Sundaram Finance Group - Investor Info

Sundaram Finance Ltd FY06 Net Profit at Rs.170.59 crores
Disbursements cross Rs. 3400 cr., registers a 20% increase YoY
Recommends 135% dividend (including special dividend of 50%)

Chennai 31st May 2006: Leading Financial Services company Sundaram Finance Limited (SFL) has announced that it has registered a Net Profit of Rs. 170.59 Cr. for the year ended 31st March 2006 as against a Net Profit of Rs. 75.99 crores for FY05 (Year ended 31st March 2005). The Net Profit for FY06 includes a one time income of Rs. 88.13 cr on account of stake sale to BNP Paribas and hence the figures for FY05 and FY06 are not comparable.

Disbursements for FY06 registered a 20% growth at Rs. 3422cr. Capital adequacy (CRAR) at 13.75% as on 31.3.2006 was well above the statutory requirement of 12%.

The Board of Directors of Sundaram Finance Ltd. have recommended a dividend of 135% (including special dividend of 50%) for the year ended 31st March 2006.

A strong player in the Commercial vehicle and Car finance segments, the Sundaram Finance Group’s services range from automobile finance to home loans, mutual funds and insurance. Sundaram Finance has a nation wide network of over 165 branches, an employee strength of over 2000 people and stands as one of the most trusted financial services providers in the country. Sundaram Finance Group remains true to its core values of prudence, fairness, transparency and service excellence.

SFL has also established a strong presence in the BPO and IT Services space through its divisions Sundaram Business Services (SBS) and Sundaram Infotech Solutions(SIS).

Financial Highlights

Particulars	2005-2006 FY06	2004-2005 FY05
Net Profit	Rs.170.59 cr	Rs.75.99 cr
Disbursements	Rs.3422 cr	Rs.2859 cr
Net NPA (Retail)	0.36%	0.39%
Networth	Rs.811 cr	Rs.683 cr
Gross Receivables	Rs.4971 cr	Rs.4460 cr

Commenting on the FY06 performance, T. T. Srinivasaraghavan, Managing Director, Sundaram Finance Ltd., said “The industry growth rate, both in Commercial vehicle and car finance segments, was lower than in previous years. However, Sundaram Finance has been able to register a 20% growth in disbursements mainly on account of its focussed ‘Go-to-Market’ strategy and building on its strong customer relationships.”

Key Business Highlights of FY06(April 2005-March 2006)

Mutual Funds
Sundaram BNP Paribas Mutual has reported good results for the year and is poised for further growth in the coming year. The mutual fund subsidiary of Sundaram Finance launched Sundaram Rural India Fund in March 2006, a first of its kind fund with a rural theme. Sundaram BNP Paribas Mutual mobilised over Rs.1200crores under this scheme. Its total Assets Under Management(AUM) has exceeded Rs. 5000 crores as of March 31, 2006.

Insurance Business
The insurance subsidiary, Royal Sundaram has also come out with strong results, notwithstanding the floods in Bombay during the year. Royal Sundaram reported a PAT of Rs. 8.63crores for year ended 31st March 2006.

Home Loans
Sundaram Home Finance(Home loan business) registered healthy growth during the year. PAT of Sundaram Home Finance stood at Rs. 5.86crores as on 31st March 2006 as against Rs. 4.01crores a year earlier, almost a 50% increase. The loan book as on 31st March 2006 was close to Rs. 1000crores.

On the market scenario, T.T. Srinivasaraghavan said, “With a diesel price hike seeming imminent, prospects for the Commercial Vehicle industry would appear to be muted. While there has been a spurt in demand since January 2006, this was largely on account of the Supreme Court ruling on overloading of trucks. However, we believe that this was in the nature of a one time correction and is unlikely to be sustained.”

Srinivasaraghavan added, “In February 2006, retail lending rates exhibited an upward trend owing to liquidity pressures. While this has eased somewhat, retail lending rates, both in the auto and home loan segments, are at least 100-150 basis points higher than at the same point last year.”

Sundaram Business Services (SBS)
The BPO arm of Sundaram Finance has expanded its presence both in India and overseas.
Sundaram BPO currently has over 450 employees housed in a 30000 sq. ft BPO facility in the heart of Chennai as well as subsidiary facilities in Mumbai and Delhi. SBS has plans to hire over 200 people this year and expects to solidify its presence in the Australian market by expanding its partnership with leading super-fund administrators in Australia, where they currently service over 1,000 funds – a number which is expected to double this year.

Sundaram Infotech Solutions (SIS)
SIS, the Info tech arm of Sundaram Finance Ltd., has made rapid strides this year including some recent large wins in the Middle East. The Info tech arm has just announced plans to triple its employee base in India, by hiring over 500 people this year. SIS also plans to set up a 50000 sq. ft software development facility in Chennai this year. On the overseas expansion front, SIS is looking at aggressively targeting the Middle East and US markets.

Sundaram Finance has recently revised Fixed Deposit rates upwards, both on 1 year as well as 3 year deposits. The revised rates are 7%, 7.5% and 8%, for 1, 2 and 3 year deposits, respectively.

“Even though there is no significant market growth expected in the near future, we are cautiously optimistic of growing by 10-15% this year as well. Our expansion into new geographies as well the breadth of our product offerings will enable us to achieve this.”

Srinivasaraghavan added, “The subsidiaries, Sundaram BNP Paribas Mutual, Sundaram Home and Royal Sundaram, have reported good results for the year and are well poised for further growth in the coming year.”