Mumbai: Aided by the stake sale in its asset management business, Reliance Capital Ltd (R-Cap), the financial services arm of the Anil Ambani-led Reliance Group, posted 11-fold year-on-year rise in net profit to 402 crore in the quarter ended 30 September.

In August, R-Cap completed a transaction to sell a 26% stake in its asset management business to Japanese life insurer Nippon Life Insurance Co. for $290 million.

The firm’s revenue for the September quarter rose 55% over the year earlier to 2,437 crore.

Apart from the stake sale, R-Cap’s commercial finance business also contributed to the improved overall earnings. Revenue from the commercial finance business grew 7.2% year-on-year to 534 crore, while operating profit from the segment rose 31% to 72 crore.

R-Cap’s share price rose 0.06% on BSE on Tuesday to close at 394.45. The bourse’s benchmark Sensex rose 0.29% to 18,817.38 points.

The mutual funds business saw its average assets under management fall by 5% to 86,327 crore, according to a company statement, which was in line with “the diminution in the industry", the company said. This led to a fall in the segment’s operating profit over the year-ago period.

R-Cap’s life insurance arm saw its net profit rise four-fold to 31 crore but the losses from the general insurance business substantially widened to 105 crore from 29 crore a year earlier. This was because “the full impact of the FY13 provisioning for the third-party motor claim reserves has been taken in this quarter", the R-Cap statement said.

The company has utilized the money received from Nippon to repay debt. Its debt-to-equity ratio at the end of the September quarter improved to 1.67 from 2.57 at the end of the June quarter. Excluding R-Cap’s commercial finance portfolio (around 19,000 crore), the outstanding debt on the company’s books is 4,000 crore, according to R-Cap’s chief executive Sam Ghosh.

“We obviously had a capital gain, but the businesses too have done well," Ghosh said. “In the coming quarters, we expected profitability from all our businesses to improve considerably, especially since we are lowering debt and have fully provided for our share of the third-party motor pool in this quarter."

Close