NBFCs likely to face tough time for 12 months: Sundaram Fin

In an interview to CNBC-TV18 TT Srinivasaraghavan, MD Sundaram Finance spoke about the latest happenings in the company.

Below is the verbatim transcript of Srinivasaraghavan’s interview on CNBC-TV18 Q: On account of high interest rates plus slowing auto sales the operating environment for auto non-banking financial companies (NBFCs) has weakened a bit. How is the situation currently and will the second half be better on account of monsoon, what could be the growth rates? A: It will take either a brave man or a fool to stick his neck out on forecasts but what you said is true, we started with Q1 numbers being reasonably good but Q2 performance has slowed down significantly, largely on account of what is happening in broader economy and specifically in the auto sector because commercial vehicle (CV) and car sales have slowed. Therefore, asset financing NBFCs like us have felt the impact of that slowdown. In the second half, everyone is talking about the monsoon dividend. One hopes that is not over hyped but there should be some positives out of bountiful monsoon that we had. Also because of what has happened on the rupee, if exports start to pickup, that too can add some life back and if goods movement at ports improves, that should help at least commercial vehicle sales to an extent and usually the festive season is good for passenger car sales. So if you put these two together, there is some room to expect that H2 will be better than H1. Q: Can you give us an outlook for the full year in terms of profitability? A: We don't give guidance. We expect the industry to go through a rough time this year simply because of what was happening in the broader economy. Commercial vehicle operators are under significant strain therefore, we don't see any dramatic growth even if the industry ends flat. I think they would have done very well, the commercial vehicle industry. I don't think you are talking about any exciting numbers happening with people who financed the auto industry. I don't think I will stick my neck out in terms of numbers but it is fair to say that we are going through a period of trough and this will play out over the next 12 months at least and then we will see an uptick. But this is something that the industry goes through every six-seven years so I don't think there is any need to over-hype it.