Mumbai: Mahindra and Mahindra Financial Services Ltd (Mahindra Finance) on Wednesday posted a consolidated net profit of Rs365 crore during the third quarter of fiscal 2018 as against a net profit of Rs12 crore during the corresponding period last year. The sharp growth in profit was led by improvement in rural cash flows and a consequent drop in loan provisions and write-offs.

The non-banking financial company’s (NBFC) loan provisions and write-offs fell to Rs223 crore during the quarter from Rs442 crore a year ago. Its consolidated total income rose 26% to Rs2,195 crore from Rs1,748 crore.

Commenting on the decline in provisions, Ramesh Iyer, vice-chairman and managing director at Mahindra Finance said, “In the last couple of quarters there has been a flattening of NPA (non-performing assets) growth as farm cash flows have seen an improvement on the back of good monsoons. Both farm and infrastructure-linked cash flows have improved for us in the rural areas. Several accounts designated as NPAs have also started showing improvement as many of them were not intentional defaults. "

Iyer added that recoveries from past accounts that had been provided for are improving. “On a nine-month basis, the collection efficiency has gone up by around 5% from last year and stands at around 93%. On a quarterly basis, the recoveries are close to 96%," he said.

The firm moved to a 90-day NPA recognition norm during the quarter and its gross NPA ratio stood at 11.6% during the quarter. “Fifty-seven percent of the NPA contracts registered movement of instalment during the period although they have not become standard. This is a clear trend showing reversal of past provisions," Iyer said.

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