The Indian economy had successfully gone through a major economic reform called the GST which is probably the biggest game changer going forward. The integration of the unorganized sector with the formal economy will be a major step that will enhance efficiency and result in higher growth in the long run. However, on account of this reform there was considerable adjustment made by corporates with respect to their inventories in the first quarter which was then compensated by higher production in the subsequent quarters. Therefore, performance tended to be uneven which also came in the way of fresh investment decisions. GDP growth came in lower at 6.7% compared with 7.1% in FY17 and gross fixed capital formation, which is the best macro indicator of the state of investment, remained flat at 28.5%. This is the background against which the performance of your company has to be evaluated.
For a rating company like yours’ business comes from two main segments - corporate debt raised and bank loans rated. Here the overall picture was lower with total debt issuances being at Rs 6.04 lkh crore against Rs 6.70 lkh crore in FY17. While bank credit growth at the aggregate level recovered by March end, the two segments pertinent to a rating agency, industry and services registered growth rates of 0.7% (-1.9%) and 13.8% (16.9%) respectively. However, notwithstanding a lower macro performance your company attained higher growth of 24.9% in new business from Rs 13.19 lkh crore to Rs 16.48 lkh crore in FY18. Your company has done well in the CP and SME segments as well which has enabled topline growth of 14.7%. Net profit is now at Rs 161 core with growth of 5.8% in FY18. We can say with some pride that we continue to have a dominant share in the ET-500, BS-1000 and FE-500.
The rating environment was supported by two regulatory interventions. The first was the dual rating for CPs which has been a major benefit for us as we have made deeper inroads into this business. Second, the IBC resolution procedure has also provided us good opportunities for rating which in turn has helped our business.
We have also been focused on enhancing business from our subsidiaries because we believe that while rating will be our flagship business, there are opportunities to leverage in associated business lines. The two rating joint ventures CARE Ratings Africa and Care Ratings Nepal are already functional and have done good business. We have also started expanding the operations of our new Wholly Owned Company CARE Advisory, Research and Training Services Limited (CART) which we believe has potential to contribute significantly to our overall business. While advisory and customized research has been shaping up well, we have also launched a new online training programme in February 2018. These efforts have been complemented by our other wholly owned company CARE Risk Solutions Limited which has done well this year.
Keeping in mind the support we have received from shareholders we have proposed a total dividend of Rs 55 per share. This includes a special dividend of Rs 25 per share which is to celebrate our twenty fifth anniversary. We would be working to continuously enhance shareholder value.
We look forward positively for the new financial year which we think will be better in terms of the macroeconomic indicators. As the investment cycle picks up funding requirements will be a challenge especially from banks and in this context the corporate debt market will play an important role progressively. Bank funding will supplement this effort given the ongoing resolution of the NPA challenge. The efforts of the government, RBI and SEBI to provide a boost to the corporate debt market will start bearing fruit this year and we will continue to work towards stretching and achieving our goals.