THE MANAGING DIRECTOR
I have great pleasure in communicating with you on the key highlights of the year thatwent by.
The year that was:
The Financial Year 2017-18 has been one of the best years for the company. Severalrecords were broken. Overall the Company grew disbursements by 35% and the Assets underManagement by 25%. PAT grew by 36% and Return on Equity improved to 20.78%. The mostsignificant action was in reducing the Non Performing Assets to 2.9% from 4.7% a yearago. Reflecting all this the market capitalisation of the company surged to ` 27224crores ( as on 30th April 2018 ) and the Rating Agencies upgraded the long term rating ofthe Company to AA+ one notch higher than what it was.
Your company has two main lines of business viz. Vehicle Finance and Home Equity. HomeLoans and other businesses are in early stage and are yet to be scaled up.
Fiscal year 2017-18 albeit a slow start heralded the return of consumer spending andgrowth for commercial vehicles industry. Vehicle manufacturers across segmentsreported double digit growth after many years.
The heavy commercial vehicles (HCV) grew by 11% YoY with a volume of 264958units.
Light commercial vehicle (LCV) grew by 17% YoY with a volume of 388325 units.
The Mini LCV grew by 33% with a volume of 230238 units
The other segments viz. the passenger vehicles two-wheelers tractors andconstruction equipment also recorded strong growth. These augured well for your companyand we could consolidate our position and increase our market share across segments/manufacturers. Both liquidity and interest rates were soft during major part of the yearand we could ride the growth backed by the availability of cheaper money. The Home Equitybusiness focussed on resolution of non performing assets besides regaining its growthmomentum. Due to intense competition this business witnessed margin pressure.
The year ahead (FY 18-19):
While the momentum in the growth of commercial / passenger vehicles and tractors havecontinued in Q1 of FY 18-19 there are external risks clouding the overall economicscenario. Higher oil prices higher trade/ current account deficit weakening Rupee allhave an impact on the macro economy. RBI has already effected a rate hike of 0.25 bps inthe recent policy and the market interest rates are hardening.
Despite this FY 2018-19 promises to be a better year for the rural economy. Predictionof a normal monsoon good agricultural output implementation of minimum support price(MSP) of the Government are expected to boost the farmers income. Implementation ofvarious infra projects and the continued growth of the road sector will further augmentrural income and create a demand for motor vehicles.
Your company is confident of maintaining its growth in the vehicle financing business.The home equity business is expected to return to normal growth in FY 18-19 by spreadingits wings in 60 more locations. We will also resolve and bring down the non-performingassets of this business through a set of specific action plans. The Governmentsemphasis on housing for all benefits announced for smaller units and credit linkedsubsidy scheme to end users is giving a big impetus to the growth of affordable housingsegment. We are targeting to grow significantly in this segment. The Board has approvedsetting up of an independent housing finance company (HFC) considering the opportunity inthe home loans segment and the home loans business will be scaled up in the new HFC whichwill be a wholly owned subsidiary of this company. Your company is a large player in theVehicle Financing space; with 870 branches located pan India and a strong relationshipwith all OEMs in the country. We continue to make significant investments in peopletechnology and analytics capabilities to redefine the business model aiming superiorprocesses and decision making. These are expected to position the company to grownon-linear handling higher volume with efficiency and better profitability.
I gratefully acknowledge the contribution of all the employees and the support of allstakeholders and look forward to an exciting year ahead.