Sundaram Finance looks to grow AUM beyond Rs 50,000 crore in 3 years

Sundaram Finance Ltd is reworking strategy to bring down the share of lending to the medium and heavy commercial vehicle (MHCV) segment from 25 per cent to below 20 per cent in expanding loan book in medium term.

The Chennai-based non-banking finance company is looking to scale up SME lending share to 8-10 per cent share from present two per cent over the medium term.

Rajiv Lochan, its managing director said the finance expects assets under management (AUMs) to cross Rs 50,000 crore in three years from its current base of Rs 31,980 crore at the end of September 2022, Rajiv Lochan, managing director said. The AUM was at Rs 29,811 crore in September 2021.

Dwelling on growth plans, Lochan said the growth is back to pre-pandemic levels (15-16 per cent). NBFC will expand its branch network especially in non-south states as part of diversification. It has 640 branches throughout the country. The share of the South region in AUM has come down from 60.3 per cent in September 2021 to 56.6 per cent in September 2022.

Lochan said while all asset classes will see growth, their share in the total book will go under change. The share of light and small commercial vehicle (LSCV) segment will be retained around 25 per cent. This segment has traditionally been the domain of NBFCs. It is experiencing continued traction due to the growth of hub-and-spoke networks in logistics & supply chain solutions and deepening of e-Commerce-driven reach into the hinterland requiring last mile connectivity.

SFL has identified 1,600 clients in eight cities and surrounding areas to increase MSME lending. These are entities which do not get bank credit and depend on funding for informal sources at high interest rates. The size of loans would be between Rs 0.25 crore to Rs two crore.    

As for capital for supporting the growth, SFL never had to raise external capital and growth will be funded through internal accrual, he said. The capital adequacy ratio was 24.3 per cent at end of September 2022, up from 22.1 per cent in March 2021 and 18.4 per cent in March 2020.

The networth rose to Rs 7,315 crore in September 2022 from Rs 6,179 crore in March 2021 and Rs 5,547 crore in March 2020.