ROADSHOW PRESENTATION February 2019 1
Disclaimer THIS DOCUMENT AND ITS CONTENTS ARE CONFIDENTIAL AND ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES. The Information has been prepared to assist the recipients in making their own assessment of Shriram Transport Finance Company L imited and its subsidiaries (the “Company”) and does not purport to contain all of the information that may be required. The Company makes no representation or warranty as to the accuracy or completeness of any information contained herein, including any estimates or projections, and nothing contained herein should be relied upon as a promise or a representation regarding future events or performance. No responsibility or liability is assumed for any information contained herein or opinions or for any errors or omissions from this document. All information presented or contained in this document is subject to verification, correction, completion and change without notice. The information contained in this document should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date of this document. None of the Company or Barclays Bank PLC, Deutsche Bank AG, Singapore Branch, Emirates NBD Bank PJSC, The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan Securities plc, ING Bank N.V., Singapore Branch and Standard Chartered Bank (the “Managers”) nor any of their respective affiliates, advisers or representatives is under any obligation to keep current the information contained in this document and any opinions expressed in it are subject to change without notice. None of the Company, the Managers nor any of their respective affiliates, advisers or representatives accept any liability whatsoever (whether in contract, tort, strict liability or otherwise) for any direct, indirect, incidental, consequential, punitive or special damages howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. Certain statements in this document may constitute "forward-looking statements". These statements reflect the Company’s beliefs and expectations about the future and are subject to risks and uncertainties. These forward -looking statements are based on a number of assumptions about the Company’s operations and factors beyond the Company’s control, and accordingly, actual results may differ materially from these forward -looking statements. This document does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter into, any investment activity. Any decision to purchase the Company’s securities in the context of an offering (if any) should be made solely on the basis of in formation contained in the offering documentation published in relation to such offering. This document should not be regarded by recipients as a substitute for the exercise of their own judgment and the merit and suitability of an investment in the Company or any of its securities should be independently evaluated. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. NO PUBLIC OFFERING OF THE SECURITIES WILL BE MADE IN THE UNITED STATES OR IN ANY OTHER JURISDICTION WHERE SUCH AN OFFERING IS RESTRICTED OR PROHIBITED. The Securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of: ( i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive 2002/92/EC (“IMD”), where that customer would not qualify as a professional client as defined in point (10) of A rticle 4(1) of MiFID II. Consequently, no key information document required by Regulation (EU) No 1286/2014 (the “PRIIPs Regulation”) for offering or selling the Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation. 2
Contents 1. Transaction Overview 5 2. Attractive Industry Dynamics 7 3. Company Overview 10 4. Key Credit Highlights 14 5. Financial Summary 24 6. Appendix 26 3
Presenters Umesh Revankar Parag Sharma Chief Executive Officer Chief Financial Officer Associated with Shriram Group Associated with Shriram Group for about 3 decades for over 24 years 4
1. Key Transaction Summary 1. Introduction 5 5
Key Transaction Summary Terms Details Shriram Transport Finance Company Limited (“STFC”) Issuer Issue Fixed rate, senior secured US$ bonds Size Benchmark Tenor [ ] Security Charge on a specified pool of receivables exclusively earmarked for this issuance BB+ / BB+ (S&P / Fitch) Expected Issue rating Use of proceeds Onward lending and other activities as may be permitted by the ECB Directions, in accordance with the approvals granted by the RBI Included but not limited to: Maintenance Covenants Security Coverage Ratio >= 1.0 Security will at all times consist of Standard Assets Distribution Reg S only Listing Singapore Stock Exchange Governing Law English Law Joint Global Coordinators Deutsche Bank, HSBC, ING, Standard Chartered Bank and Bookrunners Joint Bookrunners Barclays, Emirates NBD Capital, J.P. Morgan 6
2. Attractive Industry Dynamics 1. Introduction 7 7
NBFC Sector is an Integral Part of India’s Credit Market India’s under penetrated credit market is witnessing an increasing share of NBFCs... Credit to GDP ratio NBFC share in India’s credit market 19% China 206% 16% Singapore 171% 13% United States 151% Malaysia 136% Thailand 116% India 56% Indonesia 40% FY13 FY17 FY20E Source: “Non -banks share of credit pie to increase 300 bps in 3 years” CRISIL, September 2018 Source: BIS research, as of June 2018 …while being governed by a robust regulatory framework Shriram is a leader in the NBFC Asset Financing space Parameter Banks 2 NBFC Tier I Capital Ratio 1 7% 10% Market share of 25 – 27% in pre-owned Commercial Vehicle (CV) financing Capital to Risk Assets 9% 15% Ratio (CRAR) 1 Non-payment for 90 Non-payment for 90 Definition of NPA days days 1. NBFC – Non deposit taking – Systematically important (asset size > INR 500 crore) and NBFC – Deposit Source: S&P Rating Report Taking would have to comply with the norms 2. Does not include Capital Conservation Buffer Abbreviations: NBFC – Non-Banking Finance Company 8
Positive Outlook for Commercial Vehicle (CV) industry Demand for CVs to pick up in the upward cyclical trend Domestic CV sales / production trend 860 Units (000s) 710 680 610 890 790 810 700 2014-15 2015-16 2016-17 2017-2018 Source: Society of Indian Automobile Manufacturers (SIAM) Production Demand Company’s Growth Strategy Strong Industry Potential Second hand truck financing market is under penetrated with 55- Build partnerships with private financiers in the unorganized market 60% of the market with private financiers charging high interest rates to leverage their local know-how Stricter emission norms and legislative pressure on banning trucks Introduction of top-up products like finance for tyres, working capital older than 15 years to trigger replacement demand and engine replacement Greater demand from e-commerce / logistics companies Increase penetration into rural and urban centres Improvement of road infrastructure and growing freight capacity Economies of scale - incremental cost of new products is low Source: Company filings 9
3. Company Overview 1. Introduction 10 10
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