Muthoot Capital Services posts a decline of 47% in PBT for Q4FY20

Muthoot Capital Services Ltd (MCSL), a part of Muthoot Pappachan Group and an NBFC, posted a decline of 47 per cent in profit before tax at Rs 18.52 crore during the quarter ended March 31, 2020, as compared to Rs 34.76 crore during the same period of previous fiscal year. The company's total income grew 7 per cent to Rs 146.94 crore during the quarter, as against Rs 137.26 crore during the corresponding period a year ago.

The company disbursed two-wheeler loans amounting to Rs 329.9 crore and reported a total disbursement of Rs 347.5 crore during the quarter. The total AUM (Assets under Management) reached Rs 2650 crore at the end of the quarter, including the assigned portfolio of Rs 52.3 crore. For the same quarter last year, the company had reported a total disbursement of Rs 605.7 crore, while AUM at the end of same quarter last year was at Rs 2744.6 crore.

Thomas George Muthoot, Managing Director, Muthoot Capital Services Ltd said that it had been a challenging year for all businesses, especially two-wheeler business, owing to the new standards and the transition to BS VI among others. He said that Covid-19 was another disruption and had led to a contraction of the GDP, impacting the common man and his livelihood.

"We expect things to return to normal towards the end of Q2FY 21, early Q3FY21. Currently, the liquidity position is strong, with further funds expected through various steps initiated by the government and RBI. With the assistance offered by the government and the RBI, a loyal team and a loyal customer base, the negative impact of Covid-19 is expected to wane quickly," he said.

In order to generate additional revenue, MCSL, which offers financial solutions including 2-wheeler and used 4-wheeler loans, is partnering with Muthoot Fincorp Ltd (MFL), the flagship company of the group to source the gold loan business, which is the latter's core area. MCSL's team was redeployed for customer connect and cross-selling of gold loans, which resulted in earning additional revenue.

"Post the lockdown, with relaxations coming in place, collection through Muthoot Fincorp branches and other online means is increasing significantly. In the meanwhile, the disbursement will be resumed with tighter credit appraisal and additional process controls. Geo expansion has been paused and launch of new products has been pushed to the second half of the year,” said Madhu Alexiouse, chief operating officer, MCSL.

Meanwhile, Chief Financial Officer  Vinod Panicker, said that in the interim, a higher delinquency could be seen leading to higher NPA figures and thereby higher provisioning/credit costs. While a lot of uncertainty prevails, based on best possible assessment, a contingency provision of Rs 18 crore has been made towards any possible impact on financials due to Covid-19. "The company is looking at actively sourcing funds through public deposits in the state of Kerala, besides speaking to banks/other investors for loans/securitization, to meet its funding requirements,” he said.