THE ISSUE

The following is a summary of the terms of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in the chapter titled “Terms of the Issue” beginning on page 143 of this Prospectus.

Common Terms of NCDs

Issuer Issue

L&T Finance Limited 50,00,000 NCDs of Rs.1,000/- each aggregating to Rs.500 Crores with an option to retain over-subscription upto Rs.500 Crores for issuance of additional NCDs, aggregating upto a total of Rs.1,000 Crores NSE

Stock Exchanges proposed for listing of the NCDs Issuance and trading Depository Security

In Demat form only NSDL and CDSL Security will be created for the purpose of this Issue as per the Debenture Trust - cum - Mortgage Deed. For further details, please refer to page 153 of this Prospectus. CARE AA+ by CARE and LAA+ by ICRA Issue Opening Date: August 18, 2009 and Issue Closing Date: September 04, 2009 Deemed date of allotment shall be the date of issue of the letter of allotment / regret, as the case may be Please refer to the section titled “Terms of the Issue” beginning on page 143.

Rating(s) Issue Schedule* Deemed Date of Allotment Settlement

* The subscription list for the public issue shall remain open for subscription at the commencement of banking hours and close at the close of banking hours on the dates indicated above or earlier on such date as may be decided at the discretion of the Board / Committee of Directors of the Company, as the case may be. In case of an earlier closure, the Company shall ensure that notice of atleast 3 days is given to the investors which shall be communicated through advertisements. The NCDs will be issued at a face value of Rs.1,000/- each.

The specific terms of each instrument are set out below: Option Interest Payment Minimum Application (Rs.) Multiples (Rs.) Face Value (Rs.) Mode of Interest Payment Coupon Rate I Quarterly 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/II Semi-annual 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/III Cumulative 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/IV Semi-annual 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/-

Through various Through various Through various Through various modes available* modes available* modes available* modes available* 9.51% p.a. 9.62% p.a. 9.95% p.a. compounded annually 9.95% 88 months 10.24% p.a.

Yield on Redemption Tenor

9.85% 60 months

9.85% 60 months

10.50% 120 months

Redemption Date 60 months from 60 months from 88 months from 120 months / Maturity Period the deemed date the deemed date the deemed date from the deemed of allotment of allotment of allotment date of allotment Redemption Amount Face value plus any interest that may have accrued payable on redemption. Face value plus any interest that may have accrued payable on redemption Rs.2,005/- per NCD Face value plus any interest that may have accrued payable on redemption

* For various modes of interest payment, please refer page 149 of this Prospectus. The Issue proposed to be made hereunder shall be made in India to investors specified under the Section “Who Can Apply” on page 156 of this Prospectus.

ISSUE STRUCTURE
Public Issue of NCDs aggregating Rs.500 Crores with an option to retain over-subscription upto Rs.500 Crores for issuance of additional NCDs, aggregating upto a total of Rs.1,000 Crores Particulars Reservation for each category Retail Upto 35% of issue size (Rs.350 Crores for allotment to retail assuming Issue size of Rs.1,000 Crores) 10 NCDs (Rs.10,000/-) Full amount on application Compulsorily in dematerialised form One NCD NII Upto 30% of issue size (Rs.300 Crores for allotment to NII assuming Issue size of Rs.1,000 Crores) 101 NCDs (Rs.1,01,000/-) Full amount on application Compulsorily in dematerialised form One NCD QIB Upto 35% of issue size* (Rs.350 Crores for allotment to QIB assuming Issue size of Rs.1,000 Crores) 101 NCDs (Rs.1,01,000/-) Full amount on application Compulsorily in dematerialised form One NCD

Minimum number of NCDs per application Terms of Payment Mode of allotment Trading Lot

* Out of which upto 10% of issue size is reserved for pension funds, provident funds, superannuation and gratuity funds. It may be noted that participation by any of the above-mentioned investor class in the issue will be subject to necessary approvals and applicable laws. In case of the Application Form being submitted in joint names, the applicants should ensure that the demat account is also held in the same joint names and are in the same sequence in which they appear in the Application Form. Applicants can invest only upto the extent permissible under the laws and corporate authorisations applicable to the applicant.

Principal Terms and Conditions of the issue Nature of the NCDs We are offering secured NCDs which shall have a fixed rate of interest. The NCDs will be issued at a face value of Rs.1,000/- each. Interest on the NCDs shall be payable on quarterly, semi-annual or cumulative basis depending on the option selected by the NCD Holder as provided below: Option Interest Payment Minimum Application (Rs.) Multiples (Rs.) Face Value (Rs.) Mode of Interest Payment Coupon Rate I Quarterly 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/Through various modes available* II Semi-annual 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/Through various modes available* III Cumulative 10,000/- (Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/Through various modes available* IV Semi-annual 10,000/(Retail) 1,01,000/- (NIIs & QIBs) 1,000/1,000/Through various modes available* 10.24% p.a.

9.51% p.a.

9.62% p.a.

9.95% p.a. compounded annually 9.95% 88 months 88 months from the deemed date of allotment

Yield on Redemption Tenor Redemption Date / Maturity Period Redemption Amount

9.85% 60 months 60 months from the deemed date of allotment

9.85% 60 months 60 months from the deemed date of allotment

10.50% 120 months 120 months from the deemed date of allotment Face value plus any interest that may have accrued payable on redemption

Face value plus any Face value plus any Rs.2,005/- per NCD interest that may interest that may have accrued have accrued payable on payable on redemption. redemption * For various modes of Interest payment please refer page 149 of this Prospectus APPLICATION SIZE

The minimum application size of 10 NCDs amounting to Rs.10,000/- (Rupees Ten Thousand only) would be applicable for the Retail Category while the minimum application size of 101 NCDs amounting to Rs.1,01,000/- (Rupees One Lakh One Thousand only) would be applicable for other categories i.e. NIIs & QIBs. Applicants can apply for any or all Options of NCDs offered through the Prospectus using the same Application Form.

TERMS OF PAYMENT The entire issue price of Rs.1,000/- per NCD is payable on application. In case of allotment of lesser number of NCDs than the number applied, the Company shall refund the excess amount paid on application to the applicant in accordance with the terms appearing hereafter. DEEMED DATE OF ALLOTMENT Deemed date of allotment shall be the date of issue of the letter of allotment / regret, as the case may be. PAYMENT OF INTEREST Quarterly Payment of Interest For NCDs subscribed under Option I, interest of 9.51% p.a. will be paid on the last day of June, September, December and March every year. The first interest payment will be made on December 31, 2009 for the period commencing from Deemed Date of Allotment until the first date of payment of interest i.e. December 31, 2009. The last interest payment will be made at the time of redemption of the NCDs on a pro rata basis. Semi Annual Payment of Interest For NCDs subscribed under Option II and IV, interest of 9.62% p.a. and 10.24% p.a., respectively, will be paid on the last day of September and March every year. The first interest payment will be made on March 31, 2010 for the period commencing from the Deemed Date of Allotment until the first date of payment of interest. i.e. March 31, 2010. The last interest payment will be made at the time of redemption of the NCDs on a pro rata basis. Cumulative Payment of Interest For NCDs subscribed under Option III, interest of 9.95% p.a. will be payable. The interest payable under this Option shall be compounded annually and payable at the time of redemption.

If the date of interest payment falls on a Saturday, Sunday or a public holiday in Mumbai or any other payment centre notified in terms of the Negotiable Instruments Act, 1881, then interest would be paid on the next working day. Payment of interest would be subject to the deduction of tax as per I.T. Act or any statutory modification or re-enactment thereof for the time being in force. As per sub-section (ix) of Section 193 of the I.T. Act, no tax is required to be withheld on any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India in accordance with the SCRA and the rules made thereunder. Accordingly, no tax will be deducted at source from the interest on NCD held in dematerialised form. However, in case of NCDs held in physical form (if rematerialised by the holder), as per the current provisions of the I.T. Act, tax will not be deducted at source from interest on NCD (in case of resident individual NCD Holders), if such interest does not exceed Rs.2,500/- in any financial year. If interest exceeds the prescribed limit of Rs.2,500/- on account of interest on NCD, then the tax will be deducted at applicable rate. However in case of NCD Holders claiming non-deduction or lower deduction of tax at source, as the case may be, the NCD Holder should furnish either (a) a declaration (in duplicate) in the prescribed form i.e. (i) Form 15H which can be given by individuals who are of the age of 65 years or more (ii) Form 15G which can be given by all applicants (other than companies, firms and NR), or (b) a certificate, from the Assessing Officer which can be obtained by all applicants (including companies and firms) by making an application in the prescribed form i.e. Form 13. The aforesaid documents, as may be

applicable, should be submitted to Registrar by quoting the name of the sole / first NCD Holder, folio number and the distinctive number(s) of the NCDs held, prior to the record date to ensure non-deduction / lower deduction of tax at source from interest on NCD. The debenture holders need to submit Form 15H / 15G / certified true copy of certificate from Assessing Officer for each financial year to ensure nondeduction or lower deduction of tax at source from interest on NCD. Tax exemption certificate / document, if any, must be lodged at the office of the Registrar prior to the record date or as specifically required. Tax applicable on coupon will be deducted at source on accrual thereof in the Company’s books and / or on payment thereof, in accordance with the provisions of the I.T. Act and / or any other statutory modification, re-enactment or notification as the case may be. A tax deduction certificate will be issued for the amount of tax so deducted. Payment of interest will be made to those NCD Holders whose name appear in the register of NCD Holders (or to first holder in case of joint-holders) that is maintained in terms of Section 152A of the Act as on record date. All cheques / bank drafts accompanying the application should be crossed “A/c Payee only” and must be made payable to “Escrow Account LTF NCD Public Issue”.

ISSUE PROCEDURE
1. How to Apply? i. Availability of Prospectus and Application Forms The abridged Prospectus containing the salient features of the Prospectus together with Application Forms and copies of the Prospectus may be obtained from our Registered Office / Administrative Office, Lead Manager(s) to the Issue, Registrar and at branches / collection centres of the Bankers to the Issue, as mentioned on the Application Form. In addition, Application Forms would also be made available to the stock exchanges where listing of the NCDs are sought and to brokers, on their request. We may provide Application Forms for being downloaded on such websites as we may deem fit. ii. Who can Apply The following categories of persons are eligible to apply in the Issue: • Retail Investors • Non-Institutional Investors • Qualified Institutional Buyers Retail Investors • • Resident Indian individuals ; Hindu Undivided Families through the Karta;

applying for an aggregate amount upto Rs. 1,00,000/-.

Non-Institutional Investors • • • • • • Resident Indian individuals applying for an aggregate amount above Rs.1,00,000/-; Hindu Undivided Families through the Karta applying for an aggregate amount above Rs.1,00,000/-; Companies, Bodies Corporate and Societies registered under the applicable laws in India and authorized to invest in NCDs; Public / Private Charitable / Religious Trusts which are authorised to invest in the NCDs; Scientific and/or Industrial Research Organisations, which are authorised to invest in the NCDs; Partnership firms in the name of the partner.

Qualified Institutional Buyers • • • • • • Public Financial Institutions, Statutory Corporations, Commercial Banks, Co-operative Banks and Regional Rural Banks, which are authorised to invest in the NCDs; Provident Fund, Pension Fund, Superannuation Fund and Gratuity Fund, which are authorised to invest in the NCDs; Venture Capital fund registered with SEBI; Insurance Company registered with the IRDA; National Investment Fund; and Mutual Funds.

It may be noted that participation by any of the above mentioned investor class in the issue will be subject to necessary approvals and applicable laws. The Lead Managers, associates and affiliates of the Lead Managers are permitted to subscribe in the Issue. However, it may be noted that the Lead Managers or any of their associates / affiliates are not underwriting the issue or any part of the issue thereof. The information below is given for the benefit of the investors. Our Company and the Lead Managers are not liable for any amendment or modification or changes in applicable laws or regulations, which may occur after the date of the Prospectus. Investors are advised to ensure that NCDs applied for under any single Application Form, from them does not exceed the investment limits or maximum number of NCDs that can be held by them under applicable law. Applications by Mutual Funds No mutual fund scheme shall invest more than 15% of its NAV in debt instruments issued by a single Company which are rated not below investment grade by a credit rating agency authorised to carry out such activity. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company. A separate application can be made in respect of each scheme of an Indian mutual fund registered with SEBI and such applications shall not be treated as multiple applications. Applications made by the AMCs or custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which application is being made. In case of Applications made by Mutual Fund registered with SEBI, a certified copy of their SEBI registration certificate must be submitted with the Application Form. The applications must be also accompanied by certified true copies of (i) Trust Deed (ii) resolution authorising investment and containing operating instructions and (iii) specimen signatures of authorized signatories.

Application by Scheduled Banks, Co-operative Banks and Regional Rural Banks Scheduled Banks, Co-operative Banks and Regional Rural Banks can apply in this public issue based upon their own investment limits and approvals. The application must be accompanied by certified true copies of (i) Board Resolution authorising investments; (ii) Letter of Authorisation. Application by Insurance Companies In case of Applications made by insurance companies registered with the Insurance Regulatory and Development Authority, a certified true copy of certificate of registration issued by Insurance Regulatory and Development Authority must be lodged along with Application Form. The applications must be accompanied by certified copies of (i) Memorandum and Articles of Association (ii) Power of Attorney (iii) Resolution authorising investment and containing operating instructions (iv) Specimen signatures of authorized signatories. Failing this, our Company reserves the right to accept or reject any Application in whole or in part, in either case, without assigning any reason therefor. iii. Applications cannot be made by: a) b) c) d) e) Minors without a guardian name Non residents Non resident Indians (NRIs) Foreign Institutional Investors Overseas Corporate Bodies iv. Multiple Applications An investor shall be allowed to use a single application to apply for NCDs for multiple options. All additional applications, if any, made by the investor either for one option or multiple options shall be considered valid, aggregated based on PAN of the first applicant and shall be considered for allotment as per the procedure detailed under Basis of Allotment. Any applicant applying for aggregate amount upto Rs.1,00,000/- would be treated as retail category. v. Eligibility of Investors Investors shall confirm that they are eligible to subscribe to and be allotted NCDs pursuant to the Issue, and that they have complied with all applicable statutory and / or regulatory requirements in connection therewith.

Basis of Allotment Separate investor categories shall be maintained as under: Retail – 35% of issue size NII – 30% of issue size QIBs – 35% of issue size, out of which 10% of issue size is reserved for Pension Funds, Provident Funds, Superannuation Funds and Gratuity Funds. DETERMINATION OF TOTAL ISSUE AMOUNT If the application amount received in the Issue is greater than base amount of Rs.500 Crores, the Board / Committee of Directors of the Company, as the case may be, shall determine the amount of oversubscription to be retained for the purposes of allotment upto a maximum of an additional amount of Rs.500 Crores (“Determined Amount”). The Determined Amount shall then be aggregated with the base amount (“Total Issue Amount”) and the basis of allocation for the Total Issue Amount shall be determined in accordance with the process specified above. The Total Issue Amount shall not exceed Rs.1,000 Crores.

Process of allocation: On closure of the Issue, all the valid applications would be segregated among the aforesaid 3 categories within which allotment on a first come first serve basis to the extent of the specified percentages would be done. Under-subscription in any of the categories can be spilled over to other categories at the discretion of the Board / Committee of Directors of the Company, as the case may be. Company shall allot NCDs to any other category in case of under-subscription in the order of preference of Retail, NII and QIB. It is further clarified that in case of under subscription in the 10% reservation for Pension Funds, Provident Funds, Superannuation Funds and Gratuity Funds, such undersubscribed portion shall first be used towards the QIB category. ALLOTMENT OF NCDs AGGREGATING TO THE TOTAL ISSUE AMOUNT The Company, Lead Managers and the Registrar, in consultation with the Designated Stock Exchange, shall carry out the allotments of NCDs to the extent of the Total Issue Amount in the following manner:• Allotments, to the maximum extent possible, will be made on a first-come first-serve basis under each category, based on date of receipt of application by the Escrow Bankers. However, with respect to applications which cannot be distinguished on first come first serve basis on the basis of such applications being filed on the same date, such applicants will be allotted NCDs based in proportion to their respective application size, rounded off to the nearest integer. If an applicant has applied for more than one Option of NCDs, and in case such applicant is entitled to allocation of only a part of the aggregate number of NCDs applied for, the Optionwise allocation of NCDs to such applicants shall be in proportion to the number of NCDs with respect to each Option, applied for by such applicant.

If there are multiple applications made by an applicant, all the valid applications received will be aggregated to determine the category in which such applicant falls. All such applications will individually be considered for allotment on a first-come-first-serve basis within the category.

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