FY 2018 was a year of many changes, several of which will have long-term implications for economic growth. In terms of the global outlook, economic activity gained momentum in the US and the Euro area. In parallel, emerging markets and developing economies also performed better, with a pickup in emerging Europe and growth in emerging Asia. Tariff imposition by the US on various products and countries increased financial volatility. Despite negotiations between USA and China, there is a real fear of a trade war.
Overall, global GDP is expected to grow at 3.9% in 2018 with the advanced and emerging economies posting 2.5% and 4.9% growth respectively. Having said that, increase in protectionist policies, geo-political uncertainty and the escalation of US sanctions on Iran with the consequent impact on oil price represent key risks to global growth.
In India, we are entering a long-term phase of economic growth, with evidence of improving performance across agriculture, manufacturing, services (including financial services) segments of our economy. Despite significant interventions, such as the introduction of GST and RERA, the economy has exhibited mstrong resilience to quickly adapt and resume its growth momentum. With a revival of consumption on the demand side, and in manufacturing on the supply side, economic activity should stay strong in FY 2019. With a strong thrust on rural and infrastructure sectors in the most recent Union Budget, both urban and rural demand for products, vehicles, services and homes should grow and keep the country’s economic momentum going.
With a positive macro-economic backdrop, growth opportunities in the retail lending segment look even more encouraging. As an underbanked country, with pent up demand for housing, vehicles and consumer durables, there are strong growth opportunities for emerging lending companies such as us. IndoStar is working to establish itself as a robust, diversified lending institution.
IndoStar is highly cognizant of its responsibilities to all stakeholders. Our role, as the Board, is to set the strategy for your Company, and ensure that the business is operated in accordance with this strategy. In doing so, we look to safeguard the long term interests of all stakeholders, while creating sustained value for shareholders.
Our approach and commitment towards corporate governance is essential to the delivery of strategic priorities. Your Company conducts business based on compliance with applicable laws and regulations, fairness, mutual respect and integrity under a comprehensive ‘Code of Conduct’. Your Company is organized around the ability to attract and leverage the talent of exceptional people. The significant employee ownership of IndoStar will be an important contributor towards achieving the long-term objectives of the Company.
There have been several changes made to the Board of Directors in the last financial year, which have been detailed in the Corporate Governance Report included as part of the Annual Report. I take this opportunity to thank
Mr. Eric Schwartz, Mr. D Sivanandhan and Mr. Ravi Narain, for their valuable contributions as Directors. I look forward to working with our new Directors, Mr. D K Mehrotra, Mr. Hemant Kaul and Ms. Naina Krishnamurthy.
I would like to thank Mr. Vimal Bhandari for his able leadership and valuable contribution as our MD & CEO till April 18, 2017.
I also welcome Mr. Sridhar as our new Executive Vice-Chairman & CEO from April 18, 2017 onwards. His vast experience and track record speaks for itself, and we look forward to IndoStar scaling new heights under his leadership.
We consider that our Board has the diversity and mix of skills, experience, independence and knowledge required for the Company to be able to honor its responsibilities successfully. Profiles of each Director, together with information on their experience relevant to the Company, are set out in the Annual Report. Together with the reports from each of the Nominations, Remuneration, Stakeholder Relationship, and Audit Committees, our Annual Report provides an overview of our key governance activities and practices.
We expect to benefit from favorable macroeconomic conditions in India, which should raise people’s prosperity in general. At IndoStar, we have built a business model that is in strong alignment with this trend. Given our strong balance sheet; expanded network of branches; and a highly experienced leadership team, we are poised to build a strong business by financing the growth aspirations of a surging Middle India.
We will continue to drive growth at IndoStar keeping in mind the dynamic balance of the three primary principles on which we are building your Company: Asset Growth, Asset Quality and Profitability.
Our corporate lending business has achieved significant scale and momentum, with significant headroom for growth. We expect our new retail lending businesses to grow into sizeable parts of our overall business. We are confident that we are well positioned to achieve our goals and deliver sustained, profitable growth over the next several years.
We look forward to making this exciting journey with the support of all our stakeholders.