Development of Eligibility Criteria for SME Lending for Leading International Finance Service Company

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Client Challenge

The client was a leading international financial services company.  In India, it had a Business installment Loan product which is SME focused. In order to gain further insights across different customer segments for the above product, the client hired UC STRATEGY to analyse SME segments.

Our Approach

In order to execute the assignment, UC Strategy used the following approach:

  • As a part of the engagement interviewed more than 175 industry respondents
  • Conducted Examination of key segment characteristics, this included:
  • Overall industry size and projected growth rate
  • Extent of consolidation vs. fragmentation
  • Market and product risk
  • Business seasonality and cyclicality
  • International market risk
    • Threat of imports
    • Dependence on export markets
    • Currency fluctuation risk
  • Government policies and regulatory risk
  • Conducted detailed assessment of potential customer profile and key operating and financial ratios:
  • Overall customer profile
  • Average turnover of business
  • Debtor, creditor and inventory period.
  • Analysis of working capital cycle with share of internal funding
  • Bargaining power with customers and suppliers
  • Overall margin pressure
  • Analysis and examination of key ratios
    • Cash to turnover
    • Debt burden ratio
    • Working capital to turnover
    • Debt to Equity
    • Current ratio
  • Defined eligibility criteria:
    • Undertook final discussions with client team on key segment dynamics
    • Developed a risk vs. market attractiveness matrix
    • Finalised eligibility criteria across industry segments

Our Impact

Completed 6 weeks of the study and conducted detailed analysis for 11 industries consisting of 179 respondents. Delivered a final report to the client with finalised eligibility criteria across industry segments.

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