Spandana is one of the largest microfinance institutions in India with over 4.2 million clients served across 1,533 branches. It has demonstrated strong and consistent growth over the past decade across key metrics like number of branches and employees, clients, loan disbursements and portfolio. Spandana's profit after tax has grown at an annual rate of over 175% in the last 10 years. It has established itself as an industry leader in scale and operational efficiency.

2. • Industry Overview and Spandana’s positioning
• Product Suite
• Key financial and operating metrics
• Investors, Bankers and Rating
• Key Strengths of Spandana

3. • Industry Overview and Spandana’s positioning
• Product Suite
• Key financial and operating metrics
• Investors, Bankers and Rating
• Key Strengths of Spandana

4. Industry • Retail financial services landscape in India is dotted by following key players –
Overview • Govt/ Public Sector: Banks, District Credit Cooperatives, Regional Rural Banks etc
• Private Sector: Indian Banks, Foreign Banks, Non-Banking Finance Companies, including
Microfinance Institutions (MFIs), Urban Coop Banks etc
• Unorganized players: Moneylenders, Pawn brokers etc.
• Microfinance is the provision of micro-credit and other financial services to low-income households
What is
Microfinance • Microfinance Institutions (MFIs) are the client servicing interface, working predominantly with women and
and MFI ? providing doorstep financial services
• Non-Banking Finance Companies/ Societies/ Trusts/ Coops are the dominant legal form of MFIs
• * Only 5% of habitations in India have a Commercial Bank branch, only 40% of population has savings
Large Unmet
Bank account – large gaps in financial inclusion exist
Demand
• Estimated demand of Microfinance is INR 333,000 crore (USD 74 billion) against which, only 10% has
been reached – including private sector MFIs and govt.’s SHG-Bank linkage programme
• Microfinance business model has now been well proven with over 2 decades of successful track record
Growth path • MFIs have shown an aggregated growth of over 100% year-on-year for the last 5 years
• Being a disaggregated industry, large players with sizeable operations and established track record of
scaling-up the loan portfolio, will continue to grow at a fast pace
* Size of Financial Exclusion: Dr. D Subbarao, Governor, Reserve Bank of India, June 2010

5. Large • Spandana is the 6th largest MFI in the world, and 2nd largest in India in terms of number of clients
scale • Started operations in 1998 at Guntur, Andhra Pradesh and steadily grew at a compounded annual growth
rate of about 100% since then – mainly due to high degree of customer connect
• Scale of operations*: 4.5 mn clients, about 12,000 on roll trained staff, over 1,600 branches in 12
States of India with Asset Under Management (AUM) of about Rs.4,000 crore (USD 0.9 Bn)
• Process Efficiencies resulting in operating expense ratio at sub 6% level against the industry avg of ~12%
Leader in
operational • Good portfolio quality with a cumulative repayment rate of 99.9% shows that the business model has
efficiencies shown its robustness over the last 10 years
• Staff productivity at over 400 clients per staff against an industry average of 252**
• Strong management team lead by a dynamic leader, founder and Promoter Mrs. Padmaja Reddy
Proven track
record • Disbursed over Rs.13.7 thousand crore (USD 3 Bn) cumulatively since inception
• Most profitable MFI with highest Return on Assets (7%+ against an industry average of 3.5%)
• Optimum Capitalization also ensures one of highest Returns on Equity, presently at 50%+ levels
Rating/ • ***CRISIL MFI grading: mfR1 (highest rating grade; first MFI to achieve this distinction)
Grading • CRISIL Rating of debt and bank facilities: A-/Stable/P1’ (best in the industry)
Sustained • New products under pilots and testing are under scale-up
growth model • States where operations started in last 2 ys are ready for scale-up, many new potential states available
• Over 42 Banking relationships across Public / Private/ Foreign Banks
* as on June 30, 2010 ** M-CRIL Analytics, 2009 ***CRISIL: India's leading Ratings, Research, Risk and Policy Advisory company (www.crisil.com)

6. • Industry Overview and Spandana’s positioning
• Product Suite
• Key financial and operating metrics
• Investors, Bankers and Rating
• Key Strengths of Spandana

7. Emergency Agri Family Individual Farm Equipment
General Loan loan Group Loan Loan Loan Loan
Product Suite (Abhilasha) (Samruddhi) (Pragathi) (Dharani) (Sphoorty) (Karshak)
Nature of
Group Group Group Group Individual Individual
Loan
For income For emergency For income For small For purchase of
Purpose of For agriculture and
generation cash flow generating business farm equipments
Loan allied activities
activities needs activities activities such as tractors
Wage labourers Low-income
Small and Farmers and
(both skilled clients with
Small and micro young
Typical and unskilled) Existing slightly better
marginal farmers entrepreneurs entrepreneurs with
Customer formed in a customers well being than
and tenant farmers with co-obligant hypothecation of
group of 10 Abhilasha
guarantee vehicle
women customers
Rs 2,000 to Rs 2,000 to Rs 15,000 to Rs Rs 5,000 to Rs Rs 21,000 to Rs 50,000 to Rs
Loan Size Rs 20,000 Rs 10,000 25,000 30,000 Rs 200,000 350,000
12 to 24
Loan Tenor 50 weeks 50 weeks 12 to 24 months 11 months 3 years
months
Interest monthly;
Repayment weekly equated weekly equated monthly equated
principal semi- Monthly Monthly
Terms installments installments installments
annually
Loans are serviced at the customer locations (slums/ villages) with complete transparency – disclosure of all terms
of loan, no hidden charges in the name of value added services

8. • Industry Overview and Spandana’s positioning
• Product Suite
• Key financial and operating metrics
• Investors, Bankers and Rating
• Key Strengths of Spandana

9. Particulars Mar-07 Mar-08 Mar-09 Mar-10
Branches
No. of Branches 295 435 944 1,533
% Growth 47% 117% 62% 88%
p.a.
No. of Employees 1,911 3,024 6,373 10,428
% Growth 58% 111% 64%
No. of Clients (mn) 0.97 1.24 2.5 4.2
% Growth 28% 105% 64%
No. of Borrowers (mn) 0.92 1.19 2.4 3.7
% Growth 30% 104% 52% Gross loan Portfolio
Cum. loan disbursed (Rs mn) 17,833 29,756 59,959 119,758 (Rs. mn)
% Growth 67% 102% 100% 120%
p.a.
Gross Loan Portfolio (Rs mn) 3,916 7,313 18,683 35,567
% Growth 87% 151% 90%
Total Income (Rs mn) 608 1,339 3,556 7,241
% Growth 120% 166% 104%
Profit after Tax (Rs mn) 26 271 903 2,035
% Growth 942% 233% 125% Profit after Tax
(Rs. mn)
175%
p.a.
• Sustained growth in all operating and financial metrices
• Spandana is the first MFI to cross PAT of Rs.200 cr (USD 45 mn)

10. 1998 2004 2005 2006 2007 2008 2009 2010
Guntur, Growth across Orissa, Maharashtra, Rajasthan,
Andhra Pradesh Karnataka Tamil Nadu Jharkhand Gujarat
Andhra Pradesh Chhattisgarh Madhya Pradesh
• Registered as • Transformation • Annual • Pilot launch of • First round of PE • Second round of • Reached 3mn • Reached 3.7
a society to a non-deposit disbursement Agri Family infusion by JM PE infusion by borrowers in mn borrowers
under taking NBFC crossed Rs 1Bn Loan Financial and Lok Valiant Capital August in March
Societies Capital Partners
• Reached 0.1 • Pioneered portfolio • Became
Registration
MM borrowers sale in the industry • Pilot launch of Farm • Reached 1mn largest
Act, 1860
Equipment Loan borrowers player
• Received • CRISIL rating
across all
CRISIL rating of upgraded to mf2 • Annual
distt. of AP
mf3 disbursement
crossed INR
10Bn
New Product Pilot and Testing
Registered Planned new state
Post entries
as a Society Conversion to Post External
NBFC Equity Funding
2 Yr CAGR in 3 Yr CAGR in
Loan Book: Loan Book:
28% 109%
13 34 110 916 1,189 2,432 3,703
4
386 722
Number of Borrowers ('000s)

11. Karnataka – Entry in FY05 Tamil Nadu – Entry in FY06
• In every new state that Gross Loan Portfolio (Rs MM) Gross Loan Portfolio (Rs MM)
Spandana enters, within 4 Yr CAGR (07-10) : 74% 5,130 4 Yr CAGR (07-10) : 166%
a few years, contiguous 3,000
growth strategy helps in
rapid scale-up
1,970
1,280
• Despite the growth, the 560 550
Company has been able 60 180
to maintain its asset
quality Sep-07 Mar-08 Sep-08 Mar-10 Sep-07 Mar-08 Sep-08 Mar-10
Maharashtra – Entry in FY07 Orissa – Entry in FY07
• The Company has Gross Loan Portfolio (Rs MM) Gross Loan Portfolio (Rs MM)
successfully increased 4 Yr CAGR (07-10) : 144% 2,842 4 Yr CAGR (07-10) : 231%
2,390
its geographical
presence from only 3
states in March 2007 to
12 states in 2010 710 760
80 190 230
20
Sep-07 Mar-08 Sep-08 Mar-10 Sep-07 Mar-08 Sep-08 Mar-10

12. Rajasthan Madhya Pradesh Jharkhand
• 9 branches • 100 branches • 6 branches
• 233 villages • 2,976 villages • 107 villages
• 20,559 clients • 269,226 clients • 7,240 clients
Gujarat Chhattisgarh
• 7 branches • 36 branches
• 37 villages • 1,652 villages
• 2,375 clients • 84,350 clients
Maharashtra Orissa
• 125 branches • 114 branches
• 6,024 villages • 8,209 villages
• 382,537 clients • 353,777 clients
Goa Andhra Pradesh
• 3 branches • 787 branches
• 65 villages • 37,772 villages
• 3,802 clients • 2,159,469 clients
Karnataka Tamil Nadu
New states (post 2008)
• 222 branches • 121 branches
Old states (pre-2007)
• 9,630 villages • 3,599 villages
• 571,479 clients State of origin (pre-2006) • 337,291 clients

13. All figures in INR million
• Annualized portfolio Return (APR) at
Profit & Loss Account FY 2007 FY 2008 FY 2009 FY 2010
26.5%. [against industry avg. of 28%]
Income
Income from Operations 469 1,133 3,424 7,004
• Operating expense ratio at 5.1%
Other Income 26 141 143 237
[against industry average of 12%]
Total Income 495 1,274 3,567 7,241
Expenditure
Financial expenses 148 417 1,182 2,210 • Provisions and write-offs include a 1%
Personnel expenses 143 233 587 1,144 standard asset charge – higher than
the RBI prescribed norms
Operating and other expenses 67 81 165 362
Depreciation 6 9 26 54
Provisions and write offs 89 75 187 360 • Return on Assets at 7%+ [against
Total Expenditure 453 815 2,147 4,130 industry average of 3.5%]
Profit before tax 43 459 1,420 3,111
Tax 16 189 517 1,075 • Return on Equity at 52% [highest in
Profit after tax 27 270 903 2,036 the industry]
Balance in P & L brought fwd - - 216 939
Amount available for appropriation 27 270 1,119 2,975
• Audited by one of the top-4 Audit firms
Transfer to statutory reserve 6 54 181 407
Balance carried to balance sheet 21 216 939 2,568
Earnings per share • 1USD = 46 INR (approx)
Basic and diluted - Rs.10/ share 3 29 80 152

14. All figures in INR million
Balance Sheet FY 2007 FY 2008 FY 2009 FY 2010
Sources of funds
Share Capital 86 434 134 135
Reserves and surplus 65 450 2,647 4,716
Shareholders' funds 151 884 2,781 4,851
Subordinated loan (unsecured loan) 195 200 185 -
Secured loans 2,751 4,726 14,761 21,944
Total 3,099 5,813 17,727 26,795
Application of Funds
Fixed assets 24 38 86 115
Investments 6 14 2,951 1
Deferred tax asset, net - - 37 95
Cash and bank balances 448 1,013 2,724 7,766
Loan portfolio (excluding assigned portfolio) 2,698 4,883 12,471 21,301
Other current assets 29 77 130 190
Current assets, loans and advances 3,175 5,973 15,325 29,257
Current liabilities 93 45 367 1,962
Provisions 14 167 304 712
Current liabilities and provisions 107 212 671 2,674
Net current assets 3,068 5,760 14,654 26,583
Total 3,099 5,813 17,727 26,795

15. • Industry Overview and Spandana’s positioning
• Product Suite
• Key financial and operating metrics
• Investors, Bankers and Rating
• Key Strengths of Spandana

16. Investors Bankers: Spandana focuses on
diversified fund sources so that
the cost of borrowing is reduced.
Spandana is supported by 48
Bankers and financial
institutions.
Some of the relationships are
over five year old –FWWB,
SIDBI, ICICI Bank, HDFC Bank
and ING Vyasya Bank
Public sector Banks have been
showing increasing interest is
taking exposure with us.
The major funding instruments are Term Loans, Portfolio
EPS: Rs.152 Sales (bilateral assignments and Securitisation), Capital
(Face Value Rs.10)
Markets (NCDs) and Money Market (CPs) products.
At different stages, institutional investors have joined
Highest rating & grading in the industry (by CRISIL) –
Spandana and contributed to its growth.
• Rating of debt & bank facilities ‘A-/Stable/P1’
As on March 31, 2010, Spandana has a paid-up Share
Capital of Rs.13.5 crore (USD 3 mn) • Grading of institutional ability: mfR1

17. • Ms. G Padmaja Reddy Founder, promoter and Managing Director of Spandana - She has been instrumental in building
Spandana into one of the leading MFIs famed for its scale, efficiency, productivity and profitability
• Dr. Rajiv Behari Lall CEO & MD of IDFC. He earlier worked as Partner at Warburg Pincus, as ED with Morgan Stanley, as a
Policy Advisor and Economist at the World Bank, ADB, and in academia.
• Mr. V.P. Shetty Executive Chairman of JM Financial Limited- Asset Reconstruction Company – earlier worked as GM-
Vijaya Bank, Chairman and MD-UCO Bank, Chairman & MD-Canara Bank, Chairman & MD with IDBI.
• Mr. Vikram S Rathore ED-SIDBI – over 30 years of experience in Commercial & Development Banking
• Ms. Supritha Shetty JGM-ICICI Bank - heads the Rural Risk, Policy and Compliance of ICICI Bank
• Dr. Venkateswara Reddy Cardiologist with a long standing experience in teaching Medicine
• Mr. Harinder Sawhney Executive Director of JM Financial's Private Equity Fund
• Dr. Bala Deepthi Practicing Doctor of Medicine – represents youth on the board of Spandana
• Ms. M. Asha Latha, Head of HR & Admin at Spandana - has earlier worked in Health Administration
• Mr. Vishal Mehta From Lok Capital – rich experience in fund raising, investments and portfolio strategy

18. • Industry Overview and Spandana’s positioning
• Product Suite
• Key financial and operating metrics
• Investors, Bankers and Rating
• Key Strengths of Spandana

19. Strong Management Team
Years of diversified experience
Significant Business Highly Efficient Employee
Growth Potential Workforce
Geographical and product Highest productivity per
expansion coupled with new employee; lowest operating cost
initiatives in the industry
Established Capability to
Exceptional Financial
Scale
Performance
From 3 to 12 states and portfolio
4-year PAT CAGR of 56%
growth of 369%, in two years
Streamlined and Efficient Diversified
Processes Product Offerings
High quality asset portfolio Continuous development of
(almost Zero Net NPAs) innovative products