Mahindra Finance,the financial services arm of auto major Mahindra & Mahindra,on Friday reported a 37.84 per cent jump in its net profit for the quarter ended June 30,as compared to Rs 74 crore in the year-ago period. Total income grew by 40.65 per cent to Rs 564 crore against Rs 401 crore in the year-ago period. Having a diversified portfolio has helped us achieve this performance across the board. We have been aggressively financing commercial and construction equipment vehicles, Mahindra Finance Managing Director Ramesh Iyer said. Iyer attributed the higher numbers to the lower non-performing assets,coupled with buoyant rural cash flow. We have improved our collection efficiency,bringing the NPAs down. This is the main reason for our profits, he said. The firm's gross NPA currently stands at 4 per cent,while the net NPA is much lower at 1 per cent,he added. Gross advances of the company,which has 559 offices,grew 34.34 per cent to Rs 3,834 crore over Rs 2,854 crore,he said,adding that the network will touch 600 by March. Mahindra Finance is a non-banking finance company and is into vehicle finance,both new and old,insurance brokering and rural housing finance. Though Iyer sounded bullish on growth,especially on the rural home finance front,he admitted that the recent 50 bps hike by Reserve Bank would put pressure on volumes. On whether they would increase the lending rates,Iyer said,We are awaiting how the banks are responding to the RBI action. If the banks pass the hike to borrowers,then we would have to take a view. But we don't believe in passing on every rate hike burden to our customers. The company's average lending rate is 16 per cent. The RBI raised its short-term lending (repo) rate by 50 basis points to 8 per cent and the short-term borrowing (reverse repo) rate by a similar margin to 7 per cent to bring down inflation,this was the 11th hike in 15 months. Headline inflation for June stood at 9.44 per cent.
