Issue Opening Date: February 25, 2013
Issue Closing Date: March 15, 2013
Credit Ratings: “CRISIL AAA/Stable” by CRISIL “CARE AAA” by CARE “IND AAA” by IRRPL and “[ICRA] AAA” by ICRA.
Issue of Bonds: Tax Free Secured Redeemable Non Convertible Bonds of Face Value of Rs. 1,000 each in the nature of debentures having tax benefits under Section 10 (15)(iv)(h) of the Income Tax Act, 1961, as amended (“Bonds”) for an amount aggregating upto the Shelf Limit* (Rs. 4,500 crores) by way of issuance of Bonds in one or more tranches in the Fiscal 2013 (each a “Tranche Issue”, and together all Tranche Issues upto the Shelf Limit, “Issue”).
Issue Price: Rs. 1,000 per Bond.
Minimum Application Size: 5 Bonds (Rs. 5,000) and in multiples of 1 Bond (Rs. 1,000) thereof
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Issue Size: Public Issue by Rural Electrification Corporation Limited (“REC” or “Issuer” or the “Company”) of Tax Free Secured Redeemable Non Convertible Bonds of Face Value of Rs. 1,000 each in the nature of debentures having tax benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended (“Bonds”) for an amount aggregating upto the Shelf Limit* (Rs. 4,500 crores) by way of issuance of Bonds in one or more tranches in the Fiscal 2013 (each a “Tranche Issue”, and together all Tranche Issues upto the Shelf Limit, “Issue”).This Tranche Issue by the Issuer is of Bonds aggregating to Rs 100 crores with an option to retain oversubscription for an amount upto the Residual Shelf Limit Rs.2,482.65 crores (“Tranche-2 Issue”).
Listing: BSE and NSE. NSE shall be the Designated Stock Exchange for the Issue.
Interest on Application Money receiving allotment: @ 6.88% p.a. and 7.04% p.a. on Tranche-2 Series 1 and Tranche-2 Series 2 respectively for allottees under Category I, Category II and Category III Portion, and @ 7.38% p.a and 7.54% p.a. on Tranche-2 Series 1 and Tranche-2 Series 2 respectively for allottees under Category IV Portion
Mode of Allotment: In dematerialised form as well as in physical form, at the option of applicants
Depositories: NSDL and CDSL
SALIENT FEATURES OF THE PROPOSED TAX FREE BONDS
- The CBDT, MOF, GoI, by virtue of powers conferred upon it under item (h) of sub clause (iv) of clause (15) of Section 10 of the Income Tax Act, 1961, has issued notification authorising REC to issue Bonds for an amount aggregating to Rs. 5,000 crores in one or more Tranches during the financial year 2012-13. Out of the allocated limit of Rs. 5,000 crores, REC has raised Tax Free Bonds aggregating to Rs. 500 crores on private placement basis on November 21, 2012. Consequently, the Shelf Limit was reduced to Rs 4,500 crores. Further the Company has raised Rs 2,017.3471 crores through public issue in terms of Prospectus Tranche – 1.
- Tax benefits u/s 10 (15) (iv) (h) of the Income Tax Act, 1961 – interest on these Bonds shall not form part of total income.
- Credit Ratings of “CRISIL AAA/Stable” by CRISIL, “CARE AAA” by CARE , “[ICRA] AAA” by ICRA & “IND AAA” by IRRPL indicating Highest Degree of Safety in terms of timely servicing of financial obligations.
- Bonds to be allotted in dematerialized form as well as in physical form, at the option of the applicants but tradable in dematerialized form.
- Allotment would be on first come first serve basis based on the date of upload of the application on the electronic system of the stock exchanges.
- Bonds are proposed to be listed on the BSE and NSE.
HIGHLIGHTS OF TAX BENEFITS
- Interest from these Bonds shall not be included in total income of any person as per provisions of Section 10 (15) (iv) (h) of Income Tax Act, 1961.
- Since the interest income on these Bonds is exempt from tax, no Tax Deduction at Source is required.
- Wealth Tax is not levied on investment in bonds under section 2(ea) of the Wealth-tax Act, 1957
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Source: Shelf Prospectus dated November 26, 2012 & Prospectus Tranche-2 dated February 13, 2013
Disclaimer: “Invest only after referring to final prospectus”.
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