M&M Financial to foray into housing finance

Mahindra & Mahindra Financial Services (MMFSL) plans to foray into the housing finance business through a new arm.

"The company has completed a study on housing finance. As per regulatory requirements, we have to set up a separate company to venture into the business," said Ramesh Iyer, managing director, MMFSL.

Personal loans, two-wheelers and truck financing, financing of pre-owned vehicles are the other sectors MMFSL plans to enter.

"Non-agricultural income in villages is growing as against the agricultural income. This is a good sign for the economy. MMFSL wants to capitalise on this pattern of the rural economy," said Anand Mahindra, vice-chairman and managing director, Mahindra & Mahindra.

In order to finance its expansion plans, the company has planned an public offering of two crore equity shares of Rs 10 each for cash at a premium to be decided through the book building process.

The price band for the issue has been fixed between Rs 170 and Rs 200 per share. The issue opens on February 21, 2006 and closes on February 24.

After the public offer, M&M's stake in the company will come down to 67 per cent from the existing 89.9 per cent.

MMFSL has set up 295 branches across rural and semi-urban regions of the country. The company has four lakh customers under its belt.

For the year ended March 2005, MMFSL registered net profit of Rs 82.3 crore, growth of 26.4 per cent compared with net profit of Rs 65.1 crore in the previous year.

Total income stood at Rs 404.8 crore for the year ended March 2005, a 34.30 per cent growth compared with Rs 301.4 crore reported in the previous corresponding period.