According to the Government of India's Central Statistical Organisation India's realGDP will have grown by 7.6% in FY2016 compared to the previous year and real gross valueadded (GVA) by 7.3%. Moreover the data suggests that our growth rate is picking up from 7.2% in FY2015 in terms of GDP and from 7.1% in terms of GVA.
I accept this data. Equally I somehow feel that an economy that increased its nationalincome by over 7% in real terms a growth rate that is higher than any developedcountry or any other emerging market major ought to have shown some more tangibleindices of growth. I refer to a pick up in corporate investments and capital expenditurean increase in consumer spending a noticeable rise in household savings and a sounddoubledigit growth in credit offtake. These haven't happened so far. Perhapswe are in the early days yet and that the green shoots' are taking longer to grow.
Therefore the macroeconomic conditions that your Company had to face were not aspropitious as the growth rates might suggest. Bank credit grew by a little over 11% inFY2016; deposits increased by under 10%; and despite the Reserve Bank of India easing itspolicy rates by 100 basis points in the course of the year interest rates remained highand the supply of loanable funds was still very tight.
In such an environment I am proud to write that Bajaj Finance has done exceptionallywell and succeeded in delivering strong results yet again. Here are some of the basicfacts for the year under consideration:
Assets under management increased by 36% to Rs. 44229 crore.
Receivables under financing grew by 37% to Rs. 42756 crore.
Total income rose by 36% to Rs. 7384 crore.
Net interest income increased by 41% to Rs. 4457 crore.
Profit before tax was up by 45% to Rs. 1965 crore.
Profit after tax increased by 42% to Rs. 1279 crore.
Net nonperforming assets (NPAs) is at 0.28% which is among the lowest inbanking and the NBFC industry.
Capital adequacy as on 31 March 2016 was 19.50% which was not only higher thanthe previous year but also significantly above the RBI's norms. Tier I capital adequacywas in excess of 16%.
As was the case last year your Company has done well across each of the major businessverticals. Asset under management in Consumer Lending increased by 44% to Rs. 18996crore. Lending to Small and Medium Enterprises grew by 20% to Rs. 18692 crore. CommercialLending rose by 56% to Rs. 5202 crore. And my favourite the new Rural Lendingbusiness grew its receivables under finance from Rs. 50 crore in FY2014 to Rs. 333crore in FY2015 and now to Rs. 1339 crore in FY2016. Last year I had hoped that we could"expeditiously yet prudently tap this market for the benefit of BFL as well as of therural populace and its various enterprises". Your Company's Management has shown thatit can be successfully done with a more than threefold increase in this business.
To fuel medium term growth your Company successfully raised capital by issue of sharesto Qualified Institutional Buyers (QIBs) amounting to about Rs. 1400 crore.Simultaneously a preferential allotment of convertible warrants was made to Bajaj FinservLimited the holding company. Thus Bajaj Finance now has the additional capital tofinance higher growth while maintaining strong capital adequacy.
We must congratulate your Company's sustained and stellar growth. Equally we mustrecognise something that makes such growth safe namely an unwavering attention tomitigating risks maintaining sound business practices keeping an eagle eye on theslightest mismatch between assets and liabilities and using bestinclass IT andanalytical tools to rapidly decide what risks are worth taking and what are not. These arecore to the functioning of your Company and are no less important than the growth enginethat we have come to laud every year.
You would agree with me that the entire Management of Bajaj Finance led byRajeev Jain your Managing Director Rakesh Bhatt Chief Operating Officer Devang ModyPresident of the Consumer Business and actively guided by Nanoo Pamnani and Sanjiv Bajajboth Vice Chairmen of the Company deserves strong applause for such excellentperformance.
Given the systems that have been put into Bajaj Finance and the managerial DNA forhigher growth with greater profits and long term shareholder value I have no doubts thatyour Company will perform as well next year as it has in FY2016.
Join me in encouraging the Management to scale further heights. Which I'm sure itwill.
Thanks for your support.