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This is my deliberate first word of the first annual report of our Company since its going public in 2018.
The focus of our governance intent is to be deeply trusted.
We believe that trust represents the lifeblood of our business. The more we are trusted, the stronger the employee traction, the more capital lenders will provide resources and the longer our investors will stay with invested across our journey.
This reality makes governance a cornerstone in our Company from where our financial numbers flow.
The big question: What is governance? What does it comprise? Why will it be the single biggest difference between the excellent and the average?
My answer is that governance is the comprehensive process by which we intend to manage our Company. Good governance will be the insurance against sectoral volatility that makes all earnings growth sustainable.
Good governance comes primarily from an association with the right people - starting from the promoters, Board of Directors, professional managers, capital providers, quality of customers and community engagement.
I am pleased to report that the promoters of Aavas Financiers come with a multi-user experience of having worked in India’s banking and nonbanking finance spaces across market cycles, companies and geographies.
Our Board of Directors comprises individuals of respect and standing who provide a distinctive business direction. At a time when the Company is presenting its maiden annual report to stakeholders, post listing, it would be relevant to indicate that the Board has collaborated with the management to chart out a multi-year blueprint that provides clarity of the niche within the large industry that the Company wishes to occupy, the margins it seeks, the customers it intends to work with and the kind of growth that the Company intends to achieve year-on-year.
The professional Aavas management under the leadership of Mr. Sushil Kumar Agarwal has distinguished itself in creating a best-in-class housing finance company.
The Board believes that it is equipped to take the Company’s growth journey forward by adhering to the highest governance standards.
We believe that this articulation is of seminal importance in a sector experiencing high mortality - not because some of the sectoral players did not know their terrains well or deep enough but because they attempted to address the extensive sectoral under-penetration with an unsustainable business momentum that affected their Balance Sheet credibility. In contrast, Aavas Financiers has been pursuing a business objective that is not as much about emerging as the largest or fastest growing Indian housing finance company as much as about the prospect of growing sustainably.
The second point I wish to highlight is that we are engaged in this business with a long-term perspective. This focus is not merely limited to our vision statement; it is something that we have extended across virtually every initiative. When we recruit, the focus is on whether the individual possesses the fundamentals to be working with us 10 years from now; when we invest in a cutting-edge technology the priority is not whether we derived the best bargain but whether the technology is futuristic, modular enough to be scaled and flexible to adapt so that it continues to serve as a responsible backbone across the long-term.
The third point is our emphasis on whether our Balance Sheet can always be robust enough to address different market cycles and opportunities. The result is that even as we are engaged in a business with extensive under-penetration where the biggest objective should have normally been to fire on all cylinders, we have prudently selected to be just rightly borrowed with a high credit rating that translates into a low cost of funds - a virtuous cycle.
The fourth point - and possibly the most important - is how we wish to conduct ourselves. At Aavas Financiers, we believe an ethical framework represents the most critical infrastructure. This influences something more relevant than the cost at which we may finance home ownership; it influences whether we can be trusted and whether we can evoke a sense of respect. What makes this challenging is that this ethic needs to be articulated, lived and showcased - not only as a desirable way to work but as a way of life.
I believe that Aavas Financiers has embarked upon an exciting journey to build an organization that will evolve from being just another housing finance company into an institution of respect.
Krishan Kant Rathi,