Bajaj FinServ Limited

Table of Contents
Overview of Financial Service Industry

Bajaj FinServ Limited

Page 3-7

Bajaj FinServ : Objective & Performance

Overview of Indian Insurance Industry

Page 9-11

Bajaj Allianz Life Insurance

Bajaj Allianz General Insurance

Page 13-27

Bajaj Auto Finance

Performance Summary

Page 29-30

Bajaj Auto Ltd Bajaj Holdings & Investment Ltd

Page 31-33
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Opportunities INDIA One of the fastest growing economies

United States United Kingdom Thailand South Africa Malaysia Japan Indonesia India Germany France Colombia China Brazil
0 2

Bajaj FinServ Limited

2005

2006

3.3 2.8 5.0 5.0 5.9 2.2 5.5 9.2 2.8 2.0 6.8 10.7 3.7
4 6 8 10 12

Growth %
Source: United Nations Statistics Division www.data.un.org

2nd fastest growing economy, after China Clocking an average growth rate of ~9% Expected to grow at ~8% over the next decade

Bajaj FinServ Limited

Insurance Density

Insurance Penetration
USA
855.8

Immense market potential for financial investments

Thailand South Africa Malaysia India Colombia China Brazil 0 38.4

110.1

8.8 16.5 16 10.5 4.8 6.7 2.7 0 2 4 6 8 10 12 14 16 18

UK S Africa Japan India Germany

292.2

69.1 53.5 160.9 100 200 300 400 500 600 700 800 900

China

Per capita premium US$

Premium as a % of GDP

Size of Asset Management Market

Stock Market Capitalization

United States South Korea Japan India (BSE) China 0 2000 4000 1638.2 4459.48 6000 8000 10000 12000 14000 16000 18000 20000 (US $ Bn) 1103.34 4535.08 17773.05

India Australia Germany UK Japan 0

127

1038 1812

1000

2000

3000 AUM $ Billion

3583

4000

5000

Under-penetrated market Low Insurance density with penetration under 5%

5652

6000

Consumption Boom
% to GDP
300 Credit to Private Sector 250 200 150 150 100 50 130 120 107 98 97

Bajaj FinServ Limited

249

156

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Low Debt to GDP and Savings largely invested as deposits

Bajaj FinServ
Vision Offer To grow for, and with, India
An entire range of financial

Bajaj FinServ Limited

products and services covering individuals entire life cycle Lending

Cover

Investments
Protection
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Conceptual structure of BFS

Bajaj FinServ Limited

Bajaj Financial Services Group Structure

One Face to customer
customers

Distribution Company - Advice and Distribution of all financial products

Focused Product companies

Products and risk

Cons. Finance

Insurance

AMC

3rd Party

Consolidated Backend activities

Process

Group Shared Services opportunity

Existing businesses

Bajaj FinServ Limited

Bajaj FinServ Ltd

Financial Results

Bajaj FinServ Limited

Ownership
Subsidiaries & associates Bajaj Allianz Life Insurance Bajaj Allianz General Bajaj Auto Finance Bajaj Allianz Financial % holding 74.0% 74.0% 40.5% 50.0% 100.0% Market Value 7,588

Consolidated entities
Rs in million Q1 / FY09 Q1 / FY08 FY 08

Key Business Statistics

Gross Written Premium Gross Written Premium Funds Deployed Wind energy generated Other revenues Bajaj Allianz Life Insurance Bajaj Allianz General Insurance Bajaj Auto Finance Bajaj FinServ Ltd 18,471 7,335 6,322 118 164 10,599 5,737 7,432 71 142 97,253 25,780 30,363 348 731

Distributors
Bajaj Financial Solutions Cost Other investments 7,891

All values in INR million unless specified otherwise

Consolidated segment financials

Rs in million
Segment revenue Insurance - Net premium earned Investment & O.Income subtotal 22,495 (13,252) 9,243 13,414 6,641 20,055

Bajaj FinServ Limited

Q1 / FY09

Q1 / FY08

FY 08
111,275 9,949 121,224

Windmill
Investments & others Total Segment Profit / (Loss) Insurance - General - Life Windmill Retail financing Investments & others Profit before tax Profit after tax & minority interest

118
157 9,518

70
142 20,267

348
682 122,254

115 (698) 20 12 122 (429) (362)

354 (404) ( 25) 16 135 76 ( 48)

1679 (2139) ( 27) 83 628 224 (327)

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Financials - Standalone
Rs in million Total Income Employee cost Depreciation Other expenses Total Expenses Profit before tax Provision for tax Profit after tax EPS (weighted average) Dividend Q1/FY09 Q1/FY08 272 8 74 45 127 145 48 97 0.7 212 6 75 20 101 111 38 73 0.6 FY08 1,064 21 297 96 414 650 210 440 3.1 20%
Rs in million Sources of funds Share capital Reserves and surplus Total shareholders funds SICOM ( on windmill ) Application of funds Fixed assets ( net ) Investments at cost Net current assets Defered tax adjustment

Bajaj FinServ Limited

as on as on as on June 08 June 07 March 08 723 11,185 11,908 3,108 15,016 924 13,532 509 51 15,016 723 10,891 11,614 2,900 14,514 1,125 13,286 136 (33) 14,514 80.2 723 11,088 11,811 3,108 14,919 999 13,469 425 26 14,919 81.6

Book value per share

82.3

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Insurance Industry

12

The life insurance opportunity

Life insurance density (INR per Capita)
221,020 125,689

121,647 76,970

63,640

1,419

1,462

2,580

8,127

Low density, strong GDP growth and growing penetration = favorable climate for Life Insurance growth.

Premium/GDP is at 4% compared to 6%-9% developed countries Premium per capita is INR 1,500 against an average INR 6,750 for Asia Only a third of the target population is estimated to be insured
1 -Life insurance density Swiss Re Sigma report 2006 2- Estimates by JP Morgan Associates 1USD = INR 43

GDP INR Bn

Penetration levels still lower than developed countries

FY 08 E

FY 09 E

FY 10 E

Financial Year

GDP Premium / GDP

FY 11 E

FY 03

FY 04

FY 05

FY 06

FY 07

Premium / GDP as %

India

PR China

Thailand

Malaysia

S.Korea

US

Japan

France

UK

80000 70000 60000 50000 40000 30000 20000

6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0%

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The Indian Insurance industry past, present and future

GWP INR Bn
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 2003 2004 2005 2006 2007 2012

Non life Life

16% CAGR 07-12

20% CAGR 07-12

1 Swiss Re estimates extended by 1 year ASSOCHAM estimates 2010 extended by 2 years 2 Mckinsey estimate 2011 $ 80 Bn - $ 100 Bn we have considered $80 Bn plus 12.5% growth in 2012
Fiscal year ending 31 March

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The great Indian middle class

Source Mckinsey Global institute

15

Building Bajaj Allianz

Insurance environment until 2001
Non-Life market Agency the only distribution channel 90% of business done directly through 4,000 offices of government companies No product innovation No incentive for good service Cashless claim settlement was unheard of Life market Only one Life company1 was operating till 2001 Products like unit linked policies did not exist
1)

Start of Bajaj-Allianz JV
Non-Life Focus on retail Pioneered several innovative services Tie-up with non-traditional channels for distribution of products like motor dealers and manufacturers, travel agents, banks

What we did differently compared to our peers

Non-Life Tie-up with motor dealers and manufacturers to increase volumes Leverage IT and focus on IT-enabled systems Create image for transparency and innovation OPEX (Operational Excellence) methodology (claims handling, customer service) Life Fast and nationwide roll-out of branches to leverage crosssell/ up-sell Focus not only on tier 1, but also on tier 2 + 3 cities
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How it all started

Life Minimize set-up costs for distribution e.g. Banyan tree Fast roll out for pan-Indian presence

Life insurance corporation (state owned company)

Bajaj Allianz Life Insurance Co.

17

Bajaj Allianz Life - Market Share on APE** basis

Q1 2008/09
21.1%

2007/08
14.2%

13.7%
15.4% 10.3% 8.1% 7.8% 4.9% 4.6% 6.2% 4.1% 3.4%

ICICI PRU

Bajaj Allianz

SBI Life

Max NY life

Birla SL

Others Pvt (12 cos)

ICICI PRU

Bajaj Allianz

SBI Life HDFC Reliance Others Std Life Life Pvt (12 cos)

LICs market share is 38% for YTD May 08 as compared to 48% as on 31st March ,2008

Source: IRDA website. ** APE = 10% of Single Premium + 100% of Regular Premium

Fiscal year ending 31 March 18

Bajaj Allianz Life

Amongst private insurers during FY08

Second largest in new business premium

First position on number of policies issues Gross Written Premium 82% Rs. 97 billion v/s Rs. 53 billion in P. Yr Market share 10.3% v/s 7.4% in P. Yr on APE* basis Number of policies 3.7 million v/s 2.1 million in P. Yr

Unit linked funds increased by 111%

12 new products launched during the current year Currently 32 individual products & 9 product groups on offer
*APE = 10% of Single Premium + 100% of Regular Premium
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Performance Summary
Rs. In billion Gross written premium New business premium Net earned premium Total income Annualized premium equivalent * Policyholder surplus/(deficit) Q1/FY09 INR Bn 18.4 8.2 18.4 5.49 7.6 0.66 Q1/FY08 INR Bn 10.5 7.2 10.5 11.91 6.6 0.70 FY 08 INR Bn 97.2 67.0 97.1 107.1 60.0 1.98

Shareholder Profit/(Loss) Profit / ( Loss ) Net contribution to policy holders account

(0.69) (0.03)
0.9

(0.40) 0.30
0.5

(2.13) (0.15)
2.9
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*APE = 10% of Single Premium + 100% of Regular Premium

Shareholders funds & Investments overview

Rs. in million Share Capital Share premium Sub-total Balance in P & L account Total as on June 08 INR Mn 1,507 10,600 12,107 (5,596) 6,511 as on Mar 08 INR Mn 1,507 10,600 12,107 (4,899) 7,208 Shareholders Traditional Policyholders Unit Linked Policyholders Total Rs. in million as on June 08 INR Mn 10,043 17,043 103,922 131,008 as on Mar 08 INR Mn 11,459 14,687 109,542 135,688

Total capital infused during the year Rs. 5,101 million

Efficient capital management

Gross Written Premium to Share Capital 2007/08 Bajaj Allianz Life SBI Life HDFC SL ICICI Pru
3.66 3.60 21 5.62 8.04

New Business Achieved Profit (NBAP) trend

APE** Period INR Mn INR Mn 1,487 1,468 12,029 7,036 NBAP

2008/09 Q1 2007/08 Q1 FY 2007/08 FY 2006/07

7,640 6,581 59,953 32,330

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
** APE = 10% of Single Premium + 100% of Regular Premium 22

Bajaj Allianz General Insurance Co.

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Bajaj Allianz General (Q1/FY09)

Amongst private insurers, during FY08, maintained second position in terms of GWP GWP 28%, Rs.7.3 billion v/s Rs.5.7 billion in Q1/FY08 8.5% v/s 7.4% in Q1/FY08

Market share

Net premium earned 43% Rs.4.1 billion v/s Rs.2.8 billion in Q1/FY08 Number of policies sold 1.8 million v/s 1.4 million in Q1/FY08

Investible surplus Rs. 22.6 billion

Strong retention ration increased to 72% from 66% Losses from Motor Pool estimated at Rs 120 million v/s Rs 90 million proportionately in Q1/FY08 Bancassurance, direct retail channels growing above 60%
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Performance Summary
Rs. in billion Gross written premium Q1/FY09 7.34 Q1/FY08 5.74 FY08 25.8

Rs. in billion Cash and investments Other assets Insurance reserves

As on June 08 22.62 4.44 18.53 2.73 5.80 2.16

As on March 08 20.48 4.20 16.36 2.58 5.75 5.04

Net earned premium

Net Insurance Income Underwriting profit excluding pool losses Underwriting profit including pool losses Profit before tax Profit after tax Loss ratio Combined ratio excluding pool losses Combined ratio including pool losses Retention ratio

4.06
0.60 (0.24) (0.36) 0.12 0.07 72.2% 105.8% 108.7% 71.9%

2.84
0.63 0.03 (0.06) 0.26 0.13 69.9% 98.9% 102.1% 65.9%

14.1
2.9 0.2 (0.2) 1.7 1.1 66.7% 98.5% 101.5% 69.1%

Other liabilities Net worth Free cash flow

Focus on cash flows, growth in invested surplus.

Free cash flow = increase in invested surplus net of financing cash flows

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Changing business mix

Business Mix-Market
Corporate Motor Health Others 0% 10% 20% 2007/08 30% 40% 50% 60% Corporate Motor Health Others 0% 10% 20% 30% 40% 50% 60% 70%

Business Mix- Bajaj Allianz

2006/07

Q1 2008/09

2007/08

2006/07

By 2012, it is expected that Motor and Health will constitute more than two thirds of the market To capitalize on the growing health and motor segments and with corporate pricing under pressure, Bajaj Allianz has increased its presence in retail business

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Capital Efficiency FY08

Rs. in million

Share capital
3774 1102 1072 2200 2250

Share premium
5933 1666 4998 300 0

Total capital brought in 9707 2768 6070 2500 2250

GWP FY08
33447 24043 19464 12358 8134

GWP/ Equity
3.45 8.68 3.21 4.94 3.62

Return on Equity
10.2% 21.5% Negative 2.4% 6.4%

ICICI
Bajaj Allianz

Reliance
ITGI TATA

Bajaj Allianz is the benchmark for efficient use of capital Highest return on equity in the private sector
Return on equity is on simple average equity. GWP as per IRDA website

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Bajaj FinServ Limited

Bajaj Auto Finance Retail Financing

28

Vision
Bajaj Auto Finance
Develop a Unique Business Model focused on delivering range of

Strategy

Bajaj FinServ Limited

Plug & Play Model for accelerated growth

Innovate to grow Product and services Build and launch innovative products Offer full product suite Leverage existing gaps of service differentiation in the market Forging Business Partnerships Build partnerships with consumer databases Leverage distribution & customers to build faster growth engines Scalable Operating Platform Outsource Technology & Operations for variable cost structure Own / Automate risk & underwriting process
Leverage CRM Capabilities Sell more & more to each customer Acquisition and operating cost advantage
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consumer lending products to Indian

Middle Class serviced by best in breed specialists Leading financer of ~ Two wheelers ~ Consumer durables & personal computers ~ Personal loans New business lines ~ Securitization ~IPO financing ~ Loans against shares ~Loans against property (to launch) ~ Personal loans >Cross-sell >Small business loans

Business Performance
Rs. in million
Automobiles Consumer Durables Personal Computers Personal Loans Securitized retail asset pool Total Disbursals

Financial Performance
2007 08 14,844 6,307 4,628 1,627 2,597 30,363 Rs. in million Total Income Interest & Finance charges Other Expenses Depreciation Provision for tax Profit for the year Q1/FY09 1,282 435 792 10 15 30 Q1/FY08 1,052 378 609 5 18 41

Bajaj FinServ Limited

Q1/FY09
2,072 1,327 612 915 4,926

Q1/FY08
3,584 2,344 1,398 106 7,342

2007 08 5,027 1,704 2,975 48 99 201

Asset base of Rs. 27 billion Book value per share Rs. 291 Capital adequacy ratio 40% ( RBI norm 12% ) Earning per share ( diluted ) Rs. 0.82 in Q1/FY09 v/s Rs. 1.12 in Q1/FY08 & Rs. 5.68 in P. Yr

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Bajaj FinServ Limited

Thank you

No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written approval from Bajaj FinServ Limited, Mumbai-Pune Road, Akurdi, Pune-411 035, India. Certain part of this presentation describing estimates, objectives and projections may be a forward looking statement within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied. Undue reliance should not be placed on such statements & values because by their nature, they are subject to known and unknown risks and uncertainties and can be affected by numerous factors that could cause actual results to differ materially. This material was used by Bajaj FinServ Limited during an oral presentation; it is not a complete record of the discussion.
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