Date:28/05/2008 URL: http://www.thehindubusinessline.com/2008/05/28/stories/2008052851300600.htm

Back Sundaram Fin bucks weak trend in car, CV segments

Net profit rises 35%; announces 1:1 bonus, to pay 50% final

Bucks industry trend: Mr T.T. Srinivasaraghavan, Managing Director, Sundaram Finance Ltd, flanked by Mr Srinivas Acharya, Deputy Managing Director (left), and Mr S. Venkatesan, Chief Financial Officer, at a press conference in Chennai on Tuesday. The company's board has recommended a 1:1 bonus issue. - Bijoy Ghosh

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Chennai, May 27 Sundaram Finance Ltd has reported a 35 per cent increase in net profit to Rs 135.7 crore for fiscal ended March 31, 2008. This, however, excludes a one-time profit of Rs 77.82 crore on sale of shares in Sundaram Home Finance.

Disbursements for the Chennai-based non-banking financial company during 2007-08 were Rs 5,109 crore, up 16 per cent from Rs 4,386 crore a year ago.

The company’s board has recommended a 1:1 bonus issue, and a final dividend of Rs 5 a share (50 per cent) for the year ended March 2008, taking the total dividend for the year to 150 per cent.

“It was a good year, and becomes a better year in the context of what’s happening in the industry. We may not see great growth this year. But that does not mean there will be a dramatic drop,” Mr T.T. Srinivasaraghavan, Managing Director, Sundaram Finance, told newspersons.

Even in a downward trend in the commercial vehicle and car finance segments, Sundaram Finance has done better.

The medium and heavy commercial vehicle finance industry reported a negative growth, while Sundaram Finance had a 2 per cent growth in this segment to 16,975 units during the year.

Similarly, the company had a 14 per cent growth in the light commercial vehicles to 11,700 units, compared to a 12 per cent growth in this segment, he said.

Outlook muted

Is the growth sustainable this year? Mr Srinivasaraghavan replied, “We are not looking at doomsday. It is too soon to be making predictions. The outlook is muted with concerns around inflation and increasing oil prices,” he said.

For Sundaram Finance, nearly 60 per cent of its disbursement is in the commercial vehicle segment; 26 per cent in car; 10 per cent in construction equipment and the balance in other sectors. There may be minor variations in the percentage, but the company will remain a major player in the commercial vehicle segment, he said.

Insurance business

Royal Sundaram Alliance Insurance registered a 16 per cent growth in gross written premium, having underwritten a premium of Rs 695 crore.

This is mainly due to steep fall in premium rates across the industry, and due to de-tariffing.

“We did not indulge in price discounting and the fall in premium in the property business had a big impact in this segment,” he said.

Home finance business

During the year, Union de Credit pour le Batiment, a wholly owned subsidiary of BNP Paribas, France, acquired a 49.9 per cent stake in Sundaram Home Finance, a wholly owned subsidiary of Sundaram Finance, for a consideration of Rs 196.98 crore. The joint venture, now called Sundaram BNP Paribas Home Finance, reported a 22 per cent increase in disbursements to Rs 585 crore.

On the BSE, the Sundaram Finance stock ended Tuesday up 8.24 per cent or Rs 47.80 at Rs 627.85 over its previous close of Rs 580.05.