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Investor Presentation

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 1995. Arman Financial Services is

• ne 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 2013-14. Became

the first company in India to receive the “NBFC-MFI” license.

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Highlights for 2015-16

• 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. 406.9mn at 41% yoy
• Profit before Tax stood at Rs. 121.1mn, a growth of 31% yoy
• EBIT stood at Rs. 284.7mn, a growth of 43% yoy
• 14% dividend declared, up from 12% PY; the 4th 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.

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Financial Highlights

CONSOLIDATED FINANCIAL HIGHLIGHTS

Rs mn 2012-13 2013-14 2014-15 2015-16 Disbursement Amount (Rs.) 1,049.2 1,381.30 1,683.20 2,467.08 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) 715.5 911.1 1,148.80 1,723.16 No of Branches 27 34 45 60 Income from Operations (Rs.) 169.9 244.7 296.1 406.9 PBT (Rs.) 47.5 67.0 92.6 121.1 PAT (Rs.) 33.4 44.9 61.6 80.0

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Board Composition & Shareholding

Name Designation Chinubhai R Shah Independent Chairman Jayendra B Patel VC & Managing Director 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 Aditya Bhandari Nominee Director Promoter, 30.0 FII, 25.0 [CATEGORY NAME], 45.0

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. 56.95/share, which was at a significant premium over its book value and stock price. Exit latest by 2018.

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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)

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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

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Microfinance Namra Finance Ltd.

Business and strategy

• Two year product rolled out
• 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.

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Market Expansion Scope

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Market Potential (Conservative Estimate)

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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

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2-Wheeler Financing Arman Financial Services Ltd.

Business model

• 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

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Consolidated Financial Summary

For the year ended / as on March 31 (Consolidated) 2012 2013 2014 2015 2016 Rs mn Working results Total income 155.0 169.9 244.7 296.1 406.9 Operating Expenses 46.5 59.4 79.7 83.1 116.2 Total provisions / Write Offs 5.4 4.6 6.0 10.7 14.0 Depreciation 1.0 1.1 1.1 2.4 1.8 Interest Paid 56.2 57.3 91.2 107.3 153.8 Profit before Taxes 45.5 47.5 66.7 92.5 121.1 Profit after Taxes 30.6 33.4 45.0 61.6 80.0 Financial Position Net worth 196.8 227.5 337.0 392.4 504.6 Total Short & Long term Debt 361.5 503.8 762.1 959.4 1410.2 Loan & advances 505.8 715.5 911.1 1156.9 1740.9 Total Assets 651.8 824.3 1115.8 1378.8 1952.5

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Geographical Spread

Microfinance 55 Branches 2 Wheeler 5 Branches Gujarat 37 Branches Madhya Pradesh 18 Branches

Thank You

If you have any questions or require further information, please feel free to contact Aalok Patel Arman Financial Services Ltd Tel: +91 79 40507000 Email: aalokpatel@armanindia.com

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