Sundaram Finance conducted its 59^th AGM on 16 June 12 in Chennai. S Viji - Chairman and TT Srinivasaraghavan - Managing Director and other board of directors addressed the meet

Highlights of the meet are:

• The company has reported loan and hire purchase disbursements at Rs 9307 crore for the year registering growth of 25% in FY12. While the commercial vehicle and car segments continued to be the major growth drivers for the company. Growth in the construction equipment and tractor segments was also encouraging.

• The net accretion to public deposits during the year was Rs 68.82 crore taking the outstanding deposits at end of FY12 to Rs 1260.84 crore by end of March 12.

• Gross receivables managed by the company including assets securitized stood at Rs 15540 crore at end of FY12 against Rs 12354 crore in the corresponding previous year.

• Net Profit from operations grew 20% to Rs 355.45 crore against Rs 295.23 crore in the corresponding previous year.

• Net worth stood at Rs 1787.86 crore while consolidated Net worth stood at Rs 2163.93 crore at end of March 12 respectively.

• Giving a perspective on the current business scenario, the management noted that - the automotive industry is already facing headwinds going by the indications in the first quarter of the current financial year. Sales of MHCV's (excluding intermediate commercial vehicles) have fallen 19% while PCR sales remained sluggish due to higher prices occasioned by hike in the excise duties and higher petrol prices. However, LCV's especially the low tonnage segment and construction equipment are the only segments which remain relative buoyant and should continue to grow at a relatively healthy pace.

• Overall the prospects for most segments of automotive sector do not appear to be bright in the current year. Being closely aligned to automotive sector, the company is also likely impacted by its performance but will strive to sustain profitability while remaining focused on the asset quality.

• Gross and Net NPA % improved to 59 bps and 9 bps respectively against 77 bps and 20 bps in the corresponding previous year.

• The share of used vehicle finance would constitute 10-13% of the total loan book. Noting that the used MHCV vehicle loans attract higher risks, the management expects to improve its loan growth by increasing their offerings in LCV segment and also increasing their touch points.

• Sundaram AMC - wholly owned subsidiary of the company has posted decline in profit at Rs 11 crore against Rs 13.36 crore in the corresponding previous year.

• Sundaram BNP Paribas Home Finance has reported impressive PAT at Rs 93.73 crore in FY12. The loan portfolio stood at Rs 4241 crore at end of FY12 against Rs 2940 crore in the previous year. The company targets mid market segment retail home loans in this business. The Gross NPA for this company stood at 0.31% and Net NPA at 0.06% respectively.

• Royal Sundaram posted topline growth of 29% with Gross Written Premium of Rs 1479.79 crore during the year compared to Rs 1143.99 crore in the corresponding previous year. This company has reported turnaround results at profit of Rs 22 lakh against loss of Rs 20.1 crore in the previous year. During the year, IRDA issued guidelines relating to methodology of absorption of past losses relating to the third party motor pool. IRDA has dismantled the Motor Third Party Insurance Pool effective 31 March 12 and in its place has constituted declined pool which has become operational from 1 April 12.

• According to the management, the Insurance companies are today at cross roads with burgeoning losses of the Motor Third Party Pool having caused a huge dent on their profitability. While IRDA has announced some increase in third party premiums they are grossly inadequate in relation to actual claims experience of the industry. Third party pricing should therefore be de-tariffed so as to reflect the market realities in terms of risk and reward.

• Under present dispensation, NBFC's are required to maintain a Capital to Risk Asset Ratio (CRAR) of 15% of which at least 50% should be Tier I Capital. However, the working group headed by Smt. Usha Thorat has recommended that Tier I capital can be raised to 12% within a period of 3 years. The management noted that such steep increase would hamper the business growth. Instead it has suggested that the Tier I capital be raised in two stages as an intermediate first step to 9% and after 3 years to 10%.

• The Reserve Bank of India in June has decided to permit non-bank entities incorporated (with some prerequisites) to set up, own and operate ATMs in India. Non-bank entities that intend setting up, owning and operating ATMs, would be christened White Label ATM Operators (WLAO) and such ATMs would be called White Label ATMs (WLAs). Despite being one of the leading NBFC, the company is not interested in installing these ATM's.

• The company is also not interested in turning itself into a bank.

• The shareholders have agreed on Recommendation of final dividend of Rs 8 per share which together with interim dividend of Rs 7.50 per share paid in February 12 aggregates to Rs 15.50 per share for the year ended March 12. The Chairman has also noted that the board would look in for a bonus issue of shares in FY13.