IDFC Ltd. - Primary Issue - Term Sheet

Primary issue of Private Placement Bond  of  IDFC Ltd.

Issuer	IDFC Ltd. (IDFC OPP 2 2013)
Issue Size	Rs. 50 crores plus greenshoe
Instrument	Secured Redeemable Non-Convertible Debentures
Seniority	First pari-passu
Credit Rating	"ICRA (AAA)" from ICRA and "IND AAA" from India Ratings
Face Value/Issue Price	10,00,000/- per Bond
Minimum Application Size	1 Bond (One Bond) in  multiples of One Bond thereafter
Tenor	5 years  from the Deemed date of Allotment
Put/Call Option	NA
Coupon Rate	9.00% (Annual)
Interest Frequency	January 24, 2014, January 24, 2015, January 24, 2016, January 24, 2017, January 24, 2018
Redemption	25% of Face Value on January 24, 2015 25% of Face Value on January 24, 2016 25% of Face Value on January 24, 2017 25% of Face Value on January 24, 2018
Interest on application money	The Interest on Application shall be paid from the date of realization of the funds upto one day prior to the Deemed Date of Allotment. For further details please refer to the section "Interest on Application Money" " in the Shelf Disclosure Document.
Eligible Investors	Registered Pension Fund, Registered Provident Fund, Registered  Superannuation Fund or Registered Gratuity Fund and or any other person(s) who are authorized to invest (subject to confirmation from the Issuer) and who are specifically addressed through direct communication by or on behalf of the Company are eligible to apply for the Debentures. An application ,made by any other person will be deemed as an invalid application and rejected. Note: Each of eligible investor(s) is required to check and comply with extant rules/regulations/ guidelines, etc. governing or regulating their investments as issued by their respective regulatory authorities, and the Company is not, in any way, directly or indirectly, responsible for any statutory or regulatory breaches by any investor, neither is the Company required to check or confirm the same.

Listing	Proposed on the NSE. The Issue will be listed on Wholesale Debt Market Segment on the NSE within 15 Days from the Deemed Date of Allotment
Issue Opening Date	January 01, 2013
Issue Closing Date	January 21, 2013
Pay in Date	January 01, 2013 to January 21, 2013
Deemed Date of Allotment	January 24, 2013

As tax-free bonds flop, PSUs turn to private placements-FE

Unable to raise money through tax-free bonds, public sector entities are turning to private placements, hoping to raise close to R50,000 crore through corporate bonds. As a result, bond sales in the January-March quarter could cross R1 lakh crore, with insurance companies, banks and provident funds as buyers.

Retail and high net worth investors have shunned tax-free offerings thanks to unattractive yields. 

Merchant bankers said Indian Railway Finance Corporation (IRFC) has already started the process. “IRFC has been talking to large investors because they know tax-free bonds don’t have any takers,” said a merchant banker with a leading private bank. Rural Electrification Corporation (REC) fell short of its aim to raise R4,500 crore through tax-free bonds, attracting just R2,100 crore earlier this month. Power Finance Corporation (PFC), which launched its tax-free bond offer after REC, had to extend the closing date by a week till Thursday. PFC has received just around R670 crore worth of bids so far, a merchant banker said. 

Merchant bankers said the IIFCL offer that opened on Wednesday and the Hudco bonds expected in January, may fare even worse. 

Hudco can raise around Rs 10,000 crore while IIFCL is targetting Rs 9,200 crore. 

How proposed PF rule may cut your take-home salary

The recent EPFO circular, stating that certain allowances must also be added to the while computing the contribution, could upset millions of household budgets if it were to be enforced. On the face of it, this looks good for employees because a higher amount will flow into their PF accounts every month. However, the employers, who are supposed to match the contribution, may not want to absorb the rise in the wage bill. They are likely to rejig the compensation structure to ensure that the cost to company doesn't go up. ET Wealth estimates that the average salaried person could see his take-home pay dip by 6-8% if the revised interpretation of rules is implemented (see graphic).

Currently, 12% of an employee's basic salary is deducted from his income and put in the EPF by his employer. The company also contributes a matching sum on behalf of the employee. However, last year, the Madras high court and the Madhya Pradesh high court held that the various allowances paid to employees should also be considered while computing the PF contribution. Last month, the EPFO issued a circular, stating that the base figure for calculating the PF contribution must include many of the allowances given to the employee.

Government to review EPF circular on salary, allowances

You can breathe easy with the government reviewing a circular issued by the Employee Provident Fund Organization (EPFO) that had asked employers to deduct the subscription from the gross salary, including allowances, a move that would have reduced the take-home salary of over 5 crore workers.

A senior labour ministry official said there was a "rethink" on the circular that was issued on November 30, although a final decision is yet to be taken.

The official added that the circular did not actually change the rules and had not clarified which allowances needed to be included in the calculation of basic wage. The circular was meant to ensure that employers did not shirk their responsibility, the official added.