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L&T INFRASTRUCTURE FINANCE COMPANY LIMITED

Public Issue of Tax-saving Long Term Infrastructure Bonds

 by L&T Infra - Open from 15 October to 2 November 2010

Mumbai: L&T Infrastructure Finance Company Limited (L&T Infra) - an infrastructure financing venture promoted by India’s engineering and construction major Larsen & Toubro Ltd (L&T) - has announced a Public Issue of “Long Term Infrastructure Bonds”.

L&T Infrastructure Finance Company Limited (L&T Infra) was promoted by Larsen & Toubro Limited (L&T) in April 2006 for the development and financing of infrastructure sector in India. It commenced business in January 2007, upon receiving registration from the RBI as a systemically important non-deposit taking NBFC. L&T Infra ‘s  business is dedicated towards providing  financial products and services for customers engaged in infrastructure development, construction, operations and maintenance with a focus on power, roads, telecommunications, oil and gas and ports sectors in India. 

In July 2010, L&T Infra was classified by the RBI as an Infrastructure Finance Company ( "IFC"). This allows the Company to optimize its capital structure by diversifying its borrowings and accessing long-term funding resources, thereby expanding its financing operations while maintaining its competitive cost of funds.

The total income of the Company for Fiscal Year 2010 was Rs. 4,504.23 million. The total loans and advances outstanding as at March 31, 2010 were Rs. 42,884.99 million and total disbursements for Fiscal Year 2010 were Rs. 37,955.14 million.

The salient features of L&T Infra’s Long Term Infrastructure Bond Issue are as under:

·                     L&T Infrastructure Finance Company Limited (L&T Infra) is making a Public Issue of Long Term Infrastructure Bonds under Section 80 CCF of the Income Tax Act, 1961, to Resident Indian Individuals & HUFs. L&T Infra is classified as an Infrastructure Finance Company (IFC) by the Reserve Bank of India (RBI).

·                     Under Section 80 CCF, subscriptions of up to Rs. 20,000 made by Resident Individuals and HUFs in Long Term Infrastructure Bonds are eligible for deduction in computation of taxable income for FY 2010-11.

·                     L&T Infra would be issuing Long Term Infrastructure Bonds (“Bonds”) of up to Rs.2,000 million - with an option to retain over-subscriptions of up to Rs.5,000 million. The Bonds would be in the nature of Secured Redeemable Non-Convertible Debentures.

·                     The Bond proceeds will be utilized for “Infrastructure Lending” as defined by RBI.

·                     The Bonds are assigned the ratings of ‘CARE AA+’ (by CARE) and ‘LAA+’ (by ICRA). These “AA+” Ratings signify high safety for timely servicing of debt obligations and low credit risk.

·                     The Bonds will have a maturity period of 10 years.

·                     As an exit option to the investors, the Company will offer Buyback Facility at the end of 5 and 7 years from the date of allotment.

·                     To provide further liquidity, the Bonds are proposed to be listed on NSE, and can be traded after the initial 5 years lock-in period. After this lock-in period, the holders can also pledge the Bonds with banks for availing financial assistance.

·                     There would be 4 Series of Bonds - that would offer subscribers distinct options of annual or cumulative interest payment and buyback after 5 or 7 years. 

·                     Each Bond will have a face value of Rs.1,000 - and would be issued at par. The applicants need to subscribe to a minimum of 5 Bonds.

·                     For the convenience of investors, the Company will offer them the option to hold the Bonds either in Dematerialized or Physical Certificate(s) form.

·                     The Issue opens on 15 October 2010 and closes on 2 November 2010.