Leading NBFC Sundaram Finance expects to achieve growth in three vehicle segments and maintain its market share in two other segments.

“We expect to post reasonable growth in the light commercial vehicle (LCV), construction equipment and tractor segments, while maintaining market share in the medium and heavy commercial vehicle (M&HCV) and passenger vehicle segments,” S Viji, Chairman, Sundaram Finance, said while addressing the company’s 64th annual general meeting here.

The company expects passenger cars and utility vehicles to grow at 5-7 per cent and 7-12 per cent, respectively.

He hoped that M&HCV offtake would see an upturn once the GST related transition issues are resolved.

With interstate check posts becoming a thing of the past, the viability of truck operations is expected to improve. This could lead to better utilisation and absorption of existing capacity, in turn leading to subdued demand in the near term.

Viji stated that the economy appeared stable and weathered the impact of demonetisation better than expected.

Since the thrust on infrastructure and rural India continues, it will augur well for the growth of the tractor, LCVs and two wheeler segments, he felt.

GST – initial teething problems

He also stated that GST was a major step in the reform of indirect taxation and would benefit Sundaram Finance’s customers significantly.

In the short term, however, there could be concerns with regard to the preparedness of businesses, especially in the small and medium segments - with which the company deals extensively.

There are indications of some initial teething problems, especially with respect to the administrative changes that businesses will have to adapt to, he said.

Legislative and regulatory issues

“I continue to reiterate our long pending demand to RBI for a reduction in the risk weightage on assets with lower risk profiles, such as commercial vehicles and cars, to differentiate them from other classes of assets which carry inherently higher risks, he said.

This assumes greater urgency, considering the rapidly narrowing regulatory gap between NBFC’s and banks.

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