Best kept secrets: GE Money

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MUMBAI: The second week of India‘s Best Kept Secrets starts today. And we start this week with one of the biggest non-banking finance companies (NBFC) - GE Money.

Despite a 21% increase in revenue and a 32% growth in loan portfolio, this 100% subsidiary of General Electric, just like its peers had a bad FY07 barely managing to beak-even.

GE Money blames the poor performance on the hike in interest rates by RBI, which led to doubling of its interest expenditure. No surprise that personal loan constitutes over 30% of GE Money‘s Rs 5,000 crore portfolio - a segment that grew around 50%. So did the mortgage segment that touched almost Rs 800 crore.

Despite rising bad debts and what the company terms as mounting competition, it expects the personal loan portfolio to be the growth driver in the coming years. This growth, however, seems to have come at the cost of portfolio quality with the company writing off Rs 180 crore as bad debt - most of which is learnt to be in the personal loan segment.
 
There could be lots more to come - because almost half of GE Money‘s Rs 5,000 crore portfolio is unsecured.

One segment where GE Money has consciously slowed down is auto financing where its margins took a big hit due to growing competition in new car and used car financing. Its parent – GE - has invested over Rs 600 crore in paid up share capital. The company has reserves and surplus close to Rs 1,000 crore, which includes over Rs 750 crore from the share premium account.
 
GE Money has an all-India presence with close to 200 branches.

A tough financial year and rising NPAs, especially in the personal segment, even led to GE Money being put on the block last year, but the sale could not be concluded - apparently due to valuation mismatch.

GE MONEY
                         FY07              FY06

Revenues      963 cr            794 cr  (Up 21%)
Net Profit       10 cr                55 cr  (Down 81%) 

Loan Portfolio – Rs 5098 cr
Personal Loans – Rs 1,681 cr (Up 48%)
Mortgage Loans – Rs 790 cr
       
                                              FY07             FY06

Paid-up Capital - Rs 615 cr
Reserves – Rs 900 cr
Branches – 150+ 

(This exclusive series uncovers information and numbers regarding some of the biggest companies in India, but which are not in the public domain.)

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