Based on following, answer question.

XYZ Ltd. has been operating in the field of FMCG products in South Indian market. However to expand its operation in northen part of India, it needs additional capital ₹20,00,000 which is raised by issuing 10% Debenture of ₹12,00,000 of ₹100 issued at a discount of 10% to be repayable after 6 years. The rest of the funds is raised by issuing 5% debenture of ₹8,00,000 of ₹100 issued at 15% premium. These debentures are perpetual in nature. After six years of successful operation in northern India, company took a loan of ₹5,00,000 from PNB against 5% debenture of ₹8,00,000 of ₹100 each as a collateral security. The company successfully ran its operation and managed to pay off its loan within two years.

XYZ Ltd. issued another category of debenture which is perpetual in nature.

What type of debenture it is?

Irredeemable debentures

The correct answer is option 1- Irredeemable debentures.

Irredeemable debentures are perpetual in nature.

Debentures may be redeemable or irredeemable (perpetual). Redeemable debentures are repayable to the debenture holders on the specified maturity date.

Irredeemable debentures are also known as Perpetual Debentures because the company does not give any undertaking for the repayment of money borrowed by issuing such debentures. These debentures are repayable on the winding-up of a company or on the expiry of a long period.