Shriram City Union Finance Limited
SECURED Non Convertible Debenture Issue
Rating: AA- from CRISIL.

For 36Months
Particulars	Coupon (%)
Individuals	11.50%
Non Individuals	10.60%

For 60Months
Particulars	Coupon (%)
Individuals	11.75%
Non Individuals	10.75%

About Shriram City Union Finance Limited

Shriram City Union Finance Limited is a deposit-accepting NBFC registered with RBI. Established in 1986 and with a track record of more than twenty five years in the financial services sector, it is also one of the largest small enterprise finance company in India.

Key Strength

1. Company has track record of more than 25years in financial services and has pan india presence, with 575 branches.
2. Growth in Assets under management (AUM) from 226,889.78lacs in FY08 to Rs1,242,103.98lacs in FY12 ; growing at a CAGR of 41.30%.
3. Diversified product portfolio:
1. 11.60% of AUM comprised of product finance loans.
2. 18.33% comprised of Vehicle loans.
3. 5.23% comprised of personal loans.
4. 15.46% comprised loans against gold.
5. 19.99% loans to the small enterprises finance segment collateralized by gold.
6. 29.39% comprised loans to small enterprise finance segment.
4. Company has an experienced senior management team and a board with extensive experience in the financial services sector.
5. Largest small enterprise finance company in india with a dominant market share of 95% in the small loan segment (loans of Rs1lacs -Rs10lacs).
6. Company also leads the total india micro, small and medium enterprises market with 53% share.
7. Company is a part of the Shriram group; which has a strong presence in financial services in india; including commercial vehicle financing, consumer finance, life and general insurance, stock broking, chit funds and distribution of life and general insurance product and mutual fund products.

The Issue
Public Issue by our Company of NCDs aggregating upto Rs. 250 Crores with an option to retain over-subscription upto Rs. 250 Crores for issuance of additional NCDs aggregating to a total of upto Rs. 500 Crores. The NCDs will be secured in nature and Security for the purpose of this issue will be created in accordance with the terms of the Debenture Trust Deed.

Objects of the Issue
The funds raised through this Issue will be used to finance company's business operations, lending, investments, repay existing loans, business operations including capital expenditure, working capital requirements, meeting expenses of the Issue.

ISSUE DETAILS:

Issue Opens	12th Sept, 2012
Issue Closes	26th Sept, 2012
Tenure	36 Months & 60 Months
Rating	AA- from CRISIL & CARE
Face Value	Rs. 1,000 each
Listing	NSE & BSE
Issuance & Trading	Compulsorily in Dematerialized form
Min. Application	Rs. 10,000 (10 NCDs of Rs. 1,000 each)
Trustees for NCDs	GDA Trusteeship Ltd.

KEY FINANCIAL F IGURES (Rs. in Lacs)
Particulars	FY2010	FY2011	FY2012
AUM	521,550	799,805	1,343,104
Net Worth	100,000	121,207	172,390
Total Income	110,790	132,345	205,641
Net PAT	19,426	24,059	34,253

KEY FINANCIAL RATIOS (%)
Particulars	FY2010	FY2011	FY2012
Gross NPA	2.27%	1.86%	1.55%
Net NPA	0.71%	0.43%	0.38%
CAR	26.28%	20.53%	17.40%

Comparison to Bank & Company FD
		Post Tax Return under Tax Slab
Option	Interest Rate	30.00%	20.00%	10.00%
Bank FD	9.25%	6.48%	7.40%	8.33%
Company FD	10.50%	7.35%	8.40%	9.45%
SCUF NCD*	11.75%	8.23%	9.40%	10.58%
Source: Bank FD rates of ICICI Bank for 5 years and Company FD rates of Mahindra Finance. * SCUFL rates of 60 month Cumulative option, series IV (for Individual).

Why should one invest..?

The issue available in four series offers an added incentive in coupon for individual investors taking it to the coupon rate of 11.50% and 11.75% for 36 and 60 Months, respectively. Also, the issue being a SECURED one and a decent Credit Rating are an added advantage. However, NCDs are not guaranteed investments like those of Bank FDs and thus one should balance the portfolio's exposure towards such issues after properly analyzing the risk factors.

The additional incentive above 10.60% for 36 Months and 10.75% 60 Months of 0.90% and 1.00% respectively, for Individual Investors is an attractive option. Also, with the option of Cumulative one can lock-in the high yield for a longer duration (5 Years) with the reinvestment at the same rate. With the issue being secured the effective yield of 11.50% for 36 Months and 11.75% 60 Months is a good opportunity for individual investors.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Are you confused between NCDs and FDs ?

Now a days many companies such as India Infoline Finance Ltd, Shriram City Union Finance has came out with Non-Convertible Debenture (NCD) issues. There are some confusion among the investors what are these NCDs and how different are they from Fixed Deposits (FDs)?

Like Fixed Deposits (FDs), infrastructure bonds and tax-free bonds, companies use NCDs as another route to raise capital. For investors, an NCD is another investment option available on the debt side.

Similarities between NCDs & FDs

NCDs and FDs are similar in a few ways. For example, like FDs, the NCDs are issued by companies for varying time periods such as 400 days, three years, five years.

You can choose to receive the interest at maturity (cumulative option) or choose to receive it at certain intervals (non-cumulative option) if you require regular cash flows, just like you do for FDs. While bank and company FDs are not credit rated, both NBFC FDs and NCDs are rated by agencies such as CRISIL, ICRA or CARE.

Like in company FDs, the credit rating on NCDs serve as a important factor  to differentiate the less risky offers from the more risky ones. For example, NCDs from both Manappuram Finance and Shriram City Union Finance were open simultaneously in August 2011, but while the former was given an AA- rating by CARE, the latter was rated AA, a notch higher, by the same agency. For both FDs and NCDs, the interest is not tax free. It is taxed under the head ‘Income from Other Sources’ at the slab rates.

Differences between NCDs and FDs

There are some distinction between these instruments. First, NCDs can either be secured or unsecured. A ‘secured’ NCD would mean that, in case the company is liquidated, the NCD holders would be given a priority in repayment of money due to them as they are secured by a charge on any of the assets of the company.

In this context, unsecured NCDs will be riskier, but companies compensate this by providing comparatively higher interest rates on these. The same with NCDs, having a lower credit rating.

In FDs, there is no concept of secured or unsecured FDs. Bank FDs are generally covered by deposit insurance upto Rs 1 lakh.  As this insurance is not available for other FDs, they are comparatively riskier.  Secondly, investments in a five-year FD from scheduled banks are entitled to deduction under Sec 80C. NCDs of a similar tenure don’t enjoy this benefit. Besides, if FD interest is higher than Rs 10,000, tax is deducted at source (TDS) itself. There is no TDS for NCDs. Unlike FDs, they are mostly issued in demat form. Hence, investors may require a demat account.

The most important difference is that unlike FDs, NCDs can be listed and traded in the stock exchange, although the liquidity may not be too high. A downward movement in interest rates for example, could lead to appreciation in the value of the NCD. Selling the NCDs in the market will attract short/long-term capital gains tax.

If you have any query about investment and any financial product. please feel free to ask me.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com