Satin Creditcare Network Ltd · NSE:SATIN
Satin Creditcare Network — Q4 FY2016 Earnings Presentation
58 slides from Satin Creditcare Network's earnings presentation, May 2016
Slide 1: Satin Creditcare Network Limited Investor Presentation Q4FY16
SATIN CREDITCARE NETWORK LIMITED INVESTOR PRESENTATION – Q4FY16 MAY 2016 BSE: 539404 | NSE: SATIN | CSE: 30024 Corporate Identity No. L65991DL1990PLC041796
Slide 2: Disclaimer
Disclaimer This presentation (which may reflect some price sensitive information in terms of SEBI laws and Companies Act, 2013, as amended from time to time) has been prepared by Satin Creditcare Network Limited (the “Company”) solely for your information and for your use and may not be taken away,
Slide 3: Contents
Contents Details Slide No. Business Performance Summary 3 Corporate Overview 6 Operational Overview 13 Financial Overview 23 Borrowing Profile 28 Operational Process Overview 32 Risk Management 36 Information Technology 38 Business Outlook 41 Corporate Governance & Management Team 43 CSR & Social Pe
Slide 4: Business Performance Summary
Business Performance Summary
Slide 5: Satin Creditcare - Impressive growth trajectory
Satin Creditcare - Impressive growth trajectory Summary of FY 2016 AUM incl. Managed Portfolio (INR Mn) 40,000 78% CAGR Satin Creditcare Network Limited (SCNL) is North 32,708 India’s largest and India’s 5th largest MFI 30,000 21,407 Presence across 16 states, 431 branches (Mar’16) 20,000 10,561
Slide 6: Satin Creditcare - Financial Snapshot
Satin Creditcare - Financial Snapshot All figures in INR Mn Q4FY16 Q4FY15 % Growth FY16 FY15 % Growth 32,708 21,407 53% AUM (Incl. Managed) 32,708 21,407 53% 1,731 1,005 72% Revenue 5,585 3,242 72% 850 435 95% NIM 2,686 1,467 83% 595 274 117% Operating Expenses 1,807 1,000 81% 260 159 64% PBT 875 46
Slide 7: Corporate Overview
Corporate Overview
Slide 8: Company Snapshot
Company Snapshot Satin Creditcare Network Ltd. (SCNL) is North India’s largest and India’s 5th largest MFI with presence across 16 states with 431 branches, as of Mar’16 SCNL is listed on BSE (Oct’15), NSE (Aug’15) and CSE* (May’15). Earlier was listed on Delhi, Jaipur and Ludhiana regional exchange
Slide 9: Key Milestones
Key Milestones Starts SHG bank linkage program in Reaches 1 lakh clients and Rs. 100 Crores Rewa, MP 2016 portfolio Receives 83% in microfinance COCA One of the first MFI to do a multi- audit -amongst the best in the 2015 originator securitization country Raised INR 25mn from Lok Capital a
Slide 10: Company's Listing on NSE
Company’s Listing on NSE • In 2015, SEBI derecognized regional exchanges where Satin had been listed since 1996 • Satin applied for listing on the National Stock Exchanges, and same was approved in Aug 2015 500 450 27 May 2016 Close Price: 400 INR 338/share 350 300 250 Started trading on NSE on 200
Slide 11: Shareholding Pattern
Shareholding Pattern Shareholding Pattern – 31 Mar, 2016 DMP, 7.5% Public, 14.9% NMI, 8.3% PE Investors, 48.9% SBI-FMO, 10.0% Promoters, 36.2% MV Mauritius, 10.9% ShoreCap, 12.2% Promoter stake in Satin is the highest among MFIs Shows very strong & long term commitment of promoters towards the compa
Slide 12: Product Portfolio - Diversification Underway
Product Portfolio - Diversification Underway Started operations in 1990 with Individual Lending and Small Business Loans Started the JLG model in May 2008 to diversify its portfolio, expand across geographies and broad base its outreach MFI Presently JLG portfolio accounts for >98% of total lo
Slide 13: Accolades & Key Highlights
Accolades & Key Highlights Award by MF Transparency Organization First MFI to raise Equity after AP crisis First company to do a Multi-Originator securitization transaction First NBFC-MFI to raise funds from a domestic bank against guarantee by Asian Development Bank and IFMR Capital Raised
Slide 14: Operational Overview
Operational Overview
Slide 15: Strong Presence in States with Low Penetration & High Potential
Strong Presence in States with Low Penetration & High Potential Satin is Present Mostly in States of Low MFI Penetration Top States with Highest MFI Client Concentration (Mar 2016) Presence in 16 states – 5 states of Chhatisgarh, Jharkhand, Himachal Pradesh, West Bangal and Gujarat have been recentl
Slide 16: Geographic Diversification Strategy working as envisaged
Geographic Diversification Strategy working as envisaged Gross Loan Portfolio – Reducing Geographic concentration Areas of operations – Reducing Geographic concentration GLP - FY16 FY16 FY13 FY13 - FY16 FY13 FY16 State Change (INR mn) % mix % mix CAGR % 2.2% 2.0% 3.4% 7.9% Uttar Pradesh 13,385 41% 5
Slide 17: Leadership Position in some States of Presence
Leadership Position in some States of Presence Dominance in some states of presence – Satin’s Market Share* Portfolio Outstanding by Economic Activity* As of March 2016 As of March 2016 Other 45% 42% 0.4% 40% 35% Service/ 30% Trade 29.0% 25% 24% Agri / 20% 20% 18% Allied Activities 15% 12% 62.8% 11%
Slide 18: Product Portfolio - Details
Product Portfolio - Details Satin Creditcare Network Limited (SCNL) MFI Product Financing – Solar Lamp MSME(1) Start Date May 2008 Oct 2015 Apr 2016 Ticket Size ₹15,000 – ₹50,000 Less than ₹4,000 ₹1.0 – ₹10.0 Lakh Avg. Ticket Size (Mar’16) ~ ₹24,000 Less than ₹4,000 ~ ₹7.0 Lakh Tenure 12 - 24 months
Slide 19: Diversified Loan Book and Strong Client Relationship
Diversified Loan Book and Strong Client Relationship Trend in Loan Cycle First & second time borrowers form ~80% of GLP and volume, indicating high growth in borrower addition over the years Gross Loan Portfolio (INR mn) Clients Outreach Cycles FY13 FY14 FY15 FY16 Cycles FY13 FY14 FY15 FY16 1 3,455
Slide 20: Strong Operational Performance..
Strong Operational Performance.. No. of Villages Branch Network 40,000 500 41% CAGR 33,631 39% CAGR 431 400 30,000 22,499 267 300 20,000 16,135 199 11,945 200 161 10,000 100 0 0 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 No. of Borrowers Disbursements Trend (INR mn) 24,00,000 40,000 36,061 56% CAGR 79%
Slide 21: ..Improving Productivity..
..Improving Productivity.. Disbursement/ Branch (INR mn) Disbursement/ Employee (INR mn) 120 12 29% CAGR 28% CAGR 100 10 9.5 9.2 88.6 83.7 80 8 61.8 6.2 60 6 38.9 4.4 40 4 20 2 0 0 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 GLP/Branch (INR mn) GLP/ Loan Officer (INR mn) 100 28% CAGR 16 26% CAGR 80.2 12
Slide 22: ..and High Quality Portfolio
..and High Quality Portfolio No. of Clients/ Branch No. of Clients/ Loan Officer 6,000 13% CAGR 900 11% CAGR 800 711 5,000 4,461 686 4,295 700 4,004 592 4,000 600 505 3,013 500 3,000 400 2,000 300 200 1,000 100 0 0 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 Opex/ Avg. AUM PAR 90 9.00% 7.7% 7.6% O/S amo
Slide 23: Other Businesses – Business Correspondent Services
Other Businesses – Business Correspondent Services Under this business, Satin capitalizes on its existing geographical reach while furthering financial inclusion in remote areas Taraashna Services Pvt. Limited (TSPL), is a group company of Satin provides BC services Satin gets 10% of TSPL’s gros
Slide 24: Financial Overview
Financial Overview
Slide 25: Key Financial Indicators
Key Financial Indicators INR mn FY13A FY14A FY15A FY16A Net Worth* 1,237 1,384 1,935 3,240 AUM** 5,800 10,561 21,407 32,708 Managed AUM 1,259 2,712 6,762 9,960 Total Debt 5,898 9,087 16,301 27,483 Net Interest Income *** 155 406 599 906 PAT (post Pref. dividend) 39 155 308 573 Cost to Income (%)# 81
Slide 26: Robust Financial Performance
Robust Financial Performance RoE Tree FY13 FY14 FY15 FY16 Total Income1 21.0% 23.4% 20.3% 20.6% Interest expense 12.1% 13.0% 11.1% 10.7% Net Interest Margin 8.9% 10.5% 9.2% 9.9% Opex 7.7% 7.6% 6.3% 6.7% Provision for Tax 0.3% 1.0% 0.9% 1.1% RoA2 0.7% 1.7% 2.0% 2.2% Leverage (Avg. Liabilities/ Avg. N
Slide 27: Financial Summary – Balance Sheet
Financial Summary – Balance Sheet Figures in INR mn Particulars FY13 FY14 FY15 FY16 Net Worth (Including Share warrants)* 1,237 1,384 1,935 3,240 Preference shares - 60 60 - Total Borrowings & Other Liabilities 6,215 9,773 18,112 29,794 Total Liabilities 7,452 11,217 20,107 33,034 Fixed Assets 83 12
Slide 28: Financial Summary – P&L Statement
Financial Summary – P&L Statement Figures in INR mn Particulars FY13 FY14 FY15 FY16 YoY Growth CAGR Total Revenue Interest income on Portfolio Loans 698 1467 2374 3,805 60% 76% Income from securitization 88 116 330 892 Processing Fee income 55 112 225 352 Interest on FD 98 208 288 470 Other Income 4
Slide 29: Borrowing Profile
Borrowing Profile
Slide 30: Strong and Diversified Lending Relationships
Strong and Diversified Lending Relationships Diversified Lending Portfolio Funds Raised (INR mn) Active relationship with 73 banks and financial 40,000 34,614 institutions 35,000 Spread across Public Sector Banks, Private Banks, Foreign 30,000 Banks, Domestic Financial Institutions (DFI) and For
Slide 31: Resource Profile - Movement of Borrowing away from Banks
Resource Profile - Movement of Borrowing away from Banks FY13 FY16 18% 27% 42% 10% 1% 1% 8% 64% 4% 10% 15% Term loan (Bank) Term loan (Others) NCD Sub debt ECB Commercial Paper Securitized & Assignment portfolio Particulars (INR Bn) FY13 % of total FY16 % of total Term loan (Bank) 4.5 64% 15.4 42% T
Slide 32: Credit Rating
Credit Rating Trend in Credit Rating Instrument Date Rating Agency Amount (INR Cr.) Rating Status Nov 2015 CARE Ratings 1,600 BBB+ Reaffirmed Jun 2015 CARE Ratings 1,300 BBB+ Reaffirmed Dec 2014 CARE Ratings 1,300 BBB+ Reaffirmed Long term Bank Facilities Sep 2014 CARE Ratings 1,000 BBB+ Upgraded Fe
Slide 33: Operational Process Overview
Operational Process Overview
Slide 34: Operation's Methodology (1/3)
Operation’s Methodology (1/3) Trend in Loan Cycle Area Selection Area Selection • SCNL’s Business Development team conducts thorough area surveys for identification of suitable locations for launch of microfinance business. Village Selection • The team assimilates, analyzes several variables includi
Slide 35: Operation's Methodology (2/3)
Operation’s Methodology (2/3) Trend in Loan Cycle Center / Group Formation Area Selection • Upon approval of a village by TM, the CSO conducts an Open General Meeting in the village. • CSO educates the women about SCNL and its credit programs. Village Selection • CSO asks the women to form groups an
Slide 36: Operation's Methodology (3/3)
Operation’s Methodology (3/3) Trend in Loan Cycle Disbursement (and approval/ rejection of loan) Area Selection • Loan proposal (application) qualifies for disbursement after necessary checks done by BM during Pre-GRT and by the TM during GRT. Village Selection • All the proposals must undergo throu
Slide 37: Risk Management
Risk Management
Slide 38: Robust Internal Audit and Risk Management Mechanisms
Robust Internal Audit and Risk Management Mechanisms Strong Internal Audit Processes and Systems ensure high Portfolio quality Team Structure Full fledged in-house Internal Audit department Board/CMD 4 member supervisory/support team at HO and 50 member strong field team Head Internal Audit (IA) T
Slide 39: Information Technology Overview
Information Technology Overview
Slide 40: Scalable Business Model supported by a strong IT Infrastructure
Scalable Business Model supported by a strong IT Infrastructure Information Technology Vision Statement Our Current Technology Footprint Information Technology at SATIN is where business, innovation and technology come together to create competitive advantage. Our strategy is to deliver Robust Tec
Slide 41: Business Applications – Custom built for SCNL's technology needs
Business Applications – Custom built for SCNL’s technology needs Microfinance Core Microfinance Application for Group Lending vertical - Built by Force Ten Technologies (Kolkata) and customized for SCNL’s needs The software is based on SQL technology in the backend and Visual Basic (VB) in the f
Slide 42: Business Outlook
Business Outlook
Slide 43: Guidance for FY17
Guidance for FY17 Satin’s mission is to provide easy, doorstep services to India’s urban and rural poor, specifically those who lack access to funds from any other financial institution at affordable rates in order to support productive activities. All figures in INR Mn FY16 Actual FY17 Guidance Fun
Slide 44: Corporate Governance & Management Team
Corporate Governance & Management Team
Slide 45: Strong Corporate Governance and Internal Audit Mechanisms in Place
Strong Corporate Governance and Internal Audit Mechanisms in Place Adequate Safeguards for protecting interests of minority shareholders Board of Directors Audit Committee Promoter directors 2 Promoter Independent directors directors Investor Independent 1 7 directors directors 5 2 Compensation Comm
Slide 46: Experienced Management Team
Experienced Management Team H P Singh, Chairman, MD & Promoter Jugal Kataria, Chief Financial Officer >25 years of experience in microfinance; Pioneered the CFO of Satin since 2000 unique concept of daily collection of repayments of loans 25 years of experience as CA and Experience in the fi
Slide 47: Highly Diversified and Experienced Board
Highly Diversified and Experienced Board Satvinder Singh, Director Rakesh Sachdeva, Independent Director Has extensive consumer marketing and finance experience and has Actively involved in evaluating the company's macro issues developed new methods of credit appraisal and marketing Is a Fello
Slide 48: CSR & Social Performance Management (SPM)
CSR & Social Performance Management (SPM)
Slide 49: Recent CSR & SPM Initiatives
Recent CSR & SPM Initiatives Social Performance Management Initiatives Organized various campaigns to increase the “Financial Literacy” with focus on MFIs & their working, usage of borrowed funds, avoidance of over-indebtness, etc. – Apr 2015 to Mar 2016 Undertook an Anti-Drug and Alcohol Abuse
Slide 50: Microfinance Industry & Regulatory Scenario
Microfinance Industry & Regulatory Scenario
Slide 51: Microfinance – The Largest BoP Financial Services Sub-Sector
Microfinance – The Largest BoP Financial Services Sub-Sector Industry Snapshot On a strong growth trajectory even as some MFIs convert to banks GLP (INR bn) Client outreach (mn) India is one of the most active MFI markets in the world 600 32.5 40.0 (1) The Indian MFI industry has 32.5mn borrower
Slide 52: Consolidation around Top Players
Consolidation around Top Players RBI Regulations Indirectly Favor Stronger MFIs Large MFIs make up bulk of the industry* RBI prescribed that one borrower can borrow from a maximum of two GLP>5bn GLP>1-5 bn GLP<INR 1 bn MFIs, which acts as a high entry barrier 1.1% 100% 1.6% 1.6% 1.4% – Large porti
Slide 53: Lenders Have Turned Optimistic
Lenders Have Turned Optimistic Higher debt funding Debt funding during the period (INR bn) 400 Banks have shown greater confidence in the sector and have 337.06 350 increased their funding to MFIs 300 – MFI continues to enjoy Priority Sector status 250 217.37 – Greater monitoring and regulations f
Slide 54: Regulatory Tailwind Driving Industry Forward
Regulatory Tailwind Driving Industry Forward Allegations of malpractices like coercive collection methods, high interest rates resulting in farmer 2010 Andhra MFI Act suicides in Andhra Pradesh Andhra Pradesh passes the MFI act – collection efficiencies drop to <20% Guidelines by RBI notifies
Slide 55: Regulatory Tailwind Driving Industry Forward
Regulatory Tailwind Driving Industry Forward Comprehensive national-level Financial Inclusion scheme launched - Pradhan Mantri Jan Dhan Yojana Jan Dhan Yojna The scheme includes universal access to banking facilities starting with Basic Banking Accounts with inbuilt overdraft facility of Rs.5000
Slide 56: Grant of Small Finance Bank Licenses Has Received Mixed Reactions in the Industry
Grant of Small Finance Bank Licenses Has Received Mixed Reactions in the Industry Access to lower cost of funds by mobilizing deposits Stringent regulatory requirement and prudential from customers (No limit on amount of deposits) norms, including No restriction on size of loan to a single bor
Slide 57: Contact Information
Contact Information For any queries, please contact: Mansi Verma AVP – Capital Markets Satin Creditcare Network Limited E: mansi.verma@satincreditcare.com T: +91 11 4754 5000 (Ext – 243) 56
Slide 58: Thank You
Thank You
Satin Creditcare Network — Q4 FY2016 Earnings Presentation on 6ix