For Immediate Release
JM Financial announces unaudited results for the quarter and nine months ended December 31, 2008
Mumbai, January 30, 2009: The Board of Directors of JM Financial Limited, at its meeting held today, considered and approved the unaudited financial results for the quarter and nine months ended December 31, 2008.
Consolidated Results – Key Highlights:
FY 09 – Q3 compared to FY 08 – Q3
Ø Total income at Rs. 98.91crore compared to Rs. 216.06 crore.
Ø Net operating profit before provisions at Rs. 11.97 crore compared to Rs. 60.94 crore.
Ø Net loss after tax, minority interest and share of associates, at Rs. 230.04 crore, which is after considering a provision of Rs. 221.90 for the diminution in the value of shares in listed companies in the long term investment portfolio, compared to Net profit after tax, minority interest and share of associates at Rs 1,143.05 crore.
FY 09 – 9 months compared to FY 08 – 9 months
Ø Total income at Rs. 350.41crore compared to Rs. 533.11crore.
Ø Net operating profit before provisions at Rs. 78.60 crore compared to Rs. 194.48 crore.
Ø Net loss after tax, minority interest and share of associates, at Rs. 190.81 crore, which is after considering a provision of Rs. 221.90 for the diminution in the value of shares in listed companies in the long term investment portfolio, as compared to Net profit after tax, minority interest and share of associates at Rs. 1,207.00 crore.
The global financial crisis has led to economic slowdown across the globe. This has adversely impacted the emerging economies including India. The continued market meltdown has impacted majority of the corporates and JM Financial is no exception to this. The volume of business has decreased substantially on account of the unfavourable market conditions and as a result the corresponding revenues have also declined.
With a view that the Indian market shall continue to remain bearish for a longer period on account of the global financial meltdown, the Company, as a matter of abundant caution, thought it appropriate to provide for the diminution in the value of shares in listed companies in the long term investment amounting to Rs.221.90 crore as on December 31, 2008.
Investment banking and securities:
Capital market activities continue to remain adversely impacted due to steep correction in the global and Indian equity markets during the year.
Indian Capital Market saw fourteen equity issuances covering one IPO, one QIP and 12 Right Issues. Out of the said transactions JM Financial Consultants Private Limited managed three issues covering 1 QIP and 2 Right Issues.
The mergers and acquisitions pipeline continues to remain strong with several mandated transactions. However, given the current state of equity capital market, there is an uncertainty on timing of the transactions.
During the quarter, income from the equity brokerage business continued a declining trend. However, the investment advisory and distribution business continues to focus on growing its franchise by creating a centralised team to service its new franchisees. Once the market stablises, these investments will enable the Group to expand its business and clientele.
The Institutional equity business which is still in its nascent stage, is rapidly expanding its client base as well as its market share. We expect the contribution from this business to be more visible once the markets stabilise.
Securities funding and fund based activities:
During the quarter, NBFC industry faced a severe liquidity crunch, which has not only made borrowing costly but also posed a threat of refinancing the borrowings on maturity of the borrowing. The NBFC has slowed down on various lending initiatives.
Continuing our conservative approach the NBFC has made provision on standard assets although the loans have been serviced regularly.
While financing continues to be a challenge, we believe that distressed assets will offer several interesting opportunities in our asset reconstruction business.
Alternative Asset Management:
The combined AUM / AUA of the private equity fund, real estate fund, and special situations group stands at around Rs. 3,300 crore. No deal was concluded during the quarter in view of the bearish capital market and high valuation expectation by the promoters in case of private equity as well as real estate funds.
In line with our strategy of expanding the geographical presence, the asset management company (AMC) of JM Financial Mutual Fund now has 86 branches all over India. AMC completed signing of the definitive agreements with the investors who have invested Rs. 63.86 crore in the company for 8 % equity stake in the company. The performance of the schemes of JM Financial Mutual Fund has been affected due to the fall in the markets. The AUM as on December 31, 2008 stood at Rs. 5,857.22 crore, comprising of AUM under Equity schemes Rs.1,664.86 crore and AUM under Debt Schemes Rs.4,192.36.