Edelweiss books Rs 2,819 cr pre-tax loss in Q4 on spike in provisions

Plans to bring PE as investor in wealth & asset mgt business; raise up to $200 mn in equity

Edelweiss Financial Services (EFSL) has posted a pre-tax loss of Rs 2,818.9 crore for the fourth quarter ended March 2020, on an increase in provisions for impairment on loans and financial instruments.

It had reported a profit before tax of Rs 405.6 crore in the fourth quarter ended March 2019 (Q4FY19).

EFSL has posted a net loss of Rs 2,281.5 crore in Q4FY20, as against a net profit of Rs 246.3 crore in the year-ago period. Its net loss for FY20 stood at Rs 2,043.7 crore, against a net profit of Rs 1,044.3 crore in the previous fiscal year.

The company said management’s judgment for expected credit losses and gain/loss on fair values changes factors in the impact of Covid-19 pandemic. In the Q4Fy20, the group provided Rs 2,624 crore towards expected credit losses, write-offs, loss on sale to asset reconstruction company’s trusts and funds and net loss on fair value changes.

Chairman Rashesh Shah said the company had taken three decisions to further strengthen balance sheet and dominant franchises. First, the group will mark down and sell-down corporate asset book. Second, it will accelerate capital light model in retail credit. And finally, the firm will raise equity at EFSL level and in Wealth & Asset Management business.

The company was in talks with private equity investors to raise $130-200 million of equity capital in Wealth & Asset Management. The transaction in expected to be finalised in the next six to eight weeks, Shah added.