Fund raising via retail NCDs plunges 72% to Rs 1,250 cr

Fund raising by Indian companies through retail issuance of non-convertible debentures (NCDs) plunged by 72% to around Rs 1,250 crore in the first six months of the current fiscal, from the year-ago level.

The funds have been raised to support working capital requirements and general corporate purposes.

Four companies - SREI Equipment Finance, Muthoottu Mini Financiers, NTPC and SREI Infrastructure Finance - have collectively mobilised Rs 1,249 crore through NCDs during the April-September period of 2015-16.

In comparison, Rs 4,419 was raised via 12 such issuances in the first six months of 2014-15, as per the latest data with the Securities and Exchange Board of India (Sebi).

In the entire last fiscal (2014-15), Rs 9,713 crore had been garnered through 25 issues of NCDs.

Individually, NTPC garnered Rs 447 crore against the base size of Rs 400 crore and SREI Equipment Finance raked in Rs 410 crore against a target of Rs 250 crore.

Muthoottu raised Rs 228 crore against the targeted amount of Rs 125 crore and SREI Infrastructure Finance mopped-up Rs 163 crore compared to the base size of Rs 100 crore.

NCDs are loan-linked bonds that can not be converted into stock and usually offer higher interest rates than convertible debentures.

Many companies have lined-up plans to raise about Rs 20,000 crore through this route. However, most of these funds would be garnered via private placement basis rather than retail issuance.

Experts said that mobilising money through private placement is being viewed as a safer bet instead of opting for retail issuance.