FROM THE DESK OF MANAGING DIRECTOR
To call this year uneventful would be a farce and ironically to call this yeareventful would be a farce too. Covid-19 caught the entire world by surprise and to controlits spread within India our Prime Minister unexpectedly announced a nation-wide lockdownon 24th March 2020; a decision that challenged the status quo of peoplebusinesses and even the Government. Both the Government and businesses were forced tomake tough calls - cutting salaries laying off employees and some even permanentlyclosing their establishments. But times like these allow businesses to showcase theirresilience. As they say survival of the fittest. Your company also made its fair share oftough decisions but with great pride I can say that today we continue to soldier on.
On a positive note last year in November 2019 we witnessed history. India announcedits first personal insolvency scheme under IBC. This scheme allows creditors (and peoplethemselves) to declare individual people bankrupt through a process similar to that of acompany. We believe this scheme can not only help resolve the subsisting NPA(non-performing assets) problem but can also attract foreign investment in India byuplifting our "ease of doing business" ratings. Internally this scheme providesa great opportunity for recovering our tougher corporate cases.
Internally 2019 became a year of change. We realigned a larger part of ourorganization towards the recovery of our NPA pool focused on learning from each case anddeveloping our competencies in collection and legal recovery strategies.
Our GDP grew by a dismal 4.2% during 2019-20. From the 6-7% growth range we have beenmaintaining since the past few years a number smaller than that is disconcerting at best.Furthermore expectations from 2020-21 remain subdued at best.
This year things have been lethargic because of Covid. With the complete lockdownstill under effect in some states and intermittent lockdowns in others maintaining a 1-2%growth rate (which is expected this year) should be looked at positively.
On the flip side if relations between China and the rest of the world continue toworsen India may take China's place as the manufacturer of choice for the world whichmay prove to be a golden opportunity for our economy. While I would've preferred if Indiahad risen to that position on the back of its own manufacturing prowess in difficulttimes like these any force that positively influences the proverbial economic applecartis certainly welcome. In fact action is not far from thought here since several largecompanies have already started mobilising resources and finding Indian partners forsetting up new facilities here.
The speed bumps on our runway to success continue as we record a loss of Rs. 36.17crore this year. This loss has been largely due to additional provisioning made mandatoryby the introduction of a new accounting standard (known as IndAs) and due to the write offof non performing assets in this year. We continue to adjust our costs so they remain at asteady percentage relative to our recovery costs and loan book size.
As you know since the last few years our entire focus has been on the resolution ofour substandard cases. That focus continues as we seek to resolve tougher and toughercases. The suspension of court activity has put a serious dampener on our recoverytrajectory so our fight may have to go on for longer than we had originally expected.There is no doubt that your team is working diligently to reverse the effects that thislockdown has had on your company but I believe it is better to under promise and overdeliver than to over promise and disappoint.
Shareholders this year I also come bearing positive news. Our efforts in NPAresolution through collection and legal efforts have borne some unexpected fruit.
Our team has made strides in developing their legal knowledge and as a result of theirefforts we are working on providing legal recovery services as a product to other financecompanies. We believe the variety of problems we have resolved through the years willprovide a strong advantage in this space. As Mark Twain said "History never repeatsitself but it does rhyme." And we hope to sing along.
We will continue to work relentlessly as we recover all our non-performing assets andstrive towards becoming a profitable company once again. Today I can safely say thatthat time is not far away.
On behalf of the Board of Directors I would like to extend my gratitude to ourshareholders customers bankers and all other stakeholders who continue to support us. Iwould also like to thank our employees whose hard-work and effort has allowed us to remainafloat and thrive in these trying times.