Shriram Transport Finance NCD Review

by Manshu on June 22, 2011

in Fixed Deposits

Shriram Transport is the latest company to offer a debt issue, and they’re going to offer NCDs (Non Convertible Debentures), to retail investors which offer interest rates from 11.35% to 11.60% per annum in the reserved category.

The issue size is Rs. 500 crores (with an option to issue additional Rs. 50o crores if there’s demand), and they have divided applicants into three categories.

The prospectus shows that the company already has secured debt of 14,869.37 crores, and the money raised from this issue will add to the existing secured debt.

Retail investors come under the third category, and as long as their application is for bonds worth less than Rs. 5 lacs, they will be considered under the portion reserved under the retail category, and offered the slightly higher interest rate of 11.60% p.a. for 5 years, or 11.35% p.a. for 3 years.

Shriram Transport NCD: Open and Close Date, and Credit Rating

The issue opens on June 27 2011, and closes on July 9 2011. Going by past issues – I think online brokers will give you an option to invest in these, but that will perhaps not start on day one itself.

The issue has been rated AA/Stable by CRISIL and CARE AA+ by CARE, which for whatever it’s worth is a good rating. Further, these are secured debt instruments so that lends them additional safety as well.

Interest Rate and Options of Shriram Transport NCD

They have kept things simple by having only an annual interest rate payment option (no cumulative option), and two series – one for 5 years, and another for 3 years.

Here are the interest rates and other details of retail reserved category.

Details

Option 1

Option 2

Tenor

60 months

36 months

Interest Rate

11.60%

11.35%

Put / Call Option

Exercisable after 48 months

NA

Interest Payment

Annual

Annual

The Put / Call Option means that at the end of 4 years you can redeem the bonds with the company, or Shriram Finance can redeem them if they so desired.

As far as I know, this is the first issue in which a company has given this option to the investor. Normally, they keep this option for themselves, but the investors don’t have it.

Minimum Investment and Compulsory Dematerialization

Each bond has a face value of Rs. 1,000 and you have to invest a minimum of Rs. 10,000 after which you can invest in multiples in Rs. 1,000 each.

These will be compulsorily in Demat form, so you need a Demat account to invest in these, and can’t hold them in physical form.

One series has a tenor of 5 years, and another tenor of 3 years, but they will both list on the NSE (National Stock Exchange), so if you needed money before maturity – you could sell them in the open market.

However, prices vary in the open market, and if interest rates rise much further then you may even get less than the face value of these bonds.

TDS on Shriram Transport Finance NCD

Since these bonds will only be issued in demat form, and trade on a stock exchange – tax will not be deducted at source on them.

However, this doesn’t mean they are tax free. They will attract tax, just that it won’t be deducted at source. Also, they don’t have any tax benefits at all.

Conclusion

You need to look at it in two parts, – first is attractiveness of offer, and second is security of your money.

Shriram Transport Finance is offering a reasonably good interest rate for the medium term (3 – 5 years).

While banks offer a high interest rate for the short term, they aren’t willing to let you lock on to the higher rate for a period of 5 years or so.

Thinking about safety of money becomes tricky. You can look at smaller companies and decide that the extra percent or two is not worth the risk, or you can look at bigger companies and think that this is safe, but companies like Shriram Transport Finance are a bit harder because they’re somewhere in the middle.

The promoters own a large chunk of the company (slightly more than 40%) so that’s a good sign, there are no pledges on their stock which is a good sign, and the company has been rated well by the issuers which is also a good sign.

However, I’ve always felt that it’s better to be diversified and not expose yourself too much to one stock or one company’s fixed deposit. If something does go wrong, then the loss should not bring your entire portfolio down with it, but should be something that you can deal with and hopefully replace with the other investments you have.

In good times such as these, it’s sometimes hard to think what can go wrong, but you all know too well things do go wrong all the time.

In fact, in the prospectus of this issue itself, they have mentioned a time in 1998 when the BSE suspended trading in their shares due to non – compliance. How would you feel if that were to happen, and you had 50% of your money stuck in this deposit?

So, I’d say keep these things in mind while making your decision, and as always, all questions, comments and observations are welcome!

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{ 77 comments… read them below or add one }

manoharkantak June 22, 2011 at 7:57 am

You have been honest in providing all the details of Shriram Transport Finance Ltd. NCD’s .
Frequent borrowing from the market do send an alarm, at the same time middle class is left with little choice. The only caution that we can take is not to put all eggs in one basket as you have advised. Things can go wrong anywhere anytime. Many times the information is also concealed to build investor confidence.

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Manshu June 22, 2011 at 9:28 pm

Thanks Manohar! Your comment is very timely for me. A few hours ago, someone commented on a gold post insinuating I was deliberately holding back information, and didn’t want to share the right info.

Made me wonder what I’m doing wrong to make someone think I’m trying to deceive people. It makes no diff to me whether someone buys a gold coin or an ETF – I don’t stand to gain either way do I?

So, thank you very much for your comment!

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Sanjay June 26, 2011 at 5:21 pm

I think what manoharkantak meant is — Many times the information is also concealed “by bond issuing companies” to build investor confidence.

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Manshu June 26, 2011 at 11:46 pm

Yes, Sanjay – that’s what I interpreted it to be.

When I mentioned about what made some people think that I’m trying to deceive people that was with reference to another comment that someone else made, not Manohar.

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Ayush Jain June 22, 2011 at 9:43 am

Thanks for the article.

Can you explain what is meant by ‘secured’ here, and how does that ‘lend them additional safety’.

Btw, the TamilNadu Mercantile bank is offering 10% on FDs for the 5-10 year period, so that seems to be another decent option for locking in long-term rates. Saw this in a newspaper, no idea on how stable this bank is.

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Manshu June 22, 2011 at 9:15 pm

Hi Ayush,

Thanks for mentioning Tamil Nadu Mercantile Bank, I’ll try to look that up, but from experience know that not a lot of people are interested in opening a FD there (for whatever reasons).

To your question, when a company issues debt – it’s either secured or unsecured. Secured means they have some assets that cover the debt, and in case of default the creditors can sell those assets and recover the money.

Unsecured means that there are no assets earmarked to cover the debt, and only after everyone else is paid off, do the unsecured creditors get paid.

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Value Investor June 23, 2011 at 12:27 pm

Can you plz elaborate on why people may not be interested in opening FD with TMB?
I had mentioned the rates offered while discussion on Muthoot NCD/IFCI. I was in fact considering opening FD for longer duration with TMB.
Plz let me know what could be possible reasons to not go with it?

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Manshu June 23, 2011 at 10:59 pm

Things like a smaller network, not being sure of customer service, having to open another account, general perception of this being a lesser known and much smaller bank. These kind of soft factors if I may call them that.

Now, my experience can be biased by talking to people mostly in Delhi.

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Mithlesh June 22, 2011 at 3:54 pm

Hi Manshu…
Many thanks for this one!! I was about to ask for a review of this NCD. I skipped IFCI and planning to invest in this one.

How do you think one should go about it in terms of application money as this can be oversubscribed as well and the prospectus says its on first come first server basis?

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Manshu June 22, 2011 at 9:10 pm

Hi Mithlesh, how are you doing?

Yeah, they talk about doing this first come first serve & they’ll use the date on the bank receipt. So, looks like anyone interested should use the offline method rather than wait for their brokers to facilitate this online.

That was a great point you brought up – thank you!

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krish June 23, 2011 at 7:24 pm

Manshu,

FYI: I received a mail from ICICI Direct regarding this today. They’ve enabled online application for Shriram’s NCD

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Manshu June 23, 2011 at 10:50 pm

Thanks Krish – That’s great for people interested in this. In general, my feeling is that ICICI Direct is the first one to get most bond offers online, and other companies do it later. Do you have any thoughts on that? Thanks!

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Mithlesh June 23, 2011 at 11:40 pm

Thanks Manshu!! I am doing fine…I may apply for this issue as the minimum amount is lesser company is well known and looks stable to me( i have stocks as well of STFC which has given me exemplary returns so far :)- ) . There is no doubt about this company as it is one of best NBFCs at the moment.

Also muthoot finance and manappuram general finance are also likely to come up with NCDs in the next few weeks. Its raining bonds and NCDs :)- One should take advantage of these issues in these uncertain times.

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sorabh June 23, 2011 at 12:31 am

hi Manshu,
can you throw some light on when the interest rates goes up the coupon value will be less than the face value ? also i read somewhere that when an New offer on a bond is issued there are traders in the market but after some time say like 3 yrs or so , its very difficult to find buyers esp when the coupon value is traded at less value to the face value, and also advise that in such a case wud an investor be better off in holding it to maturity ? and will the implication of tax be covered at the end of 5 yrs ? will it be indexed ?

regards
Sorabh

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Manshu June 23, 2011 at 11:08 pm

Hi Sorabh,

So think of a situation where these bonds are listed and are trading at say par value. Now imagine, interest rates go through the roof and hit 25%. If STFC comes back with a fresh issue in this case with a rate of interest that’s 25% – think of what will happen to the price of bonds that pay only 11.35%. They are nearly not as valuable enough as they used to be now because with the same Rs. 1,000 you can generate 25% interest. That’s what I meant.

The bond market is still developing in India, and I don’t think we have enough history to say that after a few years the bond will not have enough demand. This market is still developing, and we’ll have to wait a few years before making generic statements like that. That’s my opinion anyway.

But, yeah, if for whatever reason you’re bond is trading for less than its face value then better hold it till maturity.

Yes, it will be indexed if your bonds have not been redeemed at face value (you chose the cumulative option at the beginning)

Hope this answers your questions!

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Madhab June 23, 2011 at 12:09 pm

Hi Mansu,
First time reader of the blog, but must say I really liked you style of writing..
Simple and precise – exactly what I was looking for.
Thanks and keep up he good work!

~Madhab

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Manshu June 23, 2011 at 11:03 pm

Thanks Madhab,

Stick around and you’ll notice that there are a lot of smart readers here as well. The comment section has a wealth of information, and is sometimes better than the post itself :)

Thanks and hope to see you here in the future as well!

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K V Subba Rao June 23, 2011 at 1:34 pm

Lakshmi Vilas Bank (LVB) is offering Interest at 10.75 % quarterly compounding for a TWO years’ term for Senior Citizens. Effective rate of Interest p.a. works out to 11.19 %. When we compare this with 11.35 % Interest rate p.a. offered by Shriram Transport Finance for NCDs of THREE years’ term, the difference amount involved is only Rs 160 for one year on an investment of Rs 100,000.

Karur Vysya Bank (KVB) is offering Interest at 10.50 % quarterly compounding for a TWO years’ term for Senior Citizens. Effective rate of Interest p.a. works out to 10.92 %. When we compare this with 11.35 % Interest rate p.a. offered by Shriram Transport Finance for NCDs of THREE years’ term, the difference amount involved is only Rs 430 for one year on an investment of Rs 100,000.

It appears to me that above differences of Rs 160 (LVB) and Rs 430 (KVB) for one year period on an investment of Rs 100,000 is not significant enough for parking our funds in NCDs from security and liquidity (availability of overdraft facilities to bank upon in case of emergencies) point of view

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Manshu June 23, 2011 at 10:53 pm

Thank you for your comment Mr. Rao, I guess senior citizens, who want to open a FD in these banks and don’t mind the shorter duration are better off with the banks. But it really depends from individual to individual in my opinion.

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Alpesh June 25, 2011 at 12:27 pm

Dear All,

I have enquired just few days back that Union Bank of Indi is offering a FD in which your money gets doubled in seven and a half years. I have not checked but they say the interest rate is 9.40 % compound and the yield sets to something more than 14 % prior to tax.

So, safety of a natianalised bank and as you say high interest rate for a longer period.

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Manshu June 28, 2011 at 8:09 pm

Alpesh, that means they are offering a FD for 9.40% per year probably compounded quarterly or something. In order to compare this with another product you can simply look at what is the per year rate of interest they offer.

Here is an article about it, I’d say you’re better off ignoring yields and focusing on yearly interest rate:

http://www.onemint.com/2011/06/15/dont-confuse-yields-with-interest-rates/

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Paresh June 28, 2011 at 8:29 pm

But what I think,,one can improve the yield by reinvesting the yearly interest received at some proper place.

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Manshu June 28, 2011 at 10:44 pm

Yes, absolutely, and that should be a key thing to think about. Where can you invest the money to earn a reasonable rate of return without much risk. My observation is only with respect to comparing a yield with an annual interest rate.

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Ashok June 24, 2011 at 8:06 am

Hello Manshu,
As usual a well-balanced article.

I am planning to give STFC bond issue a miss, as I already substantially invested in their 2008 issue and, as you correctly put it, don’t want to put all the eggs in the same basket.

I can’t understand why mutual funds don’t bring out FMPs with longer tenures. With the high interest rate regime now, that would have been a good option to lock in for a long period. (Perhaps, there aren’t enough long term corporate bond issues ?)

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Shiv Kukreja June 24, 2011 at 8:50 pm

Hi

I think these bonds (SBI 9.95%, IFCI 10.75%, Shriram 11.60% etc.) score reasonably high over Bank/Company FDs as there are many features in favor of these bonds like Higher Interest Rates, No TDS, Easy Liquidity through Listing on BSE/NSE, scope of Listing Gains, scope of Capital Appreciation, No Penalty on Pre-Mature Withdrawal etc.

Also provision of Online Investment facility provided by various broking houses like ICICI Direct, Edelweiss Broking, Sharekhan etc. has given quite a big relief to the investors who dont easily get services from brokers or distributors.

To invest in Shriram Transport Finance 11.60% NCDs or for any other info Contact us at 9811797407 (For Delhi, Gurgaon & Noida).

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Vimal June 25, 2011 at 12:06 pm

First of all, I should thank you for such a kind of helpful articles about Capital markets. Your articles are easy to understand and really helping a person from the non-finance background as like me.

Indiabulls also announced the online application for this NCD bond and I’m planning to invest only a very small amount to not to take more risk. What your thoughts?

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Manshu June 28, 2011 at 8:10 pm

Thank you Vimal!

I think as long as you’re diversified and don’t put too much eggs in the same basket you should be fine.

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Paresh June 26, 2011 at 10:42 pm

I have send link of your article to my clients and hopefully they will take good decision based on your review.

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Manshu June 28, 2011 at 8:05 pm

Thanks Paresh! Just curious to know what questions your clients have about these kind of NCDs. I may be able to write some articles around their questions. Thanks!

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Paresh June 28, 2011 at 8:26 pm

Dear Manshu,
In fact peoples do not understand how NCDs works?How they differ from fixed deposits? If it is secure then why there are so much risk factors in offer document and so on….

Also,,Whenever a new product comes and If i do not have much understanding about it I used to send peoples different views which I find useful so that they can take investment decisions of their own.

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Manshu June 28, 2011 at 10:45 pm

Dear Paresh,

Thanks for your comment. It’s great that you point out different perspectives to your clients and help them take a decision. I will try to write about some of these topics in a post and try to answer some questions.

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manish June 27, 2011 at 12:42 pm

Economic Times had reported on June 23:
“Though NCDs are listed on the stock exchange, hardly any trading takes place. Some earlier NCD issues of Shriram Transport (Series NF and Series NG) are available in the secondary market, with a yield ranging between 12% to 12.8%, which is slightly higher than the current yield.”

So, why not buy from the secondary market? and how to buy online from secondary market? please advise.

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Manshu June 28, 2011 at 8:03 pm

The article says that it is not liquid which means it’s not very easily bought or sold, so that’s one reason to directly get it. Secondly, you might not get it at the face value from the secondary market. It may be selling at a premium and you have to pay a little extra to buy them Manish.

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sudesh June 28, 2011 at 7:40 am

why does subramoney not rate this issue very high? He says invest in sbi bonds which are already listed?

should one invest in Shriram transport finance or ignore this issue?

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Vivek June 28, 2011 at 8:05 pm

Nice article.

One question

Is interest income taxable every year on this bonds or capital gain taxable at the time of maturity

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Manshu June 28, 2011 at 8:17 pm

Thanks Vivek.

Since interest payment is annual, it will be taxable every year. At the time of redemption you will not have to pay any capital gains since the bonds will be redeemed at the face value.

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Vivek June 28, 2011 at 8:42 pm

@manshu appreciate your response.

So you are saying it will be clubbed as other income and normal tax rates will be applicable.

Also are you suggesting annually interest will be credited to the linked savings account.

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Manshu June 28, 2011 at 10:41 pm

Hi Vivek – Yeah, interest will be added to your income and be taxed. It will be credited annually with whatever option you choose, savings bank, mail a check or whatever other options they have going.

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ManishG June 29, 2011 at 5:32 pm

Hi,

Just to update you guys that NCD issue is closed for subscription on day 1 itself.

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Manshu June 29, 2011 at 7:56 pm

Incredible! Looks like the gray market is in full swing here!

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Vivek June 29, 2011 at 8:17 pm

Wasn’t it supposed to close on July 9 ?

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Shiv Kukreja June 30, 2011 at 12:36 am

Shriram Board had the option of early closure of the NCD Issue in case of over-subscription, which they exercised yesterday.

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Shiv Kukreja July 12, 2011 at 11:56 am

Final Subscription Figs. of Shriram Transport NCD: QIB – 1.10 times, Corporates – 0.56 times, Retail upto Rs. 5 Lacs – 5.44 times, Retail after Allocation – 3.61 times, Non-Retail above Rs. 5 Lacs – 0.68 times

Listing likely to happen between July 18th & July 20th

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Manshu July 12, 2011 at 7:06 pm

Thank you Shiv!

What is the difference between Retail up to 5 lacs and Retail after allocation? Thanks!

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Shiv Kukreja July 13, 2011 at 12:32 am

Hi Manshu.. Honestly speaking even I didn’t know whats the difference was till the time you asked me this thing.. But when something had been asked I was required to find it out.. so what I’m able to find out is this:

(Note: Issue Size – Rs. 500 Crores & Green-Shoe Option – Rs. 500 Crores)

Category >> Max % Allotment >> Subscription >> Subscription in Rs. >> Actual Allotment

QIB >> 10% of Rs. 500 Crs. >> 1.1 times of Rs. 50 Crs. >> 55 Crs. >> 50 Crs.
Corporates >> 10% of Rs. 500 Crs. >> 0.56 times of Rs. 50 Crs. >> 28 Crs. >> 28 Crs.
HNIs >> 40% of Rs. 1000 Crs. >> 0.68 times of Rs. 400 Crs. >> 272 Crs. >> 200 Crs.
Retail >> Remainder of Rs. 1000 Crs. >> 5.44 times of Rs. 400 Crs. >> 2176 Crs. >> 722 Crs.

So Retail upto Rs. 5 Lacs – 5.44 times of Rs. 400 Crs. is Rs. 2176 Crores
& Retail after Allocation – 3.61 times of Rs. 200 Crs. is Rs. 722 Crores

(Note: I might be wrong here in my analysis as the figures are still source based & the company is yet to announce something publicly)

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Manshu July 13, 2011 at 4:19 am

Thanks for spending the time on this, let’s hope to see the official release soon, and get confirmation on your theory.

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Shiv Kukreja July 13, 2011 at 9:56 am

Hi.. Basis of Allotment for Retail Investors upto Rs. 5 Lacs is out:

No. of Bonds Applied No. of Bonds Allotted
10 3
50 14
100 28
200 55
300 83
400 111
500 138

Allotment is approx. 27.7% (100/3.61) of Retail Application Money.

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Manshu July 14, 2011 at 5:58 am

Thanks for this note Shiv. I think I’ll create a post out of all this info you have provided.

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Shiv Kukreja July 13, 2011 at 11:16 am

No. of Bonds Applied >>> No. of Bonds Allotted
10 >>> 3
20 >>> 6
25 >>> 7
30 >>> 8
50 >>> 14
100 >>> 28
200 >>> 55
300 >>> 83
400 >>> 111
500 >>> 138

Allotment is approx. 27.7% (100/3.61) of Retail Application Money.

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Shiv Kukreja July 14, 2011 at 3:31 pm

The Allotment has been done and all of the valid retail applications have been given the allotment on a pro-rata basis.

Link to the Allotment Status:

http://www.iepindia.com/irncd_detail_2.asp

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Manshu July 15, 2011 at 12:41 am

Thanks Shiv!!!!

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Gajanan Gajre July 14, 2011 at 5:23 pm

I have applied for Rs.300000/- worth of NCDs. Can you tell me if my cheque is recived in your office. Cheque No. 239264 Bank of Maharashtra, Jalgaon Road Branch, Jalgaon. I am worried if this cheque has reached your office or not. It was sent through an agent of Bajaj Capital, Jalgaon.

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Manshu July 15, 2011 at 12:40 am

This isn’t the STFC, so won’t be able to give you any info. Who helped you fill the application form? That person should be able to help you locate information on your check.

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Shiv Kukreja July 15, 2011 at 9:25 pm

Hi.. Listing to happen on Monday – July 18, 2011 on both BSE & NSE..

Source:

http://www.bseindia.com/cirbrief/new_notice_detail.asp?noticeid={E2B52074-087D-4393-8615-CC1A59B67A4F}&noticeno=20110714-19&dt=7/14/2011&icount=19&totcount=19&flag=0

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Manshu July 15, 2011 at 9:57 pm

Thanks Shiv, will be interesting to see how it lists. I hope it’s not at a big premium or anything.

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Shiv Kukreja July 16, 2011 at 1:34 pm

I dont think the premium would be more than 1-2% max. and realistically speaking there is a possibility of it trading at a discount on the first day itself bcoz of huge no. of people selling it due to speculative trading or grey market compulsions…

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Manshu July 18, 2011 at 4:00 am

Really at a discount? That will be something now, and I hope that’s the way it turns out too!

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Shiv Kukreja July 18, 2011 at 4:24 pm

Shriram Transport Finance 11.60% NCDs listing happened at Rs. 1020.10 and the price touched a high of Rs. 1035.90 during the day.. for most part of the trading time, it was between Rs. 1030 – Rs. 1033 and closed at Rs. 1031.26.. so the listing happened as per the Grey Market expectations.. The price is expected to move up a bit in the coming few days.. Cheers for the investors who invested without borrowing funds.. :-)

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Manshu July 19, 2011 at 3:59 am

Pretty impressive, are they visible on your Edelweiss platform already? How does one buy these bonds? I see many STFC bonds available on ICICI Direct, but uncertain which one this code signifies.

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Shiv Kukreja July 19, 2011 at 10:25 am

Most of these broking websites use NSE Codes for STFC NCDs and the Codes are NL, NM, NN, NO, NP and NQ. NL is for 11.60% Bonds and NO is for 11.35% Bonds, both for Individuals/HUF with application upto Rs. 5 Lakhs.

BSE Codes for these Bonds are 934810, 934811, 934812, 934813, 934814 and 934815. 934811 is for 11.60% & 934814 is for 11.35%, again for Individuals/HUFs upto Rs. 5 Lakhs.

Edelweiss is yet to put it on its platform & I hope by today it should be done but these are available on Edelweiss Terminals. I was not able to find it on Kotak Securities site as well. One can buy these bonds through their brokers as they buy other shares/securities as these are available on the NSE/BSE Exchange Terminals.

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Manshu July 19, 2011 at 10:53 pm

Thanks Shiv – I think a lot of people are looking for this kind of info, and I’ll do a post on this soon.

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R Ramamurthy October 5, 2011 at 12:47 pm

Your posts and comments are just fantastic and so very informative.I dont know how you manage all this .Please keep it up and may God bless you and your family.

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Manshu October 5, 2011 at 11:35 pm

What a lovely compliment – thank you so much!

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ramamurthy October 11, 2011 at 11:31 am

What is the BSE Scrip Code for Shriram Transport finance NCD issue of 60 months NCd carrying a coupon rate of 12.10%.This series was listed in Aug 2011.I dont know the exact date.Thanks.

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KAUSAR August 24, 2012 at 5:25 pm

I’ve got NCDs of shriram transport finance co Ltd in july 2011.
my option is of 3yrs and annual interest. I’ve not yet recd any interest
in my account. Please guide me.

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Shiv Kukreja August 25, 2012 at 1:07 am

Hi Kausar… you must have got the interest payment credited into your bank a/c. in the first week of April 2012, please check.

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Nishanth January 16, 2013 at 10:27 am

Hi Shiv,

I had got the payment credited to my account, but the yield appears to be 8% rather than 11.35% pa for the 3 year option. Can you throw some light on why it might be so?

Thanks,
Nishanth

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Ramamurthy January 16, 2013 at 4:25 pm

Full details of the investment made and dates of investment and the amount you have received on maturity and whether the initial investment made by you was thro secondary market etc is required please to answer your query.

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Nishanth January 16, 2013 at 9:35 pm

Hi,

I applied for the initial allotment of STFC NCD (STFCl5) around July 2011, for an amount of Rs 1 lakh and was alloted a total amount of Rs.28000.The option was for 3 years for a rate of 11.35% pa.For the first year ( from July 2011-Mar 2012) , I received an interest of Rs 2292. So was wondering if the difference between the said rate(11.35%) and what I actually received was because the period was for less than 12 months. Even then it should be a bigger amount , though and I understand that there is no TDS involved.

Thanks,
Nishanth

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Shiv Kukreja January 17, 2013 at 1:11 am

Hi Nishanth,

There is no TDS involved here and the interest paid is also correct.
Please check this:
Date of Allotment – July 20th, 2011,
Interest Due Up To – March 31st, 2012,
No. of days from July 20th to March 31st – 264
Rs. 28,000 * 11.35% * (264/366) = Rs. 2,292.33

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Nishanth January 17, 2013 at 9:35 am

Got that,Shiv…Thanks a lot:)

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Sunny August 30, 2012 at 3:14 pm

Hi

STFNCD Face value was 1000 per NCD but the same are available today in secondary mkt for 625/-. Howcome. aftreall NCDs are not shares. Second, if we buy today @625 are not we assured of redemption at 1000/-. Am unable to understand why anybody will sell at 625 and why no one is buying the same. I chked in Best Bids/Offers there are around 230 sellers in range of 625-630. Pl clear this doubt.

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Shiv Kukreja August 30, 2012 at 4:43 pm

Hi Sunny… You’ve mistakenly checked the share price of Shriram Transport Finance Company Limited on the NSE, please check the NCD prices.

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Sunny August 30, 2012 at 5:28 pm

Its a coincidence company’s share price and its NCD’ mkt value is almost same. You may pl rechk. I chked at ICICI Direct STFNCD code is INE721A07952, last traded price 626/- I talked to my relationship mgr thr but he was equally confused n could not guide

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Shiv Kukreja August 30, 2012 at 5:49 pm

I’m sorry Sunny, you are absolutely right! It is an NCD with ISIN – “INE721A07952″ and Symbol – “SRTRANSFIN N1″ on the NSE and “934785” on the BSE.

Actually what has happended, on August 26, 2012, 40% of the Face Value i.e. Rs. 400 per NCD has been redeemed by the company, which has made the NCD price fall by approximately this much. Remaining 60% of the Face Value will be redeemed in 2 tranches – 40% on August 26, 2013 and 20% on August 26, 2014.

Source: http://www.edelweiss.in/Debt/DebtSnapshot.aspx?cn=SRTRANSFIN-N1

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Sunny August 31, 2012 at 11:35 am

True thats what has happened. Thanx for the info for Mr Kukreja. I have chked from my frnds and they have got the 40% valur credited in their accounts but without any communication from company in this regard. Even call option was to be execised after 4 years i.e. wef 26/08/2013. There was not any disclosure from the company. Anyways Thanx a lot

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Shiv Kukreja August 31, 2012 at 12:57 pm

You are most welcome Sunny! As far as my experience goes with the communication process of Shriram Transport, they are very fast and active and way better than other NBFCs. I think you’ll get some communication from their side in case your address and email id are correctly captured or updated in the demat account.

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