Disha Microfin Pvt Ltd Annual Report 2013-14

Towards... a Lifetime of Progress

2

3

Registered Office/Corporate office

404, 4th Floor, 3rd Eye,

Panchvati Cross Road,C G Road,

Ahmedabad - 380006

About Disha Business History Board Products & Services Footprint 1 2 3 4 5

Chairman’s Message 5

View to the Future 21

Operational Highlights

Finance Operations Risk People Technology

12-17 6 7 8 9 11

18-19

10

6– 11

Inclusive Development

Stakeholder Engagement

12

13

Page

Pages

Pages

Pages

Page

4

5

Dear Stakeholders,

It is my great pleasure to welcome you to the 19th Annual General Meeting of your company.

Year 2013-14 has been an exhilarating one for us- Fast paced, high growth and immensely

satisfying. With a focused business plan to double our business volumes, we expanded to new

geographies, undertook fresh initiatives in business, executed key hires in leadership roles and

set the course for a scalable and sustainable growth journey.

This fiscal we saw our profits increase by over 67% compared to last year with a PAT of

Rs. 1.92 Cr compared to Rs.1.14 Cr in FY’13. We built up a portfolio of Rs. 167 Cr at the closing of

FY’14 with firm strides taken to increase disbursement volumes. We had an encouraging year

in terms of funding as well, with fresh funding of over 206 Cr raised, an increase of around 114%

over FY’13. I firmly believe, these are signs that we are at the threshold of a tremendous growth

phase in our business.

Our geographic expansion into neighboring states of Madhya Pradesh and Rajasthan has been a

noteworthy move this year. Disha, is now a multi state MFI hoping to benefit BOP households in

these underpenetrated states.

FY’14 also saw us striving to provide our customers with the best service in microfinance sector

through technological innovations with direct impact like mobile based real time loan

management leading to customer delight and various other process enhancements reducing the

lead time for disbursements. This has also significantly upped our cost efficiency leading to

better profit margins.

We are well-positioned with strong financial capital and good opportunities for growth in all our

business verticals. Thanks to committed employees, experienced management, high level of

technology and proven expertise in the industry, we have affirmed our strong position as a

company to look forward to in the MF space. And at the conclusion of this financial year we

stand on a definite position of strength and future growth.

Let me present this report to you as a brief summary of our business this fiscal. I’m taking this

opportunity to acknowledge the efforts of all Disha employees, the commitment of all its

stakeholders and the support of the regulators, bankers, funding institutions and other partners

in making this year a great one for us.

Chairman’s Message

Mr. Sameer Nanavati Promoter, Director and CEO

Disha Microfin Pvt Ltd

6

Disha Microfin Pvt Ltd is an NBFC-MFI registered with the Reserve Bank of India

(Registration Number: 01.00319). Disha caters to the Base of Pyramid sector of customers

through affordable financial services in the states of Gujarat, Rajasthan and

Madhya Pradesh.

Started in the Year 2009, Disha Microfin endeavors to make a

measurable economic and social impact on the lives of the lower

income households by carrying out various microfinance

initiatives and creating environment friendly livelihood

opportunities. Disha has set a business vision for itself to provide

a commercially viable and socially relevant financing option to the lower income group and

thereby participate in the integration of this group into the

prospering Indian middle class .

Backed by a fully committed and professional promoter

group , Disha has, over the years, built a highly scalable,

sustainable and profitable financial services business at

the Base of Pyramid.

This growth of Disha has been ably supported and nurtured by its equity partner, India

Value Fund (IVF) , brought on board in October 2010 to fuel its phenomenal growth.

The fund, managed by India Value Fund Advisors (IVFA), undertook the role of an involved

business partner and has been a key contributor to the growth of Disha from then

onwards. IVFA manages its business interests in the Base of Pyramid Financial Services

sector through India Finserve Advisors Pvt Ltd (IFAPL), a central management company

(CMC), which adds management capital to the core business functions in Disha. In addition

to its promoter group with professional background, Disha, through IFAPL, has access to

one of the best management capital in microfinance

industry in India in the functions of Finance & Treasury,

Operations, Risk Management, Information

Technology and People operations. Disha with support

from IFAPL, has continued its growth journey

innovating and introducing industry best processes

and practices to build scale and sustainability to

business.

Our business strategy is

to build a socially relevant and

commercially attractive entity at

the base of pyramid

by adopting

best-in-class practices.

Our goal is to build a

‘most admired company’ in

Base of Pyramid

Financial Services (BOP-FS) through

innovations and excellence in

processes, business practices,

technology platform,

people practices and

thought leadership.

Disha has 5 years of

Focused Business

Expertise in

Microfinance.

Committed &

Professional promoter group

Mr. Sameer Nanavati (BSc. MBA)

Promoter, Director & CEO

Mr. Soham Shukla (B.Tech, MBA)

Promoter Director

Mr. Keyur Doshi (BSc. MBA)

Promoter & CFO

Mr. Vivek Kothari (BSc. MBA) Promoter &

Operations Head

7

Disha, adhering to its mission to make a measurable economic and social impact on the

BOP segment, has evolved over the years to adapt to the needs of its customers and the

demands of a highly regulated industry.

Traditionally into unsecured joint liability based group loans for income generation,

Disha, in recent past, has ventured into multiple product lines catering to the larger life

cycle needs of its customers with a clear objective of partnering in their journey of

progress. As on March 31st 2014, Disha offers JLG based microloans, credit linked

insurance and retirement solutions (through government of India Pension product

NPS-Lite) to its customers.

Thriving in a highly regulated industry, Disha has leveraged its high caliber

management capital and focused business acumen to build a highly

efficient, transparent and sustainable business entity that is maximizing

value for all its key internal and external stakeholders. Our focused and

data driven operational capabilities help us maintain a highly scalable,

sustainable and profitable BOP-FS business. Our streamlined, process

driven and centralized risk management ensures industry best portfolio

quality. Our people practices help us build a high performance

organization. Our technological innovations in operations and processes

give us an edge over our competitors through fantastic cost and control

efficiencies. Our pioneering approach to all facets of BOP-FS business and

our active engagement with key partners of the industry makes us a

thought leader in the sector. These key business attributes of Disha is

validated by the various industry accolades received by the company and

its membership in some of the highly respected industry associations.

As of 31st March,2014

Disha operates through 61 branches spread

across Gujarat, Madhya Pradesh and

Rajasthan in India. Our Financial Products

provide financial independence and

economic security to

1.41 lakh Base Of Pyramid households

at the close of FY’14.

Disha also pursues an active community welfare agenda through its client welfare

activities, the main focus areas being economic, social and environmental well-being of the

communities where it operates.

Profile

About Disha

8

2014

2013

-

2011

Disha, at the close of FY’14, supports over 1.4 lac customers through a network of 61 branches offering a multi product portfolio consisting of the flagship product JLG loans, credit linked insurance and retirement solutions through NPS- lite, with an employee strength of 367.

Period marked by build up of scale and sustainability, continuation of industry best business practices, technology and process innovations, product line expansion and industry thought leadership position. At the close of FY’13 Disha with an employee strength of 225 employees builds a portfolio of Rs. 76 Crs and a branch network of 24 branches servicing over 1434 villages in the state of Gujarat supporting almost 70,000 households in their journey to a lifetime of progress.

On a field study about microfinance Mr. Sameer Nanavati (Promoter, Director & CEO) and Mr. Soham Shukla (Promoter Director) were convinced that microfinance is an underserviced sector with a lot of scope for securing value to both stakeholder & customers. The leadership team then decides to offer microfinance services resulting in the commencement of Disha Microfin Pvt Ltd.

Start of microfinance operations. Disha Microfin disbursed its first

microfinance loan on 11th June, 2009 through Mahemdavad branch. The disbursement cheque was handed over by Mr. Keyur Doshi, Promoter and CFO Disha Microfin, to two microfinance groups with 15 members. Loan amounts granted were Rs.8000 and Rs.12000 with weekly and

fortnightly schedules.

History

About Disha

May

2009

By March 2010, Disha Microfin had developed into a fast growing

microfinance company with 6 branches serving 5 districts in Gujarat.

In October 2010, Indium IV (Mauritius) Holdings Limited through India

Value Fund IV (IVFA - Private Equity Fund) acquired stake in Disha

Microfin through equity infusion. India Finserve Advisors Pvt Ltd then

set up, as Central Management Company, with an advisory role for the

BOP platform.

June

2009

Oct

2010

Building the ‘most admired company‘ In base of pyramid financial services sector

FY’13

76 Cr in AUM76 Cr in AUM

FY’12

41 Cr in AUM41 Cr in AUM

FY’11

25 Cr in AUM25 Cr in AUM

9

S O H A M S H U K L A Promoter Director Mr. Soham Shukla is an Electronics Engineer and a Masters in Business Administration with marketing specialization. Soham started his career with Tata Metals as a Maintenance Engineer in the Engineering side covering Quality Control and Productivity Enhancements. Post Tata Metals, he moved to Core Healthcare as Corporate Planning Team Member, Soham was posted as Country Manager- W-Africa handling business for 5 countries. During this stint at Core, he was instrumental in turning company's operations profitable in his region. Soham has been the Chief of Operations since joining the Group in 1997. As COO, Soham has been instrumental in leading the Group to a "Numero Uno" position in Gujarat for the sale of various financial service products.

S R I K R I S H N A D W A R A M Director Mr. Sri Krishna represents India Value Fund in the Board of Directors of Disha since 2010. Mr.Dwaram’s work experience includes 10 years in the financial services industry. He held various roles in the planning & strategy groups of leading private sector banks viz ICICI Bank and YES Bank prior to joining the fund management team of India Value Fund. His early years saw him working for Maruti Udyog Ltd and Kirloskar Oil Engines Ltd. Srikrishna’s education includes a B.Tech in Mechanical Engineering from the National Institute of Technology, Warangal and an MBA from the Indian Institute of Management, Ahmedabad.

Board

About Disha

M R . P R A M O D K A B R A Director Mr. Pramod Kabra represents India Value Fund on the Board of Directors of Disha since September 2013. Mr. Kabra is closely involved in supporting and building IVFA companies in cable & ISP services, Logistics, Microfinance and Radio taxi services. Mr. Kabra has spent 23 years with Unilever. He has wide ranging global experience in strategy, finance, M&A, supply chain and innovations. He has held various leadership positions in Unilever including that of head of treasury for Asia and Africa region and Board member of Global Home Care Category Team. His strength lies in leading senior multicultural and multifunctional teams and managing talent. Mr. Pramod Kabra holds a Bachelor’s degree in Commerce and is a qualified Chartered Accountant.

MR. MAHESH KRISHNAMURTHY, Director

Mr. Mahesh Krishnamurthy represents India Value Fund on the Board of Directors of Disha since 2010. He is involved with investments in the logistics, IT/ITES, infrastructure services and other sectors. His work experience includes 18 years in diverse industries in the US. Most recently, he developed the turnaround strategy and led an acquisition as the head of corporate development at Accelrys, a NASDAQ listed drug discovery software company. Prior to that, he was a General Partner at Idanta Partners, a San Diego based venture capital fund and at KT Venture Group, a corporate venture capital fund. His early years saw him working for McKinsey, AT&T and Honeywell.

Mr.Krishnamurthy has a Bachelor’rs degree from IIT, a Master's from University of Wisconsin and a Master's degree in Business Administration from Stanford University.

MR. GEORGE THOMAS* Independent Director Mr. George Thomas is an Independent Director on the Board of Directors of Disha since 2011. Between 2002 and 2011, he was a Partner at India Value Fund Advisors. Prior to this, Mr. George Thomas led BPL Soft Energy Limited since 2000, and Warner Lambert India since 1998. Mr. George Thomas started his career at Hindustan Lever Limited in 1982, where he spent 16 years in various capacities at its affiliates in India and the United Kingdom.

Mr. Thomas is a post-graduate in History from St. Stephen’s College, University of Delhi.

*Mr. George Thomas is the Founder and Managing Director at CapAleph Advisors and the Investment Officer managing investments in companies that are engaged in Emerging Consumption Trends. During the financial year, Mr.Thomas exited from the board of directors of Disha to pursue opportunities in MicroHousing segment, a cause which he strongly espouses. .

S A M E E R N A N A V A T I Promoter, Director & CEO

Mr. Sameer Nanavati has over 18 years of entrepreneurial experience spread across consumer finance, development finance and management consultancy. Prior to his microfinance foray, Mr. Sameer Nanavati started a company which became one of the leading distributors of financial services in the state of Gujarat and which later expanded its branch network into Mumbai, Pune and Bangalore. He started his career at Gujarat Lease Finance Limited in the Retail Finance Division and then moved to Core Healthcare Ltd. During his stint in Corporate Planning department at Core, he led projects on strategic and sales planning. Mr. Sameer Nanavati is a graduate in Mathematics and a Masters in Business Administration.

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Addressing the larger Lifecycle Needs

of the Base Of Pyramid Sector

Credit Linked Insurance

An essential support during micro entrepreneurship is dependable risk coverage in case of unforeseen circumstances; natural or man made. Disha offers this support to its borrowers during their loan lifecycle through premium based insurance coverage. The insurance cover, both for the borrower and co-borrower, activated through a one time premium payment by the member at the time of disbursement, protects the member and family from the burden of loan in case of any unforeseen emergencies like death or natural disasters during the tenure of the loan.

For most of our borrowers who work in the unorganized sector, saving for old age is a luxury which many do not plan for or is not affordable. Disha offers retirement solutions through NPS-Lite, a self contributory pension product from the Government of India. NPS-Lite addresses old age security needs with nominal contributions from members augmented by an equal contribution from the government to their pension fund.

Disha aims to bring this product within the reach of all its borrowers through its distribution network, affording better financial security during old age.

As on 31st March 2014, 34614 base of pyramid households have been secured through this product by Disha

Retirement Solutions

Micro Group Loans

The flagship product of Disha, micro group loans, provide affordable credit to borrowers in the BOP sector. This loan product aimed at the borrowers in the first phase of a borrower lifecycle utilizes joint liability based group lending model to finance any income generating activity. Loan amounts range from Rs. 10,000 to Rs. 35,000 with flexible repayment tenure. Group trainings are organized to educate the members, usually first time micro entrepreneurs, on efficient use of capital and for building group cohesion.

As on 31st March 2014, Disha supports 1.4 lakh borrowers through this loan product.

Micro Finance Loans

About Disha

Products & Services

11

About Disha

Footprint (Data as on 31-03-2014)

23 Locations

61 Branches 141189 Active clients

48204 Loan groups

GUJARAT

RAJASTHAN

MADHYA PRADESH

Active States

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Increase in fresh funding

by

114% in FY’14

Diversification

of funding sources

Term Loans Bilateral Securitization

Multi Originator Securitization Debentures

Multiple funding partnerships

with banks and capital institutions

T H R O U G H

Term loans and securitization

deals of

197.3 Cr

NCDs of

9 Cr Grant of

38 Lac

Funding

partnerships

16

At the close of business on 31st March 2014, your company has registered a profit of Rs. 2.86 Cr exclusive of taxes through its

financial services business. This includes a fee income to the tune of Rs. 2.1 Cr through multiple verticals.

We continued our close engagement with valued funding partners to mitigate one of the challenging areas of base of pyramid

business sector viz. funding. The company raised fresh funding of Rs.206 Cr this year through diversified sources, a rise of over

114% compared to last year. We also experimented with a new funding source this year, Viz, Non convertible Debenture

(NCD) issue.

Our NCD of 9 Cr is now listed in the NSE. We were also sanctioned a grant of

38.10 lac by SIDBI for our business operations. Our own balance sheet borrowing

O/S at the close of FY’14 stands at Rs.110 Cr.

Many of the new initiatives introduced last year have shown significant

contribution to our business performance this year. Retirement solutions

through NPS-Lite has added to our income this year to the tune of over

Rs. 27 lacs; Many of our process oriented initiatives like standard

operating procedures across geographies & functions and m-FIMO mobile

tool for sales force automation have added to our bottom-line through cost

efficiencies.

Highlights

Finance & Treasury

96 206

FY'13 FY'14

Fresh Funding

53

110

FY'13

FY'14

Borrowing O/S

Income growth (Rs. Cr) PBT growth (Rs. Cr)

1.7 2.86

FY'13 FY'14

Funding growth (Rs. Cr) Borrowing O/s (Rs. Cr)

13.44

29.24

FY'13

FY'14

13

61 Branches

360 Field level employees

99.9% Collection Efficiency

183 Cr Disbursed in

FY’14

NBFC-MFI certification: During the year, Disha Microfin received NBFC-MFI classification from the Reserve Bank of India validating our efforts to build a sustainable, transparent and compliant microfinance institution for BOP sector. Disha with its robust governance structure, efficient SOP driven microfinance operations, stable and well-funded capital structure, state-of-the-art technological platform and customer centric, transparent pricing practices was a clear claimant to this classification. With this, Disha has changed its status from NBFC-ND to NBFC-MFI w.e.f 6-12-2013, reiterating its commitment to provide quality microfinance services to the BOP sector.

Entry into the 100 Cr league and 1 Lac borrower base:

Disha achieved 100 Crs AUM in the month of July’13, in just 4 years of operation in the single state of Gujarat, signifying the reach and impact Disha has generated in Gujarat. This milestone achieved in a short span of time, taking into consideration the micro nature of business leading to low AUM per customer, has created immense confidence in your company for its future endeavors. Your company followed this by touching 1 Lac active client base in Nov’2013 and we consider this with the satisfaction that we are supporting more than a lakh BOP households in India in their aspiration for self-dependence and economic security.

Multistate MFI:

Disha turned into a multi-state MFI in this financial year with operations launched in the state of Madhya Pradesh in May’13 and Rajasthan in Aug’13 in addition to existing Gujarat. Our entry into these geographies has been a well-planned strategic move given the immense potential for microfinance activities in these under penetrated states and the proximity to our central location which affords us better control on operations. The roll out in these new geographies follows the existing DNA of excellence in operations, processes and quality of portfolio and is the next step in the evolution of our company. Disha is excited at the prospect of providing affordable finance to BOP households in these underpenetrated markets and hopes to be a market leader in these states as well.

Other than these initiatives, our branch operations saw many new practices and processes inducted to add value to our employees and customers alike. New processes were introduced for tracking disbursements and for added documentation through mandatory photo capture and upload in loan management system during disbursements and maintenance of group file at the center locations. Use of hand held devices for capturing filed collections has added to the efficiency of filed staff.

76

167

FY'13

FY'14

Portfolio O/S

12,348 48,204

FY'13 FY'14

JLG Groups

69053

141189

FY'13

FY'14

Active clients

24 61

FY'13 FY'14

Branch Network

Plan 2X: Encouraged by the successful launch of operations in multiple states, your company, in the second half of this financial year, formulated a plan to double the monthly disbursement capacity (2X) by Q1 FY’15. This initiative was expected to give a significant push to our AUM numbers and profitability. The initiative, named Plan 2X, called for scale up in terms of operating locations, infrastructure and staff strength in anticipation of increased business numbers and the project is under execution mode across the company. Geographical expansion has already been initiated and hiring the field force in right numbers is on. This is another hallmark of the strides our business is taking.

Highlights

Operations

New Product lines: In FY’13 your company added a new product vertical, retirement solutions through NPS-Lite with the objective of satisfying the needs of our borrowers and offering a comprehensive product line for BOP households through our network. Your company is pleased to announce that the new vertical has shown immense success with our customers and has added to the bottom-line of the company with fee income to the tune of 27 lakhs and secured the future of 34,614 BOP households in FY’14.

Borrower Groups (closing) Active clients (closing)

Portfolio O/S (Rs.Cr) Branch network

14

Disha with its commitment to become an admired financial services and distribution company serving clients at the base of the

pyramid, places key importance to active engagement and effective development of its human capital. We believe that the key

to customer satisfaction is a satisfied and committed employee. With a culture based on openness and meritocracy your

company has strived to improve and develop its human capital through various well appreciated initiatives this year.

Training and on-boarding:

An employee with the right tools and right attitude is an asset to any company looking to scale up and build a high

performance organization. With this goal in mind, Disha regularly organizes functional and soft skill training programs for its

employees. In FY’14 the focus areas have been regular induction and on-boarding of the field force, SOP, e-FIMO and m-FIMO

and managerial skills. Over 1700 man-days of training covering 100% of supervisory and frontline employees were conducted

during the year. In addition, the company introduced e-based training modules through the in-house web portal ‘i-grow’, an

initiative aimed to inculcate self-initiated training and development in employees.

Employee Engagement:

In FY’14 Disha furthered its employee engagement initiatives such as birthday and festival celebrations, milestone gatherings,

employee meets etc which have positively impacted employee satisfaction and led to greater cohesion in the team.

An employee engagement day is conducted twice a month in every RO with specific focus on field force morale, enabling

better and regular connect with field employees for feedback and grievance redressal. The company also organized an off-site

outdoor program for its middle management team with activities for team bonding and engagement.

R & R programs:

Your company launched Star Awards as a reward and recognition initiative to recognize outstanding work performance and

potential of our employees. Based on their functional role and hierarchy employees are given the title of Star Employee, Star

Manager and Star Leader. Over 50 employees were awarded in this financial year based on their work performance and

potential. In addition, various incentivized contests for field level employees generated much excitement and drive at the

front-end to improve business quality and volumes.

People Culture:

In an effort to benchmark its people culture, your company enrolled for Great

Place To Work certification survey this year garnering much needed insights into

the aspirations and expectations of our resources. Your company, commendably

on its first attempt itself, has received a score of 77, indicating that 77% of our

workforce is satisfied with the work culture and feels that the company is a

great work place. The survey has enabled us to review and revamp our

Employee Value Proposition( EVP), both financial and non-financial and

further standardize our people practices. The company shall continue to

work towards benchmarking of its practices through this survey.

Highlights

People

As on March’14

312

1168 27 3

Operations

People

IT

F & T

Risk

MGT

312

55

Field Non Field

350

17

Male Female

270

20

77

GJ

RJ

MP

225 367

FY'13 FY'14

Headcount( closing)

High Performance

culture

1700+ training

man-days

Active people

engagement GPTW

score of 77

50+ Star

employees in FY’14

15

100% technology

enabled

Centralized Loan application assessment and

approval

Centralized Documentation

Audit

Your company follows a risk-based audit approach where the internal audit department identifies and monitors the most

important operational risks of the company and periodically reports on the internal control framework to the Management,

Audit Committee and Board of Directors. Disha follows two types of internal audit systems: 1.The Regular Supervisory

Monitoring including Loan Utilization Check (LUC), Surprise Centre Visit (SCV) and Branch Surprise Visit (BSV) and

2. Formal audit comprising monthly, quarterly and spot audits. In FY’14 Your internal audit team undertook checks with

respect to adherence to policy, procedures and documentation as well as field

operations.

In addition to ongoing Internal audit with a quarterly reporting schedule your

company is subject to the annual statutory audit, tax audit and financial

audit which monitors its degree of compliance and risk mitigation.

With these measures, your company, continued its high rating on

innovative underwriting processes and robust compliance across the

sector, in FY’14 as well.

.

Highlights

Risk & Audit

Efficient risk mitigation and high process control is a mandatory requirement in the microfinance business where the loans are

collateral free and unsecured. The centralised Credit Back Office (CBO) of Disha underwrites large number of small loans

sourced across its operating geography and ensures error free credit screening and compliant business processes.

In the previous fiscal, risk function of Disha had undergone significant process revamps resulting in improved portfolio quality

and time management. Significant among these changes was the introduction of end-to-end standardized operating

procedures and centralization of risk/credit/process/documentation functions through a centralized credit back office (CBO).

Centralization of underwriting and documentation has helped the company to significantly reduce the per-application

transaction cost and achieve higher scalability through increased operational efficiency and faster transaction speeds. With

the help of high end technology applications, a centralized process ensures improvement in data assimilation, analysis and

controls. On the qualitative front, the centralized underwriting has also helped in unbiased and SOP driven underwriting.

In FY’14 our risk management maintained its high degree of control on portfolio quality and risk mitigation through efficient

and disciplined usage of standard operating processes and centralized underwriting. The CBO processed 74986 fresh loan

applications this year with a productivity average of 300 applications per month per officer while maintaining a portfolio

quality of 99.9% in all verticals. The centralization of documentation and underwriting has positively impacted the productivity

at field level too with the field teams able to devote greater time and energy to sourcing and servicing of customers.

1985 3038 3308 3117 2832 4216 8134 7218 7159 7287 11245 15447

Apr'13 May'13 Jun'13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14 Feb'14 Mar'14

Total applications processed

16

Disha prides itself on a state of the art IT infrastructure which helps

us in managing our operations in an efficient and cost effective

manner.

Loan Management:

Your company manages its loan process through 3 distinct

technology systems during each phase of loan sourcing and

origination, processing and post-disbursal.

CAMS– Loan origination and documentation system for

automation of loan processing & credit check to approval

phase.

Financial Accounting & Management Information System

(e-FIMO)- Web based technology solution for process and

operations management adding to the operational

efficiencies and improving our bottom-line.

Mobile based field force automation system (m-FIMO)-

In November’14 your company completed 100% field force

automation by integrating m-FIMO, a mobile phone based

field force automation system, into its core business

applications, thereby enabling fully integrated work flow

automation at the company. The primary objective for this

initiative is to remove manual accounting for payments and

make the process more efficient and error free. Loan

transactions are now automated through an mFIMO

enabled mobile phone integrated with a bluetooth printer

used for generating and issuing instant loan repayment

Mobile based field force

automation through

m-FIMO

Web based Loan process

automation through

e-FIMO

Cloud based

data server

Automated loan origination &

documentation through CAMS

Highlights

Technology

receipts to the customer. In addition to this, details of

center and group meeting start time & end time,

member attendance, exceptional transactions like

advance, OD collection, pre-payments etc. are also

captured using this device. We now pride

ourselves on a fully integrated technology platform

enhancing our operations and processes enabling

greater control on the sales, collections and credit

processes.

m-FIMO has emerged as one of the main efficiency

enabler in the field process and has also emerged as the

main differentiator for your company vis-à-vis other

microfinance players.

Oracle Business Intelligence Tool:

In addition to the core loan management systems,

your company also uses a business intelligence tool for

data mining for informed decision making. The BI-tool

helps mine data, converts raw data to useful

information and has become a strong catalyst in helping

capture new market and new product opportunities,

which the organization is aspiring for.

Cloud Server:

In FY’14, your company moved its data from on-ground

hard drive based server to cloud based highly secure

Data Center. This was another IT initiative which

showcased our state-of-the-art tech platform this FY.

The cloud server with industry grade fire-wall

protection, added anti phishing & spy features and

on-site and off-site backup is a dynamic, highly

scalable and highly accessible infrastructure providing

significant cost efficiencies.

17

Your company considers stakeholder engagement as a vital area of strategic importance and as such engages in continuous and transparent dialogue with key stakeholders through integrated communication initiatives. In FY’14 Disha furthered its stakeholder engagement through constructive communications addressing stakeholder needs and also the company’s outreach requirements.

Internal and External communication: Your company maintains regular dialogue with its external stakeholders, esp. funders and industry associations, with yearly, quarterly and monthly business update newsletters capturing business highlights and periodic information and outlining the advantages and achievements of the company. In addition to this, messaging based on our social impact and the key role played in financial inclusion is achieved through a greetings campaign to external stakeholders on all national holidays like Independence Day, Republic Day etc. In FY’14, multiple newsletters and greeting messages were sent to the target audience with this intent. The company also maintains steady communication with its employees through organizational mailers, product and process communications etc

building connect between geographically separated locations leading to a sense of cohesion and awareness parity. This year your company also released a comprehensive annual report for FY’13, recording the year’s business performance and detailing the various initiatives of the company aimed at select end users, which has worked as an effective marketing tool for the company.

Highlights

Stakeholder Engagement

Brand and Product Communication: Your company, with an effective fair practice code and code of conduct governing its operations, prides itself on communicating transparently with its stakeholders. In FY’14 your company released multiple product and process communications to its customers aiding in message permeation and clarity.

Thought Leadership: Your company has adopted thought leadership as one of its key operating pillars. As such your company is actively involved in industry forums like MFIN and has been consistently contributing to the cumulative thought platform of the industry. Every year your company, in association with IFAPL, organizes a BOP conclave which is one of the well-attended events of the industry. The 3rd edition of the conclave was conducted on 5th March, 2014 and was attended by CXO level representatives from regulator, bankers, rating agencies, industry practitioners etc and proved to be a holistic platform for discussion on microfinance.

Your company has been consistently engaging it’s stakeholders through regular and effective messaging, consistent and clear positioning and efficient message delivery throughout FY’14 and has been able to generate visibility and greater brand name recall for the company.

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Your company is incorporated as a ‘for profit’ microfinance institution with the objective of bringing affordable financial services within the reach of the base of pyramid households in India. Following the credo of a commercially viable business with a social DNA, your company conducts its business by balancing the interests of its stakeholders including investors, funders, employees on one side and financially excluded households on the other. We firmly believe that our business has a wider purpose than profit viz. one of social and economic up-liftment of the financially excluded masses that it serves. As part of our social focus we devote our efforts on areas directly related to our client welfare philosophy - promoting livelihood development and community welfare activities leading to improvement in the quality of life of our customers. In FY’14 Disha directly benefitted over 4000 households through developmental activities aimed at community welfare in the areas that we operate in. Your company’s social impact was felt in 1400 villages in India through financial literacy and advisory camps, livelihood skills training camps, sanitation camps, pest control activities, safe water campaigns, greening activities, health and hygiene camps, livestock protection and immunization camps, education initiatives etc.

Inclusive Development

O u r C l i e n t W e l fa r e P h i lo s o p h y Reach out to target customers through livelihood development and community welfare activities to achieve Social Performance goals

Health Camps

Ophthalmology camps

Distribution of medicines/first aid kits

Veterinary camps

Free inoculations

Livestock maintenance education

Village cleaning

Tree plantation and sapling distribution

Chlorination

Water Tank cleaning

Water Taps maintenance

Pest control activities

Mosquito repellant distribution

Educational Video Shows

Chart Demos

Livelihood Training

CSR Focus Areas

Health and hygiene

Nutrition awareness

Water safety

Veterinary care

Greening initiatives

Environment protection

Financial literacy

Education campaigns

Client Welfare focus areas

Health & Hygiene Nutrition awareness

Water Safety Veterinary Care

Greening Initiatives Environment protection

Financial literacy Livelihood training

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Disha with its focused commitment to efficiency in business operations and social impact in the sector, is looking forward to high growth FY’15 ensuring sustainability, profitability and competitiveness in operations.

Our industry is predicted to continue its high growth path in FY’15. Regulations have firmed up to a considerable extent. Funding to the industry is on a high with greater credibility placed on the MFI borrowers due to the high repayment rates. With the advent of these sector realities in terms of regulations and funding availability, adding to our product offering has emerged as the key driving strategy for our business in FY’15. Disha intends to broaden its product offering in FY’15, with a secured credit product for the base of pyramid borrower segment ,supporting them in their larger lifecycle needs, especially as an individual borrower with an established credit history and repayment capability.

Focus Areas– FY’15

Continued Focus On:

Maintaining high quality portfolio

Strengthen and further innovate in all aspects of business

Impacting the social bottom line with dedicated social agenda

Key Focus Areas

Diversify product portfolio with secured loan products

Increase business volumes while maintaining operational excellence

Explore non-credit product needs of BOP sector

With its close connect to the BOP segment, your company has, over the years, realized the need of this target segment for non-financial products that directly impact their social well-being. In FY’14 your company will actively explore this need of it’s borrower base and endeavor to fill this need-gap with a viable product offering that will contribute to their social welfare in a meaningful way. With these measures your company is confident of contributing positively to enable a lifetime of progress for its clients.

Your company, over the years, has built best-in-class systems in operations, risk mitigation, technology and human resources leading to a robust infrastructure and operational acumen, ideal for pursuing further growth. Your company intends to build on this foundation of excellence and further innovate in all aspects of functioning and continue its journey of thought leadership and measurable impact on society generating value for all its stakeholders.

View to the Future

The opening up of multiple funding channels is a great opportunity for your company to benefit more BOP households through effective channelization of the funds as affordable credit to our borrower base. Your company proposes to explore this opportunity to scale up business volumes while maintaining its core philosophy of operational excellence and social impact.

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Disha Microfin Pvt Ltd A Commercially Viable and Socially Impactful Venture