Indian Renewable Energy Development Agency Limited (IREDA)

Transcription

1 February 14, 2014 Indian Renewable Energy Development Agency Limited (IREDA) Tax Free Bond Issue Tranche I Summary: Indian Renewable Energy Development Agency Limited has come out with the first public issue of tax free bonds for face value of Rs 1,000 each in the nature of secured, redeemable non convertible debentures having tax benefits under section 10 (15) (iv) (h) of the Income tax Act, 1961, as amended, for bonds aggregating to Rs. 500 Crore with an option to retain oversubscription up to Rs. 500 crore for issuance of additional Bonds aggregating to a total of up to Rs. 1,000 Crore ( Tranche I Issue ) in the fiscal The NCD Issue (1 st tranche) will open for subscription on February 17, 2014 and close on March 10, 2014 (with an option for early closure or extension, as may be decided by the Board of IREDA). The issue consists of three series of Bonds 10 year, 15 year and 20 year carrying 8.16%, 8.55% and 8.55% p.a. respectively. Retail Individuals and HUF (applying for upto Rs.10 lakhs) would get an additional 25 bps interest rate. The CBDT, Department of Revenue, Ministry of Finance, Government of India has, vide the Notification No. 61/2013/F.No.178/37/2013 (ITA.I) dated August 8, 2013, authorised IREDA to issue Bonds aggregating to Rs 1,000 crore. The Company proposes to raise Rs. 1,000 crore through a public issue of Bonds in one or more tranches, prior to March 31, This Issue is for an amount aggregating up to Rs. 500 crore with an option to retain oversubscription upto Rs. 500 crore for issuance of additional Bonds aggregating to a total of up to Rs. 1,000 crore, i.e. upto the Shelf Limit. In addition to the tranche(s) of public issue, the company may also, at its discretion, raise funds through issue of Bonds on a private placement basis in one or more tranches during the process of the present Issue, for an amount not exceeding Rs. 300 crore, i.e. upto 30% of the allocated limit for raising funds through the issue of Bonds during the Fiscal However, the Bonds issued through the public issue route and private placement route in FY14 shall together not exceed Rs. 1,000 crore. Rating agencies Brickwork Rating India Private Limited has assigned a credit rating of BWR AAA (SO) [pronounced BWR Triple A (Structured Obligation)] (Outlook: Stable) while Credit Analysis & Research Limited has assigned a credit rating of CARE AAA (SO) [Triple A (Structured Obligation)] to the Bonds. Tax free bonds differ from tax saving bonds. The interest income from the instrument is not taxed in tax free bonds while investible amount does not form part of the total income in tax saving bonds. In tax free bonds there is no upper limit. This financial year, infrastructure companies such as DCI, NHAI, PFC, NHB, REC, HUDCO, Ennore Port, JNPT and IIFCL were given permission to raise Rs 60,000 crore via tax free bonds. Investors may also consider the tax free bonds which are currently trading in the secondary markets. The following table lists out the tax free bonds which are available for trading in the secondary markets such as BSE and NSE. Comparison of tax free bonds which are available for trading in the secondary markets: Issuer Series Credit Rating Coupon Rate Tenor Residual Maturity (Year) Coupon payment frequency Latest Record Date Latest Traded Price YTM Daily Average Volume NHAI 820NHAI22 AAA 8.20% 10 Yrs 7.96 Annual 16 Sep % 9329 NHAI 830NHAI27 AAA 8.30% 15 Yrs Annual 16 Sep % 5527 NHAI N3 AAA 8.27% 10 Yrs 9.99 Annual Nil NA NA NA NHAI N4 AAA 8.52% 10 Yrs 9.99 Annual Nil NA NA NA NHAI N5 AAA 8.50% 15 Yrs Annual Nil NA NA NA NHAI N6 AAA 8.75% 15 Yrs Annual Nil NA NA NA PFC 820PFC2022 AAA 8.20% 10 Yrs 7.98 Annual 27 Sep % 3198 PFC 830PFC2027 AAA 8.30% 15 Yrs Annual 27 Sep % 3333 PFC 719PFC2023 AAA 7.19% 10 Yrs 8.90 Annual 19 Dec % 57 PFC 736PFC2028 AAA 7.36% 15 Yrs Annual 19 Dec % 487 PFC 688PFC2023 AAA 6.88% 10 Yrs 9.13 Annual Nil NA NA NA PFC 704PFC2028 AAA 7.04% 15 Yrs Annual Nil % 153 PFC 818PFC23 AAA 8.18% 10 Yrs 9.77 Annual Nil NA NA NA PFC 854PFC28 AAA 8.54% 15 Yrs Annual Nil NA NA NA PFC 867PFC33 AAA 8.67% 20 Yrs Annual Nil % 365 PFC Indivi 843PFC23 AAA 8.43% 10 Yrs 9.77 Annual Nil % 110

2 PFC Indivi 879PFC28 AAA 8.79% 15 Yrs Annual Nil % 258 PFC Indivi 892PFC33 AAA 8.92% 20 Yrs Annual Nil % 3277 IRFC IRFC N1 AAA 8.00% 10 Yrs 8.04 Annual 30 Sep % 589 IRFC IRFC N2 AAA 8.10% 15 Yrs Annual 30 Sep % 1594 IRFC IRFC N3 AAA 7.18% 10 Yrs 9.03 Annual 30 Sep % 63 IRFC IRFC N4 AAA 7.34% 15 Yrs Annual 30 Sep % 62 IRFC IRFC N5 AAA 6.88% 10 Yrs 9.12 Annual 30 Sep % 1 IRFC IRFC N6 AAA 7.04% 15 Yrs Annual 30 Sep % 4 HUDCO HUDCO AA+ 8.10% 10 Yrs 8.07 Annual 18 Feb % 340 HUDCO HUDCO AA+ 8.20% 15 Yrs Annual 18 Feb % 2220 HUDCO 734HUDCO23 AA+ 7.34% 10 Yrs 9.02 Annual 1 Feb % 138 HUDCO 751HUDCO28 AA+ 7.51% 15 Yrs Annual 1 Feb % 1001 HUDCO 703HUDCO23 AA+ 7.03% 10 Yrs 9.13 Annual Nil % 6 HUDCO 719HUDCO28 AA+ 7.19% 15 Yrs Annual Nil NA NA NA HUDCO 814HUDCO23 AA+ 8.14% 10 Years 9.71 Annual Nil % 48 HUDCO 851HUDCO28 AA+ 8.51% 15 Years Annual Nil % 221 HUDCO 849HUDCO33 AA+ 8.49% 20 Years Annual Nil NA NA NA HUDCO Indivi 839HUDCO23 AA+ 8.39% 10 Years 9.71 Annual Nil % 61 HUDCO Indivi 876HUDCO28 AA+ 8.76% 15 Years Annual Nil % 1247 HUDCO Indivi 874HUDCO33 AA+ 8.74% 20 Years Annual Nil % 152 HUDCO 851HUDCO24 AA+ 8.51% 10 Years 9.93 Annual Nil NA NA NA HUDCO 858HUDCO29 AA+ 8.58% 15 Years Annual Nil NA NA NA HUDCO 876HUDCO34 AA+ 8.76% 20 Years Annual Nil % 48 HUDCO Indivi 876HUDCO24 AA+ 8.76% 10 Years 9.93 Annual Nil % 57 HUDCO Indivi 883HUDCO29 AA+ 8.83% 15 Years Annual Nil % 9 HUDCO Indivi 901HUDCO34 AA+ 9.01% 20 Years Annual Nil % 4726 REC 793REC22 AAA 7.93% 10 Yrs 8.13 Annual 15 Jun % 366 REC 812REC27 AAA 8.12% 15 Yrs Annual 15 Jun % 1496 REC 722REC22TF AAA 7.22% 10 Yrs 8.86 Annual 16 Nov % 62 REC 738REC27TF AAA 7.38% 15 Yrs Annual 16 Nov % 716 REC 688REC2023 AAA 6.88% 10 Yrs 9.12 Annual 16 Nov 13 NA NA NA REC 704REC2028 AAA 7.04% 15 Yrs Annual 16 Nov % 42 REC 801REC23 AAA 8.01% 10 Yrs 9.62 Annual 16 Nov 13 NA NA NA REC 846REC28 AAA 8.46% 15 Yrs Annual 16 Nov % 1571 REC 837REC33 AAA 8.37% 20 Yrs Annual 16 Nov 13 NA NA NA REC Indivi 826REC23 AAA 8.26% 10 Yrs 9.62 Annual 16 Nov % 220 REC Indivi 871REC28 AAA 8.71% 15 Yrs Annual 16 Nov % 1550 REC Indivi 862REC33 AAA 8.62% 20 Yrs Annual 16 Nov % 353 IIFCL 719IIFCL23 AAA 7.19% 10 Yrs 8.95 Annual 10 Jan % 206 IIFCL 736IIFCL28 AAA 7.36% 15 Yrs Annual 10 Jan % 279 IIFCL 740IIFCL33 AAA 7.40% 20 Yrs Annual 10 Jan % 1222 IIFCL 686IIFCL23 AAA 6.86% 10 Yrs 9.13 Annual Nil NA NA NA IIFCL 702IIFCL28 AAA 7.02% 15 Yrs Annual Nil NA NA NA IIFCL 708IIFCL33 AAA 7.08% 20 Yrs Annual Nil % 4 IIFCL 841IIFCL24 AAA 8.41% 10 Yrs 9.95 Annual Nil NA NA NA IIFCL 848IIFCL29A AAA 8.48% 15 Yrs Annual Nil NA NA NA IIFCL 866IIFCL34B AAA 8.66% 20 Yrs Annual Nil % 95 IIFCL Indivi 866IIFCL24C AAA 8.66% 10 Yrs 9.95 Annual Nil NA NA NA IIFCL Indivi 873IIFCL29D AAA 8.73% 15 Yrs Annual Nil % 25 IIFCL Indivi 891IIFCL34 AAA 8.91% 20 Yrs Annual Nil % 6789 NHB NHBTF2023 AAA 6.82% 10 Yrs 9.13 Annual Nil NA NA NA NHB NHB N1 AAA 8.26% 10 Yrs 9.93 Annual Nil NA NA NA NHB NHB N2 AAA 8.63% 15 Yrs Annual Nil NA NA NA NHB NHB N3 AAA 8.76% 20 Yrs Annual Nil % 1 NHB NHB N4 AAA 8.51% 10 Yrs 9.93 Annual Nil % 45 NHB NHB N5 AAA 8.88% 15 Yrs Annual Nil % 35 NHB NHB N6 AAA 9.01% 20 Yrs Annual Nil % Ennore Port 701EPL2023 AA 7.01% 10 Yrs 9.12 Annual Nil NA NA NA Ennore Port 717EPL2028 AA 7.17% 15 Yrs Annual Nil NA NA NA DCI 697DCI2023 AA+ 6.97% 10 Yrs 9.13 Annual Nil NA NA NA JNPT 682JNPT2023 AAA 6.82% 10 Yrs 9.12 Annual Nil NA NA NA

3 NHPC 818NHPC23 AAA 8.18% 10 Yrs 9.73 Annual Nil NA NA NA NHPC 854NHPC28 AAA 8.54% 15 Yrs Annual Nil % 161 NHPC 867NHPC33 AAA 8.67% 20 Yrs Annual Nil NA NA NA NHPC Indivi 843NHPC23 AAA 8.43% 10 Yrs 9.73 Annual Nil % 58 NHPC Indivi 879NHPC28 AAA 8.79% 15 Yrs Annual Nil % 199 NHPC Indivi 892NHPC33 AAA 8.92% 20 Yrs Annual Nil % 1194 NTPC N1 AAA 8.41% 10 Yrs 9.85 Annual Nil NA NA NA NTPC N2 AAA 8.48% 15 Yrs Annual Nil NA NA NA NTPC N3 AAA 8.66% 20 Yrs Annual Nil % 134 NTPC Indivi N4 AAA 8.66% 10 Yrs 9.85 Annual Nil % 30 NTPC Indivi N5 AAA 8.73% 15 Yrs Annual Nil % 54 NTPC Indivi N6 AAA 8.91% 20 Yrs Annual Nil % 709 * - Traded data as on Feb 11, Objects of the Issue: The proceeds of Issue may be utilised towards financing renewable energy and energy efficiency projects and augmenting the company s resource base. Issue Terms: Issuer Issue Issue Price and minimum application Stock Exchanges for listing Issuance Trading Trading Lot Call / Put options Depositories Rating Security Indian Renewable Energy Development Agency Limited Public issue of tax free bonds for face value of Rs 1,000 each in the nature of secured, redeemable non convertible debentures having tax benefits under section 10 (15) (iv) (h) of the Income tax Act, 1961, as amended, for bonds aggregating to Rs. 500 Crore with an option to retain oversubscription up to Rs. 500 crore for issuance of additional Bonds aggregating to a total of up to Rs. 1,000 Crore ( Tranche I Issue ) in the fiscal Rs.1,000 & Rs.5,000 respectively BSE & NSE Both physical and dematerialized form Compulsorily in dematerialized form 1 (one) Bond Nil NSDL and CDSL BWR AAA (SO) [pronounced BWR Triple A (Structured Obligation)] (Outlook: Stable) by Brickwork and CARE AAA (SO) [Triple A (Structured Obligation)] by CARE The Bonds proposed to be issued are secured by a floating first pari passu charge on present and future receivables of the Company to the extent of amount mobilized under the Issue. The Company reserves the right to create first pari passu charge on present and future receivables for its present and future financial requirements. Issue Details: For Category Investors For Category I, II & III For Category IV only Options Series IA Series IIA Series IIIA Series IB Series IIB Series IIIB Coupon Rate (%) p.a. 8.16% 8.55% 8.55% 8.41% 8.80% 8.80% Tenor 10 years 15 years 20 years 10 years 15 years 20 years Frequency of Interest Payment Annual Annual Annual Annual Annual Annual Coupon Rate (%) p.a 8.16% 8.55% 8.55% 8.41% 8.80% 8.80% Effective pre tax yield (per annum) for tax payers in 10.3% income tax bracket 9.10% 9.53% 9.53% 9.38% 9.81% 9.81% Effective pre tax yield (per annum) for tax payers in 20.6% income tax bracket 10.28% 10.77% 10.77% 10.59% 11.08% 11.08% Effective pre tax yield (per annum) for tax payers in 30.9% income tax bracket 11.81% 12.37% 12.37% 12.17% 12.74% 12.74% Note: 1. The company will pay extra 25bps coupon rate for retailers i.e. category IV investors (invest less than 10 lakh in these bonds) than the others. For eg, as seen in the above table, retail investors will get 8.41% for 10 year bond which is 25 bps higher than that of 8.16% for non retailers.

4 2. If bonds allotted to retailers are transferred to non retailers, then the extra 25bps on interest rates will not be available: In case the Bonds allotted against Series IB, Series IIB and Series IIIB are transferred by Category IV to Category I, Category II and/or Category III as on the Record Date for payment of interest, the coupon rate on such Bonds shall stand at par with coupon rate applicable on Series IA, Series IIA and Series IIIA respectively. 3. If bonds allotted to retailers are transferred to retailers, then the extra 25bps on interest rates will be available: If the Bonds allotted against Series IB, Series IIB and Series IIIB are sold/ transferred by the Category IV to investor(s) who fall under the Category IV as on the Record Date for payment of interest, then the coupon rates on such Bonds shall remain unchanged. 4. If any retailer holds the bonds for the face value amount of over Rs. 10 lakh, then he will lose out the 25bps extra benefit on the coupon rate: If on any Record Date, the original Category IV allotee(s)/ transferee(s) hold the Bonds under Series IB, Series IIB and Series IIIB for an aggregate face value amount of over Rs. 10 lakhs, then the coupon rate applicable to such Category IV allottee(s)/transferee(s) on Bonds under Series IB, Series IIB and Series IIIB shall stand at par with coupon rate applicable on Series IA, Series IIA and Series IIIA respectively. 5. Verification on the basis of PAN: For the purpose of classification and verification of status of the RII Category of Bondholders, the aggregate face value of Bonds held by the Bondholders in all the Series of Bonds, allotted under the relevant Issue shall be clubbed and taken together on the basis of PAN number. Taxation: Tax Free: The Bonds are tax free in nature (exempt u/s 10(15)(iv)(h) of the Income Tax Act, 1961 and the interest on the Bonds will not form part of the total income. TDS: Since the interest Income on these bonds is exempt, no Tax Deduction at Source is required. Long Term Capital Gains: Under section 2 (29A) & 2 (42A) of the Income Tax Act, the Bonds are treated as a long term capital asset if the same is held for more than 12 Months where they are subject to the tax at the rate of 20% of capital gains with indexation or 10% of capital gains without indexation. Short Term Capital Gains: Short term capital gains, where bonds are held for a period of not more than 12 months would be taxed at the normal tax rates. STT: Securities Transaction Tax (STT) is not applicable on transactions in the Bonds. Gift Tax: As per section 56(2)(vii) of the I.T. Act, the gift shall be taxable as the income of the recipient where the aggregate fair market value of which exceeds Rs. 50,000. Wealth Tax: No wealth tax is levied. Cess: A 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge for corporate only) is payable by all categories of tax payers. DTC: The Hon ble Finance Minister has presented the Direct Tax Code Bill, 2010 ( DTC Bill ) on August 30, 2010, which is proposed to be effective from April 1, The DTC Bill is likely to be presented before the Indian Parliament thereafter. Accordingly, it is currently unclear what effect the Direct Tax Code would have on the investors. Who can apply? Category I: Public Financial Institutions, scheduled commercial banks, state industrial development corporations, which are authorised to invest in the Bonds; Provident funds and pension funds with minimum corpus of ` 25 crores, which are authorised to invest in the Bonds; Insurance companies registered with the IRDA;

5 National Investment Fund (set up by resolution no. F. No. 2/3/2005 DDII dated November 23, 2005 of the Government of India and published in the Gazette of India); Insurance funds set up and managed by the army, navy or air force of the Union of India or set up and managed by the Department of Posts, India; Indian multilateral and bilateral development financial institutions; Mutual funds registered with SEBI; and Alternative Investment Funds, subject to investment conditions applicable to them under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended. Category II: Companies within the meaning of section 2(20) of the Companies Act 2013; Statutory bodies/corporations; Cooperative banks; Public/ private/ religious trusts; Limited Liability Partnerships; Regional rural banks; Societies registered under the applicable laws in India; Partnership firms in the name of partners; and Any other domestic legal entities/ persons as may be permissible under the CBDT Notification and authorised to invest in the Bonds in terms of applicable laws Category III: The following Investors applying for an amount aggregating to more than Rs 10 lakhs in the Tranche I Issue: Resident Indian individuals; and Hindu Undivided Families through the Karta Category IV: The following Investors applying for an amount aggregating to up to and including Rs. 10 lakhs in the Tranche I Issue: Resident Indian individuals; and Hindu Undivided Families through the Karta. Who can not apply? Minors not applying through their guardians. (A guardian may apply on behalf of a minor. However, Applications by minors must be made through Application Forms that contain the names of both the minor Applicant and the guardian); Persons Resident outside India and foreign nationals (including Non Resident Indians, Foreign Institutional Investors, Qualified Foreign Investors and Foreign Portfolio Investors); Overseas Corporate Bodies; Indian Venture Capital Funds; Foreign Venture Capital Investors; Persons ineligible to contract under applicable statutory/ regulatory requirements; and Any category of investor other than the Investors mentioned under Categories I, II, III and IV. Basis of Allotment: Applicants belonging to all three Categories will be allocated as given in the table below: Particulars QIB Portion Corporate Portion High Net Worth Individual Portion Retail Individual Investor Portion Reservation for each Portion 10% of the Overall Issue Size 20% of the Overall Issue Size 30% of the Overall Issue Size 40% of the Overall Issue Size In case of an oversubscription in any of the Portions, Allotments to the maximum extent, as possible, will be made on a first come firstserve basis and thereafter on proportionate basis, i.e. full Allotment of Bonds to the Applicants on a first come first basis up to the date falling 1 (one) day prior to the date of oversubscription and proportionate allotment of Bonds to the Applicants on the date of oversubscription (based on the date of upload of each Application on the electronic Application platform of the relevant stock exchanges, in each Portion).

6 Credit Rating: Brickwork Rating India Private Limited has, vide its letter no. BWR/BNG/RL/ /NS/0226 dated November 19, 2013 and letter dated November 22, 2013, assigned a credit rating of BWR AAA (SO) [pronounced BWR Triple A (Structured Obligation)] (Outlook: Stable) to the Bonds and revalidated the rating vide letter no. BWR/BNG/RL/ /NS/0301 dated January 29, Credit Analysis & Research Limited has, vide its letters dated November 20, 2013 and November 27, 2013, assigned a credit rating of CARE AAA (SO) [Triple A (Structured Obligation)] to the Bonds and revalidated the rating vide its letter dated January 29, Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. These ratings are not a recommendation to buy, sell or hold securities, and investors should take their own decision. These ratings are subject to revision or withdrawal at any time by the assigning rating agency(ies) and should be evaluated independently of any other ratings. Interest on application money: at the rate of 8.16% p.a., 8.55% p.a. and 8.55% p.a. on Series IA, Series IIA and Series IIIA respectively for Allottees under Category I, Category II and Category III Portion, and at the rate of 8.41% p.a., 8.80% p.a. and 8.80% p.a. on Series IB, Series IIB and Series IIIB respectively for Allottees under Category IV Portion. Interest on Refund: 5% p.a for all categories. Liquidity and Exit Options: The Bonds are proposed to be listed on the NSE and BSE Limited Company Background: IREDA is a non banking financial institution registered with RBI under the RBI Act, 1934 engaged in extending financing services to projects and schemes for generating electricity and energy through renewable sources and conserving energy through energy efficiency. IREDA was incorporated on March 11, 1987 as a public limited company under the Companies Act, 1956 and received a certificate for commencement of business on March 21, IREDA was set up by GoI under the administrative control of MNRE to promote, develop and extend financial assistance for renewable energy and energy efficiency projects. Further, IREDA has been notified as a Public Financial Institution by the MCA, through a notification (No. 10/37/94 CL.V) dated October 18, As of December 31, 2013, IREDA operates through branch offices located at Chennai and Hyderabad and camp offices located at Kolkata and Ahmedabad on let out basis and IREDA do not own such premises. IREDA primarily engaged in providing finance to specific projects and schemes for generation of energy through new and renewable sources of energy. IREDA provides financial assistance to the following renewable and energy efficiency projects: Wind Power Hydro Power Biomass Power Co generation Energy Efficiency & Conservation Solar Energy Waste to Energy & Miscellaneous The GoI has been regularly providing financial support in the form of equity infusion and has also guaranteed loans raised from international agencies. In the Union Budget , the Government of India announced allocation of funds from the National Clean Energy Fund to IREDA for the period of five years, for on lending to viable renewable energy projects by way of refinancing part of the loan at concessional rate of interest. Under the categorisation of Public Sector Enterprises, IREDA was upgraded from Schedule C to Schedule B by the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, GoI with effect from January 4, IREDA enters into memorandum of understanding with the MNRE on annual basis ( MoU ). Pursuant to the MoU, the annual targets are set with respect to loan sanctions, disbursements, profitability and other dynamic parameter. Over the last two Fiscals upto the Fiscal year , the actual achievement of the Company vis à vis the targets set out in the MoU were rated as Very Good by the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, GoI.

7 For the six month period ended September 30, 2013 and the Fiscal 2013, 2012 and 2011, the profit after interest but before tax was Rs crore, Rs crore, Rs crore and Rs crore, respectively, and The company s profit after tax was Rs crore, Rs crore, Rs crore and Rs crore, respectively. The company s outstanding loan portfolio has grown at a CAGR of 39.23% from Rs. 3, crores as of March 31, 2011 to Rs. 6, crores as of March 31, Similarly, The Company s profit after tax has grown at a CAGR of 29.70% over a period of three years from Rs crores for Fiscal 2011 to Rs crores for Fiscal The company s gross NPA was 3.42%, 3.86%, 5.46% and 5.31% and The Company s net NPA was 0.70%, 0.92 %, 2.50 %, and 0.79 % as at September 30, 2013, March 31, 2013, 2012 and 2011 respectively. The total borrowings of IREDA, as at December 31, 2013, were Rs. 5, crores. The total borrowings of IREDA as at March 31, 2013, were Rs. 5, crores and the CRAR of IREDA as at March 31, 2013 was 24.75%. Competitive Strengths: Experience and expertise in financing renewable energy projects Availability of funds at competitive costs due to support from GoI Competitive rate of lending to the borrowers Robust risk management policy Maintaining low level of NPAs Experienced senior management team and skilled human resource Strategy: Leveraging of inherent strengths towards providing loans at competitive rates Entering into consortium/co financing with other lenders for financing large size renewable energy projects Diversification strategy Maintaining strong asset quality through continued focus on risk management Further increase the market visibility participation in government programmes. Risks & Concerns: There are outstanding legal proceedings in which the Company is involved, and any adverse decision in such proceedings may affect the business, result of operations and financial condition. Inherent risks in financing towards projects and schemes for generating electricity and energy through renewable sources, to the extent they materialize, could adversely affect the company s business and result in the company s loans and investments declining in value. In the past the company has certain non compliances with the terms of the Debt Listing Agreement that the company has entered into with the NSE for listing of the company s privately placed debt securities. If the level of non performing assets in the company s loan portfolio were to increase, financial condition may be adversely affected. The company may not be able to recover, or there may be a delay in recovering, the expected value from security and collaterals for the company s loans, which may affect the company s financial condition As a financial institution focused towards financing of new and renewable sources of energy, the company and the company borrowers have received certain tax benefits, subsidies and incentives in the past. The company cannot assure that such benefits, subsidies and incentives will be available to the company and the company s borrowers in the future which may have an adverse effect on the company s business, profits, results of operations and financial condition. The company s borrowers insurance of assets may not be adequate to protect them against all potential losses to which they may be subject, which could affect the company s ability to recover the loan amounts due to the company. The company is affected by volatility in interest rates for the company s lending operations as well as the rates at which the company Company mobilizes its resources, which could adversely affect the company s return on assets and profitability. The company is subject to credit and market risks, and if any such risks were to materialize, the company s credit ratings. Unavailability of financing at commercially acceptable terms, or at all, may adversely affect the company liquidity and financial condition In addition to the company s Rupee borrowings, the company currently has foreign currency borrowings, which are likely to continue or increase in the future, which will expose the company to fluctuations in foreign exchange rates, which could adversely affect the company s financial condition If the company is unable to manage the company s growth effectively, the company s business, prospects, results of operations and financial condition could be adversely affected.

8 The renewable energy financing industry in India is still at a relatively early stage of development and is linked to the growth of the economy. If the renewable energy financing industry does not develop as anticipated, the company s business, prospects, results of operations and financial condition could be adversely affected. A decline in the company s capital adequacy ratio could restrict the company s future business growth. Delays or cancellation in the implementation of renewable energy projects financed by the company in the past or to be financed in the future may adversely affect the ability of the company s borrowers to repay their loans The company is subject to restrictive covenants under the company s financing arrangements that could limit the company s flexibility in managing the company s business and maintaining the growth of the company s loan portfolio, which may in turn have a material adverse affect on the company s business, results of operations and financial condition. A level of indebtedness beyond the company s ability to service the same could adversely affect the company s ability to react to changes in the company s business environment which may in turn affect the company s prospects and results of operations The company s success depends on the company s management team and skilled personnel and the company s ability to attract and retain such persons. The company does not have a registration for the company s trademark, name and logo. The company s ability to use the trademark, name and logo may be impaired. The company s insurance policies provide limited coverage and may not adequately insure the company against certain operational hazards which may have an adverse effect on the company s business. Financial Highlights: (Rs in Crs) Particulars Six month period ended September Fiscal 2013 Fiscal , 2013 Paid up equity share capital Net worth 1, , , Long Term Borrowing 5, , , Short Term Borrowing 0.02 Current Maturities of Long Term Borrowing Net Fixed Assets Non Current Assets 6, , , Cash and Cash Equivalents Current Investments Current Assets , Current Liabilities Assets under Management Off Balance Sheet Assets Interest Income Interest Expense Provisioning & Write offs Profit after tax (PAT) Gross NPA (%) Net NPA (%) Tier I Capital Adequacy Ratio (%) Tier II Capital Adequacy Ratio (%) N.A. N.A. N.A. Fax: (022) Corporate Office, HDFC Securities Limited, I Think Techno Campus, Bulding B, Alpha, Office Floor 8, Near Kanjurmarg Station Opp. Crompton Greaves, Kanjurmarg (East), Mumbai Fax: (022) Website: Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for Non-institutional Clients only.