core company analysis

7/27/2019 Core Company Analysis

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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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