Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2011 Earnings Presentation
34 slides from Mahindra & Mahindra Financial Services's earnings presentation, June 2010
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update JUNE - 2010
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 487 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 30th June 2010) Fund Mix on the basis of Instrument. Fund Mix on the basis of Investor profile Bank Term Banks (3699Crs) Loan ( 3649 Insurance Co. Crs ) 43% 44% (673Crs) 8% Mutual Fund (1497Crs) 17% Banks for Others(1044Crs) Assignment 12% Assignment NCD's (1643Crs) ( 1643
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 43 securitisation / Assignment transactions till date aggregating Rs. 52134 Mn Rs. Million FY06 FY07 FY08
Slide 10: Challenges
Challenges Average cash collection/day - Rs. 175 mn Banks unwilling to accept cash More than one Bank A/c per location Small denomination notes/ mutilated notes Employee acquisition & retention 10
Slide 11: Highlights for Q1 - FY11 Vs Q1- FY10
Highlights for Q1 - FY11 Vs Q1- FY10 4014 742 28544 22% 85% 76% 3293 400 16174 Total Income Profit After Tax Value of Assets Financed (Rs. In Mn) (Rs. In Mn) (Rs. In Mn) Assets under Management have increased from Rs.85863 Mn to Rs.108890 Mn year-on-year basis. 11
Slide 12: Profit & Loss Statement
Profit & Loss Statement (Rs.million) June- 10 June- 09 March- 10 Income from Operations 3924 3202 15308 Other Income 90 91 380 Total Income 4014 3293 15688 Interest Cost 1315 1210 5017 Administrative Cost 1561 1457 5366 Depreciation 28 24 99 Total Expenditure 2904 2691 10482 PBT 1110 602 5206 PAT 74
Slide 13: Balance Sheet: Liabilities
Balance Sheet: Liabilities (Rs.million) June- 10 June- 09 March- 10 Net Worth (A+B) 18020 15082 17274 Equity Share Capital (A) 960 958 960 Reserves & Surplus (B) 17060 14124 16314 Employee Stock Option O/S 11 13 12 Secured Loans 53571 41669 53259 Unsecured Loans 15560 9832 11318 Current Liabilities
Slide 14: Balance Sheet: Assets
Balance Sheet: Assets (Rs.million) June- 10 June- 09 March- 10 Fixed Assets 504 365 476 Investments 831 1248 2159 Sundry Debtors -- -- -- Other Current Assets 61 46 38 Cash & Bank Balance 2388 2261 2420 Loans & Advances & others 91488 69631 83788 Deferred Tax Asset 2130 1916 2069 TOTAL 97402 75467 9
Slide 15: Disbursements Mix
Disbursements Mix Segments June- 10 June- 09 March- 10 Auto/ Utility vehicles 34% 39% 35% Tractors 22% 22% 21% Cars 29% 25% 29% Commercial Vehicles 7% 6% 7% Used vehicles & Others 8% 8% 8% * Tentative Percentages 15
Slide 16: Segment Wise: Break up of AUM
Segment Wise: Break up of AUM Segments June- 10 June- 09 March- 10 Auto/ Utility vehicles 33% 38% 33% Tractors 23% 24% 23% Cars 30% 24% 30% Commercial Vehicles 8% 8% 8% Used Vehicles & Others 6% 6% 6% * Tentative Percentages 16
Slide 17: Highlights of Mahindra Insurance Brokers Ltd
Highlights of Mahindra Insurance Brokers Ltd (Rs.million) June- 10 June- 09 March- 10 Total Income 111 77 314 Net Premium 697 545 1863 PBT 68 45 168 PAT 44 30 111 No. of Customers for the Period (Nos.) 90,421 67,700 316,892 No. of Employees (Nos.) 366 314 386 17
Slide 18: Highlights of Mahindra Rural Housing Finance Ltd.
Highlights of Mahindra Rural Housing Finance Ltd. (Rs.million) June- 10 June- 09 March- 10 Loans Sanctioned 537 125 1072 Outstanding Loan Book 1664 560 1298 Profit After Tax 11 2 22 Shareholding Pattern: MMFSL- 87.5%, NHB- 12.5% Sanction from NHB for Refinancing Rs. 750 Mn for 7 years Currently Oper
Slide 19: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement (Rs.million) June- 10 June- 09 March- 10 Income from Operations 4045 3275 15612 Other Income 82 85 344 Total Income 4127 3360 15956 Interest Cost 1328 1212 5028 Administrative Cost 1574 1475 5426 Depreciation 29 24 101 Total Expenditure 2931 2711 10555 PBT 1196 6
Slide 20: Consolidated Balance Sheet: Liabilities
Consolidated Balance Sheet: Liabilities (Rs.million) June- 10 June- 09 March- 10 Net Worth (A+B) 18337 15245 17536 Equity Share Capital (A) 960 958 960 Reserves & Surplus (B) 17377 14287 16576 Employee Stock Option O/S 11 13 12 Minority Interest 19 16 18 Secured Loans 54524 41810 54097 Unsecured Loa
Slide 21: Consolidated Balance Sheet: Assets
Consolidated Balance Sheet: Assets (Rs.million) June- 10 June- 09 March- 10 Fixed Assets 518 373 486 Investments 705 1123 2034 Sundry Debtors 15 15 13 Other Current Assets 60 47 39 Cash & Bank Balance 2427 2281 2443 Loans & Advances & others 92709 69954 84865 Deferred Tax Asset 2133 1916 2072 TOTAL
Slide 22: Robust Growth
Robust Growth Cumulative no. of Customer Contracts (Nos.) Total Assets (INR million) 1,400,000 1,262,940 120,000 CAGR 18% CAGR 26% 1,200,000 97,402 100,000 1,013,585 1,000,000 75,466 856,206 80,000 72,136 66,067 800,000 689,527 60,000 50,868 600,000 501,077 40,000 400,000 200,000 20,000 0 0 Jun-06 J
Slide 23: Summary of Results
Summary of Results (Rs.million) June- 10 June- 09 March- 10 Total Income 4014 3293 15688 Profit before tax 1110 602 5206 Profit after tax 742 400 3427 Dividend (%) -- -- 75 Net Worth 18020 15082 17274 EPS (Basic) 7.73 4.18 35.78 Market Capitalisation 43523 26246 36125 No. of Branches 487 436 459 New
Slide 24: Ratio Analysis
Ratio Analysis June- 10 June- 09 March- 10 PBT/Total Income 27.7% 18.3% 33.2% PBT/Total Assets 4.1% 2.5% 5.7% RONW (Avg. Net Worth) 15.1% 8.6% 21.6% Overheads/Total Assets 4.3% 3.6% 3.6% Debt / Equity 3.83:1 3.40:1 3.73:1 Book value multiple 2.4 1.7 2.1 Capital Adequacy 17.37% 18.8% 18.5% Tier I 15.
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. 25
Slide 26: NPA
NPA* (Rs.million.) June- 10 June- 09 March- 10 Gross Non - Performing Assets 7,105 7,934 6,112 Less: NPA Provisions 5,858 5,591 5,283 Net Non – Performing Assets 1,247 2,343 829 Total Assets (Incl. NPA Provision) 103,261 81,057 96,233 Gross NPA to Total Assets(%) 6.9% 9.8% 6.4% Net NPA to Total Asse
Slide 27: Spread Analysis
Spread Analysis June- 10 June- 09 March- 10 Total Income/Average Assets 16.6% 16.9% 19.0% Interest / Average Assets 5.5% 6.3% 6.0% Gross Spread 11.1% 10.6% 13.0% Overheads/Average Assets 4.4% 3.7% 3.9% Write offs & NPA provisions / Average Assets 2.3% 4.2% 2.7% Net Spread 4.4% 2.7% 6.4% 27
Slide 28: Technology Initiatives
Technology Initiatives • 94% of total 487 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 30th June 2010) Promoters 60% ESOP Trust 1% Public 4% DII 7% FII 28% 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 Capita
Slide 34: Thank you
Thank Thank you you
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