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Fullerton India Home Finance Co. Ltd.
Fullerton India Home Finance Co. Ltd.
Investor Presentation
AGENDA
Industry Landscape
About Grihashakti
Business Highlights
Risk Management
Liquidity Management
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Industry Landscape
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India Growth Story Buoyed by demographics, unmet credit demand
"We always over-estimate the Change that will occur in the next two years & underestimate the change that will
occur in the next ten.“ – Bill Gates
36%
48% 51%
64% 69%
2015 2019 2020 2025 2027
India's Millennial as % of Workforce**
Incremental demand
199
171 151 134
56
-
50
100
150
200
1980 1990 2000 2010 2015 2018
Credit-to-GDP ratio*
KR UK US MY IN
Underpenetrated Market
Source –** Morgan Stanley ^PwC – GDP at purchasing power parity (PPP) adjusts for price level differences providing a better measure of the volume of goods and services produced.
*BIS (KR: Korea UK: United Kingdom US: United States MY: Malaysia IN: India)
India's economy is poised to become third-largest by 2027 with $6 trillion GDP**
8.7
11.8
15.7
2016 2020 2025
GDP in PPP^ (US$ trillion)
Growth potential
5 Source: *Mirae Asset Management **McKinsey ~ORF ^CRISIL [Housing portfolio of HFC’s total outstanding] ~Morgan Stanley #Anarock
McKinsey Global Institute defines India’s middle class as households with real annual disposable incomes between 200,000 and 1 million rupees.
• Housing sector has impact on construction, cement, steel
sectors driving up employment and income levels
• Housing Finance Companies can capture the increasing demand for
credit buoyed by favourable demographics and urbanization
India’s 9% Mortgage-to-GDP ratio in 2016 estimated at ~17% by 2026 (Morgan Stanley)
Housing - Catalyst for India’s Development Large opportunity for HFCs
430 mio in 2015 600 mio by 2030 Rapid urbanization*
64 mio in 2018 114 mio by 2022 Housing shortage~
250 mio in 2015 583 mio by 2030 Growing middle class**
Key Drivers for Housing Sector Growth Housing Sector Multiplier Effect
INR 6.3 tn in 2018 INR 14.8 tn by 2023 HFC Housing Loans^
Household size# 4.85 in 2006 4.44 in 2016
Ho
us
ing
Secto
r*
Service Sector
Skilled Labour
Architects, Designers & Engineers
Banking & Finance
Primary Sector Raw Materials
Manufacturing Sector Construction Materials
Fiscal Impact
Higher Income
Increased Tax Revenue
• Housing for all (Pradhan Mantri Awas Yojana) scheme – deliver 20 million
houses by 2022
• Home buyers recognized as financial creditors
• CLSS scheme extended till March 2020
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Government Impetus Co-ordinated policy measures to spur growth
Home Buyers
Real Estate
Developers
HFCs
• RERA regulation to enhance developer performance, improve buyer confidence
• GST rates slashed for under-construction flats to 5% and affordable homes to
1%, effective from April 1, 2019
• Smart City Project - plan to build 100 smart cities
• Relaxation in LTV norms and risk weight for HFC
• Grant of infrastructure status to affordable housing
• Better access to funds with revised ECB regulation
• Enhanced Home Loan limit under Priority Sector Lending (PSL)
About Us – The Group
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Temasek Holdings (Private) Ltd.
Fullerton Financial Holdings Pte. Ltd.
Fullerton India Credit Company Ltd.
Fullerton India Home Finance Company Ltd.
Wholly owned subsidiary
Wholly owned subsidiary
Wholly owned subsidiary
Grihashakti Housing Finance arm of Fullerton India
Fullerton Financial Holdings, Singapore (FFH) is a
wholly owned subsidiary of Temasek Holdings
• Temasek is a global investment company,
headquartered in Singapore
• FFH invests in and operates financial institutions in
emerging markets
Fullerton India Credit Co. Ltd. (FICCL) is a wholly-
owned subsidiary of FFH
• Incorporated in 2005
• Pan-India presence established across 22 states and
3 union territories
• Retail finance products for urban and rural households
as well as SMEs
Grihashakti, Fullerton India Home Finance Co. Ltd. is
a wholly-owned subsidiary of FICCL
• Commenced operations in December 2015
Fullerton Financial Holdings (FFH), the parent, was
incorporated in January 2003 as a wholly owned
subsidiary by Temasek Holdings Pte Ltd
FFH has 7 operating financial services entities located
across 6 countries
Its vision is to develop unique business models that
bring financial services to the underserved in
emerging markets
DUBAI, UAE
INDIA
Central CHINA
CHINA
MYANMANR
CAMBODIA POST
MALAYSIA
Fullerton Financial Holdings 100% step-down subsidiary of Temasek Holdings, Singapore
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Fullerton India Credit Company A wholly-owned subsidiary of Fullerton Financial Holdings
Multi-product offerings support a range of customer needs
Consumer
Urban MSME
Rural
Cross-Sell
Personal Loans, Loans Against Property
Commercial Vehicle Loans, Business Loans, Loans Against Property
Personal / Group Loans, Loans Against Property, Vehicle Loans
Life / General Insurance
Established Customer Connect across Urban and Rural India
21,542 Cr
AUM (INR)
28 Lakh
Customers
626
Branches
13,000
Employees
58,000
Villages
AAA
Rating*
Data as at FY19. *Rating CRISIL, ICRA, CARE. (Temasek rated 'AAA/Stable' by S&P Global)
The Foundation For our Strategy and Culture
Vision Be the Company of choice in financial services for our customers, employees, communities and
stakeholders, recognized for innovation and high ethical standards.
Values
Agility
Diversity
Collaboration
Integrity
Innovation
Excellence
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Board & Management Team Strong Oversight and Guidance
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Anindo Mukherjee
Chairman – Grihashakti,
Non-Executive Director - Fullerton
India Credit Co. Ltd
Rakesh Makkar
CEO - Grihashakti,
Whole-time Director
Milan Shuster Independent Director
Rajashree Nambiar
Non-Executive Director,
MD & CEO – Fullerton India
Credit Co. Ltd
Board of Directors
Management Team
Pankaj Malik Chief Financial Officer
Parag Shah Chief Risk Officer
Shyam Reddipalli GM – Head Business & Product
Rakesh Makkar
CEO - Grihashakti,
Whole-time Director
FFH has senior level representation on the Board and various committees of Board
Note - As at August 2019
About Us - Our Journey
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Our Journey So Far Steady asset growth, geographical expansion
Jul-15
Dec-15
Nov-16
Sep-17
Mar-19
Jan-18
Rated AA+ by CARE
Received HFC license with equity infusion of
INR 1 Bio
Started operations with 20
branches
Sep-16 Crossed AUM of INR 10 Bio
Team size of 425
Nov-17
SARFAESI Approval
Crossed AUM of INR 15 Bio
Crossed AUM of INR 30 Bio
Expanded – Added 20 more branches
Expanded network to 60 Branches
Jun-19
Crossed AUM of INR 35 Bio
Enhanced network of 78 branches
Jul-19
Equity infusion of INR 2 Bio
Team size of 780+
Aug-19
CRISIL ‘AAA’ Rated
Closed securitization deal worth INR 1,756 Mio
Grihashakti is a wholly-owned subsidiary of FICCL
• Customer segment – Primarily salaried, self-employed
professionals, and MSME firms
• Product suite – loans for new/resale home, home
improvement & extension, home construction, loan
against property, loans for commercial property,
construction finance, Lease Rental Discounting
• Presence – 78 locations; leveraging parent infrastructure
• Geographies – Focus on Tier 2 and 3 cities with a strong
network of associates and direct selling agents
• Target loans in the range of 20 Lakhs
• Employee strength – 780+
• Pro-active and continuous monitoring based on
external environment, customer data, bureau trends
Established customer connect in 78 branches across India
RAJASTHAN
• Branches # – 6
GUJARAT
• Branches # – 7
MUMBAI
• Branches # – 4
REST OF
MAHARASHTRA
• Branches # – 10
KARNATAKA
• Branches # – 7
MADHYA PRADESH
• Branches # – 5
AP & TELANGANA
• Branches # – 11
UTTAR PRADESH
• Branches # – 6
TAMIL NADU
• Branches # – 9
PUNJAB
• Branches # – 3
HARYANA
• Branches # – 4
DELHI
• Branches # – 1
WEST BENGAL
• Branches # – 3
UTTARAKHAND
• Branches # – 2
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Where Are We Today Business Overview
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Our USP Deepening customer relationships in underserved markets
Strong Parentage
Experienced Management Team
Strong footprint in Tier 2/3 towns
Established niche in self-employed segment
Expertise in handling new-to-credit/
borrowers from informal segment
Strong Risk Governance Framework
Comfortable Liquidity Position
AAA rated. Steady infusion of capital
Industry veterans form part of Board and Senior Leadership team
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2
3
4
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6
Geographically diversified, sizeable play basis network of 78
branches and ~600 active channel partners
Leverage parent’s understanding of credit and distribution in
underserved markets, product programs customized for SENP
Pro-active monitoring based on external environment, customer
data, bureau trends. Robust delinquency management – from
early warning signals to effective SARFAESI implementation
7 Diversified lender base, low reliance on short term funding,
well-managed ALM
Region specific specialty teams on board – underwriting, collateral
management, valuation policy. Sturdy portfolio across market cycles
- demonetization, RERA, GST, liquidity crisis
Business Highlights
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Q1FY19 Q1FY20
AUM (INR Mio)
Building Strong Franchise Continued momentum - Q1FY20
Net Revenue (INR Mio)
Q1FY19 Q1FY20
Operating Profit (INR Mio)
Q1FY19 Q1FY20
NNPA (%)
Q1FY19 Q1FY20
301 469 56% 96 150 56% 1.4 1.5
No. of active accounts (#)
Q1FY19 Q1FY20 Q1FY19 Q1FY20
22,260 36,960 66%
11.8K
~18.9K 60% 68.0 68.1
Cost-to-Income (%)
...despite pressure on cost of funds and business coming to a 3-month halt in Q3FY19
0.1%
0.1%
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Meeting Diverse Customer Needs Trusted partner for customers, DSA channels
Product Share Product Suite
Fulfil dream of
owning a home
• Home Loans (HL)
– Purchase of New
and Resale
• Home
Improvement
• Home
Construction
• Residential Plot
and Home
Construction
Loans
• Home Extension
Loans
Expand Business
/Working Capital
• Loan against
Property (LAP)
• Lease Rental
Discounting
• Loans for
commercial
property - New
and Resale
• Loans for
construction of
commercial
property
Access to
developers • Approved Project
Financing
• Construction
Finance (CF)
Programs
customized for
self-employed
segment
• Liquid Income
Program
• Gross Turnover
Program
• Income Multiplier
Program
• Banking Product
• High Equity
Program
• EMI Equalizer
Program
HL 58%
LAP 40%
CF 2%
Closing AUM (Jun-19)
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Fit For Growth Focused on expansion, efficiency & customer centricity
Rural Urban
Digital Process
• Focus on salaried profile for balanced growth
• Low channel dependency with increased focus on
direct sourcing
• Go wide into newer regions and deepen presence
in current regions
• Build scale in Tier 2-3 locations
• Leveraging our network franchise in rural India
• Tie-up with Banks, MFIs for Priority Sector Lending
• Drive Government schemes – PMAY, CLSS
• Target: Periphery of Tier 2-3 locations
• Refinance under NHB schemes – Rural Housing
Fund
• More products per customer; cross-sell and up-sell
• Tech-enabled sourcing and credit appraisal
• Digitally-driven, simplified, scalable loan processing
• Rule based engine for FTR (First-Time-Right)
underwriting and better turnaround
• Lean, streamlined processes for enhanced
efficiency, faster customer response rate
• Investments into data & analytics for risk
monitoring, customer service and control
• Targeted collections process
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Alliances with online loan aggregators and FinTechs Alliances with online loan aggregators and FinTechs
Tap existing customer base Tap existing customer base
Up-sell to quality FIHFC customers Up-sell to quality FIHFC customers
CIBIL watch, Bureau scrub for HL CIBIL watch, Bureau scrub for HL
Retention base selling Retention base selling
Staff Loans & Referrals Staff Loans & Referrals
Deriving Customer Lifetime Value for Retention Deriving Customer Lifetime Value for Retention
Strengthening the Alternate Channel Digital Platform
• Lead generation from third-
party online marketplaces
• Digital Marketing, advt. on
partner websites
• Explore risk-sharing model
with Fin-Techs
• API integration / CRM
access to partners
Paperless Processing Paperless Processing Mobile Sourcing Solution Mobile Sourcing Solution Growing the pie Growing the pie
• Perfios integration for
bank statements
• Finfort integration for
income tax returns
• Scorecard based
business rule engine
• Fully functional web-portal
• Interface enabled with digital
sanction capabilities
• Integrated lead management system
• Frontline sales can digitally source
cases and provide instant financial
sanction to salaried segment
• Online fraud checks
• No documents for sanction to salaried cases; minimal documentation for self-employed
• Reduce human error, improve overall TAT through automated underwriting
• Improve productivity and customer satisfaction
• Widen revenue streams with digital alliances and sourcing
Digital Capabilities Building integrated platform for business generation
Risk Management
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Risk principles and standards
Definitions of roles and
responsibilities
Governance structure
Key Components
Establish common principles and standards for the
management and control of all risks across the
organization and entities
Provide a shared framework to improve awareness
of risk management processes
Provide clear accountability and responsibility for
risk management
Key Objectives Key Principles
Balancing risk and return
Responsibility and Accountability
Anticipation of Future Risks
Standards Ensuring Portfolio Quality
Management
Information System
Credit Bureau
Policy
Credit Exposure
Norms
Credit Assessment
and Eligibility
Norms
Provisioning and
Asset Classification
Stress Tests and
Periodic Reviews Portfolio on Bureau
Watch Triggers
Collections and
Recovery Norms
Data Analytics
Board of Directors
Risk Oversight
Committee
Chief Executive
Officer
Policy
Approvals
Portfolio Purchases &
Sell-Offs Risk Credit
FCU, Legal,
Technical
Chief Risk Officer
Collections Analytics
Risk Governance Framework Highly Experienced Senior Management Team
Policy
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Robust Risk Management Initiatives to mitigate and monitor risks
Managing
Risk
Formation of Credit Committee
Improvised Credit Policy
Enhanced Credit Underwriting -
Geography specific collateral
management, city-specific limits
on ticket size
Framework to identify and track
delinquencies, followed by remedial action
Risk-based Analytics Scorecard,
Risk Segmentation of collections
SARFAESI initiated on
100% eligible cases
Strengthened
Collections team
with senior hiring
Strengthened Fraud Control Unit
and property appraisal process
Liquidity Management
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Borrowing Profile
• Basel III oriented, Board approved policies guide liability management
• Rigorous monitoring via ALCO
• Compliance oversight by independent verticals
• Three pillars of conservative liquidity risk management:
i. Diversification (across instruments lender category)
ii. Matching asset-liability tenors
iii. Maintenance of adequate buffers
• New Sources to be added
i. NHB Refinance
ii. ECB/ Masala Bond
iii. Retail Bonds
Stable Funding profile
(INR bio)
CRISIL AAA/Stable
Long term stable and diversified funding base, with adequate liquidity cover
27 30
70% 74%
26% 23%
4% 3%
Mar-19 Jun-19
Bank Loans NCD CP
Disclaimer
This presentation has been prepared by Fullerton India Home Finance Company Limited (the “Company”) solely for your information. This presentation is for information purposes only and should not be
deemed to constitute or form part of any offer or invitation or inducement to sell or issue any securities, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall
it or any part of it or the fact of its distribution form the basis of, or be relied upon in connection with, any contract or commitment therefor. The financial information in this presentation may have been re-
classified and reformatted for the purposes of this presentation. You may also refer to the financial statements of the Company available at https://www.grihashakti.com/home.aspx, before making any
decision on the basis of this information.
This presentation contains statements that may not be based on historical information or facts but that may constitute forward-looking statements. These forward looking statements include descriptions
regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. Such forward-looking
statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and
assumptions which the Company presently believes to be reasonable in light of its operating experience in recent years but these assumptions may prove to be incorrect. Any opinion, estimate or
projection constitutes a judgment as of the date of this presentation, and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. The
Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company.
No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the
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