Crisil reaffirms rating to Sundaram Finance FD programme

By Our Corporate Reporter

CHENNAI, OCT. 9. Credit Rating Information Services of India Limited (Crisil) has reaffirmed the `FAA+' rating assigned to the fixed deposit programme of Sundaram Finance.

Also, a `P1+' rating has been assigned to the enhanced Rs. 300 crore short-term debt programme (enhanced from Rs. 250 crore).

The short-term debt programme includes commercial paper, inter- corporate deposits, bank borrowings and all other borrowings with a contracted maturity of one year and less than one year.

The rating reaffirmation reflects the company's diversified business profile emanating from the favourable market position in commercial vehicle and car financing, reduced thrust on mid-sized corporate plant and machinery segment and conservative business practices adopted by the management. Going forward, pressure on yields due to competitive dynamics and need for provisioning would continue to pose challenges to SFL's profitability.

Lakshmi General Finance

The `FAA' rating assigned to the fixed deposit programme of Lakshmi General Finance Limited (LGF) has been reaffirmed. The `P1+' rating for the Rs. 75 crore short-term debt programme has also been reaffirmed.

The recommended rating reflects the company's moderate market position in vehicle financing business, conservative financial risk profile, the benefits arising from linkage with Sundaram Finance Limited (SFL) and the conservative business practices adopted by the management.

Nonetheless, pressure on yields due to competitive dynamics and need for provisioning would continue to pose challenges to LGF's profitability.

LGF is a medium-sized, Chennai-based asset financing company with a focus on financing vehicles with predominant focus on commercial vehicles and the balance distributed between cars and off-the-road vehicles (ORVs). As of March 2001, funds deployed stood at Rs. 433.78 crores and the reported net worth stood at Rs. 84.29 crores.

For the year ended March 31, 2001, LGF reported total income of Rs. 84.21 crores and a net profit of Rs. 11.36 crores.

According to a company release for the half-year ended September 30, 2001, LGF has registered a growth of over 24 per cent in hire purchase disbursements. In unit terms also, the company has registered a significant growth even though the vehicle manufacturers have reported lower volumes.

The recoveries in HP are also better by over six per cent over the previous year. In spite of the generally depressed market conditions, the company has a positive outlook.

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Section  : Business
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