S.M.I.L.E. Microfinance Limited was started in 2004 to provide credit services to the urban and rural poor in the state of Tamilnadu. The company started as non-deposit taking NBFC in January 2006 and later on received an MFI license in May 2015. SML provides credit to economically-backward women through the joint liability group mechanism.
DWM Investments (Cyprus) Limited infused equity of Rs. 25 crores each in FY2010 and FY2011 and holds a stake of about 66.6% in the company at present. The promoter group held 18.6% while women members (erstwhile and current) held 13.3%.
Tamilnadu region accounts for the majority of the portfolio for SMFL. The two main districts i.e. Chennai and Madurai account for 28% of total AUM as on 31.03.2020.
How does Smile Microfinance do Business?
1. SMFL operates under the JLG lending model in which the groups undergo a three-day training program (Compulsory Group Training-CGT) regarding the loan process, product details, group formation, and group liability.
2. Then Field Development Officers (FDOs) complete the loan application process and submit the documentation to the branch manager along with KYC details.
3. After verifying all the details, the loan is sanctioned by Divisional Manager for loans up to Rs.30,000. If the loan amount exceeds Rs.30,000, then the loans are sanctioned by the Zonal Manager.
4. Loan verification takes place at the branches where BM will verify the passbook of each member to make sure that the account number and IFSC code they provided are correct. These details are then sent to HO and the loan is disbursed to the client through NEFT.
5. Every borrower is given with the repayment schedule indicating the due dates and the passbook for the loan account.
6. The portfolio is monitored on an on-going basis by post disbursement verification of assets created out of loan amount. The repayment happens on fortnightly basis at the centers during center meetings.
Stats as on 31.03.2020
1. Presence in 6 states, 43 districts, and 137 branches.
2. 799 Employees, 3.16 Lakh Members, and 2.85 Lakh borrowers.
3. Total Portfolio Size = 606 Crores
4. Total loan disbursed as on date = 5800 Crores.
5. Loan disbursed in 2020 = 887 Crores.
Financial Parameters of NBFC/MFI
1. As on 31.03.2020, the Capital Adequacy Ratio is at 23.64% which is well above the regulatory requirement.
2. NIM= Net Interest Margin (NIM) increased from 9.31% in FY19 to 9.86% in FY20 on account of reduction in the cost of borrowings.
3. Opex/Total Assest= This factor has increased from 4.76% to 6.80% in FY20, as the company has recruited new employees and opened up new branches.
4. Return on Toal Assets(ROTA)= With the increase in credit cost and operational, ROTA decreased from 3.55% in FY19 to 1.91% in FY20.
5. GNPA and N.NPA = Gross NPA and Net NPA stood at 0.22% and Nil as on March 31, 2020, as against 0.26% and Nil as on March 31, 2019.
1. AUM has witnessed a growth of 17% from Rs.516 crore in FY19 to Rs.606 crore in FY20.
2. The company during FY20 has opened new branches in Chattisgarh, Jharkhand, Karnataka and Madhya Pradesh to diversify its loan portfolio.
Industry Outlook and Covid-19 impact
Post the AP crisis and regulatory intervention by RBI, the microfinance sector has seen strong growth in loan portfolios on account of improving funding profile, control over operating expenses, improving margins, and moderate leverage levels. The sector has evolved with the advent of credit bureaus in the sector and subsequent control over asset quality. However, it remains exposed to event-based risks and marginal profile of borrowers.
The recent outbreak of Covid-19 is likely to impact asset quality and credit costs. The ability to withstand event risks and avoid further deterioration in the asset quality leading to impact in the overall profitability will be the key considerations.
The collection has improved from no collection in April 2020, to Rs.4.97 crore in May 2020 to Rs.27.78 crore in June 2020 and further to Rs.16.21 crore in July 2020 (till July 15, 2020). Scheduled repayment obligations for Aug 2020 and Sep 2020 (excluding PTCs/DAs) stood at Rs. 14.13 crore and Rs.27.73 crore.
|Total Available Shares:||1000|
|Face Value:||₹ 10 Per Equity Share|
|Lot Size:||1000 Shares|
|Current Unlisted Share Price:||₹ Best In Industry Per Equity Share|