Cholamandalam Investment to raise Rs 300 cr through private placement

Cholamandalam Investment and Finance Company Ltd is planning to raise around Rs 300 crore through private placement, including through a qualified institutions placement. The proposed fund-raising is to increase tier I capital to meet the proposed regulatory requirements.

In an announcement to the BSE, the company said that the board of directors of the company, at its meeting held on December 27, 2012, has approved raising capital up to Rs 300 crore by an issue of securities in one or more tranches, through private placement.

Company sources said that the fund-raising would help the company’s future growth and also meet Usha Thorat’s Committee’s recommendations, if it comes into effect.

It may be noted, Director of Centre for Advanced Financial Research and Learning (CAFRAL) Usha Thorat-led committee has recommended increasing the tier I capital of non-banking financial companies to 12 per cent so as to reduce their risk to sensitive sectors.

CIFCL has reported a 75 per cent growth in net profit during the second quarter-ended September 30, 2012, at Rs 69.70 crore as against Rs 39.73 crore, a year ago.

Selvan attributed the growth to the growth in asset book in the last one year, high interest cost which was brought down and also less tax provision compared to last year.

The company’s total income rose to Rs 605.12 crore from Rs 412.80 crore in second quarter of 2011-12, registering a growth of 47 per cent. The growth was mainly due to vehicle finance which rose 41 per cent to Rs 2,142 crore from Rs 1,700 crore and the growth in home equity to Rs 500 crore from Rs 342 crore. The company’s interest income was also high during the quarter, said a company source.