It is with great pleasure that I present to you your Companys Annual Report forFy16 against the backdrop of increasing optimism within India.
During the year gone by all key macro metrics that influence economy improved. Thefiscal deficit current account deficit and inflation have stabilised. More relevantthese improvements are sustainable in nature as the policy framework like aligningdomestic oil prices to global movements for instance have been implemented. Furtherlarge ticket government investments in roads railways defence and other such sectorswill play a catalyst role in reviving the economy. Interest rates too are trendingdownwards apart from a possibility of a good monsoon. These factors will create a moreenabling environment for large and small businesses going forward.
The theme with which your Company was founded is that financing
Indias 50 million MSMEs and its fast-emerging middle class with a differentiatedmodel based on new technologies provides a large and unique opportunity. The Company hasso far financed more than 2.25 million customers including more than 1.5 millionself-employed individuals and MSMEs.
Keeping in line with this theme your Company has been consistent in its strategy totransform itself into a unique retail financial services institution over the past 6years. Within this short span of time we have built an extensive reach of 222 locationsacross the length and breadth of the country and have developed proprietary underwritingmethods including usage of automated credit scoring models.
The Company has established for itself a unique franchise where it has developed thecapability to provide small ticket loans. Over 97% of the
Companys 2.25 million customers financed have between Rs. 20000 and Rs. 200000with an average tenor of 8 months to 2 years. These are difficult to originate to manageand to collect because of the relatively small book size from this business. Further thesmall size of EMI and quick run off makes it challenging. your Company is working on themeans to improving capabilities to manage these accounts in a sustainable way.
I am pleased to share with you that this year the retail business as a proportion ofthe overall AuM stands at 86% as of March 31 2016 primarily driven by the growth in theretail business segments like consumer durable financing two-wheeler financing loan toMSME and self employed people for which there is a vast untapped opportunity in India.
While we are pleased that the Loan book has grown by 34% from Rs. 119.75 billion(Rs. 11975 crores) in Fy15 to Rs. 160.41 billion (Rs. 16041 crores) by end of Fy16. Weare even more pleased that we have been able to maintain our asset quality at highstandards compared to the industry.
THE THEME WITH WHICH YOUR COMPANY WAS FOUNDED IS THAT FINANCING INDIAS 50 MILLIONMSMES AND ITS FAST-EMERGING MIDDLE CLASS WITH A DIFFERENTIATED MODEL BASED ON NEWTECHNOLOGIES PROVIDES A LARGE AND UNIQUE OPPORTUNITY THE PBT GREW BY 52% FROM Rs. 1662MILLION IN FY15 TO Rs. 2522 MILLION IN FY16
THE COMPANY NOW AVAILS CREDIT FROM OVER 171 REPUTED INSTITUTIONS INCLUDING BANKSMUTUAL FUNDS PROVIDENT FUNDS PENSION FUNDS SUPER ANNUATION FUNDS GRATUITY FUNDS ANDINSURANCE COMPANIES
The NII has grown by 53% to Rs. 8181 million in Fy16 from Rs. 5363 million in Fy15.The total income too grew by 51% to Rs. 9918 million in Fy16 from Rs. 6588 million inFy15. Against the backdrop of such growth in assets and income the operating expensesgrew by 30% in Fy16 over Fy15.
I am also pleased to inform you that the PBT grew by 52% from Rs. 1662 million in Fy15to Rs. 2522 million in
FY16. I am confident that the Company will continue to grow its business at acompounded rate and such growth will translate into an abundant increase in profitsas well.
Our gross NPAs and Net NPAs have continued to remain low at 1.07% and 0.55%respectively at 150 DPD NPA provision norms. We are confident that your Company willcontinue to maintain its high asset quality in the years to come as compared to industrybenchmarks.
I am happy to inform you that your Company continues to enjoy a high long-term creditrating of AA+ on its long-term debt instruments 4 years in a row which is achieved byvery select players in the financial services industry. We also enjoy a short-term creditrating of A1+ which again is the highest rating available for this category.
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 171 reputed institutions including banks mutualfunds provident funds pension funds superannuation funds gratuity funds and insurancecompanies. Some notable names include International Finance Corporation LIC gIC ofIndia SBI Mutual Fund HSBC Mutual Fund Sundaram Mutual Fund uTI Mutual Fund DeutscheBank SBI HDFC Bank Kotak Mahindra Bank DSP Blackrock Mutual Fund HDFC Standard LifeInsurance Bank of Baroda and yes Bank. I am sincerely thankful to each and every one ofthese great institutions for extending their shoulders in building an institution that hasgreat value addition to the social sector of this country.
Im happy to state that Capital First Home Finance Limited (CFHFL) wholly-ownedhousing finance subsidiary of your Company has grown its loan book by more than 50% fromRs. 2.29 billion as of March 31 2015 to Rs. 3.99 billion as of March 31 2016.This is already profitable business for us and we have great growth aspirations for thisbusiness in the future with more contribution from the affordable housing segment.
Our aspirations go beyond becoming a larger robust financial institution. We strive tocontribute actively in many education-centric initiatives which can play a critical rolein social inclusiveness of the country. Based on detailed deliberations we have decidedto focus on select areas which we believe has maximum impact. We have rolled out ambitiousprogrammes to reach the economically disadvantaged youth children and women and thosewith mental health issues using education as the enabling fulcrum. During the yeargone by we have achieved tangible outcomes in terms of numbers of individuals benefitedand we look forward to expanding it further.
I would like to assure you that all our employees are working extremely hard with greatdedication high energy and strong commitment through the year for your Company. Isincerely thank them all vide this letter. I would also like to thank all our stakeholdersfor reposing their faith in us and thank our regulators for their constant support andguidance.
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 support and trust.
I assure you that each one of us is committed to build a company that is high oncorporate governance is of great value for society and is a Company that you will beproud of.
With Best Wishes