Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Investor Presentation (March 2009)
31 slides from Mahindra & Mahindra Financial Services's investor presentation, March 2009
Slide 1: Mahindra & Mahindra Financial Services Limited Analyst Meet March-2009
Mahindra & Mahindra Financial Services Limited Analyst Meet March-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 and commercial
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 4
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 436 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 March 2009) Fund Mix on the basis of Instrument. Fund Mix on the basis of Investor profile Commercial Insurance Co. Paper ( 185 Bonds/ NCD's (715Crs) Crs ) 3% Fixed Deposit ( 2677Crs) 11% (72 Crs ) 1% 40% Mutual Fund (1683Crs) 25% Banks (4002Crs) Others(317Crs) 59% 5%
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 37 securitisation / Assignment transactions till date aggregating Rs. 40.10 bn Rs. Mill
Slide 10: Challenges
Challenges • Ave. cash collection/day-Rs. 113 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: Profit & Loss Statement
Profit & Loss Statement (Rs.million) March- 07 March- 08 March- 09 Income from Operations 8291 12058 13648 Other Income 155 210 198 Total Income 8446 12268 13846 Interest Cost 3241 4560 5099 Administrative Cost 3103 4901 5404 Depreciation 74 87 87 Total Expenditure 6418 9548 10590 PBT 2028 2720 3256
Slide 12: Balance Sheet: Liabilities
Balance Sheet: Liabilities (Rs.million) March- 07 March- 08 March- 09 Net Worth 7769 13129 14679 Equity Share Capital 840 953 957 Reserves & Surplus 6929 12176 13722 Employee Stock Option O/S 13 14 13 Secured Loans 45803 46135 44668 Unsecured Loans 3597 4547 7462 Current Liabilities & Provs. 5628 63
Slide 13: Balance Sheet: Assets
Balance Sheet: Assets (Rs.million) March- 07 March- 08 March- 09 Fixed Assets 273 308 357 Investments 269 31 1097 Intangible Assets 7 13 18 Sundry Debtors 11 9 8 Other Current Assets 19 15 25 Cash & Bank Balance 2831 2153 2763 Loans & Advances & others 58655 66435 68384 Deferred Tax Asset 745 1254 1
Slide 14: Disbursements Mix
Disbursements Mix Segments March-07 March-08 March-09 Auto/ Utility vehicles 36% 34% 40% Tractors 23% 24% 22% Cars 22% 23% 25% Commercial Vehicles 4% 7% 6% Refinance & Others 15% 12% 7% * Tentative Percentages 13
Slide 15: Segment Wise: Break up of AUM
Segment Wise: Break up of AUM Segments March-07 March-08 March-09 Auto/ Utility vehicles 43% 38% 38% Tractors 19% 25% 25% Cars 26% 23% 24% Commercial Vehicles 3% 7% 7% Refinance & Others 9% 7% 6% * Tentative Percentages 14
Slide 16: Brief highlights of MIBL
Brief highlights of MIBL (Rs.million) March- 07 March- 08 March- 09 Total Income 119 180 231 Net Premium 844 1398 1598 PBT 60 77 101 PAT 38 50 65 No. of Customers for the Period (Nos.) 134,741 234,868 288,453 No. of Employees (Nos.) 259 400 329 15
Slide 17: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement (Rs.million) March- 07 March- 08 March- 09 Income from Operations 8368 12164 13817 Other Income 132 203 187 Total Income 8500 12367 14004 Interest Cost 3240 4558 5109 Administrative Cost 3118 4933 5463 Depreciation 74 88 88 Total Expenditure 6432 9579 10660 PBT 2
Slide 18: Consolidated Balance Sheet: Liabilities
Consolidated Balance Sheet: Liabilities (Rs.million) March- 07 March- 08 March- 09 Net Worth 7808 13208 14810 Equity Share Capital 840 953 957 Reserves & Surplus 6968 12255 13853 Employee Stock Option O/S 13 14 13 Minority Interest -- -- 15 Secured Loans 45803 46135 44819 Unsecured Loans 3577 4599 7
Slide 19: Consolidated Balance Sheet: Assets
Consolidated Balance Sheet: Assets (Rs.million) March- 07 March- 08 March- 09 Fixed Assets 276 314 363 Investments 264 95 972 Intangible Assets 8 14 18 Sundry Debtors 23 39 16 Other Current Assets 20 14 24 Cash & Bank Balance 2840 2163 2792 Loans & Advances & others 58663 66475 68706 Deferred Tax As
Slide 20: Robust Growth
Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 1,200,000 76,000 74,439 74,000 CAGR 9% CAGR 23% 973,493 1,000,000 72,000 815,665 70,218 70,000 800,000 641,087 68,000 600,000 66,000 64,000 62,809 400,000 62,000 60,000 200,000 58,000 0 56,000 FY07 FY08 FY09 FY07 FY
Slide 21: Summary of Results
Summary of Results (Rs.million) March- 07 March- 08 March- 09 Total Income 8446 12268 13846 Profit before tax 2028 2720 3256 Profit after tax 1329 1770 2145 Dividend (%) 40 45 55 Equity Share Capital 840 953 957 Reserves & Surplus 6929 12686 13722 Net Worth 7769 13129 14679 EPS (Basic) 15.81 20.81 2
Slide 22: Ratio Analysis
Ratio Analysis March- 07 March- 08 March- 09 PBT/Total Income 24.0% 22.2% 23.5% PBT/Total Assets 3.2% 3.9% 4.4% RONW (Avg. Net Worth) 18.1% 16.9% 15.4% Overheads/Total Assets 3.1% 3.6% 3.6% Debt / Equity 6.24:1 3.84:1 3.54:1 Book value multiple 2.6 2.1 1.4 Capital Adequacy 14.7% 20.7% 19.5% Tier I 1
Slide 23: 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. 22
Slide 24: NPA
NPA* (Rs.million.) March- 07 March- 08 March- 09 Gross Non - Performing Assets 3,582 5,572 6,909 Less: NPA Provisions 2,034 3,519 4,966 Net Non – Performing Assets 1,548 2,053 1,943 Total Assets (Incl. NPA Provision) 64,843 73,736 79,404 Gross NPA to Total Assets(%) 5.5% 7.6% 8.7% Net NPA to Total A
Slide 25: Spread Analysis
Spread Analysis March- 07 March- 08 March- 09 Total Income/Average Assets 14.9% 18.4% 19.1% Interest / Average Assets 5.6% 6.7% 6.9% Gross Spread 9.3% 11.7% 12.2% Overheads/Average Assets 3.4% 3.8% 3.7% Write offs & NPA provisions / Average Assets 2.2% 3.7% 3.9% Net Spread 3.7% 4.2% 4.6% 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 Improving Credit Rating & Asset Quality Dependence on M&M Increasing Non-M&M Portfolio Vagaries of nature Increasing Geographical Sprea
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 RBI r
Slide 28: 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 29: Shareholding Pattern
Shareholding Pattern (as on 31st March 2009) Promoters 60% Public 4% ESOP Trust 1% 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 III,
Slide 30: 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
Slide 31: Thank you
Thank you | 30 @/D Mahindra Finance
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