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L&T Infrastructure Finance Company Ltd
L&T Infrastructure Finance Company Ltd (LTFCL) was incorporated in 2006, and is registered with the RBI as a systemically important non deposit taking NBFC and an IFC. As at Sept 2011, LTFCL’s total infrastructure loans were Rs 8,790.3 cr, and for 1H FY 2012, company recorded total infrastructure loan disbursements of Rs 2,846.6 cr. Net NPA as on Sept 2011 was 0.73%.

Salient features of the bond issue (Tranche II)
  • The Tranche II Bonds are classified as “LONG TERM INFRASTRUCTURE BONDS” and are being issued in terms of Section 80CCF of the Income Tax Act and the Notification.
  • Credit rating agency ICRA has rated the Bonds under this offer as “(ICRA) AA+” and CARE has rated the bonds “CARE AA+” with stable outlook, indicating high safety.
  • Issue Opens on 10th January 2012 and Closes on 11th February 2012.
  • These bonds will be issued only to Resident Indian Individuals (Major) and HUF (through the Karta).
  • The bonds are fully secured with first charge on specific receivables of the company with an asset cover of 1 time and first pari pasu mortgage / charge on the leasehold rights of vacant land.
  • The Bonds bear an attractive combination of coupon rate 8.70% p.a. coupled with tax benefits of up to Rs 20,000 under Sec 80 CCF.
  • The Company shall not pay any interest on the Application Amount or on refund of application amount (in whole or part).
  • No TDS shall be deducted from interest on Tranche II Bonds, if such bonds are held in DEMAT form. LTFCL at the request of the Investors who wish to hold the Tranche 2 Bonds in physical form will fulfill such request.
  • The bonds will be listed on BSE and can be traded after the 5 year lock – in period.
  • Investors can pledge or hypothecate these bonds to avail loans after the lock-in period.
  • Under Section 80 CCF of the I.T. Act, an investor in such infrastructure bonds will be entitled to tax deduction of investments of up to Rs 20,000. The deduction is over and above the Rs 1,00,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE.
Investors to benefit from 80 CCF Benefits:
  • The Bonds are classified as “long term infrastructure bonds” and are being issued in terms of section 80 CCF of the Income Tax Act.
  • Bonds offer an additional window of tax deduction of investments of up to Rs 20,000.
  • The deduction is over and above the Rs 1,00,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE
  • It helps in intermediating the retail investor’s savings into infrastructure sector directly.
  • In the event that any applicant applies for the bonds in excess of Rs 20,000 p.a., the afore stated tax benefit shall be available to such applicant only to the extent of Rs 20,000 p.a.

Infrastructure Development Finance Company Ltd
IDFC is a leading knowledge-driven financial services company in India and plays a central role in advancing infrastructure development in the country. IDFC is a one-stop-shop for all products and services across the infrastructure value chain. Established in 1997 as a private sector enterprise by a consortium of public and private investors, the Company listed its Equity Shares in India pursuant to an initial public offering in August 2005.

Salient features of the bond issue (Tranche II)
  • The Tranche II Bonds are classified as “LONG TERM INFRASTRUCTURE BONDS” and are being issued in terms of Section 80CCF of the Income Tax Act and the Notification.
  • Credit rating agency ICRA has rated the Bonds under this offer as “(ICRA) AAA” and FITCH has rated the bonds “Fitch AAA (ind)” with stable outlook, indicating highest safety.
  • Issue Opens on 11th January 2012 and Closes on 25th February 2012.
  • These bonds will be issued only to Resident Indian Individuals (Major) and HUF (through the Karta).
  • The bonds are fully secured with first pari passu floating charge over secured assets and first fixed pari passu charge over specified immovable properties of the Company. The security cover is 1.0 times of the outstanding Tranche II Bonds at any point in time.
  • The Bonds bear an attractive combination of coupon rate 8.70% p.a. coupled with tax benefits of up to Rs 20,000 under Sec 80 CCF.
  • The Company shall not pay any interest on the Application Amount or on refund of application amount (in whole or part).
  • No TDS shall be deducted from interest on Tranche II Bonds, if such bonds are held in DEMAT form. LTFCL at the request of the Investors who wish to hold the Tranche 2 Bonds in physical form will fulfill such request.
  • The bonds will be listed on BSE and can be traded after the 5 year lock – in period.
  • Investors can pledge or hypothecate these bonds to avail loans after the lock-in period.
  • Under Section 80 CCF of the I.T. Act, an investor in such infrastructure bonds will be entitled to tax deduction of investments of up to Rs 20,000. The deduction is over and above the Rs 1,00,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE.
Investors to benefit from 80 CCF Benefits:
  • The Bonds are classified as “long term infrastructure bonds” and are being issued in terms of section 80 CCF of the Income Tax Act.
  • Bonds offer an additional window of tax deduction of investments of up to Rs 20,000.
  • The deduction is over and above the Rs 1,00,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE
  • It helps in intermediating the retail investor’s savings into infrastructure sector directly.
  • In the event that any applicant applies for the bonds in excess of Rs 20,000 p.a., the afore stated tax benefit shall be available to such applicant only to the extent of Rs 20,000 p.a.

SREI Infrastructure Finance Ltd

SREI Infrastructure Finance Ltd (SREI) was incorporated in 1985, and is registered with the RBI as a systemically important non deposit taking NBFC and an IFC. With a large customer base and over Rs 26,001 cr of Consolidated Assets Under Management, SREI has a pan- India presence with a network of 82 offices. Disbursements have grown at a CAGR of 99.66% between FY 2009 and 2011. Net NPA as on Sept 2011 was 0.08%.

Salient features of the bond issue (Tranche I)
  • The Tranche 1 Bonds are classified as “LONG TERM INFRASTRUCTURE BONDS” and are being issued in terms of Section 80CCF of the Income Tax Act and the Notification.
  • Issue Opens on 31st December 2011 and Closes on 31st January 2012.
  • Credit rating agency CARE has rated the bonds “CARE AA” with stable outlook, indicating high safety. Such instruments carry very low credit risk.
  • These bonds will be issued only to Resident Indian Individuals (Major) and HUF (through the Karta). Bonds are available to investors in DEMAT as well as Physical form.
  • The bonds are fully secured with exclusive charge on specific receivables and pari passu charge on its ownership flat situated at Salimpore Road, Kolkata. Security cover will be 1.0 time of the outstanding Bonds at any point in time.
  • The Bonds bear an attractive combination of coupon rate 8.9-9.15% p.a. coupled with tax benefits of up to Rs 20,000 under Sec 80 CCF.
  • The Company shall pay to the successful Applicants, interest @ 5% p.a. on the Application Money on the amount allotted.
  • The Company shall NOT pay any interest on refund of Application Money on the amount not allotted.
  • The bonds will be listed on BSE. No TDS shall be deducted from interest on Tranche I Bonds, if such bonds are held in DEMAT form.
  • Investors can pledge or hypothecate these bonds to avail loans after the lock-in period.
Under Section 80 CCF of the I.T. Act, an investor in such infrastructure bonds will be entitled to tax deduction of investments of up to Rs 20,000. The deduction is over and above the Rs 100,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE.
Investors to benefit from 80 CCF Benefits:
  • The Bonds are classified as “long term infrastructure bonds” and are being issued in terms of section 80 CCF of the Income Tax Act.
  • Bonds offer an additional window of tax deduction of investments of up to Rs 20,000.
  • The deduction is over and above the Rs 1,00,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE
  • It helps in intermediating the retail investor’s savings into infrastructure sector directly.
  • In the event that any applicant applies for the bonds in excess of Rs 20,000 p.a., the afore stated tax benefit shall be available to such applicant only to the extent of Rs 20,000 p.a.

Indian Railway Finance Corporation-Public Issue of Tax Free Secured Redeemable NCD
Company Profile: IRFC is a dedicated financing arm of the Ministry of Railways. Its sole objective is to raise money from the market to part finance the plan outlay of Indian Railways. The money so made available is used for acquisition of rolling stock assets and for meeting other developmental needs of the Indian Railways.

Business Overview: The primary objective of the Company is to act as a financing arm for the Indian Railways. The development of the Company’s business is dependent on the MoR’s strategy concerning the growth of the Indian Railways. The Company’s principal business therefore is borrowing funds from the commercial markets to finance the acquisition of new rolling stock which is then leased to the Indian Railways. The Company is committed to funding the development of the Indian railway sector.


Strengths
  • Assured net interest margin: The Company’s cost plus based lease agreement with the MoR ensures a net interest margin
  • The Company enjoys a strategically important position in the Indian railway sector: The Company is thus a financing arm of the MoR and it is through the Company that the Indian Railways finances the acquisition of its rolling stock.
  • Don’t have any NPA’s: The Company doesn’t have any non performing asset as on September 30, 2011.
  • Consistent Financial performance: The Company has demonstrated consistent growth in its profitability. The long term loans and advances of the Company have grown at a compounded annual growth rate of 16.35% from FY 2007 to FY 2011.
  • Low financial risk due to government support, 96.29% of the Company’s long term loans and receivables accrue directly from the MoR and therefore involve a low level of risk.
  • Low cost of borrowings The Company’s cost of incremental borrowings were 7.62%, 7.70% and 8.98% in FY 2011, FY 2010 and FY 2009 respectively, which compares favorably with the Company’s peer group finance companies.
  • Competent and committed workforce As on November 30, 2011, the Company had a work force comprising 19 employees. Besides the Managing Director, officers in the executive rank comprise of 3 general managers, 1 manager and 1 assistant manager.
  • Highest possible domestic credit rating, CRISIL has reaffirmed the credit rating of “CRISIL AAA/Stable” for Rs. 20,594.38 Crore long term borrowing programme of the Company. ICRA has reaffirmed the credit rating assigned of “[ICRA] AAA” the Debt Programme of the Company.
  • The bonds will be listed on BSE and can be traded after the 5 year lock – in period.
  • The Company has also been rated among the ‘Top 10’ Central PSUs for the years 2001-02, 2002-03, 2003- 04, 2004-05 and 2005-06.
HIGHLIGHTS OF TAX BENEFITS
  • In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of Section 10 of the Income Tax Act, 1961 (43 of 1961) the Central Government authorizes IRFC to issue during the FY 2011-12, Tax Free, Secured, Redeemable, Non-convertible Bonds.
  • The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of I.T. Act, 1961.
  • There will be no deduction of tax at source from the interest, which accrues to the bondholders in these bonds irrespective of the amount of the interest or the status of the investors.
  • Wealth Tax is not levied on investment in Bond under section 2(ea) of the Wealth-tax Act, 1957.
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