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SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
SpN corporate PPt
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SpN corporate PPt

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  • 1. • Industry Overview and Spandana’s positioning• Product Suite• Key financial and operating metrics• Investors, Bankers and Rating• Key Strengths of Spandana
  • 2. • Industry Overview and Spandana’s positioning• Product Suite• Key financial and operating metrics• Investors, Bankers and Rating• Key Strengths of Spandana
  • 3. Industry • Retail financial services landscape in India is dotted by following key players – Overview • Govt/ Public Sector: Banks, District Credit Cooperatives, Regional Rural Banks etc • Private Sector: Indian Banks, Foreign Banks, Non-Banking Finance Companies, including Microfinance Institutions (MFIs), Urban Coop Banks etc • Unorganized players: Moneylenders, Pawn brokers etc. • Microfinance is the provision of micro-credit and other financial services to low-income households What is Microfinance • Microfinance Institutions (MFIs) are the client servicing interface, working predominantly with women and and MFI ? providing doorstep financial services • Non-Banking Finance Companies/ Societies/ Trusts/ Coops are the dominant legal form of MFIs • * Only 5% of habitations in India have a Commercial Bank branch, only 40% of population has savings Large Unmet Bank account – large gaps in financial inclusion exist Demand • Estimated demand of Microfinance is INR 333,000 crore (USD 74 billion) against which, only 10% has been reached – including private sector MFIs and govt.’s SHG-Bank linkage programme • Microfinance business model has now been well proven with over 2 decades of successful track record Growth path • MFIs have shown an aggregated growth of over 100% year-on-year for the last 5 years • Being a disaggregated industry, large players with sizeable operations and established track record of scaling-up the loan portfolio, will continue to grow at a fast pace* Size of Financial Exclusion: Dr. D Subbarao, Governor, Reserve Bank of India, June 2010
  • 4. Large • Spandana is the 6th largest MFI in the world, and 2nd largest in India in terms of number of clients scale • Started operations in 1998 at Guntur, Andhra Pradesh and steadily grew at a compounded annual growth rate of about 100% since then – mainly due to high degree of customer connect • Scale of operations*: 4.5 mn clients, about 12,000 on roll trained staff, over 1,600 branches in 12 States of India with Asset Under Management (AUM) of about Rs.4,000 crore (USD 0.9 Bn) • Process Efficiencies resulting in operating expense ratio at sub 6% level against the industry avg of ~12% Leader in operational • Good portfolio quality with a cumulative repayment rate of 99.9% shows that the business model has efficiencies shown its robustness over the last 10 years • Staff productivity at over 400 clients per staff against an industry average of 252** • Strong management team lead by a dynamic leader, founder and Promoter Mrs. Padmaja Reddy Proven track record • Disbursed over Rs.13.7 thousand crore (USD 3 Bn) cumulatively since inception • Most profitable MFI with highest Return on Assets (7%+ against an industry average of 3.5%) • Optimum Capitalization also ensures one of highest Returns on Equity, presently at 50%+ levels Rating/ • ***CRISIL MFI grading: mfR1 (highest rating grade; first MFI to achieve this distinction) Grading • CRISIL Rating of debt and bank facilities: A-/Stable/P1’ (best in the industry) Sustained • New products under pilots and testing are under scale-up growth model • States where operations started in last 2 ys are ready for scale-up, many new potential states available • Over 42 Banking relationships across Public / Private/ Foreign Banks* as on June 30, 2010 ** M-CRIL Analytics, 2009 ***CRISIL: Indias leading Ratings, Research, Risk and Policy Advisory company (www.crisil.com)
  • 5. • Industry Overview and Spandana’s positioning• Product Suite• Key financial and operating metrics• Investors, Bankers and Rating• Key Strengths of Spandana
  • 6. Emergency Agri Family Individual Farm Equipment General Loan loan Group Loan Loan Loan LoanProduct Suite (Abhilasha) (Samruddhi) (Pragathi) (Dharani) (Sphoorty) (Karshak) Nature of Group Group Group Group Individual Individual Loan For income For emergency For income For small For purchase of Purpose of For agriculture and generation cash flow generating business farm equipments Loan allied activities activities needs activities activities such as tractors Wage labourers Low-income Small and Farmers and (both skilled clients with Small and micro young Typical and unskilled) Existing slightly better marginal farmers entrepreneurs entrepreneurs with Customer formed in a customers well being than and tenant farmers with co-obligant hypothecation of group of 10 Abhilasha guarantee vehicle women customers Rs 2,000 to Rs 2,000 to Rs 15,000 to Rs Rs 5,000 to Rs Rs 21,000 to Rs 50,000 to Rs Loan Size Rs 20,000 Rs 10,000 25,000 30,000 Rs 200,000 350,000 12 to 24Loan Tenor 50 weeks 50 weeks 12 to 24 months 11 months 3 years months Interest monthly;Repayment weekly equated weekly equated monthly equated principal semi- Monthly Monthly Terms installments installments installments annuallyLoans are serviced at the customer locations (slums/ villages) with complete transparency – disclosure of all termsof loan, no hidden charges in the name of value added services
  • 7. • Industry Overview and Spandana’s positioning• Product Suite• Key financial and operating metrics• Investors, Bankers and Rating• Key Strengths of Spandana
  • 8. Particulars Mar-07 Mar-08 Mar-09 Mar-10 BranchesNo. of Branches 295 435 944 1,533% Growth 47% 117% 62% 88% p.a.No. of Employees 1,911 3,024 6,373 10,428% Growth 58% 111% 64%No. of Clients (mn) 0.97 1.24 2.5 4.2% Growth 28% 105% 64%No. of Borrowers (mn) 0.92 1.19 2.4 3.7% Growth 30% 104% 52% Gross loan PortfolioCum. loan disbursed (Rs mn) 17,833 29,756 59,959 119,758 (Rs. mn)% Growth 67% 102% 100% 120% p.a.Gross Loan Portfolio (Rs mn) 3,916 7,313 18,683 35,567% Growth 87% 151% 90%Total Income (Rs mn) 608 1,339 3,556 7,241% Growth 120% 166% 104%Profit after Tax (Rs mn) 26 271 903 2,035% Growth 942% 233% 125% Profit after Tax (Rs. mn) 175% p.a.• Sustained growth in all operating and financial metrices• Spandana is the first MFI to cross PAT of Rs.200 cr (USD 45 mn)
  • 9. 1998 2004 2005 2006 2007 2008 2009 2010 Guntur, Growth across Orissa, Maharashtra, Rajasthan, Andhra Pradesh Karnataka Tamil Nadu Jharkhand GujaratAndhra Pradesh Chhattisgarh Madhya Pradesh• Registered as • Transformation • Annual • Pilot launch of • First round of PE • Second round of • Reached 3mn • Reached 3.7 a society to a non-deposit disbursement Agri Family infusion by JM PE infusion by borrowers in mn borrowers under taking NBFC crossed Rs 1Bn Loan Financial and Lok Valiant Capital August in March Societies Capital Partners • Reached 0.1 • Pioneered portfolio • Became Registration MM borrowers sale in the industry • Pilot launch of Farm • Reached 1mn largest Act, 1860 Equipment Loan borrowers player • Received • CRISIL rating across all CRISIL rating of upgraded to mf2 • Annual distt. of AP mf3 disbursement crossed INR 10Bn New Product Pilot and Testing Registered Planned new state Post entries as a Society Conversion to Post External NBFC Equity Funding 2 Yr CAGR in 3 Yr CAGR in Loan Book: Loan Book: 28% 109% 13 34 110 916 1,189 2,432 3,703 4 386 722 Number of Borrowers (000s)
  • 10. Karnataka – Entry in FY05 Tamil Nadu – Entry in FY06• In every new state that Gross Loan Portfolio (Rs MM) Gross Loan Portfolio (Rs MM) Spandana enters, within 4 Yr CAGR (07-10) : 74% 5,130 4 Yr CAGR (07-10) : 166% a few years, contiguous 3,000 growth strategy helps in rapid scale-up 1,970 1,280• Despite the growth, the 560 550 Company has been able 60 180 to maintain its asset quality Sep-07 Mar-08 Sep-08 Mar-10 Sep-07 Mar-08 Sep-08 Mar-10 Maharashtra – Entry in FY07 Orissa – Entry in FY07• The Company has Gross Loan Portfolio (Rs MM) Gross Loan Portfolio (Rs MM) successfully increased 4 Yr CAGR (07-10) : 144% 2,842 4 Yr CAGR (07-10) : 231% 2,390 its geographical presence from only 3 states in March 2007 to 12 states in 2010 710 760 80 190 230 20 Sep-07 Mar-08 Sep-08 Mar-10 Sep-07 Mar-08 Sep-08 Mar-10
  • 11. Rajasthan Madhya Pradesh Jharkhand• 9 branches • 100 branches • 6 branches• 233 villages • 2,976 villages • 107 villages• 20,559 clients • 269,226 clients • 7,240 clients Gujarat Chhattisgarh• 7 branches • 36 branches• 37 villages • 1,652 villages• 2,375 clients • 84,350 clients Maharashtra Orissa• 125 branches • 114 branches• 6,024 villages • 8,209 villages• 382,537 clients • 353,777 clients Goa Andhra Pradesh• 3 branches • 787 branches• 65 villages • 37,772 villages• 3,802 clients • 2,159,469 clients Karnataka Tamil Nadu New states (post 2008)• 222 branches • 121 branches Old states (pre-2007)• 9,630 villages • 3,599 villages• 571,479 clients State of origin (pre-2006) • 337,291 clients
  • 12. All figures in INR million • Annualized portfolio Return (APR) atProfit & Loss Account FY 2007 FY 2008 FY 2009 FY 2010 26.5%. [against industry avg. of 28%]IncomeIncome from Operations 469 1,133 3,424 7,004 • Operating expense ratio at 5.1%Other Income 26 141 143 237 [against industry average of 12%]Total Income 495 1,274 3,567 7,241ExpenditureFinancial expenses 148 417 1,182 2,210 • Provisions and write-offs include a 1%Personnel expenses 143 233 587 1,144 standard asset charge – higher than the RBI prescribed normsOperating and other expenses 67 81 165 362Depreciation 6 9 26 54Provisions and write offs 89 75 187 360 • Return on Assets at 7%+ [againstTotal Expenditure 453 815 2,147 4,130 industry average of 3.5%]Profit before tax 43 459 1,420 3,111Tax 16 189 517 1,075 • Return on Equity at 52% [highest inProfit after tax 27 270 903 2,036 the industry]Balance in P & L brought fwd - - 216 939Amount available for appropriation 27 270 1,119 2,975 • Audited by one of the top-4 Audit firmsTransfer to statutory reserve 6 54 181 407Balance carried to balance sheet 21 216 939 2,568Earnings per share • 1USD = 46 INR (approx)Basic and diluted - Rs.10/ share 3 29 80 152
  • 13. All figures in INR millionBalance Sheet FY 2007 FY 2008 FY 2009 FY 2010Sources of fundsShare Capital 86 434 134 135Reserves and surplus 65 450 2,647 4,716Shareholders funds 151 884 2,781 4,851Subordinated loan (unsecured loan) 195 200 185 -Secured loans 2,751 4,726 14,761 21,944Total 3,099 5,813 17,727 26,795Application of FundsFixed assets 24 38 86 115Investments 6 14 2,951 1Deferred tax asset, net - - 37 95Cash and bank balances 448 1,013 2,724 7,766Loan portfolio (excluding assigned portfolio) 2,698 4,883 12,471 21,301Other current assets 29 77 130 190Current assets, loans and advances 3,175 5,973 15,325 29,257Current liabilities 93 45 367 1,962Provisions 14 167 304 712Current liabilities and provisions 107 212 671 2,674Net current assets 3,068 5,760 14,654 26,583Total 3,099 5,813 17,727 26,795
  • 14. • Industry Overview and Spandana’s positioning• Product Suite• Key financial and operating metrics• Investors, Bankers and Rating• Key Strengths of Spandana
  • 15. Investors Bankers: Spandana focuses on diversified fund sources so that the cost of borrowing is reduced. Spandana is supported by 48 Bankers and financial institutions. Some of the relationships are over five year old –FWWB, SIDBI, ICICI Bank, HDFC Bank and ING Vyasya Bank Public sector Banks have been showing increasing interest is taking exposure with us. The major funding instruments are Term Loans, Portfolio EPS: Rs.152 Sales (bilateral assignments and Securitisation), Capital (Face Value Rs.10) Markets (NCDs) and Money Market (CPs) products.At different stages, institutional investors have joined Highest rating & grading in the industry (by CRISIL) –Spandana and contributed to its growth. • Rating of debt & bank facilities ‘A-/Stable/P1’As on March 31, 2010, Spandana has a paid-up ShareCapital of Rs.13.5 crore (USD 3 mn) • Grading of institutional ability: mfR1
  • 16. • Ms. G Padmaja Reddy Founder, promoter and Managing Director of Spandana - She has been instrumental in building Spandana into one of the leading MFIs famed for its scale, efficiency, productivity and profitability• Dr. Rajiv Behari Lall CEO & MD of IDFC. He earlier worked as Partner at Warburg Pincus, as ED with Morgan Stanley, as a Policy Advisor and Economist at the World Bank, ADB, and in academia.• Mr. V.P. Shetty Executive Chairman of JM Financial Limited- Asset Reconstruction Company – earlier worked as GM- Vijaya Bank, Chairman and MD-UCO Bank, Chairman & MD-Canara Bank, Chairman & MD with IDBI.• Mr. Vikram S Rathore ED-SIDBI – over 30 years of experience in Commercial & Development Banking• Ms. Supritha Shetty JGM-ICICI Bank - heads the Rural Risk, Policy and Compliance of ICICI Bank• Dr. Venkateswara Reddy Cardiologist with a long standing experience in teaching Medicine• Mr. Harinder Sawhney Executive Director of JM Financials Private Equity Fund• Dr. Bala Deepthi Practicing Doctor of Medicine – represents youth on the board of Spandana• Ms. M. Asha Latha, Head of HR & Admin at Spandana - has earlier worked in Health Administration• Mr. Vishal Mehta From Lok Capital – rich experience in fund raising, investments and portfolio strategy
  • 17. • Industry Overview and Spandana’s positioning• Product Suite• Key financial and operating metrics• Investors, Bankers and Rating• Key Strengths of Spandana
  • 18. Strong Management Team Years of diversified experienceSignificant Business Highly Efficient Employee Growth Potential Workforce Geographical and product Highest productivity perexpansion coupled with new employee; lowest operating cost initiatives in the industry Established Capability toExceptional Financial Scale Performance From 3 to 12 states and portfolio 4-year PAT CAGR of 56% growth of 369%, in two years Streamlined and Efficient Diversified Processes Product Offerings High quality asset portfolio Continuous development of (almost Zero Net NPAs) innovative products

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