as amended from time to time

(c) Other Compliances

(i) The Company has obtained the Legal Entity Identifier No.335800EJ9Y3XDP5ZDH81 asrequired under the RBI Circular -No.RBI/2017-18/82 - DBR.

No.BP.92/21.04.048/2017-18 dated November 02 2017 and as advised by NHB.

(ii) As required under Section 215 of the Insolvency and Bankruptcy Code 2016 theCompany has registered itself with National e-governance Services Limited (NeSL)


Your Company has complied with the requirements of the applicable provisions of theCompanies Act 2013 and related Rules during the FY 17-18. In accordance with Sec 134 (3)(a) of the said Act amended provision the provisional Annual Return in the prescribedformat has been made available on the website of the Company at 31st Annual General Meeting(path). During FY 17-18 the Company had allotted52915 Nos. of equity shares to Mr.Koshy George and three others as per the judgement ofthe Hon'ble High Court of Kerala in the Writ Petition. Further during October 2017 theequity shares of the Company of face value of RS 10/- were sub-divided into equity sharesof Rs 2/- each. For more details regarding Compliance please refer the Secretarial AuditReport (Annexure 3).


The Capital Adequacy Ratio (CAR) of your Company as at March 31 2018 was 19.08%(previous year 18.50%) well above the Regulatory benchmark of 12% prescribed by theNational Housing Bank (NHB).


Depreciation was calculated on the Written Down Value Method based on useful life inthe manner prescribed in Schedule II to the Companies Act 2013.


During the year Deferred Tax Liability (net) of Rs 27.60 Crore (previous year RS 19.78Crore) was charged to the Statement of Profit & Loss on account of various componentsof asset & liabilities including Special Reserve. The DTL outstanding at the end ofthe March 2018 was RS 141.24 Crore (previous year RS 113.65 Crore).


During the year your Company initiated action against 373 defaulting borrowers underthe Securitisation and Reconstruction of Financial Assets and Enforcement of SecurityInterest ("SARFAESI") Act 2002 and recovered RS 15.50 Crore (previous yearH8.94 Crore) from borrowers of Non-Performing accounts. Of this H6.69 Crore (previous yearH3.80 Crore) was recovered by way of sale of assets under SARFAESI. This apart RS 1.30Crore was recovered in Written off accounts (Previous year H0.37 Crore).


The equity shares of the Company are continued to be listed on the BSE Limited (BSE)Mumbai and the National Stock Exchange of India Ltd. (NSE) Mumbai. The listing feepayable to these Stock Exchanges were paid before the due dates.


The total number of employees of the Company was 648 (594 regular and 54 on contract)as on March 31 2018 as against 626 (471 regular and 155 on contract) as at the end of theprevious year. Attrition rate stood at about 3.50% for regular employees which is farbelow the industry level.

To upgrade knowledge/skill of the employees select employees were deputed for trainingprogrammes/ seminars organised by the National Housing Bank and other reputedinstitutions. During the year training in credit information technology humanrelations finance taxation marketing fraud prevention and other topics of importancewere imparted to employees and executives. Your Company has put in place a series of HRmeasures including promotions appropriate employee recognition and reward schemes.Industrial relations in your Company continued to be cordial during the year.

Particulars of Employees:

During FY17-18 your Company had not employed anyone with a remuneration of RS 102 Lakhor more per annum nor had employed for a part of the year with a remuneration of H8.5 Lakhor more. The ratio of remuneration of each Director to the median of employeesremuneration and such other details as required under Sec 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 and 2016 are furnished below:

i. The ratio of the remuneration of Managing Director to the median remuneration of theemployees (regular employees) of the Company for the FY17-18 was 2.72: 1 (Non-executivedirectors and Independent Directors are eligible for sitting fee only)

ii. The percentage increase in remuneration in the financial year under the headManaging Director was 7.27% (the remuneration of Managing Director is as per the ServiceRegulations of Canara Bank in terms of the resolution passed by the members at the GeneralMeeting for appointment in the Company).

The Chief Financial Officer and the Company Secretary are employees of the Company andthe percentage increase in their remuneration was 10.77% and 21.28 % respectively.

iii. The percentage increase in the median remuneration of employees in the financialyear is 9.32%.

iv. Apart from 594 permanent employees on the rolls of the Company there were 54employees on contract as on March 31 2018.

v. Average% increase in remuneration of the employees other than managerial personnelas against that of Managerial remuneration was around 10% during the period underreview.

The Company affirms that the remuneration is as per the remuneration policy of theCompany.

The Company has a Policy on 'Prevention of Sexual Harassment of Women at Workplace' andmatters connected therewith or incidental thereto covering all the aspects as containedunder the Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal)Act 2013. During FY17-18 no cases of sexual harassment were reported.

The Company has laid down a Code of Conduct for Prevention of Insider Trading inaccordance with the requirements under the Securities and Exchange Board of India(Prevention of Insider Trading) Regulations 2015 and Companies Act 2013 with a view toregulate trading in Securities of the Company by its directors designated persons andemployees. The same is made available on the website of the Company. For related linkplease refer Annexure 9.


In terms of section 124 and 125 of the Companies Act 2013 the amounts (dividenddeposits etc. with interest) that remained unclaimed and unpaid for more than 7 yearsfrom the date they first became due for payment should be transferred to IEPF.

As an investor-friendly measure your Company has been intimating the respectiveshareholders / depositors / investors to encash their dividend warrant/renew matureddeposits or lodge their claim for payment of due if any from time to time and claimsmade are settled. As per the statutory requirements unclaimed deposits/ other dues forthe previous seven years as of the date of the Annual General Meeting are made availableon the website of MCA-IEPF as well as on the Company's website.

In order to receive prompt payment of dividend the members/ investors are requested todemat the shares held in physical mode register bank account particulars opt for ECSfacility register nomination and intimate change of address if any to the Company/Depository Participants promptly.

a. Unclaimed dividends

As at March 31 2018 dividends aggregating to RS 152.72 Lakh (previous year RS 124.18Lakh) relating to dividends declared for the years FY10-11 to FY16-17 (of which H35.51Lakh related to dividend for the year 2017) had not been claimed by shareholders. As aninvestor friendly measure your Company has intimated shareholders to lodge their claimsand related particulars were provided in the annual reports each year as well as on thewebsite of your Company.

The dividend pertaining to 2009-10 which remained unclaimed/unpaid amounting to H6.37Lakh (in respect of 1917 shareholders) was transferred to IEPF on September 09 2017after the settlement of claims by members received in response to the individual reminderletters sent by your Company to the respective members.

The dividend pertaining to 2010-11 remaining unclaimed and unpaid amounting to H8.65Lakh (in respect of 2103 shareholders) as on March 31 2018 would be transferred to IEPFduring August 2018 after settlement of the claims received up to the date of completion ofseven years i.e. on August 24 2018.

b. Unclaimed deposits

As required under Section 125 of the Companies Act 2013 (corresponding Section 205C ofthe Companies Act 1956) the unclaimed and unpaid deposits together with interest for theyear 2009-10 amounting to RS 10.41 Lakh (previous year H0.72 Lakh) that remained unclaimedand unpaid for a period of 7 years were transferred to IEPF during the year under review.

c. Transfer of shares to IEPF Demat account

Investor Education and Protection Fund Authority (Accounting Audit Transfer andrefund) Amendment Rules 2017 was notified by the Ministry of Corporate Affairs (MCA) onOctober 13 2017. As per Rule 6 of the said Rules the shares in respect of whichdividend amounts have not been paid or claimed for 7 consecutive years are required to betransferred to ‘IEPF demat Account' of IEPF Authority.

On verification of records of unclaimed dividend amounts from 2004 to 2010 which havealready been transferred to IEPF on lapse of 7 years (during 2011 to 2017 respectively)364 shareholders had not claimed dividend for consecutive 7 years and their shares 248050Nos. have been transferred to IEPF demat account within the prescribed period and thedetails are provided on the website of the Company. For more details please refer `GeneralInformation to shareholders' in this report.

In terms of the above Rules three reminder letters were sent by the Company to all theshareholders who had not claimed their dividends for a consecutive period of 7 yearsinforming that their shares will be transferred to IEPF suspense account on the due dateOctober 31 2017 if they do not place their claim for unclaimed dividend amounts beforethe Company.

Your Company has provided the related details on its website (Investors page).


Since your Company is a housing finance Company and does not own any manufacturingfacility the requirement relating to providing the particulars relating to conservationof energy and technology absorption as per Sec 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 are not applicable.

Your Directors are pleased to inform that Solar Power systems and power saving lampshave been installed in 16 branches so far as a measure for conservation of energy. YourCompany has installed Solar-UPS in some of its branches.

As a part of Save Green efforts and leverage of technology a lot of paper work atbranches and the Registered Office has been reduced (also refer para 5).

During the year your Company did not earn any income or incur any expenditure inforeign currency/exchange other than payment of Dividend to NRIs on repatriation basis toan extent of H30.82 Lakh through authorised dealers.


The Board of Directors made the following appointments/ re-appointments based on therecommendations of the Nomination and Remuneration Committee:

(1) Smt Bharati Rao Former DMD of State Bank of India was appointed as an additionaldirector and Independent Director with effect from September 05 2017.

(2) Shri Shreekant M Bhandiwad DGM of Canara Bank has been appointed as an additionalDirector and Whole-time Director (designated as Dy. Managing Director) by the Board w.e.fApril 28 2018.

The directors had filed their consent(s) and declarations that they are notdisqualified to become directors in terms of the provisions of Companies Act 2013 andrelated Rules. The directors have intimated to the Company that they are not holding anyshares or taken any loan(s) from the Company. The proposals relating to the appointmentand re-appointment of directors will be placed for approval by members at the ensuingAnnual General Meeting.

The particulars of directors including their profile are provided in the Report ofDirectors on Corporate Governance forming part of this Annual Report. Further the agendarelating to appointments / re-appointments of Directors are provided in the Notice of the31st Annual General Meeting of the Company seeking approval from the members. Theparticulars relating to the Directors and all other relevant information are provided inthe explanatory statement forming part of the said Notice for the information of members.

Smt. Shamila M Dy. General Manager reporting to the Managing Director has beenappointed as an additional Key Managerial personnel w.e.f. April 28 2018 in terms of theCompanies (Amendment) Act 2017.

Retirement by rotation:

In terms of Section 152 and all other applicable provisions of the Companies Act 2013and the Articles of Association of the Company Shri S A Kadur Director retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment. The particulars relating to Shri S A Kadur Director are providedin the Report of Directors on Corporate Governance. Your Directors recommend the re-appointment of Shri S A Kadur as a Director.

The agenda relating to re-appointment of Shri S A Kadur Director forms part of thenotice convening the ensuing Annual General Meeting and all other relevant information asper SEBI Regulations are also provided in the explanatory statement.


During the year ten meetings of the Board of Directors were held and the relateddetails including that of various committees constituted by the Board are made availablein the Report of Directors on Corporate Governance forming part of the annual reportplaced before the members.

Your Company has complied with all the requirements as applicable under Companies Act2013 and related rules SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and also HFCs Corporate Governance (NHB) Directions 2016 in relationto the Board of Directors and the Committees of the Board.

Committees of the Board

Currently the Board has six Committees viz. the Audit Committee the NominationRemuneration & HR Committee the Corporate Social Responsibility Committee theStakeholders Relationship Committee the Risk Management Committee and the ManagementCommittee. A detailed note on the composition of the Board and its Committees and otherrelated particulars are provided in the Report of Directors on Corporate Governanceforming part of this Annual Report.


In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of theCompanies Act 2013 and based on the information provided by the Management the Board ofDirectors report that:

a) in the preparation of annual accounts the applicable Accounting Standards have beenfollowed along with proper explanation relating to material departures if any;

b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) the Directors have prepared the annual accounts on a going concern basis; e) theDirectors in the case of a listed Company have laid down internal financial controls tobe followed by the Company and that such internal financial controls are adequate and wereoperating effectively and

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

The Independent Directors have given declarations to the Company in terms of Section149(7) of the Companies Act 2013 that they meet the criteria of independence as providedin Section149(6).

Code of Conduct

In terms of Regulation 26(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 all the members of the Board and Senior ManagementPersonnel have affirmed compliance with the Code of Conduct of Board of Directors andSenior Management for the FY17-18. As required under Schedule V (D) of the saidRegulations a declaration signed by the Managing Director & Chief Executive Officerof the Company stating that the members of the Board and the Senior Management Personnelhave affirmed compliance of their respective Codes of Conduct is enclosed to this Reportas Annexure 2.


Your Company has constituted a Nomination Remuneration and HR Committee (NRC) of theBoard in terms of Section 134(3) (e) of the Act Regulation 19 of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 and Para 3(II) of NHBCorporate Governance (National Housing Bank) Directions 2016. This Committee identifiespersons who are qualified to become Directors of the Company. The appointment renewalreappointment re-categorisation and/ or removal of the Directors so identified includingextension or continuation of the term of appointment will be recommended by the NRC tothe Board. This Committee has also laid down the criteria to identify persons who may beappointed to the senior management of the Company. The NRC has formulated the criteria fordetermining qualifications positive attributes and independence of a Director carryingout evaluation of every Director's performance performance of the Board and that of theCommittees. The NRC Policy of the Company covering all the above aspects is made availableon the official website of the Company at Investors/CorporateGovernancedocuments(path) in terms of Section 134(3) (p) of Companies Act 2013.For web link please refer Annexure 9.

The Board ensures the annual evaluation of its own performance and that of itsCommittees and individual directors through the meeting of independent directors the NRCand evaluation by each of the directors independently.


Your Company constituted a Corporate Social Responsibility (CSR) Committee of the Boardas prescribed under Section 135 of the Companies Act 2013 and has put the CSR policy inplace. The Company has focussed in promoting education including special education andemployment in enhancing vocation skills especially among children. The other areas offocus are women empowerment by promoting gender equality setting up homes and hostels forwomen and orphans; setting up old age homes day care centres livelihood enhancementprojects for the elderly & the differently abled and healthcare sector. During theyear the company also worked in the environmental sustainability by plantingtrees/saplings.

As a well thought out strategy all CSR projects of the Company are executed throughour own branches with a view to inculcate a sense of social responsibility amongst thestaff. The total amount/ budget under CSR for the FY 2017-18 was H668 lakh (previous yearH401 lakh) out of which total amount spent under the CSR activities is H338 Lakh(previous year H436 Lakh). The unspent amount of H330 Lakh is carried forward as perprovisions of Companies Act with the aim to go in for granular details/ appropriateprojects before spending in FY 18-19. A summary of CSR details as on 31/03/18 is givenbelow:

Sl No. Activities undertaken No. of Beneficiaries Amount in Rupees
1 Construction/ repair & renovation of Schools/ Hostels 7 7157395.00
2 Desks & benches/ Tables/ Almirah/ Green Board/ Chairs etc. 57 14308670.00
3 Drinking water facility/ supply of other articles of necessity etc. 12 1761873.00
4 Nalli kalli round tables/ chairs/ desk & benches/ drinking water facility etc. 25 6756114.00
5 Electrical & Electronic Items to schools 3 271482.00
6 Toilet Facility in schools 1 336105.00
7 Scholarship 1 35000.00
8 Equipment for hospitals 1 749724.00
9 Equipments to old age home 1 168650.00
10 Schools bags/stationery items etc. 3 455917.00
11 Solar lighting system 1 34000.00
12 Tree planting under environmental protection/ sustainability/ saplings with tree guards/ pots to the customers. 3 751770.00
13 Career Digest books to the govt. schools 1 998000.00
Total 116 33784700.00

The Annual Report on CSR activities including brief contents are provided as anAnnexure 6 to this report.


Your Company has constituted a Risk Management Committee with four directors and asenior executive of the Company. In terms of Section 134(3)(n) of the Act your directorswish to state that your Company has adhered to the Risk Management Policy. The abovepolicy was reviewed during the year. For weblink Please refer Annexure 9.


Your Company strengthened existing internal control systems for loan reviews atperiodical intervals and introduced measures for minimising operational risks commensuratewith the nature of its business and size of operations. Further your Company has revieweddelegation of authorities and streamlined standard operating procedures for all areas ofits business/ operations/ functions strengthened the Offsite Transaction MonitoringSystem (OTMS) to track transactions/early-warning signals across all branches byintroducing innovative monitoring tools.

The National Housing Bank conducts inspection of your Company on an annual basis.During the year the NHB conducted regular inspection of your Company in July 2017 for theposition as at March 2016 and March 2017. The compliance on the observations weresubmitted within the prescribed time to the NHB which were reviewed by the AuditCommittee and the Board.

Your Company has also put in place a well- defined policy on Risk Based Internal Audit(RBIA) and as per the said policy all the 152 branches that became due for audit wereaudited in the FY17-18.

Apart from the RBIA considering the volume of business branches are also subjected toquarterly/ half yearly internal audit by empanelled audit firms. The Audit Committeereviewed the audit reports/remarks/ observations and replies/ compliances including thecompliance of KYC norms.


The Secretarial Audit for FY17-18 was conducted as required U/s.204 of the CompaniesAct 2013 by S. Viswanathan ACS Practising Company Secretary. In terms of Section 204(3)of the Act your Directors are pleased to inform that there was no qualification orobservation or other remarks made by the said Company Secretaries in their SecretarialAudit Report. The Secretarial Audit Report issued by the Practising Company Secretaries isenclosed to the report of Directors (Annexure 3) in terms of Section 134(3) (f) read withSection 204(1) of the Act.

Loans Guarantees or Investments:

There are no particulars of loans guarantees or investments made during the year interms of Section 186(1) and 186(2) of the Act requiring disclosure to be made in thereport of Directors as required under Section 134(3)(g) of the Act. In terms of Section186(11)(a) the requirement relating to the disclosure is not applicable to a loan madeguarantee given or security provided by a housing finance Company.

Related Party Transactions:

The particulars of contracts or arrangements with the ‘Related Parties' referredto in sub-section (1) of Section 188 of the Act are furnished in Note No.32 of the Notesforming part of the financial statements for FY17-18 forming a part of the Annual Report.The particulars of Related Party Transactions as required u/s sec 134(3)(Rs) in theprescribed format is attached to this Report as Annexure 8.


Pursuant to the provisions of Section 139 142 and all other applicable provisions ofthe Companies Act 2013 and rules made thereunder M/s. Varma & Varma CharteredAccountants (Firm Reg.No.004532S) were appointed by the members as the Statutory Auditorsof the Company to hold office from the conclusion of this 30th Annual General Meetinguntil the conclusion of the 35th Annual General Meeting subject to ratification bymembers every year as applicable at such remuneration and out-of-pocket expenses as maybe decided by the Board of Directors of the Company.

Pursuant to the provisions of Section 143(8) of the Companies Act 2013 and rules madethereunder the Members had authorised the Board of Directors to appoint any person(s)qualified for appointment as auditor(s) of the Company under Section 141 and all otherapplicable provisions of the Companies

Act 2013 as Branch Auditors for audit of any of the Branch of the Company present andfuture from the conclusion of this Annual General Meeting until the conclusion of the35th Annual General Meeting subject to ratification by members every year as applicableon such terms and conditions including remuneration and out-of pocket expenses as may bedecided by the Board of Directors of the Company.

The requirement of placing the matter relating to such appointment for ratification bymembers at every annual general meeting has been dispensed with due to omission of thefirst proviso to Section 139(1) by the Companies (Amendment) Act 2017 effective from May07 2018 as per the Notification issued by Ministry of Corporate Affairs Govt. of India[File No.1/1/2018-CL.I dated May 07 2018].

In view of the above M/s Varma & Varma Chartered Accountants (FirmReg.No.004532S) appointed by the members at the 30th Annual General Meeting for a tenureupto the conclusion of the 35th Annual General Meeting will continue as the StatutoryAuditors of the Company at such remuneration and out-of-pocket expenses as may bedecided by the Board of Directors of the Company. Further as authorized by the members atthe 30th Annual General Meeting the Branch Auditors appointed by the Board of Directorsof the Company will continue until conclusion of the 35th Annual General Meeting on suchterms and conditions including remuneration and out-of pocket expenses as may be decidedby the Board of Directors of the Company.


In terms of Regulation 34(2) of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report forms partof this Annual Report.


As required under the Companies Act 2013 Regulation 34 read with Schedule V of theSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 and HousingFinance Companies – Corporate Governance (National Housing Bank) Directions 2016the ‘Report of Directors on Corporate Governance' for the year FY17-18 is placed inthis Annual Report.

The said Report covers in detail the Corporate Governance Philosophy of the CompanyBoard Diversity Directors appointment and remuneration declaration by IndependentDirectors Board evaluation familiarisation programme vigil mechanism etc. The AuditorsCertificate on Corporate Governance is provided with this report as Annexure 1.

Business Responsibility Report:

The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandatesinclusion of Business Responsibility Report (BRR) in the prescribed format as a part ofthe Annual Report for top 500 listed entities based on the market capitalisation. Incompliance with the said Regulations the BRR is provided as a part of this Report asAnnexure 7.

In terms of Regulation 17(10) of the SEBI (Listing Obligations & DisclosureRequirement) Regulations 2015 read with the SEBI Circular No. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated January 5 2017 your Company has put in place the ‘Boardand Director's Evaluation Policy' laying down a framework for evaluation of the Board itsCommittees and of the individual directors with defined attributes for evaluation. Theresults of the evaluation exercise will be shared with the Board in subsequent BoardMeeting(s) including listing of the identified strengths areas of improvement andactions to be taken if any.


In recognition and support to the green initiative taken by the Ministry of CorporateAffairs (MCA) Government of India your Company is sending AGM notices annual reportscorrespondence with the stakeholders etc. to the respective e-mail IDs of stakeholders. Tofacilitate paperless banking initiatives taken by your Company include ECS / NACHfacility for repayment of loans streamlining the systems and procedures for reporting bythe branches and at the Registered Office through Integrated Business Suite (IBS)networking of branches with the Registered Office harnessing solar energy for lightingand computer operations in its 16 branches and the like. The usage of paper is minimised.

As in the previous years we continue to publish only the statutory disclosures in theprint version of the Annual Report. Electronic copies of the Annual Report Annual GeneralMeeting Notices and such other notices are being sent to all members whose e-mail addressare registered with the Company/ Depository participants. For members who have notregistered their e-mail address and to those who specifically request for physical copiesthe same is sent in the permitted mode.

In the FY 2017-18 your Company conducted a tree plantation drive (November 12 2017)in commemoration of their 30th anniversary in Bengaluru. Under the auspices of theresidents of Akshay Nagar in Bengaluru about 300 saplings were planted by the staffaround the Akshay Nagar lake and Viveka Gudda area. The day has been etched in the annalsof the Company as a green Sunday and the beginning of an initiative to plant 30000 treesby involving all the branches of the Company. CFHL also espouses the cause of environmentas a CSR initiative and during the year the Company has come out with a novel initiativeof gifting a tree sapling/potted plant to each borrower across branches. The aim is toencourage every home buyer to join hands with the Company to ensure a greener environment.

30. OUTLOOK FOR 2018 19

Government's initiative of ‘Housing for all by 2022' and the consequent incentivesto 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 CLSSinfrastructure status and rationalization of GST rates in favour of affordable housingetc. are going to be the key drivers of growth in the year 18-19.

We remain buoyant with regard to our market expansion to potential geographies beyondour home turf and have plans to open about 20 new branches during the current fiscal. Wealso acquired license from the IRDA and began insurance agency business from January 2018.The insurance business adds to our business competitiveness and widens our serviceportfolio and will generate revenue for the year too.

Your Company is targeting a loan book size of Rs 19500 Crore by March' 19. Lending tothe salaried class will continue to be our mainstay. However with the rising cost offunds expectations of borrowers for loans at lesser rates intense competition in themarket etc. margins are expected to remain under pressure.

The prime focus of your Company would be growth with quality. The onus of maintaininghigh standards is a formidable challenge however your Company is confident of meeting thesame.


Your Directors would like to thank Canara Bank the promoter for their continuoussupport.

Your Directors would like to acknowledge the role of all its stakeholders viz.shareholders debenture holders CP holders depositors bankers lenders borrowersmerchant bankers debenture trustees and all others for their continuous support to yourCompany and the confidence and faith that they have always reposed in your Company.

Your Directors acknowledge and appreciate the guidance and support extended by all theRegulatory authorities including National Housing Bank (NHB) Insurance Regulatory andDevelopment Authority of India (IRDAI) Securities Exchange Board of India (SEBI)Ministry of Corporate Affairs (MCA) Registrar of Companies Karnataka the StockExchanges and the NSDL and CDSL.

Your Directors thank the Rating Agencies ICRA CARE India Ratings & Research Ltd.(FITCH) the Registrars & Share Transfer Agents Debenture Trustees and Trustees ofpublic deposits of your Company Government(s) local/ statutory authorities and allothers for their whole-hearted support during the year and look forward to their continuedsupport in the years ahead.

Your Directors value the professionalism of all the employees who have provedthemselves in a challenging environment and whose efforts have stood the Company in goodstead and taken it to present level.

For and on behalf of the Board of Directors
Place: Bengaluru K N Prithviraj
Date : June 02 2018 Chairman