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CCA SKS MICROFINANCE Presented By:
Sidhartha Banerjee
Shashank K. Choudhary
Shivam Gupta
Vaibhav
Neelam AgarwalPriyanka
Geetinder
Rajat Gupta
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What is Microfinance
Microfinance is often defined as financial services for poor andlow-income groups, micro-entrepreneurs and small businesses,
which lack access to banking and related services.
MFIs Microfinance Institutions provide a range ofservices to
lower income group and deprived section of the society.
These services include :
Savings
Provision of Credit Insurance
Remittances
Money Transfers
Counselling
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Origin OfMicrofinance MuhammadYunus Father of Microfinance Professor of Economics at Chittagong University Bangladesh.
Founder of Grameen Bank in 1983.
Winner of Nobel Peace Prize in the year 2006.
Started giving a loan of $27 from his own to 42 women villagers fortheir handcrafts and made $o.o2 profit from each loan in return.
Origin of Microfinance in India :-
In INDIA First Microfinance Institution Shri Mahila SEWA SahkariBank was setup by self employed women association (SEWA) in year1974 (Founder Ms. Ela Bhatt).
The First Official effort Materialized in INDIA by NABARD (NationalBank for Agriculture and Rural Development ) in Year 1986-87.
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Understanding Microfinance The term Microfinance refers to small-scale financial services- both credit
and saving that are extended to poor in rural, semi-urban and urbanareas.
Microcredit is the most common product offering.
In India, microfinance ranges from Rs.5,000 to Rs.20,000 which can notexceed Rs.50,000.
Micro finance institutions(MFI) are the main players in microfinance space
in India.
All the MFIs works on two models: SelfHelp Group(SHG). Jonit-Liability Group(JLG).
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Classification of MFIsMFIs differs from one another in terms of:
Lending Model.
Loan Repayment Structure.
Mode of interest rate calculation.
Product offerings.
Legal Structure.
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MISSION
VISION
Their purpose is to eradicate poverty byproviding financial services to the poorand by using channel to provide goodand services that the poor need
SKS plans to serve 50 millionhouseholds across India and the otherparts of the world and also to create acommercial microfinance model thatdelivers high value to customers
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CORE VALUES
RIGHT FOCUSRIGHT MEANS
RIGHT WAY
ANTHEMUdhte Jaayen, Badhte Jaayen
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INCOME GENERATION LOANS
MID-TERM LOANS
MOBILE LOANS
SANGAM STORE LOANS HOUSING LOANS
FUNERAL ASSISTANCE
GOLD LOANS
LIFE INSURANCE
SKS Microfinance offers 8 financial products andservices to its client:
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INITIAL PUBLIC OFFER (IPO) The Company completed an IPO of nearly 1 cr equity
shares of Rs. 10 each
The IPO was done in accordance with the terms of theCompanys prospectus dated August 5, 2010.
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UTILIZATION OF IPO
722.2, 50%
682.8
47%
39.4, 3%
IPO Allocation
Other Non Operating
Expenses
Utilization for onward
lending (business
operations)
Retained forFuture IPO
expenditure
FINANCIAL HIGHLIGHTS
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FINANCIAL HIGHLIGHTSYear ended March 31 2011(In Rs. Crores)
2010(In Rs. Crores)
Total revenue 1,269.54 958.51
Less: total expenditure 1,097.11 690.81
Profit Before Tax (PBT) 172.43 267.70
Profit After Tax (PAT) 111.63 173.95
Surplus brought forward 220.00 80.84
Amount available for appropriation 331.63 254.79Appropriation has been made asunder:
Transfer to statutory reserve 22.33 34.79
Surplus carried to balance sheet 309.30 220.00
EPS (Rs.) 16.10 32.82
Diluted EPS (Rs.) 15.24 27.33
The Companys total revenue for the year ended March 31, 2011 has increased toRs. 1,269.54 crore from Rs. 958.51 crore
in the previous year registering an increase of32.4%.
Net profit after tax for the year decreased by 36% to Rs. 111.63 crore from Rs. 173.95 crore in the previous year.
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OPERATIONAL HIGHLIGHTSYear ended March 31 2011 2010 Percentage change
Number of branches 2,379 2,029 17.25%
Number of borrowers (inLakh) 73.07 67.80 7.77%
Number of employees 22,733 21,154 7.46%
Amount disbursed (Rs. inCrore) 7,831 7,618 2.79%
Portfolio outstanding(Rs. in Crore) 4,111 4,321 (4.85%)
During the year under review, the Companys borrower base has increased to
73.07lakh (7.31 million) as compared to 67.80 lakh (6.78 million) for the previousyear
It demonstrates a growth of 7.77%.
Resulting in a 2.79% increase in loans disbursed to Rs. 7,831 crore from Rs.7,618crore
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KEY RATIOS & ANALYSIS
06/08/2012Market Capitalization 1029.32
Capital Adequacy Ratio 0.4539
P/E Ratio -0.0048
Mar 31, 2012 Mar 31, 2011 Mar 31, 2010
PER SHARE RATIOS
Operating Profit Per Share (Rs.) -158.96 60.38 78.52Net Operating Income Per Share (Rs.) 60.22 160.95 138.86
Adjusted E P S (Rs.) -187.88 15.69 27.11
PROFITABILITY RATIOS
Operating Margin (%) -263.98 37.51 56.54
Adjusted Return On Net Worth (%) -316.02 6.4 18.48
Return On long Term Funds (%) -157.2 13.73 16.2
LEVERAGE RATIOS
Long Term Debt / Equity 0.66 1.14 2.6
LIQUIDITY RATIO
Current Ratio 2.00 15.08 9.99
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SKS A Life Line
(A Real Case from Jaipur)
Manju Devi hailed from jaipur and belonged from a lower class family, herhusband being a saree designer
Unfortunately one day her husbands index finger gets cut while working atan embroidery machine
It was during this time that Manju Devi took up her husbands businessand got introduced to SKS Finance
They took a loan of INR10,000 and a mid term loan of 6,000 for their
business
Today she earns INR 150 per day and pays regular wages to the workers shehas employed and her sarees sells for INR 1000 to INR 50000
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Impact Of Microfinance in India
Micro Finance contribution to
improvement in income related aspects
Micro credit contributed to improvement in asset acquisition.
Partially helped clients to take advantage of educational opportunities for
their children
Produced positive impact on diversification of livelihood for the poor
Contributed to reduction in casual labour
Contributed to improved level of income
Reduced dependence on costly informal sources
Brought about reduction in the incidence of poverty among clients
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Micro Finance contributes to
women empowerment Micro Finance contributed towards increase in savings by women in
their own name
Micro Finance created new economic avenues for women
Ownership of assets jointly with male members has improved
Micro Finance enabled increased control of women over runningfamily enterprises
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Issues faced by Micro-lenders Risks involved
Debt and equity funds
Customized solutions
Micro-finance training
Distribution System
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Issues faced by Micro-
entrepreneurs Inability to offer collateral
Lack of Knowledge
Inability to exploit growth opportunities
Poor governance
Low bargaining power
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Problems faced by SKS Microfinance
Acquiring new clients.
Poor financial performance.
Problem in Andhra Pradesh.
Incurred losses of Rs.697mn
in the 4th quarter.
Recovery problems.
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REGULATORY MEASURES TO IMPROVE
MICROFINANCING Improvement in regulation at system level
Lowering the interest rates on loans
Create a well knit national id system
Encourage creation of non profit organizations to take upmicro financing
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MEASURES TO IMPROVE MICRO FINANCING
BY COMPANIES
Improve internal governance and management practises
Reduce dependance on banks for funds
Follow the double bottom line approach
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THANK YOU
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