Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Investor Presentation (June 2006)
32 slides from Mahindra & Mahindra Financial Services's investor presentation, June 2006
Slide 1: Mahindra & Mahindra Financial Services Limited Analyst Meet June-06
Mahindra & Mahindra Financial Services Limited Analyst Meet June-06 0
Slide 2: Agenda
Agenda 1 Industry Overview / MMFSL Overview 2 Operations 3 Performance Highlights 4 Key Risks 5 Principal Investment Themes 1
Slide 3: Automobile Industry
Automobile Industry Over a million passenger cars and utility (units) 2005-06 2009-10E CAGR% vehicles were sold in India in 2006 Passenger cars 882,094 1,699,613 17.8% The total demand for cars and utility Utility Vehicles (domestic) 260,943 399,956 11.3% vehicles is expected to grow at a CAGR o
Slide 4: Tractor Industry
Tractor Industry With net sales of 2.93lac Tractors, the Indian tractor industry grew by 18.2% during the first nine months of FY06 on the back of higher demand growth, improvement in realisations and easy and cheaper availability of finance Almost all tractors are sold on finance due to relativ
Slide 5: The Auto Finance Industry
The Auto Finance Industry Disbursements: Organised auto finance * 2002-2006 2006-2010 (Rs. billion) 2001-02 2004-05 2005-06 2009-10 (CAGR %) (CAGR%) New car finance 108 206 216 379 18.98 15.07 New UV finance 36 67 76 149 20.73 18.10 Total new auto finance market 144 273 293 528 19.42 15.88 Used vehi
Slide 6: 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 and cars The
Slide 7: 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
Slide 8: 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 9: 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 10: 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 Recently commenced mutual fund distribution business Plans to enter housing loans and personal loans business 9
Slide 11: Agenda
Agenda 1 Industry Overview / MMFSL Overview 2 Operations 3 Performance Highlights 4 Key Risks 5 Principal Investment Themes 10
Slide 12: Extensive Distribution Network
Extensive Distribution Network MMFSL has an extensive distribution network with presence in 25 states and 2 union territories in India through 356 branches – Our market categorised into five zones and 16 regions with branches reporting into their respective regional office – Branches provided auth
Slide 13: 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 Dec Mar Mar Mar Aug04
Slide 14: Source of Borrowing
Source of Borrowing Mutual Fund (2389Crs) 53% Insurance Co. (117Crs) 3% Bonds ( Rs.3171 Crs) 71% Others(104 Crs) Banks 2% (1853Crs) 42% Banks ( Rs.773 Crs ) Securitisatio Commercial Fixed 17% n ( Rs. 504 Paper (Rs. 5 Deposits Crs ) Crs.) ( Rs.9Crs ) 11% 0% 0% 13
Slide 15: Asset Securitisation
Asset Securitisation 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 19 securitisation transactions till date aggregating Rs. 15 bn All securitisation programs (except bilate
Slide 16: Challenges
Challenges • Ave. cash collection/day-Rs. 60 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 15
Slide 17: Agenda
Agenda 1 Industry Overview / MMFSL Overview 2 Operations 3 Performance Highlights 4 Key Risks 5 Principal Investment Themes 16
Slide 18: Business Snapshot
Business Snapshot June 05 June 06 March-06 New contracts during the year (Net) (Nos.) 23475 33100 131,158 Branches (Nos.) 271 356 305 Total Assets (Rs. million) 35946 50868 49,513 Total Income (Rs. million) 1141 1650 5,964 PBT (Rs. million) 259 267 1622 PAT (Rs. million) 170 192 1083 Borrowings (Rs.
Slide 19: Robust Growth
Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 600,000 60,000 501,077 50,868 500,000 50,000 CAGR 46% R 51% CAG 400,000 360,294 40,000 35,946 300,000 30,000 234,677 22,274 200,000 20,000 100,000 10,000 0 0 June04 June05 June06 June04 June05 June06 Total Income (I
Slide 20: Summary of Results
Summary of Results June 05 June 06 March-06 Total Income (Rs. million) 1141 1650 5,964 Profit before tax (Rs. million) 259 267 1622 Profit after tax (Rs. million) 170 192 1083 Dividend % (Rs. million) - - 35 Equity Share Capital (Rs. million) 702 833 860 Reserves & Surplus (Rs. million) 3024 6179 6,
Slide 21: Ratio Analysis
Ratio Analysis June 05 June 06 March-06 PBT/Total Income 22.70% 16.20% 27.2% PBT/Total Assets 2.50% 1.90% 3.3% RONW (Avg. Net Worth) 14.40% 15.8%* 26.8%* Overheads/Total Assets 2.70% 3.10%** 2.7% Debt / Equity 7.79:1 5.57:1 5.65:1 Book value multiple - 2.20 3.0 Capital Adequacy 17.00% 16.81% 18.2% T
Slide 22: Provisioning Norms
Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL > 5 and <= 18 10% > 5 and <= 12 10% > 18 and <= 30 20% > 12 and <= 24 50% > 30 and <= 48 30% > 24 months 100% > 48 months 50% At MMFSL NPA provisioning norms are more stringent than RBI norms for loan. 21
Slide 23: NPA
NPA* (Rs. Mn.) June-05 June-06 March-06 Gross Non - Performing Assets 2704 3374 2,472.1 Less: NPA Provisions 1187 1537 1,258.7 Net Non – Performing Assets 1517 1837 1,213.4 Total Assets 35,946 50,868 49,513 Gross NPA to Total Assets 7.30% 6.40% 4.9% Net NPA to Total Assets 4.20% 3.60% 2.5% * Excludi
Slide 24: Spread Analysis
Spread Analysis (Rs. Mn.) June-05 June-06 March-06 Total Income/Average Assets 14.80% 13.60% 12.80% Interest / Average Assets 5.30% 5.30% 5.30% Gross Spread 9.50% 8.30% 7.50% Overheads/Average Assets 3.30% 2.90% 3.20%* Write offs & NPA provisions / Average Assets 2.00% 2.70% 2.30% Net Spread 2.70% 2
Slide 25: Agenda
Agenda 1 Industry Overview / MMFSL Overview 2 Operations 3 Performance Highlights 4 Key Risks 5 Principal Investment Themes 24
Slide 26: 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 Geogra
Slide 27: 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 R
Slide 28: Agenda
Agenda 1 Industry Overview / MMFSL Overview 2 Operations 3 Performance Highlights 4 Key Risks 5 Principal Investment Themes 27
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
Slide 30: Shareholding Pattern (as on 30 Jun 06)
Shareholding Pattern (as on 30 Jun 06) th Promoters 68% Shareholding Others 2% Public 6% Trust 3% FII 21% 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
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
Slide 32: Thank you
Thank you | @/D Mahindra Finance 31
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