Issue Details
Issue – Non Convertible Debentures aggregating INR 5.00 Billion, with an option to retain over subscription, of INR 10.00 Billion.
Security – First pari-passu charge on the receivable of the Company and an identified immovable property (100% asset cover for the value of NCDs)
Rating- LAA+ by ICRA and CARE AA+ by CARE
Schedule – Issue opened on February 2 and closes on February 24, 2009
Options – Various investment options available with monthly, quarterly, annual and cumulative interest payment options with coupon ranging from 11% to 12% per annum.
Tenor/Redemption – 60 Months
Put/Call Option – 36/42 months
Background
Tata Capital Limited (TCL) is a diversified financial services company providing services (either directly or through its subsidiaries) to retail, corporate and institutional clients in the areas of retail finance, corporate finance, investment banking, retail broking and distribution, wealth management and private equity. The company was incorporated in year 1991, however actively commenced business operations since September 2007.
TCL is a wholly owned subsidiary of Tata Sons Limited, the apex Tata Company. The company has its headquarters in Mumbai and operates 2 regional offices and 32 branches in 22 cities in India. In addition, the company has a subsidiary in Singapore and is in process of obtaining approvals for setting up a subsidiary in London.
The activities of the company are primarily divided into Fund based business viz. Retail Finance, SME Finance, Infrastructure Finance, Housing Finance and Corporate Finance and Fee based business viz. Private Equity, Wealth Management, Treasury Advisory, Investment Banking, Merchant Banking, Retail Broking & Distribution, Depository Services, etc.
Most of the fee based businesses of the company have been commenced recently and presently the fund based business constitutes the majority of the business and revenue of the company.
TCL was incorporated in year 1991 and was registered with RBI in 1999 as a Non Banking Financial Company to carry on the business of NBFC.
Management
Mr. Praveen P. Kadle is the Managing Director and the Chief Executive Officer of the Company. He is an honours graduate in commerce and accountancy from the Bombay University and is a member of the Institute of Chartered Accountants of India, Cost and Works Accountants of India and the Company Secretaries of India.
Mr. Kadle has been working for the Tatas for the last 17 years. For the first five years, he was the Chief Financial Officer of the Joint Venture of the Tatas with IBM in India. Thereafter, he joined Tata Motors Limited as Vice President (Finance) and in the year 2001 was promoted to the Board of Directors of Tata Motors Limited as Executive Director (Finance & Corporate Affairs). Prior to his joining the Tatas, Mr. Kadle was the Chief Executive Officer and member of the Board of Directors of Garware- Wall Ropes Limited.
Mr. Kadle is a member of the Board of Directors of various Tata companies. Mr. Kadle has received a number of awards in recognition of his outstanding contribution to Tata Motors Limited, which are : CNBC-TV18, the Country’s best performing CFO in the Auto and Ancillaries sector for 2006; ‘The Best CFO of the year 2005’ in India by Business Today; the ‘CFO of the year 2004’ by IMA (formerly known as Economist Intelligence Unit).
Other directors of the company include Mr. H N Sinor, Mr. Janki Ballabh (Independent Directors) and Mr. Farrokh K Kavarana, Mr. Ishaat Hussain and Mr. F N Subedar (Non Executive Directors).
Promoter
Tata Capital Limited has been promoted by Tata Sons Limited. Tata Sons Limited was incorporated as a private limited company under the Indian Companies Act, 1913 on November 8, 1917. Tata Sons Limited is the principal investment holding company of Tatas with significant holdings in the share capital of major operating companies of which it is Promoter. Amongst its subsidiaries, Tata Consultancy Services Limited (“TCS”), Tata Investment Corporation Limited (TICL) and Tata Teleservices (Maharashtra) Limited are listed on the stock exchanges. Currently Tata Sons Limited has 113 subsidiaries (various Tata Group companies).
Issue Ratings
The issue has been rated LAA+ by ICRA and CARE AA+ by CARE.
Conclusion
Tata Capital Limited is a new entrant in the financial services industry. While the company boasts of trusted TATA brand, experienced management and a broad spectrum of fund based and fee based services; the prevailing economic scenario poses significant challenges for growth in short to medium term. TCL has actively started its operations since September 2007 only; thus there is little historical performance to comment upon.
The main comfort in the present issue emanates from the strong parentage of the company (100% subsidiary of Tata Sons Limited), trusted TATA brand, diversified product mix, and significant opportunities of leveraging the synergies with other Tata Group companies by financing various participants in the supply chain as well as some of the end products. The strong parentage provides adequate comfort of the Company to remain adequately capitalized and to refinance its debt.
Though the company is yet to make a strong foothold in the competitive financial services industry; given the intrinsic strengths discussed above, the present issue provides good long term investment opportunity with attractive (upto 12% annualized) returns.
Source: Issue Prospectus, Website of the Company, etc.
Disclaimer
This material is for the general information of the authorized recipient, and we are not soliciting any action based upon it.
It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. You are advised to independently evaluate the investments and strategies discussed herein and also seek the advice of your financial adviser.
This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Any opinions expressed here in reflect judgments at this date and are subject to change without notice.
Issue – Non Convertible Debentures aggregating INR 5.00 Billion, with an option to retain over subscription, of INR 10.00 Billion.
Security – First pari-passu charge on the receivable of the Company and an identified immovable property (100% asset cover for the value of NCDs)
Rating- LAA+ by ICRA and CARE AA+ by CARE
Schedule – Issue opened on February 2 and closes on February 24, 2009
Options – Various investment options available with monthly, quarterly, annual and cumulative interest payment options with coupon ranging from 11% to 12% per annum.
Tenor/Redemption – 60 Months
Put/Call Option – 36/42 months
Background
Tata Capital Limited (TCL) is a diversified financial services company providing services (either directly or through its subsidiaries) to retail, corporate and institutional clients in the areas of retail finance, corporate finance, investment banking, retail broking and distribution, wealth management and private equity. The company was incorporated in year 1991, however actively commenced business operations since September 2007.
TCL is a wholly owned subsidiary of Tata Sons Limited, the apex Tata Company. The company has its headquarters in Mumbai and operates 2 regional offices and 32 branches in 22 cities in India. In addition, the company has a subsidiary in Singapore and is in process of obtaining approvals for setting up a subsidiary in London.
The activities of the company are primarily divided into Fund based business viz. Retail Finance, SME Finance, Infrastructure Finance, Housing Finance and Corporate Finance and Fee based business viz. Private Equity, Wealth Management, Treasury Advisory, Investment Banking, Merchant Banking, Retail Broking & Distribution, Depository Services, etc.
Most of the fee based businesses of the company have been commenced recently and presently the fund based business constitutes the majority of the business and revenue of the company.
TCL was incorporated in year 1991 and was registered with RBI in 1999 as a Non Banking Financial Company to carry on the business of NBFC.
Management
Mr. Praveen P. Kadle is the Managing Director and the Chief Executive Officer of the Company. He is an honours graduate in commerce and accountancy from the Bombay University and is a member of the Institute of Chartered Accountants of India, Cost and Works Accountants of India and the Company Secretaries of India.
Mr. Kadle has been working for the Tatas for the last 17 years. For the first five years, he was the Chief Financial Officer of the Joint Venture of the Tatas with IBM in India. Thereafter, he joined Tata Motors Limited as Vice President (Finance) and in the year 2001 was promoted to the Board of Directors of Tata Motors Limited as Executive Director (Finance & Corporate Affairs). Prior to his joining the Tatas, Mr. Kadle was the Chief Executive Officer and member of the Board of Directors of Garware- Wall Ropes Limited.
Mr. Kadle is a member of the Board of Directors of various Tata companies. Mr. Kadle has received a number of awards in recognition of his outstanding contribution to Tata Motors Limited, which are : CNBC-TV18, the Country’s best performing CFO in the Auto and Ancillaries sector for 2006; ‘The Best CFO of the year 2005’ in India by Business Today; the ‘CFO of the year 2004’ by IMA (formerly known as Economist Intelligence Unit).
Other directors of the company include Mr. H N Sinor, Mr. Janki Ballabh (Independent Directors) and Mr. Farrokh K Kavarana, Mr. Ishaat Hussain and Mr. F N Subedar (Non Executive Directors).
Promoter
Tata Capital Limited has been promoted by Tata Sons Limited. Tata Sons Limited was incorporated as a private limited company under the Indian Companies Act, 1913 on November 8, 1917. Tata Sons Limited is the principal investment holding company of Tatas with significant holdings in the share capital of major operating companies of which it is Promoter. Amongst its subsidiaries, Tata Consultancy Services Limited (“TCS”), Tata Investment Corporation Limited (TICL) and Tata Teleservices (Maharashtra) Limited are listed on the stock exchanges. Currently Tata Sons Limited has 113 subsidiaries (various Tata Group companies).
Issue Ratings
The issue has been rated LAA+ by ICRA and CARE AA+ by CARE.
Conclusion
Tata Capital Limited is a new entrant in the financial services industry. While the company boasts of trusted TATA brand, experienced management and a broad spectrum of fund based and fee based services; the prevailing economic scenario poses significant challenges for growth in short to medium term. TCL has actively started its operations since September 2007 only; thus there is little historical performance to comment upon.
The main comfort in the present issue emanates from the strong parentage of the company (100% subsidiary of Tata Sons Limited), trusted TATA brand, diversified product mix, and significant opportunities of leveraging the synergies with other Tata Group companies by financing various participants in the supply chain as well as some of the end products. The strong parentage provides adequate comfort of the Company to remain adequately capitalized and to refinance its debt.
Though the company is yet to make a strong foothold in the competitive financial services industry; given the intrinsic strengths discussed above, the present issue provides good long term investment opportunity with attractive (upto 12% annualized) returns.
Source: Issue Prospectus, Website of the Company, etc.
Disclaimer
This material is for the general information of the authorized recipient, and we are not soliciting any action based upon it.
It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. You are advised to independently evaluate the investments and strategies discussed herein and also seek the advice of your financial adviser.
This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Any opinions expressed here in reflect judgments at this date and are subject to change without notice.
