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

Public Issue of Long Term Infrastructure Bonds
u/s 80 CCF of Income Tax Act, 1961
2012 A Series

Issue Opens on: January 10, 2012

Issue Closes on: February 11, 2012

Disclaimer
• This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis
of any contract or commitment whatsoever. This presentation is in relation to the proposed issuance of Long Term Infrastructure Bonds by L&T
Infrastructure Finance Company Limited (“Company”) and should not be construed in any manner as promotion of the Company or any of its other
products. This presentation is being communicated only to persons who have professional experience in matters relating to investments and to persons
to whom it may be lawful to communicate it (all such persons being referred to as relevant persons). This presentation is only directed at relevant
persons and any investment or investment activity to which the presentation relates is only available to relevant persons or will be engaged in only with
relevant persons. This presentation is being furnished to you solely for your information and may not be reproduced or redistributed to any other
person. Investors and prospective investors in securities of the issuer mentioned herein are required to make their own independent investigation and
appraisal of the business and financial condition of such company and the nature of the securities. Certain statements contained in this presentation
may be statements of future expectations and other forward-looking statements that are based on third party sources and involve known and unknown
risks and uncertainties. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the future. There is no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking
statements, which speak only as of the date of this presentation. The contents of this presentation are subject to changes without prior notice. This
document is just a presentation and is not intended to be a “Prospectus” (as defined under the Companies Act, 1956). Any decision to purchase
securities in the context of a proposed offering of securities, if any, should be made solely on the basis of information contained in a prospectus
published in relation to such an offering. No representation or warranty is given as to the accuracy or completeness of the information contained herein.
By participating in this presentation or by accepting any copy of the slides presented, you agree to be bound by the foregoing limitations. For risk factor
and detailed information, please refer to the Shelf Prospectus dated November 18, 2011 (“Shelf Prospectus”) and Prospectus – Tranche 2 dated
January 3, 2012 (“Prospectus Tranche 2”) together with Shelf Prospectus (“the Prospectus”) filed with Registrar of Companies (ROC), Chennai, Tamil
Nadu. The Prospectus is available on the websites of Lead Managers: www.icicisecurities.com,www.karvy.com, and www.jmfinancial.in and on the
website of BSE at www.bseindia.com.

• All investors proposing to participate in the Public Issue of Long Term Infrastructure Bonds by L&T Infrastructure Finance Company Limited should
invest on the basis of information contained in the Prospectus.

• Disclaimer Clause of the RBI: RBI has issued certificate of registration dated January 10, 2007 and a fresh certificate of registration dated July
7, 2010 re-classifying the company under the category “Infrastructure Finance Company”. It must be distinctly understood that the issuing of the
certificate and granting a license and approval by RBI in any other matter should not in any way, be deemed or construed to be an approval by RBI to
the Prospectus nor should it be deemed that RBI has approved it and the RBI does not take any responsibility or guarantee the financial soundness of
the Company or for the correctness of any of the statements made or opinions expressed by the Company in this connection and for repayment of
deposits / discharge of liabilities by the Company.

• Disclaimer of BSE: It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the
Prospectus has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the Prospectus.
The investors are advised to refer to the Prospectus for the full text of the "Disclaimer Clause of BSE Limited".

Infra Project Finance Structured Products Financial Advisory Services

Contents

» Infrastructure Sector – Overview

» L&T Infra – The Issuer

» L&T Infra – Financial Performance

» Long term Infrastructure Bonds

» L&T Infra Bonds (2012A Series) – Issue Highlights

» L&T Infra Bonds (2012A Series) – Issue Structure

» Investment Considerations


Growing Infra Investments . . but still a long way to go

Economic Growth Sectoral Infrastructure Investments
(Rs. in trillion)

8.00
7.31
GDP Growth Rate (%) 7.00 6.59
10 6.00
9
8 5.00

7
4.00 3.45
6 3.40
3.14
5 3.00 2.79

4
2.00
3 1.27
1.02
2 1.00
1 0.23 0.41
0.00
0
Electricity Roads Telecom Ports Others
2008 2009 2010 2011

Tenth Plan Eleventh Plan


Infrastructure Sector – Strong potential
• 2011 GDP: ~US$ 4.444 trillion (Purchasing power parity basis)
• 5th largest economy in terms of GDP in 2010
• Huge infra investments expected over next 5 years
– Rs 9.0 tn in Power – 57% by Private Sector
– Rs 6.9 tn in Roads – 35% by Private Sector
– Rs 2.0 tn in Telecom sector by private sector

Strong Infrastructure Base  Engine for
Accelerated Economic Growth

L&T Infra – Overview
• Promoted by L&T in April 2006, for financing Infrastructure Sector
• Subsidiary of L&T Finance Holdings Company Limited
• Obtained NBFC license from RBI on January 10, 2007
• Classified as a Systemically Important Non-Deposit taking NBFC
• Board comprises 50% Independent Directors

Classified as Infrastructure Finance Company (IFC) by RBI in July 2010
& Notified as Public Financial Institution by
Ministry of Corporate Affairs in June, 2011.

L&T Infra – Overview (Contd…)
• Sound corporate governance structure
– Comprehensive policies, efficient systems & processes
• Professional management team – with infra sector experience
• Networth of Rs. 1,486.54 Crores; Loan Portfolio of Rs. 8,790.34
Crores as on September 30, 2011
• Rated “CARE AA+” (by CARE) and “[ICRA] AA+” (by ICRA)

Classified as Infrastructure Finance Company (IFC) by RBI in July 2010
& Notified as Public Financial Institution by
Ministry of Corporate Affairs in June, 2011.

L&T Infra – Board of Directors
Name Experience
 CMD of L & T Finance Holding Company Ltd.
Y.M. Deosthalee  Erstwhile Member of the Board and CFO of L&T
Director  Instrumental in promoting L&T‟s Financial Services business
 Served as a member of Government and SEBI Committees

 Heads the Financial Services business of L&T
N. Sivaraman
 Wide experience in L&T group with varied responsibilities
Director  Played key role in structuring demerger of L&T‟s cement business

 Director of CRISIL Ltd and Chairman of its Rating Committee
B.V. Bhargava  Three decades of experience in development banking & project
finance
Independent Director
 Served as Vice Chairman & MD of ICICI

Chairman of Clearing Corporation of India Ltd
Dr. R.H. Patil 

 Instrumental in setting up the NSE & NSDL
Independent Director
 Served as Chairman/Member of various Government, RBI & SEBI
Committees


L&T Infra – Key Managerial Personnel

Name Experience

 Heading L & T Infra since inception.
Suneet K.  Over 30 years of experience in infrastructure finance, investment
Maheshwari banking, corporate finance and private equity
Chief Executive &  An active member of various state and central chambers of
Manager commerce focusing on infrastructure sector policies and PPP
matters.


L&T Infra – Products and Services

• Senior Debt Products: Term
Project Loans, Debentures, Securitized Debt
Finance • Mezzanine Debt Products: Sub-
Debt, CCD, and Preference Shares

Equity • Equity Capital
Investment • Convertible Preference Capital
• Hybrid Debt

Financial • Corporate and Project Advisory
Advisory • Debt Advisory and Debt Arranging
Services • Capital raising & Strategic Advisory


L&T Infra – Industry & Sector Focus

Power Roads Telecom Ports Other
• Generation • Construction • Passive • Greenfield Sectors
and Infrastructure Construction
• Transmission Development • Urban
• Telecommunic • Expansion and
• Distribution • Operation ations and Modernization Infrastructure
• Maintenance Broadband • Water and
Sanitation
• Logistics
• SEZs


L&T Infra – Industry & Sector Focus (Contd…)

Total Infrastructure Loans Total Disbursements
(as on Sept 30, 2011) (for the six months ended Sept 30, 2011)
Total = Rs. 8,790.34 Crores Total = Rs. 2,846.57 Crores

Others,
20.49%
Others, Power,
Ports,
35.07% 36.82%
0.65%

Ports,
1.39% Telecom, Power,
14.30% 56.93%

Telecom, Roads, Roads,
11.80% 14.91% 7.63%


L&T Infra – Financial Overview

Amount in Rs. Mn Period from FY ended FY ended FY ended Period from Period from
Apr to Sept-11 Mar-11 Mar-10 Mar-09 Jul-07 to Mar-08 18-Apr-06 to Jun-07
Balance Sheet Items
Equity capital 7,271.50 7,021.50 6,834.00 5,000.00 5,000.00 2,430.00
Net worth 14,865.39 12,348.94 10,125.68 6,266.11 5,489.50 5,034.82
Loan Funds (Borrowings) 76,017.00 61,935.26 32,367.56 17,712.00 13,650.00 0.00
(1)
Infrastructure Loans 87,680.69 71,654.90 42,554.39 22,583.47 18,331.81 2,393.12
Investments 3,500.10 3,500.00 250.00 1,150.00 599.07 2,087.39
Profit and Loss Items

Total Income 5,409.26 7,039.75 4,504.23 2,959.89 1,103.24 131.44
Interest & Other Charges
3,239.31 3,801.67 2,462.91 1,629.72 334.50 0.00
Employee, Establishment etc.
Costs 197.94 237.85 132.05 111.7 81.91 51.73
Provision & Contingencies
52.12 57.85 253.60 77.00 0.00 0.00
Profit after Tax
1342.84 2008.27 1108.57 764.59 451.68 49.84
Note:
1. Total Infrastructure Loans net of provisions


L&T Infra – Financial Overview

Total Income (Rs. mn) Profit after Tax (Rs. mn)
8,000.00 7,039.75 2500 2008.3
7,000.00
6,000.00 5,409.26 2000
5,000.00 4,504.23 1342.8
1500 1108.6
4,000.00 2,959.89
3,000.00 1000 764.6
451.7
2,000.00 1,103.24 500
1,000.00
0.00 0
Period from FY 2009 FY 2010 FY 2011 Period from Period from FY 2009 FY 2010 FY 2011 Period from
Jul-07 to Apr to Sept- Jul-07 to Apr to Sept-
Mar-08 11 Mar-08 11

Net Loans Portfolio (Rs. mn) Networth (Rs. mn)
100,000.00 16,000.00 14,865.39
87,903.43
87,680.69
14,000.00 12,348.94
80,000.00 71,654.90 10,125.68
12,000.00
60,000.00 10,000.00
42,554.39 8,000.00
40,000.00 6,266.11
6,000.00 5,489.50
22,583.47
20,000.00 18,331.81 4,000.00
2,000.00
0.00 0.00
As at As at As at As at As at As at As at As at As at As at
March'08 March'09 March'10 March'11 Sept'11 March'08 March'09 March'10 March'11 Sept'11


Infra Bonds u/s 80 CCF of IT Act
 Government‟s new initiative to channelize long-term savings of retail
Purpose investors into infrastructure sector - with tax benefits to investors

 IFCs & select other Institutions notified by the Government
Eligible Issuers  They are eligible to issue Infra Bonds up to 25% of incremental
infrastructure investments made during FY 2010-11
Eligible  Resident Indian Individuals & HUFs
Investors
 Investments up to Rs. 20,000 in Infra Bonds eligible for deduction
Tax Benefit
from taxable income for FY 2011-12

Maturity period  Bonds will have a maturity period of minimum 10 years

Buy-back  Buyback facility may be availed after initial lock in period of 5 years

 Bonds will be listed on BSE. Investors can exit through secondary
Liquidity
market after the initial 5 year lock-in period
In the first tranche (Nov–Dec 2011) the company raised approximately Rs.530 Crores
through Infra Bonds. The collections for FY11 Infra Bonds Issue were Rs.656.20 Crores


Issue Structure Highlights
Issue Schedule : January 10, 2012 to February 11, 2012
Issuer L&T Infrastructure Finance Company Limited (L&T Infra)

Public Issue of Long Term Infrastructure Bonds in the nature of Secured,
Issue Details Redeemable, Non Convertible Debentures, having benefits under Section
80 CCF of the Income Tax Act

Eligible Investors Resident Indian Individuals and HUFs

Aggregate amount up to Rs. 300 Crores with an option to retain an
oversubscription of up to Shelf Limit of Rs.1,100 Crores, including the
Size
amount received against the allotment of Tranche 1 bonds i.e.
approximately Rs. 530 crore

Exclusive first charge on specific receivables and mortgage/charge on the
Security
leasehold rights of specific property

Security Cover 1 time

Rating ‘CARE AA+’ by CARE Ratings; ‘[ICRA] AA+’ by ICRA Ratings

Face Value and Rs. 1,000 each. Minimum application for 5 (Five) Bonds and in multiples of
Min. Application 1 (One) Bond thereafter



Coupon Coupon Tenor Buyback
Payment Option
Series 1 8.70% p.a. Annual 10 At the end of 5
Instrument years years and 7
Options years

Series 2 8.70% p.a. Cumulative 10 At the end of 5
compounded years years and 7
annually years


Maturity /
10 years from the Date of Allotment
Redemption

Lock in period 5 years from the Date of Allotment

Bombay Stock Exchange of India (BSE) - Can be traded after 5
Listing
year lock-in period

Issuance & • In Dematerialised and Physical Form*
Trading • Trading in Dematerialised form only

Depository NSDL and CDSL

Date of The date on which the Board / Committee of Directors
Allotment approves allotment of Bonds

Basis of
First Come First Serve
Allotment
In terms of Regulation 4(2)(b) of the Debt Regulations the Company will make public issue of the Bonds in the dematerialised form.
However, in terms of Section 8 (1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the Bonds
in physical form will fulfil such request.


Returns on Investment
Series 1 2
Interest Payment Annual Cumulative

8.70 %
Coupon Rate 8.70 % p.a.
compounded annually

First Working Day after 5 years from First Working Day after 5 years from
the Date of Allotment and first the Date of Allotment and first
Buyback Date
Working Day after 7 years from the Working Day after 7 years from the
Date of Allotment Date of Allotment
Tax Rate YIELD TO THE INVESTORS ON MATURITY (with Tax Benefits u/s 80CCF)
10.30% 10.41% 9.89%
20.60% 12.41% 11.24%
30.90% 14.81% 12.79%
Tax Rate YIELD TO THE INVESTORS ON BUYBACK (with Tax Benefits u/s 80CCF)
Buyback at the Buyback at the Buyback at the Buyback at the
end of 5 years end of 7 years end of 5 years end of 7 years
10.30% 11.52% 10.88% 11.09% 10.40%
20.60% 14.82% 13.42% 13.83% 12.34%
30.90% 18.75% 16.45% 17.04% 14.59%


List of Intermediaries

Debenture Trustee

Registrar Sharepro Services (India) Private Limited

Legal Advisor to the
AZB & Partners
Issuer

Legal Advisor to the
Krishnamurthy & Co.
Lead Managers

Lead Managers

Co-Managers


Investment Considerations
Wholly owned subsidiary of L&T Finance Holdings
Strong Parentage Limited, which is a subsidiary of Larsen & Toubro
Limited (L&T - Rated ‘AAA’)

CARE AA+ by (CARE) & [ICRA] AA+ by (ICRA)
Dual Credit Instruments with a rating of „CARE AA+‟ by CARE are considered to offer high
safety for timely servicing of financial obligations. Such instruments carry very low

Rating credit risk. Instruments with a rating of „[ICRA] AA+‟ by ICRA are considered to
have high degree of safety regarding timely servicing of financial obligations.
Such instruments carry very low credit risk.

Bonds can be held in Physical or
Issuance Dematerialized form
Buyback option available at the end of 5
Buyback Options years and at the end of 7 years for both
Series

• Coupon at 8.70% p.a.
Returns • Effective yields to investors under buy-back options (with tax
benefits) range from 10.40% to 18.75% p.a.


Other Investment Considerations

While other tax saving instruments available to retail investors provide an exemption from tax on the
interest earned, this issue provides an exemption from tax (deduction from taxable income) on the
principal amount (Up to Rs.20,000) invested as per section 80CCF of the Income tax Act.
The deduction from taxable income from investment in Infra Bonds is over and above the deduction
of Rs.1,00,000 available for investments u/s 80C, 80CCC and 80CCD read with section 80CCE of the
Income Tax Act, 1961
No TDS on interest payment shall be deducted on Infrastructure Bonds held in dematerialized form
and listed on a recognized stock exchange in India and in the case of bonds held in a physical form if
the interest payment is within Rs.2,500
As per regulations, the maximum interest rate that can be offered on these tax-saving infrastructure
bonds is the annualized yield on Government Securities as on the last working day of the immediately
preceding month of issue
Furthermore, specific to this issue, the provision to buy-back at two intervals provides added flexibility
to investors to exit their investment. For example, If at the end of 5 years the interest rate
environment does not justify an exit, the investors/company would have another window for buy back
at the end of the 7th year.
Investors can pledge or mortgage Infra Bonds to avail loans from Scheduled Commercial Banks after
the 5 year lock-in period.


Comparative Return Landscape for Debt Securities
Pre-Tax Post-Tax
Cap on Initial
Return Return Tenor Liquidity
Investment
(%) (%)(1)
Bank Fixed Deposit (u/s
17.77% 14.90% 1,00,000 5 years and above Low
80C)(2)
National Savings
12.7% 9.65% N/A 7.5 years Low
Certificate
No, but
withdrawal
Public Provident Fund(3) 17.25% 17.25% 1,00,000 15 years
allowed after 6
years
Mutual Funds Debt 9.35%- 8.42%-
N/A One year Low
Scheme-FMP(4) 9.65% 8.69%
10 years with option
Infra Bond – L&T
18.75% 15.28% 20,000 to buy back after 5 Low
Infra(5)
years

Tax Free Bond – NHAI 11.87% 11.87% N/A 10 years Low
Notes:
1. Post tax returns have been calculated at the maximum marginal tax rate of 30.9%.
2. The rate of return on Fixed Deposit has been considered at 9.25% p.a. for tenure of atleast 5 years which are eligible for deduction under Sec 80C
3. Assumed withdrawal after 6 years
4. The investors‟ tax liability on long term capital gain is taken at 10%.
5. After considering buy back after 5 years with annual interest payment @ 8.7%


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

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

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (16)

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

Similar a L&t infra provides future perspective on the infrastructure sector in india (20)

Último

Último (20)

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

Notas del editor