Sundaram Finance Ltd (SFL) expects the growth to be modest in the current fiscal and will continue to focus on profitable growth, leveraging our intimate knowledge and expertise of the market and customer relationships that have been built over a period of time, said S Viji, chairman, SFL.
Addressing shareholders at the 55th annual general meeting in Chennai on Thursday, he said that significant increase in vehicle prices, higher fuel prices, reduced freight availability and higher interest rates were expected to affect the sales of commercial vehicles. Sales of passenger cars are also likely to register lower growth. “Given these challenges, we expect Sundaram Finance’s growth to be modest this year the cmpany will continue to focus on profitable growth,” he said. Commenting on RBI’s move to increase the capital adequacy requirements for non-deposit taking NBFCs, Viji said, “Raising CRAR further to 15% (it is currently being raised from 10% to 12%) for non-deposit taking NBFCs would be unduly harsh.”
“The larger issue, however, is that, capital allocation should ultimately reflect the appropriate levels of risk inherent in the assets financed by NBFCs. The risk weightage for assets financed by NBFCs should be suitably revised to reflect the varying risk profiles,” he added. On the plans to expand the branch network, TT Srinivasaraghavan, managing director, SFL, said, “We will continue to reach out to customers where they are. Through Sundaram Direct, our distribution arm, we will take the entire range of our lending and investment products to the market.” Sundaram Finance plans to open 100 offices this year that will take its branch network to over 525 by March 2009, he added. Meanwhile, the shareholders approved the issue of 1:1 bonus shares. The company declared a final dividend of 50%, which was also approved by the shareholders at the AGM.