Public Issue of
Tax Free Secured Non-Convertible Bonds by IRFC Ltd
Brief Introduction of the company:
- Financing
arm of the Indian Railways, notified as a Public Financial Institution
under Section 4A of the Companies Act, 1956.
- Registered
as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank of
India. 100% shareholding held by Government of India. Consistently, profit
making Public Sector Undertaking. Consistently rated ‘AAA’ by CRISIL, ICRA
and CARE Impeccable track record of funding rolling stock asset
creation worth Rs. 60,163 crore (5,060 locomotives, 32,115 passenger coaches
and 1,39,659 freight cars) for Indian Railways so far, besides providing
funding support of Rs. 2,294 crore to other Railway entities such as Rail
Vikas Nigam Ltd., Rail Tel Corporation of India Ltd. Etc
- Networth as
on September 30, 2011 is Rs 4487.49 crores. Net Profit after Tax as on
September 30, 2011 is 201.52 crores and it stood at Rs.485.20 crores for
year ended March 31, 2011 compared to Rs 442.69 crore in March 31, 2010.
Strengths
- Assured net interest
margin:
The Company’s cost plus based lease agreement with the MoR (Ministry of
Railways) ensures a net interest margin. The Company enjoys a
strategically important position in the Indian railway sector: The
Company is wholly owned by the Government of India. The Company is a public
financial institution and a non-banking financial company providing fund
based support for the development of the Indian Railways.
- Consistent track record
of not having any non performing assets: As of September 30, 2011, IRFC do not have any
non performing assets. All its loans and receivables accrue from the MoR
and other related entities like RVNL, Pipavav Railway and RailTel.
- Consistent financial
performance:
The Company has demonstrated consistent growth in its profitability. In
addition, the Company has low establishment, overhead and administrative
expenses and the Company’s operational efficiency is high, which results
in increased profitability.
- Low cost of borrowings: The Company’s
costs of incremental borrowings were 7.62%, 7.70% and 8.98% in FY 2011, FY
2010 and FY 2009 respectively, which are relatively low with its peer
group.
Issue details:
Issuer
|
Indian
Railway Finance Corporation Limited
|
Issue
of Bonds
|
Secured, Redeemable,
Non-Convertible bonds in the nature of debentures, having benefits under
section 10(15)(iv)(h) of the Income Tax Act, 1961
Issue Size Rs. 3,000
crores with an option to retain oversubscription up to Rs.6,300 crores
(Shelf-limit)
|
Issue
Open Date
|
27th January, 2012
|
Issue
Closing Date
|
10th
February, 2012
|
Face
Value
|
Rs.1,000 per Bond
|
Minimum
Application
|
Rs. 10000 (10 Bonds)
& in multiples of ` 5000 (5 Bonds)
|
Tenor/Redemption
Date
|
10 Years and 15
Years from the deemed date of allotment
|
Ratings
|
“CRISIL AAA/Stable”
by CRISIL, “CARE AAA” by CARE & “ICRA AAA” by ICRA
|
Security
|
Charge on the
movable assets comprising of rolling stock such as wagons, locomotives and
coaches by way of first/ pari passu charge, present and future, as may be
agreed between IRFC and the Trustee, pursuant to the terms of the Debenture
Trust Deed
|
Trading
|
Compulsorily in
dematerialized form
|
Issuance
|
In dematerialized
form as well as physical form, at the option of Applicants.
|
Lead
Managers
|
A. K. Capital
Services Ltd., SBI Capital Markets Ltd. & ICICI Securities Ltd.
|
Depository
|
National Securities
Depository Ltd. and Central Depository Services (India) Ltd
|
Trustee
|
Indian Bank
|
Allocation
|
Category I (QIB+
Corporate)- up to 45%; Category II (Individual above 5 Lakhs)- up to 25%;
Category III (Individual below 5 Lakhs)- up to 30%
|
Listing
|
Proposed to be
listed on BSE & NSE
|
Interest
on Application Money used towards allotment of bonds
|
@ 8.00% p.a. on the
amount for which Bonds are allotted to the Applicants subject to deduction of
income tax under the provisions of the Income Tax Act, 1961, as amended, from
the date of realization of the cheque(s)/ demand draft(s) or 3 (three) days
from the date of banking of the application (being the date of submission of
each application as duly acknowledged by the Bankers to the Issue) whichever
is later, upto one day prior to the Deemed Date of Allotment
|
Interest
on Application Money which is liable to be refunded
|
@ 4.00% p.a. on
application money that is liable to be refunded to the Applicants in
accordance with the provisions of the SEBI Debt Regulations, or other
applicable statutory and/or regulatory requirements, subject to deduction of
income tax under the provisions of the Income Tax Act, 1961, as amended, from
the date of realization of the cheque(s)/ demand draft(s) or 3 (three) days
from the date of receipt of the application (being the date of presentation
of each application as acknowledged by the Bankers to the Issue) whichever is
later, upto one day prior to the Deemed Date of Allotment. Provided that IRFC
shall not be liable to pay any interest on monies liable to be refunded in
case of (a) invalid applications or applications liable to be rejected,
and/or (b) applications which are withdrawn by the applicant.PF / PIN /
28122011 / 770
|
Highlights of Tax Benefits
·
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 IT Act.
·
There will be no deduction of tax at source
from the interest, which accrues to the bondholders on these bonds irrespective
of the amount of the interest or the status of the investors.
·
Wealth Tax is not levied on investment in
Bonds under section 2(ea) of the Wealth-tax Act, 1957.
The issue
Options
|
I
|
II
|
Tenor
|
10 Years
|
15 Years
|
Face
Value(Rs./Bond)
|
1,000.00
|
1,000.00
|
Minimum
Application Size
|
10000 or 10 Bonds
|
10000 or 10 Bonds
|
In
Multiples of
|
5000 or 5 Bonds
|
5000 or 5 Bonds
|
Coupon
Rate (%)p.a.
|
|
|
Retail
(Category III)
|
8.15%*
|
8.30%*
|
Others
(Category I & II)
|
8.00%
|
8.10%
|
Interest
Payment
|
Annually
|
Annually
|
Interest
Payment Date
|
October 15, every
year
|
October 15, every
year
|
Redemption
Date
|
10 Years from the
Deemed Date of Allotment
|
15 Years from the
Deemed Date of Allotment
|
Maturity
Amount
|
Face Value + Interest
Accrued at the Redemption Date
|
Face Value + Interest
Accrued at the Redemption Date
|
*The coupon rates of 8.15% p.a. and
8.30% p.a. shall be payable only to the original allottees under Category III
for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds
respectively and shall not be payable to the transferees in case the Bonds are
transferred or sold by the original allottee. In such case, the
transferees shall be entitled to receive coupon rates of 8.00% p.a. and 8.10%
p.a. for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds
respectively. However, in case of any transfer by a permanently
disabled allottee to their legal heir(s), the transferee shall continue to be
entitled to receive interest at the coupon rate of 8.15% p.a. and 8.30% p.a.,
for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds
respectively. Where the Bonds are held in joint names and subsequently there is
a change in the sequence of the names of the joint holders, the joint holders
subsequent to such change in sequence of names, will be entitled to receive the
interest at the coupon rate of 8.00% p.a. and 8.10% p.a., for the Tranche 1 and
Series I Bonds and Tranche 1 and Series II Bonds respectively. However, in case
of change in name of any of the joint holders, such joint holders shall
continue to be entitled to receive interest at the coupon rate of 8.15% p.a.
and 8.30% p.a., for the Tranche 1 and Series I Bonds and Tranche 1 and Series
II Bonds respectively. In case of transmission of the Bond(s) in accordance
with the Articles of Association of the Company, to the nominee in the event of
demise of the Bondholder (single or joint holders) who was originally allotted
Bonds under Category III, the new Bondholder (single or joint holders) shall
continue to be entitled to receive interest at the coupon rate of 8.15% p.a.
and 8.30% p.a., for the Tranche 1 and Series I Bonds and Tranche 1 and Series
II Bonds respectively. For the purpose of classifying the investors into
various categories, the applications will be consolidated on the basis of PAN.
Consequent to such consolidation of applications, if an Applicant falls in any
category other than Category III, such Applicant will not be entitled to
receive the coupon rate of 8.15% p.a. and 8.30% p.a for Tranche 1 Series I
Bonds and Tranche 1 Series II Bonds respectively
^ The Company shall allocate and
allot Bond Series bearing longest maturity to all valid applications, wherein
the Applicants have not indicated their choice of the relevant Bond Series in
their Application Form.
Who Can Apply?
Category
I: QIB and Corporates
Category
II: Resident Indian individuals;
Hindu Undivided Families through the Karta
Non Resident Indians on repatriation as well as
non-repatriation basis (Above Rs.5 Lakhs)
Category
III: Resident Indian individuals; Hindu
Undivided Families through the Karta
Non Resident
Indians on repatriation as well as non-repatriation basis (Up to Rs.5 Lakhs)
How to Pay?
Cheque/DD’s to be Crossed A/C payee & drawn in favour
of:
·
For Non NRI’s “IRFC Tax Free Bonds – Escrow
Account – Tranche I”
·
For NRI’s "IRFC Tax Free Bonds – NRI
Escrow Account – Tranche I"
·
For FII’s "IRFC Tax Free Bonds – FII
Escrow Account – Tranche I"
IMPORTANT: Please read the Prospectus of this issue
carefully before investing in the same.
Disclaimer: This note is for information purpose only and
hence request you to read the prospectus for correct and accurate information
before investing.
