Chennai-based non-banking finance company Sundaram Finance Ltd. (SFL) has, for the first time, reported a net profit of over Rs.1000 crore for the year ended March 2023.
At Rs. 1088 crore on a disbursement of Rs. 20,966 crores, the net profit was up 20% over the previous year.
The disbursements were up 58% over the previous year.
Rajiv Lochan, Managing Director, said that 2022-23 “was a good year for SFL on the back of economic recovery.”
Mr. Lochan said that the 2022-23 numbers must be read in the context of three challenging years earlier. “This (2022-23) is the first full year of uninterrupted economic activity after the Covid-19,”he said.
Fielding a range of questions, he said that SFL was committed to the GQP (growth, quality and profit) mantra and ensured consistent delivery.
The asset quality - with gross stage 3 assets at 1.66% (2.19% as of March 31, 2022) and net stage 33 assets at 0.86% (1.07%) – showed improvement.
The assets under management (AUM) grew 17% to Rs. 34,552 crore during the year under review.
Mr. Lochan said that SFL registered growth across segments and geographies. With high inflation, the funding cost proved tough for everybody, he said. Queried on the liability side of its balance sheet, he said 15% comprised public deposits, 11% securitisation, 58% medium-term funds and the rest short-term borrowing.
To a question on funding the electric vehicles, he said the EV was an evolving thing and that SFL was studying the technology. Stating that EV would be a part of SFL strategy, Mr. Lochan said SFL was trying to understand the subsidy regime and it would play out in the future. The residual value of an EV, according to him, is critical for its funding by an NBFC.
He said that the banks had access to low cost funds and gave them the advantage over big truck operators in the M & HCV (medium and heavy commercial vehicle) space. The intense price competition in the M & HCV segment resulted in lower yields. Obviously, the margins were compressed. SFL always looked at asset classes and aspirational customers who were non-bank oriented and had not been served by banks. SFL would focus on this kind of customers by reducing the administrative load through the use of technology, he said.
Disbursements of SFL for Q4 FY23 were up by 40% over Q4 FY22 and profits after tax for Q4 FY23 by 6% to Rs. 316 crore from Rs. 299 crore in Q4 FY22. ROA (return on assets) stood at 2.8% (2.5% in FY22) and the Capital Adequacy Ratio at 22.8% (24.4% in FY22). The board approved a final dividend of 150% (Rs.15 per share).
“We have re-established our pre-Covid growth trajectory in FY23 while improving asset quality to our traditional standards,” Mr. Lochan said.
