While IDFC, ICICI Bank and IL&FS are expected to launch tax-free infrastructure bonds, robust activity on this front is expected only in the last quarter
IDFC, ICICI Bank and IL&FS at present are the three frontrunners likely to launch tax-free infrastructure bonds. While this tool of investment has been in discussion since the Budget announcement, an investor can expect launches of such bonds only in the last financial quarter.
"As these bonds come with a tax advantage, most people will show interest and subscribe to them only in the last quarter of the financial year.
This is when most tax-saving tools are in demand," said an official from a leading infrastructure company, preferring anonymity.
According to sources, while IDFC and ICICI Bank are most likely to launch such infrastructure bonds, IL&FS may also join the list.
An executive official from IDFC was also quoted in a news report expressing willingness to raise funds through such bonds. "Since we have a lot of leeway in raising resources with this new status (as an infrastructure finance company), we will not be looking at applying for a banking licence. But, at the same time, we are open to the idea of raising funds by issuing retail bonds or tax-free infrastructure bonds," the official was quoted as saying in a news report.
Chanda Kochhar, CEO, ICICI Bank, has also spoken in favour of such tax-free bonds. "Tax-free bonds would prove to be a cost-effective source of funding for banks and enable them to ramp up their infrastructure financing activities," Ms Kochhar has been quoted in various news reports.
An email query sent to ICICI Bank, IDFC and IL&FS remained unanswered at the time of writing this story.
Last month, the Central government had allowed non-banking financial companies (NBFCs) to issue tax-free infrastructure bonds.
The Union Budget has proposed to offer tax relief on investments up to Rs20,000 in long-term infrastructure bonds.
Issuance of tax-free infrastructure bonds is among the multiple options that the Central government is considering in order to cater to the huge investment outlay planned for infrastructure. The 12th Five Year Plan (2012- 2017) has an investment outlay of $1 trillion for infrastructure.
New Delhi : The Lok Sabha on Monday passed a Bill to replace the unit linked insurance plan (ULIP) Ordinance that seeks to set up a joint mechanism to address the issues of jurisdiction between the financial sector watchdogs after the government assured that autonomy of existing sectoral regulators will not be diluted, reports PTI.
The beleaguered winemaker’s top UK executives were accused of utilising the company’s British arm’s funds before it entered into a credit-restructuring deal abroad
Winemaker Indage Vintners Ltd, which has staved off the threat of liquidation after agreeing to a restructuring of its huge debts, has said that there has been no misuse of funds in its UK unit and it is conducting an enquiry into all affairs of Santosh Verma, its global director of sales, marketing and business development.
There were allegations that Indage Vintners' chief financial officer Rajesh Chalke and Mr Verma had used company funds through credit card transactions just before its UK-based unit Indage UK Ltd filed for Company Voluntary Arrangement (CVA) in that country. In the UK, CVA is a deal between an insolvent company and its creditors that places a ring fence around the company to keep creditors at bay. It allows a viable but struggling company to repay some, or all, of its historic debts out of future profits, over an agreed period of time.
In an email reply to Moneylife, Ranjit Chougule, managing director, Indage Vintners said, "Specifically, the alleged transactions made by Rajesh Chalke are false and inaccurate. Mr Chalke has already informed the liquidators and the sole banker to the company that, with the exception of one genuine expense on behalf of the company, he is not aware of, neither has he authorised or taken part in any transactions relating to any company expenses allegedly debited to his name and/or account. Anyone who purports to the contrary may do so at their own risk."
In an email sent to Moneylife, a person claiming to be a former employee of Indage UK, alleged that Mr Chalke's credit card was in fact in the possession of Mr Verma. "The demise of Indage in the UK was partly to do with the huge personal expenditure by the directors and siphoning of funds through the credit cards which were used just before the company entered into a CVA, to buy cars and accessories worth about £14,000; gold jewellery (£9,000); flight tickets for people who never worked for Indage UK and personal expenses to the tune of £1,20,000 in total," the person had alleged in the email.
Replying to these allegations, Mr Chougule said, "With regard to Santosh Verma, we have similarly advised as above and are conducting an inquiry into all of his affairs including India as global director of sales, marketing and business development."
There were also allegations that Indage had sold some stock for £2.95 million in Singapore and it was recorded in the account books of its UK unit as an 'international transaction'. However, after nine months, the company instructed the accounts department to reverse the transaction since the other party refused to pay, the email said.
"Unless we receive audited statements of the last financial year of the company which went into liquidation before the company accounts were finalised and audited, we are unable to comment on transactions, if any, that are outlined in brief in your mail," said Indage's MD.
Mr Chougule said that Indage UK went into administration and, subsequently, liquidation due to constraints in working capital from the inception of the acquisition of the business by Indage Vintners Ltd in and around June 2008 and the global financial crisis only worsened the effects of this liquidity shortfall leading to an attempted CVA by the company in December 2009 and the eventual liquidation in March 2010.
Last week, Indage said it had filed a debt-repayment plan in the Bombay High Court. The company had a total debt of Rs400 crore as of March 2010.
In May, Indage told the High Court that its managing director Ranjit Chougule and other members of his family would invest about Rs75 crore in a deal supported by banks led by ICICI Bank Ltd, IndusInd Bank, Allahabad Bank, UCO Bank, IDBI Bank and Bank of Rajasthan.