Sundaram Finance sees market discouraging this financial year

Chennai-based non-banking finance company, Sundaram Finance Limited, is expecting a tough market in near future, considering the current uncertainty in the economy coupled with other challenges, said the company management.

Speaking to reporters here, TT Srinivasaraghavan, managing director, Sundaram Finance, said, “The 12 months starting from April 1, 2012 seem to be very much challenging with the uncertain macro environment. Most of the key parameters, which indicate growth, are far from encouraging and appear rather risky.”

The company management abstained from giving out its outlook for the current fiscal, commenting that the year ahead seems uncertain.

The global uncertainty, which is now playing in the domestic market as well, the current account deficit and liquidity issues, the weakening of the Rupee and inflation are discouraging to the auto industry, as any other industry at present.

The impact of the sharp increase in petrol prices in the car and two-wheeler segments also has to be watched out, Srinivasaraghavan added. The overall market sentiment is not good for the industry and the company would not be giving out any outlook for this year, he added.

In the commercial vehicle segment, there is a rebalancing happening, where the light commercial vehicle (LCV) and small commercial vehicles are growing along with the heavy commercial vehicle segment, which offers a capacity of around 25 tonne. However, the market for medium commercial vehicles,of 16 tonne is shrinking dramatically, he added. A majority of the company's disbursements are into the commercial vehicle segment.

Sundaram Finance has posted a net profit of Rs 98.21 crore for the fourth quarter ended March 31, 2012, as compared to Rs 59.35 crore for the same period last year, registering an increase of 65.67 per cent. Income from operations stood at Rs 467.71 crore, as against Rs 380.12 crore, an increase of 23 per cent.

However, the company officials said that the fourth quarter of 2010-11 had a one-time exceptional amount of Rs 38.85 crore on account of the profit on the sale of shares by its subsidiary company, Sundaram Finance Distribution, thus making a total of Rs 98.20 crore net profit for the quarter ended March 31, 2011, according to the balance sheet.

The disbursements for the quarter ended March 2012, registered a growth of 31 per cent to Rs 2,702 crore for the quarter, as compared to Rs 2,066 crore in the same period last year.

Almost 84 per cent of the disbursements for the year, which was at Rs 9307 crore with a 25 per cent increase from the previous years’ disbursements of Rs 7475 crore, came from the commercial vehicles and car segments. The construction equipment and tractor business crossed the Rs 1000-crore mark.