Satin Creditcare Network Ltd · NSE:SATIN
Satin Creditcare Network — Q2 FY2017 Earnings Presentation
64 slides from Satin Creditcare Network's earnings presentation, Nov 9, 2016
Slide 1: Cover letter to stock exchanges: Investor Presentation
ARE NETWORK LTD. November 9, 2016 To, The Manager, The Manager The Manager, National Stock Exchange of India Ltd. BSE Limited The Calcutta Stock Exchange Ltd Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy Towers, 7, Lyons Range Bandra Kurla Complex, Dalal Street, Kolkata 700001 Bandra East, Mumbai
Slide 2: Satin Creditcare Network Limited Investor Presentation 2Q FY17
SATIN CREDITCARE NETWORK LIMITED INVESTOR PRESENTATION - 2Q FY17 NOV 2016 BSE: 539404 | NSE: SATIN | CSE: 30024 Corporate Identity No. L65991DL1990PLC041796
Slide 3: Disclaimer
Disclaimer By accessing this presentation, you agree to be bound by the following terms and conditions. This presentation (which may reflect some price sensitive information in terms of SEBI regulations and Companies Act, 2013, as amended from time to time) has been prepared by Satin Creditcare Netw
Slide 4: Contents
Contents Details Business Highlights 3 Corporate Overview 7 Product Portfolio 11 Key Investment Thesis 15 Financial & Operational Details (Consolidated, Standalone, TSPL) 31 Annexure Top 10 Shareholders 47 Future Business Strategy 49 Operational Process Overview 52 Information Technology Overview 56
Slide 5: Business Highlights
Business Highlights
Slide 6: Fresh Equity Capital Raised via QIP
1. Fresh Equity Capital Raised via QIP Successfully Raised Rs. 2.50 bn in Oct’16 Allottees who were allotted more than 5% of the QIP issue size The board of directors of SCNL at their meeting held on June 30, 2016, passed an enabling resolution to raise funds for an aggregate amount not exceeding
Slide 7: Rating Upgraded by CARE Ratings
2. Rating Upgraded by CARE Ratings CARE RATINGS upgraded SCNL in Oct 2016 Facilities Type OLD RATING NEW RATING Long Term Bank Facilities (Rs. 22.00 bn) CARE BBB+ CARE A- (Single A minus) NCDs CARE BBB+ CARE A- (Single A minus) Preference Shares CARE BBB (RPS) CARE BBB+ (RPS) (Triple B plus) NCD (Su
Slide 8: Acquired Taraashna Services Private Limited (TSPL)
3. Acquired Taraashna Services Private Limited (TSPL) TSPL acquisition effective September 1, 2016 Taraashna Services Private Limited (“TSPL”), was incorporated on May 22, 2012. The acquisition of TSPL was on the basis of a swap ratio of 1.00 : 7.33 (one It acts as a Business Correspondent (BC)
Slide 9: Corporate Overview
Corporate Overview
Slide 10: Company Overview
Company Overview Satin Creditcare Network Ltd. (‘Satin’ or ‘SCNL’) was India’s fifth largest Microfinance Shareholding Pattern – October 3, 2016 Institution (MFI) in terms of Gross Loan Portfolio (Mar’16)# with a strong presence in North India Other Promoters and 17.23% As of Sep’16, Satin had 6
Slide 11: Key Milestones
Key Milestones Reaches 2.59 mn(A) active clients and gross AUM of ₹ 41,809.81 mn(A) as on Sep’16 Raised INR 2.50 bn via QIP in Oct’16 CARE Ratings upgraded LT Bank Facilities & NCDs to A- in Oct’16 Acquired TSPL in Sep’16 Starts SHG bank linkage Exit of DMP in Jul'16 and Shore Capital in
Slide 12: Select Accolades & Key Highlights
Select Accolades & Key Highlights Received “Client Protection Certificate” under the Award by Client Protection Certificate Smart Campaign – 2016 from M-CRIL MF Transparency Organization Smart Campaign - 2016 Received certificate for being the ‘Best Micro Finance Company in India’ from Worldwide
Slide 13: Product Portfolio
Product Portfolio
Slide 14: Product Portfolio - Diversification Underway
Product Portfolio - Diversification Underway(1) Started operations in 1990 with an objective to provide ‘doorstep’ credit and savings services to individual businesses engaged in productive, trading and services activities in urban areas; gradually forayed into semi-urban and rural areas also St
Slide 15: Product Portfolio – Details
Product Portfolio – Details Business Correspondent MFI Segment(1) Non-MFI Segment services(2) Product Financing Product features as on Sep’16 MFI Lending Loans to MSME(3) TSPL(4) (Loan for Solar lamps) Start Date May’08 (JLG) Oct’15 Apr ‘16 May’12(4) Rs. 100,000 – Rs. Rs. 15,000 – Rs. 30,000 Ticket
Slide 16: Product Portfolio – Other Service Offerings
Product Portfolio – Other Service Offerings Have entered into an agreement with Reliance Capital Limited (“RCL”) in Dec’13 to provide certain services to RCL for providing loans against property (“LAP”) with a view to leverage on our rural reach Loan Against Under the arrangement, Satin sources
Slide 17: Key Investment Theses
Key Investment Theses
Slide 18: Key Investment Thesis
Key Investment Thesis 1 7 Robust industry Experienced fundamentals with management strong regulatory team support Widespread presence with 6 Robust internal leadership position 2 audit and risk in underpenetrated management regions having high mechanisms growth potential Robust operational Strong cl
Slide 19: Microfinance – Supportive Industry Dynamics and Robust Fundamentals
1 Microfinance – Supportive Industry Dynamics and Robust Fundamentals; Strong Growth to Continue Industry Snapshot Sector has seen high growth in GLP and client reach** High level of credit under-penetration in rural areas – Rural areas accounted for only 10% of overall o/s bank-credit while compr
Slide 20: Strong Portfolio Growth Coupled with Low Delinquencies Ensured Continued Funding
1 Strong Portfolio Growth Coupled with Low Deliquencies has Ensured Continued Funding Higher debt and equity funding Debt funding and securitization during the period* Banks have shown high confidence in the sector and have increased their Debt Funding (Rs. bn) Securitization (Rs. bn) funding to M
Slide 21: Regulatory Tailwind Driving Industry Forward
1 Regulatory Tailwind Driving Industry Forward Allegations of malpractices like coercive collection methods, high interest rates resulting in 2010 Andhra MFI Act farmer suicides in Andhra Pradesh Andhra Pradesh passes the MFI act – collection efficiencies drop to ~10% Guidelines by RBI notifie
Slide 22: Regulatory Tailwind Driving Industry Forward
1 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 financial services, namely, banking/savings and deposit 2014 accounts, remittance, credit, insur
Slide 23: India's Fifth Largest MFI with Widespread Presence
2 Satin Creditcare - India’s Fifth Largest MF, in terms of GLP, with Widespread Presence(1) With strong presence in North India, Satin is steadily building a pan India presence(1) Presence in 16 states, with Chhatisgarh, Jharkhand, Himachal Pradesh, West Bengal and Gujarat being added during FY16 Ja
Slide 24: Established Presence in Underserved Geographies
2 Established Presence in Underserved Geographies Leading to Significant Growth Opportunities(1) Satin is present mostly in states of low MFI penetration It has significant presence in under-penetrated and high growing markets Key markets for Satin(1) YoY growth in MFI 2Q FY17 MFI penetration in
Slide 25: Strengthening Presence in Underserved Geographies through Acquisition of TSPL
2 Strengthening Presence in Underserved Geographies through Acquisition of TSPL TSPL is serving clients in under penetrated geographies Presence in 7 states – Punjab have been recently added during FY17 Punjab (as on Sep'16) GLP (INR mn) 13.85 No. of branches 2 Rajasthan (as on Sep'16) GLP (INR mn)
Slide 26: Strong Client Relationships Built Through Transparent Operations
3 Strong Client Relationships Built Through Transparent Operations(1) Track record of over 25 years in microcredit space with comprehensive understanding of the industry and client segment – Rapidly growing operations despite cyclical changes in the economy as well as the MFI space in the past - E
Slide 27: Strong and Diversified Lending Relationships
4 Strong and Diversified Lending Relationships(1) Diversified Lending Portfolio Funds raised (Rs. mn) Total Funds Raised Debt Funds Raised Active relationship with 76 banks and financial institutions (Sep’16) 1HFY17 21,314.31 Spread across Public Sector Banks, Private Banks, Foreign Banks, 13,77
Slide 28: Robust Operational Performance Over the Years
5 Robust Operational Performance Over the Years(1) PARTICULARS FY14 FY15 FY16 CAGR % 1Q FY17 1H FY17 Gross AUM (Rs. mn) 10.560.55 21,406.50 32,707.60 75.99% 32,782.40 37,517.22 No. of districts 97 121 215 48.88% 222 225 No. of branches 199 267 431 47.17% 458 544 No. of States of operation 10 11 16 2
Slide 29: Robust Operational Performance Over the Years (Contd.)
5 Robust Operational Performance Over the Years(1) (Contd.) PARTICULARS FY14 FY15 FY16 CAGR % 1Q FY17 1H FY17 Prod. Financing AUM (Rs. mn) - - 112.61 - 70.46 20.19 No. of Active Customers - - 190,044 - 205,300 124,291 Disbursement during the period (Rs. mn) - - 140.30 - 14.48 22.06 No. of loans disb
Slide 30: Robust Financial Performance Over the Years
5 Robust Financial Performance Over the Years(1) PARTICULARS (Rs. mn) FY14 FY15 FY16 CAGR % 1Q FY17 1H FY17 Revenue 1,916.55 3,241.56 5,585.21 45.71% 1,967.54 4,056.76 PBT 234.13 464.54 875.29 86.92% 364.28 757.30 PAT 155.58 317.16 579.41 86.21% 245.89 506.24 PAT (post Pref. Dividend & Minority Inte
Slide 31: Robust Internal Audit and Risk Management Mechanisms
6 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 for Group Lending and MSME 6 member supervisory/support team at Head Office CMD and Audit Committee and a
Slide 32: Organizational Structure
7 Organizational Structure Board of Directors Chairman cum Managing Director Chief Financial Chief Operating Chief Information Business Head – SME Business Head – SME Head - Human Head - Internal Audit, Officer Officer Officer (North & East) (West & South) Resources Process and Risk Deputy COO – Nor
Slide 33: Financial & Operational Details - Consolidated
Financial & Operational Details - Consolidated
Slide 34: Business Details – Consolidated
Business Details – Consolidated PARTICULARS 2Q FY17(A) 2Q FY16 YoY % 1Q FY17 QoQ % AUM (Rs. mn) 41,809.81 21,558.95 93.93% 32,782.40 27.54% On-Book AUM (Rs. mn) 27,920.24 16,171.75 72.65% 24,087.09 15.91% Securitization/ Assignment (Rs. mn) 9,596.98 5,387.20 78.14% 8,695.31 10.37% TSPL - Business Co
Slide 35: Balance Sheet – Consolidated
Balance Sheet – Consolidated PARTICULARS (Rs. mn) Sep’16(A) Sep’15 YoY % Jun’16 QoQ % Equity(1) 4,293.19 2,673.36 60.59% 3,441.23 24.76% Preference shares 250.00 60.00 316.67% 250.00 0.00% Net Worth 4,543.19 2,733.36 66.21% 3,691.23 23.08% Minority Interest 22.82 na - na - Long Term Borrowings 16,43
Slide 36: P&L Statement – Consolidated (Quarterly)
P&L Statement – Consolidated (Quarterly) PARTICULARS (Rs. mn) 2Q FY17(A) 2Q FY16 YoY % 1Q FY17 QoQ % Total Revenue Interest income on Portfolio Loans 1,308.42 923.72 41.65% 1,319.72 -0.86% Income from securitization 439.45 165.98 164.76% 369.33 18.99% Processing Fee income 138.55 67.80 104.35% 86.07
Slide 37: P&L Statement – Consolidated (Half Yearly)
P&L Statement – Consolidated (Half Yearly) PARTICULARS (Rs. mn) 1H FY17(A) 1H FY16 YoY % Total Revenue Interest income on Portfolio Loans 2,628.14 1,750.30 50.15% Income from securitization 808.78 360.36 124.44% Processing Fee income 224.62 96.42 132.96% Interest on FD 317.79 189.52 67.68% Income fr
Slide 38: Financial & Operational Details - Standalone
Financial & Operational Details - Standalone
Slide 39: Operational Details – Standalone
Operational Details – Standalone PARTICULARS 2Q FY17 2Q FY16 YoY % 1Q FY17 QoQ % Gross AUM 37,517.22 21,558.95 74.02% 32,782.40 14.44% No. of districts 225 177 27.12% 222 1.35% No. of branches 544 329 65.35% 458 18.78% No. of Regional Offices (RO) 29 12 141.67% 18 61.11% No. of States of operation 1
Slide 40: Operational Details – Standalone (Contd.)
Operational Details – Standalone (Contd.) PARTICULARS 2Q FY17 2Q FY16 YoY % 1Q FY17 QoQ % Prod. Financing AUM (Rs. mn) 20.19 na - 70.46 -71.34% No. of Active Customers 124,291 na - 205,300 -39.46% Disbursement during the period (Rs. mn) 7.58 na - 14.48 -47.69% No. of loans disbursed during the perio
Slide 41: Financial Performance – Standalone
Financial Performance – Standalone RoE Tree 2Q FY17 2Q FY16 1Q FY17 Gross Yield (1) 23.78% 24.35% 24.03% Financial Cost Ratio(2) 11.55% 12.80% 11.91% Net Interest Margin(3) 12.23% 11.56% 12.13% Operating Expense ratio(4) 6.82% 6.94% 7.03% Loan Loss Ratio(5) 0.94% 0.38% 0.65% RoA(6) 2.72% 2.57% 2.87%
Slide 42: Balance Sheet – Standalone
Balance Sheet – Standalone PARTICULARS (Rs. mn) Sep’16 Sep’15 YoY % Jun’16 QoQ % Equity(1) 4,289.33 2,673.36 60.45% 3,441.23 24.65% Preference shares 250.00 60.00 316.67% 250.00 0.00% Net Worth 4,539.33 2,733.36 6.07% 3,691.23 22.98% Long Term Borrowings 16,384.97 9,798.61 67.22% 15,391.78 6.45% Lon
Slide 43: P&L Statement – Standalone (Quarterly)
P&L Statement – Standalone (Quarterly) PARTICULARS (Rs. mn) 2Q FY17 2Q FY16 YoY % 1Q FY17 QoQ % Total Revenue Interest income on Portfolio Loans 1,308.42 923.72 41.65% 1,319.72 -0.86% Income from securitization 439.45 165.98 164.76% 369.33 18.99% Processing Fee income 138.55 67.80 104.35% 86.07 60.7
Slide 44: P&L Statement – Standalone (Half Yearly)
P&L Statement – Standalone (Half Yearly) PARTICULARS (Rs. mn) 1H FY17 1H FY16 YoY % Total Revenue Interest income on Portfolio Loans 2,628.14 1,750.30 50.15% Income from securitization 808.78 360.36 124.44% Processing Fee income 224.62 96.42 132.96% Interest on FD 317.79 189.52 67.68% Other Income 7
Slide 45: Financial & Operational Details - TSPL
Financial & Operational Details - TSPL
Slide 46: Operational Details – TSPL
Operational Details – TSPL PARTICULARS Q2FY17 Q2FY16 YoY % Q1FY17 QoQ Gross AUM (Rs. mn) 4,292.59 2,700.40 58.96% 3,715.00 15.55% No. of districts 78 42 85.71% 70 11.43% No. of branches 137 82 67.07% 131 4.85% No. of Regional Offices (RO) 8 5 60.00% 7 14.29% No. of States of operation 7 5 40.00% 6 1
Slide 47: Balance Sheet – TSPL
Balance Sheet – TSPL PARTICULARS (Rs. mn) Sep’16 Sep’15 YoY % Jun’16 QoQ % Share Capital 90.83 90.83 0.00% 90.83 0.00% Reserves and Surplus 96.64 93.42 3.45% 87.52 10.43% Net Worth 187.47 184.25 1.75% 178.34 5.12% Long Term Borrowings 46.67 13.74 239.56% 6.67 600.00% Long Term Provisions 6.53 2.59 1
Slide 48: P&L Statement – TSPL
P&L Statement – TSPL PARTICULARS (Rs. mn) Q2FY17 Q2FY16 YoY % Q1FY17 QoQ % Total Revenue 106.42 85.00 25.20% 88.82 19.82% Interest Expense 3.01 1.61 86.96% 2.57 17.12% Personnel Expenses 55.81 40.30 38.49% 54.74 1.95% Credit cost (Provisions for NPAs, Write-offs, etc.) 10.82 1.75 518.25% 4.18 158.71
Slide 49: Annexure: Top Shareholders
Annexure Top 10 Shareholders
Slide 50: Shareholding Pattern post QIP
Shareholding Pattern post QIP Top 10 Shareholders as of 3 Oct 2016 Top 10 Institutional Shareholders as of 3 Oct 2016 Share Share Entity Entity holding % holding % PROMOTER 33.04 MORGAN STANLEY MAURITIUS COMPANY LTD 4.34 MV MAURITIUS LIMITED 9.30 MORGAN STANLEY ASIA (SINGAPORE) PTE 2.95 SBI FMO 8.82
Slide 51: Annexure: Future Business Strategy
Annexure Future Business Strategy
Slide 52: Future Business Strategy
Future Business Strategy Product Market size* Future Business Strategy Core operations (MFI Rs. 590 bn+ market; expected to grow at 32% CAGR over Geographic diversification – Broadbase operations and reduce any Lending) next 4 years geographic concentration in states such as Uttar Pradesh Increa
Slide 53: Future Business Strategy (Contd.)
Future Business Strategy (Contd.) New Products Product Market opportunity* Future Business Strategy BC 1,500 5,400-5,600 7,500 TSPL seeks to enter into arrangements with various other No. of BC transaction operations 934 banks and financial institutions to scale the business Amt transacted (Rs. Bn
Slide 54: Annexure: Operational Process Overview
Annexure Operational Process Overview
Slide 55: Operational Methodology
Operational Methodology 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 including pop
Slide 56: Operation's Methodology (Contd.)
Operation’s Methodology (Contd.) 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
Slide 57: Operation's Methodology (Contd.)
Operation’s Methodology (Contd.) 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 Prior to generation of sanction l
Slide 58: Annexure: Information Technology Overview
Annexure Information Technology Overview
Slide 59: 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 SCNL is where business, innovation and technology come together to create competitive advantage. Our strategy is to deliver Robust Tech
Slide 60: Business Applications – Current Footprint
Business Applications – Current Footprint Microfinance & SME Business Core Microfinance Application for Group Lending vertical has been developed by Force Ten Technologies and customized as per SATIN business requirements. The software is primarily build on .Net framework with SQL as core databa
Slide 61: Annexure: CSR & Social Performance Management (SPM)
Annexure CSR & Social Performance Management (SPM)
Slide 62: Recent CSR & SPM Initiatives
Recent CSR & SPM Initiatives Committed towards social initiatives - conducted regular campaigns including organizing campaigns to increase financial literacy Contribution to various CSR projects undertaken by independent implementing agencies Year CSR project Name Of implementing Agency FY15 “Improv
Slide 63: 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) 61
Slide 64: Thank You
Thank You
Satin Creditcare Network — Q2 FY2017 Earnings Presentation on 6ix