Growing financial services

Transcription

1 Mahindra Finance Growing financial services Montreal,

2 Mandate Grow financial services for the future Market selection Increased customer base Product portfolio Complaint with 2020 strategy

3 coming solution at a glance Focus on growing domestic rural market New channel to sell financial services New product to meet customer demand esp. insurance Grow in a trusted, well-known market play on strength to provide villages with financial services

4 Agenda Analysis of status quo Evaluation of strategic alternatives Detailed implementation plan Costs and benefits Next steps

5 Your business model Product Credit Home finance Customized cost-efficient flexible loans Step by step home completion 3 visits until they buy Insurance Life insurance Asset protection Health insurance SME Financing of vehicles, tractors Good brand image; trusted brand Channel Direct sales channels Add on (tractor +) Customer Parent company s vehicle financing 40% Loans for end-customer 60% Young population Most do not have bank accounts Rural areas Urban areas Good brand image. Trusted brand which is the most valuable asset in rural areas.

6 Rural customer 69% of population (833 million people) 2/3 not covered currently Related to agriculture (250,000 villages) 50% have no bank accounts From hand to mouth Owner-driven & sole breadwinner within the family Seasonal income Low per capita income; heterogeneous income Cash-based economy > 550 million people are not covered by financial services

7 Macroeconomic development Governmental interaction: home for everyone Underdeveloped infrastructure Growing rural market GDP 9% Increasing middle class Slowly incremental spending

8 Customer s wallet over seasons Disposable Customer income Disposable customer income depends on harvesting periods Crop prices can have a huge impact on disposable income Season Need for very specific offerings to rural customers at the right point of time.

9 Financial health check Revenues Revenue mix in mio. INR 2% 5% 53,006 60,609 41,129 29,104 5,980 8,472 12,366 14,004 15,956 20,386 93% Insurance Home Finance SME Tremendous revenue growth basically from small and medium enterprise business.

10 Financial health check EBT in mio. INR 13,526 14,615 13,999 Reducing EBT in 2015 because of higher increased financing costs High profit margin for insurance however volume of business is currently low 5,401 7,477 9, % Profit margins 1,646 2,067 2,788 3, % 14.70% Insurance Home Finance SME Constantly profitable business and great performance even in financial crisis.

11 Financial health check 15.24% Return on Equity 17.06% Return on equity is Key performance indicator in the Banking industry New Private Sector Banks performed better in past Highly profitable business (insurance) existing since 2004 and still in growing phase You Industry You need to play on your highly profitable services to increase profitability.

12 Financial health check Capital structure 16% 84% Equity to total assets ratio is typical for banking industry Stable financing situation As part of the M&M Group you have the support of your mother company Debt Equity AAA Rating Cash for investments are available without facing stability issues.

13 Agenda Analysis of status quo Evaluation of strategic alternatives Detailed implementation plan Costs and benefits Next steps

14 Growth of Financial Services Domestic International Expertise in market Potential Maturity of financial market Where to go in the next 4 years?

15 Where to go? Criteria Domestic International Expertise in market Potential Maturity of financial market The focus on your domestic market is the best opportunity in order to grow sustainable.

16 Your possible positions inside the market Rural Suburban Urban Expertise in market Margins Brand awareness Access to channels Channels Where do you want to position yourself in the future?

17 Where to go? Criteria Rural Suburban Urban Expertise in market Margins Brand awareness Access to channels Competition Focus on the rural market for growing big.

18 Challenges Impact 1 1. Slowdown in rural economy Focus on services 2. Shrinking market during state initiatives Focus on insurances 2 Probability

19 Growth of Financial Services Growth until 2020 Flexible sales channel New products Balanced finance Conquer the rural market with flexible channels and new products.

20 Agenda Analysis of status quo Evaluation of strategic alternatives Detailed implementation plan Costs and benefits Next steps

21 Evaluating possible sales channel Criteria FinTech Local representatives Sales vehicle Feasibility Costs Flexibility Reaching the consumer in his village with face-to-face advisory.

22 Introducing the sales truck Home Financing Satellite communication Insurance Advertisement screen Offering sales truck to enforce registering of bank accounts and insurances

23 Bird eyes view on the sales truck Multifunctional ATM Outside access Multifunctional ATM Advertisement screen Cockpit Home Financing Insurance Offering sales truck to enforce registering of bank accounts and insurances

24 Hedging as a product innovation for insurance Customer faces serious problems if crop prices drop Hedging Satisfied and safe feeling customer Margins through provisions Offering the customer safety net.

25 Riding the wave of FinTech to serve sub-urban customers Microtransactions Account registration Insurance overview adjusting conditions Online advisory by financial experts

26 Your road to success Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Flexible sales channels Design Trucks Produce Trucks Recruitment Coaching Testing Operations Product innovation Hedging FinTech Milestones Q1/2017: product innovation: Hedging Q2/2017: Sales channel: Truck rollout Q4/2017 product innovation: FinTech

27 Agenda Analysis of status quo Evaluation of strategic alternatives Detailed implementation plan Costs and benefits Next steps

28 Summing your investments Investments Sales Trucks Strategy 62,000,000 7,000,000 7,000,000 7,000,000 7,000,000 # trucks 300 price 150,000 operation costs 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 # Staff Salary in USD 20,000 20,000 20,000 20,000 20,000 Coaching in USD 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Hedging 7,500,000 8,750,000 11,375,000 12,312,500 12,875,000 Product design 2,500,000 Coaching 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Risk reserves 5% of 30 % insurance sales 3,000,000 6,750,000 9,375,000 10,312,500 10,875,000 FinTech - 3,000,000 3,000,000 3,000,000 3,000,000 Coopoeration with Mahindra IT 3,000,000 3,000,000 3,000,000 3,000,000 Total 69,500,000 18,750,000 21,375,000 22,312,500 22,875,000 Total investment of 155 Mio. USD

29 What is the benefit? Additional Profits Reached vilages 80, , , , ,000 Sales Insurance (2.5K each village) 200,000, ,000, ,000, ,500, ,000,000 Sales Home finance per village (1.5k each village) 120,000, ,000, ,000, ,500, ,000,000 Profits for insurance sales 68,000, ,000, ,500, ,750, ,500,000 Profits for home finance sales 16,560,000 37,260,000 51,750,000 56,925,000 60,030,000 Additional Profit in USD 84,560, ,260, ,250, ,675, ,530,000 total 1,136,275,000

30 Generating value for your group in USD Cash Flow 15,060, ,510, ,875, ,362, ,655,000 total 981,462,500 NPV at 9% WAAC ,188,160 Highly profitable and valuable investment to both you and your group.

31 Agenda Analysis of status quo Evaluation of strategic alternatives Detailed implementation plan Costs and benefits Next steps

32 Next steps Grow financial services for the future Market selection Increased customer base Product portfolio Complaint with 2020 strategy Focus on growing domestic rural market New channel to sell financial services New product to meet customer demand esp. insurance Grow in a trusted, well-known market play on strength to provide villages with financial services How to get started Corporate with mother company to develop the truck Set up team for evaluating the requirements of the new products Provide all farmers with your great financial services

33 Backup Revenue Mix Revenue Profits Margin Insurance 1, Home Finance 3, SME 56, Total 60,