Vedanta Limited, a diversified natural resources company, has announced its plan to raise up to Rs 2,500 crore through debt securities known as non-convertible debentures.
The company intends to issue up to 2.5 lakh NCDs, each having a face value of Rs 1 lakh, aggregating to a total of Rs 2,500 crore. The issuance may take place in one or more tranches, as per the company's disclosure.
Private placement is a method of raising capital whereby a company issues securities directly to a select group of investors, rather than offering them to the general public through a stock exchange. This method allows companies to raise funds more quickly and with fewer regulatory requirements compared to a public offering.
Non-Convertible Debentures (NCDs) are fixed-income securities that cannot be converted into equity shares of the issuing company. They offer several advantages to both investors and issuers. For investors, NCDs provide a stable and predictable stream of income through regular interest payments and the return of principal upon maturity. Additionally, NCDs are generally less risky compared to equity investments, as they have a fixed maturity date and rank higher in the company's capital structure. For issuers, NCDs allow them to raise capital without diluting the ownership of existing shareholders, and the interest paid on NCDs is tax-deductible, making them a cost-effective financing option.
The NCDs will be listed on the BSE Limited, and the tenure, coupon rate, payment schedule, and security details will be outlined in the disclosure document. The funds raised through this private placement are expected to be utilized for the company's general corporate purposes and to support its ongoing growth initiatives.
Vedanta Limited, known for its diverse portfolio of natural resources, including zinc, lead, silver, copper, iron ore, and aluminum, has been consistently exploring various avenues to strengthen its financial position and fund its expansion plans. This private placement of NCDs is a strategic move by the company to raise capital while maintaining a balanced debt profile.