Salem Erode Investments Limited has taken a significant step in raising funds through a private placement of debentures. The company's Board of Directors has approved the issuance of unlisted secured redeemable non-convertible debentures (NCDs) worth Rs 1.05 crore.

Key Details of the Debenture Issue

Debenture Schemes and Tenure Options

The company is offering multiple tenure options for investors:

1. 36-Month Monthly Scheme

   • Coupon Rate: 12% per annum
   • Interest Payment: Monthly

2. 36-Month Cumulative Scheme

   • Interest Payment: At maturity

3. 68-Month Cumulative Doubling Scheme

   • Interest Payment: At maturity

Security and Put Option

The debentures are fully secured against the company's current assets, loans, advances, standard gold loan receivables, and other unencumbered assets. A minimum security cover of 100% will be maintained for the outstanding balance of debentures and accrued interest.

Investors in the 36-month scheme have the option to exercise a put option, allowing for early redemption. However, this will result in an adjusted interest rate as per the terms outlined in the Private Placement Offer cum Application Letter.

Debenture Trustee and Allotment Timeline

Vistra ITCL (India) Limited has been appointed as the debenture trustee for this issue. Salem Erode Investments Limited plans to complete the allotment process within 30 days of receiving the application money from investors.

This move by the company to raise funds through secured NCDs could potentially strengthen its financial position and provide capital for its operations or expansion plans. However, investors should carefully review the terms and conditions of the offer before making any investment decisions.

Salem Erode Investments Limited (SEIL) has announced a significant move in its financial strategy, approving the issuance of unlisted secured redeemable non-convertible debentures (NCDs) worth Rs 75 lakhs through private placement. This decision, made by the company's Board of Directors, marks a notable development in SEIL's capital raising efforts.

Debenture Details

The company plans to issue 7,500 NCDs, each with a face value of Rs 1,000. These debentures will be offered in one or more tranches, providing flexibility in the issuance process. SEIL is offering investors two tenure options:

1. 36-month scheme
2. 68-month scheme

For the 36-month monthly scheme, SEIL has set a coupon rate of 12.00% per annum, payable on the first day of every month. This option caters to investors seeking regular income streams.

Additionally, the company is offering cumulative schemes for both 36 months and 68 months, with payment at maturity. The 68-month scheme is notably marketed as a 'doubling' scheme, suggesting potential attractive returns for long-term investors.

Security and Trustee

To ensure investor confidence, the debentures are fully secured against the company's current assets, loans, and advances. This includes standard gold loan receivables and other unencumbered assets, maintaining a minimum security cover of 100% of the outstanding balance of debentures and accrued interest.

Vistra ITCL (India) Limited has been appointed as the debenture trustee, adding an extra layer of security and oversight for investors.

Allotment and Put Option

SEIL has committed to completing the allotment within 30 days from the receipt of application money, ensuring a swift process for interested investors.

The company is offering a put option for the 36-month scheme. This feature allows debenture holders to exercise the option as per the terms and conditions outlined in the Private Placement Offer cum Application Letter. However, exercising the put option will result in a reduced interest rate.

Regulatory Compliance

The company has made the necessary disclosures as required under the master circular issued by the Securities and Exchange Board of India (SEBI) on November 11, 2024. This ensures transparency and compliance with regulatory standards.

Conclusion

This move by Salem Erode Investments Limited to raise Rs 75 lakhs through secured NCDs demonstrates the company's strategic approach to capital raising. By offering varied tenure options and attractive interest rates, SEIL aims to appeal to different investor preferences while securing funds for its operations and growth initiatives. As the private placement process unfolds, it will be interesting to see the market response to this offering.