Mahindra and Mahindra Financial Services on Monday reported a 45.52% fall in its standalone net profit in the April-June quarter.
Mahindra and Mahindra Financial Services on Monday reported a 45.52% fall in its standalone net profit in the April-June quarter. Ramesh Iyer, vice-chairman and managing director at Mahindra Finance, pointed out in a press briefing on Tuesday that with many states going to the polls over the next two years, the growth story looks very promising. Iyer also asserts that the second half of the year is always the biggest half for rural India. Edited excerpts:
Please throw some light on your NPAs.
If you look at our gross NPAs, it is close to 10.5% which is almost the same as last year first quarter. Our net NPAs will be about 4.4% as against 5.4% last year. In this 12 months time, we have done half a million customers. Historically, if you look at from March 31, i.e. last quarter to first quarter, you will always see a spike in NPAs of about 30% because for rural India, second half is the biggest half. In the first half, you will always see spikes.
What are your margins?
Our net margins are close to 7.6%—it has increased by 75 basis points.
What is the future outlook?
In my 22 years of running this business, we have had the toughest five quarters I am assuming. Next two years, six states would be coming up for elections. We are very bullish that these six states will definitely be a growth story. I would strongly think that whatever we must have lost in 15 months is getting decently fixed back.
What has been your cost of funds this quarter?
Our cost of funds has been close to 8.25%.
What is your profit outlook for the next three quarters?
I won’t put a number. Last year, we had Rs 400 crores of profit after tax. But it had a very high provision of Rs 1,200-1,300 crore of which about Rs 500-odd crore had come from disposal losses—that means we had repossesed vehicles from customers long overdue. We took a view and we cleaned up whatever we needed to do. Is that going to repeat this year? The clear answer is no.
What is your average ticket size?
Our average ticket size should be around Rs 4-5 lakhs. Slightly must have gone up with tractor growth and commercial vehicles. The lowest will be in the pre-owned cars at Rs 2 lakh and the highest will be commercial vehicles at Rs 13-14 lakh.