Sundaram Finance reports pick-up in disbursements

By Our Special Correspondent

CHENNAI, JUNE 29. Non-banking finance company Sundaram Finance (SFL) has reported gross hire-purchase disbursements of Rs. 200 crores in the first three months of the current financial year.

Disclosing this at a press conference here today, Mr. G. K. Raman, Managing Director, said this represented a 35 per cent growth in disbursals as compared to the same quarter last year.

Mr. Raman asserted that the ``difficult days are behind us'' and expressed optimism that the company would return to the pre- recession growth trend in the current year.

He did concede that the spread had definitely come down. ``One has to learn to do business with lower spreads,'' he added. In this context, Mr. T. T. Srinivasa Raghavan, Joint Managing Director, pointed out that there had been a drop of nearly three per cent in the spread in the truck business in the past 2-3 years.

To fight competition in the field, the company would rely on deft treasury management, close monitoring of costs and cost-effective portfolio of funds.

Ruling out a rate war with others, especially banks, in car financing, Mr. Raman said SFL would focus on winning market share via efficient service. In this context, he pointed out that his company's ``experience in car financing is good''.

Mr. Raman said SFL was waiting for the IRA (Insurance Regulatory Authority) to open the window for private sector entry into the field.

He indicated that SFL would rope in others in the group to participate in the equity of its proposed insurance venture.

Mr. Raman also said SFL would venture into areas such as depository participant services, IT-related activities and shared services.

A combination of factors ranging from recession to hyper competition for business has hit SFL figuratively.

It has reported a lower profit after tax of Rs. 51.58 crores during 1999-2000, down from Rs. 63.31 crores in the preceding year. The income from financing operations came down to Rs. 415.69 crores from Rs. 439.53 crores.

Thanks to dividend receipts and sale of investments, other income, however, has shot up to Rs. 45.43 crores, from Rs. 29.50 crores in the preceding year. As a result, the total income was only slightly lower at Rs. 461.12 crores against Rs. 469.04 crores previously.

Provisions and write off amount to Rs. 40.55 crores, up from Rs. 36.63 crores. The higher provision is mainly due to the `past baggage'. A part of this has also been caused by the merger of India Equipment Leasing (IEL) with the company. The company has set apart Rs. 12.20 crores towards taxation, down from Rs. 24.20 crores.

The lower tax provision, according to company officials, is mainly due to larger provisions and write off. Credit has been taken last year for Rs. 19.43 crores under lease equalisation account.

This represents the excess statuary depreciation over annual lease charge. This year there is a debit of Rs. 1.69 crores under this head.

The company has paid interim dividends totalling 60 per cent for the year under reference against a total dividend of 65 per cent in the previous year. There is no final dividend.

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Section  : Business
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