Carrying forward a valuable legacy
FY21 has been a tumultuous year and will forever remain stamped in ourmemory. The year started with widespread disruptions caused by the COVID-19 pandemicwhich affected lives all over the world. The year also saw the untimely death of ourerstwhile Chairman and my elder brother Shri M.G. George Muthoot. His unexpected demiseon March 5 2021 is an irreparable loss for us for all those who knew him theorganisation he so lovingly built up and for the people of this great nation whom hedutifully served with his philanthropic work and through a business which servesunderserved segments of the population. He has left a void that will be difficult to fillyet we understand that we must carry on with his mission. I am beyond humbled to have beenelected the Chairman of this prestigious Group and will be fully committed to uphold thevalues and benchmarks set by my brother both in the professional and personal spheres.
The year was characterised by the outbreak of the novel coronavirusacross the globe which caused massive trade disruptions affecting economies across theworld including that of India.
The pandemic-induced lockdown across the country resulted inmanufacturing activities coming to a halt disruptions in the supply chain and labourshortage as migrant labour returned home. The Indian economy de-grew for the first twoquarters before finally re-emerging in the growth territory in the third quarter. Theproactive measures taken by the Government of India particularly its boost to the MicroSmall and Mediumsized Enterprises (MSME) sector resulted in the situation improvingtowards the second half of the year. However the resurgence of infections led todisruptions again towards the fag end of the year as localised lockdowns had to beimposed to control the spread of the virus.
The frequent lock downs/restrictions to control the pandemic hascreated stress in the business sector particularly among MSMEs given their limitedability to manage liquidity beyond their trade cycle.
The demand for gold loans both through banks and NBFCs saw a spike asa result. For one every household owns some jewellery and using it as collateral is apreferred option especially when unsecured loans whether personal or group loans isdifficult to come by.
The uncertainty of the pandemic increased the hesitance of variousfinancial institutions to extend unsecured credit. This led many to use gold loans to meetthe liquidity requirements. The rise in the price of gold also increased the attraction ofgold loans. Access to organised and trustworthy lenders such as Muthoot Finance made goldloans a credible option as loan of upto 75% of the value of the holding could be easilyavailed by the borrower who could either approach any of our 4600+ branches or accessour digital platform that granted instant loans within five minutes. This resulted in a26% growth in our gross loan assets.
Over the years we have consolidated our presence as the most respectedand largest gold loan company in the country in terms of the loan portfolio and otherfinancial parameters. During the year under review our consolidated gross loan assetsunder management increased by ~24% to reach 1582802 millions from 1468705 millions inFY20. This was driven by growth in gold loan assets under management by 27% at 1519266millions. Despite the gloomy economic scenario our consolidated
total income increased by ~19% to reach 1115664 millions in FY21. Ourconsolidated profit after tax increased by ~21 % to reach 138189 millions.
During the year we adopted a cautious approach on the non-gold loanbusiness run through our subsidiaries on account of the impact of the pandemic and theresultant lockdowns and hence witnessed a modest growth of those businesses. Loan assetsof subsidiaries which were 12% of the consolidated loan assets in FY20 declined to 10%in FY21.
Our housing finance subsidiary Muthoot Homefin (India) Limitedreported a decline in revenue from 12876 millions in FY20 to 12409 millions in FY21while profit after tax declined from 1318 millions in FY20 to 1126 millions in FY21. Ourmicrofinance arm Belstar Microfinance Limited performed reasonably well with loanassets increasing from 126310 millions in FY20 to 132999 millions in the year underreview registering an increase of ~25%. However profits decreased from 1990 millions inFY20 to 1467 millions in FY21.
Our Sri Lankan subsidiary Asset Asia Finance Plc performed reasonablywell in FY21 with loan assets of LKR 14002 millions compared to LKR 13839 millions inthe previous year while its PAT stood at LKR 45 millions. Another subsidiary MuthootMoney Limited which is primarily engaged in extending loans for vehicles registeredsubdued performance and the total loan portfolio stood at 13668 millions compared to15090 millions in the previous year. Despite the decline in the loan portfolio and thesectoral headwinds PAT increased to 137 millions compared to 127 millions in the previousyear.
Muthoot Insurance Brokers Private Limited registered a premiumcollection of 14055 millions in FY21 compared to 13232 millions in FY20 an increase of~25%. Total policies sold increased to ~3.2 millions in FY21 from ~2.8 millions in FY20registering a PAT of 1316 millions. Our diversified business model and an efficientproduct mix helped us deliver consistent returns to our shareholders with total dividendpayout increasing from 17249 millions in FY20 to 18024 millions in FY21 and an increaseof the dividend payout ratio from 19% in FY20 to 21% during the reporting year.
Among our most significant achievements during the year was our abilityto reap from our sustained investment in digital technology. We leveraged ourtechnological and digital capabilities to withstand the headwinds caused by anunprecedented scenario. Our innovations such as the Loan at Home service which enables acustomer to avail a loan entirely from home and Click to Call app which allows our staffto connect with a customer at the click of a button have immensely helped us.
We will continue to put emphasis on strengthening our IT governance andinformation security system across the organisation in line with the RBI Master Directionfor IT Framework in NBFCs.
Our dedicated team of software engineers have been engaged indesigning building and supporting all strategic software solutions to meet theever-changing needs of the business. As a result we have been able to introduce a slew ofmobile applications - from lead creation loan repayment loan top-up customeronboarding customer engagement collections and so on - that ensure the seamlessness ofour operations and increase customer satisfaction. We are using WhatsApp for customeralerts and systems integration for smoother KYC procedures. We are also bolstering oursurveillance and security system through the use of Artificial Intelligence which weintend to apply more extensively in the future.
Standing by our people
We realised at a very early stage that this pandemic was more of ahuman tragedy than an economic one. Ensuring the safety and well-being of our employeeshas been our biggest priority. We have provided additional paid COVID leaves along withmonetary compensation for the families of employees who passed away due to COVID-19. Wealso assigned Staff Welfare Officers for each region to assist our employees in receivingbenefits under statutory provisions such as ESI medical claim and other support schemes.Our efforts towards building a more people-centric organisation resulted in our receivingthe Great Place to Work certification.
Furthering mission welfare
Since inception we have worked diligently for the upliftment ofmarginalised people and facilitating their mainstreaming by strengthening their access toeducation healthcare sanitation and other facilities. Under that aegis of our CSR armthe Muthoot M George Foundation we continued our CSR activities in the areas ofeducation healthcare and environment. As a result of the pandemic we amplified ourefforts to ensure the safety and wellbeing of underprivileged people. Under the MuthootAashiyana Project for assistance of the flood affected in Kerala we constructed andhanded more than 100 houses during the year. We have dedicated the Cancer hospital inKozhencherry in the memory of Late Shri M.G. George Muthoot to reach quality healthcare tothe poor. We will carry on with his philanthropic mission in every way possible.
I would like to take this opportunity to thank all the employees of theCompany. It would not have been possible to overcome this incredibly challenging timewithout their support and dedication to work and their complete loyalty to theorganisation. This is the beginning of a new chapter for us but I want to assure everyoneassociated with the Company that we will uphold the values of my brother Shri M.G. GeorgeMuthoot and continue to focus on enhancing value for all our stakeholders.
|George Jacob Muthoot |
|Chairman & Whole Time Director |