Dear Shareholders,
The Indian economy continues to demonstrate resilience against global
headwinds, recording stronger-than-expected growth in 2023-24 with a positive outlook
ahead. The Government's emphasis on capital expenditure is beginning to stimulate private
investment, setting the stage for the next phase of growth.
I am pleased to inform you that our company has achieved
record-breaking disbursals, collections, and profitability.
Alongside the steady growth of our established businesses, our new
ventures are making substantial contributions to both volume and value. Chola continues to
make significant progress towards our long-term vision of becoming a financial powerhouse.
In FY 24, Chola has implemented numerous initiatives, such as enabling
direct-to-customer channels, consolidating various mobile phone apps into a comprehensive
Chola One app to drive growth and deliver industry leading customer experience. A few key
achievements has been detailed below:
Vehicle Finance business increased its focus on digitization across
the value chain - generating digital leads, facilitating seamless disbursements, and
enabling collections through tele-calling and digital channels.
Gaadi Bazaar: Our online auto ecosystem has seen strong traction in
the used vehicle market, offering generative AI-based search engines and innovative
features such as WhatsApp bots. The dealer portal allows dealers to list vehicles,
generate leads, and apply for loans, promoting customer excellence and value service.
Loan Against Property has become an industry leader among NBFCs,
serving over 65,000 satisfied customers with customized schemes and a simple, digital loan
processing interface.
Home Loans has significantly expanded its reach across India,
serving a broad customer base of over 1,10,000 active accounts.
The business is proud to drive India's financial inclusion with
over 24% of its customers being first-time borrowers.
Consumer and Small Enterprise Loans with a customer base ofover 1.2
million, has become a significant for Chola.
Chola Securities has revamped its strategy and is targeting
specific customer segments such as private clients, retail broking, institutional broking,
and partner alliances. It has launched a customer-friendly app with over 90 features to
facilitate seamless and secure trading.
Chola launched a Belief Campaign that is focused on creating a
better life for our workforce, and promoting community service, environmental protection,
and global well-being. The "Believe" statement unites Chola's employees, shaping
our future and making a profound impact on everyone's lives.
Industry Review
Even with elevated inflation, tight monetary and financial conditions,
and escalating geopolitical tensions, the Indian economy exhibited strength and stability
with robust macroeconomic fundamentals and financial stability. Your company has grown
stronger in this background.
Vehicle Finance
In FY 24, the Indian Auto sector achieved a notable 12% YoY growth,
with the Light Commercial vehicle, Passenger vehicle (Car & MUV) and Two-Wheeler
setting all time high sales over any previous year.
Two-Wheelers: This segment grew by 13%, driven by enhanced options,
positive market sentiment, the burgeoning electric vehicle market, and strategic premium
segment launches.
Three-Wheelers: Achieving about 42% year on year growth, this
segment was boosted by cost-effective CNG options, new EV models, expanding urban
landscapes, and strong demand for last-mile mobility.
Passenger Vehicles (Car & MUV): The Car & MUV segment grew
by 8% due to improved vehicle availability, replacement demand and launch of new models
contributing to higher sales in the MUV/SUV segments.
Commercial Vehicles (CV): The CV segment had a flat growth,
supported by improved vehicle supply and significant purchases from Government tenders and
bulk deals.
Tractors: Tractor segment had a degrowth of 7.5% over last year due
to headwinds from a poor monsoon and a high base effect of previous year, the
Government support continues in this segment, and FY 25 is expected to see shoots of
growth with good rains.
Loan Against Property
Loan Against Property (LAP) industry size is approx.
Rs. 10 lakh crore, with approximately 15% growth in FY 24. The emerging
small-ticket LAP segment, currently less than 10% penetrated, is expected to grow rapidly
due to robust economic conditions and business expansion.
Housing Loans>
The Indian Housing Finance market, estimated at Rs. 26 lakh crore,
approximately grew by 13-14% in FY 24.
Affordable housing finance companies (AHFCs) grew by around 29% during
the same period driven by Government initiatives and their ability to cater to underserved
markets. NBFCs are expected to grow by 15-16% YoY in FY 25 by leveraging their diversified
product offerings.
Other Businesses
Personal and Professional Loans is one of the fastest-growing segments
post-pandemic. Despite its rapid expansion, many individuals in India still lack access to
formal credit sources. While growth may be muted this year, Chola remains conservative in
the personal loans segment, focusing on select business and professional customer segments
to mitigate risk and ensure sound portfolio management.
The MSME sector has significantly contributed to entrepreneurship
development, especially in semi-urban and rural areas. It plays a crucial role in India's
GDP and exports. With rising demand, improved credit performance, and promising economic
growth prospects, the market is conducive for lenders to expand MSME credit portfolios.
Company Review
Chola has achieved its best-ever disbursals, collections, and
profitability in FY 24, recording a disbursement of
Rs. 88,725 crore.
• Vehicle Finance disbursements grew by 22% year on year,
supported by steady growth across segments.
• Loan Against Property disbursements grew by 46%, while Home
Loans grew by 66%, driven by geographical expansion into Tier 3 and 4 locations.
• Small and Medium Enterprises Loans (SME) disbursements for FY 24
were Rs. 8,106 crore, registering 27% YoY growth.
• Consumer and Small Enterprise Loans (CSEL) disbursements were
Rs. 11,281 crore, registering 64% YoY growth.
• Secured Business and Personal Loans (SBPL) disbursements were
Rs. 1,074 crore, registering 138% YoY growth.
As of March 31, 2024, Assets Under Management (AUM) stood at Rs.
1,53,718 crore, compared to Rs. 1,12,782 crore as of March 31, 2023, marking a 36%
year-over-year growth.
Consolidated Profit Before Tax (PBT) for FY 24 was at
Rs. 4,582 crore as against Rs. 3,599 crore in FY 23 registering a
growth of 27%.
Your company is categorised as an Upper Layer NBFC (NBFC-UL) by
the Reserve Bank of India under the Scale Based Regulatory Framework for NBFCs. To augment
capital adequacy for its growing balance sheet and enhanced regulatory requirements, Chola
launched a composite QIP issue of equity shares (Rs. 2,000 crore at a price of Rs. 1,180
per share) and compulsorily convertible debentures (Rs. 2,000 crore at a face value of
Rs. 1,00,000), overall aggregating to Rs. 4,000 crore.
Amid regulatory intervention on bank credit to NBFCs, your company
broadened its lender base and optimized borrowing costs. Despite rising interest rates and
tightening liquidity, your company maintained a focus on ALM, engaging with lenders and
market experts to secure funds at optimal rates. The upgrade in long-term rating outlook
from AA+ (Stable) to AA+ (Positive) endorses your company's strong business position and
sustained profitability.
Chola continued to emphasize sustainable governance and growth across
its operations. Initiatives such as EV financing,
ESG awareness, implementation of best-in-class data protection tools
and providing credit to new and first-time entrepreneurs are yielding benefits. Our
Environmental, Social, and Governance (ESG) framework reinforces ESG principles in all
aspects of our business, focusing on responsible products, improving efficiency,
empowering people, and promoting environmental consciousness.
Chola maintained a strong focus on CSR throughout the year, effectively
implementing all board-approved programs and fully utilizing the budget. Your company also
participated in the efforts of the Government in providing support to the community.
As always, employees remain Chola's greatest strength. Their
extraordinary commitment over the past year has been invaluable, and I extend my gratitude
to them and their families. I also thank the board for their ongoing guidance and express
special appreciation to the RBI, bankers, and business partners for their continued
support. I extend my heartfelt thanks to our valued customers for their loyalty.
I express my deepest gratitude to all of you for your continued trust
and patronage as we strive to transform Chola into one of the most relevant NBFCs in
India.
| Best Wishes |
| Vellayan Subbiah |
| Chairman |