Shriram City Union Finance Limited - Karvy

of our Assets Under Management comprised loans against gold, and 24 % of our Assets Under Managementcomprised loans to small enterprise finance segment. Our diverse revenue streams reduce our dependence on anyparticular product, thus enabling us to spread and mitigate our risk exposure to any particular industry, business orcustomer segment.Pan-India Presence, Strong Foot-hold in Southern India and Synergies with Other Shriram Group EntitiesAs of March 31, 2011, we had 559 branches and 91 other business outlets across 17 states in India, with a significantpresence in south India. As on March 31, 2011, our total employee strength was 2,318. We have a strong foothold insouth India. We leverage on the Shriram Group’s ecosystem to solicit our customers and our focus has been inmaximizing our association with the “Shriram” brand name and the synergies offered by the infrastructure, of otherentities in the Shriram Group. Our customer base over the years has significantly comprised of customers of otherentities in the Shriram Group. The large customer bases and wide-spread network of business outlets of entities suchas, Shriram Transport Finance Company Limited, (one of the largest organized asset financing NBFCs in India), andentities operating under the “Shriram Chits” brand name, has continued to provide us with a large platform of targetcustomers. We believe the under-banked community, especially the small enterprise finance segment often do nothave sufficient movable and/or immovable property to provide as security or collateral for loans. Our relationshipand knowledge of customers’ requirements also enables us to minimize our risks while extending loans to suchunder-banked communities. For instance, loans provided to chit depositors of Shriram Chits, are partly or entirelysecured by the deposits made with Shriram Chits. Shriram Chits has several years of experience of collecting chitdeposits from self-employed professionals, wholesale/retail dealers, merchants, builders, manufacturers and smalland medium scale business operators, which provides us a with an extensive database of potential borrowers,specially for our loans to the small enterprise finance segment.Hub and Spoke Business Model with Efficient Credit Policies and ProceduresWe operate in a ‘hub-and spoke’ business model, where the responsibilities from loan origination to recoveries ofloans are vested in each of our business outlets, under the general supervision and control of our head office inChennai. Our business outlet networks are interconnected and each business outlet is connected to our head officethrough an ERP platform developed by Take Solution Limited, Chennai. The ERP platform enables ourmanagement to monitor each loan right from its origination to final closure of accounts.Our head office and senior management is primarily responsible for the broad policy formulation for our businesses.However, the decision making process in connection with loans is decentralized and majorly vested in our businessoutlets, which ensures speedy credit approvals and more efficient turn around times in processing loans.We focus on closely monitoring our assets and borrowers through our officials at each business outlet. Our branchofficials develop relationships with our target customer base, which enables us to capitalize on local knowledge. Wefollow stringent credit policies, including limits on customer exposure, to ensure the asset quality of our loans andthe security provided for such loans. Further, we have nurtured a culture of accountability by making our productexecutives responsible for loan administration and monitoring as well as recovery of the loans they originate. Wehave a dedicated team of officials at each business outlet who are responsible for (i) loan origination, (ii) creditevaluation, (iii) pre-lending field investigations where our officials personally visit our prospective customers attheir homes or offices, and (v) post lending credit appraisal. The team of officials responsible for origination of aloan is also responsible for the timely servicing of loans, recoveries, and monitoring the performance of each loanfrom origination to closure of the loan. We offer incentivized salary structures to such officials, where theirincentives are linked to recovery of installments of the principal amount and interest on the loans. We believe ourefficient credit policies, credit approval procedures, credit delivery process and relationship-based loanadministration and monitoring methodology have aided in increasing our customer loyalty and earn repeat businessand customer referrals.Our stringent credit policies and relationship based model has helped us maintain relatively low NPA levels. OurGross NPAs as a percentage of Total Loan Assets were 1.86 % as of March 31, 2011. Our Net NPAs as a percentageof Net Loan Assets was 0.43 % as of March 31, 2011.30