As many as 6 firms raised Rs 190 bn through debentures in April-July period

As many as six companies raised over Rs 190 billion through the issuance of debentures during April-July period of the ongoing financial year, a surge of five times from the year-ago period.

The funds have been mobilised for business expansion, supporting working capital requirements and other general corporate purposes.

According to the latest data with regulator Sebi, Kosamattam Finance, Muthoot Finance, Srei Equipment Finance, Dewan Housing Finance Corp, JM Financial Credit Solutions and Shriram Transport Finance Company together mopped up Rs 190 billion through retail issuance of non-convertible debentures (NCDs) during the period.

This was in comparison to three companies collecting Rs 36.81 billion through this route in the same period of 2017-18. Overall, firms had garnered about Rs 49.5 billion in the entire preceding financial year.

Muted demand for qualified institutional placements (QIPs), lukewarm secondary market and apprehension over a sustained rise in interest rates attracted companies towards the debentures, market experts said.

Moreover, over a dozen firms have announced plans to raise funds through NCDs, which are loan-linked bonds that cannot be converted into stocks and usually offer higher interest rates than convertible debentures.

Individually, Dewan Housing raised Rs 109.45 billion in the period under review as against a target of Rs 30 billion, Shriram Transport garnered Rs 36.48 billion against a target of Rs 10 billion and Muthoot Finance raked in Rs 30 billion against a base size of Rs 5 billion.