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8/9/2019 What It Takes to Be a Finance Professional... SIMS
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SIMS
"What it takes to be a Finance
Professional?"
05.06.2010
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Finance definition
finance (fnans, f nans)
noun
the money resources, income, etc. of
a nation, organization, or personthe managing or science of managingmoney matters, credit, etc.
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FINANCE PROFESSIONAL
Product
Market
Customer
Distribution channel
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Product
Retail Finance
Corporate Finance
Investments
Capital Markets
Investment Banking
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Product
Forex
Insurance
Mutual Funds
Alternative Investments ( Private Equity,RealEstate... New Age products)
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Market
Local Urban and Rural
International- Unlimited Opportunitieswith Globalisation.
The income and consumptionlevels are rising therefore creatingnew markets
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Customers
Retail customers
Corporate Customers
HNI
NRI
New customer class getting createdwith M&A deals,Overseas acquisitions
by Indian companies
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Distribution Channels
Banks
NBFCs
Broking Firms
Insurance Companies
Private Equity Firms
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Distribution Channels
Asset Management Companies
Forex Dealers
Primary Dealerships
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FINANCIAL SERVICES..
Roles people Play
Sales
Marketing/Product
Research
Credit
Operations
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Roles people Play
Treasury
IT
Collections
Customer service
BIU
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BANKING SECTOR
Asset Side
Highly profitable business if Operating Costand Quality of loans is the focus
Liability Side Source of low cost of fund and fee incomethrough distribution
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Asset Side
Retail Loans
Car loan Home loan
Personal loan
Credit Cards
SME/SEG Group
Loan against Property
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Asset Side
Corporate Loans
Term loan
Working Capital facility
Non Fund Based- Bank Guarantee/Letter of Credit
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Liability Side
Managing Deposits and Investments
Branch Banking-
Acquisition and servicing of bankaccounts- CASA (Current accounts and
Savings accounts)
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Liability Side
Fee Income-
Selling Investment Products- Fixed
deposits,Insurance, Mutual Funds, RealEstate,Private Equity Funds,Forex,Gold
Cross selling is the key strategy
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2008 survey by Dun & Bradstreet
As in 2008, in the banking industrythere are-
No of offices/branches- 56640(Pvt Banks-
7000 apprx) No of employees- 893353 (Pvt Banks-160000 apprx)
No of ATMs-2
7088
( Pvt Banks-10800
apprx)
Growth has been phenomenal... Willcontinue.....
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FINANCIAL SERVICES INDUSTRY
One of the highest paid
Large Recruiters- Both Fresher and
Lateral InterRelated with Many other
Employers- Insurance Companies/
Broking Houses/ Asset ManagementCompanies/ Private Equity Firms-
Industry as a whole has ample space
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Backdrop to the Indian economy
Share of GDP (%)
1951 1991 2008
Agriculture 55% 31% 18%
Industry 15% 26% 27%
Services 30% 43% 55%
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Key pillars of sustenance and
growth in India
Domestic demand
Infrastructure
Skilled Manpower
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Domestic Demand
Young, working population
Increasing urbanization
Rising household incomes
Low penetration
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Infrastructure
Strong economic growth
Low infrastructure penetration
Strong government focus
Multiplier effect on economy
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Skilled manpower
Large, educated workforce
Increased efficiency of labour
Quality research institutes
India is a partner of choice
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Resilience of the Indian economy
Domestic consumption driveneconomy
Low exports to GDP ratio High forexreserves
Manageable external debt
Stability in banking system
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Resilience of the Indian economy
High savings rate
Manageable inflation.Proactive policymaking.
Reform process continuity
These factors provide sustainable growthpotential over the long term
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INDIA STORY
Role of Financial services Industry-
Very important for GDP Growth- Developedeconomies are seeing recession because of
financial crisis
Responsible Banking-
A sustainable industry. QUALITY OF LOANS
AND COST CONTROL
Indian Banks are better placed after sub primecrisis- Fewer losses..Traditional Banking
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INDIA... FUNDAMENTALS
Creation of new Markets
Above 300 million people are expected tomove up from the category of rural poor torural lower middle class between 2005and 2025.
Rural consumption levels are expected torise to current urban levels by 2017.
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INDIA.. FUNDAMENTALS
Such developments in India's markets areexpected to create major opportunities for Indian companies and multinationals (MNCs)alike and further fuel consumer demand in
India.
Despite the gloom in the global markets, Indiawill continue to be the second fastest growingeconomy in the world. Indian economy may wellgrow at over 7 per cent in 2008-09.
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SERVICE SECTOR... THE FASTRUNNER
One of the most important segments ofIndian economy
Has contributed nearly 63% of the GDP in2007-08
Dominant role in the economy accountingfor59.6% of the overall average growth inGDP in the last eight years between 2000-01 and 2007-08.
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INDIA.. A Long term growthstory....
According to a study by the McKinsey Global
Institute (MGI), Indian incomes are likely to
grow three-fold over the next two decades and
India will become the world's fifth-largest
consumer market by 2025, moving up from its
position in 2007 as the 12th-largest consumermarket.
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INDIA.. A Long term growthstory...
According to the National Council for Applied
Economic Research (NCAER) estimates, by
2012, only 14 per cent households in India willhave annual household incomes of less than
US$ 921.66, from 58 per cent in 1995-96 and 25
per cent currently.
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Challenges and Opportunities for
the Finance professional ..2020
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Challenges
Globalisation
Fluctuating demographics
Significantly increased businesscomplexity
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Changing role of a Finance Professional
Demise of the process focusedprofessional with most of their work being
automated or outsourced
The financial generalist will be valued
highly, someone whose understanding of
a broad range of issues will make them
able to act as a 'Navigator' in the businessworld.
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Skill sets to be acquired
KnowledgeUnderstanding of a broad range of issues...
CommunicationGeneral communication to applied
communication- There will be diversity
in the customer class
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The ability to exercise professionaljudgement based on a foundation of ethics,
broad but deep technical excellence,strategic awareness and communication willbe the key
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THANK YOU
[email protected] 9823128916
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ALTERNATE INVESTMENTS
A Sunrise investment asset class
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PRIVATE EQUITY
The Indian Private equity industry has maturedover the last few years
TOTAL INVESTMENTS 2005 06 07 08(USD bn.. Excluding RE 2.0 7.9 12.3 20
And Infra deals)
Avrg deal size 15 26 70 85+(USD mn)Increasing deal activity and opportunities forInvestments
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PE Market.. India- Total Market
Potential (2007-2012 cumulative)
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PRIVATE EQUITY
Fund raising at growth stage bydilution of capital i.e. by selling stake inthe company. Different from debt.PE Investors do
not look for interest on capital employed,investment is made with a timeframe tosell the acquired stake ( equity) at a
premium.Investors have high riskappetite but are very strong at due
diligence.
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EXIT OPTIONS
Sale to a strategic Buyer- Largebusinessgroups seeking to enter the businessor existingplayers wishing to enter a new
segment-Reliance Adlabs, Synergy Adlabs,Disney- UTV
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EXIT OPTIONS
Sale to a Financial Buyer- PE firmssuch as Blackstone,Columbia Capital,
Carlyle, TPG,Soros Funds.
IPO on domestic exchanges
Buyback of stake by promoters