Im- Infra Series IV

8/3/2019 Im- Infra Series IV

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[This is a Disclosure Document prepared in conformity with

Securities and Exchange Board of India (Issue and Listing of

Debt Securities), Guidelines, 2008]

PRIVATE PLACEMENT OF 2,00,000 (TWO LAKH) UNSECURED, REDEEMABLE, NON-CONVERTIBLE

LONG TERM INFRASTRUCTURE BONDS SERIES - IV OF RS. 5,000/- EACH FOR CASH AT PAR

AGGREGATING TO RS. 100 CRORE (RUPEES HUNDRED CRORES ONLY) WITH A GREEN-SHOE

OPTION, HAVING BENEFITS UNDER SECTION 80CCF OF THE INCOME TAX ACT, 1961

Registered & Corporate Office: IFCI Ltd. IFCI Tower, 61, Nehru Place, New Delhi - 110019Tel No.: (011) 41792800, 41732000 Fax No. 91-11- 26230029, 26230466

E-mail: [email protected]; Website:www.ifciltd.com

INFORMATION MEMORANDUM

Credit RatingBrickwork Ratings India (P) Ltd. (BRICKWORK) has vide its letter No. BWR/BLR/RA/2011-12/0061

dated May 24, 2011 assigned credit rating of "BWR AA- (pronounced as BWR Double A Minus) with

positive outlook for long term bonds. Instruments with this rating are considered to offer High

Credit Quality in terms of timely servicing of debt obligations.

Credit Analysis and Research Ltd. (CARE Ratings) has vide its letter dated May 30, 2011 assigned

credit rating of "CARE A+ to the Bonds. Instruments with this rating are considered to offer

Adequate Safety for timely servicing of debt obligations.

ICRA has vide its letter dated May 18, 2011 assigned credit rating of "LA with stable outlook for long

term bonds of IFCI. Instruments with this rating have adequate credit quality and carries average

credit risk.

The above rating is 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.

ListingThe Unsecured, Redeemable, Non-Convertible IFCI Long Term Infrastructure Bonds Series IV with

benefits under section 80CCF are proposed to be listed on the Bombay Stock Exchange (BSE).

Karvy Computershare Private Limited

Plot nos.17-24, Vittal Rao Nagar, Madhapur,

Hyderabad 500 081;

Tel : +91 40 4465 5000; Fax: +91 40 2342 0814

IDBI Trusteeship Services Limited

Asian Building, Gr. Floor, 17,

R. Kaani Marg, Ballard Estate, Mumbai - 400 001

Tel: (022) 4080 7000; Fax: (022) 6631 1776

Issue opens on: November 30, 2011 Issue closes on: January 16, 2012

Deemed Date of Allotment: February 15, 2012
http://www.ifciltd.com/http://www.ifciltd.com/http://www.ifciltd.com/


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IFCI Long Term Infrastructure BondsSeries IV2011-12 Information Memorandum

2

ARRANGERS TO THE ISSUE

(In alphabetical order)

Almondz Global Securities Limited

2nd Floor, 3 Scindia House

Janpath, New Delhi - 110 001

Tel: 011-41514666/669

Fax: 011-41514665

Email:[email protected]

Karvy Investor Services Limited

2nd Floor, Regent Chambers,

Nariman Point,Mumbai - 400 021

Tel: D +91 22-22895190/5174

Fax : +91 22-30204040

Email: [email protected]

Bajaj Capital Limited

Bajaj House, 5th Floor

97, Nehru Place,

New Delhi-110 019

Tel: 011-39881010/41693000

Fax: 011-26476638


ICICI Securities Ltd.

Shree Sawan Knowledge Park, Plot NO.

D-507, T.T .C. Industrial Area, M.I.D.C.,

Turbhe, Navi Mumbai- 400 706

Tel: 022-40701575

Fax: 022-40701022


RR Investors Capital Services Pvt Ltd

47, M M Road, Rani Jhansi Marg,

Jhandewalan, New Delhi 110 055

Tel: 011-23636362/63, 9312940483

Fax: 011-23636666


IFCI Financial Services Ltd.

2B (1), Ground Floor, Film Centre 68,Tardeo Road,

Mumbai 400 034

Tel: 022-43335111/81

Fax: 022-43335100

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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TABLE OF CONTENTS

I DEFINITIONS/ABBREVIATIONS......4

II DISCLAIMER STATEMENT.......................................................................................................6

III RISK FACTORS.............................................................................................................................7

IV ISSUE STRUCTURE (SUMMARY)17

V GENERAL INFORMATION.......................................................................................................19

i. Registrationii. Arrangers

iii. Registrariv. Trusteesv. Bankers

vi. Credit Ratingvii. Listing

viii. Future Resource raisingix. Permission/consent from prior creditors

VI DETAILEDTERMS OF THE ISSUE.............................................................................................24i. Issue

ii. Subscription related paymentsiii. Titleiv. Nominationv. Transfer

vi. Interestvii. Tenor & Redemption

viii. Modes of paymentix. Debentures Trustee

x. Rights of bondholders

VII STATEMENT OF TAX BENEFITS...........................................................................................38

VIII PROCEDURE OF APPLICATION............................................................................................40

i. Who can applyii. How to apply

iii. Payment Instructionsiv. Rejection of Applicationsv. Letters of allotment/refund order

IX ABOUT IFCI LTD.......................................................................................................................46

i. Background and Main Objectsii. Board of Directors

iii. Operational performanceiv. Details of other borrowings

X APPENDICES

i. Notification for issuance of Infrastructure Bondsii. Rating assignment lettersiii. Consent letter of Debenture Trusteeiv. List of Collecting Branches


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DEFINITIONS/ ABBREVIATIONS

Arrangers Almondz Global Securities Ltd., Bajaj Capital Ltd., ICICI Securities Ltd.,

IFCI Financial Services Ltd., Karvy Investor Services Ltd. & RR Investors

Capital Services Ltd.Articles Articles of Association of IFCI Ltd.

Board/ Board of

Directors

The Board of Directors of IFCI Ltd. or Committee thereof

Bonds Unsecured, Redeemable, Non-Convertible Long Term Infrastructure Bonds

Series-IV having benefits under section 80 CCF of the Income Tax, 1961 for

Long Term Infrastructure Bonds

Book Closure/ Record

Date

The date of closure of register of Bonds for payment of interest and

repayment of principal

Buyback Amount The amount specified as the buyback amount for the various options of bonds

Buyback Date The date on which the buyback of the Bonds shall be effected by the

CompanyBuyback Intimation

Period

The period during which the request of investor for buyback should be

received by the Issuer i.e. September 15 to November 14 of the calendar

years 2016 and 2018 for Option I & II and September 15 to November 14 of

the calendar years 2016 and 2021 for Option III & IV.

CAR Capital Adequacy Ratio

CDSL Central Depository Services (India) Ltd.

Company IFCI Limited

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 instrumentsDepository 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

Designated Stock

Exchange

Bombay Stock Exchange Ltd. (BSE)

DER Debt Equity Ratio

Director(s) Director(s) of IFCI Ltd. unless otherwise mentioned

Disclosure Document Disclosure Document dated November 28, 2011 for Private Placement of

Unsecured, Redeemable, Non-Convertible Long term Infrastructure Bonds

Series IV having benefits under section 80 CCF of the Income Tax, 1961 forLong Term Infrastructure Bonds

DP Depository Participant

EPS Earning Per Share

FIs Financial Institutions

FIIs Foreign Institutional Investors

Financial Year/ FY Period of twelve months period ending March 31, of that particular year

GoI Government of India/ Central Government

HUF Hindu Undivided Family


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Issuer/ IFCI/ Company IFCI Ltd.

I.T. Act The Income Tax Act, 1961, as amended from time to time

Listing Agreement Listing Agreement for Debt Securities issued by Securities and Exchange

Board of India vide circular no. SEBI/IMD/BOND/1/2009/11/05 dated May

11, 2009 and Amendments to Simplified Debt Listing Agreement for Debt

Securities issued by Securities and Exchange Board of India vide circular

no.SEBI/IMD/DOF-1/BOND/Cir-5/2009 dated November 26, 2009 and

Amendments to Simplified Debt Listing Agreement for Debt Securities

issued by Securities and Exchange Board of India vide Circular No.

SEBI/IMD/DOF-1/BOND/Cir-1/2010 dated January 07, 2010

MoF Ministry of Finance

Notification Notification No.50/2011/F.No.178/43/2011-SO(ITA.1) dated

September 9, 2011, issued by CBDT, Deptt. of Revenue, Ministry of

Finance, Government of India

NPAs Non Performing Assets

NRIs Non Resident Indians

NSDL National Securities Depository Ltd.

OCBs Overseas Corporate Bodies

PAN Permanent Account Number

PLR Prime Lending Rate

Rs. Indian National Rupee

RBI Reserve Bank of India

RTGS Real Time Gross Settlement

Registrar Registrar to the Issue, in this case being Karvy Computershare Pvt. Ltd.

SEBI The Securities and Exchange Board of India, constituted under the SEBI Act,1992

SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to

time

SEBI Regulations Securities and Exchange Board of India (Issue and Listing of Debt Securities)

Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878

dated June 06, 2008

TDS Tax Deducted at Source

The Companies Act/ The

Act

The Companies Act, 1956 as amended from time to time

The Issue/ The Offer/

Private Placement

Issue through Private Placement of 2,00,000 Unsecured, Redeemable, Non-

Convertible Long Term Infrastructure Bonds Series-IV (in the nature ofpromissory notes of Rs.5000/- each) having benefits under section 80 CCF

of the Income Tax Act, 1961, with unspecified green shoe option, to retain

over-subscription for issuance of additional Infrastructure Bonds.


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DISCLAIMER STATEMENT

This Information Memorandum is neither a Prospectus nor a statement in lieu of Prospectus. It does

not constitute an offer or an invitation to the Public to subscribe to the IFCI Long Term Infrastructure

Bonds issued by IFCI Limited. This Information Memorandum is not intended for distribution and is

for the consideration of the person to whom it is addressed and should not be reproduced/redistributed

by the recipient. It cannot be acted upon by any person other than to whom it has been specifically

addressed. Multiple copies hereof given to the same entity shall be deemed to be offered to the same

person. The securities mentioned herein are being issued strictly on a private placement basis and this

offer does not constitute a public offer/invitation.

This Information Memorandum is not intended to form the basis of evaluation for the potential

investors to whom it is addressed and who are willing and eligible to subscribe to these IFCI Long

Term Infrastructure Bonds issued by IFCI. This Information Memorandum has been prepared to give

general information regarding IFCI to parties proposing to invest in this issue of IFCI Long Term

Infrastructure Bonds and it does not purport to contain all the information that any such party may

require. IFCI and the Arrangers do not undertake to update this Information Memorandum to reflectsubsequent events and thus it should not be relied upon without first confirming its accuracy with

IFCI.

Potential investors are required to make their own independent valuation 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 the Bonds. It is the responsibility of potential investors to have obtained

all consents, approvals or authorisation required by them to make an offer to subscribe for, and

purchase the Bonds. Potential investors should not rely solely on information in the Information

Memorandum or by the Arrangers nor would providing of such information by the Arrangers be

construed as advice or recommendation by the Issuer or by the Arrangers to subscribe to and purchase

the Bonds. Potential investors also acknowledge that the Arrangers do not owe them any duty of care

in respect of their offer to subscribe for and purchase of the Bonds. It is the responsibility of potentialinvestors to also ensure that they will sell these Bonds in strict accordance with this Information

Memorandum and other applicable laws, and that the sale does not constitute an offer to the public

within the meaning of the Companies Act, 1956. Potential investors should also consult their own tax

advisors on the tax implications of the acquisitions, ownership, sale and redemption of Bonds and

income arising thereon.

The Company may have included statements in this Information Memorandum, which contain words

or phrases such as will, would, aim, aimed, will likely result, is likely, are likely,believe, expect, expected to, will continue, will achieve, anticipate, estimate,

estimating, intend, plan, contemplate, seek to, seeking to, trying to, target, proposeto, future, objective, goal, project, should, can, could, may, will pursue, our

judgment and similar expressions or variations of such expressions, that are forward-lookingstatements. Actual results may differ materially from those suggested by the forward-lookingstatements due to certain risks or uncertainties associated with the Companys expectations. By theirnature, certain market risk disclosures are only estimates and could be materially different from what

actually occurs in the future. As a result, actual future gains, losses or impact on net interest income

and net income could materially differ from those that have been estimated.


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RISK FACTORS

Prospective investors should carefully consider the risks and uncertainties described below, in

addition to the other information contained in this Information Memorandum before making any

investment decision relating to the Issue. Investors must rely on their own examination of the

Company and this Issue, including the risks and uncertainties involved.

INTERNAL RISK FACTORS

1. As a financial institution, the risk of default and non-payment by borrowers and other

counterparties is one of the most significant risks which may affect our profitability and

asset quality.Our loan portfolio consists of loans provided to large corporates, and medium scale enterprises, with

the earlier segment constituting a significant portion of our portfolio. While large corporate customers

are generally stable in their risk profile, the relatively large sized single ticket exposures to the same

can impact profitability and result in NPAs on even a small number of defaults. The borrowers and/or

guarantors and/or third parties may default in their repayment obligations due to various reasonsincluding insolvency, lack of liquidity, and operational failure. Besides macroeconomic conditions,

we face risks specific to each line of our business. Though the Companys total provisioning againstthe NPAs, with 94% provision coverage, may be considered at present adequate to cover all the

identified losses in the loan portfolio, there may not be any assurance that in the future, provisioning

levels, though compliant with regulatory requirements, will be sufficient to cover all anticipated

losses. This is because the Company may not be able to meet its recovery targets for NPAs set for the

particular fiscal year due to the general economic slowdown at both global and domestic levels and

other factors mentioned above.

2. If we are unable to manage our rapid growth effectively, our business, prospects, resultsof operations and financial condition could be adversely affected.

Our business has grown rapidly since the fiscal 2009. From fiscal 2009 to fiscal 2011, our balancesheet size and total income increased at a compounded annual growth rate of 35 per cent and 19 per

cent respectively. We intend to continue to grow our business rapidly, though with caution, which

could place significant demands on our operational, credit, financial and other internal risk controls.

Our growth may also exert pressure on the adequacy of our capitalization, making management of

asset quality increasingly important.

Our asset growth will be primarily funded by the issuance of new debt. We may have difficulty

obtaining funding on suitable terms or at all. As we are a systemically important non-deposit

accepting NBFC and do not have access to deposits, our liquidity and profitability are dependent on

timely and adequate access to capital, including borrowings from banks. Banks may fix internal limits

for their aggregate exposure to NBFCs, which may put strain on our ability to obtain adequate

funding.

Increase in debt would lead to leveraging the balance sheet, exerting pressure on the financial

covenants that we are required to maintain under our various loan agreements. We cannot assure you

that we would continue to be in compliance with loan agreements conditions. Any default under aloan agreement may lead to an adverse impact on our financial condition and results of operations.

Further, our growth also increases the challenges involved in preserving a uniform culture, values and

work environment; and developing and improving our internal administrative infrastructure.

Addressing the challenges arising from our growth entails substantial senior level management time

and resources and would put significant demands on our management team and other resources. As


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we grow and diversify, we may not be able to implement, manage or execute our strategy efficiently

in a timely manner or at all, which could adversely affect our business, prospects, results of

operations, financial condition and reputation.

3. We have significant exposure to certain sectors and to certain borrowers and if certain

assets become non-performing, the quality of our asset portfolio may be adversely

affected.

As of March 31, 2011, our four largest sector-wise exposures were in the Infrastructure, Iron & Steel,

Banking & Finance and Construction & Real Estate sectors. Additionally, our concentration within

these sectors was also significant. Any negative trends or adverse developments in the energy,

transportation, construction and real estate sectors could increase the level of non-performing assets in

our portfolio and adversely affect our business and financial performance. Though, subsequently, our

exposure to iron & steel has reduced substantially, credit losses on account of sector concentration

risk in the other three sectors could adversely affect our business and financial performance and the

price of our Bonds.

In addition, at present a majority of our income is in the form of interest income received from our

borrowers. Additionally, we expect good return from our investment in project equity in post

implementation period of the concerned projects. Any default by our large borrowers and/or any

difficulty in profitable exit from our equity investment for any reason may have an adverse impact on

our liquidity position and results of operations.

4. If the level of non-performing assets in our portfolio were to increase, our business willbe adversely affected.

As of March 31, 2011, our gross and net non-performing loans were Rs. 2,644 crore and Rs. 156

crore, respectively. These represent 14.23 per cent and 0.97 per cent of our total gross and net assets,

respectively. We expect the size of our asset portfolio to continue to increase in the future, and wemay have additional non-performing assets on account of these new loans and sectoral exposures. If

we are not able to prevent increases in our level of non-performing assets, our business, prospects,

results of operations, financial condition and asset quality could be adversely affected.

5. The Company may experience delays in enforcing its collateral when borrowers defaulton their obligations to the Company, which may result in failure to recover the expected

value of collateral security, exposing it to a potential loss.

A substantial portion of the Companys loans to corporate customers are secured by real assets,including property, plant and equipment. In some cases, the Company may have taken further security

of a first or second charge on fixed assets, a pledge of financial assets like marketable securities,

corporate guarantees and personal guarantees. Although in general the Companys loans are over-collateralized, an economic downturn could result in a fall in relevant collateral values for the

Company. In India, foreclosure on immovable property generally requires a written petition to an

Indian court or tribunal.

An application, when made, may be subject to delays and administrative requirements that may result,

or be accompanied by, a decrease in the value of the immovable property. Security created on shares

of a borrower can be enforced without court proceedings. However, there can be delays in realization

in the event that the borrower challenges the enforcement in an Indian court. In the event a corporate

borrower makes a reference to a specialized quasi-judicial authority called the Board for Industrial


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and Financial Reconstruction (BIFR), foreclosure and enforceability of collateral is stayed.

Additionally, the realizable value of our collateral in liquidation may be lower than its book value. In

a volatile equity market, the value and volume of pledged shares traded may fall significantly thereby

reducing our security cover and we may not be able to sell the pledged shares to the extent and at the

price we need to do to realise our loan recovery.

The Company may not be able to realize the full value on its collateral as a result of, among other

factors, delays in bankruptcy and foreclosure proceedings, defects in the registration of collateral and

fraudulent transfers by borrowers. A failure to recover the expected value of collateral security could

expose the Company to a potential loss. Any unexpected loss could adversely affect the Companysbusiness, its future financial performance and the trading price of the Bonds.

6. We may not be able to access funds at competitive rates and such higher cost ofborrowings could have a significant impact on the scale of our operations and on our

profit margins.

Our growing business needs would require us to raise funds through commercial borrowings. Ourability to raise funds at competitive rates would depend on our credit rating, regulatory, economic and

financial markets environment in the country and on the price and availability of liquidity in the

financial markets. Besides any domestic developments, changes in the international markets also

affect the Indian interest rate environment, and may relatively impact our borrowing costs. A

substantial position of our borrowing is on floating interest rate basis, which has been rising due to

policy rate hikes by RBI. Further increase in interest rates would affect the NIM and profitability of

the company adversely.

7. We are affected by volatility in interest rates for both our lending and treasuryoperations, which could cause our net interest income to decline and adversely affect our

return on assets and profitability.

Being a non-deposit accepting NBFC, our Company is exposed to greater interest rate risk compared

to banks or deposit accepting NBFCs. Interest rates are highly sensitive to many factors beyond our

control, including the monetary policies of the RBI, deregulation of the financial sector in India,

domestic and international economic and political conditions and other factors. Due to these factors,

interest rates in India have historically experienced a relatively high degree of volatility.

If interest rates rise we may have greater difficulty in maintaining a low effective cost of funds

compared to our competitors which may have access to low-cost deposit funds. Since, a good portion

of our borrowings are linked to market rates, we may have to pay interest at a higher rate as compared

to other lenders. But significantly high proportion of our lending is at fixed rate, which may reduce

our net interest margin in an increasing rate scenario. Fluctuations in interest rates may also adversely

affect our treasury operations. In a rising interest rate environment, especially if the rise were suddenor sharp, we could be adversely affected by the decline in the market value of our securities portfolio

and other fixed income securities. In addition, the value of any interest rate hedging instruments we

may enter into in the future would be affected by changes in interest rates.

When interest rates decline, we are subject to greater repricing and prepayment risks as borrowers

take advantage of the attractive interest rate environment. When assets are repriced, our spread on our

loans, which is the difference between our average yield on loans and our average cost of funds, could

be affected. During periods of low interest rates and high competition among lenders, borrowers may

seek to reduce their borrowing cost by asking lenders to reprice loans. If we reprice loans, our results


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may be adversely affected in the period in which the repricing occurs. If borrowers prepay loans, the

return on our capital may be impaired as any prepayment premium we receive may not fully

compensate us for the redeployment of such funds elsewhere. Our inability to effectively and

efficiently manage interest rate variations may adversely affect our result of operations and

profitability.

8. We make equity investments, which can be volatile and may not be recovered.As of March 31, 2011, the book value of our equity investments accounted for 15.56 per cent of our

total assets. The value of these investments depends on the success of the operations and management

and continued viability of the investee entities. We may have limited control over the operations or

management of these entities and majority of these investments are unlisted, offering limited exit

options. Therefore, our ability to realize expected gains as a result of our equity investments is highly

dependent on factors outside of our control. Write-offs or write-downs in respect of our equity

portfolio could adversely affect our business, prospects, results of operations, financial condition and

asset quality.

9. The Company may not be able to detect money-laundering and other illegal or improperactivities fully or on a timely basis, which could expose it to additional liability and harm

its business or reputation

The Company is required to comply with applicable anti-money-laundering and anti-terrorism laws

and other regulations in India. These laws and regulations require the Company, among other things,

to adopt and enforce know-your-customer policies and procedures and to report suspicious and large

transactions to the applicable regulatory authorities in different jurisdictions. While the Company has

adopted policies and procedures aimed at detecting and preventing the use of its network for money-

laundering activities and by terrorists and terrorist-related organizations and individuals generally,

such policies and procedures may not completely eliminate instances where the Company may be

used by other parties to engage in money-laundering and the relevant government agencies to whomthe Company reports have the power and authority to impose fines and other penalties. In addition,

the Companys business and reputation could suffer.

10. Devolvement of Contingent Liabilities could adversely impact the Companysprofitability.

As on March 31, 2011, the company had contingent liabilities not provided for of Rs.165 crore

including Rs. 92.25 crore as claims not acknowledged as debt and Rs. 26.96 crore towards guarantees

issued as against contingent liabilities of about Rs. 430 crore as on March 31, 2010. These liabilities,

if devolved on the Company, may adversely affect the financial performance of the Company and the

trading price of the Bonds.

11. The Company is involved in legal proceedings arising from its operations from time totime.

The Company is involved in various litigations which have mostly arisen out of its operations, when

the Company seeks to recover its dues from the borrowers. The Company is also involved in various

legal cases by its customers, employees, seeking claims/compensation. The Company does not make

provisions or disclosure in its financial investments where in its assessment, the risk is insignificant.

Adverse decisions against the Company in major cases may affect its financial performance

adversely.


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12. Our transition to IND AS reporting could have a material adverse effect on ourreported results of operations or financial condition.

On February 25, 2011, the Ministry of Corporate Affairs, Government, of India (MCA), notifiedthat the IND AS will be implemented in a phased manner. It was also mentioned that the date of

implementation of IND AS will be notified by the MCA at a later date. As of the date of this IM, the

MCA has not yet notified the date of implementation of IND AS. There can be no assurance that the

financial condition, results of operations, cash flow or changes in shareholders equity of theCompany will not appear materially different under IND AS than under Indian GAAP. As our

Company adopts IND AS reporting, it may encounter difficulties in the ongoing process of

implementing and enhancing its management information systems. Moreover, there is increasing

competition for the small number of IND AS-experienced accounting personnel availableonce Indian

companies begin to prepare IND AS financial statements.

13. System failures and infrastructure bottlenecks in computer systems may adverselyaffect our business and significant security breaches could adversely impact theCompanys business

Our business is highly dependent on our ability to process, on a daily basis, a large number of

transactions. Our financial, accounting or other data processing systems may fail to operate

adequately or may become disabled as a result of events that are wholly or partially beyond our

control, including a disruption of electrical or communications services. These circumstances could

affect our operations and/or result in financial loss, disruption of our businesses and/or damage to our

reputation. In addition, our ability to conduct business may be adversely impacted by a disruption in

the infrastructure that supports our businesses and the localities in which we are located.

The Company seeks to protect its computer systems and network infrastructure from physical break-

ins as well as security breaches and other disruptions caused by increased use of technology includingthe internet. Computer break-ins and power disruptions could affect the security of information stored

in and transmitted through these computer systems and network infrastructure. Although the

Company intends to continue to implement security technology and establish operational procedures

to prevent break-ins, failed security measures could have a material adverse effect on the Companysbusiness, its future financial performance and the trading price of the Bonds.

14. We may face asset-liability mismatches, which could affect our liquidity positionThe difference between the value of assets and liabilities maturing, in any time period category

provides the measure to which we are exposed to the liquidity risk. However, a large portion of our

liabilities have medium to long-term maturities and asset-liability cumulative gap is positive. Still, on

account of unforeseen factors, the funding mismatches could happen, which could have an adverseeffect on our business and future financial performance.

15. The current trading of our existing listed privately placed unsecured non-convertiblebonds may not reflect the liquidity of the Bonds

We have offered other unsecured non-convertible bonds from time to time, on private placement

basis, which have been listed on BSE. There can be no assurance that an active public market for the

Bonds will develop, and if such a market were to develop, there is no obligation on us to maintain

such a market.


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16. Changes in interest rates may affect the price of the BondsAll securities where a fixed rate of interest is offered, such as the Bond s, are subject to price risk. The

price of such securities will vary inversely with changes in prevailing interest rates, i.e. when interest

rates rise, prices of fixed income securities fall and when interest rates drop, the prices increase. The

extent to which prices increase or decrease is a function of the existing coupon, days to maturity and

the extent to which prevailing interest rates increase or decrease.

EXTERNAL RISK FACTORS

17. The private infrastructure development industry in India is still at a relatively earlystage of development and is linked to the continued growth of the Indian economy, and

stable and experienced regulatory regimes.

Although infrastructure is a rapidly growing sector in India, we believe that the further development

of Indias infrastructure is dependent upon the formulation and effective implementation of programsand policies that facilitate and encourage private sector investment in infrastructure. Many of these

programs and policies are evolving and their success will depend on whether they are designed to

properly address the issues faced and are effectively implemented. Additionally, these programs will

need continued support from stable and experienced regulatory regimes that not only stimulate and

encourage the continued movement of private capital into infrastructure development, but also lead to

increased competition, appropriate allocation of risk, transparency, effective dispute resolution and

more efficient and cost-effective services to the end consumer.

If the central and state governments initiatives and regulations in the infrastructure industry do notproceed in the desired direction, or if there is any downturn in the macroeconomic environment in

India or in our investment-specific sectors, our business, prospects, results of operations and financial

condition could be adversely affected.

18. Our access to liquidity is susceptible to adverse conditions in the domestic and globalfinancial markets.

Since the second half of 2007, the global credit markets have experienced, and may continue to

experience, significant dislocations and liquidity disruptions, which have originated from the liquidity

disruptions in the United States and the European credit and sub-prime residential mortgage markets.

These and other related events, such as the collapse of a number of financial institutions, have had and

continue to have a significant adverse impact on the availability of credit and the confidence of the

financial markets, globally as well as in India. There can be no assurance that we will be able to

secure additional financing required by us on adequate terms or at all.

In response to such developments, legislators and financial regulators in the United States and other

jurisdictions, including India, have implemented a number of policy measures designed to addstability to the financial markets. However, the overall impact of these and other legislative and

regulatory efforts on the global financial markets is uncertain, and they may not have the intended

stabilizing effects. In the event that the current difficult conditions in the global credit markets

continue or if there is any significant financial disruption, such conditions could have an adverse

effect on our business, prospects, results of operations and financial condition.


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19. A large part of the Companys loans are disbursed at fixed rates for specific tenureswhich may differ from its funding sources and therefore interest rate fluctuations couldimpact the Companys margins as well as profitability.

Our Companys business is largely dependent on interest income from our operations. We areexposed to interest rate risk principally as a result of lending to customers at interest rates and in

amounts and for periods, which may differ from the funding sources (institutional/bank borrowings

and debt offerings). We endeavour to match our interest rate positions to minimize our interest rate

risk. Despite these efforts, there can be no assurance that significant interest rate movements will not

have an effect on the results of our operations. Any adverse/unexpected movements in interest rates

may affect our profitability.

20. Regulatory changes in India could adversely affect our business and competitivenessWe are subject to the Companies Act and are subject to supervision and regulation by the RBI and by

the SEBI. In addition, we are subject generally to changes in Indian Law, as well as to changes in

regulation and government policies and accounting principles. We also receive certain benefits frombeing notified as a public financial institution under Companies Act. Any amendments or other

changes to the regulations governing us may require us to restructure our activities and/or incur

additional expenses in complying with such laws and regulations and could materially and adversely

affect our business, financial condition and results of operations.

21. A slowdown in economic growth could cause the Companys business to suffer.The Companys performance and the quality and growth of its assets are necessarily dependent on thehealth of the Indian economy as well as on global economic conditions. An economic slowdown

could adversely affect our business, including our ability to grow our asset portfolio, to maintain the

quality of our assets and to implement our strategy. The domestic economy could be adversely

affected by a variety of domestic as well as global factors.

The current uncertain economic situation, in India and globally, could result in a further slowdown in

economic growth, investment and consumption. A further slowdown in the rate of growth in the

Indian economy could result in lower demand for credit and other financial products and services and

higher defaults. Any slowdown in the growth or negative growth of sectors where we have a relatively

higher exposure could adversely impact our performance. Any such slowdown could adversely affect

our business, prospects, results of operations and financial condition.

22. Our business may be adversely impacted by natural calamities or unfavourable climaticchanges.

India has experienced natural calamities such as earthquakes, floods, droughts and a tsunami in recentyears. India has also experienced pandemics, including the outbreak of avian flu and swine flu. The

extent and severity of these natural disasters and pandemics determine their impact on the economy

and in turn their effect on the financial services sector of which our Company is a part. Prolonged

spells of abnormal rainfall and other natural calamities could have an adverse impact on the economy

which in turn could adversely affect our results of operations.


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23. The Company faces increasing competition from other established banks and otherNBFCs. The success of our business depends on our ability to face the competition.

The Companys main competitors are established commercial banks and other NBFCs. Over the pastfew years, the infrastructure financing area has seen the entry of banks, both public and private sectors

as well as foreign. Banks have access to low cost funds which could enable them to offer finance to

our customers at lower rates, thereby reducing our Companys competitive ability for attractingquality customers.

24. Financial instability in other countries could disrupt our business.The Indian market and the Indian economy are influenced by economic and market conditions in

other countries. Although economic conditions are different in each country, investors reactions todevelopments in one country can have adverse effects on the economy as a whole, in other countries,

including India. A loss of investor confidence in the financial systems of other emerging markets may

cause volatility in Indian financial markets and indirectly, in the Indian economy in general. Any

worldwide financial instability could also have a negative impact on the Indian economy, includingthe movement of exchange rates and interest rates in India.

In the event that the current difficult conditions in the global credit markets continue or if the recovery

is slower than expected or if there any significant financial disruption, this could have an adverse

effect on our cost of funding, loan portfolio, business, prospects, results of operations and financial

condition.

25. Political instability or changes in the Government could adversely affect economicconditions in India and consequently, our business.

The Government has traditionally exercised and continues to exercise a significant influence over

many aspects of the economy. Since 1991, successive governments have pursued policies of

economic and financial sector liberalisation and deregulation and encouraged infrastructure projects.The current Government, which came to power in May 2009, is a coalition of several political parties.

Although the previous Governments had announced policies and taken initiatives that supported the

economic liberalisation programme pursued by previous governments, the policies of subsequent

Governments may change the rate of economic liberalisation.

A significant change in the Governments policies in the future, particularly in respect of the bankingand finance industry and the infrastructure sector, could affect business and economic conditions in

India. This could also adversely affect our business, prospects, results of operations and financial

condition.

26. If regional hostilities, terrorist attacks or social unrest in India increases, our businesscould be adversely affected.

India has from time to time experienced social and civil unrest and hostilities within itself and with

neighbouring countries. India has also experienced terrorist attacks in some parts of the country.

These hostilities and tensions and/or the occurrence of similar terrorist attacks have the potential to

cause political or economic instability in India and adversely affect our business and future financial

performance. India has also experienced social unrest in some parts of the country. If such tensions

occur in other parts of the country, leading to overall political and economic instability, it could have

an adverse effect on our business, prospects, results of operations and financial condition.


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27. Difficulties faced by other banks, financial institutions or NBFCs or the Indian financialsector generally could cause our business to be adversely affected.

We are exposed to the risks of the Indian financial sector which in turn may be affected by financial

difficulties and other problems faced by Indian financial institutions. Certain Indian financial

institutions have experienced difficulties during recent years particularly in managing risks associated

with their portfolios and matching the duration of their assets and liabilities, and some co-operative

banks have also faced serious financial and liquidity crises. Any major difficulty or instability

experienced by the Indian financial sector could create adverse market perception, which in turn could

adversely affect our business, prospects, results of operations and financial condition.

RISKS RELATING TO THE BONDS

28. There has been no prior public market for the Bonds and it may not develop in thefuture, and the price of the Bonds may be volatile.

In India, the Bonds have no established trading market. Moreover, the Bonds issued in this Issue aresubject to statutory lock-in for a minimum period of five years from the date of Allotment. No trading

market would exist or be established for the Bonds issued in this Issue for the Lock-In Period despite

the Bonds being listed on BSE. Even after the expiry of the Lock-in Period, there can be no assurance

that a public market for the Bonds would develop. The proposed tax changes to the income tax regime

by introduction of the draft Direct Tax Code (DTC) may result in extinguishment of benefitsavailable under Section80CCF of the Income Tax Act. This may result in no further issuance of the

Bonds after DTC is approved by the Government of India. Although an application has been made to

list the Bonds on BSE, there can be no assurance that an active public market for the Bonds will

develop, and if such a market were to develop, there is no obligation on us to maintain such a market.

The liquidity and market prices of the Bonds can be expected to vary with changes in market and

economic conditions, our financial condition and prospects and other factors that generally influence

market price of Bonds. Such fluctuations may significantly affect the liquidity and market price of theBonds, which may trade at a discount to the price at which you purchase the Bonds. Moreover, the

price of the Bonds on BSE may fluctuate after this Issue as a result of several other factors.

29. There is no guarantee that the Bonds issued pursuant to this Issue will be listed on BSEin a timely manner, or at all.

In accordance with Indian law and practice, permissions for listing and trading of the Bonds issued

pursuant to this Issue will not be granted until after the Bonds have been allotted. There could be a

failure or delay in listing the Bonds on the Stock Exchanges.

30. The investors may not be able to recover, on a timely basis or at all, the full value of theoutstanding amounts and/or the interest accrued thereon in connection with the Bonds.

Our ability to pay interest accrued on the Bonds and/or the principal amount outstanding from time to

time in connection therewith would be subject to various factors inter-alia including our financial

condition, profitability and the general economic conditions in India and in the global financial

markets. We cannot assure you that we would be able to repay the principal amount outstanding from

time to time on the Bonds and/or the interest accrued thereon in a timely manner, or at all.


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31. The Bondholders are required to comply with certain lock-in requirementsThe Bondholders are required to hold the Bonds for a minimum period of five years before they can

sell the same or utilise the buy-back option offered by the Company. This may lead to a lack of

liquidity for the Bondholders during such periods (whether before or after the expiry of the Lock-in

Period). Additionally, after the Lock-in Period, the Company will provide for buyback of the Bonds

on the Buyback Date in a manner as prescribed herein below.

Other than on the Buyback Date, no Bondholder will be permitted to require a buyback of the Bonds

by the Company. In the event that a Bondholder fails to inform the Company during the Buyback

Intimation Period of his or her intention to utilize the buyback facility offered by the Company, such

Bonds held by such Bondholder shall not be bought back by the Company on the Buyback Date. In

such a case, a Bondholder may after the expiry of the Lock-in Period sell or dispose of those Bonds

on the Stock Exchanges.

32. Debenture Redemption Reserve shall not be created for these bonds.The Department of Company Affairs General Circular No.9/2002 No.6/3/2001-CL.V dated April 18,2002 specifies that NBFCs which are registered with the RBI under Section 45-IA of the Reserve

Bank of India Act, 1934 need not create any Debenture Redemption Reserve for redemption of the

debentures issued through private placement. Therefore, the Company will not be maintaining any

debenture redemption reserve and the Bondholders may find it difficult to enforce their interests in the

event of or to the extent of a default.

33. Any downgrade in the credit ratings of our Bonds may affect the value of the Bonds andthus our ability to refinance our debt.

Brickwork Ratings, ICRA and CARE Ratings have assigned the rating of BWR AA-, LA andCARE A respectively, for issue of these Bonds for long term borrowings of the Company. The

Issuer cannot guarantee that these ratings will not be downgraded. The Rating Agencies have the rightto revise/suspend/withdraw the ratings in future on the basis of any information etc. Any revision or

downgrading in the above rating may affect our ability to raise further debt and lower the price of the

bond.


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ISSUE STRUCTURE (SUMMARY)

PRIVATE PLACEMENTIFCI LONG TERM INFRASTRUCTURE BONDSSERIES IV

The following is a summary of the IFCI Long Term Infrastructure Bonds- Series IV Issue. The

summary should be read in conjunction with, and is qualified in its entirety by, more detailedinformation in the section Terms of the Series IV Issue.

Common Terms

Issuer IFCI Limited (the Issuer)

Offering 2,00,000 Nos. Unsecured, Redeemable, Non-Convertible Long Term Infrastructure

Bonds SeriesIV (Rs.5,000/- each aggregating to Rs.100 crore with a green-shoe

option to retain over-subscription)

Type Private Placement basis

Instrument Unsecured, Redeemable, Non-Convertible Long Term Infrastructure Bonds - Series

IV having benefits under section 80CCF of the Income Tax, 1961 for long term

Infrastructure BondsEligible Investors Resident Indian Individuals (Major) and HUF through Karta of the HUF

Rating BWR AA by Brickwork Ratings India Pvt. Limited

CAREA+ by CARE Ratings (Credit Analysis & Research Ltd.)

LA by ICRA Limited

Face Value Rs. 5000/- per bond

Minimum Application Rs. 5,000/- (i.e. 1 bond)

Application in multiples of Rs. 5,000/- (i.e. 1 Bond)

Deemed Date of Allotment February 15, 2012

Security Unsecured

Trustee IDBI Trusteeship Services LimitedListing Proposed to be listed on Bombay Stock Exchange (BSE)

Depositories National Securities Depository Ltd. and Central Depository Services (India) Ltd.

Registrars Karvy Computershare Pvt. Ltd.Issuance & Trading Bonds shall be issued both in dematerialised form and physical form. However,

trading allowed only in dematerialised mode after the expiry of Lock-in Period of 5

years

Mode of Payment At Par Cheques/Demand Drafts

(For detailed various modes of payment of interest and redemption amount by the

company, please refer to the section titled Modes of Payment at page 33)

Issue Schedule Issue Open Date : November 30, 2011

Issue Close Date : January 16, 2012

The issuer would have the right to pre-close the issue or extend the closing date bygiving 1 day notice to the Arrangers


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The specific terms of available Options under this Infrastructure Bond Series IV Issue are set

out below:

Options I II III IV

Frequency of Interest

Payment

Cumulative Annual Cumulative Annual

Tenor 10 (Ten) years 10 (Ten) years 15 (Fifteen) years 15 (Fifteen ) years

Face Value

(Rs./Bond)Rs. 5000/- Rs. 5000/- Rs. 5000/- Rs. 5000/-

Issue Price

(Rs./Bond)

At par At par At par At par

Terms of Payment Full amount with

application

Full amount with

application

Full amount with

application

Full amount with

application

Coupon (% p.a.) 9.09 % p.a.

(Annualcompounding)

9.09 % p.a. 9.16 % p.a.

(Annualcompounding)

9.16 % p.a.

Coupon Payment

DateAt the time of

redemption

February 15,

each year

At the time of

redemption

February 15,

each year

Redemption/

Maturity

At the end of 10 years from the deemed

date of allotment

At the end of 15 years from the deemed

date of allotment

Maturity Date February 15, 2022 February 15, 2022 February 15, 2027 February 15, 2027

Buyback Option Yes Yes Yes Yes

Buyback Dates February 15 of the calendar years 2017

and 2019

February 15 of the calendar years 2017

and 2022

Buyback Intimation

period

September 15 to November 14 of the

calendar years 2016 and 2018

September 15 to November 14 of the

calendar years 2016 and 2021

Redemption amount

(Rs. per bond)11,935/- 5,000/- 18,618/- 5,000/-

Redemption amount in case buy back option is exercised : (in Rs.)

At the end of Year 5 7,725/- 5,000/- 7,750/-. 5,000/-.

Year 7 9,194/- 5,000/- N.A. N.A.

Year 10 N.A. N.A. 12,012/- 5,000/-

Lock-in period 5 years from the deemed date of Allotment

Interest on Application Money shall be paid at the respective coupon from the date of realisation of

subscription amount to the date immediately preceding the deemed date of allotment along with first annualinterest payment in Option II & IV and at the time of redemption in Option I & III.


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GENERAL INFORMATION

About the Issuer

IFCI Ltd. was established in 1948 by an Act of Parliament and subsequently corporatised in

1993.Our Company holds a certificate of registration dated August 18, 2009 bearing registrationno.B-1400009 issued by the RBI to carry on the activities of a NBFC under section 45 IA of the RBI

Act, 1934.

Corporate Identification Number is: L74899DL1993PLC053677 issued by the Registrar of

Companies,

Registered OfficeIFCI Tower, 61 Nehru Place, New Delhi 110 019

Board of Directors of IFCI as on November 25, 2011:

Name Designation

Shri P. G. Muralidharan Non-Executive Chairman of the Board

Shri Atul Kumar Rai Chief Executive Officer and Managing Director

ShriV.K.Chopra Govt. Nominee

Shri Sanjeev Kumar Jindal Govt. Nominee

Shri Shilabhadra Banerjee Independent Director

Shri Prakash P Mallya Independent Director

Shri Rakesh Bharti Mittal Independent Director

Smt. Usha Sangwan Independent Director

Prof. Shobhit Mahajan Independent Director

Shri Omprakash Mishra Independent DirectorShri K. Raghuraman Independent Director

Shri S. Shabbeer Pasha Independent Director

Shri Sujit K. Mandal Whole Time Director

For further details on the IFCIs Management, please refer Chapter VIII of this Information

Memorandum.

Compliance OfficerMs.Rupa Deb, Company Secretary

Tel.: 91 11 41732104, 41792800

Fax: 91 11 26230206


Contact PersonMs Barkha Chhabra, Sr. Associate Vice President

Tel.: 011-26485610, 41792800

Fax: 011-26230029

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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A summary of financial performance of IFCI for the last three years is given

below:

(Rs. cr)

ParticularsFor the Financial Years ended on

March 31, 2011 March 31, 2010 March 31, 2009

Income

Operating Income 2421.64 1657.05 1402.07

Other Income 64.73 22.28 82.45

Total Income 2486.37 1679.33 1484.52

Less: Expenditure

Interest & other charges 1318.97 891.18 790.05

Employee expenses 64.92 57.28 51.23Establishment expenses 76.27 54.44 39.62

Depreciation 10.28 8.98 7.52

Provisions (150.32) (447.81) (414.13)

Profit before Taxation 1166.25 1115.26 1010.23

Less: Provision for Taxation

Current Tax 93.47 105.45 111.62

Deferred Tax 366.53 338.87 241.46

Profit after Tax 706.25 670.94 657.15

ARRANGERS TO THE ISSUE1. Almondz Global Securities Ltd.2. Bajaj Capital Ltd.3. ICICI Securities Ltd.4. IFCI Financial Services Ltd.5. Karvy Investor Services Ltd.6. RR Investors Capital Services Pvt. Ltd.

REGISTRAR TO THE ISSUE

Karvy Computershare Private Limited has been appointed as Registrar to the Issue. The Registrar

will monitor the applications while the private placement is open and will coordinate the post privateplacement activities of allotment, dispatch of interest warrants etc. Investors can contact the Registrar

in case of any post-issue problems such as non receipt of letters of allotment, demat credit, physical

bond certificate, refund orders, interest on application money.

TRUSTEE

IDBI Trusteeship Services Limited has given its consent to act as the Trustee to the proposed Issue

and for its name to be included in this Information Memorandum. All remedies of the Bond holder(s)

for the amount due on the Bonds will be vested with the Trustees on behalf of the Bond holders. The

holders of the Bonds shall without any further act or deed be deemed to have irrevocably given their


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consent to and authorised the trustees to do inter-alia, all acts, deeds, and things necessary for

servicing the Bonds being offered.

BANKER TO THE ISSUE

HDFC Bank, HDFC Bank House, Senapati Bapat Marg, Lower Parel (West), Mumbai- 400 013

IndusInd Bank Ltd., CMS-Hub, Solitaire Corporate Park,No.1001, Building No.10, Ground Floor,

Guru Hargovindji Marg, Andheri EastMumbai400093.

CREDIT RATING

Brickwork Ratings India (P) Ltd. (BRICKWORK) has vide its letter No. BWR/BLR/RA/2011-12/0061 dated May 24, 2011 assigned credit rating of "BWR AA- (pronounced as BWR Double A

Minus) with positive outlook for long term bonds. Instruments with this rating are considered tooffer High Credit Quality in terms of timely servicing of debt obligations.

Credit Analysis and Research Ltd. (CARE Ratings) has vide its letter dated May 30, 2011 assignedcredit rating of "CARE A+ to the Bonds. Instruments with this rating are considered to offerAdequate Safety for timely servicing of debt obligations.

ICRA has vide its letter dated May 18, 2011 assigned credit rating of "LA with stable outlook forlong term bonds of IFCI. Instruments with this rating have adequate credit quality and carries average

credit risk.

Copies of rating letters received and the rating rationale from Brickwork Ratings, CARE Ratings &

ICRA are enclosed as appendix to this Information Memorandum.

The above rating is not a recommendation to buy, sell or hold securities and investors should taketheir own decision. The Rating Agencies have the right to revise/suspend/withdraw the rating at any

time on the basis of new information etc.

LISTING

The Bonds are proposed to be listed on the Bombay Stock Exchange (BSE). IFCI has applied for

in-principle approval from the BSE for listing of IFCI Long Term Infrastructure Bonds Series-IV.

After closure of the issue, IFCI shall make an application to the BSE to list the Bonds to be issued and

allotted under this Information Memorandum and complete all the formalities relating to listing of the

Bonds within reasonable time. In connection with listing of Bonds with BSE, IFCI hereby undertakes

that:

It shall comply with conditions of listing of Bonds as may be specified in the Listing Agreementwith BSE.

Rating obtained by IFCI shall be periodically reviewed by the credit rating agency and anyrevision in the rating shall be promptly disclosed by IFCI to BSE.

Any change in rating shall be promptly disseminated to the holder(s) of the Bonds in such manneras BSE may determine from time to time.

The Company, the Trustees and BSE shall disseminate all information and reports on Bondsincluding compliance reports filed by the Company and the Trustees regarding the Bonds to the

holder(s) of Bonds and the general public by placing them on their websites.


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ISSUE PROGRAMME

The Issue shall remain open for subscription for the period indicated below:

ISSUE OPENS ON November 30, 2011

ISSUE CLOSES ON January 16, 2012

The issuer would have the right to pre-close the issue or extend the closing date by giving 1 day

notice to the Arrangers.

AUTHORITY FOR THE ISSUE

This issue is being made pursuant to the Resolution of the Board of Directors of the Company, passed

at its Meeting held on April 18, 2011 and the delegation provided there under. The current issue of

bonds is within the overall borrowings limits set out in the resolution passed under section 293(1)(d)

of the Companies Act, 1956. This specific issue is being made by virtue of the

Notification No.50/2011/F.No.178/43/2011-SO(ITA.1) dated September 9, 2011, issued by CBDT,Deptt. of Revenue, Ministry of Finance, Government of India and the approval of the Board and the

Company as mentioned above. The Company can issue the bonds proposed by it in view of the

present approvals and no further approvals in general from any Government Authority is required by

it to undertake the proposed activity.

OBJECTS OF THE ISSUE

The objective of the issue is to raise funds for utilisation towards infrastructure lending.

The main objects clause of the Memorandum of Association of the Company permits the Company toundertake its existing activities as well as the activities for which the funds are being raised throughthis issue.

UTILISATION OF THE ISSUE PROCEEDS

The proceeds of the issue shall be utilized towards Infrastructure lending as defined by the RBI in theGuidelines issued by it from time to time, after meeting the expenditures of, & related to the issue.

The Company is managed by professionals under the supervision of its Board of Directors. Further,the Company is subject to a number of regulatory checks and balances as stipulated in its regulatoryenvironment. Therefore, the management shall ensure that the funds raised via this private placementshall be utilized only towards satisfactory fulfillment of the Objects of the Issue.

Further, in accordance with the SEBI Debt Regulations, the Company will not utilize the proceeds ofthe issue for providing loans to or acquisition of shares of any person who is a part of the same group

as the Company or who is under the same management as the Company or any subsidiary of theCompany. The issue proceeds shall not be utilized towards full or part consideration for the purchaseor any other acquisition, inter alia by way of a lease, of any property.

FUTURE RESOURCE RAISINGIFCI will be entitled to borrow/raise loans or avail financial assistance both from domestic and

international market as also issue Bonds/Equity Shares/Preference Shares/other securities in any

manner ranking paripassu or otherwise and on terms and conditions as IFCI may think fit without the

consent of or intimation to Bondholders or Trustees in this connection.


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PERMISSION/ CONSENT FROM PRIOR CREDITORSThe Company hereby confirms that it is entitled to raise money through current issue of Long Term

Infrastructure Bonds without the consent/permission/approval from the Bondholders/Trustees

/Lenders/ other creditors of IFCI. Further the Bonds proposed to be issued under the terms of this

Information Memorandum being unsecured there is no requirement for obtaining permission/consent

from the prior creditors.


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DETAILED TERMS OF THE ISSUE

The following are the terms and conditions of Long Term Infrastructure Bonds Series IV Issue being

offered under this Information Memorandum for an amount of Rs.100 crore with a green-shoe option

to retain over-subscription.

1. IssueIFCI Limited (IFCI or Issuer or Company) is offering forsubscription unsecured, redeemable,

non-convertible Long Term Infrastructure bonds in the nature of promissory notes of Rs.5,000/- each

for cash at par with benefits under section 80 CCF of the Income Tax Act, 1961 termed as Long Term

Infrastructure Bonds (Infrastructure Bonds)by way of private placement ('the Issue).

2. Status of BondsThe Bonds are classified as long term infrastructure bonds and are being issued in terms of

Section 80 CCF of the Income Tax Act and the Notification No.50/2011/F.No.178/43/2011-

SO(ITA.1) dated September 09, 2011 issued by Central Board of Direct Taxes, Department of

Revenue, Ministry of Finance, Government of India. A copy of the Notification is annexed to this

Memorandum.

The Infrastructure Bonds shall be redeemable, non-convertible and unsecured. In accordance with

Section 80CCF of the Income Tax Act, the amount not exceeding Rs.20,000 per annum, paid or

deposited as subscription to long term infrastructure bonds during the previous year i.e FY 2011-12

relevant to the assessment year beginning April 01, 2012 shall be deducted in computing the taxable

income of a resident individual or HUF.

Eligible investors can apply for up to any amount of the Bonds across any of the Options or a

combination thereof. The investors will be allotted the total number of Bonds applied for in

accordance with the Basis of Allotment.

3. Face Value & Issue PriceThe face value of each Bond is Rs.5000/- and is issued at par.

4. Application sizeEligible investors can apply upto any amount of the Bonds across any of the Option(s) or a

combination thereof. In case of multiple applications, which is two or more application formssubmitted by a single applicant, the applications shall be aggregated bases on the PAN of the

applicant.

5. Subscription and Related Payments(a) SubscriptionThis Issue will open for subscription and close on the dates indicated below:


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Issue Opens on : November 30, 2011

Issue Closes on : January 16, 2012

The issuer would have the right to pre-close the issue or extend the closing date by giving 1

day notice to the Arrangers.

(b) Application amountApplication amount will be required to be made in full with the application. Any payment

made in excess of application amount mentioned in the Application will be refunded to the

applicant. No additional Bonds shall be issued for this excess of Application Amount, and the

same shall be refunded along with issuance of other Refund Orders without any interest.

Further, in case of allotment of lesser number of Bonds than the number applied for, the

excess amount paid on Application shall be refunded to the applicant, without any interest on

such refund amount.

(c) Interest onApplication MoneyInterest on Application money will be paid at the respective coupon applicable for the

particular option chosen. The interest shall be payable from the date of realisation of

cheque/DD until one day prior to the Deemed Date of Allotment. No interest shall be payable

in case of rejection of application on any count. The interest on application money shall be

paid along with first annual interest payment due in case of Options II and IV, and at the time

of redemption along with cumulative interest in Options I and III.

(d) Tax Deduction at SourceInterest on Application money shall be paid with respect to the value of Bonds Allotted,

subject to deduction of income tax at source under the Income Tax Act, as applicable.

6. Deemed Date of AllotmentDeemed date of allotment shall be February 15, 2012. All benefits relating to the Bonds, to the extent

permitted by law, will be available to the investors from the Deemed Date of Allotment. The actual

allotment may occur on a date other than the Deemed Date of Allotment.

7. Withdrawal by investorsInvestors are allowed to withdraw their Application any time prior to closure of the Issue.

8. Over-subscription amountThe issue size is Rs.100 crore with unspecified green shoe option. At its sole discretion, IFCI (the

Issuer) will decide the amount of over-subscription to be retained over and above the basic Issue book

size of Rs.100 crore, within the limit specified in the Notification.


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9. Basis of AllotmentIn case the aggregate of subscription of bonds under this issue exceeds the limit, if any, upto which

such bonds can be issued, as would be decided by IFCI, the Allotment of bonds shall be made in the

following order of priority in consultation with the Registrar and the Registrar shall be responsible forensuring that the Basis of Allotment is finalized in a fair and proper manner.

(a)Full Allotment of Bonds to the Applicants on a first come first basis upto the date falling oneday prior to the Oversubscription Date.

(b) For Applications received on the Oversubscription Date, the Bonds shall be allotted in the

following order of priority:

(i) Allotment to the Applicants for Option - I Bonds

(ii) Allotment to the Applicants for Option - II Bonds

(iii) Allotment to the Applicants for Option - III Bonds

(iv) Allotment to the Applicants for Option - IV Bonds

Provided, however, that in the event of oversubscription in any Option of Bonds mentioned in

(i), (ii), (iii) and (iv) above, the Bonds shall be allotted proportionately in that respective

Option, subject to the overall limit, and the Applications for the Bonds in subsequent Options

shall be rejected.

(c) All Applications received after the Oversubscription Date shall be rejected.

10. FormThe Bonds being issued hereunder can be applied for in the dematerialised or physical form through a

valid Application Form filled in by the applicant along with attachments, as applicable. The

Bondholders holding the Bonds in dematerialised form shall deal with them in accordance with the

provisions of the Depositories Act and/or rules as notified by the Depositories from time to time. The

Bonds will be issued in Indian Rupees only.

Subsequent to the issuance of the Bonds, a Bondholder holding bonds in dematerialised form may

request the Depository to convert the demat bonds into physical form and provide a physical Bond

certificate. In case of any Bonds rematerialised by a Bondholder in physical form, a single certificate

will be issued to the Bondholder for the aggregate amount (Consolidated BondCertificate) for each

option of Bonds allotted to him under this Issue.

In respect of Consolidated Bond Certificates, upon receipt of a request from the Bondholder, thecompany will split such Consolidated Bond Certificates into smaller denominations subject to the

minimum of the Market Lot. No fees would be charged for splitting of Bond Certificates into Market

Lots, but stamp duty payable, if any, would be borne by the Bondholder. The request for splitting is

required to be accompanied by the original Bond Certificate(s) which would then be treated as

cancelled by us.


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11. Market Lot and Trading Lot of the BondsThe market lot will be One Bond (Market Lot). Trading of the Bonds shall be compulsorily in

dematerialised form in Market Lot after expiry of lock-in period of 5 years. Investors may note that

the Bonds in dematerialised form can be traded only on the Stock Exchange having electronicconnectivity with NSDL or CDSL.

12. ListingThe Bonds are proposed to be listed on Bombay Stock Exchange (BSE).

13. Record dateThe record date for payment of interest and redemption of principal amount shall be 15 (fifteen) days

prior to the Interest payment date or redemption date respectively or any other date on which interest

and/or principal is due and payable.

14. Title(i) In case of Bonds held in the dematerialized form, the person for the time being appearing inthe register of beneficial owners maintained by the Depository; and

(ii) In case of Bonds held in physical form, the name of the person for the time being appearing inthe Register of bondholders, as Bondholder, shall be treated for all purposes by the Company, the

Debenture Trustee, the Depositories and all other persons dealing with such person as the holder

thereof and its absolute owner for all purposes whether or not it is overdue and regardless of any

notice of ownership, trust or any interest in it or any writing on, theft or loss of the Consolidated Bond

Certificate issued in respect of the Bonds and no person will be liable for so treating the Bondholder.

No transfer of title of a Bond will be valid unless and until entered on the Register of Bondholders or

the register of beneficial owners maintained by the Depository prior to the Record Date. In the

absence of transfer being registered, interest and/or Maturity Amount, as the case may be, will be paid

to the person, whose name appears first in the Register of Bondholders maintained by the

Depositories and/or the Company and/or the Registrar, as the case may be. In such cases, claims, if

any, by the purchasers of the Bonds will need to be settled with the seller of the Bonds and not with

the Company or the Registrar. The provisions relating to transfer and transmission and other related

matters in respect of the Company's shares contained in the Articles of Association of the Company

and the Companies Act shall apply, mutatis mutandis (to the extent applicable) to the Bond(s) as well.

15. NominationThe Companies Act, 1956, vide Section 109A gives the bondholder an option to nominate a person to

whom his/her bond(s) shall rest in the event of his/her death.

In respect of allotment of the Bonds in dematerialised mode, there is no need to make a separate

nomination with the Company. Nominations registered with the respective Depository Participant of

the applicant would prevail. If the Bondholders require changing their nomination, they are requested

to inform their respective Depository Participant. Nominee shall become entitled to the bond(s) in the


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event of death of the bond holder on production of death certificate or such other evidence as may be

required by IFCI.

Investors applying for bonds in physical form are required to fill in the nomination details in the form.

The sole Bondholder or first Bondholder, along with other joint Bondholders (being individual(s))

may nominate any one person (being individual) who, in the event of death of the sole holder or all

the joint-holders, as the case may be, shall become entitled to the Bond. A person, being a nominee,

becoming entitled to the Bond by reason of the death of the Bondholder(s), shall be entitled to the

same rights to which he would be entitled if he were the registered holder of the Bond. Where the

nominee is a minor, the Bondholder(s) may make a nomination to appoint, in the prescribed manner,

any person to become entitled to the Bond(s), in the event of his death, during the minority.

A nomination shall stand rescinded upon sale of a Bond by the person nominating. A buyer will be

entitled to make a fresh nomination in the manner prescribed. When the Bond is held by two or more

persons, the nominee shall become entitled to receive the amount only on the demise of all the

holders. Fresh nominations can be made only in the prescribed form available on request at ourRegistered/Corporate Office/Registrar or such other person at such addresses as may be notified by

us.

16. Transfer of BondsThere are no restrictions on transfers and except as per Applicable Laws.

Register of Bondholders: The Company shall maintain at its registered office or such other place as

permitted by law a register of Bondholders (the "Register of Bondholders") containing such

particulars as required by Section 152 of the Companies Act. In terms of Section 152A of the

Companies Act, the Register of Bondholders maintained by a Depository for any Bond indematerialized form under Section 11 of the Depositories Act shall be deemed to be a Register of

Bondholders for this purpose.

The Bonds shall be transferred/transmitted in accordance with applicable laws. A suitable instrument

as may be prescribed by us may be used to effect this.

Lock in period: In accordance with the Notification, the bondholders shall not sell or transfer the

Bonds in any manner for a period of 5 years from the Deemed Date of Allotment (the lock in

period). The Bondholders may sell or transfer the bonds after the expiry of the Lock in period on the

stock exchange where the bonds are listed. These bonds can also be pledged, hypothecated or given

on lien for obtaining loans from Scheduled Commercial Banks after the lock-in period of five years.

Transmission of Bonds: However, transmission of the Bonds to the legal heirs in case of death of

the Bondholder/Beneficiary to the Bonds is allowed. Bondholder(s) are advised to provide the

specimen signature of the nominee to the Company/Registrar to expedite the transmission of the

Bond(s) to the nominee in the event of demise of the Bondholder(s). The signature can be provided at

the time of making fresh nominations. This facility of providing the specimen signature of the

nominee is purely optional.


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Transfer of Bonds held in dematerialized form: In respect of Bonds held in the dematerialized

form, transfers of the Bonds may be effected only through the Depository(ies) where such Bonds are

held, in accordance with the provisions of the Depositories Act, 1996 and/or rules as notified by the

Depositories from time to time. The Bondholder shall give delivery instructions containing details of

the prospective purchaser's Depository Participant's account to his Depository Participant. If aprospective purchaser does not have a Depository Participant account, the Bondholder may

rematerialize his or her Bonds and transfer them in a manner as specified below.

The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date,

otherwise the Maturity Amount for the Bonds shall be paid to the person whose name appears as a

Bondholder in the Register of Bondholders. In such cases, any claims shall be settled inter se between

the parties and no claim or action shall be brought against the Company/Registrar.

Transfer of Bonds held in physical form

The Bonds are negotiable instruments and Bonds held in physical form may be transferred byendorsement and delivery by the Bondholder(s). All endorsements must be clear and vernacular

endorsements must be translated into English immediately below the endorsement. However, buyers

of the Bonds are advised to send the Bond Certificate(s) to us or to such persons as may be notified

by us from time to time, along with a duly executed transfer deed or other suitable instrument of

transfer as may be prescribed by us for registration of transfer of the Bond(s). No transfer will be valid

unless and until entered on the IFCI Register.

Provision of bank account details

As a matter of precaution against possible fraudulent encashment of Bond Certificates due to loss or

misplacement, the particulars of the Applicants bank account are mandatorily required to be providedat the time of rematerialisation of the Bonds or transfer of Bond Certificate. Applications without

these details are liable to be rejected. The Bondholders are advised to submit their bank account

details with the Registrar before the Record Date failing which the amounts will be dispatched to the

postal address of the Bondholders as held in the records of the IFCI. However, in relation to

Applications for dematerialised Bonds, these particulars will be taken directly from the Depositories.

17. Succession:Where a nomination has not been made or the nominee predeceases the Bondholder(s) the provisions

of the following paragraphs will apply:

In the event of demise of the holder(s) of the Bonds, IFCI will recognise the executor or administrator

of deceased bondholder, being an individual / HUF, or the holder of the succession certificate or other

legal representative, being an individual / HUF as having title to the Bonds. IFCI shall not be bound to

recognise such executor, administrator, or holder of succession certificate, unless such executor or

administrators obtains probate 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 of India having jurisdiction

over the matter. IFCI may at 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


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recognise such holder, being an individual / HUF as being entitled to the Bonds standing in the name

of the deceased bond holder(s) on production of documentary proof or indemnity. All requests for

registration of transmission along with requisite documents should be sent to the Registrars.

18. Dematerialisation and Rematerialisation of BondsDematerialisation of bonds viz. conversion of bonds from physical mode to electronic form and

rematerialisation of bonds viz. conversion of bonds from electronic to physical form have to be

carried out by giving necessary instructions through the Depository Participant where the demat

account is maintained by the bondholder.

19. Interesta. Rate of Interest: Option I & II Bo

Im- Infra Series IV

Documents

Transcript of Im- Infra Series IV