Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Valorem Conference (March 2021)
54 slides from Ugro Capital's conference presentation, Mar 10, 2021
Slide 1: U GRO Capital | Presentation
U GRO Capital | Presentation Tech focused Small Business Lending Platform UGROCAP | 511742 March 10th, 2021
Slide 2: Table of Contents
Table of Contents 01 Executive Summary Operating & Financial Performance 02 03 U GRO Capital Overview Sector Based Approach 04 05 Distribution Strategy Diverse Set of Liability Providers 06 07 Our Long Term Goals
Slide 3: Executive Summary
GRO Executive Summary
Slide 4: Where we stand now
Where we stand now Metric ₹1,127 Cr 22 70% AUM Active Lenders Secured on Book ₹950 Cr 8,429 300+ 600+ GRO Net Worth Customers Employees Partners ₹2,065 Cr ₹562 Cr 34 Cumulative Total Debt Disbursals Branches Focus in the current quarter has been on operationalising 25 Micro Branches and Disbursement
Slide 5: Recent Updates
Recent Updates Uptick in Disbursals Launch of Micro Branches ▪ Disbursals back to pre-COVID levels as we saw ▪ All 25 GRO Micro branches across Tamil strong momentum in branch led channel Nadu, Karnataka, Gujarat, Telangana and Rajasthan have been inaugurated ▪ Growth in Partnerships & Alliances cha
Slide 6: Executive Summary
Executive Summary 1) AUM & Disbursements 5) Credit Costs ▪ Cumulative Disbursements crossed ₹2,000 Cr milestone in Q3FY21 ▪ Proforma 90+ DPD stood at 2.3% and NNPA stood at 1.4% (Proforma ▪ AUM stood at ₹1,127 Cr as on Dec’20 (₹978 Cr as on Sep’20), ~15% without taking the benefit of Supreme Court s
Slide 7: Financial and Operating performance
Financial and Operating performance 7
Slide 8: We have been consistently expanding our AUM with strong Equity & Debt support
We have been consistently expanding our AUM with strong Equity & Debt support AUM (in ₹ Cr) Disbursals (in ₹ Cr) Debt (in ₹ Cr) & Leverage Ratio 1,127 0.59 978 2,065 861 847 0.42 0.42 753 1,696 0.28 562 1,367 1,398 0.20 1,074 387 397 257 372 368 178 293 298 31 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q3FY
Slide 9: Our operating & financials ratios continue to improve as we scale up
Our operating & financials ratios continue to improve as we scale up Interest Income (in ₹ Cr) & Yield NII (in ₹Cr) and NIM% Finance Cost (in ₹ Cr) & Cost of debt 11.8% 14.8% 12.0% 11.0% 11.1% 10.7% 14.3% 14.3% 14.4% 11.5% 10.3% 14.1% 38.9 10.5% 10.6% 34.1 10.1% 22.5 23.8 24.4 28.9 30.6 19.6 27.1 24
Slide 10: Channel-wise evolution of AUM
Channel-wise evolution of AUM 1,400 Partnership and Alliances Channel Ecosystem Channel 1,127 1,200 Channel Mix Branch Led Channel Self- Sourced 978 1,058 1,000 15% 861 847 753 842 800 691 687 575 600 18% 555 400 67% 374 200 0 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 249 388 498 510 656 759 B
Slide 11: Our portfolio remains well diversified by Geography and Sector
Our portfolio remains well diversified by Geography and Sector Geographical Mix* Sectoral Mix* 1% 18% 3% 6% Light Engineering 8% Education 5% 3% 24% Electrical Equipment 9% Food Processing 13% 8% Hospitality 10% Chemicals ▪ Delhi/NCR 16% Healthcare 15% ▪ Karnataka ▪ Gujarat 13% Auto Components 10% ▪
Slide 12: Portfolio & restructuring highlights
Portfolio & restructuring highlights Portfolio split by Channel and ECL Data Product category POS (Cr) ROI (%) Ticket size (Cr) All figures in ₹ Cr Loan Exposure Loan Exposure (%) Branch Channel 759 14.8% 0.41 Stage 1 1,050.57 93.20% Ecosystem Channel 197 13.2% 1.05 Stage 2 47.35 4.20% Partnerships
Slide 13: Income Statement
Income Statement Income Statement (₹ Cr) Q3 FY21 Q2 FY21 Q3 FY20 9M FY21 9M FY20 Income Interest Income 35.07 30.32 23.89 92.87 43.84 Interest from investments 3.70 4.17 4.45 11.17 20.83 Sale of Services 0.02 0.00 0.40 0.02 2.90 Other operating revenue 0.30 0.33 0.16 0.63 0.42 Total Income (A) 39.08
Slide 14: U GRO Capital - Overview
GRO U GRO Capital - Overview
Slide 15: U GRO Capital | Who we are
U GRO Capital | Who we are Experienced Management Team 250+ Years of Experience A highly specialized, technology enabled small business lending Strong Corporate Governance platform Board Controlled, Management Run Knowledge Technology Deep domain expertise of A scalable, data driven Large Institutio
Slide 16: To Solve the Unsolved
Our Mission ‘To Solve the Unsolved’ India’s $600B+ SME Credit Availability Problem 16
Slide 17: U GRO Capital | About us
U GRO Capital | About us U GRO Capital Sector Specialization • Healthcare • Educational Services Shortlisted from 180 A technology enabled, highly specialized, small • Food Processing business lending platform • Hospitality sectors through an • Chemicals extensive study of Management team with a col
Slide 18: Our Business Model
Our Business Model Branch Channel | GRO-Plus Traditional Balance Sheet Intermediated and Direct Distribution branches across Tier I to Tier III locations, serving a broad Lending using funds from banks; PSL nature of books demographic of SMEs and Microenterprises to aid in obtaining bank financing K
Slide 19: Founder with experience creating Institutions across Financial Services
Founder with experience creating Institutions across Financial Services… Mr. Shachindra Nath Executive Chairman and Managing Director 26 years of experience in providing strategic direction to institutions across the financial services domain Lending Capital Markets Asset Management Insurance SME Le
Slide 20: Supported by a Leadership Team with a strong track record of execution
…supported by a Leadership Team with a strong track record of execution… Abhijit Ghosh CEO and Whole Time Director Anuj Pandey Sandeep Zanvar J Sathiayan Chief Operating Officer Chief Financial Officer Chief Business Officer Sunil Lotke Manish Agarwal Amit Gupta Nirav Shah Chief Officer - Legal & Ch
Slide 21: Supervised by an Independent Board comprising of Industry luminaries (1/2)
…supervised by an Independent Board comprising of Industry luminaries (1/2) Shachindra Nath – Executive Chairman and Managing Director Satyananda Mishra - Chairman, CSR Committee ▪ 26 years of experience in creating institutions across the financial ▪ Ex-Chairman, MCX, Ex-CIC, GoI, Ex-Director - SID
Slide 22: Supervised by an Independent Board comprising of Industry luminaries (2/2)
…supervised by an Independent Board comprising of Industry luminaries (2/2) Navin Puri Rajeev K. Agarwal - Chairman, Stakeholder Committee ▪ Ex-Head of Branch Banking, HDFC Bank ▪ Ex-Whole Time Member, SEBI ▪ Over 30 years of experience at HDFC Bank and ANZ Grindlays Bank ▪ Over 30 years with experi
Slide 23: Backed by Diverse and Marquee Shareholders
Backed by Diverse and Marquee Shareholders 1994 - 2017 Formation of Chokhani Securities Preferential Allotment Qualified Institutional Placement Aug 2018 Dec 2017 1994: Formation of Chokhani $62.1M raised from global private $16M raised from public market 1995: Listing on the BSE equity firms - ADV
Slide 24: Specialization & Technology
Specialization & Technology 24
Slide 25: Specialized SME Lenders are better positioned to bridge the MSME Credit Gap
Specialized SME Lenders are better positioned to bridge the MSME Credit Gap Specialized SME Lenders Traditional NBFCs Banks Customized products based on the nature of business, non-financial Loans against property, supply Loans against property, supply Product parameters, end use, payment chain fina
Slide 26: Technology is essential to achieve a Specialized Model at Scale
Technology is essential to achieve a Specialized Model at Scale DISTRIBUTION CREDIT UNDERWRITING ▪ Quick and easy integration with distribution partners ▪ Access and process the large trove of private and public data ▪ Paperless login enabled by API integrations and OCR ▪ Centralize underwriting kno
Slide 27: U GRO Lies at the intersection of Specialized NBFCs and FinTechs
U GRO Lies at the intersection of Specialized NBFCs and FinTechs Specialized NBFCs Fintech Platforms Sector Specialization Supply Chain Platforms Product Specialization Digital Lenders Geographical Specialization Off-Balance Sheet Lenders U GRO intends to create a specialized, scalable platform opti
Slide 28: Building deep sector expertise
Building deep sector expertise 28
Slide 29: Deep analysis of Macro and Micro Economic Factors
Deep analysis of Macro and Micro Economic Factors… 180+ Sectors Demand Working Impact of Sector specific supply gap & Input Environmental Capital change in government cyclicality in risk issues Cycle technology policy demand Criteria Asset Upgrade & Revenue EBITDA Median Interest Turnover downgrade
Slide 30: To arrive at a set of Specialized Sectors
…to arrive at a set of Specialized Sectors 8 sectors & Micro Enterprises and their allied 200+ ecosystems Focus on Micro & Small Businesses clusters in India ~50% - Contribution of the 8 sectors to the overall MSME lending market in India Partnership with CRISIL to deep dive into sub-sectoral develo
Slide 31: GRO Score, a superior underwriting framework
GRO Score, a superior underwriting framework, launched to make our selection sharper We are on track to achieve 100% digital underwriting in SME lending Business Evaluation of System assessment using Forecasting of repayment generated transaction future cashflow history digital PD data Gro Score 2.0
Slide 32: Supplemented by Industry First 'Expert Scorecards' for all Sub-sectors
Supplemented by Industry First ‘Expert Scorecards’ for all Sub-sectors Education | K-12 Schools Light Engineering | Medical Equipment Manufacturers Parameter Factor Weightage Parameter Factor Weightage Vintage of the school 30% Vintage of the entity 25% School Principal’s Experience 25% Entity relat
Slide 33: Creating multi line distribution
Creating multi line distribution 33
Slide 34: Distribution Channels | Multi pronged approach led by Offline presence and Tech capabilities
Distribution Channels | Multi pronged approach led by Offline presence and Tech capabilities a Branch Led Channel | GRO-Plus b Ecosystem Channel | GRO-Chain ▪ 9 intermediated Branches with loans sourced by DSAs ▪ Supply Chain Financing by partnering with anchor – onboarded 603 intermediary GRO-Partn
Slide 35: These distribution engines are powered by proprietary technology platforms
These distribution engines are powered by proprietary technology platforms a GRO-Plus GRO-Direct d Branch Led Direct Interface An uberized distribution Direct to customer (Online) model capable of channel – went live in beta onboarding DSAs, CAs and phase in December 2019 NBFCs/ Suppliers other inte
Slide 36: Our platforms are integrated with rich data enrichment layer
Our platforms are integrated with rich data enrichment layer GRO Partners & Partnership & Eco System Digital Direct Direct Distribution Alliances A Plug and Play Multiple Distribution customer Module GRO App Partner LOS Customer ERP Customer Devices touchpoints GRO LOS All process Data Enrichment ar
Slide 37: Branch Led Channel – GRO Plus | Tier 1 Branches & Micro Branches
a Branch Led Channel – GRO Plus | 9 Tier 1 Branches & 25 Micro Branches Total 34 Branches identified through rigorous SME cluster Tier 1 Branches analysis & portfolio benchmarking Partner Selection Criteria Value Proposition for Channel Partners Head Office ▪ Lower TAT : In principal approval in 1 T
Slide 38: Branch Led Channel – GRO Plus | Launch of Micro Branches
a Branch Led Channel – GRO Plus | Launch of Micro Branches We made a strategic pivot to enter the Microenterprises Segment with launch of our direct distribution Branches. Based on our assessment of peers & market, entering the Significant Impact to be Created in ‘Solving the Unsolved’ microenterpri
Slide 39: We launched 25 new GRO-Micro Branches to serve the micro-enterprises
a We launched 25 new GRO-Micro Branches to serve the micro-enterprises Karnataka Tamil Nadu Gujarat Telangana Rajasthan Bommasandra Mangadu Odhav Nizamabad Ajmer Peenya Tambaram Himatnagar Suryapet Kotputli Mysore Thiruvallur Baroda Nalgonda Sikar RR Nagar Vellore Nadiad Warangal Jhotwara Mahadevpur
Slide 40: We distribute products through these branches with different ticket sizes
a We distribute products through these branches with different ticket sizes that serve the entire spectrum of MSMEs tailored to their needs Segment Fulfilment Product Type Avg. Ticket Yield Co-lending with large Prime Pratham Secured 25-250 lacs 8.15-9.75% banks & NBFCs Secured 75-300 lacs 12.0-13.0
Slide 41: Ecosystem Channel – GRO Chain | Supply Chain Financing (1/2)
Ecosystem Channel – GRO Chain | Supply Chain Financing – Anchor led & Non- b anchor led (1/2) i Anchor Led Vendor Distributor / Retailer Financing Dealer Financing Financing Payables Management Receivables Management Vendor Anchor Dealer ▪ Provides much needed WC for ▪ Receives faster payment ▪ Mini
Slide 42: Ecosystem Channel – GRO Chain | Supply Chain Financing (2/2)
Ecosystem Channel – GRO Chain | Supply Chain Financing – Anchor led & Non- b anchor led (2/2) ii Non-Anchor Led Sales Invoice Purchase Invoice Discounting Discounting Key Features ▪ No corporate acceptance required ▪ Seamless virtual escrow account repayments ▪ Downloadable app for invoice level man
Slide 43: Partnership Channel – GRO Xstream | Servicing entire spectrum of MSMEs
c Partnership Channel – GRO Xstream | Servicing entire spectrum of MSMEs Symbiotic partnerships to cater to the MEL segment Mainly catered to by large banks Challenges faced by NBFCs Large Ticket size > $7M ▪ Given scale of NBFCs, their regional concentration and the Corporates target segment, acces
Slide 44: Partnership Channel – GRO Xstream | Partnering with FinTech players
c Partnership Channel – GRO Xstream | Partnering with FinTech players Neo Banks Online Aggregators Financial technology firms that offer 2 sided marketplaces that connect a internet-only financial services and lack range of service providers with physical branches customers POS / Wallets / Payment G
Slide 45: Direct Digital – GRO Direct | Our Innovation-Driven Digital Lending Platform
d Direct Digital – GRO Direct| Our Innovation-Driven Digital Lending Platform Product Development Customer Service ▪ Sectoral Need Gap Chatbot based, integrated with Identification based on popular message apps (proposed) Perception Maps ▪ Completely Digital Customer Servicing ▪ E.g. Solutions avail
Slide 46: Building diverse set of liability providers
Building diverse set of liability providers 46
Slide 47: Liability is an 'Art' – U GRO is designed to perfect this Art
Liability is an ‘Art’ – U GRO is designed to perfect this Art.. U GRO’s asset strategy would lead to a low cost of capital Key tenets of our liability strategy Liability led asset strategy Active engagement with stakeholders Diversified Liability Base ▪ Build a diversified, granular book catering ▪
Slide 48: Our Liability Strategy | A Tri-Pronged Approach
Our Liability Strategy | A Tri-Pronged Approach Relationship with 22 partners Partnerships already signed with including Banks, NBFCs & DFIs SBI, ICICI Bank and Bank of Baroda Policy of actively securitizing the loan book to ensure that the Actively partner with Co-origination with larger mismatch i
Slide 49: We are expanding our liability book & have 22 active lenders
i We are expanding our liability book & have 22 active lenders EOP Sanctioned Liability on Book (INR Cr) Weighted Borrowing Cost (%, papm) Liability Type by Sanctions 4% (Q3 FY21, INR Cr) Undrawn Sanctions 194 1% Drawn Sanctions 6% 12.02% 11.46% 38% 11.43% 22% 562 10.54% 10.56% 10.12% 387 397 257 17
Slide 50: Co-origination Partnerships with Three of the Largest Banks in India
ii Co-origination Partnerships with Three of the Largest Banks in India Co-origination is a value accretive strategy Bank of Baroda Numbers provided are for illustrative purposes only (Loan Book: $67B) Example of Co-origination Model Secured Business Loans Signed October 5, 2019 – Going live under t
Slide 51: Our long term goals
GRO Our long term goals si
Slide 52: Where we want to be in next 5 years
Where we want to be in next 5 years ROA Tree (Projected) FY25P Interest Income 16-17% Cross-sell 0.2-0.5% ~₹119B ~₹200B Co-lending/Assignment Income 0.4-0.6% 5th Year Disbursals AUM at the end of 5th Year Other income 0.5-1% Interest on cash 0.5-1% Total Income 17.5-19.5% 16.3% Interest Yield Borrow
Slide 53: Thank you
Thank you www.ugrocapital.com
Slide 54: Disclaimer
Disclaimer This presentation has been prepared by UGRO Capital Limited (the “Company”) solely for your information. By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation is for information purposes only and should not be deemed to constitute or