We dedicated FY17 to superior customer service. And the results were evident in ourperformance.
I take pleasure in warmly welcoming you to this Twenty Third Annual General Meeting.
I am delighted that so many ofyou have taken time out of your busy schedules to attendthis meeting. It shows the commitment that you have as shareholders in the management ofyour company. I assure you that my colleagues at Geojit will not let you down.
The year that went by 20162017 has been in many ways a time of recovery and growthfor the international economy at large. Global GDP growth was 3.1% in 2016 moderatingslightly from 3.4% reported in 2015. The mild slowdown was caused by the weaker economicoutput in the developed economies which grew 1.7% in 2016 against 2.1% in 2015. The USeconomy slowed down from 2.6% in 2015 to 1.6% in 2016 reflecting investment and exportweakness. The Euro area declined marginally from 2% in 2015 to 1.8% in 2016. Brexit wasthe major event which shook the Euro area.
This was a defining year for the Company for more than one reason. Until 2016 ourfocus was largely on retail brokerage
a segment from which the lion's share of our income came from. Since then as part ofstrategic realignment we broadened our business horizon by laying equal emphasis onmarketing and distribution of Mutual Fund SIPs and Mutual Funds. This is in line with ourthrust towards creating investor wealth and to meet their long term financial goals. Thisalso helps us in providing one more avenue to our clients in terms of investments.
We dedicated FY17 as a year of superior customer service. The results were evident inour performance. We launched an online financial planning platform. The launch was metwith great acclaim and we have received significant positive feedback about this platform.Our Online Financial Planning platform creates an Investment advisory report customizedaround individuals with an inbuilt risk meter; this 'financial MRI' made it possible toascertain portfolio health in real time. The report makes it possible to compareportfolios with the investor's risk appetite resulting in an understanding of gaps riskanalysis and ideal risk
balancing - a completely new investor experience.
The implementation of Microsoft Dynamics achieved significant organizational coverage
providing the management a dashboard of customer relationship management initiatives.It helped in reducing operational issues and the effective plugging of local inadequaciesand accelerating remedial action.
We strengthened the operational back-end to accelerate new product offerings customizedaround investor needs.
Analytics is the need of the hour. We strengthened our big data analytics through ananalysis of decadal customer data empowering sales executives with information tounderstand customers better; this data was shared with customers as well; the use of thisknowledge pool facilitated decision-making without human bias.
The company enjoys strategic B2B agreements with seven leading commercial banks whichmake it possible for its clients to open integrated 3-in- 1 accounts to seamlessly tradevia the company's sophisticated Online Trading platform.
Growth is projected to gain strength in both advanced economies and emerging market& developing economies (EMDEs). Global trade growth has firmed and is expected tooutpace GDP growth after two years of marked weakness. The global economic growth isexpected to rebound from 3.1% in 2016 to 3.5% in 2017 with growth both in the emergingeconomies and advanced economies are anticipated to be recovering.
As the integration of the Indian economy into the global economy deepens we shallcontinue to reap the advantages of higher growth and stability abroad. India's GDP grew at7.1% in FY17 compared to a 7.6% in FY16. India's GDP growth in the January-March quarterwas lower at 6.9% due to several factors including demonetisation. Despite a sequentialslowdown agriculture and mining sectors held up with consumption being robust. Thiscoupled with rising domestic investor investment has put the Indian economy on a strongfooting. The shock of demonetization apart Dalal Street is euphoric and investors haveseen their valuations rise steeply.
The markets surged ahead and finally broke through its previous high watermarks andclimbed to new highs. In addition to the above mentioned economic factors the marketsseemed to believe in the vision policy initiatives and managerial ability of thisgovernment. The government's
positive stance in reviving the economy has been taken positively by the market and aslew of reforms have been initiated by the government to bolster economic growth. Theimpact of demonetization is expected to be over and consumer confidence is coming back.The imminent implementation of GST is expected to further drive growth in the country andcreate a strong case for investment which in turn is expected to create higheremployment opportunities and subsequently drive spending. Moreover less than 5% ofhousehold savings is invested in equity compared to 45% in the US. A diversion of thesesavings would create significant value in the equity market.
Our results for the last year reflect all these developments. While total turnover forQ4 was B79.86 crore (as opposed to B69.55 crore for the corresponding quarter last year)the annual turnover (FY 16-17) at B305.75 crore registered an increase of 12% againstB271.96 crore the corresponding figure for last year (FY15-16). As a result the Profitafter Tax (PAT) went up by 49% from 37.60 crore last year to B56.02 crore in FY16-17. TheBoard has recommended a dividend of B 1.25 per equity share of B1/- each which I hope youwill be happy with.
We launched a special initiative for promoting Mutual Funds SIP's which has startedpicking up and we anticipate that the coming year will witness appreciable revenue growthfrom this business vertical. We target to generate a significant part of our revenues fromdistribution over the next few years.
With the Sensex climbing past 30000 India's market capitalisation has crossed theUS$2- trillion mark. Only eight other countries have a higher market capitalisation. Thebenchmark Sensex on the BSE exchange has gained 20 per cent in dollar terms so far in2017 making it one of the best-performing index among global peers. In local currency
terms the Sensex is up 13.2 per cent. India's mid-cap is now 82 per cent of the sizeof the 2016-17 gross domestic product. We are confident that the buoyancy in the Indiancapital market will drive our equity brokerage and distribution business in the comingyear.
The roll out of GST is expected to be a game changer for the economy and many expectrenewed investment by corporates as well as a boost to strategic sectors. Meanwhile thegrowing economy and renewed domestic investor appetite for financial products will boostthe markets. The ongoing digital India campaign will allow Geojit Technologies oursubsidiary to use its core competencies to support the company's technology thrust. Asyou all know the name of the company is now Geojit Financial Services Limited. The nameand logo were launched in accordance with the restated shareholder's agreement between BNPParibas S.A the Company and its initial promoters. While BNP Paribas continues to retainits stake in the company it withdrew nominees from the Board of Directors of the company.
Less than 5% of household savings is invested in equity compared to 45% in the US. Adiversion of these savings would create significant value in the equity market.
I am happy to convey that the company is favourably positioned to capitalize theemerging market potentialities. A portfolio of sound products backed by detailed researchand a robust delivery and service platform is expected to provide best-in-class experienceto our clients. With our deepening presence in the industry we expect to serve more andmore investors in the coming years.
I take this opportunity to thank all our shareholders for being with us in this journeyso far. The path ahead looks exciting and we are confident that we will be building strongvalue for our shareholders in the times to come.
A P Kurian