Sundaram Finance fares well in falling market

By Our Special Correspondent

CHENNAI, JUNE 25. Sundaram Finance Ltd. (SFL) has reported a 18 per cent jump in gross disbursements during 2000-01 at Rs. 1,141 crores, up from Rs. 969 crores in the preceding year, in a market that ``is clearly headed south''. The gross income is reported at Rs. 532.55 crores (Rs. 461.13 crores) after adoption of ICAI (Institute of Chartered Accountants of India)-ordained accounting standards. The gross profit is up to Rs. 277.69 crores (Rs. 216.88 crores). The net profit is placed higher at Rs. 70.54 crores (Rs. 51.58 crores). The 60 per cent tax-free dividend paid already is treated as the final dividend.

SFL has performed better in a `falling market' and has managed to beef up its market share. Though sales of commercial vehicles (including exports) and passenger cars declined by 12.3 per cent and 8 per cent, respectively, SFL did well to report just a 6 per cent drop in the number of commercial vehicles it financed during the year under review. The number of cars financed by it went up by 20 per cent during 2000-01. Today, its share in the commercial vehicle cake (excluding state road transport and defence segments) is 10 per cent. It has a market share of 3 per cent in car finance. With the economy showing signs of a slow down, SFL, not surprisingly, reported a 5 per cent decline in leasing disbursements to Rs. 107 crores, down from Rs. 112 crores in the previous year. ``By design, leasing disbursements is lower and it will drop as we go further,'' declared Mr. T.T. Srinivasa Raghavan, Joint Managing Director of the company. In his reckoning, SFL's asset focus would be on vehicles even as it was looking for bigger space in the retail segment. Roughly about 50 per cent of its total disbursements of Rs. 1,034 crores comprised commercial vehicles. Multiutility vehicles constituted 40 per cent of hire-purchase disbursement. According to Mr. G.K. Raman, Managing Director of the company, the fact that many a cost inefficient NBFC - with margins relentless under hammer - had disappeared from the field had helped SFL to boost its market share in a significant way. The joint MD anticipated no significant growth in the passenger cars and commercial vehicles this year. ``The performance of initial months has conformed that the apprehension is well taken,'' he said. Nevertheless, he indicated that SFL would strive to buck the trend yet once more by increasing penetration and market share. SFL had set itself a 20 per cent growth target in disbursements during the current year.

Entry into banking ruled out

Raman ruled out SFL's entry into banking field. ``We are not going into banks,'' he asserted. The SFL board after considerable debate and discussions had decided against going into banking, he said. ``We are wedded to road transport finance. And, we will continue to run it better,'' he added. He was of the view that SFL could `render service to the core sector' within its existing structure and form.

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