By

Manoj Kumar,ZM (MPRJ)

SPANDANA EXPANSION PLAN

(M.P., RAJASTHAN, U.P.)

Objective

To emerge as Market leader in Madhya Pradesh by the end of this fiscal

To rejuvenate Operations in Rajasthan

To start Operations in UP

Industry/Sector Analysis – MP-RJBARRIERS TO ENTRY

threat of new entrants

threat of substitutes

SUPPLIERPOWER

SUBSTITUTES

COMPETITIVE INTENSITY CUSTOMER POWER

POLITICALECONOMIC

SOCIO CULTURALTECHNOLOGICAL

Moving from High - Medium - lowMoney Lenders

Co-Society/Bank and Chit FundsFamily and FriendsSHG - NGO/ Banks

New Innovative products from Bank industry - AXIS BankHowever, Switching cost is low

HighTrained Manpower

CreditabilityCapital Base

Building Economies of ScalePolitical Contact/Network

Economies of ScaleLow Switching Cost for Customer

Moving from Low to Medium

Low penetration. In addition, MFI is comparatively very reasonable to current

borrowing options.

Collective Bargaining may be an issue in near future.

Switching Cost is low

Medium

Bank will not have very asset pool than the one they get from the MFIs

Strong base of 42 Banking relation and over dependance on few lenders are

reduced.

Major Lenders has helped building strong creditability hence obligated.

Moving from Low to MediumPenetration is low. Hence, room for

competitors to enter and tap the untapped market.

Exit Barrier is low with the current loan outstanding which may increase with the

increase in the loan portfolioCompetitors not of the same school of thought of industry growth and cooperate accordingly.

HighMedium

Low

- Political/Bureaucratic intervention in the processes and recoveries (Vested Interest)

- Loan Waivers

- Political interference during unfortunate natural calamities

- Policies - PSL, Interest Rate, Securitizations- Monetary Policy - Increasing shift of corporate to the bottom of the pyramid

- Economic Development - NRI Linkage "Remittance"- Availability of Bank Branches

- Better infrastructure can help reach out to clients better and quicker

Community ethos not non repayment/interestLanguage Barriers

Gender issuesPossible Class/caste discriminationWork Culture ( 9 to 6)

Grapevine - "Word of mouth" prominent to establish creditability

Unique Indentification number making if difficult for a MFI Credit BuereuTechnological infrastructure to run the business more efficiently

Proposed Branches

Division No. of Branches

Proposed Branches

1st Phase (By 10 Dec.)2nd Phase (By 1st

Jan)3rd Phase (By 26th Jan)

Bhopal 16Bareli, Bhopal 2, Gwalior,

Jhansi 1, Sagar2, Deoni

Nasarullagunj, Lalitpur, Gwalior 2, Jhansi 2, Sehore 2

Ghodanagri, Bhopal 2, Gwalior 3, Sheopur,

Garhakota

Jabalpur 16Panduna, Rewa, Panagar,

Gadarwara 2, Singroli, Allahabad

Sausar, Amarwada, Sidhi, Patan

Balaghat, Chindwara 2, Allahabad 2, Annupur,

Mirzapur, Dindori

Indore 18Burhanpur, Baitma,

Sarangpur, Aalot, Ujjain 2, Indore 4

Manasa, Deepalpur, Tarana, Indore 5,

Rajgarh, Ratlam 2, Dewas 2

Garoth, Baagli, Ghatabillod, Manavar,

Susner,

Rajasthan 25Udaipur1, Chittorgarh,

Ajmer1, Alwar

Jhalawad, Banswada, Jaisamand, Jodhpur, Dilwara, Kishangarh,

Shahpura, Hanumangarh

Bhilwada, Baran, Rajsamand, Jalsamand,

Dungrapur, Kotputli, Bikaner, Ganganagar,

Rajgarh, Pushkar, Udaipur 2, Ajmer 2

Characteristics of MP’s MF market• Market in horizontal development/growth phase –

geographical expansion.• No. of MFIs growing. Multiple lending in nascent phase.• Vertical penetration starting – subsequent cycles starting &

ticket size increasing, coverage of target group increasing.• Product-bundling /product diversification/Product

differentiation starting - additional products being introduced (Samhita’s social products in education & health,SKS’ mobile selling.),different rate of interest by different players.

• Clients overall loyal and/or feel they have very few other options, but some clients seek other options.

• High operation cost because of thin population density

Current Market Scenario – Madhya Pradesh

The Big ThreeSKS SPANDA

NASHARE

Portfolio Size 160 Cr. 105 Cr. 90 Cr.

Clients 2.4 Lakhs 1.8 Lakhs 1.2 Lakhs

Branches 71 69 65

Individual Lending

No No Yes

Age of Operations

4 years 23 months 3 years

Current Market Scenario – Madhya Pradesh

Other Players(i)Samhita : Mostly in Rewa, Panna,Shahdol,

and Bhopal. Starting in Gwalior.(ii)Fullerton India (iii) Sahayata : Just started from Ujjain(iv) Sonata : Jabalpur and Bhopal(v) BASIX

Strategy

Ambushing the market – opening branches in big way after a lull that was a phase of consolidation.

Opening branches in locations where - there is need of the credit and good environment of

micro-enterprising

- minimum potential of 3,000 clients in the radius of 35 KMs

- other MFIs doing well Capitalizing on second/third mover’s

advantage Non-experimental with the market

Characteristics of Rajasthan MF market

Horizontally in development/growth phase No. of MFIs growing Non-uniformity in commercial micro

financing in terms of geographical areas. Upon proper and regimented training

members are loyal Repayment problems because of staffs and

ring leaders Problematic community – Gurjar, Meena,

Nomadic

Current Market Scenario – Rajasthan

The Big ThreeSKS SHARE +

AsmithaSahayat

aPortfolio Size 160 cr. 35 Cr. 20 cr.

Clients 1.6 lacs 45,000 35,000

Branches 75 13+ 12=25 26

Individual Lending

No No Yes

Age of Operations

3 yrs. 12-14 months

Current Market Scenario – Rajasthan

Other Players ARTH Finance – Haroti areas Ujjivan SPANDANA BASIX, and Fullerton India• Market has still lot of potential although

certain areas need to be avoided (Gujjar and Meena dominated)

Special strategy for Rajasthan

No old staff in new branches.Recruitment in new areas.

Opening branches in areas where other MFIs are doing well- dist.HQ, urban areas etc.

Not hiring staff of other MFIs Rigorous training of the process Slow pace in the beginning. Focus on

quality rather than quantity

Characteristics of U.P.’s MF Market

MF activities across the state. But, only eastern parts good for entry.

Industry still in growth phase Strong presence of regional players Major Players – SKS, Share/Asmita, Cashpor,

Sonata,Ujjivan Small Players – Satin,Mimo, NEED,Nirman

Bharati,Margdarshak,Sathi,Samridhi, Problematic areas – Western U.P. & Central

U.P.

Strategy for Uttar Pradesh

Starting operations in adjoining areas of Madhya Pradesh like Allahabad, Lalitpur, Mirzapur, Jhansi etc.

Monitoring from MP based locations in the beginning.

Looking for organic growth towards eastern parts.

Human Resource Planning

• Requirement : (i)C.As: 350 , BMs: 75 during expansion (ii)R.Ms: 12-15 during/after expansion

(iii) D.Ms : 2-3• Sourcing Human resources : (A) Open Recruitment (B) Internal

Promotions (i) Credit Assistants – D.Ms/HRs conducting recruitment tests (written test +

interview) in different parts of their divisions every week(ii)Branch Managers – Promotions of C.As/direct recruitment. - Promotion tests being conducted every month in every division by

HR,DM,and ZM. - Direct recruitment of BMs – identified by DMs and HR. Finalised by ZM. (iii) Regional Managers – promotions of B.Ms/direct recruitment

- Identified by DM/ZM in promotion tests and interview .Final interview at HO- Direct recruitment at HO

(IV) Divisional Managers – promotions of R.Ms/direct recruitment- Identified by DM/ZM and recommended by ZM for interview at HO- Direct recruitment at HO

(V) Support Staff – Recruitment to be done after opening branches and dividing divisions.

Spl. Guidelines for C.As’ Recruitment

Age group : 18-26 yrs 12th pass No prior experience of MF sector. Avoid with local

MFIs and big players’ experience Wards of members to be avoided Not to take from blacklisted areas of the div. Having own bike and DL & RC. Ready to work in areas beyond 150 KMs from home. Physically fit, good communication, inter-personal and

calculation skills. Maximum from rural areas. Following the company’s recruitment guidelines.

Training

A. C.As’ Training (i) Exposure training – First-hand learning,

orientation, daily routine, center-register filling, application forms, Do’s n Don’ts . In branches for 20 days

(ii)In-house training - Concept, process, calculation, exercises, reports, expectations etc. One week in D.O.

(iii)Test of Understanding – at DO.(iv)Placement – Independent handling of centers in

the branches for 15 days before final placement in the same old branch.

Training

B. B.Ms’ Training (i) Exposure Training – first-hand knowledge of BM’s

roles and responsibilities, daily works reports preparation, accounts/book/record keeping. 10 days in a branch .

(ii)In-house training -Concept, process, calculation, exercises, reports, expectations etc. 10 days. In D.O.

(iii)HO training

(iv)Dummy placement – independent branch handling for 15 days.

(v)Test of understanding – at HO

(vi)Final Placement – in new branches.

Survey

A. DEMOGRAPHY: 1.Total population, Sex Ratio and Population Density2. Level of poverty3.Concentration of population. Pockets of high

concentration.(Particularly potential clients)4.Important link roads and no. of villages along those

roads. No. of House Holds (HHs) of those villages.5.Percentage of  potential clients of total population6.Social structure in terms of religion/caste. What

percentage Hindu/Muslims/others. Family types.7.Culture/habits. This hints at spending/saving

pattern. 

Survey ……

B. INCOME :  1.Main Source of Income2.Secondary sources of income3.Regularity/irregularity of income4.Range of family income5.No. of earning members in the family

C. NEEDS: 1.Centrality of credit needs to the clients2.What are people's perceived needs?3. Need of aspiration (Do they aspire for higher life styles/to

send their children to schools/to own a pucca house,white goods etc.?)

 

Survey…..

D.COMPETITOR ANALYSIS/SECTOR ANALYSIS 1.Who are other players?

2.What fee they charge?

3.What are their strategies? Competitors assumptions/current strategies/future plans, objectives/capabilities and comparison with ours.

4.Problems faced by them- problematic areas/slums, recovery problems, staff, problems, political/administrative, threatening, coercion. How did they overcome their problems?

5.External Environment Analysis of the area for MF.

7.SWOT Analysis.

6. Do we have any Competitive/comparative advantage over others in the area?

Survey…..

E. CITY MAPPING (for location of the branch)

1.Law and order condition2.Supply of electricity- erratic/non-erratic?3.Political/administration's interferences4.Internet facility/Telecom services5.Banks - pvt. n public?6.Normal working hours - till what time people generally

work? Whether shops remain open or not till 9 PM?7.Medical facilities8.Availability of diesel/petrol9.Transportation/accessability from main cities 

Activity chartActivity Who will Do Time Period Remarks

Survey RM-DM 3-4 Days1st Phase - by 10

Dec2nd Phase – by 1 Jan3rd Phase – 26 Jan

RM’s will carry out survey in potential locations accompanied by DM’s. Based on the survey report decision to open branches will be taken by DM, ZM

Recruitment RM-DM-HR Every Week Recruitment to be done every week from different locations

Training• Field Placement•In house training• HO training

RM-DM-ZM-HO 1 month Staff will be first exposed to field after which they will be groomed on conceptual aspects through classroom training sessions to be organized at DO. Promoted BM’s will also be sent to HO for further training and better exposure

Administrative (Branch Location, Certificates, Furniture, Stock, Bank A/c etc.)

RM-DM 10 Days(10 days before

formal announcement )

These activities will be carried out on final approval for opening branches in a particular location by ZM, DM

THANK YOU!!