My questionnaire for the AGM Meeting
Canfin has predominantly been a South based HFC - with Karnataka (33%) and Tamil Nadu (15%) being largest contributors. We have also seen it’s growth getting impacted due to over dependence in these regions. Do we have a conscious strategy in place to grow more into Non-South based regions. If yes, could you give us a broad outline of the growth plan over the next 2 - 3 years.
Canfin has always maintained very high asset quality and it’s stance has been not to compromise quality for growth. Hence, it’s exposure to Salaried segment is very high close to 75%. But don’t you think that this market is highly saturated. If yes, do we have a conscious strategy to grow our Non-Salaried book. Also, underwriting skills needed for Non-salaried segment would be different. What is our stance on this aspect. Have we taken steps to augment this segment in our portfolio. [ Training to credit evaluation team to assess cash flows of Non salaried individuals etc.]
Many of the large HFC’s have actually grown faster due to their builder tie-ups. [ The HFC’s would have given loan to builders for construction of buildings and would have pre-approved these projects for Home loan processing. Hence, every homebuyer is routed by the builder to the HFC for buying the house in the building. This creates a win win situation - builder gets construction finance + faster sales as flats in his building a pre-approved and hence lesser time spent in processing. HFC’s gets to rollover his loan from builder to Home buyer, as the HFC will fund the home buyer, who in turn pays to the builder, who in turn repays it to the HFC. ]
Canfin has a very low exposure to Builder finance. What is our stance on this segment. Would we still avoid this segment.
The primary concern of the Karnataka market is the high number of Non Rera registered projects which are stuck.
Could you throw some light on ground situation
a. What will happen to the projects which are no registered? What recourse do the builders have to sell their unsold inventory?
b. Do you see a trend where Construction Finance segment witness a sharp rise in NPA’s as these builders begin to default?
c. By when do we see the ground situation change? There is an article which says the sales in Bengaluru have grown sharply?
d. Concerns about IT sector are allaying. TCS reported good numbers and have guided for good growth. Will this see a revival in demand for Housing in our markets and hence can we guide for higher growth than projected?
- On the cost of borrowing.
a. What is our outlook on Int. Rates. What is our projection of the Cost of borrowing for FY 19 & FY 20
b. How do we arrive at the yields we must charge. Do we have a NIM / Spread target in mind while fixing them. If so, what is our targeted NIM / Spread range we aim at.
c. How do we account for competition when setting our yields? Since our yields are marginally higher than the competition, what margin above the competition would we be comfortable with. For e.g. SBI Home loans for < 30 Lk is 8.50% Vs Our offering at 8.95% (45 bps higher)