Investor Presentation

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Dennis Norton
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2 Brief History Started operations in November, 1992 as Arman Lease & Finance Private Limited. Converted into a Public Limited company in December, 1993, and had an IPO in Arman Financial Services is one of the few A category non-banking financial companies in the state of Gujarat. Company operates in two major business segments: Two-wheeler financing under Arman Financial Services JLG Microfinance under wholly-owned subsidiary, Namra Finance Ltd. Company s target segment is mostly the unorganized and underserviced segment of the economy and mostly in niche markets. Arman has become a regional leader in vehicle finance and Microfinance not by reinventing financing, but by providing affordable financing with simple, no-hassle loan products, serviced by an exceptional team and world class systems. Demerged MFI operations into a wholly owned subsidiary Namra Finance Ltd in Became the first company in India to receive the NBFC-MFI license. 2

3 Highlights for At the end of FY16, consolidated AuM stood at Rs. 1.72bn, a growth of 50% yoy Consolidated disbursements for FY16 totaled Rs. 2.47bn, a growth of 47% yoy Overall branch strength (both MFI and two-wheeler business) stood at 60, up from 43 the previous year. Company has penetrated into Maharashtra, where it is anticipating 15 branches this year MFI business is operational from 55 branches (37 in Gujarat, 18 in Madhya Pradesh) Two wheeler business operates from 5 branches Total active clients 1.26 Lakhs No of dealer touch points - 56 Consolidated FY16 revenue grew to Rs mn at 41% yoy Profit before Tax stood at Rs mn, a growth of 31% yoy EBIT stood at Rs mn, a growth of 43% yoy 14% dividend declared, up from 12% PY; the 4 th consecutive year of increase Staff 456 Employees. Raised Tier II Equity for the first time in the amount of Rs.50mn at a subsidiary level Company has made significant investment in IT infrastructure. 3

4 Financial Highlights CONSOLIDATED FINANCIAL HIGHLIGHTS Rs mn Disbursement Amount (Rs.) 1, , , , No of Loan Disbursed 56,597 73,390 93,191 1,18,784 No of Active Borrowers (AUM) 61,121 77,315 1,03,619 1,25,619 Portfolio outstanding (AUM) , , No of Branches Income from Operations (Rs.) PBT (Rs.) PAT (Rs.)

5 Board Composition & Shareholding Name Chinubhai R Shah Jayendra B Patel Designation Independent Chairman VC & Managing Director Others, 45.0 Promoter, 30.0 Aalok J. Patel Executive Director Amit R. Manakiwala Whole Time Director Kaushikbhai D. Shah Independent Director Ritaben J. Patel Director Aakash J. Patel Director Ramakant Nagpal Independent Director FII, 25.0 Aditya Bhandari Nominee Director FII holding (including DVR) is investment by Incofin IM under their fund RIF North West 2. Incofin Investment Management is a specialized fund management company with more than 10 years experience in microfinance and currently has 700 M EUR assets under management. Investment of Rs. 15 crore in December 2011 at a price of Rs /share, which was at a significant premium over its book value and stock price. Exit latest by

6 Core Management Team Jayendra Patel (Vice-Chairman & Managing Director) Amit Manakiwala (Whole-Time Director) Aalok Patel (Executive Director) Rambabu Agarwal (Head Two Wheeler Operations) Anuj Nathaniel (Head Microfinance Operations) Prashant Modi (Head Collections) Atul Patel (Chief Accountant) Kamlesh Garg (Head Management Information Systems) Binu Mathew (Head Human Resources) Mohammed Javeed (Head Internal Audit Operations) Chandrabhan Gadhavi (Head Information Technology) Jaimish Patel (Company Secretary) 6

7 Microfinance Industry Financial Inclusion has become a major Central Government Initiative Jan Dhan Yojna MUDRA Yojna Industry saw the emergence of 1 Universal Bank and 8 Small Finance Banks (SFBs) Licenses Major challenge for SFB will be to access rural deposits, maintain profitability due to decreased margins GLP of approximately 53 thousand crores and total Microloan accounts 3.2 crores, so still a large scope for expansion. India still has large underserved pockets due to low density of population. Scope of expansion into those areas is still there. NPA risk will decrease with better monsoon predicted in the current FY. Key challenges include Rapid growth of the industry will create pressure on overall asset quality High competition in some areas Product diversification Increased scrutiny by local governments 7

8 Business and strategy Two year product rolled out Microfinance Namra Finance Ltd. Expansion into Maharashtra begins. Will be the primary thrust in the current FY. Evaluating simultaneous expansion into UP. Continues to expand to MP. Namra is sticking to conservative lending and growth in Rural areas, with 82% of the loan portfolio in Rural and Semi-Rural areas. Surpassed all targets in FY16. Disbursement expected to cross Rs3Bn in FY17 Member of SRO MFIN and Credit Bureau Highmark Awarded an investment grade Bank rating of BBB and a Microfinance grading of Mfi-2 by CARE Ratings. 8

9 Market Expansion Scope 9

10 Market Potential (Conservative Estimate) 10

11 2-Wheeler Financing Mature industry Two wheeler industry growing between 6 8% Captive finance companies making headwinds. Personal transportation will never go out of style and Company has many years of expertise. Expansion into Madhya Pradesh (Indore Branch) will provide growth Conservative lending approach and in-house collection team Company has a lot of experience in rural financing, that will bode well as rural population s per capita income increases and they enter the market to upgrade to two-wheelers. Demand skewed 11

12 Business model 2-Wheeler Financing Arman Financial Services Ltd. Branch / sales office include Ahemdabad, Gandhinagar, Kalol, Kadi, Mehsana, Sabarkantha, Palanpur, Vadodara, Kheda, Anand, Sevalia,Tarapura, Indore As far as Ahmedabad is concerned, Arman ranks among the top-five financers in 2W/ 3W financing Unique Selling product: Customer can walk into a dealership and the entire processing is done in a short period of time Strategy Expanded into Madhya Pradesh in FY 16. Will consider limited bulk financing like Dealer Channel Partnering, Securitization, etc. Piloting a tailor made rural product To consider SME financing for lending between Fifty Thousand and Two Lakhs with MUDRA bank 12

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16 Consolidated Financial Summary For the year ended / as on March 31 (Consolidated) Rs mn Working results Total income Operating Expenses Total provisions / Write Offs Depreciation Interest Paid Profit before Taxes Profit after Taxes Financial Position Net worth Total Short & Long term Debt Loan & advances Total Assets

17 Microfinance 55 Branches 2 Wheeler 5 Branches Gujarat Madhya Pradesh 37 Branches 18 Branches Geographical Spread

18 Thank You If you have any questions or require further information, please feel free to contact Aalok Patel Arman Financial Services Ltd Tel:

Ahmadabad, India, 13 August, 2016 Mr. Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services

Ahmadabad, India, 13 August, 2016: Arman Financial Services Ltd (Arman), a leading Gujarat based non-banking financial company (NBFC), with interests in microfinance and two wheelers loans, announced its