CHAPTER -5 DATA ANALYSIS AND INTERPRETATION

CHAPTER -5 DATA ANALYSIS AND INTERPRETATION

CHAPTER-5 Sr. No. Name of Topic Page No. 5.1 Introduction 187 Comparisons of Home Loan Schemes 189 (a) Comparison of Eligibility Criteria of AGE, INCOME and WORK 189 EXPERIENCE for Salaried and Self Employed person for Selected Housing Finance Companies of India (b) Comparison of Eligibility Criteria of LOAN Amount, LOAN tenure and FINANCE Percentage for Selected Housing Finance Companies of India 190 (c) Comparison of Types of Various Housing Loan Scheme for Selected 191 Housing Finance Companies of India (d) Comparison of Processing Fees for Selected Housing Finance 191 Companies of India (e) Comparison of Administrative and Commitment charges for Selected Housing Finance Companies of India 193 5.2 (f) Comparison of Security of loan for Selected Housing Finance 194 Companies of India (g) Comparison of Sanctioning Period for Selected Housing Finance 195 Companies of India (h) Comparison of Disbursement period for Selected Housing Finance 196 Companies of India (i) Comparison of Insurance required for Selected Housing Finance 197 Companies of India (j) Comparison of Penalty for Pre-Payment for Selected Housing Finance 198 Companies of India (k) Comparison of Home Loan Interest Rate for Selected Housing 199 Finance Companies of India (l) Comparison of Home Loan Sanction, Disbursement and percentage of Disbursement to Sanction Loan for Selected Housing Finance Companies of India 201 Financial Data Analysis Profitability and Efficiency Criteria Analysis 205 (A) (a) Net Profit(Net Income) Margin 206 (b) Asset Turnover Ratio 209 Return Base Analysis 212 (B) (a) Return on Net Worth 212 (b) Return on Capital Employed 215 5.3 (c) Return on Assets 218 Per Share Return Base Analysis 221 (C) (a) Basic EPS 221 (b) Fund from Operations Per Share 224 Liquidity Base Analysis 227 (D) (a) Current Ratio 228 (b) Dividend Pay-out Ratio 231 (c) Debt Equity Ratio 234 5.4 Conclusion 237 References 237 186

5.1 INTRODUCTION The Indian real estate market has witnessed an unprecedented rise in the realty and land prices in the last ten years or so. In the present condition the best investment option most people would rely on is buying a home. Home is the safest investment because it is one of the few assets whose value appreciates over the years. Buying a home is not only a dream that people cherish life long, but it can also be a tax saving option, as tax deductions are available on the purchase of a house if you apply for housing loans in India. Following the boom in the real estate market, a healthy competition can be witnessed in the housing finance sector, as more and more banks and financial institutions are entering the house loan market. The market is flooded by various housing finance schemes offered by these banks and financial institutions and the ultimate beneficiaries are the consumers as they have got plenty of options to choose from according to their requirements. The immediate impact of rising competition in the housing loan sector can be seen in the rates of interest charged by various HFCs. Most of the HFCs and financial institutions are offering housing loans at competitive interest rates and innovative house loan products. The standard interest rate in the market today is 8 to 8.5% per annum for a five-year loan. However, the terms and conditions for housing loans differ from one HFCs to the other. Housing loans in India are available for a number of reasons such as purchase, construction, expansion and renovation of house. So housing finance companies now offer individuals with various alternatives to choose from while taking a Home loan. They offer loans for property investment like home purchase, home construction, and home improvement, and home extension, home equity and home conversion. Other housing loans offered by them are land purchase loan, stamp duty loan, balance transfer loan, refinance loan and others. Generally Housing Finance Companies provide following types of loan 187

Home Equity Loans: A form of finance to the customer by way of mortgage of existing property to the financier for taking a loan for some other purpose. The current market value of the property is the basis for providing home equity loans. Home Extension Loans: The purpose of this loan is the extension of existing houses take the addition of rooms, toilet facilities etc. Such loans fall under the category of home loans. Home Improvement Loans: These loans are provided mainly for repairs and maintenance of existing houses- These could include internal and external repairing, waterproofing and roofing, complete interior renovation, tiling and flooring etc. Home Purchase Loans: Finance provided for the purchase of ready-made houses. Land Purchase Loans: These loans are being provided for the purchase of land to the purpose of construction of residential houses. 188

5.2 COMPARISONS OF HOME LOAN SCHEMES (a) Comparison of Eligibility Criteria of AGE, INCOME and WORK EXPERIENCE for Salaried and Self Employed person for Selected Housing Finance Companies of India Table 5.1 Comparison of Eligibility Criteria of AGE,INCOME and WORK EXPERIENCE for Salaried and Self Employed person for Selected Housing Finance Companies of India AGE INCOME Rs. Work Experience Company (Years) (Per Annum) (In Years) Salarie Self Salaried Self Salaried d Employed Employed Can Fin 21-58 21-58 N.A. N.A. 3 2 DHFL 21-55 21-55 1,44,000 1,50,000 3 N.A. GIC 18-60 18-65 N.A. N.A. 2 3 Gruh Fin 18-65 18-65 N.A. N.A. 2 2 HDFC 21-65 21-65 1,20,000 1,50,000 3 3 India HL 21-60 21-60 1,20,000 1,50,000 2 2 India bulls 21-65 21-65 N.A. N.A. N.A. N.A. LICHF 18-60 18-60 1,80,000 2,00,000 2 3 REPCO 18-65 18-65 N.A. N.A. N.A. N.A. SAHARA 18-65 18-65 1,20,000 1,50,000 3 3 SHRISTI IS 21-65 21-65 1,44,000 2,00,000 2 N.A. VAXHF 21-60 21-65 1,20,000 1,50,000 N.A. N.A. Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com Self Employed From the above table it is found that Minimum Age limit for selected housing finance companies of India is ranging between 18-21 Years while Maximum age Limit is ranging between 50-65 Years for salaried and self-employed person. Minimum Income eligibility for salaried person is ranging between 1,20,000 to 1,80,000 p.a. but most of housing finance companies asking it for 1,20,000 Rs. p.a. while Income criteria for Self-employed person is ranging between 1,50,000 to 2,00,000 some housing finance company is considering Income criteria of the applicant depending upon real time terms of the loan agreement hence it is mentioned as Not Applicable. Eligibility criteria for work experience for salaried person is ranging between 2 to 3 years while for self-employed person it is between 2 to 3 years some housing finance companies considering it on real time application hence it is mentioned as Not Applicable. 189

(b) Comparison of Eligibility Criteria of LOAN Amount, LOAN tenure and FINANCE Percentage for Selected Housing Finance Companies of India Table 5.2 Comparison of Eligibility Criteria of LOAN Amount,LOAN tenure and FINANCE Percentage for Selected Housing Finance Companies of India Company LOAN AMOUNT (In Lac Rs.) LOAN TENURE (In Years) Maximum Amount of Percentage Finance Minimum Maximum Minimum Maximum Maximum (%) Can Fin 1 50 5 30 75 DHFL 2 500 15 20 80 GIC 2 100 15 20 85 Gruh Fin 1 50 15 20 85 HDFC 2 100 5 20 85 India HL 1 50 5 25 85 India bulls 1 50 5 25 85 LICHF 5 100 5 20 85 REPCO 1 50 15 20 85 SAHARA 2 500 5 20 85 SHRISTIIS 1 100 15 25 85 VAXHF 1 50 5 25 85 Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com From the above table it is found that Minimum Loan Amount sanctioned by selected housing finance companies of India is ranging between Rs. 1-5 Lacs while Maximum Loan Amount sanctioned is ranging between Rs.50 Lacs to Rs. 5 Cr. offer documents of Most of the housing finance companies are showing real time condition for sanctioning the loan for salaried and self-employed person separately. Minimum Loan tenure of the selected housing finance companies are ranging between 5 years to 15 years while it is 20 to 25 years for Maximum Loan tenure of the selected housing finance companies and this period is depending upon the size of the sanction loan and loan agreement depending upon the agreement deed of the respective applicant. Eligibility criteria for sanctioning loan amount is ranging between 80-85 percentage of Agreement value but most of selected housing finance companies are offering 85 % of the Agreement Value. 190

(c) Company Comparison of Types of Various Housing Loan Scheme for Selected Housing Finance Companies of India Table 5.3 TYPES OF VARIOUS HOUSING LOAN SCHEME OF SELECTED HOUSING FINANCE COMPANIES OF INDIA construction Plot purchase Renovation Extension Flat Purchase Non Resident purpose NRI Loan Transfer Can Fin - - - DHFL GIC - - - - Gruh Fin - - - HDFC India HL - - - India bulls - - - LICHF REPCO - - - - SAHARA SHRISTIIS - - VAXHF - - Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com Other It is evidently clear from the above table that most of the selected Housing Finance Companies are providing loan for construction while from the available data it is found that Housing Finance Company who provides the loan for construction may not provide the loan for purchasing the plot. The entire selected Housing Finance Companies providing loan for renovation and extension. From the observation of the available data it is found that excepting GIC all the selected housing finance companies are providing loan for purchase the flat. Only DHFL, HDFC, LICHF and SAHARA is found from the available records that they are doing the transaction with NRI. Except GIC all the banks are doing the business of Loan Transfer from existing Loan Scheme with another Companies or Banks, Likewise, the entire selected research unit is also providing the loan for other purposes related to housing finance schemes. (d) Comparison of Processing Fees for Selected Housing Finance Companies of India Most of the housing finance companies charge the processing fee. Processing fees means charge involved in the processing of loan application. Due to competition some institutions waive the processing fees. Details information about processing fee has been presented in following table. 191

Table 5.4 Comparison of Processing Fees for Selected Housing Finance Companies of India Housing Finance Processing Fees Companies Can Fin 0.75% DHFL Loan up to 30 Lac Rs. 5000 + Doc Charges+ Taxes Loan above 30 Lac and up to Rs. 75 Lac Rs. 10,000 + Doc Charges + Taxes Loan above Rs 75 Lacs Rs. 20,000 + Doc Charges + Taxes GIC 0.3% for loan up to 2 Lacs or 0.8% for loans above RS. 2 Lacs (subject to minimum of RS. 250) Gruh Fin 0.25 % To 1.0 % HDFC India HL 0.50% India bulls LICHF 0.50% or Rs. 10,000 whichever is lower Nil REPCO 0.50% to 1,0 % Rs. 1,000 To Rs. 15,000 one time SAHARA Home Loan with loan ticket of up to Rs.5 Lacs: @ 1.25% plus applicable ST, subject to minimum fees of Rs.2500/- (Rs.2000/- for Sahara employees) plus applicable ST; Home Loan with loan ticket of above Rs.5 Lacs: @ 1% plus applicable ST; Mortgage Loan (any amount): @1.5% plus applicable ST, subject to minimum fees of Rs.2500/- (Rs.2000/- for Sahara employees) plus applicable ST; NRP Loan (any amount): @ 1% plus applicable ST, subject to minimum fees of Rs.2500/- (Rs.2000/- for Sahara employees) plus applicable ST; SHRISTI IS 0.5% to 1.0 % VAXHF 1.0% Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com From the above table it is evident that processing Fees are varying company to company and observing the offer document and website of respective company it also suggest that amount of processing fees depends up on the loan amount, tenure of loan and repayment capacity of the borrower. Some Housing Finance Companies Like DHFL, LICHF, and SAHARA is charging one time processing fees depending upon the loan amount while most of Housing Finance Companies are charging some percentage of loan amount. 192

(e) Comparison of Administrative and Commitment charges for Selected Housing Finance Companies of India Housing finance companies charge to the customers for the service provided during the loan period in the form of administrative charges. It also varies from housing finance agency to agency. Commitment charges means once the loan is sanctioned and borrower does not avail this loan, housing agency will charge some amount for blocking of their money, it is known as commitment charges, only very few housing agencies charge the commitment charges. Detail and exact picture has shown in the table given below. Table 5.5 Comparison of Administrative and Commitment charges for Selected Housing Finance Companies of India Companies Can Fin 0.5% to 1 % DHFL 1% Administrative and Commitment Charges GIC 1% of loan(subject to a minimum of Rs. 250), commitment fees @ 1% per annum on the in drawn amount of the loan, commencing nine months from the date of acceptance of the loan till the same is fully availed of. Gruh Fin 0.25 % To 1.0 % HDFC 0.50% or 1% India HL 0.50% to 1 % India bulls Nil LICHF 1% REPCO 0.50% SAHARA 0.5% to 1% SHRISTI IS VAXHF Nil Nil Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com From the above table it is evident that most of Selected Housing Finance Companies are charging Administrative charges ranging between 0.5% to 1%. 193

(f) Comparison of Security of loan for Selected Housing Finance Companies of India Security of loan is taken by every Housing Finance Companies but it varies from the Company to Company in term of different security some Housing Finance Company require the additional security like the marketable security, guarantee of other person, etc. It also depends on the management policy of the particular individual company. Following table is showing the scenario of security of loan for selected housing finance companies of India. Table 5.6 Comparison of Security of loan for Selected Housing Finance Companies of India Companies Can Fin DHFL GIC Gruh Fin HDFC India HL India bulls LICHF REPCO SAHARA SHRISTI IS VAXHF Security of Loan First mortgage of the property, generally by deposit of title deed with Can Fin Home Ltd. Guarantors based on assessment, also on second mortgage in case of government and public sector undertaking employees. First Mortgage of Property and other collateral security as necessary to DHFL may also be required. Primary security would be the mortgage of the property proposed to be financed by GIC. Depending on the risk assessment, other collateral security in the form of LIC policies, NSCs, FDs, other immovable property, personal guarantee may be required. The Loan would be secured by creating first mortgage of the property financed in GRUH s favor by way of deposit of title deeds. Besides this, the loan would be secured by one or more personal guarantees as applicable. Another securities as acceptable to GRUH may also be required. It would be the applicant s responsibility to ensure that the title to the property is absolutely clear and marketable and free from any encumbrances. for this purpose a Title Clearance Certificate (TCC) from an advocate would have to be submitted to GRUH. First mortgage of the property, the other collateral security, guarantees from sound and solvent guarantors, pledge of shares and such other investments that are acceptable to HDFC. First Mortgage of Property & Equated mortgage, Guarantee of a third party First Mortgage of Property and Guarantee of a third party Deposit of title deeds of the property, LIC policy, Equivalent to the loan value (except Grah Lakshmi) One guarantor less than 50 years age. Collateral Securities in addition to primary security is taken by the REPCO, which may be in the form of guarantee from one or two persons, assignment of LIC policies, deposit of shares and units or other securities. Equitable mortgage, mortgage by entering into a memorandum of Entry and Registered Mortgage or English Mortgage. SAHARA follows any of the three mortgages in addition to primary security. First Mortgage of Property & Equated mortgage, Guarantee of a third party First Mortgage of Property & Equated mortgage, Guarantee of a third party Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com 194

Most of the selected Housing Finance Companies asking either Equitable Mortgage and Guarantee of third party in addition to primary Mortgage before sanctioning the loan. GIC, HDFC and REPCO accepting collateral Security like any financial instrument in addition to primary security before sanctioning the loan. (g) Comparison of Sanctioning Period for Selected Housing Finance Companies of India Every Housing Finance Companies has different period for sanctioning the loan. It also varies from Company to Company. Minimum sanctioning period is fixed by the management to see the liquidity position and sources of fund, Capital structure etc. It varies from the same day to 7-15 days. Following table is showing the scenario of Sanctioning period for the selected housing finance Companies. Table 5.7 Comparison of Sanctioning Period for Selected Housing Finance Companies of India Companies Can Fin DHFL GIC Gruh Fin HDFC India HL India bulls LICHF REPCO SAHARA SHRISTI IS VAXHF Sanctioning Period 7 Days About 3-15 days, subject to proper documentation provided by the Home loan applicant. 7-15 Days Same Day subject to proper documentation provided by the Home loan applicant. Same Day subject to proper documentation provided by the Home loan applicant. 7 Days subject to proper documentation provided by the Home loan applicant. Same Day subject to proper documentation provided by the Home loan applicant. 8 Working Days Same Day subject to proper documentation provided by the Home loan applicant. 7-15 Days Same Day subject to proper documentation provided by the Home loan applicant. Same Day subject to proper documentation provided by the Home loan applicant. Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com 195

Most of the Housing Finance companies asking time to sanction the loan is varying between 7-15 days. Some of the Selected Housing Finance Companies are sanctioning the loan on same day subject to proper documentation provided by the applicant. (h) Comparison of Disbursement period for Selected Housing Finance Companies of India Housing Finance Companies have different disbursement period for the loan, as per the organization s rules and regulations. It effects the operation of the business. Disbursement period varies from same day to 45 days from the date of sanctioning of the loan. Following table are exhibits the present scenario of selected housing finance companies regarding the disbursement period of loan. Table 5.8 Comparison of Disbursement Period for Selected Housing Finance Companies of India Companies Can Fin DHFL GIC Gruh Fin HDFC India HL India bulls LICHF REPCO SAHARA SHRISTI IS VAXHF 30-35 Days About 40-45 days 30-45 Days 30 Days 7-15 Days 7 Days Disbursement Period Same Day subject to proper documentation provided by the Home loan applicant and sanction by the sanctioning authority 45 Working Days 15-30 Days 7-15 Days 7-15 Days 15-45 Days Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com 15 Days to 45 Days is taken for disbursement of the loan after sanctioning procedure. Most of the Selected Housing Finance Companies generally disburse the loan within a period of average thirty days. 196

(i) Comparison of Insurance required for Selected Housing Finance Companies of India Insurance is also important criteria for the operational aspect. Most of the Housing Finance Companies have made compulsory insurance of the property as well as borrowers but it vary in terms that individual insurance or comprehensive insurance required. Table 5.9 Comparison of Insurance required for Selected Housing Finance Companies of India Companies Can Fin DHFL GIC Gruh Fin HDFC India HL India bulls LICHF REPCO SAHARA SHRISTI IS VAXHF Yes Insurance requirement Yes Insurance against Fire Yes, free accidental death insurance cover to all borrowers to the extent of loan outstanding as per policy conditions. Yes Yes, property should duly and properly insured for fire and other appropriate hazards, as required by HDFC's during the pendency of the loan and to produce evidence there of the HDFC Yes, free personal accident and property insurance. Yes Yes, free accidental death insurance cover to all borrowers to the extent of loan outstanding as per policy conditions. Yes, comprehensive joint name policy. Yes Yes Yes, comprehensive joint name policy. Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com Insurance of any property is now a day is essential as per the Risk Management policy. There are various Risk involves in any financial matters. Providing Housing Loan is long term financial disbursement therefore it is essential to plan the Risk Management and hence all the Housing Finance Companies are asking for Insurance of the related property. 197

(j) Comparison of Penalty for Pre-Payment for Selected Housing Finance Companies of India Penalty for pre-payment means company charges a penalty if borrower returns the loan amount before the stipulated time in part or full. At present most of the housing finance companies do not charge the pre-payment charges due to competition, but a some Housing Finance Companies are continuing the pre-payment charge because it hinder the financial planning of the institutions. Below table exhibit the true picture about the penalty for pre-payment. Table 5.10 Comparison of Penalty for Pre- Payment for Selected Housing Finance Companies of India Penalty for Pre- Companies Payment Can Fin Nil DHFL GIC Gruh Fin Nil Nil Nil HDFC 2% India HL 1% India bulls Nil LICHF 1.5% REPCO Nil SAHARA 0.5% SHRISTI IS VAXHF Nil Nil Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com Penalty for pre-payment is not asking by most of Housing Finance Companies now a days due to competition but some of Housing Finance Companies like LICHF, SAHARA and HDFC are asking nominal rate of pre-payment penalty due to the part of their administrative procedure. 198

(k) Comparison of Home Loan Interest Rate for Selected Housing Finance Companies of India New players are always entered in any industry, Likewise, New players also have taken place in the Housing Finance Industry as well as Current player also have expand their area of business. Therefore it is essential for customers to study various market loan schemes and choose the best financing facility. There is a great need to choose a banking institute providing the most affordable loan facilities. This all helps ward-off chances of any kind of fraud and to getting transparent deals. Interest rates of different Housing Finance Companies have been changing very quickly during the last three years of period. Changes are so quick even within the 15 days to one month interest rates are changing. Researcher is presenting the current data as on March 2010. As on March 2010 it is vary from 8 % to 16% fixed basis and from 8% to 10.5 %at the floating basis for the different schemes for different Housing Finance Companies. Generally different in rate of interest varies from 0.5% to 2.5% for the different housing finance companies. Interest rates are going down day by day due to sever competition in the market and there is interest war in the market if one housing finance company lowering down interest rate, other company announces in the next day. After entry of commercial banks in the housing finance sector, competition is in the war foot ground and every financial institution comes after the housing finance sector because of potential market in the housing sector and changes in the rules and regulation of RBI towards CRR and SLR. Following table is showing the Comparative Interest Rate of Selected Housing Finance Companies on the base of Home Loan Amount 199

Table 5.11 Comparative Interest Rate of Selected Housing Finance Companies of India on the base of Home Loan Amount (March 2010 w.e.f. August 2009) Housing Finance Company CAN FIN Homes DHFL GIC GRUH Finance HDFC INDIA HL INDIA BULLS Interest Rates for various Loan amount Interest Type up to 5 lakh 5-20 lakh 20-30 lakh 30-50 lakh 50-75 lakh more than 75 lakh Floating ** 8.75 8.75 9.0 9.75 9.75 9.75 Fixed 11 11 11 11.25 11.25 11.25 Floating 9.25 9.25 10.75 10.75 10.75 10.75 Fixed 13.25 13.25 14.75 14.75 14.75 14.75 Floating 10.5 10.5 10.5 10.5 10.5 10.5 Fixed@ 15.0 15.0 15.0 15.0 15.0 15.0 Floating 9.0 9.0 9.0 9.0 9.0 9.0 Fixed 10.25 10.25 10.25 10.25 10.75 10.75 Floating 8.75 8.75 8.75 9 9.25 9.25 Fixed 14.25 14.25 14.25 14.25 14.25 14.25 HDFC-Special Scheme Floating 8.25 8.25 8.25 8.25 8.25 8.25 Floating 9.5 9.5 10.0 10.0 10.0 10.0 Fixed@ 13.0 13.0 13.0 13.0 13.0 13.0 Floating 8.75 8.75 8.75 9.0 9.5 9.5 India bulls Special Scheme -Floating 8.25 8.25 8.25 N.A. N.A. N.A. Fixed 16.0 16.0 16.0 16.0 16.0 16.0 LIC HF Floating 9.75 9.75 9.75 9.75 9.75 9.75 LIC Fix -o-floaty* 8.9 8.9 8.9 8.9 8.9 8.9 REPCO SAHARA SHRISTI IS VAXHF Floating 9.0 9.0 9.0 9.0 9.0 9.0 Fixed 14.0 14.0 14.0 14.0 14.0 14.0 SAHARA-Floating 9.75 9.75 9.75 10.25 10.25 10.25 SAHARA Fix 11 11 11 11 11 11 Home Loan Floating# 9.25 9.25 9.25 9.25 9.5 9.5 Home Loan -Fixed 11.0 11.0 11.0 11.0 11.0 11.0 Floating 9.5 9.5 10.0 10.0 10.0 10.0 Fixed 14.25 14.25 14.25 14.25 14.25 14.25 Source: (i) Offer document (ii) Websites of respective companies (iii) bankbazar.com (iv) deal4loan.com * LIC offers 8.9% fixed for first 3 yrs thereafter then prevailing floating rate will be applicable. ** Floating interest rate is linked to HDFC's Retail Prime Lending Rate (RPLR) currently 13.75%. # The Floating interest rate is linked to Shristi Infra Structure Prime Lending Rate (BPLR) currently 11.75%. @ Fixed rates may be reset at the end of every 3 years on the basis of the prevailing interest rate. From the above table it is evident that fixes as well as floating Rate of Interest is varies on the base of loan amount for most of the selected housing finance companies. Fixed Interest Rate is higher compare to floating Interest Rate in most of the selected housing finance companies during study period. Some of selected housing finance companies are offering special scheme 200

for floating interest rate. Lowest Interest rate for special scheme is offered by HDFC during study period which is 8.25 %. Highest fixed rate of interest charges by India Bulls which is 16% during study period. (l) Comparison of Home Loan Sanction, Disbursement and percentage of Disbursement to Sanction Loan for Selected Housing Finance Companies of India Table 5.12 Comparison of Home Loan Sanction, Disbursement and percentage of Disbursement to Sanction Loan for Selected Housing Finance Companies of India Company A = Sanction; B = Disbursement; C = [(Disbursement/Sanction) * 100] Year 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 Average (%) CANFIN DHFL GIC GRUH HDFC INDIA HL INDIA BULLS LICHF REPCO SAHARA SHRISTI IS VAXHF (A) 264 356 653 546 1105 2093 2907 3670 (B) 247 301 547 473 859 1814 2548 3346 (C) 93.56 84.55 83.77 86.63 77.74 86.67 87.65 91.17 (A) 2009 2698 5274 8949 12845 17337 22377 28497 (B) 1761 2266 3865 6505 9065 13357 16647 19821 (C) 87.66 83.99 73.28 72.69 70.57 77.04 74.39 69.55 (A) 871 920 980 1069 1072 1424 1754 2305 (B) 785 835 905 969 992 1353 1665 2225 (C) 90.13 90.76 92.35 90.65 92.54 95.01 94.93 96.53 (A) 869 928 1012 1628 2029 2797 3068 3561 (B) 632 655 780 1211 1487 2174 2577 3121 (C) 72.69 70.57 77.04 74.39 73.28 77.74 83.99 87.66 (A) 75949 91378 108268 129274 155431 187010 217763 253333 (B) 73328 85198 97967 117127 140875 170046 197100 228181 (C) 96.55 93.24 90.49 90.60 90.64 90.93 90.51 90.07 (A) 489 487 556 721 600 915 1496 2248 (B) 429 435 477 596 532 743 1211 1948 (C) 87.73 89.32 85.79 82.66 74.93 74.93 74.93 74.93 (A) 13862 10099 12163 13501 14754 16624 19762 20511 (B) 5921 3767 3452 3754 4020 3098 5105 6905 (C) 42.71 37.30 28.38 27.81 27.25 18.64 25.83 33.66 (A) 5209 5027 6105.42 8617.88 10898 18043 22603 22034 (B) 4650 4670 5121.36 7071.48 8762 14852 19912 20027 (C) 89.27 92.89 83.88 82.06 80.40 82.31 88.09 90.89 (A) 402 473 649 991.8 1111.6 1284.8 1822.5 2398.9 (B) 380 428 583 915.6 1042.3 1167.4 17.15.3 2181.2 (C) 94.53 90.49 89.83 92.32 93.77 90.86 94.12 90.93 (A) 22345 28100 27582 24476 21195 45095 37528 38446 (B) 20829 25950 21219 22191 18912 40395 34362 35522 (C) 93.22 92.35 76.93 90.66 89.23 89.59 91.56 92.39 (A) 6667 8900 7913 8141 15627 13415 13862 10099 (B) 3201 4373 4829 4662 8180 6136 5921 3767 (C) 48.01 49.13 61.03 57.27 52.35 45.74 42.71 37.30 (A) 356 476 489 487 556 721 600 915 (B) 236 370 429 435 477 596 532 743 (C) 66.29 77.73 87.73 89.32 85.79 82.66 88.67 81.20 86.47 76.15 92.86 77.17 91.63 80.65 30.20 86.22 92.10 89.50 49.19 81.20 From the above table it is clear that lowest disbursement ratio is found in India Bulls with average 30 % during Study Period followed by SHRISTI Infra Structure with average 49 201

percent while highest Average disbursement ratio is 92.86% for GIC during study period followed by REPCO with average 92.10%. Most of HFCs are providing average 85% disbursement of the sanctioned loan. 5.3 FINANCIAL DATA ANALYSIS Housing finance strategies vary from country to country, and depend on overall levels of internal economic, social, and political development. Natural disasters and human conflicts, however, know no borders. When confronted with either, developed countries assumedly have institutions and resources to deal with short-term relief, mid-term recovery, and long-term solvency and prevention. Developing countries, however, may have neither. The analysis of performance evaluation of selected housing finance companies of India presented here will seek to fill the gaps posed by these discrepancies. Performance Evaluation is closely related to the surety of the working system of a company as a whole. Efficiency is a technique to evaluate past, current and projected performance of a concern Sudha Nigam. It is a powerful applied tool to examine, to measure to interpret and to weigh critically and draw outputs. Financial Performance of an organization is based on following basic four parameters 1) How liquid is the firm? 2) Is management generating adequate operating profits on the firm s assets? 3) How is the firm financing its assets? 4) Are the stockholders receiving an adequate return on their investment? In the Present Study researcher have focus on this basic parameter for to evaluate the financial performance There are so many different methods, strategies and processes in evaluation that it can be hard to work which one to choose for an evaluation. Following figure highlights the system of evaluation. 202

Figure 5.1 Performance Evaluation Present study is for Housing finance Industry who has more concern with finance, hence researcher have taken special care to consider the evaluation system in such a way which focus on evaluate the performance of financial segment. FINANCIAL PERFORMANCE EVALUATION Financial Performance is the snapshot of a position of concern and ability to withstand the ever-changing environment. It is the blueprint of the financial affair of the concern and reveals how a business has prospered under the leadership of a management personnel. In fact, it can be said that financial Performance is the medium of evaluation of management efficiency. The overall object of business is to earn satisfactory returns on the funds Invest in it. Consistent with maintaining a sound financial position, an evaluation of such 203

performance is done in order to measure the efficiency of operations or profitability of the organization and to appraise the financial strength as compared with a similarly situated concern. Thus, financial Performance is generally directed towards evaluating the Liquidity, stability and profitability of a concern which put together symbolize the financial Performance of a concern. Present Study is based on following parameters Sr. No. A Category Profitability & Efficiency Criteria Table 5.13 Category and Parameters Parameter (a) Net Profit (Net Income) Margin (b) Asset Turnover Ratio B Return (a) Return on Net Worth (b) Return on Capital Employed (c) Return on Assets C Per Share Return (a) Basic EPS (b)funds from operation per share D Liquidity (a) Current Ratio (b) Dividend Pay-out Ratio (c) Debt Equity Ratio 204

[A] PROFITABILITY AND EFFICIENCY CRITERIA ANALYSIS Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run. So measuring current and past profitability and projecting future profitability is very important. Profitability is measured with income and expenses. Income is money generated from the activities of the business. For example, if crops and livestock are produced and sold, income is generated. However, money coming into the business from activities like borrowing money does not create income. This is simply a cash transaction between the business and the lender to generate cash for operating the business or buying assets. Expenses are the cost of resources used up or consumed by the activities of the business. For example, seed corn is an expense of a farm business because it is used up in the production process. A resource such as a machine whose useful life is more than one year is used up over a period of years. Repayment of a loan is not an expense; it is merely a cash transfer between the business and the lender. Profitability is measured with an income statement. This is essentially a listing of income and expenses during a period of time (usually a year) for the entire business. Information File about Net worth Statement includes - a simple income statement analysis. An Income Statement is traditionally used to measure profitability of the business for the past accounting period. However, a pro forma income statement measures projected profitability of the business for the upcoming accounting period. A budget may be used when you want to project profitability for a particular project or a portion of a business. Reasons for Computing Profitability Whether organization are recording profitability for the past period or projecting profitability for the upcoming period, measuring profitability is the most important measure of the success of the business. A business that is not profitable cannot 205

survive. Conversely, a business that is highly profitable has the ability to reward its owners with a large return on their investment. Increasing profitability is one of the most important tasks of the business managers. Managers constantly look for ways to change the business to improve profitability. These potential changes can be analysed with a pro forma income statement or a Partial Budget. Partial budgeting allows you to assess the impact on profitability of a small or incremental change in the business before it is implemented. A variety of Profitability Ratios (Decision Tool) can be used to assess the financial health of a business. These ratios, created from the income statement, can be compared with industry benchmarks. Also, Income Statement Trends (Decision Tool) can be tracked over a period of years to identify emerging problems. For the present study researcher have considered the three parameters to measure the profitability (a) Net Profit (Net Income) Margin Net income is a company s profit in a given fiscal period. It consists of total revenues earned in the period less total expenses incurred to generate the revenues in the period. When revenues exceed expenses, the company has a net profit. When expenses exceed revenues, the company has a net loss. Net income is reported on a company s income statement. It is an important measure of a company s profitability and financial performance for the relevant fiscal period. Net income is also called net earnings, net profit, or the bottom line. Basically, net income is computed by subtracting all relevant costs and expenses from total revenue. Start with total revenue, also known as the top line because it is shown at the top of the income statement, and subtract the costs of sales, operating expenses, non-operating expenses, and taxes. This gives you net income, also known as the bottom line because it is shown at the bottom of the income statement. 206

Table 5.14 NET PROFIT MARGIN IN PERCENTAGE Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Average Can Fin 12.62 14.14 18.33 18.17 15.29 13.78 13.10 10.56 14.50 Dewan 15.83 12.50 14.79 18.29 12.41 10.96 10.64 10.39 13.23 GIC 20.77 18.35 22.76 33.82 13.53 15.39 15.64 14.08 19.29 Gruh Fin 20.99 17.10 22.37 25.34 23.41 22.42 20.92 19.22 21.47 HDFC 29.79 20.88 25.05 27.50 23.78 22.96 22.53 21.86 24.29 India HL 27.07 26.97 157.70 23.26 2.46 26.55 29.57 23.41 39.62 India bulls 70.59 47.48 32.03 12.22 10.43 26.36 28.90 31.66 32.46 LICHF 18.53 18.45 19.15 21.09 14.95 13.50 14.34 12.99 16.63 REPCO 21.90 22.29 26.88 25.78 19.27 19.72 20.61 17.78 21.78 SAHARA 9.82 10.02 12.70 11.23 11.16 10.18 13.24 12.60 11.37 SHRISTIS 7.42 0.71 1.78 3.42 0.66 2.11 1.94 2.14 2.52 VAXHF 99.88 51.42 31.31 9.00 6.15 0.28 0.60 0.65 24.91 Average 29.60 21.69 32.07 19.09 12.79 15.35 16.00 14.78 Source : www.moneycontrol.com Analysis for calculated ratio for selected Housing finance companies of India From the above table it is evident that Highest Net Profit margin is showing for India Home Loans with 39.62% which is followed by India Bulls with 32.46 % while lowest is shown by SHRISTI IS during the study period. Highest yearly average is shown by the year 2009-10 that may due to India Home loan is having highest margin on that year and average profit margin is reduced nearer 40 to 50 percent from 2009-10 onwards. Graphical Analysis 50.00 40.00 30.00 20.00 10.00 0.00 Chart 5.1 Average of Net Profit Margin of Selected Housing Finance Companies from 2007-08 to 2014-15 207

From the above Graph it is evident that Highest Net Profit margin is showing for India Home Loans with 39.62% which is followed by India Bulls with 32.46 % while lowest is shown by SHRISTI IS during the study period. Statistical Analysis Table 5.15 F -Test TWO Way ANOVA for Ratio of Net Profit Margin of Selected Housing Finance Companies of India From 2007-08 To 2014-15 H o : All the selected Housing Finance companies of India have equal profitability Margin during study period. H 1 : All the selected Housing Finance companies of India have unequal profitability Margin during study period. Source of Variation Sum of Square Degree of Freedom Mean Sum of Square Company 8446.718 11 767.8835 2.43956 1.915305 Year 4297.799 7 613.9713 1.950606 2.13099 Error 24236.46 77 314.7593 Total 95 Fc Ft From the F test two way ANOVA Table as calculated above it shows that calculated value of F c for company is 2.43956 while tabular value of F t for Company is 1.915305 which show that calculated value F c is greater than tabular value F t. F c > F t for company, hence Null Hypothesis is rejected and Alternative Hypothesis is accepted that Profitability for company wise is different for selected Housing finance companies of India while Year wise calculated value of F c is 1.950606 and year wise tabular value of F t is 2.13099 which show that calculated value F c is smaller than tabular value F t. F c < F t for company, hence Null Hypothesis is accepted and Alternative Hypothesis is rejected that Profitability on year wise is showing equal norms for selected Housing finance companies of India. 208

(b) Asset Turnover Ratio The asset turnover ratio is an efficiency ratio that measures a company's ability to generate Business from its assets by comparing net output with average total assets. In other words, this ratio shows how efficiently a company can use its assets to generate Business. The total asset turnover ratio calculates net output as a percentage of assets to show how many Businesses are generated from each rupee of company assets. For instance, a Debt Equity ratio of 0.5 that means each rupee of assets generates 50 paisa of Output Business. This ratio measures how efficiently a firm uses its assets to generate businesses, so a higher ratio is always more favourable. Higher turnover ratios mean the company is using its assets more efficiently. Lower ratios mean that the company isn't using its assets efficiently and most likely have management or production problems. Like with most ratios, the asset turnover ratio is based on industry standards. Some industries use assets more efficiently than others. To get a true sense of how well a company's assets are being used, it must be compared to other companies in its industry. The total asset turnover ratio is a general efficiency ratio that measures how efficiently a company uses all of its assets. This gives investors and creditors an idea of how a company is managed and uses its assets to produce products and sales. Sometimes investors also want to see how companies use more specific assets like fixed assets and current assets. The fixed asset turnover ratio and the working capital ratio are turnover ratios similar to the asset turnover ratio that is often used to calculate the efficiency of these asset classes. 209

Table 5.16 ASSET TURNOVER RATIO IN PERCENTAGE Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Average Can Fin 11.22 11.42 9.74 10.19 10.53 9.69 9.77 9.79 10.29 Dewan 11.60 10.58 9.86 8.68 11.44 11.51 11.32 10.94 10.74 GIC 10.82 10.63 9.65 9.02 10.18 11.62 11.30 10.87 10.51 Gruh Fin 9.97 11.58 11.54 10.65 11.85 11.61 11.67 11.54 11.30 HDFC 9.67 10.81 9.72 9.23 10.34 10.80 10.69 10.78 10.26 India HL 12.36 10.52 5.18 5.26 10.33 10.14 12.75 10.74 9.66 India bulls 1.64 33.19 19.36 18.62 12.28 12.08 12.12 11.33 15.08 LICHF 8.94 9.80 8.58 8.79 9.49 9.40 9.58 9.48 9.26 REPCO 9.46 10.92 11.02 10.75 11.17 10.69 11.27 11.39 10.83 SAHARA 8.67 12.92 11.59 12.57 12.37 10.73 11.37 10.68 11.36 SHRISTI 71.64 45.51 43.70 34.44 40.25 36.03 38.82 35.05 43.18 IS VAXHF 10.65 4.30 6.33 115.48 16.66 33.30 17.06 20.96 28.08 Average 14.72 15.18 13.02 21.14 13.91 14.80 13.98 13.63 Source : www.moneycontrol.com Analysis for calculated ratio for selected Housing finance companies of India From the above table it is evident that Highest Average Asset Turnover Ratio is showing for SHRISTI IS with 43.18% which is followed by VAXHF with 28.08 % while lowest is shown by LIC Housing Finance with 9.26% during the study period. Highest yearly average is shown for the year 2010-11 that may due to VAXHF is having highest Asset Turnover Ratio for that year. Graphical Analysis 50.00 40.00 30.00 20.00 10.00 0.00 Chart 5.2 Average of Asset Turnover Ratio of Selected Housing Finance Companies from 2007-08 to 2014-15 210

From the above Graph it is evident that Highest Average Asset Turnover Ratio is showing for SHRISTI ISwith 43.18% which is followed by VAXHF with 28.08 % while lowest is shown by LIC Housing Finance with 9.26% during the study period. Highest yearly average is shown for the year 2010-11 that may due to VAXHF is having highest Asset Turnover Ratio for that year. Statistical Analysis Table 5.17 F -Test TWO Way ANOVA for Asset Turnover Ratio of Selected Housing Finance Companies of India From 2007-08 To 2014-15 H o : All the selected Housing Finance companies of India have equal Asset Turnover Ratio during study period. H 1 : All the selected Housing Finance companies of India have unequal Asset Turnover Ratio during study period. Source of Variation Sum of Square Degree of Freedom Mean Sum of Square Company 9233.733 11 839.4302 6.171215 1.915305 Year 550.3638 7 78.6234 0.578013 2.13099 Error 10473.81 77 136.0235 Total 95 Fc Ft From the F test two way ANOVA Table as calculated above it shows that calculated value of F c for company is 6.171215 while tabular value of F t for Company is 1.915305 which show that calculated value F c is greater than tabular value F t. F c > F t for company, hence Null Hypothesis is rejected and Alternative Hypothesis is accepted that Asset Turnover Ratio for company wise is different for selected Housing finance companies of India while Year wise calculated value of F c is 0.578013 and year wise tabular value of F t is 2.13099 which show that calculated value F c is smaller than tabular value F t. F c < F t for year base, hence Null Hypothesis is accepted and Alternative Hypothesis is rejected that Asset Turnover on year wise is showing equal norms for selected Housing finance companies of India. 211

[B] RETURN BASE ANALYSIS Return base analysis is basically a part of profitability analysis. Income generated after disbursement by the organization is analysed on the base of various parameters is called as return base analysis. For the present Study the researcher have considered three parameter for the study they are as (i) Return on Net Worth (ii) Return on Capital Employed and (iii) Return on Asset. (a) Return on Net Worth The net worth ratio states the return that shareholders could receive on their investment in a company, if all of the profit earned were to be passed through directly to them. Thus, the ratio is developed from the perspective of the shareholder, not the company, and is used to analyse investor returns. The ratio is useful as a measure of how well a company is utilizing the shareholder investment to create returns for them, and can be used for comparison purposes with competitors in the same industry. To calculate the return on net worth, first compile the net profit generated by the company. The profit figure used should have all financing costs and taxes deducted from it, so that it accurately reflects the profit available to shareholders. This is the numerator in the formula. Next, add together the capital contributions made by shareholders, as well as all retained earnings; this is the denominator in the formula. An excessively high net worth ratio may indicate that a company is funding its operations with a disproportionate amount of debt and trade payables. If so, a decline in its business could result in the inability to pay back the debt, which increases the risk of bankruptcy; this means that the shareholders may lose their investment in the company. Thus, an investor relying upon this measurement should also examine company debt levels to see how excessive returns are being generated. 212

Table 5.18 RETURN ON NET WORTH (EQUITY) IN PERCENTAGE Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Average Can Fin 12.72 12.79 14.25 13.51 12.59 13.80 16.73 11.17 13.45 Dewan 18.85 18.99 16.69 17.12 15.07 13.96 14.79 13.40 16.11 GIC 17.82 16.37 17.33 24.39 11.87 15.43 15.97 15.59 16.85 Gruh Fin 22.25 22.76 26.05 28.78 31.21 29.71 29.14 28.64 27.32 HDFC 20.39 17.43 18.69 20.41 21.67 19.52 19.46 19.34 19.61 India HL 3.63 2.85 11.22 1.27 0.29 2.71 3.78 3.25 3.63 India bulls 1.16 20.92 17.83 6.64 5.18 24.86 27.61 30.47 16.83 LICHF 21.13 23.79 19.54 23.37 16.08 15.78 17.48 17.72 19.36 REPCO 16.31 22.51 23.08 23.47 20.26 12.61 14.85 15.15 18.53 SAHARA 6.02 8.48 9.71 8.99 8.09 6.82 8.24 6.92 7.91 SHRISTI 22.21 2.24 1.68 3.67 0.85 2.44 2.36 2.17 4.70 IS VAXHF 16.21 2.61 2.92 12.70 1.15 0.09 0.10 0.14 4.49 Average 14.89 14.31 14.92 15.32 12.03 13.14 14.21 13.66 Source : www.moneycontrol.com Analysis for calculated ratio for selected Housing finance companies of India From the above table it is evident that Highest Return on Net worth in percentage is showing for Gruh Finance with Average 27.32% which is followed by HDFC with an Average of 19.61% and LIC Housing finance with an average of 19.36% while lowest is shown by VAXHF with an average of 4.49% during the study period. Highest yearly average is shown by the year 2010-11with an Average of 15.32% but throughout the research period yearly average is maintaining between 12 to 15%. Graphical Analysis 30.00 25.00 20.00 15.00 10.00 5.00 0.00 Chart 5.3 Average of Return on Net Worth of Selected Housing Finance Companies from 2007-08 To 2014-15 213

From the above graph it is evident that Highest Return on Net worth in percentage is showing for Gruh Finance with Average 27.32% which is followed by HDFC with an Average of 19.61% and LIC Housing finance with an average of 19.36% while lowest is shown by VAXHF with an average of 4.49% during the study period. Statistical Analysis Table 5.19 F -Test TWO Way ANOVA for Ratio of Return on Net worth of Selected Housing Finance Companies of India From 2007-08 To 2014-15 H o : All the selected Housing Finance companies of India have equal Return on Net worth during study period. H 1 : All the selected Housing Finance companies of India have unequal Return on Net worth during study period. Source of Variation Sum of Degree Mean Fc Ft Square of Freedom Sum of Square Company 4804.772 11 436.7975 17.58195 1.915305 Year 100.001 7 14.28586 0.575034 2.13099 Error 1912.951 77 24.84352 Total 6817.724 95 From the F test two way ANOVA Table as calculated above it shows that calculated value of F c for company is 17.58195 while tabular value of F t for Company is 1.915305 which show that calculated value F c is greater than tabular value F t. F c > F t for company, hence Null Hypothesis is rejected and Alternative Hypothesis is accepted that Return on Net worth for company wise is different for selected Housing finance companies of India while Year wise calculated value of F c is 0.575034 and year wise tabular value of F t is 2.13099 which show that calculated value F c is smaller than tabular value F t. F c < F t for company, hence Null Hypothesis is accepted and Alternative Hypothesis is rejected that Return on Net worth on year wise is showing equal norms for selected Housing finance companies of India. 214