Dear Fellow Shareholder,
This is my first letter to you in an annual report of your Company. I am honoured to
write this letter because I am truly proud of how well Bajaj Finance Limited has fared for
two consecutive years despite difficult economic circumstances.
Indias GDP growth not only remained weak, but also continued to decline
throughout FY2013: 5.5% in Q1, 5.3% in Q2, followed by 4.5% in Q3, the last being the
lowest quarterly growth in a decade. For FY2013, growth is expected to be around 5%, which
is well below the 6.2% achieved in FY2012. As a matter of fact, the countrys growth
rate has declined by 3.3% over the last eight quarters.
Today, we are looking at low GDP growth; lack of sufficient investments to
significantly increase the nations productive capital stock; a high current account
deficit, which is expected to be around 5% for FY2013 and a scenario where wholesale price
inflation (WPI) and consumer price inflation (CPI) may remain uncomfortably high which
could preclude further rate cuts by the RBI.
In such a milieu, I am delighted to share with you how well Bajaj Finance has done.
Here are some key facts, the details of which you may read in the chapter on Management
Discussion and Analysis.
Your Companys total income increased by 43% to Rs 3,111 crore in FY2013
Profit before tax grew by 45% to Rs 872 crore
Profit after tax rose by 46% to Rs 591 crore
Loan deployment was up by 23% to Rs 19,367 crore
Bajaj Finance ended the year with net non-performing assets (net NPA)
accounting for only 0.19% of its total loan book, which is amongst the lowest in the
Capital adequacy as on 31 March 2013 stood at 21.95%, which is well above the
Being aggressive in business yet conservative in financing, your Company opted to raise
further capital in FY2013 through a rights issue in February 2013 which offered existing
shareholders three shares for every nineteen shares held. Thanks to your faith in the
Company and its business model, the issue was subscribed 1.16 times and enabled Bajaj
Finance to raise Rs744 crore. This will create adequate headroom to leverage further
growth in the next couple of years.
I am particularly proud of how well your Company has done in its consumer finance
business and in the funding of small and medium entrepreneurs. Let me share some facts
Bajaj Finance continued to remain the largest two-wheeler lender in the country
It maintained its position as the largest consumer durables lender in India and
helped finance 13% of all consumer electronics sold in the year. In doing so, it acquired
over 1.9 million new customers and operated across 4,500 points of sale in the country
Your Company financed one out of every four LCD and plasma televisions sold in
Bajaj Finances personal loan cross-sell where it focuses on
customers with a good repayment history of their two-wheeler and/or consumer durables
loans to cross-sell a personal loan grew by 47% to Rs862 crore. In addition, the business
of offering personal loans to relatively well off salaried employees working for leading
companies stood at Rs559 crore in FY2013
Loans against collateral of property grew by 34% to Rs3,024 crore l
Home loans grew by 94% to Rs1,410 crore
Working capital loans to relatively affluent small business customers, including
doctors and other professionals, increased by 38% to Rs1,237 crore in FY2013
Financing of auto component manufacturers was Rs2,483 crore in FY2013
To reiterate, this has been a stellar year for your Company-even more creditable
because it comes on the back of excellent performance of the previous year and has
occurred in a very difficult economic environment.
On your behalf, allow me to congratulate Rajeev Jain, your Companys Chief
Executive Officer, Nanoo Pamnani, Vice Chairman, Sanjiv Bajaj, Director of the Company and
the rest of the management team for performing so well while maintaining high standards of
financial care and probity.
Having said so, let me state that FY2014 may continue to be a difficult year for India.
Therefore, it is imperative for your Companys management to remain even more focused
on its businesses to deliver the excellent results that we are now getting accustomed to.
Im sure that the team will yet again rise to the challenge.
Thank you for your support. May it continue as Bajaj Finance scales greater heights.