The year 2020 belonged to active listeners better observers and fast learners. Todayas I write this letter to you I am thinking of how far and fast the world has changedwithin the last twelve months. We have experienced profound changes starting from betterawareness towards health discovering the power of flexibility in businesses to rapiddigitalisation and growing interest towards sourcing alternative energy options. A lot wesee around today was barely there a year back and yet we have all seamlessly become apart of this new normal.' Amidst this our team's undying hard work unwaveringcommitment and strong resolution to smoothly transition into this world' have helpedsupport our customers and other stakeholders. Each one of them deserves our deepestgratitude and sincerest appreciation.
As the nation continues fighting a pandemic the spotlight is drawn on the shockabsorbers of our economy our respected Government and esteemed regulatory bodiesbanks NBFCs and other supporting financial service intermediaries. I have extremegratitude for these financial warriors responsible for keeping our engines up and running.Together we will win and emerge stronger from this crisis. From a business standpointthe pandemic definitely created headwinds. But like I mentioned earlier active listenersand better observers who focussed on lessons learned adapted swiftly to this new normal.Your Company backed by prudence proactiveness and preparedness waded through the tideof every quarter to ensure business continuity and continued to build on strengths.
The economy witnessed sharp degrowth owing to lockdowns with restrictions on travel andtrade dampening business sentiment. As commerce started slowing down the IndianGovernment promptly took measures to announce fiscal and monetary policies to limiteconomic disruption. In the second half of the year gradual un-locks and phasedresumption of business across sectors boosted confidence. However the second wave ofCOVID-19 once again pulled brakes on the otherwise improving economic scenario.
Building on Strengths
Despite the challenging operating environment your
Company focused on building strengths and concentrated on getting the basics rightduring the year.
Business: We continued being one of the leading financers in our focused Rural andInfrastructure Finance businesses. Our digital and data analytics capabilities allowed usto identify the right sales point leading to strengthening of market share for Farm andTwo-Wheeler financing. In the Micro Loans business we largely focussed on collections formost part of the year and only in Q4FY21 did we cautiously start underwriting newcustomers. In our Housing Finance business we mostly focussed on existing real estateprojects and restricted disbursement for LAP. Under Infrastructure Finance we continuedto maintain our sell down abilities and concentrating on projects with strong sponsors.Our Mutual Fund business saw an increase in Assets under Management this year owing toour consistent focus on building a high-quality portfolio.
Collection: Being in the lending business collections play a crucial role inestablishing business stability. Our continuous on-field efforts rebalancing the salesand collection teams within products coupled with analytics-led prioritisation andresource allocation led to improved collections across all our businesses. The collectionefficiencies reached pre-Covid levels and surpassed FY20 collections by ~20%.
ALM and Liquidity: The objective of our liability franchise has always been toraise funds in a timely manner and ensure sufficient liquidity. During the year yourCompany proactively built its liquidity buffers as a cover against unforeseen disruptionsresulting out of moratorium and tight funding scenarios. With easing of liquidity fromQ3FY21 onwards your Company was able to reduce cost of borrowing.
Asset Quality and Provisioning: Your Company maintained sharp focus on assetquality backed by a strong collection performance strengthened the balance sheet andbuilt a strong risk management framework. Despite the pandemic we have had the lowestever NS3 and a good level of PCR. We also created additional cushion and reserves throughmacro prudential provisions and additional overlays on standard assets.
Balance Sheet: Your Company raised additional capital through a successful rightsissue during the year which was oversubscribed by ~15%. This helped in strengthening thebalance sheet and enabling your Company to pursue long term growth opportunities. Besideswe maintained a strong capital adequacy and lowered our debt-to-equity ratio. In summaryyour Company's agility preparedness and solid financial strength will help counter futureuncertainties.
The short-term scenario appears vulnerable considering the prevailing situation owingto the second wave. Furthermore ongoing concerns around a potential third COVID-19 waveits impact on business especially rural as well as on our society and the economy is yetto be calibrated. However with the country's rollout of vaccination and improving publicawareness I do hope there will be a rebound in H2FY22. Your Company's preparedness isaimed at agilely navigating the future trends of our businesses in order to propel growthover the medium to long term.
Digital & Data Analytics n these uncertain times Digital and Data AnalyticswillI continue to radically change the way business is conducted. Right from intuitivecustomer experience to robust risk management framework giving early warning signals anddriving business efficiencies and more will undergo transformation. We believe Digitaland Data Analytics being
Core' in our Right to Win' framework right from the start has positionedus well ahead of the curve in navigating the Covid related crisis. Your Company willcontinue to leverage Digital and Data Intelligence to drive Scale Cost Effectiveness andCustomer Experience across businesses.
Commitment to ESG
We believe sustainability is the nucleus of comprehensive growth and addressing itsissues is your Company's topmost priority. For us sustainability is a dynamic process ofmeeting the needs of our employees and our society with a compassionate mindset andresponsible approach. To this end your Company's Corporate Social ResponsibilityCommittee's remit extends to ESG initiatives as well.
Your Company's Covid Care support for employees was immediate. In addition to safetykits and vaccination cost reimbursement we were amongst the first to announce ex-gratiaand two-year salary payment as well as education and vocational training support forfamilies of deceased employees. Our long-standing commitment is to create value forsociety through our initiatives and investments. E: Our environment stewardship isreflected through our investments in renewables. We believe we are rightly positioned toempower India's journey to Net Zero. S: Our social endeavours are reflected throughour Rural Finance business. Our products and services facilitate financial inclusion forour customers through strong linkages in the Rural sector especially in unserved andunderserved communities. Besides our community initiatives are further highlightedthrough our flagship program Digital Sakhi' which promotes women empowerment andnurtures an ecosystem of digital financial transactions. G: On the Governancefront your Company has a diverse and independent board. It keeps a constant track of themanagement's operation of the business and effective handling of all the governanceissues. You Company already has separate offices of the Chairman and Managing Director& CEO since July 2016 and Chairman is an independent director on the Board since 2017.Besides we also have a strong gender diversity with two women Independent Directors onthe Board in the total strength of nine since June 2018.
As I close this letter I would like to sincerely thank all our shareholdersassociates partners and stakeholders for their undeterred support and continued faith inthe Company's capabilities. I would like to recognise the support and committedinvolvement of all my fellow Board colleagues. I also appreciate the outstandingcontribution of the leadership teams who have remained dedicated to implementing our valuecreation strategy.
Despite a trying year and challenges we see good prospects in the years to come. Restassured that we will invest all our efforts there and until then take care and staysafe!