Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN

Mahindra & Mahindra Financial Services — Q3 FY2009 Earnings Presentation

32 slides from Mahindra & Mahindra Financial Services's earnings presentation, January 2009

  1. Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result December-08

    Mahindra & Mahindra Financial Services Limited Quarter Result December-08 0

  2. Slide 2: Overview

    Overview MMFSL is a Mahindra and Mahindra subsidiary, 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 and commercial

  3. Slide 3: Excellent Competitive Positioning

    Excellent Competitive Positioning Our competitive edge is our immense domain experience in a challenging industry Industry Characteristics MMFSL An early entrant with a large existing client base, Government thrust to give a boost to the rural MMFSL is well poised to take advantage of the economy ru

  4. Slide 4: 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

  5. Slide 5: 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

  6. Slide 6: 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 5

  7. Slide 7: 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

  8. Slide 8: Funding

    Funding MMFSL has consistently enjoyed a good FAA+ FAA+ FAA+ FAA+ credit rating enabling it to borrow funds Fixed Deposits / Bond FAA FAA at competitive rates FAA- FAA- FAA- Rating linked to credit rating of M&M, decline in rating in FY03 due to rating FA+ downgrade of M&M Mar Mar Mar Mar Sep Dec Ma

  9. Slide 9: Source of Borrowing

    Source of Borrowing (as on 31st December 2008) Fund Mix on the basis of Instrument. Fund Mix on the basis of Investor profile Bonds/ NCD's Insurance Co. ( 3031Crs) (715Crs) 46% Commercial 11% Mutual Fund Paper ( 235 (1937Crs) Crs ) 4% 30% Banks Others(245Crs) (3630Crs) 4% 55% Bank Term Loan ( 2108 S

  10. Slide 10: 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 transaction in FY02 and has done 34 securitisation / Assignment transactions till date aggregating Rs. 34.48 bn All securitisation pr

  11. Slide 11: Challenges

    Challenges • Ave. cash collection/day-Rs. 109 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 10

  12. Slide 12: Profit & Loss Statement

    Profit & Loss Statement (Rs.million) Dec- 07 Dec- 08 March- 08 Income from Operations 8509 9755 12058 Other Income 146 115 210 Total Income 8655 9870 12268 Interest Cost 3380 3827 4560 Administrative Cost 3653 4329 4901 Depreciation 66 62 87 Total Expenditure 7099 8218 9548 PBT 1556 1652 2720 PAT 10

  13. Slide 13: Balance Sheet: Liabilities

    Balance Sheet: Liabilities (Rs.million) Dec- 07 Dec- 08 March- 08 Net Worth 8789 14206 13129 Equity Share Capital 841 955 953 Reserves & Surplus 7948 13251 12176 Employee Stock Option O/S 17 14 14 Secured Loans 44719 45209 46135 Unsecured Loans 12212 8528 4547 Current Liabilities & Provs. 5285 7067

  14. Slide 14: Balance Sheet: Assets

    Balance Sheet: Assets (Rs.million) Dec- 07 Dec- 08 March- 08 Fixed Assets 306 343 308 Investments 31 57 31 Intangible Assets 16 18 13 Sundry Debtors 20 8 9 Other Current Assets 106 109 15 Cash & Bank Balance 2258 1994 2153 Loans & Advances & others 67237 70857 66435 Deferred Tax Asset 1048 1560 1254

  15. Slide 15: Disbursements Mix

    Disbursements Mix Segments Dec-08 March-08 March-07 Auto/ Utility vehicles 41% 34% 36% Tractors 22% 24% 23% Cars 24% 23% 22% Commercial Vehicles 7% 7% 4% Refinance & Others 6% 12% 15% * Tentative Percentages 14

  16. Slide 16: Segment Wise: Break up of AUM

    Segment Wise: Break up of AUM Segments Dec-08 March-08 March-07 Auto/ Utility vehicles 39% 38% 43% Tractors 24% 25% 19% Cars 24% 23% 26% Commercial Vehicles 8% 7% 3% Refinance & Others 5% 7% 9% * Tentative Percentages 15

  17. Slide 17: Brief highlights of MIBL

    Brief highlights of MIBL (Rs.million) Dec- 07 Dec- 08 March- 08 Total Income 122 172 180 Net Premium 990 1226 1398 PBT 47 68 77 PAT 30 43 50 No. of Customers for the Period (Nos.) 163,526 221,813 234,868 No. of Employees (Nos.) 393 390 400 16

  18. Slide 18: Consolidated Profit & Loss Statement

    Consolidated Profit & Loss Statement (Rs.million) Dec- 07 Dec- 08 March- 08 Income from Operations 8584 9878 12164 Other Income 142 111 203 Total Income 8726 9989 12367 Interest Cost 3378 3833 4558 Administrative Cost 3680 4383 4931 Depreciation 67 63 90 Total Expenditure 7125 8279 9579 PBT 1600 171

  19. Slide 19: Consolidated Balance Sheet: Liabilities

    Consolidated Balance Sheet: Liabilities (Rs.million) Dec- 07 Dec- 08 March- 08 Net Worth 8854 14320 13208 Equity Share Capital 841 955 953 Reserves & Surplus 8013 13365 12255 Employee Stock Option O/S 17 14 14 Minority Interest -- 5 -- Secured Loans 44720 45359 46135 Unsecured Loans 12162 8507 4599

  20. Slide 20: Consolidated Balance Sheet: Assets

    Consolidated Balance Sheet: Assets (Rs.million) Dec- 07 Dec- 08 March- 08 Fixed Assets 312 348 314 Investments 5 1 95 Intangible Assets 17 19 14 Sundry Debtors 42 29 39 Other Current Assets 106 109 14 Cash & Bank Balance 2267 2006 2163 Loans & Advances & others 67253 71130 66475 Deferred Tax Asset 1

  21. Slide 21: Robust Growth

    Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 1,000,000 942,812 80,000 75,024 CAGR 26% CAGR 12% 71,022 900,000 70,000 780,894 800,000 59,524 60,000 700,000 595,286 600,000 50,000 500,000 40,000 400,000 30,000 300,000 20,000 200,000 100,000 10,000 0 0 Dec06 Dec0

  22. Slide 22: Summary of Results

    Summary of Results (Rs.million) Dec- 07 Dec- 08 March- 08 Total Income 8655 9870 12268 Profit before tax 1556 1652 2720 Profit after tax 1016 1065 1770 Dividend (%) -- -- 45 Equity Share Capital 841 955 953 Reserves & Surplus 7948 13251 12686 Net Worth 8789 14206 13129 EPS (Basic) 12.09 11.16 20.81

  23. Slide 23: Ratio Analysis

    Ratio Analysis Dec- 07 Dec- 08 March- 08 PBT/Total Income 17.9% 16.7% 22.2% PBT/Total Assets 2.6% 2.6% 3.9% RONW (Avg. Net Worth) 14.6% 9.3% 16.9% Overheads/Total Assets 3.5% 3.7% 3.6% Debt / Equity 6.41:1 3.76:1 3.84:1 Book value multiple 3.1 1.7 2.1 Capital Adequacy 14.9% 18.9% 20.7% Tier I 11.0%

  24. Slide 24: 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. 23

  25. Slide 25: NPA

    NPA* (Rs.million.) Dec- 07 Dec- 08 March- 08 Gross Non - Performing Assets 6,487 8,082 5,572 Less: NPA Provisions 3,578 5,225 3,519 Net Non – Performing Assets 2,909 2,857 2,053 Total Assets (Incl. NPA Provision) 74,600 80,172 73,736 Gross NPA to Total Assets(%) 8.7% 10.1% 7.6% Net NPA to Total Asse

  26. Slide 26: Spread Analysis

    Spread Analysis Dec- 07 Dec- 08 March- 08 Total Income/Average Assets 17.0% 17.9% 18.4% Interest / Average Assets 6.6% 6.9% 6.7% Gross Spread 10.4% 11.0% 11.7% Overheads/Average Assets 3.7% 3.8% 3.8% Write offs & NPA provisions / Average Assets 3.8% 4.3% 3.7% Net Spread 2.9% 2.9% 4.2% 25

  27. Slide 27: 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 Maintaining Credit Rating & Asset Quality Dependence on M&M Increasing Non-M&M Portfolio Vagaries of nature Increasing Geographical Spr

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: Shareholding Pattern

    Shareholding Pattern (as on 31st December 2008) Promoters 60% Public 3% ESOP Trust 2% FII 35% 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 Capital I

  31. Slide 31: Important Notice

    Important Notice No representation or warranty, express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. The information contained in this presentation is only current as of the date o

  32. Slide 32: Thank you

    Thank you | 31 @/D Mahindra Finance

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