PRIVILEGED AND CONFIDENTIAL
DO NOT COPY
SHIELDS INDIA LIMITED
October, 2002
Business Plan Copy Number 1
This document is Privileged and Confidential.
This document is not for Re-distribution. Do not Copy
Amit Gupta / Kevin NickCEO & President / CIO, Vice President & Secretary
4B Graduate Circle
State College
PA 16801, USA
(814) 862-8427
www.shieldsindia.com
This is a business plan. It does not imply an offering of Securities.
Executive Summary
This summary is intended for quick reference and should not be taken as the primary informational resource with regard to Shields India, Limited. More extensive data of immediate interest to potential investors and business partners is provided in the later sections of the memorandum.
Purpose of Plan
This plan provides information about Shields India (company overview), its products, its market and operations. A brief overview of the management team, financial estimates and company operations are also provided.
Mission
Shields India’s mission is to provide reliable credit rating information services to financial institutions in India. The focus is on reliability, efficiency, security of data and customer service.
Company
Shields India Limited was founded on October 22, 2003 and is an information management company dealing with credit rating information services. It is a limited liability company (LLC). Our offices are located at New Delhi and Mumbai, India and Erie, Pennsylvania, USA.
Market Need
Currently, financial institutions in India do not exchange customer credit rating information with each other. This leads to significant legwork by each individual financial institution to “estimate” credit history and “verify” personal assets before issuing credit or debit cards, loans or insurance policies. The lack of information sharing between financial institutions leads to substantial credit fraud activity and loan payment defaults. The market needs a centralized system (similar to one used in the United States) that will provide “one time” verification of personal assets and reliable credit history of customers that require credit, loans or insurance policies. The market is now ready for centralized information management services which will provide credit history and verification of personal assets of customers.
The Reserve Bank of India (RBI), the apex financial institution in India, also recognizes the need for centralized credit rating information services. In November, 1999 a report was submitted by a high-powered committee to the Governor of RBI, detailing the urgency and modalities of setting up a Credit Information Bureau in India. No such system or bureau has been set in place so far.
Market Potential
Our clients are financial institutions who extend credit, debit, and insurance or loan services to the general public. There are over 250 such institutions in India. Many of these financial institutions are multi-national in operations and hence are accustomed to obtaining and paying for credit rating information services. Examples of such institutions are American Express, Citibank Group, Standard Chartered and Hong Kong and Shanghai Bank Corporation (HSBC).
There are over 135 million Indians who hold bank accounts and are likely to avail loan facilities at one time or the other. Currently there are an estimated 6 million credit card holders in India along with an equal number of debit card holders. The credit card market is growing at a healthy rate of 35 to 40% per annum. The total number of credit and debit card holders is expected to double by 2005. In addition, about 300 million Indians enjoy affluent lifestyle and demand conveniences.
The market potential for Shields India is immense and more importantly, will grow at healthy rate of at least 25% every year.
Competitive Advantage
The most important competitive advantage comes from the fact that there are no existing similar services in India. The RBI and Government of India also recognize these facts and had deputed a high-powered committee to propose a remedial framework. Shields India will bring in technical and managerial expertise to make the project happen. Once established, Shields India will be a market leader and will have the ‘first-movers’ advantage.
Product and Service
Shields India will collect and sell credit rating information services to financial institutions in India. Our primary customer base consists of institutions that extend credit and debit cards, loans and insurances to consumers. Shields India will also provide credit rating information services to cell phone and auto insurance companies.
Shields India also intends to re-package and market its gathered proprietary data to third-party companies seeking consumer information. In this manner, Shields India will generate incremental revenues based on pre-existing information while diversifying its offerings.
Summary of Financial Results
There were will be three rounds of financing. The first year capital requirements are $150,000. The second phase of funding will require $1,065,000. The last phase of funding will be $2,000,000. The first (2003 – 2004), second (2004 – 2005) and third year (2005 – 2006) post-tax profits are $0, $ 78,312 and $ 523,680 respectively. From year 2006 – 2007 onwards, the company is expected to make an annual post tax profit of $1,500,000.
TABLE OF CONTENTS
Executive Summary 2
Purpose of Plan 2
Mission 2
Company 2
Market Need 2
Market Potential 3
Competitive Advantage 3
Product and Service 3
Summary of Financial Results 3
COMPANY OVERVIEW 5
Mission 5
Company 5
Market Need 5
Products and Services 5
Competitive Advantage 6
PRODUCTS, SERVICES AND MARKETS 6
Market 6
Competition 7
Risk/Opportunity 7
MANAGEMENT TEAM 8
FINANCIAL ANALYSIS 8
Capital Requirements 8
Exit Strategies 9
OPERATIONS 9
Security of Assets 10
Legal Environment 10
COMPANY OVERVIEW
Mission
Shields India’s mission is to provide reliable credit rating information services to financial institutions in India. The focus is on reliability, efficiency, security of data and customer service.
Company
Shields India Limited was founded on October 22, 2003 and is an information management company dealing with credit rating information services. It is a limited liability company, registered under the Companies Act, 1956 (of India). Our offices are located at New Delhi and Mumbai, India and Erie, Pennsylvania, USA.
Market Need
Currently financial institutions in India do not exchange customer credit rating information with each other. This leads to significant legwork by each individual financial institution to “estimate” credit history and “verify” personal assets before issuing credit or debit cards, loans or insurance policies. The lack of information sharing between financial institutions leads to substantial credit fraud activity and loan payment defaults. The market needs a centralized system that will provide “one time” verification of personal assets and reliable credit history of customers that require credit, loans or insurance policies. The market is now ready for centralized information management services which will provide credit history and verification of personal assets of customers.
The Reserve Bank of India (RBI), the apex financial institution in India, also recognizes the need for centralized credit rating information services. In November, 1999 a report was submitted by a high-powered committee to the Governor of RBI, detailing the urgency and modalities of setting up a Credit Information Bureau in India. No such system or bureau has been set in place so far.
Products and Services
Shields India will collect and sell credit rating information services to financial institutions in India. Our primary customer base consists of institutions that extend credit and debit cards, loans and insurances to consumers. Shields India will also provide credit rating information services to cell phone and auto insurance companies.
Shields India also intends to re-package and market its gathered proprietary data to third-party companies seeking consumer information. In this manner, Shields India will generate incremental revenues based on pre-existing information while diversifying its offerings.
We will be the first to offer formalized credit rating information services in India. We expect to be the only provider of these services in the market over the next couple of years, and a focus on adoption will enable us to retain our market leadership position for years to come.
Competitive Advantage
The most important competitive advantage comes from the fact that there are no existing similar services in India. The RBI and Government of India also recognize these facts and had deputed a high-powered committee to propose a remedial framework. Shields India will bring in technical and managerial expertise to make the project happen. Once established, Shields India will be a market leader and will have the ‘first-movers’ advantage.
Competitive edge will also come from strategic alliances with international credit rating agencies and technology vendors. The initially identified agencies are:
· M/s. Dun and Bradstreet Information Services
· M/s. Equifax Venture Infotek
· M/s. Experian
· M/s. London Bridge Software (ASPAC) Pte., Ltd
Competitive advantage will also come from setting up a world class technology and database infrastructure. There are number of excellent technology vendors such as Infosys and Satyam Computers in India which will be able to provide backend technology support.
Alliances with banks and financial institutions will be a strong competitive advantage. Shields India will make all efforts to establish strong relationships with its customers.
Shields India will provide reliable, secure, efficient and comfortable customer service to the public. Any complaints will be promptly and efficiently handled to customer’s satisfaction. All these, when combined, will provide an unbeatable competitive advantage to Shields India.
PRODUCTS, SERVICES AND MARKETS
Market
We define our market as consumers of credit rating information services.
Our clients are financial institutions who extend credit, debit, and insurance or loan services to the general public. There are over 250 such institutions in India. Many of these financial institutions are multi-national in operations and hence are accustomed to obtaining and paying for credit rating information services. Examples of such institutions are American Express, Citibank Group, Standard Chartered and Hong Kong and Shanghai Bank Corporation (HSBC).
It is estimated that there are 6 million credit cards and 5 million debit cards in circulation today in India, and the market is growing at the rate of 35 to 40% annually. The potential credit card market is composed of the 135 million people who currently hold bank accounts. Each person is expected to hold at least 2 credit cards, making the total market potential in excess of 270 million credit cards.
No other company in India currently provides credit rating information services. Instead, credit rating information is collected individually and independently by each respective financial institution. This requires significant expenditure on the part of each firm, and the lack of a centralized information database invariably leads to credit card and loan defaults.
Competition
There is no consumer credit information infrastructure in India, so we have no direct competition. As such, being the first-mover will pay huge dividends. Our service will be unique as it will save financial institutions from doing individual credit rating information checks, often erroneously.
Risk/Opportunity
The venture has some political risks. While there are no current laws in India which regulate collecting and sharing of customer information, the potential for future legislation in this area poses a serious threat. Another potential risk is nationalization of such activity by the Reserve Bank of India (Federal level bank). However, because the Indian economy is currently being liberalized, we feel the risk the risk of nationalization is minimal.
The financial industry in India was nationalized (held by Government of India) up until early 1990s. Since then the financial industry has been opened up to private investors. This has led to numerous cases of highly successful private sector financial institutions. The laws relating to privacy and information in public domain are either non-existent or inadequate.
Political and other risks can be substantially mitigated by following all the required laws religiously. We intend to hire a reputed law firm specializing in the financial industry to assist us in this endeavor.
However, the lack of specific laws can also provide Shields India with numerous opportunities. Being the first in the market, Shields India will be able to set market trends and help shape future trends. In addition, the lack of information privacy legislation will enable the company to gather, package, and market consumer information in ways not possible elsewhere.
The opportunity is tremendous. The lack of any centralized credit rating information services (as practiced in the US under the social security number) provides immense opportunities for Shields India to obtain a revenue share whenever a credit or debit card, loan or insurance policy is issued. Shields India’s credit rating information services will be extended to auto insurance and cell phone industry at a later stage.
The business will become self sustaining and a major force in the market once the services are accepted by a few leading financial institutions.
The overarching principle behind the credit rating information services is to provide middle and high-class tax paying individuals with ease and comfort when applying for credit or debit cards, loans or insurance. However, the end consumer will never pay for any of these services. The revenues will be generated from the financial institutions which will be using Shield India’s information (see Funds and Information flow chart - attached).
MANAGEMENT TEAM
The co-founders of Shields India are:
Amit Gupta – Mr. Gupta is a Co-Founder of Shields India and is currently working for the company full-time. Amit has an MBA in marketing and corporate innovation from Penn State’s Smeal College of Business Administration. Prior to joining Shields India, Amit worked as a Director with Environmental Resources Management (ERM), a global environmental and management consulting firm. Amit has also attained a Bachelor of Engineering in Civil Engineering and Master of Science in Environmental Engineering from University of Delhi and University of Hawaii respectively.
Kevin Nick – Mr. Nick is a Co-Founder of Shields India and is currently working for the company part-time. Kevin has an MBA from Penn State’s Smeal College of Business Administration. Kevin has experience in the human resources, consulting, training, and information technology fields, and has worked with companies such as IBM and GE. His undergraduate work was also performed at Penn State University, where he received a Bachelor of Science in Marketing and a Bachelor of Arts in Media Studies.
The management team is still being built at present. The team will consist of highly motivated individuals who believe in this business plan, and have financial industry knowledge and a track record of success. We would outsource legal services with a suitable legal firm. We are currently seeking to add expertise in finance and accounting, call center management, customer service, marketing and sales.