Sundaram Home Finance keen on e-approval model

Not only did he assume charge from his home on April 1 of this year, the MD was forced by circumstances to rethink, redeploy and re-energise the workforce, redrawing the plans for the present and the future. In an interaction with DTNext, he narrates the story so far.

Early phase as MD: On March 24, when the lockdown was announced, no one anticipated the scale of the pandemic. Our initial expectations of it lasting for about 3-4 weeks, went awry. Our first response to the lockdown was to focus on ensuring employees’ safety while simultaneously trying to have the business continuity in place. Throughout the lockdown period, we have had an ongoing and continuous communication programme through video ‘Town Hall’ meetings, sharing updates and the plans with the employees.

Green Shoots in realty: As the sequential unlocking happened, we began to witness a bit of activity in the real estate space and in the last month or so have been seeing green shoots in this segment. Enquiries in sub-Rs 60 lakh segment has been quite encouraging, reaching the Jan-Feb levels. But, one should remember the 12-18 months leading up to the lockdown witnessed a severe realty slowdown. And there were a lot of headwinds for the sector, as a whole. Issues plaguing the industry, multiplied. Against that backdrop, for the industry to recover to the Jan/Feb levels is a positive sign. While the salaried segment is the first off the block in terms of a comeback and the demand for bigger gated community is also up, high-ticket investment is still not happening. Buyers seem to still be waiting for the ‘good deal’ in the high-end premium segment as they weigh options against other investment avenues. Also, the gestation period between enquiries and sales is increasing for the larger properties.

Redeploying resources: We are at around 50% of the pre-COVID levels in terms of disbursements. We had planned for growth to be stagnant in the initial lockdown phase, and hence the focus was on 

collections. We moved key sales personnel into recovery operations, thereby marshalling our resources. This redeployment strategy has worked well for us since April, leading to fairly successful outcomes.

Growth target: Our objective is not to chase topline but profitable growth. Our focus is clearly on recovery with the pulse on maintaining a strong portfolio. While we achieved around Rs 2,100 cr disbursements last year, given the lockdown (full and partial) in the H1 of the year, our target is to achieve disbursements of around Rs 1,500 cr this year. Enquiries are increasing from NRI returnees in Kerala. But that picture is still hazy and we have to wait and see as to how this pans out.

Investment in digitisation: We are investing in a digital approval process and hope to launch phase 1 by December. We are looking at a paperless approval process, wherever possible. We will also look at 

digitising the technical processes in the next phase, leveraging Sundaram Finance’s distribution arm’s national presence. While we are not planning to open new branches this year, we will work closely with Sundaram Direct, the distribution arm of SF. They have around 500 branches, including in markets where we are not present. They source home loans for us and we hope to leverage their presence even more this year.

Disbursement trends in first six months: We continue to look at portfolio acquisitions. A key noticeable trend this year is the shift to tier 2 towns in terms of disbursements. There is a perceptible change in the contribution from tier 2 cities. Self-construction houses and smaller-sized apartments are on the rise in these locations. Mysuru, Hassan, Mangaluru, Namakkal, Pollachi, Mettupalayam and such places have made good contributions to the disbursements this year compared to what they did last year. Ticket sizes are around Rs 25 lakh, which is in line with our philosophy of going retail and spreading our risks.

Fundraising: In the first six months of the year, using the current interest rate regime, we raised funds to the extent of around Rs 2,500 cr. We plan to raise another Rs 2,000 cr in the next six months to manage the asset liability mismatch and rejig the liabilities book, to stay relevant. Also, financing old age homes could be the next wave, a significant development waiting to happen in the post-COVID era.