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Spandana Sphoorty Financial Ltd.

BSE: 542759 Sector: Financials
NSE: SPANDANA ISIN Code: INE572J01011
BSE 00:00 | 24 Sep 585.15 -6.60
(-1.12%)
OPEN

603.60

HIGH

603.60

LOW

582.05

NSE 00:00 | 24 Sep 587.40 -4.65
(-0.79%)
OPEN

592.45

HIGH

595.95

LOW

582.35

OPEN 603.60
PREVIOUS CLOSE 591.75
VOLUME 1221
52-Week high 830.00
52-Week low 505.00
P/E 30.96
Mkt Cap.(Rs cr) 3,769
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 603.60
CLOSE 591.75
VOLUME 1221
52-Week high 830.00
52-Week low 505.00
P/E 30.96
Mkt Cap.(Rs cr) 3,769
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Spandana Sphoorty Financial Ltd. (SPANDANA) - Chairman Speech

Company chairman speech

4 Even while sailing through these tough times our strong resolutehelped us deliver value for all our stakeholders.

This approach backed by our undeterred grit and spirit to bounce backpushed us to propel onto a steady growth orbit.

With our firmly rooted values and belief in our mission of serving low-income households and individuals we steadfastly kept growing to improve the quality oflife for our customers.

Dear Members

With immense pleasure I present to you the first annual report ofSpandana Sphoorty Financial Limited post our listing on the Indian stock exchanges onAugust 19 2019. I am glad to share that our Company extended its growth trajectory toreach a Consolidated AUM of f 68291 Mn as on March 2020 (year-on-year growth of 56%).With this we clocked the highest AUM in our history. The year witnessed multiple externalevents which impacted the NBFC industry in general and MFIs in specific cases. Whilethese exogenous events have created certain hurdles for the NBFC industry Spandana hasdisplayed a proven track record of emerging stronger and as a result more resilient timeand again.

Reaching new summits

We expanded our operations to Haryana in FY 2019-20 in addition to theexisting presence in 16 states and 1 union territory. The branch network grew by 85taking the total from 925 branches at the end of FY 2018-19 to 1010 at the end of FY2019-20. More importantly Spandana entered 16 new districts taking our total districtcount to 280 as on March 31 2020. This was in line with our philosophy of penetratingdeeper in our operating areas and serving most of the potential borrowers. The branchexpansion was supported by the addition of 1430 Loan Officers taking their total countto 6103 as on March 31 2020.

On August 19 2019 Spandana successfully completed its public listingon the Indian stock exchanges via an Initial Public Offering (IPO). Due to events such asthe abrogation of Article 370 and 35A the stock market indices were turbulent and sharplyfell by 38% on an annualized basis

a month prior to our listing date. Despite such challenging marketconditions the IPO was subscribed 1.05 times. The ~f1200-Cr issue received bids for10327585 shares against 9822367 units on offer.

We endeavour to become a one-stop-shop for our borrowers'financial requirements. This led us to launching and expanding a new product known as BlueLemon a consumer goods financing product. Besides we have always put a special emphasison technology integration to make our systems and processes more efficient and convenientto eventually make our systems and processes leaner.

Another focus area for our Company was to improve efficiency at thefield level considering a significant expansion of the branch network. Often expansionand efficiency are not spoken about in the same breath however we managed to tick allthe boxes on both the counts. Operational improvements resulted in beating our own recordfor the lowest Opex ratio (operating expense to average AUM) in the industry at 3.9% as onMarch 31 2020. Nevertheless I strongly believe there is immense scope to further improvethis ratio as the productivity of lower AUM per branch and AUM per borrower improves ascompared to the industry.

To our credit we recorded our highest-ever total revenue and profitsbefore tax during FY 2019-20 of f 14695.1 Mn and f 6184.5 Mn respectively. Continuousfocus on bringing down the borrowing costs also contributed to this performance. Today wehave 32 lender partners as compared to 3 partners around three years ago. Their incrediblesupport has exceeded our expectations.

In our experience elections have a very limited impact on microfinanceoperations in general. Every single year there

are elections at multiple levels of governance - Panchayat MandalMunicipality State and Central among others. However there has been negligible tomarginal impact on the industry across the 20+ years of microfinance operations in India.As a result of a consistent focus on operations and various system-based controls ourasset quality continues to be an industry-defining one. The GNPA and NNPA as on March 312020 was 0.36% and 0.07% respectively.

Braving the rough seas

Following the Central Government's announcement of a completelockdown from March 24 2020 we closed down all our branch and head office operations. Wesuspended collections and other operations not only for compliance with the order but alsoto ensure the health and safety of our employees. Guided by the Covid-19 RegulatoryPackage announced by the Reserve Bank of India we extended the moratorium to ourborrowers. 95% of our borrowers are situated in the rural areas (which fortunately hadrelatively lesser Covid-19 impact) and 57% engage in ‘essential services' likedairy or agricultural activities. Hence their cashflows and repayment capabilitiesremained largely intact. The average loan outstanding per borrower for us is f 26610 v/sf 37465 for the industry - a clear indication of our borrowers' better position interms of repayment. Later according to the order issued by the Ministry of Home Affairson April 15 2020 79% of our branches became operational by April-end in compliance withthe regulatory guidelines on businesses and social distancing among others. We were thefirst in the industry to recommence operations on April 20 2020.We started withapproximately 30% field staff gradually increased it to approximately 50% by Apri end and92% by the third week of May 2020. The field staff educated the borrowers on the impact ofthe moratorium and started collecting from those unwilling to avail it. By May-end allour branches became fully operational.

Even while sailing through these tough times our strong resolutehelped us deliver value for all our stakeholders. This approach backed by our undeterredgrit and spirit to bounce back pushed us to propel onto a steady growth orbit. With ourfirmly rooted values and belief in our mission of serving low-income households andindividuals we steadfastly kept growing to improve the quality of life for our customers.

Our lenders have shown unceasing faith in us even amidst suchchallenging times. They continued lending to us through various modes including directassignments even during the lockdown. Based on our healthy financial condition a ratingagency has upheld our rating with a stable outlook.

A note of gratitude

We thank our borrowers for continuously preferring us for theirfinancial requirements. We are glad to be able to positively impact the lives of more than2.5 Mn households. This motivates us to further reach out to more people. We can'tthank our employees enough for all the hard work and dedication they show in the fieldwhile being the face of

Spandana. We are also thankful to our lenders and investors whocontinuously support us in furthering our financial inclusion goal.

Fostering a spirit of entrepreneurship and helping the overall valuecreation process we endeavour to continue serving women to help them realize theirdreams. This goes a long way in participating in nation-building while supporting our goalof uplifting the quality of our borrowers' lives. Because when women prosper thesociety prospers and the overall welfare of the state happens.

With my best wishes and my prayers that you and your family stay safe.

Padmaja Reddy

Founder & Managing Director

.