A company release attributed the dip in net profit to a higher provision for tax to the tune of of Rs 22.40 crore as compared to Rs 18 crore in the previous year. Kotak Mahindra's profit before tax was pegged at Rs 34.58 crore in 1998-99 against Rs 39.11 crore in 1997-98.

"One of the significant achievements of the year was the company's ability to control its non-performing assets (NPAs) with only insignificant incremental NPAs during the year," the Kotak release said.

The net NPA is pegged at Rs 32.41 crore, representing 3 per cent of assets and 9 per cent of the net worth. This level of NPAs is one of the lowest in the finacial services sector, the release said. KMFL expects asubstantial reduction in the NPAs by the end of 1999-2000.

The company has a capital adequacy exceeding 24 per cent and a debt equity ratio of 1.85:1.

Among the company's subsidiaries franchise income of Kotak Mahindra Capital Company rose to Rs 20.43 crore from Rs 15.39 crore in the previous year, but the net profit declined from Rs 16.51 crore to Rs 13.10 crore.