The Hindu Business Line : Lakshmi General Finance: For a short ride

THE fixed deposit programme of Lakshmi General Finance (LGF), a group entity of Sundaram Finance, is open. The interest rate is lower than that offered by such auto finance companies as Ashok Leyland Finance.

However, given the revival in the auto sector, the past financial performance and the association the company has with the Sundaram Finance group, an investment up to one year can be considered.

Considering the risk involved in the cyclical nature of the auto industry and in order to retain the flexibility of reviewing the investment, an investment beyond one year need not be considered.

Schemes and features: LGFL offers both cumulative and non-cumulative schemes. Under the latter, the interest is paid at monthly and quarterly intervals. The monthly income option is available only for the three-year tenure.

The interest rate for the cumulative deposit scheme and non-cumulative quarterly option are the same (see table for interest rates).

However, the annual yield for the cumulative option is 6.7 per cent for one year, 7.45 per cent for two years and 8.33 per cent for three years. The interest rates are effective from July 1, 2003.

Details can be obtained from the company's registered office at 21, Patullos Road, Chennai - 600 002.

Business prospects: LGFL provides finance for acquisition of commercial vehicles, and for acquiring equipment either under the hire-purchase or lease-finance route.

The company's prospects depend largely on the automobile industry, which is cyclical in nature.

However, considering the strong growth witnessed by the auto sector in 2002-03, the company has good growth prospects.

However, this may not necessarily lead to an improved bottomline, given the increasing competition in the auto-financing segment.

Financials: The company's fundamentals are encouraging. The gross disbursements for the year ending March 2002 stood at Rs 335.2 crore, up 25.3 per cent over the previous year.

Income from financing operations was Rs 84.1 crore, (Rs 82.9 crore). The net profit was Rs 12.6 crore (Rs 11.4 crore). The net profit margin for the period was at 14.9 per cent up from 13.7 per cent.

The provision for non-performing assets is Rs 2.1 crore, down from Rs 3.4 crore. The gross NPAs as on March 2002 were 2.7 per cent of the total business assets.

The capital-to-risk assets ratio is 17.5 per cent, above the prescribed minimum of 12 per cent.

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