Muthoot Fincorp Limited launched its seventh NCD (non-convertible debentures) issue on 28 September. The issue size is Rs 200 crore with a greenshoe option of another Rs 200 crore, a total of Rs 400 crore. The offer closes on 23 October.
What are NCDs?
Companies use non-convertible debentures to raise long-term capital for their business. In simple words, it is like a loan that the company borrows from the public which it will return with interest. These come with a fixed interest rate and tenure. It is like a fixed deposit with a bank in a way, but less secure.
Why is it called non-convertible?
Companies give the option to convert debentures issued into shares after a certain time to the owners of these debentures. NCDs do not come with this option. Further, these are divided as secured and unsecured NCDs. Secured NCDs are backed by the company's assets and unsecured ones are not. The unsecured ones are paid a higher interest rate because they hold higher risk.
Details on the Muthoot Fincorp September 2020 NCD issue
- Dates: 28 September to 23 October 2020
- Tenures: From 27 months, 38 months or 60 months
- Investors can choose between monthly, annual or cumulative interest payment options.
- Issue price: Rs 1,000 per NCD
- Minimum purchase: 10 NCDs
- Security Type: Secured, Redeemable, Non-Convertible Debentures (Secured NCDs)
- To be listed on: BSE
- NCDs will be allotted on a First-Come-First-Serve basis
- 8.85% for 27 months NCD with monthly interest payment
- 9% for 38 months NCD with monthly interest payment
- 9.15% for 60 months NCD with monthly interest payment
- 9.25% for 27 months NCD with annual interest payment
- 9.45% for 38 months NCD with annual interest payment
- 9.6% for 60 months NCD with annual interest payment
- The offer is rated as "CRISIL/A" Stable by CRISIL.
- Invest with caution as the "A" rating from CRISIL is lower than "AA" or "AAA". There is high risk associated with such a rating.
- Muthoot Fincorp is part of the Muthoot Pachappan Group and should not be confused with Muthoot Finance, which is part of a separate corporate group and also a listed company. Thomas John Muthoot, Thomas George Muthoot and Thomas Muthoot are the promoters of Muthoot Fincorp.
- Returns from NCDs are taxed based on one's income tax slab.
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