Indostart net dives 23% as NPAs soar more than three-times

Mid-sized non-banking finance company Indostar Capital on Thursday reported a 23 percent decline in net income at Rs 49.4 crore for the September quarter due to higher provisions for two corporate accounts. "We have taken precautionary provision for two corporates. We can see stress in these two accounts but currently they are not NPAs," Indostar Capital vice-chairman R Sridhar said.

Of the Rs 72-crore normal provisions made during the quarter, Rs 50 crore are for these two accounts, he added. Its exposure to both the companies is around Rs 200 crore, Sridhar said without naming them.

Gross non-performing assets shot up to 3.7 percent as against 1.1 percent. "The increase in NPA was due to the commercial vehicle finance business of IIFL which we bought in March. With that we also acquired Rs 250 crore of bad loans," he said, adding the company did not grow the loan book in the quarter due to uncertainty over the liquidity situation.

"In the first quarter, we had disbursed around Rs 1,250 crore but in the second quarter it was Rs 660 crore," he said..