Caspian Impact Investments · Caspian Impact Investments (CII) completed four years as of March...
Transcript of Caspian Impact Investments · Caspian Impact Investments (CII) completed four years as of March...
CaspianImpactInvestmentsSOCIALPERFORMANCEREPORT
FY2017
TableofContents
Foreword............................................................................................................................................................................3
FundProfileandTimeline................................................................................................................................................4
AnnualPerformanceHighlights......................................................................................................................................5
InvestmentObjectives......................................................................................................................................................6
TheProcess........................................................................................................................................................................7
Food&Agriculture............................................................................................................................................................8
SmallBusinessFinance...................................................................................................................................................12
Microfinance....................................................................................................................................................................14
Healthcare........................................................................................................................................................................17
AffordableHousing.........................................................................................................................................................19
CleanEnergy&EnergyEfficiency..................................................................................................................................22
OtherSectors......................................................................................................................................................................24
CorporateSocialResponsibility.....................................................................................................................................25
CaspianisaCertifiedBCorp..........................................................................................................................................26
GlossaryandAcknowledgements.................................................................................................................................27
CaspianImpactInvestments:SocialPerformanceReport2017
Wedidthisgraduallyanddeliberately,buildingnetworksandexpertiseinnewsectors.WithloansrangingfromINR10MntoINR150Mn,theportfoliohasbeencarefullycurated.
Thedirect impactofa lender likeCII is thatwearewillingtomakethe loansthat traditionalfinancial institutionswillnot.Ourcapitalprovidesthemostliftincaseswhereotherinstitutionaldebtisscarce,forlackofscale,collateraland/orprofitability.OurthesisforCIIwas that relativelyearly stageSMEs couldbedeservingofnon-collateralizeddebt,provided theyareassessedappropriatelyandnotforcefitintoastandardizedmodelsuitableonlyformature,asset-heavybusinesses.
Wewerethefirstbusinesslenderto17%ofourinvestees.41%ofourinvesteeswerelossmakingwhenwefirstfundedthem.Only5outofthe125loanswehavemadearebackedbymortgagecollateral.Inallthis,creditqualityhasremainedexcellent;ouractiveportfoliocompanieshave seen rapid revenuegrowthandequity infusionofmore than INR20Bnduring thispast year,with several of themachievingmonthonmonthoperationalprofitabilityfollowingourloan.Ourinstrumentshavebeenvaried–termloans, linesofcredit,receivables finance, subordinateddebt, securitizeddebt and, onoccasion, venture debt – and are customized to the needs and riskprofileofourinvestees.WeendedFY2017with~INR2.21Bn inportfolioand53activeclientrelationships.Today,weareactive infinancial inclusion, food&agriculture,healthcare,cleanenergy&energyefficiency,affordablehousing,education,livelihoods,drinkingwaterandtech4D.
During the year, we expanded the debt team significantly, in order to prepare for future growth as well as to strengthen our riskmonitoring.Foreverydebtinvestment,weneedtobeconvinced,asateam,abouttheimpactoftheenterprise'sbusinessmodel.ThebusinessmustaddressasocialorenvironmentalproblemthatweatCaspianarecommittedtohelpsolve.Thisisthelensthroughwhichwevieweachpotential investment. To further cement our commitment to using business as a force for good, Caspian became a Certified BCorporationinJune2017.ThisReporttraceshighlightsofourjourneythispastyear,theexcitingbusinesseswehaveworkedwithandtheimpactoftheirworkontheground.
Asalways,weappreciateanyfeedbackyoumayhave.
SViswanathaPrasadManagingDirector
Caspian Impact Investments (CII) completed four years as of March 2017. This is the third impactinvestingvehicle-andthefirstdebtinitiative-managedbyCaspian.Ourbalancesheethasgrown6timesinfouryears.AsofMarch2017,wehavedeployed,cumulatively,INR4.77Bn/~USD75Mnin66enterprisesand125loansacrossmultipleimpactsectors.Since 2004, Caspianhasbeen a pioneer equity investor in financial inclusion. Throughour first fund,Bellwether, and our second, India Financial Inclusion Fund, we have invested INR 4.36 billion in 16companiesinmicrofinance,smallbusinessfinanceandaffordablehousing.In2013,wesetupourthirdinvestmentvehicle,CII,asamulti-sector impactdebtprovider.Themovetodebtandtonon-financialsectors was due toa clear market need that we identified and our intent to bring our capital andexpertisetootherequallycriticalsectors.tors.
Foreword
CaspianImpactInvestments:SocialPerformanceReport2017 3
FundProfile
FundName
Vintage
LegalForm
AssetClass
AssetSize(FY2017)
FundTerm
Manager
CaspianImpactInvestments
2013
Non-Bankingfinancecompany,regulatedbytheRBI
Debt
INR2.94Billion/USD45Million
Open;nofixedterm
CaspianImpactInvestmentAdviser
Timeline
CaspianImpactInvestments:SocialPerformanceReport2017 4
20132013
20142014
2015201520162016
20172017
3YearGoal!
CIIlaunchedasamulti-sectordebtvehiclewithsupportfromGrayGhost,Triodos,FMO.Clearmarketneedidentifiedfordebtamongearlystageimpactenterprises.
BeganwithafocusonFinancialinclusionandFood&Agriculture.
EndedYear1withINR443Mninportfolioand13clients.
DebtfromAnchorlender-OverseasPrivateInvestmentCorp(OPIC).
ForgedpartnershipswithRaboandUSAID.
AddedFinancialInclusionEnablersandHealthcaretoourmandate.
CumulativedisbursementsofINR4.77Bn,125loansto66enterprises
Becameafullydiversifiedimpactlender-AddedWater,Education,Livelihoods,Environment,Tech4Dtoourmandate.
AdditionalEquityraisedfromSIDBI'sSamridhiFund.CrossedINR2Bninassetsize.AddedCleanEnergytoourmandate.
Launchedmarketdevelopmentinitiative;partnershipsforgedwithNAARM,ICRISAT
100clientrelationships
INR7Bn+portfolio
LoansDisbursedandOutstanding
1,043
1,555 1,686
1,068
1,801
2,213
Disbursements(INRMn) PortfolioO/S(INRMn)
FY2015 FY2016 FY20170
1,000
2,000
3,000
PortfolioDistribution(INRMn)
726571
434
292
8927 20 53
SmallBusiness Microfinance Food&Agri Housing FIEHealthcare CleanEnergy OtherSectors
0
250
500
750
LoanType(by#ofloans)
59
21
12
Secured Unsecured Securitized Shortterm
FinancialPerformance
122
228
385
68
156
326
54 71 59
Revenue(INRMn) Expense(INRMn) PBT(INRMn)
FY2015 FY2016 FY20170
200
400
600
PerformanceHighlights
Food & Agri, Microfinance, Small BusinessFinance, Healthcare, Housing, Clean Energy &energy Efficiency, Education,Water& Sanitation,Livelihoods,Tech4D
(UP,BH,MP,OD,CH,JK,RJ,WB)
LoanPortfolio
ClientsfocusedinLowincomestates
First/Secondlender
Clientspre-profitatfirst
loan
UnsecuredLoans
39%47%
21%53Activeclients
11
INR4.7Bndisbursedin125loansto66Clientsacross
Sinceinception(April2013)
2.21Bn
PortfolioUpdate(asonMarch31,2017)
CaspianImpactInvestments:SocialPerformanceReport2017 5
By#Clients
Strengtheningessentialmarket
ecosystems
Reducingvulnerabilityand
inequality
Protectingtheenvironment,promoting
sustainability
IDEATE
Improvingaccesstobasicproductsandservices
Reducingdrudgeryandimprovingthequalityof
life
Providingsafetyandsecuritytolowincome
groupsagainstvulnerability
Operatinginunservedandunderservedgeographicregions
Increasingtheefficiencyofcriticalvaluechains
Improvingfarmproductivity,increasingincomesof
producersandsmallholders
Improvingconnectivity,communicationandother
infrastructure
Creatingopportunitiesfordecentworkandenhancing
livelihoods
Buildingresilienceandadaptabilitytoclimate
change
Providingsubstitutestoharmfulproductsand
technologies
Conservingnaturalresourcesandpromotingtheirsustainableuse
Our mission at CII is to enable the growth of enterprises that work towards creating social and/or environmental impact, in aresponsible, transparent and sustainable manner. We use a variety of debt instruments to achieve this.We lend to sectors andcompanieswheredebtcapitalisscarceandmuchneeded.Here,wecanhavethemostimpact.Beyondthestandardsecuredloans,weextend unsecured loans and loans to pre-profit companies where we are convinced about the business model and profitabilityprospects.Inmanycases,weareanearly(insomecases,theonly)lender.Westructureourinstrumentstosuitthebusinessneedsofourportfoliocompanies.Wecontinueworkingwiththecompaniesastheymatureandtheirdebtneedsgrowandchange.OurimpactobjectivesareinlinewithsomeoftheSustainableDevelopmentGoals(SDGs)ortheGlobalGoals,auniversalcalltoactiontoendpoverty,protecttheplanetandensurethatallpeopleenjoypeaceandprosperity.AchievingtheSDGsrequiresthepartnershipofgovernments,theprivatesector(includinginvestorslikeusandtheenterpriseswesupport),civilsocietyandcitizenstomakesureweleaveabetterplanetforfuturegenerations.
ImpactObjectives
CaspianImpactInvestments:SocialPerformanceReport2017 6
At CII, the environmental & social performance evaluation is anintegralpartofthecreditevaluationprocess.PRE-INVESTMENTInitialscreening:Weapplyapositiveaswellasanegativescreentoeachprospectiveportfoliocompany.Thecompanymusthaveastated or demonstrated focus that is in line with our impactobjectives. ItmustnotbeengagedinanyoftheactivitiesonourExclusion List. In sectors with greater risk of negativeenvironmentalimpact,additionalscreensareapplied.
Scorecard: We assess each company using a proprietary DueDiligence Scorecard and measure a “baseline” score. Thescorecard has several components including: a) Mission andImpactBusinessModel;b)Governance; c) Internal controls andsystems;d)Workerpractices;e)Products; f)Clientprotection;g)Community; and h) Environment. Any externalsocial/environmental ratings that the company may haveobtainedwillalsobetakenintoconsideration.INVESTMENTDECISIONThe Credit Committee evaluates the financial as well as thesocial/environmental rationale of every proposal. We considerfavorably, companies that take proactive steps to improve theirenvironmental, social and governance outcomes. If there areshortcomings in these areas that are highlighted following theduediligenceprocess,weengagewiththecompaniesandassesstheir willingness to improve. Some mutually agreed plans andgoalsmustbeinplacebeforetheinvestmentcangoahead.
TheProcess
Ataminimum,weexpectourportfoliocompaniestofullycomplywithallrelevantlawsandindustryregulations.Theyareexpectedto meet professional standards for internal and externalgovernance. In addition to these basics, we strongly prefercompanies that go above and beyond the minimum legalrequirement in improving their social, environmental andcorporategovernancepractices.
Documentation: Social and environmental considerations areincorporated in to all investment documentation, for e.g., KPIreporting, participation in industry initiatives, covenants andexclusionlists.Qualityandtimelinesofreportingisakeyinputintodecisionsonrepeatloans.
POST-DISBURSALMONITORINGOnce a loan ismade, portfolio companies are required to trackandreportdataonasetofkeyperformancemetricsidentifiedasbeing most appropriate for that company’s business. While weagreethattherearebenefitstostandardizingimpact-relateddataand have been active participants in industry initiatives in thisregard,thediversityinbusinessmodelsinsomeofthesectorsweoperate in (for ex, food & agri)makes this a challenge. In suchcases,wetrackperformanceusingcustomizedmetrics.Capability to track and measure performance varies dependingon the stage of the company and their internal capabilities.Wecontinue to engage with our portfolio companies on improvingmeasurementandreportingmechanisms.Wewillprovideadvice,supportandencouragement to thecompany to improve itsESGperformance.
CaspianImpactInvestments:SocialPerformanceReport2017 7
InitialScreening InformationSharing1 2 3 4
5678
9 10 11 12
OnsiteDueDiligence
AdditionalData
Disbursement Documentation CreditCommittee
CreditProposal
MonthlyMonitoring
Onsitevisits LoanClosureRepeatloanmaybeconsidered
Impactbusinessmodelscreening Social/environmentaldata
Assessmentofenvironmental,socialandgovernanceaspects
InvestmentrationaleincludesESGperspective.Baselinedatashared
DecisionfactorsinESGIncludesclausesonE&Sreportingandethics
Social/environmentaldata
Obtainandreviewsocial/environmentalperformancedata
Decisionbasedonfinancial,repaymentaswellasESGperformance
FOOD&AGRICULTURE70% of rural households in India still depend primarily on agriculture for their livelihood. And yet, nearly a quarter of Indians do not getsufficientfoodtomeettheirdailynutritionalneeds.
Asmuchas67%of India's farmland isheldbymarginal farmerswithholdingsbelowonehectare (2.47acres),against less than1% in largeholdingsof10hectaresandabove.Theaveragesizeoflandholdingisestimatedas1.15hectares,showingadecliningtrendsince1970-71.Theproportionofnetirrigatedareatonetareasownwas45.70%,whichmeansthatforhalfthecountry'sfarmland,irrigationisyettoreachthefarmers,whorelyentirelyontherainsfortheircrops.
Increased investments are needed to enhance agricultural productivity, improve supply chain infrastructure and introduce technologicalinnovationsacrossallstagesinthesupplychain.Weneedtoimprovetheincomesofsmallandmarginalfarmersthroughproductiveresourcesandinputs,knowledgeandtimelyinformation,accesstofinancialservicesandmarkets.Weneedtoidentifywaystoreducewastageinthepostharveststagethroughtechnologyandsupplychaininnovationstoenablegreaterrealizationofvalueforthefarmer.
Fromanenvironmentalstandpoint,weneedtoensuresustainablefoodproductionandagriculturalpracticesthatincreaseproductivityinawaythathelpsmaintainecosystemsandconserve/improvelandandsoilquality.
CaspianImpactInvestments:SocialPerformanceReport2017 8
Food&Agriculture
Ourobjective:To enable the growth of small andmedium food &agribusinessenterprisesthatwillincreasethecapacityandoutreachofagriculture and allied sectors, promoting economic strength andstabilityinruralcommunitiesandfoodsecurity.
Withtheaimofunlockingvalueacrossmultiplesupplychains,weinvestinenterprisesthat:
1.Aggregate,processandsellagriculturalproducts;
2.Providegoodqualityaffordableinputstofarmers;and
3. Strengthen the supply chain by providing support services(technology,storage,transportation,qualityassessment,etc).
Companiesinourportfoliothisyear:
FY2015
FY2016FY2017
ClientRelationships
CIIPortfolioGrowth
275370 325
190
382434
Disbursements(INRMn) PortfolioO/S(INRMn)
FY2015 FY2016 FY20170
500
250
NumberofLoans
11
25
34
FY2015
FY2016
FY2017
0 10 20 30 40
9ofthe11companiesinourportfolioattheendofFY17,werepre-profitwhenwemadethefirstloantothem.Sincetheirfirstloan,5of themhadaCAGRbetween25-50%and2of themhadaCAGRabove 100%. Together, these companies raised INR 672 Mn inequityduringFY17.
operate across multiple supply chains (milk, fruits, pulses,vegetablesandorganicprocessedfoods);
provide cold chain solutions to reduce losses in the supplychain;
usetechnologytoenablereal-timetrackingofthesupplychain;
provideeco-friendlypestcontrolsolutions;
enable productivity improvement by manufacturing low costfarmingimplements;
use agribyproducts to make handicrafts thus providingemploymenttolocalartisans;and
provideweatherprediction, cropmonitoring, yield forecasting,pest forecasting, UAV, remote sensing, GIS, agri input planning,etc.
TypeofCompanies
93
4
Production,Aggregation,Processing Inputs Supplychain
Cumulativeuniqueclients
ClientswithatleastoneactiveloaninFY17
ActiveloansduringtheFY
CaspianImpactInvestments:SocialPerformanceReport2017 9
With>3loans:4
Withrepeatloans:9
AttheendofFY17:11
Duringtheyear:16
CAGR>100%:2
CAGR>50%:4
CAGR>25%:9
NumberofActiveClients
Food&Agriculture:Snapshots
CaspianImpactInvestments:SocialPerformanceReport2017 10
OurFood&Agriportfoliocompaniesoperateinvariouspartsofthevaluechainandinamultitudeofcommodities.Hereareafewsnapshotsfromourportfoliothatdemonstratethediversityofbusinessmodelsthatwefundinthissector.
Companiesthataggregate,process,andsellagriculturalproduce
INI Farms is a horticulture company focused on pomegranates andbananas. It is deeplyinvolved in the value chain all the way from cultivation to marketing. The companycultivatesonitsownfarmsandalsocarriesoutcontractandpartnershipfarming,advisingfarmers on improving production quality. The company sells packaged whole fruits andpomegranate seeds. Exports account for over 60% of revenue. The company has beenGlobalG.A.Pcertified.
INI’sadvicehelpsfarmersimproveproductionqualityandhavebettermarketlinkages,allofwhichcanresultinapriceadvantage.FarmersinneighboringareasarealsoimprovingtheirfarmingpracticesincertainlocationsduetothepresenceofINI.
Companiesthatprovideinputstofarmers
BarrixAgroSciencesdevelopsandpatentsAbbreviatedNewPheromones (ANPs) andANPApplications,whichalleviate theproblemofpestswithoutusing chemicalpesticides.Thepheromone solution reduces the use of chemical pesticides and encouragesenvironmentallysustainablefarming.Thecompanyoperatesacross12statesinIndia.Morethan243,000farmersand813,000acreshavebeencoveredbyBarrixproducts.
BarrixhasrecentlyexecutedcontractswiththestategovernmentsofAndhraPradesh,BiharandJharkhand.Thecompanyexports toBangladeshandSriLankaand is lookingto furtherexpand internationally.ThecompanywasrecentlyawardedtheTIMEStartupInnovatoroftheYear(2017).
Companiesthatstrengthenthesupplychainthroughsupportservices
Ecozen manufactures affordable and efficient energy access products for theagriculture supply chain. Ecotron, the company's major revenue source, is a solarpump controllerwith a highly interactiveweb interface that allows the user to live-track the system's performance. Ecozen's analytics engine then helps ensure quickresponsetimesandreducesservicecosts.
The company also manufactures a solar-powered micro cold storage called Ecofrost. Given the mobility andremotemonitoringcapabilitiesoftheproduct,thiscoldstoragecanbeusedforavarietyofproductsandavarietyoflocationswheregridelectricitymaynotbeadequate.
The company currently operates in 6 states. As of FY 2017, the Company sold more than 2400 solar pumpcontrollers,190solarpumpsand13coldstorages.
Stellaps is an agri-tech "internet of things" company that provides end-to-end technologysolutions forthedairysupplychain. Itprovides farmautomationservicesaswellassupplychainmonitoringsolutionsfordairyfarmers,dairycompaniesandco-operatives.Itcurrentlyoperates across Karnataka, Tamil Nadu, Kerala, Maharashtra, Gujarat and recently beganoperationsinRajasthanandPunjab.
Thecompany'sSmartAutomaticMilkCollectionUnits,placedatthemilkcollectioncentres,testthemilkandgivethefarmeraprintedreceiptofthequalityandamountpayable;alocallanguagetextmessageisalsosenttothefarmers.Thistypeofsystemistypicallyusedinco-operativesandprivatecompanieswheremilkiscollecteddirectlyfromfarmers.Thecloud-basedbackendallowsthecompanytoaccessrealtimeinformationatalowcost.
Otherofferingsinclude'SmartFarms'-integratedsystemsfortheautomatedmilkingofcowsindairyfarms-and'Contrak'-remotesensingdevicescapableoftrackingtemperature,volumeandanyinflowsoroutflowsinrealtimethusenablingremotemonitoringofthesupplychain.
Food&Agriculture
10.0%
85.0%
5.0%
SupplierFarmers FarmerswhoreceivedinputsFarmerswithimprovedefficiency(technology)
3
1
1
1
6
2
5
2
4
8
8
8
4
1
1
4 4
2
3
3
CaspianImpactInvestments:SocialPerformanceReport2017
CumulativeDisbursementssinceinception.
INR975MILLION
ofAnnualDisbursementsweretoFood&Agricompanies.
19%
Relationshipssinceinception.
18
ofportfoliocompanieswererepeatclients, takingmorethanoneloanfromCII,28%availedofmorethan3loanstilldate.
56%
ofportfoliocompanieshadCIIasafirstorsecondlender,beforetheycouldqualifyforotherinstitutionalfinancing.
19%
outof16activeportfoliocompaniesinFY17wereEBITDAnegative at the time of their first CII loan. 4 of themturnedpositivethisyearonaquarterlybasis.
6
11
Metrics IRISMetric FY2015 FY2016 FY2017
NumberofCompanies NA 8 12 16
NumberofFarmers* NA 73,404 327,502 346,580
AreaCultivated(Acres)** PI7403 107,637 691,451 1,053,091
NumberofFullTimeEmployees
0I3160 2,080 1,750 3,191
Theportfoliocontinuedtobewelldiversifiedacrossregionandcommodity.6portfoliocompaniesoperatedacrossmorethantenstateswhiletheremaining10operatedmainlyinthesouthern,centralandwesternpartsofIndia.
Farmeroutreachincreasedby~9%,duetothegrowthofourportfoliocompaniesandtheadditionof3newclientsthisyear.
8 of our 16 clients have certifications orexternal ratings covering different aspects of their operations. These include GLOBAL G.A.P,Sedex,HACCP,OrganicCertification,FairTradeCertification,andinonecase,M-Cril.
*NumberoffarmersisabroadoutreachfigureandincludesfarmersfromwhomourF&Acompaniespurchasedirectly,farmerswhoreceiveinputsandadvicefromourcompanies,andthosewhopurchaseproductsandservicesfromourclients.ItreferstofarmersincontactwiththecompanyasonthelastdateoftheFY.
#activecompanieswithoperationsineachstate&UTinFY17
Geographicalpresenceofcompanies
FoodandAgriOutreach
NumberofFarmers:Classification
**AreacultivatedreferstototalacreageundermanagementduringtheFY,directlyandindirectly.Thelandmayproducecropsforprocurement,ormaybecoveredusingourclients'inputs.
AggregateddataforallcompaniesinourportfolioforthemajorpartofFY17
7
5
SMALLBUSINESSFINANCEMicro,mediumandsmallenterprises(MSMEs)contributetomorethan30%ofIndia'sGDPandareprolificjobcreators.Thereareanestimated51MnMSMEsinIndiaacrossvariousindustries,employing117millionpeople.Andyet,avastmajorityofthemdonothaveaccesstoadequatecredit, forgrowth.Poor infrastructureand inadequatemarket linkagesare theotherkeychallenges thatconstrain thegrowthof thiscriticalsector.
In order to achieve higher levels of economic productivity, we need to support productive activities, job creation, entrepreneurship andinnovation. We need to encourage the formalization and growth of micro-, small andmedium-sized enterprises, including through accesstotimelyandappropriatefinancialservices.
CaspianImpactInvestments:SocialPerformanceReport2017 12
SmallBusinessFinance
Our Objective: To support the growth of small enterprises in theinformalsegment,creatingincreasedemploymentopportunitiesfor lowincomecommunities.
FY2015FY2016
FY2017
ClientRelationships
CIIPortfolioGrowth
368500 430
380
607 726
Disbursements(INRMn) PortfolioO/S(INRMn)
FY2015 FY2016 FY20170
250
500
750
NumberofLoans
13
24
30
FY2015
FY2016
FY2017
0 5 10 15 20 25 30
Metrics IRISMetric FY2015 FY2016 FY2017
NumberofPortfolioCompanies NA 9 11 14
NumberofMSMEs PI9652 224,547 319,673 410,003
PortfolioatRisk>90days FP6373 1.12% 2.05% 3.44%
NumberofFulltimeEmployees OI3160 4,079 6,403 10,116
NumberofJobsintheunderlyingenterprises('000s)
PI4874 351 350 533
NumberofStatescovered NA 16 20 27
NumberofBranches NA 528 1,058 1,208
SmallBusinessFinanceOn-lendingPortfolio
16,20311,459 12,643
10,40514,461
27,767
Disbursements(INRMn)PI7569 PortfolioO/S(INRMn)PI5476
FY2015 FY2016 FY20170
10,000
20,000
30,000
ActiveduringtheFY
SmallBusinessFinanceOutreach
Ourportfolio companies collectivelyearned revenuesof INR10,597Mn and employed 10,116 full time employeeswhile the underlyingMSMEsthattheylenttosupportedoverhalfamillionjobs.
Cumulativeuniqueclients
CaspianImpactInvestments:SocialPerformanceReport2017 13
Over the past few years, the small business finance space hasevolved significantly. Today, we have, in addition to conventionalbrickandmortarplayers, 'fintech' lendersthatusedataanalyticstomake lending decisions quickly, and other lending platforms thatconnectlenderswithsmallbusinessborrowers.SomelendersfocusonspecificSMEsegmentswhileothersaremorediversified.Thenewsmall finance banks, most of which have commenced bankingoperations,willalsoleadtoanincreasedfocusonthisspace.
Ourportfoliocompanies in thissectoruseamixof technologyandtouchtolendtosmallbusinesses.Somelendersspecialiseinspecificsegments such as education, or specialise in geographical clusters,whileothersspecializeinapproachintermsoftheirproductoffering.
Duringtheyear,wefinanced14SmallBusinessLenderswithaloanportfolio of INR 27,767Mn and an active enterprise client base of410,000.
MICROFINANCEMicrofinanceistodayamatureindustryinIndiawithphenomenalgrowthoverthepastseveralyearsbuoyedbyincreasedcapitalflowsintothesectorincludingfrommainstreaminvestors.Thesectorfacedamajorcrisisin2010,butrecoveredwellandeventhrivedsincethen,aided by central bank regulation, self-regulation through industry bodies and the establishment of credit bureaus. In a significantdevelopmentduringthelastfiscalyear(FY15-16),8MFIsobtainedsmallfinancebanklicencesfromtheReserveBank(atotalof10licenceswereissued).
AttheendofFY2017,theindustryhadaportfolioofINR924Bn/USD14Bn(excludingINR145Bn/USD2.2Bnof6SFBs),agrowthof26%overFY16.Approx.39millionclientsareservedbyNBFC-MFIsandSFBs.
Duringthisyear,theindustryfacedasignificanthitfromdemonetization,giventhelargelycash-basednatureofmicrofinancetransactions.Mostcompaniesarestillonthepathbacktonormalcy.
CaspianImpactInvestments:SocialPerformanceReport2017 14
MicrofinanceOurObjective:Toenable increasedaccesstofinancialservicesforthelowerincome,entrepreneurialpoorandfinanciallyexcludedsegmentsofthe population and enable them to better manage their financialresourcesandattainfinancialstability.
Demonetisationanditsimpact:
During this financial year, Microfinance institutions across thecountrywereimpacted,somequiteseverely,bydemonetisation(theGovernment'sdecisiononNov8toscrapcertainhighvaluecurrencynotes (INR500and INR1000).Giventhepredominantlycash-basedoperations, collectionsplummeted in the immediate aftermath ofthisannouncement,withafewregionalexceptions.
Withgradually improvedcashcirculation,collectionswereexpectedtoimprovebyMarch/April2017.Howeversomestates(UP,UK,MH,HR,DL,PN,KA,MP) continued to showdeclining collectionsdue topolitical factorsandrumorsofa loanwaiver.AsofMarch2017 theindustry PAR 30+ was 11% and PAR 90+ was 5%. With the RBIdispensationonNPArecognition*,thefullfinancialimpactmayonlybefeltinFY18.
DuringFY2017,theGrossLoanPortfolioofNBFC-MFIsgrewby25%over FY16 (YoY) and 5% over Q3FY17 (QoQ), the slowest in manyyears.AsMFIscontinuetheireffortstostabilize,growthisexpectedto slow downin FY 2018, at25-30%, compared to 50-60% annualgrowthachievedinthepastfewyears.
OurMicrofinancePortfolio
Microfinance formed 20% of our year-end portfolio and 20% ofannualdisbursements,aconsciousreductionfrompreviousyears,infavorofamorediversifieddebtportfolio.Weendedtheyearwith17activemicrofinancerelationshipscomparedto16 thepreviousyearandthenumberofloansoutstandingreducedfrom24attheendofFY16to22attheendofFY17.
StartingFY16,wealsolendtofinancialinclusionenablers.Duringthisyear, we had three such companies in our portfolio - twobanking correspondents that source microfinance loans for banksand other partners and one rural-focused e-commerce companypartneringwithMFIstodelivermobilephonestoMFIclients.
FY2015
FY2016FY2017
ClientRelationships
CIIPortfolioGrowth
350600
343
442
705571
Disbursements(INRMn) PortfolioO/S(INRMn)
FY2015 FY2016 FY20170
500
1,000
NumberofLoans
12
24
32
FY2015
FY2016
FY2017
0 5 10 15 20 25 30 35
CaspianImpactInvestments:SocialPerformanceReport2017 15
Cumulativeuniqueclients
ActiveloansduringtheFY
MicrofinanceOn-lendingPortfolio
58,735
140,163 147,65547,663
119,951131,741
Disbursals(INRMn) PortfolioO/S(INRMn)
FY2015 FY2016 FY20170
50,000
100,000
150,000
*TheRBIprovidedanadditionalperiodof90daystoclassifyaloanaccount(upto1Cr)asanon-performingasset,forduespayablebetweenNovember1andDecember31,2016
(IncludestheBCs'portfolio)
Metrics IRISMetrics FY2015 FY2016 FY2017
NumberofPortfolioCompanies NA 10 12 16
NumberofActiveClients('000s) PI9327 3,548 7,033 10,070
WomenClients% PI8330 99.0% 97.8% 99.7%
RuralClients% PI1190 38.0% 60.2% 69.9%
UrbanClients% PI6751 62.0% 39.8% 30.1
PortfolioatRisk(PAR)>30 FP2635 0.16% 0.27% 16.99%
PortfolioatRisk(PAR)>90 FP6373 0.11% 0.19% 7.81%
NumberofFullTimeEmployees OI3160 10,280 22,134 30,094
AverageLoanSize PI5160 13,435 16,830 13,066
NumberofStates&UTscovered NA 19 26 28
NumberofBranches NA 1,254 2,629 3,823
AdditionalEquityRaised(INRMn) PI4142 3,980 4,273 13,492
The total number of active clients of the MFIs in ourportfolio increased by ~43% to ~10 Mn. The number ofemployeesgrewby~36%to30,094.
PAR>30and PAR>90, at 16.99% and 7.81% respectively,have shown a sharp increase as a result ofdemonetization.
MFIsinourportfoliocovered25statesacrossthecountry.CII's maximum single state concentration was at 22%(TamilNadu).
All the NBFC-MFIs and SFBs in our portfolio reported toone or more Credit Bureaus during the year and aremembers of MFIN, the self-regulatory body. 5 of ourclientshaveactiveSMARTcertifications.
Microfinance
CaspianImpactInvestments:SocialPerformanceReport2017 16
MicrofinanceOutreach
CIIexposurebystates&UTsattheendofFY17
Geographicalconcentrationofportfolio
AFFORDABLEHOUSINGInrecentdecades,theworldhasexperiencedunprecedentedurbangrowth.Indiaisnoexceptionwithoururbanpopulationgrowingby2.3%annually. Rapid urbanization brings enormous challenges, including growing numbers of slum dwellers and inadequate basic services and infrastructure.Themostbasicneed,thatofhousing,isavastunmetneed.ThecurrenturbanhousingshortageinIndiaisestimatedtobe19 millionhomes,withtheeconomicallyweakersectionsandlowerincomegroupsaccountingfor96%ofthisshortage.
Inthepastcoupleofyears,theGovernment'sreformagendahasbroadenedanda"HousingforAll"programwaslaunchedin2015thataimstobuild 20millionurbanhomesby2022.Variousincentivesarealsobeingextendedtotheprivatesectortoencourageagreaterfocusonaffordablehousing financeaswellashousingdevelopment.TheRealEstate(Regulation&Development)Act,2016cameintoeffectduringtheyear,aregulationthat appliestohousingdevelopers(hithertounregulated)andaimstoimprovetransparencyandcompliance.
Since2009,whenthefirstdedicatedmicro-mortgagecompanywassetup(MicroHousingFinanceCorporation,aCaspiangreenfieldinvestee throughourequityfund),morethan17otherHFCswithafocusonaffordablehousingfinancehavebeenlicensedwiththeNationalHousing Bank. While their share of the overall housing market remain very small,the favorable policy environment, the vast unmet demand and theexcellentfinancialperformanceofthesenewcompaniesthusfar,isresultinginstronggrowth.
CaspianImpactInvestments:SocialPerformanceReport2017 17
CaspianImpactInvestments:SocialPerformanceReport2017 18
AffordableHousingOur Objective: Good quality housing has the potential to improvehealth,hygiene,education,andoverallqualityoflife.Byprovidingdebtfinance to affordable housing companies (finance, development,rentals),wesupportthescaleupofaffordablehousingsolutionsforlowincome and informal segment households, enabling larger homeownershipand/oranupgradationinexistinghousingconditions.
OurHousingPortfolio
Affordable Housing formed ~13% of our year-end portfolio and~24% of annual disbursements. Our cumulative disbursement inthissectorsinceinceptionisINR575Mn.
The portfolio includes micro mortgage companies, homeimprovement companies,affordable housing developers and onerentalhousingprovider.
Housing Finance: We have one housing finance company in ourportfolio this year which extended loans for home acquisition. Ithad9,651activeclientsattheendoftheyear,56%ofwhomwerewomen.
Home Improvement: We worked with a non-profit MFI based inTamil Naduthat has worked almost exclusively in the water andsanitation space for over two decades. TheMFI provides loans tolow income rural and urban householdsfor the purpose ofconstructingwaterandtoiletfacilitiesandhad23,278activeclientsattheendoftheyear,100%ofwhomwerewomen.
HousingDevelopment:Thetwohousingdevelopmentcompaniesinour portfolio have launched the construction of 6,907 homes ofwhich~68%havebeensold.
RentalHousing:Our portfolio company, Aarusha Homes providesgood quality and short term rental housing solutions to urbanmigrantswhomovetothecitiestoworkintheorganizedsectororfor higher education. Aarusha offers good quality rooms, food,purifiedwater,securityandotheramenities.Thehostelsarelocatedinstrategiclocationstomakeiteasierfortheirclientstocommute.~40%of their clients arewomen.AsofMarch2017, the companysetup21hostelswith4,745beds,withanoccupancyrateof~65%.
NumberofRelationships
2 2
2
1 1
2
1
1
HFCs Developers HomeImprovement RentalHousing
FY2015 FY2016 FY20170
2
4
6
CII'sPortfolioGrowth
50 50
410
57 74
292
Disbursements(INRMn) PortfolioO/S(INRMn)
FY2015 FY2016 FY20170
100
200
300
400
500
3793millionHFCandMFILoanportfolio32,929
Clienthouseholdsreceivedhousing/homeimprovementloans
87%ofloanclientswerewomen
6,907Homeslaunched/underconstruction
Cumulativeuniqueclients
HousingFinanceOn-lendingPortfolio
1,817
1,215
3,793
PortfolioO/S(INRMn)PI5476
FY2015 FY2016 FY20171,000
2,000
3,000
4,000
584Employees
AffordableHousing:ClientSnapshotThe two affordable housing project developers in our portfolio create housing stock at a price point accessible to the low and middleincomesegmentwheredemandfaroutstripscurrentsupply.
The mission of DBS is to make market-based and affordablehousing solutions available to low income groups that have verylimited or no access to the formal real estate market. Given themassive housing shortage in the country for low incomepopulations,DBS is focusedonputting inplacea systemof largescalemassproductionofaffordablehomes.Thecompany'svisionistodeliver10,000housesby2019.
OurloantoDBSisforaprojectnearanindustrialareainGujarat.Buyers are primarily blue-collar workers from nearby factories. Inthisproject,thecompanyisbuilding376residentialunitsofvaryingconfigurations-87%oftheunitsare1-2roomapartments.
Buyercomposition(%)
Self-employed Salaried Retired
Buyerincomeprofile(%)
> 5Lakhs 3-5Lakhs 1.5-3Lakhs <1.5Lakhs
VBHCValueHomesprovidesaffordablehousinginthepricerangeof INR 15 -35 lakhs in urban areas. The Company currently hasprojects in the suburban areas of Bangalore, Chennai, Mumbai,and National Capital Region (“NCR”). The company's focus onbuildinghighqualityhousingstockatanaffordablepricepointona large scale makes it a potential leader in this space. VBHC hasbeenaCaspianequityinvesteesince2011.
Amajorityofitscustomerbasecomprisesfirsttimehomebuyers.85%ofBuyersaresalariedindividuals.57%earnlessthanINR5Lakhs/USD7,500annually.
Buyercomposition(%)
Self-employed Salaried Retired Housewives Students
Buyerincomeprofile(%)
> 5Lakhs 3-5Lakhs 1.5-3Lakhs <1.5Lakhs
61%oftheirbuyersareself-employedand73%haveannualhouseholdincomeoflessthanINR5Lakh/~USD7500.
The company works with partner-NGOs on marketing andfinancialliteracytrainingandwithhousingfinancecompaniestofacilitate mortgage finance for the buyers. DBS CommunitiesobtainedaGIIRSratingin2015-thecompanygota4Starratingfor Operations (ESG) and a Platinum rating for their ImpactBusinessModel(IBM).
VBHCworksonauniquemodelthatconsiderslandasinventoryinsteadofacapitalassetthatappreciateswithtimeandusesanassembly line approach to construction and development, withstandardizeddesign,materials,executionprocessesandcontrolfunctions.
The company has a major focus on energy efficiency. TheirprojectatAnekal(thecompany'sfirst)isAsia’sfirstExcellenceinDesignforGreaterEfficiencies(EDGE)certifiedbuilding,aGreenstandard adopted by IFC. To qualify for certification, a newbuilding must achieve a 20% reduction in energy, water, andembodied energy in materials compared to a conventionalbuilding.
DBSAffordableHomeStrategy
VBHCValueHomes
CaspianImpactInvestments:SocialPerformanceReport2017 19
HEALTHCAREHealthcare delivery in India has improved significantly but we continue to lag in terms of Key Health Indicators. In addition to the vastinfrastructure gap(we need 3.5 million additional beds, 2-3 million doctors and 6 million nurses), there is a severe shortage of skilledmanpower,especiallyinruralareas.50%ofthepopulationtravelmorethan100kmstoaccessahigherlevelofcare.Publicexpenditureoncorehealthcareisonly1%ofGDPinIndia.Thereisalsoaclearurbanbias:morethan80%ofdoctorsaresituatedinurbanareas.Overtheyears, Indiahasseenmassiveactivity intheprivatesectortoaddresstheseveregapsinhealthcare infrastructureanddelivery.Theprivate sector today dominates the healthcare delivery segment, with a 72% share in total healthcare spend, 74% of hospitals and 40% ofhospitalbeds.Theprivatesectorhasintroducedarangeofinnovationsinhealthcaredelivery-identifyingkeypainpointsinthesupplychainandsettingupinitiativesthatespeciallyaddressthelowincomemarket.
CaspianImpactInvestments:SocialPerformanceReport2017 20
HealthcareOurObjective:Toenableimprovedaccesstoqualityhealthcareatanaffordablecost.Whileourfocusisonenablingbetterhealthcareaccessforlowincomepopulations,clientprofile(ex-bluecollarworkers)andregion(TierY/Zlocations)serveasaproxyforthis.
WeaddedHealthcare toourmandate inFY2016.Wesupport thegrowth of commercially viable companies that provide improvedaccesstohealthcareforunderservedpopulationsbyeitherbuildinga physical healthcare distribution channel, or by using technologysolutionsthatimproveefficiencyandreducecostofdelivery.
OurHealthcarePortfolio
We ended FY 2017 with 3 healthcare companies in our portfolio.Thesecompanieshavedistinctbusinessmodels:
1) Providing primary healthcare access to workers by setting up andmanagingclinicsinfactoriesandotherofficelocations;
2) Providing affordable eyecare in underserved regions by setting upfullyequippedsurgicalhospitalsinTierYorZlocationsandprimaryeyecarecentresinsmallerlocations;and
3)Distributingmedicaldevicesandconsumablestosmallandmediumsized hospitals, nursing homes, single doctor clinics and resellers,primarilyinnon-TierXlocationswherethereislimitedaccesstomedicaldevices.
CIIPortfolioGrowth
5
25
5
27
Disbursements(INRMn) PortfolioO/S(INRMn)
FY2016 FY20170
10
20
30
FY2016
FY2017
NumberofRelationships
NumberofLoans
1
4
FY2016
FY2017
0 1 2 3 4
MedicalconsultationsduringtheFY
312,677
Factorieswhereprimaryhealthcarefacilitiesareoperational
23
PrimaryHealthcareclinicsoperatinginTierY/Zlocations
20
OPDeyecarepatients
67,49842,063
Eyecarehospitals/clinics9170
Eyesurgeriesconducted
671
(Thisdatapertainstothe1primaryhealthcareproviderintheportfolio) (Thisdatapertainstotheaffordableeyecareproviderintheportfolio.DatapertainstooperationsinthelastquarterofFY17)
Cumulativeuniqueclients
1 3
ActiveloansduringtheFY
PrimaryHealthcareOutreach AffordableEyecareOutreach
Childrentreated/consulted
EyeCampsconducted
CaspianImpactInvestments:SocialPerformanceReport2017 21
CLEANENERGY&ENERGYEFFICIENCYNearly~50millionruralhouseholdsinIndiahavelittleornoaccesstogrid-basedelectricityandrelyinsteadonkeroseneastheirprimarysourceoflighting,whichresultsinenvironmentalpollutionfromcarbonemissionsaswellaschronicillnesses.Beyondelectricity,thesecommunities/householdshavescarceaccesstomodernformsofcookingenergyorenergyforpurposeslikeirrigationandotherproductivecauses.
Inadditiontoenablingaccesstothosewholackaccessorhavehighlyerraticaccesstogridpower,asustainableenergyfuturerequirestransitionfromfossilfuelbasedenergysourcestocleanandrenewablesourcesaswellaslargescalereductioninenergyusethroughtheadoptionofenergyefficientproductsacrossbothhouseholdsandotherestablishments.
CaspianImpactInvestments:SocialPerformanceReport2017 22
CleanEnergy&EnergyEfficiency
OurObjective:Toenableaccess to cleanenergy for segmentsof thepopulation without access to the grid, to increase the adoptionof renewable energy by the general population in order to reduceconsumption of fossil-fuel based energy, and to support the adoptionofenergyefficientproductsandsolutions.
We added clean energy & energy efficiency to our mandate inDecember2016.Welendtocompaniesthat:
a) Provide clean energy access to un-served/ underservedhouseholds and businesses that either lack, or have erratic, gridaccess;b)Providecleanenergyaccesstohouseholdsandenterprisesthathavegridaccessbutwishtoadoptrenewablesources;c)Operateintheenergyefficiencyspaceandthroughtechnologicalinnovation,significantlyreduceenergyconsumption.
As of March 2017, we had 1 energy efficiency company in theportfolio.
Silvan InnovationLabs.Silvan isahomeautomationtechnologycompany that allows customers to control multiple homeappliancesanddevicesusingtheirsmartphones.
Productofferingsincludemotionsensingsmartlightingsolutionsand security solutions. Silvan caters to both the B2C and B2Bbusiness segments. Its products result in increased energyefficiencyandamorejudicioususeofelectricity.
AsofMarch 2017, Silvanhas executed 41 energy efficiencyprojectsandhasinstalleditssmartsolutionsin382homes.
ClientSnapshot:SilvanInnovationLabs
CaspianImpactInvestments:SocialPerformanceReport2017 23
Other Sectors
Hippocampus operates low cost, high quality pre-schools forchildren aged 3 to 6 years in small towns and villages. Theschools have holistic curricula which focus on learningoutcomes. The company has 300+ learning centres and 4schools.
AsofMarch2017,wehad3portfoliocompaniesfromamongthesefivecategories-twoarefeaturedbelow.
Waterlife provides potable water to rural communities byinstalling and operating community water purification plants.Capex is covered by government or CSR partnerships, whilemaintenance and operating costs are paid for by customers.Waterlifealsocreatesjobs,byhiringandtrainingoperatorsfromlocal villages to operate, maintain, and service the purificationplants, and by establishing a distribution network of localentrepreneurstodeliverwatertoremotepartsofthevillage.
TowardstheendofFY2017,weaddedthefollowingsectorstoourmandateaspartofourongoingdiversificationstrategy.
9,215Pre-schoolstudents
3,045Students(ownschools+partnerschoolsusingHippocampustools)
4 294 26Schools LearningCentres SchoolPartners
8Statescovered
386Waterpurificationplantscurrentlyoperational
175 9%LocalPlantOperators WomenOperators
CaspianImpactInvestments:SocialPerformanceReport2017 24
ClientSnapshots
HippocampusLearningCentres Waterlife
LearningCentresincl.45Franchisees
EducationandSkillDevelopment
Livelihoods ICT&Physicalconnectivity
WaterandSanitation Environment
Deliveryofgoodquality,affordableeducationandskill
developmenttrainingtolowerincomeor
underservedcommunitiesincludingthedifferently-abled.
Enablelargescalejobcreationor
improvedincomeforunemployedorunder-employedsectionsof
society.
DevelopICT-basedorphysicalchannels
thatenableaccesstoproducts,servicesand/oreconomicopportunities.
Accesstosafedrinkingwaterandsanitation,
promotingbetterhealthand/orconservationof
theenvironment.
Contributetowardsahealthierplanetby
providingoradoptingeco-friendlyproductsor
services.
CorporateSocialResponsibility(CSR)The approach to CSR must integrate with the core businessstrategy, address the well-being of all stakeholders and not justthecompany’sshareholders.PhilanthropicactivitiesarebutapartofCSR.
By this measure, Caspian's core mission, strategy and focusreflect a deep commitment to corporate social responsibility. Wehave gone a step further in 2017 by becoming a Certified BCorporation(seesectiononBCorp).
In accordance with Schedule VII of the Companies Act, 2013, wechoseEducationasthefocusforCIIforFY2017.Wehaveworkedwiththefollowingpartnerinstitutionsduringtheyear:
1.SageSevaSociety
Sage Seva Society is a non-profit founded in 2007 with theprimary objective of providing quality Education to underprivilegedchildreninremoteruralareasatanaffordablecost.
TheSageSocietycurrentlyrunstwoSchools,oneeachatChennurandMedaripet,bothinAdilabaddistrictinTelangana-identifiedas one of the 50 most backward districts in the country by theGovt.ofIndia.Tribalsconstituteasignificantportionofthedistrictpopulation.
During this financial year, we have provided financial support toSage for the purpose of improving the general infrastructure inthese two schools including adding a library, improving audio-visualaidsandcomputerfacilities.
2.ParinaamFoundation
Parinaam’sAcademicAdoptionProgramisdesignedtotransformthelivesofdesperatelypoorchildrenbyprovidingthemaccesstohigh quality education in the English medium through academicscholarships. It is a program wherein generous patrons adopt achildtosponsorhis/herstudiesuntilcompletionofschoollife.
We have sponsored the school education of 37 children underthisprogram.
2.Janaagraha
Janaagrahaiswidelyrecognisedasthecountry’sleadingadvocatefor large-scale urban reform and civic participation. Janaagrahaworks with citizens on catalysing active citizenship inneighbourhoods and with governments to institute reforms tocity-systemsacrossthefollowingprogrammes.
Janaagraha believes that Good citizenry is the key to buildinghealthy and vibrant cities. The children of today will be the adultcitizens of tomorrow, and will play a vital role in developing ourfuturecommunities.
Towards this, in 2001, Janaagraha started the Bala JanaagrahaProgram, a civic education program, which aims to transformtoday’s children into informed, responsible and active citizens.Theprogramisdesignedtoenablecriticalthinkingwhenitcomesto addressing local civic challenges. In the long run, Janaagrahaexpects a multiplier effect that will lead to the creation of youthleaders, who can be agents of change in their homes andneighborhoods.
The Program is currently in its 15th year and has grownsubstantially.From5schoolsreaching700studentsinBangalorein2002,theprogramnowcovers25citiesacrossIndia,withmorethan40,000studentsin536schools(includingHyderabad).
During FY 2017, we have provided financial support for theimplementation of the Bala Janaagraha program across 16schoolsinHyderabad.
3.InternationalAssociationforHumanValues(IAHV):
IAHVprovidesaccesstofreeandholisticeducationtoover39,000underprivilegedchildreninslum,tribalandruralbeltsacrossthecountry.Theyhaveestablished>400schoolsintribal,urban/slumand rural areas across the country including Jharkhand, WestBengalandTripura(NorthEastIndia).
We have worked with IAHV for the past three years, focusing ontheschoolstheyruninthethreetribalvillagesofDadika,KalchitiandChakdohainGhatsila, Jharkhand.InFY 2015, we contributedtowards the installation of solar-powered digital classrooms inthese tribal schools. In FY 2016, we funded the student mid-daymealprograminthesameschools.
DuringFY2017,wecontinuedoursupportofthestudentmid-daymealprogram.
CaspianImpactInvestments:SocialPerformanceReport2017 25
CaspianisaCertifiedBCorporation
OnJune20,2017,CaspianbecameaCertifiedBCorporation.
BCorpsarefor-profitcompaniesthatusethepowerofbusinesstosolvesocialandenvironmentalproblemsinanethicalandtransparentmanner.
CaspianisthefirstIndianImpactInvestingfirmtobegrantedaBCorpcertification.
TheBCorpcertificationbyBLabconfirmsthatCaspianmeetsrigorousstandardsofsocialandenvironmentalperformance,accountability,andtransparency.Duringtheprocess,wehavebeenevaluatedonhowourpracticesimpactouremployees,ourcommunity,theenvironment,andourcustomers.BCorp'smeasurementpracticesaredynamic(theyareupdatedeverytwoyears)andtailoredtosize,industryandlocation.
Theminimumqualifyingscoreis80outof200.Ourscorewas109.7.Themedianscorefor"BestfortheWorld"BCorpsis131.
Today,thereareover2,100CertifiedBCorpsacross50countriesand130industries.Weareproudtojointheminredefiningsuccessinbusinessandbuildingafuturewhereeveryoneusesbusinessasaforceforgood.
ThecorevaluesthatCertifiedBCorpsembodyareinperfectalignmentwiththewaywehaveconductedbusinessatCaspiansincewewerefoundedin2004.Asanimpactinvestmentmanagerinvestingonlyinentrepreneursandbusinessesthatsolvesocialorenvironmentalproblems,weholdourselves,aswellasourportfoliocompanies,tohighstandardsofgovernance,transparency and ethics. We believe in working for the benefit ofall stakeholders, including employees and the widercommunity.
CaspianImpactInvestments:SocialPerformanceReport2017 26
GlossaryAbbreviations:
1.G.A.P:GoodAgriculturalPractices.2.GIIRS:GlobalImpactInvestingRatingSystem(http://b-analytics.net/giirs-funds)3.HACCP:HazardAnalysisandCriticalControlPoints4.HFC:HousingFinanceCompany5.MSME:Micro,Small&MediumEnterprises6.MFI:MicrofinanceInstitution7.NBFC:NonBankFinanceCompany8.NBFC-MFI:NonBankFinanceCompany-Microfinance9.NHB:NationalHousingBank10.SBF:SmallBusinessFinance14.SDGs:SustainableDevelopmentGoalsorGlobalGoals(https://sustainabledevelopment.un.org/sdgs)15.SME:Small&MediumEnterprises
Definitions:
1.AffordableHousing:PertheReserveBankofIndia(RBI),thecostofaffordableresidentialpropertyshouldbelessthanRs65lakhinthe6metrocitiesandlessthanRs50lakhinnon-metros.Priorto2014,thelimitwasuptoRs25lakhformetrosandRs15lakhfornon-metros.2.EWSandLIG:EWShouseholdsaredefinedashouseholdshavinganannualincomeuptoINR3,00,000.States/UnionTerritoriesshallhavetheflexibility to redefine theannual income criteria asper local conditions in consultationwith theCentre. LIGhouseholds aredefinedashouseholds having an annual income between INR 3,00,000 and INR 6,00,000. States/Union Territories have the flexibility to redefine theannualincomecriteriaasperlocalconditionsinconsultationwiththeCentre.(http://mhupa.gov.in/writereaddata/HFA_guidelines_March2016-English.pdf)3 .Global GAP: GLOBAL GAP is an internationally recognized set of farm standards dedicated to Good Agricultural Practices (GAP).Throughcertification,producersdemonstratetheiradherencetoGLOBALG.A.P.standards.4.IRISMetrics:IRISisthecatalogofgenerally-acceptedperformancemetrics.IRISismanagedbytheGlobalImpactInvestingNetwork(GIIN),anonprofitorganizationdedicated to increasing thescaleandeffectivenessof impact investing.TheGIINoffers IRISasa freepublicgood tosupport transparency, credibility, and accountability in impact measurement practices across the impact investingindustry.https://iris.thegiin.org5.LowIncomeStates:UttarPradesh,Bihar,MadhyaPradesh,Odisha,Chhattisgarh,Jharkhand,Rajasthan,WestBengal6.Sedex:Globalcollaborativeplatformforsharingresponsiblesourcingdataonsupplychains.ThousandsofcompaniesuseSedextomanagetheirperformancearoundlabourrights,health&safety,theenvironmentandbusinessethics.7.SMART:TheSmartCampaignembodiesa setof coreprinciples for the treatmentof clients - theminimumstandards that clients shouldexpecttoreceivewhendoingbusinesswithafinancialinstitution.9.TierY/Zlocations:Cities/townsclassifiedbytheGovernmentofIndiaassuchforthepurposeofallowancestobepaidtopublicservants.WeuseTierYandZasaproxytoindicatetowns/citiesthataresmaller,havealowercostoflivingandareunservedorunderservedwithrespecttoessentialproductsandserviceswhencomparedtometropolitan(TierX)cities.
DataDisclaimer
Data,unlessspecifiedotherwise,correspondstotheendofthefinancialyear,i.e.March31,2017.WhilewehaveusedourreasonableeffortstoensuretheaccuracyofthedatausedinthisReport,datafromourportfoliocompanieshasnotbeenauditedorindependentlyverifiedbyCaspian.Dataoncertainmetricshasbeenreceivedfrommostbutnotallofourinvesteecompaniesandhenceanyaggregateddatadoesnotnecessarilyincludeallthecompanies intheportfolio. Insomecases,themostrecentlyavailabledatafromacompanyhasbeenincludedandrelatesascloselyaspossibletofinancialyearend2017.DataonjobsinunderlyingSMEenterprisesinourSmallBusinessFinanceportfolioincludesestimatesmadebysomeofourSBFcompaniesandshouldbereadasbeingindicativeofscaleratherthanexactfigures.SectoraldataatanallIndialevelhasbeentakenfromgovernmentdatabasesorotherreliableinternationalorganizationalsources.Incertaincases,thesedatadonotpertaintothecurrentfinancialyearandmaypertaintoimmediatelyprecedingyears.
CaspianImpactInvestments:SocialPerformanceReport2017 27
AcknowledgementsWegratefullyacknowledgethefollowingpublicsourcesforthemacro/sectoraldatainthisreport:
1.TheAgriculturalCensus2010-11:http://agcensus.nic.in/document/agcensus2010/completereport.pdf2.MFINIndia:TheMicroMeterforFY2017:http://mfinindia.org/latest-news/micrometer-issue-21-fy-16-17/
3.Sa-Dhan:TheBharatMicrofinanceReport2016:http://indiamicrofinance.com/wp-content/uploads/2016/09/The-Bharat-Microfinance-Report-2016.pdf
4.TheWorldBank:http://data.worldbank.org/indicator/SP.URB.GROW?locations=INhttp://data.worldbank.org/indicator/SH.XPD.PUBL.ZS
5.TheCensus2011:http://censusindia.gov.in/2011-prov-results/paper2/data_files/india/Rural_Urban_2011.pdf
6.Reportofthetechnicalurbangrouponurbanhousingshortage2012-2017MOHUPA20127.InternationalEnergyAgency:https://www.iea.org/publications/freepublications/publication/IndiaEnergyOutlook_WEO2015.pdf
8.PWC:FundingIndianHealthcare:http://www.pwc.in/assets/pdfs/publications/2017/funding-indian-healthcare-catalysing-the-next-wave-of-growth.pdf
9.IndianChamberofCommerce:SectorBrief-May2015:https://www.indianchamber.org/sectors/healthcare/healthcare-notes-may-2015/
10.KPMG-OPPI:ReportonHealthcareAccessInitiatives:https://home.kpmg.com/in/en/home/insights/2016/08/report-on-healthcare-access-initiatives.html
11.MinistryofMicro,Small&MediumEnterprises:AnnualReport2015-16:http://msme.gov.in/sites/default/files/MEME%20ANNUAL%20REPORT%202015-16%20ENG.pdf
12.NationalHousingBank:http://www.nhb.org.in/List-of-HFCs-Registered-with-NHB-19-02-2016.pdf
PhotoCredits:
Ourportfoliocompanies;Photographer:RahulThomas.Healthcare:Photobyfreestocks.orgonUnsplash.CleanEnergy:PhotobyBielMorroonUnsplash.
CaspianImpactInvestments:SocialPerformanceReport2017 29
CaspianImpactInvestmentAdviser(P)Ltd3rdFloor,8-2-596/5/B/1RoadNo.10,BanjaraHills
Hyderabad,TelanganaState-500034IndiaEmail:[email protected]
www.caspian.in