The Members of
Mahindra & Mahindra Financial Services Limited
Your Directors are pleased to present their Twenty-Eighth Report together with theaudited financial statements of your Company for the Financial Year ended 31st March2018.
The performance highlights and summarised financial results of the Company are givenbelow:
Consolidated income for the year increased by 19% to Rs. 8573.5 Crores as compared toRs. 7200.7 Crores in 2016-17; Consolidated income from operations for the year was Rs.8533.1 Crores as compared to Rs. 7146.2 Crores in 2016-17 a growth of 19%; Consolidatedprofit before tax for the year was Rs.1661.7 Crores as compared to Rs. 837.8 Crores in2016-17; Consolidated profit after tax and minority interest for the year was Rs. 1023.9Crores as compared to Rs.511.6 Crores in 2016-17.
|FINANCIAL RESULTS || || || || |
| || || || ||Rs. in Crores |
| || |
| ||March 2018 ||March 2017 ||March 2018 ||March 2017 |
|Total Income ||8573.5 ||7200.7 ||7206.1 ||6237.5 |
|Less : Finance Costs ||3426.3 ||3186.2 ||3000.4 ||2857.4 |
|Expenditure ||3481.0 ||3123.0 ||2853.7 ||2714.0 |
|Depreciation/Amortisation ||55.2 ||53.7 ||44.2 ||46.0 |
|Total Expenses ||6962.5 ||6362.9 ||5898.3 ||5617.4 |
|Profit Before Exceptional Items and Taxes ||1611.0 ||837.8 ||1307.8 ||620.1 |
|Exceptional Items (net) - income / (expense) ||50.7 ||- ||65.0 ||- |
|Profit Before Tax ||1661.7 ||- ||1372.8 ||- |
|Less : Provision For Tax || || || || |
|Current Tax ||676.3 ||463.5 ||543.1 ||363.5 |
|Deferred Tax ||(66.0) ||(155.4) ||(62.2) ||(143.6) |
|Profit After Tax for the Year before Minority Interest ||1051.4 ||529.7 ||891.9 ||400.2 |
|Less : Minority Interest ||27.5 ||18.1 ||- ||- |
|Profit After Tax for the Year after Minority Interest ||1023.9 ||511.6 ||891.9 ||400.2 |
|Add : Amount brought forward from Previous Years ||2850.5 ||2522.4 ||2489.0 ||2240.5 |
|Less: Corporate Dividend and Dividend Distribution Tax ||164.3 ||2.8 ||161.0 ||- |
|Less: Transitional charge in respect of Mark to Market loss ||- ||5.1 ||- ||5.1 |
|on derivative transactions || || || || |
|Amount available for Appropriation ||3710.1 ||3026.1 ||3219.9 ||2635.6 |
|Appropriations || || || || |
|General Reserve ||88.4 ||40.0 ||89.2 ||40.0 |
|Statutory Reserve ||224.3 ||109.1 ||178.4 ||80.1 |
|Debenture Redemption Reserve ||50.5 ||26.5 ||50.5 ||26.5 |
|Surplus carried to Balance Sheet ||3346.9 ||2850.5 ||2901.8 ||2489.0 |
TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs. 89.2 Crores to the General ReserveRs.178.4 Crores to the Statutory Reserve and Rs.50.5 Crores to the Debenture RedemptionReserve. An amount of Rs.2901.8 Crores is proposed to be retained in the Statement ofProfit and Loss.
Your Directors are pleased to recommend a dividend of Rs. 4 per Equity Share of theface value of Rs. 2 each payable to those Members whose names appear in the Register ofMembers as on the Book Closure date. The dividend including dividend tax for the FinancialYear 2017-18 will absorb a sum of Rs. 293.8 Crores [as against 161.0 Crores on account ofdividend of Rs. 2.4 per Equity Share and tax thereon paid for the previous year].
DIVIDEND DISTRIBUTION POLICY
The Board of Directors at its Meeting held on 25th October 2016 approved and adoptedthe Dividend Distribution Policy containing the requirements prescribed in Regulation 43Aof the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. The Policy is appended as Annexure I and formspart of this Annual Report.
The Dividend Distribution Policy can also be accessed on the Company's website at theweb-link http://www.mahindrafinance.com/policies.aspx.
During the year an amount of Rs.339065 being the unclaimed/unpaid dividend of theCompany for the Financial Year ended 31st March 2010 was transferred in September 2017to the Investor Education and Protection Fund Authority.
After three years of subdued rural consumption there were increasing signs of ruralgrowth recovery with catalysts driving the awaited revival in rural demand. While twosuccessive years of normal monsoon portend well for farm output the combination ofMinimum Support Price (MSP) hikes direct benefit transfers and farm loan waiverscontributed to disposable incomes. The rural sentiments turned positive and the Companydid see an improvement in its performance both in sales as well as overall collections.
Being largely engaged in the semi-urban and rural areas of the country major part ofthe Company's collection is in cash. Your Company however continues to educate itscustomers to adopt digital and online modes of repayment including Unified PaymentsInterface (UPI) and Aadhaar Enabled Payment System (AEPS).
While fulfilling its mission of Financial Inclusion your Company has also built a deepknowledge of customers with micro-data points ranging from income payment behaviourssocio-economic status and other indirect data. The Company is successfully mining thisdata to build powerful analytics models extended through digital platforms for customeracquisition collections NPA management customer engagement forecasting businesstrends etc. Your Company has also successfully integrated India Stack capabilities likeeKYC eSign etc. and digital payment channels in its platforms to serve customers evenin low-connectivity remote locations. Among the early adopters of blockchain technologyyour Company has in the year under review launched a vendor financing platform powered byblockchain. This cloud based application is one of the first such blockchain-enabledprojects in South Asia outside of traditional banking.
Your Company remains a significant financier to its customers in rural and semi-urbangeographies by providing a wide range of easy and affordable products and services. YourCompany consolidated its position as a leading financier in all Aggregator and Self-drivevehicles segment. Your Company expanded vide its channel connect with leading car dealersand yet again emerged as a major financier for Maruti vehicles in semi-urban and ruralIndia during this fiscal. Your Company has retained its leadership position in financingthe Mahindra range of vehicles and tractors in addition to extending its lending tovehicles of other Original Equipment Manufacturers (OEMs) and also continued to be thepreferred financier for Hyundai Renault and Nissan range of vehicles.
Your Company further expanded its geographical presence by reaching out to untappedvillages and increased its footprint by opening new branches and making it more accessibleto its customers. New financial products and services were introduced during the year tomeet various lifecycle needs of its customers and your Company focused on buildingadditional skill sets and digital capabilities to meet such requirements. Your Company hasalso enhanced the offerings in-used tractor financing and agri-implements thereby playinga key role in farm mechanisation across the country.
Your Company strengthened its pan-India presence with a network of 1284 offices whichis one of the largest amongst Non-Banking Financial Companies. In addition to theseoffices your Company has during the year under review set up over 200 smart branches atdealerships of OEMs and works closely with dealers and customers. Your Company'snationwide network of branches and locally recruited employees have facilitated incatering to the diverse financial requirements of its customers by identifying andunderstanding the needs and aspirations of the people.
With its strong presence covering even the most remote areas of the country yourCompany is providing flexible financing opportunities to aspiring individuals to realisetheir dreams and helping them to RISE'. Your Company believes that incessantlyserving its customers and channel partners and enhancing customer relationship is thestarting point of a great successful journey.
Your Company has earned the trust and confidence of its customers with its consistenttransparent and reliable services and as a result customer satisfaction across itsnetwork continues to remain high. Your Company has cumulatively financed the aspirationsof over 5.3 million customers since its inception most of whom had no prior credithistory. Your Company's philosophy of helping rural customers by providing easy finance attheir doorstep has given a big boost in transforming rural lives.
During the year under review your Company continued to expand its reach in the MicroSmall and Medium Enterprises (MSME) segment. MSME Assets Under Management crossed morethan Rs. 4988.04 Crores during the period under review covering 3017 customers.
In the year under review the effect of demonetisation has substantially come down withimproved availability of currency notes. Further with the stabilization of the Goods andServices Tax (GST) the temporary downward impact witnessed during the roll-out has beenadequately addressed.
The overall disbursement registered a growth of 19% at Rs. 31659.1 Crores as comparedto Rs. 26706.3 Crores in the previous year. Total Income grew by Rs. 968.6 Crores toRs.7206.1 Crores for the year ended 31st March 2018 as compared to Rs.6237.5 Crores forthe previous year. Profit Before Tax (PBT) grew by Rs.752.6 Crores to Rs.1372.7 Crores ascompared to Rs. 620.1 Crores for the previous year. Profit After Tax (PAT) increased byRs. 491.7 Crores to Rs.891.9 Crores as compared to Rs.400.2 Crores in the previousyear.
During the year under review the Assets Under Management stood at Rs. 55101 Crores asat 31st March 2018 as against Rs. 46776 Crores as at 31st March 2017 a growth of 18%.
There is no change in the nature of business of the Company during the year underreview.
DISTRIBUTION OF MUTUAL FUND PRODUCTS
During the year under review the activity of distribution of Mutual Fund Products(MFP) was carried out across 161 branches covering 23 States.
As on 31st March 2018 the amount of Assets Under Management outstanding through theCompany's Distribution Services on MFP aggregate of institutional and retail segment wasRs. 2331.40 Crores and the number of clients stood at 59506.