Tata Capital Introduces NCDs with up to 9.1% Coupon Rate

Tata Capital Financial Services Ltd. has issued new secured and unsecured non-convertible debentures (NCDs) on 10th September 2018. The current issue will be available for investment till 21st September with Tata Capital retaining the option of an early closure. Subsequent to closure of the issue, these Tata Capital NCDs will be listed on NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) with the latter operating as the designated stock exchange for the issue. The size of the base issue is Rs.2,000 crores and Tata Capital will have the option to retain oversubscription up to a Rs. 7,500 crores limit.

The minimum investment you need to make to participate in this NCD issue is Rs. 10,000 i.e. a minimum of 10 NCDs of face value Rs. 1000 have to be purchased as an initial subscription. The current NCDs issued feature maturities of 3 years, 5 years and 10 years with annual interest payouts and coupon rates ranging from 8.70% to 9.10%. In case you want to sell your Tata Capital NCDs prior to maturity, you can do so on the BSE and NSE where the NCDs will be listed.

The following are the different NCDs series on offer from Tata Capital :

Effective Yield (% p.a.) Category I & II

• Category I and II investors include institutional investors including various financial institutions, insurance companies, commercial banks, provident funds, alternative investment funds, SEBI registered mutual funds etc.

• Category III comprises high net worth Resident Indians and Hindu Undivided Families (HUFs) who invest more than Rs. 10 lakhs.

• Category IV includes Resident Indians and HUFs investing less than Rs.10 lakh.

CRISIL rating of the Tata Capital NCDs is CRISIL AAA/Stable, while CARE AAA/Stable is the rating provided by CARE Ratings. These are high ratings that are provided to corporate debt instruments of issuers who are expected to fulfill their future financial commitments. Investors of Tata NCDs will thus expose themselves to potentially low levels of credit risk. The current issue however, does include both secured and unsecured subordinated NCDs. While, secured NCDs are backed by Tata Capital’s assets, the unsecured NCDs are not so and the latter are potentially more risky.

Additional Information regarding the Tata Capital NCD Issue:

Tax on NCDs

Interest on NCDs is fully taxable at your slab rate. No TDS is deducted on maturity value of NCDs, provided they have been listed on stock exchanges. Tata Capital Financial Services Ltd. has proposed to list its NCDs on the BSE and the NSE.

Other Funds by Tata Asset Management

{Data as on Feb 20, 2020; Source: Value Research}