MIRA INFORM REPORT

Report Date :

09.05.2008

IDENTIFICATION DETAILS

Name :	SUNDARAM FINANCE LIMITED
Registered Office :	21, Patullos Road, Chennai – 600 002, Tamil Nadu
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	11.08.1954
Com. Reg. No.:	18-2429
CIN No.: [Company Identification No.]	U65191TN1954PLC002429
TAN No.: [Tax Deduction & Collection Account No.]	CHES00556D
Legal Form :	A public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	It is a finance company engaged in hire purchase finance on commercial vehicles and equipment leasing.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 35115220
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed finance company having fine track of performance and financial status. The company is backed by TVS Group. Available information indicates high financial responsibility of the company. Financial position is good. Business is active. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings. It can be regarded as a promising business partner in a long-run.

LOCATIONS

Registered Office :	21, Patullos Road, Chennai – 600 002, Tamil Nadu, INDIA
Tel. No.:	91 – 44 – 2852 1181 / 0391 / 28558236
Fax No.:	91 – 44 – 2852 0456 / 28586641 / 28550290
E-Mail :	sf@sundaramfinance.com pnsrik@sundaramfinance.in pv@sundaramfinance.in
Website :	http://www.sundaramfin.com

DIRECTORS

Name :	Mr. S. Viji
Designation :	Chairman
Name :	Mr. S. Ram
Designation :	Director
Name :	Mr. S. Narayanan
Designation :	Director
Name :	Mr. A. Rangaswami
Designation :	Director
Name :	Mr. S. Padmanabhan
Designation :	Director
Name :	Mr. T.R. Seshadri
Designation :	Director
Name :	Mr. G K Raman
Designation :	Wholetime Director
Name :	Mr. T T Srinivasa Raghavan
Designation :	Managing Director
Name :	Mr. Srinivas Acharya
Designation :	Deputy Managing Director

KEY EXECUTIVES

Name :	Mr. T T Srinivasa Raghavan
Designation :	Chairman
Name :	Mr. Srinivas Acharya
Designation :	Chairman
Name :	Mr. S Venkatesan
Designation :	Chairman
Name :	Mr. A N Raju
Designation :	Chairman
Name :	Mr. M Rama Swamy
Designation :	Chairman
Name :	Mr. S Venkatesan
Designation :	Chief Finance Officer and Secretary
Name :	Mr. P S Raghavan
Designation :	Executive Director and Head Sundaram Business Services
Name :	Mr. A N Raju
Designation :	Executive Director
Name :	Mr. Paramesh Krishnaier
Designation :	Executive Director
Name :	Mr. K Swami Nathan
Designation :	Senior Vice President (Sundaram Infotech Solutions)
Name :	Mr. M Rama Swamy
Designation :	Senior Vice President and Head - Treasury
Name :	Mr. Harsha Viji
Designation :	Senior Vice President (Special Projects)
Name :	Mr. S Ravindran
Designation :	Vice President and Head – Northern Region
Name :	Mr. P Viswanathan
Designation :	Vice President and Deputy Secretary
Name :	Mr. J Raghu Nathan
Designation :	Vice President (Sundaram Infotech Solutions)
Name :	Mr. S Srinivasan
Designation :	Vice President and Head – Leasing
Name :	Mr. K Manivannan
Designation :	Vice President (Training)
Name :	Mr. S Siva Kumar
Designation :	General Manager (Operations)
Name :	Mr. T S Venkataraman
Designation :	General Manager (Operations)
Name :	Mr. M J Kulkarni
Designation :	General Manager and Head – Western Region
Name :	Mr. S Ramachandran
Designation :	General Manager (Audit)
Name :	Mr. Venkatesh Kumar Swamy
Designation :	General Manager (Sundaram Business Services)
Name :	Mr. K Sankara Kumar
Designation :	General Manager and Head - Distribution

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2008

Category Code	Names of Shareholders	No. of Shares	Percentage of Holding
(A)	Shareholding of Promoter and Promoters Group
(1)	Indian
	Individuals/ Hindu Undivided Family	6298411	22.68
	Bodies Corporate	3406136	12.26
	Sub Total (A)(1)	9704547	34.94
(2)	Foreign
	Individuals ( Non Resident Individuals / Foreign Individuals)	1326629	4.78
	Sub Total (A) (2)	1326629	4.78
	Total (A) (1) + (A) (2)	11031176	39.71
(B)	Public Shareholding
(1)	Institutions
	Mutual Funds / UTI	1006887	3.63
	Financial Institutions / Banks	950	0.000
	Insurance Companies	1577649	5.68
	Foreign Institutional Investors	1155031	4.16
	Sub Total (B) (1)	3740517	13.47
(2)	Non Institutions
	Bodies Corporate	1333257	4.80
	Individual shareholders holding nominal share capital up to Rs. 1 lakh	5017891	18.07
	Individual shareholders holding nominal share capital in excess of Rs. 1 lakh	5937316	21.38
	Any Other (Specify)*	715808	2.58
	Sub Total (B) (2)	13004272	46.82
	Total (B) (1) + (B) (2)	16744789	60.29
	Total (A) + (B)	27775965	100.00
	Grand Total (A) + (B) + (C)	27775965	100.00

Notes:

* Any Other Includes

1. 712012 Shares held by Mr. M S Parthasarathy and Mr. S Krishnamurthy, Trustees, SFL Shares Trust. The Trustees do not have any voting rights in respect of these shares.

2. 500 shares held by Kynan Darius Chennai Trust, Hyderabad.

3. 3296 shares held by 14 Clearing Members in NSDL and CDSL.

BUSINESS DETAILS

Line of Business :

It is a finance company engaged in hire purchase finance on commercial vehicles and equipment leasing.

Products :

ITC Code	Product Description
--	Hire Purchase Leasing Hypothecation Loan

GENERAL INFORMATION

No. of Employees :

400

Bankers :

Ø State Bank of India

Ø State Bank of Travancore

Ø State Bank of Hyderabad

Ø State Bank of Saurashtra

Ø State Bank of Patiala

Ø Indian Overseas Bank

Ø Indian Bank

Ø United Bank of India

Ø The Hongkong and Shanghai Banking Corporation Limited

Ø Bank of India

Ø Syndicate Bank

Ø UCO Bank

Ø HDFC Bank Limited

Ø IDBI Bank Limited

Ø Standard Chartered Bank

Ø Canara Bank

Ø ABN-Amro Bank N.V.

Ø Citibank N.A.

Facilities :

	31.03.2007	31.03.2006
Secured Loans	Rs. in millions	Rs. in Millions
Non - Convertible Debentures	13540.000	9190.000
From Scheduled Banks	21687.848	20422.910
From International Finance Corporation	2000.000	2000.000
From a Financial Institution	--	2.593
Total	37227.848	31615.503
Unsecured loans
Fixed deposits
From Directors	30.878	33.964
From others	6553.823	6245.882
Non - Convertible Debentures	5380.000	480.000
Subordinated Non Convertible Debentures	400.000	--
Debenture Application Money	--	1200.000
Short term loans and advances
From Scheduled Banks	5119.112	2169.540
Commercial Paper	2650.000	3000.000
Total	20133.813	13129.386

Banking Relations :	Satisfactory
Auditors :
Name :	v Brahmayya and Company, Chartered Accountants 48, Masilamani Road, Balaji Nagar, Royapettah, Chennai – 600 004 v Tejas Brain ware Systems Private Limited, Chartered Accountants 28, Second Main Road, C,I,T. Colony, Chennai – 600 004
Memberships :	Confederation of Indian Industry
Parent Company	TVS Group
Subsidiaries :	Ø Sundaram BNP Paribas Asset Management Company Limited Ø Sundaram Home Finance Limited Ø Royal Sundaram Alliance Insurance Company Limited Ø Sundaram BNP Paribas Trustee Company Limited Ø Sundaram BNP Paribas Asset Management Company Limited Ø Sundaram Finance Distribution Limited Ø LGF Services Limited Ø Sundaram Infotech Solutions Limited Ø Sundaram Business Services Limited Ø In Frieght Logistics Solutions Limited (Associate till 23.11.2006)
Associates :	Ø Axles India Limited Ø Turbo Energy Limited Ø Transenergy Limited Ø Sundaram Dynacast Private Limited Ø In Freight Technologies India Limited Ø Sundaram Medical Foundation Ø Sundaram BNP Paribas Mutual Fund Ø Professional Management Consultants Private Limited (from 07.03.2007)
Joint Ventures :	Ø Royal Sundaram Alliance Insurance Company Limited (Subsidiary till 23.11.2006) Ø Gulf Outsourcing Services Private Limited (from 08.08.2006)

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
10,00,00,000	Equity Shares	Rs.10/- each	Rs. 1000.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
2,77,75,965	Equity Shares	Rs.10/- each	Rs. 277.760 Millions

Note:

(Include 2,31,99,580 Equity Shares allotted as fully paid up by way of bonus shares by Capitalisation of Reserves and 37,75,965 Equity shares of Rs. 10/- Each allotted for consideration other than cash pursuant to a Scheme of Amalgamation.)

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		277.760	277.760	240.000
2] Share Application Money		0.000	0.000	37.760
3] Reserves & Surplus		8501.045	7830.570	6552.214
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		8778.805	8108.330	6829.974
LOAN FUNDS
1] Secured Loans		37227.848	31615.503	23259.624
2] Unsecured Loans		20133.813	13129.386	14804.168
TOTAL BORROWING		57361.661	44744.889	38063.792
DEFERRED TAX LIABILITIES		0.000	0.000	19.470
TOTAL		66140.466	52853.219	44913.236
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1626.431	1589.623	1888.923
Capital work-in-progress		0.000	0.000	0.000
INVESTMENT		4495.401	4726.049	3111.318
DEFERREX TAX ASSETS		194.891	77.388	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	0.000	0.000	4756.445
	Interest accrued on investments	0.000	0.000	21.429
	Cash & Bank Balances	0.000	0.000	1003.907
	Other Current Assets	10329.923	6521.847	97.441
	Loans & Advances	53505.265	43311.643	36925.814
Total Current Assets		63835.188	49833.490	42805.036
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	3553.218	2522.300	2336.233
	Provisions	458.227	851.031	555.808
Total Current Liabilities		4011.445	3373.331	2892.041
Net Current Assets		59823.743	46460.159	39912.995
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		66140.466	52853.219	44913.236

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		6408.941	4839.826	4416.074
Other Income		309.915	1118.709	174.807
Total Income		6718.856	5958.535	4590.881
Profit/(Loss) Before Tax		1434.384	2088.064	1223.857
Provision for Taxation		429.708	382.142	463.900
Profit/(Loss) After Tax		1004.676	1705.922	759.957
Earnings in Foreign Currency :
	Export Earnings	27.877	29.528	7.988
Total Earnings		27.877	29.528	7.988
Imports :
	Capital Goods	63.159	7.073	5.846
Total Imports		63.159	7.073	5.846
Expenditures :
	Financial Expenses	3746.628	2619.426	2148.391
	Establishment Expenses	613.529	518.856	483.021
	Administrative and Other Expenses	580.672	475.772	458.870
	Provisions and Write Off	127.947	72.409	55.123
	Depreciation	215.696	184.008	221.619
Total Expenditure		5284.472	3870.471	3367.024

QUARTERLY RESULTS

PARTICULARS	30.06.2007	30.09.2007	31.12.2007
Type	1st Quarter	2nd Quarter	3rd Quarter
Sales Turnover	1917.500	2273.700	2315.400
Other Income	34.900	43.600	1060.900
Total Income	1952.400	2317.300	3376.300
Total Expenditure	420.200	457.900	510.000
Operating Profit	1532.200	1859.400	2866.300
Interest	1119.500	1241.700	1280.700
Gross Profit	412.700	617.700	1585.600
Depreciation	59.100	74.100	85.800
Tax	119.300	181.500	313.600
Reported PAT	234.300	362.100	1186.200

KEY RATIOS

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Debt-Equity Ratio	5.98	5.46	5.30
Long Term Debt-Equity Ratio	3.98	3.68	3.77
Current Ratio	2.52	2.47	2.59
TURNOVER RATIOS
Fixed Assets	1.29	1.14	0.90
Inventory	2.07	1.60	1.35
Debtors	82.51	79.88	69.93
Interest Cover Ratio	1.38	1.80	1.57
Operating Profit Margin (%)	80.63	81.89	77.86
Profit Before Interest And Tax Margin (%)	74.89	74.22	62.67
Cash Profit Margin (%)	20.27	34.57	29.32
Adjusted Net Profit Margin (%)	14.52	26.90	14.12
Return On Capital Employed (%)	8.80	9.75	8.88
Return On Net Worth (%)	11.90	22.90	12.64

LOCAL AGENCY FURTHER INFORMATION

History

Subject 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 Limited, Sundaram Asset Management Company Limited, Royal Sundaram Alliance Insurance Company Limited, Sundaram Finance Distribution Limited, LGF Services Private Limited and Sundaram Finance Trustee Company Limited 

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 Private Limited 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 201 Millions 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 the 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 Limited (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. 277.800 Millions.

AWARDS AND RECOGNITIONS 

The company's IT division, Sundaram Infotech Solutions (SIS) was accorded the Microsoft Gold Certified Partner status with Microsoft Business Solutions competency, only the second Indian company to be so recognised in this area. 

SIS also achieved ISO/IEC 27001:2005 certification for its Information Security Management System. 

MANAGEMENT DISCUSSION AND ANALYSIS 

OVERVIEW 

The Indian Economy continued its impressive growth during 2006-07. GDP growth for the year has been placed at 9.4%, as against the revised estimate of 9% for the year 2005-06. Sustained growth in the industry and services sectors, supported by a growing world economy, continued to contribute to the growth of the Indian Economy. Industrial output, estimated at 10.2%, continued its healthy growth during 2006-07, with growth in the manufacturing sector, estimated at 12.1%, being the prime mover once again. The services sector is estimated to have grown at 11% and accounts for 55% of GDP. Agricultural growth, however, was down from 6% in the previous year to 2.7% in the current year.  

The country's balance of payments position remained comfortable during the year. Exports are estimated to have increased by 19.3% in dollar terms, while imports grew by 27.8%. Notwithstanding the widening current account deficit, India's foreign exchange reserves increased by USD 47.6 billion, from USD 151.6 billion as at end-March 2006 to USD 199.2 billion as at end-March 2007. 

There have, however, been some genuine concerns on the inflation front.

Inflation increased from 4.1% as at end-March 2006 to an intra-year peak of 6.7% as at end-January 2007, before moderating to 5.7% as of end-March 2007. The average inflation, based on movements in the wholesale price index (WPI), stood at 5.4% compared to 4.4% in the previous year. The fiscal deficit has been estimated at 3.5%, lower than the budgeted level of 3.8%, mainly on account of a reduction in the revenue deficit, sustained buoyancy in tax revenues and containment in plan expenditure. 

AUTOMOTIVE SECTOR 

The year 2006-07 witnessed a healthy growth in the automotive sector with sales of medium and heavy commercial vehicles (M&HCV) registering a growth of 33% (PY - 4.5%) and sales of light commercial vehicles (LCV) registering a growth of 34% (PY - 19.4%). Sales of cars and multi-utility vehicles grew by 21% during the year, as against 7.7% during the previous year. Growth in the M&HCV segment was driven primarily by multi-axle and articulated vehicles and tippers, while LCV growth was essentially in the one tonne segment. 

REGULATORY: 

For several years now, the Company has been advocating the need for a distinct classification for NBFCs engaged primarily in financing productive assets. It is, therefore, heartening that the Reserve Bank of India (RBI) has introduced a new classification called Asset Financing Company (AFC).

Consequently, the Company has been re-classified as an Asset Financing Company - Deposit taking. RBI also issued several other guidelines during the year, notable among which are: 

 1) Financial regulation of Systemically Important NBFCs. 

 2) Appointment of trustees for the benefit of deposit holders and creation of a floating charge on statutory liquid assets.

 3) Approval for distribution of mutual fund products by NBFCs.

OPERATING & FINANCIAL PERFORMANCE 

The Company's hire purchase and loan disbursements at Rs. 43850.000 millions registered a healthy growth of 28%, as against Rs. 34220.000 millions in the previous year. This translates to a Compounded Annual Growth Rate of 27.71% over the last 3 years. Significantly, the Company improved its market share in the highly competitive M&HCV segment. The gross receivables being managed by the Company, including assets sold or securitised, stood at Rs. 70700.000 millions as at 31st March 2007, as against Rs. 54520.000 millions in the previous year. 

Outstanding asset quality remains at the core of the Company's operations.

Gross and net NPAs as at 31st March, 2007 came down to 1.16% and 0.54% respectively, from 1.58% and 0.80%, in the previous year, amongst the lowest in the industry. 

Gross income for the year from hire purchase, hypothecation loans and leasing grew by 32% over last year, reflecting the strong growth in disbursements. While competition remained stiff, the Company was able to improve its margins, based on its ability to provide greater value addition and deliver a consistently high level of service to its customers. Establishment and administrative expenses have been consistent with the growth in business. The Company continues to focus on new opportunities to improve profitability. 

The net profit for the year was Rs. 1004.700 millions as against Rs. 824.600 millions.

(Excluding the one-time profit on the sale of shares in Sundaram Asset Management Company Limited) in the previous year, registering a growth of 22%. The Company's Net-Worth stood at Rs. 8778.800 millions as on 31.3.2007, while Capital Adequacy (CRAR) at 13.46% was comfortably higher than the statutory requirement of 12%. 

Hire Purchase and Hypothecation Loan Disbursements: 

Year (Rs. in Cr.) 

2006-07 Rs. 43850.000 millions 

Receivables under Management: 

Year (Rs. in Cr.) 

2006-07 Rs. 70700.000 millions. 

RESOURCE MOBILISATION 

a) Deposits: 

During 2006-07, the Company mobilised fresh deposits aggregating to Rs. 1315.400 millions. Renewal of deposits matured during the year amounted to Rs. 2149.100 millions representing 75% of the matured deposits. Deposits outstanding at the year-end were at Rs. 6584.700 millions and the number of depositors exceeded 243000. 

 As at 31st March 2007, 4002 deposits amounting to Rs. 102.800 millions had matured for payment and were due to be claimed or renewed. After close follow-up of repayments/renewals, the figures are currently down to 2452 and Rs. 59.500 millions. Respectively. Steps are continuously being taken to arrange for repayment/renewal of these deposits. 

 b) Term Funding: 

 During the year, the Company raised term funding in the form of non-convertible debentures and term loans to the tune of Rs. 15600.000 millions across various tenors. 

c) Subordinated debt: 

During the year, the Company raised Rs. 400.000 millions through the issue of long term, redeemable, non-convertible debentures on a subordinated basis. The debt is subordinated to present and future senior indebtedness of the Company and qualifies as Tier II capital under the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998. 

d) Bank Finance: 

The Company's bankers continue to extend their support, providing both Rupee and Foreign Currency loans at competitive rates. The Company issued commercial papers aggregating to Rs. 6450.000 millions during the year. The maximum amount outstanding at any time was Rs. 5450.000 millions and the amount outstanding at the end of the year was Rs. 2650.000 millions. 

The working capital credit limits of the Company were enhanced from Rs.1400 cr. to Rs. 16500.000 millions. and stood at that level at the end of the year. 

e) Sell-down of Receivables: 

During the year, the Company sold hire purchase/hypothecation loan receivables to the extent of Rs. 7486.600 millions. 

BUSINESS OUTLOOK: 

The prospects for the automotive sector would appear to be a little uncertain in the coming year. Sales of commercial vehicles in the first two months of the current financial year are reported to be lower than the corresponding period last year. While this is being attributed to the increase in interest rates, the prospect of a cyclical slowdown cannot be ruled out altogether. As always, the behaviour of the monsoon will have a significant bearing on the fortunes of the commercial vehicle sector. The Company will adopt appropriate strategies to meet the evolving market developments. The planned geographic expansion across the country, in the current year, will take us even closer to the customers and enable us to broaden and deepen the reach. 

SUBSIDIARIES:

* Sundaram Home Finance Limited (SHFL): 

* Sundaram Home Finance Limited (SHFL): 

SHFL, in its eighth year of operation, approved loans aggregating Rs. 5560.000 millions while disbursements amounted to Rs. 4770.000 millions. The Company earned a gross income of Rs. 1207.100 millions as against Rs. 933.800 millions. in the previous year and reported a profit after tax of Rs. 146.000 millions as against Rs. 58.600 millions. in the previous year. The loan portfolio as at 31st March 2007 stood at Rs. 11691.800 millions as against Rs. 9987.200 millions in the previous year. 

During the year, the Company acquired 1,75,00,000 equity shares of Rs. 10/- each (25%), held by Nederlandse Financierings - Maatschappij voor ontwikkelingslanden N.V. (the FMO, Netherlands) and International Finance Corporation (IFC, Washington) in the capital of SHFL, for a total consideration of Rs. 485.200 millions pursuant to the Put Option exercised by the FMO and IFC. Consequent to this acquisition, SHFL became a wholly-owned subsidiary of the Company. 

Subsequently, during May 2007, the Company entered into a joint venture agreement with Union de Credit pour le Batiment SA (UCB), a wholly-owned subsidiary of BNP Paribas SA of France, under which, subject to relevant regulatory approvals, UCB will acquire a 49.90% stake in SHFL for a total consideration of Rs. 1969.800 millions.

Out of this amount, a sum of Rs. 1469.800 millions shall be payable to the Company, while a sum of Rs. 500.000 millions would be invested directly in SHFL. At the completion of the aforementioned transactions, the Company's shareholding will be 50.10% of the enhanced paid-up equity capital of SHFL. 

* Sundaram BNP Paribas Asset Management Company Limited: 

Sundaram BNP Paribas Asset Management Company Limited earned a gross income of Rs. 482.500 millions as against Rs. 203.500 millions in the previous year. The overall Assets under Management amounted to Rs. 74410.000 millions as on 31.3.2007, as against Rs. 32780.000 millions at the end of the previous year. The gross mobilisation under the various schemes of Sundaram Mutual Fund (SMF) during the year amounted to Rs. 220850.000 millions. After providing for depreciation and tax, the company reported a profit of Rs. 57.500 millions as against Rs. 17.400 millions in the previous year. The Company recommended a maiden dividend of 15% for the financial year ended 31st March 2007. 

During the year, Sundaram BNP Paribas Mutual Fund launched three new equity schemes, viz., Sundaram BNP Paribas Rural India Fund, Sundaram BNP Paribas Equity Multiplier and Sundaram BNP Paribas Select Small Cap, the latter two being close ended schemes, which mobilised a sum of Rs.2075 cr. in aggregate. 

The commendable performance of the various Mutual Fund schemes managed by the company attracted considerable investor interest. During the year, Sundaram BNP Paribas Select Mid Cap and Sundaram BNP Paribas Select Focus were awarded the Best Equity Diversified Fund and Best Large Cap Oriented Fund of the year 2006 respectively, by CRISIL. Further, Sundaram BNP Paribas Select Mid Cap Fund has been ranked ICRA MFR 1 at the ICRA Mutual Funds Awards in the category of Open Ended Diversified Equity-Aggressive, for its 1-year and 3-year performance, indicating performance within the top 10% of the stated category.

 * Sundaram BNP Paribas Trustee Company Limited: 

Sundaram BNP Paribas Trustee Company Limited earned a gross income of Rs. 54.230 millions as against Rs.2.595 millions in the previous year and reported a profit after tax of Rs. 1.434 millions for the year, as against Rs. 0.364 millions in the previous year. The Company recommended a maiden dividend of 100% for the financial year ended 31st March 2007. 

* Sundaram Finance Distribution Limited (SFDL): 

During the year, SFDL earned a gross income of Rs. 20.575 millions through distribution of insurance products, mutual funds and other financial products, as against Rs. 22.051 millions in the previous year. The profit after tax was Rs. 7.970 millions as against Rs.10.030 millions in the previous year. The company declared a dividend of 65% for the financial year ended 31st March 2007. 

* LGF Services Limited: 

In its third year of operation, LGF Services Limited earned a gross income of Rs. 47.472 millions through distribution of insurance products, as against Rs. 27.861 millions in the previous year. The profit after tax was Rs. 15.381 millions as against Rs. 9.264 millions in the previous year. During the year, the Company issued Bonus Shares in the ratio of 4:1. The company declared a dividend of 350% for the financial year ended 31st March 2007, on the increased paid-up capital of Rs. 2.500 millions. 

 * Sundaram Infotech Solutions Limited (SISL): 

 SISL has made steady progress during the year, building on the early successes in the previous year. The company earned a gross income of Rs. 68.298 millions, as against Rs. 32.691 millions in the previous year. 

The company has acquired several new customers and has taken initiatives to achieve geographical expansion. 

* Sundaram Business Services Limited (SBSL): 

SBSL entered into a strategic alliance with Professional Management Consultants Private Limited, a domestic BPO with a proven record of operations. This, together with certain strategic partnerships and joint ventures, has improved the growth prospects of the company in the BPO segment in both local and overseas markets. 

* In freight Logistics Solutions Limited (In freight): 

The Company initially held a 40% stake in In freight Logistics Solutions Limited (formerly In freight Technologies India Limited), a company engaged in the business of logistics services. During the year, the Company invested a further sum of Rs.4.01 cr. in the capital of In freight, consequent to which that company became a subsidiary of the Company. 

JOINT VENTURE: 

* Royal Sundaram Alliance Insurance Company Ltd. (Royal Sundaram): 

Royal Sundaram registered 30% growth in Gross Written Premium at Rs. 5982.000 millions as against Rs. 4586.400 millions in the previous year and earned an investment income of Rs. 328.800 millions as against Rs. 211.300 millions in the previous year. The Company reported a net profit of Rs. 211.900 millions for the year as against Rs. 86.300 millions in the previous year, registering a growth of 146%. The Company wiped off its entire carried forward loss of Rs. 187.500 millions. 

Contingent Liability:

Contingent liabilities in respect of	31.03.2007 [Rs. in millions]	As on 31.03.2006 [Rs in Millions]
a) Liability -
To Banks - on Cheques discounted	264.874	270.058
- on Counter Guarantee	7.469	4.683
To Sales Tax Authorities	1.244	1.527
Uncalled Liability on partly paid up shares	63.600	--
On Guarantee given on behalf of a Subsidiary Company	500.000	1000.000
ii) Hire Purchase transactions and termination of Lease transactions
- Appeals filed by the company	4.607	4.607
iii) Others	26.622	26.633

Fixed Assets

v Plant and Machinery

v Freehold Land and Buildings

v Leasehold Office / Residential Premises

v Furniture / Office Equipment

v Equipment

v Computer Software

v Vehicles

v Office Equipments

Media Release

Sundaram Finance Ltd., disbursement up 28% at Rs. 43860.000 millions Operating Net Profit grows 22% year on year to Rs. 1004.700 millions Recommends Final Dividend of 20%, taking total dividend for the year to 105%

Chennai 30th May 2007: Leading Financial Services Company Sundaram Finance Limited (SFL) has announced that it has registered a 28% growth in disbursements in 2006-07. The disbursements stood at Rs. 43860.000 millions as on 31st March 2007 as against Rs. 34220.000 millions as on 31st March 2006. The company had indicated last year that it expected to grow by about 10%-15% in 2006-07.

The company registered an operating Net Profit of Rs. 1004.700 millions for the year ended 31st March 2007. The company had recorded an operating Net Profit of Rs. 824.600 millions *(excluding the one time profit on sale of its stake in Sundaram Asset Management Company) for the year ended 31st March 2006, thus recording an

Increase of 22%.

Dividend

The Board of Directors of Sundaram Finance Ltd., have recommended a final dividend of 20% for the year ended 31st March 2007, which along with the interim dividend of 85% takes the total dividend for the year to 105%.

A strong player in the Commercial vehicle and Car finance segments, the Sundaram Finance Group’s services include automobile finance, home loans, mutual funds, IT, BPO and insurance. The company has employee strength of over 2500 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.

Sundaram Direct Expansion

As part of its ‘close to customer’ strategy, Sundaram Direct, (distribution of financial products and services) expanded significantly opening close to 50 new offices. Sundaram Direct expects to continue its pan India expansion this year and plans to open another 200 offices across the country over the next 12 months. The current expansion is expected to double Sundaram Finance’s overall presence in the country to over 450 offices.

Commenting on the FY07 performance, T. T. Srinivasa Raghavan, Managing Director, Sundaram Finance Ltd., said “This has been a year of strong growth for the automobile industry, with M and HCVs leading the way. The performance of Sundaram Finance reflects the strong presence in the chosen areas. They have gained market share in the‘M and HCV’ segment, lending rates have improved and the asset quality continues to be amongst the best in the industry.”

Key Business Highlights of FY07 (April 2006-March 2007)

v Disbursements up 28%.

v Sundaram Direct Expansion-Opens close to 50 new offices

v All key subsidiaries and JVs have reported strong performance

Financial Highlights

Particulars	2005-06	2006-07	% Growth
	F Y 06	F Y 07
Disbursements	Rs. 34220.000 millions	Rs. 43860.000 millions	28%
Operating Net Profit*	Rs. 824.600 millions	Rs. 1004.700 millions	22%
Net Worth	Rs. 8110.000 millions	Rs. 8778.800 millions
Receivables under Management	Rs. 54520.000 millions	Rs. 70700.000 millions	30%

* For the Year ended 31st March 2006, the company had reported a Net Profit of Rs. 1705.900 millions but that included a one time profit of Rs. 881.300 millions resulting out of the Sundaram Asset Management Company stake sale to BNP Paribas. Hence, the Net Profit figures of 2005-06 and 2006-07 are not comparable

Capital adequacy (CRAR) at 13.47% as on 31.3.2007 was well above the statutory requirement of 12%. Net NPA as on 31st March 2007 was at 0.54% as against 0.81% the previous year.

Sundaram BNP Paribas Mutual

The Assets under Management (AUM) grew to Rs. 75000.000 millions. The PAT grew to Rs. 57.400 millions in 2006-07 from Rs. 1.900 millions in 2005-06. Sundaram BNPP Mutual launched two close ended equity funds-Small Cap and Equity Multiplier- during the year. The company won several prestigious awards including the CNBC-Crisil award for Best Large Cap Fund and Best Diversified Equity Fund.

Sundaram Home

Sundaram Home Finance (Home loan business), in which UCB, a subsidiary of BNP Paribas, recently signed an agreement to acquire a 49.9% stake, registered healthy growth during the year. PAT more than doubled to Rs. 146.000 millions from Rs. 58.600 millions a year earlier. Disbursements as on 31st March 2007 were at Rs. 4770.000 millions. Net NPA was at 0.61%. During the year, Sundaram Home’s customer base went up to over 25000 customers.

Royal Sundaram

Royal Sundaram’s revenues gew by 30% to Rs. 6010.000 millions, 65% of the portfolio is retail. Profit after Tax grew to Rs. 211.900 millions from Rs. 86.300 millions in 2005-06.

On the current market scenario, T.T. Srinivasa Raghavan said, “There are apprehensions that there could be a slow down in growth as a result of higher interest rates. This is a phenomenon that has already been witnessed in the Housing Finance Sector.”

Srinivasa Raghavan added, “While the sales figures of the first two months of this year are mixed, they need to wait for a couple of months before any clear trend emerges.”

Revision in Fixed Deposit rates

In line with market trends, Sundaram Finance revised its Fixed Deposit rates upwards during 2006-07. The company has further revised the interest rates, effective May 1, 2007 to 9.5%, 10% and 10.5% on 1 year, 2 year and 3 year deposits.

Commenting on the outlook for the company, T.T. Srinivasa Raghavan said, “They will focus on the strengths and continue to provide a superior customer experience. The geographic expansion right across the country, this year, will take us even closer to the customers.”

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

The market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

The Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 41.38
UK Pound	1	Rs. 80.76
Euro	1	Rs. 63.89

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, they have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions