Reaching New Heights in Retail Finance FY15 Update

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1 Reaching New Heights in Retail Finance FY15 Update 1 Magma Fincorp Limited

2 HELPING PEOPLE REACH OUT TO THEIR DREAMS 2 2

3 Financial Results FY15 Business Overview and Strategy Leadership Team Annexures 3 3

4 Key Business Highlights FY15 #1 Focus on profitability - Consistent growth in NIM, increases to 6.16% in FY15 from 5.51% in FY14, driven by change in product-customer-location mix #2 Loan book growth contributed by disbursement growth in mortgage, SME and used assets finance #3 NPA recognition at 120 dpd, 2 years ahead of norms prescribed by RBI #4 Consol PAT increased 17% yoy to Rs 187 crore, driven by 65 bps yoy increase in NIM #5 Raised Rs 500 crore from new and existing investors to drive growth in FY16 and FY17 4 4

5 Financial Results FY15 (Consolidated) FY15 19, % 3.66% 9% 17% 65 bps 39 bps FY14 17, % 3.27% Loan Assets Profit After Tax NIM Opex / Loan Assets Values in Rs crore 5 5

Financial Results Q4 FY15 (Consolidated) Q4FY15 19,567 54.13 6.41% 3.

6 Financial Results Q4 FY15 (Consolidated) Q4FY15 19, % 3.89% 9% 18% 41 bps 23 bps Q4FY14 17, % 3.66% Loan Assets Profit After Tax NIM Opex / Loan Assets Values in Rs crore 6 6

Disbursement Mix Disbursements 8,678 9,081 10,115 2,639 2,332 100% 75% 50% 25% 7.4% 14.4% 15.3% 14.2% 17.8% 8.5% 8.9% 17.4% 14.2% 10.

7 Disbursement Mix Disbursements 8,678 9,081 10,115 2,639 2, % 75% 50% 25% 7.4% 14.4% 15.3% 14.2% 17.8% 8.5% 8.9% 17.4% 14.2% 10.0% 11.7% 17.1% 10.1% 16.9% 14.0% 8.2% 9.2% 13.0% 9.5% 15.8% 13.1% 9.9% 11.6% 18.6% 16.7% 13.4% 14.0% 8.1% 5.9% 62.6% 37.4% 31.0% 29.3% 24.5% 27.1% 23.2% 0% FY13 FY14 FY15 Q4 FY14 Q4 FY15 UV/Cars CV CE Used Assets Tractors SME Loans Mortgage Share of Tractor, Used Assets, Mortgage and SME Loans steadily increasing and contributed more than 60% of total disbursements in Q4 FY15 Values in Rs crore 7 7

Loan Assets Mix Total Loan Assets 16,240 17,877 19,567 100% 75% 50% 25% 0.4% 0.5% 7.6% 9.4% 4.7% 5.6% 12.4% 16.0% 9.8% 11.3% 13.8% 11.8% 23.6% 17.8% 14.6% 7.1% 17.8% 11.9% 9.8% 13.3% 51.4% 48.6% 27.

8 Loan Assets Mix Total Loan Assets 16,240 17,877 19, % 75% 50% 25% 0.4% 0.5% 7.6% 9.4% 4.7% 5.6% 12.4% 16.0% 9.8% 11.3% 13.8% 11.8% 23.6% 17.8% 14.6% 7.1% 17.8% 11.9% 9.8% 13.3% 51.4% 48.6% 27.6% 27.6% 25.5% 0% FY13 FY14 FY15 UV/Cars CV CE Used Assets Tractors SME Loans Mortgage Gold Loans Diversified portfolio of 7 products with the single product exposure restricted to 25% of total book Includes Off B/S loan assets and values in Rs crore 8 8

Loan Assets (Rs crore) Loan Assets and NIM Growth Loan Assets (Rs crore) 16,240 17,877 19,567 17,887 19,567 20,000 6.41% 6.40% 15,000 10,000 5,264 6,525 6.16% 6,292 6.00% 6,525 6,292 6.20% 6.00% 5.

9 Loan Assets (Rs crore) Loan Assets and NIM Growth Loan Assets (Rs crore) 16,240 17,877 19,567 17,887 19,567 20, % 6.40% 15,000 10,000 5,264 6, % 6, % 6,525 6, % 6.00% 5.80% NIM 5.60% 5, % 5.51% 5.40% - 10,976 11,352 13,274 11,352 13,274 FY13 FY14 FY15 Q4 FY14 Q4 FY15 On Book Assets Off Book Assets NIM (yoy) NIM (qoq) 5.20% 5.00% Improvement in NIM driven by gradual shift in product and customer mix NIM: (Total Income Interest Expenses)/Average Loan Assets 9 9

Pradesh, 12% Bihar, 4% West: 26% Gujarat, 5% Jharkhand, 2% East: 13% Chattisgarh, 3% Tamil Nadu, 4% Kerala, 5% Karnataka, 6% Orissa,

10 State-wise Loan Assets Breakup Total Loan Assets: Rs. 19,567 crore North: 38% Maharashtra, 9% Uttarakhand/Delhi, 7% Haryana, 7% Punjab/Himachal, 4% Rajasthan, 9% Madhya Pradesh, 8% Uttar Pradesh, 12% Bihar, 4% West: 26% Gujarat, 5% Jharkhand, 2% East: 13% Chattisgarh, 3% Tamil Nadu, 4% Kerala, 5% Karnataka, 6% Orissa, 4% West bengal, 4% Seemandhra, 3% Telangana, 5% South: 23% Diversification of loan book exposure minimizes impact of regional/local/single event risks Value as on 31 Mar 2015; Includes Off B/S loan assets 10 10

11 Liability Profile On B/S Debt 10,599 10,375 11, % 16.2% 15.3% 13.7% 75% 50% 25% 30.7% 28.9% 53.1% 55.8% 21.5% 64.9% 0% FY13 FY14 FY15 Tier I/II Capital & Others Debt Capital Markets Banks Diversified liability sources limit concentration risk, allows stable flow of funds and improved rating, all leading to lower costs Consortium of 21 public & private sector banks Capital market funding from wide spectrum of lenders including MFs, Insurance companies, Pension / Provident funds and Corporates among others Other unsecured debt includes Perpetual debt, Sub debt and Preference capital Magma has a long term rating of AA and short term rating of A1+ On B/S Debt includes Preference Capital and based on MFL Consolidated financials; Values in Rs crore as on closing day of the period ; 11 11

12 NPA Recognition NPA (% of Total Loan RBI norms 5.0% 4.0% 3.0% 2.0% 2.7% 2.0% 3.9% 2.9% 1.0% 0.0% 0.7% 0.3% FY13 FY14 FY15 GNPA % NNPA % GNPA at 180 dpd+ (as per RBI norms) NNPA factors in the higher than required provisions already made by Magma Based on MFL Consolidated financials Magma follows conservative NPA recognition policy at 4 months default instead of RBI requirement of 6 months 12 12

13 P&L Statement (Consolidated) Q4 FY15 Q4 FY14 Q3 FY15 Y-o-Y % Change Q-o-Q FY15 FY14 Income from Ops % 1% 2, ,081.3 Interest Expenses % -1% 1, ,177.1 Net Operating Income % 2% 1, Other Income % -6% Net Total Income % 2% 1, Prov./Write Offs % -33% Post Prov Profit % 14% Operating Expenses % 9% :Personnel Expenses % 10% :Other Expenses % 4% :Depreciation % 44% Profit Before Tax % 28% Taxes % 70% Profit After Tax % 20% Values in Rs crore 13 13

14 Balance Sheet (Consolidated) 31 Mar Mar Dec 14 % Change Y-o-Y Q-o-Q LIABILITIES 14,882 13,178 15,208 13% -2% Net Worth 1,655 1,504 1,632 10% 1% Share Capital % 0% Reserves and Surplus 1,617 1,466 1,594 10% 1% Minority Interest % 5% Preference Capital % -3% Borrowings 11,714 10,226 11,919 15% -2% Other Liabilities 1,341 1,266 1,481 6% -9% ASSETS 14,882 13,178 15,208 13% -2% Loan Assets 13,274 11,352 13,560 17% -2% Fixed Assets % -1% Other Assets % -6% Cash & Bank Balance % 2% TOTAL LOAN ASSETS 19,567 17,877 19,503 9% 0% Values in Rs crore 14 14

15 Key Ratios (Consolidated) Q4 FY15 Q4 FY14 Q3 FY15 Change (in Bps) Y-o-Y Q-o-Q FY15 FY14 Total Income/Assets 16.7% 16.6% 16.7% % 16.1% Interest Exp/Assets 8.4% 8.8% 8.4% % 9.0% Gross Spreads 8.3% 7.8% 8.2% % 7.2% Prov & WO/Assets 1.4% 1.5% 2.1% % 1.4% Opex/Assets 5.0% 4.7% 4.6% % 4.2% PBT/Assets 1.9% 1.5% 1.5% % 1.5% RoA 1.44% 1.35% 1.20% % 1.21% RoE 12.03% 10.46% 10.19% % 9.55% CRAR Tier % 11.5% 11.0% % 11.5% Total 16.3% 16.6% 16.4% % 16.6% CRAR based on MFL (Standalone) financials Assets implies average of opening and closing balance of On B/S Assets of MFL (Consolidated) 15 15

16 Financial Results FY15 Business Overview and Strategy Leadership Team Annexures 16 16

Customer Centric Approach with a bouquet of products UV/Cars New & Used Tractors Commercial

life time Customer focused structure and processes Invest early into customers 1 st time /

needs Recovery systems based on customer behavior SME Loans Mortgage General Insurance Feedback

17 Customer Centric Approach with a bouquet of products UV/Cars New & Used Tractors Commercial Vehicles New & Used Construction Equipment New & Used Customer Diverse financial needs over life time Customer focused structure and processes Invest early into customers 1 st time / under banked customers Business structure aligned to specialize in customer s specific business needs Recovery systems based on customer behavior SME Loans Mortgage General Insurance Feedback systems to improve service Sales support Design and product development based on customer feedback 17 17

18 Synergistic Approach to Growth Products Key customer segments Focus areas to drive growth Average ticket size (Rs lakh) Loan to value Door to door tenure (months) UV/Cars Entry level vehicles and UV/MUV Small Road Transport Operator (SRTO) Rural markets and UV/MUV segment Tie up with car manufacturers % 46 Commercial Vehicles (CV) 1-5 vehicle owners (esp.ftb segment) SRTO LCV & SCV Tie up with CV manufacturers %* 44 Construction Equipment (CE) Small Scale Entrepreneurs Increase collaboration with OEMS Wider product range % 43 Used Assets First time buyers, Small fleet drivers M&HCV, Refinance LCV High vintage vehicles (7-8 years) % 35 Tractors Land owning farmers HP tractors Alliances with OEMs New product introductions % 44 SME Loans SME segment Working capital, business expansion MSME segment 20 NA 35 Mortgage Self employed Informal segment Larger contribution from Tier 3-4 towns % 154 General Insurance Captive customers Rural agri based products Penetrate motor insurance market Rural agri markets Leverage branch / collection presence and understanding of product, target customer behaviour and its requirements to grow new products Numbers represent average for disbursements done during FY15 * LTV has been calculated without considering cost of truck body 18 18

19 Vertically Aligned Business Model Product-wise Verticals Collections Vertical Integrators Asset Finance UV/Cars CV CE Used Assets Tractors SME Loans Mortgage Finance (started in FY13) Home Loan LAP General Insurance (started in FY13) General Insurance Based on Customer Behaviour Retail 0 dpd 1-30 dpd dpd dpd High ticket 0 dpd dpd Strategy Inorganic opportunities Product mix alignment Marketing Risk Management Identify areas of risk / concerns - preventive measures Product Geography Customer segment People Management Product wise Functions Sales Credit Operations Common dpd 730+ dpd and S&S Legal Recovery Branding Channel development Product innovation Customer relations Cross selling Leadership development Succession planning Training & retention Product Development Channel Management Supported by Marketing Technology Finance / Treasury Operations Audit 19 19

Branch Network Pan - India Network 232 branches with presence across 24 states/ut 9,788 employees including 7500+ FOS Region-wise Distribution of

20 Branch Network Pan - India Network 232 branches with presence across 24 states/ut 9,788 employees including FOS Region-wise Distribution of Branch Network North, 73 West, 62 East, 42 South, 55 Rural-Urban Breakup of Branch Network Rural, 85 Semi Rural, 96 Urban, 51 As on 31st March

21 Financial Results FY15 Business Overview and Strategy Leadership Team Annexures 21 21

22 Board of Directors Board of Directors Professional Entrepreneur MD Audit Professional Management Team Business Heads Collections Marketing Risk Strategy Human Resource Technology Treasury/ Finance/IR Promoter Directors Non Promoter Directors Mayank Poddar Chairman Supports policy formulation and guidance to the Management/Board Over 30 years of experience in the financial sector. Sanjay Nayar Non Executive Director (Nominee of KKR) CEO and Country Head of KKR, India. Ex CEO of Citi India & South Asia operations Nabankur Gupta Founder - Nobby Brand Architects & Strategic Marketing Consultants. Pioneer of sub branding and multi branding in India. Also served as Group President in Raymond Sanjay Chamria VC and MD Anchors strategic policy formulation and execution. Drives new business initiatives and leads management team Ritva Laukkanen Non Executive Director (Nominee of IFC) * Ex-Director in IFC. Over 3 decades of experience in investments, financial markets and development finance Satya Brata Ganguly Chairman Emeritus of Exide Industries. On the board of Indian Chamber of Commerce and Industry and Bengal Chamber of Commerce and Industry among others. Narayan K Seshadri Entrepreneur consultant. Former Country Head - KPMG Consulting & Head of Business Consulting in Arthur Andersen Neil Graeme Brown Co-Founder of Subito Partners (UK). Ex-Partner of Coopers & Lybrand (now PwC) and Ex-Director of Apax Partners. Set up FIG practice in Apax Partners * Joined in October

23 Management Team Ashutosh Shukla Chief- Risk, Credit & Operations, Asset Finance Experience of over 25 years in Magma and Consortium Finance. Setup North and West Zone business and headed collections vertical in Magma earlier Atul Bansal Chief Financial Officer Over three decades of experience across multiple industries (Financial Services, Tea, hotel industry, IT & entertainment), out of which two decades was in Tata Group companies Kailash Baheti Chief Strategy Officer Ex-CEO of Century Extrusions. Extensive experience in finance, accounts, compliance and legal functions. Mahendar Bagrodia Chief of Receivables Management Served as National Risk and Credit Head prior to current role. Experience of over 18 years of which 12 years with Magma Fincorp Sachin Khandelwal MD & CEO, Magma HFC; Chief Sales Officer Asset Finance Experience of over 20 years in sales and marketing. Ex- MD of ICICI Home Finance. Sumit Mukherjee Chief Product & Program Served as National Sales Head for High Yield Products and Credit and Risk Head at Magma prior to current role. Worked with Citi Corp as VP prior to joining Magma. Over 18 years of experience in sales. Swaraj Krishnan CEO, Magma HDI General Insurance Veteran in the general insurance industry. Ex-CEO of Bajaj Allianz General Insurance Senior management with extensive experience both within Magma and in the industry 23 23

Holding Structure, Shareholding Pattern and Top Shareholders Holding Structure Magma Fincorp (Consolidated) Net Worth: Rs

3 cr 100% 74% 37% 100% Magma Fincorp (Standalone) Magma ITL JV (tractor biz) Magma HDI JV (general Insurance biz) Magma

1 cr PAT: Rs 25.4 cr PAT: Rs 5.8 cr* PAT: Rs 10.6 cr Shareholding of Magma Fincorp (on 31 March 2015) Public, 5.

24 Holding Structure, Shareholding Pattern and Top Shareholders Holding Structure Magma Fincorp (Consolidated) Net Worth: Rs 1,655 cr PAT: Rs cr 100% 74% 37% 100% Magma Fincorp (Standalone) Magma ITL JV (tractor biz) Magma HDI JV (general Insurance biz) Magma Housing Finance Net Worth: Rs 1,384 cr Net Worth: Rs 153 cr Net Worth: Rs 181 cr* Net Worth: Rs 218 cr PAT: Rs cr PAT: Rs 25.4 cr PAT: Rs 5.8 cr* PAT: Rs 10.6 cr Shareholding of Magma Fincorp (on 31 March 2015) Public, 5.6% Promoters, 33.6% Overseas Bodies, 26.2% Top Non Promoter Shareholders KKR IFC, Washington Chrys Capital Wellington Domestic Investors 5.5 Bank Muscat FII, 29.1% Net Worth and PAT for all subsidiaries (at 100% value) as per FY15 financials 24 24

25 Thank You Forward Looking Statements Certain statements in this document with words or phrases such as will, should, etc.., and similar expressions or variation of these expressions or those concerning our future prospects are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to a number of risks or uncertainties associated with the expectations. These risks and uncertainties include, but are not limited to, our ability to successfully implement our strategy and changes in government policies. The company may, from time to time, make additional written and oral forward looking statements, including statements contained in the company s filings with the stock exchanges and our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company

26 Financial Results FY15 Business Overview and Strategy Leadership Team Annexures 26 26

27 Profit & Loss Statement (Standalone) Q4 FY15 Q4 FY14 Q3 FY15 Y-o-Y % Change Q-o-Q FY15 FY14 Income from Ops % 1% 2, ,846.8 Interest Expenses % -2% 1, ,055.2 Net Operating Income % 5% Other Income % -11% Net Total Income % 5% Prov./Write Offs % -33% Post Prov Profit % 19% Operating Expenses % 11% :Personnel Expenses % 15% :Other Expenses % 3% :Depreciation % 43% Profit Before Tax % 45% Taxes % 87% Profit After Tax % 36% All values in Rs crore 27 27

28 Balance Sheet (Standalone) % Change 31 Mar Mar Dec 14 Y-o-Y Q-o-Q LIABILITIES 12,312 11,318 12,646 9% -3% Net Worth 1,384 1,264 1,367 9% 1% Share Capital % 0% Reserves & Surplus 1,345 1,226 1,329 10% 1% Minority Interest Preference Capital % -4% Borrowings 9,815 8,918 10,074 10% -3% Other Liabilities 1,016 1,021 1,104 0% -8% ASSETS 12,312 11,318 12,646 9% -3% Loan Assets 11,040 9,740 11,318 13% -2% Fixed Assets % -2% Other Assets % -11% Cash & Bank Balance % 3% TOTAL LOAN ASSETS 16,921 15,909 16,488 6% 3% All values in Rs crore 28 28

29 Profit & Loss Statement: Magma ITL (MITL) Q4 FY15 Q4 FY14 Q3 FY15 Y-o-Y % Change Q-o-Q FY15 FY14 Income from Ops % 1% (-) Interest Expenses % 2% Net Operating Income % 0% (+) Other Income % -25% Net Total Income % -1% (-) Prov./Write Offs % -73% (-) Operating Expenses % -7% Profit Before Tax % 162% (-) Taxes % -223% Profit After Tax % 66% All values in Rs crore 29 29

30 Profit & Loss Statement: Magma Housing Finance (MHFC) Q4 FY15 Q4 FY14 Q3 FY15 Y-o-Y % Change Q-o-Q FY15 FY14 Total Income % 6% (-) Interest Expenses % 8% Net Income % 2% (-) Prov./Write Offs % 105% (-) Operating Expenses % 0% Profit * FY13 Before financials Tax for full year; Consolidation 4.9 with 3.2 Magma was 6.0 effective from 53% 11th Feb % (-) Taxes % -6% Profit After Tax % -24% All values in Rs crore 30 30

31 Profit & Loss Statement: Magma HDI General Insurance Company (MHDI) Q4 FY15 Q4 FY14 Q3 FY15 Y-o-Y % Change Q-o-Q FY15 FY14 Gross Written Premium % 19% Net Earned Premium % -3% (-) Claims Incurred % 22% (-) Net Commission % -32% (-) Management Exp % -1% Underwriting Profit % 122% (+) Investment Income % 0% Profit Before Tax % -169% (-) Taxes % -162% Profit After Tax % -172% All values in Rs crore 31 31

Reaching New Heights in Retail Finance Q1 FY15 Update

Reaching New Heights in Retail Finance Q1 FY15 Update 1 Magma Fincorp Limited HELPING PEOPLE REACH OUT TO THEIR DREAMS 2 2 Financial Results Q1 FY15 Business Overview and Strategy Leadership Team Annexures