MFI Grading Report

Ujjivan Financial Services Private Limited

May 2009
 MFI Grading: Ujjivan Financial Services Private Limited

Ujjivan Financial Services Private Limited

Year of Incorporation: December 2004 Mr. Samit Ghosh
Legal Status: Private Limited Company registered Managing Director
as Non Banking Financial Companies (without Ujjivan Financial Services Private Limited
accepting public deposits) 93, Jakkasandra Extension
Type of Institution: MFI Sarajapur Main Cross Road,
Lending Model: Grameen Model (5 member JLGs) First Block, Koramangala
and Individual loans Bangalore 560 034
Statutory Auditors: Deloitte Haskins & Sells, Tele: +91-80-40712121
Bangalore Fax: 91-80-4146 8700
Email: ujjivan.blr@ujjivan.com

MFI Grading CRISIL’s microfinance institution (MFI) grading is a current opinion on the ability of an MFI to

mfR1 conduct its operations in a scalable and sustainable manner. The grading is assigned on an
mfR2 eight-point scale, with ‘mfR1’ being the highest, and ‘mfR8’ the lowest. The MFI grading is a
mfR3
measure of the overall performance of an MFI on a broad range of parameters under CRISIL’s
mfR4
mfR5 MICROS framework. It includes a traditional creditworthiness analysis using the CRAMEL
mfR6 approach, modified to be applicable to the microfinance sector. The acronym MICROS stands
mfR7
for Management, Institutional arrangement, Capital adequacy and asset quality, Resources and
mfR8
mfR1:highest asset-liability management, Operational effectiveness, and Scalability and sustainability.

mfR8: lowest

Disclaimer
This assignment is a one-time assessment based on the information provided by UFSPL to CRISIL; the operations of UFSPL
would not be monitored by CRISIL. CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is
not responsible for any errors or omissions for the results / opinions obtained from the use of such information. CRISIL
especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report.

CRISIL's MFI grading reflects CRISIL’s current opinion on the ability of an MFI to conduct its operations in a scalable and
sustainable manner. The MFI grading does not constitute an audit of the graded MFI by CRISIL. In the case of NGO-MFIs,
CRISIL’s MFI grading applies only to their microfinance programmes. CRISIL MFI grading are based on information provided by
the graded MFI, or obtained by CRISIL from sources it considers reliable. This grading does not opine on the MFI’s ability for
timely payment of interest and principal. Nor is it a recommendation to purchase, sell, or hold any financial instrument issued by
the graded MFI, or to make loans / donations/ grants to the graded MFI. The MFI grading assigned by CRISIL cannot be used by
the MFI/NGO-MFI in any form for mobilizing deposits/savings/thrift from its members or general public.

© 2009- CRISIL-All rights reserved

May 2009 2
MFI Grading: Ujjivan Financial Services Private Limited

1 Rationale
CRISIL has assigned its microfinance institution (MFI) grading of mfR3 to Ujjivan Financial
Services Pvt Ltd (UFSPL)

The grading reflects UFSPL’s following strengths:

™ Strong governing board

™ Adequate capitalisation
™ Well-qualified and experienced management
™ Good loan appraisal and loan monitoring systems
™ Adequately diversified funding profile

The grading strengths are partially offset by UFSPL’s following weaknesses:

™ Operations self-sufficiency (OSS) is yet to be achieved for period ended March 31, 2009
™ High operating expense ratio

Profile

UFSPL was incorporated in December 2004. It got its certification of registration from the
Reserve Bank of India (RBI) in October 2005 to start its urban microfinance programme. UFSPL
started a pilot scheme of on-lending activities on a small scale from November 2005 in Bangalore
with the capital base of Rs.28.01 million resourced from various individual and social investors.
The MFI received its first external funding for microfinance operations in September 2006 from
Grameen Bank (Bangladesh) and HDFC Bank Ltd. As on March 31, 2009, UFSPL had loans
outstanding of Rs.1690.11 million catering to 295,903 borrowers with 127 branches spread across
44 districts in 11 states in India.

UFSPL follows both the Grameen Bank and individual lending models. Under group methodology,
it offers three 12-months tenor loans - family, business, and combo and housing loans are for loan
tenors of one to three years. The quantum of loans range from Rs.6,000 to Rs.25,000, with interest
rates from 24 to 26.9 per cent on a reducing balance basis. The MFI also provides top-up loans to its
existing borrowers to meet their consumption and emergency credit requirements on every six
months of credit cycle of the existing loans. In case of individual loans (upto Rs.25,000), which are
targeted at business entrepreneurs, the interest rate ranges between 26 to 28 per cent per annum on

May 2009 3
MFI Grading: Ujjivan Financial Services Private Limited

a reducing balance basis. MFI has also tied up with ICICI Prudential Life Insurance Company for
offering insurance covers to all its borrowers

The MFI collects 10 per cent compulsory security deposit from its borrowers at the time of loan
disbursement. It charges Rs.200 as loan processing fee for all new and repeat loans, and Rs.75 for
top-up loans. The MFI used to collect additional deposits based on the ability of the member to
save; it has discontinued this scheme since February 2009..

Management

Since its inception, UFSPL has been continuously developing its field-level systems and procedures
to bring in more standardisation in its microfinance operations. It has adopted centralised loan
processing system, with four regional centers conducting all the credit approvals, loan processing
and documentation related back-office operations. The branches typically act as point of credit
delivery and get involved in member acquisition, initial due diligence, appraisal of borrowers and
loan monitoring through the customer relationship officers. So far, this operational structure has
helped UFSPL to grow its asset size within a short span of time. The field-level staff is mostly used
for borrower acquisition; a centrally dedicated team undertakes all the back-office processing
activities which enhance quality control and standardisation in the entire process. The MFI has also
outsourced some routine operational processes such as creation of customer profile, preparation of
identity cards for the members, and filing of insurance details to external agencies. CRISIL believes
that UFSPL’s present centralised system could be further enhanced, especially in terms of
improving processing-time of loans, cash management and reconciliation, and reducing branches’
dependence on central system for routine activities such as getting demand and collection sheets.

At present, UFSPL’s branches are not authorised to make transaction entries in the system; the
branches maintain limited record of borrowers. However, the branches report their cash balances
daily and send the overdue reports to the regional office monthly. The branch manager also
reviews the performance of its field-level staff weekly.

Considering the logistical problems faced while centrally handling the growing borrower size,
UFSPL is now planning to shift to a different online MIS system. This will allow branches to do
some transaction entries which could be updated on the central server on near real-time basis. As
this system stabilises, the entire customer profiling and loan processing would also be gradually

May 2009 4
MFI Grading: Ujjivan Financial Services Private Limited

decentralised at the branch level. CRISIL believes that the regional centre-level loan processing
model that UFSPL presently uses may be inadequate for the MFI’s growing business; a timely
transition to a more robust, decentralised and online MIS system will be the key driver of UFSPL’s
growth.

UFSPL’s internal audit system is adequate for its growing asset size. The MFI has instituted a 19-
member internal audit team, which does yearly and bimonthly audit of each of its branches.
Internal audit primarily focus on system compliance and portfolio audit of the branches. CRISIL
believes that UFSPL needs to strengthen its audit team and also incorporate audit of book keeping
and loan documentation. The MFI has introduced a risk scoring model for its branches based on
their performance, which CRISIL believes, must enable UFSPL’s senior management to better
ascertain the overall risk profile of its branches.

The MFI has put in place adequate human resource (HR) related practises. The recruitment process
for field level staff is rigorous as the selection is based on written test and interviews at two levels.
The employees are promoted based on performance, which is evaluated by the HR committee. It
conducts half-yearly appraisal and training sessions. It has started an online HR help desk for its
staff and compensation-related issues. Despite this, employee turnover is high at 17.30 per cent in
2008-09 (refers to financial year, April 1 to March 31), which is an area of concern for the MFI.

Institutional Arrangement

UFSPL has one of the strongest governance boards in the MFI space. It has experienced
professionals from banking, finance, and venture capital companies. UFSPL’s international
shareholders have placed their senior executives on the MFI’s board; they are involved in the
company’s business planning and regular performance reviews. The governing board has been
strengthened by the induction of Mr. A. Vikraman, who has extensive experience in banking and
has served as Chief General Manager at Small Industries Development Bank of India (SIDBI).
UFSPL has separate committees on audit and technology, and HR and compensation. The board
meets every quarter to discuss and review the implementation and progress of the microfinance
and developmental programmes.

UFSPL’s present governing board has guided the MFI through its start-up stage and contributed
adequately towards regular capital infusion, resource mobilisation and improvement of systems

May 2009 5
MFI Grading: Ujjivan Financial Services Private Limited

and processes. CRISIL believes that sustained participation and continued guidance by UFSPL’s
present board will be instrumental in keeping the MFI as one of India’s leading players in the
microfinance space.

UFSPL’s senior management is independent of the board and comprises professionals having good
experience in banking, finance, operations, and credit and risk management; each of the four
regions are headed by the four operational heads. All the major departments of the MFI are headed
by professionals having strong domain experience.

Capital Adequacy and Asset Quality

Capital Adequacy: UFSPL is one of the strongest capitalised non-banking financial company
(NBFC)-MFIs in India in comparison to its asset size. As on March 31 2009, UFSPL’s net worth was
Rs.1003.66 million, which was a significant improvement from a net worth of Rs.94.87 million as on
March 31, 2008. Since its inception, UFSPL has been able to mobilise capital from various social
investors and venture capital funds on regular intervals. The MFI has registered a deficit of Rs.9.48
million in 2008-09. However, regular equity infusion by investors helped the MFI to maintain
comfortable gearing of 0.88 times as on March 31, 2009. CRISIL believes that regular capital infusion
will enable UFSPL to maintain capitalisation as required by systemically important non-deposit
taking NBFCs (NBFCs ND-SI). CRISIL believes that UFSPL’s present capitalisation will help the
MFI to mobilise resources over the medium term.

Asset Quality: UFSPL’s asset quality is healthy with 99.28 per cent of its total loan portfolio being
current (collection on time) as on March 31, 2009 (Refer Table 1). However, the MFI has witnessed
decline in the absolute amount of portfolio being at risk during 2008-09 as PAR more than 30 days
has increased to Rs.3.73 million as on March 31, 2009, from Rs.1.03 million as on March 31, 2008.
The number of loans disbursed during the year 2008-09 increased to 339,687 from 73,922 loans
during the previous year. Therefore, the majority of the portfolio is yet to season as more than 90
per cent of borrowers are yet to complete their first loan cycle. 83 per cent of its outstanding
borrowers as on March 31, 2009, however, have taken loans for income-generating activities.
CRISIIL believes that UFSPL may witness some impact on its asset quality over the medium term
because of the MFI’s significant exposure towards urban microfinance, which has shown more
deterioration vis-à-vis rural portfolio. The MFI needs to improve its credit appraisal process before

May 2009 6
 MFI Grading: Ujjivan Financial Services Private Limited

increasing exposure towards larger ticket loans such as housing loans and individual business
loans.

UFSPL has lowered its loan loss provision to 0.18 per cent of its average loan outstanding as on
March 31, 2009, from 0.47 per cent of its average loan outstanding as on March 31, 2008.

Rs.million
Table 1: Asset Quality
Mar-09 Mar-08 Mar-07
Total outstanding balance % % %
associated with loans that are PAR of PAR PAR of PAR PAR of PAR
Portfolio being current 1677.93 99.28 359.93 98.42 83.26 98.77
Late (at least one payment) 0.00
1-30 days 8.45 0.50 4.76 1.30 0.20 0.23
31-60 days 2.24 0.13 0.28 0.08 0.23 0.28
61-90 days 0.70 0.04 0.25 0.07 0.18 0.22
91-180 days 0.66 0.04 0.41 0.11 0.43 0.51
181-360 days 0.13 0.01 0.09 0.02 0.00 0.00
Total portfolio 1690.11 100 365.73 100 84.30 100
Portfolio at risk (> 30 days
delinquent) 0.22 0.28 1.00
Portfolio at risk (> 90 days
delinquent) 0.05 0.14 0.51

Resources and Asset-Liability Management

UFSPL has a diversified funding profile. As on March 31, 2009, it borrowed Rs.721.74 million from
12 lenders. The borrowing profile is fairly diversified with the highest borrowing from a single
lender being around 25 per cent of the total borrowings. Private and foreign banks accounted for 60
per cent of the MFI’s total borrowings; the balance comes from apex MFIs and public sector banks.
The average cost of borrowing during 2008-09 has declined to 11.11 per cent from 6.77 per cent
during the previous year. UFSPL has access to low-cost funds as security deposits from borrowers
accounted for more than 20 per cent of its total borrowings. The weighted average cost of fresh
borrowings sanctioned from its lenders is 12.92 per cent. However, the MFI’s policy of collecting
zero cost security deposit from its borrowers helps it to arrest any rise in its cost of funds.

UFSPL has planned to borrow around Rs.2,860 million from various lenders during 2009-10. It has
already finalised funding arrangements with its lenders for the next two quarters of 2009-10.
CRISIL believes that UFSPL will successfully mobilise funds on time for its projected growth plans.

May 2009 7
MFI Grading: Ujjivan Financial Services Private Limited

The asset liability maturity profile is comfortable as all loans to borrowers are for 6-12 months while
most of its institutional borrowings are for a tenor of 18 months and more.

Operational Effectiveness

UFSPL’s microfinance operations have grown significantly during 2008-09. The MFI has opened up
90 branches, which has helped the MFI increase its disbursements to Rs.2493 million during 2008-09
from Rs.515 million during 2007-08. Similarly, loan portfolio grew to Rs.1690.11 million from 365.73
million during the same period. For 2009-10, the MFI has plans to open up new branches in coastal
Karnataka and adjoining districts of Tamil Nadu. However, 80 per cent of its total disbursements
during 2008-09 has come from Karnataka and West Bengal because majority of its mature branches
operate in those states. CRISIL believes that the growth in UFSPL’s loan portfolio will be driven by
Karnataka and West Bengal in the medium term.

UFSPL is yet to sustain its operations as its operational self-sufficiency (OSS) ratio was 97.35 per
cent for year ended March 31, 2009, (which, nevertheless, was a marked improvement from 64.78
per cent for year ended March 31, 2008). The MFI’s earnings improved in 2008-09 because of growth
in asset size coupled with increase in interest rate on loans to 25 per cent in August 2008 from 24
per cent (on reducing balance). In addition, the MFI’s practice of providing top-up loans to its
existing members not only helps it benefit from economies of scale, but also from leveraging its
resources more efficiently. This is reflected in the improvement in the fund-based yield to 20.83 per
cent for year ended March 31, 2009, from 17.51 per cent for year ended March 31, 2008. UFSPL has
also achieved monthly break-even since January 2009.

UFSPL’s operating expense ratio of 19.23 per cent for year ended March 31, 2009, remains high,
despite decreasing from 25.09 per cent for year ended March 31, 2008. The operating expenses are
high mainly due to the personnel cost and branch cost, which the MFI has incurred for setting up
new branches during 2008-09. CRISIL believes that UFSPL will be able to stabilise operations in
2009-10 on the back of increased asset size and improved efficiency in its newly-opened branches.
However, UFSPL’s gross interest margin will come under pressure because of increase in cost of
borrowings. UFSPL’s earnings will be moderate over the medium term because of high operating
expense ratio and cost of borrowings.

May 2009 8
MFI Grading: Ujjivan Financial Services Private Limited

Table 2: Outreach Summary

Unit Mar-09 Mar-08 Mar-07
Groups No. 59,181 13,222 4,114
Members No. 295,903 58,646 18,561
Loans disbursed during the year No. 339,687 73,922 19,981
Borrowers No. 261,671 58,646 18,561
Active loans No. 280,013 63,366 19,474
Branches No. 127 38 13
Districts covered No. 44 6 1
Women borrowers % 100 100 100
Disbursements Rs. million 2,493.00 515.00 118.30
Loan outstanding Rs. million 1,690.11 365.73 84.30

Scalability and Sustainability

UFSPL is planning to upgrade to more decentralised information technology (IT)-based loan

processing/management information system during 2009-10. The timely implementation of this
new system would help the MFI to bring more effectiveness at the branches to monitor the loans
and increase the business volumes.

However, with increasing asset size, UFSPL needs to strengthen its internal audit system, by
increasing the team strength and implementing risk-profiling of its branches through internal
audits across all regions. UFSPL has projected profit of Rs. 94 million in microfinance operations
during 2009-10, and that it will be able to achieve sustainability of operations. CRISIL believes that
UFSPL will be able to achieve sustainability during 2009-10 by further market penetration and
diversifying its presence across regions. The MFI may face intense market competition and risks
relating to multiple borrowing as it focuses on urban microfinance. UFSPL needs to be cautious
about increasing its exposure to larger ticket loans, such as housing and individual business loans,
to minimise any loan loss prevalent in this category of loans.

CRISIL also believes that the members of UFSPL’s governing board will play a major role in
mobilising resources from the lending institutions. However, the MFI needs to demonstrate its
ability to mobilise other avenues of resources, such as securitisation, portfolio sale or issues of
bonds, which will help it to diversify its funding profile further.

May 2009 9
MFI Grading: Ujjivan Financial Services Private Limited

2 Annexures
2.1 Board of Directors (As on March 31, 2009) ................................................................................. 11
2.2 Top Management (As on March 31, 2009) .................................................................................. 12
2.3 Financial Statements ...................................................................................................................... 13
2.3.1 INCOME AND EXPENDITURE STATEMENTS ....................................................................13
2.3.2 BALANCE SHEET .............................................................................................................14
2.3.3 KEY FINANCIAL RATIOS .................................................................................................15
2.4 Projected Financial Statements as provided by UFSPL........................................................... 16
2.4.1 INCOME AND EXPENDITURE STATEMENT .....................................................................16
2.4.2 BALANCE SHEET .............................................................................................................17
2.4.3 PROJECTED KEY FINANCIAL RATIOS ..............................................................................18

May 2009 10
 MFI Grading: Ujjivan Financial Services Private Limited
2.1 Board of Directors (As on March 31, 2009)
Name
Mr. K.R. Ramamoorthy
Mr. Ravindra Bahl
Mr. S. Vishwanatha Prasad
Mr. Vishnu Rampratap Dusad Director
Mr. Raghvendra Singh
Mr. Sandeep Farias
Mr. Sunil Patel
Mr. Samit Ghosh
Mr. A.Vikraman
Mr. Mohit Bhatnagar
Mr. Venky Natarajan
May 2009
Designation Profile
Chairperson Ex-Chairman and Managing Director of Corporation
Bank and Vysya Bank. Through his consultancy firm
BankConsult, he has been offering consulting services to
World Bank, IMF, IFC and other commercial banks in
India and to other developing countries. He is also on the
board of ING Vysya Bank, Fidelity Trustee Co., Clearing
Corp of India and several other corporates
Director Managing Director of ChrysCapital, a venture capital
firm. He is an ex-Citibanker with experience in consumer
banking and post graduate from IIM, Kolkata
Director Ex-Chief Executive Officer of Bhartiya Samruddhi
Finance Limited, a leading NBFC-MFI in the country.
Currently he is the fund manager of Bellwether
Microfinance Fund, based in Hyderabad
Founder and Managing Director of Nucleus Software
Exports Limited
Director Post graduate from London School of Economics and has
12 years experience in retail banking with HSBC Bank.
Currently, associated with Global Microfinance Initiative
of Michael and Susan Dell Foundation
Director He is Chief Innovation Officer and India Country
Director of Mauritius Unitus Corporation. He is law
graduate from National Law School of India, Bangalore
Director Former Director of A.F.Ferguson & Co and graduate
from Wharton Business School.
Managing Ex-Citibanker. He was instrumental in launching retail
Director banking for Standard Chartered Bank and HDFC Bank
Limited. More than three decades of banking experience.
Before starting UFSPL he was Chief Executive Officer of
Bank Muscat.
Director He has a long experience of banking in India and retired
as Chief General Manager of SIDBI
Director Operating partner with Sequoia Capital. Had earlier
stints with Bharti Cellular Ltd. And Ericsson
Director MBA from Cornell University and has experience in
strategic investment with Intel. Currently associated with
Lok Capital
11
 MFI Grading: Ujjivan Financial Services Private Limited

2.2 Top Management (As on March 31, 2009)

Name Designation Profile

Mr. Samit Ghosh Chief Executive Officer & Ex-Citibanker. He was instrumental in
Managing Director launching retail banking for Standard
Chartered Bank and HDFC Bank Limited.
More than three decades of banking
experience. Before starting UFSPL he was
Chief Executive Officer of Bank Muscat.
Ms. Carol Furtado Chief Operating Officer (South) 10 years banking experience in ANZ
Grindlays Bank and Bank of Muscat.
Mr. Manoj Dwivedi Chief Operating Officer (North ) MBA from VAMNICOM, Pune and has 5
years experience with BASIX
Mr. Santhosh Kumar Chief Operating Officer (East) Has 20 years experience with Grameen Bank
Roy
Mr. Jolly Zacharaiah Chief Operating Officer (West) 20 years experience with Citi corp/Citi Bank
and managed consumer banking and credit
card business in India, Middle East and US
Ms. Sudha Suresh Chief Financial Officer Charted accountant having experience in
fiscal management, fund raising and
budgetary controls and compliances.
Mr. Brian Frazier Head-Operations MBA from University of Houston
Col. Murthy Rajan Head-HR 30 years experience with armed forces and
has also worked with Akshara Foundation
as Chief operating officer
Mr. Deepak Ayare Chief Technology Officer 18 years experience in information
technology domain and has experience in
ERP implementation
Mr. Prem Kumar Head –Administration 10 years experience in administration with
various companies
Mrs. Lalita Rao Head-Audit 20 years experience with IDBI and SIDBI.
She is also certified portfolio auditor ,
Microsave
Mr. Gautam Gan Head-IBL Having long experience in banking while
working with different banks like Grindlays
Bank, Standard Charted Bank, HDFC Bank,
IDBI Bank and DCB Bank

May 2009 12
MFI Grading: Ujjivan Financial Services Private Limited

2.3 Financial Statements

2.3.1 Income and Expenditure statements

Rs. million
For the year ended Mar-09 Mar-08 Mar-2007
Provisional Audited Audited
Fund based income
Interest income from loans 227.56 42.57 8.61
Income from bank deposits 4.23 1.01 0.67
Other income 4.42 0.14 0.02
Total fund based income 236.22 43.71 9.31
Interest and finance charges
On borrowings 60.52 11.54 1.47
On security/saving deposits - 0.22 0.19
Finance charges 5.31 1.28 0.32
Total interest and finance charges paid 65.83 13.04 1.98
Gross spread 170.38 30.67 7.33
Fee based income
Total fee based income 47.41 9.62 2.91
Total income 283.62 53.33 12.22
Gross profit 217.79 40.29 10.24
Expenses
Personnel expenses 146.17 38.29 12.56
Administrative expenses 71.90 24.36 10.26
Total expenses 218.07 62.65 22.82
Write-offs and provisions
Write-off of bad debts - 0.22 0.03
Provision for loan loss 0.82 1.05 0.00
Total 0.82 1.27 0.04
Depreciation 6.61 5.36 2.44
Profit/loss before tax -7.71 -29.00 -15.06
Tax 1.77 0.69 0.20
Net profit -9.48 -29.68 -15.26

May 2009 13
MFI Grading: Ujjivan Financial Services Private Limited

2.3.2 Balance Sheet

Rs. million
As at, Mar-09 Mar-08 Mar-07
Liabilities Provisional Audited Audited
Capital 348.42 123.30 54.98
Reserve and Surplus 678.09 23.38 -
Employee loan grant 38.42 - -
Cumulative net profit/ loss -61.28 -51.80 -22.12
Net worth 1003.66 94.87 32.86
Total long term borrowings 674.98 245.80 61.57
Security deposits 203.30 61.11 16.98
Provision for loan loss 1.88 1.06 -
Other liabilities 23.10 8.17 2.93
Total current liabilities 24.98 9.23 2.94
Total liabilities 1906.91 411.02 114.35
Assets
Loans and advances 1690.11 365.73 84.30
Cash & bank balances 143.79 16.52 14.36
Other assets & advances 38.33 13.17 5.34
Total current assets 182.13 29.69 19.70
Total funds deployed 1872.24 395.42 104
Net fixed assets 34.67 15.60 10.35
Total assets 1906.91 411.02 114.35

May 2009 14
MFI Grading: Ujjivan Financial Services Private Limited

2.3.3 Key Financial Ratios

In per cent
As at/ For the period ended Mar-09 Mar-08 Mar-07
Yield
Fund based yield 20.83 17.51 14.16
Portfolio yield 22.14 18.92 19.94
Fee based income /Avg. funds deployed 4.18 3.85 4.42
Total income / Avg. funds deployed 25.01 21.36 18.58
Cost of funds
Interest paid/Average funds deployed 5.81 5.22 3.01
Interest paid/Average borrowings 11.11 6.77 5.01
Interest spread
Gross spread/Average funds deployed 15.03 12.28 11.15
Spreads on lending 9.72 10.74 9.15
Overheads
Operating expenses / Disbursements 8.75 12.17 19.29
Operating expense ratio 19.23 25.09 34.70
Personnel expense ratio 12.89 15.33 19.10
Administrative expense ratio 6.34 9.76 15.60
Profitability
Return on net worth -1.73 -46.48 -50.55
Return on funds deployed -0.84 -11.89 -23.20
Operational self sufficiency 97.35 64.78 44.79
Asset quality
Net write-offs / Average loan outstanding - 0.10 0.07
Loan loss provisions / Average loan outstanding 0.08 0.47 0.01
Provisioning / Average loan outstanding 0.18 0.47 0.01
Capitalisation
Total debt/Net worth (times) 0.88 3.23 2.39
Capital adequacy 56.93 24.05 32.87

May 2009 15
MFI Grading: Ujjivan Financial Services Private Limited

2.4 Projected Financial Statements as provided by UFSPL

2.4.1 Income and Expenditure statement

Rs. million
For the period ended, Mar-12 Mar-11 Mar-10
Fund based income
Interest income from loans 2740.58 1686.39 749.46
Total fund based income 2740.58 1686.39 749.46
Total interest paid 877.21 539.42 216.28
Gross spread 1863.37 1146.97 533.18
Fee based income
Total fee based income 282.13 190.53 135.60
Total income 3022.71 1876.92 885.06
Gross surplus 2145.50 1337.50 668.78
Expenses
Personnel expenses 829.72 542.67 331.31
Operating expenses 517.47 331.41 191.79
Total expenses 1347.19 847.08 523.10
Write-offs and provisions
Provision for loan loss 26.19 17.37 8.56
Write-offs 7.90 5.60 2.94
Total 34.09 22.97 11.50
Depreciation 29.31 20.88 13.73
Profit /loss before tax 734.91 419.57 120.45
Tax 256.20 147.83 26.34
Net profit 478.71 271.74 94.11

May 2009 16
MFI Grading: Ujjivan Financial Services Private Limited

2.4.2 Balance Sheet

Rs. million
As at, Mar-12 Mar-11 Mar-10
Liabilities
Capital 2083.69 2071.72 1064.93
Accumulated profit/loss 599.08 266.98 32.60
Net worth 2682.77 2338.70 1097.53
Total long term borrowings 7931.90 5063.79 2927.58
Security deposits 2294.71 1500.15 559.17
Provisions 151.79 110.84 82.96
Total liabilities 13061.17 9013.48 4667.24
Assets
Loans and advances 12717.33 8752.41 4462.68
Cash & bank balances 18.52 33.13 46.34
Other assets & advances 52.74 35.65 23.51
Total current assets 71.26 68.78 69.85
Total funds deployed 12788.59 8821.19 4532.53
Net fixed assets 272.58 192.29 134.71
Total assets 13061.17 9013.48 4667.24

May 2009 17
MFI Grading: Ujjivan Financial Services Private Limited

2.4.3 Projected key financial ratios

In per cent
For the period ended Mar-12 Mar-11 Mar-10
Yield
Fund based yield 25.6 25.26 23.40
Portfolio yield 25.53 25.52 24.36
Cost of funds
Interest paid/Average borrowings 13.50 13.50 12.01
Interest spread
Spreads on lending 11.86 11.76 11.40
Overheads
Operating expense ratio 12.47 13.09 16.33
Profitability
Operational self-sufficiency 132.12 128.79 115.75
Capitalization
Total debt/Net worth (times) 2.96 2.17 2.67
Capital adequacy 20.57 26.04 23.75

May 2009 18