Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — FY2010 Earnings Presentation
34 slides from Mahindra & Mahindra Financial Services's earnings presentation, March 2010
Slide 1: Mahindra & Mahindra Financial Services Limited Analyst Meet
Mahindra & Mahindra Financial Services Limited Analyst Meet March - 2010 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 459 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 of Rs. 10,000 Millio
Slide 8: Source of Borrowing
Source of Borrowing (as on 31st March 2010) Fund Mix on the basis of Instrument. Fund Mix on the basis of Investor profile Bank Term Loan ( 3679 Banks (3952Crs) Crs ) 44% Insurance Co. 49% (673Crs) 8% Mutual Fund (1068Crs) 13% Banks for Assignment NCD's Others(764Crs) 9% Assignment ( 1712 Crs ) ( 21
Slide 9: Asset Assignment
Asset Assignment MMFSL Assigns 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 42 securitisation / Assignment transactions till date aggregating Rs. 50.55 bn Rs. Million FY06 FY07 FY08
Slide 10: Challenges
Challenges Average cash collection/day - Rs. 152 mn Banks unwilling to accept cash More than one Bank A/c per location Small denomination notes/ mutilated notes Employee Acquisition & retention 9
Slide 11: Highlights for Q4 & FY10
Highlights for Q4 & FY10 Q4 Highlights Total Income up by 19% at Rs. 475 Crs Vs 398 Crs PAT up by 30% at Rs. 140 Crs Vs 108 Crs Value of Assets Financed up by 90% at Rs. 2738 Crs Vs 1439 Crs FY 10 Highlights Total Income up by 13% at Rs. 1569 Crs PAT up by 60% at Rs. 343 Crs Estimated Value of Asset
Slide 12: Profit & Loss Statement
Profit & Loss Statement (Rs.million) March- 10 March- 09 March- 08 Income from Operations 15308 13648 12058 Other Income 380 198 210 Total Income 15688 13846 12268 Interest Cost 5017 5099 4560 Administrative Cost 5366 5404 4901 Depreciation 99 87 87 Total Expenditure 10482 10590 9548 PBT 5206 3256 2
Slide 13: Balance Sheet: Liabilities
Balance Sheet: Liabilities (Rs.million) March- 10 March- 09 March- 08 Net Worth 17274 14679 13129 Equity Share Capital 960 957 953 Reserves & Surplus 16314 13722 12176 Employee Stock Option O/S 12 13 14 Secured Loans 53259 44668 46135 Unsecured Loans 11318 7462 4290 Current Liabilities & Provs. 9087
Slide 14: Balance Sheet: Assets
Balance Sheet: Assets (Rs.million) March- 10 March- 09 March- 08 Fixed Assets 476 375 321 Investments 2159 1097 31 Sundry Debtors -- 8 9 Other Current Assets 38 25 15 Cash & Bank Balance 2420 2763 2153 Loans & Advances & others 83788 68384 66435 Deferred Tax Asset 2069 1787 1254 13
Slide 15: Disbursements Mix
Disbursements Mix Segments March- 10 March- 09 March-08 Auto/ Utility vehicles 35% 40% 34% Tractors 21% 22% 24% Cars 29% 25% 23% Commercial Vehicles 7% 6% 7% Used vehicles & Others 8% 7% 12% * Tentative Percentages 14
Slide 16: Segment Wise: Break up of AUM
Segment Wise: Break up of AUM Segments March- 10 March- 09 March-08 Auto/ Utility vehicles 33% 38% 38% Tractors 23% 25% 25% Cars 30% 24% 23% Commercial Vehicles 8% 7% 7% Used Vehicles & Others 6% 6% 7% * Tentative Percentages 15
Slide 17: Highlights of Mahindra Insurance Brokers Ltd
Highlights of Mahindra Insurance Brokers Ltd (Rs.million) March- 10 March- 09 March- 08 Total Income 314 231 180 Net Premium 1863 1598 1398 PBT 168 101 77 PAT 111 65 50 No. of Customers for the Period (Nos.) 316,892 288,453 234,868 No. of Employees (Nos.) 386 329 400 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 for FY10 : Rs.1072 Mn Outstanding Loan Book as on 31st Mar 10 : Rs.1298 Mn Net Profit for FY10 : Rs.21.8 Mn Sanction from NHB for Refinancing Rs. 750 Mn for 7 years Currently Operating f
Slide 19: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement (Rs.million) March- 10 March- 09 March- 08 Income from Operations 15612 13817 12164 Other Income 344 187 203 Total Income 15956 14004 12367 Interest Cost 5028 5109 4558 Administrative Cost 5426 5463 4933 Depreciation 101 88 88 Total Expenditure 10555 10660 9579 P
Slide 20: Consolidated Balance Sheet: Liabilities
Consolidated Balance Sheet: Liabilities (Rs.million) March- 10 March- 09 March- 08 Net Worth 17536 14810 13208 Equity Share Capital 960 957 953 Reserves & Surplus 16576 13853 12255 Employee Stock Option O/S 12 13 14 Minority Interest 18 15 -- Secured Loans 54097 44819 46135 Unsecured Loans 11153 738
Slide 21: Consolidated Balance Sheet: Assets
Consolidated Balance Sheet: Assets (Rs.million) March- 10 March- 09 March- 08 Fixed Assets 486 381 328 Investments 2034 972 95 Sundry Debtors 13 16 39 Other Current Assets 39 24 14 Cash & Bank Balance 2443 2792 2163 Loans & Advances & others 84865 68706 66475 Deferred Tax Asset 2072 1788 1254 20
Slide 22: Robust Growth
Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 1,400,000 100,000 90,950 CAGR 16% CAGR 26% 1,189,848 90,000 1,200,000 80,000 74,439 973,493 70,218 1,000,000 70,000 62,809 815,665 800,000 60,000 50,201 641,087 50,000 600,000 467,977 40,000 400,000 30,000 20,000 20
Slide 23: Summary of Results
Summary of Results (Rs.million) March- 10 March- 09 March- 08 Total Income 15688 13846 12268 Profit before tax 5206 3256 2720 Profit after tax 3427 2145 1770 Dividend (%) 75 55 45 Equity Share Capital 960 957 953 Reserves & Surplus 16314 13722 12686 Net Worth 17274 14679 13129 EPS (Basic) 35.78 22.4
Slide 24: Ratio Analysis
Ratio Analysis March- 10 March- 09 March- 08 PBT/Total Income 33.2% 23.5% 22.2% PBT/Total Assets 5.7% 4.4% 3.9% RONW (Opening Net Worth) 23.4% 16.3% 22.5% RONW (Avg. Net Worth) 21.6% 15.4% 16.9% Overheads/Total Assets 3.6% 3.6% 3.6% Debt / Equity 3.73:1 3.54:1 3.84:1 Book value multiple 2.1 1.4 2.1
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.) March- 10 March- 09 March- 08 Gross Non - Performing Assets 6,112 6,909 5,572 Less: NPA Provisions 5,283 4,966 3,519 Net Non – Performing Assets 829 1,943 2,053 Total Assets (Incl. NPA Provision) 96,233 79,404 73,736 Gross NPA to Total Assets(%) 6.4% 8.7% 7.6% Net NPA to Total Ass
Slide 27: Spread Analysis
Spread Analysis March- 10 March- 09 March- 08 Total Income/Average Assets 19.0% 19.1% 18.4% Interest / Average Assets 6.0% 6.9% 6.7% Gross Spread 13.0% 12.2% 11.7% Overheads/Average Assets 3.9% 3.7% 3.8% Write offs & NPA provisions / Average Assets 2.7% 3.9% 3.7% Net Spread 6.4% 4.6% 4.2% 26
Slide 28: Technology Initiatives
Technology Initiatives • 91% of total 459 branches are online realtime connected • All collection executive uses Hand Held Device, connected by GPRS to central server, resulting in Prompt intimation by SMS to customer Complete information in hand to handle customer queries with transaction security
Slide 29: Employee engagement & training
Employee engagement & training Tied up with 130 local graduate colleges for continuous recruitment. 5 days Induction program on product knowledge, business processes and aptitude training. On Job training by superiors followed by an assessment test. Tied up with various distance learning institution
Slide 30: 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 31: 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 32: 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 33: Shareholding Pattern
Shareholding Pattern (as on 31st March 2010) 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 Capit
Slide 34: Thank you
Thank you | 33 (4D Mahindra Finance
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