You are here » Home » Companies » Company Overview » Sundaram Finance Ltd

Sundaram Finance Ltd.

BSE: 590071 Sector: Financials
NSE: SUNDARMFIN ISIN Code: INE660A01013
BSE LIVE 19:46 | 19 Oct 1665.50 9.20
(0.56%)
OPEN

1670.00

HIGH

1679.25

LOW

1640.30

NSE 19:31 | 19 Oct 1662.85 11.85
(0.72%)
OPEN

1668.00

HIGH

1678.75

LOW

1651.00

OPEN 1670.00
PREVIOUS CLOSE 1656.30
VOLUME 349
52-Week high 1800.00
52-Week low 1089.00
P/E 35.41
Mkt Cap.(Rs cr) 18,504
Buy Price 0.00
Buy Qty 0.00
Sell Price 1665.50
Sell Qty 264.00
OPEN 1670.00
CLOSE 1656.30
VOLUME 349
52-Week high 1800.00
52-Week low 1089.00
P/E 35.41
Mkt Cap.(Rs cr) 18,504
Buy Price 0.00
Buy Qty 0.00
Sell Price 1665.50
Sell Qty 264.00

Sundaram Finance Ltd. (SUNDARMFIN) - Chairman Speech

Company chairman speech

SUNDARAM FINANCE LIMITED ANNUAL REPORT 2009-2010 CHAIRMAN'S REPORT Ladies and gentlemen, It gives me great pleasure to welcome you all to the fifty seventh Annual General Meeting of your Company. The company's annual report and audited accounts for the year ended 31st March 2010 have been with you for some time now and with your permission, I shall take them as read. THE ECONOMY: Uncertainty continues to cloud the shape and pace of global economic recovery. Just as the US seemed to be emerging from its worst recession since the Great Depression, Europe finds itself in the midst of a major crisis. Private spending in advanced economies continues to be constrained and inflation remains generally subdued, making it likely, that fiscal and monetary stimuli in these economies will continue for. an extended period. Emerging market economies, on the other hand, seem to be significantly ahead on the recovery path, but some of them are also facing inflationary pressures. This has prompted central banks in some of these countries to begin phasing out their accommodative monetary policies. In India, the economic recovery, which began around the second quarter of 2009-10, has since shown sustained improvement. Industrial recovery has become more broad-based and is expected to continue in the wake of rising domestic and external demand. Reversing a nearly yearlong decline, exports and imports have both grown since November 2009. Flow of credit from both bank and non-bank sources has picked up and overall business sentiment has turned distinctively positive. India's GDP growth in 2009-10 has been estimated at 7.4%, driven by growth in the industrial and services sectors. The abundance of liquidity in the system ensured that interest rates remained reasonable for most part. The fiscal deficit for 2009-10 stood at 6.6% of GDP, slightly below the full year's estimate of 6.7%. In the Budget for 2010-11, the fiscal deficit for FY 2011 has been estimated at 5.5% of GDP, a reduction of 1.2% from last year's estimate. However, the windfall mobilisation through the recent 3G auction might further reduce the deficit. The developments on the inflation front are, however, far from encouraging. The wholesale price index (WPI) inflation climbed steeply from 1.5% in October 2009 to 10.2% by May 2010. Your company's hire purchase and loan disbursements at Rs.5834 crores during the year, registered a significant growth of 29%, over the previous year's figure of Rs.4540 crores, led by a 51% growth, in unit terms, in the Medium &, Heavy Commercial Vehicle (M & HCV) segment, against the industry growth of 33%, resulting in significant market share gains during the year. Your Company also achieved a strong 25% year on year growth, in unit terms, in Car Finance. The company's continuing focus on asset quality and its finely honed credit appraisal and collection skills have ensured that the portfolio is possibly 'Best in Class'. Gross receivables under management by the Company, including assets sold or securitised stood at Rs. 10219 crores as of 31 March 2010, as against Rs.9203 crores in the previous year. The net profit for the year was Rs.201.36 crores (excluding the one-time profit of Rs.25.39 crores on sale of shares in WABCO-TVS (INDIA) Limited) as against Rs. 150.73 crores in the previous year, registering a growth of 34%. Gross and net NPA's stood at 1.26% and 0.45% respectively, as against 1.64% and 0.75% in the previous year. As a measure of prudence and with a view to strengthen the balance sheet, a general provision of 0.40% of Standard Assets, amounting to Rs.31.62 crores has been made during the year. The company's net worth stood at Rs.1316.36 crores as on 31 March 2010, while the consolidated net profit and net worth stood at Rs.273.62 crores and Rs.1472.36 crores respectively, as at 31 March, 2010. I am happy to inform you that the total number of branches has crossed 500, with a significant number of them in tier 2 and 3 towns. This will ensure last mile delivery to large numbers of retail customers and represents your company's continuing commitment to the larger national goal of Financial Inclusion. The net accretion to public deposits during the year 2009-10, was Rs.154.85 crores, taking the deposits outstanding at the year end to Rs. 1094.91 crores. I thank our depositors, many of whom have been with us for several decades, for the high degree of confidence reposed in the Company and assure them of our constant endeavour to maintain the highest standards of safety, efficiency and personalised service for which your Company is renowned. Your directors are pleased to recommend a final dividend of Rs.4/- per share, which together with the interim dividend of Rs.6A per share paid in February 2010, aggregates to a higher dividend of Rs.10/- per share for the financial year ended 31 March 2010, on the paid-up capital of Rs.55.55 crores. The total payout, including dividend tax of Rs.7.74 crores, amounted to Rs.63.29 crores. PROSPECTS The current financial year has started off on a strong note. The automotive sector has posted strong year on year growth, albeit on a low base. Sales of commercial vehicles, passenger cars and utility vehicles in the first! quarter have been robust, enabling your Company to register a healthy growth in disbursements. The off take of commercial vehicles is expected to remain buoyant in the second quarter as well, driven by improved freight availability, better freight rates and advancement of purchases, ahead of the implementation of new emission norms, from October 1, 2010. The strong growth in the car segment and the momentum that was witnessed in the previous year is expected to be maintained during the current year, aided partly by the launch of several new models in recent months, with a few more to follow. A revival in infrastructure projects across the country also bodes well, not only for the road transport and construction equipment sectors, but for the economy as a whole. GDP growth for the financial year 2010-11 is projected at 8.5%, based on strong growth in the manufacturing sector, expansion in exports, sharp upturn in the capital goods sector and a reasonable expectation of a favourable monsoon. However, it is to be hoped that the irrational exuberance of a few years ago, which led to excess capacity creation in the CV segment, is not repeated. While the infrastructure sector presents great opportunities, it is ironically one of the key concern areas as well, with the power situation, in particular, threatening to spoil the growth story. Uncertainties in terms of global events and volatility in commodity and oil prices could pose problems for the Indian economy, while inflation continues to be a worry, domestically. Introduction of the Base Rate and hardening of the policy rates are likely to exert upward pressure on interest rates. SUBSIDIARIES AND JOINT VENTURES: Your company's subsidiaries and joint ventures have reported good results for the year under review. Sundaram BNP Paribas Asset Management reported higher profits of Rs.20.84 crores, against Rs.10.68 crores during the previous year. Notably, in the mid and small-cap space, the funds of Sundaram BNP Paribas Mutual Fund outpaced both benchmarks and peer group by comfortable margins. Sundaram BNP Paribas Home Finance Limited, despite the challenges posed by the volatility and uncertainty in the operational environment and stiff competition, managed to turn out a good performance during the year 2009-10, aided by an upswing in business during the second half of the year. Royal Sundaram reported a higher net profit of Rs.30.97 crores, against Rs.5.66 crores during the previous year, making this year its best in its first decade of operations. The global acquisition of the Fortis Group by BNP Paribas resulted in their acquiring interest in the Fortis asset management business in India. Consequently, your Company and BNP Paribas have, after careful consideration of the available options, amicably agreed to disengage from the asset management joint venture and for your Company to acquire their 49.9% stake therein. This will, however, have no impact on the other joint ventures between your Company and the BNP Paribas Group. LEGISLATIVE AND REGULATORY ISSUES: I would like to reiterate our long pending demand to RBI for a reduction in the risk weightage on assets with lower risk profiles, like commercial vehicles and cars, to differentiate them from other classes of assets which carry inherently higher risks. I also renew my appeal for a structured funding mechanism, especially for small and medium Asset Finance Companies, who have played a vital role in delivering credit to the Road Transport sector. I would also reiterate our submissions to the Ministry of Finance to treat asset financing companies on par with banks and housing finance companies with regard to tax treatment of income recognition and provisioning in respect of Non-Performing Assets. ACKNOWLEDGEMENTS: On behalf of the Board and on my own behalf, I place on record my sincere appreciation and gratitude to our customers, depositors, shareholders, bankers and mutual, funds for their continued support and the confidence they have reposed in the Company. I record my special appreciation of the sterling efforts and untiring commitment of the loyal band of employees who make up Team Sundaram. I thank you for your attention. Sri S. Viji Chairman