2014 - 15 The year that proved us right. We spent eight years, laying Ujjivan’s foundations. Bringing together the right people. Developing our infrastructure. Building processes and systems. We spent eight years, directing our energies and skill not just towards the present but towards the future we believed in. We spent eight years, for what Ujjivan achieved this year. This year, we doubled our customer base. This year, we doubled the loan portfolio. And we believe, bettered more lives. This is our Annual Report for 2014 - 15. 2006 2008 2009 2011 2012 1,000 Indian Awarded for #1 microfinance Microfinance More than dreams made real process excellence employer Organisation 1,000,000 Indian of the Year dreams made real 2007 2008 2009 2012 Awarded for 68,000 Indian 621,000 Indian #2 Best financial innovation dreams made real dreams made real services employer 2013 2013 2014 2015 Awarded for Among India’s top Most Inspiring #16 Best innovation in 25 employers for Workplace Award employer in Asia responsible business 3 consecutive years 2013 2014 2014 2014 #7 Best employer 1.3 million Indian #9 Best employer 23 states, in India dreams made real in India 350+ branches, 5000+ employees So to commemorate the 10-year milestone we put our thoughts together to represent all we are and all that we stand for. Of the hundreds, one stood out. The brainchild of Shijo R of Wadakkanchery, it showed a profound understanding of the idea behind Ujjivan. A recognition that the woman is the heart of the household. The force that unites the family. That nurtures all hopes and dreams. And the hopes and dreams of the woman and her household are realised As we stride by our promise of a better life. towards our tenth year, These values have carried us we look at the past to this 10-year milestone. with satisfaction. And will carry us forward as well. And welcome the future with great expectation. Exciting times are ahead for all of us. Let us all look forward to the journey. Looking back on what made us succeed - it’s our values, commitment in deeds. Table of contents Letter from the Managing Director 8 Products and Services 15 Information Technology 25 Service Quality – Customer Care, Retention and Protection 27 Operational Efficiency Initiatives 34 Awards and Recognition 36 Management Team 38 Management Discussion & Analysis 42 Human Resources 53 Marketing 58 Community Development Programs 59 Corporate Governance Report 63 Board’s Report 70 Audited Financial Report 102 Letter from the Managing Director My career as a banker started in 1975 and spanned 30 years. In 2004, I began preparations to set up Ujjivan which was established in November 2005. This year at Ujjivan, we will be celebrating ten years of providing financial services to those who are excluded by the banking world. I have spent four decades in the financial services industry. What makes me jump out of bed on Monday mornings and head to work? Customers It is the stories which Another customer in South Pune used her loans to our customers tell us of their journey with us. train her sons in martial arts and has now helped It is the Dhokla lady in Surat - who used to prepare her elder son set up a martial arts school. A whole Dhoklas at home and sell them on pavements - bunch of our customers take higher-education who took a loan of Rs. 10,000. Three years later loans for their children. They firmly believe that it when I met her, she had borrowed Rs. 100,000 is the long-term way out of poverty. and had scaled up her business to become a Thirty housewives in Garia over the years have wholesaler of Dhokla in Surat. She was joined in turned into successful micro-entrepreneurs. A host business by her husband and eldest son, and she of our women customers have availed loans to buy now employs three karigars. hybrid cows and buffaloes to supplement their A lady in burkha at our Yelahanka branch who has family income. The enterprise of our customers a Rs. 99,000 loan, has scaled up her one-person and the varied businesses they are engaged in tailoring shop to a business powered by ten is mind boggling. We pride ourselves on being a machines, selling women’s garments. She wants customer-focused organisation. And the proof of another lakh for the Eid seasonal sale. the pudding is our customer retention. 100% 87.7% 86.7% 76.9% 82.1% 77.7% 84.6% 50% 68.5% 73.0% 70.2% Customer retention ratio 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 8 As our customers move up the economic ladder and/or dashboard, planning and team work. She will put many scale up their business, their financial needs vary, and of our business school-educated managers to shame. increase from the simple Group Loan. Our Individual Her husband is in the catering business. Both of them Loans provide the path for financial growth. We have are bringing up two sons, one of whom is studying over 70,000 Individual Loan customers. Our success engineering. We have a diversified workforce with is attributable to our ability to offer appropriate loan people from a wide range of backgrounds. A quarter products for every stage of business growth as our of our field staff are women, while 19% of our total customers scale up their business and family needs i.e. employees are women. higher education, housing, etc. Customer retention and staff retention are highly In the first eight years, we acquired a million customers correlated. Providing the opportunity for staff to grow as we scaled up and opened our wings across the and develop in the organisation, is not only good for the country in 24 states and union territories. Last year was employee but also for the business. a tipping point – we added another million customers! We continue to be among the top ranked organizations Our active customer base today, is 2.2 million. in India under the Economic Times/Great Place to Work ranking in India and Asia. We used to wonder Employees how we can compete with the likes of Google, Intel, It is the stories of our and American Express. It is not our compensation staff and how they have transformed their lives, that level & work environment. We get the highest score gets me to work on Monday mornings. The branch in employee survey on job satisfaction. The respect & manager of one of our most successful branches joined appreciation our customers have for our staff, make all as a humble field staff. Today she ascribes her branch’s the hard work in an unpleasant & risky environment success to monitoring performance using her branch worth it. 8,000 7,089 6,000 4,667 4,009 4,000 2,830 3,449 3,656 1,691 2,000 285 551 Headcount March 07 March 08 March 09 March 10 March 11 March 12 March 13 March 14 March 15 85% 83.4% 80% 78.4% 78.0% 82.8% 82.7% 76.1% 75% Staff retention ratio 70% 09-10 10-11 11-12 12-13 13-14 14-15 9 Investors We have always enjoyed half of the same was to provide partial or whole exits to an excellent relationship with our investors. Most of our early institutional and individual investors. our institutional investors have been our partners in Investors have been able to generate 20-25% return progress through their active participation in the board on their investment in Rupee terms and some of the and voluntary support for the various activities we investors from our first two rounds, who exited in undertake within Ujjivan and Parinaam Foundation. the latest round in the financial year, were able to They have actively supported us during periods of get 14.6x return on their original investment. This is industry crisis by bringing in new investors. We have unparalleled in the industry. The details of both current actively assisted our early investors to exit through and past investors along with their feedback, are on our secondary sales. In the latest round of capital raise of website: www.ujjivan.com/html/our_investors.php Rs. 600 crore (Rs. 589 crore during the financial year), 350 Primary infusion (amount in crore) 300 300 250 200 150 128 100 88 50 47 3 3 9 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 350 Secondary transactions (amount in crore) 277 300 250 200 150 100 13 50 44 4 Sep 12 Mar 13 Aug 14 Mar 15 20% ROE 15.9% 13.7% 15% 10.5% 12.0% 9.3% 10% 5% 1.0% 0 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 10 Key Partners – Key Partners – Banks and Financial Institutions Operations and Technology Our biggest partners are The key area in this high the banks and financial institutions which provide us volume but low margin business is to constantly work with funding. Last year, we raised debt of Rs. 2,803 crore on lowering our operating cost and simultaneously from banks and financial institutions. continue to improve the quality of service in terms of loan Turnaround Time (TAT), bring error rates We enjoy the finest pricing in the industry and one of close to zero and constantly move towards cashless the best ratings for a microfinance institution: CARE transactions. rated us ‘A’ on our long term borrowings.