The Hindu Business Line : M&M Financial Services: Ride on

THE fixed deposit programme of Mahindra and Mahindra Financial Services (MMFSL) is a good investment option. The interest rate on offer is lower than that given by companies such as Ashok Leyland Finance.

However, given the revival in auto sector, the business prospects of MMFSL appear bright. Its financial performance also give confidence.

An investment up to one year can be considered, but not beyond considering the cyclical nature of the automobile sector.

Scheme and feature: MMFSL offers only a cumulative fixed deposit scheme. The interest rates are 7.25 per cent for 12 months, 7.5 per cent for 18 months, 7.75 per cent for 24 months and 8.25 per cent for 36 months.

The yields for the tenors are 7.25 per cent, 7.64 per cent, 8.05 per cent and 8.95 per cent respectively. The minimum deposit, across tenors, is Rs 10,000 and, thereafter, in multiples of Rs 1,000.

Further information can be had from the company's registered office at Gateway Building, Apollo Bunder, Mumbai 400 001.

Business prospects: MMFSL, a subsidiary of the auto major, Mahindra and Mahindra, provides hire-purchase finance for utility vehicles and light commercial vehicles segments.

It finances dealers of M&M, their customers and small businesses by extending short-term finance for four-wheelers as well as lease and hire purchase finance.

The company's business prospects appear to be bright considering the 9.6 per cent growth in utility vehicle sales for the year ending March 2003. The LCV segment also grew by about 32 per cent during that period. However, given the monsoon forecast, the recessionary conditions in the agriculture sector may continue. This, in turn, may affect the sale of tractors, which is a major revenue contributor for the company.

Financials: Despite tough market conditions, the company's disbursements for the year ended March 2002, grew 16.4 per cent to Rs 1,166 crore, from the previous fiscal.

The net income for the period grew 37.9 per cent to Rs 191.3 crore. The post-tax profits stood at Rs 27.7 crore (Rs 9.6 crore). The net profit margin for the period stood at 14.5 per cent (6.9 per cent).

The capital-to-risk assets ratio was 17.05 per cent as on March 31, 2002 against the required 12 per cent. The provisioning for non-performing assets stood at Rs 15.37 crore (1.3 per cent of the total disbursements).

Given the risk profile and the rates on offer, an investment beyond one year can be avoided.

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