Indian Railway Finance Corporation Limited
|IRFC was incorporated as a financing arm of Indian Railways, for the purpose of raising a part of the resources necessary for meeting the developmental needs of the Indian Railways. Its 100% shareholding is held by Government of India as on September 30, 2012. It is classified as a Public Financial Institution under Section 4A of the Companies Act, 1956 and as a NBFC-ND and classified as an Infrastructure Finance Company by the RBI. As of September 30, 2012, IRFC does not have any non performing assets. The vast majority of assets of the Company consists of railway rolling stock and lease receivables in respect of rolling stock. The company’s net worth is of Rs 5,699.79 crores as on September 30, 2012.|
Indian Railway Finance Corporation Limited – Public Issue of Tax Free Bonds
Issuer : Indian Railway Finance Corporation Limited
Issue Type : Public Issue
Instrument :Public issue by Indian Railway Finance Corporation Limited of tax free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures having tax benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended, aggregating up to Rs 8886.40 crore* in the Fiscal Year 2013. The Bonds will be issued in one or more tranches subject to the Shelf Limit. This Tranche Issue by the Issuer of bonds aggregating to Rs 1000 crores with an option to retain oversubscription upto the Shelf Limit* (i.e. Upto Rs 8886.40 crores*) and is being offered by way of the Prospectus Tranche-1 containing, inter alia, the terms and conditions of the Tranche-1, which should be read together with the Shelf Prospectus dated December 21, 2012 filed with the RoC, BSE(Designated Stock Exchange), NSE and SEBI. * Pursuant to the CBDT Notification, IRFC has raised Rs 1113.60 crores through the private placements of Bonds. In case IRFC raises any further funds through private placement not exceeding Rs 2500 crores, i.e. upto 25% of the allocated limit for raising funds through Tax Free Bonds during Fiscal Year 2013, during the process of the present Issue, the Shelf Limit for the Issue shall get reduced by such amount raised.
Issue Size : Rs 1,000 Crores and option to retain over subscription Upto the Shelf Limit (i.e., up to Rs 8,886.40 Crores*) *In terms of Regulation 4(2)(d) of the Debt Regulations, the Company will make public issue of the Bonds in the dematerialised form. However, in terms of Section 8 (1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the Bonds in physical form will fulfill such request. However, trading in Bonds shall be compulsorily in dematerialized form.
Opens : 21st Jan.,13 and Closing on 29th Jan.,13. The issuer might close it giving prior notice.
Interest Rates for Retail Individual – upto Rs. 10 lacs –
7.68% for 10 years & 7.84% for 15 years
Credit Ratings : “CRISIL AAA/Stable” by CRISIL, “[ICRA] AAA” by ICRA and “CARE AAA” by CARE
Interest Rates for HNI, Corporate and QIB –
7.18 for 10 years & 7.34% for 15 years
Security : Secured by creating a first pari-passu charge on the movable assets of the Company comprising of rolling stock such as wagons, locomotives and coaches by a first pari passu charge, present and future, as may be agreed between the Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed.
Interest Payment Date : 15th October, every year
Issuance : In dematerialised form as well as in physical form, at the option of the Applicant
Trading : In Dematerialized form only
Basis of Allotment : On First Come First Serve Basis
Issue Price Rs.1000
Listing :The Bonds are proposed to be listed on BSE and NSE. BSE is the Designated Stock Exchange for the Issue
Tenor : 10 & 15 Years
Face Value : Rs.1000 per Bond
Frequency of Interest Payment : Annual
Depositories : NSDL & CDSL
Minimum Application Size : 5 Bonds ( Rs.5000) and in multiples of 1 Bond (Rs.1000) thereof
Debenture Trustee : SBICAP Trustee Company Limited
Depositories : NSDL & CDSL
Market Lot / Trading Lot : One Bond
Put & Call Option : None
Security Cover : At least one time of the value of the total outstanding Bonds
Lead Managers : AK Capital Services Ltd., SBI Capital Markets Ltd, Enam Securities Pvt. Ltd., ICICI Securities and Kotak Mahindra Capital Company Ltd.
Categories & Basis of Allotment :
Category I – QIB – 20% of the Issue Size
Category II – Corporate – 20% of the Issue Size
Category III – HNIs – 20% of the Issue Size ( Investment > Rs.10 Lacs)
Category IV – Retail Individual – 40% of the Issue Size ( Investment. Upto Rs.10 Lacs)
Deemed Date of Allotment : Deemed Date of Allotment shall be the date on which the Directors of the Company or any committee thereof approves the allotment of the Bonds for each Tranche Issue or such date as may be determined by the Board of Directors or any committee thereof and notified to the stock exchanges. All benefits relating to the Bonds including interest on Bonds (as specified for each tranche by way of Tranche Prospectus) shall be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment.
Interest on application monies received which are used towards allotment of Bonds: @ 7.18%p.a. and 7.34% p.a. for the Tranche-1 Series I Bonds and Tranche-1 Series II Bonds, respectively for Allottees under Categories I, II and III (except for ASBA Applicants) subject to deduction of tax at source, as applicable @ 7.68%p.a. and 7.84%p.a. for the Tranche – 1 Series I Bonds and Tranche – 1 Series II Bonds, respectively for Allottees under Categories IV, (except for ASBA Applicants) subject to deduction of tax at source, as applicable
Can NRIs Apply : Eligible NRIs on a repatriation or non – repatriation basis
Interest on application monies received which are liable to be refunded : @ 5% p.a (except Application Amounts received after the Issue Closure Date and ASBA Applicants), subject to deduction of tax at source, as applicable.
Indian Railway Finance Corporation Limited a dedicated financing arm of the Ministry of Railways (MoR), will open its Public Issue of tax free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures on January 21, 2013. The issue is worth Rs. 10,000 crores, during the Fiscal 2013. This tranche issue by the company is of bonds aggregating to Rs 1,000 crore with an option to retain oversubscription up to the Shelf Limit (i.e., up to Rs 8,886.40 crore*).
* Pursuant to the CBDT notification, IRFC has raised Rs 1,11,360 lakhs through the private placements of Bonds. In case our Company raises any further funds through private placement not exceeding Rs 2,50,000 lakhs, i.e. upto 25% of the allocated limit for raising funds through tax free bonds during Fiscal Year 2013, during the process of the present Issue, the Shelf Limit for the issue shall get reduced by such amount raised.
These bonds being offered, as part of Tranche- 1 shall bear a fixed rate of interest and are under two Series- Series I and Series IIhaving a tenure of 10 years and 15 years, respectively. In case of Series I, the interest rate of 7.68% p.a. is applicable to retail individual investors– Category IV (i.e. Resident Indian individuals, Eligible NRIs on a repatriation or non – repatriation basisand HUFs), while for the Qualified Institutional Buyers– Category I, Non-Institutional Investors – Category II and HNIs– Category III the interest rate is 7.18% p.a. In case of Series II, the interest rate of 7.84%p.a is applicable to Retail IndividualInvestors – Category IV (i.e. Resident Indian individuals, Eligible NRIs on a repatriation or non – repatriation basis and HUFs) while for the Qualified Institutional Buyers – Category I, Non-Institutional Investors – Category II and HNIs– Category III, the interest rate stands at 7.34% p.a.
The additional interest of 0.50% p.a shall only be available to the original Allottees under Category IV for the Tranche – 1 Series I Bonds and the Tranche – 1 Series II Bonds. In the event the Bonds held by the original Allottees under Category IV are sold/ transferred (except in case of transfer of Bonds to legal heir in the event of death of the original Allottee), the coupon rate shall stand revised to the coupon rate applicable for Allottees falling under Category I, Category II and Category III
Allocation of Bonds shall be made up to overall amount reserved for different categories of investors on first come first serve basis, determined on the basis of the date of upload of each application into the electronic system of relevant stock exchanges.
The bonds proposed to be issued under this Issue have been rated ‘CRISIL AAA/Stable’ by CRISIL, 'CARE AAA' by CAREand ‘[ICRA]AAA’ by ICRA. The ratings assigned by CRISIL, CARE, ICRA are considered to have the highest degree of safety with regard to timely servicing of financial obligations and carry lowest credit risk.
The funds raised through this issue will be utilized towards financing the acquisition of rolling stock which will be leased to the MoR in line with present business activities.
The Bonds are proposed to be listed on BSE Limited and National Stock Exchange of India Limitedwithin 12 working days of the Issue closing date.
SBI Capital Markets Limited, A.K. Capital Services Limited, Axis Capital Limited, ICICI Securities Limited and Kotak Mahindra Capital Company Limited are the Lead Managers to the Issue. Karvy ComputersharePvt. Ltd. is the Registrar to the Issue, while SBICAP Trustee Company Ltd. is Trustee for the Bondholders.
- Indian Railway Finance Corporation Ltd is fully owned by the government of India
- Credit Ratings: AAA/Stable by CRISIL, AAA by ICRA and CARE
- Interest on these Bonds is Tax-Free, no TDS is applicable, Wealth Tax is not levied
- No lock in period and no upper limit on investment amount
- Issue Size: Rs 1,000 Crores with an option to retain oversubscription upto Rs 8,886.40 Crores
- Additional Coupon Rate of 0.50% p.a. for Category IV Applicants
- Eligible NRIs can invest in Category III or IV
Issue Structure: Issue of Tax Free Secured Redeemable Non Convertible Bonds
|Options / Series of Bonds||Series 1||Series 2|
|Tenor||10 years||15 years|
|Coupon Rate % p.a. (Category I, II and III)||7.18||7.34|
|Additional Coupon Rate % p.a. (Category IV)||0.50||0.50|
|Total Coupon Rate % p.a. (Category IV)||7.68||7.84|
|Frequency of Interest payment||Will be paid on 15 Oct every year|
|Face Value / Issue Price per Bond||Rs 1,000|
|Minimum Application||Rs 5,000 (in multiples of Rs 1,000 thereafter)|
|Issuance||Physical and Demat mode|
|Interest on application % p.a.||As per coupon rate applicable to investor category|
|Interest on refund % p.a.||5.0|
|Proposed to be listed on||Proposed to be listed on BSE and NSE|
Basis of Allotment : On first come first serve basis
|Investor Category||I – Institutional||II – Non Institutional||III – HNI (more than 10 lacs)||IV – Retail (upto and including 10 lacs)|
- When Bonds held by the original allottees of Category IV are sold / transferred, coupon rate will be revised to the coupon rate for Category I, II & III investors. Refer to details.