Investor Presentation Fullerton India Home Finance Co. Ltd. No part of it may be circulated, quoted, or reproduced for distribution outside the organization without prior written approval from Fullerton India Home Finance Co. Ltd.
AGENDA Industry Landscape About Grihashakti Business Highlights Risk Management Liquidity Management 2
Industry Landscape 3
India Growth Story Buoyed by demographics, unmet credit demand India's economy is poised to become third-largest by 2027 with $6 trillion GDP** Underpenetrated Market Incremental demand Growth potential GDP in PPP^ (US$ trillion) Credit-to-GDP ratio* India's Millennial as % of Workforce** KR UK US MY IN 69% 64% 199 15.7 200 51% 171 48% 11.8 151 150 134 36% 8.7 100 56 50 - 2016 2020 2025 1980 1990 2000 2010 2015 2018 2015 2019 2020 2025 2027 "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 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. 4 *BIS (KR: Korea UK: United Kingdom US: United States MY: Malaysia IN: India)
Housing - Catalyst for India’s Development Large opportunity for HFCs India’s 9% Mortgage -to-GDP ratio in 2016 estimated at ~17% by 2026 (Morgan Stanley) Housing Sector Multiplier Effect Key Drivers for Housing Sector Growth Skilled Labour Rapid urbanization* 430 mio in 2015 600 mio by 2030 Architects, Designers Service Sector & Engineers Growing middle class** 250 mio in 2015 583 mio by 2030 Banking & Finance Housing Sector* Housing shortage~ 64 mio in 2018 114 mio by 2022 Primary Sector Raw Materials Household size # Manufacturing Sector Construction Materials 4.85 in 2006 4.44 in 2016 Higher Income HFC Housing Loans^ INR 6.3 tn in 2018 INR 14.8 tn by 2023 Fiscal Impact Increased Tax Revenue • Housing Finance Companies can capture the increasing demand for • Housing sector has impact on construction, cement, steel credit buoyed by favourable demographics and urbanization sectors driving up employment and income levels Source: *Mirae Asset Management **McKinsey ~ORF ^CRISIL [Housing portfolio of HFC’s total outstanding] ~Morgan Stanley # Anarock 5 McKinsey Global Institute defines India’s middle class as households with real annual disposable incomes between 200,000 and 1 million rupees.
Government Impetus Co-ordinated policy measures to spur growth • Housing for all (Pradhan Mantri Awas Yojana) scheme – deliver 20 million houses by 2022 Home Buyers • Home buyers recognized as financial creditors • CLSS scheme extended till March 2020 • RERA regulation to enhance developer performance, improve buyer confidence Real Estate • GST rates slashed for under-construction flats to 5% and affordable homes to Developers 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 HFCs • Better access to funds with revised ECB regulation • Enhanced Home Loan limit under Priority Sector Lending (PSL) 6
About Us – The Group 7
Grihashakti Housing Finance arm of Fullerton India Fullerton Financial Holdings, Singapore (FFH) is a wholly owned subsidiary of Temasek Holdings Temasek Holdings (Private) Ltd. • Temasek is a global investment company, headquartered in Singapore Wholly owned subsidiary • FFH invests in and operates financial institutions in emerging markets Fullerton Financial Holdings Pte. Ltd. Fullerton India Credit Co. Ltd. (FICCL) is a wholly- owned subsidiary of FFH Wholly owned subsidiary • Incorporated in 2005 • Pan-India presence established across 22 states and Fullerton India Credit Company Ltd. 3 union territories • Retail finance products for urban and rural households Wholly owned subsidiary as well as SMEs Grihashakti, Fullerton India Home Finance Co. Ltd. is a wholly-owned subsidiary of FICCL Fullerton India Home Finance Company Ltd. • Commenced operations in December 2015 8
Fullerton Financial Holdings 100% step-down subsidiary of Temasek Holdings, Singapore CHINA Central CHINA INDIA DUBAI, UAE MYANMANR Fullerton Financial Holdings (FFH), the parent, was incorporated in January 2003 as a wholly owned CAMBODIA POST subsidiary by Temasek Holdings Pte Ltd FFH has 7 operating financial services entities located across 6 countries MALAYSIA Its vision is to develop unique business models that bring financial services to the underserved in emerging markets 9
Fullerton India Credit Company A wholly-owned subsidiary of Fullerton Financial Holdings Established Customer Connect across Urban and Rural India Villages AUM (INR) Branches 58,000 21,542 Cr 626 Rating* Employees Customers AAA 28 Lakh 13,000 Consumer Personal Loans, Loans Against Property Urban MSME Commercial Vehicle Loans, Business Loans, Loans Against Property Rural Personal / Group Loans, Loans Against Property, Vehicle Loans Cross-Sell Life / General Insurance Multi-product offerings support a range of customer needs Data as at FY19. *Rating CRISIL, ICRA, CARE. (Temasek rated 'AAA/Stable' by S&P Global) 10
The Foundation For our Strategy and Culture Be the Company of choice in financial services for our customers, employees, communities and Vision stakeholders, recognized for innovation and high ethical standards . Agility Collaboration Innovation Values Diversity Integrity Excellence 11
Board & Management Team Strong Oversight and Guidance Board of Directors Milan Shuster Rakesh Makkar Rajashree Nambiar Anindo Mukherjee Independent Director CEO - Grihashakti, Non-Executive Director, Chairman – Grihashakti, MD & CEO – Fullerton India Whole-time Director Non-Executive Director - Fullerton Credit Co. Ltd India Credit Co. Ltd Management Team Pankaj Malik Parag Shah Shyam Reddipalli Rakesh Makkar GM – Head Business & Product Chief Financial Officer Chief Risk Officer CEO - Grihashakti, Whole-time Director FFH has senior level representation on the Board and various committees of Board 12 Note - As at August 2019
About Us - Our Journey 13
Our Journey So Far Steady asset growth, geographical expansion Equity infusion of INR 2 Bio Team size of 780+ Aug-19 Jul-19 Crossed AUM of INR 30 Bio CRISIL ‘AAA’ Rated Jun-19 Closed securitization deal worth INR 1,756 Mio Mar-19 Expanded network to 60 Branches Crossed AUM of INR 35 Bio Jan-18 Enhanced network of 78 branches Nov-17 Rated AA+ by CARE SARFAESI Approval Sep-17 Crossed AUM of INR 15 Bio Started operations with 20 Nov-16 branches Crossed AUM of INR 10 Bio Sep-16 Team size of 425 Dec-15 Expanded – Added 20 more branches Jul-15 Received HFC license with equity infusion of INR 1 Bio 14
Where Are We Today Business Overview Grihashakti is a wholly-owned subsidiary of FICCL Established customer connect in 78 branches across India • Customer segment – Primarily salaried, self-employed PUNJAB DELHI professionals, and MSME firms • Branches # – 3 • Branches # – 1 • Product suite – loans for new/resale home, home HARYANA UTTARAKHAND improvement & extension, home construction, loan • Branches # – 4 • Branches # – 2 against property, loans for commercial property, construction finance, Lease Rental Discounting RAJASTHAN UTTAR PRADESH • Branches # – 6 • Branches # – 6 • Presence – 78 locations; leveraging parent infrastructure GUJARAT WEST BENGAL • Branches # – 7 • Branches # – 3 • Geographies – Focus on Tier 2 and 3 cities with a strong network of associates and direct selling agents MUMBAI MADHYA PRADESH • Branches # – 4 • Branches # – 5 • Target loans in the range of 20 Lakhs REST OF • Employee strength – 780+ AP & TELANGANA MAHARASHTRA • Branches # – 11 • Branches # – 10 • Pro-active and continuous monitoring based on TAMIL NADU KARNATAKA external environment, customer data, bureau trends • Branches # – 9 • Branches # – 7 15
Our USP Deepening customer relationships in underserved markets 1 Strong Parentage AAA rated. Steady infusion of capital 2 Experienced Management Team Industry veterans form part of Board and Senior Leadership team Geographically diversified, sizeable play basis network of 78 3 Strong footprint in Tier 2/3 towns branches and ~600 active channel partners Leverage parent’s understanding of credit and distribution in 4 Established niche in self-employed segment underserved markets, product programs customized for SENP Region specific specialty teams on board – underwriting, collateral Expertise in handling new-to-credit/ 5 management, valuation policy. Sturdy portfolio across market cycles borrowers from informal segment - demonetization, RERA, GST, liquidity crisis Pro-active monitoring based on external environment, customer 6 Strong Risk Governance Framework data, bureau trends. Robust delinquency management – from early warning signals to effective SARFAESI implementation Diversified lender base, low reliance on short term funding, 7 Comfortable Liquidity Position well-managed ALM 16
Business Highlights 17
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