Cholamandalam Investment and Finance Co. Ltd. (CIFCL) standalone net profit for the fourth quarter ended March 2020 declined to ₹43 crore after creation of one-time provision of ₹504 crore to cover contingencies due to COVID-19 and macro provisions.
On a comparable basis, net profit for the quarter stood at ₹418 crore, before one-time provision to cover contingencies due to COVID-19 and macro provisions, against ₹292 crore posted for the corresponding year-ago period. The company registered total income of ₹2,151 crore against ₹1,885 crore, said the company in a regulatory filing.
In total, the company had set aside an additional provision of ₹534 crore (including ₹30 crore of macro provision created in FY19) to meet any contingencies that may arise in future due to the Covid-19 shut down, it said.
Further, CIFCL said that it had not availed moratorium from banks or other lenders and its cashflow position was strong and adequate to cover upto September 2020, and it does not intend to avail any moratorium benefit.
“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 20, 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," said Arun Alagappan, managing director, CIFCL.
Stating that the pandemic severely impacted disbursements of Q4, CIFCL said that disbursements, which were already registering a slow growth till December 2019, suffered resulting in a drop of 4% for the year over FY19.
During the period under review, aggregate disbursements was down to ₹5,663 crore (₹8,893 crore) due to shutdown. Vehicle Finance business clocked a volume of ₹4,703 crore against ₹7,383 crore, while home equity business disbursed stood at ₹589 crore (₹1,034 crore). Home loan business disbursed ₹271 crore against ₹392 crore. Assets under management grew by 16% to ₹66,943 crore.
Pursuant to the moratorium announced by the Reserve Bank on EMI repayments, CIFCL framed a board approved policy and offered moratorium to its customers. Nearly 76% of our customers have availed moratorium.
Even after extending the moratorium to its customers, for the second phase, the cash position of CIFCL is adequate to meet all its maturities and fixed obligations till September 2020, the statement said.
During the fourth quarter, the company raised ₹1,200 crore. The board has not recommended final dividend for FY20. It had paid total dividend of ₹1.70 per share against ₹1.30 per share paid in the previous year.