Mumbai, May 22, 2003: Cholamandalam Investment and Finance Company Limited ("CIFCL") raised Rs. 1 billion through a 3 year debenture issue. The issue, which opened on May 9,2003, and closed on May 19,2003, targeted a base amount of Rs. 250 million and received an overwhelming response from the investors with an oversubscription in excess of 3 times the issue size. DSP Merrill Lynch and Standard Chartered Bank were the Joint Book Running Lead Arrangers to the transaction.

The debentures, rated MAAA by ICRA, offered through the book-building route under fixed rate and floating rate options. For the Fixed Rate option, the coupon range was 6.35% - 6.60% p.a. payable annually and in the Floating Rate option, the book building spread was 115 bps to 140 bps over the 1-yr INBMK rate (The one year Government Security Benchmark published by Reuters).

The issue was subscribed to the tune of Rs. 1.17 billion with majority of the investors opting for the floating rate option. The cut off coupon rate was 6.60% p.a. for the fixed rate debentures. The floating rate bonds achieved a cut off at a spread of 125 bps over the 1-yr INBMK benchmark. The issue was well received by institutional investors due to the strong business profile and positioning of CIFCL (also reflected in the AAA rating on the bonds), the Murugappa group parentage and structuring of the bonds on offer.

CIFCL, a part of the Chennai based Murugappa Group of Companies, is a leading non-banking finance company (NBFC) predominantly engaged in asset financing. CIFCL, incorporated in 1978, CIFCL has a network of 40 branches with 20 of them located in South India and market presence in about 160 locations across India.

According to Mr. Anandan, Managing Director, CIFCL, "The company constantly looks out for innovative funding options to optimise the cost of raising funds. After the successful completion of the rights issue of Rs.29.52 crores, the company found the favorable market conditions and attractive interest rates to augment the resource base to meet the anticipated growth especially in the Vehicle Finance business."