L&T Finance Holdings on Friday reported 69 per cent fall in net profit to Rs 174 crore in the second quarter ended September 30, following one time adjustment due to the deferred tax assets (DTA) after cut in corporate tax. The company had registered a net profit of Rs 559.12 crore during the corresponding period a year ago.
Total income during the second quarter of 2019-20 increased to Rs 3,711.85 crore as against Rs 3,302.35 crore in the year-ago period. The consolidated pre-DTA PAT was Rs 647 crore for the quarter, up 15 per cent from Rs 560 crore in the same quarter last earlier.
"We remain a partner of choice for financiers and continue to diversify our liability mix through reputed domestic and global institutions. Our continued investment in businesses where we have a clear 'Right to Win', has been the bedrock of our strategy, and we remain committed to this plan," said Dinanath Dubhashi, Managing Director & CEO, LTFH.
Under the new reduced tax guidelines, corporates that have taken higher provisions and created Deferred Tax Assets (DTA) at 34.94 per cent need to revise the tax rate to 25.17 per cent, leading to a one-time P&L (profit & loss) charge of 9.77 per cent, a company spokesperson said.
"Following this, LTFH is opting for lower CTR of 25.17 per cent leading to lower tax liability from FY20 onwards. As a part of its robust risk management framework, over the last 3 years, LTFH has implemented accelerated provisions to enhance PCR (provision coverage ratio).
"Consequently, Q2 FY20 results reflect one time impact of Rs 473 crore due to reversal of DTA as on April 1, 2019," the spokesperson said.
In the second quarter of this fiscal, the government announced the reduction in corporate tax rate from 34.94 per cent from 25.17 per cent earlier. Stock of the company closed at Rs 85.35 on the BSE, down 0.23 per cent from previous close.