In a meeting held earlier today, the board of directors at Motherson Sumi Systems Ltd (MSSL) has approved the issuance of listed, secured, redeemable, non-convertible debentures (NCDs) with an aggregate amount up to ₹500 crore on a private placement basis, the company said in a regulatory filing today.
The leading automotive component supplier said that it would issue up to 5000 NCDs with a face value of ₹10,00,000 each in one of more tranches. The tenure of the instrument would be 3 years with a payable interest of 7.84% per annum.
The said funds raised via NCDs are part of the company’s plan to raise ₹1,000 crore to secure liquidity through the covid-19 crisis for its operations, Laksh Vaaman Sehgal, vice chairman, Motherson Group and director at MSSL clarified to Mint.
The company had, on late night April 13, informed the BSE that its board had delegated the responsibility to raise new funds to a committee of directors who would evaluate various borrowing proposals.
Earlier this week, the company had also disclosed its unaudited financials wherein it reported it’s consolidated net debt as on March 31, 2020 at ₹7,150 crore, which included Samvardhana Motherson Automotive Systems Group B.V. or SMRP’s net debt of euros 702 million or about ₹5,870 crore.
SMRP, in which MSSL holds 51% stake, is the umbrella company for all global subsidiaries such as Samvardhana Motherson Reflectec (SMR), Samvardhana Motherson Peguform (SMP), Motherson Innovations (MI) and Samvardhana Motherson Reydel Companies (SMRC).
Meanwhile, Samvardhana Motherson International Ltd (SAMIL), the investment vehicle of the promoter family, holds the remaining 49% in SMRP.
MSSL, on April 13, had said that it’s consolidated cash as on March 31, 2020 stood at ₹4,690 crore, out of which SMRP reported cash reserves of euros 412 million or ₹3,448 crore for the period.
Sehgal told Mint on a phone call on Thursday that as part of reducing fixed costs, the company is working with foreign governments such as in Germany, USA and others where they have instituted employment protection schemes and are bearing part of employee costs during the lockdown period.
He also added that the several executives in the top management have already taken voluntary pay cuts in order to save costs wherever necessary.
Earlier this week, Fitch Ratings, driven by the impact of the pandemic on SMRP’s earnings and cash flow in FY2021, downgraded the company’s long-term issuer default rating (IDR) to BB from BB+ with negative outlook.
Last month, Moody’s Investor Service had assigned Ba1 corporate family rating (CFR) to MSSL while placing it under review for further downgrade, and had withdrawn the Baa3 issuer rating.
