Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY10 Earnings Presentation
32 slides from Mahindra & Mahindra Financial Services's earnings presentation, January 2010
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result December-2009
Mahindra & Mahindra Financial Services Limited Quarter Result December-2009 0
Slide 2: Overview
Overview MMFSL is a subsidiary of Mahindra and Mahindra Ltd., one of India’s leading tractor and utility vehicle manufacturer The Company is one of India’s leading non-bank finance companies focused on the rural and semi-urban sector MMFSL finances purchase of utility vehicles, tractors, cars, comme
Slide 3: Business Strengths
Business Strengths Knowledge Knowledge of of the the rural rural and and semi-urban semi-urban markets markets Extensive Extensive branch branch network network Relationship Relationship with with M&M M&M Quick Quick approval approval and and simple simple administration administration procedures pr
Slide 4: Business Strategy
Business Strategy Continue to maintain market position in rural and semi urban automobile financing Significant experience of the local characteristics of the rural and semi-urban markets across India Simple documentation and prompt loan approval procedures Nationwide network of branches and locally
Slide 5: Business Strategy: Diversify Product Portfolio
Business Strategy Diversify Product Portfolio Started financing non-M&M vehicles in 2002 Commenced insurance broking business in MIBL in Fiscal 2005 Commenced financing Commercial Vehicles in 2006 Commenced mutual fund distribution business Commenced housing loans business in MRHFL in Oct 2007 Comme
Slide 6: Extensive Distribution Network
Extensive Distribution Network MMFSL has an extensive distribution network with presence in 25 states and 2 union territories in India through 442 branches – Our market categorised into five zones and 16 regions with branches reporting into their respective regional office – Branches provided author
Slide 7: Funding
Funding MMFSL has consistently enjoyed a good credit rating enabling it to borrow funds at competitive rates FITCH has assigned AA(ind) rating and CRISIL has assigned a AA- rating to the Company’s long term debt, which is also linked to credit rating of M&M Total Consortium Size increased from Rs. 7
Slide 8: Source of Borrowing
Source of Borrowing (as on 31st December 2009) Fund Mix on the basis of Instrument. Fund Mix on the basis of Investor profile Bonds/ Commercial Fixed Insurance Co. NCD's ( Paper ( 75 Deposit (329 (673Crs) 2659Crs) Crs ) 1% Crs ) 4% 9% 35% Mutual Fund (1553Crs) 20% Others(562Crs) 7% Banks (4886Crs) 6
Slide 9: Asset Securitisation/Assignment
Asset Securitisation/Assignment MMFSL securitises parts of its loan portfolio to improve its cash flows and reduce borrowings The company did its first securitisation / Assignment transaction in FY02 and has done 41 securitisation / Assignment transactions till date aggregating Rs. 46.45 bn Rs. Mill
Slide 10: Challenges
Challenges • Average cash collection/day - Rs. 144 mn • More than one Bank A/c per location • Small denomination notes/ mutilated notes • Non-acceptance of cash • Huge cash collection charges • High revenue leakage 9
Slide 11: Highlights for Q3 FY10
Highlights for Q3 FY10 Q3 Highlights Total Income up by 13% at Rs. 402 Crs PAT up by 111% at Rs. 93 Crs Value of Assets Financed up by 74% at Rs. 2373 Crs Apr09-Dec09 (Nine Months) Highlights Total Income up by 11% at Rs. 1094 Crs PAT up by 91% at Rs. 202 Crs Estimated Value of Assets Financed for t
Slide 12: Profit & Loss Statement
Profit & Loss Statement (Rs.million) Dec- 09 Dec- 08 March- 09 Income from Operations 10671 9755 13648 Other Income 267 115 198 Total Income 10938 9870 13846 Interest Cost 3777 3827 5099 Administrative Cost 4052 4329 5404 Depreciation 71 62 87 Total Expenditure 7900 8218 10590 PBT 3038 1652 3256 PAT
Slide 13: Balance Sheet: Liabilities
Balance Sheet: Liabilities (Rs.million) Dec- 09 Dec- 08 March- 09 Net Worth 16707 14206 14679 Equity Share Capital 958 955 957 Reserves & Surplus 15749 13251 13722 Employee Stock Option O/S 15 14 13 Secured Loans 47406 45209 44668 Unsecured Loans 13886 8528 7462 Current Liabilities & Provs. 7614 707
Slide 14: Balance Sheet: Assets
Balance Sheet: Assets (Rs.million) Dec- 09 Dec- 08 March- 09 Fixed Assets 409 343 357 Investments 1809 57 1097 Intangible Assets 9 18 18 Sundry Debtors -- 8 8 Other Current Assets 108 109 25 Cash & Bank Balance 2317 1997 2763 Loans & Advances & others 78855 70935 68384 Deferred Tax Asset 2121 1560 1
Slide 15: Disbursements Mix
Disbursements Mix Segments Dec- 09 Dec- 08 March- 09 Auto/ Utility vehicles 36% 41% 40% Tractors 20% 22% 22% Cars 29% 24% 25% Commercial Vehicles 8% 7% 6% Refinance & Others 7% 6% 7% * Tentative Percentages 14
Slide 16: Segment Wise: Break up of AUM
Segment Wise: Break up of AUM Segments Dec- 09 Dec- 08 March- 09 Auto/ Utility vehicles 35% 39% 38% Tractors 23% 24% 25% Cars 28% 24% 24% Commercial Vehicles 9% 8% 7% Refinance & Others 5% 5% 6% * Tentative Percentages 15
Slide 17: Highlights of Mahindra Insurance Brokers Ltd
Highlights of Mahindra Insurance Brokers Ltd (Rs.million) Dec- 09 Dec- 08 March- 09 Total Income 233 172 231 Net Premium 1433 1226 1598 PBT 131 68 101 PAT 86 43 65 No. of Customers for the Period (Nos.) 228,192 221,813 288,453 No. of Employees (Nos.) 353 390 329 16
Slide 18: Highlights of Mahindra Rural Housing Finance Ltd.
Highlights of Mahindra Rural Housing Finance Ltd. Shareholding Pattern: MMFSL- 87.5%, NHB- 12.5% Loans sanctioned till Dec09: Rs.1118 Mn Net Profit for the period Apr-Dec09: Rs.9.0 Mn Sanction from NHB for Refinancing Rs. 250 Mn for 7 years Currently Operating from 6 States 17
Slide 19: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement (Rs.million) Dec- 09 Dec- 08 March- 09 Income from Operations 10887 9878 13817 Other Income 240 111 187 Total Income 11127 9989 14004 Interest Cost 3781 3833 5109 Administrative Cost 4094 4383 5463 Depreciation 72 63 88 Total Expenditure 7947 8279 10660 PBT 3180
Slide 20: Consolidated Balance Sheet: Liabilities
Consolidated Balance Sheet: Liabilities (Rs.million) Dec- 09 Dec- 08 March- 09 Net Worth 16934 14320 14810 Equity Share Capital 958 955 957 Reserves & Surplus 15976 13365 13853 Employee Stock Option O/S 15 14 13 Minority Interest 16 5 15 Secured Loans 47527 45359 44819 Unsecured Loans 13754 8450 738
Slide 21: Consolidated Balance Sheet: Assets
Consolidated Balance Sheet: Assets (Rs.million) Dec- 09 Dec- 08 March- 09 Fixed Assets 418 348 363 Investments 1684 1 972 Intangible Assets 9 19 18 Sundry Debtors 18 29 16 Other Current Assets 93 108 24 Cash & Bank Balance 2336 2009 2792 Loans & Advances & others 79216 71209 68706 Deferred Tax Asset
Slide 22: Robust Growth
Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 1,200,000 1,124,230 90,000 85,628 CAGR 10% CAGR 20% 75,024 80,000 1,000,000 942,812 71,022 70,000 780,894 800,000 60,000 50,000 600,000 40,000 400,000 30,000 20,000 200,000 10,000 0 0 Dec07 Dec08 Dec09 Dec07 Dec08 D
Slide 23: Summary of Results
Summary of Results (Rs.million) Dec- 09 Dec- 08 March- 09 Total Income 10938 9870 13846 Profit before tax 3038 1652 3256 Profit after tax 2025 1065 2145 Dividend (%) -- -- 55 Equity Share Capital 958 955 957 Reserves & Surplus 15749 13251 13722 Net Worth 16707 14206 14679 EPS (Basic) 21.15 11.16 22.
Slide 24: Ratio Analysis
Ratio Analysis Dec- 09 Dec- 08 March- 09 PBT/Total Income 27.8% 16.7% 23.5% PBT/Total Assets 4.4% 2.6% 4.4% RONW (Opening Net Worth) 17.5% 9.7% 16.3% RONW (Avg. Net Worth) 16.3% 9.3% 15.4% Overheads/Total Assets 3.5% 3.7% 3.6% Debt / Equity 3.66:1 3.76:1 3.54:1 Book value multiple 2.0 1.7 1.4 Capita
Slide 25: Provisioning Norms
Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL > 5 and <= 18 10% > 5 and <= 11 10% > 18 and <= 30 20% > 11 and <= 24 50% > 30 and <= 54 30% > 24 months 100% > 54 months 50% At MMFSL NPA provisioning norms are more stringent than RBI norms for loan. 24
Slide 26: NPA
NPA* (Rs.million.) Dec- 09 Dec- 08 March- 09 Gross Non - Performing Assets 7,988 8,082 6,909 Less: NPA Provisions 5,987 5,225 4,966 Net Non – Performing Assets 2,001 2,857 1,943 Total Assets (Incl. NPA Provision) 91,615 80,250 79,404 Gross NPA to Total Assets(%) 8.7% 10.1% 8.7% Net NPA to Total Asse
Slide 27: Spread Analysis
Spread Analysis Dec- 09 Dec- 08 March- 09 Total Income/Average Assets 17.9% 17.9% 19.1% Interest / Average Assets 6.2% 6.9% 6.9% Gross Spread 11.7% 11.0% 12.2% Overheads/Average Assets 3.8% 3.8% 3.7% Write offs & NPA provisions / Average Assets 3.1% 4.3% 3.9% Net Spread 4.8% 2.9% 4.6% 26
Slide 28: Key Risks & Management Strategies
Key Risks & Management Strategies Volatility in interest rates Matching of Asset Liabilities Rising competition Increasing Branch Network Funds at competitive rates Improving Credit Rating & Asset Quality Dependence on M&M Increasing Non-M&M Portfolio Vagaries of nature Increasing Geographical Sprea
Slide 29: Treasury & Risk Management
Treasury & Risk Management Treasury Management Risk Management The treasury department undertakes The Risk management team is a eight liquidity management by maintaining member team which identifies, assesses optimum level of liquidity and complying and monitors the principal risks of the with RBI r
Slide 30: Key Investment Themes
Key Investment Themes Immense potential in the rural and semi urban markets Early entry and knowledge of the rural and semi urban market M&M Parentage Strong Capital Base Extensive Branch Network / Dealer Relationships Consistent financial performance Client Base Prudent loan approval and administra
Slide 31: Shareholding Pattern
Shareholding Pattern (as on 31st December 2009) Promoters 60% ESOP Trust 1% Public 4% DII 8% FII 27% Incorporated in 1991 mainly to finance Mahindra vehicles by Mahindra & Mahindra Ltd. The Company inducted a financial investor, Copa Cabana in January 2006. Copa Cabana, a 100% subsidiary of Chrys Ca
Slide 32: Thank you
Thank you | 31 (4D Mahindra Finance
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