Financials - Capital First

Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
2
Overview
•
•
•
•
•
Capital First Ltd. (CFL) is an NBFC with record of consistent growth & profitability.
CFL largely focuses on providing financial services to retail and MSME customers.
CFL is continuously expanding the composition of Retail loans to overall assets, which has
steadily increased from 7% in FY 10, to 28% in FY 11 to 56% in FY 12, and 71% as on December
31, 2012.
CFL has loan assets under management of Rs. 70 bn (~ $ 1.3 billon)
CFL focuses on secured lending and has high asset quality – Gross and Net NPA of the
Company stood at 0.13% and 0.00% respectively.
•
CFL has a strong distribution of 200 branches and ~1200 employees across India covering 42
cities.
•
•
The Net Worth of CFL is Rs. 9.87 bn (~ $ 180 mn)
Recent Developments:

On 04th December, 2012, Warburg Pincus completed the acquisition of 70 % of the equity shares
of the company, and are the promoters of the company.

The long term credit rating of the Company, including NCD and Subordinate debt has been
revised to AA+ by rating agencies.
Corporate Presentation
* USD – INR conversion has been assumed to be 55
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Our Vision
To be a leading financial services provider, admired for high level of customer
service, and respected for ethics, values and corporate governance.
To provide Micro, Small and Medium Enterprises in India with debt capital and
services to support the growth of the MSME sector.
To finance the growing consumption needs of the Indian consumers, which is
driven by increased affluence, growing aspirations and favourable demographics.
Corporate Presentation
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Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
5
Increasing Share of Retail loans
Retail Credit AUM (%)
Wholesale Credit AUM (%)
Total AUM (Rs. bn)
7%
28%
29%
44%
56%
72%
71%
93%
FY10
FY11
FY12
Q3-FY13
Rs. 13.0 bn
Rs. 28.2 bn
Rs. 61.7 bn
Rs. 70.1 bn
Gross
NPA %
5.28%
0.25%
0.08%
0.13%
Net
NPA %
3.78%
0.06%
0.00%
0.00%
Corporate Presentation
6
Retail Loan Book Composition (as of 31 Dec 2012)
Mortgage
Loans, 74.9%
Others, 4.7%
Gold
Loans, 12.0%
Conumer
Durable
Loans, 4.9%
Two-Wheeler
Loans, 3.6%
The retail loan book of the Company has increased by 58% from Rs. 19.58 Bn as of 31 Dec 2011 to
Rs. 30.99 Bn as of 31 Dec 2012
Corporate Presentation
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Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
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Serving Customers Across selected segments
Retail Credit
Consumer
Durable Loan
Customer
Segment
Two Wheeler
Loan
Gold Loan
Mass / Mass Affluent Salaried & Self Employed
SME Loan
against Property
Small and Mid
Size Businesses
Average Loan Size
Rs. 25 – 40 K
Rs. 25 – 40 K
Rs. 75 -200 K
Rs. 7 – 12 mn
Average Tenure
< 1 Year
2 Years
1-2 Years
5-6 Years
Corporate Presentation
9
Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
10
Extensive Branch Network
Through an Extensive Branch Network, Capital First has
reached Customers across most of the states and major cities
in India
Amritsar:
Jalandhar:
Chandigarh:
Delhi & NCR
Jaipur
Ludhiana
Dehradun
Lucknow
Ajmer
Kotta
Jodhpur
Udaipur
Bhopal
Ahmadabad
Baroda
Rajkot
Indore
Kolkata
Raipur
Nagpur
Bhubaneswar
Surat:
Nasik
Mumbai& Thane
Vizag
Pune
Hyderabad
Bangalore
200 Branches,
~1200 Employees
Chennai
Coimbatore
Corporate Presentation
Vellore
Salem
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Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
12
Processes – Underwriting Control
•
At Capital First, there is segregation of authorities and responsibilities across all functions.
Sales, credit, operations and collections are independent of each other, with independent
reporting lines.
•
We underwrite all loans on the basis of cash flow capability of the customers as well as LTV
norms.
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Proposals are checked with credit bureaus, and loans are approved after checking with India’s
leading Credit Bureau, CIBIL.
•
A robust collections infrastructure is in place.
Corporate Presentation
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Mortgages – Credit Underwriting Process
Rigorous and robust credit assessment processes in Capital First help in maintaining the high
asset quality and low NPA levels
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✘
✘
In Mortgages, 29% of the total applications are disbursed
after passing through several levels of scrutiny and
checks,
mainly
centred
around
cash
flow
evaluation, credit bureau and reference checks
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-5
100
✘
✘
-10
-10
✘
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Application
Logged in
Corporate Presentation
CIBIL
Rejections
Rejections
due to
Insufficient
Cashflow
Rejections
after
Personal
Interview
Rejections
due to
Defective
Title Deeds
Others
Rejections
Net
Disbursals
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Maintaining Strong Asset Quality…
6.00%
5.28%
5.00%
4.00%
3.00%
2.60%
1.98%
2.00%
1.00%
0.27%
0.25%
0.05%
0.03%
0.04%
0.08%
0.13%
0.18%
0.13%
0.00%
Q4-FY10 Q1-FY11 Q2-FY11 Q3-FY11 Q4-FY11 Q1-FY12 Q2-FY12 Q3-FY12 Q4-FY12 Q1-FY13 Q2-FY13 Q3-FY13
Gross NPA (%)
Net NPA (%)
•
The Company maintained high asset quality over time
•
The current Gross and Net NPA levels compare well among financial players in India
Corporate Presentation
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Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
16
Profile – Chairman & Managing Director
Mr. V. Vaidyanathan is the Chairman and Managing Director of Capital First Limited. He recently concluded the India’s
largest Management Buyout of a listed company which is one of his most significant professional achievements. As part
of this MBO, Warburg Pincus, one of the worlds most reputed Private Equity players, with funds of over US$ 40 billion in
36 countries, has acquired a majority stake (70%) in Capital First Limited.
In 2010, in order to take an entrepreneurial role, he joined Capital First Limited (CFL) from ICICI Prudential Life Insurance
Company, where he was the Managing Director and CEO. From a largely wholesale financing company with assets of
USD 200 million, he changed CFL into largely a retail lending company with loan assets over USD 1.3 billion, out of which
70% is retail assets. Since his joining CFL, he has successfully launched a number of retail businesses including MSME
financing, Gold Loans, Two Wheeler loans Consumer Durable loans and Wealth Management. He is instrumental in
implementing latest cutting edge technologies and scoring solutions for on-boarding, credit scoring and customer
lifecycle management to improve asset quality and customer service significantly. Within 3 years, he has built a large
retail franchise of 200 branches, 1200 employees across 42 cities, and has made CFL a leading player in lending to
MSMEs. Under his leadership, the company’s long term credit rating has been re-rated thrice from A+ to AA+ within 3
years.
He was earlier appointed as Executive Director on the Board of ICICI Bank at the age of 38. He was also the Chairman of
ICICI Home Finance Co. Ltd, and served on the Board of ICICI Lombard General Insurance Company and CIBIL, India’s first
credit bureau. He started his career with Citibank India in 1990 and served in the Consumer Banking Division of Citibank
till 2000.
He joined ICICI Bank in early 2000 and helped transition the then ICICI Limited from a Domestic Financial Institution (DFI)
to a Universal Bank. He was responsible for launching the Retail Banking Business since its inception in 2000 and
managed the retail business till 2009. He built ICICI bank into a large retail powerhouse in the country and built a loan
book of USD 30 billion in Mortgages, Auto, Consumer loans and credit cards, and took the bank to market leadership. He
also built a network of 1400 ICICI Bank branches across 800 cities, built a vast deposit base, and a franchise of 25 million
customers. He also built the SME business and Rural Banking Business for the bank. His key passion is the usage of new
age technology to expand organized retail lending and deposits to a vast expanse of India.
Over the years, his contribution won him many domestic and international awards including Best Retail bank in Asia
2001, “Excellence in Retail Banking Award” 2002, Best Retail Bank in India 2003, 2004, and 2005 from the Asian
Banker, “Most Innovative Bank” 2007, and was nominated “Retail Banker of the Year” by EFMA Europe for 2008 and
2009. He is an alumnus of Birla Institute of Technology and Harvard Business School. He is a regular marathoner and has
run 7 marathons. He lives in Mumbai with his family of father, wife and three children.
Corporate Presentation
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Board of Directors
Profile
Vishal Mahadevia
Non-Executive
Director
Vishal joined
Warburg Pincus in
2006, is co-head of
the firm's Mumbai
office. Previously, he
was a principal at
Greenbriar Equity
Group, a fund
focused on private
equity investments.
Prior to that, Mr.
Mahadevia worked at
Three Cities
Research, Inc., a New
York-based private
equity fund, and with
McKinsey & Company
Corporate Presentation
Anil Singhvi
Independent Director
Anil is the Chairman
of Ican Investments
Advisors Pvt Ltd.
Prior to establishing
Ican Investments, he
was the Advisor to
Reliance ADA
Group. Mr. Singhvi
was the Managing
Director of Ambuja
Cements Ltd. He
played a key role in
the growth of the
company from 0.7
million tonnes to 17
million tonnes.
N.C. Singhal
Independent Director
Hemang Raja
Independent Director
N. C. Singhal was a
Banking Expert to
the Industrial
Development Bank
of Afghanistan, for
the World Bank
project and a
Consultant and
Management
Specialist with the
ADB in
Philippines, South
Korea, Pakistan and
Uzbekistan. He was
the founder Chief
Executive Officer of
The Shipping Credit
& Investment
Corporation of India
Limited.
Hemang has a vast
experience of over
thirty three years in
financial services
encompassing fund
based businesses
such as Project
Finance and
Corporate Banking
with IL&FS. He has
been involved in the
Private Equity and
Fund Management
business with Credit
Suisse and Asia
Growth Capital
Advisers in India as
MD and Head-India
M S Sundar Rajan
Independent Director
Sundar Rajan was
Chairman and
Managing Director
(CMD) of Indian
Bank and has total
experience of over
38 years in the
Banking Industry. He
has also earlier
worked with Union
Bank of India for
over 33 years.
During his
Stewardship as CMD
of Indian Bank, the
said Bank has won
many accolades and
awards
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Experienced Management Team
V. Vaidyanathan
Chairman & MD
Apul Nayyar
CEO – Consumer Business
Ashok Shinkar
CEO – Wholesale Business
Nihal Desai
Chief Risk Officer
Pankaj Sanklecha
CFO & Head – Corporate Center
Adrian Andrade
Head – HR & Admin
15 Years in Financial
Services
19 Years in Financial
Services
18 Years in Financial
Services
17 Years in Financial
Services
22 years in Financial
Services
Apul was the Executive
Director & CEO with India
Infoline Investment Services
Ltd and held leadership
position in DSP Merryl Lynch
and Citi Financial in different
areas like across Product
Development, Marketing, Sal
es & Distribution, Risk
Management, Product
Portfolio
Management, Treasury
Management, Investments,
Fund raising, etc
Corporate Presentation
Ashok has held senior
positions in J M Morgan
Stanley and SSKI Corporate
Finance in the field of
Corporate Finance
Advisory, M&A, Private
Equity, Debt and Equity
Structuring and Merchant
Banking activities including
merchant banking, corporate
and financial advisory in
various sectors
Nihal has worked in ICICI
Bank for 16 years where he
held various leadership roles
in credit, collections, retail
and wholesale banking.
Before joining Capital
First, he was the managing
director of Serco Global
Services and was in-charge of
establishing Serco’s frontline
business in India
Pankaj has extensive
experience in Indian Retail
and SME banking segment.
Prior to joining CFL, he was
the Head of Credit for Retail
lending, managing a portfolio
of close to $ 2.5 billion in
Standard Chartered Bank. He
has earlier worked with ICICI
Bank in senior business and
risk management positions.
Adrian has several years of
experience in HR relationship
Mgmt, L&D, R&R
management, HR
operations, Mergers &
Acquisition and Project Mgmt
. Prior to joining Capital
First, was previously the
Head HR –
Risk, products, Marketing &
Academy with Standard
Chartered Bank. He has also
worked with ANZ Bank prior
to joining Standard Chartered
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Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches & Infrastructure
Credit Processes
Management
Funding
Financials
Corporate Presentation
20
Funding – (as on 31 Dec 2012)
Credit Rating
Borrowing Profile
Bank
Funding, 73.45%
3 notch Rating
upgrade
received in the
last 2 years of
operation
AA+
Equity, 16.27%
AAA+
FY11
FY12
FY13
Commercial
Paper, 1.81%
Long Term
NCD, 8.48%
•
The Company has a healthy overall Capital Adequacy Ratio of 18.90% with Tier -1 Capital Adequacy at 15.08%
•
The Company has access to a wide range of funding options, including reputed Mutual Funds, Provident
Funds, Banks through NCDs, CPs, and long term loans.
Corporate Presentation
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Asset Liability Management – (as on 31 Dec 2012)
All figures are in Rs. mn unless specified
30,000
25,000
20,000
15,000
Year 1
Year 2
Total Inflows into the Company
Year 3
22,664
22,664
11,296
14,294
19,123
26,203
-
11,412
5,000
26,808
10,000
Year 3 onwards
Total Outflows from the Company
•
The Company follows a policy of matched funding, whereby all assets are entirely funded by corresponding
liability of similar maturities on an actuarial basis, thus protecting the company from liquidity risks.
•
Floating rate loans are funded by floating rate liabilities to cover interest rate risks.
Corporate Presentation
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Our Agenda
Overview of the Company
Changing Asset Composition
Segments served
Branches
Credit Processes
Management
Funding
Financials
Corporate Presentation
23
Significant Changes in Accounting Policy in FY 13
During the quarter ending September 2012, the company changed the accounting policy and
made it more conservative. These changes and its impact on the P and L are described below.
The company, in the course of its normal business collects fees for wholesale lending, receives
income by assigning loans, and pays fees for securing credit limits to financial institutions. The
net income from such activities in FY12 was Rs. 946 mn. On an average, the net income every
quarter from such activities, booked upfront, in FY12, was Rs. 236 mn.
So far, the company has followed a policy of booking this income upfront. From Q2-FY13, this
income is being amortized over the average tenure of loans, and therefore the profits will accrue
to the P&L of the company over the life of the loan.
Since in FY12 the above income was accounted upfront, and in FY13 this is being amortized, the
YOY and QOQ financials are not comparable.
Corporate Presentation
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Simulation on effect of Amortization of Income
in FY 13
This slide is a simulation to understand the impact of the new policy of amortising fee income from lending
businesses and income from securitization
Reported Quarterly Income
(Rs. mn)
For purpose of this simulation, the average actual quarterly performance of FY12 for income from such
activities has been assumed constant over next few quarters, and the impact has been demonstrated here.
This is merely a simulation and if not intended as a guidance.
300
250
200
150
100
50
0
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Old Accounting Method
Income - Old Method
Amortized Income from Q8
Amortized Income from Q12
Amortized Income from Q16
Q9
Q10
Q11
Q12
Q13
Q14
Q15
Q16
New Accounting Method
Amortized Income from Q5
Amortized Income from Q9
Amortized Income from Q13
Amortized Income from Q6
Amortized Income from Q10
Amortized Income from Q14
Amortized Income from Q7
Amortized Income from Q11
Amortized Income from Q15
As seen from the illustration above, in the next few quarters, the income from these activities is expected to reduce by
about Rs. 180- 200 Mn per quarter, compared to the prior years, on account of the change in Accounting Policy. This
income will be booked over the life of the loan and will reflect in future years. The -ve impact on the reported income
is neutralized over time as the economic value is the same under both accounting methods.
Corporate Presentation
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9M - Profit & Loss (Consolidated)
All figures are in Rs. mn unless specified
Particulars
9M-FY12
9M-FY13
Interest Income
3,920
5,346
Less: Interest Expense
2,411
3,495
Net Interest Income (NII)
1,509
1,852
Income from Assignment
382
312
Fee income
405
264
Other Income
236
90
-
224
Total Income
2,533
2,741
Opex
1,158
1,954
Operating profit
1,375
787
229
80
1,146
707
Tax
355
157
PAT
791
550
Exceptional Item
Provision
PBT
If the new Accounting Policy (of amortising Fees received from customers, and amortising income
from assignment of loans) is applied to the past financials, Profit After Tax would have increased
by 21% from Rs. 543 mn in 9M-FY12 to Rs. 657 mn in 9M-FY13
Corporate Presentation
26
Equity Shareholding Pattern – (as on 31 Dec 2012)
Promoters
(Warburg PincusCloverdell), 70.28
%
Others, 1.62%
Individuals, 7.50%
Bodies
Corporate, 19.31
%
FII, 1.01%
Financial
Institutions, 0.29
%
• The stake mentioned of Warburg Pincus as mentioned above includes CCPS of 30,86,420, which will be converted to shares anytime before the
expiry of 18 months ending 28-March-2014
• Financial Institutions include Banks, Mutual Funds, Insurance Companies and other Financial Institutions
• Others include NRI-Repatriable, NRI-Non-Repatriable, Clearing Members and Trusts
Corporate Presentation
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Capital First Limited
India Bulls Finance Centre
Tower II, 15th Floor
Senapati Bapat Marg
Elphinston (West)
Mumbai 400 013
Website
www.capitalfirst.com
E-mail
Investor Relations - [email protected]
Telephone
+91 22 40423400
Corporate Presentation
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