Mukesh Main Project Stated

8/2/2019 Mukesh Main Project Stated

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PROJECT REPORT ON

INFRASTRUCTURE BOND

SUBMITTED TO

UNIVERSITY OF MUMBAI

FOR ACADAMIC YEAR: 2011-2012

IN PARTIAL FULLFILLMENT FOR THE

REQUREMENT OF 5th

SEMESTER

B.COM FINANCIAL MARKET DEGREE

SUBMITTED BY

MUKESH N. SAROJ

ROLL NO: 24

VIVA COLLEGE OF ARTS, COMMERCE & SCIENCE VIRAR (W)


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DECLARATION

I hereby declare that the project titled INFRASTRUCTURE BOND is an original

work prepare by me and is being submitted to university of Mumbai in partialfulfilment of B.COM FINANCIAL MARKET degree for academic year 2011-2012.

To the best of my knowledge, this report has not been submitted earlier to this

university or to any other affiliated college for the fulfilment of BFM degree.

Signature:

Name: Mukesh N. Saroj

Roll no: 24

Exam seat no:

Place: VIVA College, Virar (w)

Date:


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ACKNOWLEDGEMENT

I Master MUKESH SAROJ from T.Y.B.COM FINANCE MARKET would like to pay

credits for all those who helped in making of this project & so I would like to thanks those

who influenced my project in order to achieve the desire results correctly.

The First & foremost part in accomplishment of in this project is our Principal

Dr.R.D.BHAGAT, Co-ordinator Prof, Prajakta Paranjape, and Guide

Prof. Vasanti Shenoy & teaching & non-teaching staff of Viva College. I would like to

pay the gratitude for their help without which it would have been impossible for me to

attain the desired performance level.

I would like to pay the gratitude for the help received by my parents & friend.

Lastly, I am thankful to all those who directly & indirectly helped in my project.


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INDEX

Sr.no TOPIC Pg.no

1 I

2 RISK FACTORS

3 COMPANY

4 LISTING

5 TERMS OF THE ISSUE

6 BRIEF PROFILE OF DIRECTORS OF THECOMPANY

7 COMPANY PROFILE

8 PTC INDIA LIMITED (PROMOTER)

9 PRODUCT & SERVICES

10 INVESTMENTS IN ENERGY VALUE CHAIN

11 INDUSTRY OUTLOOK

12 ORGANIZATION OF THE POWER INDUSTRY IN

INDIA

13 PROVIDERS OF FINANCE TO THE POWER

SECTOR IN INDIA

14 CAPITAL STRUCTURE OF THE COMPANY

15 CONCLUSION


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INTRODUCTION

This Information Memorandum (document/IM) is neither a Prospectus nor a Statement in

Lieu of Prospectus or an invitation to the Public to subscribe to the Infrastructure Bondsissued by PTC India Financial Services Limited (PFS) (the Issuer/ the Company) and is

prepared in accordance with Securities and Exchange Board of India (Issue and Listing of

Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878

dated June 06, 2008. This IM is not intended for distribution and is for the consideration of

the person to whom it is addressed and should not be reproduced / redistributed by the

recipient. It cannot be acted upon by any person other than to whom it has been specifically

addressed. Multiple copies hereof given to the same entity shall be deemed to be offered to

the same person. The securities mentioned herein are being issued strictly on a private

placement basis and this offer does not constitute a public offer/invitation. This Information

Memorandum is not intended to form the basis of evaluation for the potential investors

to whom it is addressed and who are willing and eligible to subscribe to these Infrastructure

Bonds issued by PFS. This IM has been prepared to give general information regarding PFS

to parties proposing to invest in this issue of Infrastructure Bonds and it does not purport to

contain all the information that any such party may require. PFS and the Arrangers do not

undertake to update this Information Memorandum to reflect subsequent events and thus it

should not be relied upon without first confirming its accuracy with PFS.

Potential investors are required to make their own independent valuation and judgment before

making the investment and are believed to be experienced in investing in debt markets and are

able to bear the economic risk of investing in the Bonds. It is the responsibility of potential

investors to have obtained all consents, approvals or authorizations required by them to make

an offer to subscribe for, and purchase the Bonds. Potential investors should not rely solely on

information in the Information Memorandum or by the Arrangers nor would providing of

such information by the Arrangers be construed as advice or recommendation by the Issuer or

by the Arrangers to subscribe to and purchase the Bonds. Potential investors also

acknowledge that the Arrangers do not owe them any duty of care in respect of their offer to

subscribe for and purchase of the Bonds. It is the responsibility of potential investors to also

ensure that they will sell these Bonds in strict accordance with this IM and other applicable

laws, and that the sale does not constitute an offer to the public within the meaning of the

Companies Act, 1956. Potential investors should also consult their own tax advisors on the


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tax implications of the acquisitions, ownership, sale and redemption of Bonds and income

arising thereon.

SECURITIES & EXCHANGE BOARD OF INDIA

This Disclosure Document has not been filed with Securities & Exchange Board of India

(SEBI). The Securities have not been recommended or approved by SEBI nor does SEBI

guarantee the accuracy or adequacy of this document. It is to be distinctly understood that this

document should not, in any way, be deemed or construed to have been cleared or vetted by

SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme

or the project for which the Issue is proposed to be made, or for the correctness of the

statements made or opinions expressed in this document. The issue of Bonds being

made on private placement basis, filing of this document is not required with SEBI. However,

SEBI reserves the right to take up at any point of time, with PFS, any irregularities or lapses

in this document.


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RISK FACTORS

(A) FORWARD-LOOKING STATEMENTS

While no forecasts or projections relating to the Companys financial performance are

included in this Information Memorandum, this document contains certain forward-looking

statements like intends/believes/expects and other similar expressions or variations of such

expressions. These statements are primarily meant to give Investors an overview of the

Companys future plans, as they currently stand. The Company operates in a highly

competitive, regulated and ever-changing business environment, and a change in any of these

variables may necessitate an alteration of the Companys plans. Further, these plans are not

static, but are subject t continuous internal review, and may be altered if the altered plans areperceived to suit the Companys needs better. Further, many of the plans may be based on one

or more underlying assumptions (all of which may not be contained in this Information

Memorandum) which may not come to fruition. Thus, actual results may differ materially

from those suggested by the forward-looking statement. The Company cannot be held liable

by estoppel or otherwise for any forward-looking statement contained herein. The Company

and all intermediaries associated with this Information Memorandum do not undertake to

inform Investors of any changes in any matter in respect of which any forward-looking

statements are made. All statements contained in this Information Memorandum that are not

statements of historical fact constitute forward-looking statements and are not forecasts or

projections relating to the Companys financial performance. All forward-looking statements

are subject to risks, uncertainties and assumptions that may cause actual results to differ

materially from those contemplated by the relevant forward-looking statement. Important

factors that may cause actual results to differ materially from the Companys expectations

include, among others:

General economic and business conditions in India;

The Companys ability to successfully implement its strategy and growth plans;

The Companys ability to compete effectively and access funds at competitive cost;

Changes in Indian or international interest rates;

The level of non-performing assets in its portfolio;

Rate of growth of its loan assets;

Potential mergers, acquisitions or restructurings and increased competition;


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Changes in tax benefits and incentives and other applicable regulations, including various

tax laws;

The Companys ability to retain its management team and skilled personnel;

Changes in laws and regulations that apply to NBFCs in India, including laws that impact

its lending rates and its ability to enforce its collateral; and

Changes in political conditions in India.

(These are only illustrative and not exhaustive)

By their nature, certain market risk disclosures are only estimates and could be materially

different from what actually occurs in the future. As a result, actual future gains or losses

could materially differ from those that have been estimated. Neither the Company nor any of

its Directors nor any of their respective affiliates have any obligation, or intent to update or

otherwise revise any statements reflecting circumstances arising after the date hereof or to

reflect the occurrence of underlying events, even if the underlying assumptions do not come

to fruition.

(B) PRESENTATION OF FINANCIALS AND USE OF MARKET DATA

Unless stated otherwise, the financial information used in this Information Memorandum is

derived from the Companys financial statements for the period April 1, 2009 to March 31,

2010, being the statutory year ended March 31, 2010 and prepared in accordance with Indian

GAAP and the Companies Act, 1956 as stated in the report of the Companys Statutory

Auditors, Price Waterhouse, Chartered Accountants (statutory auditors of the company for

financial year 2008- 09), included in this Information Memorandum. In addition to the

financial information for the financial year 2009-10, the financial information related to

audited accounts for the half year ended on September10 is also used and the same has been

audited by Companys Statutory Auditor for FY 2010-11, M/s Deloitte Haskins & Sells. The

Issuers fiscal year commences on April 01 and ends on March 31 of a particular year. Unless

stated otherwise, references herein to a Fiscal Year are to the Fiscal Year ended March 31 of

the reference year. Fiscal 2010 for instance, refers to the Fiscal year ended March 31, 2010.

In this Information Memorandum, any discrepancies in any table between the total and the

sum of the amounts listed are due to rounding off. Unless stated otherwise, macroeconomic

and industry data used throughout this Information Memorandum has been obtained from


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publications prepared by providers of industry information, Government sources and

multilateral institutions. Such publications generally state that the information contained

therein has been obtained from sources believed to be reliable but that their accuracy and

completeness are not guaranteed and their reliability cannot be assured. Although the Issuer

believes that industry data used in this Information Memorandum is reliable, it has not been

independently verified.

(C) INTERNAL/EXTERNAL RISK FACTORS

The following are the risks envisaged by the management, and Investors should consider the

following risk factors carefully for evaluating the Company and its business before making

any investment decision. Unless the context requires otherwise, the risk factors described

below apply to PTC India Financial Services Limited only. The risks have been quantified

wherever possible. If any one of the following stated risks actually occurs, the Companys

business, financial conditions and results of operations could suffer and therefore the value of

the Companys debt securities could decline. Note: Unless specified or quantified in the

relevant risk factors, the Company is not in a position to quantify the financial or other

implications of any risk mentioned herein below:


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INTERNAL RISK FACTORS

(a) Bond Redemption Reserve

No Bond Redemption Reserve is being created for issue of BONDs in pursuance of thisInformation Memorandum.

Management Perception: Creation of Bond Redemption Reserve is not required for the

propose issue of Bonds. The MCA vide General Circular No.9/2002; No. 6/3/2001-CL.V

dated April 18, 2002 has clarified that NBFCs need not create a Bond Redemption Reserve as

specified under section 117C of the Companies Act, 1956, in respect of privately placed

Bonds.

(b) Credit Risk

The Company carries the risk of default by borrowers and other counterparties.

Management Perception: Any lending and investment activity is exposed to credit risk

arising from the risk of repayment default by the borrowers and counterparties. The Company

has institutionalized a systematic credit evaluation process monitoring the performance of its

asset portfolio on a regular and continual basis to detect any material development, and also

constantly evaluates the changes and developments in sectors to which it has substantial

exposure. The Company also undertakes a periodic review of its entire asset portfolio with a

view to determine the portfolio valuation, identify potential areas of action and devise

appropriate strategies thereon. The Company follows a conservative provisioning and write-

off policy, which is in line with what is prescribed by the RBI.

(c) Contingent Liabilities

The Companys contingent liabilities could adversely affect its financial cond ition.

Management Perception: As on September 30, 2010, PFS had no contingent liabilities on

account of income-tax/interest-tax/sales-tax liabilities in respect of matters in appeal and bond

executed in respect of legal matters.

(d) Non-Performing Assets (NPA)

If the level of NPAs in the Companys portfolio were to increase, its business would suffer.

Management Perception: The Gross and Net NPAs of PFS as on September 30, 2010, were

zero respectively. PFS is fully complying with the RBI Guidelines/Directives in connection


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with the same. The Company believes that its overall financial profile, capitalization levels

and risk management systems, provide significant risk mitigation.

(e) Interest Rate Risk

The Companys business is largely dependent on interest income from its operations.

Management Perception: The Company is exposed to interest rate risk principally as a result

of lending to customers at interest rates and in amounts and for periods, funding sources

(institutional/bank borrowings and debt offerings). The Company seeks to match its interest

rate positions to minimize interest rate risk. Despite these efforts, there can be no assurance

that significant interest rate movements will not have an effect on its results of operations.

Interest rates are highly sensitive to many factors beyond its control, including the monetary

policies of the RBI, deregulation of the financial sector in India, domestic and international

economic and political conditions, inflation and other factors. Due to these factors, interest

rates in India have historically experienced a relatively high degree of volatility. Nevertheless

the endeavour of the Company will be to keep the interest rate risk at minimum levels by

proactively synchronizing resource rising and lending activities on an ongoing basis.

(f) Access to Capital Markets and Commercial Borrowings

The Companys growth will depend on its continued ability to access funds at competitive

rates.

Management Perception: With the growth of its business, the Company is increasingly

reliant on funding from the debt capital markets and commercial borrowings. The market for

such funds is competitive and its ability to obtain funds at competitive rates will depend on

various factors, including its ability to maintain its credit ratings. While its borrowing costs

have been competitive in the past due to its credit rating and the quality of its asset portfolio,

if the Company is unable to access funds at an effective cost that is comparable to or lower

than its competitors, the Company may not be able to offer competitive interest rates for its

loans. This may adversely impact its business, its future financial performance. The value of

its collateral may decrease or the Company may experience delays in enforcing its collateral

when its customers default on their obligations, which may result in failure to recover the

expected value of collateral and adversely affect its financial performance. The Company has

also filed its Draft Red Herring Prospectus with market regulator i.e. SEBI on December 22,

2010, for its proposed fund raising exercise through Initial Public Offering (IPO).


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(g) A ailment of foreign currency borrowings in the future, which will

expose Company to fluctuations in currency exchange rates, which could

adversely affect its business, financial condition and results of operations.While PFS currently do not have any foreign currency borrowings, it may avail foreign

currency borrowings in the future. As an IFC, PFS is eligible to raise external commercial

borrowings without prior RBI approval up to 50.00% of its Owned Funds and are likely to

avail significant external commercial borrowings in the future. In October 2010, the Company

has also entered into a loan agreement with Deutsche Infestations - und

Entwicklungsgesellschaft me H ("DEG") for an aggregate amount of U.S. $26 million for on-

lending to renewable energy projects and therefore may be exposed to fluctuations in currencyexchange rates in the future. Although PFS may enter into hedging transactions with respect

to its foreign currency borrowings, there can be no assurance that any such measure will be

effective or that PFS will enter into effective hedging with respect to any new foreign

currency borrowings. Volatility in currency exchange rates could adversely affect Companys

business, financial condition and results of operations and the price of its Equity Shares.

(h) Failure to recover the expected value of collateral when borrowersdefault on their obligations to Company may adversely affect its financial

performance.

As of September 30, 2010, all loans were secured by project assets. For debt provided on a

senior basis, PFS generally seek a first ranking pair passu charge on the project assets. For

loans provided on a subordinated basis, PFS generally seek to have a pari passu charge on the

project assets. Although we seek to maintain a collateral value to loan ratio of at least 1.25:1

for our secured loans, an economic downturn or other project risks could result in a fall incollateral values. Moreover, foreclosure of such collateral may require court or tribunal

intervention that may involve protracted proceedings and the process of enforcing security

interests against collateral can be difficult. Additionally, the realizable value of all collateral

in liquidation may be lower than its book value. PFS cannot guarantee that it will be able to

realize the full value of its collateral, due to, among other things, defects in the perfection of

collateral, delays on its part in taking immediate action in bankruptcy foreclosure

proceedings, stock market downturns, claims of other lenders, legal or judicial restraint andfraudulent transfers by borrowers. In the event a specialized regulatory agency gains


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jurisdiction over the borrower, creditor actions can be further delayed. In addition, to put in

place an institutional mechanism for the timely and transparent restructuring of corporate

debt, the RBI has devised a corporate debt restructuring system. Any failure to recover the

expected value of collateral security could expose PFS to a potential loss. Apart from the RBI

guidelines, PFS may be a part of a syndicate of lenders the majority of whom elect to pursue a

different course of action than the Company would have chosen. Any such unexpected loss

could adversely affect business, prospects, results of operations and financial condition.

EXTERNAL RISK FACTORS

(a) Material changes in Regulations to which the Company is subject could cause the

Companys business to suffer

Management Perception: NBFCs in India are subject to detailed supervision and regulation

by the RBI. NBFCs not accepting public deposits are exempt from most such provisions. The

Company is subject generally to changes in Indian law, as well as to changes in Government

regulations and policies and accounting principles. The RBI also requires the Company to

make provisions in respect of NPAs. The provision made is equal to or higher than that

prescribed under the prudential norms. Any changes in the regulatory framework affecting

NBFCs including the provisioning for NPAs or capital adequacy requirements could

adversely affect the profitability of the Company or its future financial performance, by

requiring a restructuring of its activities, increasing costs or otherwise.

(b) Risk of competition in lending and resource raising could cause the Companys

business to suffer

Management Perception: PFS offers a financial products and services, such as Term Loans

and Bridge Loans, catering to varied cross section of customers. The management believes

that the Companys brand equity, reach and strategic alliances along with its resource base

would provide the necessary strength to perform well in a competitive market.

(c) A slowdown in economic growth in India could cause the Companys business to

suffer


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Management Perception: The Companys performance and the quality and growth of its

assets are necessarily dependent on the health of the overall Indian economy. A slowdown in

the Indian economy could adversely affect its business, including its ability to grow its asset

portfolio, the quality of its assets, and its ability to implement its strategy. Indias economy

could be adversely affected by a general rise in interest rates, or various other factors affecting

the growth of industrial, manufacturing and services sector or general down trend in the

economy.

Notes to Risk Factors:

Save, as stated elsewhere in this Information Memorandum, since the date of publishing

audited financial accounts contained in this Information Memorandum:

(a) No material developments have taken place that are likely to materially affect the

performance or prospects of the Company; and

(b) No developments have taken place in the last nine months which materially and adversely

affect the profitability of the Company or the value of its assets, or its ability to pay its

liabilities within the next 12 months.


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COMPANY

PTC India Financial Services Ltd (PFS or Issuer or Company) is offering for

subscription, on private placement basis, secured, redeemable, non-convertible Long Term

Infrastructure Bonds of the face value of Rs. 5,000/- each for cash at par with benefits under

Section 80CCF of the Income Tax Act, 1961 termed as PFS LONG TERM

INFRASTRUCTURE NON- CONVERTIBLE BONDS (INFRASTRUCTURE BONDs).

The minimum application shall be for 1 Bond of Rs. 5,000/- each and in multiples of 1 Bond

thereafter.

AUTHORITY FOR THE ISSUE

This issue is being made pursuant to the Resolution of the Board of Directors of the Company

passed at its meeting held on March 22, 2010 and the Committee of Directors for Bond

Issuance of the Company, passed at its Meeting held on January 27, 2011 and is made under

appropriate provisions of the Income Tax Act, 1961.

ISSUE SIZE

PFS (the Issuer or the Company) proposes to raise Rs. 30 Crore, with a green-shoeoption, to retain over-subscription by issuance of additional Infrastructure Bonds up to Rs. 70

Crore, in that case the total issue size may be up to Rs. 100 Crore, through issue of Secured,

Redeemable, Non-Convertible Long Term Infrastructure Bonds face value of Rs.5,000 each

for cash at par with benefits under section 80CCF of the Income Tax Act, 1961 termed as PFS

LONG TERM INFRASTRUCTURE BONDS - SERIES 1 (Infrastructure Bonds) by way of

private placement (the Issue). The allotment of Bonds will be made on First -cum-first serve

basis (as per records of Company) and Company will monitor the Issue collection on daily

basis. In case of over subscription of the issue, the applications received over and above of the

Issue size may be rejected or the Company may allot the entire application/s received on

Closing date through pro-rata basis or draw of lot or the Company may adopt any other mode

as may be deemed fit by the Company at its sole discretion so that the total Issue size could

not exceed Rs. 100 Crore.


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OBJECTS OF THE ISSUE

The proceeds shall be utilized towards infrastructure lending as defined by the Reserve Bank

of India in the Guidelines issued by it from time to time, after meeting the expenditures of,

and raised through this issue.

CREDIT RATING

Brickwork has assigned BWR AA (Pronounced Double A with Stable outlook) rating to

the Bonds of the Company aggregating to Rs. 100 Crores letter Ref No. BWR/BLR/RA/2010-

11/0274 on January 31, 2011. A copy of rating letter from Brickwork is enclosed elsewhere in

this Disclosure Document Instrument with this rating are considered to offer High Credit

quality in terms of timely payment of debt obligations. A copy of rating letter from Brickwork

is enclosed elsewhere in this Disclosure Document

ICRA has assigned LA+ (pronounced L A plus) rating to the Bonds of the Company

aggregating to Rs.100 crores letter Ref no. D/RAT/2010-11/P48/9 on February 3, 2011. This

rating is considered to offer adequate credit quality for timely servicing of debt obligations. A

copy of rating letter from ICRA is enclosed elsewhere in this Disclosure Document. Other

than rating mentioned hereinabove, the Company has not sought any other credit rating from

any other credit rating agency (ies) for the Bonds offered for subscription under the terms of

this Disclosure Document. The above ratings are not a recommendation to buy, sell or hold

securities and investors should take their own decision. The ratings may be subject to revision

or withdrawal at any time by the assigning rating agencies and each rating should be

evaluated independently of any other rating. The ratings obtained are subject to revision at

any point of time in the future. The rating agencies have the right to suspend, withdraw the

rating at any time on the basis of new information etc.


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LISTING

The Secured Redeemable Long Term Infrastructure Non-Convertible Bonds Series 1 of PFS

is proposed to be listed on the Wholesale Debt Market (WDM) Segment of the National Stock

Exchange of India Ltd. (NSE). The Company has obtained an in-principle approval from

the NSE for listing of said Bonds on its Wholesale Debt Market (WDM) Segment. The

Company the Bonds to be issued and allotted under this Disclosure Document and complete

all the formalities relating to listing of the Bonds within 70 days from the date of closure of

the Issue. If such permission is not granted within 70 days from the date of closure of the

Issue or where such permission is refused before the expiry of the 70 days from the closure of

the Issue, the Company shall forthwith repay without interest, all monies received from the

applicants in pursuance of the Disclosure Document, and if such money is not repaid within 8

days after the Company becomes liable to repay it (i.e. from the date of refusal or 70 days

from the date of closing of the subscription list, whichever is earlier), then the Company and

every director of the Company who is an officer in default shall, on and from expiry of 8

days, will be jointly and severally liable to repay the money, with interest at the rate of 15 per

cent per annum on application money, as prescribed under Section 73 of the Companies Act,

1956.

REGISTRAR

M/s Karvy Computershare Pvt Limited has been appointed as Registrar to the Issue. The

Registrar will monitor the applications while the private placement is open and will

coordinate the post private placement activities of allotment, dispatch of interest warrants etc.

Investors can contact the Registrar in case of any post-issue problems such as non receipt of

letters of allotment; demat credit, refund orders, interest on application money.

TRUSTEES

IDBI Trusteeship Services Limited has given its consent to act as the Trustee to the proposed

Issue and for its name to be included in this Information Memorandum. All remedies of the

Bond holder(s) for the amount due on the Bond will be vested with the Trustees on behalf of

the Bond holders. The holders of the Bond shall without any further act or deed be deemed to

have irrevocably given their consent to and authorised the trustees to do inter-alia, all acts,

deeds, and things necessary for servicing the Bond being offered including any payment by

the Company to the Bond holders / Bond Trustee, as the case may be, shall, from the time of


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making such payment, completely and irrevocably discharge the Company pro tanto from any

liability to the Bond holders..

FUTURE RESOURCE RAISING

PFS will be entitled to borrow/raise loans or avail financial assistance both from domestic and

international market as also issue Bonds/Equity Shares/Preference Shares/other securities in

any mannerhaving such ranking pari passu or otherwise and on terms and conditions as PFS

may think fit without theconsent of or intimation to Bond holders or Trustees in this

connection.

PERMISSION/ CONSENT FROM PRIOR CREDITORS

The Company hereby confirms that it is entitled to raise money through current issue of

Infrastructure Bonds without the consent/permission/approval from the Bond

holders/Trustees/ Lenders/other creditors of PFS. Further the Bonds proposed to be issued

under the terms of this Information Memorandum being secured there is no requirement for

obtaining permission/consent from the prior creditors.


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TERMS OF THE ISSUE

The following are the terms and conditions of Bonds being offered under this Information

Memorandum for an aggregate amount of up to Rs. 100 Crore for the financial year 2010-

2011.

1. STATUS OF THE BOND

The Infrastructure Bonds shall be non-convertible and secured. These bonds carry tax benefit

under section 80CCF of Income Tax Act, 1961 (up to a maximum of Rs.20, 000/- per

applicant) and these Long Term Infrastructure Bonds are being issued in terms of Notification

No. [48/2010/F No 149/84/2010-SO (TPL)] dated 09th July, 2010 issued by Central Board of

Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, and RBI

certificate no. N-14.03116 dated 23rd August 2010; a copy of the RBI certificate is annexed

to this Memorandum. In accordance with Section 80CCF of the Income Tax Act, 1961 the

amount, not exceeding Rs. 20,000 per annum, paid or deposited as subscription to Long-Term

Infrastructure Bonds during the previous year relevant to the assessment year beginning April

01, 2011 shall be deducted in computing the taxable income of a resident individual or HUF.

In the event that any Applicant subscribes to the Bonds in excess of Rs. 20,000, the foretasted

tax benefit shall be available to such Applicant only to the extent of Rs. 20,000. Eligible

investors can apply for up to any amount of the Bonds across any of the Series(s) or a

combination thereof. The investors will be allotted the total number of Bonds applied for in

accordance with the Basis of Allotment.

2. FORM

a) The allotment of the Bonds shall be made in physical and dematerialized form both. The

Company has made depository arrangements with National Securities Depository Limited

("NSDL") and Central Depository Services (India) Limited ("CDSL", and together with

NSDL, the "Depositories") for issue of the Bonds in a dematerialized form. The Company

shall take necessary steps to credit the Depository Participant account of the Applicants with

the number of Bonds allotted. b) In case of Bonds that are rematerialized and held in physical

form, the Company will issue one certificate to the Bond holder for the aggregate amount of

the Bonds that are rematerialized and held by such Bond holder (each such certificate a

"Consolidated Bond Certificate"). In respect of the Consolidated Bond Certificate(s), the

Company will, upon receipt of a request from the Bond holder within 30 days of such request,


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split such Consolidated Bond Certificates into smaller denominations, subject to a minimum

denomination of one Bond. No fees will be charged for splitting any Consolidated Bond

Certificates but, stamp duty, if payable, will be paid by the Bond holder. The request to split a

Consolidated Bond Certificate shall be accompanied by the original Consolidated Bond

Certificate which will, upon issuance of the split Consolidated Bond Certificates, be cancelled

by the Company.

3. FACE VALUE

The face value of each Bond is Rs. 5,000/-.

4. TITLE

In case of:

1. Bonds held in the dematerialized form, the person for the time being appearing in the

register of beneficial owners maintained by the Depository; and

2. the Bond held in physical form, the person for the time being appearing in the Register of

bondholders (as defined below) as Bond holder, shall be treated for all purposes by the

Company, the Bond Trustee, the Depositories and all other persons dealing with such person

as the holder thereof and its absolute owner for all purposes whether or not it is overdue and

regardless of any notice of ownership, trust or any interest in it or any writing on, theft or loss

of the Consolidated Bond Certificate issued in respect of the Bonds and no person will be

liable for so treating the Bond holder. No transfer of title of a Bond will be valid unless and

until entered on the Register of Bond holders or the register of beneficial owners maintained

by the Depository prior to the Record Date. In the absence of transfer being registered,

interest, Buyback Amount and/or Maturity Amount, as the case may be, will be paid to the

person, whose name appears first in the Register of Bond holders maintained by the

Depositories and/or the Company and/or the Registrar, as the case may be. In such cases,

claims, if any, by the purchasers of the Bonds will need to be settled with the seller of the

Bonds and not with the Company or the Registrar. The provisions relating to transfer and

transmission and other related matters in respect of the Company's shares contained in the

Articles of Association of the Company and the Companies Act shall apply, mutatis mutandis

(to the extent applicable) to the Bond (s) as well.


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5. LISTING

The Bonds are proposed to be listed on NSE.

6. NOMINATION

In accordance with Section 109A of Companies Act, 1956, the sole Bond holder or first

bondholder, along with other joint bondholders [being individual(s)] may nominate any one

person (being an individual) who, in the event of death of sole holder or all the joint holders,

as the case may be, shall become entitled to the Bond(s). Nominee shall be entitled to the

same rights to which he will be entitled if he were the registered holder of the Bond(s). Where

nominee is a minor, the Bondholders may make a nomination to appoint any person to

become entitled to the Bond(s), in the event of their death, during the minority. A buyer will

be entitled to make a fresh nomination in the manner prescribed. When the Bond is held by

two or more person, the nominee shall become entitled to receive the amount only on the

demise of all the Bond holders. The Bond holders are advised to provide the specimen

signature of the nominee to the company to expedite the transmission of Bond(s) to the

nominee in the event of demise of Bond holders. In dematerialized mode, there is no need tomake a separate nomination with the Company.

7. TRANSFER OF BONDs

a) Register of Bondholders: The Company shall maintain at its registered office or such

other place as permitted by law a register of Bondholders (the "Register of Bondholders")

containing such particulars as required by Section 152 of the Companies Act. In terms of

Section 152A of the Companies Act, the Register of Bondholders maintained by a Depositoryfor any Bond in dematerialized form under Section 11 of the Depositories Act shall be

deemed to be a Register of Bondholders for this purpose.

b) Lock in Period: In accordance with the Notification, the Bondholders shall not sell or

transfer the Bonds in any manner for a period of 5 years from the Deemed Date of Allotment

(the "Lock-in Period"). The Bondholders may sell or transfer the Bonds after the expiry of the

Lock-in Period on the stock exchange where the Bonds are listed. These Bonds can also be


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pledged, hypothecated or given on lien for obtaining loans from Scheduled Commercial

Banks after the lock-in period of five years.

c) Transmission of Bonds: However, transmission of the Bonds to the legal heirs in case of

death of the Bondholder / Beneficiary to the Bonds is allowed.

d) Transfer of Bonds held in dematerialized form: In respect of Bonds held in the

dematerialized form, transfers of the Bonds may be effected only through the Depository(ies)

where such Bonds are held, in accordance with the provisions of the Depositories Act, 1996

and/or rules as notified by the Depositories from time to time. The Bondholder shall give

delivery instructions containing details of the prospective purchaser's Depository Participant's

account to his Depository Participant. If a prospective purchaser does not have a Depository

Participant account, the Bondholder may rematerialize his or her Bonds and transfer them in a

manner as specified below. The transferee(s) should ensure that the transfer formalities are

completed prior to the Record Date. If a request for transfer of the Bond is not received by the

Registrar before the Record Date for maturity, the Maturity Amount for the Bonds shall be

paid to the person whose name appears as a Bondholder in the Register of Bondholders. In

such cases, any claims shall be settled inter se between the parties and no claim or action shall

be brought against the Company.

e) Succession: In the event of demise of the holder(s) of the Bonds, PFS will recognise the

executor or administrator of deceased bondholder, being an individual / HUF, or the holder of

the succession certificate or other legal representative, being an individual / HUF as having

title to the Bonds. PFS shall not be bound to recognise such executor, administrator, or holder

of succession certificate, unless such executor or administrators obtains probate or letter of

administration or such holder is the holder of succession certificate or other legalrepresentation, as the case may be, from a Court of India having jurisdiction over the matter.

PFS may at its absolute discretion, where it thinks fit, dispense with production of probate or

letter of administration or succession certificate or other legal representation, in order to

recognise such holder, being an individual / HUF as being entitled to the Bonds standing in

the name of the deceased bond holder(s) on production of documentary proof or indemnity.

All requests for registration of transmission along with requisite documents should be sent to

the Registrars.


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8. DEEMED DATE OF ALLOTMENT

The Deemed Date of Allotment shall be March 25, 2011. All benefits under the Bond

including payment of interest will accrue to the Bondholders from the Deemed Date of

Allotment.

9. SUBSCRIPTION

Issue opens on February 09, 2011

Issue closes on *March 15, 2011

* Issue date may be change at sole discretion of Company.

10. INTEREST

a) Annual Payment of Interest: For Option I (subject to buyback, as applicable) & Option

III Bonds, interest will be paid annually commencing from the Deemed Date of Allotment and

on the equivalent date falling every year thereafter.

b) Cumulative Payment of Interest: Interest on Option II & IV Bonds shall be

Compounded annually commencing from the Deemed Date of Allotment and shall be payableon the Maturity Date or the Buyback Date, as the case may be.

c) Day Count Convention: Interest shall be computed on a 365 days-a-year basis on the

principal outstanding on the Bonds. However, where the interest period (start date to end date)

includes February 29, interest shall be computed on 366 days-a-year basis, on the principal

outstanding on the Bonds.

d) Interest on Application and Refund Money: The Company shall not pay any interest on

refund of Application Amount, in whole or part. However, interest on Application Money, to

the extent of allotment of bonds, shall be paid on first interest payment date (i.e. 25 March

2012 for all options), from the date of credit of this money to the bank account of PFS to the

date immediately preceding the deemed date of allotment at the respective coupon rates.


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11. REFUND

In case of rejection of the application on account of technical grounds or receipt of application

after the closure of the issue, refund without interest will be made within a period of 30 daysfrom the deemed date of allotment of the bonds.

12. REDEMPTION

Unless previously redeemed as per the terms of the Bond, the Company shall redeem the

Bonds on the Maturity Date i.e. March 25, 2021 PFSs liability to Bondholder(s) towards all

their rights including payment of face value shall cease and stand extinguished up on

redemption of the Bonds Series 1 in all events. Further PFS will not be liable to pay any

interest, income or compensation of any kind after the date of such Redemption of the

Bonds(s).

Bonds held in electronic form: No action is required on the part of Bondholders at the time

of maturity of the Bonds. On the redemption date, redemption proceeds would be paid by

NECS/At Par Cheque/Demand Drafts to those Bondholders, whose names appear on the list

of beneficial owners given by the depository to PFS. These names would be as per thedepositorys record on the record date/book closure date fixed for the purpose of redemption.

These Bonds will be simultaneously extinguished.

Bonds held in physical form: No action will ordinarily be required on the part of the

Bondholder at the time of redemption and the maturity amount will be paid to those

Bondholders whose names appear in the Register of Bondholders maintained by the Company

or Registrar on the Record Date fixed for the purpose of redemption. However, the Company

may require that the Consolidated Bond Certificate(s), duly discharged by the sole holder or

all the joint-holders (signed on the reverse of the Consolidated Bond Certificate(s) to be

surrendered for redemption on Maturity Date and sent by registered post with

acknowledgment due or by hand delivery to the Registrar or Company or to such persons at

such addresses as may be notified by the Company from time to time. Bondholders shall have

to surrender the Consolidated Bond Certificate(s) in the manner as stated above, not more

than three months and not less than two months prior to the Maturity Date so as to facilitate

timely payment. In case of transmission applications pending on the record date, the


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redemption proceeds will be issued to the legal heirs after the confirmation of the adequacy

and correctness of the documentation submitted with such application till such time, the

redemption proceeds will be kept in abeyance.

13. INTERIM EXIT ROUTES

These Bonds shall be listed at NSE. The investors shall have the right to exit through the

secondary market, but only after completion of the lock-in period of five years from the date

of allotment. In respect of the Bonds having buyback facility, the investors can exit either

through secondary market or through buyback route.

14. BUYBACK OF BONDSIn respect of Bonds with buyback option, exit facility shall be available at the end of 5th, 6th,

7th, 8th and 9th year. The investors, who opt and are allotted Bonds with buyback facility and

wish to exit through this facility, shall have to apply for buy back by writing to the Company

early.

Redemption Notice for PFS Long Term Infrastructure Bond Series 1) of his/her

intention to redeem all the Bonds held by him/her under the buyback option. Such earlyRedemption Notice from the Bondholder should reach the Registrar or the Company between

January 1 to January 31, starting from year 2016 to year 2020 (Early Redemption Date) for

redeeming the Bonds in that particular financial year. The Bonds will be redeemed on March

25 of the same financial year. Partial buyback of the bonds held under the buyback option

shall not be permissible.

Bonds held in dematerialized form

The Company or the Registrar upon receipt of the notice from the Bondholders would

undertake appropriate corporate action to effect the buyback. The bank details will be

obtained from the Depositories for payments. Investors who have applied or who are holding

the Bonds in electronic form are advised to immediately update their bank account details as

appearing on the records of Depository Participant. Failure to do so could result in delays in

credit of the payments to investors at their sole risk and neither the Arrangers nor the

Company shall have any responsibility and undertake any liability for such delays on part of

the investors


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Bonds held in physical form

On receipt of the notice from the investor for exercise of buy back option, no action would

ordinarily be required on the part of the Bondholder on the Buyback Date and the Buyback

Amount would be paid to those Bondholders whose names appear first in the Register of

Bondholders. However, the Company may require the Bondholder to duly surrender the

Consolidated Bond Certificate to the Company/Registrar for the buyback. While exercising

the buyback option, Bondholder are required to furnish any change of address or bank details

etc. Upon payment of the Buyback Amounts, the Bonds shall be deemed to have been repaid

to the Bondholders and all other rights of the Bondholders shall terminate and no interest shall

accrue on such Bonds thereafter. Subject to the provisions of the Companies Act, where the

Company has bought back any Bond(s) under the Buyback Facility, the Company shall have

and shall be deemed always to have had the right to keep such Bonds alive without

extinguishment for the purpose of resale and in exercising such right, the Company shall have

and be deemed always to have had the power to resell such Bonds.

15. PAYMENT OF INTEREST/ REDEMPTION/BUYBACK AMOUNT

Payment of Interest

Payment of interest on the Bonds will be made to those holders of the Bonds, whose name

appears first in the Register of Bondholders maintained by the Depositories and/or the

Company and/or the Registrar, as the case may be, as on the Record Date.

Record Date

The record date for the payment of interest or the Buyback Amount or the Maturity Amount

shall be 3 days prior to the date on which such amount is due and payable ("Record date").

Effect of holidays on payment

If the date of payment of interest or principal or any date specified does not fall on a Working

Day, then the succeeding Working Day will be considered as the effective date. Interest and

principal or other amounts, if any, will be paid on the succeeding Working Day. Payment of

interest will be subject to the deduction of tax as per Income Tax Act or any statutorymodification or re-enactment thereof for the time being in force. In case the Maturity Date


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falls on a holiday, the payment will be made on the next Working Day, without any interest

for the period overdue.

Payment on Redemption or Buyback

Bonds held in electronic form

On the Maturity Date or the Buyback Date as the case may be, the Maturity Amount or the

Buyback Amount as the case may be, will be paid as per the Depositories' records on the

Record Date fixed for this purpose. No action is required on the part of Bondholders. The

bank details will be obtained from the Depositories for payments. Investors who have applied

or who are holding the Bond in electronic form are advised to immediately update their bank

account details as appearing on the records of Depository Participant. Failure to do so could

result in delays in credit of the payments to investors at their sole risk and neither the Lead

Arrangers nor the Company shall have any responsibility and undertake any liability for such

delays on part of the investors.

Bonds held in physical form

Payments with respect to maturity or buyback of Bonds will be made by way of cheques or

pay orders or electronically. The bank details will be obtained from the Registrar for effecting

payments. However, if the Company so requires, payments on maturity may be made on

surrender of the Consolidated Bond Certificate(s). Dispatch of cheques or pay orders in

respect of payments with respect to redemptions will be made on the Maturity Date or

Buyback Date within a period of 30 days from the date of receipt of the duly discharged

Consolidated Bond Certificate, if required by the Company. The Company's liability to the

Bondholders including for payment or otherwise shall stand extinguished from the Maturity

Date or upon dispatch of the Maturity Amounts to the Bondholders. Further, the Company

will not be liable to pay any interest, income or compensation of any kind from the Maturity

Date.

Mode of Payment

All payments to be made by the Company to the Bondholders shall be by cheques demand

drafts or through National Electronic Clearing System ("NECS")


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16. TAXATION

The interest on Bonds will be subject to deduction of tax at source at the rates prevailing from

time to time under the provisions of the Income Tax Act or any statutory modification or re-

enactment thereof. As per the current provisions of the Income Tax Act, on payment to all

categories of resident Bondholders, tax will not be deducted at source from interest on Bonds,

if such interest does not exceed Rs. 2,500 in a financial year. As per clause (ix) of Section 193

of the Income Tax Act, no income tax is required to be withheld on any interest payable on

any security issued by a company, where such security is in dematerialized form and is listed

on a recognized stock exchange in India in accordance with the Securities Contracts

Regulation Act, 1956, as amended, and the rules notified there under. Accordingly, no income

tax will be deducted at source from the interest on Bonds held in dematerialized form. In case

of Bonds held in a physical form no tax may be withheld in case the interest does not exceed

Rs. 2,500. However, such interest is taxable income in the hands of resident Bondholders. If

interest on Bonds exceeds the prescribed limit of Rs. 2,500 in case of resident individual

Bondholders, to ensure non-deduction or lower deduction of tax at source, as the case may be,

the Bondholders are required to furnish either (a) a declaration (in duplicate) in the prescribed

form i.e. Form 15G which may be given by all Bondholders other than companies, firms and

non-residents subject to provisions of section 197A of the Income Tax Act; or (b) a

certificate, from the assessing officer of the Bondholder, in the prescribed form under section

197 of the Income Tax Act which may be obtained by the Bondholders. Senior citizens, who

are 65 or more years of age at any time during the financial year, can submit a self-declaration

in the prescribed Form 15H for non-deduction of tax at source in accordance with the

provisions of section 197A even if the aggregate income credited or paid or likely to be

credited or paid exceeds the maximum limit for the financial year. These certificates may be

submitted to the Company or to such person at such address as may be notified by us from

time to time, quoting the name of the sole or first Bondholder, Bondholder number and the

distinctive number(s) of the Bond(s) held, at least one month prior to the interest payment

date. Tax exemption certificate or document, if any, must be lodged at the office of the

Registrar prior to the Record Date or as specifically required. Tax applicable on coupon will

be deducted at source on accrual thereof in the Company's books and / or on payment thereof,

in accordance with the provisions of the Income Tax Act and / or any other statutory

modification, re-enactment or notification as the case may be. A tax deduction certificate will

be issued for the amount of tax so deducted on annual basis.


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17. RIGHTS OF BONDHOLDERS

The Bonds shall not confer upon the holders thereof any rights or privileges including the

right to receive notices or annual reports of, or to attend and/or vote, at a General Meeting of

PFS. If any proposal affecting the rights attached to the Bonds is considered by PFS, the said

proposal will first be placed before the registered Bondholders or Trustees for their

consideration. The Bonds comprising the present Private Placement shall rank pari passu inter

se without any preference to or priority of one over the other or others over them and shall

also be subject to the other terms and conditions to be incorporated in the Agreement / Trust

Deed(s) to be entered into by PFS with the Trustees and the Letters of Allotment/Bond

Certificates that will be issued. A register of Bondholders will be maintained and sums

becoming due and payable in respect of the Bonds will be paid to the Registered Holder

thereof. The Bonds are subject to the provisions of the Act and the terms of this Information

Memorandum. Over and above such terms and conditions, the Bonds shall also be subject to

other terms and conditions as may be incorporated in the Agreement/Bond Trust Deed/Letters

of Allotments/Bond Certificates, guidelines, notifications and regulations relating to the issue

of capital and listing of securities issued from time to time by the Government of India and/or

other authorities and other documents that may be executed in respect of the Bonds.

18. MODIFICATION OF RIGHTS

The rights, privileges and conditions attached to the Bonds may be varied, modified and / or

abrogated with the consent in writing of the holders of at least three-fourths of the outstanding

amount of the Bonds or with the sanction of the Trustees, provided that nothing in such

consent or sanction shall be operative against PFS, where such consent or sanction modifies

or varies the terms and conditions governing the Bonds, if the same are not acceptable to PFS.

19. NOTICES

The communications to the Bondholder(s) required to be sent by PFS or the Trustees shall be

deemed to have been given if sent by an ordinary post to the registered holder of the Bonds.

All communications to be given by the Bondholder(s) shall be sent by registered post or by

hand delivery to the Registrar and Transfer Agents or to PFS or to such person, at such

addresses as may be notified by PFS from time to time.


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20. MISCELLANEOUS

Loan against Bonds

The Bonds cannot be pledged or hypothecated for obtaining loans from scheduled commercial

banks during the Lock-in Period of five years.

Lien

The Company shall have the right of set-off and lien, present as well as future on the moneys

due and payable to the Bondholder, whether in single name or joint name, to the extent of all

outstanding dues by the Bondholder to the Company.

Lien on Pledge of Bonds

The Company, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond is

accepted by any bank or institution for any loan provided to the Bondholder against pledge of

such Bonds as part of the funding after completion of lock-in period of five years as notified

time to time.

Right to Reissue Bond(s)

Subject to the provisions of the Act, where the Company has redeemed or repurchased any

Bond(s), the Company shall have and shall be deemed always To have had the right to keep

such Bonds alive without extinguishment for the purpose right, the Company shall have and

be deemed always to have had the power to resell or reissue such Bonds either by reselling or

reissuing the same Bonds or by issuing other Bonds in their place. This includes the right to

reissue original Bonds.

Joint-holders

Where two or more persons are holders of any Bond (s), they shall be deemed to hold the

same as joint holders with benefits of survivorship subject to Articles and applicable law.

Sharing of Information

The Company may, at its option, use its own, as well as exchange, share or part with any

financial or other information about the Bondholders available with the Company, its

subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies,


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statutory bodies, as may be required and neither the Company nor its subsidiaries and

affiliates nor their agents shall be liable for use of the aforesaid information.

Issue of Duplicate Consolidated Bond Certificate(s)

If any Consolidated Bond Certificate is mutilated or defaced it may be replaced by the

Company against the surrender of such Consolidated Bond Certificates, provided that where

the Consolidated Bond Certificates are mutilated or defaced, they will be replaced only if the

certificate numbers and the distinctive numbers are legible. If any Consolidated Bond

Certificate is destroyed, stolen or lost then upon production of proof thereof to the

RTA/Companys satisfaction and upon furnishing such indemnity/security and/or documents

as we may deem adequate, duplicate Consolidated Bond Certificate(s) shall be issued.

Jurisdiction

The courts of New Delhi shall have jurisdiction to settle any disputes which may arise out of

or in connection with the Bond Trust Deed or the Bonds and that accordingly any suit, action

or proceedings (together referred to as "Proceedings") arising out of or in connection with the

Bond Trust Deed and the Bonds may be brought in the courts of New Delhi.


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Brief Profile of Directors of the Company

Name of Director Designation

Mr. Tantra Narayan Thakur Chairman &

Managing

Director

Dr. Ashok Haldia Whole-Time

Director and

Chief

Financial Officer

Mr. Sudhir Kumar Independent

Director

Mr. M K Goel Non-executive

Director

Mr. Prathipati Abraham Independent

Director

Mrs. Rama Murali Independent

Director

Dr. Uddesh Kohli Independent

Director

Mr. Ramarao Muralidharan

Coimbatore

Independent

Director

Mr. Neil Kant Arora Non-Executive

Director

Mr. Surinder Singh Kohli Independent

Director

Mr. Tantra Narayan Thakur,aged 61 years, is the Chairman and Managing Director

of our Company. He is the founder of our Company and has been on the Board since our

incorporation. He holds a Bachelors degree in Science in engineering. Mr. Thakur has more

than 30 years of experience as a member of the Indian Audit and Accounts Service. Mr.

Thakur has also served as a Director (Finance and Financial Operations), Power Finance


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Corporation Limited, where he was responsible for mobilizing resources for the company for

on-lending to power projects in addition to accounting and compliance related matters.

Currently he is also the chairman and managing director of our Promoter namely PTC India

Limited.

Dr. Ashok Haldiaaged 54 years, is a Whole Time Director and Chief Financial Officer of

our Company. He is a member of the Institute of Chartered Accountants of India, Institute of

Company Secretaries of India and the Institute of Cost and Works Accountants of India. He

holds a Ph.D. degree in Privatization of Public Enterprises in India from University of

Rajasthan. He has been on the Board of the Company since August 13, 2008, prior to which

he served as a Secretary, Institute of Chartered Accountants of India, New Delhi for about a

decade. Dr. Haldia has been associated with the Bureau of Enterprises, State Enterprises

Department, Government of Rajasthan and Power Finance Corporation Limited

Mr. Sudhir Kumar, aged 54 years, is an Independent Director of our Company and has

been on the Board of our Company since March 22, 2010. He holds a Masters degree in

Commerce from the Delhi School of Economics, University of Delhi. He is an Indian

Administrative Services officer presently serving as Joint Secretary in Ministry of Power,

Government of India. He has also served as the officer on special duty to Minister for

Railways, Government of India. Presently, he is also on the board of our Promoter, PTC India

Limited.

Mr. M.K. Goelaged 53, is a Non Executive Director of our Company and has been on the

Board of our Company since January 12, 2010. He holds a Bachelors degree in technology

specializing in electrical engineering from Kanpur University. Currently he is associated with

Power Finance Corporation Limited (PFC) as director (commercial) besides heading the

human resources, administration, institutional appraisal and legal functions. Prior to joining

PFC, Mr. Goel was working with NHPC Limited for about a decade. Presently, he is also on

the board of our Promoter, PTC India Limited.

Mr. P Abrahamaged 71 years, is an Independent Director of our Company and has been

on the Board of our Company since June 4, 2007. He holds a Masters degree in Arts from

Andhra University, Visakhapatnam. Mr Abraham has served as the Secretary to the Ministry


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of Power, Government of India and is presently serving as the chairman of Maharashtra State

Electricity Board. Presently, he is also on the board of our Promoter, PTC India Limited

Mrs. Rama Muraliaged 62 years, is an Independent Director of our Company and has

been on the Board of our Company since April 21, 2009. She holds a Bachelors of Arts

(Hons) degree from Maharani College, Jaipur, and University of Rajasthan. She is a retired

Indian Audit and Accounts Service officer. Mrs. Murali has served as the Joint Secretary,

Department of Economic Affairs, Ministry of Finance. She has also served as the financial

advisor in the Department of Scientific and Industrial Research, the Council of Scientific and

Industrial Research, Government of India, and the New Delhi Municipal Committee where

she was also the overall in-charge of finance and accounts. She is also a life member of the

Indian Institute of Public Auditors.

Dr. Uddesh Kohliaged 69 years, is an Independent Director of our Company and has

been on the Board of our Company since September 25, 2009. He holds a Bachelors degree

(Hons) in Engineering from the Indian Institute of Technology, Roorkee. He also holds a

Ph.D. degree in Economics from the Kohli is the chairman of Engineering Council of India

and Construction Industry Arbitration Association. He was the chairman and managing

director of Power Finance Corporation Limited and former adviser, Planning Commission

(Government of India) and has also been associated with international bodies such as Asian

Development Bank, United Nations Industrial Development Organization, United Nations

Development Programme and United Nations Office for Project Services.

Mr. C. R. Muralidharanaged 63 years, is an Independent Director of our Company and

has been on the Board of our Company since January 11, 2010. He holds a Bachelors of

Science degree from Madras University and is a certified associate of Indian Institute of

Bankers. Mr. Muralidharan has served as a whole-time member (finance and accounts) of

Insurance Regulatory and Development Authority (IRDA). Prior to joining IRDA, he

served in the Reserve Bank of India (RBI) for more than three decades in various capacities

and was also heading the Department of Banking Policy and Regulation, RBI between 1998

to 2005 as the chief general manager. He has also been a member of the International

Monetary Fund missions on financial sector assessment project of Uganda in 2001 and the

assessment of the regime for insolvency of banks in Kuwait in 2004.


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Mr. Neil Kant Arora aged 41 years, is a Non Executive Director of our Company and has

been on the Board of our Company since January 31, 2008. He holds a first class honours

degree in Actuarial Science from the Mr. Arora is serving as an executive director with

Macquarie Capital Group (Macquarie), Dubai and heads the Middle Eastern advisory team.

Prior to this, he was based out of the Singapore office of Macquarie and heading the Asian

infrastructure team. Mr. Neil Kant Arora is a resident of the United Arab Emirates

Mr. Surinder Singh Kohliaged 65 years, in an Independent Director of our Company

and has been on the Board of our Company since December 13, 2010. He holds Bachelors

degree in Science (Mechanical Engineering) from Banaras Hindu University and a diploma in

Industrial Finance from Indian Institute of Bankers. Prior to joining our Company he was the

chairman and managing director of India Infrastructure Finance Company Limited, Punjab

National Bank, Small Industries Development Bank of India and Punjab and Sind Bank

respectively. He was also the chairman of the India Banks

Association for two terms.


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COMPANY PROFILE

PTC India Financial Services Limited (PFS) is an Indian non-banking financial institution

promoted by PTC India Limited (PTC") to make principal investments in, and provide

financing solutions for companies with projects across the energy value chain, which inter-

alia includes investing in equity and/or extending debt to power projects in generation,

transmission, distribution; fuel sources, fuel related infrastructure like gas pipelines, LNG

terminals, ports, equipment manufacturers and EPC contractors etc. PFS is regulated by the

Reserve Bank of India (RBI) as a systemically important non-deposit taking, non-banking

financial company ("NBFC"), and have recently been classified by the RBI as an

Infrastructure Finance Company, or IFC. PFS also believes that it is one of few NBFCs that

have been granted this status. The IFC status enhances PFSs ability to raise funds on a cost-

competitive basis and enables Company to assume higher debt exposure in infrastructure

projects. PFS is a one stop solution provider offering a comprehensive range of financial

products and services that add value throughout the life cycle of projects across all areas of

the energy value chain. PFS believes this has enabled it to establish itself as a preferred

financing provider for power projects. PFS believes its power sector knowledge and

experience enables it to identify investment opportunities with high potential and effectively

manage risks associated with such opportunities. PFS also believes its exclusive focus on the

power sector has enabled it to develop strong relationships and become a preferred financing

provider for power projects, particularly for smaller and medium sized projects, compared to

competitors that are not similarly focused on the power sector. The investment decision by

PFS into the equity and/or debt is based on many factors such as the valuation offered by the

power projects, commitment shown by the developers and overall techno-economic viability.

The investment made by PFS adds to the valuation of the project (investee company) by

bringing the core competency of its promoter i.e. PTC in off-take and marketing of power,

side by side the brand value of Goldman Sachs and Macquarie, which assists in tying up the

balance funding requirements for the project.


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PTC INDIA LIMITED (PROMOTER)

PTC India Limited (PTC) was established in 1999 through an initiative of the Government ofIndia, in consonance with the Mega Power Policy, to establish a power market in India as well

as to act as a credit mitigating agency for Mega Power Projects by buying electricity from

them through long term Power Purchase Agreements (PPAs) and sell the same through back-

to-back Power Sale Agreements (PSAs) to various state utilities. In the meantime, PTC

started the concept of short term trade of electricity in a perennially electricity starved

country. In addition to the development of the short term market, PTC through facilitation of

power projects being set up by Independent Power Producers (IPPs) with whom it enters into

long term PPAs and sells the electricity being generated in the plant to various utilities

through long term back-to-back PSAs. PTCs total portfolio size has grown to more than

14,185 MW of PPAs (including cross border) and more than 11,781 MWs of MOUs for

power purchase with various IPPs across the country. Additionally, PTC has started various

ancillary services in the form of Advisory as well as fuel intermediation to support the growth

of such power projects in the country.

OTHER SHAREHOLDERS

G S Strategic Investments Limited

G S Strategic Investments Limited, a company incorporated with limited liability under the

laws of Mauritius is a 100% subsidiary of Goldman Sachs. Goldman Sachs is a leading global

investment banking, securities and investment management firm that provides a wide range of

services to a substantial and large client base that includes corporations, financial institutions,

governments and high-net-worth individuals;.

Macquarie India Holdings Limited

Macquarie India Holdings Limited is a part of the Macquarie Group. Macquarie Group is a

provider of specialist investment, advisory and financial services.


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SHAREHOLDING PATTERN

Particulars No. of

Equity

Shares

Shareho

lding

(%)

1 PTC India

Ltd

337,250,001 77.60%

2 G S

Strategic

Investments

Ltd

48,666,667 11.20%

3 Macquarie

India

Holdings

Limited

48,666,667 11.20%

TOTAL 434,583,335 100.00%


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PRODUCT & SERVICES

1. Equity

PFS do strategic equity investments in companies in the energy value chain in India,including in Greenfield and Brownfield projects. The nature and extent of our equity

participation in such companies vary in accordance with the requirements, opportunities and

risks associated with the relevant project, but we typically do not retain management control.

Our investment horizon tends to focus on the short to medium term. As of September 30,

2010, our Board had approved equity commitments for ten companies for an aggregate

amount of Rs.4,838.46 million, with projects aggregating 2,621 MW of power generation

capacity.

2. Lending

PFS offers debt assistance to projects subject to exposure limits stated earlier. PFS structure

the debt assistance taking into consideration factors like needs of the borrowing entity, the

market conditions, regulatory requirements, risks and rewards from the projects. PFS offers

the following debt instruments:

Term Loans

Bridge Loans

Short Term Loans

PFS also considers mezzanine funding debt against promoters contribution in equity or in

any other form depending upon the requirements of the project. PFS provides debt assistance

to projects in the entire energy value chain i.e. power projects, fuel sources, related

infrastructure like gas pipelines, LNG terminals, ports, equipment manufacturers like

transformers, conductors, insulators, cables etc; which are technically and economically

viable PFS extends finance assistance to all kinds of borrowing entities as well as private

sector in the entire energy value chain. However, the priority of PFS would be private sector,

followed by Joint sector/ Government sector projects. The interest rate to be charged by PFS

shall take into account the cost of funds of PFS, rates being charged by other

institutions/bank, and condition of the financial market While providing for a reasonable

margin, PFS may provide for charging differential interest rate form the borrowers depending


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upon the type of project, and grading based on the entity appraisal. As of September 2010, our

Board had approved debt sanctions (including long term and short term/mezzanine funding)

for 27 companies for an aggregate amount of approx Rs 18,815 million, with projects

aggregating 8,853 MW of power generation capacity.

3. Fee Based Services

With a core team of in-house power sector professionals, PFS strives to help its clients to

become more competitive, effective and successful. PFS has already started its loan

syndication activities in current

Financial year.


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INVESTMENTS IN ENERGY VALUE CHAIN (as on September 30, 2010)

Indian Energy Exchange, in which PFS as promoter, had subscribed for a 26% equity stake

for Rs. 69.39 million. It is Indias first exchange to facilitate the trading of power. The

exchange was commissioned on June 27, 2008 and has a market share of approx 84% of the

electricity traded on any power exchange. In September 2010, we liquidated a portion of

shareholding in IEX for a consideration of Rs. 135.3 million after which our shareholding

comes to 21.12%.

Varam Bio energy Private Limited, in which PFS subscribed for a 26% equity stake for

Rs.43.90 million, has developed a 10 MW biomass project, based primarily on rice husk, in

Bhandara, Maharashtra, that was commissioned in February 2009.

RS India Wind Energy Private Limited, in which PFS subscribed for a 37% equity stake

for Rs.611.21million under a subscription agreement, is setting up a 99.45 MW wind based

power project in Satara, Maharashtra of which 39.60 MW is commissioned and in process of

setting up a 3 MW solar power project in Haryana. Meenakshi Energy Private Limited is

setting up a 900 MW imported coal based tolling power project in Nellore, Andhra Pradesh.

The project has been bifurcated into phase I of 300 MW (2 x 150 MW) and phase II of 600

MW. PFS has subscribed for a 26% equity stake for Rs. 996.80 million for phase I and has

disbursed Rs. 603.41 million in the company. Project is under advance stage of development

and expected to commission by December 2011.

PTC Bermaco Green Energy Systems Limited, in which PFS has subscribed for a 26%

equity stake for Rs. 13.75 million, is a joint venture arrangement between Bermaco Energy

Systems Limited. Under the joint venture agreement it will set up a series of biomass projects

across India.

East Coast Energy Private Limited is developing a 1320 MW thermal power project,

comprising of two units of 660 MW each, in Andhra Pradesh. The project is expected to be

commissioned by May 2014. The estimated cost of the project is Rs.65,700 million and

financial closure for the project has been achieved. East Coast has entered into a PPA with

PTC partly on long-term and partly on a short-term basis. PFS has committed an equity


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investment of Rs. 1333.85 million and as on 30 Sep 2010, we have invested Rs. 1250 million

in project.

Ind Barath Powergencom Limited, in which PFS has subscribed for a 26% equity stake for

Rs.556.30 million, under a share subscription agreement, is developing three units of each 63

MW, totaling to 189 MW coal fired power project, in Thoothukkudi District, Tamilnadu. Two

of the units of the project have already been synchronized with the grid.

Ind Barath Energy (Utkal) Ltd, in which PFS has subscribed for a 13% equity stake for

Rs.1050 million, under a share subscription agreement, is developing a 700 MW thermal

power project in Orissa. Financial closure has been achieved for the project. The project is

due for commissioning in March 2012.


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INDUSTRY OUTLOOK

Overview of the Indian Economy

India is the fifth largest economy in the world after the European Union, United States of

America, China and Japan in purchasing power parity terms with an estimated GDP

(purchasing power parity) of US$3.68 trillion in 2009. India is also among the fastest growing

economies globally and has grown at an average rate of more than 7.0% since 1997. An

industrial slowdown early in 2008, followed by the global financial crisis, led annual GDP

growth to slow to 6.5% in 2009, still the second highest growth in the world among major

economies (Source: CIA World Fact book website). India escaped the brunt of the global

financial crisis because of cautious banking policies and a relatively low dependence on

exports for growth. According to the revised estimates of the Central Statistical Organisation

(CSO) Indias GDP grew at a rate of 7.4% in the fiscal year 2010.

The following table presents a comparison of Indias real GDP growth rate with the real GDP

growth rate of certain other countries:

Countries 2007 2008 2009

Australia 4.8% 2.3% 1.3%

Brazil 6.1% 5.1% -0.2%

China 13.0% 9.0% 9.1%

Germany 2.5% 1.3% (4.9%)

India 9.0% 7.4% 7.4%

Japan 2.3% (1.2%) (5.3%)South Korea 5.1% 2.3% 0.2%

Malaysia 6.5% 4.7% (1.7%)

Russia 8.1% 5.6% (7.9%)

Thailand 4.9% 2.5% (2.2%)

United Kingdom 2.7% (0.1%) (4.9%)

United States 1.9% 0.0% (2.6%)


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Investment in India has, remained relatively stable despite the global slowdown and has been

growing at a rate higher than that of GDP. There has been upward trend in the growth of the

private investment. The recovery was broad based with mining and quarrying, manufacturing,

and electricity, gas and water supply recording impressive growth rates. (Source: Ministry of

Finance: Economic Survey, 2009-10) Indias ability to recover from the global slowdown and

its own domestic liquidity crunch has been driven by the countrys large domestic savings

(including corporate retained earnings) and private consumption. Further, the GoIs fiscal

policies and the monetary policies of the Reserve Bank of India have also played an important

role in the revival of economic growth. In particular, the GoI as part of its fiscal stimulus

package took the following initiatives to promote consumption in the economy: (i) increased

GoI expenditure especially on infrastructure; and (ii) reduced taxes to spur consumption.

The RBI has also taken various other steps to stimulate the economy including by (a)

reducing the cash reserve ratio (CRR) to 6.00%; (b) maintaining the statutory liquidity ratio

(SLR) at 25.00%; (c) reducing the repo rate to 6.25%; and (d) reducing the reverse repo rate

to 5.35%. (Source: RBI) A strong recovery in the industrial sector combined with a resilient

services sector muted the impact of a deficient South-West monsoon on overall output. The

contribution of the industrial sector to the overall growth increased sharply from 9.5% in

2008-2009 to 28.0% in 2009-2010. (Source: RBI,2009-2010 Annual Report).

Relative Contribution to GDP Growth

0

2

4

6

8

10

12

2005-06 2006-07 2007-08 2008-09 2009-10

Agriculture & allied

activities

Industry

Services


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Sctoral Gross Domestic Product Growth

The Indian economy witnessed robust recovery in growth in the last quarter of fiscal 2010.

Most of the business expectation surveys suggest continuation of the growth momentum in

fiscal 2011. The Industrial Outlook Survey of the Reserve Bank indicates further

improvement in several parameters of the business environment for the three months endedSeptember 30, 2010 quarter. The Professional Forecasters Survey conducted by the Reserve

Bank in June 2010 places overall (median) GDP growth rate for fiscal 2011 at 8.4%, higher

than 8.2% reported in the previous round of the survey. (Source: Macroeconomic and

Monetary Developments: First Quarter Review Fiscal 2011).

0

2

4

6

8

10

12

14

2005-06 2006-07 2007-08 2008-09 2009-10

Agriculture & allied

activities

Industry

Services


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Organization of the Power Industry in India

The following diagram depicts the current structure of the Indian power industry:

Generation Transmission Distribution Distribution

Overview of Indian Power Industry

India has continuously experienced shortages in energy and peak power requirements.

According to the Monthly Review of the Power Section ("Monthly Review") published by

the CEA in October 2010, the total energy deficit and peak power deficit during April 2010 to

October 2010 was approximately 9.2% and 10.1%, respectively.

SEBs

CPUs

IPPs &

Private

Licensees

Captive

SEBs/STUs

Power

grid

Private

Utilities

Open

SEBs/EDs

Discoms Pvt

Licenses

Energyavailable and

sold

Transformation

Transmission

Distribution

Losses including

unaccounted

Energy

Agriculture

Domestic

commercial

industry other

Captive

Consumer

Power Trading Companies


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The shortages in energy and peak power have been primarily due to the sluggish progress in

capacity addition. During the 10th Five Year Plan (fiscal 2002 to fiscal 2007), capacity

addition achieved compared to target capacity addition was 51.5%. During the 11th Five Year

Plan (fiscal 2008 to fiscal 2012), capacity addition achieved was 9,263 MW or 56.7% of

target capacity addition of 16,335 MW in fiscal 2008, while in fiscal 2009, capacity addition

achieved was 3,454 MW, or 31.2% of target capacity addition of 11,061 MW, while in fiscal

2010, capacity addition achieved was 9,585 MW, or 66.1% of target capacity addition of

14,507 MW. According to the Monthly Review (October 2010), the total installed power

generation capacity in India was 167278.36 MW as of August 31, 2010.

Power Consumption

The per capita consumption of power in India has grown from 566.7 kWh/year in fiscal 2003

to 733.5 kWh/year in fiscal 2009, at a CAGR of 4.39% (Source: Monthly Review (July

2010)). The following table sets forth information relating to India's per capital consumption

of power for the periods indicated:

Year Per Capita Consumption

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