What It Takes to Be a Finance Professional... SIMS

8/9/2019 What It Takes to Be a Finance Professional... SIMS

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SIMS

"What it takes to be a Finance

Professional?"

05.06.2010


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Finance definition

finance (fnans, f nans)

noun

the money resources, income, etc. of

a nation, organization, or personthe managing or science of managingmoney matters, credit, etc.


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FINANCE PROFESSIONAL

Product

Market

Customer

Distribution channel


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Product

Retail Finance

Corporate Finance

Investments

Capital Markets

Investment Banking


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Product

Forex

Insurance

Mutual Funds

Alternative Investments ( Private Equity,RealEstate... New Age products)


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Market

Local Urban and Rural

International- Unlimited Opportunitieswith Globalisation.

The income and consumptionlevels are rising therefore creatingnew markets


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Customers

Retail customers

Corporate Customers

HNI

NRI

New customer class getting createdwith M&A deals,Overseas acquisitions

by Indian companies


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Distribution Channels

Banks

NBFCs

Broking Firms

Insurance Companies

Private Equity Firms


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Distribution Channels

Asset Management Companies

Forex Dealers

Primary Dealerships


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FINANCIAL SERVICES..

Roles people Play

Sales

Marketing/Product

Research

Credit

Operations


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Roles people Play

Treasury

IT

Collections

Customer service

BIU


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BANKING SECTOR

Asset Side

Highly profitable business if Operating Costand Quality of loans is the focus

Liability Side Source of low cost of fund and fee incomethrough distribution


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Asset Side

Retail Loans

Car loan Home loan

Personal loan

Credit Cards

SME/SEG Group

Loan against Property


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Asset Side

Corporate Loans

Term loan

Working Capital facility

Non Fund Based- Bank Guarantee/Letter of Credit


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Liability Side

Managing Deposits and Investments

Branch Banking-

Acquisition and servicing of bankaccounts- CASA (Current accounts and

Savings accounts)


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Liability Side

Fee Income-

Selling Investment Products- Fixed

deposits,Insurance, Mutual Funds, RealEstate,Private Equity Funds,Forex,Gold

Cross selling is the key strategy


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2008 survey by Dun & Bradstreet

As in 2008, in the banking industrythere are-

No of offices/branches- 56640(Pvt Banks-

7000 apprx) No of employees- 893353 (Pvt Banks-160000 apprx)

No of ATMs-2

7088

( Pvt Banks-10800

apprx)

Growth has been phenomenal... Willcontinue.....


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FINANCIAL SERVICES INDUSTRY

One of the highest paid

Large Recruiters- Both Fresher and

Lateral InterRelated with Many other

Employers- Insurance Companies/

Broking Houses/ Asset ManagementCompanies/ Private Equity Firms-

Industry as a whole has ample space


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Backdrop to the Indian economy

Share of GDP (%)

1951 1991 2008

Agriculture 55% 31% 18%

Industry 15% 26% 27%

Services 30% 43% 55%


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Key pillars of sustenance and

growth in India

Domestic demand

Infrastructure

Skilled Manpower


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Domestic Demand

Young, working population

Increasing urbanization

Rising household incomes

Low penetration


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Infrastructure

Strong economic growth

Low infrastructure penetration

Strong government focus

Multiplier effect on economy


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Skilled manpower

Large, educated workforce

Increased efficiency of labour

Quality research institutes

India is a partner of choice


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Resilience of the Indian economy

Domestic consumption driveneconomy

Low exports to GDP ratio High forexreserves

Manageable external debt

Stability in banking system


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Resilience of the Indian economy

High savings rate

Manageable inflation.Proactive policymaking.

Reform process continuity

These factors provide sustainable growthpotential over the long term


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INDIA STORY

Role of Financial services Industry-

Very important for GDP Growth- Developedeconomies are seeing recession because of

financial crisis

Responsible Banking-

A sustainable industry. QUALITY OF LOANS

AND COST CONTROL

Indian Banks are better placed after sub primecrisis- Fewer losses..Traditional Banking


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INDIA... FUNDAMENTALS

Creation of new Markets

Above 300 million people are expected tomove up from the category of rural poor torural lower middle class between 2005and 2025.

Rural consumption levels are expected torise to current urban levels by 2017.


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INDIA.. FUNDAMENTALS

Such developments in India's markets areexpected to create major opportunities for Indian companies and multinationals (MNCs)alike and further fuel consumer demand in

India.

Despite the gloom in the global markets, Indiawill continue to be the second fastest growingeconomy in the world. Indian economy may wellgrow at over 7 per cent in 2008-09.


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SERVICE SECTOR... THE FASTRUNNER

One of the most important segments ofIndian economy

Has contributed nearly 63% of the GDP in2007-08

Dominant role in the economy accountingfor59.6% of the overall average growth inGDP in the last eight years between 2000-01 and 2007-08.


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INDIA.. A Long term growthstory....

According to a study by the McKinsey Global

Institute (MGI), Indian incomes are likely to

grow three-fold over the next two decades and

India will become the world's fifth-largest

consumer market by 2025, moving up from its

position in 2007 as the 12th-largest consumermarket.


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INDIA.. A Long term growthstory...

According to the National Council for Applied

Economic Research (NCAER) estimates, by

2012, only 14 per cent households in India willhave annual household incomes of less than

US$ 921.66, from 58 per cent in 1995-96 and 25

per cent currently.


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Challenges and Opportunities for

the Finance professional ..2020


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Challenges

Globalisation

Fluctuating demographics

Significantly increased businesscomplexity


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Changing role of a Finance Professional

Demise of the process focusedprofessional with most of their work being

automated or outsourced

The financial generalist will be valued

highly, someone whose understanding of

a broad range of issues will make them

able to act as a 'Navigator' in the businessworld.


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Skill sets to be acquired

KnowledgeUnderstanding of a broad range of issues...

CommunicationGeneral communication to applied

communication- There will be diversity

in the customer class


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The ability to exercise professionaljudgement based on a foundation of ethics,

broad but deep technical excellence,strategic awareness and communication willbe the key


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THANK YOU

[email protected] 9823128916


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ALTERNATE INVESTMENTS

A Sunrise investment asset class


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PRIVATE EQUITY

The Indian Private equity industry has maturedover the last few years

TOTAL INVESTMENTS 2005 06 07 08(USD bn.. Excluding RE 2.0 7.9 12.3 20

And Infra deals)

Avrg deal size 15 26 70 85+(USD mn)Increasing deal activity and opportunities forInvestments


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PE Market.. India- Total Market

Potential (2007-2012 cumulative)


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PRIVATE EQUITY

Fund raising at growth stage bydilution of capital i.e. by selling stake inthe company. Different from debt.PE Investors do

not look for interest on capital employed,investment is made with a timeframe tosell the acquired stake ( equity) at a

premium.Investors have high riskappetite but are very strong at due

diligence.


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EXIT OPTIONS

Sale to a strategic Buyer- Largebusinessgroups seeking to enter the businessor existingplayers wishing to enter a new

segment-Reliance Adlabs, Synergy Adlabs,Disney- UTV


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EXIT OPTIONS

Sale to a Financial Buyer- PE firmssuch as Blackstone,Columbia Capital,

Carlyle, TPG,Soros Funds.

IPO on domestic exchanges

Buyback of stake by promoters

Documents

What It Takes to Be a Finance Professional... SIMS