High interest costs and mark-to-market losses on account of forex exposure dragged down the net profit of non-banking finance company, Magma Fincorp, by 59 per cent to Rs 13 crore in the quarter ended December 31, 2011, from Rs 32 crore in the corresponding year-ago period.

Interest cost jumped by 82 per cent to Rs 176 crore (Rs 97 crore).The MTM loss on account of forex exposure was Rs 5 crore.

Change in accounting

The company changed its accounting policy on recognition of gain from securitisation, which is another reason for the subdued income, said Mr V. Lakshminarasimhan, Chief Financial Officer. Income now accrues over the tenure of the loan as against the earlier practice of upfront recognition.

If the company were to follow the practice of upfront recognition of gain from securitisation, the profit after tax as on end-December would have been Rs 115 crore.

Explaining the reason behind the accounting policy change, Mr Lakshminarasimhan said the company has been reducing its securitised portfolio and its dependence on selling of loans as a tool for funding.

“We now use the sell-down route sparingly. It will be used more as a treasury tool,” he said. “The impact of the accounting policy change may be felt till September 2012.”

Disbursements rise

Disbursements grew by 50 per cent to Rs 1,915 crore (Rs 1,274 crore). Loans to segments such as auto, multi-utility vehicles, used commercial vehicles and tractors accounted for bulk of the loans.

The company plans to start gold loan and affordable housing finance business by the first quarter of the next financial year.

In the current financial year, disbursements are likely to grow by 50 per cent and margins are likely to be 4.2-4.3 per cent, Mr Lakshminarasimhan said.

Shares of Magma closed at Rs 56, down 4.11 per cent, on the BSE, on Monday.

>priyan@thehindu.co.in

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