SREI EQUIPMENT FINANCE LIMITED

INVESTMENT RATIONALE SREI EQUIPMENT FINANCE LIMITED The issue offers effective yields ranging from 8.63 % to 9.77% depending up on the Category of Investor and the option applied for. Credit Rating of BWR AA+ (BWR Double A plus) (Outlook: Stable) by Brickworks Ratings India Private Limited and SMERA AA/Stable (SMERA Double A/Stable) by SMERA Ratings Limited. The NCDs are proposed to be listed on the National Stock Exchange of India Limited ( NSE ) and BSE Limited ( BSE ) COMPANY PROFILE SREI Equipment Finance limited (SEFL) is one of the leading non-banking financing companies in the organized equipment financing sector in India with a principal focus on financing infrastructure equipment. Its financial products and services comprise loans, leases, rentals and fee-based services. SEFL is registered with the RBI as a non-deposit taking systemically important, non-banking financial company. SEFL is an Asset Finance Company-Non-Deposit Taking under Section 45-IA of the RBI Act, 1934. As of September 30, 2016, SEFL has a presence in approximately 21 states, including 89 branches across India. They have strategically expanded the marketing network and operations enabling it to have relationships with more than 60,000 customers. SEFL has different business verticals like Infrastructure Equipment Financing, Technology and Solutions Financing, Healthcare Equipment Financing, Agriculture and Farming Equipment Financing, Used Equipment Financing. SEFL s disbursements as on March 31, 2016 were Rs 9,158.87 crore. The total financial assets of the Company increased from Rs 10,036.46 crore as of March 31, 2012 to Rs 13,635.57 crore as of March 31, 2016, at a CAGR of 7.96%. The total income of the Company increased from Rs 1,818.52 crore in fiscal 2012 to Rs 2,615.09 crore in fiscal 2016, at a CAGR of 9.51%. The AUM of the Company increased from Rs 17,367.62 crore as of March 31, 2012 to Rs 18,597.79 crore as of March 31, 2016 at a CAGR of 1.73%. And the net worth of the company increased from Rs 1,335.94 crore as of March 31, 2012 to Rs 2,321.87 crore as of March 31, 2016, at a CAGR of 14.82%. As at September 30, 2016, the total loans outstanding in the Infrastructure equipment sector were Rs 14,194.03 crore, which accounted for 89.39 % of the total loan outstanding of SEFL.

STRENGTHS Well positioned to access and appraise borrowers in the growing Indian infrastructure financing sector SEFL has been involved in infrastructure sector finance since its inception, primarily for construction & mining equipment finance. They have developed extensive infrastructure sector knowledge and relationships with borrowers and the ability to appraise and extend financial assistance to the borrowers in infrastructure segment. Due to SEFL s experience in the infrastructure equipment finance sector, it s diversified business model and product offerings and pan-india distribution network SEFL is well positioned to capitalize the opportunities in the in the infrastructure sector. Strong Promoter relationship and brand SEFL is a wholly owned subsidiary of Srei Infra. Srei Infra is well established brand domestically in infrastructure financing business this provides with a significant competitive advantage, with access to management talent and professionals with strong industry knowledge in their respective sectors, early access to potential business opportunities, ability to understand and efficiently cater to the needs of the customers in a comprehensive manner and access funds at competitive rates from a wide variety of market participants. Experienced Board and senior management team The Board consists of five directors, two of whom are executive directors and remaining three are independent directors with extensive experience in banking and financial services sector. The directors bring extensive experience in the Indian financial sectors, especially in equipment financing, lending, portfolio management, operational and managerial experience. In-depth industry knowledge and loyalty of management and professionals provide SEFL with a distinct competitive advantage. Leading infrastructure equipment financing NBFC in India SEFL is one of the leading financing institutions in the organized sector for infrastructure equipment financing in India. It has a client base of more than 60,000 clients as of September 30, 2016. Further, as of September 30, 2016, its AUM was Rs 19,934.53 crore. It has emphasised the diversification of its business by entering into new areas of financing, such as information technology, healthcare, rural equipment, logistics and used equipment financing. Pan-India set-up with a unique relationship based distribution network As of September 30, 2016, SEFL has a presence in approximately 21 states, including 89 branches across India. This pan-india presence allows it to cater to a large customer base across various segments of the industry. They have developed a unique relationship based distribution network, which is managed by the relationship manager as entrepreneurs and SEPs for its retail business which helps in commanding a better presence and penetration in markets. This helps SEFL develop long-term relationships with each customer. It has also entered into memoranda of understanding with major leading manufacturers and vendors of construction equipments across India. Effective risk management framework and operating efficiency SEFL has established an effective risk management framework through the implementation of robust systems and procedures for evaluating and approving debt financing proposals. Prior to its commitment of any financial assistance, SEFL undertakes extensive financial and legal due diligence of the potential debt financing opportunity, either in-house or by appointing third party experts. Its risk management framework enables SEFL to identify the risks and suitably adopt various risk mitigation measures. SEFL s in-house risk team helps it to understand the sector and industrial risks involve and process to mitigate the same. Access to a range of cost effective funding sources SEFL has diversified funding sources. At present SEFL meets its funding requirement from bank loans which basically include cash credit facility and long term secured borrowing, issue of non-convertible debentures i.e. secured and unsecured, tier II borrowing, external commercial borrowing, issue of commercial paper. SEFL undertakes cost effective securitization and assignment transaction to maintain and balance its overall borrowing cost. Further it has diversified its funding source through Public Issue of Secured debt issues.

ISSUE STRUCTURE Issuer Srei Equipment Finance Limited Lead Managers A. K. Capital Services Limited, Edelweiss Financial Services Limited, Karvy Investor Services Limited, Srei Capital Markets Limited and Trust Investment Advisors Private Limited Debenture Trustee Axis Trustee Services Limited Registrar to the Issue Karvy Computershare Private Limited Issue Public Issue of Secured, Redeemable Non-Convertible Debentures of the Company of NCDs aggregating upto Rs 250 Crs ( Base Issue Size ) with an option to retain over-subscription upto Rs 250 Crs aggregating to a total of upto Rs 500 Crs. Type of Instrument Secured, redeemable, non-convertible debentures Nature of Instrument Secured Nature of Indebtedness and Ranking / The claims of the NCD Holders shall be superior to the claims of any unsecured creditors of the Company and subject to applicable statutory and/or regulatory Seniority requirements, rank pari passu inter se to the claims of other creditors of the Company having the same security. Listing The NCDs are proposed to be listed on BSE and NSE. The NCDs shall be listed within 12 Working Days from the date of Issue Closure. For more information, see Other Regulatory And Statutory Disclosures Listing in the Prospectus. Rating of the Instrument The NCDs have been rated BWR AA+ (BWR Double A Plus) (Outlook: Stable) by BRICKWORK pursuant to letter dated November 9, 2016 and reaffirmed vide letter dated November 10, 2016 and further reaffirmed by letter dated December 5, 2016 and SMERA AA/Stable by SMERA pursuant to letter dated November 9, 2016 and reaffirmed by letter dated December 6, 2016. Step Up/Step Down Coupon Rate N.A. Coupon Type Fixed Coupon Rates Coupon Reset Process N.A. Day Count Basis Actual/Actual Interest on Application Amounts received, at 8% on the Application Amount allotted, from the date of realization of the Application Amount through cheque(s)/demand draft(s)/any other mode up to 1 which are used towards Allotment of NCDs (one) day prior to the Deemed Date of Allotment, subject to deductions under the provisions of the Income Tax Act or any other statutory modification or reenactment thereof, as applicable. However no interest is to be paid on Application Amount(s) to the ASBA Applicants. Interest on Application Amounts received, The company shall pay interest on Application Amounts which is liable to be refunded to the Applicants (other than ASBA Applicants) subject to deduction of income which are liable to be refunded tax under the provision of Section 194A of the Income Tax Act, as applicable, from the date of realization of the cheque(s)/demand draft(s) upto one day prior to the Deemed Date of Allotment at the rate of 6% Issue Price/ Face Value (Rs per NCD) Rs 1,000/- Call Option/Put Option N.A. Minimum Application and in multiples of Rs 10,000/- (10 NCDs) across all Series. 1(one) NCD thereafter Issue Opening Date 3-Jan-17 Issue Closing Date 20-Jan-17 The Issue shall remain open for subscription from 10 A.M. to 5 P.M. (Indian Standard Time), except that the Issue may close on such earlier date or extended date as may be decided by the Board/ Committee of Directors, as the case maybe, subject to necessary approvals. In the event of an early closure or extension of the Issue, the Company shall ensure that notice of the same is provided to the prospective investors through advertisements in a leading national daily newspaper on or before such earlier date of Issue Closure or initial date of Issue closure, as the case may be. Pay-in Date The date of Application. The entire Application Amount is payable on Application. Deemed Date of Allotment The Deemed Date of Allotment for the NCDs shall be the date on which the Board of Directors or duly authorized committee thereof approves the allotment of NCDs or such date as may be determined by the Board of the Company and/or a duly authorized committee thereof and notified to the Stock Exchanges. All benefits under the NCDs including payment of interest will accrue to the NCD Holders from the Deemed Date of Allotment. The actual allotment of NCDs may take place on a date other than the Deemed Date of Allotment. Issuance mode of the Instrument Compulsorily in dematerialized form to all categories of investors other than Individual Category Investors who have opted for allotment of NCDs in the physical form in accordance with Section 8(1) of the Depositories Act, 1996. Only Category III Investors can apply for allotment of NCDs in the physical form. However Series II & Series V NCDs would be allotted compulsorily in dematerialized form to all categories of Investors Trading Lot 1 (one) NCD Trading mode of the Instrument The trading of the NCDs on the Stock Exchanges shall be in dematerialized form only. Depositories NSDL and CDSL Working Day Convention If the date of payment of interest does not fall on a Working Day, then the interest payment will be made on succeeding Working Day, however the calculation for payment of interest will be only till the originally stipulated Interest Payment Date. The dates of the future interest payments would be as per the originally stipulated schedule. Payment of interest will be subject to the deduction of tax as per Income Tax Act or any statutory modification or re-enactment thereof for the time being in force. In case the Maturity Date (also being the last Interest Payment Date) does not fall on a Working Day, the payment will be made on the immediately preceding Working Day, along with coupon/interest accrued on the NCDs until but excluding the date of such payment. Record Date In connection with Series III and Series VI NCDs, 15 (Fifteen) Days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the Stock Exchanges, and in connection with Series II and Series V NCDs, 10 (Ten) working Days prior to the date on which interest is due and payable, or the date of redemption, or as may be prescribed by the Stock Exchanges and in connection with Series I, Series IV and Series VII NCDs, 15 (Fifteen) Days prior to the Maturity Date or as may be prescribed by the Stock Exchanges. If the Record Date falls on a day that is not a Working Day, then immediate next Working Day will be deemed as Record Date. Security The principal amount of the NCDs to be issued in terms of the Prospectus together with all interest due on the NCDs in respect thereof shall be secured by way of exclusive first charge in favour of the Debenture Trustee on specific present and/or future receivables/assets and/or first pari passu charge on an identified immovable property of the Company as may be decided mutually by the Company and the Debenture Trustee. The Company will create appropriate security in favour of the Debenture Trustee for the NCD Holders on the assets adequate to ensure 100% asset cover for the NCDs (along with the interest due thereon). For further details please refer to the section titled Terms of the Issue Security in the Prospectus.

SPECIFIC TERMS FOR EACH SERIES OF NCDs Series I** II# III*** IV** V# VI VII** Frequency of Interest Payment NA Monthly Annual NA Monthly Annual NA Minimum Application Rs 10,000/- (10 NCDs) across all Series Face Value/Issue Price of NCDs (Rs/ NCD) Rs 1,000/- In Multiples of (Rs) 1000 1000 1000 1000 1000 1000 1000 (1NCD) (1NCD) (1NCD) (1NCD) (1NCD) (1NCD) (1NCD) Tenor from Deemed Date of Allotment 400 days 3 years 5 years Coupon (% per annum) for NCD Holders N.A. 8.90% 9.25% N.A. 9.11% 9.50% N.A. in Category I & Category II Coupon (% per annum) for NCD Holders N.A. 9.12% 9.50% N.A. 9.35% 9.75% N.A. in Category III Effective Yield (per annum) for NCD 8.63% 9.27% 9.29% 9.27% 9.50% 9.52% 9.50% Holders in Category I and Category II Effective Yield (per annum) for NCD Holders in Category III 8.81% 9.51% 9.54% 9.55% 9.75% 9.77% 9.75% Mode of Interest Payment Through various mode available. Amount (Rs / NCD) on Maturity for NCD Rs 1,095/- Rs 1,000/- Rs 1,000/- Rs 1,305/- Rs 1,000/- Rs 1,000/- Rs 1,575/- Holders in Category I & Category II ** Amount (Rs / NCD) on Maturity for NCD Holders in Category III ** Rs 1,097/- Rs 1,000/- Rs 1,000/- Rs 1,315/- Rs 1,000/- Rs 1,000/- Rs 1,593/- Maturity Date (from Deemed Date of 400 days 3 years 3 years 3 years 5 years 5 years 5 years Allotment) Put and Call Option N.A. N.A. N.A. N.A. N.A. N.A. N.A. Institutional, Non-Institutional Category Investor(s) and Individual Category Investor(s) can subscribe to all Series of NCDs. ** Subject to applicable tax deducted at source, if any. *** The Company shall allocate and allot Series III NCDs wherein the Applicants have not indicated their choice of the relevant NCD Series. #Series II & Series V NCDs would be allotted compulsorily in dematerialized form to all categories of Investors. INVESTOR CATEGORIES AND ALLOTMENT Category I Category II Category III Institutional Investors Non Institutional Investors Individual Category Investors 1. Public financial institutions, statutory corporations, scheduled commercial banks, co-operative banks Indian multilateral and bilateral development financial institution and regional rural banks, which are authorized to invest in the NCDs; 2. Provident funds & pension funds with a minimum corpus of Rs 2500.00 lacs, superannuation funds and gratuity fund, which are authorized to invest in the NCDs; 3. Venture capital funds and / or Alternative investment funds registered with SEBI; 4. Insurance companies registered with the IRDA; 5. Insurance funds set up and managed by the army, navy, or air force of the Union of India; 6. Insurance funds set up and managed by the Department of Posts, the Union of India; 7. National investment fund set up by resolution no. F. No. 2/3/2005- DDII dated November 23, 2005 of the Government of India published in the Gazette of India; 8. State industrial development corporations; and 9. Mutual funds. 1. Companies within the meaning of section 2(20) of the Companies Act, 2013; statutory bodies/ corporations and societies registered under the applicable laws in India and authorized to invest in the NCDs; 2. Trusts including Public/private charitable/religious trusts which are authorized to invest in the NCDs; 3. Scientific and/or industrial research organizations, which are authorized to invest in the NCDs; 4. Partnership firms in the name of the partners; 5. Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009); 6. Association of Persons; and 7. Any other incorporated and/ or unincorporated body of persons 1. Resident Indian individuals; and 2. Hindu undivided families through the karta.

ALLOCATION RATIO Institutional Portion Non-Institutional Portion Individual Category Portion 30% of Overall Issue Size 20% of Overall Issue Size 50% of Overall Issue Size MODES OF MAKING APPLICATIONS (a) ASBA Applications through the Lead Managers, Brokers to the Issue and trading members of the Stock Exchanges only in specified cities (namely, Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodra and Surat) for Applicants who intend to hold the NCDs in demat form; ( Syndicate ASBA ); (b) ASBA Applications through Designated Branches of the SCSBs for Applicants who intend to hold the NCDs in demat form; (c) Non ASBA Applications through the Lead Managers, Brokers to the Issue and trading members of the Stock Exchanges for Applicants who intend to hold the NCDs in demat form; and (d) Non ASBA Applications through the Lead Managers, Brokers to the Issue and trading members of the Stock Exchanges for Applicants who intend to hold the NCDs in physical form. APPLICATIONS CANNOT BE MADE BY Minors without PAN and a guardian name*; (A guardian may apply on behalf of a minor. Applications by minor must be made through Application forms that contain the names of both the minor Applicant and the guardian); Foreign nationals except as may be permissible under the applicable law; NRIs who are (i) based in the USA, and/or, (ii) domiciled in the USA, and/or, (iii) residents/citizens of the USA, and/or, (iv) subject to any taxation laws of the USA; NRIs on repatriation basis; Persons resident outside India including without limitation Foreign Institutional Investors, Foreign Portfolio Investors, Qualified Foreign Investors and Overseas Corporate Bodies; Persons ineligible to contract under applicable statutory/regulatory requirements and Any category of investor other than the Investors mentioned in categories I, II and III *Applicant shall ensure that guardian is competent to contract under Indian Contract Act, 1872

KEY OPERATIONAL AND FINANCIAL PARAMETERS Particulars (Rs.in Crores) As on for the period As on for the As on for the As on for the ended 30.09.2016 year ended year ended year ended March 31, March 31, March 31, 2016 2015 2014 (Audited) (Audited) (Audited) (Audited) Net worth 2395.67 2321.87 2208.80 2039.12 Total Debt 11767.90 11853.71 13064.53 13095.93 of which - Non current maturities of Long Term Borrowings 2771.72 2778.84 3214.95 4092.38 - Short Term Borrowings 7785.99 7631.49 8185.66 7395.21 - Current Maturities of Long Term Borrowings 1210.19 1443.38 1663.92 1608.34 Net Fixed Assets 1662.80 1417.99 1658.37 1291.44 Non-Current Assets -other than Net Fixed Assets (including noncurrent 8064.30 7985.59 7589.25 7847.45 investment) Cash & Bank Balance 359.14 207.83 353.29 617.36 Current Investments 3.98 5.72 7.25 29.71 Current Assets (Excluding Current Investment and Cash & Bank 6056.33 6045.00 6686.88 6339.80 Balances) Current Liabilities (Excluding Short Term Borrowing and Current 1565.08 1070.51 622.09 607.87 Maturities of Long Term Borrowing) Assets Under Management 19934.53 18597.79 18348.43 18164.95 Off Balance Sheet Assets (Securitized Portfolio) 3787.99 2935.66 2053.39 2039.19 Revenue from Operations 1229.53 2613.88 2601.44 2617.93 Finance Cost 662.70 1417.71 1442.28 1533.73 Provisioning & Write-offs 144.69 396.18 336.57 259.41 PAT 68.83 115.26 153.02 225.38 Gross NPA (%) 2.72 2.95 4.98 4.97 Net NPA (%) 1.87 1.99 3.83 4.07 Tier I Capital Adequacy Ratio (%) 14.47 14.65 13.35 12.63 Tier II Capital Adequacy Ratio (%) 4.23 4.97 3.70 4.50

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