Public Issue of Long Term Infrastructure Bonds     u/s 80 CCF of Income Tax Act, 1961                 2012 A Series       ...
Disclaimer     •    This presentation does not constitute an offer or invitation to subscribe for or purchase any securiti...
Contents        »        Infrastructure Sector – Overview        »        L&T Infra – The Issuer        »        L&T Infra...
Infra Project Finance   Structured Products   Financial Advisory Services
Growing Infra Investments . . but still a long way to go                Economic Growth                           Sectoral...
Infrastructure Sector – Strong potential     • 2011 GDP: ~US$ 4.444 trillion (Purchasing power parity basis)     • 5th lar...
Infra Project Finance   Structured Products   Financial Advisory Services
L&T Infra – Overview     • Promoted by L&T in April 2006, for financing Infrastructure Sector     • Subsidiary of L&T Fina...
L&T Infra – Overview (Contd…)     • Sound corporate governance structure           – Comprehensive policies, efficient sys...
L&T Infra – Board of Directors              Name                                       Experience                         ...
L&T Infra – Key Managerial Personnel              Name                                          Experience                ...
L&T Infra – Products and Services                        • Senior Debt Products: Term          Project         Loans, Debe...
L&T Infra – Industry & Sector Focus   Power                Roads             Telecom              Ports                 Ot...
L&T Infra – Industry & Sector Focus (Contd…)             Total Infrastructure Loans                                 Total ...
Infra Project Finance   Structured Products   Financial Advisory Services
L&T Infra – Financial Overview  Amount in Rs. Mn                                      Period from     FY ended    FY ended...
L&T Infra – Financial Overview                     Total Income (Rs. mn)                                                  ...
Infra Project Finance   Structured Products   Financial Advisory Services
Infra Bonds u/s 80 CCF of IT Act                             Government‟s new initiative to channelize long-term savings ...
Infra Project Finance   Structured Products   Financial Advisory Services
Issue Structure Highlights             Issue Schedule : January 10, 2012 to February 11, 2012  Issuer                L&T I...
Issue Structure Highlights           Issue Schedule : January 10, 2012 to February 11, 2012                               ...
Issue Structure Highlights  Maturity /                                10 years from the Date of Allotment  Redemption  Loc...
Returns on Investment               Series                       1                                     2        Interest P...
List of Intermediaries           Issue Schedule : January 10, 2012 to February 11, 2012  Debenture Trustee  Registrar     ...
Infra Project Finance   Structured Products   Financial Advisory Services
Investment Considerations                        Wholly owned subsidiary of L&T Finance Holdings    Strong Parentage    Li...
Other Investment Considerations     While other tax saving instruments available to retail investors provide an exemption ...
Comparative Return Landscape for Debt Securities                                          Pre-Tax             Post-Tax    ...
L&t infra provides future perspective on the infrastructure sector in india
Upcoming SlideShare
Loading in …5
×

L&t infra provides future perspective on the infrastructure sector in india

692 views

Published on

This document has some exclusive insights on the growing investment potential of infrabonds in India provided by L&T Infrastructure. It also provides a brief background of L&T infrastructure and it's recent tax saving bond- Tranche II.

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
692
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
18
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Split in 2 slides to improve redability when projected
  • Split into 2 slides
  • Fonts modified
  • Split into 2 slides for projection
  • Split into 2 slides for projection
  • Highlighted certain items
  • Split into 2 slides
  • L&t infra provides future perspective on the infrastructure sector in india

    1. 1. Public Issue of Long Term Infrastructure Bonds u/s 80 CCF of Income Tax Act, 1961 2012 A Series Issue Opens on: January 10, 2012 Issue Closes on: February 11, 2012
    2. 2. Disclaimer • This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. This presentation is in relation to the proposed issuance of Long Term Infrastructure Bonds by L&T Infrastructure Finance Company Limited (“Company”) and should not be construed in any manner as promotion of the Company or any of its other products. This presentation is being communicated only to persons who have professional experience in matters relating to investments and to persons to whom it may be lawful to communicate it (all such persons being referred to as relevant persons). This presentation is only directed at relevant persons and any investment or investment activity to which the presentation relates is only available to relevant persons or will be engaged in only with relevant persons. This presentation is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. Investors and prospective investors in securities of the issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such company and the nature of the securities. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements that are based on third party sources and involve known and unknown risks and uncertainties. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. There is no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. The contents of this presentation are subject to changes without prior notice. This document is just a presentation and is not intended to be a “Prospectus” (as defined under the Companies Act, 1956). Any decision to purchase securities in the context of a proposed offering of securities, if any, should be made solely on the basis of information contained in a prospectus published in relation to such an offering. No representation or warranty is given as to the accuracy or completeness of the information contained herein. By participating in this presentation or by accepting any copy of the slides presented, you agree to be bound by the foregoing limitations. For risk factor and detailed information, please refer to the Shelf Prospectus dated November 18, 2011 (“Shelf Prospectus”) and Prospectus – Tranche 2 dated January 3, 2012 (“Prospectus Tranche 2”) together with Shelf Prospectus (“the Prospectus”) filed with Registrar of Companies (ROC), Chennai, Tamil Nadu. The Prospectus is available on the websites of Lead Managers: www.icicisecurities.com,www.karvy.com, and www.jmfinancial.in and on the website of BSE at www.bseindia.com. • All investors proposing to participate in the Public Issue of Long Term Infrastructure Bonds by L&T Infrastructure Finance Company Limited should invest on the basis of information contained in the Prospectus. • Disclaimer Clause of the RBI: RBI has issued certificate of registration dated January 10, 2007 and a fresh certificate of registration dated July 7, 2010 re-classifying the company under the category “Infrastructure Finance Company”. It must be distinctly understood that the issuing of the certificate and granting a license and approval by RBI in any other matter should not in any way, be deemed or construed to be an approval by RBI to the Prospectus nor should it be deemed that RBI has approved it and the RBI does not take any responsibility or guarantee the financial soundness of the Company or for the correctness of any of the statements made or opinions expressed by the Company in this connection and for repayment of deposits / discharge of liabilities by the Company. • Disclaimer of BSE: It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the Prospectus has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the Prospectus. The investors are advised to refer to the Prospectus for the full text of the "Disclaimer Clause of BSE Limited".Infra Project Finance Structured Products Financial Advisory Services
    3. 3. Contents » Infrastructure Sector – Overview » L&T Infra – The Issuer » L&T Infra – Financial Performance » Long term Infrastructure Bonds » L&T Infra Bonds (2012A Series) – Issue Highlights » L&T Infra Bonds (2012A Series) – Issue Structure » Investment ConsiderationsInfra Project Finance Structured Products Financial Advisory Services
    4. 4. Infra Project Finance Structured Products Financial Advisory Services
    5. 5. Growing Infra Investments . . but still a long way to go Economic Growth Sectoral Infrastructure Investments (Rs. in trillion) 8.00 7.31 GDP Growth Rate (%) 7.00 6.59 10 6.00 9 8 5.00 7 4.00 3.45 6 3.40 3.14 5 3.00 2.79 4 2.00 3 1.27 1.02 2 1.00 1 0.23 0.41 0.00 0 Electricity Roads Telecom Ports Others 2008 2009 2010 2011 Tenth Plan Eleventh PlanInfra Project Finance Structured Products Financial Advisory Services
    6. 6. Infrastructure Sector – Strong potential • 2011 GDP: ~US$ 4.444 trillion (Purchasing power parity basis) • 5th largest economy in terms of GDP in 2010 • Huge infra investments expected over next 5 years – Rs 9.0 tn in Power – 57% by Private Sector – Rs 6.9 tn in Roads – 35% by Private Sector – Rs 2.0 tn in Telecom sector by private sector Strong Infrastructure Base  Engine for Accelerated Economic GrowthInfra Project Finance Structured Products Financial Advisory Services
    7. 7. Infra Project Finance Structured Products Financial Advisory Services
    8. 8. L&T Infra – Overview • Promoted by L&T in April 2006, for financing Infrastructure Sector • Subsidiary of L&T Finance Holdings Company Limited • Obtained NBFC license from RBI on January 10, 2007 • Classified as a Systemically Important Non-Deposit taking NBFC • Board comprises 50% Independent Directors Classified as Infrastructure Finance Company (IFC) by RBI in July 2010 & Notified as Public Financial Institution by Ministry of Corporate Affairs in June, 2011.Infra Project Finance Structured Products Financial Advisory Services
    9. 9. L&T Infra – Overview (Contd…) • Sound corporate governance structure – Comprehensive policies, efficient systems & processes • Professional management team – with infra sector experience • Networth of Rs. 1,486.54 Crores; Loan Portfolio of Rs. 8,790.34 Crores as on September 30, 2011 • Rated “CARE AA+” (by CARE) and “[ICRA] AA+” (by ICRA) Classified as Infrastructure Finance Company (IFC) by RBI in July 2010 & Notified as Public Financial Institution by Ministry of Corporate Affairs in June, 2011.Infra Project Finance Structured Products Financial Advisory Services
    10. 10. L&T Infra – Board of Directors Name Experience  CMD of L & T Finance Holding Company Ltd. Y.M. Deosthalee  Erstwhile Member of the Board and CFO of L&T Director  Instrumental in promoting L&T‟s Financial Services business  Served as a member of Government and SEBI Committees  Heads the Financial Services business of L&T N. Sivaraman  Wide experience in L&T group with varied responsibilities Director  Played key role in structuring demerger of L&T‟s cement business  Director of CRISIL Ltd and Chairman of its Rating Committee B.V. Bhargava  Three decades of experience in development banking & project finance Independent Director  Served as Vice Chairman & MD of ICICI Chairman of Clearing Corporation of India Ltd Dr. R.H. Patil   Instrumental in setting up the NSE & NSDL Independent Director  Served as Chairman/Member of various Government, RBI & SEBI CommitteesInfra Project Finance Structured Products Financial Advisory Services
    11. 11. L&T Infra – Key Managerial Personnel Name Experience  Heading L & T Infra since inception. Suneet K.  Over 30 years of experience in infrastructure finance, investment Maheshwari banking, corporate finance and private equity Chief Executive &  An active member of various state and central chambers of Manager commerce focusing on infrastructure sector policies and PPP matters.Infra Project Finance Structured Products Financial Advisory Services
    12. 12. L&T Infra – Products and Services • Senior Debt Products: Term Project Loans, Debentures, Securitized Debt Finance • Mezzanine Debt Products: Sub- Debt, CCD, and Preference Shares Equity • Equity Capital Investment • Convertible Preference Capital • Hybrid Debt Financial • Corporate and Project Advisory Advisory • Debt Advisory and Debt Arranging Services • Capital raising & Strategic AdvisoryInfra Project Finance Structured Products Financial Advisory Services
    13. 13. L&T Infra – Industry & Sector Focus Power Roads Telecom Ports Other • Generation • Construction • Passive • Greenfield Sectors and Infrastructure Construction • Transmission Development • Urban • Telecommunic • Expansion and • Distribution • Operation ations and Modernization Infrastructure • Maintenance Broadband • Water and Sanitation • Logistics • SEZsInfra Project Finance Structured Products Financial Advisory Services
    14. 14. L&T Infra – Industry & Sector Focus (Contd…) Total Infrastructure Loans Total Disbursements (as on Sept 30, 2011) (for the six months ended Sept 30, 2011) Total = Rs. 8,790.34 Crores Total = Rs. 2,846.57 Crores Others, 20.49% Others, Power, Ports, 35.07% 36.82% 0.65% Ports, 1.39% Telecom, Power, 14.30% 56.93% Telecom, Roads, Roads, 11.80% 14.91% 7.63%Infra Project Finance Structured Products Financial Advisory Services
    15. 15. Infra Project Finance Structured Products Financial Advisory Services
    16. 16. L&T Infra – Financial Overview Amount in Rs. Mn Period from FY ended FY ended FY ended Period from Period from Apr to Sept-11 Mar-11 Mar-10 Mar-09 Jul-07 to Mar-08 18-Apr-06 to Jun-07 Balance Sheet Items Equity capital 7,271.50 7,021.50 6,834.00 5,000.00 5,000.00 2,430.00 Net worth 14,865.39 12,348.94 10,125.68 6,266.11 5,489.50 5,034.82 Loan Funds (Borrowings) 76,017.00 61,935.26 32,367.56 17,712.00 13,650.00 0.00 (1) Infrastructure Loans 87,680.69 71,654.90 42,554.39 22,583.47 18,331.81 2,393.12 Investments 3,500.10 3,500.00 250.00 1,150.00 599.07 2,087.39 Profit and Loss Items Total Income 5,409.26 7,039.75 4,504.23 2,959.89 1,103.24 131.44 Interest & Other Charges 3,239.31 3,801.67 2,462.91 1,629.72 334.50 0.00 Employee, Establishment etc. Costs 197.94 237.85 132.05 111.7 81.91 51.73 Provision & Contingencies 52.12 57.85 253.60 77.00 0.00 0.00 Profit after Tax 1342.84 2008.27 1108.57 764.59 451.68 49.84 Note: 1. Total Infrastructure Loans net of provisionsInfra Project Finance Structured Products Financial Advisory Services
    17. 17. L&T Infra – Financial Overview Total Income (Rs. mn) Profit after Tax (Rs. mn) 8,000.00 7,039.75 2500 2008.3 7,000.00 6,000.00 5,409.26 2000 5,000.00 4,504.23 1342.8 1500 1108.6 4,000.00 2,959.89 3,000.00 1000 764.6 451.7 2,000.00 1,103.24 500 1,000.00 0.00 0 Period from FY 2009 FY 2010 FY 2011 Period from Period from FY 2009 FY 2010 FY 2011 Period from Jul-07 to Apr to Sept- Jul-07 to Apr to Sept- Mar-08 11 Mar-08 11 Net Loans Portfolio (Rs. mn) Networth (Rs. mn) 100,000.00 16,000.00 14,865.39 87,903.43 87,680.69 14,000.00 12,348.94 80,000.00 71,654.90 10,125.68 12,000.00 60,000.00 10,000.00 42,554.39 8,000.00 40,000.00 6,266.11 6,000.00 5,489.50 22,583.47 20,000.00 18,331.81 4,000.00 2,000.00 0.00 0.00 As at As at As at As at As at As at As at As at As at As at March08 March09 March10 March11 Sept11 March08 March09 March10 March11 Sept11Infra Project Finance Structured Products Financial Advisory Services
    18. 18. Infra Project Finance Structured Products Financial Advisory Services
    19. 19. Infra Bonds u/s 80 CCF of IT Act  Government‟s new initiative to channelize long-term savings of retail Purpose investors into infrastructure sector - with tax benefits to investors  IFCs & select other Institutions notified by the Government Eligible Issuers  They are eligible to issue Infra Bonds up to 25% of incremental infrastructure investments made during FY 2010-11 Eligible  Resident Indian Individuals & HUFs Investors  Investments up to Rs. 20,000 in Infra Bonds eligible for deduction Tax Benefit from taxable income for FY 2011-12 Maturity period  Bonds will have a maturity period of minimum 10 years Buy-back  Buyback facility may be availed after initial lock in period of 5 years  Bonds will be listed on BSE. Investors can exit through secondary Liquidity market after the initial 5 year lock-in period In the first tranche (Nov–Dec 2011) the company raised approximately Rs.530 Crores through Infra Bonds. The collections for FY11 Infra Bonds Issue were Rs.656.20 CroresInfra Project Finance Structured Products Financial Advisory Services
    20. 20. Infra Project Finance Structured Products Financial Advisory Services
    21. 21. Issue Structure Highlights Issue Schedule : January 10, 2012 to February 11, 2012 Issuer L&T Infrastructure Finance Company Limited (L&T Infra) Public Issue of Long Term Infrastructure Bonds in the nature of Secured, Issue Details Redeemable, Non Convertible Debentures, having benefits under Section 80 CCF of the Income Tax Act Eligible Investors Resident Indian Individuals and HUFs Aggregate amount up to Rs. 300 Crores with an option to retain an oversubscription of up to Shelf Limit of Rs.1,100 Crores, including the Size amount received against the allotment of Tranche 1 bonds i.e. approximately Rs. 530 crore Exclusive first charge on specific receivables and mortgage/charge on the Security leasehold rights of specific property Security Cover 1 time Rating ‘CARE AA+’ by CARE Ratings; ‘[ICRA] AA+’ by ICRA Ratings Face Value and Rs. 1,000 each. Minimum application for 5 (Five) Bonds and in multiples of Min. Application 1 (One) Bond thereafterInfra Project Finance Structured Products Financial Advisory Services
    22. 22. Issue Structure Highlights Issue Schedule : January 10, 2012 to February 11, 2012 Coupon Coupon Tenor Buyback Payment Option Series 1 8.70% p.a. Annual 10 At the end of 5 Instrument years years and 7 Options years Series 2 8.70% p.a. Cumulative 10 At the end of 5 compounded years years and 7 annually yearsInfra Project Finance Structured Products Financial Advisory Services
    23. 23. Issue Structure Highlights Maturity / 10 years from the Date of Allotment Redemption Lock in period 5 years from the Date of Allotment Bombay Stock Exchange of India (BSE) - Can be traded after 5 Listing year lock-in period Issuance & • In Dematerialised and Physical Form* Trading • Trading in Dematerialised form only Depository NSDL and CDSL Date of The date on which the Board / Committee of Directors Allotment approves allotment of Bonds Basis of First Come First Serve Allotment In terms of Regulation 4(2)(b) of the Debt Regulations the Company will make public issue of the Bonds in the dematerialised form. However, in terms of Section 8 (1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the Bonds in physical form will fulfil such request.Infra Project Finance Structured Products Financial Advisory Services
    24. 24. Returns on Investment Series 1 2 Interest Payment Annual Cumulative 8.70 % Coupon Rate 8.70 % p.a. compounded annually First Working Day after 5 years from First Working Day after 5 years from the Date of Allotment and first the Date of Allotment and first Buyback Date Working Day after 7 years from the Working Day after 7 years from the Date of Allotment Date of Allotment Tax Rate YIELD TO THE INVESTORS ON MATURITY (with Tax Benefits u/s 80CCF) 10.30% 10.41% 9.89% 20.60% 12.41% 11.24% 30.90% 14.81% 12.79% Tax Rate YIELD TO THE INVESTORS ON BUYBACK (with Tax Benefits u/s 80CCF) Buyback at the Buyback at the Buyback at the Buyback at the end of 5 years end of 7 years end of 5 years end of 7 years 10.30% 11.52% 10.88% 11.09% 10.40% 20.60% 14.82% 13.42% 13.83% 12.34% 30.90% 18.75% 16.45% 17.04% 14.59%Infra Project Finance Structured Products Financial Advisory Services
    25. 25. List of Intermediaries Issue Schedule : January 10, 2012 to February 11, 2012 Debenture Trustee Registrar Sharepro Services (India) Private Limited Legal Advisor to the AZB & Partners Issuer Legal Advisor to the Krishnamurthy & Co. Lead Managers Lead Managers Co-ManagersInfra Project Finance Structured Products Financial Advisory Services
    26. 26. Infra Project Finance Structured Products Financial Advisory Services
    27. 27. Investment Considerations Wholly owned subsidiary of L&T Finance Holdings Strong Parentage Limited, which is a subsidiary of Larsen & Toubro Limited (L&T - Rated ‘AAA’) CARE AA+ by (CARE) & [ICRA] AA+ by (ICRA) Dual Credit Instruments with a rating of „CARE AA+‟ by CARE are considered to offer high safety for timely servicing of financial obligations. Such instruments carry very low Rating credit risk. Instruments with a rating of „[ICRA] AA+‟ by ICRA are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Bonds can be held in Physical or Issuance Dematerialized form Buyback option available at the end of 5 Buyback Options years and at the end of 7 years for both Series • Coupon at 8.70% p.a. Returns • Effective yields to investors under buy-back options (with tax benefits) range from 10.40% to 18.75% p.a.Infra Project Finance Structured Products Financial Advisory Services
    28. 28. Other Investment Considerations While other tax saving instruments available to retail investors provide an exemption from tax on the interest earned, this issue provides an exemption from tax (deduction from taxable income) on the principal amount (Up to Rs.20,000) invested as per section 80CCF of the Income tax Act. The deduction from taxable income from investment in Infra Bonds is over and above the deduction of Rs.1,00,000 available for investments u/s 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act, 1961 No TDS on interest payment shall be deducted on Infrastructure Bonds held in dematerialized form and listed on a recognized stock exchange in India and in the case of bonds held in a physical form if the interest payment is within Rs.2,500 As per regulations, the maximum interest rate that can be offered on these tax-saving infrastructure bonds is the annualized yield on Government Securities as on the last working day of the immediately preceding month of issue Furthermore, specific to this issue, the provision to buy-back at two intervals provides added flexibility to investors to exit their investment. For example, If at the end of 5 years the interest rate environment does not justify an exit, the investors/company would have another window for buy back at the end of the 7th year. Investors can pledge or mortgage Infra Bonds to avail loans from Scheduled Commercial Banks after the 5 year lock-in period.Infra Project Finance Structured Products Financial Advisory Services
    29. 29. Comparative Return Landscape for Debt Securities Pre-Tax Post-Tax Cap on Initial Return Return Tenor Liquidity Investment (%) (%)(1) Bank Fixed Deposit (u/s 17.77% 14.90% 1,00,000 5 years and above Low 80C)(2) National Savings 12.7% 9.65% N/A 7.5 years Low Certificate No, but withdrawal Public Provident Fund(3) 17.25% 17.25% 1,00,000 15 years allowed after 6 years Mutual Funds Debt 9.35%- 8.42%- N/A One year Low Scheme-FMP(4) 9.65% 8.69% 10 years with option Infra Bond – L&T 18.75% 15.28% 20,000 to buy back after 5 Low Infra(5) years Tax Free Bond – NHAI 11.87% 11.87% N/A 10 years LowNotes:1. Post tax returns have been calculated at the maximum marginal tax rate of 30.9%.2. The rate of return on Fixed Deposit has been considered at 9.25% p.a. for tenure of atleast 5 years which are eligible for deduction under Sec 80C3. Assumed withdrawal after 6 years4. The investors‟ tax liability on long term capital gain is taken at 10%.5. After considering buy back after 5 years with annual interest payment @ 8.7%Infra Project Finance Structured Products Financial Advisory Services

    ×