Appointment of 3 directors clears decks for Rs127 cr rights issue
By CL Jose
KOCHI/November 10-2022: The Thrissur-headquartered Dhanlaxmi Bank has reported a net profit of Rs15.89 crore for the second quarter (Q2) ending September 30, 2022, against Rs3.66 crore profit the bank earned for the same period last year – clocking a year on year (YoY) growth of 334 per cent.
However, the bank has closed the first half (H1) ending September 30 with a loss of Rs10.54 crore, thanks to the Rs26.43 crore loss the bank had reported for the first quarter (Q1).
More importantly, Dhanlaxmi Bank saw several of its woes getting resolved on Wednesday (November 09) with the result of which an ‘unpleasant’ extraordinary general meeting (EGM) convened for November 12 has been called off, much to the relief of the management.
The bank that has been constrained on growth due to its low capital adequacy ratio (CAR) or CRAR of 12.32 per cent, can now forge ahead with its planned 1:2 rights issue aimed at raising close to Rs130 crore into boosting capital base.
The appointment of three directors to the board on Wednesday – Dr Nirmala Padmanabhan, Sreesankar Radhakrishnan and KN Madhusoodanan, has helped the bank satisfy the Sebi’s condition of adequate size of the board as well as the mandatory requirement of a woman member on the board.
The new development has paved the way for the calling off of the EGM that would have escalated the issues faced by the bank further.
In fact, a section of shareholders led by the businessman B Ravindran Pillai had called the EGM on November 12 to seek the suspension of the MD and CEO’s powers related to capital expenditure, among other issues.
Several from the top brass of the bank have been removed or resigned from the bank in the past couple of years, the most infamous being the voting out of the then MD & CEO of the bank, Sunil Gurbaxani, by the shareholders in October 2020.
Raising capital key
Now that the decks are cleared for the long-awaited rights issue that could bolster the capital base meaningfully helping the bank grow its asset base.
Another challenge before the bank is its sizeable NPA, which needs to be addressed on a war footing though the volumes have dropped considerably over the past few quarters.
While the bank carries a gross NPA of Rs549.75 crore or 6.04 per cent (down from 8.67 per cent a year ago), the net NPA as on September 30 was at Rs202.85 crore or 2.32 per cent (down from 4.92 per cent a year ago).
Total deposits during the quarter under review grew 6.96 per cent YoY from Rs11,917.96 crore to Rs12,747 crore, advances staged a smart growth of 30.86 per cent during the period, from Rs6,695.94 crore to Rs8,762.26 crore.
Total assets during the said period also expanded modestly by 9.57 per cent, from Rs13,231.89 crore to Rs14,497.76 crore. The bank enjoys a decent provision coverage ratio (PCR) of 83.25 per cent as on September 30, 2022.
