Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — H1 FY2012 Earnings Presentation
38 slides from Mahindra & Mahindra Financial Services's earnings presentation, September 2011
Slide 1: Mahindra & Mahindra Financial Services Limited Result Update September 2011
Mahindra & Mahindra Financial Services Limited Result Update SEPTEMBER - 2011
Slide 2: Company overview
Company overview 2
Slide 3: Background
Background Mahindra & Mahindra Financial Services Limited (M&MFSL) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 492 billion)*, one of India’s leading tractor and utility vehicle manufacturers M&MFSL (Mcap: Rs 66 billion)* is one of India’s leading non-banking finance companies focused
Slide 4: M&MFSL Group structure
M&MFSL Group structure Mahindra and Mahindra Limited 56% M&MFSL 87.5% , balance 100% 12.5% with National 49% 100% Housing Bank Mahindra Finance Mahindra Rural Mahindra Insurance USA LLC Mahindra Business & Housing Brokers Limited (Joint venture Consulting Services Finance Limited (“MIBL”) with Rabob
Slide 5: Shareholding pattern
Shareholding pattern (as on September 30, 2011) Public ESOP Trust 3.8% 1.4% DII (Mutual Funds) 4.5% FII Promoters 34.3% 56.0% Incorporated in 1991 and initially provided financing to dealers of Mahindra & Mahindra Limited The Company also issued shares to the ESOS trust in December 2005 The Company
Slide 6: Competitive strengths
Competitive strengths 6
Slide 7: Competitive strengths
Competitive strengths Product portfolio and knowledge catering to rural and semi-urban #1 markets #2 Extensive network of branches #3 Established track record #4 Synergies with Mahindra Group and brand recall #5 Experienced management team and board #6 History of strong customer and dealer relations
Slide 8: Product portfolio and knowledge catering to rural and semi-urban markets
Product portfolio and knowledge catering to rural and semi-urban markets Vehicle Loans for auto and utility vehicles, tractors, cars , commercial vehicles and Financing construction equipments Pre-Owned Loans for pre-owned cars, two wheelers and multi-utility vehicles Vehicles Insurance Insurance so
Slide 9: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed Half year ended Half year ended Full year ended Segments September-11 September-10 March-11 Auto/ Utility vehicles (M&M) 27% 30% 29% Tractors (M&M) 20% 21% 22% Cars and other (including non M&M 32% 33% 33% vehicles) Commercial vehicles and 11% 7% 7% C
Slide 10: Break down of AUM
Break down of AUM As on As on As on Segments September-11 September-10 March-11 Auto/ Utility vehicles (M&M) 32% 34% 31% Tractors (M&M) 20% 22% 23% Cars and other (including non M&M 31% 30% 31% vehicles) Commercial vehicles and 11% 8% 9% Construction equipments Pre-owned vehicles and others 6% 6% 6%
Slide 11: Extensive branch network
Extensive branch network M&MFSL has an extensive branch network with presence in 24 states and 4 union territories in India through 570 offices as of September 30, 2011 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 4 16 9 6 16 6 547 570 40 1 56
Slide 12: Established track record
Established track record Figures on consolidated basis Loans & Advances and Borrowings (Rs. million) Total Assets (Rs. million) Loans & Advances CAGR (FY09-FY11): 32.1% CAGR(FY09-FY11): 33.2% Borrowings CAGR (FY09-FY11): 36.9% 1,63,517 1,26,692 1,27,474 139,396 171,606 89,024 97,846 78,590 96,154 72
Slide 13: Established track record
Established track record Figures on standalone basis ROA (Avg. Assets) (%) RONW (Avg. Net Worth) (%) 4.1% 4.1% 21.5% 22.0% 3.5% 19.4% 18.0% 3.0% 3.2% 15.4% FY09 FY10 FY11 H1 FY11 H1 FY12 FY09 FY10 FY11 H1 FY11 H1 FY12 Gross NPA and Net NPA to Total Assets (%) Leverage ratio 8.7% 4.6 3.9 4.3 6.4% 3.5
Slide 14: Key Risks & Management Strategies
Key Risks & Management Strategies Volatility in interest rates Matching of asset and liabilities Rising competition Increasing branch network Raising funds at competitive rates Maintaining credit rating & improving asset quality Dependence on M&M Increasing non-M&M Portfolio Occurrence of natural di
Slide 15: Financial Information
Financial Information 15
Slide 16: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Half year ended Half year ended Year ended Particulars (Rs. million) September – 11 September – 10 March – 11 Income from operations 11,968 8,620 19,739 Other income 322 183 387 Total income 12,290 8,803 20,126 Interest cost 4,749 2,833 6,602 Administrative cost 3,
Slide 17: Standalone Balance Sheet
Standalone Balance Sheet As on As on As on LIABILITIES (Rs. million) September – 11 September – 10 March – 11 Shareholder’s funds 27,319 19,201 24,901 Secured loans 94,879 62,832 83,006 Unsecured loans 29,347 19,383 13,744 Current liabilities & provisions 15,548 12,927 15,890 TOTAL 167,093 114,343 1
Slide 18: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Half year ended Half year ended Year ended Particulars (Rs. million) September – 11 September – 10 March – 11 Income from operations 12,495 8,902 20,435 Other income 215 156 309 Total income 12,710 9,058 20,744 Interest cost 4,812 2,859 6,662 Administrative cost
Slide 19: Consolidated Balance Sheet
Consolidated Balance Sheet As on As on As on LIABILITIES (Rs. million) September – 11 September – 10 March – 11 Shareholder’s funds 27,948 19,585 25,450 Minority Interest 72 42 47 Secured loans 98,324 63,753 84,349 Unsecured loans 29,150 19,182 13,497 Current liabilities & provisions 16,112 13,178 1
Slide 20: Funding
Funding M&MFSL believes that its credit rating and strong brand equity enable it to borrow funds at competitive rates Total consortium size of Rs. 10 billion comprising several banks CRISIL Rating Outlook Fixed Deposit programme FAAA Stable Short term debt A1+ Stable Long term and Subordinated debt
Slide 21: Source of Borrowing
Source of Borrowing (as on September 30, 2011) Figures on standalone basis Fund Mix on the basis of Investor profile Fund Mix on the basis of Instrument Banks for Assignment Assignment Insurance (Rs.13715 (Rs.13715 CP, ICD Co. & mn) mn) (Rs. 14247 Institutions 10% 10% mn) (Rs.11988 mn) 10% Others 9%
Slide 22: Loan Receivables Assignment
Loan Receivables Assignment M&MFSL assigns parts of its loan receivables to third parties to improve its capital adequacy ratio and to increase the efficiency of its loan portfolio. M&MFSL has completed 46 securitisation / Assignment transactions as of September 30, 2011. Particulars (Rs. million) F
Slide 23: Highlights for H1-FY12 Vs H1-FY11
Highlights for H1- FY12 Vs H1- FY11 Figures on standalone basis Rs.12,290 mn Rs.2,377 mn Rs.82,864 mn 40% 25% 33% Rs.8,803 mn Rs.1,907 mn Rs.62,172 mn Total Income Profit After Tax Value of Assets Financed Assets under Management have increased from Rs.125,813 Mn to Rs.177,046 Mn year-on-year basis.
Slide 24: Summary of Results
Summary of Results Figures on standalone basis Half year ended Half year ended Year ended Particulars (Rs. million) September – 11 September – 10 March – 11 Total Income 12,290 8,803 20,126 Profit before tax 3,529 2,852 7,024 Profit after tax 2,377 1,907 4,631 Dividend (%) -- -- 100 Net Worth 27,263
Slide 25: Ratio Analysis
Ratio Analysis Figures on standalone basis Half year ended Half year ended Year ended September – 11 September – 10 March – 11 PBT/Total Income 28.7% 32.4% 34.9% PBT/Total Assets 4.3% 4.8% 5.2% RONW (Avg. Net Worth) 18.0% 19.4% 22.0% Overheads/Total Assets 3.5% 4.0% 3.6% Debt / Equity 4.55:1 4.28:1
Slide 26: Spread Analysis
Spread Analysis Figures on standalone basis Half year ended Half year ended Year ended September – 11 September – 10 March – 11 Total Income / Average Assets 16.5% 17.0% 17.9% Interest / Average Assets 6.3% 5.5% 5.8% Gross Spread 10.2% 11.5% 12.1% Overheads / Average Assets 3.9% 4.4% 4.4% Write offs
Slide 27: NPA
NPA Figures on standalone basis Particulars (Rs. million) September – 11 September – 10 March – 11 Gross Non - Performing Assets 6,688 6,744 5,488 Less: NPA Provisions 5,034 5,562 4,744 Net Non – Performing Assets 1,654 1,182 744 Total Assets (Incl. NPA Provision) 168,262 116,550 138,606 Gross NPA t
Slide 28: Provisioning Norms
Provisioning Norms Duration (months) RBI Norms Duration (months) M&MFSL > 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 M&MFSL NPA provisioning norms are more stringent than RBI norms 28
Slide 29: Technology initiatives and Employee management
Technology initiatives and Employee management 29
Slide 30: Technology initiatives
Technology initiatives Approximately 90% of our 570 offices are connected to the centralised data centre in Mumbai Through hand held devices connected by GPRS to the central server, we transfer data which provides – Prompt intimation by SMS to customers – Complete information to handle customer quer
Slide 31: Employee engagement & training
Employee engagement & training Training programs for employees on continuous basis. 5 days induction program on product knowledge, business processes and aptitude training. Launch of Mahindra Finance Academy for training prospective and present employees. Assessment & Development Centre for critical
Slide 32: Information about key subsidiaries
Information about key subsidiaries 32
Slide 33: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Half year ended Half year ended Year ended Particulars (Rs. million) September – 11 September – 10 March – 11 Loans disbursed 1,215 829 2,036 No. of Customer Contracts (Nos) 12,525 7,044 21,981 Outstanding loan book 4,183 2,110 3,152 Total income 367 192 493 PB
Slide 34: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Half year ended Half year ended Year ended Particulars (Rs. million) September – 11 September – 10 March – 11 Total income 162 234 517 Net premium 1,819 1333 2,891 PBT 39 146 329 PAT 26 94 218 No. of Policies for the Period (nos.) 307,656 205,715 508,877 No. of emp
Slide 35: Business Strategies
Business Strategies 35
Slide 36: Business Strategies
Business Strategies Grow market share in rural and semi urban & vehicle and automobile financing market Expand nationwide network of branches Diversify product portfolio Continue to attract and retain talented employees Effective use of technology to improve productivity 36
Slide 37: Disclaimer
Disclaimer This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Mahindra & Mahindra Financial Services Limited (the “Company”), nor shall it or any part of it or
Slide 38: Thank you
Thank you
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