Mumbai: Higher costs drove down profit for the second quarter by almost 32% at Reliance Capital Ltd, or RCap, the flagship financial services company of the Reliance-Anil Dhirubhai Ambai Group.

The firm reported net profit of Rs156 crore for the quarter, against Rs229 crore in the same quarter last fiscal.

Expenses grew to Rs879.1 crore from Rs742.77 crore. The higher costs, RCap said, were on account of claims incurred, depreciation, and “other expenditure”.

The firm, with wholly-owned subsidiaries in insurance, mutual funds, brokerage, consumer finance, private equity and asset reconstruction businesses, had net sales of Rs1,447 crore, 11% more than the Rs1,305 crore in the year-ago period.

RCap also said that, like in the April-June quarter, it has booked lower capital gains “owing to the planned partial stake sale later this year in Reliance Life Insurance”. Benefits from the sale, it added, would bolster annual profit for this fiscal.

RCap plans to list its life insurance business, and is awaiting a key regulatory approval. In July, Anil Ambani had said at the firm’s annual general meeting that there would be more focus in RCap’s newer businesses of merchant banking, private equity and institutional brokerage.

“RCap’s mutual fund business, like all others, would have to push its schemes by paying higher commission to distributors because of the new entry-load norms, and that will have an impact on margins going forward,” said a Mumbai-based analyst with a local brokerage, who did not want to be identified.