Objective To emerge as Market leaderin MadhyaPradesh by the end of this fiscal To rejuvenate Operations in Rajasthan To start Operations in UP
Industry/SectorAnalysis – MP-RJBARRIERS TO ENTRYthreat of new entrantsthreat of substitutesSUPPLIERPOWERSUBSTITUTESCOMPETITIVE INTENSITY CUSTOMERPOWERPOLITICALECONOMICSOCIO CULTURALTECHNOLOGICALMoving from High - Medium - lowMoney LendersCo-Society/Bank and Chit FundsFamily and FriendsSHG - NGO/ BanksNew Innovative products from Bank industry - AXIS BankHowever, Switching cost is lowHighTrained ManpowerCreditabilityCapital BaseBuilding Economies of ScalePolitical Contact/NetworkEconomies of ScaleLow Switching Cost for CustomerMoving from Low to MediumLow penetration. In addition, MFI iscomparatively very reasonable to currentborrowing options.Collective Bargaining may be an issue innear future.Switching Cost is lowMediumBank will not have very asset pool thanthe one they get from the MFIsStrong base of 42 Banking relation andover dependance on few lenders arereduced.Major Lenders has helped buildingstrong creditability hence obligated.Moving from Low to MediumPenetration is low. Hence, room forcompetitors to enter and tap the untappedmarket.Exit Barrier is low with the current loanoutstanding which may increase with theincrease in the loan portfolioCompetitors not of the same school of thoughtof industry growth and cooperate accordingly.HighMediumLow- Political/Bureaucratic interventionin the processes and recoveries(Vested Interest)- Loan Waivers- Political interference duringunfortunate natural calamities- Policies - PSL, Interest Rate, Securitizations- Monetary Policy- Increasing shift of corporate to the bottom ofthe pyramid- Economic Development - NRI Linkage"Remittance"- Availability of Bank Branches- Better infrastructure can help reach out toclients better and quickerCommunity ethos not nonrepayment/interestLanguage BarriersGender issuesPossible Class/caste discriminationWork Culture ( 9 to 6)Grapevine - "Word of mouth"prominent to establish creditabilityUnique Indentification numbermaking if difficult for a MFI CreditBuereuTechnological infrastructure torun the business more efficiently
Characteristics of MP’s MF market• Market in horizontal development/growth phase –geographical expansion.• No. of MFIs growing. Multiple lending in nascent phase.• Vertical penetration starting – subsequent cycles starting &ticket size increasing, coverage of target group increasing.• Product-bundling /product diversification/Productdifferentiation starting - additional products being introduced(Samhita’s social products in education & health,SKS’ mobileselling.),different rate of interest by different players.• Clients overall loyal and/or feel they have very fewother options, but some clients seek other options.• High operation cost because of thin population density
Current Market Scenario – Madhya PradeshThe Big ThreeSKS SPANDANASHAREPortfolio Size 160 Cr. 105 Cr. 90 Cr.Clients 2.4 Lakhs 1.8 Lakhs 1.2 LakhsBranches 71 69 65IndividualLendingNo No YesAge ofOperations4 years 23 months 3 years
Current Market Scenario – Madhya PradeshOtherPlayers(i) Samhita : Mostly in Rewa, Panna,Shahdol, andBhopal. Starting in Gwalior.(ii)Fullerton India(iii) Sahayata : Just started from Ujjain(iv) Sonata : Jabalpur and Bhopal(v) BASIX
Strategy Ambushing the market – opening branches in big wayafter a lull that was a phase of consolidation. Opening branches in locations where- there is need of the credit and good environment of micro-enterprising- minimum potential of 3,000 clients in the radius of 35 KMs- other MFIs doing well Capitalizing on second/third mover’s advantage Non-experimental with the market
Characteristics of Rajasthan MFmarket Horizontally in development/growth phase No. of MFIs growing Non-uniformity in commercial micro financing interms of geographical areas. Upon proper and regimented training membersare loyal Repayment problems because of staffs and ringleaders Problematic community – Gurjar, Meena,Nomadic
Current Market Scenario – RajasthanOtherPlayers ARTH Finance – Haroti areas Ujjivan SPANDANA BASIX, and Fullerton India• Market has still lot of potential although certainareas need to be avoided (Gujjar and Meenadominated)
Special strategy forRajasthan No old staff in new branches.Recruitment innew areas. Opening branches in areas where other MFIsare doing well- dist.HQ, urban areas etc. Not hiring staff of other MFIs Rigorous training of the process Slow pace in the beginning. Focus on qualityrather than quantity
Characteristics of U.P.’s MFMarket MF activities across the state. But, only easternparts good for entry. Industry still in growth phase Strong presence of regional players MajorPlayers – SKS, Share/Asmita, Cashpor,Sonata,Ujjivan Small Players – Satin,Mimo, NEED,NirmanBharati,Margdarshak,Sathi,Samridhi, Problematic areas – Western U.P. & Central U.P.
Strategy forUttarPradesh Starting operations in adjoining areas ofMadhya Pradesh like Allahabad, Lalitpur,Mirzapur, Jhansi etc. Monitoring from MP based locations in thebeginning. Looking for organic growth towards easternparts.
Human Resource Planning• Requirement : (i)C.As: 350 , BMs: 75 during expansion(ii)R.Ms: 12-15 during/after expansion(iii) D.Ms : 2-3• Sourcing Human resources : (A) Open Recruitment (B) InternalPromotions(i) Credit Assistants – D.Ms/HRs conducting recruitment tests (written test +interview) in different parts of their divisions every week(ii)Branch Managers – Promotions of C.As/direct recruitment.- Promotion tests being conducted every month in every division by HR,DM,andZM.- Direct recruitment of BMs – identified by DMs and HR. Finalised by ZM.(iii) Regional Managers – promotions of B.Ms/direct recruitment- Identified by DM/ZM in promotion tests and interview .Final interview at HO- Direct recruitment at HO(IV) Divisional Managers – promotions of R.Ms/direct recruitment- Identified by DM/ZM and recommended by ZM for interview at HO- Direct recruitment at HO
Spl. Guidelines forC.As’Recruitment Age group : 18-26 yrs 12thpass No prior experience of MF sector. Avoid with local MFIs andbig players’ experience Wards of members to be avoided Not to take from blacklisted areas of the div. Having own bike and DL & RC. Ready to work in areas beyond 150 KMs from home. Physically fit, good communication, inter-personal andcalculation skills. Maximum from rural areas. Following the company’s recruitment guidelines.
TrainingA. C.As’ Training(i) Exposure training – First-hand learning, orientation,daily routine, center-register filling, application forms,Do’s n Don’ts . In branches for 20 days(ii) In-house training - Concept, process, calculation,exercises, reports, expectations etc. One week inD.O.(iii)Test of Understanding – at DO.(iv)Placement – Independent handling of centers in thebranches for 15 days before final placement in thesame old branch.
TrainingB. B.Ms’ Training(i) Exposure Training – first-hand knowledge of BM’s roles andresponsibilities, daily works reports preparation,accounts/book/record keeping. 10 days in a branch .(ii) In-house training -Concept, process, calculation, exercises,reports, expectations etc. 10 days. In D.O.(iii) HOtraining(iv) Dummy placement – independent branch handling for 15days.(v) Test of understanding – at HO(vi) Final Placement – in new branches.
SurveyA. DEMOGRAPHY: 1.Total population, Sex Ratio and Population Density2. Level of poverty3.Concentration of population. Pockets of high concentration.(Particularly potential clients)4.Important link roads and no. of villages along those roads.No. of House Holds (HHs) of those villages.5.Percentage of potential clients of total population6.Social structure in terms of religion/caste. What percentageHindu/Muslims/others. Family types.7.Culture/habits. This hints at spending/saving pattern.
Survey ……B. INCOME : 1.Main Source of Income2.Secondary sources of income3.Regularity/irregularity of income4.Range of family income5.No. of earning members in the familyC. NEEDS: 1.Centrality of credit needs to the clients2.What are peoples perceived needs?3. Need of aspiration (Do they aspire for higher life styles/to sendtheir children to schools/to own a pucca house,white goodsetc.?)
Survey…..D.COMPETITORANALYSIS/SECTORANALYSIS 1.Who are other players?2.What fee they charge?3.What are their strategies? Competitors assumptions/currentstrategies/future plans, objectives/capabilities and comparison withours.4.Problems faced by them- problematic areas/slums, recoveryproblems, staff, problems, political/administrative, threatening,coercion. How did they overcome their problems?5.External Environment Analysis of the area for MF.7.SWOT Analysis.6. Do we have any Competitive/comparative advantage over others inthe area?
Survey…..E. CITY MAPPING (forlocation of the branch)1.Law and order condition2.Supply of electricity- erratic/non-erratic?3.Political/administrations interferences4.Internet facility/Telecom services5.Banks - pvt. n public?6.Normal working hours - till what time people generally work?Whether shops remain open or not till 9 PM?7.Medical facilities8.Availability of diesel/petrol9.Transportation/accessability from main cities
Activity chartActivity Who will Do Time Period RemarksSurvey RM-DM 3-4 Days1stPhase - by 10 Dec2ndPhase – by 1 Jan3rdPhase – 26 JanRM’s will carry out survey inpotential locations accompaniedby DM’s. Based on the surveyreport decision to open brancheswill be taken by DM, ZMRecruitment RM-DM-HR Every Week Recruitment to be done everyweek from different locationsTraining• Field Placement•In house training• HO trainingRM-DM-ZM-HO 1 month Staff will be first exposed to fieldafter which they will be groomedon conceptual aspects throughclassroom training sessions tobe organized at DO. PromotedBM’s will also be sent to HO forfurther training and betterexposureAdministrative(Branch Location,Certificates, Furniture,Stock, Bank A/c etc.)RM-DM 10 Days(10 days before formalannouncement )These activities will be carriedout on final approval for openingbranches in a particular locationby ZM, DM