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Muthoot Capital Services Ltd.

BSE: 511766 Sector: Financials
NSE: MUTHOOTCAP ISIN Code: INE296G01013
BSE 00:00 | 27 Jan 347.55 6.65
(1.95%)
OPEN

339.00

HIGH

350.90

LOW

337.40

NSE 00:00 | 27 Jan 346.60 5.80
(1.70%)
OPEN

340.80

HIGH

350.00

LOW

337.50

OPEN 339.00
PREVIOUS CLOSE 340.90
VOLUME 3604
52-Week high 495.50
52-Week low 327.00
P/E
Mkt Cap.(Rs cr) 572
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 339.00
CLOSE 340.90
VOLUME 3604
52-Week high 495.50
52-Week low 327.00
P/E
Mkt Cap.(Rs cr) 572
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Muthoot Capital Services Ltd. (MUTHOOTCAP) - Chairman Speech

Company chairman speech

Esteemed Shareholders

Numerous thoughts have been stirring in my mind as to be honest these are not easytimes to write to you. The past one year or so has been turbulent for everyone. I wishthat this message finds you and your family in good health. I wish all of you continuedgood health and recovery from the current tumultuous times. The world has been undergoinga rapid change over the past few years adding another dimension to this uncertainty andvolatility. The world's focus has suddenly shifted to a future that is unpredictableunknown and consuming in its entirety. Over the past year with the onset of the COVID-19pandemic the normal life has been seriously disrupted. Never before has the globaleconomy simultaneously seen demand and supply evaporate overnight. Millions have beenrendered jobless for no fault of their own. What makes the matters worse is that this is acombination of severely damaging health crisis and economic slowdown. The medical bills ofthe people have gone up while the restrictions imposed have slowed down the movement ofgoods and increased the cost of living. We can't overstate enough how much the result hasdevastated human lives directly and how its effects have been unkind to many who've had toface severe challenges posed by the lockdown. The lockdown has reinforced the value of theessentials of life–food clothing shelter and now personal transport and theinternet. Muthoot Capital Services is in the right business here and we have done businessof providing two-wheeler and used car loans in the right way to enable a common man tofulfill his dream of owning a personal transport at a reasonable cost. Together people inthe whole world have made efforts to overcome the pandemic and now gradually we areworking towards restoring normalcy in our daily lives. There are two choices in anychallenging situation; the first is the default option where we wait for things to getbetter and curse the circumstances that has caused us to bear these difficulties. Theother option is more difficult as it requires proactive effort and hard work withoutgetting bogged down by the circumstances. At MCSL we believe that much can be achievedwith strong intent well designed platforms good execution and a consultative approachto identify solutions.

As both change and crisis are similar to each other because they force us tointrospect they induce critical thinking on our part. This helps us in getting thepriorities right because we can look at our actions and options available dispassionatelyand objectively. These are no doubt difficult times but they also create opportunitiesand often they are the harbinger of new growth areas. In retrospect this leads to anemergence of a more sophisticated approach to deal with the challenges. The strength ofMCSL lies in making the most optimal use of tangible and intangible resources which makesus far better placed in navigating the serious macro headwinds. The COVID-19 Pandemic hasnot changed our value system or our business philosophy. But we see this as an opportunityfor us to review our methods and be more creative to cope with the situation whilemaintaining a relentless focus on efficiency and excellence. We are neither adventurousnor extravagant but at the same time we are also not going to allow interesting businessopportunities to pass by. In the last couple of years we overcame both natural andman-made issues with grit and patience to make the right decisions. This year we surviveda challenging year continued our business with utmost caution strived to achieve what isexpected from us by all of you in a turbulent year and above all come out unscathed.Whenever and wherever required we have been nimble and aggressive with our firepower andsharp acumen to make courageous and mature decisions. We will move forward with strongconviction when that choice is in the best interest of business and all the stakeholders.On this note it brings me great pleasure to present to you the Annual Report of MuthootCapital for FY 2020-21.

In FY 21 MCSL made disbursements of `750 34 lakhs and reported an overall loanportfolio of `2088 48 Lakhs. We earned `52 19 lakhs worth of Net Profit which isequivalent to a decline of 13% from FY 20. With the help of the various schemes floated bythe Central Government and Reserve Bank of India as well as with the trust that we as aCompany and the Muthoot Pappachan Group have built with the Lenders we collected totalfunds of `1165 36 lakhs in the form of NCDs Term Loans through Securitizations etc. Theconfidence and trust shown by our investors and lenders encourages us to work harder. Onthe asset quality MCSL ended FY 21 with a Gross NPA of `251 77 lakhs maintaining aprovision coverage of 54.0% on the entire on book AUM. In addition to the normal ECLprovisioning the Company has made additional provisions of `14 82 lakhs for COVID-19related slippages.

MCSL is actively increasing its footprints in the non-southern states. The businesswhich was showing a promising growth in volumes from the North and Eastern states till FY20 has reduced the volumes in the year FY 21 and we will now refocus on the same in FY 22.For the long-term growth of the Company geographical diversification will be the rightmove. Used Car financing will continue to be our focus in the current year with. With alarge customer base and robust distribution network MCSL used-car segment is alsoexpanding into several locations. Another important area I want to touch upon isDigitization. It is the need of the hour and also the way forward. When customers were notable to travel to our branches our mobile based application and NACH made theirtransactions and our collections easier. Collection through mobile applications and othermodes have increased rapidly. Rising collections through this route will also bring downcosts and delinquencies over a period of time. Our representatives can source businessand send the details of the customers with a mobile phone while customers can seek a loanthrough the Mpower App. We are working on digitally sourcing customers through a platformthat we would be setting up shortly. We are in interesting times and all this will augurwell for us. In the year that went by we did not seek moratorium from any Lender andcontinued paying even during the months when collection was low. Our Lenders rewarded usfor the same with interest rates which has helped us and will continue to do so. MCSL hasa comfortable liquidity position and we are confident that it will continue to improve.Plans are being made for scaling up the fixed deposits via massive campaigns as there arehuge amounts that can be borrowed through this route; furthermore it could significantlylower the overall cost of funds. As we enter this new fiscal year the economy havinglearnt it's lessons from the first wave of the pandemic has taken the 2nd wavein its stride and has bounced back to normal in quick speed with the exception of a fewweeks of destabilization. The next few months will be very crucial for us; maintaining therecovery trend will be the key. We are in touch with our loyal customers and finding waysto continue adding value to them by improving current product lines and launching newofferings according to market demand. The plans drawn for the year 2021-22 is assumingthat the pandemic will subside and growth will return. The current priority is to protectand consolidate the position of the Company during the first half of FY22. The maintenanceof delinquencies product portfolios and quality and a close watch on credit processeswill be the highest priority tasks in the first two quarters or till the situationimproves. Control over costs would also be a major activity in the current year. As socialdistancing norms continue and people avoid public transport we are expecting promisinggrowth in its two-wheeler and used car operations. We also intends to do a pilot of theConsumer Durables. All these will ensure that the Company will grow in a secured butrobust manner and add value for its stakeholders over the medium-to-long term. Beforeconcluding I would like to thank all the stakeholders for their continuous support whilealso assuring you that our quality of services and delivery will be as good as ever. Weare aware that FY21 was marred with numerous issues but the Company has delivered asatisfactory performance despite serious headwinds. I want to further reassure you on ourcommitment to adaptability in the changing times. I also pray to the Almighty that thesufferings of humanity get eliminated soon.

With regards
Thomas George Muthoot
Managing Director

Message from the

Chief Operating Officer

Dear Shareholders

I would like to open my address by wishing all of you good health and happiness. Theyear bygone has truly been an extraordinary one with an unprecedented health crisisleading to lockdowns loss of lives and income testing not only the physical grit ofpeople but mental grit as well. The pandemic has been global in its scale but personalin its impact. All of us has been affected in deeply individual ways.

Thanks to the extraordinary efforts of our healthcare professionals who have fought allodds to save thousands of lives. We are extremely proud of the resilience that wasdisplayed by them along with other Covid warriors.

Our Performance

Despite challenges that has come our way our proactive approach towards strengtheningthe organizational core together with our technological capabilities and timely executionhas helped us to face the challenges caused by the pandemic. As we grapple withpandemic-induced uncertainties it is imperative than we do not lose the human touch whilewe deal with our customers and employees. On the employee wellbeing front we providedCovid insurance to our employees connected with Covid affected employees regularly tokeep their morale up took measures to sanitise offices & HUBs on weekly basis andintroduced the M-Insure-doctor on-call facility for all employees. The Company has alsoworked out a reimbursement plan of both Vaccination doses for all employees. Given thechallenges posed our Company also recalibrated the skill sets of our employees to meetthe requirement of the new norm through special initiatives in Learning & Development.

The Company ensured that we continued to connect with our customers especially duringtheir tough times. Our digital capabilities ensured that the customers could reach out tous and seamlessly benefit from our loan services digitally even during the lockdown whenthe branches were closed or on restricted functioning. Our Business continuity processeswere tested to the core and we are happy to share that we were servicing Pan Indiaoperations without interruptions even during the recent lockdown. While the Covid pandemichad its own impact the Company had initiated special schemes targeting niche customersegments through the year. Over a period of time we believe that this initiative willhelp us in building a robust portfolio serving as a catalyst for our cross-sell programs.

We have posted disbursements of `750 34 lakhs in FY 21 leading to a revenue of `505 04lakhs generating a net income of `318 00 lakhs and a profit after tax of `52 19 lakhs. Wehave also considered impairment of `94 79 lakhs during the year taking our provisions to`179 35 lakhs building buffers for the any asset quality related issues in the future.You'll find a detailed financial performance attached in this report.

At this juncture let me also highlight commendable efforts and instances ofresilience and character displayed by Muthootians and their families in steering theCompany through these difficult times.

Awards and Accolades

As a testimony to the Company's digital servicing capabilities MCSL was awarded byASSOCHAM in Digital Services Category at a National Level event. The Award identifiescompanies with best digital practices and capabilities in terms of loan sourcing loanmanagement and digital processes.

Outlook

In the post-Pandemic world we have assuredly transformed ourselves by leveraging onthe strengths of our brand enhancing the reach and service for our customers andcontinuously re-engineering our processes to align with the new normal.

With a strong presence across 240+ districts in 20 states we have been able to servethe financial needs of our customers even in the remotest parts of the country. Goingforward we will continue to expand our horizons and will be augmenting our focus towardsgrowth locations while consolidating our counter share in existing locations. Buildingthe business through Muthoot FinCorp channel has always been our priority and to furtherstrengthen our resolve we have launched exciting engagement programs including awell-defined customer connect program for Muthoot FinCorp customers. It is also noteworthythat we will be migrating to a robust loan management system and upgrading our ITinfrastructure this year as part of the technological transformation that MuthootPappachan Group has undertaken. Even as we grapple with the second wave of Covid we areoptimistic that an aggressive vaccination drive and reviving economy should help theindustry navigate successfully through this financial year. The building blocks are inplace and we will endeavor to leverage on it to further enhance our operationalperformance and build a resilient portfolio.

The past year has shown us that even in a time of adversity we stand united and morecommitted than ever to our vision to be the most trusted financial service provider atthe doorstep of common man.

Let me reiterate my sincere gratitude to all my colleagues for their relentlessefforts and thank all our stakeholders for their continued partnership with MCSL in ourlong-term growth story.

With regards
Madhu Alexiouse
Chief Operating Officer

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