Mahindra Finance reports 10% drop in Q4 net profit at Rs 619 cr

New Delhi: Mahindra & Mahindra Financial Services has reported a 10 per cent decline in standalone profit and tax to Rs 619 crore for the January-March quarter of 2023-24.

The non-banking finance company also said that in a fact-finding assessment of the fraud in its Aizawl branch during the quarter identified 2,887 loan accounts as potentially fraudulent in nature.

"These loans had an outstanding net recoverable balance of Rs 135.9 crore as of 31st March 2024, which have been fully provided," Mahindra Finance said in a regulatory filing.

The NBFC, which last month delayed disclosure of its financial statement due to fraud at one of its branches in the north-eastern states, said that the fraud relates to retail vehicle loans disbursed by the company and is a case of extreme collusion between the company's employees, with segregated duties, and external parties including vehicle dealers and bank employees.

The fraud involved forgery of KYC and other asset-related documents leading to the embezzlement of company funds. Following this, the company appointed a law firm and an accounting firm to undertake a fact-finding assessment of the suspected irregularities.

The company has carried out an exhaustive analysis of customer contracts across the portfolio at an all-India level and has confirmed no instances of similar fraud elsewhere.

"As a proactive step, the company has identified a few key initiatives to further strengthen controls, including but not limited to accelerating the timeline for centralization of document reviews and implementing digital due diligence tools for customer onboarding," Mahindra Finance said.

During the March quarter of 2023-24 fiscal, Mahindra Finance posted a total income of Rs 3,706 crore, up 21 per cent over Rs 3,057 crore in the year-ago period.

Net interest income rose 14 per cent to Rs 1,971 crore during the fourth quarter of FY24.

For the 2023-24 fiscal, the profit after tax declined 11 per cent to Rs 1,760 crore. Total income rose 23 per cent to Rs 13,562 crore in FY24.