PFS IM Series 1 Infra Bonds 7 Feb 2011 - rrfinance.com IM.pdf · Capital Structure of the Company...

Private & Confidential- Not for Circulation (This is a Disclosure Document prepared in conformity with

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)

PRIVATE PLACEMENT OF PFS SECURED LONG TERM INFRASTRUCTURE

BONDS - SERIES 1 OF Rs.5,000/- EACH FOR CASH AT PAR WITH BENEFITS UNDER

SECTION 80CCF OF THE INCOME TAX ACT, 1961

Registered Office: 2nd Floor, NBCC Tower, 15, Bhikaji Cama Place, New Delhi 110 066

Corporate Office: 2nd Floor, NBCC Tower, 15, Bhikaji Cama Place, New Delhi 110 066 Tel: 011 41595122 Fax: 011 41595155, website: www.ptcfinancial.com

PRIVATE PLACEMENT OF PFS LONG TERM INFRASTUCTURE NON-

CONVERTIBLE BONDS OF Rs. 5,000/- (RUPEES FIVE THOUSAND ONLY) EACH

FOR CASH AT PAR WITH BENEFITS UNDER SECTION 80 CCF OF THE INCOME

TAX ACT, 1961 FOR Rs. 30 CRORES (RUPEES THIRTY CRORE ONLY) WITH AN

OPTION TO RETAIN OVER-SUBSCRIPTION UP TO AN ADDITIONAL AMOUNT OF

Rs. 70 CRORES (RUPEES SEVENTY CRORE ONLY), THUS AGGREGRATING TO

Rs. 100 CRORES (RUPEES ONE HUNDRED CRORE ONLY)

Credit Rating

‘Brickwork’ has assigned “BWR AA” (Pronounced Double A) (Outlook: Stable) rating. Instrument with this rating are considered to offer High Credit quality in terms of timely payment of debt obligations.

‘ICRA’ has assigned “LA+” (pronounced L A plus) positive outlook rating. This rating is considered to offer adequate credit quality for timely servicing of debt obligations.

The above ratings are not recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future.

Listing

The Secured Redeemable Taxable Non-Convertible Bond are proposed to be listed on the WDM segment of National Stock Exchange of India Limited (NSE).

REGISTRAR TO THE ISSUE

Karvy Computershare Private Limited

Plot No. 17 to 24, Vithalrao Nagar Madhapur, Hyderabad 500 086 Telephone: +91 40 2342 0815 Fax +91 40 2342 0814

TRUSTEE FOR THE BONDHOLDERS

IDBI Trusteeship Services Limited

Asian Building, Ground Floor 17, R. Kamani Marg Ballard Estate, Mumbai – 400 021 Tel No. 022 – 66311771/2/3 Fax No. 022 – 66311776

* An Investor may invest any amount but the maximum tax benefit under section 80 CCF of Income Tax Act 1961, would be available

on the maximum investment of up to Rs. 20,000 only

Note: This information memorandum is neither a prospectus nor a statement in lieu of prospectus. This is only an information

brochure intended for private use and should not be construed to be prospectus and/or an invitation to the public for subscription to

Bonds. PFS can at its sole and absolute discretion change the terms of the offer. The investors are advised to check the terms and

conditions including rate of interest prevailing at the time of applying for the Bonds. The issuer also reserves the right to close the

issue earlier/extend from the @aforesaid date or change the issue time table including the Deemed Date of Allotment at its sole

discretion, without giving any reasons or prior notice.

INFORMATION MEMORANDUM

Minimum Application Size: Rs. 5000/- Maximum Application Size: No Limit*

ISSUE OPEN ON: February 09, 2011 @ISSUE CLOSES ON : March 15, 2011

PFS Tax Saving Long Term Infrastructure Bonds Series 1: Information Memorandum

ARRANGERS TO THE ISSUE

Almondz Global Securities Limited

2nd Floor, 3 Scindia House

Janpath, New Delhi 110001

Tel No. 011-41514666-669

Fax No. 011-41514665

Bajaj Capital Limited

Bajaj House, 5th Floor

97 Nehru Place , New Delhi 110019

Tel No. 011-66161111 Fax No. 011-66608888

Edelweiss Capital Limited

14th Floor, Express Towers

Nariman Point

Mumbai 400021

Tel No. 022 – 6623 3405

Fax No. 022 – 4342 8029

JM Financial Service Pvt Limited

2,3 & 4, Kamanwala Chambers

Sir P. M. Road Fort

Mumbai 400001

Tel No. 022- 22665577 to 80

Fax No. 022-22665902

R R Investors Capital Services Pvt Limited

47, M M Road

Rani Jhansi Marg, Jhandelwalan

New Delhi 110055

Tel No. 011-23508908

Fax No. 011-23636745

SPA Merchant Bankers Limited

25 ‘C’ Block Community Centre

Janak Puri

New Delhi 110058

Tel No. 011- 45675536

Fax No. 011-25532644


TABLE OF CONTENT

Title Page No.

Definitions/ Abbreviations 4

Disclaimer 6

Issue Structure 8

Risk Factors 11

General Information 16

Terms of the Issue 18

Statement of Tax Benefit 26

Procedure of Application 28

Brief Profile of Directors of the Company 31

Company Profile 33

PTC India Limited (Promoter) 34

Shareholding Pattern of Company 34

Financial Performance 35

Product & Services 36

Investments In Energy Value Chain 37

Industry Outlook 38

Capital Structure of the Company

(A) Details of Share Capital 49

(B) Details of other borrowings 50

Material Contracts & Agreements Involving Financial Obligations of the Issuer 56

Declaration 57

ANNEXURES

A Credit rating letter from ICRA LTD

B Credit rating letter from BRICKWORK RATINGS INDIA PVT LTD

C Consent letter from Karvy Computershare Private Limited

D Consent letter from IDBI Trusteeship Services Ltd

E RBI Certificate for conferring Infrastructure Finance Company status to PFS

F List of Collecting Banks


DEFINITIONS/ ABBREVIATIONS

Board/ Board of Directors The Board of Directors of PTC India Financial Services Limited

or Committee thereof

Bonds Secured, Redeemable, Non-Convertible Bonds Series 1 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

CAR Capital Adequacy Ratio

CDSL Central Depository Services (India) Ltd.

Depository A Depository registered with SEBI under the SEBI (Depositories

and Participant) Regulations, 1996, as amended from time to time

Depositories Act The Depositories Act, 1996, as amended from time to time

Depository Participant A Depository participant as defined under Depositories Act

Designated Stock Exchange National Stock Exchange of India Ltd.

DER Debt Equity Ratio

Director(s) Director(s) of PTC India Financial Services Limited unless

otherwise mentioned

DP Depository Participant

EPS Earnings 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

Issuer/ PFS/ Company PTC India Financial Services Ltd

Disclosure Document Disclosure Document dated February 07, 2011 for Private

Placement of Secured, Redeemable, Non-Convertible Bonds

Series 1 having benefits under section 80 CCF of the Income Tax,

1961 for long term Infrastructure Bonds

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

Arrangers Almondz Global Securities Ltd, Bajaj Capital Ltd, Edelweiss

Capital Limited, JM Financial Service Pvt Limited, R R Investors

Capital Services Pvt Ltd & SPA Merchant Bankers Ltd

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

NPAs Non Performing Assets

NSDL National Securities Depository Ltd.

PAN Permanent Account Number

Rs. Indian National Rupee


RBI Reserve Bank of India

RTGS Real Time Gross Settlement

Registrar Registrar to the Issue, in this case being IDBI Trusteeship

Services Limited

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 60,000 Secured, Redeemable,

Non-Convertible Bonds Series 1 having benefits under section 80

CCF of the Income Tax, 1961


DISCLAIMER

GENERAL DISCLAIMER

This Information Memorandum (“document”/”IM”) is neither a Prospectus nor a Statement in Lieu of

Prospectus or an invitation to the Public to subscribe to the Infrastructure Bonds issued by PTC India

Financial Services Limited (PFS) (the “Issuer”/ “the Company”) and is prepared in accordance with

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. This IM 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 Infrastructure Bonds issued

by PFS. This IM has been prepared to give general information regarding PFS to parties proposing to

invest in this issue of Infrastructure Bonds and it does not purport to contain all the information that any

such party may require. PFS and the Arrangers do not undertake to update this Information Memorandum

to reflect subsequent events and thus it should not be relied upon without first confirming its accuracy

with PFS.

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 authorizations 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 potential investors to also ensure that

they will sell these Bonds in strict accordance with this IM 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.

DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA

This Disclosure Document has not been filed with Securities & Exchange Board of India (SEBI). The

Securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or

adequacy of this document. It is to be distinctly understood that this document should not, in any way, be

deemed or construed to have been cleared or vetted by SEBI. SEBI does not take any responsibility either

for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for

the correctness of the statements made or opinions expressed in this document. The issue of Bonds being

made on private placement basis, filing of this document is not required with SEBI. However, SEBI

reserves the right to take up at any point of time, with PFS, any irregularities or lapses in this document.

DISCLAIMER OF THE ISSUER

The Issuer confirms that the information contained in this Disclosure Document is true and correct in all material respects and is not misleading in any material respect. All information considered adequate and relevant about the Issue and the company has been made available in this Disclosure Document for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. The company accepts no responsibility for statements made otherwise than in this Disclosure Document or any other material issued by or at the instance of the


company and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. Neither the Company nor the arrangers take any responsibility for any future changes in the Income Tax Rules by the Government of India, which may affect the status of these Bonds. PTC India Financial Services Limited proposes, subject to receipt of requisite approvals, market conditions and other considerations, to make an initial public offer of its equity shares and has filed a draft red herring prospectus (“DRHP”) with the Securities and Exchange Board of India (“SEBI”). The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1993, as amended (“U.S. Securities Act”) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. Accordingly, the Equity Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. The DRHP is available on SEBI website at www.sebi.gov.in as well as on the websites of the Book Running Lead Managers at (“BRLMs”) associated with the Issue (i.e. the website of SBI Capital Markets Limited- www.sbicaps.com , JM Financial Consultants Private Limited- www.jmfinancial.in , ICICI Securities Limited- www.icicisecurities.com , Almondz Global Securities Limited- www.almondzglobal.com ) and the Co-Book Running Lead Manager (“Co- BRLM”) associated with the Issue ( i.e. website of Avendus Capital Private Limited- www.avendus.com).

DISCLAIMER OF THE ARRANGERS

It is advised that company has exercised self due-diligence to ensure complete compliance of prescribed

disclosure norms in this Disclosure Document. The role of the Arrangers in the assignment is confined to

marketing and placement of the Bonds on the basis of this Disclosure Document as prepared by the

Company. The Arrangers have neither scrutinized/ vetted nor have they done any due-diligence for

verification of the contents of this Disclosure Document. The Arrangers shall use this document for the

purpose of soliciting subscription from qualified institutional investors in the Bonds to be issued by the

company on private placement basis. It is to be distinctly understood that the aforesaid use of this

document by the Arrangers should not in any way be deemed or construed that the document has been

prepared, cleared, approved or vetted by the Arrangers; nor do they in any manner warrant, certify or

endorse the correctness or completeness of any of the contents of this document; nor do they take

responsibility for the financial or other soundness of this Issuer, its promoters, its management or any

scheme or project of the company. The Arrangers or any of its directors, employees, affiliates or

representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever

nature and extent in connection with the use of any of the information contained in this document.

DISCLAIMER OF THE STOCK EXCHANGE

As required, a copy of this Disclosure Document has been submitted to the National Stock Exchange of

India Ltd. (hereinafter referred to as “NSE”) for hosting the same on its website. It is to be distinctly

understood that such submission of the document with NSE or hosting the same on its website should not

in any way be deemed or construed that the document has been cleared or approved by NSE; nor does it in

any manner warrant, certify or endorse the correctness or completeness of any of the contents of this

document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the

Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters,

its management or any scheme or project of the company. Every person who desires to apply for or

otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation

and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which

may be suffered by such person consequent to or in connection with such subscription/ acquisition

whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.


ISSUE STRUCTURE

PRIVATE PLACEMENT - LONG TERM INFRASTRUCTURE BONDS

SUMMARY TERM SHEET

Issuer PTC India Financial Services Limited (the “Issuer”)

Offering 60,000 Secured, Redeemable, Non-Convertible Long Term Infrastructure Bonds of Series 1 of Rs. 5,000/- each aggregating to Rs. 30,00,00,000 (Rupees Thirty Crore only) with a green-shoe option to retain over-subscription for issuance of additional Infrastructure Bonds up to Rs. 70,00,00,000 (Rupees Seventy Crore only) resulting the cumulative amount up to of Rs. 100,00,00,000/- (Rupees One Hundred Crore Only) to be raised through issuance of Non-Convertible Long Term Infrastructure Bonds Series 1

Objects of the Issue The proceeds shall be utilized towards infrastructure lending as defined by the

Reserve Bank of India in the Guidelines issued by it time to time.

Type of Issue Private Placement Basis

Instrument Secured, Redeemable, Non-Convertible Long Term Infrastructure Bonds with

benefits under section 80CCF of the Income Tax, 1961, Series 1

Credit Rating “BWR AA” by Brickwork Ratings &“LA+” (positive outlook) by ICRA

Eligible Investors Resident Indian Individual (Major) and HUF through Karta of the HUF

Security First charge on the receivables of the assets created from the proceeds of current

Bond issue and other unencumbered receivables of the Company to provide the

100% security coverage

Face Value Rs. 5,000/- per Bond

Issue Price At par i.e. Rs. 5,000/- per Bond

Minimum Application 1 Bond and in multiples of 1 Bond thereafter

Lock-in For first 5 years from date of allotment

Tenure 10 years, with or without buyback option after five years

Options for Subscription

The Bonds are proposed to provide the following options-

Option I - Annual Coupon and Buyback after 5 years

Option II- Cumulative Coupon and Buyback after 5 years

Option III - Annual Coupon and No Buyback (maturity at the end of 10 years)

Option IV- Cumulative Coupon and No Buyback (maturity at the end of 10 years)

Redemption/ Maturity For Option I and III: At par at the end of 10th year from the deemed date of

allotment.

For Option II and IV: At par with cumulated interest thereon.

Coupon Rate Option I (Annual Coupon and Buyback after 5 years) –8.25% p.a.

Option III (Annual Coupon and No Buyback) – 8.30 % p.a.

Option II and IV will have cumulative payment at the end of the Buyback period or 10 years, as per the option opted by the Investor (Refer Table on Page 10)

Registrar & Transfer

Agent

Karvy Computershare Private Limited

Trustees IDBI Trusteeship Services Ltd

Listing Proposed on the Wholesale Debt Market (WDM) Segment of National Stock

Exchange of India Limited (NSE)


Compliance All provisions/ clauses/ regulations specified by GoI/ SEBI/ RoC with respect to

issue of Secured Redeemable Non Convertible Bonds shall be complied with by

the PFS.

Form of Issuance Physical and Dematerialized form

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

Mode of Payment ECS/ At par Cheques/ Demand Drafts or any other mode as may be permissible

at time of such payment/s

Issuance Demat and Physical Form

Trading Demat mode only following expiry of lock-in period

Record Date 3 days prior to each interest payment and/ or principal repayment date.

Issue Opening Date February 9, 2011

Issue Closing Date * March 15, 2011. The issuer would have an option to pre-close/extend the issue by

giving notice to the Arrangers without giving any reason to any third party

Deemed Date of

Allotment

March 25, 2011

Buy Back Dates March 25, 2011 every year commencing from year 2016 to year 2020


AVAILABLE OPTIONS FOR INVESTMENT IN INFRASTRUTURE BONDS OF PFS

Options I II III IV

Buyback/

Non

Cumulative

Option

Buyback/

Cumulative

Option

Non Buyback/

Non Cumulative

Option

No Buyback/

Cumulative Options

Face Value (Rs.) 5,000/- 5,000/- 5,000/- 5,000/-

Minimum

Application

1 Bond 1 Bond 1 Bond 1 Bond

In Multiples of 5,000/- 5,000/- 5,000/ 5,000/-

Buy Back Option Yes Yes No No

Interest Payment Yearly NA Yearly NA

Coupon 8.25% per annum

8.25% per annum to be compounded annually

8.30% per annum 8.30% per annum to be compounded annually

Yield on Redemption 8.25% 8.25% 8.30% 8.30%

Coupon Payment

Date

March 25 every year

NA March 25 every year NA

Maturity Date March 25, 2021 March 25, 2021 March 25, 2021 March 25, 2021

Buy Back

Intimation Period Every Year Between January 1 to January 31, starting from Year 2016 till Year 2020

Every Year Between January 1 to January 31, starting from Year 2016 till Year 2020

NA NA

Buy Back After 5/6/7/8/9 Years 5/6/7/8/9 Years NA NA

Redemption Amount (Rs.)

5,000/- 11,047/- 5,000/- 11,098/-

Annual Interest Payment and Interest on application money

The First Annual Interest shall be paid on March 25, 2012. Interest on application money at the above rate from the date of credit in PFS bank account to the previous date of allotment shall be paid with the first annual Interest Payment.

Redemption Amount in case ‘Buy Back’ option is exercised (in Rs.)

Year 5 5,000 7,432 -- --

Year 6 5,000 8,045 -- --

Year 7 5,000 8,709 -- --

Year 8 5,000 9,427 -- --

Year 9 5,000 10,205 -- --


RISK FACTORS

(A) FORWARD-LOOKING STATEMENTS While no forecasts or projections relating to the Company’s financial performance are included in this Information Memorandum, this document contains certain “forward-looking statements” like intends/believes/expects and other similar expressions or variations of such expressions. These statements are primarily meant to give Investors an overview of the Company’s future plans, as they currently stand. The Company operates in a highly competitive, regulated and ever-changing business environment, and a change in any of these variables may necessitate an alteration of the Company’s plans. Further, these plans are not static, but are subject to continuous internal review, and may be altered if the altered plans are perceived to suit the Company’s needs better. Further, many of the plans may be based on one or more underlying assumptions (all of which may not be contained in this Information Memorandum) which may not come to fruition. Thus, actual results may differ materially from those suggested by the forward-looking statement. The Company cannot be held liable by estoppel or otherwise for any forward-looking statement contained herein. The Company and all intermediaries associated with this Information Memorandum do not undertake to inform Investors of any changes in any matter in respect of which any forward-looking statements are made. All statements contained in this Information Memorandum that are not statements of historical fact constitute “forward-looking statements” and are not forecasts or projections relating to the Company’s financial performance. All forward-looking statements are subject to risks, uncertainties and assumptions that may cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that may cause actual results to differ materially from the Company’s expectations include, among others:

• General economic and business conditions in India;

• The Company’s ability to successfully implement its strategy and growth plans;

• The Company’s ability to compete effectively and access funds at competitive cost;

• Changes in Indian or international interest rates;

• The level of non-performing assets in its portfolio;

• Rate of growth of its loan assets;

• Potential mergers, acquisitions or restructurings and increased competition;

• Changes in tax benefits and incentives and other applicable regulations, including various tax laws;

• The Company’s ability to retain its management team and skilled personnel;

• Changes in laws and regulations that apply to NBFCs in India, including laws that impact its lending rates and its ability to enforce its collateral; and

• Changes in political conditions in India. (These are only illustrative and not exhaustive)

By their nature, 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 or losses could materially differ from those that have been estimated. Neither the Company nor any of its Directors nor any of their respective affiliates have any obligation, or intent to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.

(B) PRESENTATION OF FINANCIALS AND USE OF MARKET DATA Unless stated otherwise, the financial information used in this Information Memorandum is derived from the Company’s financial statements for the period April 1, 2009 to March 31, 2010, being the statutory year ended March 31, 2010 and prepared in accordance with Indian GAAP and the Companies Act, 1956 as stated in the report of the Company’s Statutory Auditors, Price Waterhouse, Chartered Accountants (statutory auditors of the company for financial year 2008-09), included in this Information Memorandum. In addition to the financial information for the financial year 2009-10, the financial information related to audited accounts for the half year ended on September’10 is also used and the same has been audited by Company’s Statutory


Auditor for FY 2010-11, M/s Deloitte Haskins & Sells. The Issuer’s fiscal year commences on April 01 and ends on March 31 of a particular year. Unless stated otherwise, references herein to a Fiscal Year are to the Fiscal Year ended March 31 of the reference year. “Fiscal 2010” for instance, refers to the Fiscal year ended March 31, 2010. In this Information Memorandum, any discrepancies in any table between the total and the sum of the amounts listed are due to rounding-off.

Unless stated otherwise, macroeconomic and industry data used throughout this Information Memorandum has been obtained from publications prepared by providers of industry information, Government sources and multilateral institutions. Such publications generally state that the information contained therein has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Issuer believes that industry data used in this Information Memorandum is reliable, it has not been independently verified.

(C) INTERNAL/EXTERNAL RISK FACTORS The following are the risks envisaged by the management, and Investors should consider the following risk factors carefully for evaluating the Company and its business before making any investment decision. Unless the context requires otherwise, the risk factors described below apply to PTC India Financial Services Limited only. The risks have been quantified wherever possible. If any one of the following stated risks actually occur, the Company’s business, financial conditions and results of operations could suffer and therefore the value of the Company’s debt securities could decline.

Note: Unless specified or quantified in the relevant risk factors, the Company is not in a position to quantify the financial or other implications of any risk mentioned herein below:

INTERNAL RISK FACTORS

(a) Bond Redemption Reserve

No Bond Redemption Reserve is being created for issue of BONDs in pursuance of this Information Memorandum.

Management Perception: Creation of Bond Redemption Reserve is not required for the propose issue of Bonds. The MCA vide General Circular No.9/2002; No. 6/3/2001-CL.V dated April 18, 2002 has clarified that NBFCs need not create a Bond Redemption Reserve as specified under section 117C of the Companies Act, 1956, in respect of privately placed Bonds.

(b) Credit Risk

The Company carries the risk of default by borrowers and other counterparties.

Management Perception: Any lending and investment activity is exposed to credit risk arising from the risk of repayment default by the borrowers and counterparties. The Company has institutionalized a systematic credit evaluation process monitoring the performance of its asset portfolio on a regular and continual basis to detect any material development, and also constantly evaluates the changes and developments in sectors to which it has substantial exposure. The Company also undertakes a periodic review of its entire asset portfolio with a view to determine the portfolio valuation, identify potential areas of action and devise appropriate strategies thereon. The Company follows a conservative provisioning and write-off policy, which is in line with what is prescribed by the RBI.

(c) Contingent Liabilities

The Company’s contingent liabilities could adversely affect its financial condition.


Management Perception: As on September 30, 2010, PFS had no contingent liabilities on account of income-tax/interest-tax/sales-tax liabilities in respect of matters in appeal and bond executed in respect of legal matters.

(d) Non-Performing Assets (NPA)

If the level of NPAs in the Company’s portfolio were to increase, its business would suffer.

Management Perception: The Gross and Net NPAs of PFS as on September 30, 2010, were zero respectively. PFS is fully complying with the RBI Guidelines/Directives in connection with the same. The Company believes that its overall financial profile, capitalization levels and risk management systems, provide significant risk mitigation.

(e) Interest Rate Risk

The Company’s business is largely dependent on interest income from its operations.

Management Perception: The Company is exposed 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 its funding sources (institutional/bank borrowings and debt offerings). The Company seeks to match its interest rate positions to minimize interest rate risk. Despite these efforts, there can be no assurance that significant interest rate movements will not have an effect on its results of operations. Interest rates are highly sensitive to many factors beyond its control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions, inflation and other factors. Due to these factors, interest rates in India have historically experienced a relatively high degree of volatility. Nevertheless the endeavor of the Company will be to keep the interest rate risk at minimum levels by proactively synchronizing resource raising and lending activities on an ongoing basis.

(f) Access to Capital Markets and Commercial Borrowings

The Company’s growth will depend on its continued ability to access funds at competitive rates.

Management Perception: With the growth of its business, the Company is increasingly reliant on funding from the debt capital markets and commercial borrowings. The market for such funds is competitive and its ability to obtain funds at competitive rates will depend on various factors, including its ability to maintain its credit ratings. While its borrowing costs have been competitive in the past due to its credit rating and the quality of its asset portfolio, if the Company is unable to access funds at an effective cost that is comparable to or lower than its competitors, the Company may not be able to offer competitive interest rates for its loans. This may adversely impact its business, its future financial performance. The value of its collateral may decrease or the Company may experience delays in enforcing its collateral when its customers default on their obligations, which may result in failure to recover the expected value of collateral and adversely affect its financial performance. The Company has also filed its Draft Red Herring Prospectus with market regulator i.e. SEBI on December 22, 2010, for its proposed fund raising exercise through Initial Public Offering (“IPO”).

(g) Availment of foreign currency borrowings in the future, which will expose Company to

fluctuations in currency exchange rates, which could adversely affect its business, financial

condition and results of operations.

While PFS currently do not have any foreign currency borrowings, it may avail foreign currency borrowings in the future. As an IFC, PFS is eligible to raise external commercial borrowings without prior RBI approval up to 50.00% of its Owned Funds and are likely to avail significant external commercial borrowings in the future. In October 2010, the Company has also entered into a loan agreement with Deutsche Investitions - und Entwicklungsgesellschaft mbH ("DEG") for an aggregate amount of U.S.$26 million for on-lending to renewable energy projects and therefore may be exposed to fluctuations in currency exchange rates in the future. Although PFS may enter


into hedging transactions with respect to its foreign currency borrowings, there can be no assurance that any such measure will be effective or that PFS will enter into effective hedging with respect to any new foreign currency borrowings. Volatility in currency exchange rates could adversely affect Company’s business, financial condition and results of operations and the price of its Equity Shares.

(h) Failure to recover the expected value of collateral when borrowers default on their

obligations to Company may adversely affect its financial performance.

As of September 30, 2010, all loans were secured by project assets. For debt provided on a senior basis, PFS generally seek a first ranking pari passu charge on the project assets. For loans provided on a subordinated basis, PFS generally seek to have a pari passu charge on the project assets. Although we seek to maintain a collateral value to loan ratio of at least 1.25:1 for our secured loans, an economic downturn or other project risks could result in a fall in collateral values. Moreover, foreclosure of such collateral may require court or tribunal intervention that may involve protracted proceedings and the process of enforcing security interests against collateral can be difficult. Additionally, the realizable value of all collateral in liquidation may be lower than its book value.

PFS cannot guarantee that it will be able to realize the full value of its collateral, due to, among other things, defects in the perfection of collateral, delays on its part in taking immediate action in bankruptcy foreclosure proceedings, stock market downturns, claims of other lenders, legal or judicial restraint and fraudulent transfers by borrowers. In the event a specialized regulatory agency gains jurisdiction over the borrower, creditor actions can be further delayed. In addition, to put in place an institutional mechanism for the timely and transparent restructuring of corporate debt, the RBI has devised a corporate debt restructuring system. Any failure to recover the expected value of collateral security could expose PFS to a potential loss. Apart from the RBI guidelines, PFS may be a part of a syndicate of lenders the majority of whom elect to pursue a different course of action than the Company would have chosen. Any such unexpected loss could adversely affect business, prospects, results of operations and financial condition.

EXTERNAL RISK FACTORS

(a) Material changes in Regulations to which the Company is subject could cause the

Company’s business to suffer

Management Perception: NBFCs in India are subject to detailed supervision and regulation by the RBI. NBFCs not accepting public deposits are exempt from most such provisions. The Company is subject generally to changes in Indian law, as well as to changes in Government regulations and policies and accounting principles. The RBI also requires the Company to make provisions in respect of NPAs. The provision made is equal to or higher than that prescribed under the prudential norms. Any changes in the regulatory framework affecting NBFCs including the provisioning for NPAs or capital adequacy requirements could adversely affect the profitability of the Company or its future financial performance, by requiring a restructuring of its activities, increasing costs or otherwise.

(b) Risk of competition in lending and resource raising could cause the Company’s business to

suffer

Management Perception: PFS offers a financial products and services, such as Term Loans and Bridge Loans, catering to varied cross section of customers. The management believes that the Company’s brand equity, reach and strategic alliances along with its resource base would provide the necessary strength to perform well in a competitive market.


(c) A slowdown in economic growth in India could cause the Company’s business to suffer

Management Perception: The Company’s performance and the quality and growth of its assets are necessarily dependent on the health of the overall Indian economy. A slowdown in the Indian economy could adversely affect its business, including its ability to grow its asset portfolio, the quality of its assets, and its ability to implement its strategy. India’s economy could be adversely affected by a general rise in interest rates, or various other factors affecting the growth of industrial, manufacturing and services sector or general down trend in the economy.

Notes to Risk Factors:

Save, as stated elsewhere in this Information Memorandum, since the date of publishing audited financial accounts contained in this Information Memorandum:

(a) no material developments have taken place that are likely to materially affect the performance or prospects of the Company; and

(b) no developments have taken place in the last nine months which materially and adversely affect the profitability of the Company or the value of its assets, or its ability to pay its liabilities within the next 12 months.


GENERAL INFORMATION

PTC India Financial Services Ltd (“PFS” or “Issuer” or “Company”) is offering for subscription, on private placement basis, secured, redeemable, non-convertible Long Term Infrastructure Bonds of the face value of Rs. 5,000/- each for cash at par with benefits under Section 80CCF of the Income Tax Act, 1961 termed as PFS LONG TERM INFRASTRUCTURE NON- CONVERTIBLE BONDS (“INFRASTRUCTURE BONDs”). The minimum application shall be for 1 Bond of Rs. 5,000/- each and in multiples of 1 Bond thereafter.

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 March 22, 2010 and the Committee of Directors for Bond Issuance of the Company, passed at its Meeting held on January 27, 2011 and is made under appropriate provisions of the Income Tax Act, 1961.

ISSUE SIZE

PFS (the “Issuer” or the “Company”) proposes to raise Rs. 30 Crore, with a green-shoe option, to retain over-subscription by issuance of additional Infrastructure Bonds up to Rs. 70 Crore, in that case the total issue size may be up to Rs. 100 Crore, through issue of Secured, Redeemable, Non-Convertible Long Term Infrastructure Bonds face value of Rs.5,000 each for cash at par with benefits under section 80CCF of the Income Tax Act, 1961 termed as PFS LONG TERM INFRASTRUCTURE BONDS - SERIES 1 (“Infrastructure Bonds”) by way of private placement (‘the Issue”). The allotment of Bonds will be made on First-cum-first serve basis (as per records of Company) and Company will monitor the Issue collection on daily basis. In case of over subscription of the issue, the applications received over and above of the Issue size may be rejected or the Company may allot the entire application/s received on Closing date through pro-rata basis or draw of lot or the Company may adopt any other mode as may be deemed fit by the Company at its sole discretion so that the total Issue size could not exceed Rs. 100 Crore.

OBJECTS OF THE ISSUE

The proceeds shall be utilized towards infrastructure lending as defined by the Reserve Bank of India in the Guidelines issued by it from time to time, after meeting the expenditures of, and raised through this issue.

CREDIT RATING

‘Brickwork’ has assigned “BWR AA” (Pronounced Double A with Stable outlook) rating to the Bonds of

the Company aggregating to Rs. 100 Crores letter Ref No. BWR/BLR/RA/2010-11/0274 on January 31,

2011. A copy of rating letter from Brickwork is enclosed elsewhere in this Disclosure Document

Instrument with this rating are considered to offer High Credit quality in terms of timely payment of debt

obligations. A copy of rating letter from Brickwork is enclosed elsewhere in this Disclosure Document

‘ICRA’ has assigned “LA+” (pronounced L A plus) rating to the Bonds of the Company aggregating to

Rs.100 crores letter Ref no. D/RAT/2010-11/P48/9 on February 3, 2011. This rating is considered to offer

adequate credit quality for timely servicing of debt obligations. A copy of rating letter from ICRA is

enclosed elsewhere in this Disclosure Document.

Other than rating mentioned hereinabove, the Company has not sought any other credit rating from any

other credit rating agency (ies) for the Bonds offered for subscription under the terms of this Disclosure

Document.

The above ratings are not a recommendation to buy, sell or hold securities and investors should take their

own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating

agencies and each rating should be evaluated independently of any other rating. The ratings obtained are


subject to revision at any point of time in the future. The rating agencies have the right to suspend,

withdraw the rating at any time on the basis of new information etc.

LISTING

The Secured Redeemable Long Term Infrastructure Non-Convertible Bonds Series 1 of PFS is proposed

to be listed on the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Ltd.

(“NSE”). The Company has obtained an in-principle approval from the NSE for listing of said Bonds on

its Wholesale Debt Market (WDM) Segment. The Company shall make an application to the NSE to list

the Bonds to be issued and allotted under this Disclosure Document and complete all the formalities

relating to listing of the Bonds within 70 days from the date of closure of the Issue. If such permission is

not granted within 70 days from the date of closure of the Issue or where such permission is refused

before the expiry of the 70 days from the closure of the Issue, the Company shall forthwith repay without

interest, all monies received from the applicants in pursuance of the Disclosure Document, and if such

money is not repaid within 8 days after the Company becomes liable to repay it (i.e. from the date of

refusal or 70 days from the date of closing of the subscription list, whichever is earlier), then the Company

and every director of the Company who is an officer in default shall, on and from expiry of 8 days, will be

jointly and severally liable to repay the money, with interest at the rate of 15 per cent per annum on

application money, as prescribed under Section 73 of the Companies Act, 1956.

REGISTRAR

M/s Karvy Computershare Pvt 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 private placement 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, refund orders, interest on application money.

TRUSTEES

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 Bond will be vested with the Trustees on behalf of the Bond holders. The holders of the Bond shall without any further act or deed be deemed to have irrevocably given their consent to and authorised the trustees to do inter-alia, all acts, deeds, and things necessary for servicing the Bond being offered including any payment by the Company to the Bond holders / Bond Trustee, as the case may be, shall, from the time of making such payment, completely and irrevocably discharge the Company pro tanto from any liability to the Bond holders..

FUTURE RESOURCE RAISING

PFS 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 having such ranking pari passu or otherwise and on terms and conditions as PFS may think fit without the consent of or intimation to Bond holders or Trustees in this connection.

PERMISSION/ CONSENT FROM PRIOR CREDITORS

The Company hereby confirms that it is entitled to raise money through current issue of Infrastructure Bonds without the consent/permission/approval from the Bond holders/Trustees/ Lenders/other creditors of PFS. Further the Bonds proposed to be issued under the terms of this Information Memorandum being secured there is no requirement for obtaining permission/consent from the prior creditors.


TERMS OF THE ISSUE

The following are the terms and conditions of Bonds being offered under this Information Memorandum for an aggregate amount of up to Rs. 100 Crore for the financial year 2010-2011.

1. STATUS OF THE BOND

The Infrastructure Bonds shall be non-convertible and secured. These bonds carry tax benefit under section 80CCF of Income Tax Act, 1961 (up to a maximum of Rs.20,000/- per applicant) and these Long Term Infrastructure Bonds are being issued in terms of Notification No. [48/2010/F No 149/84/2010-SO (TPL)] dated 09th July, 2010 issued by Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, and RBI certificate no. N-14.03116, dated 23rd August 2010; a copy of the RBI certificate is annexed to this Memorandum.

In accordance with Section 80CCF of the Income Tax Act, 1961 the amount, not exceeding Rs. 20,000 per annum, paid or deposited as subscription to Long-Term Infrastructure Bonds during the previous year relevant to the assessment year beginning April 01, 2011 shall be deducted in computing the taxable income of a resident individual or HUF. In the event that any Applicant subscribes to the Bonds in excess of Rs. 20,000, the aforestated tax benefit shall be available to such Applicant only to the extent of Rs. 20,000.

Eligible investors can apply for up to any amount of the Bonds across any of the Series(s) or a combination thereof. The investors will be allotted the total number of Bonds applied for in accordance with the Basis of Allotment.

2. FORM

a) The allotment of the Bonds shall be made in physical and dematerialized form both. The Company has made depository arrangements with National Securities Depository Limited ("NSDL") and Central Depository Services (India) Limited ("CDSL", and together with NSDL, the "Depositories") for issue of the Bonds in a dematerialized form. The Company shall take necessary steps to credit the Depository Participant account of the Applicants with the number of Bonds allotted.

b) In case of Bonds that are rematerialized and held in physical form, the Company will issue one certificate to the Bond holder for the aggregate amount of the Bonds that are rematerialized and held by such Bond holder (each such certificate a "Consolidated Bond Certificate"). In respect of the Consolidated Bond Certificate(s), the Company will, upon receipt of a request from the Bond holder within 30 days of such request, split such Consolidated Bond Certificates into smaller denominations, subject to a minimum denomination of one Bond. No fees will be charged for splitting any Consolidated Bond Certificates but, stamp duty, if payable, will be paid by the Bond holder. The request to split a Consolidated Bond Certificate shall be accompanied by the original Consolidated Bond Certificate which will, upon issuance of the split Consolidated Bond Certificates, be cancelled by the Company.

3. FACE VALUE

The face value of each Bond is Rs. 5,000/-.

4. TITLE

In case of:

1. Bonds held in the dematerialized form, the person for the time being appearing in the register

of beneficial owners maintained by the Depository; and

2. the Bond held in physical form, the person for the time being appearing in the Register of

bondholders (as defined below) as Bond holder,


shall be treated for all purposes by the Company, the Bond 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 Bond holder.

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

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

absence of transfer being registered, interest, Buyback Amount and/or Maturity Amount, as the

case may be, will be paid to the person, whose name appears first in the Register of Bond holders

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.

5. LISTING

The Bonds are proposed to be listed on NSE.

6. NOMINATION

In accordance with Section 109A of Companies Act, 1956, the sole Bond holder or first bondholder, along with other joint bondholders [being individual(s)] may nominate any one person (being an individual) who, in the event of death of sole holder or all the joint holders, as the case may be, shall become entitled to the Bond(s). Nominee shall be entitled to the same rights to which he will be entitled if he were the registered holder of the Bond(s). Where nominee is a minor, the Bondholders may make a nomination to appoint any person to become entitled to the Bond(s), in the event of their death, during the minority. A buyer will be entitled to make a fresh nomination in the manner prescribed. When the Bond is held by two or more person, the nominee shall become entitled to receive the amount only on the demise of all the Bond holders. The Bond holders are advised to provide the specimen signature of the nominee to the company to expedite the transmission of Bond(s) to the nominee in the event of demise of Bond holders. In dematerialized mode, there is no need to make a separate nomination with the Company.

7. TRANSFER OF BONDs

a) 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 in dematerialized form under Section 11 of the Depositories Act shall be deemed to be a Register of Bondholders for this purpose.

b) 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.

c) 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.


d) 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 a prospective 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. If a request for transfer of the Bond is not received by the Registrar before the Record Date for maturity, 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.

e) Succession: In the event of demise of the holder(s) of the Bonds, PFS 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. PFS 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. PFS 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 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.

8. DEEMED DATE OF ALLOTMENT

The Deemed Date of Allotment shall be March 25, 2011. All benefits under the Bond including

payment of interest will accrue to the Bondholders from the Deemed Date of Allotment.

9. SUBSCRIPTION

Issue opens on February 09, 2011

Issue closes on *March 15, 2011

* Issue date may be change at sole discretion of Company.

10. INTEREST

a) Annual Payment of Interest: For Option I (subject to buyback, as applicable) & Option

III Bonds, interest will be paid annually commencing from the Deemed Date of Allotment

and on the equivalent date falling every year thereafter.

b) Cumulative Payment of Interest: Interest on Option II & IV Bonds shall be

compounded annually commencing from the Deemed Date of Allotment and shall be

payable on the Maturity Date or the Buyback Date, as the case may be.

c) Day Count Convention: Interest shall be computed on a 365 days-a-year basis on the

principal outstanding on the Bonds. However, where the interest period (start date to end

date) includes February 29, interest shall be computed on 366 days-a-year basis, on the

principal outstanding on the Bonds.

d) Interest on Application and Refund Money: The Company shall not pay any interest on

refund of Application Amount, in whole or part. However, interest on Application Money,

to the extent of allotment of bonds, shall be paid on first interest payment date (i.e. 25


March 2012 for all options), from the date of credit of this money to the bank account of

PFS to the date immediately preceding the deemed date of allotment at the respective

coupon rates.

11. REFUND

In case of rejection of the application on account of technical grounds or receipt of application

after the closure of the issue, refund without interest will be made within a period of 30 days from

the deemed date of allotment of the bonds.

12. REDEMPTION

Unless previously redeemed as per the terms of the Bond, the Company shall redeem the Bonds

on the Maturity Date i.e. March 25, 2021 PFS’s liability to Bondholder(s) towards all their rights

including payment of face value shall cease and stand extinguished up on redemption of the

Bonds Series 1 in all events. Further PFS will not be liable to pay any interest, income or

compensation of any kind after the date of such Redemption of the Bonds(s).

Bonds held in electronic form: No action is required on the part of Bondholders at the time of maturity of the Bonds. On the redemption date, redemption proceeds would be paid by NECS/At Par Cheque/Demand Drafts to those Bondholders, whose names appear on the list of beneficial owners given by the depository to PFS. These names would be as per the depository’s record on the record date/book closure date fixed for the purpose of redemption. These Bonds will be simultaneously extinguished.

Bonds held in physical form: No action will ordinarily be required on the part of the Bondholder at the time of redemption and the maturity amount will be paid to those Bondholders whose names appear in the Register of Bondholders maintained by the Company or Registrar on the Record Date fixed for the purpose of redemption. However, the Company may require that the Consolidated Bond Certificate(s), duly discharged by the sole holder or all the joint-holders (signed on the reverse of the Consolidated Bond Certificate(s) to be surrendered for redemption on Maturity Date and sent by registered post with acknowledgment due or by hand delivery to the Registrar or Company or to such persons at such addresses as may be notified by the Company from time to time. Bondholders shall have to surrender the Consolidated Bond Certificate(s) in the manner as stated above, not more than three months and not less than two months prior to the Maturity Date so as to facilitate timely payment. In case of transmission applications pending on the record date, the redemption proceeds will be issued to the legal heirs after the confirmation of the adequacy and correctness of the documentation submitted with such application till such time, the redemption proceeds will be kept in abeyance.

13. INTERIM EXIT ROUTES

These Bonds shall be listed at NSE. The investors shall have the right to exit through the secondary market, but only after completion of the lock-in period of five years from the date of allotment. In respect of the Bonds having buyback facility, the investors can exit either through secondary market or through buyback route.

14. BUYBACK OF BONDS

In respect of Bonds with buyback option, exit facility shall be available at the end of 5th, 6th,7th, 8th and 9th year. The investors, who opt and are allotted Bonds with buyback facility and wish to exit

through this facility shall have to apply for buy back by writing to the Company (‘Early

Redemption Notice for PFS Long Term Infrastructure Bond Series 1”) of his/her intention to redeem all the Bonds held by him/her under the buyback option. Such early Redemption Notice from the Bondholder should reach the Registrar or the Company between January 1 to January 31, starting from year 2016 to year 2020 (‘Early Redemption Date’) for redeeming the Bonds in that particular financial year. The Bonds will be redeemed on March 25 of the same financial year. Partial buyback of the bonds held under the buyback option shall not be permissible.


Bonds held in dematerialized form

The Company or the Registrar upon receipt of the notice from the Bondholders would undertake appropriate corporate action to effect the buyback. The bank details will be obtained from the Depositories for payments. Investors who have applied or who are holding the Bonds in electronic form, are advised to immediately update their bank account details as appearing on the records of Depository Participant. Failure to do so could result in delays in credit of the payments to investors at their sole risk and neither the Arrangers nor the Company shall have any responsibility and undertake any liability for such delays on part of the investors

Bonds held in physical form

On receipt of the notice from the investor for exercise of buy back option, no action would ordinarily be required on the part of the Bondholder on the Buyback Date and the Buyback Amount would be paid to those Bondholders whose names appear first in the Register of Bondholders. However, the Company may require the Bondholder to duly surrender the Consolidated Bond Certificate to the Company/Registrar for the buyback. While exercising the buyback option, Bondholder are required to furnish any change of address or bank details etc. Upon payment of the Buyback Amounts, the Bonds shall be deemed to have been repaid to the Bondholders and all other rights of the Bondholders shall terminate and no interest shall accrue on such Bonds thereafter. Subject to the provisions of the Companies Act, where the Company has bought back any Bond(s) under the Buyback Facility, the Company shall have and shall be deemed always to have had the right to keep such Bonds alive without extinguishment for the purpose of resale and in exercising such right, the Company shall have and be deemed always to have had the power to resell such Bonds.

15. PAYMENT OF INTEREST/ REDEMPTION/BUYBACK AMOUNT

Payment of Interest Payment of interest on the Bonds will be made to those holders of the Bonds, 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, as on the Record Date.

Record Date The record date for the payment of interest or the Buyback Amount or the Maturity Amount shall be 3 days prior to the date on which such amount is due and payable ("Record date").

Effect of holidays on payment

If the date of payment of interest or principal or any date specified does not fall on a Working Day, then the succeeding Working Day will be considered as the effective date. Interest and principal or other amounts, if any, will be paid on the succeeding Working Day. Payment of interest will be subject to the deduction of tax as per Income Tax Act or any statutory modification or re-enactment thereof for the time being in force. In case the Maturity Date falls on a holiday, the payment will be made on the next Working Day, without any interest for the period overdue.

Payment on Redemption or Buyback

Bonds held in electronic form On the Maturity Date or the Buyback Date as the case may be, the Maturity Amount or the Buyback Amount as the case may be, will be paid as per the Depositories' records on the Record Date fixed for this purpose. No action is required on the part of Bondholders. The bank details will be obtained from the Depositories for payments. Investors who have applied or who are holding the Bond in electronic form are advised to immediately update their bank account details as appearing on the records of Depository Participant. Failure to do so could result in delays in


credit of the payments to investors at their sole risk and neither the Lead Arrangers nor the Company shall have any responsibility and undertake any liability for such delays on part of the investors.

Bonds held in physical form Payments with respect to maturity or buyback of Bonds will be made by way of cheques or pay orders or electronically. The bank details will be obtained from the Registrar for effecting payments. However, if the Company so requires, payments on maturity may be made on surrender of the Consolidated Bond Certificate(s). Dispatch of cheques or pay orders in respect of payments with respect to redemptions will be made on the Maturity Date or Buyback Date within a period of 30 days from the date of receipt of the duly discharged Consolidated Bond Certificate, if required by the Company.

The Company's liability to the Bondholders including for payment or otherwise shall stand extinguished from the Maturity Date or upon dispatch of the Maturity Amounts to the Bondholders.

Further, the Company will not be liable to pay any interest, income or compensation of any kind from the Maturity Date.

Mode of Payment All payments to be made by the Company to the Bondholders shall be by cheques or demand drafts or through National Electronic Clearing System ("NECS")

16. TAXATION

The interest on Bonds will be subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act or any statutory modification or re-enactment thereof. As per the current provisions of the Income Tax Act, on payment to all categories of resident Bondholders, tax will not be deducted at source from interest on Bonds, if such interest does not exceed Rs. 2,500 in a financial year.

As per clause (ix) of Section 193 of the Income Tax Act, no income tax is required to be withheld on any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India in accordance with the Securities Contracts Regulation Act, 1956, as amended, and the rules notified there under. Accordingly, no income tax will be deducted at source from the interest on Bonds held in dematerialized form. In case of Bonds held in a physical form no tax may be withheld in case the interest does not exceed Rs. 2,500. However, such interest is taxable income in the hands of resident Bondholders.

If interest on Bonds exceeds the prescribed limit of Rs. 2,500 in case of resident individual Bondholders, to ensure non-deduction or lower deduction of tax at source, as the case may be, the Bondholders are required to furnish either (a) a declaration (in duplicate) in the prescribed form i.e. Form 15G which may be given by all Bondholders other than companies, firms and non-residents subject to provisions of section 197A of the Income Tax Act; or (b) a certificate, from the assessing officer of the Bondholder, in the prescribed form under section 197 of the Income Tax Act which may be obtained by the Bondholders. Senior citizens, who are 65 or more years of age at any time during the financial year, can submit a self-declaration in the prescribed Form 15H for non-deduction of tax at source in accordance with the provisions of section 197A even if the aggregate income credited or paid or likely to be credited or paid exceeds the maximum limit for the financial year. These certificates may be submitted to the Company or to such person at such address as may be notified by us from time to time, quoting the name of the sole or first Bondholder, Bondholder number and the distinctive number(s) of the Bond(s) held, at least one month prior to the interest payment date.


Tax exemption certificate or document, if any, must be lodged at the office of the Registrar prior to the Record Date or as specifically required. Tax applicable on coupon will be deducted at source on accrual thereof in the Company's books and / or on payment thereof, in accordance with the provisions of the Income Tax Act and / or any other statutory modification, re-enactment or notification as the case may be. A tax deduction certificate will be issued for the amount of tax so deducted on annual basis.

17. RIGHTS OF BONDHOLDERS The Bonds shall not confer upon the holders thereof any rights or privileges including the right to receive notices or annual reports of, or to attend and/or vote, at a General Meeting of PFS. If any proposal affecting the rights attached to the Bonds is considered by PFS, the said proposal will first be placed before the registered Bondholders or Trustees for their consideration. The Bonds comprising the present Private Placement shall rank pari passu inter se without any preference to or priority of one over the other or others over them and shall also be subject to the other terms and conditions to be incorporated in the Agreement / Trust Deed(s) to be entered into by PFS with the Trustees and the Letters of Allotment/Bond Certificates that will be issued. A register of Bondholders will be maintained and sums becoming due and payable in respect of the Bonds will be paid to the Registered Holder thereof. The Bonds are subject to the provisions of the Act and the terms of this Information Memorandum. Over and above such terms and conditions, the Bonds shall also be subject to other terms and conditions as may be incorporated in the Agreement/Bond Trust Deed/Letters of Allotments/Bond Certificates, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by the Government of India and/or other authorities and other documents that may be executed in respect of the Bonds.

18. MODIFICATION OF RIGHTS The rights, privileges and conditions attached to the Bonds may be varied, modified and / or abrogated with the consent in writing of the holders of at least three-fourths of the outstanding amount of the Bonds or with the sanction of the Trustees, provided that nothing in such consent or sanction shall be operative against PFS, where such consent or sanction modifies or varies the terms and conditions governing the Bonds, if the same are not acceptable to PFS.

19. NOTICES

The communications to the Bondholder(s) required to be sent by PFS or the Trustees shall be deemed to have been given if sent by an ordinary post to the registered holder of the Bonds. All communications to be given by the Bondholder(s) shall be sent by registered post or by hand delivery to the Registrar and Transfer Agents or to PFS or to such person, at such addresses as may be notified by PFS from time to time.

20. MISCELLANEOUS

Loan against Bonds

The Bonds cannot be pledged or hypothecated for obtaining loans from scheduled commercial banks during the Lock-in Period of five years.

Lien

The Company shall have the right of set-off and lien, present as well as future on the moneys due and payable to the Bondholder, whether in single name or joint name, to the extent of all outstanding dues by the Bondholder to the Company.

Lien on Pledge of Bonds

The Company, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond is accepted by any bank or institution for any loan provided to the Bondholder against pledge of


such Bonds as part of the funding after completion of lock-in period of five years as notified time to time.

Right to Reissue Bond(s)

Subject to the provisions of the Act, where the Company has redeemed or repurchased any Bond(s), the Company shall have and shall be deemed always to have had the right to keep such Bonds alive without extinguishment for the purpose of resale or reissue and in exercising such right, the Company shall have and be deemed always to have had the power to resell or reissue such Bonds either by reselling or reissuing the same Bonds or by issuing other Bonds in their place. This includes the right to reissue original Bonds.

Joint-holders

Where two or more persons are holders of any Bond (s), they shall be deemed to hold the same as joint holders with benefits of survivorship subject to Articles and applicable law.

Sharing of Information

The Company may, at its option, use its own, as well as exchange, share or part with any financial or other information about the Bondholders available with the Company, its subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Company nor its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid information.

Issue of Duplicate Consolidated Bond Certificate(s)

If any Consolidated Bond Certificate is mutilated or defaced it may be replaced by the Company against the surrender of such Consolidated Bond Certificates, provided that where the Consolidated Bond Certificates are mutilated or defaced, they will be replaced only if the certificate numbers and the distinctive numbers are legible.

If any Consolidated Bond Certificate is destroyed, stolen or lost then upon production of proof thereof to the RTA/Company’s satisfaction and upon furnishing such indemnity/security and/or documents as we may deem adequate, duplicate Consolidated Bond Certificate(s) shall be issued.

Jurisdiction

The courts of New Delhi shall have jurisdiction to settle any disputes which may arise out of or in connection with the Bond Trust Deed or the Bonds and that accordingly any suit, action or proceedings (together referred to as "Proceedings") arising out of or in connection with the Bond Trust Deed and the Bonds may be brought in the courts of New Delhi.


STATEMENT OF TAX BENEFITS

TAX BENEFITS UNDER THE INCOME TAX ACT, 1961

Under the current tax laws (existing as well as proposed) the following tax benefits, inter alia, will be available to the Bond Holder as mentioned below. The benefits are given as per the prevailing tax laws and may vary from time to time in accordance with amendments to the law or enactments thereto. The Bond Holder is advised to consider in his own case the tax implications in respect of subscription to the Bond after consulting his tax advisor as alternate views are possible. PFS or the Trustees shall not be liable to the Bond Holder in any manner for placing reliance upon the contents of this statement of tax benefits.

A. INCOME TAX:

Tax Benefits to the Resident Bond Holders

According to section 80CCF an amount not exceeding rupees twenty thousand invested in long term infrastructure Bonds shall be allowed to be deducted from the total income of an Individual or Hindu Undivided Family, This deduction shall be available over and above the aggregate limit of Rs. One Lakh as provided under sections 80C, 80CCC and 80CCD read with section 80CCE.

Section 80CCF reads as “In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011, as subscription to long-term infrastructure Bonds as may, for the purposes of this section, be notified by the Central Government”

Taxability of Interest

Taxability of interest on Bonds would depend upon the method of accounting adopted by the resident Bondholder as mentioned in the provisions of the IT Act.

Withholding Tax No income tax is deductible at source on interest on Bonds as per the provisions of section 193 of the I.T. Act in respect of the following:

a) In case the payment of interest on Bonds to resident individual Bond Holder by company by an account payee cheque and such Bonds being listed on a recognized stock exchange in India, provided the amount of interest or the aggregate of the amounts of such interest paid or likely to be paid during the financial year does not exceed Rs. 2500;

b) When the Assessing Officer issues a certificate on an application by a Bond Holder on satisfaction that the total income of the Bond Holder justifies nil/lower deduction of tax at source as per the provisions of Section 197(1) of the I.T. Act;

c) When the resident Bond Holder (not being a company or a firm or a senior citizen) submits a declaration to the payer in the prescribed Form 15G verified in the prescribed manner to the effect that the tax on his estimated total income of the financial year in which such income is to be included in computing his total income will be ‘nil’ as per the provisions of Section 197A (1A) of the I.T. Act. Under Section 197A (1B) of the I.T. Act, Form 15G cannot be submitted nor considered for exemption from deduction of tax at source if the aggregate of income of the nature referred to in the said section, viz. dividend, interest, etc as prescribed therein, credited or paid or likely to be credited or paid during the financial year in which such income is to be included exceeds the maximum amount which is not chargeable to tax. To illustrate, the maximum amount of income not chargeable to tax in case of individuals (other than women assesses and senior citizens) and HUFs is Rs 160,000, in case of women assesses is Rs.190, 000 and in case of senior citizen is Rs. 240,000 for financial year 2009-10. Senior citizens, who are 65 or more years of age at any time during the financial year, enjoy the special privilege to submit a self declaration to the payer in the prescribed Form 15H for non-deduction of tax


at source in accordance with the provisions of section 197A (1C) of the I.T. Act even if the aggregate income credited or paid or likely to be credited or paid exceed the maximum amount not chargeable to tax i.e. Rs 240,000 for FY 2009-10, provided tax on his estimated total income of the financial year in which such income is to be included in computing his total income will be nil.

d) On any securities issued by a company in a dematerialized form listed on recognized stock exchange in India. (w.e.f. 1.06.2008).

In all other situations, tax would be deducted at source as per prevailing provisions of the I.T. Act;

Transfer before maturity: Under section 2 (29A) of the I.T. Act, read with section 2 (42A) of the I.T. Act, a listed Bond is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer.

Under section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being listed securities are subject to tax at the rate of 10% of capital gains calculated without indexation of the cost of acquisition. The capital gains will be computed by deducting expenditure incurred in connection with such transfer and cost of acquisition of the Bonds from the sale consideration.

In case of an individual or HUF, being a resident, where the total income as reduced by the long term capital gains is below the maximum amount not chargeable to tax i.e. Rs. 1,60,000 in case of all individuals, Rs. 1,90,000 in case of women and Rs. 2,40,000 in case of senior citizens, the long term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of ten per cent in accordance with and the proviso to sub-section (1) of section 112 of the I.T. Act read with CBDT Circular 721 dated September 13, 1995.

A 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge) is payable by all categories of tax payers as per the current tax laws.

Short-term capital gains on the transfer of listed Bonds, where Bonds are held for a period of not more than 12 months, would be taxed at the normal rates of tax in accordance with and subject to the provision of the I.T. Act. The provisions related to minimum amount not chargeable to tax, surcharge and education cess as described above would also apply to such short-term capital gains.

In case the Bonds are held as stock in trade, the income on transfer of Bonds would be taxed as business income or loss in accordance with and subject to the provisions of the IT Act.

B. WEALTH TAX

Wealth-tax is not levied on investment in Bonds under section 2(ea) of the Wealth-tax Act, 1957.

C. GIFT TAX

Gift-tax is not levied on gift of Bonds in the hands of the donor as well as the donee as the provisions of the Gift-tax Act, 1958 have ceased to apply in respect of gifts made on or after 1st October, 1998.


PROCEDURE OF APPLICATION

Who can apply: 1. Resident Indian Individuals who are major 2. Hindu Undivided Families (HUF) through the Karta of HUF

Joint Application: Maximum of three individuals can apply through a Joint Application and should be in the similar sequence as mentioned in the Demat Account.

How to apply: Investors are required to submit the Application Form duly filled in along with necessary enclosures at the specified Collecting Bankers as indicated in the Information Memorandum under “List of Collecting Branches.

All Applicants are required to make payment of the full Application Amount along with the Application Form.

Applications are required to be for a minimum of one (1) Bond and multiples of one (1) Bond thereafter.

The investor must complete the application for the Bonds in the prescribed form, and in block letters in English. The complete Application Form must be accompanied by either a Demand Draft or crossed

Cheque of the amount as desired by the investor and made payable in favour of “PFS INFRA BOND

ACCOUNT”. Demand Draft charges, if any, shall be borne by the applicant.

Cheques/Demand Drafts may be drawn on any designated collection centre (as mentioned in the Information Memorandum) where application form is being deposited. The investors may attach a self attested copy of proof of DP ID and Client ID (desirable to avoid mismatch). All other details would be taken from the demat account.

Rejection of Applications: The Company reserves its full, unqualified and absolute right to accept or reject any Application in whole or in part and in either case without assigning any reason thereof. Application would be liable to be rejected on one or more technical grounds, including but not restricted to:

• Number of Bonds applied for is less than the minimum Application size;

• Applications not duly signed by the sole/joint Applicants;

• Application amount paid not tallying with the number of Bonds applied for;

• Applications for a number of Bonds which is not in a multiple of one;

• Investor category not ticked;

• Bank account details not given;

• Applications by persons not competent to contract under the Indian Contract Act, 1872, as amended;

• In case of Applications under Power of Attorney where relevant documents not submitted;

• Application by stockinvest;

• Applications accompanied by cash;

• Applications without PAN;

• DP ID, Client ID and PAN mentioned in the Application Form do not match with the DP ID, Client ID and PAN available in the records with the depositories; and

• Multiple Applications. The collecting bank shall not be responsible for rejection of the Application on any of the technical grounds mentioned above. Application form received after the closure of the Issue shall be rejected. In the event, if any Bond(s) applied for is/are not allotted, the Application monies of such Bonds will be refunded, as may be permitted under the provisions of applicable laws, without any interest.


Basis of Allotment The allotment of Bonds will be made on First-cum-first serve basis (as per records of Company) and Company will monitor the Issue collection on daily basis. In case of over subscription of the issue, the applications received over and above of the Issue size may be rejected or the Company may allot the entire application/s received on Closing date through pro-rata basis or draw of lot or the Company may adopt any other mode as may be deemed fit by the Company at its sole discretion so that the total Issue size could not exceed Rs. 100 Crore.

Letters of Allotment/ Refund Orders PFS reserves, in its absolute and unqualified discretion and without assigning any reason thereof, the right to reject any application in whole or in part. The unutilized portion of the application money will be refunded to the Applicant by an account payee cheque/demand draft. In case the cheque payable at par facility is not available, PFS reserves the right to adopt any other suitable mode of payment. PFS shall credit the allotted Bond to the respective beneficiary accounts/dispatch the Letter(s) of Allotment or Letter(s) of Regret/ Refund Orders in excess of Rs. 2,500 as the case may be, by registered/speed post at the Applicant’s sole risk, within 30 days from the date of allotment of the Bonds. Refund Orders up to Rs.2,500 will be sent under certificate of posting. Further,

a) Allotment of the Bonds shall be made on March 25, 2011 b) Credit to dematerialized accounts will be made within two Working Days from the date of

Allotment; c) The letters of allotment will be sent within 30 days of the date of allotment. d) In case of rejection of the application on account of technical ground or for any other reason,

refund of application money without interest will be made within a period of 30 days from the date of allotment of the Bonds.

Payment of interest on application money: In respect of allotted Bonds, interest on the application money shall be paid on first interest payment date (i.e. 25 March 2012 for all options) to the investors from the date of realization of the instrument to one day before deemed date of allotment as the case may be, at the interest rates as applicable to the various options for subscriptions.

Governing Law The Bonds are governed by and shall be construed in accordance with the existing laws in India. Any dispute arising thereof will be subject to the jurisdiction of courts at New Delhi.

Investor’s relations and grievances redressal: Arrangements have been made to redress investor grievances expeditiously as far as possible. PFS endeavours to resolve the investors’ grievances within 30 days of its receipt. All grievances related to the issue quoting the Application Number (including prefix), number of Bonds applied for, amount paid on

application and place where the application was submitted, may be addressed to the Registrar and

Transfer Agents, M/s Karvy Computershare Private Limited at the address as mentioned elsewhere in this Memorandum or Registered & Corporate Office of PFS.


i. Name and address of the registered office of the Issuer:

Name PTC INDIA FINANCIAL SERVICES LIMITED

Registered office 2nd Floor, NBCC Tower, 15, Bhikaji Cama Place, New Delhi 110 066

Tel No. 011 – 41595122

Fax No. 011 – 41595155/ 41659144

Website www.ptcfinancial.com

ii. Name and addresses of the Directors of the issuer: (as on 31 Jan 2011)

Name of Director Designation Residential Address

Mr. Tantra Narayan

Thakur

Chairman &

Managing Director

B 1/46 2nd Floor

Safdarjung Enclave, New Delhi 29

Dr. Ashok Haldia Whole-Time

Director and Chief

Financial Officer

Suraj Kuteer,

A-76, Sector 30,

Gautam Budh Nagar, Noida 201 303.

Mr. Sudhir Kumar Independent

Director

Type VI/41, Railway Officers, Enclave,

San Martin Marg, Chanakya Puri, New

Delhi – 110 021

Mr. M K Goel Non-executive

Director

#278-D, Pocket II,

Mayur Vihar, Phase I,

Delhi – 110 091

Mr. Prathipati Abraham Independent

Director

D-71, Nivedita Kunj, Sector 10, RK Puram, New Delhi – 110022

Mrs. Rama Murali Independent

Director

155, Shriniketan CGHS Ltd

Plot 1, Sector 7, Dwarka

New Delhi 75

Dr. Uddesh Kohli Independent

Director

S 50, GK-I, New Delhi 110048

Mr. Ramarao

Muralidharan Coimbatore

Independent

Director

29 A, Kamala Street

Nehru Nagar, Chramepet, Chennai 600044

Mr. Neil Kant Arora Non-Executive

Director

Villa 3, Street 3, Terranova, Arrabian Ranches, Dubai, United Arab Emirates

Mr. Surinder Singh Kohli Independent

Director

J -70 Rajouri Garden New Delhi 110027

� Mr. Tantra Narayan Thakur, aged 61 years, is the Chairman and Managing Director of our Company. He is the founder of our Company and has been on the Board since our incorporation. He holds a Bachelors degree in Science in engineering. Mr. Thakur has more than 30 years of experience as a member of the Indian Audit and Accounts Service. Mr. Thakur has also served as a Director (Finance and Financial Operations), Power Finance Corporation Limited, where he was responsible for mobilizing resources for the company for on-lending to power projects in addition to accounting and compliance


related matters. Currently he is also the chairman and managing director of our Promoter namely PTC India Limited.

� Dr. Ashok Haldia aged 54 years, is a Whole Time Director and Chief Financial Officer

of our Company. He is a member of the Institute of Chartered Accountants of India,

Institute of Company Secretaries of India and the Institute of Cost and Works Accountants

of India. He holds a Ph.D. degree in ‘Privatization of Public Enterprises in India’ from

University of Rajasthan. He has been on the Board of the Company since August 13,

2008, prior to which he served as a Secretary, Institute of Chartered Accountants of India,

New Delhi for about a decade. Dr. Haldia has been associated with the Bureau of Public

Enterprises, State Enterprises Department, Government of Rajasthan and Power Finance

Corporation Limited

� Mr. Sudhir Kumar, aged 54 years, is an Independent Director of our Company and has

been on the Board of our Company since March 22, 2010. He holds a Masters degree in

Commerce from the Delhi School of Economics, University of Delhi. He is an Indian

Administrative Services officer presently serving as Joint Secretary in Ministry of Power,

Government of India. He has also served as the officer on special duty to Minister for

Railways, Government of India. Presently, he is also on the board of our Promoter, PTC

India Limited.

� Mr. M.K. Goel aged 53, is a Non Executive Director of our Company and has been on

the Board of our Company since January 12, 2010. He holds a Bachelors degree in

technology specializing in electrical engineering from Kanpur University. Currently he is

associated with Power Finance Corporation Limited (“PFC”) as director (commercial)

besides heading the human resources, administration, institutional appraisal and legal

functions. Prior to joining PFC, Mr. Goel was working with NHPC Limited for about a

decade. Presently, he is also on the board of our Promoter, PTC India Limited.

� Mr. P Abraham aged 71 years, is an Independent Director of our Company and has been

on the Board of our Company since June 4, 2007. He holds a Masters degree in Arts from

Andhra University, Visakhapatnam. Mr Abraham has served as the Secretary to the

Ministry of Power, Government of India and is presently serving as the chairman of

Maharashtra State Electricity Board. Presently, he is also on the board of our Promoter,

PTC India Limited

� Mrs. Rama Murali aged 62 years, is an Independent Director of our Company and has

been on the Board of our Company since April 21, 2009. She holds a Bachelors of Arts

(Hons) degree from Maharani College, Jaipur, University of Rajasthan. She is a retired

Indian Audit and Accounts Service officer. Mrs. Murali has served as the Joint Secretary,

Department of Economic Affairs, Ministry of Finance. She has also served as the

financial advisor in the Department of Scientific and Industrial Research, the Council of

Scientific and Industrial Research, Government of India, and the New Delhi Municipal

Committee where she was also the overall in-charge of finance and accounts. She is also a

life member of the Indian Institute of Public Auditors.

� Dr. Uddesh Kohli aged 69 years, is an Independent Director of our Company and has

been on the Board of our Company since September 25, 2009. He holds a Bachelors

degree (Hons) in Engineering from the Indian Institute of Technology, Roorkee. He also

holds a Ph.D. degree in Economics from the Delhi School of Economics. Presently, Dr.

Kohli is the chairman of Engineering Council of India and Construction Industry

Arbitration Association. He was the chairman and managing director of Power Finance

Corporation Limited and former adviser, Planning Commission (Government of India)


and has also been associated with international bodies such as Asian Development Bank,

United Nations Industrial Development Organization, United Nations Development

Programme and United Nations Office for Project Services.

� Mr. C. R. Muralidharan aged 63 years, is an Independent Director of our Company and has been on the Board of our Company since January 11, 2010. He holds a Bachelors of Science degree from Madras University and is a certified associate of Indian Institute of Bankers. Mr. Muralidharan has served as a whole-time member (finance and accounts) of Insurance Regulatory and Development Authority (“IRDA”). Prior to joining IRDA, he served in the Reserve Bank of India (“RBI”) for more than three decades in various capacities and was also heading the Department of Banking Policy and Regulation, RBI between 1998 to 2005 as the chief general manager. He has also been a member of the International Monetary Fund missions on financial sector assessment project of Uganda in 2001 and the assessment of the regime for insolvency of banks in Kuwait in 2004.

� Mr. Neil Kant Arora aged 41 years, is a Non Executive Director of our Company and

has been on the Board of our Company since January 31, 2008. He holds a first class

honours degree in Actuarial Science from the London School of Economics. At present,

Mr. Arora is serving as an executive director with Macquarie Capital Group

(“Macquarie”), Dubai and heads the Middle Eastern advisory team. Prior to this, he was

based out of the Singapore office of Macquarie and heading the Asian infrastructure team.

Mr. Neil Kant Arora is a resident of the United Arab Emirates

� Mr. Surinder Singh Kohli aged 65 years, in an Independent Director of our Company

and has been on the Board of our Company since December 13, 2010. He holds Bachelors

degree in Science (Mechanical Engineering) from Banaras Hindu University and a

diploma in Industrial Finance from Indian Institute of Bankers. Prior to joining our

Company he was the chairman and managing director of India Infrastructure Finance

Company Limited, Punjab National Bank, Small Industries Development Bank of India

and Punjab and Sind Bank respectively. He was also the chairman of the India Banks

Association for two terms.

iii. A brief summary of the business activities of the Issuer and its line of business

COMPANY PROFILE

PTC India Financial Services Limited (“PFS”) is an Indian non-banking financial institution promoted by

PTC India Limited (“PTC") to make principal investments in, and provide financing solutions for

companies with projects across the energy value chain, which inter-alia includes investing in equity and/or

extending debt to power projects in generation, transmission, distribution; fuel sources, fuel related

infrastructure like gas pipelines, LNG terminals, ports, equipment manufacturers and EPC contractors etc.

PFS is regulated by the Reserve Bank of India (“RBI”) as a systemically important non-deposit taking,

non-banking financial company ("NBFC"), and have recently been classified by the RBI as an

Infrastructure Finance Company, or IFC. PFS also believes that it is one of few NBFCs that have been

granted this status. The IFC status enhances PFS’s ability to raise funds on a cost-competitive basis and

enables Company to assume higher debt exposure in infrastructure projects.

PFS is a one stop solution provider offering a comprehensive range of financial products and services that add value throughout the life cycle of projects across all areas of the energy value chain. PFS believes this has enabled it to establish itself as a preferred financing provider for power projects. PFS believes its power sector knowledge and experience enables it to identify investment opportunities with high potential and effectively manage risks associated with such opportunities. PFS also believes its


exclusive focus on the power sector has enabled it to develop strong relationships and become a preferred financing provider for power projects, particularly for smaller and medium sized projects, compared to competitors that are not similarly focused on the power sector.

The investment decision by PFS into the equity and/or debt is based on many factors such as the valuation

offered by the power projects, commitment shown by the developers and overall techno-economic

viability. The investment made by PFS adds to the valuation of the project (investee company) by bringing

the core competency of its promoter i.e. PTC in off-take and marketing of power, side by side the brand

value of Goldman Sachs and Macquarie, which assists in tying up the balance funding requirements for

the project.

PTC INDIA LIMITED (PROMOTER)

PTC India Limited (PTC) was established in 1999 through an initiative of the Government of India, in

consonance with the Mega Power Policy, to establish a power market in India as well as to act as a credit

mitigating agency for Mega Power Projects by buying electricity from them through long term Power

Purchase Agreements (PPAs) and sell the same through back-to-back Power Sale Agreements (PSAs) to

various state utilities.

In the meantime, PTC started the concept of short term trade of electricity in a perennially electricity

starved country.

In addition to the development of the short term market, PTC has also focused on the long term market

through facilitation of power projects being set up by Independent Power Producers (IPPs) with whom it

enters into long term PPAs and sells the electricity being generated in the plant to various utilities through

long term back-to-back PSAs. PTC’s total portfolio size has grown to more than 14,185 MW of PPAs

(including cross border) and more than 11,781 MWs of MoUs for power purchase with various IPPs

across the country.

Additionally, PTC has started various ancillary services in the form of Advisory as well as fuel

intermediation to support the growth of such power projects in the country.

OTHER SHAREHOLDERS

� G S Strategic Investments Limited

G S Strategic Investments Limited, a company incorporated with limited liability under the laws of

Mauritius is a 100% subsidiary of Goldman Sachs. Goldman Sachs is a leading global investment

banking, securities and investment management firm that provides a wide range of services to a

substantial and large client base that includes corporations, financial institutions, governments and

high-net-worth individuals;.

� Macquarie India Holdings Limited

Macquarie India Holdings Limited is a part of the Macquarie Group. Macquarie Group is a provider

of specialist investment, advisory and financial services.

SHAREHOLDING PATTERN:

Particulars No. of Equity Shares Shareholding

(%)

1 PTC India Ltd* 337,250,001 77.60%

2 G S Strategic Investments Ltd 48,666,667 11.20%

3 Macquarie India Holdings Limited 48,666,667 11.20%

TOTAL 434,583,335 100.00%

*PTC India Limited is holding 6 equity shares through 6 of its nominees.


MANAGEMENT

PFS is a professionally managed company with day-to-day affairs being handled by a team of senior

executives who have extensive experience in their line of business. The Board of Directors consists of a

number of eminent personalities and is headed by Mr. T. N. Thakur in his capacity as Chairman.

Refer to point no ii, page 9, for details of Directors

FINANCIAL PERFORMANCE

PROFITABILITY SNAPSHOT

Rs. in million

FINANCIAL PARAMETERS 31/03/07# 31/03/08 31/03/09 31/03/10 30/09/10

Audited Audited Audited Audited Audited

No. of months 12 12 12 12 6

Profit and Loss:

Total Interest Income - - 0.14 135.74 314.06

Total Interest Expense - - 0.18 116.04 160.17

Other Income (Income from Investments,

Fees etc)

- 31.09 115.87 399.16 221.99

Operating Profit - (5.87) 87.04 367.47 361.85

Depreciation - 0.08 0.24 0.47 26.93

PBT - (5.95) 86.81 367.00 334.93

PAT - (0.97) 85.30 254.52 255.10

-

Balance Sheet: -

WC/ST Debt - - - 246.00 846.58

LT Debt - - 200.00 2,862.01 4,373.69

Total Debt - - 200.00 3,108.01 5,220.26

Tangible Net Worth(TNW) 40.00 1,106.79 6,093.45 6,359.37 6,359.37

Current Assets 41.63 5.60 4,101.12 2,510.66 1,630.83

Current Liabilities (incl. CPLTD, ST Loans) 19.00 23.08 12.01 79.24 83.29

Investment - 1,117.87 2,000.12 4,067.04 3,978.53

Net Fixed Assets - 0.41 0.60 350.66 324.17

Gross NPAs - - - - -

Key Ratios:

EBITDA - (5.87) 87.22 483.51 522.02

Total Debt/ EBITDA - - 2.29 6.43 10.00

Total Debt/ TNW - - 0.03 0.49 0.82

Current Ratio 2.19 0.24 341.46 31.69 19.58

Net NPA as % of Loan - - - - -

Net NPA as % of Net Worth - - - - -

# The first P&L account was prepared for the period ending March 31, 2008


PRODUCT & SERVICES

1. Equity

PFS do strategic equity investments in companies in the energy value chain in India, including in

greenfield and brownfield projects. The nature and extent of our equity participation in such companies

vary in accordance with the requirements, opportunities and risks associated with the relevant project,

but we typically do not retain management control. Our investment horizon tends to focus on the short

to medium term. As of September 30, 2010, our Board had approved equity commitments for ten

companies for an aggregate amount of Rs.4,838.46 million, with projects aggregating 2,621 MW of

power generation capacity.

2. Lending

PFS offers debt assistance to projects subject to exposure limits stated earlier. PFS structure the debt

assistance taking into consideration factors like needs of the borrowing entity, the market conditions,

regulatory requirements, risks and rewards from the projects. PFS offers the following debt

instruments:

• Term Loans

• Bridge Loans

• Short Term Loans

PFS also considers mezzanine funding debt against promoter’s contribution in equity or in any other

form depending upon the requirements of the project.

PFS provides debt assistance to projects in the entire energy value chain i.e. power projects, fuel

sources, related infrastructure like gas pipelines, LNG terminals, ports, equipment manufacturers like

transformers, conductors, insulators, cables etc; which are technically and economically viable PFS

extends finance assistance to all kinds of borrowing entities as well as private sector in the entire

energy value chain. However, the priority of PFS would be private sector, followed by Joint sector/

Government sector projects.

The interest rate to be charged by PFS shall take into account the cost of funds of PFS, rates being

charged by other institutions/bank, and condition of the financial market While providing for a

reasonable margin, PFS may provide for charging differential interest rate form the borrowers

depending upon the type of project, and grading based on the entity appraisal.

As of September 2010, our Board had approved debt sanctions (including long term and short

term/mezzanine funding) for 27 companies for an aggregate amount of approx Rs 18,815 million, with

projects aggregating 8,853 MW of power generation capacity.

3. Fee Based Services

With a core team of in-house power sector professionals, PFS strives to help its clients to become more

competitive, effective and successful. PFS has already started its loan syndication activities in current

financial year.


INVESTMENTS IN ENERGY VALUE CHAIN (as on September 30, 2010)

• Indian Energy Exchange, in which PFS as promoter, had subscribed for a 26% equity stake for Rs. 69.39 million. It is India’s first exchange to facilitate the trading of power. The exchange was commissioned on June 27, 2008 and has a market share of approx 84% of the electricity traded on any power exchange. In September 2010, we liquidated a portion of shareholding in IEX for a consideration of Rs. 135.3 million after which our shareholding comes to 21.12%.

• Varam Bioenergy Private Limited, in which PFS subscribed for a 26% equity stake for Rs.43.90 million, has developed a 10 MW biomass project, based primarily on rice husk, in Bhandara, Maharashtra, that was commissioned in February 2009.

• RS India Wind Energy Private Limited, in which PFS subscribed for a 37% equity stake for Rs.611.21million under a subscription agreement, is setting up a 99.45 MW wind based power project in Satara, Maharashtra of which 39.60 MW is commissioned and in process of setting up a 3 MW solar power project in Haryana. Meenakshi Energy Private Limited is setting up a 900 MW imported coal based tolling power project in Nellore, Andhra Pradesh. The project has been bifurcated into phase I of 300 MW (2 x 150 MW) and phase II of 600 MW. PFS has subscribed for a 26% equity stake for Rs. 996.80 million for phase I and has disbursed Rs. 603.41 million in the company. Project is under advance stage of development and expected to commission by December 2011.

• PTC Bermaco Green Energy Systems Limited, in which PFS has subscribed for a 26% equity stake for Rs. 13.75 million, is a joint venture arrangement between Bermaco Energy Systems Limited. Under the joint venture agreement it will set up a series of biomass projects across India.

• East Coast Energy Private Limited is developing a 1320 MW thermal power project, comprising of two units of 660 MW each, in Andhra Pradesh. The project is expected to be commissioned by May 2014. The estimated cost of the project is Rs.65,700 million and financial closure for the project has been achieved. East Coast has entered into a PPA with PTC partly on long-term and partly on a short-term basis. PFS has committed an equity investment of Rs. 1333.85 million and as on 30 Sep 2010, we have invested Rs. 1250 million in project.

• Ind Barath Powergencom Limited, in which PFS has subscribed for a 26% equity stake for Rs.556.30 million, under a share subscription agreement, is developing three units of each 63 MW, totaling to 189 MW coal fired power project, in Thoothukkudi District, Tamilnadu. Two of the units of the project have already been synchronized with the grid.

• Ind Barath Energy (Utkal) Ltd, in which PFS has subscribed for a 13% equity stake for Rs.1050 million, under a share subscription agreement, is developing a 700 MW thermal power project in Orissa. Financial closure has been achieved for the project. The project is due for commissioning in March 2012.


INDUSTRY OUTLOOK

Overview of the Indian Economy

India is the fifth largest economy in the world after the European Union, United States of America,

China and Japan in purchasing power parity terms with an estimated GDP (purchasing power parity)

of US$3.68 trillion in 2009. India is also among the fastest growing economies globally and has grown

at an average rate of more than 7.0% since 1997. An industrial slowdown early in 2008, followed by

the global financial crisis, led annual GDP growth to slow to 6.5% in 2009, still the second highest

growth in the world among major economies (Source: CIA World Factbook website). India escaped

the brunt of the global financial crisis because of cautious banking policies and a relatively low

dependence on exports for growth. According to the revised estimates of the Central Statistical

Organisation (CSO) India’s GDP grew at a rate of 7.4% in the fiscal year 2010.

The following table presents a comparison of India’s real GDP growth rate with the real GDP growth

rate of certain other countries:

Countries 2007* 2008* 2009*

Australia 4.8% 2.3% 1.3%

Brazil 6.1% 5.1% -0.2%

China 13.0% 9.0% 9.1%

Germany 2.5% 1.3% (4.9%)

India 9.0% 7.4% 7.4%

Japan 2.3% (1.2%) (5.3%)

South Korea 5.1% 2.3% 0.2%

Malaysia 6.5% 4.7% (1.7%)

Russia 8.1% 5.6% (7.9%)

Thailand 4.9% 2.5% (2.2%)

United Kingdom 2.7% (0.1%) (4.9%)

United States 1.9% 0.0% (2.6%)

* Estimated

(Source: CIA World Factbook, website: https://www.cia.gov/library/publications/the-world-factbook)

Investment in India has, remained relatively stable despite the global slowdown and has been growing

at a rate higher than that of GDP. There has been upward trend in the growth of the private

investment. The recovery was broad based with mining and quarrying, manufacturing, and electricity,

gas and water supply recording impressive growth rates. (Source: Ministry of Finance: Economic

Survey, 2009-10)

India’s ability to recover from the global slowdown and its own domestic liquidity crunch has been

driven by the country’s large domestic savings (including corporate retained earnings) and private

consumption. Further, the GoI’s fiscal policies and the monetary policies of the Reserve Bank of India

have also played an important role in the revival of economic growth. In particular, the GoI as part of

its fiscal stimulus package took the following initiatives to promote consumption in the economy: (i)

increased GoI expenditure especially on infrastructure; and (ii) reduced taxes to spur consumption.

The RBI has also taken various other steps to stimulate the economy including by (a) reducing the

cash reserve ratio (CRR) to 6.00%; (b) maintaining the statutory liquidity ratio (SLR) at 25.00%; (c)

reducing the repo rate to 6.25%; and (d) reducing the reverse repo rate to 5.35%. (Source: RBI)

A strong recovery in the industrial sector combined with a resilient services sector muted the impact

of a deficient South-West monsoon on overall output. The contribution of the industrial sector to the

overall growth increased sharply from 9.5% in 2008-2009 to 28.0% in 2009-2010. (Source: RBI,

2009-2010 Annual Report)


Source: RBI, 2009-2010 Annual Report

The Indian economy witnessed robust recovery in growth in the last quarter of fiscal 2010. Most of

the business expectation surveys suggest continuation of the growth momentum in fiscal 2011. The

Industrial Outlook Survey of the Reserve Bank indicates further improvement in several parameters of

the business environment for the three months ended September 30, 2010 quarter. The Professional

Forecasters’ Survey conducted by the Reserve Bank in June 2010 places overall (median) GDP

growth rate for fiscal 2011 at 8.4%, higher than 8.2% reported in the previous round of the survey.

(Source: Macroeconomic and Monetary Developments: First Quarter Review Fiscal 2011).

Organization of the Power Industry in India

The following diagram depicts the current structure of the Indian power industry:

Overview of Indian Power Industry

India has continuously experienced shortages in energy and peak power requirements. According to

the Monthly Review of the Power Section ("Monthly Review") published by the CEA in October

2010, the total energy deficit and peak power deficit during April 2010 to October 2010 was

approximately 9.2% and 10.1%, respectively.


The shortages in energy and peak power have been primarily due to the sluggish progress in capacity

addition. During the 10th Five Year Plan (fiscal 2002 to fiscal 2007), capacity addition achieved

compared to target capacity addition was 51.5%. During the 11th Five Year Plan (fiscal 2008 to fiscal

2012), capacity addition achieved was 9,263 MW or 56.7% of target capacity addition of 16,335 MW

in fiscal 2008, while in fiscal 2009, capacity addition achieved was 3,454 MW, or 31.2% of target

capacity addition of 11,061 MW, while in fiscal 2010, capacity addition achieved was 9,585 MW, or

66.1% of target capacity addition of 14,507 MW. According to the Monthly Review (October 2010),

the total installed power generation capacity in India was 167278.36 MW as of August 31, 2010.

Power Consumption

The per capita consumption of power in India has grown from 566.7 kWh/year in fiscal 2003 to 733.5

kWh/year in fiscal 2009, at a CAGR of 4.39% (Source: Monthly Review (July 2010)). The following

table sets forth information relating to India's per capital consumption of power for the periods

indicated:

Year Per Capita Consumption (kWh)

2002-03 566.7

2003-04 592.0

2004-05 612.5

2005-06 631.5

2006-07 671.9

2007-08 717.1

2008-09 733.5

(Source: Monthly Review (October 2010))

The total energy consumption in India is estimated to grow from 566 Mtoe in 2006 to 1280 Mtoe in

2030. (Source: World Economic Outlook 2008, IEA). This implies growth at a CAGR of 3.5% CAGR

in India's energy requirement over the next 25-30 years and hence, there is a huge potential for

investments in the energy sector in India.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Can

ada

United States

Aus

tralia

Japa

n

Franc

e

German

y

United Kingd

om

Rus

sia

Brazil

China

India

Ele

ctric

ity C

onsum

ption p

er capita (kwH)

The GoI has set a goal of 1,000 kWh per capita by fiscal 2012 in its mission of “Power for All by

2012” under the National Electricity Policy.

According to the CIA Factbook, India is sixth largest consumer of electricity in the world after the

United States, China, European Union, Russia and Japan with an estimated 568 billion kWh in total

electricity generated plus imports and minus exports in 2007.


Power Demand-Supply Overview

The Indian power sector has historically been beset by energy shortages which have been rising over

the years. In fiscal 2010, peak energy deficit was 12.7% and total energy deficit was 10.1%. The

following table provides the peak and normative shortages of power in India from fiscal year 2003 to

June 2010:

Peak

Demand

(MW)

Peak

Met

(MW)

Peak

Deficit/

Surplus

(MW)

Peak

Deficit/

Surplus

(%)

Power

Require

ment

(MU)

Power

Availabil

ity (MU)

Power

Deficit/

Surplus

(MU)

Power

Deficit/

Surplus

(%)

2002-03 81,492 71,547 -9,945 -12.2 545,983 497,890 -48,093 -8.8

2003-04 84,574 75,066 -9,508 -11.2 559,264 519,398 -39,866 -7.1

2004-05 87,906 77,652 -10,254 -11.7 591,373 548,115 -43,258 -7.3

2005-06 93,255 81,792 -11,463 -12.3 631,757 578,819 -52,938 -8.4

2006-07 100,715 86,818 -13,897 -13.8 690,587 624,495 -66,092 -9.6

2007-08 108,866 90,793 -18,073 -16.6 739,345 666,007 -73,338 -9.9

2008-09 109,809 96,685 -13,124 -12.0 774,324 689,021 -85,303 -11

2009-10 119,166 104,009 -15,157 -12.7 830,594 746,644 -83,950 -10.1

April-

October 2010

119,437 107,394 -12,043 -10.1 503,510 457,239 -46,271 -9.2

(Source: Power Scenario at a Glance, November 2010)

The deficits in electric energy and peak power requirements vary across different regions in India. The

peak deficit was 17.2% in the Western Region, followed by 18.5% in the North Eastern Region in the

period from April to October 2010. The deficit is a result of the slow development progress of

additional power generation capacity in those areas.

The following table outlines the peak and normative power shortages in India in fiscal year 2010

across the regions of India:

Peak

Demand

(MW)

Peak Met

(MW)

Peak

Deficit/

Surplus

(MW)

Peak

Deficit/

Surplus

(%)

Power

Require

ment

(MU)

Power

Availabili

ty (MU)

Power

Deficit/

Surplus

(MU)

Power

Deficit/

Surplus

(%)

Northern 37,159 31,439 -5,720 -15.4 254,231 224,661 -29,570 -11.6

Western 39,609 32,586 -7,023 -17.7 258,528 223,127 -35,401 -13.7

Southern 32,178 29,049 -3,129 -9.7 220,576 206,544 -14,032 -6.4

Eastern 13,220 12,384 -836 -6.3 87,927 84,017 -3,910 -4.4

N.

Eastern

1,760 1,445 -315 -17.9 9,332 8,296 -1,036 -11.1

All India 119,166 102,009 -15,157 -12.7 830,594 746,644 -83,950 -10.1

(Source: CEA, April 2010 Monthly Review)

Demand Projections

According to the Integrated Energy Policy (“IEP”) report dated August 2006 issued by the Planning

Commission, India would require additional capacity of about 220-233 gigawatt (“GW”) by 2012,

306-337 GW by 2017 and 425-488 GW by 2022, respectively, based on normative parameters in order

to maintain a 8-9% GDP growth rate (Source: GoI, "Integrated Energy Policy, Report of the Expert

Committee", August 2006, available at

http://planningcommission.gov.in/reports/genrep/rep_intengy.pdf).


The table below lays out the additional capacity needed by 2012, 2017 and 2022 under different GDP

growth rate scenarios:

Assumed

GDP Growth

(%)

Electricity

Generation

required

(BU)

Peak

Demand

(GW)

Installed

Capacity

(GW)

Capacity

Addition

Required

(GW)*

By fiscal 8.0 1,097 158 220 71

2012 9.0 1,167 168 233 84

By fiscal 8.0 1,524 226 306 157

2017 9.0 1,687 250 337 188

By fiscal 8.0 2,118 323 425 276

2022 9.0 2,438 372 488 339

* Based on the existing installed capacity of 149 GW in India.

Source: IEP report, Expert Committee on Power

Power Generation

Historical Capacity Additions

The energy deficit in India is a result of insufficient progress in the development of additional energy

capacity. The Indian economy is based on planning through successive five year plans (“Five-Year

Plans”) that set out targets for economic development in various sectors, including the power sector.

In the last three Five-Year Plans (the Eighth, Ninth, and Tenth Five-Year Plans, covering fiscal years

1992 to 2007), less than 55% of the targeted additional energy capacity level was added. According to

the White Paper on Strategy for Eleventh Plan, prepared by CEA and Confederation of Indian

Industry, August 2007 (the “White Paper”)),India added an average of approximately 20,000 MW to

its energy capacity in each of the 9th and 10th Five-Year Plan periods (fiscal years 1997 to 2002 and

2002 to 2007).

The following table sets forth the targeted energy capacity addition, the installed capacity actually

achieved at the end of those fiscal year and the installed capacity actually achieved as a percentage of

the targeted capacity additions for each of those fiscal years:

Five-Year Plan/Year Target

(MW)

Achievement

(MW)

Achievement

(% of MW)

10th Plan 39258.72 21,094.6 53.7%

FY 2008 16,335 9,263 56.7%

FY 2009 11,061 3,454 31.2%

FY 2010 14,507 9,585 66.1%

October 2010 21441.2 7020.0 32.7

(Source: CEA, October, 2010 Monthly Review)

The total capacity addition during the past 25 years between the 6th and the 10th Five-Year Plans was

approximately 91,000 MW. A total capacity addition of 78,700 MW is planned for the 11th Five-Year

Plan which should result in significant investments in the power generation sector.


Installed Generation Capacity

The following table sets forth a summary of India's energy generation capacity as of October 31, 2010

in terms of fuel source and ownership:

Sector Thermal Nuclear Hydro RES* Total

Central 38,622.23 4,560.00 8,685.40 0.00 51,867.63

State 52,186.73 0.00 27,218.00 2,822.32 82,227.05

Private 17,794.02 0.00 1,425.00 13,964.66 33,183.68

TOTAL 108,602.98 4,560.00 37,328.40 16,786.98 167,278.36

*RES = Renewable energy sources

(Source: CEA, Monthly Review (October 2010))

The private sector has historically been hesitant to enter into the market for power plants because of

onerous governmental regulations on the construction and operation of power plants and sourcing of

fuel for such plants. The participation of the private sector has, however, been increasing over time,

thanks to some key power sector reforms.

Future Capacity Additions

The proposed capacity addition during the 11th Five-Year Plan is 78,700.4 MW according to Monthly

Review (October 2010), published by CEA.

Thermal Nuclear Hydro Total

Central 24,840 3,380 8,654 36,874

State 23,301 0.00 3,482 26,783

Private 11,552 0.00 3,491 15,043

TOTAL 59,693 3,380 15,627 78,700

(Source: CEA, Monthly Review (October 2010))

This represents a growth in capacity of 9.8% per annum during the 11th Plan period. According to the

White Paper, the total fund requirement has been assessed to ` 10.32 trillion.

Planned Expansion

The aim for the 11th Plan i.e. by 2012 is a capacity addition of 15,000 MW from renewables. By the

end of the 11th Plan, renewable power capacity could be 25,000 MW in a total capacity of 2,00,000

MW accounting for 12.5% and contributing around 5% to the electricity mix. A capacity addition of

around 30,000MW is envisaged for the 12th and 13th Plans. Renewable power capacity by the end of

the 13th plan period i.e. by 2022 is likely to reach 54,000 MW, comprising 40,000 MW wind power,

6,500 MW small hydro power and 7,500 MW bio-power, which would correspond to a share of 5% in

the then electricity-mix. (Source: 11th Five Year Plan MNRE)

Investments in generation

The total fund requirement for generation projects, during the Twelfth Plan period is estimated at

approximately ` 4,950,830 million, with approximately ` 1,266,490 million being required for the

hydro sector, approximately ` 3,306,680 million being required for the thermal sector and

approximately ` 377,660 million being required for the nuclear sector. (Source: Base Paper,

International Conclave on Key Inputs for Accelerated Development of Indian Power Sector for

Twelfth Plan and Beyond, 18-19 August 2009, MoP and CEA)


Capacity Utilisation

Capacity utilization in the Indian power sector is measured by the plant load factor (“PLF”) of

generating plants.

Coal

The average PLF for coal-fired plants in India has increased from 69.0% in the fiscal year 2001 to

76.65% in the fiscal year 2010. The following table sets forth the average PLF for coal-fired plants in

India:

Fiscal

Year Central State Private Overall

2001 74.3 65.6 73.1 69.0

2002 74.3 67.0 74.7 69.9

2003 77.1 68.7 78.9 72.1

2004 78.7 68.4 80.5 72.7

2005 81.7 69.6 85.1 74.8

2006 82.1 67.1 85.4 73.6

2007 84.8 70.6 86.3 76.8

2008 86.7 71.9 90.8 78.6

2009 84.3 71.2 91.0 77.2

2010* 84.13 69.72 84.43 76.65

Source: MoP, 2009-2010 Annual Report * Up to January, 2010

PLF varies significantly across ownership segments. According to the MoP, 2008-2010 Annual

Report, coal-fired generating plants owned by the state electricity boards (“SEBs”) operated at an

average PLF of around 69.72% as of January 31, 2010, while those owned by private companies

operated at an average PLF of 84.43%. The average PLF of central public sector undertakings

(“CPSUs”) was 84.13% during the same period.

Renewable Power

Power from renewable energy sources such as wind, biomass, small hydro and solar energy is being

generated for meeting the electricity requirements in different locations across the country. 15,691

MW grid power from renewable sources of power has been installed up to December 31, 2009. In

addition, renewable energy sources are being utilised for off-grid power generation to meet electricity

requirements at decentralised locations. Renewable power projects based on wind power, biomass,

small hydro and solar are mainly private investment driven with favorable tariff policy regimes

established by State Electricity Regulatory Commissions (SERC), and almost all-renewable power

capacity addition during the year has come through this route. (Source: Annual Report 2009-10

MNRE)

Wind Power

Wind energy, today, has emerged as the most promising renewable energy technology for generating

grid connected power amongst various renewable energy sources. A total capacity of 10,925 MW has

been established up to December, 2009 in the country. India is now the fifth largest wind power

producer in the world, after USA, Germany, Spain and China. The on shore wind power potential has

been estimated at about 48,500 MW, assuming 1% land availability in potential areas for setting up

wind farms @12 ha/MW in sites having wind power density greater than 200 W/sq.m at 50 m height.

(Source: Annual Report 2009-10 MNRE)


Biomass

The current potential for power generation from surplus agro and forestry residues is estimated at

16,000 MW. With progressive higher steam parameters and efficient project configuration in new

sugar mills and modernization of existing ones, the potential of surplus power generation through

bagasse cogeneration in sugar mills is estimated at 5000 MW. Thus the total estimated biomass power

potential is approximately 21,000 MW. Between April and December 2009, biomass power and

bagasse cogeneration capacity addition of 384 MW (125 MW biomass projects and 259 MW bagasse

cogeneration) has been achieved in the States of Andhra Pradesh, Chhattisgarh, Karnataka,

Maharashtra, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal against a target of 400 MW.

Current trends indicate that it is likely that a total capacity of 450 MW would be added during fiscal

2009. The cumulative biomass power and cogeneration based power capacity has reached

approximately 2,136 MW which comprises of 829 MW of biomass power projects and 1307 MW of

bagasse cogeneration projects. (Source: Annual Report 2009-10 MNRE)

Power Transmission and Distribution

In India, the transmission and distribution system is a three-tier structure comprised of regional grids,

state grids and distribution networks. The five regional grids, configured on a geographical contiguity

basis, enable transfer of power from a power surplus state to a power deficit state. The regional grids

also facilitate the optimal scheduling of maintenance outages and better co-ordination between power

plants. These regional grids are to be gradually integrated to form a national grid, whereby surplus

power from a region could be redirected to another region facing power deficits, thereby allowing a

more optimal utilization of the national generating capacity.

Most inter-regional and interstate transmission links are owned and operated by Power Grid though

some are jointly owned by the State Electricity Boards (“SEBs”). Power Grid is the central

transmission utility of India and holds one of the largest transmission networks in the world. Power

Grid has a pan-India network presence of approximately 79,556 circuit kms of transmission network

(as of December 1, 2010), 132 substations (as of September 30, 2010), and a total transformation

capacity of 89,170 mega volt ampere (as of December 1, 2010). As of December 1, 2010,

approximately 51% of the entire generating capacity in India is sent through Power Grid's system.

(Source: http:powermin.nic.in and http:powergridindia.com).

Power Grid is pursuing the establishment of an integrated national power grid, in a phased approach,

in order to fortify the regional grids and to support the generation capacity addition program of about

78,577 MW during the Eleventh Five-Year Plan period. The existing inter-regional power transfer

capacity of 17,000 MW is expected to be boosted to 37,000 MW by 2012 through the use of

“Transmission Super Highways”. (Source: http:powergridindia.com) According to the White Paper,

the total fund requirement has been assessed to ` 10.32 trillion.

State grids and distribution networks are mostly owned and operated by the respective SEBs or state

governments (through state electricity departments). A direct consequence of the high AT&C losses is

the inadequate financial condition of SEBs, thereby holding back the SEBs from making any

meaningful investments in generation and in modernizing the transmission and distribution network.

Investments in generation, transmission and distribution

The total fund requirement for transmission system development and related schemes during the

Twelfth Plan period is estimated at ` 2,400,000 million, with ` 1,400,000 million being required for

the central sector and ` 1,000,000 million being required for the state sector. (Source: Base Paper,

International Conclave on Key Inputs for Accelerated Development of Indian Power Sector for

Twelfth Plan and Beyond, 18-19 August 2009, MoP and CEA)

The total fund requirement for the distribution sector, during the Twelfth Plan period is estimated at `

3,710,000 million. (Source: Base Paper, International Conclave on Key Inputs for Accelerated


Development of Indian Power Sector for Twelfth Plan and Beyond, 18-19 August 2009, MoP and

CEA).

Power Trading

Historically the main suppliers and consumers of bulk power in India have been the various

government controlled generation and distribution companies who usually contracted power on a

long-term basis through power purchase agreements (“PPAs”) with regulated tariffs. However, in

order to encourage the entry of merchant power plants and private sector investment in the power

sector, the Electricity Act recognized power trading as a separate activity from generation and has

facilitated the development of a trading market for electricity in India by allowing for open access to

transmission networks for normative charges. Power trading involves the exchange of power from

suppliers with surplus to those with deficit. Seasonal diversity in generation and demand, as well as

the concentration of power generation facilities in the resources rich eastern region of India, have

created significant opportunities for the trading of power. Recent regulatory developments include the

announcement of rules and provisions for open access and licensing related to interstate trading in

electricity. Several entities have started trading operations or made application for trading licenses.

With the help of the reforms, the volume of power traded as well as its traded price has increased

rapidly over the last few years.

Tariffs

The main objectives of the National Tariff Policy (“NTP”) notified by the GoI on January 6, 2006,

include promoting competition, efficiency in operations and improvements in the quality of power

supply and ensuring the accessibility of electricity to consumers at reasonable and market-competitive

rates. The NTP reiterates the importance of implementing competition in different segments of the

electricity industry as highlighted in the Electricity Act and that competition will lead to significant

benefits to consumers through reduction in capital costs and improved efficiency of operations. It will

also facilitate the shaping of price through competition.

The NTP stipulates that all future power requirements should be procured competitively by

distribution licensees except in cases of expansion of pre-existing projects or where there is a state-

controlled or state-owned developer involved, in which case, regulators must resort to tariffs set by

reference to standards of the CERC, provided that expansion of generating capacity by private

developers for this purpose will be restricted to a one time addition of not more than 50% of the

existing capacity. Under the NTP, even for public sector projects, tariffs for all new generation and

transmission projects will be decided on the basis of competitive bidding after a certain time period.

Merchant Power Plants

Merchant power plants (“MPPs”) generate electricity for sale at market-driven rates in the open

wholesale market. Typically, the MPPs do not have long-term PPAs and are constructed and owned by

private developers. Merchant sales, however, include the sale of power under short-term PPAs and

on-spot basis. Many private sector newcomers are starting to adopt the MPP model for their projects

to generate higher returns as opposed to selling power through a long term PPA, as the off-take risk is

seen to be low in light of significant power shortages in the country. The MPPs can sell power to the

power trading companies (like the PTC India Ltd and Tata Power Trading Company), the SEBs and

industrial and bulk customers.

Captive Power Generation

Another segment of power generation in India is the captive power segment. Captive power refers to

power generation from a project established for industrial consumption. According to Monthly

Review of Power Sector, August 2010 (CEA), captive power capacity, at 19,509 MW, accounted for

11.86% of the 164,508.80 MW of total installed capacity in India. The dependence on captive power

has been rising, due to the continuing shortage of power and India's sustained economic growth.


The Electricity Act 2003 provided further incentives to captive power generation companies to grow

by making them exempt from licensing requirements. This has resulted in an increase in captive power

capacity. Reliability of power supply and better economics are other variables pushing industries to

develop captive generation plants.

Indian Energy Exchange

Indian Energy Exchange (“IEX”) is India's first nation-wide automated and online electricity trading

platform. IEX seeks to catalyze the modernization of electricity trade in India by allowing trading

through a technology-enabled platform. On June 9, 2008, IEX received Central Electricity Regulatory

Commission approval to begin operations. IEX is a demutualised exchange that will enable efficient

price discovery and price risk management in the power trading market. IEX offers a broader choice

to generators and distribution licensees for sale and purchase of power facilitating trade in smaller

quantities. IEX enables participants to precisely adjust their portfolio as a function of consumption or

generation. The total volume of power traded on IEX amounted to 1,089.46 million units in October,

2010 (Source: http://www.cercind.gov.in/2010/MMC/MMC_Monthly_Report_Oct_2010.pdf).

Power Exchange India Limited

Power Exchange India Limited (“PXIL”) is a fully electronic, nation-wide exchange for trading of

electricity. It has been promoted by two of India's leading Exchanges, National Stock Exchange of

India Ltd (NSE) & National Commodities & Derivatives Exchange Ltd (NCDEX). PXIL received

regulatory approval from Central Electricity Regulatory Authority (CERC) on September 30, 2008 to

begin operations and PXIL successfully began its operations on October 22, 2008. The total volume of

power traded on PXIL amounted to 112.32 million units in October, 2010 (Source:

http://www.cercind.gov.in/2010/MMC/MMC_Monthly_Report_Oct_2010.pdf).

PROVIDERS OF FINANCE TO THE POWER SECTOR IN INDIA

The primary providers of power sector financing in India are power sector specific government

companies, financing institutions, public sector banks and other public sector institutions, multilateral

development institutions and private banks.

Power-Sector Specific Government Companies

Besides our Company, the other sector-specific companies engaged in power sector financing are as

follows:

Power Finance Corporation Limited

In order to provide funds for the power projects in India and to act as developmental financial

institution for the power sector in India, PFC was incorporated on July 16, 1986. PFC is a Public

Sector Undertaking and its main objective is to raise resources from international and domestic

sources at competitive rates and terms and conditions and on-ward lend these funds on optimum basis

to the power projects in India. PFC has been actively persuading State Governments to initiate reform

and restructuring of their power sector in order to make them commercially viable and in this regard,

is providing financial assistance to reform-minded States under relaxed lending criteria/exposure limit

norms. It is also providing funds based services like Term Loans, Equipment Leasing, Bill

Discounting, Buyers Line of Credit and also non funds based services like Guarantee Services and

Consultancy Services.

Rural Electrification Corporation

The Rural Electrification Corporation (“REC”) was incorporated on July 25, 1969 under the

Companies Act. REC is a wholly owned Government enterprise and its main objective is to finance

and promote rural electrification projects throughout India. It provides financial assistance to SEBs,

state government departments and rural electric cooperatives for rural electrification projects. REC

also promotes and finances rural electricity cooperatives; administers funds and grants from the GoI


and other sources for financing rural electrification; provides consultancy services and project

implementation in related fields; finances and executes small, mini and micro generation projects; and

develops other energy sources.

Indian Renewable Energy Development Agency Limited

The Indian Renewable Energy Development Agency Limited (“IREDA”) was incorporated on March

11, 1987 as a public sector NBFC under the administration of the Ministry of Non-Conventional

Energy Sources with the objective of promoting, developing and extending financial assistance for

renewable energy and energy efficiency, and energy conservation projects. IREDA plays a key role in

the development of renewable energy in India.

Financial Institutions

Financial institutions were established to provide medium-term and long-term financial assistance to

various industries for setting up new projects and for the expansion and modernization of existing

facilities. These institutions provide fund based and non-fund based assistance in the form of loans,

underwriting, direct subscription to shares, Bonds and guarantees. The primary long-term lending

institutions include IDFC Limited, IIFCL Limited, IFCI Limited, and Industrial Investment Bank of

India Limited and Small Industries Development Bank of India.

State Level Financial Institutions

State financial corporation’s operate at the state level and form an integral part of the institutional

financing system. State financial corporations were set up to finance and promote small and medium-

sized enterprises. At the state level, there are also state industrial development corporations, which

provide finance primarily to medium-sized and large-sized enterprises.

Public Sector Banks and other Public Sector Institutions

Public sector banks make up the largest category of banks in the Indian banking system. The primary

public sector banks providing finance to the power sector include the IDBI Bank Limited, State Bank

of India Limited, Punjab National Bank and the Bank of Baroda. Other public sector entities such as

the Life Insurance Corporation of India, India Infrastructure Finance Company Limited, etc. are also

providing financing to the power sector.

Private Sector Banks

After the first phase of bank nationalization was completed in 1969 the majority of Indian banks were

public sector banks. Some of the existing private sector banks, which showed signs of an eventual

default, were merged with state owned banks. In July 1993, as part of the banking reform process and

as a measure to induce competition in the banking sector, the RBI permitted entry by the private sector

into the banking system. This resulted in the introduction of nine private sector banks. These banks

are collectively known as the ''new'' private sector banks. These institutions also provide fund based

and non-fund based assistance in the form of loans, underwriting, direct subscription to shares, Bonds

and guarantees and also compete in the power sector.

Infrastructure Finance Companies

IFCs are a new category of infrastructure funding entities introduced by the RBI in February 2010.

Non-deposit taking NBFCs which satisfy the following conditions are eligible to apply to the RBI and

seek the IFC status:

• a minimum of 75.00% of its assets deployed in infrastructure loans;

• net owned funds of at least Rs. 3,000.0 million;

• minimum credit rating 'A' or equivalent of CRISIL, FITCH, CARE, ICRA or equivalent rating by

any other accrediting rating agencies; and

• CRAR of 15.00% (with a minimum Tier I capital of 10.00%).


IFCs enjoy benefits including a lower risk weight on their bank borrowings (from a flat 100.0% to as

low as 20.0% for AAA-rated borrowers), higher permissible bank borrowing (up to 20.0% of the

bank‘s net worth as against 15%. for an NBFC that is not an IFC), access to external commercial

borrowings (up to 50.0% of owned funds on an automatic basis) and relaxation in their single party

and group exposure norms. IFCs are also eligible for issuance of infrastructure bonds. These benefits

should enable a highly rated IFC to raise more funds, of longer tenors and at lower costs, and in turn

lend more to infrastructure companies.

International Development Financial Institutions

International development financial institutions are supportive of power sector reform and of more

general economic reforms aimed at mobilizing investment and increasing energy efficiency. The

primary international development financial institutions involved in power sector lending in India

include several international banking institutions such as Japan Bank for International Cooperation,

Kreditanstalt fur Wiederaufbau, the World Bank, the Asian Development Bank and the International

Finance Corporation.

In the early 1990s, the World Bank decided to finance mainly projects in states that “demonstrate a

commitment to implement a comprehensive reform of their power sector, privatize distribution, and

facilitate private participation in generation and environment reforms”. Recent loans from the World

Bank have gone to support the restructuring of SEBs. In general, the loans are for rehabilitation and

capacity increase of the transmission and distribution systems, and for improvements in metering the

power systems in states that have agreed to reform their power sector.

The overall strategy of the Asian Development Bank for the power sector is to support restructuring,

especially the promotion of competition and private sector participation. Like the World Bank, the

ADB also provides loans for restructuring the power sector in the states and improving transmission

and distribution.

Other Provisions for Power Sector Finance

There also exist several short term and long-term financing measures by the GoI to facilitate the

financial viability of the power sector, such as the implementation of the Electricity Act. As a long-

term financing measure, the process has been initiated for institutionalizing mechanism for facilitating

and accelerating private and foreign direct investment into the power sector.

iv. A brief history of the issuer since its incorporation giving details of its activities

including any reorganization, reconstruction or amalgamation, changes in its capital

structure, (authorized, issued and subscribed) and borrowings, if any

CAPITAL STRUCTURE OF THE COMPANY

Share Capital Amount in Rs.

Authorised

1,000,000,000 equity shares of Rs. 10/- each

10,000,000,000

Total 10,000,000,000

Issued, Subscribed and Paid up

434,583,335 equity shares of Rs. 10/- each

4,345,833,350

BUILD UP OF EQUITY SHARE CAPITAL

Date of Allotment No. of Equity

Shares

Face

Value

Consider-

ation

Remark

November 30, 2006 3,000,006 10 Cash Allotted to PTC India Ltd at par

November 30, 2006 1,000,000 10 Cash Allotted to PTC India Ltd at par

May 25, 2007 50,000,000 10 Cash Allotted to PTC India Ltd at par


January 31, 2008 36,000,004 10 Cash 18,000,002 equity shares each

allotted to G S Strategic

Investments Ltd and Macquarie

India Holdings Limited at a

premium of Rs. 6 per equity share

April 10, 2008 153,333,324 10 Cash • 91,999,994 equity shares

allotted to PTC India Ltd at

par.

• 30,666,665 equity shares each

allotted to G S Strategic

Investments Ltd and Macquarie

India Holdings Limited at a

premium of Rs. 6 per equity

share.

March 30, 2009 191,250,001 10 Cash • 10,000,000 equity shares

allotted to PTC India Ltd at

par.

• 181,250,001 equity shares

allotted to PTC India Ltd at a

premium of Rs. 6 per equity

share.

*Out of 3,000,006 equity shares, 6 equity shares of PFS, were allotted to and all are presently

held by 6 nominees of PTC India Limited.

v. Details of other borrowings including any other issue of debt securities in past Details of

Long Term outstanding Borrowings as per audited financial accounts on September 30,

2010.

Nature of Debts Sanctioned

Rs. in MM

Outstanding

Rs. in MM

SECURED BORROWINGS

- Long Term Loans 5,250.00 2,373.69

- Short Term Loans 346.58 346.58

- Non Convertible Bonds 2,000.00 2,000.00

- Total Secured 7,596.58 4,720.27

UNSECURED BORROWINGS

- Short Term Loans 500.00 500.00

- Total Unsecured 500.00 500.00

Total Long Term Borrowings 8,096.58 5,220.27


Non- Convertible Bonds issued by PTC India Financial Services Limited

Set forth below is a brief summary of our outstanding Bonds as on September 30, 2010 together with a

brief description of certain significant terms of such financing arrangements.

Secured Bonds issued by our company

Our Company had issued secured bonds, on private placement basis. The detail of the same as on

September 30, 2010 is mentioned below:

Sr.

No.

Name of

Trustee

Nature of

Bond

Redemption Security

1. IDBI

Trusteeship

Services

Limited

Secured,

redeemable,

taxable, non

convertible

Bond series I

of aggregate

nominal

value of Rs.

1000 million

allotted on

October 1,

2009 with a

coupon of

10.60% per

annum

payable

annually

Tenure/

maturity: 5

years

commencing

from the date

of allotment.

Redemption:

staggered

redemption at

par in 3 equal

annual

installments

beginning at

the end of the

3rd year from

the date of

allotment.

The Series I Bonds have been secured by the following: Memorandum of hypothecation dated December 29, 2009 executed by the Company in favour of the Trustee amended by a first addendum dated July 27, 2010*, wherein the following securities have been created for securing an amount of Rs. 1250 million:

• First charge on the receivables of the assets created by the proceeds of the Series I Bonds

• Pari-passu charge on the receivables of the loan assets created by the Company out of its own sources which are not charged to any other lenders of the Company.

• Letter of comfort dated September 7, 2009 issued by PTC India Limited.

2. IDBI

Trusteeship

Services

Limited

Secured,

redeemable,

taxable, non

convertible

Bond series 2

of aggregate

nominal

value of Rs.

1000 million

allotted on

February 3,

2010 with a

coupon of

9.35% per

annum

payable

annually

Tenure/Maturity: 2 years commencing from the date of allotment. Redemption: bullet redemption at par in 1 installment at the end of the 2nd year from the date of allotment.

The Series II Bonds have been secured by the following: Memorandum of hypothecation dated April 29, 2010 executed by the Company in favour of the Trustee amended by the first addendum dated July 27, 2010*, wherein the following securities have been created for securing an amount of Rs. 1000 million:

• First charge on the receivables from the assets created by the proceeds of the Series II Bonds to provide 100% security coverage:

• Letter of comfort dated January 27, 2010 issued by PTC India Limited.

Note :

• For Series I : Mortgage deed dated December 29, 2009 executed by the Company in favour of the

Trustee for creating a first charge in favour of the Trustee over the Company’s property situated at

Janta Flat No. 1584, First Floor, Pocket B, Sector 16B, Dwarka, Phase II, New Delhi 110 075


• For Series II: Mortgage deed dated April 29, 2010 executed by the Company in favour of the

Trustee for creating a first charge in favour of the Trustee over the Company’s property situated at

Janta Flat No. 1584, First Floor, Pocket B, Sector 16B, Dwarka, Phase II, New Delhi 110 075.

vi. Any material event/ development or change at the time of issue or subsequent to the issue which

may affect the issue or the investor’s decision to invest/ continue to invest in the debt securities

The Company hereby declares that there has been no material event, development or change at the time

of issue which may affect the issue or the investor’s decision to invest/ continue to invest in the debt

securities of the Company.

vii. Particulars of the debt securities issued (i) for consideration other than cash, whether in whole or

part, (ii) at a premium or discount, or (iii) in pursuance of an option

The Company confirms that other than and to the extent mentioned elsewhere in this Disclosure

Document, it has not issued any shares or debt securities or agreed to issue any shares or debt securities

for consideration other than cash, whether in whole or in part, at a premium or discount or in pursuance

of an option since inception

viii. A list of highest ten holders of each class or kind of securities of the issuer as on the date of

application along with particulars as to number of shares or debt securities held by them and the

address of each such holder.

a) List of top ten largest equity shareholders of the Company as on September 30, 2010

Sr.

No.

Name of the Shareholder No. of Shares % of Equity

Capital

1 PTC India Ltd* 337,250,001 77.60%

2 G S Strategic Investments Ltd 48,666,667 11.20%

3 Macquarie India Holdings Limited 48,666,667 11.20%

Total 434,583,335 100.00

* PTC India Limited is holding 6 equity shares through 6 if its nominees.

b) List of top ten / maximum available Banks/Bond Holders of the Company as on September

30, 2010:

Sr.

No.

Name of Banks Long Term Loan

(Rs. in million)

1. Corporation Bank (Long Term Loan) 1,000.00

2. Punjab National Bank (Long Term Loan) 545.80

3. Union Bank of India (Long Term Loan) 318.72

4. Indian Bank (Long Term Loan) 254.72

5. Oriental Bank of Commerce (Long Term Loan) 254.45

Sr. No. Name of Bank/FI/other lenders NCD (Rs. in million)

1. Templeton India Short-Term Income Plan 1,000

2. MTNL Gratuity Trust 150

3. Parle Biscuits Pvt Ltd 100

4.. Hooghly District Central Co-Operative Bank Limited 50

5. Urvashi D Morarji 50

6. Rajkot Nagrik Sahakari Bank Ltd 50

7. Telecommunication Consultants India Limited

Employees Provident Funds Trust 33

8. APSCSC Employees Provident Fund Trust 30


9. Wallace Flour Mills Co Pvt Ltd 30

10. Radha Govind Samiti 27

ix. An undertaking that the issuer shall use a common form of transfer.

The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by

the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and

rules notified in respect thereof. The normal procedure followed for transfer of securities held in

dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller

should give delivery instructions containing details of the buyer’s DP account to his depository

participant.

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

absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in

the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled

with the transferor(s) and not with the Company.

The Company undertakes that it shall use a common form/ procedure for transfer of Bonds issued under

terms of this Disclosure Document.

AUTHORITY FOR THE ISSUE

This private placement of Bonds is being made pursuant to the resolutions of the Board of Directors of

PFS passed at its meeting held on March 22, 2010 and Committee of Directors for issuance of Bond in its

meeting held on January 27, 2011. The current private placement of Bonds is within the overall borrowing

limits of the Company.

SECURITY

The Bonds together with interest, trustees’ remuneration, charges, expenses and all other monies payable

in respect thereof shall be secured by a First charge on the receivables of the assets created from the

proceeds of current Bond issue and other unencumbered receivables of the Company to provide the 100%

security coverage, during the currency of the current Bond Series 1 of Company.

The said security shall be created in favour of the Trustees within 3 (three) months from the Date of

Closure of the proposed Issue or such extended period as may be permitted by the relevant authority(ies).

The security will be created by the Company as aforesaid in favour of the Trustees on such of the assets

for which the Company obtains, after all due diligence and efforts, the requisite consents and permissions

applicable under laws or in accordance with conditions of holding of such assets for creating the above

mentioned charge. The creation of such security shall be sufficient compliance of the Company’s

obligation to create security.

On creation of the final security, the Bonds will have a security cover of not less than 100% of the total

amount outstanding on the Bonds Series 1. The Trustee shall have the power to substitute or release any

property charged in its favour without approval of the Bond holders.

FORCE MAJEURE

The Company reserves the right to withdraw the issue prior to the closing date in the event of any

unforeseen development adversely affecting the economic and regulatory environment. The Company

reserves the right to change the Issue Schedule.


COMPLIANCE OFFICER & COMPANY SECRETARY

Mr. Vishal Goyal

Company Secretary

PTC India Financial Services Limited

2nd Floor, NBCC Tower, 15, Bhikaji Cama Place,

New Delhi 110 066

Tel: 011 41595122

Fax: 011 41595155/ 41659144

e-mail: [email protected]/ [email protected]

Shri Vishal Goyal will also act as Investor Relationship Manager and for the Grievance Redressal if

any. PFS endeavours to resolve the investors’ grievances within 30 days of its receipt. All grievances

related to the issue quoting the Application Number (including prefix), number of bonds applied for,

amount paid on application and Bank and Branch/PFS Collection Centre where the Application was

submitted, may be addressed to the Shri Vishal Goyal. All investors are hereby informed that the company

has appointed a Compliance Officer who may be contacted in case of any problem related to this issue.

x. The discount at which such offer is made and the effective price for the investor as a result

of such discount

The Bonds are being issued at face value and not at discount to offer price.

xi. The debt equity ratio prior to and after issue of the debt security:

(a) Debt Equity Ratio prior to issue of the Debt security 0.72 as on unaudited accounts of

December 31, 2010.

(b) Debt Equity Ratio after issue of the Debt security 0.87 as on unaudited accounts of

December 31, 2010 and the Rs. 100

Crore (Rupees One Hundred Crore Only)

to be raised through proposed PFS Long

Term Infrastructure Bond Series 1

issuance.

xii. Servicing behavior on existing debt securities, payment of due interest on due dates on

term loans and debt securities

The Company hereby confirms that the

1. The Company has been servicing all its principal and interest liabilities on time and there has been

no instance of delay or default since inception.

2. The Company has neither defaulted in repayment/ redemption of any of its borrowings nor

affected any kind of roll over against any of its borrowings in the past.

xiii. That the permission/ consent from the prior creditor for a second or pari passu charge

being created in favour of the trustees to the proposed issue has been obtained

The Company hereby confirms that it is entitled to raise money through current issue of Bonds without

the consent/ permission/ approval from the Bond holders/ Trustees/ Lenders/ other creditors of the

Company. The Company hereby undertakes that it shall seek consent from the existing charge holders

for creating of security for the Bonds on pari passu basis. In future, the Trustees shall provide consent to

create pari-passu charge subject to Company’s complying with the requisite terms of the Bonds issued.


xiv. Name of the Bond Trustee

In accordance with the provisions of Section 117B of the Companies Act, 1956 (1 of 1956) and

Securities and Exchange Board of India (Bond Trustees) Regulations, 1993, the PTC India Financial

Services Ltd has appointed IDBI Trusteeship Services Ltd. (ITSL) to act as Trustees (“Trustees”) for

and on behalf of the holder(s) of the Bonds. The address and contact details of the Trustees are as

under:

IDBI Trusteeship Services Limited

Asian Building, Ground Floor

17, R. Kamani Marg

Ballard Estate,

Mumbai – 400 021

Tel No. 022 – 66311771/2/3

Fax No. 022 – 66311776

A copy of letter from IDBI Trusteeship Services Ltd. conveying their consent to act as Trustee for the

current issue of Bonds is enclosed elsewhere in this Disclosure Document.

The Company hereby undertakes that a Trust Deed shall be executed by it in favour of the Trustees

within three months of the closure of the Issue. The Trust Deed shall contain such clauses as may be

prescribed under section 117A of the Companies Act, 1956 and those mentioned in Schedule IV of the

Securities and Exchange Board of India (Bond Trustees) Regulations, 1993. Further the Trust Deed

shall not contain any clause which has the effect of (i) limiting or extinguishing the obligations and

liabilities of the Trustees or the Company in relation to any rights or interests of the holder(s) of the

Bonds, (ii) limiting or restricting or waiving the provisions of the Securities and Exchange Board of

India Act, 1992 (15 of 1992); Securities and Exchange Board of India (Issue and Listing of Debt

Securities) Regulations, 2008 and circulars or guidelines issued by SEBI, (iii) indemnifying the

Trustees or the Company for loss or damage caused by their act of negligence or commission or

omission.

The Bond holder(s) shall, without further act or deed, be deemed to have irrevocably given their

consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters

and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem

necessary or require to be done in the interest of the holder(s) of the Bonds. Any payment made by the

Company to the Trustees on behalf of the Bond holder(s) shall discharge the Company pro tanto to the

Bond holder(s). The Trustees shall protect the interest of the Bond holders in the event of default by

the Company in regard to timely payment of interest and repayment of principal and shall take

necessary action at the cost of the Company. No Bond holder shall be entitled to proceed directly

against the Company unless the Trustees, having become so bound to proceed, fail to do so. In the

event of Company defaulting in payment of interest on Bonds or redemption thereof, any distribution

of dividend by the Company shall require approval of the Trustees

xv. Names of all the recognized stock exchanges where securities are proposed to be listed clearly

indicating the designated stock exchange and also whether in principle approval from the

recognized stock exchange has been obtained

The Secured Redeemable Non-Convertible Bonds are proposed to be listed on the Wholesale Debt

Market (WDM) Segment of the National Stock Exchange of India Ltd. (“NSE”). The Company has

obtained an in-principle approval from the NSE for listing of said Bonds on its Wholesale Debt Market

(WDM) Segment. The Company shall make an application to the NSE to list the Bonds to be issued and

allotted under this Disclosure Document and complete all the formalities relating to listing of the Bonds


within 70 days from the date of closure of the Issue. If such permission is not granted within 70 days

from the date of closure of the Issue or where such permission is refused before the expiry of the 70

days from the closure of the Issue, the Company shall forthwith repay without interest, all monies

received from the applicants in pursuance of the Disclosure Document, and if such money is not repaid

within 8 days after the Company becomes liable to repay it (i.e. from the date of refusal or 70 days from

the date of closing of the subscription list, whichever is earlier), then the Company and every director of

the Company who is an officer in default shall, on and from expiry of 8 days, will be jointly and

severally liable to repay the money, with interest at the rate of 15 per cent per annum on application

money, as prescribed under Section 73 of the Companies Act, 1956.

In connection with listing of Bonds with NSE, the company hereby undertakes that:

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

with NSE.

2. Ratings obtained by the company shall be periodically reviewed by the credit rating agencies and

any revision in the rating shall be promptly disclosed by the company to NSE.

3. Any change in rating shall be promptly disseminated to the holder(s) of the Bonds in such manner

as NSE may determine from time to time.

4. The company, the Trustees and NSE shall disseminate all information and reports on Bonds

including 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.

5. Trustees shall disclose the information to the holder(s) of the Bonds and the general public by

issuing a press release in any of the following events:

a. default by the company to pay interest on Bonds or redemption amount;

b. revision of rating assigned to the Bonds;

6. The information referred to in para (e) above shall also be placed on the websites of the Trustees,

company and NSE

xvi. Material Contracts & Agreements Involving Financial Obligations of the issuer

By very nature and volume of its business, the Company is involved in a large number of

transactions involving financial obligations and therefore it may not be possible to furnish details

of all material contracts and agreements involving financial obligations of the Company.

However, the contracts referred to in Para A below (not being contracts entered into in the

ordinary course of the business carried on by the Company) which are or may be deemed to be

material have been entered into by the Company. Copies of these contracts together with the

copies of documents referred to in Para B may be inspected at the Registered Office of the

Company between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date.

A. Material Contracts

a. Copy of letter appointing Registrar and Transfer Agents.

b. Copy of letter appointing from IDBI Trusteeship Services Ltd, as Trustees to the Bond

holders.

B. Documents

a. Memorandum and Articles of Association of the Company as amended from time to time.

b. Certificate of Incorporation of the Company dated September 8, 2006.

c. Certificate of Commencement of Business dated March 30, 2007.

d. Certificate of NBFC (Infrastructure Finance Company) issued by Reserve Bank of India dated

August 23, 2010

e. Board Resolution dated March 22, 2010 and resolution of Committee of Directors for Bond

Issuance dated January 27, 2011 authorizing issue of Bonds offered under terms of this

Disclosure Document.


f. Letter of consent from IDBI Trusteeship Services Ltd for acting as Trustees for and on behalf

of the holder(s) of the Bonds.

g. Letter of consent from Karvy Computershare Pvt Limited for acting as Registrars to the Issue.

h. Letter from ICRA conveying the credit rating for the Bonds of the Company and the rating

rationale pertaining thereto

i. Letter from Brickwork conveying the credit rating for the Bonds of the Company and the

rating rationale pertaining thereto

j. Tripartite Agreement between the Company, NSDL and Karvy Computershare Pvt Limited

for issue of Bonds in dematerialised form.

k. Tripartite Agreement between the Company, CDSL and Karvy Computershare Pvt Limited

for issue of Bonds in dematerialised form.

xxii. Declaration

It is hereby declared that this Disclosure Document contains full disclosures in accordance with

Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008

issued vide Circular No. LADNRO/ GN/2008/13/127878 dated June 06, 2008.

The Company also confirms that this Disclosure Document does not omit disclosure of any

material fact which may make the statements made therein, in light of the circumstances under

which they are made, misleading. The Disclosure Document also does not contain any false or

misleading statement.

The Company accepts no responsibility for the statement made otherwise than in the Disclosure

Document or in any other material issued by or at the instance of the Company and that any one

placing reliance on any other source of information would be doing so at his own risk.

Signed pursuant to the authority granted by Board of Directors of the Company at its meeting held

on March 22, 2010 and Committee of Directors for Issuance of Bonds on January 27, 2011

For PTC India Financial Services Limited

VISHAL GOYAL

Company Secretary

Place: New Delhi

Date: February 07, 2011


RATING LETTER – ICRA LIMITED


RATING LETTER – Brickwork RATINGS INDIA PVT LTD


CONSENT LETTER FROM KARVY COMPUTERSHIP PRIVATE LIMITED


CONSENT LETTER from IDBI TRUSTEESHIP SERVICES LIMITED


RBI Certificate for conferring Infrastructure Finance Company status to PFS

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