The Company shall issue the Bonds in one or more tranche(s), on or prior to March 31, 2011, up to the amount of ` 5300 crore approved by the Board and, including oversubscription (as permitted under the SEBI Letter), subject to the total Issue size not exceeding 25% of the incremental infrastructure investment made by the Company in Fiscal 2010. The following is a summary of the terms of the Bonds. This section should be read in conjunction with, and is qualified in its entirety by, more detailed information in “Terms of the Issue” on page 200.
COMMON TERMS FOR ALL SERIES OF THE BONDS
Issuer: Power Finance Corporation Limited
Issue of Bonds: Public issue of ‘long term infrastructure bonds’ in the nature of secured, redeemable, nonconvertible debentures, of face value of ` 5000 each, having benefits
under section 80CCF of the Income Tax Act, up to '5300 crore in aggregate (subject to not exceeding 25% of the incremental infrastructure investment made by the Company in Fiscal 2010), to be issued at par on the terms contained in the Tranche prospectus.
Face Value Rs: 5000
Issue Price Rs: 5000
Minimum Application: One Bond and in multiples of one Bond thereafter.
Pay-in Date: Application Date (Full Application Amount is payable on Application)
Ratings: “AAA/Stable” from CRISIL and “LAAA with stable outlook” from ICRA
Listing: BSE
Debenture Trustee: GDA Trustee & Company Ltd
Depositories: Central Depository Services (India) Limited (“CDSL”) and National Securities Depository Limited (“NSDL”)
Registrar: Karvy Computershare Private Limited
Modes of Payment:
1. National Electronic Clearing Services (“NECS”)
2. At par cheques
3. Demand drafts
4. RTGS
5. NEFT
6. Direct Credit
Issuance: In dematerialized form and physical form
Lock-In Period: Five years from the Deemed Date of Allotment
Trading: In dematerialized form only following expiry of the Lockin Period
Issue Opening Date: February 24, 2011
Issue Closing Date: March 22, 2011, except that the Issue may close on such earlier date as may be decided by the Board. In the event of early closure of the Issue for any reason other than full subscription for the Bonds up to ` 5300 crores, the Company shall ensure that notice is provided to the prospective investors through newspaper advertisements at least three days prior to such earlier date of Issue closure.
Deemed Date of Allotment: The Deemed Date of Allotment shall be the date as may be determined by the Board of the Company and notified to the Designated Stock Exchange
Lead Managers: I-Sec, SBI Caps
SPECIFIC TERMS FOR EACH SERIES OF BONDS
IN TERMS OF THE NOTIFICATION, THE BONDS ARE CLASSIFIED AS ‘LONG TERM INFRASTRUCTURE BONDS’, HAVING BENEFITS UNDER SECTION 80CCF OF THE INCOME TAX ACT. IN ACCORDANCE WITH SECTION 80CCF OF THE INCOME TAX ACT, THE AMOUNT, NOT EXCEEDING ` 20,000, PAID OR DEPOSITED AS SUBSCRIPTION TO ‘LONGTERM INFRASTRUCTURE BONDS’ DURING THE PREVIOUS YEAR
RELEVANT TO THE ASSESSMENT YEAR BEGINNING APRIL 1, 2011 SHALL BE DEDUCTED IN COMPUTING THE TAXABLE INCOME OF A RESIDENT INDIVIDUAL OR HUF. IN THE EVENT THAT ANY APPLICANT APPLIES FOR THE BONDS IN EXCESS OF ` 20,000, THE AFORESTATED TAX BENEFIT SHALL BE AVAILABLE TO SUCH APPLICANT ONLY TO THE EXTENT OF ` 20,000.
ISSUE STRUCTURE
The Company shall issue the Bonds in one or more tranche(s), on or prior to March 31, 2011, up to the amount of ` 5300 crore approved by the Board, subject to the total Issue size not exceeding 25% of the incremental infrastructure investment made by the Company in Fiscal 2010. (incremental infrastructure investment to be defined as per notification)
Issue Structure
*The Bonds are classified as ‘long term infrastructure bonds’ and are being issued in terms of Section 80CCF of the Income Tax Act and the Notification. In accordance with Section 80CCF of the Income Tax Act, the amount, not exceeding ` 20,000, paid or deposited as subscription to ‘longterm infrastructure bonds’ during the previous year relevant to the assessment year beginning April 1, 2011 shall be deducted in computing the taxable income of a resident individual or HUF. In the event that any Applicant applies for and is Allotted Bonds in excess of ` 20,000 (including ‘long term infrastructure bonds’ issued by any other eligible entity), the aforestated tax benefit shall be available to such Applicant only to the extent of ` 20,000 for the Fiscal 2011.
Application Amount and Tax Savings
Eligible Applicants can apply for up to any amount of the Bonds across any of the Series(s) or a combination thereof. The Applicants will be allotted the Bonds in accordance with the Basis of Allotment. In the event any Applicant applies for and is allotted Bonds in excess of Rs. 20,000 (including ‘long term infrastructure bonds’ issued by any other eligible entity), the aforestated tax benefit shall be available to such Bondholder only to the extent of Rs. 20,000.
Interest on application money
The Company shall pay interest on refund of Application Amount on the amount not Allotted, at the rate of 4.00% p.a. on the amount not Allotted, three days from the date of receipt of the Application Form, or the date of realization of the Application Amount, whichever is later, upto one day prior to the Deemed Date of Allotment, subject to deductions under the Income Tax Act, if the amount of such interest exceeds the prescribed limit of ` 2,500. Interest on refund shall be paid along with the refund money. Payment of interest on refund of Application Amount is not applicable in case of applications rejected on technical grounds or withdrawn by the Applicants.
TDS on Interest
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 recognised stock exchange in India in accordance with the Securities Contracts Regulation Act, 1956, as amended, and the rules notified thereunder. Accordingly, no income tax will be deducted at source from the interest on Bonds held in dematerialised form. In case of Bonds held in 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 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. To ensure non-deduction/lower deduction of tax at source from interest on Bonds, a resident Bondholder is required to submit Form 15G/15H/certificate under section 197 of the Income Tax Act or other evidence, as may be applicable, with the Application Form, or send to the Registrar to the Issue along with a copy of the Application Form on or before the closure of the Issue. Subsequently, Form 15G/15H/ original certificate issued under section 197 of the Income Tax Act or other evidence, as may be applicable, 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.
Lien on Pledge of Bonds
Subject to applicable laws, 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.
WHO CAN APPLY
The following categories of persons are eligible to apply in the Issue:
Indian nationals resident in India who are not minors in single or joint names (not more than three); and Hindu Undivided Families or HUFs, in the individual name of the Karta. The Applicant should specify that the Application is being made in the name of the HUF in the Application Form as follows: “Name of Sole or First Applicant: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Applications by HUFs would be considered at par with those from individuals.
Applications for Allotment of Bonds in the physical form
Applicant(s) who wish to subscribe to, or hold, the Bonds in physical form can do so in terms of Section 8(1) of the Depositories Act and the Company is obligated to fulfill such request of the Applicant(s). Accordingly, any Applicant who wishes to subscribe to the Bonds in physical form shall undertake the following steps:
Please provide the following documents along with the Application Form:
(a) Self-attested copy of the PAN card;
(b) Self-attested copy of the proof of residence. Any of the following documents shall be considered as a verifiable proof of residence:
ration card issued by the GoI; or
valid driving license issued by any transport authority of the Republic of India;
or
electricity bill (not older than three months); or
landline telephone bill (not older than three months); or
valid passport issued by the GoI; or
Voter’s Identity Card issued by the GoI; or
passbook or latest bank statement issued by a bank operating in India; or
leave and license agreement or agreement for sale or rent agreement or flat
maintenance bill;
(c) Self-attested copy of a cancelled cheque of the bank account to which the
amounts pertaining to payment of refunds, interest and redemption, as
applicable, should be credited.
WHO CANNOT APPLY
Non-resident investors including NRIs, FIIs and OCBs
Multiple Applications:
An Applicant may make multiple applications for the total number of Bonds required.
Payment Mode
The cheque/DDs should be drawn in favour of “PFC Infra Bond Public Issue A/c”.
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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