Cholamandalam Investment and Finance Company Limited NCD

Cholamandalam Investment and Finance Company Limited (CIFCL) is set to rise to Rs 1,000 crore in its inaugural public offering of secured, rated, listed redeemable non-convertible debentures (NCDs). Arulselvan D, President and CFO of the company, stated that with assets under management surpassing INR 1 lakh crore in December 2022, CIFCL seeks to expand its borrowing options by reaching out to retail investors. Currently, bank term loans makeup 57% of the NBFCs total borrowings, while debentures account for 16%, securitization for 10% and other sources for the remaining portion. Arulselvan projects that the proportion of borrowings via debenture issuances to retail investors will rise to 10% over time.

The NCDs, each with a face value of Rs 1,000, are available with tenor choices of 22 months, 37 months, and 60 months, offering annual and cumulative payment options across six series. The minimum application size is Rs 10,000 (i.e., 10 NCDs), with subsequent increments of Rs 1,000 (i.e., 1 NCD).

The effective yield (per annum) for NCD holders across all investor categories ranges from 8.25% to 8.40% per annum, as stated by the Chennai-based non-banking finance company. The base issue size is INR 500 crore, with the option to retain any oversubscription up to Rs 500 crore. The NCD issue will be open from April 25, 2023, to May 9, 2023, with the possibility of early closure.

About Company

Established in 1978, Cholamandalam Investment and Finance Co. Ltd. (CIFCL) serves as the financial services division of the Murugappa Group, which boasts a history of over 122 years. CIFCL, an NBFC-ICC, initially began as an equipment financing company. It has since broadened its scope to provide vehicle finance, loans against property, home loans, loans for small and medium-sized enterprises (SMEs), consumer and consumer and small enterprise loans, as well as secured business and personal loans.

The company also delivers stockbroking and various other financial services to clients through its subsidiaries. As of December 31, 2022, CIFCL had an active customer base of 22.70 lakh across India, with 1,166 branches spanning 29 states and union territories. As of December 2022, the company employed 13,277 individuals.

CIFCL has capitalized on its expertise and experience in the vehicle finance sector, as well as its relationships with original equipment manufacturers (OEMs) and dealers, to expand its operations and extend its network. Furthermore, as part of the Murugappa Group, CIFCL has reaped substantial benefits by leveraging the group’s brand and existing clientele.

Issue Details

CIFCL is launching its inaugural Tranche-I debt issue to raise an aggregate sum of Rs 1,000 crore. The secured NCD issue has a base size of INR 500 crore and includes a green shoe option for retaining oversubscription up to Rs 500 crore, with a shelf limit of Rs 5,000 crore. The company is set to issue secured, redeemable non-convertible debentures, each with a face value of Rs 1,000. Applications require a minimum of 10 NCDs (i.e., Rs 10,000) and increments of 1 NCD (i.e., Rs 1,000) after that. The subscription window will be opening on April 25, 2023, and will be closing on or before May 9, 2023. The NCDs will be listed on both BSE and NSE.

The company will allocate INR 8.92 crore for this INR 1,000 crore NCD issue. About the net proceeds, a minimum of 75% will be designated for onward lending, financing, and repaying existing borrowings, while up to 25% will be reserved for general corporate purposes.

The issue is segmented into four categories: a) 20% for institutional investors, b) 25% for non-institutional investors, c) 25% for high-net-worth individuals (HNIs), and d) 30% for retail investors. A K Capital Services Ltd. is the sole lead manager for the issue, while KFin Technologies Ltd. is the registrar. IDBI Trusteeship Services Ltd. acts as the debenture trustee.

The NCD issue offers tenors of 22 months, 37 months, and 60 months, with coupon rates ranging from 8.25% to 8.40%. Investors can choose between annual or cumulative interest payment options based on their preferred series. Allotments will be made in demat form and follow a “first come, first served” approach.

Financial Performance (In Crore)

Period Ended	Total Assets	Total Revenue	Profit After Tax
31-Mar-18	44,089.73	5,479.66	918.30
31-Mar-19	57,490.12	7,108.83	1,196.94
31-Mar-20	64,058.38	8,712.63	1,053.72
31-Mar-21	74,644.16	9,639.72	1,521.39
31-Mar-22	82,478.68	10,231.81	2,158.89

Important Dates

Issue Open	Apr 25, 2023 – May 9, 2023
Security Name	Cholamandalam Investment and Finance Company Limited
Security Type	Secured, Redeemable, Non-Convertible Debentures (Secured NCDs)
Issue Size (Base)	Rs 500.00 Crores
Issue Size (Shelf)	Rs 5,000.00 Crores
Issue Price	Rs 1000 per NCD
Face Value	Rs 1000 each NCD
Minimum Lot size	10 NCD
Market Lot	1 NCD
Listing At	BSE, NSE
Credit Rating	ICRA AA+ (Stable) by ICRA Limited and IND AA+ (Stable) by India Ratings & Research Private Limited
Tenor	22, 37 and 60 months
Series	Series I to VI
Payment Frequency	Annually and Cumulative
Basis of Allotment	First Come First Serve Basis
Debenture Trusties	Idbi Trusteeship Services Ltd.

Coupon Rates

#	Series 1	Series 2	Series 3	Series 4	Series 5	Series 6
Frequency of Interest Payment	Annual	Cumulative	Annual	Cumulative	Annual	Cumulative
Nature	Secured	Secured	Secured	Secured	Secured	Secured
Tenor	22 Months	22 Months	37 Months	37 Months	60 Months	60 Months
Coupon (% per Annum)	8.25%	NA	8.30%	NA	8.40%	NA
Effective Yield (% per Annum)	8.26%	8.25%	8.30%	8.30%	8.39%	8.40%
Amount on Maturity (In Rs)	Rs 1,000.00	Rs 1,156.64	Rs 1,000.00	Rs 1,279.15	Rs 1,000.00	Rs 1,497.40

NCD Rating

This debt offering is rated IND AA+ / Stable by India Ratings and Research Pvt. Ltd. and ICRA AA+ / Stable by ICRA Ltd. 

Company Promoters

The promoters of Cholamandalam Financial Holdings Limited include Ambadi Investments Limited, M V Subbiah, M A Alagappan, A Vellayan, A Venkatachalam, M M Murugappan, M M Venkatachalam, M A M Arunachalam, S Vellayan, Arun Alagappan, M M Veerappan, V Narayanan, V Arunachalam, M M Muthiah, M V Muthiah, Arun Venkatachalam, M V Subramanian, M V Murugappan HUF, M V Subbiah HUF, M A Alagappan HUF, A Vellayan HUF, A Venkatachalam HUF, M M Murugappan HUF, M A M Arunachalam HUF, M M Venkatachalam HUF, M M Muthiah HUF, A M M Arunachalam HUF, and Murugappa & Sons (with M V Subbiah, M A Alagappan, and M M Murugappan holding shares on behalf of the firm). Other promoters include Tube Investments of India Limited, New Ambadi Estates Private Limited, Coromandel International Limited, Ambadi Enterprises Limited, Carborundum Universal Limited, and EID. Parry (India) Limited, and M A Alagappan (who holds shares on behalf of Kadamane Estates).

The Objective of the Issue

The funds raised from the issue will be utilised for several purposes, including onward lending, financing, and repayment of interest and principal on the company’s existing borrowings. Additionally, the proceeds will also be allocated towards general corporate purposes.

How to Apply

Wait for the NCD to open for subscription, then click on this link to apply for the Cholamandalam Investment and Finance Company Limited NCD with Bigul https://ncd.bonanzaonline.com/.

How to Check Allotment Status

The registrar for Cholamandalam Investment and Finance Company Limited NCD is KFin Technologies Limited. To check your allotment status, please click on this link https://karisma.kfintech.com/

FAQs

When is the Cholamandalam Investment NCD Tranche I April 2023 public issue taking place? 

The Cholamandalam Investment NCD Tranche I April 2023 issue is scheduled to open for subscription on April 25, 2023, and close on May 9, 2023. It is important to note that the public issue of NCD may close early if it is fully subscribed (base + shelf) before the closing date. The allotment is done on a first-come, first-served basis.

What is the timetable for Cholamandalam Investment NCD Tranche I, April 2023? 

The key dates for the Cholamandalam Investment and Finance Company Limited NCD IPO are as follows:

• Bid/Offer Opens On April 25, 2023
• Bid/Offer Closes On May 9, 2023

What is the pricing for the Cholamandalam Investment NCD Tranche I April 2023 issue? 

The price for the Cholamandalam Investment NCD Tranche I April 2023 issue is set at Rs 1,000 per NCD.

What is the face value of the Cholamandalam Investment NCD Tranche I April 2023? 

The NCDs will be issued with a face value of Rs 1,000 each.

How often will interest payments be made for Cholamandalam Investment NCD Tranche I in April 2023? 

The interest payment frequency for the Cholamandalam Investment NCD Tranche I April 2023 is annual and cumulative.

What is the minimum application size for investing in the Cholamandalam Investment NCD Tranche I April 2023 public issue?

Each application must be for a minimum of 10 NCDs and multiples of 1 NCD thereafter.

When does the Cholamandalam Investment NCD Tranche I April 2023 subscription close? 

The Cholamandalam Investment NCD Tranche I April 2023 subscription is open for working days from 10:00 am to 5:00 pm until May 9, 2023. The bidding may close earlier if fully subscribed.

What are the tenors for the Cholamandalam Investment NCD Tranche I April 2023 bonds? 

The NCDs have fixed maturity dates of 22, 37, and 60 months.

On which stock exchanges are the Cholamandalam Investment and Finance Company Limited NCDs proposed to be listed? 

The NCDs are proposed to be listed on BSE and NSE.

What is the basis of allotment for the Cholamandalam Investment NCD Tranche I April 2023 issue, and how will allocation occur in case of oversubscriptions?  Applicants will be allocated NCDs on a first-come, first-served basis.