About SK Finance Limited

Introduction

Founded in 1994 by Rajendra Kumar Setia, SK Finance is a non-deposit-taking Non-Banking Finance Company Middle Layer (NBFC ML) specializing in vehicle financing and MSME financing. According to the CRISIL Report, we are the fastest-growing player among our peers in both segments based on AUM CAGR from Fiscal 2021 to Fiscal 2023. Our long-standing expertise, robust branch network, and innovative technology integration have enabled us to cater to underserved rural and semi-urban markets, empowering unbanked and underbanked customers.

A) Vehicle Financing: A Core Vertical

SK Finance’s vehicle financing portfolio is secured, granular, and retail-oriented, covering:

1. Used and New Commercial Vehicles (excluding M&HCVs)
2. Cars and Tractors
3. New Two-Wheelers

B) Key Metrics:

1. Leadership in Used Vehicle Financing: As of December 31, 2023, 77.41% of our vehicle financing portfolio comprised used vehicles, the highest among peers.
2. 
   
3. Market Opportunity: The vehicle financing market in India, valued at ₹11.85 trillion in Fiscal 2023, is projected to grow at a CAGR of 16-18%, reaching ₹21 trillion by Fiscal 2027. NBFCs held a dominant share of 39.97% in vehicle finance credit outstanding in Fiscal 2023.

C) Competitive Edge:

With a legacy of over 25 years, diversified offerings, and an extensive branch network, SK Finance is poised to capitalize on the growing demand in vehicle financing.

D) MSME Financing: Driving Financial Inclusion

SK Finance entered the MSME financing vertical in late 2016 to address the working capital needs of rural and semi-urban businesses. Our loans are:

1. Asset-backed and Income-generating: Targeted at mid-to-low-income customers.
2. 
   
3. Designed for self-employed, unbanked, or underbanked individuals.

E) Market Opportunity:

1. Rural areas account for 47% of India’s GDP but receive only 8% of overall banking credit (as of March 31, 2023). This highlights the significant untapped potential for NBFCs in these regions.

F) Distribution and Sourcing:

1. MSME loans are sourced entirely through our direct on-ground sales team.
2. 
   
3. We plan to expand MSME offerings to untapped branches within our network.

G) Branch Network and Workforce Strength

SK Finance operates with a robust infrastructure to support last-mile delivery:

1. 535 Branches across 11 states and 1 union territory.
2. 
   
3. MSME Focus: 322 branches currently offer MSME financing.
4. 
   
5. Extensive Workforce: 10,725 employees, including 6,202 sales personnel and 1,607 collection team members.
6. 
   
7. Diverse Sourcing: Vehicle loans are sourced through both direct sales teams and a network of 8,853 DSAs.

H) Three-Pillar Underwriting Process

Our underwriting framework ensures consistent asset quality through:

1. Income: Focus on income-generating activities and collateral value.
2. 
   
3. Intent: Rigorous intent evaluation through reference checks.
4. 
   
5. Insurance: Security-backed lending as a safeguard against defaults.

This process is supported by a high-touch collection model, ensuring effective engagement with our customers and low delinquency rates.

I) Technology Integration: Transforming Operations

SK Finance has embraced technology across the customer lifecycle:

1. Paperless Underwriting: Reduces turnaround time and enhances efficiency.
2. 
   
3. Data-driven Analytics: Supports smarter credit decision-making.
4. 
   
5. Automated Processes: From loan origination to collections, technology ensures scalability and cost optimization.

J) Asset Quality: A Testament to Strong Risk Management

Our focus on maintaining asset quality is reflected in the consistent reduction in Days Past Due (DPD) metrics:

1. Over the past fiscal years, AUM with DPD >1, 30, and 90 days has shown a declining trend, signifying strong risk controls and effective collections.

K) Strategic Focus on Rural Markets

SK Finance caters primarily to informal customers in rural and semi-urban areas:

1. Market Opportunity: Rural credit remains underpenetrated, offering immense growth potential.
2. 
   
3. Unique Positioning: Our robust on-ground presence and understanding of customer behavior enable us to navigate these challenging markets effectively.

L) Growth Opportunities in Key Segments

1. Vehicle Financing:
2. Market expected to grow at a CAGR of 16-18%, driven by demand for used vehicles and two-wheelers.
3. SK Finance’s leadership in used vehicle financing positions us as a key player to capture this growth.
4. MSME Financing:
5. Increasing credit penetration in rural areas offers a significant growth avenue.
6. Expansion of MSME offerings to untapped branches will enhance our reach and market share.

M) Competitive Advantages

1. Strong Market Presence: Over 25 years of expertise in vehicle financing and a growing footprint in MSME financing.
2. 
   
3. Extensive Distribution Network: 535 branches and a well-diversified DSA network ensure last-mile connectivity.
4. 
   
5. Technological Edge: Seamless integration of technology enhances operational efficiency and customer experience.
6. Robust Underwriting Process: A proven framework built on income, intent, and insurance ensures strong asset quality.

Conclusion

SK Finance is a leader in the NBFC sector, driven by its strong legacy, market leadership, and commitment to financial inclusion. With a focus on rural and semi-urban markets, we are uniquely positioned to capitalize on the growing demand for vehicle and MSME financing. Our robust processes, technological innovation, and strategic expansion plans will continue to drive sustainable growth and deliver value to our stakeholders.