Motherson Sumi Systems has announced that it is upsizing its maiden unsecured three-year NCD issue to Rs 2,130 crore using the green shoe option. The company statement added that the original issue of Rs 1,500 crore was upsized due to an overwhelming investor demand.
As per the company, the proceeds from the NCD will be used to pre-pay the debt, thereby strengthening its balance sheet and reducing interest costs. Further, the transaction will help diversify funding source by providing access to deep mutual funds and financial institution markets. Overall 24 investors (including 23 qualified institutional buyers) have invested in the NCDs.
NCD stands for non-convertible debentures and it is a financial instrument used by companies to raise capital for the longer term. The investors of such NCDs receive regular interests at a certain rate for a fixed period of time. Motherson in its latest annual report had revealed that the company has finalised a capital efficiency plan (Project Victory) to strengthen its returns on capital employed (ROCE) and liquidity.
Laksh Vaaman Sehgal, Director, MSSL pointed out that, “The strong response to the NCD issue showcases the trust of investors in the abilities and growth prospects of the company.”