The Hindu Business Line : Sundaram Finance: Riding high

The company's fundamentals have remained strong and its prospects also appear bright, given the revival in the auto segment. An investment in any of the options can be considered.

Schemes and features: Sundaram Finance offers cumulative and non-cumulative deposit schemes. Under the latter, the interest rate is paid is quarterly and monthly rests.

The monthly payment option is available for three-year deposits only. The interest rate for both cumulative and non-cumulative (quarterly) option is the same (see table for rates).

However, for the cumulative scheme, the annual yield is 7.2 per cent for one-year, 8 per cent for two-year and 8.93 per cent for three-year option.

The minimum deposit for each of these schemes is Rs 10,000. Further details can be obtained from the head office at 21, Patullos Road, Chennai - 600 002.

Business prospects: Sundaram Finance is one of the well-managed non-banking finance company operating now.

The main business of the company includes hire-purchase and lease financing of commercial vehicles, cars and machinery.

It also undertakes short-term activities such as bill discounting and commercial mortgage lending. The company has good growth prospects given the revival of demand in the auto sector.

However, this may not necessarily improve the company's profitability, given the increasing competition in this industry.

Financials: For the nine months ended December 2002, the income from operations fell marginally to Rs 339.34 crore from Rs 340.54 crore in the corresponding previous period.

However, the net profit, at Rs 33.55 crore, was up 18 per cent. This, to a large extent, is due to the sharp drop in the interest expenses during the period. The net profit margin was 9.9 per cent (8.4 per cent).

The company's disbursements as on March 2002 totalled Rs 1,220 crore, 18 per cent up from the previous year.

The capital adequacy was 18.27 per cent, against the statutory requirement of 12 per cent. The net non-performing assets were 2.37 per cent (3.97 per cent) of the total business assets.

Given the risk profile, investment in any of the above options can be considered.

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