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Services Limited
Quarter Result Update
June - 2016
1
Company Overview
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and
Mahindra Limited (Mcap: Rs 891 billion)*, India‟s largest tractor and utility vehicle manufacturer
About MMFSL: MMFSL (Mcap: Rs 180 billion)*, one of India‟s leading non-banking finance companies focused
in the rural and semi-urban sector is the largest Indian tractor financier
Key Business Area: Primarily in the business of financing purchase of new and pre-owned auto and utility vehicles,
tractors, cars, commercial vehicles, construction equipments and SME Financing
Vision: MMFSL‟s vision is to be a leading provider of financial services in the rural and semi-urban
areas of India
Reach: Has 1172 offices covering 26 states and 3 union territories in India, with over 4.25 million
vehicle finance customer contracts since inception
Credit Ratings: India Ratings has assigned AAA(ind)/Stable, CARE Ratings has assigned AAA, Brickwork has
assigned AAA/Stable and CRISIL has assigned AA+/Stable rating to the Company‟s long term
and subordinated debt
3 3
MMFSL Group structure
(1)
85%
Mahindra Insurance Brokers Limited (“MIBL”)
49%
100%
Mahindra Trustee Company Pvt. Ltd
Note:
1. Balance 15% with Inclusion Resources Pvt. Ltd.,a subsidiary of Leapfrog Financial Inclusion Fund, incorporated in Singapore.
2. Balance 12.5% with National Housing Bank (NHB)
4 4
Our Journey
Crossed 1 million
Reach extended to over
cumulative customer
1100 offices
contracts
Crossed 4 million
IPO Over-Subscribed ~ cumulative customer
Stake sale in MIBL to
27 times contracts
Equity participation of Inclusion Resources
12.5%by NHB in MRHFL Pvt. Ltd.
Certificate of
Registration received
Recommenced Fixed QIP Issue of Rs. 8.67 bn.
from SEBI by Mahindra
Deposit Program Mutual Fund
FY 06 FY 08 FY 09 FY 10 FY 11 FY 13 FY 15 FY 16 FY 17
5 5
Shareholding Pattern (as on 30th June 2016)
6 6
Company Overview
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
Global Comparison in terms of PV per thousand people (1) Addressable HHs to increase over the next 5 years
300 285
588 267
526 238
500 250
476
385 200
294 150
270 115
196 100
147 71
93 50 31 37
39 23
17 12
0
2009-10 E 2015-16 E
2014-15 E 2019-20 P
China
Mexico
S. Korea
India
Thailand
Russia
Japan
USA
UK
Brazil
Germany
Italy
Total HHs (mn) Addressable HHs (mn) Total PV Population (mn)
With 17 cars per 1000 people, India has strong long term growth prospects
Growth to be driven by increase in income of households and higher passenger vehicle penetration, rising rural penetration to
increase small car sales
Source: *CRISIL Research
Note : (1) All numbers except India are for CY 2012. India's figures are for 2013-14. 8
Passenger Vehicles Industry: Overall Demand Drivers
FY 06 – FY11 FY 11 – FY 16 FY 16 – FY 20
Small Cars 14% 2% 11% - 13% Small Cars to drive growth in the long term due
to higher aspiration levels led by economy
Sedans 10% -9% 8% - 10% recovery and lower cost of ownership
Low single digit growth expected in larger vehicles - Impact of infrastructure cess and ban on diesel vehicles (over 2000 cc) in Delhi
FY 11 – FY 16 FY 16 – FY 20
MHCV goods vehicle sales supported by growth in economic activity,
LCV (goods) 6% 11% - 14% export-import and freight traffic, construction activities etc.
MHCV (goods) 0% 10% - 12% Demand for LCVs fuelled by increase of hub-and-spoke model,
growth of organised retail, rising consumption expenditure and
Buses 1% 8% - 10% improvement in rural road infrastructure
Total (CV) 3% 10% - 13%
LCV industry poised to see improved growth in FY 17 after 2 consecutive years of negative/ poor growth
South Peninsula (10) 302 291 4% Out of the total of 36 sub-divisions, no sub-division
is suffering from scanty or no-rainfall (6 sub-
India (36) 346 338 2% divisions still has deficient rainfall).
Tractor Financing Market has improved significantly on the back of expectation of good monsoon and improvement of farmers sentiment
Source: Tractor Industry: CRISIL Research, April 2016; Rainfall Statistics: IMD (as of 19th July 2016)
11
Auto Industry Volume
Source: Crisil
12
Automobile Finance Market: 5 years Projected Growth @16-18%
5 year CAGR
(% growth YoY) FY12E FY13E FY14E FY15E FY16E FY17E
(FY21P)
Utility Vehicles 16% 39% -6% 1% 16% 16% - 18% 20% - 22%
Commercial Vehicles 17% -14% -24% 10% 28% 20% - 22% 14% - 16%
By FY 2020, penetration levels are expected to increase to 78% for cars and 75% for utility vehicles from 76% and 70% respectively as a
result of a moderation in interest rates and alleviation of credit risk
Increase of finance penetration in cities (excluding top 20) are going to contribute in the overall growth
Loan-to-value (LTVs) expected to increase marginally to 77% for cars and 74% for UVs from 75% and 72% respectively over the next 5 years
13
Housing Finance Growth
10000
Growth in Housing Finance Disbursements (Rs.bn)
9000 8,303
8000
7000 Growth in disbursements to be supported by rising focus of
6000 developers on the affordable housing segment
5000
4000 3,302
3000
1,752
2000
990
Tier II and III cities to drive growth
1000 552
0
2003-04 E 2006-07 E 2010-11 E 2014-15 E 2019-20 F
Banks HFCs
100% 94%
90% Mortgage Penetration (as % of GDP) 81%
80%
70%
56%
62% Though India‟s mortgage-to-GDP ratio is low, it has
60%
50% 45% 45% improved by 300-400 bps over the last six years.
40%
40% 36%
32%
30% 20%
18%
20%
9%
10% Growth in economic activity, disposable incomes,
0% improving affordability
Thailand
China
Singapore
Denmark
USA
India
Korea
Germany
Malasyia
Hong Kong
UK
Taiwan
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
Grow in rural and semi urban markets for vehicle and automobile financing
16
Extensive Branch Network
Extensive branch network with presence in 26 states and 3 union territories in India through 1172 offices
JK
11
HP
35
27 1167 1172
PB UC
19
1108
30
HR Delhi Sikkim
17
UP 3
RAJ 72 106 AS 34 893
BH 4
45 Megh
GUJ JH 3 1 Mizoram
70 21 WB
96 Tripura
MP CH 62
36 OR 547
21
MAH 103 436
TS
58 256
KK
GOA 2 AP
63 59 1 Port Blair
17
Diversified Product Portfolio
Loans for auto and utility vehicles, tractors, cars, commercial vehicles and construction
Vehicle Financing
equipments
Pre-Owned Vehicles Loans for pre-owned cars, multi-utility vehicles, tractors and commercial vehicles
Loans for varied purposes like project finance, equipment finance and working capital
SME Financing
finance
Offers personal loans typically for weddings, children‟s education, medical treatment and
Personal Loans
working capital
Advises clients on investing money through AMFI certified professionals under the brand
Mutual Fund Distribution
“MAHINDRA FINANCE FINSMART”
Loans for buying, renovating, extending and improving homes in rural and semi-urban
Housing Finance
India through our subsidiary MRHFL
18
Break up of estimated value of Assets Financed
Others* 5% 3% 6%
19
Break up of AUM
As on As on As on
Asset Class
June – 16 June – 15 March – 16
Others* 6% 5% 6%
1. Approximate percentages
2. As on 30th June 16, ~48% of the AUM was from M&M assets
* Others include SME assets
20
Credit Rating
MMFSL believes that its credit rating and strong brand equity enables it to borrow funds at competitive rates
Brickwork Outlook
CRISIL Outlook
21
Broad Based Liability Mix
Funding Mix by Investor profile (June’ 16) Funding Mix by type of Instrument (June’ 16)
Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share
Successfully placed Retail NCD worth Rs. 1000 crores. The issue was over-subscribed 7.4x on the base issue size of Rs. 250 crores
22
Employee Management and Technology Initiatives
Training programs for employees on regular basis All our offices are connected to the centralised data centre in
Mumbai through Lease line/HHD
5 days induction program on product knowledge, business
processes and aptitude training Through hand held devices connected by GPRS to the central
server, we transfer data which provides
Mahindra Finance Academy training programs for prospective and – Prompt intimation by SMS to customers
existing employees at 5 locations – Complete information to handle customer queries with
transaction security
Assessment & Development Centre for promising employees – On-line collection of MIS on management‟s dashboard
– Recording customer commitments
Employee recognition programs such as – Dhruv Tara, Annual – Enables better internal checks & controls
Convention Award and Achievement Box
23
Company Overview
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
1% 2% 8%
* Note: The Company is required to recognise NPA based on four months overdue by end of FY 2017, which the Company has been following w.e.f. quarter ended 31st March 2016. This has resulted in
additional provision of Rs. 918 mn in the current quarter (including income de-recognition) as compared to quarter ended June 30, 2015 (NPA recognised on a 5 months basis)
25
Growth Trajectory
Figures on standalone basis
11%
378.14 9%
366.58
329.30 341.19
296.17 55.85 59.05
49.53
13.68 13.76
FY14 FY15 FY16 Q1FY16 Q1FY17 FY14 FY15 FY16 Q1FY16 Q1FY17
Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.)
9%
8.87 107.0 108.2
8.32 101.3
99.7
6.73 89.6
0.89 0.87
FY14 FY15 FY16 Q1FY16 Q1FY17 FY14 FY15 FY16 Q1FY16 Q1FY17
Note : (1) PAT post exceptional items. (2) Calculated as Shareholders funds/ Number of shares.
* All figures and ratios are post additional provision of Rs. 918 mn (including income de-recognition). Please refer to detailed note on Slide 25.
26
Financial Performance
Figures on standalone basis
Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%)
47.6%
3.2%
2.5%
1.8%
36.1% 36.4%
1.0% 0.9%
33.0% 32.6%
FY14 FY15 FY16 Q1FY16 Q1FY17 FY14 FY15 FY16 Q1FY16 Q1FY17
Note : (1) Cost to Income calculated as Operating Expenses (including depreciation)/(Net Interest Income + Other Income). (2) Calculated based on average total assets
* All figures and ratios are post additional provision of Rs. 918 mn (including income de-recognition). Please refer to detailed note on Slide 25.
27
Standalone Profit & Loss Account
Particulars (Rs. in Million) Q1FY17 Q4FY16 Q-o-Q Q1FY16 Y-o-Y FY16
Revenue from operations 13,603 15,995 (15.0%) 13,163 3.3% 56,468
Provisions and write Offs 2,245 1,089 106.2% 3,228 (30.4%) 10,495
Net Profit after Taxes for the year 870 3,703 (76.5%) 890 (2.3%) 6,726
* All figures and ratios are post additional provision of Rs. 918 mn (including income de-recognition). Please refer to detailed note on Slide 25.
28
Standalone Balance Sheet
Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016
29
Standalone Balance Sheet (Contd.)
Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016
ASSETS
Non-current assets
a) Fixed Assets 1,161 1,106 1,135
b) Non-current investments 9,916 7,914 9,923
c) Deferred tax assets (Net) 6,133 4,280 5,853
d) Long-term loans and advances 1,86,384 1,71,388 1,84,172
e) Other non-current assets 547 2,848 518
Non-current assets 2,04,141 1,87,536 2,01,601
Current assets
a) Current investments 2,612 937 4,910
b) Trade receivables 49 49 51
c) Cash and cash equivalents 5,475 3,748 5,890
d) Short-term loans and advances 1,91,752 1,69,805 1,82,406
e) Other current assets 1,022 415 937
Current assets 2,00,910 1,74,954 1,94,194
Total Assets 4,05,051 3,62,490 3,95,795
30
Consolidated Profit & Loss Account
* All figures and ratios are post additional provision of Rs. 918 mn (including income de-recognition). Please refer to detailed note on Slide 25.
31
Consolidated Balance Sheet
Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016
32
Consolidated Balance Sheet (Contd.)
Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016
ASSETS
Non-current assets
a) Fixed Assets 1,332 1,199 1,291
b) Non-current investments 6,399 5,807 6,522
c) Deferred tax assets (Net) 6,282 4,349 5,992
d) Long-term loans and advances 2,33,484 2,03,672 2,28,420
e) Other non current assets 553 2,854 524
Non-current assets 2,48,050 2,17,881 2,42,749
Current assets
33
Summary & Key Ratios
Figures on standalone basis
* Note: The Company is required to recognise NPA based on four months overdue by end of FY 2017, which the Company has been following w.e.f. quarter ended 31st March 2016. This has resulted in
additional provision of Rs. 918 mn in the current quarter (including income de-recognition) as compared to quarter ended June 30, 2015 (NPA recognised on a 5 months basis)
34
Spread Analysis
Figures on standalone basis
Write offs & NPA provisions / Average Assets 2.3% 3.7% 2.9%
* Note: The Company is required to recognise NPA based on four months overdue by end of FY 2017, which the Company has been following w.e.f. quarter ended 31st March 2016. This has resulted in
additional provision of Rs. 918 mn in the current quarter (including income de-recognition) as compared to quarter ended June 30, 2015 (NPA recognised on a 5 months basis)
35
NPA Analysis
Figures on standalone basis
Note: *includes additional assets of Rs. 2486 mn and Rs. 4496 mn for March 2016 and June 2016 respectively identified due to accelerated recognition.
* The Company is required to recognise NPA based on four months overdue by end of FY 2017, which the Company has been following w.e.f. quarter ended 31st March 2016. This has resulted in
additional provision of Rs. 918 mn in the current quarter (including income de-recognition) as compared to quarter ended June 30, 2015 (NPA recognised on a 5 months basis)
36
Company Overview
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
PAT 81 68 627
Business Area: Provide loans for home construction, extension, purchase and improvement to a wide
base of customers in rural and semi-urban India
38
Mahindra Insurance Brokers Limited
Business Area: Licensed by IRDA for undertaking insurance broking in Life, Non-Life and reinsurance businesses
39
Company Overview
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
Great Place to Work Institute in association with Economic Times has recognized
Mahindra & Mahindra Financial Services Ltd. as one of INDIA‟S BEST
COMPANIES TO WORK FOR, 2016.
The FSS sector has also topped the sectors for the below 2 categories:
Ranked 1st at Best Place to Work.
Ranked 2nd in Loyalty.
Mahindra Finance has been appraised and rated at People CMM® Maturity Level 3
Mahindra Finance made it to the list of Carbon Disclosure Leadership Index (CDLI)
for 2nd consecutive year in 2015
41
Company Overview
Industry Overview
Business Strategy
Financial Information
Key Subsidiaries
43
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 the fact of its distribution form the basis of, or be relied on in connection with,
any contract or commitment there for.
This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the
Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words
such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company believes to
be reasonable in light of its operating experience in recent years. The Company does not undertake to revise any forward-looking statement that may be made from time to time
by or on behalf of the Company.
No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness or fairness of
the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy
of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Any opinions
expressed in this presentation are subject to change without notice. None of the Company, the placement agents, promoters or any other persons that may participate in the
offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise
arising in connection therewith.
This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or part, or disclosed by recipients directly or indirectly to any
other person. In particular, this presentation is not for publication or distribution or release in the United States, Australia, Canada or Japan or in any other country where such
distribution may lead to a breach of any law or regulatory requirement. The information contained herein does not constitute or form part of an offer or solicitation of an offer to
purchase or subscribe for securities for sale in the United States, Australia, Canada or Japan or any other jurisdiction. The securities referred to herein have not been and will not
be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to or for the benefit of US persons absent
registration or an applicable exemption from registration.
CRISIL DISCLAIMER: CRISIL limited has used due care and caution in preparing this report. Information has been obtained by CRISIL from sources which it considers reliable.
However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained
from the use of such information. No part of this report may be published/reproduced in any form without CRISIL‟s prior written approval. CRISIL is not liable for investment
decisions which may be based on the views expressed in this report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL‟s
Rating Division, which may, in its regular operations, obtain information of a confidential nature that is not available to CRISIL Research.
44 44
Thank You
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