Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Q4 FY2019 Earnings Presentation
34 slides from Ugro Capital's earnings presentation, May 2019
Slide 1: U Gro Capital Q4 FY19 / FY19 Earnings Update
U Gro Capital Q4 FY19 / FY19 Earnings Update
Slide 2: U GRO Capital | Executive Summary
U GRO Capital | Executive Summary U GRO Capital Sector Specialization • Healthcare A technology enabled, highly specialized, small • Educational Services Shortlisted from 180 business lending platform • Food processing sectors through an • Hotels & resorts extensive study of • Chemicals Management t
Slide 3: FY19 | Key Highlights
FY19 | Key Highlights 1 2 Distribution People ▪ Business Launch in January, 2019 ▪ 96 people onboarded ₋ 7 branches operational ▪ All CXO and CXO-1 positions on-board ₋ 76 GRO Partners onboarded ₋ Management team with an average ▪ INR 82 crores of disbursals - AUM of experience of 25+ years INR 80 c
Slide 4: Disbursal and AUM Summary
Disbursal and AUM Summary Steady Month on Month Increase in Disbursals Largely Secure Portfolio SBL UBL SCF SBL 15% 12 7% UBL 3 SCF 78% 33 1 2 6 5 Jan-19 Feb-19 Mar-19 SBL UBL SCF Geographically Diversified Book 8% Avg Ticket Size (INR) 3.6 Crs 0.18 Crs 1.2 Crs 13% Andhra Pradesh Delhi Avg Yield 12.
Slide 5: Income Statement
Income Statement INCOME STATEMENT (INR Mn) Q4 FY19 FY19 Proforma FY19 Operating Income 134.6 368.1 448.8 Less: Interest Expense 0.1 0.1 0.1 Net Income 134.5 368.0 448.7 Fee & Other Income 30.0 50.0 50.0 Total Income 164.5 418.0 498.7 Opex 186.7 367.2 447.9 Provision 2.4 3.2 3.2 Profit Before Tax Bef
Slide 6: Balance Sheet
Balance Sheet BALANCE SHEET (INR Mn) As on March 31, 2019 SOURCES OF FUNDS Net Worth 6,377.5 Compulsorily convertible debentures 138.3 Loan Funds 69.4 ▪ INR 98 crores from conversion of Other Non-Current Liabilities 6.2 warrants outstanding expected by Current Liabilities 112.9 December, 2019 ▪ Net
Slide 7: Shareholding Pattern
Shareholding Pattern Calculation of Shares Outstanding Shareholding Pattern (Fully Diluted Basis, Post the demerger) # Shares Issued & Outstanding (as on March 30, 2019) 2,33,31,482 IndGrowth Others 5% 15% Add: Dilutive Instruments Promoters 4% Samena Compulsorily Convertible Instruments 2,76,74,420
Slide 8: Our view on current market conditions
Our view on current market conditions View on market conditions Our Response ▪ Liability costs will continue to remain high ▪ Reduced ALM mismatch by increasing the mix of shorter tenor products viz. supply chain financing, loans against ▪ Spreads between AAA rated entities and AA/A machinery rated
Slide 9: U GRO | An Introduction
GRO U GRO | An Introduction
Slide 10: Small Business Lending Isn't A Small Business
Small Business Lending Isn’t A Small Business 50 Mn MSMEs in India US$300 Bn | SME Credit Gap 50 Potential Addressable Credit Gap: 560 Bn Gross Value Add (US$) 45 40 INR 20.46 Trillion growing at 7%+ 35 per annum 30 INR Tn 0.7 25 2.9 29% Contribution to India’s GDP 20 15 45.0 10 23.7 20.1 5 10% MSME
Slide 11: Diversity of Small Businesses Creates Challenges for Traditional Lenders
Diversity of Small Businesses Creates Challenges for Traditional Lenders Challenges in lending to the SME segment… ? Difficult to understand Fragmented set of High cost of customer High dependence on Lack of businesses/cash flows customers acquisition the ecosystem data …leading to a Frustrating Bor
Slide 12: New-age, specialized SME lenders better positioned to bridge the SME credit gap
New-age, specialized SME lenders better positioned to bridge the SME credit gap Specialized SME Lenders Traditional NBFCs Banks Customized products basis nature of business, non financial parameters, Loan against property, supply Loan against property, supply Product end use, paying capacity/ freque
Slide 13: U GRO Capital | Who we are
U GRO Capital | Who we are Large Institutional Capital INR 9,530 Mn (~US$135mn) Of Equity A highly specialized, technology enabled small business lending Strong Corporate Governance platform Board Controlled, Management Run Knowledge Technology Deep domain expertise of A scalable, data driven Experi
Slide 14: One of the only firms in the lending space to start with US$ 135Mn of capital
One of the only firms in the lending space to start with US$ 135Mn of capital 1994 - 2017 Formation of Chokhani Securities Preferential Allotment Qualified Institutional Placement Aug, 2018 Dec, 2017 1994: Formation of Chokhani INR 4,350mn raised from global INR 1,120 Mn raised from public 1995: Lis
Slide 15: Strong corporate governance framework enshrined in the Articles
Strong corporate governance framework enshrined in the Articles Special Resolution of the shareholders required for effecting any changes to the AoA ▪ High degree of regulatory oversight and transparency ▪ Mandatory requirement for a Big 4 firm to be appointed ▪ Ability to create an institution with
Slide 16: Our Board
Our Board Independent Members of the Board Satyananda Mishra - Head, CSR Committee Rajeev K. Agarwal - Head, Stakeholder Committee ▪ Ex-Chairman, MCX, Ex-CIC, GoI, Ex-Director - SIDBI ▪ Ex-Whole Time Member, SEBI ▪ Over 40 years with the Indian Administrative Services ▪ Over 30 years with experience
Slide 17: Founder with the experience of creating institutions across financial services
Founder with the experience of creating institutions across financial services… Mr. Shachindra Nath Executive Chairman and Managing Director ▪ 26 years of experience in creating institutions across the financial services domain Lending Capital Markets Asset Management Insurance SME Lending Retail Br
Slide 18: Supported by a team with a strong track record of execution
… supported by a team with a strong track record of execution Abhijit Ghosh Chief Executive Officer AUM Managed: INR 180 Bn Anuj Pandey Kalpesh Ojha J Sathiayan Chief Operating Officer Chief Financial Officer Chief Business Officer AUM Managed: INR 120 Bn Liability Raised: INR 700 Bn AUM Managed: IN
Slide 19: Our Mission
GRO Our Mission 19
Slide 20: 'To Solve the Unsolved'
Our Mission ‘To Solve the Unsolved’ India’s US$ 600Bn+ SME Credit Availability Problem 20
Slide 21: How we want to do this
How we want to do this Deep sector specialization to understand, reach, and Know More, service the customer Grow More better Leverage the best practices of Create an organization that traditional NBFCs and the pro-actively address the Fin-touch + Liability modern fin-tech providers to ‘needs’ of rat
Slide 22: Sector led approach to lending
Sector led approach to lending Healthcare Light Education 38 identified sub-sectors within the 8 sectors engineering Focus on the SME clusters in India Auto Top 8 Chemicals components Sectors ~50% - Contribution of the 8 sectors to the overall SME lending market in India Electrical Validated indepen
Slide 23: Our Credit Appraisal Philosophy
Our Credit Appraisal Philosophy Touch and Analytics Experience Feel 8 sector specific statistical 25+ sub-sector specific expert All traditional checks to be scorecards created after scorecards created in conducted before disbursing a analysis of 8 Mn loans collaboration with CRISIL after loan to a
Slide 24: Credit Appraisal Process | A Three Pronged Approach
Credit Appraisal Process | A Three Pronged Approach In principal approval in 60 File Flow For A Secured Loan mins ~8 segment specific statistical scorecards Pre-defined Statistical Sub-sector ~Sub-sector specific Sourcing Channel Data Enrichment PD templates Criteria Met? Score-cards Policies ▪ Sour
Slide 25: Our Product Philosophy
Our Product Philosophy Moving beyond conventional products offered by most NBFCs in the market… Secured Loans Supply Chain Unsecured Loans Financing Mostly long tenor, loan Short term working 30-90 day loans against against property capital loans invoices To create sub-sector specific products by mo
Slide 26: Customized solutions to better solve the MSME credit availability problem
Customized solutions to better solve the MSME credit availability problem Restaurants Challenges Faced: Cash based collections reducing eligibility, a new restaurant takes time to reach positive cashflows U GRO Approach Assessment: A combination of Zomato ratings, seats, cuisine served, price points
Slide 27: Traditional Channels | A new approach to the old
Traditional Channels | A new approach to the old A technology led, partnership based approach to GRO Partners Rigorous Partner Selection Criteria GRO Partner App: An Industry First Branch Office Head Office ▪ An initial list of 100+ channel Planned Branches partners arrived at post rigorous Ludhiana
Slide 28: Partnership Channels | Ability to reduce sourcing costs
Partnership Channels | Ability to reduce sourcing costs Symbiotic approach to lending to cater to the value chain Analytics led sourcing arrangements Ticket Size < INR 5 Mn Ticket Size > INR 50 Mn Leverage third party origination platforms (traditional/digital) for lead sourcing ▪ Analytics led pre
Slide 29: Growth Channels | Ecosystem based lending
Growth Channels | Ecosystem based lending Partnership with a large food aggregator Dedicated “Growth Team” to build industry partnerships ▪ Pre-approved program based on data analytics for Unsecured & Secured Loans to Restaurants ▪ Performance data of restaurants partners with UGRO to be shared by t
Slide 30: Distribution Network
Distribution Network 1st Year In 5 Years Branches 7 27 States 7 10-12 GRO 100 350-400 Partners Corporate 3 25-30 Partners Co-lending 3 10-15 Partners 30
Slide 31: Hybrid Lending Model
Hybrid Lending Model… Traditional – Fin-Touch Alternative – Fin-Tech Traditional credit assessment models like Alternate credit assessment models CIBIL scores leveraging analytics + publicly available data Leverage technology to automate processes Physical processes such as visits to customers thus
Slide 32: ..to complement traditional "touch and feel" across the value chain
..to complement traditional “touch and feel” across the value chain Sourcing Verification and Disbursal Collection and Recovery ▪ Online process to augment traditional fraud ▪ Collection and litigation team already in place ▪ Partnerships with traditional/digital control process ▪ Analytics led pred
Slide 33: Liability is an 'Art' – U GRO is designed to perfect this Art
Liability is an ‘Art’ – U GRO is designed to perfect this Art U Gro’s asset strategy would lead to low cost of capital Key tenets of our liability strategy Liability led asset strategy Active engagement with stakeholders Diversified Liability Base ▪ Build a diversified, granular book catering ▪ Enha
Slide 34: Disclaimer
Disclaimer U Gro Capital Ltd Disclaimer: The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all inform