Page 58 - DMGT207_MANAGEMENT_OF_FINANCES

Unit 3: Sources of Finance

Lupin Chemicals Ltd. has stated in their prospects that they are eligible for sales tax incentive for Notes
a period of five years or till they reach the ceiling of 60% of fixed capital investment whichever
is earlier.

Self Assessment

Fill in the blanks:
14. The seed capital assistance scheme is designed by ………………. for professionally or
technically qualified entrepreneurs.

15. The central and state governments provide subsidies to industrial units located in
………………. areas.



Caselet NHAI to Raise 10,000 cr from Tax-free Bonds

T he National Highways Authority of India has decided to launch its first ever tax-
free bonds issue of 5,000 crore on December 28, with a face value of 1,000 each.
The Highways authority plans to raise 10,000 crore through the issue, which will remain
open till January 11, 2012.
These bonds will have a tenure of 10 years and 15 years, respectively. The 10-year bonds
will give 8.2 per cent interest annually, while the 15-year bonds would offer 8.3 per cent
interest. The interest would be payable annually on October 1 of each year. The bonds are
proposed to be listed on the BSE and NSE.
Safe Investment Option
The Minister of Road Transport and Highways, Mr C.P Joshi, said: "These bonds are being
offered across three categories of retail investors, high networth investors and institutional
investors.
Thirty per cent of the bonds would be for those who want to invest 5 lakh and below,
another 30 per cent for those who want to invest 5 lakh and above and the remaining 40 per
cent for institutional investors." The issue comes with an option to close earlier or extend up
to a maximum period of 30 days at the discretion of the board of NHAI, subject to necessary
approvals. However, the issue shall remain open for a minimum of three days.

"Apart from being a safe investment option, the interest earned on these bonds would not
be taxed and there would be no holding period restrictions as well. The funds realised
would be utilised for part financing of the various NHAI projects," he added.
According to Mr Gajendra Haldea, Advisor to the Deputy Chairman, Planning Commission,
infrastructure investment has risen sharply in India and much of the incremental push has
come from the private sector.
"Investment in infrastructure has more than doubled in the five-year period to $470-480
billion from $230 billion.
"We see this figure rising to $1 trillion according to the 12{+t}{+h} Plan projection and
50 per cent of the total investment would come from the private sector. To achieve this, the
sources of finance need to increase and the bond market will play an important role."
Source: http://www.thehindubusinessline.com/markets/stock-markets/article2742185.ece

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