Capital Infusion In Motion: Salem Erode Investments Approves Rs 7.5 Million Debenture Issue Via Private Placement

Salem Erode Investments Ltd, a non-banking financial company (NBFC) operating in diversified financial services, has announced the issuance of secured debentures aggregating to Rs 7.5 million through private placement. The move, disclosed in late September 2025, reflects the company’s ongoing strategy to strengthen its funding base and support operational liquidity amid a cautious but stabilizing credit environment.

 

The debentures will be backed by hypothecation of loan receivables and other financial assets, ensuring full asset cover for investors. This issuance follows a similar Rs 5.5 million tranche approved earlier in August, indicating a phased approach to capital mobilization.

 

Key Highlights From The Issuance Plan

 

- Salem Erode Investments to raise Rs 7.5 million via secured debentures  

- Instruments to be issued on private placement basis to select investors  

- Debentures backed by loan receivables and financial assets for full security cover  

- Funds to be deployed for working capital, refinancing, and portfolio expansion  

- Company maintains stable asset-liability profile despite recent losses  

 

Strategic Purpose And Financial Context

 

The capital raised through this issuance will be used to:

 

- Refinance short-term liabilities and reduce interest burden  

- Expand lending operations in Tier II and Tier III markets  

- Maintain liquidity buffers amid evolving regulatory norms  

- Support digital onboarding and credit servicing platforms  

 

Salem Erode Investments has been gradually rebuilding its financial position after reporting a net loss of Rs 9.89 million in Q1 FY25. However, revenue from operations grew 14.6 percent year-on-year to Rs 10.88 million, and total income rose to Rs 11.01 million, indicating a recovery in core business activity.

 

Instrument Structure And Investor Targeting

 

The debentures will be issued in denominations of Rs 1,000 each, with a fixed coupon rate expected to range between 11.5 and 12.5 percent annually. The maturity period is likely to span 24 to 36 months, with monthly interest payouts. The instruments will not be listed and are intended for private investors with appetite for secured, high-yield debt.

 

Targeted investor segments include:

 

- Family offices and high-net-worth individuals  

- Regional NBFC treasuries and cooperative banks  

- Structured credit desks and boutique investment firms  

 

The company has confirmed that full asset cover will be maintained through hypothecation of receivables, ensuring investor protection and regulatory compliance.

 

Operational Performance And Market Position

 

Despite its small scale, Salem Erode Investments has demonstrated resilience in maintaining asset quality and operational discipline. The company’s debt-to-equity ratio remains conservative, and its capital adequacy is within regulatory thresholds.

 

Key financial metrics include:

 

- Market capitalization: Rs 45.9 crore  

- Revenue (TTM): Rs 3.9 crore  

- Net profit (TTM): Rs -4.7 crore  

- Return on equity: -22.8 percent  

- Price-to-book ratio: 2.4  

 

The company’s shareholding remains tightly held, with ICL Fincorp Ltd owning 75 percent of equity as of June 2025.

 

Regulatory Compliance And Risk Management

 

The debenture issuance complies with RBI’s guidelines on private placements and NBFC capital instruments. The company has also implemented internal controls to monitor asset cover, repayment schedules, and investor disclosures.

 

Risk mitigation measures include:

 

- Diversified loan book across consumer and SME segments  

- Conservative provisioning for non-performing assets  

- Regular audit of receivables and collateral valuation  

- No downgrade in credit rating reported in the past 12 months  

 

Capital Strategy Outlook

 

Salem Erode Investments’ Rs 7.5 million debenture issuance reflects a cautious but deliberate approach to capital raising. As the company continues to stabilize its financials and expand its lending footprint, investors will be watching for signs of profitability recovery, portfolio growth, and improved return metrics.

 

The phased issuance strategy suggests that the company may pursue additional tranches in FY26, depending on market conditions and operational needs.

 

Sources: ScanX Trade, Value Research Online, Wint Wealth Bond Database.