#1Arman Financial Services Ltd. PANU Arman Financial Services Ltd. Q4 & FY22 - Investor Presentation June 2022 from ACCESS to INCLUSION maw sqmad#2Pending#3CONTENTS 04 Performance Update - Q4 & FY22 17 Liability Overview 20 Company Overview 29 Product Overview 34 Annexures 0 Arman Financial Services Ltd.#4Pending#5Q4 FY22 - Financial Performance Highlights Total AUM up by 51% YoY to INR 12,332 Mn in Q4FY22 vs INR 8,144 Mn in Q4 FY21 We have added more than 80,000 new customers in Q4 FY22. Active Customer base of more than 4.6 lakh. Shareholders Equity Stood at INR 2,127 Mn in Q4 FY22 Consolidated Debt-Equity Ratio stood at 4.65x on 31st March 2022 Collection Efficiency was steady and healthy with each month being north of 95% Operating expenses increased by 29% YoY to INR 183 Mn in Q4 FY22 as a result of expansion in MFI & MSME branches and recruitment of staff for the branch expansions. Further the increase is also due to the growth in the loan portfolio. Disbursements grew by 23% YoY to INR 3,375 Mn in Q4 FY22 Profit before Tax stood at INR 221 Mn compared to loss of INR 2 Mn in Q4 FY21 Profit after tax increased sharply to INR 163 Mn compared to INR 9 Mn in Q4 FY21 Provisions and write-offs (Impairment Losses on Financial Assets) during the quarter was INR 10.8 Crores Cumulative Provisions stood at INR 653 Mn as on 31st March 2022 (covering 5.7% of the total AUM) AUM Crosses INR 12,000 Mn growing at a CAGR of more than 30% in last 7 years 5#6Update on Collections Update on Collections ☐ Collections in all the segments were healthy and remained above 95% during the quarter • 'Microfinance' collections was healthy and reached 98% during March 2022. • 2W and MSME collections continued to be well-north of 95% during December 2021 □ Cumulative collection Efficiency in the post covid loan book disbursed since September 2020 stands at ~99% Cumulative Provisions stood at INR 653 Mn as of 31st March 2022 covering 5.7% of the total AUM • Namra: Cumulative Provisions stood at INR 472 Mn as on 31st March 2022 covering 5.0% of the total AUM Standalone: Cumulative Provisions stood at INR 181 Mn as on 31st March 2022 covering 8.6% of the total AUM ☐ The company has adequately provided to withstand any further uncertainties pertaining to the pandemic - Collection Efficiency % (January 2022 March 2022) Collections Due Amount Collected Business Segment (Jan'22) (Jan'22) Collection Efficiency % (Jan'22) Collections Due Amount Collected (Feb'22) (Feb'22) Collection Efficiency % (Feb'21) Collections Due Amount Collected (Mar'22) (Mar'22) Collection Efficiency % (Mar'22) Total 748 700 94% 765 725 95% 795 775 98% Microfinance 578 537 93% 597 567 95% 622 611 98% MSME 138 131 95% 138 130 Two-wheeler 32 31 96% 30 29 32 94% 143 135 94% 95% 30 29 96% Note: All the amounts are in INR Mn. 6#7Pending#8Q4 & FY22 - Consolidated Profit & Loss Statement Particulars (INR Mn) Q4 FY22 Q4 FY21 YoY (%) FY22 FY21 YoY (%) Assets Under Management (AUM) 12,332 8,144 51% 12,332 8,144 51% Disbursements 3,375 2,752 23% 1,0233 5,097 101% Shareholder's Equity * 2,127 1,868 14% 2,127 1,868 14% Income from Operations 756.5 450.0 68% 2340.1 1943.6 20% Other Income 1.6 2.4 -32% 9.9 6.8 47% Gross Total Income 758.1 452.3 68% 2,350.1 1,950.4 20% Finance Costs 247.0 201.8 22% 894.5 792.3 13% Net Total Income (NTI) 511.1 250.6 104% 1455.6 1158.1 26% Employee Benefits Expenses 118.2 91.8 29% 418.5 355.7 18% Depreciation and Amortisation 3.4 2.0 68% 9.5. 8.1 18% Other Expenses 61.3 48.2 27% 19.9 13.1 52% Pre-Provision Operating Profit 328.2 108.6 202% 828.5 663.6 25% Total Provisions & Write-offs 107.5 110.1 -2% 373.3 545.9 -32% Profit Before Tax 220.8 -1.5 455.2 117.6 287% Profit After tax 162.8 8.7 1772% 317.2 106.2 199% GNPA % NNPA % Return on Avg. AUM % Return on Avg. Equity % * 4.1% 4.6% (50 bps) 4.1% 4.6% (50 bps) 0.7% 0.6% 7 bps 0.7% 0.6% 7 bps 6.4% 1.5% 594 bps 3.1% 1.3% 180 bps 31.3% 1.9% 2940 bps 15.6% 5.8% 980 bps Note: * Fully-diluted equity base There may be minor variations between Namra + Standalone figures and the consolidated figures due to eliminations / knock-offs RoE PAT/Avg. Fully Diluted Equity; GNPA % = GNPA / AUM (On + Off-Book); NNPA % = NNPA / AUM (On + Off-Book). RoE and Return on Avg. AUM figures are annualized. 8#9Q4 FY22 - Consolidated Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 8,144 7,848 9,083 10,446 12,332 2,752 2,665 2,965 3,375 443 497 508 587 758 iiilliiiiiill 1,216 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Net Total Income (INR Mn) 335 299 311 251 ☐ 511 Q4 FY21 PAT (INR Mn) Q1 FY22 70 Q2 FY22 163 ...l 9 36 49 Q3 FY22 Q4 FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 9#10Q4 & FY22 - Consolidated Balance Sheet Particulars (in INR Mn) Consolidated Standalone Consolidated Standalone ASSETS March 2022 March 2021 March 2022 March 2021 LIABILITIES & EQUITY March 2022 March 2021 March 2022 March 2021 Financial Assets Equity Share capital 85 85 85 85 Cash and cash equivalents 755 879 310 Reserves & Surplus 2,042 1,783 1,325 1,193 491 Total Shareholders Funds 2,127 1,868 1,410 1,278 Bank Balance 668 805 76 178 Financial Liabilities Loans & Advances 10,576 7,432 1,883 1,512 Other Payables 12 8 0 0 Investments 59 32 930 652 Debt Securities 1,951 1,776 673 648 Other Financial assets 129 76 11 17 Total Borrowings 7,696 5,288 1,057 835 Total Financial Assets 12,187 9,224 3,210 2,848 Subordinated Liabilities 250 150 50 50 Non-Financial Assets Other Financial Liabilities 329 242 50 50 50 Current tax Assets (Net) 0 0 2 0 Total Financial Liabilities 10,238 7,464 1,829 1,583 Deferred tax Assets (Net) 165 134 46 46 44 Non-Financial Liabilities Property, Plant and Equipment 37 48 35 8 8 Current tax liabilities (Net) 27 27 49 49 0 4 Right To Use Asset 12 6 0 0 Provisions 12 9 4 4 Other non-financial assets 11 3 7 7 Other non-financial liabilities 10 10 12 31 32 37 Total Non-Financial Assets 225 177 63 59 Total Non-Financial Liabilities 49 70 35 45 Total Assets 12,413 9,401 3,274 2,907 Total Liabilities & Equity 12,413 9,401 3,274 2,907 10#11Q4 & FY22 - Microfinance “Namra” Performance Update Particulars (INR Mn) Q4 FY22 Q4 FY21 YoY (%) FY22 FY21 YoY (%) Asset Under Management 10,220 6,431 59% 10,220 6,431 59% Disbursements 2,795 2,297 22% 8,401 4,176 101% ܀ ܀ A Q4 FY22 MFI AUM stood at INR 10,220 Mn - higher by 59% vis-à- vis last year . Active MFI Customer base stood at 4.01 Lakhs in Q4 FY22. Added more than 74,000 new customers in Q4 FY22. Disbursements grew by 22% with opening of new, along with increase in ticket size of second cycle borrowers Gross Total Income increased by 66% YoY to INR 428.1 Mn due to higher average AUM ❖ Similarly, Net Total Income increased by 113% YoY to INR 353.6 Mn * Income from Operations 559.4 336.1 66% 1,729.0 1,357.3 Other Income 0.0 0..0 Gross Total Income 559.4 336.1 66% 0.15 1,730.4 0.02 27% 607% 1,357.5 Finance Costs 205.8 170.5 21% 728.6 612.2 27% 19% Net Total Income (NTI) 353.6 165.6 113% 1001.8 745.3 34% Employee Benefits Expenses 82.0 60.1 36% 290.5 239.0 22% Depreciation and Amortisation 3.1 1.8 76% 8.5 7.1 20% Other Expenses 38.4 25.6 50% 131.0 85.9 53% Pre-Provision Operating Profit 230.0 78.1 194% 571.7 413.3 38% Total Provision & Write-offs 98.1 76.9 28% 300.0 366.7 -18% Profit After Tax 97.7 8.5 1044% 184.5 49.1 276% ܀ ܀ Profit After Tax increased sharply to INR 97.7 Mn in Q4FY22 compared to INR 8.5 Mn in Q4FY21 on the back of strong growth of loan portfolio and better operational efficiencies Provisions & write off for the quarter increased by 28% YoY to INR 98.1 Mn Strengthened provision coverage by prudently earmarking INR 44 Mn for provisions in this quarter. Additionally, the company also took an aggressive write-off of INR 53.7 Mn. Cumulative total ECL Provisions as on 31st March 2022 were INR 471 Mn covering 5.0% of the total AUM. GNPA % 3.7% 4.1% (44 bps) 3.7% 4.1% (44 bps) NNPA % 0.6% 0.6% 3 bps 0.6% 0.6% 3 bps Return on Avg. AUM % 4.2% 0.6% 359 bps 2.6% 0.8% 179 bps Return on Avg. Equity % 25.0% 2.8% 2217 bps 13.1% 4.2% 890 bps ❖ Repayment rates has been steady and healthy at 95% during the quarter and reached 98% in March 2022 Note: Income from Operations includes: Interest Income on loans and managed assets; processing fees, and other charges in respect of loans. Other Income includes capital gains on liquid funds NIM = NTI / Avg. AUM (On + Off-Book); Yields = Gross Interest Income / Avg. AUM (On + Off-Book); Cost-to-Income Ratio = Opex (excl. provisions) / Net Total Income; RoE = PAT/Avg. Equity; GNPA % = GNPA / AUM (On + Off-Book); NNPA % = NNPA / AUM (On + Off-Book); NIM %. RoE and Return on Avg. AUM figures are annualized 11#12Pending#13Pending#14Pending#15Q4 FY22-MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 93 96 353 380 502 379 1,395 1,651 1,253 1,247 1,131 أسس اس اس 99 108 164 il 160 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Note: • Asset Quality# 12.8% 12.8% 11.8% Yields % 31.8% 32.1% 31.8% 32.7% 32.2% 7.9% 6.0% 2.7% 2.3% 1.5% 1.4% 0.5% Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 -GNPA% NNPA % Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Gross Interest Income = Interest Income + processing fees / other charges, Yields = Gross Interest Income / Avg. AUM (On+ Off-Book); NNPA % = NNPA/AUM. Yields % figures are annualized. Q4 FY22 15 15#16• Note: Q4 FY22 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 459 410 419 494 461 112 163 31 30 30 31 42 lillahil 76 71 79 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Asset Quality Yields % 28.9% 26.8% 27.3% 27.5% 10.8% 24.6% 8.3% 8.8% 7.3% 6.9% 4.7% 2.8% 1.9% 2.2% 2.1% Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 -GNPA % -NNPA % Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Gross Interest Income Interest Income + processing fees / other charges, Yields = Gross Interest Income / Avg. AUM (On + Off-Book); NNPA % = NNPA / AUM. Yields % figures are annualized 16#17Arman Financial Services Ltd. Liability Overview#18Efficient Liability Management Funding profile is well diversified with increase in share of funds from NCDs & DFIs Q4 FY21 - Borrowing Mix % INR 7,665 Mn * Q4 FY22 - Borrowing Mix % ■ Banks & SFBS INR 10,858 Mn * 20% 21% 27% 6% 7% 13% 24% Note: * INR 7,665 Mn includes direct assignment of INR 581 Mn Positive ALM (in Months) 22 23 18 19 19 19 16 16 Q4 FY21 Q1 FY22 Average Tenor of Active Assets (months) Q2 FY22 Q3 FY22 ■ DFIs (NABARD, MUDRA & SIDBI) ■ NBFC / FI ■ Securitization 8.4% 26.0% 18.1% 3.8% 8.0% ■ЕСВ 13.8% ■ NCD 21.8% ■ DA Note: # INR 10,858 Mn includes direct assignment of INR 917 Mn 22 22 Well-diversified borrowing mix with increasing share of NCD's, ECB's, DFIs (NABARD Refinance, MUDRA) and Securitization Share of NCD's, ECB's, DFIs, and Securitization represented -44% of borrowings in Q4 FY22 Comfortable liquidity position with a potential to increase leverage. 18 • Q4 FY22 Average Maturity of Active Borrowings (months) • 18#19Pending#20Arman Financial Services Ltd. Company Overview#21Key Strengths Genesis Arman Financial Services ("Arman") is a diversified NBFC focusing on large under-served rural & semi-urban retail markets Founded in 1992 by Mr. Jayendra Patel in Ahmedabad. Listed on BSE in 1995 and on NSE in 2016 Strong Management Team led by Mr. Jayendra Patel having a combined experience of 100+ years in the Lending Business Presence in Attractive Retail Lending Segments Total Loan Assets of INR 12,332 Mn in Q4 FY22 Robust Risk Management Framework Consistent rating upgrades backed by strong financial & operating performance - Currently rated BBB+ by CARE Ratings and ACUITE A- with stable outlook Track record of consistent profitability - Never reported an annual loss Completely in-house operations with bottoms up driven credit appraisal models and rigorous collections practices – tailored for the areas of operations Microfinance ― 82.9% of AUM (via 100% owned subsidiary "Namra Finance") " MSME Loans - 13.4% of AUM Arman Financial Services Ltd. " Strong Financial Performance High-Growth Trajectory (FY2016-22 CAGR) : " AUM: 38% Net Income: 34% Consolidated debt to equity ratio of 4.65:1 - Sufficient Capital to drive growth going forward 2-Wheeler Loans - 3.7% of AUM Strong Retail Presence & Wide Distribution Network " 292 branches; 55+ Two-Wheeler dealerships 107 Districts, 8 states ~4.65 lakh live customers Undertaken contiguous expansion from Gujarat since 2014 to achieve geographic diversifications Note: " - High Return Ratios ROE: 15.6%%; ROAA: 3.1% fast recovering from the COVID impact - Efficient Liability Management Comfortable Liquidity Position: Positive ALM Avg. lending tenor at origination: ~24 months; Avg. tenor of debt at origination: ~36 months Diversified Borrowing Profile with Relationship across 30+ Banks & other Financial Institutions Yields Gross Interest Income / Avg. AUM (On + Off-Book); NIM = NTI / Avg. AUM (On + Off-Book); RoE = PAT/Avg. Equity; GNPA % = GNPA / AUM (On + Off-Book); NNPA % = NNPA/AUM (On + Off-Book). Yields, NIM, ROAA and ROE figures are annualized. 21#22Pending#23Pending#24Differentiated Operations Focus on small-ticket retail loans to the large under-served informal segment customer in rural & semi-urban geographies KEY STRATEGIC DIFFERENTIATORS Diversifying products, geographies, sources of funds and delivering growth by increase in volumes rather than ticket sizes Conservative operations framework with focus on risk & asset quality Completely in-house operations with bottoms up driven credit appraisal models and rigorous collections practices – tailored for the areas of operations Business model centered around conservative approach to high yielding assets to deliver a sustainable ROA of 3-5% 24#25Technological Initiatives to Strengthen Operations In FY19, the company launched an integrated mobile interface for its MFI field staff to enable seamless on-boarding of MFI customers by digitizing & standardizing the loan origination and appraisal process. 'This technology has been successfully implemented across all the MFI branches now.' Rolled-out the 'Jayam' initiative across the company's MFI operations to transform business processes from physical to digital. 'As a part of this initiative, the 'integrated loan origination system (LOS) & loan management system (LMS)' is hosted on the Cloud. This system manages and tracks originations and recoveries on a real-time basis.' In the next phase, the company will be implementing these initiatives for its MSME & 2W operations as well. However, the next phase will a bit delayed due to the Covid disruption ADVANTAGES OF IMPLEMENTING THE 'JAYAM' INITIATIVE & INTEGRATED MOBILE INTERFACE FOR FIELD OPERATIONS AT THE COMPANY LEVEL ✓ Reduce 'turnaround time' ✓ Enhance people productivity and increase controls AT THE FIELD LEVEL ✓ Facilitates real-time credit check of loan applications ✓ Completely 'Paperless' loan applications and loan servicing capabilities (except where paper documents are statutorily required) DRIVING DIGITAL TRANSFORMATION AT THE LEADERSHIP LEVEL ✓ Provide bird's eye view of the business operations at the click of a button on a real-time basis. ✓ Enable superior monitoring and immediate course correction ENABLE SEAMLESS GEORAPHIC EXPANSION ✓ Bind the organization into a cohesive and agile unit as it expands geographic footprint 25 25#26Diversified portfolio of 12,332 Mn in Q4 FY22 split between - • Microfinance: INR 10,220 Mn (82.9%), Strong Growth in AUM & Disbursements..... Total AUM (INR Mn) 12,332 13% A • MSME Loans: INR 1,651 Mn (13.4%) 4% 8,599 • 8,144 17% 6,847 15% 16% 6% 14% 4,532 15% 83% 10% 20% 1,761 2,038 70% 79% 71% • 32% 36% 70% 68% 61% 2-Wheeler Loans: INR 461 Mn (3.7%) Strategically forayed into MSME Loans in 2017. Successfully scaled up the business to INR 1,651 Mn (13.4% of Total AUM) in the last 5 years Further, we recently launched a new product "Rural 2-wheeler loans" (currently in pilot stage) to effectively meet the under-served market. Higher ROA business offering immense growth potential Plan to reduce share of MFI book in overall AUM to -60% over time FY16 FY17 FY18 FY19 FY20 FY21 FY22 ■MFI 2-Wheeler ■MSME Total Disbursements (INR Mn) 10,233 14% 4% 8,736 7,836 16% 12% 10% 5,450 13% 5,097 10% 13% 17% 82% 5% 2,711 2,473 75% 75% 82% 23% 33% 73% 77% 64% FY16 FY17 FY18 FY19 FY20 FY21 FY22 ■MFI 2-Wheeler MSME Note: FY22, FY21, FY20 & FY19 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP. Asset Strategy at Arman Small ticket, granular loans - Ticket size INR 20,000 - 1,50,000 Self-employed / cash-income informal segment customers High-yield rural focused products - 20%+ yields Stringent underwriting Rigorous collections practices - in-house, feet-on-street model Aim to deliver 3-5% post-tax ROA 26 26#27.....While Maintaining Superior Cost Efficiency & Asset Quality Gross Income and Net Total Income (INR Mn) Focus on risk have led to immaculate through-cycle asset quality Demonetization CAGR: 34% Demonetization Yield % and NIM % CAGR: 34% 2,350 2,152 1,950 28.7% 28.3% 27.4% 25.5% 24.4% 1,456 1,276 21.5% 22.9% .158 6.7% 1,411 3.3% 2.6% 2.6% I 4.6% 780 782 407 I 536 253 I 438 311 I 2.0% 1.6% 3.0% 17.4% 16.5% 16.5% 14.0% 14.3% 14.2% 1.0% 12.2% 1.7% I FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1.1% FY16 | FY17 1.2% FY18 1.0% FY19 1.1% FY20 FY21 FY22 L ■Gross Income (INR Mn) ■Net Total Income (INR Mn) Yield (%) -NIM (%) GNPA (% of Advances) Provisions & Write-offs (% of Avg. On-Book AUM) PAT (INR Mn) Cost to Income Ratio % Consistently high through cycle ROA / ROE Demonetization 415 317 Demonetization 29.7% 28.1% I 60.2% Demonetization I 264 I I I I 106 80 63 73 1 57.2% 17.8% 46.6% 47.4% COVID-19 15.6% 42.2% 42.7% 43.1% 12.9% 11.9% I I 5.5% I I 3.3% I 2.2% 1 4.6% I 5.4% 1 5.8% I 3.1% 1.3% I I FY16 FY17 FY18 I FY19 FY20 FY21 I FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22 I L Return on Avg. AUM (%) Return on Avg. Equity (%) Note: FY21, FY20 & FY19 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP. NIM = NII / Average AUM (On + Off-Book); Yields = Gross Income / Average AUM 27#28Pending#29Arman Financial Services Ltd. OPOLTUR MSME LOANS MICROFINANCE Product Overview TWO WHEELER LOANS#30Product Overview: Microfinance FY22 - Key Metrics (Mn) ☐ JLG model with small ticket loans (Avg. Ticket Size INR 10,220 35,000) given to women borrowers for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores AUM (INR Mn) 8,401 Disbursement (INR Mn) Operations in 8 states; 236 MFI branches; 4.01 lakh live customers Product Overview 1,730 49 36,500 Arman MFI operating model - Total Income (INR Mn) PAT (INR Mn) Avg. Ticket Size (INR) ☐ High touch monthly collection model ☐ Rural concentration: ~85% rural & semi-urban portfolio (vs 43% for MFI industry) FY22 - Key Metrics (%) ■ Conservative risk framework 22.2% 12.9% 2.6% 100% Cashless disbursement Yield NIM ROAA ☐ JLG groups formed by customers themselves Loan utilization checks to ensure loan for income generating purpose 3.7% 4.1% 13.1% ■ Controlled growth targets driven by bottom-up projections GNPA NNPA ROE 30 30#31Product Overview: 2W & Rural 2W Loans Product Overview ☐ Hypothecation (secured) loans given to self-employed / cash- salaried customer in the informal segment in semi-urban / rural areas for a 2W ■ Currently operates only in Gujarat; across 55+ dealerships ☐ ■ Piloting new Rural 2W product: Operating in Tier 3-4 & below locations for higher yields; higher ROA business; key growth driver going forward Growth levers - ☐ Increase in finance penetration Geographical & new product expansion Arman 2W & Rural 2W operating model - 461 AUM (INR Mn) FY22 - Key Metrics (Mn) 428 Disbursement (INR Mn) 133 68,000 Total Income (INR Mn) Avg. Ticket Size (INR) FY22 - Key Metrics (%) 28.9% 19.0% Yield NIM ☐ Focus on quick turn around time ◉ Excellent relationships with dealers and OEMS 6.9% ☐ In-house feet-on-street model for rigorous collections GNPA 2.05% NNPA 31#32" Product Overview: MSME Loans Product Overview Individual enterprise / working capital loans for small rural businesses in low competition areas Currently operates across 4 states - Gujarat, MP, Maharashtra & Rajasthan with 45 branches Arman MSME operating model - " Dual credit bureau check for both customer and spouse on CRIF (for MFI loans) and CIBIL (for non-MFI loans) High-touch monthly cash collection model Cash Flow assessment using tailored appraisal techniques " Locally drawn field force with personal knowledge of the market ◉ In-house teams for pre-lending field investigations and appraisals, with centralized final credit approval Highest ROA product at Arman; focus on growing this business over time Focus on quality underwriting & rigorous collections to ensure asset quality FY22 - Key Metrics (%) 1,651 AUM (INR Mn) 467 Total Income (INR Mn) FY22 - Key Metrics (%) 32.2% Yield 7.9% GNPA 1,391 Disbursement (INR Mn) 70,000 Avg. Ticket Size (INR) 22.9% NIM 1.4% NNPA MSME Process Overview • • Sourcing Underwriting In-house sourcing team (No DSAs) Feet-on-Street sales team model Door-to-door knocking & cold calling BTL activities such as pamphlet distribution, stalls at village level gatherings Referrals from existing customers "Sales team logs-in the case & collects KYC docs" • • "Trigger sent to independent credit team for FI" Credit bureau check (CRIF & CIBIL) Physical FI & PD by in-house credit manager at residence & workplace Capacity to Pay - Use of non-traditional income & expense estimation methodologies Willingness to pay - Reference checks Final sanction by centralized credit team Collections "Door-step cash collection" X-bucket (current) collections to be handled by sales team Door-to-door collection allows Company to maintain relations with customer and ensures high collection efficiency Monthly collections - High touch, relationship driven model 32#33Pending#34Annexures from ACCESS to INCLUSION#35Microfinance: 5-Year Performance Disbursement growth is driven by customer & branch addition AUM growth exceeds MFI industry growth rates A Demonetization 1.70 2.24 2.32 2.30 Demonetization 10,220 0.74 4,001 1.13 8,401 5,896 6,531 4,176 1,585 6,207 6,431 4,837 3,170 1,239 I FY17 FY18 I FY19 FY20 FY21 FY22 I FY17 FY18 FY19 FY20 FY21 FY22 MFI disbursement (Rs Mn) -# of MFI cases disbursed (lakhs) ■Microfinance AUM (INR Mn) PAT (INR Mn) Demonetization 38 41 157 252 49 Yields (%) & NIM (%) Trend 30.3% 25.6% 25.8% 23.3% 23.1% 22.2% 185 15.8% 14.7% 13.3% 12.5% 12.7% 12.9% FY17 FY18 FY19 FY17 FY18 FY19 FY20 FY21 FY22 -Yield (%) FY20 -NIM (%) FY21 FY22 Note: FY22, FY21, FY20 & FY19 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP. 35#36Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency Demonetization 2% MFI AUM Mix (%) 1% 1% 6% 7% 0.2% 2% 5% 1% 9% " 61% 21% 20% 1% 17% 18% 18% 11% 4% 1% 56% 13% 21% 24% 21% 18% 48% 43% 45% 42% 21% 13% 27% 25% 27% 72% 22% I 44% 31% 27% 27% 23% I I FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 FY19 FY20 FY21 L FY22 ■Gujarat ■MP ■Maharashtra UP ■Uttarakhand Cost / Income (%) Rajasthan Haryana ■Bihar ■IBL Through cycle asset quality under control Demonetization 2.9% 2.0% 1.3% 0.9% 0.3% FY17 L FY18 2.4% 0.9% 0.5% FY19 FY20 5.8% 4.0% 4.1% FY21 Sustaining strong ROA (%) & ROE (%) Demonetization 13.1% 3.7% 11.3% 27.1% 26.2% 17.5% COVID-19 4.2% 3.1% 1 3.9% 4.6% 1.9% 2.6% 0.8% I FY18 I FY19 I FY20 FY21 FY22 J FY17 FY22 L-- -MFI GNPA (%) - Provisions & Write-offs (% of Avg. On-Book AUM) Note: FY22, FY21, FY20 & FY19 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP. Return on Avg. AUM (%) Return on Avg. Equity (%) 36#372W Loans: 5-Year Performance Yields (%) & NIM (%) Trend 25.7% 24.9% 25.5% 23.9% 24.4% 18.4% 14.8% 15.6% 16.5% 14.0% Arman 2W AUM/ has seen steady growth over FY15-20 COVID-19 955 سالار 459 461 L FY21 FY22 FY20 1,017 900 738 FY19 FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 -Yields % NIM % Disbursement growth is driven by sharp recovery in 2 wheeler sales 19,443 20,122 17,589 ■Arman 2W AUM (INR Mn) Collection focus has ensured superior NPA as compared to peers; NPA has inched up because of change in recognition norms 16,809 COVID-19 10.0% 7.4% 9.6% 8.8% 8.7% 9.15% 8.75% 7.2% 8.1% 5.4% 6.2% 4.6% 8.34% 6.90% 7,177 4,434 3.9% 4.0% I 3.0% 2.8% 428 247 I FY17 FY18 FY19 FY20 FY21 FY22 I I FY20 FY21 FY22 L Arman 2W GNPA (%) -Player 1 -Player 2 -# of 2W loans disbursed 923 962 824 843 FY17 FY18 FY19 2W disbursement (INR mn) Note: FY22, FY21, FY20 & FY19 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP. 37#38Pending