Shriram Transport Finance Co Ltd (i.e. STFC) on Wednesday has reported a standalone net profit of ₹223.38 crores, down 70% from the same period as last year owing to provisions of around ₹909.64 crores set aside for COVID-19.
The lender said in a regulatory filing that it has used relevant indicators of the moratorium, considering various measures taken by the government and other authorities along with an estimation of potential stress on the probability of defaults and loss gave defaults due to the COVID-19 situation.
Based on such an assessment, it has made an additional expected credit loss provision of ₹909.64 crores. However, it said that while the impairment loss provided for on account of the pandemic is based on the assessment of the current situation, the actual impairment loss could be different due to uncertainty.
Shriram Transport ’s total income stood at ₹4,173 crores in the March quarter of FY20, up 7% from ₹3,883.38 crores in the same period last year. The company’s finance costs were at ₹2,158.85 crores, as compared to ₹1,888.47 crores in the same period last year.
The company told that extension of the moratorium benefit to borrowers as per the corona virus regulatory package of the RBI by itself is not even considered to result in a significant increase in credit risk us per Ind AS 109 for the staging of accounts.
“The staging of accounts as on 31 March with respect to assets which were overdue though standard and to whom moratorium has been granted is based on the days past due as on 29 February keeping it at standstill. Further, estimates and associated assumptions applied in preparing the financial statements, especially in respect of credit loss on loans, are based on historical experience and other emerging/forward-looking factors including those arising on account of the COVID-19 pandemic,” it said.
This will be the 1st time ever in a decade the commercial vehicle financier will tap the equity markets to raise funds. STFC last has raised around ₹584 crores through a qualified institutional placement (i.e. QIP) in January 2010.