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Sundaram Finance Ltd.

BSE: 590071 Sector: Financials
BSE 00:00 | 24 Jun 1749.70 34.10






NSE 00:00 | 24 Jun 1750.55 35.55






OPEN 1712.15
52-Week high 2699.00
52-Week low 1557.10
P/E 21.52
Mkt Cap.(Rs cr) 19,439
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1712.15
CLOSE 1715.60
52-Week high 2699.00
52-Week low 1557.10
P/E 21.52
Mkt Cap.(Rs cr) 19,439
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sundaram Finance Ltd. (SUNDARMFIN) - Director Report

Company director report

Your directors have pleasure in presenting the 68th Annual Report together with auditedaccounts for the year ended 31st March 2021. The summarised financial results of theCompany are presented hereunder:


(Rs. in cr.)
Particulars Year ended March 31 2021 Year ended March 31 2020
Revenue from Operations 3953.74 3842.09
Other Income 60.46 84.85
Total Revenue 4014.20 3926.94
Less: Total Expenses 2957.90 2981.82
Profit before exceptional items and tax 1056.30 945.12
Add: Exceptional item NIL NIL
Profit before tax 1056.30 945.12
Profit after Tax 809.05 723.95
Other Comprehensive Income 0.05 55.92
Surplus brought forward 519.51 444.76
Less: Transfer to COVID-19 Reserve (net of deferred tax) (20.34) 20.34
Amount available for appropriation 1348.94 1204.28
Appropriations to:
- Statutory Reserve 161.81 144.79
- General Reserve - 246.75
- Final 2018-19 - 138.88
- Interim 2019-20 - 111.10
- Final 2019-20 33.33 -
- Interim 2020-21 133.32 -
Dividend Tax - 43.25
Surplus carried to balance sheet 1020.48 519.51


Your Company paid an interim dividend of Rs.12/- per share in February 2021. Yourdirectors are pleased to recommend a final dividend of Rs.6/- per share which togetherwith the interim dividend would aggregate to a total dividend of Rs.18/-per share (180%on the face value of Rs.10/-) representing a dividend pay-out of 24.72%.

The Dividend Distribution Policy formulated in accordance with the provisions ofRegulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is attached as part of this report vide Annexure I.


A detailed report on corporate governance together with a certificate from theSecretarial Auditor in compliance with the relevant provisions of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is attached as part of thisreport vide Annexure II (i).

Compliance reports in respect of all laws applicable to the Company have been reviewedby the Board of Directors.


All transactions with related parties were in the ordinary course of business and on anarm's length basis.

The Company did not enter into any material transaction with such related partiesunder Section 188 of the Companies Act 2013 during the year. Form AOC-2 as requiredunder Section 134 (3) (h) of the Act read with Rule 8 (2) of the Companies (Accounts)Rules 2014 is attached as part of this report vide Annexure III (i). The Company'spolicy on Related Party Transactions is attached as part of this report vide Annexure III(ii).

The Company did not enter into any transactions with any person or entity belonging tothe promoter or promoter group and holding 10% or more shareholding in the Company.


Your Company along with its subsidiaries and associates has always responded in aresponsible manner to the growing needs of the communities in which it operates. Duringthe year your Company has in consonance with the CSR policy of the Company undertaken anumber of initiatives that contribute to society at large in the areas of healtheducation environment and preservation of the country's rich culture and heritage.

The Annual Report on CSR Activities undertaken by the Company for the Financial Year2020-21 prepared in the amended format is annexed with this report vide Annexure IV.


A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is enclosed as partof this report vide Annexure V.


The Company has in place a Policy for prevention of Sexual Harassment in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. An Internal Complaints Committee (ICC) has been set up toredress complaints. All employees (permanent contractual temporary trainees) arecovered under this policy. No complaints were received during the financial year nor wereany pending unresolved as on 31st March 2021.


In terms of Section 204 of the Companies Act 2013 and the rules thereunder theCompany has appointed M/s Damodaran & Associates Practising Company Secretaries asthe Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company andits material unlisted subsidiary viz. Sundaram Home Finance Limited are annexed to thisReport vide Annexures VI(1) and VI(2) respectively.


Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed vide Annexure VII.


Based on the recommendations of the Nomination Compensation & RemunerationCommittee your Board of Directors has amended the SFESOS by introducing StockAppreciation Rights Scheme; the Board has granted subject to regulatory approvals wherenecessary 14336 stock options and 2384 Stock Appreciation Rights to select eligibleemployees on 28th May 2021. The disclosure required under SEBI (Share Based EmployeeBenefits) Regulations 2014 is furnished vide Annexure VIII along with the amendmentsmade to the SFESOS in Annexure IX.


As required under Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of theCompanies (Management and Administration) Rules 2014 the draft form MGT-7 is hosted onthe Company's website in the link:


During the year under review no significant and material orders were passed by theregulators courts or tribunals against the Company impacting its going concern statusor its future operations.


Your Company has no activity relating to conservation of energy or technologyabsorption. During 2020-21 expenditure in foreign currencies amounted to Rs.29.48 cr.Foreign currency earnings amounted to Rs.2.63 cr.



The financial year 2020-21 (FY21) was fraught with uncertainty across the globe as theonce-in-a-century COVID-19 pandemic led to a significant loss of lives and livelihoodsglobally. This had a devastating impact on global growth that witnessed a contraction of3.5% year on year (YOY). The IMF notes that "the adverse impact has been severe onwomen youth the poor informally employed and those who work in contact-intensivesectors." Countries however were quick to respond with sizeable stimulus measures.A total of US$30 trillion has been spent by countries across the world on fiscal andmonetary stimuli spanning FY21 to offset the impact of the pandemic. The IMF estimatesthat the impact could have been at least three times worse "if not for extraordinarypolicy support." These policy measures and the gradual phased reopening of activitywitnessed a sharp pickup in consumption of which pent-up demand played a large part inthe initial phases moving back to pre-pandemic levels of activity on the back of risingvaccinations. While advanced economies except China which grew in 2020 are expected toreturn to their pre-COVID GDP levels this year all emerging economies and low-incomecountries are not expected to do so till 2023.

The global economic growth for 2021 is expected to be 5.5-6% although a high degree ofuncertainty surrounds this estimate. The recovery paths of different countries areexpected to be substantially different. Most emerging economies have seen a significantsetback to their poverty reduction efforts of the past few years. In light of differentialimpact and recovery trajectories between advanced and emerging economies greaterinternational collaboration will likely be crucial on both the economic and healthcarefronts (particularly related to vaccines) and the economic prospects will depend largelyon the global community's ability and willingness to fight the virus-increased resilienceon the back of vaccinations and adherence to safety protocols will accelerate globalprogress while new variants and strains that prolong the pandemic will depress globaleconomic growth.


The first wave of COVID-19 infections in India spanned nearly the entire FY21 andcaused significant economic disruption. The onset of the pandemic in India in the firstquarter of FY21 was met with a series of national lockdowns that led to a sharp drop inactivity. The contact-sensitive services segment was the most impacted and the largelyinformal nature of this segment in India further worsened the economic impact on thenation. All told the toll on India's economy has been severe and the provisionalestimates show a GDP growth in FY21 of (7.3)% YOY.

In response the government and the RBI announced a slew of fiscal and monetarymeasures to overcome the difficulties caused by the national lockdowns. The year witnesseda number of government initiatives in the series of fiscally prudent Atma Nirbhar BharatAbhiyan packages including for agriculture and allied infrastructure. The key aspects ofthese measures started with food and health support during the lockdown. This was expandedon and followed up with other packages for MSMEs NBFCs migrant workers agriculturesocial sector funding festival allowances and state government support. One notablehighlight was the extension of the production-linked incentive (PLI) scheme to tensectors. This is likely to have laid a key foundation for substantial capital expenditureand increased competitiveness for Indian industry in the years ahead.

In all the Atma Nirbhar Bharat Abhiyan package of measures totalled Rs.17.2 lakhcrores in support. While these announcements were timely they were largely focused onsupply-side support and longer-term reforms. Demand-side measures were not quite as largeas the stimulus packages seen in developed economies; the Indian government and policymakers seemed to privilege fiscal prudence over nearterm economic stimulus.

The fiscal deficit for the 2020-21 was projected at 3.5% at the start of the year.However the large loss of revenue for the centre due to the stringent COVID-19 relatedrestrictions had led the government to target a higher fiscal slippage of 9.5% of GDP. Thepickup in tax revenues during the last quarter is expected to bring down this deficit tojust under 8%. Into the fiscal year 2021-22 the government has projected a fiscal deficittarget of 6.8%. This is likely to worsen given the vicious second wave and the associatedset of lockdowns leading to likely revenue shortfalls in the first quarter of FY22.

On the external front the drop in growth had a positive rub-off on the currency. Thesizeable stimulus measures in the western economies led to a constant inflow of money intoemerging economies. India stood differentiated on its inherent strength and received largeFII and FDI inflows in FY21. This stabilised the rupee that saw an appreciation of 2.6%against the dollar ending the fiscal year at 73.1. The RBI cashed in on this opportunityand added $103bn to its forex reserves that currently stand at $579bn. India's currentaccount balance however recorded a deficit of 0.2% of GDP after recording surplus (1.7%of GDP) during the three quarters ended December 2020.

The RBI more than compensated for the lack of substantial demand-side fiscal supportthrough accommodative monetary policy to lessen the burden on borrowers and make abundantliquidity available during the difficult period of the pandemic. Starting the last week ofMarch 2020 the RBI cut its key policy Repo rate by 115 basis points to 4% and cut thecash reserve ratio (CRR) by 100 basis points. Through various other liquidity tools likethe long-term repo operations (LTRO) targeted long term repo operations (TLTRO) openmarket purchases (OMO) special liquidity to mutual funds and others RBI infused a totalliquidity of Rs.12.7 lakh crores into the system resulting in a significant reduction ininterest rates. The measures of extended regulatory forbearance easing of assetclassification norms relaxation to banks on commercial real estate moratoriumextensions introduction of a resolution framework particularly for the MSME segment andrationalisation of risk weights for individual housing all helped ease systemic stress.To top it all in the early weeks of the financial year 2021-22 the RBI introduced agovernment security acquisition program (G-SAP) that would work to keep market ratesfurther in check besides ensuring an assured secondary market purchase limit of securitiesby RBI.

The financial year 2020-21 also witnessed the passing of bills on agricultural reformand labour laws. The bills on agriculture were set to do away with the inter-state andintrastate restrictions imposed earlier on sale of agricultural produce. In addition theeasing of contract farming laws is intended to enable greater participation from theprivate sector in procurement storage and transportation of agricultural produce all ofwhich were expected to unlock inefficiencies in the agricultural value chain. Howeverthese bills currently remain suspended owing to large scale protests from farmers andother interest groups. The changes to the labour laws have been appreciated by thebusiness community as it gives them the flexibility to deal with their employee workforcewithout compulsory notification to the government and facilitates the ease of doingbusiness even though the cost of establishment would substantially increase on account ofchanges in definition of "wages" and the associated emphasis on retiral savingsas opposed to take-home pay.


The automotive sector was already witnessing bouts of weakness even before thecommencement of financial year 2020-21. The onset of the COVID-19 pandemic only deepenedthe fall in this sector. The commercial vehicles (CV) segment was the worst affectedgiven its close linkages to overall economic growth. Even though the second half of theyear was encouraging on the whole the sharp drop in economic activity and a postponementof the capex cycle led to a 28% YOY drop in MHCV volumes and a 17% YOY drop in LCVvolumes. Increased e-commerce sales and brick- and-mortar businesses adopting doordelivery enabled a ramp up in SCV sales which partially cushioned the drop in volumes.

The financial year 2020-21 was a very strong year for tractors. Three consecutive yearsof good harvests increased government spending in rural India strong agricultural outputand elevated farmer sentiment resulted in a 27% YOY growth in tractor sales volumes.Agriculture as an industry and rural India in general were relatively unaffected by thepandemic unlike urban India which bore the brunt of it. While concerns around job lossesand weakness in urban demand appeared to be two key reasons that led to a 13% YOY declinein twowheeler volumes the increased need for personal mobility by first-time owners ledto a much lesser impact on passenger vehicle (PV) volumes that contracted by a mere 2%YOY. However within the PV segment utility vehicles witnessed growth of 8% YOY ascustomers with higher income profiles were relatively less affected by the pandemic.


Your Company's disbursements at Rs.11741 cr. (PY Rs.15176 cr.) were down by 22.63%during the year under review reflecting the marked decline in sales across the automotivesector owing to multiple factors as also the elevated risk perceptions in light of thepandemic-induced disruptions. Disbursements against Commercial Vehicles declined 41% inunit terms as compared to the market drop of 21%; disbursements against passenger cars andutility vehicles declined 3% almost mirroring the overall market which was lower by 2%.Gross receivables managed by your Company as of March 31 2021 stood at Rs.35736 cr. asagainst Rs.35088 cr. showing a marginal growth over the previous year. Your Company'stight rein on operating costs and its ability to raise resources at competitive ratesenabled it to maintain its margins at a reasonably healthy level.

Reflecting the economic slowdown and the cash flow strains faced by its customers yourCompany's delinquencies increased during the year. However your Company's superior creditstandards and systematic collections and recovery efforts ensured best-in-classperformance on asset quality. Stage-3 assets Gross and Net of ECL provisions stood at1.84% (PY 2.47%) and 1.01% (PY 1.65%) respectively as at 31st March 2021.

RBI as part of the COVID relief had announced various measures like additional creditrelief moratorium and restructuring aimed at alleviating the financial hardships forindividuals and small business customers. Your Company extended the moratorium andrestructuring support for providing timely relief to such customers. In addition yourCompany also extended financing support to its MSME customers through the ECLGS windowannounced by the Government of India as part of the Atma Nirbhar Bharat Abhiyan package.

Your Company has been maintaining comfortable liquidity in the form of liquidinvestments and undrawn bank limits to meet its maturing liabilities and did not opt formoratorium in respect of its debt obligations to its lenders.

Your Company registered a net profit of Rs. 809 cr. compared to Rs. 724 cr. in theprevious year a growth of 12%. Excluding the one-time gain of Rs. 53 cr. (on sale ofequity shares in Sundaram Finance Holdings Ltd.) last year net profit grew by 21% on alike-to-like basis. Your Company's net worth stood at Rs.6179 cr. as on 31.3.2021.Capital adequacy (CRAR) at 22.06% was comfortably higher than the statutory requirement of15%.

There are no significant changes in key financial ratios of the Company for F.Y.2020-21 as compared to F.Y. 2019-20 except for the following:

Net Profit Margin (%)

Return on Net Worth(%)

March 2021 March 2020 Variance March 2021 March 2020 Variance
Ratios 20.15% 18.44% 9.33% 13.80% 13.67% 0.93%


a) Deposits

During the year your Company mobilised fresh deposits aggregating to Rs. 708.52 cr.Renewal of deposits during the year amounted to Rs.1345.58 cr. representing 81% of thematured deposits of Rs.1631.16 cr. Deposits outstanding at the year-end were at Rs.4020.99cr. as against Rs.3676.19 cr. in the previous year. The net accretion for the financialyear was Rs.344.81 cr. As at 31st March 2021 4090 TDRs amounting to Rs.36.06 cr. hadmatured for payment and were due to be claimed or renewed. After close followup thesefigures are currently 3243 and Rs.24.53 cr. respectively. Continuous efforts are beingmade to arrange for repayment or renewal of these deposits. There has been no default inrepayment of deposits or payment of interest thereon during the year. Investor RelationServices - Deposits continue to enjoy the ISO 9001:2015 Certification from Bureau Veritas(India) Private Limited.

During the year your Company's outstanding deposits crossed Rs.4000 cr. As part of thedigital initiative to provide support to depositors your Company launched Online servicesto its depositors through Customer Portal / Mobile APP in September 2020.

b) Term Funding

During the year your Company raised term funding from Banks Mutual funds Insurancecompanies and others in the form of non-convertible debentures and term loans to the tuneof Rs.7526 cr. across varying tenors.

c) Bank Finance

As part of the overall funding plan your Company's working capital limits withconsortium banks were retained at Rs.3000 cr. During the year your Company also issuedseveral tranches of commercial paper aggregating to Rs.6500 cr. The maximum amount ofoutstanding commercial papers at any time was Rs.4475 cr. and the amount outstanding atthe end of the year was Rs.2025 cr.

d) Assets Securitised / Assigned

During the year your Company raised resources to the extent of Rs.493.70 cr. throughsecuritisation and assignment of receivables.


Your Company's long term credit ratings have been retained at "AAA" (HighestDegree of Safety) with a "Stable Outlook" by both ICRA and CRISIL. Theshort-term borrowings (including commercial paper) are rated "A1+" (very strongdegree of safety) by both ICRA and CRISIL. Fixed Deposits are rated "AAA"(Highest Credit Quality) by both ICRA and CRISIL.


The widespread disruption caused by the nationwide lockdown posed several challengesboth in terms of people safety and technology. As a customer-facing business your Companyhad to quickly reorient its approach and processes to respond to the emerging situation.While the primary objective was to ensure the safety of employees customers associatesand other partners it was vitally important to ensure that customer service levels werenot compromised. Taking a cue from developments in other parts of the country yourCompany took a number of steps to enable a "Work from home' environment ahead of thelockdown imposed by various state governments depending on the situation in the respectivestates. This included putting in place adequate IT security measures to safeguard thetechnology environment while providing access to nearly 3000 users on a real time basis.This ensured continuity of operations and service to customers especially our depositors.All deposit maturities as well as redemption of other liabilities were met on or beforedue dates.

All borrowers were kept regularly informed about the regulatory developmentsespecially regarding the grant of moratorium. This was done entirely using digital methodsand last mile servicing was done by our employees using telephones and digitalcommunications. The digital tools deployed were enhanced to improve the customerexperience.

Detailed safety protocols were put in place to ensure that operating proceduresincluding deep cleaning and fumigation educating and training the staff to wear masksimportance of social distancing and hand sanitisation/washing with soap and avoidingphysical contact. These are being reinforced and communicated to all our employeescontinuously using digital technology. A vaccination drive was conducted in yourCompany's head office and coordinated efforts continue to ensure all employees especiallyfrontline staff are vaccinated at the earliest.


The pandemic has caused significant economic damage. However the central governmentstretching itself within its framework of prudence and the swift and frequent RBI policymeasures have greatly helped to contain the negative impact. Initial projections for FY22indicated an appreciable spurt in growth in the range of 11-13% YOY. However the secondwave of the pandemic that has hit the country suddenly and with an unexpectedly highintensity has crippled economic activity in the first quarter of FY22. Infection levelshave been at over four times that witnessed in the first wave. Mortality in absolutenumbers has been correspondingly higher (although the mortality rate has remained between1% and 1.5%). Worryingly the second wave has spread wider into semi-urban and ruralIndia. And to complicate matters the pace of vaccinations has seen a sharp drop both onaccount of supply shortages of vaccines and vaccine hesitancy amongst citizens.

The lockdowns and associated restrictions that have been triggered in the states arelikely to shave-off at least 150250bps from the FY22 GDP growth projection. The secondwave has peaked in May and optimistically the economic damage from this wave of thepandemic could well be contained in the June quarter. This could then lead to a faster legof recovery through a layer of pent-up demand led sales that could bolster full yeargrowth numbers.

Realistically India's economic recovery in FY22 will be marked by a high degree ofuncertainty. The country's ability to mobilise vaccines at scale ramp up the pace ofvaccinations and the speedy containment of virus spread in rural India will all be majordeterminants of consumer confidence returning and consequently of faster economicrecovery. Continued adherence to safety protocols and minimising super-spreader eventswill ensure any subsequent "waves" are contained to ripples. The emergence ofnewer variants and strains of the virus will trigger disruptions which could depressconsumer sentiment and consequently economic activity.

Given how sensitive the commercial vehicle (CV) sector is to economic momentum thissegment is likely to take a while to recover. A dramatic turnaround seems unlikely. Eventhe expected recovery in second half of FY22 on the back of a 3-year downcycle may getpushed out. However if the second wave is effectively contained within the first quarterof this financial year there could be some support the sector may receive on theside-lines. The government's resolve to invest over Rs.100 lakh crore behindinfrastructure through the National Infrastructure Pipeline should provide support toconstruction equipment as well as tippers within the MHCV segment. Continued growth ofe-commerce sales and direct- to-home models across sectors are expected to support theLSCV segment growth. Rising global agricultural prices and a good monsoon are most likelyto help hold up growth in rural India and as a result in tractors and farm equipmentsales. However the second wave's significant inroads into rural India could soften growthin the tractor and farm equipment segment. It is expected that the need for personalmobility will continue to drive demand for passenger cars and utility vehicles. Howeversupply side challenges due to global shortage of semiconductors as well as risingcommodity prices across steel and fuel are likely to dampen the recovery in demand.


The Company has a well-established internal financial control and risk managementframework to ensure the highest standards of integrity and transparency in its operationsand a strong corporate governance structure. Appropriate controls are in place to ensure:

a) the orderly and efficient conduct of business including adherence to policies;

b) safeguarding of assets;

c) prevention and detection of frauds/errors;

d) accuracy and completeness of accounting records; and

e) timely preparation of reliable financial information.

The Board has adopted policies and procedures to ensure compliance and oversight to theimplementation of its internal financial control and risk management framework.


Your Company has built a robust risk management framework over the years. Engaged as itis in retail financing the Company has to manage various risks including credit riskliquidity risk interest rate risk and operational risk. The Risk Management Committee andthe Asset Liability Management Committee review and monitor these risks on a regularbasis.

The primary objectives of the Risk Management Committee include:

i) To assist the Board in fulfilling its corporate governance oversightresponsibilities with regard to the identification evaluation and mitigation ofstrategic operational and external environment risks;

ii) To monitor and approve the enterprise risk management framework and associatedpractices of the Company;

iii) To periodically assess risks to the effective execution of business strategy byreviewing key leading indicators in this regard; and

iv) To periodically review the risk management processes and practices of the Companyand ensure that the Company is taking the appropriate measures to achieve prudent balancebetween risk and reward in both ongoing and new business activities.

The primary responsibility of ALCO (Asset Liability Committee) includes:

i) Monitoring and advising on Liquidity risk management;

ii) Management of market risks;

iii) Funding and capital planning;

iv) Profit planning and growth projection; and

v) Forecasting and analysing 'What if scenario' and preparation of contingency plansprimary focus of ALCO on Liquidity and Interest Rate risks as stipulated under RBIguidelines.

The Company manages credit risk through stringent credit norms established throughseveral decades of experience in retail lending and continues to follow the time-testedpractice of personally assessing every borrower before committing to a credit exposure.The Company monitors AIM on an ongoing basis to mitigate liquidity risk while interestrate risks arising out of maturity mismatch of assets and liabilities are managed throughregular monitoring of the maturity profiles. The Company also measures the interest raterisk by the duration gap method.

Operational risks can arise due to changes in business environment or changes inprocesses affecting the control effectiveness. The internal audit team reviews theprocesses and controls to ensure the design effectiveness and adequacy of controls tomitigate risk. A stable and experienced risk management team and the Treasury team providemuch- needed continuity and expertise in managing the dynamic changes in the marketenvironment. Your Company has well- documented standard operating procedures for allprocesses to ensure superior control over transaction processing and regulatory complianceand periodical review of the same ensures that the risks including technology risks areunder control. While meeting the strategic objectives is the primary goal your Company'svalues and culture that are enshrined in the Sundaram Way of doing business and theobligations and commitment to our customers employees deposit holders and the communityaround us are the foundations on which its risk framework rests.

Your Company has additionally taken steps to adopt the Enterprise Risk Management (ERM)framework and map with the internal financial controls. This will assist in several waysto identify and mitigate risk besides acting as a safety monitoring mechanism.

The detailed Risk Management Framework of your Company has been furnished in the Notesto the Accounts under Note 38 for your information.

Your Company has implemented the policy on Liquidity Coverage Ratio with effect from1st December 2020 as mandated by RBI. RBI introduced the Liquidity Risk Managementframework for NBFCs in the year 2019-20. During the year the Board of Directors approvedthe Liquidity Risk Management Policy and implemented the Liquidity coverage ratio (ICR).Your Company will maintain a sufficient liquidity buffer in terms of ICR and ensureadequate High Quality Liquid Assets (HQLA) in line with regulatory norms in order toprudently manage any potential acute liquidity stress scenarios.


Your Company's internal audit department independently evaluates the adequacy ofcontrol measures on a periodic basis and recommends improvements wherever appropriate tosuit the changes in business and control environment. The effectiveness and efficiency ofthe controls and the design are regularly measured through process reviews and riskassessment. The Internal Audit team plays a vital role in monitoring the effectiveness ofthe Standard Operating Procedures and makes extensive use of software and analytical toolswhich enables effective offsite or remote auditing. A robust process that includes acontinuous learning mechanism ensures that the Internal Audit team regularly updates itsskills and knowledge base in order to analyse assess mitigate and continuously monitorthe controls and guard against inadequacies including various risks that could pose athreat to your Company's strategic objectives as part of key pillar or 3rd line ofdefence. Systematic identification of risks red flags and early warning signals on aproactive basis enables quick decision-making on strengthening and redesigning thecontrols where required through agile audit plans. The internal audit function is fullygeared to meet the emerging challenges in the post COVID-19 era.

The internal audit department is staffed by highly qualified and experienced personneland reports directly to the Audit Committee of the Board. The Audit Committee regularlyreviews the audit findings as well as the adequacy and effectiveness of the internalcontrol measures.

Additionally an Information Security Assurance Service is also provided by independentexternal professionals. Based on their recommendations the Company has implemented anumber of control measures both in operational and IT-related areas apart frominformation security related measures.

To ensure adequate strengthening of controls surrounding information security andmitigate technology risks external information systems auditors carry out periodical andcontinuous reviews on both network and application systems. They work along with InternalAudit teams to ensure adequate independence while reviewing IT applications infrastructureand network management.

In the wake of COVID-19 the Internal Audit team along with the information systemsauditors are redefining the scope of coverage to address future risks as part of the riskmitigation strategy and to facilitate strengthening of the internal IT control systems inline with the regulatory requirements.


Your Company is strictly following the IT Framework Master Directions laid down by RBIand conducts resilience drills regularly to safeguard the customers' and shareholders'data.

The IT Strategy Committee of your Company is periodically monitoring the robustness ofyour Company's infrastructure and its processes to protect the IT landscape. Thiscommittee also shares its expertise in strengthening various measures implemented by yourCompany's strong technology team.

Your Company has a state-of-the-art Data Centre catering not only to its own needs butalso to those of its subsidiaries and associates with a capacity of over 300 serversmanaged by professionals providing 24/7 support with over 99.99% uptime. The Data Centreis accredited for ISO/IEC 27001:2013 by TUV Rheinland for Information Security ManagementSystem. The Disaster Recovery Site for all critical applications is hosted at a separatefacility located in a different seismic zone with near real-time data replication. YourCompany continues to invest in various new technologies software tools and monitoringmechanisms to improvise and modernize the IT Infrastructure. Your Company has engaged inregular discussions with external consultants industry experts to reinforce Information& Cyber Security methodologies. Periodic vulnerability assessment and penetrationtesting were carried out on the infrastructure to ascertain the effectiveness of thepractices laid down by your Company.

With proficiency in a variety of technologies our in-house IT team has provencapability to develop and maintain complex business applications that cater to theCompany's operations and business functions. Your Company employs technology not only toenrich the jobs of our employees but also to aid decision-making provide bettercontrols manage risk and enhance our customer's experience. The end-to-end process ofcredit to the retail segment has been substantially digitised through mobile-enabledapplications credit decisioning automation that provides approval in under 30 seconds atthe point-of-sale and direct payment into the dealers' bank accounts via a "straightto bank" payment solution. Collections processes are automated through a homegrown"mCollect" application that enables monitoring follow-up and resolution of allpast-due accounts digitally. A range of digital payment solutions have been enabled forcustomers to transact electronically to update their accounts. These digital technologycapabilities of your Company were put to test during the Covid-19 pandemic and succeededin supporting both customers and staff during the lockdown and work from home phases ofthe pandemic. Significant investments continue to be made in technology to expand theautomation of processes augment the digital interfaces for customers and employees andenable delivery of the unique Rs.Sundaram Experience' to customers. The modernization ofIT application platforms to ensure reliability and minimise any risks of obsolescence isalso a priority.

Your Company is in a relationship-centric business relying on physical interactionswith customers and other stakeholders. The digital strategy has consciously been adoptedto augment these relationships and for resources to be digitally available for customersas and when they need them.


In accordance with the provisions of Section 129 (3) of the Companies Act 2013 theConsolidated Financial Statements drawn up in accordance with the applicable AccountingStandards form part of the Annual Report. A separate statement containing the salientfeatures of the financial statements of Subsidiaries and Associates in Form AOC-I formspart of the Annual Report.

The Consolidated profit after tax is Rs.1165.08 cr. as against Rs.791.54 cr. of theprevious year. The total comprehensive income for the year was Rs.1210.89 cr. as againstRs.754.81cr.

The annual accounts of all the Subsidiary Companies have been posted on your Company'swebsite - Detailed information including the annual accounts ofthe Subsidiary Companies will be available for inspection by the members through adigital platform which would be provided by the Company as physical inspection ofdocuments at the registered office of the Company is not possible under the existingrestrictive procedures advised by the Central and State Governments as safety measures toavoid the COVID-19 risk.


• Sundaram Finance Holdings Limited

Sundaram Finance Holdings Limited reported a gross income of Rs.39.76 cr. as againstRs.94.35 cr. in the previous year. Profit after tax was Rs.14.55 cr. as compared toRs.61.39 cr. in the previous year a clear reflection of disruption caused by the Covid-19pandemic and its impact on the business operations of its associate companies includingtheir subsidiary companies which in turn have impacted the financials results of theCompany. The Company has recommended a final dividend of Rs.0.50 per share (10%) for theyear ended 31st March 2021.

• Sundaram Home Finance Limited

Sundaram Home Finance Limited approved loans aggregating to Rs.1446 cr. (Previous yearRs.2240 cr.). Disbursements during the year were lower by 41% at Rs.1254 cr. (PY Rs.2113cr.). The Company earned a gross income of Rs.1039 cr. (PY Rs.1079 cr.) and reported aprofit after tax at Rs.191.64cr. (PY Rs.218.15 cr.). The Net Profit after tax for the yearended 31st March 2021 is not comparable with that of the previous period which included aonetime exceptional item of Rs.60.25 cr. on account of write back of deferred taxliability. The loan portfolio under management as at 31st March 2021 stood at Rs.9173 against Rs.9638 cr. in the previous year. Gross Stage -3 assets stood at 4.48% and netof ECL provisions stood at 1.09% as at 31st March 2021. The Board of Directors haverecommended a final dividend of Rs.5.50 per share (55%) for the year ended 31st March2021. This together with Interim dividend of Rs.1.50 per share (15%) already paid wouldaggregate to a total dividend of Rs.7/- per share (70%).

• Sundaram Asset Management Company Limited (On consolidated basis)

The Company reported a consolidated gross income of Rs.288.15 cr. as against Rs.300.50cr. in the previous year. Consolidated Profit after tax was Rs.55.13 cr. as compared toRs.32.69 cr. during the previous year. The Average Assets under Management amounted to Rs.36962cr. for the year 2020-21 as compared to Rs. 36916 cr. in the previous year. TheCompany has recommended a final dividend of Rs.7.50 per share (75%) for the year ended31st March 2021.

• Sundaram Trustee Company Limited

Sundaram Trustee Company Limited earned a gross income of Rs. 1.37cr. as againstRs.1.48 cr. in the previous year and reported a profit after tax of Rs.0.72 cr. for theyear as against Rs.0.80 cr. in the previous year. The Company recommended a dividend ofRs.50 per share (500%) for the year ended 31st March 2021.

• LGF Services Limited

During the year the Company reported a gross income of Rs.0.11cr. as against Rs. 0.19cr. in the previous year. The profit after tax for the year was Rs.0.06 cr. as againstRs.0.11cr. in the previous year. The Company recommended a dividend of Rs.2.5 (25%) pershare for the year.

• Sundaram Fund Services Limited

Sundaram Fund Services Limited earned an income of Rs. 4.94 cr. during the year asagainst and Rs.5.30 cr. in the previous year. The Company reported a profit after tax atRs.0.11 cr. as against a profit of Rs.0.58 cr. in the previous year.


• Royal Sundaram General Insurance Co. Ltd (Royal Sundaram)

Royal Sundaram reported a Gross Written Premium (GWP) of Rs.2883 cr. as compared toRs.3718 cr. in the previous year impacted primarily by a drop in motor insurance salesdue to the pandemic situation and the Company's decision to exit from writing cropbusiness during the financial year 2020-21. The Company reported as per IND AS a profitafter tax of Rs.313 cr. for the current year as against a loss after tax of Rs.76 cr. inthe previous year. The current year's profit was higher due to decline in motor claims inthe early months of lock-down and marked to market (MTM) gain of Rs.137 cr. (net of tax)

on equity investments against the previous year MTM loss of Rs.72 cr. (net of tax) onequity investments.


The details regarding number of board meetings held during the financial year andcomposition of Audit Committee are furnished in the Corporate Governance Report. Thedetails of all other Committees are provided elsewhere in this Annual Report.


Sri T T Srinivasaraghavan laid down his Managing Directorship on 31-3-2021. He servedyour Company in various capacities in an outstanding career spanning around four decades.During his long and illustrious career Sri T T Srinivasaraghavan has provided dynamicleadership not only for your Company but also for the Non-Banking financial sector. YourDirectors place on record their recognition and appreciation of Sri T TSrinivasaraghavan's leadership which has helped the Company to retain its pre-eminentposition in the industry. Sri T T Srinivasaraghavan continues as a nonexecutive Directorand he would mentor the managerial and senior management of the Company.

Based on the recommendations of the Nomination Compensation & RemunerationCommittee:

a) Sri Harsha Viji Deputy Managing Director was appointed as the Executive ViceChairman of the Company with effect from 1-4-2021;

b) Sri Rajiv C Lochan Director-Strategy took over as Managing Director on 1-4-2021;and

c) Sri A N Raju Director (Operations) was appointed as Deputy Managing Director witheffect from 1-4-2021.

The tenure of office of all these three Key Management Personnel is five years.


Sri S. Ram and Sri S Viji Directors retire by rotation and being eligible offerthemselves for re-election which is subject to approval by a Special Resolution.


The Company has received necessary declaration from each Independent Director of theCompany under Section 149 (7) of the Companies Act 2013 that they meet with the criteriaof their Independence laid down in Section 149 (6).


The Board has made a formal evaluation of its own performance and that of itscommittees and individual directors as required under Section 134(3) (p) of the CompaniesAct 2013.


Your directors confirm that:

1. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

2. The Company has selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period;

3. Proper and sufficient care has been exercised for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

4. The annual accounts have been prepared on a going concern basis;

5. Adequate internal financial controls have been put in place and they are operatingeffectively; and

6. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.


As per the Guidelines for Appointment of Statutory Central Auditors (SCAs)/StatutoryAuditors (SAs) of Commercial Banks (excluding RRBs) UCBs and NBFCs (including HFCs)("RBI Guidelines") issued by the Reserve Bank of India (RBI) vide theirNotification dated 27th April 2021 the existing Statutory Auditors of the Company wouldnot be eligible to continue as the statutory auditors if their term has exceeded threeyears as on 30th September 2021 and the Company is required to appoint two independentChartered Accountant firms in their place as the Joint Statutory Auditors for a maximumterm of three (3) consecutive years.

Accordingly M/s Sundaram & Srinivasan Chartered Accountants Chennai who hadbeen appointed as the Statutory Auditors of your Company to hold office for a term offive (5) consecutive years from the conclusion of the 64th Annual General Meeting held on20th July 2017 until the conclusion of the 69th Annual General Meeting would be demittingoffice as the Statutory Auditors of the Company at the conclusion of the 68th AnnualGeneral Meeting in compliance with the provisions of the RBI Guidelines.

Your Company has initiated steps to identify two Chartered Accountant firms forappointment as the Joint Statutory Auditors of the Company within the timeline stipulatedin the RBI Guidelines. The appointment of the Joint Statutory Auditors will be subject tothe approval of the shareholders at the 68th Annual General Meeting and will take effectfrom the conclusion of that Meeting.


Your directors gratefully acknowledge the support and cooperation extended to yourCompany by all its customers depositors shareholders and bankers as also the variousmutual funds insurance companies automotive manufacturers and dealers.

Your directors also place on record their special appreciation of Team Sundaram for itsdedication and commitment in delivering the highest quality of service to every one of ourvalued customers especially in these difficult and trying times.

For and on behalf of the Board
Chennai 600 002 S VIJI
28.05.2021 Chairman