Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Investor Presentation (September 2009)
32 slides from Mahindra & Mahindra Financial Services's investor presentation, September 2009
Slide 1: Mahindra & Mahindra Financial Services Limited Analyst Meet
Mahindra & Mahindra Financial Services Limited Analyst Meet September-2009 0
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, commercial ve
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 439 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 30th September 2009) Fund Mix on the basis of Instrument. Fund Mix on the basis of Investor profile Commercial Bonds/ NCD's Paper ( 145 Fixed Deposit Insurance Co. ( 2670Crs) Crs ) 2% (153 Crs ) 2% (698Crs) 37% 10% Mutual Fund (1758Crs) 24% Others(336Crs) 5% Banks (4451Crs
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 39 securitisation / Assignment transactions till date aggregating Rs. 43.20 bn Rs. Mill
Slide 10: Challenges
Challenges • Average cash collection/day - Rs. 127 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 H1 FY10
Highlights for H1 FY10 Crisil revises rating outlook from ‘Negative’ to ‘Stable’ Disbursement for Invoice discounting for H1 FY10 above Rs.80 Crores Estimated Value of Assets Financed have increased from Rs.3475 Crs to Rs.3804 Crs year-on-year basis. Assets under Management have increased from Rs. 8
Slide 12: Profit & Loss Statement
Profit & Loss Statement (Rs.million) Sep- 09 Sep- 08 March- 09 Income from Operations 6732 6222 13648 Other Income 186 81 198 Total Income 6918 6303 13846 Interest Cost 2415 2414 5099 Administrative Cost 2822 2884 5404 Depreciation 45 40 87 Total Expenditure 5282 5338 10590 PBT 1636 965 3256 PAT 109
Slide 13: Balance Sheet: Liabilities
Balance Sheet: Liabilities (Rs.million) Sep- 09 Sep- 08 March- 09 Net Worth 15774 13760 14679 Equity Share Capital 958 955 957 Reserves & Surplus 14816 12805 13722 Employee Stock Option O/S 14 13 13 Secured Loans 47613 44561 44668 Unsecured Loans 10560 14088 7462 Current Liabilities & Provs. 8729 66
Slide 14: Balance Sheet: Assets
Balance Sheet: Assets (Rs.million) Sep- 09 Sep- 08 March- 09 Fixed Assets 406 354 357 Investments 261 58 1097 Intangible Assets 12 10 18 Sundry Debtors -- 6 8 Other Current Assets 77 53 25 Cash & Bank Balance 2700 2375 2763 Loans & Advances & others 77206 74772 68384 Deferred Tax Asset 2028 1418 178
Slide 15: Disbursements Mix
Disbursements Mix Segments Sep- 09 Sep- 08 March- 09 Auto/ Utility vehicles 35% 36% 40% Tractors 19% 20% 22% Cars 29% 29% 25% Commercial Vehicles 9% 8% 6% Refinance & Others 8% 7% 7% * Tentative Percentages 14
Slide 16: Segment Wise: Break up of AUM
Segment Wise: Break up of AUM Segments Sep- 09 Sep- 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) Sep- 09 Sep- 08 March- 09 Total Income 145 117 231 Net Premium 944 829 1598 PBT 79 45 101 PAT 52 29 65 No. of Customers for the Period (Nos.) 143,722 149,932 288,453 No. of Employees (Nos.) 346 435 329 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 Sep09: Rs.885 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) Sep- 09 Sep- 08 March- 09 Income from Operations 6868 6300 13817 Other Income 172 80 187 Total Income 7040 6380 14004 Interest Cost 2418 2418 5109 Administrative Cost 2855 2918 5463 Depreciation 46 41 88 Total Expenditure 5319 5377 10660 PBT 1720 100
Slide 20: Consolidated Balance Sheet: Liabilities
Consolidated Balance Sheet: Liabilities (Rs.million) Sep- 09 Sep- 08 March- 09 Net Worth 15962 13861 14810 Equity Share Capital 958 955 957 Reserves & Surplus 15004 12906 13853 Employee Stock Option O/S 14 13 13 Minority Interest 16 -- 15 Secured Loans 47744 44710 44819 Unsecured Loans 10435 14010 7
Slide 21: Consolidated Balance Sheet: Assets
Consolidated Balance Sheet: Assets (Rs.million) Sep- 09 Sep- 08 March- 09 Fixed Assets 414 359 363 Investments 135 3 972 Intangible Assets 12 10 18 Sundry Debtors 12 25 16 Other Current Assets 69 52 24 Cash & Bank Balance 2723 2426 2792 Loans & Advances & others 77539 74979 68706 Deferred Tax Asset
Slide 22: Robust Growth
Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 1,200,000 84,000 82,690 CAGR 20% 1,062,981 CAGR 8% 82,000 1,000,000 910,105 80,000 79,046 741,223 78,000 800,000 76,000 600,000 74,000 72,000 70,548 400,000 70,000 68,000 200,000 66,000 0 64,000 Sep07 Sep08 Sep09 Se
Slide 23: Summary of Results
Summary of Results (Rs.million) Sep- 09 Sep- 08 March- 09 Total Income 6918 6303 13846 Profit before tax 1636 965 3256 Profit after tax 1092 620 2145 Dividend (%) -- -- 55 Equity Share Capital 958 955 957 Reserves & Surplus 14816 12805 13722 Net Worth 15774 13760 14679 EPS (Basic) 11.40 6.49 22.46 M
Slide 24: Ratio Analysis
Ratio Analysis Sep- 09 Sep- 08 March- 09 PBT/Total Income 23.6% 15.3% 23.5% PBT/Total Assets 3.5% 1.9% 4.4% RONW (Avg. Net Worth) 12.7% 7.1% 15.4% Overheads/Total Assets 3.6% 3.5% 3.6% Debt / Equity 3.67:1 4.28:1 3.54:1 Book value multiple 1.4 1.8 1.4 Capital Adequacy 17.7% 17.8% 19.5% Tier I 16.2%
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.) Sep- 09 Sep- 08 March- 09 Gross Non - Performing Assets 7,933 7,866 6,909 Less: NPA Provisions 5,648 4,729 4,966 Net Non – Performing Assets 2,285 3,137 1,943 Total Assets (Incl. NPA Provision) 88,338 83,775 79,404 Gross NPA to Total Assets(%) 9.0% 9.4% 8.7% Net NPA to Total Asset
Slide 27: Spread Analysis
Spread Analysis Sep- 09 Sep- 08 March- 09 Total Income/Average Assets 17.1% 16.4% 19.1% Interest / Average Assets 6.0% 6.3% 6.9% Gross Spread 11.1% 10.1% 12.2% Overheads/Average Assets 3.8% 3.7% 3.7% Write offs & NPA provisions / Average Assets 3.5% 4.2% 3.9% Net Spread 3.8% 2.2% 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 30th September 2009) Promoters 60% Public 7% ESOP Trust 1% FII 32% 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
Slide 32: Thank you
Thank you | 31 @/D Mahindra Finance
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