Mumbai: L&T Finance Holdings (LTFH), a diversified non-banking financial company, has posted nearly 68.92 percent drop in its net profit at Rs 174 crore for the July to September quarter compared to Rs 559 crore in the same quarter of last year.
“The profit figure fell on account of a one-time adjustment for deferred tax asset (DTA). Pre-DTA adjusted profit after tax stood at Rs 647 crore,” the company said in a statement.
In the second quarter of the current financial year, the government announced the reduction of the corporate tax rate from 34.94 percent to 25.17 percent.
Under the new guidelines, corporates that have taken higher provisions and created DTA at 34.94 percent to revise the tax rate to 25.17 percent, leading to a one-time profit and loss charge of 9.77 percent.
“Following this, LTFH is opting for a lower cash turnover ratio of 25.17 percent leading to lower tax liability from FY20 onwards,” said the statement.
“As a part of its robust risk management framework over the past three years, LTFH has implemented accelerated provisions to enhance the provision coverage ratio.
Consequently, Q2 FY20 results reflect a one-time impact of Rs 473 crore due to the reversal of DTA as April 1.”
The consolidated interest income for the quarter stood at Rs 3,294 crore against Rs 2,822 crore reported in the same quarter last year.
LTFH maintains liquidity of Rs 11,607 crore (including Rs 3,380 crore in the form of cash, fixed deposits, and other liquid instruments. The average assets under management decreased by 6 percent from Rs 73,754 crore in Q2 FY19 to Rs 69,213 crore in Q2 FY20.
Assets under service increased to Rs 26,309 crore in Q2 FY20 from Rs 21,065 crore in Q2 FY19, marking a growth of 25 percent.
“We remain a partner of choice for financiers and continue to diversify our liability mix through reputed domestic and global institutions,” said LTFH Managing Director and CEO Dinanath Dubhashi.
“Our continued investment in businesses where we have a clear ‘Right to Win,’ has been the bedrock of our strategy, and we remain committed to this plan.”