New Delhi, Sept. 18 (PTI): The Tatas are expected to invest up to Rs 300 crore in two tranches in Tata Finance this year to enable the company to fulfil mandated capital adequacy conditions.
This fresh capital infusion is being envisaged even as the company’s businesses are being restructured, with the focus areas identified as commercial vehicle, car and scooter financing.
“In line with the commitment made by the Tata group to the company, they have infused Rs 200 crore up to March 31, 2002 as advance towards capital to be issued by the company after obtaining necessary approvals and expect to bring in another Rs 100 crore by December 2002 to recapitalise the company to enable it to achieve the RBI mandated norms of capital adequacy,” TFL said in its latest annual report.
This capital infusion in its finance arm by the Tatas comes even as the Tata group is in the thick of a controversy over alleged irregularities to the tune of Rs 500 crore detected at the company during 2001 and again over an audit report of accounting firm A F Ferguson. After financial irregularities came to light, the Tatas had promised infusion of Rs 500 crore in the beleaguered company.
On efforts to restructure the company’s operations, the report says: “TFL has, in the past, been involved in several areas of financing including commercial vehicles, cars and scooter financing, corporate finance, capital market related activities, credit cards and wind mills.”
“As part of its restructuring programme, the company has decided to focus on its core areas of commercial vehicles, cars and scooter financing and is negotiating to hive off its other activities,” the report adds.
Also, besides divesting non-core business, Tata Finance has also begun reduction in administration and manpower costs, rationalisation of branches and focusing on more profitable segments of lending.
“The number of employees (of TFL) has been brought down from 1016 in April 2001 to 794 in July 2002,” it said.