Fiducia Money » Blog Archives

Tag Archives: PFC Bonds

Investments Non-convertible-Debentures

PFC Tax Free Bonds offering the highest Interest rate

Published by:

PFC Tax Free Bonds

PFC Tax Free Bonds offering highest interest rates amongst the Tax free bonds currently available in the market. PFC tax free bonds are rated AAA by three rating agencies and are offering 17 Basis points (.17%) higher rate of interest offered by IIFCL tax free bonds for a similar maturity of 10, 15 and 20 years. IIFCL Tax Free Bonds are also rated AAA. It is a good time to lock in your money in these tax free bonds. The higher rate of interest offered is mainly because of the higher G – Sec yield which prevailed in the market after the RBI raised the repo rates in its monetary policy review of 20th September, 2013. The 10 year G – Sec during this period remained in the region of 9%, which has since then come down. PFC tax free bonds are offering a much better pre -tax return to investors compared to a bank Fixed Deposit. Given the higher coupon offered by PFC The investors in 30% tax bracket wouldn’t even think twice before investing in PFC tax Free Bonds

PFC Tax Free Bonds Yield

PFC Tax Free Bonds Yield

About the PFC Tax Free Bonds Issue:

Issue Opens On:               Monday, October 14, 2013

Issue Closes On:               Monday, November 11, 2013

Minimum Application:  Rs.5000 (5 Bonds)

In terms of Regulation 4(2)(d) of the Debt Regulations, the company will undertake this public issue of the Bonds in dematerialised form. However, in terms of section 8(1) of the Depositories Act,1996, the Company, at the request of the Investors who wish to hold the Bonds in physical form will fulfill such request. However, trading in Bonds shall be compulsorily in dematerialized form.The Company has received approval to issue securities in physical form vide SEBI’s letter dated September 24, 2013.

Source: Shelf Prospectus and Prospectus Tranche – I Dated October 5, 2013

About the Issuer (Power Finance Corporation Limited):

  • Listed government company and public financial institution providing comprehensive range of financial products and related advisory services from project conceptualization to post-commissioning stage for clients in the power sector
  • Registered with RBI as a non-deposit taking systemically important NBFC classified as an IFC in July 2010
  • Conferred with “Mini Ratna” (Category – I) status in 1998 and notified as a Navratna company by the GoI in 2007
  • PFC is an integral part of, and continues to play a strategic role in, GoI’s initiatives for development of power sector in India

Strengths of Power Finance Corporation

  • Comprehensive range of financial products and related advisory services
  • Strategic role in GoI initiatives and established relationships with power sector participants
  • Operational flexibility to capitalize on both fundraising and lending opportunities
  • Favorable credit rating and access to various cost-competitive sources of funds
  • Comprehensive credit appraisal and risk management policies and procedures
  • Track record of consistent financial performance and growth
  • Experienced and committed management and employee base with in-depth sector expertise

Financial performance of Power Finance Corporation (5 years)

  • Total loan assets increased from INR 64428.99 crores as of March 31, 2009 to  INR 160366.60 crores as of March 31, 2013
  • Total income increased from INR 6583.54 crores as of March 31, 2009 to INR 17272.55 crores as of March 31, 2013
  • Profit after tax increased from INR 1969.96 crores as of March 31, 2009 to INR 4419.60 crores as of March 31, 2013
  • Gross NPAs of INR 13.16 crores,  13.16 crores,  230.65 crores,  1,358.47 crores and 1134.52 crores as of March 31, 2009, 2010, 2011, 2012 and 2013, respectively, which represented 0.02%, 0.02%, 0.23%, 1.04% and 0.71% of our total loan assets, respectively, as of such dates
  • Net worth as of March 31, 2013 was INR 22351.41 crores
  • Capital adequacy ratio was 15.71%, 16.29% and 17.98% as of March 31, 2011, 2012 and 2013, respectively

Tax Benefits of the PFC tax Free Bonds

  • The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income
  • No deduction of tax at source (TDS) from the interest, which accrues to the bondholders in these bonds irrespective of the amount of the interest or the status of the investors
  • No upper limit on investment amount
  • No lock in period for the Bonds
  • The Bonds shall be listed and can be traded on BSE
  • Wealth Tax is not levied on investment in Bond under section 2(ea) of the Wealth-tax Act, 1957
  • However, no deduction from the total income will be available for invested amount

Disclaimer: “Invest only on the basis of Prospectus”