Brief Note on NCD Issue This note provides a brief overview about the various aspects and procedure

of a NCD issue and the different intermediaries involved in the process with their respective roles. Key Issue Formalities/ Guidelines a) Limits and the amount of Issue The aggregate amount of NCDs issued by a corporate shall be within such limit as approved by the Board of Directors of the Corporate or the quantum indicated by the Credit Rating Agency for the rating granted, whichever is lower. b) Merchant Banker A Merchant Banker looks into the appointment of various intermediaries like Registrar, Debenture Trustee and Rating Agency; helps complete the documentation and listing of securities. c) Credit Rating An eligible corporate intending to issue listed NCDs will have to obtain credit rating for issuance of the NCDs from one of the credit rating agencies. d) Debenture Trustee The Debenture Trustee’s responsibility is to protect the interest of debenture holders. It includes creation of security by the Company issuing the debentures and to grievance redressal. The Debenture Trustee executes various responsibilities by: a) Ensuring that the assets of the issuer company and each of the guarantors are sufficient to discharge the principal amount at all times b) Ensuring that the prospectus or the offer letter is consistent with the terms of debentures c) Ensuring that the Company does not commit any breach of covenants and provisions of the Trust Deed d) Taking reasonable steps to remedy any breach of terms of issue of the debentures

407 Business Park, Chincholi Junction, S.V. Road, Malad (W), Mumbai 400 064 Tel no: +91 22 6792 9999 Fax no: +91 22 2879 3592

Road.5 lakh (face value) and in multiples of Rs. Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) can invest and hold NCDs. Banker etc. Mumbai 400 064 Tel no: +91 22 6792 9999 Fax no: +91 22 2879 3592 . h) Approvals Required Board approval for issuance of NCD and the appointment of various intermediaries ensures a reasonable justification for the issuance and validates the appointment of various intermediaries. k) Timeline No. g) Listing For better transparency and tradability. other corporate bodies including Insurance Companies and Mutual Funds registered or incorporated in India and Unincorporated Bodies. Registrar. f) Investors Individuals. Primary Dealers (PDs). Malad (W). Chincholi Junction. i) Maturity NCDs can be issued for maturities of 90 days or from the date of issue.e) Registrar & Transfer Agent An RTA is appointed for record keeping and transfer processing of debentures.V. LTD 407 Business Park.1 lakh. of Weeks 1 2 3 4 5 6 Scope of Work Apply to the Rating Agency for the NCD Rating Investor Feedback & Finalization of Issue Terms Tie up with Trustee. S. Banks. Preparation of Offer Document Marketing of Debentures and Mobilization of Funds Post Issue Formalities EQUATOR CORPORATE SERVICES P. j) Denomination NCDs are issued in denominations with a minimum of Rs. the NCDs are listed on various stock exchanges like NSE/BSE.

etc. accessing markets by means of Public Issues can help access huge number of masses and help the issuer. Mumbai 400 064 Tel no: +91 22 6792 9999 Fax no: +91 22 2879 3592 . Road. Malad (W). Individuals. c) Comfortable repayment by Structured Products The repayment of NCDs can be structured according to the need of the issuer and hence help them align according to the cash flows. EQUATOR CORPORATE SERVICES P. b) Diverse Investor Base NCDs can increase access to a diverse investor base like Institutions. Issuer can defer the payment towards the end of the tenure by issuing deep discount bonds. Also. staggered bonds and likewise whereas an issuer with regular cash inflows can issue a normal bond. Chincholi Junction. HNIs. LTD 407 Business Park. S. d) Less Restrictive Covenants Restrictive covenants are less prohibitive as compared to other modes of Debt funding making it easier for an issuer to access funds. Benefits of NCD Issuance: a) Alternative Means of Financing Issuance of NCDs provides an alternate mode for funding as compared to conventional modes of funding like bank funding and equity infusion.l) Creation of Security The security creation happens within 90 days after the allotment of the debentures. which increase diversification and provides comfort in accessing funds.V.