Cholamandalam profit after tax down 24% in Q1

By: |
July 31, 2021 3:45 AM

Total income of the company, however, grew 17% to Rs 2,467 crore from Rs 2,114 crore, said a Chola statement.

Many of the borrowers and the staff of Chola were impacted by the second wave, whereby the priority shifted from business to protecting the well being of affected persons.Many of the borrowers and the staff of Chola were impacted by the second wave, whereby the priority shifted from business to protecting the well being of affected persons.

Cholamandalam Investment and Finance Company (Chola), the financial services arm of the Murugappa Group, on Friday reported a 24% decline in its profit after tax (PAT) at Rs 327 crore for the first quarter of FY22, compared with Rs 431 crore in the corresponding quarter last fiscal, owing to the impact of Covid second wave-induced lockdowns.

Total income of the company, however, grew 17% to Rs 2,467 crore from Rs 2,114 crore, said a Chola statement.

Many of the borrowers and the staff of Chola were impacted by the second wave, whereby the priority shifted from business to protecting the well being of affected persons. This has resulted in a setback in performance in Q1 on the disbursements and collections front, Chola said.

Disbursements were up by 1% to Rs 3,635 crore, compared with Rs 3,589 crore in Q1 of FY21, as purchase of vehicles were predominantly deferred. Collections also suffered, resulting in increase in Stage 3 assets from 3.96% to 6.79%. The restructuring option with asset classification benefit extended by RBI under Restructuring 2.0 was used to the extent of 3.86% of the book as of June 2021. Total restructuring (including the restructuring done under Restructuring 1.0) stood at 5.44% of the book, it said.

Chola held management overlay provisions of Rs 750 crore as on December 2020 and created additional overlay provisions in March 2021 to the tune of Rs 350 crore to support possible uncertainties stemming from the second wave, taking the total management overlay to Rs 1,100 crore. Of this, management overlay of Rs 400 crore was reversed during Q1.

Chola witnessed recovery in disbursements and collections during the later part of June after relaxation of state-wise lockdowns. “We expect a gradual revival in subsequent quarters in FY22 with normalisation and rollbacks of accounts which moved to higher buckets,” the company said.

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