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MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED

Mahindra & Mahindra Financial Services Limited (MMFSL) is part of the Mahindra group, which is one of the largest business conglomerates in India. MMFSL Company was incorporated on 1 January 1991 under the name of Maxi Motors Financial Services Limited as a public limited company under the provisions of the Companies Act 1956. Mahindra & Mahindra Financial Services Limited is one of the leading non-banking finance companies with customers primarily in the rural and semi-urban markets of India. MMFSL is primarily engaged in providing financing for new and pre-owned auto and utility vehicles, tractors, cars and commercial vehicles. MMFSL also provides housing finance, manage mutual funds, personal loans, financing to small and medium enterprises, insurance broking and mutual fund distribution services.

MMFSL has established a pan-India presence, spanning 27 states and five union territories through 1,296 offices as of 30 September 2018. MFSL caters to the financing needs of retail customers and small and medium-sized enterprises. MMFSL primarily focuses on providing financing for purchases of auto and utility vehicles, tractors, cars, commercial vehicles and construction equipment, pre-owned vehicles, and others which accounted for 26 %, 18 %, 20 %, 13 %, 23% and 9 % of estimated total value of the assets financed by MMFSL, respectively, for the financial year 2018. For the half-year ended 30 September 2018, financing for purchases of auto and utility vehicles; tractors; cars; commercial vehicles and construction equipment; and pre-owned vehicles, SME and others accounted for 23%, 18%, 20%, 18% and 21% of estimated total value of the assets financed by the Company, respectively. Mahindra & Mahindra, the promoter and the flagship company of the Mahindra group, had a market capitalisation of Rs. 90,600 crore as of 30 September 2018. The Mahindra group has a strong presence in the utility vehicles, tractors, information technology, financial services, aerospace, real estate, hospitality and logistics sectors.

In October 2007, MMFSL commenced housing finance business through registered subsidiary, Mahindra Rural Housing Finance Limited (MRHFL). MMFSL hold 89.0% of the outstanding equity shares of MRHFL and on 20 June 2013, Mahindra Asset Management Company Private Limited was incorporated and was appointed as the asset management company of the Mahindra Mutual Fund. The Mahindra Mutual Fund was constituted as a trust and was registered with SEBI. Apply now

INVESTMENT RATIONALE

The Issue offers yields ranging from 9.02% to 9.50% depending up on the Category of Investor and the option applied for. Public Issue by Mahindra & Mahindra Financial Services Limited of Secured Redeemable Non-Convertible Debentures of face value of Rs. 1,000 each (“Secured NCDs”) and Unsecured Redeemable Non-Convertible Debentures of face value of Rs 1,000 each (“Unsecured NCDs”) for an amount of Rs. 500 crore (“Base Issue Size”) with an option to retain oversubscription up to Rs. 3000 crore aggregating up to Rs. 3500 crore (“Tranche I Issue Limit”) (“Tranche I Issue”). The Secured NCDs shall be allotted for a value of up to Rs. 2500 crore and the Unsecured NCDs shall be allotted for a value of up to Rs. 1000 crore within the overall limit of Rs. 3500 crore. The Unsecured NCDs shall be in the form of subordinated debt eligible for Tier II Capital.

Credit Rating of “CARE AAA (Triple A); Stable” for an amount of up to Rs 10,000 Crore, by Credit Analysis & Research Ltd. and “IND AAA; Stable” for an amount of up to Rs 10,000 Crore, by India Ratings and Research Private Limited. The NCDs are proposed to be listed on BSE Limited (“BSE”). For the purpose of the Issue, BSE shall be the Designated Stock Exchange.

ISSUE STRUCTURE

Issues Mahindra & Mahindra Financial Services Limited
Type of instrument/ Name of the security/ Seniority Secured and/ or Unsecured Subordinated, Redeemable, Non-Convertible Debentures
Nature of Indebtedness and Ranking / Seniority Secured and/ or Unsecured Subordinated, Redeemable, Non-Convertible Debentures subject to applicable RBI requirements and other applicable statutory and/or regulatory provisions. The Unsecured NCDs will be in the nature of subordinated debt and will be eligible for Tier II capital
Mode of the issue Public issue
Lead Managers A. K. Capital Services Limited, Edelweiss Financial Services Limited, Axis Bank Limited, ICICI Securities Limited, SBI Capital Markets Limited, Trust Investment Advisors Private Limited, YES Securities (India) Limited
Tranche I Issue/Tranche I Issue Size Public Issue by Mahindra & Mahindra Financial Services Limited of Secured Redeemable Non-Convertible Debentures of face value of Rs. 1,000 (Indian Rupees One Thousand) Each and/ or unsecured, subordinated, redeemable non-convertible debentures of face value of Rs. 1,000 (Indian Rupees One Thousand) each for an amount aggregating up to of Rs. 500 crore (“Base Issue Size”) with an option to retain versubscription up to Rs. 3000 crore aggregating up to Rs. 3500 crore. The Secured NCDs shall be allotted for a value of up to Rs. 2500 crore and the Unsecured NCDs shall be allotted for a value of up to Rs. 1000 crore within the overall limit of Rs. 3500 crore.
Base Issue Size Rs. 500 crore
Option to retain Oversubscription Amount Rs. 3000 crore
Issuance mode of the instrument In dematerialised form only
Day count basis Actual / Actual
Default interest rate The company shall pay interest in connection with any delay in allotment, refunds, listing, dematerialized credit, execution of Debenture Trust Deed, payment of interest, redemption of principal amount beyond the time limits prescribed under applicable statutory and/or regulatory requirements, at such rates as stipulated/ prescribed under applicable laws
Redemption Date Shall mean 39 months from Deemed Date of Allotment for Series I NCDs, 60 months years from Deemed Date of Allotment for Series II NCDs, 96 months from Deemed Date of Allotment for Series III NCDs and 120 months from Deemed Date of Allotment for Series IV. If the Redemption Date/Maturity Date of any Series of the NCDs falls on a day that is not a Working Day, the redemption/maturity proceeds shall be paid on the immediately preceding Working Day along with interest accrued on the NCDs until but excluding the date of such payment.
Issue Price (in Rs.) Rs. 1,000 per NCD
Face value Rs. 1,000 per NCD
Minimum Application size and in multiples of NCD thereafter Rs. 10,000 (10 NCDs) collectively across all Series and in multiple of Rs. 1,000 (1 NCD) thereafter across all Series
Market Lot/ Trading Lot One
Pay-in date Application Date. The entire Application Amount is payable on Application.
Credit ratings The NCDs proposed to be issued under the Issue have been rated ‘CARE AAA; Stable’ for an amount of Rs. 10,000 crores, by CARE and “IND AAA; Stable” for an amount of Rs. 10,000 crores, by India Ratings. The rating of NCDs by CARE and India Ratings vide their letter dated September 29, 2018 and revalidated by revalidation letters dated October 31, 2018 and December 17, 2018 and vide letter dated October 3, 2018 and revalidated by revalidation letters dated November 2, 2018 and December 18, 2018, respectively indicate that instruments with the rating are considered to have highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk.
Listing The NCDs are proposed to be listed on BSE. The NCDs shall be listed within 6 (six) Working Days from the date of Issue Closure.
Trading mode of the instrument In dematerialised form only
Tranche I Issue opening date 4-Jan-19
Tranche I Issue closing date** 25-Jan-19
Record date 15 (fifteen) days prior to the relevant interest payment date, relevant Redemption Date for NCDs issued under the relevant Tranche Prospectus. In case of redemption of NCDs, the trading in the NCDs shall remain suspended between the Record Date and the Redemption Date. In the event the Record Date falls on a Sunday or holidays of Depositories, the succeeding working day or a date notified by the Company to the stock exchanges shall be considered as Record Date.
Deemed date of Allotment The date on which the Board of Directors/or Bond Issue Committee approves the Allotment of the NCDs for each Tranche Issue or such date as may be determined by the Board of Directors/ or duly authorised committee thereof and notified to the Designated Stock Exchange. The actual Allotment of NCDs may take place on a date other than the Deemed Date of Allotment. All benefits relating to the NCDs including interest on NCDs (as specified for each Tranche Issue by way of the relevant Tranche Prospectus) shall be available to the Debenture holders from the Deemed Date of Allotment.