13.5% D S Kulkarni Developers Secured NCD-Aug-2014
D.S.Kulkarni Developers Secured NCD-Aug-2014
Real Estate company, D.S.Kulkarni Developers is coming with Secured Non Convertible Debentures (NCD) offering 12.75% interest rates. D S Kulkarni Developers NCD would open for subscription today, i.e. 4th August, 2014. You can double your money in 66 months, i.e. 5 years 6 months. Annualised yield works out to be 13.5%. Should you invest in D S Kulkarni Developers NCD of August, 2014? What are the risks involved in it?
About D.S.Kulkarni Developers Limited
This is a real estate development and construction company primarily focussing on the development of residential units in the city of Pune with presence in Mumbai, Bengaluru, Nasik and New Jersey, USA. They construct and develop independent buildings consisting of flats, residential complexes, villas and apartments of varying sizes. They also develop and sell land plots, commercial space and retail outlets as an integral part of their residential projects.
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D S Kulkarni Developers NCD August, 2014
DS Kulkarni Developers is issuing 36 months, 66 months, 72 months and 84 months secured NCD’s. For Secured NCD the assets are backed up for principal and interest. In case something happens to the company and it gets closed, investors of NCD would still get their principal investment and interest. They would be given first preference compared to others. For these NCD’s security cover is in terms of land.
Features of D S Kulkarni Developers NCD August, 2014
- Start date: 4-August-2014
- End date: 26-August-2014
- NCD’s are available for 36 months, 66 months, 72 months and 84 months tenure.
- Interest payable monthly, quarterly, annually or at maturity depending on the series of NCD.
- Face value of bond is Rs 5,000 for Option I, II and IV and Rs 25,000 for Option III
- Minimum investment is Rs 25,000 and maximum is Rs 5 Lakhs. Additionally, you can invest in multiple of 1 bond.
- These NCD bonds would be listed in BSE. These are somewhat liquid investments provided buyers are available.
- NCD’s can be invested through Demat account or Physical form.
- Non-Resident Indians (NRI’s) cannot invest in these NCD’s.
- Senior Citizens and employees of D S Kulkarni Developers would get 0.25% higher interest rate compared to others.
- The issue size is Rs 100 Crores with an option to retain Rs 100 Crores aggregating to Rs 200 Crores.
Detailed prospectus from SEBI website can be downloaded here (Draft version)
Below is the Interest rate chart
D S Kulkarni Developers Secured NCD – How the returns taxed?
- If the NCD’s are purchased through demat account, no TDS would be deducted by the company on the interest paid.
- If the NCD’s are purchased in physical form, TDS would be deducted if interest exceeds Rs 5,000 as per tax guidelines.
- Income tax on interest would be based on individual tax slab. Means, irrespective of whether company deducts TDS or not, you should show the interest income on your income tax return and pay necessary income tax.
How the company is doing in terms of Financials?
- Revenues of the company have grown from Rs 213.7 Crores (FY 2009-10) to Rs 232.55 Crores (FY 2013-14) in the last 5 years
- Profits have declined from Rs 21.78 Crores (FY 2009-10) to Rs 13.05 Crores (FY 2013-14) in the last 5 years.
Why to invest?
- Well known company in real estate sector. Its stocks are listed in NSE/BSE.
- Secured NCD protects your money. Means in case of anything happening to the company and it gets closed, investors of NCD would still get the principal and interest. Hence it is safe to invest in such secured NCD’s.
- Attractive interest rates of 12.75% for 84 months NCD. Highest annualised yield of 13.5%.
Why not to invest?
- D S Kulkarni Developers profits are in a declining trend. In future, if profits further decline, interest payment could be delayed.
- Companies in Real Estate are high risk as real estate price fluctuates.
- These NCD’s are rated as BBB+ by Care which indicates a moderate degree of safety in terms of timely servicing of financial obligations. There are other high rated NCD’s which you can invest.
Conclusion: D S Kulkarni Developers NCD’s of August, 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. You can invest in such secured NCD’s considering moderate credit rating and other negative points indicated.
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D S Kulkarni Developers Secured NCD-Aug-2014