Gruh Finance to raise Rs 150 crore through NCDs

Ahmedabad-based Gruh Finance Ltd has decided to raise Rs 150 crore through non-convertible debentures (NCBs).

The amount will be raised in the remaining part of the financial year and will be used to meet housing loan disbursement requirements of the company. The company has set a disbursement target of over Rs 225 crore.

Gruh has filed the Shelf Information Memorandum for the NCD issue with the National Stock Exchange (NSE) and plans to raise the money in multiple tranches for tenures ranging from three to seven years. Crisil has given a AA rating to the NCD. The Shelf Information Memorandum was filed in the last week of September.

"We have drawn up a 20-25 per cent growth plan in disbursements this year. The National Housing Bank (NHB) has already provided a sum of around Rs 100 crore and has sanctioned another Rs 100 crore. But we will require funds for disbursement of loans beginning December this year, which has prompted us to raise the money through NCBs," Sudhin Choksey, managing director, Gruh Finance told Business Standard on Monday.

NHB has sanctioned a loan of Rs 100 crore for the year 2004-05, which is yet to be availed. The company, has during the year, raised Rs 93.51 crore from NHB from its unutilised sanction of the previous year at a rate of 5.95 per cent for three years.

Choksey said that 1,500 NCDs, having a face value of Rs 10 lakh each, aggregating Rs 150 crore will be issued.

"The period could range from three years to five or seven years. We have been talking to our merchant banker on the rate of interest, but Gruh will prefer to have a fixed rate of interest for the NCDs," said Choksey.

He added that Gruh had planned to raise money through NCDs in October 2003, but that did not materialise. Choksey stated that the company will first exhaust the NHB refinance funds before utilising the funds collected from the NCD issue. "I believe we will require funds for loans disbursements in December or January," Choksey said.

He added that the Rs 150 crore will be raised in two or more series, which will allow the company to handle interest rate issues better.