It gives me great pleasure to present to you your Company's Annual ReportforFY17sharewithyouyourCompany's progress thus far and thoughts for the future.
Clearly the most significant year was the government's decision to demonetise 86% ofthe high-value currency in circulation in one stroke. This government has implemented manysignificant reforms since it has assumed office three years ago but demonetisation has tobe counted as the boldest decision this government has taken.
No matter what the contrasting opinions were for all high-value currency to hit thesystem and wash itself for cleanliness and to give a one-time jolt to promote digitalIndia this was amazing means. Data shows that economic activity is back to pre-Novemberlevels. Enquiries for loans are a lightning rod for economic activity. CIBIL reports show
"Iron man Sardar Vallabhbhai Patel unified India politically GST will unify Indiaeconomically. It's that big a moment" that retail loan enquiries fell 12% in November16 over September 16 but by February 17 it was higher over September16 by 9%.
That things stabilised quickly within 3 months and business is back to normal is a bigvindication. Nine million new taxpayers crawled out of the woodwork and paid their taxesfor the first time.
Demonetisation may be remembered for a few years but GST will be remembered for ever.Millions of un-organised business people will register themselves for GST and start payingtheir taxes for the first time as not doing so will make them uncompetitive as they won'tget input credit. For the first time we will become one nation economically it wassometimes easier to import instead of buying from another state of India! When the billwas passed in the Rajya Sabha in August 2016 I tweeted "Iron man Sardar Vallabhbhai
Patel unified India politically GST will unify India economically. It's that big amoment". That sums up GST's significance for generations.
The smartest decision by this government has to be accepting Aadhaar as the platformfor a new India even if it was initiated by the previous government. The Aadhaar platformhas not only made a digital India possible through e-KYC e-signature and e-payments buthas also helped reduce ghost beneficiaries who were sucking and siphoning what was meantfor the poor. I hope the judiciary sees the merit of making Aadhaar mandatory for availingall government benefits to avoid such siphoning of course with a lead notice period forthe citizens to sign up. If
Nine million new taxpayers crawled out of the woodwork and paid their taxes for thefirst time.
It's more equitable - after all why should small enterprises pay the same tax slab asthe large ones?
we "also" provide subsidy benefits to people outside of such authenticationsystem the ghosts will always hide under the "also" category we can'teffectively weed them out and middlemen will consume the poors' entitlements.
An important part of India Inc. is the voiceless small entrepreneur. I have always beenpublicly advocating for progressive and lower tax rates for small enterprises in variousforums including ASSOCHAM National Business events budget debates and even inrepresentation to the Finance Minister and to the Minister of State for Finance over thelast three years. It's more equitable - after all why should small enterprises pay thesame tax slab as the large ones? Don't salaried people with large pay-checks pay highertaxes? Besides small enterprises largely deal in cash so you might as well encourage themwith low taxes and bring them to the tax net. I am delighted that in its latestbudget FY 17-18 the government reduced the tax rate for small companies with turnover ofless than Rs 50 crores to 25%. No one can say that any move by the government was becauseof their representation neither can I. But I am happy nevertheless that this wasimplemented. In the next stage I wish the same for other small entities includingproprietorships and partnerships who are not covered under this structure today.
Finally in financial services the big breakthrough was awarding new bank licenses.India waited 25 years after nationalisation for 5 licenses to be issued in FY94. After tenyears in FY04 2 more bank licenses were issued. After yet another ten years in FY14 2more were issued. In FY15 19 bank licenses including payment and small banks wereissued. In FY16 it was announced that bank licenses would be issued on tap.
The theme with which your Company was founded is that financing
India's 50 million MSMEs and its fast-emerging middle class with a differentiatedmodel based on new technologies provides a large and unique opportunity. Keeping withthis theme the Company has continuously grown its retail businesses over the years andhas built a strong business model focussed on these areas. I am happy to share that theCompany has so far successfully financed more than four million customers in 222 locationsacross the country thereby establishing a connect with millions of customers.
I am pleased to share with you that once again we have augmented our presence in theretail business segment. Retail lending now stands at 93% of the Assets under Managementas of March 31 2017.
The Company's loan book grew by 24% from Rs 160.41 billion (Rs 16041 crores) in FY16to Rs 198.24 billion (Rs 19824 crores) by the end of FY17. We are happy toshare that along with this growth we have maintained our asset quality at highstandards with Gross NPA at only 0.95% and Net NPA at 0.30% on 120 DPD basis.
The NII has grown by 59% from Rs 8181 million in FY16 to Rs 13008 million inFY17. The total income too grew by 65% to Rs 16403 million in FY17 from Rs 9918 millionin FY16.
The PAT grew by 44% from Rs 1661 million in FY16 to Rs 2389 million in FY17. Iam confident that the Company will continue to grow its business at a compounded rate andsuch growth will translate into an abundant increase in profits as well.
I am happy to inform you that your Company has been rated AAA on its long-term debtinstruments.
One of the remarkable successes for your Company in recent years is that it hassuccessfully diversified its lines of credit from a large number of institutions. TheCompany now avails credit from over 221 reputed institutions including banks mutualfunds provident funds pension funds
I am delighted to welcome GIC the Sovereign Wealth Fund of Government of Singapore asthe key shareholders of the Company. They are now the second largest shareholders afterWarburg Pincus.
I am happy to assure you that all the employees are working extremely hard with greatdedication high energy and strong commitment throughout the year for your Company.superannuation funds gratuity funds insurance companies domestic and internationalFinancial Institutions as at end March 2017 compared to a total count of 171 institutionsin FY16. This ensures a steady stream of funding for continued growth in thefuture.
I am delighted to share that during this financial year GIC the Sovereign Wealth Fundof Government of Singapore with over uSD 100 billion of funds under management investedRs 3.40 billion into the Company in December 2016 taking the Capital Adequacy to 20.34%as of March 2017. Subsequently in May 2017 Warburg Pincus reduced its stake from 61% to36% and we are proud to inform that the stake was bought by GIC and a number of marqueeforeign and domestic investors. In the process GIC demonstrated its confidence in theCompany by increasing its shareholding to 14%. We are overwhelmed by such show ofconfidence in your Company from globally top rated firms and hereby reaffirm ourcommitment for the highest standard of business and corporate governance anywhere in theworld.
I am happy to share that your Company is carrying on CSR activities with great vigour.I assure you that I personally encourage employees to actively participate and widelysupport the CSR activities through their personal efforts. We have further expanded thescope and magnitude of these initiatives. Our flagship CSR programme Capital FirstScholarship Program (CFSP) entails providing financial assistance to meritorious studentsfrom the economically weaker sections of the society and this is progressing extremelywell. We have also tied up with various NGOs and change agents to sponsor programmes inthe field of and skill training for the economically weaker sections of society. We arepleased to report that these programmes have moved beyond the drawing board stage andshowing tangible results.
I am happy to assure you that all the employees are working extremely hard with greatdedication high energy and strong commitment throughout the year for your Company. Isincerely thank them all vide this letter. I would also like to thank all our stakeholdersincluding our lenders and customers for reposing their faith in us and thank ourregulators for their constant support and guidance.
I also express my thanks to all our Directors for their invaluable contribution throughtheir guidance and encouragement which have been critical for the success of the Company.Finally I thank each and every shareholder large and small for your confidence in us.
With your continued support and trust we look forward to growing your Company andcontributing to the economic progress that our country is set to achieve.
|Thank you |
|With Best Wishes |
|V. Vaidyanathan |