Salem Erode to raise ₹1.5 cr via unlisted NCDs at 12% coupon
The nano-cap NBFC will issue 15,000 NCDs of ₹1,000 each on private placement, with 36-month and 68-month tenures. The 12% coupon reflects its risk profile amid ongoing losses and net worth erosion.
— 3 earlier stories on Salem Erode Investments Ltd. →What's new
- Board approves ₹1.5 cr unlisted secured NCD issue on private placement
- Two tenures: 36 months at 12% monthly/cumulative and 68 months with doubling structure
- Funds fully secured against current assets and gold loan receivables; Vistra ITCL as trustee
Why this matters
For a company with FY26 net loss of ₹4.84 cr and net worth of ₹13.39 cr, this ₹1.5 cr debt raise (3.4% of market cap) is material. The 12% coupon is a direct cost of capital, and the proceeds will likely support lending or working capital at a time when profitability is under pressure.
What we're watching
- Allotment within 30 days and actual utilisation of funds
- Impact on debt/equity ratio (currently 0.65) and interest coverage
- Any subsequent update on the viability of coupon payments given continued losses
The full read
Salem Erode Investments, a nano-cap NBFC with a market cap of ₹44 cr, has approved the issuance of ₹1.5 cr in unlisted secured NCDs. The terms: 15,000 debentures of ₹1,000 each, offered in two tenures ( 36 months with a 12% monthly coupon or cumulative option, and 68 months with a doubling structure). The issue is fully secured against current assets and gold loan receivables, with Vistra ITCL as trustee. This debt raise equals 3.4% of market cap, making it material for a company that reported a net loss of ₹4.84 cr on revenue of ₹3.51 cr in FY26 and a net worth of just ₹13.39 cr. The 12% coupon signals the risk premium lenders demand. For a business already shrinking (revenue down 19.7% ), this infusion is necessary to keep lending alive, but the interest burden will pressure an already strained P&L.
Questions answered
- Why is Salem Erode raising debt despite losses?
- The company needs working capital to continue its lending operations. With a net loss of ₹4.84 cr in FY26, internal accruals are insufficient, prompting external debt at a 12% coupon.
- What are the specific terms of the NCDs?
- 15,000 NCDs of ₹1,000 each, unlisted and secured. Two options: 36 months with 12% monthly or cumulative interest, and 68 months with a doubling structure. Allotment within 30 days of application.
- How does this issue size compare to the company's market cap?
- The ₹1.5 cr issue is equivalent to about 3.4% of Salem Erode's market capitalisation of ₹44 cr, crossing the 1% materiality threshold for nano-caps.
- What is the security backing the NCDs?
- The NCDs are fully secured against the company's current assets, loans and advances, including gold loan receivables. A debenture trustee, Vistra ITCL, holds the charge.
- When will the NCDs be allotted?
- Allotment will occur within 30 days of receiving the application money, as stated in the board approval.
Salem Erode Investments Ltd.
Latest quarter · Mar 2026
Leverage & growth
Story so far
All notes on SALEM →- 22 Jun 2026 · 3:48 PM IST Salem Erode to raise ₹1.5 cr via unlisted NCDs at 12% coupon
- 27d ago Salem Erode Investments reports another year of losses
- 27d ago Salem Erode Investments posts annual loss of ₹484.66 lakh
- 27d ago Salem Erode Investments loses another ₹4.84 cr as net worth shrinks