Manappuram Fin reports Rs 141-cr loss in Q4

Provision for bad and doubtful loans balloon

Gold-loan company Manappuram Finance Ltd posted a net loss of Rs 141.43 crore in the fourth quarter ended March 2013 as against a net profit of Rs 186.23 crore in Q4 of FY12.

Its income from operations nosedived to Rs 312.13 crore from Rs 790.74 crore in January-March 2012. The provisions for bad and doubtful loans rose to Rs 61.95 crore, from a mere Rs 2.23 crore in Q4 last year. Its stock price closed higher by one per cent Rs 16 per share on BSE.

Its annual profit for 2012-13 declined to Rs 208.43 crore from Rs 591.46 crore a year ago. The income, too, dropped to Rs 2,217.31 crore from Rs 2,615.54 crore.

The profits fell due to under recovery of interest amounting to Rs 284.20 crore on a specific pool of its portfolio, that was booked during Q3 of FY 2012, the Kerala-based non-banking finance said in a statement.

It also made additional provision amounting to Rs. 51.40 crore being the reversal of interest booked in FY-2012. The company faced a higher incidence of defaults in this pool after it began realigning its portfolio under the new loan to value (LTV) regime brought into effect in March 2012.

V P Nandakumar, MD & CEO, said, “The company has faced considerable stress last year on account of policy changes and market forces. However, this is a temporary phase unlikely to hold back the company or the industry beyond the short term.”

The total gold loan disbursements amounted to Rs 20,516 crore in 2012-13 as against Rs 31,698 crore in FY12. The company’s Assets under Management (AUM) has also declined to Rs 9,952 crore from Rs.11,630 crores a year ago.The decline reflects the realignment of the LTV and the changes in the liability profile of the company.

The capital adequacy ratio has been maintained at a high level of 22.49 percent. The Net non performing assets (NPAs) stood at 0.77 percent as of March 31, 2013.

The company has stepped up its interest collection efforts due to the changed market scenario.

The loan repayments in the current portfolio are at normal levels. Moreover, it has begun an initiative to encourage borrowers to remit periodical interest on gold loans.