New Delhi: State-run power utility NTPC's Rs 700 crore public issue for tax-free bonds will open on Wednesday, of which 40 percent or Rs 280 crore is reserved for retail investors.
The company will open the public issue of Rs 700 crore tax-free bonds on September 23 for which the government had given approval, NTPC Chairman and Managing Director A K Jha told reporters in a press conference here.
Earlier in July, the government had approved the plan to raise Rs 1,000 crore through tax-free bonds, including Rs 700 crore through public issue.
NTPC was among seven state-run entities, including NHAI and IRFC, which were given permission to raise Rs 40,000 crore in the current fiscal through tax-free bonds.
"The 40 percent of the issue i.E Rs 280 crore is reserved for allocation to retail category. The remaining issue will be for non-retail investors including QIB, corporates and High Networth Indians," NTPC Director (Finance) K Biswal said.
He further said: "For a person in 30 percent tax bracket the effective pre tax yield is 10.88 percent approx in 20 year option. The coupons (rates) are attractive than the returns from FD (fixed deposits) returns which hover in the range of 7.5 to 8.75 percent per annum for various maturities," Biswal said.
The issues has three tenures -- 10 years, 15 years and 20 years.
For retail investors the coupon rate is 7.36 percent for 10 years tenure, 7.53 percent for 15 years and 7.62 percent for 20 years.
Similarly for non-retail investors, the coupon rate is 7.11 percent for 10 years, 7.28 percent for 15 years and 7.37 percent for 20 years.
Against the allocation of Rs 1,000 crore tax free bonds, the company has already issues Rs 300 crore on private placement basis to institutional investors which was oversubscribed by 7.25 per times.
On the capital expenditure, Jha said that the company may surpass the target of Rs 23,000 crore for the current fiscal and its has already spent Rs 5,850 crore in first quarter of 2015-16.
Shareholders of the company have also approved the
borrowing of Rs 5,000 crore through non-convertible debentures in domestic markets to be raised in the next one year.
On the issue of USD 1 billion masala bonds or rupee- denominated bonds issued in capital markets abroad, Biswal said, "RBI has to issue guidelines for the Masala bonds. We are expecting those during the current financial year."
NTPC has planned to raise rupee denominated 'Global INR' bonds worth USD 1 billion to finance its capital expenditure.
The power producer requires funds mainly for expanding its generation capacity. It envisages that the renewable energy will contribute 28 percent to its capacity of 1,28,000 MW by 2032.
At present, NTPC has an installed power generation capacity of 45,548 MW. Against the capacity addition target of 2,403 MW, the company has already added 1,150 MW.
The company has generated 110 billion units of power so far and surpassed the production of 260 billion units generated last fiscal.
