Sebi wants 500 violators blacklisted

Capital market regulator Sebi has decided to share with the Ministry of Corporate Affairs the names of about 500 companies that allegedly garnered money from investors in violation of its Collective Investment Scheme (CIS) rules.

Sebi (the Securities and Exchange Board of India) would also give the names of the directors of such entities to the ministry so that necessary action can be taken to prevent these companies and persons from associating with any new company, a senior official says.

The Collective Investment Schemes, where an entity pools in money from investors for certain pre-specified purposes and later distributes the profits or income, come under Sebi’s ambit.

In some recent crackdowns, Sebi had barred companies including Rose Valley Real Estate, Sun-Plant Agro and Pearl Green Forest from raising public money and from launching any new schemes.

Many of these entities and their operators and directors tend to restart similar business under a new name and numerous investors are taken for a ride before they come under the Sebi scanner, the official says.

Sebi has requested the ministry to circulate the names of defaulter CIS entities and their directors among all the Registrars of Companies (RoCs) in the country to prevent them from being associated with any new company. Sebi is also of the view that an overhaul of the current CIS regulations is needed, as loopholes in the existing rules allow investors to be taken for a ride.

Sebi will take up the issue of these regulatory gaps at a meeting of the Financial Stability and Development Council chaired by the Finance Minister. The council includes top financial sector regulators such as the RBI Governor and the Sebi Chairman.

While hundreds of companies have engaged in CIS activities in the country, just one such entity is registered with Sebi to undertake such business. According to Sebi data, more than 100,000 investor complaints are pending with it in connection with such schemes, and the matters have been sub-judice for long in most cases.

While Sebi is the regulatory authority for such schemes, a number of other government agencies and departments also govern similar investment products and a lack of clarity in this regard comes in the way of bringing the guilty to book.

Source: Business Standard

Sebi to come out with IPP guideline

Capital market regulator Sebi has said it would issue guidelines next week for private placement of shares through auction route to institutional investors by promoters.

"IPP (Institutional Placement Programme) guideline would come in next 3-4 days. Work has been done with regard to changes in regulation. Those changes would be done in next 3-4 days," Sebi Chairman U K Sinha said.

IPP would allow promoters to sell up to 10 per cent of their capital through auction to institutional investors.

Opening of this additional route would facilitate the disinvestment programme of the government in current market conditions.

The government is running against time to meet its ambitious disinvestment target of Rs 40,000 crore for the current fiscal.

"This method can be used only for the purpose of complying with minimum public shareholding requirements under Securities Contract Regulation (Rules) or SCRR, either by way of fresh issue of capital or dilution by the promoters through an offer for sale," Sebi had said earlier this month after its board approved a new IPP route.

Using this method, public shareholding can be increased by 10 per cent or lesser percentage as is required to comply with the minimum public shareholding requirement, it had said.

As per government norms, at least 10 per cent of the shareholding in all listed state-owned companies should be with the public, while in the case of private sector companies, the minimum public shareholding should be 25 per cent.

Sebi had said under the IPP mode, companies would be required to simultaneously file a red herring prospectus/prospectus with SEBI, the Registrar of Companies and stock exchanges.

Under the new mechanism, the offer would be restricted to Qualified Institutional Buyers (QIBs), it said. A minimum of 25 per cent of the offer would be reserved for mutual funds and insurance companies.

The company or promoter would announce an indicative floor price or price band at least one day prior to the opening of the offer, it had said.

Issuers shall endeavour to maximise the number of allottees in order to ensure wider distribution of shares, it had said, adding that there shall be at least 10 allottees in every IPP issuance. Furthermore, no single investor shall receive allotment for more than 25 per cent of the offer size.

The regulator also allowed the stock exchange to offer a separate window for the purpose of such sales. The duration of this window would co-exist with the normal trading hours, it had said.

Allotment would be done either on price priority or a clearing price basis proportionately and would be overseen by the exchanges, it added.

Source: Financial Express

HUDCO to raise Rs 4,685 cr via tax-free bonds

Housing and Urban Development Corporation Ltd (HUDCO) today said it will raise up to Rs 4,685 crore through a public issue of tax-free bonds.

The company said that it had filed a draft prospectus yesterday for the same with the National Stock Exchange (NSE), where these bonds would be listed.

“The company proposes to make a public issue of tax-free bonds of face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures... aggregating up to Rs 4,684.72 crore,” HUDCO said in a statement.

These bonds would have tax benefits for subscribers under the Income-Tax Act, 1961.

HUDCO is a public sector firm fully owned by the government for the financing of housing and urban infrastructure activities in India.

“The Finance Ministry has given us approval for raising Rs 5,000 crore through tax-free bonds. We have raised Rs 315 crore through private placement of bonds. Now we are coming up with a public issue of tax-free bonds to raise up to Rs 4,685 crore,” HUDCO Senior Executive Director, Mr R.K. Khanna, told PTI.

The funds would be utilised in project financing, he said, adding that the public issue of tax-free bonds is likely to be launched by the month-end.

“In the 2010-11 fiscal, we sanctioned Rs 19,762 crore and out of that, Rs 5,293 crore was in housing and about Rs 14,500 crore in infrastructure projects. We are targeting the sanction of Rs 24,000 crore this fiscal and out of that, 25 per cent would be toward housing schemes,” he said.

The lead managers of the issue are Enam Securities and SBI Capital Markets. The trustee for the bondholders is SBICAP Trustee Company.

L&T Infra's second tranche of long-term bonds opens on January 10

L&T Infrastructure Finance Company is looking to raise over Rs 500 crore through its second tranche of tax-saving long-term infrastructure bonds. The issue opens on January 10 and closes on February 11.

Last month, the infrastructure finance company raised Rs 530 crore through first tranche of bonds. It is looking to raise a total of Rs 1,100 crore in the current financial year.

In its latest bond issue, the company is offering a coupon rate of 8.7 per cent, which is slightly lower than 9 per cent offered in the first issue. This is because the rate is linked to the yield of the previous month's government securities, said Mr Suneet Maheshwari, Chief Executive, L&T Infrastructure Finance.

Mr Y. M. Deosthalee, Chairman and Managing Director, L&T Finance Holdings, said that this is perhaps an indication that interest rates have peaked.

“This is probably our last issue in the current financial year,” Mr Maheshwari said.

Investment of up to Rs 20,000 in the tax-free long-term infrastructure bonds is eligible for income-tax exemption under Section 80CCF.

Last quarter of the year is when most investors normally make investments to save tax. Hence, there will be lot of interest in the issue, said Mr Atul Mehra, Managing Director and Co-CEO, J. M. Financial, one of the lead managers to the issue.

There is also plenty of interest from investors in Tier-II cities, for whom the limit of Rs 20,000 would be sufficient, said Mr Anup Bagchi, MD and CEO, ICICI Securities, the other lead manager to the issue.

Other tax-free bonds

IDFC Ltd has announced its second tranche of long-term infrastructure bonds, which will open between January 11 and February 25. In its first tranche the company had raised Rs 538 crore, at a coupon of 9 per cent. It is looking to raise a total of Rs 5,000 crore by March 2012.

SREI Infrastructure Finance Ltd is also looking to raise about Rs 300 crore through its first tranche, the subscription for which closes on January 31. The coupon rates range from 8.9 to 9.15 per cent.

priyan@thehindu.co.in

Srei Infra yet to decide on second trench of bond issue

AHMEDABAD" Srei Infrastructure Finance on Monday said that it would decide on the second trench of the public issue of tax-free bonds depending upon the response to the tranche-I issue that seeks to raise upto Rs 300 crore.

"Depending on the response to this particular issue (tranche-I) we will decide whether to go for the second tranche or not," SREI CFO Sanjeev K Sancheti said. "We are now focusing more on the infrastructure debt fund through the mutual fund route to be launched by us," he said.

Srei, which was accorded a status of an Infrastructure Finance Company (IFC)by RBI in 2011, is raising up to Rs 300 crore through the first tranche of the issue which is currently on and closes on January 31.

The company had filed prospectus with the market regulator SEBI to raise Rs 500 crore through a public issue of tax free infrastructure bonds, by end of this fiscal.

IDFC, another IFC company, had mopped up Rs 538 crore from the first tranche of its tax-saving long term infrastructure bonds from around 2.7 lakh retail investors recently. IDFC company had plans to raise Rs 5,000 crore from the infra bonds issue this fiscal.

L&T Infra Finance, today, announced another trench of tax saving bond issue to raise Rs 570 crore though at a lower coupon rate of 8.70 per cent. It raised Rs 530 crore in the first trench at an interest rate of nine per cent.

Srei Infra's bonds with a face value of Rs 1,000 will be issued in four series at an annual interest rate of 8.90 per cent for series 1 and 2 with 10-year maturity and 9.15 per cent for series 3 and 4 with 15-year maturity. Bonds have a lock-in period of five years.

The company's consolidated disbursements last fiscal stood at Rs 14,400 crore. It expects a 25-30 per cent growth in disbursements this fiscal.

Its total market borrowings stood at Rs 13,000 crore as of September, 2011. It gross NPA's range between 2 to 2.3 per cent.

Source: EconomicTimes

IDFC's Rs 4,400 cr infra bond issue soon

New Delhi: Infrastructure Development Finance Company (IDFC) today said it will raise Rs 4,400 crore through the issuance of a second tranche of tax-saving long term infrastructure bonds on January 11.

The second tranche of the bond issue would be open for subscription till February 25, IDFC said in a filing to the Bombay Stock Exchange.

In December, IDFC had mopped up Rs 538.08 crore from the a first tranche of tax-saving long-term infrastructure bonds.

The company plans to raise Rs 5,000 crore from infra bond issues this fiscal. The five-year bonds have a coupon of 9 per cent.

The NBFC had mopped up Rs 1,451 crore from over 7.3 lakh retail investors through the issue of long-term infrastructure bonds in FY'11.

Source: Financial Express

Interest rates on post office savings scheme to remain fixed till maturity

The Government today said that the interest rates on post office savings scheme, except the PPF, will remain fixed throughout the term of the scheme.

It clarified that the interest rate for such small savings will be declared on April 1 every year and will remain valid till the maturity of the scheme.

However, in the case of Public Provident Fund (PPF), which is a 15-year scheme, interest rates would not remain fixed for the entire period. The annual interest accruals in the PPF account will depend upon the rate for that particular year, the Finance Ministry said.

“The rate of interest on small savings schemes will be aligned every year with the rates of Government securities of similar maturity ... the rates are fixed and not floating so far as individual investments except PPF are concerned,” it said, while responding to media reports that the interest rates on all small savings schemes are floating.

Interest rates on PPF

With effect from December 1, 2011, the Government has increased the interest rates on PPF to 8.6 per cent from 8 per cent now, and also raised the ceiling on annual contributions to the fund to Rs 1 lakh from Rs 70,000.

Interest rates on savings account in post offices also rose to 4 per cent from 3.5 per cent. Similarly, interest rates on deposits of other maturities too were raised from December.

“The rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revision in interest rates in subsequent years will only be applicable to the investments made in the relevant period,” it said.

Kisan Vikas Patra

The sale of ‘Kisan Vikas Patras’ (KVP) has also been discontinued from November 30, 2011. There was an apprehension about KVP, which was kind of a bearer instrument, that it was used for money laundering.

In addition, the maturity period of monthly investment schemes (MIS) and national savings certificates has been reduced from six years to five years. MIS earns an interest of 8.2 per cent, but accounts opened on/after December 1, 2011, would not be entitled for bonus.

Besides, loans taken from PPFs would attract an interest of two per cent per annum from December 1, 2011.

Agents commission

The Government has done away with the commission paid to the agents for opening PPF accounts and Senior Citizens Savings Schemes, while the agents’ commission for Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) has been fixed at four per cent. Besides, agency commission for all other schemes has been halved to 0.5 per cent.

With bank deposits giving over nine per cent return, people are now preferring parking funds in banks and hence there has been a net outflow from the small savings schemes, which are administered by the National Small Savings Fund (NSSF).

Govt sets eyes set on Post Office banks

New Delhi: The government's plan to tap into India's vast postal system to reach out to the unbanked population by utilising offices across the country as banks is expected to take some shape this year as the proposal has been sent to the Finance Ministry for its nod.

The idea that 1.55 lakh Post Offices could double up as banks is aimed at aiding the government's goal of financial inclusion, especially in rural areas. Once implemented, coverage of the country's banking network will increase three-fold in one stroke.

Around 90 per cent of the Post Office branches are in rural areas. In contrast, out of approximately 87,000 bank branches in the country, around 24,000 are in rural India.

India Post is the biggest postal network in the world, a major portion of which, about 1.4 lakh post offices, are located in rural India.

Although the idea has been around for a while, Communications Minister Kapil Sibal brought it centre-stage in July. However, before it takes shape, the Acts governing the banking and postal sectors will have to go through major amendments.

"Before applying for a banking licence, there are certain procedures that need to be completed. The work is in progress and the proposal has been submitted to the Ministry of Finance for its nod to go ahead," a government official privy to the development said.

The year may witness quite a few amendments to the 113-year-old Post Office Act, which are aimed at opening up the sector.

The proposed amendments in The Indian Post Office Act, 1898, include recognising the services of private courier players and bringing them under the regulatory ambit. This will legalise 'forbidden services' like sending personal letters through private courier companies.

However, a lot needs to be done within the Department of Posts before reforms are implemented in the sector, as the industry is demanding that the services wing of the DoP should be a separate entity. This could be done along the lines of BSNL, which was hived-off from the Department of Telecom, industry players have said.

During 2011, Sibal made efforts to kick-off reforms in the sector, starting with India Post.

"After many years, we have seen government is ready to listen to industry. Minister (Sibal) has said that no policy decision will be made without taking views of industry. It's a highly welcome move, but DoP officials are still not ready to open up," said an industry representative.

Sibal had announced a 100-day agenda for revamping the DoP, especially its services. The agenda was designed around objectives assigned under the 11th Five-Year Plan (2007-12).

The agenda included provisions to facilitate round-the-clock transactions by customers through web portals, call centres, ATMs and other tools to modernise and enhance the operational and service efficiency of the government-run 'India Post'.

Sibal attempted to create an image of modernisation in India Post by launching an e-post office portal with an e-commerce section. He pushed India Post to build partnerships with private players for utilising its capacity. The effort did show some results.

In June, 2011, India Post partnered with apparel retail chain Fab India to provide its customers with the facility to ship their purchases to destinations they want from the store.

The DoP also partnered with state handloom centres to provide logistics services to craftsmen for both national and international destinations.

Built up over the years, its reach in the hinterland caught the government's attention as a tool to reach out to the masses under public programmes.

The year for the DoP began with a partnership with the UIDAI to deliver Aadhar numbers. In November, the UIDAI roped in TCIL to support India Post, which could not manage the work load in view of inadequate printing facilities at Kolkata and Delhi.

India Post was printing about 1.5 lakh Aadhaar cards a day, whereas the UIDAI enrollment was over 10 lakh residents daily in that month.

The DoP was also seen as good option to disseminate wages to people under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). However, a lack of capacity and lax management posed questions over its service standards.

A parliamentary Standing Committee on the DoP found a huge gap between the wages disseminated by the DoP and the figures recorded by the Department of Rural development.

In 2009-10, the gaps in the data submitted by both departments widened to 13 lakh in terms of total MGNREGA worker accounts and over Rs 1,000 crore vis-a-vis the wages distributed.

During 2010-11, the DRD furnished the data one month later than the DoP. Upon examination, it was found there was a deviation of 29 lakh in respect of the number of accounts and about Rs 1,221 crore in respect of the amount disbursed vis-a-vis the DoP's figures, the Standing Committee said in its report.

Besides these glitches, a fund crunch left the DoP unable to address urgent and important requirements.

During the 11th Five-Year Plan, the DoP was allocated Rs 2,700 crore for technology upgradation of Post Offices. However, the Expenditure Finance Committee (EFC) restricted this to Rs 2,505.86 crore.

The final amount approved two years after commencement of the Plan was Rs 978 crore.

With immense potential and as possibly many hiccups on the way to realising them, 2012 will be the year to watch which way India's postal system goes.

Source: Financial Express

IDFC mops up Rs 533 cr from tax-saving infra bonds

Infrastructure Development Finance Company (IDFC) today said it had raised Rs 532.6 crore through an issue tax-saving infrastructure bonds.

The bonds have been alloted against 2.6 lakh applications, IDFC informed the BSE.

The first tranche opened for subscription on November 21 and closed on December 16. The company has plans to raise Rs 5,000 crore from the infra bonds issue this fiscal.

The five-year bonds carry a coupon rate of 9%.

Amount raised through the first tranche this fiscal is 14% higher than its equivalent in FY11, the company had said in a statement.

The NBFC firm had mopped up Rs 1,451 crore from over 7.3 lakh retail investors through the issue of long-term infrastructure bonds in FY11.

Source: Business Standard

Sebi cracks down further on IPOs fraud

Capital market regulator Sebi is reviewing the process for initial public offerings (IPOs), its chairman said on Thursday, a day after it banned seven small companies from fund-raising for what it said were IPO rule violations.

We are currently reviewing the entire IPO process, including shortening the timeline for the entire process, U.K. Sinha said.

The Securities and Exchange Board of India (Sebi) said on Wednesday a probe revealed a fraud in IPOs, inadequate documentation and due diligence and possible trading violations on the day of listing.

The IPOs were launched between July and November and had raised about 4.5 billion rupees ($84 million).

It also banned the directors of the seven companies from dealing in the securities market and told some of the merchant bankers they would not be able to handle new capital issues until further notice.

We are happy that Sebi has taken such a bold step, which is an unprecedented action, Sageraj Bariya, managing partner of research house Equitorials, wrote in a note. Sebi might be slightly late but it is definitely better than never.

Shares in the companies -- PG Electroplast, Brooks Laboratories, RDB Rasayans, Taksheel Solutions, Tijaria Polypipes, Onelife Capital Advisors and Bharatiya Global Infomedia -- fell 5-17 percent on Thursday in a Mumbai market that was down 1 percent.

Some of the companies could not be reached for comment, while others did not return calls.

Five of the companies have lost 90 percent or more of their value from their peaks, while PG Electroplast is down 70 percent and OneLife Capital has lost about a third.

The companies and merchant bankers have 21 days to respond to the Sebi order.

MERCHANT BANKS UNDER SCANNER

We will be representing our case to the regulator ... within the time that has been specified, Sanjay Dewan, associate director at Almondz Global, told Reuters over the telephone from Delhi.

The merchant banker, along with PNB Investments, the investment banking arm of state-run Punjab National Bank , D&A Financial, Artherstone Capital, Chartered Capital and Onelife Capital Advisors have been barred from taking new assignments, Sebi said.

Officials at PNB Investments and Onelife Capital were not available for comment, while calls to the other merchant bankers were unanswered.

Sebi, over the last 6-9 months, has been highlighting to the merchant banking community that you have to do very serious due diligence, Sinha told the news channel.

We are trying to hold them responsible ... and I hope by this method a pressure will be built on future issuers, he said. ($1 = 53.3 rupees)

Source: Financial Express

SEBI to launch toll-free investor helpline

Chennai: Market regulator SEBI would launch a toll-free helpline as part of educating investors on the securities market, Chairman U K Sinha a said today.

With the launch of helpline, an investor can ask any question regarding the securities market which will be answered. "The reason why we are launching is that we have identified that self-help mechanism could be more useful for investor," Sinha told reporters.

Besides, SEBI would launch in association with the Central Board of Secondary Education a course curriculum on financial markets at the secondary school level as part of educating the younger generation (about the financial market).

"We are trying to make all the students aware about the basics of financial market. (Before launching), the curriculum will be tested. It will be built in to the senior secondary curriculum to begin with..", he said on the sidelines of a conference.

Asked why it has been launched through the CBSE mode than targeting the State government run schools, he said once this experiment was successful, it would be expanded into other areas.

Source: Financial Express

United Bank to issue 10-year bonds

United Bank of India will issue 10-year bond at a coupon rate of 9.20 per cent by the end of December this year in order to augment its Tier II capital. The bank has appointed IDFC Ltd as the arranger for its proposed Tier – II bond issue.

The bank plans to raise about Rs 100 crore through these non-convertible bonds. The bond issue will have green shoe options to raise additional Rs 100 crore on private placement basis, said a press statement issued by the bank.

United Bank's capital adequacy was at 12.95 per cent as on September 30, 2011

IIFCL shelves plans for bond issues

India Infrastructure Finance Company Ltd (IIFCL) has dropped plans to raise debt resources through tax-saving and tax-free bonds in the remaining months of the current fiscal.

Domestic fund raising plans through tax bonds have been shelved for now as the market conditions are very tough and also there are sufficient surplus funds with IIFCL, its Chairman and Managing Director, Mr S.K. Goel said.

“We have sufficient liquidity. That is why we are postponing our fund raising plans. We were earlier looking to mop up funds through both tax savings and tax free bonds. Our board has decided against this for the current fiscalm” Mr Goel said.

He also highlighted that the Government was really not interested in piling of cash in any of the institutions. “They are rather trying to squeeze out some liquidity from cash rich companies. Some cash may be drawn from us also.”

As IIFCL borrows funds on a long-term basis (average tenor of 10 years), Mr Goel felt that raising money at the current high interest rates may not be in the best interest of IIFCL.

“At today's rate if we tie-up funds for 10 years.... after two years, we may repent why we had taken money at this price. It may be better not to take funds now unless we very urgently require them”.

High interest rates

Both tax-free bonds (for corporates) and tax-saving bonds (for retail investors) today come at high interest rates, thanks to tightening of interest rates in the banking system, following successive 13 policy rate hikes by the Reserve Bank in the last 18 months.

Only the cash starved institutions may be compelled to go in for such high rates, Mr Goel said.

“Our aim is to provide loans to developers at concessional interest rates. It will not be in my interest to raise funds at such high rates”, he said.

Till date, IIFCL has sanctioned loans worth Rs 39,000 crore. Of this, the disbursement in the domestic market by this state-owned company is about Rs 19,000 crore.

Mr Goel said that IIFCL's London subsidiary has so far sanctioned loans worth $ 3.4 billion and disbursed about $ 800 million.

IIFCL is also yet to draw down the $1.195 billion line of credit made available to it by the World Bank.

Yields on govt bonds likely to ease this week

Yields on government securities are expected to ease in the coming week and will hover in the range of 8.3 per cent to 8.35 per cent for 10-year benchmark bonds, treasury officials of various banks have said.

“Yields are likely to be in the range of 8.3-8.35 per cent for the 10-year benchmark bonds this week, as liquidity issues are being addressed by the central bank through open market operations (OMOs),” Indian Overseas Bank General Manager (Treasury), Mr T.S. Srinivasan, told PTI.

On Friday, yields on the 10-year benchmark bond closed at 8.36 per cent, one basis point lower in comparison to the previous week.

OMOs, which are conducted by the RBI to infuse liquidity into the system through the buy-back of government securities, have been conducted frequently by the central bank in the last one month to ease pressure on the liquidity front.

The central bank has infused around Rs 33,300 crore into the system through OMOs in the last one month and is likely to infuse more in the future.

Mr Srinivasan further said that government spending would accelerate from January as the Budget nears, making the liquidity situation comfortable.

It is usually seen that departmental spending by various government agencies speeds up from January to expend money allocated in the Budget for the fiscal. Mr Srinivasan said the possibility of the government pledging some of its holdings in private companies to borrow more, as suggested by reports, would support this trend.

“There are reports suggesting that the government may pledge its holding in some of the private companies to borrow around Rs 50,000 crore from the market. If that happens, pressure on yields will further ease,” he said.

Earlier, market participants had anticipated that if government borrowing increases, yield rates will harden due to oversupply.

Another treasury official echoed a similar sentiment about the yields on government bonds.

“It should flatten out as the central bank is infusing liquidity through open market operations. Also, the regulations allowing a higher FII limit and some of the other measures should help in easing of the yields,” Corporation Bank General Manager (Treasury), Mr P. Rajaram Karanth, said, adding that yields on the 10-year G-Secs will be around 8.33 per cent next week.

He also said liquidity that has gone out of the system due to advance tax payouts would be pumped back in, which would ease the liquidity conditions going ahead.

NHAI to launch tax-free bonds

New Delhi: Unfazed by uncertainty in the capital markets, the National Highways Authority of India (NHAI) will launch its first ever tax-free bonds issue of Rs 10,000 crore on December 28.

The issue will close on December 30, a senior Road Transport Ministry official said.

The official further said the interest (coupon) rate of the bonds issue will be between 8 to 8.5 per cent, while refusing to disclose the exact number.

"A formal announcement will be made tomorrow by Road Transport Minister C P Joshi and you should wait for that," the official said, adding that the money raised from it will be used to partly finance various National Highways projects under different government schemes.

Some money will also be used for viability gap funding for BOT (build-operate-transfer) road contracts, the official added.

As per the prospectus filed by NHAI with the market regulator SEBI, the bonds will have two maturity periods of 10 and 15 years, and would get listed on the BSE and the National Stock Exchange.

In this year's Budget, the government had allowed NHAI to raise Rs 10,000 crore from the tax-free bonds, an instrument never used by it earlier. Till now, it used to raise funds through issue of 54EC bonds, under which subscribers can claim exemption of capital gains tax.

Citing the provisions of Income Tax rules, the NHAI prospectus has, however, clarified that only the interest earned on the new bonds will be tax-free, not the actual investments.

Moreover, investors will be liable to pay capital gains tax as applicable, it further said.

According to the NHAI prospectus, the bonds issue will worsen its debt to capital ratio from 0.11 to 0.29 if it raises Rs 10,000 crore from the markets. The debt to capital ratio reflects the financing strengths of a firm, higher the ratio, the more debt company has compared to its equity.

As on June 30, 2011, the NHAI's total debt (including secured loans) stood at Rs 6,636.21 crore.

The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch.

SBI Caps, ICICI Securities, Kotal Mahindra Capital and AK Capital Services have been appointed as the lead managers by the NHAI for the bonds issue.

Source: Financial Express

EPFO may lower interest rate to 8.25%

New Delhi: The advisory panel of retirement fund body EPFO has recommended a lower rate of interest of 8.25 per cent for the current fiscal compared to 9.5 per cent last year, a move that will affect over 4.7 crore subscribers.

The unions' representative on EPFO's advisory body, Finance and Investment Committee (FIC), has demanded maintaining the rate of interest at 9.5 per cent for 2011-12.

"FIC opined that payment of 8.25 per cent rate of return to its 4.7 crore subscribers during this fiscal is feasible," a source privy to the development said after a meeting today.

"The unionists present in the meeting demanded maintaining 9.5 per cent rate of return as given in 2010-11 and pointed out inaccuracies in income projection for this fiscal by EPFO officials," the source added.

Now FIC's recommendations would be tabled before the Employees' Provident Fund Organisation's (EPFO) apex decision making body, the Central Board of Trustees' (CBT), headed by labour minister for taking a final call on the issue in its meeting scheduled tomorrow.

The source said the employees' representatives in the FIC meeting sought clarification about the income estimation error which was Rs 458.73 crore.

They pointed out that when rate of return on over 85 per cent of the investment made by the EPFO is fixed, how could they calculate this amount on entire possible income of the body.

EPFO has reduced 2.5 per cent (Rs 458.73) crore as estimation error from estimated income of Rs 18,349.20 crore and projected an income of Rs 17,890.47 crore. The unionists are of the view that if this estimation error is factored in properly, then EPFO can spare around Rs 400 crore which is sufficient to pay additional 0.25 per cent over projected 8.25 per cent rate of return this fiscal.

According to estimates worked out the by the EPFO, the payment of 8.25 per cent of interest rate during 2011-12, will result in a deficit of a mere Rs 24 lakh.

It further pointed out that payment of 8.5 per cent rate of return to its subscribers will leave a deficit of Rs 526.44 crore.

The unionists, on their part, also raised the issue of interest income on the inoperative accounts on which EPFO has stopped paying interest rate from April 1, 2011, to the subscribers.

Inoperative accounts are those account which have not received any contribution for 36 months or more. There is about Rs 15,000 crore lying in those account, which was also invested and was yielding some returns, it was pointed out.

However EPFO was not clear on the issue whether the income on these inoperative accounts would be distributed among live accounts or kept as reserves when unionist asked their stand on the issue.

Source: Financial Express

Srei Infra to raise Rs 500 cr via infra bonds

Kolkata: Srei Infrastructure Finance Ltd has decided to raise up to Rs 500 crore through a public issue of infrastructure bonds.

"The company board today approved the Rs 500 crore secured, non-convertible, redeemable infrastructure bond and the issue will hit the market by early January, 2012," said Srei Infra Chairman Hemant Kanoria.

Srei has not issued retail infrastructure bonds so far, though the tax-saving tool has been available for the last two years.

Srei officials declined to provide a figure on the rate of interest of the bond as it was not yet finalised and an application has not been filed with the market regulator.

However, they indicated the rate would not be higher than 9 per cent.

Srei officials said the company would tap the 30,000-odd client base of the group and its distribution network along with normal capital market distribution channels for the issue.

In the 2011-12 fiscal, IDFC was looking to raise Rs 5,000 crore in two or three tranches and L&T Infra hoped to raise Rs 1,100 crore from infrastructure bonds, which reportedly have not been receiving a very enthusiastic response.

Source: Financial Express

IDFC raises Rs 538 cr via infra bonds

Infrastructure Development Finance Company Ltd has raised a total of Rs 538.08 crore from approximately 2.7 lakh investors through the first tranche of its “Long Term Infrastructure Bonds”.

The company is looking to raise a total of Rs 5,000 crore by March 2012 through the infrastructure bonds, said a press release issued by the company.

The issue was open for subscription from November 21 to December 16. The face value of the bond is Rs 5,000. Investment up to Rs 20,000 is eligible for tax exemption under Section 80CCF.

Nabard sanctions Rs 615 cr to Maharashtra

Nabard has sanctioned a total of Rs 615.33 crore during FY 2011-12 to the Government of Maharashtra out of its Rural Infrastructure Development Fund (RIDF).

The money is for development of roads and bridges, minor irrigation (MI), Kharland projects and construction of anganwadi centres.

The sanction comprises Rs 151.25 crore for six MI projects in the two districts of Washim and Nanded.

This is towards creation of an additional irrigation potential in 6,486 ha., and employment to the tune of 100.47 lakh non-recurring man-days and 4.87 lakh recurring man-days, besides contributing to agricultural production/productivity in the State.

Rs 346.31 crore has been given for 142 road and 26 bridge projects in seven districts which will create connectivity to the extent of 360.39 km of road and 3,205 m of bridges connecting 603 villages, 370 marketing centres as also several tourist places, pilgrimage centres etc.

This will create a recurring and non-recurring employment to the tune of 83.45 lakh man-days.

kharland projects

On the Kharland projects front, Rs 32.74 crore is for 35 projects to reclaim 4,580.74 ha of saline land in the State's four coastal districts.

This will facilitate agriculture cultivation and help increase livelihood opportunities and incremental income.

Finally, Rs 85.03 crore is for building anganwadi centres in 33 districts of Maharashtra, and will facilitate construction of pucca structures for operation and storage for anganwadi centres.

IFCI Infra Bonds open

IFCI Infra bonds series IV is now open for subscription. If you are looking for safe avenues for investment which also gives good returns, grab this opportunity!

These bonds offer an interest rate of 9.09 per cent for a 10 year tenure and a slightly higher rate of 9.16 per cent for a 15 year tenor.

While investments in the former scheme would be bought back by the company at the end of the 5th or the 7th year, investors have the flexibility to exit the 15 year investment at the end of the 5th or the 10th year through a buy back.

What's more, these investments are also tax exempt up to an investment of Rs 20,000 under Sec 80CCF.