Ceat Financial In Parleys For $10m Term Loan

Only months after being granted a $20 million term-loan by the Washington-based International Finance Corporation, Ceat Financial Services is in advanced negotiations with a leading European multilateral agency for yet another $10 million term-loan to expand its hire purchase and leasing business. Though nothing has been decided as yet, sources say the company is in talks with a Netherlands-based institution. "Discussions are on and we hope to come to a decision in a few months," a Ceat Financial executive said.

The board of directors of Ceat Financial Services, part of the Rs-6,000 crore RPG Enterprises, yesterday met to approve the audited results for the year ended March 31, 1997 and has recommended a dividend of 31 per cent.

 

Though the company's turnover increased 44.77 per cent to Rs 156.32 crore during the financial year 1996-97 against Rs 107.98 crore in the previous year, net profit dipped 7.89 per cent to Rs 18.56 crore (against Rs 20.15 crore). Net profit during the year under review declined as a result of MAT which absorbed Rs 2.75 crore against nil in the previous year', said S A Krishnan, chief executive officer, Ceat Financial Services. While profit before depreciation and tax stood at Rs 58.92 crore, indicating a jump of 47 per cent from Rs 47.08 crore in 1995-96, profit before tax was up by a paltry 5.76 per cent to Rs 21.31 crore on an equity capital of Rs 27.7 crore.

During the year under review, the company's public deposits rose from Rs 198 crore to Rs 345 crore and has been rated 'A' by CARE, indicating high safety and offers a mix of high return and flexibility. The total net worth of Ceat Financial Services is pegged at Rs 91 crore and the current asset base is over Rs 550 crore.

The company, which offers a range of services comprising corporate finance, office equipment finance, investment and merchant banking, stock broking, forex advisory, treasury management and container leasing, has decided to lay emphasis on the retail office credit segment through its branded product 'Ceat Office Credit' to finance office equipment. The company also commenced money market operations and has been among the few non-banking finance companies to be accredited as a satellite dealer by the RBI.

Ceat Financial Services has entered into an agreement with Japanese major Itochu, the third largest corporation in the world and global leaders in leasing and hire purchase, to make a foray into hire purchase of automobiles and textile equipment and other capital goods.

The joint venture company, RPG Itochu Finance, in which CFCL holds 50 per cent stake, has an equity base of Rs 30 crore.