Tata Capital plans Rs 500 cr NCD issue

• Issue opens on Monday, 2nd February 2009
• Issue of Rs 500 crores with an option to retain over-subscription of up to Rs. 1,000 crores for additional NCDs
• High credit rating of “LAA+” by ICRA and “CARE AA+” by CARE
• Interest rate up to 12%
• No TDS, allotment on first-come-first-serve basis
• The issue closes on Tuesday, 24th February 2009 with an option with the company to close earlier

MUMBAI: Tata Capital, a wholly-owned subsidiary of Tata Sons Limited, which is registered with the Reserve Bank of India (RBI) as a Systemically Important Non Deposit accepting, Non Banking Financial Company, proposes to enter the capital markets on 2nd February 2009 with a public issue of Secured Non-Convertible Debentures (NCDs) aggregating to Rs. 500 crores with an option to retain over-subscription of up to Rs. 1,000 crores and has in this regard filed a prospectus with the Registrar of Companies, Maharashtra.

The Issue closes on 24th February 2009 or earlier or on such date as may be decided at the discretion of the Committee of Directors of Tata Capital subject to necessary approvals.

The NCDs have been rated ‘LAA+’ by ICRA and ‘CARE AA+’ by CARE. The rating of ‘LAA+’ by ICRA indicates high-credit-quality and low credit risk. The rating of ‘CARE AA+’ by CARE is considered to offer high safety for timely servicing of debt obligations. Such instruments carry very low credit risk. The ratings provided by ICRA and CARE may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions.


Key Highlights of the Instrument:

• Interest at the rate of 12% per annum is offered for the annual and cumulative interest payment options.
• Quarterly interest payment option to offer a coupon rate of 11.25% per annum with an annualized yield of 11.73%.
o For the quarterly, annual and cumulative interest payment options the minimum application size is Rs 10,000 and additional investments in multiples of Rs 1,000.
• Monthly interest payment option to offer a coupon rate of 11% per annum with an annualized yield of 11.57%. The minimum application size is Rs 100,000 and additional in multiples of Rs. 100,000
• Interest on application money at the rate of 8% p.a. to be paid from the date of realization of the cheque or 5 days after the date of application, whichever is later, upto one day prior to the deemed date of allotment. As per clause (ix) of Section 193 of the I.T. Act, no 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 (42 of 1956) and the rules made thereunder. Hence, there will be no tax deduction at source on the interest payout. The tenure of all the NCDs is 60 months with a put and call option after 36 months for monthly, annual and cumulative options and 42 months for quarterly option. Allotment to applicants will be on a first-come-first serve basis for each category of investor.

The net proceeds of the Issue is proposed to be used for the Company’s various financing activities including lending and investments, to repay existing loans and business operations including its capital expenditure and working capital requirements. ICICI Securities Ltd, Citigroup Global Markets India Pvt Ltd and DSP Merrill Lynch Ltd are the Lead Managers to the Issue. Tata Capital Markets Limited is the advisor to the issue.

Speaking on the occasion, Mr. Praveen P Kadle, Managing Director, Tata Capital said, “The debut year for Tata Capital has been consistent with our business and growth plans. Tata Capital aspires to become one of the leading financial services company in India with a global footprint and build a brand which is admired and respected by all stakeholders. . In keeping with our brand proposition, ‘We only do what’s right for you’, we aim to combine genuine care with expertise to give our customers only what we believe is right.. At Tata Capital, we aim to offer world-class financial services to our esteemed customers.”

About Tata Capital Limited

Tata Capital Limited is a customer-centric financial services company catering to the diverse needs of retail, corporate and institutional clients via seven broad areas of business, namely - Retail Finance, Corporate Finance, Investment Services, Investment Banking, Private Equity, Wealth Management and Rural Finance.

Going forward, the company’s strategy is to consolidate existing lines of business, explore new business opportunities, pursue strategic acquisitions and alliances, leverage its technology advantage, attract and retain talented professionals and expand client base and geographical presence.