The issue opens for public subscription on Dec 12 and closes on Dec 20.

Should you subscribe?

The Non Convertible Debentures offer a coupon rate of 11.52 per cent per annum, payable monthly, taking your yield to 12.52 per cent annually. Now, this is a good rate of returns and is much better then the interest rates of around 9-9.5 per cent offered by banks.

This is slightly ahead of good company fixed deposits like Mahindra and Mahindra which offer you an interest rate of around 10-10.25 per cent. Of course, when it comes to safety one would prefer a bank, rather then a non banking finance company.

Having said that CARE has rated the NCDs with a rating of ‘CARE AA-', [Double A minus]. The rating of NCDs by CARE indicates instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk for NCD Holders.

Overall, the NCDs offer an attractive coupon rate, though the tenure of five years makes one a little uncomfortable.

However, one can always sell these NCDs as they are to be listed on the Bombay Stock Exchange and the National Stock exchange. It's important to remember that though these NCDs would be listed on the exchanges, at times they can offer poor liquidity. So, if you have purchased large quantities you may find it difficult to sell all at one go.

Clearly, its an attractive coupon rate with some risk as well.

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