Chennai: Hinduja Leyland Finance Ltd, the financing arm of India’s second largest truck maker Ashok Leyland Ltd, plans to raise 2,000 crore by issuing non-convertible debentures (NCDs), a top company executive said.

NCDs are unsecured bonds that cannot be converted into equity but earn higher interest than convertible debentures. They are used by companies to raise long-term funds.

The move comes at a time when demand for trucks, especially in states with coal mines, is picking up. The company may also list on the stock exchange in two years to help Everstone Capital Advisors exit its investment, said managing director S. Nagarajan.

The private equity firm had picked up a 15% stake in the company for 200 crore in July 2013. Ashok Leyland holds a 57% stake in Hinduja Leyland Finance.

“In the last three months, we saw demand for trucks in coal-mining states like West Bengal, Jharkhand and Chhattisgarh," Nagarajan said. Demand for trucks in Rajasthan and Maharashtra is being fuelled by the need to replace old trucks, he said.

In 2014-15, the company disbursed truck loans worth 6,300 crore, as against 3,800 crore in the previous year.

In February, rating agency India Ratings and Research Private Ltd had improved its outlook on commercial vehicle loans to stable from negative for 2015-16, citing the improvement in the economy on lower inflation, interest rates and fuel prices.

The first signs of improvement in the commercial vehicle sector emerged with the drop in the delinquency rate in 2014 from the year-ago period.