New Delhi, Jul 15 (PTI) Manappuram Finance on Wednesday said it expects to maintain profitability in the gold loan business amid the coronavirus pandemic, though vehicle finance, small business and housing finance verticals may be impacted.

Impact of the COVID-19 pandemic is not completely ascertainable given the pace at which the disease appears to be spreading and the continuing uncertainty about the development of a vaccine or a defined treatment protocol, it said in a business update to the stock exchanges.

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The pandemic's impact on the company's business will largely depend on how quickly the Indian economy recovers, and the working cycle in the rural and unorganised sector is restored, it said.

"As per our current assessment, the company is expected to maintain its profitability to a good extent. Though the company expects that it will be able to maintain profitability of its gold loan business, the negative impacts of the COVID-19 pandemic may affect profitability of the company's vehicle finance, MSME finance, housing finance verticals in the financial year 2020-21," it said.

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The non-banking finance company said there may not be any significant impact on its capital and financial resources.

The company has a capital adequacy ratio (CAR) of 21.74 per cent as on March 31, 2020 and may be able to withstand the impacts of the pandemic, it added.

The lenders to the company continue to roll over the credit lines and have also extended additional finance, it said, adding it continues to explore options to diversify its borrowings, strengthen the balance sheet, and look for growth opportunities to face the COVID-led contingencies.

The company, at the consolidated level, has made additional provisions of Rs 70.25 crore for the quarter ended March 31, 2020 towards expected credit losses.

"The company is closely monitoring collections and if required will make accelerated provisions for the expected credit losses in the subsequent quarters," it added.

Manappuram Finance said it is comfortably placed as far as liquidity is concerned and has laid down stringent cost control measures to conserve cash.

The company, which has as much as 70 per cent of its total portfolio as gold loans, said it raised USD 300 million (about Rs 2,250 crore) during the March quarter through foreign debt issuance. Besides, there were borrowings of Rs 1,350 crore via domestic debt instruments.

"Our ability to service debts and other financial debt commitment has not been affected at all as indicated by our low financial leverage and comfortable liquidity. In fact, based on its comfortable liquidity, the company has decided not to apply for a moratorium on the loans taken from banks," Manappuram Finance said.

Talking about new loans, it said demand from the rural sector would revive with the onset of monsoon, while that from the urban areas would depend on resumption of economic activities.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)