INVESTOR PRESENTATION Q1 FY19
CONTENTS SLIDE NO. COMPANY OVERVIEW 2 RECENT UPDATES AND IH 4 7 BUSINESS MODEL OPERATING MODEL 12 PORTFOLIO UPDATE 17 FINANCIALS 26 PARTNERS 30
COMPANY OVERVIEW 2
ABOUT THE COMPANY - Incorporated in 1985 - Promoted by prominent bankers including former Governor RBI, Chief Justice of India - Initial business was advisory to foreign banks BACKGROUND - Listed on BSE (in 1985) and NSE (in 2016) - Started providing Micro loans in 2008 As on 30.06.2018 Public 15.68% Bank Borrowings: Profit After Tax: Employees: Net Worth: Branches: Credit Rating: AUM: Clients: FII Rs. 511 Crores Rs. 6.72 Crores 242 2098 Rs. 226 Crores BBB+ Promoter Rs. 796 Crores 1.77 Lacs 17.27% 66.17% 3
RECENT UPDATES AND INVESTMENT HYPOTHESIS 4
RECENT COMPANY UPDATES Awarded one of India’s Top 400 Small Cap Companies by Dalal Street Awarded one of India’s Top 1000 Best Performing Corporations by Dalal Street Awarded 78 th position in FT’s 1000 High Growth Companies in Asia -Pacific Highlights Closure of Rs. 150 Crore NCD with Baring Private Equity Asia - Credit Hiring of new top management team (CFO, COO, HR Head, Audit Head, Business Head) Diverse borrowing profile of 24 financial partners (12 banks and 12 NBFCs) 5
INVESTMENT HYPOTHESIS Strong Entry Barriers ( inability of MFIs and non desire of banks to cater to our clients) One Stop Financial Institution (with a 100% owned MFI subsidiary, we offer loans from 25K-10Lacs)) Robust Financials and Established Growth Record (56% CAGR of AUM in last 3 years, 36% CAR) Extensive Branch Network (242 branches spread over 62 districts and 10 states) Perfect Example of Digi-Touch Model (cashless disbursement with fortnightly cash collection) Skin in the Game (high promoter shareholding of ~66%) Diversified Equity and Liability Partners (1PE fund, 12 banks and 12 NBFCs providing support) 6
BUSINESS MODEL 7
UNIQUE BUSINESS MODEL Capital Trust Microfinance Capital Trust Limited Banks and large NBFCs MFIs ASSET FINANCING MISSING MIDDLE (Rs. 25K – Rs. 1Lac) (Rs 10Lacs onwards) (Rs. 1Lac – Rs. 10Lacs) Rs. 1.05Lac loan Rs. 2Lac loan Rs. 3Lac loan Rs. 5Lac loan Footwear Business (Saharanpur) Yarn Production (Hapur) Cloth Store (Bareilly) Handloom Business (Hathras) 8
EMPOWERING MICRO ENTERPRISES MSME SECTOR DEBT SHORTFALL: DEBT 26 LAC CRORE ** SHORTFALL: 94% of India’s 2.65 Crore MSME’s are 2.5 LAC unregistered, hence don’t have access to CRORE * traditional banking 8% of all Microfinance clients graduate to the next economic level each year but do not have access to traditional forms of funding (Mfin) ASSET MICROFINANCE MSME * Axis Securities Microfinance Report 2016 FINANCING ** IFC Report on Indian MSMEs (2015) WHO WHY WHY US Methods and products designed to meet Typically family-run organizations that employ MFIs not allowed to provide loans in this ticket the customer requirement 1 - 10 people size by RBI Timely credit; feet-on-street model with Lack of comprehensive formal documentation of transparent policies accounts, income and business transactions 9
LOAN PRODUCTS • Loans from Rs. 25,000 – Rs. 40,000 • Tenure: 24 months MICROFINANCE • Joint Liability INDUSTRY • Interest Rate: 24.5% • Loan of Rs. 1,05,000 Micro- • Tenure: 36 months • Enterprise Loan Joint Liability • Interest Rate: 26% MSME INDUSTRY • Loans from Rs. 1,00,000 – Rs. 10,00,000 • Tenure: 36 – 48 months Secured- • Secured by original property documents of client Enterprise Loan • Interest Rate: 28% - 30% 10
PRODUCT BREAKUP 900 795 796 800 700 555 600 Micro Enterprise 500 619 626 Secured Enterprise 304 Microfinance 400 340 * Yes Bank BC 300 186 116 200 125 81 95 120 112 100 38 56 93 68 56 58 34 0 FY '15 FY '16 FY '17 FY '18 Q1 FY '19 11 * Microfinance Loan as a Business Correspondent
OPERATING MODEL 12
GEOGRAPHICAL PRESENCE DELHI UTTARAKHAND Branches: 4 Branches: 17 Portfolio: 15 Crores Portfolio: 57 Crores PUNJAB UTTAR PRADESH Branches: 40 Branches: 65 Portfolio: 180 Crores Portfolio: 247 Crores RAJASTHAN BIHAR Branches: 32 Branches: 25 Portfolio: 106 Crores Portfolio: 51 Crores MADHYA PRADESH ODISHA Branches: 25 Branches: 20 Portfolio: 87 Crores Portfolio: 40 Crores CHHATISGARH JHARKHAND Branches: 6 Branches: 8 Portfolio: 4 Crores Portfolio: 9 Crores 13
BRANCH NETWORK DISTRICT OFFICES HUB-AND-SPOKE MODEL Bijnor Aligarh ALIGARH DISTRICT Khanpur Sehore DISTRICT LEVEL BRANCH BLOCK LEVEL BRANCH 14
ORGANIZATIONAL STRUCTURE Board Of Directors Managing Director CFO COO Audit Training Credit Business HR Head Risk Head CTO Head Head Head Head Zonal Head Zonal Head State State Audit State Credit (North) (East) Trainer Manager Manager Audit State CVO Executive Head Field Cluster Cluster Cluster Head Head Head District District District District District Manager Manager Manager Manager Manager Branch Branch Branch Branch Branch Manager Manager Manager Manager Manager Field Staff Field Staff (JLG) (SEL) 15
OPERATIONAL AND IT PROWESS Client on-boarding and in- Staff empowered with Cashless Disbursement for all principle approval from smartphones with access to products since April 2015 scanning of client’s Aadhar card customized mobile application Information available to staff Paperless Audit and closing of One of the most for collections on real-time EOD cashbook branch-wise at technologically advanced basis at remotest location in 6PM NBFCs in this sector country 16
PORTFOLIO UPDATE 17
NON-AFFECTED STATES (OVERVIEW) Punjab, Rajasthan, Madhya Pradesh, States Bihar, Odisha, Jharkhand, Chhattisgarh AUM Rs. 477 Crores 90+ % 0.63% Branches 156 Clients 1.14 Lacs Staff 1199 18
NEW LOANS DISBURSED FY17 ONWARDS Affected States Non Affected States (UP / UKH/ DEL) Company-Wide Disbursement 432.79 188.23 621.01 AUM (Cr.) 359.68 157.34 517.01 90+ AUM(Cr.) 0.06 1.44 1.50 90+% 0.02% 0.92% 0.29% 19
COMPANY-WIDE (PORTFOLIO QUALITY) Non Affected States Affected States Company-Wide (UP / UKH/ DEL) AUM (Cr.) 476.93 318.98 795.91 90+ AUM(Cr.) 3.03 84.00 87.03 90+% 0.63% 26.33% 10.93% 20
NON-AFFECTED STATES (CUMULATIVE COLLECTION UPDATE) Collection Efficiency 101% 100% 99% 99% 99% 99% 98% 100% 80% 60% 40% 20% 0% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Apr-18 May-18 Jun-18 Collection Efficiency of New Loans Disbursed Post April ‘17 101% 101% 101% 101% 101% 100% 100% 101% 100% 80% 60% 40% 20% 0% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Apr-18 May-18 Jun-18 Cumulative 21
COMPANY-WIDE (CUMULATIVE COLLECTION UPDATE) Collection Efficiency 107% 107% 101% 98% 99% 99% 100% 89% 80% 60% 40% 20% 0% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Apr-18 May-18 Jun-18 Collection Efficiency of New Loans Disbursed Post April ‘17 99% 100% 100% 99% 99% 99% 99% 98% 100% 80% 60% 40% 20% 0% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Apr-18 May-18 Jun-18 Cumulative 22
90+ NPA MOVEMENT 900 30.00% 27.84% 26.74% 795 796 800 24.69% 717 25.00% 662 700 589 600 20.00% 500 AUM 15.00% 90+ 400 11.07% 10.93% Op NPA% 300 10.00% 177 177 164 200 5.00% 88 87 100 0 0.00% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1FY19 Owing to the lag of installments between November ‘16 – March ‘17, the company is dealing with “Active 90+ cases .” These are cases that are giving us timely installments but are still potentially reflecting as Reduction: NPAs on our books because of the company’s decision to not provide any top up loan / do any form of restructuring. What was a 36month loan is now behaving as a 40-42 month loan. When the tenure of an active client gets over , every additional installment received shifts the client one bucket to the left. 23
OUTSTANDING RISK 87 Crores NPA 90 80 12Cr (13%) JH (UKH) With 7Cr increase in provisioning in 70 CH Q1, this is the pending risk OD 51 60 BH Active MP 50 Pending RJ 70Cr (80%) Provided Non Active PUN 40 (UP) DL UKH 30 15 UP 20 36 21 10 0 24
LINGERING NPAs Collection Efficiency: 101.1% Collection Efficiency of Loans Disbursed Post FY17: 99.2% NPA% of disbursements post FY17: 0.29% Why does the company still have high NPA? Foreclose loan Lag of installments (between Pay pending installments in one go Nov’16 and Mar’17) Ensure client remains active and NPA reduction would take place once tenure gets over 51 of the 87 Crore NPA is active and paying installments on time Active NPAs Internal Accruals to Write-off Not raised money through equity post demonetization. Managing through internal accruals Risky Portfolio 25
FINANCIALS 26
YEAR-OVER-YEAR GROWTH (Q1FY19 vs Q1FY18) Profit After Tax (in Cr.): Assets Under Management (in Cr): Net Worth (in Cr): 6.7 796 226 (159%) (35%) (8%) -11.4 589 209 Book Value (in Rs): Earnings Per Share (in Rs): Total Borrowings (in Cr): 138 16.4 511 (159%) (8%) (31%) 128 -27.8 390 Cost of Borrowings (in %): Number of Branches (in #): Staff Strength (in #): 13.7 242 2098 (49%) (32%) (3%) 13.3 163 1589 27
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