In a crucial move, Tube Investments of India Ltd (TII), a Murugappa group company, on Friday announced that said it has invested 1.5 billion rupees (Rs 150 crore) in Cholamandalam DBS Finance by subscribing to 1 per cent fully convertible cumulative preference shares (FCCPS) of DBS.

A top official working for the company said that the shares have since been allotted to both Tube Investments and DBS.

In a disclosure to the Bombay Stock Exchange, the company said that the FCCPS are convertible into equity shares within a period of 18 months from the date of allotment. With this move, the company anticipates to fortify its capital adequacy ratio and beef up its liquidity.

It can be recalled that as of December 2008, Tube Investments holds 30.93 per cent in DBS Cholamandalam.

The company also made it clear that it would pull out of the personal loan space. In September 2008, the company had raised Rs.135 crore by way of conversion of warrants into equity shares.

Moreover, a proposal to raise further capital aggregating to Rs.500 crore was approved by the company in October last year.

Both the partners (the Murugappa Group and DBS) had already pointed out that they would bring in a total of Rs.300 crore. For this amount, each partner would give Rs. 150 crore in the form of fully convertible cumulative preference shares.

TII possess admired bicycle products like Hercules, BSA and Philips.