Cholamandalam DBS Finance Limited

31st Annual General Meeting28th July 2009

1

Executive Summary• Very difficult/ most challenging business environment marked by:

– Liquidity crunch– Slowdown in the economy– Virtual collapse of the stock market– Job losses, customer confidence– Higher delinquencies and Loan losses

• Chola’s businesses steeply impacted by lower disbursements, higher borrowing costs and higher loan losses in PL segment.

• Swift response by the company to arrest the declining trend and all round action initiated.

– Aggregate Capital infusion of Rs.435 crs (Promoters Rs.401 Crs).– Aggressive cost cutting and rationalization of branches– Stopped the PL disbursement and focused on collection and recovery– Implemented Capital restructuring– Complete recast of borrowings to overcome ALM and augment liquidity

• Company’s operations back to normal since Q4. However business challenges remain and corporate rebound would depend on economic turnaround.

2

Financial Snapshot

3

• Financials :

– Disbursements – Rs. 2844 Cr.

– Income - Rs. 1120.63 Cr.

– Profit After Tax – Rs.42.75 Cr.

– EPS : Basic – Rs.7.05 & Diluted – Rs.6.83

– Capital Adequacy Ratio – 15.12%

Overall Challenges

– Financial Crisis & Liquidity crunch

– Sudden withdrawal of Mutual funds from Money market

– Redemption pressures on every side

– Even sanctioned lines were choked and Banks were reluctant to take an exposure to NBFCs

Impact

Non availability of funds

Increase in cost of funds

Reduction in spreads impacting profitability / margins

Challenges Faced – 2008 - 09

Challenges

• Economic slow down

• Loss of jobs

• General slow down across all sectors

• Huge fall in Stock markets- value erosion by investors – high level of volatility

Impact

• SME sector worst affected

• Delinquencies on the rise

• Coupled with job losses, PL customers could not pay the installments

• Directly impacted the Corporate mortgage business. PL customers who suffered losses defaulted on installments

Challenges Faced – 2008 - 09

Challenges

• No demand in CV segment

• Rating downgrades

• Credit evaluation becomes tough

Impact

• Disbursements slow down

• Lesser absorption of fixed costs impacting profitability

Challenges Faced – 2008 - 09

Action Taken

• Joint Venture Partners – Infused Rs.300 Cr. of Preference Share Capital at a nominal dividend of 1%.

• Implementation of Capital Restructuring Scheme whereby part of securities premium balance is used to offset the personal loan losses and diminution in value of investments in subsidiaries.

• Revamping of borrowing profile from short term to long term.

• Cost reduction measures such as rationalization of branches, and reduction in manpower initiatives implemented swiftly.

7

Financial Highlights

8

892 1121

0

200

400

600

800

1000

1200

FY - 08 FY - 09

Revenue in Crores

26%

8077

8546

7800

7900

8000

8100

8200

8300

8400

8500

8600

FY - 08 FY - 09

Assets in Crores

6%

59.36 42.75

0

10

20

30

40

50

60

70

FY - 08 FY - 09

Profit After Tax in Crores

-28%

4,994 2,844

-

1,000

2,000

3,000

4,000

5,000

6,000

FY - 08 FY - 09

Disbursements in Crores

-43%

Product Portfolio

Vehicle Finance

•Operating through more than 150 locations

•Product Segments-Prime and Shubh loans

•Prime- New and Used CV’s , Cars & Muv’s•Shubh- Funding against FTU and older vehicles

Non PDC based

Home Equity

•Operating out of more than 22 locations

•Loan Against Existing Property

•Mostly for self occupied residential property

•Average LTV 50%

Products – At a Glance

Business Finance

• Finance Against Shares

•Working capital Loans

• Loan against Property

Cross Sell

•Separate vertical for cross sell formed

•More than 4 lakhs customer base

•Life Insurance Partner – TATA AIG

•General Insurance Partner – Cholamandalam MS

Products – At a Glance

Asset ProfileAsset Profile

51%

31%

6%

12% Vehicle Finance

Personal Loans

Business Finance

Home Equity

Asset Profile

Asset ProfileBorrowing – Profile

19%

5%

33%

17%

26%

Term Loans

Subordinated Debt

Medium Term NCD

Banks

Short Term Instruments

Cholamandalam DBS Strategy

• Vehicle Finance• Realign the business model to address strategic customer segments

• Improve collection infrastructure and increase geographical penetration to address used vehicle loan customers

Home Equity• National Expansion leveraging VF Branch network.

•Maintain asset quality

Personal Loans• Increase collection efficiency•Reduce Losses on existing loan portfolio

Business Finance• Portfolio to be consolidated

Strategy – Road Ahead

Credit Rating • During the year the Company Credit Rating was revised

• CRISIL– Short Term Rating from P1 + to P1

• ICRA– Medium Term Rating from LAA to LAA – / Negative

• Fitch– Medium Term Rating from FAA to FAA – / Negative

• Impact – Limited Access to Short Term Instruments– Higher Coupon Rate for Medium Term Borrowing – Increases the Cost of Funds for the Company

14

Certain of the statements included in this presentation may be forward looking statements made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Cholamandalam DBS finance Ltd and its subsidiaries. There can be no assurance that future developments affecting Cholamandalam DBS Finance Ltd and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are important factors that could cause actual results to differ, possibly materially, from expectations reflected in such forward-looking statements. Cholamandalam DBS Finance Ltd does not intend, and is under no obligation, to update any particular forward-looking statement included in this presentation.

Disclaimer

Thank You

Financials Results

Q – 1 of FY - 10

Rs in Cr.

Details Last Year Current Year Growth

Retail Disbursements 964.11 701.87 -27%

Gross Income 319.38 238.88 -25%

Profit Before Tax 5.26 5.07 -4%

Apr - Jun 09

Results of Q 1 – 2009 - 10

Audit Comments

Capital Restructuring Scheme

• The scheme has been approved by all shareholders, creditors, and by the Honorable High Court of Judicature at Madras as well as the Registrar of Companies and SEBI.

• Scheme has been given effect to in the financials for 2008-09. The utilisation of Rs. 323.53 Cr. from Share Premium is towards : – Creation of Provision for Standard Assets – Rs. 200 Cr.– Towards write-off of Bad Debts during the current year – Rs.100 Cr.– Provision towards accumulated losses in subsidiary – Rs.23.53 Cr.

• Though the said adjustments are not in accordance with Accounting Standards issued by The Institute of Chartered Accountants of India, since it has the approval of the Honorable High Court of Judicature at Madras this transaction has regulatory approval.

20

Bank Reconciliation Statement• Auditor have qualified their report for unmatched items in Bank

Reconciliation Statement.

• The matching process was delayed due to significantly high level of volumes as well as certain data migration issues while moving from legacy system to a new system.

• These issues have been largely resolved, and the Company is in the process of building additional controls and certain system modifications to strengthen the auto matching process.

• There is no significant impact on the profit & loss account on account of these unmatched items.

21

Certain of the statements included in this presentation may be forward looking statements made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Cholamandalam DBS finance Ltd and its subsidiaries. There can be no assurance that future developments affecting Cholamandalam DBS Finance Ltd and its subsidiaries will be those anticipated by management. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are important factors that could cause actual results to differ, possibly materially, from expectations reflected in such forward-looking statements. Cholamandalam DBS Finance Ltd does not intend, and is under no obligation, to update any particular forward-looking statement included in this presentation.

Disclaimer