Shriram Transport Finance Corporation - NCD - FAQ

Q1. What is the Issue Size?

Ans: Base issue size of ` 300 Crore, with an option to retain oversubscription of ` 300 Crore, aggregating to a total of ` 600 Crore

Q2. What is the face value of this NCD?

Ans: The NCDs will be issued at a face value of ` 1,000/‐ per NCD

Q3. What is the frequency of interest payment?

Ans: Series I and Series II NCDs will carry an interest payment to be made on annual basis. Series III and IV NCDs are for cumulative interest options, where the interest will be paid on maturity period of three or five years.
Q4. What is the minimum application size for investment?

Ans: An investor needs to apply for a minimum of  Rs.10,000 or 10 NCDs and in multiples of  Rs.1,000 or 1 NCD thereafter

Q5. Is there any reservation for individual investor investing in this issue?

Ans: Yes. Individual investors in this issue have been classified under two categories, i.e.

Reserved Individual Portion (investment up to ` 5 lakhs) and Non Reserved Individual Portion

(investment above ` 5 lakhs). 40% of the issue is reserved for Reserved Individual Portion and

40% for Non Reserved Individual Portion

Q6. Is demat account necessary for Individual Investors to invest in these bonds?

Ans: The demat account is not necessary for investing in these NCDs. But having demat account would be advantageous.

Q7.Who is NOT eligible to invest in the issue?

Ans: Minors without a guardian name; Foreign nationals; Persons resident outside India including without limitation any Foreign Institutional Investors, Non Resident Indians, Qualified Financial Institutions and Overseas Corporate Bodies

Q8. What is the time period between date of allotment and date of closure of the issue?

Ans: Allotment of NCDs offered to the public shall be made within a time period of 30 days from the date of closure of the Issue.

Q9. Which stock exchange are the bonds proposed to be listed on?

Ans: The NCDs are proposed to be listed on NSE and BSE


Q10. What are the new features introduced in this Issue?

Ans:

(a) Market Making
(b) Reserved Individual Investors have the option to apply for NCDs in physical form
(c) If Individual Investors (Reserved Individual Investors and Non Reserved Individual Investors) hold the NCDs on any record date, they shall be eligible to additional incentive in terms of interest in case of Series I and II and redemption premium amount in case of Series III and IV respectively


Q11. What are the benefits received by investors falling under Category I, II, III & IV as individual investors?

Q12. What is the interest on application money on allotted amount?

Ans: @ 9.00% on application money on the amount allotted, subject to the deduction of Income

Tax under the provisions of the Income Tax Act 1961, as amended, as applicable, to any

applicants to whom NCDs are allotted pursuant to the Issue from the date of realization of the

cheque(s)/demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation of each application as acknowledged by the Bankers to the Issue) whichever is later upto one day prior to the Deemed Date of Allotment


Q13. Who can invest in to these NCDs and what is the basis of allotment?

Q14. What is the issue period and timing?

Ans: Issue opens on July 26, 2012 and closes on August 10, 2012.


Q15. What is the tax treatment of these NCDs?

Ans: For resident NCD holder, interest received would be subject to tax at the normal rates of tax. Long‐term capital gains arising on the transfer of listed debentures would be subject to tax at the rate of 10% of capital gains calculated without indexation of the cost of acquisition. Short term capital gains on the transfer of listed debentures, where debentures are held for a period of not more than 12 months would be taxed at the normal rates of tax.

However, investors are advised to consider in his own case the tax implications in respect of

subscription to the NCDs after consulting his tax advisor.


Q16. Will there be TDS on the coupon interest paid to these NCDs holders?

Ans:

Interest received by the NCD Holders would be subject to tax at the normal rates of tax.

No tax is deductible at source on any interest payable on securities issued by the Company in dematerialized form and listed on a recognized stock exchange in India

In case of NCDs held in physical form, tax will not be deducted at source from interest payable on such NCDs held by the investor (in case of resident Individuals and HUFs), if such interest does not exceed ` 5,000 in any financial year. If interest exceeds the prescribed limit of ` 5,000 on account of interest on the NCDs, then the tax will be deducted at applicable rate. Interest on application money and interest on refund of application money, shall be subject to TDS.

However, investors are advised to consider in their own case the tax implications in respect of subscription to the NCDs after consulting their tax advisor.

Q17. Are the NCDs secured?

Ans: The principal amount of the NCDs together with all interest due on the NCDs, as well as all costs, charges, all fees, remuneration of Debenture Trustee and expenses payable in respect thereof are secured by way of first and exclusive charge on an identified immovable property and specified future receivables of the Company as may be decided mutually by the Company and the Debenture Trustee.

Q18. What happens when an Individual buys the NCD from a Non Individual in the secondary market? Will the new Individual investor get higher interest coupon/redemption premium?

Ans: Yes, the new Individual will get higher interest coupon/redemption premium if the new

Individual is a holder of the NCD on the relevant record date.Irrespective of the trading history of the NCDs, the Individual will be entitled to the additionalincentive in terms of interest in case of Series I and II NCDs and redemption premium amount incase of Series III and IV NCDs respectively, if the Individual is a NCD holder on the relevant record date.

Irrespective of the trading history of the NCDs, the Non Individual will not be entitled to the additional incentive in terms of interest in case of Series I and II NCDs and redemption premium amount in case of Series III and IV NCDs respectively, if the Non Individual is a NCD holder on the relevant record date.