Addressing Emerging Needs. Expanding the Portfolio
The increase in credit demand for MSMEs and a strong demand for housing loans lend an
optimistic outlook for our business and the industry. We are thrilled to make the most of
the underserved and emerging opportunities by diversifying our portfolio with the recently
launched gold loans. The car loan distribution shall contribute in a significant manner to
our income.
Dear Shareholders,
I hope this letter finds you and your loved ones safe and in good health. While we
spent the year under the constant threat of newer Covid strains, there was a remarkable
recovery of business as relaxation in lockdown restrictions revived economic activity
significantly. The Government of India estimated India's economy to have grown at 8.7%
during FY 2021-22. Going ahead, Government spending on infrastructure and social projects
is expected to keep the economy buoyant and aggregate demand scenario at healthy levels.
Financial Performance
The year was marked by a substantially strong balance sheet and earnings performance.
We built on the steadily improving post-lockdown momentum. Total disbursements increased
68%, surpassing the previous peak achieved in FY 2018-19 to touch H42,856 Million. AUM
grew by 37% and stood at RS.66,329 Million. The AUM growth rate substantially exceeded our
target 22-27% range for medium term. Our MSME and Affordable Housing portfolios remained
at the forefront as key growth drivers comprising 50% and 26% of AUM respectively. The
balance was contributed by Construction Finance and Indirect Lending. Our earnings
performance mirrored the strong balance sheet momentum. Operating profit grew by 28% to
Rs.3,783 Million on a net income of Rs.6,319 Million. PAT rose to Rs.2,050 Million, a 16%
increase over last year.
Robust Market Scenario for our Offerings
The growth outlook for our products remains strong. The MSME sector is bouncing back
and credit demand in the segment is expected to pick-up, given the still significant
addressable gap at a systemic level. Disbursals in this segment increased 59% to touch
Rs.11,308 Million. The co-lending tie-ups with SBI and Union Bank of India is a very
landmark arrangement that shall serve as an important driver for future growth in the
segment.
The fundamentals supporting a strong structural growth in housing loans-neuclarisation
of families, rising disposable incomes-remain robust as ever. Over the past few years,
affordable housing has received a strong impetus from the government and private real
estate developers in non-metro locations. Our wholly-owned housing finance subsidiary
CGHFL is well placed to benefit from these growth opportunities. CGHFL received an equity
infusion of Rs.1,500 Million from parent CGCL to support the strong growth anticipated
over medium term. Our loans are meant for the urban informal sector customers, who are
credit-worthy but unserved by the formal banking system. We expect Housing
Finance to be the fastest growing segment over medium term. During FY 2021-22, there
was a 111% increase in disbursals in Affordable Housing segment. Construction Finance has
been our oldest offering. The pace of disbursals increased in the year as construction
activity took off following the unlock. We focus on standalone residential projects in
Tier 1 and Tier 2 cities. Our average ticket size at sanction was RS.168 Million in FY
2021-22. The unique structuring of each transaction has consistently ensured negligible
NPAs thereby delivering high RoAs in this business.
New Businesses
We forayed into the car loan distribution segment in alliance with the top 5 banks
namely Bank of Baroda, HDFC Bank, Union Bank of India, Indian Overseas Bank and Yes Bank.
During FY 2021-22, the first full year of operations of this business, we achieved a loan
origination volume of Rs.17,020 Million and generated a net fee income of Rs.276 Million.
In a little over a year since its launch in Jan'21, we have expanded presence to 216
locations. This business does not require regulatory capital and will be an important fee
income contributing business in future. We have commenced our gold loan business with the
inauguration of 108 exclusive gold loan branches in August 2022. Our research shows that
there is considerable supply gap in the markets where we mainly operate, namely North and
West India. The gold loan business here still has a dominance of informal channels. This
allows for a strong growth opportunity to tap including cross-selling to existing or past
customers.
Digital to the core
Digitisation is already disrupting and transforming the way businesses work. As part of
our digitisation strategy, we undertook a number of initiatives during the year. Some of
the accomplished projects are moving our operations to cloud, building our own OCR KYC
engine and creation of a data warehouse that acts as a single source of key data across
functions. Coming months shall see a further ramp up in our digital capabilities as we
roll out an array of in-house digital solutions in the business, customer service, and
data analytics domain. We are extremely excited about the digital journeys we have
undertaken.
People-Centric at Heart
We conducted vaccination drives for our employees and their dependents at our Mumbai,
Pune, Delhi and Jaipur offices where 500+employees were jabbed. The cost for vaccination
was borne by the Company. We provided additional benefits such as supporting children's
education, additional pay-outs and alternative employment opportunities for the family
members of employees who unfortunately succumbed to Covid-19.
During the year, we were recognised as a 'Great Place to Work' by the Great Place to
Work Institute. We believe that high level of engagement ensures retention of talent,
customer loyalty and improvements in organisational performance. Our focus lies in
nurturing our talent and recognising their efforts and contributions towards meeting
organisational goals. We wish to be recognised as a trusted financial conglomerate in the
country. By 2026, we are targeting rapid scale-up of our business through deeper
penetration of existing products, besides adding diverse financial products to our
repertoire. Our well-paced talent recruitment is a part of the roadmap to achieve our
target.
I would like to express my sincere gratitude to fellow Board members who guided our
leadership team in spearheading business recovery and achieving business excellence. I
thank all our bankers, regulators and shareholders for reposing their continued faith in
us through these turbulent times. Your support makes us even stronger and more confident
to take on any challenge in the future. With your trust, Capri Global will continue to
empower people and communities with financial independence that generates economic
prosperity.
Thank you,
Rajesh Sharma
Managing Director.