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Shriram Capital Ltd Sanlam Investor Day– October 2012

2

Table of Contents

Section 1: Executive Summary

Section 2: Shriram Group

Section 3: Shriram Capital

Section 4: Overview of Financial Services operating companies

A. Shriram Transport Finance

B. Shriram City Union Finance

C. Shriram General Insurance

D. Shriram Life Insurance

E. Shriram Credit Company

Shriram Insight Share Brokers

Shriram Fortune Solutions/ Shriram Financial Product Solutions

Section 5: Shriram Capital future plans

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4

Impeccable

Pedigree

Established in 1974, Shriram Group is one of the most respected Groups in India with an established track record of 35+

years.

Currently Assets under Management is over US$ 11.80 bn

Presence of

Marquee

Investors

A mix of strategic and financial investors including Sanlam Group, TPG Investments, Chryscapital , Bessemer Venture

Partners and ICICI Ventures, LeapFrog Investments etc

Diversified

conglomerate

with cross sell

opportunities

Presence in all aspects of Financial Services – Asset and Retail financing, Life and General Insurance, stock broking,

financial products distribution and wealth advisory services

Cross selling of various group products across 9.3 mn strong client base of the Group

Competitively

positioned

Shriram Transport is the largest used CV finance provider in the country with approximately 25% market share

Shriram City is amongst the largest and one of the most well diversified retail finance NBFCs in India

Shriram Life leverages on the captive customer base and infrastructure of the Shriram Group

Shriram General focuses mainly on motor insurance which forms a large part of Shriram Transport and Shriram City portfolio

High Yielding

Businesses

with low NPAs

Shriram Transport with an FY12 RoA of 3.8% and an RoE of 22.8% is amongst the most profitable NBFCs with low NPAs of

0.44%

Shriram City Union with an FY 12 RoA of 3.1% and an RoE of 24% is highly profitable with low NPAs of 0.38%

Shriram Life turned profitable in the very 1st year of operation vs. 7-10 years for a typical life insurance firm without sacrificing

growth

Shriram General is among the few profitable general insurance companies despite following ‘Motor only’ strategy

Brand Equity The brand “Shriram” is one the most trusted and reputed brands in India which lends a competitive edge in attracting

customers and exploring untapped business potential

Key Highlights- Shriram Capital

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6

Shriram Group Founder’s profile

Founder Chairman of the Shriram Group of Companies

Founded the Shriram Group in 1974 to cater to the financial needs of a very large “unbanked / credit starved” customers

Has envisioned and strategized the development of the financial businesses as well as the Shriram Group’s diversification into

non-financial businesses

By inculcating the philosophy of “putting people first”, has transformed the Shriram Group into India’s premier networked

financial services supermarket chain

Has four decades of experience in general insurance industry

– Has worked with New India Assurance Co. Ltd., J.B. Boda & Co. Pvt. Ltd. and has mentored several large insurance broking

companies

Education:

Masters in Mathematics

Masters in Mathematical Statistics from Indian Statistical Institute, Calcutta

Associate of Chartered Insurance Institute, London

Visiting faculty of Asian Institute of Insurance, Philippines on Consequential Loss Insurance

Mr. R. Thyagarajan

Founder, Shriram Group

Among the most respected visionaries in the financial services industry in India

7

Established in 1974, Shriram Group is one of the most respected Groups in India with a predominant presence in the financial services

space

Shriram Capital Limited (SCL) is the overarching holding arm of all the financial services entities of the group.

Currently its financial service businesses include commercial vehicle (CV) financing, retail financing, chit fund, equipment financing,

mortgages, life insurance, general insurance, stock broking, distribution of financial products and wealth advisory services.

Shriram Group (non financial services arm) has significant presence in engineering services, property development, information

technology and interest in auto component manufacturing and renewable energy.

The group manages assets of over US$ 13 bn (including non-financial services).

The group has been promoting financial inclusion across sections of the society.

Key Operating Parameters

Branch Network Over 2,500

Marketing Force Over 100,000

Manpower Strength Over 51,000

Customer Base Over 9.3 mn

Key Financials (aggregated(1),in USD mn) FY12

Revenue 2,670

Profit After Tax 369

Assets Under Management (AUM) 13,351

Note 1: Aggregated financials including non-financial services

Note: FY12, FY11 & FY10 respectively represents Financial Year ending on 31st March 2012, 31st March 2011 & 31st March 2010 throughout this presentation

Note: Exchange rate has been taken as 1 US $ = Rs. 52 throughout this presentation

Shriram Group Brief Overview

8

Shriram Group

Shriram Enterprise Trust

(holding Non-Financial Services

Businesses)

Shriram Ownership Trust

(holding Financial Services Businesses)

Shriram Capital

Limited

Shriram Chits

(Tamil Nadu/ Hyderabad/

Karnataka/Maharashtra)

(Chit Fund Business)

Shriram Transport

Finance (Listed)

(Commercial Vehicle

Finance)

Shriram City

Union (Listed)

(Retail, Enterprise,

and Gold loan )

Shriram Insurance

Businesses

(Life & General

Insurance)

Shriram Equipment

(Construction

Equipment

Finance)

The Shriram group manages its businesses through two Trusts. These trusts are run independent of each other with a significant

number of trustees being independent professionals

Shriram Ownership Trust holds the financial services businesses and Shriram Enterprise Trust holds the non financial services

businesses

Shriram Credit Co.

(Brokerage, Financial

Product Distribution

Infrastructure support

and PMS & Wealth Mgt)

Shriram Enterpreneurial Ventures Limited

Engineering / Property Development /

Information Technology / Auto Component

Manufacture / Renewable Energy

Shriram Housing

Finance

(Mortgages)

Shriram Automall

(Facilitate

secondary sale of

trucks)

Note: Only the main holding company and main operating businesses are depicted above

Shriram Group Holding Structure

9

Shriram Group Partners and Investors

Business Company Investor Domain Investors

Holding company

Shriram Financial Ventures

(Chennai) Private Limited International

SANLAM Group of South Africa

Shriram Capital Limited International TPG Investments

Truck Finance Shriram Transport Finance International

TPG Investments, Chryscapital, Blue Ridge, Tiger Global

Management LLC

Domestic Axis Bank, Citi Corp, JM Finance Ventures

Retail Finance Shriram City Union

Finance International

TPG Investments, Merrill Lynch, Chryscapital, Cambridge Place

Investment Management, Bessemer Venture Partners, Asia Bridge

Domestic ICICI Venture

Housing Finance Shriram Housing Finance International Valiant Capital Partners

Life Insurance Shriram Life Insurance International

SANLAM Group of South Africa

Non-Life Insurance Shriram General Insurance

Stock Broking & Distribution

of Financial Products

Shriram Credit Company International

LeapFrog Financial Inclusion Fund

Engineering Shriram EPC

International

Chryscapital, Bessemer Venture Partners, New Vernon, Argonaut

Ventures, Hamon Group & Cie of Belgium, Leitwind B.V. Olympus

Capital, India Industrial Growth Fund, Gaja Partners,

Equipaggiamenti Electronic Industrial

Domestic UTI – IAS

Property Development Shriram Properties International

Sun Apollo, Walton Street Capital, Starwood Capital, TPG

Investments and India Opportunity Real Estate Fund

Note: Includes Past and Present investors & partners

Includes only primary infusion. Does not include secondary/market purchases

10

Arun Duggal Chairman

Shriram Capital

Chairman of Board of Directors of Shriram Capital, Shriram Transport, Shriram Properties, Shriram City, Shriram EPC and Bellwether Microfinance

Fund

Senior Advisor to TPG Capital and Vice Chairman of International Asset Reconstruction Company

Former Chairman of American Chamber of Commerce, India and was also on the Board of Governors of the National Institute of Bank Management

Prior to joining Shriram Group, he had a 26 years career with Bank of America, mostly in the U.S., Hong Kong and Japan

A Mechanical Engineer degree from Indian Institute of Technology (IIT), Delhi and an MBA from Indian Institute of Management (IIM), Ahmadabad

Governing Council Financial Services

Akhila

Srinivasan MD

Shriram Life

Ms.Akhila is currently the Managing Director of Shriram Life Insurance Co. Ltd. which is a part of the Rs.60,000 crores Shriram Group.

Her contribution to the Group has been exemplary and has transcended professional excellence into one, filled with commitment, dedication and

exceptional work ethic.

Under her leadership, the Shriram Group set up the Shriram Foundation in 1993. Ms.Akhila is the State President of the Art of Living Foundation

She has been selected as one of the twenty-five Most Powerful Women in Indian business by ‘Business Today’ in the year 2008 & and as one of the

thirty Most Powerful Women in Indian business by ‘Business Today’ in 2010.

A K Singh MD

Shriram AMC

Mr AK Singh has a rich professional career of over 25 years out of which last 17 years have been in the Financial Services space. He has been

associated with Shriram Group since 1994 starting his career as the President of Shriram City Union Finance Limited

In 2005 he took up the position of MD in Shriram Insight Share Brokers, and He has recently taken up the position of MD of Shriram Asset

Management Company Ltd, a step forward for the group’s foray into wealth management

Mr.Akhilesh Kumar Singh is a B.Tech (IIT Kahargpur) and PGDM from IIM Bangalore

R Thyagarajan Advisor

Founder of the Shriram Group of Companies

Founded the Group to cater to the financial needs of a very large “unbanked / credit starved” customers, and has transformed the Shriram Group

into India’s premier networked financial services supermarket chain

Among the most respected visionaries in the financial services industry in India

R Kannan Advisor

R Kannan is amongst the senior-most Directors of the Shriram Group

Spearheaded group's Chit Fund companies to achieving the leadership status in the industry

S. Natarajan Advisor

Joined Shriram Group in 2001 and is part of the core team

Responsible for strategy compliance of the group companies with statutory and regulatory bodies

A Chartered Accountant with specialization in taxation matters, strategic planning and corporate financial restructuring, property development and

promotion of new business initiatives

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Governing Council Financial Services

G S

Sundararajan Group Director

Former CEO & Managing Director of Fullerton India Credit Company Ltd, a fully owned subsidiary of Temasek Holdings, Singapore.

Had a long and distinguished career with Citi Bank

Holds a Bachelor of Engineering degree from Coimbatore and an MBA from Indian Institute of Management (IIM), Ahmadabad

Umesh

Revankar MD

STFC

He has been with Shriram Group for last 24 years and possesses extensive experience in the financial service industry.

Mr Revankar is a storehouse of knowledge on the transport industry and has grown by hard work combined with a high degree of professionalism.

He holds bachelor's degree in Business Management from Mangalore University and MBA in Finance. He had attended Advanced Management

Program at Harvard Business School.

R. Sridhar MD & CEO

Shriram Capital

Fellow member of the Institute of Chartered Accountants of India

Joined Shriram in 1985 and was later promoted as President of the company in 1994 and appointed as Managing Director in 2000

Has over two decades of experience in the financial service sector, especially in commercial vehicle financing.

Member of Finance Industry Development Council and is actively involved with social organizations such as Shri Shanmukhananda Fine Arts &

Sangeetha Sabha, Mumbai (as a Treasurer) and Srikrishna Gana Sabha, Chennai (as a member)

JS Gujral MD & CEO

Shriram GI

Prior to becoming the MD & CEO of Shriram General Insurance, He was MD &CEO of Shriram Overseas Finance Ltd

Gujral is known for offering excellent and out of box Business solutions. He has been running the enterprise as a businessman and has created

five businesses including “SGI” as a new business from scratch

Mr Gural holds a bachelors degree in Commerce and is a Management Graduate and has done Advanced Management Program from Kellogg

Business School, Chicago and Executive Management program from IIM Ahmadabad.

R Duruvasan MD

Shriram City

Union Finance

Mr.Duruvasan has been serving the Shriram Group for 34 years

Mr Duruvasan played a key role as Managing Director and Principal Officer of Shriram Life Insurance Co. Ltd in the initial 5 years of the company’s

story and was greatly responsible for making synergies from the groups customers and creating a potential life insurance business for the group

D V Ravi MD

Shriram Capital

Started his career with Karnataka Oil Seeds Federation, Bangalore in 1987 and joined the Commercial Vehicle Finance business of the Shriram

group in 1992

Areas of expertise include corporate strategy, synergy creation, risk management efforts, leadership development and corporate finance

Non Executive Director and Co-founder of TAKE Solutions Ltd, a global technology solutions and service provider

Commerce graduate from the University of Bangalore and post graduate in management from the Institute of Rural Management, Anand (IRMA)

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13

Objectives of SCL:

To provide overall Governance and Corporate support to all the financial services investments in the group

To put in place senior management representation on the board of operating companies

To create synergy between different financial services companies

To provide assistance and support to all financial services companies in Shriram Group as needed in various areas such as Liability Management,

Investor Relations, Risk Management, Rating Agencies Relations, Financial Institutions and Central Bank Relations, PR, Government Interface, etc

To determine the overall strategy for the financial services companies in Shriram Group and oversee implementation of that strategy, including

inorganic growth

Management development of executives across Shriram Group financial services entities

To promote and strengthen the “Shriram” brand

Shriram Capital An active holding company

Key Financials (Standalone, USD mn) FY12(1) FY11

Revenue 8 9

Profit Before Tax 1 1

Profit After Tax 1 3

Net worth 132 148

Note 1 : Based on effective stake Shriram Capital holds in various operating companies, the profit of Shriram Capital would be approximately USD 105 mn in FY’12

Aggregate Financials (USD mn) FY12(1) FY11

Revenue 2,011 1,664

Profit After Tax 345 290

14

Shriram Capital Holding Structure

Shriram Retail

Holdings

Shriram Holdings

(SHMPL)(1)

Bharat Re-

Insurance Broker Shriram Credit

Company (SCCL)(2)

Other investments Shriram General

Insurance

Shriram Life

Insurance

Shriram Capital Ltd

Shriram Ownership

Trust

Shriram Transport

Finance Co. Ltd.

Shriram

Enterprise

Holdings

Shriram Insight

Brokers

Shriram City Union

Finance Ltd.

Shriram Wealth

Advisors

Shriram Fortune

Solutions

TPG

10.48%

11.10%

51% 49% 51% 49%

41.26% 100%

100% 99.58%

67.49% 100%

90%

80%

97.83%

Unlisted Holding Company

Unlisted Operating Company

Listed Operating Company

Legend 50.76%

Holding chit

business

Strategic/JV Partner

5.04%

Note 1: SHMPL will be merged with STFC on receipt of High Court Approval

Note 2: LeapFrog Financial Inclusion Fund, Mauritius invested in Compulsorily Convertible Preference Shares of SCCL representing 13.6% of its fully diluted equity share capital

Shriram Housing

Finance Ltd

Shriram Equipment

Finance Company

Ltd

100%

76.50%

4.39%

Shriram Automall

India Ltd

100%

Shriram Asset

Management Co.

Ltd

40%

Shriram Financial

Ventures (Chennai)

Pvt. Ltd

66.85%

78.42%

Sanlam 33.15%

Shriram Financial

Products Solutions

(Chennai)

100%

15

Shriram Financial Ventures (Chennai)/ Sanlam Stake

Holding Structure

Shriram Capital Ltd

Shriram Ownership

Trust

Shriram Financial

Ventures (Chennai)

Pvt. Ltd

Sanlam Emerging

Market (Maritius)

Ltd., Mauritus

Sanlam Ltd.

South Africa

Commercial Vehicle

Finance

Insurance Business

(Life and General)

Brokerage, Financial

Product Distribution

Infrastructure support,

Portfolio Management &

Wealth Mgt

Housing Finance Construction

Equipment Finance

Facilitation of

Secondary sale of

trucks

10.48%

66.85%

33.15%

78.42%

TPG

11.10%

Retail, Enterprise

and

Gold loan

16

Shriram Capital Board of Directors

Arun Duggal

D. V. Ravi

R. Sridhar

G.S. Sundararajan

Heinie Werth

Sanlam Nominee

Puneet Bhatia

TPG Nominee

17

Shriram Capital Senior Management Team

S.Murali

Eexcuitve

Director, CFO &

Company

Secretary

Has 23 years of rich experience in various industries in India and abroad

High level of expertise in financial services, financial analysis, risk management, valuation, regulatory/ compliance matters,

management study, identification of control weakness, framing of corporate financial policies for sound internal control systems,

etc

Is a Chartered Accountant, a Company Secretary, Associate of the Chartered Institute of Management Accountants (UK) and a

CWA (India)

R.Vasudevan Chief Risk

Officer

Rich experience of over 30 years as Head of Management Information/Finance/Accounts/Secretarial with leading Companies in

India in both financial and non-financial services sectors

One of the Promoter Directors of Proactive Solutech, Chennai, a Management Consultancy Company in operation since 1995

Head and Director (RISK Management Committee) for Shriram Group of Companies

Specalised in Corporate Finance, Resource Mobilization, Management Accounts ,Costing and Systems, Secretarial Functions,

Risk, Operational and Management Audit.

Commerce graduate , Cost Accountant and Associate Company Secretary

A.C.Sinha Executive

Director -

External

Relations

Vani

Narayanan Senior Vice

President

Over 25 years of experience in various entities in financial services sector including Commercial Bank, leading Development

Financial Institution in India and NBFCs

Has been with Shriram Group since 2004

Science Graduate and an MBA from Indian Institute of Management (IIM), Bangalore

N.Mani Senior Vice

President

Has been with Shriram Group for nearly three decades

Rich and varied experience in the areas of Accounts/General Administration/Public Relations/Taxation

More than 25 years of experience in Operations and External Relations

Law Graduate and an MBA

18

FY12

(12 months)

June’ 12

(3months)

Total Premuim 124 23

New Premuim 75 16

Total Capital Injected

Profit after tax

34

11

34

Sum Assured 4760 4912

Note 1: Revenue is Net Interest Income (NII) + other income

2: TN: Tamil Nadu, AP: Andhra Pradesh, MH: Maharashtra and KT: Karnataka

Strategy

Strengths

Key

Business

Financials

(US $ mn)

Shriram City Union

Leverage Shriram Group’s Chit fund

customer base and distribution

infrastructure

Focus on and provide access to under-

banked sections of the society

Seasoned credit policy processes

backed by recovery skills of Shriram chits

Among the most diversified player in the

retail finance place

Offers gold loans (36% of total book),

small enterprise loans (29%), auto loan

(18%), two wheeler loan (10%) and

personal and consumer durables (7%) to

retail consumers

Recently forayed into Housing finance.

Valiant Capital has committed to invest

US$ 35 mn (Including US $ 15 mn

already invested) for 23% stake

Shriram Transport

Continue growing its market share in pre-

owned CVs

Leverage existing franchisee for financing

new CVs and construction equipments

Ability to value pre-owned CVs

Recovery/ Collection skills

Geographical reach and proximity to

customers

Provides purchase finance for pre-owned

trucks (5-12 years old) to small truck

owners (owning less than 3 trucks)

Offers value added services to

Commercial Vehicle (CV) operators

Diversified into Equipment Finance with

FY12 AUM of US$ 370 mn and setting up

of Automall (market for sale of pre-owned

CVs)

(Standalone) FY12

(12 months)

June’ 12

(3 months)

Revenue1 645 168

PAT 242 62

Net worth 1,145 1214

AUM 7,733 8062

(Standalone) FY12

(12 months)

June’ 12

(3months)

Revenue1 217 72

PAT 66 20

Net worth 336 356

AUM 2,583 2863

SCL Subsidiaries Business Snapshot

Shriram Life Insurance

Leverage Shriram Group’s large

customer base and network

Significant expertise in designing

products for ‘Bottom of Pyramid’

Association with Sanlam

Strong presence in TN, AP, MH and

KT(2)

Underwrite life insurance business

Offer a suite of investment and

insurance products

19

Strategy

Focus on retail clients

Expand into mass affluent

segments

Aims to become a one stop

super store for all kind of

insurance and investment

products

Strengths

An active client base of 184,000

customers

A network of 700+ branches

and 1,189 trading terminals

Distribution footprint - a pan

India branch network of 360

branches and 37,000 agents

Clientele - Customer base of 1

mn+ through

Key

Business

Equity (cash and derivative)

and commodities brokerage

services to retail clients

Loan against shares (through

SCCL , an NBFC)

Distribution of financial products

like life & general insurance,

fixed deposits, debentures and

mutual funds

Financials

(US $ mn)

Shriram General Insurance

Focus on tapping captive

transportation customer base

Become market leader in motor

insurance in the medium term

Captive customer base in

transportation segment

Association with Sanlam

Strong presence in TN, AP, MH and

KT(1)

Collecdted Gross Premuim of over

USD 550 mn. within a span of 4 years

(Market share of 5.63% in FY’12 )

Underwrite motor, fire,

engineering, liability and

shopkeeper’s insurance

Note 1 :TN: Tamil Nadu, AP: Andhra Pradesh, MH: Maharashtra and KT: Karnataka

2: Aggregate revenue and PAT of Shriram Insight (broking business), Insight Commodities and Shriram Credit ( financing business) 3) Indicates to Profit before tax

FY12

(12 months)

June 12

(3 months)

Gross

Direct

Premuim

244 63

Net

Premuim 125 59

Profit After

Tax 12 5

FY12

(12 months)

June 12

(3 months)

Revenue2 12 3

Profit After

Tax2

2 13

Net worth 16 17

FY12

(12 months)

June 12

(3 months)

Revenue 17 5

Profit After

Tax

2 13

Net worth 3 4

Shriram Credit Company Limited (SCCL)

Stock Broking Distribution of Financial

Products

SCL Subsidiaries Business Snapshot

20

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21 21

CV Financing Business Model

Market

Share

Target

Segment &

Expertise

Target

Segment

New

Owned Funds Average core lending business yields 18-24%

Owned Funds Average core lending business yields 15-16%

Securitization Average back-stop funding – Net spread: 5-6%

Small Truck owners (less than 2-3 trucks) with

underdeveloped banking habits

Leadership position with a market share of 20-25%

AUM of approximately US$ 5.9 bn at the end of FY12

Pre Owned (5-12 Years Old CVs)

Existing customer base upgrading to new trucks

7-8%

AUM of approximately US $ 1.8 bn at the end of FY12 Performance

Targets only 5-12 year old trucks bought by Small Road Transport Owners (SRTO)

Risk is relatively low as compared to 12+ year old trucks

Banks lack valuation expertise and risk appetite to finance more than 5 year old trucks

Small truck owners (owning less than 3 trucks), though creditworthy, typically lack paper work to avail bank loans

Leveraged expertise in pre-owned truck to enter into new truck financing.

Securitized portfolio (off book) stands at 45% of total portfolio

5-6% spread in average back stop funding

Shriram Transport Finance Unique Business Model

22 22

Source: Company filings, analyst presentations and research reports

Note 1: Operating income is defined as Net Interest Income + Other Operating Income

Scale

One of the Largest NBFCs in asset financing space with 20-25% market share in pre-owned and 7-8% share in new truck

financing

Total AUM of $7.7 bn with a Net worth of $1.14 bn, generating Income(1) of $ 645mn (FY 12) )

Customer base has grown to 0.8 mn with an employee base of 15,057

Pan India presence with a network of 502 branches serviced by 8,155 field officers and partnership with 500+ financiers

c.60%+ branches located in growth corridor of the country – Maharashtra, Tamil Nadu, Andhra Pradesh and Karnataka

High footprint in difficult to access rural and urban areas

Geographic

Spread

Yield on Advances are in 18% - 24% range for Pre-owned CVs and 15% - 16% for New CVs

Low cost of funds due to a) priority sector status with banks b) high credit appraisal and c) access to institutional funds

High level of valuation skills, locally drawn sales force - customer familiarity, and strong information network resulting in highly

efficient collection mechanism and hence low NPAs at 0.44% (FY 12)

Proprietary credit evaluation tools, asset backed lending with adequate cover and well defined incentive schemes for sales force

helps keep default rates low

Margins and

Asset Quality

Run by a professional management team and backed by a respected promoter group & global financial investors

Average work experience of the top team of over two decades

Presence of marquee investors like TPG, Equinox, ICICI Prudential Life, Genesis India Investment Company etc.

Promoters /

Management

Target AUM of USD 9.5 bn by FY13

Do innovative tie-ups and target new products

Tied up with Axis bank to distribute credit cards to small truck owners - Distributed over 1,70,000 credit cards (Mar ‘11)

Development of Automalls / Touch screen kiosks

Explore acquisition of CV portfolios on an opportunistic basis

Expansion of Shriram Equipment Finance business – FY 12

Market expected to grow at a CAGR of 30% +driven by infrastructure spending

Going

forward

Shriram Transport Finance Key Highlights

23

0.4%0.2%

0.7%

1.2%

0.1%

1.0%

STFC IDFC MMFSL Srei Sundaram LTFH

NPA %

Profitability: RoA, RoE (FY12, %) Scale: Net worth, Assets (FY12, US $ mn)

Market Cap & P/B Multiple (FY12, US $ mn, x) Net NPA (FY12, %)

1,1

45

2,3

35

566

497

344

914

6,8

73

11,6

74

3,5

70

2,4

43

2,4

88

5,1

79

STFC IDFC MMFSL Srei Sundaram LTFHNetworth (YoY) Assets

2,8

15

4,6

27

1,7

82

264

895

1,6

75

2.52.0

3.1

0.5

2.61.8

STFC IDFC MMFSL Srei Sundaram LTFH

Market Cap P/B

Shriram Transport Finance

compares well in almost all

fundamentals as compared to

peers

Comparable size to its peers

in terms of size of balance

sheet

One among the best in peer

group return on assets &

equity

Optimising growth with

keeping asset quality (NPAs)

in check

High P/B multiple suggesting

market expectations of solid

foundations coupled with

high future growth potential

Note : 1) LTFH – consolidated financials considered

2) Market Price - October 2012

Shriram Transport Finance Peer Analysis

3.8% 2.9% 3.9% 2.8% 2.1%

22.8%13.0%

22.8%

2.3%

21.4%11.9%

STFC IDFC MMFS Srei Sundaram LTFH

RoA RoE

24

Retail & Small Enterprises financing model

Small Enterprises

Finance

Personal Loans /

Consumer Durable

Retail Loan

Two wheeler Loans Auto Loans Loan against gold

Shriram City Started Average Tenor Average Yield % of Portfolio Growth YoY

(FY’12) GNPA (%) NNPA (%)

Consumer Durable / Two

Wheeler

Dec’ 2002 24 months 24-26% 12% 18% 6.31% 1.89%

Personal Loans Jan’ 2006 30 months 24-27% 5% 33% 4.12% 0.00%

Auto Loans Oct’ 2005 30 months 22-24% 18% 108% 3.23% 0.73%

Loan against Gold Oct’ 2006 4 months 18-20% 36% 47% Nil Nil

Small Enterprises

Finance

Dec’ 2005 36 months 22-24% 29% 156% 0.59% 0.28%

Focus on under banked segments of society in difficult to access rural / semi urban areas resulting in high yield on assets

Localized sales force, seasoned credit approval processes and shared recovery responsibility results below industry average

NPAs

Business

Model

Shriram City Union Finance Unique Business Model

25

Difficult to

replicate

Portfolio

Amongst the largest and most diversified players in the retail financing space

Target under-banked customers who are otherwise not eligible for credit

Access to 9.3 mn Shriram Group client base

Focus on rural and semi-urban areas; 80% of branch network in such areas

Pan India presence with an existing concentration in South India; expanding into other geographies

Field force drawn locally – advantage of domain knowledge & personal knowledge of the customers

Focus Market

& Geographic

Spread

Streamlined processes & clear responsibility lines results in efficient disbursal and collection machinery

– Originations & Credit evaluation through own team; Centralized broad policy formulation; Decentralized decision making

authority

– Credit team responsible for monitoring early warning signals, deal originators being responsible for the portfolio quality

Successful execution of above policies reflects in results – GNPA at 1.55% and NNPA at 0.38%

Credit Policy

& Asset

Quality

Run by a professional management team and backed by a respected promoter group & global financial investors

Presence of marquee investors like TPG, Bessemer, IDBI Trusteeship, Asia Bridge, NVP Ventures etc.

Promoters /

Management

Product expansion across branches; still large number of branches do not offer full suite of Shriram City products

Leverage Shriram group’s network and clientele to grow its newly launched mortgage finance business

Continued focus on small business loans (especially very small and under banked enterprises)

Going forward

Source: RBI, Company filings, analyst presentations and research reports

Borrowing Mix

& Margins

Optimum borrowing mix with bank borrowing at 55%, retail borrowing at 27% and market borrowing (incl. public NCD) at 18%

– Has been able to reduce dependence on bank from 60% in Mar 11 to 55% in Mar 12; cost of funds remains low at 10%

Focus on high-yielding assets (with yield on advances of 18 - 22%) secured by quality assets

~95% of the loan book is secured with 63% by assets like auto, two-wheelers & gold

Shriram City Union Finance Key Highlights

26

0.4%

0.0%0.1% 0.3%

0.0%0.3%

SCUF Magma BajajFinance

Manap-puram

Future Capital

Chola

NPA %

Profitability: RoA, RoE (FY12, %) Scale: Net worth, Assets (FY12, US $ mn)

Market Cap & P/B Multiple (FY12, US $ mn, x) Net NPA (FY12, %)

317

208

387

458

156

273

2,4

32

1,5

36 2,4

86

2,3

22

901

2,5

81

SCUF Magma Bajaj Finance

Manap-puram

Future Capital

Chola

Networth (YoY) Assets

3.1%0.9%

3.8% 6.0% 2.3% 1.5%

24%

6%

24% 27%

12% 14%

SCUF Magma Bajaj Manap-puram

Future Capital

Chola

RoA RoE

806 237 949 645 197 589

2.5

1.1

2.5

1.41.3

2.2

SCUF Magma BajajFinance

Manappuram

FutureCapital

Chola

Market Cap P/B

Shriram City Union Finance

compares well in almost all

fundamentals as compared

to peers

One among the best in

peer group return on

assets & equity

Optimizing growth and

asset quality (NPAs)

High P/B multiple

suggesting market

expectations of solid

foundation coupled with

high future growth

potential

Note: Market Price - October 2012

Shriram City Union Finance Peer Analysis

27 2

7

27

Competitive

Advantage

Access to captive customer base of Shriram Transport and two wheeler/ auto loan customers of Shriram City Union.

Enhanced ability to mitigate two key risks a) pricing based on competitor pricing and not on risk and b) ‘moral hazard’ i.e. fake

claims

The captive customer base of Shriram is well spread over the country with concentration in Southern states. These states are

among the most developed in terms of GDP growth, banking habits and per capita income

Currently operates 92 branches. New branches breakeven early due to presence of an existing clientele and distribution network

Focus market

& products

Currently offers 46 products including Burglary Insurance, public liability insurance, marine cargo, money insurance, property

insurance, housekeep umbrella insurance and shopkeeper umbrella insurance among others

– However, de-tarification of industry in last 4 years has led to heavy discounting on most of these products. Focus on profitable

growth has led Shriram General to pursue Motor insurance. Also, pursuing motor insurance capitalizes on the captive

customer base (especially Small Road Transport Operators) of the Group companies

Products

Promoted by Shriram Group with an excellent track record in the financial services business in Joint Venture with Sanlam Group,

a well established financial services Group in South Africa with an asset base of around US $ 60 billion. Sanlam Group has in its

fold Santam Limited the leading short term insurer in South Africa

Promoters /

Management

Going forward Shriram General would continue to focus on motor insurance primarily to Small Road Transport Operators and

deliver high return on capital.

Will resume underwriting non motor business as and when the discounting in non motor stabilizes.

Going

forward

Profitability

Margins

One of the few general insurance companies that are currently profitable due to its focus on profitable growth

– Appropriate pricing of the motor insurance based on risk and ability to reduce fake claims

– Stopped underwriting non-motor insurance due to heavy discounting by competitors

Claims/Benefit paid ratio of 70% and Opex ratio of 10% to total income

Shriram General Insurance Key Highlights

28

19%

11%

56%

18%

19% 26% 18%

7% 11%

42%

53% 38% 40% 53% 38%

42%

16%

14% 18% 15%

8% 9%

5% 14%

8% 8%

23% 17%

ShriramGeneral

BhartiAXA

FutureGenerali

Chola RoyalSundaram

Tata AIG UniversalSompo

Fire Marine Motor TP Motor OD Health Others

92

50

84 93 94

53

78

Shrira

mG

enera

l

Bha

rti A

XA

Fu

ture

Genera

li

Chola

Royal

Sun

dara

m

Ta

ta A

IG

Univ

ers

al

Som

po

Branches

FY12 Total Premiums (US $ mn)

FY12 Shareholder’s Account Profit after Tax (US$ mn) FY12 Branches

Shriram General Insurance

was established in 2008

and commenced

operations thereafter

It is one of the most

successful Non-Life

Insurers amongst the new

established players

It is one of the few

profitable general

insurers in India

It benefits greatly from

the strong distribution

capabilities as well as

loyal customer base of

the Shriram Group

244

170 177

259 285

316

78

FY12 Product-wise Distribution (%)

Shriram General Insurance Peer Analysis

12

-27

-10

4

0

-5

-23

ShriramGeneral

BhartiAXA

FutureGenerali

Chola RoyalSundaram

Tata AIG UniversalSompo

Policyholder's PAT

29

Competitive

Advantage Access to Shriram Group customer base of 9.3 mn and infrastructure

Low cost of operations due to access to Group customer base and infrastructure

Promoted by Shriram Group with an excellent track record in the financial services business in Joint Venture* with Sanlam Group

a well established financial services Group in South Africa with an asset base of around US $ 60 billion. Sanlam Group has in its

fold the Santam Limited the leading short term insurer in South Africa. * - Since disinvested by Sanlam Group in September 2012

Promoters /

Management

Expand modularly in geographic and customer segments profitably. Going

forward

Profitability

Margins

Earned profits in the very first year of operations

Apart from SBI Life, the only private insurer to have cumulative profits at the end of 5 years of operations

Commission paid ratio of 8% and Opex ratio of 20% to total premium income

Shriram Life Insurance Key Highlights

30

135

208181 185

6033

146

15

53

8 0

Sahara

Life

Shri

ram

Life

Bhart

i A

xa

Life

Futu

re

Genera

li L

ife

IDB

I F

edera

l

Canara

H

SB

C O

BC

Life

Branches Agents ('000)

FY12 Total Premiums (US $ mn)

FY12 Shareholder’s Account Profit after Tax (US$ mn) FY12 Branches & No. of Agents (1)

6

11

-37

-25

-13

-17

Sahara Life Shriram Life

Bharti Axa Life

Future Generali

Life

IDBI Federal

Canara HSBC

OBC Life

Shriram Life Insurance was

established in 2005 and

commenced operations

thereafter

It is one of the most

successful Life Insurers

amongst the new

established players

It is one of the few

profitable life insurance

companies in India

It benefits from the strong

distribution capabilities as

well as loyal customer

base of the Shriram

Group

1,962

1,229

2,696

565

1,132

2,526

1,439

43 124 149 150 142358

HDFC Life Max NYL ICICI Pru Life

Kotak Old Mutual

Birla Sunlife

SBI Life Bajaj Allianz

Sahara Life

Shriram Life

Bharti Axa Life

Future Generali

Life

IDBI Federal

Canara HSBC OBC

Life

Oct ’00 Nov ’00 Nov ‘00 Jan ‘01 Jan ‘01 Mar ’01 Aug ‘01 Feb ‘04 Nov ‘05 Jul ‘06 Sep’ 07 Dec’ 07 May 08 Established in:

Note : 1 Except Shriram Life others figure are based on FY’ 11

Shriram Life Insurance Peer Analysis

31

Shriram Credit Company

Shriram Credit Company Limited

(SCCL) incorporated in 1980 is a

Non-Deposit taking NBFC registered

with RBI

SCCL is directly engaged in

Financing activities mostly Loan

against Shares

Through its subsidiaries, SCCL is

engaged in

Stock Broking (Shriram Insight

Share Brokers Limited)

Distribution of Financial Products

(Shriram Fortune Solutions

Limited)

Infrastructure Provider (Shriram

Financial Products Solutions

(Chennai) Private Limited)

Expanded into Wealth Management

Services (Shriram Wealth Advisors

Limited) activities of which are at a

nascent stage.

Leapfrog invested US$ 15 mn. in

October 2011 for 13.57% stake

valuing the company at around US$

110 mn

Shriram Credit

(NBFC)

Business: Loan Against Shares and holdco for other

companies

Shriram Insight Share

Brokers

Business: Stock and commodity Broking

Shriram Fortune

Solutions

Business: Infrastructure Provider

Shriram Financial Products

Solutions (Chennai)

Business: Distribution of financial products

Shriram Wealth

Business: PMS & Wealth Mgmt.

(yet to commence business)

32

Shriram Insight Share brokers, incorporated in

1995, is a professionally managed stock broking

arm of Shriram group

Commenced operations in cash segment at

NSE in 1996

Commenced operations in derivatives at NSE

in 2003

Commodity broking services on MCX through a

wholly owned subsidiary

Focused on retail clients

An active client base of 184,000 customers

Aims to target mass affluent customers to drive

next level of growth

Products include equities broking, derivatives

broking, commodities broking (through a 100%

subsidiary), online trading, margin financing,

trading, IPO distribution, demat account and basic

research support (intraday calls, technical analysis

etc)

Member of National Stock Exchange (NSE)

(equity and derivatives) and Bombay Stock

Exchange (BSE) for stocks

Depository participant with Central Depositary

Services (India) Limited (CDSL)

Has a network of around 700 + branches and

1,189 trading terminals

Key Financials

Key Financials (in USD mn) FY’12 FY11

Revenue1 12 18

EBITDA1 3 4

PAT1 2 2

Net worth 16 15

Total Assets 22 31

Note 1 : Aggregate revenue and PAT of Shriram Insight (broking business), Insight Commodities and Shriram Credit (financing business)

Source : Corporate website

Peer Comparison (FY11 Revenue & Profit after Tax(1) (US$ mn))

18 31

24

502

54

2 11

2

150

10

Shriram Insight A.K. Capital Emkay Indiabulls Geojit BNPP

Revenue PAT

Shriram Credit Shriram Insight Share Brokers

33

Shriram Fortune/ Shriram Financial Products distribute a

range of investment and insurance products, primiraly of

Shriram Group and offer infrastructre support services /

training facilities

A nationwide distribution network with 428 branches and

an agency force of more than 50,000 personnel catering

to a pan India customer base of more than 1.5 million

Direct presence through 65 branches and an indirect

presence through 363 branches

An employee base of 2,300

Products distributed :

A range of deposits/ debenture products of Shriram

Group

Life insurance products of Shriram Life

General insurance products of Shriram General and

Health Insurance of Apollo Munich, Star Health, etc.

Mutual fund products of 34 Asset Management

Companies (AMC) (out of a total 44 AMCs active in

India)

Total Volume of investment & insurance product distributed by Shriram Group

Source: Corporate website

Peer Comparison (FY12 Branches & Clients)

644

300

1000.25

1,500

541

160

374

8

428

Geojit BNPP Indiabulls Emkay A.K. Capital Shriram Fortune Solutions

Clients ('000) Branches

Particulars (in USD mn) FY12 FY11

Deposit / Debenture 476 439

Life Insurance (APE) 24 28

General Insurance 3 2

Mutual Fund 2 1

Shriram Credit Shriram Fortune Solutions/Shriram Financial Product Solutions (Chennai)

34

Table of Contents













35 35

Banking

Opportunity

Equipment Finance business which targets small to medium contractors is expected to grow with significant operating synergies

with its parent company - STFC

Housing Finance will cater to the large middle income population of the country and provide the additional housing product to

Shriram group’s existing customer base.

Passenger CV and Tractor Financing will enhance the products market scope of STFC.

Wealth Management products development will augment the group’s product capability as it targets the mass affluent segment ;

The listed AMC within the group will be an added advantage

New

Businesses

Consolidate STFC operations and maintain a modest growth rate

Grow SCUF into a large enterprise finance entity at an attractive growth rate

Expand modularly in geographic& customer segments profitably for SLIC

Expand and develop Corporate Insurance programs, while simultaneously growing the Motor book

The large customer base of the group will continue to be data mined for Financial product distribution and Brokerage services

Growth in

existing

businesses

Shriram

Capital

Institutionalize active engagement with all operating companies

Identify and induct Strategic partners & financial investors in SCL and subsidiary companies

Prepare for a potential IPO of SCL and other unlisted companies

Shriram Capital Future Plans

Drive financial inclusion and provide a wider product suite to existing customers as well as new customers in the

same/similar space

Deepen our presence by covering new customer segments in its existing geographies as well as by expanding its

distribution presence in new geographies to tap the unbanked/under-banked customers in those locations

www.shriram.com

www.shriramcapital.com

Forward Looking Statement

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 SCL’s (the Company) 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.

shriram capital ltd - sanlam shared documents... · 2014-07-01 · chairman of board of directors...

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