Muthoot Finance NCD Issue Details

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About Muthoot Finance Limited
Muthoot Finance Ltd is a NBFC incorporated in 1997 primarily provides loan against household used jewellery and offers other products and services like money transfer, insurance, securities, foreign exchange, vehicle and asset finance services. Gold loans account for 99% of Muthoot’s assets under management with predominant exposure to South India.

Issue Size
The company plans for a public issue of secured, redeemable, non-convertible debentures (NCDs) of face value of Rs 1,000 each aggregating upto Rs 300 crore with an option to retain over subscription up to Rs 300 crore, aggregating to a total of upto Rs 600 crore.

Objective of the issue: 
The funds raised through this Issue will be utilized for various financing activities including lending and investments, to repay existing liabilities or loans and towards business operations including capital expenditure and working capital requirements, after meeting the expenditures of and related to the issue and subject to applicable statutory/regulatory requirements.

Issue Dates:
Issue Open: Dec 22 2011
Issue Close: Jan 07 2012

Investment Options
There are 4 options through which investment can be made in Muthoot Finance NCD as described in the picture below.

Ratings
The NCDs under this issue have been rated as AA -/Stable by CRISIL and ICRA. The rating indicates a high degree of safety with regard to timely servicing of financial obligations on the NCDs and such instruments carry a very low credit risk.

Why Invest in Muthoot Finance NCD
The interest rate of 13-13.43% is being offered to individuals for duration of 2 years, 3 years, as well as 5 years, 5.5 years is an attractive opportunity when compared to bank deposits which offer interest rate ranging 9 - 10.25%. Unlike bank deposits there is no TDS for the interest rate payments. These are secured instruments and hence backed by assets of the company. The NCDs will be listed in the BSE and NSE hence there is a chance for capital appreciation in case the RBI starts reducing interest rates after some month.

How to apply to Muthoot Finance NCD?
You can download the forms below

Download Application Forms

Submit the filled up form to Collection canter near you

Should You apply for NHAI tax free bonds ?

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According to wealth managers, tax-free bonds — even if it bears a lower pay-out rate than G-Secs and corporate bonds — are good bets for investors in the current scenario as not many asset classes are generating near-8% risk adjusted (tax-free) returns. Despite 10-year G-secs and bank fixed deposits yielding 8.3% and 9.25%, respectively, wealth managers expect the bond to attract investments because of its tax-free status.

An 8% tax-free coupon rate is very much comparable to an investment product that delivers 12% pre-tax returns. This issuance is even better than bank fixed deposits, which are currently giving about 9% (pre-tax) returns. 

Also, with interest rates expected to slide over the next few months, money managers are hoping to generate higher returns by selling these bonds at a relatively higher coupon rate. In the event of a fall in interest rates, wealth managers expect 5-10% price appreciation on premature encashment of the bond.

How to apply to NHAI tax free bonds?
You can download the forms below

Download Application Forms

Submit the filled up form to Collection canter near you

Brief Introduction of the Muthoot finance

§ With a rich Heritage of over 72 years Muthoot finance has since then broadened the scale and geographic scope of retail lending to become the largest provider of Gold Loan as on March 2010.

§ Revenues from gold loans contribute 99% of the total income. Average Gold loan amount outstanding is around Rs. 37000, with total Gold loans under management of Rs. 20766 Crores as of 30th Sep 2011. Approximately 129.5 tons of gold jewellery is held as security for gold loans for the same period.

 

§ Total income as on 31st march 2011 was Rs. 2315 Crores exhibiting growth of 112.59% over previous year. Profit after tax of Rs. 494 Crores exhibited growth of 116.25% over previous year.

§ Apart from Gold loan Muthoot finance also provides money transfer services & collection agency services and are currently operating three windmills in the state of Tamil Nadu.

You can download the forms below
Download Application Forms

Submit the filled up form to Collection canter near you