IFMR Trust's

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• IFMR Trust's
• Network Enterprises Fund

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Agenda

• IFMR Trust Structure
• Network Enterprises Fund
• Strategy
• Network Enterprises

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IFMR Trust Structure

• Private Trust
• Established in Oct'06, Chennai (HQ)?
• Area of Work-India
• Professional Management team with hands on
  experience in
• Banking/Finance
• Investment Management
• Business Development
• Strategic Alliances

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India Context- the opportunity

• Every Low Income Household (LIH) is engaged in
  productive activity and is willing to pay for a
  range of services
• Targeted supply chain investments can unlock the
  opportunity for LIH to be competitive suppliers
  and consumers

Key
challenge How do we create an enabling
architecture to leverage LIH competitive
strengths?
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Context-India

• Indian Economy-High growth rates
• Surging unmet demand for quality goods, services,
  skills
• Low Income Households (LIH)-over 67 of India has
  constrained access to
• Finance
• Markets
• Quality services and products

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Our strategy

• IFMR Trust- a private, for-profit Trust with a
  vision to address the needs of, and unlock the
  commercial value embedded in the low-income
  households of India.
• Our three-pronged strategy
• Invest in scalable business models using a
  sector-focused approach
• Build a national financial services channel
  focused on outreach to remote rural locations
• Facilitate the creation of back-ends to support
  the access to finance and markets strategies

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How we do it

• Financial Services Channel
• 'Last Mile Banking'
• Network Enterprises Fund
• Private Equity Fund
• Guarantee Company
• Tapping Capital Markets to benefit LIHs
• IFMR Foundation
• Not-for-profit group

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IFMR Trust Structure
IFMR Trust
NEF
Financial Services Channel
NBFC
Channels
Network of Enterprises
Reg. Rural Financial Services Co.
Securitization, Debt lines
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Network Enterprises Fund

• A Fund that will invest only in supply chain
  companies
• 10-15 investments envisaged by the NEF
• Each of these investee companies (Network
  Enterprises NE) will identify and develop
  high-return supply chain opportunities in rural
  India

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Rationale
Rural consumers pay more in absolute terms for
services (healthcare, drinking water, credit)
relative to urban consumers
Rural producers have spare capacity even when
markets are experiencing severe shortages of
products and skills (Ex furnishing, skills)?
Interface to markets appears weakened by
remoteness and resultant transaction costs
Commercial opportunity for dedicated companies
that fix supply chain failures
These companies will create an architecture for
large markets to profitably interact with remote
rural India
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Sectors Identified

• Poor as Consumers
• Water
• Health
• Education
• Energy

• Poor as Producers
• Crafts
• Food
• Dairy
• Vocational Education
• Rural Tourism
• Rural BPO

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The Strategy
Identify sectors in which producers have a
competitive advantage / sectors where expenditure
can add to capacity
Identify a Network Enterprise that can create
networks in these sectors to enable effective
market linkages
Invest in the capacity of the Network
Enterprise to act as a market maker
Support the NEs to achieve rapid scaling by
adding to the network
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Investment criteria for the Fund

• Only companies that are purely in the business of
  supply chain acceleration
• Companies that start with an existing deep market
  and innovate in business models
• Companies with strategies that exploit the remote
  location of the rural consumer/producer
• Each company focussed on only one supply chain
  and possessing a deep understanding of that
  supply chain

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Business Model for NEs

• Investment in Existing Start ups Equity
  Soft Debt
• Hands on Mentoring Nurturing

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Revenue model of NEs

• Interest
• Dividend
• Revenue share
• and Others

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Investment Approach
Network Enterprises Fund
Shared back-end services HR, Accounting, Legal,
Audit, IT, PR and Administration support
Non-financial inputs Business Development and
Investment management
Financial inputs Debt/Equity
Sector-specific Network Enterprises
Financial and Non-Financial Support
E n t e r p r i s e s
Value Chain
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Investments by NEF
Investments in Network Enterprises
NE Crafts and Apparels
NE Food Processing
NE Vocational Training
NE Food Processing
NE Food Processing
NE Food Processing
NE Rural Tourism
NE Rural BPO
Village Ways
Enterprise 1
Enterprise 1,2,3
Enterprise 1
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Characteristics of an Investee company

• Make financial investments in a large number of
  enterprises in the respective sector
• Facilitate access to high quality non-financial
  investments (technical, design marketing
  resources)?
• Strengthen supply chains, link disaggregated
  supply chains and support growth of multiple
  supply chains
• Facilitate provision of back-end services to
  enterprises on an Application Service Provider
  (ASP) mode

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The Crafts and Apparels Network Enterprise

• NE focuses on building sustainable livelihood
  opportunities for artisans and handicraft
  producers by providing financial and
  non-financial inputs (improving product design,
  efficient sourcing of raw material, order
  management, quality control and training)?
• On the supply side, NE works with artisan groups
  and NGOs to build capacity required to grow their
  enterprise, improve quality and designs of
  products to meet large market demand and ensure
  fair practices.
• On the demand side, NE actively works with its
  network of buyers and large companies in a vendor
  development capacity.

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The Vocational Skills Network Enterprise

• Aims to provide livelihood opportunities to youth
  from underserved and un-reached segments of
  population both geographically and economically
  and bring them into the mainstream economy by
  enhancing and integrating skillsets to market
  demand in a viable and sustainable manner.
• Market-driven model where the value proposition
  is
• Students access to financing instruments,
  career training, guaranteed job placements
• Corporates access to a steady supply of
  trained skilled and semi-skilled talent,
  customized training, pre-selection and follow-up
• Shareholders through partnerships and
  investments in commercially viable entities
  targeted to achieve large-scale impact

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The Processed Foods Network Enterprise

• NE focuses on the processed foods and consumer
  products space. It works with private
  entrepreneurs, NGOs and enterprises producing
  disaggregated high-quality food products.
• NE invests in a variety of entities across the
  value chain to
• - build capability of entrepreneurs to
  effectively manage and scale operations
• - improve supply chains, sourcing raw materials,
  packaging and transportation to make cost
  structures competitive
• - improve logistics, distribution and retail
  linkages for products.
• ?

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Value Chain Mapping Craft Apparel
Producers
-Entrepreneurs - Jobwork

Local Aggregators
-Traders - Producer Cos
Consumers -Retail -
Corporates -Export
Customer Facing
Brands -Fab India -Bombay
Stores -Big Bazaar

• Unorganized
• Absence of mkt orientation
• Quality variance
• Home based/low investment

• Bridge between buyers and artisans
• Working capital and investment needs

• Strong brand
• Concerned about utilizing shelf space
• Need for large lots and quality consistency

• High end export and urban high income
• Mass home furnishing market (price sensitive)?

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NE Crafts competitive advantage
Access to Markets
Capacity Building
Investments Financing
Specialized Services
Generic Services
Research
B2B
Interior Projects
B2C
Needs for working capital Short term
Design Development
IT
Front end retail
Office interiors
Wholesale handmade
Artisan Database
HR /Training
Needs for front end expansion and back end
production Long term
Campuses
Wholesale tailoring finishing
Catalog and Merchandising
Online Ecommerce
Legal
Resource Centre By Craft
Corporate guesthouses
Investments in forms of structuring debt equity
for scale up
Accounts and Admin
Industry specific propositions
Business Strategy and Planning
Information Delivery Formats
Portal for master craftsmen
Audit and Compliance
Corporate sales
Group Dynamics
Business Planning
Export markets Trade fairs, retail chain stores
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• Thank You
• Contact
• Saurabh Jha
• email Saurabh.jha_at_ifmrtrust.co.in