• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Mr T.T. Srinivasaraghavan

N.S. Vageesh
Suresh Parthasarathy

Chennai, Oct. 21

Sundaram Finance is among the top financiers of commercial vehicles in the country. It has over the past few years built a well-regarded franchise across various branches of financial services such as asset management, home loans, insurance, distribution and more recently into BPO and IT.

Sundaram Finance recently unveiled a plan to open 200 new branches within a year — practically doubling its branch network.

These plans seemed a bit unusual, coming from a conservative company, that has always advocated the slow and steady path to growth. We queried its Managing Director, Mr T.T. Srinivasaraghavan, on whether there was a change of strategy and whether the company was in a hurry to ramp up turnover.

Mr T.T. Srinivasaraghavan, a readily accessible man while simultaneously being equally reluctant to step on to the media limelight, explained the logic behind these moves.

He emphasises, “We are planting flags because they will make money for us. Revenue in this business is a very dicey measure. To us, bottom line is important. Chasing revenues is not our game.”

Excerpts from the interview:

We were surprised by the branch expansion plans of Sundaram Finance. Why 200 branches in one year?

Well, 200 is a number. We see a huge opportunity in distribution and hence we are building a distribution network across India. We are planning to open over 200 offices this year that will take the total number of Sundaram Finance offices in the country to well over 430 by March 2008. Many of these offices will be multi-product, multi-brand offices.

They would sell a range of financial products – including those that belong to others also. We see our strength in distribution. Markets have matured. It is part of our ‘close to customer’ strategy. We are reaching out even more to our customers in B & C category towns and even in rural areas. To date, we have served them satisfactorily from larger hubs but with the changing customer needs, we now feel it is time to go ‘close to customers’ and offer a much higher level of personalised service which has been our differentiator.

How are you going to do this now?

Take Chennai city itself. In the old days, we operated out of the Mount road area – where our head office is located. In the eighties, we felt that Chennai had grown and we wanted to reach out – so we opened offices in Anna Nagar, Parrys Corner and Adyar – these were the main outlying areas. In the nineties, our people felt this was inefficient – so we pulled everything back. We just kept some service windows in each of these places.

Today, as I look at it, with traffic being what it is, if I required my customer to come from K.K. Nagar, Valasaravakkam or Velachery (suburbs of Chennai) to Mount Road, I would lose the right to call myself a customer-friendly company. The question that customers ask is “Where do I park?” We don’t have answers.

If my bank or service provider, made me travel 8 or 10 km in Chennai city today, I would think it is customer unfriendly. So I put myself in those shoes. Therefore, we decided to open new offices.

All these new outlets will not necessarily be in new towns — but multiple locations in same towns. In Chennai, we are spreading out to being closer to the customer’s doorstep. There is a huge amount of goodwill for this.

In a sense, it is contrarian to the Internet service approach others follow. Our approach has always been to establish people-to-people relationships and this sort of takes it to the next level. In the financial services space, we believe that it is important to be able to give that comfort level to customers that they are dealing with real people.

Your deposit volumes have come down over the last two years (down from Rs 740 crore two years ago to about Rs 658 crore as of March 2007). Has that been a conscious decision?

Yes, it has been a conscious decision to spread the mix. We realised that you need a mix in your basket. Perhaps in the 1990s, our dependence on term deposits was a little on the higher side. I wouldn’t call it excessive — but it was on the higher side. We needed to balance that. Hence, we brought it down a bit.

In 2003, we found that there was so much liquidity in the market that we could raise funds through other sources, which were significantly cheaper than deposits. Around that time we had closed our deposits window for sometime.

However, we recognised that even though we had to pay a slight premium for deposits, it was a service many of our long-term customers wanted and had come to expect from Sundaram Finance, as they needed a safe haven for their investments. Therefore, we felt responsible to open the deposit window and we have kept it open regardless of the inflow since then.

Obviously, deposits are rate sensitive. For example, a couple of months ago, when there was a rate hike and we increased our three-year deposits rate to 10.5 per cent, there was a virtual flood of deposits. Depending on the overall context of the market, we will review our deposits strategy. However, it will always be an integral part of our funding needs. There’s no doubt about that.

Your income from operations in the first quarter has grown 50 per cent — despite a slowdown. How was that possible?

I have said this before — in a manufacturing company, quarterly numbers are reasonably reflective of what is happening at the ground level. In a finance business, if our business has grown 50 per cent in Q1, the benefit will not be seen in Q1.

Suppose we had done a huge increase in disbursements in June, you won’t see it here. It will only show up in the next quarter. At times, there are also one-off items such as sell-downs, for instance. So the fact of the slowdown will probably felt in Q3.

Our business in second half was good – that income will show up now. But having said that, our business has been pretty encouraging. We are doing better than market. There isn’t always a correlation.

What are your interest rate expectations?

I don’t see a dramatic change in the interest rate scenario. We’ll wait for the Governor’s direction.

More Stories on : NBFCs | Interview

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Launch window ready for northeast monsoon

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line