Cholamandalam Investment and Finance Company declined 2.57% to Rs 151.75 after net profit slumped 85.38% to Rs 42.66 crore on 14.11% rise in total income to Rs 2,151.45 crore in Q4 March 2020 over Q4 March 2019.
Cholamandalam said one-time provision of Rs 504 crore towards COVID-19 and macro provisions majorly impacted net profit in Q4 March 2020. The NBFC major said net profit before this provision stood at Rs 418 crore which is up by 43% for the quarter over previous year.
Commenting on the moratorium announced by RBI on EMI repayments, Cholamandalam Investment said that nearly 76% of customers have availed moratorium considering the uncertainty over the period of lockdown. The company has created a one-time contingency provision of Rs 284 crore towards probable losses against loans for which moratorium was extended. Over and above this, the company has also created a Macro provision of Rs 250 crore to meet contingencies that may arise post moratorium due to the global recession and economic slow-down. In total, the company has set aside an additional provision of Rs 534 crore (including Rs 30 crore of Macro provision created in FY 19) to meet any contingencies that may arise in future due to the Covid-19 shut down. The company further said it has not availed moratorium so far on its borrowings, and it does not intend to avail any moratorium benefit.
The NBFC major said Covid-19 shutdown impacted disbursements in Q4 March 2020 as disbursements tumbled by 36% to Rs 5,663 crore in Q4 March 2020 due to shut down.
Cholamandalam's Vehicle Finance (VF) business has clocked a volume of Rs 4,703 crore for the quarter ended March 2020 as against Rs 7,383 crore in the previous year, reporting a decline of 36% year on year. Home Equity (HE) business disbursed Rs 589 crore in Q4 March 2020 as against Rs 1,034 crore disbursed in Q4 March 2019 for Q4 March 2019, decline of 43%. Home Loan (HL) business disbursed Rs 271 crore in Q4 March 2020 as against Rs 392 for Q4 March 2019, decline of 31%.
Total Assets under Management (AUM) grew by 16% to Rs 66,943 crore from Rs 57,560 crore in Q4 March 2019.
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The Capital Adequacy Ratio (CAR) of the company as on 31 March 2020, was at 20.68% (As per Ind AS) above the regulatory requirement of 15%.
Commenting on the results, Arun Alagappan, managing director, said, "Given the uncertainties in the market, the company was conservative with respect to creating contingency provisions towards COVID-19 and maintaining more than adequate cash reserves. As of March 2020, while many in the industry were affected by the liquidity crunch due to Covid-19, Chola was strongly placed with sufficient liquidity to pass on the moratorium benefits to its customers, without having to avail any. During this period, the company has fast-tracked implementation of key digital initiatives, which shall help us serve customers better in a post Covid-19 world. We strongly believe the company shall leverage these capabilities to the fullest in the coming quarters and emerge stronger."
Cholamandalam Investment and Finance Company is a diversified non-banking finance company engaged in providing vehicle finance, home loans and corporate mortgage loans, small and medium enterprises (SME) loans, investment advisory services, stock broking and a range of other financial services.
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