India Equity Research: Tax-Free Bonds issued by Rural Electrification Corporation

08 March 2012

Tax-Free Bonds issued by Rural Electrification Corporation

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We are pleased to present you the details of Tax-Free Bonds issued by Rural Electrification CorporationThe interest earned on these bonds is fully exempt from tax and there will be no deduction of tax at source from the interest, irrespective of the amount or the investors’ status. The bonds have been rated AAA by CRISIL, CARE & ICRA and carry an attractive tax-free coupon ranging between 7.93-8.32%. The pre-tax yield works out to around 12% (for corporates & retail investors in the highest tax bracket).

Bond Details:

Particulars	Details
Bond Structure	Tax Free, Secured, Redeemable, Non Convertible Bond
Tax Free Coupon	HNI & Corporates: 7.93% (10 Yr); 8.12% (15 Yr) Retail Investors: 8.13% (10 Yr); 8.32% (15 Yr)
Rating	“AAA” by CRISIL, CARE & ICRA
Face Value (per bond)	Rs.1000
Minimum Application	Rs.5,000
Issuance	In demat mode only
Listing	Proposed to be listed on BSE
Issue Opens On	March 06, 2012
Issue Closes On	March 12, 2012

Company Profile:

Rural Electrification Corporation Limited (REC), a Navratna Central Public Sector Enterprise under Ministry of Power, was incorporated on July 25, 1969 under the Companies Act 1956. REC a listed Public Sector Enterprise of Government of India had a net worth of Rs. 12,789 Crore as on 31.03.11. Its main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them

Financial Highlights:

(Rs. Cr)

FY Ending	2008-09	2009-10	2010-11
Total Income	4,931.28	6,707.60	8,495.26
Net Profit	1,272.08	2,001.42	2,569.92
Reserves	5,331.42	10,092.88	11,801.16