Spandana Sphoorty Financial Limited · NSE:SPANDANA
Spandana Sphoorty Financial — Q1 FY22 Earnings Presentation
50 slides from Spandana Sphoorty Financial's earnings presentation, Aug 15, 2021
Slide 1: Stock exchange cover letter for Investors' Presentation
Ref: SSFL/Stock Exchange/2021-22/45 Date: August 15, 2021 To To BSE Limited, National Stock Exchange of India Limited, Department of Corporate Services Listing Department P. J. Towers, 25th Floor, Exchange Plaza, C-1, Block G Dalal Street, Bandra Kurla Complex, Bandra (E) Mumbai – 400001 Mumbai – 40
Slide 2: Spandana Sphoorty Financial Limited Investor Presentation August 2021
Spandana Sphoorty Financial Limited ….Committed to low-income households Investor Presentation August 2021 18 Years Q1 FY22
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by Spandana Sphoorty Financial Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe f
Slide 4: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financial Limited became subsidiary
Slide 5: Executive Summary
Executive Summary Collection Efficiency* impacted in Q1, but Increased focus on Collections & Overview significantly improved in July’21 conscious decision to lower Disbursements Rs crore ▪ Second largest microfinance company in India with an AUM of Cum. CE% for Rs 7,390 crore and an active customer
Slide 6: Q1 FY22 – Performance Highlights
Q1 FY22 – Performance Highlights ▪ Assets under management grew by 6% YoY and de-grew by 9% QoQ to Rs 7,390 crore ▪ Field Staff spent significant time and effort on collections and addressing borrowers concerns Sustained Growth ▪ Cautious approach followed on loan disbursements –Rs. 216 crore in Q1
Slide 7: Spandana has always shown consistent growth, profitability and sustainability
Spandana has always shown consistent growth, profitability and sustainability... Growth Profitability Sustainability Robust AUM (Rs crore) Industry Leading NIM (%) Limited Concentration Risk – Top 3 States 8,157 16.5% 16.7% 7,390 15.3% 15.4% 63% 6,829 14.1% 53% 47% 48% 47% 4,372 3,166 FY18 FY19 FY20
Slide 8: All-weather team having navigated multiple cycles
...with its ‘all-weather’ team having successfully navigated multiple cycles… AP Crisis: 2010 Measures Taken Increase in Cumulative Collections from Old AP Book each year ✓ Kept on-ground presence in AP by keeping branches open and engaging with customers 976 1,015 1,018 1,022 1,033 1,040 1,046 1,04
Slide 9: Covid19 being another demonstration of the same ability
...with Covid19 being another demonstration of this same ability First MFI to resume ▪ First MFI to resume business post-lockdown, opening branches across 18 states in April 2020 – significant advantage in collections effort operations ▪ Quickly moved branches from ‘red’ to nearby ‘green’ zones to e
Slide 10: Management has continued to demonstrate agility in implementing Covid learnings
Management has continued to demonstrate agility in implementing learnings from Covid’19... 99% ▪ Taking cues from COVID 1.0 and using lessons from 76% Share of Pre & FY21 lockdown, COVID 2.0 has been managed well, 24% Post Covid which resulted in faster recovery 1% Portfolio Q1 FY21 Q1FY22 ▪ All Bra
Slide 11: No repayment holiday provided, provisions accelerated
No repayment holiday provided to borrowers, however, provisions were accelerated to provide adequate buffer Total portfolio coverage for Q1FY22 stands at a comfortable Rs 577 crore, which equates to 7.8% of the total portfolio Month on Month PAR Trend (%) 24.0% 21.6% 17.8% 10.3% 9.1% 9.3% 6.8% 6.0%
Slide 12: Business Trajectory in Q1 FY22
Business Trajectory in Q1 FY22 Conservative practices and seasoned team helped in faster recovery AUM on Growth Path (Rs. crore) Disbursements reached highest Industry leading Opex (%) Strong Capital Adequacy Ratio % ever in Q4 FY21 (Rs crore) 53.0% 8,157 2,317 2,426 3.4% 3.4% 7,764 3.1% 3.1% 3.2% 4
Slide 13: Key Operating Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 14: Operational Summary
Operational Summary AUM (Rs. crore) Disbursements (Rs. crore) Borrowers (In lakhs) Off-Book On-Book* Off-Book On-Book* CAGR CAGR CAGR +19% +16% +37% 8,157 7,999 7,390 24.6 25.7 24.5 24.5 6,829 6,426 4,969 15.9 4,372 4,914 7,280 6,576 3,858 3,166 4,232 1,915 216 140 877 814 Mar-18 Mar-19 Mar-20 Mar-2
Slide 15: Rising Employee Productivity has led to Opex Efficiency
Rising Employee Productivity has led to Opex Efficiency Active Borrowers/Branch (#) AUM/Employee (Rs crore) Cost To Income (%) Excl. Trainees Incl. Trainees 30.4% 2,658 1.05 1.07 2,541 1.02 24.9% 2,285 2,324 2,297 21.9% 22.5% 0.94 19.9% 0.86 0.80 0.80 0.83 0.78 0.66 Mar-18 Mar-19 Mar-20 Mar-21 Jun-2
Slide 16: Industry-Leading Geographic Diversification
Industry-Leading Geographic Diversification at State, District and Branch Levels State-wise Concentration Well diversified portfolio across States Well dispersed district level exposure ensures low impact from region-specific Top States AUM Concentration* issues Madhya Pradesh 18.0% District wise Co
Slide 17: Continued Focus on Further Increasing Diversification
Continued Focus on Further Increasing Diversification, Without Compromising Rural Focus State-wise Consolidated AUM Mix – Greater Diversification Concentration (by AUM) of Top 3 States is Reducing 18.0% 63.0% Madhya Pradesh 18.3% 54.7% 16.7% 48.4% 48.0% 47.4% Orissa 16.9% 12.7% Karnataka 12.8% 10.7
Slide 18: Agile Risk Management Helped Avoid Over-Leveraged Areas
Agile Risk Management Helped Avoid Over-Leveraged Areas Strong History of Pre-Emptively Managing Exposure to Risky Geographies Current Footprint Reflects Same Experience and Agility Paused UP in 2016 as borrowers were over-leveraged, and chose not to expand in Slowly expanded into WB, but pulled bac
Slide 19: Successful Transition to Monthly Repayment
Successful Transition to Monthly Repayment ▪ Company started transition to monthly repayment in late-2019, in response to customer demand, driven by a lower time commitment from their side ▪ Industry has evolved, where more frequent borrower meetings were once required to maintain discipline – no lo
Slide 20: Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 21: Financial Performance
Financial Performance Total Income (Rs crore) Net Interest Income (Rs crore) Yield (%) Cost of Borrowings (%) +156% +217% -260 bps -280 bps 1,470 1,506 1,082 25.7% 26.2% 14.2% 24.0% 13.5% 23.1% 22.2% 906 11.9% 11.4% 10.9% 1,049 623 588 435 341 292 FY18 FY19 FY20 FY21# Q1FY22 FY18 FY19 FY20 FY21 Q1FY
Slide 22: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Particulars (Rs. crore) FY21 FY20 Q1 FY22 Q1 FY21 Q4 FY21 Revenue from Operations Interest income 1,362.7 1,169.2 396.7 309.8 403.0 Net gain on fair value changes 76.1 218.5 28.7 15.5 37.2 Other Income 43.9 47.6 8.7 0.7 33.7 Total income from operations 1482.6 1,
Slide 23: Consolidated Balance Sheet
Consolidated Balance Sheet ASSETS (Rs. crore) Jun 30, 2021 Mar 31, 2021 Jun 30, 2020 LIABILITIES & EQUITY (Rs. crore) Jun 30, 2021 Mar 31, 2021 Jun 30, 2020 Financial Assets Financial Liabilities Cash and cash equivalents 1,693.9 1,135.2 762.3 Debt Securities 2,243.5 2,034.7 778.6 Bank Balances othe
Slide 24: Borrowing Profile
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 25: Diversified Borrowing Profile
Diversified Borrowing Profile Borrowings (Rs crore) ▪ Total borrowings raised during Q1 FY22 is Rs 751 crore ▪ No moratorium availed from lenders 6,194 DA 5,965 ▪ Further diversified the borrowing profile by tapping into retail debt PTC market through wealth management channels and money market NCDs
Slide 26: Comfortable Liquidity Position Driven by Strong Track Record
Comfortable Liquidity Position Driven by Strong Track Record Positive ALM Mismatch (Rs. crore) Assets Liabilities 2,293 2,029 1,834 2,184 1,449 1,149 1,027 509 347 335 467 295 220 320 34 75 Upto 1 Month 1 to 2 Months 2 to 3 Months 3-6 Months 6 to 12 Months 1 to 3 Years 3 to 5 Years Over 5 Years Posi
Slide 27: Strong Credit Rating – Upgraded to 'A' rating
Strong Credit Rating – Upgraded to ‘A’ rating, despite impact of Covid Rating Instrument Rating Agency Rating Consistent Rating Upgrades CRISIL * A (Stable) Bank Facilities Ind-Ra A (Stable) Jul’21 A/Stable (CRISIL) ICRA A- (Stable) A/Stable (IndRa) Ind-Ra A (Stable) Non-Convertible Debentures ICRA
Slide 28: Overview of Criss Financial & Abhiram
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 29: Overview of Criss Financial
Overview of Criss Financial ▪ Criss Financial Limited (CFL) is an NBFC, which is a 98.5% subsidiary of Spandana Sphoorty Financial Limited ▪ It was set up to operate in states / asset classes that SSFL itself could not, given its status as an NBFC-MFI ▪ CFL offers Loans against Gold, Loans against p
Slide 30: Criss Financial – Robust Financial Performance
Criss Financial – Robust Financial Performance AUM (Rs crore) Disbursements (Rs crore) Total Income (Rs crore) PBT (Rs crore) CAGR CAGR +21% CAGR +28% 403 418 326 56 23 +37% CAGR 277 19 20 +55% 244 40 35 186 11 10 168 22 24 108 103 78 FY18 FY19 FY20 FY21 Q1FY22 FY18 FY19 FY20 FY21 Q1FY22 FY18 FY19 F
Slide 31: Criss Financial – Q1 FY22 Profit & Loss Statement
Criss Financial – Q1 FY22 Profit & Loss Statement Particulars (Rs. crore) FY21 FY20 Q1 FY22 Q1 FY21 Q4 FY21 Revenue from Operations Interest income 51.4 30.5 23.8 10.5 16.3 Net gain on fair value changes 0.9 - 0.1 - 0.9 Others 2.1 1.9 0.3 0.0 1.2 Total income from operations 54.3 32.4 24.2 10.5 18.3
Slide 32: Criss Financial – Balance Sheet
Criss Financial – Balance Sheet ASSETS (Rs. crore) Jun 30, 2021 Mar 31, 2021 LIABILITIES & EQUITY (Rs. crore) Jun 30, 2021 Mar 31, 2021 Financial Assets Financial Liabilities Borrowings 264.6 249.9 Cash and cash equivalents 3.1 4.4 Subordinated Liabilities - - Bank Balances 0.0 0.5 Other Financial l
Slide 33: Overview of Abhiram Marketing
Overview of Abhiram Marketing ▪ Abhiram Marketing is a consumer goods retail company, incubated by Spandana’s promoter Overview ▪ It purchases various consumer durables goods such as rice cookers, lamps, mobile phones, white goods, etc from OEMs, for sale to customers in harder-to-reach geographies
Slide 34: Insignificant Impact on Spandana's Opex due to Abhiram's Cost Sharing
Insignificant Impact on Spandana’s Opex due to Abhiram’s Cost Sharing ▪ Abhiram was incubated to help Spandana serve it’s customers more effectively, and hence does not seek to make profits ▪ Like all third-party retailers, it pays its partnering MFI a sales commission – this is ~10-13% for Abhiram,
Slide 35: Abhiram Marketing – Profit & Loss and Balance Sheet
Abhiram Marketing – Profit & Loss and Balance Sheet ▪ Abhiram is a relatively small entity, which enables Spandana to serve its borrowers more effectively, by providing them with access to consumer durables and similar products ▪ It does not have a substantial P&L or balance sheet of its own, and ha
Slide 36: Strong Management Team & Risk Management Processes
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & 6 7 Annexure Risk Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 37: Strong Top Management Team with Cross-Cycle Experience
Strong Top Management Team with Cross-Cycle Experience PADMAJA REDDY Managing Director Padmaja is the Promoter and Managing Director. She has an overall experience of 24 years in the ‘social development’ and ‘microfinance’ industry. She founded ‘Spandana’ in 1998 and promoted the Company in 2003. Un
Slide 38: Experienced Second Layer of Management
Experienced Second Layer of Management OMKAR NAMDEV GOBIND PRASAD MOHANTY VP & Business Head of VP & Business Head of Jharkhand & West BASAVARAJA PARAMESHWARAPPA ANUPAM JAIN Chhattisgarh Bengal VP & Business Head of North Karnataka VP & Business Head of Madhya Gobind has been associated with ‘SSFL’
Slide 39: Strong Risk Management DNA
Strong Risk Management DNA Risk Management Key Risks Concentration Risk Political Risk Operational Risk Management Responsible Lending, Process Controls & Geographic & Lender Dependence Adherence to CoC Strategy and Fair pricing Non Negotiable Norms ▪ Portfolio caps based on net worth ▪ Continue to
Slide 40: Technology Leveraged for Superior Efficiency and Control
Technology Leveraged for Superior Efficiency and Control finS : In-house Developed CRM/ERP Application Efficiency ✓ Enables real-time paper-less processing of all loans, providing our borrowers with industry-leading TATs ✓ System / process design also leads to more efficiency for Smart and User High
Slide 41: Annexure
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 42: Products
Products Product Name Purpose Interest Rate (%) Tenor Ticket Size (Rs.) Core Product: 96.3% of AUM • These unique loan products are designed especially for low- income households who aspire to improve their financial well- 95.0% Abhilasha / being 21.37% 12 to 36 Months 25,000 to 80,000 Chethana • Th
Slide 43: Shareholding Pattern
Shareholding Pattern As on Mar-21 Non-Promoter Investor Details % Holding 7.24% 9.95% Valiant Mauritius Partners* 9.54% 5.35% ICICI Prudential Life Insurance 4.75% 4.10% JM Financial India Trust 3.07% 10.98% Padmaja 62.38% Reddy Bajaj Allianz Life Insurance 1.25% + Edelweiss Alternative Investment 1
Slide 44: Experienced Board of Directors
Experienced Board of Directors Deepak Calian Vaidya | Chairman & Independent Director Ramachandra Kasargod Kamath | Nominee Director A fellow of ICA in England and Wales since 1979. Served as a BoD of He is a former Chairman & MD of PNB for 5 years. He was an ED at Bank of India for 01 Capricon Secu
Slide 45: Niche Business Model
Niche Business Model Business Model Processes HR policies ▪ Standardized systems and a front-end ▪ Group size of 6 to 10 women interface that gives real time ▪ Strict employee transfer policy with information on demand and collections adherence to operational risk control ▪ Loans given under Joint L
Slide 46: Efficient Business Process
Efficient Business Process Spandana Village Selection Branch Manager Survey a Village Group Formation (6-10 Clients) and Training Formation and training of groups Center Formation Credit Assistant Loan Repayment Financial Service at doorstep Services at the Door Borrowers Steps ▪ Loans are offered f
Slide 47: A People Focused Organization: CSR Initiatives
‘Spandana’ – A People Focused Organization: CSR Initiatives ‘Spandana’ is undertaking various CSR initiatives to promote better livelihood and quality of life for economically weaker section of people living in its areas of business presence. A brief overview of the major CSR activities has been giv
Slide 48: Awards & Accolades
Awards & Accolades Dun & Bradstreet – Leading BFSI & FinTech companies Dun & Bradstreet placed Spandana in India’s leading BFSI & FinTech companies 2021 NewsX - Excellence in Entrepreneurship NewsX placed Mrs Padmaja Reddy in India’s A-List for Excellence in Entrepreneurship AIWMI - India’s top 100
Slide 49: Glossary
Glossary Sr. No. Particulars Formula 1 Networth Shareholders Fund + Other Equity excluding Non controlling interest 2 Capital Adequacy Tier I ratio + Tier II ratio 3 Leverage Closing On Balance sheet Borrowings / Closing Net worth 4 Marginal Cost of Borrowing (Borrowings availed during the period *
Slide 50: Thank You
Contact Information Company : Investor Relations Advisor : Spandana Sphoorty Financial Limited Strategic Growth Advisors Pvt. Ltd. CIN: L65929TG2003PLC040648 CIN: U74140MH2010PTC204285 Mr. Aditya Kumar Mr. Abhishek Shah / Ms. Krunali Shah VP – Investor Relations E: abhishek.shah@sgapl.net / krunali.
Spandana Sphoorty Financial — Q1 FY22 Earnings Presentation on 6ix