PRIVATE PLACEMENT OFFER LETTER- SERIES-142 (PRIVATE & CONFIDENTIAL) FOR ADDRESSEE ONLY
RURAL ELECTRIFICATION CORPORATION LIMITED (A Government of India Enterprise)
Regd. Office: Core-4, SCOPE Complex, 7 Lodi Road, New Delhi 110003 Tel.:+91-11 41020101; Facsimile: +91-112436 9849;
E-mail: [emailprotected] Website: www.recindia.com & www.recindia.nic.in
CIN No. – L40101DL1969GOI005095
FOR PRIVATE CIRCULATION ONLY This Private Placement Offer Letter is issued in conformity with Companies Act, 2013, Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended, Form PAS-4 prescribed under Section 42 and Rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014, the Companies (Share Capital and Debenture) Rules, 2014, Circular No. RBI/2014-15/475DNBR (PD) CC No. 021/03.10.001/2014-15 dated February 20, 2015 issued by the Reserve Bank of India on “Raising
Money through Private Placement by NBFCs-Non-Convertible Debentures (NCDs) by NBFCs”
PRIVATE PLACEMENT OFFER LETTER DATED DECEMBER 28, 2016
PRIVATE PLACEMENT OFFER LETTER FOR PRIVATE PLACEMENT OF UNSECURED, REDEEMABLE, NON-CONVERTIBLE, NON-CUMULATIVE, TAXABLE BONDS IN THE NATURE OF DEBENTURES UPTO ₹ 500 CRORE WITH OPTION TO RETAIN OVERSUBSCRIPTION. NEITHER THE ISSUER NOR ANY OF THE CURRENT DIRECTORS OF THE ISSUER HAS BEEN DECLARED AS WILFUL DEFAULTER.
TRUSTEE FOR THE BONDHOLDERS SBICAP TRUSTEE COMPANY LIMITED
REGISTRAR TO THE ISSUE KARVY COMPUTERSHARE PRIVATE LIMITED
Registered Office:
202, Maker Tower – „E‟, Cuffe Parade, Colaba, Mumbai 400 005; and Apeejay House, 6th floor, 3, West Wing, Dinshaw Wachha Road, Churchgate, Mumbai 400 020
Also having one of the offices at:
424-425, 4th Floor, World Trade Centre, Babar lane, New Delhi – 110001
Registered Office:
Karvy Selenium Tower B, Plot No. 31-32, Gachibowli Financial District Nanakramguda, Hyderabad Tel: +91 40 6716 2222; Facsimile: +91 40 2343 1551; Contact Person: Sh. S. P. Venugopal, DGM (Corp. Reg.) Email: [emailprotected] SEBI Registration No.: INR000000221
ISSUE PROGRAMME
ISSUE OPENS ON: DECEMBER 30, 2016 ISSUE CLOSES ON: DECEMBER 30, 2016
LISTING
The Bonds are proposed to be listed on Wholesale Debt Market segment of the National Stock Exchange of India Ltd. and/or BSE Ltd. The BSE and NSE have granted the in-principle approval vide letter dated December 23, 2016 and December 26, 2016, respectively.
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TABLE OF CONTENTS
Sr. NO. TITLE
SECTION I DEFINITIONS/ ABBREVIATIONS...........................................................................1
SECTION II DISCLAIMERS ...........................................................................................................4
SECTION III GENERAL INFORMATION ......................................................................................6
SECTION IV BRIEF HISTORY OF ISSUER SINCE INCORPORATION, DETAILS OF ACTIVITIES UNDERTAKEN, ANY REORGANIZATION, RECONSTRUCTION OR AMALGAMATION. ........................................................9
SECTION V EXISTING CORPORATE ORGANOGRAM .......................................................... 13
SECTION VI BRIEF SUMMARY OF BUSINESS/ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS ................................................................................................ 14
SECTION VII OUR MANAGEMENT ............................................................................................. 23
SECTION VIII DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION, ETC. .................................................................................................. 26
SECTION IX MANAGEMENT‟S PERCEPTION OF RISK FACTORS ....................................... 31
SECTION X CAPITAL STRUCTURE AND FINANCIAL POSITION OF THE ISSUER .......... 33
SECTION XI PARTICULARS OF THE OFFER ............................................................................ 83
SECTION XII SUMMARY TERM SHEET ..................................................................................... 94
SECTION XIII MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE ...................................................................................................................... 100
SECTION XIV CREDIT RATING & RATIONALE THEREOF .................................................... 101
SECTION XV NAME OF BOND TRUSTEE ................................................................................. 102
SECTION XVI STOCK EXCHANGE WHERE SECURITIES ARE PROPOSED TO BE LISTED .................................................................................................................... 103
SECTION XVII DEBT EQUITY RATIO (ON STAND ALONE BASIS) ........................................ 104
SECTION XVIII WILFUL DEFAULTER……………………… …………………………….... ….105
SECTION XIX SERVICING BEHAVIOUR ON EXISTING DEBT SECURITIES AND OTHER BORROWINGS ........................................................................................ 106
SECTION XX UNDERTAKING REGARDING COMMON FORM OF TRANSFER ................. 107
SECTION XXI MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER ......................................................................... 108
SECTION XXII DECLARATION ..................................................................................................... 109
SECTION XXIII ANNEXURES ......................................................................................................... 110
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SECTION I DEFINITIONS/ABBREVIATIONS
AY Assessment Year
Articles/Articles of Association/AoA
Articles of Association of our Company as amended from time to time.
Allotment/Allot The issue and allotment of the Bonds to the successful Applicants pursuant to this Issue.
Applicant/ Investor A person who makes an offer to subscribe the Bonds pursuant to the terms of this Private Placement Offer Letter and the Application Form.
Auditing Standards Standards of auditing or any addendum thereto for companies or class of companies referred to in sub-section (10) of Section 143 of the Companies Act, 2013.
Associate Company A company in which the Issuer has a significant influence, but which is not a subsidiary company of Issuer having such influence and includes a joint venture company. Significant influence means control of at least 20% of total share capital, or of business decisions under an agreement.
Application Form The form in terms of which the Applicant shall make an offer to subscribe to the Bonds and which will be considered as the application for Allotment of Bonds for Series 142.
Arrangers to the Issue Arrangers to the issue are the entities as listed in this Private Placement Offer Letter.
Board/ Board of Directors The Board of Directors of Rural Electrification Corporation Limited or Committee thereof.
Bonds Unsecured, Redeemable, Non-Convertible, Non-Cumulative, Taxable Bonds in the nature of Debentures of face value of ₹10 Lakh each offered through private placement route under the terms of this Private Placement Offer Letter.
Bondholder(s) Any person holding the Bonds and whose name appears in the list of Beneficial Owners provided by the Depositories or whose name appears in the Register of Bondholders maintained by the Issuer/Registrar.
Beneficial Owner(s) Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996).
Book Closure/Record Date Record date of interest shall be 15 days prior to each interest payment date and 15 days prior to the date of Maturity. Interest shall be paid to the person whose name appears as sole/first in the Register of Bondholders/Beneficial Owners position of the Depositories on Record Date or to the Bondholders who have converted the Bonds to physical form and their name is registered on the registers maintained by Company/Registrar. In the event of REC not receiving any notice of transfer at least 15 days before the respective due date of payment of interest and at least 15 days prior to the maturity date, the transferees for the Bond shall not have any claim against REC in respect of interest so paid to the registered Bondholder.
BSE BSE Limited
CAG Comptroller and Auditor General of India
CAGR Compounded Annual Growth Rate
CAR Capital Adequacy Ratio
CARE Credit Analysis & Research Limited CDSL Central Depository Services (India) Limited CMD Chairman & Managing Director of REC CRISIL CRISIL Limited
The Companies Act The Companies Act, 1956, as amended(to the extent applicable) and/or the Companies Act, 2013, to the extent notified by the Ministry of Corporate Affairs, Government of India, as applicable.
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Debt Securities Non-Convertible debt securities which create or acknowledge indebtedness and include debenture, bonds and such other securities of the Issuer, whether constituting a charge on the assets of the Issuer or not, but excludes security receipts and securitized debt instruments.
Deemed Date of Allotment The cut-off date on which the duly authorized committee approves the Allotment of the Bonds i.e. the date from which all benefits under the Bonds including interest on the Bonds shall be available to the Bondholders. The actual allotment of Bonds (i.e. approval from the Board of Directors or a Committee thereof) may take place on a date other than the Deemed Date of Allotment.
Depository A Depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time
Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant A Depository participant as defined under Depositories Act, 1996 Designated Stock Exchange BSE Limited DER Debt Equity Ratio DP Depository Participant
EPS Earnings Per Share
FIs Financial Institutions
FIIs Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional Investors) Regulations, 1995) and registered with the SEBI under applicable laws in India.
FPI Foreign Portfolio Investors as defined under SEBI (Foreign Portfolio Investors) Regulations, 2014 registered with SEBI.
Financial Year/ FY/ Fiscal Period of twelve months period ending on March 31, of that particular year
ICRA ICRA Limited
IRRPL India Ratings & Research Private Limited
GoI Government of India/Central Government
HUF Hindu Undivided Family
Trustee SBICAP Trustee Company Limited
Independent Director An independent director referred to in sub-section (5) of Section 149 of the Companies Act, 2013
Issuer/ REC/ Corporation/Company
Rural Electrification Corporation Limited. A company incorporated under Companies Act, 1956and having its registered office at Core-4, SCOPE Complex, 7 Lodi Road, New Delhi 110003 and bearing CIN L40101DL1969GOI005095.
“our”/”we”/”us” Our Company together with its subsidiaries, associates and its joint venture on a consolidated basis. As the context may require.
Issue/ Offer Private Placement of Bonds of ₹500 Crore with option to retain oversubscription under this Private Placement Offer Letter.
I.T. Act The Income Tax Act, 1961, as amended from time to time
IT Department/IT Dept. Income Tax Department
IT Income Tax
JPY Japanese Yen
Key Managerial Personnel Key managerial personnel, in relation to the Company, shall mean: i. Managing Director & Chief Executive Officer or the Manager; ii. Company Secretary; iii. Whole-Time Directors; iv. Chief Financial Officer; and any such other officer as may be prescribed under the Companies Act,2013.
Listing Agreement Listing Agreement under SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015
Memorandum/Memorandum of Memorandum of Association of the Company as originally framed or as
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
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Association altered from time to time in pursuance of any previous company law or of the Companies Act, 2013.
MF Mutual Fund
NRIs Non Resident Indians
NSE National Stock Exchange of India Ltd.
NSDL National Securities Depository Ltd.
PAN Permanent Account Number
Private Placement Offer of Bonds or invitation to subscribe to the Bonds of the Issuer(other than by way of public offer) through issue of this Private Placement Offer Letter investors on such conditions including the form and manner of private placement as prescribed under the Companies Act, 2013 and RBI Circular No. RBI/2014-15/475 DNBR(PD) CC NO. 021/03.10.001/2014-15 dated February 20, 2015.
Private Placement Offer Letter Private Placement Offer Letter shall mean this Private Placement Offer Letter
GIR General Index Registration Number
₹/INR/Rupee/Rs./₹ Indian National Rupee
RBI Reserve Bank of India
RBI Act, 1934 Reserve Bank of India Act, 1934
RTGS Real Time Gross Settlement
ROC Registrar of Companies, National Capital Territory of Delhi & Haryana
Registrar to the Issue Karvy Computershare Private Limited
RBI Guidelines Any rule, regulations, guideline or amendment as may be issued by RBI from time to time.
SEB State Electricity Board(s)
SEBI Securities and Exchange Board established under Securities and Exchange Board of India Act, 1992, as amended from time to time
SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time
SEBI Guidelines Any rule, regulation or amendment as may be issued by SEBI from time to time.
SEBI Debt Regulations Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2012as amended from time to time.
TDS Tax Deducted at Source
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DISCLAIMER OF THE ISSUER This Private Placement Offer Letter is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in conformity with Companies Act, 2013, Form PAS-4 prescribed under Section 42 and Rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014, SEBI Guidelines and RBI Guidelines and the relevant rules and regulations therein. This document does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds to be issued by REC. This document is for the exclusive use of the investors to whom it has been specifically addressed and it should not be circulated or distributed to third party (s). It is not and shall not be deemed to constitute an offer or an invitation to the public in general to subscribe to the Bonds issued by the Issuer. This Bond issue is made strictly on private placement basis. Apart from this Private Placement Offer Letter, no offer document or prospectus is being prepared in connection with the offering of this Issue or in relation to Issuer. This Private Placement Offer Letter is not intended to form the basis of evaluation for the prospective subscribers to whom it is addressed and who are willing and eligible to subscribe to the Bonds issued by REC. This Private Placement Offer Letter has been prepared to give general information regarding REC to parties proposing to invest in this issue of Bonds and it does not purport to contain all the information that any such party may require. REC believes that the information contained in this Private Placement Offer Letter is true and correct as of the date hereof. REC does not undertake to update this Private Placement Offer Letter to reflect subsequent events and thus prospective subscribers must confirm about the accuracy and relevancy of any information contained herein with REC. However, REC reserves its right for providing the information at its absolute discretion. REC accepts no responsibility for statements made in any advertisem*nt or another material and anyone placing reliance on any other source of information would be doing so at his own risk and responsibility. Prospective subscribers must make their own independent evaluation 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 Bonds. It is the responsibility of the prospective subscribers to have obtained all consents, approvals or authorizations required by them to make an offer to subscribe for, and purchase the Bonds. It is the responsibility of the prospective subscribers to verify if they have necessary power and competence to apply for the Bonds under the relevant laws and regulations in force. Prospective subscribers should conduct their own investigation, due diligence and analysis before applying for the Bonds. Nothing in this Private Placement Offer Letter should be construed as advice or recommendation by the Issuer or by the Arrangers to the Issue to subscribers to the Bonds. The prospective subscribers also acknowledge that the Arrangers to the Issue do not owe the subscribers any duty of care in respect of this private placement offer to subscribe for the Bonds. Prospective subscribers should also consult their own advisors on the implications of application, allotment, sale, holding, ownership and redemption of these Bonds and matters incidental thereto. This Private Placement Offer Letter is not intended for distribution and as per sub-section (8) of section 42 of the Companies Act, 2013, the Issuer shall not release any public advertisem*nts or utilise any media, marketing or distribution channels or agents to inform the public at large in relation to this Issue. It is meant for the consideration of the person to whom it is addressed and should not be reproduced by the recipient. The securities mentioned herein are being issued on private placement basis and this offer does not constitute a public offer/ invitation. The Issuer reserves the right to withdraw the private placement of the Bond issue prior to the issue closing date(s) in the event of any unforeseen development adversely affecting the economic and regulatory environment or any other force majeure condition including any change in applicable law. In such an event, the Issuer will refund the application money, if any, along with interest payable on such application money, if any. DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA This Private Placement Offer Letter has not been approved by Securities & Exchange Board of India. The Bonds have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this Private Placement Offer Letter. It is to be distinctly understood that this Private Placement Offer Letter should not, in any way, be deemed or construed that the same has 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 Private Placement Offer Letter. Pursuant to rule 14 (3) of the Companies (Prospectus and Allotment of Securities)
SECTION II DISCLAIMERS
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Rules, 2014, a copy of this Private Placement Offer Letter shall be filed with the Registrar of Companies, National Capital Territory of Delhi & Haryana along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 and the same shall also be filed with SEBI along with fee as provided in the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 within a period of thirty days of circulation of the Private Placement Offer Letter. However SEBI reserves the right to take up at any point of time, with REC, any irregularities or lapses in this Private Placement Offer Letter. DISCLAIMER OF THE ARRANGERS It is advised that REC has exercised self-due-diligence to ensure complete compliance of prescribed disclosure norms in this Private Placement Offer Letter. The role of the Arrangers to the Issue in the assignment is confined to marketing and placement of the Bonds on the basis of this Private Placement Offer Letter as prepared by REC. The Arrangers to the Issue have neither scrutinized/vetted nor have they done any due-diligence for verification of the contents of this Private Placement Offer Letter. The Arrangers to the Issue shall use this Private Placement Offer Letter for the purpose of soliciting subscription from qualified institutional investors in the Bonds to be issued by REC on private placement basis. It is to be distinctly understood that the aforesaid use of this Private Placement Offer Letter by the Arrangers to the Issue shall neither in any way be deemed or construed that this Private Placement Offer Letter has been prepared, cleared, approved or vetted by the Arrangers to the Issue, nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Private Placement Offer Letter; nor do they take responsibility for the financial or other soundness of the Issuer, its promoters, its management or any scheme or project of REC. The Arrangers to the Issue or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this Private Placement Offer Letter. DISCLAIMER OF THE STOCK EXCHANGE As required, a copy of this Private Placement Offer Letter has been submitted to BSE and/or NSE (hereinafter collectively referred to as “Exchanges”) for hosting the same on its website. It is to be distinctly understood that such submission of the document with BSE and/or NSE or hosting the same on its website should not in any way be deemed or construed that this Private Placement Offer Letter has been cleared or approved by the Exchanges; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor do they warrant that the Issuer‟s bonds will be listed or continue to be listed on
the Exchanges; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of REC. Every person who desires to apply for or otherwise acquire any bonds of the Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. DISCLAIMER OF THE RESERVE BANK OF INDIA The Bonds have not been recommended or approved by the RBI nor does RBI guarantee the accuracy or adequacy of this Private Placement Offer Letter. It is to be distinctly understood that this Private Placement Offer Letter should not, in any way, be deemed or construed that the Bonds have been recommended for investment by the RBI. RBI does not take any responsibility either for the financial soundness of the Issuer, or the Bonds being issued by the Issuer or for the correctness of the statements made or opinions expressed in this Private Placement Offer Letter. The potential investors may make investment decision in respect of the Bonds offered in terms of this Private Placement Offer Letter solely on the basis of their own analysis and RBI does not accept any responsibility about servicing/repayment of such investment.
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SECTION III GENERAL INFORMATION
3.1. ISSUER
Name of the Issuer : Rural Electrification Corporation Ltd. Registered/ Head Office/ : Core-4, SCOPE Complex, 7, Lodi Road Corporate Office New Delhi 110003 Website : www.recindia.gov.in E-mail : [emailprotected] Telephone Number : +911124361320 Fax Number : +911124369849 CIN : L40101DL1969GOI005095
Our Company was incorporated as a private limited company under the Companies Act, 1956 on July 25, 1969 at New Delhi as “Rural Electrification Corporation Private Limited”. The word “private” was
deleted from the name of our Company on June 3, 1970. Our Company became a deemed public limited company with effect from July 1, 1975. Our Company was converted into a public limited company with effect from July 18, 2003.
3.2. COMPLIANCE/NODAL OFFICER AND DIRECTOR (FINANCE)
COMPLIANCE/NODAL OFFICER DIRECTOR (FINANCE) Mr. Vijay Kumar Addl. General Manager (Finance) Rural Electrification Corporation Limited Core-4, SCOPE Complex 7, Lodi Road, New Delhi 110 003 Tel: +91 11 4309 1620 Facsimile: +91 11 2436 9849 E-mail:[emailprotected],
Mr. Ajeet Kumar Agarwal, Rural Electrification Corporation Limited Core-4, SCOPE Complex 7, Lodi Road New Delhi-110003 Tel: +91 11 24361914 Facsimile: +91 11 24365090 E-mail: [emailprotected]
3.3. ARRANGERS TO THE ISSUE A.K. CAPITAL SERVICES LIMITED ICICI SECURITIES PRIMARY DEALERSHIP
LIMITED A. K. Capital Services Limited 609, 6th Floor, Antriksh Bhawan, 22, Kasturba Gandhi Marg, New Delhi – 110 001 Telephone No. (011) 23739628 Fax No. (011) 23739627 E-mail: [emailprotected]
ICICI Securities Primary Dealership Limited ICICI Tower, 3rd Floor, NBCC Place, Pragati Vihar, Lodi Road, New Delhi – 110003 Telephone No. (011) 24390025/26 Fax No. (011) 43560036 / 24390074 E-mail: [emailprotected]
AXIS BANK LIMITED ICICI BANK LIMITED Axis Bank Ltd., 13th Floor, Statesman House, 148 Barakhamba Road, New Delhi - 110 001 Telephone No. (011) 43682422 Fax No. (011) 41515449 E-mail: [emailprotected]
ICICI Bank Limited ICICI Bank Towers Bandra Kurla Complex, Bandra (East), Mumbai – 400051 Telephone No. (022) 26531414, (011) 4221 8275 Fax No. (022) 26531063, (022) 26531122, ( 011) 24360072 E-mail: [emailprotected]
TIPSONS CONSULTANCY SERVICES PRIVATE LIMITED
Tipsons Consultancy Services Private Limited 401, Sheraton House, Opp. Ketav Petrol Pump, Polytechnic Road, Ambawadi, Ahmedabad – 380015 Telephone No. (079) 30002004, (079) 30427790, (011) 23351155
mailto:[emailprotected]
mailto:[emailprotected]
mailto:[emailprotected]
mailto:[emailprotected]
mailto:[emailprotected]
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Fax No. (079) 30480298, (011) 23351188 E-mail: [emailprotected]
3.4. CREDIT RATING AGENCIES
INDIA RATINGS & RESEARCH PRIVATE
LIMITED
CREDIT ANALYSIS & RESEARCH LIMITED
A Fitch Group Company Wockhardt Tower, Level 4, West Wing BandraKurla Complex, Bandra (E) Mumbai - 400051 Tel: + 91 22 40001700 Fax: +91 22 40001701 Website: www.indiaratings.co.in
13th Floor, E-1, Block, Videocon Tower, Jhandewalan Extension, New Delhi 110055 Tel:+91 11 4533 3200 Fax: +91 114533 3238 Website: www.careratings.com
CRISIL LIMITED ICRA LIMITED CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai- 400 076 Tel: + 91 22 3342 3000 Fax: +91 22 3342 3050 Website: www.crisil.com
1105, Kailash Building, 11th Floor, 26, Kasturba Gandhi Marg, New Delhi – 110001 Tel: +91 11 23357940/50 Fax: +91 11 23357014 Website: www.icra.in
3.5. STATUTORY AUDITORS OF THE ISSUER
S.No. Name Address Auditors of the Company Since
1
M/s A R & Co., Chartered Accountants, ICAI Firm Registration: 002744C
A 403, Gayatri Apartments, Airlines Group Housing Society, Plot No.27, Sector 10, Dwarka, New Delhi- 110075 Tel: +91 120 6451160 Email: [emailprotected] Contact Person: Mr.Pawan K. Goel
July 01, 2015
2 M/s Raj Har Gopal& Co., Chartered Accountants, ICAI Firm Registration: 002074N
412, Ansal Bhawan,16, Kasturba Gandhi Marg,New Delhi – 110001 Tel:+91 11 4152 0698/99 Email: [emailprotected] Contact Person: Mr.GopalKrishan
July 26, 2013
Being a Government Company, the statutory auditors of the Issuer are appointed by the Controller and Auditor General of India (“CAG”). The annual accounts of the Issuer are reviewed every year by CAG and a report is
published. 3.6. Details of change in Auditors of the Company since last three years:
S. No.
Financial Year
Name Address Date of Appointment/ Resignation
Remark (if any)
1.
2013-14 M/s Raj HarGopal& Co., Chartered Accountants, having Firm Registration No.002074N M/s P.K. Chopra &Co., Chartered Accountants, having FirmRegistrationNo.006747N
412, AnsalBhawan, 16, Kasturba Gandhi Marg, New Delhi – 110001. N-Block, Bombay Life Building, 2nd Floor, Above Post Office Connaught Place, NewDelhi-110001
Appointed on 26.07.2013
M/s Raj Har Gopal & Co. was appointed by CAG.
2. 2015-16 M/s A R & Co., A 403, Gayatri Appointed on M/s A R & Co.
mailto:[emailprotected]
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S. No.
Financial Year
Name Address Date of Appointment/ Resignation
Remark (if any)
Chartered Accountants, having Firm Registration No. 002744C M/s Raj HarGopal& Co., Chartered Accountants, having Firm Registration No.002074N
Apartments, Airlines Group Housing Society, Plot No.27, Sector 10, Dwarka, New Delhi- 110075 412, AnsalBhawan, 16, Kasturba Gandhi Marg, New Delhi – 110001.
01.07.2015 was appointed by CAG.
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4.1. CONSTITUTION REC is a Government of India ("GoI") Public Sector Enterprise, incorporated on July 25, 1969 under the Companies Act, having net worth of over ₹28,893.40 crores (on consolidated basis) as on March 31, 2016. It provides financial assistance to SEB, State Government Departments and Rural Electric Cooperatives for village electrification and energisation of pump sets for increasing agricultural production and to other Centre and State utilities as also to the private sector utilities. REC was declared as a Public Financial Institution under Section 4A of the Companies Act, 1956 (corresponding Section 2(72) of the Companies Act, 2013) in February 1992 and registered as Non-Banking Financial Company under Section 45-IA of the RBI Act, 1934 in February 1998. It is also the nodal agency for channelizing finance to aid the GoI‟s social and economic objective of achieving 100% rural electrification. REC‟s importance has been further enhanced by the virtual absence of private sector investments in rural electrification.
4.2. CHANGES IN THE REGISTERED AND CORPORATE OFFICE Our Registered and Corporate Office is currently situated at Core-4, SCOPE Complex, 7, Lodi Road, New Delhi 110 003, India. Our registered office was initially situated at Floor No. 3, Jeevan Vihar, Parliament Street, New Delhi-110001, India, pursuant to a resolution of our Board dated September 5, 1969. The table below encapsulates changes in our registered office since our incorporation.
Date of shareholders‟
resolution Change in address of the Registered Office
September 5, 1969 Floor No. 3, JeevanVihar, Parliament Street, New Delhi 110 001, India.
March 3, 1970 D-5, NDSE, Part-II, South Extension, New Delhi 110 049, India.
November 30, 1976 2nd and 3rd Floor, DDA Building, Nehru Place, New Delhi 110 019, India.
November 28, 1995 Core-4, SCOPE Complex, 7, Lodi Road, New Delhi 110 003, India. 4.3. MAJOR EVENTS AND MILESTONES
Calendar Year Event
1969 Incorporation of our Company.
1970 Commenced lending operations to SEBs.
1974 Authorised by the Ministry of Irrigation and Power to finance rural electrification under the „Minimum Needs Programme‟.
1979 CIRE set up in Hyderabad.
1988 Launch of KutirJyoti and JalDhara programmes for rural electrification.
1992 Declared a Public Financial Institution under Section 4A of the Companies Act, 1956.
1993 Entered into MoU with the Ministry of Power for the year 1993-1994 for the first time to achieve certain performance related targets.
1998 Registered as a NBFC under Section 45(IA) of the RBI Act, 1934.
2001 Allowed to issue Capital Gains Tax Exemption Bonds under Section 54 EC of the IT Act.
Up gradation from Schedule „B‟ to Schedule „A‟ Corporation
2002 Grant of Mini Ratna- I status
2005 Appointed as the nodal agency for RGGVY (presently known as Deendayal Upadhyaya Gram Jyoti Yojana).
2006 Entered into agreement with Japan International Cooperation Agency for availing a loan facility of JPY 20,629 million. Entered into agreement with KfW, Frankfurt am Main for availing a loan facility of Euro 70 million.
SECTION IV BRIEF HISTORY OF ISSUER SINCE INCORPORATION, DETAILS OFACTIVITIES
UNDERTAKEN, ANY REORGANIZATION, RECONSTRUCTION OR AMALGAMATION
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Calendar Year Event
2008 Launch of Initial Public Offer and dilution of Promoter‟s shareholding from 100% to
81.82%. Gross proceeds from IPO were₹ 819.63 crores. Listed Equity Shares of the Company on NSE and BSE. Accorded “Navratna” status by the Department of Public Enterprise, GoI for our operational efficiency and financial strength, which affords greater operational freedom and autonomy in decision making. Entered into agreement with Japan International Cooperation Agency for availing a loan facility of JPY 20,902 million.
2009 Entered into agreement with KfW, Frankfurt am Main for availing a loan facility of Euro 70 million. Received „LAAA‟ rating from ICRA in relation to ₹ 25,000 crores long term borrowing programme for the Fiscal 2010.
2010 Follow-on issue of Equity Shares resulting in (a) raising ₹ 2,647.53 crores of gross proceeds through fresh issue and (b) GoI reducing its ownership to 66.80%. RBI categorised REC as an Infrastructure Finance Company (“IFC”). REC was included in the MSCI emerging marketing index.
2011 REC successfully priced a USD 500 million 4.25% 5-year Reg S Senior Unsecured Notes transaction. REC was the first Indian NBFC –IFC to enter into the international debt market.
2012 CHF Bonds through Reg S for CHF 200 million were issued by REC, which were listed in the SIX Swiss Exchange, Switzerland. Entered into agreement with KfW, Frankfurt am Main for availing a loan facility of Euro 100 million. National Electricity Fund (Interest Subsidy Scheme) has been set up by Ministry of Power to provide interest subsidy on loans disbursed to the State Power Utilities, Distribution Companies (DISCOMS) - both in public and private sector, to improve the infrastructure in distribution sector. REC is the nodal agency for the scheme with a mandate to operationalize the scheme through which amount for interest subsidy will be provided.
2013 REC received DSIJ PSU Award, 2012 for "Fastest Growing Operational Metrics" in Non-Manufacturing Navratna Category. REC received CIDC Vishwakarma Award 2013 in the category of "Achievement Award for Industry Doyen. REC received Award in the Category of "Non-Banking Financial Services" by India Pride Awards, Dainik Bhaskar and DNA.
2014 Entered into offshore syndicated facility agreements for availing loan facility of USD 285 million from Hong Kong and Shanghai Banking Corporation Limited, State Bank of India, Singapore Branch and Sumitomo Mitsui Banking Corporation as Mandated Lead Arrangers and Book runners (MLAB's) in November. REC named 'Best Employer India 2013' and also been awarded 'The Aon Hewitt Voice of Employee Award Public Sector Enterprise India 2013' by Aon Hewitt. Received 'Best HR Practices' Award in the Navratna PSU's category from India Today PSUs Award 2014
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Calendar Year Event REC received DSIJ PSU Award, 2014 for "Fastest Growing Navratna of the Year in Non-Manufacturing Category. 'Rural sector PSE of the Year making Grass Root Infrastructure Impact' from IPSE Award 2014. 'Best Power Financing Company' for outstanding contribution in terms of providing financial assistance and promoting Rural electrification Projects all over the Country having consistent record of Excellent all round Performance Growth and Profitability since inception and Contribution to the Growth of Nation from CBIP "Best Governed Company" by Institute of Company Secretaries of India and REC has been awarded “ICSI National Award for excellence in corporate governance”. Nodal Agency for operationalization of Deendayal Upadhyaya Gram Jyoti Yojana on December 3, 2014 (including Rural Electrification (RE) component - the erstwhile Rajiv Gandhi Grameen Vidyutikaran Yojana - RGGVY) mainly for separation of agriculture and non-agriculture feeders; strengthening and augmentation of sub-transmission & distribution infrastructure in rural areas; and rural electrification for completion of the targets laid down under RGGVY for XII and XIII Plans.
2015 "Fastest Growing Navratna PSU" award from India Today. Third Largest Financier in RE in FY 2015-16 from Ministry of Non-Conventional and Renewable Energy (MNRE)
2016 Rated "Excellent" for Fiscal 2015 in terms of MoU signed with GoI for the 22nd year in succession, Nodal Agency for implementation of Outage Management System and 11 KV Rural Feeder Management System.
4.4. DETAILS REGARDING ACQUISITION OF BUSINESS/UNDERTAKINGS, MERGERS, AMALGAMATION, REVALUATION OF ASSETS
Our Company has neither acquired any entity, business or undertakings nor undertaken any mergers, amalgamation, or revaluation of assets in the last Fiscal. 4.5. HOLDING ENTITY- OUR PROMOTER Our Promoter is the President of India, acting through the Ministry of Power, holding 60.64% of our Equity Share Capital as on September 30, 2016. 4.6. JOINT VENTURES Energy Efficiency Services Limited (“EESL”) REC, along with three other PSUs, namely Power Grid Corporation of India Limited, NTPC and PFC as partners, has formed a Joint Venture Company by the name Energy Efficiency Services Limited (EESL) on December 10, 2009. During the financial year 2016-17, the Equity investment of REC in EESL was increased to 14,65,00,000 Equity Shares of ₹ 10/- each w.e.f April 25, 2016. Accordingly, as on date REC holds 31.70% of the paid up equity share capital of EESL. EESL is formed to create & sustain market access of energy efficient technologies particularly in the public facilities like municipalities, buildings, agriculture, industry etc. and to implement several schemes of Bureau of Energy Efficiency, Ministry of Power, Government of India. EESL is also leading the market related activities of the National Mission for Enhanced Energy Efficiency (NMEEE), one of the 8 national missions under National Action Plan on Climate Change. The Business verticals of the company inter-alia include implementing projects in Energy Service Company (ESCO) mode in Agriculture Demand Side Management (AgDSM), Municipal Demand Side Management (MuDSM), Distribution Energy Effi ciency projects, Building,
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Small & Medium Enterprises (SMEs), Perform, Achieve and Trade-Joint Implementation Plan (PAT-JIP), Corporate Social Responsibility activities, etc. Currently, EESL is implementing Municipal Street Lighting projects with various Municipal Corporation and AgDSM projects for replacement of inefficient Agricultural Pump sets in agriculture sector, Unnat Jyoti by Affordable LEDs for all formerly Domestic Efficient Lighting Programme (DELP) in domestic residential sector in ESCO mode with various Utilities and CSR projects of various companies. 4.7. ENTITIES IN WHICH WE HAVE EQUITY INVESTMENT Indian Energy Exchange Limited (“IEX”) Pursuant to the approval of Board of Directors in year 2007, our Company acquired 5% (12,50,000 equity shares of face value of ₹10 each) of the then equity share capital of IEX. Certain significant details of IEX are provided hereunder: IEX was incorporated on March 26, 2007 and received its certificate of commencement of business on April 17, 2007. Its registered office is situated at Unit No. 3-6, 4th Floor, TDI Centre, District Centre, Jasola, New Delhi – 110025. IEX offers national level electronic platform to facilitate trading in electricity, subject to supervision of the Central Electricity Regulatory Commission („CERC‟). Entities listed to undertake trading in electricity, distribution licensees
and grid connected entities use the platform offered by IEX to purchase and sell electricity. Currently, IEX operates Day-Ahead Market (DAM) and Term-Ahead Market (TAM) in electricity as well as Renewable Energy Certificate (REC) Market. The Exchange provides a transparent, demutualised and automated platform enabling efficient price discovery and price risk management for participants. The equity shares of IEX are not listed on any stock exchange. As on March 31, 2016, REC holds 4.34% in the equity share capital of IEX. Universal Commodity Exchange Limited (“UCX”) Pursuant to a Board resolution dated December 16, 2011, our Company approved the acquisition of 16% of the initial capital of INR 100 crores of UCX by paying the consideration amount of INR 16 crores. Certain significant details of UCX are provided hereunder: UCX was incorporated on February 25, 2008. Its registered office is situated at Exchange House, Building No. 8 (105), Sector II, Millennium Business Park, Mahape, Navi Mumbai, Maharashtra-400710. UCX is engaged in the business of commodity exchange. The equity shares of UCX are not listed on any stock exchange. As per the latest available shareholding pattern, REC holds 16% shareholding in UCX. „Small is Beautiful‟ Fund (“SBF”) SBF is an Indian venture capital fund organised and settled as a contributory trust and registered with SEBI as a Venture Capital Fund. KSK Trust Private Limited is the trustee for SBF. The office of SBF is situated at Plot No. 84, Kaveri Hills, Phase II, Madhapur, Hyderabad – 500033, Andhra Pradesh, India. SBF is engaged in the business of making investments in power generation and other allied projects in Indian power sector. Investment in NHPC REC has invested in 26,05,42,050 equity shares of NHPC Limited at the rate of ₹ 21.78 per share (including STT, brokerage and other charges) amounting to ₹ 567.50 Crore in April 2016 during disinvestment by Government of India through OFS route. REC holds around 2.35% total equity share capital of NHPC Ltd. NHPC Limited, a Govt. of India Enterprise, was incorporated in the year 1975 with an objective to plan, promote and organise an integrated and efficient development of hydroelectric power in all aspects. Later on NHPC expanded its objects to include development of power in all its aspects through conventional and non-conventional sources in India and abroad. At present, NHPC is a Mini Ratna Category-I Enterprise of the Govt. of India with an authorised share capital of ₹15,000 crores and issued share capital is ₹ 11,070.67 crores. NHPC has been assigned credit rating of AAA / stable by CRISIL.
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SECTION V EXISTING CORPORATE ORGANOGRAM (AS ON DECEMBER 26, 2016)
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SECTION VI
BRIEF SUMMARY OF BUSINESS/ACTIVITIES OF ISSUER AND ITS LINE OFBUSINESS 6.1. OVERVIEW We are public financial institution in the Indian power infrastructure sector and are engaged in the financing and promotion of transmission, distribution and generation including renewable energy projects throughout India. We commenced our operations in 1969 for the purpose of developing the power infrastructure in rural areas. We have contributed to the development of rural India and India's agriculture through our funding of transmission and distribution projects in rural areas. Our mandate has evolved in accordance with the development priorities of GoI and since Fiscal 2003, we are permitted to finance all segments of the power sector, including generation, transmission and distribution, throughout the country. Our mandate was further extended to include financing other activities with linkages to power projects, such as coal and other mining activities, fuel supply arrangements for the power sector and other power-related infrastructure. In June 2011, we have set up a separate division for funding renewable projects in order to further achieve the goal of conserving fossil fuels and reducing our carbon foot prints. REC is one of only 14Indian public sector undertakings to be granted “Navratna” status by the Department of Public Enterprise by virtue of our operational efficiency and financial
strength. The GoI has rated our performance as “Excellent” continuously since Fiscal 1994. We have also been
ranked among the top ten public sector undertakings in India by the Ministry of Heavy Industries and Public Enterprises for Fiscal 2000, Fiscal 2001, Fiscal 2002, Fiscal 2004 and Fiscal 2005. Domestically, we hold the highest credit rating for long-term borrowing consisting of domestic credit rating from each of IRRPL, CRISL, ICRA and CARE. On an international basis, we hold long-term borrowing ratings from Fitch and Moody's that are at par with sovereign ratings for India. The President of India, acting through nominees from the Ministry of Power ("MoP"), currently holds 60.64% of the issued and paid up equity capital of our Company. The GoI, acting through the MoP, oversees our operations and has the power to appoint Directors to our Board. We have a branch network of 18 project offices and 3 sub-offices spread across India. The registered office at New Delhi looks at the matters relating to Planning and Policy formulation, Resource Mobilization, Financial Operations etc. Project/Field offices attend functions relating to preliminary processing of new schemes, monitoring of on-going schemes, scrutiny of loan claims, recovery of dues and maintain liaison with SEBs and State Governments for effective implementation of rural electrification programme funded by the Corporation. Our Strengths We believe that the following are our primary strengths: Our financial position is strong and our business is profitable. We are uniquely positioned to access and appraise borrowers in the Indian power sector. We occupy a key strategic position in the GoI's plans for growth of the power sector. We have an experienced management team with sector expertise. Pan India presence through our zonal/project offices in most of state capitals.
Our Strategy The key elements of our business strategy are as follows: Continue to fund the increased investment in the Indian power sector. Maintain the diversity of our asset portfolio and seek higher yielding loan assets. Increase our involvement in consortium lending and private sector participation in the Indian power sector. Increase our fee-based income. Implement technological innovation to manage our growth and remain a dynamic organisation.
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6.2. OUR PRODUCTS Long-term Loans We offer our long-term loans to central-sector power utilities, state-sector power utilities, joint-sector power utilities, state power departments, private sector power utilities and rural electricity cooperatives. Our long-term loans generally are sanctioned with respect to a specific power-related project at project inception or as bulk loans for procurement of equipment. Our long-term loans to the public sector for transmission and distribution projects typically require the borrower to obtain a state government guarantee of the loan and/or hypothecate a portion of its existing assets or hypothecate all of its project assets to secure the loan. The percentage of guarantee and hypothecation of assets differs on a case-to-case basis. Short-term Loans We offer short-term loans to our state sector borrowers to meet their immediate working capital requirements, including for the purchase of fuel for power plants, system and network maintenance, including transformer repairs, the purchase of power, the purchase of materials and minor equipment. Others Debt Refinancing We may offer a debt refinancing scheme for borrowers who have borrowed funds from other lending institutions at a higher rate of interest. The refinancing facility is available generally for commissioned projects. We offer our debt refinancing products on the same interest rate terms as our long-term loans; however, the maturity of our debt refinancing products is generally not later than the maturity of the refinanced indebtedness. Bridge Loans We may provide short-term bridge loan financing for borrowers that have been sanctioned financial assistance from or through us, primarily in the form of grants or long-term loans, and have received a sanction letter for the funding but are awaiting disbursem*nts pending formalities or clearances. Short-term Loans to Equipment Manufacturers We may offer short-term loans to manufacturers of equipment or materials. To be eligible to receive these loans the equipment manufacturers must have been awarded a firm order for executing contracts in power projects in India by power utilities. We do not currently have any such loans outstanding. Medium-term Loans We offer medium-term loans (MTL) to the Central/State Government Power Utilities and State Governments that are not in default to our Company for the following purposes:
purchase of fuel for power plant system and network maintenance including transformer repairs purchase of power any other requirement due to inadequate tariff revision, repayment of loan obligation, delay in receipt
of support from Govt. etc.
MTL are not provided to the following category of customer: who are in default to REC, or utilities categorised as Grade "C" utilities that have availed Transitional Financing Loan (TFL) facility
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These loans have a loan period of more than one to three years. As on March 31st 2016, MTL outstanding amounted to ₹5867.36 crores. Loans for Power Purchase through Indian Energy Exchange In December 2009, our Board of Directors approved a new scheme pursuant to which we intend to finance power purchases made through the India Energy Exchange, which is one of two energy exchanges operating in India. It is currently intended that these power purchase loans may be offered to our existing public sector borrowers for the purpose of non-speculative purchases of power through the exchange with a maturity of 90 days from disbursem*nt. Power purchase loans will be secured by escrow arrangements or bank guarantees, at the discretion of the borrower. Deendayal Upadhyaya Gram Jyoti Yojana Government of India, in April 2005, launched the "Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) Scheme of Rural Electricity Infrastructure and Household Electrification" vide O.M. No. 44/19/2004-D(RE), dated March 18, 2005 for providing access to electricity to all rural households. REC is the Nodal Agency for implementation of the Scheme. Under the scheme 90% capital subsidy is being provided by GoI which is released through REC to the respective Implementing Agencies of the State. Subsequently, RGGVY scheme has been subsumed in new „Deendayal Upadhyaya Gram Jyoti Yojana‟ (DDUGJY) scheme which was approved by Government of India vide OM No. 44/44/2014-RE dated December 03, 2014. Under DDUGJY, 60% of the project cost (85% for special States) is provided as grant by Government of India and additional grant upto15% (5% for special States) is provided by Government of India on achievement of prescribed milestones. The main components of the scheme are as under: i. Separation of agriculture and non-agriculture feeders facilitating judicious fostering of supply to
agricultural & non- agricultural consumers in the rural areas; and ii. Strengthening and augmentation of sub-transmission & distribution infrastructure in rural areas,
including metering of distribution transformers/feeders/consumers; and iii. Rural electrification for completion of the targets laid down under RGGVY for 12th and 13th Plans by
carrying forward the approved outlay for RGGVY to DDUGJY. The components at (i) and (ii) will have an estimated outlay of INR 43,033Crores including budgetary support of INR 33,453 Crore from GOI during the entire implementation period. For component (iii) above, scheme cost of INR 39,275Crore including a budgetary support of INR 35,447Crores has been approved. Rural Electrification Corporation Limited (REC) is the Nodal Agency for operationalization of the scheme and REC would be paid 0.5% of the total project cost as Agency fee. National Electricity Fund (NEF) National Electricity Fund (NEF) - Interest Subsidy Scheme, has become operational during the year 2012-13. The scheme has been introduced by GoI to promote the capital investment in the distribution sector. The scheme shall provide interest subsidy, linked with reform measures, on loans taken by private and public power distribution utilities for approved power Distribution Infrastructure projects. NEF would provide interest subsidy aggregating to INR 84,660 million (USD 1,355 million spread over maximum loan tenure of 13 years against loan amount of INR 250,000 million (USD 4,000 million)) for distribution projects approved during 2012-13 and 2013-14. The pre-conditions for eligibility are linked to certain reform measures to be achieved by Discoms. Interest subsidy to the tune of3-7%, is linked to the achievement of mainly two efficiency benchmark i.e., reduction of AT&C losses & reduction in revenue gap (ACS & ARR).
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Rural Electrification Corporation is the Nodal Agency for the scheme with a mandate to operationalize the scheme and pass on the benefit of interest subsidy to eligible distribution utilities. REC will receive service charges at the rate of 0.5% of the total loan amount approved by the NEF Steering Committee. REC, during Fiscal 2013 & Fiscal 2014, has conveyed approval for projects of loan amounting to INR 264,067 million (USD 4,226 million) to 25 discoms of 15 states. Since, the interest subsidy shall be released on the basis of continual improvement in performance of discom (mainly reduction of AT&C losses & reduction in revenue gap-ACS & ARR) to be evaluated on annual basis during the loan tenure. Further, Independent Evaluators have been appointed for evaluation of interest subsidy proposal. It is expected that NEF scheme will supplement the efforts of Govt. of India and result in improvement in distribution sector in the country. NEF scheme has given an opportunity to REC to enhance its business prospects in the power distribution sector. NEF Steering Committee till 30th June 2016, has approved interest subsidy amounting to INR 169.20 million to eligible Discoms based on the performance criterion evaluated by Independent Evaluators and REC. Discoms have started getting the interest subsidy amount under the Scheme and the benefits shall ultimately be passed on to the consumers of the respective Discoms. UDAY SCHEME The recent initiative by Ministry of Power, Government of India through Ujwal DISCOM Assurance Yojana (UDAY), launched in November 2015, is a path breaking reform for realizing the Hon‟ble Prime Minister‟s
vision of affordable and accessible 24x7 power for all. It is another decisive step furthering the landmark strides made in the Power sector over the past two years, with the sector witnessing a series of historic improvements across the entire value chain, from fuel supply (highest coal production growth in over 2 decades), to generation (highest ever capacity addition), transmission (highest ever increase in transmission lines) and consumption (over 2.3 crore LED bulbs distributed). Financially stressed DISCOMs are not able to supply adequate power at affordable rates, which hampers quality of life and overall economic growth and development. Efforts towards 100% village electrification, 24X7 power supply and clean energy cannot be achieved without performing DISCOMs. Power outages also adversely affect national priorities like “Make in India” and “Digital India”. Due to legacy issues, DISCOMs are trapped in a vicious cycle with operational losses being funded by debt. Outstanding debt of DISCOMs has increased from about 2.4 lakh crore at the end of 2011-12 to about 4.3 lakh crore at the end of 2014-15. UDAY assures the rise of vibrant and efficient DISCOMs through a permanent resolution of past as well as potential future issues of the sector. It empowers DISCOMs with the opportunity to break even in the next 2-3 years. This is through four initiatives (i) Improving operational efficiencies of DISCOMs; (ii) Reduction of cost of power; (iii) Reduction in interest cost of DISCOMs; and (iv) Enforcing financial discipline on DISCOMs through alignment with State finances. ERP and Information Security Management System (ISMS) REC remains committed to use of technology to increase its efficiency, and in its efforts to increase its efficiency by use of technology and reduce the time involved in business functions like Central Accounting, Project Appraisal and Sanction, Disbursem*nt etc., REC has implemented Enterprise Resource Planning (ERP) system in the Corporation, which has resulted in increase in efficiency and greater customer satisfaction. Employee processes are also on-line through HR-ERP System. Towards achieving efficient e-governance and transparency, in procurement, now all procurement of goods and services above a cut-off value are being done through the E-procurement system which is also capable of conducting e-Reverse Auction. Additionally, Document Management System (“DMS”) and other in-house developed systems viz. Annual Property Return, Bill Payment and Tracking System, Visitor Management System, File Movement System etc. have been implemented to improve the efficiency of REC. Also, for better operational environment & internal control and to mitigate security risk, REC Data Centre and Disaster Recovery Centre comply with Information Security Management System (“ISMS”) policies and are ISO/IEC 27001:2013 certified, which is the global security
standard, by British Standard Institution (BSI).
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6.3. Resource Mobilisation We generally fund our assets, primarily comprising loans to the power sector, with borrowings of various maturities in the domestic and international markets. Our market borrowings include bonds, short-term loans, medium-term loans, long-term loans and external commercial borrowings. As on March 31, 2016, we had total outstanding borrowing of 169106.38 crores. The following table sets forth our indebtedness classified by Rupee-denominated and foreign currency-denominated sources and the percentages such resources constituted of our total indebtedness as on March 31, 2014, 2015 and 2016. The Rupee equivalents of foreign currency-denominated debts (other than those that are already fully hedged) are translated with reference to rates of exchange prevailing as at the end of all the periods indicated.
(All figures are in (INR) crores, except percentages)
Resource Denomination
As on March, 31st
2014 2015 2016
Amount % Amount % Amount %
Rupee 108,619.04 86.04 126,995.92 84.09 147,182.66 87.04
Foreign currency 17,621.15 13.96 24,028.20 15.91 21,923.72 12.96
Total 126,240.19 100 151,024.12 100 169,106.38 100 6.4. Domestic Borrowings
In terms of domestic resources, a significant proportion of our Rupee denominated funds are raised through privately placed bond issues in the domestic market and term loans. We have a diverse investor base of banks, financial institutions, mutual funds, insurance companies, provident fund trusts, gratuity fund trusts and superannuation trusts and individuals. The following table sets forth our outstanding Rupee-denominated indebtedness by type and the percentage such indebtedness constituted of our total Rupee-denominated indebtedness as on March 31, 2014, 2015 and 2016.
(All figures are in (INR) crores, except in percentages)
Rupee Denominated As on March 31
2014 2015 2016
Amount % Amount % Amount %
Taxable bonds 75289.46 69.32 97068.18 76.43 109677.54 74.52
54EC Capital Gain Tax Exemption bonds
15492.52 14.26 15590.94 12.28 17164.39 11.66
Infrastructure bonds 376.32 0.35 376.32 0.30 242.39 0.17
Tax-free bonds 11648.41 10.72 11648.41 9.17 12648.41 8.59
Term loans 3264.40 3.01 1575.00 1.24 1100.00 0.75
GoI loans 7.93 0.01 3.07 0.00 0.00 0.00
Commercial paper 2540.00 2.34 0.00 0.00 5600.00 3.80
WCDL 0.00 0.00 734.00 0.58 749.93 0.51
Total 108619.04 100.00 126995.92 100.00 147,182.66 100.00
Taxable Bonds We issue secured/ unsecured, non-convertible, non-cumulative, redeemable, taxable, senior/subordinate bonds typically with a maturity of three to ten years from the date of issuance and bearing a fixed interest rate that depends upon market conditions at the time of issuance. 54EC – Capital Gain Tax Exemption Bonds We began issuing 54 EC – Capital Gain Tax Exemption bonds from Fiscal 2001. Section 54EC of the Income Tax Act, 1961 relates to exemption of taxes on long term capital gains, if invested in these bonds, subject to limits and qualifications. We are, therefore, able to price such bonds at a lower rate of interest than would
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otherwise be available to us. In order to qualify for the tax exemption, these bonds must be held for period not less than three years. Up to Fiscal 2007, these bonds have put dates or maturity dates at the end of three years from issuance and thereafter automatic redemption after the lock in period of three years. Since January 2007, the GoI has limited the amount of our bonds that an individual investor can utilise to offset long term capital gains to INR 0.50 crore in a financial year which has reduced the amount of bonds we have been able to offer for subsequent periods. The 54EC – capital gain tax exemption bonds are offered on a domestic private placement basis and are not listed on any exchange. Infrastructure Bonds We have issued infrastructure bonds, in Fiscal 2002 to 2005 u/s 88 of the Income Tax Act, and in Fiscal 2011 and 2012, u/s 80CCF of the Income Tax Act. Under provisions of Section 88 of the Income Tax Act, 1961, deduction is allowed from the amount of income tax (as computed before allowing the deductions under Chapter VI) on investor's total income, on investment of these bonds. Under provisions of Section 80CCF of the Income Tax Act, 1961, deduction is allowed from gross total income of an assessee on investment in these bonds and terms of the issue were subject to Notification No. 48/2010/F NO 149/84/2010-SO (TPL) issued by CBDT. The weighted average annualised interest rate on Infrastructure Bonds issued during the Fiscal 2011 and Fiscal 2012 was 8.14% and 8.98% respectively. The weighted average annualised interest rate on all of our outstanding Infrastructure Bonds, as on March 31, 2016 was 8.74%. Our infrastructure bonds typically have a maturity of ten and fifteen years from the date of issuance and bear a fixed interest rate with buyback option after specified years i.e., 5/6/7/8/9 years. The infrastructure bonds were offered on a domestic private placement basis and bond issued in Fiscal 2011 & 2012 are listed on NSE and tradable after lock in period. Tax-free Bonds We have issued tax-free bonds up to Fiscal 2002 and thereafter issued in Fiscal 2012 to Fiscal 2014 and Fiscal 2016. Under provisions of the Income Tax Act, interest on these bonds was tax exempt for bondholders and we were therefore able to price such bonds at a lower rate of interest that would otherwise have been available to us. The weighted average annualise cost of borrowing on all of our outstanding tax free bonds as on March 31, 2016 was 8.07%. The tax-free bonds issued up to Fiscal 2002, were offered on a domestic private placement basis and listed on the “whole sale debt market segment” of the NSE. The tax-free bonds issued in Fiscal 2012, were offered under domestic public issue and listed on the “whole sale debt market segment” of the BSE. The tax-free bonds issued in Fiscal 2013 & Fiscal 2014, were offered under domestic public issue & private placement and listed on the "retail debt market segment" and “whole sale debt market segment” respectively of the BSE and NSE. The tax-free bonds issued in Fiscal 2016 were offered under domestic public issue & private placement and listed on the "retail debt market segment" and “whole sale debt market segment” respectively of the BSE. Our tax free bonds typically have a maturity of ten, fifteen and twenty years from the date of issuance and bear a fixed interest rate. Term loans from commercial banks and financial institutions As on March 31, 2016 we had a total of three Rupee denominated secured term loan facilities from Life Insurance Corporation of India having outstanding balance of ₹ 1100 crore as on 31/03/2016. These facilities are obtained on commercial terms and have varying maturity dates and interest rates. The weighted average annualised interest rate on all of our outstanding indebtedness under term loan facilities from commercial banks and financial institutions as on March 31, 2016 was 7.03%. WCDL: As on March 31, 2016, an amount of ₹ 749.93 crore is outstanding on account of WCDL. STL: As on March 31, 2016, nothing is outstanding on account of STL. Loans from GoI: As on March 31, 2016, nothing is outstanding on account of GOI.
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Commercial Paper: The Company mobilised funds through Commercial Paper during various years. These are obtained on varying maturity dates and interest rates. The weighted average annualised interest rate on all new borrowings through Commercial Paper during Fiscal 2016 was 7.75%. Commercial Paper of ₹ 5600 crore are outstanding as on March 31, 2016. 6.5. Foreign Currency Resources We first began arranging for foreign currency borrowings during Fiscal 2007. As on March 31, 2016, outstanding foreign currency loans are ₹ 21923.72 crores. 6.6. External Commercial borrowings in foreign currency In Fiscal 2014, the Issuer raised ECB as under: Syndicated loan agreement through State Bank of India, Sumitomo Mitsui Banking Corporation and
Hong Kong and Shanghai Banking Corporation for USD 285 million. Loan under this agreement bear a variable interest at a spread of 150 basis points over six-month USD LIBOR and will mature in Fiscal 2019. As on March 31, 2016, this loan facility was fully drawn and hedged through principal only swap at 6.2031% pa.
In Fiscal 2015, the Issuer raised ECB as under:
Syndicated loan agreement through State Bank of India and Mizuho Bank Limited for USD 250 million. Loan under this agreement bear a variable interest at a spread of 170 basis points over six-month USD LIBOR and will mature in Fiscal 2020. As on March 31, 2016, this loan facility was fully drawn and USD 190 million hedged through principal only swap at 5.9160% pa and the balance is unhedged.
Syndicated loan agreement through State Bank of India, Hong Kong and Shanghai Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Bank of India, BNP Paribas and The Australia and New Zealand Banking Group Limited for USD 400 million. Loan under this agreement bear a variable interest at a spread of 150 basis points over six-month USD LIBOR and will mature in Fiscal 2020. As on March 31, 2016, this loan facility was fully drawn and hedged through principal only swap at 5.4157% p.a.
Syndicated loan agreement through Mizuho Bank, Ltd, State Bank of India and Sumitomo Mitsui Banking Corporation for USD 400 million. Loan under this agreement bear a variable interest at a spread of 117 basis points over six-month USD LIBOR and will mature in Fiscal 2020. As on March 31, 2016, this loan facility was fully drawn and USD 300 million hedged through principal only swap at 4.8877% pa and the balance is unhedged.
In Fiscal 2016, the Issuer raised ECB as under:
Syndicated loan agreement through Mizuho Bank, Ltd, State Bank of India and Bank of Baroda for USD 300 million. Loan under this agreement bear a variable interest at a spread of 100 basis points over six-month USD LIBOR and will mature in Fiscal 2021. As on March 31, 2016, this loan facility was fully drawn and entire USD 300 million hedged through principal only swap at 4.9155% pa.
Syndicated loan agreement for USD 250 million through Sumitomo Mitsui Banking Corporation, Mizuho Bank Ltd. and The Bank of Tokyo-Mitsubishi UFJ Ltd. to refinance the ECB of USD 250 Million raised in Fiscal 2013, as per approval of RBI. Loan under this agreement bear a variable interest at a spread of 70 basis points over six-month USD LIBOR and will mature in Fiscal 2019. As on March 31, 2016, this loan facility was fully drawn and USD 50 million hedged through principal only swap at 5.5295% pa, USD 50 million hedged through call spread options at 4.4985% pa and balance USD 150 million is unhedged.
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Syndicated loan agreement through State Bank of India and HSBC Banks (Mauritius) Limited for USD 300 million. Loan under this agreement bear a variable interest at a spread of 105 basis points over six-month USD LIBOR and will mature in Fiscal 2021. As on March 31, 2016, this loan facility was fully drawn and USD 75 million hedged through principal only swap at 4.9760% pa and USD 225 million hedged through call spread options at 4.0088% pa
Syndicated loan agreement for USD 250 million through Mizuho Bank Ltd. and The Bank of Tokyo-Mitsubishi UFJ Ltd. to refinance the ECB of USD 250 Million raised in Fiscal 2013, as per approval of RBI. Loan under this agreement bear a variable interest at a spread of 65 basis points over six-month USD LIBOR and will mature in Fiscal 2019. As on March 31, 2016, this loan facility was fully drawn and entire USD 300 million hedged through call spread options at 4.1859% pa.
Syndicated loan agreement for USD 120 million through Australia and New Zealand Banking Group
Limited to part-refinance the ECB of USD 250 Million raised in Fiscal 2013, as per approval of RBI. Loan under this agreement bear a variable interest at a spread of 95 basis points over six-month USD LIBOR and will mature in Fiscal 2019. As on March 31, 2016, this loan facility was fully drawn and entire USD 75 million hedged through call spread options at 4.44% pa.
Bilateral credit agreements: We also have five foreign currency loan facilities from external bilateral credit agencies.
In Fiscal 2006, we also entered into a loan agreement with JICA for financial assistance of JPY 20,629
million restated to 16,949.38 million w.e.f. 29.08.2012. This agreement bears a fixed interest rate of 0.75% per annum and matures in 2021. The GoI has guaranteed borrowings under this facility for which we pay a guarantee fee. As of March 31, 2019, entire outstanding amount of JPY 16,949.38 million has been drawn under this facility.
In Fiscal 2008, we entered into a second loan agreement with JICA for financial assistance of JPY
20,902 million restated to JPY 13,000 million w.e.f. 18.02.2012 and further restated to JPY 11,809 million w.e.f. 31.03.2016. This agreement bears a fixed interest rate of 0.65% per annum and matures in Fiscal 2023. The GoI has guaranteed borrowings under this facility for which we pay a guarantee fee. As on March 31, 2016, JPY 11,809 million have been fully drawn under this facility.
In Fiscal 2007, we entered into a loan agreement with KfW for financial assistance of Euro 70 million.
Loans under this agreement bear a fixed interest rate of 3.73% per annum and mature in 2018. The GoI has guaranteed borrowings under this facility for which we pay a guarantee fee. As of March 31, 2016, entire loan amount of Euro 70 million has been drawn under this facility.
In Fiscal 2009, we entered into a second loan agreement with KfW for financial assistance of Euro 70
million. This agreement bears a fixed interest rate of 2.89% per annum and matures in 2020. The GoI has guaranteed borrowings under this facility for which we pay a guarantee fee. As of March 31, 2016, entire loan amount of Euro 70 million has been drawn under this facility.
In Fiscal 2012, we entered into a third loan agreement with KfW for financial assistance of Euro 100 million. This agreement bears a fixed interest rate of 1.86% per annum and matures in 2024. The GoI has guaranteed borrowings under this facility for which we pay a guarantee fee. As March 31, 2016, Euro 100 million has been fully drawn under this facility.
6.7. Business details of subsidiaries and their special purpose vehicles (SPVS): 6.7.1. REC Transmission Projects Company Limited RECTPCL was incorporated on January 8, 2007 as a public limited company and its registered office is situated at Core-4, SCOPE Complex, 7, Lodhi Road, New Delhi 110 003, India. It received its certificate of commencement of business on February 5, 2007. RECTPCL is engaged inter alia in the business of, to promote, organise or carry on the business of consultancy services and/or project implementation in any field of activity relating to transmission and distribution of electricity in India or abroad.
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6.7.2. REC Power Distribution Company Limited RECPDCL was incorporated on July 12, 2007 as a public limited company and its registered office is situated at Core-4, SCOPE Complex, 7, Lodhi Road, New Delhi 110 003, India. It received its certificate of commencement of business on July 31, 2007. RECPDCL is presently engaged inter alia in the business of, to promote, develop, construct, own, operate, distribute and maintain 66KV and below voltage class electrification, distribution, electric supply lines or distribution system. 6.7.3. NER II Transmission Limited NER II Transmission Limited has been incorporated as a Special Purpose Vehicle as a wholly owned subsidiary of REC Transmission Projects Company Limited on April 21, 2015 to undertake activities for transmission systems relating to a NER System Strengthening Scheme– II(B) & V. A two stage Bidding process featuring separate Request for Qualification (RfQ) and Request for Proposal (RfP) has been adopted in accordance with tariff based competitive bidding guidelines of Ministry of Power, GoI for selection of developer as Transmission Service Provider. The RfQ of the project was issued on November 27, 2015. Five bidders have participated at the RFQ stage and all five have qualified to participate in next stage of bidding i.e. RFP. The RFP for the project has been issued w.e.f September 15, 2016 and the bidding process is expected to conclude during FY 2016-17. 6.7.4 Dinchang Transmission Limited Dinchang Transmission Limited has been incorporated as a Special Purpose Vehicle as a wholly owned subsidiary of REC Transmission Projects Company Limited December 2, 2015 as transmission service provider for Transmission system for Phase-I Generation Projects in Arunachal Pradesh. A two stage Bidding process featuring separate Request for Qualification (RFQ) and Request for Proposal (RFP) has been adopted in accordance with tariff based competitive bidding guidelines of Ministry of Power, GoI for selection of developer as Transmission Service Provider. The RfQ of the project was issued on December 4, 2015. Five bidders have participated at the RFQ stage and all five bidders have qualified to participate in next stage of bidding i.e. RFP. The RFP for the project has been issued w.e.f April 13, 2016 and the bidding process is expected to conclude during FY 2016-17.
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SECTION VII OUR MANAGEMENT
7.1. DETAILS OF THE BOARD Under our Articles of Association, we are required to have not less than three directors and not more than fifteen directors. We currently have seven directors out of which three are Executive Directors including the Chairman and Managing Director and one is Government Nominee Director and three are Part time Non Official Independent Directors. The following table sets forth details regarding our Board as on the date of this Private Placement Offer Letter (as on December 26, 2016).
Name, Father‟s Name, Designation, Occupation, DIN, Age and Nationality
Residential Address
Director of the Company Since
Other Directorships Appointment / Resignation
Shri Bhagwati Prasad Pandey S/o Shri Goverdhan Pandey Chairman and Managing Director Occupation: Service DIN: 01393312 Age: 59 years Nationality: Indian
C-II/9 Tilak Lane New Delhi 110001.
October 1, 2016 REC Transmission Projects Company Limited
REC Power Distribution Company Limited
No. 46/8/2011-RE dated September 30, 2016
Shri Ajeet Kumar Agarwal S/o Late Shri Shree Gopal Agarwal Director (Finance) Occupation: Service DIN: 02231613 Age: 56 years Nationality: Indian
C-601, Plot GH-7, ShikshaNiketan Apartment, Sector 5, Vasundhara, Ghaziabad, 201012, Uttar Pradesh, India
August 1, 2012 REC Transmission Projects Company Limited
Indian Energy Exchange Limited
No. 46/9/2011-RE dated May 17, 2012
Shri Sanjeev Kumar Gupta S/o Shri Bhukan Saran Gupta Director (Technical) Occupation: Service DIN: 03464342 Age: 55 years Nationality: Indian
16-C, Nilgiri-1 Apartment, Sector 34, Noida 201307, Uttar Pradesh, India
October 16, 2015 REC Power Distribution Company Limited
REC Transmission Projects Company Limited
No. 46/14/2014-RE dated October 16, 2015
Dr. Arun Kumar Verma S/o Late Shri Siya Kant Prasad Government Nominee Director Occupation: Service
E-203, Central Government Residential Complex, Deen Dayal Upadhyay Marg, New Delhi – 110002, India
October 6, 2015 Power Finance Corporation Limited
No. 46/8/2015-RE dated October 6, 2015
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Name, Father‟s Name, Designation, Occupation, DIN, Age and Nationality
Residential Address
Director of the Company Since
Other Directorships Appointment / Resignation
DIN: 02190047 Age: 57 years Nationality: Indian Shri Arun Singh S/o Shri Vijay Narain Singh Part time Non Official (Independent) Director Occupation: Chartered Accountant DIN: 00891728 Age: 51 years Nationality: Indian
A-57, Parwana Apartments, MayurVihar, New Delhi – 110091, India
November 13, 2015
None No. 46/2/2010-RE-Vol.II (Part-IV) dated November 13, 2015
Shri Aravamudan Krishna Kumar S/o Shri K. Aravamudan Part time Non Official (Independent) Director Occupation: Retired Banker DIN: 00871792 Age: 62 years Nationality: Indian
Flat No. 1001, Block C, Fortune Towers, Madhapar, Hyderabad – 500081, India
November 13, 2015
Andhra Bank Suraksha Asset
Reconstruction Private Limited
Sathguru Catalyst Advisors Private Limited
Central Depository Services (India) Limited
No. 46/2/2010-RE-Vol.II (Part-IV) dated November 13, 2015
Prof. Tiruvallur Thattai Rammohan S/o Shri T.T. Vijayaraghavan Part time Non Official (Independent) Director Occupation: Professor DIN:00008651 Age: 60 years Nationality: Indian
House No. 306, Indian Institute of Management, Vastrapur, Ahmedabad – 380015, India
November 13, 2015
SBICAP Securities
Limited IndusInd Bank
Limited
No. 46/2/2010-RE-Vol.II (Part-IV) dated November 13, 2015
None of the current Directors of the Issuer appear in the RBI‟s defaulter list and/or ECGC default list. Corporate Governance Our Company has been complying with the requirements of Corporate Governance as prescribed under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. As on date, the composition of the Board of Directors is three (3) Executive Directors, three (3) Part-time Non-official (Independent) Directors and one (1) Government Nominee Director, thereby short of one (1) Part Time Non-official (Independent) Director/ one (1) Woman Director. Hence, our Company is required to appoint one (1) Part Time Non-official (Independent) Director / one (1) Woman Director on its Board. The Company has already requested the Ministry of Power, Government of India to expedite the appointment of one (1) Part-time Non-official Independent Director/ one (1) Woman Director, and the same is under process. As soon as appointment of one (1) Part-time Non-official Independent Director/ one (1) Woman Director is made, the Company will be in compliance with the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 relating to composition of the Board.
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Details of Changes in Directors in last 3 years:
Name DIN Designation Date of Appointment
Date of Completion of
tenure/ Resignation
Date
Reason
Dr. Devi Singh 00015681 Part time Non-official Independent Director
June10, 2011 June 09, 2014 Ceased to be a Director pursuant to a notification by MoP, GoI.
Shri Venkataraman Subramanian
00357727
Part time Non-official Independent Director
June 10, 2011 June 09, 2014 Ceased to be a Director pursuant to a notification by MoP, GoI.
Shri Prakash Thakkar
01120152 Director (Technical)
May 2, 2011 October 12, 2015
Ceased to be a Director pursuant to resignation.
Shri Rajeev Sharma 00973413 Chairman & Managing Director
November 29, 2011
October 1, 2016 Ceased to be a Director pursuant to relinquishment of charge as CMD.
Dr. Sunil Kumar Gupta
00948089 Part time Non-official Independent Director
March 16, 2012 March 15, 2015 Ceased to be a Director pursuant to a notification by the MoP, GoI.
Shri BadriNarain Sharma
01221452
Government Nominee Director
August 23, 2012 October 6, 2015
Ceased to be a Director pursuant to a notification by the MoP, GoI.
Dr.Arun Kumar Verma
02190047 Government Nominee Director
October 6, 2015 Continuing Appointment pursuant to a notification by the MoP, GoI.
Shri Sanjeev Kumar Gupta
03464342 Director (Technical)
October 16, 2015
Continuing Appointment pursuant to a notification by the MoP, GoI.
Shri Arun Singh 00891728 Part time Non Official (Independent) Director
November 13, 2015
Continuing Appointment pursuant to a notification by the MoP, GoI.
Shri Aravamudan Krishna Kumar
00871792 Part time Non Official (Independent) Director
November 13, 2015
Continuing Appointment pursuant to a notification by the MoP, GoI.
Prof. Tiruvallur Thattai Rammohan
00008651 Part time Non Official (Independent) Director
November 13, 2015
Continuing Appointment pursuant to a notification by the MoP, GoI.
Shri Bhagwati Prasad Pandey
01393312 Chairman & Managing Director
October 1, 2016 Continuing Assigned with additional charge as CMD REC pursuant to a notification by the MoP, GoI.
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SECTION VIII DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION, ETC.
8.1. INTERESTS OF OUR DIRECTORS
Except as otherwise stated in “Financial Statements – Related Party Transactions” our Company has not entered into
any contract, agreements and arrangement during the three financial years preceding the date of this Private Placement Offer Letter in which the directors are interested directly or indirectly and no payments have been made to them in respect of such contracts or agreements. All our Directors, including our Independent Director, may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof, as well as to the extent of other remuneration and reimbursem*nt of expenses payable to them. 8.2. INTEREST OF KEY MANAGERIAL PERSONS/PROMOTERS IN THE OFFER All KMPs, may be deemed to be interested to the extent of remuneration and reimbursem*nt of expenses if any payable to them, as well as to the extent of shareholding held by them in the Company. Promoter (i.e. President of India) may be deemed to be interested to the extent of shareholding held in the Company. 8.3. LITIGATION Since the Government of India is the Promoter of the Company, it is not possible to give details of litigations, legal actions or directions pending or taken by any Ministry or Department of the Government or a statutory authority against the Promoter of the Company during the last three years.
8.4. REMUNERATION OF DIRECTORS
8.4.1. Chairman and Managing Director and Whole Time Directors The following table sets forth the details of remuneration paid to the Whole Time Directors as on September 2016:
Name of the Director Salary& Allowances, Performance linked Incentive/Ex-gratia (₹)
Other Benefits (₹) Total (₹)
Shri Rajeev Sharma, CMD 35,84,371 6,09,449 41,93,820 Shri Ajeet Kumar Agarwal, Director (Finance)
29,74,571 3,29,527 33,04,098
Shri Sanjiv Kumar Gupta, Director (Technical)
28,52,516 1,02,004 29,54,520
The following table sets forth the details of remuneration paid to the Whole Time Directors during the Fiscal 2016:
Name of the Director Salary& Allowances, Performance linked Incentive/Ex-gratia (₹)
Other Benefits (₹) Total (₹)
Shri Rajeev Sharma, CMD 47,77,084 10,48,630 58,25,714 Shri Ajeet Kumar Agarwal, Director (Finance)
42,46,990 2,60,905 45,07,895
Shri Prakash Thakkar, Director (Technical) upto 12.10.2015
47,07,475 11,61,156 58,68,631
Shri Sanjiv Kumar Gupta, Director (Technical) w.e.f 16.10.2015
20,00,858 2,20,612 22,21,470
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The following table sets forth the details of remuneration paid to the Whole Time Directors during the Fiscal 2015:
Name of the Director Salary& Allowances, Performance linked
Incentive/Ex-gratia (₹) Other Benefits (₹) Total (₹)
Shri Rajeev Sharma, CMD 54,96,408 10,64,892 65,61,300
Shri Ajeet Kumar Agarwal, Director (Finance)
40,55,935 7,32,450 47,88,385
Shri Prakash Thakkar, Director (Technical)
4746923 11,18,630 58,65,553
The following table sets forth the details of remuneration paid to the Whole Time Directors during the Fiscal 2014:
Name of the Director Salary& Allowances, Performance linked
Incentive/Ex-gratia (₹) Other Benefits (₹) Total (₹)
Shri Rajeev Sharma, CMD 54,27,152 2,91,107 57,18,259
Shri Ajeet Kumar Agarwal, Director (Finance)
44,28,692 4,39,554 48,68,246
Shri Prakash Thakkar, Director (Technical)
48,16,081 1,98,140 50,14,221
8.4.2. Remuneration of Part-time Non official Directors The Part- time Non official Independent Directors do not have any material pecuniary relationship or transaction with the Company. The Board of Directors in their meeting held on May 28, 2013 decided to pay following as sitting fee to Part time Non-official Independent Directors for Board/Committee meeting:
S. No Meetings Sitting fees per Meeting (in ₹)
1 Board Meeting 20,000
2 Committee Meeting 20,000 Set forth below are the details of the sitting fees paid to Independent Directors during Fiscal 2016:
Sl. No.
Name of Part-time Non-official Independent Director Sitting Fees Total
Board Meeting
Committee Meeting
1. Shri Arun Singh 60,000 60,000 1,20,000
2. Shri A. Krishna Kumar 80,000 1,40,000 2,20,000
3. Prof. T.T. Ram Mohan 80,000 1,20,000 2,00,000
Total 5,40,000
Set forth below are the details of the sitting fees paid to Independent Directors during Fiscal 2015: S. No Name of the Part time Non official
Independent Directors Sitting fees (in ₹) Total
(in ₹) Board Meeting Committee Meeting 1 Dr. Devi Singh* 40,000 1,00,000 1,40,000 2 Shri Venkataraman Subramanian 40, 000 60,000 1,00,000 3 Dr. Sunil Kumar Gupta 1,80,000 2,60,000 4,40,000 * Dr. Devi Singh was additionally paid ₹10,000 by way of honorarium for attending meeting of Departmental Promotion Committee (DPC). Set forth below are the details of the sitting fees paid to Independent Directors during Fiscal 2014
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S. No Name of the Part time Non official Independent Directors
Sitting fees (in ₹) Total (in ₹) Board Meeting Committee Meeting
1 Dr. Devi Singh 1,60,000 3,55,000 5,15,000 2 ShriVenkataraman Subramanian 1,60,000 2,40,000 4,00,000 3 Dr. Sunil Kumar Gupta 40,000 - 40,000 Set forth below are the details of the sitting fees paid to Independent Directors during Fiscal 2013
S. No Name of the Part time Non official
Independent Directors Sitting fees (in ₹) Total
(in ₹) Board Meeting Committee Meeting
1 Dr. Devi Singh 135000 240000 375000
2 ShriVenkataraman Subramanian 135000 150000 285000
3 Dr. Sunil Kumar Gupta 105000 30000 135000
4 Dr.GovindaMarapalliRao* 120000 135000 255000 * Dr.GovindaMarapalliRao ceased to be Director pursuant to a Presidential Notification No. 10/(2)-B(S)/2012 dated January 02,
2013w.e.f. February 05, 2013 8.5. Relationship with other Directors
None of the Directors of the Company are, in any way, related to each other. 8.6. RELATED PARTY TRANSACTIONS Related party transactions entered during the last 3 financial years immediately preceding the year of circulation of this Private Placement Offer Letter including with regard to loans made or guarantees given or securities provided: FY 2015-16, 2014-15 and FY 2013-14: Details of amount due from/ to the related parties:
(₹ in Crores)
Particulars As at 31.03.2016 As at 31.03.2015 As at 31.03.2014
Long-term Debt RECTPCL 60.00 60.00 60.00 RECPDCL 10.44 7.00 7.00 Key Managerial Personnel 0.10 0.17 0.08
Loans & Advances RECTPCL 0.22 2.04 3.32 RECPDCL 0.73 - 0.31 Key Managerial Personnel 0.83 0.29 0.09
Other Current Liabilities RECPDCL 5.37 2.27 2.57 RECTPCL - 1.05 - Details of Transactions with the related parties:
(₹ in Crores) Particulars As at
31.03.2016 As at
31.03.2015 As at
31.03.2014 Long Term Debt - Amount Invested RECTPCL - - 25.00 RECPDCL 3.44 - 7.00 Key Managerial Personnel 0.01 - 0.04 Loans & Advances Key Managerial Personnel 0.53 0.04 0.09 Sale of Fixed Assets RECPDCL 0.01 - 0.05
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Particulars As at 31.03.2016
As at 31.03.2015
As at 31.03.2014
Investment in Share Capital (including applied for)
EESL 124.00 - - Disbursem*nt from Subsidy/ Grant Received from Govt. of India
RECPDCL 6.90 - - Dividend from Subsidiaries RECTPCL 9.51 0.10 0.10 RECPDCL 0.50 0.25 0.05 Interest Income - Loans & Advances RECTPCL - - 0.34 Key Managerial Personnel 0.04 0.06 0.01 Apportionment of Employee Benefit and Other Expenses
RECTPCL 2.35 2.58 4.96 RECPDCL 4.32 2.20 3.04 Finance Cost Interest Paid to RECTPCL 4.70 4.70 2.95 Interest Paid to RECPDCL 0.64 0.54 0.10 Interest Paid to Key Managerial Personnel 0.01 0.01 - Employee Benefits Expense - Managerial Remuneration 2.33 1.91 1.56 CSR Expenses RECPDCL 91.77 19.04 0.17 EESL 0.28 1.59 3.98 Other Expenses RECPDCL 2.22 7.31 6.30 8.7. DETAILS OF ANY INSPECTIONS/INVESTIGATION/INQUIRY CONDUCTED UNDER
COMPANIES ACT, 2013 AND PREVIOUS COMPANY LAW DURING THE LAST THREE YEARS AGAINST THE COMPANY OR ITS SUBSIDIARIES
NIL
8.8. FRAUDS COMMITTED AGAINST COMPANY
NIL
8.9. DETAILS OF ANY INQUIRY, INSPECTIONS OR INVESTIGATIONS INITIATED OR
CONDUCTED UNDER THE COMPANIES ACT OR ANY PREVIOUS COMPANY LAW IN THE
LAST THREE YEARS IMMEDIATELY PRECEDING THE YEAR OF CIRCULATION OF
PRIVATE PLACEMENT OFFER LETTER AGAINST THE COMPANY AND ITS
SUBSIDIARIES
There has been no inquiry, inspection or investigation initiated or conducted against the Company or its subsidiaries under the Companies Act or any previous company law in the last three years immediately preceding the year of circulation of Private Placement Offer Letter. Further there was no prosecution filed, fines imposed, compounding of offences against the Company or its subsidiaries in the last three years immediately preceding the year of circulation of Private Placement Offer Letter.
8.10. DETAILS OF DEFAULT(S) AND/OR DELAY(S) IN PAYMENTS OF ANY KIND OF STATUTORY DUES, DEBENTURES/ BONDS/ DEBT SECURITIES AND INTEREST
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THEREON, DEPOSITS AND INTEREST THEREON, LOANS FROM ANY BANK OR FINANCIAL INSTITUTION AND INTEREST THEREON AND OTHER FINANCIAL INDEBTEDNESS INCLUDING CORPORATE GUARANTEE ISSUED BY THE COMPANY. 8.10.1. The Issuer has not defaulted on payment of any kind of statutory dues to the Government of
India, State Government(s), statutory/ regulatory bodies, authorities, departments etc., since inception.
8.10.2. The main constituents of the Issuer‟s borrowings are generally in form of
debentures/bonds/debt securities, commercial paper, medium term notes (“MTNs”), external commercial borrowings (“ECBs”), loans from banks and financial institutions, assistance from multilateral and bilateral financing agencies etc. In respect of such borrowings, the Issuer certifies that:
(i) it has serviced all the principal and interest liabilities on all its borrowings on time
and there has been no instance of delay or default since inception; and
(ii) it has not affected any kind of roll over or restructuring against any of its borrowings in the past.
8.10.3. The Issuer has not defaulted on any of its payment obligations arising out of any corporate
guarantee issued by it to any counterparty including its subsidiaries, joint venture entities, group companies etc. in the past.
8.11. DETAILS OF ACTS OF MATERIAL FRAUDS COMMITTED AGAINST THE COMPANY IN
THE LAST THREE YEARS, IF ANY, AND IF SO, THE ACTION TAKEN BY THE COMPANY
There has been no act of material fraud committed against the Company in the last three years immediately preceding the year of circulation of Private Placement Offer Letter.
8.12. OUTSTANDING BORROWINGS/DEBT SECURITIES ISSUED FOR CONSIDERATION
OTHER THAN CASH, WHETHER IN WHOLE OR PART, AT A PREMIUM OR DISCOUNT, OR IN PURSUANCE OF AN OPTION
Other than and to the extent mentioned elsewhere in the Private Placement Offer Letter, the Issuer has not issued any debt securities or agreed to issue any debt securities or availed any borrowings for a consideration other than cash, whether in whole or in part, at a premium or discount or in pursuance of an option since inception.
8.13 AUDITORS‟ QUALIFICATIONS
Details with respect to qualifications, reservations and adverse remarks of the auditors of the Company in the last five financial years immediately preceding the year of circulation of Private Placement Offer Letter and their impact on the financial statements and financial position of the Company and the corrective steps taken and proposed to be taken by the Company for each of the said qualifications, reservations and adverse remarks are given as under:
Financial Year Auditors‟ qualifications, reservations and adverse remarks
2015-16 Nil
2014-15 Nil
2013-14 Nil
2012-13 Nil
2011-12 Nil
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SECTION IX MANAGEMENT‟S PERCEPTION OF RISK FACTORS
MANAGEMENT PERCEPTION OF RISK FACTOR The Investor should carefully consider all the information in this Private Placement Offer Letter, including the risks and uncertainties described below before making an investment in the Bonds. The risks and uncertainties described in this section are not the only risks that we currently face. Additional risks and uncertainties not known to us or that we currently believe to be immaterial may also have an adverse effect on our business, prospects, results of operations and financial condition. RISK RELATING TO BUSINESS OR INDUSTRY 1. Our business depends upon policies and support provided by GoI. We are also regulated by other laws
i.e. Companies Act, 2013, guidelines by RBI, SEBI, stock exchanges and other applicable laws. GoI may withdraw its support, tax incentives etc. and can come up with the policies/regulations/laws which may be inconsistent with our business objectives. Any such adverse change in policies of the GoI may affect our business. Also, as a majority stake holder and Promoter, GoI could require us to take actions designed to serve the public interest in India and not necessarily to maximize our profits.
2. Our competitive efficiency depends on our capacity to maintain low cost of funds. Any increase in cost of funds will adversely affect our business. Adverse change in exchange rates on account of our foreign currency borrowings and volatility of interest rates both in International and Domestic Debt Markets may lead to increase in the cost of funds.
3. Any negative trends or financial difficulties, particularly among the borrowers and borrower groups to whom we have the greatest exposure, including SEBs and SPUs, could increase the level of NPAs in our portfolio and that may make us unable to service our outstanding indebtedness. SEBs which were our borrowers and have been restructured may not have transferred liabilities related with loans to new entity, which may affect our ability to enforce the applicable provisions of the original agreement.
4. We may face potential liquidity risks due to varying periods over which our assets and liabilities mature.
5. We are involved in large number of litigations and any adverse decision in these cases may affect our financial conditions.
6. We may not have obtained sufficient security and collateral from our borrowers, or we may not be able to recover or enforce, or there may be a delay in recovering or enforcing, the expected value from any security and collateral which could have a material adverse effect on our business, financial condition and results of operations.
7. The escrow account mechanism for the payment obligations of our state sector borrowers may not be effective, which may reduce our recourse in the event of defaulted loans and could have a material adverse effect on our business, financial condition and results of operations.
8. We have granted loans to the private sector on a non-recourse or limited recourse basis, which may increase the risk of non-recovery and could expose us to significant losses.
9. Our Directors may have interests in companies/entities similar to ours, which may result in a conflict of interest that may adversely affect future financing opportunity referrals and there can be no assurance that these or other conflicts of interest will be resolved in an impartial manner.We have entered and may enter into certain transactions with related parties, which may not be on an arm‟s length basis or
may lead to conflicts of interest.
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32 32
10. We are subject to restrictive covenants, in the agreements entered into with certain banks and financial institutions for our borrowings, like to maintain credit ratings, financial ratios etc. Such restrictive covenants may restrict our operations or ability to expand and may adversely affect our business. Further non-compliance by our borrowers to comply with terms and conditions like security and insurance etc. will affect our ability to recover the loan.
11. Power projects carry various project specific and general risk, which are beyond control of REC including non conversion of letter of assurance/ MoU by coal suppliers into binding fuel supply agreement, delays in development of captive coal mines, adverse changes in demand for, or the price of, power generated or distributed by the projects to which we lend, the willingness and ability of consumers to pay for the power produced by projects to which we lend, increased cost due to environmental changes etc. Any adverse change in such conditions may affect our business.
12. We have been granted certain exemption by various authorities like RBI etc. Withdrawal of such exemptions may affect our competitive strength.
13. We may not be in compliance with certain regulations like corporate governance etc. and the same may result in imposition of penalties on us.
14. With the computerization of the accounting, payroll, human resource systems and other areas of our Company, there is every possibility of cybercrimes and frauds related to hacking of internal systems, possibility of manual intervention which may lead to destruction of our data.
RISKS RELATING TO INVESTMENT IN THE BONDS 1. There has been only limited trading in these Bonds. Further, there is no guarantee that these bonds will
be listed on the stock exchanges in a timely manner or at all. 2. Our ability to pay interest and redemption depends on variety of factors including our financial
conditions, Indian and global market conditions, event of bankruptcy, winding up and liquidation. We cannot assure you of payment of principal amount or interest in a timely manner or at all.
3. No Debenture Redemption Reserve is envisaged against the Bonds being issued under the terms of this
Private Placement Offer Letter. In absence of Debenture Redemption Reserve investor may find it difficult to recover their money.
4. Any down grading in rating of bonds will affect the prices of these Bonds. EXTERNAL RISK FACTOR 1. A slow- down in economic growth of India, shortages in the supply of crude oil, natural gas or coal,
political instability, labour unrest, strikes, or changes in the government, international financial regulations, natural calamity, act of terrorism, war, riot etc. may affect our business. Any adverse change in such conditions may result in difficulties in obtaining funding on attractive terms.
2. Any adverse revisions to India‟s sovereign credit ratings for domestic and international debt by credit
rating agencies may adversely impact the interest rates and other commercial terms at which such financing is available to us.
3. The Indian capital market is developing and maturing at good pace and the same may cause a shift in the pattern of power sector financing. In case our borrowers start directly accessing the market same may affect our business.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
33 33
SECTION X CAPITAL STRUCTURE AND FINANCIAL POSITION OF THE ISSUER
10.1. CAPITAL STRUCTURE 10.1.1. The equity share capital of our Company, as on September 30, 2016, is set forth below:
(₹incrores, except share data) Aggregate value at nominal value
A) AUTHORISED SHARE CAPITAL
500,00,00,000 Equity Shares of face value of ₹10/- each 5,000.00
B) ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL
197,49,18,000 Equity Shares of face value of ₹10/- each fully paid up 1974.92
C) SECURITIES PREMIUM ACCOUNT 3223.72
Notes: Since the present offer comprises of issue of non-convertible debt securities, it shall not affect the paid-up equity share capital or share premium account of the Company after the offer. 10.1.2. Changes in the Capital Structure for last five years There is no change in the capital structure of the Company as on September 30, 2016, for the last five years other than as mentioned below. 10.1.3. Share Capital History
Date of Issue/
allotment
No. of equity
shares of our
Company
Face Value
(₹)
Issue price (₹)
Nature for allotment
Consideration in Cash/ other than
cash
CumulativeShare Premium
Equity Share
Capital (₹)
Cumulative Equity Share
Capital (₹)
October 7, 1969
2,000 1,000 1,000 Initial subscription(1)
Cash Nil 2,000,000 2,000,000
January 30, 1970
28,000 1,000 1,000 Further issue Cash Nil 28,000,000 30,000,000
December 2, 1970
60,000 1,000 1,000 Further issue Cash Nil 60,000,000 90,000,000
April 30, 1971
20,000 1,000 1,000 Further issue Cash Nil 20,000,000 110,000,000
January 28, 1972
10,000 1,000 1,000 Further issue Cash Nil 10,000,000 120,000,000
August 28, 1972
80,000 1,000 1,000 Further issue Cash Nil 80,000,000 200,000,000
September 27, 1973
70,000 1,000 1,000 Further issue Cash Nil 70,000,000 270,000,000
March 23, 1974
40,000 1,000 1,000 Further issue Cash Nil 40,000,000 310,000,000
October 31, 1974
100,000 1,000 1,000 Further issue Cash Nil 100,000,000 410,000,000
February 20, 1975
90,000 1,000 1,000 Further issue Cash Nil 90,000,000 500,000,000
March 8, 1976
50,000 1,000 1,000 Further issue Cash Nil 50,000,000 550,000,000
August 17, 1976
50,000 1,000 1,000 Further issue Cash Nil 50,000,000 600,000,000
July 30, 1977
70,000 1,000 1,000 Further issue Cash Nil 70,000,000 670,000,000
September 4, 1978
100,000 1,000 1,000 Further issue Cash Nil 100,000,000 770,000,000
July 25, 1979
100,000 1,000 1,000 Further issue Cash Nil 100,000,000 870,000,000
April 23, 1980
40,000 1,000 1,000 Further issue Cash Nil 40,000,000 910,000,000
August 23, 1980
15,000 1,000 1,000 Further issue Cash Nil 15,000,000 925,000,000
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
34 34
Date of Issue/
allotment
No. of equity
shares of our
Company
Face Value
(₹)
Issue price (₹)
Nature for allotment
Consideration in Cash/ other than
cash
CumulativeShare Premium
Equity Share
Capital (₹)
Cumulative Equity Share
Capital (₹)
September 22, 1980
75,000 1,000 1,000 Further issue Cash Nil 75,000,000 1,000,000,000
July 27, 1981
100,000 1,000 1,000 Further issue Cash Nil 100,000,000 1,100,000,000
May 10, 1982
16,600 1,000 1,000 Further issue Cash Nil 16,600,000 1,116,600,000
August 16, 1982
83,400 1,000 1,000 Further issue Cash Nil 83,400,000 1,200,000,000
May 28, 1983
16,600 1,000 1,000 Further issue Cash Nil 16,600,000 1,216,600,000
August 3, 1983
83,400 1,000 1,000 Further issue Cash Nil 83,400,000 1,300,000,000
August 17, 1984
110,000 1,000 1,000 Further issue Cash Nil 110,000,000 1,410,000,000
May 29, 1985
30,000 1,000 1,000 Further issue Cash Nil 30,000,000 1,440,000,000
August 6, 1985
60,000 1,000 1,000 Further issue Cash Nil 60,000,000 1,500,000,000
December 17, 1985
110,000 1,000 1,000 Further issue Cash Nil 110,000,000 1,610,000,000
May 21, 1986
40,000 1,000 1,000 Further issue Cash Nil 40,000,000 1,650,000,000
July 16, 1986
220,000 1,000 1,000 Further issue Cash Nil 220,000,000 1,870,000,000
June 8, 1987
47,000 1,000 1,000 Further issue Cash Nil 47,000,000 1,917,000,000
August 6, 1987
239,000 1,000 1,000 Further issue Cash Nil 239,000,000 2,156,000,000
May 27, 1988
53,300 1,000 1,000 Further issue Cash Nil 53,300,000 2,209,300,000
July 30, 1988
266,700 1,000 1,000 Further issue Cash Nil 266,700,000 2,476,000,000
June 14, 1989
58,300 1,000 1,000 Further issue Cash Nil 58,300,000 2,534,300,000
July 20, 1989
291,700 1,000 1,000 Further issue Cash Nil 291,700,000 2,826,000,000
November 15, 1990
300,000 1,000 1,000 Further issue Cash Nil 300,000,000 3,126,000,000
January 28, 1991
70,000 1,000 1,000 Further issue Cash Nil 70,000,000 3,196,000,000
May 27, 1991
30,000 1,000 1,000 Further issue Cash Nil 30,000,000 3,226,000,000
August 21, 1991
200,000 1,000 1,000 Further issue Cash Nil 200,000,000 3,426,000,000
November 27, 1991
200,000 1,000 1,000 Further issue Cash Nil 200,000,000 3,626,000,000
June 11, 1992
65,000 1,000 1,000 Further issue Cash Nil 65,000,000 3,691,000,000
September 17, 1992
210,000 1,000 1,000 Further issue Cash Nil 210,000,000 3,901,000,000
June 18, 1993
190,000 1,000 1,000 Further issue Cash Nil 190,000,000 4,091,000,000
September 10, 1993
295,000 1,000 1,000 Further issue Cash Nil 295,000,000 4,386,000,000
February 23, 1994
40,000 1,000 1,000 Further issue Cash Nil 40,000,000 4,426,000,000
August 23, 1994
200,000 1,000 1,000 Further issue Cash Nil 200,000,000 4,626,000,000
November 22, 1994
240,000 1,000 1,000 Further issue Cash Nil 240,000,000 4,866,000,000
August 25, 1995
240,000 1,000 1,000 Further issue Cash Nil 240,000,000 5,106,000,000
September 13, 1995
240,000 1,000 1,000 Further issue Cash Nil 240,000,000 5,346,000,000
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
35 35
Date of Issue/
allotment
No. of equity
shares of our
Company
Face Value
(₹)
Issue price (₹)
Nature for allotment
Consideration in Cash/ other than
cash
CumulativeShare Premium
Equity Share
Capital (₹)
Cumulative Equity Share
Capital (₹)
August 27, 1996
370,000 1,000 1,000 Further issue Cash Nil 370,000,000 5,716,000,000
November 21, 1996
110,000 1,000 1,000 Further issue Cash Nil 110,000,000 5,826,000,000
July 31, 1997
170,000 1,000 1,000 Further issue Cash Nil 170,000,000 5,996,000,000
September 5, 1997
310,000 1,000 1,000 Further issue Cash Nil 310,000,000 6,306,000,000
June 29, 1998
160,000 1,000 1,000 Further issue Cash Nil 160,000,000 6,466,000,000
September 4, 1998
340,000 1,000 1,000 Further issue Cash Nil 340,000,000 6,806,000,000
December 14, 2000
500,000 1,000 1,000 Further issue Cash Nil 500,000,000 7,306,000,000
March 13, 2002
500,000 1,000 1,000 Further issue Cash Nil 500,000,000 7,806,000,000
The face value of equity shares of our Company were split from a face value of ₹ 1,000 per equity share to ₹10 per equity share pursuant to aresolution of our shareholdersdated September 27, 2002. March 5, 2008
78,060,000
10 105 Initial public offering
Cash *** 780,600,000 8,586,600,000
March 5, 2010
128,799,000 10 (193-215)
Further public offering
Cash *** 1,287,990,000 9,874,590,000
September 30, 2016
98,74,59,000 10 NIL Bonus shares -- -- 987,45,90,000 1974,91,80,000
Our Company has not made any issue of Equity Shares during the preceding one year from the date of this Private Placement Offer Letter.
10.1.4. Our Shareholding Pattern The table below represents the shareholding pattern of our Company as SEBI (Listing Obligation and Disclosure Requirements), 2015, as on September 30, 2016:
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
36 36
Table I - Summary Statement holding of specified securities Category Category of
Share- holder No of
Share- holders
No of fully paid up
equity shares held
No of Partly
paid-up equity shares held
No of Shares Under- lying
Depository Receipts
Total No of Shares Held
(VII) = (IV)+(V)+
(VI)
Share holding as
a % of total no of
shares (As a % of (A+B+C2))
Number of Voting Rights held in each class of securities
No of Shares Under- lying
Outstand- ing
convertible securities (Including Warrants)
Share- holding as a %
assuming full
conversion of
convertible Securities
(as a percentage of diluted
share capital)
Number of Locked in
Shares
Number of Shares
pledged or otherwise
encumbered
Number of equity shares
held in de- materialized
form
No of Voting Rights Total as a %
of (A+B+C)
No. As a % of total Shares held
No. As a % of total Shares held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
(A) Promoter & Promoter Group
1 598767680 0 0 598767680 60.64 598767680 0 598767680 60.64 0 60.64 0 0.00 0 0.00 598767680
(B) Public 266420 388691320 0 0 388691320 39.36 388691320 0 388691320 39.36 0 39.36 0 0.00 NA NA 388667779 (C) Non
Promoter-Non Public
(C1) Shares underlying DRs
0 0 0 0 0 NA 0 0 0 0.00 0 NA 0 0.00 NA NA 0
(C2) Shares held by Employes Trusts
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
Total: 266421 987459000 0 0 987459000 100.00 987459000 0 987459000 100.00 0 100.00 0 0.00 0 0.00 987435459
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
37 37
Table II - Statement showing shareholding pattern of the Promoter and Promoter Group Category
Category & Name of the Shareholder
PAN
No of Share- holders
No of fully paid up equity shares held
No of Partly paid-
up equity shares held
No of Shares Under-lying
Deposi-tory
Receipts
Total No of Shares
Held (IV+V+
VI)
Shareholding as a % of total no of shares
(calculated as per SCRR, 1957
(VIII) As a % of
(A+B+C2
Number of Voting Rights held in each class of securities
No of Shares Under-lying
Outstan-ding
convert-tible
securities (Inclu-
ding War-rants)
Shareholding as a % assuming
full conversion
of convertible Securities
(as a percentage of diluted
share capital)
(VII)+(X) As a % of (A+B+C2)
Number of Locked in Shares
Number of Shares
pledged or otherwise encumber-
red
Number of equity shares
held in de-materialized
form
No of Voting Rights Total as a % of
(A+B+C)
No. As a % of total Shares held
No. As a % of total Shares
held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
(1) Indian
(a)
Individuals/ Hindu undivided Family
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
(b)
Central Government/State Government(s)
1 598767680 0 0 598767680 60.64 598767680 0 598767680 60.64 0 60.64 0 0.00 0 0.00 598767680
PRESIDENT OF INDIA
EXEMPT CATG
1 598767680 0 0 598767680 60.64 598767680 0 598767680 60.64 0 60.64 0 0.00 0 0.00 598767680
(c) Financial Institutions/Banks
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
(d) Any Other 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
Sub-Total (A)(1) 1 598767680 0 0 598767680 60.64 598767680 0 598767680 60.64 0 60.64 0 0.00 0 0.00 598767680
(2) Foreign
(a)
Individuals (Non-Resident Individuals/Foreign Individuals
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
(b) Government 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
(c) Institutions 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
38 38
Category
Category & Name of the Shareholder
PAN
No of Share- holders
No of fully paid up equity shares held
No of Partly paid-
up equity shares held
No of Shares Under-lying
Deposi-tory
Receipts
Total No of Shares
Held (IV+V+
VI)
Shareholding as a % of total no of shares
(calculated as per SCRR, 1957
(VIII) As a % of
(A+B+C2
Number of Voting Rights held in each class of securities
No of Shares Under-lying
Outstan-ding
convert-tible
securities (Inclu-
ding War-rants)
Shareholding as a % assuming
full conversion
of convertible Securities
(as a percentage of diluted
share capital)
(VII)+(X) As a % of (A+B+C2)
Number of Locked in Shares
Number of Shares
pledged or otherwise encumber-
red
Number of equity shares
held in de-materialized
form
No of Voting Rights Total as a % of
(A+B+C)
No. As a % of total Shares held
No. As a % of total Shares
held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
(d) Foreign Portfolio Investor
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
(e) Any Other 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
Sub-Total (A)(2) 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 0 0.00 0
Total Shareholding of Promoter and Promoter Group (A)=(A)(1)+(A)(2)
1 598767680 0 0 598767680 60.64 598767680 0 598767680 60.64 0 60.64 0 0.00 0 0.00 598767680
Details of Shares which remain unclaimed may be given hear along with details such as number of shareholders, outstanding shares held in demat/unclaimed suspense account, voting rights which are frozen etc Note:
(1) PAN would not be displayed on website of Stock Exchange(s). (2) The term "Encumbrance" has the meaning as assigned under regulation 28 (3) of SEBI (Substantial Acquisition of of Shares and Takeovers) regulations, 2011.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
39 39
Table III - Statement showing shareholding pattern of the Public shareholder Category
Category & Name of the Shareholder
PAN
No of Shareholders
No of fully paid up
equity shares held
No of Partly
paid-up equity shares held
No of Shares
Underlying Depository
Receipts
Total No of Shares
Held (IV+V+VI)
Share holding as a % of total no of
shares (A+B+
C2)
Number of Voting Rights held in each class of securities
No of Shares
Underlying
Outstan-ding
convert-tible
secure-ties
(Inclu-ding War-rants)
Shareholding as a
% assuming
full conver-sion of conver-
tible Securi-
ties (as a percentag
e of diluted share
capital)
Number of Locked in
Shares
Number of Shares
pledged or otherwise
encumbered
Number of equity shares
held in dematerialized
form No of Voting Rights Total
as a % of
(A+B+C)
No. As a % of total
Shares held
No. As a % of total Shares
held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
(1) Institutions (a) Mutual Funds 38 24659117 0 0 24659117 2.50 24659117 0 24659117 2.50 0 2.50 0 0.00 NA NA 24659117
HDFC TRUSTEE COMPANY LIMITED-HDFC EQUITY FUND
AAATH1809A
6 16630769 0 0 16630769 1.68 16630769 0 16630769 1.68 0 1.68 0 0.00 NA NA 16630769
(b) Venture Capital Funds
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
(c) Alternate Investment Funds
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
(d) Foreign Venture Capital Investors
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
(e) Foreign Portfolio Investors
316 162971517 0 0 162971517 16.50 162971517 0 162971517 16.50 0 16.50 0 0.00 NA NA 162971517
(f) Financial Institutions/Banks
21 7465741 0 0 7465741 0.76 7465741 0 7465741 0.76 0 0.76 0 0.00 NA NA 7465741
(g) Insurance Companies
22 84376726 0 0 84376726 8.54 84376726 0 84376726 8.54 0 8.54 0 0.00 NA NA 84376726
LIFE INSURANCE CORPORATION OF INDIA
AAACL0582H
17 78398021 0 0 78398021 7.94 78398021 0 78398021 7.94 0 7.94 0 0.00 NA NA 78398021
(h) Provident 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
40 40
Category
Category & Name of the Shareholder
PAN
No of Shareholders
No of fully paid up
equity shares held
No of Partly
paid-up equity shares held
No of Shares
Underlying Depository
Receipts
Total No of Shares
Held (IV+V+VI)
Share holding as a % of total no of
shares (A+B+
C2)
Number of Voting Rights held in each class of securities
No of Shares
Underlying
Outstan-ding
convert-tible
secure-ties
(Inclu-ding War-rants)
Shareholding as a
% assuming
full conver-sion of conver-
tible Securi-
ties (as a percentag
e of diluted share
capital)
Number of Locked in
Shares
Number of Shares
pledged or otherwise
encumbered
Number of equity shares
held in dematerialized
form No of Voting Rights Total
as a % of
(A+B+C)
No. As a % of total
Shares held
No. As a % of total Shares
held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
Funds/Pension Funds
(i) Any Other
FOREIGN NATIONALS
2 129100 0 0 129100 0.01 129100 0 129100 0.01 0 0.01 0 0.00 NA NA 129100
FOREIGN BANK 1 406600 0 0 406600 0.04 406600 0 406600 0.04 0 0.04 0 0.00 NA NA 406600 Sub Total (B)(1) 400 280008801 0 0 280008801 28.36 280008801 0 280008801 28.36 0 28.36 0 0.00 NA NA 280008801
(2)
Central Government/State Government(s)/President of India
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
Sub Total (B)(2) 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0 (3) Non-Institutions
(a)
i.Individual shareholders holding nominal share capital up to ₹2 lakhs
261181 48830766 0 0 48830766 4.95 48830766 0 48830766 4.95 0 4.95 0 0.00 NA NA 48807225
ii.Individual shareholders holding nominal share capital in excess of ₹ 2 Lakhs
241 25968796 0 0 25968796 2.63 25968796 0 25968796 2.63 0 2.63 0 0.00 NA NA 25968796
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
41 41
Category
Category & Name of the Shareholder
PAN
No of Shareholders
No of fully paid up
equity shares held
No of Partly
paid-up equity shares held
No of Shares
Underlying Depository
Receipts
Total No of Shares
Held (IV+V+VI)
Share holding as a % of total no of
shares (A+B+
C2)
Number of Voting Rights held in each class of securities
No of Shares
Underlying
Outstan-ding
convert-tible
secure-ties
(Inclu-ding War-rants)
Shareholding as a
% assuming
full conver-sion of conver-
tible Securi-
ties (as a percentag
e of diluted share
capital)
Number of Locked in
Shares
Number of Shares
pledged or otherwise
encumbered
Number of equity shares
held in dematerialized
form No of Voting Rights Total
as a % of
(A+B+C)
No. As a % of total
Shares held
No. As a % of total Shares
held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
(b) NBFCs Registered with RBI
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
(c) Employee Trusts 0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
(d)
Overseas Depositories (Holding DRs)(Balancing figure)
0 0 0 0 0 0.00 0 0 0 0.00 0 0.00 0 0.00 NA NA 0
(e) Any Other
BODIES CORPORATES
1670 26565310 0 0 26565310 2.69 26565310 0 26565310 2.69 0 2.69 0 0.00 NA NA 26565310
NON RESIDENT INDIAN NON REPATRIABLE
844 899336 0 0 899336 0.09 899336 0 899336 0.09 0 0.09 0 0.00 NA NA 899336
NON RESIDENT INDIAN REPATRIABLE
1811 1432924 0 0 1432924 0.15 1432924 0 1432924 0.15 0 0.15 0 0.00 NA NA 1432924
TRUSTS 36 1616235 0 0 1616235 0.16 1616235 0 1616235 0.16 0 0.16 0 0.00 NA NA 1616235
CLEARING MEMBERS
237 3369152 0 0 3369152 0.34 3369152 0 3369152 0.34 0 0.34 0 0.00 NA NA 3369152
Sub Total (B)(3) 266020 108682519 0 0 108682519 11.01 108682519 0 108682519 11.01 0 11.01 0 0.00 108658978
Total Public Shareholding (B) = (B)(1)+(B)(2)+(B)
266420 388691320 0 0 388691320 39.36 388691320 0 388691320 39.36 0 39.36 0 0.00 388667779
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
42 42
Category
Category & Name of the Shareholder
PAN
No of Shareholders
No of fully paid up
equity shares held
No of Partly
paid-up equity shares held
No of Shares
Underlying Depository
Receipts
Total No of Shares
Held (IV+V+VI)
Share holding as a % of total no of
shares (A+B+
C2)
Number of Voting Rights held in each class of securities
No of Shares
Underlying
Outstan-ding
convert-tible
secure-ties
(Inclu-ding War-rants)
Shareholding as a
% assuming
full conver-sion of conver-
tible Securi-
ties (as a percentag
e of diluted share
capital)
Number of Locked in
Shares
Number of Shares
pledged or otherwise
encumbered
Number of equity shares
held in dematerialized
form No of Voting Rights Total
as a % of
(A+B+C)
No. As a % of total
Shares held
No. As a % of total Shares
held
Class X Class Y
Total
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII) (XIII) (XIV)
(3) Details of the shareholders acting as persons in Concert including their Shareholding (No. and %) Details of Shares which remain unclaimed may be given hear along with details such as number of shareholders, outstanding shares held in demat/unclaimed suspense account, voting rights which are frozen etc No. of share holders – 266– Number of shares credited to demat/unclaimed suspense account/voting writes freezed - 21756 Note: (1) PAN would not be displayed on website of Stock Exchange(s). (2) The above format needs to be disclosed along with the name of following persons: Institutions/Non Institutions holding more than 1% of total number of shares. (3) W.r.t. the information pertaining to Depository Receipts, the same may be disclosed in the respective columns to the extent information available and the balance to be disclosed as held by custodian,
NOTE: The shareholders of REC, in its 47th AGM held on 21st September, 2016 inter-alia approved the proposal for issue of Bonus shares in the ratio 1:1 to the shareholders of the Company. Subsequently, the Bonus Issue Committee of Directors approved the allotment of Bonus shares to eligible shareholders, in its 1st Meeting held on 30th September, 2016. Considering that the credit action/dispatch of share certificates in respect of the said Bonus shares was pending as on 30th September 2016, therefore, the figures in the above table do not include Bonus shares allotted to respective shareholders.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
43
10.1.5. Except as set forth below, none of our Directors hold any Equity Shares as on September 30, 2016
1. Mr. Rajeev Sharma* - 60Equity Shares 2. Mr.Ajeet Kumar Agarwal - 242 Equity Shares 3. Mr.Sanjeev Kumar Gupta - Nil 4. Dr. Arun Kumar Verma - NIL 5. Mr. Arun Singh - NIL 6. Mr. Aravamudan Krishna Kumar - NIL 7. Mr. T.T. Ram Mohan - NIL
* Shri Rajeev Sharma has ceased to be Chairman of the Company from October 1, 2016 10.1.6. Our top ten shareholders and the number of Equity Shares held by them, as on September 30,
2016 are as follows:
S.No Name Shares % To
Equity Category
1 PRESIDENT OF INDIA 598767680 60.64% POI
2 LIFE INSURANCE CORPORATION OF INDIA 73622024 7.46% INS
3 EAST BRIDGE CAPITAL MASTER FUND LIMITED 8835880 0.89% FPI
4 HDFC TRUSTEE COMPANY LIMITED - HDFC PRUDENCE FUND
7427000 0.75% MUT
5 EASTSPRING INVESTMENTS (SINGAPORE) LIMITED A/C THE
7239829 0.73% FII
6 EASTSPRING INVESTMENTS INDIA EQUITY OPEN LIMITED 6132210 0.62% FII
7 VANGUARD EMERGING MARKETS STOCK INDEX FUND ASERIE
5857780 0.59% FII
8 HDFC TRUSTEE COMPANY LIMITED-HDFC EQUITY FUND 5644000 0.57% MUT
9 STICHTING DEPOSITARY APG EMERGING MARKETS EQUITY P
5049290 0.51% FPI
10 LIFE INSURANCE CORPORATION OF INDIA P & GS FUND 4775627 0.48% IFI
Total 723351320 73.25%
NOTE: The shareholders of REC, in its 47th AGM held on 21st September, 2016 inter-alia approved the proposal for issue of Bonus shares in the ratio 1:1 to the shareholders of the Company. Subsequently, the Bonus Issue Committee of Directors approved the allotment of Bonus shares to eligible shareholders, in its 1st Meeting held on 30th September, 2016. Considering that the credit action/dispatch of share certificates in respect of the said Bonus shares was pending as on 30th September 2016, therefore, the figures in the above table do not include Bonus shares allotted to respective shareholders.
10.1.7. List of Top ten Bondholders of the Company as on September 30, 2016:
S. No. Name Total face value amount of
bonds held in ₹ 1. LIFE INSURANCE CORPORATION OF INDIA P & GS FUND 82,47,00,00,000 2. LIFE INSURANCE CORPORATION OF INDIA 75,72,70,00,000 3. STATE BANK OF INDIA 36,35,00,00,000 4. CBT EPF-05-C-DM 21,98,10,00,000 5. COAL MINES PROVIDENT FUND ORGANISATION 20,60,80,00,000 6. HDFC STANDARD LIFE INSURANCE COMPANY LIMITED 15,29,70,00,000 7. PUNJAB NATIONAL BANK 13,63,80,00,000 8. RELIANCE INDUSTRIES LIMITED 12,80,57,20,000 9. THE STATE BANK OF INDIA EMPLOYEES PROVIDENT FUND 10,32,30,00,000 10. BIRLA SUN LIFE INSURANCE COMPANY LIMITED 9,47,22,15,040
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
44
10.1.8. No Equity Shares of the Company as on September 30, 2016, are pledged or otherwise encumbered by the Promoters.
10.1.9. The Company has not issued any Equity Shares or debt securities for consideration other than cash, whether in whole or part, since its incorporation.
10.1.10. Our Company has not undertaken any acquisition or amalgamation in the last one year prior to filing of this Private Placement Offer Letter.
10.1.11. Our Company has not undergone any reorganization or reconstruction in the last one year prior to issue of this Private Placement Offer Letter.
10.1.12. Other than debt securities issued by the Company, outstanding as on September 30, 2016 as detailed below, our Company has not issued any debt securities: • for consideration other than cash; • at a premium or a discount; and/or • in pursuance of an option.
(i) Zero Coupon Bonds:
Sr. No. Instrument Type Date of Issuance Number of
Bonds/instruments
Face Value per Bond (₹)
Discount Per Bond (₹)
1 Zero Coupon Bonds December 15, 2010 3,92,700 30,000 16,422 2 Zero Coupon Bonds February 03, 2011 89,510 30,000 17,033
(ii) Foreign Currency Bonds:
Sr. No. Instrument Type
Date of Issuance
Issue Size Issue Value
(%) Discount (%)
1. International Bonds March 07, 2012 CHF 200 million 99.932 0.068
(iii) Commercial Papers
S.No. Date of Issue/ Value Date
Number of Commercial Papers (CP/s) issued
Face Value per CP (₹)
Discount Per CP (₹)
1. September 06, 2016 54,000 5,00,000 4054 2 September 08, 2016 26,000 500000 8042 3. September 30,2016 17,000 500000 5414
(iv) Bonds issued at premium
Sr. No. Date Of Issuance/Value Date
Number of Bonds/ instrument Face Value per Bond
(₹) Premium per Bond
(₹) 1. November 29,
2012 500 1000000 1000
2. August 29,2013 13500 1000000 726 3. October 11, 2013 1500 1000000 1727 4. July 23, 2015 3000 1000000 954
10.1.13. Amount of corporate guarantees issued by the Issuer in favour of various counter parties including its
Subsidiaries, Joint Venture entities, Group Companies etc. – Nil
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
45
10.2. FINANCIAL INDEBTEDNESS (ON STANDALONE BASIS) 10.2.1. Set forth below is a brief summary of our Company‟s significant outstanding secured borrowings of
₹62786.77 crores and unsecured borrowings of ₹99472.41 crores, as on September 30, 2016 together with a brief description of certain significant terms of such financing arrangements.
(1) Secured term loans from banks and financial institutions availed by our Company
(All figures are in (₹) crores, except in percentages) Sr. No.
Name of the Lender
Loan documentation
Facility/ Amount Sanction
ed (₹crores)
Amount outstandi
ng (₹crores)
as on Septembe
r 30, 2016
Rate of interest (%)
Repayment Date/Schedule
Security
1 LIC
Term loan Agreement dated August 6, 2004
2000.00 800.00 7.35 being 48 annualized G-Sec for 10 years + 100 bps, for a period of seven days reckoned two working days prior to the date of disbursem*nt.
Repayable in 10 equal annual instalments after a moratorium of 5 years starting from October 1, 2010
The term loan is secured by a charge on the receivables of our Company, both present and future, save and except certain specific receivables hypothecated to IL&FS Trust Company Limited (“ITCL”), and
the security trustee for the charged receivables is ITSL on the basis of joint hypothecation agreement last updated on September 24, 2010.
2 LIC
Term loan Agreement dated March 24, 2004
500.00 100.00 6.231 being average 10 years‟
G-Sec for a period of seven days reckoned two working days prior to the date of disbursem*nt.
Repayable in 10 equal annual instalments after a moratorium of 5 years starting from October 1, 2008
3 LIC
Term loan Agreement dated January 29, 2004
1000.00 200.00 6.242 being average 10 years G-Sec reckoned from one week prior to the date of disbursem*nt.
Repayable in 10 equal annual instalments after a moratorium of 5 years starting from October 1, 2008
Total of Term Loans from banks and financial institutions
1100.00
(2) Unsecured loans availed by our Company Set forth below is a brief summary of our outstanding unsecured borrowings.
(All figures are in (₹) crores, except in percentages)
Sr. No.
Name of the Lender
Loan documentation
Facility/Amount
Sanctioned
(₹crores)
Amount outstandin
g, as on September
30, 2016
Rate of interest (% p.a.)
Repayment Date/ Schedule
A. Unsecured Term Loans; Nil
B. Unsecured Long term loans availed by our Company from the MoF
Nil C. Foreign Currency Borrowings
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
46
Sr. No.
Name of the Lender
Loan documentation
Facility/Amount
Sanctioned
(₹crores)
Amount outstandin
g, as on September
30, 2016
Rate of interest (% p.a.)
Repayment Date/ Schedule
1 Japan Bank for International Cooperation
Loan Agreement No. ID-P169 dated March 31, 2006 (1)
JPY 16,949 million (Revised wef August 29, 2012)
₹340.91 crores i.e. JPY 5161.38 million
0.75% 15 years tenor with a moratorium of 5 years. Repayable in semi-annual equal instalments beginning March 20, 2011 of JPY 982.34 million, and instalment on Sep 20, 2018 of JPY 638.94 million & Instalment of JPY 148.27 million each from March 20, 2019 till March 20, 2021
2 Japan Bank for International Cooperation
Loan Agreement No ID-P190 dated March 10, 2008 (1)
JPY 11,809 million (Revised wef March 31, 2016)
₹254.08 crores i.e. JPY 3846.81 million
0.65% 15 years tenor with a moratorium of 5 years. Repayable in semi-annual equal instalments beginning March 20, 2013 of JPY 995.34 million, and instalment on Sep 20, 2017 of JPY 777.11 million & Instalment of JPY 188.58 million each from March 20, 2018 till March 20, 2023
3 KfW, Frankfurt am Main^
Loan Agreement dated August 8, 2006(1)
Euro 70 million
₹137.70 crores i.e. Euro 18.42 million
3.73% 12 years tenor with a moratorium of 3 years. Repayable in 19 semi-annual instalments beginning December 30, 2009
4 KfW, Frankfurt am Main ^
Loan agreement dated March 16, 2009(1)
Euro 70 million
₹261.64 crores i.e. Euro 35.00 million
2.89% 12 years tenor with a moratorium of 3 years. Repayable in 18 semi-annual instalments beginning June 30, 2012
5 KfW, Frankfurt am Main^
Loan agreement dated March 30, 2012 (1)
Euro 100 million
₹629.49 crores i.e. Euro 84.21 million
1.86% 12 years tenor with a moratorium of 3 years. Repayable in 19 semi-annual instalments beginning June 30, 2015
6 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated March 6, 2012
JPY 19,029 million
₹1,256.87 crores i.e. JPY 19,029 million
6 Months JPY Libor plus 2.20%
5 Years Tenor, Repayable on April 10, 2017
7 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated November 22, 2013
USD 285 million
₹1899.80 crores i.e. USD 285 million
6 months USD LIBOR plus 1.50%
5 years Tenor. Repayable USD 285 Million on December 02, 2018
8 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated May 21, 2014
USD 250 million
₹1666.49 crores i.e. USD 250 million
6 months USD LIBOR plus 1.70%
5 years Tenor. Repayable USD 250 Million on May 29, 2019
9 Syndicated Unsecured Borrowings
Syndication and Amendment Agreement dated October 16, 2014
USD 400 million
₹2666.38 crores i.e. USD 400 million
6 months USD LIBOR plus 1.50%
5 years Tenor. Repayable USD 230 Million &USD 170 Million on July 24, 2019 and October 27, 2019 respectively
10 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated March 02, 2015
USD 400 million
₹2666.38 crores i.e. USD 400 million
6 months USD LIBOR plus 1.17%
5 years Tenor. Repayable USD 400 Million on March 12, 2020
11 Syndicated Syndicated USD 300 ₹1999.79 6 months USD 5 years Tenor. Repayable USD
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
47
Sr. No.
Name of the Lender
Loan documentation
Facility/Amount
Sanctioned
(₹crores)
Amount outstandin
g, as on September
30, 2016
Rate of interest (% p.a.)
Repayment Date/ Schedule
Unsecured Borrowings
Facility Agreement dated July 17, 2015
million crores i.e. USD 300 million
LIBOR plus 1.00%
300Million on July 29, 2020
12 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated September 04, 2015
USD250 million
₹1666.49 crores i.e. USD 250 million
6 months USD LIBOR plus 0.70%
3 years Tenor. Repayable USD 150 Million on September 18, 2018 and USD 100 Million on November 19, 2018.
13 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated November16, 2015
USD 300 million
₹1999.79 crores i.e. USD 300 million
6 months USD LIBOR plus 1.05%
5 years Tenor. Repayable USD 300 Million on December01, 2020
14 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated January 27, 2016
USD 250 million
₹1666.49 crores i.e. USD 250 million
6 months USD LIBOR plus 0.65%
3 years Tenor. Repayable USD 250 Million on February 05, 2019
15 Syndicated Unsecured Borrowings
Syndicated Facility Agreement dated March 11, 2016
USD 120 million
₹799.92 crores i.e. USD 120 million
6 months USD LIBOR plus 0.95%
3 years Tenor. Repayable USD 120 Million on March 21, 2019
16 International Bond
Rural Electrification Corporation Limited 3.5% Bonds 2012 – 2017 of CHF 200 million
CHF 200 million
₹1368.11 crores i.e. CHF 200 million
3.50% pa 5 Years Tenor, Repayable on March 7, 2017
Total Unsecured Loans from MoF, Foreign Banks
and other Institutions 21280.33
Total Unsecured Loans – (2) (A + B+ C) 21280.33 ** These loans were sanctioned for relending to the state governments to be used for relending to state governments/state electricity board
for rural electrification programme in the state plans under the ‘Minimum Needs Programme’. There is a rebate of 0.25% for prompt repayment or interest payments on these loans.
(1) The loan shall be utilized only for such purposes for which the facility has been granted and is secured by a guarantee provided by the Republic of India, represented by its President for the entire amount
^ Our Company has also entered into three financing agreements with KfW, dated August 8, 2006, March 16, 2009 and March 30, 2012 for a grant of Euro 500,000 each, to be utilized for strengthening the power distribution companies by capacity building measures initiated by our Company. The amount received by our Company under this agreement is not repayable except in the event that (a) certain obligations cast upon our Company are violated, or (b) the said amount is not used for the stipulated purpose(s).
(3) Secured & Unsecured Bonds issued by our Company
(All figures are in ₹crores, except in percentages)
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
A. Secured taxable bonds Set forth below is a brief summary of our secured outstanding taxable bonds.
See Below Table
1 Secured non-converti- ble redeema- ble „taxable
bonds – 2017‟ („81st Series‟) in
January 20, 2007
314.80 314.80 8.85 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. January 20,
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind)
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
48
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
the nature of debentures.
2017
2 Secured non-converti-ble redeem-able „taxable
bonds – 2017‟ („82nd Series‟) in
the nature of debentures
September 28, 2007
883.10 883.10 9.85 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. September 28, 2017
CRISIL: AAA/Stable; ICRA: LAAA; FITCH: AAA(ind)
Secured
3 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟ („83rd Series‟) in
the nature of debentures
February 28, 2008
685.20 685.20 9.07 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment.
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
4 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟
(„85thSeries‟
) in the nature of debentures.
June 13, 2008
500.00 500.00 9.68 payable annually
5 years Redeemable at par on the expiry of 10 years from the date of allotment. June 13, 2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
5 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟ („86th A Series‟)
in the nature of debentures
July 29, 2008
500.00 500.00 10.70 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. July 29, 2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
6 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟ („86th B – III Series‟) in
the nature of debentures.
August 14, 2008
432.00 432.00 10.85 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. August 14, 2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
49
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
7 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟ („87th – II Series‟)
in the nature of debentures.
September 30, 2008.
657.40 657.40 10.85 payable annually
10 years
Redeemable at par on the expiry of 10 years from the date of allotment September30,2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) A
Secured
8 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟ („87th A – III Series‟) in
the nature of debentures.
October 24, 2008
61.80 61.80 11.15payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. October 24, 2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
9 Secured non-converti-ble redeem-able „taxable
bonds – 2019‟ („88th Series‟) in
the nature of debentures
January 15, 2009
1495.00 1495.00 8.65 payable annually
10 years
Redeemable at par on the expiry of 10 years from the date of allotment. January 15, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
10 Secured non-converti-ble redeem-able „taxable
bonds – 2019‟ („90th Series‟) in
the nature of debentures
August 3, 2009
2000.00 2000.00 8.80 payable annually
10 years
Redeemable at par on the expiry of 10 years from the date of allotment. August 03, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
11 Secured non-converti-ble redeem-able „taxable
bonds – 2019‟ („90th B Series- II‟) in the
nature of debentures
September 4, 2009
868.20 868.20 8.72 payable annually
10 years
Redeemable at par on the expiry of 10 years from the date of allotment. September 04, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
12 Secured non-converti-ble redeem-able „taxable
bonds –
October 6, 2009
1040.00 1040.00 8.80, payable annually
10 years
Redeemable at par on the expiry of 10 years from the date of
CRISIL: AAA/Stable; CARE: CARE AAA;
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
50
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
2019‟ („90th C Series- II‟) in the
nature of debentures.
allotment. October 6, 2019
FITCH: AAA(ind) ICRA: LAAA
13 Secured non-converti-ble redeem-able „taxable
bonds – 2019‟ („91st Series- II‟) in the nature of debentures
November 17, 2009
995.90 995.90 8.80 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. November 17, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
14 Secured non-convertible redeem-able „taxable
bonds – 2020‟
(„92nd
Series- II‟) in the nature of debentures
January 22, 2010
945.30 945.30 8.65 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. January 22, 2020
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
15 Secured non-converti-ble redeem-able „taxable
bonds – 2016‟ („116
Series- I‟) in
the nature of debentures
October 17, 2013
430.00 430.00 9.05 payable annually
3 years Redeemable at par on the expiry of 3 years from the date of allotment. October 17, 2016
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
16 Secured non-converti-ble redeem-able „taxable
bonds – 2018‟ („116
Series- II‟) in the nature of debentures
October 17, 2013
850.00 850.00 9.24 payable annually
5 years Redeemable at par on the expiry of 5 years from the date of allotment. October 17, 2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
17 Secured non-convertible redeem-able „taxable
bonds – 2018‟ („117
Series‟) in
the nature of debentures
November 06, 2013
2878.00 2878.00 9.38 payable annually
5 years Redeemable at par on the expiry of 5 years from the date of allotment. November 06, 2018
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
51
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
18 Secured non-convertible redeem-able „taxable
bonds – 2019‟ („118
Series‟) in
the nature of debentures
January 03, 2014
1655.00 1655.00 9.61 payable annually
5 years Redeemable at par on the expiry of 5 years from the date of allotment. January 03, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
19 Secured non-converti-ble redeem-able „taxable
bonds – 2019‟ („119
Series‟) in
the nature of debentures
February 05, 2014
2090.00 2090.00 9.63 payable annually
5 years Redeemable at par on the expiry of 5 years from the date of allotment. February 05, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
20 Secured non-convertible redeem-able „taxable
bonds – 2017‟ („120
Series‟) in
the nature of debentures
March 10, 2014
1100.00 1100.00 9.67 payable annually
3 years Redeemable at par on the expiry of 3 years from the date of allotment. March 10, 2017
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
21 Secured non-convertible redeem-able „taxable
bonds – 2017‟ („121
Series‟) in
the nature of debentures
March 26, 2014
1600.00 1600.00 9.52 payable annually
3 years Redeemable at par on the expiry of 3 years from the date of allotment. March 26, 2017
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
22 Secured non-convertible redeem-able „taxable
bonds – 2019‟ („122
Series‟) in
the nature of debentures
June 18, 2014
1700.00 1700.00 9.02 payable annually
5 years Redeemable at par on the expiry of 5 years from the date of allotment. June 18, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
23 Secured non-convertible redeem-able „taxable
non-priority sector bonds –(„123
Series
July 17, 2014
₹ 1515 ₹ 1515 9.40 payable annually
7 years Redeemable at par on the expiry of 7 years from the date of allotment. July 17, 2021
CRISIL: AAA/STABLE; CARE:CARE AAA; ICRA: [ICRA] AAA;
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
52
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
Tranche 1‟)
in the nature of debentures
IRPL: IND AAA
25 Secured non-convertible redeem-able „taxable
non-priority sector bonds –(„123
Series Tranche 3‟)
Option I in the nature of debentures
August 25, 2014
₹ 1275 ₹ 1275 9.25 payable annually
3 years Redeemable at par on the expiry of 3 years from the date of allotment. August 25, 2017
CRISIL: AAA/STABLE; CARE:CARE AAA; ICRA: [ICRA] AAA; IRPL: IND AAA
Secured
26 Secured non-converti-ble redeem-able „taxable
non-priority sector bonds – („123
Series Tranche 3‟)
Option II in the nature of debentures
August 25, 2014
₹ 1955 ₹ 1955 9.34 payable annually
10 years Redeemable at par on the expiry of 10 years from the date of allotment. August 25, 2024
CRISIL: AAA/STABLE; CARE:CARE AAA; ICRA: [ICRA] AAA; IRPL: IND AAA
Secured
28 Secured non-convertible redeem-able „taxable
non-priority sector bonds – („124
Series Tranche 1‟)
in the nature of debentures
September 24, 2014
₹ 2610 ₹ 2610 9.06 payable annually
3 years Redeemable at par on the expiry of 3 years from the date of allotment. September 23, 2017
CRISIL: AAA/STABLE; CARE:CARE AAA; ICRA: [ICRA] AAA; IRPL: IND AAA
Secured
Total Secured Bonds through Private
Placement of Institutional Bond Series 31036.70
B. Capital gains tax exemption bonds under Section 54EC of the Income Tax Act Set forth below is a brief summary of our outstanding capital gains tax exemption bonds issued under Section 54EC of the IT Act, together with a brief description of certain significant terms of such financing arrangements. These bonds are not proposed to be listed on any stock exchange.
1. Secured non-convertible redeemable taxable -54 EC long
On Tap Basis
2998.26 2998.26 6.00 payable annually
3 years Redemption at par on the expiry of 3 years from the Deemed Date of Allotment. **
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind)
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
53
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
term capital gains tax exemption bonds Series IX‟
issued in Fiscal 2014
2. Secured non-convertible redeemable taxable -54 EC long term capital gains tax exemption bonds Series IX‟
issued in Fiscal 2015
On Tap Basis
5,337.782 5,337.782 6.00 payable annually
3 years Redemption at par on the expiry of 3 years from the Deemed Date of Allotment. **
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind)
Secured
3 Secured non-convertible redeemable taxable -54 EC long term capital gains tax exemption bonds Series X‟
issued in Fiscal 2016
On Tap Basis
6476.70 6476.70 6.00 payable annually
3 years Redemption at par on the expiry of 3 years from the Deemed Date of Allotment. **
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind)
Secured
4 Secured non-convertible redeemable taxable -54 EC
On Tap Basis
3188.92 3188.92 6.00 payable annually
3 years Redemption at par on the expiry of 3 years from the Deemed Date of Allotment.
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind)
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
54
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
long term capital gains tax exemption bonds Series X‟
issued in Fiscal 2017
**
Secured Capital Gains Tax Exemption Bonds U/S 54EC
18001.66
C.
Secured Tax Free Bonds under Section 10(15)(iv)(h) of the IT Act Set forth below is a brief summary of our outstanding Tax Free Bonds issued under Section 10(15)(iv)(h) of the IT Act, together with a brief description of certain significant terms of such financing arrangements. These bonds are listed on BSE and/or NSE.
1. Tax Free Secured Redeemable Non –
Convertible Bonds, in the nature of debentures.
March 27, 2012
3,000
3,000.00 Category I & II – Series I 7.93%
10 years
Redemption at par on the expiry of 10 years from the date of allotment.
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
Category I & II – Series II 8.12 %
15 years
Redemption at par on the expiry of 15 years from the date of allotment.
Category III – Series I 8.13 %
10 years Redemption at par on the expiry of 10 years from the date of allotment.
Category III – Series II 8.32 %
15 years Redemption at par on the expiry of 15 years from the date of allotment.
2. Series 2-A Tax free secured redeemable non-convertible bonds
November 21, 2012
255.00 255.00 7.21% p.a. 10 years November 21, 2022
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
3. Series 2-B Tax free
November 21,
245.00 245.00 7.38% p.a. 15 years November 21, 2027
CRISIL: AAA/ Stable;
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
55
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
secured redeemable non-convertible bond
2012 CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
4. Series 2012-13 Tranche – 1 Tax free secured redeemable non-convertible bonds
December 19, 2012
2017.35 2017.35 7.38% p.a. 15 years December 19, 2027
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
5. Series 2012-13 Tranche – 1 Ts
7.22% p.a. 10 years December 19, 2022
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
6. Series 2012-13 Tranche – 2 Tax free secured redeemable non-convertible bonds
March 25, 2013
131.06 131.06 6.88% p.a. 10 years March 25, 2023
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
7. Series 2012-13 Tranche – 2 Tax free secured redeemable non-convertible bonds
March 25, 2013
7.04% p.a. 15 years March 25, 2028
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
8. Series 3A Tax free secured redeemable non-convertible bonds
August 29, 2013
209.00 209.00 8.01% p.a. 10 years August 29, 2023
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
56
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
9. Series 3B Tax free secured redeemable non-convertible bonds
1141.00 1141.00 8.46% p.a. 15 years August 29, 2028
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
10. Series 1A - 2013-14 Tranche – 1 Tax free secured redeemable non-convertible bonds
September 24, 2013
3440.60 3440.60 8.01% 10 years September 24, 2023
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
11. Series 2A - 2013-14 Tranche – 1 Tax free secured redeemable non-convertible bonds
8.46% 15 years September 24, 2028
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
12. Series 3A - 2013-14 Tranche – 1 Tax free secured redeemable non-convertible bonds
8.37% 20 years September 24, 2033
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
13. Series 1B - 2013-14 Tranche – 1 Tax free secured redeemable non-convertible bonds
8.26% 10 years September 24, 2023
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
14. Series 2B - 2013-14 Tranche
8.71% 15 years September 24, 2028
CRISIL: AAA/ Stable; CARE:
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
57
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
– 1 Tax free secured redeem-able non-convertible bonds
CARE AAA; FITCH: AAA(ind) ICRA: LAAA
15. Series 3B -2013-14 Tranche – 1 Tax free secured redeemable non-convertible bonds
8.62% 20 years September 24, 2033
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
16. Series 4A Tax free secured redeemable non-convertible bonds
October 11, 2013
105.00 105.00 8.18% p.a. 10 years October 11, 2023
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
17. Series 4B Tax free secured redeemable non-convertible bonds
October 11, 2013
45.00 45.00 8.54% p.a. 15 years October 11, 2028
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
18. Series 1A – 2013-14 Tranche 2 Tax free secured redeemable non-convertible bonds
March 24, 2014
1059.40 1059.40 8.19% 10 years March 24, 2024
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
19. Series 2A – 2013-14 Tranche 2 Tax free secured redeemable non-
8.63% 15 Years March 24, 2029
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA:
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
58
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
convertible bonds
LAAA
20. Series 3A – 2013-14 Tranche 2 Tax free secured redeemable non-convertible bonds
8.61% 20 Years March 24, 2034
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
21. Series 1B – 2013-14 Tranche 2 Tax free secured redeemable non-convertible bonds
8.44% 10 Years March 24, 2024
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
22. Series 2B – 2013-14 Tranche 2 Tax free secured redeemable non-convertible bonds
8.88% 15 Years March 24, 2029
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
23 Series 3B – 2013-14 Tranche 2 Tax free secured redeemable non-convertible bonds
8.86% 20 Years March 24, 2034
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
24 Series 5A Tax free secured redeemable non-convertible bonds
July 23, 2015
300.00 300.00 7.17% 10 years July 23, 2035
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
59
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
25 Series 1A – 2015-16 Tranche 1 Tax free secured redeemable non-convertible bonds
November 05, 2015
700 700 6.89% 10 years November 05, 2025
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
26 Series 2A – 2015-16 Tranche 1 Tax free secured redeemable non-convertible bonds
7.09% 15 Years November 05, 2030
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
27 Series 3A – 2015-16 Tranche 1 Tax free secured redeemable non-convertible bonds
7.18% 20 Years November 05, 2035
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
28 Series 1B – 2015-16 Tranche 1 Tax free secured redeemable non-convertible bonds
7.14% 10 Years November 05, 2025
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
29 Series 2B – 2015-16 Tranche 1 Tax free secured redeemable non-convertible bonds
7.34% 15 Years November 05,2030
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
30 Series 3B – 2015-16
7.43% 20Years November 05,2035
CRISIL: AAA/ Stable;
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
60
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
Tranche 1 Tax free secured redeemable non-convertible bonds
CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Secured Tax Free Bonds 12648.41 Security Details of the Secured Borrowings – The Bond Series 81, 82, 83, 85, 86A, 86 B-III, 87-II, 87 A-III, 88, 90, 90 B-II, 90 C-II, 91-II, 92-II of Institutional
Bonds are secured by a charge on (a) mortgage of Flat no. 640, Asian Games Village, New Delhi 110 049, India and (b) pari-passu charge on the receivables of our Company, both present and future, save and except receivables hypothecated to IL&FS Trust Company Limited on the basis of joint hypothecation agreement dated September 24, 2010 in favour of IDBI Trusteeship Services Ltd.
The bond series 116-I & 116-II, 117,118,119,120,121, 122 is secured by first pari-passu charge on the book debts of the issuer both present & future which are charged to other lender/trustee and as may be agreed between the issuer & the trustee - IDBI Trusteeship Services Ltd., pursuant to the terms of debenture/bond trust cum hypothecation deed with a minimum security cover of one time of the aggregate face value of the bonds outstanding at all times.
The Bond Series 123-1, 123-3, 124-1 of Institutional Bonds and Series IX of 54EC Capital Gain Tax Exemption Bonds are secured by mortgage way of first pari-passu charge on (a) mortgage of premises at Sub Plot No. 8, TPS No 2, FP No. 584P, situated at Village Subhanpura, Distt. Vadodara and (b.) the book debts of the Issuer which are charged to other lender / trustee and as may be agreed between the Issuer and the Trustee, pursuant to the terms of the Bond Trust Deed with a minimum security cover of one time of the aggregate face value of amount of bonds outstanding at all times and amount of interest due thereon in favor of IDBI Trusteeship Services Ltd.
Tax Free Bonds (issued during FY 2011-12) are secured by first pari-passu charge on premises at Shop no. 12, Ground floor, Block no. 35, Church road, Mylapore, Chennai and hypothecation of receivables of ₹4,998.66crores of MSEDCL in favour of IL&FS Trust Co. Ltd.
Tax Free Bonds (issued during FY 2012-13 and during FY 2015-16) and Series X of 54EC Capital Gain Tax Exemption Bonds are secured by first pari-passu charge on (a) mortgage of premises at sub-plot no. 8, TPS No.2, FP No. 584P, situated at village Subhanpura, distt. Vadodara and (b) hypothecation of receivables in favour of SBI Cap Trustee Co. Ltd.
Tax Free Bonds (issued during FY 2013-14) are secured by first pari-passu charge on hypothecation of receivables in favour of SBI Cap Trustee Co. Ltd.
All the term loans are secured by a charge on the receivables of the company, both present & future, save & except certain specific receivables hypothecated to IL&FS Trust Co. Ltd. on the basis of joint hypothecation agreement last updated on Sept. 24, 2010.
D. Unsecured bonds issued by our Company Set forth below is a brief summary of certain of our other outstanding unsecured bonds. These bonds are listed on the whole sale debt market segment in the NSE/BSE.
1 „94th
Taxable non-priority sector bond‟
June 08, 2010
1250.00 1250.00 8.75 payable yearly.
15 years
June 08, 2025
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
2 „95th–I Taxable non-priority sector bond‟
July 12, 2010
200.00 200.00 8.70 payable yearly.
9 years July 12, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(Ind) ICRA:
Unsecured
-
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
61
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
LAAA 3 „95th -II
Taxable non-priority sector bond‟
July 12, 2010
1800.00 1800.00 8.75 payable yearly.
15 years July 12, 2025
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
4 „96th
Taxable non-priority sector bond‟
October 25, 2010
1150.00 1150.00 8.80 payable yearly.
10 years October 25, 2020
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
5 „97th
Taxable non-priority sector bond‟
November 29, 2010
2120.50 2120.50 8.80 payable yearly.
10 years November 29, 2020
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
6 „ZCB-I Taxable non-priority sector bond‟
December 15, 2010
533.21 at issue price
795.38 8.25 (yield) 10 years
December 15, 2020
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
7 „ZCB-II Taxable non-priority sector bond‟
February 03, 2011
116.07 at issue price
175.27 8.75 (yield) 10 years
February 03, 2021
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
8 „98th
Taxable non-priority sector bond‟
March 15, 2011
3000.00 3000.00 9.18 payable yearly.
10 years
March 15, 2021
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH:
Unsecured
-
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
62
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
AAA(ind) ICRA: LAAA
9 ‟100th
Taxable non-priority sector bond‟
July 15, 2011
1500.00 1500.00 9.63 payable yearly.
10 years July 15, 2021
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRORESA: LAAA
Unsecured
-
11 ‟101st-III Taxable non-priority sector bond‟
August 10, 2011
3171.80 3171.80 9.48 payable yearly.
10 years
August 10, 2021
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
13 ‟103rd-I Taxable non-priority sector bond‟
October 19, 2011
915.00 50.00 9.35 payable yearly.
5 years
October 19, 2016
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
14 ‟105th
Taxable non-priority sector bond‟
November 11, 2011
3922.20 3922.20 9.75 payable yearly.
10 years
November 11, 2021
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
15 ‟106th
Taxable non-priority sector bond‟
February 15, 2012
1500.00 1500.00 9.28 payable yearly.
5 years
February 15, 2017
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
16 ‟107th
Taxable non-priority sector
June 15, 2012
2378.20 2378.20 9.35% p.a. payable yearly.
10 years 10 Years June 15, 2022
CRISIL: AAA/Stable; CARE: CARE
Unsecured
-
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
63
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
bond‟ AAA; FITCH: AAA(ind)
17 ‟108th – I Taxable non-priority sector bond‟
July 20, 2012
2125.00 2125.00 9.40% p.a. payable yearly
5 years
5 Years July 20, 2017
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
18 ‟108th – II Taxable non-priority sector bond‟
July 20, 2012
960.00 960.00 9.39% p.a. payable yearly
7 years 7 Years July 20, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
19 ‟109th
Taxable non-priority sector bond‟
August 27, 2012
1734.70 1734.70 9.25% p.a. payable yearly
5 years
5 Years August 27, 2017
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
20 ‟111th– I Taxable non-priority sector bond‟
November 19, 2012
452.80 452.80 9.02% p.a. 7 years November 19, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
21 ‟111th – II Taxable non-priority sector bond‟
November 19, 2012
2211.20 2211.20 9.02% p.a. 10 years November 19, 2022
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
22 ‟112th
Taxable non-priority sector
Feb 01, 2013
1500.00 1500.00 8.70% p.a. 5 years Feb 01, 2018
CRISIL: AAA/Stable; CARE: CARE
Unsecured
-
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
64
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
bond‟ AAA; FITCH: AAA(ind) ICRA: LAAA
23 ‟113th
Taxable non-priority sector bond‟
March 08, 2013
1542.00 1542.00 8.87% p.a. 7 years March 08, 2020
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
24 ‟114th
Taxable non-priority sector bond‟
April12, 2013
4300.00 4300.00 8.82% p.a. 10 years April12, 2023
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
25 ‟115th
Taxable non-priority sector bond‟
May31, 2013
2500.00 2500.00 8.06% p.a. 10 years May31, 2020
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured (Sub-Debt)
-
26 ‟125th
Taxable non-priority sector bond‟
October 13, 2019
3000.00 3000.00 9.04% 5 years October 12, 2019
CRISIL: AAA/Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
27 ‟126th
Taxable non-priority sector bond‟
November 13, 2014
1700.00 1700.00 8.56% 5 years November 13, 2019
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
65
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
28 ‟127th
Taxable non-priority sector bond‟
December 04, 2014
1550.00 1550.00 8.44% 7 years December 04, 2021
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
29 ‟128th
Taxable non-priority sector bond‟
December 22, 2014
2250.00 2250.00 8.57% 10 years December 21, 2024
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
30 ‟129th
Taxable non-priority sector bond‟
January 23, 2015
1925.00 1925.00 8.23% 10 years January 23, 2025
CRISIL:CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
31 ‟130th
Taxable non-priority sector bond‟
February 6, 2015
2325.00 2325.00 8.27% 10 years February 6, 2025
CRISIL: CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
32 ‟131st
Taxable non-priority sector
February 23, 2015
2285.00 2285.00 8.35% 10 years February 22, 2025
CRISIL:CARE: CARE AAA; CRISIL:
Unsecured
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
66
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
bond‟ AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
33 ‟132nd
Taxable non-priority sector bond‟
March 9, 2015
700.00 700.00 8.27% 7 years March 9, 2022
CARE: CARE AAA; CARE: CARE AAA; IR&RPL: IND AAA/ Stable
Unsecured
34 ‟133nd
Taxable non-priority sector bond‟
April10, 2015
2396.00 2396.00 8.30% 10 years April 10, 2025
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
35 ‟134nd
Taxable non-priority sector bond‟
August 14, 2015
2675.00 2675.00 8.37% 05 years August 14, 2020
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
36 ‟135th
Taxable non-priority sector bond‟
September 22, 2015
2750.00 2750.00 8.36% 05 years September22, 2020
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
37 ‟136th Octob 2585.00 2585.00 8.11% 10 Years October 07, CARE:
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
67
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
Taxable non-priority sector bond‟
er 07, 2015
2025 CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
38 ‟137th
Taxable non-priority sector bond‟
December 08, 2015
2225.00 2225.00 8.05% 03 Years December 07, 2018
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
39 ‟138th
Taxable non-priority sector bond‟
February 05, 2016
2895.00 2895.00 8.28% 01 Year & 01 Month
March 04, 2017
CARE: CARE AAA; CRISIL: AAA/ Stable; ICRA: ICRA AAA; IR&RPL: IND AAA/ Stable
Unsecured
Total Un-secured Bonds through
Private Placement of Institutional Bond
Series
71600.05
E. Unsecured Infrastructure bonds issued by our Company Set forth below is a brief summary of certain of our other outstanding unsecured bonds. Some of bonds are listed on the whole sale debt market segment in the NSE
1. u/s 80CCF of IT Act 1961 Tax-able, Non-convertible Bonds.
March 31, 2011
218.73 84.51 8, 8.1 and 8.2 payable annually
10 years Redeemable at par on the expiry of 10 years with put option after 5/6/7/8/9 years from the date of allotment
CRISIL: AAA/ Stable; CARE: CARE AAA; FITCH: AAA(ind) ICRA: LAAA
Unsecured
-
2. u/s 80CCF of IT Act
February 15, 2012
157.59 157.59 8.95 and 9.15 payable annually
10 years 15 years
Redeemable at par on the expiry of 10/15 years
CRISIL: AAA/ Stable; CARE:
Unsecured
-
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
68
S. No. Nature of the Bonds
Date of Allot- ment
Total value of bonds (₹crores)
Amount outstanding,
As on September
30, 2016
Interest Coupon rate (%)
Tenor/ Period of maturity
Redemption Date/
Schedule
Credit Rating
Secured/
Unsecured
Security
1961 Tax-able, Non-convertible Bonds.
and cumulative
with buyback option after 5/7 years respectively from the date of allotment. February 15, 2022; February 15, 2027
CARE AAA; FITCH: AAA(ind) ICRA: LAAA
242.10 Total of Bonds - (3) (A to E) 133184.43
** The bonds have been issued on private placement basis and are currently listed on the „whole sale debt market segment‟ in the NSE.
10.2.2. Corporate Guarantees Our Company has not issued any Corporate Guarantee as on September 30, 2016. 10.2.3. Details of Commercial Paper Our company has Commercial Paper of Face Value ₹4850 crore outstanding as on September 30, 2016, which are maturing in October, (₹ 2700 crore), Novemeber (₹ 850 crore) and December (₹ 1300). 10.2.4. Working Capital Demand Loan from Banks Our Company has ₹ 900 crore outstanding as WCDL from banks as on September 30, 2016. 10.2.5. Short Term Loan from Banks Our Company has no outstanding short term loans from banks as on September 30, 2016. 10.2.6. Details of Rest of the Borrowings (if any including hybrid debt like FCCB, Optionally
Convertible Debentures/Preference Shares) as on September 30, 2016. Our Company has no outstanding borrowings in form of hybrid debt as on September 30, 2016. 10.3. FINANCIAL INFORMATION (ON STANDALONE BASIS)
(₹incrores)
Particulars
As on/for the year ended
September 30, 2016 (Limited
Review)
As on/for the year ended
March 31, 2016 (Audited)
As on/for the year ended
March 31, 2015 (Audited)
As on/for the year ended
March 31, 2014 (Audited)
For Financial Entities Net worth 31,777.79 28,617.76 24,857.03 20,669.46
Total Debt 1,62,077.29 1,69,106.38 1,51,024.12 1,26,240.19
of which – Non Current Maturities of Long Term Borrowing
1,30,855.17 1,38,789.43 1,31,168.32 1,10,162.30
- Short Term Borrowing 5,750.00 6,349.93 734.00 2,540.00
- Current Maturities of Long Term Borrowing
25,472.12 23,967.02 19,121.80 13,537.89
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
69
Particulars
As on/for the year ended
September 30, 2016 (Limited
Review)
As on/for the year ended
March 31, 2016 (Audited)
As on/for the year ended
March 31, 2015 (Audited)
As on/for the year ended
March 31, 2014 (Audited)
Net Fixed Assets 162.00 150.32 81.32 81.83
Non-Current Assets 1,74,323.30 1,60,362.94 1,65,547.04 1,37,673.55
Cash and Cash Equivalents 1,659.54 1,728.19 522.54 1,192.94
Current Investments 196.32 149.16 438.66 47.16
Current Assets 28,907.22 45,990.03 17,627.99 15,179.35
Current Liabilities 38,944.05 37,591.50 25,999.11 21,381.69
Asset Under Management N.A. N.A. N.A. N.A.
Off Balance Sheet Assets N.A. N.A. N.A. N.A.
Interest Income 11,645.38 23,470.66 20,072.08 16,806.39
Finance Costs 6,949.68 14,283.12 11,844.61 10,038.46
Net interest income 4,695.70 9,187.54 8,227.47 6,767.93
Provisioning & Write-offs 477.95 1,089.85 802.96 312.02
PAT 3,172.13 5,627.66 5,259.87 4,683.70
Gross NPA (%) 2.45% 2.11% 0.74% 0.33%
Net NPA (%) 1.81% 1.61% 0.54.% 0.24.%
Tier I Capital Adequacy Ratio (%) 18.22% 17.48% 16.52% 16.02%
Tier II Capital Adequacy Ratio (%) 2.80% 2.90% 3.04% 3.33%
Total Loan Assets (net) 1,95,384.89 2,00,265.02 1,79,281.49 1,48,504.24
Capital Adequacy ratio (%) 21.02% 20.38% 19.56% 19.35%
Net interest margin 4.84% 4.82% 5.01% 4.90%
Yield on Loan Assets 11.95% 12.32% 12.23% 12.18%
Cost of funds 8.18% 8.50% 8.36% 8.31%
Return on Net worth (average) 22.70 21.05% 23.11% 24.57%
Debt equity ratio (times) 5.10 5.91 6.08 6.11
Total Assets 2,03,230.52 2,06,352.97 1,83,175.03 1,52,852.90
Return on assets (average) 1.55% 2.89% 3.13% 3.31%
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
70
STANDALONE REFORMATTED STATEMENT OF ASSETS AND LIABILITIES
(₹ in crores)
Particulars Note As at As at As at As at
No. September 30, 2016 (Limited Review)
March 31,2016 March 31,2015 March 31,2014
I. EQUITY AND LIABILITIES
(1) Shareholders' Funds
(a) Share Capital A 1,974.92 987.46 987.46 987.46
(b) Reserves and Surplus B
29,802.87 27,630.30 23,869.57 19,682.00
Sub-total (1) 31,777.79 28,617.76 24,857.03 20,669.46
(2) Non-current Liabilities
(a) Long-term Borrowings C
1,30,855.17 1,38,789.43 1,31,168.32 1,10,162.30
(b) Deferred Tax Liabilties (Net)
4.72 49.75 107.32 173.69
(c) Other Long-term Liabilities D
58.71 9.50 36.16 23.52
(d) Long-term Provisions E
1,590.08 1,295.03 1,007.09 442.24
Sub-total (2) 132508.68 1,40,143.71 1,32,318.89 1,10,801.75
(3) Current Liabilities
(a) Short-term Borrowings F
5,750.00 6,349.93 734.00 2,540.00
(b) Other current liabilities G
32,615.64 30,389.52 24,811.40 18,583.73
(c) Short-term Provisions E
578.41 852.05 453.71 257.96
Sub-total (3) 38,9444.05 37,591.50 25,999.11 21,381.69 Total (1+2+3) 2,03,230.52 2,06,352.97 1,83,175.03 1,52,852.90
II. ASSETS
(1) Non-current Assets
(a) Fixed assets H (i) Tangible Assets 119.47 117.83 72.50 69.67
(ii) Intangible Assets
0.65 0.91 1.43 2.45
(iii) Capital work-in-progress
40.67 30.37 7.39 9.71
(iv) Intangible Assets under Development
1.21 1.21 - -
162.00 150.32 81.32 81.83
(b) Non-current Investments I
2,837.80 2,317.46 1,174.81 1,660.63
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
71
Particulars Note As at As at As at As at
No. September 30, 2016 (Limited Review)
March 31,2016 March 31,2015 March 31,2014
(c) Deferred Tax Assets (Net)
- - - -
(d) Long-term Loans & Advances J
1,70,404.80 1,57,794.10 1,64,213.78 1,35,898.97
(e) Other Non-current Assets K
918.70 101.06 77.13 32.12
Sub-total (1) 1,74,323.30 1,60,362.94 1,65,547.04 1,37,673.55
(2) Current Assets
(a) Current Investments I
196.32 149.16 438.66 47.16
(b) Cash & Bank Balances L
1,659.90 1,728.55 522.90 1,192.94
(c) Short-term Loans & Advances M
4,902.94 795.26 1,100.24 381.58
(d) Other Current Assets N
22,148.06 43,317.06 15,566.19 13,557.67
Sub-total (2) 28,907.22 45,990.03 17,627.99 15,179.35 Total (1+2) 2,03,230.52 2,06,352.97 1,83,175.03 1,52,852.90
STANDALONE REFORMATTED STATEMENT OF PROFIT AND LOSS
(₹ in crores)
Particulars
Notes Year ended Year ended Year ended Year ended
No.
September 30, 2016
(Limited Review)
March 31, 2016 March 31, 2015 March 31, 2014
I. Revenue from
Operations O 11,910.47 23,638.35 20,229.53 17,017.98
II. Other Income P 248.41 117.93 158.52 102.82
III. Total
Revenue (I+II)
12,159.28 23,756.28 20,388.05 17,120.80
IV. Expenses
(i) Finance Costs Q 6,949.68 14,283.12 11,844.61 10,038.46
(ii) Employee Benefits Expense
R 78.40 137.44 133.94 129.91
(iii) Depreciation
& Amortization
2.39 5.45 6.76 4.21
(iv)
Corporate Social
Responsibility Expenses
73.28 128.20 103.25 38.40
(v) Other
Expenses S 49.03 67.01 69.49 67.07
(vi) Provisions
and T 1,089.85 802.96 312.02
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
72
Particulars
Notes
Year ended Year ended Year ended Year ended
No.
September 30, 2016
(Limited Review)
March 31, 2016 March 31, 2015 March 31, 2014
Contingencies 477.95
Total Expenses
(IV) 7,630.73 15,711.07 12,961.01 10,590.07
V.
Profit before Prior Period Items & Tax
(III-IV)
4,528.55 8,045.21 7,427.04 6,530.73
VI. Prior Period
Items 29.15 - - -0.39
VII. Profit before Tax (V-VI)
4,449.40 8,045.21 7,427.04 6,531.12
VIII.
Extraordinary Items
- - -
VII. Profit before Tax (V-VI)
4,449.40 8,045.21 7,427.04 6,531.12
VIII.
Tax Expense :
(i) Current Year
1,325.97 2,477.89 2,231.86 1,704.66
(ii) Earlier Years/
(Refunds) 0.42 -2.77 1.30 14.04
(iii) Deferred Tax
0.88 -57.57 -65.99 128.72
Total Tax Expense (i+ii+iii)
1,327.27 2,417.55 2,167.17 1,847.42
IX.
Profit for the period from Continuing Operations (VII-VIII)
3,172.13 5,627.66 5,259.87 4,683.70
X.
Profit from Discontinuing Operations
(after tax)
-
- - -
XI. Profit for the
period (IX+X)
3,172.13 5,627.66 5,259.87 4,683.70
XII.
Earnings per Equity Share (in ₹ for an
equity share of ₹ 10 each)
(1) Basic
16.06 56.99 53.27 47.43
(2) Diluted
16.06 56.99 53.27 47.43
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
73
STANDALONE REFORMATED STATEMENT OF CASH FLOWS (₹ in crores)
PARTICULARS YEAR ENDED March 31,2016
YEAR ENDED March 31,2015
YEAR ENDED March 31,2014
A. Cash Flow from Operating Activities : Net Profit before Tax 8,045.21 7,427.04 6,531.12
Adjustments for: 1. Profit / Loss on Sale of Fixed Assets 0.38 0.09 0.69
2. Depreciation 5.45 6.76 4.21
3. Provisions and Contingencies 1,089.85 802.96 312.02
4. Allowance for Staff Advance 0.00 0.00 0.07
5. Interest on Commercial Paper 285.91 300.03 230.88
6. Excess Provision written back -0.07 0.00 -3.18
7. Profit on sale/redemption of investments -12.29 - -
8. Loss/ Gain(-) on Exchange Rate fluctuation 666.13 259.99 304.27
9. Dividend from Subsidiary Co. -10.01 -0.35 -0.15
10. Dividend from Investments -3.05 -3.63 -0.38
11. Interest on Long-Term Investments/ Govt. Securities -85.97 -149.18 -47.16
12. Provision made for Interest on Advance Income Tax - 1.38 2.96
13. Discount on Bonds written off 3.99 4.83 4.83
14. Interest Accrued on Zero Coupon Bonds 76.17 70.39 64.97
15. Dividend & Dividend Tax paid in excess of provision 0.00 0.00 0.01
Operating profit before Changes in Operating Assets & Liabilities: 10,061.70 8,720.31 7,405.16 Increase / Decrease :
1. Loan Assets -21,733.35 -31,005.84 -22427.06
2. Other Operating Assets 27.89 -366.08 -355.16
3. Operating Liabilities 936.54 944.51 -273.94
Cash flow from Operations -10,707.22 -21,707.10 -15,651.00 1. Income Tax Paid (including TDS) -2,539.74 -2,284.67 -1640.06
2. Income Tax refund 42.00 - 8.27
Net Cash Flow from Operating Activities -13,204.96 -23,991.77 -17,282.79 B. Cash Flow from Investing Activities
1. Sale of Fixed Assets 0.86 0.18 0.31
2. Purchase of Fixed Assets (incl. CWIP & Intangible Assets under development) -104.63 -7.64 -3.46
3. Investment in shares of Energy Efficiency Services Ltd. (including share application money pending allotment) -124.00
4. Investment in 11.15% Additional Tier-1 Perpetual Bonds of Indian Bank -500.00
5. Investment in 11.25% Additional Tier-1 Perpetual Bonds of Vijaya Bank -500.00
6. Investment in 11.25% Additional Tier-1 Perpetual Bonds of Syndicate Bank -500.00
7. Redemption of 8% Government of Madhya Pradesh Power Bonds-II 94.32 94.32 94.32
8. Sale of Long-term Investments 762.53 - -
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
74
PARTICULARS YEAR ENDED March 31,2016
YEAR ENDED March 31,2015
YEAR ENDED March 31,2014
9. Profit on sale/redemption of investments 12.29 - -
10. Refund of Share Application Money in Energy Efficiency Services Ltd.
0.00 0.00
11. Interest on Long-Term Investments/ Govt. Securities 106.05 154.10 47.16
12. Dividend from Subsidiary Co. 10.01 0.35 0.15
13. Dividend from Investments 3.05 3.63 0.38
Net Cash Flow from Investing Activities -739.52 244.94 138.86 C. Cash Flow from Financing Activities
1. Issue of Bonds (Net of redemptions) 14,972.72 21,806.74 17,492.70
2. Raising of Term Loans/ STL from Banks/ FIs (Net of repayments) -459.07 -955.40 -3044.40
3. Raising of Foreign Currency Loan (Net of redemptions) -2607.56 6344.25 1706.32
4. Grants received from GOI including interest ( Net of refund) 4,436.52 3,421.17 2,920.69
5. Disbursem*nt of grants -4,691.45 -3,639.69 -2,429.28
6. Repayment of Govt. Loan -3.07 -4.86 -7.21
7. Payment of Final Dividend -266.61 -172.81 -148.13
8. Payment of Interim Dividend -1184.95 -789.97 -765.28
9. Payment of Corporate Dividend Tax -293.47 -187.26 -155.20
10.Premium on issue of Securities 0.28 - 1.24
11. Issue of Commercial Paper (Net of repayments) 5246.79 -2745.74 1281.16
Net Cash flow from Financing Activities 15,150.13 23,076.43 16,852.61
Net Increase/Decrease in Cash & Cash Equivalents 1,205.65 -670.40 -291.32
Cash & Cash Equivalents as at the beginning of the year 522.54 1,192.94 1,484.26 Cash & Cash Equivalents as at the end of the year 1,728.19 522.54 1,192.94
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
75
CONSOLIDATED REFORMATTED STATEMENT OF ASSETS & LIABILITIES (₹ in crores)
Particulars Note As at As at As at
No. March 31, 2016 March 31,.2015 March 31,.2014
I. EQUITY AND LIABILITIES
(1) Shareholders' Funds
(a) Share Capital A 987.46 987.46 987.46
(b) Reserves and Surplus B 27,905.94 24,085.12 19,815.59
Sub-total (1) 28,893.40 25,072.58 20,803.05
(2) Non-current Liabilities
(a) Long-term Borrowings C 1,38,783.85 1,31,123.26 1,10,095.30
(b) Deferred Tax Liability (Net) 47.54 105.80 172.92
(c) Other Long-term Liabilities D 10.09 36.18 23.54
(d) Long-term Provisions E 1,295.46 1,007.39 442.32
Sub-total (2) 1,40,136.94 1,32,272.63 1,10,734.08
(3) Current Liabilities (a) Short-term Borrowings F 6,460.77 734.00 2,540.00
(b) Trade Payables 118.69 30.83 6.07
(c) Other current liabilities G 30,476.70 24,887.16 18,601.59
(d) Short-term Provisions E 858.42 458.71 259.45
Sub-total (3) 37,914.58 26,110.70 21,407.11
Total (1+2+3) 2,06,944.92 1,83,455.91 1,52,944.24 II. ASSETS (1) Non-current Assets (a) Fixed assets H (i) Tangible Assets 253.05 108.50 70.65
(ii) Intangible Assets 1.03 1.47 2.45
(iii) Capital work-in-progress 76.84 9.81 10.37
(iv) Intangible Assets under Development 1.21 - -
332.13 119.78 83.47
(b) Non-current Investments I 2,202.14 1,157.21 1,643.03
(c) Deferred Tax Assets (Net) - - -
(d) Long-term Loans & Advances J 1,57,796.82 1,64,215.25 1,35,900.51
(e) Other Non-current Assets K 109.26 85.11 33.63
Sub-total (1) 1,60,440.35 1,65,577.35 1,37,660.64
(2) Current Assets (a) Current Investments I 149.41 438.81 47.41
(b) Inventories U 66.79 - -
(c) Trade Receivables L 231.89 120.28 60.54
(d) Cash & Bank Balances M 1,864.08 645.71 1,234.29
(e) Short-term Loans & Advances N 809.24 1,100.45 382.11
(f) Other Current Assets O 43,383.16 15,573.31 13,559.25
Sub-total (2) 46,504.57 17,878.56 15,283.60 Total (1+2) 2,06,944.92 1,83,455.91 1,52,944.24
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
76
Particulars Note As at As at As at
No. March 31, 2016 March 31,.2015 March 31,.2014
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
77
CONSOLIDATED REFORMATTED STATEMENT OF PROFIT AND LOSS (₹ in Crores)
Particulars
Notes
Year ended Year ended
No. March 31, 2016 March 31, 2015 March 31,2014
I. Revenue from Operations P 24,012.88 20,384.34 17,122.21
II. Other Income Q 117.05 165.55 106.73
III. Total Revenue (I+II) 24,129.93 20,549.89 17,228.94 IV. Expenses (i) Finance Costs R 14,282.35 11,839.59 10,034.74
(ii) Employee Benefits Expense S 143.19 136.75 134.54
(iii) Depreciation & Amortization 19.67 8.32 4.51
(iv) Corporate Social Responsibility Expenses T 120.29 102.07 38.73
(v) Other Expenses T 355.57 104.10 87.16
(vi) Provisions and Contingencies T 1,096.18 806.18 312.59
(vii) Purchases of Stock-in-Trade 32.42 0.44 -
(vii) Changes in inventories of Stock-in-Trade & Work-in-Progress V
-66.79 - -
Total Expenses (IV) 15,982.88 12,997.45 10,612.27
V. Profit before Prior Period Items & Tax (III-IV)
8,147.05 7,552.44 6,616.67
VI. Prior Period Items 0.39 0.10 -0.04
VII. Profit before Tax (V-VI) 8,146.66 7,552.34 6,616.71 VIII. Extraordinary Items - - -
VII. Profit before Tax (V-VI) 8,146.66 7,552.34 6,616.71 VIII. Tax Expense :
(i) Current Year 2,516.85 2,273.91 1,733.26
(ii) Earlier Years/ (Refunds) -2.77 0.77 14.12
(iii) Deferred Tax -58.84 -66.76 128.08
Total Tax Expense (i+ii+iii) 2,455.24 2,207.92 1,875.46
IX. Profit for the period from Continuing Operations (VII-VIII)
5,691.42 5,344.42 4,741.25
X. Profit from Discontinuing Operations (after tax) - - -
XI. Profit for the period (IX+X) 5,691.42 5,344.42 4,741.25
XII. Earnings per Equity Share (in ₹ for an equity
share of ₹ 10 each)
(1) Basic 57.64 54.12 48.01
(2) Diluted 57.64 54.12 48.01
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
78
CONSOLIDATED REFORMATTED STATEMENT OF CASH FLOWS
(₹ in crores)
PARTICULARS YEAR ENDED
March 31, 2016 YEAR ENDED March 31, 2015
YEAR ENDED , March 31, 2014
A. Cash Flow from Operating Activities : Net Profit before Tax 8,146.66 7,552.34 6,616.71 Adjustments for: 1. Profit / Loss on Sale of Fixed Assets 0.38 0.10 0.69 2. Depreciation & Amortization 19.67 8.32 4.52 3. Provisions and Contingencies 1096.18 806.08 312.02 4. Allownace for Staff Advances 0.00 0.07 5. Interest on Commercial Paper 285.91 300.03 230.88 6. Interest Expense on Misc. Borrowings 3.90 0.19 0.16 7. Excess Provision written back -0.05 0.03 -3.18 8. Profit on sale/redemption of investments -12.29 0.00 0.00 9. Loss/ Gain(-) on Exchange Rate fluctuation 666.13 259.99 304.27 10. Dividend from Investments -2.37 -3.63 -0.38 11. Interest on Long-term Investments/ Govt. Securities
-95.76 -154.47 -50.99
12. Provision made for Interest on Advance Income Tax
0.00 1.38 2.96
13. Discount on Bonds written off 3.99 4.83 4.83 14. Interest Accrued on Zero Coupon Bonds 76.17 70.39 64.97 15. Dividend & Dividend Tax paid in excess of provision
0.00 0.00 0.01
16. Other Finance Expenses 0.00 0.00 0.16 17. Provision for Diminution in value of Investment 0.00 0.10 0.00 18. Provision for contigencies of Project Cost revisions
0.00 0.00 1.72
Operating profit before Changes in Operating Assets & Liabilities:
10,188.52 8,845.68 7,489.42
Increase / Decrease : 1. Loan Assets -21,733.35 -31,005.84 -22427.06 2. Other Operating Assets -229.97 -435.35 -381.60 3. Operating Liabilities 1,029.88 1,027.56 -265.28 Cash flow from Operations -10,744.92 -21,567.95 -15,584.52 1. Income Tax Paid (including TDS) -2575.09 -2330.28 -1667.38 2. Income Tax refund 42.00 0.00 8.27 Net Cash Flow from Operating Activities -13,278.01 -23,898.23 -17,243.63 B. Cash Flow from Investing Activities 1. Sale of Fixed Assets 0.85 0.18 0.26 2. Purchase of Fixed Assets (incl. CWIP & Intangible Assets under development)
-259.41 -45.34 -4.79
3. Investment in 11.15% Additional Tier-1 Perpetual Bonds of Indian Bank
-500.00
4. Investment in 11.25% Additional Tier-1 Perpetual Bonds of Vijaya Bank
-500.00
5. Investment in 11.25% Additional Tier-1 Perpetual Bonds of Syndicate Bank
-500.00
6. Redemption of 8% Government of Madhya Pradesh Power Bonds-II
94.32 94.32 94.32
7. Sale of Long-term Investments 762.53 0.00 0.00 8. Profit on sale/redemption of investments 12.29 0.00 0.00 9. Interest on Long term Investments/ Govt. Securities
114.96 158.41 50.56
10. Dividend from Investments 3.05 3.63 0.38 11. Investment in Shares of Fellow Subsidiary Companies
-0.10 0.00 0.00
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PARTICULARS YEAR ENDED March 31, 2016
YEAR ENDED March 31, 2015
YEAR ENDED , March 31, 2014
12. Investment in Tax Free Bonds/Others -26.28 0.00 -5.19 11.Sale of shares of Fellow Subsidiaries 0.00 0.00 0.00 13. Fixed Deposit made during the year -1.25 -84.49 0.00 14. Fixed Deposit matured during the year 43.34 24.38 0.00 14. Interest Income 0.00 0.00 0.00
Net Cash Flow from Investing Activities -
755.70
151.09
135.54 C. Cash Flow from Financing Activities 1. Issue of Bonds (Net of redemptions) 14969.28 21806.74 17460.70 2. Raising of Term Loans/ STL from Banks/ FIs (Net of repayments)
-308.65 -955.40 -3049.95
3. Raising of Foreign Currency Loan (Net of redemptions)
-2607.56 6366.18 1706.32
4. Funds received from GOI for further disbursem*nt as Subsidy/ Grant including interest ( Net of refund)
4,436.52
3421.17 2920.69
5. Disbursem*nt of grants -4691.45 -3639.69 -2429.28 6. Repayment of Govt. Loan -3.07 -4.86 -7.21 7. Payment of Final Dividend -266.61 -172.81 -148.13 8. Payment of Interim Dividend -1184.95 -789.97 -765.28 9. Payment of Corporate Dividend Tax -295.51 -187.32 -155.23 10. Interst Paid on Misc. Borrowings -3.90 -0.19 -0.16 11. Premium on issue of securities 0.28 0.00 1.24 12. Issue of Commercial Paper (Net of repayments) 5246.79 -2745.74 1281.16 13. Other Finance Expenses 0.00 0.00 -0.16
Net Cash flow from Financing Activities
15,291.17
23,098.11
16,814.71 Net Increase/Decrease in Cash & Cash Equivalents
1,257.46 -649.03 -293.38
Cash & Cash Equivalents as at the beginning of the year
559.10 1207.95 1501.33
Cash & Cash Equivalents as at the end of the year 1,816.56 558.92 1,207.95
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IMPORTANT FINANCIAL INDICATORS (ON CONSOLIDATED BASIS)
(₹ in crores)
Particulars As on/ For the year ended March 31, 2016 (Audited)
As on/ For the year ended March 31, 2015 (Audited)
As on/ For the year ended March 31, 2014 (Audited)
For Financial Entities Net worth 28,893.40 25,072.58 20,803.05 Total Debt 1,69,211.64 1,50,979.06 1,26,173.19 of which – Non Current Maturities of Long Term Borrowing 1,38,783.85 1,31,123.26 1,10,095.30 - Short Term Borrowing 6,460.77 734.00 2,540.00 - Current Maturities of Long Term Borrowing 23,967.02 19,121.80 13,537.89 Net Fixed Assets 332.13 119.78 83.47 Non-Current Assets 1,60,440.35 1,65,577.35 1,37,660.64 Cash and Cash Equivalents 1,816.56 558.92 1,207.95 Current Investments 149.41 438.81 47.41 Current Assets 46,504.57 17,878.56 15,283.60 Current Liabilities 37,914.58 26,110.70 21,407.11 Asset Under Management N.A. N.A. N.A. Off Balance Sheet Assets N.A. N.A. N.A. Interest Income 23,470.66 20,072.08 16,806.39 Finance Costs 14,282.35 11,839.59 10,034.74 Net interest income 9,188.31 8,232.49 6,771.65
Provisioning & Write-offs
1,096.18 806.18 312.59 PAT 5,691.42 5,344.42 4,741.25 Gross NPA (%) * 2.11% 0.74% 0.33% Net NPA (%) * 1.61% 0.54.% 0.24.% Tier I Capital Adequacy Ratio (%)
Tier II Capital Adequacy Ratio (%)
Total Loan Assets (net) 2,00,265.02 1,79,281.49 1,48,504.24 Capital Adequacy ratio (%) Net interest margin * 4.82% 5.01% 4.90% Yield on Loan Assets * 12.32% 12.23% 12.18% Cost of funds * 8.50% 8.36% 8.31% Return on Net worth (average) 21.09% 23.30% 24.74% Debt equity ratio (times) 5.86 6.02 6.07 Total Assets 2,06,944.92 1,83,455.91 1,52,944.24 Return on assets (average) 2.92% 3.18% 3.34%
* These figures have been given on standalone basis. 10.4. OTHER FINANCIAL PARAMETERS
Particulars FY 2015-16 FY 2014-15 FY 2013-14
Dividend declared (As %age on FV) 171%* 107%* 95% Interest Coverage Ratio (times) 1.56 1.63 1.65 * The Company has paid an interim dividend of Rs 12/- per Equity Share (on face value of ₹10/- each) in the month of February, 2016.
The Board of Directors had recommended final dividend of ₹5.10 per share for the year 2015-16, which has been approved by the Shareholders in the Annual General Meeting held on 21.09.2016.
10.5. CHANGES IN ACCOUNTING POLICIES DURING THE LAST THREE YEARS AND THEIR
EFFECT ON THE PROFITS AND THE RESERVES OF THE COMPANY
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Financial Year Change in accounting policies and their effect 2016-17 During the quarter ended June 30, 2016, the Company had revised the accounting
policy for accounting for derivatives contracts in order to align it with the 'Guidance Note on Accounting for Derivative Contracts' issued by the Institute of Chartered Accountants of India which has become applicable from April 1, 2016. In accordance with the transitional provisions mentioned in the Guidance Note, an amount of ` 86.75 Crores after netting of taxes of ` 45.92 Crores had been adjusted in the opening balance of reserves, representing the change in the fair value of the interest rate swaps till March 31, 2016. Further, the fair value gain on interest rate swaps of `48.99 Crores and ` 84.88 Crores has been booked to the Statement of Profit & Loss for the quarter and half year ended September 30, 2016 respectively in accordance with the revised accounting policy. Further, the accounting policy on treatment of foreign currency exchange differences on the hedged loans and the corresponding derivative contracts has also been revised in order to align the same with existing accounting policy for amortising the foreign exchange fluctuation loss/ (gain) on the long term foreign currency monetary items over the balance period of such items in accordance with AS-11. The impact of this change, foreign exchange fluctuation loss pertaining to the previous years ` 29.79 Crores and foreign exchange fluctuation gain pertaining to current period ` 0.21 Crores has been adjusted in the Finance Cost for the period ended 30th September 30, 2016. Due to these changes in accounting policies, profit before tax for the half year ended September 30, 2016 is higher by ` 55.30 Crores.
2015-16 During the year ended 31st March, 2016, the Company had revised the accounting policy in respect of asset classification in line with RBI Guidelines. Further, the accounting policy for creation of allowance against Standard Loan assets has been modified to align it with the revised provisioning requirements for Standard Loans as per RBI Notification dated 10th November, 2014. Due to these changes in accounting policy, profit before tax for the year ended 31st March, 2016 is lower by ₹ 87.87 Crores. Further, minor modifications have been made in the Accounting Policy in respect of basis of preparation of financial statements, revenue recognition, intangible assets and cash flow statements. However, there is no financial impact of such modifications.
2014-15 Consequent to the notification of Companies Act, 2013, modifications have been made in Significant Accounting Policy No. 1(a) and 7. Further, modifications have been made in Significant Accounting Policy No. 2, 6. However, there is no financial impact of such modifications. The Company has also changed its Significant Accounting Policy 4.1 regarding depreciation on fixed assets in alignment with Schedule-II to the Companies Act, 2013 which has become applicable from 1st April, 2014. If the company had followed the earlier policy, profit before tax for the year would have been higher by ₹ 2.89 Crores. Further, the accounting policy on Provisioning against Loans has been amended to create provision @ 2.75% on stock of restructured loans. Thus, during the year, a provision has been made amounting to ₹ 451.77 Crores (Previous year Nil) on qualifying loans(comprising of loans to Public sector ₹ 11,682.23 Crores and loans to Private sector ₹ 4,745.92 Crores). Due to this change in accounting policy, the profit before tax is lower by ₹ 410.70 Crores after considering the existing provision on standard loan assets on theses restructured loans.
2013-14 Modifications were made in Significant Accounting Policy regarding basis of preparation of financial statements, income recognition, income from investments, asset classification, intangible assets, investments and current tax & deferred tax to make it more clarificatory/explicit. However, there was no financial impact of such modifications.
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Financial Year Change in accounting policies and their effect
Further, the Company changed its Significant Accounting Policy regarding provision on Standard Assets which was created at 0.25% of the outstanding standard assets as against creating it in a phased manner upto March 31, 2015. If the company had followed the earlier policy, the profit after tax for the year would have been higher by ₹ 105.74 crore.
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SECTION XI PARTICULARS OF THE OFFER
Eligibility of REC to come out with the Issue and Government Approvals REC, its Directors and authorised officers have not been prohibited from accessing the debt market under any order or directions passed by SEBI/any other Government authority. This present issue of Bonds is being made in accordance with extant guidelines for floatation of PSU Bonds as amended from time to time. The Corporation can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(s) is required by the Corporation to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time. Further, Reserve Bank of India vide its Circular No. RBI/2014-15/475DNBR (PD) CC No. 021/03.10.001/2014-15 dated February 20, 2015 has allowed NBFCs to issue unsecured bonds. Authority for the Placement The present issue of Bonds is being made pursuant to: (i) resolution passed by the Board of Directors of the Company on March 18, 2016 and delegation
provided thereunder; (ii) special resolution passed by the shareholders of the Company under section 42 of the Companies Act, 2013
and sub-rule 2 of rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, in Annual General Meeting held on September 21, 2016;
(iii) Article 95(xxii), 96 (i) & 96 (ii) of the Articles of Association of the Company. REC can issue the Bonds proposed by it in view of the present approvals and no further approvals in general from any Government Authority are required by REC to undertake the proposed activity.
Objects of the Issue
The Main Object Clause of REC as contained in the Memorandum of Association and Articles of Association of REC enables the Company to undertake the activities for which the funds are being raised under the present issue. Also, the Main Objects of REC as contained therein adequately covers its existing and proposed activities. The funds raised by way of the Issue will be utilized for various operations of REC. Utilisation of Issue Proceeds The funds raised through this private placement are not meant for any specific project as such and therefore the proceeds of this Issue shall be utilized for the regular business activities of REC which is subject to a number of regulatory checks and balances as stipulated in its regulatory environment. Therefore, the management shall ensure that the funds raised via this private placement shall be utilized only towards satisfactory fulfilment of the Objects of the Issue. REC further confirms that the proceeds of the current issue of Bonds shall not be used for providing loan to or acquisition of shares of any person who is part of the same group or who is under the same management. Minimum Subscription As the current issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable and therefore REC shall not be liable to refund the issue subscription(s)/proceed(s) in the event of the total issue collection falling short of issue size or certain percentage of issue size.
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Nature and Class of Securities Unsecured, Redeemable, Non-Convertible, Non-Cumulative, Taxable Bonds in the nature of debentures - These Bonds shall be fully paid-up and the claims of the Bondholders shall be unsecured, senior and unsubordinated. Put & Call Option Neither the Bondholder(s) shall have any right to exercise Put option nor shall the Company have right to exercise Call Option. Contribution made by Promoters or Directors NIL Maximum Investors for the Issue
In view of RBI‟s Circular No.RBI/2014-15/475DNBR (PD) CC No. 021/03.10.001/2014-15 dated February 20, 2015 on private placement basis there is no limit on the number of subscribers in respect of issuances with a minimum subscription of ₹ 1 crore and above. Issue Price Each Bond has a face value of INR10 Lakh each and is issued at par. The Bonds shall be redeemable at par i.e. for INR10 Lakh per Bond. Since there is no discount or premium on either issue price or redemption value of the Bonds, the effective yield for the investors shall be the same as the coupon rate on the Bonds.
Security Bonds are unsecured. Terms of Payment The full Issue price of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s)/RTGS for the full face value of the Bonds applied for.
Issue Price of the Bond
Minimum Application for Amount Payable on Application per
Bond INR10 Lakh Application must be for a minimum of INR
10 crores and in multiples of INR 1Crore (10 bond) thereafter.
Full Issue Price i.e. INR10 Lakh per bond
Deemed Date of Allotment The cut-off date declared by the Company from which all benefits under the Bonds including interest on the Bonds shall be available to the Bondholders is called as the Deemed Date of Allotment. The actual allotment of Bonds (i.e. approval from the Board of Directors or a Committee thereof) may take place on a date other than the Deemed Date of Allotment. REC reserves the right to keep multiple allotment date(s)/deemed date(s) of allotment at its sole and absolute discretion without any notice. If in case, the issue closing date changes (i.e. pre-pond/postponed), then the Deemed Date of Allotment may also be changed (pre-pond/ postponed) by REC, at its sole and absolute discretion. Letter(s) of Allotment/ Bond Certificate(s)/ Refund Order(s)/ Issue of Letter(s) of Allotment The beneficiary account of the investor(s) with National Securities Depository Ltd. (NSDL)/ Central Depository Services (India) Ltd. (CDSL)/ Depository Participant will be given initial CREDIT within 15 days from the Deemed Date of Allotment. The initial CREDIT in the account will be akin to the Letter of Allotment. On
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completion of the all-statutory formalities, such CREDIT in the account will be akin to a Bond Certificate. Bonds to be issued in demat format only The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of the Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/Depository Participant from time to time and other applicable laws and rules notified in respect thereof. The Bonds shall be allotted in DEMAT form only. However, if any Bondholder wants to convert bonds into physical form he/she makes appropriate application to the Depositories as per relevant rules and regulations of concerned Depository. Depository Arrangements REC has entered into depository arrangements with NSDL and CDSL. The securities shall be issued in dematerialized form as per the provisions of Depositories Act,as amended from time to time. REC has signed two tripartite agreements in this connection viz. 1. Tripartite Agreement dated November 15, 2007 between REC, National Securities Depository Limited
(NSDL) and the Registrar i.e., Karvy Computershare Private Limited 2. Tripartite Agreement dated October 16, 2007 between REC, Central Depository Services Limited
(CDSL) and the Karvy Computershare Private Limited. The Bonds will be issued in dematerialised form and the same shall be in accordance with the provisions of the SEBI Debt Regulations, Depositories Act, 1996 and the regulations made there under and are to be issued as per the terms and conditions stipulated under this Private Placement Offer Letter. The Bond holder will have the right to convert the dematerialized Bonds into physical form as per the Applicable Law. Procedure for applying for Demat Facility 1. Investor(s) should have / open a beneficiary account with any Depository Participant of NSDL or
CDSL.
2. For allotment of Bonds in dematerialized form, the beneficiary account number and depository participants ID shall be specified in the relevant columns of the Application Form.
3. If incomplete/incorrect beneficiary account details are given in the Application Form which does not match with the details in the Depository system, the Allotment of Bonds shall be held in abeyance till such time satisfactory demat account details are provided by the investor.
4. The Bonds allotted to investor in dematerialized form would be directly credited to the beneficiary account as given in the Application Form after verification. Allotment advice/refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the confirmation of the CREDIT of the Bonds to the investor‟s Depository Account will be provided to the investor by the
investor‟s DP.
5. Interest or other benefits with respect to the Bonds held in dematerialized form would be paid to those Bondholders whose names appear on the list of beneficial owners given by the depositories to REC as on the Record Date or to the Bondholders who have converted the demat securities to physical form and their names are registered as Bondholders on the registers maintained by Company/Registrar. In case, the beneficial owner is not identified by the Depository on the Record Date due to any reason whatsoever, REC shall keep in abeyance the payment of interest or other benefits, till such time the beneficial owner is identified by the Depository and intimated to REC. On receiving such intimation, REC shall pay the interest or other benefits to the beneficiaries identified, within a period of 15 days from the date of receiving such intimation.
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6. Investors may please note that the Bonds in dematerialised form can be traded only on the stock exchanges having electronic connectivity with NSDL or CDSL.
Fictitious applications
Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 38 of the Companies Act, 2013 which is reproduced below: “Any person who—
(a) makes or abets making of an application in a fictitious name to a company for
acquiring, or subscribing for, its securities; or
(b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or
(c) otherwise induces directly or indirectly a company to allot, or register any transfer of,
securities to him, or to any other person in a fictitious name. shall be liable for action under Section 447.”
Market Lot The market lot for trading of Bonds will be one Bond (“Market Lot”). Trading of Bonds The marketable lot for the purpose of trading of Bonds shall be ONE (1) BOND. Trading of Bonds would be permitted in dematerialised mode only in standard denomination of INR10 Lakh and such trades shall be cleared and settled in recognised stock exchange(s) subject to conditions specified by SEBI. In case of trading in Bonds which has been made over the counter, the trades shall be executed and reported on a recognized stock exchange having a nation-wide trading terminal or such other platform as may be specified by SEBI. Mode of Transfer of Bonds The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer‟s DP account to his Depository Participant. Transfer of Bonds to and from foreign investors, in case they seek to hold the Bonds and are eligible to do so, will be governed by the then prevailing guidelines of RBI. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with REC. Interest on Application Money In respect of Investors who get Allotment of Bonds in the Issue, interest on Application Money shall be paid at the Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) on the aggregate face value amount of Bonds for the period starting from and including the date of realization of Application Money in Issuer‟s Bank
Account upto but excluding the Deemed Date of Allotment. Such interest on Application Money shall be paid by the Issuer to the relevant Applicants within 15 days from the Deemed Date of Allotment.
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Interest on the Bonds The Bonds shall carry interest at the coupon rates as per term sheet (subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof for which a certificate will be issued by REC) on the outstanding principal amount of Bonds till final redemption. If any interest payment date falls on a day which is not a Business Day („Business Day‟ being a day on which
Commercial Banks are open for business in the city of New Delhi), then payment of interest will be made on the next day that is a Business Day. Computation of Interest The Bonds will carry interest rates as per the term sheet from the Deemed Date of Allotment. The interest will be paid from the Deemed Date of Allotment (subject to deduction of tax at source at the rates prevailing from time to time under the IT Act, or any other statutory modification or re-enactment thereof) as per term sheet. The Interest shall be computed on “Actual / Actual” day count basis. Record Date Record date of interest shall be 15 days prior to each interest payment date and 15 days prior to the date of Maturity. Interest shall be paid to the person whose name appears as sole/first in the Register of Bondholders/beneficiaries position of the Depositories on Record Date or to the Bondholders who have converted the Bonds to physical form and their name is registered on the registers maintained by Company/Registrar. In the event of REC not receiving any notice of transfer at least 15 days before the respective due date of payment of interest and at least 15 days prior to the maturity date, the transferees for the Bond shall not have any claim against REC in respect of interest so paid to the registered Bondholder. Deduction of Tax at Source Tax as applicable under the IT Act, or any other statutory modification or re-enactment thereof will be deducted at source. The investor(s) desirous of claiming exemption from deduction of income tax at source on the interest on Application money are required to submit the necessary certificate(s), in duplicate, along with the Application Form in terms of Income Tax rules. Interest payable subsequent to the Deemed Date of Allotment of Bonds will be treated as “Interest on
Securities” as per Income Tax Rules. Bondholders desirous of claiming exemption from deduction of income tax at source on the interest payable on Bonds should submit tax exemption certificate/ document, under Section 193 of the Income Tax Act, 1961, if any, at the head office of REC, at least 45 days before the payment becoming due. Regarding deduction of tax at source and the requisite declaration forms to be submitted, prospective investors are advised to consult their own tax consultant(s). Redemption The face value of the Bonds will be redeemed at par, on the expiry of the tenor of the Bonds series as per details in the summary term sheet from the Deemed Date of Allotment. The Bonds will not carry any obligation, for interest or otherwise, after the date of redemption. The Bonds shall be taken as discharged on payment of the redemption amount by REC on maturity to the registered Bondholders whose names appear in the Register of Bondholders on the Record Date/ or the beneficial owners as per the list provided by the Depositories. Such payment will be a legal discharge of the liability of the Company towards the Bondholders. In case if the redemption date falls on a day which is not a Business Day (“Business Day being a day on which
Commercial Banks are open for Business in the city of Delhi), then the payment due shall be made on the previous Business Day but without liability for making payment of interest after actual date of redemption.
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Settlement/ Payment on Redemption Payment on redemption will be made by way of cheque(s)/ redemption warrants(s)/ demand draft(s)/ CREDIT through RTGS system in the name of the Bondholders whose name appear on the list of Beneficial Owners given by Depository to REC/or the Bondholders (who have converted the Bonds to physical form), whose names are registered on the register maintained by the REC/Registrar as on the Record Date. The Bonds shall be taken as discharged on payment of the redemption amount by REC on maturity to the list of Bondholders as provided by NSDL/ CDSL/ Depository Participant. Such payment will be a legal discharge of the liability of REC towards the Bondholders. On such payment being made, REC shall inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant shall be adjusted. REC‟s liability to the Bondholders towards all their rights including for payment or otherwise shall cease and
stand extinguished from the due date of redemption in all events. Further REC will not be liable to pay any interest or compensation from the date of redemption. On REC dispatching/ crediting the amount to the Beneficiary(s) as specified above in respect of the Bonds, the liability of REC shall stand extinguished. Right of Bondholder(s) Bondholder is not a shareholder. The Bondholders will not be entitled to any other rights and privilege of shareholders other than those available to them under statutory requirements. The Bond(s) shall not confer upon the holders the right to receive notice, or to attend and vote at the General Meeting of the Company. The principal amount and interest on the Bonds will be paid to the registered Bondholders only, and in case of Joint holders, to the one whose name stands first. Besides the above, the Bonds shall be subject to the provisions of the Companies Act, 1956, notified provisions of Companies Act, 2013 and the relevant rules and regulations, the Articles of Association of REC, the terms of this issue of Bonds and the other terms and conditions as may be incorporated in the Bond Trustee Agreement and other documents that may be executed in respect of these Bonds. Effect of Holidays If any Coupon Payment Date falls on a day that is not a Business Day, the payment shall be made by the Issuer on the immediately succeeding Business Day along with interest for such additional period. Further, interest for such additional period so paid, shall be deducted out of the interest payable on the next Coupon Payment Date.If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the immediately preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment. In the event the Record Date falls on a day which is not a Business Day, the immediately succeeding Business Day will be considered as the Record Date. List of Beneficial Owners REC shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be. Succession In the event of the demise of the sole/first holder of the Bond(s) or the last survivor, in case of joint holders for the time being, REC will recognize the executor or administrator of the deceased Bondholder, or the holder of succession certificate or other legal representative as having title to the Bond(s). REC shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. REC may, in 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 recognize such holder as being entitled to the
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Bond(s) standing in the name of the deceased Bondholder on production of sufficient documentary proof or indemnity. Where a non-resident Indian becomes entitled to the Bonds by way of succession, the following steps have to be complied: a. Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the Bond was
acquired by the NRI as part of the legacy left by the deceased holder. b. Proof that the NRI is an Indian National or is of Indian origin. Such holding by the NRI will be on a non-repatriation basis. Who Can Apply The following categories are eligible to apply for this private placement of Bonds: 1. Mutual Funds, 2. Public Financial Institutions specified in Section 2(72) of the Companies Act 2013; 3. Scheduled Commercial Banks; 4. State Industrial Development Corporations; 5. Insurance Companies registered with the Insurance Regulatory and Development Authority; 6. Provident Funds, Pension Funds, Gratuity Funds and Superannuation Funds authorised to invest in the
Issue 7. National Investment Funds set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of
the Government of India published in the Gazette of India; 8. Insurance funds set up and managed by army, navy or air force of the Union of India. 9. Companies and Bodies Corporate authorized to invest in bonds/ debentures; 10. Co-operative Banks and Regional Rural Banks authorized to invest in bonds/ debentures; 11. Gratuity Funds and Superannuation Funds; 12. Societies authorized to invest in bonds/ debentures; 13. Trusts authorized to invest in bonds/ debentures; 14. Foreign Institutional Investors and sub-accounts registered with SEBI or Foreign Portfolio Investors
(not being an individual or family offices); 15. Statutory Corporations/ Undertakings established by Central/ State legislature authorized to invest in
bonds/ debentures. The applications must be accompanied by certified true copies of (1) Memorandum and Articles of Association/ Constitution/Bye-laws; (2) Resolution authorizing investment and containing operating instructions; (3) Specimen signatures of authorized signatories; (4) Necessary forms for claiming exemption from deduction of tax at source on the interest income/ interest on application money, wherever applicable; (5) Documents relating to withholding tax applicability;(6) Copy of Permanent Account Number Card (PAN Card) provided by the Income Tax Department; and (7) in case of remittance of money through electronic mode, a self-attested bank account statement has to be submitted reflecting the debit for the application money. The bank account statement should contain the name of the applicant, account number, name and branch of the bank. Who Cannot Apply
The following categories of persons, and entities, shall not be eligible to participate in the Issue and any Applications from such persons and entities are liable to be rejected:
1. Minors 2. Non-resident investors being an individual including NRIs, QFIs(individual), and FPIs(individual or
family offices); 3. Venture Capital Fund and Foreign Venture Capital Investor; 4. Overseas Corporate Bodies; and 5. Person ineligible to contract under applicable statutory/regulatory requirements. 6. Resident Individual Investors;
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7. Hindu Undivided Families; 8. Partnership firms.
Application under Power of Attorney or by Limited Companies In case of Applications made under a Power of Attorney or by a Limited Company or a Body Corporate or Registered Society or Mutual Fund, and scientific and/or industrial research organizations or Trusts etc., the relevant Power of Attorney or the relevant resolution or authority to make the Application, as the case may be, together with the certified true copy thereof along with the certified copy of the Memorandum and Articles of Association and/or Bye-Laws as the case may be must be attached to the Application Form or lodged for scrutiny separately with the photocopy of the Application Form, quoting the serial number of the Application Form and REC‟s branch where the Application has
been submitted, at the office of the Registrars to the Issue after submission of the Application Form to REC‟s bankers
to the Issue or any of their designated branches as mentioned on the reverse of the Application Form, failing which the applications are liable to be rejected. Such authority received by the Registrars to the Issue more than 10 days after closure of the subscription list may not be considered. Mode of Subscription/How to Apply This being a Private Placement Offer, Investors have been addressed through this Communication directly, only are eligible to apply. Copies of Private Placement Offer Letter and Application Form may be obtained from the registered office of REC. Applications for the Bonds must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in English and as per the instructions contained therein. Applications complete in all respects must be submitted before the last date indicated in the issue time table or such extended time as decided by REC, at any of the designated collection centres, accompanied by the subscription amount by way of cheque(s)/draft(s)/RTGS drawn on any bank including a co-operative bank which is situated at and is a member of the Bankers‟ clearing house located at a place where the Application Form is submitted. The Original Applications Forms (along with all necessary documents as detailed in the memorandum of information), pay-in slip and other necessary documents should be sent to corporate office through respective Arrangers at New Delhi on the same date. Outstation cheque(s)/Bank draft(s) drawn on Bank(s) not participating in the clearing process at the designated clearing centres will not be accepted. Money orders/postal orders will also not be accepted. Investors in centres, which do not have any bank, including a Co-operative Bank, which is a member or sub member of the Banker‟s
clearing house located at the above mentioned centres would be required to make payment only through Demand Draft payable at any one of the above mentioned centres. The Corporation assumes no responsibility for any applications/cheques/ DDs lost in mail. All cheques /drafts should be in favour of “Rural Electrification
Corporation Ltd. – Bond Issue” and Crossed “Account Payee only”. The entire amount of ₹10 Lakhs (Rupee Ten Lakhs only) per bond is payable on application. Applications should be for the number of Bonds applied for, by the Applicant. Applications not completed in the said manner are liable to be rejected. The name of the applicant‟s bank, type of account and account number
must be filled in the Application Form. This is required for the applicant‟s own safety and these details will be
printed on the refund orders and interest/ redemption warrants. The applicant or in the case of an application in joint names, each of the Applicant, should mention his/her Permanent Account Number (PAN) allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the provision of Section 139A (5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the TDS certificates. Hence, the investor should mention his PAN/GIR No. In case neither the PAN nor the GIR Number has been allotted, the Applicant shall mention “Applied for” and if, in case the applicant is not assessed to income tax, the applicant shall mention „Not Applicable‟ (stating reasons for non-applicability) in the appropriate box provided for the purpose. Application Forms without this information will be considered incomplete and are liable to be rejected. Unless the Issuer Corporation specifically agrees in writing with or without such terms or conditions it deems fit, a
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separate single cheque/ demand draft must accompany each Application Form. Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are made. All Applicants are requested to tick the relevant column “Category of Investor” in the Application Form. Public/ Private/ Religious/ Charitable Trusts, Provident Funds and Other Superannuation Trusts and other investors requiring “approved security” status for making investments. It is to be distinctly noted that in pursuance of sub clause (d) of clause (2) of Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014, remittance of Application Money for subscription to the Bonds shall be made only from the bank account of the person/ entity subscribing to the Bonds. In case of monies payable on subscription to the Bonds to be held by joint holders, the remittance of Application Money shall be made from the bank account of the person whose name appears first in the Application Form. In pursuance of the said provisions, the Applicants are required to submit a self-attested copy of their bank account statement reflecting debit for the application money. Such bank account statement must contain the name of Applicant, account number, name and branch of the bank. For further instructions, please read General Instructions along with the Application Form carefully. Force Majeure REC reserves the right to withdraw the Issue prior to the closing date in the event of any unforeseen development adversely affecting the economic and regulatory environment. REC reserves the right to change the Issue schedule. Acknowledgements No separate receipts will be issued for the application money. However, the bankers to the Issue receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the „Acknowledgement Slip‟at the bottom of each Application Form. Applications under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Corporation or to its Registrars or to such other person(s) at such other address(s) as may be specified by the Corporation from time to time through a suitable communication. Application by Mutual Funds In case of Applications by Mutual Funds, a separate Application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the Application has been made. Right to Accept or Reject Applications REC reserves its full, unqualified and absolute right to accept or reject any Application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. The Application forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the Application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: (i) Number of Bonds applied for is less than the minimum application size; (ii) Applications exceeding the issue size; (iii) REC account details not given;
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(iv) Details for issue of Bonds in electronic/ Dematerialized form not given; PAN/GIR and IT Circle/Ward/District not given;
(v) In case of Applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted;
In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted. PAN/GIR Number All Applicants should mention their PAN or the GIR Number allotted under IT Act, and the Income Tax Circle/ Ward/ District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided. Signatures
Signatures should be made in English or in any of the Indian languages. Thumb impressions must be attested by an authorized official of a REC or by a Magistrate/ Notary Public under his/her official seal.
Nomination Facility
As per Section 72 of the Companies Act, 2013, only individuals applying as sole applicant/Joint Applicant can nominate, in the prescribed manner, a person to whom his Bonds shall vest in the event of his death. Non-individuals including holders of Power of Attorney cannot nominate.
Bondholder not a Shareholder The Bondholders will not be entitled to any of the rights and privileges available to the shareholder. If, however, any resolution affecting the rights attached to the Bonds is placed before the members of REC, such resolution will first be placed before the Bondholders for their consideration.
Modification of Rights The rights, privileges, terms and conditions attached to the Bonds may be varied, modified or abrogated with the consent, in writing, of those holders of the Bonds who hold at least three fourth of the outstanding amount of the Bonds or with the sanction accorded pursuant to a resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall be operative against REC where such consent or resolution modifies or varies the terms and conditions of the Bonds, if the same are not acceptable to REC. Future Borrowings REC shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds/ Debentures/ Notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as REC may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection. Ranking of Bonds The Bonds are Unsecured, Redeemable, Non-Convertible, Non-Cumulative, Taxable Bonds in the nature of Debentures. The Bonds shall rank pari-passu inter se and, subject to any obligations preferred by mandatory provisions of the law prevailing from time to time, shall also as regards repayment of principal and payment of interest, rank pari-passu with all other existing unsecured borrowings (except subordinated debt) of the Corporation.
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Bond/ Debenture Redemption Reserve As per the Companies (Share Capital and Debentures) Rules,2014 dated March 31, 2014, DRR is not required to be created in the case of privately placed debentures issued by NBFC‟s registered with the RBI under section
45-IA of the RBI ( Amendment ) Act, 1997. Notices All notices required to be given by REC or by the Bond Trustees to the Bondholders shall be deemed to have been given if sent by ordinary post/ courier to the original sole/ first allottees of the Bonds and/ or if published in one All India English daily newspaper and one regional language newspaper. All notices required to be given by the Bondholder(s), including notices referred to under “Payment of Interest”
and “Payment on Redemption” shall be sent by registered post or by hand delivery to REC or to such persons at such address as may be notified by REC from time to time. Tax Benefits to the Bondholders of REC The holder(s) of the Bonds are advised to consider in their own case, the tax implications in respect of subscription to the Bonds after consulting their own tax advisor/ counsel. Disputes & Governing Law The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof will be subject to the jurisdiction of courts of New Delhi. Investor Relations and Grievance Redressal Arrangements have been made to redress investor grievances expeditiously as far as possible, REC endeavours to resolve the investors' grievances within 30 days of its receipt. All grievances related to the issue quoting the Application Number (including prefix), number of bonds applied for, amount paid on application and Bank and Branch/REC collection centre where the Application was submitted, may be addressed to the Resource Mobilization Unit at the Head office. All investors are hereby informed that the Company has appointed a Compliance Officer who may be contracted in case of any problem related to this issue.
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SECTION XII SUMMARY TERM SHEET
REC proposes to raise bonds with Issue Size ₹500 Crore with option to retain oversubscription under Bond Series 142.
Security Name 7.54%Rural Electrification Corporation Limited 2026
Issuer Rural Electrification Corporation Limited
Type of Instrument Unsecured, Redeemable, Non-Convertible, Non-Cumulative Bonds in the nature of Debentures
Seniority Unsecured, Senior and Unsubordinated Bond Series
Nature and status of Instrument
Unsecured, Redeemable, Non-Convertible, Non-Cumulative Bonds in the nature of Debentures (“Bonds”)
Mode of Issue Private placement
Eligible Investors 1. Mutual Funds, 2. Public Financial Institutions specified in Section 2(72) of the
Companies Act 2013; 3. Scheduled Commercial Banks; 4. State Industrial Development Corporations; 5. Insurance Companies registered with the Insurance Regulatory and
Development Authority; 6. Provident Funds, Pension Funds, Gratuity Funds and Superannuation
Funds authorised to invest in the Issue 7. National Investment Funds set up by resolution no. F. No. 2/3/2005-
DDII dated November 23, 2005 of the Government of India published in the Gazette of India;
8. Insurance funds set up and managed by army, navy or air force of the Union of India;
9. Companies and Bodies Corporate authorized to invest in bonds/debentures;
10. Co-operative Banks and Regional Rural Banks authorized to invest in bonds/debentures;
11. Gratuity Funds and Superannuation Funds; 12. Societies authorized to invest in bonds/debentures; 13. Trusts authorized to invest in bonds/debentures; 14. Foreign Institutional Investors and sub-accounts registered with SEBI or
Foreign Portfolio Investors (not being an individual or family offices); 15. Statutory Corporations/ Undertakings established by Central/ State
legislature authorized to invest in bonds/ debentures. Non-Eligible classes of Investors
1. Minors; 2. Non-resident investors being an individual including NRIs,
QFIs(individual), and FPIs(individual or family offices); 3. Venture Capital Fund and Foreign Venture Capital Investor; 4. Overseas Corporate Bodies; 5. Person ineligible to contract under applicable statutory/regulatory
requirements; 6. Resident Individual Investors; 7. Hindu Undivided Families; and 8. Partnership firms
Listing (including name of stock Exchange(s) where it
BSE and/or NSE
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will be listed and timeline for listing)
Rating of the Instrument IND AAA by IRRPL CARE AAA (Triple A) by CARE CRISILAAA/Stable by CRISIL ICRAAAA by ICRA
Issue Size ₹ 500 Crore with option to retain oversubscription
Option to retain oversubscription (Amount)
Yes
Reasons of retaining oversubscription
To meet our fund requirements for borrowing, lending and repayment of debt.
Objects of the Issue To augment long-term resources of the Company for the purpose of carrying out its functions authorized under the object clause of the Memorandum of Association of REC.
Details of the utilization of the Proceeds
The funds raised through this private placement are not meant for any specific project as such and therefore the proceeds of this Issue shall be utilized for the regular business activities of REC. Therefore, the management shall ensure that the funds raised via this private placement shall be utilized only towards satisfactory fulfillment of the Objects of the Issue.
Coupon Rate 7.54% p.a.
Step Up/Step Down Coupon Rate
N.A.
Coupon Payment Frequency Annual
Coupon Payment Date* First interest payment on January 01, 2018, second payment on December 31, 2018 thereafter December 31st, of every year and final interest payment on December 30, 2026 along with maturity proceeds.
Coupon Type Fixed
Coupon Reset N.A.
Day Count Basis Actual/Actual Interest shall be computed on an “actual/actual basis”. Where
the interest period (start date to end date) includes February 29, interest shall be computed on 366 days-a-year basis
Interest on Application Money In respect of Investors to whom Bonds are Allotted in the Issue, interest on Application Money shall be paid at the Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) on the aggregate face value amount of Bonds for the period starting from and including the date of realization of Application Money in Issuer‟s Bank Account up to but
excluding the Deemed Date of Allotment. Such interest on Application Money shall be paid by the Issuer to the relevant Applicants within 15 days from the Deemed Date of Allotment.
Interest on Refunded Money against which Allotment is not made
In respect of applications, which are valid but rejected on account of oversubscription, interest on refunded money shall be paid at the Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) (excluding the valid rejections) for the period starting from and including the date of realization of Application Money in Issuer‟s Bank
Account up to but excluding the Deemed Date of Allotment. The refund amounts together with interest thereon shall be paid by the Issuer to the relevant Applicants within 15 days from the Deemed Date of Allotment.
Default Interest Rate 2% p.a. over the coupon rate will be payable by the Company for the defaulting period in case of default in payment of interest/redemption amount.
Tenor 10 Year
Redemption Date ** December 30, 2026
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Redemption Amount Redeemed at face value of Bonds
Redemption Premium /Discount
Nil
Issue Premium/Discount Nil
Issue Price ₹ 10 lakh per bond
Discount at which security is issued and the effective yield as a result of such discount.
Nil
Put option Date N.A.
Put option Price N.A.
Call Option Date N.A.
Call Option Price N.A.
Put Notification Time N.A.
Call Notification Time N.A.
Face Value ₹ 10 lakh per bond
Minimum Application and in multiples of Debt securities thereafter
Application must be for a minimum size of INR 10 Crores (100 bonds) and in multiple of INR 1 Crore (10 bond) thereafter.
Issue Timing 1. Issue Opening Date 2. Issue Closing Date 3. Pay-in Date 4. Deemed Date of Allotment
December 30, 2016 December 30, 2016 December 30, 2016 December 30, 2016
No. of Applications N.A.***
Issuance mode of the Instrument
In Dematerialized mode
Trading mode of the Instrument
In Dematerialized mode
Settlement mode of the Instrument
Payment of interest and repayment of principal shall be made by way of cheque(s)/ interest/ redemption warrant(s)/ demand draft(s)/ credit through direct credit/ RTGS/ Fund Transfer/ NECS/ NEFT or any other electronic mode offered by the Banks.
Depository National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
Effect of Holidays If any Coupon Payment Date falls on a day that is not a Business Day, the payment shall be made by the Issuer on the immediately succeeding Business Day along with interest for such additional period. Further, interest for such additional period so paid, shall be deducted out of the interest payable on the next Coupon Payment Date. If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the immediately preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment. In the event the Record Date falls on a day which is not a Business Day, the immediately succeeding Business Day will be considered as the Record Date.
Record Date 15 days prior to each Coupon Payment Date/ Redemption date.
Security Bonds are Unsecured.
Transaction Documents The Issuer has executed/ shall execute the documents including but not limited to the following in connection with the Issue: 1. Letter appointing Trustees to the Bondholders;
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2. Debenture Trusteeship Agreement; 3. Debenture/Bond Trust Deed; 4. Rating letter from IRRPL; 5. Rating letter from CARE; 6. Rating letter from CRISIL; 7. Rating letter from ICRA; 8. Tripartite Agreement between the Issuer; Registrar and NSDL for issue of
Bonds in dematerialized form; 9. Tripartite Agreement between the Issuer; Registrar and CDSL for issue of
Bonds in dematerialized form; 10. Letter appointing Registrar; 11. Application made to BSE and/or NSE for seeking their in-principle
approval for listing of Bonds; 12. Listing Agreement with BSE and/or NSE; and 13. Letters appointing Arrangers to the Issue.
Additional Covenants In case of default in payment of interest and/ or principal redemption on the due dates, the Company shall pay additional interest at the rate of 2.00% p.a. over the Coupon Rate for the defaulting period i.e. the period commencing from and including the date on which such amount becomes due and up to but excluding the date on which such amount is actually paid. The Company shall allot the Bonds within sixty days from the date of receipt of the application money for such Bonds and if the Company is not able to allot the Bonds within such period, it shall repay the application money to the subscribers within fifteen days from the date of completion of sixty days and if the Company fails to repay the application money within the aforesaid period, it shall be liable to repay such money with interest at the rate of 12% p.a. from the expiry of the sixtieth day. Listing: The Issuer shall complete all the formalities and seek listing permission within 15 days from the Deemed Date of Allotment. In case of delay in listing of the Bonds within the prescribed period from the Deemed Date of Allotment, the Company shall pay penal interest at the rate as mentioned in relevant regulations. In case the Bonds issued to the SEBI registered FIIs / sub-accounts of FIIs/FPIs are not listed within 15 days of issuance to the SEBI registered FIIs / sub-accounts of FIIs/FPIs, for any reason, then the FII/sub-account of FII/FPIs shall immediately dispose of the Bonds either by way of sale to a third party or to the Issuer and in case of failure to list the Bonds issued to SEBI registered FIIs/ sub-accounts of FIIs/FPIs within 15 days of issuance, the Issuer shall immediately redeem / buyback such Bonds from the FIIs/sub-accounts of FIIs/FPIs.
Events of Default As specified in the Bond Trust Deed
Remedies As mentioned in Bond Trust Deed
Cross Default N.A.
Trustee SBICAP Trustee Company Limited
Registrars Karvy Computershare Private Limited
Role and Responsibilities of Debenture Trustee
The Trustees shall protect the interest of the Bondholders as stipulated in the Bond Trust Deed and in the event of default by REC in regard to timely payment of interest and repayment of principal and shall take necessary action at the cost of REC. No Bondholder shall be entitled to proceed directly against REC unless the Trustees, having become so bound to proceed, fail to do so.
Conditions precedent to The subscription from investors shall be accepted for allocation and allotment
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subscription of Bonds
by the Issuer subject to the following: 1. Rating letters from IRRPL, CARE, ICRA and CRISIL not being more
than one month old from the issue opening date; 2. Seek a written consent letter from the Trustees conveying their consent to
act as Trustees for the Bondholders; 3. Making an application to BSE and/or NSE for seeking their in-principle
approval for listing of Bonds.
Conditions subsequent to subscription of Bonds
The Issuer shall ensure that the following documents are executed/ activities are completed as per time frame mentioned elsewhere in this Private Placement Offer Letter: 1. Ensuring that the payment made for subscription to the Bonds is from the
bank account of the person/ entity subscribing to the Bonds and keep record of the bank accounts from where payments for subscriptions have been received and in case of subscription to the Bonds to be held by joint holders, monies are paid from the bank account of the person whose name appears first in the Application Form;
2. Maintaining a complete record of private placement offers in Form PAS-5
and filing the such record along with Private Placement Offer Letter in Form PAS-4 with the Registrar of Companies, National Capital Territory of Delhi & Haryana with fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and with Securities and Exchange Board of India, within a period of thirty days of circulation of the Private Placement Offer Letter;
3. Filing a return of allotment of Bonds with complete list of all
Bondholders in Form PAS-3 under Section 42(9) of the Companies Act, 2013, with the Registrar of Companies, National Capital Territory of Delhi & Haryana within thirty days of the Deemed Date of Allotment along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014;
4. Credit of demat account(s) of the allottee(s) by number of Bonds allotted
within the stipulated time period from the Deemed Date of Allotment; 5. Taking steps for listing of Bonds with BSE and/or NSE within 15 days
from the Deemed Date of Allotment of Bonds; 6. Submission of Debenture/Bond Trust Deed with BSE and/or NSE within
five working days of execution of the same for uploading on their website.
7. Filing of Form PAS-4 and PAS- 5 with SEBI Besides, the Issuer shall perform all activities, whether mandatory or otherwise, as mentioned elsewhere in this Private Placement Offer Letter.
Mode of Subscription Applicants may make remittance of application money through either of following two modes: Cheque(s)/ demand draft(s)/ bank funds transfer may be drawn in favour of “RURAL ELECTRIFICATION CORPORATION LTD.- BOND ACCOUNT” and marked “A/c Payee Only” payable at par at any of the CBS
branches of the Collecting Bankers to the Issue as per details given hereunder:
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Name of the Banker HDFC Bank Ltd Credit into Current A/c 00030350004616 Electronic transfer of funds through RTGS mechanism for credit as per details given hereunder: Name of the Banker HDFC Bank Ltd Credit into Current A/c 00030350004616 Account Name “REC INSTITUTIONAL BONDS COLLECTION A/c” IFSC Code HDFC0000003 Address of the Branch Surya Kiran Branch, KG Marg, New Delhi 110 001
Governing Law and Jurisdiction
The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof shall be subject to the jurisdiction of courts of New Delhi.
* As per the SEBI circular no. CIR/IMD/DF/18/2013 dated October 29, 2013, if the date of payment of interest falls on a holiday or Sunday then such payment shall be made on the succeeding day after including the interest for holiday or Sunday.
** As per the SEBI circular no. CIR/IMD/DF/18/2013 dated October 29, 2013, if the redemption date falls on a holiday or Sunday, then such payment shall be made on the previous working date along with interest is required to be paid till the redemption date.
***As per the RBI circular no. RBI/2014-15/475 DNBR (PD) CC No. 021/03.10.001/2014-15 dated February 20, 2015, there shall be no limit on the number of subscribers in respect of issuances with a minimum subscription of ₹ 1 crore and above.
Illustration of Bond Cash Flows
Company Rural Electrification Corporation Limited
Face Value (per security) ₹ 10,00,000/-
Issue Date/Date of Allotment December 30, 2016
Tenure 10 Years
Coupon Rate 7.54%
Frequency of the Interest Payment with specified dates Annual
Day Count Convention Actual / Actual
Particulars Original Date Revised Date No. of Days
Cash Flow
1st Coupon Sunday, December 31, 2017 Monday, January 01,.2018 367 2274394521 2nd Coupon Monday, December 31, 2018 Monday, December 31, 2018 364 2255802740 3rd Coupon Tuesday, December 31, 2019 Tuesday, December 31, 2019 365 2262000000 4th Coupon Thursday, December 31, 2020 Thursday, December 31, 2020 366 2262000000 5th Coupon Friday, December 31, 2021 Friday, December 31, 2021 365 2262000000 6th Coupon Saturday, December 31, 2022 Saturday, December 31, 2022 365 2262000000 7th Coupon Sunday, December 31, 2023 Monday January 01, 2024 366 2268197260 8th Coupon Tuesday, December 31, 2024 Tuesday, December 31, 2024 365 2255819672 9th Coupon Wednesday, December 31, 2025 Wednesday, December 31, 2025 365 2262000000 10th Coupon Wednesday, December 31, 2026 Wednesday, December 30, 2026 364 2255802740 Principal Wednesday, December 31, 2026 Wednesday, December 30, 2026 30000000000
TOTAL 52620016933
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SECTION XIII MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE
There has been no material development on date of PPOL which affects our Company.
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SECTION XIV CREDIT RATING & RATIONALE THEREOF
India Ratings & Research Private Limited (“IR&RPL”) vide its letter dated December 02, 2016, has assigned a credit rating of “INDAAA/Stable” to the long term borrowing programme of REC aggregating to ₹15,000 crore. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from IRRPL is enclosed elsewhere in this Private Placement Offer Letter. Credit Analysis & Research Limited (“CARE”) vide its letter dated December 05, 2016, has reaffirmed a credit rating of “CARE AAA (Triple A)” to the long term borrowing programme of REC aggregating to ₹15,000 crore. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from CARE is enclosed elsewhere in this Private Placement Offer Letter. CRISIL Limited (“CRISIL”) its letter dated December 02, 2016, has reaffirmed a credit rating of “CRISIL AAA/Stable” to the long term borrowing programme of REC aggregating to ₹15,000 crore. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from CRISIL is enclosed elsewhere in this Private Placement Offer Letter. ICRA Limited (“ICRA”) its letter dated December 02, 2016, has assigned a credit rating of “ICRA AAA ” to
the long term borrowing programme of REC aggregating to ₹15,000 crore. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from CRISIL is enclosed elsewhere in this Private Placement Offer Letter. Other than the CREDIT ratings mentioned hereinabove, REC 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 Private Placement Offer Letter. 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.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
102
SECTION XV NAME OF BOND TRUSTEE
In accordance with the provisions of Section 71 of the Companies Act, 2013, Companies (Share Capital and Debentures) Rules 2014 and Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, REC has appointed SBICAP Trustee Company Limited to act as Bond Trustee (“Bond Trustee”) for and on
behalf of the holder(s) of the Bonds. The address and contact details of the Trustees are as under:
SBICAP Trustee Company Limited 202, Maker Tower – „E‟, Cuffe Parade, Colaba, Mumbai 400 005
and
Apeejay House, 6th floor, 3, West Wing, DinshawWachha Road, Churchgate, Mumbai 400 020 Also having one of the offices at: 424-425, 4th Floor, World Trade Centre, Babar lane, New Delhi - 110001 A copy of letter from SBICAP Trustee Company Limited conveying their consent to act as Bond Trustee for the current issue of Bonds is enclosed elsewhere in this Private Placement Offer Letter. REC hereby undertakes that the rights of the Bondholders will be protected as per the agreement/deed executed/to be executed between REC and the Bond Trustee. The Bond Trustee Agreement/Deed shall contain such clauses as may be prescribed under Section 71 of the Companies Act, 2013, Companies (Share Capital and Debentures) Rules, 2014 and those mentioned in Schedule IV of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993. Further the Bond Trustee Agreement/Deed shall not contain any clause which has the effect of (i) limiting or extinguishing the obligations and liabilities of the Bond Trustee or REC in relation to any rights or interests of the holder(s) of the Bonds; (ii) limiting or restricting or waiving the provisions of the SEBI Act; SEBI Debt Regulations and circulars or guidelines issued by SEBI; and (iii) indemnifying the Trustees or REC for loss or damage caused by their act of negligence or commission or omission. The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Bond Trustee or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Bond Trustee may in their absolute discretion deem necessary or require to be done in the interest of the holder(s) of the Bonds. Any payment made by REC to the Bond Trustee on behalf of the Bondholder(s) shall discharge REC protanto to the Bondholder(s). The Bond Trustee shall protect the interest of the Bondholders in the event of default by REC in regard to timely payment of interest and repayment of principal and shall take necessary action at the cost of REC. No Bondholder shall be entitled to proceed directly against REC unless the Bond Trustee, having become so bound to proceed, fail to do so. In the event of REC defaulting in payment of interest on Bonds or redemption thereof, any distribution of dividend by REC shall require approval of the Bond Trustee.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
103
SECTION XVI STOCK EXCHANGE WHERE SECURITIES ARE PROPOSED TO BE LISTED
The Unsecured, Redeemable, Non-Convertible, Non-Cumulative Bonds in the nature of Debentures (“Bonds”)
(Series 142) are proposed to be listed on the Wholesale Debt Market (WDM) Segment of the BSE and/or NSE. The company has obtained the in-principle approval of BSE and/or NSE for listing of the Bonds. REC shall make an application to the BSE and/or NSE to list the Bonds to be issued and allotted under this Private Placement Offer Letter and complete all the formalities relating to listing of the Bonds within stipulated time (as per applicable law) from the date of closure of the Issue. If the permission to list and trade the Bonds is not granted by the stock exchanges, our Company shall forthwith repay, without interest, all such moneys received from the Applicant in pursuance of this Private Placement Offer Letter and Section 40 of the Companies Act, 2013. If default is made, our Company and every officer in default will liable to fine as prescribed in Section 40 of the Companies Act, 2013. In connection with listing of Bonds with BSE and/or NSE, REC hereby undertakes that: It shall comply with conditions of listing of Bonds as may be specified in the Listing Agreement with
BSE and/or NSE.
Ratings obtained by REC shall be periodically reviewed by the CREDIT rating agencies and any revision in the rating shall be promptly disclosed by REC to BSE and/or NSE.
Any change in rating shall be promptly disseminated to the holder(s) of the Bonds in such manner as
BSE and/or NSE may determine from time to time.
REC, the Bond Trustee and BSE and/or NSE shall disseminate all information and reports on Bonds including compliance reports filed by REC and the Trustees regarding the Bonds to the holder(s) of Bonds and the general public by placing them on their websites.
Bond Trustee shall disclose the information to the holder(s) of the Bonds and the general public by
issuing a press release in any of the following events:
(i) default by REC to pay interest on Bonds or redemption amount; (ii) revision of rating assigned to the Bonds;
The information referred to in para above shall also be placed on the websites of the Trustees, REC,
BSE and/or NSE.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
104
(₹ in crores)
Particulars Pre-Issue* Post-Issue#
Debt
Short Term Debt 6,349.93 6,349.93 Long Term Debt 1,62,756.45 1,71,376. 45 Total Debt (A) 1,69,106.38 1,77, 726.38 Equity
Share Capital 987.46 987.46 Reserves & Surplus 27630.3 27630.30 Total Equity (B) 28,617.76 28,617.76 Debt / Equity (A/B) 5.91 6.21 * Pre issue figures are as on March 31, 2016. # No effect has been given for changes in equity and debt instruments subsequent to March 31, 2016 except Rs. 2500 Crores towards Institutional Bonds Series 139, Rs. 2100 Crores towards Institutional Bonds Series 140, Rs. 1,020 Crores towards Institutional Bonds Series 141 & Rs. 3,000 Crores towards proposed Institutional Bonds Series.
SECTION XVII DEBT EQUITY RATIO (On standalone basis)
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
105
Neither the Issuer nor any of the current directors of the Issuer has been declared as wilful defaulter.
SECTION XVIII WILFUL DEFAULTER
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
106
REC hereby confirms that: a) The main constituents of REC‟s borrowings have been in the form of borrowings from Banks and
Financial Institutions, Bonds etc. b) REC has been servicing all its principal and interest liabilities on time and there has been no instance of
delay or default since inception. c) REC has neither defaulted in repayment/ redemption of any of its borrowings nor affected any kind of
roll over against any of its borrowings in the past.
SECTION XIX SERVICING BEHAVIOUR ON EXISTING DEBT SECURITIES AND OTHER
BORROWINGS
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
107
SECTION XX UNDERTAKING REGARDING COMMON FORM OF TRANSFER
The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/CDSL/Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer‟s DP account to his depository participant. The transferee(s) should ensure that
the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with REC. Where the Bonds are held in physical form, transfer of Bonds shall be as per the relevant provisions of Companies Act, 2013, and Ministry of Corporate Affairs notification number GSR 463(E) dated June 5, 2015 issued in respect of Government Companies or any other relevant law. However, REC reserves it right to duly confirm the identity of the transferor and conduct necessary due diligence wherever required.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
108
SECTION XXI MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS
OF THE ISSUER
By very nature of its business, REC is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of REC. However, the contracts referred below (not being contracts entered into in the ordinary course of the business carried on by REC) which are or may be deemed to be material have been entered into by REC. Copies of these contracts together with the copies of documents referred below may be inspected at the Head Office of REC between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date. MATERIAL DOCUMENTS 1. Memorandum and Articles of Association of the Company, as amended to date. 2. Certificate of Incorporation dated July 3, 1969 and Fresh Certificate of Incorporation dated July 18,
2003. 3. Copy of shareholders resolution obtained for overall borrowing limit. 4. Credit Rating letters issued by CARE, IRRPL, ICRA and CRISIL respectively. 5. Auditor‟s Report and standalone financial statements for the financial year March 31, 2016, 2015 and
2014 and consolidated financial statements prepared under Indian GAAP for the financial year 2016, 2015 and 2014.
6. Annual Report of the Company for the last three Fiscals. 7. Board Resolution dated March 18, 2016 authorizing issue of Bonds offered on private placement basis. 8. Letter of consent from Trustee dated June 7, 2016 for acting as Trustees for and on behalf of the
holder(s) of the Bonds. 9. Tripartite Agreement between REC, NSDL and Karvy Computershare Private Limited for issue of
Bonds in Dematerialized form. 10. Tripartite Agreement between REC, CDSL and Karvy Computershare Private Limited for issue of
Bonds in Dematerialized form. 11. Bond Trustee Agreement between the Company and Bond Trustee. 12. Bond Trust Deed in favour of Trustee. 13. EBP Agreements with BSE and NSE dated August 24, 2016 and December 07, 2016, respectively.
PRIVATE PLACEMENT OFFER LETTER-SERIES 142 FOR ADDRESSEE ONLY
110
SECTION XXIII
ANNEXURES A. APPLICATION FORM ALONG-WITH GENERAL INSTRUCTIONS – SHALL BE ISSUED
SEPARATELY. B. CONSENT LETTER OF TRUSTEE
Annexed as Annexure – I
C. CREDIT RATING LETTERS & RATING RATIONALE
Annexed as Annexure- II
D. COPY OF SPECIAL RESOLUTION DATED SEPTEMBER 21, 2016 AND BOARD RESOLUTION DATED MARCH 18, 2016. Annexed as Annexure- III
~~RatingsProfessional Risk Opiniori Analytical Excellence
CARE/DRO/RL/2016-17/2286
Mr. A. K.AgarwalDirector - FinanceRural Electrification Corporation Ltd.Core 4} Scope Complex} .l} Lodhi Road} New Delhi - 110003
December 051 2016
ConfidentialDear Sir}
Credit rating for Market Borrowing Programmes
Please refer to our letter number CARE/DRO/RL/2016-17 /1947 dated September 29,
2016 and further review of the rating assigned to the market borrowing programmes ofyour company.
2. Our Rating Committee has reviewed the following rating(s):
Instrument Amount Rating1 Remarks(Rs. crore)
Market 150}591.80 CAREAAA; Stable/ ReaffirmedBorrowing (Rs. One Lakh Fifty Thousand CAREAl+Programmes Five Hundred Ninety One Crores (Triple A; Outlook:
and Eighty Lakhs only) Stable / A One Plus)
3. Refer Annexure I for details of rated facilities and instruments.
4. The Commercial Paper/Short term debt issue would be for a maturity not exceeding oneyear.
5. The rationale for the rating will be communicated to you separately.
6. Please arrange to get the rating revalidated, in case the issue is not made within a
period of six months for long term rating and two months for short term rating from the
date of this letter.
lComplete definitions of the ratings assigned are available at www.careratinqs.com and in other CAREpublications.
Page 1 of 3
CREDIT ANALYSIS & RESEARCH LTD.
CORPORATE OFFICE: 4thFloor, Godrej Coliseum, Somaiya Hospital Road,
Off Eastern Express Highway, Sion (E), Mumbai 400 022.Tel.: +91-11-67543456; Fax: +91-11-67543457
Email: [emailprotected] I www.careratings.com CIN-l67190MH1993PLC071691
13th Floor, E-1 Block, Videocon TowerJhandewalan Extension, New Delhi 110055
Tel: +91-11-4533 3200Fax: +91-11-4533 3238
mailto:[emailprotected]
7. Please inform us the details of issue [date of issue} name of investor} amount issued}
interest rate} date of maturity} etc.] as soon as it has been placed.
8. CARE reserves the right to undertake a surveillance/review of the rating from time. to
time} based on circ*mstances warranting such review} subject to at least one such
review/surveillance every year.
9. CARE reserves the right to suspend/withdraw/revise the rating assigned on the basis of
new information or in the event of failure on the part of the company to furnish such
information} material or clarifications as may be required by CARE. CARE shall also be
entitled to publicize/disseminate such suspension / withdrawal/revision in the assigned
rating in any manner considered appropriate by it} without reference to you.
10. Users of this rating may kindly refer our website www.careratings.com for latest update
on the outstanding rating.
11. CARE ratings are not recommendations to buy} sell} or hold any securities or sanction}
renew} disburse or recall the concerned bank facilities.
If you need any clarification} you are welcome to approach us in this regard.
Thanking you}
~~Riya AnejaAnalyst
riya.a ne [emailprotected]/.: As above
Yours faithfully}
~/~~'Gaurav DixitAssistant General Manager
ga u ra v. d ix it @ca re rat in gs. co m
Disclaimer
CARE's ratings are opinions on credit quality and are not recommendations to sanction, renew,disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has basedits ratings on information obtained from sources believed by it to be accurate and reliable. CAREdoes not, however, guarantee the accuracy, adequacy or completeness of any information and isnot responsible for any errors or omissions or for the results obtained from the use of suchinformation. Most entitie:s whose bank facilities/instruments are rated by CARE have paid a creditrating fee, based on the amount and type of bank facilities/instruments.In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capitaldeployed by the partners/proprietor and the financial strength of the firm at present. The ratingmay undergo change in case of withdrawal of capital or the unsecured loans brought in by th(~partners/proprietor in addition to the financial performance and other relevant factors.
Page 2 of 3
CREDIT ANALYSIS & RESEARCH lTD.13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi 110055 ..
Tel: +91-11-4533 3200 I Fax: +91-11-4533 3238 I Email: [emailprotected] I www.careratmgs.comCIN-L67'i 90MH"1993PLC07'] 6~VI
mailto:[emailprotected]
mailto:[emailprotected]
Annexure I
s. No. Instrument/ Facility Rated AmountExisting Rating(Rs:Cr)
3. Long Term Market Borrowing Programme - FY07 314.80 CAREAAA4. Long Term Market Borrowing Programme - FY08 1}568.30 CAREAAA5. Long Term Market Borrowing programme - FY09 3}646.20 CAREAAA6. Long Term Market Borrowing programme - FY10 5}849.40 CAREAAA7. Long Term Market Borrowing programme - FYll 10}169.78 CAREAAA8. Long Term Market Borrowing programme - FY12 13}094 CAREAAA9. Long Term Market Borrowing programme - FY13 15}552.31 CAREAAA10. Long Term Market Borrowing programme - FY14 25J266.53 CAREAAA
11. Long Term Market Borrowing programme - FY15 30}127.78 CAREAAA
12. Long term Market Borrowing Programme - FY16 23002.70 CAREAAA13. Long term Market Borrowing Programme - FY17 15}000.00 CAREAAA14. Short Term Market Borrowing programme - FY17 7}000.00 CAREAl+
Total 150,591.80
Page 3 of 3
CREDIT ANALYSIS & RESEARCH LTD.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi 110055.Tel: +91-11-4533 3200 I Fax: +91-11-4533 3238 I Email: [emailprotected] I www.careratings.com
CIN-L6 7190ivlH 1993PLCO'/'16<;--"1
mailto:[emailprotected]
Rating Rationale
Rural Electrification Corporation Limited
Ratings
Facilities Amount
(Rs. crore) Ratings
1 Remarks
Long-term Market Borrowing Programme – FY05
951.79 (Rs. Nine Hundred Fifty One Crore
and Seventy Nine Lakh Only) CARE AAA Reaffirmed
Long-term Market Borrowing Programme – FY06
3,584.10 (Rs. Three Thousand Five Hundred
Eight Four Crore and Ten Lakh Only) CARE AAA Reaffirmed
Long-term Market Borrowing Programme - FY07
314.80 (Rs. Three Hundred Fourteen Crore
and Eight Lakh Only) CARE AAA Reaffirmed
Long-term Market Borrowing Programme – FY08
1,568.30 (Rs. One Thousand Five Hundred Sixty Eight Crore and Thirty Lakh
Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY09
9,921.30 (Rs. Nine Thousand Nine Hundred Twenty One Crore and Thirty Lakh
Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY10
13,660.78 (Rs. Thirteen Thousand Six Hundred Sixty Crore and Seventy Eight Lakh
Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY11
15,798.10 (Rs. Fifteen Thousand Seven
Hundred Ninety Eight Crore and Ten Lakh Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY12
25,862.55 (Rs. Twenty Five Thousand Eight
Hundred Sixty Two Crore and Fifty Five Lakh Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY13
36,000.00 (Rs. Thirty Six Thousand Crore Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY14
37,000.00 (Rs. Thirty Seven Thousand Crore
Only) CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY15
41,000.00 (Rs. Forty One Thousand Crore Only)
CARE AAA Reaffirmed
Long-term Market Borrowing Programme - FY16
36,500.00 (Rs. Thirty Six Thousand Five
Hundred Crore Only) CARE AAA Reaffirmed
Short-term Market Borrowing Programme - FY16*
- - Withdrawn
Long-term Market Borrowing 15,000.00 CARE AAA Reaffirmed
1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications
Programme - FY17 (Rs. Fifteen Thousand Crore Only)
Short-term Market Borrowing Programme - FY17
7,000.00 (Rs. Seven Thousand Crore Only)
CARE A1+ Reaffirmed
* Withdrawal of short term ratings for FY16 Market Borrowing Programme as there is no outstanding under the said issue
Rating Rationale
The ratings assigned to various market borrowing programmes of Rural Electrification Corporation Ltd. (REC, CIN
Number: L40101DL1969GOIOO5095) continue to factor in the majority ownership by the Government of India
(GoI), its status as the nodal agency of GoI for financing rural electrification programme and its strategic
importance in funding the power infrastructure in India. The ratings also draw comfort from REC’s comfortable
capital adequacy with healthy capitalization levels, diversified resource profile and stable profitability. The ratings
also factor in risks associated with REC’s moderation in asset quality as reflected by slippages in FY16 (refers to
period April 01 to March 31) and high proportion of restructured accounts compared to net-worth, high exposure to
weak state power utilities and high sectoral and borrower concentration risk.
Going forward, continued ownership and support by GoI by way of extension of favorable policy regime and asset
quality would be the key rating sensitivities.
Background
REC was established in 1969 under the Companies Act, 1956, in pursuance of the recommendations of the All India
Rural Credit Review Committee constituted by the Reserve Bank of India. It was declared a Public Financial
Institution in 1992 under Sec. 4A of the Companies Act and also registered as “systemically important” Non-
Banking Financial Company under Sec. 45- IA of the RBI Act in 1998. As on June 30, 2016, the GoI has a majority
shareholding of 60.64% in REC.
REC plays an important role in partnering with Ministry of Power (MoP), Government of India (GoI) in their major
initiatives to improve the power distribution sector in the country, by its involvement in programmes like Deen
Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) (Nodal Agency) [formerly known as Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY)], Restructured Accelerated Power Development and Reforms Programme (R-APDRP),
National Electricity Fund (Nodal Agency), Financial Restructuring Plan (FRP), Smart Grid task force etc. The
company was conferred the Navratna status in 2008-09.
The product portfolio of REC includes financial products and services like project term loan, short-term loan,
equipment lease financing and consultancy services, etc, for various power projects in generation, transmission
and distribution sector. REC’s clients mainly include state power utilities, private power sector utilities (including
independent power producers), joint sector power utilities and power equipment manufacturers. The company
received from RBI the status of an Infrastructure Finance Company (NBFC-ND-IFC) in September 2010.
Credit Risk Assessment
Government ownership and support
The GoI is the major shareholder with 60.64% stake in the company (as on June 30, 2016). The government has
been supporting REC by way of guaranteeing its borrowings from international agencies like Japan International
Cooperation Agency (JICA) and KfW. Besides, REC is a strategically important entity for the government, as it is the
nodal agency for implementing the DDUGJY scheme aimed at providing electricity to rural India. REC also acts as
the nodal agency for the National Electricity Fund (NEF), an interest subsidy scheme started by the Ministry of
Power to provide interest subsidy to loans disbursed to DISCOMs to improve infrastructure in the distribution
sector. REC also plays a pivotal role in financing power projects from both the state and private sector, thereby
being instrumental in strengthening the power infrastructure of the country.
Comfortable capital adequacy and diversified resource profile REC had a comfortable capital adequacy ratio (CAR) of 20.38% as on March 31, 2016 (19.56% as on March 31,
2015). The CAR has improved as compared to previous year due to healthy internal capital generation during FY16
(refers to the period April 1 to March 31).
REC has a well-diversified resource profile, since it can mobilize funds at cost-effective rates from various sources
such as external commercial borrowings (ECB), borrowings from international agencies like JICA and KfW, domestic
financial institutions, long-term bonds, bank loans, commercial paper, capital gains tax exemption bonds,
infrastructure bonds and tax free bonds. After getting the status of Infrastructure Finance Company in September
2010, REC has become eligible for issuance of infrastructure bonds and for raising funds up to US$ 750 million
through ECB in a year under automatic route. During FY16, REC has raised Rs. 31,255 crore through capital gain
bonds (21%), institutional and zero coupon bonds (50%), tax-free bonds (3%) and foreign currency borrowings
(26%). Further, the company has also raised CP of Rs. 20,772 crore during the year.
Growth in advances portfolio; however continued sectoral and borrower concentration
During FY16, REC had disbursed Rs.46,026 crore against sanctions of Rs. 65,471 crore vis-à-vis disbursem*nts of
Rs.42,818 crore and sanctions of Rs.61,421 crore in FY15. The disbursem*nt in FY16 includes transmission and
distribution segment (67% of the total disbursem*nts in FY16), generation segment (29%) and short term loans
(5%). REC’s gross advances portfolio grew by 12% to Rs.2,01,278 crore as on March 31, 2016 vis-à-vis Rs.1,79,647
crore as on March 31, 2015. The loans to the generation sector registered growth of 9% y-o-y to Rs. 83,417 crore
and accounted for 41% of the total loan portfolio as on March 31, 2016.
Loans to transmission & distribution sector increased by 13% y-o-y to Rs.115,939 crore and accounted for 58% of
the loan portfolio as on March 31, 2016. As on June 30, 2016, loan portfolio stood at Rs.188,835 crore. Yield on the
advances portfolio was stable at 12.32% in FY16 vis-à-vis 12.23% in FY15 (refers to the period April 1 to March 31).
REC continues to remain exposed to high sector and borrower concentration risk as it caters only to the power
sector with approximately 82% of the total advances as on March 31, 2016 towards State power utilities (SPUs).
Furthermore, top 10 exposures contributed 37% of the outstanding loan book and 259% of net worth as on March
31, 2016 (40% to the total outstanding loan book as on March 31, 2015).
Consistent profitability
Over the years, REC has achieved adequate profitability led by consistent growth in total income, improving
interest spread and Net Interest Margins (NIM). REC registered growth of 16.5% in total income in FY16 mainly on
account of increase in loan portfolio. Further, PAT has increased by 7% in FY16 over FY15. The interest spread
continued to remain stable owing to better yield and availability of low cost funds. In FY16, REC has made
additional provisions of Rs.821.34 crore against standard restructured loan accounts (FY15: Rs.451.77 crore). The
same has led to decline in ROTA to 2.88% in FY16 as compared to 3.13% in FY15.
Moderation in asset quality and high exposure to weak state power utilities (SPU)
The asset quality of REC moderated in FY16 on account of higher slippages. Slippages of Rs.2,910.13 crore during
FY16 led to increase in gross NPA to Rs. 4,244 crore as on March 31, 2016 vis-à-vis Rs. 1,335 crore as on March 31,
2015. The Gross NPA % and Net NPA % as on March 31, 2016 stood at 2.11% and 1.61% vis-à-vis 0.74% and 0.54%
as on March 31, 2015. Net NPA/ Net worth as on March 31, 2016 stood at 11.29% vis-à-vis 3.90% as on March 31,
2015. During Q1FY17, there have been further slippages in asset quality with Gross NPA % and Net NPA % as on
June 30, 2016 at 2.55% and 1.88% respectively. Further, the restructured standard assets as on March 31, 2016
stood at Rs.20,237 crore. Net stressed assets (Net NPA + Net restructured standard accounts) as proportion of net
worth stood at 82% as on March 31, 2016. Also, during FY16, 23 standard loan accounts amounting to
Rs.22,829.88 crore ie. 11% of gross advances have been rescheduled due to delayed commissioning of the
respective projects.
REC’s portfolio mainly includes loans to SPUs which forms 82% of the outstanding loan portfolio as on March 31,
2016. Further, exposure to private sector borrowers accounted for 15% of the total loan portfolio as on March 31,
2016. Since majority of the state power utilities have weak financial profile, it exposes REC to vulnerability in asset
quality. However, REC has been able to maintain good collection efficiency from its state as well private sector
entities with recovery rate of 96.61% in FY16 vis-à-vis 97.70% in FY15.
Prospects
REC has demonstrated sustained business growth in FY16 as well as Q1FY17; however, the company has also faced
moderation in its asset quality along with continued weak financial health of state power utilities. The Ujwal
DISCOM Assurance Yojana (UDAY) envisages structural and financial changes that are expected to impact the
performance of DISCOMs. REC’s exposures to the DISCOMS will be affected by this scheme. DISCOMS will get 75%
of their outstanding debt (as on 30th Sept 2015) funded through the state governments and 25% of their debt will
be re-priced at a lower rate. Therefore REC’s exposure to DISOMS, of state governments participating in UDAY, will
be reduced significantly. The state governments will issue bonds to fund the DISCOMS which would either be
subscribed by the market participants & if there are any unsubscribed bonds, they will be issued to the lending
institution (like REC). If REC is subscribing to these bonds then it would affect the profitability, but at the same time
improve asset quality due to exposure moving from DISCOMs to State governments. Based on preliminary analysis,
the markets are subscribing to the bonds and therefore there is relatively lower impact on REC’s profitability. For
REC, around 20% of their loan book has exposure to the participating DISCOMS. Therefore 15% of REC loan
portfolio (75% of 20%) is expected to be either repaid to REC by DISCOMS or they will hold state government
bonds against them. Further around 5% of REC loan portfolio (25% OF 20%) will be refinanced at lower interest
rates. The short-term impact of UDAY scheme on REC’s profitability is likely to be moderate and the asset quality is
expected to improve (due to better financial profile of DISCOMS & change in exposure to state governments). The
long-term impact depends on the implementation of the operational improvements envisaged under the UDAY
scheme.
Going forward, the continued support of the GoI by way of extension of favorable policy regime and the ability of
the company to maintain comfortable profitability and asset quality would be the key rating sensitivity.
Financial Performance
(Rs. Cr)
As on / Year ended March 31 2014 2015 2016
(12m, A) (12m, A) (12m, A)
Working Results
Interest Income from loan financing 16,806.39 20,072.08 23,470.66
Other income 314.41 315.97 285.62
Total Income 17,120.80 20,388.05 23,756.28
Operating Expenses 235.38 306.68 332.65
Total Provision / Write offs 312.02 802.96 1,069.89
Depreciation 4.21 6.76 5.45
Interest and other financial charges 10,038.46 11,844.61 14,283.12
PBT 6,530.73 7,427.04 8,045.21
PAT 4,683.70 5,259.87 5,627.66
Financial Position
Tangible Net worth 20,667.01 24,855.60 28,616.85
Total Borrowings 126,240.19 151,024.12 169,106.38
Total Loan Portfolio 148,641.10 179,646.94 201,278.29
Total Assets 152,987.30 183,539.05 207,365.33
Key Ratios (%)
Solvency
Overall Gearing (times) 6.11 6.08 5.91
Capital Adequacy Ratio (CAR) (%) 19.35 19.56 20.38
Tier I CAR (%) 16.02 16.52 17.48
Interest Coverage (times) 1.65 1.63 1.56
As on / Year ended March 31 2014 2015 2016
(12m, A) (12m, A) (12m, A)
Profitability
Net Interest Margin 4.84% 4.98% 4.75%
Return on Total Assets (ROTA) 3.30% 3.13% 2.88%
Operating expenses to Average Total Assets 0.17% 0.18% 0.17%
Asset Quality
Gross NPA Ratio 0.33% 0.74% 2.11%
Net NPA Ratio 0.24% 0.54% 1.61%
Net NPA to Net worth 1.71% 3.90% 11.29%
Note: Ratios have been computed based on average of annual opening and closing balances NIM has been calculated as net interest income/ average annual total assets Details of Rated Facilities 1.A. Market Borrowing Programmes
S. No. Instrument/ Facility Rated Amount (Rs. Cr)
1. Long Term Market Borrowing Programme – FY05 951.79
2. Long Term Market Borrowing Programme – FY06 3,584.10
3. Long Term Market Borrowing Programme - FY07 314.80
4. Long Term Market Borrowing Programme – FY08 1,568.30
5. Long Term Market Borrowing programme – FY09 9,921.30
6. Long Term Market Borrowing programme – FY10 13660.78
7. Long Term Market Borrowing programme – FY11 15,798.10
8. Long Term Market Borrowing programme – FY12 25,862.55
9. Long Term Market Borrowing programme – FY13 36,000.00
10. Long Term Market Borrowing programme – FY14 37,000.00
11. Long Term Market Borrowing programme – FY15 41,000.00
12. Long term Market Borrowing Programme - FY16 36,500.00
13. Long term Market Borrowing Programme - FY17 15,000.00
14. Short Term Market Borrowing programme – FY17 7,000.00
Disclaimer CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.
9 Credit Analysis & Research Limited
Brief Rationale
CARE REAFFIRMS THE RATINGS ASSIGNED TO THE MARKET BORROWING PROGRAMMES OF
RURAL ELECTRIFICATION CORPORATION LIMITED Ratings
Facilities Amount
(Rs. crore) Ratings
2 Remarks
Long-term Market Borrowing Programme – FY05
951.79 (Rs. Nine Hundred Fifty One Crore
and Seventy Nine Lakh Only) CARE AAA Reaffirmed
Long-term Market Borrowing Programme – FY06
3,584.10 (Rs. Three Thousand Five Hundred
Eight Four Crore and Ten Lakh Only) CARE AAA Reaffirmed
Long-term Market Borrowing Programme - FY07
314.80 (Rs. Three Hundred Fourteen Crore
and Eight Lakh Only) CARE AAA Reaffirmed
Long-term Market Borrowing Programme – FY08
1,568.30 (Rs. One Thousand Five Hundred Sixty Eight Crore and Thirty Lakh
Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY09
9,921.30 (Rs. Nine Thousand Nine Hundred Twenty One Crore and Thirty Lakh
Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY10
13,660.78 (Rs. Thirteen Thousand Six Hundred Sixty Crore and Seventy Eight Lakh
Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY11
15,798.10 (Rs. Fifteen Thousand Seven
Hundred Ninety Eight Crore and Ten Lakh Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY12
25,862.55 (Rs. Twenty Five Thousand Eight
Hundred Sixty Two Crore and Fifty Five Lakh Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY13
36,000.00 (Rs. Thirty Six Thousand Crore Only)
CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY14
37,000.00 (Rs. Thirty Seven Thousand Crore
Only) CARE AAA Reaffirmed
Long-term Market Borrowing programme – FY15
41,000.00 (Rs. Forty One Thousand Crore Only)
CARE AAA Reaffirmed
Long-term Market Borrowing Programme - FY16
36,500.00 (Rs. Thirty Six Thousand Five
Hundred Crore Only) CARE AAA Reaffirmed
Short-term Market Borrowing Programme - FY16*
- - Withdrawn
Long-term Market Borrowing Programme - FY17
15,000.00 (Rs. Fifteen Thousand Crore Only)
CARE AAA Reaffirmed
Short-term Market Borrowing Programme - FY17
7,000.00 (Rs. Seven Thousand Crore Only)
CARE A1+ Reaffirmed
* Withdrawal of short term ratings for FY16 Market Borrowing Programme as there is no outstanding under the said issue
Rating Rationale
The ratings assigned to various market borrowing programmes of Rural Electrification Corporation Ltd. (REC, CIN Number:
L40101DL1969GOIOO5095) continue to factor in the majority ownership by the Government of India (GoI), its status as
1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications
10 Credit Analysis & Research Limited
Brief Rationale
the nodal agency of GoI for financing rural electrification programme and its strategic importance in funding the power
infrastructure in India. The ratings also draw comfort from REC’s comfortable capital adequacy with healthy capitalization
levels, diversified resource profile and stable profitability. The ratings also factor in risks associated with REC’s moderation
in asset quality as reflected by slippages in FY16 (refers to period April 01 to March 31) and high proportion of
restructured accounts compared to net-worth, high exposure to weak state power utilities and high sectoral and
borrower concentration risk.
Going forward, continued ownership and support by GoI by way of extension of favorable policy regime and asset quality
would be the key rating sensitivities.
Background
REC was established in 1969 under the Companies Act, 1956, in pursuance of the recommendations of the All India Rural
Credit Review Committee constituted by the Reserve Bank of India. It was declared a Public Financial Institution in 1992
under Sec. 4A of the Companies Act and also registered as “systemically important” Non-Banking Financial Company
under Sec. 45- IA of the RBI Act in 1998. As on June 30, 2016, the GoI has a majority shareholding of 60.64% in REC.
REC plays an important role in partnering with Ministry of Power (MoP), GoI in their major initiatives to improve the
power distribution sector in the country, by its involvement in programmes like Deen Dayal Upadhyaya Gram Jyoti Yojana
(DDUGJY) (Nodal Agency) [formerly known as Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY)], Restructured
Accelerated Power Development and Reforms Programme (R-APDRP), National Electricity Fund (Nodal Agency), Financial
Restructuring Plan (FRP), Smart Grid task force etc. The company was conferred the Navratna status in 2008-09.
The product portfolio of REC includes financial products and services like project term loan, short-term loan, equipment
lease financing and consultancy services, etc, for various power projects in generation, transmission and distribution
sector. REC’s clients mainly include state power utilities, private power sector utilities (including independent power
producers), joint sector power utilities and power equipment manufacturers. The company received from RBI the status
of an Infrastructure Finance Company (NBFC-ND-IFC) in September 2010.
Ujwal DISCOM Assurance Yojana (UDAY) envisages structural and financial changes that are expected to impact the
performance of DISCOMs. REC’s exposures to the DISCOMS will be affected by this scheme. DISCOMS will get 75% of their
outstanding debt (as on 30th September 2015) funded through the state governments and 25% of their debt will be re-
priced at a lower rate. Therefore REC’s exposure to DISOMS, of state governments participating in UDAY, will be reduced
significantly. The short-term impact of UDAY scheme on REC’s profitability is likely to be moderate and the asset quality is
expected to improve (due better financial profile of DISCOMS & change in exposure to state governments). The long-term
impact depends on the implementation of the operational improvements envisaged under the UDAY scheme.
During FY16 (refers to the period April 01 to March 31), REC reported a net profit of Rs.5,628 crore on a total income of
Rs.23,756 crore as compared to net profit of Rs.5,260 crore on a total income of Rs.20,388 crore during FY15. Gross NPA
and net NPA ratios stood at 2.11% and 1.61% respectively as on March 31, 2016 as compared to 0.74% and 0.54%
respectively as on March 31, 2015. Capital Adequacy Ratio (CAR) as on March 31, 2016 stood at 20.38% as compared to
19.56% as on March 31, 2015.
11 Credit Analysis & Research Limited
Brief Rationale
During Q1FY17 (refers to the period April 01 to June 30), REC reported a net profit of Rs.1,421 crore on a total income of
Rs.6,051 crore. Gross NPA and net NPA ratios stood at 2.55% and 1.88% respectively as on June 30, 2016.
Analyst Contact Name: Mr. Gaurav Dixit Tel: 011-4533 3235 Cell: + 91 97170 70079 Email: [emailprotected]
**For detailed Rationale Report and subscription information, please contact us at www.careratings.com CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [emailprotected] for any clarifications.
Disclaimer: CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.
In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.
12 Credit Analysis & Research Limited
Brief Rationale
CONTACT
Head Office Mumbai Mr. Amod Khanorkar Mr. Saikat Roy Mobile: + 91 98190 84000 Mobile: + 91 98209 98779 E-mail: [emailprotected] E-mail: [emailprotected]
CREDIT ANALYSIS & RESEARCH LIMITED Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022
Tel: +91-22-6754 3456 | Fax: +91-22-6754 3457 | E-mail: [emailprotected] AHMEDABAD Mr. Mehul Pandya 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015 Cell: +91-98242 56265 Tel: +91-79-4026 5656 E-mail: [emailprotected] BENGALURU Mr. Deepak Prajapati Unit No. 1101-1102, 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore - 560 001. Cell: +91-9099028864 Tel: +91-80-4115 0445, 4165 4529 E-mail: [emailprotected] CHANDIGARH Mr. Sajan Goyal SCF No. 54-55, First Floor, Phase 11, Sector 65, Mohali - 160062 Chandigarh Cell: +91 99888 05650 Tel: +91-172-5171 100 / 09 Email: [emailprotected] CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002. Cell: +91 98407 54521 Tel: +91-44-2849 7812 / 0811 Email: [emailprotected] COIMBATORE Mr. V Pradeep Kumar T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore - 641 037. Tel: +91-422-4332399 / 4502399 Email: [emailprotected] HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, 3-6-502, Himayat Nagar, Hyderabad - 500 029. Cell : + 91 90520 00521 Tel: +91-40-4010 2030 E-mail: [emailprotected]
JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur - 302 016. Cell: +91 – 95490 33222 Tel: +91-141-402 0213 / 14 E-mail: [emailprotected] KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata - 700 071. Cell: +91-98319 67110 Tel: +91-33- 4018 1600 E-mail: [emailprotected] NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Cell: +91-98117 45677 Tel: +91-11-4533 3200 E-mail: [emailprotected] PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: +91-98361 07331 Tel: +91-20- 4000 9000 E-mail: [emailprotected]
CIN - L67190MH1993PLC071691
mailto:[emailprotected]
mailto:[emailprotected]
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mailto:[emailprotected]
May 17, 2016Mumbai
Rural Electrification Corporation Limited
Ratings Reaffirmed
Rs.150.0 Billion Long-Term BorrowingProgramme (Reduced from Rs.170.0 Billion)^* CRISIL AAA/Stable (Reaffirmed)
Rs.70.0 Billion Short-Term DebtProgramme(Enhanced from Rs.50.0 Billion)^@ CRISIL A1+ (Reaffirmed)
Rs.365.0 Billion Long-Term BorrowingProgramme CRISIL AAA/Stable (Reaffirmed)
Rs.150.0 Billion Short-Term Debt Programme CRISIL A1+ (Reaffirmed)
Lower Tier-II Bonds Aggregating Rs.50 Billion CRISIL AAA/Stable (Reaffirmed)
Bond Programme Aggregating Rs.506 Billion CRISIL AAA/Stable (Reaffirmed)
Rs.90 Billion Non-Convertible DebenturesProgramme CRISIL AAA/Stable (Reaffirmed)
Long-Term Borrowing Programme AggregatingRs.1980 Billion CRISIL AAA/Stable (Reaffirmed)
Rs.2.25 Billion Tax-Free Bond Programme CRISIL AAA/Stable (Reaffirmed)
Rs.2.75 Billion Taxable Bond Programme CRISIL AAA/Stable (Reaffirmed)
Rs.100 Billion Short-Term Debt Programme CRISIL A1+ (Reaffirmed)
Rs.25 Billion Short-Term Debt Programme CRISIL A1+ (Reaffirmed)^ Borrowing programme for 2016-17 (refers to financial year, April 1 to March 31). There has been a change in sub-limits betweenthe long-term borrowing programme and the short-term borrowing programme within the overall limit of Rs.220.0 billion. Totalincremental long-term bank borrowing and borrowings under the rated long-term bonds programme not to exceed Rs.150.0 billionat any point in time during 2016-17. The long-term borrowing programme includes tax-free bonds under Section 10 of the IncomeTax Act 1961.*The total borrowings under long-term borrowing programme and lower tier II bonds not to exceed Rs150.0 billion at any point intime during 2015-16@ Short-term bank borrowing including bank guarantees; total short-term bank borrowing and borrowing under the rated short-term debt programme not to exceed Rs.70.0 billion at any point during 2016-17.
CRISIL's ratings on the debt instruments of Rural Electrification Corporation Limited (REC) continue to reflect the company'sstrategic importance to, and majority ownership by, the Government of India (GoI) because of its key role in financing theIndian power sector. The ratings also factor in REC's sound resource profile, and comfortable capitalisation and profitability.These strengths are partially offset by inherent vulnerability of asset quality, and significant sectoral and customerconcentration.REC is strategically important to GoI as the nodal agency for channelling finance towards GoI's rural electrification programmeunder the Deendayal Upadhyaya Gram Jyoti Yojana (formerly known as Rajiv Gandhi Grameen Vidyutikaran Yojana).Furthermore, REC has been nominated as the sole nodal agency to operate the National Electricity Fund Scheme-an interestsubsidy scheme introduced by GoI-to promote capital investment in the power distribution sector. The company also plays adevelopmental role in channelling finance to meet the power sector's large funding requirements, particularly of SPUs. RECplayed an important role in providing transitional finance to state distribution companies (discoms) under the GoI's financialrestructuring package. REC is the second-largest lender to the sector. GoI supports the company financially and operationallyin various ways, including conferring special status to raise capital gains tax exemption bonds. CRISIL believes that GoI hasstrong strategic reasons and a moral obligation to support REC, both on an ongoing basis and in the event of distress, givenREC's role in implementing GoI's power sector policies and GoI's majority ownership in the company (60.64 per cent as onDecember 31, 2015).REC's credit risk profile is supported by its sound resource profile, with competitive borrowing costs and a diversified, albeitwholesale, resource base. Its debt instruments have wide market acceptability and the company typically borrows at lowspreads over government securities. Its cost of borrowings is lower than that of peers, and was 8.8 percent (annualised;
May 17, 2016 http://www.crisil.com
including foreign currency fluctuation losses) in the first nine months of 2015-16 (8.5 percent for 2014-15).REC's capitalisation remains comfortable, providing a cushion against asset-side risks arising from high sectoral and customerconcentration. The company's networth was Rs.280.1 billion as on December 31, 2015 (Rs.248.6 billion as on March 31,2015). Its overall capital adequacy ratio was 20.04 per cent as on December 31, 2015 (19.56 per cent as on March 31, 2015).The company's capitalisation is supported by healthy accruals; three-year average accruals to net worth were 19 per centbetween 2012-13 and 2014-15. REC's comfortable net worth will support its growth plans, while it maintains adequate gearing(6.0 times as on December 31, 2015) over the medium term. REC's healthy profitability is supported by ability to maintainhealthy interest spreads and low operating expenses ratio. Its return on assets ratio was 3.2 percent (annualised) during thefirst nine months of 2015-16 (3.1 percent in 2014-15). However, its profitability will remain susceptible to increase in creditcosts because of weakening in asset quality in the private sector exposures.REC caters only to the power sector and faces inherent asset quality challenges because of the weak financial risk profiles ofits main customers, SPUs comprising around 82 per cent of its overall advances as on December 31, 2015. Measures underthe recently announced Ujwal DISCOM Assurance Yojana (UDAY) plan are likely to structurally strengthen the distributionsector over the long run. Nevertheless, effective execution is extremely critical for SPUs to produce the desired positive impactand broad-based political consensus is necessary to implement the much-needed tariff hikes to ensure a sustainedimprovement in SPUs' performance. REC also had around 15 per cent exposure to the private sector as on December 31,2015, which has increasingly become more vulnerable to asset quality risks owing to issues such as lack of fuel availability,inability to pass on fuel price increases, and absence of long-term power purchase agreements for assured power offtake.Aggressive bidding by few players could also threaten the viability of new projects likely to be commissioned over the mediumterm. As on December 31, 2015, gross non-performing assets (NPAs) in the private sector sharply increased to 11.6 per centfrom 4.2 per cent as on March 31, 2015, mainly due to slippages in few large private sector accounts. Accordingly, overallgross NPAs increased to 1.71 per cent as on December 31, 2015 from 0.74 per cent as on March 31, 2015. Additionally,REC's top 10 customers accounted for about 40 per cent of its advances as on December 31, 2015. REC has been able tomanage asset quality risks owing to its criticality to borrowers and through various asset protection mechanisms. CRISIL,however, believes that REC's asset quality will remain vulnerable over the medium term primarily because of the weakfinancial risk profiles of SPUs and the increased challenges faced by the private sector borrowers.
Outlook: StableCRISIL believes that REC will continue to benefit from GoI's support, given its strategic role in the implementation of GoI'spower sector initiatives and the government's majority ownership in the company. Moreover, REC will maintain its healthyposition in the infrastructure-financing segment along with comfortable capitalisation and earnings. The outlook may be revisedto 'Negative' if there is a decline in REC's strategic importance to, or in the support it receives from, GoI. The outlook may alsobe revised to 'Negative' if there is a significant and sustained deterioration in REC's asset quality or profitability.
About the CompanyIncorporated in 1969, REC is a public financial institution under the administrative control of the Ministry of Power, GoI. REC isregistered with Reserve Bank of India as a non-banking infrastructure finance company (NBFC-IFC). Until 2003, REC's primaryobjective was to provide financial assistance on concession to SPUs for rural electrification. REC's mandate was broadened in2003 to include financing of all segments of the power sector; REC finances generation projects, including independent powerprojects. Since September 2009, REC's mandate has been further widened to include financing activities allied to the powersector, and power-related infrastructure, such as coal and other mining activities, and fuel supply arrangements.For 2014-15, REC reported a total income (net of interest expense) and a profit after tax (PAT) of Rs.85.4 billion and Rs.52.6billion, respectively, up from Rs.70.8 billion and Rs.46.8 billion, respectively, in the previous year. For the nine months endedDecember 31, 2015, REC reported a total income (net of interest expense) and a PAT of Rs.71.4 billion and Rs.44.7 billion,respectively, compared to Rs.62.7 billion and Rs.41.6 billion, respectively, for the corresponding period of the previous year.
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May 17, 2016 http://www.crisil.com
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Rural Electrification Corporation Limited
Instrument Amount rated Rating Rating Action Long term borrowing programme 2016-17 Rs.15,000 crore [ICRA]AAA Assigned Short term borrowing programme 2016-17 Rs.7,000 crore [ICRA]A1+ Assigned
ICRA has assigned the rating of [ICRA]AAA on the long term borrowing programme of Rural Electrification Corporation Limited (REC) for an amount of Rs. 15,000 crore†. ICRA has also assigned the rating of [ICRA]A1+ (pronounced ICRA A one plus) to the Rs. 7,000 crore short term borrowing programme of the corporation†. ICRA has a rating outstanding of [ICRA]AAA to the various long-term bond and bank borrowing programmes, and a rating outstanding of [ICRA]A1+ (pronounced ICRA A one plus) for its commercial paper/short-term debt programme of the corporation.† The [ICRA]AAA ratings are underpinned by REC’s sovereign ownership (60.64% of equity share are held by Government of India as on December 31, 2015) and the important role the corporation plays as a nodal agency for the Government of India’s rural electrification schemes under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and also as a sole nodal agency for operationalisation of NEF1 scheme. Further, REC, as one of the major power sector financiers, remains strategically important for the Government of India (GoI), given the latter’s objective of augmenting power capacities across the country. The ratings continue to draw comfort from REC’s comfortable earnings profile, its comfortable liquidity position, and its strong financial flexibility, which, along with its access to low-cost capital gains bonds (accounting for around 10% of total borrowings as on Dec-15), enables it to raise long-term funds at competitive rates. These strengths are however are moderated by the corporation’s exposure to a single sector and the high concentration of weaker-credit-quality State power utilities and high vulnerability of loans to Independent Power Producers or IPPs (loans to IPPs accounted for 15% of REC’s loan book as on December 31, 2015). ICRA however notes the approval of UDAY (Ujwal DISCOM Assurance Yojana) on November 5, 2015 by GoI, a scheme with an objective to turnaround the financial health of state owned distribution companies. The scheme proposes a phased takeover of discom debt by state governments and steps to improve operational efficiencies, reduce cost of power purchase and enforce financial discipline of DISCOMs through an alignment with state finances. The scheme also envisages the states taking over the future losses of discoms from FY 2016-17 onwards in a graded manner. ICRA believes that the timely implementation of the scheme, which is optional, by State Governments remains critical for ensuring the credit quality of not only the distribution companies, and also for the generation industry by enabling the discoms to offtake power as well as make timely payments. As of now, discoms of ten states have signed the memorandum of understanding for restructuring of their debt under Uday scheme. Out of these, eight state governments have taken over the part of discoms debt by issuing bonds of Rs 98,960 crore under Uday scheme in FY16. Total debt of the discoms of these eight states accounted for around 45% of the total debt of all discoms as on September 30, 2015. Furthermore health of the discoms would also be dependent upon adequate and timely tariff revision by SERCs including periodic pass-through of fuel cost fluctuations and timely & adequate subsidy releases by State Governments. The scheme however could impact REC’s credit growth over the next 2 years as well as its profitability profile to some extent. As on March 2015, around 42% of REC’s credit book was towards exposure to state discoms which could come under the purview of the scheme, 75% of which under the provisions of the scheme could get repaid by March 2017, while the balance 25% could get re-priced at 10 bps above base rate. Within REC’s total discoms exposure of 42%, around 17% of total book was towards the state discoms where state government have taken over part of the debt (through issuance of bonds) in FY16. Following bond issuances by state government, REC’s discoms loan of around Rs 10,000 crore (~5% of loan book) was repaid in FY16 and in early FY17. † For complete rating scale and definitions, please refer ICRA’s website www.icra.in or other ICRA Rating Publications. 1 National Electricity Fund – an interest subsidy scheme introduced by GoI to promote the capital investment in the distribution sector
As for impact on profitability, while REC’s NIMs could decline to some extent with re-pricing of balance 25% exposure at base rate plus 10 bps, REC which had an ROA and ROE of 3.1% and 22.5% respectively in December 2015 however is expected to continue to maintain reasonable profitability. At the same time Uday package is expected to reduce the vulnerability of RECs exposures to discoms and also reduce counter party risks on its exposure to the IPP segment. ICRA has also taken note of REC’s exposure to the Independent Power Producers (IPP) segment, which stood at 15% of total portfolio as on December 31, 2015. In light of the prevailing challenges with respect to significant time and cost overruns, fuel availability, disputed/competitive power sale tariffs and environmental & land acquisition issues large number of REC’s IPP exposures have high level of vulnerability. ICRA however favorably notes the sustained coal output growth by Coal India Ltd and also the possible easing of counter party risks for IPPs incase of successful implementation of the Uday scheme. In light of high vulnerability of IPPs loan book, REC’s Gross NPA % increased from 0.74% as on March 2015 to 1.71% as on December 2015. Going forward, it would be important for the corporation to maintain a strict control over collections from the IPP segment. As on December 31, 2015, REC had a gearing of around 6.2 times, and going forward, its ability to maintain this ratio at a prudent level would be an important rating consideration. REC enjoys a comfortable asset-liability matching profile, with low cumulative mismatches in the short term. Un-hedged foreign currency borrowings of REC accounted for around 26% of its net worth as on March 31, 2015, which exposes it to foreign currency variations. REC adopts an accounting policy of amortizing exchange differences on long term foreign currency items over their tenure. Total un-amortized foreign currency item translation losses of REC as on December 31, 2015 stood at Rs. 221.88 crore or 0.8% of shareholder funds. Repayment on a majority of REC un-hedged foreign currency borrowings are largely staggered between FY16-FY21 and such losses could crystallize unless there is a reversal in foreign currency rates by then. Going forward ability of the corporation to manage its foreign currency risks would have an important bearing over the stability of its earnings profile. As regard REC’s investments in Additional Tier 1 (AT1) instruments of public sector banks (PSBs), so far REC has invested Rs 1,500 crore in AT1 instruments of PSBs, management mentioned that total investments by REC in these instruments are not expected to be more than Rs 3,000-3,500 crore (approximately around 10% of REC’s net worth). About the Corporation REC was incorporated in 1969 to exclusively fund the GOI’s rural electrification programmes. The GoI has a majority shareholding of 60.64% in REC, while the balance is held by the public. The corporation was conferred the status of ‘Navratna’ in May 2008. While the initial mandate of REC was to finance village electrification, pump-set energising and T&D2 projects, since 2002-03 the mandate has been extended to cover power generation projects larger than 25 MW and IPPs. REC is also the nodal agency for implementing of the GoI’s rural electrification scheme, the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY). According to audited results for the financial year ended March 31, 2015, REC reported a 12% growth in its profit after tax (PAT) to Rs. 5260 crore that year on an asset base of Rs. 1,83,175 crore. During the nine month period ended December 31, 2015, REC reported a profit after tax of Rs.4467.6 crore against a profit of Rs. 4163.4 crore during the corresponding period in the previous financial year. As on December 31, 2015 the net worth of the corporation stood at Rs. 28,014 crore, while the Gross NPA% and net NPA % stood at 1.71% and 1.36% respectively.
May 2016 For further details please contact: Analyst Contacts: Ms. Vibha Batra, (Tel. No. +91-124-4545 302) [emailprotected] Relationship Contacts: Mr. L. Shivakumar, (Tel. No. +91 22 6114 3406) [emailprotected] 2 Transmission & Distribution
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