|
Your Directors have pleasure in presenting the 73rd Annual Report
together with audited accounts for the year ended 31st March 2026. The summarised
financial results of the Company are presented hereunder:
FINANCIAL RESULTS: STANDALONE
(Rs. in crores)
| Particulars |
Year ended March 31, 2026 |
Year ended March 31, 2025 |
| Revenue from Operations |
7,682.96 |
6,520.44 |
| Other Income |
51.52 |
75.63 |
| Total Revenue |
7,734.48 |
6,596.07 |
| Less: Total Expenses |
5,291.08 |
4,534.39 |
| Profit before exceptional items and tax |
2,443.40 |
2,061.68 |
| Less: Exceptional item |
74.75 |
|
| Profit before tax |
2,368.65 |
2,061.68 |
| Profit after Tax |
1,834.17 |
1,542.65 |
| Other Comprehensive Income |
147.90 |
451.47 |
| Total Comprehensive Income for the Year |
1,982.07 |
1,994.12 |
| Dividend |
|
|
| Final 2023-24 |
|
177.77 |
| Interim 2024-25 |
|
155.55 |
| Final 2024-25 |
233.32 |
|
| Interim 2025-26 |
177.77 |
|
DIVIDEND
Your Company paid an interim dividend of Rs. 16/- per share in February
2026. Your Directors are pleased to recommend a final dividend of Rs. 24/- per share,
which, together with the interim dividend, would aggregate to a total dividend of Rs. 40/-
per share (400 per cent on the face value of Rs. 10/-), representing a dividend pay-out of
24.23 per cent.
The Dividend Distribution Policy, formulated in accordance with the
provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 has been disclosed on the website of the Company under the web link -
https://sundaramfinance.in/assets/app_docs/investor-info/corporate_governance/policies/sebi/sfl_policy_for_distribution_of_dividends.pdf?v=1.1
CORPORATE GOVERNANCE
Your Company has always focused on ensuring the highest standards for
prudence, ethics and transparency in corporate governance over the decades. The Board of
Directors serve as stewards of the performance and health of your Company. The
Board's mandate is to oversee your Company's strategic direction, monitor the
performance of your Company, its subsidiaries & joint venture, maintain highest
ethical standards of governance, assess the adequacy of risk management measures, evaluate
internal financial controls, authorise and monitor strategic investments, facilitate and
review Board and senior management succession planning and oversee regulatory compliance
and corporate social responsibility activities. The Directors' deep industry
knowledge, functional specialization and decades of experience has helped your Company
handle complex issues related to macroeconomic uncertainty, regulatory changes,
technological & digital developments, market volatility & risk management and
information security & cyber security threats.
The Corporate Governance Report of the Company provides information
about the corporate philosophy, details of the Directors and their other directorships,
number of Board Meetings and Committee Meetings held during FY 2025-26, various other
details which evidence the fact that the Company is customer-oriented, respectful in
letter and spirit of all the regulatory provisions, mindful of high quality standards in
all areas and, above all, follows a time-tested approach that balances growth with quality
and profitability.
A detailed report on corporate governance, together with a certificate
from the Secretarial Auditor, in compliance with the relevant provisions of SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, is attached as part of this
report, vide Annexure I.
Compliance reports in respect of all laws applicable to the Company
have been reviewed by the Board of Directors.
RELATED PARTY TRANSACTIONS
All transactions with related parties were in the ordinary course of
business and on an arm's length basis. The Company did not enter into any material
transaction with such related parties, under Section 188 of the Companies Act, 2013,
during the year. Form AOC-2, as required under Section 134
(3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts)
Rules 2014, is attached as part of this report, vide Annexure II (i). The Company's
Policy on Related Party Transactions is attached as part of this report, vide Annexure
II (ii).
The Company did not have any transactions with any person or entity
belonging to the promoter or promoter group and holding 10 per cent or more shareholding
in the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company, along with its subsidiaries and associates, has always
proactively invested in a responsible manner to the growing needs of the communities in
which it operates and has responded swiftly to health-related complications, weather &
catastrophic events and other unexpected challenges that have impacted these communities.
During the year, your Company has, in consonance with the CSR Policy of the Company,
undertaken a number of initiatives that contribute to society at large, in the areas of
healthcare, education, environmental sustainability and ecological balance, and
preservation of the country's rich culture and heritage. The highlights of the CSR
activities are:
1. Average Net Profit computation in accordance with Sec.135(5): Rs.
1,48,000.00 lakhs
2. CSR Budget, Amount spent in CSR, amount un-spent if any and amount
to be set off in the financial year, if any.
| Particulars |
Amount |
| Total CSR Obligation for FY 2025-26 |
2,960.00 |
| Less: Set off from FY 2024-25 |
(45.67) |
| Net CSR Obligation for FY 2025-26 |
2,914.33 |
| CSR spent during FY 2025-26 |
2,774.65 |
| Administrative overheads (including expenses |
167.55 |
| incurred towards Impact Assessment) |
|
| Amount spent in excess of the requirement |
27.87 |
The Annual Report on CSR Activities undertaken by the Company for FY
2025-26 is attached as part of this report, vide Annexure III.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
A Business Responsibility and Sustainability Report (BRSR) as required
under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations 2015, is enclosed as part of this report, vide Annexure IV. Further, as
required under the SEBI Circular on BRSR Core - Framework for Assurance and ESG
Disclosures for Value Chain dated 12th July, 2023, the Company has undertaken a reasonable
assurance of the BRSR Core during the year and the Independent Practitioner's
Reasonable Assurance Report issued by M/s Sundaram and Srinivasan, Chartered Accountants,
Chennai, is enclosed as part of this report.
DISCLOSURE UNDER THE PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
POLICY'
The Company has in place a Policy for prevention of sexual harassment,
in line with the requirements of The Sexual Harassment of Women at the Workplace
(Prevention,
Prohibition & Redressal) Act, 2013. An Internal Complaints
Committee (ICC) has been set up to redress complaints. All employees (permanent,
contractual, temporary, trainees) are covered under this policy.
| Number of complaints of sexual harassment received in the
year |
Nil |
| Number of complaints resolved during the year |
Nil |
| Number of cases pending for more than 90 days |
Nil |
DISCLOSURE UNDER THE PROVISIONS OF MATERNITY BENEFIT ACT, 1961
The Company is in compliance with the provisions of the Maternity
Benefit Act, 1961. Details have been provided in the Business Responsibility and
Sustainability Report.
SECRETARIAL AUDIT
M/s Damodaran & Associates LLP, Practising Company Secretaries,
have been appointed as the Secretarial Auditor of the Company, for a term of five (5)
consecutive years w.e.f. 1st April 2025, in accordance with the provisions of
Regulation 24A of the SEBI (LODR) Regulations, 2015. The Secretarial Audit Report and
Secretarial Compliance Report, as provided by them, are attached as part of this report,
vide Annexures V(i) and (ii) respectively.
REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is attached as part of this report, vide
Annexure VI.
SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME (SFESOS)
Based on the recommendations of the Nomination, Compensation and
Remuneration Committee, the Board has granted, subject to regulatory approvals where
necessary, 14,629 stock options to select eligible employees, on 25th May 2026. The
information required under Rule 12 of the Companies (Share Capital and Debenture) Rules,
2014, read with Reg. 14 of the SEBI (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021 is furnished, vide Annexure VII and Notes to the Accounts (Refer Note
No. 41).
EXTRACT OF ANNUAL RETURN
As required under Section 92 (3) of the Companies Act, 2013, read with
Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the
Extract of the Annual Return in E-form MGT-7 is
https://sundaramfinance.in/assets/app_docs/downloads/annual-reports/2025-2026/eform_mgt_7_annual_return_2025_26_26062026.pdf
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, no significant and material orders were
passed by the regulators, courts, or tribunals against the Company, impacting its going
concern status or its future operations.
INFORMATION AS PER SECTION 134 (3) (M) OF THE COMPANIES ACT, 2013 READ
WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014
The initiatives taken by your Company towards conservation of energy
have been provided in the Business Responsibility and Sustainability Report, which has
been annexed to this Report.
Further, your Company's initiatives towards technology absorption
have been provided in the portion relating to Information Technology, forming part of this
Report. During FY 2025-26, expenditure in foreign currencies amounted to
`0.08 cr. There were no earnings in foreign currency during the year.
MANAGEMENT DISCUSSION AND ANALYSIS
Global Economy
During the year under review, the global economy remained fragile amid
persistent geopolitical tensions, tariff measures and the outbreak of war in West Asia in
late February 2026. These developments heightened risks to global growth and disrupted
commodity markets, inflation expectations, financial conditions and global demand. Damage
to critical energy infrastructure and closure of the Strait of Hormuz adversely affected
freight movement and supply chains across crude oil, hydrocarbons, fertilisers and other
key commodities.
In view of the rapidly evolving environment, the World Economic Outlook
(WEO) has presented the current outlook by way of a "reference forecast" and
projected global growth at 3.1 per cent in 2026 and 3.2 per cent in 2027, as against an
average growth rate of around 3.4 per cent during 2024-25. Over the medium term, global
growth is expected to remain below the historical average of 3.7 per cent recorded during
2000 to 2019. Global headline inflation is projected at 4.4 per cent in 2026 and 3.7 per
cent in 2027, both reflecting upward revisions.
Given the prevailing uncertainty, the outlook is supplemented by
adverse scenarios involving a more prolonged or wider escalation of the conflict and/or
greater damage to energy infrastructure in the affected region. Under such scenarios,
global growth in 2026 could moderate further to around 2.0-2.5 per cent, while
global inflation could rise to approximately 5.4-6.0 per cent. The adverse effects under
such scenarios are expected to be more pronounced for emerging market and developing
economies.
Over the medium term, prospects could improve with renewed
structural reforms and a durable easing of trade tensions; however, any further escalation
or geographic spread of the conflict would remain a material downside risk
to the global outlook.
Indian Economy
Despite global uncertainties, the Indian economy remained resilient in
FY 2025-26. As per the NSO's Second Advance Estimates under the revised GDP series
(base year 2022-23), real GDP grew 7.6 per cent, driven by robust private
consumption and strong fixed investment, while net external demand remained subdued. On
the supply side, real GVA grew 7.7 per cent, led by services and supported by
manufacturing; services, industry, and agriculture and allied activities grew 9.1
per cent, 6.2 per cent, and 3.1 per cent respectively.
Industrial activity in early FY 2026-27 has, however, been affected by
the crisis in West Asia, with the fertiliser sector among the most impacted due to
disruptions in gas and chemical supplies. The Government has responded with measures to
address supply disruptions, preserve energy security, support trade and logistics, and
maintain overall macroeconomic stability.
Headline CPI inflation moderated from about 3.8-4.0 per cent in early
2025 to near zero by October 2025, before rising to around 3.4-3.6 per cent by March 2026.
The decline was driven mainly by a sharp fall in food inflation, while the subsequent
increase reflected unfavourable base effects and emerging cost pressures from higher
energy and commodity prices. Core inflation remained broadly stable at around 3.7
per cent.
During FY 2025-26, the Reserve Bank of India's Monetary Policy
Committee (MPC) shifted its posture from restraint to calibrated easing, reducing the repo
rate cumulatively to 5.25 per cent by December 2025 in response to moderating inflation
and resilient growth conditions. In April 2026, in view of the supply-side shocks and
risks to growth and inflation arising from the conflict in West Asia, the MPC adopted a
cautious wait and watch' approach and kept the policy repo rate unchanged at
5.25 per cent. The Reserve Bank also continued to manage liquidity actively in order to
support transmission while preserving financial stability. Notwithstanding the reduction
in policy rates, bond yields remained elevated, particularly in the latter half of the
year, reflecting concerns relating to imported inflation through higher oil prices, the
implications for the current account deficit, and continued monetary tightness in global
markets.
India's fiscal deficit stood at 4.4 per cent of GDP in FY
2025-26 and is estimated at 4.3 per cent of GDP in FY 2026-27, reflecting prudent
fiscal management and supported by sustained growth in revenue collections over recent
years. During FY 2025-26, the Indian Rupee depreciated amid tariff measures introduced by
the United
States, sustained portfolio outflows and elevated energy import costs
arising from the conflict in West Asia and touched an all-time low of `94.65 per US dollar
in March 2026. As at 31 March 2026, the country's foreign exchange reserves
stood at USD 691.11 billion, equivalent to 10.8 months of projected merchandise imports
for FY 2025-26 and 21.9 per cent of outstanding external debt as at end-December 2025.
Automotive Sector
After a modest start to the year, the Indian automotive industry
recorded its highest-ever sales across the principal vehicle segments in FY 2025-26 after
seven years. Domestic sales across passenger vehicles, commercial vehicles, two-wheelers
and three-wheelers reached record levels, supported by improved affordability, reduction
in policy rates, changes in income-tax slabs, GST-related reforms and resilient domestic
demand. As per data released by the Society of Indian Automobile Manufacturers (SIAM), the
strong performance was driven largely by momentum in the second half of the year.
Passenger vehicle sales increased by 7.9 per cent year-on-year to 46.4
lakh units in FY 2025-26, representing the highest-ever annual volumes for the segment.
The increase was supported by tax and interest-rate measures, improved affordability and
stronger consumer sentiment in the second half of the year. Electric passenger vehicle
registrations also recorded healthy growth, reflecting a gradual structural shift towards
alternative powertrains.
The commercial vehicle segment recorded sales of 10.8 lakh units
in FY 2025-26, reflecting growth of 12.6 per cent over the previous year. Demand
was supported by GST-related reforms, fleet operator demand across subsegments, increased
economic activity and public capital expenditure. The reduction in the policy repo rate
also aided market sentiment by easing the cost of financing. Electric light commercial
vehicles witnessed improving acceptance, supported by favourable total cost of ownership
dynamics and rising adoption among organised fleet operators. Electric small commercial
vehicles also recorded early traction from a low base, aided by intra-city logistics
demand.
The tractor and farm equipment segment also recorded strong
growth during FY 2025-26, increasing by 23.5 per cent over the previous year.
Growth in the segment was supported by favourable monsoon conditions, improved rural
sentiment, stronger farm incomes, and the benefit of lower financing costs.
Automotive exports grew by 24 per cent during the year, reflecting
continued global acceptance of Indian automotive products. Passenger vehicle exports
registered their highest-ever levels for the second consecutive year, recording growth of
17.5 per cent over FY 2024-25, while commercial vehicle exports increased by 17.4 per cent
over the previous year.
The outlook for the automotive sector for FY 2026-27 remains
favourable, supported by strong macroeconomic fundamentals and healthy domestic demand. At
the same time, geopolitical developments in West Asia continue to pose risks through their
potential impact on supply chains, vehicle production, commodity prices, freight costs and
broader economic activity. Consequently, an early de-escalation and resolution of the
conflict would be important for sustaining growth momentum in the sector.
Operating & Financial Performance
Against the backdrop of a volatile economy, your Company's overall
performance for the year has been well balanced across growth, asset quality and
profitability. Gross receivables managed by your Company as of March 31, 2026, stood at
`70,137 cr., as against Rs. 60,290 cr., recording a growth of 16.3 per
cent over the previous year. Your Company's disbursements at Rs. 32,321 cr. (PY Rs.
28,405 cr.) have registered a reasonable growth of 13.8 per cent during the year under
review.
During the year, your Company's "AAA" credit rating and
the treasury team's ability to raise resources at competitive rates enabled your
Company to maintain its cost of borrowings at a best-in-class level. Despite competitive
intensity and mix of price-sensitive medium & heavy commercial vehicle segments, your
Company was able to maintain yields through better pricing of risk and improving asset
mix. Consequently, your Company's focus on improving pricing and managing borrowing
costs well has yielded positive results on margin expansion in FY 2025-26.
Collections in the financial system remained a challenge for a
significant part of the year due to macro-economic uncertainties and fragile finances of
some State Governments. However, your Company's consistent and focused efforts
through the year, coupled with improvement in demand, economic activity and sentiments
towards the later part of the year, enabled a notable improvement in the fourth quarter.
Your Company's superior credit standards, strong customer relationships and
systematic collection efforts have enabled it to ensure best-in-class performance on asset
quality in the year in question. Stage 3 assets, Gross and Net of ECL provisions, stood at
1.44 per cent (PY 1.44 per cent) and 0.69 per cent (PY 0.75 per cent) respectively, as at
31st March, 2026.
Your Company maintained disciplined control over operating expenses
during the year under review. The cost-to-income ratio stood at 28.71 per cent as at 31st
March 2026, as compared to 30.80 per cent in the previous year. Prudent management of
operating expenditure continues to remain an area of focus for your Company.
Your Company has been maintaining comfortable liquidity in the form of
liquid investments and undrawn bank limits, to meet its maturing liabilities.
Your Company registered a net profit of Rs. 1,834 cr. compared to Rs.
1,543 cr. in the previous year, a growth of 19 per cent. Profits from core operations
registered a growth of 16 per cent. Your Company's net worth stood at Rs.
12,715 cr., as on 31st March 2026. Capital adequacy (CRAR) at 18.95 per cent
was comfortably higher than the statutory requirement of 15 per cent.
There are no significant changes in key financial ratios of the Company
for FY 2025-26 as compared to FY 2024-25. Your Company's Return on Net Worth as on
31.03.2026 stood at 17.5 per cent as compared to 16.3 per cent as on 31.03.2025. Core
Return on Net Worth, adjusting for investments in Group companies, as on 31.03.2026 stood
at 18.4 per cent as compared to 19 per cent as on 31.03.2025.
RESOURCE MOBILISATION
a) Deposits
During the year, your Company mobilised fresh deposits aggregating to
`929.46 cr. Renewal of deposits during the year amounted to Rs. 2,374.34 cr. representing
78 per cent of the matured deposits of Rs. 3,052.08 cr. Deposits outstanding at the
year-end were at Rs. 6,216.24 cr. as against Rs. 6,094.08 cr. in the previous year.
The net accretion for the financial year was Rs. 122.15 cr. as at 31st March 2026. 2,975
Term Deposit Receipts (TDRs) amounting to Rs. 43.28 cr. had matured for payment and were
due to be claimed or renewed. After close follow-up, these figures are currently at 2,109
and Rs. 21.91 cr. respectively. Continuous efforts are being made to arrange for
repayment or renewal of these deposits. There has been no default in repayment of deposits
or payment of interest thereon during the year.
You will be happy to note that as part of the continued digital
journey, your Company has introduced online fresh deposits for new depositors. Depositors
can also place additional deposits, renew their deposits, initiate payment requests,
furnish Form No. 121, provide instruction for change in address and/or bank details with
necessary supporting documents, through our online customer portal and SF Next mobile
application.
b) Term Funding
During the year, your Company raised term funding from Banks, Mutual
funds, Insurance companies and others in the form of non-convertible debentures and long
term loans to the tune of Rs. 14,840 cr., across varying tenors.
c) Bank Finance
As part of the overall funding plan, your Company's working
capital limits with consortium banks were retained at Rs. 3,500 cr. During the year, your
Company also issued several tranches of commercial paper aggregating to `7,900 cr. The
maximum amount of outstanding commercial papers at any time was Rs. 6,055 cr. and the
amount outstanding at the end of the year was Rs. 3,750 cr.
d) Assets Securitised / Assigned
During the year, your Company raised resources to the extent of Rs.
4,450 cr. through securitisation and assignment of receivables.
CREDIT RATINGS
Your Company's long term credit ratings have been retained at
"AAA" (Highest Degree of Safety) with a "Stable Outlook", by both ICRA
and CRISIL. The short-term borrowings (including commercial paper) are rated
"A1+" by both ICRA and CRISIL.
Fixed Deposits are rated "AAA" (Highest Credit Quality) by
both ICRA and CRISIL.
OUTLOOK
India is expected to remain among the fastest-growing major economies
in FY 2026-27, with real GDP growth projected in the range of 6.5-7.0 per cent, supported
by resilient domestic consumption, sustained public capital expenditure and a gradual
revival in private investment. Inflation is expected to remain within the RBI's
tolerance band, fiscal consolidation is progressing, the banking system remains
well-capitalised, asset quality trends are favourable, and foreign exchange reserves
continue to provide external resilience. Domestic demand drivers are expected to remain
broadly intact, with urban consumption, government-led capital formation and improving
private sector activity supporting growth. Manufacturing and services should continue to
benefit from structural reforms, supply-chain diversification, digital adoption and
formalisation, although input-cost pressures and weaker external demand may moderate
momentum in some sectors.
The near-term outlook, however, remains subject to material external
and supply-side risks. The ongoing conflict in West Asia, together with disruption to
shipping routes and the blockage of the Strait of Hormuz, has heightened uncertainty
around crude oil prices, freight costs and supply chains. These developments could affect
imported inflation, the current account balance, exports, remittance flows and
interest-rate expectations, and may also weigh on cost structures and demand conditions in
certain MSME segments. In addition, adverse weather conditions, including the possibility
of a below-normal monsoon and an El Ni?o event, remain key risks for agricultural output,
rural incomes and food inflation.
Taking these factors into account, the Reserve Bank of India's
Monetary Policy Committee (MPC) has projected real GDP growth for FY 2026-27 at 6.9 per
cent and projected CPI inflation for FY 2026-27 at 4.6 per cent. The outlook remains
subject to downside risks arising from geopolitical escalation, supply disruptions
and adverse weather conditions, and volatility in international energy and commodity
prices.
Overall, the outlook for FY 2026-27 remains one of guarded optimism.
While domestic macroeconomic fundamentals remain supportive, the external environment
continues to warrant close monitoring. The outlook for the sub-segments of the automotive
sector is expected to broadly reflect this macroeconomic context, with growth supported by
domestic demand, but moderated by geopolitical and supply-side risks.
Medium, Heavy and Intermediate Commercial Vehicles (MHICV): The
MHICV industry is expected to grow in the low single digits in FY 2026-27, following the
strong rebound recorded in FY 2025-26. Demand for this segment will remain linked to
economic activity and replacement demand, with relatively stronger traction in tippers and
buses. Infrastructure, mining and railway activity are expected to
continue to support the segment.
Material Handling and Construction Equipment (MHCE): MHCE demand
remains linked to infrastructure
and construction activity. After a contraction of 7 per cent in FY
2025-26, with several equipment segments recording double-digit decline, the industry is
expected to recover in FY 2026-27 and record single digit growth.
Retail Commercial Vehicles (Light & Small Commercial Vehicles):
The Light and Small Commercial Vehicle (L&SCV)
segment is expected to record steady growth in FY 2026-27, supported by
replacement demand, intra-city logistics and essential goods movement. Demand is expected
to remain broad-based across urban, semi-urban and select rural markets, with LCVs likely
to be the principal contributors to overall CV growth.
Passenger Cars & Utility Vehicles (UVs): The passenger car and
utility vehicle market is expected to be supported by steady urban demand and continued
preference for personal mobility. Growth is expected to be supported by improving model
availability, charging infrastructure and operating economics, though pricing, range
confidence and policy clarity remain relevant constraints. The segment is expected to
record moderate growth of mid-single digits in FY 2026-27.
Tractors & Farm Equipment (TFE): The TFE segment is expected to
record modest growth in FY 2026-27, following two successive years of strong 25-30 per
cent growth in
FY 2024-25 & FY 2025-26. Demand is expected to remain supported by
replacement demand, mechanisation and rural
financing. The possibility of an El Ni?o event and below-normal
monsoon forecast remain key risks, particularly for rain-fed regions. Geopolitical
developments may indirectly affect the segment through higher diesel, fertiliser and
logistics costs, with implications for farm profitability and rural demand.
INTERNAL FINANCIAL CONTROLS
The Company has a well-established internal financial control and risk
management framework to ensure the highest standards of integrity and transparency in its
operations and a strong corporate governance structure. Appropriate controls are in place
to ensure:
a) the orderly and efficient conduct of business, including adherence
to policies;
b) safeguarding of assets; c) prevention and detection of
frauds/errors; d) accuracy and completeness of accounting records; and e) timely
preparation of reliable financial information.
Additionally, as part of RBI's Risk Based Internal Audit (RBIA)
requirement, your Company has adopted appropriate policy and operating guidelines. Along
with the Risk Management team and Internal Audit department, the functional and
operational risk control matrices have been designed to ensure that adequate controls as
may be required are in place and operating effectively and efficiently.
RISK MANAGEMENT
Your Company has built a robust risk governance and risk management
framework over the years. The Audit Committee, Risk Management Committee, Asset Liability
Management Committee and IT Strategy Committee review and monitor the risks on a regular
basis.
The risk management process of the Company is underpinned by a strong
and long-standing organisational culture and sound operating procedures involving our
Sundaram values, competencies, internal control culture and effective internal reporting.
Your Company has adopted the ERM Framework, which is based on 3 lines
of defence:
a. First pillar: Function-heads who are the risk owners and responsible
and accountable for assessing, controlling and mitigating risks;
b. Second pillar: Chief Risk Officer and the Risk Management team who
assist through facilitating risk awareness, risk reviews, providing analysis and reports
including creating a proactive forward-looking view to emerging risks;
c. Third pillar: Internal Auditors and Statutory Auditors who provide
assurance to the senior management on risk governance through their assessment of the
adequacy and the effectiveness of internal controls and the monitoring mechanisms.
Your Company has a robust first line of defence in the form of
sensitised and aware functional teams with deep domain expertise. Active operational
engagement on risk management is enabled through two levels of internal teams that review
operational risks on an on-going basis:
i) a Functional Working Group on operational risks comprised of 85
operating executives across the Company and
ii) a Core Working Group on Risk Management comprised of 11 functional
heads of various departments of the Company. These groups are convened by our second line
of defence, the Risk Management department, which ensures meetings on a regular basis to
review status on various risks, anticipate emerging risks and define a proactive action
plan for containing incipient risk.
The internal audit team reviews the processes and controls to ensure
the design effectiveness and to assure adequacy of controls to mitigate risk in line with
the RBI's Risk-based Internal Audit (RBIA) framework. Your Company has
well-documented standard operating procedures and risk control matrices for all processes
to ensure superior control over transaction processing and regulatory compliance.
Periodical review of the same ensures that the risks including technology risks are under
control. This apart, policies are reviewed and approved by the Board and its Committees
that facilitate the review of identification of risks and controls and provide guidance to
manage the risks across business that ensures a sustainable and ethical business
environment, reflected in our risk management process.
The risk management process fulfils the requirement under Section 134
of the Companies Act, 2013 and Regulation 21, read with Schedule II of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015.
Above all, your Company's values and culture that are enshrined in
the Sundaram Way of doing business and the obligations and commitment to our customers,
employees, deposit holders and the community are the foundations on which its risk
framework rests.
A few principal financial risks of your Company have been furnished in
the Notes to the Accounts under Note No. 38, for your information.
INTERNAL AUDIT
Your Company's internal audit department independently provides
the Audit Committee/Board of Directors and the Senior Management a reasonable assurance on
the adequacy and effectiveness of internal controls and the risk management framework of
the Company. The effectiveness and efficiency of the controls, and the design are
regularly measured through process reviews and risk assessment. Your Company has rolled
out Risk Based Internal Audit (RBIA) Policy with effect from 1st April 2022 as required by
the RBI. The internal audit department reports directly to the Audit Committee of the
Board. The Audit Committee regularly reviews the audit
findings as well as the adequacy and effectiveness of the internal
control measures.
Audits are conducted encompassing the branch network and all the
functional areas at Head office in such a manner that it serves as an important tool of
internal control. Additionally, Information Systems audit is carried out by an external
professional firm under direct supervision of the Internal Audit Department. Based on the
recommendations of the Information Systems Auditor, the Company has implemented a number
of control measures both in operational and IT-related areas, apart from information
security related measures.
The quality assurance and improvement programme (QAIP') of
the internal audit function for FY 2025-26 was carried out by an external professional
consultant in accordance with the prescribed RBI Guidelines.
INFORMATION TECHNOLOGY
Your Company recognises Information Technology as a critical pillar for
running and growing its business. Significant investments continue to be made in
strengthening IT infrastructure particularly in the areas of information security and
network capabilities. On the applications front, the Company is investing in solutions
that enhance the efficiency and performance of front-line staff, improve decision-making
through advanced data and analytics, and establish the architectural foundation required
for modernisation of its core systems. During the year, the Company also implemented a
stateofthe-art Human Resource Management System (HRMS) to further strengthen
employee engagement.
Your Company follows a hybrid approach to data centre operations. A
modern on premises Data Centre is complemented by a multi vendor cloud environment
comprising over 500 servers, delivering an uptime exceeding 99.99 per cent. The on
premises Data Centre is certified by TUV Rheinland for compliance with the ISO/IEC
27001:2022 Information Security Management Standard. Together, these facilities support
the technological needs of the Company, its subsidiaries, and its associates.
To ensure resilience, a dedicated Disaster Recovery (DR) site is
maintained in a separate seismic zone, with near real time replication of all critical
applications. Regular DR drills, along with a secure and scalable remote working
infrastructure, ensure operational continuity during disruptions. The Company's Cloud
strategy continues to focus on achieving an optimal balance of opportunity, risk and cost.
Cyber Security remains an area of sustained and proactive focus. A full
time Chief Information Security Officer (CISO) oversees the Company's security
posture, supported by continued investments in strengthening detection, response, and
recovery capabilities. During the year, enhanced tools and processes were implemented to
ensure the reliability, security, and integrity of the Company's systems and data.
The Company operates a 24x7 Security Operations Centre (SOC) for real time threat
monitoring and alerting. Periodic vulnerability assessments and penetration testing are
conducted across applications and infrastructure to validate the effectiveness of
established security controls. The Company also engages regularly with external
consultants and industry experts to validate its transformation initiatives and reinforce
its Information and Cyber Security practices, consistently adopting recognised industry
best practices.
Your Company's in-house technology team brings together deep
expertise across multiple technologies and strong business & domain knowledge to
deliver differentiated digital solutions. Strategic partnerships with select technology
specialists help augment internal capabilities with external expertise. Contemporary
technology and architecture practices now form the core of the Company's digital
capabilities, positioning the Company well to expand and advance its technology landscape.
During the year, the Company implemented a Cloud-based Enterprise Data Platform as the
foundational element of its Systems of Intelligence layer. Machine Learning and Artificial
Intelligence models are increasingly being embedded into business processes, and the
Company continues to develop and refine such models to support diverse business functions.
The Company has also begun piloting the Agentic framework to apply advanced AI
capabilities to real world business use cases.
Working closely with the business functions, the technology team has
implemented several process improvements that have reduced turnaround times, enabled
straight-through processing, and supported timely decision making. These improvements have
been underpinned by reusable digital capabilities, including digitally guided workflows,
enterprise task-management tools, a structured communication framework, and embedded Nano
Learning modules.
As a relationship centric organisation, your Company continues to focus
on creating the right balance of high touch and high tech interactions to deepen customer
and stakeholder engagement. The Company's technology priorities remain centred on
deploying intelligent solutions that enhance customer service and acquisition, improve
employee productivity, reduce cost to serve, expand the use of analytics, and deliver
superior customer experiences across all touchpoints.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements, drawn up in accordance with the
applicable Accounting Standards, form part of the Annual Report as required by the
provisions of Section 129 (3) of the Companies Act, 2013. A separate statement containing
the salient features of the financial statements of the Subsidiaries and Joint Venture in
Form AOC-I forms part of the Annual Report.
The Consolidated profit after tax is Rs. 2,059 cr. as against
Rs. 1,879 cr. in the previous year, a growth of 9.6 per cent year on
year. The total comprehensive income for the year was Rs. 2,134 cr. as against Rs. 2,443
cr. The consolidated net worth for the year stood at Rs. 14,894 cr. as against
` 13,197 cr. in the previous year.
The annual accounts of all the Subsidiaries and Joint Venture have been
posted on your Company's website www.sundaramfinance.in. Detailed
information, including the annual accounts of the Subsidiaries and Joint Venture will be
available for inspection by the members, through a digital platform which would be
provided by the Company. The same will also be made available in physical form to the
members upon request.
SUBSIDIARIES
Sundaram Home Finance Limited
Sundaram Home Finance Limited, during the year approved loans
aggregating to Rs. 6,946 cr. (PY Rs. 6,940 cr.). Disbursements during the year were higher
by 4.5 per cent at Rs. 6,830 cr. (PY Rs. 6,534 cr.). The company earned a gross
income of Rs. 1,868 cr. (PY Rs. 1,597 cr.) and reported a profit after tax at Rs.
281.88 cr.
(PY Rs. 244.66 cr.). The loan portfolio under management as at 31st
March 2026 stood at Rs. 19,909 cr. as against
Rs. 17,428 cr. in the previous year. Gross Stage 3 assets stood at 1.11
per cent (PY 1.02 per cent) and net of ECL provisions stood at 0.51 per cent (PY 0.53 per
cent), as at 31st March, 2026. The Net Stage 3 assets, excluding restructured
assets, stood at 0.46 per cent as at 31st March 2026. The Board of Directors have
recommended a final dividend of Rs. 3.58/- per share (35.77 per cent) for the year ended
31st March 2026. This together with the interim dividend of
Rs. 3.38/- per share (33.83 per cent), would aggregate to a total
dividend of Rs. 6.96/- per share (69.60 per cent).
Sundaram Asset Management Company Limited (On
consolidated basis)
The company, along with its subsidiaries reported a consolidated gross
income of Rs. 581.40 cr. as against
Rs. 515.75 cr. in the previous year. Consolidated Profit after tax was
Rs. 173.60 cr. as compared to Rs. 153.53 cr. during the previous year. The Average Assets
under Management amounted to `82,987 cr. for the year 2025-26 as compared to `76,008 cr.
in the previous year. The company had declared an interim dividend of `8.22/- per share in
the month of January 2026 and has decided to propose a final dividend of `8.34/- per share
with the approval of shareholders for the year FY 2025-26.
Sundaram Trustee Company Limited
Sundaram Trustee Company Limited earned a gross income of Rs. 2.21 cr.,
as against Rs. 3.64 cr., in the previous year and reported a profit after tax of Rs. 1.08
cr. for the year, as against Rs. 2.23 cr. in the previous year. The company recommended a
dividend of Rs. 216/- per share for the year ended 31st March 2026.
LGF Services Limited
During the year, the company reported a gross income of `0.16 cr. as
against `0.19 cr. in the previous year. The profit after tax for the year was `0.09 cr. as
against `0.08 cr. in the previous year. The company recommended a dividend of Rs. 3/- (30
per cent) per share for the year.
Sundaram Fund Services Limited
Sundaram Fund Services Limited earned an income of
`0.08 cr. during the year as against `0.14 cr. in the previous year.
The company reported a profit after tax of `0.05 cr. as against `0.03 cr. in the previous
year.
JOINT VENTURE
Royal Sundaram General Insurance Co. Ltd (Royal Sundaram)
Royal Sundaram reported a Gross Written Premium (GWP) of Rs. 4,638 cr.
as compared to Rs. 4,065 cr. in the previous year, representing a growth of 14.1 per cent.
The company reported a profit after tax (as per IND AS) of Rs. 107 cr. for the current
year as against Rs. 133 cr. in the previous year. The company has paid an interim dividend
of `0.55/- per share during the year and recommended a final dividend of `0.25/- per
share, aggregating a total dividend of `0.80/- per share for FY 2025-26 (PY `0.90/- per
share). The company's solvency ratio as at March 31, 2026 was at 2.21 times (PY 2.20
times) as against the mandated threshold of 1.50 times.
BOARD & AUDIT COMMITTEE
The details regarding number of Board Meetings held during the
financial year and composition of Audit Committee are furnished in the Corporate
Governance Report. The details of all other Committees are also furnished in the Corporate
Governance Report.
DIRECTORS
Mr. Harsha Viji and Mr. Rajiv C. Lochan, Directors, retire by rotation
and being eligible, offer themselves for re-election.
KEY MANAGERIAL PERSONNEL
During the year under review, the shareholders of the Company approved
the re-appointment of the Whole-time Directors in the following manner:
| Name |
Designation |
Effective |
Term |
|
|
Date |
|
| Mr. Harsha Viji |
Executive |
01.04.2026 |
5 years |
|
Vice Chairman |
|
|
| Mr. Rajiv C. Lochan |
Managing |
01.04.2026 |
5 years |
|
Director |
|
|
| Mr. A. N. Raju |
Joint Managing |
01.04.2026 |
4 years |
|
Director |
|
|
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of the
Company under Section 149 (7) of the Companies Act, 2013 that they meet with the criteria
of their Independence laid down in Section 149 (6).
ANNUAL EVALUATION BY THE BOARD
The Board has made a formal evaluation of its own performance and that of its
committees and individual Directors as required under Section 134(3)(p) of the Companies
Act, 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to material
departures;
2. The Company has selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for that period;
3. Proper and sufficient care has been exercised for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
4. The annual accounts have been prepared on a going concern basis;
5. Adequate internal financial controls have been put in place and they
are operating effectively; and
6. Proper systems have been devised to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
effectively.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai (Regn. No.
000511S) and M/s R.G.N Price & Co., Chartered
Accountants, Chennai (Regn. No. 002785S), have been appointed as Joint
Statutory Auditors of your Company, to hold office for a term of three (3) consecutive
years from the conclusion of the 71st Annual General Meeting to the conclusion of the 74th
Annual General Meeting, in accordance with the Guidelines for Appointment of Statutory
Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs),
UCBs and NBFCs (including HFCs) issued by the Reserve Bank of India vide their
notification dated 27th April 2021 (RBI Guidelines), at such remuneration as may be
mutually agreed to between the Board of Directors of the Company and the Joint Statutory
Auditors.
ACKNOWLEDGEMENT
Your Directors gratefully acknowledge the support and cooperation
extended to your Company by all its customers, depositors, shareholders, and bankers, as
also the various mutual funds, insurance companies, automotive manufacturers and dealers,
oil marketing companies and other stakeholders.
Your Directors also place on record their special appreciation of Team
Sundaram for its dedication and commitment in delivering the highest quality of service to
every one of our valued customers.
|
For and on behalf of the Board |
| Chennai 600 002 |
S. VIJI |
| 25.05.2026 |
Chairman |
|