Dear Shareholders,
The global economy has been posting a strong growth of ~4% p.a. in the recent past, and
the expectation has been that this growth trend would sustain. Risk to this growth are
however tilted to the downside. Interest rate hikes by the US Federal Reserve and rising
crude price is of concern. The rise of protectionism is evident from the tariff increases
being enforced, citing unfair commercial practices and rising trade deficit. It is
estimated that global gross domestic product growth could take a hit of around one percent
if the tariff wars escalate. Needless to add, a global trade war would hit emerging
markets the hardest as trade is a key factor in supporting developing economies address
their concerns. As In India, growth in the first half of FY2018 was disappointing.
The economy has recovered in the fourth quarter of FY2018 and has posted a 7.7% growth
rate, enabling the country to retain its position as the fastest growing major economy. A
faster pace of growth in manufacturing at 9.1%, compared with 6.1% a year ago, helped lift
the overall economic growth during the quarter. The farm sector also grew at a healthy
rate of 4.5%, while construction activity, powered by the government investments in the
highways sector, clocked a double digit growth of 11.5% to give a fillip to the economy.
The World Bank has forecast that the Indian economy will see a robust GDP growth of 7.3%
in 2018-19 and 7.5% for the next two years An environment of strong growth in the country
is key to our ability in raising new funds. While we continuously strive to leverage the
positive macro-economic conditions in our Fund raise, we also need to be cognizant of the
various underlying risks. The banking sector is facing a significant challenge in terms of
managing a large portfolio of non-performing loans. This may impact the bank's ability to
grow the fresh loan book to the extent required to support the projected growth and
investment in the country. In addition, a sustained rise in crude oil prices would curb
the fiscal room available to the government to invest in key sectors like infrastructure.
Furthermore, the resultant inflationary pressures, in turn, may adversely impact
currency stability and also lead to upward movement in the interest rate curve. These
factors would have a significant impact on investor and investment appetite
India is also heading into an election year. This will add to the complexity of
decision making for the investors. The Private Equity Fund raise and investment
environment for the coming year will reflect this uncertainty. The impact would vary
across sectors. Certain sectors like consumer-tech, banking, insurance, Information
Technology etc. may witness lower unpredictability. In other sectors like infrastructure
and real estate, investors may adopt a wait and watch position – not just to see how
the macroeconomic and political situation pans out, but also to see how effectively the
insolvency resolution is implemented across various stressed assets In this context, your
Company is seeking to work on products which either leverage on investor preferences or
which effectively the former, the next round expansion of your Company's infrastructure
debt platform and the general purpose private equity fund is a case in point. As regards
the latter, an infrastructure fund focused on operating assets or a real estate fund
investing into yield generating properties can be considered as suitable product offerings
In parallel, your Company has also been focusing on de-risking its India centric
business model. Some of the initiatives are beginning to bear fruit. We believe that by
the end of this financial year, a meaningful component of revenues would begin to accrue
from such offshore ventures of your Company Many of the above products are being developed
in partnership with marquee Institutions. We value these partnerships, and have been
investing significant time and resources in nurturing these relationships. Likewise, we
value the support and encouragement which you as shareholders have extended to us. We hope
for success in building sustainable value for our partners, and foremost our shareholders,
during the coming year
With Regards,
S M Datta
Chairman
July 5, 2018