Mumbai: Women and senior citizens have bid for over 60% of retail investors category (Category III) of secured redeemable Non-Convertible Debentures (“NCDs”) Public Issue of D. S. Kulkarni Developers Limited (the “Company” or “Issuer”). Women investors and senior citizens have bid for 30,439 bonds and 30,436 bonds respectively out of the total of 109,735 bonds (subscribed to till August 13, 2014) while Resident Indian Individuals have bid for 41,723 bonds as of 5 pm on August 13, 2014 (as per NSE). The Issue is nearly 70% subscribed as of 5 pm on August 13, 2014, while Category III (Retail investors) is 84% subscribed.
According to experts, interest rates being offered by the Company (with effective yields ranging from 13.1% p.a. to 13.52% p.a.) are better than the yields prevailing for bonds of other comparable companies in the secondary market. Another attractive feature for women and senior citizens is that there is no TDS if bonds are held in demat account, which is very useful to senior citizens and women because their overall income is generally below taxable limits. All non-ASBA applicants will be paid interest on application money on the amount allotted @7% per annum. The rate of interest on application money, which is liable to be refunded, will be @6% per annum. For further details, applicants may refer to Offer Document.
The Public Issue, which opened on August 4, 2014, comprises secured redeemable Non-Convertible Debentures (“NCDs”) of face value of Rs. 5,000 each for Option I, II and IV; and Rs. 25,000 each for Option III aggregating upto Rs. 100 crore (with an option to retain oversubscription of an equal amount) aggregating up to Rs. 200 crore (“Overall Issue size”). This is the first ever secured NCD Public Issue by any real estate company in recent times and is a significant in terms of deepening of the bond market.
The minimum application amount is Rs. 25,000 across all options on NCDs and in multiples of One (1) NCD after the minimum application. Allotment is on a first-come-first-serve basis. Options of investment tenors are as follows: Option 1 – tenure of 36 months; quarterly interest payment); Option II – tenure of 66 months; and interest payment on maturity; Option III – tenure of 72 months and interest payable annually; Option IV - 84 months and interest payable annually. The coupon rate is 12.5% p.a. for Option I; 12.65% p.a. for Option III; & 12.75% p.a. for Option IV respectively. Effective yields are as follows: 13.1% p.a. for Option I; 13.43% p.a. for Option II; 12.65% for Option III; and 13.52% for Option IV.
Valid applications by DSK Employees, Existing Equity Shareholders, Senior Citizen, Servicemen Ex-servicemen and Women (first holder), falling under any of the above three (3) categories shall be eligible for an additional coupon of 0.25% p.a. For such investors, the coupon rate is 12.75% p.a. for Option I; 12.90% p.a. for Option III; & 13% p.a. for Option IV respectively. Effective yields are as follows: 13.37% p.a. for Option I; 13.43% p.a. for Option II; 12.90% for Option III; and 13.80% for Option IV. Such investors are required to mention the appropriate sub category code provided in the application form and provide the requisite KYC documents, failing which, such additional coupon shall not be payable.
No tax will be deducted at source from the interest on listed NCDs held in the dematerialised form. However in case of Secured NCDs held in physical form, as per the current provisions of the I.T. Act, tax will not be deducted at source from interest payable on such Secured NCDs held by the investor (in case of resident individual Debenture Holders and Hindu Undivided Family), if such interest does not exceed Rs. 5,000 in any financial year and the interest is paid by an account payee cheque.
Category 1 of investors include amongst others Resident Public Financial Institutions, Co-operative Banks and Regional Rural Banks, Provident Funds, Venture Capital funds, Insurance Companies, National Investment Fund, Insurance funds and Mutual Funds.
Category II of investors include Educational institutions, Trust including Public/private charitable/religious trusts, Scientific or industrial research organizations, etc.
Category III of investors include amongst others Resident Indian individuals and Hindu Undivided Families through the Karta.
All non-ASBA applicants will be paid interest on application money on the amount allotted @7% per annum. The rate of interest on application money, which is liable to be refunded, will be @6% per annum. For further details, applicants may refer to Offer Document.
The NCDs proposed to be issued under the Issue have been rated ‘CARE BBB+’ by CARE for an amount of upto Rs. 200 crore by way of its letter dated July 14, 2014 which has been revalidated by its letter dated July 24, 2014. Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.
The Company proposes to use the issue proceeds for Projects under development and general corporate purposes.
The NCDs are proposed to be listed on the Bombay Stock Exchange (“BSE”). The NCDs shall be listed within 12 working days of Issue Closure. Mode of Allotment is in dematerialised form with an option to allot NCDs in physical form on an Application made by an Applicant.
The Lead Manager to the issue is SBI Capital Markets Limited.
Source: Sachin Murdeshwar