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Murugappa Group’s Cholamandalam Investment and Finance Company registered a 41 per cent rise in net profit at ₹432 crore for the quarter ended September 30, 2020, when compared to ₹307 crore in the year-ago quarter amid a drop in disbursements.
Total income grew 11 per cent to ₹2,440 crore in the September 2020 quarter against ₹2,197 crore in the same quarter in the previous fiscal, said a company statement.
Loan losses were higher at ₹318 crore (₹95 crore). Profit before tax (PBT) of the NBFC grew 11 per cent at ₹582 crore (₹523 crore).
Fall in disbursements
Total disbursements during the July-September period fell 13 per cent to ₹6,457 crore (₹7381). Vehicle finance business declined by 18 per cent at ₹4,781 crore (₹5,796 crore), while Loan Against Property (LAP) business disbursed was ₹1,052 crore against ₹1,064 crore. Home loan business stood at ₹381 crore (₹414 crore)
Assets under management grew 16 per cent at ₹74,471 crore (₹64,409 crore in the year-ago quarter).
Stage 3 assets (to gross assets) stood at 2.75 per cent with provision coverage of 42.65 per cent as on September 30 against 3.18 per cent in H1 of FY20, with provision coverage of 34.43 per cent. Stage 3 assets improved from 3.80 per cent in March 2020 to 2.75 per cent in September 2020.
Pursuant to the moratorium getting over in August 2020, the company had over 95 per cent of its customers starting to repay their instalments till date. However, the company has created additional provisions of ₹250 crore towards macro provisions during Q2 in Stage 1 and 2 assets, taking the total additional provisions to ₹800 crore.
As per the apex court order, the company has not classified any new accounts as NPA after August 31. If it had classified new accounts as NPA, then the Gross Stage 3 and Net Stage 3 would have been 2.98 per cent and 1.70 per cent, respectively.
As of September 30, the company had ₹6,802 crore as cash balance, with a total liquidity position of ₹9,797 crore (including undrawn sanctioned lines). The ALM is comfortable with no negative cumulative mismatches across all time buckets.
“The quarter gone by was critical not just for us, but for the entire banking and financial services industry. With the six-month moratorium ending in August, the focus was to scale up on-field collection efforts, and the company has been able to make considerable improvement in the last 2 months. While the broader economy is still recovering, the company has witnessed better-than-expected disbursement numbers in Q2 FY21, with the trend seeming to be on a positive trajectory in the coming quarters,” said Arun Alagappan, Managing Director.
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