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Prospects for most segments of the automotive sector do not appear very bright in the current year. Sundaram Finance Ltd, being closely aligned to the automotive sector, is also likely to be impacted by its performance, according to the company’s Chairman, Mr S. Viji.
However, the company has, over the years, broad-based its exposure to various segments of the automotive sector. This enables it to re-balance its portfolio on a ‘dynamic’ basis. It is this strategy that has facilitated the company’s consistent growth across economic cycles, he told shareholders at the company’s 59th Annual General Meeting.
Sluggish sales
The automotive industry is already facing headwinds, going by indications in the first quarter of the current financial year. Sales of medium and heavy commercial vehicles (excluding intermediate commercial vehicles) have fallen by 19 per cent compared to the corresponding quarter of the previous year.
Passenger car sales remain sluggish due to the higher prices caused by the hike in excise duties and higher petrol prices. The tractor industry is also projecting lower sales growth during the current year.
Light commercial vehicles, especially the low tonnage segment, and construction equipment are the only segments that remain relatively buoyant and should continue to grow at a relatively healthy pace, he said.
For the year ended March 31, 2012, the Chennai-based non-banking finance company’s loan and hire purchase disbursement stood at Rs 9,307 crore, a 25 per cent growth over the previous year. While the commercial vehicle and car segments continued to be the major growth drivers for the company, growth in construction equipment and tractor segments was encouraging, he said.
Mr Viji said that given the various uncertainties in the macroeconomic environment and none-too-optimistic outlook for the automotive industry, the company will strive for growth that is sustainable and profitable while remaining strongly focussed on the highest asset quality.
On the Bombay Stock Exchange, the company’s share priced closed at Rs 735.95, an increase of Rs 66.30 or 9.90 per cent over the previous day’s closing price.
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