Companies garner Rs 9K cr via NCDs, much lower than last fiscal

Indian companies have raised over Rs 9,000 crore via retail issuance of non-convertible debentures (NCDs) so far in the current fiscal to meet working capital requirements.

Although this is more than the initial target of Rs 3,850 crore, it is just about 20 per cent of the amount raised in the previous fiscal. In 2013-14, firms had collectively raised Rs 42,383 crore via 35 issues.

Firms including Shriram City Union Finance, Kosamattam Finance, SREI Infrastructure Finance and Muthoot Finance, collectively raised Rs 9,050 crore via NCDs through 22 issues till March 16, with just two weeks left for the close of 2014-15 fiscal, according to data from Securities and Exchange Board of India.

Market experts said fund raising via NCDs has been less, compared to the previous fiscal as companies have preferred QIPs and rights issues modes to garner capital.

Moreover, many companies are looking to raise funds via initial public offers (IPOs) as investor confidence has returned in the equity markets after the formation of a stable government at the Centre.

NCDs are loan-linked bonds issued by a company that cannot be converted into stock and usually offers higher interest rate than that of convertible debentures.

Individually, Shriram Transport Finance Company raised Rs 1,975 crore against a target of Rs 500 crore; IFCI raked in Rs 1,209 crore against a base size of Rs 250 crore; ECL Finance mopped up Rs 790 crore against a target of Rs 400 crore and IFCI pocketed in about Rs 742 crore as against a target of Rs 250 crore.

Moreover, SREI Infrastructure Finance, Shriram Transport Finance Company, Kosamattam Finance, Muthoot Finance, Muthoot Fincorp, Muthoottu Mini Financiers and ECL Finance tapped the NCD route more than once.