Transwarranty Finance Limited has announced plans to raise up to Rs 12.95 crore through the issuance of unlisted Non-Convertible Debentures (NCDs) on a private placement basis. The company's Board of Directors has given the green light for this strategic financial move, which includes a diverse range of debenture offerings.

NCD Offering Details

The NCD issuance comprises three distinct categories:

1. Secured NCDs: 295 debentures at Rs 1 lakh each
2. Unsecured NCDs: 500 debentures at Rs 1 lakh each
3. Special Category Type B NCDs: 50 debentures at Rs 10 lakh each

Terms and Conditions

The secured NCDs will be backed by a pari-passu charge on certain current assets of the company, providing an additional layer of security for investors. It's worth noting that these NCDs will not be listed on any stock exchanges, making them a private investment opportunity.

Implications for Investors

This move by Transwarranty Finance Limited presents a potentially attractive investment option for private investors looking for fixed-income securities. The varying tenures, interest rates, and payment frequencies across the different NCD types offer flexibility to suit different investor preferences.

The higher interest rates on the unsecured and special category NCDs reflect the increased risk associated with these instruments, as they lack the asset-backed security of the secured NCDs.

Company Strategy

By opting for unlisted NCDs, Transwarranty Finance Limited is likely aiming to raise capital without the regulatory complexities and costs associated with public listings. This private placement approach allows the company to tap into funds from a select group of investors, potentially streamlining the fundraising process.

The diverse NCD offering suggests a strategic approach to cater to different investor segments and optimize the company's debt structure. The funds raised could be utilized for various purposes such as expanding operations, refinancing existing debt, or strengthening the company's financial position.

As this is a private placement, potential investors would need to conduct thorough due diligence and consider their risk appetite before participating in this NCD issuance.

Transwarranty Finance Limited (TFL) has reported mixed financial results for the first quarter, along with several strategic decisions approved by its Board of Directors.

Financial Performance

On a standalone basis, TFL reported a total income of Rs 332.17 lakhs, marking a significant decrease from Rs 1,484.34 lakhs in the same quarter last year. Despite the revenue decline, the company managed to post a profit after tax of Rs 57.33 lakhs, though substantially lower than the Rs 1,259.66 lakhs recorded in the previous year's quarter.

The consolidated results paint a different picture, with the company reporting a loss after tax of Rs 85.68 lakhs, compared to a loss of Rs 38.58 lakhs in the prior year quarter.

Key Financial Metrics

Board Approvals and Strategic Decisions

The Board of Directors, in their meeting held on July 31, made several key decisions:

1. Secretarial Auditor Reappointment: The Board approved the reappointment of M/s. Yogesh Sharma & Co. as the Secretarial Auditor for a period of five years, from 2025-26 to 2029-30, subject to shareholder approval at the upcoming Annual General Meeting (AGM).

2. Non-Convertible Debentures (NCDs) Issuance: TFL received approval to issue unlisted NCDs worth up to Rs 129.5 crore through private placement. The issuance includes both secured and unsecured NCDs with varying tenures and interest rates:

   • Secured NCDs: 3-year tenure with 11.25% p.a. interest rate
   • Unsecured NCDs: 5-year tenure with 11.50% p.a. interest rate
   • Special Category NCDs: 5 years and 367 days tenure with 12.00% p.a. interest rate

3. External Commercial Borrowings: The Board approved raising funds through external commercial borrowings, subject to shareholder consent at the upcoming AGM.

Financial Results Analysis

The standalone financial results show:

• Revenue from operations decreased to Rs 328.97 lakhs from Rs 1,483.74 lakhs in the same quarter last year.
• Other income slightly increased to Rs 3.20 lakhs from Rs 0.60 lakhs year-over-year.
• Total expenses increased to Rs 274.84 lakhs from Rs 224.68 lakhs in the same quarter last year.

The consolidated financial results indicate:

• Revenue from operations decreased to Rs 395.27 lakhs from Rs 402.09 lakhs in the same quarter last year.
• Total expenses increased to Rs 496.57 lakhs from Rs 462.60 lakhs year-over-year.

Conclusion

While Transwarranty Finance Limited faces challenges in its financial performance, particularly on a consolidated basis, the company is taking strategic steps to strengthen its position. The approval for NCD issuance and exploration of external commercial borrowings suggest that TFL is actively seeking to diversify its funding sources and potentially improve its financial structure in the coming quarters.