Mahindra and Mahindra Finance Services Limited (MMFSL), the auto financing subsidiary of utility vehicles major Mahindra & Mahindra, has announced the details of the IPO which is slated to open next week.
MMFSL currently offers retail auto financing, mainly for M&M products like tractors and utility vehicles. The company also provides financing for other non-competing auto brands as well as used vehicle financing. MMFSL has a subsidiary which is into insurance broking as well as distribution of mutual fund products.
The company has a nationwide network of 295 branches, mostly in semi-urban and rural areas. Unlike most other financial services companies, MMFSL is focused more on smaller towns.
For the financial year 2004-05, MMFSL recorded a net profit of Rs82.28 crore as compared to Rs67.62 crore for the previous year, a growth of 21.68 per cent. Total revenues increased 34.56 per cent to Rs405.92 crore from Rs301.67 crore during the previous year.
Total loan disbursement during 2004-05 was Rs3,343.36 crore as against Rs2,302.7 crore during the previous year, a growth of 45.19 per cent. Total assets as at the end of 2004-05 increased 51.35 per cent to Rs4,268.58 crore from Rs2,820.36 crore at the end of the previous year.
MMFSL is planning to diversify into a wide range of retail financial services. Personal loans and two-wheeler and commercial vehicle financing are some of the segments the company is planning to enter. MMFSL is also considering a subsidiary to enter the home loan segment.
At present, M&M holds 97 per cent of the Rs70.16 crore capital base of MMFSL. M&M is offering 1 crore shares, or more than 14 per cent, to the public as an offer for sale. MMFSL is also offering 1 crore new shares to the public. After the issue, M&M's stake in MMFS would decline to 67 per cent.
The price band has been fixed at between Rs170 and Rs200 per share. The IPO opens on 21 February and would close on 24 February.