Rbi Scrutinises Ceat Fin Rights

The Reserve Bank of India (RBI) has conducted an enquiry into the Ceat Financial Services Ltd's (CFSL) forthcoming rights issue.

The non-banking finance company of the RPG group is expected to float the issue by May, while the shareholders' approval for increasing the authorised capital would be secured by the company at its ym general meeting in March. CFSL has given its assurance to the apex bank that the funds would be utilised for repaying the deposits and that the RPG group might pick up the unsubscribed rights. RBI had sought details of the rights issue from the company in the interest of the depositors as CFSL has been going through a troubled phase for quite some time.

 

It has given its assurance to all their depositors as well that their repayment would be made two months after the date of maturity. The company has proposed a rights issue on the basis of four shares of every one share held.Infusion of funds into CFSL has become necessary as it has been facing a difficult situation owing to funds crunch. For the 18-month period, ended September 30, 1999, the company's operating loss before making provisions was Rs 17.47 crore against a total income of Rs 204.46 crore. The RPG group has about 60 per cent stake in CFSL. The company intends to bring down its deposit liability and non performing assets.

CFSL has stopped collecting deposits following directions from the RBI. Registered with the RBI, the existing lines of business of the non banking finance company of the group are office machinery financing, container leasing and infrastructure financing.