Bajaj Finserv Limited Investor Presentation H1 FY 2012

October 2011

Bajaj Finserv - Summary

Diversified financial services holding company with presence across lending, insurance and investment management businesses with a strong focus on the fast growing retail and SME segments

Bajaj Group has a track record of building large scale, profitable and sustainable businesses, led by professional management teams.
Bajaj Finserv is a listed opportunity to participate in Indias insurance growth story.

BFS aims to be a Pan-India financial services business focused on sustainable profit growth

Source Economic Survey 2010-11

Middle class households is an immense opportunity to offer financial services

Bajaj Allianz Life Insurance Bajaj Allianz General Insurance Bajaj Finance

Bajaj Finserv

Bajaj Allianz AMC

Bajaj Financial Solutions

Bajaj Finserv at the group level has an existing customer base of 15 million+ customers and presence in over 1000+ locations through its subsidiaries In principle license received from SEBI in Jan 2011 for setting up AMC as a joint venture with AllianzGI Bajaj Financial Solutions launched in four cities in February 2011 Bajaj Infrastructure Finance business commenced in February 2011
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* Proposed to be set up

Bajaj Finserv performance highlights for H1 FY2012 over H1 FY 2011

All Figures in Rs Million

61,804

5,902

2,869

14,444

- 1.7%

121.2%

111.7%

15.0%

62,873
Gross Revenue*

2,668
Profit before Tax

1355
PAT

12,562
Net Worth (Standalone)

Bajaj Finserv was a debt-free company as on September 30, 2011 Bajaj Finservs surplus funds stood at Rs. 3,997 million as on September 30, 2011

# Bajaj Finance was not a subsidiary in Q1 FY 11 and hence the results up to Q1 FY 11 are consolidated as an associate company * Does not include gross revenue of Bajaj Finance Limited up to Q1 FY 11

Bajaj Finance has become an important contributor to group profits. Life insurance profits continue to be significant.
All Figures in Rs Million

Consolidated profit components for the period H1 2011-12

Bajaj Financial Solution Intercompany adjustments

# Became subsidiary of BFS w.e.f. July 2010

Bajaj Allianz Financial Distributors BALIC BAGIC Bajaj Finserv Standalone

Bajaj Finance#

997 -44 -205

2869
Bajaj Finserv Consolidated

815

758

543

Consolidated profit components for the period H1 2010-11

Bajaj Financial Solution Bajaj Allianz Financial Distributors BALIC BAGIC Bajaj Finserv Standalone Bajaj Finance Intercompany adjustments

482 -30

1,355
-111
Bajaj Finserv Consolidated

162

486 5

363

Bajaj Allianz Life Insurance

Life insurance industry has seen tremendous growth in the last five years

All Figures in Rs Million

The CAGR for Insurance industry (FY 07-10) was 16%, with private insurers growing at 31%, compared to LIC which grew at 12%. BALIC in the same period clocked a growth of 16%.

The CAGR for Insurance industry (FY 07-11) was 14%, with private insurers growing at 18%, compared to LIC which grew at 12%.

Post regulatory changes in September 2010, the industry is facing challenges

All Figures in Rs Million

The growth of the industry for H1-FY11/H1FY10 was 60%, LIC grew at 77%, private insurers grew at 26% and BALIC grew at 5%. For the second half of FY 2011, the industry degrew by 10%, LIC de-grew by 5%, private insurers de-grew by 18%, BALIC de-grew by 35%.

The de-growth of the industry for Q1 FY12/Q1 FY11 was (28%,) LIC de-grew at (29%) private insurers de-grew at (27%) and BALIC de-grew at (37%).

Bajaj Allianz Life Insurance plans to manage the external environment impact by focusing on the following areas
Need for balanced portfolio (traditional, ULIPs, single premium, health). Share of UL

business for the period April September 11 was 31.6% compared to 68.5% for the corresponding period previous year.
Increased focus on cost control by controlling of acquisition and management costs Improve agency productivity - biggest channel has to start contributing major share of

New Business premium

Focusing on investment performance both in UL and traditional funds

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* Operating expenses is net of service tax borne by policyholders

BALICs new business is more balanced across products

All Figures in Rs Million

In FY 2010-11 share of traditional products increased significantly compared to previous year

The H1 FY 2012 product mix was much more balanced compared to H1 FY 2011

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With a live policies base of more than 8 million, assets under management have grown significantly
All Figures in Rs Million

Growth in assets under management has contributed to strong profits

Assets under management are primarily from unit linked funds

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BALIC is a highly capital efficient and the most profitable life insurer in private sector
All Figures in Rs Million

Capital efficiency multiple

Total share capital invested is Rs. 12,107 million

As on March 31, 2011, all past losses have been recouped and accumulated profits stood at Rs. 11489 million

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BALIC has also managed to sustain NBAP Margins at healthy levels in spite of the challenging environment
All Figures in Rs Billion

NBAP Comparison with other Life Companies might not be very relevant as actuarial Assumptions & methodology used are likely to vary from Company to Company, in the absence of any common agreed process.

* The tax rate used is 14.1625% for NBAP calculation

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Bajaj Allianz Life Insurance performance highlights for H1 FY 2012 over H1 FY 2011
All Figures in Rs Million

Performance Highlights of H1 FY 2012 over H1 FY 2011

30662

9418

21244

-26%

- 38%

-20%

41507
Gross written premium

15106
New Business Premium

26401
Renewal Premium

5716

447%

369,463

55%

-5%

3685
Profit Solvency Ratio as on date

387,598
Total Investments

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Bajaj Allianz General Insurance

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In a continued competitive pricing environment, BAGIC has grown through better selection of business
Industry Highlights
Market grew by 25.2% in H1 FY12 over H1

BAGICs Initiatives to manage the challenges

BAGIC growth for H1 FY12 over H1 FY11was

FY11
Private Sector: 23.4% Public Sector: 27.6%

13.3%

New business focused on retail

The general insurance industry has been affected adversely in 2010-11 because of Motor pool. IRDA directed all general insurers to provide for the Motor Pool losses at 153% (as against around 126% already provided over the years). Combined ratios for industry deteriorating Chase renewal aggressively on good quality business Loss Ratios have improved by 5.1% from 66.8% in the Q1 FY 2011 to 61.7% in Q1 FY 2012 Prudent underwriting and selection of risks help to improve the combined ratios

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BAGIC has retained its second position amongst private sector general insurers

Industry CAGR from FY07-11 was 14.3%. Private sector grew 19.3% in the same period and Public Sector grew at 11.3%.

BAGIC GWP CAGR for FY07-11 was 12.7%

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A healthy and profitable business mix - leading to a steady growth in investments has added stability to revenues
All Figures in Rs Million

Business mix is retail focused. Motor continues to lead the business mix followed by property and health

Investments are largely in fixed income securities

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BAGIC has a high capital efficiency coupled with the industrys best combined ratio
All Figures in Rs Million

BAGIC has one of the highest capital efficiencies Shareholders have contributed Rs 2768 mn.

BAGIC has the lowest combined ratio in the industry

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Excl. Motor Pool

Bajaj Allianz General Insurance performance highlights for H1 FY 2012 and profit history for last 5 years
All Figures in Rs Million

Performance Highlights of H1 FY 2012 over H1 FY 2011 16,087*

13.3%

10,665*
14.8%

1,025
56.0%

11.56%
45.2%

14,197*
Gross written premium * Excluding pool Inward Premium

9,292*
Net earned premium

657
Profit After Tax

7.96%
ROE (Not Annualized) Solvency Ratio was 173% as against regulatory requirement of 150%

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Bajaj Finance

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Bajaj Finance offers diversified product lines

All Figures in Rs Million

Product

Indicative Terms,
Maturity : 8 12 months Repayment : EMI

Key Features
12% of the portfolio as of FY11 One of the few organized players with cutting edge technology architecture & robust risk management framework 6% of the portfolio as of FY11 Loans to existing customer with very good credit performance track record 26% of the portfolio as of FY11 Captive financing Financing only Bajaj auto vehicles.

Target Customer Base

Mass Affluent and Affluent

Consumer durable financing

Consumer finance

Personal Loans Cross sell

Maturity : 12-36 months Repayment : EMI

Mass Affluent and Affluent

2 Wheeler & 3 Wheeler Finance

Maturity : 12 24 months Repayment : EMI

Mass customers

Mortgage

Maturity :60 180 months Repayment : EMI

30% of the portfolio as of FY11 Includes loan against property 10% of the portfolio as of FY11 (SBL) 4% of the portfolio as of FY11 (VF) SBL to affluent small businessmen VF to vendors of large auto manufacturer 4% of the portfolio as of FY11 Launched retail loans to HNI customers in FY11 8% of the portfolio as of FY11 Launched in FY11 Assets backed funding to Small, Mid & strategic contractors

Affluent and HNIs

Small business

Small Business Loan (SBL) & secured vendor financing (VF)

Maturity :12 - 36 months (SBL) Maturity : 1 - 24 months (VF) Repayment : EMI (SBL & VF)

Affluent and HNIs

Loan against securities

Maturity : 10 12 months Repayment : Bullet

HNIs

Commercial

Construction Equipment Finance

Maturity : 12-42 months Repayment : EMI

HNIs and Affluent

Infrastructure financing

Maturity : NA Repayment : Moratorium period followed by EMI

Launched in FY12

Medium / large infrastructure companies

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A mix of scale-builders and profit-maximisers provides scale without compromising on RoA and quality of portfolio
Profit Maximisers
Relatively higher RoA Lower asset base and lower capital requirements High risk and return

All Figures in Rs Million

Scale Builders
Relatively lower RoA Higher asset base and higher capital requirements Lower risk & return

Non qualifiers
Low ROE Lack of competitive advantage Customer segmentation

Consumer

Relatively higher RoA Not a banks business Large cross sell opportunity Credit Card partnership (WIP)

Relatively low RoA Captive financing E2E Integration play leading to higher ROA

2 Wheeler Finance

Sales Finance

Car loans Captive play

Relatively high RoA Critical to full scale SF business

Small Business Loans

Gold loans & Micro finance

Customer segmentation issues

Relatively low RoA Un-penetrated space Meet working capital needs of MSME & SME clients
Mortgage

Small business

Relatively higher RoA Meet working capital needs of MSME & SME clients Relatively higher RoA Regulatory advantage. Meet working capital needs of MSME & SME clients

Commercial vehicle Specialized business

Loan Against Securities

Construction Equipment Infra ancillary

Commercial

Relatively low RoA Dominated by non banks. Large upstream opp.

Relatively low RoA High growth rates and high demand potential

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The product line strategy has so far focused on 2 distinct customer groups
Consumer finance
2011-12 2010-11 2009-10 2008-09 200708 100% POS link up. 3 Min-TAT Started PL cross sell to existing good customers Launched POS ins. cross sell. Launched project 3secTAT. Launched post sale insurance cross sell.

All Figures in Rs Million

Small business
2011-12 2010-11 Launch EMI card 3 second TAT Launch cobrand credit card. 2009-10 2008-09 Launched no insurance no loan. Launched cutting edge underwriting platform. Expanded to 23 cities. Portfolio seasoning for PSBL & Mort. Launched CE & HL. Launched partnership model Launch SBS cross sell to cross collateralize portfolios and deepen wallet size.

Historical business model. 3 day TAT. No cross sell.

Launched PSBL & Mortgages in 16 cities. Unique sales & collect model.

Consumer Durables & 2-wheelers

Personal Loans Cross-sell

Insurance services

EMI card

Credit Card Partnership

Acquisition

Cross-sell

Acquisition

Cross sell

Rel. model S,C & C

Competitive Advantage Data Mart and Cross sell capabilities Customer Lifecycle Management Low ticket - high volume transaction domain specialization

Competitive Advantage Relationship model Sales & Collect Premium customer experience model Cross sell to Small Business segment
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Bajaj Finance has clocked strong growth in disbursements while maintaining healthy NIMs

All Figures in Rs Million

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Quality of assets has improved and operating costs remain under control

All Figures in Rs Million

Lower operating expenses coupled with lower NPAs are giving a higher PAT and EPS

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Bajaj Finance is on a path to become one of the leading NBFCs in the country
All Figures in Rs Million

Performance Highlights of H1 2012 over H1 FY 2011

69,399

93,331

9,451

66%

61%

52%

41,746
Deployment

57,807
Book Size

6,231
Total Income

1,782

2.1%

12.3%

79%

5%

48%

996
Profit After Tax

2.0%
Return on Assets (Not Annualized)

8.3%
ROE (Not Annualized)

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Bajaj Financial Solutions Limited Bajaj Financial Securities Limited

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Bajaj Finserv Wealth Management provides advice based solutions based on specific needs of its clients
HIGH

Planners Value-add

Advice based Solution

Need based Solution

Invt. based Solution
LOW HIGH

Customer Awareness & Sophistication

Individuals with investible surplus between Rs. 0.5 and 3 million is the target segment

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Bajaj Financial Wealth Management provides a one-stop advisory to execution service to the investors
Our Process

Relationship Manager

Financial Planner

Pilots launched in 4 cities in India Pune, Aurangabad, Chandigarh and Ludhiana

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THANK YOU

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Disclaimer
This presentation is for information purposes only and does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities, The information contained in this Presentation does not constitute an offer for sale of any securities in the United States. Nothing contained in this Presentation should be regarded or construed as a "general solicitation or general advertising" as defined under Regulation D of the Securities Act, or "directed selling efforts" under Regulation S of the Securities Act 1934. Certain portions of this Presentation contain statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company and/or its subsidiaries. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company believes to be reasonable in light of its operating experience in recent years. The Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company. This material was used by Bajaj Finserv Limited during an oral presentation and is not a complete record of the discussion. No part of this presentation and its contents are to be circulated, distributed, published or reproduced, in whole or part, or disclosed by recipients directly or indirectly to any other person without the prior written approval from Bajaj Finserv Ltd., Mumbai-Pune Road, Pune 411035, India.

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