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L&T Finance Holdings Ltd.

BSE: 533519 Sector: Financials
NSE: L&TFH ISIN Code: INE498L01015
BSE 00:00 | 02 Dec 91.30 3.00
(3.40%)
OPEN

88.30

HIGH

92.25

LOW

88.15

NSE 00:00 | 02 Dec 91.35 2.95
(3.34%)
OPEN

88.40

HIGH

92.25

LOW

88.15

OPEN 88.30
PREVIOUS CLOSE 88.30
VOLUME 1868923
52-Week high 92.25
52-Week low 58.50
P/E 69.17
Mkt Cap.(Rs cr) 22,625
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 88.30
CLOSE 88.30
VOLUME 1868923
52-Week high 92.25
52-Week low 58.50
P/E 69.17
Mkt Cap.(Rs cr) 22,625
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

L&T Finance Holdings Ltd. (L&TFH) - Chairman Speech

Company chairman speech

We look forward to the future with renewed optimism as LTFH is focused on measurableoutcomes. Our Lakshya 2026 plan offers a clear roadmap for the future and we believe thatwe have a bright opportunity ahead of us. Our targets are set as we get ready to exploreand create more milestones ahead.

Dear Shareholders

As I begin to write this message my first as the Chairperson of the Board I look backin appreciation of Mr. Shailesh Haribhakti's earnest leadership in establishing LTFH as asustainable and well-capitalised financial institution. With over five decades ofexperience across various sectors Mr. Haribhakti has been associated with LTFH since FY11and has led the Company despite turmoil in the financial industry. His stewardship of theBoard and contribution in the areas of digital data analytics ESG / Sustainabilityretailisation and risk management has added great value and enabled the Company to have acompetitive edge in the future. He also handled the Company through the period of Covidwhen many of the staff were finding it difficult to meet clients or go to places of work.This year we witnessed the world emerge from the pandemic's struggles changing from‘the New Normal' to ‘the Now Normal' and getting into a more settled outlook.Notwithstanding the exceptional circumstances your Company progressed steadily andaccomplished milestones be it in businesses processes or the safety of our employees.We improved financial performance metrics strengthened businesses and revisitedstrategic priorities for the next phase of growth by building on our shared strengths.This report presents your Company's accomplishments and along with the management team weare resolved to build a healthier and stronger Company.

The extent of recovery observed in urban centres was different from rural geographieswhere cashflows in addition to Covid impact were also burdened by the skewness ofmonsoon and elevated costs of cultivation. This resulted in demand challenges in ruralIndia which was indicated by YoY decline in retail sale of Two-Wheelers and tractors inthe country.

Macro-economic Scenario

If FY21 was all about retooling mindsets strategies and businesses FY22 was aboutrecovery. Post-easing of Covid limitations economic activities picked up across sectors.The Government's stimulus measures the RBI's fiscal policies and a broader immunisationtogether handheld the economy towards stability. Forecasts of normal monsoons withequitable distribution is likely to aid strengthening of rural economy in this year.According to the IMF India will remain the world's fastest-growing major economy from2021 to 2024. The economy is anticipated to witness a GDP growth of 7.2% in FY23. Withincreased Government spending post Union Budget 2022 the rise in private consumption andinvestment is further expected to bolster economic activity and boost demand.

Digital-led

Transformation Journey

We introduced the LTFS 2.0 strategy five years ago to transform your Company throughthe strategy of ‘Right Business' ‘Right Structure' and ‘Right People.' Iam pleased to report our significant progress in the businesses we chose to continue andwhere we have built a strong ‘Right to Win'. Our ability to respond to marketexpectations has grown manifold using Digital and Data Analytics a journey your Companystarted way back in 2016 helping us deliver among the fastest Turn Around Times (TATs) inthe market today. Whether for customer profile identification credit evaluationcollection efficiency & analysis and customer retention our technical acumen indeploying analytics has helped us gain a market-leading position across products.

Geared up for Lakshya 2026

It is at this time that our parent company L&T unveiled the way forward strategyplan ‘Lakshya 2026'. Lakshya which means ‘Target' lays down a roadmap forgrowth and value addition to achieve the overarching goal of Return on Asset (RoA) /Return on Equity (RoE). Your Company intends to align with the group's ‘Lakshya'through its ‘Lakshya' of creating a top-class digitally enabled retail financecompany. LTFH intends to achieve this by focussing on

‘AIM. INNOVATE. CREATE.' The goal is to move the emphasis from product-focusto customer-focus and establish a robust retail portfolio with excellent quality assetsas well as strong NS3 thus creating a Fintech@scale.

This would be built by crafting a sustained and profitable growth engine keepingcustomers at the core. A sustainable and profitable growth engine will be developed aroundfive key vectors as follows:

1. Continued product excellence;

2. Cross-sell and Up-sell to existing good customers;

3. Geo-expansion through pan India footprint;

4. App & Digital-based channel expansion; and

5. Launch of new products. As we move forward to create a Fintech@scale newcapabilities and processes will have to be developed on the ability to analyse customercredit needs and deepen our abilities around underwriting and collection. Secondly newautonomous modes of digital channel expansion have to be created in addition to existingchannels to encourage customer self-service. This will have to be established on the backof leveraging next-gen risk management capabilities aimed at new-age portfolio managementwhile building an ESG-conscious organisation. With ambitious targets in place the digitalcapabilities will surely drive scale build efficiencies and enable us to cater to ageo-agnostic customer across the nation. Thus leveraging every stage of the customerlifecycle will help your Company stay ahead of the curve. We are embracing and in manycases leading the application of technological innovations.

Year Under Review

In FY22 we once again exhibited our solid execution ability by delivering focusedoutcomes across our business. Sharing with you some of the key takeaways:

Business performance: Our concerted efforts to increase retailisation to 51% of thetotal asset book a stated business objective alongside limiting the wholesale bookgrowth delivered encouraging results. We recorded the best-ever retail disbursementsduring the year while reducing our wholesale book's proportion in a calibrated manner.With the targets set in Lakshya Strategy your Company will continue to delve deeper into‘Retailisation'.

Strong disbursements:

We continued progressing in Micro Loans while clocking the highest-ever disbursementas well as maintaining market share in Two-Wheeler and Farm Equipment Finance segmentsdespite cyclical hurdles. We improved disbursements by course-correcting and balancingequations in our Home Loans business. Your Company benefitted from a two-pronged approachin Consumer Loans – cross-selling and digital native – automating the entireclient journey process from identification and application to payout without any manualintervention. While continuing its disbursements trajectory your Company ensured thatbusiness remained well within the risk guardrails and the portfolio quality wasmaintained.

Maintaining and growing NIMs: Increasing Retailisation has helped increase NIMs andFees through several triggers. Firstly strong OEM and dealership relationships added toincreasing and maintaining market share. Secondly enhancing diversification ofborrowings and reducing interest costs helped improve the NIMs further. Going forward– this makes us confident of maintaining our NIMs.

Strengthening balance sheet: Our robust Early Warning Signal mechanism earlybucket collections and resolution efforts have worked well resulting in moderation ofStage 3 assets. We have also included adequate non-GS3 measures to deal with unanticipatedexternal events. I am pleased to report that your Company is well capitalised with astrong capital adequacy ratio of 22.88%.

We have also established a strong liability franchise and our AAA credit ratings attestto the high degree of safety in the business model of our Company.

ESG-linked loan: We are one of the first NBFCs to raise low-cost credit through aSustainability Linked Rupee Loan. This loan's interest rates and facilities are directlylinked to our progress in meeting the ESG KPIs. The innovative approach of linking ESGwith the funding helps both the planet as well as growing our balance sheet. Goingforward sustainability focused financing will play an important role among borrowers andlenders assisting the country's long-term and sustainable progress.

Our Progress on ESG

We have been gradually progressing on our ESG path for the past four years thuscreating a solid foundation of protection progression and growth for the entireecosystem leading to long-term benefits for all stakeholders. Your Company has achievedwater neutrality in FY22 and targets carbon neutrality by FY35. To this end we haveestablished ESG-focused Board Committee implemented materiality assessments acrossstakeholders connected BRSR to our sustainability reporting and provided concrete pathsfor meeting annual objectives. Our commitment to social initiatives is reflected in ourstrong rural links in unserved and underserved communities as our products and serviceshelp customers attain financial independence and create sustainable livelihoods. Ourflagship programme ‘Digital Sakhi' promotes rural women empowerment and fostersdigital financial transactions in unserved and underserved communities.

Your Company's diverse Board oversees business operations with emphasis on followinghighest standard of governance.

Closing Note

We look forward to the future with renewed optimism as LTFH is focused on measurableoutcomes. Our Lakshya 2026 plan offers a clear roadmap for the future and we believe thatwe have a bright opportunity ahead of us. Our targets are set as we get ready to exploreand create more milestones ahead.

We thank our stakeholders for their continued support. We owe a debt of gratitude toall the employees for helping build your Company and its businesses. We could not havedone this without our shareholders and the communities we operate within. I envisiongreater achievements for your Company in the years to come and look forward to asuccessful year ahead.

S.N.Subrahmanyan

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