Sundaram Finance Ltd (SFL), a Chennai-based NBFC, is planning to raise debt to the tune of Rs 1,500-2,000 crore to support its disbursements. It said that since the automobile industry started slowing down, only a modest growth in disbursements is expected.
Speaking on the sidelines of the company AGM, T T Srinivasa Raghavan, managing director, Sundaram Finance Ltd, said the company is looking at raising the debt through term borrowings, Non Covertible Debentures (not retail) and other traditional modes.
“As part of our annual debt-raising plan to meet the disbursement targets this year, we are looking at raising around Rs 1,500-2,000 crore,” he said.
Addressing the company's shareholders, SFL chairman S Viji said, “Overall, sentiments seem to have turned slightly negative, with infrastructure companies reporting a slowdown in investments and the corporate sector, from real estate to auto, witnessing a demand slowdown.”
After two successive years of high growth, sales of medium and heavy commercial vehicles are almost flat in the first three months of the current fiscal, compared to the corresponding period in the previous year. Light commercial vehicles, on the other hand, seem poised for a year of health growth, fuelled primarily by the sub-one tonne segment.
Given the slowdown in sales of passenger cars and utility vehicles in the first quarter, growth, if any, is expected to be moderate. Raghavan said cars were expected to grow by around ten per cent and growth in CVs would be around 5-8 per cent.
The company said it expects only a modest growth in disbursements, but was confident of maintaining profitability. It also expects increased growth in the tractor and LCV segments and increased presence in the growing construction equipment segments, Raghavan said.
SFL announced a total dividend of Rs 14 per share (140 per cent on the facevalue of Rs 10) for the year ended March 31, 2011, on the paid-up capital of Rs 55.55 crore. The total payout, including dividend tax of Rs 4.45 crore, will amount to Rs 82.22 crore.
The company has reported a net profit of Rs 275.50 crore in 2010-11 as against Rs 201.36 crore a year ago, an increase of 28 per cent.
