Fund mop-up through NCDs up 2-fold at Rs. 34K cr

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NCDFund mop-up by Indian companies through retail issues of non-convertible debentures has risen over two-fold so far in the current fiscal to Rs. 34,000 crore, primarily to meet working capital requirements.

The amount is expected to further go up in the remaining period of the current fiscal, ending on March 31.

A cumulative amount of Rs. 16,982 crore was garnered by 15 firms through their NCDs in the entire 2012-13 fiscal.

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

According to the latest data available with Securities and Exchange Board of India (Sebi), 17 companies including India Infrastructure Finance Company, Rural Electrification Corp and NHPC, have collectively raised Rs. 34,496 crore via NCDs so far in 2013-14. They had targeted Rs. 12,675 crore.

Market analysts believe that companies opted for debt route to raise fresh capital because of lack of options available on the equity side.

Many firms including India Infrastructure Finance Company, Shriram Transport Finance Company, India Infoline Finance, SREI Infrastructure Finance and Muthoot Finance tapped the NCD route more than once in the current fiscal.

Interestingly, all the issues managed to raise more than their targeted amounts.

In 2011-12, the companies had raised Rs. 35,611 crore, against their targeted amount of Rs. 31,100 crore.

Individually, Indian Railways Finance Corporation raised Rs. 4,083 crore in 2013-14, as against the base size of Rs. 1,500 crore, while Power Finance Corporation mopped-up Rs. 3,876 crore, as against the target of Rs. 750 crore.