Sakthi Finance is fundamentally a lender that finances pre-owned commercial vehicles - not new ones - for small truck operators and businesses across South India. Incorporated in 1955 and registered with the Reserve Bank of India as a deposit-taking NBFC since 1998, the company has spent decades building a focused niche in an asset class where credit assessment depends less on paperwork and more on physical inspection and local knowledge. The recurring approach is to fund its lending by raising retail deposits and issuing debentures, then deploy that capital into hire-purchase loans secured against the vehicles themselves, earning a spread between what it pays for funds and what it charges borrowers. # Business segments A single lending engine, funded by a deposit-and-debenture liability franchise and supplemented by a small wind-power sideline - one core business, two supporting capabilities. ## 1. Pre-owned commercial vehicle financing: the core lending book **The company makes almost all its money by lending against used trucks, buses and construction equipment, secured by the vehicle itself and repaid from the borrower's freight earnings.** - **Only pre-owned, never new** - the company exclusively finances pre-owned commercial vehicles, a deliberate choice that avoids competing with banks and captive finance arms on new-vehicle loans and instead serves buyers who need a smaller ticket size or lack formal credit histories. - **The vehicle is the collateral** - every loan is a hire-purchase agreement secured by the tangible asset being financed; if a borrower defaults, the company physically repossesses the vehicle, sells it to recover dues, and returns any surplus to the customer. - **South India footprint** - the loan book is geographically concentrated, with Tamil Nadu and Puducherry alone accounting for roughly ₹92,271 lakh of the net stock on hire as of March 2021, followed by Kerala, Karnataka and Andhra Pradesh, giving the company deep local familiarity with its borrower base. - **Credit judged on the ground, not on paper** - the credit appraisal process relies on physical verification and field visits rather than automated bureau scores, and a three-stage expected credit loss model tracks every loan from performing (0-30 days past due) to credit-impaired (more than 90 days past due) so provisions build early. - **Spread plus fees** - income comes mainly from the interest spread between what the company earns on loans and what it pays on deposits and debentures, supplemented by service charges, cheque-bouncing fees and foreclosure charges that are recognised only when actually received. ## 2. Deposit and debenture franchise: the funding engine **The company funds its loan book by gathering retail public deposits and repeatedly tapping the bond market through secured non-convertible debentures - a liability structure that turns savers' money into vehicle loans.** - **Public deposits as a stable base** - as a deposit-taking NBFC, the company accepts public deposits, which stood at ₹18,336.79 lakh as of March 2025, and backs them with a floating charge on statutory liquid assets held with a trustee. - **Preference shares for equity cushion** - to strengthen its capital adequacy ratio, the company issues redeemable cumulative preference shares on a private placement basis, raising ₹7.66 crore in the quarter ended September 2025 alone, with a redemption period of up to 20 years. ## 3. Windmill power generation: a small non-lending sideline **The company owns windmills that sell electricity to state grids under long-term purchase agreements - a legacy asset that contributes a minor, predictable income stream unrelated to lending.** - **Sold to the grid** - power is generated and supplied to State Electricity Boards under Power Purchase Agreements, with income recognised on delivery to the grid, making the revenue stream contractual and independent of the financing cycle. - **Long-life asset** - the windmill plant is classified with a useful life of 22 years and carried a net book value of ₹1,301.68 lakh as of March 2021, so it generates returns over decades with minimal ongoing intervention. # Group structure and partners **The company is a promoter-led NBFC with no subsidiaries as of December 2025, but with deep family and business ties to the Sakthi group, particularly Sakthi Sugars.** - **No subsidiaries currently** - as of 31 December 2025, the company has no subsidiary, associate or joint venture, though earlier years show it had entities such as Sakthifinance Commercial Vehicle and Infrastructure Limited and Sakthi Finance Financial Services Ltd. - **Promoter family at the helm** - the Chairman, Dr M Manickam, and the Vice Chairman and Managing Director, Sri M Balasubramaniam, are brothers, and the latter also serves as Managing Director of Sakthi Sugars Limited, creating a direct link to the wider industrial group. - **Related-party ecosystem** - the company transacts with several group entities including ABT Finance Ltd, Sakthi Financial Services Cochin Pvt Ltd and ARC Retreading Company Pvt Ltd, with all related-party deals governed by a materiality threshold of ten per cent of annual turnover and prior Audit Committee approval.