Aditya Birla Finance Limited ("ABFL"), a lending subsidiary of Aditya Birla Capital Limited is among the leading well-diversified non-banking financial services company in India. ABFL offers customized solutions in areas of personal finance, SME finance, SME finance, corporate finance, wealth management, debt capital markets and loan syndication. ABFL is registered with RBI as a systemically important non-deposit accepting non-banking finance company (“NBFC”) and is amongst the top five largest private diversified NBFCs in India based on AUM.
For the FY ended 31st March 2023, ABFL has a book size of Rs. 66,923 Crores, net PAT of Rs 1287 Crores and net worth of 7,784 crores. The Net Interest Margin expanded by 53 bps y-o-y to 7.35% and ROA at 2.47%. ABFL’s long-term credit rating of AAA (Stable) has been reaffirmed by ICRA in February 2023. ABFL also has a long-term credit rating of AAA (Stable) by India Ratings, Perpetual debt credit rating of AA+ (Stable) by ICRA and AA+ (Stable) by India Ratings (Stable) and short-term credit rating of A1+ by ICRA & India Ratings.
SME caters to the varied needs of a diverse set of customers across retail, HNI, ultra HNI, Micro,Small & Medium enterprises . It encompasses a wide variety of financing solutions for clients, ranging Loan against property, to more complex Lease Rental discounting, Commercial Purchase and Construction Finance lending. Financing solutions are provided to Self-Employed [professionals/ non-professionals] against a wide array of lending programs, each of which aims to estimate the client’s repayment capability accurately before the company to take an exposure. The lending program requires assessing clients on various dimensions, including income, repayment behavior, stability of income/ residence, profile, collateral [valuation, marketability], ownership structure of business and the property and many others.
Loan approvals entail a good mix of profile checks, balance sheet lending and collateral assessment. An in-depth understanding of the customer’s business model, Cash flows, customers & suppliers, success factors and dependencies needs to be taken into account given these are long term exposures [ranging upto 15 years]. The financials are assessed to understand the repayment capability in the near and long term. Collateral assessment is another complex part of the underwriting process involving checking the structural stability, marketability, valuation, regulatory / local body compliance and legal veracity – all to ensure the property can be liquidated to repay the loan if required in case of customer default. Lending is often structured to meet the client needs by deriving comfort through the hard collateral [can be a ready or under-construction property / project] and cash flows [in form of rentals, or project cash-flows – both against sold/ unsold receivables].
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For the FY ended 31st March 2023, SME is significant contributor to ABFL’s Portfolio (35% of ABFL Book Size) with a closing book of 23,133 crs
SME has been delivering all-time high PBT of almost 563.3 crs and has posted 3.04% of ROA for FY23
SME has moved into segmented strategy model with further focus on client types considering their different complexities and expectations
In SEG Business, focusing on Customized solutions offering to SME customers through industry cluster programs .Adaptable tenure to suit customer requirements with minimum documentations and customized based sourcing and distribution model of sourcing is envisaged for this business.
FY ended 31st March 2023, SEG has contributed 8% to SME Portfolio with a closing book of 1,906 cr’s
SEG had also delivering PBT of 15.6 crs and has posted close to 1% of ROA for FY23
Being one of the most preferred asset classes in the lending business today, this business continues to present challenge of competing with all FI’s / Banks in a highly price sensitive target segment.
Key Challenges:
Retail – SEG as a business faces a lot of competition from Banks, other NBFCs and Fintechs which has been intense, dynamic and ever changing considering the entry of new players in the market.
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Managing factors like technological advancements, changing regulations, and evolving consumer behavior
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Strongly imbibe the ethical way of business & drive Aditya Birla Group’s Vision & values to each and every one in the team.
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Develop robust processes across Credit, operations, Collections & legal.
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Manage profit & loss, manage portfolio, customer, customer portfolio, customer life-cycle to maintain a clean Book growth and hygiene.
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Spearhead & launch many campaigns to drive the business in respect to Distribution, support functions & keep the spirit & morale high for the team while imbibing the ethical way of business & drive Aditya Birla Group’s Vision & values to each and every one in the team.
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Manage and Monitor employee productivity and foster employee development
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To ensure manpower is in place to execute the desired business plan.
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Setting up robust, comprehensive and scalable Governance frameworks for identifying and managing risk
