Issue Opens on: January 10, 2012
Issue Closes on: February 11, 2012
• L&T Infrastructure Finance Company Limited
Public Issue of Long Term Infrastructure Bondsu/s 80 CCF of Income Tax Act, 1961
2012 A Series
Infra Project Finance Structured Products Financial Advisory Services
• 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".
Disclaimer
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
Infra Project Finance Structured Products Financial Advisory Services
Infrastructure Sector - Overview
Infra Project Finance Structured Products Financial Advisory Services
Growing Infra Investments . . but still a long way to go
Sectoral Infrastructure Investments(Rs. in trillion)
2008 2009 2010 20110
1
2
3
4
5
6
7
8
9
10
GDP Growth Rate (%)
Electricity Roads Telecom Ports Others0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
3.40
1.271.02
0.23
3.14
6.59
2.79
3.45
0.41
7.31
Tenth Plan Eleventh Plan
Economic Growth
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• 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
Infrastructure Sector – Strong potential
Strong Infrastructure Base Engine for Accelerated Economic Growth
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L&T Infra – The Issuer
Infra Project Finance Structured Products Financial Advisory Services
• 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
L&T Infra – Overview
Classified as Infrastructure Finance Company (IFC) by RBI in July 2010 & Notified as Public Financial Institution by Ministry of Corporate Affairs in June, 2011.
Infra Project Finance Structured Products Financial Advisory Services
• 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)
L&T Infra – Overview (Contd…)
Classified as Infrastructure Finance Company (IFC) by RBI in July 2010 & Notified as Public Financial Institution by Ministry of Corporate Affairs in June, 2011.
Infra Project Finance Structured Products Financial Advisory Services
L&T Infra – Board of Directors
Name Experience
Y.M. DeosthaleeDirector
CMD of L & T Finance Holding Company Ltd. Erstwhile Member of the Board and CFO of L&T Instrumental in promoting L&T’s Financial Services business Served as a member of Government and SEBI Committees
N. SivaramanDirector
Heads the Financial Services business of L&T Wide experience in L&T group with varied responsibilities Played key role in structuring demerger of L&T’s cement
business
B.V. BhargavaIndependent Director
Director of CRISIL Ltd and Chairman of its Rating Committee Three decades of experience in development banking &
project finance Served as Vice Chairman & MD of ICICI
Dr. R.H. PatilIndependent Director
Chairman of Clearing Corporation of India Ltd Instrumental in setting up the NSE & NSDL Served as Chairman/Member of various Government, RBI &
SEBI Committees
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L&T Infra – Key Managerial Personnel
Name Experience
Suneet K. Maheshwari
Chief Executive & Manager
Heading L & T Infra since inception. Over 30 years of experience in infrastructure finance,
investment banking, corporate finance and private equity An active member of various state and central chambers of
commerce focusing on infrastructure sector policies and PPP matters.
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L&T Infra – Products and Services
• Senior Debt Products: Term Loans, Debentures, Securitized Debt
• Mezzanine Debt Products: Sub-Debt, CCD, and Preference Shares
Project Finance
• Equity Capital • Convertible Preference Capital • Hybrid Debt
Equity Investment
• Corporate and Project Advisory• Debt Advisory and Debt Arranging• Capital raising & Strategic Advisory
Financial Advisory Services
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L&T Infra – Industry & Sector Focus
Power•Generation•Transmission•Distribution
Roads•Construction and Development•Operation•Maintenance
Telecom•Passive Infrastructure•Telecommunications and
Broadband
Ports•Greenfield Construction•Expansion and Modernization
Other Sectors•Urban Infrastructure•Water and Sanitation•Logistics•SEZs
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L&T Infra – Industry & Sector Focus (Contd…)
Others, 35.07%
Telecom, 11.80%
Roads, 14.91%
Power, 36.82%
Ports, 1.39% Telecom,
14.30%
Roads, 7.63%
Power, 56.93%
Others, 20.49%
Ports, 0.65%
Total Infrastructure Loans(as on Sept 30, 2011)
Total = Rs. 8,790.34 Crores
Total Disbursements(for the six months ended Sept 30, 2011)
Total = Rs. 2,846.57 Crores
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L&T Infra – Financial Performance
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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-0818-Apr-06 to Jun-
07Balance Sheet Items
Equity capital 7,271.50 7,021.50 6,834.00 5,000.00 5,000.00 2,430.00Net worth
14,865.39 12,348.9410,125.6
86,266.11 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
Infrastructure Loans (1)
87,680.69 71,654.9042,554.3
922,583.47 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 51.73Provision & Contingencies
52.12 57.85 253.60 77.00 0.00 0.00Profit after Tax
1342.84 2008.27 1108.57 764.59 451.68 49.84Note:
1. Total Infrastructure Loans net of provisions
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L&T Infra – Financial Overview
Period from Jul-07 to Mar-08
FY 2009 FY 2010 FY 2011 Period from Apr to Sept-
11
0.001,000.002,000.003,000.004,000.005,000.006,000.007,000.008,000.00
1,103.24
2,959.89
4,504.23
7,039.75
5,409.26
Total Income (Rs. mn)
Period from Jul-07 to Mar-08
FY 2009 FY 2010 FY 2011 Period from Apr to Sept-
11
0
500
1000
1500
2000
2500
451.7764.6
1108.6
2008.3
1342.8
Profit after Tax (Rs. mn)
As at March'08
As at March'09
As at March'10
As at March'11
As at Sept'11
0.0010,000.0020,000.0030,000.0040,000.0050,000.0060,000.0070,000.0080,000.0090,000.00
100,000.00
18,331.8122,583.47
42,554.39
71,654.9087,903.43
Net Loans Portfolio (Rs. mn)
As at March'08
As at March'09
As at March'10
As at March'11
As at Sept'11
0.002,000.004,000.006,000.008,000.00
10,000.0012,000.0014,000.0016,000.00
5,489.50 6,266.11
10,125.6812,348.94
14,865.39
Networth (Rs. mn)87,680.69
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Long Term Infrastructure Bonds
Infra Project Finance Structured Products Financial Advisory Services
Infra Bonds u/s 80 CCF of IT Act
Purpose Government’s new initiative to channelize long-term savings of
retail investors into infrastructure sector - with tax benefits to investors
Eligible Issuers
IFCs & select other Institutions notified by the Government They are eligible to issue Infra Bonds up to 25% of
incremental infrastructure investments made during FY 2010-11
Tax Benefit
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
Eligible Investors
Resident Indian Individuals & HUFs
Investments up to Rs. 20,000 in Infra Bonds eligible for deduction from taxable income for FY 2011-12
Maturity period
Liquidity Bonds will be listed on BSE. Investors can exit through
secondary market after the initial 5 year lock-in periodIn 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
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Infra Project Finance Structured Products Financial Advisory Services
Issue Structure Highlights
Issue Schedule : January 10, 2012 to February 11, 2012
Issuer L&T Infrastructure Finance Company Limited (L&T Infra)
Issue DetailsPublic Issue of Long Term Infrastructure Bonds in the nature of Secured, Redeemable, Non Convertible Debentures, having benefits under Section 80 CCF of the Income Tax Act
Eligible Investors
Resident Indian Individuals and HUFs
Size
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 amount received against the allotment of Tranche 1 bonds i.e. approximately Rs. 530 crore
SecurityExclusive first charge on specific receivables and mortgage/charge on the leasehold rights of specific property
Security Cover 1 time
Rating ‘CARE AA+’ by CARE Ratings; ‘[ICRA] AA+’ by ICRA Ratings
Face Value and Min. Application
Rs. 1,000 each. Minimum application for 5 (Five) Bonds and in multiples of 1 (One) Bond thereafter
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Instrument Options
Coupon Coupon Payment
Tenor Buyback Option
Series 1 8.70% p.a. Annual 10 years
At the end of 5 years and 7
years
Series 2 8.70% p.a.compounded annually
Cumulative 10 years
At the end of 5 years and 7
years
Issue Structure Highlights
Issue Schedule : January 10, 2012 to February 11, 2012
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Issue Structure Highlights
Maturity / Redemption 10 years from the Date of Allotment
Lock in period 5 years from the Date of Allotment
Listing Bombay Stock Exchange of India (BSE) - Can be traded after 5 year lock-in period
Issuance & Trading
• In Dematerialised and Physical Form*• Trading in Dematerialised form only
Depository NSDL and CDSL
Date of Allotment
The date on which the Board / Committee of Directors approves allotment of Bonds
Basis of Allotment First Come First Serve
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.
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Returns on Investment
Series 1 2
Interest Payment Annual Cumulative
Coupon Rate 8.70 % p.a.8.70 %
compounded annually
Buyback Date
First Working Day after 5 years from the Date of Allotment and first Working Day after 7 years
from the Date of Allotment
First Working Day after 5 years from the Date of Allotment and first Working Day after 7 years
from the 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 theend of 5 years
Buyback at theend of 7 years
Buyback at theend of 5 years
Buyback at theend 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%
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List of Intermediaries
Debenture Trustee
Registrar Sharepro Services (India) Private Limited
Legal Advisor to the Issuer
AZB & Partners
Legal Advisor to the Lead Managers
Krishnamurthy & Co.
Lead Managers
Co-Managers
Issue Schedule : January 10, 2012 to February 11, 2012
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Investment Considerations
Infra Project Finance Structured Products Financial Advisory Services
Investment Considerations
CARE AA+ by (CARE) & [ICRA] AA+ by (ICRA) 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 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.
Dual Credit Rating
Buyback Options
Strong Parentage
Wholly owned subsidiary of L&T Finance Holdings Limited, which is a subsidiary of Larsen & Toubro Limited (L&T - Rated ‘AAA’)
Buyback option available at the end of 5 years and at the end of 7 years for both Series
IssuanceBonds can be held in Physical or Dematerialized form
Returns• Coupon at 8.70% p.a.• Effective yields to investors under buy-back options
(with tax benefits) range from 10.40% to 18.75% p.a.
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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.
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Pre-TaxReturn
(%)
Post-TaxReturn (%)(1)
Cap on Initial
InvestmentTenor Liquidity
Bank Fixed Deposit (u/s 80C)(2) 17.77% 14.90% 1,00,000 5 years and above Low
National Savings Certificate
12.7% 9.65% N/A 7.5 years Low
Public Provident Fund(3) 17.25% 17.25% 1,00,000 15 years
No, but withdrawal allowed after 6 years
Mutual Funds Debt Scheme-FMP(4)
9.35%-9.65%
8.42%-8.69%
N/A One year Low
Infra Bond – L&T Infra(5) 18.75% 15.28% 20,000
10 years with option to buy back
after 5 yearsLow
Tax Free Bond – NHAI
11.87% 11.87% N/A 10 years Low
Comparative Return Landscape for Debt Securities
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 80C3. 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%
Thank You!!!