Sundaram Finance 1:1 bonus issue gets shareholders’ nod

July 24th, 2008 - 6:33 pm ICT by IANS  

Chennai, July 24 (IANS) Shareholders of the Sundaram Finance Ltd., a non-banking Indian finance company, Thursday approved issue of bonus shares on 1:1 basis despite a note of warning of company chairman S. Viji about the company’s growth prospects in the current fiscal. At the company’s annual general meeting (AGM) here, Viji said increase in the prices of vehicles and fuel together with reduced freight availability and higher interest rates are expected to affect the sales of commercial vehicles.

“Sales of passenger cares are also likely to register lower growth. Given these challenges, we expect the company’s growth to be modest this year,” he said.

Last fiscal the company’s disbursements grew 16 per cent to Rs.51.10 billion and it earned a net profit Rs.1.35 billion, he said.

Terming the Reserve Bank of India’s (RBI) move to increase the capital adequacy ratio for non-deposit-taking, non-banking finance companies (NBFCs) like Sundaram to 15 per cent “a harsh measure”, he said, “The larger issue, however, is that capital allocation should ultimately reflect the appropriate levels of risk inherent in the assets financed by NBFCs. The risk weightage for assets financed by NBFCs should be suitably revised to reflect the varying risk profile.”

Regarding plans to expand the branch network, T. T. Srinivasaraghavan, managing director, said, “The company will open 100 offices this year thereby taking the total branch network to over 525 by the end of this fiscal.”

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