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Jayabharat Credit


Jayabharat Credit is a non-banking finance company (NBFC) in the hire purchase/leasing business in the transport segment.

It is allowed to accept public deposits in its business.

The balance sheet is financed with approximately 30% equity and 70% debt of which, half consists of short-term funding and balance consists of inter-corporate deposits.  This was used to finance loans and advances of about 57cr (constituting net current assets of 13cr) and government securities of about 5cr as at 31st March, 2011.

The debt was rated ‘C’ by a reputed credit rating agency and hence, is now required by the RBI to reduce the level of public deposits from the 19cr (as at 31st March, 2011) to under 10cr, thereby requiring a material reduction in business activities, which will reduce expectable future profits.  This is already reflected in a drop in income from about 10cr to 6cr (in the trailing twelve months) and net losses in place of profits in the past.

The business is specifically plagued by problems in collecting dues resulting in 5cr of provisioning for non-performing assets last year.  The business is also exposed to the risks of rising interest rates (squeezing profit margins), sluggish transport demand (also resulting from high interest rates), intense competition etc.
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