Private & Confidential – For Private Circulation Only (This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus). This Disclosure Document is prepared in conformity with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008 as amended from time to time. Dated: [●]
Dated: [●] September 2019 Konkan Railway Corporation Limited (KRCL) (A Government of India undertaking) Date of Incorporation: July 19, 1990 Registered Office: Belapur Bhavan, Plot No: 6, Sector 11, CBD Belapur, Navi Mumbai 400614. Contact Person: Mr. Praveen Singh, DGM (F) Tel: 022-2758 7311; Fax: 2757 2420; E-mail: [email protected]; Website: www.konkanrailway.com THIS IS A PRIVATE PLACEMENT INFORMATION MEMORANDUM ISSUED IN CONFORMITY WITH FORM PAS-4 PRESCRIBED UNDER SECTION 42 OF THE COMPANIES ACT,2013 AND COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014, THE COMPANIES (SHARE CAPITAL AND DEBENTURE) RULES, 2014, SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2008/13/127878 DATED JUNE 06, 2008, AS AMENDED FROM TIME TO TIME AND SUCH OTHER CIRCULARS APPLICABLE FOR ISSUE OF DEBT SECURITIES ISSUED BY SEBI FROM TIME TO TIME.
DRAFT OFFER LETTER FOR PRIVATE PLACEMENT OF __% RATED, LISTED, SECURED , TAXABLE, REDEEMABLE, NON-CONVERTIBLE DEBENTURES (“BONDS”) OF FACE VALUE OF Rs.10 LACS EACH AT PAR AGGREGATING Rs. 120 CRORES (“THE ISSUE”) BY KONKAN RAILWAY CORPORATION LIMITED (OR “KRCL” OR “ISSUER”) GENERAL RISK For taking an investment decision, investors must rely on their own examination of the Issue and the Disclosure Document including the risks involved. The Issue has not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Disclosure Document. This Information Memorandum has not been submitted, cleared or approved by SEBI. It should be clearly understood that the Issuer is solely responsible for the correctness, adequacy and disclosure of all relevant information herein. CREDIT RATING The Bonds proposed to be issued by the Issuer have been assigned a rating of “ICRA AAA(S) /(Stable)” by ICRA vide their letter dated 23rd September, 2019 and “AAA (CE)/Stable” by India Ratings vide their letter dated 20th September, 2019. The above rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and should be evaluated independently of any other ratings. Please refer to Annexure I for Rating Letter for the above rating. LISTING The Bonds are proposed to be listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India (NSE) Lead Arranger to the Issue Trustee of the Issue Registrar of the Issue
Sharex Dynamic (India) Pvt. Ltd SBI Capital Markets Limited IDBI Trusteeship Services Limited Unit – 1, Luthra Industrial Premises, 202, Maker Tower ‘E’, Cuffe Parade, Asian Building, Ground Floor Safedpool, Andheri Kurla Road, Mumbai - 400 005 17. R. Kamani Marg Ballard Estate Andheri(east), Mumbai – 400072 Tel: 022 22178300 Mumbai – 400 001 Tel: 022-28515606/44 Fax: 022 2218 8332 Tel: +91 022 40807000 Fax: 022-28512885 Fax: +91 022 66311776 Email: [email protected] Email: [email protected] Email: [email protected] Website: www.sbicaps.com
Issue Opens on Issue Closes on Deemed Date of Allotment 27.09.2019 27.09.2019 01.10.2019 The Issuer reserves its sole and absolute right to modify (pre -pone/ postpone) the above issue schedule without giving any
Page 1 of 93 reasons or prior notice. The Issuer also reserves its sole and absolute right to change the Deemed Date of Allotment of the above issue without giving any reasons or prior notice.
Table of Contents Table of Contents ...... 2 Disclaimers: ...... 5 1. General Disclaimer: ...... 5 2. Disclaimer of the Securities & Exchange Board of India (SEBI): ...... 6 3. Disclaimer of the Arranger to the Issue: ...... 6 4. Disclaimer of the Stock Exchange: ...... 8 5. Disclaimer of the Rating Agencies: ...... 8 6. Disclaimer of the Trustees: ...... 8 Forward Looking Statements ...... 9 Definitions and Abbreviations ...... 9 A. Issuer Information ...... 12 B. A Brief Summary of the business / activities of the Issuer and its line of business: ...... 13 (i) Overview……………...…………………………………………………………………………………13 (ii) Corporate Structure:...... 25 (iii) Key Operational and Financial Parameters for the last 3 Audited years: ...... 26 (iv) Project cost and means of financing, in case of funding of new projects ...... 28 C. A Brief history of the issuer since its incorporation giving details of its following activities……………………………………………………………………………………………………..….28 (i) Details of Share Capital as on 30.06.2019: ...... 28 (ii) Changes in the capital structure of the Issuer as on 30.06.2019, for the last five years: ...... 28 (iii) Equity Share Capital History of the Issuer as on 30.06.2019 for the last five years: ...... 28 (iv) Details of any Acquisition or Amalgamation in the last 1 year: ...... 29 (v) Details of any Reorganization or Reconstruction in the last 1year: ...... 29 D. Details of shareholding of the Issuer as on 30.06.2019 ...... 29 (i) Shareholding pattern of the Issuer as on 30.06.2019 ...... 29 (ii) List of top 10 holders of equity shares of the Issuer as on 30.06.2019 ...... 30 E. Details regarding the Directors of the Issuer ...... 30 (i) Details of the current Directors of the Issuer as on 30.06.2019 ...... 31 (ii) Details of change in Directors since last three years: ...... 34 (iii) Remuneration of Directors for last 3 years (in Rs. lakhs): ...... 35 F. Details regarding Auditors of the Issuer: ...... 37 (i) Details of the current auditors of the Issuer: ...... 37 (ii) Details of the change in auditors since last three years: ...... 37
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G. Details of Borrowings of the Issuer as on 31.03.2019 ...... 37 (i) Details of Secured Loan Facilities: ...... 37 (ii) Details of Unsecured Loan Facilities: ...... 38 (iii) Details of Non-Convertible Debentures outstanding: ...... 38 (iv) List of top 10 Bondholders as on 31.03.2019:...... 39 (v) The amount of corporate guarantee issued by the Issuer along with name of the counterparty (including Subsidiaries, Joint Ventures, Group Companies, etc.) on behalf of whom it has been issued ...... 39 (vi) Details of Commercial Paper outstanding as on 31.03.2019: ...... 39 (vii) Details of Rest of the borrowings (including hybrid debt like FCCB, Optionally Convertible Bonds /Preference Shares) as on 31.03.2019: ...... 39 (viii) Details of all default (s ) and /or delay (s ) in payments of interest and principal of any kind of term loans , debt securities and other financial indebtedness including corporate guarantee issued by the issuer, in the past five years: ...... 39 (ix) Details of any outstanding borrowings taken/ debt securities issued where taken / issued ... 39 H. Details of promoters of the Issuer ...... 40 (i) Details of the Promoter Holding in the Company as on 31.03.2019: ...... 40 ( ii) Abridged version of Audited Consolidated (wherever available) and Standalone Financial Information (Profit & Loss statement, Balance Sheet and Cash Flow statement) for last three years and auditor qualifications, if any: ...... 41 A. Standalone Profit & Loss Account for last 3 yrs: ...... 41 B. Standalone Balance Sheet for last 3 yrs: ...... 42 C. Standalone Cash Flow Statement for last 3 yrs:...... 43 D. Consolidated Profit & Loss Account for last 3 yrs: ...... 51 E. Consolidated Balance Sheet for last 3 yrs: ...... 52 F. Consolidated Cash Flow Statement for last 3 yrs: ...... 53 I. Abridged version of Latest Audited/ Limited Review Half yearly Consolidated (wherever applicable) and Standalone Financial Information.(Like P&L, Balance Sheet) and auditors qualification if any…………………………………………………………………………………….……..54
J. Any material event/ development or change having implications on the financials/credit quality (e.g. any material regulatory proceedings against the Issuer/Promoters, Tax litigations resulting in material liabilities, corporate restructuring event etc.) at the time of issue which may affect the issue or the investor’s decision to invest / continue to invest in the debt securities. 66
K. Disclosure with Regard to Interest of Directors,Litigation etc………………………………………………………………………………………………………………..66
L. Names of the Trustee and Consent thereof: ...... 66 M. Rating and Detailed Rating Rationale...... 68 N. Security ...... 68
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O. Copy of consent letter from the Debenture Trustee shall be enclosed………………………………..68 P. Stock Exchange where Bonds are proposed to be listed ...... 68 Q. Other Details: ...... 68 (i) DRR Creation – ...... 68 (ii) Issue/instrument specific regulations ...... 69 (iii) Application Process ...... 69 Material Contracts& Documents ...... 81 A. Issue Details ...... 81 R. DECLARATION ...... 91 ANNEXURE I ...... 92 Copy of rating letter from ICRA & India Ratings ...... 92 ANNEXURE II ...... 92 Copy of consent letter from IDBI Trusteeship Services ...... 92 ANNEXURE III ...... 92 Copy of Board Resolution for the proposed fund raising ...... 92 ANNEXURE IV ...... 92 Indicative Cash Flow Schedule ...... 92 ANNEXURE V ...... 93 Copy of Comfort Letter from Ministry of Railways………………………………………………………..93 ANNEXURE VI ...... 93 Copy of In-principle listing approval from NSE……………………………………………………………94
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Disclaimers:
1. General Disclaimer:
This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/20 08/13/127878 dated June 06, 2008, as amended and Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012, as amended. This Disclosure Document does not constitute an offer to public in general to subscribe for or otherwise acquire the Bonds to be issued by (“Konkan Railway Corporation Limited”/ “KRCL”/ the “Issuer”). This Disclosure Document is for the exclusive use of the addressee and it should not be circulated or distributed to third party (ies). It is not and shall not be deemed to constitute an offer or an invitation to the public in general to subscribe to the Bonds issued by the Issuer. This bond issue is made strictly on private placement basis. Apart from this Disclosure Document, no offer document or prospectus has been prepared in connection with the offering of this bond issue or in relation to the issuer.
This Disclosure Document is not intended to form the basis of evaluation for the prospective subscribers to whom it is addressed and who are willing and eligible to subscribe to the bonds issued by KRCL. This Disclosure Document has been prepared to give general information regarding to parties proposing to invest in this issue of Bonds and it does not purport to contain all the information that any such party may require. KRCL believes that the information contained in this Disclosure Document is true and correct as of the date hereof.
KRCL does not undertake to update this Disclosure Document to reflect subsequent events and thus prospective subscribers must confirm about the accuracy and relevancy of any information contained herein with KRCL. However, KRCL reserves its right for providing the information at its absolute discretion. KRCL accepts no responsibility for statements made in any advertisement or any other material and anyone placing reliance on any other source of information would be doing so at his own risk and responsibility. Prospective subscribers must make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in Bonds. It is the responsibility of the prospective subscriber to have obtained all consents, approvals or authorizations required by them to make an offer to subscribe for, and purchase the Bonds. It is the responsibility of the prospective subscriber to verify if they have necessary power and competence to apply for the Bonds under the relevant laws and regulations in force. Prospective subscribers should conduct their own investigation, due diligence and analysis before applying for the Bonds. Nothing in this Disclosure Document should be construed as advice or recommendation by the Issuer or by the Arrangers to the Issue to subscribers to the Bonds. The prospective subscribers also acknowledge that the Arrangers to the Issue do not owe the subscribers any duty of care in respect of this private placement offer to subscribe for the bonds. Prospective subscribers should also consult their own advisors on the implications of application, allotment, sale, holding, ownership and redemption of these Bonds and matters incidental thereto.
This Disclosure Document is not intended for distribution. It is meant for the consideration of the person to whom it is addressed and should not be reproduced by the recipient. The securities mentioned herein are being issued on private placement Basis and this offer does not constitute a public offer/ invitation. The Issuer reserves the right to withdraw the private placement of the bond issue prior to the issue closing date(s) in the event of any unforeseen development adversely affecting the economic and regulatory environment or any other force majeure condition including any change in applicable law. In such an event, the Issuer will refund the application money, if any, along with interest payable on such application money, if any.
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2. Disclaimer of the Securities & Exchange Board of India (SEBI):
This Disclosure Document has not been filed with Securities & Exchange Board of India (“SEBI”). The Bonds have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this Disclosure Document. It is to be distinctly understood that this Disclosure Document should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this Disclosure Document. The Issue of Bonds being made on private placement basis, filing of this Disclosure Document is not required with SEBI. However SEBI reserves the right to take up at any point of time, with the Issuer, any irregularities or lapses in this Disclosure Document.
3. Disclaimer of the Lead Arranger to the Issue:
The role of the Lead Arranger in the assignment is confined to marketing and placement of the Debentures on the basis of this Information Memorandum as prepared by the Company. The Lead Arranger has neither scrutinized nor vetted nor reviewed nor has it done any due-diligence for verification of the contents of this Information Memorandum. The Lead Arranger shall use this Information Memorandum for the purpose of soliciting subscription(s) from Eligible Investors in the Debentures to be issued by the Company on a private placement basis. It is to be distinctly understood that the aforesaid use of this Information Memorandum by the Lead Arranger should not in any way be deemed or construed to mean that the Information Memorandum has been prepared, cleared, approved, reviewed or vetted by the Lead Arranger; nor should the contents to this Information Memorandum in any manner be deemed to have been warranted, certified or endorsed by the Lead Arranger so as to the correctness or completeness thereof.
Nothing in this Information Memorandum constitutes an offer of securities for sale in the United States of America or any other jurisdiction where such offer or placement would be in violation of any law, rule or regulation. No action is being taken to permit an offering of the debentures or the distribution of this Information Memorandum in any jurisdiction where such action is required. The distribution/taking/sending/dispatching/transmitting of this Information Memorandum and the offering and sale of the Debentures may be restricted by law in certain jurisdictions, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.
The Issuer has prepared this Information Memorandum and the Issuer is solely responsible and liable for its contents. The Issuer will comply with all laws, rules and regulations and has obtained all regulatory, governmental, corporate and other necessary approvals for the issuance of the Debentures. The Company confirms that all the information contained in this Information Memorandum has been provided by the Issuer or is from publicly available information, and such information has not been independently verified by the Lead Arranger. No representation or warranty, expressed or implied, is or will be made, and no responsibility or liability is or will be accepted, by the Lead Arranger or their Affiliates for the accuracy, completeness, reliability, correctness or fairness of this Information Memorandum or any of the information or opinions contained therein, and the Lead Arranger hereby expressly disclaims any responsibility or liability to the fullest extent for the contents of this Information memorandum, whether arising in tort or contract or otherwise, relating to or resulting from this Information Memorandum or any information or errors contained therein or any omissions therefrom. Neither Lead Arranger and its affiliates, nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of this document. By accepting this Information Memorandum, the Eligible Investor accepts terms of this Disclaimer Clause of Lead Arranger, which forms an integral part of this Information Memorandum and agrees that the Lead Arranger will not have any such liability.
The Eligible Investors should carefully read this Information Memorandum. This Information Memorandum is for general information purposes only, without regard to specific objectives, suitability, financial situations and needs of any particular person and does not constitute any recommendation and the Eligible Investors are not to construe the contents of this Information Memorandum as investment, legal, accounting, Page 6 of 93
Private & Confidential – Not for Circulation regulatory or Tax advice, and the Eligible Investors should consult with its own advisors as to all legal, accounting, regulatory, Tax, financial and related matters concerning an investment in the Debentures. This Information Memorandum should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities mentioned therein, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.
This Information Memorandum is confidential and is made available to potential investors in the Debentures on the understanding that it is confidential. Recipients are not entitled to use any of the information contained in this Information Memorandum for any purpose other than in assisting to decide whether or not to participate in the Debentures. This document and information contained herein or any part of it does not constitute or purport to constitute investment advice in publicly accessible media and should not be printed, reproduced, transmitted, sold, distributed or published by the recipient without the prior written approval from the Lead Arranger and the Company. This Information Memorandum has not been approved and will or may not be reviewed or approved by any statutory or regulatory authority in India or by any Stock Exchange in India. This document may not be all inclusive and may not contain all of the information that the recipient may consider material.
Each person receiving this Information Memorandum acknowledges that: 1. Such person has been afforded an opportunity to request and to review and has received all additional information considered by it to be necessary to verify the accuracy of or to supplement the information herein; and 2. Has not relied on the Lead Arranger and/or its affiliates that may be associated with the Debentures in connection with its investigation of the accuracy of such information or its investment decision.
Issuer hereby declares that the Issuer has exercised due-diligence to ensure complete compliance of applicable disclosure norms in this Information Memorandum. The Lead Arranger: (a) is not acting as trustee or fiduciary for the investors or any other person; and (b) is under no obligation to conduct any "know your customer" or other procedures in relation to any person. The Lead Arranger is not responsible for (a) the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Issuer or any other person in or in connection with this Information Memorandum; or (b) the legality, validity, effectiveness, adequacy or enforceability of this Information Memorandum or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with this Information Memorandum; or (c) any determination as to whether any information provided or to be provided to any investor is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
The Lead Arranger or any of their directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this document. By accepting this Information Memorandum, investor(s) agree(s) that the Lead Arranger will not have any such liability.
Please note that: (a) the Lead Arranger and/or their affiliates may, now and/or in the future, have other investment and commercial banking, trust and other relationships with the Issuer and with other persons ("Other Persons"); (b) as a result of those other relationships, the Lead Arranger and/or their affiliates may get information about Other Persons, the Issuer and/or the Issue or that may be relevant to any of them. Despite this, the Lead Arranger and/or their affiliates will not be required to disclose such information, or the fact that it is in possession of such information, to any recipient of this Information Memorandum; (c) the Lead Arranger and/or their affiliates may, now and in the future, have fiduciary or other relationships under which it, or they, may exercise voting power over securities of various persons. Those securities may, from time to time, include securities of the Issuer; and (d) the Lead Arranger and/or their affiliates may exercise such voting powers, and otherwise perform its functions in connection with such fiduciary or other relationships, without regard to its relationship to the Issuer and/or the securities.” Page 7 of 93
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4. Disclaimer of the Stock Exchange:
If required, a copy of this Disclosure Document may be submitted to Stock Exchange (s) for hosting the same on its website. It is to be distinctly understood that such submission of the Disclosure Document with Stock Exchange (s) or hosting the same on its website should not in any way be deemed or construed that the Disclosure Document has been cleared or approved by Stock Exchange (s); nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Disclosure Document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the exchange (s); nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.
5. Disclaimer of the Rating Agencies:
The ICRA Limited rating reflects ICRA’s current opinion on the likelihood of timely payment of the obligation under rated instrument and does not contribute an audit of the rated entity by ICRA. ICRA ratings are based on the information provided by the issuer or obtained by ICRA from sources it considers reliable. ICRA does not guarantee the completeness or accuracy of the information on which the rating is based. ICRA rating is not a recommendation to buy, sell or hold the rated instrument, it does not comment on the market price or suitability for a particular investor. All ICRA ratings are under surveillance. Ratings are revised as and when circumstances so warrant. ICRA is not responsible for any errors and especially, states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. ICRA Ratings rating criteria are available without charge to the public on the ICRA website www.icra.in The India Ratings & Research Private Limited (IRRPL) rating reflects IRRPL’s current opinion on the likelihood of timely payment of the obligation under rated instrument and does not contribute an audit of the rated entity by IRRPL. IRRPL ratings are based on the information provided by the issuer or obtained by IRRPL from sources it considers reliable. IRRPL does not guarantee the completeness or accuracy of the information on which the rating is based. IRRPL rating is not a recommendation to buy, sell or hold the rated instrument, it does not comment on the market price or suitability for a particular investor. All IRRPL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. IRRPL is not responsible for any errors and especially, states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. IRRPL Ratings rating criteria are available without charge to the public on the IRRPL website www.indiaratings.co.in
6. Disclaimer of the Trustees:
Investors should carefully read and note the contents of the Disclosure Document/Disclosure Documents. Each Prospective investor should make its own independent assessment of the merit of the investment in Bonds and the issuer. Prospective investors should consult their own financial, legal, tax and other professional advisors as to the risks and investment considerations arising from an investment in the Bonds and should possess the appropriate resources to analyze such investment and suitability of such investment to such investor's particular circumstance. Prospective investors are required to make their own independent evaluation and judgement before making the investment and are believed to be experienced in Investing in debt markets and are able to bear the economic risk of investing in such instruments.
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Forward Looking Statements
All statements in this Disclosure Document that are not statements of historical fact constitute “forward looking statements”. Readers can identify forward-looking statements by terminology like “aim”, “anticipate”, “intend”, “believe”, “continue”, “estimate”, “expect”, “may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would” or other words or phrases of similar import. All statements regarding the Issuer’s expected financial condition and results of operations, business, plans and prospects are forward looking statements. These forward looking statements and any other projections contained in this Disclosure Document (whether made by the Issuer or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause the Issuer’s actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements or other projections.
The forward looking statements contained in this Disclosure Document are based on the beliefs of the management of the Issuer, as well as the assumptions made by and information available to management as at the date of this Disclosure Document. There can be no assurance that the expectations will prove to be correct. The Issuer expressly disclaims any obligation or undertaking to release any updated information or revisions to any forward looking statements contained herein to reflect any changes in the expectations or assumptions with regard thereto or any change in the events, conditions or circumstances on which such statements are based. Given these uncertainties, recipients are cautioned not to place undue reliance on such forward looking statements. All subsequent written and oral forward looking statements attributable to the Issuer are expressly qualified in their entirety by reference to these cautionary statements.
Definitions and Abbreviations AY Assessment Year Allotment/ Allot/ The issue and allotment of the Bonds to the successful Applicants in the Issue Allotted A successful Applicant to whom the Bonds are allotted pursuant to the Issue, either Allottee in full or in part A person who makes an offer to subscribe the Bonds pursuant to the terms of this Applicant/ Investor Disclosure Document and the Application Form The form in terms of which the Applicant shall make an offer to subscribe to the Application Form Bonds and which will be considered as the application for allotment of Bonds in the Issue Any person or entity holding the Bonds and whose name appears in the list of Bondholder(s) Beneficial Owners provided by the Depositories Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Beneficial Owner(s) Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996) Board/ Board of The Board of Directors of the Issuer and includes any Committee thereof. Directors Non-convertible, Redeemable, Secured Bonds of face value of Rs.10 lacs each at par Bond(s) aggregating Rs. 120 crores by Konkan Railway Corporation Limited BSE BSE Limited Electronic Book Provider Platform of BSE for issuance of debt securities on private BSE EBP Guidelines placement basis. CDSL Central Depository Services (India) Limited Coupon / Interest Coupon payments shall be made on 1st January every year till Redemption and last Payment Date interest payment date being the Redemption Date of Bonds
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C&AG Comptroller and Auditor General of India Non-Convertible debt securities which create or acknowledge indebtedness and include debenture, bonds and such other securities of a body corporate or any statutory body constituted by virtue of a legislation, whether constituting a charge Debt Securities on the assets of the Issuer or not, but excludes security bonds issued by Government or such other bodies as may be specified by SEBI, security receipts and securitized debt instruments The cut-off date declared by the Issuer from which all benefits under the Bonds Deemed Date of including interest on the Bonds shall be available to the Bondholder(s). The actual Allotment allotment of Bonds (i.e. approval from the Board of Directors or a Committee
thereof) may take place on a date other than the Deemed Date of Allotment A Depository registered with SEBI under the SEBI (Depositories and Participant) Depository Regulations, 1996, as amended from time to time Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant A Depository participant as defined under Depositories Act Disclosure Disclosure Document dated 25th September, 2019. Document DP Depository Participant DRR Bond/ Debenture Redemption Reserve EPS Earnings Per Share FIs Financial Institutions FIIs Foreign Institutional Investors Financial Year/ FY Period of twelve months ending March 31, of that particular year GoI Government of India/ Central Government ICRA ICRA Limited
India Ratings India Ratings & Research Private Limited Issuer / KRCL Konkan Railway Corporation Limited (A Government of India undertaking) I.T. Act The Income Tax Act, 1961, as amended from time to time Listing Agreement entered into/to be entered into by the Issuer with the NSE, in relation to the listing of the Bonds, as per the format issued by Securities and Exchange Board of India in its circular dated October 13, 2015 (bearing reference Listing Agreement CIR/CFD/CMD/6/2015) read with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations (Listing Regulations), as amended from time to time . MF Mutual Fund MoF Ministry of Finance
MoR Ministry of Railways
NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited PAN Permanent Account Number GIR General Index Registration Number Rs. / INR Indian National Rupee Page 10 of 93
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RBI Reserve Bank of India RTGS Real Time Gross Settlement Record Date 15 days prior to each Coupon Payment Date, and Redemption Date Registrar Registrar to the Issue, in this case being Sharex Dynamic (India) Pvt Ltd. The Securities and Exchange Board of India, constituted under the SEBI Act, SEBI 1992 Securities and Exchange Board of India Act, 1992, as amended from time to SEBI Act time Securities and Exchange Board of India (Issue and Listing of Debt Securities) SEBI Debt Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 Regulations dated June 06, 2008, as amended from time to time. TDS Tax Deducted at Source The Companies Act The Companies Act, 2013, as amended from time to time The Issue/ The Private placement of non-convertible, redeemable, secured bonds of face value Offer/ Private of Rs.10 lacs each (“bonds”) at par aggregating Rs. 120 crores by Konkan Placement Railway Corporation Limited Trustees Trustees for the Bondholders in this case being IDBI Trusteeship Services Ltd..
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A. Issuer Information Registered Office of the Issuer: Corporate Office of the Issuer:
Konkan Railway Corporation Limited Konkan Railway Corporation Limited Belapur Bhavan, Belapur Bhavan, Sector – 11, C.B.D. Belapur, Sector – 11, C.B.D. Belapur, Navi Mumbai – 400 614 Navi Mumbai – 400 614 Chief Financial Officer of the Issuer: Auditors of the Issuer:
Mr. Amitabh Banerjee, M. Com, FCMA, IRAS V K Surana & Co. Director (Finance) Unit No 202, Tower A, Peninsula Business park, Tel: 022 -2757 -0353 / 022 -2758 -7303 Senapati Bapat Marg, Lower Parel, Mumbai Fax: 400013 Email: [email protected] FRN: 110634W Tel: 022 - 41731000 Fax: 022 - 41731010 Email: [email protected] Website: www.vksca.com Compliance officer of the Issue Registrar of the issue:
Mr. Rajendra C Parab Sharex Dynamic (India) Pvt. Ltd Unit – 1, Luthra Industrial Premises, Company Secretary Safedpool, Andheri Kurla Road, Tel: 022 -2757 -2015 Andheri (east), Mumbai – 400072 Email: [email protected] Tel: 022-28515606/44 Website: http://www.konkanrailway.com Fax: 022-28512885 Email: [email protected]
Lead Arranger to the issue: Credit Rating Agencies of the issue :
SBI Capital Markets Limited ICRA Limited 202, Maker Tower ‘E’, Cuffe Parade, Electric Mension, 3rd floor, Apasahab Marathe Marg, Mumbai - 400 005 Prabhadevi, Mumbai – 4000 25 Tel: 022 22178300 Tel: 022 616933 00 Fax: 022 2218 8332 Email: [email protected] Email: [email protected] Website: www.icra.in Website: www.sbicaps.com India Ratings & Research Private Limited Wockhardt Tower, level 4, West wing, BKC Mumbai – 400 051 Phone – 022 – 4000 1700 Fax: 022 – 4000 1701 Website: www.indiaratings.co.in
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B. Brief Summary of the business / activities of the Issuer and its line of business:
(i) Overview
KONKAN RAILWAY CORPORATION LTD. (KRCL) was incorporated as a Public Limited Corporation on July 19, 1990 and obtained certificate for commencement of business on August 20, 1990. It is the first Railway Project in the country to be executed on BOT Principle (Build, Operate and Transfer). KRCL is a Corporation formed with the participation of four states viz. Maharashtra, Karnataka, Goa and Kerala along with the Ministry of Railways. It is a Government Company under Section 617 of the Companies Act, 1956.
Praised as an engineering marvel internationally the most modern Railway line of India was completed in ’97 at a total cost of INR 3555 Crores.
Salient Features
Gauge ……. 1676 mm BG Route Length ……. 741 kms Stations ……. 67 (more than 3 LINE : 11, 3 LINE :26, 2 LINE :21,HALT : 9) No. of major Bridges ….… 179 Longest Bridge …..... Across river Sharavati 2065 mtrs. No. of tunnels …..... 91 Longest tunnel …..... Karbude Tunnel 6.5 kms.
Projects
The Konkan Railway Project bridges a distance of 741 kms between Roha and Mangalore on the West Coast of India. The construction of the Railway line has considerably reduced the distance and travel time to Southern India.
SAVING IN OTHER ROUTES KONKAN RAILWAY STATIONS DISTANCE (Kms) ROUTE (Kms) (Kms) Mangalore-Mumbai 2041 914 1127 Mangalore-Ahmedabad 2653 1358 1295 Mangalore-Delhi 3033 2249 784 Mumbai-Cochin 1849 1336 513
Trains on KR Route
The first passenger train run on Konkan Railway was on 20.03.1993 between Udupi & Mangalore. Since then there has been no looking back and a number of trains have been introduced or diverted via Konkan Railway route thereafter. Presently 45 Pairs of Mail/Express and 9 Pairs of Passenger Trains are run over Konkan Railway as under:
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Trains Mail/Express Passenger Daily 09 pairs 07 pairs 6 days -- 02 pairs 5 days 01 pair -- 4 days 01 pair -- Tri-weekly 03 pairs -- Bi-weekly 10 pairs -- Weekly 22 pairs --
Originating Trains: 16 Mail/Express trains & 13 Passenger Trains originate on KRCL:
Mail / Express Trains:
1 10112 Madgaon - Mumbai CSMT ‘Konkankanya’ Express (Daily)
2 10104 Madgaon - Mumbai CSMT ‘Mandovi’ Express (Daily)
3 12052 Madgaon – Dadar ‘Janshatabdi’ Express (Daily)
4 11004 Sawantwadi – Dadar ‘Tutari’ Express (Daily)
5 12449 Madgaon – Chandigarh ‘Goa Sampark Kranti’ Express (Bi-weekly)
6 10215 Madgaon – Ernakulam Express (Weekly)
7 16516 Karwar – Yeshwantpur Express (Tri-Weekly Via Kunigal)
8 16514 Karwar – KSR Bangalore City Express (via Kunigal)
9 16524 Karwar – KSR Bangalore City Express (Via Mysore)
10 22907 Madgaon – Hapa Express (Weekly)
11 22635 Madgaon – Mangalore Intercity Express (Daily)
12 22116 Karmali - Lokmanya Tilak (T) (Weekly)
13 22413 Madgaon – H. Nizamuddin Rajdhani Express (Bi-weekly)
14 11086 Madgaon – Lokmanya Tilak (T) (Bi-weekly)
15 22120 Karmali – Mumbai CSMT (Five days a week) * (Tri-Weekly in Monsoon Season)
16 11100 Madgaon – Lokmanya Tilak (T) (weekly)
Passenger Trains:
1 56641 Madgaon - Mangalore Passenger (Daily)
2 50104 Dadar - Ratnagiri Passenger (Daily)
¾ 50107/08 Sawantwadi – Madgaon- Sawantwadi Passenger (Daily)
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5 50106 Sawantwadi - Diva Passenger (Daily)
6/7 70101/02 Pernem - Karwar – Pernem Passenger DEMU (Daily)
8/9 70103/04 Pernem - Karwar-Pernem Passenger DEMU (6 Days)
10 70105 Madgaon-Mangalore Central DEMU (6 Days)
11 56666 Mookambika Road Byndoor Passenger (Daily)
12/13 50101/02 Ratnagiri – Madgaon - Ratnagiri Daily Passenger (Daily)
Year-wise details of trains introduced during last five years:
Year Train No From - To 22629/22630 Dadar – Tirunelveli (Weekly) 22113/22114 Lokmanya Tilak (T) – Kochuveli (bi-weekly) 22635/22636 Mangalore - Madgaon Intercity (Daily) 2013-14 70105/70106 Bhatkal - Mangalore DEMU (six days a week) 22633/22634 Trivandrum - Nizamuddin(weekly) 70103/70104 Madgaon - Karwar DEMU (six days a week) 22115/22116 Lokmanya Tilak (T)-Karmali AC (weekly) 56665/56666 Mookambika Rd Byndoor-Kasargod Passenger (Daily) 2014-15 22655/22656 TVC - H. Nizamuddin via Alleppey (weekly)
22653/22654 TVC – H. Nizamuddin via Kottayam (weekly) 50101/50102 Ratnagiri – Madgaon – Ratnagiri Passenger (Daily)
2015-16 22414/22413 H. Nizamuddin – Madgaon Rajdhani (Bi-weekly) 11085/11086 L. Tilak (T) – Madgaon Double Decker (tri-weekly) 2016-17 19332/19331 Indore – Kochuveli – Indore (Weekly)
2017-18 22119/22120 Mumbai CSMT – Karmali (5 days a week) 16513/16514 KSR Bengaluru–Mangaluru (C)l-Karwar (4 days week) 2018-19 19424/19423 Gandhidham-Tirunelveli “Hamsafar” 2019-20 11009/11100 L Tilak (T) – Madgaon Double Decker (Weekly)
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Running of Holiday Specials: Special trains are being regularly run during festival seasons like Ganapati Festival, Christmas, Summer and Winter Holidays, Weekends etc. so as to clear extra rush of traffic. There has been increasing trend in number of special trains run on Konkan Railway as can be seen below;
SPECIAL TRAINS
Year Summer Ganapati Winter Deccan Odyssey Others Total Tourist Train Special *
2014-15 139 207 98 03 130 577 2015-16 167 244 42 5 134 592 2016-17 168 240 110 8 168 694 2017-18 222 236 54 4 163 679 2018-19 147 202 64 7 186 606
Segment-wise and product wise performance (Rs. In Crore) Particulars 2017-18 2018-19 % Variation Traffic Earnings (Incl. other Income) 1228.23 1337.59 8.90% Project Earnings 1255.12 1561.09 24.38% Total 2483.35 2898.68 16.72%
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Operations: Present Trends
Passenger Traffic
2019-20 2014 - 2015- 2016- 2017- Particulars 2018-19 (Up to 15 16 17 18 June)
No. of passenger 16839 19181 19895 19627 19315 5069 trains run
GTKMs (Million) 7460 8075 8327 8531 8497 2204
Earnings 552.00 569.91 620.80 654.33 695.11 169.70 (Rs. In Crores)
Freight Traffic
2019-20 2014 - 2015- 2016- 2017- Particulars 2018-19 (Up to 15 16 17 18 June)
No. of freight 5772 6282 6063 5821 5605 3069 trains run
GTKMs (Million) 4724 5546 5437 6345 6488 1491
Earnings 353.58 459.28 439.97 514.84 560.96 121.00 (Rs. In Crores)
Freight Operations
During 2018-19, the freight earning registered is Rs.569 Crores as compared to Rs.523 Crores in FY 2017-18 showing a growth of Rs.9%. The major commodities handled includes food grain, Pig Iron, fertilizers, LPG/POL and Calcined Petroleum coke. Konkan Railway & Container Corporation of India Ltd have set up a Multi Model Logistics Park at Balli station. Which is the first of its kind in Goa. CONCOR has started loading of container rakes in the month of May 2018 and loaded 62 rakes during the financial year 2018-19 which generated a freight revenue of Rs.28.73 Crores. Ro-Ro service of KR has been first time extended on Electrified Territory on Western Railway up to Karambeli (KEB) Railway Station near Vapi on 20/09/2018. Further to promote the digitized transaction over Railways and reduce the cash handling at the station, KR has introduced on-line system for booking of Ro-Ro trucks in the month of January 2019.
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The following sidings, terminals, connectivity projects etc will have an impact on freight traffic on our system. a. Mangalore Refinery and Petrochemicals Ltd. (MRPL) siding work at Thokur railway station
Construction of a Private siding at Km.738.130 from the Thokur Railway station of Konkan Railway to the premises of MRPL having a route length of 1.587 km on “Deposit term Basis “and agreement was signed by both KRCL & MRPL on 31.10.2016. The work of construction of MRPL siding including EW, Bridges, two ROBs, sub soil stabilization and approach roads are completed. The physical progress is 95% up to March 2019. Track linking of 2.2km out of 3.2km is completed and balance work is near to completion. Financial progress in the year 2018-2019 is Rs 27.4 Crore is against target of Rs 25 Crore. b. Jaigarh – Digni Rail Connectivity Project.
The Joint Measurement and public hearing for acquisition of land is completed and ready for publication of 20E Notification. The Financial Closure for the project is awaited. Due to lack of funds, the land acquisition process will not be able to be pursued further. The financial institutions are reluctant to approve the funds due to non-visibility of projected traffic.
Passenger Traffic
Passenger Operations
The earnings from coaching traffic has registered a growth of 6 % in FY 2018-19. The coaching earning has reached to Rs.687 Crores in 2018-19 compared to Rs.646 Crores in 2017-18. Memorandum of Understanding (MoU) was signed between KRCL and CRIS on 15.06.2018 for Implementation of Unreserved Ticketing System (UTS) over Konkan Railway. Unreserved Ticketing System (UTS) has been implemented at all 59 stations of KRCL on 25.01.2019.
Traffic Augmentation works
(a) Roha – Veer Doubling
Doubling of track in Roha – Veer Section (47km) involves construction of 11 Major bridges, 2 Road under bridges, 198 Minor bridges, more than 16 lakhs cum earthwork and track linking. A financial progress of more than Rs 150 crore has been achieved in Financial Year 2018-19, making a cumulative financial progress of more than Rs 230 crore. The project has recorded a physical progress of 80%.
(b) Construction of 10 numbers of new crossing stations and 7 numbers of additional loop lines The project was approved by Ministry of Railways vide Railway Board letter No.2014/PL/50/15 Dated 18.04.2016 under Capital Budget 2015-16 for a total cost of Rs.73.27 Crore for construction of 8 Page 18 of 93
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Nos of additional loop lines and Rs. 149.41 Crores for construction of 11 Nos. of new crossing stations. The work for construction of 8 Nos. of new crossing stations and 7 Nos. of additional loop lines was commenced on April, 2017 and 77.50 % work is completed up to March 2019. Additional loop lines at Sawarda station and Rajapur station are commissioned on 05-02-2019 and 07-03-2019 respectively. The MOU target for the year 2018-19 of Rs 77 Crore is achieved against target of Rs 71Crs.
(c) Electrification of Konkan Railway
With Electrification planned at all the interchange points of KRCL, we are also going ahead with Electrification so that seamless transportation on electric traction can be ensured on our entire route. For Electrification work, the entire stretch of Konkan Railway route (Roha-Thokur) has been divided in two sections i.e. Roha-Verna (Section 1) & Verna-Thokur (Section 2). The work has been awarded to M/s Larsen & Toubro Ltd, Faridabad for Section-1 and M/s STS-KPTL (JV), Noida for Section-2 on composite tender basis. Execution has already commenced simultaneously from both Roha (Northern end) as well as from Thokur (Southern end).
Projects
(a) Construction of Katra-Dharam section of Udampur- Srinagar-Baramulla Rail Link (USBRL) Project, J&K Tunnel excavation of 10.865 km is achieved during financial year 2018-19 as compared to 3.506 km of previous year. This has surpassed highest tunnel excavation of 4.126 km achieved in full financial year 2012-13. A cumulative length of 33.85 km of Tunnel excavation has been completed out of 46.1 Km. Tunnel Lining of 4.126 km is achieved during this financial year Cumulative length of Tunnel lining completed is 30.021 km. The construction of Iconic Bridge across river Chenab & Anji are in progress. At Chenab Bridge Fabrication of Arch, Pier & Trestles completed. All together 5515 MT of Fabrication completed during this financial year. Total Fabrication completed so far is 25636 MT. Launching of 2551 MT is achieved during this year. Total Launching completed so far is 9811 MT. At Anji Bridge construction of Main Pylon work is in progress. Ancillary Viaduct portion Pier P1, P2, P3 & Abutment A1 completed except Abutment A2. Further 8 segments of Central embankment completed out of 12 Nos. At other Bridges total 12 Bridges completed out of 21 No.s. Total 56 nos foundations & 53 nos Pier/Abutment completed out of 60 nos. Financial progress of Rs 1163.64 Crore has been achieved during financial year 2018-19 against target of Rs. 950 Crore. This is Rs. 88 Crore (8 %) higher than last year’s financial progress of Rs. 1076 Crore. This is highest ever progress achieved in a single financial year so far by KRCL.
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(b) Setting up Rolling Stock Component Factory at Ratnagiri
Mechanical Department is also working on the project of construction of Rolling Stock Component Factory for Central Railway at Chiplun. The DPR and Detailed Estimate of Rs 410 crore prepared by KRCL has been sanctioned by Central Railway. The land development and boundary wall work is under progress. The tender for construction of factory has been opened on 07.02.2019. The commissioning of factory is expected to be completed by December 2020.
(c) NTPC-Kudgi-STPP-Railway Siding Project:
The work of Rail Connectivity for Super Thermal Power Plant (3 x 800 MW) of NTPC at Kudgi, Karnataka being implemented by Konkan Railway under Project Management Consultancy (PMC) contract. The Work was awarded in Feb 2014. The revised cost of Work is Rs. 380 Cr. The siding was commissioned on 10.02.2017. Presently, about 98.4% physical works are completed at an up to date cost of Rs 351.94 Cr. The route length of the siding is 11.65 km and total track length is 38.00 km which includes 15 lines in In-plant yard. There are 16 bridges including one viaduct of 700 m length.
(d ) NTPC-Gadarwara-STPP-Railway Siding Project:
The work of Rail Connectivity for Super Thermal Power Plant (2 x 800 MW) of NTPC at Gadarwara, Madya Pradesh being implemented by Konkan Railway under Project Management Consultancy (PMC) contract. The Work was awarded in June 2014.
(e) PET Survey for new BG line between Raxaul and Kathmandu (Nepal)
The work of Preliminary Engineering cum Traffic (PET) Survey for new electrified BG line between Raxaul (India) & Kathmandu (Nepal) was awarded to KRCL by East Central Railway. The report of feasibility study has been submitted by the Corporation.
New Projects of Konkan Railway
(a) Rail connectivity to Vizhinjam International Seaport:
An MoU has been signed between the Corporation and Vizhinjam International Seaport Ltd (VISL) to link the Vizhinjam Seaport (12 km) with Southern Railway. The Detailed Project Report (DPR) with an estimated cost of Rs 1032 crore has been submitted to VISL and in the process of approval.
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(b) Operationalization of Railway in Nepal:
Corporation had submitted a competitive offer for operationalization of the cross-border rail link between Jaynagar (India) and Kurtha (Nepal). The comprehensive offer included supply of two DEMU rakes, maintenance of track, rolling stock, assets of S&T, Electrical Departments, manning of Operations & Maintenance posts, Training of Nepalese recruits and train operations for a period of one year. A Contract Agreement for the same was signed in Kathmandu on 10th May 2019 in the presence of the Ambassador of India to Nepal and the Secretary, Ministry of Physical Infrastructure & Transport, Government of Nepal.
Management perception of risk factors
An investment in Bonds involves a certain degree of risk. Investors should carefully consider all the information in this Offer Letter, including the risks and uncertainties described below, before making an investment in the Bonds. The risk factors set forth below do not purport to be complete or comprehensive in terms of all the risk factors that may arise in connection with our business or any decision to purchase, own or dispose of the Bonds. Additional risks and uncertainties not known to the Company or that the Company currently believes to be immaterial may also have an adverse effect on its business, prospects, results of operations and financial condition. If any of the following or any other risks actually occur, the Company’s business, prospects, results of operations and financial condition could be adversely affected and the price and value of your investment in the Bonds could decline such that you may lose all or part of your investment.
You should not invest in the Issue unless you are prepared to accept the risk of losing all or part of your investment, and you should consult your own tax, financial and legal advisors about the particular consequences of an investment in the Bonds.
The numbering of risk factors has been done to facilitate ease of reading and reference, and does not in any manner indicate the importance of one risk factor over another.
Risk Related to our Business:
1. Changes in Passenger Fares
The passenger fares are decided by Ministry of Railways. KRCL doesn’t have control on deciding the passenger fares as per requirements of its business.
2. Alternate modes of transportation for Passenger traffic
There has been increasing thrust from the Govt. to develop infrastructure. There has been continuous and steady development in roads infrastructure. Also, introduction of more comfortable bus fleet, its reach to interior parts of the cities/villages. i.e. point to point pick up / drop may lead to diversion of passenger traffic from Rail to Road.
There is a vast scope for passenger traffic by sea route between Mumbai and Goa/Mangalore. At present there is not much development on water transport. However, in the coming future this alternative can create a competition to the railways. Page 21 of 93
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3. Changes in Freight Fares
Majority of freight traffic handled by KRCL is cross, food grain & fertilizer traffic. The pattern of freight traffic is not fixed but changing all the time depending upon various factors like production, supply and demand. Any adverse change in demand and/or supply pattern would negatively impact the freight revenue.
Freight fares are decided by Ministry of Railways. KRCL doesn’t have control on deciding the freight fares as per its business requirements.
4. Alternate modes of transportation for Freight traffic
RORO service through shipping was introduced in 2015-16. However, due to logistics issues in operations of the same, the service is discontinued. Considering the benefits in haulage cost in water transportation, such service may get introduced in future also. Materialisation of the same will be the great risk for RORO operations of KRCL as the major stream of RORO trucks is from Gujarat to Cochin area of Kerala.
5. Personnel Planning
KRCL foresee mass retirement in next 10-15 years as most of the employees are of same age group. This may create shortage for skilled / trained and experienced manpower at various levels in future.
6. Outsourcing of special services to capable vendors
Certain Annual Maintenance contracts, which are specialized works, for which IT dept. does not have the staff or expertise, has been outsourced to ensure high uptime and availability of services.
7. Financial instruments and cash deposits
Balances with banks and financial institutions are managed by the Corporation’s Finance department in accordance with the Corporation’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Corporation’s Board of Directors on an annual basis and may be updated throughout the year subject to approval of the Corporation’s Finance Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
The Corporation’s exposure is Rs. 1132.89 crores representing investment in deposit with banks and Financial Institutions.
8. Contingent liabilities
Claims/Disputed liabilities not acknowledged as debt: i. As per the MOU between Northern Railway (NR) and KRCL,in case of any claim/ dispute, it will be mutually decided by them as to who will bear the claim. Failing mutual agreement, the same will be decided under Arbitration. Even if, it is to be borne by KRCL, the claim amount will be restricted to 80% of the total profit of the Project of that year.
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In case of the claims outstanding against Arbitration and Court cases related to USBRL project amounting to Rs 1978.84 Crores,it is the considered opinion of the Corporation that in case of any adverse outcome of case, the claims will be chargeable to the project. Arbitration claim up to 31st March, 2019amounting to Rs 10.08 Crores(Rs 10.08 Crores) are charged to and accepted by Northern Railway. ii. Assessment of Income Tax u/s 143(3) and u/s 271(1)(C ) for the Financial Year 2007-08 to 2014-15 are pending at various level of Appellate Authority. However, the Management is of the opinion that, considering the past Assessment and existing carry forward un-absorbed Depreciation loss of Rs 1,372.65 crores, there will not be any impact on financials of the company. iii. Against the demand of the Service Tax Department of Rs 704.40 Crores and applicable interest thereonfor the period from 2009-10 to 2013-14, the corporation has filed a writ petition in the Mumbai High Courton 30th March, 2017 challenging the same as unconstitutional and against the service tax law being double taxation on business transaction between KRCL and Indian Railways. iv. The TRACES Portal of Income tax department shows demand of Rs 1.12Crores including interest ( Rs 1.74 Crores). The same is on account of mismatch in credit of TDS paid due to certain punching error. The management affirms the rectification of above mentioned amount. v. Claims by contractors against the Corporation pending under Arbitration are Rs 40.11 Crores (Rs 33.21 Crores). Besides this, against the arbitration award to the tune of Rs 12.07Crores (Rs 32.19 Crores) the corporation has preferred an appeal in the Court. vi. 435 (464) cases relating to land have been filed by the landowners in several Courts for revision of amount of the award passed by the respective State Governments involving amount of Rs 46.98Crores (Rs 47.92Crores) (approx.). The Corporation has deposited Rs 22.16 Crores ( Rs 23.70 Crores)with the Court which includes interest also. vii. Total 66(69) personal claims pertaining torailway accidents are pending with Tribunal amounting to Rs 5.28Crores(Rs 5.50Crores). viii. Performance Guarantee is given to Gujarat Water Infrastructure Ltd. amounting toRs 0.10 Crores(Rs 0.10 Crores) and NTPC Projects amounting to Rs 2.25Crores(Rs 2.62Crores)and Margin money has been kept for these bank guarantees in the form of term deposits. ix. There is demand of Rs 19 crores (Rs 19 crores) towards Value Added tax by the department of Commercial tax for work of ROB executed in Jharkhand state which has been challenged by the Corporation. x. 400 (NIL) cases has been filed for enhance Land Compensation payable to claimants under section 28A having financial implication of Rs 51 (NIL) crores
Risk Relating to the Issue:
9. Debenture Redemption Reserve
The Issuer is required to create a debenture redemption reserve (“DRR”) equivalent to 25% of the value of the Debenture offered through this Issue out of profits available for distribution of dividends. In the absence of sufficient profits, we may not be able to transfer adequate amounts to the DRR.
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Sub rule 7 of Rule 18 of the Companies (Share Capital and Debenture) Rules, 2014 and Section 71 of the Companies Act states that any company that intends to issue debentures must create a DRR to which adequate amounts shall be credited out of the profits of the company available for payment of dividend until the debentures are redeemed. The quantum of DRR to be created before the redemption liability actually arises in normal circumstances should be ‘adequate’ which has been prescribed to be 25% of the value of debentures issued through public issue. As further clarified by the DRR Circular, the amount to be credited as DRR will be carved out of the profits of the Issuer only and there is no obligation on the part of the Issuer to create DRR if there is no profit or no adequate profit for the year to pay dividends for the particular year. Accordingly, if we are unable to generate adequate profits, the DRR created by us may not be adequate to meet the 25% of the value of the NCDs issued.
10. There has been only a limited trading in the bonds of such nature and the price of the Bonds may be volatile subject to fluctuations.
The Bonds have no established market and there is no assurance that an active market for these Bonds will develop or be sustained. Further, the liquidity and price of the Bonds may vary with changes in market and economic conditions, the Issuer’s financial condition and other factors that may be beyond the Issuer’s control.
11. There is no guarantee that the Bonds will be listed on the Stock Exchange(s) in a timely manner or at all, or that monies refundable to Eligible Investors will be refunded in a timely manner.
In accordance with Indian law and practice, approval for listing and trading of the Bonds will not be granted until after the Bonds have been allotted. While issuer will use best efforts to ensure that all steps for completion of the necessary formalities for allotment, listing and commencement of trading on the Stock Exchange(s) are taken within the time prescribed by SEBI or applicable law, there may be a failure or delay in listing the Bonds on the Stock Exchange(s). Issuer cannot assure you that any monies refundable on account of (a) withdrawal of the Issue, or (b) failure to obtain final approval from the Stock Exchange(s) for listing of the Debentures, will be refunded in a timely manner. The Issuer shall, however, refund any such monies, with interest due and payable thereon, as prescribed under applicable law.
12. Changes in interest rates may affect the price of the Bonds.
Securities where a fixed rate of interest is offered, such as the Bonds, are subject to price risk. The price of such securities will vary inversely with changes in prevailing interest rates, i.e., when interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices increase. The extent of fall or rise in the prices is a function of the coupon rate, days to maturity and increase or decrease in prevailing interest rates. Increased rates of interest, which may accompany inflation and/or a growing economy, may have a negative effect on the price of the Bonds.
13. Credit ratings may not reflect all risks.
ICRA Limited and India Rating and Research Private Limited have assigned credit ratings to Bonds. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Bonds. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.
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(ii) Corporate Structure:
Source: http://www.konkanrailway.com
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(iii) Key Operational and Financial Parameters for the last 3 Audited years: Key Operational and Financial Parameters of the Issuer for the last 3 Audited years on a standalone basis are as under (Rs. Crores):
Particulars For FY 2018-19 For FY 2017-18 For FY 2016-17
Share Capital 5339.05 5109.17 4,885.97
Reserves & Surplus (3,270.95) (3,277.54) (3392.78)
Net worth 2,068.10 1,831.63 1,493.19
Total Debt/Borrowings 1,939.08 1,750.00 1,750.00 – Non Current Maturities of 1,939.08 1,750.00 1,750.00 Long term borrowing
- Short Term Borrowing - - - - Current Maturities of - - - Long Term Borrowing
Net Fixed Assets 3,878.34 3,360.52 3,146.30
Non-Current Assets 3,973.05 3,440.69 3,250.68
Cash and Cash Equivalents 265.62 141.50 282.90
Current Investments 854.12 1,044.13 1076.05
Current Assets 2,141.22 2,206.74 2,270.65
Current Liabilities 1,830.12 1,844.62 2,029.22
Net sales 2,898.68 2,483.42 2152.60
EBITDA 293.03 307.76 263.22
EBIT 236.39 253.73 213.20
Interest 134.52 131.00 153.54
Exceptional Items - - -
PAT 101.87 122.73 59.66
Dividend amounts - - -
RATIOS
Current ratio 1.17 1.20 1.12
Interest coverage ratio1 1.76 1.94 1.39
Gross debt/equity ratio2 0.94 0.96 1.17
Debt Service Coverage Ratio3 2.18 2.32 0.57
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Calculations: 1. Interest Coverage Ratio: (Profit After Tax + Interest) / Interest 2. Gross Debt to Equity Ratio: Total Debt / (Share Capital + Reserves & Surplus)
3. Debt Service Coverage Ratio: (Profit After Tax + Interest + Depreciation & Amortization) / (Interest + Current Maturities of Long Term Borrowing)
Key Operational and Financial Parameters of the Issuer for the last 3 Audited years on a consolidated basis are as under (Rs. Crores):
Particulars For FY 2018-19 For FY 2017-18 For FY 2016-17
Share Capital 5339.05 5109.17 4,885.97
Reserves & Surplus (3,270.52) (3,277.24) (3392.64)
Net worth 2,068.53 1,831.93 1,493.33
Total Debt/Borrowings 1,939.08 1,750.00 1,750.00 – Non Current Maturities of 1,939.08 1,750.00 1,750.00 Long term borrowing - Short Term Borrowing - - - - Current Maturities of - - - Long Term Borrowing Net Fixed Assets 3,878.23 3,360.52 3,146.30
Non-Current Assets 3,973.48 3,440.99 3,250.82
Cash and Cash Equivalents 265.62 141.50 282.90
Current Investments 854.12 1,044.13 1076.05
Current Assets 2,141.22 2,206.74 2,270.65
Current Liabilities 1,830.12 1,844.62 2,029.22
Net sales 2,898.68 2,483.42 2152.60
EBITDA 293.16 307.92 263.46
EBIT 236.52 253.89 213.44
Interest 134.52 131.00 153.54
Exceptional Items - - -
PAT 102.00 122.89 59.90
Dividend amounts - - -
RATIOS
Current ratio 1.17 1.20 1.12
Interest coverage ratio1 1.76 1.94 1.39
Gross debt/equity ratio2 0.94 0.96 1.17
Debt Service Coverage Ratio3 2.18 2.32 0.57
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Calculations: 1. Interest Coverage Ratio: (Profit After Tax + Interest) / Interest 2. Gross Debt to Equity Ratio: Total Debt / (Share Capital + Reserves & Surplus) 3. Debt Service Coverage Ratio: (Profit After Tax + Interest + Depreciation & Amortization) / (Interest + Current Maturities of Long Term Borrowing)
(iv) Project cost and means of financing, in case of funding of new projects The funds raised through the bond issue shall not be utilised for funding of new project.
(v) Gross Debt: Equity Ratio of the Issuer (Standalone basis) as on 30.06.2019:
Particulars Before the issue of bonds After the issue of bonds Total Borrowing (Rs. Crores) 2,046.71 2,166.71 Net worth* (Rs. Crores) 2,068.10 2,068.10 Borrowings / Net worth ratio 0.99 1.05 *(Net worth as on 31.03.19)
C. A Brief history of the Issuer since its incorporation giving details of its following activities:
(i) Details of Share Capital as on 30.06.2019:
Share Capital Amount Authorized Share Capital 40,000,000,000 12,712,962,000 Issued Share Capital 12,712,962,000 Subscribed Share Capital
Paid-up Share Capital 12,712,962,000
Preference Share Capital 4,07,951,00,000
(ii) Changes in the capital structure of the Issuer as on 30.06.2019, for the last five years:
Amount (Rs. Year of Change Particulars Crores) Non-Cumulative redeemable Preference shares held by Ministry of Railways converted to Compulsory Convertible Non- Cumulative Preference shares wef 31/03/2015 vide a special 2014-15 4079.51 resolution dated 19/08/2016. Approval from MoR obtained vide letter no 2015/PL/50/09 dated 23rd June 2016. The approval of Central government has been obtained on 27th December 2017. Rights issue to Shareholders in their existing shareholding 2017-18 310.00 proportion. Rights issue to Shareholders in their existing shareholding 2018-19 196.00 proportion. Rights issue to Shareholders in their existing shareholding 2019-20 11.76 proportion.
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(iii) Equity Share Capital History of the Issuer as on 30.06.2019 for the last five years: Cumulative Consideratio Nature No. of Face Issue No. of Equity Equity Date of n (Cash, of Equity Value Price Equity Share Share Remarks Allotment other than Allotme Shares (Rs.) (Rs.) Shares Capital Premium cash, etc.) nt (Rs. crores) (Rs. crores) 9-10-2017 1581000 1000 1000 Cash Rights 9645562 964.56 - To Issue Ministry of Railways 28-11-2017 465000 1000 1000 Cash Rights 10110562 1011.06 - To issue Karnataka Govt. 16-02-2018 186000 1000 1000 Cash Rights 10296562 1029.66 - To Kerala issue Govt. 26-04-2018 682000 1000 1000 Cash Rights 10978562 1097.85 - To issue Maharasht ra Govt. 26-04-2018 186000 1000 1000 Cash Rights 11164562 1116.45 - To Goa issue Govt. 28-02-2019 999600 1000 1000 Cash Rights 12164162 1216.41 To issue Ministry of Railways 28-02-2019 431200 1000 1000 Cash Rights 12595362 1259.53 - To issue Maharasht ra Govt. 22-04-2019 117600 1000 1000 Cash Rights 12712962 1271.30 - To Goa issue Govt.
(iv)Details of any Acquisition or Amalgamation in the last 1 year: There was no acquisition or amalgamation carried out by the Company in the last 1 year
(v)Details of any Reorganization or Reconstruction in the last 1year: Type of Event Date of Announcement Date of Completion Details There was no Reorganization or Reconstruction carried out by the Company in the last 1 year
D. Details of shareholding of the Issuer as on 30.06.2019
(i) Shareholding pattern of the Issuer as on 30.06.2019: Sr. No Name of the Total No of No of Total No of % of shareholders Equity Shares shares shareholding Shares Shares in as % of total Pledged pledged demat no of equity with form shares respect to shares owned 1 Ministry of Railways 66,93,474 - 52.65 - -
2 Government of 28,87,424 - 22.71 - -
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Maharashtra
3 Government of Goa 7,87,479 - 6.19 - -
4 Government of 16,74,698 - 13.17 - - Karnataka
5 Government of 6,69,880 - 5.27 - - Kerala
6 Railway Board 1 - - - Nominee
7 Railway Board 1 - - - Nominee
8 Railway Board 1 - - - Nominee
9 Special 1 - - - Commissioner, MH
10 Resident 1 - - - Commissioner, Goa
11 Resident 1 - - - Commissioner, Karnataka
12 Resident 1 - - - Commissioner, Kerala 12712962
(ii) List of top 10 holders of equity shares of the Issuer as on 30.06.2019:
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Total Shareholding Sr. Name of the Total no. of No. of shares in Face Value of Shares as % of total no. shareholders equity shares Demat Form no. of equity shares Ministry of 1 Railways 66,93,474 1000 - 52.65 Government of 2 Maharashtra 28,87,424 1000 - 22.71 Government of 3 Karnataka 16,74,698 1000 - 13.17
4 Government of Goa 7,87,479 1000 - 6.19 Government of 5 Kerala 6,69,880 1000 - 5.27 * Remaining shareholders are the nominee shareholders who hold 1 share each. The same has been enlisted under the shareholding pattern disclosures.
E. Details regarding the Directors of the Issuer
(i) Details of the current Directors of the Issuer as on 30.06.2019: Director of Sr. Name, Designation and Age Details of other Address the Issuer no. DIN (yrs.) directorships since Shri Sanjay Gupta Konkan Railway Corporation Chairman & Managing Ltd. Sector 11, Plot No. 6, 1. 55 08/07/2016 None Director CBD Belapur, Navi Mumbai - DIN: 06710604 400614, Maharashtra Konkan Railway Corporation Shri Amitabh Banerjee Ltd. Sector 11, Plot No. 6, IRAS 2. 56 05/10/2013 None Director (Finance) CBD Belapur, Navi Mumbai - DIN:03315975 400614, Maharashtra
Konkan Railway Corporation Shri Hari Das Gujrati Ltd. Sector 11, Plot No. 6, Director (Operations & 3. 58 18/01/2018 None Commercial) CBD Belapur, Navi Mumbai - DIN 01393052 400614, Maharashtra
Konkan Railway Corporation Shri Subhash Chand Ltd. Sector 11, Plot No. 6, Gupta 4. 54 15/01/2019 None Director (Way & Works), CBD Belapur, Navi Mumbai - DIN 08339258 400614, Maharashtra
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Mrs. Anju Ranjan Railway Board Executive Director, F/E- 5. 53 Railway Bhavan, Raisina 21/06/2018 None 1/Railway Board DIN 06681154 Road, New Delhi – 110001 Shri Amar Prakash Dwivedi Railway Board 1) RITES LIMITED 6. Executive Director 55 Railway Bhavan, Raisina 01/11/2018 2) RAIL VIKAS (PSU)/ Railway Board, Road, New Delhi – 110001 NIGAM LIMITED DIN 07122333 Shri Ashish Kumar MAHARASHTRA Singh RAIL Chief Secretary / Government of Maharashtra INFRASTRUCTURE 7. Principal Secretary 56 Mantralaya, 06/08/2018 DEVELOPMENT (Transport), Government Mumbai-400032 CORPORATION of Maharashtra, LIMITED DIN 02751191 Shri Parimal Rai Government of Goa KADAMBA Secretary (Transport), Secretariat, 8. 57 26/04/2019 TRANSPORT CORPN Government of Goa Porvorim, Goa LIMITED DIN 00396446 403521 1) KARNATAKA STATE FOREST INDUSTRIES CORPORATION LIMITED 2)INFRASTRUCTURE DEVELOPMENT CORPORATION (KARNATAKA) LIMITED 3) BANGALORE INTERNATIONAL AIRPORT LIMITED 4) HASSAN MANGALORE RAIL Dr. Sandeep Dave Government of Karnataka DEVELOPMENT Addl. Chief Secretary, Infrastructure Development COMPANY LIMITED 9. IDD, Government of 58 Department, 24/08/2017 5) KARNATAKA Karnataka, Room 28, Vikasa Soudha, ROAD DIN 03410193 Bangalore-560001 DEVELOPMENT CORPORATION LIMITED 6) RAIL INFRASTRUCTURE DEVELOPMENT COMPANY (KARNATAKA) LIMITED 7) KARNATAKA TOURISM INFRASTRUCTURE LIMITETADADI PORT LIMITEDD 8)TADADI PORT LIMITED
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9)KARNATAKA MINING ENVIRONMENT RESTORATION CORPORATION 1) COCHIN SHIPYARD LIMITED 2)KERALA AQUA VENTURES INTERNATIONAL LIMITED 3) KERALA STATE COASTAL AREA DEVELOPMENT CORPORATION LIMITED 4)KERALA RAPID TRANSIT CORPORATION Shri K.R. Jyothilal Government of Kerala LIMITED Principal Secretary Room No. 394, 1st Floor, 5)KERALA RAIL 10 (Transport), Government 50 Main Block, Secretariat, 26/07/2018 DEVELOPMENT of Kerala Thiruvananthapuram, CORPORATION DIN 01650017 Kerala, India LIMITED 6) KERALA TRANSPORT DEVELOPMENT FINANCE CORPN LTD 7)KERALA INFRASTRUCTURE FUND MANAGEMENT LIMITED 8)KITCO LIMITED 9)AZHIKKAL PORT LIMITED Ms. Archana Arora 11 Independent Director, 65 [Address] 31/01/2017 None DIN 02800673 FLAT NO. 170, GROUND FLOOR, TOWER E BOLLYWOOD Air Marshal Sukhchain HEIGHTS-2 Singh AVSM VSM (Retd.) PEERMUSHALLA, 12 64 11/07/2019 None Independent Director, DHAKAULI, SAS DIN 06920513 NAGAR MOHALI Punjab India 140603 Shri Mosali Devaraja H NO 5-9-42/2, FLAT INDIAN INSTITUTE 13 Reddy 58 NO 303, SIDDHU 11/07/2019 OF INSOLVENCY Independent Director, RESIDENCY PROFESSIONALS OF
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DIN 07112941 HILL FORT STREET NO ICAI 2, BASHEERBAGH HYDERABAD Telangana India 500063 Shri R. Srinivasan RH-56, Meenkshi Avenue, 14 Independent Director, 55 Lalainagar First St, Madurai – 11/07/2019 None DIN 625017, Tamil Nadu
(ii)Details of change in Directors since last three years:
Sr. Name, Designation and DIN Date of Appointment Date of Cessation Reason no. Shri Rajendra Kumar 1 Director (Way & Works) 07/07/2015 31/12/2018 Superannuation DIN:07345986 Shri Sanjay Lavania Executive Director, F/E- 2 17/09/2015 20/06/2018 Transfer 1/Railway Board DIN 07292516 Shri Rajiv Chaudhry Principal Executive Director 3 14/07/2016 31/10/2018 Transfer (Station Development)/ Railway Board, DIN 03146422 Shri Manoj Saunik Principal Secretary (Transport 4 16/01/2017 05/08/2018 Transfer & Ports), Government of Maharashtra, DIN 02954463 Shri Biju Prabhakar Special Secretary (PWD), 5 24/06/2017 25/07/2018 Transfer Government of Kerala DIN 03093072 Shri Subrata Biswas Add.Chief Secretary (PWD) 6 09/06/2016 23/06/2017 Transfer Government of Kerala DIN 00914881 Shri D V Prasad Addl. Chief Secretay 7 03/09/2016 23/08/2017 Transfer Government of Karnataka DIN 01280303 Shri Dharmendra Sharma Chief Secretary, Government of 8 04/07/2017 18/02/2018 Transfer Goa DIN 07038838 Shri Swadheen Kshatriya 9 15/12/2015 24/05/2016 Transfer Chief Secretary Government of
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Maharashtra Shri Alok Ranjan 10 Advisor (Land and Amenities), 08/07/2013 20/06/2016 Transfer Railway Board Smt Vandita Sharma 11 Addl. Chief Secretay IDD 15/10/2013 02/09/2016 Transfer Government of Karnataka Lt. General (Dr.) Arvind 12 Mahajan (Retd.) 19/12/2013 18/12/2016 Transfer Independent Director Shri R K Shrivastava 13 Chief Secretary, Government of 18/06/2015 01/01/2017 Transfer Goa Shri Sudhir Shrivastava Addl. Chief Secretary 14 25/05/2016 15/01/2017 Transfer (Transport) Government of Maharashtra
(iii) Remuneration of Directors for last 3 years (in Rs. Cr):
Sr. no. Name of Director 2018-19 2017-18 2016-17 Remarks Functional 1. Shri Sanjay Gupta 0.95 0.49 0.39 Director Functional 2. Shri Amitabh Banerjee IRAS, DF 0.86 0.57 0.37 Director Shri Rajendra Kumar DW/W 3. 0.72 0.52 0.38 Ex- Director (Retired on 31/12/2018) Functional 4. Shri H D Gujarati, D O/C 0.50 0.10 NA Director Shri Subhash Chand Gupta Functional 5. Director W/W (Appointed as 0.11 NA NA Director Director from 15/01/2019)
Total 3.14 1.68 1.14
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Director’s Profile
Shri Sanjay Gupta, Chairman & Managing Director
Shri Sanjay Gupta is a Mechanical Engineer by profession, a Graduate of the Council of Engineering Institutions (United Kingdom) and has close to three decades of experience as a Rolling Stock Engineer on Indian Railways looking after maintenance management of locomotives, coaches and wagons at various locations across India.
As Director (Operations & Commercial) of Konkan Railway Corporation Limited since 2013 and as its Chairman & Managing Director since 2016, Shri Sanjay Gupta has the responsibility of operating a Railway Corporation through a very challenging geographical terrain on the Western Coast of India, along with maintaining safety and profitability. Besides operating a Railway, which is moving 34 million passengers and 9 million tonnes of freight annually, the Company is also into construction of Railway infrastructure.
During his tenure as Director and then as Chairman & Managing Director, the Company has seen about 127% growth in its gross revenue. The Company is utilizing its construction expertise for challenging infrastructure projects across the globe and is currently constructing 53 km Railway line in Jammu and Kashmir with many tunnels and iconic bridges.
Shri Amitabh Banerjee, Director (Finance)
Shri Amitabh Banerjee is the Director Finance, for over 6 years in Konkan Railway Corporation Limited (KRCL), a Government of India enterprise. He belongs to the IRAS Cadre of 1988 and holds Fellow Membership of Institute of Cost and Management Accountants of India. Prior to joining KRCL he worked in the capacity of Director (Finance) in Hindustan Paper Corporation Limited (HPC), a Government of India enterprise, for a period of 3 years (September 2010 to October 2013). He also worked in the capacity of General Manager (Finance) in Delhi Metro Rail Corporation Limited (DMRC) for over five years.
He has worked in the capacity of Director in the Office of Comptroller and Auditor General of India for two years (2003 to 2005). He has also held several portfolios in the Finance Department of Ministry of Railways since 1989 through 2003 handling major projects like Gauge conversion, Laying of new lines, Track doubling, construction of Railway bridges.
Shri H D Gujrati, Director (Operations & Commercial)
Shri H D Gujrati has been working as Director (Operations & Commercial) in Konkan Railway Corporation Ltd. A Postgraduate in Physics and MBA in Finance and PGDM/Marketing. He joined Indian Railway Traffic Service in 1985 batch. Before taking over the charge of the post of Director (Operation & Commercial) in KRCL, he was working as Director (Operations & Business Development) in Dedicated Freight Corridor Corporation of India Ltd. Prior to this, he has worked as Executive Director/Traffic Transportation, Executive Director/Freight Marketing and Director/Traffic, Director/Safety in Ministry of Railways (Railway Board), Group General Manager/Strategic Planning, International Marketing and Operations in Container Corporation of India Ltd. He started his career on undivided South Eastern Railway, the Blue Chip Railway of Indian Railways. He has vast experience in rail transportation including Freight Operation, Multimodal Logistics, Traffic Planning, Strategic Planning and use of Information Technology in rail transportation.
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Shri Subhash C Gupta, Director (Way & Works)
Shri Subhash C Gupta is a Post Graduate in Soil Mechanics & Foundation Engineering from IIT Delhi. Having served in various capacities with Indian Railways as an IRSE (Indian Railways Service of Engineers) Officer, he has close to three decades of experience in rail infrastructure. He has a vast exposure in planning, execution, monitoring & management of major rail infrastructure projects and in maintenance, operations and renewal of railway assets.
He has Joined Konkan Railway Corporation Ltd as Director (Way & Works) w.e.f. January 2019. Prior to this he has served on various posts in RITES, DFCCIL and Indian Railways.
F. Details regarding Auditors of the Issuer:
(i) Details of the current auditors of the Issuer: Sr.no. Name Address Auditor since Unit No 202, Tower A, Peninsula Business park, V K Surana & Co 1. Senapati Bapat Marg, Lower Parel, Mumbai 19-07-2018 Statutory Auditors 400013
(ii) Details of the change in auditors since last three years: Sr. Name Address Date of Auditor of Remarks no Appointment the . / company Resignation) since (in case of Resignatio n) 1. V.K Surana & Unit No 202, Tower 19-07-2018 NA Appointme Co. A, Peninsula nt as Statutory Auditors Business park, Statutory Senapati Bapat Marg, Auditor for Lower Parel, the F.Y. Mumbai 400013 2018-19 2. Banshi Jain and 404/405, Imperial 31-03-2018 30-07-2014 Appointme Associates Plaza, Dr.K.B. nt as Statutory Auditors Hedgewar Marg, Off Statutory Linking Road, Auditor. Bandra-West, Bandra, Mumbai – 400 050, Maharashtra.
G. Details of Borrowings of the Issuer as on 30.06.2019:
(i) Details of Secured Loan Facilities: (Rs Cr) Principal Repayment Lender’s Type of Amt Amt Date / Name Facility Sanctioned outstanding Schedule Security
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Secured by way of a pari Rupee Term Loan is for a period of passu charge / Loan for 20 years with a mortgage created / to Route moratorium of 5 years be created on movable Electrificatio fro the 1st drawdown or immovable assets of SBI n and Part 700 173.08 date (28th dec-2018). KRCL. doubling Repayment to start project. from Oct-Dec-2023 EXIM Bank 500 123.63 Qtr.
TOTAL 1200 296.71
(ii) Details of Unsecured Loan Facilities: Principal Repayment Lender’s Type of Amt Amt Date / Name Facility Sanctioned outstanding Schedule Security
The Corporation does not have any loans outstanding
(iii) Details of Non-Convertible Debentures outstanding: Amount Redemptio Debenture Coupon Date of Credit Secured / Maturity (Rs. n date/ Security series (%) allotment Rating unsecured Million) schedule 16-I# 2024 9.14% 1200.00 21.07.2014 21.07.2024 AAA(SO) Secured Secured by way of 16-II 2024 9.15% 1700.00 21.07.2014 21.07.2024 AAA(SO) Secured a pari 16-III 2024 9.18% 1100.00 11.08.2014 11.08.2024 AAA(SO) Secured passu 16-IV 2024 9.08% 5000.00 25.09.2014 25.09.2024 AAA(SO) Secured charge / mortgage 17-I 2026 8.50% 2500.00 25.01.2016 25.01.2026 AA+ Secured created / to be 17-II 2026 8.50% 2500.00 30.03.2016 30.03.2026 AAA(SO) Secured created on 17-III 2026 8.30% 500.00 29.04.2016 29.04.2026 AAA(SO) Secured movable or 18-I 2026 7.65% 3000.00 22.09.2016 22.09.2026 AAA(SO) Secured immovabl e assets of KRCL. Further, they are backed by Letter of Comfort issued by Ministry of Railways # Call option exercised on the 21st of July 2019. The NCDs have been redeemed at Par.
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(iv)List of top 10 Bondholders as on 31.03.2019: SR. AMOUNT NAME OF THE BOND HOLDER NO (Rs.) 1 LIFE INSURANCE CORPORATION OF INDIA 250,00,00,000 2 LIFE INSURANCE CORPORATION OF INDIA P & GS FUND 200,00,00,000 BOARD OF TRUSTEES HINDUSTAN STEEL LIMITED BHILAI STEEL PROJECT 95,00,00,000 3 PROVIDENT FUND MAHARASHTRA STATE ELECTRICITY BOARDS CONTRIBUTORY PROVIDENT 80,00,00,000 4 FUND 5 B E S AND T UNDERTAKING PF 75,00,00,000 6 THE NEW INDIA ASSURANCE COMPANY LIMITED 50,00,00,000 7 LIFE INSURANCE CORPORATION OF INDIA 50,00,00,000 NALCO EMPLOYEES PROVIDENT FUND TRUST 44,00,00,000 8 INDIAN PROVIDENT FUND OF BHARAT PETROLEUM CORPORATION 40,00,00,000 9 LIMITED 10 UNITED INDIA INSURANCE COMPANY LIMITED 30,00,00,000
(v) The amount of corporate guarantee issued by the Issuer along with name of the counterparty (including Subsidiaries, Joint Ventures, Group Companies, etc.) on behalf of whom it has been issued The issuer has not issued any corporate guarantee.
(vi)Details of Commercial Paper outstanding as on 31.03.2019:
Maturity Date Amount Outstanding
The company does not have any outstanding Commercial Papers
(vii) Details of Rest of the borrowings (including hybrid debt like FCCB, Optionally Convertible Bonds /Preference Shares) as on 31.03.2019:
NOT APPLICABLE
(viii) Details of all default (s ) and /or delay (s ) in payments of interest and principal of any kind of term loans , debt securities and other financial indebtedness including corporate guarantee issued by the issuer, in the past five years:
There have been no default and/or delay in payments in interest and principal of any kind of term loans, debt securities and other financial indebtedness including corporate guarantee issued by the Issuer in the past five years
(ix) Details of any outstanding borrowings taken/ debt securities issued where taken / issued (i) For consideration other than cash, whether in whole or part,
(ii) at a premium or discount, or
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(iii) In pursuance of an option:
NOT APPLICABLE
H. Details of promoters of the Issuer
(i) Details of the Promoter Holding in the Company as on 30.06.2019:
Sr. Name of the Total No of No of Total No of % of Shares No shareholders Equity Shares shares in shareholding as Shares pledged with demat % of total no of Pledged respect to form equity shares shares owned. 1 Ministry of 66,93,474,000 - 52.65 - - Railways
2 Government of 28,87,424,000 - 22.71 - - Maharashtra
3 Government of 7,87,479,000 - 6.19 - - Goa
4 Government of 16,74,698,000 - 13.17 - - Karnataka
5 Government of 6,69,880,000 - 5.27 - - Kerala
6 Railway Board 1,000 - - - Nominee
7 Railway Board 1,000 - - - Nominee
8 Railway Board 1,000 - - - Nominee
9 Special 1,000 - - - Commissioner, MH
10 Resident 1,000 - - - Commissioner, Goa
11 Resident 1,000 - - - Commissioner, Karnataka
12 Resident 1,000 - - - Commissioner, Kerala Page 40 of 93
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12,71,29,62,000
(ii) Abridged version of Audited Consolidated (wherever available) and Standalone Financial Information (Profit & Loss statement, Balance Sheet and Cash Flow statement) for last three years and auditor qualifications, if any:
A. Standalone Profit & Loss Account for last 3years:
(Rs. in crs) Particulars 2018-19 2 017-18 2 016-17
I Revenue from Operations Sales of Services i) Traffic Earnings 1256.07 1169.18 1060.77 ii) Project Revenue 1561.09 1255.12 1015.22 Other Operating Income 8.24 13.12 10.17 Total Revenue from Operations 2825.40 2437.42 2086.46 II Other Income 73.28 46.00 66.14 III Total Income(I+II) 2898.68 2483.42 2152.60
IV EXPENSES Cost of Operation i) Train Operation Expenses 625.84 563.57 509.68 ii) Project Cost 1444.70 1155.88 941.40 Employee Benefit Expenses 480.70 409.16 396.01 Finance Costs 134.52 131.00 50.02 Depreciation and Amortization Expenses 56.64 54.03 153.54 Other Expenses 54.41 47.05 42.29 Total Expenses (IV) 2796.81 2360.69 2092.94
V. Profit / (Loss) before Tax (III-IV) 101.87 122.73 59.66 VI Tax Expenses
(i) Current Tax - - (ii) Deferred Tax VII Profit / (Loss) before tax (V-VI) 101.87 122.73 59.66
VIII Other Comprehensive Income (i) Items that will not be classified to Profit or Loss (88.45) (29.53) (58.26) (ii) Income Tax relating to Items that will not be classified to Profit or Loss - - - Total Other Comprehensive Loss, Net of Tax (88.45) (29.53) (58.26) IX Total Comprehensive Income for the Year (VII+VIII) 13.42 93.20 1.40 Earnings per equity share of par value 1,000/- each Page 41 of 93
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(i) Basic 90.76 136.48 73.98 (ii) Diluted 19.58 24.65 12.21 B. Standalone Balance Sheet for last 3 Years: (Rs. in crs) As at 31st As at 31st As at 31st Particulars March, 2019 March, 2018 March, 2017 ASSETS Non-Current Assets Property Plant & Equipment 3140.19 3097.53 3043.57 Capital Work-in-Progress 738.04 262.99 102.73 Other Intangible Assets .01 - - Financial Assets (i) Investments 26.00 26.00 10.41 (ii) Loans 1.30 2.50 20.33 (iii) Other Financial Assets 4.98 4.57 26.43 Other Non-Current Assets 62.53 47.10 47.21 Total Non-Current Assets 3973.05 3440.69 3,250.68 Current Assets Inventories 52.32 48.47 47.45 Financial assets (i) Investments 854.12 1044.13 1076.05 (ii) Trade Receivables 229.18 216.97 185.50 (iii) Cash and Cash equivalents 265.62 141.50 282.90 (iv) Bank balances other than (iii) above 13.15 - - (v) Loans 19.03 17.83 - (v) Other Financial Assets 493.83 587.12 525.66 Current Tax Assets (Net) 5.70 5.16 - Other Current Assets 207.27 145.56 153.09 Total Current Assets 2141.22 2206.74 2270.65 TOTAL ASSETS 6114.27 5647.43 5521.33 EQUITY AND LIABILITIES Equity (a) Equity Share Capital 1259.54 1029.66 806.46 (b) Instruments entirely equity in nature 4079.51 4079.51 4079.51 ( c) Other Equity (3270.95) (3277.54) (3392.48) Total Equity 2068.10 1831.63 1493.19 LIABILITIES Non-Current Liabilities Financial Liabilities Borrowings 1939.08 1750.00 1750.00 Provisions 260.73 205.94 248.22 Other Non-Current Liabilities 16.24 15.24 0.70 Current Liabilities Financial Liabilities (i) Trade Payables 928.89 911.78 792.39 (ii) Other financial Liabilities 397.85 312.84 177.58 Other Current Liabilities 457.39 577.19 1017.74 Provisions 45.99 42.82 41.51
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Total Liabilities 4046.18 3815.80 4028.14 TOTAL EQUITY & LIABILITIES 6114.27 5647.43 5521.33
C. Standalone Cash Flow Statement for last 3 Years: (Rs. in crs) As at 31st As at 31st As at 31st Particulars March, 2019 March, 2018 March, 2017 CASH FLOW FROM OPERATING ACTIVITIES Profit / (Loss) before tax 101.87 122.73 59.66 Add Other Comprehensive Income Before Tax (88.45) (29.53) Total Comprehensive Income Before Tax 13.42 93.20 59.66
Adjustments for Non-Cash Items: Depreciation and Amortisation Expenses 56.64 54.03 50.02
Adjustments for classification of Cash generated from Other activities: Interest on Deposits (65.95) (42.60) (57.96) Finance Cost 134.52 131.00 153.54 Prior period Depreciation/Adjustment Excess Provision written back (net) (8.17) Loss / (Profit) on Sale of Fixed Asset (1.14) 1.40 (.01) Operating Profit before Working Capital changes 137.49 237.03 197.09
Adjustment for Working Capital Changes: Adjustment for A) Current Liabilities i) Trade Payables a) Total outstanding dues of Micro, Small and Medium enterprises; b) Total outstanding of creditors other than Micro, Small and Medium enterprises; 17.12 92.12 21.41 ii) Other Financial Liabilities 85.01 71.69 Other Current Liabilities (119.79) (351.74) 362.14 Provisions 3.17 1.31
B) Non – Current Liabilities Provisions 54.79 (42.29) Other non-current liabilities 0.99 14.54
C) Non – Current Assets Other non-current assets (15.43) (0.69)
D) Current Assets Inventories (3.84) 0.30 (5.39) Trade Receivables (12.21) (31.29) Current Tax Assets (Net) (0.54) (4.54) Other Current Assets (61.71) 7.70 NET CASH FLOW FROM OPERATION 85.06 5.84
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Taxes Paid - - (1.68) NET CASH FLOW FROM OPERATING ACTIVITIES A 85.06 5.84 573.56 CASH FLOW FROM INVESTMENT ACTIVITIES Sale / (Purchase) of Property, Plant and Equipment (99.29) (104.03) (130.56) Profit / (Loss) on Sale of Fixed Asset 1.14 (1.40) Decrease / (Increase) in Capital Work in Progress (475.05) (160.26) Purchase of Intangible Assets (0.01) - Interest on Deposits 65.95 42.60 (.87) Decrease / Increase in Non-current Investments - (15.59) Decrease / Increase in Non-current Loans 1.20 17.32 Decrease / Increase in Other Non-current financial assets (0.40) (1.05) Decrease / Increase in Current Investments 190.01 31.78 (1076.04) Decrease / Increase in Bank Balances other than cash and cash equivalent (13.15) - Decrease / Increase in Current Loans (1.20) (17.32) Decrease / Increase in Other Current Financial Assets 92.28 (38.42) 0.70
NET CASH USED IN INVESTMENT ACTIVITIES B (238.53) (246.36) (1206.77)
CASH FLOW FROM FINANCING ACTIVITIES Issue of Share Capital 229.88 223.20 Increase / (Decrease) Share Application Money Pending Allotment (6.84) 18.60 Issue of Bonds 350 Loan from Bank 189.08 - Finance Cost (134.52) (131.00) (128.04) Repayment of Borrowings (310)
NET CASH USED IN FINANCING ACTIVITIES C 277.59 110.80 (88.04)
Net Increase in Cash & Cash Equivalents D = A+B+C 124.12 (141.41) (721.25)
Cash & Cash Equivalents at beginning of year E 141.50 282.91 1004.16
Cash & Cash Equivalents at end of year F = D+E 265.62 141.50 282.91
Auditor’s Opinion Extracts: (Standalone)
For FY 2014-15
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India
i. In case of Balance Sheet, of the state of affairs of the Company as at March 31, 2015;
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Private & Confidential – Not for Circulation ii. In the case of Statement of Profit and Loss of the profit of the company for the year ended on that date iii. In the case of Cash flow statement, of the cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to: i. Point no D (ii) to the significant accounting policies wherein the Corporation has disclosed that “Stores for repairs and maintenance are charged off to revenue in the year of purchase. Used material is also valued at NIL.” However, the corporation has not produced before us, proper records of movement/consumption of such inventory of stores procured for repairs and maintenance. ii. Note No. 17.2 (c) and (d) of the standalone financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 1,58, 236 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) No provision of contingency on estimated basis has been made for Rs 1,008 lakh as communicated by Railway board. The company has either to absorb arbitration cost in ration 80:20 against the profit of that year or go for arbitration. The management has decided to go for arbitration and charged the amount of claim to project cost. If the company has to bear the claim as per the arbitration award, the same shall be charged to profit for that year. iii. Note no 24 of the standalone financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iv. Note No. 30 of the standalone financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities, Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditor’s Opinion Extracts: (Standalone)
For FY 2015-16
Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, and profit and its cash flows for the year ended on that date.
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Private & Confidential – Not for Circulation
Emphasis of Matter
We draw attention to:
i. Note No. 18.2 (c) and (d) of the standalone financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 1,93,202 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) No provision of contingency on estimated basis has been made for Rs 1,008 lakh as communicated by Railway board. The company has either to absorb arbitration cost in ration 80:20 against the profit of that year or go for arbitration. The management has decided to go for arbitration and charged the amount of claim to project cost. If the company has to bear the claim as per the arbitration award, the same shall be charged to profit for that year.
ii. Note no 25 of the standalone financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub-contractor or would be charged to Fixed Asset; and
iii. Note No. 31 of the standalone financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities, Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditor’s Opinion Extracts: (Standalone)
For FY 2016-17
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs of the Company as at March 31, 2017, and profit , other comprehensive income, the changes in equity and its cash flows for the year ended on that date.
Emphasis of Matter
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Private & Confidential – Not for Circulation
We draw attention to: i. Note No. 16.6 of the standalone Ind AS financial statements regarding conversion of Non- cumulative Redeemable Preference shares (RPS) into Compulsory Convertible Non-cumulative Preference Shares (CCPS):
The impact of above conversion is appropriately reflected in the financials. However approval of the Central Government for the above conversion is still pending.
ii.Note No. 26.1(c ) and (d) of the standalone Ind AS financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 1,90,359 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) The Company has paid arbitration claim of Rs 1,008 lakh on account of USBRL Project as at 31st March, 2017. As per the MOU it will be mutually decided by NR and KRCL whether the claim will be borne by NR or KRCL, failing mutual agreement this will be decided arbitration. In case it has to be borne by KRCL, the claim amount will be restricted to 80% of the total profit of the project of that year. The said claim has been charged to the project as in the opinion of the management; the same will have to be borne by NR. iii. Note no 35 of the standalone Ind AS financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iv. Note No. 41 of the standalone Ind AS financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities , Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditor’s Opinion Extracts: (Standalone)
For the FY 2017-18
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs of the Company as at March 31, 2018, and profit , other comprehensive income, the changes in equity and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to: Page 47 of 93
Private & Confidential – Not for Circulation i. Note No. 26.1(c ) and (d) of the standalone Ind AS financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 2,03,722 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) The Company has paid arbitration claim of Rs 1,008 lakh on account of USBRL Project as at 31st March, 2018. As per the MOU it will be mutually decided by NR and KRCL whether the claim will be borne by NR or KRCL, failing mutual agreement this will be decided arbitration. In case it has to be borne by KRCL, the claim amount will be restricted to 80% of the total profit of the project of that year. The said claim has been charged to the project as in the opinion of the management; the same will have to be borne by NR. ii. Note no 35 of the standalone Ind AS financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iii. Note No. 41 of the standalone Ind AS financial statements regarding balances in Trade receivables, Trade Payables, Government Authorities , Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditor’s Opinion Extract: (Standalone)
For the FY 2018-19
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.
Emphasis of Matter
A) We draw attention to Note No. 44 of the standalone financial statements, that the Balances of the Receivable and Payable accounts of Major Railways, Suppliers, Contractors, Taxation etc. are subject to confirmation / adjustments / reconciliations. The Company will review of such balances for carrying out necessary adjustments in the subsequent years.
We also draw attention to Note No. 41 of the standalone financial statements that the reconciliation of loan given to Konkan Railway Welfare Organisation (KRWO) with their books is under process.
B) We draw attention to Note No. 24 of the standalone financial statements related to Trade Payable which includes Rs. 703.07 Crores in respect of amount due to Railways, out of which the outstanding
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Private & Confidential – Not for Circulation up to 2017-18 is Rs.311 crores and are lying since long, as old as 2004-2005 and onwards including old unclaimed amounts.
C) We draw attention to Note No. 19.7 of the standalone financial statements, which describes that there is a difference of Rs. 214.02 Crores in authorized share capital as per records of Ministry of Corporate Affairs – MCA (Rs. 8293.53 Crores) and as per company’s records (Rs. 8079.51 Crores). The application given to MCA for correction / reduction in authorised share capital in line with approval of President of India, is not yet acted upon and the Management is pursuing for the same. Alternatively management will approach to Government of India to grant approval to enhance the share capital in line with MCA.
D) We draw attention to Note No. 10 of the standalone financial statements related to Investments wherein presently the Investment of free fund is also kept deposited with Life Insurance Corporation (LIC) in the Group Leave Encashment Scheme, including life assurance benefit. The same need to be evaluated as per Norms and Guidelines including disclosure and considering it as unfunded, Refer Note No. 34 of the standalone financial statements for disclosure of Employee benefits as per Ind AS 19.
E) We draw attention to Note No. 45 of the standalone financial statements related to Taxes on Income whereby, considering the huge accumulated losses and current trend of income, the management is of the view that the future taxable profit shall not be sufficient to recoup/recover the carried forward unabsorbed losses & unabsorbed depreciation in future. In view of this, Provision for Income Tax on taxable income earned during current financial year and deferred tax asset related to carried forward unabsorbed losses & unabsorbed depreciation have not been created by the company.
F) We draw attention to Note No. 45 of the standalone financial statements that the amount of ineligible Input Tax Credit (ITC) of Goods and Services Tax (GST) has not been finalized for the Financial Year 2017-18 due to pending reconciliation with the ITC reflected in GST portal.
G) We draw attention to the Face of Balance Sheet related to Trade payables and Note No. 24 of the standalone financial statements related to Trade Payables in respect of Disclosure requirements of Micro, Small and Medium Enterprises, wherein Disclosure requirement as per Schedule III of the Companies Act 2013, related to Micro, Small and Medium Enterprises under the head Trade Payables are not quantified by the company.
H) We draw attention to Non-compliances of the Company Law Matters related to: i) Non Compliance of Section 149 (4) of Companies Act, 2013, Regulation 17 (b) of the SEBI Listing Obligation and Disclosure Requirement and Clause 3.1.4 of the Guidelines on Corporate Governance for Central Public Sector Enterprises w.r.t. composition of the Board of Directors of the Company. ii) Non Compliance of Section 177 (2) and Section 178 (1) of Companies Act, 2013 and Rule 6 of Companies (Meetings of Board and its Powers) Rules 2014 and Clause 18 (1) and 19 (1) of SEBI Listing Obligation and Disclosure Requirement regarding composition of Audit Committee and Nomination and Remuneration Committee. iii) Non Compliance of Section 62 (1) (a) (i) of Companies Act 2013, regarding the closure of Right Issue within 30 days. The company has come out with the Rights Issue for INR 196 Crore to the shareholders in their existing shareholding proportion which was kept open from 1.12.2018 to 29.12.2018 (both days inclusive). Against this, the allotment of shares to Government of Goa is being
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Private & Confidential – Not for Circulation done on 22/04/2019 while the subscription amount is not received from Government of Karnataka & Kerala. Consequently, the Board of Director in their meeting held on 18.01.2019 have allowed for receiving the subscription from the shareholders even after the closure of Rights Issue.
Our opinion is not modified in respect of these matters.
Summary of reservations or qualifications or adverse remarks of auditors during last five financial years
No reservations or qualifications or adverse remarks of statutory auditors during last five financial years.
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Private & Confidential – Not for Circulation
D. Consolidated Profit & Loss Account for last 3 years: (Rs. in crs)
Particulars 2018-19 2 017-18 2 016-17
I Revenue from Operations Sales of Services i) Traffic Earnings 1256.07 1169.18 1060.77 ii) Project Revenue 1561.09 1255.12 1015.22 Other Operating Income 8.24 13.12 10.17 Total Revenue from Operations 2825.40 2437.42 2086.46 II Other Income 73.28 46.00 66.14 III Total Income(I+II) 2898.68 2483.42 2152.60
IV EXPENSES Cost of Operation i) Train Operation Expenses 625.84 563.57 509.68 ii) Project Cost 1444.70 1155.88 941.40 Employee Benefit Expenses 480.70 409.16 396.01 Finance Costs 134.52 131.00 50.02 Depreciation and Amortization Expenses 56.64 54.03 153.54 Other Expenses 54.41 47.05 42.29 Share of (Profit) / Loss of Joint Venture (0.13) (0.16) (0.24) Total Expenses (IV) 2796.68 2360.53 2092.70
V. Profit / (Loss) before Tax (III-IV) 102.00 122.89 59.90 VI Tax Expenses
(i) Current Tax - - (ii) Deferred Tax VII Profit / (Loss) before tax (V-VI) 102.00 122.89 59.90
VIII Other Comprehensive Income (i) Items that will not be classified to Profit or Loss (88.48) (29.54) (58.26) (ii) Income Tax relating to Items that will not be classified to Profit or Loss - - - Total Other Comprehensive Loss, Net of Tax (88.48) (29.54) (58.26) IX Total Comprehensive Income for the Year (VII+VIII) 13.52 93.35 1.64 Earnings per equity share of par value 1,000/- each (i) Basic 90.88 136.66 74.27 (ii) Diluted 19.61 24.68 12.26
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Private & Confidential – Not for Circulation
E.Consolidated Balance Sheet for last 3 years: (Rs. in crs) As at 31st March, As at 31st As at 31st Particulars 2019 March, 2018 March, 2017 ASSETS Non-Current Assets Property Plant & Equipment 3140.19 3097.53 3043.57 Capital Work-in-Progress 738.04 262.99 102.73 Other Intangible Assets .01 - - Financial Assets (i) Investments 26.43 26.30 10.55 (ii) Loans 1.30 2.50 20.33 (iii) Other Financial Assets 4.98 4.57 26.43 Other Non-Current Assets 62.53 47.10 47.21 Total Non Current Assets 3973.48 3440.99 3,250.82 Current Assets Inventories 52.32 48.47 47.45 Financial assets (ii) Investments 854.12 1044.13 1076.05 (ii) Trade Receivables 229.18 216.97 185.50 (iii) Cash and Cash equivalents 265.62 141.50 282.90 (iv) Bank balances other than (iii) above 13.15 - - (v) Loans 19.03 17.83 - (vi) Other Financial Assets 493.83 587.12 525.66 Current Tax Assets (Net) 5.70 5.16 - Other Current Assets 207.27 145.56 153.09 Total Current Assets 2141.22 2206.74 2270.65 TOTAL ASSETS 6114.70 5647.73 5521.47 EQUITY AND LIABILITIES Equity (c) Equity Share Capital 1259.54 1029.66 806.46 (d) Instruments entirely equity in nature 4079.51 4079.51 4079.51 ( c) Other Equity (3270.52) (3277.24) (3392.48) Total Equity 2068.53 1831.93 1493.33 LIABILITIES Non-Current Liabilities Financial Liabilities Borrowings 1939.08 1750.00 1750.00 Provisions 260.73 205.94 248.22 Other Non Current Liabilities 16.24 15.24 0.70 Current Liabilities Financial Liabilities (i) Trade Payables 928.89 911.78 792.39 (ii) Other financial Liabilities 397.85 312.84 177.58 Other Current Liabilities 457.39 577.18 1017.74 Provisions 45.99 42.82 41.51 Total Liabilities 4046.17 3815.80 4028.14 TOTAL EQUITY & LIABILITIES 6114.70 5647.73 5521.47
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Private & Confidential – Not for Circulation
G. Consolidated Cash Flow Statement for last 3 Yrs: (Rs. in crs) As at 31st As at 31st As at 31st Particulars March, 2019 March, 2018 March, 2017 CASH FLOW FROM OPERATING ACTIVITIES Profit / (Loss) before tax 102.00 122.89 59.90 Add Other Comprehensive Income Before Tax (88.45) (29.53) Total Comprehensive Income Before Tax 13.55 93.36 59.90
Adjustments for Non-Cash Items: Depreciation and Amortisation Expenses 56.64 54.03 50.02
Adjustments for classification of Cash generated from Other activities: Interest on Deposits (65.95) (42.60) (57.96) Finance Cost 134.52 131.00 153.54 Prior period Depreciation/Adjustment Excess Provision written back (net) (8.17) Loss / (Profit) on Sale of Fixed Asset (1.14) 1.40 (.01) Operating Profit before Working Capital changes 137.62 237.19 197.31
Adjustment for Working Capital Changes: Adjustment for A) Current Liabilities i) Trade Payables a) Total outstanding dues of Micro, Small and Medium enterprises; b) Total outstanding of creditors other than Micro, Small and Medium enterprises; 17.12 92.12 21.41 ii) Other Financial Liabilities 85.01 71.69 Other Current Liabilities (119.79) (351.74) 362.14 Provisions 3.17 1.31
B) Non – Current Liabilities Provisions 54.79 (42.29) Other non-current liabilities 0.99 14.54
C) Non – Current Assets Other non-current assets (15.43) (0.69)
D) Current Assets Inventories (3.84) 0.30 (5.39) Trade Receivables (12.21) (31.29) Current Tax Assets (Net) (0.54) (4.54) Other Current Assets (61.71) 7.70 NET CASH FLOW FROM OPERATION 85.19 (5.68) Taxes Paid - - (1.68) NET CASH FLOW FROM OPERATING ACTIVITIES A 85.19 (5.68) 573.80
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Private & Confidential – Not for Circulation
CASH FLOW FROM INVESTMENT ACTIVITIES Sale / (Purchase) of Property, Plant and Equipment (99.29) (104.03) (130.56) Profit / (Loss) on Sale of Fixed Asset 1.14 (1.40) Decrease / (Increase) in Capital Work in Progress (475.05) (160.26) Purchase of Intangible Assets (0.01) - Interest on Deposits 65.95 42.60 (.87) Decrease / Increase in Non-current Investments (0.13) (15.75) (.24) Decrease / Increase in Non-current Loans 1.20 17.32 Decrease / Increase in Other Non-current financial assets (0.40) (1.05) Decrease / Increase in Current Investments 190.01 31.78 (1076.04) Decrease / Increase in Bank Balances other than cash and cash equivalent (13.15) - Decrease / Increase in Current Loans (1.20) (17.32) Decrease / Increase in Other Current Financial Assets 92.28 (38.42) 0.70
NET CASH USED IN INVESTMENT ACTIVITIES B (238.66) (246.52) (1207.01)
CASH FLOW FROM FINANCING ACTIVITIES Issue of Share Capital 229.88 223.20 Increase / (Decrease) Share Application Money Pending Allotment (6.84) 18.60 Issue of Bonds 350 Loan from Bank 189.08 - Finance Cost (134.52) (131.00) (128.04) Repayment of Borrowings (310) NET CASH USED IN FINANCING ACTIVITIES C 277.59 110.80 (88.04)
Net Increase in Cash & Cash Equivalents D = A+B+C 124.12 (141.41) (721.25)
Cash & Cash Equivalents at beginning of year E 141.50 282.91 1004.16
Cash & Cash Equivalents at end of year F = D+E 265.62 141.50 282.91
Auditor’s Opinion Extracts: (Consolidated)
For the financial year 2014-15 Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India
i. In case of Balance Sheet, of the state of affairs of the Company as at March 31, 2015; ii. In the case of Statement of Profit and Loss of the profit of the company for the year ended on that date iii. In the case of Cash flow statement, of the cash flows for the year ended on that date.
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Private & Confidential – Not for Circulation
Emphasis of Matter
We draw attention to: i. Point no D (ii) to the significant accounting policies wherein the Corporation has disclosed that “Stores for repairs and maintenance are charged off to revenue in the year of purchase. Used material is also valued at NIL.” However, the corporation has not produced before us, proper records of movement/consumption of such inventory of stores procured for repairs and maintenance. ii. Note No. 17.2 (c) and (d) of the consolidated financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 1,58,236 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) No provision of contingency on estimated basis has been made for Rs 1,008 lakh as communicated by Railway board. The company has either to absorb arbitration cost in ration 80:20 against the profit of that year or go for arbitration. The management has decided to go for arbitration and charged the amount of claim to project cost. If the company has to bear the claim as per the arbitration award, the same shall be charged to profit for that year. iii. Note no 24 of the consolidated financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iv. Note No. 30 of the consolidated financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities, Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditor’s Opinion Extracts: (Consolidated)
For the financial year 2015-16
Opinion In our opinion and to the best of our information and according to the explanations given to us the said Consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally
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Private & Confidential – Not for Circulation accepted in India of the state of affairs of the company and its associated company, as at March 31, 2016, and its consolidated profit and its consolidated cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to: i. Note No. 18.2 (c) and (d) of the consolidated financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 1,93,202 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) No provision of contingency on estimated basis has been made for Rs 1,008 lakh as communicated by Railway board. The company has either to absorb arbitration cost in ration 80:20 against the profit of that year or go for arbitration. The management has decided to go for arbitration and charged the amount of claim to project cost. If the company has to bear the claim as per the arbitration award, the same shall be charged to profit for that year. ii. Note no 25 of the consolidated financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iii. Note No. 31 of the consolidated financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities, Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditor’s opinion extracts: (Consolidated)
For the financial year 2016-17
Opinion
In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of report of the other Auditor on separate financial statements of the associate company referred to in the “other Matter” below, the aforesaid Consolidated Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs of the Group, as at March 31, 2017, and its consolidated profit ,
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Private & Confidential – Not for Circulation consolidated other comprehensive income, the consolidated changes in equity and its consolidated cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to: i. Note No. 16.6 of the consolidated Ind AS financial statements regarding conversion of Non- cumulative Redeemable Preference shares (RPS) into Compulsory Convertible Non-cumulative Preference Shares (CCPS):
The impact of above conversion is appropriately reflected in the financials. However approval of the Central Government for the above conversion is still pending ii. Note No. 26.1(c ) and (d) of the Consolidated Ind AS financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project: a) Claims lodged against the company and lying under arbitration for a sum of Rs 1,90,359 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project. b) The Company has paid arbitration claim of Rs 1,008 lakh on account of USBRL Project as at 31st March, 2017. As per the MOU it will be mutually decided by NR and KRCL whether the claim will be borne by NR or KRCL, failing mutual agreement this will be decided arbitration. In case it has to be borne by KRCL, the claim amount will be restricted to 80% of the total profit of the project of that year. The said claim has been charged to the project as in the opinion of the management; the same will have to be borne by NR. iii. Note no 35 of the Consolidated Ind AS financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iv. Note No. 41 of the Consolidated Ind AS financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities , Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditors’ Opinion Extracts: (Consolidated)
For the financial year 2017-18 In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of report of the other Auditor on separate financial statements of the associate company referred to in the “other Matter” below, the aforesaid Consolidated Ind AS financial statements give the information required by the Act in the manner so required and give a
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Private & Confidential – Not for Circulation true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs of the Group, as at March 31, 2018, and its consolidated profit , consolidated other comprehensive income, the consolidated changes in equity and its consolidated cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to: i. Note No. 26.1(c ) and (d) of the Consolidated Ind AS financial statements regarding execution of Udhampur Srinagar Baramulla Rail link (USBRL) Project:
a) Claims lodged against the company and lying under arbitration for a sum of Rs 2,03,722 lakh are not considered as contingent liability, as in the opinion of the Company, these claims will be charged to the project.
b) The Company has paid arbitration claim of Rs 1,008 lakh on account of USBRL Project as at 31st March, 2018. As per the MOU it will be mutually decided by NR and KRCL whether the claim will be borne by NR or KRCL, failing mutual agreement this will be decided arbitration. In case it has to be borne by KRCL, the claim amount will be restricted to 80% of the total profit of the project of that year. The said claim has been charged to the project as in the opinion of the management; the same will have to be borne by NR. ii. Note no 35 of the Consolidated Ind AS financial statements regarding provision for Contingencies of Liabilities on account of maintenance / defects and arbitration/court award, where no provision is made in books of Accounts as Company is of the opinion that the same would be made good by sub- contractor or would be charged to Fixed Asset; and iii. Note No. 41 of the Consolidated Ind AS financial statements regarding balances in Trade Receivables, Trade Payables, Government Authorities , Zonal Railways and Control Accounts that are subject to confirmation, adjustment and reconciliation and the Company is in the process of review of such Balances for carrying out necessary adjustment in the subsequent years.
Our opinion is not modified in respect of matter described in Emphasis of Matter paragraph.
Auditors’ Opinion Extracts: (Consolidated)
For the Financial Year 2018-19
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS”) and other accounting principles generally accepted in India, of the consolidated state of affairs of the Holding Company as at March 31, 2019, and consolidated profit (including other comprehensive income), consolidated changes in equity and its consolidated cash flows for the year ended on that date.
Emphasis of Matter
A) We draw attention to Note No. 44 of the consolidated financial statements, that the Balances of the Receivable and Payable accounts of Major Railways, Suppliers, Contractors, Taxation etc. are subject Page 58 of 93
Private & Confidential – Not for Circulation to confirmation / adjustments / reconciliations. The Company will review of such balances for carrying out necessary adjustments in the subsequent years.
We also draw attention to Note No. 41 of the consolidated financial statements that the reconciliation of loan given to Konkan Railway Welfare Organisation (KRWO) with their books is under process.
B) We draw attention to Note No. 24 of the consolidated financial statements related to Trade Payable which includes Rs. 703.07 Crores in respect of amount due to Railways, out of which the outstanding up to 2017-18 is Rs.311 crores and are lying since long, as old as 2004-2005 and onwards including old unclaimed amounts.
C) We draw attention to Note No. 19.7 of the consolidated financial statements, which describes that there is a difference of Rs. 214.02 Crores in authorized share capital as per records of Ministry of Corporate Affairs – MCA (Rs. 8293.53 Crores) and as per company’s records (Rs. 8079.51 Crores). The application given to MCA for correction / reduction in authorised share capital in line with approval of President of India, is not yet acted upon and the Management is pursuing for the same. Alternatively management will approach to Government of India to grant approval to enhance the share capital in line with MCA.
D) We draw attention to Note No. 10 of the consolidated financial statements related to Investments wherein presently the Investment of free fund is also kept deposited with Life Insurance Corporation (LIC) in the Group Leave Encashment Scheme, including life assurance benefit. The same need to be evaluated as per Norms and Guidelines including disclosure and considering it as unfunded, Refer Note No. 34 of the consolidated financial statements for disclosure of Employee benefits as per Ind AS 19.
E) We draw attention to Note No. 45 of the consolidated financial statements related to Taxes on Income whereby, considering the huge accumulated losses and current trend of income, the management is of the view that the future taxable profit shall not be sufficient to recoup/recover the carried forward unabsorbed losses & unabsorbed depreciation in future. In view of this, Provision for Income Tax on taxable income earned during current financial year and deferred tax asset related to carried forward unabsorbed losses & unabsorbed depreciation have not been created by the company.
F) We draw attention to Note No. 45 of the consolidated financial statements that the amount of ineligible Input Tax Credit (ITC) of Goods and Services Tax (GST) has not been finalized for the Financial Year 2017-18 due to pending reconciliation with the ITC reflected in GST portal.
G) We draw attention to the Face of Balance Sheet related to Trade payables and Note No. 24 of the consolidated financial statements related to Trade Payables in respect of Disclosure requirements of Micro, Small and Medium Enterprises, wherein Disclosure requirement as per Schedule III of the Companies Act 2013, related to Micro, Small and Medium Enterprises under the head Trade Payables are not quantified by the company.
H) We draw attention to Non-compliances of the Company Law Matters related to: i)Non Compliance of Section 149 (4) of Companies Act, 2013, Regulation 17 (b) of the SEBI Listing Obligation and Disclosure Requirement and Clause 3.1.4 of the Guidelines on Corporate Governance for Central Public Sector Enterprises w.r.t. composition of the Board of Directors of the Company.
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Private & Confidential – Not for Circulation ii)Non Compliance of Section 177 (2) and Section 178 (1) of Companies Act, 2013 and Rule 6 of Companies (Meetings of Board and its Powers) Rules 2014 and Clause 18 (1) and 19 (1) of SEBI Listing Obligation and Disclosure Requirement regarding composition of Audit Committee and Nomination and Remuneration Committee. iii)Non Compliance of Section 62 (1) (a) (i) of Companies Act 2013, regarding the closure of Right Issue within 30 days. The company has come out with the Rights Issue for INR 196 Crore to the shareholders in their existing shareholding proportion which was kept open from 1.12.2018 to 29.12.2018 (both days inclusive). Against this, the allotment of shares to Government of Goa is being done on 22/04/2019 while the subscription amount is not received from Government of Karnataka & Kerala. Consequently, the Board of Director in their meeting held on 18.01.2019 have allowed for receiving the subscription from the shareholders even after the closure of Rights Issue.
Our opinion is not modified in respect of these matters.
Summary of reservations or qualifications or adverse remarks of auditors during last five financial years
There are no reservations or qualifications or adverse remarks of statutory auditors during last five financial years.
Related Party Transactions:
Related Party Disclosures:- for the financial year 2016-17
1. The corporation is controlled by the Government of India (Ministry of Railways). The corporation along with other Zonal Railways is under the control of the Ministry of Railways. The various Zonal Railways are: Central Railways, Northern Railways, East Central Railways, East Coast Railways, Eastern Railways, North Central Railways, North Eastern Railways, North Western Railways, Northeast Frontier Railways, South Central Railways, South East Central Railways, South Eastern Railways, South Western Railways, Southern Railways, West Central Railways and Western Railways.
A substantial portion of Traffic Earnings of the Corporation accrues from various Zonal Railways. The corporation also makes payment of significant amounts of Traffic Earnings to said Zonal Railways as per the agreement with the Ministry of Railways. Such “apportioned earnings” form a major part of traffic revenue of the corporation.
The revenue expenditure incurred under the head ‘Train Operations Expenses ‘ includes large amount of expenditure towards Hire charges of Coaches, Locos and Wagons and fuel charges from the various Zonal Railways.
A large portion of Project Revenue is contributed by the various Zonal Railways and from other PSU companies owned by Central Government. The name of the projects and such awarding entities from which Project Revenue or advances have been received are mentioned below: a) USBRL Project – Northern Railway b) Rolling stock component factory at Lote Parshuram project – Central Railway. c) NTPC Kudgi project– NTPC owned by Central Government Page 60 of 93
Private & Confidential – Not for Circulation d) NTPC –Gadarwara project - NTPC owned by Central Government e) Mangalore Refinery & Petrochemical Limited project– subsidiary of ONGC Ltd. owned by Central Government. f) Mangalore SEZ Ltd project - Owned by Government entities IL&FS,ONGC Ltd, KIADB and KCCI
KRCL has issued bonds for long term borrowings wherein letter of comfort has been issued by Ministry of Railways in favor of lending agencies.
2. Investment in associate company Jaigarh Digni Rail Limited- 26 % holding
Purchase of 1,04,13,000 no of Equity Shares of face value of Rs 10/- each at total cost of Rs 10.41 crore.
3. The Key Managerial Personnel of the Corporation and their remuneration (including Superannuation benefits) are as below: a) Shri Sanjay Gupta, Director (Operations & Commercial) (Period 01/04/16 to 31/03/2017) and Chairman and Managing Director (Period 24/11/2015 to 31/03/2017)
Salary & Allowances: Rs 0.40 crore (Previous year Rs 0.28 crore) including Employer Contribution to PF: Rs 0.02 (Previous year Rs 0.02 crore)
Perks: Nil b) Shri Amitabh Banerjee, Director (Finance) (Period 01/04/16 to 31/03/17)
Salary & Allowances: Rs 0.39 (Previous year Rs 0.30 crore) including Employer Contribution to PF: Rs 0.02 crore (Previous year Rs 0.02 crore)
Perks: Nil c) Shri Rajendra Kumar, Director (Way & Works) (Period 01/04/2016 to 31/03/17)
Salary & Allowances: Rs 0.39 crore (Previous year Rs 0.23 crore) including Employer Contribution to PF: Rs 0.02 crore (Previous year Rs 0.02 crore)
Perks: Nil d) Shri Rajendra Parab (Company Secretary) (Period 08/07/16 to 31/03/2017)
Salary & Allowances: Rs 0.13 crore (Previous year Rs Nil) includingEmployer Contribution to PF: Rs 0.01 crore (Previous year Rs Nil)
Perks: Nil e) Shri B Satyanaryana (Company Secretary) (Period 01/04/2016 to 31/03/2017) Salary and Allowances: Rs 0.13 crore (Previous year Rs 0.20 crore) including Employer Contribution to Pension: Rs 0.01 crore (Previous year Rs 0.01 crore)
Perks: Nil f) Shri B.P Tayal, Ex- Chairman and Managing Director (Period 01/04/2015 to 24/11/2015) Salary and Allowances: Nil (Previous year Rs 0.19 crore) including Employer Contribution to Pension: Nil (Previous year Rs 0.01 crore) Page 61 of 93
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Perks: Nil
Related Party Disclosures:- for the financial year 2017-18
1. The corporation is controlled by the Government of India (Ministry of Railways). The corporation along with other Zonal Railways is under the control of the Ministry of Railways. The various Zonal Railways are: Central Railways, Northern Railways, East Central Railways, East Coast Railways, Eastern Railways, North Central Railways, North Eastern Railways, North Western Railways, Northeast Frontier Railways, South Central Railways, South East Central Railways, South Eastern Railways, South Western Railways, Southern Railways, West Central Railways and Western Railways.
A substantial portion of Traffic Earnings of the Corporation accrues from various Zonal Railways. The corporation also makes payment of significant amounts of Traffic Earnings to said Zonal Railways as per the agreement with the Ministry of Railways. Such “apportioned earnings” form a major part of traffic revenue of the corporation.
The revenue expenditure incurred under the head ‘Train Operations Expenses ‘ includes large amount of expenditure towards Hire charges of Coaches, Locos and Wagons and fuel charges from the various Zonal Railways.
A large portion of Project Revenue is contributed by the various Zonal Railways and from other PSU companies owned by Central Government. The name of the projects and such awarding entities from which Project Revenue or advances have been received are mentioned below: a) USBRL Project – Northern Railway b) Rolling stock component factory at Lote Parshuram project – Central Railway. c) NTPC Kudgi project– NTPC owned by Central Government d) NTPC –Gadarwara project - NTPC owned by Central Government e) Mangalore Refinery & Petrochemical Limited project– subsidiary of ONGC Ltd. owned by Central Government. f) Mangalore SEZ Ltd project - Owned by Government entities IL&FS,ONGC Ltd, KIADB and KCCI
KRCL has issued bonds for long term borrowings wherein letter of comfort has been issued by Ministry of Railways in favor of lending agencies.
2. Investment in associate company Jaigarh Digni Rail Limited- 26 % holding
Purchase of 2,60,00,000 no of Equity Shares of face value of Rs 10/- each at total cost of Rs 26 crore (Previous year 1,04,13,000 no of Equity Shares of face value of Rs 10/- each at total cost of Rs 10.41 crore).
3. The Key Managerial Personnel of the Corporation and their remuneration (including Superannuation benefits) are as below: a) Shri Sanjay Gupta, Director (Operations & Commercial) (Period 01/04/17 to 17/01/2018) and Chairman and Managing Director (Period 24/11/2015 to 31/03/2018)
Salary & Allowances: Rs 0.49 crore (Previous year Rs 0.40 crore) including Employer Contribution to PF: Rs 0.03 (Previous year Rs 0.02 crore)
Perks: Nil Page 62 of 93
Private & Confidential – Not for Circulation b) Shri Amitabh Banerjee, Director (Finance) (Period 01/04/17 to 31/03/18)
Salary & Allowances: Rs 0.57 (Previous year Rs 0.39 crore) including Employer Contribution to PF: Rs 0.03 crore (Previous year Rs 0.02 crore)
Perks: Nil c) Shri Rajendra Kumar, Director (Way & Works) (Period 01/04/2017 to 31/03/18)
Salary & Allowances: Rs 0.52 crore (Previous year Rs 0.39 crore) including Employer Contribution to PF: Rs 0.02 crore (Previous year Rs 0.02 crore)
Perks: Nil d) Shri Hari Das Gujrati, Director (Operations & Commercial) (Period 18/01/18 to 31/03/2018)
Salary & Allowances: Rs 0.10 crore (Previous year Rs Nil) including Employer Contribution to PF: Rs 0.005 crore (Previous year Rs Nil)
Perks: Nil e) Shri Rajendra Parab (Company Secretary) (Period 01/04/17 to 31/03/2018) Salary & Allowances: Rs 0.19 crore (Previous year Rs 0.13) including Employer Contribution to PF: Rs 0.01 crore (Previous year Rs 0.01 crore)
Perks: Nil
For the financial year 2018-19:
The Corporation being a Government related entity is exempt from the general disclosure requirements in relation to related party transactions and outstanding balances with the controlling Government and another entity under same Government.
1. Government of India (acting through Ministry of Railways -MOR) is holding 54% of equity shares and State Govt. of Maharashtra, Goa, Karnataka and Kerala holding 23%, 5%, 13% and 5% respectively in the Corporation. Accordingly, Corporation is controlled by the Government of India (Ministry of Railways). The Corporation along with other Zonal Railways is under the control of the Ministry of Railways. The various Zonal Railways are: Central Railways, Northern Railways, East Central Railways, East Coast Railways, Eastern Railways, North Central Railways, North Eastern Railways, North Western Railways, Northeast Frontier Railways, South Central Railways, South East Central Railways, South Eastern Railways, South Western Railways, Southern Railways, West Central Railways and Western Railways.
A substantial portion of Traffic Earnings of the Corporation accrues from various Zonal Railways. The corporation also makes payment of significant amounts of Traffic Earnings to said Zonal Railways as per the agreement with the Ministry of Railways. Such “apportioned earnings” form a major part of traffic revenue of the Corporation.
The revenue expenditure incurred under the head ‘Train Operations Expenses‘ include large amount of expenditure towards Hire charges of Coaches, Locos and Wagons and fuel charges from the various Zonal Railways.
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The reconciliation of loan given to KRWO in the books of KRCL and with that of in the books of KRWO is under process.
A large portion of Project Revenue is contributed by the various Zonal Railways and from other PSU companies owned by Central Government. The name of the projects and such awarding entities from which Project Revenue or advances have been received are mentioned below: a) USBRL Project – Northern Railway b) Rolling stock component factory at Lote Parshuram project – Central Railway. c) NTPC Kudgi project– NTPC owned by Central Government d) NTPC –Gadarwara project - NTPC owned by Central Government e) Mangalore Refinery & Petrochemical Limited project– subsidiary of ONGC Ltd. owned by Central Government. f) Mangalore SEZ Ltd project - Owned by Government entities IL&FS,ONGC Ltd, KIADB and KCCI g) RVNL deposit work at Madgaon – RVNL owned by Central Railway h) Research Deisgns& Standards Organization – Ministry of Railways i) Raxaul Kathmandu Railway Line Project – East Central Railway j) Vizhinjam Seaport Rail Connectivity Project – Govt. of Kerala k) Thelisery – Mysore Project – Govt. of Kerala l) Ramakrishna Hegde Skill Development Centre(RHSDC) - a society registered under Karnataka Societies Registration Act 1969 KRCL has issued bonds for long term borrowings wherein letter of comfort has been issued by Ministry of Railways in favor of lending agencies.
2. Investment in associate company Jaigarh Digni Rail Limited- 26%holding
Purchase of 2,60,00,000 no.(2,60,00,000 no.) of Equity Shares of face value of Rs 10/- each at total cost of Rs 26 Crores (Rs 26 Crores).
3. Loan is given to Konkan Railway Welfare Organization (KRWO) formed for the welfare for the employees of Corporation. As on 31st March 2019, total amount receivable from KRWO is Rs 24.04 Crores ( Rs 22.62 Crores).
4. Ramakrishna Hegde Skill Development Centre(RHSDC) is a society registered under Karnataka Societies Registration Act 1969 at Udupi , Karnataka with an object to setting up of training centre for imparting training in Mechatronics to engineering students and industry professionals.
The corporation has given a corpus of Rs 1 Lakh in the current year. Further Corporation had spent Rs 208.65 Lakhs from CSR budget for the said society.
5. The Key Managerial Personnel of the Corporation and their remuneration (including Superannuation benefits) are as below: a) Shri Sanjay Gupta, Chairman and Managing Director (Period 01/04/2018 to 31/03/2019)
Salary & Allowances: Rs 0.95 Crores ( Rs 0.49 Crores) including Employer Contribution to PF: Rs 0.24 Crores ( Rs 0.03 Crores); Perks: Nil b) Shri Amitabh Banerjee, Director (Finance) (Period 01/04/18 to 31/03/19)
Salary & Allowances:Rs 0.86 Crores(Rs 0.57Crores) including Employer Contribution to PF: Rs 0.24Crores(Rs 0.03Crores); Perks: Nil Page 64 of 93
Private & Confidential – Not for Circulation c) Shri Rajendra Kumar, Director (Way & Works) (Period 01/04/2018 to 31/12/18) Salary & Allowances:Rs 0.72 Crores (Rs 0.52 Crores) including Employer Contribution to PF: Rs 0.16 Crores ( Rs 0.02 Crores); Perks: Nil d) Shri Hari Das Gujrati, Director (Operations & Commercial) (Period 01/04/18 to 31/03/2019) Salary & Allowances:Rs 0.50 Crores (Rs 0.10 Crores) includingEmployer Contribution to PF: Rs 0.08 Crores ( Rs 0.005); Perks: Nil e) Shri Subhas Chandra Gupta (Way & Works) (Period 01/01/2019 to 31/03/19) Salary & Allowances:Rs 0.11 Crores (Rs Nil Crores) including Employer Contribution to PF: Rs 0.015 Crores ( Rs Nil Crores); Perks: Nil f) Shri RajendraParab (Company Secretary) (Period 01/04/18 to 31/03/2019) Salary & Allowances:Rs 0.21 Crores (Rs 0.19) including Employer Contribution to PF: Rs 0.012 Crores ( Rs 0.01 Crores); Perks: Nil
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I. Abridged version of Latest audited / Limited Review Half Yearly Consolidated (wherever applicable) and Standalone Financial Information (like Profit & Loss statement, and Balance Sheet) and auditor’s qualifications, if any: NOT APPLICABLE
J. Any material event/ development or change having implications on the financials/credit quality (e.g. any material regulatory proceedings against the Issuer/Promoters, Tax litigations resulting in material liabilities, corporate restructuring event etc.) at the time of issue which may affect the issue or the investor’s decision to invest / continue to invest in the debt securities.
There is no material event / development or change having implications on the financials / credit quality (eg. any material regulatory proceedings against the Issuer / Promoters, Tax litigations resulting in material liabilities, corporate restructuring event etc.) at the time of issue which may affect the issue or the investors’ decision to invest/continue to invest in the debt securities.
K. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION ETC.
1. There has been no financial or other material interest of the directors, promoters or key managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons.
2. There have been no litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of the offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action shall be disclosed
3. There have been no related party transactions entered during the last three financial years immediately preceding the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided
4. There has been no inquiry, inspections or investigations initiated or conducted under the Companies Act or any previous company law in the last three years immediately preceding the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of the offer letter and if so, section-wise details thereof for the company and all of its subsidiaries
5. There have been no acts of material frauds committed against the company in the last three years, if any, and if so, the action taken by the company.
(l) Names of the Trustee and Consent thereof:
In accordance with the provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended from time to time:
The Issuer has appointed IDBI Trusteeship Services Ltd to act as Trustees to the Bondholder(s).
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The address and contact details of the Trustees are as under:
IDBI Trusteeship Services Ltd
Asian Building, Ground Floor 17. R. Kamani Marg Ballard Estate Mumbai Maharashtra – 400 001 India Phone: +91 022 40807000 Fax: +91 022 66311776 Email: [email protected]
Copy of letter from IDBI Trusteeship Services Ltd conveying their consent to act as Trustees for the current issue of Bonds is enclosed under Annexure II in this Disclosure Document.
The Issuer hereby undertakes that a Debenture Trusteeship Deed shall be executed by it in favor of the Trustees within two months permissible under applicable laws. Further, the Debenture Trusteeship Agreement shall not contain a clause which has the effect of i. limiting or extinguishing the obligations and liabilities of the Trustees or the Issuer in relation to any rights or interests of the holder(s) of the Bonds; ii. limiting or restricting or waiving the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992); Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended from time to time and circulars, regulations or guidelines issued by SEBI, as amended from time to time; iii. Indemnifying the Trustees or the Issuer for loss or damage caused by their act of negligence or commission or omission.
The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the holder(s) of the Bonds. Any payment made by the Issuer to the Trustees on behalf of the Bondholder(s) shall discharge the Issuer pro -tanto to the Bondholder(s). No Bondholder shall be entitled to proceed directly against the Issuer unless the Trustees, having become so bound to proceed, fail to do so.
The Trustees shall perform its duties and obligations and exercise its rights and discretions, in keeping with the trust reposed in the Trustees by the holder(s) of the Bonds and shall further conduct itself, and comply with the provisions of all applicable laws, provided that, the provisions of Section 20 of the Indian Trusts Act, 1882, shall not be applicable to the Trustees. The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, Disclosure Document and all other related transaction documents, with due care, diligence and loyalty.
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(m) Rating and Detailed Rating Rationale
ICRA vide letter dated letter dated 23rd September, 2019 has assigned “Provisional [ICRA]AAA(S)/ (Stable)” with outlook on the long term is stable) and India Ratings & Research vide letter dated letter dated 20th September, 2019 has assigned “Provisional IND AAA(CE)/Stable” with outlook on the long term is stable) rating to the Bonds being issued under the current bond issue.
Instrument with this rating indicate highest degree of safety regarding timely service of financial obligations. Such instruments carry lowest credit risk. Copy of the letter from ICRA Limited and India Ratings & Research Private Limited are enclosed with this Offer Letter including respective Rating Rationales as Annexure I.
Other than the credit ratings mentioned herein above, the Issuer has not accepted any other credit rating from any other credit rating agency (ies) for the Bonds offered for subscription under the terms of this Disclosure Document. However the Issuer reserves the right to get the issue rated by any other credit rating agency at a later date, should it feel the necessity.
The above ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc.
(n) Security
If the security is backed by a guarantee or letter of comfort or any other document / letter with similar intent, a copy of the same shall be disclosed. In case such document does not contain detailed payment structure (procedure of invocation of guarantee and receipt of payment by the investor along with timelines).
The Bonds shall be secured by way of first pari-passu charge on the specific immovable property and/or movable property, except book debts of the Company. In addition to that, bonds are issued under Letter of Comfort issued by Ministry of Railways, Government of India (GOI). (Copy of letter of comfort is enclosed under Annexure V)
(o) Copy of consent letter from the Debenture Trustee shall be disclosed
Copy of consent letter from IDBI Trusteeship Services is enclosed under Annexure II
(p) Stock Exchange where Bonds are proposed to be listed The Bonds are proposed to be listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India (NSE)
(q) Other Details:
(i) DRR Creation – In accordance with the provisions of clause (7) of rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 and the Companies Act, 2013, as amended from time to time, Company shall create a Debenture Redemption Reserve during the tenor of the Debentures.
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(ii) Issue/instrument specific regulations • Companies Act 2013, as amended from time to time; • Companies (Share Capital and Debenture) Rules, 2014, as amended from time to time; • Companies (Prospectus & Allotment of Securities) Rules, 2014, as amended from time to time; • Securities and Exchange Board Of India (Issue And Listing Of Debt Securities) Regulations, 2008, as amended from time to time.
(iii) Application Process
i. Who Can Apply
All QIBs, and any non-QIB Investors specifically mapped by the Issuer on the BSE BOND – EBP Platform, are eligible to bid / invest / apply for this Issue.
All applicants are required to comply with the relevant regulations/ guidelines applicable to them for investing in the issue of Bonds as per the norms approved by Government of India, RBI or any other statutory and regulatory body from time to time.
This Disclosure Document is intended solely for the use of the person to whom it has been sent by the Issuer for the purpose of evaluating a possible investment opportunity by the recipient(s) in respect of the securities offered herein, and it is not to be reproduced or distributed to any other persons (other than professional advisors of the prospective investor receiving this Disclosure Document from the Issuer). ii. Documents to be provided by Investors
Investors need to submit the certified true copies of the following documents, along-with the Application Form, as applicable:
• Memorandum and Articles of Association/constitution/ bye-laws/ trust deed; • Board resolution authorizing the investment and containing operating instructions; • Power of attorney/ relevant resolution/authority to make application; • Specimen signatures of the authorized signatories (ink signed), duly certified by an appropriate authority; • Government notification (in case of primary co-operative Issuer and regional rural Issuers); • SEBI registration certificate (for Mutual Funds); • Copy of Permanent Account Number Card (“PAN Card”) issued by the Income Tax department; • Necessary forms for claiming exemption from deduction of tax at source on interest on application money, wherever applicable; • Application Form (including RTGS/NEFT details). iii. Applications to be accompanied with Issuer Account Details
Every application shall be required to be accompanied by the Issuer account details of the Applicant for the purpose of facilitating direct credit of all amounts through RTGS.
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iv. How to Apply
All eligible Investors should refer the operating guidelines for issuance of debt securities on private placement basis through an electronic book mechanism as available on the website of BSE. Investors will also have to complete the mandatory know your customer (KYC) verification process. Investors should refer to the BSE EBP Guidelines in this respect. The Application Form will be filled in by each Investor and uploaded in accordance with the SEBI regulatory and operational guidelines. Applications for the Bonds must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in English as per the instructions contained therein.
(a) The details of the Issue shall be entered on the BSE – EBP Platform by the Issuer at least 2 (two) Business Days prior to the Issue opening date, in accordance with the Operational Guidelines.
(b) The Issue will be open for bidding for the duration of the bidding window that would be communicated through the Issuer’s bidding announcement on the BSE– EBP Platform, at least 1 (one) Business Day before the start of the Issue opening date.
Some of the key guidelines in terms of the current Operational Guidelines on issuance of securities on private placement basis through an EBP mechanism are as follows:
(a) Modification of Bid
Investors may note that modification of bid is allowed during the bidding period / window. However, in the last 10 (ten) minutes of the bidding period / window, revision of bid is only allowed for improvement of coupon / yield and upward revision of the bid amount placed by the Investor.
(b) Cancellation of Bid
Investors may note that cancellation of bid is allowed during the bidding period / window. However, in the last 10(ten) minutes of the bidding period / window, no cancellation of bids is permitted.
(c) Multiple Bids
Investors are permitted to place multiple bids on the EBP platform in line with EBP Guidelines vide SEBI circular SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018.
However, Investors should refer to the Operational Guidelines prevailing as on the date of the bid.
Payment Mechanism
Applicants shall make remittance of application money by way of electronic transfer of funds through RTGS/electronic fund mechanism for credit by the pay-in time in the Issuer account of the BSE Clearing Corporation appearing on the BSEEBP platform in accordance with the timelines set out in the EBP Guidelines and the relevant rules and regulations specified by SEBI in this regard. All payments must be made through RTGS as per the Issuer details mentioned in the application form /BSE-EBP platform.
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Payment of subscription money for the Debentures should be made by the successful Eligible Investor as notified by the Issuer.
Successful Eligible Investors should do the funds pay-in to the account of ICCL (“Designated Bank Account”). The Designated Bank Account information shall be displayed in the front end of BSE EBP Platform and the same shall also be available in the obligation file downloaded to Eligible Investors.
The Designated Bank Accounts of ICCL are as under: ICICI Bank : Beneficiary Name: INDIAN CLEARING CORPORATION LTD Account Number: ICCLEB IFSC Code : ICIC0000106 Mode: NEFT/RTGS YES Bank : Beneficiary Name: INDIAN CLEARING CORPORATION LTD Account Number: ICCLEB IFSC Code : YESB0CMSNOC Mode: NEFT/RTGS
HDFC Bank: Beneficiary Name: INDIAN CLEARING CORPORATION LTD Account Number: ICCLEB IFSC Code : HDFC0000060 Mode: NEFT/RTGS
Successful Eligible Investors must do the subscription amount payment to the Designated Bank Account on or before 10:30 a.m. on the Pay-in Date (“Pay-in Time”). Successful Eligible Investors should ensure to make payment of the subscription amount for the Debentures from their same bank account which is updated by them in the BSE EBP Platform while placing the bids. In case of mismatch in the bank account details between BSE EBP Platform and the bank account from which payment is done by the successful bidder, the payment would be returned.
Note: In case of failure of any successful bidders to complete the subscription amount payments by the Pay-in Time or the funds are not received in the ICCL’s Designated Bank Account by the Pay-in Time for any reason whatsoever, the bid will liable to be rejected and the Issuer shall not be liable to issue the Debentures to such successful bidders.
The Issuer assumes no responsibility for any Applications lost in mail. The entire amount of Rs.10 lacs per Bond is payable on application.
How to fill the Application Form
• Applications should be for the number of Bonds applied by the Applicant. Applications not completed in the said manner are liable to be rejected. • The name of the applicant’s Issuer, type of account and account number must be filled in the Application Form. • The Applicant or in the case of an application in joint names, each of the Applicant, should Page 71 of 93
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mention his/her PAN allotted under the Income -Tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the provision of Section 139A (5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the certificates. Hence, the investor should mention their PAN/GIR No. Application Forms without this information will be considered incomplete and are liable to be rejected. • All applicants are requested to tick the relevant column “Category of Investor” in the Application Form. Public/ private/ religious/ charitable trusts, provident funds and other superannuation trusts and other investors requiring “approved security” status for making investments.
v. Terms of Payment
The full face value of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to send in the Application Form and payment through RTGS for the full value of Bonds applied for.
vi. Force Majeure
The Issuer reserves the right to withdraw the issue prior to the Issue Closing Date in the event of any unforeseen development adversely affecting the economic and regulatory environment or otherwise. vii. Applications under Power of Attorney
A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Issuer or to the Registrars or to such other person(s) at such other address(es) as may be specified by the Issuer from time to time through a suitable communication.
In case of an Application made by companies under a power of attorney or resolution or authority, a certified true copy thereof along with memorandum and articles of association and/or bye-laws along with other constitutional documents must be attached to the Application Form at the time of making the application, failing which, the Issuer reserves the full, unqualified and absolute right to accept or reject any application in whole or in part and in either case without assigning any reason thereto. Names and specimen signatures of all the authorized signatories must also be lodged along with the submission of the completed Application Form. viii. Application by Mutual Funds
In case of applications by mutual funds and venture capital funds, a separate application must be made in respect of each scheme of an Indian mutual fund/venture capital fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the asset management company/ trustees/ custodian clearly indicate their intention as to the scheme for which the application has been made.
The application forms duly filled shall clearly indicate the name of the concerned scheme for which application is being made and must be accompanied by certified true copies of: Page 72 of 93
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a. SEBI registration certificate b. Resolution authorizing investment and containing operating instructions c. Specimen signature of authorized signatories
ix. Application by Provident Funds, Superannuation Funds and Gratuity Funds
The applications must be accompanied by certified true copies of a. Trust deed / bye laws /resolutions b. Resolution authorizing investment c. Specimen signatures of the authorized signatories
Those desirous of claiming tax exemptions on interest on application money are required to submit a certificate issued by the Income Tax officer along with the Application Form. For subsequent interest payments, such certificates have to be submitted periodically.
x. Acknowledgements
No separate receipts will be issued for the application money. However, the Issuer receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the acknowledgement slip at the bottom of each Application Form.
xi. Basis of Allocation
Allotment against valid applications for the Bonds will be made to applicants in accordance with applicable SEBI regulations, operational guidelines of the exchanges and all applicable laws. At its sole discretion, the Issuer shall decide the amount of over subscription to be retained over and above the Base Issue size.
The allotment of valid applications received on the EBP shall be done on yield-time priority basis in the following manner:
(a) allotment would be done first on “yield priority” basis; (b) where two or more bids are at the same yield, then the allotment shall be done on “time- priority” basis; (c) where two or more bids have the same yield and time, then allotment shall be done on “pro rata” basis.
If the proportionate allotment of Bonds to such applicants is not a minimum of one Bond or in multiples of one Bond (which is the market lot), the decimal would be rounded off to the next higher whole number if that decimal is 0.5 or higher and to the next lower whole number if the decimal is lower than 0.5. All successful applicants on the Issue closing date would be allotted the number of Bonds arrived at after such rounding off. It is clarified that the rounding off as specified here will not amount to the Issuer exceeding the total Issue size. xii. Right to Accept or Reject Applications
The Issuer reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The application forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Page 73 of 93
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Application would be liable to be rejected on one or more technical grounds, including but not restricted to:
(a) Number of Bonds applied for is less than the minimum application size; (b) Application money received not being from the Issuer account of the person/entity subscribing to the Bonds or from the Issuer account of the person/ entity whose name appears first in the Application Form, in case of joint holders; (c) Issuer account details of the Applicants not given; (d) Details for issue of Bonds in dematerialized form not given; (e) PAN/GIR and IT circle/Ward/District not given; (f) In case of applications under power of attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted;
In the event, if any Bonds applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.
xiii. PAN /GIR Number
All applicants should mention their Permanent Account Number or the GIR Number allotted under Income Tax Act, 1961 and the Income Tax Circle/ Ward/ District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided.
xiv. Signatures
Signatures should be made in English or in any of the Indian languages. Thumb impressions must be attested by an authorized official of Issuer or by a Magistrate/ Notary Public under his/her official seal.
xv. Nomination Facility
Only individuals applying as sole applicant/joint applicant can nominate, in the prescribed manner, a person to whom his Bonds shall vest in the event of his death. Non-individuals including holders of power of attorney cannot nominate.
xvi. Fictitious Applications
In terms of the Section 38 of the Companies Act, 2013, any person who makes, in fictitious name, any application to a body corporate for acquiring, or subscribing to, the bonds, or otherwise induced a body corporate to allot, register any transfer of bonds therein to them or any other person in a fictitious name, shall be punishable under the extant laws. xvii. Depository Arrangements
The Issuer has appointed Sharex Dynamic (India) Pvt. Ltd as the Registrar for the present Bond Issue. The Issuer has entered into necessary depository arrangements with NSDL and CDSL for dematerialization of the Bonds offered under the present Issue, in accordance with the Depositories Act, 1996 and regulations made there under. In this context, the Issuer has signed two tripartite agreements as under:
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• Tripartite Agreement between the Issuer, NSDL and the Registrar for dematerialization of the Bonds offered under the present Issue. • Tripartite Agreement between the Issuer, CDSL and the Registrar for dematerialization of the Bonds offered under the present Issue.
Bondholders can hold the bonds only in dematerialized form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time. xviii. Procedure for applying for Demat Facility
A. Applicant(s) must have a beneficiary account with any DP of NSDL or CDSL prior to making the application. B. Applicant(s) must specify their beneficiary account number and DP ID in the relevant columns of the Application Form. C. For subscribing to the Bonds, names in the application form should be identical to those appearing in the account details of the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depository. D. If incomplete/ incorrect beneficiary account details are given in the Application Form which does not match with the details in the depository system, it will be deemed to be an incomplete application and the same be held liable for rejection at the sole discretion of the Issuer. E. The Bonds shall be directly credited to the beneficiary account as given in the Application Form and after due verification, the confirmation of the credit of the Bonds to the applicant’s depository account will be provided to the Applicant by the DP of the Applicant. F. Interest or other benefits with respect to the Bonds would be paid to those bondholders whose names appear on the list of beneficial owners given by the depositories to the Issuer as on the Record Date. G. For the allotment of debentures and all future communications including notices, the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the Application Form vis-a-vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for the losses, if any.
1. Others
i. Right of Bondholder(s) Bondholder is not a shareholder. The Bondholders will not be entitled to any rights and privilege of shareholders other than those available to them under statutory requirements. The Bond(s) shall not confer upon the holders the right to receive notice, or to attend and vote at the general meetings of the Issuer. The principal amount and interest on the Bonds will be paid to the registered Bondholders only, and in case of Joint holders, to the one whose name stands first. Besides the above, the Bonds shall be subject to the provisions of the terms of this Issue and the other terms and conditions as may be incorporated in the Debenture Trusteeship Agreement and other documents that may be executed in respect of these Bonds.
ii. Modification of Rights The rights, privileges, terms and conditions attached to the Bonds may be varied, modified or abrogated with the consent, in writing, of those holders of the Bonds who hold at least three
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fourth of the outstanding amount of the Bonds or with the sanction accorded pursuant to a resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall be operative against the Issuer where such consent or resolution modifies or varies the terms and conditions of the Bonds, if the same are not acceptable to the Issuer. Further, the Issuer shall be entitled (without obtaining a prior approval from the Bondholders) to make any modifications in this Disclosure Document which in its opinion is of a formal, minor or technical nature or is to correct a manifest error.
iii. Future Borrowings The Issuer shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds or other securities in any manner with ranking as pari -passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions asthe Issuer may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection.
iv. Notices
All notices required to be given by the Issuer or by the Trustee to the Bondholders shall be deemed to have been given if sent by ordinary post/ courier /e-mail and/or any other mode of communication as may be permitted under applicable law as per the discretion of the Issuer to the original sole/ first allottees of the Bonds and/ or if an advertisement is given in a leading newspaper. All notices to be given by the Bondholder(s) shall be sent by registered post or by hand delivery to the Issuer at Registered Office or to such address as may be notified by the Issuer from time to time and shall be deemed to have been received on actual receipts.
v. Minimum subscription As the current issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable and therefore the Issuer shall not be liable to refund the issue subscription(s) / proceed (s) in the event of the total issue collection falling short of the issue size or certain percentage of the issue size.
vi. Underwriting The present issue of Bonds is not underwritten.
vii. Deemed Date of Allotment All benefits under the Bonds including payment of interest will accrue to the Bondholders from and including the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. In case if the issue closing date/ pay in dates is/are changed (pre-poned/ postponed), the Deemed Date of Allotment may also be changed (pre -pond/ postponed) by the Issuer at its sole and absolute discretion.
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Private & Confidential – Not for Circulation viii. Credit of the Bonds
The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ DP will be given initial credit within 2 working days from the Deemed Date of Allotment. The initial credit in the account will be akin to the letter of allotment. On completion of the all statutory formalities, such credit in the account will be akin to a bond certificate.
ix. Issue of Bond Certificate(s) Subject to the completion of all statutory formalities within time frame prescribed in the relevant Regulations/Act/ Rules etc., the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted. The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof. . The Bonds shall be allotted in dematerialized form only.
x. Market Lot The market lot will be one Bond (“Market Lot”). Since the Bonds are being issued only in dematerialized form, the odd lots will not arise either at the time of issuance or at the time of transfer of Bonds.
xi. Trading of Bonds The marketable lot for the purpose of trading of Bonds shall be 1 (one) Bond of face value of Rs.10 lacs each. Trading of Bonds would be permitted in demat mode only in standard denomination of Rs.10 lacs and such trades shall be cleared and settled in recognized stock exchange(s) subject to conditions specified by SEBI. In case of trading in Bonds which has been made over the counter, the trades shall be reported on a recognized stock exchange having a nationwide trading terminal or such other platform as may be specified by SEBI.
xii. Mode of Transfer of Bonds The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/DP of the transferor/transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his DP. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Issuer. xiii. Common Form of Transfer The Issuer undertakes that it shall use a common form/procedure for transfer of Bonds issued under terms of this Disclosure Document.
xiv. Interest on Application Money Interest at the Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to the applicants on the application money for the Bonds for the period starting from and including the date of realization of application money in the Issuer’s account up to one day prior to the Deemed Date of Allotment. The interest on application money shall Page 77 of 93
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be payable by the Issuer through electronic mode within 15 (Fifteen) days from the Deemed Date of Allotment. In absence of complete Issuer details i.e. correct/updated Issuer account number, IFSC/RTGS code/NEFT code etc., the Issuer shall be required to make payment through cheques/ DDs or any other mode of payment as per the discretion of the Issuer. Since the Pay-In Date and the Deemed Date of Allotment fall on the same date, interest on application money shall not be applicable. Further, no interest on application money will be payable in case the Issue is withdrawn by the Issuer in accordance with the Operational Guidelines. The Issuer shall not be liable to pay any interest in case of invalid applications or applications liable to be rejected including applications made by person who is not an Eligible Investor.
xv. Interest on the Bonds The face value of the Bonds outstanding shall carry interest at the coupon rate from deemed date of allotment and the coupon rate & frequency of payment (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re- enactment thereof, as applicable) are mentioned at summary term sheet. The interest payment shall be made through electronic mode to the bondholders whose names appear on the list of beneficial owners given by the depository participant to R&TA as on the record date fixed by Issuer in the bank account which is linked to the demat of the bondholder. However, in absence of complete bank details i.e. correct/updated bank account number, IFSC/RTGS code /NEFT code etc., issuer shall be required to make payment through cheques / DDs on the due date at the sole risk of the bondholders. Interest or other benefits with respect to the Bonds would be paid to those Bondholders whose names appear on the list of beneficial owners given by the depository participant to R&TA as on the Record Date.
xvi. Payment on Redemption
The Bond will be redeemed on the expiry of the number of years/months as specified in the Summary Term Sheet from the Deemed Date of Allotment.
The redemption proceeds shall be made through electronic mode to the bondholders whose names appear on the list of beneficial owners given by the DP to R&TA as on the record date fixed by the Issuer in the Issuer account which is linked to the demat of the bondholder. However, in absence of complete Issuer details i.e. correct/updated Issuer account number, IFSC/RTGS code/NEFT code etc., The Issuer shall be required to make payment through cheques / DDs or any other mode of payment as per the discretion of the Issuer on the due date at the sole risk of the bondholders.
The redemption proceeds shall be paid to those Bondholders whose names appear on the list of beneficial owners given by the DP to R&TA as on the record date fixed by the Issuer for the purpose of redemption.
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xvii. Right to further issue under the ISINs
The Issuer reserves right to effect multiple issuances under the same ISIN with reference to SEBI Circular CIR/IMD/DF-1/ 67 /2017 dated June 30, 2017 as amended (“First ISIN Circular”) and SEBI Circular CIR/DDHS/P/59/2018 dated March 28, 2018, as amended or any other applicable laws or regulations from time to time (“Second ISIN Circular”, together with the First ISIN Circular, the “ISIN Circulars”).
The Issue can be made either by way of creation of a fresh ISIN or by way of issuance under the existing ISIN at premium, par or discount as the case may be in line with the ISIN Circulars. xviii. Right to Re-purchase, Re-issue or Consolidate the Bonds
The Issuer will have power, exercisable at its sole and absolute discretion from time to time, to re-purchase a part or all of its Bonds from the secondary markets or otherwise, at any time prior to the Redemption Date, subject to applicable law and in accordance with the applicable guidelines or regulations, if any.
In the event of a part or all of the Issuer’s Bonds being repurchased as aforesaid or redeemed under any circumstances whatsoever, the Issuer shall have, and shall be deemed always to have had, the power to re-issue the Bonds either by re-issuing the same Bonds or by issuing other debentures in their place. The Issuer shall have right to consolidate the Bonds under present series in accordance with applicable law.
Further the Issuer, in respect of such re-purchased or re-deemed Bonds shall have the power, exercisable either for a part or all of those Bonds, to cancel, keep alive, appoint nominee(s) to hold or re-issue at such price and on such terms and conditions as it may deem fit and as permitted under the ISIN Circulars or by laws or regulations.
xix. Deduction of Tax at Source Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re- enactment thereof will be deducted at source out of interest payable on Bonds.
Interest payable subsequent to the Deemed Date of Allotment of Bonds shall be treated as “Interest on Securities” as per Income Tax Rules. Bondholders desirous of claiming exemption from deduction of income tax at source on the interest payable on Bonds should submit tax exemption certificate/ document, under Section 193 of the Income Tax Act, 1961, if any, with the Registrars, or to such other person(s) at such other address (es) as the Issuer may specify from time to time through suitable communication, at least 45 days before the payment becoming due. Regarding deduction of tax at source and the requisite declaration forms to be submitted, applicants are advised to consult their own tax consultant(s).
xx. List of Beneficial Owners The Issuer shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be.
xxi. Succession In the event of the demise of the sole/first holder of the Bond(s) or the last survivor, in case of Page 79 of 93
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joint holders for the time being, the Issuer shall recognize the executor or administrator of the deceased Bondholder or the holder of succession certificate or other legal representative as having title to the Bond(s).The Issuer shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Issuer may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the deceased Bondholder on production of sufficient documentary proof or indemnity.
Where a non-resident Indian becomes entitled to the Bond by way of succession, the following steps have to be complied: • Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the Bond was acquired by the NRI as part of the legacy left by the deceased holder. • Proof that the NRI is an Indian National or is of Indian origin. • Such holding by the NRI will be on a non -repatriation basis.
xxii. Joint - Holders Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship subject to provisions contained in the Companies Act, 1956 and the amendments there to.
xxiii. Disputes & Governing Law The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof shall be subject to the jurisdiction of district courts of Mumbai, Maharashtra.
xxiv. Investor Relations and Grievance Redressal Arrangements have been made to redress investor grievances expeditiously as far as possible. The Issuer shall endeavor to resolve the investor’s grievances within 30 days of its receipt. All grievances related to the issue quoting the Application Number (including prefix), number of Bonds applied for, amount paid on application and details of collection centre where the Application was submitted, may be addressed to the Compliance Officer at registered office of the Issuer. All investors are hereby informed that the Issuer has designated a Compliance Officer who may be contacted in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s),interest warrant(s)/ cheque(s) etc. Contact details of the Compliance Officer are given elsewhere in this Disclosure Document.
xxv. Material Contracts & Agreements involving Financial Obligations of the Issuer By very nature of its business, the Issuer is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of the Issuer. However, the contracts referred to in Para A below (not being contracts entered into in the ordinary course of the Page 80 of 93
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business carried on by the Issuer) which are or may be deemed to be material that have been entered into by the Issuer. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the Head Office of the Issuer between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date.
Material Contracts& Documents a. Letter appointing Sharex Dynamic (India) Pvt Ltd. as Registrar to the issue and copy of MoU entered into between the Issuer and the Registrar. b. Letter appointing IDBI Trusteeship Services Ltd. as Trustees to the Bondholders. c. Board Resolution of the meeting held on 5th July, 2019 authorizing issue of Bonds offered under terms of this Disclosure Document. d. Letter of Consent from IDBI Trusteeship Services Ltd., to act as Trustees to the Issue. e. Letter of Consent from Sharex Dynamic (India) Pvt Ltd., for acting as Registrars to the Issue. f. Letter granting In-principle Approval for listing of Bonds by NSE. g. Letter from ICRA Limited and India ratings & Research Private Limited , conveying the credit rating for the Bonds. h. Tripartite Agreement between the Issuer, NSDL and Registrar for issue of Bonds in dematerialized form. i. Tripartite Agreement between the Issuer, CDSL and Registrars for issue of Bonds in dematerialized form. j. Annual Report along with Audited financials and Audit Reports for the last three financial years k. Letter of Comfort by Ministry of Railways, Government of India
A. Issue Details
a. Summary term sheet:
Security Name ___% KRCL NCD Series 19-I Konkan Railway Corporation Limited (the “Company”/ the “Issuer”/ Issuer “KRCL”) Rated, Listed, Secured, Redeemable, Taxable, Non-Convertible Bonds in the Type of Instrument nature of Debentures (“Bonds”) Nature of Instrument Secured
Security Class Bonds
Seniority Senior
Mode of Issue Private Placement
Arranger(s) to the issue [●] All QIBs, and any non-QIB Investors specifically mapped by the Issuer on the BSE BOND – EBP Platform, are eligible to bid / invest / apply for this Issue. All participants are required to comply with the relevant regulations/ Eligible Investors guidelines applicable to them for investing in this Issue. Further, notwithstanding anything contained above, only eligible investors who have been addressed through the application form are eligible to apply. Prior to making any investment in these Bonds, each Eligible Investor should
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satisfy and assure himself/herself/itself that he/she/it is authorized and eligible to invest in these Bonds. The Issuer shall be under no obligation to verify the eligibility/authority of the Eligible Investor to invest in these Bonds. Further, mere receipt of the Disclosure Document (and/or any Transaction Document in relation thereto and/or any draft of the Transaction Documents and/or the Disclosure Document) by a person shall not be construed as any representation by the Issuer that such person is authorized to invest in these Bonds or eligible to subscribe to these Bonds. If after applying for subscription to these Bonds and/or allotment of Bonds to any person, such person becomes ineligible and/or is found to have been ineligible to invest in/hold these Bonds, the Issuer shall not be responsible in any manner. Notwithstanding any acceptance of bids by the Issuer on and/or pursuant to the bidding process on the Electronic Book Platform, (a) if a person, in the Issuer’s view, is not an Eligible Investor, the Issuer shall have the right to refuse allotment of Bonds to such person and reject such person’s application; (b) if after applying for subscription to these Bonds and/or allotment of Bonds to any person, such person becomes ineligible and/or is found to have been ineligible to invest in/hold these Bonds, the Issuer shall not be responsible in any manner. Contribution being made by the promoters or directors either as part of the offer or Nil separately in furtherance of such objects Proposed to be listed on the Wholesale Debt Market Segment (WDM) of Listing National Stock Exchange of India Ltd. (NSE) Provisional [ICRA]AAA(S) (Stable)” by ICRA Ltd. and “Provisional IND Credit Rating AAA(CE)/Stable” by India Ratings & Research Private Limited Credit Enhancement The bonds are backed by Letter of Comfort issued by Ministry of Railways.
Issue Size Rs. 120 crores Option to retain Nil oversubscription Date of passing of Board 5th July, 2019 Resolution for the issue Objects of the Issue Part repayment of existing debt and servicing of future interest obligations. The funds raised through present issue of bonds are not meant for financing any particular project. The funds shall be utilized for part repayment of Utilization of Issue existing debt and servicing of future interest obligations. The management of Proceeds the issuer shall ensure that the funds raised shall be utilized only towards satisfactory fulfillment of the objects of the issue. Coupon Rate [●] Step Up/ Step Down Coupon None Rate Coupon Payment Frequency Annual The first Coupon payments shall be made on 1st January 2020 and annually Coupon Payment Dates thereafter till Redemption and last interest payment date being the Redemption Date of Bonds
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Coupon Type Fixed
Coupon Reset None Actual/Actual. Interest payable on the Debentures will be calculated on the basis of actual number of days elapsed in a year of 365 or 366 days as the case Day Count Basis may be. (as per the SEBI Circular dated November 11, 2016 bearing reference CIR/IMD/DF-1/122/2016) ‘Business Day’ shall be a day on which commercial Issuers are open for business in the city of Mumbai, Maharashtra and when the money market is functioning in Mumbai. If the date of payment of interest/redemption of principal does not fall on a Business Day, the payment of interest/principal shall be made in accordance with SEBI Circular CIR/IMD/DF-1/122/2016 dated November 11, 2016.
If any of the Coupon Payment Date(s), other than the ones falling on the redemption date, falls on a day that is not a Business Day, the payment shall be made by the Issuer on the immediately succeeding Business Day, which Business Day Convention/ becomes the coupon payment date for that coupon. However, the future Effect of Holidays coupon payment date(s) would be as per the schedule originally stipulated at the time of issuing the debentures. In other words, the subsequent coupon payment date(s) would not be changed merely because the payment date in respect of one particular coupon payment has been postponed earlier because of it having fallen on a non-Business Day.
If the redemption date of the Bonds falls on a day that is not a Business Day, the redemption amount shall be paid by the Issuer on the immediately preceding Business Day which becomes the new redemption date, along with interest accrued on the debentures until but excluding the date of such payment. Interest at the Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to the applicants on the application money for the Bonds for the period starting from and including the date of realization of application money in the Issuer’s account up to one day prior to the date of allotment. Since the Pay-In Date and the Deemed Interest on Application Money Date of Allotment fall on the same date, interest on application money shall not be applicable. Further, no interest on application money will be payable in case the Issue is withdrawn by the Issuer in accordance with the Operational Guidelines. The Issuer shall not be liable to pay any interest in case of invalid applications or applications liable to be rejected including applications made by person who is not an Eligible Investor.
In respect of applications, which are valid but rejected on account of Interest on Refunded Money oversubscription, interest on refunded money shall be payable at the Coupon against which Allotment is not Rate (subject to deduction of income tax under the provisions of the Income made Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) (excluding the valid rejections) for the period starting from and including the date of realization of Application Money in Issuer’s Bank Page 83 of 93
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Account upto but excluding the Deemed Date of Allotment. The refund amounts together with interest thereon shall be paid by the Issuer to the relevant Applicants within 15 days from the Deemed Date of Allotment.
No interest on Application Money will be payable in respect of applications which are invalid and rejected for not being in accordance with the terms of Private Placement Offer Letter.
In case of default in payment of Interest and/or principal redemption on the Default Interest Rate due dates, additional interest at 2% p.a. over the Coupon Rate will be payable by the Issuer for the defaulting period. Tenor 10 years from the deemed date of allotment
Redemption Date 1st October, 2029
Redemption Amount At par (Rs. 10 Lacs) per Bond
Premium on redemption Nil
Discount on redemption Nil
Issue Price At par (Rs. 10 Lacs) per Bond
Premium on issue Nil
Discount on issue Nil
Put Option At the end of 5th year from the deemed date of allotment
Put Option Price Not Applicable
Put Option Date 1st October, 2024
Put Notification Time Not Applicable
Call Option At the end of 5th year from the deemed date of allotment
Call Option Price Not Applicable
Call Option Date 1st October, 2024
Call Notification Time Not Applicable
Face Value Rs. 10 Lacs per Bond
Minimum Application 1 Bond and in multiples of 1Bond thereafter
Issue Timing
1. Issue Opening Date 27th September 2019
2. Issue Closing Date 27th September 2019
3. Pay-in Date 1st October 2019
4. Deemed Date of Allotment 1st October 2019
Issuance Mode In Demat mode only
Trading Mode In Demat mode only Payment of interest and repayment of principal shall be made by way of Settlement Mode cheque(s)/ credit through RTGS/ Fund Transfer/ NEFT or any other electronic mode offered by the Banks Page 84 of 93
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Settlement Cycle for EBP T+2 (‘T’ being the bidding date) National Securities Depository Limited and Central Depository Services Depositories (India) Limited. A “Business Day‟/ “Working Day” shall mean a day from Monday to Friday, Business Day/ Working Day excluding a bank holiday in Mumbai, on which commercial banks are open for business in the city of Mumbai. If any Coupon Payment Date, except the last coupon payment date, falls on a day that is not a Business Day, the payment shall be made by the Issuer on the immediately succeeding Business Day along with interest for such additional period. Further, interest for such additional period so paid, shall be deducted out of the interest payable on the next Coupon Payment Date.
Effect of holidays If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the immediately preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment.
In the event the Record Date falls on a day which is not a Business Day, the immediately succeeding Business Day will be considered as the Record Date. Record Date 15 Days prior to each Coupon Payment Date and Redemption Date The Bonds shall be secured by way of first pari-passu charge on the specific immovable property and/or movable property, except book debts of the Company with minimum asset coverage of 1.25 times of the aggregate face value amount of Bonds outstanding at all times.
The Company shall execute a Debenture Trust Deed in Form No.SH.12 or as near thereto as possible, in favour of the Debenture Trustee within three Security months of closure of the issue and submit with NSE within five working days of execution of the same for uploading on its website.
In the event of delay in execution of Debenture Trust Deed within three months of closure of the issue, the Company shall refund the subscription with the Coupon Rate or pay penal interest at the rate of 2.00% p.a. over the Coupon Rate till these conditions are complied with, at the option of the Bondholders. The Issuer has executed/ shall execute the documents including but not limited to the following in connection with the Issue: 1. Letter appointing IDBI Trusteeship Services Ltd. as Trustees to the Bondholders; 2. Debenture Trusteeship Agreement; 3. Debenture Trust Deed; 4. Rating Agreement with ICRA Limited and India Ratings & Research Private Limited Transaction Documents 5. Tripartite Agreement between the Issuer; Registrar and NSDL for issue of Bonds in dematerialized form; 6. Tripartite Agreement between the Issuer, Registrar and CDSL for issue of Bonds in dematerialized form; 7. Letter appointing Registrar and MoU entered into between the Issuer and the Registrar; 8. Application made to NSE for seeking its in-principle approval for listing of Bonds; 9. Listing Agreement with NSE; Page 85 of 93
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10. Letters appointing Arranger to the Issue.
The subscription from investors shall be accepted for allocation and allotment by the Issuer subject to the following: 1. Written consent letter from IDBI Trusteeship Services Ltd. conveying Conditions precedent to their consent to act as Trustees for the Bondholders; subscription of Bonds 2. In-Principle Listing approval from NSE, for listing of the Bonds; 3. Rating Letters from ICRA Limited and India Ratings & Research Private Limited ; 4. Written consent letter from Sharex Dynamic (India) Pvt Ltd. conveying their consent to act as Registrar for the Bondholders The Issuer shall ensure that the following documents are executed/ activities are completed as per time frame mentioned elsewhere in this Private Placement Offer Letter:
1. Ensuring that the payment made for subscription to the Bonds is received from the bank account of the person/ entity subscribing to the Bonds and keep record of the bank accounts from where payments for subscriptions have been received. In case of subscription to the Bonds to be held by joint holders, application monies is received from the bank account of the person whose name appears first in the Application Form; 2. Maintaining a complete record of private placement offers in Form PAS- 5 and filing the such record along with Private Placement Offer Letter in Form PAS-4 with the Registrar of Companies, Mumbai with fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and Conditions subsequent to with Securities and Exchange Board of India, within a period of thirty subscription of Bonds days of circulation of the Private Placement Offer Letter; 3. Filing a return of allotment of Bonds with complete list of all Bondholders in Form PAS-3 under section 42 of the Companies Act, 2013, with the Registrar of Companies, Mumbai within thirty days of the Deemed Date of Allotment along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014; 4. Credit of demat account(s) of the allottee(s) by number of Bonds allotted within two working days from the Deemed Date of Allotment; 5. Making listing application to NSE within 15 days from the Deemed Date of Allotment of Bonds and seeking listing permission within 20 days from the Deemed Date of Allotment of Bonds; 6. Executing the Debenture Trust Deed in Form No.SH.12 or as near thereto as possible, in favour of the Trustee within three months from the closure of the issue and submit with NSE within five working days of execution of the same for uploading on its website. Besides, the Issuer shall perform all activities, whether mandatory or otherwise, as mentioned elsewhere in the Private Placement Offer Letter. If the Issuer commits a default in making payment of any instalment of Events of Default interest or repayment of principal amount of the Bonds on the respective due dates, the same shall constitute an “Event of Default” by the Issuer Cross Default Not Applicable IDBI Trusteeship Services Limited has been appointed by KRCL to act as Trustees Trustees for and on behalf of the holder(s) of the Bonds The Trustees shall perform its duties and obligations and exercise its rights Role and Responsibilities of and discretions exercise its rights and discretions, in keeping with the trust Trustees reposed in the Trustees by the holder(s) of the Bonds and shall further
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conduct itself, and comply with the provisions of all applicable laws.
The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, Disclosure Document and all other related transaction documents, with due care, diligence and loyalty.
The Company shall provide to the Trustee with: (i) annual (audited) financial statements of the Company (prepared on both standalone and consolidated basis) within 180 (One Hundred and Eighty) calendar days following the closure of the preceding Financial Year; and (ii) quarterly un-audited accounts (prepared on both standalone and consolidated basis) of the Company within 60 (sixty) days of end of quarter. Registrar Sharex Dynamic (India) Pvt Ltd.
Valuer Not Applicable 1. Security Creation: In the event of delay in execution of Debenture Trust Deed within three months of closure of the issue, the Company shall refund the subscription with the Coupon Rate or pay penal interest at the rate of 2.00% p.a. over the Coupon Rate till these conditions are complied with, at the option of the Bondholder(s).
2. Default in Payment: In case of default in payment of interest and/ or principal redemption on the due dates, the Company shall pay additional interest at the rate of 2.00% p.a. over the Coupon Rate for the defaulting period i.e. the period commencing from and including the date on which such amount becomes due and upto but excluding the date on which such amount is actually paid. Additional Covenants
3. Delay in Listing: The Company shall make listing application to NSE within 15 days from the Deemed Date of Allotment of the Bonds and seek listing permission within 20 days from the Deemed Date of Allotment of Bonds. In case of delay in listing of the Bonds beyond 20 days from the Deemed Date of Allotment, the Company shall pay penal interest at the rate of 1.00% p.a. over the Coupon Rate from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the Bondholder(s).
The interest rates mentioned in above three covenants shall be independent of each other. Type of Bidding Closed bidding
Manner of Allotment Uniform Yield
Mode of Settlement ICCL The Bonds are governed by and shall be construed in accordance with the Governing Law and existing laws of India. Any dispute arising thereof shall be subject to the Jurisdiction jurisdiction of district courts of Mumbai (Maharashtra) The Company shall maintain the Debenture Redemption Reserve as per Debenture Redemption section 71(4) of the Companies Act, 2013 read with Rule 18(7) of Companies Reserve (Share Capital and Debentures) Rules, 2014 and circulars issued by Central Government in this regard. Note: The Issuer reserves its sole and absolute right to modify (pre -pone/ postpone) the above issue
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Private & Confidential – Not for Circulation schedule without giving any reasons or prior notice. The Issuer also reserves its sole and absolute right to change the Deemed Date of Allotment of the above issue without giving any reasons or prior notice. Consequent to change in Deemed Date of Allotment, the Coupon Payment Dates, if any may also be changed at the sole and absolute discretion of the Issuer. The Issuer reserves the right to close the issue earlier than the stipulated issue closing date and it is further clarified that the Issuer need not wait for any minimum subscription amount to the Bonds before closing the issue.
C. Disclosures pertaining to willful default
(a) Name of the Issuer declaring the entity as a willful defaulter : Not Applicable
(b) The year in which the entity is declared as a willful defaulter : Not Applicable
(c) Outstanding amount when the entity is declared as a willful defaulter : Not Applicable
(d) Name of the entity declared as a willful defaulter: Not Applicable
(e) Steps taken, if any, for the removal from the list of willful defaulters: Not Applicable
A. Additional Disclosures:
Particulars Disclosures
A Details of Branches and Units Please refer page no. 13 for Brief Summary of the business / activities of the Issuer and its line of business. B Details of default, if any, including therein the amount involved, duration of default and present status, in repayment of –
i) statutory dues; NIL
ii) debentures and interest thereon; NIL
iii) deposits and interest thereon; and NIL
iv) loan from any bank or financial NIL institution and interest thereon.
C Details of default in annual filing There are no defaults in annual filing of the of the Company, if any, under the Company under the Companies Act, 2013 and Companies Act, 2013 and the rules the rules made thereunder made thereunder
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Particulars Disclosures
D The change in control, if any, in Not Applicable as the present issue relates to the Company, that would occur issue of non-convertible debentures consequent to the private placement
E The number of persons to whom NIL allotment on preferential basis/private placement/rights issue has already been made during the year, in terms of number of securities as well as price
F Contribution being made by the Contribution by promoters and directors is promoters or directors either as NIL part of the offer or separately in furtherance of such objects
G The details of significant and NIL material orders passed by the regulators, courts and tribunals impacting the going concern status of the Company and its future operations.
H The pre-issue and post-issue Not Applicable as the present issue relates to shareholding pattern of the issue of non-convertible debentures Company
I Summary of reservations or There has not been any reservations or qualifications or adverse remarks qualifications or adverse remarks of auditors of auditors in the last five financial in the last five financial years immediately years immediately preceding the preceding the year of circulation of this year of circulation of this disclosure document. However, Opinion of Disclosure Document and of their Auditor and Matters of Emphasis of the last impact on the financial statements five financial year immediately preceding the and financial position of the year of circulation of this disclosure document company and the corrective steps has been provided ( please refer page no. 44 to taken and proposed to be taken by 50 and 54 to 60) the company for each of the said reservations or qualifications or adverse remark.
J Details of any inquiry, inspections NIL or investigations initiated or conducted under the Act or any
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Particulars Disclosures
previous company law in the last three years immediately preceding the year of circulation of this Disclosure Document in the case of company and all of its subsidiaries. Also, if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of this Disclosure Document and if so, section-wise details thereof for the company and all of its subsidiaries.
K Details of acts of material frauds NIL committed against the company in the last three years, if any, and if so, the action taken by the company.
L The securities premium account Before the issue of Not Applicable before and after the Issue Debentures
After the issue of Not Applicable Debentures
Not Applicable as the present issue relates to issue of non-convertible debentures to be issued at par. M Any change in accounting policies Not Applicable during the last three years and their effect on the profits and the reserves of the company.
N Valuer who performed value of Not Applicable security offered
O Relevant Date with reference to Not Applicable which the price has been arrived at
P The justification for the allotment Not Applicable proposed to be made for consideration other than cash together with valuation report of
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Particulars Disclosures
the registered valuer;
Q Profile of Directors Please refer Page no. 36
E. DECLARATION
The Issuer undertakes that this Disclosure Document contains full disclosures in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended from time to time.
The Issuer also confirms that to the best of its knowledge and beliefs this Disclosure Document does not omit disclosure of any material fact which may make the statements made therein, in light of the circumstances under which they are made, misleading. The Disclosure Document also does not contain any false or misleading statement.
The Issuer accepts no responsibility for the statement made otherwise than in the Disclosure Document or in any other material issued by or at the instance of the Issuer and that anyone placing reliance on any other source of information would be doing so at his own risk.
The Board of Directors of the Company vide resolution dated 5th July, 2019 authorized CMD and DF who in turn delegated the power to Mr. Mathew Philip vide letter of authority no. CO- 12034(12)/150/2019/ACCTS/#04 , to sign this Disclosure Document and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association
It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form.
Signed pursuant to internal authority granted; For Konkan Railway Corporation Limited
Authorized Signatory Place: Mumbai Date: [●]
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ANNEXURE I Copy of rating letter from ICRA Limited and India ratings & Research Private Limited
ANNEXURE II Copy of consent letter from IDBI Trusteeship Services
ANNEXURE III Copy of Board Resolution for the proposed fund raising
ANNEXURE IV Indicative Cash Flow Schedule
As per SEBI circular no. CIR/IMD/DF-1/122/2016 dated November 11, 2016, illustrative cash flow for bonds is as under:
Illustration
Name of the Issuer Konkan Railway Corporation Limited Face Value (Rs) 10,00,000 Deemed Date of Allotment [●] Redemption Date [●] Coupon Rate [●] Frequency of Interest Annual Payment Day Count Convention Actual/ Actual
No. of Days in Cash Flows Coupon Payment Date Amount (Rs.) Coupon Period 1st Coupon [●] [●] [●] 2nd Coupon [●] [●] [●] 3rd Coupon [●] [●] [●] 4th Coupon [●] [●] [●] 5th Coupon [●] [●] [●] 6th Coupon [●] [●] [●] 7th Coupon [●] [●] [●] 8th Coupon [●] [●] [●] 9th Coupon [●] [●] [●] 10th Coupon [●] [●] [●] Principal Repayment [●]
In case Put/ Call Option is exercised at the end of 5th year from the deemed date of allotment:
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No. of Days Cash Flows Coupon Payment Date in Coupon Amount (Rs.) Period 1st Coupon [●] [●] [●] 2nd Coupon [●] [●] [●] 3rd Coupon [●] [●] [●] 4th Coupon [●] [●] [●] 5th Coupon [●] [●] [●] Principal [●] Repayment Assumptions: We have not considered the effect of public holidays as it is difficult to ascertain for future dates
ANNEXURE V Copy of Letter of Comfort from Ministry of Railway
ANNEXURE VI Copy of In-principle Listing approval from NSE
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