Tata Capital Financial tightens lending norms for auto & allied sector

Tata Capital Financial Services (TCFSL) is cautious of lending to the auto and allied industries, as the sector is facing slowdown. 

Besides, the company has moderated its growth forecast for 2019-20 to 20 per cent as against 25 per cent growth in the last financial year due to signs of overall decline in the Indian economy, a senior official said. 

Whatever is happening in the auto sector is something which is there in the market for the last 7-8 months andn TCFSL has a short term exposure to the sector, Rajiv Sabharwal, MD&CEO, Tata Capital said here. 

Tata Capital is the parent company of TCFSL. 

“We are more into financing the dealers for their working capital and their inventory build-up purposes. So we have proactively from that period (last 7-8 months) become more selective in terms of which dealers to deal with and insisted on more security. 

“We have also reduced our exposure wherever we can. In fact, the (loan) portfolio also came down as the sales reduced…however, our experience over the last three months is that there is no stress build-up that we are
seeing in our books,” Sabharwal told reporters at an event here on Friday. 

TCFSL’s overall exposure to the auto sector is about 18 per cent, which is in the form of financing to auto dealers, loans limited to only used cars and financing of new two-wheelers. 

Dealing with the same set of dealers over the past 10 years has been helping the company in limiting the exposure to the auto and allied sector, Sabharwal said, adding the company has been very selective from the
very beginning and continue to do so. 

“The only positive thing that I see is that the government is seized of what is happening and is talking to the industry as to what can be done. We are hopeful that the situation will get better in the next 3-4 months,” he added. 

Talking about the public issue of non-convertible debentures (NCDs) to raise up to Rs 4,126 crore, with base issue of Rs 500 crore, TCFSL said the fund mop-up will be mostly used to fuel growth of the company. 

The NCD issue programme will open on Tuesday. 

This will be a second tranche of the NCD issue. In the first tranche, the company raised Rs 3,400 crore in September 2018. 

Tata Capital’s treasury head Kiran Joshi told PTI that the company is looking to raise USD 100-150 million through external commercial borrowings in the next quarter. 

The company has raised USD 75 million via ECBs since the troubled NBFC sector was allowed to raise money through this route earlier this year.

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