KERALA FINANCIAL CORPORATION Email : PRIVATE … im.pdf · india (issue and listing of debt securities) regulations, 2008 issued vide circular no. lad-nro/gn/2008/13/127878 dated

Private & Confidential Not for circulation

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(THIS DISCLOSURE DOCUMENT IS NEITHER A PROSPECTUS NOR A STATEMENT IN LIEU OF PROSPECTUS). THIS DISCLOSURE DOCUMENT PREPARED IN CONFORMITY 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, AS AMENDED BY SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) (AMENDMENT) REGULATIONS, 2012 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2012-13/19/5392 DATED OCTOBER 12, 2012 AND CIR/IMD/DF/18/2013 DATED OCTOBER 29, 2013) AND THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) (AMENDMENT) REGULATIONS, 2014 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2013-14/43/207 DATED JANUARY 31, 2014.

KERALA FINANCIAL CORPORATION

(Incorporated under the State Financial Corporations Act No. LXIII of 1951)

H.O.: Vellayambalam, Thiruvananthapuram, Kerala-695033

Phone: 0471- 2737500, 2311750, 2318319 Fax : 0471- 2313813

Email : [email protected], Website : www.kfc.org

PRIVATE PLACEMENT OF TAXABLE, REDEEMABLE, NON CONVERTIBLE BONDS OF 200 CRORE

( Irrevocably and unconditionally guaranteed by Govt. of Kerala)

GENERAL RISK

Investment in debt instruments involves a degree of risk and investors should invest any funds in the issue only after

reading the risk factors in the Information Memorandum carefully including the risk involved. The Securities have not

been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the

accuracy or adequacy of this document.

ISSUER’S ABSOLUTE RESPONSIBILITY

The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document

contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the

information contained in the Information Memorandum is true and correct in all material aspects and is not

misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there

are no other facts, the omission of which make this document as a whole or any of such information or the expression

of any such opinions or intentions misleading in any material respect.

HIGHLIGHTS

Impeccable track record of timely servicing of its debt obligation to all the bond holders. Unconditional & Irrevocable Guarantee by Govt. of Kerala for the timely servicing of the bond obligation. Credit rating shows low credit risk, making it a safe investment option.

Attractive returns: Coupon Rate of 09.15% p.a. payable semi-annually.

Annualized Yield: 09.36%.

Maturity: 10 years. Put/call Option: at the end of 4th year. In case exercised 25% redemption at the end of 4th / 5th/6th and 7th year each.

BRICKWORKS has assigned “BWR A-(SO)”

Consistent Profit Making and Dividend Paying Corporation

Positive net-worth of Rs. 414.83 Crores as on 31.03.2014

Notified Public Financial Institution

Sole Arranger to the Issue

SPA CAPITAL ADVISORS LTD.

New Delhi

mailto:[email protected]

http://www.kfc.org/


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PROFILE OF THE CORPORATION

Incorporated under the State Financial Corporations Act of 1951 by Government of Kerala on

December 01, 1953.

Promotes rapid industrialization of Kerala by extending financial assistance mainly to Micro, Small

and Medium Enterprises (MSME) in manufacturing and services sector.

Provides finance in the form of term loans, working capital loans and special schemes.

Member of Credit Guarantee Fund Trust for Micro & Small Enterprises.

Profit making and Dividend paying organization

One of the top PSUs’ in Kerala and No. 1 SFC in the country in terms of profitability and low level of

NPA.

Managed by an expert panel comprising of senior IAS officers/professionals as Directors under the

guidance of the Chairman and Managing Director, Mr. P. Joy Oommen, former Chief Secretary,

Chhatisgarh.

SOLE ARRANGER TO THE ISSUE

SPA CAPITAL ADVISORS LTD

25, C-Block Community Centre,

Janak Puri, New Delhi - 110 058

Ph - 011-25517371 / 45675588

Fax 011-25572763

TRUSTEE TO THE ISSUE REGISTRAR TO THE ISSUE

GDA Trusteeship Ltd. GDA House, Plot No. 85, Bhusari Colony ( Right) , Paud Road, Pune -411038 Ph. 020-25280081

Karvy Computershare Private Limited 24-Rajabahadur Mansion 6-Ambalal Doshi Marg Behind BSE, Fort Mumbai 400 023. Maharashtra, India Tel: 66235454, Fax : 66331135 www.karvycomputershare.com

ISSUE SCHEDULE

Placement Opening Date Sep 10, 2014

Placement Closing Date Oct 17, 2014

Deemed Date of Allotment Oct 30, 2014

http://www.karvycomputershare.com/


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Private placement of Bonds issued by Kerala Financial Corporation

Dear Sir/Madam,

Kerala Financial Corporation (the issuer) is issuing Bonds on a private placement basis as described

in the Memorandum. Investors are requested to make payment through demand draft(s)/ cheque(s)

payable in favour of 'Kerala Financial Corporation Non SLR Bond Issue 2014' and crossed 'Account Payee

only'. The full face value of the Bonds has to be paid up on application. The issuer reserves the right to

reject in full or part any or all of the offers received by them to invest in these Bonds without assigning any

reason for such rejections. You are requested to confirm your acceptance to the terms and conditions

outlined in this Memorandum of Private Placement by sending the duly filled in Application Form along

with the cheque(s)/demand draft(s) to the Arranger to the issue. Your acceptance of the terms and

conditions outlined in this Memorandum will constitute an offer to invest in the above referred private

placement and will be subject to acceptance by the issuer. Please note that this Private Placement

Memorandum is restricted for circulation only to the investors to whom the above has been addressed

personally and this Memorandum cannot be transferred /circulated to others. The information contained

herein is to be retained in strict confidence.

Should you require any further clarifications regarding the above mentioned Private placement we request

you to contact the undersigned or the compliance officer (mentioned elsewhere here-in) or the Arrangers

to the issue.

Yours faithfully,

For Kerala Financial Corporation

General Manager (F&M)

Place: Thiruvananthapuram

Date: 04.09.2014


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DISCLAIMERS

GENERAL DISCLAIMER

THIS DISCLOSURE DOCUMENT IS NEITHER A PROSPECTUS NOR A STATEMENT IN LIEU OF PROSPECTUS.

THIS DISCLOSURE DOCUMENT PREPARED IN CONFORMITY 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, AS AMENDED BY SECURITIES AND EXCHANGE BOARD OF

INDIA (ISSUE AND LISTING OF DEBT SECURITIES) (AMENDMENT) REGULATIONS, 2012 ISSUED VIDE

CIRCULAR NO. LAD-NRO/GN/2012-13/19/5392 DATED OCTOBER 12, 2012 AND CIR/IMD/DF/18/2013

DATED OCTOBER 29, 2013) AND THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF

DEBT SECURITIES) (AMENDMENT) REGULATIONS, 2014 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2013-

14/43/207 DATED JANUARY 31, 2014. This document does not constitute an offer to the public generally to

subscribe for or otherwise acquire the Bonds to be issued KERALA FINANCIAL CORPORATION (the “Issuer”/

the “Corporation”/ the “Issuer Corporation”). The document is for the exclusive use of the Institutions to

whom it is delivered and it should not be circulated or distributed to third party (ies). KERALA FINANCIAL

CORPORATION certifies that the disclosures made in this document are generally adequate and are in

conformity with the captioned SEBI Regulations. This requirement is to facilitate investors to take an

informed decision for making investment in the proposed Issue.

DISCLAIMER OF THE 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 that the same has 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 the Corporation,

any irregularities or lapses in this document.

DISCLAIMER OF THE ARRANGER

It is advised that the Corporation has exercised self due-diligence to ensure complete compliance of

prescribed disclosure norms in this Disclosure Document. The role of the Arranger in the assignment is

confined to marketing and placement of the bonds on the basis of this Disclosure Document as prepared by

the Corporation. The Arranger have neither scrutinized/ vetted nor have they done any due-diligence for

verification of the contents of this Disclosure Document. The Arranger shall use this document for the

purpose of soliciting subscription from qualified institutional investors in the bonds to be issued by the

Corporation on private placement basis. It is to be distinctly understood that the aforesaid use of this

document by the Lead Arrangers should not in any way be deemed or construed that the document has

been prepared, cleared, approved or vetted by the Lead Arrangers; nor do they in any manner warrant,

certify or endorse the correctness or completeness of any of the contents of this document; nor do they

take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any


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scheme or project of the Corporation. The Arranger or any of its directors, employees, affiliates or

representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever

nature and extent in connection with the use of any of the information contained in this document.

DISCLAIMER OF THE ISSUER

The Issuer confirms that the information contained in this Disclosure Document is true and correct in all

material respects and is not misleading in any material respect. All information considered adequate and

relevant about the Issue and the Corporation has been made available in this Disclosure Document for the

use and perusal of the potential investors and no selective or additional information would be available for

a section of investors in any manner whatsoever. The Corporation accepts no responsibility for statements

made otherwise than in this Disclosure Document or any other material issued by or at the instance of the

Issuer Corporation and anyone placing reliance on any other source of information would be doing so at

his/her/their own risk.

DISCLAIMER OF THE STOCK EXCHANGE

As required, a copy of this Disclosure Document has been submitted to the Bombay Stock Exchange.

(Here in after referred to as “BSE”) for hosting the same on its website. It is to be distinctly understood that

such submission of the document with “BSE”) or hosting the same on its website should not in any way be

deemed or construed that the document has been cleared or approved by “BSE”); nor does it in any

manner warrant, certify or endorse the correctness or completeness of any of the contents of this

document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the

Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters,

its management or any scheme or project of the Corporation. Every person who desires to apply for or

otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation

and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which

may be suffered by such person consequent to or in connection with such subscription/ acquisition

whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

DISCLAIMER IN RESPECT OF JURISDICTION

The private placement of Bonds is made in India to Companies, Corporate Bodies, Trusts registered under

the Indian Trusts Act, 1882, Societies registered under the Societies Registration Act, 1860 or any other

applicable laws, provided that such Trust/ Society is authorised under constitution/ rules/ byelaws to hold

bonds in a Corporation, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Insurance

Companies, Commercial Banks including Regional Rural Banks and Cooperative Banks, Provident, Pension,

Gratuity, Superannuation Funds as defined under Indian laws. The Information Memorandum does not,

however, constitute an offer to sell or an invitation to subscribe to securities offered hereby in any other

jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any

person into whose possession this Information Memorandum comes is required to inform him about and

to observe any such restrictions. Any disputes arising out of this issue will be subject to the exclusive

jurisdiction of Honourable High Court of Kerala at Ernakulam. All information considered adequate and

relevant about the Issuer Corporation has been made available in this Information Memorandum for the


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use and perusal of the potential investors and no selective or additional information would be available for

a section of investors in any manner whatsoever.

DISCLAIMER BY DEBENTURE TRUSTEE

The debenture trustee is not a guarantor and will not be responsible for any non-payment of interest and

redemption and/or any loss or claim.


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A. Issuer Information

a. Name and Address of the Issuer:

I. Registered & Corporate office of the Issuer

Head Office:

Kerala Financial Corporation

Vellayambalam

Thiruvananthapuram – 695 033

Phone : +91 471 2318319(7 Lines)

Fax : +91 471 2311750, 2318541, 2313813, 2722090

Email : [email protected]

Website: www.kfc.org

II. Compliance Officer details

Sri. Premnath Ravindranath

General Manager ( F & M)


Vellayambalam,

Thiruvananthapuram – 695033

Kerala

Ph. 0471-2737777

Mob: 09496030120

The investors can contact the Compliance Officer in case of any pre-issue / post-issue related

problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account,

non-receipt of refund order(s),interest warrant(s)/ cheque(s) etc.

III. Sole Arranger:

SPA CAPITAL ADVISORS LTD 25, C-Block Community Centre,

Janak Puri, New Delhi - 110 058

Ph - 011-25517371 / 45675588

Fax 011-25572763



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IV. TRUSTEE TO THE ISSUE

GDA Trusteeship Ltd.

GDA House, Plot No. 85,

Bhusari Colony ( Right) ,

Paud Road,

Pune -411038

Ph. 020-25280081

V. REGISTRAR OF THE ISSUE

Karvy Computershare Private Ltd.

Registered Office

Karvy House, 46, Avenue 4,

Street No. 4, Banjara Hills,

Hyderabad – 500 034

Ph. 040- 23312454

Fax: 040- 23311968

Email: [email protected]

VI. CREDIT RATING AGENCY

Brickwork Ratings India Pvt ltd

3rd Floor, Raj Alkaa Park, Kalena Agrahara,

Bannerghatta Road,

Bengaluru – 560076

Tel: 080 – 40409940,

Fax: 080 – 40409990,

www.brickworkratings.com

VII. AUDITORS OF THE ISSUER

M/s. Jose & Hemachandran

Chartered Accountants

TC 6/686(3), Vattiyoorkavu

PO: Thiruvananthapuram-695 013,

Kerala

Mob: 9447123625


http://www.brickworkratings.com/


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B. Brief summary of the business / activities of the Issuer and its line of business :

i. OVERVIEW

Activities of the Corporation Sanction of Term Loans to new Micro, Small and Medium enterprises in the manufacturing and

Services Sector. Sanction of Term Loans to existing industrial concerns and Services sector units for

expansion/Modernisation/diversification.

Sanction of Working Capital Loans to meet working capital requirements of industrial/service

enterprises under special schemes.

Special scheme for Financial Assistance to Civil Contractors.

Special scheme for Financial Assistance for producing Feature Film and TV serials

Special scheme for Modernization, up gradation and expansion of existing cinema theatres and

establishment of new multiplexes.

Special scheme for Purchase of Lab Equipments/Waste Management.

During F.Y. 2014-15, KFC will implement an innovative interest subvention scheme for manufacturing

sector as announced by the Hon. Finance Minister of Kerala and will also give special thrust to the following

sectors.

SC/ST Entrepreneurs.

Women entrepreneurs starting manufacturing concern.

Micro, Small, Medium enterprises (MSME) in manufacturing sector (starting new units or

expansion of existing units).

Renewable energy/Solar energy/Wind energy.

Entrepreneur development through KSEDM (Kerala State Entrepreneur Development Mission)

Functioning of the Corporation.

The main objective of KFC is to promote rapid industrialization of the state by extending financial

assistance to Micro, Small and Medium Enterprises (MSME) in manufacturing and service sector. The

financial assistance is provided in from of term loans, working capital loans and special schemes. KFC is a

member of Credit Guarantee Fund Trust for Micro & Small Enterprises and provides credit facility up to Rs.

50 lakhs without collaterals and third party guarantees to MSMEs. KFC has 16 Branch Offices with its Head

Quarters at Thiruvananthapuram and Zonal Offices at Kozhikode, Ernakulam and Thiruvananthapuram.

KFC is today offering term loans at the most easy terms and lowest rates of interest and with

increased flow of funds, intend to increase the portfolio size substantially giving a big push to much needed

investment and development activities in the State. With better monitoring mechanism, objective appraisal

and sanction, the recoveries and collection of KFC are also showing an upward trend. Further besides the

size of portfolio, emphasis is now being laid on improving the quality of its advances.


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Performance

When compared to the previous year, Kerala Financial Corporation has achieved substantial

growth in terms of sanction, disbursement and recovery of financial assistance. An analysis of the

operational performance of the Corporation during the last five years is shown in the Table below:

(Amounts in Rs. crores)

FY Sanction Disbursement Recovery Interest

Income

Net

Profit

Gross

NPA

(%)

Net

NPA

(%)

2009-10 615.93 419.53 299.57 108.54 33.72 9.04 2.40

2010-11 507.06 443.44 354.73 131.84 36.40 8.20 1.88

2011-12 539.01 464.57 467.17 173.98 45.65 3.60 1.30

2012-13 661.39 475.92 540.22 257.7 66.83 3.51 0.36

2013-14 989.62 754.73 565.13 266.19 41.34 3.45 0.35

The growth, when compared to the previous financial year is 49.63% in sanction and 58.58% in

disbursement, indicating the healthy contribution of the Corporation to the development of the industrial

activity in the State. On the recovery front, the total amount collected has gone up by 4.61% while the

total interest income has gone up by 16.38%. The high level of growth in these areas throw light on the

effective functioning of the organization in terms of quality lending, highly efficient collection of current

dues and scientific & practical compromise settlement policies in place for realization of non-performing

advances. These are also reflected in the fall in the level of non-performing assets to 0.35% in terms of Net

NPA and to around 3.45% at the Gross Level at par with banking standards.

Strengths and Feats

Only SFC in India which has given dividend out of profits during the last 3 years with a portfolio size of Rs. 1800 Crores.

KFC has been adjudged as second in the FACT MKK Nayar Memorial Productivity Award for the FY

2012-13 in the category of service organizations.

Assisted over 45000 units.

Positive attitude towards first generation entrepreneurs/green field projects.

Longer gestation and repayment period

Lowest Interest rates in the market.

Wide delegation of powers to the 16 Branches and 3 Zonal Offices.

Easy access and hassle-free procedures.

Hand-holding and friendly services, besides finance.

Time-bound sanction and disbursement.

Only 0.5% processing fee and no hidden charges.

Dedicated and professionally qualified personnel.

Technology driven appraisal, monitoring and MIS.

An ISO Certified organization.


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ii. MANAGEMENT TEAM

Sl.

No. Name & Address Telephone (office)

1. Shri P Joy Oommen,IAS

Chairman & Managing Director,

Kerala Financial Corporation,

Vellayambalam,

Thiruvananthapuram.

Phone: 0471-2737555, 2315891, 2315694


2. Shri Rajesh Kumar Sinha, IAS,

Secretary, Finance Department

Finance Department,

Government of Kerala,

Thiruvananthapuram.

(Office): 0471 2326436, 2518695

(Res): 0471 2317211

(Fax): 0471 2328980

Email:[email protected]

3. Shri K.S. Sreenivas, IAS,

Special Secretary,

Industries (IP) Department,

Industries (IP) Department,

Government of Kerala,

Thiruvananthapuram.

(Office): 0471 2336602, 2518444

(Res): 0471 2733783

(Fax): 0471 2336602

Email:[email protected]

4. Shri Ramnath,

Chief General Manager,SIDBI

Small Industries Dev. Bank of India,(SIDBI), SME

Develop-ment Centre, C-11, G Block Bandra- Kurla

Complex,

Mumbai – 400 051.

5. Shri S. Chandrasekharan,

General Manager (Treasury),SBT

State Bank of Travancore,

Head Office, Poojappura,

Thiruvananthapuram. Office) : 0471-2351906

(Fax): 0471-2357324

Email : [email protected]

6. Shri Anadi Charan Sahu,

Deputy General Manager,SIDBI

Small Industries Dev. Bank of India,Finance Towers, 2nd

Floor,

Kaloor, Kochi – 682 017.

Mob : 9446067811

Ph:0484-2401791/ 2401792

7. Sri Shaji M S,

Senior Divisional Manager, LIC

Life Insurance Corpn. Of India,

Pattom, Thiruvananthapuram.






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(Office): 0471-2541631, 2540851

(Fax): 0471-2541405


8. Smt. Premilla V. Nair, FCA, DISA(ICAI),

Director

T.C.4/1274, ‘ Krishna’,

Kuravankonam, Kawdiar.P.O.,

Thiruvananthapuram.

Phone: (Res): 0471-2437320, 2437321

Mob: 9495937320

9. Adv. Ponnachan,

Director

Kizhakkethil,Palayam,

Thiruvananthapuram.

Mob: 9446748315

Principal Officers

Sno. Name & Designation Address & Telephone

1 Shri P Joy Oommen, IAS

Chairman & Managing Director,


Vellayambalam,

Thiruvananthapuram.

Phone: 0471-2737555, 2315891, 2315694


2 Sri. Premnath Ravindranath,

General Manager(F&M)


Vellayambalam,

Thiruvananthapuram.

Mob: 9496030120

[email protected]

3 Sri. N. Asok Kumar ,

General Manager(R)


Vellayambalam,

Thiruvananthapuram.

Mob : 9496030155

[email protected]

4 Sri. A. G. Dinesh ,

General Manager(A&C)


Vellayambalam,

Thiruvananthapuram.

Mob: 9496030172

[email protected]

5 Smt. Soya K ,

Corporate Secretary cum AGM Accounts


Vellayambalam,

Thiruvananthapuram.

Mob: 9496030174

[email protected]








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i. Key operational and Financial parameters for last 3 Audited years :

Parameters

FY 2013-14

( amt in Lacs)

FY 2012-13

( amt in Lacs)

FY 2011-12

( amt in Lacs)

Net worth 41483.77 38376 32585.42

Total Debt 137277 99562 94637

of which - Non Current Maturities of Long Term

Borrowing 96496 73183 73991

Short Term Borrowing 19468 9753 --

Current Maturities of Long term Borrowing 213.13 166.25 206.46

Net Fixed Assets 336.12 877.99 274.81

Non Current Assets 1930.13 1458.16 5145.77

Cash and Cash Equivalents 1577.61 1729.13 7116.83

Currents Investments 1000 2000 885.00

Current Assets 9401.25 5486.67 123983.89

Current Liabilities 3261.87 3335.81 10183.89

Assets Under Management

-

Off Balance Sheet Assets

-

Interest Income 26312 25294 15775.08

Interest Expense 12714.31 10021.68 8208.75

Provisioning & Write offs 5450 4192 3559.79

PAT 4134 6849 4565.19

Gross NPA( %) 3.45 3.51 3.60

Net NPA (%) 0.35 0.36 1.30

Tier I Capital Adequacy Ratio 21.57 24.61 20.51

Debt: Equity Ratio of the Corporation (considering the issue size of Rs. 200 Crores)

Before the issue of debt securities 3.31

After the issue of debt securities 3.79

A. Brief history of the Issuer since its incorporation:

Kerala Financial Corporation (KFC) incorporated under the State Financial Corporations Act of 1951,is a

trend setter and path breaker in the field of long term finance, playing a major role in the development and

industrialization of Kerala. It was established as the Travancore Cochin Financial Corporation on

01.12.1953.

Consequent to the reorganization of states on linguistic basis in November 1956, Kerala State was formed

and the Travancore Cochin Financial Corporation was renamed as Kerala Financial Corporation.


14

I. Details of Share Capital as on last quarter end:- as on 31.03.14

Share Capital Rs. ( in lacs)

Authorized Share Capital

3,50,00,000 shares of Rs. 100 each 35000

Issued, Subscribed and Paid up Share Capital

21197303 shares of Rs. 100 each 21197.30

I. Changes in its Capital structure as on last quarter end for the last five years:-

As on Rs. Particulars

31.03.2010 Rs. 2,040,600,300 2009-2010

31.03.2011 Rs.2,040,600,300 2010-2011

31.03.2012 Rs. 2,119,730,300 2011-2012

31.03.2013 Rs. 2,119,730,300 2012-2013

31.03.2014 Rs. 2,119,730,300 2013-2014

II. Equity Share Capital history of the Corporation as on last quarter end for the last five years

Date of

Allotment Name of Allottees

No. of equity

shares of

Rs.100/- each

Share

Amount

(Rs)

Cumulative

shares

26/06/10 Government of Kerala 19782512 1978251200 19782512

26/06/10 Small Industries Development Bank

of India 613327 61332700 20395839

26/06/10 LIC of India 7103 710300 20402942

26/06/10 State Bank of Travancore 2099 209900 20405041

26/06/10 Kerala State Co-op. Agr. & Rural Dev.

Bank Ltd. 207 20700 20405248

26/06/10 C. Chandramohan, B.E. 124 12400 20405372

18/07/12 N. Jayakrishnan 31 3100 20405403

18/07/12 N. Rajkumar 101 10100 20405504

26/06/10 The Thrissur Dist. Co-op. Bank Ltd. 41 4100 20405545

26/06/10 Kuttanad Agricultural Co-op. Society

Ltd. 41 4100 20405586

26/06/10 K. Mytheenkunju & Sons (P) Ltd. 41 4100 20405627

26/06/10 The Trustees, The Kerala Balers Ltd.

Staff P.F. 41 4100 20405668

26/06/10 N. Harikrishnan 41 4100 20405709

26/06/10 The Trustees, The Alleppey Co. Ltd. 25 2500 20405734


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26/06/10 The Kanjirappally Service Co-op.

Bank Ltd. 21 2100 20405755

26/06/10 Sree Karunakaran Charitable Trust 21 2100 20405776


18/07/12 N. Radhakumari 6 6 20405803

26/06/10 N. Narendran 19 1900 20405822

26/06/10 C. Rajamohan 17 1700 20405839

26/06/10 Pandiath R. Chandran 10 1000 20405849

26/06/10 N. Harikrishnan 10 1000 20405859


26/06/10 V.S. Natarajan 10 1000 20405879


26/06/10 M.K. Jacob 4 400 20405891

26/06/10 Sree Ramavilas Press & Publications

Ltd. 4 400 20405895

26/06/10 Parukutty Amma Ammini Amma 4 400 20405899

26/06/10 N. Radhabhai Amma 4 400 20405903

26/06/10 Abbasbhoy Abdul Taybe Olai 4 400 20405907

26/06/10 M.K. Jacob 4 400 20405911

26/06/10 T.M. Hassan Rawther 4 400 20405915

26/06/10 Joseph Cherian 4 400 20405919

26/06/10 The South Travancore Plantation Ltd. 4 400 20405923

26/06/10 M. Raghava Iyer 4 400 20405927

26/06/10 Koodal Manickam Devaswom 4 400 20405931

26/06/10 Smt. Molly Varkey 4 400 20405935

26/06/10 M.D. Devassia 4 400 20405939

26/06/10 The Kottayam Co-operative Bank Ltd. 2 200 20405941

26/06/10 Ramalingam Ganesh 2 200 20405943

26/06/10 National Tyre & Rubber Co. of India

Ltd. 2 200 20405945

26/06/10 Navarathna Pharmaceutical

Laboratory Ltd. 2 200 20405947

26/06/10 P.S. George 2 200 20405949

26/06/10 N.C. John & Sons Ltd. 2 200 20405951

26/06/10 The Cochin Chemicals & Refineries

Ltd. 2 200 20405953

26/06/10 K. Chandrasekhara Pillai 2 200 20405955

26/06/10 Paratex Corporation (P) Ltd. 2 200 20405957

26/06/10 P.C. Abraham, Advocate 2 200 20405959

26/06/10 K. Narendranathan 2 200 20405961

26/06/10 P.T. Paul Bros. 2 200 20405963


16

26/06/10 K.R. Elamkath 2 200 20405965

26/06/10 P.A.P. Sahib 2 200 20405967

26/06/10 H. Kunjukrishnan Nadar 2 200 20405969

26/06/10 S.M. Mohammed Kannu 2 200 20405971

26/06/10 R. Venkitakrishna Iyer 2 200 20405973

26/06/10 V. Kuttalam Pillai 2 200 20405975

26/06/10 Kumaravelu Pillai 2 200 20405977

26/06/10 Parameswaran Pillai 2 200 20405979

26/06/10 Sivanu Chettiar 2 200 20405981

26/06/10 Kunangani Pillai 2 200 20405983

26/06/10 B. Krishnamoorthy 2 200 20405985

26/06/10 K. Rajangom Iyer 2 200 20405987

26/06/10 L. Padmavathy Kovilamma 2 200 20405989

26/06/10 M.K. Sainuddin 2 200 20405991

26/06/10 M.J. Nair 2 200 20405993

26/06/10 N. Sreenivasan 2 200 20405995

26/06/10 T.D. Sebastian 2 200 20405997

26/06/10 George Thomas 2 200 20405999

26/06/10 A.P. Thampi & Susheela P. Thampi 2 200 20406001

26/06/10 Subhadra Ravi Karunakaran 2 200 20406003

1/9/2011 Government of Kerala 791300 79130000 21197303

TOTAL 21197303 2119730300 21197303

IV. Details of any Acquisition or Amalgamation in the last 1 year

NIL

V. Details of any Reorganization or reconstruction in the last 1 year:-

NIL

C. Details of the shareholding of the Corporation as on the latest quarter end:-

i. The Share holding composition of KFC as on 30th June 2014 is as follows;

Shareholders Rs. in crores % of Shareholding

Government of Kerala 205.74 97.06

SIDBI 6.13 2.89

LIC 0.07 0.03

SBT 0.02 0.01

Others 0.01 0.01

Total 211.97 100.00


17

ii. List of top 10 holders of equity shares of the Corporation as on the latest quarter end:

Sl No. Name of Allottees

No. of equity

shares of Rs.100/-

each

Share Amount

(Rs)

1 Government of Kerala 20573812 2057381200

2 Small Industries Development Bank of India 613327 61332700

3 LIC of India 7103 710300

4 State Bank of Travancore 2099 209900

5 Kerala State Co-op. Agr. & Rural Dev. Bank Ltd. 207 20700

6 C. Chandramohan, B.E. 124 12400

7 N. Rajkumar 101 10100

8 The Thrissur Dist. Co-op. Bank Ltd. 41 4100

9 Kuttanad Agricultural Co-op. Society Ltd. 41 4100

10 K. Mytheenkunju & Sons (P) Ltd. 41 4100

D. Following details regarding the directors of the Corporation:-

i. Details of the current Directors of the Corporation:

Name, Designation Address Directors of the

Corporation Since

Sri. P. Joy Oommen,

Chairman & Managing Director, KFC

President COSIDICI


Vellayambalam, P.O.

Thiruvananthapuram- 695033.

23- Feb-2013

Shri Rajesh Kumar Sinha , IAS

Secretary (Finance &Expenditure)

Finance Department, Govt. OF

Kerala

Thiruvananthapuram

12-Dec-2012

Shri K.S.Srinivas , IAS Special Secretary (Industries &IP)

Finance Department, Govt. OF

Kerala

Thiruvananthapuram

09-Sep -2010

Shri Ramnath

Chief General Manager, Small Industries

Development Bank of India

SME Develop-ment Centre, C-11, G

Block Bandra- Kurla Complex,

Mumbai – 400 051.

Ph: 022 -26541128

022-67221465

27-Sep -2014


18

Shri. S. Chandrasekharan,

General Manager (Treasury),

SBT, Head Office,

Poojappura, Thiruvananthapuram

(Office) : 0471-2351906

(Fax): 0471-2357324

Email

21-Aug-2012

Shri Anadi Charan Sahu

Deputy General Manager

Small Industries Development Bank of

India

SIDBI, Finance Tower, 2nd Floor,

Kaloor

Kochi - 682017

Mob : 9446067811

Ph:0484-2401791/ 2401792

06- Sep -2013

Sri Shaji M S

Senior Divisional Manager

LIC of India

LIC of India, Pattom

Thiruvananthapuram

(Office): 0471-2541631, 2540851

(Fax): 0471-2541405

16-June-2014

Smt. Premilla. V. Nair

Director

T.C. 4/1274, "Krishna"

Kuravankonam, Kawdiar. P.O.

Thiruvananthapuram.

Phone: (Res): 0471-2437320,

2437321

Mob: 9495937320

26-Sep- 2011

Adv Ponnachan

Director

Kizhakkethil, Palayam,

Thiruvananthapuram

04-June 2013

* Corporation to disclose name of the current directors who are appearing in the RBI defaulter list and/or ECGC

default list, if any. NONE

i. Details of change in directors since last three years:

Name, Designation

Date of Appointment

/ Resignation

Shri Yogesh Gupta IPS, Chairman & Managing Director 07.09.11-22.02.13

Dr. M.P.Sukumaran Nair , Special Secretary to Chief

Minister, Govt. of Kerala

22.07.10 – 26.09.11

Prof Sushil Khanna

Chairman

20.03.07- 16.05.11

Shri S V G Nandagopal

Chief General Manager, SIDBI

20.01.12-21.08.12

Shri A K Dubey IAS

Principal Secretary

08.08.11- 07.09.11

Shri Sanjay Garg IAS

Expenditure Secretary

15.12.10 - 12.12.12

Shri Ravi Jha

General Manager (treasury) State Bank of Travancore

18.05.11 – 21.08.12

Shri Namgial

Chief General Manager, SIDBI

20.06.11-20.01.12


19

Shri Namgial Chief General Manager, SIDBI, Mumbai

21.08.12 –06.09.13

Shri Krishna Iyer Mani Chief General Manager, SIDBI, Mumbai

06.09.13- 27.09.14

Smt. IndumathiSreedhar Dy. General Manager, SIDBI, Ernakulam

18.06.10 –06.09.13

Shri Saswata Chaudhuri, General Manager (treasury) State

Bank of Travancore

3.12.09- 18.05.11

Shri Saji Paul, Senior Divisional Manager , LIC 01.10.09 – 07.06.11

Smt. LekshmyKylas Senior Divisional Manager,LIC

07.06.11 -16.06.2014

Shri. K. Sathianandan, General Manager, SIDBI 18.06.10 – 20.06.11

Shri K.M.Nair, Chief General Manager , SIDBI 01.12.10 – 25.07.11

Sri A.Vikraman , (CGM Rtd. , SIDBI) 25.05.08 – 18.06.10

Dr. Debashish Chatterjee,

Director , IIM Kozhikode

06.02.10 - 25.01.11

E. Following details regarding the auditors of the Corporation:-

i. Details of the auditor of the Corporation:-

Name Address Remarks

M/s. Jose & Hemachandran

TC 6/686(3), Vattiyoorkavu

PO: Thiruvananthapuram-

695013,Kerala

Mob: 9447123625

Statutory Auditor for FY 2010-

11, 2011-12 , 2012-13 &

2014-15

ii. Details of change in auditor since last three years:-

Name Address Date of

Appointment /

Resignation

Auditor of the

Corporation

since

(in case of

resignation)

Remarks

M/S Kumar &

Biju

Associates

‘CHORUS’ F-1, KOCHAR

ROAD

SASTHAMANGALAM P O

TRIVANDRUM – 695 010

Phone: (0471) 2725830,

Fax: (0471) 2722996

19.07.2013-

30.07.2014


20

G . Details of borrowings of the Corporation, as on the latest quarter end:-

I. Details of Secured Loan Facilities ( as on 30.10.2014):-

Lender’s

Name

Type of

Facility

Amount

Sanctioned ( in

lacs)

Principal

Amount

Outstanding (

in lacs)

Repayment Date

/ Schedule ( in

lacs)

Security

SIDBI Term loan

Running

sanctions

19912.17 Quarterly

repayment

Hypothecati

on of

receivables

Federal

Bank

Term loan 10000.00 5000.00 Quarterly

repayment in 5

years with 1 year

moratorium

Hypothecati

on of

receivables

South

Indian Bank


repayment in 5

years with 1 year

moratorium

Hypothecati

on of

receivables

Indian Bank Term loan 30000.00 21770.83 Quarterly

repayment in 5

years with 1 year

moratorium

Hypothecati

on of

receivables

Canara

Bank


repayment in 5

years with 15

months

moratorium

Hypothecati

on of

receivables

State Bank

of

Travancore

Term Loan 10000.00 7855.00 Yearly repayment

in 7 years with 1

year moratorium

Hypothecati

on of

receivables

Tamilnadu Mercantile Bank

Term Loan

5000.00

3850.00

Quarterly repayment in 5 years with 1 year moratorium

Hypothecation of receivables

South

Indian bank

Over Draft 10000.00 0.00 Running Account Hypothecati

on of

receivables

Federal

Bank

Over Draft 15000.00 3828.40 Running Account Hypothecati

on of

receivables


21

II. Details of Unsecured Loan Facilities: NIL

Lender’s Name Type of Facility Amount

Sanctioned

Principal

Amount

Outstanding

Repayment Date /

Schedule

III. Details of NCD (including the current issue) : -

Debenture

Series

Tenor/

Period of

Maturity

Coupon Amount Date of

allotment

Redemption Date/

Schedule

Credit

Rating

Secured/

Unsecured

1/2011 10 Years 9.99% 200 cr. 28-12-

2011

25% every year at

the end of 7th, 8th,

9th & 10th year on

27-12-2018, 27-

12-2019, 27-12-

2020 & 27-12-

2021.

A-(SO)

from

Brickwork

Rating

Agency

Unsecured

1/2013 10 Years 8.72% 200 cr. 07-06-

2013

25% every year at


9th & 10th year on

06-12-2020, 06-

12-2021, 06-12-

2022 & 06-12-

2023.

A-(SO)

from

Brickwork

Rating

Agency

Unsecured

1/2014 10 Years 9.15% 200 Cr 30-10-

2014

25% every year at


9th & 10th year on

30-10-2021, 30-

10-2022, 30-10-

2023 & 30-10-

2024

A-(SO)

from

Brickwork

Rating

Agency

Unsecured

IV. List of Top 10 debenture Holders (as on 30.10.14 ):

Sl No Name of Bond Holder Amount

1 CANARA BANK (EMPLOYEES) PENSION FUND 90,00,00,000


22

2 UNITED INDIA INSURANCE COMPANY (EMPLOYEES) PENSION FUND 45,00,00,000

3 CANARA BANK STAFF PROVIDENT FUND 33,00,00,000

4 CANARA BANK EMPLOYEES GRATUITY FUND 30,00,00,000

5 FOOD CORPORATION OF INDIA CPF TRUST, NEW DELHI 29,70,00,000

6 TRUSTEES, GEB'S C P FUND, BARODA 27,10,00,000

7 HAL (BC) Provident Fund Trust 24,50,00,000

8 B E S AND T UNDERTAKING PF 21,00,00,000

9 NLC Employees Provident Fund 18,00,00,000

10 APGENCO Pension & Gratuity Fund 16,00,00,000

Total 334,30,00,000

V. The amount of corporate guarantee issued by the Issuer along with name of the counterparty (like

name of the subsidiary, JV entity, group Corporation, etc) on behalf of whom it has been issued.

NIL

VI. Details of Commercial Paper:- The total Face Value of Commercial Papers Outstanding as on the

latest quarter end to be provided and its breakup in following table:-

NIL

VII. Details of Rest of the borrowing (if any including hybrid debt like FCCB, Optionally Convertible

Debentures/Preference Shares) as on :-

NIL

VIII. Details of all default/s and/or delay in payments of interest and principal of any kind of term loans,

debt securities and other financial indebtedness including corporate guarantee issued by the

Corporation, in the past 5 years:

NIL

IX. Details of any outstanding borrowings taken / debt securities issued where taken / issued (i) for

consideration other than cash, whether in whole or part, (ii) at a premium or discount or (iii) in

pursuance of an option:

NIL

H. Details of Promoters of the Corporation

i. Details of Promoter Holding in the

Corporation as on the latest quarter end:-

S.No.

Name of Shareholders

Total No. of Equity Shares

No. of shares in demat form

Total Shareholding as % of total no. of equity shares

No. of Shares Pledged

% of Shares pledged with respect to shares owned

1 Govt. of

Kerala

20573812

- 97.06 % - -


23

2 SIDBI 613327 - 2.89 % - -

3 LIC 7103 - 0.03% - -

4 SBT 2099 - 0.01% - -

5 Others 962 - 0.01% - -

I. Abridged Version of Audited consolidated (wherever available) and Standalone Financial

Information (like Profit & Loss statement, Balance Sheet and Cash Flow State) for at least last

three years and auditor qualifications, if any.

Balance Sheet as at 31 March 2014

Particulars As at 31 March, 2014

As at 31 March, 2013

Amount in Lacs Amount in Lacs

A EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share capital 21,197.30 21,197.30

(b) Reserves and surplus 19,083.35 16,189.57

(c) Money received against share capital 1,203.13 989.13

2 Non-current liabilities

(a) Long-term borrowings 117,808.97 89,809.75

(b) Deferred tax liabilities (net) 405.75 301.15

(c) Long-term provisions 5,591.37 4,429.20

3 Current liabilities

(a) Short-term borrowings 19,468.00 9,753.64

(b) Other current liabilities 3,621.87 3,335.81

(d) Short-term provisions 5,989.02 5,248.49

TOTAL 194,368.76 151,254.04

B ASSETS

1 Non-current assets

(a) Tangible Assets 321.16 336.12

(b) Non-current investments 101.29 101.00

(c) Other non-current assets 1,930.13 1,458.16

2 Loans and Advances 180,037.32 140,142.96

3 Current assets

(a) Current investments 1,000.00 2,000.00

(b) Cash and cash equivalents 1,577.61 1,729.13

(c) Other current assets 9,401.25 5,486.67

4 Significant Accounting policies and Notes to Accounts

TOTAL 194,368.76 151,254.04


24

Statement of Profit and Loss for the Year ended 31st March 2014

Particulars For the year ended

31 March, 2014

For the year ended

31 March, 2013

Amount in Lacs Amount in Lacs

A CONTINUING OPERATIONS

1

Revenue from operations 26,312.25 25,293.97

2 Other income 307.15 475.99

3 Total revenue 26,619.40 25,769.96

4 Operating Expenses

(a) Interest expenses 12,714.31 10,021.68

(b) Employee benefits expense 2,354.78 2,317.32

(c) Administrative Expenses 574.44 437.71

(d) Depreciation and amortisation expense 64.58 57.02

(e) Bad debts written off 4,138.60 2,566.41

Total expenses 19,846.71 15,400.14

5 Operating Profit before exceptional and extraordinary items and tax

6,772.69 10,369.82

6 Add: Prior Period Income 247.95 98.73

7 Operating Profit After exceptional and extraordinary items and tax

7,020.64 10,468.55

8 Less: Provision for Bad and Doubtful debts 1,310.71 1,626.39

9 Profit before tax 5,709.93 8,842.16

10 Tax expense:

Less: Current tax expense - (a) Provision for Income Tax 1,471.56 2,060.81

(b) Provision for Deferred Tax 104.61 -67.68

B Discontinuing operations 0.00 0.00

11 Profit for the year 4,133.76 6,849.03

12 Earnings per share (Equity shares of Rs 100/- each):

(a) Basic 19.50 32.31

(b) Diluted 18.63 30.87

C Profit and loss appropriation

Balance in Profit & Loss A/C B/f 7,657.62 4,930.14

Net Profit for the year 4,133.76 6,849.03

Total profit available for appropriation 11,791.38 11,779.17

Less: Appropriations

Proposed Dividend 1,059.86 1,695.78

Provision for Dividend tax 180.12 275.23

Transfer to Reserve u/s 36 (1) (viii) 1,354.54 2,073.96

Balance Profit after appropriations 9,196.86 7,734.20

Less: Prior Period Adjustments - 76.58

Balance Profit carried to Balance sheet 9,196.86 7,657.62


25

CASH FLOW STATEMENT

FOR THE PERIOD 2013-14 2012-13

A Cash flows from operating activities

Interest and other Revenue receipts (A) 26,380.73 25383.46

Interest and other Financial Charges (B) (12,714.31) (10,021.68)

Payment to employees and Administrative expenses ( C) (2,929.23) (2,755.03)

Operating profit before Working Capital Changes (A+B+C) 10,737.19 12,606.75

Increase in operating assets (Loans and advances) (44,032.96) (18,725.48)

Long term borrowings (Refinance from SIDBI) 2,710.00 5,900.00

Repayment SIDBI Finance (12,602.02) (16,000.00)

LOC from Banks 27,500.00 20,000.00

Repayment of LOC from Banks (9,608.76) (12,274.24)

Decrease in other current assets (912.00) (145.63)

Increase in Other Liabilities 10,097.24 10,230.31

Net cash from operating activities before Income Tax (16,111.31) 1,591.71

Income Tax paid (3,474.55) (1,730.00)

Net cash from operating activities after tax (X) (19,585.87) (138.29)

B Cash flows from investing activities - -

Interest received on deposits / Investments in Mutual Funds 235.12 377.54

Purchase of fixed assets (50.87) (120.11)

Sale of fixed assets 7.40 9.97

Investments 999.71 2,534.00

Net cash from investing activities (Y) 1,191.36 2,801.41

C Cash flows from financing activities - -

Share Capital from State Government/Other Advance from Govt 214.00 -

Non - SLR Bond issued 20,000.00 -

Repayment of Long term borrowings (Bonds) - (2,453.00)

Dividend and Dividend Tax Paid (1,971.01) (1,847.82)

Net cash from financing activities (Z) 18,242.99 (4,300.82)

Net increase in cash and cash equivalents (X+Y+Z) (151.52) (1,637.70)

Cash and cash equivalent at the beginning of the Financial year 1,729.13 3,366.83

Cash and cash equivalent at the end of the Financial year 1,577.61 1,729.13


26

Balance Sheet as at 31 March, 2013

Particulars As at 31 March,

2013

As at 31 March,

2012

Rs. In Lacs Rs. In Lacs

A EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share capital 21,197.30 21,197.30

(b) Reserves and surplus 16,189.57 11,388.12

(c) Money received against share capital 989.13 0.00

2 Non-current liabilities

(a) Long-term borrowings 89,809.75 94,636.99

(b) Deferred tax liabilities (net) 301.15 368.83

(c) Long-term provisions 4,429.20 2,902.37

3 Current liabilities

(a) Short-term borrowings 9,753.64 0.00

(b) Other current liabilities 3,335.81 3,848.19

(d) Short-term provisions 5,248.49 3,064.49

TOTAL 151,254.04 137,406.29

B ASSETS

1 Non-current assets

(a) Tangible Assets 336.12 274.80

(b) Non-current investments 101.00 185.00

(c) Other non-current assets 1,458.16 1,680.67

2 Loans and Advances 140,142.96 123,983.89

3 Current assets

(a) Current investments 2,000.00 4,450.00

(b) Cash and cash equivalents 1,729.13 3,366.83

(c) Other current assets 5,486.67 3,465.10

4 Significant Accounting policies and Notes to Accounts

TOTAL 151,254.04 137,406.29


27

Statement of Profit and Loss for the year ended 31 March, 2013 Particulars For the year

ended 31 March, 2013

For the year ended

31 March, 2012

Rs. In Lacs Rs. In Lacs

A CONTINUING OPERATIONS

1 Revenue from operations 25,293.97 19,809.12

2 Other income 475.99 1,615.85

3 Total revenue 25,769.96 21,424.97

4 Operating Expenses

(a) Interest expenses 10,021.68 9,830.68

(b) Employee benefits expense 2,317.31 1,792.40

(c) Administrative Expenses 437.71 401.87

(d) Depreciation and amortisation expense 57.02 58.40

(e) Bad debts written off 2,566.42 3,078.20

Total expenses 15,400.14 15,161.55

5 Operating Profit before exceptional and extraordinary items and tax

10,369.82 6,263.42

6 Less: Provision for Bad and Doubtful debts 1,626.39 481.56

7 Profit before tax 8,743.43 5,781.86

8 Tax expense:

(a) Current tax expense 2,060.81 1,216.67

2,060.81 1,216.67

B Discontinuing operations 0.00 0.00

9 Profit for the year 6,682.62 4,565.19

10 Earnings per share (Equity shares of Rs 100/- each):

(a) Basic 32 22

(b) Diluted 30 22

C Profit and loss appropriation

Balance in Profit & Loss A/C B/f 4,930.14 3,333.63

Net Profit for the year 6,682.62 4,565.19

Total profit available for appropriation 11,612.76 7,898.82

Add: Prior Period Income 98.73 0.00

Deferred Tax 67.68 131.80

Provision for FBT written back 0.00 0.02

Total 11,779.17 8,030.64


Proposed Dividend 1,695.78 1,589.80

Provision for Dividend tax 275.23 258.02

Transfer to Reserve u/s 36 (1) (viii) 2,073.96 1,252.68

Balance Profit after appropriations 7,734.20 4,930.14

Less: Prior Period Adjustments 76.58 0.00

Balance Profit carried to Balance sheet 7,657.62 4,930.14


28

CASH FLOW STATEMENT

FOR THE PERIOD 2012-13 2011-12

Cash flows from operating activities

Interest and other Revenue receipts (A) 25,383.46 17,341.08

Interest and other Financial Charges (B) (10,021.68) (8,452.58)

Payment to employees and Administrative expenses ( C) (2,755.03) (5,272.49)

Operating profit before changes in operating assets (A+B+C) 12,606.75 3,616.01

Increase in operating assets (Loans and advances) (18,725.48)

(16,247.21)

Net cash from operating activities before Income Tax (6,118.73)

(12,631.20)

Income Tax paid (1,730.00) (1,218.00)

Net cash from operating activities after tax (X) (7,848.73)

(13,849.20)

Cash flows from investing activities -

Interest received on deposits / Investments in Mutual Funds 377.54 314.84

Purchase of fixed assets (120.11) (59.84)

Sale of fixed assets 9.97 2.59

Investment in shares and debentures 2,534.00 (4,450.00)

Decrease in other current assets (145.63) 671.92

Increase in Other Liabilities 10,230.31 1,501.66

Net cash from investing activities (Y) 12,886.09 (2,018.83)

Cash flows from financing activities -

Share Capital from State Government/Other Advance from Govt - 989.13

KSSEDM Advance - 1,000.00

Long term borrowings (Refinance from SIDBI) 5,900.00 7,900.00

Repayment SIDBI Finance (16,000.00)

(11,390.48)

Non - SLR Bond issued - 20,000.00

Repayment of Long term borrowings (Bonds) (2,453.00) (3,655.00)

LOC from Banks 20,000.00 11,500.00

Repayment of LOC from Banks (12,274.24) (6,687.50)

Dividend and Dividend Tax Paid (1,847.82) (1,189.76)

Net cash from financing activities (Z) (6,675.06) 18,466.39

Net increase in cash and cash equivalents (1,637.70) 2,598.36

Cash and cash equivalent at the beginning of the Financial year 3,366.83 768.47

Cash and cash equivalent at the end of the Financial year 1,729.13 3,366.83


29

BALANCE SHEET as at 31.03.2012

Particulars

In Lacs as at

31.03.2012

In Lacs as at

31.03.2011

SOURCES OF FUNDS

Shareholder's Fund

Share Capital 21197.3 20406

Share Capital Advance 0 791.3

Reserves & Surplus 11388.12 8538.93

Loan Funds

Secured Loans 72183.99 70861.97

Bonds (Guaranteed By Government of Kerala ) 22453 6108

Deferred Tax Liability (Net) 368.83 500.63

Other Liabilities 3848.2 2065.16

Provisions 5966.86 10256.56

Total 137406.3 119528.55

APPLICATION OF FUNDS

Cash & Bank Balances 3366.83 664.91

Loans & Advances 123983.89 112481.4

Investments 4635 288.56

Fixed Assets 274.81 275.98

Other Assets 5145.77 5817.7

Total 137406.3 119528.55

Profit & Loss Account for the year ended 31st March 2012

Particulars

In Lacs as at

31.03.2012

In Lacs as at

31.03.2011

INCOME

Income from Operations 19809.12 16459.39

Other Income 1615.85 138.64

TOTAL 21424.97 16598.03

EXPENDITURE

Operating Expenses 8452.59 6044.49

Employee Cost 1792.4 2464.08

Administrative Cost 401.86 409.52

Interest rebate on Loans 1378.06 951.38

Depreciation 58.41 64.17


30

Bad Debts Written Off 3078.23 494.62

TOTAL 15161.55 10428.26

Operating Profit ( C ) 6263.42 6169.77

Less: Provision for Income Tax 1216.67 1110.56

Provision for Bad & Doubtful Debts 481.56 1419.19

TOTAL ( D ) 1698.23 2529.75

Net Profit for the year ( C-D) 4565.19 3640.02

Add: Provision for deferred tax liability 131.8 3.61

Provision for FBT written back 0.02 0


Proposed Dividend 1589.8 1020.3

Provision for Dividend Tax 258.02 169.46

Transfer to Reserve u/s 36(1) (viii) 1252.68 1233.95

Balance Profit after appropriations 1596.51 1219.92

Add: Balance in Profit & Loss A/C B/f 3333.63 2113.71

Balance Profit carried to Balance Sheet 4930.14 3333.63

Cash Flow Statement for the period 2011-12

FOR THE PERIOD

2011-12 ( amt

in lacs)

2010-11 ( amt

in lacs)

Cash flows from operating activities

Interest and other Revenue receipts (A) 17341.08 15577.77

Interest and other Financial Charges (B) -8452.58 -6044.49

Payment to employees and Administrative expenses (C ) -5272.49 -3872.44

Operating Profit before charges in operating assets (A+B+C) 3616.01 5660.84

Increase in operating assets (Loans and advances) -16247.21 -23612.29

Net cash from operating activities before Income Tax -12631.2 -17951.45

Income Tax paid -1218 -1568.28

Net Cash from Operating activities after tax (X) -13849.2 -19519.73

Cash flows from investing activities

Interest received on deposits/ investments in Mutual Funds 314.84 63.63

Purchase of Fixed Assets -59.84 -93.72

Sale of Fixed Assets 2.59

Investment in Shares & Debentures -4450 19.5

Decrease in other current assets 671.92 -419.19

Increase in Other Liabilities 1501.66 521.8

Net cash from investing activities (Y) -2018.83 92.02

Cash Flows from Financing Activities


31

Share capital from State Government / Other Advance from

Government 989.13 791.3

KSSEDM Advance 1000

Long term Borrowings ( Refinance from SIDBI) 7900 16000

Repayment SIDBI Finance -11390.48

Non SLR Bond issued 20000

Repayment of Long Term borrowings ( Bonds ) -3655 -20181.79

LOC from Banks 11500 26100

Repayment of LOC from Banks -6687.5 -2600

Dividend and Dividend Tax Paid -1189.76 -954.96

Net Cash from financing activities (Z) 18466.39 19154.55

Net increase in cash and cash equivalents 2598.36 -273.16

Cash and cash equivalent at the beginning of the Financial year 768.47 1041.63

Cash and cash equivalent at the end of the Financial year 3366.83 768.47

J. Abridged version of Latest Audited/Limited Review Half Years consolidated (Wherever

available) and Stand alone Financial Information (life Profit & Loss Statement, and Balance Sheet) and

auditors qualifications, Given Above

K. Any material event/ development or change having implications on the financials/credit quality (e.g. any

material regulatory proceedings against the Issuer/promoters, tax litigations resulting in material

liabilities, corporate restructuring event etc) at the time of issue which may affect the issue or the

investor’s decision to invest/continue to invest in the debt securities.

NIL

L. The name of the debenture trustee(s) shall be mentioned with statement to the effect that debenture

trustee(s) has given his consent to the Issuer for his appointment under regulation 4 (4) and in all the

subsequent periodical communications sent to the holders of debt securities.

Enclosed in the Annexure

M. The detailed rating rationale (s) adopted (not older than one year on the date of opening of the

issue)/credit rating letter issued (not older than one month on the date of opening of the issue) by the

rating agencies shall be disclosed.


N. If the security is backed by a guarantee or letter of comfort or any other document/letter with similar

intent, a copy of the same shall be disclosed. In case such document does not contain detailed payment

structure (procedure of invocation of guarantee and receipt of payment by the investor along with

timelines), the same shall be disclosed in the offer document.


32

Enclosed in the Annexure.

O. Copy of consent letter from the Debenture Trustee


P. Names of all the recognized stock exchanges where the debt securities are proposed to be listed clearly

indicating the designated stock exchange.

Proposed to be listed in Bombay Stock Exchange (BSE). In Principle Approval received.


33

Summary term sheet :

Security Name 9.15% Kerala Financial Corporation Bonds 2024

Issuer Kerala Financial Corporation

Type of Instrument Rated , Listed, Redeemable, Non Convertible

Nature of Instrument Unsecured

Seniority Not applicable Mode of Issue Private Placement

Eligible Investors a. Individuals.

b. Companies and Bodies Corporate

c. Commercial Banks

d. Primary Urban Co-operative Banks

e. Regional Rural Banks (RRBs)

f. Financial Institutions and Mutual Funds

g. Insurance Companies

h. Non Banking Finance Companies and

Residuary Non Banking Finance Companies

i. Provident Funds, Superannuation Funds,

Pension Funds and Gratuity Funds

j. Charitable and Religious Trusts, Port Trusts

k. Co-operative Societies & Institutions

Listing ( including name of Stock Exchange

where it will be listed and timeline of listing)

Bombay Stock Exchange

Rating of the Instrument ‘A-(SO)’ by Brickworks Rating Agency Pvt. Ltd.

Issue Size Rs. 200 Cr

Objects of the Issue To Augment resources for KFC’s operations

Details of Utilization of the proceeds As Above

Coupon Rate 9.15%p.a. payable semi annually, annualized yield :

9.36%

Step Up / Step Down Coupon Rate Not Applicable

Coupon Payment Frequency Semi Annual

Coupon Payment Dates 30th April and 30th October every year till redemption

Coupon Type Fixed

Coupon Reset Process ( including rates,

spread, effective date, interest rate cap and

floor etc)

Not Applicable

Day Count Basis Actual/Actual

Interest on Application Money From the date of credit of amount into KFC’s account

through cheque/ DD/ RTGS till one day prior to the

date of allotment

Default Interest rate Additional interest rate of 2% over the coupon rate

for the defaulting period.

Tenor 120 months from the Deemed Date of Allotment


34

Redemption Date 1. 25% at the end of 7th year

2. 25% at the end of 8th year



Redemption Amount At Par

Redemption Premium / Discount Nil

Issue Price At Par

Discount at which security is issued and the

effective yield as a result of the such discount

Not Applicable

Put Option Date At the end of 4th year ( 25% Face Value at the end of

4th, 5th , 6th and 7th year each)

Put Option Price At Par

Call Option Date At the end of 4th year ( 25% Face Value at the end of

4th, 5th , 6th and 7th year each

Call Option Price At Par

Put Notification Time Timelines by which the investor need to intimate

Issuer before exercising the put option 60 days prior

to the due date

Call Notification Time Timelines by which the Issuer needs to intimate the

investor before exercising the Call option 60 days

prior to the due date

Face Value Rs 10 lakhs per instrument for all the issues

Minimum Application and in multiples of

one bond thereafter

One Bond & in multiples of one bond thereafter

Issue Timing

1. Issue Opening Date

2. Issue Closing Date

3. Pay in Date

4. Deemed Date of Allotment

1. Sep 10, 2014

2. Oct 17, 2014

3. Sep 10 - Oct 17, 2014

4. Oct 30, 2014

Interest Payment Dates 30th April & 30th October every year till redemption

Issuance mode of the Instrument Demat only ( for private placement)

Trading mode of the Instrument Demat only ( for private placement)

Settlement Mode of the Instrument Demat only ( for private placement)

Depository NSDL/CDSL

Business Day Convention Means a day (other than a Sunday or a Kerala Govt.

/Bank holiday) on which banks are open for general

business in Kerala. If the due date for payment falls

on a day that is not a Business Day, then the due date

in respect of such payment shall be succeeding

Business Day of the Issuer.

Record Date 15 Days prior to each coupon payment/ Put option

date/Call option date / Redemption Date


35

Guarantee Unconditional and irrevocable guarantee by

Government of Kerala.

Transaction Documents Information Memorandum

Debenture Trustee Agreement

Tripartite Agreement between Trustee, Issuer and

Guarantor

Conditions Precedent to Disbursements Nil

Conditions Subsequent to Disbursements Nil

Events of Default Delay in payment of interest and redemption of

principal on the respective due dates.

Provisions related to Cross Default Clause Not Applicable

Roles & Responsibility of Debenture Trustee To oversee and monitor the overall transaction for

and on behalf of the Bond Holders.

Governing Law & Jurisdiction The Bonds are governed by and shall be construed in

accordance with the existing Indian Law. Any dispute

arising thereof on any account whatsoever will be

subject to the jurisdiction of the Honourable High

Court of Kerala at Ernakulam only.

WHO CAN APPLY

Persons who have been addressed through a communication directly are only eligible to apply No

other person can apply. The bonds are eligible for investment by:

a. Individuals.

b. Companies and Bodies Corporate

c. Commercial Banks

d. Primary Urban Co-operative Banks

e. Regional Rural Banks (RRBs)

f. Financial Institutions and Mutual Funds

g. Insurance Companies

h. Non Banking Finance Companies and Residuary Non Banking Finance Companies

i. Provident Funds, Superannuation Funds, Pension Funds and Gratuity Funds

j. Charitable and Religious Trusts, Port Trusts

k. Co-operative Societies & Institutions.

Application by Individuals

Individuals are also entitled to apply to the bond issue subject to the application qualifying for the

minimum application amount and are valid in all other respects. Those desirous of claiming tax exemptions

on interest on application money are compulsorily required to submit relevant declaration Form (as per I.T.

Act 1961) along with the Application Form. For subsequent interest payments, such Forms have to be

submitted periodically.


36

In the case of joint applications, the number of such applicants should not be more than three. All

communications and cheques for interest/redemption will be addressed to the applicant whose name

appears first, at the address stated in the application form/register of Bondholders.

Nomination Facility

As per Section 109 A of the Companies Act, 1956, only individuals applying as sole applicant/Joint Applicant

can nominate, in the prescribed manner, a person to whom his Bonds shall vest in the event of his death.

Non-individuals including holders of Power of Attorney cannot nominate.

Application by Company/ Corporate bodies/ Financial institutions & Statutory companies

The application must be accompanied by certified true copies of 1} Memorandum of Articles of Association

/ constitution /bye laws 2} Resolution authorising investment and containing operating instruction 3}

Specimen signature of authorised signatories 4} Relevant certificates in the prescribed form (s) under

Income Tax Rules, 1962, if exemption is sought from deduction of tax at source on interest income.

Application by Charitable / Religious Trusts

The bonds being unconditionally and irrevocably guaranteed by the Government of Kerala fall within

Section 20 (a) of the Indian Trust Act, 1882 and hence are considered as eligible investments for trusts,

which are registered under the said Act. Other trusts, whose trust deeds provide for investment in bonds

may apply to this issue of bonds, subject to the approval of the charity commissioner or other appropriate

authority as the case may. Investment in bonds of KFC will qualify as eligible investments under clause (6)

Section 11 (5) of the Income Tax Act,1961 by religious /charitable trusts.

The application must be accompanied by certified true copies of 1) Trust Deed / bye laws 2) Certificate of

Registration 3) Resolution authorising investment and containing operating instruction 4) Specimen

signature of authorised signatories 5) Relevant certificates in the prescribed form (s) under Income Tax

Rules, 1962, if exemption is sought from deduction of tax at source on interest income.

Application by Commercial Banks/ Mutual Funds

The Reserve Bank of India vide its Circular DBOD No.DIR: BC.4/13.7.05/94 dated 25th January 1994 to all

scheduled commercial banks, has withdrawn the ceiling of 5 % of incremental deposits of the previous year

for investments in equity shares and Bonds of Public Sector Undertakings. The Reserve Bank of India has

vide its Circular No. DP.BD.3221.01.018/98 dated April 29, 1998 clarified that investment in bonds and

debentures where payment of interest and principal is quarantined by the Central/State Government shall

carry zero risk weight for the purpose of capital adequacy. The Reserve Bank of India has however, vide

Circular No. MPD- BC 181/07.01. 279 /98-99 dated 30.10.1998 introduced a 2.5% risk weight on Central

/State Government securities and in securities guaranteed by them by the year ending March 2000.

Further, an additional risk weight of 20% is introduced in the Government guaranteed securities of

Government undertakings with effect from financial year 2000-01.

The application must be accompanied by certified true copies of 1) Power of Attorney 2) Resolution

authorising investment and containing operating instruction 3) SEBI registration certificate 4) Specimen

signature of authorised signatories.


37

Application by Co-operative Banks

The Reserve Bank of India vide its Circular No.BR.CIR.72/16.20.00/93-04 dated May 16,1994 has allowed

primary co-operative banks to invest their surplus funds upto 10% of deposits in bonds of Public Sector

Undertakings provided inter-alia, that a provision exist for such investments in the respective State Co-

operative Societies Act/ Multi State Co-operative Societies Act and Banks should intimate the Registrar of

Co-operative Societies of the State. Hence, the bonds are eligible securities for investments by primary co-

operative banks. The application must be accompanied by certified true copies of 1) Government

notification / certificate of incorporation /other documents governing constitutions 2} Resolution

authorising investment and containing operating instruction 3) Specimen signature of authorised

signatories 4) Relevant certificates in the prescribed form (s) under Income Tax Rules, 1962, if exemption is

sought from deduction of tax at source on interest income.

Application by Regional Rural Banks (RRBs)

The RBI vide Circular No. RPCD RRB.BC.882/03.05.34/96-97 dated December 13, 1996 has permitted RRBs

to invest their surplus non-SLR funds in bonds of Public Sector Undertakings. The RBI has, vide circular no.

RPCD(H)/04.03.06/98-99 dated November 2, 1998 clarified that single exposure norms would be applicable

in respect of investments in debentures and bonds of Public Sector Undertakings. The applications must be

accompanied by certified true copes of (I) Government notification/ Certificate of Incorporation/

Memorandum & Articles of Association/ Other documents governing constitution (ii) resolution authorising

investment and containing operating instructions (iii) Specimen signatures of authorised signatories (iv)

Form 15 AA for claiming exemption from deduction of tax at source on interest income and (v) Form 15 H

for claiming exemption of deduction of tax at source on interest on application money.

Application by Provident Funds, Superannuation Funds, Pension Funds and Gratuity Funds

The Government of India has, vide its Gazette notification dated 06.03.2003, in partial modification of

notification no. F.11 (3-PD/98) dated March 31, 1999 has permitted Provident, Superannuation Funds,

Gratuity Funds & Pension Funds to invest up to 30% of incremental accretions in the bonds/securities of

“public sector companies” as defined under Section 2 (36-A) of the Income Tax Act, 1961.

KFC is a “Public Sector Corporation” within the meaning of the said notification as more than 51% of the

paid up share capital is held by Government of Kerala. The bond issue has the additional credit

enhancement of an unconditional and irrevocable guarantee from the Government of Kerala for the

repayment of the principal and for the payment of the interest.

As per Notification dated July 9, 2003 issued by Ministry of Labour/ Shram Mantralaya, Government of

India, in exercise of the powers conferred by sub-paragraph (1) of paragraph 52 of the Employees’

Provident Funds Scheme, 1952 and in Supersession of the Notification of the Government of India in the

Ministry of Labour No. S.O. 1398 dated the 11th July 1998 the Central Government directed funds to invest

incremental accretions in these avenues as under:

• 15%: under category (ii) (b), the Bonds being fully and unconditionally guaranteed by the State

Government of Kerala for payment of interest and repayment of principal.

• 30%: under category (iii) (a), Bonds of ‘Public Financial Institutions’ as specified under Section 4(1) of the Companies Act; ‘Public Sector Companies’ as defined in Section 2(36-A) of the Income Tax Act, 1961.

• 30%: under category (iv), for investment at the discretion of the Trustees in the above categories.


38

The applications must be accompanied by certified true copies of

(i) Trust Deed/Bye Laws/Resolutions, (ii) Resolution authorizing investment and (iii) specimen signatures of

the authorized signatories. Those desirous of claiming tax exemptions on interest on application money are

compulsorily required to submit a certificate issued by the Income Tax Officer along with the Application

Form. For subsequent interest payments, such certificates have to be submitted periodically.

RETIREMENT FUNDS FOLLOWING MINISTRY OF FINANCE GUIDELINES

As per the latest notification issued by the Ministry of Finance vide its Notification No- 5 (88)/2006 –PR.

dated 14th August, 2008 thereby effecting partial modification in the Notification No.5(53)/2002-ECB & PR

dated 24th January, 2005, the pattern of investment to be followed by Non-Government Provident Funds,

Superannuation Funds and Gratuity Funds shall be as follows, effective from 1st April, 2009:

Up to 55%: in Government Securities the principal whereof and interest whereon is fully and

unconditionally guaranteed by the Central Government or any State Government

OR

Up to 40%: in Debt securities with maturity of not less than three years tenure issued by Bodies Corporate

including banks and public financial institutions(Public Financial Institutions’ as specified under Section 4A

of the Companies Act, 1956.)

Enclosure required:

The applications must be accompanied by certified true copies of (I) Trust Deed/Bye laws (ii) resolution

authorising investment and containing operating instructions (iii) specimen signatures of authorized

signatories (iv) Recognition Certificate from Income Tax Department.

Application by Port Trusts

As per section 88 of the Major Port Trusts Act, 1963 the bonds being guaranteed by the Government of

Kerala are categorized as public security for the purpose of investments by Port Trusts.

Application by Non Banking Finance Companies (NBFCs)/ Residuary Non-Banking Finance Companies

(RNBFCs)

As per Circular No. DFC (COC) No. 2/02.04/96-97 dated July 24, 1996 issued by the Reserve Bank of India,

NBFCs and RNBFCs are required to invest, inter alia, upto 10% of their deposits in Government Guaranteed

Bonds to meet their liquidity requirements. The Reserve Bank of India has vide its Circular No:

DFC.121/ED/(G)-98 dated January 31, 1998 has specified that NBFCs are required to maintain liquid assets

of 15.00% on and from April, 26 1999.

The applications must be accompanied by certified true copies of (I) Memorandum and Articles of

Association (ii) Power of Attorney (iii) resolution authorizing investment and containing operating

instructions (iv) specimen signatures of authorised signatories. Application By Insurance Companies As per

Circular No. 32(I)/INVT/93 dated September 20, 1994 issued by Insurance Division, Department of

Economic Affairs, Ministry of Finance, Government of India, insurance companies are required to invest up

to 10% of their net surplus funds in State Government Securities or Government Guaranteed bonds.


39

Application by Insurance Companies

As per IRDA Circular F. No. IRDA/Reg./5/47/2008 dated August 30, 2008 insurance Companies can invest in

these State Government guaranteed bonds within the meaning of Section 27A of Insurance Act’ 1938 and

as per investment policy approved by the Board of Directors/ Investment Committee.

The application must be accompanied by certified true copies of (i) Certificate of Information and

Memorandum & Articles of Association (ii) Resolution of the Board of Directors and Identification of those

who have authority to operate (iii) Power of Attorney granted to its managers, officers or employee to

transact on its behalf (iv) Copy of PAN allotment letter and (v) copy of the Telephone bill.

DOCUMENTATION TO BE PROVIDED BY INVESTORS

Investors need to submit the following documentation, along with the application form, as applicable in

addition to documents under ‘Know Your Customer (KYC) Guidelines-Anti Money Laundering Standards’

• Memorandum and Articles of Association/ Documents Governing Constitution

• Resolution authorizing investment.

• Certified True Copy of the Power of Attorney

• Specimen signatures of the authorized signatories duly certified by an appropriate authority.

• Proof of Income tax exemption certificate seeking exemption from Tax deducted at source from interest.

BANKING DETAILS:

All Application Forms, duly completed, together with cheque/ demand draft for the amount payable on

application must be delivered before the closing of the issue to the Arrangers to the Issue.

The remittances can be made by way of electronic transfer of funds through RTGS mechanism as per

following details:

Name of the Bank

HDFC Bank Details:

Account No. : 15960350000061

Account Name : Kerala Financial Corporation Non SLR Bond Issue 2014

IFSC Code : HDFC0001596

Federal Bank Details:

Account No. : 10300200054114

Account Name : Kerala Financial Corporation Non SLR Bond Issue 2014

IFSC Code : FDRL0001030


40

C. Terms of Offer

a. Issue price

Issue of the Debentures of the face value of Rs10,00,000/- (Rupees Ten Lakhs only) each, aggregating up to

Rs. 100 Crores (one hundred Crores only) on private placement basis at par.

b. Deemed Date of Allotment

The deemed date of allotment is October 30, 2014. All benefits related to the debentures will be available

to the allotees from the deemed date of allotment

c. The Interest Payment dates are 30th April & 30th October every year till redemption

d. Authority for the Placement

The issue is made pursuant to sub section (1) of section 7 of SFCs Amendment Act 2000. The Board of

Directors of KFC at its Meeting held on 04.06.2013, 24.03.2014 and 16.06.2014, passed the resolution

approving the borrowings through issue of private placement bonds of Rs 200.00 Crores.

e. Security

Unconditional and irrevocable guarantee by the Government of Kerala.

f. Debenture trustee

GDA Trusteeship Ltd.

f. Record Date

Record date of interest shall be 15 days prior to each interest payment date, and 15 days prior to the

date of maturity. Interest shall be paid to the person whose name appears as sole/first in the register

of bondholders/beneficiaries position of the Depositories on record date.

Record date for the purpose of payment of redemption would be 15 days before the due date of

payment of redemption of maturity proceeds. The persons acquiring the bonds by transfer should pay

specific attention to the aforesaid Record dates. The record date for the purpose of put and call option

will be 15 days prior to the date when the option becomes due.

Payment of interest/principal will be made to the registered first named bondholder as on the record

date. If the bond has been transferred, the transferor(s) jointly with the transferee(s) shall notify the

Corporation.

g. Maturity & Yield on Redemption

10 years from the date of allotment.

Coupon @ 9.15% p. a. payable semi-annually


41

i. MATERIAL CONTRACTS & DOCUMENT

A. MATERIAL CONTRACTS

The Copies of the contracts, agreements and documents, referred to below, may be inspected at

the Registered Office of the Corporation between 10.00 a.m. to 12.00 noon on any working day

until the date of closing of the issue.

Sr. No Type of Contract / Material Document

1 Copy of Government of Kerala Order for providing unconditional and irrevocable guarantee

to KFC for issue of Bonds for Rs. 400 Crores.

2 Certified true copy of the resolution passed by the Board of Directors at the meeting held on

24.03.2014 for the issue of Bonds.

3 Credit rating Letter issued by Brickwork Ratings India Pvt. Ltd.

4 Consent Letter from GDA Trusteeship Ltd. as Bond/Debenture Trustee.

5 Consent Letter from Karvy Computershare Private Ltd. to act as Registrar & Transfer Agent.

6 Consent Letter from HDFC Bank and Federal Bank to act as Bankers to the Issue.

B. Documents

(i) Credit Rating Letters for the current placement

(ii) Board resolution approving the current private placement of bonds

(iii) Consent letters of the registrar and the trustee of the Bond holders

j. ANY MATERIAL EVENT/ DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE OR SUBSEQUENT TO

THE ISSUE WHICH MAY AFFECT THE ISSUE OR THE INVESTOR’S DECISION TO INVEST / CONTINUE

TO INVEST IN THE DEBT SECUTITIES.

The Corporation hereby declares that there has been no material event, development or change at

the time of issue which may affect the issue or the investor’s decision to invest/continue to invest

in the debt/securities of the Corporation.

k. UNDERTAKING THAT THE ISSUER SHALL USE A COMMON FORM OF TRANSFER

The Corporation would be issuing the bonds in de-mat form. It shall use a common transfer form

for physical holdings if at a later stage there is some holding in physical form due to the depository

giving the re-materialization option to any investor.


42

l. INFORMATION RELATING TO THE TERMS OF OFFER OR PURCHASE.

1. PRESENT PLACEMENT

KFC raised Rs. 200 Crores through private placement of 2000 Bonds of face value of Rs. 10,00,000/-

each.

2. AUTHORITY FOR THE PLACEMENT

The present placement of Bonds is being made pursuant to the resolution passed by the Board of

Directors of the Corporation at its meeting held on 04.06.2013 24.03.2014 and 16.06.2014.

3. NATURE OF INSTRUMENT

State Government guaranteed Rated, Listed Redeemable, and Non- Convertible Bonds in the

form of debentures.

4. GUARANTEE

The Bonds are unconditionally and irrevocably guaranteed by Government of Kerala.

5. FACE VALUE

Each Bond shall have a face value of Rs. 10,00,000/- (Rupees Ten lacs only).

6. CREDIT RATING

BWR A- (SO) (Outlook : Stable) has been assigned and revalidated by M/s Brickwork Rating

Agency Pvt. Ltd. vide their letter no. BWR/BNG/RL/2014-15/0172 dated September 02, 2014.

7. LISTING

The Bonds of the Corporation are proposed be listed on Bombay Stock Exchange Ltd. (BSE). The

corporation shall comply with the requirements of the listing agreement. The in principle listing

approval has already been received from BSE.

8. BONDS TO BE ISSUED ONLY IN DEMATERIALISED FORM

The Corporation has appointed Karvy Computershare Private Ltd. as Registrars & Transfer Agent for

the present Bond Issue. The Corporation has made necessary depository arrangements with

National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited

(CDSL) for issue and holding of Bonds in dematerialised form. In this context the Corporation has

entered into two tripartite agreements as under:


43

a. Tripartite Agreement between KFC, Karvy Computershare Private Ltd. and National

Securities Depository Limited (NSDL) for offering depository option to the investors.

b. Tripartite Agreement between KFC, Karvy Computershare Private Ltd. and Central

Depository Services (India) Limited (CDSL) for offering depository option to the investors.

Investors can hold the Bonds in dematerialised form and deal with the same as per the

provisions of Depositories Act, 1996 as amended from time to time.

The applicant must have at least one beneficiary account with any of the Depository

Participants (DPs) of NSDL or CDSL prior to making the application.

The applicant must necessarily fill in the details, including the beneficiary account number

and Depository Participant’s ID in the Application Form.

Bonds allotted to an applicant will be credited directly to the applicant’s respective

Beneficiary Account(s) with the DP.

For subscribing the Bonds, names in the application form should be identical to those

appearing in the account details in the depository. In case of joint holders, the names

should necessarily be in the same sequence as they appear in the account details in the

depository.

If incomplete/ incorrect details are given in the application form, it will be deemed to be an

incomplete application and the same may be held liable for rejection at the sole discretion

of the Corporation.

For allotment of Bonds, the address, nomination details and other details of the applicant

as registered with his/her DP shall be used for all correspondence with the applicant. The

Applicant is therefore responsible for the correctness of his/her demographic details given

in the application form vis-à-vis those with his/her DP. In case the information is incorrect

or insufficient, the Issuer would not be liable for losses, if any.

It may be noted that Bonds being issued in electronic form, the same can be traded only on

the Stock Exchanges having electronic connectivity with NSDL or CDSL. Bombay Stock

Exchange Limited where the Bonds of the Corporation are proposed to be listed has

connectivity with NSDL and CDSL.

Interest or other benefits would be paid to those Bondholders whose names appear on the

list of beneficial owners given by the Depositories to the Corporation as on Record Date. In

case of those Bonds for which the beneficial owner is not identified by the Depository as on

the Record Date, the Corporation would keep in abeyance the payment of interest or other

benefits, till such time that the beneficial owner is identified by the Depository and

conveyed to the Corporation, whereupon the interest or benefits will be paid to the

beneficiaries, as identified.

9. UNDERWRITING

The present issue is not underwritten.


44

10. LETTER OF ALLOTMENT

The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/

Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit

within 02 days from the Date of Allotment. The initial credit in the account will be akin to the Letter

of Allotment. On completion of the all statutory formalities, such credit in the account will be akin

to a Bond Certificate.

The bonds will be issued in electronic (dematerialized) form. It will be governed as per the

provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and

Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to

time and other applicable laws and rules notified in respect thereof, if it is issued in dematerialised

form.

11. MINIMUM APPLICATION

The application should be for a minimum of one bond.

12. HOW TO APPLY

The full face value of the Bond is payable on application. The application should be

accompanied with the cheque(s)/ RTGS details, Demand draft(s) for the total amount of face

value of Bonds applied for subscription. All applications for the bonds must be made in the

prescribed form, and must be completed in block letters in English. The completed Application

form along with cheque(s)/ RTGS details, Demand draft(s) for the requisite amount, and other

necessary documents may either be submitted with the Arrangers or may be deposited directly

with the Collecting Banker.

For detailed instruction, please see the enclosed Application Form.

13. UNDERTAKINGS FROM THE ISSUER:

KFC hereby undertakes :

i) That the complaints received in respect of the issue shall be attended expeditiously and

satisfactorily.

ii) That all steps for completion of the necessary formalities and commencement of trading at

BSE will be taken within 15 working days of finalisation of the allotment of securities.

iii) That KFC shall apply in advance for listing of the securities at BSE.

iv) That the funds required for despatch of refund orders/allotment letters/certificates by

registered post shall be made available to the Registrar to the issue.

v) That the certificates of the securities/ refund orders to the non-resident Indians shall be

despatched within specified time, if eligible.

vi) That no further issue of securities shall be made till the securities offered through this

Information Memorandum are listed or till the application moneys are refunded on

account of non-listing etc.


45

vii) That KFC shall forward the details of utilisation of the funds raised through the Bonds duly

certified by the statutory auditors of KFC, to the Bond Trustees at the end of each half-year.

viii) That KFC shall disclose the complete name and address of the Bond Trustee in the

annual report.

ix) That KFC shall provide a compliance certificate to the Bondholders (on yearly basis) in

respect of compliance with the terms and conditions of issue of Information

Memorandum as contained in the Information Memorandum, duly certified by the Bond

Trustee.

x) That necessary cooperation with the credit rating agency (ies) shall be extended in

providing true and adequate information till the debt obligations in respect of the

instrument are outstanding.

14. PAN/GIR NUMBER

All the applicants should mention their Permanent Account Number (PAN) allotted under the IT Act

or where the same has not been allotted, the GIR No and the Income Tax Circle/Ward/District. In

case neither the PAN nor the GIR No has been allotted, or the Applicant is not assessed to income

tax, the appropriate information should be mentioned in the space provided.

15. SIGNATURES

Signatures should be made in English or in any of the Indian Languages. If the signature is in any

other language then it must be attested by an authorized official of a Bank or by a

Magistrate/Notary Public under his/her official seal.

16. INTEREST ON APPLICATION MONEY

Successful applicants will be paid interest on their application money, at the coupon rate for the

Bonds from the date of realization of cheque/DD/ RTGS by KFC up to one day prior to the Date of

Allotment. Refund cheques/Warrants/Demand Drafts will be mailed within seven days of Date of

Allotment.

Interest at the coupon rate (subject to deduction of income tax under the provisions of the Income

Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be

paid to all the applicants on the application money for the Bonds. The interest on application

money will be computed on an Actual/Actual day basis.

Interest on application money will be dispatched by Post/Courier at the allottees’ risk. Income Tax

as applicable will be deducted at source at the time of payment of interest on application money.

Those desirous of claiming exemption from tax are required to submit a certificate issued by the

income-tax officer concerned in form 15AA or submit Form 15G in duplicate as applicable along

with the application form and PF Trusts/ superannuation trusts would be required to give Income

Tax Recognition Certificate issued by the Income Tax Department.

Where the entire subscription amount has been refunded, the interest on application money will

be paid along with the Refund Orders. Where an applicant is allotted lesser number of Bonds than

applied for, the excess amount paid on application will be refunded to the applicant along with the

interest on refunded money.


46

The interest cheque(s)/ demand draft(s) for interest on application money along with Refund

Orders, in case of refund of application money, if any shall be dispatched by the Corporation within

7 days from the Date of Allotment by courier/registered post to the sole/ first applicant, at the sole

risk of the applicant.

17. ACKNOWLEDGEMENTS

No separate receipts will be issued for the application money. However, the Arranger to the Issue

receiving the duly completed Application Form will acknowledge receipt of the application by

stamping and returning to the applicant the Acknowledgement slip at the bottom of each

Application Form.

18. AMENDMENT OF THE TERMS OF THE BONDS:

KFC may amend the terms of the Bond(s) at any time by a resolution passed at a meeting of the

bondholders with the consent of the bondholders holding in the aggregate more than 75% in

nominal value of the Bonds outstanding out of those present and voting.

19. ALLOTMENT PROCEDURE

Allotment will be made on day basis amongst such investors based on the credit given by the

collecting banker. Subsequently, if the issue gets subscribed on any single day, mode of payment

shall be the priority for allotment on proportionate basis. In case of over-subscription in the issue

on the closing day, allotment would be done on a proportionate basis among the investors. The

Corporation reserves the right to decide on the allotment suitably in case of over /under-

subscription.

20. BONDHOLDER NOT A SHAREHOLDER

The Bondholders will not be entitled to any of the rights and privileges available to the

shareholders. If, however, any resolution affecting the rights attached to the Bonds is placed

before the members of the Corporation, such resolution will first be placed before the Bondholders

for their consideration.

21. CONSENTS

Consents in writing from the Trustees to the Bondholders, Registrars and the Bankers to the Issue

to act in their respective capacities have been obtained and none of them have withdrawn their

consent up to the date of delivery of a copy of this Information Memorandum to the BSE.

22. FORCE MAJEURE

If the performance in whole or in part by the contract or any obligation under this contract is

prevented or delayed by reasons of any eventuality for a period not exceeding 20 working days, the

KFC may at its option to terminate this contract by notice in writing.


47

23. MODIFICATION OF RIGHTS

The rights, privileges, terms and conditions attached to the Bond may be varied, modified or

abrogated with the consent, in writing, of those holders of the Bond who hold at least three fourth

of the outstanding amount of the Bond or with the sanction accorded pursuant to a resolution

passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall

be operative against the KFC where such consent or resolution modifies or varies the terms and

conditions of the Bond, if the same are not acceptable to the KFC.

24. INTEREST RATE

The Bonds will carry interest at the coupon rate for tenure of 10 years, from the Deemed Date of

Allotment. The interest will be paid from the Deemed Date of Allotment (subject to deduction of

tax at source at the rates prevailing from time to time under the Income Tax Act, 1961 or any other

statutory modification or re-enactment thereof) and is payable half yearly. The interest payable

shall be calculated by multiplying the coupon rate by the principal amount, multiplying such

product by actual number of days in the interest period concerned dividing by 365 (in case of leap

year by 366 days).The day count convention is actual/actual basis.

25. INTEREST PERIOD

1. The first interest period is defined as the actual number of days falling between the Deemed

Date of Allotment to the last day of the six month from that date including both the first date and

the last date.

2. The last interest payment would be made on the redemption date along with the redemption of

principal amount or where-in the put/call option is exercised the last interest payment date shall

be the 10th year from the deemed date of allotment.

26. PAYMENT OF INTEREST

Interest for each of the interest periods shall be computed on an actual/365 days a year basis on

the principal outstanding on the Bonds at the Coupon rate. If the interest period from start date to

end date includes February 29, then interest shall be paid on the basis of 366 days basis.

Payment of interest/principal will be made to the registered first named bondholder as on the

record date. If the bond has been transferred, the transferor(s) jointly with the transferee(s) shall

notify the Corporation.

The final interest payment dates after the allotment of securities are 30th April & 30th October

every year till redemption.

27. PUT OPTION AND CALL OPTION

CALL OPTION

The Corporation will have the right of exercising the call option at the end of 4th year from the

date of allotment. However, notice to the effect of exercising the call option by the Corporation

would be given 60 days before the end of 4th year from the date of allotment of the Bonds failing

which the Corporation shall not be entitled to exercise call option in future. Thus, if the

Corporation gives due notice to the bondholders and exercises the call option, it will redeem 25%

every year at the end of 4th, 5th, 6th and 7th year.


48

PUT OPTION

The Investor will have the right of exercising the put option at the end of 4th year from the date of

allotment. However, notice to the effect of exercising the put option by the Investor would be

given 60 days before the end of 4th year from the date of allotment of the Bonds, failing which the

Investor shall not be entitled to exercise put option in future. Thus, if the Investor gives due notice

to the Corporation and exercise the put option ,the investor will receive redemption of 25% every

year on at the end of 4th, 5th , 6th and 7th year.

TAX DEDUCTED AT SOURCE

This being a Listed Issue in dematerialised form, no TDS will be deducted from the Interest

Payment. However, for the Interest on application money, Tax as applicable under the Income Tax

Act, 1961, or any other statutory modification or re- enactment thereof will be deducted at source.

For seeking TDS exemption / lower rate of TDS relevant certificate/ document must be lodged by

the applicants at the registered office of the Corporation along with the original application forms.

Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application

money, should be submitted along with the application form. Failure to comply with the above

shall entitle the Corporation to deduct tax at source as may be advised to it. TDS once deducted by

Corporation and deposited with the Income Tax Department shall not be refunded by Corporation

under any circumstances and the concerned Bondholders will have to seek refund of the amount

from the Income Tax Department alone. Bondholder(s) should also consult their own tax advisers

on the tax implications of the acquisition, ownership and sale of Bonds, and income arising

thereon.

28. REDEMPTION

The face value of the Bonds will be redeemed at par at the end 7th, 8th , 9th and 10th year in the

ratio of 25:25:25:25 from the deemed date of allotment (dates given elsewhere in this document).

The interest on the bonds will cease to accrue from the date of redemption. The Bonds held in the

Dematerialised Form shall be taken as discharged on payment of the redemption amount by the

Corporation on maturity to the registered Bondholders whose name appears in the Register of

bondholders on the record date. Such payment will be a legal discharge of the liability of the

Corporation towards the Bondholders. On such payment being made, the Corporation will inform

NSDL/ CDSL and accordingly the account of the Bondholders with NSDL /CDSL will be adjusted.

29. REGISTER OF BONDHOLDERS

The Register of bondholders containing necessary particulars will be maintained by Finance

Division in KFC at its Registered Office and all enquiries / correspondence relating thereto may be

addressed to the compliance officer at the above mentioned address.

30. SPLITTING AND CONSOLIDATION

The request from the Registered Bondholders for split /consolidation of bond certificates will be

handled by the R&T Agent as per procedures laid under the Depositories Act, 1996.


49

31. BUY BACK

KFC may buy back the bonds before maturity. Also KFC reserves the right to prematurely redeem

the Bonds at its sole discretion at the express request of the bond holder in exceptional cases,

subject to regulatory provisions.

32. REGISTRATION AND GOVERNMENT APPROVALS

This present issue of Bonds is being made in accordance with extant guidelines for floatation of

State Government guaranteed Bonds as amended from time to time. The KFC can undertake the

activities proposed by it in view of the present approvals and no further approval from any

government authority/(ies) is required by the KFC to undertake the proposed activities save and

except those approvals which may be required to be taken in

the normal course of business from time to time.

33. RIGHT TO REPURCHASE/REPLACEMENT OF BOND(S)

KFC shall have the power exercisable at its absolute discretion, from time to time, to repurchase

from the open market, through market makers or otherwise at par, discount or premium, all or any

of the Bonds at any time prior to the specified date of redemption. Such

bonds may be cancelled (extinguished), held, resold or replaced. Where KFC purchases bonds, KFC

shall have and shall be deemed always to have had the right to keep such Bonds alive for the

purposes of resale or replace and in exercising such right, KFC shall have and deemed always to

have had the power to resell or replace the same bonds or by issuing other bonds in lieu thereof.

34. SUCCESSION

In the event of the demise of the sole/ first holder of the Bond(s) or the last survivor, in case of joint

holders for the time being, the Corporation will recognize the executor or administrator of the

deceased Bondholder, or the holder of succession certificate or other legal representative as having

title to the Bond(s). The Corporation shall not be bound to recognize such executor or administrator,

unless such executor or administrator obtains probate, wherever it is necessary, or letter of

administration or such holder is the holder of succession certificate or other legal representation, as

the case may be, from a Court in India having jurisdiction over the matter. The Corporation may, in 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 recognize such holder as being

entitled to the Bond(s) standing in the name of the deceased

Where a non-resident Indian becomes entitled to the Bond by way of succession, the following steps

have to be complied with:

a. Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the Bond

was acquired by the NRI as part of the legacy left by the deceased holder.

b. Proof that the NRI is an Indian National or is of Indian origin. Such holding by the NRI will be on a

non-repatriation basis.


50

35. FURTHER BORROWINGS

KFC will be entitled to borrow/raise loans or avail financial assistance in whatever form as also

issue of debentures/bonds/ other securities in any manner having such ranking in priority, pari-

passu or otherwise and change the capital structure including issue of shares of any class or

redemption or reduction of any class of paid-up capital on such terms and conditions as KFC may

think appropriate without the consent of or intimation to the bondholders.

36. RIGHT TO ACCEPT/ REJECT APPLICATIONS

The Corporation reserves its full, unqualified and absolute right to accept or reject any application,

in part or in full, without assigning any reason thereof. The rejected applicants will be intimated

along with the refund warrant, if applicable, to be sent. Interest on application money will be paid

from the date of realization of the cheque(s)/demand drafts(s) till one day prior to the date of

refund. The application forms that are not complete in all respects are liable to be rejected and

would not be paid any interest on the application money. Application would be liable to be

rejected on one or more technical grounds, including but not restricted to:

i. Number of Bonds applied for is less than the minimum application size;

ii. Applications exceeding the issue size;

iii. Bank account details not given;

iv. Details for issue of Bonds in electronic/ dematerialised form not given; PAN/GIR and IT

Circle/Ward/District not given;

v. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc.

relevant documents not submitted;

In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such

Bonds will be refunded.

37. REGISTRATION OF TRANSFER

Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by

the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws

and rules notified in respect thereof. The normal procedure followed for transfer of securities held

in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The

seller should give delivery instructions containing details of the buyer’s DP account to his

depository participant.

Transfer of Bonds to and from NRIs/ OCBs, in case they seek to hold the Bonds and are eligible to

do so, will be governed by the then prevailing guidelines of RBI. The transferee(s) should ensure

that the transfer formalities are completed prior to the Record Date. In the absence of the same,

interest will be paid/ redemption will be made to the person, whose name appears in the records

of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with

the transferor(s) and not with the Corporation.

38. REFUNDS

The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent.

Refund cheques/Warrants/Demand Drafts will be mailed within seven days of Date of Allotment.


51

39. PAYMENTS AT PAR

Interest as well as the redemption amount, shall be paid through RTGS/ instruments payable at

par.

40. DESPATCH OF DOCUMENTS

All the correspondence shall be dispatched by registered post to the address of the holder

whose name appears first in the Register of Bond holders. This will be at the sole risk of the

addressee.

41. GOVERNING LAW

The Bonds are governed by and shall be construed in accordance with the existing Indian Law. Any

dispute arising thereof on any account whatsoever will be subject to the jurisdiction of Honourable

High Court of Kerala at Ernakulam only.

42. NOTICES

All notices to the Bond holder(s) required to be given by KFC or by the Trustees shall be deemed to

have been given if published in one English and one regional language daily newspaper, or may, at

the sole discretion of KFC, but without any obligation, be sent to the Bonds holder(s) at the address

stated in the Application Form, or at the address as notified by the Bonds holder(s) in due course.

All notices to KFC by the Bonds holder(s) must be sent by registered post or by hand delivery to KFC

at its Head Office or to such person(s) at such address as may be notified by KFC from time to time.

43. GENERAL

Over and above the aforesaid Terms and Conditions, the said Bonds shall be subject to the

Terms and Conditions incorporated in the Application.

44. SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES, PAYMENT OF DUE INTEREST ON DUE

DATES ON TERM LOANS AND DEBT SECURITIES.

There has been no delay in servicing of interest due.

45. PERMISSION AND CONSENT FROM CREDITORS

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

Debentures without the consent/ permission/ approval from the Debenture holders/

Trustees/ Lenders/ other creditors of the Corporation.


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46. TRUSTEES OF THE BONDHOLDERS:

KFC has appointed “GDA Trusteeship Ltd.” to act as Trustees to the Bondholders. KFC and the Trustees will enter into a Trustee Agreement, specifying inter alia, the powers, authorities and obligations of the Trustees and KFC. The bondholders shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorised officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the bondholders. It is proposed that in terms of the agreement, the Trustees will endeavour to protect the interest of the bondholders, in the event of default in regard to timely payment of interest or repayment of principal by KFC. Any payment made by KFC to the Trustees on behalf of the bondholders shall discharge KFC of its obligations to the bondholders. No Bondholder shall be entitled to proceed directly against KFC unless the Trustees, having become so bound to proceed, fail to do so. A copy of letter from GDA Trusteeship Ltd conveying their consent to act as Trustee for the current issue of Bonds is enclosed elsewhere in this Disclosure Document. 47. Structure Payment Mechanism : 1. Kerala Financial Corporation (KFC) shall open a no-lien (or Trust and Retention Account (TRA)) account with a Designated Bank. The bondholders shall have exclusive charge on any amount credited in the Escrow account. Any withdrawal from the said Escrow account shall be made only for payment of principal and/ or interest to the Bondholders. Any credit balance lying in the Escrow account can be withdrawn by KFC only after full payment to the bondholders on the due date. The transaction envisages a tripartite agreement among KFC, Government of Kerala (GOK) and the Trustee to the Bondholders in order to ensure timely debt service. 2. KFC will Thirty days(T-30) before the forthcoming due date 'T' credit the requisite funds in the Trust & Retention Account (TRA) for servicing the bondholders or put them in a fixed deposit (FD) with any scheduled bank and ensure that the FDs are liened to the trustees. KFC shall ensure that Government of Kerala and the trustees are intimated about the clear funds balance in the TRA/opening of FD. 3. In the case of FD, at least 1 working day prior to the due date (T-1), KFC shall with due intimation to the Trustees, ensure that proceeds from maturity of FDs are transferred to the TRA for payment to the Bondholders on due date (T) 4. In case the TRA Account is not funded or put the funds in FD with any scheduled by the KFC Bank to the requisite extent at least 25 days (T-25) before the due date for payment of interest and/ or principal (T), the Trustee shall forthwith invoke the Govt. of Kerala (GOK) guarantee by sending notice of invocation of the Guarantee to the GOK (T-25). 5. The GOK shall without demur, reservations and recourse, at least before 5 (Five) working days (T-5) before the due date, deposit/ transfer the principal and/ or accrued interest amount in the TRA account as per the notice of invocation of guarantee by the Trustees.(T-5) 6. The Trustee may make more than one demand under the Guarantee. 7. The Trustee shall intimate the GOK, through the Principal Secretary, Finance Department, or any other designated official to pay the amounts as may be required for servicing of the Bonds on the relevant due date. The change in the address of the Principal Secretary, Finance Department or any other designated official will be intimated to the Trustees by the GOK. In the event of the change of address not being communicated to the Trustees, Notice sent at the old address will be valid and binding. The address for the purpose of Notice is as under:

The Principal Secretary, Finance Department, Government of Kerala Thiruvananthapuram – 695001.


53

8. The TRA Account shall not be discontinued / closed during the subsistence of the Trustee Agreement and/or until the entire Servicing of Bonds is completed, without the prior written approval of the Trustees. 9. The Bonds and all due and payable outstanding related thereto shall be secured by this unconditional, absolute and irrevocable guarantee by the GOK. “

DRR creation - relevant regulations and applicability. KFC is a Public Financial Institution within the meaning of clause (72) of Section 2 of the Companies Act 2013. As per sub rule (7)(b)(i) &(ii) of Rule 18 of the Companies (Share Capital and Debentures) Rules 2014 issued by the Ministry of Corporate Affairs, vide its Gazette notification dated 31-03-2014 no DRR is required in the case of the Private Placement bonds issued.

Computation and payment of Interest on bonds Interest for each of the interest periods shall be computed on Actual/Actual day convention on the outstanding bond amount at the coupon rate. The interest payment is semi annual. The due dates for payment of Interest will be 30th April and 30th October every year. As per SEBI Circular No CIR/IMD/DF/18/2013 dated 29-10-2013 on “Issuances pertaining to primary debt

securities” the cash flows emanating from the bond, i. e. computation and payment of interest and

maturity/redemption(principal) on due dates have to be mentioned in the disclosure document by way of

an illustration. Accordingly, the following illustration is given.

Issue opening 10.09.2014

Issue closing 17.10.2014

Deemed date of allotment 30.10.2014

Half yearly basis IP Dates 30/04 & 30/10

Face Value per Bond Rs. 1000000/- and calculation done for Rs. 200 Crores

Case A : Redemption for full 10 years

Interest Due Dates

Day of the week IP Dates

Day of the week

No. of days in Coupon Period

Interest Amount (In Rs.)

Principal Amount (in Rs. )

Total Payment (in Rs. )

2015-16

30-Apr-2015 Thursday 30-Apr-2015 Thursday 182 912,49,315.07

912,49,315.07

30-Oct-2015 Friday 30-Oct-2015 Friday 183 365 917,50,684.93

917,50,684.93

2016-17 (Leap Year)

30-Apr-2016 Saturday 2-May-2016 Monday 185 925,00,000.00

925,00,000.00

30-Oct-2016 Sunday 31-Oct-2016 Monday 182 367 910,00,000.00

910,00,000.00

2017-18

30-Apr-2017 Sunday 1-May-2017 Monday 182 912,49,315.07

912,49,315.07

30-Oct-2017 Monday 30-Oct-2017 Monday 182 364 912,49,315.07

912,49,315.07

2018-19

30-04-2018 Monday 1-May-2018 Tuesday 183 917,50,684.93

917,50,684.93


54

30-10-2018 Tuesday 30-Oct-2018 Tuesday 182 365 912,49,315.07

912,49,315.07

2019-20

30-Apr-2019 Tuesday 30-Apr-2019 Tuesday 182 912,49,315.07

912,49,315.07

30-Oct-2019 Wednesday 30-Oct-2019 Wednesday 183 365 917,50,684.93

917,50,684.93

2020-21 (Leap Year)


915,00,000.00


915,00,000.00

2021-22

30-Apr-2021 Friday 30-Apr-2021 Friday 182 912,49,315.07

912,49,315.07

30-Oct-2021 Saturday 29-Oct-2021 Friday 182 364 912,49,315.07

5000,00,000.00

5912,49,315.07

2022-23


695,65,068.49

30-Oct-2022 Sunday 28-Oct-2022 Friday 179 364 673,08,904.11

5000,00,000.00

5673,08,904.11

2023-24


463,76,712.33


5000,00,000.00

5456,24,657.53

2024-25 (Leap Year)


228,75,000.00


5000,00,000.00

5228,75,000.00

TOTAL 10

years

15551,22,602.74

20000,00,000.00

35551,22,602.74

Case B : Redemption with Put Call Option

Interest Due Dates

Day of the week IP Dates

Day of the week

No. of days in Coupon Period

Interest Amount (In Rs.)

Principal Amount (in Rs. )

Total Payment (in Rs. )

2015-16


912,49,315.07


917,50,684.93

2016-17 (Leap Year)


925,00,000.00

30-Oct-2016 Sunday 31-Oct-2016 Monday 182 367 910,00,000.00

910,00,000.00

2017-18


912,49,315.07


912,49,315.07


55

2018-19

30-04-2018 Monday 30-Apr-2018 Monday 182 912,49,315.07

912,49,315.07

30-10-2018 Tuesday 30-Oct-2018 Tuesday 183 365 917,50,684.93

5000,00,000.00

5917,50,684.93

2019-20


684,36,986.30


5000,00,000.00

5688,13,013.70

2020-21 (Leap Year)


457,50,000.00


5000,00,000.00

5457,50,000.00

2021-22

30-Apr-2021 Friday 30-Apr-2021 Friday 182 228,12,328.77

228,12,328.77

30-Oct-2021 Saturday 29-Oct-2021 Friday 182 364 228,12,328.77

5000,00,000.00

5228,12,328.77

TOTAL 10 years

10063,73,287.67

20000,00,000.00

30063,73,287.67

1) * Interest is calculated up to one day prior to coupon payment date. If 30.04.2015 is payment date, interest is calculated up to 29.04.2015.

2) ** Calendar Years 2016, 2020 and 2024 are leap years, In interest computation, the number of days in denominator will be 366. However, if the interest payment period overlaps both non-leap year and leap year will be divided by 365 and number of days falling in leap year will be divided by 366.

3) Coupon payment dates, 30.10.2016, 30.05.2017, 30.10.2022 and 30.04.2023 are Sundays.

Therefore, interest payment date will be made on Monday, with one extra day in interest computation.

4) Coupon payment dates, 30.04.2016, 30.10.2021 and 30.04.2022 are Saturdays.

Therefore, interest payment date will be made on Monday, with two extra day in interest computation. If any of the principle redemption date falls on a Saturday or Sunday or any Public Holiday, it will be paid

on the immediately preceding working day.


56


57

BSE In Principle Listing Approval Letter


58

Letter from Debenture Trustee


59

Letter from Registrar and Transfer Agent


60

Credit Rating Letter & rationale


61

Rating Rationale


62


63


64


65

Government Guarantee Letter


66


67


68


69


70


71

Consent Letter from the Collecting Bankers


72


73


74