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NCD

Your

Instrument for Raising

Long Term Capital

NCD (Non Convertible Debentures)

Superior Fixed Return Investments

SUPERIOR FIXED RETURN INVESTMENTS

If you are looking for ways to earn a regular income from fixed return investments, you would normally come across options such as Provident Fund (PPF), National Savings Certificate (NSC), Bank Fixed Deposits (FDs) and Non-Convertible Debentures (NCDs). Each type has its own merits and limitations. For e.g., though returns from PPF are tax free, the investment in a year is limited to ₹1.50 lakhs and the money is locked in till the end of a 15 -year period.

Most people think of tax benefits, interest rates or security while considering such investments. However, an important decision that involves your hard-earned money should not be made on the basis of just one or two indicators. NCDs issued by corporates have gained significant attention from retail investors in the recent past and it is worth your time to study the various factors involved before making a well-informed decision.

What is a NCD?

Non-Convertible Debentures (NCDs) are debt instruments that companies registered under Companies Act 1956/2013 issue to raise money for their business. The period of these instruments is fixed and usually it ranges between 1-10 years. NCDs cannot be converted into equity shares at a future date. Buying equity shares of a company helps you become a shareholder of that company. However, in the case of NCDs, you are only a lender. As an investor in NCDs you can choose to receive a fixed interest regularly during the term of your investment. The other option is to choose to enjoy the benefit of compounding at a fixed rate and receive a lump sum on maturity. Further, Companies may offer an option to investors to withdraw the amount at a pre-determined date, called ‘Put Option’. Company may also reserve the right to redeem the NCDs at a predetermined date, called ‘Call Option’. NCDs may be listed on the Stock Exchange. This will facilitate easy sale or purchase of NCDs on any day and for quantities as small as one unit.

Secured and unsecured NCDs

Secured and unsecured NCDs

An NCD is secured when it is specifically mentioned as backed by the issuing company’s assets to fulfil the obligation.

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Interest Rates on NCDs

Interest Rate

Interest Rates on NCDs are generally decided based on the credit rating of the Company.

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DOMESTIC CREDIT RATING

Credit Rating

To provide an opinion on the relative probability of timely payment of interest and principal on the rated obligation.

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Liquidity Risk

Liquidity

It is possible for listed NCDs to be sold in the debt market through the stock exchange platform.

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NCD Taxation

Taxation

Bank FDs and NCDs give you interest which is added to your total income and hence both are taxable as per income tax slab.

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NCD Period

Period

Most NCDs offer periods ranging from 1 to 10 years. NCDs with longer periods offer a substantially higher return.

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How to invest in an NCD

If you are interested in investing in an NCD, you will need to have a Demat account with any SEBI registered broker. NCD issue is kept only for a certain period and will not be on offer all through the year. It is important to note the dates of the NCD offer and invest before the offer closes. However, the particular NCD will be available in secondary market if there are any sellers after the allotment and post listing at the Stock Exchange. The buyer can buy the NCD through the broker where he has a Demat account by offering the quoted price on the Stock Exchange.

NCD Period of Investment

Choose the period of Investment

Once you have decided to invest, you would first need to choose the period you want. This choice will depend on when you need the money and what your long term and short-term goals are.

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NCD Record Date & Payment

Earn more through NCDs

The regular income gained through NCDs can be instrumental in increasing your earning if it is used wisely.


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How to choose in an NCD

While deciding to invest in the NCD issue of a Company, the following factors may be assessed:

  • NCD Small IconTrack record of the company
  • Line of the business activityLine of the business activity
  • NCD ManagementManagement
  • Listed in stock exchangeListed in stock exchange
  • Profits made by the companyProfits made by the company
  • Assets Size of the companyAssets Size of the company
  • Credit RatingCredit Rating
  • Asset quality of the companyAsset quality of the company
  • Promoter holding Interest in the companyPromoter holding Interest
    in the company
DOMESTIC CREDIT RATING
SHORT TERM RATING
RATING AGENCIES RATING INDICATES
Commercial Paper    
CRISIL Ratings CRISIL A1+ Very Strong Degree of safety with regard to timely payment of financial obligation and carry lowest credit risk
ICRA Limited ICRA A1+ Very Strong Degree of safety with regard to timely payment of financial obligation and carry lowest credit risk
Bank Loans    
ICRA Limited ICRA A1+ Very Strong Degree of safety with regard to timely payment of financial obligation and carry lowest credit risk
LONG TERM RATING
Subordinated Debts    
CRISIL Ratings CRISIL AA+/Stable High Degree of safety with regard to timely servicing of financial obligations and carry very low credit risk.
ICRA Limited ICRA AA+(Stable) High Degree of safety with regard to timely servicing of financial obligations and carry very low credit risk.
Non-Convertible Debentures    
CRISIL Ratings CRISIL AA+/Stable High Degree of safety with regard to timely servicing of financial obligations and carry very low credit risk.
ICRA Limited ICRA AA+(Stable) High Degree of safety with regard to timely servicing of financial obligations and carry very low credit risk.
Bank Loans    
ICRA Limited ICRA AA+(Stable) High Degree of safety with regard to timely servicing of financial obligations and carry very low credit risk.

 

INTERNATIONAL CREDIT RATING
LONG TERM RATING
RATING AGENCIES RATING INDICATES
Fitch Ratings BB(Stable) An elevated vulnerability to default risk, particularly in the event of adverse change in business or economic condition over time, however, business or financial flexibility exists that supports the servicing of financial commitments.
S&P Global Ratings BB (Negative) Less vulnerable in the near-term but faces majpr ongoing uncertainities to adverse business, financial and economic conditions.
Moody's Investors Service Ba2 (Stable) Obiligations are judged to bespeculative and are subject to substantial credit risk. The modifier 2 indicates a midrange ranking

 

MARKET LINKED DEBENTURES

 

Muthoot Finance Limited (“MFIN”) issued Rated, Secured, Redeemable, Non-Convertible Debentures which are Principal Protected and Market Linked (“PPMLDs”).

 

Please review the relevant offer document/memorandum of private placement relating to specific PPMLDs for details on the PPMLDs including their risk factors. CRISIL Limited has been appointed as the valuation agency for the valuation of these PPLDs.

 

As per the Guidelines for Issue and Listing of Structured Products / Market Linked Debentures dated September 28, 2011 issued by SEBI, depending on the valuation agency mentioned in the offer document/memorandum of private placement; latest and historical valuations provided by the valuation agent will be available at:

 

CRISIL Limited: Click Here to Know More

 

The regular income gained through NCDs can be instrumental in increasing your earning if it is used wisely.

Tranche Offer Document

 

31-03-2021

07-12-2020

22-10-2020

Shelf Offer Document

 

QUARTER I (JUNE,2015)

22-10-2020

DRAFT SHELF OFFER DOCUMENT

 

DRAFT SHELF PROSPECTUS

DRAFT SHELF PROSPECTUS

ADDENDUM TO DRAFT SHELF PROSPECTUS

 

BS_DELHI_15.10.20

METRO VAARTHA_CLT_P3_15.10.20

MUMBAI_BS_15.10.20

1. Record date intimation

FY 2020-21

March 2021

JANUARY 2021

DECEMBER 2020

FY 2021-22

APRIL 2021

MAY 2021

JUNE 2021

July 2021

AUGUST 2021

SEPTEMBER 2021

OCTOBER 2021

NOVEMBER 2021

DECEMBER 2021

JANUARY 2022

FY 2022-23

JUNE 2022

2. Payment confirmation

FY 2020-21

MARCH 2021

FEBRUARY 2021

JANUARY 2021

DECEMBER 2020

FY 2021-22

APRIL 2021

MAY 2021

JUNE 2021

JULY 2021

AUGUST 2021

SEPTEMBER 2021

OCTOBER 2021

NOVEMBER 2021

DECEMBER 2021

JANUARY 2022

FEBRUARY 2022

MARCH 2022

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