ENTREPRENEURSHIP PROJECT

SARTHAK MALHOTRA – 4850

AMIT SINGH – 4853
DIVAM ANAND – 4859
 INTRODUCTION
 India’s largest and World’s fastest growing microfinance institution

 Started as a NGO in 1998 and turned into an NBFC in 2005

 Disbursed loans worth Rs. 7618 crores till end of FY 09

 VC funding from leading firms like Sequoia Capital & Silicon Valley Bank

 Investors include NR Narayan Murthy, Vinod Khosla & George Soros

 Listed among World's most influential companies by Business Week

 Raised $358 million recently through an Initial Public Offer

 ENTREPRENEUR - GROWING UP
 Dr. Vikram Akula, born in Hyderabad, Andhra Pradesh in 1969.

 Emigrated to United States at the age of three and grew up in New York

 Encountered poverty while visiting relatives in Medhak, Andhra Pradesh

 Promised himself to do something about poverty

 EDUCATION
 Dropped out of Harvard Divinity School to join Tufts University

 Completed his masters in rural & agrarian development from Yale and
doctorate in microfinance from University of Chicago .

 Came to India as Fulbright Scholar and worked as coordinator for Jawahar

Rozgar Yojana

 Worked as a researcher for World Watch Institute and as program coordinator

for Deccan Development Society

 Also worked as management consultant with McKinsey & Co.

 RECOGNIZING OPPORTUNITIES
 Commercial Banking sector avoids lending to the poor

 Considered risky due to lack of collateral and high transaction costs

 Moneylenders were charging an interest rate in excess of 72%

 Grameen Bank model could solve the risk problem but high transaction costs
still remained

 Also, none of the Indian microfinance institutions could scale up their

operations to reach the vast poor population
PROBLEMS WITH COMMERCIAL LENDING
 Ineffective Branch Network

 Ignored Segments in Priority Sector

 Interest Rate Ceilings

 Collateral Requirements.

 Bureaucratic Procedures & Bribes

 Lack of Credit Information

 SELF HELP GROUP MODEL
 10-20 women come together and form a common fund which serves collateral

 The group then obtains loans from partner banks & other sources

 The SHG then lends to its members on terms decided by the group

 RRBs provide funding support to SHGs, subsidized by Government.

However, it suffers from the following anomalies:

 Weak Social Structure  Inadequate management skills

 Unequal participation/influence  Inconsistent Standards.

 SWAYAM KRISHI SANGAM
 Overwhelmed by the poverty in rural India

 Looked for ways to catalyze rapid economic development for the poor

 Considers Mohammad Yunus as his role-model.

 Raised $52000 from 357 people, mostly friends and family

 Forms SKS as an NGO in December 1997 and begins operations next year

 Till 4 years after its formation, it functioned only in Andhra Pradesh

 Realized not-for-profit model was hindering its growth.

 Decide to transfer all its business & operations to a Pvt. Ltd. Company in 2003
 BUSINESS MODEL
 Lending business based on the group lending model.

 Poor has skills that are underutilized due to lack of resources

 If given opportunities, poor will identify new and better self-employment avenues
 INNOVATION
 Launched to address the fundamental flaw in microfinance institutions.

 This was addressed through the following:

 Using for-profit model to address capital constrains
 Leveraging best practices for scaling to overcome capacity constraint
 Using technology to automate processes and lower costs

 Electronic Delivery Channels and Branch Infrastructure

 Networking & Information management

 ERP and human resource processes in place with third party data centers for
continuous information exchange
 FUNDING
 Launched with an initial capital of $52000 raised from friends and family

 Pioneers SmartCard Pilot Project. CGAP pro-poor award of $50000 in 2000

 Digital SEL Award and Grameen Foundation Awards of $25000 each in 2001

 Rs 20 Crores partnership loan from ICICI Bank in 2005

 Venture capital funding from Vinod Khosla and Ravi & Pratibha Reddy
Foundation in 2006

 In 2007, receives Venture capital funding from more than 20 companies

including Sequoia Capital and Silicon Valley Bank

 Commercial Papers by major banks and NBFCs

 Raised $358 million through an IPO in August 2010

 THE TEAM
 Managed by Vikram Akula as an NGO till 2004. He remained CEO till 2007

 Sitaram Rao appointed as CEO under whose leadership SKS expanded from
Andhra Pradesh to Karnataka, Maharashtra, Orissa and Madhya Pradesh.

 In 2007, Barclays India chief, Suresh Gurumani, who had extensive

experience in banking and consumer finance was brought in as CEO.

 In 2008, Dilli Raj, who had 17 years of experience in treasury and fund raising
was appointed as CFO

 He helped the company to raise much needed capital from various sources
when the company was expanding rapidly.
 SALES & MARKETING
 Sales personnel consist of Branch & Asst. managers and Sangam managers.

 Hired and trained locally to have string understanding of areas they work in

 Average Sangam manager manages approx 547 members.

 Also operates as a distributor of life insurance products. It has partnered with

Bajaj Allianz to offer life insurance policies

 Strategic business alliance with Nokia and Airtel to provide loans for Nokia
phones with Airtel Connections.

 Strategic business alliance with Metro Cash-n-Carry to provide loans to kirana

shops buying supplies from Metro
 THE COMPANY - TODAY
Since microfinance is not suitable for the destitute in society who need not just access to finance but
livelihood training, social and health inputs, SKS has a unique Ultra Poor programme for this section of
society. Under the programme, the beneficiaries receive training to run an income-generating enterprise,
financial education and an asset. Over an 18-month period these beneficiaries are trained to become
self-sufficient and graduate into regular microfinance. The first phase of the Ultra Poor programme was
conducted in medak district of Andhra Pradesh where nearly 500 women were covered. In all, 426
women have successfully graduated from this programme. In the next phase, the Ultra Poor Programme
is being planned in some of the poorest districts of Odisha and Jharkhand .

So far, SKS Microfinance has provided over USD 1.1 billion in

loan, maintaining a loan outstanding of USD 425 million and has
disbursed loans to a total of 3,429,252 women members in poor
regions of India. Borrowers take loans for a range of income-
generating activities, including livestock, agriculture, trade (such
as vegetable vending), production (such as basket weaving,
pottery) and other businesses (photography, etc). SKS also
offers interest-free loans for emergencies as well as life
insurance to its members. SKS charges interest rates in the
range of 21 to 28 percent
 THE ENTREPRENEUR - TODAY
In 2006, Vikram was named by TIME Magazine as one of the world’s
100 most influential people.

Not involved in day to day  working of co. Only promoter and BoD

Dr. Akula is also the founder of the SKS Foundation which is a US based

non profit organization that supports the Ultra Poor Program, a program that
attacks the challenge of extreme poverty on three levels: economic, social
and health, and aims to graduate clients into being able to run a sustainable
income-generating enterprise. Dr. Akula has been recognized globally for his
achievements. He was recognized by the TIME Magazine as one of the 100
most influential people for the year 2006. He also won the Schwab Social
Entrepreneur of the Year (India) Award in 2006, the Ernst & Young Start Up
Entrepreneur of the Year Award (India) and the 2008 Karmaveer Puraskar
instituted by iCONGO, the confederation of  NGOs in India. For his work
towards community improvement and economic development, he was also
awarded theEchoingGreen fellowship in 1998.
Dr. Akula, who served as the CEO of SKS
for 10 years, stepped down from the role in
December 2008 to transition to the role of a
full-time Director on the SKS Board and to
focus on new strategic initiatives for SKS
including microinsurance and investment.