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Public Issue of Secured Non Convertible Debentures 1 July 2014.

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Presentation on theme: "Public Issue of Secured Non Convertible Debentures 1 July 2014."— Presentation transcript:

1 Public Issue of Secured Non Convertible Debentures 1 July 2014

2 2 Disclaimer This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any jurisdiction. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner. This presentation contains forward-looking statements based on the currently held beliefs and assumptions of our management, which are expressed in good faith and in their opinion reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, financial condition or performance or industry results to differ materially from the results, financial condition or performance expressed or implied by such forward-looking statements. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update these forward-looking statements to reflect future events or developments. This presentation has not been approved and will not be reviewed or approved by any statutory or regulatory authority in India or by any Stock Exchange in India and may not comply with all the disclosure requirements prescribed thereof. This presentation may not be all inclusive and may not contain all of the information that you may consider material. Shriram Transport Finance Company Limited, (“Company”), is proposing, a public issue of secured redeemable non- convertible debentures and has filed a Shelf Prospectus and Tranche I Prospectus with the Registrar of Companies, Chennai, Tamil Nadu, SEBI, the National Stock Exchange of India Limited, (“NSE”) and the BSE Limited (“BSE”). The Prospectus is available on the website of the NSE, the BSE, the Company and the websites of the Lead Managers to the Issue, namely Investors are urged to take any decision to invest in the said debt securities pursuant to and solely on the basis of the disclosures made in the Prospectus. Please see the section entitled “Risk Factors” on page 17 of the Shelf Prospectus for the risks in this regard.

3 3 Offering Summary Lead Managers and Debenture Trustee to the Issue Debenture Trustee Size Base Issue Size of ` 500 Crore with an option to retain oversubscription upto the Shelf Limit of ` 3,000 Crore Investment options Eight Options including two monthly option to Individuals applying for allotment in demat mode Credit Rating “CARE AA+” by CARE, “CRISIL AA/Stable” by CRISIL and “IND AA+” by India Ratings Subscription period Issue Opening date : July 2, Issue Closing date : July 22, 2014 Issue may be closed on earlier date, at the discretion of the duly authorised committee of Directors of Company upon achieving subscription of Base Issue size of ` 500 Crore for early closure before 22 nd July,2014 Security First charge to be created on an identified immovable property and specific future receivables of the Company Listing NCDs are proposed to be listed on NSE and BSE Series I, II, III, IV and V NCDs Aggregate of Coupon and Additional Incentive on any record date for NCD Holders Individuals (Retail and HNI): 11.00% p. a. for 3 years, 11.25% p. a. for 5 years and 11.50% p.a. for 7 years with monthly interest payout option available for 5 years and 7 years Others: 9.85% p. a. for 3 years, 10.00% p. a. for 5 years and 10.15% p.a. for 7 years Series VI, VII and VIII NCDs Redemption Amount for NCD Holders Individuals (Retail and HNI): ` 1, per NCD for 3 year option, ` 1, per NCD for 5 year option & ` 2, per NCD for 7 year option Others: ` 1, per NCD for 3 year option, ` 1, per NCD for 5 year option & ` 1, per NCD for 7 year option Effective Yield on any record date for NCD Holders Individuals (Retail and HNI): % p. a. for 3 years, 11.25%p. a. for 5 years, 11.50%p. a. for 7 years Others: 9.85 % p. a. for 3 years, 10.00%p. a. for 5 years, 10.15%p. a. for 7 years Additional Incentive for Senior Citizens Senior Citizens (only First Allottee) shall be entitled to an additional yield at the rate of 0.25% p.a. For series VI, VII and VIII, Senior Citizens (only First allottee) will get ` 1,377.29, ` 1, and ` 2, respectively at end of the tenure. *subject to applicable tax deducted at source, if any on the Physical Applications Lead Managers

4 4 Company Snapshot Shriram Transport Finance Company Limited  SHRIRAM conglomerate has strong presence in: Financial Services Business : Commercial Vehicle Financing; Consumer Finance; Life and General Insurance; Stock Broking; Distribution of Third Party financial Products  On of the largest Indian asset financing NBFC, with total AUM of ` 53,834 Crore as of March 31, 2014  Track record of over 35 years  Pan-India presence through widespread network of 654** branches  Total employee strength was 18,122**  Registered as a Deposit taking NBFC with Reserve Bank of India  Strategic presence in pre-owned and new commercial vehicles (with a focus on First Time Users (FTUs) and Small Road Transport Operators (SRTOs))  Expertise in origination, valuation and collection ** As of March 31, 2014 “SHRIRAM” Group

5 5 Subsidiaries Shriram Transport Finance Company Limited Pre-owned and new commercial vehicle and passenger vehicle financing Shriram Equipment Finance Company Limited -Wholly owned subsidiary -Pre-owned and new construction equipment financing -As on March 31, 2014, it had assets under finance of ` 3,418 Crore Shriram Automall India Limited -Wholly owned subsidiary -Providing facilitation services, Stock-yard services, refurbishing of commercial vehicles and equipment, -One-stop shop catering to the various needs of commercial vehicle and equipment users, banks, NBFCs and other lenders of commercial vehicles -As on March 31, 2014, there are 32 operational "Automalls"

6 Business Strengths One of the largest Indian asset financing NBFC Unique business model and Extensive experience & expertise in credit appraisal Experienced senior management team  AUM of ` 53,834 Crore as of March 31, 2014  Widespread network of 654 branches across India as of March 31, 2014 with a large customer base  Strategically expanded marketing and customer origination network by entering into partnership and co-financing arrangements with private financiers involved in commercial vehicle financing  Our credit evaluation techniques, relationship based approach, extensive branch network and strong valuation skills make our business model unique and sustainable  Stringent credit policies, including limits on customer exposure, to ensure the asset quality of the loans and the security provided for such loans has helped us maintain relatively low NPA levels  Expertise in valuing pre- owned vehicles enables the Company to accurately determine a recoverable loan amount for commercial vehicle purchases  Board of Directors with extensive experience in the automotive and/or financial services sectors  Senior and middle management personnel with significant experience and in- depth industry knowledge and expertise  Most of our senior management team has grown with the Company and have more than 15 years of experience with the Company 6

7 Business Strengths Access to a range of cost effective funding sources Strong brand name  Able to borrow from a range of sources at competitive rates  Relatively stable cost of funds due to our improved credit ratings, effective treasury management and innovative fund raising programs  Borrowings  Strategic mix of retail and institutional borrowing  Access to fixed and floating rate borrowings due to prompt debt servicing and strong relationships with public, private sector and foreign banks  Also able to mobilize retail fixed deposits at competitive rates  Also raised subordinated debt eligible for Tier II capital  Securitization of loan book at regular intervals to maintain growth momentum  Well established "Shriram" brand  Strong presence in Financial Services 7

8 M. S. Verma Non-Executive Independent Director  A career banker with over five decades of experience in banking and finance  Former Chairman of State Bank of India. Since then has served as Advisor to RBI, non-executive Chairman IDBI Bank and Chairman TRAI  Member of governing Board/Council/Committee of educational and research institutions of national/international importance – National Council of Applied Economic Research (NCAER) and Jawaharlal Nehru University (JNU)  Retiring from directorship from July 9, 2014 Lakshminarayanan Subramanian Non-Executive Independent Director  Former Member of IAS and held several senior positions in Ministry of Home Affairs, Ministry of Communications and Information Technology, Ministry of Information and Broadcasting and in the Department of Tourism, Culture and Public Relations, Department of Mines, Mineral Resources, Revenue and Relief and Rehabilitation of the Government of Madhya Pradesh Kishori Udeshi Non-Executive Independent Director  Former Deputy Governor of the Reserve Bank of India  Served as chairman of BRBNM (P) Ltd. and DICGC and was on the Boards of SEBI, NABARD, Exim Bank Amitabh Chaudhry Non-Executive Independent Director  Managing Director and CEO of HDFC Standard Life Insurance Company  Over 25 years of experience in different capacities with leading Indian Financial Services Group, Technologies Service Company and international banks Gerrit Lodewyk Van Heerde Non-Executive Independent Director  CFO of Sanlam Emerging Markets and has 22 years of experience in the financial services industry  Fellow of the Institute and Faculty of Actuaries in the United Kingdom as well as a Fellow of the Actuarial Society of South Africa 8 Board of Directors Arun Duggal, Non-Executive Chairman  Experienced international banker with an experience of ~ 35 years in the banking and finance industry  A member of the Investment Committee of Axis Private Equity  26 years experience with Bank of America, also the Chief Executive of Bank of America in India from 1998 to 2001 Umesh Govind Revankar, Managing Director  Started his career with Shriram Group as an Executive Trainee in the year 1987  Has been with the Shriram group for the last 27 years and possesses extensive experience in the financial services industry  Has shouldered various responsibilities and worked in several key roles of business operations R Sridhar Non-Executive Non Independent Director  Over twenty five years of experience in financial services sector, especially in commercial vehicle financing  Former Managing Director of the Company for twelve years ( )  The recipient of Ernst & Young’s entrepreneur of the year – Manager Award 2011 and Business Achiever Award from Institute of Chartered Accountants of India (ICAI) for the year  Member of the Corporate Bond and Securitisation Advisory Committee of SEBI  Member of the Advisory Group on NBFCs constituted by the Ministry of Finance, Government of India Puneet Bhatia Non-Executive Director and Non- Independent  Managing Director and Country Head -TPG Capital India  Former Chief executive of the Private Equity Group for GE Capital India S. M. Bafna Non-Executive Independent Director  Over 29 years of experience in the automobile industry  Dealer of Tata Motors, Honda, Hyundai and Maruti Udyog Limited

9 9 Financial Highlights High Credit Rating While Exhibiting Strong Financial Growth Credit Rating for the issue CARE: CARE AA+ for an amount of upto ` 3,000 Crore CRISIL: CRISIL AA/Stable for an amount of upto ` 3,000 Crore India Ratings: IND AA+ for an amount upto ` 3,000 Crore Consolidated Financials Consolidated AUM is a sum of individual AUMs in Shriram Transport Finance and Shriram Equipment Finance

10 10  Stringent credit evaluation tools, limiting customer and vehicle exposure, and direct interaction with customers  Strong Credit evaluation and recovery mechanism, asset-backed lending model and adequate asset cover Prudent Credit Norms  Regular direct contact with customers and other market players, avoiding intermediaries  The product executives are responsible for customer origination and evaluation, loan administration and monitoring as well as loan recovery processes which enables them to develop strong relationships and capitalize on local knowledge Efficient Collection Procedure Expertise in origination, valuation and collection Net NPA of 0.84% Gross NPA of 3.89% CAR of 23.37% As on March 31, 2014 (Unconsolidated) Financial Highlights

11 11 Business Strategy Further expand operations by growing our branch network, penetration into rural centres and increasing partnership and co-financing arrangements with private financiers Continue to develop our Automall business through our wholly-owned subsidiary Shriram Automall India Limited Consolidate and expand our construction and equipment finance business through our wholly-owned subsidiary, Shriram Equipment Finance Company Limited Consolidate our product portfolio Continue to implement advanced processes and systems

12 Details Face Value and Issue Price ( ` per NCD) ` 1,000 Minimum Application ` 10,000/- (10 NCDs) (for all Series of NCDs either taken individually or collectively) Mode of allotment All Series of NCDs except for Series IV and Series V NCDs will be allotted in the dematerialized form and/or the physical form, at the option of the Applicant. Series IV and Series V NCDs will be allotted compulsorily in the dematerialized form Trading Lot One NCD Rating of NCDs “CARE AA+” by CARE, “CRISIL AA/Stable” by CRISIL and “IND AA+” by India Ratings Record Date Date falling 15 days prior to the relevant Interest Payment Date on which the interest is due and payable, or the Redemption Date under the Tranche-I Prospectus, or as may be prescribed by the relevant Stock Exchange/s. In case the record date, as defined herein, falls on a public holiday, the record date shall be the previous Working Day immediately preceding such date. Deemed Date of Allotment The Deemed Date of Allotment for the NCDs shall be the date on which the Board of Directors or duly authorized committee thereof approves the allotment of the NCDs or such date as may be determined by the Board of our Company and/or a duly authorized committee thereof and notified to the Stock Exchanges. Stock Exchanges proposed for listing of the NCDs NSE and BSE Depositories NSDL and CDSL Mode of Interest Payment Through various options available Tax on the coupon interest to the Resident NCD Holder 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 NCDs 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. 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 Tax on the capital gains to the Resident NCD Holder Long-term capital gains arising on the transfer of listed NCDs 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 their own case the tax implications in respect of subscription to the NCDs after consulting their tax advisor 12 Issue Structure – Common Terms Issue Size Base Issue Size of ` 500 Crore with an option to retain oversubscription upto the Shelf Limit of ` 3,000 Crore

13 13 Issue Structure – Details * subject to applicable tax deducted at source, if any. **Monthly option shall be available only to Individuals applying for Allotment of NCDs in demat form only. *** Senior Citizens (only First Allottees) shall be entitled to an additional yield at the rate of 0.25% per annum # For series VI, VII and VIII, Senior Citizens (only First Allottee) will be paid an aggregate amount of ` 1,377.29, ` 1, and ` 2, per NCD, respectively, on the Redemption Date. ## For series IV and V, Senior citizens (only First Allottee) will get a coupon of 10.94% per annum and 11.17% per annum respectively payable monthly. Note Issue Size SeriesIIIIIIIVVVIVIIVIII Tenor 36 months60 months84 months60 months84 months36 months60 months84 months Interest Payment Frequency Annual Monthly** Not Applicable Coupon (% per annum) 9.85%10.00%10.15%10.71% ## 10.94% ## Not Applicable Additional Incentive on coupon (% per annum) IndividualsOthersIndividualsOthersIndividualsOthers Nil Not Applicable 1.15%Nil1.25%Nil1.35%Nil Aggregate of Coupon and Additional Incentive on any Record Date (% per annum) 11.00%9.85%11.25%10.00%11.50%10.15%10.71%10.94%Not Applicable Redemption Amount for NCD Holders ( ` / NCD) Repayment of the Face Value plus any interest at the applicable Coupon that may have accrued at the Redemption Date plus Additional Incentive as may be applicable for Individual NCD Holders IndividualsOthersIndividualsOthersIndividualsOthers ` 1, per NCD* ` 1, per NCD* ` 1, per NCD* ` 1, per NCD* ` 2, per NCD* ` 1, per NCD* Effective Yield on any record date*** (% p. a.) IndividualsOthersIndividualsOthersIndividualsOthersIndividuals OthersIndividualsOthersIndividualsOthers 11.00%9.85%11.25%10.00%11.50%10.15%11.25%11.50% 11.00%9.85%11.25%10.00%11.50%10.15% Interest on Application (% p. a.) 9.00% Interest on Refund (% p. a.) 4.00% Base Issue Size of ` 500 Crore with an option to retain oversubscription upto the Shelf Limit of ` 3,000 Crore

14 14 Categories Category ICategory IICategory IIICategory IV Institutional InvestorsNon Institutional InvestorsHigh Net-worth Individual, (“HNIs”) Retail Individual Investors Resident public financial institutions as specified in Section 2 (72) of the Companies Act, 2013 authorized to invest in the NCDs; Companies; bodies corporate and societies registered under the applicable laws in India and authorized to invest in the NCDs; Resident Indian individuals who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs Resident Indian individuals who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series of NCDs Statutory corporations including State Industrial Development Corporations, commercial banks, co-operative banks and regional rural banks incorporated in India and authorized to invest in the NCDs; Educational institutions and associations of persons and/or bodies established pursuant to or registered under any central or state statutory enactment; which are authorized to invest in the NCDs; Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value more than ` 5 Lacs, across all Series of NCDs Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value not more than ` 5 Lacs, across all Series of NCDs Indian Provident funds with a minimum corpus of ` 2,500 lacs, pension funds with a minimum corpus of ` 2,500 lacs, superannuation funds and gratuity funds, authorized to invest in the NCDs; Trusts settled under the Indian Trusts Act, 1882, public/private charitable /religious trusts settled and/or registered in India under applicable laws, which are authorized to invest in the NCDs; Indian alternative investment funds registered with SEBI and Venture Capital Funds; Resident Indian scientific and/or industrial research organizations, authorized to invest in the NCDs; Indian insurance companies registered with the IRDA; Partnership firms formed under applicable laws in India in the name of the partners, authorized to invest in the NCDs; and National Investment Fund set up pursuant to the resolution F. No. 2/3/2005-DD-II dated November 23, 2005 by the Government of India; Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009), authorized to invest in the NCDs Insurance funds set up and managed by the Indian army, navy or the air force of the Union of India or by the Department of Posts, India Indian Mutual Funds registered with SEBI Issue Structure – Categories

15 15 Applications cannot be made by: Minors without a guardian name* Foreign nationals inter-alia including any NRIs who are (i) based in the USA, and/or, (ii) domiciled in the USA, and/or, (iii) residents/citizens of the USA, and/or, (iv) subject to any taxation laws of the USA Persons resident outside India Foreign Institutional Investors Foreign Portfolio Investors Qualified Foreign Investors Overseas Corporate Bodies; and Persons ineligible to contract under applicable statutory/regulatory requirements Issue Structure – Categories * Applicant shall ensure that guardian is competent to contract under Indian Contract Act, 1872

16 16 Safety of Investment NCDs rated ‘CARE AA+’ by CARE, ‘CRISIL AA/Stable’ by CRISIL and “IND AA+” by India Ratings IDBI Trusteeship Services Limited is appointed as Debenture Trustee to the Issue NCDs to be secured by a first charge on an identified immovable property and specified future receivables of the Company Salient Features Liquidity and Exit Options Allocation, Reservation and Dematerialization  Allocations will be on a First Come First Serve Basis, with reservations as follows: 50% - Retail Individual Portion (Individual and HUFs applying for ` 5 lakhs or less across all series of NCDs) 30% - HNI Portion (Individual and HUFs applying for more than ` 5 lakhs across all series of NCDs) 10% - Non Institutional Portion 10% - Institutional Portion  Inter - Category over -flow in favour of Retail Individual, then HNI, then Non Institutional and then Institutional  An applicant has the option to opt for allotment in dematerialized form and/or the physical form for all Series of NCDs except for Series IV and Series V NCDs. Series IV and Series V NCDs will be allotted compulsorily in the dematerialized form Creation of Debenture Redemption Reserve of 25% of the value of NCDs through public issue (subject to the Company generating adequate profits every year, until such NCDs are redeemed) Exit Prior to Maturity Secondary Market Exit Listing on both the exchanges, NSE and BSE to provide tradability Liquidity Exploring the Market making possibilities One Instrument for each Series, which will reduce the number of instruments

17 17 Individuals (Retail Individual Investors and High Net - worth Individuals (HNIs) who hold the NCDs on any record date shall be eligible to additional incentive in terms of interest in case of Series I, II and III NCDs and redemption amount in case of Series VI, Series VII and Series VIII NCDs respectively Qualifying Investors can apply for the NCDs in physical form and/or dematerialised form except for Series IV and Series V NCDs which will be allotted compulsorily in the dematerialized form Exploring the market making possibilities Unique Features Monthly payment option to provide regular cash flow to investors Additional Incentive available for Senior Citizens

18 18 Investment Rationale One of the largest Indian asset financing NBFC Experienced Management Team Good Credit Rating and Strong Financials Attractive returns – Individuals to get additional benefits Retail Individual Investors and High Net - worth Individuals (HNIs) to get the same benefits Low levels of NPAs – Net NPA of 0.84% as on March 31, 2014 Listing on NSE & BSE to provide liquidity and exit options Qualifying Investors can apply for the NCDs in physical form except for series IV and series V under monthly option Unique Business Model and Consistent Track Record

19 19 Lead Managers & Other Intermediaries JM Financial Institutional Securities Limited Edelweiss Financial Services Limited Lead Managers A. K. Capital Services Limited ICICI Securities Limited Registrar Integrated Enterprises (India) Limited Debenture Trustee IDBI Trusteeship Services Limited Stock Exchange National Stock Exchange of India Limited BSE Limited

20 20 Lead Brokers A. K. Stockmart Private Limited Axis Capital Limited Lead Brokers Just Trade Securities Limited Edelweiss Broking Limited HDFC Securities Limited India Infoline Limited ICICI Securities Limited Integrated Enterprises (India) Limited JM Financial Services Limited Karvy Stock Broking Limited SMC Global Securities Limited RR Equity Brokers Private Limited SHCIL Services Limited Tipsons Stock Brokers Private Limited Trust Financial Consultancy Services Private Limited Kotak Securities Limited

21 Thank You


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