Cholamandalam Financial Holdings Limited (‘CFHL')
incorporated in 1949, is a part of the Murugappa Group, one of the most diversified
business conglomerates of India. CFHL is a Non-Deposit taking Systemically Important Core
Investment Company registered with RBI and falls under the category of Middle Layer NBFC
under the Scale Based Regulations of RBI. The Company holds substantial investments in
group companies and offers a diverse range of financial products and risk management
services to individual and corporate customers through its group companies.
Message from the Chairman
Dear Shareholders,
Your Company celebrates its 75th anniversary this September.
Over the decades, it has evolved from a manufacturing entity to an investment company,
marking a significant transformation. Established in 1949 as ‘TI Cycles of India
Limited', in collaboration with Tube Investments Limited, UK, the then world's
largest manufacturer of bicycles, the journey has been characterised by a series of
strategic acquisitions and mergers. These moves expanded the Company's footprint in
diverse segments including bicycles, engineering and metal formed products. Following the
merger of ‘Tube Products of India Limited' with the Company, it was renamed as
‘Tube Investments of India Limited' in 1959.
After a successful foray in manufacturing business, your company
ventured into financial services by acquiring major stake of Cholamandalam Investment and
Finance Company in 2001 and in the same year, established its insurance business. In the
year 2003, it entered joint venture with Mitsui Sumitomo Insurance, Japan holding stake in
Cholamandalam MS General Insurance and Cholamandalam MS Risk Services.
FY 2017 marked a major structural shift for the Company which led to
the demerger of manufacturing business and retention of financial services business by the
Company. This strategic move brought a sharper business focus and helped realize maximum
potential, thereby unlocking value for the stakeholders. As part of the demerger scheme,
your Company was rechristened as ‘TI Financial Holdings Limited' and then in
2019 renamed as ‘Cholamandalam Financial Holdings Limited' to better reflect its
business activities.
This milestone is not just a testament to our endurance but also a
reflection of values and commitment that have guided us since inception. As we reflect on
this journey, we honour the legacy of our founders and all individuals who have
contributed to our growth.
On this note, it gives me immense pleasure to share the performance
highlights of your Company and its group entities in FY 24.
India continued to be one of the few major economies demonstrating a
strong growth of 8% in FY 24 amid challenging global conditions characterised by
inflationary pressures, supply chain disruptions, and heightened geopolitical tensions.
Against this economic landscape, Cholamandalam Financial Holdings and
its group entities delivered well in FY 24. Your Company ended the year with a
consolidated income of Rs.28,087 Crore, a growth of 42% compared to the previous year and
a consolidated profits before tax of Rs.5,212 Crore, 37% growth over the previous year. We
have repaid all outstanding borrowings this year and the Company is now debt free. Strong
execution by our leadership teams across key businesses have helped to successfully scale
up the Company's performance with improved profitability. I take this opportunity to
acknowledge their efforts and commitment. Your Company has been consistent in sharing the
benefits of improved performance with the shareholders. I am glad to inform you that the
Board of Directors have proposed a dividend of 55% for FY 24.
The Indian financial services industry has displayed remarkable
resilience over the last decade. In a dynamic market scenario, both NBFC and insurance
sectors have undergone substantial transformation largely driven by enhanced financial
inclusion, conducive policy environment and digital adoption. Your Company's NBFC
subsidiary, Cholamandalam Investment and Finance Company (CIFCL) delivered yet again a
stellar performance in terms disbursals, collections and profitability. CIFCL continually
monitored risks and maintained a healthy ALM with its Total Assets under Management (AUM)
crossing the Rs.1.5 Lakh Crore mark in FY 24. Leveraging the industry growth, the company
improved market share across its product segments. To augment capital adequacy for its
growing balance sheet and enhanced regulatory requirements, CIFCL completed a composite
QIP issue of equity shares and CCDs (Compulsory Convertible Debentures) aggregating to
Rs.4,000 Crore during the year.
On the insurance front, the non-life insurance industry offers
considerable scope for insurance penetration given the fact that insurance penetration
still languishes at about 1%. The insurance regulator has been steadfast in making the
clarion call for insurance penetration and introducing reforms aimed at providing freedom
to insurers in terms of products, shift to principle-based supervision, emphasis on policy
holders' servicing and protection etc. CFHL's insurance subsidiary,
Cholamandalam MS General Insurance has grown well in FY 24 by continuing to add to its
business partners, re-entering the crop space, enhancing its retail customer base and
diversifying its product mix. The company has grown its top-line, contained its
underwriting losses and with higher investment income, enhanced its return to
shareholders.
Cholamandalam MS Risk Services (Chola Risk), a JV company offering
safety and environment engineering solutions, strengthened its order book by bagging new
contracts aggregating to Rs.100 Crore during the year. The company expanded its service
offering by launching strategic projects in hydrogen safety and other sustainability
services during the year. The company looks forward to diversifying its services into
emerging areas viz., Ethanol, Biological Safety, Biodiversity, and Climate & Water
Risk Assessments.
Aligned with technological and digital advancements, the businesses
continued to innovate with new digital capabilities for enhancement of product offerings
and operational efficiencies. Your Company stays committed to making a positive impact on
society. Through the subsidiaries, we have initiated CSR activities in the areas of
health, education, sports, environmental sustainability and community development during
the year. We continued to incorporate environmental, social and governance principles in
our operations. Our efforts towards community development and employee well-being
reflect our commitment in creating sustainable long-term value for all stakeholders.
As the global economy recovers steadily, we look forward for an optimal
environment to continue in the current year too supported by strong Government
fundamentals and private demand. We remain committed to optimise resources, accomplish
business specific priorities and deliver unparalleled customer satisfaction.
The Board plays a vital role in shaping and embedding the right
corporate culture to progress our purpose. My colleagues on the Board have always been a
great source of encouragement and support. I would like to thank them for their consistent
counsel and guidance. I also thank and appreciate our Auditors, M/s Sharp & Tannan
Associates for their oversight in upholding the standards of governance in the Company.
Before I conclude, I take this opportunity to extend my gratitude to
all our stakeholders - regulators, business partners, shareholders and valuable customers
for their unwavering support and patronage. My appreciation and best wishes to all our
employees for their dedication and valuable contribution in driving the Company to reach
greater heights.
| Best Regards, |
| M M Murugappan |