RETAIL investors wanting fixed returns on their investment have another option on the horizon with Larsen & Toubro's infrastructure finance unit joining in the queue of infrastructure companies floating bonds issue.
L&T Infra Finance plans is aiming to raise up to Rs 700 crores via an issue of 10-year infrastructure bo-nds paying between 7.5-7.75 per cent per annum to retail investors.
The issue opened on October 15 and closes on November 2. The bonds paying 7.5 per cent will have a buyback option at the end of five years, while the
bonds paying 7.75 per cent can be repurchased at the close of seven years.
The buyback can be exercised at the option of the investor at face value including accrued unpaid interest if any.
In all, the company is offering four variants of these bonds with options for annual or cumulative interest payments. "The bonds would be classified as secured redeemable non-convertible debentures and would have a 1:1 cover as security of specific receivables and mort gage on leasehold land," said Suneet K Maheshwari, chief executive officer of L&T Infra Finance.
"Investors will have a five-year lock-in period though the bonds would be listed on the NSE to provide more liquidity," Maheshwari said.
"We are talking to banks to provide loans against the bonds held, but would be applicable only after the lock in period," said, YM Deosthalee, group chief financial officer of Larsen & Toubro.
The investment made in these bonds will be eligible for tax benefits under section 80 CCF of the Income Tax Act, 1961.
Investment in these bonds would allow investors an income tax exemption on investments of up to Rs 20,000 over an above the Rs 100,000 exemption under another section of the Income Tax Act.
