Edelweiss’ ECL Finance Limited 10.60% NCDs – February 2015 Issue

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

ECL Finance Limited, a subsidiary of Rashesh Shah’s Edelweiss Group, is launching its third public issue of secured, redeemable non-convertible debentures (NCDs) from the coming Thursday, February 26th. The issue will carry a maximum of 10.60% coupon rate with monthly, annual and cumulative interest payment options and will remain open till March 16th.

Size & Objective of the Issue – The company plans to raise Rs. 800 crore from this issue, including the green shoe option of Rs. 400 crore. The company plans to use at least 75% of the issue proceeds for its lending activities and to repay its existing loans and up to 25% of the proceeds for general corporate purposes.

Coupon Rate & Tenor of the Issue – Last time, the company offered its NCDs with 12% coupon rate and 70 months maturity period. This time the company has decided to issue its NCDs for a duration of 36 months and 60 months. The company has cut its offered rate of interest sharply to 10.45% and 10.60% for 36 months and 60 months respectively.

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Minimum Investment – Investors need to apply for a minimum of ten bonds in this issue with face value Rs. 1,000 each i.e. an investment of Rs. 10,000 at least.

Categories of Investors & Allocation Ratio – The investors have been classified in the following three categories and each category will have the below mentioned percentage fixed in the allotment:

Category I – Institutional Investors – 30% of the issue is reserved

Category II – Non-Institutional Investors – 20% of the issue is reserved

Category III – Individual & HUF Investors – 50% of the issue is reserved

NCDs will be allotted on a first come first served basis.

NRIs Not Allowed – Non-Resident Indians (NRIs), foreign nationals and qualified foreign investors (QFIs) among others are not eligible to invest in this issue.

Credit Rating & Nature of NCDs – CARE and ICRA have rated this issue as ‘AA’ with a ‘Stable’ outlook. As mentioned above, these NCDs will be ‘Secured’ in nature.

Listing, Premature Withdrawal & Put/Call Option – These NCDs will get listed on both the national exchanges i.e. Bombay Stock Exchange (BSE) as well as National Stock Exchange (NSE). The listing will take place within 12 working days after the issue gets closed. Though there is no option of a premature redemption, the investors can always sell these bonds on the exchanges.

Demat & TDS – Demat account is not mandatory to invest in these bonds as the investors have the option to apply these NCDs in physical form as well. Also, though the interest income would be taxable with these bonds, NCDs taken in demat form will not attract any TDS.

Financials of ECL Finance

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Loan Book of ECL Finance

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Should you invest in these NCDs?

Though the interest rates have fallen in the past one year and it is widely expected that there will be more rate cuts by the RBI and the commercial banks in the next 6-12 months, I think the rates offered by ECL Finance are on a slightly lower side for me to call it an attractive issue. I think these NCDs are suitable for those investors who have no taxable income or who seek regular monthly income. The investors would do well to invest in Gilt funds or bond funds as I think they should fetch higher returns in the next 3-5 years.

Application Form of ECL Finance NCDs

Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in ECL Finance NCDs, an investor can reach us at +919811797407

25 thoughts on “Edelweiss’ ECL Finance Limited 10.60% NCDs – February 2015 Issue”

  1. Please communicate Latest investment schemes for doubling moneys, monthly income plan , monthly saving schemes & term deposits.

  2. ECL Finance NCDs got listed on both the exchanges on March 13, 2015. BSE and NSE codes for the same are as follows:

    Series I – 10% interest, payable monthly – BSE Code – 935355; NSE Code – N8
    Series II – 10.45% interest, payable annually – BSE Code – 935357; NSE Code – N9
    Series III – 10.45% interest, payable on maturity – BSE Code – 935359; NSE Code – NA
    Series IV – 10.15% interest, payable monthly – BSE Code – 935361; NSE Code – NB
    Series V – 10.60% interest, payable annually – BSE Code – 935363; NSE Code – NC
    Series VI – 10.60% interest, payable on maturity – BSE Code – 935365; NSE Code – ND

    Deemed date of allotment has been fixed as March 11, 2015. Interest will be paid on April 1st every year under the annual interest payment option and on 1st of every month under the monthly interest payment option.

  3. Hi Shiv,

    Can you give BSE and NSE listing codes for the above issue. Thanks in advance for your help.

    Kind Regards

  4. Day 3 (March 2) subscription figures:

    Category I – Rs. 210 crore as against Rs. 240 crore reserved
    Category II – Rs. 45.45 crore as against Rs. 160 crore reserved
    Category III – Rs. 545.09 crore as against Rs. 400 crore reserved
    Total Subscription – Rs. 800.54 crore as against total issue size of Rs. 800 crore

    The issue stands closed today.

    1. Day 2 (February 27) subscription figures:

      Category I – Rs. 170 crore as against Rs. 240 crore reserved
      Category II – Rs. 38.09 crore as against Rs. 160 crore reserved
      Category III – Rs. 509.72 crore as against Rs. 400 crore reserved
      Total Subscription – Rs. 717.81 crore as against total issue size of Rs. 800 crore

    1. Thanks Ikjot!

      Here you have the Day 1 (February 26) subscription figures:

      Category I – Rs. 130 crore as against Rs. 240 crore reserved
      Category II – Rs. 31.07 crore as against Rs. 160 crore reserved
      Category III – Rs. 435.46 crore as against Rs. 400 crore reserved
      Total Subscription – Rs. 596.52 crore as against total issue size of Rs. 800 crore

  5. Shiv,
    What are the reasons based on which you prefer monthly interest option always? So that we can evaluate if those apply for us also to take the same route?

    1. ‘A bird in the hand is worth two in the bush’ – is what I follow in case of private debt investments. If the company keeps paying monthly interest regularly on time, it indicates company’s sound financial standing.

  6. Hi Shiv..Thx for the info.
    How shud be the liquidity of these bonds on listing. Will I be able to sell them on bourse easily?

    And secondly,
    Shud I go with the Monthly interest option??

    1. Hi Priyanka,
      Liquidity really depends on the demand & supply for these NCDs. As the rate of interest is on a lower side, the demand will also be lower. So, though you’ll be able to sell these NCDs on the exchanges, it will not be as easy as selling an equity share. But, I think this should not be a reason to avoid this issue. As this issue is bigger than the previous one, I think the liquidity should be relatively better.

      Whether you should go for the monthly interest option or annual or cumulative, it is completely your decision and it really depends on your requirements. Personally, I always prefer the monthly interest option, unless there is a compelling reason to do otherwise.

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