Indian companies have garnered over Rs 29,212 crore by issuing non-convertible debentures (NCDs) to retail investors in the current financial year so far to meet their corporate needs. In the entire 2015-16, firms had mobilised Rs 38,812 crore through this route. The funds have been raised for funding expansion plans, retiring debt, supporting working capital requirements and other general corporate purposes. NCDs are loan-linked bonds that cannot be converted into stock and usually offer higher interest rates than convertible debentures.
According to the latest data with the Securities and Exchange Board of India (Sebi), companies have raised funds totalling Rs 29,212 crore through retail issuance of NCDs during the current financial year (till January 20).
In terms of number, funds were raised through 14 issues this fiscal so far against 20 in the whole of 2015-16.
“Fund raising from capital markets is a function of cost and availability of capital. High volatility, weak sentiment in equity markets and lower cost for raising funds via debt encouraged firms to raise capital through private and public bond issues instead of equity issues,” Bajaj Capital Senior V-P and Head (investment analytics) Alok Agarwala said.
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“At the same time, there were many regulatory initiatives for deepening Indian bond markets such as banks being allowed to issue additional tier 1 bonds to meet their capital requirement, investment limit for foreign portfolio investors being increased and withholding tax rate being reduced from 20 per cent to 5 per cent. These factors contributed tremendously to capital raising via debt route,” he added.
This fiscal, Kosammattam Finance took to NCDs thrice to mobilise capital while Dewan Housing Finance Corporation and Muthoot Finance have raised funds twice through this instrument.
Individually, Dewan Housing Finance raised a total of Rs 14,000 crore through this route in the ongoing financial year. Indiabulls Housing Finance raised Rs 7,000 crore against a target of Rs 3,500 crore and Reliance Home Finance garnered Rs 3,054 against a base size of Rs 1,000 crore.