Rpg Bails Out Rights Issue Of Ceat Financial Services

The Rama Prasad Goenka group has brought in the entire Rs 111 crore by way of advance against Ceat Financial Services (CFSL) to pre-empt the flopping of the 1:4 rights offer of the loss-making finance company.

The promoters' contribution, which exceeds the required amount to fund their entitlement of the rights offer, will substantially increase their stake in the finance company from the existing level of 60 per cent.

Due to the trying times that the company has been passing through and the stringent provisioning made for doubtful and irrecoverable debts, the decision to re-capitalised CFSL by way of rights issue was taken.

 

The company, which is in the process of a major restructuring of its operations as well as its equity capital, aims at returning to the black in the next financial year. The finance company has a fiscal of October_September . CFSL has already tied up with a group company for developing an e-commerce portal in debt market instruments, an area of its specialization. The firm has decided to begin distribution of various financial products namely mutual funds and insurance products shortly. Alongside, the company having a net loss of Rs 46.75 crore in the first half of the current financial year ended March 2000, has already discontinued its activities of merchant banking, foreign exchange advisory and management services and equity research. The company has also stopped taking fresh deposits.