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Disbursement remained slow in SME sector in March quarter, says M&M Financial Services

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Mahindra and Mahindra Financial Services expects pre-owned vehicle and commercial vehicle segments to drive growth in the next year

Mahindra and Mahindra Financial Services expects pre-owned vehicle and commercial vehicle segments to drive growth in the next year. “We are in a sweet spot when it comes to growth opportunity in rural, irrespective of the fact what OEM numbers look to be,” said Ramesh Iyer, vice chairman and managing director, M&M Financial Services.
The company on Wednesday declared its fourth-quarter earnings. Net profit jumped 87 percent to Rs 588 crore, compared to Rs 314 crore in the corresponding quarter a year ago. Total income increased to Rs 2,480 crore as compared with Rs 1,808 crore in the year-ago quarter, Mahindra Finance said in a release.
Assets under management (AUM) growth of 27 percent was on the higher side in the last 12 quarters. Net interest margins remained steady at 8.1 percent and gross NPAs improved to 5.9 percent versus 7.7 percent but disbursements were down 1.1 percent year on year and 11.8 percent quarter on quarter.
Iyer said, “Given the market conditions we went slow on SME segment. However, the automobile disbursement be it auto, tractor, refinance registered 11 percent growth in Q4. For the overall year, the higher disbursement of 22 percent has resulted in AUM growth."
He said the improvement in NPAs was due to recovery or settlement with customers, better collection and they have not auctioned any NPAs.
Talking about impact of elections, he said whatever the outcome there is no long-term impact on rural market. For couple of weeks after results there would be wait and watch situation to see how the overall scenario pans out, he added. Basically, most of the credit taken by the rural customers is need based and therefore they adjust to the new scenario within short time, so it does not impact the company in the long-term.
In terms of growth going forward, he said, “We are an enabler, we wait and see what the OEM directions are. As the year opened up most of the OMEs talked about 8-10 percent growth, which is an opportunity for us.”