L&T Finance Holdings Consolidated Profit For The Year Grows By 7%

L&T Finance Holdings Loans & Advances as on 31st March 2014 grew by 20% year on year to Rs 40080 crore as compared to Rs 33310 crore as on 31st March 2013 and by 6% quarter on quarter. This has been driven by a conscious focus on the rural products finance, personal vehicle finance and housing finance segments in retail business, while pursuing operational assets in the wholesale business.

The earnings before credit costs (excluding exceptional items) for the full year grew by 23% y-o-y to Rs 1406 crore and for the quarter by 47% y-o-y to Rs 414 crore. The consolidated PAT (excluding exceptional items) has been impacted by higher credit costs compared to previous year. For the full year the consolidated PAT (excluding exceptional items) grew by 7% y-o-y to Rs 597 crore and for the quarter it grew by 7% y-o-y to Rs 187 crore.

The slowdown in the economy continues to put pressure on the asset quality. The asset quality has given a poor show due to higher exposure to the power sector, which was almost close to 45%. This might also lead to higher NPAs in the next quarter also. Gross NPAs stood at 3.18% of loan assets as on 31st March 2014 as compared to 2.93% as on 31st December 2013. Net NPAs stood at 2.29% of loan assets as on 31st March 2014 as compared to 2.05% as on 31st December 2013.

Tractor sales clocked impressive growth of 20% during FY14 due to good monsoons in most of the states. Tractor industry expected to grow by 4-6% in FY15. In the personal vehicle segment, 2W sales growth was positive and is expected to maintain growth momentum in FY15. Higher interest rates, fuel cost and ownership costs continue to dampen sales in personal vehicle segment. Strong demand continues in the microfinance segment.
Construction equipment sales continue to de-grow in excess of 20% due to pending policy decisions, non-release of funds in approved projects, land acquisition/environmental clearance issues and relatively higher interest rates. A big drop in commercial vehicle segment was witnessed mainly due to slowdown in economic activity and stagnant freight rates; negative impact being seen in LCV segment also.

CRISIL downgraded 1165 firms compared to 921 upgrades in FY14. Around 90% of downgrades were on account of slowing demand, tight liquidity and stretched WC cycles. There were no perceptible signs of a pick-up in the manufacturing sector. This is one area where new government would have to focus on, to accelerate the domestic growth and to make the recovery broad-based.

Commenting on the results and financial performance, Y M Deosthalee, Chairman & Managing Director, L&T Finance Holdings, said, “We are delighted that our outstanding loan book has crossed the Rs 40000 crore mark this quarter which is another milestone in our journey of becoming a comprehensive financial services player. While credit costs remain elevated due to the challenging macro environment, containing the stress and building a quality portfolio has been a key focus for the management team. Post acquisition of FamilyCredit and Indo-Pacific Housing Finance, there are plenty of opportunities to expand our presence in retail and rural markets.”