Blue Star, the air conditioning and commercial refrigeration company, has joined the list of companies tapping the debt markets amid the nationwide lockdown.
Blue Star is planning to raise up to Rs 500 crore through non-convertible debentures (NCDs) through private placement. A proposal to this effect was okayed by its board of directors late last month.
A statement from the company said that based on this approval, it intends to issue NCDs amounting to Rs 300 crore in the near term. Blue Star said that this will be done primarily to finance working capital and capital expenditure, subject to the terms of the issue.
“We have always met our working capital as well as capital expenditure requirements through internal accruals. The current national lockdown, especially during the peak summer season, has impacted our cash flow and consequently the working capital cycle is likely to get lengthened,” said Vir. S. Advani, vice-chairman and managing director, Blue Star.
Meanwhile, Mahindra Logistics on Saturday said its board has approved raising up to Rs 250 crore through various means, including loans and debt issuances. The borrowing will be done in one or more tranches.
Advani added that the company has just resumed production partially at its Wada and Dadra plants and other operations are set to resume progressively as and when the government announces relaxations.
“We foresee demand revival from the second half of the financial year, and it is important to persist with capital expenditure pertaining to indigenisation and backward integration programmes to enhance our competitiveness and market leadership. Therefore, it is prudent to infuse additional funds through the issuance of NCDs in order to retain adequate liquidity to support business continuity and growth over the next 12 to 18 months,” he noted.
Several other corporates such as Tata Motors, Tata Steel, Reliance Industries Ltd, Motherson Sumi, TVS Motors, Apollo Tyres and Mahindra & Mahindra have either announced similar issuances or raised money through these instruments via private placements.
Their fund raising comes at a time the cash flow of corporate India has been hit hard by the ongoing lockdown, even as the Reserve Bank of India (RBI) has announced various measures to boost bank lending.
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One of them include targeted long term repo operations (TLTRO) where banks can raised funds from the central bank and then invest them in investment grade papers of companies. Last month, banks had raised Rs one lakh crore from this window. However, a major grouse has been that banks have only invested in bonds having a rating of AA and above.
