Companies line up NCDs to raise Rs 17,000 crore

Most of the funds will be used for expansion plans, meeting business needs and other general corporate purposes

Non-convertible debentures (NCDs) seem to be emerging as the preferred mode of fund-raising for companies, including DLF and Jet Airways, as they have lined up plans to raise over Rs 17,000 crore through this route.

Others that are also considering going the NCD way are HDFC, ABB India, Ceat, Future Corporate Resources and SRF.

The issue of SREI Infrastructure Finance, which is expecting to raise up to Rs 1,000 crore, is under way.

Together, these companies are estimated to raise more than Rs 17,000 crore.

Most of the funds would be used for expansion plans, meeting business needs and other general corporate purposes.

Some of these companies have already received approval from their respective boards of directors and shareholders for the fund-raising plans while others are in the process of securing the nod.

The firms will come out with their fund-raising proposals soon after getting the necessary clearances.

Experts said market volatility has led to companies opting for the NCD route to raise funds. Besides, investors are attracted to its solid returns.

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

Individually, real estate giant DLF plans to garner up to Rs 5,000 crore through NCDs, including bonds and other debt securities on a private placement basis.

Mortgage lender HDFC intends to raise NCDs of up to Rs 5,000 crore along with warrants while Jet Airways looks to mop up USD 400 million (Rs 2,500 crore) by issuing non-convertible debentures.

SRF is eyeing an amount of up to Rs 2,000 crore through this instrument.

Furthermore, power and automation technologies firm ABB India and Kishore Biyani-owned Future Corporate Resources plan to mobilise Rs 600 crore each while tyre company Ceat intends to raise Rs 500 crore.

In 2014-15, companies had raked in Rs 9,713 crore through NCDs compared with Rs 42,383 crore in the previous financial year.