Shriram City Union Finance Limited - Karvy

the Assets Under Management for loans to the small enterprises finance segment was ` 195,329.92 lakhs, whichrepresented 24 % of our total Assets Under Management as at that date.We believe that the small enterprises finance segment is still under banked to a large extent and barring certainpublic financial institutions and public sector banks, lending in this sector has traditionally been addressed by theunorganized players in most regions in India. Accordingly, we see a significant opportunity for our Company toexpand our customer base in small enterprises segment.The Shriram Group, particularly Shriram Chits has a large number of customers under the small enterprisessegment. Our Company does business with various vendors and dealers of Shriram Group. We plan to tap thispotential small enterprises segment and increase the size of our small enterprises segment portfolio by continuing tooffer customized products to our target customers.Our Company’s OperationsBusiness Outlet NetworkAs of March 31, 2011, we had a wide network of 559 branches and 91 other business outlets across India and 2,318employees, across 17 states in India. We have a strong concentration of our business in south India in the states ofTamil Nadu, Andhra Pradesh and Karnataka. We propose to target establishing our operations through new businessoutlets in cities and towns where we historically had relatively limited operations, such as in eastern and northernparts of India, and to further consolidate our position and operations in western and southern parts of India. As aninternal policy, we typically introduce our products in a particular location only after having evaluated the regionalmarket and the demand for each individual product. Currently, not all of our business outlets offer our full range ofproducts. As a part of our strategy we target to gradually introduce our entire range of product offerings at each ofour existing business outlets across India.A typical business outlet comprises 3 to 6 employees, including the branch manager. As of March 31, 2011, all ofour business outlets were connected to servers at our corporate office to enable real time information with respect toour loan disbursement and recovery administration. Our customer origination efforts strategically focus on buildinglong term relationships with our customers, address specific issues and local business requirements of potentialcustomers in a specific region.Strategic PartnershipsSince the retail financing and Small Enterprise Finance Segment continue to be influenced by the unorganizedlending sector in semi-urban regions, we from time to time, enter into agreements and memorandum ofunderstanding with local private financiers to cater to such markets. Currently, we have entered into a memorandumof understanding dated January 2, 2010 with M/s. Hari & Company Investment Madras Private Limited, (“HAC”),whereby HAC identifies the prospective customers desirous of availing finance, verifies the credit worthiness ofsuch customers, evaluates the loan proposals, disburses the loan amounts, obtains all necessary documentation inconnection with the loan proposal, collects installments and penalties for all customers, assists in creation of thecharge in connection with the loan and follows up on recovery of loan amounts, repossession of assets and/orenforcement of the security interest on such loans. Our Company in turn provides the necessary funds for financingthe target customers and maintains the policy and procedures and banking transactions in connection with suchloans. The aforesaid memorandum of understanding is valid for a period of five years. HAC is entitled to anincentivized revenue sharing based payment in connection with each loan originated and serviced by HAC.Customer Evaluation, Credit Appraisal and DisbursementInitial EvaluationDue to our customer profile, in addition to a credit evaluation of the borrower, we rely on guarantor arrangements,the availability of security, referrals from existing relationships and close client relationships in order to manage ourasset quality.88