ABOUT SUNDARAM FINANCE Ltd.

Sundaram Finance( SF ) is a leading Non Banking Finance Company ( NBFC ) in India Sundaram Finance has grown over the past decades on the foundations of dedicated customer service, fair business practices, efficient, safe and trusted financial policies. Strong Values Faith. Depositor Confidence. Institutional Trust. Investor Steadfastness. Employee loyalty. These five pillars support the strong edifice of Sundaram Finance. An edifice built in 1954, when Shri T.S.Santhanam envisioned the future of Hire-purchase Finance in India. Sundaram Finance was promoted by Madras Motor Insurance Company, a part of the reputed TVS Group. A visionary ahead of his times, Shri Santhanam identified the opportunities that arose as a fledgling nation embarked on the path of development, anticipating the important role the finance industry would play in the emerging market scenario in the country. It was his foresight and entrepreneurial instincts, which laid the foundations of Sundaram Finance. Foundations that would ensure a secure future. Reaching Out Driven by the sincerity of Shri Santhanams concern for commitment to and passion for the small truck operators, at a time when the focus was only on financing large truck operators, Sundaram Finance emerged as a leading financier of the transport sector. Devoting its services to the growth of the road transport industry, Sundaram Finance is today synonymous with automotive financing in the country. Today, Sundaram Finance has a nationwide network supported by a dedicated team of service oriented personnel, who ensure personalized customer service. Sundaram Finance remains true to its core values of prudence, fairness, transparency and service excellence which have enabled it to emerge as a leader in its chosen field. Dedicated Service At Sundaram Finance, values are defined by the services rendered to the customer. Long before customer satisfaction became a fashionable concept, Sundaram Finance distinguished itself by providing a host of value-added services which transcend the ordinary approach.

Integrity From being the leader in hire-purchase, Sundaram Finance has spread its activities and today its range of financial services encompasses Leasing and Car Finance. Sundaram Finance also offers Home Finance and Asset Management through its subsidiaries. Deposits Sundaram Finance offers attractive schemes to all its depositors. In fact, many of the depositors have a relationship with the company which spreads over three generations and view Sundaram Finance as synonymous with safety, security and service. The company has been rated MAAA by ICRA signifying highest safety. Leasing Sundaram Finance diversified into leasing in 1981, when leasing was still in its conceptual stages in the country. Pioneering the growth of leasing with its flexible, cost-effective and tailor-made leases, Sundaram Finance, today counts among its clientele some of the most reputed blue chip companies. Sundaram Finance has a diversified portfolio ranging from computers to aircraft. Car Finance Economic liberalization saw the entry of many foreign car manufacturers in the country. Realising the high growth potential of the car market, Sundaram Finance launched Sundaram Car Finance exclusively to finance cars and utility vehicles. Supported by a large countrywide network, strong dealer relationship and its customised service, Sundaram Finance has attained a position of strength in its area, servicing a very large customer base. Prudence & Vision Sundaram Finance achieved its leadership position by a unique combination of traditional conservatism and judicious dynamism. The values envisioned and inculcated by Shri T.S.Santhanam have endured and inspired the professional workforce at Sundaram Finance to a very high degree of commitment and dedication. The prudent practices followed by the Company such as strong credit appraisal skills, effective receivables management, well defined documentation and procedures have become industry benchmarks. At Sundaram Finance, people are its most valuable assets. The Company conducts regular in-house training programmes that help motivate employees and improve leadership and managerial abilities. Every employee at Sundaram Finance is proud to represent an institution that values professional integrity, above all else. Sundaram Finance not only invests in its people but also in the latest advanced state-of-the-art technology. It set industry standards by computerising and networking all its offices through a variety of communication media including VSAT installations. These ensure efficient and smooth functioning of all its systems and procedures resulting in better customer service.

Secure Future Be it lenders, depositors, shareholders, customers or employees, Sundaram Finance has always enjoyed an excellent relationship with all its stakeholders. In fact, the Company owes its impressive track record to these long standing relationships. Today, Sundaram Finance has come a long way from its position of being the leading Hire-purchase Finance Company to become the leader in its chosen field. Committed to Society Sundaram Medical Foundation (SMF), a non-profit Trust set up in 1990, exemplifies the commitment of Sundaram Finance Group to the community and its citizens. Dedicated to setting new standards in quality healthcare to the community in a cost-effective manner without compromising on patient care, medical competence, service courteousness and compassion, Dr. Rangarajan Memorial Hospital is a hospital under SMF, where caring is not a sub-speciality in medicine. Endowed with a large corpus Fund, the hospital is today, equipped with up-to-date medical infrastructure and provides a wide range of medical services fulfilling a long felt need for providing quality healthcare at affordable costs. Main Building Sundaram Medical Foundation, Shanthi Colony 4th Avenue, Anna Nagar, Chennai 600 040. Ph: 044 2626 8844 Annex Sundaram Medical Foundation, 783/784, 17th Main Road, Tirumangalam, Anna Nagar, Chennai 600 040. Ph: 044 2622 0103 / 2622 0104 / 2622 0105 / 2622 0106

HISTORY: Sundaram Finance (SFL) was promoted by Madras Motor Insurance Company, a part of the reputed TVS Group. The Company was incorporated in 1954. It became a public limited company in 1961 and went public in 1972. The main business of the company includes hire purchase and lease financing of commercial vehicles, cars and machinery. It also undertakes short-term activities such as bill discounting and commercial mortgage lending. SFL achieved its leadership position by a unique combination of traditional conservatism and judicious dynamism. Faith, Depositor Confidence, Institutional Trust, Investor Steadfastness & Employee loyalty are the five pillars to support the strong edifice of the company.

It set industry standards by computerising and networking all its offices through a variety of communication media including VSAT installations. These ensure efficient and smooth functioning of all its systems and procedures resulting in better customer service. The company allotted bonus shares in the ratio of 1:1 in Nov. 1995. The subsidiaries of the company are Sundaram Home Finance Ltd, Sundaram Asset Management Company Ltd, Royal Sundaram Alliance Insurance Company Ltd, Sundaram Finance Distribution Ltd, LGF Services Pvt Ltd and Sundaram Finance Trustee Company Ltd. As part of diversification and to provided more financial service to the customers, the company entered in to various collaboration and joint ventures. It formed an asset management company called Sundaram Newton Asset Management Company Pvt. Ltd. in collaboration with Newton Management, UK. In housing loan sector it promoted Sundaram Home Finance Limited with equity participation from International Finance Corporation (IFC), Washington, and FMO (Netherlands Development Finance Company). During 1999-2000, India Equipment Leasing (IEL), Aparajita Finance Company (APC), Balika Finance Company (BFC) & Paramjyothi Finance Company (PFC) were amalgamated with the company. The company paid a total consideration of Rs 20.10 crore for the acquisition of shares of the amalgamating companies. During 2000-2001, Sundaram Finance Services (SFSL) was amalgamated with the company. Subsequently Sundaram Finance Securities (SFSec.) became a wholly-owned subsidiary of your company. Further during the year it promoted Fiat Sundaram Auto Finance Limited, a joint venture with Fidis S.p.A., Italy for financing Fiat cars. Also with the opening up of the insurance sector the company along with Royal & Sun Alliance Insurance plc formed a joint venture company named Royal Sundaram Alliance Insurance Company (RSAIC) for non-life insurance business. It commenced its operation in March 2001 and offers full range of insurance products including fire, motor, personal accident, home, health, travel and rural insurance. The Company has merged Lakshmi General Finance Ltd (LGF) with itself with effect from 1st April 2004. According to the scheme of merger the company has issued 3775965 equity shares of Rs.10/- each to the shareholders of LGF in the ratio of 1:1.52. Consequent to this merger the company`s paid up capital increased to Rs.27.78 crores. COMPANY BACKGROUND:
Industry Name: Finance & Investments House Name: TVS Group Face Value: 10.0 ISIN: INE660A01013 Market Lot: 1 Registered Address Registrar Cameo Corporate Services Ltd. "Subramanian Building", Vth Floor, No.1, Club House Road City:Chennai (Madras) State:Tamil Nadu Pincode:600002 Auditor: Brahmayya & Co.,

21, Patullos Road City:Chennai (Madras) State:Tamil Nadu Pincode:600002 Email ID:investorservices@sundaramfinance.in Web Url:http://www.sundaramfinance.in

Sundaram Finance Limited, which was incorporated in 1954 with the object of financing the purchase of commercial vehicles and passenger cars, has grown today into one of the most trusted financial services groups in India. Today, the activities of the Sundaram Finance Group span Commercial Vehicle Finance, Car Finance, Insurance, Asset Management, Home Loans, Equipment Finance, Fleet Card, Infotech Solutions, Business Process Outsourcing, Tyre Finance and Logistics Services.

Sundaram Finance has a Nation-wide presence with 561 branches, over 2 lakh depositors and nearly 100,000 commercial vehicle and car finance customers.

PRODUCT or SEVICES OFFERED BY INDUSTRY 1) FACTORING: Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. In "advance" factoring, the factor provides financing to the seller of the accounts in the form of a cash "advance," often 80% of the purchase price of the accounts, with the balance of the purchase price being paid, net of the factor's discount fee (commission) and other charges, upon collection from the account client. In "maturity" factoring, the factor makes no advance on the purchased accounts; rather, the purchase price is paid on or about the average maturity date of the accounts being purchased in the batch. Factoring differs from a bank loan in several ways. The emphasis is on the value of the receivables (essentially a financial asset), whereas a bank focuses more on the value of the borrower's total assets, and often also considers, in underwriting the loan, the value attributable to non-accounts collateral owned by the borrower. Such collateral includes inventory, equipment, and real property, that is, a bank loan issuer looks beyond the credit-worthiness of the firm's accounts receivables and of the account debtors (obligors) thereon. Secondly, factoring is not a loan it is the purchase of a financial asset (the receivable). Third, a nonrecourse factor assumes the "credit risk that a purchased account will not collect due solely to the financial inability of account debtor to pay. In the United States, if the factor does not assume credit risk on the purchased accounts, in most cases a court will recharacterize the transaction as a secured loan.

2) LEASING: Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments. The lessee is the receiver of the services or the assets under the lease contract and the lessor is the owner of the assets. The relationship between the tenant and the landlord is called a tenancy, and can be for a fixed or an indefinite period of time (called the term of the lease). The consideration for the lease is called rent.

A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from lawnmowers and washing machines to handbags and jewelry. 3) FORFIATING: Forfiating is a financial transaction involving the purchase of receivables from exporters by a forfiater. The forfiater takes on all the risks associated with the receivables but earns a margin. The forfiater may also be immunized from certain risks if the transaction involves payment by negotiable instrument. The forfiating is a transaction involving the sale of one of the firm's transactions.

4) MERCHANT BANKING: A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to. In the United Kingdom, the term "merchant bank" refers to an investment bank. Today, according to the U.S. Federal Deposit Insurance Corporation (FDIC), "the term merchant banking is generally understood to mean negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies." Both commercial banks and investment banks may engage in merchant banking activities. Historically, merchant banks' original purpose was to facilitate and/or finance production and trade of commodities, hence the name "merchant".

5) VENTURE CAPITAL: Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. Venture capital is a subset of private equity. Therefore, all venture capital is private equity, but not all private equity is venture capital.

Venture capital is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering.

6) SECURITIZATION: Securitization is a process where NBFC is engaged in hire purchase or installment sale or mortgage business would have many customers who owe them a stream of monthly payments. Thus, NBFC invest its funds in assets and would charge in built interest rate to its hirers. All money business is based on two things: Risk & Interest. These NBFCs expertise is to scrutinize the creditworthiness of its prospective hirers/customer and invest funds in them. Thus, these companies source funds at some rate of interest, load this rate of interest for their efforts and risk and pass it on to its customers. Would there be a point when NBFCs investible funds are fully invested and it has no further funds to invest. Certainly Yes , unless these NBFCs have continuous source of funds, it cannot do unlimited and continuous business. Thus, one of the ways to overcome the situation is securitization.

7) HIRE PURCHASE: Hire purchase is the legal term for a contract, in which persons usually agree to pay for goods in parts or a percentage at a time. It was developed in the United Kingdom and can now be in Australia, China, India, Jamaica, Japan, Malaysia, New Zealand, and South Africa. It is also called closed-end leasing. In cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase contract allows the buyer to hire the goods for a monthly rent. When a sum equal to the original full price plus interest has been paid in equal installments, the buyer may then exercise an option to buy the goods at a predetermined price or return the goods to the owner. 8) CREDIT RATING: A credit rating evaluates the credit worthiness of a debtor, especially a business (company) or a government. It is an evaluation made by a credit rating agency of the debtor's ability to pay back the debt.

Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. Credit ratings are not based on mathematical formulas. Instead, credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations. A poor credit rating indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects.

9) DEMAT: In a demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates. A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place. Access to the demat account requires an internet password and a transaction password. Transfers or purchases of securities can then be initiated. Purchases and sales of securities on the demat account are automatically made once transactions are confirmed and completed.

10) DEPOSITORIES: Depositories act as intermediary between issuing company and investors. They manage the securities account of investors. It assists in investor related issues. It also helps in immobilization of physical shares into mobilization in e-form. It also acts as intermediary for IPO. It assists in development of primary and secondary market. Depositories also ensure fungibility of shares.

11) REGISTRAR & SHARE TRANSFER AGENT: Registrar & Share Transfer Agent acts as mediator to transfer the share from one investor to another. They are involved in transfer of shares. They act as underwriter to issue. They also act as a guide for the company and the investor. They help in conversion of physical shares e-form. They act as intermediary to do registration of shares. They are responsible for keeping track of all transactions.

Products / Services Offered By The company:

Deposits

Car Finance

Commercial Vehicle Finance

Tyre Finance

Tractor Finance

Fleet Card

DEPOSITS:

The following is the rate of interest offered on deposits held with Sundaram Finance Ltd.

CAR FINANCE:

Sundaram Finance is one of the largest and a leading player in the area of car finance. They extend finance on all makes and models of cars.The vast network of 561 branches and experienced field force help customers choose the vehicles and the finance package to suit their budget. The approval is fast and with minimum documentation. In fact customers can drive away with their dream car in 48 hours flat. Their car finance schemes are easy to understand and without any hidden costs

Commercial Vehicle Finance:

Sundaram Finance is one of the oldest and largest providers of finance for the acquisition of commercial vehicles of all makes. The Commercial vehicle finance provided by them helps the small operators to acquire vehicles with minimum hassle and documentation. They also provide customised financing options to suit your needs. The strength of the Group lies in the quick completion of transactions, long association with transporters for generations and the intimate knowledge of the market and its nuances. Large fleet operators also find it easy to expand their fleet through the finance provided by SFL. SFL has a vast network of 561 branches to cater to the financing needs of our customers. SFL also offer special schemes, supported by the manufacturers, where the rates are highly competitive. TYRE FINANCE: Sundaram Finance offers you an exclusive tyre finance scheme. The scheme gives you the never-before advantage of solving your temporary financial needs

TRACTOR FINANCE:

People looking to buy a new tractor and need finance for it, Sundaram Finance is the place. With more than 50 years of being in the business of financing the road transport industry, they now finance tractors, sugarcane harvesters, grain harvesters, and implements. Their experienced staff will gladly guide you through every step of buying a new tractor. The finance schemes are transparent, and flexible to suit your repayment requirements. Attractive interest rates are a key feature of our tractor finance schemes and you can be rest assured that there are no hidden costs. Documentation is simple and processing is quick. All this supported by excellent customer service, is sure to make your experience with Sundaram Finance, a pleasant one. A trusted financial services brand, they have a pan-India network of 561 branches.

FLEET CARD:

From the trusted house of Sundaram Finance, here is another simple and secure solution for managing your fleets fuel needs. Sundaram Finance has a comprehensive fleet card programme - XTRAPOWER with IndianOil & SmartFleet with Bharat Petroleum. What is a Fleet Card? The Fleet Card is an effective fuel management tool that provides customers an efficient way of purchasing auto fuels like diesel, petrol and lubricants. The Fleet Card is an affordable fuel finance product that offers low cost working capital to monitor and control your fleet expenses. It offers a comprehensive customer credit limit, within which one can preset daily usage limits for each vehicle and derive maximum effectiveness. It also allows you to outsource the billing and payment process and thereby helps manage your paperwork more efficiently. What are its features?

Simplicity Value for Money Convenience & Control Security Affordability Who is eligible for Fleet Card? If you're a fleet owner, an operator or a corporate, and are in need of an effective tool to monitor and control your fuel expenses, then the Fleet Card is just what you should be looking for.

COMPETITION: The following table shows the performance of Sundaram finance ltd Vs its competitors

Services offered by the industry Vs services offered by Sundaram Finance:

Services offered by the industry: Factoring Leasing Forfiating Merchant Banking Venture Capital Securitization Hire Purchase Credit Rating Demat Depositories Registrars and transfer agents

Services offered by Sundaram finance: Deposits Car Finance Commercial Vehicle Finance Tyre Finance Tractor Finance Fleet Card

Conclusion: Sundaram finance has been into the business of financing since a long time. Its into car finance, commercial vehicle finance, tyre finance, tractor finance etc. So, Sundaram finance can also foray into sectors like Leasing, Hire purchase and also venture capital. Sundaram finance has a good experience in financing sector so, it can expand its business by entering into the sectors mentioned above. NBFCs are gaining momentum in the past few decades with wide variety of products and services. NBFCs collect public funds and give loan able funds. There has been significant increase in such companies since 1990s. They are playing a vital role in the development of financial system of our country. The banking sector is financing only 40 percent and the rest is by NBFCs and private money lenders. At the same time, 50 percent of the credit requirement of manufacturing is done by NBFCs. 65 percent of financing of the private constructions activities is also financed by the NBFCs. NBFCs in India have become prominent in various activities such as hire purchase, lease financing, loans, investments and so on. In desperate times, NBFCs could survive, owing to the aggressive character and customized services. NBFCs are doing more fee based services than fund based. They are focusing now, on retailing sector- husing finance, personal loans and marketing of insurance.