NON SLR BONDS IM ARRANGERS-1 REEDEMABLE NON CONVERTIBLE APSFC NON-SLR BONDS-SERIES VI-2013, ... Free Press Journal Marg ... non-convertible Non-SLR bonds of APSFC

APSFC

PRIVATE & CONFIDENTIAL – MEANT FOR USE OF ADDRESSEE ONLY

(DISCLOSURE DOCUMENT) DISCLOSURE UNDER SCHEDULE-I OF SEBI (ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008, dated 6-June-08 as amended by SEBI (Issue and Listing of Debt Securities)

(Amendment) Regulations, 2012 dt.12-Oct-2012)

Andhra Pradesh State Financial Corporation (Incorporated under the State Financial Corporations Act, LXIII of 1951)

Corporate Office: 5-9-194, Post Box No.165, Chirag Ali Lane, Hyderabad - 500 001 (A.P.) Phones: 040 -23201398, 23201646, 23202547, 23202550 - 53

Fax: (040)-23200174 URL: www.apsfc.com F&A Dept. e-mail: [email protected]

PRIVATE PLACEMENT OF GOVT. OF ANDHRA PRADESH GUARANTEED, RATED, LISTED

UNSECURED REEDEMABLE NON CONVERTIBLE APSFC NON-SLR BONDS-SERIES VI-2013, AGREEGATING TO RS.160 CRORE WITH A GREEN SHOE OPTION UPTO RS. 160 CRORE

(Irrevocably and unconditionally guaranteed by the Govt. of Andhra Pradesh) GENERAL RISK: Investment in debt instruments involves a degree of risk and investors should invest any funds in the issue only after reading the Disclosure Document 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 Disclosure Document 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. PROFILE OF THE CORPORATION: • Majority of share holding is held by Government of Andhra Pradesh and Small Industries Development

Bank of India. • APSFC is a state level Financial Institution established in the year 1956 under State Financial

Corporation’s Act 1951. • Providing Financial Assistance mainly to Micro, Small, Medium Scale Industries (MSMEs), in the state

of Andhra Pradesh. • Mobilizes funds through Re-finance from SIDBI, Non-SLR Bonds and Term Loans from

Banks/Financial Institutions, etc. • Managed by the Managing Director under the supervision & direction of the Board of Directors where

Senior IAS Officers/Professionals are Directors. • The Corporation making profits and declared dividend for the FY 2011-12. • APSFC retains its NUMBER ONE position amongst its peers in the Country for the 11th year in a row.

BOND HIGHLIGHTS:

• State Government guaranteed Rated, Listed, Redeemable, and Non-Convertible Bonds in the form of Debentures (Non-SLR Bonds).

• Issue Size: Rs.160.00 crore of APSFC Non-SLR Bonds (Series VI-2013) with green shoe option upto Rs.160.00 crore.

• Coupon Rate of 9.15% p.a. payable semi-annually. • Maturity (10 years) with redemption from the end of 6th year onwards @20% on the bond value. • Call option at the end of 5th year.

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ARRANGERS TO THE ISSUE AK Capital Services Ltd

30-39, Free Press House, 3rd Floor, Free Press Journal Marg,

Nariman Point, Mumbai – 400 021. Tel: 022- 67546500 Fax: 022-

66100594

Almondz Global Securities

P-17/90 (2nd floor), Connaught Circus New Delhi-110001, India

Tel.: +91 11 43511400 Fax: +91 11 43511420

Axis Bank Ltd

11th Floor,Maker Tower-‘F’ Wing, Cuffe Parade, Coloba, Mumbai-400005 Tel: 022- 22164716, Fax:022-22164721

Centrum Capital Ltd.

“Centrum House” Level 7, CST Road, Near Bandra-Kurla Complex Vidya Nagari Marg,Kalina,Santacruz (E),

Mumbai – 400 098 Phone +91-22-67249000

Darashaw & Co. Pvt. Ltd 1205/1206, Regent Chambers,

Nariman Point, Mumbai - 400 021 Ph: 022-66306612 / 13

Fax : 022 - 22040031

Edelweiss Capital Limited

14th Floor, Express Towers, Nariman Point, Mumbai 400 021

Tel: 022 43428000, Fax:022 43428029

ICICI Bank Ltd., Regional office, ICICI Tower, NBCC Palace, Bhism

Pitamah Marg, Pragati Vihar, New Delhi 110003

Tel No 011- 4221 8275

ICICI CENTRE H.T. Parekh Marg, Churchgate, Mumbai 400020 Tel No 022 – 22882460 / 70 Fax No 022 – 22882312 / 13

LKP Securities Ltd

203, Embassy Centre, Nariman Point, Mumbai – 400021

Tel. (022) 22828234 / 5 / 6 Fax: (022) 22842415

Real Growth Securities Pvt Ltd

112 – A, Jyoti Shikhar Building, District Centre, Janak Puri,

New Delhi – 110058. Phone. 011 – 25513114, 25513115, Fax

: 011 – 25532212

SPA Capital Advisors Ltd. (SPA Merchant Bankers Ltd)

25, C-Block Community Centre, Janak Puri, New Delhi - 110 058 Ph - 011-25517371 / 25515086

Fax - 011-25532644

Tip Sons Consultancy Services Pvt. Ltd.

401, Sheraton House Opp: Ketav Petrol Pump

Polytechnic Road, Ambawadi Ahmedabad – 380 015 Tel: (079) 3048 0295, Fax: (079) 3048 0298

Trust Investment Advisors Pvt. Ltd.

109//110, 1 st Floor, Balrama, Village – Parigkhari,

Bandra Kurla Complex, Bandra (E) Mumbai-51 Ph. 022-30681150-52

Kotak Mahindra Bank Limited,

6-3-1109/1/P202, 2nd Floor,

Jewel Pavani Tower, Raj Bhavan Road,

Somajiguda, HYDERABAD – 500 082 Fax No.040-6684 2328.

RR Investors Capital Services Pvt. Ltd.,

S – 111, Manipal Centre 47, Deckenson Road,

BANGALORE – 560 042 Fax: 080 2559 3664

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Karvy Investor Services Ltd.,

Karvy House, 46, Avenue – 4, Street No.1,

Banjara Hills, HYDERABAD – 500 034

Tel: 040-4667 7592 Fax: 040-2337 4714

REGISTRAR TO ISSUE XL Softech Systems Ltd, 3, Sagar Society, Road No.2, Banjara Hills, Hyderabad-500 034. Ph. (040)-23545913/14/15. BOND TRUSTEES M/s. GDA Trusteeship Ltd. “GDA HOUSE”, Plot No.85, Survey No. 94/95 Paud Road, Pune- 411 038 Tel: 020 – 25280081.

Issue Schedule Offer Opening Date 11.01.2013 Offer Closing Date 15.02.2013 Deemed Date of Allotment 15 working days from the date of closure of the

issue

The issuer reserves the right to close the issue earlier from the aforesaid date or change the issue time table including the Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice.

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I. DEFINITIONS/ABBREVIATIONS USED

APSFC Andhra Pradesh State Financial Corporation

AY Assessment Year

APPLICATION FORM The form in terms of which, the investors shall apply for the Government of Andhra Pradesh Guaranteed Redeemable Non-Convertible APSFC Non- SLR Bonds (Series-VI- 2013) in the nature of Debentures of the Corporation

BOD Board of Directors of APSFC

Bondholder(s) The Holder(s) of the Bond(s) in dematerialised form

Beneficial Owner(s)

Bondholder(s) holding Bond(s) in dematerialised form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996)

BRICK Brickwork Ratings India Pvt.Ltd.,

BSE Bombay Stock Exchange, Mumbai

CAR Capital Adequacy Ratio

CDSL Central Depository Services (India) Ltd.

CPSU Central Public Sector Undertaking

DER Debt Equity Ratio

DDA Deemed Date of Allotment

DP Depository Participant

Depository(ies) National Securities Depository Limited (NSDL) and, Central Depository Services (India) Limited (CDSL)

DIP Disclosure and Investor Protection Guidelines of SEBI

ED Executive Director

FY Financial Year

GoAP Government of Andhra Pradesh

GOI Government of India

MF Mutual Fund

NPA Non-Performing Asset

NSDL National Securities Depository Ltd.

NSE National Stock Exchange of India Ltd.

PAN / GIR Permanent Account Number / General Index Registration Number

PY Previous Year

R&TA Registrar & Transfer Agent

RBI Reserve Bank of India

RTGS Real Time Gross Settlement

SEBI Securities and Exchange Board of India

SIDBI Small Industries Development Bank of India

SLR BONDS Statutory Liquidity Ratio Bonds

TDS Tax Deducted at Source

THE BOARD The Board of Directors of APSFC

THE CORPORATION Andhra Pradesh State Financial Corporation

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BOND TRUSTEES GDA Trusteeship Limited

ARRANGER (S)

(In alphabetical order)

1. AK Capital Services Ltd

2. Almondz Global Securities Limited

3. Axis Bank Ltd.

4. Centrum Capital Ltd.

5. Darashaw & Company Pvt. Ltd

6. Edelweiss Capital Ltd.

7. ICICI Bank Ltd.

8. ICICI Securities Primary Dealership Ltd.

9. Karvy Investor Services Ltd.

10. Kotak Mahindra Bank Ltd.

11. LKP Securities Limited

12. Real Growth Securities Pvt. Ltd.

13. RR Investors Capital Services Pvt. Ltd.

14. SPA Merchant Bankers Ltd

15. Tipsons Consultancy Services Pvt. Ltd.

16. Trust Investment Advisors Pvt. Ltd.

ISSUE/OFFER/OFFERING Private Placement of 1600 with a green shoe option upto 1600 unsecured, redeemable, non-convertible Non-SLR bonds of APSFC (Series VI - 2013) of Rs.10,00,000/- each for cash at par aggregating to Rs.160.00 crore with a green shoe option upto Rs.160.00 crore.

DISCLOSURE DOCUMENT/ OFFER DOCUMENT

Disclosure Document dated 09.01.2013 for private placement of unsecured, redeemable, non-convertible guaranteed by the Government of AP, APSFC Non-SLR Bonds (Series VI - 2013) of Rs.10,00,000/- each for cash at par aggregating to Rs.160.00 crore with a green shoe option upto Rs.160.00 crore.

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PRIVATE PLACEMENT OF BONDS ISSUE BY APSFC Dear Sir/Madam, APSFC (the issuer) is proposing to issue Bonds on a private placement basis as described in this Document. Investors are required to make payment through RTGS /Demand Draft(s) / Cheque (s) payable in favour of “APSFC Non-SLR Bonds (Series VI -2013)” and all Demand drafts/ Cheques shall be 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 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 Disclosure Document by sending the duly filled in Application Form along with the subscription amount by way of RTGS/Cheque(s)/Demand draft(s) in favour of “APSFC Non SLR Bonds (Series VI-2013) “ to the Arrangers/Issuer’s/Collecting Bank branches. Your acceptance of the terms and conditions outlined in this Document will constitute an offer to invest in the above referred Private Placement of Bonds and will be subject to acceptance by the Issuer. Please note that this Private Placement Disclosure Document is restricted for circulation only to the investors to whom the above has been addressed personally and this Document 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 Andhra Pradesh State Financial Corporation CHIEF GENERAL MANAGER (F&A) Place: Hyderabad Date: 09.01.2013

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DISCLAIMER

GENERAL DISCLAIMER This Disclosuer Document is neither a prospectus nor a statement in lieu of prospectus and is prepared in accordence with Securities and Exchange Board of India (Issued and listing of Debt Secruities) Regulations, 2008 issued vide Circular No.LAD-NRO/GN/2008/13/127878 dated June 06, 2008 and as amended in the Regulations dated 12th October 2012. This document does not consistute an offer to the public generally to subscribe for or acquire the bonds to be issued by ANDHRA PRADESH STATE FINANCIAL CORPORATION (the“issuer”/the “Corporation”/the “issuer Corporatiion” ). The document is for the exclusive use of the Institutions to whom it is delivered and it should not be circulatd or distributed to thrid party (ies). Andhra Pradesh State Financial Corporation certifies that the disclosures made in this dcoument 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 Secuirities & 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 cosntrued 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 ARRANGERS In light of Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulatations, 2008 issued vide circular No.LAD-NRO/GN/2008/13/127878 dated 6th June, 2008 and also in confromity of the debt amendment regulation of 2012; 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 Lead Arrangers 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 Lead Arrangers have neither scrutinized/vetted nor have they done any due-diligenece for verification of the contents of this Disclosure Document. The Lead Arrangers shall use this document for the purpose of soliciting subsciption 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 Scheme or project of the Corporation. The Lead Arrangers 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 othe source of information would be doing so at his/her/their own risk.

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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 otheriwse 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. 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 restictions. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of the courts at Hyderabad, Andhra Pradesh. All information considered adequate and relevant about the Issuer Corporation has been made available in this Information Memorandum for the use and perusal of the potential investors and no selective or additional 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. FORCE MAJEURE APSFC reserves the right to withdraw the issue at any time in the event of any unforeseen development adversely affecting the economic and regulatory environment. In such an event, APSFC will refund the application money, if any, along with the interest payable on such application money. A. ISSUER INFORMATION: a. Name and Address of the Issuer:

i. Registered/Corporate Office of the Issuer: Andhra Pradesh State Financial Corporation

5-9-194, Chirag Ali Lane, Abids, Hyderabad - 500 001. Telephone: 040 -2320 1646. Fax:040-23200174 Email: [email protected].

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ii. Compliance Officer Details: E. Chengalrayulu, Chief General Manager(F&A)

Andhra Pradesh State Financial Corporation 5-9-194, Chirag Ali Lane, Abids, Hyderabad - 500 001. Telephone: 040 -2320 1646. Fax:040-23200174 Email: [email protected].

iii. Arrangers:

1. AK Capital Services Ltd. 2. Almondz Global Securities Limited 3. Axis Bank Ltd. 4. Centrum Capital Ltd. 5. Darashaw & Company Pvt Ltd. 6. Edelweiss Capital Ltd. 7. ICICI Bank Ltd. 8. ICICI Securities Primary Dealership Ltd. 9. Karvy Investor Services Ltd. 10. Kotak Mahindra Bank Ltd. 11. LKP Securities Limited 12. Real Growth Securities Pvt. Ltd. 13. RR Investors Capital Services Pvt. Ltd. 14. SPA Merchant Bankers Ltd. 15. Tipsons Consultancy Services Pvt. Ltd. 16. Trust Investment Advisors Pvt. Ltd.

iv. Trustees of the Issue:

M/s. GDA Trusteeship Ltd. “GDA HOUSE”, Plot No.85, Survey No. 94/95 Paud Road, PUNE- 411038 Tel: 020 – 25280081.

v. Registrar of the issue: XL Softech Systems Ltd,

3, Sagar Society, Road No.2, Banjara Hills, HYDERABAD-500034. Ph. (040)-23545913/14/15.

vi. Credit Rating Agencies:

a) Brick Work Ratings

3rd Floor, Raj Alkaa Park 29/3 & 32/2 Kalena Agrahara Bannerghatta Road Banglore – 560 076 Phone 080 4040 9940.

b) India Ratings and Research Private Limited, (A Fitch Group Company)

Apeejay House, 6th floor, 3 Dinshaw vachha Road,

Churchgate, MUMBAI-400 020. INDIA. Tele.No.022-40001700

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vii. Auditors of the Issuer:

M/s. G .S. Madhava Rao & Co., Chartered Accountants 3-5-823, F-5&7, Hyderabad Business Centre, Hyderguda, HYDERABAD - 500 029.

B. BRIEF SUMMARY OF THE BUSINESS/ACTIVITY OF THE ISSUER AND ITS LINE OF BUSINESS:

i) Overview:

APSFC is a state level financial institution established in the year 1956 under the State Financial Corporations Act, 1951. APSFC is meeting the financial needs of micro, small and medium scale industries (MSMEs) in the state of Andhra Pradesh for more than five decades. The Corporation is having a network of 25 branch offices covering all districts of the state. The Government of Andhra Pradesh and SIDBI together are holding 99.87% of the shareholding in APSFC. APSFC is making significant contribution for the development of small and medium scale industries in the state by providing the need based credit in the form of medium/ long term loans. The Corporation is playing predominantly a promotional and developmental role and acting as a catalyst for the growth of MSME sector, generation of direct and indirect employment in the state. India being a developing nation there is every need for specialized development financial institutions like APSFC to foster further growth of SME sector and to promote first generation entrepreneurs. APSFC is first among all SFCs in the country to obtain ISO 1994 certification for all its branch offices and head office, as also ISO 9001- 2008 certification. APSFC got the professional man-power at all levels in the financial, technical and legal streams. APSFC’s resources mainly consist of refinance from SIDBI, SLR Bonds, Non-SLR Bonds, Term Loans from Banks, and Fixed Deposits. SIDBI is the major lender to the Corporation. APSFC has sanctioned term loans of over Rs.12503.43 crore to more than 93999 tiny/ small/medium scale units up to 31.03.2012. Consequent upon implementation of financial sector reforms in India in 1992-93, the operations of all SFCs in the country were adversely affected and APSFC too had been impacted. APSFC has been constantly improving its performance in all its key result areas of Sanctions, Disbursement and Recoveries year after year. The performance of the Corporation for the last 5 years is as under: (Rs. in crores)

KEY RESULT AREA 2007-08 2008-09 2009-10 2010-11 2011-12

Sanctions 1006.61 885.67 1052.38 1386.38 1368.82 Disbursements 662.70 685.70 707.99 904.35 936.89 Recoveries 621.94 658.08 785.12 902.38 966.47

APSFC retained the coveted No.1 position for the 11th year in a row among all SFCs in the country by achieving the highest performance in key result areas of Sanctions and Disbursements in terms of amount and Recoveries in terms of percentage to the outstanding during 2011-12.

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The shareholding pattern of the Corporation as on date is as under: (Rs. in crore)

Sl. No.

Shares held by Equity Share Capital

Share Capital pending

allotment

Special Share

Capital

Total % of holding

1. State Govt. 141.141 30.160 5.564 176.865 85.85 2. SIDBI 23.310 0 5.564 28.874 14.02 3. LIC of India 0.216 0 --- 0.216 0.11 4. Individuals, Co-op. Banks,

PF Trusts etc. 0.055 0 --- 0.055 0.02

Total 164.722 30.160 11.128 206.010 100.00 The Corporation has been making cash profits since inception. The Corporation has declared dividend for the FY 2011-12. The details of profit and net worth of the Corporation are as under:

Sl.No. Year Amount in Rs. in Crore

Net Profit Net worth 1 2005-06 24.58 45.26 2 2006-07 27.21 73.63 3 2007-08 89.51 266.05 4 2008-09 42.85 266.59 5 2009-10 67.68 332.19 6 2010-11 67.33 377.16 7 2011-12 68.32 409.14

ii) Management Team:

Name Designation

Sri T. S. Appa Rao, IAS (Retd) ChairmanSri T. Satyanarayana Rao, IAS Managing Director Sri B. Santhosh Babu Executive Director

iii) Key operational and Financial parameters for last 3 Audited years: (Rs.in Lakhs)

Parameters FY 2011-12 FY 2010-11 FY 2009-10For Financial Entities Net worth 40913.58 37715.99 33219.05Borrowings 221655.96 192446.48 172401.71Loans & advances (Net of NPA provision) 238438.63 211735.30 185141.20Fixed Assets 15054.56 14966.09 14557.17Investments 2225.56 586.27 17448.00Cash and Bank Balances 21550.71 15726.77 9661.01Interest Income 33032.81 28789.82 25708.03Interest Expense 16478.03 14241.07 13638.07Operating Profit 11212.38 10028.02 9965.30PAT 6832.50 6733.26 6767.94Gross NPA (%) 5.39 4.31 6.23Net NPA (%) 3.11 2.87 5.53Capital Adequacy Ratio (%) 15.63 16.24 15.09

Gross debt: equity Ratio of the Corporation:

Before the issue of debt securities 5.15After the issue of debt securities 5.89

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C. BRIEF HISTORY OF THE ISSUER SINCE ITS INCORPORATION:

i) Details of Share Capital as on last quarter end:

Share Capital Rs.Authorized Share Capital 5,00,00,000 Equity Shares of Rs.100/- each

500,00,00,000

Issued, subscribed and Paid-up Share Capital 1,64,72,240 Equity Shares of Rs.100/- each

164,72,24,000

ii) Changes in its Capital structure as on last quarter end for the last five years:

(Rs.in Lakhs) Date of change Rs. Particulars

15972.24 2007-08 31.03.2009 16472.24 2008-09 16472.24 2009-10 16472.24 2010-11 16472.24 2011-12 16472.24 2012-13 (as on 30.09.2012)

iii) Equity Share Capital history of the Corporation as on last quarter end for the last five years:

Date of

Allotment No. of Equity Shares

Face Value (Rs.)

Issue Price (Rs.)

Consideration

(Cash, other than cash, etc)

Nature of

Allotment

Cumulative RemarksNo of equity shares

Equity Share

Capital (in Rs.)

Equity Share

premium (in Rs.)

2007-08 15979240 1597924000 2008-09 5,00,000 Rs. 100/-

per share 16479240 1647924000 --

2009-10 16479240 1647924000 2010-11 16479240 1647924000 2011-12 16479240 1647924000

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.

D. DETAILS OF THE SHAREHOLDING OF THE COMPANY AS ON THE LATEST QUARTER END:

i) Shareholding pattern of the Company as on last quarter end 31st December,2012:

Sl. No

particulars Total No. of Equity Shares

No. of shares in demat form

Total Shareholding as % of total no of equity shares

1 Hon’ble Governor of Andhra Pradesh

1,41,14,087 -- 85.68

2 Small Industries Development Bank of India

23,30,987 -- 14.15

3 LIC of India 21,655 -- 0.134 Individuals, Co-operative Banks,

PF Trusts, etc. 5,511 -- 0.03

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E. DETAILS REGARDING THE DIRECTORS OF THE COMPANY: i) Details of the current Directors of the Corporation:

SL. NO NAME, DSGN & DIN

Age (Dt.of Birth)

ADDRESS Directors of

the Company Since

Details of other Directorship

01. Sri T.S.Appa Rao, IAS (Rtd) DIN 00412492

10.05.1952 (61 yrs)

Plot No.109 Prashashan Nagar Road No.72, Jubilee Hills, Hyderabad-500 033

18.04.2012 -Nil-

02. Sri DrRajat Kumar, IAS DIN 02665304

12..11.1963 (49 yrs)

Commissioner of Industries, Chirag Ali Lane, Abids, Hyderabad-500 001.

14.09.2010

As Director: i) APIDC Ltd., Hyd. ii) APIIC, Hyd. iii) APITCO, Hyd.

03. Sri K.Pattabhi Seetha Rama Rao Chartered Accountant DIN 00416233

10.05.1961 (52 yrs)

301, Sabarigiri Towers 7/1, Chandramouli Nagar Guntur.

09.09.2010

Nil

04. Sri R.P.Malik Chief General Manager DIN 0209355

01.06.1953 (59 yrs)

SME Devt.Centre S.I.D.B.I., C-11, G-Block, BandraKurla Complex,Bandra (E) MUMBAI – 400 051.

01.08.2012 Nil

05. Sri S.Mallikarjun General Manager DIN 05174508

28.03.1959 (54 yrs)

S.I.D.B.I., 101, Hermitage Office Complex, 1st Floor, Saifabad, Post Box No. 130 HYDERABAD - 500 004.

01.12.2011

Nil

06. Sri Uday Kumar Navani Sr.Divisional Manager DIN Nil

16.05.1964 (49 yrs)

S.D.M., LIC of India, Secunderabad Divisional Office, Sy.No.110/113/114, Behind NTR Stadium Near IndiraPark Hyderabad - 500 080.

08.06.2010

Nil

07. Sri K.Jagadish Prasad Industrialist DIN Nil

13.01.1956 (56 yrs)

H.No. 2-1-293/88, Plot No.1, Road No.72, Prashashan Nagar, Jubilee Hills, Hyderabad-500 033.

27.04.2007

Nil

08. Sri C.Rajendra Prasad Industrialist DIN 00702292

11.06.1952 (60 yrs)

O/o CCL Product (India) Ltd. 7-1-24/2/D, Green Dale Ameerpet Hyderabad-500 016.

27.04.2007

Nil

09. Sri K.Narasimha Murthy Cost & Management Consultant DIN 00023046

13.08.1957 (55 yrs)

3-6-365, 104 & 105, Pavani Estate, Himayatnagar Hyderabad - 500 029.

07.07.2009

As Director: i) LIC Housing Finance Ltd. ii) Max Healthcare Instt.Ltd. iii) KIOCL (Formerly Kudremukh Iron Ore Company Ltd.,) iv) Srikari Management Consultants Pvt. Ltd As Member : i) NABARD, Hyd.

10. SriT.Satyanarayana Rao, IAS Managing Director DIN 01742312

16.03.1954 (59 yrs)

APSFC, 5-9-194, Chirag Ali Lane Abids Hyderabad-500 001.

07.01.2012

As Director: i) SIDBI,Lucknow ii) APIDC Ltd. , Hyd. iii) APIIC, Hyd.

14

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

S.No. Name Designation in APSFC

Date of Appointment

Date of cessation

Reason for change

1 Sri J.Rambabu, IAS (Retd) DIN

Chairman 10.03.2006 10.03.2012 As per SIDBI

2 Sri T.S.Appa Rao DIN 00412492

Chairman 18.04.2012 Continuing

3 Sri Vikas Raj, IAS DIN 02648465

M.D. 17.03.2009 07.01.2012 As per GO AP

4 Sri T.Satyanarayana Rao, IAS DIN 01742312

M.D. 07.01.2012 Continuing

5 Sri Karikal Valaven, IAS DIN 0151994

Director 14.09.2010 Transferred

6. Sri K.PattabhiSeetharama Rao DIN 00416233

Director 09.09.2010 Continuing

7 Sri N.K.Narula DIN Nil

Director 15.06.2009 30.11.2011 As per SIDBI

8 Sri S.Mallikarjun DIN 05174508


9 Sri Namgial DIN 01490266l


10 Smt.Bhama Krishnamurthy DIN 02196839


11 Sri R.P.Malik DIN 0209355


12 Sri L.K.Shamsunder DIN Nil

Director 27.05.2008 07.06.2010 As per LIC

13 Sri Uday Kumar Navani DIN Nil


14 Sri K.Jagadish Prasad DIN Nil


15 Sri C.Rajendra Prasad DIN 00702292


16 K.Narasimha Murthy Cost & Management Consultant DIN 00023046


17 Amitabha Guha Ex-MD of SBH DIN Nil

Director 21.04.2009 20.04.2012 Tenure over

F. DETAILS REGARDING THE AUDITORS OF THE CORPORATION:

i) Details of the auditor of the Corporation:

Name Address Auditor since M/s. G .S. Madhava Rao & Co., Chartered Accountants

3-5-823, F-5&7, Hyderabad Business Centre, Hyderguda, HYDERABAD - 500 029.

2010-11

15

ii) Details of change in auditor since last three years:

Name Address Date of Appointment/R

esignation

Auditor of the Companysince (in case of resignation)

Remarks

M/s. M. Anadam & Co., Chartered Accountants

7‘A’ Surya Towers, SP Road, Sec’bad – 500 003

30.07.2009 2009-10

M/s. G .S. Madhava Rao & Co., Chartered Accountants


28.10.2010 2010-11



28.07.2011 2011-12



30.07.2012 2012-13

G. DETAILS OF BORROWINGS OF THE CORPORATION, AS ON THE LATEST QUARTER END:

i) Details of Secured Loan Facilities (As on 31.12.2012): (Rs. In Crores)

Lender’s Name Type of Facility

Amount Sanctioned

Principal Amount

Outstanding

Repayment Period

Security

SIDBI TL/LOC 1152.06 Upto 8 years

Assignment of Book Debts

Karur Vysya Bank TL 100.00 57.50 5 years

Assignment of Book Debts

Axis Bank TL 50.00 31.25 5 years Canara Bank STL 200.00 141.66 2/3 years Andhra Bank TL 100.00 90.00 5/6 years Tamilnadu Mercantile Bank STL 30.00 15.00 1 year South Indian Bank TL 50.00 45.00 4 years AP.Co-Operative Bank TL 50.00 20.00 5 years

Total 580.00 1552.47

ii) Details of Unsecured Loan Facilities:

Lender’s Name

Type of Facility Amount Sanctioned

Principal Amount

Outstanding

Repayment Date/Schedule

-- -NIL-

16

iii) Details of Non SLR Bonds: (Rs in Crores)

Debenture Tenor/ Period of Maturity

Coupon Allotment

Amount (Rs.in crore)

Date of issue Redemption unsecured Schedule

Credit Secured/Remarks

Series -I 05 years 9.10% 50.00 31.08.2007 06.09.2012 A+(SO) by Fitch & A(SO) by Crisil

Redeemed on 06.09.2012

Series –II 10 years 8.50% 129.00 15.02.2008 27.03.2018 A(SO) by Fitch & A(SO) by Crisil

Secured by Government Guarantee

Series –III 10 years 9.00% 100.00 24.12.2008 03.01.2019

Series –IV 10 years 8.35% 121.00 21.12.2009 29.12.2019

Series –V 10 years 9.48% 200.00 29.02.2012 28.03.2022

iv) List of Top 10 debenture Holders (as on 01.09.2012)

Sl. No.

Debentures holders Name Amount (Rs. In crores)

1 Canara Bank Employees Pension Fund 50.00

2 State Bank of Hyderabad Employees Gratuity Fund 30.00 3 Canara Bank (Employees) Pension Fund 25.00 4 General insurance Corporation of India 20.00 5 Indian Overseas Bank Employees Pension fund 20.00 6 Board Of Trustees for Bokaro Steel Employees Provident Fund 17.10 7 Canara Bank Staff Provident Fund 15.00 8 SBOP Employees Pension Fund Trust 15.00 9 Bank of India Provident Fund 10.00

10 AP Genco Pension & Gratuity Trust 10.00

v) The amount of corporate guarantee issued by the Issuer along with name of the counterparty (like name of the subsidiary, JV entity, group company, 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 guarantee issued by the Company, 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

17

H) DETAILS OF PROMOTERS OF THE CORPORATION:

i. Details of Promoters Holding in the Corporation as on the latest quarter end:

Sl. No.

Name of the share holders 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 Hon’ble Governor of Andhra Pradesh

1,41,14,087 -- 85.68 Nil Nil

2 Small Industries Development Bank of India

23,30,987 -- 14.15 Nil Nil

ii. Abridged version of Audited consolidated (wherever applicable) and Standalone Financial Information (like Profit &

Loss Account, Balance Sheet and Cash Flow Statement) for last 3 years and Auditor qualifications, if any.

BALANCE SHEET AS ON 31st MARCH, 2012

(Rs in lakhs)

Schedule As on 31.03.2012

As on 31.03.2011

Capital and Liabilities : Share Capital A 20600.99 20600.99 Loans Pending Conversion to Share Capital B 1334.00 1334.00 Reserve Fund and Other Reserves C 21140.46 18317.03 Borrowings D 221655.96 192446.48 Current Liabilities & Provisions E 27923.71 23368.44 T O T A L : 292655.12 256066.94 Property and Assets : Cash & Bank Balances F 21550.71 15726.77 Investments G 2225.56 586.27 Loans & Advances (Net of NPAs provision) H 238438.63 211735.30 Fixed Assets I 15054.56 14966.09 Other Assets J 15385.66 13052.51 T O T A L : 292655.12 256066.94

Profit and Loss Account for the year ended 31st March, 2012

(Rs in lakhs)


As on 31.03.2011

Income : Interest on Loans & Advances 33032.81 28789.82 Other Income K 3768.80 3453.53 T O T A L : 36801.61 32243.35 Expenditure : Interest and other Financial Expenses L 16478.03 14241.07 Personnel Expenses M 5137.57 4785.98 Administrative Expenses N 596.80 637.69 Depreciation I 125.66 119.36 Bad Debts written off 3251.17 2431.23 T O T A L : 25589.23 22215.33 Operating Profit c/f 11212.38 10028.02 Add : Excess NPA provision written back 0.00 357.21 Excess Income tax provision of earlier years written back 0.00 0.26 Deferred Tax Asset (DTA) 318.57 186.67 Profit before provisions 11530.95 10572.16

18

Less : Provision for Income tax 3017.99 2816.12 Provision for incentive to employees 200.00 314.53

Provision for retirement benefits of employees 1189.86 638.63

Provision against Standard Assets 290.60 69.62 4698.45 3838.90 Net Profit carried to P&L appropriation a/c C1 6832.50 6733.26

Cash Flow Statement

As on 2011-12

As on 2010-11

A. CASH FLOW FROM OPERATING ACTIVITIES Profit before tax & provisions 11112.38 10028.02 Add: Depreciation 125.66 119.36 Bad Debts Written off 3251.17 2431.23 Less: Profit on sale of Fixed Assets (Net of loss on sale) 0.66 1.60 Profit on sale of investments 5.18 78.51 Dividend on shares 1.84 2.76 Cash from Operations 14481.53 12495.74 Adjustment for : Increase in advances (33397.36) (30972.23) Increase in borrowings 32372.16 19268.80 Decrease in deposits (3162.68) 775.97 Increase in other assets (760.54) (348.43) Increase in other Liabilities 1013.15 (8601.52) Direct Taxes paid (Net) (2871.42) (2968.88) Net cash from Operating Activities 7674.84 (10350.55) B. CASHFLOW FROM INVESTMENT ACTIVITIES : Purchase of investments (1639.29) 0.00 Purchase of Fixed Assets (215.07) (529.79) Sale of Fixed Assets 1.61 3.11 Sale of investments 0.00 16940.23 Dividend on shares 1.84 2.76 Net cash from investment activities (1850.91) 16416.31 C. OTHER CASH FLOWS : Increase in Share Capital 0.00 0.00 Loan pending conversion to Share Capital 0.00 0.00 Other net cash flows 0.00 0.00 Net cash flows (A+B+C) 5823.93 6065.76 Net increase / (decrease) in cash and cash equivalents 5823.93 6065.76 Cash and Cash equivalents at the beginning of the year 15726.77 9661.01 Cash and Cash equivalents at the end of the year 21550.70 15726.77

19

BALANCE SHEET AS ON 31st MARCH, 2011

(Rs in lakhs)


As on 31.03.2010

Capital and Liabilities : Share Capital A 20600.99 20600.99 Loans Pending Conversion to Share Capital B 1334.00 1334.00 Reserve Fund and Other Reserves C 18317.03 13729.37 Borrowings D 192446.48 172401.71 Current Liabilities & Provisions E 23368.44 28756.94

T O T A L : 256066.94 236823.01

Property and Assets : Cash & Bank Balances F 15726.77 9661.01 Investments G 586.27 17448.00 Loans & Advances (Net of NPAs provision) H 211735.30 185141.20 Fixed Assets I 14966.09 14557.17 Other Assets J 13052.51 10015.63

T O T A L : 256066.94 236823.01

Profit and Loss Account for the year ended 31st March, 2011

(Rs in lakhs)


As on 31.03.2010

Income : Interest on Loans & Advances 28789.82 25708.03 Other Income K 3453.53 3108.82 T O T A L : 32243.35 28816.85 Expenditure : Interest and other Financial Expenses L 14241.07 13638.07 Personnel Expenses M 4785.98 3545.01 Administrative Expenses N 637.69 553.70 Depreciation I 119.36 119.19 Bad Debts written off 2431.23 995.58 T O T A L : 22215.33 18851.55 Operating Profit c/f 10028.02 9965.30 Add : Excess NPA provision written back 357.21 0.00 Excess Income tax provision of earlier years written back 0.26 50.99 Deferred Tax Asset (DTA) 186.67 (44.86) Profit before provisions 10572.16 9971.43 Less : Provision for Income tax 2816.12 2599.79 Provision for incentive to employees 314.53 323.46 Provision for retirement benefits of employees 638.63 190.07 Provision against Standard Assets 69.62 90.17 3838.90 3203.49 Net Profit carried to P&L appropriation a/c C1 6733.26 6767.94

20

Cash Flow Statement

2010-11 2009-10

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax & provisions 10028.02 9965.30

Add:

Depreciation 119.36 119.19

Bad Debts Written off 2431.23 995.58

Less:

Profit on sale of Fixed Assets (Net of loss on sale) 1.60 0.03

Profit on sale of investments 78.51 64.06

Dividend on shares 2.76 2.36

Cash from Operations 12495.74 11013.62

Adjustment for :

Increase in advances (30972.23) (20835.45)

Increase in borrowings 19268.80 13205.52

Increase in deposits 775.97 3090.52

Increase in other assets (348.43) (276.94)

Decrease in other Liabilities (8601.52) 8050.67

Direct Taxes paid (Net) (2968.88) (1873.31)

Net cash from Operating Activities (10350.55) 12374.63

B. CASHFLOW FROM INVESTMENT ACTIVITIES :

Purchase of investments 0.00 (9750.03)

Purchase of Fixed Assets (529.79) (531.48)

Sale of Fixed Assets 3.11 0.50

Sale of investments 16940.23 84.84

Dividend on shares 2.76 2.36

Net cash from investment activities 16416.31 (10193.81)

C. OTHER CASH FLOWS :

Increase in Share Capital 0.00 0.00

Loan pending conversion to Share Capital 0.00 0.00

Other net cash flows 0.00 0.00

Net cash flows (A+B+C) 6065.76 2180.82

Net increase / (decrease) in cash and cash equivalents 6065.76 2180.82

Cash and Cash equivalents at the beginning of the year 9661.01 7480.19

Cash and Cash equivalents at the end of the year 15726.77 9661.01

21

J. Un-audited financial results for the half year ended 30.09.2012 (Rs. In Lakhs)

Sl. No. Particulars

6 months ended Year ended 30.09.2012 (Unaudited)

30.09.2011 (Unaudited)

31.03.2012 (Audited)

31.03.2011 (Audited)

1 Interest earned (a)+(b)+( c) +(d) 16279.78 14068.62 33542.61 29219.80

(a) Interest on Loans &Advances 15685.95 13757.57 33032.81 28789.82

(b) Income on Investments 237.82 116.22 218.78 255.41 (c) Interest on deposits with Bank 299.15 130.58 191.39 48.87 (d) Others 56.86 64.25 99.63 125.70 2 Other Income 505.54 521.76 3259.00 3023.55 3 Total Income(1+2) 16785.32 14590.38 36801.61 32243.35 4 Interest Expended 9811.17 7710.49 16369.61 14218.88 5 Operating Expenses(i)+(ii) 2943.62 2802.67 10609.48 8949.61 (i) Employees Cost 2614.16 2444.81 6527.43 5739.14

(ii) Other operating expenses 329.46 357.86 4082.05 3210.47

6 Total Expenditure (4+5) excluding provisions & contingencies 12754.79 10513.16 26979.09 23168.49

7 Operating Profit before Provisions and Contingencies (3 - 6) 4030.53 4077.22 9822.52 9074.86

8 Provisions (other than tax) and Contingencies 0.00 0.00 (27.97) (474.52)

9 Exceptional Items 0.00 0.00 0.00 0.00

10 Profit (+)/Loss(-) from Ordinary Activities before tax(7-8-9) 4030.53 4077.22 9850.49 9549.38

11 Tax Expense 1128.55 1137.66 3017.99 2816.12

12 Net Profit(+)/Loss(-) from Ordinary Activities after tax (10 - 11) 2901.98 2939.56 6832.50 6733.26

13 Extraordinary items(net of tax expense) 0.00 0.00 0.00 0.00

14 Net Profit(+)/Loss(-) for the period (12-13) 2901.98 2939.56 6832.50 6733.26

15 Paid-up equity share capital 16472.24 16472.24 16472.24 16472.24

16 Reserves excluding Revaluation Reserves 22331.09 19545.24 19429.11 16605.68 17 Analytical Ratios

(i) Capital Adequacy Ratio 16.35% 17.04% 15.63% 16.24%

(ii) Earnings Per Share(EPS) 17.62 17.85 41.48 40.88 18 NPA Ratios -- -- (a) Net NPA -- -- 7383.74 6059.88 (b) % of Net NPA -- -- 3.11% 2.87% (c ) Return on assets -- -- 2.60% 2.84%

Note: Provision for Non-performing Assets will be assessed as per the guidelines of Small Industries Development Bank of India at the end of the year.

22

k. Any material event/development or change having implications on the financials/credit quality (e.g. any material regulatory proceedings against the Issue/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(40) 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 opening of the issue)/credit rating

letter issued (not older the 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.


o. Copy of consent letter from the Debenture Trustee.

Enclosed in the annexure p. Names of all the recognized stock exchanges where the debt securities are proposed to be listed clearly

indicating the designated stock exchange.

The Bonds are proposed to be listed on The Bombay Stock Exchange (BSE), The Corporation has obtained in-principle approval from BSE for listing of said Bonds.

q. Other Details: 1. Application Process:

i) WHO CAN APPLY

Person’s 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:

1. Provident Funds, Superannuation funds and Pension, Gratuity Funds. 2. Commercial Banks. 3. Financial Institutions. 4. Insurance Companies, societies registered under the applicable laws in India and authorized to invest in

bonds. 5. State/Central Co-operative Banks, Development Co-Operative Banks, land Development Banks, RRBs,

Primary Co-operative Banks. 6. Port Trusts. 7. Mutual Funds, Companies, Bodies Corporate, Association of Persons and Individuals. 8. Scientific and/or Industrial research Organizations, authorized to invest in bonds. 9. Other Government and Non-government agencies authorized to invest in these bonds as per resent and

relevant government guidelines. 10. Others (subject to prevalent regulations) to whom a specific invitation has been made to subscribe to

the Bonds.

23

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.

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

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 PROVIDENT FUNDS, SUPERANNUATION FUNDS, GRATUITY FUNDS AND PENSION FUNDS The Ministry of Finance vide its Gazette Notification F.No.5 (88)/2006-PR dated 14th August 2008 – in partial modification of this ministry notification No. 5(53)/2002-ECB & PR dated 24th January 2005 has permitted the Non-Government Provident Funds, Superannuation funds and Gratuity funds to invest up to a maximum of 55% of incremental accruals in the securities where the principal and interest payment is fully or unconditionally guaranteed by the central government or a state government. APSFC is also a Public Financial Institution as defined under section 4A(1) of the Companies Act. APSFC is a “Public Sector Company” within the meaning of the notification of Section 2 (36-A) of the Income Tax Act, 1961, as more than 51% of the paid up share capital is held by Government of Andhra Pradesh. The bond issue has the additional credit enhancement of an unconditional and irrevocable guarantee from the Government of Andhra Pradesh 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 for payment of interest and repayment of principal. • 30%: under category (iii) (a), Bonds of ‘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.

The applications must be accompanied by certified true copies of (1) Trust Deed/Bye laws (2) Resolution authorising investment and containing operating instructions (3) Specimen signatures of 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. 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.

24

The applications must be accompanied by certified true copies of (1) Government notification/ Certificate of Incorporation/ Memorandum & Articles of Association/ Other documents governing constitution (2) resolution authorizing investment and containing operating instructions (3) Specimen signatures of authorised signatories (4) Proof of Income Tax exemption certificate for claiming exemption from deduction of tax at source on income from interest on application money and for claiming exemption from deduction of tax at source on the interest income. 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 27 A of Insurance Act’1938 and as per investment policy approved by the Board of Directors/Investment Committee. The applications 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. APPLICATION BY CO-OPERATIVE BANKS All cooperative banks including primary urban cooperative banks can invest in these bonds to the extent permissible under applicable Reserve Bank of India notification in force from time to time. The applications must be accompanied by certified true copies of (i) Government Notification / Certificate of incorporation/Other documents governing constitution (ii) Resolution authorizing investment and containing operating instructions (iii) Specimen signatures of authorised signatories and (iv) Recognition certificates from Income tax Department. 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) Ce r t i f i ed t ru e copy o f t he r esolution authorising investment and containing operating instructions 3) Specimen signature of authorised signatories 4) Relevant certificate (s) in the prescribed form (s) under Income Tax Rules, 1962, if exemption is sought from deduction of tax at source on interest income. 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. Upto 55% in Government Securities the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government or any State Government. OR Upto 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 application must be accompanied by certified true copies of (i) Certificate of registration, if registered (ii) Power of Attorney granted to transact business on its behalf (iii) Any official valid document to identify the trustees, selectors, beneficiaries and those holding Power of Attorney, founders/managers/foundation/association (v) Telephone bill and (iv) PAN (otherwise exemption certificate issued by IT authorities).

25

APPLICATION BY CHARITABLE/RELIGIOUS TRUSTS These bonds being unconditionally and irrevocably guaranteed by the Government of Andhra Pradesh fall with in 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 investments in the Bonds, may also apply to this issue of bonds, subject to the approval of the charity commissioner or other appropriate authority as the case may be investments in these bonds 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 authorizing 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 guaranteed 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. MPDBC 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) Certificate of incorporation, Memorandum and Articles of Association 2) Power of Attorney 3) Resolution authorizing investment and containing operating instruction 4) SEBI registration certificate wherever applicable 5) Specimen signature of authorised signatories. 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 upto 10% of their net surplus funds in State Government Securities or Government Guaranteed bonds. The applications must be accompanied by certified true copies of (i) Memorandum and Articles of Association/Other documents governing the constitution (ii) Power of Attorney (iii) Resolution authorizing investment and containing operating instructions and (iv) Specimen signatures of authorized signatories. APPLICATION BY PORT TRUSTS As per section 88 of the Major Port Trusts Act, 1963 the bonds being guaranteed by the Government of Andhra Pradesh are categorized as public security for the purpose of investments by Port Trusts.

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APPLICATIONS UNDER POWER OF ATTORNEY A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/additions in the power of attorney or authority should be notified to the APSFC or to its Registrars or to such other person(s) at such other address (es) as may be specified by the APSFC from time to time through a suitable communication. DOCUMENTATION TO BE PROVIDED BY INVESTORS Investors need to submit the following documents, 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.

ii) Issue Details: SUMMARY TERM SHEET

Description of the Bonds APSFC Non SLR Bonds Series VI Issuer Andhra Pradesh State Financial Corporation (APSFC) Issue Size Rs.160.00 crore with a green shoe option upto Rs.160.00 crore Nature of instrument Unsecured Redeemable Non-Convertible Bonds in the nature of

Debentures. Mode of Issue Private Placement Instrument form In Dematerialized Form Credit Rating BWR A+ (SO)(Outlook : Stable) by Brick work Ratings and

IND A(SO) by India Ratings & Research Ltd. Government Guarantee Unconditional and Irrevocable guarantee from the Government of

Andhra Pradesh for repayment of principal and payment of Interest. Face Value Rs. 10,00,000/- per bond Tenure 10 Years Call Option At the end of 5th year. Put option NilRedemption In case call option is not exercised at the end of 5th year, the Corporation

repays @ 20% on the bond value every year from the end of 6th yearonwards.

Coupon Payment 9.15 % p.a, Payable Semi-annual Annualized yield 9.36% p.a Issue opening date 11.01.2013 Earlier Issue Closing date 15.02.2013 Listing The Bonds issued are proposed to be listed on the Wholesale Debt

Market (WDM) Segment of the Bombay Stock Exchange (BSE).

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2. How to Apply

Investors are advised to comply with the following General Instructions: a) Instructions for filling in Application Form:

Investors can hold the Bonds only in dematerialized form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time. i) Application for the bonds must be in the prescribed form and completed in BLOCK LETTERS

in English as per the instructions contained therein. ii) Application Form Number (including the prefix) should be mentioned on the reverse of the

cheque/draft. iii) A separate cheque/draft must accompany each application form iv) Signature may be in English or in any other Indian languages. Thumb impression must be

attested by an authorized official of bank or by a Magistrate/Notary Public under his/her official seal.

Bank Details: This being a Private Placement Offer, Investors who are established/ resident in India and who have been addressed through this communication directly only are eligible to apply. 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, at any of the designated collection centers or to the Arrangers to the Issue. Applications should be for a minimum of 1 Bond and in multiples of 1 Bond thereafter. All cheques/ demand drafts should be drawn in favor of “APSFC Non-SLR Bonds (Series VI-2013)"and crossed “Account Payee Only”. The entire amount of Rs. 10,00,000/- (Rs. Ten Lakh only) per Bond is payable on application.

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 LTD Branch LAKDIKAPUL Centre HYDERABAD RTGS/IFSC Code HDFC0000021 Name of the Beneficiary APSFC Non-SLR Bonds (Series VI-2013) Account Number 00210350004377

Applications for the Bonds must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in English and as per the instructions contained therein. Applications complete in all respects (along with all necessary documents as detailed in this Disclosure Document) must be submitted before the last date indicated in the issue time table or such extended time as decided by the Corporation, at any of the designated collection centers, accompanied by the subscription amount by way of cheque(s)/ demand draft(s) drawn on any bank including a co-operative bank which is situated at and is a member of the Bankers’ clearing house located at a place where the application form is submitted. Outstation cheque(s)/ Bank draft(s) drawn on Bank(s) not participating in the clearing process at the designated clearing centers will not be accepted. Money orders/ postal orders will also not be accepted. The Corporation assumes no responsibility for any applications/ cheques/ demand drafts lost in mail. No separate receipt will be issued for the application money. However, the Corporation’s designated collection branches or Arranger(s) receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the Acknowledgment Slip at the bottom of the each Application Form. As a matter of precaution against possible fraudulent encashment of interest warrants/ cheques due to loss/ misplacement, the applicant should furnish the full particulars of his or her bank account (i.e.Account Number, name of the bank and branch) at the appropriate place in the Application Form. Interest warrants will then be made out in favor of the bank for credit to his/her account so specified and dispatched to the investors, who may deposit the same in the said bank.

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b) Applications under Power of Attorney or by Authorised Representatives

A certified copy of the Power of Attorney and/or the relevant authority, as the case may be, along with the names and specimen signatures of all the authorised signatories and the tax exemption certificate/document, if any, must be lodged along with the submission of the completed application form. Future modifications/additions in the Power of Attorney or Authority should also be notified with the Registrar of Issue.

c) Multiple Applications

An applicant should submit only one application form (and not more than one) for the total number of Bonds applied for. Two or more applications in single or joint names will be deemed to be multiple applications if the sole and/or first applicant is one and the same. The Corporation reserves the right to accept or reject, in its absolute discretion, any or all-multiple applications.

d) Application by Mutual Funds

In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/Trustees/Custodian clearly indicate their intention as to the scheme for which the application has been made.

e) Joint Applications in the case of Individuals

Applications may be made in single or joint names (not more than three). In the case of joint applications, all payments will be made out in favour of the first applicant. All communications will be addressed to the applicant whose name appears first at the address stated in the Application Form.

f) 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.

g) Bank Account details

As a matter of abundant precaution against possible fraudulent encashment of refund orders/interest cheques/redemption cheques, due to loss or misplacement, the particulars of the applicant’s Bank Account are mandatory and required to be given for printing on the cheques. Applications without the details are liable to be rejected. The applicant must fill in the relevant column in the application form, giving particulars of their Bank Account number and name of the bank with whom such account is held.

h) Terms of payment/Payment instructions.

a) The full face value of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to submit the Application Form and the cheque(s)/demand draft(s) for the full face value of the Bonds applied for.

Face Value per bond Minimum Application for Amount Payable on Application per Bond

Rs.10 lakh One Bond and in multiples of one Bond thereafter

Rs.10 lakh

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b) Payment may be made by way of cheque/draft/RTGS/Funds Transfer. c) All cheques/drafts must be made payable to “APSFC Non SLR Bonds (Series VI-2013)” and

crossed “A/C. PAYEE ONLY”.

i) Submission of completed Application Forms Applications, duly completed and accompanied by cheque/demand draft must be lodged, while the issue under private placement of the bond is open, with the COLLECTING BANK as mentioned in the Disclosure Document.

j) Acknowledgements The collecting Banks 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. No separate receipts will be issued for the application money.

k) Right to Accept or 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 draft(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:

1) Number of Bonds applied for is less than the minimum application size; 2) Application exceeding the issue size; 3) Bank account details not given; 4) Details for issue of Bonds in electronic/dematerialized form not given 5) PAN/GIR and IT Circle/Ward/District not given; 6) 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. 3. Basis of Allotment

Allotment will be made on day basis amongst such investors based on the credit given by the collecting banker. The Corporation reserves the right to decide on the allotment, suitably, in case of over/under-subscription.

4. Deemed Date of Allotment

Fifteen working days from the date of closure of the issue. 5. Depository Arrangements

The Corporation has appointed M/s. XL Softech Systems Ltd. as Registrars & Transfer Agent for the present Bond Issue. The Company shall make necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of Bonds in dematerialized form.

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Investors can hold the Bonds only in dematerialized 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.

• The name, address, nomination details, bank account number and other details of the applicant as registered with applicant’s DP shall be used for the purpose of allotment of bonds, payment of interest and principal and correspondence. The Applicant is, therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with the DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any.

The Registrars to the Issue will directly send non-transferable allotment advice/refund orders to the applicant. 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 wherein 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, within a period of 30 days. Investors may note that pursuant to circular no.EBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 issued by SEBI, the Bonds of the Corporation would be issued and traded only in dematerialized form.

6. 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 realisation of cheque/DD/ RTGS by APSFC up to one day prior to the Deemed Date of Allotment. Interest on application money will be paid along with the allotment letter. The interest on application money will be computed on an Actual/ Actual. These would be dispatched by 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.

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7. Letter(s) of Allotment/Bond Certificate(s)/Refund Order(s) Issue of Letter(s) 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 15 days from the Deemed Date of Allotment. Letter(s) of Regret along with Refund Order(s), as the case may be, will be dispatched by registered post/ courier at the sole risk of the applicant to the sole/ first applicant within 15 days of closure of the Issue.

8. Computation of Interest

The bonds shall carry interest at the following rate and is payable semi-annually from the deemed date of allotment.

Coupon rate 9.15% p.a

The last interest payment will be made along with the final redemption and will be sent along with the redemption cheque/demand draft. The interest will be payable to the registered bondholders as per the demat records available with the Registrar of the issue and in the case of joint holders to the one whose name stands first in the register of bondholders. The Bonds will carry interest at the rate specified in the Offering Details 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 semi annually during the tenure of the Bonds. If any interest payment date falls on a day, which is not a business day in Hyderabad, Andhra Pradesh ("Business Day" being a day on which Commercial Banks are open for business in the city of Hyderabad, Andhra Pradesh), then payment of interest will be made on the next business day but without liability for making payment of interest for the delayed period. 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 (a leap year would be considered as 366 days for the purpose of interest calculation). The day count convention is actual/actual basis.

9. Payment of Interest

The Interest payment would be made by means of cheques/demand drafts and will be mailed to the Bondholders at their risk. Payment of interest will be made to the holders of the Bonds whose names appear in the list of beneficiaries given by NSDL/CDSL to the Corporation on Record Date.

Payment of interest will be made to the registered first named bondholder as on the record date. If the bond has been transferred, the transferor (s) or jointly with the transferee(s), shall notify the Corporation.

10. Tax Deduction at Source

Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or reenactment thereof will be deducted at source. For seeking TDS exemption/ lower rate of TDS, relevant certificate/ document must be lodged by the Instrument Holders at the head office of the Corporation at least 30 days before the interest payment becoming due and if required, be submitted afresh annually and/or as and when called upon for the same by the Corporation. 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.

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11. Payment on Redemption

The payment of the redemption amount of the Bonds will be made by the Corporation to the beneficiaries as per the beneficiary list provided by the depository as on the record date.

The Bonds held in the Dematerialized 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.

The Corporation's liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due dates of redemption in all events. Further the Corporation will not be liable to pay any interest or compensation from the dates of such redemption.

On the Corporation dispatching the amount as specified above in respect of the Bonds, the liability of the Corporation shall stand extinguished.

12. Call Option

The Corporation will have the right of exercising the call option at the end of 5th year from the deemed date of allotment, however notice to the effect of exercising the call option by the Corporation would be given 30 days before the end of 5 t h year.

13. Put Option

There is no put option. 17. Record Date / Book Closure Date Falling on Sunday / Holiday

The Corporation’s Register of Bondholders will be closed for the purposes of payment of interest or redemption of Bonds, as the case may be, one calendar month prior to the respective due date. In case, the record date happens to be a holiday or a non trading day, the immediate preceding non holiday/trading day will be reckoned as the record date.

15. Effect of Holidays

Should any of the dates defined above or elsewhere in the Disclosure Document, excepting the deemed date of allotment, fall on a Sunday or Public Holiday, in Andhra Pradesh, the next working day will be considered as the `Effective Date(s)’.

16. Register of Bondholders

The register of Bondholders containing necessary particulars will be maintained by APSFC at their Head Office.

17. 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.

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18. Market Lot

The market lot will be one Bond (“Market Lot”). Since the Bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of Bonds.

19. Trading of Bonds

The trading of privately placed Debt securities would be permitted in demat mode only in standard denomination of Rs.10 lakhs in the anonymous, order driven system of the Stock Exchange in a separate trading segment. The marketable lot would be Rs.10 lakhs. All class of investors would be permitted to trade subject to the standard denomination/marketable lot. The trades executed on spot basis shall be required to be reported to the Stock Exchange(s).

20. Mode of Transfer of Bonds

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.

21. Buy-back:

APSFC may buy back the bonds before maturity. Also APSFC 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.

22. Amendment of the terms of bonds:

APSFC 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 50% in nominal value of the Bonds outstanding out of those present and voting.

23. Future Borrowings

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

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24. Notices

All notices to the Bond holder(s) required to be given by APSFC shall be deemed to have been given if published in one English and one regional language (Telugu daily) newspaper, or may, at the sole discretion of APSFC, but without any obligation, be sent to the Bond holder(s) at the address stated in the Application Form, or at the address as notified by the Bond holder(s) in due course. All notices to APSFC by the Bond holder(s) must be sent by registered post or by hand delivery to APSFC at its Head Office or to such person(s) at such address as may be notified by APSFC from time to time.

25. Purchase and Sale of Bonds

The Corporation may, at any time and from time to time, purchase Bonds at the price available in the Debt Market in accordance with the applicable laws. Such Bonds may, at the option of the Corporation, be cancelled, held or reissued at such price and on such terms and conditions as the Corporation may deem fit and as permitted by law.

26. Re-issue of Bonds

Where the Corporation has redeemed any such Bonds, subject to the applicable provisions, the Corporation shall have and shall be deemed always to have had the right to keep such Bonds alive for the purpose of reissue and in exercising such right, the Corporation shall have and shall be deemed always to have had the power to re-issue such Bonds either by re-issuing the same Bonds or by issuing other Bonds in their place.

27. List of Beneficial Owners

The Corporation shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be.

28. Succession

In the event of demise of the sole /first holder of the bond, the Corporation will recognise the executor or administrator of the deceased bondholder, or a holder of succession certificate or other legal representative as having title to the bonds. The Corporation will not be bound to recognise such executor, administrator or holder unless such executor or administrator obtains probate or letter of administration or such holder is the holder of a succession certificate or other legal representation, as the case may be, from a duly constituted Court in India. The Board of Directors if in their absolute discretion think fit may dispense with production of probate or letter of administration in order to recognise such holder as being entitled to the bonds standing in the name of the deceased bondholder.

29. Nomination Facility

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.

30. Bondholder not a Shareholder

The bondholder(s) shall not be entitled to any of the rights and privileges of shareholders other than those available to them under statutory provisions. The bonds shall not confer upon the holders the right to receive notice or to attend and vote at the General Meetings of APSFC. The bonds shall be subject to other usual terms and conditions incorporated in the SFCs Act, this Disclosure Document and the APSFC Regulations.

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31. 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 Corporation where such consent or resolution modifies or varies the terms and conditions of the Bond, if the same are not acceptable to the Corporation.

32. Governing Law

The Bonds are governed by and shall be construed in accordance with the Indian Laws. The High Court of Andhra Pradesh, Hyderabad alone shall have the jurisdiction in connection with any matter arising under these precincts.

33. Consents

Consents in writing of the Registrar of issue and Trustees for the Bondholders to act in their respective capacities, have been obtained.

34. Underwriting of the issue The Issue of bonds has not been underwritten. 35. Tax Benefits

A Bondholder is advised to consider in his own case the tax implications in respect of subscription to the Bonds after consulting his tax advisor.

36. Details of utilization of the issue proceeds: The funds raised through the present issue will be used for augmenting the resources of the Corporation for its business operations.

37.A Statement containing particulars of the dates of and parties to all material contracts, agreements

involving financial obligations of the issuer:

Copies of the contracts and documents, referred to below, may be inspected at the Registered Office of the Corporation between 10.00 a.m and 12.00 noon on any working day (Monday to Friday) until the date of closing of the issue.

Sl. No. Nature of Contract 1 State Financial Corporations Act 19512 General Regulations of the Corporation3 Certified true copy of the resolution of the Board of Directors for issue of bonds. 4 Annual Report of the Corporation (Financial Year 2011-12) 5 Credit Rating letters of BRICKWORK & INDIA RATINGS 6 Consent Letter of GDA Trusteeship Ltd, Pune, to act as Bond Trustee.

7 Letter Issued by BSE, granting in-principle approval for listing of Bonds. 8 Consent Letter from XL Softech Systems Ltd. to act as R& T Agent. 9 G.O from Govt. of Andhra Pradesh - Unconditional and Irrevocable guarantee.

38. CREDIT RATING:

BWR A+(SO) (Outlook: Stable) by M/s. Brickwork Ratings India Pvt. Ltd., and IND A (SO) (exp) by M/s.India Ratings & Research Private Limited.

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39. 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 Disclosure Document to the BSE.

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

ON DUE DATES ON TERM LOANS AND DEBT SECURITIES.

The payment of interest & repayment of principal is being done in a timely manner on the respective due dates.

41.THAT THE PERMISSION / CONSENT FROM THE PRIOR CREDITOR FOR A SECOND OR PARI PASSU CHARGE BEING CREATED IN FAVOR OF THE TRUSTEES TO THE PROPOSED ISSUE HAS BEEN OBTAINED.

The proposed issue of Bonds are guaranteed by the Government of Andhra Pradesh, for repayment of Principal and payment of Interest. No permission or consent from the existing lenders/creditors/charge holders is required since no pari passu charge is created for the bonds.

42.TRUSTEES OF THE BONDHOLDERS:

The Corporation has appointed “GDA Trusteeship Ltd.”, registered with SEBI, to act as Trustees to the Bondholders of the proposed issue. The Corporation will enter into a Trustee Agreement/Trust Deed, inter-alia, specifying the powers, authorities and obligations of the Corporation and the Trustees in respect of the Bonds. The Bondholders shall, without any further act or deed, be deemed to have irrevocably given their consent to and authorized the Trustees or any of their Agents or authorized officials to do, all incidental acts, deeds and things necessary in terms of this Disclosure Document of Private Placement. All rights and remedies under the Trust Deed/Trust Agreement and/or other security documents shall rest in and be exercised by the Trustees without having it referred to the Bondholders. Any payment made by the Corporation to the Trustees on behalf of the Bondholder(s) shall discharge the Corporation pro tanto the Bondholder(s). The Trustees will protect the interest of the Bondholders in the event of default by the Corporation in regard to timely payment of interest and repayment of principal and they will take necessary action at the cost of the Corporation.

44. Undertaking by the Issuer: The Issuer Corporation undertakes that:

a) The complaints received in respect of the Issue shall be attended to by the Issuer Corporation expeditiously and satisfactorily.

b) It shall take all steps for completion of formalities for listing and commencement of trading at the concerned stock exchange where securities are to be listed, from the date of closure of issue.

c) The funds required for refund orders shall be made available by the Issuer Corporation. d) No further issue of securities shall be made till the securities offered through this disclosure document

are listed or till the application moneys are refunded on account of non-listing etc., e) Necessary co-operation to the credit rating agencies shall be extended in providing true and adequate

information till the debt obligations in respect of the instrument are outstanding.

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44.A SUMMARY TERM SHEET SHALL BE PROVIDED WHICH SHALL INCLUDE BRIEF

INFORMATION PERTAINING TO THE SUCURED/ UNSECURED NON CONVERTIBLE DEBT SECURITIES (OR A SERIES THEREOF) AS FOLLOWS :

Description of the Bonds APSFC Non SLR Bonds Series VI Issuer Andhra Pradesh State Financial Corporation (APSFC) Issue Size Rs.160.00 crore with a green shoe option upto Rs.160.00 crore Nature of instrument Unsecured Redeemable Non-Convertible Bonds in the nature of

Debentures. Mode of Issue Private Placement Instrument form In Dematerialized Form Credit Rating BWR A+ (SO)(Outlook : Stable) by Brick work Ratings and

IND A(SO) by India Ratings & Research Ltd.,Security (Government Guarantee)

Unconditional and Irrevocable guarantee from the Government of Andhra Pradesh for repayment of principal and payment of Interest.

Face Value Rs. 10,00,000/- per bond Tenure 10 Years Call Option At the end of 5th year. Put option Nil Redemption In case call option is not exercised at the end of 5th year, the

Corporation repays @ 20% on the bond value every year from theend of 6th year onwards.

Coupon Payment 9.15 % p.a, Payable Semi-annual Annualized yield 9.36% p.a Issue opening date 11.01.2013 Earliest Issue Closing date 15.02.2013 Listing The Bonds issued are proposed to be listed on the Wholesale Debt

Market (WDM) Segment of the Bombay Stock Exchange (BSE). Registrar to the Issue M/s. XL Softech Systems Ltd. Bankers to the Issue HDFC Bank Ltd. Trustee to the issue M/s. GDA Trusteeship Ltd., Pune to act as Agent & Trustees

for and on behalf of the holder(s) of the Bonds (The Issuer reserves the right to change the issue programme and also accept or reject any application in part or in full without assigining any reason.)

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