Shriram City Union Finance Limited - Karvy

Access to a range of cost effective funding sourcesWe fund our capital requirements through a variety of sources. Our fund requirements are currently predominantlysourced through term loans from banks, issue of redeemable non-convertible debentures on a private placementbasis, and cash credit from banks including working capital loans. We access funds from a number of creditproviders, including nationalized banks, private Indian banks and foreign banks, and our track record of prompt debtservicing has allowed us to establish and maintain strong relationships with these financial institutions. We have alsoplaced commercial paper, as and when required in the past. As a deposit-taking NBFC, we are also able to mobilizeretail fixed deposits at competitive rates. We have also raised subordinated loans eligible for Tier II capital. We alsoundertake securitization/assignment transactions to increase the efficient use of our capital and as a cost effectivesource of funds.In relation to our long-term debt instruments, we currently have ratings of CARE AA from Credit Analysis andResearch Limited (“CARE”), AA-(ind) from Fitch Ratings India Private Limited, (“Fitch”) and CRISIL AA-/Stable from CRISIL. In relation to our short-term debt instruments, we have also received ratings of CARE A1+from CARE, F1+(ind) from Fitch, and CRISIL A1+ from CRISIL. Our fixed deposit programme has been rated asCARE AA (FD) by CARE, and tAA- (ind) by Fitch. The NCDs proposed to be issued under this Issue have beenrated CARE AA by CARE for an amount of upto ` 75,000 Lakhs vide its letter dated July 14, 2011, and CRISILAA-/Stable by CRISIL for an amount of upto ` 75,000 Lakhs vide its letter dated July 14, 2011. The rating of theNCDs by CARE indicates high degree of safety regarding timely servicing of financial obligations and carrying verylow credit risk. The rating of NCDs by CRISIL indicates high degree of safety regarding timely servicing offinancial obligations.We believe that we have been able to achieve a relatively stable cost of funds despite the difficult conditions in theglobal and Indian economy and the resultant reduced liquidity and an increase in interest rates, primarily due to ourimproved credit ratings, (as evidenced by the recent upgrade in our ratings by Fitch and CARE). We believe we areable to borrow from a range of sources at competitive rates.Experienced senior management teamOur Board consists of 12 Directors, (including representatives of the TPG Group), with extensive experience in thefinancial services sectors. Our senior and middle management personnel have significant experience and in-depthindustry knowledge and expertise. Our management promotes a result-oriented culture that rewards our employeeson the basis of merit. In order to strengthen our credit appraisal and risk management systems, and to develop andimplement our credit policies, we have hired a number of senior managers who have extensive experience in theIndian banking and financial services sector and in specialized finance firms providing loans to retail customers. Webelieve that the in-depth industry knowledge and loyalty of our management and professionals provide us with adistinct competitive advantage.StrategyOur key strategic priorities are as follows:Further expand operations by growing our business outlet network and introducing full range of products in allbusiness outletsWe intend to continue to strategically expand our operations in target markets establishing additional businessoutlets. Our customer origination and servicing efforts strategically focus on building long term relationships withour customers and address specific issues and local business requirements of potential customers in a particularregion. We have a strong concentration of our business in south India with 248 of our 559 branches as on March 31,2011, located in the states of Tamil Nadu, Andhra Pradesh and Karnataka. 91 % of our Assets Under Managementas on March 31, 2011 were represented by loans originated in the states of Tamil Nadu, Karnataka and AndhraPradesh. However, we have continued to make efforts to expand and penetrate into other regions in India.Currently, we have succeeded in opening business outlets in 17 different states in India. We propose to targetestablishing our operations through new business outlets in cities and towns where we historically had relativelylimited operations, such as in eastern and northern parts of India, and to further consolidate our position and31