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Oct 18, 2011

IRFC Tax-Free Bond Issue October-2011


INDIAN RAILWAY FINANCE CORPORATION LTD. - PRIVATE PLACEMENT of TAX FREE BONDS

 

Nos.

Company Profile :

1

Financing arm of the Indian Railways

2

Notified as a Public Financial Institution under Section 4A of the Companies Act, 1956

3

Registered as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank of India

4

100% shareholding held by Government of India

5

Consistently profit making Public Sector Undertaking

6

Consistently rated 'AAA' by CRISIL, ICRA and CARE

7

Impeccable track record of funding rolling stock asset creation worth Rs. 60,163 crore (5,060 locomotives, 32,115 passenger coaches and 1,39,659 freight cars) for Indian Railways so far, besides providing funding support of Rs. 2,294 crore to other Railway entities such as Rail Vikas Nigam Ltd., Rail Tel Corporation of India Ltd. etc

8

Capital Adequacy Ratio of 160.70% as on March 31, 2011

9

Return on Assets of 1.11% for the year ended March 31, 2011


Salient Features

Tax benefits u/s 10 clause (15) of the Income Tax Act, 1961 – the interest received on such bonds are tax free in nature.

Credit Rating(s) of "AAA/Stable" by CRISIL, "LAAA" by ICRA & "AAA" by CARE for existing outstanding bonds indicating highest safety with regard to servicing of bonds.

Bonds would be issued only to Resident Indians.

Bonds are likely to be issued in demat.

Bonds are proposed to be listed on the WDM segment of NSE.

Bonds would be issued by a wholly owned sovereign entity wherein 100% shareholding is held by Govt. of India.

 

ISSUE TIME TABLE

Issue Opening Date

Monday

10-Oct-11

Issue Closing Date

Friday

21-Oct-11

Pay-In Dates

Monday to Friday

October 10, 2011 to October 21, 2011

Deemed Date of Allotment

Tuesday

8-Nov-11

 

 

HIGHLIGHTS OF THE BONDS

Issuer

Indian Railway Finance Corporation Ltd.

Issue Size

Rs. 150 crore with an option to retain oversubscription (As per CBDT notification, IRFC can retain maximum subscription amount of upto Rs. 10,000 crore in FY 2011-12).

Instrument

Secured Redeemable Non-Convertible Non-Cumulative Tax-Free Bonds in the nature of Promissory Notes.

Tax Benefits

The income by way of interest will be entitled to exemption from income tax under section 10 (15) (iv) (h) of Income Tax Act, 1961.

Instrument Form

In dematerialized form

Security

Pari-passu first charge over the rolling stock assets of the Company

Credit Rating

"AAA/Stable" by CRISIL, "LAAA" by ICRA and "CARE AAA" by CARE

Face Value

Rs. 1,00,000/- per Bond

Issue Price

At par i.e. Rs. 1,00,000/- per Bond

Minimum Subscription

1 Bond (Rs. 1,00,000/-) and in multiples of 1 Bond (Rs. 1,00,000/-) thereafter

Option

Option -I

Option –II

Tenure

10 Years

15 Years

Put & Call Option

None

None

Maturity/ Redemption

At par on the expiry of 10th Year from the Deemed Date of Allotment

At par on the expiry of 15th Year from the Deemed Date of Allotment

Coupon Rate

7.55% p.a.

7.77% p.a.

Interest Payment

Annual

Annual

Interest Payment Date

October15, every year till maturity

October15, every year till maturity

Pre-Tax Yield

May be subjective and may vary from case to case. However some sample illustrations of pre-tax yield are given on the next page.

Listing

Proposed on the Wholesale Debt Market (WDM) Segment of National Stock Exchange of India Ltd. (NSE).

Trustee

Indian Bank

Interest on Application Money

At the respective coupon rate (subject to deduction of tax at source, as applicable) will be paid to the eligible investors from the date of realization of subscription money up to one date prior to the Deemed Date of Allotment.

Who can apply

Resident Individuals, Companies, Bodies Corporate, Scheduled Commercial Banks, Financial Institutions, Insurance Companies, Primary/ State/ District/ Central Co-operative Banks (subject to permission from RBI), Regional Rural Banks, Mutual Funds, Provident, Gratuity, Superannuation and Pension Funds, and any other investor authorized to invest in these bonds, subject to confirmation from the Issuer.

 

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