CHAPTER-6

LIC HOUSING FINANCE LTD.

CASE STUDY-2
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LIC HOUSING FINANCE LTD.

CASE STUDY - 2

A. History and Growth of LIC Housing Finance :

The Life Insurance Corporation of India has been in­

volved in the field of housing finance since 1957. Over the last

35 years, it has given about Rs.5,500 crores as housing loans,

helping creation of about 30 lakh houses. In 1964, it started the

"OWN YOUR HOME SCHEME". Lie’s contribution to housing has been

through financial assistance to State Governments, Apex Co-opera­

tive Housing Finance Societies, investment in public housing

projects, granting direct loans to policy holders under its

various mortgage loan schemes, giving loans to other housing

institutions and granting loans to Public Limited copanies/Public

Sector undertakings for construction of staff quarters and Co­

operative Housing Societies formed by the employees of these

organisations for building their houses. As a part of the observ­

ance of the year 1987 as the International Year of Shelter for

Homeless, LIC simplified Its popular "OWN YOUR HOME SCHEME" and

launched the "BIMA NIWAS YOJANA" in 1988 facilitating the put—

chase of flats.

To formulate a well defined housing finance system for

the country and to act as an apex body to promote and control

housing finance institutions, providing financial assistance for

undertaking research studies on housing and formulating schemes

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for mobilising resources etc, the Reserve Bank of India

established the National Housing Bank in July 1988 as its wholly

owned subsidiary- Consequent upon the declaration of the National

Housing Policy and the setting up of the National Housing Bank by

the Reserve Bank of India, the Life Insurance Corporation of

India conferred special Importance to housing loans which was,

till then, a subdued activity and coined a new slogan-Housing

Loan as Marketing Tool.

With a view to giving greater thrust to housing devel­

opment and in pursuance of the objectives of the National Housing

Policy, the Life Insurance Corporation of India set up a separate

organisation called “LIC Housing Finance Ltd.” On 19th June 1989

as Its subsidiary with equity participation from the Unit Trust

of India (UTI), Industrial Credit and Investment Corporation of

India (IFCI) with an authorised share capital of Rs.100 crores

and a subscribed capital of Rs.25 crores. Initially in LICHFL,

50.48 percent of the equity is held by LIC, 16.5 percent each by

UTI, ICICI and IFCI and the rest Is held by the subsidiaries of

QIC. After the Public issue, the holding of LIC in the company

got diluted to 38.46 percent.

t *

The Corporation started its operations with the opening

of 8 centres in VIsakhapatnam, Lucknow, Qhaziabad, Coimbatore,

Chandigarh, Bhubaneshwar with its registered Head Office In

Bombay during the year 1989-90 and added another 8 centres viz.

Bangalore, Bombay, Calcutta, delhi, Goa, Hyderabad and Pune

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during the year 1990-91. The Corporation sanctioned as many as

1 ,484 loans for Rs.14.08 crores during the period June 1989-March

1990 and disbursed Rs.10.85 crores under 1,085 loans in a short

span of 9 months.

The permissible quantum of loan is calculated as follows :

Slabs of Property Value Maxmimum percentage of

loan allowed on the
slab property value

A. For employees and professionals

like doctors, lawyers, engineers etc.

a) Upto Rs. 50,000 80%

b) Above Rs. 50,000-Rs.100,000 75%
c) Above Rs.100,000 70%

B. For the self-employed (Businessmen)

/

a) Upto Rs. 50,000 75%

b) Above Rs. 50,000-Rs.100,000 70%
c) Above Rs.100,000-Rs.200,000 65%
d) Upto Rs.200,000 60%

Maximum loan per policy holder is Rs.2,50,000 in all

centres. The borrower should have a life insurance policy for a

sum assured equal to the desired amount of loan. LIC grants loans

under equitable mortgage so that the borrowers does not have to

pay high stamp duty and registration charges.

In Pune alone during the year 1990-91 the number of

applications received were 1246, the sanctioned number of appli­

cations were 1201 amounting to Rs.ll.16 crores and out of which

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the actual amount disbursed was Rs.6.84 crores to 1024

applicants,

B. L.I.C.’s Liberalised Own Your Home Scheme :

It is a scheme that helps any one own a house without

burdening with huge debts. And it is a scheme with, very long

repayment period plus easy terms and conditions.

The Scheme is exclusively for L-I.C, policy holder- It

is available for constructing <a new house or purchasing one or

for extending one that you already have.

The loan amount may vary from 60% to 80% of the value

of the house, depending upon the category of the borrower.

The Corporation also launched two new schemes viz.

"JEEVAN NIWAS" and "JEEVAN KUTIR" which provide loans for pur­

chase/construction of houses and flats.

During the year 1990-92, the first full year of its

operation, LIC Housing Finance Ltd, sanctioned 18,245 loans for

Rs.169.43 crores and disbursed 11,784 loans for Rs.96.38 crores.

During the 1990-91 L.I.C. and LICHFL have disbursed

38,140 loan for Rs.248.70 crores as against 27,399 loans for

Rs.181.22 crores in the year 1989-90.

 1G2

The overall performance of both together in 1990-92 is as under:

(Amount in Crores)

1. Individual housing loan by L* M X M C M 188.32

2. Individual housing loan by LICHFL 96.38
3. Loans to apex housing societies/
State Government 280.30
4. Policy holders housing 40.04
5. Staff quarters 2.09

607.13

The Corporation opened another 27 area offices during

the year 1991-92. For the year ending 31st March 1992, the Corpo­

ration sanctioned 42,240 loans for Rs.420.02 crores and disbursed

Rs.242.60 crores.

The Corporation has sanctioned a total of Rs.114.80

crores in project financing portfolio and disbursed Rs.24 crores,

helping to generate 13,499 dwelling units. In association with

the Life Insurance Corporation, the Cororation has launched the

"JEEVAN GRIHA POLICY" as a cover for housing loan benefitting

borrowers with a low cost life insurance cover.

With the opening up of another 17 offices during the

year 1992-93 the LIC Housing Finance Ltd. became the first Hous­

ing Finance Company in India with the largest number of operating

offices totalling 60 in all. The Corporation also introduced 3

new housing loan schemes for individuals during the year viz.

i) Griha Shoba for NRIs with a maximum loan limit of Rs.lO

lakhs;
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ii) Griha Jyoti for insured applicants under Group Insurance

with a maximum loan upto Rs. 1 lakh, and

iii) Griha Laxmi for purchase or construction of second house or

flats in urban centres with a maximum loan upto Rs.10 lakhs.

The Corporation also renamed the earlier schemes Jeevan

Niwas and Jeevan Kutir as Griha Prakash and Griha Tara respec­

tively. The maximum loan quantum under the Griha Tara was raised

to Rs.5 lakh from Rs.l lakh under Jeevan Kutir.

LIC Housing Finance also framed loan schemes to corpo­

rate bodies viz. line of credit "to" and "through", the former-

being loan to companies (borrowers) to advance to their employees

under house building advance or housing loan schemes of the

borrower company. The later scheme envisages that the employees

of the borrower company will get housing loans through their

employers who also act as LIC Housing Finance Ltd.’s administra­

tive agents.

The Corporation sanctioned 52,118 loans for Rs.525.15

crores and disbursed Rs.430.07 crores during the year 1992-93.

As on 31.3.1994, the LIC Housing Finance Ltd. has 65

offices all over India with the opening up of 5 offices and also

an office in Bahrain to provide loans to Indian expatriates who

want to buy houses in India. The Company, in order to make houses

cheap, acquired land from development agencies in places like,

Madras, Bangalore, Bhuvaneshwar, Bhopal, Jaipur and Ahmedab'ad.

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Mainly LICHFL has Five Schemes with loans amount ranging from

Rs.l lakh to Rs. 10 lakhs. During the year 1993-94, the Corpora­

tion sanctioned 40.818 loans for Rs.473.97 crores and disbursed

Rs.440.41 crores. Thus, as of 31st March 1994, the Corporation

has sanctioned cumulative loan of 1,54,905 amounting to

Rs.l,717.45 crores and a cumulative disbursement of Rs.l,244.31

crores generating 1,81,640 dwelling units under both Individual

and Project Loans.

C. Setting up of Lie Housing Finance Ltd. :

The LIC Housing Finance Ltd. set up on 29th June 1989

with its registered office in the Yogakshema Building and its

Administrative office in the Bombay Life Building, both in Bom­

bay, commenced its lending operations by setting u its first Area

office in Delhi on 18th December 1989. As on 31st March 1994, the

company has its presence in 19 states and union territories with

56 Area offices and 9 unit offices, totalling 65.

The company has two streams of employees one being the

direct recruits and the other being the employees of Life Insui—

ance Corporation of India whose services are placed at the dis­

posal of the company. The respective numbers being 430 and 307,

totalling 737 as at 31st March 1994. As per information collected

the industrial relations were cordial and work atmosphere was

/

healthy since Its inception. The company conducted various train­

ing sessions for the employees on topics of general interest,

technical matters on housing loan as well as computer training.

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These training programmes were conducted in a phased manner.

Apart from these intensive courses, the company organised train­

ing at the main training centres of the Life Insurance Corpora­

tion of India and at outside centres. Almost all the offices were

provided with personal computer support system. The 386 systems

has been installed in most of its Area offices. Thus a large

number of jobs have been computerized with a view to economise

operations and enhance customer satisfaction.

D. Management of LICHFL :

The management of LICHFL vests in the Board of Direc­

tors comprising persons with a background in finance or housing

activities. The Chairman. Shri J.S.Salunkhe and the Managing

Director Shri S.P.Subhedar work under the guidance and supervi­

sion of the Board Shri J.S.Salunkhe is also the Chairman of LIC

of India. He was earlier Managing Director of LIC of India. He

has held senior position in LIC of India and has experience of

over 35 years at LIC of India. He is a Fellow of Institute of

Actuaries, London.

Shri S.P. Subhedar is the Managing Director of the

Company as well as of LIC of India. He has held senior position

In LIC of India and has experience of of 35 years. He is an

Associate of the Institute of Actuaries, London.

Shri S.G.Guhagarkar, Chief Executive has held senior

positions in LIC of India. His last position was Executive Direc-

 16G

tor (Marketing) at LIC Central Office, Bombay.

Shri S.P.Subhedar, Shri S.G.Guhagarkar and the Chief

General Managers look after the day to day affairs of the Company

and are assisted by a team of experienced and qualified finance

and administrative personnel.

The Board of Directors constitute members representing

the Life Insurance Corporation of India, the Unit Trust of India,

the Industrial Credit and Investment Corporation of India and the

Industrial Finance Corporation of India. Since the Life Insurance

Corporation of India has the highest equity stake, the Chairman

and the Managing Director are normally their representatives.

Even in the Unit offices and the Area offices, the managerial

level executives are deputed by the Life Insurance Corporation of

India .

The Loan sanctioning authority of an Area Manager is

limited to the tune of Rs.5 lakhs. Any amount exceeding this

limit has to be sanctioned by the committee at the corporation

office in Bombay.

LICHFL has been in the business of providing housing

finance since its inception. Consequently, it has in Its service

and experienced team of professional. Presently there are about

740 employees on the rolls of LICHFL and these Include a comple­

ment of personnel drawn from LIC of India.

For decades, the Life Insurance Corporation of India

has advanced loans for purchase/construction of houses. The

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extent of their assistance to public housing agencies and policy

holders is enormous- By helping the homeless to secure affordable

shelter and by contributing to the growth of the nation9s overall

housing stocks, the LICI, has truly taken the lead in the fulfil­

ment of these objectives, long before they were envisaged in the

draft National Housing Policy document (1988).

E. Objectives of LICHFL s

The Lie Housing Finance Ltd- has been set up for directly financ­

ing the housing activities in the country in order to overcome

the housing shortage in the country which is estimated to be

around 41 million dwelling units by the turn of the century.

Nevertheless, profit making and maximization of the shareholders

wealth are equally important objectives of LIC Housing Finance

Ltd- The Housing loan is also used as a marketing tool for sell­

ing life insurance policies. Life insurance satisfies many needs

like security, old age provision, marriage and education provi­

sion for children, savings etc., amongst which the need for

security is the greatest- However, there is no definite method of

assessing or quantifying this need- Ability to pay premium is a

vague method. It is interesting to know that when life insurance

is taken as collateral security for housing loan, the quantifica­

tion problem gets resolved- So from a true marketing point of

view it is easy to determine the type and the quantum of insui—

ance which must more or less equal the amount 'of loan sanctioned.
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Further, the insurance policies taken for housing loan purposes

can be expected to remain in force until the loan is fully liqui­

dated- The help rendered by the insurance salesman in arranging

the loan wins the confidence, goodwill and word of mouth publici­

ty of the borrower in the insurance salesman.

Vet, another objective of the company is to widen its

area of operation without any external financial assistance. This

is done with the help of Equated monthly Instalment system. Under

this system, the housing company is able to get back its invested

capital in a continuous and uniformly increasing pattern- The

capital thus returned can be utilized for granting fresh loans.

Economic Development is another objective of the

company. This is evident with the introduction of construction

and project Finance in the year 1991-92.

F. Modus Operand! of LIC Housing Finance Ltd. :

The housing loan schemes offered by the LIC Housing

Finance Ltd. are mostly backed up by life insurance cover as

collateral security due to the following reasons :

i) Being a subsidiary of the Life Insurance Corporation of

India, its objective makes it mandatory to grant loans particu­

larly to its policy holders.

ii) This special feature also ensures repayment of the loan on

the unfortunate demise of the borrower from his death claim, and

his family or the legal heirs are given the ownership of the

house/flat free of loan.

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iii) It helps achieve the Corporation9s objective to provide a

unique repayment method-repayment out of the policy proceeds

which is not in vogue with other housing finance agencies.

iv) Insurance policies taken for housing loan purpose could b©

expected to remain in force until the loan is repaid in full.

v) The entire process of selling life insurance policies is

facilitated to an appreciable extent. The Insurance

salesmen do not have to explain the advantages of taking a lif©

policy and answer objections.

In order to cater to the need of different segments of

borrowers including Non-Resident Indians (NRIs), the Corporation

has introduced five different schemes for individual loans and

several other schemes for Builders, Corporate Bodies and Public

Agencies.

The loans under the different schemes are for construc­

tion of a new house/flat or for purchase of an already built

house/flat or for purchase of an old house/flat. However, there

are certain conditions for sanctioning a loan regarding the ag©

of the building, quality of construction, etc. in the case of old

house/flat. Loans are also given for extension to houses/flats.

There is, of course, no loan schemes for repairs to houses/flats

or for renovations.

Loans are normally granted to persons having salary

income and to those who submit their income tax regularly.

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Employees of Government,, Public Sector undertakings, Public

Limited Companies and reputed Private companies are usually

eligible for loans.

In the case of Private Companies, they must have Provi-

dent Fund and Employees State Insurance Schemes. This is to make

sure that the applicant has a stable job and a regular income.

The Income tax returns and assessment orders are necessary in the

case of businessmen and professionals like doctors, lawyers, etc.

Applicants having only agricultural income will have to submit

Tehsildar Certificate of Income with survey number, extent of

landownership etc.
/

The size of the loan sanctioned depends on the credit-

worthiness and repaying capacity of the applicant, value of the

house or flat and clean marketable title to the property. In the

case of agricultural Income, the maximum loan usually sanctioned

is Rs.50,000/-.

If, however, Agricultural Income Tax is paid (where

such tax is payable) and returns ace produced, the maximum limit

of Rs.50,000 does not apply. Normally, for sanctioning a loan,

the Corporation takes about 40-50% of the net income of the

applicant and his repaying capacity. On satisfying all the crite­

ria, the amount of life insurance to be taken is decided. The

life insurance cover must equal the amount of loan sanctioned.

Rate of interest charged on the loans include 0.5%

towards interest tax payable to the Government. The rates are

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subject to revision from time to time- But once a loan is

sanctioned at a certain rate, then that rate of interest is

applicable throughout the term of the loan, irrespective of the

revision in rates.

The security for loan under all the schemes is an

equitable mortagage of the house/flat, that is, the borrower

deposits the title deed of his house/flat with the Corporation as

security for the loan. However, in some cases, the Corporation

insists on English Mortgage where stamp duty payable is high

depending upon the position of the title deeds.

Guarantors are required in the case of loans for flats

mainly because the idea of ownership of a flat is not quite the

same as ownership of an independent house on idenpendent land.

Guarantors are also insisted on house loan under special circum-

i

stances.

Joint applications from husband and wife, father and

sons, mother and sons are entertained for grant of loans. For

other close relations like brothers, sisters who are co-owners,

the joint applications are accepted under special conditions.

Income of both applicants are taken into account whenever feasi­

ble in the case of joint applications.

Central Government employees can avail additional loan

from LIC Housing Finance Ltd. On the second mortgage of their

properties. This benefit is extended to State Government

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employees where the State Governments have issued necessary

notifications',.

Those who have taken housing loan from the Life

Insurance Corporation of India can take additional loan from LIC

Housing Finance Ltd. on the second mortgage of their property for

purpose of extension to the existing houses.

While applying for a loan from LIC Housing Finance

Ltd., the following documents are being insisted upon :

a) Loan application form duly completed, signed and witnessed

with a non-refundable processing fee of 0.5% of the loan applied

for subject to a minimum of Rs.250/- and a maximum of

Rs.15,000/-.

b) Copy of sanctioned plan and site plan certified by an archi­

tect along with a detailed estimate.

c) Employer’s certificate showing salary and other related

information in the prescribed form for a salaried person.

d) Income Tax returns and Assessment Orders along with State­

ment of computation of income for the last three years certified

by a Chartered Accountant in respect of persons like businessmen

or professionals like doctors, engineers, lawyers etc.

a) Certificate showing gross and net agricultural income for

the last three years from the Tehsildar with survey number,

extent of property and name of the person in whose name the

property stands for applicants having only agricultural income.

Further, a guarantor acceptable to the Corporation is required.

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f) Salary certificate or contract agreement duly attested by

officials of the Indian Embassy or officials of Life Insurance

Corporation (International) in the case of a Non-Resident Indian

with two guarantors acceptable to the Corporation for flats and

one guarantor for house.

g) The firm’s Profit and Loss Accounts and Balance Sheets for

the last three years in respect of partnership firms. One partner

younger to the applicant should stand guarantee.

h) Attested copy of the latest title deed.

i) Preliminary valuation report on the house/flat in the pre­

scribed form from a qualified architect.

3) Site inspection report by an authorised official of Life

Insurance Corporation or LIC Housing Finance Ltd. In case th©

applicant is buying an already constructed property* then a copy

of the sale deed must be submitted.

k) Copy of the Power of Attorney wherever applicable.

In addition to the usual requirements, the following additional

documents are required for loans for flats :

1. Attested copy of the sale deed along with a detailed title

investigation report indicating the root or abstract of title

chain for a minimum period of 15 years.

2. An allotment letter where a co-operative housing society is

already registered indicating the details of the flat and its

estimated cost.
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3. Receipt from the Sub-Registrar for lodgement of the agree­

ment.

4. Copies of receipts of payments made to the builder or socie­

ty.

5. Two guarantors with their proof of income.

Once the application is complete with all requirements,

the aplicant is interviewed by the Area Manager or an authorised

official of the Corporation. The interview is based on the mutual

benefit of both the parties in the sense that the Corporation

officials can make an assessment of the applicants repaying

capacity by seeking relevant information and the applicant gets

his doubts clarified and gives him a direct,, personal guidance

with regard to his obligations under the loan agreement.

After the interview, the Corporation arrives at a fair

amount of loan that can be sanctioned and issues the Loan Offer

Letter (LOL) which sets out the various terms and conditions of

the loan. If the applicant finds the loan offer acceptable, he

has to sign his acceptance. On acceptance of the loan, the appli­

cant has to pay the nonrefundable administrative fee of 1.5% of

the loan amount subject to a minimum of Rs.600/- for loan upto

Rs.50,000/-, 1.25% or Rs.750/- for loan amounting to Rs.50,000/-

to Rs.1,00,000/- ad 1.00% subject to a minimum amount of

Rs.1,250/- for loan amount above Rs.1,00,000/-.

In addition to the titles so far mentioned, the leal

advisors to the Corporation require the following documents :

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1. Tax receipts and building tax receipts in the case of put—

chases.

2. Affidavit by both the applicant and the seller in respect of

purchase cases.

3. Copy of Sale Deed or Agreement to Sell in respect of pui—

chase cases.

4. Income Tax and Wealth Tax clearance certificate wherever

applicable.

Once the title is provded, the valuation of the propel—

ty is done by the CoporationPanel Valuer. On receipt of satis­

factory 'report, the approporiate amount of first instalment Is

arrived at.

The Legal and Credit appraisal procedures are carefully

drawn up as LICHFL believes that this would help In having a

healthy mortgage portfolio. LICHFL has an elaborate system of

title investigation and property valuation. Life Insurance on the

life of borrowers is insisted upon in most schemes of loans to

individuals. The insurance policy acts as collateral security and

in case of death of the borrwoer, takes care of the outstanding

loan „

However, the applicant has to first invest the diffei—

ence between the cost of the property and the loan amount

sanctioned. Before disbursing the first instalment the life

insurance policies accepted as collateral security will have to

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be assigned to the Corporation along with the original policy

document with the premium position noted. Fire Insurance for the

appropriate value of the property mortgaged must be taken.

Valuation and inspection by the Corporation officials

Is done before disbursing each subsequent instalment including

the final instalment.

Repayment of the loan Is in the form of Equated Monthly

Instalment. The equated monthly instalment includes a part of the

principal amount and the interest. This instalment remains uni­

form throughout the term of the loan. The equated monthly instal­

ment Is arrived at in such a way that by the end of the term, the

loan amount and the interest is fully paid. The Instalment Is

based on the monthly rest system where credit of loan repayment

made by loanee is given to him on monthly basis unlike the yearly

rest system where credit is given only at the end of the year.

The monthly insurance premium is added to the equated monthly

Instalments. However, if the loan Is taken under Griha Jyoti

Scheme, the insurance need not be taken into account because a

small single premium is payable at the time of taking the loan

and 50% of the premium is added to the loan amount.

The Corporation also has the system of repayment by

Policy monies where only interest is paid during the term of the

loan and the principal amount is cleared out of the policy amount

available on maturity of the insurance policy.

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Q. Resource Mobilisation - Sources of Finance :

Apart from the issue of equity share capital the major

sources of finance for LIC Housing Finance for the first two

years consisted of'long-term loans from the life Insurance Corpo­

ration of India by a negative lien on the assests of the company.

Ouring the first year of- its operation, the company raised a sum

of Rs. 10 crores by issuing share captal at the rate of Rs.10,000

per share and Rs.24.23 crores in the form of secured loan. The

retained earnings constituted a meagre sum of Rs.7 lakhs. To

strengthen the capital base of the company, the share capital was

raised from Rs.10 crores to Rs.25 crores In the second year of

its operation. The LICI remained the main source of long term

loans. However, the company started seeking refinance from the

National Housing Bank.

In the year 1991-92, the company managed to secure a

loan of Rs.40 crores from the National Housing Bank. The NHB also

started Its Home Loan Account scheme under which the LIC Housing

Finance Ltd. took a sum of Rs.16 lakhs as unsecured loans. The

company also managed to improve its retained earnings by trans­

ferring Rs.40 lakhs to General Reserve and Rs.3.81 crores to the

special Reserve which were Rs one lakhs and Rs. 1.97 crores

respectively in the previous year. The gross income increased

from Rs.16.IS crores in 1990-91 to Rs.44.50 crores in the year

1991-92 i.e by 2.75 times. To augement its equity base, the

company raised its subscribed share capital from Rs.25 crores to

 178

Rs.35 crores by Issuing rights shares worth Rs.10 crores at a

premium of Rs.5 per share in the fourth year. The company also

sub-divided the face value of its equity shares from Rs.10,000

per share to Rs.10 per share. The National Housing Bank and the

Life Insurance Corporation of India remained the sources of

secured loans. However, the company was able to raise Rs. 27

lakhs from deposits under the Home Loan Account Scheme of Nation­

al Housing Bank. The income of the company grossed around

Rs.109.87 crores and a sum of Rs.7.75 crores was transferred to

the Special Reserve thus building up t;he shareholders fund.

The year 1993-94 witnessed another increase in the paid

up capital of the company from Rs.35 crores to Rs.55 crores by

issuing further shares of Rs.20 crores at a premium of Rs.10 per

share aggregating to Rs. 40 crores to its existing share holders.

The LICI and NHB continued to provide finance to the company and

the company raised another Rs.30 lakhs from the Home Loan Account

Scheme. The gross income amounted to a whopping Rs.175.08 crores

and an after tax profit of Rs.21.53 crores out of which Rs.2

crores was transferred to General Reserve and Rs.11.82 crores to

Special Reserve. The gross income of the company includes intei—

est on housing loan, interest on debentures, interest on corpora­

tion deposits, interest on Government securities, profit on sale

of Investments, dividends and other operating income, fees and

other charges etc. Depreciation on fixed assets is provided on

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Straight line method on month to month basis as per the rates

prescribed for each asset under schedule XIV of the Companies

Act# 1956.

H. Lending Operations - Approvals and Disbursements :

Starting with an equity base of Rs. 10 crores and

a secured loan of Rs.24.23 crores, the LIC Housing Finance Ltd-

earned a total of Rs.10.88 crores and an after tax profit of

Rs.0.07 crores in 1989-90 despite the fact that most of the

company’s offices commenced their operations in the month of

March 1990 except the Area office at Delhi. The whole amount of

the profit after tax was transferred to the reserve thus increas­

ing the book value per share to Rs.10.07 the networth of the

company however improved tremendously to Rs.27.04 crores in the

year 1990-91. This increase in the net worth of the company can

be attributed to the high profitability of Rs.3.35 crores which

was approximately 48 times that of the previous year’s profit.

There was ofcourse an increase in the equity share capital of

Rs.25 crores. During this year the company declared dividend of

7.5%. Compared to this the company earned a total income of

Rs.44.50 crores in the third year ofits operation with a profit

after tax to the tune of Rs.6.72 crores thus increasing its

networth to Rs.31.27 crores. The book value per share rose to

Rs.12.51 from Rs.10.82 in the previous year and the company

declared a dividend of 10%. The growth was further made inevita­

ble with a total earning of Rs.109.87 crores in 1992-93 and a

 .180

after tax profit of Rs.13.47 crores thus increasing its reserves

to Rs.21.46 crores from Rs.6.27 crores in preceding year. Ouring

the period 1993-94 LICHFL made a record profit of Rs.21.53 crores

with a total income of Rs.175.08 crores and declared a 15% divi­

dend. Inspite of this high percentage of the dividend declared,

the net worth of the company jumped to Rs.111.89 crores from

Rs.56.46 crores in the previous year, thus reaching to a growth

rate of 198.17%.

Now, coming to the operational part, the individual

loans disbursed increased from Rs.10.85 crores in 1989-90 to

Rs.96.38 crores in 1991-92 and to Rs.440 crores in 1993-94. The

company also introduced construction and Project Finance in the

year 1991-92 and disbursed a sum of Rs.22.13 crores during the

same year followed by Rs.45.54 crores in 1992-93 & Rs.60.62

crores in 1993-94
 .181
TABLE 6.1

PERFORMANCE OF LIC HOUSING FINANCE LTD.

FOR THE PERIOD 1989-90 TO 1993-94.

Years 1939-90 1990-91 1991-92 1992-93 1993-94

Equity Share Capital 10.00 25.00 25.00 35.00 55.00

Reserves and Surplus 0.07 2.04 6.27 21.46 56.89

Loans 24.23 144.19 414.81 889.53 1271.83

Total Income ^ 0.88 16.18 44.50 109.87 175.08

Profit before Tax 0.08 4.81 9.68 18.77 29.23

Profit after Tax 0.07 3.35 6.72 13.47 21.53

Dividend (%) - 7.50 10.00 12.50 15.00

Individual Loan
Sanctioned 14.08 169.43 420.02 525.00 473.97

Individual Loan
Disbursed 10.85 96.38 242-60 430.07 440.41

Construction and
Project Finance
Sanctioned •Mr
91.44 81.57 89.54

Disbursed “ _ 22.13 45.54 60.62

Source : Annual Reports.

I. Performance of LIC Housing Finance Ltd. :

In the following pages, an attempt was made to evaluate

the performance of LIC Housing Finance Ltd. by practical analysis

using the parameters such as :

 G\R*PH|C+«VRT^ <s*t

Lie HOUSING FINANCE LTD.

COMPOSITION OF RESOURCES IN 1993-94

AMOUNT IN CRORES RS.

f
M LOANS B SH/>RE CAPITAL RESERVES TOTAL INCOME

!>«■ h

Oo
ro
 J 83

1) Liquidity,
2) Profitability,
3) efficiency and
4) financial strength of the organisation.

1. LIQUIDITY :

Years 1993-94 1992-93 1991-92 1990-91 1989-90

Current Ratio 17.50 16.03 17.29 17.62 17.69

The current ratio shows that the LICHFL under review is

quite liquid. In other words, the current ratio as a measure of

the short term financial liquidity of the company reveals that

the current assets are large enough to pay its curent maturing

debt as and when it becomes due. However, the current ratio doe©

not conform to the conventional ratio of 2:1 nor is it anywhere

near it. This high current ratio can be attributed to the fact

that since the company is a trading firm, the Investments and the

housing loans were included in the current assets during analy­

sis. This does not, therefore, Imply that the high current ratio

is due to slack management practices. Infact, when we do not

include the Investments and housing loan in the current assets,

the current ratio conforms more or less to the' ideal ratio of

2:1. This has been confirmed by the acid test ratio which has

been designed to overcome the drawbacks of the current ratio.

 Years 1993-94 1992-93 1991-92 1990-91 1989-90

Acid Test Ratio 1.19 1.86 2.40 3.62 13.22

Since the current ratio fails to convey any information

on the composition of the current assets of the company,, the acid

test ratio was applied. Although the acid test ratio in the first

year of the company’s operation (being nine months only) was as

high as 13.22, the management has been able to bring it down to

the satisfactory level of acound 1 to 2 in the last three years

of the period under review. This rigorous and penetrating test of

liquidity which is a measurement of a company's ability to con­

vert its current assets quickly into cash in order to meet short

term obligations is quite satisfactory. Moreover, the LIC Housing

Finance Ltd. has been improving this ratio is evident from the

fact that in the year 1990-91 the ratio was 3.62 which was slowly

brought down to 2.40 in 1991-92 and 1.86 in the year 1992-93.

The high liquidity of the company is further revealed

by the large -amount of working capital that the company has at

its disposal. This has been increasing over the years. Even after

excluding the investments and the housing loans from the current

assets, the position of the working capital remains very high

starting with Rs.24.68 crores in 1989-90, Rs.27.53 crores in

199—92, Rs.39.22 crores in 991-92, Rs.54.11 crores in 1992-93

and Rs.76.37 crores in the year 1993-94. These figures indicate

 Gf RfVPVV IC.WVRT - 6 .a.

SANCTIONS il DISBURSEMENTS
185
 18G

that the company has very well managed its short term funds thus

safeguarding the interest of all those parties who has a stake in

the company.
TABLE 6.2

FUNDS FLOW STATEMENT OF LICHFL

PARTICULARS 1993-94 1992-93 1991-92 1989-90

i
Increase in Share Capital 20.00 10.00 —
15.00
Increase in Loan Funds 382.30 474.72 270.62 119.96
Decrease in Capital Adv. 0.03 - - -
Funds from Operation 35.99 15.49 4.43 2.08
Decrease in other
Current Assets 37.74 - — —

4 76.07 500.21 275.05 137.04

APPLICATIONS :

Increase in Fixed Assets 1.48 1.65 1.45 0.97

Increase in Capital Funds - 0.06 0.05 -

Increase in Investments
and Housing Loan 474.58 483.62 261.86 133.22

Increase In other Current

Assets ' - 14.88 11.69 2.85

Source : Annual Reports.

2. PROFITABILITY

A look at the profitability ratios indicate that the

corporation is able to ensure adequate returns to the sharehold­

ers on their investment.

 187
*

Years .1993-94 1992-93 1991-92 1990-91 1989-90

Operating Profit Margin 95.18% 93.67% 90.11% 88.38% 75.00%

This high ratio of operating profit margin which is an

indication of good management with relatively low operating cost

is supported by the findings of the net profit magin.

Years 1993-94 1992-93 1991-92 1990-91 1989-90

Net Profit Margin 12.30% 12.26% 15.10% 20.46% 7.95%

This ratio which was only 7.95% in the year 1989-90

made a good progress in the second year of operation and then

declined in the third year. After that the ratio has been steadi­

ly maintained at around 12%. This reveals that the management of

LIC Housing Finance Ltd. has not only been able to run the busi­

ness profitably but also with reasonable operating expenses. This

is further supported by the expenses ratio which has made tremen­

dous improvement over the years.

Years 1993-94 1992-93 1991-92 1990-91 1989-90

Expenses ratio 4.82% 6.33% 9.89% 11.62% ' 25.00%

The improvement in the expenses or operating ratio

itself is indicative of the LICHFL’s operating efficiency in

bringing down its administrative and selling expenses.

 & JWH-/<3 HA JTT-6.3

OUSBNG FINANC
NET WORTH
AMOUNT IN CHORE Rs.

YEAR OF OPERATION
188
 189
The return on investment ratios help in finding out the
t
v.
profitability of 'the long term funds of company as shown in

Table-6.

TABLE 6.3

RETURN ON INVESTMENT RATIOS

Years 1993-94 1992-93 1991-92 1990-91 1989-90

Return on Assets 10.84% 9.68% 7.84% 6.86% 1.78%

Return on Capital
Employed 11.49% 10.32% 8.33% 7.48% 1.87%

Return on
Shareholder’s Fund 19.00% 24.00% 21.00% 12.00% 0.70%

Source : Annual Reports.

The above three ratios indicate that the long term

creditors and the owners are enjoying a fairly good return on

their invested funds. Intact, the shareholders in particular have

had the privelege of harvesting a high return on their funds

which again is revealed by the earnings per share-.

Years 1993-94 1992-93 1991-92 1990-91 1989-90

\

Earnings per Share

(face value of
share Rs.10 each) 3.91 3.84 2.69 1.32

Since the earnings per share can not be taken at their face

value,1 the dividend paid per share was taken as the basis for
 GtfWH/e44flRT~ € -4-.

TOTAL INCOME OF
LIC HOUSING FINANCE LTD
.AMOUNT IN CRORES Rs.

1989-90 1990-91 1991-92 1992-93 1993-94

190
 191
.finding out the actual amount received by the shareholders on

their share capital.

Years 93-9-4 92-93 91-92 90-91 89-90

Dividend per Share 1.09 0.93 1.00 0.54

Although the first two years of the operations have not

been very fruitful to the shareholders of the company, the divi­

dend per share indicate that they have been receiving a constant­

ly increasing dividend from the third year. The high percentage

of dividend received by the shareholders is further revealed by

the dividend payout ratio.

Years 93-94 92-93 91-92 90-91 89-90

Dividend payout 27.09% 24.00% 37.17% 41.00%

Ratio

The dividend payout ratio which enables an investor to

determine the percentage of annual earnings paid to the share­

holders in the form of dividends and the amount ploughed back in

the business for its long term growth show that the company has

been paying a high percentage of its earnings to the shareholders

in the form of dividend. As it is, the company is already suffei—

ing from a resource crunch. So a high payout must be looked into

very seriously although the company has improved its retention

percentage from 59% in 1990-91 to 62.83% in 1991-92, 76% in 1992-

 192

93 and 73% in 1993-94.

3. EFFICIENCY

Taking a look a th© activity ratios indicate that the

corporation has not been very efficient in managing its resources

except fo the fixed assets turnover ratio which showed a high

ratio ranging from 3.38 times in 1989-90 to 35.37 times in the

year 1993-94 steadily improving over the years. The other activi­

ty ratios remained below 0.2 times throughout the period under

review.

TABLE 6.4

ACTIVITY RATIOS

Years 93-94 92-93 91-92 90-91 89-90

Total Assets 0.12 0.11 0.09 0.09 0.02

Turnover

Capital Turnover 0.13 0.12 0.10 0.09 0.03

Current Assets 0.12 0.11 0.09 0.09 0.02

Turnover

Working Capital 0.13 0.12 0.10 0.09 0 •* 03

Turnover

F ixed Assets 35.37 27.82 18.16 13.83 3-38

Turnover

This is of another serious concern for the management

of the company since it could be possible that the management may

not be making full use of the available resources. However, a

deeper look into this matter coincides with one of the difficul­

ties faced by the company.

 193

' . TABLE 6.5

CHANGES IN WORKING CAPITAL OF LICHFL

(Rs. in Crores)

PARTICULARS 93-94 92-93 91-92 90-91 89-90

CURRENT ASSETS : ■

Interest Outstand­ 48.23 19.13 6.51 2.05 0.40

ing and Accrued

Advance to Scheduled — • - 10.00 20.00 —

Banks & other Advances

Cash & Bank Balance 22.59 23.22 24.45 7.75 25.64

Miscellaneous Debits - - - - 0.08

TOTAL CURRENT ASSETS 98.65 116.75 67.10 38.05 26.70

CURRENT LIABILITIES

Interest Accrued 59.66 44.26 13 M 64 7.16 0.57

but not Due
i

Sundry Creditors 15.25 ■13.69 6.14 1.16 1.43

Provision for Tax 0.85 4 1.20 0.56 0.86 0.02

Contingencies 0.50 0.21 0.04 ~

Provision

Proposed Dividend 6.03 3.28 2.50 1.34 -

TOTAL CURRENT
LIABILITIES ■ 82.29 62.64 27.88 10.52 2.02

NET WORKING CAPITAL 16.36 54.10 39.22 27.53 24.68

INCREASE IN WORKING
CAPITAL -
„ 14.89 11.69 2.85
DECREASE IN WORKING
CAPITAL ,37.74 - - - -

Source : Annual Reports.

 194

The fact that LIC Housing Finance Ltd. borrows money

from the National Housing Bank in lumpsum at an exorbitant rate

of interest and its obligation to disburse loan amounts below

Rs.50a000 at nominal rate of interest to low income group and

agricultural income earners could be one of the reasons.

4. FINANCIAL STRENGTH

As already pointed out that the LICHFL under review is

suffering from a resource crunch, it has therefore no other-

alternative than to resort to borrowings. This could be the

reason for the high debt equity ratio of the company.

Years 93-94 92-93 91-92 90-91 89-90

Debt Equity Ratio 11.36 15.75 13.27 5.33 2.41

The high debt equity ratio if not checked at the oppor­

tune time could lead to excess pressure and interference in its

management by the long term creditors of the company who enjoy a

larger claim against the assets of the firm. Further, a decline

in its profits could put pressure on the company since a large

part of the fund would be used up to pay the interest on the

borrowed funds. However, since the Life Insurance Corporation of

India, the main promoter of the LICHFL Is the main source of

funds for both borrowed funds and owned fund, the risk of

unnecessary interference is reduced to the extent of the amount

 195
funded by LICI.

The creditors on their part are not free from risks.

The debt to total capital employed ratio throughout the period

under review is far from the conventional ratio of 1:2.

Years 93-94 92-93 91-92 90-91 89-90

Debt to Total 0.92 0.94 0.93 0.84 0.71

Capital

This ratio along with the proprietory ratio shows that

the funds of the company mainly consisted of borrowed funds. The

owners fund as represented by the proprietory ratio was a meagre

7.64% in the year 1993-94. The condition was no better in the

preceding years except the first two years.

Years 93-94 92-93 91-92 90-91 89-90

Proprietory Ratio 7.64% 5.60% 6.60% 14.50% 27^.97%

The company is also enjoying the benefits that it

derives from limited stake viz. first, the control of the company

with a limited fund and secondly, since the borrowed funds carry

a fixed rate of interest the shareholders enjoy a higher rate of

return on their funds thus increasing their earnings more than

proportionately.

Another important revelation is made by the interest

coverage ratio.
 190

Years 93-94 92-93 91-92 90-91 89-90

Interest Coverage 1.21 1.22 1.32 1,51 1.16

Ratio

The interest coverage ratio of the company is far below

the ideal norm of 6:1. This shows the excessive use of debt. The

company thus have to be very careful in managing its funds.

J. The Difficulties and Problems of LICHFL :

The main difficulties faced by LIC Housing Finance Ltd.

are with regard to the resources. Since its inception the company

has been facing a resource crunch. This can be seen from the fact

that the company was able to raise loans only# from the Life

Insurance Corporation of India and the National Housing Bank for

the last five years. These loans carry an exorbitant rate of 13%

interest. Further, under the Refinance Scheme from National

Housing Finance the company has to give loans below Rs.50,000

which has an adverse effect on the interest rate considering the

I
lumpsum amount that the company takes as loan from the source.

Another problem the company facing is the competition.

With the economic reforms of the country underway, a large number

of private housing finance companies has come Into the scene

apart from the existing public sector undertakings. Although

these private sector companies are new entrants on the scene,

there is a loss of LIC Housing Finance Ltd’s market share inspite

of its already built on image since all these companies are

 197

attacking the same market. The 49% of market share that the

company is presently commanding can drop with many new entrants

offering different schemes.

One more problem that the company facing is with regard

to the legal aspects in case of defaulters. The legal system in

the country is quite cumbersome and time consuming. Due to this

long process in the legal system, the capital gets blocked and

the company lands up in paying heavy legal charges. Once a case

is filed against the defaulter of a loan the interest on the loan

amount is frozen until the case is settled. By the time the final

verdict of the case comes up the company land up paying more than

the loan amount in terms of blocked capital and legal charges. So

only in very rare cases does the company file cases against the

defaulters.

K. Control Measures :

The LIC Housing Finance Ltd. has adopted a number of

control measures. First of all, a look at the LIC Housing Loan

Scheme reveals some very interesting and strict measures. Loans

are normally granted to persons having salary income and to those

who submit their income tax returns regularly. Employees of

Government, public sector undertakings, public limited companies

are eligible for the loans. However, in case of private

companies, the companies shuld have Provident Fund and Employees

\

State Insurance Scheme etc. This is to confirm that the loanee

 198
has a stable job and a regular income. The income of the appli­

cant is thoroughly scrutinised since the amount of loan to be

sanctioned depends very much on the credit worthiness and repay­

ing capacity of the applicant.

The company insists on guarantors especially in case of

loans for flats since the ownership of a flat is not quite the

same as ownership of an independent house on an independent land.

The gurantors in turn should also have sufficient income so that

their gurantee is safe and sound. Before sanctioning a loan, a

personal interview of the applicant is conducted by the Area

Manager or another official of the LIC Housing Finance Ltd. This

interview is conducted to make an assessment of the applicant”&

repaying capacity by seeking relevant information. The valuation

of the property or building to be mortgaged is done by the

company's own Panel Valuers inspite of the valuation already done

by qualified architects. The company then makes the applicant

invest his share first i.e. the difference between the cost of

the property and the loan sanctioned. It is the practice of the

company to disburse the loan as a form of reimbursement where the

loanee spends first and the company reimburses the amount spent

by him on the basis of valuation. The company also insists on all

the orginal title deeds for atleast the 15 years in case of

purchase/construction extension of a house.

Now, coming to the administrative and other functional

controls, the management of the comapny physically verifies the

 199

fixed assets every year. Records showing full particulars of the

fixed assets including quantitative details and location are

properly maintained. Internal auditing which was looked after by

the Internal Audit Department of the Life Insurance Corporation

of India till the later half of the year 1992 since the inception

of the company was taken over by the Internal Audit Department on

the strength of the direct recruits i.e. their own employees and

the employee strenght of LICI in the company is coming down. The

LIC Housing Finance Ltd. is also opening its doors for direct

recruits in the managerial level which were until now dominated

by the employees of LICI. To develop their own human resources*

the company has conducted various training programmes covering

general topics, technical matters on housing loan and computers.

For the benefit of the employees, the company has introduced a

Group Gratuity-cum-life Insurance Scheme in collaboratio with

LICI. To encourage and motivate the Area Managers, their loan

Sanctioning authority also been raised from Rs.l Lakh until 1993

to Rs.5 lakhs in 1994. However, to curb malpractices the authori­

ty to sanction any amount exceeding Rs.5 lakhs per applicant has

been vested with the Loan Committee at the Corporate office in

Bombay.

L. Some Observations and Suggestions :

With the opening up of the Indian economy and inspite

of the entry of a good number of new comers in the field of

 POO
housing finance, the LIC Housing Finance Ltd- has been doing very

well over the years. This can be seen from the amount of loans

sanctioned, the number of housing units it has created under both

individual and project loan schemes, the rate of growth of the

company in terms of its income, net profits and net worth.

Due to its attractive housing loan schemes, the company

has created a name for itself in urban as well as rural parts of

India- Further with Its presence in almost all parts of India,

the LIC Housing Finance Ltd.has made a big stride in its mission.

The company has been doing very well financially. With

the resource crunch at Its helm, the company has utilised its

funds very effectively and efficiently. Although there is a

dearth of public participation in its share holding pattern, the

Board of Directors of the company has been well represented by

its share holders.

The LIC Housing Finance Ltd.has had a tremendous growth

over a short period of five years. There has Infact been an all

round development of the company. However, a few suggestions are

being incorporated after having done an analytical study.

The company must in the first place broad base its

share holding pattern and otehr long-term financial resources.

Since a few financial institutions are holding a greater part of

its share capital, the company is taking a big risk. Socially,

the public do not enjoy the pride of becoming the shareholder of

the company. Hence, Issue of share capital to the public and

 ?01

minimising the shares of the financial institutions would lead to

stable long-term growth of the company. Secondly inspite of the

resource crunch that the is at present facing, its main financers

are LICI and National Housing Bank. The company can approach

other finance companies. With the economic reforms in process, a

lot of housing finance companies have come into the scene.

Over the years, the company has been increasing the

rate of dividend declared every year. Instead the company can

resort to ploughing back of its profits.

Introduction of housing loans with pledge of shares as

collateral security would be quite attractive. So the company

could consider introducing this scheme. Repayment of housing loan

which is by way of Equated Monthly Instalments (EMI) comprising

of principal and interest do not take Into account the future

value of money since the EMI remains the same throughout the term

of the loan irrespective of changes In the rate of interest. This

could be corrected with a change in the EMI when there is a

change in the rate of interest.

The company would do better if an aggressive marketing

strategy Is adopted. With a lot of new entrants In Housing

Finance, the company must go in for aggressive marketing so as to

retain and increase Its market share.

 TABLE 6.6

OPERATIONAL AND FINANCIAL PERFORMANCE OF LICHFL

FOR THE PERIOD 1989-90 TO 1993-94.

Years 1989-90 1990-91 1991-92 1992-93 1993-94

No.of months (9) (12) (12) (12) (12)

Individual Housing Loans Sanctions :

Applications (Nos.) 1484 18245 42240 52129 40818
Amount 14.08 169.43 420.02 52S.00 473.97
Disbursements Applications (Nos.) 115? 11784 26478 45916 39560
Amount 10.85 96.38 430.07 440.41 40818
Construction & Project Finance
Sanctions (Amount) - - 91.44 81.5? 89.54
Disbursements (Amount) - - 22.13 45.54 60.62
Equity Share Capital 10.00 25.00 25.00 35.00 55.00
(Including Share Application Money)
Reserves & Surplus 0.0? 2.04 6.27 21.46 56.96
(Including Share Premium A/c)
Loan Funds Surplus 24.23 144.19 414.81 889.53 1271.83
Operating Income\0ther Income 0.86 16.18 44.49 109.84 174.99
Other Income 0.02 0.00 0.01 20.03 50.09
Total Income plus 0.83 16.18 44.50 109.87 175.08
Profit bef.depreciation, 0.72 14.37 40.26 103.18 167.10
interest and tax
Interests Surplus 0.5? 9.49 30.42 84.14 137.41
Profit before Tax 0.08 4.77 9.® 18.77 29.23
Profit after Tax 0.07 3.31 6.72 13.4? 21.53
Earning per share (Rs.) 0.07# 1.57* 2.69# 5.13# 5.38#
Dividend (X) 0.00 7.50 10.00 12.50 15.00$
Book value per share (Rs.) 0.0? 10.82 12.51 16.13 20.34

tetter comparisons.
face value of Rs.10,000/- each to a face value of Rs.10/-
each.
* Weighted EPS.
S Proposed Dividend
 ?03
-m(5UE 6-7
RATIOS

1993-94 1989-90

LIQBIMTT RATIOS

1. Current Ratio 1404.98 1004.4? 482.04 185.29 35.74

17.75 14.03 17.29 17.42 17.49
82.30 42.44 27.88 10.51 2.02

2. Acid Test Ratio 98.4? 114.75 47.14 38.05 24.72

1.19 1.84 2.40 3.42 13.22
82.30 42.44 27.88 10.51 2.02
LETESASE MHOS
1271.83 889.53 414.81 144.19 24.23
1. Debt Equity Ratio 11.34 15.75 13.27 5.33 2.41
111.94 54.44 31.27 27.04 10.07

2. Debt to Total Capital 1271.83 889.53 414.81 144.19 24.23

0.92 0.94 0.93 0.84 0.71
1383.79 945.99 444.08 171.13 34.30

3. Properietory Ratio 111.94 54.44 31.27 27.04 10.07

7.442 - - - -XlOO
x 5.402 ----XlOO
* 4.402 - - - -XlOO
X 14.502 - - -XlOO
x 27.972
1445.91 1008.42 473.71 184.44 34.00

4. Interest Coverage Ratio 144.44 102.91 40.10 14.30 0.44

1.21 1.22 1.32 1.51 1.14
137.41 84.14 30.42 9.50 0.57
PROHTMILITY RATIOS
144.43 102.91 40.10 14.24 0.45
1. Operating Profit Margin -X100 95.182 -XlOO 93.472 -XlOO 90.112 -XlOO 88.382 -XlOO 75.002
175.08 109.87 44.50 14.18 0.88

2. Met Profit Margin 21.52 13.47 4.72 3.31 0.07

-XlOO 12.301 -XlOO 12.242 -XlOO 15.102 - - - XlOO 20.442 -XlOO 7.952
175.08 109.87 44.50 14.18 0.88

3. Return on Assets 158.94 97.41 37.14 12.80

-XlOO 10.842 - - - XlOO 9.482 -XlOO 7.842 - - - XlOO -- XlOO 1.782
1445.91 1008.42 473.71 184.44 34.00

4. Return on Capital Enployed 158.94 97.41 37.14 12.80 0.31

-XlOO 11.492 --- *100 10.322 -XlOO 8.332 7.482 -- XlOO 1.872
1383.79 945.99 : 444.08 171.13 34.30
 P04

1993-94 1992-93 1991-92 1990-91 1989-9D

5. Return on Shareholder’s 21.52 13.47 8.72 3.31 0.07

_ ____ ulAA 0.071
Entry 19.001 24.002 . . . XIOU 21.002 ... XIUu 12.002 -- -xlOO
111.93 58.48 31.27 27.04 10.07

6. Earnings per Share 21.52 13.47 8.72 «* 3.31 0.07

3.91 3.84 2:89 1.32 0.071
5.50 3.50 2.50 2.50 1.00

8.03 3.287 2.50 1.34

1.09 .933 1.00 0.54
5.50 3.50 2.50 2.50

8. Dividend Payient Ratio 1.09 0.93 1.00 0.54

27.001 24.002 •••""•XIvw 37.172 41.002
3.91 3.84 20.57 1,32

9. Expense Ratio 100-95.18 4.822 100-93.87 8.332 100-90.11 9.892 100-88.38 11.822 100-7 751

fiETIfITT RATIOS
175.08 109.87 44.50 15.18 0.88
1. Total Assets Turnover 0.12 0.11 0.09 U.V7 0.02
Ratio 1485.91 1008.42 473.71 185.45 35.00

175.08 109.87 44.50 18.18 0.88

2. Fixed Assets Turnover 35.37 27.82 18.18 13.83 3.38
Ratio 4.95 3.95 2.45 1.17 0.25

175.08 109.87 44.50 15.18 0.88

3. Capital Turnover Ratio 0.13 0.12 0.10 0.09 0.03
1383.79 945.99 445.08 171.13 34.30

175.08 109.87 44.50 15.18 0.88

4. Current Assets Turnover 0.12 0.11 V.V7 0.09
Ratio 1480.98 1004.47 482.08 185.29 35.74

175.08 109.87 44.50 15.18 0.88

A fA
5. Korkins Capital Turnover 0.13 0.12 9,19 0.09 0.03
Ratio 1378.87 941.83 454.18 174.78 33.72