Always more than just a financial institution
Dear Shareholders,
I hope that this finds you well and your loved ones are safe and in
good health.
I want to begin by extending my heartfelt gratitude towards the medical
fraternity and governments across nations for their contribution and resilience during the
Covid-19 pandemic. A multitude of initiatives were undertaken by the governments towards
the disaster management and addressing the economic disruptions. The timely rollout of
vaccinations, stringent measures to curb the spread of the virus and effective medical
recourses offered to patients have helped the world in gradually coming close to normalcy.
The last two years were probably the most challenging in history as the
eruption of the pandemic brought about a set of completely unprecedented challenges. It is
fair to say that none of the economies across the globe were immune to the disruptions it
brought forth, including India.
However, I am pleased to say that I am extremely optimistic about the
fact that the worst is behind us now. India demonstrated remarkable resilience, validated
by the fact that it grew by 8.9% during CY2021, the fastest among major global economies.
This was only made possible due to the wide- scale vaccination campaign across the
country, easing of Covid restrictions in a phased manner, and proactive policy response
from the Government of Indian and Reserve Bank of India (RBI).
Attractive opportunity at hand
We are of the belief that we are truly at an inflection point now. Gold
demand had been growing consistently over the last decade till the outbreak of the
pandemic which severely muted consumer sentiments. However, we have been noticing a
gradual recovery in gold demand across the world, amidst the soaring inflation rates
across major economies. A challenging period like this poses the question, 'What is the
safest investment option?'
The answer is simple: Gold.
With uncertainties looming large, especially the ongoing geo-political
and impending economic crisis, investors are viewing the purchase of gold as a safe-haven
asset.
In India, gold has always held a central role in our culture and is
often considered a symbol for wealth and status, notably more among the rural population
and people belonging to the lower-income groups in the cities. The effects of the
pandemic-induced challenges trickled down the most to the lower-income households, MSMEs
and SMEs. These individuals ended up resorting to gold loan to mitigate their financial
exigencies. So even during this challenging period, we witnessed a considerable demand.
We do not expect the RBI policy benchmark rate hikes to dampen the
overall demand scenario and feel that this growth will be sustained over the foreseeable
future as gold loans are an easily accessible medium of relief during this period of
uncertainty.
Our goal moving forward would be to ensure that we are constantly
innovating to be attractively placed for capitalising on these opportunities.
Our performance
Despite the emergence of unprecedented headwinds, we continued on our
trajectory of delivering consistent performance. During the year under review, our gross
loan assets under management increased to ' 580,532 million, compared to ' 526,223 million
in the previous year, recording an increase of 10%. We have noticed a significant increase
in our average ticket size from ' 61,743 to ' 68,739, validating the growth momentum in
the economy. Our gold loan portfolio increased by ~11% and reached ' 575,313 million
during the year under review.
Our total revenue during the year increased by ~5% to reach ' 110,984
million compared to ' 105,744 million in the previous year, whereas our profit after tax
reached ' 39,543 million, compared to ' 37,222 million in the previous year, an increase
of ~6%.
We feel these numbers demonstrate the resilience imbibed within the
organisation, considering the culmination of headwinds that we had to endure during the
year.
We have been growing consistently over the years as a company and I am
pleased to say, as a result of our concerted efforts over the years, we have been able to
reach a net worth of ' 183,445 million and achieve an Earnings per Share of ' 98.55 as on
31st March, 2022.
Looking back at the performance of our subsidiaries
Muthoot Homefin (India) Limited, our housing finance subsidiary,
recorded revenues of ' 2,137 million compared to ' 2,446 million in the previous year,
while profit after tax declined from ' 126 million in FY21 to ' 84 million in the year
under review. We have been conservative in the housing loan business amidst the pandemic
headwinds and with the uptick in the economy, our housing loan disbursements picked up in
Q4 FY22.
Belstar Microfinance Limited, our microfinance arm, performed
significantly well as it recorded revenues of ' 7,824 million, compared to ' 5,532 million
in the previous year, an increase of ~41%, while recording a profit after tax of ' 451
million.
Asset Asia Finance Plc, our Sri Lankan subsidiary, recorded revenues of
LKR 3,181 million, compared to LKR 2,952 million in the previous year, an increase of ~8%.
Its profit after tax stood at LKR 118 million, compared to LKR 45 million, a significant
increase of 162%.
Muthoot Money Limited, which is primarily engaged in extending loans
for vehicles, registered revenue of ' 456 million compared to ' 697 million in the
previous year. We incurred a loss of ' 66 million during the year compared to a profit of
' 37 million in the previous year. Due to the pandemic and consequent lockdowns, we have
been selective in vehicle loan business and reported improved loan disbursements in Q4
FY22.
Muthoot Insurance Brokers Private Limited, registered a premium
collection of ' 4,793 million, compared to ' 4,055 million in the previous year an
increase of ~18%. Similarly, our number of policies issued also increased from 3.2 million
to 3.6 million.
Enhancing value for our shareholders
Our responsibility towards our valued shareholders, who have placed
their trust in the Company, has always been of paramount importance to your Board of
Directors. Your support and encouragement are critical to your company's success. The
Board and the executive leadership recognise their responsibility towards delivering value
for your investment in us. I feel privileged to report that your Board has paid a 200%
dividend on the face value of the shares, involving a payout of ' 8,027 million.
Technology
This is a new India and we are fully aware that the modern Indian is
impatient, and needs access to solutions at their fingertips. Aware of this reality, we
are moving forward with a digital blueprint. Our goal is to blur the line between physical
and digital through the integration of technology to ensure that we are able to create a
contactless and seamless ecosystem.
In line with this, we launched Loan@ Home in 2020 and witnessed
increased business volumes in the year under review. For years, borrowers would have to
physically come to our branches, deposit their gold and get their loans. Our Loan@Home
facility completely changes that convention. Under this offering, customers can avail
loans from the comfort of their homes. This has been made possible due to the embracement
of digital architecture with an open mindset.
At Muthoot, we are changing the way we have been functioning internally
and replacing the manual with digital, and integrating automation across all our business
verticals.
This digital-first approach will not only help us improve efficiencies,
but completely transform the customer experience. We have introduced a series of mobile
applications - from lead creation, loan repayment to, loan top-up, customer onboarding,
customer engagement, collections and so on. In addition to this, we are using WhatsApp for
customer alerts and systems integration for smoother KYC procedures. We are also
leveraging the power of 'artificial intelligence’ to strengthen our surveillance and
security system.
We will also continue to further strengthen our IT governance and
information security system across the organisation in line with the RBI Master Direction
for IT Framework in NBFCs. We possess a dedicated team of software engineers, who have
been engaged in designing, building and supporting all strategic software solutions to
meet the ever-changing needs of the business. We truly believe that this digital mindset
of ours will extend to all our concerned stakeholders and enhance value for them.
Being a responsible organisation
I can assure that anyone who has been associated with the organisation
can vouch that for us, generating profits is not our sole motive, but doing it in a way
that brings about a transformation in people's lives. For years, we have been working
extensively towards the upliftment of the marginalised communities in our society. We
placed great focus in the areas of education, healthcare, societal development and women
empowerment, among others. During the year as well, we continued to identify areas where
we could intervene and bring about a change for the better. As a result of our concerted
focus on community upliftment, we were awarded the 'Golden Peacock’ award by the
Institute of Director's for the best CSR practices in the category on financial services
for FY21-22.
Looking forward to what lays ahead
I want to thank each and every stakeholder for their continued support
for all these years. We would not have reached where we are today if not for the
undeterred grit and determination demonstrated by every single employee associated with
the Company. I want to invite all the shareholders on this exciting journey of Muthoot,
where we intend to transform the lives of millions across the country.
George Jacob Muthoot
Chairman & Whole Time Director