NCDs: A Student’s Guide to Corporate Fundraising

For finance students, non-convertible debentures (NCDs) offer an opportunity to explore how companies manage capital, while artificial intelligence (AI) in HR is transforming workforce strategies. Poonawalla Fincorp’s decision to raise Rs 190 crore through NCDs is not just a financial move—it reflects the intersection of structured finance and cutting-edge technology.

Understanding NCDs: A Key Financial Tool

NCDs are fixed-income instruments issued by companies to secure funds without diluting equity. Unlike convertible debentures, they do not convert into shares, making them ideal for businesses seeking debt-based funding. In this instance, the NBFC aims to raise Rs 100 crore with an additional Rs 90 crore via a green shoe option.

These debentures are secured, redeemable, rated, and listed on the Bombay Stock Exchange (BSE), offering both safety and liquidity. With a coupon rate providing an extra 2% over the applicable base rate, they appeal to investors prioritizing consistent returns.

AI in HR: A Game-Changer for Finance

The financial sector increasingly relies on AI-driven HR practices to streamline operations and address workforce challenges. For companies like Poonawalla Fincorp raising funds through NCDs, efficient HR processes are vital to manage the talent required for executing their strategic objectives.

AI in HR includes tools like recruitment algorithms, predictive analytics, and automated employee engagement systems. These tools ensure that companies can attract, retain, and optimize their workforce. For example:

• Recruitment: AI can sift through resumes, identify top candidates, and reduce hiring times, ensuring that the right talent is onboarded quickly.

• Performance Management: Predictive analytics can identify high-performing employees and suggest training or promotion opportunities.

• Engagement: Chatbots and sentiment analysis tools gauge employee satisfaction and recommend interventions to improve morale.

For finance students, understanding how AI integrates into HR processes offers a glimpse into the operational efficiencies that support financial strategies like NCD issuance.

The Context Behind the NCD Issuance

The NBFC’s decision to raise Rs 190 crore through NCDs comes amid financial challenges. As of September 2024, the company reported an asset under management (AUM) of Rs 28,396 crore but faced a consolidated net loss of Rs 471.04 crore in Q2 FY25, compared to a profit of Rs 860.17 crore in the same quarter the previous year. Total income also declined by 36.4%.

In such scenarios, efficient workforce management becomes critical. AI-powered HR systems can help companies allocate resources effectively, ensuring that their workforce is aligned with financial recovery goals.

Why Finance Students Should Care About AI in HR

For finance students, exploring how AI supports HR processes offers insights into the broader operational context of financial strategies. Here’s why it matters:

• Cost Management: Automated HR systems reduce administrative costs, freeing up resources for investment in growth areas like NCDs.

• Strategic Workforce Planning: AI tools provide data-driven insights into talent management, aligning workforce capabilities with organizational goals.

• Enhanced Productivity: By automating repetitive tasks, AI allows HR teams to focus on strategic initiatives, directly impacting financial outcomes.

The synergy between AI in HR and financial strategies like NCDs demonstrates how technology and finance intersect to drive organizational success.

Lessons from the NCD Issuance

The Rs 190 crore NCD issuance provides finance students with practical lessons in corporate fundraising:

1. Capital Structuring: NCDs illustrate how companies balance debt and equity to meet funding needs.

2. Investor Attraction: Offering competitive coupon rates highlights the importance of tailoring financial products to market demands.

3. Operational Support: AI-driven HR processes ensure that companies can maintain productivity and efficiency during periods of financial adjustment.

These lessons emphasize the importance of integrating operational strategies with financial tools for achieving organizational resilience.

AI and the Future of Finance

The adoption of AI in HR is a growing trend in the financial sector. As companies like the NBFC issuing these NCDs leverage AI, they improve not just workforce management but also overall financial stability. For finance students like myself,  this is a critical area to explore as it showcases the interplay between technology and finance.

AI-driven HR solutions are not limited to large-scale companies—they are becoming increasingly accessible to mid-sized firms, transforming how organizations approach talent and financial goals. For students preparing to enter the financial world, understanding this trend can provide a competitive edge.

Final Thoughts

NCDs and AI in HR may seem like separate domains, but they are interconnected in the world of corporate finance. The recent NCD issuance demonstrates how structured financial instruments support organizational goals, while AI ensures that the workforce is optimized to execute those strategies. For finance students, exploring these areas offers valuable insights into the modern financial ecosystem, where technology and finance work hand-in-hand to drive growth and stability.