Description
The PPT explains Leasing Industry Status, NBFC, challenges, opportunities, SREI
LEASING IN INDIA
Evolution phases
Pre 1970
1970-1995
1995-2004
- Exit of large no. of companies: * Small & Large * Indian & Foreign - Regulation by RBI
- Only HP companies - Entry into equipment finance through: - Automobile * Leasing financing mainly for commercial vehicles * Hire Purchase - Fixed Deposit: main - Commencement of car finance source of funds
- Few companies - Access to Capital Markets diversified into related financial - Funds from FDs and Banks services
Leasing Industry Status
Present industry order
Only few major players exist
? SREI International Finance ? Sundaram Finance ? Cholamandalam Finance ? Countrywide Finance ? Mahindra & Mahindra ? Citicorp
? Shriram Finance
? Tata Finance
? GE Capital
NBFCs on strong turf
?
NBFCs are today an Integral Part of Indian Financial System showing improving health:
? ? ? ?
Increase in resource profile
Significant decline in NPA Substantial improvement in brand image Improvement in profitability margins
?
Maturing industry in which financially & managerially weak companies already weeded out
?
Surviving companies are large corporates with good brand image
NBFCs on strong turf
?
NBFCs enjoys a Niche position in the financial sector due to:
?
? ? ? ? ?
Better Customer service Innovative & flexible financing options Continuously reducing NPA’s Healthy Capitalisation Innovative resource mobilisation Focused Operation – Products/Customers/Geography
?
Formation of Finance Industry Development Council - a Self Regulatory Organisation for NBFC’s
Challenges before the Industry
Rising competition from banks
? ?
Unequal competition from Banks & MNCs – Cost of Funds No focused / dedicated Recovery Mechanism - Housing Finance Corporations / Banks enjoy special recovery platforms such as DRT’s / Recovery officers / Securitisation Act 2002 TDS on interest payments to NBFCs – Not applicable to banks NBFC Stigma – Credibility issues , Industry brand image Competition for talent - From newer financial services players
? ? ?
Funding and regulatory issues
?
Poor availability of medium and long term funding
?
Although right of repossession of assets recognised there are impediments in implementation
?
Multiplicity of taxes - Sales tax / Service tax / Entry tax on lease transactions
?
Multiple Regulators - Lack of Comprehensive Legislation
Opportunities for the Industry
Huge leasing opportunity
Large Potential
? ?
?
Outstanding lease & hire purchase assets around Rs 20,000 crores Large variety of user segment High growth potential in Vehicle Finance
Commercial Transportation – Govt. support, Diverse products ? Personal Transportation – Wide Variety, Low finance costs, Increasing Propensity for credit purchase, Huge used car finance market ? New Products - Dealer Finance, Working Capital Finance, Personal Loans
?
?
Low lease penetration ratio
? ? ?
Around 1.5% as a % of Gross Domestic Capital Formation Very low in sectors like equipment & infrastructure Substantial upside possible
Expansion Opportunity
Huge infrastructure spending in next 5yrs (apprx Rs 3,60,000 crores) ? Steadily rising disposable income – Generating huge demand for consumer goods
?
With growth ingredients in place
?
Global opportunities – Cross-Border Leases allowed Substantially reduced dependence on public deposits as a source of fund - Out of a total asset base of Rs 40,050 crores, public deposits account for Rs 5,850 crores as against NOF Rs 4,500 crores Comparatively Low Default Rate – Particularly in consumer loans and vehicles financing as compared to many other markets
?
?
Future Strategy
Clear Segmentation and positioning
? ? ?
Identification of focus areas and core strengths Consolidation Customer centric service
Development of focused Business Strategy
? ? ? ?
Improve quality of asset portfolio Implement risk mitigating tools Matching asset-liability tenure Sustainable, varied & innovative resource mobilisation practices
Innovation to address evolving consumer needs
? ? ? ?
Operating Leases Leveraged Leases Residual value products Using Depreciation & Tax Shields for structuring
Shift focus from customer to product / asset
?
Develop strong asset management capabilities including repossession & remarketing Long term mutually beneficial vendor relationships
?
Cross selling
? ?
Distribution of Financial Products Distribution of Insurance Products
Securitisation
?
Strong liability product
SREI Experience
SREI’s introduction
? ?
SREI International Finance Ltd. (SREI) was set up in 1989 Major player in infrastructure project financing – Power, Roads and
Ports
?
Market leader in financing infrastructure construction equipment by way of Lease 32 offices spread across India Total assets under management over US$ 450 million Shareholders’ Funds of about US$ 50 million Disbursement of more than US$ 265 million during last year Credit rating in ‘AA’ category – signifying high credit quality & high investment grade Recipient of prestigious Willis Harman Spirit of Work Award
? ? ? ? ?
?
SREI’s relationships
? ?
IFC Washington, FMO Netherlands and DEG Germany hold 19% equity Host of international banks and institutions have extended lines of credit and mezzanine capital
?
Strong alliances with leading global and local vendors such as Caterpillar, Volvo, Ingersoll Rand, JCB, Metso Minerals, Writgen, Vermeer, Atlas Copco, Ashok Leyland, Telcon, L&T, Tata Motors, etc.
?
Robust customer base including large Indian and multinational corporates
SREI’s success factors
?
Infrastructure focused player with end to end services i.e. advisory,
structuring and lending
?
Offers infrastructure financing across broad spectrum - from small to
big projects with strong appraisal, recovery and redeployment mechanism
?
One of the lowest NPAs (1.01%) in the industry with strong integrated risk management system and project appraisal techniques
?
Innovative solutions to enhance competitiveness – securitisation, cobranding, and setting up of equipment bank
?
Strong customer focus and quick response time enables offering customised products and tailor made solutions
SREI INTERNATIONAL FINANCE LIMITED Vishwakarma 86 C , Topsia Road (S) Kolkata – 700 046 INDIA
Tel : +91 33 2285 6294 Fax : +91 33 2285 7542 Mobile : ( +91) 98300 62954 Email : [email protected] Web Site : www.srei.com
THANK YOU
doc_684737643.ppt
The PPT explains Leasing Industry Status, NBFC, challenges, opportunities, SREI
LEASING IN INDIA
Evolution phases
Pre 1970
1970-1995
1995-2004
- Exit of large no. of companies: * Small & Large * Indian & Foreign - Regulation by RBI
- Only HP companies - Entry into equipment finance through: - Automobile * Leasing financing mainly for commercial vehicles * Hire Purchase - Fixed Deposit: main - Commencement of car finance source of funds
- Few companies - Access to Capital Markets diversified into related financial - Funds from FDs and Banks services
Leasing Industry Status
Present industry order
Only few major players exist
? SREI International Finance ? Sundaram Finance ? Cholamandalam Finance ? Countrywide Finance ? Mahindra & Mahindra ? Citicorp
? Shriram Finance
? Tata Finance
? GE Capital
NBFCs on strong turf
?
NBFCs are today an Integral Part of Indian Financial System showing improving health:
? ? ? ?
Increase in resource profile
Significant decline in NPA Substantial improvement in brand image Improvement in profitability margins
?
Maturing industry in which financially & managerially weak companies already weeded out
?
Surviving companies are large corporates with good brand image
NBFCs on strong turf
?
NBFCs enjoys a Niche position in the financial sector due to:
?
? ? ? ? ?
Better Customer service Innovative & flexible financing options Continuously reducing NPA’s Healthy Capitalisation Innovative resource mobilisation Focused Operation – Products/Customers/Geography
?
Formation of Finance Industry Development Council - a Self Regulatory Organisation for NBFC’s
Challenges before the Industry
Rising competition from banks
? ?
Unequal competition from Banks & MNCs – Cost of Funds No focused / dedicated Recovery Mechanism - Housing Finance Corporations / Banks enjoy special recovery platforms such as DRT’s / Recovery officers / Securitisation Act 2002 TDS on interest payments to NBFCs – Not applicable to banks NBFC Stigma – Credibility issues , Industry brand image Competition for talent - From newer financial services players
? ? ?
Funding and regulatory issues
?
Poor availability of medium and long term funding
?
Although right of repossession of assets recognised there are impediments in implementation
?
Multiplicity of taxes - Sales tax / Service tax / Entry tax on lease transactions
?
Multiple Regulators - Lack of Comprehensive Legislation
Opportunities for the Industry
Huge leasing opportunity
Large Potential
? ?
?
Outstanding lease & hire purchase assets around Rs 20,000 crores Large variety of user segment High growth potential in Vehicle Finance
Commercial Transportation – Govt. support, Diverse products ? Personal Transportation – Wide Variety, Low finance costs, Increasing Propensity for credit purchase, Huge used car finance market ? New Products - Dealer Finance, Working Capital Finance, Personal Loans
?
?
Low lease penetration ratio
? ? ?
Around 1.5% as a % of Gross Domestic Capital Formation Very low in sectors like equipment & infrastructure Substantial upside possible
Expansion Opportunity
Huge infrastructure spending in next 5yrs (apprx Rs 3,60,000 crores) ? Steadily rising disposable income – Generating huge demand for consumer goods
?
With growth ingredients in place
?
Global opportunities – Cross-Border Leases allowed Substantially reduced dependence on public deposits as a source of fund - Out of a total asset base of Rs 40,050 crores, public deposits account for Rs 5,850 crores as against NOF Rs 4,500 crores Comparatively Low Default Rate – Particularly in consumer loans and vehicles financing as compared to many other markets
?
?
Future Strategy
Clear Segmentation and positioning
? ? ?
Identification of focus areas and core strengths Consolidation Customer centric service
Development of focused Business Strategy
? ? ? ?
Improve quality of asset portfolio Implement risk mitigating tools Matching asset-liability tenure Sustainable, varied & innovative resource mobilisation practices
Innovation to address evolving consumer needs
? ? ? ?
Operating Leases Leveraged Leases Residual value products Using Depreciation & Tax Shields for structuring
Shift focus from customer to product / asset
?
Develop strong asset management capabilities including repossession & remarketing Long term mutually beneficial vendor relationships
?
Cross selling
? ?
Distribution of Financial Products Distribution of Insurance Products
Securitisation
?
Strong liability product
SREI Experience
SREI’s introduction
? ?
SREI International Finance Ltd. (SREI) was set up in 1989 Major player in infrastructure project financing – Power, Roads and
Ports
?
Market leader in financing infrastructure construction equipment by way of Lease 32 offices spread across India Total assets under management over US$ 450 million Shareholders’ Funds of about US$ 50 million Disbursement of more than US$ 265 million during last year Credit rating in ‘AA’ category – signifying high credit quality & high investment grade Recipient of prestigious Willis Harman Spirit of Work Award
? ? ? ? ?
?
SREI’s relationships
? ?
IFC Washington, FMO Netherlands and DEG Germany hold 19% equity Host of international banks and institutions have extended lines of credit and mezzanine capital
?
Strong alliances with leading global and local vendors such as Caterpillar, Volvo, Ingersoll Rand, JCB, Metso Minerals, Writgen, Vermeer, Atlas Copco, Ashok Leyland, Telcon, L&T, Tata Motors, etc.
?
Robust customer base including large Indian and multinational corporates
SREI’s success factors
?
Infrastructure focused player with end to end services i.e. advisory,
structuring and lending
?
Offers infrastructure financing across broad spectrum - from small to
big projects with strong appraisal, recovery and redeployment mechanism
?
One of the lowest NPAs (1.01%) in the industry with strong integrated risk management system and project appraisal techniques
?
Innovative solutions to enhance competitiveness – securitisation, cobranding, and setting up of equipment bank
?
Strong customer focus and quick response time enables offering customised products and tailor made solutions
SREI INTERNATIONAL FINANCE LIMITED Vishwakarma 86 C , Topsia Road (S) Kolkata – 700 046 INDIA
Tel : +91 33 2285 6294 Fax : +91 33 2285 7542 Mobile : ( +91) 98300 62954 Email : [email protected] Web Site : www.srei.com
THANK YOU
doc_684737643.ppt