HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED
Public Issue of Tax Free Bonds - FAQs
1)Brief about HUDCO?
HUDCO is a techno-financial institution engaged in the financing and promotion of housing and urban infrastructure projects throughout India. It was established on April 25, 1970 as a wholly owned government company with the objective to provide long term finance and undertake housing and urban infrastructure development programmes.
2)How hasHUDCO’s business grown in last few years?
HUDCO has an established track record of consistent financial performance and growth:
HUDCO’s total long term loan and advances increased from Rs.16,482.25 crores as of March 31, 2009 to Rs. 19,111.64crores as of September 30, 2012.
HUDCO’sprofit after tax (PAT) increased from Rs.400.99 crores as of March 31, 2009 to Rs.630.33crores as of September 30, 2012.
HUDCO had gross NPAs of Rs.1,227.60croresand Rs.1518.25 croresas of March 31, 2011 and 2012, respectively, which represented 5.46%, and 6.07% of HUDCO’s total loan assets, respectively, as of such dates. Gross NPA for September 30, 2012 was Rs. 2397.79crores, which represented 9.55% of HUDCO’s total loan assets as of September 30, 2012.
HUDCO’s net worth as of September 30, 2012 was Rs. 6,220.89crores.
HUDCO’sTier I capital adequacy ratio was41.51%, 39.81% and 31.37% as of March 31, 2010, 2011 and 2012, respectively. As of September 30, 2012, HUDCO’s capital adequacy ratio was 34.81%
3)Please tell us about HUDCO’s resource mobilisation
HUDCO’s primary sources of funds include internal resources and domestic and foreign borrowings. HUDCO’s borrowings reflect various sources, maturities and currencies, and include bonds and term loans,
As on 30th September, 2012 Rs.Crore
Mode of Financing / Amount Sanctioned/ Raised / Amount OutstandingDebt raised from the domestic market
Secured Term Loan / 150.00 / 93.75
Secured Rupee Bonds / 5,000.00 / 5,000.00
Unsecured Rupee Bonds
- Taxable
- Tax Free
Special Priority Sector Bonds / 81.55 / 64.85
Refinance Assistance from National Housing Bank / 500.00 / 481.00
HUDCO Gujarat Punarnirman Special tax free bonds / 78.5 / 73.5
Loan from Government of India / 52.96 / 52.96
Loan from financial institutions / 83.00 / 5.53
Loan From Banks / 9390.00 / 4011.39
Loan against fixed deposit receipts from banks / 104.67 / 104.67
Public deposits/Interest bearing cash securities / 1192.39 / 1192.39
Loans in foreign currency
- The Overseas Economic Cooperation Fund, Japan (now called Japan Bank of International Cooperation)
- Asian Development Bank
- U.S. Capital Markets
HUDCO has outstanding secured borrowings of Rs. 5,747.87 crores and unsecured borrowings of Rs.11,572.97crores, as on September 30, 2012
Rupee resources
HUDCO’s primary sources of funds are Rupee-denominated bonds and term loans availed in India.
A significant percentage of the Rupee-denominated borrowings are raised through the issuance of privately placed bonds in India. As of September 30, 2012, HUDCO had outstanding borrowings aggregating Rs.10,342.5crores in the form of bonds and Rs.4,268.1 crores in the form of term loans from Indian banks and financial institutions.
4)What is the intended use of proceeds?
The funds proposed to be raised through the Issue shall be utilized towards lending purposes, working capital requirements, augmenting the resource base of our Company and other operational requirements (including debt servicing, which includes servicing of both the principal amounts as well as interest payments of various debt facilities availed by the Company in the past and currently outstanding in its books of accounts, including loans and market borrowings).
5)What are the Issue details?
It is a Public Issue by Housing and Urban Development Corporation Limited (“Company” or the “Issuer”) of tax free bonds of face value of Rs.1,000.00 each in the Nature of secured, redeemable, non-convertible debentures, having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961, as Amended (“Bonds”) aggregating up to Rs.750.00 crores (“Issue”) with an option to retain an oversubscription up to the shelf limit (i.e. Rs.5000.00 crore). This issue is being offered by way of this prospectus tranche- I which contains, inter alia, all terms and conditions of The tranche- I (the “Prospectus Tranche- I”), which should be read together with the Shelf Prospectus dated December 13, 2012 filed With the NSE and SEBI (the “Shelf Prospectus”). The Shelf prospectus, together with the Prospectus Tranche –I shall constitute “the Prospectus”
In addition to the tranche(s) of public issue, our Company may also raise Bonds on a private placement basis in one or more tranches during the process of the present Issue,not exceedingRs. 1,250 crores, i.e. upto 25% of the allocated limit for raising funds through the Bonds during the Fiscal 2013, at its discretion. Our Company shall ensure that Bonds issued through the public issue route and privateplacement route shall together not exceedRs. 5,000 crores. In case our Company raises funds through private placements during the process of the present Issue, the Shelf Limit for the Issue shall get reduced by such amount raised.
6)What is the Issue Structure?
Option / Tranche 1 Series 1 / Tranche I Series 2Tenor / 10 years from the Deemed Date of Allotment / 15 Years from the Deemed Date of Allotment
Frequency of Interest Payment / Annual / Annual
Minimum Application / Five Bonds (Rs. 5000) across both series
In Multiples of / One Bond (1000)
Face Value/ Issue Price ( per NCD) / Rs. 1,000/-
Coupon (%) per annum - Category I , II and III / 7.34% / 7.51%
Coupon (%) per annum - Category IV * / 7.84% / 8.01%
Put and Call Option / None / None
Coupon Payment Date / First Coupon: The date, which is the day falling one year from the Deemed date of allotment
Subsequent Coupons: Same date every year, until redemption date
Trading lot / 1 bond
Redemption Amount (per NCD) / Repayment of the face value along with any interest that may have accrued at the Redemption Date
Utilization of Issue Proceeds / The issue proceeds shall be utilized towards lending purposes, working capital requirements, augmenting the resource base of our Company and other operational requirements (including debt servicing, which includes servicing of both the principal amounts as well as interest payments of various debt facilities availed by the Company in the past and currently outstanding in its books of accounts, including loans and market borrowings)
7)What is the minimum application size?
The minimum number of bonds per application form will be five (5) amounting to Rs. 5,000/- (for all Series of bonds either taken individually or collectively) and in multiples of Rs. 1,000/- thereafter calculated on the basis of the total number of bonds applied for under each such Application Form and not on the basis of any specific option
8)What is the issue Schedule?
Issue will open on January 9,2013and will close on January 22, 2013.Applications will be accepted during banking hours only.
The Issue shall remain open for subscription from 10:00 a.m to 5:00 p.m. (Indian Standard Time) for the period indicated above, except that the Issue may close on such earlier date (such early closure being subject to the Category IV Portion being fully subscribed prior to such early closure) or extended date as may be decided by the Board or the a duly constituted committee thereof, subject to necessary approvals. In the event of an early closure or extension of the Issue, HUDCO shall ensure that notice of the same is provided to the prospective investors through an advertisement in a reputed daily national newspaper on or before such earlier or extended date of Issue closure.
9)Whether Bonds are secured by fixed charge or floating charge?
The Bonds proposed to be issued are secured by a charge on the book debts of the Companyand/ or identified immovable property by a first/ paripassu charge, as may be agreed between the Company and the Debenture Trustee
10)Who can apply for these Bonds ?
Category I:
- Public Financial Institutions, scheduled commercial banks, multilateral and bilateral development financial institutions, state industrial development corporations, which are authorised to invest in the Bonds;
- FIIs and their sub – accounts (other than a sub-account which is a foreign corporate or foreign individual), registered with SEBI
- Provident funds and pension funds with minimum corpus of Rs. 25 crores, which are authorised to invest in the Bonds;
- Insurance companies registered with the IRDA;
- National Investment Fund;
- 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;
- Mutual funds; and
- Alternative Investment Funds, subject to investment conditions applicable to them under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
Category II:
Companies within the meaning of section 3 of the Companies Act and bodies corporate registered under the applicable laws in India and authorised to invest in the Bonds.
Category III:
The following investors applying for an amount aggregating to above Rs.10 lakhs across all Series of Bonds in the Issue:
- Resident Indian individuals;
- Eligible NRIs on a repatriation or non – repatriation basis; and
- Hindu Undivided Families through the Karta.
Category IV:
The following investors applying for an amount aggregating upto and including Rs.10 lakhs across all Series of Bonds in the Issue:
- Resident Indian individuals; and
- Eligible NRIs on a repatriation or non – repatriation basis; and
- Hindu Undivided Families through the Karta.
Participation of any of the aforementioned categories of persons or entities is subject to the applicable statutory and/or regulatory requirements in connection with the subscription to Indian securities by such categories of persons or entities.
An FII and Eligible NRI is not (i) based in the United States of America (“USA”), and/or, (ii) domiciled in the USA, and/or, (iii) residents/citizens of the USA, and/or, (iv) subject to any taxation laws of the USA.
11)Who are not eligible to apply for these Bonds?
a)Minors without a guardian name (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)
b)Foreign nationals who are (i) based in the USA, and/or, (ii) domiciled in the USA, and/or, (iii) residents/citizens of the USA, and/or, (iv) subject to any taxation laws of the USA
c)Overseas Corporate Bodies;
d)Indian Venture Capital Funds;
e)Foreign Venture Capital Investors;
f)Qualified Foreign Investors;
g)Co-operative societies;
h)Regional rural banks;
i)Societies;
j)Public/private charitable/ religious trusts;
k)Scientific and industrial research organizations;
l)Partnership firms;
m)Limited liability partnerships;
n)Persons ineligible to contract under applicable statutory/ regulatory requirements; and
o)Categories of Investors who have not been specifically mentioned as eligible Investors under Categories I, II, III and IV.
In case of Applications for Allotment of the Bonds in dematerialised form, the Registrar shall verify the above and the Categories on the basis of the records provided by the Depositories based on the DP ID and Client ID provided by the Applicants in the Application Form and uploaded onto the electronic system of BSE by the Members of the Syndicate or the Trading Members, as the case may be.
12)Can any applicant apply for a physical form?
The bonds can be applied in dematerialised form as well as in physical form, at the option of Applicants. The Allotment of the Bonds shall be in a dematerialised form as well as physical form.
Please note that Investor’s cannot apply for the Bonds through the ASBA process if they wish to be Allotted the Bonds in physical form.
13)Are there additional instructions specific for applicants seeking allotment of the bonds in physical
Any Applicant who wishes to subscribe to the Bonds in physical form shall undertake the following steps:
- Please complete the Application Form in all respects, by providing all the information including PAN and Demographic Details. However, do not provide the Depository Participant details in the Application Form. The requirement for providing Depository Participant details shall be mandatory only for the Applicants who wish to subscribe to the Bonds in dematerialised form.
- Please provide the following documents along with the Application Form:
(a)Self-attested copy of the PAN card;
(b)Self-attested copy of your proof of residence. Any of the following documents shall be considered as a verifiable proof of residence:
- ration card issued by the GoI; or
- valid driving license issued by any transport authority of the Republic of India; or
- electricity bill (not older than three months); or
- landline telephone bill (not older than three months); or
- valid passport issued by the GoI; or
- voter’s identity card issued by the GoI; or
- passbook or latest bank statement issued by a bank operating in India; or
- registered leave and license agreement or agreement for sale or rent agreement or flat maintenance bill; or
- Aadhaar letter issued by the Unique Identification Authority of India (UIDAI).
- Self-attested copy of a cancelled cheque of the bank account to which the amounts pertaining to payment of refunds, interest and redemption, as applicable, should be credited.
In absence of the cancelled cheque, HUDCO may reject the Application or it may consider the bank details as given on the Application Form at its sole discretion. In such case the Company, Lead Managers and Registrar shall not be liable for any delays/ errors in payment of refund and/ or interest
In relation to the issuance of the Bonds in physical form, please note the following:
- An Applicant has the option to seek Allotment of Bonds in either dematerialised or physical mode. No partial Application for the Bonds shall be permitted and is liable to be rejected.
- In case of Bonds that are being issued in physical form, HUDCO will issue one certificate to the holders of the Bonds for the aggregate amount of the Bonds for each of the Series of Bonds that are applied for (each such certificate a “Consolidated Bond Certificate”).
- Any Applicant who provides the Depository Participant details in the Application Form shall be Allotted the Bonds in dematerialised form only. Such Applicant shall not be Allotted the Bonds in physical form.
- HUDCOshall dispatch the Consolidated Bond Certificate to the address of the Applicant provided in the Application Form.
14)What are the documents/certificates that need to be filed along with the Application Form if investor is a Mutual Fund / Alternative Investments Funds / Scheduled Commercial Banks / Insurance Companies / Public Financial Institutions / companies and bodies corporate / provident funds and pension funds / National Investment Funds?
Applications by Mutual Funds
A mutual fund scheme cannot invest more than 15.00% of its NAV in debt instruments issued by a single company which are rated not below investment grade by a credit rating agency authorised to carry out such activity. Such investment limit may be extended to 20.00% of the NAV of the scheme with the prior approval of the board of trustees and the board of asset management company.
A separate Application can be made in respect of each scheme of an Indian mutual fund registered with SEBI and such Applications shall not be treated as multiple Applications. Applications made by the AMCs or custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which the Application is being made. An Applications Forms by a mutual fund registered with SEBI must be also accompanied by certified true copies of (i) its SEBI registration certificates (ii) the trust deed in respect of such mutual fund (ii) a resolution authorising investment and containing operating instructions and (iii) specimen signatures of authorized signatories. Failing this, HUDCO reserves the right to accept or reject any Application from a Mutual Fund for Allotment of the Bonds in whole or in part, in either case, without assigning any reason therefor.
Application by Scheduled Banks
Scheduled Banks can apply in this Issue based upon their own investment limits and approvals. Applications for Allotment of the Bonds by them must be accompanied by certified true copies of (i) a board resolution authorising investments; and (ii) a letter of authorisation. Failing this, HUDCO reserves the right to accept or reject any Application for Allotment of the Bonds in whole or in part, in either case, without assigning any reason therefor.
Application by Insurance Companies
In case of Applications made by an Insurance Company, a certified copy of its certificate of registration issued by IRDA must be lodged along with Application Form. The Applications must be accompanied by certified copies of (i) its Memorandum and Articles of Association; (ii) a power of attorney (iii) a resolution authorising investment and containing operating instructions; and (iv) specimen signatures of authorized signatories. Failing this, HUDCO reserves the right to accept or reject any Application for Allotment of the Bonds in whole or in part, in either case, without assigning any reason therefor.
Applications by Alternative Investments Funds
Applications made byan Alternative Investments Fundeligible to invest in accordance with the Securities and Exchange Board of India (Alternate Investment Funds) Regulations, 2012, for Allotment of the Bonds must be accompanied by certified true copies of:(i) the SEBI registration certificate of such Alternative Investment Fund;(i) a resolution authorising the investment and containing operating instructions; and (ii) specimen signatures of authorised persons. Failing this, HUDCO reserves the right to accept or reject any Applications for Allotment of the Bonds in whole or in part, in either case, without assigning any reason thereof.
Alternative Investment Funds applying for Allotment of the Bonds shall at all time comply with the conditions for categories as per their SEBI registration certificate and the Securities and Exchange Board of India (Alternate Investment Funds) Regulations, 2012.
Applications by Public Financial Institutions which are authorized to invest in the Bonds
Applications by Public Financial Institutions for Allotment of the Bonds must be accompanied by certified true copies of: (i) any Act/rules under which such Applicant is incorporated; (ii) a resolution of the board of directors of such Applicant authorising investments; and (iii) specimen signature of authorized persons of such Applicant. Failing this, HUDCO reserves the right to accept or reject any Applications for Allotment of the Bonds in whole or in part, in either case, without assigning any reason therefor.
Applications made by companies and bodies corporate registered under applicable laws in India