The company's profit before tax however increased by 15 per cent over the previous year. PBT stood at Rs 39.1 crore against Rs 33.9 crore in 1996-97. KMFL has created a higher provision for tax at Rs 18 crore compared to Rs 3.75 crore in the previous year.

KMFL's income from operations fell from Rs 361.24 crore in 1996-97 to Rs 309.53 crore for the year ended March 31, 1998, indicating a fall of over 14 per cent. The company managed to reduce its expenditure during the year by Rs 3 crore to Rs 31.47 crore. The interest expenses during the year amounted to Rs 148.92 crore against Rs 197.24 crore in the previous year.

Gross profit during the year was at Rs 129.14 croremarginally lower than the previous year's corresponding figure of Rs 129.53 crore. Depreciation charges during 1997-98 amounted to Rs 73.08 crore against Rs 70.53 crore in the previous year.

"in view of the fluid and extremely difficult environment, the company reduced risk, curtailing assets by Rs 360 crore during 1997-98," said a company release.

A sum of Rs 16.95 crore was charged towards non-performing assets (NPAs) against Rs 25.10 crore in the previous year.

The company's gearing on networth of Rs 324 crore was at 2.3 times."The large networth allows the company to absorb any further NPAs that may arise because of recessionary conditions," said the company press release.

Group networth, including that of KMFL, its investment banking subsidiary, Kotak Mahindra Capital Company and its auto-finance subsidiary, Kotak Mahindra Primus Ltd stood at Rs 635 crore.

KMPL earned a profit of Rs 3.8 crore for the nine-month period ended December 31, 1997 against Rs 30 lakh for the 13-month period endedMarch 31, 1997.

The future audited accounts of Kottak Mahindra Primus Ltd will be for calendar years.