spandana microfinance

SPANDANA – Innovative Financial Solutions for the Poor

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AGENDA

Global Microfinance Industry Global Microfinance Industry

Micro-Finance India StoryMicro-Finance India Story

Spandana StorySpandana Story

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GLOBAL MICROFINANCE INDUSTRY

– 25% annual CAGR

– Asset Under Management- $32 Billion Dollars

– 25% annual CAGR

– Asset Under Management- $32 Billion Dollars

– Rapid development in some

regions seeing some over-

indebtedness

– Asian MFIs see corporate

governance, technology and

staffing as key issues

– Specifically in India, political

interference is seen as a

major concern

– Rapid development in some

regions seeing some over-

indebtedness

– Asian MFIs see corporate

governance, technology and

staffing as key issues

– Specifically in India, political

interference is seen as a

major concern

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AGENDA




• More than ~ 135Mn households in India not yet serviced by financial players

• Potential credit demand of ~ INR 1,650 Bn (30K per poor household)

• Large players will continue to grow at a fast pace

• Indian market is the largest microfinance market in the world

• Indian Microfinance in a 2 Decade Story

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INDIAN MICROFINANCE INDUSTRY

Industry Overview

• Estimated to cover only about 10% of poor

• 7 Indian MFIs in the Global Forbes top 50 MFI

• Most efficient in terms of operating costs

• Estimated requirements are over $50 billion

Statistics

Current Microcredit Opportunity in India Rs Bn

Potential Credit Demand estimated in the range of INR 1,650 Bn (USD 37 Bn) to INR 2,314 Bn (USD 51 Bn)

255

1,650*

2,314^

Current Micro-credit Disbursement

Potential Micro-credit Demand

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INDIAN MICROFINANCE INDUSTRY• Dominated by the NBFC model

• Top MFIs in terms of member size and portfolio size are all NBFC• SHG under Govt. patronage is a significant player

• Grameen - Hybrid models increasingly relevant

• Lending is at about 12 – 15% pa flat• Far cheaper than moneylenders and even credit cards• Costlier than the average rates paid by

Recent Trend

MFI Growth – Borrowers and Outstanding Loan Portfolio

Source Inverting the pyramid, 2008, Intellecap

3.611.4

22.3

37.1

69.1

1.0 2.3

4.9

7.9

14.2

0

4

8

12

16

0

25

50

75

2004 2005 2006 2007 2008Loan Portfolio ( Rs Bn) (LHS) Number of Borrowers (MM) (RHS)

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INDIAN MICROFINANCE INDUSTRY

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AGENDA




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SPANDANA STORY

Highest in the Industry

PROFITABILITY

Lowest in the Industry

OPERATION COST

Highest in the Industry

ROE/ROA

6th Largest – Outreach 07

Global Ranking

Second Largest

Indian Ranking

Highest : A-/Stable

CRISIL Rating

1998

INCORPORATION

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Key Mile Stone

1998 2005 2006 2007 2008 2009Oct 2009

Outreach AP – 1 State

Karnataka – 2 States

Tamil Nadu – 3 States

Orissa, MH, Chhattisgarh – 6 States

Rajasthan and MP – 8 States

Jharkhand & Goa – 10 States

Gujarat – 11 States

PE Infusion First Round PE – JM Financial and LOK Capital

Second Round Equity Infusion – Valiant Capital Partners

Third Round of Equity – Tamaseak Holding (Under Process)

PAT 2.6 Crores 21 Crores 94 Crores

AUM 289 Crores 391 Crores 731 Crores 1868 Crores

2431 Crores

Registered as a

Society

Post Conversion

to NBFC2 Yr CAGR

in Loan Book: 28%

Post External Equity

Funding2 Yr CAGR

in Loan Book: 117%

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SPANDANA – Growth Story “ Financial”

4 Yr Revenue CAGR (05-09) : 82%4 Yr PAT CAGR (05-09) : 59%

4 Yr PAT CAGR (05-09) : 59%

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SPANDANA – Growth Story “ Operation”

Operational Highlights October 2009 March 2009 March 2008 March 2007

Presence in States 10 8 8 6

No. of Branches 1,188 944 435 295

No. of Clients (000) 3,384 2,543 1,240 916

Loan O/s. (Rs Cr.) 2,432 1,868 731 425

Total Staff 8,405 6,373 3,024 1911

SPANDANA – Growth Story “ Operation”

2,3882,892 3,916

7,313

18,683

386 722916

1,189

2,432

FY05 FY06 FY07 FY08 FY09

Gross Loans Outstanding (Rs MM)

SPANDANA – “Reach”

Andhra Pradesh

Karnataka

Maharashtra

Tamil Nadu

Rajasthan

Orissa

Madhya Pradesh

Chhattisgarh Jharkhand

Goa

OUTREACH - SSFL

TOTAL STATE : 10 STATES

NUMBER OF VILLAGES : 55,382

NUMBER OF DISTRICTS : 167

NUMBER OF CLIENTS : 3,384,531

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SPANDANA – SOCIAL Initiatives

FLOOD RELIEFBasic amenities to the best of our abilities to flood affected

victims

SCHOLARSHIPSMonetary support to students to complete higher education

SAFE DRINKING WATERTie up with HUL to supply water purifiers in rural areas

ALTERNATE SOURCES OF ENERGYTie up with Intelizon to supply solar lanterns

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SPANDANA – Departments

External FinanceExternal Finance

TreasuryTreasury

ITIT

MISMIS

HR ManagementHR Management

AdministrationAdministration

TrainingTraining

Field OperationField Operation

AccountsAccounts Corporate CommunicationCorporate Communication

New Business InitiativesNew Business InitiativesAuditAudit

Corporate Affairs ( Legal)Corporate Affairs ( Legal)

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Key Milestone of SSFL Operational Highlights August 2009 March 2009 March 2008

Presence in States 10 8 8

No. of Branches 1,150 944 435

No. of Centers 112,377 90,221 47,693

No. of Groups 363,326 265,650 125,883

Active Borrowers (000) 3,005 2,432 1,189

Loan O/s. (Rs Cr.) 2,388 1,868 731

Total Staff 7,981 6,373 3,024

Total Credit Assistants 5,648 4,556 2,223

Introduction

Spandana was founded in 1997 by Ms Padmaja Reddy. A chance encounter with a rag picker prompted Ms Reddy to start microfinance in the urban slums of Guntur. Since then Spandana’s microfinance programme has grown tremendously and the organisation is now one of the largest and most rapidly growing MFIs in India. Spandana is one of the most efficiently run MFIs in the world.

Spandana has achieved this remarkable distinction in a short span of just under a decade since its inception in 1998. This has been possible on account of its highly focused and clearly structured operations.Spandana has continued to successfully manage growth with operations now spanning 8 States Andhra Pradesh, Karnataka, Tamil Nadu, Orissa, Maharashtra, Chhattisgarh, Madhyapradesh and Rajasthan. It now boasts of a client base that constitutes almost 1.5% of the BPL (Below Poverty Line) population of India.

BOARD OF DIRECTORS

Mission

To be the leading service provider, creating market driven & equitable solutions for segments not optimally served.

This will be achieved through a culture of client focus, innovation, efficiency, transparency and excellence for the benefit of all stakeholders.

VISIONWe endeavour to serve our clients by addressing their

complete credit needs so as to bring in significant impact in their living standards. Besides financial intermediation, we would be focusing on sub sector intervention such as dairy development since about 90% of our rural clients have invested their loan amounts on this activity. We retain our core values of professional rigor, efficacy and excellence and remain a client responsive organisation by being humble and receptive to their needs.

PRODUCTSGeneral Loans Meant for daily wage women labourers and petty

traders for Income generation and consumption purpose with a loan size of between Rs. 2,000 and Rs. 20,000

Small Business LoanMeant for small business people with daily cash flow with a loan size of between Rs. 4,000 and Rs. 20,000

Micro Enterprise LoanMeant for SMEs and salaried people with a loan size of between Rs. 25,000 and Rs. 200,000

PRODUCTSAgri Family LoanMeant for small and

marginal farmers with a loan size of between Rs. 5,000 and Rs. 30,000

Dairy LoanMeant for milk collection agents and milk producers with a loan size of between Rs. 10,000 and Rs. 100,000

Farm Equipment LoanMeant mainly to cater to the needs of Small and Marginal Farmers with a loan size between Rs.50,000 and Rs.350,000

AREA OF OPERATIONS

PROJECTS

Educational and recreational programs for School dropouts

Objective: Facilitate programmes aimed at procuring rights

of children with a special focus on health, education, recreation and protection

Achievements:More than 500 children out of school have been

helped to attened fomal Schools.5 working children have been rescued from child

labour and are being provided with long term support for education

More than 500 child labourers & Street Children are being helped to go school through our Residential and Non-Residential bridge campus.

More than 500 children going to school have been helped to get through exams with remedical education support offered by Spandana.

Future Direction: Reach out to more than 10,000 children over a

period of 5 years with support in the areas of Education, Recreation, Health, Shelter, Food & Clothing through community based intervention and institutional services as situation demands.

Awareness Generation Activities

Objective: Educate masses on issues related to health,

legal, environmental and social aspects of human life in order to create an enabling atmosphere for individuals.

Achievements: 1500 people from 20 communities were

reached out with the message on HIV / AIDS, Cancer and Tuberculosis. The extension outreach wing has identified 50 positive cases under HIV and carrying out referral services in collaboration with various organisations.

Future Directions:To organize workshops and camps on

health and legal issues for focused groups.

To start vermin compost and paper recycling units.

To intensify Legal Awareness progammes. in the community.

Self Help Programs for Women

Objective: Create opportunities to marginalized women to

identify suitable vocations, impart trainings and establish micro enterprise units through thrift and credit programme.

Achievements: 100 Women from 12 Self Help Groups were helped

to receive revolving fund to the tune of Rs.1,25,00/- from various government run schemes to start income generation units.

500 women are part of the self help programme promoted by Spandana.

Future Directions:Aiming to form a Mutually aided co-operative

thrift society which would be mutually beneficial to women in establishing micro enterprise units and income generation programmes for more needy families living in poverty.

Identify and establish more IGP units for needy women.

Enroll more number of women in the thrift credit programme for larger benefit.

Programs for Young People

Objective: Facilitate programmes aimed at empowerment

through business / income generation / skill up-gradation, awareness and recreation for youth.

Achievement: Started in the year 2005, the Career Counseling

and Job Placement desk for youth has given opportunities for 40 young men and women to take up suitable vocation and successfully placed in jobs in corporate offices with a salary between Rs.2,000/- to Rs.6,000/- per month.

Future Directions:To impart skill development programmes for

young girls who are economically weak.Start micro enterprise units in their

neighborhood so as to realise their financial needs and help them market their products.

Imparting life skills.

Peace Initiative Programs

Objective: Promote peace, harmony and social justice through

programmes aimed at sensitisation and awareness.Achievement: The peace and conflict resolution project has created

better relationships among people living in communities manifested with religion based conflict. The project covers most sensitive slums in urban southern Hyderabad city of Andhra Pradesh.

Future Directions: To expand these activities and link them up with

micro finance and formation of youth clubs

Entrepreneurship Training and Development

250 young girls and women have undergone capacity building programmes for skill enhancement in Embroidery, beautician course, food processing and hand embroidery work apart from gaining knowledge on business and marketing skills.

Service to the Senior Citizens

Services to the Senior Citizens:5 Senior Citizens who have been deserted by their

families have been helped with food, shelter and clothing at our senior citizen's home.

Future Directions: To expand activities for care and support to women,

young girls and children in distress in terms of rescue operations in collaboration with organisations working for women and children’s rights.

To reach out to the senior citizens in need through emotional care and counseling, health, food and shelter in a larger way.

Start a job placement help line for women in need of jobs with a motive to provide them with safe and secure work place.

Loan Products1. General Loan

> Group based lending

> 5 to 10 women are formed into joint liability groups

> Loan is for income generation and debt relief

> Weekly repayment

> Tenure: 50 weeks (for loans above Rs.10,000- 60 to 75 weeks op-tion is given)

> Loan Size: Rs.2,000 to 15,000

> Clients: Daily wage laborers both skilled and unskilled and only women

> Interest Rate: 15% diminishing and 2.5% upfront fees

2. Small Business Loan

> Group based and individual lending (80% group and 20% indi-vidual lending)

> 5 to 10 women or men having small business are formed into joint liability groups

> Loan is for business expansion and working capital

> Daily repayment other than Sunday

> Loan Size: Rs.2,000 to 20,000

> Tenure: 100 days or 200 days or 300 days

> Clients: Small business people with daily cash flow both men and women

> Interest rate: 14% flat with no fees

3. Micro Enterprise Loan> Individual Lending> Guarantee: PDCs and Co Obligant guarantee> Should have a sizeable business/ salary/

rental income> Monthly Repayment> Loan Size: Rs.25,000 to Rs.200,000> Clients: SME owners, Salaried Employees etc

both men and women> Interest Rate: 18% diminishing and 2%

upfront fees

4. Agri Family Loan

> Group based lending

> 4 to 6 small and marginal farmers are formed into joint liability groups

[both men and women]

> Loan is for agriculture and allied activities;

> Flexible repayment. Interest payable monthly

> Tenure: One year

> Loan Size: Rs.5,000 to 30,000-

> Clients: small and marginal farmers with land holding of 1 to 10 acres

[both men and women]

> Interest rate: 15% diminishing and 2% upfront fees

5. Dairy Loan> Loan is given to Milk Collection Agents and

Milk Producers both men and women> Individual Lending:> Guarantee: The Dairy Owner who buys milk> Loan tenor: 1 year> Loan repayment frequency: once in fifteen

days> Loan Size: Rs.10,000 to 1,00,000-> Interest Rate: 12% diminishing

Thank You!

spandana microfinance

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