Sundaram Finance Net Dips To Rs 40 Crore

The Chennai-based Sundaram Finance Ltd (SFL) has reported a lower net profit of Rs 40.36 crore for the year ended March 2002 against Rs 70.54 crore during last fiscal.

Income from operations dropped to Rs 461.72 crore from Rs 527.11 crore in April- March 2001. The board has recommended a dividend of 60 per cent during the year. The dividend payment would be around Rs 14.4 crore on the paid-up capital of Rs 24 crore for the company.

G K Raman, managing director, said, "During last financial year (2000-01), we changed the method of accounting hire purchase (HP) finance charges from the even spread method to the internal rate of return (IRR) method. Consequently, income from operations during that year (fiscal ended March 2001) was higher by Rs 86.31 crore".

In the case of even spread method, the company estimates the total receivable over a period of time and takes uniform credit for HP finance charges every year. In IRR, the company would deduct the principal proportionately as and when it receives the instalments. Therefore, finance charges under IRR is higher in the first year and it gets reduced proportionately in the subsequent years.

SFL has achieved a growth of 18 per cent in hire purchase and loan disbursements for 2001-02. Gross disbursements crossed Rs 1,220 crore against Rs 1,034 crore in the previous year. However, leasing disbursements dipped to Rs 28 crore from Rs 107 crore as on March 2001.

During the year ended March 2002, SFL disbursed Rs 602 crore (Rs 425 crore) to new commercial vehicles and Rs 414 crore (Rs 404 crore) to passenger cars and multi-utility vehicles.

During fiscal 2002, Sundaram Finance diversified into several new business and expanded its portfolio to include working capital finance for transporters. The diversification include, Sundaram Infotech Solutions (SIS), a strategic business unit (SBU), and Sundaram Business Services (SBS), a division under SFL. While SIS will focus on application software development, data centre management and IT services, SBS will act as Information Technology Enabled Service (ITES) provider for the entire group. Both, SIS and SBS, would offer its range of services to outside clients.