Ashok Leyland Finance Payout At 50 Per Cent

Ashok Leyland Finance Ltd (ALF) has recommended a 50 per cent dividend for the year ended June 1998.

During the year under review, total disbursements touched Rs 1015 crore (Rs 675 crore in the previous corresponding period). Of this, hire purchase accounted for Rs 1000 crore (Rs 613 crore) while leasing accounted for Rs 15 crore (Rs 62 crore).

The drastic fall in leasing has largely accounted for the fall in net profit to Rs 28.27 crore from Rs 34.43 crore in the previous year. With depreciation benefits declining, provisioning for tax has increased to Rs 18 crore (Rs 3.72 crore), N Sampath Kumar, vice president, ALF, said.

According to S Nagarajan, the company's managing director, construction equipment financing will be a key growth area this year. For the year under review, financing in this segment grew 173 per cent to Rs 82 crore (Rs 30 crore).

Nagarajan said, as a policy, Ashok Leyland Finance will try to cut its exposure to the transport sector _ from about 50 per cent (of total disbursements) to 40 per cent _ over the next couple of years.

And, within the transport sector, in 1997-98, commercial vehicles disbursements accounted for Rs 560 crore (Rs 340 crore), while cars and utility vehicles accounted for Rs 252 crore (Rs 175 crore).

This year, car financing will be around Rs 300 crore. In the passenger car segment, the company has consciously restricted itself to the lower end covering Maruti 800, vans, Zen and jeeps.

In a difficult year, ALF has been able to increase disbursements, largely because of its well-established branch network enabling personal credit appraisal of borrowers. This year, disbursements are set to increase further by 20 per cent to reach Rs 1200 crore.

Ashok Leyland Finance has emerged as a leading player in asset securitisation and this is a major source of funding, says Nagarajan. This year, the company already has firm orders for Rs 850 crore.

In the next couple of months, securitisation deals have been firmed up with ICICI for Rs 75 crore, ABN Amro for Rs 25 crore and Citi Bank for Rs 25 crore.

As funds deployment is a problem given the economic slowdown, the whole programme is being staggered over the next few months.

The company has also raised Rs 10.5 crore by privately placing secured non-convertible debentures and another Rs 5 crore as unsecured non-convertible debentures. A total of Rs 100 crore is to be raised this year via issue of non-convertible debentures.

The debenture issue will be carried out in two tranches of about Rs 50 crore each _ the first to be issued between October and November and the second in the first quarter of the next year.

ALF has also got its working capital limits from banks enhanced and will continue to look at other traditional funding avenues.

Apart from selling its receivables, the company is also looking into buying receivables from smaller NBFCs. This portfolio consists largely of two-wheeler and consumer durable receivables.

"We have just commenced buying, and hence are taking utmost care on asset quality," says Nagarajan.