Real Touch Finance Limited , a non-banking financial company, has reported a significant shift in its financial performance and taken steps to address non-performing assets, according to its latest quarterly results and board meeting outcome.

Financial Performance

The company reported a net loss of ₹486.41 lakhs for the quarter, marking a substantial downturn from the profit of ₹308.56 lakhs recorded in the previous period. This shift underscores the challenges faced by Real Touch Finance in the current financial landscape.

Write-Off of Bad Debts

In a strategic move to clean up its balance sheet, Real Touch Finance's Board of Directors has approved the write-off of ₹2.22 crore in outstanding receivables. This decision was made after a thorough evaluation by the management and recommendations from the Audit Committee. The write-off represents approximately 7.68% of the company's total turnover, which stands at ₹28.89 crores based on the last audited financials.

Impact and Future Actions

Real Touch Finance has stated that the write-off will not have any additional material impact on its financial position or operations. This is due to adequate provisions that were already in place for these non-performing assets. Despite the write-off, the company has expressed its intention to continue pursuing recovery through legal channels where feasible.

Key Details of the Write-Off

The company's decision to write off these bad debts aligns with its commitment to maintaining transparency and adhering to regulatory norms. As per the disclosure, this action is in compliance with Regulation 30 of SEBI (LODR) Regulations, 2015.

Real Touch Finance's proactive approach in addressing non-performing assets, while potentially impacting short-term results, may be seen as a step towards improving the overall health of its loan portfolio. However, the shift from profit to loss in the quarterly results suggests that the company may face ongoing challenges in the current economic environment.

Investors and stakeholders will likely be watching closely to see how these measures impact the company's performance in the coming quarters and whether they lead to improved financial health in the long term.

Real Touch Finance Limited , a financial services company, has made a significant move in the stressed assets market by subscribing to Security Receipts worth Rs. 125.00 crores issued by Omkara Assets Reconstruction Private Limited. This strategic investment aims to support the acquisition and resolution of stressed financial assets under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

Transaction Details

The company disclosed the following details about the transaction:

Implications and Context

This move by Real Touch Finance Limited signifies its participation in the stressed assets market, which has been gaining traction in India's financial landscape. By investing in Security Receipts, the company is indirectly participating in the process of resolving non-performing assets (NPAs) in the banking system.

The SARFAESI Act, under which this transaction is taking place, empowers banks and financial institutions to recover their bad debts without court intervention. Asset Reconstruction Companies (ARCs) like Omkara Assets Reconstruction play a crucial role in this process by acquiring stressed assets from banks and working towards their resolution.

Real Touch Finance's investment could potentially yield returns based on the successful resolution of the underlying stressed assets. However, it's important to note that returns on such investments are typically contingent on the recovery from the stressed assets, which can be subject to various market and economic factors.

The company has clarified that Omkara Assets Reconstruction is not a related party, ensuring transparency in the transaction and compliance with regulatory requirements.

This strategic move aligns with the broader trend in India's financial sector, where there's an increasing focus on resolving stressed assets to improve the overall health of the banking system. It also demonstrates Real Touch Finance's proactive approach in exploring opportunities within the evolving landscape of financial asset management.