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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!!