Akme Fintrade Greenlights Rs 300 Crore NCD Issuance

Akme Fintrade (India) Ltd has approved a total NCD issuance of Rs 300 crore, with an initial tranche of Rs 50 crore.

Reader Takeaway: The NCDs offer secured debt funding for the company, though maintaining a 1.10x security cover is mandatory.

What just happened

The Board of Directors at Akme Fintrade has cleared a plan to raise funds through Secured, Listed, Rated, Transferable, Redeemable Non-Convertible Debentures (NCDs). The company has authorized an aggregate ceiling of Rs 300 crore for these issuances. As an immediate step, the company has greenlit the issuance of Rs 50 crore in NCDs, divided into two distinct series: Series A1 (Rs 25 crore with a 24-month tenure) and Series A2 (Rs 25 crore with a 30-month tenure).

Why this matters

This private placement allows Akme Fintrade to diversify its borrowing profile and secure medium-term capital. By listing these debentures on the National Stock Exchange, the company provides transparency and potential liquidity for investors participating in the NCD offer. The Loan & Investment Committee holds the authority to decide the timing and specific terms for the remaining balance of the Rs 300 crore authorized limit.

Risks to watch

Investors should note the specific protective covenants attached to these instruments. Akme Fintrade is contractually obligated to maintain a minimum security cover of 1.10x against its loan receivables throughout the tenure. Failure to meet payment obligations triggers a penal provision, requiring the company to pay an additional 2% per annum interest over the base rate until the default is rectified. Similar penalties apply if there are delays in creating the necessary security or executing the required Debenture Trust Deeds.

What to track next

Shareholders should monitor the company's upcoming disclosures regarding the specific coupon rates, exact allotment dates, and the schedule for the remaining tranches of the Rs 300 crore aggregate approval.