Cholamandalam Investment and Finance Company Limited has completed the allotment of secured non-convertible securities worth ₹1,001 crores through private placement. The securities come with an 8.20% coupon rate and a maturity period of 2.15 years.

Securities Allotment Details

The company has provided comprehensive details regarding the securities allotment under Regulation 30 and 30(A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The following table summarizes the key parameters of the allotted securities:

Interest Rate and Maturity Structure

The securities offer attractive returns with a structured payment schedule designed for institutional investors. The interest rate framework and maturity details are outlined below:

Regulatory Compliance and Risk Factors

The company has confirmed full compliance with listing regulations and provided necessary disclosures regarding the securities. Key regulatory aspects include:

• No delays in payment of interest or principal amount for more than three months from due dates
• No defaults in payment of interest or principal amounts reported
• No adverse letters or comments regarding payment obligations
• Securities do not involve preference share redemption or debenture-related complications

Issue Structure and Market Positioning

The allotment of ₹1,001 crores represents a substantial portion of the total issue size of ₹1,500 crores, which includes a greenshoe option of ₹500 crores. The securities are structured as secured instruments, providing additional safety to investors through asset backing. The listing in the WDM (Wholesale Debt Market) segment of NSE ensures appropriate market access for institutional participants.

The successful completion of this securities allotment demonstrates Cholamandalam Investment's continued access to capital markets and its ability to raise funds through debt instruments at competitive rates in the current market environment.

Cholamandalam Investment and Finance Company has mounted a comprehensive defense against recent governance allegations, with management providing detailed clarifications on various concerns raised. The company's proactive response helped calm market nerves, with shares gaining 6.4% to close at ₹1,680.60 on the BSE.

Management Calls Allegations Inconsistent and Context-Free

Speaking during an analyst call, Arul Selvan D from Cholamandalam Investment strongly pushed back against the allegations, stating they lack consistency and ignore the regulatory framework that existed at the time. "There is no consistency in the way these allegations have been approached. Different years have been selectively used to inflate numbers and portray a larger issue, without recognising that laws on related-party disclosures have evolved over time," he explained.

The management emphasized that all disclosures and transactions were carried out strictly in line with the laws prevailing then, and that judging past actions using today's norms creates a misleading impression. "At every point, the company ensured compliance with the law prevailing then. Applying current disclosure norms retrospectively and saying things were not disclosed earlier is completely incorrect," Arul Selvan D added.

Insurance Transaction Clarifications

Addressing allegations of fund diversion through insurance transactions, including the ₹3,040.00 crore transfer from Cholamandalam MS General Insurance to other Murugappa Group entities, management explained the business rationale behind these arrangements:

"Insurance ensures that the borrower's family is not burdened with loan repayments during emergencies. Even a one-month disruption in income can make it difficult for customers to pay EMIs, and medical insurance helps them manage such situations," Arul Selvan D explained.

Executive Compensation and Family Member Payments

Responding to allegations of excessive payments to family members and key managerial personnel, management clarified that promoter family members hold active executive positions. "Most family members hold executive positions and are deeply involved in day-to-day business operations. They are not non-executive promoters. Their contribution is visible, and compensation is aligned with industry standards," he stated.

The company emphasized that all remuneration follows due process, with salaries and commissions approved by the board and shareholders and benchmarked to industry practices.

Murugappa Management Services Payments Explained

Regarding concerns around payments made to Murugappa Management Services, management explained these related to an earlier group-level governance structure. "At the group level, we earlier had a corporate board with internal and external experts overseeing finance, HR and IT to ensure common practices across companies," Arul Selvan D clarified.

He added that from FY22, the group was reorganised into three verticals due to the scale of operations, and as each vertical built its own management framework, costs paid to Murugappa Management Services reduced significantly.

Strong Financial Position Reaffirmed

The company continues to emphasize its robust financial metrics and operational performance:

In a comprehensive regulatory filing, the company categorically stated there has been no revision to its earlier guidance and that it will continue to deliver as per its board-approved business plan. All payments to board members and senior management have been made in compliance with applicable law and fully disclosed to shareholders.

Brokerage Firms Maintain Positive Outlook

Despite the allegations, major brokerages continue to maintain positive ratings on the stock. Motilal Oswal reiterated its 'Buy' rating with a target price of ₹2,000.00, while Morgan Stanley maintained an 'Equal-weight' rating with a target price of ₹1,540.00. Jefferies sustained its 'Buy' rating with a target price of ₹1,980.00, stating that governance-related allegations appear misplaced.

Concluding his response, Arul Selvan D expressed disappointment that the allegations were raised without engagement. "These issues could have been clarified through discussion. Instead, conclusions were drawn without understanding the full context, creating an unnecessary controversy."