11.50% Shriram City Union Finance secured NCD of Nov/Dec-2013
If you are looking for Latest Shriram City Union Finance NCD of March/Apr-2014 which offers 11.75% interest rates, here is the link of analysis and recommendation. In Oct-2013, Shriram transport Finance has come up with secured NCD’s. Now one of the Shriram group company, Shriram City Union Finance is coming up with Secured redeemable Non Convertible Debentures (NCD’s) early next week. It comes with 3 years, 4 years and 5 year option. The interest rates are as high as 11.50% per annum. In this article, I would detail about whether we should invest in Shriram City Union Finance NCD, what are its features and the risks involved in this NCD.
Shriram City Union Finance secured NCD of Nov/Dec-2013
Shriram City Union Finance is issuing 36 months, 48 months and 60 months NCD’s. For secured NCD the assets are backed up for principal and interest. In the case windup of company, investors of NCD would still get their principal investment and interest. In Shriram NCD, the immovable properties and receivables are backed up.
Also read: Muthoot Finance NCD of Nov-13 – Should you invest?
Features of Shriram City Union Finance secured NCD of Nov/Dec-2013
- The NCD issue would be started from 25-Nov-2013 and would end by 24-Dec-2013.
- NCD’s are available in 36 months, 48 months and 60 month period.
- Series I, II and III indicate that Interest is payable annually and Series IV, V and VI pays the interest at maturity. Series VII provides interest annually, but bond value would be paid in 3 equal instalments i.e. 33% each at end of 3 years, 4 years and 5 years.
- Bond face value is Rs 1,000.
- Minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
- These NCD bonds would be listed in NSE and BSE. Hence these are liquid investments.
- NCD’s can be invested through Demat account or Physical form.
- Non-Resident Indians (NRI’s) can invest in these NCD’s.
- The issue size is Rs 200 Crores.
- Download the Shriram City Union NCD prospectus here
Below is the Interest rate chart.
How the company is doing in terms of Financials?
Below are the details profit after tax
- Year ended Mar-2009 – Rs 117 Crores
- Year ended Mar-2010 – Rs 194 Crores
- Year ended Mar-2011 – Rs 240 Crores
- Year ended Mar-2012 – Rs 342 Crores
- Year ended Mar-2013 – Rs 449 Crores
- First half of this financial year 2013-14 – Rs 244 Crores
Non Performing Assets (NPA) of the company is 2.19% (FY2012-13) Vs 2.43% ended Sep-2013.
Why to invest?
- Company is good in terms of profits.
- These NCD’s are secured. Means in case of any unforeseen thing happening to company, investors of NCD would still get the principal and interest. Hence it is safe to invest in such secured NCD’s up to this limit.
- Attractive interest rates of 11.00% for 36 months, 11.25% for 48 months and 11.50% for 60 months NCD.
- These NCD's are rated as AA by Care.
Why not to invest?
- Companies into financing business are little risky. Means the profits indicated now can reduce in future due to increase in interest rate payments. Due to competition, in future, it may need to reduce interest rates charged to customers and this can lower the margins.
Conclusion: The Shriram City union Finance NCD’s are secured. You can safely invest in such safe investment options and get high returns. Since these are traded on stock exchanges, these are liquid investments too. Though there are a few drawbacks, due to secure in nature, I feel you can invest in such safe investment options.
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Shriram City Union finance secured NCD of Nov/Dec-2013
Is the interest Taxable ?
Yes bansal. It would be based on your individual tax slab
Hello Suresh Sir,
Nice article. Interest earned on such NCD’s are tax free?
Ni Vikas, The interest needs to be added to your income and pay tax based on your individual tax bracket
Very good article and site always offers sound advice.Maturity Value of the cumulative option is wrong can you please change it to give correct picture. Thanks Vinayak
Oops thanks. I have just corrected Vinayak
How would you rate SBI's Saral Jeevan Plan?
according to it, if we pay Rs 100000 for 10 years and put the entire amt into its annuity, we will be paid 10000 per month for life; the amt passes to the spouse on death of the policy holder and the entire amt + bonus will be paid to the nominee on her death. it sounds good on paper. What is your assessment.
Can you suggest other good retirement plans that offer fixed amts like this per month. I am aware of NPS but since it is eqity based, one can never be sure of the final amt that one will get at 58 years.
Hi Smitha, I started analysing few pension plans, you would see one in next 10 days as it is queu. But the issue with these plans are they offer only 4% to 5% returns. If you invest in PPF kind of investments you would get 8%+ returns. At maturity you can invest in Bank FD and get monthly fixed income. When you say that amount would be passed to nominee at death, it is better to consider term insurance plan with smaller amount instead of investing big amounts and compromising for 5% returns
Thanks Suresh, for this article.