Cholamandalam DBS is planning to raise Rs 300 crore by subscribing 10 million convertible shares of EID Parry, Coromandel Fertilizer Ltd. & DBS Bank. The shares would have the face value of Rs 100 and these would be converted into liquid stake within 18 months as per filing by the company to the stock exchange.

It may be recalled that Murugappa group and Singapore based DBS Group had formed a joint venture called Cholamandalam DBS to diversify their business in non-banking sector. The announcement to raise funds has come at a time when all sectors are facing liquidity crunch due to the financial turmoil in the market. The step by Cholamandalam DBS would help the non- banking finance company to ride the tight economic conditions.

The board of the company had already approved the proposal and expressed hopes to insulate the company from the ongoing financial crisis. The company said in a statement that the funds would help to ease the liquidity problem and improve its capital adequacy ratio amid the tight financial conditions world wide. The reserve bank has increased the capital adequacy ratio to 12% by March 2009 and 15% by March 2010 according to the reports.

The shares of the company surged by 8.6% to Rs 40.45 in the
latest trading in Mumbai.