DEMETER

THE YIELD ENHANCER

 TABLE OF CONTENTS

KARVY GROUP 3

CURRENT DEBT MARKET SCENARIO 7

DEMETER OVERVIEW 16

Private & Confidential | 2

KARVY GROUP
Premier Integrated Financial Services Provider
 About Karvy Group

Business Overview
30+
Years in Financial
• Karvy Group is a premier integrated financial services provider, ranked among the Top-5 in Services
the country across its business segments with high reputation and financial strength
• Member of BSE, NSE, MCX, NCDX, MCX-SX and registered with NSDL, CDSL, RBI and SEBI 467
Branches
Service Offerings
• Equity & Commodity Broking • Realty Services
1167
• Depository Participant • Registry Services for Corporate Franchisees
• Distribution of Financial Products • Merchant Banking
• Forex & Currencies • Insurance Repository
• Wealth Management • Investment Advisory
>80%
• Portfolio Management • NBFC ET 500
Companies
Served
Marquee Base Of Investors
2100+
Unique
Touch Points

Private & Confidential | 4

 History of Over 3 Decades in Indian Market

1985: 1995: 2001: 2005: 2009: 2014-16:

• Company • Fund investment by • Member of NSE- • Private Equity • Launched Data • Initiated
incorporated Jardine Fleming Derivative segment Investment by PCG Management , PMS, Analytics &
• Launched • Started merchant • Started Equity Research of USD 19Mn in NBFC & Wealth Market
Registry services banking Karvy Stock Broking Management research
• Member of NSE- • Forayed into services
Cash segment Insurance broking

1985 2000 2010 >2016

1990: 1997-99: 2003-04: 2007-08: 2013:
• Entered into financial • Registered as • Induction of • Investment by ICICI • Set-up of Insurance
product distribution Depository Computershare Venture and Baring repository
• Retail broking with Participant with Australia as a JV Asia for USD
Hyderabad Stock NSDL & CDSL Partner 110Mn
Exchange • Forayed into
• Entered into Realty
Institutional, Debt
Services, Online
Market &
Broking and Forex
Commodity broking
Derivatives

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 Unrivalled Reach and Healthy Assets Under Management

Branches & Franchisees Assets Under Management (AUM)*

Punjab Madhya Pradesh

12 l 38 22l 36
Rajasthan & Delhi Uttar Pradesh
31 l 63 46 l 174
13%
Gujarat West Bengal
37 l 59 25 l 60

Maharashtra
56 l 177
27% 1,500 Cr
Telangana Orissa 60%
20 l 27 14 l 43

Karnataka & Goa Andhra Pradesh

48 l 74 21 l 67

Tamil Nadu &

Kerala
20 l 56 Pondicherry
48 l 70 NCD Placement Debt PMS Equity PMS
Branches Other States Note 1) * The Karvy Group has 3 PMS licenses. The given AUM represents the
BA 71 l 183 aggregate of the 3 businesses.

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CURRENT DEBT MARKET SCENARIO
Growing Demand and Attractive Returns
 Market Ripe for a Healthy Bond Market

Robust Macro Fundamentals with Growing Uptrend >7% GDP Growth Rate 1
1

2 Stable Inflation Regime with Downward Bias 4% Inflation Rate 2

3 Improving Fiscal Position with Strong Forex Reserves 16.50% of GDP 3

Stable Currency Markets INR / $ - 64-67 Range 4

4

5
Improving Regulatory Framework Insolvency & Bankruptcy Code, 2016

Note (1) World Bank Indicators Database, 2017 (2) RBI Inflation Targeting – Urjit Patel Committee, 2014 (3) IMF, RBI Weekly Statistical Supplement, Dec 2017 (4) www.moneycontrol.com

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 Significant Global Interest in Indian Bond Market

PTI - “RBI Raises Foreign Investment Limit in Bond Market” BLOOMBERG- “India’s Corporate Bond Market Heats Up”

REDIFF- “FPI Renew Interest in Indian Bonds” ET BUREAU – “Exuberance in Debt Market”

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 Huge Potential in Indian Debt Market

Public Bond Market Capitalisation as % of GDP Private Bond Market Capitalisation as % of GDP

80% 130%

89%
47%
39%
30% 32% 32%

7% 15% 16% 16%

4%

chile India China UK Singapore USA Italy India Singapore China UK Spain USA

Source: SEBI, BIS, Cbonds Source: SEBI, BIS, Cbonds

Note (1) Calculated using BIS Statistics for Debt Securities Issues & Amounts Outstanding, SEBI Outstanding Corporate Bonds Data & http://cbonds.com/countries/

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 Growing Debt Market with Attractive Returns

Cumulative Debt Outstanding Repo Rate & Sovereign Yield Bond Return & Sovereign Yield
(Rs. Lakhs Crores)
15.0%
101.6
92.0 8.2%
81.4 8.0% 11.5%
71.3 10.6%
7.1%
7.5% 7.5%

8.2% 8.0%
6.0% 6.7%

FY 13 FY 14 FY 15 FY 16 FY 13 FY 14 FY 15 FY 16 FY 17 FY 13 FY 14 FY 15 FY 16 FY 17

Repo Rate* Sovereign Yield^ AAA Rated Bonds** Sovereign Yield^

Source: Department of Economic Affairs Source: Monetary Policy of India, Bloomberg Source: Bloomberg, NSE India

Note: (1) * Repo Rate as on Dec 08, 2017 (2) ^ 10 Year Government Bond Yield as on Dec 01, 2017 (3) ** Bond Return Calculated based on NIFTY Corporate Bond Index as on Oct 03, 2017

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 However, Banks Are Constrained To Fund…

Equity Gap High NPAs

Public Sector Banks while being recapitalized by Banks are currently facing Rs. 8,29,3382
Rs. 2.11 lakh crore1 would be able to grow their Crores of NPAs and will only see higher
credit by only 10%-15% post adjusting for provisioning going forward
provisions and write-offs
Excess supply in sectors like Steel, Real estate
Poor Profitability has led to limited to fund etc can further aggravate the situation
generation from internal accruals

Difficult to raise capital from outside sources RBI has become more vigilant & forcing banks
due to weak operating performance to make aggressive provision in riskier loans

Infrastructure sector alone would need more than Rs 50 lakh crores3 by 2022 to fund the capital expenditure

Source: (1) http://www.thehindu.com/todays-paper/rs-211-lakh-crore-for-psu-banks-to-boost-lending/article19915075.ece (2) NPAs in Banks (June 2017) , CARE (Aug 2017)
(3) http://www.thehindu.com/business/india-has-to-spend-50-lakh-cr-on-infra/article19926836.ece

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 …Leading to Growing Interest in Corporate Bonds

Private Placement of Corporate Bonds In last Eight Years, Private Placement

500
2,611
3,377 9,500.0

8,500.0
270% of Corporate Bonds witnessed 270%
growth in term of amount raised
2,489
500 6,407
7,500.0

6,500.0
Growth
1,404 5,500.0

500 1,041
3,615 4,041 4,500.0

3,500.0

500 2,188
1,733 2,500.0

500 1,500.0

500
FY 09 FY 11 FY 13 FY 15 FY 17
500.0

-500.0 240% Number of Private Placement issues

increase by 240% during 2009 and
Growth 2017
Amount Raised (Rs. Billion)
No of Issues (Nos)

Amount raised via Private Placement of Corporates Bonds rose 40% to Rs. 6,400 Billion
in Financial Year 2017 against Rs. 4,041 Billion in Financial Years 2016

Source: http://www.sebi.gov.in/statistics/corporate-bonds/privateplacementdata.html

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 Significant Interest Among Borrowers Due to..

Gaps we see in the market

Corporates
• Market prefers very safe AA and above
• Customised solutions needed to address industry rated assets which has resulted in a thin
or business requirements compared to market for lower rated bonds
standardized solutions offered by banks
• This has resulted in the exclusion of small
• Funding needed for specific purposes like and medium enterprises, which are
Acquisitions, PE Exits which are generally not generally rated between AA and BBB,
given by Banks from the debt market
• Secondary market activity is also marginal
• Faster deal closure in relation to Banks which take
with most of the volumes dominated by a
inordinate time due to credit logjam
few large issuances by PSUs and banks

Source: Karvy Capital Structured Finance Desk

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 Our Solution: DEMETER

INR 25 Lakhs Minimum Investment

Portfolio Mix >3 Years Ideal Investment Horizon

• Structured Mezzanine Debt

Targeted Yield 8 – 11% more than the SBI FD Rate*
• Secured/ Unsecured NCDs

• Preference Capital
Benchmark S&P BSE India Corporate Bond Index

Strategy Risk Profile Low Moderate High

Moderate to High

Note: (1) * Demeter is a moderate risk instrument compared to bank FD and thus returns may be higher compared to the same

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DEMETER OVERVIEW
The Yield Enhancing PMS
 Fund Highlights: Demeter

Demeter PMS strives to seek interest income as well as capital appreciation by investing in debt securities and
trading in debt securities in the secondary market.

KEY FEATURES^ IDEAL FOR TARGET YIELD ^

• Mix of structured • Investors looking for • 8 – 11% more than the

mezzanine debt and allocation in FI portfolio rate of interest of the
preference capital • Investors with moderate 5-year FD offered by the
• Scheduled Cash Flows* to high risk appetite SBI
• Higher Yield compared expecting moderate
to Bank Fixed Deposit return over long term
• Investors with current
exposure in high-yielding
securities looking for
diversification

Note: (1) * Refers to cash corporate benefits paid out by Company whose debt instrument the portfolio is subscribed to (2) ^Demeter is a moderate risk instrument compared to bank FD and thus returns may be higher
compared to the same. To view weighted average returns of the portfolio, please refer to the Disclosure Document. Performance is net of transaction costs and before management fees. Past performance may or may
not be sustained in the future. Returns of individual clients may vary depending on time of entry.

Private & Confidential | 17

 Leading Through Strong Management
Kedar Deshpande
Director
• Kedar has been serving as
Director since 2015. Prior to
this, he was country head
for Karvy Stock Broking .
• He is the founder of Repeat
Purchase India Pvt Ltd &
Financial Catalysts Pvt Ltd
• He has set up Edelweiss
Broking retail business. Prior
to that he worked as retail
business head of
ICICIDirect.com
• MBA from Pune University
Private & Confidential | 18
Phani Sekhar Ponangi
Fund Manager
• 13+ years of experience in
Indian Markets on sell and
buy side debt and equity
• Previously, worked as Fund
Manager for Angel Broking
and managed Equity
Midcap and Large-cap
Portfolio for 8 years with
stellar returns for investors
• Holds the CFA and CAIA
charters
• MBA in Finance and BE in
Mechanical Engineering
Santosh Natrajan Punita Sood Sohal
Deputy General Manager Deputy General Manager
• 10+ years of experience in • 20+ years of experience in
credit analysis of SMEs & Financial Services
Corporate with a strong • Expertise in Structuring and
background in credit
Investment Structuring
underwriting and credit
Activities and has advised
ratings
on various complex
• Evaluated innumerable structuring transactions in
SMEs in his previous roles individual capacity
in a Leading Private Bank • Qualified Engineer & MBA
and Credit Rating Agency
• Chartered Accountant and
M.Com from Mumbai
University
 Our Investment Philosophy

Higher Return Cash Flow based Avoid Keyman High Corporate

on Equity Repayments Risk Governance

Growing profit & Ensures regular Preference for Top priority while
sustainable ROE servicing businesses with investing
sound
professional
management

Sector-agnostic investment philosophy with a focus on growing companies with profitable track record

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 Structure of Instruments

Non-Convertible Debentures: Offers High to Mid yield (pre - tax)

Preference Capital: Ideal for Investors in the Highest Marginal Bracket because of Post Tax Yield nature

Commercial Paper: Debt instruments with maturity of less than one year

DEMETER
Pass Through Certificates: Securitized Debt

Corporate Bonds: Debt instruments with maturity of at least one year

Tax Free Bonds: Yield is exempted from tax

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 Due Diligence By Structured Finance Desk

Company Analysis of Risk Analysis & Review & Financial Legal

Analysis Financials & Mitigation Due Diligence Documentation
Business Plan

Final
Offer
Creation

• Credible • Cash Flows • Escrow of • Review by • Done by

Management • ROE > Cost of Cash Flows Core Independent
• Professional Borrowing • Share Committee External
Board Pledge/ Fixed • Financial Due Legal Firm
Asset Cover Diligence by
an external
CA Firm

Source: Independent Agencies

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 Demeter Ranks Higher on All Parameters…

Demeter# Debt Mutual Fund Bank Fixed Deposit

Liquidity Available ** Available * Available*

Returns Moderate Low to Moderate Low

Diversification Multiple Industries Diversified No Diversification

Limited (Gov. Securities

Instruments Debt, Pref Cap
& Corporate Bonds)
NA

Available^ NA NA
Periodic Payouts

Note: (1) * Subject to exit load (2) Subject to exit load and regular servicing of obligations by the Investee Company (3) ^ Refers to cash corporate benefits paid out by Company whose debt instrument the portfolio is subscribed to
(4) # Demeter is a moderate risk instrument as compared to Bank FD and therefore, the returns may be higher as compared to Bank FD. (5) These are the views of Karvy Capital Limited

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 …Based on Options v/s Opportunities

High

DEMETER

Moderate
Risk

Debt
Mutual
Fund

Low Bank
Fixed
Deposit

5% - 7% 8% - 11% 15%-17%
Pre-tax Returns*
Note: (1) * This is the XIRR. To view weighted average returns, please refer to the Disclosure Document. Performance is net of transaction costs and before management fees. Past performance may or may not be sustained in
future. Returns of individual clients may vary depending on time of entry. (2) Demeter is a moderate risk instrument as compared to Bank FD and thus returns compared to the same may be higher.

Private & Confidential | 23

 Transparent Fee Structure
Charges Frequency Base

Fixed
Daily Average NAV of the
Management 1.50 % p.a. Quarterly/Monthly~
Portfolio^
Fees

Placement
Upto 2.50 % On each corpus infusion Corpus
Fees

3% in 1st Year,
2% in 2nd Year,
Exit Load 1% in 3rd Year On Exit NAV of the Portfolio^
& NIL thereafter

Note: (1) All charges are exclusive of GST. These charges are stated as an example. Actual charges will be levied as per agreement between client and portfolio manager at time of opting for PMS . For other charges levied on
actual, for details please refer the Disclosure Document. (2) ^ Inclusive of all securities and cash/ bank balances. (3)~ as agreed with the client.

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 Current Investment Portfolio

Spandana Spoorthy Campus Student

Financial Ltd. Communities Pvt. Ltd.

Fino Finance Pvt. Ltd.

Bindu Recepies
Pvt. Ltd.

Katalyst Software
Services Pvt. Ltd.
Neogen
Chemicals Ltd.
Satin Credit Care Pudhuaaru Financial
Network Ltd. Services Pvt. Ltd.

Note: Investments are subject to change in decision of the Investment Committee.

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 Case Studies: Neogen Chemicals Limited
Incorporated in 1983, Neogen is a Mumbai-based manufacturer of Specialty Bromine, Lithium, Grignard
compounds and Advance Intermediate which are used in the field of Pharma, Agrochemicals,
Refrigeration, Flavors and specialty solvents. Clients include reputed names such as Sun Pharma, Shasun,
Glenmark, Lupin, Aurobindo, Dr Reddy’s, BASF, Thermax, Voltas etc

770+
Nov 2016 Jan 2017 FY 2018E
Domestic Clients
• INR 11 Cr • Commencement of • INR 200 Cr
Investment through the Plant Revenue
Fully Redeemable
100+ Preference Capital • INR 5 Cr Revenue • 60% YoY Revenue
per month from Growth
International Clients • Utilization: new plant
Expansion of • 16% Profit Margin
capacity by 1x at
Baroda
BBB
Crisil Rating

Source: As per information provided by Neogen Chemicals Limited

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 Case Studies: Campus Students Communities Private Limited
Founded by Saket Jain and based in Bangalore, Campus Student Communities Private Limited is a leading
developer, owner, manager of high-quality student housing facilities. The Company has grown from 28
beds in 2002 to 1,200 beds in 2017 with more than 3,000 students under its portfolio. It has tied-up with
reputed education institutions such as Jain Group, NM College, Christ College and Alliance University
which ensures high occupancy level.

3,000+ Capacity expansion from

Students 1,200 beds to 3,000 beds

INR ~17 Cr Fund

Turnover in FY 2017 Utilization

INR 36 Cr+ Investment of INR 17 Cr

through Redeemable
Turnover in FY 18E Non-Convertible Debentures in
Nov 2017
BB-
Crisil Rating
Source: As per information provided by Campus Student Communities Private Limited

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 Disclaimer

Karvy Capital Limited (Karvy), a wholly owned subsidiary of Karvy Stock Broking Limited, is an Investment NBFC registered with the RBI and also acts as Sponsor and Manager
to Karvy Capital Alternative Investment Fund (Trust)apart from being a SEBI registered portfolio manager bearing registration number INP000004524.The information and
views presented here, pertaining to the portfolio management services[PMS] offered by Karvy Capital Limited [Karvy] are prepared by Karvy and are subject to change without
any notice. Also there are references to data collected from third parties, public sources and sources believed to be reliable but no independent verification has been made
nor is its accuracy or completeness guaranteed. This presentation and information herein is solely for informational purpose and may not be used or considered as an offer
document or invitation or solicitation of any kind to subscribe or to use PMS offered by Karvy and is not intended to create any rights or obligations. This presentation and
information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in
part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of Karvy. Past performance is not necessarily a guide to future
performance. Karvy and its Group companies or any person connected with it accepts no liability whatsoever for the content of this presentation or for the consequences of
any actions taken on the basis of the information provided therein or for any loss or damage of any kind arising out of the use of this presentation. Karvy and its affiliates,
officers, directors, and employees worldwide may from time to time, be engaged in any other transaction involving such securities/commodities and earn brokerage or other
compensation or act as a market maker in the securities/commodities discussed herein or have other potential conflict of interest with respect to any recommendation and
related information and opinions. Karvy operates from within India and is subject to Indian regulations. This presentation is not directed or intended for distribution to, or use
by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use
would be contrary to law, regulation or which would subject Karvy or its affiliates to any registration or licensing requirement within such jurisdiction. Certain category of
investors in certain jurisdictions may or may not be eligible to avail the PMS offered by Karvy as mentioned in this presentation. Persons in whose possession this document
may come are required to inform themselves of and to observe such restriction. Nothing in this presentation constitutes investment, legal, accounting and tax advice or a
representation that is suitable or appropriate to your specific circumstances. The information given in this document on tax is for guidance only, and should not be construed
as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. While we would endeavor to update
the information herein on reasonable basis, Karvy, its associated companies, their directors and employees (“Karvy Group”) are under no obligation to update or keep the
information current. Also, there may be regulatory, compliance or other reasons that may prevent Karvy from doing so. Karvy will not treat recipients as customers by virtue of
their receiving this brochure. The PMS discussed and opinions expressed in this presentation may not be suitable for all recipients, who must make their own investment
decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent
judgment by any recipient. Persons interested in availing the portfolio management services from Karvy are advised to read and understand the Disclosure Document and its
annexures and other documents provided by Karvy to get acquainted with the terms and conditions of the offering and the risks associated therein prior to availing the said
service. Except for the historical information contained herein, statements in this presentation which contain words or phrases such as 'will', 'expected to', etc., and similar
expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and
other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by the forward-looking statements. Prospective
investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Karvy’s proprietary trading and
investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Karvy Group may have issued other reports that are
inconsistent with and reach different conclusion from the information presented in this document.

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 Contact Details

Karvy Capital Limited Punita Sood

702, Hallmark Business Plaza, Email: punita.sood@karvy.com
Sant Dnyaneshwar, Contact No.: +91 22 6149 1678
Bandra (East), Mumbai - 400 051
Tel: +91 22 6149 1500
Fax: +91 22 3305 5033
Email: karvycapitalpms@karvy.com

Registration Nos
SEBI: INP000004524 I AIF: IN/AIF 3/13-14/0045 I NBFC: B-13.00462

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