The company had booked profit before tax of Rs 405.6 crore in fourth quarter ended March 2019 (Q4FY19).
It posted net loss of Rs 2,281.5 crore in Q4FY20 as against net profit of Rs 246.3 in Q4FY19, while its net loss for the whole of FY20 stood at Rs 2,043.7 crore, as against a net profit of Rs 1,044.3 crore the previous year.
EFSL, which is listed on BSE, is a holding company that straddles various businesses in the financial sector, with operations in lending, asset management, insurance and broking.
The company said in a statement that the management’s judgement for expected credit losses and gain/loss on fair values changes factors in the impact of the Covid-19 pandemic. In Q4FY20, the group provided Rs 2,624 crore towards expected credit losses, write-offs, loss on sale to Asset Reconstruction Company’s Trusts and Funds and net loss on fair value changes.
Rashesh Shah, chairman, EFSL, said impairment is not a cash loss. Instead of deferring it through the year, the company thought it prudent to record impairment now. This is in preparation for post the Covid-19 scenario.
Shah said the company has taken three conscious decisions to further strengthen balance sheet and dominant franchises. First, the group will mark down and sell the corporate asset book. Second, it will fast-track a capital-light model in retail credit. And finally, it will raise equity at the EFSL level and in the Wealth & Asset Management business.
The company was in discussions with private equity investors to raise $130-200 million of equity in Wealth & Asset Management (EGIA). The transaction in expected to be finalised in the next six to eight weeks, Shah added.
