Shriram City Union Finance to issue Rs 500-cr NCDs soon

Shriram City Union Finance Ltd (SCUFL) is planning to issue non-convertible debentures (NCDs) of about Rs 250 crore, with an over-allotment option of another Rs 250 crore, by August or September. “We have to get board approval to go ahead,” said Subhasri Sriram, executive director.

The company had recently announced the board of directors’ approval to raise about Rs 2,000 crore through issuance of NCDs. It has informed the exchanges that the board had decided to issue NCDs in one or more tranches of varying value, aggregating to a maximum Rs 2,000 crore, including an option to retain over-subscription for issuance of additional NCDs to the public.

“The NCDs are towards our working capital and the Rs 2,000 crore would be raised in tranches over a period of one to two years,” she said.

The company’s promoter group firm, Shriram Capital, would convert some of the warrants it has in SCUF into equity in two tranches in 2013. The company has around Rs 240 crore due on warrants and part of it is expected to be converted by March 2013 and the rest in September. However, the details of the March conversion has not been finalised. The fund infusion by the promoter group is towards creating a higher capital adequacy ratio, which would enable future growth of the company, said Sriram.

The company, in 2011-12, allotted 2.3 million equity shares and 5.9 mn warrants to the promoter group at Rs 570 per share and at a subscription price of Rs 143 per warrant. With the capital infusion and retention of profit, the capital adequacy ratio was 17.4 per cent as on March 31, as against the 15 per cent norm, said Arun Duggal, chairman of SCUF, in the company’s recent annual general meeting.

After conversion of the warrants, Shriram Capital will hold around nine per cent of the total share in the company, said Sriram. According to data with the Bombay Stock Exchange, till March 2012, Shriram Capital had 2.3 mn shares in SCUFL, or 4.39 of the total share in the company.

The non-banking financing company under the Shriram Group had a net profit of Rs 342.5 crore during 2011-12, with a growth of 42.3 per cent compared to the Rs 240.6 crore net profit registered in the previous year. The assets under management, as on March 31, was Rs 13,431 crore, from Rs 7,998 crore in the previous year. The income from operations grew 55.4 per cent to Rs 2,056 crore, against Rs 1,323 crore earlier.