Piramal, Tata Motors, Coastal Gujarat to issue NCDs to raise Rs 5,700 crore

Piramal Enterprises and two Tata group entities, Tata Motors and and Coastal Gujarat Power, are planning to raise over Rs 5,700 crore through debentures. This is by taking benefit of cheaper funds available for better-rated entities amid the huge liquidity in the system.
 

Piramal Enterprises’s (PEL’s) Rs 3,000 crore fundraising is through debentures. Tata Motors also informed the stock exchange that it plans to raise about Rs 1,000 crore in three tranches and the committee of its board will meet on May 5 to consider the proposal.
 

Coastal Gujarat Power, a unit of Tata Power, managing the Mundra Ultra Mega Power Project, plans to issue non-convertible debentures (NCDs) of up to Rs 1,790 crore. It would use the private placement route to raise funds. Merchant bankers said some banks are tapping into the Reserve Bank of India’s (RBI’s) special liquidity window to draw funds at the prevailing policy repo rate (4.4 per cent).

They are infusing this money into papers issued by better-rated entities at rates over seven cent. This gives a good spread and business opportunity at a time when demand for credit is low. Meanwhile, CARE Ratings has assigned AA\stable rating for PEL’s Rs 3,000 crore fundraising through debentures.
 

The rating derives strength from the established track record of the promoter group in building and scaling up businesses. Other factors include strong and experienced management team and experience in the pharmaceutical industry.
 

The rating also positively factors in PEL’s adequate financial flexibility. Being the holding company of the group, it showed fundraising/refinancing ability and monetisable investments in entities of Shriram group.
 

CARE also pointed out that Piramal Enterprises derives more than 50 per cent of its revenues and profit from the financial services business carried out by its NBFC and HFC subsidiaries. The spread of the Covid-19 pandemic has led to a nationwide lockdown, which is likely to impact the overall growth and collections of NBFCs or HFCs.