Earlier in Nov-2013, Shriram City Union Finance has come up with secured NCD’s offering 11.50% interest rates. Currently Shriram City Union Finance is again coming up with Secured Redeemable Non Convertible Debentures (NCD’s) which would open for subscription on 16th “April, 2014. It comes with 1 year, 3 year and 5 year option. The interest rates are as high as 11.75% per annum. In this article, I would detail about whether we can invest in Shriram City Union Finance NCD, its features and the risks involved in this NCD.
Shriram Citi Union finance secured NCD of March/Apr-2014
Shriram City Union Finance is issuing 24 months, 36 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. These are covered in the form of immovable properties and receivables.
Features of Shriram Citi Union finance secured NCD of April, 2014
- Start date: 16-April-2014
- End date 16-May-2014
- NCD’s are available for 24 months, 36 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.
- 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 on 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.
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 earning good profits, hence less risk for payment of interest on these NCD’s.
- These NCD’s are secured. Means in case of any unforeseen thing happening to company, investors of NCD would still get the principal. Hence it is safe to invest in such secured NCD’s up to this limit.
- Attractive interest rates of 11.00% for 24 months, 11.50% for 36 months and 11.75% for 60 months NCD.
- CARE rated these NCD’s as “CARE-AA”
Why not to invest?
- Companies into finance 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.
- In case of non performance of the company, there could be delay in interest payment and repayment of principal investment.
You can download the prospectus of Shriram City Union Finance NCD-April, 2014 from SEBI Website at this link
Conclusion: Shriram City union Finance NCD’s of April-2014 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 safety in nature, I feel you can invest in such safe investment options.
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Shriram Citi Union finance secured NCD of April, 2014
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