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Faced with delinquencies arising from sluggish demand and a slowdown in sectors such as mining, Shriram Transport Finance Ltd's net profit was unchanged in the July-September quarter as compared with the same period last year.
The profit after tax for the second quarter was Rs 299 crore, the same as in the corresponding quarter last year. Provisions and write-offs almost doubled to Rs 236 crore, from Rs 120 crore.
Mr R Sridhar, Managing Director, Shriram Transport, said the company saw excess write-offs due to delinquencies caused by losses incurred by transport operators servicing the mining sector.
Mining woes
“In the mining industry, what started off as sluggishness in usage was brought to a complete standstill due to regulatory issues. Loans given for buying trucks that were used in the industry turned delinquent as borrowers were unable to pay. So, we saw higher write-offs in the just ended quarter as compared to earlier quarters,” he said.
Write-offs amounted to Rs 130 crore, as against Rs 50-60 crore which is the norm.
“We could have shown more profit if we did not make any write-offs. But we did not do that because we felt that in the next two quarters also growth will be sluggish as interest rates have not moderated and the economic scenario is tough. So, we are not growing aggressively,” he said.
The company disbursed Rs 4,800 crore loans in the second quarter. Total assets under management as on September 30, 2011, stood at Rs 38,076 crore against Rs 36,997 crore as on June 30, 2011, said a press release issued by the company.
Loan target
For the whole year the company has revised its loan growth target downwards to 10 per cent, from 15-20 per cent, Mr Sridhar said.
“Demand would continue to be sluggish for at least two more quarters or at least till interest rates moderate,” he said.
Net interest income in the second quarter ended September 30, 2011, increased by 19 per cent to Rs 835 crore against Rs 700 crore in the same period last year.
Net interest margin moved up to 8.19 per cent, from 7.55 per cent last year and 7.59 per cent in the June quarter.
Shriram Transport's board declared an interim dividend of Rs 2.50 (25 per cent) per share.
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