Peerless Wipes Out Carryforward Loss

Kolkata, Sept 17: | Updated: Sep 18 2003, 05:30am hrs
Peerless General Finance & Investment Co Ltd, the countrys largest residuary non-banking company, has reported another year of strong profit growth that enabled it to finally wipe off its carry-forward loss of Rs 124 crore and create a special reserve of Rs 128 crore.

Total income shot up to Rs 3,287 crore during the year to March 31, 2003, from Rs 1,142 crore the previous year, while profit before tax rose by 10 per cent to Rs 331 crore from Rs 302 crore the previous year.

Profit after taxes (Rs 105 crore) was Rs 226 crore in the latest year, lower than the Rs 282 crore it had reported the previous year after taxes of Rs 20 crore. However, after adding an opening deferred tax asset of Rs 96 crore, Peerless was left with enough to clear the last traces of its losses.

This, coupled with its success in securing a registration certification from the Reserve Bank of India earlier this year, is expected to bring cheer to its shareholders at their 70th annual general meeting scheduled for Monday, September 22.

For Peerless, founded in 1932 to tap the savings of small investors, the results for 2002-03 are the culmination of a seven-year long rescue effort masterminded by former State Bank of India chairman Dhruba Narayan Ghosh with the full backing of Mr SK Roy, whose family owns the company.

Mr Ghosh told FE that Peerless has cleared all its earlier problems, and now the whole focus will shift to cost-effective marketing.

Towards the middle of last year, we achieved a positive net worth, and this year we reached a capital adequacy level of around 14 per cent, Mr Ghosh told FE.

In the mid-Nineties, Peerless lost a court battle with the RBI as a result of which it had to make a fundamental change in its accounting policies and ended up with a hole in its balance sheet. At the same time, it had diversified into a host of unrelated activities.

After Mr Ghosh was put at the helm by the government, he worked out a roadmap with clear financial milestones and recast the group, putting Peerless on course to become the countrys largest financial supermarket.

During the latest year, Peerless maintained the trend of high growth in collections, with new business increasing by 68 per cent to Rs 692 crore. Collections under its unique daily deposit and fixed deposit schemes rose by 29 per cent and 88 per cent respectively. Investment income declined to Rs 905 crore in 2002-03, from Rs 1,034 crore the previous year, with market interest rates falling and high maturity payments reducing the availability of investible funds.