Amid difficult global conditions the Indian economy displayed a remarkable resiliencegrowing at a steady pace of 7.1% in FY17 as estimated by the Central Statistics OfficeGovernment of India. Worldwide it has been a challenging year with events like theBrexit elections in the US and Europe and ongoing crisis in the Middle East weighing downon sentiment. Things however began to look brighter in the second half of FY17 aseconomic activity gained momentum leading to a steady recovery in most of the world'slarge economies. According to International Monetary Fund global GDP is expected to growby 3.5% in 2017 which is a scale up from 3.1% in 2016.
On the domestic turf the economy had its share of ups and downs especially in thewake of demonetization. While the immediate effect of the surprise withdrawal of highercurrency notes created a dent in the overall growth the economy was quick to bounce backposting a modest recovery. This was further aided by a buoyant rebound in agriculturalactivity on the back of a normal monsoon and record production of food grains. There wasalso significant uncertainty and apprehensions about the GST but its smooth rollout on 1stJuly 2017 has been a positive step which will not only simplify the tax structure fortrade and industries but will also boost the revenue mop-up for the Government.
From the Company's point of view the year marked a significant development. Inconsequence of a restructuring exercise demerging all the manufacturing businesses toanother entity with a mirror image of the shareholders your Company will henceforth be anon-banking financial company classified as a Core Investment Company and carry theinvestments in the financial services business. This is a key strategic move to give thedesired focus and to derive the full potential for the financial services business.
Cholamandalam Investment and Finance Company Limited (CIFCL)
Ranked among the country's leading non-banking financial companies CIFCL continues toreinstate its leading position in rural and semi-urban areas with 90% access in Tier IIIIV V and VI towns. CIFCL provides a host of financial services including vehicle financebusiness finance home equity loans stock broking and distribution of financial productsthrough its nation-wide network of 709 branches spread across 25 states.
CIFCL had total assets under management (AUM) of ' 36984 Cr. as of March 31 2017with net non-performing assets (NPA) of 3.2% and a healthy return on total assets(PBT-ROTA) of 3.9%. The total disbursements for FY17 stood at ' 18591 Cr. clocking agrowth of 13% over the previous year. Profit after tax was 26% higher at ' 719 Cr.
During the year CIFCL introduced a new product called trip loans to meet the financialneeds of transport owners/drivers on their trip journeys for fueling toll fee paymentsservicing etc. CIFCL also adopted Gross NPA recognition at 90 days one year ahead of theRBI's stipulated period.
Cholamandalam MS General Insurance Company Limited (CMSGICL)
CMSGICL is in its 15th year of operations. Coinciding with the same theCompany declared a maiden dividend of 6% on the Equity shares. CMSGICL registered a strongGross Written Premium (GWP) growth of 28% in FY17 over the previous year and continues tomaintain its market share at 2.76%. GWP was ' 3133 Cr. while profit before tax stood at '297 Cr. in FY17 largely driven by new partnerships secured during the year and stronggrowth achieved by proprietary channels and partners.
In line with the Government's Digital-India move CMSGICL has taken proactive steps tomake operations more technology driven. These projects include system integration withpartners mobility solutions including break-in inspection app claims survey app withintegrated video streaming lead management app for managing renewals and UPI & walletpayments for customers and agents. Some other projects in the areas of telematics dataintegration and analytics are near completion and would be ready for application in thecoming quarters.
Cholamandalam MS Risk Services Limited (CMSRSL)
CMSRSL continues to be a leader in the field of providing comprehensive safety andenvironment engineering solutions to corporates in managing their risks profitably. TheCompany has successfully executed more than 5000 consulting projects both in India andabroad. The Company has also invested in building a rich repository of best in classsoftware and state-of-the-art instruments to quantify risks faced by its clients.
I take this opportunity to express my gratitude to all our customers employeesbusiness partners intermediaries vendors for their continued support and contribution inthe Company's growth as we continue to work towards building greater value for all ourstakeholders. I would also like to specifically thank you our shareholders for yourvaluable support and putting your faith in us.