India's economy continued to grow attractively amid a sluggish and fragile globaleconomic landscape in FY 2016-17. The GDP grew by 7.2% despite several national andinternational challenges. The government is implementing radical reforms to make India'seconomic growth more inclusive and sustainable. One such bold reform is the implementationof the goods and services tax (GST). Apart from unifying the segregated markets of IndiaGST is expected to improve the country's indirect tax system. Other government initiativesare also helping strengthen the economy in different ways.
India's financial sector is maturing to keep pace with the country's economic progress.It is a diverse industry that consists of various financial entities including non-bankingfinance companies (NBFCs). NBFCs like us play a vital role in expanding financialinclusion by complementing the banking sector - and provide credit solutions to theunbanked segments of society especially to the small enterprises. The NBFC sector hascome to be recognised as a significant component of the financial system and has shownconsistent growth - a compound annual growth rate (CAGR) of ~19% over the past few years.
CONNECTING 3 ASPIRATIONS & OPPORTUNITIES
As India's largest gold financing company we are increasingly creating opportunitiesfor millions of people to achieve their aspirations. Since inception we have helpedtransform India's gold banking system and today we are a trusted pan-India brand in thissegment.
However we believe that our journey has just commenced; and we are keen to grow as abrand that offers various products and services to a wide cross-section of customers.
At the same time we are catering to different financial requirements of our existingand potential customers in other segments of financial services business. Going forwardour objective will be to connect aspirations and opportunities to help shape a happier andprosperous India.
PERFORMANCE IN FY17
Despite challenges our overall results in FY17 were robust. Our revenues grew by 18%from Rs. 4875 Crores in FY16 to Rs. 5747 Crores in FY17. Our net profit increased by 46%to Rs. 1180 Crores in FY17 from Rs. 810 Crores in FY16. Besides our loans undermanagement increased from Rs. 24379 Crores in FY16 to Rs. 27278 Crores in FY17 recordingan increase of 12%. In addition our branch network increased to 4307 branches spreadacross India in 29 states and union territories.
Moreover our subsidiaries contributed to about 5% of our group assets.
In FY17 we increased our stake in Belstar Investment and Finance Private Limited(BIFPL) to 64.60% thereby making it a subsidiary. BIFPL grew its loan portfolio by 114%at Rs. 567 Crores. It achieved a profit after tax (PAT) of Rs. 10 Crores during the yearvis--vis PAT of Rs. 6 Crores in FY16. Its gross and net non-performing assets (NPAs)were 0.09% and 0.02% respectively as on 31st March 2017.
We acquired 100% stake in Muthoot Insurance Brokers Private Limited (MIBPL) an IRDAregistered direct broker in insurance products in FY17 making it as a wholly/ownedsubsidiary. It generated a first-year premium collection of Rs. 70 Crores in FY17 asagainst Rs. 48 Crores in FY16.
Further we increased our shareholding in the housing finance company - Muthoot Homefin(India) Ltd from 79% to 88.27%. During the year its loan portfolio increased by Rs. 409Crores to touch Rs. 441 Crores. Total revenue for FY17 stood at Rs. 24 Crores vis--visRs. 2 Crores in FY16. It achieved a PAT of Rs. 2.87 Crores during the FY17.
During FY17 we augmented our shareholding in the Sri Lankan subsidiary - Asia AssetFinance PLC. It improved its loan portfolio by 23% at Rs. 369 Crores in the year underreview. Total revenue for FY17 stood at Rs. 97 Crores compared to total revenue of Rs. 66Crores in FY16. It generated a PAT of Rs. 13 Crores in FY17.
These ventures have enabled us diversify our product offerings to cater to variouscustomer needs. These developments have enabled us to derive synergies beneficial for theCompany's long-term prospects.
AA/Stable' long-term credit rating from CRISIL and ICRA demonstrates ourconsistent performance over the years. Moreover under short-term debt rating we alreadyhave the highest rating of A1+ from CRISIL and ICRA which indicates lowest credit risk.These ratings will enable us to draw better rates from financial institutions reducingour cost of borrowing. This will eventually let us provide loans at more competitiverates.
At Muthoot our people are our biggest asset. In the year under review we concentratedon building a stronger team with enhanced capabilities through trainings. Our HR policiesare aimed at balancing business needs and the requirements and concerns of our people.Besides Muthoot Management Academy trains and develops our people cultivating leadershipqualities. We have a rewards and recognition programme that motivates our team to deliveroutcomes.
For us community care is an essential part of our sustainability strategy. As aresponsible organisation we conduct our business to enhance community lives around us. Webelieve in providing inclusive growth through community development initiatives that willlead to social prosperity. We deliver our community care with the help of our corporateresponsibility arm Muthoot M George Foundation'.
We believe the road ahead of us will require consistent innovation and technologyupgradation to stay ahead of the curve. Going forward we are devising strategies toenhance our products services and revenues while increasing contributions of oursubsidiaries to our group assets. Further we will continue to expand our operationsnationally and internationally empowering masses across the social spectrum and addingstakeholder value.
Before I conclude I want to thank all our stakeholders on behalf of the Muthoot teamfor supporting our journey and vision.
M. G. George Muthoot