The year 2010 - 11 has been a turnaround year for Chola. The company
emerged from a challenging environment to once again claim its place as
a strong player in the NBFC space, with solid and sustainable growth.
The three Asset Management businesses-Vehicle Finance, Home Equity and
Corporate Mortgage Finance made a significant contribution to the
companys bottom line. Capitalizing on the buoyancy in the market, the
company increased its volume in Vehicle Finance and Home Equity, with
aggregate disbursements of Rs.5731 crores, the highest ever by both
these verticals. More importantly, portfolio performance from these two
verticals continue to be very strong. Vehicle Finance has had Net
Credit Losses(NCL) of Rs.21.80 crores, and Home Equity has had NCL of
Rs.3.80 crores. Vehicle Finance NCL numbers are the lowest ever
achieved to date.
Chola continues to compete as a multi-line lender in the industry. We
have, however, made conscious choices in terms of the segments in which
we compete. We have significantly reduced our exposure to unsecured
lending and it is our intent to stay away from this business until
environmental and legal conditions in the unsecured lending business
significantly change. For the most part, it is also our intent to
restrict our lending to the productive end of the segment versus the
This year has also been a year focused on strengthening our core. We do
believe that the process of strengthening our core will continue well
in to the 2011-12 financial year, and perhaps the year after as well.
The focus of this imitative is to improve customer service whilst also
improving portfolio quality. We are doing this by improving our internal
processes, strengthening our technology platform, and investing
significantly in terms of training our people. Over the last twelve
months, all of our teams have delivered extremely robust business
Kaushik Banerjee and his team at Vehicle Finance were on the right
track with their strategies for growth. Vehicle Finance increased its
market share by expanding its presence in Tier III and Tier IV towns
and rural areas. The business posted a 57% increase in disbursements
over the past year, The collections team also produced strong results
with a closing ACL of 0.36%.
Kaushik also led the Corporate Mortgage division to establish its mark
in the HNI and promoter funding space, despite intense competition and
volatile stock market fluctuations.
Chola has emerged a key player among NBFCs in the Home Equity business
in the short span of four years. During the year Rohit Phadke and his
team redefined the business with personalized customer service and
faster turnaround on loan disbursements. Reducing operating cost to
income ratio and enhancing team productivity, the division increased
its asset book by 49% over the previous year, meeting ambitious stretch
The subsidiaries too, turned in reasonably good performances,
considering the volatile market conditions. I am sure Jaikumar and team
from Cholamandalam Distribution Services and Mariam and her colleagues
from Cholamandalam Securities will seize opportunities for greater
growth this year.
Good treasury management is crucial to all businesses, to finance
institutions - it is critical. The continued efforts of Arulselvan and
his team towards strengthening the treasury, focusing on credit ratings
and bringing in business intelligence and good asset liability
management, all contributed to increase in profit margins.
Regulatory Compliance and Stakeholder management is vital. At a time
when the company has gone through a difficult phase, Sujatha and her
team from Secretarial rose to the occasion with true professionalism
and dedication. The team ably supported the company in its transition
and its fund raising activities of equity as well as debt capital,
ensuring compliance in a dynamic regulatory environment.
Our new venture into the Gold Loan business is part of our strategy for
expansion and future growth. I am sure Pravin Salian and his team will
capitalize on the strength of the Chola brand and the captive customer
base to script another success chapter in the companys history.
At Chola this turnaround year has provided us with a great learning.
When you try to surmount challenges that most believe is impossible,
you go beyond what you had hitherto believed is possible. And therein
lies the truth of a turnaround.