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Dear Fellow Shareholder,
This is my first letter to you in an annual report of your Company. I am honoured to write this letter because I am truly proud of how well Bajaj Finance Limited has fared for two consecutive years despite difficult economic circumstances.
India's GDP growth not only remained weak, but also continued to decline throughout FY2013: 5.5% in Q1, 5.3% in Q2, followed by 4.5% in Q3, the last being the lowest quarterly growth in a decade. For FY2013, growth is expected to be around 5%, which is well below the 6.2% achieved in FY2012. As a matter of fact, the country's growth rate has declined by 3.3% over the last eight quarters.
Today, we are looking at low GDP growth; lack of sufficient investments to significantly increase the nation's productive capital stock; a high current account deficit, which is expected to be around 5% for FY2013 and a scenario where wholesale price inflation (WPI) and consumer price inflation (CPI) may remain uncomfortably high which could preclude further rate cuts by the RBI.
In such a milieu, I am delighted to share with you how well Bajaj Finance has done. Here are some key facts, the details of which you may read in the chapter on Management Discussion and Analysis.
i. Your Company's total income increased by 43% to Rs. 3,111 crore in FY2013
ii. Profit before tax grew by 45% to Rs. 872 crore
iii. Profit after tax rose by 46% to Rs. 591 crore iv. Loan deployment was up by 23% to Rs. 19,367 crore
v. Bajaj Finance ended the year with net non–performing assets (net NPA) accounting for only 0.19% of its total loan book, which is amongst the lowest in the industry
vi. Capital adequacy as on 31 March 2013 stood at 21.95%, which is well above the RBI norms
Being aggressive in business yet conservative in financing, your Company opted to raise further capital in FY2013 through a rights issue in February 2013 which offered existing shareholders three shares for every nineteen shares held. Thanks to your faith in the Company and its business model, the issue was subscribed 1.16 times and enabled Bajaj Finance to raise Rs. 744 crore. This will create adequate headroom to leverage further growth in the next couple of years.
I am particularly proud of how well your Company has done in its consumer finance business and in the funding of small and medium entrepreneurs. Let me share some facts with you.
i. Bajaj Finance continued to remain the largest two–wheeler lender in the country
ii. It maintained its position as the largest consumer durables lender in India and helped finance 13% of all consumer electronics sold in the year. In doing so, it acquired over 1.9 million new customers and operated across 4,500 points of sale in the country
iii. Your Company financed one out of every four LCD and plasma televisions sold in India
iv. Bajaj Finance's 'personal loan cross–sell' where it focuses on customers with a good repayment history of their two–wheeler and/or consumer durables loans to cross–sell a personal loan grew by 47% to Rs. 862 crore. In addition, the business of offering personal loans to relatively well off salaried employees working for leading companies stood at Rs. 559 crore in FY2013
v. Loans against collateral of property grew by 34% to Rs. 3,024 crore
vi. Home loans grew by 94% to Rs. 1,410 crore
vii. Working capital loans to relatively affluent small business customers, including doctors and other professionals, increased by 38% to Rs. 1,237 crore in FY2013
viii. Financing of auto component manufacturers was Rs. 2,483 crore in FY2013
To reiterate, this has been a stellar year for your Company–even more creditable because it comes on the back of excellent performance of the previous year and has occurred in a very difficult economic environment.
On your behalf, allow me to congratulate Rajeev Jain, your Company's Chief Executive Officer, Nanoo Pamnani, Vice Chairman, Sanjiv Bajaj, Director of the Company and the rest of the management team for performing so well while maintaining high standards of financial care and probity.
Having said so, let me state that FY2014 may continue to be a difficult year for India. Therefore, it is imperative for your Company's management to remain even more focused on its businesses to deliver the excellent results that we are now getting accustomed to. I'm sure that the team will yet again rise to the challenge.
Thank you for your support. May it continue as Bajaj Finance scales greater heights.