Hit hard by economic slowdown in India after the global financial crisis began in late 2008, Fullerton, which had significant unsecured credit such as personal loans, booked a huge loss of Rs 717 crore in 2009-10.
Subsequently, it revised business strategy to increase focus on secured asset classes, tighten credit norms for unsecured lending and rationalise branch network. Now showing signs of turnaround, it booked a net profit of Rs 2.6 crore for 2010-11, though the total income was down to Rs 880.6 crore from Rs 935.6 crore in 2009-10.
The revamp has begun to show results but needs another year to consolidate operations. The growth in credit was flat and loan dues were Rs 4,000 crore at the end of March 2011, said president and chief executive Ruben La Mora. The company expects to grow the loan book by 35 per cent to cross the Rs 5,000-crore mark.
The loan defaults had jumped in the aftermath of the financial crisis. Non-performing assets declined to Rs 135.3 crore by March 2011, from Rs 341.9 crore a year before.
Mora said the focus during restructuring was to retain customers, rationalise branch network and prune staff, especially in urban branches. According to rating agency Icra, as a part of its drive to cut costs, Fullerton shut half its branches and reduced employee strength by nearly a third.
While it did slash branches in urban areas, It opened 84 branches in rural areas. Nor did it discontinue unsecured lending, Mora said.
Capital infusion would not be needed in the short term, as the capital adequacy ratio was 20.4 per cent at the end of March, well above the regulatory minimum of 15 per cent, he said.
Cumulatively, it has received equity capital of Rs 1,700 crore. This includes equity infusion of Rs 240 made in 2009-10. Parent company Fullerton Financial Holdings is a wholly-owned subsidiary of Temasek, an investment arm of the Singapore government.
For its investments in the Indian real estate, Blackstone seems to follow adage “slow and steady wins the race” quite ardently.Till 2011, the real ...