1. Weathering the Storm : Ujjivan Best Practices
Change and to reposition Ujjivan for the future
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2. Index
 Formative Years
 Industry Crisis & Our approach
 Industry Crisis : Gaps in People Management
 Ujjivan’s response during crisis
 Post crisis : The Need for Change
 Guidelines for Change Leaders
 Change Management Programs Post Crisis
 Conclusion
 Lessons

3. Formative Years: 2005-2010
 Mission: financial inclusion of the urban & semi-urban poor
 Started our operations with 18 month pilot - November 2005 in Bangalore
 Our mantra - rapid expansion and break-even by the 4th year of operations
 Break-even in 2009-10, wiped-out start-up losses, dividends & bonus for
employees
Story of Robust growth
2005-2006 CAGR
Key Metrics (5 months) 2006-2007 2007-2008 2008-2009 2009-2010 2005-2010
Loan (Rs. Crores) 0.2 8.4 36.5 169 370 555.83%
Customers 1,110 22,220 68,033 295,903 620,624 386.27%
Branches 3 13 37 127 230 195.90%
States 1 1 4 11 13 89.88%
PBT (Rs. Crores) -0.5 -1.4 -2.9 -0.8 11.9 NA
PAT (Rs. Crores) -0.6 -1.5 -3 -0.7 9.6 NA

4. Industry Crisis & Our approach
 Uninterrupted growth - first half & ability to raise funds in second
maintain portfolio book size
 Collateral damage in credit portfolio and pro-active credit management
 Prudent Strategies that helped us emerge from the crisis unscathed:
 Exclusion of AP & other vulnerable areas
 Effective Business & HR practices helped during & after Crisis
 Impressive financial & business performance in 2010-11
Key Metrics 2009-10 2010-11 CAGR
Loan O/S (Rs. Crores) 370.1 625.1 69%
Customers 620,624 991,584 60%
Branches 230 351 53%
States 13 20 54%
PBT (Rs. Crores) 11.9 17.7 49%
PAT (Rs.Crores) 9.6 11.4 19%

5. Industry Crisis : Gaps in People Management
 Poor Staff & Customer Connect
 Nil or Poor communication in a by a hostile media reports on crisis, led to high
degree insecurity among staff & customers
 MFI had lost customer connect. Seen as a ‘low cost money lender’. Led to
customers not standing by the MFIs in face political & administrative onslaught.
 Job Insecurity
 Loan disbursements and recovery ground to a halt : paralysis of basic business
 Delayed salary payment & stopped incentive : led to frauds
 Rumors
 Mismanaged staff & competition spread rumors of closure non home stated
based MFIs, death of promoters & led to staff default
 No communication on assessment of crisis & direction from own company led
staff to believe rumors building a vicious cycle.

6. Ujjivan’s response during crisis
• Salaries: On time • Communication at
• Benefits : Staff Loans all levels : staff
& Advances as usual meetings
• Performance Bonus Salaries & Higher • FAQ for Employees &
Payments Customers
Benefits – Employee
as usual Connect
Other Mission
• ESOP at all levels Initiatives intact • Loan Disbursements to
based on existing customers
performance • Social Development
• Awards for Service Program
Quality Champions • Prudent Cash
Management

7. Post Crisis Analysis: The Need for Change
 Aggressive & uncontrolled growth brought crisis – “Prince to Frog”.
 Overextension of credit led to coercive collection - the key factors of crisis
 Ill-conceived Andhra Ordinance brought entire MFI sector to door of collapse
 Drying up of bank funding
 Post the crisis and dramatically changed regulatory & business environment.
Led to need to make fundamental changes in business operations remaining
true to our mission of providing financial services to the poor.
 This & next financial year we will undertake number of major changes in the
way conduct business.
 The leadership teams both regional & national have the important tasks of
leading the changes. It will be a important challenge & experience for each of
us to develop as change leaders.

8. Guidelines for Change Leaders
 Meticulous planning & execution taking the feedback from all parties involved:
staff & customers.
 Establishing a team with clearly defined responsibilities with time lines. Team
work under a leader has to work like a well oiled machine.
 Buy-in and involvement of key players - staff & customers. Communication &
interaction clearly discussing why we are undertaking the project, what is the
benefit to the customer, Ujjivan & staff are extremely important.
 Selecting the timing of executing the change is very important this includes
being completely ready: right staffing, training, infra-structure and the need to
execute the project as a part of the overall strategy/plan of Ujjivan.
 Those executing the project must have clear understanding of the constraints &
regulations within which we operate.

9. HR Change Management Actions - post crisis
 Equipping Staff through Training
 Domain refresher programs for Field Staff /Managers on changes in
products & process
 Exclusive Productivity Workshops at branch level
 Right Staffing:
 A 3 months Performance Improvement Plan to weed-out poor performers
 No retrenchment /Allow natural attrition
 Managing Branch Mergers:
 Lead by Chief Operating Officers; HR Manager pre & post visit
 Fortnightly Review by respective functions (HR, Admin, Distribution,…)
 Clarity on Roles & Responsibilities of new branch set-up

10. Change Management Programs - Post -Crisis
 Increased Operations Efficiency
 New core banking technology & DMS Project;
 Customer Retention – Monthly Meetings & ‘Mera Loan’
 Field staff increased efficiency programs to double customer handling
 New Product Lines post Malegam Committee recommendation
 Quality Control of Operations
 Diversifying Source of Funds from banks
 Increased Social Development Programs
 Introducing Credit Bureau checks for credit approval
 Financial Literacy Programs to Customers to manage their debt
 Sankalp – covered over 70% of customers in 3 months
 Diksha – led by service quality

11. Conclusion
 PAST: Our strategy to focus on urban & semi-urban poor and grow
nationally has built a solid base
 LAST YEAR: Coming out of the crisis stronger and acknowledged as one of
the best MFIs is a testimony to our past track record, professional
management and good governance
 PRESENT: These two years are going to be periods of change & steady
growth.
 FUTURE: We expect to grow at a steady pace in 25-30% range, which will
position us ideally in the future for a conversion to a bank for financial
inclusion.

12. Lessons
 Do not be complacent look at both direct & collateral damage
 Honest Communication: evaluation of problem, how it impacts us & plan
of action
 Be pro-active and pre-empt any damage
 Honest evaluation of all that went wrong and corrective action to be
taken.
 Buy in of all employees & customers of changes being made key to
successful execution
 Keep the faith : do not dilute the original mission.