Arman Financial Services Limited

An Agile
Arman

Q3 & 9M FY23 Investor Presentation

February 2023
Safe Harbour
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Arman Financial Services Ltd. (the
“Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to
purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding
commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document
containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the
Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth,
accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive
and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission
from, this Presentation is expressly excluded.

This presentation contains certain forward looking statements concerning the Company’s future business prospects and business
profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such
forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and
uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international),
economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts,
our ability to manage our international operations, government policies and actions regulations, interest and other fiscal costs
generally prevailing in the economy. The Company does not undertake to make any announcement in case any of these forward-
looking statements become materially incorrect in future or update any forward-looking statements made from time to time by or on
behalf of the Company.

2
Contents

Quarterly Business Update Page 4 - Page 8

About the Company Page 9 - Page 15

Presence in Attractive Retail

Page 16 - Page 22
Lending Segments

Efficient Liability Management Page 23 - Page 26

Strong Financial Performance Page 27 - Page 40

3
Quarterly
Business
Update

4
 9M FY23 Performance Highlights*
Assets Under
Disbursement Shareholder’s Equity Profit Before Tax Profit After Tax
Management

INR 1,642 Crore INR 1,135 Crore INR 332 Crore INR 76 Crore INR 58 Crore

CRAR
(+57% Y-o-Y) (+66% Y-o-Y) (+225% Y-o-Y) (+273% Y-o-Y)
Arman (Standalone): 48.05%
Namra Finance: 21.66%

Provisions and write Active Customer

Asset Quality Return Ratios # Collection Efficiency
offs Base

INR 31 Crore GNPA: 3.4% ROAA: 5.4% Steady and

healthy with each More than 5.8 Lakhs
Cumulative Provisions stood
at INR 70 Crore NNPA: 0.2% ROE: 28.3% month being north
of 98.2% ^
(covering 4.3% of the
consolidated AUM, 4.6% on-book)

^For the month of December 2022

*Numbers on consolidated basis
# On annualised basis

ROAA - Return on Average AUM; ROE - Return on Equity 5

 Recent Fund Raise – September 2022 (1/2)
Company raised INR 115 crore via allotment of CCDs and OCRPS on a preferential basis

• Allotment of 6,24,388 Unsecured Compulsorily Convertible Shareholding Pattern - Shareholding Pattern -

Debentures (“CCDs”) on preferential basis to Investors Pre-Capital Raise Post-Capital Raise*
Business Performance
belonging to non-promoter category.

• The total amount raised is approximately Rs. 76.8 crore.

• Some of the marquee investors include fund(s) controlled 27.4% 24.6%
by Singapore based Sixteenth Street Capital and USA
41.7% 41.1%
based Seven Canyons Advisors.
• Other investors include both domestic and foreign
individuals. 20.1%
22.3%
• Allotment of 3,10,972 Optionally Convertible Redeemable 3.4% 3.8%
Preference Shares (“OCRPS”) on preferential basis belonging 5.3% 10.4%
to non-promoter category.

• The total amount raised is approximately Rs. 38.2 crore.

Promoters Elevation Capital FII Bodies Corporates Retail & Others
• The investors include a mix of individuals and family
offices.

The mix of Tier I & II equity capital will be used to fund the targeted growth plans of approximately INR 2,500 Crore with a
healthy capital adequacy and debt-equity ratio by leveraging our presence in the MFI, MSME, Two-Wheeler, and other loan
segments which will enables the company to achieve a sustained growth momentum in the coming few quarters.

*Post-Capital Raise on a fully diluted basis assuming full conversion of CCDs and OCRPS 6
Recent Fund Raise – September 2022 (2/2)
Fund Raised on Net worth (INR Crore)
Particulars 31-Mar-22 Particulars
28-Sep-22 Calculated as per IND-AS
332
CCDs INR 76.8 Crore 213
187
Equity Share Capital INR 213 Crore
CCDs Outstanding 6,24,388 CCDs

Total Shares 84,92,334 OCRPS INR 38.2 Crore Mar-21 Mar-22 Dec-22
Outstanding Shares
OCRPS Outstanding 3,10,972 OCRPS
Debt/Equity (x) #
4.7
3.9 3.6

Amount Mar-21 Mar-22 Dec-22

Shareholders Fund^ No of shares*
(INR Crore)
CRAR (%)
Shareholders fund (excluding CCD & OCRPS) 267.7 84,92,334
48.8% 48.1%
15% Unsecured Compulsorily Convertible Debentures (CCDs) 76.8 6,24,388
29.0%
20.3% 18.7% 21.7%
10% Optionally Convertible Redeemable Preference Shares (OCRPS) 38.3 3,10,972

Total 382.8 94,27,694 Mar-21 Mar-22 Dec-22

*on fully diluted basis
^data as on 31st December 2022
Arman (Standalone) Namra
#After adjusting the impact of CCDs and OCRPS, debt component as per IND-AS and overdrafts (OD) from banks having 100% security against fixed deposits amounts to INR 196 Crore.
7
Impact of RBI’s New Microfinance Guidelines

Annual household Maximum FOIR of 50% Qualifying assets limit revised

Removal of
income limit raised considering all outstanding from 85% of net assets to 75%
Pricing Cap
to INR 3 Lakh loans of the household of the total assets

• Increased annual • The regulator has capped • The RBI removal of the • Increasing the non-
household limit from INR the monthly loan interest rate ceiling on qualifying asset limit
1.25 Lakh to INR 3 Lakh repayment of borrowers, loans offered by NBFC- provide MFIs more
will provide more it should not exceed half MFIs has put all flexibility to experiment
headroom to NBFC-MFIs to the monthly household microfinance lenders and innovate new
lend to more customers. income. including banks, small products and achieve
• This will reduce the finance banks, NBFC and more balanced lending
• This will help microfinance pressure of EMI not-for-profit companies portfolio, reduce the
lenders to service repayments on the on a uniform regulatory cyclicity and volatility
consumers from diverse borrowers, as well as lead platform. impact on the balance
segments. to lower delinquency and sheet, and strengthen the
lower credit costs for the • This has allowed lenders ability of institutions to
industry. to go for risk-based weather any external
pricing. risks.

8
About the
Company

9
 About Arman Financial Services
About the Company
Business Performance
Presence in Attractive Retail Lending Segments
• A diversified NBFC focusing on large under-served rural & semi-urban retail markets 4%
2%
• Founded in 1992 by Mr. Jayendra Patel in Ahmedabad 13%

Microfinance ^
• Listed on BSE in 1995 and on NSE in 2016 AUM
MSME Loans
INR 1,642 Crore
• Strong Management Team having a combined experience of 100+ years in the Lending 2-Wheeler Loans
Business
Individual Business Loans
81%

Strong Financial Performance As of December 2022

• High-Growth Trajectory (FY16-22 CAGR): 321 114 8

• AUM: 39% Branches Districts States
• Net Income: 34%

• Consolidated debt to equity ratio of 3.6:1– Sufficient Capital to drive growth going forward # ~5.8 Lakh 55+
• High Return Ratios - ROE: 28.3%; ROAA: 5.4% - fast recovering from the COVID impact Live Customers Two-Wheeler dealerships

Efficient Liability Management

Began operations in Gujarat and has continuously
• Consistent rating upgrades backed by strong financial & operating performance undertaken expansion since 2014 to achieve geographic
• Currently rated BBB+(Stable Outlook) by CARE Ratings for NCDs and ACUITE A - (Stable Outlook) for diversifications
NCDs and Bank Borrowings
• MFI-1 (MFI One) rating has been awarded to Namra Finance Limited, the wholly owned subsidiary
offering microfinance loans Positive ALM 50+
• Track record of consistent profitability- Never reported an annual loss
• Completely in-house operations with bottoms up driven credit appraisal models and rigorous Comfortable Liquidity Position Diversified Borrowing Profile &
collections practices Relationship with Banks & FIs
#After
adjusting the impact of CCDs and OCRPS, debt component as per IND-AS and overdrafts (OD) from banks having 100% security against fixed deposits amounts to INR 196 Crore.
^Company’s wholly owned subsidiary ‘Namra Finance Limited’ offers microfinance loans 10
 Journey so Far

The Company has been supporting the small dreams

of the brave hearts of India for 30 years… and
• Disbursement • AUM crossed
counting! crosses INR 750 INR 1,000
2022

Crore Crore
• 100% Cashless • Raised INR
2021 115 Crore
disbursements
• Crosses 100 • Expanded into through
branches across Rajasthan 2020 allotment of
5 states & 3 CCDs and
products OCRPs on
• Disbursement 2019 preferential
crosses INR 500 • Disbursement basis
• Expanded to Crore 2018 crosses INR
Maharashtra, 875 Crore
• Raised PE MP, UP & 2017 • Raised PE funding
funding from Uttarakhand
from SAIF Partners
Incofin • Listing on NSE
2017
• Disbursement
• Company
crosses INR 50
Incorporated 2014-16
Crore • Launched MSME
• Started bill
discounting & • Launched 2W Loans 2013 Loans business
Machine leasing 2011
2010
1998 • Demerged MFI operations into
1992 1995
“Namra Finance”
• Launched Microfinance • Disbursement crosses INR 100
• Listing on BSE – Issue business Crore
subscribed 22x
11
 Geographical Footprint
Geographical AUM Mix Number of
(Consolidated) 9MFY23 9MFY22
Branches

10.0% Microfinance 260 211

2 10.4% 29.3%
15
MSME 57 50
65 10.4%
41 2W & Rural 2W 4 6
15

78 63 16.9% 23.1% Total 321 267

42 Gujarat Uttar Pradesh

Madhya Pradesh Maharashtra
Rajasthan Others

Number of Branches

321 ~5.8 Lakh 2,857 2,505

Branches Active Customers No of Employees No of Loan Officers

Strong presence in the states of Gujarat, Rajasthan, Maharashtra, Madhya Pradesh, Uttar Pradesh and Uttarakhand & forayed
into two new states of Bihar & Haryana

Note: Map not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness 12
 Strong Underwriting Measures by Leveraging Digital Transformation
Instant Verification Of Key Details Traceability Superior Collection
• The LOS* & LMS* System facilitates instant • Better customer traceability by 4D customer • Mobile-based collection at Point of transaction
verification Verification, which includes geotagging (Latitude, • Customized UPI QR code to each customer
• KYC Validation through OCR and face recognition Longitude), House Picture, auto address capture, facilitating them to Go Cashless
and Mobile verification • An easy way out to Prepone and postpone the due
• Mobile No. verification through OTP
• Centre Branch Geo fencing to avoid any slippages dates in case of Holidays
• Customer identity verification through UPI System
in the defined process • Instant acknowledgment SMS to the customer in
• Bank Account verification through "penny-drop”
• Audit trail of each stage vernacular languages

Instant First-level Credit Assessment Customer Gain Loan Management

• Immediate household-based credit assessment • Paperless disbursement through eSign • Loan Utilization check
through Credit Bureau API integration and • Providing intimation of each relevant • Instant pre-closure and pre-
robust rule engine transaction through SMS to every settlement and its simulation
• Algorithm based risk assessment customer for the customer to understand
• Fully compliant with new RBI regulations for • Tele-calling will happen through the • Hassle-free check in case of
household income assessment system with a call recording facility advance or Overdue collection
• Overlapping customers will be alerted by the • Will develop customer facing app post • Centre & Customer
system across products and divisions to avoid implementation categorization based on
over indebtedness repayment trends

~50% Reduction in TAT between sourcing documents and fund disbursement

*Loan Origination System (LOS), Loan Management System (LMS) 13
Eminent Board of Directors
Alok N. Prasad Jayendrabhai B. Patel Aalok J. Patel
Chairman Vice Chairman & Managing Director Joint Managing Director

A veteran banker with over 35 years of regulatory, banking and He has been an entrepreneur for 45 years. He was involved in a He has 16 years of banking and finance experience, including 12 years at
financial services experience, with Senior positions at RBI, NHB, and pharmacy business in a USA early in his career followed by running a Arman. Prior to Arman, he worked as an independent auditor at KPMG
Citi Bank. He was the founder CEO of MFIN, the Industry Body and Self- textile start-up in Gujarat. He founded Arman in 1992 and has been at in US. He is a licensed Certified Public Accountant (CPA) from USA. He
Regulatory Organization (SRO) for Microfinance Institutions (MFIs) in the helm of management since then. He is the founder member of the also has served as a visiting professor at HL College of Commerce and is
India. He has served on has served on a number of committees of the Gujarat Finance Companies Association and presently serves as Vice- a guest lecturer at IIM-A. He holds a Bachelor’s in Accounting & Finance
Ministry of Finance, Govt of India. Chairman of the Association. and Master’s in Accountancy from Drake University, USA.

Yash K. Shah Ritaben J. Patel Aakash J. Patel

Independent Director Non-Executive Director Non-Executive Director

He is a Chartered Accountant and currently a partner at DBS & Co. He She holds Banking qualifications from First National Bank of Chicago, He has over 18 years of Information Technology , Computer Science,
is an expert in the fields of Mergers & Acquisitions and Valuations. USA and has worked with various other USA banks like Golf Mill Bank and business experiences. Currently, he works as a Manager- PMO for
Prior to DBS, he was at KPMG in the MA division. He has written and Morton Grove Bank in various capacities for more than a decade. Bullhorn Inc. Prior to that, he worked at various other roles such as IT
various papers on Domestic Transfer Pricing and Cross Border She holds a B. A. in Economics. Consulting with Deloitte, software developer at Intellitools, and other
Transactions and also given numerous lectures in the topic of M&A companies such as Hewlett Packard, EMC Corporation, Softscape Inc
and Sumtotals Systems. He holds a MBA from Bentley College, USA.

Ramakant Nagpal Mridul Arora Geeta Haresh Solanki

Independent Director Nominee Director Independent Director

He is a Chartered Accountant with over three decades of senior level He is the nominee director of Elevation Capital (Erstwhile SAIF Partners). She is a serial social entrepreneur in Women’s health, hygiene, and
banking and finance experience. He has worked at Centurion Bank, Prior to joining Elevation, Mridul was an Engagement Manager with social development. She co-founded a company for educating and
Central Bank, and was the MD/CEO of Central Bank Housing Finance. McKinsey & Company where he focused on financial services, in providing women hygiene care to bottom of the pyramid customers.
He was heading Internal audit at Central Bank of India, and as particular banking, insurance, and asset management. He is a Chemical She received the ‘Bharat Ki Laxmi’ award from The Ministry of Women
statutory auditor of a Cooperative Bank. He also headed the Finance Engineering from IIT Madras and holds his MBA from IIM Lucknow. and Child Development, and also serves as an expert on numerous
Department of a Leading Central Government Pharma Company. panels and summits on Women’s hygiene.

14
Competitive Moat

Focus on small ticket Diversifying Conservative Completely in house Business model

retail loans to the products, operations operations with centered around
large under served geographies, sources framework with bottom up driven conservative
informal segment of funds and focus on risk & asset credit appraisal approach to high
customer in rural & delivering growth by quality models and rigorous yielding assets to
semi urban increase in volumes collections practices deliver a sustainable
geographies rather than ticket tailored for the areas ROA of 3-5%
sizes of operations

15
 Presence in
Attractive
Retail Lending
Segments

16
 Product Offerings across Verticals

81%* 13%* 4%* 2%*

Microfinance - JLG MSME Loans Two-Wheeler Loans Individual Business
Loans
Average Ticket Size :
INR 45,000 Average Ticket Size: Average Ticket Size: Average Ticket Size:
(Cycle 1 & 2 -INR 20 -50k INR 75,000 INR 70,000 INR 75,000
Cycle 3+ -INR 20-75k)

Ten u r e: 18-24 Mon th s Tenure: 18-24 Months Tenure: 12-36 Months Tenure: 24 Months

Company’s wholly owned subsidiary ‘Namra Finance Limited’ offers microfinance to women
*% of AUM as of December 2022 17
 Microfinance Loans
(INR Crore)

AUM* Disbursement Total Income Profit After Tax Avg. Ticket Size
(INR)
1,367 949 209 38 46,000
36,000
856 561 117

9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23

*Includes Individual Business Loans

• JLG model with small ticket loans (Avg. Ticket Size – INR 45,000) given to women borrowers • Disbursement: 100% Cashless
for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores • Credit Check: CRIF / Equifax Score; JLG Model with Training, Home
Visit, Lifestyle Appraisal
• Operations: Operations in 8 states; 260 MFI branches; 5.1 lakh active customers
• Collections: Cash collection at centre meeting
• Operating Model:

• High touch monthly collection model

Key Ratios (9M FY23)
• Rural concentration: ~85% rural & semi-urban portfolio (vs 43% for MFI industry)

• Conservative risk framework

Yield: 23.8% NIM: 13.6% ROAA: 4.2%
• 100% Cashless disbursement

• JLG groups formed by customers themselves

• Loan utilization checks to ensure loan for income generating purpose GNPA: 3.3% NNPA: 0.1% ROE: 23.4%
• Controlled growth targets driven by bottom-up projections
18
MSME Loans
(INR Crore)

AUM Disbursement Total Income Avg. Ticket Size

(INR)
217 146 53 70,000 75,000

140 89 30

9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23

• Individual enterprise /working capital loans for small rural businesses in low competition • Disbursement: 100% Cashless
areas • Credit Checks: CIBIL & CRIF Score; Detailed Cash Flow Assessment;
• Currently operates across 4 states – Gujarat, MP, Maharashtra & Rajasthan with 57 Home & Business Field Investigation
branches • Collections: Doorstep cash collection
• Arman MSME operating model –
• Dual credit bureau check for both customer and spouse on CRIF (for MFI loans)
and CIBIL (for non -MFI loans) Key Ratios (9M FY23)
• High-touch monthly cash collection model
• Cash Flow assessment using tailored appraisal techniques
Yield: 36.8%
• 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 GNPA: 3.7% NNPA: 0.6%
• Focus on quality underwriting & rigorous collections to ensure asset quality
19
2W and Rural 2W Loans
(INR Crore)

AUM Disbursement Total Income Avg. Ticket Size

(INR)
58 40 11 70,000
49 35 9
52,000

9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23 9MFY22 9MFY23

• Hypothecation (secured) loans given to self-employed /cash-salaried customer in the • Disbursement: 100% Cashless
informal segment in semi-urban/rural areas for a 2W • Credit Checks: CIBIL & CRIF Score; Home & Business Field
Investigation
• Currently operates only in Gujarat; across 55+ dealerships
• Collections: Doorstep cash collection
• 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:
Key Ratios (9M FY23)
• Increase in finance penetration
• Geographical & new product expansion
Yield: 27.6%
• Arman 2W & Rural 2W operating model:
• Focus on quick turn around time
• Excellent relationships with dealers and OEMs GNPA: 4.8% NNPA: 0.6%
• In-house feet-on-street model for rigorous collections
20
MSME Process Overview
MSME Process Overview

Sourcing Underwriting Collections

• In-house sourcing team (No DSAs) • Credit bureau check (CRIF & CIBIL) • Team member that does sales also
• handles collections
• Feet-on-Street sales team model Physical FI & PD by in house credit
manager at residence & workplace • Door to door collection allows
• Door-to-door knocking & cold calling
• Capacity to Pay Use of nontraditional Company to maintain relations with
• BTL activities such as pamphlet income & expense estimation customer and ensures high collection
distribution, stalls at village level methodologies efficiency
gatherings
• Willingness to pay reference checks • Monthly collections high touch,
• Referrals from existing customers relationship driven model
• Final sanction by centralized credit
team

“Sales team logs in the case & collects KYC docs” “Trigger sent to independent credit team for FI” “Door-step cash collection”

21
Collection Efficiency
Microfinance MSME Two-Wheeler Total

98.5% 98.2% 98.4% 98.4% 98.3% 97.9% 98.1% 98.1% 97.1% 95.7% 95.5% 96.5% 98.4% 98.1% 98.2% 98.3%

Oct-22 Nov-22 Dec-22 Jan-23 Oct-22 Nov-22 Dec-22 Jan-23 Oct-22 Nov-22 Dec-22 Jan-23 Oct-22 Nov-22 Dec-22 Jan-23

Update on Collections Two

Particulars (INR Crore) Microfinance MSME Total
Wheeler
• Collections in all the segments were healthy and were aligned to its pre covid levels
Collection Due 87.5 18.1 3.4 109.0
• Microfinance and MSME collections was healthy and reached 98%+ in January 2023 Oct-22
Amount Collected 86.2 17.8 3.3 107.3
• 2W collections continued to be well-north of 97% in January 2023
Collection Due 92.8 19.2 3.4 115.5
• Cumulative Provisions stood at INR 70 Crore as of 31St December 2022 covering 4.7% of the
Nov-22
total AUM (on Book)
Amount Collected 91.2 18.8 3.3 113.3
• Namra Finance: Cumulative Provisions stood at INR 55 Crore as on 31st December 2022
covering 4.0% of the total AUM Collection Due 93.3 19.9 3.8 117.0
Dec-22
• Standalone: Cumulative Provisions stood at INR 15 Crore as on 31st December covering Amount Collected 91.8 19.5 3.6 115.0
5.5% of the total AUM
Collection Due 97.1 20.2 3.5 120.8
• The company has adequately provided to withstand any further uncertainties pertaining to Jan-23
the pandemic Amount Collected 95.6 19.9 3.3 118.8
22
 Efficient
Liability
Management

23
Strong Capitalization with Sufficient Liquidity
Capital Adequacy Ratio ALM Position (in Months)

48.8% 48.1% 23
22 22 22 22
20
18 17 17 17
29.0%

20.3% 21.7%
18.7%

31-Mar-21 31-Mar-22 31-Dec-22 Q3 FY 2 2 Q4 FY 2 2 Q1 FY 2 3 Q2 FY 2 3 Q3 FY 2 3

Arman (Standalone) Namra Av g T e n u r e o f Ac t i v e As s e t s Av g T e n u r e o f Ac t i v e B o r r o w i n g s

Update on Liquidity
• Healthy Liquidity position with INR 285 Crore in cash/bank balance, liquid investments, and undrawn CC limits
• ALM continues to remain positive, and the company continue to have access to new sources of funds via CCD’s and OCRPS
• Additionally, company has INR 31 Crore undrawn sanctions from existing lenders

24
 Lending Profile
Borrowing Mix (%) Top 5 Lending Partners
(INR Crore)
879 1,084 1,164 1,368 1,518 Top 5 Lenders % of Borrowings

Lender 1 – Term Loans & PTC 11.2%

26.0% 24.0% 27.0%
31.6% 29.3%
Lender 2 – NCD 11.0%
5.9% 3.2% Lender 3 – Term Loans 7.2%
8.0% 1.9%
11.0% Lender 4 – Term Loans 6.9%
24.4% 24.4% 24.2%
21.8%
Lender 5 – Term Loans & NCD 6.1%
26.7%
13.8% 15.8% 16.4%
22.9% Credit Rating
7.3% 3.8% 3.5% 2.7%
4.7% 3.0% Credit Rating CARE ACUITE
18.1% 19.4% 16.2%
14.8%
17.9% Long Term Bank Facilities -
8.4% 7.0% 9.2% ACUITE A-
4.7%
0.8% CARE BBB+ Stable
Q3FY22 Q4FY22 Q1FY23 Q2FY23* Q3FY23* Non Convertible Debentures Stable Outlook
Banks & SFBs NBFC / FI ECB DA Outlook
DFIs (NABARD, MUDRA & SIDBI) Securitization NCD In January 2023, Namra Finance Limited is assigned ‘MFI-1’ (MFI One)
grading by CARE Advisory Research & Training Limited.

*Excluding fund raised through CCDs and OCRPS 25

Lending Partners
Bank Borrowings Non-Bank Borrowings Securitization Partners

NCDs & ECB

26
Strong Financial
Performance

27
Q3 & 9M FY23 Consolidated Profit & Loss Statement
Particulars (INR Crore) Q3 FY23 Q3 FY22 Y-o-Y (%) Q2 FY23 Q-o-Q (%) 9M FY23 9M FY22 Y-o-Y (%)

Income from Operations 101.6 57.8 91.6 271.6 157.4

Other Income 1.4 0.9 1.0 3.0 1.8

Gross Total Income 103.0 58.7 75.6% 92.7 11.2% 274.6 159.2 72.5%

Finance Costs 44.0 25.2 36.1 108.7 64.8

Net Total Income (NTI) 59.0 33.5 76.3% 56.6 4.3% 165.9 94.4 75.7%

Employee Benefits Expenses 14.1 11.2 13.7 40.5 30.0

Depreciation and Amortisation 0.3 0.2 0.3 0.9 0.6

Other Expenses 6.0 5.9 6.2 17.8 13.8

Pre-Provision Operating Profit 38.6 16.2 138.6% 36.4 6.0% 106.8 50.0 113.6%

Total Provisions & Write-offs 9.2 6.6 9.7 30.7 26.6

Profit Before Tax 29.4 9.6 206.5% 26.7 10.0% 76.1 23.4 224.7%

Profit After tax 22.0 7.0 213.1% 19.9 10.3% 57.6 15.4 273.1%

28
Balance Sheet as on December 2022
Particulars (INR Crore) Consolidated Standalone Particulars (INR Crore) Consolidated Standalone

ASSETS Dec-22 Mar-22 Dec-22 Mar-22 LIABILITIES & EQUITY Dec-22 Mar-22 Dec-22 Mar-22

Financial Assets Equity Share capital 8.5 8.5 8.5 8.5

Cash and cash equivalents 157.3 75.5 10.5 31.0 Reserves & Surplus 323.1 204.2 214.5 132.5

Total Shareholders Funds 331.5 212.7 223.0 141.0

Bank Balance 390.0 66.8 61.5 7.6
Financial Liabilities
Loans & Advances 1,414.3 1,057.6 255.8 188.3
Other Payables 0.5 1.2 0.0 0.0
Investments 16.1 5.9 165.8 93.0
Debt Securities 262.2 195.1 120.8 67.3
Other Financial assets 16.9 12.9 1.1 1.1
Total Borrowings 1,350.3 769.6 139.3 105.7
Total Financial Assets 1,994.7 1,218.7 494.6 321.0
Subordinated Liabilities 25.0 25.0 5.0 5.0
Non-Financial Assets
Other Financial Liabilities 44.2 32.9 5.0 5.0
Current tax Assets (Net) 0.0 0.0 0.3 0.2
Total Financial Liabilities 1,682.2 1,023.8 270.1 182.9
Deferred tax Assets (Net) 18.6 16.5 4.0 4.6
Non-Financial Liabilities
Property, Plant and Equipment 5.3 3.7 0.8 0.8
Current tax liabilities (Net) 1.3 2.7 0.0 0.0
Right To Use Asset 1.0 1.2 0.0 0.0 Provisions 4.3 1.2 0.3 0.4
Other non-financial assets 2.1 1.1 0.3 0.7 Other non-financial liabilities 2.3 1.0 6.7 3.1
Total Non-Financial Assets 27.0 22.5 5.5 6.3 Total Non-Financial Liabilities 7.9 4.9 7.0 3.5
Total Assets 2,021.7 1,241.3 500.1 327.4 Total Liabilities & Equity 2,021.7 1,241.3 500.1 327.4

29
 Consolidated Business Performance
(INR Crore)

AUM Disbursement Gross Total Income

1,642 478 103

1,436 93
1,388
1,233 380 79
337 76
1,045 296 278 59

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

Net Total Income Pre-provision Operating Profit Profit After Tax

57 59 39 22
36 20
51 50 33 32
16 16
33
16
7

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

30
 Consolidated Business Performance
Net Interest Margin (%) Cost to Income Ratio (%) Yield (%)

14.7% 14.9% 15.0% 14.8% 51.7% 26.6% 26.0% 26.4%

13.5% 23.9% 23.9%

35.8% 36.8% 35.6% 34.6%

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

Asset Quality (%) Return on Average AUM (%) Return on Equity (%)

5.3% 5.7% 5.7% 5.6% 5.7% 31.4%

28.5% 29.6%
4.4% 4.8%
23.9%
3.6%
3.3% 3.4%
14.2%

1.1%
0.8%
0.3% 0.1% 0.2%

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

GNPA NNPA

NIM %, RoE and Return on Avg. AUM figures are annualized 31

Q3 & 9M FY23 – Standalone Profit & Loss Statement (2W & MSME)
• Standalone AUM stood grew by 45.5% to INR 275
Particulars (INR Crore) Q3 FY23 Q3 FY22 Y-o-Y (%) Q2 FY23 Q-o-Q (%) 9M FY23 9M FY22 Y-o-Y (%)
Crore as compared to INR 189 Crore

Income from Operations 23.5 15.3 21.4 66.2 42.3 o With the improved demand in rural and semi-
rural markets, MSME AUM grew by 55% to INR
Other Income 1.0 1.3 0.8 2.5 2.9 217 Crore and 2W AUM grew by 18% YoY to INR
58 Crore

Gross Total Income 24.5 16.6 47.5% 22.1 10.7% 68.7 45.2 51.9% • In Q3FY23, Disbursements grew by 27.8% from INR 54
Crore to INR 69 Crore. For 9MFY23, disbursements
Finance Costs 9.4 5.1 6.0 21.3 13.8 stood at INR 186 Crore.

• With the government's focus on rural and semi-rural

Net Total Income (NTI) 15.1 11.5 30.7% 16.1 -6.3% 47.4 31.5 50.8% India, we anticipate opportunities to emerge in the
MSME sector, resulting in a healthy growth in
Employee Benefits Expenses 4.5 3.3 4.4 13.0 9.2 disbursements.

Depreciation and • With lower provisioning and improving asset quality

0.0 0.0 0.0 0.1 0.1 profit after tax has grown 49.8% to INR 7 Crore. For
Amortisation
9MFY23 profit after tax stood at 21 Crores a growth
Other Expenses 2.0 2.1 1.9 5.8 4.5 of 147.8% YoY

Pre-Provision Operating • The total Provisions stood at INR 15 Crore covering

8.6 6.2 38.9% 9.8 -12.7% 28.6 17.7 61.7% 5.5% of total AUM
Profit

Total Provisions & Write-offs -0.2 0.4 -0.7 0.7 6.4 • GNPA % and NNPA % stood at 3.91% and 0.55%
respectively
Profit Before Tax 8.8 5.7 52.5% 10.5 -16.6% 27.9 11.3 146.8% • Repayment rates for both MSME and 2W were
healthy and steady during the quarter at 98% & 96%
Profit After tax 6.7 4.5 49.8% 7.9 -15.3% 21.3 8.6 147.8% respectively.

32
 Standalone Business Performance
(INR Crore)

AUM Disbursement Gross Total Income

275 69 22
246 62 21 21 20
229 58 58 55 3
211 54 9 19 4 4 4
189 49 8
47 12 14
46 16
49 3

197 217 50 53 50 16 16 18
182 43 16
140 165 38 11

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

Yield (%) Gross NPA (%) Net NPA (%)

37.5% 12.8% 2.3% 2.2%

32.1% 33.5% 2.1%
32.7% 32.2% 30.8% 30.6%
27.5% 28.9% 27.6%
7.3% 7.9% 1.4%
6.9% 6.3% 5.9% 1.1%
4.8% 5.1% 4.8% 0.9%
3.7% 0.8%
0.6% 0.6%
0.4%

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

Two Wheeler Loans MSME

33
Q3 & 9M FY23 – Namra Finance Profit & Loss Statement
Particulars (INR Crore) Q3 FY23 Q3 FY22 Y-o-Y (%) Q2 FY23 Q-o-Q (%) 9M FY23 9M FY22 Y-o-Y (%) • MFI AUM stood at INR 1,367 Crore registering a
growth of 59.7% as compared to same period last year
Income from Operations 79.3 42.5 70.4 207.0 116.4 o Active MFI Customer base stood at 5.1 Lakhs and
added more than 37,000 new customers in Q3 FY23
Other Income 1.2 0.3 0.8 2.4 0.7
• Namra Finance has clocked the highest ever
disbursement of INR 409 Crore in Q3FY23 recording a
Gross Total Income 80.5 42.8 88.0% 71.2 13.2% 209.4 117.1 78.8% growth of 69.0% YoY and 83.4% QoQ
o Disbursements for 9MFY23 stood at INR 949 Crore
Finance Costs 35.8 20.2 30.2 89.0 52.3 with an increase of 68.9% YoY
o These disbursements were backed by our
Net Total Income (NTI) 44.7 22.7 97.4% 41.0 9.1% 120.4 64.8 85.8%
technological shift that helped us to achieve a
completely digital process including the loan
Employee Benefits Expenses 9.5 8.0 9.4 27.5 20.9 documentation using digital signatures.
Depreciation and • In Q3FY23, Gross Total Income grew by 88.0% and Net
0.3 0.2 0.2 0.8 0.5
Amortisation Total Income grew by 97.4%

Other Expenses 4.6 3.8 4.3 12.6 9.3 • Profit After Tax reported a remarkable growth of
375.8% to INR 16 Crore in Q3FY23; this was led by a
Pre-Provision Operating strong AUM growth, better yields and improving asset
30.3 10.7 182.0% 27.1 11.9% 79.6 34.2 133.0% quality.
Profit
• Cumulative provisions stood at INR 55 Crore; write -
Total Provisions & Write-offs 9.4 6.2 10.4 30.0 20.2
offs during the quarter stood at INR 9 Crore

Profit Before Tax 20.9 4.6 357.7% 16.7 24.8% 49.6 14.0 254.7% • In January 2023, Namra Finance, was assigned the
highest ever grading of MFI-1 (MFI One) by CARE
Ratings.
Profit After tax 15.5 3.3 375.8% 12.5 23.9% 37.7 8.7 334.0%

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
Company’s wholly owned subsidiary ‘Namra Finance Limited’ offers microfinance to women 34
 Microfinance Business Performance – Namra Finance (1/2)
(INR Crore)

AUM Disbursement Gross Total Income

1,367 409 81
1,159 1,190 71
1,022 317
280 56 58
856 242
223 43

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

Net Total Income Pre-provision Operating Profit Profit After Tax

45 30 16
41 27
35 35 13
23 22
10 10
23
11
5

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

35
Microfinance Business Performance – Namra Finance (2/2)
Net Interest Margin (%) Cost to Income Ratio (%) Yield (%)

14.8% 14.7% 52.6% 23.2% 23.8%

13.8% 21.5% 22.5% 22.6%
12.9% 13.3%

34.9% 36.0% 33.9% 32.2%

Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

Asset Quality (%) Return on Average AUM (%) Return on Equity (%)

3.8% 3.7% 4.9% 25.0% 24.1% 23.4%

3.3% 4.3% 21.8%
3.1% 3.0% 3.8%
3.5%

1.6% 8.8%
0.9%
0.6%
0.2% 0.1% 0.1%
Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23

GNPA NNPA

36
 Strong Growth in AUM and Disbursements
Total AUM (INR Crore) Total Disbursements (INR Crore)
1,233
1,024
13%
4% 880 14%
778 4%
860 16%
814
12%
685 17% 10%
15% 12%
11% 6% 547
14% 509
10%
453 15% 83% 17% 13%
5% 82%
10%
20% 248 248 75% 75%
72% 79%
172 204 71% 26% 0% 3%
82%
33% 73%
32% 36% 70%
74% 64%
68% 61%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22

MSME 2-Wheeler MFI

• Diversified portfolio of 1,642 Crore in 9M FY23 split between –

• Small ticket, granular loans - Ticket size INR 20,000 –
• Microfinance: INR 1,329 Crore (80.9%), 2,50,000
• MSME Loans: INR 217 Crore (13.2%),
• Self-employed / cash cash-income informal segment
• 2-Wheeler Loans: INR 58 Crore (3.5%),
customers
• Individual Business Loans: INR 38 Crore (2.3%)
• High -yield rural focused products – 20%+ yields
• Strategically forayed into MSME Loans in 2017. Successfully scaled up the business to INR
197 Crore (13.7% of Total AUM) in the last 5 years • Stringent underwriting
• Further, we recently launched a new product “Rural 2-wheeler loans”(currently in pilot
• Rigorous collections practices – in-house, feet feet-on -
stage) to effectively meet the under-served market.
street model
• Higher ROA business offering immense growth potential
• Aim to deliver 3-5% post post-tax ROA
• Plan to reduce share of MFI book in overall AUM to ~60% over time

FY22, FY21 & FY20 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP 37
 While Maintaining Cost Efficiency & Asset Quality
Gross and Net Total Income Yield & NIM (%) Asset Quality
(INR Crore) Demonetization COVID-19

Demonetization COVID-19 235 6.7%

215 28.7%
195
28.3% 27.4%
25.5% 24.4%
21.5% 22.9%
141 146
128
116
17.4% 16.5% 16.5%
14.0% 14.3% 14.2% 2.6% 2.6% 4.6% 3.3%
78 78
12.2%
2.0% 1.6%
54 3.0%
41 44 1.0%
25 31
1.7% 1.1%
1.1% 1.2% 1.0%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22
FY16 FY17 FY18 FY19 FY20 FY21 FY22

Gross Income Net Total Income Yield NIM GNPA (% of Advances) Provisions & Write-offs (% of Avg. On-Book AUM)

Profit After Tax Cost to Income Ratio % Return Ratios

(INR Crore)
Demonetization COVID-19 Demonetization COVID-19 Demonetization 29.7% COVID-19
42 28.1%
36
32 60.2%
57.2% 17.8%
15.6%
11.9% 12.9%
46.6% 47.4%
11 42.2% 42.7% 43.1% 5.8%
8 5.5% 4.6% 5.4%
6 7 3.3% 3.1%
2.2% 1.3%

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22

Return on Avg. AUM (%) Return on Avg. Equity (%)

FY22, FY21 & FY20 figures are as per IND-AS, all the figures prior to FY19 are as per I-GAAP 38
Annexure
• Gross Interest Income = Interest Income + processing fees / other charges

• Net Interest Margins = Net Interest Income / Average AUM (On + Off -Book)

• Yields = Gross Interest Income / Avg. AUM (On + Off Off-Book)

• Cost-to -Income Ratio = Opex (excl. provisions) / Net Total Income

• GNPA % = GNPA / AUM (On + Off Off-Book)

• NNPA % = NNPA / AUM (On + Off Off-Book)

• Return on Equity = Profit After Tax / Avg. Equity

39
Thank You
Contact Information
Company:

Arman Financial Services Limited

CIN: L55910GJ1992PLC018623

Mr. Vivek Modi

Chief Financial Officer (CFO)
Email : [email protected]
www.armanindia.com

Investor Relations Advisors:

Strategic Growth Advisors Pvt. Ltd.

CIN: U74140MH2010PTC204285

Ms. Krunali Shah / Mr. Abhishek Shah

[email protected] / [email protected]
+91 9820987564 /+91 9930651660
www.sgapl.net

40