The Chennai-based Sundaram Finance Ltd has posted a 37 per cent increase in its net profit at Rs 70.54 crore for the year ended March 31, 2001 compared with Rs 51.58 crore in the previous year.
Gross disbursements increased to Rs1141crore against Rs 969 crore in the previous year, an increase of 18 per cent. While hire purchase disbursals increased by 21 per cent to Rs1034crore from Rs 857crore, leasing deals were lower at Rs107crore against Rs112 crore in 1999-2000, a fall of 5 per cent.
T T Srinivasaraghavan, joint managing director, said: "Although the overall market declined, we achieved growth during the year mainly on account of consolidation of existing market share and capturing new market".
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Commercial vehicle financing, the core business of Sundaram, declined by 6 per cent during last year against the industry drop of 16 per cent and the passenger cars financing witnessed a 20 per cent increase against the industry drop of 6 per cent.
The gross and net non-performing assets (NPAs) in the core retail business (CV financing) at the end of the year stood at 2 per cent and 1 per cent.
At present, Sundaram enjoys a 10 per cent market share in the CV segment and 3 per cent in the passengers cars market. "Leasing disbursements were lower by design and by design it will continue to decline in the coming years," he said. It may be noted that changes in accounting standard with respect to leases have increased the gross income for the year by Rs 86.31crore.
C K Raman, managing director, said the company did not face any difficulty both in fund raising and in disbursals and added the margins have been relentlessly hampered by financial institutions. At present, the NBFCs cost of funding were between 11 per cent and 11.5 per cent with a margin of 4 per cent to 4.5 per cent.
To a query whether the company would convert itself as a bank, he replied: "Even though, we satisfy all statutory regulations stipulated by the central bank, the board after extensive consultations decided not to enter into banks. In addition, our cost of funding is almost similar to that prevailing in new private sector banks. Hence, there is no incentive to convert into a bank." He also ruled out the possibility of entering two-wheeler financing or personal loan segment.
In a related development, the Madras high court has approved the scheme of amalgamation of Sundaram Finance Services with the Sundaram Finance Ltd. Sun Sundaram Alliance (insurance), Sundaram Home Finance are the other two prominent subsidiaries of Sundaram Finance.