Strictly Confidential
This report is solely for internal use. No part of it may be circulated, quoted, or reproduced for distribution outside the organization without prior written approval from Fullerton India Credit Company Limited.
Author : FICCL
Fullerton India Credit Company Limited
February 7, 2013
Fullerton India – Rural Business Overview
1!
Our promoters
Incorporated since 2003. FFH invests in financial institutions in emerging markets, bringing an operational perspective to all investment decisions. Primarily, it focuses on both Business banking and Consumer banking. Within Business banking, FFH focuses on the Commercial, SME and Self-employed mass market segments. On the other hand, it focuses on the Mass affluent and Mass salaried segments within Consumer banking. Currently it is spread across 9 countries
Commercially launched in Jan 2007. Retail Non-banking Finance Company registered with the Reserve Bank of India. 0ver 350 branches across India & 6000 employees – offering small SME loans , Mortgage loans, Commercial Vehicle and Two-wheeler loans, business loans, personal loans.
2!
100 %
100 %
Launch of Pilots for urban retail financing
NBFC
Skoch Virtual Corporation Award for Robust and Scalable
IT Infrastructure
Voted one of the World’s Hottest
Brands by AdAge Magazine, USA
Product Portfolio
Key Corporate Milestones
• SME loans • Mortgage loans • Business loans • Two wheeler loans
FICC is a Category –A (Deposit Accepting) Non Banking Finance Company (NBFC), providing retail financial services to rural and urban mass market in India
Fullerton India Credit Company Set up in 2006 -offers a wide range of retail products
2005
2006
2007
2008
2009
2010 Entry in the
SME segment
Asia Microfinance Award for Innovation in
Technology
2011
• Commercial vehicle loans • Personal loans • Microfinance
Launch of Rural
pilots Commercial Launch
of urban retail financing network
Commercial launch of rural
business
3!
Fullerton India – 3 key verticals
Retail Business
§ Flagship business
§ Urban centres
§ 238 branches countrywide
• Personal Loans • 2W Loans • Mortgage Loans
Commercial Business § ABF : Asset Backed Finance § 34 branches § Commercial Vehicle Finance
§ SME Funding
§ 50 L – 5 Cr § Mortgage Loans for Working Capital § Capital expenses
Rural Gramshakti
§ Rural centres
§ 117 branches – 6 states § Rural Housing Loans § Group Loans § Growing Enterprise Loans § 2W Loans § Commercial Vehicle Loans
4!
Fullerton India
• Capital Adequacy : 24.5% of assets
• Host of reputed lenders to Fullerton India – Public Sector Banks – Private Sector & MNC Banks – Mutual funds – DFIs – Development Financial Institutions
• Were recently sanctioned INR 750 Mn by SIDBI – Small Industries Development Bank of India • For addressing “missing middle market” - micro-enterprises – for Loans upto Rs.250,000 ( USD 5000) • For “green” enterprises including for investments in renewable energy
Retail Target Market - Urban
Self employed / small businesses Salaried Employees
Annual sales turnover Annual Household income
(INR 0.3 Mn)
(INR 6.1 Mn)
(INR 24.5 Mn)
(INR 490 Mn)
(INR 0.5 Mn)
(INR 0.2 Mn)
(INR 0.06 Mn)
(INR 1.2 mn)
100% = 59 million HH (House Hold)
Large and medium corp.
SME 1.4mn enMMes
Small business 0.75 million HH
Micro business 19.9 million HH
ProducMve poor
Lower Affluent
HNW
Mass market 18.5 million HH
Upper mass market 10.3 million HH
Upper Affluent
Target segment
Target segment
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Client Segment FICC Offering Unique Business Value Client Needs
Our Retail Business
SME - Turnover > INR 100 MM
• SME (LAP) • LAS
• Business Expansion • Capital Expense • Working Capital
• Higher Loan Amount – LAP + Unsecured Business Loan (Term Loan + Ready Credit)
Mass Retail Salaried / Self Employed Income : INR 150 K – 1MM
• Asset creation • Medical / hospitalization • Children’s marriage /
education • Emergency • Business capital
• Personal Loans • 2 wheeler / used car • Gold Loan
• Geographical Spread Credit expertise in lower income segment
• Choice of loan options under the same roof
• Client relationships across client life stage
Mass Affluent Self Employed Income : INR 1MM - 5MM / Turnover <100MM
• Business Expansion • Capital Expense • Working Capital • Home Renovation
• Mortgage (LAP) • Commercial Vehicle
• Geographical Spread • Credit expertise in Self
Employed segment • Accept different types of
property • Smaller vehicles, used CV
6!
Client Segment FICC Offering Unique Business Value Client Needs
Our Rural Business
Women’s Livelihood Groups Self employed / Agri-allied livelihoods/ Rural livelihoods Income: INR 100 K– 500 K
• Dairy farming – purchase of cattle
• Purchase of stock/ working capital/ machinery
• Business capital • Home improvement • Purchase of FICC
marketed merchandise
• Solidarity Group Loans • Merchandise loans • Two wheeler loans
• Wide geographical Spread • Credit expertise in lower
income segment • Last mile service/ door-step
service • Client relationships across
client life stage
Small Enterprises Small manufacturing enterprises/ wholesalers/ large dairies/ other small enterprises - Turnover INR 300K to 3 MM
• Business Expansion • Capital Expense • Working Capital • Home/ shop Renovation • Local Transportation
• Growing Enterprise Loans - Unsecured Business loans
• Two wheeler loans • CV loans
• Wide geographical Spread • Credit expertise in Self
Employed segment • Last mile-doorstep service • Client relationships across
client life stage • Cash collection at doorstep
Rural Self-Employed Individuals / Small enterprises / wholesalers/ traders/ small transporters
• Marketing of merchandise • Loans to fund
merchandise purchase
• Access to merchandise • Last mile service • Funding for merchandise
• Alternative power supply • Eco-friendly stoves • Water filters • Cattle feed
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Fullerton India – Large customer Base
1 Million Customers § Urban customers : 500,000+ customers § Rural Customers: 450,000 +
Asset base :
§ Over Rs.4000 Crores ( USD 800 Mn)
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TAMIL NADU – 25
MAHARASHTRA– 22
KARNATAKA– 16
CHATTISGARH -7
CHANDIGARH -1
RAJASTHAN - 16
GOA - 2
GUJARAT -19
HARYANA - 8
HIMACHAL PRADESH -3
JAMMU & KASHMIR - 1
KERALA - 3
MADHYA PRADESH - 21
PUNJAB - 16
DELHI - 6
UTTAR PRADESH- 14
WEST BENGAL - 3
JHARKHAND - 3
ORISSA - 2
ANDHRA PRADESH – 31
KARNATAKA – 22
MAHARASHTRA– 22
GUJARAT -19
RAJASTHAN - 14
TAMIL NADU – 28
ANDHRA PRADESH – 10
UTTARANCHAL - 6
Retail network – 225 branches – 21 states; Rural – 117 branches – 6 states Rural branches
Retail branches
11!
Gramshakti – Rural Business
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Rural market segmentation
Self employed / small businesses / Salaried Employees
Annual Household income Rupees /(USD)
Rs. 60000/ (US$1200)
365,00 (US$7310)
100% = 153 million HH (Households)
Mass Market 90 million HH
Productive poor
Gramshakti target segment
55 mn HH
7 mn HH
1 mn entities 3 mn
(US$60,000)
Annual Sales Turnover Rupees / (USD)
50 mn (US$ 1 mn)
Each Household (HH) = 5 individuals
Upper mass
market
27!
Our rural business approach
• Larger objective : Financial Inclusion
• Identifying & mapping the Livelihood value chain
• Identifying needs of each segment in the chain
• Developing products for each segment in the chain
• Capitalizing on opportunity in the full value chain
• Building market linkages to develop the market
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Gramshakti - overview
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Gramshakti – mnemonic symbolizing our rural business – helping livelihood advancement
1.Women’s hand – with symbols of all rural livelihoods 2. Five fingers represent a borrowing group of 5 women 2.Rural livelihood cycle of borrowing and repaying and growing 3. Elements of FICC rural operaMons
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Rural market segmentation
Self employed / small businesses / Salaried Employees
Household income Rupees /(USD)
60000 (US$1200)
365,00 (US$7310)
100% = 153 million HH (House Hold)
Mass Market 90 million HH
Productive poor
Gramshakti target segment
55 mn HH
Upper mass
market 7 mn HH
1 Mn-Small enterprises
3 mn (US$60,000)
Annual Sales Turnover Rupees / (USD)
50 mn (US$ 1 mn)
Each Household (HH) = 5 individuals
TAMIL NADU – 28 Population: 72 Mn
ANDHRA PRADESH – 10 Population: 84 Mn
KARNATAKA – 22 Population: 61 Mn
MAHARASHTRA – 22 Population: 112 Mn
RAJASTHAN – 16 Population : 68 Mn
Rural network – 117 branches - 6 states ~ 12500 villages
GUJARAT – 19 Population: 60 Mn
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Branch catchment – 25 Km radius – 120 villages
§ Coverage: 25 km radius around the branch – total of 625 sq km
§ Each branch catchment has 40,000+ households – approx 200,000 population
§ Varied livelihoods, farming and non-farm activity, cottage and small industry
§ Each branch has 12-15 officers reporting to a Branch Manager
§ Last mile reach – each officer has his motorcycle
§ All staff stay in the dormitory above the branch
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§ A strong culture of process compliance
§ A non-compromise disciplined environment
§ High customer-contact technology enabled business operations
§ Localised credit assessment and operations
What we have managed to build in the market
§ Deployed good online technology for efficient operations
§ Use of bio-metric devices for efficiency, transparency and convenience of both staff and customers
§ Designed programs : To support and enhance livelihoods we fund – builds customer relationships and ensures repayments
§ To promote adoption of new and alternate livelihoods – builds customer relationships, goodwill and trust in the segment – creates funding opportunities
§ Highly committed and motivated team
§ High level of employee engagement – unique initiatives
Robust Technology infrastructure
§ Fullerton India was the first company to invest in a fully computerized branch network with an online booking system at all rural branches with bio-metric device enabled transaction devices
§ Computer platforms: Each branch has 3-4 computers on WAN ,
one high speed scanner and printer
§ Central Server linkage : Branches linked to central server where all loan data rests
§ Internet connectivity: All branches have internet broadband connectivity with server and Credit Bureaus – High Mark for Microfinance & CIBIL for all others
§ Bio-Metric devices : All officers equipped with bio-metric touch screen transaction devices to issue customer finger print authenticated installment receipts
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Women’s Livelihood Group Loans – Over 400,000 existing women customers § Occupation: Traditional non-farm Rural livelihoods – weaving, dairy, cottage industry, retail trade, agri and non-agri labour § Age group- 18 – 50 – median age 35 § Annual household income: Rs.125,000-400,000 § Own house
Our rural customer base
Growing Enterprise Loans
§ Small entrepreneurs – Over 25,000 existing customers – largely male
§ Occupation : Large dairy, Retailers, wholesalers, traders, small manufacturers
§ Annual business turnover : Rs.250,000- 50,00,000
§ Own House, house +shop, motorcycle
Rural 2 wheeler loans ( recently launched) § Over 20000 customers in rural ( Over 250,000 in urban) § Across customer segments
Commercial vehicle loans ( recently launched) § Captive users of Small Commercial Vehicles § Occupation : Wholesalers, distributors, services, agri-business
Leveraging our rural network – marketing relevant merchandise
Merchandise marketing : relevant products for rural households leveraging customer relationships and last mile reach on behalf of manufacturers
§ Products enhance standard of living, productivity and health of customers and families
§ Marketing and promotions & product demonstrations
§ Marketing and order booking done by Gramshakti leveraging last mile reach in rural markets
§ Special Merchandise loans to enable purchase
§ Products being promoted and financed:
§ Eco-stoves, Cattle feed, solar lamps, water filters, drip irrigation equipment
§ Each of the six states of Fullerton India’s Gramshakti -Rural network, (Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka, Gujarat & Rajasthan) are among the top 6 States in India for wind energy potential.
§ Together these 6 States account for 97 % of the wind resources of India and wind powered energy generation.
§ These 6 States will continue to dominate the wind energy generation for the next 20-30 years; both in the grid tied megawatt (1MW to 500MW) generation as well as off-grid, micro wind (1KW to 10KW) energy generation.
Alternate energy financing business
§ Combining micro wind turbines (capacity from 600W to 3500W) with equal or lesser or more capacity of SolarPV synchronised to feed the load is referred as micro hybrid.
§ Micro hybrids could range from 1Kw to 10Kw capacity. Generally the energy generated from the hybrid system is stored in a battery bank; thus referred as off-grid system.
§ These micro hybrid systems could be mounted on the roof top of the building, typically the total weight of the system (including the mast) is about 200Kgs to 800Kgs.
What is a micro hybrid, off-grid system?
§ Fullerton serves over 12,000 villages in these 6 States
§ Targeting 30% of the villages to be covered ( 3500 villages) in the next 5 years for community powering based on wind + solar hybrid
§ …with an average of 2 systems/village being deployed.
§ Each hybrid of 1.5 KW capacity ( 850 to 1000W of wind + 650 to 500W of Solar PV)
§ In specific cases, the hybrid configuration can go up to 10KW capacity) ( 7KW of wind and 3KW of SolarPV
§ Potential is 7000 hybrid units over the next 5-7 years.
§ Each unit @ INR 300,000 (average) for every 1.5KW hybrid.
§ Total capital funding: INR 2,100 Mn
Potential of wind energy financing business
Promoting alternate energy solutions
Promoting use of alternate energy through merchandise loans for wind / solar energy equipment 1. Hypothecation Loans for promoting Alternate Energy systems among micro-eneterprises 2. Loan amounts – Rs.100,000 to Rs 1 Mn 3. Also offer loans to SMEs/ small enterprises to install higher end hybrid energy systems for commercial use
Thank you
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