10.40% Yield On Rs 10,000 Investment On This Non-Convertible Debentures: Tenure, Lot Size, Payment Details!

SMC Global Securities announced its first ever public offering of secured, rated, listed, redeemable, non-convertible debentures (NCDs) amounting to Rs. 75 crore ("Base Issue Size"), with a green shoe option of up to Rs. 75 Crore, aggregating to Rs. 150 crore. The issue opened for subscription from Friday, 19 July 2024 and will close on Thursday, 1 August 2024 (with an option of early closure).

The face value and the Issue Price of each NCD is Rs. 1,000/-. With a minimum investment of Rs 10,000/- (10 NCDs), the offering caters to a wide range of investors. The NCDs are secured and will be listed on BSE Limited.

The NCDs carry credit ratings of 'CRISIL A/Stable' and '[ICRA] (A Stable)'. These ratings indicate a low credit risk and a high degree of safety for timely payment. The NCDs are being issued in six series, carrying fixed coupons and having a tenure of 24 months, 36 months and 60 months, with monthly, annual and cumulative interest options. Investors can earn effective yields ranging from 9.94% p.a. to 10.40% p.a.

The funds raised through this issuance will be primarily used to meet the working capital requirements. A portion of the proceeds will also be allocated for general corporate purposes. Subhash Chand Aggarwal, Mahesh C Gupta, Sushma Gupta and Damodar Krishan Aggarwal are the promoters of the Company.

Corporate Professionals Capital Private Limited, SEBI Registered Category I Merchant Banker is the Book Running Lead Manager to the issue.

Established in 1994, SMC Global Securities has a diversified financial services business model with presence in brokerage services, portfolio management services, investment banking, wealth management, distribution of financial products, financing (NBFC), insurance broking, real estate brokerage, clearing and depository services, fixed income securities and financial, mortgage and loan advisory services.

As of 31 March 2024, the Company serviced its clients through a network of 188 branches, including one international branch in Dubai and 2,327 registered authorised persons spread over 437 cities across India.

What Are NCDs?

SMC in its blog explained that An NCD or Non-Convertible Debentures refers to long-term funds that are raised through debt instruments by various companies. To know what is NCD, While other forms of debt securities can be converted into equity, NCDs cannot be converted into equity shares of the issuing company.

It sets them apart from Convertible Debentures (CDs) which give the investor the right to convert this debenture into company shares at a predetermined price and at a particular time. It implies that NCD holders are debenture holders and are legally entitled to interest and capital on the debenture at the due date.

In simple terms, when investing in an NCD, you are actually depositing money with the company for a certain number of years. Consequently, you will receive a fixed rate of interest throughout the expiry of the NCD, and the company will redeem the face value upon its expiration.