This year has been one of the most challenging for the microfinance
industry in India. The events were precipitated by the Andhra Pradesh
Microfinance Act, which had serious repercussions on all Microfinance
Institutions operating in the state. Subsequently, the RBI appointed
the Malegam Committee to look into the functioning of the sector and
its recommendations presently provide the framework governing the
various stakeholders. Even though steps to be `Malegam compliant'' will
put some pressures on the company in the short term, the
recommendations are welcome as they lay out the regulatory clarity and
the continuation of the priority sector tag, both of which are seen to
be healthy for the growth of the industry in the long run.
Capital Trust has been able to sail through this turbulent time with
deftness and agility, both on account of the fact that it has no
exposure in the state of Andhra Pradesh and because it has a modest
portfolio size which is easily manageable. The very practices which
were seen as too conservative in the face of competition before the
crisis have been the backbone of the company''s resilience in the recent
months. Our painstaking effort on the ground level to have a
transparent and humble relationship with our clients has ensured no
change in the payback pattern of the loans, despite a slowdown in fresh
disbursements. This has given us the confidence that our investment in
building social capital has borne fruit and has reaffirmed our intent
to continue working in this sector.
The shake-up in the industry has given a much needed `breathing time''
to a game which was otherwise just running after numbers.
During this period, the company has focused upon consolidation of its
operations. Smaller branches have been merged to have healthier, more
efficient operations. Stricter adherence to operational rules has
improved client discipline, the main foundation of a successful
microfinance company. The company has also launched its new product -
micro enterprise finance - with loan amounts ranging from 15,000 to
100,000. This shall further improve the asset quality as well as
improve efficiency. The company is also exploring other avenues to
take advantage of its network in servicing its clients with goods and
With this background in mind, I am pleased to inform the shareholders
that the Company reported a profit after tax of Rs.49.06 lacs on a
total income of Rs.734.50 lacs for the financial year ended 31.03.2011.
Corresponding figures with respect to the financial year ended
31.03.2010 were 22.07 lacs and 391.14 lacs respectively.
I would like to convey my thanks to the employees of the company who
have shown their loyalty to the company during this trying period.
Special thanks to the field staff who have painstakingly motivated the
clients to maintain the repayment record. Needless to say, this would
have not been possible without the support of our Bankers and Financial
Institutions who have reposed faith in the Company and we look forward
to their continued association. On behalf of the Company I would also
like to thank the shareholders who have supported us in our strive
towards economic empowerment through enterprise.
Place : New Delhi
Date : 2nd August, 2011