India Inc fund mop-up via NCDs near halves in Apr-Oct FY15

Indian companies have raised over Rs 5,000 crore via retail issuance of non-convertible debentures (NCDs) in the first seven months of the current financial year, primarily to meet their working capital requirements.

In comparison, firms had collectively raised close to Rs 10,846 crore via 10 issues in the April-October period of 2013-14.

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

Most of the funds have been raised to support the working capital requirements and for other general corporate purposes.

"Firms including Shriram City Union Finance, Kosamattam Finance, SREI Infrastructure Finance, ECL Finance and Muthoot Finance collectively raised Rs 5,136 crore via NCDs in the current financial year through 15 issuances," according to data from Securities and Exchange Board of India (Sebi).

This was more than the initially targeted Rs 2,250 crore.

Individually, Shriram Transport Finance Company raised Rs 1,975 crore, against the target of Rs 500 crore; Muthoot Finance mopped-up Rs 466 crore, against a base size of Rs 250 crore and ECL Finance garnered Rs 400 crore against Rs 200 crore.

Moreover, Muthoot Finance, Muthoot Fincorp Limited and Kosamattam Finance tapped the NCD route more than once.

Market experts said fund raising via NCDs has been less compared to the year-ago period as companies have preferred QIP route and rights issue for garnering money.

Moreover, many companies are looking to tap the IPO route for fund raising as investor confidence has returned in the equity markets after the General elections in May.

In the entire 2013-14, about Rs 42,383 crore had been garnered through 35 issues of NCDs.