Transcription
MergingNew-Age Fintechwith TraditionalLendingCAPITAL TRUST LIMITEDQ4 & FY2022INVESTORPRESENTATIONMay 2022
DisclaimerCertain statements in this document that are not historical facts are forward looking statements. Such forwardlooking statements are subject to certain risks and uncertainties like government actions, local, political oreconomic developments, technological risks, and many other factors that could cause actual results to differmaterially from those contemplated by the relevant forward-looking statements.Capital Trust Limited will not be in any way be responsible for any action taken based on such statements andundertakes no obligation to publicly update these forward-looking statements to reflect subsequent events orcircumstances.2
TABLE OFCONTENTSCOMPANY OVERVIEW04-13COMPETITIVE ADVANTAGES14-19DIGITAL JOURNEY20-22RURAL DOORSTEP-FINTECH23-28FINANCIALS29-38KEY PARTNERSHIPS39-41CAPITAL IMPACT42-43
COMPANY OVERVIEW
Capital Trust - Financing with a Tech-Touch BalanceCompany Snapshot Being India’s first "Rural Doorstep-Fintech Company,” we arefocused on providing financial inclusion services to underserved Indiaby merging fintech and traditional financing. Our digitized rural financing model offers quick digital micro loans toMSMEs and caters to over 99,000 customers across 94 districtsthrough 315 branches in 10 states in India.Our VisionTo become the first fully digitalised and most trusted consumer servicepoint in rural India that redefines the rules of MSME financing.Our MissionTo encourage self-sufficiency and entrepreneurship in the underservedpart of India by using ‘low-cost, high-tech’ digital finance processes.5As we continue to address the growingcapital needs of the underserved markets ofIndia, we have reached a tipping-point inour digital transformation journey,propelling us into the next phase of growthto help us serve more customers, better.
Capital Trust – Numbers at a GlancePORTFOLIONET WORTHCAPITAL ADEQUACYGROSS NPA*NET NPABRANCHESEMPLOYEES 301 Cr 121 Cr43.8 %5.0 %0.0 %3152,138*Own Book 90 / Own Book Portfolio6
Q4 FY2022 - Quarter At a GlanceHighest QuarterlyDisbursement since FY20Continuous Reduction inGNPASequential Improvement inProfitability10%0.91.01.6Q2 FY22Q3 FY22Q4 FY22239%58103%9%2218Q1 FY2255Steady Increase in 13%2%1%-140%Q1 FY22Q2 FY22Q3 FY22PAT in CrIncrease in Capital DigitalLoans ProportionCDL*Legacy**Q1 FY22Q4 FY22Q2 FY22AUM in Cr180Capital Digital Loans’Continued ResilienceConstant Rise In % Of DigitalCollection Of Capital DigitalLoans’ Clients***5%5%4%Q4 FY22Disbursement in Cr162160Q3 1 FY22Q2 FY22Q3 FY22Q3 FY223%3%46%2%8054%2%2%2%2%401%201%0Q1 FY2255%4%3%6028%3%Q2 FY22Q3 FY22Q4 FY22% Split in AUM0%Q1 FY22Q2 FY22Q3 FY22Q4 FY22AUM in Cr, 30 % and 90 %* Loans disbursed post FY20 (automated credit engine backed)** Stopped disbursement in 2019 (cash collection product)*** Collection % when bank clearance data is received (NACH clearance Advance collection)% Of Collection7Q1 FY22Q2 FY22Q3 FY22Q4 FY22Collection EfficiencyEnhancement Of Existing & OnBoarding Of New Partnerships
Capital Trust 2.0: Capital Digital Loans01Driven byTechnology08Faster CreditDeliveryUnique CustomerProfileLow Risk - HighReturnsRural Doorstep FintechShort Turn-Around-TimeServing theBetterCompanyFor Disbursement Client facing CapitalConnect smart phoneapplication in addition tostaff Capital Salesapplication. Capability for sameday disbursementwith 82% loansdisbursed within 48hours turnaroundtime.Missing Middle Only player offeringunsecured, individual,digital, businessgenerating loans of lessthan 1Lac. Sector untapped by MFIsand Banks / NBFCs.Rewards Higher NIM’s. Paperless Processing. Geo-tagging of businessand customers. Ticket size of 5,000 50,000.8StringentCredit ControlRobust QualityChecks Blending the best ofphysical & digital Short tenure of 3-18practices.months makes repayment AI and Businessfaster.Intelligence to calculate Digital NACH Collections.applicants' income based Automated risk engineon business industry.preventing build of High quality portfolio –concentration.lower NPA .
Capital Digital Loans to Drive Future GrowthAccelerated growth in RuralInternet UsersBetter Collection Efficiency0128%02 60% collections made Digitally23045%0304Faster Turnaround Time243Lower Operating Cost2019Rural India050607082943522021Urbran India100% Digital DisbursementsIncreasing Digital Penetration in IndiaBetter Net Interest Margin India has surpassed every nation, incl. China and US indigital financial transactions.Shorter Tenure – Low RiskRobust Internal Controls India has highest real-time payments amongbusinesses around the world with 40% of world widetransactions done in India in 2021. According to ACI Worldwide, data India made 48.6 bn.Real-time payments in 2021, which is 2.6 times morethan China, which is at second place with 18.5 bn realtime transactions.9
Target AudienceGraduated from Microfinance8% of the Microfinance clients graduate yearly fromthe Microfinance sector and hit a wallNew to Organized CreditMISSINGMIDDLEReplacing traditional informal sources of financing(local moneylenders) which currently account for84% of all financing to MSMEs‘Micro’ of the MSMEUnserved by MFIs (owing to RBI guidelines) and banks /large NBFCs (owing to no formal income documentation)Clients Needing Instant CreditWith 100% digital processes, company is able todisburse loans in a matter of hours from onboarding10
Our ClienteleKirana StoresDairy and Livestock FarmersGrocery VendorsSmall EateriesTextile StoresHandicraft ManufacturersUtility StoresSalonsFlower Vendors11
Increasing our Reach in Rural 23Expansion in customer base viadiversification in New Geographies anddeeper penetration in existingGeographies315 Branches spread across 94 Districts in10 States of India12
Our Products: Capital Digital LoansAddressing a wide spectrum of customers, across needs and affluenceProduct NameQuick Digital LoanCapital Magic LoanType of LoanUnsecured Digital LoanUnsecured Digital LoanTicket Size ( )5,00030,000 – 50,0003 months12 – 18 monthsInterest-Free 35%Digital followed by physical cash collectionDigital followed by physical cash collectionTenureROIRepaymentWhy CTL?-Branch bankingEase of getting loanUnsecured loanDigital loanProduction Optimization-- Human connect- Quick turnaround time- Transparency with connect app- Paperless Process13Small Ticket SizeShort TenureOptimal EMI amountShort Turn-Around-Time- High Yield- Digital Collection Enabled- Full Cash Collection Setup- Geo-tagged and Analytics backed
COMPETITIVEADVANTAGES
Creating a Competitive Advantageto Increase Stakeholder Value1. Unique Business Model3. Prudent Risk Management With a deep understanding of targetcustomer segments, lean cost structures anddifferentiated business models we cater tounderserved segments of the economy. Our conservative thought process towardsfinancial engineering has helped ustransform underwriting and decision making,thereby, helping drive competitiveadvantage and robust risk management. Our one-of-a-kind business model finds theperfect balance between technology andtraditional financing, something not manyother companies can do. Further, our risk management frameworkspro-actively detect, manage and mitigateinternal and external risks.Investing inCapitalTrust2. Technology Driven Operational Efficiency4. Strong Governance By leveraging technology to penetrateunderserved segments, we have capitalizedon the inability of banks to rapidly scaleoperations and customize rigid policies inregard to providing business loans in ruralIndia. Being a publicly listed NBFC for the last 37years, we have built a robust governancemodel to maintain stakeholder trust andimprove resilience to survive in testing times. This has enabled us to develop strategicpartnerships with key ecosystem players andleverage technology for meeting thedemands of new consumers. This transformation is helping us create anagile and scalable business model.15
1. Unique Business ModelFinancing the Overlooked VoidTICKET SIZE 10 LakhUNSECUREDSECUREDNew Age FintechsANNUAL INCOMELarge SME Funding NBFCs / Banks 10 LakhProduct Specialized MSME NBFCs 4 - 10 LakhMSME 1Lac - 10 LakhGeographical Specialized MSME NBFCs 3 - 4 Lakh 30,000 – 1LacMicrofinance 20,000 – 60,000 3 LakhNBFC-MFIsOnly player offering unsecured individual digital loans in the ticket size of 30,000 - 1 Lac16
2. Technology Driven Operational EfficiencyEnabling Improved Disbursements & Jun-21Jul-21Aug-21 Sep-21Oct-21 Nov-21 Dec-21Jan-22Feb-22 t-21Capital Digital Loans Collection EfficiencyCompanywide Collection EfficiencyNov-2155%Dec-21Jan-22Digital Collection as % Age of Collection*With our newly developed automated disbursement engine and algorithmic credit scorecard, our disbursements have increasedconsistently. Further, our average turnaround time has improved to less than 48 hours as on Q4 FY2022* Collection % when bank clearance data is received (NACH clearance Advance collection)17
3. Prudent Risk ManagementConservative ALM Practices and Diversified Funding BookNBFC, 28%BC, 19%Term Loan, 30%DFI, 6%DIVERSIFICATIONACROSS PTC, 12%Public SectorBanks, 17%DA, 6%Sub-Debt, 16%ICD, 2%NCD, 11%Private SectorBanks, 46%OD, 3%InstrumentsFundersAsset Liability Position Update *Q1FY22 (Actual)Q2FY22 (Actual)Q3FY22 (Actual)Q4FY22 (Actual)Q1FY23 (Expected)Quarterly Collections ( Cr.)73.376.674.978.181.1Quarterly Repayments ( Cr.)53.858.461.861.059.0Quarterly Surplus ( Cr.)19.518.213.117.122.8Monthly Surplus ( Cr.)6.56.14.45.77.6* Assuming no incremental disbursements18
4. Strong GovernanceBeing a Publicly Listed Systemically Important NBFC, We Try to Create Sustainable Value for StakeholdersBOARD1.2.3.4.5.6.Mr. Yogen KhoslaMr. Sanjv SyalMr. Govind SabooMr. Pawan DubeyMr. Vahin KhoslaMs. Suman KukretyAccountable for overall management and performanceMr. Yogen KhoslaDelegate management of day-to-day affairsCOMPANY SocialResponsibilityCommitteeMANAGING DIRECTOR & CEOAudit & mmitteeReporting/accountability of corporate governance,Board and management mattersManagestrategy,business plansand policiesapproved byBoardReportingEXECUTIVE TEAMManagementand oversightInternal AuditorReportingEMPLOYEESExternal AuditorGovernance at Capital Trust is designed to align our purpose and value creation model to seize market opportunitiesand to create sustainable value. In this spirit, the Board provides leadership to drive integrated thinking and formulaterequisite strategies to direct the Company to its desired aspiration.19
DIGITALJOURNEY
Pioneers of Digital Transformation in Rural IndiaReady to Capture Next Phase Of Growth in Evolving Rural EcosystemMore Rural Internet Users (277 Mn) than Urban (227 Mn):Indian internet is more rural and local than everGrowing 3x Faster Than Urban India:Ready to capture rural digital growth as one of the first in theindustry to introduce 100% digital processesRegistering 45% Growth in Internet Usage:With digital focus; best in class technology and analytics wehave 100% paperless processing18% Growth in Rural Smartphone Penetration:Poised to make most of upcoming potential with nomanual processes and clients more mobile first than ever21
Evolution of Capital Trust’s Digital Business cision to go 100%Cashless Disbursements(First in rural industry)Issuance of Geo-TaggedDigital Receipts ratherthan physical passbooksigning(First in rural industry)Launch of Capital Salessmartphone app withreal-time information atstaff fingertips(First in rural industry)Decision to go 100%Cashless Collection asfirst mode of payment(First in rural industry)Incorporation of AI EnabledCredit Engine (automateddecision making with creditscoring of borrower. Doneon Income, Credit Historyand Debt servicing capacity)Launch of client-facingCapital Connectsmartphone app(First in rural industry)Start of 100% paperless processes:no physical signature requiredfrom sourcing to disbursement(First in rural industry)Launch of AI EnabledGeo-Tagged ClientRoute Mapping forincreased operationalefficiencyIntroduction of AI EnabledPhysical Visit Engine(automated income inputanalysing client industry, salesand margin)RURALDOORSTEP-FINTECHCOMPANYPROACTIVE RATHER THAN REACTIVE:Capital Trust is emerging as Thought and Innovation leaders capturing the changing rural landscape22
RURAL DOORSTEPFINTECH PROCESSES
Meaning: Rural Doorstep-Fintech1. LEAD GENERATIONGenerate lead by door to door canvasingGeotagging of business and residential premiseMobile number verification through OTPHandholding of client through digital onboarding2. HYBRID CREDIT UNDERWRITINGQR Code scan of Aadhaar CardAutomated credit bureau checkPhysical Verification of business and residence premiseBusiness and cash flow analysisPhysical Visit EngineCredit EngineTelephonic Verification3.DIGITAL DISBURSEMENTE-Sign / Signing of Terms and ConditionsE-NACHPenny-drop verificationDisbursement into bank account4. COLLECTIONAutomated client allocation based on client geo-tagged residenceAutomated outbound dialling, installment reminder messageMonthly NACH paymentPayment enabled through company appCash collection if digital payment not receivedDIGITAL PROCESS24PHYSICAL PROCESS
3 Pillars of Capital Trust2. HYBRID DUAL CREDITAutomated credit (credit bureau checks and preset algorithms)supplemented with Traditional Safeguards of Branch Banking (physicalverification of residence, business premise and cash flow analysis)1. TECHNOLOGY3. BUSINESS INTELLIGENCEUse of Technology for faster,confidential, transparent and betterenhancement of credit profile withlow risk and better returnsUse of Advanced Statistical Modelsand predictive analysis beforesanctioning a loan and after for performance evaluation25
1. TechnologyCashless Disbursement &CollectionOne of the first NBFCs to start cashless disbursement of allloans since 2015 and cashless collection as primary modeof repayment since 2019Automated closing of company and all branch books at6PM daily through collation of issued Digital Receipts(SMSs sent to client on collection of any repayment)Automation of Daily CashBook Through DigitalReceiptsStaff and client-facing smartphone applicationswith access to all details regarding the loan topromote transparency and authenticityStaff Facing and ClientFacing ApplicationsAll new staff onboarding through paperless,digitalized processes with joiningformalities done within hoursDigitalized HROnboardingPaperless Processes100% paperless processes. From onboarding to disbursement allprocesses are digitalized and through the application with noscope of any manual input into system26
2. Hybrid Dual CreditInstant in-principal approval by automated creditdecisioning system with no manual intervention atclient doorstep. Final approval subject to positivephysical verification of cash flow and disposable incomeDisbursementTelephonicVerification by HOCredit TeamNo exceptions or manualintervention permittedAlgorithmic CreditVerification of documentsRule Engine &uploaded into system andPhysical Visit Engine re-assessment of cash flowPhysical Verification Automatic rejection in caseby Field Credit Teamof any deviation fromof client during callprescribed credit policiesAutomated CreditBureau CheckQR Code Scanning ofAadhaar By Field TeamLink-up with Equifax toreview past credit history.Hard rejection in case ofnegative credit bureauAutomatic uploading of clienthistorydata into system. Location geotagged and case rejected ifclient residence is beyond20kms from branchGround level authenticationby physical verification ofhome, business and income.All details uploaded into app Decision communication flow and all processes are automated Technology used at all stages of loan cycle eliminating requirement ofphysical movement of documents All processes time stamped and tracking of cases available on live basis27
3. Business IntelligenceCREDIT ENGINEAutomated decision making withCredit Scoring of the borrowerbased on Income, Credit Historyand Debt servicing capacity. Theengine calibrates regionaldifferences in performance usingpin-code level dataSTAFF ENGINEIntegrated tool for real timemonitoring of current staffavailability and projected staffsufficiency at branch level bylooking at past attendance thisengine predicts staff shortfall intimes to comePHYSICAL VISIT ENGINEEnablement of IndependentCredit Officer’s data entry withbackend automated decisionmaking. System automaticallycalculates Household Incomebased on standardized businesssize, industry margin andexpected expensesDISBURSEMENT ENGINE28Developed Real-Time system ofautomated controls ondisbursement to avoid risk buildup in branches. This engine helpsmonitor internal and externalparameters and ensuresautomatic stoppage ofbranch/staff disbursement wherecollection parameters fall below aprescribed level
FINANCIALS
Product-Wise Portfolio 430 Cr 427 CrLegacy Portfolio is comingdown on the back ofimproved collections, nonew disbursements andwrite-off** in Q4 FY22 401 Cr 337 Cr 311 Cr355 312 Cr 301 Cr29740824310594Q4 FY21Q1 FY227219611516914213916222Q2 FY21Q3 FY21Capital Digital LoansQ2 FY22Q3 FY22Q4 FY22Legacy Portfolio** Further split into Microfinance, Micro-Enterprise, Secured-Enterprise Loan (no new disbursement since 2019)** Company did write-off 13.7Cr in Q4 FY22 (all through existing provision balance)30Share of Capital DigitalLoans continuouslyincreasing and stands at54% in Q4 FY22 vs 5% ofLoan Book in Q2 FY21With Increased pace ofdisbursements, CapitalDigital Loans book willincrease going forward
State-Wise Portfolio 430 CrCautious approach inDisbursement led to declinein Loan portfolio duringCOVID-19 427 Cr 401 Cr16171769 337 Cr726985 311 Cr 312Cr15191588628551 301Cr152252455568546552438586416142Q2 FY21DEL31Q3 4 FY21Q1 FY22Q2 FY22Q3 FY22Q4 FY22MPQ4 FY22 AUM declinedmarginally in spite of 6%QoQ growth indisbursements due tohealthy improvement incollection efficiencyPUNRAJBIHODSCGJHA31E UPEconomic Revival combinedwith Strengthened BranchNetwork will be Key Driversof Growth Going Forward
Portfolio Quality – Capital Digital LoansRobust portfolio quality of loans disbursed post FY 20 (automated credit engine backed)Despite Covid, there has been no restructuring or write-off in this productTotal Disbursed: 293 CrPortfolio Outstanding: 162 Cr( in Crores)30 DPD:3.4%90 Y2230 %32Q3FY22Q4FY2290 %
Portfolio Quality - CompanywideGNPA *60COMPANYWIDE 90 **18%16%51( in Crores)18%52 Y220%Q2FY21GNPA (%)* Changed retrospectively in accordance with Nov 21 RBI circular (Own Book 90 / Own Book Portfolio)** Includes Off Balance Sheet portfolio- Company did write-off of 13.7Cr in Q4 FY22 (all through existing provision balance)33- Company has outstanding 109 Cr restructured portfolioQ3FY21Q4FY21Q1FY22Q2FY2290 90 (%)Q3FY22Q4FY22
Outstanding ProvisionsCumulative Provisions of 41.7 Crores which accounts for 18.2% of the On-Balance Sheet Portfolio( in Crores)ParticularsQ4 FY21Q1 FY22Q2 FY22Q3 FY22Q4 FY22FY 22Standard Provisions (Stage 1 & 2)4.44.71.31.111.011.0COVID & Other Provisions (Including Stage 3)31.150.955.856.430.730.7Cumulative Provision Balance35.555.657.157.541.741.7Impairment Charged to P&L23.520.11.50.4-2.519.534
Key Highlights & RatiosAsset Under Management ( in Crores)Net Worth ( in 18119121301Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22Capital Adequacy Ratio (%)Leverage (in Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY222.01.61.61.51.92.02.01.7Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY2235
Key Highlights & RatiosBorrowings ( in Crores)Cost of Borrowing 0%13.1%13.2%28012.8%13.4%Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22Net Interest Margin (%) (Annualised)Operating Cost to AUM Ratio (%) 4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY2236
Quarterly Consolidated P&L Update Q4 & FY22( in Crores)ParticularsQ4 FY22Q4 FY21YoY %Q3 FY22QoQ %FY22FY21YoY %Total Income27.828.1-1%29.2-5%106.0114.6-8%Total Expense (excluding tax)25.461.5-59%27.9-9%120.2144.0-17%Profit / Loss before tax2.3-33.3-1.382%-14.2-29.4-Profit / Loss after tax1.6-26.2-1.070%-10.3-23.6-Net Worth120.5130.7-8%118.81%120.5130.7-8%Capital Digital Loans162.0104.655%142.024%162.0104.655%Legacy Loans138.6296.5-53%169.9-13%138.6296.5-53%Total Assets Under Management (AUM)300.6401.1-25%311.9-4%300.6401.1-25%On-Book Book Portfolio70.8120.5-41%46.154%70.8120.5-41%Total Assets Under Management (AUM)300.2401.1-25%311.9-4%300.2401.1-25%37
Quarterly Consolidated Balance Sheet Update Q4 & FY22AssetsMar-22Dec-21Liabilities And EquitySep-21( in Crores)Mar-22Dec-21Sep-21Financial LiabilitiesFinancial AssetsCash and Cash Equivalents4.910.821.2Bank Balances other than cash &cash Equivalents52.549.751.9Trade Receivables3.32.72.7Loan er Financial Assets20.116.316.2Total Financial Assets310.9329.0330.0Trade Payables0.9Debt Securities64.157.680.1Borrowings other than Debt Securities98.8134.4114.0Deposits0.00.00Subordinate Liabilities44.944.944.8Lease Liabilities0.20.20.2Other Financial Liabilities17.28.910.4Total Financial Liabilities226.1246.5249.6Current Tax Liabilities al LiabilitiesNon-Financial AssetsCurrent Tax Assets (Net)5.44.54.2Deferred Tax Assets (Net)34.835.335.5Other Non-Financial Liabilities6.35.44.2Total Non-Financial Liabilities7.616.946.0Property, Plant and Equipment1.61.71.7Right to use Asset0.10.20.2Intangible Assets0.20.20.2Equity Share Capital16.216.216.2Other Non-Financial Assets1.21.31.6Other Equity104.3102.5101.6Total Non-Financial Assets43.343.243.4Total Shareholders Fund120.5118.8117.8Total Assets354.2372.2373.4Total Liabilities and Equity354.2372.2373.4Equity38
KEY PARTNERSHIPS
Long-Term Funding PartnershipsMSME Client throughBusiness Correspondent RelationshipBenefits of Long-Term Funding SecuredOn-Tap FundingEnables Raise OfEquity At Right TimeIncrease Of ROE40LeveragingPartner’sBalance Sheet
Equity & Funding PartnershipsEquity:1Public Sector Banks:5Private Sector Banks:2DFI / NBFCs:941
CAPITAL IMPACT
Capital PlusWorking with a Double-Bottom Line mission, company does a lot of good on ground levelEncouragement ofself-sufficiencyandentrepreneurshipIncrease n of theunbanked andun-servicedMitigation offinancialvolatility43Financial literacy
THANKYOUVinod RainaChief Financial OfficerVinod.raina@capitaltrust.inVahin KhoslaExecutive DirectorVahin.khosla@capitaltrust.inPushpa Mani/Chintan MehtaIR ConsultantsEmail: capital.trust@dickensonworld.comContact no.: 91 9911684123/989218338944
Collection Of Capital Digital Loans [ lients*** 55% 54% 56% 58% Q1 FY22 Q2 FY22 Q3 FY22 Q3 FY22 . According to ACI Worldwide, data India made 48.6 bn. Real-time payments in 2021, which is 2.6 times more . Borrowings other than Debt Securities 98.8 134.4 114.0 Deposits 0.0 0 Subordinate Liabilities 44.9 44.8
