ASK Wealth Advisors

Structured Product Solutions: Yield Enhancement Ideas

Enhanced FMP – Tata Capital Financial Services Limited
 Structured Products (SP)/ Market Linked Debentures (MLD)

• Market Linked Debentures (MLDs) ~ Structured Products / Structured Notes are bespoke investment products where the
returns are linked to the performance of an underlying like Nifty 50 index, Basket of Stocks and/or G-sec
• MLDs offer investors different levels of market exposure, risk, return and protection, and act as valuable portfolio
return enhancement tool

Effective Use of a Structured Product

Protection

Diversification
Efficiency

Different levels of principal protection Different combinations of payoff profiles Capability to optimize returns
(100% to 0%). and underlying customizable. across market cycles, with tax efficiency.
Hedge for existing portfolio. Optimize portfolio return with controlled risk.
What are SPs/MLDs?

Objectives Underlyings

Investor Goals ✓ Market Indices (Nifty/Bank Nifty)

• Principal Protection
✓ Single Stocks or Baskets
• Hedging
✓ G-Sec
• Enhanced Returns
✓ Interest Rate Futures
• Market Access
✓ Gold
• Tax Efficiency
✓ Hybrids
• Diversification
✓ Any other customized Indices

Market Outlook

Bullish Bearish Stable Uncertain Volatile

 Construct of a Structured Product

A combination of
Equity Options
Protection

Calls, Puts, Digitals, Barriers, Asians, Efficiency

Spreads, Knock-Out, Knock-In etc Diversification

A zero coupon
bond
Funding cost of Issuer (Credit rating,
Structured Product
Balance Sheet requirements, Demand/Supply etc)
 Market Linked Debenture Details
• Regulated by SEBI – as “Market Linked
Debentures” i.e. NCDs issued with coupon
linked to indices / stocks / rates / other
underlying.
• Principal Protected at maturity (PP): Rated,
Listed, Secured, Redeemable, Non-
Convertible, Principal Protected Market
Issuance Linked Debentures;
• Non-PP MLDs are Unlisted
• NBFCs, regulated by RBI
• Listed on Exchange (Principal
Protected)
• Rated PP-MLDs (As per Issuer rating)
Issuing Entities by all leading rating agencies
• Rationale: MLDs are NCDs used by issuing
NBFCs for raising liabilities (borrowing on
their Balance Sheet for business purposes)
• Secured: 100% cover to be maintained;
security to include immovable property
and business receivables of the Issuer
• Distribution: Private Placement
Key Features
• Rating by agencies like ICRA, ongoing
valuation by Crisil
• Individuals, Domestic Institutions, FIIs,
Body Corporate etc.
Investors
Market Linked Debenture Offerings

• 10 Year G-Sec Linked Enhanced FMP

Idea 1 – 10 Year G-Sec Linked Enhanced FMP ~18 Months

Issuing Entity Tata Capital Financial Services Limited

Issuer Rating “CRISIL PP-MLD AAAr” by CRISIL Limited

Tenor ~15/18 Months (Maturity 14-Aug-20)

Rated, Listed, Secured, Redeemable, Non- Convertible, Principal Protected Key characteristics
Instrument
Market Linked Debentures
7.17 G-Sec 2028 having ISIN: IN0020170174 and Maturity on 08th Jan 28 As • The structure is designed for
Reference Index
published by FBIL on www.fbil.org.in investors who have a stable
view on underlying reference
Initial Level Last Traded Closing Price of Reference Index on Trade Date in the medium term – and
will help them to achieve
Final Level Last Traded Closing Price of Reference Index on Final Fixing date high probabilistic IRR of
8.45% by exercising that view,
Minimum Coupon (IRR) 12.52 (8.40% IRR)
with principal protection
Maximum Coupon (IRR) 12.60 (8.45% IRR)
• If Final Level closes below
Digital Level than IRR of
Digital Level 75% Of Initial Level 8.40%
If Final Level >= Digital Level, Maximum Coupon
Payoff If Final Level < Digital Level, Minimum Coupon • Principal back If Final Level
closes below 25% of Initial
If Final Level < 25% of Initial Level, Principal Back at Maturity Level
Enhanced FMP: Scenario Analysis

Annualized Pre-Tax Return

Underlying Performance Issue Price Maturity Value
IRR
140.00% 10,00,000 8.45% 11,26,008

120.00% 10,00,000 8.45% 11,26,008

100.00% 10,00,000 8.45% 11,26,008

80.00% 10,00,000 8.45% 11,26,008

75.00% 10,00,000 8.45% 11,26,008

65.00% 10,00,000 8.40% 11,25,248

50.00% 10,00,000 8.40% 11,25,248

30.00% 10,00,000 8.40% 11,25,248

25.00% 10,00,000 8.40% 11,25,248

20.00% 10,00,000 0.00% 10,00,000

Note: This scenario analysis is for illustrative purposes only, and may not represent all possible outcomes. Maturity value may differ based on investment date
 Idea 2 – 10 Year G-Sec Linked Enhanced FMP ~25 Months

Issuing Entity Tata Capital Financial Services Limited

Issuer Rating “CRISIL PP-MLD AAAr” by CRISIL Limited

Tenor ~22/25 Months (Maturing 14-Apr-21)

Rated, Listed, Secured, Redeemable, Non- Convertible, Principal
Instrument Key characteristics
Protected Market Linked Debentures
7.17 G-Sec 2028 having ISIN: IN0020170174 and Maturity on 08th • The structure is designed for
Reference Index
Jan 28 As published by FBIL on www.fbil.org.in investors who have a stable
Initial Level Last Traded Closing Price of Reference Index on Trade Date view on underlying reference
in the medium term – and
Final Level Last Traded Closing Price of Reference Index on Final Fixing date will help them to achieve
high probabilistic IRR of
Minimum Coupon (IRR) 18.96 (8.50% IRR) 8.55% by exercising that view,
with principal protection
Maximum Coupon (IRR) 19.08 (8.55% IRR)
• If Final Level closes below
Digital Level 75% Of Initial Level Digital Level than IRR of
8.50%
If Final Level >= Digital Level, Maximum Coupon
Payoff If Final Level < Digital Level, Minimum Coupon • Principal back If Final Level
If Final Level < 25% of Initial Level, Principal Back at Maturity closes below 25% of Initial
Level
Enhanced FMP: Scenario Analysis

Annualized Pre-Tax Return

Underlying Performance Issue Price Maturity Value
IRR
140.00% 10,00,000 8.55% 11,90,824

120.00% 10,00,000 8.55% 11,90,824

100.00% 10,00,000 8.55% 11,90,824

80.00% 10,00,000 8.55% 11,90,824

75.00% 10,00,000 8.55% 11,90,824

65.00% 10,00,000 8.50% 11,89,657

50.00% 10,00,000 8.50% 11,89,657

30.00% 10,00,000 8.50% 11,89,657

25.00% 10,00,000 8.50% 11,89,657

20.00% 10,00,000 0.00% 10,00,000

Note: This scenario analysis is for illustrative purposes only, and may not represent all possible outcomes. Maturity value may differ based on investment date
Idea 3 – 10 Year G-Sec Linked Enhanced FMP – 37 M

Issuing Entity Tata Capital Financial Services Limited

Issuer Rating “CRISIL PP-MLD AAAr” by CRISIL Limited

Tenor ~34/37 Months (Maturity 14-Apr-22)

Rated, Listed, Secured, Redeemable, Non- Convertible, Principal
Instrument Key characteristics
Protected Market Linked Debentures
7.17 G-Sec 2028 having ISIN: IN0020170174 and Maturity on 08-01- • The structure is designed for
Reference Index
28 As published by FBIL on www.fbil.org.in investors who have a stable
Initial Level Last Traded Closing Price of Reference Index on Trade Date view on underlying reference
in the medium term – and
Final Level Last Traded Closing Price of Reference Index on Final Fixing Date will help them to achieve
high probabilistic IRR of
Minimum Coupon 29.45% (IRR 8.60%) 8.65% by exercising that view,
with principal protection
Maximum Coupon 29.63% (IRR 8.65%)
• If Final Level closes below
Digital Level 75% Of Initial Level Digital Level than IRR of
8.60%
If Final Level >= Digital Level, Maximum Coupon
Payoff If Final Level < Digital Level, Minimum Coupon • Principal back If Final Level
If Final Level < 25% of Initial Level, Principal Back at Maturity closes below 25% of Initial
Level
Enhanced FMP: Scenario Analysis

Annualized Pre-Tax Return

Underlying Performance Issue Price Maturity Value
IRR
140.00% 10,00,000 8.65% 12,96,369

120.00% 10,00,000 8.65% 12,96,369

100.00% 10,00,000 8.65% 12,96,369

80.00% 10,00,000 8.65% 12,96,369

75.00% 10,00,000 8.65% 12,96,369

65.00% 10,00,000 8.60% 12,94,503

50.00% 10,00,000 8.60% 12,94,503

30.00% 10,00,000 8.60% 12,94,503

25.00% 10,00,000 8.60% 12,94,503

20.00% 10,00,000 0.00% 10,00,000

Note: This scenario analysis is for illustrative purposes only, and may not represent all possible outcomes. Maturity value may differ based on investment date
Compendium:
Issuer Profile
 About Issuer: Tata Capital Financial Services Limited

Tata Capital Financial Services Limited ("TCFSL") is a subsidiary of Tata Capital limited. The Company
is registered with the Reserve Bank of India as a Systemically Important Non Deposit Accepting Non Banking Financial
Company (NBFC) and offers fund and fee-based financial services to its customers, under the Tata Capital brand.

These include: Home Loans, Auto Loans, Personal Loans, Business Loans, Education Loans, Loans against Property, Loan
against Securities, Consumer Durable Loans, Two Wheeler Loans, Commercial Vehicle Loans.

Strong front end and back end integration to offer a single window interface to the customer where the customer has a
single Relationship Manager cutting across product lines. Wide array of products and customized service helps small,
medium and large corporates grow their business. Range of offerings includes Term Loans, Working Capital Loans,
Channel Finance, Bill Discounting, Promoter Funding and Structured Products

Agri & Allied Business Loans provide farmers and rural entrepreneurs with finance for various agriculture and allied
activities including dairy development, food processing, horticulture, poultry, land development and more.
Holding Structure

TATA SONS PRIVATE LTD

96% including Tata Invt Corpn

Tata Capital Limited

100% 80.5%

Tata Capital Tata Capital Pte Ltd Tata Cleantech

Tata Capital Financial Tata Securities
Housing Finance (Foreign Holding Capital Limited
Services Limited Limited
Limited Company)
Financial Health

Asset Under Management Rs. 42477 Crs.

Net Worth Rs. 5920 Crs

Profit After Tax Rs 309 Crs

Income Rs 2773 Crs

Debt to Equity Ratio 7.66 Times

CRAR 17.40

Earning Per Shares 1.91

Net NPA 0.90%

H1 FY-19 as per IGAAP
INSTRUMENT RATING
Long Term Rating CRISIL AAA (Stable),ICRA AAA (Stable) & CARE AAA
Commercial Paper ICRA A1+, CRISIL A1+
Subordinated Debt CRISIL AAA (Stable),ICRA AAA (Stable) & CARE AAA
Market Linked Debenture CRISIL PP-MLD AAA Stable
Breakdown of estimated value of Assets Financed

Percentage
Business Segment Asset Class AUM(In Crs)
Allocation
Secured: Loan Against Property, Two Wheeler,
Consumer Finance 17,633 41.58%
Car Loans, Loan against Shares
Channel Finance, Construction Equipment Loans,
SME Leasing, Invoice Discounting, Working Capital 14,978 35.32%
loans
Term Loans, Structured finance and Debt
Commercial Finance 9,797 23.10%
Syndication
Total 42,408
H1 FY-19
Diversified Liability Portfolio

Bank Debt : Combination of Term loans, Working Capital Total Borrowings – ₹ 39,380 Cr

loans and cash credit facilities Bank debt,

31.17%
NCDs : Debentures issued in Capital markets, usually rated NCDs
36.31%
and listed including Public issuance
SubDebt/Perp : Long tenor instruments for qualifying as
ICDs,
Capital support instruments – Unsecured, Rated, Listed 3.5%
CP : Commercial Papers issued for tenors less than 1 year- CP, 21.09%
Rated Subdebt /
perp, 7.89%
ICD : Intercorporate deposit – usually tenor less than 1
year
H1 FY-19
Disclaimer

This document is for information purposes only and should not be construed to be an investment recommendation basis the material contained herein. The Investment
Products discussed in this document may not be suitable for all the investors. Recipients of this document should consider and independently evaluate the suitability of the
specific investments/securities mentioned herein and, if necessary, seek professional / financial advice. Product names like ‘Enhanced FMP’ are just marketing names and
are not meant to communicate or promise any payoffs or returns from the underlying debentures.

ASK Wealth Advisors Pvt. Ltd. (ASKWA) does not warrant the accuracy, adequacy or completeness of the information contained in this presentation and shall not be held
liable for any errors or omissions or delays in updating this information and materials. In no event will ASKWA or its directors, officers, agents, or employees be liable for
any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with this presentation
or use thereof. ASK Wealth Advisors Pvt. Ltd. (ASKWA) has referral/distribution arrangements with various Product/Service Providers for the products and services offered.

The Market Linked Debentures (MLDs) detailed in this presentation can be subscribed to through a Discretionary Portfolio Management Services Scheme offered by ASK
Investment Managers Pvt. Ltd. (ASKIM), a SEBI registered portfolio manager (herein referred as Portfolio Manager), and interested investors should refer to the detailed
product note and term sheet as issued by ASKIM, as well as the Information Memorandum (IM) as provided by the issuer of the MLDs for complete set of risk factors and
terms of the specific debenture series before investing/subscribing. All the general risk factors applicable to the schemes of the Portfolio Manager are also mentioned in
the SEBI Disclosure Document which are applicable to this series.