Companies tap NCDs to raise Rs 35K cr in 2012

Moreover, two companies -- Housing and Urban Development Corp (HUDCO) and India Infoline Finance -- are in the process of collecting over Rs 14,000 crore through the NCD route.

Additionally, Thomas Cook had announced plans to raise Rs 200 crore through NCD route on a private placement basis.

Non-Convertible Debentures 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 information available with market regulator Sebi, as many as 12 companies mopped-up Rs 35,038 crore last year through various tranches, a steep hike from Rs 12,753 crore garnered in 2011.

Most of the funds were raised to support financing activities and to meet working capital requirements.

Experts say the companies have chosen NCD route as the equity market continued to be volatile last year, even though it had given good return to investors, making it difficult for firms to raise funds.

"Debt instruments, especially NCDs, have emerged as a preferred route for retail investors to park their funds as these were offering higher returns compared to most of the banks providing on fixed deposits," CNI Research Head Kishor Ostwal said.

"While banks offer a return of 9-9.5 per cent for a 5-year period, NCDs of a similar tenure can offer between 10 per cent and 12 per cent," he added.

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