Mahindra & Mahindra Financial Services net drops 14%

Mahindra & Mahindra Financial Services, a subsidiary of Mahindra and Mahindra has posted a 14% decline in consolidated net profit to Rs 157 crore in the quarter ended December 31 due to higher loan provisions and write offs.

The loan provisions and write offs rose 51% year-on-year to Rs 276 crore while the total income grew by 12% to Rs 1,522 crore during the quarter.

"The overall rural economy was on the low head and therefore, cash flows have been impacted or delayed. We do believe that some of this could get corrected in the fourth quarter once cash flows comes in from crop sales. But we believe it continues to be pressuring as far as the overall activities are concerned at the rural level. Their cash flow cycles are getting stretched and delayed. That impacts the collections and the provisions and therefore profits get impacted," said Ramesh Iyer, managing director of the company.

On a standalone basis the net profit declined 17% to Rs 136 crore while the total income rose by 10% to Rs 1,396 crore.

The gross non-performing assets (NPA) to total assets stood at 7.1% as on December 31, 2014 compared with 4.8% a year ago while the net NPA to total assets was at 3.4% compared with 2.2% a year ago.

The provisioning coverage ratio stood at 54.3% compared with 55.5% a year ago.