Vehicle financier Mahindra Finance on Thursday reported a year-on-year decline of over 50% in its standalone net profit at `67.17 crore for the December quarter, as higher provisions impacted the company’s operating income.
Total income fell just over 1% year-on-year to `739.10 crore, as the company witnessed a decline in its net interest income, which fell around 1% to `730.60 crore. Other income fell 4% annually to `8.50 crore. The non-banking finance company’s provisions, at `340.60 crore, were 27% higher than in the same quarter last year. Gross non-performing assets (NPAs) as a percentage of total advances as on December 31 stood at 10.1% as against 7.1% last financial year, while net NPAs rose 120 basis points to 4.6%.
In order to comply with fresh norms laid down by the Reserve Bank of India (RBI) regarding identification and providing for NPAs after five months of failing to meet interest payments, Mahindra Finance made an additional provision of around
`51 crore over the past nine months of the current fiscal. “However, there is no significant impact of this change on the provision for the quarter ended 31st December 2015,” the company said in a post-earnings statement.
Ramesh Iyer, managing director of the company, said in a post-earnings investor call that the semi-urban and rural markets are yet to show any significant improvement in terms of growth. Even as states like Bihar, Uttar Pradesh, Gujarat, Rajasthan and Andhra Pradesh are performing well, others like Maharashtra and Karnataka continue to pose challenges, Iyer said. The MD also said due to excess rains in Tamil Nadu a couple of months ago, the company witnessed increased demand from the region during the festival season.