The Sundaram way

Sep 02 2014, 01:06 IST
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SummaryChennai-based Sundaram Finance is one of the oldest and largest non-banking companies in the country.

Chennai-based Sundaram Finance is one of the oldest and largest non-banking companies in the country. When it celebrated its 60th anniversary a few weeks ago, one of its customers of long standing placed a R60 lakh FD with the company as a birthday gift. Its activities span savings products such as deposits and mutual funds, car and commercial vehicle finance, insurance, home loans, software solutions, BPO, tyre finance, and tractor finance. Sundaram Finance has a pan-India presence with 586 branches, with the farthest branch in the North being just 50 km off the Wagah border.

The company’s disbursements during 2013-14 were lower by 3% at R9,719 crore, reflecting the prolonged downturn in the auto sector. Sales of M&HCVs, the backbone of its business, registered a fall of 25%, while LCV sales declined by 18%.

But Sundaram Finance was able to retain its market share in its key asset segments. The gross receivables managed by the company grew by 3% and stood at R18,158 crore as on March 2014. The company’s asset quality remains one of the best in the industry in spite of the challenging macro environment. Gross and net NPAs were 1.23% and 0.45%, respectively, based on the stringent 120-day NPA classification norm adopted by the company, as against the regulatory norm of 180 days. The net profit from operations was R442.51 crore as against R410.11 crore in the previous year—a growth of 8%. The net accretion to public deposits during 2013-14 was R188.58 crore, the second highest ever in any financial year, taking the deposits outstanding at the year-end to R1,665.57 crore. The company’s asset portfolio has been the best in the industry.

When founder TS Santhanam decided to set up Sundaram Finance, it was an answer to a felt need. He said he was pressurised by truck and bus operators to get into this business. He wanted to help small and medium scale operators; bank finance was not available to them. Santhanam was one of the sons of TV Sundaram Iyengar, the founder of the TVS Group, which was then a dealer of vehicles and components. He had taken the group into insurance in 1948 itself by starting Madras Motor Insurance, which after nationalisation became part of United India Insurance. Sundaram Finance came into existence in 1954 as a subsidiary of the insurance company.

The company welcomed deposits in the early years and gained the reputation of protecting the depositors’ interests.

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