CCA SKS MICROFINANCE

Presented By:

Sidhartha Banerjee Shashank K. Choudhary Shivam Gupta Vaibhav Neelam Agarwal Priyanka Geetinder Rajat Gupta

What is Microfinance
Microfinance is often defined as financial services for poor and

low-income groups, micro-entrepreneurs and small businesses, which lack access to banking and related services.
MFIs Microfinance Institutions provide a range of services to

lower income group and deprived section of the society. These services include : Savings Provision of Credit Insurance Remittances Money Transfers Counselling

Origin Of Microfinance
Muhammad Yunus 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 for

their handcrafts and made $o.o2 profit from each loan in return.
Origin of Microfinance in India : In INDIA First Microfinance Institution Shri Mahila SEWA Sahkari

Bank was setup by self employed women association (SEWA) in year 1974 (Founder Ms. Ela Bhatt).
The First Official effort Materialized in INDIA by NABARD (National

Bank for Agriculture and Rural Development ) in Year 1986-87.

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 urban areas.

Microcredit is the most common product offering.

In India, microfinance ranges from Rs.5,000 to Rs.20,000 which can not

exceed Rs.50,000. in India.

Micro finance institutions(MFI) are the main players in microfinance space All the MFIs works on two models:
Self Help Group(SHG). Jonit-Liability Group(JLG).

Classification of MFIs
MFIs differs from one another in terms of:
Lending Model.

Loan Repayment Structure.

Mode of interest rate calculation.

Product offerings.
Legal Structure.

MISSION
Their purpose is to eradicate poverty by providing financial services to the poor and by using channel to provide good and services that the poor need

VISION
SKS plans to serve 50 million households across India and the other parts of the world and also to create a commercial microfinance model that delivers high value to customers

CORE VALUES
RIGHT FOCUS RIGHT MEANS RIGHT WAY

ANTHEM
Udhte Jaayen, Badhte Jaayen

SKS Microfinance offers 8 financial products and services to its client:

INCOME GENERATION LOANS MID-TERM LOANS

MOBILE LOANS
SANGAM STORE LOANS HOUSING LOANS FUNERAL ASSISTANCE GOLD LOANS

LIFE INSURANCE

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 the

Companys prospectus dated August 5, 2010.

UTILIZATION OF IPO
IPO Allocation
39.4, 3% Other Non Operating Expenses 722.2, 50% 682.8 47%

Utilization for onward lending (business operations)

Retained forFuture IPO expenditure

FINANCIAL HIGHLIGHTS
Year ended March 31 Total revenue Less: total expenditure Profit Before Tax (PBT) Profit After Tax (PAT) Surplus brought forward Amount available for appropriation Appropriation has been made as under: Transfer to statutory reserve 22.33 34.79 2011 (In Rs. Crores) 1,269.54 1,097.11 172.43 111.63 220.00 331.63 2010 (In Rs. Crores) 958.51 690.81 267.70 173.95 80.84 254.79

Surplus carried to balance sheet

EPS (Rs.) Diluted EPS (Rs.)

309.30
16.10 15.24

220.00
32.82 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.

OPERATIONAL HIGHLIGHTS
Year ended March 31 Number of branches Number of borrowers (in Lakh) Number of employees Amount disbursed (Rs. in Crore) Portfolio outstanding (Rs. in Crore) 2011 2,379 73.07 22,733 7,831 4,111 2010 2,029 67.80 21,154 7,618 4,321 Percentage change 17.25% 7.77% 7.46% 2.79% (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 previous year It demonstrates a growth of 7.77%. Resulting in a 2.79% increase in loans disbursed to Rs. 7,831 crore from Rs.7,618 crore

KEY RATIOS & ANALYSIS

Market Capitalization Capital Adequacy Ratio P/E Ratio 06/08/2012 1029.32 0.4539 -0.0048 Mar 31, 2012 PER SHARE RATIOS Operating Profit Per Share (Rs.) Net Operating Income Per Share (Rs.) Adjusted E P S (Rs.) PROFITABILITY RATIOS Operating Margin (%) Adjusted Return On Net Worth (%) Return On long Term Funds (%) LEVERAGE RATIOS Long Term Debt / Equity LIQUIDITY RATIO Current Ratio Mar 31, 2011 Mar 31, 2010

-158.96 60.22 -187.88

60.38 160.95 15.69

78.52 138.86 27.11

-263.98 -316.02 -157.2

37.51 6.4 13.73

56.54 18.48 16.2

0.66

1.14

2.6

2.00

15.08

9.99

SKS A Life Line (A Real Case from Jaipur)

Manju Devi hailed from jaipur and belonged from a lower class family, her

husband being a saree designer

Unfortunately one day her husbands index finger gets cut while working at

an embroidery machine
It was during this time that Manju Devi took up her husbands business

and 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 she

has employed and her sarees sells for INR 1000 to INR 50000

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

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 running family enterprises

Issues faced by Micro-lenders

Risks involved
Debt and equity funds Customized solutions Micro-finance training Distribution System

Issues faced by Microentrepreneurs

Inability to offer collateral Lack of Knowledge Inability to exploit growth opportunities Poor governance Low bargaining power

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.

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 up

micro financing

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

THANK YOU

ANY QUESTIONS ???? SHOOT