We are going through the throes of the second wave of COVID-19 andthings are looking grim. As I write to you in the second half of April 2021 there havebeen over 141 million cases across the world which have claimed more than three millionlives. With India crossing 14.8 million cases it is the second worst affected country:less than USA but higher than Brazil.
In India the second wave has been particularly severe. In the middleof February 2021 when it was mostly believed that COVID-19 was done and dusted the dailynumber of reported cases stood at 9121. By 1 April it had spiked to 81398. Since 15April we are witnessing well over 200000 additional cases per day rising to morethan 350000 on 25 April 2021.
Most epidemiologists are forecasting this wave will peak by 31 May2021.
The Central and State Governments are taking emergency actions tonavigate through this unprecedented second wave. A rapidly accelerated pace ofvaccinations coupled with a strict enforcement of wearing masks and social distancingshould bring this second wave in control sooner rather than later.
Let me now share with you what your Company did when the nationwidelockdown was announced on 25 March 2020. Briefly stated Bajaj Finance swiftly evolved atwo-pronged approach which focused on: (i) conservation and prudence and (ii) initiationof an ambitious business transformation plan.
First we ensured health safety and work-from-home (WFH) for ouremployees.
Second we enabled the technology platforms and communication systemsto support WFH and ensure least disruption in conducting business.
Third we carefully looked at each business and function and applied a'zero-based budgeting' framework to streamline processes and eliminate unnecessary costs.
Fourth we examined and calibrated the risk profiles of each businessof the Company to ensure conservatism in new loan bookings.
Fifth we took a conscious call to make large and sensible provisions.Thanks to a financially conservative approach that has been a cornerstone of your Companywe could afford an increase in loan losses and provisions from Rs. 1501 crore in FY2019to Rs. 3929 crore in FY2020 to Rs. 5969 crore in the current year and yet generatereasonable profits for the shareholders.
Sixth as the first wave started to abate your Company accelerated itsbusiness rapidly by focusing on customers less susceptible to the economic consequences ofthe pandemic.
Seventh believing in the dictum "Never let a crisis go towaste" your Company utilised this crisis to rapidly accelerate the transformationaljourney it had embarked upon in the third quarter of FY2020.
All these are given in considerable detail in the chapter on ManagementDiscussion and Analysis. I urge you to read it carefully.
I have always been proud of your Company's leadership and employeesand their ability to consistently deliver superlative achievements over the past decade.
In these incredibly difficult times I am truly proud of how BajajFinance's team led by Rajeev Jain the Managing Director seamlessly worked togetherthrough incredibly long hours to navigate through this crisis. It helped in deliveringreasonable results for FY2021 and creating a strong platform for the post COVID-19 world.Let me share some of the highlights.
Number of new loans booked in FY2021 was 16.88 million.
The Company's customer franchise grew by 14% to 48.6 million.
Despite COVID-19 assets under management (AUM) increased by 4% to Rs.152947 crore.
Total income increased by 1% to Rs. 26683 crore.
Net interest income (NII) rose by 2% to Rs. 17269 crore.
Total operating expenses (opex) reduced by 6% to Rs. 5308 crore.Consequently opex to NII improved to 30.7% from 33.5% in FY2020.
Pre-impairment operating profit increased by 6% to Rs. 11961 crore.
Loan losses and provisions grew by 52% to Rs. 5969 crore.
Profit before tax decreased by 18% to Rs. 5992 crore.
Profit after tax reduced by 16% to Rs. 4420 crore.
Bajaj Finance's capital adequacy ratio as of 31 March 2021 was 28.31%which continued to be well above the RBI norms. Tier I adequacy was 25.11%.
Rahul Bajaj the founder Chairman of your Company has decided toretire as a director. He has been a beacon to all of us and your Board has unanimouslydecided to have him as Chairman Emeritus. On your behalf allow me to offer him ourheartfelt thanks for his long leadership.
Amidst the second COVID-19 wave it is difficult to predict what thefirst and second quarter of FY2022 will bring. However notwithstanding my innateconservatism
I can say one thing with a fair degree of certainty - Your Company hasthe team the commitment the capability and the financial strength to overcome the secondwave as well. Indeed as I write the team is actively working on this.
Remember the song "We Shall Overcome". That is the motto andleitmotif of your Company. And will forever be.
Stay safe. Vaccinate yourself and your family. Wear masks. Maintainsocial distancing. Never forget that all grey clouds must pass.
With my very best