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LKP Corporate Presentation

November 2010

The Organization

Overview
Consolidated Revenues (Rs. Mn.) LKP Finance (NBFC) is registered with RBI and listed on BSE. Established in 1948. The company went public in 1986. Key businesses include Equity broking and Distribution, Fixed Income, Merchant Banking and Treasury. Large client base of ~67,500 registered customers in broking . Total broking turnover of Rs. 445 billion in FY 2009 and Rs. 576 billion in FY 2010. Fixed Income volumes in secondary market of Rs.796 billion in FY2009 and Rs.1754 billion in FY2010 Network of 450 outlets across 147 cities in India with 420 Sub brokers and 40 branches. Current staff strength of more than 400 people and growing
947 FY08 FY09 FY10 H1 FY11 854 695 586 1,400

Consolidated EBITDA (Rs. Mn.)

346 147

347

FY08 3

FY09

FY10

H1 FY11

A strong balance sheet


INR Mn. Net Worth Loan funds Net Deferred Tax Liability Total Sources of Funds FY08* 605 75 4 684 FY09* 1255 589 (26) 1818 FY10* 1428 347 (59) 1717

Fixed Assets Investments Net Current Assets Cash & Bank Balances Total Application of Funds

198 77 130 279 684

173 526 244 876 1818

165 526 446 579 1717

* Consolidated Balance Sheet of LKP Finance 4

Profitable
INR Mn. Revenues Total Expenditure Operating Profit Depreciation Interest Cost Extra ordinary items Profit Before Tax Tax Profit After Tax FY08* 694 547 147 34 127 573 559 90 470 FY09* 1400 454 946 32 52 863 76 787 FY10* 854 508 346 25 84 238 3 234 H1 FY11* 586 240 347 11 24 312 63 250

* Consolidated Profit & Loss of LKP Finance 5

Group structure
Shareholding Pattern*

Promoter Group 51.58%

Public 48.42%

BOD

Mahendra Doshi - Chairman Sayanta Basu Pratik Doshi Milan Bhise Vineet Suchanti Hariharan Padmanabhan

LKP Finance Limited (NBFC)

97.7%

LKP Securities Limited

Institutional Equities Broking & Distribution Fixed Income Investment Banking

* As on Sep 2010

Board of Directors

Experienced Board of Directors with diverse areas of expertise

Mahendra Doshi

Sayanta Basu

Pratik Doshi

Milan Bhise

Vineet Suchanti

Hariharan Padmanabhan

Executive Chairman

Director

Director

Independent Director

Independent Director

Independent Director

32 years of experience in the field of Finance, Capital Markets and Business Administration.

19 years of Financial market experience Areas of expertise: M&A, Investment management,Capital markets

7 years business experience in the field of Foreign Exchange, Stock Market and Commodity Market

18 years of experience in the field of Corporate Law and Legal Matters

14 years of experience in the field of Finance, Capital Markets and Business Administration

Entrepreneur ,25 years of experience in the field of Information Technology

Current management team

Most of the team has been together for the last 18-20 years, with some new key additions

Board Sub Committee Mahendra Doshi, Sayanta Basu , Pratik Doshi

Retail & Distribution

Anand Agarwal & Deepak Singh

CFO & Business Strategy

Anish Unadkat

Institutional Equities

Pratik Doshi

COO

Rajesh Dixit

Research

S.Ranganathan

Corporate Affairs

S.S.Gulati

Fixed Income

Sanjay Chitalia

IT

Sriram J

Compliance

Neha Malviya

Risk Management

Anup Shah

Business Snapshot

The opportunity
Total brokerage market: 12,000 crs per annum growing at 20% per annum with the natural tailwinds of GDP and greater domestic and foreign participation. 800 brokers and 62,000 sub-brokers. Capital key to success with regulators making life difficult for weaker players. Retail pool 3 times bigger than the institutional pool Investment banking pool about INR 2000 crs, more than 100 players Consolidation of the industry a matter of time Asset management a volume game and not attractive for brokers/investment banks Risks: Pro-longed de-rating of India

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Equities: The business today


Retail and Institutional Daily Turnover (Rs. Mn.) LKP Finance (NBFC) is registered with RBI and listed on BSE. LKP Securities is registered Stock Broker with SEBI. Key businesses include Equity Broking and
341 334 231 1,485 2,571 1,973

Distribution, Fixed Income, Merchant Banking and some Prop activity. Large client base of 67,500 registered customers in retail. Total retail and institutional broking turnover of Rs. 445 billion in FY 2009 and Rs. 576 billion in FY 2010. Network of 450 outlets across 147 cities in India.

FY09 Retail

FY10 Institutional

H1 FY11

Retail & Institutional Gross Daily Brokerage (Rs. In 000)

1543 1059

1,368

FY09

FY10

H1 FY11

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Retail Distribution
Pan India footprint with 450 branches/outlets in 147 cities Strong network to facilitate reach Large customer base of 67,500 clients Strong network of 420 Sub-brokers
No of Retail Clients

67,500 39,745 48,217

2008

2009

2010

Branches
450 385 285

2008

2009

2010

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Retail Distribution other products


Mutual Fund Distribution AUM worth ~Rs.1155 cr. with Rs.155cr in Equity and Rs.900cr in Debt Supported by a team of 23 personnel . Income generated by way of brokerage i.e., upfront and trail Mutual Fund Advisory Servicing Direct clients , Institutions and Sub Brokers Portfolio Management Services In-house team of fundamental and technical research analysts Supported by a host of financial databases and information packages like Bloomberg, CRISINFAC, Capitaline etc. Services available to both individuals and corporates.

Insurance Products

Forayed in the sales of General and Life Insurance products in November 2007

Tie-up with Bajaj-Allianz for distribution of their insurance products.

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Institutional Equities

Established in 1948, taken over by Mr. Mahendra Doshi in 1982

Long track record

Strong risk management culture, managed 2008 downside with minimal losses. Minimal proprietary trading activities

Presence in 400+ locations, 75,000 retail and high networth clients giving nationwide access

Deep relationships in India


Ability to access block deals stemming out of our domestic institutional contacts More than 50 senior level employees and 400 franchises

Current Networth - More than Rs. 200 cr.

Strong balance sheet

Negligible Debt Cash and cash equivalents More than Rs. 50 cr

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Research focus areas


38 companies covered:
Large Cap: 23, Mid Cap: 39, Small Cap: 28

Strong performance of model portfolio

Fundamental Research

Pharma, Agriculture, Automobiles, Telecom, Infra, Capital Goods, Engineering, FMCG, Retail, Industrials, Fertilizers, Cement, Sugar, Oil & Gas, Shipping Theme Based Research

69 companies:
Large Cap: 11, Mid Cap: 24, Small Cap: 40

LKP Contacts

Mr. Mahendra Doshi, our research team, employees and associates have Chairman, Directors, CEO and CFOs level contacts in a host of companies

Technical analysis based on price and volume


New products:

Quantitative Research
Attribution analysis for Mutual fund performance Long/Short portfolio based on quantitative strategies Global impact analysis on Indian stocks

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PS: Definitions of cap: Large Cap: > 5000 cr, Mid Cap: > 1000 cr and < 5000 cr, Small Cap: < 1000 cr

Fundamental Research Performance


Q3 FY10
Buy Calls: 10 Hold Calls: 3 Sell Calls: 0 Buys recommended: Bank of Baroda ACC TTK Prestige Indoco Remedies BGR Energy Aries Agro Federal Bank

Q4 FY10
Buy Calls: 15 Hold Calls: 2 Sell Calls: 0 Buys recommended: SAIL Hero Honda Mahindra & Mahindra Titan Inds. TTK Prestige Techno Electric Bajaj Auto

Q1 FY11
Buy Calls: 23 Hold Calls: 5 Sell Calls: 2 Buys recommended: VST Tillers Chambal Fertilizers Nestle India M & M Financial TVS Motor Tata Chemicals Yes Bank

Q2 FY11
Buy Calls: 5 Hold Calls: 3 Sell Calls: 1 Buys recommended: Mahindra & Mahindra Yes Bank M & M Financial Indoco Remedies

Return on Model Portfolio: 25.2%


(Benchmark: 5.1%)
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Return on Model Portfolio: 8.9%


(Benchmark: 8.2%)

Return on Model Portfolio: 9.4%


(Benchmark: 4.3%)

Return on Model Portfolio: 8.6%


(Benchmark: 2.3%)

Fixed Income: Business today


Member of NSE and BSE WDM segment Empanelled with major banks, insurance companies, mutual funds, Corporates and domestic institutions Network Hotline with treasuries of all major banks, mutual funds and primary dealers Ranked in the top 3 WDM brokers in India. Supported by a team of 40 personnel. Fixed Income volumes in secondary market of Rs.796 billion in FY2009 and Rs.1754 billion in FY2010
Products and Services Government Securities and Treasury Bills Nature Of Clients Nationalized, Foreign, Private, Co-operative Banks (87) Insurance Companies (35)

Certificate of Deposits & Commercial Paper Corporate Bonds /PSU Bonds /Bank Bonds /Fertiliser Bonds/ Oil Bonds PTC /Securitized Papers

Mutual Funds (33)

Primary Dealers (11)

PF (205)

Corporates (90)

Institutions (9) & FII (6)

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Fixed Income: Deals and Placements


Ranked No.2 Arranger for CP & Short Term Debts and Prime League Table Placed Fertiliser bonds worth Rs.55 bn. for various Fertiliser companies in FY09. Primary placement of CPs, NCDs and CDs of ~Rs.480 bn & Rs.980 bn in FY09 and FY10 respectively. Achieved turnover of ~Rs. 800 bn in secondary debt market in FY09 and Rs 1748 bn in FY 10 Acted as an Arranger for private placement of long term bond issues aggregating to Rs. 123 bn in FY09 & of Rs 236 bn during FY10 (Rs. Bn) Long Term Short Term FY08 2 315 FY09 66 280 FY10 24 394 H1FY11 14 138 Primary Market Nature of Funds
FY08 FY09 FY10 H1FY11 317 418 346 152

Primary Market Debt Raised (Rs. Bn)

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Fixed Income: Relationships with Institutions & Corporates

We have strong relationships with over 475 Institutions & Corporates.

LKP has successfully executed deals for the above Clients


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Merchant Banking
Overview Presence in the Primary market involved in marketing activities for IPOs. Network Dedicated network of sub-brokers catering to primary market activities SEBI registered category 1 Merchant Banker Capability to carry out all regulated investment banking activities FY09 - Ranking by Amount Procurement : 19th with 1.05% Market Share & Ranking by Application Procurement: 17th
Nature Of Activities Issue Management (IPO / Rights) Mandates Handled Managed 48 public and rights issue Getting Van Leer to acquire Paper Products Ltd Merger of Arch Pharmalabs with Merven Drugs Valuation of SourceOne Communications having operations in USA, Canada Debt swap for Intercontinental Hotel

Takeovers / M&A

Sale of listed companies

Managed Delisting

Business Valuation

Creating ESOPs

Managed 20 takeovers under SEBI code

Advice on all SEBI related matters

Delisting of Bharti Telecom and Siporex India

Raising Debt for Hemavathy Power

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Going Forward...

Vision

By 2014 LKP aims to become:


One of the top 5 players in retail brokerage and distribution

One of the top 10 players in the institutional business:


Sales Trading & Investment Banking (focus midcap sector) Fixed Income

growing through a combination of organic and inorganic strategy

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The way forward Effective utilization of balance sheet (Current NW of 225 Crores)
To use capital effectively across operating activities to generate stable ROE of 20% in next 3-5 years Use of the chairman, employee and affiliate network effectively

People
Increase productivity: Recruit young but trained and experienced personnel Culture: Professional and performance driven organization with clear objectives and regular reviews Well defined incentive plans and ESOPs Transparency: Open communication across the organization

Operational Excellence
Use of Technology Strong focus on risk management and liquidity

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Disclaimer

LKP Finance Limited (the Company) has prepared the information contained in this Presentation. While the information contained in the Presentation has been prepared in good faith, each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. Neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction. The Company reserves the right to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. The information contained in this Presentation is subject to updation, revision and further amendment. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.

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