Promoters to infuse Rs 300 cr in Bajaj Finance by March

The promoters of Bajaj Finance plan to infuse about Rs 300 crore this quarter to beef up the company’s Tier-I capital. After infusing Rs 96 crore in September 2010, the non-banking financial company plans to make its core capital stronger.

“We will be looking to increase our Tier-I capital by 60 to 70 basis points in the last quarter of this financial year. Apart from increasing it through internal accruals, the promoters would also bring in Rs 300 crore,” chief executive Rajeev Jain told Business Standard. The funds would be infused by way of preferential allotment of warrants, he added. In September 2010, the promoters had infused Rs 96 crore against the total target of Rs 400 crore.

As on December 31, the company’s capital adequacy ratio was 17.3 per cent.

Bajaj Finance had allotted 600,000 warrants to its promoter, Bajaj Finserv, on July 28. “An amount equivalent to 25 per cent of the issue price has been received from Bajaj Finserv, which now entitles it to apply for an equivalent number of equity shares on payment of the balance 75 per cent of the issue price within 18 months from the date of allotment of warrants," Bajaj Finance had said in an announcement. As a result of the capital infusion, promoters’ shareholding in the company is set to rise.

The company would also raise around Rs 350 crore in 2013 through a qualified institutional placement.

The company reported 58 per cent growth in net profit at Rs 120 crore for the quarter ended December 31, compared with Rs 76 crore during the same quarter in 2010-11. The rise was aided by higher loan disbursements and higher total income. Loans disbursed rose 68 per cent to Rs 4,649 crore from Rs 2,774 crore, while assets under management rose 74 per cent to Rs 11,919 crore.

"Strong consumer demand, especially for consumer durables and two wheelers, has been the main reason for higher loan disbursals," said Jain. The demand remained strong, despite the high interest rate environment, he added.

Asset quality also improved, as net non-performing assets declined to 0.25 per cent, against 1.1 per cent. The provision coverage ratio increased from 77 per cent to 81 per cent.

The holding company, Bajaj Finserv, recorded a net profit of Rs 170 crore, a growth of 59 per cent from Rs 107 crore, owing to robust performances by the non-banking financial company and general insurance units. Bajaj Allianz General Insurance's net profit rose 71 per cent to Rs 60 crore. However, the life insurance arm’s net profit fell from Rs 300 crore to Rs 283 crore, owing to low premium collections.