Executive Summary

Bajaj Finance Limited (Bajaj Finance or BFL) had a strong year aided by a diversified product mix ,robust volume growth, prudent operating cost management and low NPAs. With assets under management of B 32,410 crore, BFL has emerged as one of the leading diversified NBFCs in the country. The Company delivered strong results in FY2015, the highlights of which are given below.

Bajaj Finance Limited: Performance highlights, FY2015

Assets under management up 35% to B 32,410 crore Receivables under financing up 36% to B 31,199 crore Total income up 33% to B 5,418 crore Total operating cost up by 24% to B 1,428 crore Loan losses and provisions B 385 crore Profit before tax up 24% to B 1,357 crore Profit after tax up 25% to B 898 crore Capital adequacy as on 31 March 2015 was 17.97%, which is well above the RBI norms A 27 year old non bank finance company Diversified consumer, SME & commercial lender in India Credit rating of AA+ with (+) outlook by CRISIL & ICRA for over 7 years 126 branches presence with over 11,000+ distribution franchise Large customer franchise with 33.90 lacs clients

Group structure

A strong platform for profitable growth

Successfully delivered the transformation journey

What do we stand for?

Introduction

Bajaj Finserv Lending offers loans for various needs. We offer loans for Bajaj Auto Two Wheelers under the name of Bajaj Auto Finance Ltd. We offer Consumer Durable Loans, Personal Loans, Loan against Property, Small Business Loans, Construction Equipment Loans, Loan against Securities and Insurance Services under the name of Bajaj Finserv Lending.

Bajaj Finserv Lending is one of the most diversified NBFCs in the market catering to more than 5 million customers across the country. Apart from being a well recognized organization, we pride ourselves for holding the highest credit rating of FAAA/Stable for any NBFC in the country today. Our product offerings include Consumer Durable Loans, Personal Loans, Loan against Property, Small Business Loans, Two-wheeler and Three-wheeler Loans, Construction Equipment Loans, Loan against Securities and Insurance Services.

Our unique products feature across all categories and offer a compelling value proposition to our customers. Our strong presence in the Indian market for over 23 years has enabled us to establish a strong foothold here and we aim to continuously provide our customers with premium service and exclusive benefits.

Consumer Lending

BFL was the largest financier of Bajaj motorcycles and Three Wheelers in FY2015. The Company operates at around 3,000 Bajaj dealers, sub-dealers and authorised service centres across the country. Its unique Direct Cash Collection (DCC) model in rural and semi-urban markets enabled customers with no banking habits to repay their EMIs in cash.

BFL continued to be one of the largest consumer durable lenders in India, being present in161 cities across the country with deployments of B 10,093 crore growth of 49% over FY2014.Its unique Existing Member Identification (EMI) card enables customers to avail instant credit.Consumer Durable financing through EMI cards grew by 215% over FY2014.

BFL has expanded its consumer durable financing model to digital products and lifestyle products. BFL has tied up with leading manufacturers like Samsung, Apple authorised resellers and Sony amongst others in its digital products financing. Lifestyle products (financing for products like furniture, home furnishings, etc.) is present in around 3,800 dealer counters. The combined growth in deployments in digital and lifestyle financing in FY2015 was 173%.Personal loans cross-sell and salaried personal loans deployments grew by 59% and102% respectively over FY2014.

Rural Lending

As part of its geographical expansion strategy in FY2015, BFL furthered its rural footprint by setting up branches in Maharashtra and Gujarat. The major products offered through the rural branch network are consumer durable loans, gold loans, refinance loans and personal loans. It disbursed 505 crore to 1.31 lakh customers in FY2015. Assets under finance of the rural business as at 31 March 2015 was 333 crore, versus 50 crore in FY2014.

SME Lending

SME lending offers secured and unsecured loans to its customers. Secured lending is done through four product offerings: Loan Against Property, Lease Rental Discounting, Home Loans to SME customers and Loans Against Securities.

The Company also offers unsecured working capital loans to affluent small business customers,doctors and other professionals. Loans against securities business had a good year on the backof a resurgent equity market and sharper focus by the business team. Bajaj Finance continues toremain customer centric and does not levy any pre-payment or part pre-payment charges for itsSME customers.Commercial Lending

BFL auto component manufacturers financing business remained stable in FY2015.However, given the problems plaguing the infra sector, BFL has exited the ConstructionEquipment (CE) financing business and has been selective in infrastructure lending too.Due to the above, the CE and infra loan book de-grew by 84% and 20% in FY2015.

Risk management and portfolio quality

As an NBFC, Bajaj Finance is exposed to credit risk, liquidity risk and interest rate risk. TheCompany has invested in people, processes and technology to mitigate risks posed by externalenvironment and by its borrowers. It has in place a strong risk management team and aneffective credit operations structure. Its risk management policies continue to segregate thefunctions of a Chief Risk Officer and a Chief Credit Officer to focus on portfolio management and underwriting respectively. Sustained efforts to strengthen the risk framework and portfolio quality have yielded significant results over the last few years.

BFL continues to invest in analytics to create customised cross-sell propositions for its customerfranchise. Analytics is integrated with business strategy and uses technology to deliverdifferentiated proposition.

BFLs conservative approach to portfolio management coupled with a rigorous portfolio reviewmechanism has enabled it to get early stress signals in the infrastructure sector and takecorrective action in its infrastructure and construction equipment business. As mentioned before,Bajaj Finance ended the year with a net NPA of 0.45%. The Company continues to have aconservative provisioning policy which is more stringent than RBI norms.Asset Liability Management (ALM)

BFL had a total borrowing of B 26,691 crore as on 31 March 2015. The Companys Asset-Liability Committee (ALCO), set up in line with the guidelines issued by the RBI, monitors asset-liability mismatches to ensure that there are no imbalances or excessive concentrations on either side of the Balance Sheet. BFL continued to raise longer tenor borrowings in FY2015 as well this included B 453 crore Tier II subordinated debt.

Till date, BFL has assigned B 2,985 crore of its receivables including B 827 crore assigned inFY2015. The net receivables due as on 31 March 2015 amounted to B 1,210 crore.The Company continues to very closely monitor liquidity in the market and as a part of its ALCO strategy, maintains a liquidity management desk to reduce its liquidity risk. The liquidity buffer is stepped up whenever signs of tight liquidity in the system is noticeable.

Technology

BFL has been a leader in technology adoption among NBFCs, and has used it to enhancecustomer service and streamline back-office operations. It has leveraged technology in allbusiness lines and related operations and has a strong technology orientation.Disaster Recovery (DR) data centres have been set up to ensure business continuity for customeracquisition, loan processing and servicing.

Customer service

BFL continues to remain customer centric in its policies and practices. It provides its customersmulti-channel options across call centre, IVR, online portal, branch and mobile applications. It also annually benchmarks its customer service practices by seeking feedback through an independent customer service survey.

In FY2015, BFL has worked closely with Unique Identification Authority of India (UIDAI) to assist in accessing the e-KYC customer database. This will substantially improve customer experience and should help grow the business in the upcoming year.

Human resources

The Company continues to lay emphasis on people, its most valuable resource. In an increasinglycompetitive market for human resources, it seriously focuses on attracting and retaining the righttalent. It provides equal opportunity to employees to deliver results. During FY2015, Bajaj Finance added 2,093 employees, taking the total employee strength to 5,058.In FY2015, BFL was recognised as among the top three employers in the Banking and FinancialServices Industries space by Great Places to Work. It was also recognised by AON Hewitt in itsranking of the best employers in India.

Product Launch Journey

The Company BFL focuses on five broad categories: (i) Consumer Lending, (ii) SME Lending, (iii) Commercial Lending, (iv) Rural Lending, and (v) Fixed Deposits and Fee Based Product Distribution. The Companys product suites are given below.

Verticals ProductConsumer Lending 2 Wheeler and 3 Wheeler Consumer Durables Lifestyle Products Personal Loans Cross-Sell Salaried Personal Loans Co-branded Credit Cards Home LoansSME Lending Loan Against Property Lease Rental Discounting Business and Professional Loans Loans Against SecuritiesCommercial Lending Auto Component Manufacturer Financing Infrastructure Finance Construction EquipmentRural Lending Gold Loans Refinance LoansFixed Deposits and Fee Based Products Fixed Deposits Life Insurance Distribution General Insurance Distribution Credit Rating Distribution Property Fitness Reports

Diversified Business Model

Product Line Strategy

A Few Differentiators

CONSUMER DURABLE LOANS

Bajaj Finserv Lending is one of the leading financiers in the market offering consumer durable loans on EMI.

Now you can easily avail a loan for products like LCD, LED, Color TV, Refrigerator, Washing Machine, Air Conditioner, Music System, Microwave etc amongst a host of other products.

Bajaj Finserv Lending consumer durable loan comes with 0% financing and with a small fee. You can apply online on our website and get an instant approval or visit a dealership to easily avail a loan. We provide on the spot approval with minimum documentation & fast processing.

FEATURES & BENEFITS

Features

Bajaj Finance, the sole organized financier in the market offering Consumer Durable loans offers you Dreams on EMI, with 0% finance options also available. CD loans are EMI loans for Consumer Durable items like Washing Machines, Refrigerators, Color TV's, LCD's etc. These CD loans come at a very reasonable pr ice, with a very simple process. You can just walk into one of our Dealer partner showrooms and avail of this facility for the item of your choice. Loans are available for amounts more than Rs.7000. Multiple Credit programs are also available to suit your fitment.

Avail loans ranging from Rs. 7,000 to Rs. 5,00,000 for Washing Machines, Refrigerators, Color TVs, LCDs and other consumer durables. Apply Online or walk in to one of our Dealer Partner showrooms and get your loan approved in 15 minutes.

Benefits

0% finance options available (for select schemes). Simple process with minimum documentation. On the spot approvals with fastest processing. Flexible repayment options. ECS clearing, reducing hassle of arranging cheques. Extended Warranty available. Pre-approved personal loan offers for existing customers

Eligibility & DocumentsEligibilityIf you are a salaried person your age should be between 21 years to 60 years. If you are Self Employed your age should be between 21 years to 65 years.DocumentsDocuments requiredSalariedSelf Employed

Photo Id ProofyesYes

Residence proofYesYes

One Cheque in case of ECSYesYes

Credit program specific documents ( Any one of the following)

Credit Card front side photocopyYesYes

Visiting Card & Employee Id proofYesNo

Photocopy of RC book (Not applicable for vehicles registered after 2004 & commercial cars)YesYes

Bajaj Finserv Lending existing loan Repayment LoanAccount Number / Schedule (subject to not later than 18 months old)YesYes

Any other Bank/NBFC Repayment ScheduleYesYes

Salary SlipYesNo

Banking Details (latest 6 months) Account Type- OD/ CCYesYes

Fees & ChargesAmount Financed SlabProcessing Fees

Upto 15000/-Rs.499/- to Rs.599/-

Between Rs.15001/- & upto Rs.30,000/-Rs.599/- to Rs.699/-

Rs.30,001/- & aboveRs.699/- to Rs.799/-

OTHER CHARGESAMOUNT

Foreclosure ChargesNIL

PDC SwappingRs. 500

Bounce ChargesCheque Bounce - Rs. 350 per chequeLate payment penalty - Rs. 150

IT Product Loans

Features

Bajaj Finance, the sole organized financier in the market offering IT Product loans, offer s you Dream Desktop/Laptop on EMI, with 0% options also available. These IT Product loans come at a very reasonable price, with a very simple process. You can just walk into one of our Dealer partner showrooms and avail of this facility for the item of your choice. PC loans are available up to 100% of the product price. Loans are available for amounts above Rs. 20000.

Benefits

0% finance options available (for select schemes).

Simple process with minimum documentation.

On the spot approvals with fastest processing.

Flexible repayment options.

ECS clearing, reducing hassle of arranging cheques.

Extended Warranty available.

Eligibility & DocumentsEligibility If you are a salaried person your age should be between 21 years to 60 years.If you are Self Employed your age should be between 21 years to 65 years.

Documents -

Documents requiredSalariedSelf Employed

Photo Id ProofYesYes

Residence proofYesYes

3 ChequesYesYes

Credit program specific documents ( Any one of the following)

Credit Card front side photocopyYesYes

Visiting Card & Employee Id proofYesNo

Photocopy of RC book (Not applicable for vehicles registered after 2004 & commercial cars)YesYes

Bajaj Finserv Lending existing loan Repayment LoanAccount Number / Schedule (subject to not later than 18 months old)YesYes

Any other Bank/NBFC Repayment ScheduleYesYes

Salary SlipYesNo

Insurance Services

Bajaj Auto Finance Limited (BAFL) has tied up with Bajaj Allianz Life (part of Bajaj Group), to offer a rich bouquet of world class life insurance products to suit the financial needs of all segments of buyers through different stages of their lives. With its successful track record and its highly acclaimed standing, Bajaj Allianz Life Insurance Company (BALI C) prides on serving over 8 million Indian customers. BAFL shares BALIC's philosophy of providing insurance solutions relevant to the customer's needs.

Business Strategy

Focus on Diversified & profitably growth through its distinct Consumer, SME, Commercial & Rural Verticals Differentiated product offerings Deep geographic distribution

Leverage large and growing customer franchise Continue to attract, train and retain talent Broad base liability mix Focus on technology and analytics to further improve productivity and reduce risks

Financial InformationKey portfolio metrics

Strong distribution reach

Strong Growth Trajectory

Robust Financial Performance

Statement of Profit and Loss

Balance Sheet

Shareholding Pattern March 31, 2015

Key performance highlights for Q3 FY15Profit before tax for Q3 FY15 33% to ` 393 Crores from ` 295 Crores in Q3 FY14 Profit after tax for Q3 FY15 33% to ` 258 Crores from ` 194 Crores in Q3 FY14. Assets Under Management during Q3 FY15 37% to ` 30,822 Crores from ` 22,461 Crores in Q3 FY14. Total income for Q3 FY15 37% to ` 1,485 Crores from ` 1082 Crores in Q3 FY14. Customers acquired during Q3 FY15 59% to 15,31,580 from 9,62,204 in Q3 FY14. Loan losses and provisions for Q3 FY15 37% to `108 Crores as against ` 79 Crores in Q3 FY14. Return on Assets and Return on Equity for Q3 FY15 were 0.9% and 5.6% (not annualized) respectively. Gross NPA and Net NPA for Q3 FY15 stood at 1.50% and 0.49% respectively. The provisioning coverage ratio stood at 68% as of 31 December 2014. The Company continues to provide for loan losses in excess of RBI requirements. Capital adequacy ratio (including Tier-II capital) stood at 18.69%. The tier I capital stood at 14.72%.The Company continues to be well capitalized to support its growth trajectory.

Market Assessment :

Bank credit growth was at historical low of 10% in the first half with Public Sector Banks recording agrowth of only 7.9%. Bank deposit grew by 12.9%. Output gap in the economy remains at an all time low. Demand momentum is weak but mood is buoyant. Discretionary spending surged in the festive month but has slowed dramatically in the last two months.

Auto sector is showing some revival with nine months growth of Two wheeler, Passenger and Commercial vehicles at 12%, 3%, -7% respectively.

Real estate sector was amongst the worst performing investment asset class in 2014-15 with lowestappreciation rate in the last 5 years (Gold being the other).

Business Commentary :

Overall a very good festival quarter for the company with robust volume momentum & strong creditperformance across Consumer & SME businesses despite a weak demand environment in second half ofthe quarter..The company continued to readjust its portfolio mix to reduce the beta in its business model.

Two Wheeler financing penetration of Bajaj Auto domestic Two Wheeler sales inched up to 37% due toincreased financing demand during festival. Overall volume for the quarter dropped by 10% YoY.

Three Wheeler business volume reduced by 39% due to portfolio quality challenges. Three Wheelerfinancing penetration of Bajaj Auto domestic Three Wheeler sales in these locations currently at 15%.

Consumer Durable business had its best ever quarter. It disbursed 1.12 million cases ( 61% YOY) despite 15% to 18% industry growth. Rewarding promotional schemes & contests to existing & EMI card customers, Several promotional schemes by manufactures, Geo expansion and category extensions with proactive capability builds have helped deliver this solid growth in Q3. The company has managed to seamlessly process & decision more than 65K application on the day of Dhanteras.

The company sourced 22 K cases through its cutting edge mobile application during this quarter.Lifestyle Finance business disbursed 124 K accounts (350% growth), another highest for any quarterdriven by Digital products. Tie-ups with leading manufacturers like Samsung, Apple, Sony and leadingnational & regional wireless chains enabled the business register this growth. Non-digital Lifestylebusiness grew by 62% YOY. Given the profit pool opportunity and different orientation required between digital & other lifestyle products, the company has now carved out a 3rd business viz.

Digital Financing within the sales finance business to dominate the financing space in forthcoming years.Cross sell momentum across Lending and Fee products remained strong.Salaried personal loans business continued to grow well with healthy credit performance. Digitalchannels now contributes 16% of new originations.Rural Lending business delivered strong momentum in Q3. The business has now cumulatively brokeneven and is profitable. Company continues to increase its footprint in a measured manner. Work onlaunching MSME rural lending business has been initiated.

Business loans business continued to grow very well with strong credit performance. Professional loansnow contribute to 17%-18% of Business loans origination. The company has carved out Professional loans as a separate business structure to tap high growth opportunity in this counter cyclical business.Mortgage business is in hyper competitive situation as all lenders want to grow this asset class. LAPbusiness is in consolidation mode and is growing at a slower rate than company AUM growth.LAS business had an excellent quarter supported by new product & renewed channels strategy.