Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY2011 Earnings Presentation
45 slides from Mahindra & Mahindra Financial Services's earnings presentation, December 2010
Slide 1: Mahindra & Mahindra Financial Services Limited Result Update December 2010
Mahindra & Mahindra Financial Services Limited Result Update December – 2010
Slide 2: 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 3: Table of contents
Table of contents Company overview Industry overview Competitive strengths Financial information Technology initiatives and Employee management Information about key subsidiaries Business strategies 3
Slide 4: Company overview
Company overview 4
Slide 5: Background
Background Mahindra & Mahindra Financial Services Limited (M&MFSL) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 453 billion)*, one of India’s leading tractor and utility vehicle manufacturers M&MFSL (Mcap: Rs 69 billion)* is one of India’s leading non-banking finance companies focused
Slide 6: M&MFSL Group structure
M&MFSL Group structure Mahindra and Mahindra Limited 60.1% 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 Rab
Slide 7: Roadmap till date
Roadmap till date •• Total Total Assets Assets ofof Rs. Rs. 123.48 123.48 Billion Billion as as of of December December 31, 31, •• Commenced Commenced housing housing 2010 2010 •• IPO IPO on on NSE NSE & & BSE BSE finance finance business business through through •• Increase Increase inin vehicle ve
Slide 8: Shareholding pattern
Shareholding pattern (as on December 31, 2010) Public 5% ESOP Trust DII 1% 7% FII 27% Promoters 60% 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 came out with its IPO in F
Slide 9: Industry overview
Industry overview 9
Slide 10: Strong macro growth momentum
Strong macro growth momentum Share of Financing is increasing in GDP Nominal GDP Movement (Rs. trillion) (Financing as % of GDP) CAGR 12.6% 58.7 52.3 45.4 39% 46% 47% 37.8 32.8 12% 28.8 15% 16% 20% 17% 18% 30% 22% 20% FY97 FY05 FY10 FY05 FY06 FY07 FY08 FY09 FY10 Agriculture Manufacturing Financing O
Slide 11: Vehicle finance industry has re-entered a growth phase
Vehicle finance industry has re-entered a growth phase New Vehicle Finance Disbursements New Vehicle Underlying Market (Rs. billion) (Rs. billion) 1,000 1,800 800 1,500 1,200 600 900 400 600 200 300 0 0 FY 08 FY 09 FY 10 E FY 11P FY 15P FY 08 FY 09 FY 10 E FY 11P FY 15P Cars UV Commercial Vehicles T
Slide 12: Rural India accounts for 25% of car and UV financial disbursements
Despite containing 41% of the car and UV market, rural India only accounts for 25% of the segment’s financial disbursements Car & UV Market Sales Regional Breakup (in no.) Cars and UVs Financial Penetration (%) Top 7 78.5% Rest of 69.3% cities 62.5% India 39% 41% Next 15 cities 20% Top 7 cities Next
Slide 13: Competitive strengths
Competitive strengths 13
Slide 14: Competitive strengths
Competitive strengths Product Product portfolio portfolio and and knowledge knowledge catering catering to to rural rural and and semi-urban semi-urban #1 #1 markets markets #2 #2 Extensive Extensive network network of of branches branches #3 #3 Established Established track track record record #4 #
Slide 15: Product portfolio and knowledge catering to rural and semi-urban markets
Product portfolio and knowledge catering to rural and semi-urban markets Vehicle Vehicle Loans Loans for for auto auto and and utility utility vehicles, vehicles, tractors, tractors, cars cars ,, commercial commercial vehicles vehicles and and Financing Financing construction equipments construction
Slide 16: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed Nine Months ended Nine Months ended Full year ended Full year ended Segments December-10 December-09 March-10 March-09 Auto/ Utility vehicles (M&M) 30% 36% 35% 40% Tractors (M&M) 22% 20% 21% 22% Cars and other (including 33% 29% 29% 25% non M&M vehicl
Slide 17: Break down of AUM
Break down of AUM Nine Months ended Nine Months ended Full year ended Full year ended Segments December-10 December-09 March-10 March-09 Auto/ Utility vehicles (M&M) 30% 35% 33% 38% Tractors (M&M) 23% 23% 23% 25% Cars and other (including 33% 28% 30% 24% non M&M vehicles) Commercial vehicles and 8%
Slide 18: 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 537 offices as of December 31, 2010 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 537 3 1 6 436 13 6 16 6 41 1 5
Slide 19: Established track record (consolidated)
Established track record Figures on consolidated basis Loans & Advances and Borrowings (Rs. million) Total Assets (Rs. million) Loans & Advances CAGR (FY08-FY10): 13.0% CAGR(FY08-FY10): 14.3% Borrowings CAGR (FY08-FY10): 13.7% 116,357 123,477 84,865 91,278 91,952 66,475 68,707 65,250 70,368 74,679 5
Slide 20: Established track record (standalone)
Established track record Figures on standalone basis ROA (Avg. Assets) (%) RONW (Avg. Net Worth) (%) 4.1% 21.5% 20.9% 3.7% 16.9% 3.0% 15.4% 2.7% FY08 FY09 FY10 9MFY11 FY08 FY09 FY10 9MFY11 Gross NPA and Net NPA to Total Assets (%) Leverage ratio 8.7% 4.4 7.6% 3.8 3.7 6.4% 3.5 5.6% 2.9% 2.6% 0.9% 1.1
Slide 21: 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 22: Financial Information
Financial Information 22
Slide 23: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Nine Months ended Nine Months ended Year ended Particulars (Rs. million) Dec – 10 Dec – 09 March – 10 Income from operations 13,823 10,671 15,308 Other income 280 267 380 Total income 14,103 10,938 15,688 Interest cost 4,646 3,777 5,017 Administrative cost 4,485 4,
Slide 24: Standalone Balance Sheet
Standalone Balance Sheet Nine Months ended Nine Months ended Year ended LIABILITIES (Rs. million) Dec – 10 Dec – 09 March - 10 Shareholder’s funds 20,365 16,722 17,286 Secured loans 63,170 47,406 53,259 Unsecured loans 27,349 13,886 11,318 Current liabilities & provisions 11,225 7,614 9,087 TOTAL 12
Slide 25: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Nine Months ended Nine Months ended Year ended Particulars (Rs. million) Dec – 10 Dec – 09 March – 10 Income from operations 14,301 10,886 15,612 Other income 232 241 344 Total income 14,533 11,127 15,956 Interest cost 4,689 3,781 5,028 Administrative cost 4,549
Slide 26: Consolidated Balance Sheet
Consolidated Balance Sheet Nine Months ended Nine Months ended Year ended LIABILITIES (Rs. million) Dec – 10 Dec – 09 March - 10 Shareholder’s funds 20,833 16,949 17,548 Minority Interest 46 16 18 Secured loans 64,175 47,527 54,097 Unsecured loans 27,103 13,754 11,153 Current liabilities & provision
Slide 27: 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 P1+ Stable Long term and Subordinated debt
Slide 28: Source of Borrowing
Source of Borrowing (as on December 31, 2010) Figures on standalone basis Fund Mix on the basis of Investor profile Fund Mix on the basis of Instrument Banks f or Assignment Assignment (Rs.17,094 (Rs.17,094 mm) mm) 16% 16% Insurance Co. (Rs.6,480 mm) Banks CP 6% (Rs.49,730 (Rs. 9,990 Bank Term mm) m
Slide 29: 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 45 securitisation / Assignment transactions as of December 31, 2010. Particulars (Rs. million) FY
Slide 30: Highlights for Q3-FY11 Vs Q3-FY10
Highlights for Q3- FY11 Vs Q3- FY10 Figures on standalone basis 5300 1159* 42390 32% 24% 79% 4020 933 23734 Total Income Profit After Tax Value of Assets Financed (Rs. In Mn) (Rs. In Mn) (Rs. In Mn) * After considering additional provision of 0.25% on standard assets amounting to Rs. 285 Mn (net of
Slide 31: Highlights for 9M-FY11 Vs 9M-FY10
Highlights for 9M- FY11 Vs 9M- FY10 Figures on standalone basis 14103 3066* 104563 29% 51% 69% 10938 2025 61771 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.96498 Mn to Rs.134374 Mn year-on-year basis. * Aft
Slide 32: Summary of Results
Summary of Results Figures on standalone basis Nine Months ended Nine Months ended Year ended Particulars (Rs. million) Dec – 10 Dec – 09 March – 10 Total Income 14,103 10,938 15,688 Profit before tax 4,585 3,038 5,206 Profit after tax 3,066 2,025 3,427 Dividend (%) -- -- 75 Net Worth 20,356 16,707
Slide 33: Ratio Analysis
Ratio Analysis Figures on standalone basis Nine Months ended Nine Months ended Year ended Dec – 10 Dec – 09 March – 10 PBT/Total Income 32.5% 27.8% 33.2% PBT/Total Assets 4.8% 4.4% 5.7% RONW (Avg. Net Worth) 20.9% 16.2% 21.5% Overheads/Total Assets 3.7% 3.5% 3.6% Debt / Equity 4.44:1 3.66:1 3.73:1 B
Slide 34: Spread Analysis
Spread Analysis Figures on standalone basis Nine Months ended Nine Months ended Year ended Dec – 10 Dec – 09 March – 10 Total Income / Average Assets 17.4% 17.9% 19.0% Interest / Average Assets 5.7% 6.2% 6.0% Gross Spread 11.7% 11.7% 13.0% Overheads / Average Assets 4.3% 3.8% 3.9% Write offs & NPA p
Slide 35: NPA
NPA Figures on standalone basis Particulars (Rs. million) Dec – 10 Dec – 09 March – 10 Gross Non - Performing Assets 7,104 7,987 6,112 Less: NPA Provisions 5,798 5,987 5,283 Net Non – Performing Assets 1,306 2,000 829 Total Assets (Incl. NPA Provision) 127,907 91,615 96,233 Gross NPA to Total Assets
Slide 36: 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 36
Slide 37: Technology initiatives and Employee management
Technology initiatives and Employee management 37
Slide 38: Technology initiatives
Technology initiatives Approximately 92% of our 537 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 39: 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 40: Information about key subsidiaries
Information about key subsidiaries 40
Slide 41: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Nine Months ended Year ended Year ended Year ended Particulars (Rs. million) Dec – 10 March – 10 March – 09 March – 08 Total income 375 314 231 180 Net premium 2,037 1,863 1,598 1,398 PBT 238 168 101 77 PAT 155 111 65 50 No. of Policies for the Period 349,790 316,8
Slide 42: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Nine Months ended Year ended Year ended Year ended Particulars (Rs. million) Dec – 10 March – 10 March – 09 March – 08 Loans disbursed 1,362 906 434 30 Outstanding loan book 2,577 1,298 453 30 Total income 332 163 48 3 PBT 83 25 (7) (6) PAT 61 22 (8) (6) Shareh
Slide 43: Business Strategies
Business Strategies 43
Slide 44: Business Strategies
Business Strategies Grow Grow market market share share in in rural rural and and semi semi urban urban & & vehicle vehicle and and automobile automobile financing financing market market Expand Expand nationwide nationwide network network of of branches branches Diversify Diversify product product
Slide 45: Thank you
Thank Thank you you
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