ஆசிர்வாத் மைக்ரோபைனான்ஸ் லிமிடெட்          Asirvad Microfinance Limited          आशीर्वाद माइक्रोफिनॅन्स लिमिटेड         ആശിർവാദ് മൈക്രോഫിനാൻസ് ലിമിറ്റഡ്          ಅಸೀರ್ವಾಡ್ ಮಿಕ್ರೊಫಿನನ್ಸೆ ಲಿಮಿಟೆಡ್          ਅਸਿਰਵਾਦ ਮਿਕਰੋਫਈਨਂਸੇ ਲਿਮਿਟੇਡ          ଆଶୀର୍ବାଦ ମଇକ୍ରୋଫାଇନାନ୍ସ ଲିଃ          আশির্বাদ মাইক্রো ফাইনান্স লিমিটেড

Message from Chairman


“I am happy that our company has performed spectacularly over the last year,being the first full year as a subsidiary of Manappuram Finance Ltd”.Our business has soared and we have expanded too many more geographies, thereby setting up a solid base for continued growth in the future as well.

Economic Outlook

Indian economy is on the path of steady recovery. After two years of drought like situation agriculture output had suffered leading to depressed farm incomes and higher food inflation. However, this year the Indian Meteorological Department has predicted above normal monsoon across India. Good monsoon is likely to bring relief to India’s agriculturists and increase rural income levels with positive impact on rural demand and consumption. Moreover, if monsoon is normal and adequate, food prices will likely be kept in check thereby curtailing inflationary expectation.

The Reserve Bank of India (RBI) has, accordingly, maintained its accommodative stance on monetary policy although further rate cuts have been held back against the backdrop of resurgence in crude and other commodity prices and pending clarity on how monsoon pans out.

The RBI will shortly review the implementation of the Marginal Cost Lending Rate frameworks by banks to reduce the cost of borrowing and have the benefits of decreasing key policy rate passed on to customers. Further, at the policy making level, considerable progress has made over the last couple of years. The new Bankruptcy law, real estate and Aadhar bills becoming law, further liberalization in FDI norms and in the financial system etc. are some of the areas to make headway. The introduction of on-tap license for opening new banks is particularly welcome for the large NBFCs.

According to the latest estimated released by the Central Statistics Office, India’s economic growth to register 7.6% in 2015-16 against the government’s more modest expectation of 7-7.5% growth. With good monsoon and expected increase in corporate profitability due to lower input cost and increased domestic demand and with pick up in private and public investments, the economy’s growth prospects are bright.

Outlook for Non-Banking Financial Companies (NBFCs)

Non-banking financial companies (NBFCs) have been a success story in India. In terms of financial assets, NBFCs have recorded healthy growth CAGR of 19 per cent over the past few years—and now account for 13 per cent of the total credit and which is expected to reach nearly 18 per cent by 2018-19.

Over the years, the NBFC sector has evolved considerably in terms of its size, operations, technological sophistication and entered into the new areas of financial services and products. Although total number of NBFCs has come down from 51,929 in 1997 to 11,700 as of March 2016, aggregate assets of systematically important non-deposit taking NBFCs and deposit taking NBFCs have grown from Rs 700 billion at the end of March 1998 to Rs 15 trillion at the end of December 2015. Share of NBFC assets as a percentage of scheduled commercial banks assets has increased from 7 per cent in 1998 to 14.8 per cent in March 2015.

Outlook for Microfinance Institutions (MFIs)

Non-banking Financial Companies – Micro Finance Institutions (NBFC-MFIs) play an important role in the governments agenda of financial inclusions. NBFC-MFIs cater to unbanked sections of Indian society under the regulatory oversight of the Reserve Bank of India (RBI). The outreach of MFI has been growing rapidly. According to a recent report, MFI’s together have a branch network of 9,669 (increase of 22 per cent over last year) with an employee count of 86,565 of whom the majority (63 per cent) are loan officers providing door to door services to low income clients. The data also reveals that MFIs cater to around 3.25 crore clients as of March 2016, an increase of 44 per cent compared to the previous year. The aggregate gross loan portfolio of MFIs registered an increase of 84 per cent to Rs 53,233 crore as of March 2016 as compared to the previous year. Another aspect of the MFI sector in India is that market share is largely concentrated among a few big players. Large MFI players account for about 90 per cent of the industry gross loan portfolio (GLP).

The aggregate loans disbursed by MFIs during financial year 2015-16 has also registered a growth of 65 per cent to Rs 61,860 crore, as compared to the year before. There is an increase in loan size too with the average loan amount disbursed per account increasing by 21 per cent to Rs 17,805 in March 2015. Non-agricultural activities, mainly trade, services and manufacturing, accounted for the maximum share of 64 per cent of loans disbursed, followed by agriculture at 31 per cent. Households finance accounted for 5 per cent of the loan portfolio. One area of concern in this context is the stringent norms for asset classification now in place. For NBFC-MFIs, non-standard assets are defined as an asset for which interest / principal payment have remained overdue for a period of 90 days or more. Provisioning norms stipulate 50 percent provision on aggregate loan installments overdue for more than 90 days up to 180 days and 100 percent provision for aggregate of loan installments overdue for 180 days or more. Such stringent regulation are negatively affecting MFIs and impeding their growth for MFIs. Since MFIs cater mostly to customers with little or no regular incomes (being seasonal), the 90 days norm leads to higher reported non-standard assets that impacts profitability.

Takeover by Manappuram

In February 2015, Asirvad Microfinance Pvt. Ltd. with an AUM a little short of Rs.300 crore was acquired by Manappuram Finance Ltd. Today, one year after the takeover, Asirvad’s AUM has more than tripled to over Rs.1, 000 crore. Prior to takeover, this was a microfinance company struggling against odds to grow. It had a quality management sincerely committed to the cause of microfinance but the company was burdened by high interest costs. After Manappuram Finance came into the picture, Asirvad was able to leverage its parents credit worthiness. It got expand access to bank finance at significantly lower cost than before, giving it comfortable cushion to meet competition head on, and later to expand to new geographies like Madhya Pradesh, Chhattisgarh, Punjab, Haryana, Chandigarh, Jharkhand, Bihar, West Bengal and UP. By the end of FY 2015-16, Asirvad’s AUM had grown to Rs.1, 000 crore, a three-fold increase.
Today, India’s microfinance industry is, in general, doing well, and we expect Asirvad to maintain growth at a rapid pace in the coming years as well.

Performance of the Company

Fiscal year 2015-16 marked an inflection point as Asirvad was able to grow its business substantially in the first full year of operations after its takeover by the Manappuram Finance.
Net profit for the year ended March 31, 2016 has gone up to Rs.23.96 crores, a commendable increase of 130.40 percent, compared to Rs.10.39 crores reported in FY 2014-15. Operating income for the year stood at Rs.145.07 crores, an increase of 149.04 percent in comparison to Rs. 58.25crores recorded the year before.

Thank you

I am grateful to all our shareholders and all other stakeholders for their support to the company through its days of challenge and setbacks. We are thankful to the Reserve Bank of India for maintaining stability in a potentially volatile environment. I now seek your continued support so that we can sustain the performance and keep growing the business over the coming years. I believe together, we can go farther and achieve much more.