Tata Capital Financial Services to raise raise Rs 3,000 cr via debentures

NBFC arm of Tata group had assets under management of about Rs 21,000 cr at the end of March 2014

Taking benefit of falling bond yields, Tata Capital Financial Services Ltd (TCFSL) is planning to raise about Rs 3, 000 crore non-convertible debentures to support business growth. 

Predominantly, its asset book consists of wholesale finacning. The unlisted Non banking finance company (NBFC) of Tata group, had assets under management of about Rs 21,000 crore at the end of March 2014.

Rating agency ICRA has assigned "AA" rating to proposed bond offering. 

Untill recently NBFCs were predominently using bank credit lines to meet funding needs. Now after softening of yields on bonds, finance companies have changed strategies to raise funds from market to take advantage of lower interest rate on debt instrument.

The base rate, minimum rate at which banks lend money, of most banks hovers between 10.0-10.25%. 

The yield on corporate bonds are ruling in the region of 8.25.8.50, much below minimum rate at which bank lend to top rated borrowers.

TCFSL's principal business segments include auto finance for non-Tata vehicles, loan against property, unsecured retail finance, construction equipment finance, project finance, and, term loan and working capital finance. The company operates from 110 branches.

For 2013-14, TCFSL reported net profit of Rs 172 crore on total income of Rs 1, 093 crore. For Fy 13 its net profit sttod at Rs 276 crore on total income of Rs 1, 061 crore, ICRA said.