Capacite Infraprojects Ltd approved a ₹55 crore Non-Convertible Debenture (NCD) issuance. The secured NCDs carry a 12.72% annual coupon, payable monthly, with a 42-month tenure. This move aims to raise debt capital for the company.

Capacite Infraprojects Ltd

Capacite Infraprojects Ltd announces plans to raise ₹55 crore through the issuance of Unlisted, rated, senior, secured, redeemable Non-Convertible Debentures (NCDs).

Reader Takeaway: Company raises funds via debt; investors get 12.72% annual return secured by assets.

What just happened

The Board of Directors of Capacite Infraprojects Ltd has approved the issuance of NCDs on a private placement basis. The total issue size is ₹55 crore, which includes a base issue size of ₹35 crore and a greenshoe option of ₹20 crore. These NCDs are unlisted, rated, senior, secured, and redeemable. They have a tenure of 42 months.

Why this matters

This capital-raising exercise through NCDs allows Capacite Infraprojects to secure necessary funding for its operations or expansion. For investors, it offers an opportunity to invest in a secured debt instrument with a fixed return. The 12.72% coupon rate, payable monthly, provides a steady income stream.

The backstory

Capacite Infraprojects is involved in the construction and project management sector, undertaking large-scale infrastructure and building projects. Raising debt capital is a common practice for infrastructure companies to fund their capital-intensive projects. This issuance follows the company's ongoing business activities and capital requirements.

What changes now

The company will proceed with the private placement of these NCDs. The funds raised will be utilized as per the company's strategic financial plans. Investors who subscribe to these NCDs will receive monthly interest payments and quarterly repayments over the 42-month period.

Risks to watch

A significant risk factor mentioned is the default penalty. If the company fails to make any payment by the due date, a default charge of 2% per annum will be levied on the outstanding amount from the due date until the payment is made. The NCDs are secured by a mortgage over certain immovable properties, a subservient charge over current assets, and guarantees from promoters.

Peer comparison

While specific peer NCD issuances are not detailed in the filing, infrastructure companies often tap the debt markets to fund their projects. The coupon rate of 12.72% for secured NCDs needs to be compared with prevailing rates for similar instruments from other construction and engineering firms.

Context metrics (time-bound)

• Total Issue Size: ₹55 crore
• Coupon Rate: 12.72% per annum (monthly payout)
• Tenure: 42 months
• Redemption Schedule: 13 equal quarterly repayments
• Face Value: ₹10 lakh per debenture

What to track next

Investors should monitor the company's financial health, its ability to service this debt, and its project execution progress. Tracking the timely payment of interest and principal repayments will be crucial. The successful completion of the NCD issuance and its utilization will be key indicators.