mukesh main project stated
TRANSCRIPT
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PROJECT REPORT ON
INFRASTRUCTURE BOND
SUBMITTED TO
UNIVERSITY OF MUMBAI
FOR ACADAMIC YEAR: 2011-2012
IN PARTIAL FULLFILLMENT FOR THE
REQUREMENT OF 5th
SEMESTER
B.COM FINANCIAL MARKET DEGREE
SUBMITTED BY
MUKESH N. SAROJ
ROLL NO: 24
VIVA COLLEGE OF ARTS, COMMERCE & SCIENCE VIRAR (W)
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DECLARATION
I hereby declare that the project titled INFRASTRUCTURE BOND is an original
work prepare by me and is being submitted to university of Mumbai in partialfulfilment of B.COM FINANCIAL MARKET degree for academic year 2011-2012.
To the best of my knowledge, this report has not been submitted earlier to this
university or to any other affiliated college for the fulfilment of BFM degree.
Signature:
Name: Mukesh N. Saroj
Roll no: 24
Exam seat no:
Place: VIVA College, Virar (w)
Date:
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ACKNOWLEDGEMENT
I Master MUKESH SAROJ from T.Y.B.COM FINANCE MARKET would like to pay
credits for all those who helped in making of this project & so I would like to thanks those
who influenced my project in order to achieve the desire results correctly.
The First & foremost part in accomplishment of in this project is our Principal
Dr.R.D.BHAGAT, Co-ordinator Prof, Prajakta Paranjape, and Guide
Prof. Vasanti Shenoy & teaching & non-teaching staff of Viva College. I would like to
pay the gratitude for their help without which it would have been impossible for me to
attain the desired performance level.
I would like to pay the gratitude for the help received by my parents & friend.
Lastly, I am thankful to all those who directly & indirectly helped in my project.
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INDEX
Sr.no TOPIC Pg.no
1 I
2 RISK FACTORS
3 COMPANY
4 LISTING
5 TERMS OF THE ISSUE
6 BRIEF PROFILE OF DIRECTORS OF THECOMPANY
7 COMPANY PROFILE
8 PTC INDIA LIMITED (PROMOTER)
9 PRODUCT & SERVICES
10 INVESTMENTS IN ENERGY VALUE CHAIN
11 INDUSTRY OUTLOOK
12 ORGANIZATION OF THE POWER INDUSTRY IN
INDIA
13 PROVIDERS OF FINANCE TO THE POWER
SECTOR IN INDIA
14 CAPITAL STRUCTURE OF THE COMPANY
15 CONCLUSION
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INTRODUCTION
This Information Memorandum (document/IM) is neither a Prospectus nor a Statement in
Lieu of Prospectus or an invitation to the Public to subscribe to the Infrastructure Bondsissued by PTC India Financial Services Limited (PFS) (the Issuer/ the Company) and is
prepared in accordance with Securities and Exchange Board of India (Issue and Listing of
Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878
dated June 06, 2008. This IM is not intended for distribution and is for the consideration of
the person to whom it is addressed and should not be reproduced / redistributed by the
recipient. It cannot be acted upon by any person other than to whom it has been specifically
addressed. Multiple copies hereof given to the same entity shall be deemed to be offered to
the same person. The securities mentioned herein are being issued strictly on a private
placement basis and this offer does not constitute a public offer/invitation. This Information
Memorandum is not intended to form the basis of evaluation for the potential investors
to whom it is addressed and who are willing and eligible to subscribe to these Infrastructure
Bonds issued by PFS. This IM has been prepared to give general information regarding PFS
to parties proposing to invest in this issue of Infrastructure Bonds and it does not purport to
contain all the information that any such party may require. PFS and the Arrangers do not
undertake to update this Information Memorandum to reflect subsequent events and thus it
should not be relied upon without first confirming its accuracy with PFS.
Potential investors are required to make their own independent valuation and judgment before
making the investment and are believed to be experienced in investing in debt markets and are
able to bear the economic risk of investing in the Bonds. It is the responsibility of potential
investors to have obtained all consents, approvals or authorizations required by them to make
an offer to subscribe for, and purchase the Bonds. Potential investors should not rely solely on
information in the Information Memorandum or by the Arrangers nor would providing of
such information by the Arrangers be construed as advice or recommendation by the Issuer or
by the Arrangers to subscribe to and purchase the Bonds. Potential investors also
acknowledge that the Arrangers do not owe them any duty of care in respect of their offer to
subscribe for and purchase of the Bonds. It is the responsibility of potential investors to also
ensure that they will sell these Bonds in strict accordance with this IM and other applicable
laws, and that the sale does not constitute an offer to the public within the meaning of the
Companies Act, 1956. Potential investors should also consult their own tax advisors on the
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tax implications of the acquisitions, ownership, sale and redemption of Bonds and income
arising thereon.
SECURITIES & EXCHANGE BOARD OF INDIA
This Disclosure Document has not been filed with Securities & Exchange Board of India
(SEBI). The Securities have not been recommended or approved by SEBI nor does SEBI
guarantee the accuracy or adequacy of this document. It is to be distinctly understood that this
document should not, in any way, be deemed or construed to have been cleared or vetted by
SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme
or the project for which the Issue is proposed to be made, or for the correctness of the
statements made or opinions expressed in this document. The issue of Bonds being
made on private placement basis, filing of this document is not required with SEBI. However,
SEBI reserves the right to take up at any point of time, with PFS, any irregularities or lapses
in this document.
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RISK FACTORS
(A) FORWARD-LOOKING STATEMENTS
While no forecasts or projections relating to the Companys financial performance are
included in this Information Memorandum, this document contains certain forward-looking
statements like intends/believes/expects and other similar expressions or variations of such
expressions. These statements are primarily meant to give Investors an overview of the
Companys future plans, as they currently stand. The Company operates in a highly
competitive, regulated and ever-changing business environment, and a change in any of these
variables may necessitate an alteration of the Companys plans. Further, these plans are not
static, but are subject t continuous internal review, and may be altered if the altered plans areperceived to suit the Companys needs better. Further, many of the plans may be based on one
or more underlying assumptions (all of which may not be contained in this Information
Memorandum) which may not come to fruition. Thus, actual results may differ materially
from those suggested by the forward-looking statement. The Company cannot be held liable
by estoppel or otherwise for any forward-looking statement contained herein. The Company
and all intermediaries associated with this Information Memorandum do not undertake to
inform Investors of any changes in any matter in respect of which any forward-looking
statements are made. All statements contained in this Information Memorandum that are not
statements of historical fact constitute forward-looking statements and are not forecasts or
projections relating to the Companys financial performance. All forward-looking statements
are subject to risks, uncertainties and assumptions that may cause actual results to differ
materially from those contemplated by the relevant forward-looking statement. Important
factors that may cause actual results to differ materially from the Companys expectations
include, among others:
General economic and business conditions in India;
The Companys ability to successfully implement its strategy and growth plans;
The Companys ability to compete effectively and access funds at competitive cost;
Changes in Indian or international interest rates;
The level of non-performing assets in its portfolio;
Rate of growth of its loan assets;
Potential mergers, acquisitions or restructurings and increased competition;
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Changes in tax benefits and incentives and other applicable regulations, including various
tax laws;
The Companys ability to retain its management team and skilled personnel;
Changes in laws and regulations that apply to NBFCs in India, including laws that impact
its lending rates and its ability to enforce its collateral; and
Changes in political conditions in India.
(These are only illustrative and not exhaustive)
By their nature, certain market risk disclosures are only estimates and could be materially
different from what actually occurs in the future. As a result, actual future gains or losses
could materially differ from those that have been estimated. Neither the Company nor any of
its Directors nor any of their respective affiliates have any obligation, or intent to update or
otherwise revise any statements reflecting circumstances arising after the date hereof or to
reflect the occurrence of underlying events, even if the underlying assumptions do not come
to fruition.
(B) PRESENTATION OF FINANCIALS AND USE OF MARKET DATA
Unless stated otherwise, the financial information used in this Information Memorandum is
derived from the Companys financial statements for the period April 1, 2009 to March 31,
2010, being the statutory year ended March 31, 2010 and prepared in accordance with Indian
GAAP and the Companies Act, 1956 as stated in the report of the Companys Statutory
Auditors, Price Waterhouse, Chartered Accountants (statutory auditors of the company for
financial year 2008- 09), included in this Information Memorandum. In addition to the
financial information for the financial year 2009-10, the financial information related to
audited accounts for the half year ended on September10 is also used and the same has been
audited by Companys Statutory Auditor for FY 2010-11, M/s Deloitte Haskins & Sells. The
Issuers fiscal year commences on April 01 and ends on March 31 of a particular year. Unless
stated otherwise, references herein to a Fiscal Year are to the Fiscal Year ended March 31 of
the reference year. Fiscal 2010 for instance, refers to the Fiscal year ended March 31, 2010.
In this Information Memorandum, any discrepancies in any table between the total and the
sum of the amounts listed are due to rounding off. Unless stated otherwise, macroeconomic
and industry data used throughout this Information Memorandum has been obtained from
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publications prepared by providers of industry information, Government sources and
multilateral institutions. Such publications generally state that the information contained
therein has been obtained from sources believed to be reliable but that their accuracy and
completeness are not guaranteed and their reliability cannot be assured. Although the Issuer
believes that industry data used in this Information Memorandum is reliable, it has not been
independently verified.
(C) INTERNAL/EXTERNAL RISK FACTORS
The following are the risks envisaged by the management, and Investors should consider the
following risk factors carefully for evaluating the Company and its business before making
any investment decision. Unless the context requires otherwise, the risk factors described
below apply to PTC India Financial Services Limited only. The risks have been quantified
wherever possible. If any one of the following stated risks actually occurs, the Companys
business, financial conditions and results of operations could suffer and therefore the value of
the Companys debt securities could decline. Note: Unless specified or quantified in the
relevant risk factors, the Company is not in a position to quantify the financial or other
implications of any risk mentioned herein below:
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INTERNAL RISK FACTORS
(a) Bond Redemption Reserve
No Bond Redemption Reserve is being created for issue of BONDs in pursuance of thisInformation Memorandum.
Management Perception: Creation of Bond Redemption Reserve is not required for the
propose issue of Bonds. The MCA vide General Circular No.9/2002; No. 6/3/2001-CL.V
dated April 18, 2002 has clarified that NBFCs need not create a Bond Redemption Reserve as
specified under section 117C of the Companies Act, 1956, in respect of privately placed
Bonds.
(b) Credit Risk
The Company carries the risk of default by borrowers and other counterparties.
Management Perception: Any lending and investment activity is exposed to credit risk
arising from the risk of repayment default by the borrowers and counterparties. The Company
has institutionalized a systematic credit evaluation process monitoring the performance of its
asset portfolio on a regular and continual basis to detect any material development, and also
constantly evaluates the changes and developments in sectors to which it has substantial
exposure. The Company also undertakes a periodic review of its entire asset portfolio with a
view to determine the portfolio valuation, identify potential areas of action and devise
appropriate strategies thereon. The Company follows a conservative provisioning and write-
off policy, which is in line with what is prescribed by the RBI.
(c) Contingent Liabilities
The Companys contingent liabilities could adversely affect its financial cond ition.
Management Perception: As on September 30, 2010, PFS had no contingent liabilities on
account of income-tax/interest-tax/sales-tax liabilities in respect of matters in appeal and bond
executed in respect of legal matters.
(d) Non-Performing Assets (NPA)
If the level of NPAs in the Companys portfolio were to increase, its business would suffer.
Management Perception: The Gross and Net NPAs of PFS as on September 30, 2010, were
zero respectively. PFS is fully complying with the RBI Guidelines/Directives in connection
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with the same. The Company believes that its overall financial profile, capitalization levels
and risk management systems, provide significant risk mitigation.
(e) Interest Rate Risk
The Companys business is largely dependent on interest income from its operations.
Management Perception: The Company is exposed to interest rate risk principally as a result
of lending to customers at interest rates and in amounts and for periods, funding sources
(institutional/bank borrowings and debt offerings). The Company seeks to match its interest
rate positions to minimize interest rate risk. Despite these efforts, there can be no assurance
that significant interest rate movements will not have an effect on its results of operations.
Interest rates are highly sensitive to many factors beyond its control, including the monetary
policies of the RBI, deregulation of the financial sector in India, domestic and international
economic and political conditions, inflation and other factors. Due to these factors, interest
rates in India have historically experienced a relatively high degree of volatility. Nevertheless
the endeavour of the Company will be to keep the interest rate risk at minimum levels by
proactively synchronizing resource rising and lending activities on an ongoing basis.
(f) Access to Capital Markets and Commercial Borrowings
The Companys growth will depend on its continued ability to access funds at competitive
rates.
Management Perception: With the growth of its business, the Company is increasingly
reliant on funding from the debt capital markets and commercial borrowings. The market for
such funds is competitive and its ability to obtain funds at competitive rates will depend on
various factors, including its ability to maintain its credit ratings. While its borrowing costs
have been competitive in the past due to its credit rating and the quality of its asset portfolio,
if the Company is unable to access funds at an effective cost that is comparable to or lower
than its competitors, the Company may not be able to offer competitive interest rates for its
loans. This may adversely impact its business, its future financial performance. The value of
its collateral may decrease or the Company may experience delays in enforcing its collateral
when its customers default on their obligations, which may result in failure to recover the
expected value of collateral and adversely affect its financial performance. The Company has
also filed its Draft Red Herring Prospectus with market regulator i.e. SEBI on December 22,
2010, for its proposed fund raising exercise through Initial Public Offering (IPO).
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(g) A ailment of foreign currency borrowings in the future, which will
expose Company to fluctuations in currency exchange rates, which could
adversely affect its business, financial condition and results of operations.While PFS currently do not have any foreign currency borrowings, it may avail foreign
currency borrowings in the future. As an IFC, PFS is eligible to raise external commercial
borrowings without prior RBI approval up to 50.00% of its Owned Funds and are likely to
avail significant external commercial borrowings in the future. In October 2010, the Company
has also entered into a loan agreement with Deutsche Infestations - und
Entwicklungsgesellschaft me H ("DEG") for an aggregate amount of U.S. $26 million for on-
lending to renewable energy projects and therefore may be exposed to fluctuations in currencyexchange rates in the future. Although PFS may enter into hedging transactions with respect
to its foreign currency borrowings, there can be no assurance that any such measure will be
effective or that PFS will enter into effective hedging with respect to any new foreign
currency borrowings. Volatility in currency exchange rates could adversely affect Companys
business, financial condition and results of operations and the price of its Equity Shares.
(h) Failure to recover the expected value of collateral when borrowersdefault on their obligations to Company may adversely affect its financial
performance.
As of September 30, 2010, all loans were secured by project assets. For debt provided on a
senior basis, PFS generally seek a first ranking pair passu charge on the project assets. For
loans provided on a subordinated basis, PFS generally seek to have a pari passu charge on the
project assets. Although we seek to maintain a collateral value to loan ratio of at least 1.25:1
for our secured loans, an economic downturn or other project risks could result in a fall incollateral values. Moreover, foreclosure of such collateral may require court or tribunal
intervention that may involve protracted proceedings and the process of enforcing security
interests against collateral can be difficult. Additionally, the realizable value of all collateral
in liquidation may be lower than its book value. PFS cannot guarantee that it will be able to
realize the full value of its collateral, due to, among other things, defects in the perfection of
collateral, delays on its part in taking immediate action in bankruptcy foreclosure
proceedings, stock market downturns, claims of other lenders, legal or judicial restraint andfraudulent transfers by borrowers. In the event a specialized regulatory agency gains
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jurisdiction over the borrower, creditor actions can be further delayed. In addition, to put in
place an institutional mechanism for the timely and transparent restructuring of corporate
debt, the RBI has devised a corporate debt restructuring system. Any failure to recover the
expected value of collateral security could expose PFS to a potential loss. Apart from the RBI
guidelines, PFS may be a part of a syndicate of lenders the majority of whom elect to pursue a
different course of action than the Company would have chosen. Any such unexpected loss
could adversely affect business, prospects, results of operations and financial condition.
EXTERNAL RISK FACTORS
(a) Material changes in Regulations to which the Company is subject could cause the
Companys business to suffer
Management Perception: NBFCs in India are subject to detailed supervision and regulation
by the RBI. NBFCs not accepting public deposits are exempt from most such provisions. The
Company is subject generally to changes in Indian law, as well as to changes in Government
regulations and policies and accounting principles. The RBI also requires the Company to
make provisions in respect of NPAs. The provision made is equal to or higher than that
prescribed under the prudential norms. Any changes in the regulatory framework affecting
NBFCs including the provisioning for NPAs or capital adequacy requirements could
adversely affect the profitability of the Company or its future financial performance, by
requiring a restructuring of its activities, increasing costs or otherwise.
(b) Risk of competition in lending and resource raising could cause the Companys
business to suffer
Management Perception: PFS offers a financial products and services, such as Term Loans
and Bridge Loans, catering to varied cross section of customers. The management believes
that the Companys brand equity, reach and strategic alliances along with its resource base
would provide the necessary strength to perform well in a competitive market.
(c) A slowdown in economic growth in India could cause the Companys business to
suffer
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Management Perception: The Companys performance and the quality and growth of its
assets are necessarily dependent on the health of the overall Indian economy. A slowdown in
the Indian economy could adversely affect its business, including its ability to grow its asset
portfolio, the quality of its assets, and its ability to implement its strategy. Indias economy
could be adversely affected by a general rise in interest rates, or various other factors affecting
the growth of industrial, manufacturing and services sector or general down trend in the
economy.
Notes to Risk Factors:
Save, as stated elsewhere in this Information Memorandum, since the date of publishing
audited financial accounts contained in this Information Memorandum:
(a) No material developments have taken place that are likely to materially affect the
performance or prospects of the Company; and
(b) No developments have taken place in the last nine months which materially and adversely
affect the profitability of the Company or the value of its assets, or its ability to pay its
liabilities within the next 12 months.
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COMPANY
PTC India Financial Services Ltd (PFS or Issuer or Company) is offering for
subscription, on private placement basis, secured, redeemable, non-convertible Long Term
Infrastructure Bonds of the face value of Rs. 5,000/- each for cash at par with benefits under
Section 80CCF of the Income Tax Act, 1961 termed as PFS LONG TERM
INFRASTRUCTURE NON- CONVERTIBLE BONDS (INFRASTRUCTURE BONDs).
The minimum application shall be for 1 Bond of Rs. 5,000/- each and in multiples of 1 Bond
thereafter.
AUTHORITY FOR THE ISSUE
This issue is being made pursuant to the Resolution of the Board of Directors of the Company
passed at its meeting held on March 22, 2010 and the Committee of Directors for Bond
Issuance of the Company, passed at its Meeting held on January 27, 2011 and is made under
appropriate provisions of the Income Tax Act, 1961.
ISSUE SIZE
PFS (the Issuer or the Company) proposes to raise Rs. 30 Crore, with a green-shoeoption, to retain over-subscription by issuance of additional Infrastructure Bonds up to Rs. 70
Crore, in that case the total issue size may be up to Rs. 100 Crore, through issue of Secured,
Redeemable, Non-Convertible Long Term Infrastructure Bonds face value of Rs.5,000 each
for cash at par with benefits under section 80CCF of the Income Tax Act, 1961 termed as PFS
LONG TERM INFRASTRUCTURE BONDS - SERIES 1 (Infrastructure Bonds) by way of
private placement (the Issue). The allotment of Bonds will be made on First -cum-first serve
basis (as per records of Company) and Company will monitor the Issue collection on daily
basis. In case of over subscription of the issue, the applications received over and above of the
Issue size may be rejected or the Company may allot the entire application/s received on
Closing date through pro-rata basis or draw of lot or the Company may adopt any other mode
as may be deemed fit by the Company at its sole discretion so that the total Issue size could
not exceed Rs. 100 Crore.
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OBJECTS OF THE ISSUE
The proceeds shall be utilized towards infrastructure lending as defined by the Reserve Bank
of India in the Guidelines issued by it from time to time, after meeting the expenditures of,
and raised through this issue.
CREDIT RATING
Brickwork has assigned BWR AA (Pronounced Double A with Stable outlook) rating to
the Bonds of the Company aggregating to Rs. 100 Crores letter Ref No. BWR/BLR/RA/2010-
11/0274 on January 31, 2011. A copy of rating letter from Brickwork is enclosed elsewhere in
this Disclosure Document Instrument with this rating are considered to offer High Credit
quality in terms of timely payment of debt obligations. A copy of rating letter from Brickwork
is enclosed elsewhere in this Disclosure Document
ICRA has assigned LA+ (pronounced L A plus) rating to the Bonds of the Company
aggregating to Rs.100 crores letter Ref no. D/RAT/2010-11/P48/9 on February 3, 2011. This
rating is considered to offer adequate credit quality for timely servicing of debt obligations. A
copy of rating letter from ICRA is enclosed elsewhere in this Disclosure Document. Other
than rating mentioned hereinabove, the Company has not sought any other credit rating from
any other credit rating agency (ies) for the Bonds offered for subscription under the terms of
this Disclosure Document. The above ratings are not a recommendation to buy, sell or hold
securities and investors should take their own decision. The ratings may be subject to revision
or withdrawal at any time by the assigning rating agencies and each rating should be
evaluated independently of any other rating. The ratings obtained are subject to revision at
any point of time in the future. The rating agencies have the right to suspend, withdraw the
rating at any time on the basis of new information etc.
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LISTING
The Secured Redeemable Long Term Infrastructure Non-Convertible Bonds Series 1 of PFS
is proposed to be listed on the Wholesale Debt Market (WDM) Segment of the National Stock
Exchange of India Ltd. (NSE). The Company has obtained an in-principle approval from
the NSE for listing of said Bonds on its Wholesale Debt Market (WDM) Segment. The
Company the Bonds to be issued and allotted under this Disclosure Document and complete
all the formalities relating to listing of the Bonds within 70 days from the date of closure of
the Issue. If such permission is not granted within 70 days from the date of closure of the
Issue or where such permission is refused before the expiry of the 70 days from the closure of
the Issue, the Company shall forthwith repay without interest, all monies received from the
applicants in pursuance of the Disclosure Document, and if such money is not repaid within 8
days after the Company becomes liable to repay it (i.e. from the date of refusal or 70 days
from the date of closing of the subscription list, whichever is earlier), then the Company and
every director of the Company who is an officer in default shall, on and from expiry of 8
days, will be jointly and severally liable to repay the money, with interest at the rate of 15 per
cent per annum on application money, as prescribed under Section 73 of the Companies Act,
1956.
REGISTRAR
M/s Karvy Computershare Pvt Limited has been appointed as Registrar to the Issue. The
Registrar will monitor the applications while the private placement is open and will
coordinate the post private placement activities of allotment, dispatch of interest warrants etc.
Investors can contact the Registrar in case of any post-issue problems such as non receipt of
letters of allotment; demat credit, refund orders, interest on application money.
TRUSTEES
IDBI Trusteeship Services Limited has given its consent to act as the Trustee to the proposed
Issue and for its name to be included in this Information Memorandum. All remedies of the
Bond holder(s) for the amount due on the Bond will be vested with the Trustees on behalf of
the Bond holders. The holders of the Bond shall without any further act or deed be deemed to
have irrevocably given their consent to and authorised the trustees to do inter-alia, all acts,
deeds, and things necessary for servicing the Bond being offered including any payment by
the Company to the Bond holders / Bond Trustee, as the case may be, shall, from the time of
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making such payment, completely and irrevocably discharge the Company pro tanto from any
liability to the Bond holders..
FUTURE RESOURCE RAISING
PFS will be entitled to borrow/raise loans or avail financial assistance both from domestic and
international market as also issue Bonds/Equity Shares/Preference Shares/other securities in
any mannerhaving such ranking pari passu or otherwise and on terms and conditions as PFS
may think fit without theconsent of or intimation to Bond holders or Trustees in this
connection.
PERMISSION/ CONSENT FROM PRIOR CREDITORS
The Company hereby confirms that it is entitled to raise money through current issue of
Infrastructure Bonds without the consent/permission/approval from the Bond
holders/Trustees/ Lenders/other creditors of PFS. Further the Bonds proposed to be issued
under the terms of this Information Memorandum being secured there is no requirement for
obtaining permission/consent from the prior creditors.
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TERMS OF THE ISSUE
The following are the terms and conditions of Bonds being offered under this Information
Memorandum for an aggregate amount of up to Rs. 100 Crore for the financial year 2010-
2011.
1. STATUS OF THE BOND
The Infrastructure Bonds shall be non-convertible and secured. These bonds carry tax benefit
under section 80CCF of Income Tax Act, 1961 (up to a maximum of Rs.20, 000/- per
applicant) and these Long Term Infrastructure Bonds are being issued in terms of Notification
No. [48/2010/F No 149/84/2010-SO (TPL)] dated 09th July, 2010 issued by Central Board of
Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, and RBI
certificate no. N-14.03116 dated 23rd August 2010; a copy of the RBI certificate is annexed
to this Memorandum. In accordance with Section 80CCF of the Income Tax Act, 1961 the
amount, not exceeding Rs. 20,000 per annum, paid or deposited as subscription to Long-Term
Infrastructure Bonds during the previous year relevant to the assessment year beginning April
01, 2011 shall be deducted in computing the taxable income of a resident individual or HUF.
In the event that any Applicant subscribes to the Bonds in excess of Rs. 20,000, the foretasted
tax benefit shall be available to such Applicant only to the extent of Rs. 20,000. Eligible
investors can apply for up to any amount of the Bonds across any of the Series(s) or a
combination thereof. The investors will be allotted the total number of Bonds applied for in
accordance with the Basis of Allotment.
2. FORM
a) The allotment of the Bonds shall be made in physical and dematerialized form both. The
Company has made depository arrangements with National Securities Depository Limited
("NSDL") and Central Depository Services (India) Limited ("CDSL", and together with
NSDL, the "Depositories") for issue of the Bonds in a dematerialized form. The Company
shall take necessary steps to credit the Depository Participant account of the Applicants with
the number of Bonds allotted. b) In case of Bonds that are rematerialized and held in physical
form, the Company will issue one certificate to the Bond holder for the aggregate amount of
the Bonds that are rematerialized and held by such Bond holder (each such certificate a
"Consolidated Bond Certificate"). In respect of the Consolidated Bond Certificate(s), the
Company will, upon receipt of a request from the Bond holder within 30 days of such request,
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split such Consolidated Bond Certificates into smaller denominations, subject to a minimum
denomination of one Bond. No fees will be charged for splitting any Consolidated Bond
Certificates but, stamp duty, if payable, will be paid by the Bond holder. The request to split a
Consolidated Bond Certificate shall be accompanied by the original Consolidated Bond
Certificate which will, upon issuance of the split Consolidated Bond Certificates, be cancelled
by the Company.
3. FACE VALUE
The face value of each Bond is Rs. 5,000/-.
4. TITLE
In case of:
1. Bonds held in the dematerialized form, the person for the time being appearing in the
register of beneficial owners maintained by the Depository; and
2. the Bond held in physical form, the person for the time being appearing in the Register of
bondholders (as defined below) as Bond holder, shall be treated for all purposes by the
Company, the Bond Trustee, the Depositories and all other persons dealing with such person
as the holder thereof and its absolute owner for all purposes whether or not it is overdue and
regardless of any notice of ownership, trust or any interest in it or any writing on, theft or loss
of the Consolidated Bond Certificate issued in respect of the Bonds and no person will be
liable for so treating the Bond holder. No transfer of title of a Bond will be valid unless and
until entered on the Register of Bond holders or the register of beneficial owners maintained
by the Depository prior to the Record Date. In the absence of transfer being registered,
interest, Buyback Amount and/or Maturity Amount, as the case may be, will be paid to the
person, whose name appears first in the Register of Bond holders maintained by the
Depositories and/or the Company and/or the Registrar, as the case may be. In such cases,
claims, if any, by the purchasers of the Bonds will need to be settled with the seller of the
Bonds and not with the Company or the Registrar. The provisions relating to transfer and
transmission and other related matters in respect of the Company's shares contained in the
Articles of Association of the Company and the Companies Act shall apply, mutatis mutandis
(to the extent applicable) to the Bond (s) as well.
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5. LISTING
The Bonds are proposed to be listed on NSE.
6. NOMINATION
In accordance with Section 109A of Companies Act, 1956, the sole Bond holder or first
bondholder, along with other joint bondholders [being individual(s)] may nominate any one
person (being an individual) who, in the event of death of sole holder or all the joint holders,
as the case may be, shall become entitled to the Bond(s). Nominee shall be entitled to the
same rights to which he will be entitled if he were the registered holder of the Bond(s). Where
nominee is a minor, the Bondholders may make a nomination to appoint any person to
become entitled to the Bond(s), in the event of their death, during the minority. A buyer will
be entitled to make a fresh nomination in the manner prescribed. When the Bond is held by
two or more person, the nominee shall become entitled to receive the amount only on the
demise of all the Bond holders. The Bond holders are advised to provide the specimen
signature of the nominee to the company to expedite the transmission of Bond(s) to the
nominee in the event of demise of Bond holders. In dematerialized mode, there is no need tomake a separate nomination with the Company.
7. TRANSFER OF BONDs
a) Register of Bondholders: The Company shall maintain at its registered office or such
other place as permitted by law a register of Bondholders (the "Register of Bondholders")
containing such particulars as required by Section 152 of the Companies Act. In terms of
Section 152A of the Companies Act, the Register of Bondholders maintained by a Depositoryfor any Bond in dematerialized form under Section 11 of the Depositories Act shall be
deemed to be a Register of Bondholders for this purpose.
b) Lock in Period: In accordance with the Notification, the Bondholders shall not sell or
transfer the Bonds in any manner for a period of 5 years from the Deemed Date of Allotment
(the "Lock-in Period"). The Bondholders may sell or transfer the Bonds after the expiry of the
Lock-in Period on the stock exchange where the Bonds are listed. These Bonds can also be
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pledged, hypothecated or given on lien for obtaining loans from Scheduled Commercial
Banks after the lock-in period of five years.
c) Transmission of Bonds: However, transmission of the Bonds to the legal heirs in case of
death of the Bondholder / Beneficiary to the Bonds is allowed.
d) Transfer of Bonds held in dematerialized form: In respect of Bonds held in the
dematerialized form, transfers of the Bonds may be effected only through the Depository(ies)
where such Bonds are held, in accordance with the provisions of the Depositories Act, 1996
and/or rules as notified by the Depositories from time to time. The Bondholder shall give
delivery instructions containing details of the prospective purchaser's Depository Participant's
account to his Depository Participant. If a prospective purchaser does not have a Depository
Participant account, the Bondholder may rematerialize his or her Bonds and transfer them in a
manner as specified below. The transferee(s) should ensure that the transfer formalities are
completed prior to the Record Date. If a request for transfer of the Bond is not received by the
Registrar before the Record Date for maturity, the Maturity Amount for the Bonds shall be
paid to the person whose name appears as a Bondholder in the Register of Bondholders. In
such cases, any claims shall be settled inter se between the parties and no claim or action shall
be brought against the Company.
e) Succession: In the event of demise of the holder(s) of the Bonds, PFS will recognise the
executor or administrator of deceased bondholder, being an individual / HUF, or the holder of
the succession certificate or other legal representative, being an individual / HUF as having
title to the Bonds. PFS shall not be bound to recognise such executor, administrator, or holder
of succession certificate, unless such executor or administrators obtains probate or letter of
administration or such holder is the holder of succession certificate or other legalrepresentation, as the case may be, from a Court of India having jurisdiction over the matter.
PFS may at its absolute discretion, where it thinks fit, dispense with production of probate or
letter of administration or succession certificate or other legal representation, in order to
recognise such holder, being an individual / HUF as being entitled to the Bonds standing in
the name of the deceased bond holder(s) on production of documentary proof or indemnity.
All requests for registration of transmission along with requisite documents should be sent to
the Registrars.
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8. DEEMED DATE OF ALLOTMENT
The Deemed Date of Allotment shall be March 25, 2011. All benefits under the Bond
including payment of interest will accrue to the Bondholders from the Deemed Date of
Allotment.
9. SUBSCRIPTION
Issue opens on February 09, 2011
Issue closes on *March 15, 2011
* Issue date may be change at sole discretion of Company.
10. INTEREST
a) Annual Payment of Interest: For Option I (subject to buyback, as applicable) & Option
III Bonds, interest will be paid annually commencing from the Deemed Date of Allotment and
on the equivalent date falling every year thereafter.
b) Cumulative Payment of Interest: Interest on Option II & IV Bonds shall be
Compounded annually commencing from the Deemed Date of Allotment and shall be payableon the Maturity Date or the Buyback Date, as the case may be.
c) Day Count Convention: Interest shall be computed on a 365 days-a-year basis on the
principal outstanding on the Bonds. However, where the interest period (start date to end date)
includes February 29, interest shall be computed on 366 days-a-year basis, on the principal
outstanding on the Bonds.
d) Interest on Application and Refund Money: The Company shall not pay any interest on
refund of Application Amount, in whole or part. However, interest on Application Money, to
the extent of allotment of bonds, shall be paid on first interest payment date (i.e. 25 March
2012 for all options), from the date of credit of this money to the bank account of PFS to the
date immediately preceding the deemed date of allotment at the respective coupon rates.
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11. REFUND
In case of rejection of the application on account of technical grounds or receipt of application
after the closure of the issue, refund without interest will be made within a period of 30 daysfrom the deemed date of allotment of the bonds.
12. REDEMPTION
Unless previously redeemed as per the terms of the Bond, the Company shall redeem the
Bonds on the Maturity Date i.e. March 25, 2021 PFSs liability to Bondholder(s) towards all
their rights including payment of face value shall cease and stand extinguished up on
redemption of the Bonds Series 1 in all events. Further PFS will not be liable to pay any
interest, income or compensation of any kind after the date of such Redemption of the
Bonds(s).
Bonds held in electronic form: No action is required on the part of Bondholders at the time
of maturity of the Bonds. On the redemption date, redemption proceeds would be paid by
NECS/At Par Cheque/Demand Drafts to those Bondholders, whose names appear on the list
of beneficial owners given by the depository to PFS. These names would be as per thedepositorys record on the record date/book closure date fixed for the purpose of redemption.
These Bonds will be simultaneously extinguished.
Bonds held in physical form: No action will ordinarily be required on the part of the
Bondholder at the time of redemption and the maturity amount will be paid to those
Bondholders whose names appear in the Register of Bondholders maintained by the Company
or Registrar on the Record Date fixed for the purpose of redemption. However, the Company
may require that the Consolidated Bond Certificate(s), duly discharged by the sole holder or
all the joint-holders (signed on the reverse of the Consolidated Bond Certificate(s) to be
surrendered for redemption on Maturity Date and sent by registered post with
acknowledgment due or by hand delivery to the Registrar or Company or to such persons at
such addresses as may be notified by the Company from time to time. Bondholders shall have
to surrender the Consolidated Bond Certificate(s) in the manner as stated above, not more
than three months and not less than two months prior to the Maturity Date so as to facilitate
timely payment. In case of transmission applications pending on the record date, the
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redemption proceeds will be issued to the legal heirs after the confirmation of the adequacy
and correctness of the documentation submitted with such application till such time, the
redemption proceeds will be kept in abeyance.
13. INTERIM EXIT ROUTES
These Bonds shall be listed at NSE. The investors shall have the right to exit through the
secondary market, but only after completion of the lock-in period of five years from the date
of allotment. In respect of the Bonds having buyback facility, the investors can exit either
through secondary market or through buyback route.
14. BUYBACK OF BONDSIn respect of Bonds with buyback option, exit facility shall be available at the end of 5th, 6th,
7th, 8th and 9th year. The investors, who opt and are allotted Bonds with buyback facility and
wish to exit through this facility, shall have to apply for buy back by writing to the Company
early.
Redemption Notice for PFS Long Term Infrastructure Bond Series 1) of his/her
intention to redeem all the Bonds held by him/her under the buyback option. Such earlyRedemption Notice from the Bondholder should reach the Registrar or the Company between
January 1 to January 31, starting from year 2016 to year 2020 (Early Redemption Date) for
redeeming the Bonds in that particular financial year. The Bonds will be redeemed on March
25 of the same financial year. Partial buyback of the bonds held under the buyback option
shall not be permissible.
Bonds held in dematerialized form
The Company or the Registrar upon receipt of the notice from the Bondholders would
undertake appropriate corporate action to effect the buyback. The bank details will be
obtained from the Depositories for payments. Investors who have applied or who are holding
the Bonds in electronic form are advised to immediately update their bank account details as
appearing on the records of Depository Participant. Failure to do so could result in delays in
credit of the payments to investors at their sole risk and neither the Arrangers nor the
Company shall have any responsibility and undertake any liability for such delays on part of
the investors
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Bonds held in physical form
On receipt of the notice from the investor for exercise of buy back option, no action would
ordinarily be required on the part of the Bondholder on the Buyback Date and the Buyback
Amount would be paid to those Bondholders whose names appear first in the Register of
Bondholders. However, the Company may require the Bondholder to duly surrender the
Consolidated Bond Certificate to the Company/Registrar for the buyback. While exercising
the buyback option, Bondholder are required to furnish any change of address or bank details
etc. Upon payment of the Buyback Amounts, the Bonds shall be deemed to have been repaid
to the Bondholders and all other rights of the Bondholders shall terminate and no interest shall
accrue on such Bonds thereafter. Subject to the provisions of the Companies Act, where the
Company has bought back any Bond(s) under the Buyback Facility, the Company shall have
and shall be deemed always to have had the right to keep such Bonds alive without
extinguishment for the purpose of resale and in exercising such right, the Company shall have
and be deemed always to have had the power to resell such Bonds.
15. PAYMENT OF INTEREST/ REDEMPTION/BUYBACK AMOUNT
Payment of Interest
Payment of interest on the Bonds will be made to those holders of the Bonds, whose name
appears first in the Register of Bondholders maintained by the Depositories and/or the
Company and/or the Registrar, as the case may be, as on the Record Date.
Record Date
The record date for the payment of interest or the Buyback Amount or the Maturity Amount
shall be 3 days prior to the date on which such amount is due and payable ("Record date").
Effect of holidays on payment
If the date of payment of interest or principal or any date specified does not fall on a Working
Day, then the succeeding Working Day will be considered as the effective date. Interest and
principal or other amounts, if any, will be paid on the succeeding Working Day. Payment of
interest will be subject to the deduction of tax as per Income Tax Act or any statutorymodification or re-enactment thereof for the time being in force. In case the Maturity Date
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falls on a holiday, the payment will be made on the next Working Day, without any interest
for the period overdue.
Payment on Redemption or Buyback
Bonds held in electronic form
On the Maturity Date or the Buyback Date as the case may be, the Maturity Amount or the
Buyback Amount as the case may be, will be paid as per the Depositories' records on the
Record Date fixed for this purpose. No action is required on the part of Bondholders. The
bank details will be obtained from the Depositories for payments. Investors who have applied
or who are holding the Bond in electronic form are advised to immediately update their bank
account details as appearing on the records of Depository Participant. Failure to do so could
result in delays in credit of the payments to investors at their sole risk and neither the Lead
Arrangers nor the Company shall have any responsibility and undertake any liability for such
delays on part of the investors.
Bonds held in physical form
Payments with respect to maturity or buyback of Bonds will be made by way of cheques or
pay orders or electronically. The bank details will be obtained from the Registrar for effecting
payments. However, if the Company so requires, payments on maturity may be made on
surrender of the Consolidated Bond Certificate(s). Dispatch of cheques or pay orders in
respect of payments with respect to redemptions will be made on the Maturity Date or
Buyback Date within a period of 30 days from the date of receipt of the duly discharged
Consolidated Bond Certificate, if required by the Company. The Company's liability to the
Bondholders including for payment or otherwise shall stand extinguished from the Maturity
Date or upon dispatch of the Maturity Amounts to the Bondholders. Further, the Company
will not be liable to pay any interest, income or compensation of any kind from the Maturity
Date.
Mode of Payment
All payments to be made by the Company to the Bondholders shall be by cheques demand
drafts or through National Electronic Clearing System ("NECS")
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16. TAXATION
The interest on Bonds will be subject to deduction of tax at source at the rates prevailing from
time to time under the provisions of the Income Tax Act or any statutory modification or re-
enactment thereof. As per the current provisions of the Income Tax Act, on payment to all
categories of resident Bondholders, tax will not be deducted at source from interest on Bonds,
if such interest does not exceed Rs. 2,500 in a financial year. As per clause (ix) of Section 193
of the Income Tax Act, no income tax is required to be withheld on any interest payable on
any security issued by a company, where such security is in dematerialized form and is listed
on a recognized stock exchange in India in accordance with the Securities Contracts
Regulation Act, 1956, as amended, and the rules notified there under. Accordingly, no income
tax will be deducted at source from the interest on Bonds held in dematerialized form. In case
of Bonds held in a physical form no tax may be withheld in case the interest does not exceed
Rs. 2,500. However, such interest is taxable income in the hands of resident Bondholders. If
interest on Bonds exceeds the prescribed limit of Rs. 2,500 in case of resident individual
Bondholders, to ensure non-deduction or lower deduction of tax at source, as the case may be,
the Bondholders are required to furnish either (a) a declaration (in duplicate) in the prescribed
form i.e. Form 15G which may be given by all Bondholders other than companies, firms and
non-residents subject to provisions of section 197A of the Income Tax Act; or (b) a
certificate, from the assessing officer of the Bondholder, in the prescribed form under section
197 of the Income Tax Act which may be obtained by the Bondholders. Senior citizens, who
are 65 or more years of age at any time during the financial year, can submit a self-declaration
in the prescribed Form 15H for non-deduction of tax at source in accordance with the
provisions of section 197A even if the aggregate income credited or paid or likely to be
credited or paid exceeds the maximum limit for the financial year. These certificates may be
submitted to the Company or to such person at such address as may be notified by us from
time to time, quoting the name of the sole or first Bondholder, Bondholder number and the
distinctive number(s) of the Bond(s) held, at least one month prior to the interest payment
date. Tax exemption certificate or document, if any, must be lodged at the office of the
Registrar prior to the Record Date or as specifically required. Tax applicable on coupon will
be deducted at source on accrual thereof in the Company's books and / or on payment thereof,
in accordance with the provisions of the Income Tax Act and / or any other statutory
modification, re-enactment or notification as the case may be. A tax deduction certificate will
be issued for the amount of tax so deducted on annual basis.
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17. RIGHTS OF BONDHOLDERS
The Bonds shall not confer upon the holders thereof any rights or privileges including the
right to receive notices or annual reports of, or to attend and/or vote, at a General Meeting of
PFS. If any proposal affecting the rights attached to the Bonds is considered by PFS, the said
proposal will first be placed before the registered Bondholders or Trustees for their
consideration. The Bonds comprising the present Private Placement shall rank pari passu inter
se without any preference to or priority of one over the other or others over them and shall
also be subject to the other terms and conditions to be incorporated in the Agreement / Trust
Deed(s) to be entered into by PFS with the Trustees and the Letters of Allotment/Bond
Certificates that will be issued. A register of Bondholders will be maintained and sums
becoming due and payable in respect of the Bonds will be paid to the Registered Holder
thereof. The Bonds are subject to the provisions of the Act and the terms of this Information
Memorandum. Over and above such terms and conditions, the Bonds shall also be subject to
other terms and conditions as may be incorporated in the Agreement/Bond Trust Deed/Letters
of Allotments/Bond Certificates, guidelines, notifications and regulations relating to the issue
of capital and listing of securities issued from time to time by the Government of India and/or
other authorities and other documents that may be executed in respect of the Bonds.
18. MODIFICATION OF RIGHTS
The rights, privileges and conditions attached to the Bonds may be varied, modified and / or
abrogated with the consent in writing of the holders of at least three-fourths of the outstanding
amount of the Bonds or with the sanction of the Trustees, provided that nothing in such
consent or sanction shall be operative against PFS, where such consent or sanction modifies
or varies the terms and conditions governing the Bonds, if the same are not acceptable to PFS.
19. NOTICES
The communications to the Bondholder(s) required to be sent by PFS or the Trustees shall be
deemed to have been given if sent by an ordinary post to the registered holder of the Bonds.
All communications to be given by the Bondholder(s) shall be sent by registered post or by
hand delivery to the Registrar and Transfer Agents or to PFS or to such person, at such
addresses as may be notified by PFS from time to time.
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20. MISCELLANEOUS
Loan against Bonds
The Bonds cannot be pledged or hypothecated for obtaining loans from scheduled commercial
banks during the Lock-in Period of five years.
Lien
The Company shall have the right of set-off and lien, present as well as future on the moneys
due and payable to the Bondholder, whether in single name or joint name, to the extent of all
outstanding dues by the Bondholder to the Company.
Lien on Pledge of Bonds
The Company, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond is
accepted by any bank or institution for any loan provided to the Bondholder against pledge of
such Bonds as part of the funding after completion of lock-in period of five years as notified
time to time.
Right to Reissue Bond(s)
Subject to the provisions of the Act, where the Company has redeemed or repurchased any
Bond(s), the Company shall have and shall be deemed always To have had the right to keep
such Bonds alive without extinguishment for the purpose right, the Company shall have and
be deemed always to have had the power to resell or reissue such Bonds either by reselling or
reissuing the same Bonds or by issuing other Bonds in their place. This includes the right to
reissue original Bonds.
Joint-holders
Where two or more persons are holders of any Bond (s), they shall be deemed to hold the
same as joint holders with benefits of survivorship subject to Articles and applicable law.
Sharing of Information
The Company may, at its option, use its own, as well as exchange, share or part with any
financial or other information about the Bondholders available with the Company, its
subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies,
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statutory bodies, as may be required and neither the Company nor its subsidiaries and
affiliates nor their agents shall be liable for use of the aforesaid information.
Issue of Duplicate Consolidated Bond Certificate(s)
If any Consolidated Bond Certificate is mutilated or defaced it may be replaced by the
Company against the surrender of such Consolidated Bond Certificates, provided that where
the Consolidated Bond Certificates are mutilated or defaced, they will be replaced only if the
certificate numbers and the distinctive numbers are legible. If any Consolidated Bond
Certificate is destroyed, stolen or lost then upon production of proof thereof to the
RTA/Companys satisfaction and upon furnishing such indemnity/security and/or documents
as we may deem adequate, duplicate Consolidated Bond Certificate(s) shall be issued.
Jurisdiction
The courts of New Delhi shall have jurisdiction to settle any disputes which may arise out of
or in connection with the Bond Trust Deed or the Bonds and that accordingly any suit, action
or proceedings (together referred to as "Proceedings") arising out of or in connection with the
Bond Trust Deed and the Bonds may be brought in the courts of New Delhi.
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Brief Profile of Directors of the Company
Name of Director Designation
Mr. Tantra Narayan Thakur Chairman &
Managing
Director
Dr. Ashok Haldia Whole-Time
Director and
Chief
Financial Officer
Mr. Sudhir Kumar Independent
Director
Mr. M K Goel Non-executive
Director
Mr. Prathipati Abraham Independent
Director
Mrs. Rama Murali Independent
Director
Dr. Uddesh Kohli Independent
Director
Mr. Ramarao Muralidharan
Coimbatore
Independent
Director
Mr. Neil Kant Arora Non-Executive
Director
Mr. Surinder Singh Kohli Independent
Director
Mr. Tantra Narayan Thakur,aged 61 years, is the Chairman and Managing Director
of our Company. He is the founder of our Company and has been on the Board since our
incorporation. He holds a Bachelors degree in Science in engineering. Mr. Thakur has more
than 30 years of experience as a member of the Indian Audit and Accounts Service. Mr.
Thakur has also served as a Director (Finance and Financial Operations), Power Finance
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Corporation Limited, where he was responsible for mobilizing resources for the company for
on-lending to power projects in addition to accounting and compliance related matters.
Currently he is also the chairman and managing director of our Promoter namely PTC India
Limited.
Dr. Ashok Haldiaaged 54 years, is a Whole Time Director and Chief Financial Officer of
our Company. He is a member of the Institute of Chartered Accountants of India, Institute of
Company Secretaries of India and the Institute of Cost and Works Accountants of India. He
holds a Ph.D. degree in Privatization of Public Enterprises in India from University of
Rajasthan. He has been on the Board of the Company since August 13, 2008, prior to which
he served as a Secretary, Institute of Chartered Accountants of India, New Delhi for about a
decade. Dr. Haldia has been associated with the Bureau of Enterprises, State Enterprises
Department, Government of Rajasthan and Power Finance Corporation Limited
Mr. Sudhir Kumar, aged 54 years, is an Independent Director of our Company and has
been on the Board of our Company since March 22, 2010. He holds a Masters degree in
Commerce from the Delhi School of Economics, University of Delhi. He is an Indian
Administrative Services officer presently serving as Joint Secretary in Ministry of Power,
Government of India. He has also served as the officer on special duty to Minister for
Railways, Government of India. Presently, he is also on the board of our Promoter, PTC India
Limited.
Mr. M.K. Goelaged 53, is a Non Executive Director of our Company and has been on the
Board of our Company since January 12, 2010. He holds a Bachelors degree in technology
specializing in electrical engineering from Kanpur University. Currently he is associated with
Power Finance Corporation Limited (PFC) as director (commercial) besides heading the
human resources, administration, institutional appraisal and legal functions. Prior to joining
PFC, Mr. Goel was working with NHPC Limited for about a decade. Presently, he is also on
the board of our Promoter, PTC India Limited.
Mr. P Abrahamaged 71 years, is an Independent Director of our Company and has been
on the Board of our Company since June 4, 2007. He holds a Masters degree in Arts from
Andhra University, Visakhapatnam. Mr Abraham has served as the Secretary to the Ministry
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of Power, Government of India and is presently serving as the chairman of Maharashtra State
Electricity Board. Presently, he is also on the board of our Promoter, PTC India Limited
Mrs. Rama Muraliaged 62 years, is an Independent Director of our Company and has
been on the Board of our Company since April 21, 2009. She holds a Bachelors of Arts
(Hons) degree from Maharani College, Jaipur, and University of Rajasthan. She is a retired
Indian Audit and Accounts Service officer. Mrs. Murali has served as the Joint Secretary,
Department of Economic Affairs, Ministry of Finance. She has also served as the financial
advisor in the Department of Scientific and Industrial Research, the Council of Scientific and
Industrial Research, Government of India, and the New Delhi Municipal Committee where
she was also the overall in-charge of finance and accounts. She is also a life member of the
Indian Institute of Public Auditors.
Dr. Uddesh Kohliaged 69 years, is an Independent Director of our Company and has
been on the Board of our Company since September 25, 2009. He holds a Bachelors degree
(Hons) in Engineering from the Indian Institute of Technology, Roorkee. He also holds a
Ph.D. degree in Economics from the Kohli is the chairman of Engineering Council of India
and Construction Industry Arbitration Association. He was the chairman and managing
director of Power Finance Corporation Limited and former adviser, Planning Commission
(Government of India) and has also been associated with international bodies such as Asian
Development Bank, United Nations Industrial Development Organization, United Nations
Development Programme and United Nations Office for Project Services.
Mr. C. R. Muralidharanaged 63 years, is an Independent Director of our Company and
has been on the Board of our Company since January 11, 2010. He holds a Bachelors of
Science degree from Madras University and is a certified associate of Indian Institute of
Bankers. Mr. Muralidharan has served as a whole-time member (finance and accounts) of
Insurance Regulatory and Development Authority (IRDA). Prior to joining IRDA, he
served in the Reserve Bank of India (RBI) for more than three decades in various capacities
and was also heading the Department of Banking Policy and Regulation, RBI between 1998
to 2005 as the chief general manager. He has also been a member of the International
Monetary Fund missions on financial sector assessment project of Uganda in 2001 and the
assessment of the regime for insolvency of banks in Kuwait in 2004.
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Mr. Neil Kant Arora aged 41 years, is a Non Executive Director of our Company and has
been on the Board of our Company since January 31, 2008. He holds a first class honours
degree in Actuarial Science from the Mr. Arora is serving as an executive director with
Macquarie Capital Group (Macquarie), Dubai and heads the Middle Eastern advisory team.
Prior to this, he was based out of the Singapore office of Macquarie and heading the Asian
infrastructure team. Mr. Neil Kant Arora is a resident of the United Arab Emirates
Mr. Surinder Singh Kohliaged 65 years, in an Independent Director of our Company
and has been on the Board of our Company since December 13, 2010. He holds Bachelors
degree in Science (Mechanical Engineering) from Banaras Hindu University and a diploma in
Industrial Finance from Indian Institute of Bankers. Prior to joining our Company he was the
chairman and managing director of India Infrastructure Finance Company Limited, Punjab
National Bank, Small Industries Development Bank of India and Punjab and Sind Bank
respectively. He was also the chairman of the India Banks
Association for two terms.
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COMPANY PROFILE
PTC India Financial Services Limited (PFS) is an Indian non-banking financial institution
promoted by PTC India Limited (PTC") to make principal investments in, and provide
financing solutions for companies with projects across the energy value chain, which inter-
alia includes investing in equity and/or extending debt to power projects in generation,
transmission, distribution; fuel sources, fuel related infrastructure like gas pipelines, LNG
terminals, ports, equipment manufacturers and EPC contractors etc. PFS is regulated by the
Reserve Bank of India (RBI) as a systemically important non-deposit taking, non-banking
financial company ("NBFC"), and have recently been classified by the RBI as an
Infrastructure Finance Company, or IFC. PFS also believes that it is one of few NBFCs that
have been granted this status. The IFC status enhances PFSs ability to raise funds on a cost-
competitive basis and enables Company to assume higher debt exposure in infrastructure
projects. PFS is a one stop solution provider offering a comprehensive range of financial
products and services that add value throughout the life cycle of projects across all areas of
the energy value chain. PFS believes this has enabled it to establish itself as a preferred
financing provider for power projects. PFS believes its power sector knowledge and
experience enables it to identify investment opportunities with high potential and effectively
manage risks associated with such opportunities. PFS also believes its exclusive focus on the
power sector has enabled it to develop strong relationships and become a preferred financing
provider for power projects, particularly for smaller and medium sized projects, compared to
competitors that are not similarly focused on the power sector. The investment decision by
PFS into the equity and/or debt is based on many factors such as the valuation offered by the
power projects, commitment shown by the developers and overall techno-economic viability.
The investment made by PFS adds to the valuation of the project (investee company) by
bringing the core competency of its promoter i.e. PTC in off-take and marketing of power,
side by side the brand value of Goldman Sachs and Macquarie, which assists in tying up the
balance funding requirements for the project.
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PTC INDIA LIMITED (PROMOTER)
PTC India Limited (PTC) was established in 1999 through an initiative of the Government ofIndia, in consonance with the Mega Power Policy, to establish a power market in India as well
as to act as a credit mitigating agency for Mega Power Projects by buying electricity from
them through long term Power Purchase Agreements (PPAs) and sell the same through back-
to-back Power Sale Agreements (PSAs) to various state utilities. In the meantime, PTC
started the concept of short term trade of electricity in a perennially electricity starved
country. In addition to the development of the short term market, PTC through facilitation of
power projects being set up by Independent Power Producers (IPPs) with whom it enters into
long term PPAs and sells the electricity being generated in the plant to various utilities
through long term back-to-back PSAs. PTCs total portfolio size has grown to more than
14,185 MW of PPAs (including cross border) and more than 11,781 MWs of MOUs for
power purchase with various IPPs across the country. Additionally, PTC has started various
ancillary services in the form of Advisory as well as fuel intermediation to support the growth
of such power projects in the country.
OTHER SHAREHOLDERS
G S Strategic Investments Limited
G S Strategic Investments Limited, a company incorporated with limited liability under the
laws of Mauritius is a 100% subsidiary of Goldman Sachs. Goldman Sachs is a leading global
investment banking, securities and investment management firm that provides a wide range of
services to a substantial and large client base that includes corporations, financial institutions,
governments and high-net-worth individuals;.
Macquarie India Holdings Limited
Macquarie India Holdings Limited is a part of the Macquarie Group. Macquarie Group is a
provider of specialist investment, advisory and financial services.
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SHAREHOLDING PATTERN
Particulars No. of
Equity
Shares
Shareho
lding
(%)
1 PTC India
Ltd
337,250,001 77.60%
2 G S
Strategic
Investments
Ltd
48,666,667 11.20%
3 Macquarie
India
Holdings
Limited
48,666,667 11.20%
TOTAL 434,583,335 100.00%
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PRODUCT & SERVICES
1. Equity
PFS do strategic equity investments in companies in the energy value chain in India,including in Greenfield and Brownfield projects. The nature and extent of our equity
participation in such companies vary in accordance with the requirements, opportunities and
risks associated with the relevant project, but we typically do not retain management control.
Our investment horizon tends to focus on the short to medium term. As of September 30,
2010, our Board had approved equity commitments for ten companies for an aggregate
amount of Rs.4,838.46 million, with projects aggregating 2,621 MW of power generation
capacity.
2. Lending
PFS offers debt assistance to projects subject to exposure limits stated earlier. PFS structure
the debt assistance taking into consideration factors like needs of the borrowing entity, the
market conditions, regulatory requirements, risks and rewards from the projects. PFS offers
the following debt instruments:
Term Loans
Bridge Loans
Short Term Loans
PFS also considers mezzanine funding debt against promoters contribution in equity or in
any other form depending upon the requirements of the project. PFS provides debt assistance
to projects in the entire energy value chain i.e. power projects, fuel sources, related
infrastructure like gas pipelines, LNG terminals, ports, equipment manufacturers like
transformers, conductors, insulators, cables etc; which are technically and economically
viable PFS extends finance assistance to all kinds of borrowing entities as well as private
sector in the entire energy value chain. However, the priority of PFS would be private sector,
followed by Joint sector/ Government sector projects. The interest rate to be charged by PFS
shall take into account the cost of funds of PFS, rates being charged by other
institutions/bank, and condition of the financial market While providing for a reasonable
margin, PFS may provide for charging differential interest rate form the borrowers depending
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upon the type of project, and grading based on the entity appraisal. As of September 2010, our
Board had approved debt sanctions (including long term and short term/mezzanine funding)
for 27 companies for an aggregate amount of approx Rs 18,815 million, with projects
aggregating 8,853 MW of power generation capacity.
3. Fee Based Services
With a core team of in-house power sector professionals, PFS strives to help its clients to
become more competitive, effective and successful. PFS has already started its loan
syndication activities in current
Financial year.
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INVESTMENTS IN ENERGY VALUE CHAIN (as on September 30, 2010)
Indian Energy Exchange, in which PFS as promoter, had subscribed for a 26% equity stake
for Rs. 69.39 million. It is Indias first exchange to facilitate the trading of power. The
exchange was commissioned on June 27, 2008 and has a market share of approx 84% of the
electricity traded on any power exchange. In September 2010, we liquidated a portion of
shareholding in IEX for a consideration of Rs. 135.3 million after which our shareholding
comes to 21.12%.
Varam Bio energy Private Limited, in which PFS subscribed for a 26% equity stake for
Rs.43.90 million, has developed a 10 MW biomass project, based primarily on rice husk, in
Bhandara, Maharashtra, that was commissioned in February 2009.
RS India Wind Energy Private Limited, in which PFS subscribed for a 37% equity stake
for Rs.611.21million under a subscription agreement, is setting up a 99.45 MW wind based
power project in Satara, Maharashtra of which 39.60 MW is commissioned and in process of
setting up a 3 MW solar power project in Haryana. Meenakshi Energy Private Limited is
setting up a 900 MW imported coal based tolling power project in Nellore, Andhra Pradesh.
The project has been bifurcated into phase I of 300 MW (2 x 150 MW) and phase II of 600
MW. PFS has subscribed for a 26% equity stake for Rs. 996.80 million for phase I and has
disbursed Rs. 603.41 million in the company. Project is under advance stage of development
and expected to commission by December 2011.
PTC Bermaco Green Energy Systems Limited, in which PFS has subscribed for a 26%
equity stake for Rs. 13.75 million, is a joint venture arrangement between Bermaco Energy
Systems Limited. Under the joint venture agreement it will set up a series of biomass projects
across India.
East Coast Energy Private Limited is developing a 1320 MW thermal power project,
comprising of two units of 660 MW each, in Andhra Pradesh. The project is expected to be
commissioned by May 2014. The estimated cost of the project is Rs.65,700 million and
financial closure for the project has been achieved. East Coast has entered into a PPA with
PTC partly on long-term and partly on a short-term basis. PFS has committed an equity
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investment of Rs. 1333.85 million and as on 30 Sep 2010, we have invested Rs. 1250 million
in project.
Ind Barath Powergencom Limited, in which PFS has subscribed for a 26% equity stake for
Rs.556.30 million, under a share subscription agreement, is developing three units of each 63
MW, totaling to 189 MW coal fired power project, in Thoothukkudi District, Tamilnadu. Two
of the units of the project have already been synchronized with the grid.
Ind Barath Energy (Utkal) Ltd, in which PFS has subscribed for a 13% equity stake for
Rs.1050 million, under a share subscription agreement, is developing a 700 MW thermal
power project in Orissa. Financial closure has been achieved for the project. The project is
due for commissioning in March 2012.
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INDUSTRY OUTLOOK
Overview of the Indian Economy
India is the fifth largest economy in the world after the European Union, United States of
America, China and Japan in purchasing power parity terms with an estimated GDP
(purchasing power parity) of US$3.68 trillion in 2009. India is also among the fastest growing
economies globally and has grown at an average rate of more than 7.0% since 1997. An
industrial slowdown early in 2008, followed by the global financial crisis, led annual GDP
growth to slow to 6.5% in 2009, still the second highest growth in the world among major
economies (Source: CIA World Fact book website). India escaped the brunt of the global
financial crisis because of cautious banking policies and a relatively low dependence on
exports for growth. According to the revised estimates of the Central Statistical Organisation
(CSO) Indias GDP grew at a rate of 7.4% in the fiscal year 2010.
The following table presents a comparison of Indias real GDP growth rate with the real GDP
growth rate of certain other countries:
Countries 2007 2008 2009
Australia 4.8% 2.3% 1.3%
Brazil 6.1% 5.1% -0.2%
China 13.0% 9.0% 9.1%
Germany 2.5% 1.3% (4.9%)
India 9.0% 7.4% 7.4%
Japan 2.3% (1.2%) (5.3%)South Korea 5.1% 2.3% 0.2%
Malaysia 6.5% 4.7% (1.7%)
Russia 8.1% 5.6% (7.9%)
Thailand 4.9% 2.5% (2.2%)
United Kingdom 2.7% (0.1%) (4.9%)
United States 1.9% 0.0% (2.6%)
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Investment in India has, remained relatively stable despite the global slowdown and has been
growing at a rate higher than that of GDP. There has been upward trend in the growth of the
private investment. The recovery was broad based with mining and quarrying, manufacturing,
and electricity, gas and water supply recording impressive growth rates. (Source: Ministry of
Finance: Economic Survey, 2009-10) Indias ability to recover from the global slowdown and
its own domestic liquidity crunch has been driven by the countrys large domestic savings
(including corporate retained earnings) and private consumption. Further, the GoIs fiscal
policies and the monetary policies of the Reserve Bank of India have also played an important
role in the revival of economic growth. In particular, the GoI as part of its fiscal stimulus
package took the following initiatives to promote consumption in the economy: (i) increased
GoI expenditure especially on infrastructure; and (ii) reduced taxes to spur consumption.
The RBI has also taken various other steps to stimulate the economy including by (a)
reducing the cash reserve ratio (CRR) to 6.00%; (b) maintaining the statutory liquidity ratio
(SLR) at 25.00%; (c) reducing the repo rate to 6.25%; and (d) reducing the reverse repo rate
to 5.35%. (Source: RBI) A strong recovery in the industrial sector combined with a resilient
services sector muted the impact of a deficient South-West monsoon on overall output. The
contribution of the industrial sector to the overall growth increased sharply from 9.5% in
2008-2009 to 28.0% in 2009-2010. (Source: RBI,2009-2010 Annual Report).
Relative Contribution to GDP Growth
0
2
4
6
8
10
12
2005-06 2006-07 2007-08 2008-09 2009-10
Agriculture & allied
activities
Industry
Services
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Sctoral Gross Domestic Product Growth
The Indian economy witnessed robust recovery in growth in the last quarter of fiscal 2010.
Most of the business expectation surveys suggest continuation of the growth momentum in
fiscal 2011. The Industrial Outlook Survey of the Reserve Bank indicates further
improvement in several parameters of the business environment for the three months endedSeptember 30, 2010 quarter. The Professional Forecasters Survey conducted by the Reserve
Bank in June 2010 places overall (median) GDP growth rate for fiscal 2011 at 8.4%, higher
than 8.2% reported in the previous round of the survey. (Source: Macroeconomic and
Monetary Developments: First Quarter Review Fiscal 2011).
0
2
4
6
8
10
12
14
2005-06 2006-07 2007-08 2008-09 2009-10
Agriculture & allied
activities
Industry
Services
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Organization of the Power Industry in India
The following diagram depicts the current structure of the Indian power industry:
Generation Transmission Distribution Distribution
Overview of Indian Power Industry
India has continuously experienced shortages in energy and peak power requirements.
According to the Monthly Review of the Power Section ("Monthly Review") published by
the CEA in October 2010, the total energy deficit and peak power deficit during April 2010 to
October 2010 was approximately 9.2% and 10.1%, respectively.
SEBs
CPUs
IPPs &
Private
Licensees
Captive
SEBs/STUs
Power
grid
Private
Utilities
Open
SEBs/EDs
Discoms Pvt
Licenses
Energyavailable and
sold
Transformation
Transmission
Distribution
Losses including
unaccounted
Energy
Agriculture
Domestic
commercial
industry other
Captive
Consumer
Power Trading Companies
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The shortages in energy and peak power have been primarily due to the sluggish progress in
capacity addition. During the 10th Five Year Plan (fiscal 2002 to fiscal 2007), capacity
addition achieved compared to target capacity addition was 51.5%. During the 11th Five Year
Plan (fiscal 2008 to fiscal 2012), capacity addition achieved was 9,263 MW or 56.7% of
target capacity addition of 16,335 MW in fiscal 2008, while in fiscal 2009, capacity addition
achieved was 3,454 MW, or 31.2% of target capacity addition of 11,061 MW, while in fiscal
2010, capacity addition achieved was 9,585 MW, or 66.1% of target capacity addition of
14,507 MW. According to the Monthly Review (October 2010), the total installed power
generation capacity in India was 167278.36 MW as of August 31, 2010.
Power Consumption
The per capita consumption of power in India has grown from 566.7 kWh/year in fiscal 2003
to 733.5 kWh/year in fiscal 2009, at a CAGR of 4.39% (Source: Monthly Review (July
2010)). The following table sets forth information relating to India's per capital consumption
of power for the periods indicated:
Year Per Capita Consumption