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Information Memorandum Private & Confidential – For Private Circulation Only

(This Information Memorandum is neither a Prospectus

nor a Statement in Lieu of Prospectus)

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IFMR Capital Finance Private Limited

Registered Office:

IITM Research Park| Phase 1,10th Floor| No. 1 Kanagam Village (Behind Tidel

Park)|Taramani|Chennai-600 113

Corporate Office:



Tel: + 91-44-6668 7000

Fax: + 91-44-6668 7010

Contact Person: C. Kalyansundaram, Head, Finance and Operations

Website: http://capital.ifmr.co.in

E-Mail: [email protected]

Issue of, secured, rated, listed, taxable, redeemable non-convertible debentures of face

value of Rs. 1,000,000/- (Rupees One Million Only) each, aggregating Rs. 360,000,000/-

(Rupees Three Hundred Sixty Million Only) (the “Debentures”) on a Private Placement

basis (the “Issue”) by IFMR Capital Finance Private Limited (the “Issuer”)

Information Memorandum

Date: December 20, 2011




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GENERAL RISKS

Investment in debt and debt related securities involve a degree of risk and investors should not

invest in any funds in the debt instruments, unless they can afford to take the risks attached to such

investments. Investors are advised to read the Information Memorandum carefully before taking an

investment decision in this offering. For taking an investment decision, investors must rely on their

own examination of the issuer and the offer including the risks involved. The Debentures have not

been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does

SEBI guarantee the accuracy or adequacy of this document. This Information Memorandum has not

been submitted, cleared or approved by SEBI.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this

Information Memorandum contains all information with regard to the Issuer and the Issue, which is

material in the context of the Issue, that the information contained in this Information Memorandum

is true and correct in all material aspects and is not misleading in any material respect, that the

opinions and intentions expressed herein are honestly held and that there are no other facts, the

omission of which makes this Information Memorandum as a whole or any of such information or

the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Debentures to be issued under this Information Memorandum will be listed on the Wholesale

Debt Market segment of the Bombay Stock Exchange. The issuer shall make an application for

listing within one day from the Deemed Date of Allotment of Debentures and shall have obtained

the in-principle approval of the Bombay Stock Exchange for the listing of the Debentures.

CREDIT RATING:

“A-” (pronounced A Minus) by ICRA Limited

Symbols Rating Definition

ICRA A Instruments with this rating are considered to have adequate

degree of safety regarding timely servicing of financial

obligations. Such instruments carry low credit risk.

(-) modifier represents comparative standing in that category

The 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 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 agency has the right to suspend,

withdraw the rating at any time on the basis of new information etc.




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REGISTRAR & SHARE TRANSFER AGENT

Sharepro Services (India) Pvt Limited

13 AB Samhiata Warehousing Complex,

Andheri Kurla Road

Mumbai - 400 072

Phone No.: 022-67720329

Fax No.: 022- 28508927

E-mail: [email protected]

This Information Memorandum prepared under SEBI (Issue and Listing of Debt Securities)

Regulations, 2008 dated June 6, 2008, for private placement of the Debentures is neither a

prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public

generally to subscribe for or otherwise acquire the debt securities to be issued by the Issuer. This is

only an information brochure intended for private use.

ISSUE SCHEDULE

Issue Opening Date: December 22, 2011

Issue Closing Date: December 22, 2011

Issue Pay-in Date: December 22, 2011

Deemed Date of Allotment: December 23, 2011

mailto:[email protected]




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DEFINITIONS AND ABBREVIATIONS

General terms

Term Description

Act The Companies Act, 1956, as amended from time to time

Eligible Investor Refers to the following categories of investors eligible to invest in the Debentures,

when addressed directly:

a. Commercial Banks, Eligible Financial Institutions* and Insurance

Companies;

b. Companies;

c. Non Banking Finance Companies (NBFCs) and Residuary NBFCs and

d. Mutual Funds

e. Foreign Institutional Investors

f. Provident Funds , Gratuity, Superannuation & Pension Funds, subject to

their Investment guidelines

g. Any other investor authorised to invest in these Debentures

*Eligible Financial Institution means such financial institutions from whom monies

borrowed even under an unsecured debenture would not constitute a ‘deposit’

within the meaning of the term as defined under Section 2(b) of the Companies

(Acceptance Of Deposits) Rules, 1975.

Issuer / the

Company / IFMR

Capital

IFMR Capital Finance Private Limited, having its registered office at IITM

Research Park, Phase 1, 10th Floor, No. 1 Kanagam Village (Behind Tidel Park),

Taramani, Chennai-600 113

Ltd. Limited

Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996.

RBI The Reserve Bank of India

ROC The Registrar of Companies

SEBI Securities and Exchange Board of India

“we”, “us”, “our” Unless the context otherwise requires, the Issuer

Issuer-related terms

Term Description

Allot / Allotment /

Allotted

Unless the context otherwise requires or implies, the allotment of the Debentures

pursuant to the Issue.




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Term Description

Application Form The form used by an Investor to apply for subscription to the Debentures offered

through this Issue, attached as Annexure 3 hereto.

BSE Bombay Stock Exchange Limited

Business Days Business Day shall mean a day (other than a public holiday under Section 25 of the

Negotiable Instruments Act, 1881 at Mumbai or a Saturday or a Sunday).

Credit Rating

Agency(ies)

ICRA Limited or any other credit rating agency, appointed from time to time.

Deemed Date of

Allotment

The date on which Allotment for the Issue is made.

Debenture

Holder(s)

The several persons who are for the time being holders of the Debentures and who

are entered in the register of Debenture Holders as mentioned under the Debenture

Trust Deed and who will be subscribing to the Debentures from time to time

Debentures The debentures of the Company to be issued by way of private placement in the

form of secured redeemable non-convertible debentures for an aggregate amount

not exceeding Rs. 36,00,00,000 and in accordance with the terms and conditions

contained herein and the terms and conditions contained in the Debenture Trust

Deed, constituted and issued under the Debenture Trust Deed, or the amount thereof

for the time being outstanding or, as the case may be, a specific number thereof.

Debenture Trust

Deed

The deed dated December 20, 2011 executed between the Company and the

Debenture Trustee.

Debenture Trustee Trustee for the Debenture Holder(s), in this case being IDBI Trusteeship Services

Ltd.

Depository(ies) The National Securities Depository Limited (NSDL) and/or Central Depository

Securities (India) Limited, as the case may be, such other depository registered with

SEBI, with whom the Company has entered into an agreement for keeping and

dealing with the Debentures in a dematerialized form.

FII Foreign Institutional Investor

Governmental

Authority

The Government of India or of any state in India or any ministry, department,

board, authority, instrumentality, agency, corporation (to the extent acting in a

legislative, judicial or administrative capacity) or commission under the direct or

indirect control of such government or any political subdivision of any of them or

owned or controlled by the government or any of their subdivisions, or any court,

tribunal, judicial or regulatory body within India or any other court, administrative

agency or arbitrator.

Information This Information Memorandum pursuant to which the Debentures are being offered




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Term Description

Memorandum for private placement.

Investor Such person who subscribes to this Issue.

Issue This issue of Secured, Rated, Listed, Taxable, Redeemable, Non-Convertible

Debentures of a face value of Rs. 1,000,000- each, aggregating to Rs. 360 million

on a private placement basis.

Issue Opening Date December 22, 2011

Issue Closing Date December 22, 2011

Issue Pay-in-Date December 22, 2011

Loan to Origination

Transaction

A loan provided by the Company to a MFI.

Majority Consent The written consent obtained from the Debenture Holders representing not less than

75% (seventy five percent) in value of the nominal amount of the Debentures for

the time being outstanding;

or

consent by special resolution duly passed at the meeting of the Debenture Holders

convened in accordance with the provisions set out in the Debenture Trust Deed.

Memorandum of

Hypothecation

The memorandum executed by the Company in favour of the Trustee dated

December 20, 2011 under the terms of which the Debentures shall be secured by

way of a floating charge over certain moveable assets of the Company

MFI The micro-finance institution originating the loans in relation to the Securitization

Transactions and / or the Loan to Origination Transaction

Registrar/Registrar

to the Issue

Registrar to the Issue, in this case being Sharepro Services (India) Pvt Limited

RTGS Real Time Gross Settlement

SEBI Regulations The Securities and Exchange Board of India (Issue and Listing of Debt Securities)

Regulations, 2008 as amended from time to time.

Securitization

Transaction

The securitization transaction which the Company arranges, invests in, provides

credit or other support to, as part of its general business activities in the micro-

finance sector.

Securitization

Transactions

The securitization transactions which the Company arranges, invests in, provides

credit or other support to, as part of its general business activities in the micro-




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Term Description

finance sector.

Arranger Deutsche Bank AG, DB House, Hazarimal Somani Marg, Fort, Mumbai - 400 001

Stock Exchange Bombay Stock Exchange Limited

WDM Wholesale Debt Market segment of the BSE




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DISCLAIMERS

GENERAL DISCLAIMER

THIS INFORMATION MEMORANDUM OF PRIVATE PLACEMENT (HEREINAFTER

REFERRED TO AS THE “INFORMATION MEMORANDUM” IS NEITHER A

PROSPECTUS NOR A STATEMENT IN LIEU OF PROSPECTUS. THE ISSUE OF RATED,

SECURED LISTED REDEEMABLE NON-CONVERTIBLE DEBENTURES (HEREINAFTER

REFERRED TO AS “DEBENTURES”) TO BE ISSUED IS BEING MADE STRICTLY ON A

PRIVATE PLACEMENT BASIS. IT IS NOT INTENDED TO BE CIRCULATED TO MORE

THAN 49 (FORTY-NINE) PERSONS. MULTIPLE COPIES HEREOF GIVEN TO THE SAME

ENTITY SHALL BE DEEMED TO BE GIVEN TO THE SAME PERSON AND SHALL BE

TREATED AS SUCH. IT DOES NOT CONSTITUTE AND SHALL NOT BE DEEMED TO

CONSTITUTE AN OFFER OR AN INVITATION TO SUBSCRIBE TO THE DEBENTURES

ISSUED TO THE PUBLIC IN GENERAL. APART FROM THIS INFORMATION

MEMORANDUM, NO OFFER DOCUMENT OR PROSPECTUS HAS BEEN PREPARED IN

CONNECTION WITH THE OFFERING OF THIS ISSUE OR IN RELATION TO THE

ISSUER NOR IS SUCH A PROSPECTUS REQUIRED TO BE REGISTERED UNDER THE

APPLICABLE LAWS. ACCORDINGLY, THIS INFORMATION MEMORANDUM HAS

NEITHER BEEN DELIVERED FOR REGISTRATION NOR IS IT INTENDED TO BE

REGISTERED.

SINCE THE ISSUE IS BEING MADE ON A PRIVATE PLACEMENT BASIS, THE

PROVISIONS OF SECTION 60 OF THE ACT SHALL NOT BE APPLICABLE AND

ACCORDINGLY, A COPY OF THIS INFORMATION MEMORANDUM IS NOT REQUIRED

TO BE FILED WITH THE REGISTRAR OF COMPANIES OR SEBI. THEREFORE, AS PER

THE APPLICABLE PROVISIONS OF LAW, A COPY OF THIS INFORMATION

MEMORANDUM HAS NOT BEEN FILED WITH OR SUBMITTED TO ROC OR SEBI FOR

ITS REVIEW AND/OR APPROVAL.

THE ISSUER HAVING MADE ALL REASONABLE INQUIRIES, ACCEPTS

RESPONSIBILITY FOR AND CONFIRMS THAT THE INFORMATION CONTAINED IN

THIS INFORMATION MEMORANDUM IS TRUE AND CORRECT IN ALL MATERIAL

ASPECTS AND IS NOT MISLEADING IN ANY MATERIAL RESPECT, THAT THE

OPINIONS AND INTENTIONS EXPRESSED HEREIN ARE HONESTLY HELD AND THAT

THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKE THIS DOCUMENT

AS A WHOLE OR ANY OF SUCH INFORMATION OR THE EXPRESSION OF ANY SUCH

OPINIONS OR INTENTIONS MISLEADING IN ANY MATERIAL RESPECT.

THIS INFORMATION MEMORANDUM AND THE CONTENTS HEREOF ARE

INTENDED ONLY FOR RECIPIENT(S) WHO HAVE BEEN ADDRESSED DIRECTLY

AND SPECIFICALLY THROUGH A COMMUNICATION BY THE ISSUER AND ONLY

SUCH RECIPIENTS ARE ELIGIBLE TO APPLY FOR THE DEBENTURES. ALL

INVITED ELIGIBLE INVESTORS ARE REQUIRED TO COMPLY WITH THE

RELEVANT REGULATIONS/ GUIDELINES APPLICABLE TO THEM FOR

INVESTING IN THIS ISSUE. IT IS NOT INTENDED FOR DISTRIBUTION TO ANY

OTHER PERSON AND SHOULD NOT BE REPRODUCED BY THE RECIPIENT.

NO INVITATION IS BEING MADE TO ANY PERSONS OTHER THAN THE INVITED

ELIGIBLE INVESTORS. ANY APPLICATION BY A PERSON OTHER THAN AN INVITED

ELIGIBLE INVESTOR SHALL BE REJECTED WITHOUT ASSIGNING ANY REASON. NO




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PERSON WHO IS IN RECEIPT OF THIS INFORMATION MEMORANDUM SHALL BE

ENTITLED TO REPRODUCE OR DISTRIBUTE IN WHOLE OR PART OR MAKE ANY

ANNOUNCEMENT IN PUBLIC OR TO A THIRD PARTY REGARDING THE CONTENTS

OF THIS INFORMATION MEMORANDUM WITHOUT THE CONSENT OF THE ISSUER.

DISCLAIMER OF THE ISSUER

THIS INFORMATION MEMORANDUM HAS BEEN PREPARED TO PROVIDE GENERAL

INFORMATION ABOUT THE ISSUER TO POTENTIAL INVESTORS TO WHOM IT IS

ADDRESSED AND WHO ARE WILLING AND ELIGIBLE TO SUBSCRIBE TO THE

DEBENTURES. THIS INFORMATION MEMORANDUM DOES NOT PURPORT TO

CONTAIN ALL THE INFORMATION THAT ANY POTENTIAL INVESTOR MAY

REQUIRE. NEITHER THIS INFORMATION MEMORANDUM NOR ANY OTHER

INFORMATION SUPPLIED IN CONNECTION WITH THE DEBENTURES IS INTENDED

TO PROVIDE THE BASIS OF ANY CREDIT OR OTHER EVALUATION NOR SHOULD

ANY RECIPIENT OF THIS INFORMATION MEMORANDUM CONSIDER SUCH RECEIPT

A RECOMMENDATION TO PURCHASE ANY DEBENTURES. EACH INVESTOR

CONTEMPLATING THE PURCHASE OF ANY DEBENTURES SHOULD MAKE HIS OWN

INDEPENDENT INVESTIGATION OF THE FINANCIAL CONDITION AND AFFAIRS OF

THE ISSUER, AND HIS OWN APPRAISAL OF THE CREDITWORTHINESS OF THE

ISSUER. POTENTIAL 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

DEBENTURES AND SHOULD POSSESS THE APPROPRIATE RESOURCES TO

ANALYSE SUCH INVESTMENT AND THE SUITABILITY OF SUCH INVESTMENT TO

SUCH INVESTOR'S PARTICULAR CIRCUMSTANCES. IT IS THE RESPONSIBILITY OF

INVESTORS TO ALSO ENSURE THAT THEY WILL SELL THESE DEBENTURES IN

STRICT ACCORDANCE WITH THIS INFORMATION MEMORANDUM AND OTHER

APPLICABLE LAWS, SO THAT THE SALE DOES NOT CONSTITUTE AN OFFER TO THE

PUBLIC WITHIN THE MEANING OF THE COMPANIES ACT, 1956. NONE OF THE

INTERMEDIARIES OR THEIR AGENTS OR ADVISORS ASSOCIATED WITH THIS ISSUE

UNDERTAKE TO REVIEW THE FINANCIAL CONDITION OR AFFAIRS OF THE ISSUER

DURING THE LIFE OF THE ARRANGEMENTS CONTEMPLATED BY THIS

INFORMATION MEMORANDUM OR HAVE ANY RESPONSIBILITY TO ADVISE ANY

INVESTOR OR POTENTIAL INVESTOR IN THE DEBENTURES OF ANY INFORMATION

AVAILABLE WITH OR SUBSEQUENTLY COMING TO THE ATTENTION OF THE

INTERMEDIARIES, AGENTS OR ADVISORS.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE

ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN

THIS INFORMATION MEMORANDUM OR IN ANY MATERIAL MADE AVAILABLE BY

THE ISSUER TO ANY POTENTIAL INVESTOR PURSUANT HERETO AND, IF GIVEN OR

MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS

HAVING BEEN AUTHORIZED BY THE ISSUER. THE INTERMEDIARIES AND THEIR

AGENTS OR ADVISORS ASSOCIATED WITH THIS ISSUE HAVE NOT SEPARATELY

VERIFIED THE INFORMATION CONTAINED HEREIN. ACCORDINGLY, NO

REPRESENTATION, WARRANTY OR UNDERTAKING, EXPRESS OR IMPLIED, IS

MADE AND NO RESPONSIBILITY IS ACCEPTED BY ANY SUCH INTERMEDIARY AS

TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN

THIS INFORMATION MEMORANDUM OR ANY OTHER INFORMATION PROVIDED BY




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THE ISSUER. ACCORDINGLY, ALL SUCH INTERMEDIARIES ASSOCIATED WITH THIS

ISSUE SHALL HAVE NO LIABILITY IN RELATION TO THE INFORMATION

CONTAINED IN THIS INFORMATION MEMORANDUM OR ANY OTHER

INFORMATION PROVIDED BY THE ISSUER IN CONNECTION WITH THE ISSUE.

EACH COPY OF THIS INFORMATION MEMORANDUM IS SERIALLY NUMBERED AND

THE PERSON, TO WHOM A COPY OF THE INFORMATION MEMORANDUM IS SENT,

IS ALONE ENTITLED TO APPLY FOR THE DEBENTURES.

EACH PERSON RECEIVING THIS INFORMATION MEMORANDUM ACKNOWLEDGES

THAT:

SUCH PERSON HAS BEEN AFFORDED AN OPPORTUNITY TO REQUEST AND TO

REVIEW AND HAS RECEIVED ALL ADDITIONAL INFORMATION CONSIDERED

BY AN INDIVIDUAL TO BE NECESSARY TO VERIFY THE ACCURACY OF OR TO

SUPPLEMENT THE INFORMATION HEREIN; AND

SUCH PERSON HAS NOT RELIED ON ANY INTERMEDIARY THAT MAY BE

ASSOCIATED WITH ISSUANCE OF THE DEBENTURES IN CONNECTION WITH ITS

INVESTIGATION OF THE ACCURACY OF SUCH INFORMATION OR ITS

INVESTMENT DECISION.

THE ISSUER DOES NOT UNDERTAKE TO UPDATE THE INFORMATION

MEMORANDUM TO REFLECT SUBSEQUENT EVENTS AFTER THE DATE OF THE

INFORMATION MEMORANDUM AND THUS IT SHOULD NOT BE RELIED UPON WITH

RESPECT TO SUCH SUBSEQUENT EVENTS WITHOUT FIRST CONFIRMING ITS

ACCURACY WITH THE ISSUER. NEITHER THE DELIVERY OF THIS INFORMATION

MEMORANDUM NOR ANY SALE OF DEBENTURES MADE HEREUNDER SHALL,

UNDER ANY CIRCUMSTANCES, CONSTITUTE A REPRESENTATION OR CREATE

ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE

ISSUER SINCE THE DATE HEREOF.

THIS INFORMATION MEMORANDUM DOES NOT CONSTITUTE, NOR MAY IT BE

USED FOR OR IN CONNECTION WITH, AN OFFER OR SOLICITATION BY ANYONE IN

ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT

AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN

OFFER OR SOLICITATION. 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 OF THIS INFORMATION MEMORANDUM AND THE OFFERING AND

SALE OF THE DEBENTURES MAY BE RESTRICTED BY LAW IN CERTAIN

JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THIS INFORMATION

MEMORANDUM COMES ARE REQUIRED TO INFORM THEMSELVES ABOUT AND TO

OBSERVE ANY SUCH RESTRICTIONS.

DISCLAIMER OF THE ARRANGER

IT IS HEREBY DECLARED THAT THE ISSUER HAS EXERCISED DUE-DILIGENCE TO

ENSURE COMPLETE COMPLIANCE OF PRESCRIBED DISCLOSURE NORMS IN THIS

INFORMATION MEMORANDUM. EACH PERSON RECEIVING THIS INFORMATION

MEMORANDUM ACKNOWLEDGES THAT SUCH PERSON HAS NOT RELIED ON THE

ARRANGER, NOR ANY PERSON AFFILIATED WITH THE ARRANGER, IN




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CONNECTION WITH ITS INVESTIGATION OF THE ACCURACY OF SUCH

INFORMATION OR ITS INVESTMENT DECISION, AND EACH SUCH PERSON MUST

RELY ON ITS OWN EXAMINATION OF THE ISSUER AND THE MERITS AND RISKS

INVOLVED IN INVESTING IN THE DEBENTURES. EXCEPT AS SPECIFICALLY

PROVIDED IN THE TRANSACTION DOCUMENTS, THE ARRANGER: (A) HAS NO

OBLIGATIONS OF ANY KIND TO ANY INVITED ELIGIBLE INVESTOR UNDER OR IN

CONNECTION WITH ANY TRANSACTION DOCUMENT; (B) IS NOT ACTING AS

TRUSTEE OR FIDUCIARY FOR THE INVITED ELIGIBLE INVESTORS OR ANY OTHER

PERSON; AND (C) IS UNDER NO OBLIGATION TO CONDUCT ANY "KNOW YOUR

CUSTOMER" OR OTHER PROCEDURES IN RELATION TO ANY PERSON ON BEHALF

OF ANY INVITED ELIGIBLE INVESTOR. THE 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 ANY TRANSACTION DOCUMENT INCLUDING THIS

INFORMATION MEMORANDUM; OR (B) THE LEGALITY, VALIDITY,

EFFECTIVENESS, ADEQUACY OR ENFORCEABILITY OF ANY TRANSACTION

DOCUMENT OR ANY OTHER AGREEMENT, ARRANGEMENT OR DOCUMENT

ENTERED INTO, MADE OR EXECUTED IN ANTICIPATION OF OR IN CONNECTION

WITH ANY TRANSACTION DOCUMENT; OR (C) ANY DETERMINATION AS TO

WHETHER ANY INFORMATION PROVIDED OR TO BE PROVIDED TO ANY FINANCE

PARTY 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 ROLE OF THE ARRANGER IN THE ASSIGNMENT IS

CONFINED TO MARKETING AND PLACEMENT OF THE DEBENTURES ON THE BASIS

OF THIS INFORMATION MEMORANDUM AS PREPARED BY THE ISSUER. THE

ARRANGER HAS NEITHER SCRUTINIZED NOR VETTED THE CONTENTS OF THIS

INFORMATION MEMORANDUM. THE ARRANGER SHALL USE THIS INFORMATION

MEMORANDUM FOR THE PURPOSE OF SOLICITING SUBSCRIPTION(S) FROM

ELIGIBLE INVESTORS IN THE DEBENTURES TO BE ISSUED BY THE ISSUER ON A

PRIVATE PLACEMENT BASIS. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE

USE OF THIS INFORMATION MEMORANDUM BY THE ARRANGER SHOULD NOT IN

ANY WAY BE DEEMED OR CONSTRUED TO MEAN THAT THE INFORMATION

MEMORANDUM HAS BEEN PREPARED, CLEARED, APPROVED OR VETTED BY THE

ARRANGER; NOR DOES IT IN ANY MANNER WARRANT, CERTIFY OR ENDORSE THE

CORRECTNESS OR COMPLETENESS OF ANY OF THE CONTENTS OF THIS

INFORMATION MEMORANDUM.

THE ARRANGER HAS NOT INDEPENDENTLY VERIFIED THE CONTENTS OF THIS

INFORMATION MEMORANDUM. ACCORDINGLY, NO REPRESENTATION,

WARRANTY OR UNDERTAKING (EXPRESS OR IMPLIED) IS MADE AND NO

RESPONSIBILITY IS ACCEPTED BY THE ARRANGER OR ANY OF THEIR OFFICERS

AS TO THE ADEQUACY, COMPLETENESS OR REASONABLENESS OF THE

INFORMATION CONTAINED HEREIN OR OF ANY FURTHER INFORMATION,

STATEMENT, NOTICE, OPINION, MEMORANDUM, EXPRESSION OR FORECAST

MADE OR SUPPLIED AT ANY TIME IN RELATION THERETO.

DISCLAIMER OF THE STOCK EXCHANGE

IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF THIS DISCLOSURE

DOCUMENT WITH THE STOCK EXCHANGE SHOULD NOT, IN ANY WAY, BE




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DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY

THE STOCK EXCHANGE. THE STOCK EXCHANGE 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.

DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA

THIS INFORMATION MEMORANDUM HAS NOT BEEN FILED WITH OR SUBMITTED

TO SEBI. THE DEBENTURES HAVE NOT BEEN RECOMMENDED OR APPROVED BY

SEBI NOR DOES SEBI GUARANTEE THE ACCURACY OR ADEQUACY OF THIS

DOCUMENT. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THIS INFORMATION

MEMORANDUM SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED TO HAVE

BEEN APPROVED OR VETTED BY SEBI. SEBI DOES NOT TAKE ANY

RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY PROPOSAL

FOR WHICH THE DEBENTURE ISSUE IS PROPOSED TO BE MADE OR FOR THE

CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS

INFORMATION MEMORANDUM. THE ISSUE OF DEBENTURES BEING MADE ON A

PRIVATE PLACEMENT BASIS, FILING OF THIS DOCUMENT IS NOT REQUIRED WITH

SEBI.

DISCLAIMER IN RESPECT OF JURISDICTION

THIS ISSUE IS MADE IN INDIA TO INVESTORS AS SPECIFIED UNDER THE CLAUSE

ENTITLED “ELIGIBLE INVESTORS” OF THIS INFORMATION MEMORANDUM, WHO

SHALL BE SPECIFICALLY APPROACHED BY THE ISSUER. THIS INFORMATION

MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR AN INVITATION

TO SUBSCRIBE TO DEBENTURES OFFERED HEREBY TO ANY PERSON TO WHOM IT

IS NOT SPECIFICALLY ADDRESSED. ANY DISPUTES ARISING OUT OF THIS ISSUE

WILL BE SUBJECT TO THE JURISDICTION OF THE COURTS OF CHENNAI. THIS

INFORMATION MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR AN

INVITATION TO SUBSCRIBE TO THE DEBENTURES HEREIN, IN ANY OTHER

JURISDICTION AND TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN

OFFER OR INVITATION IN SUCH JURISDICTION.

CAUTIONARY NOTE

EACH INVITED ELIGIBLE INVESTOR ACKNOWLEDGES THAT IT (I) IS

KNOWLEDGEABLE AND EXPERIENCED IN FINANCIAL AND BUSINESS MATTERS,

HAS EXPERTISE IN ASSESSING CREDIT, MARKET AND ALL OTHER RELEVANT RISK

AND IS CAPABLE OF EVALUATING, AND HAS EVALUATED, INDEPENDENTLY THE

MERITS, RISKS AND SUITABILITY OF SUBSCRIBING TO/ PURCHASING THE

DEBENTURES; (II) UNDERSTANDS THAT THE ISSUER HAS NOT PROVIDED, AND

WILL NOT PROVIDE, ANY MATERIAL OR OTHER INFORMATION REGARDING THE

DEBENTURES, EXCEPT AS INCLUDED IN THE INFORMATION MEMORANDUM, (III)

HAS NOT REQUESTED THE ISSUER TO PROVIDE IT WITH ANY SUCH MATERIAL OR

OTHER INFORMATION, (IV) HAS NOT RELIED ON ANY INVESTIGATION THAT ANY

PERSON ACTING ON ITS BEHALF MAY HAVE CONDUCTED WITH RESPECT TO THE

DEBENTURES, (V) HAS MADE ITS OWN INVESTMENT DECISION REGARDING THE




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DEBENTURES BASED ON ITS OWN KNOWLEDGE (AND INFORMATION IT HAS OR

WHICH IS PUBLICLY AVAILABLE) WITH RESPECT TO THE DEBENTURES OR THE

ISSUER (VI) HAS HAD ACCESS TO SUCH INFORMATION AS DEEMED NECESSARY

OR APPROPRIATE IN CONNECTION WITH SUBSCRIPTION TO/ PURCHASE OF THE

DEBENTURES, (VII) IS NOT RELYING UPON, AND HAS NOT RELIED UPON, ANY

STATEMENT, REPRESENTATION OR WARRANTY MADE BY ANY PERSON,

INCLUDING, WITHOUT LIMITATION, THE ISSUER, AND (VIII) UNDERSTANDS THAT,

BY PURCHASE OR HOLDING OF THE DEBENTURES, IT IS ASSUMING AND IS

CAPABLE OF BEARING THE RISK OF LOSS THAT MAY OCCUR WITH RESPECT TO

THE DEBENTURES, INCLUDING THE POSSIBILITY THAT IT MAY LOSE ALL OR A

SUBSTANTIAL PORTION OF ITS INVESTMENT IN THE DEBENTURES, AND THAT IT

WILL NOT LOOK TO THE ARRANGER FOR ALL OR PART OF ANY SUCH LOSS OR

LOSSES THAT IT MAY SUFFER.

NEITHER THE DELIVERY OF THIS INFORMATION MEMORANDUM AT ANY TIME

NOR ANY STATEMENT MADE IN CONNECTION WITH THE OFFERING OF THE

DEBENTURES SHALL UNDER THE CIRCUMSTANCES IMPLY THAT ANY

INFORMATION/ REPRESENTATION CONTAINED HEREIN IS CORRECT AT ANY TIME

SUBSEQUENT TO THE DATE OF THIS INFORMATION MEMORANDUM.

THE SALE OR TRANSFER OF THESE DEBENTURES OUTSIDE INDIA MAY REQUIRE

REGULATORY APPROVALS IN INDIA, INCLUDING WITHOUT LIMITATION, THE

APPROVAL OF THE RBI. IT IS THE RESPONSIBILITY OF THE DEBENTURE HOLDERS

TO ALSO ENSURE THAT THEY WILL SELL THESE DEBENTURES STRICTLY IN

ACCORDANCE WITH THIS INFORMATION MEMORANDUM, THE OTHER

TRANSACTION DOCUMENTS AND APPLICABLE LAWS SO THAT THE SALE DOES

NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE ACT.




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RISK FACTORS

The following are the risks envisaged by the management and investors should consider these risk

factors carefully for evaluating the trading or profitability of the Company and its business before

making any investment decision. Unless the context requires otherwise, the risk factors described

below apply to the Company only.

The investors must rely on their own examination and investigation of the Company and its

business, their promoters, associate companies and the Issue including the risks and uncertainties

involved.

The Company and its business are subject to risks, uncertainties and assumptions, internal as well

as external, and could materially affect the performance of the Company. The following are some

of the important factors that could cause actual results to differ materially from the Company’s

expectations:

RISK FACTORS

The Company’s entire portfolio is presently exposed to relatively high political and regulatory

risk typically associated with microfinance operations. Further, the regulator has recently

sought to amend regulations pertaining to Non Bank Finance Companies and pertaining to

securitizations, some of which could have an adverse impact on the Company.

In October 2010, the Andhra Pradesh government issued an Ordinance that severely curbed the

business practices of microfinance institutions in AP. This Ordinance resulted in a sharp shortfall

in liquidity for the microfinance sector across the country and consequent worsening in

profitability and ratings. The RBI subsequently constituted a committee chaired by Mr. YH

Malegam, which released recommendations in January 2011. Some of these regulations have

been implemented by the RBI and further regulation on the sector is awaited.

The government also released a fresh draft of a proposed Microfinance Bill. The Bill envisages

that the microfinance sector is solely regulated by the RBI. However, the Bill has not been placed

for discussion in the Parliament.

Since October 2010, no other state in India has come forth with any similar rule or act that affects

the microfinance sector. However, it is difficult to predict with any certainty that this will not

happen in the future. The sector has seen instances of disruption in business in the past due to

episodes of political interference in districts such as Krishna in Andhra Pradesh (2006) and Kolar

and Mysore in Karnataka (2010). Largely catering to a clientele which is below poverty line, the

sector always remains exposed to random episodes of political interference.

As a response to event risk, IFMR Capital has since inception been working towards substantially

diversifying its portfolio across states and districts. As on November 30, 2011, the Company’s

portfolio is spread across 22 states and 215 districts across the country.

In December 2011, the RBI has released final guidelines governing the regulation and operations

of NBFC-MFIs – created as a separated category to be regulated by the RBI. These regulations

are expected to provide a degree of stability to the regulation and oversight of microfinance

institutions.




15

In April 2010, the RBI released draft regulations governing securitization transactions. It was

proposed that the minimum holding period by the originator for amortising loans be nine months.

This would have severely impacted microfinance securitization. Subsequently in October 2011,

the RBI has released a fresh set of draft regulations that have envisaged a six month holding

period. If this draft regulation is implemented, there may be a negative business impact in the

short term.

The RBI also constituted a committee chaired by Mrs. Usha Thorat on suggesting changes in the

regulation of NBFCs. The committee recently released its recommendations for public comment.

Some of these recommendations may have an adverse effect on the operations of the Company.

In case of changes of laws which, in the opinion of the Debenture Trustee (acting on the

instructions received from the Debenture Holders), adversely and materially impacts the business

of the Company, the Debenture Trustee and the Company shall discuss the implications of such

change on the business of the Company. Based on these discussions the Trustee shall decide with

Majority Consent whether the prepayment of the outstanding amount of the Debentures by the

Company is required or not.

The Company’s focus is on small and medium sized microfinance institutions that are typically

rated at or below investment grade. This exposes the Company to substantially higher credit

risk.

The Company has developed detailed and comprehensive underwriting guidelines and eligibility

criteria to evaluate microfinance institutions.

A thorough due diligence is conducted on every potential partner, based on the

underwriting guidelines. The underwriting guidelines include eligibility criteria which form a

critical part the evaluation process. The broad heads covered under the eligibility criteria are

governance, strategy and organisational factors, management, systems and technology, risk

management practices, and financial performance.

The due diligence visits last 3-4 days and include meetings with top management, second line of

management personnel, and field staff. The MIS is evaluated for its accuracy of loan performance

data, ability to clearly tag loans to specify lenders/investors and ability to generate meaningful

reports. A large portion of time during the due diligence visit is spent evaluating field operations.

During their visits to randomly selected branches, sections, and customers of the client, the due

diligence team evaluates the quality of the origination and collection processes, cash management

and follow up process by the field staff in cases of delay in repayment as well as how strictly the

client’s own prescribed processes are followed. At the end of the visit the due diligence team

meets with the senior management team of the client to provide detailed feedback on the findings

during the due diligence, with specific recommendations. In some cases, the due diligence team

may require the organization to implement the recommendations before any exposure may be

taken by IFMR Capital. In such instances, a follow-up due diligence visit is conducted at a later

stage to verify if all suggestions have been implemented as per the requirements of the Company.

Further, the risk management process of the Company involves an in-depth data analysis plus

periodic field monitoring of each client. Analytics involves weekly follow-up on the performance

of the underlying pools on a granular loan-by-loan basis. Any irregularities noticed are

immediately reported to the Monitoring and Surveillance team and brought to the notice of the




16

MFI. The monitoring & surveillance team typically conducts 3-4 monitoring visits a year on

every active client. A typical monitoring visit consists of a 3-4 days field visit followed by

interaction with senior management. The goal of closely and continuously monitoring the MFI is

to assess potential stress symptoms on the ground, ascertain quality of systems and operations,

verify compliance with covenants and underwriting guidelines, and monitor financial

performance and management quality.

The quality of the underwriting guidelines developed and the thoroughness of the due diligence

and monitoring processes has enabled the Company to identify and work with high quality

originators who are small and regionally focused.

If the Company is not able to attract, motivate, integrate or retain qualified personnel at levels

of experience that are necessary to maintain its quality and reputation, it will be difficult for

the Company to manage its business and growth.

The Company’s business model is unique in its sphere of operations, which is a key attraction for

highly qualified professionals. The organization has, so far, been able to attract high quality and

highly motivated individuals, with substantial experience in capital markets, global markets and

microfinance. The Company is also governed by a well qualified Board that includes two

independent Directors. The Board and the senior management team benefit from the experience

of an advisory council consisting of pioneers and experts in the financial services sector.

The Company is also in the process of implementing a robust long term incentive plan for senior

management to ensure that key senior staff remains motivated towards the long term growth and

well being of the Company.

The Company is still in its growth phase. Track record of size and sustained and profitable

growth is yet to be demonstrated.

The Company has completed three years of profitable operations and demonstrated the efficacy

of its business plan by enabling financing of over Rs. 12,000 million for its clients. The Company

has completed over 60 due diligences and has, at present, over 23 clients. Over the years, the

Company has structured and implemented various kinds of capital market transactions including

single originator securitizations, multi-originator securitizations, non convertible debentures etc.

Transactions structured by the Company have been placed with a wide variety of investors.

Further, the Company has achieved a high market share of financing amongst its clients.

The Company has also obtained a rating of A- from ICRA (rating issued in October 2010 and re-

affirmed recently) and A1 from CARE for long term debt and short term debt respectively. The

rating indicates the rating agencies’ confidence in the Company’s ability to scale up its business

in a profitable manner. It draws from the strong risk management practices followed by the

Company and the ensuing performance with zero non-performing assets or overdues.

To scale up business volumes, there is a need for continued development of a broad investor

base for investments in MFIs. The Company faces the risk of not being able to excess a

suitably wide investor base to ensure demand for the transactions arranged by the Company.

Over the last three years the Company has enabled investments by mutual funds, banks, non bank

finance companies and private wealth clients into the microfinance sector via securitization

transactions. The Company’s Investor Relations team operates from Mumbai. The Company has




17

built a strong network of investors who have largely been repeat investors in transactions

arranged by the Company. Further, the Company’s strategy of co-investing in every transaction is

a factor that improves investor confidence in the sector thereby attracting new class of investors

into microfinance.

The Company is also actively pursuing and acquiring new investors – banks, private wealth,

offshore institutions and mutual funds – for investing in transactions structured by it.

Competition from investment banks and other arrangers may adversely affect the Company’s

competitive position and ability to source business.

The Company’s business model is quite unique with substantial focus on local underwriting,

relationship building and risk monitoring. The Company’s competitive advantages are as follows:

Development of underwriting guidelines – the underwriting guidelines represent a significant

step in the Company’s understanding of the sector and risks involved. These guidelines are

modified from time to time based on market changes.

Relationship and value added to clients – the Company has enabled substantial funding for

several clients over the past twelve months at a time when the sector faced a crisis and found

it difficult to raise financing. Further, the Company has also provided incremental benefits to

its clients through feedback post due diligence, regular financing at a lower cost etc.

Risk analytics - The Company also has a strong risk analytics team that, through a portfolio

monitoring system, has captured granular data on every transaction. This data has been

utilized in development of risk models, predictive asset models, correlation analysis, area /

state risk metrics etc., all of which are essential inputs into credit decisions.

Movement in market interest rates may adversely affect the margins of the Company

The Company largely borrows from the bank market, which is floating rate in nature. Further,

such borrowing is typically linked to the lender’s base rate, which is a non-tradeable benchmark.

The Company’s assets are currently fixed rate in nature, thus exposing the Company to falling

margins in a rising interest rate scenario.

The Company has constituted an Asset and Liability Management Committee (ALCO) that

actively monitors the interest rate risk. The following measures have been taken by the Company

to manage the risk:

- Some of the borrowings of the Company from an NBFC are fixed rate in nature, which

reduces the risk

- The proposed NCD issuance will be linked to a liquid floating rate benchmark, which can be

easily hedged as and when required

- The loans provided by the Company amortise at a weekly / fortnightly / monthly frequency,

which allows the Company to create fresh assets from collections and re-price these assets in

line with market rates

The Company’s strategy is to enable access to financing to high quality originators in various

asset classes, including emerging asset classes such as Small Business Loans, Affordable

Housing Finance and other areas. Given that originators in these asset classes typically have

limited track record, this exposes the Company to higher business risk




18

The Company believes that expanding its reach beyond microfinance into other asset classes that

directly have an impact on low-income households will enable to build a truly inclusive financial

system. Small Business Loans and Affordable Housing Finance are emerging asset classes,

typically targeting the informal sector. The business model relies on the originator’s ability to

ascertain creditworthiness of the Issuer through an assessment of business cash flows, business

and household expenses, references from business partners and security over tangible assets.

These asset classes offer a diversification opportunity for the Company as well, as the underlying

receivables are secured and less exposed to political and event risk. However, these sectors are

yet to scale up and, barring a few cases, yet to exhibit significant track record.

The Company’s strategy in emerging asset classes is similar to that followed for microfinance –

field assessment of originators, developing stringent underwriting guidelines, assisting rating

agencies and investors in their evaluation frameworks, enhancing due diligence and monitoring

capabilities, and structuring capital market transactions.

RISKS RELATING TO THE ISSUE

The NCDs are subject to taxation requirements.

Potential purchasers and sellers of the NCDs should be aware that they may be required to pay

stamp duties or other documentary charges/taxes in accordance with the laws and practices of

India. Payment and/or delivery of any amount due in respect of the NCDs will be conditional

upon the payment of all applicable taxes, duties and/or expenses. Potential investors who are in

any doubt as to its tax position should consult its own independent tax advisers. In addition,

potential investors should be aware that tax regulations and its application by the relevant taxation

authorities change from time to time. Accordingly, it is not possible to predict the precise tax

treatment which will apply at any given time.

Early Termination for Extraordinary Reasons, Illegality and Force Majeure.

In case of changes of laws which, in the opinion of the Debenture Trustee (acting on the

instructions received from the Debenture Holders), adversely and materially impacts the business

of the Company, the Debenture Trustee and the Company shall discuss the implications of such

change on the business of the Company. Based on these discussions the Trustee shall decide with

Majority Consent whether the prepayment of the outstanding amount of the Debentures by the

Company is required or not.

Uncertain trading market

The Company intends to list the NCDs on the WDM segment of the BSE. The Company cannot

provide any guarantee that the NCDs will be frequently traded on the BSE and that there would

be any market for the NCD(s).

The Company will not create or maintain a Debenture Redemption Reserve (DRR) for the

NCDs issued under this Information Memorandum.

The Department of Company Affairs General Circular No. 9/2002 No. 6/3/2001-CL V dated

April 18, 2002 specifies that for NBFCs registered with the RBI under Section 45-IA of the

Reserve Bank of India Act, 1934, no debenture redemption reserve (DRR) is required in the case




19

of privately placed debentures. Therefore, the Company will not be maintaining a DRR in respect

of the NCDs issued herein and the Debenture Holders may find it difficult to enforce its interests

in the event of default.

However, the Company will be maintaining a debt service reserve account as detailed in the

indicative terms of the offer.

Any downgrading in credit rating of the Company’s NCDs may affect the value of NCDs and

thus its ability to raise further debts.

This Issue has been rated by ICRA as having a A- (pronounced A Minus). The rating letter is

provided in Annexure 1. The Company cannot guarantee that these ratings will not be

downgraded. Such a downgrade in the above credit ratings may lower the value of the NCDs and

may also affect the Company’s ability to raise further debt.

Full value of the Security may not be realized as a result of certain factors

Enforcement of security takes an inordinately long period of time in India. An application when

made may be subject to delays and administrative requirements that may result, or be

accompanied by a decrease in value of the property. Full value of the security may not be realized

as a result of among other factors, delays in bankruptcy and foreclosure proceedings, defects in

the registration of collateral and fraudulent transfers.

EXTERNAL RISK FACTORS

The NCDs may not be a suitable investment for all purchasers.

Potential investors should ensure that they understand the nature of the NCDs and the extent of its

exposure to risk, that they have sufficient knowledge, experience and access to professional

advisers to make its own legal, tax, accounting and financial evaluation of the merits and risks of

investment in the NCDs and that they consider the suitability of the NCDs as an investment in the

light of its own circumstances and financial condition.

Regulatory risk and the interpretation of some Indian laws is uncertain.

Indian laws comprise but are not limited to legislation at Central and State levels and also various

rules, regulations, notifications, guidelines, governmental orders, by-laws and internal policy

rulings. The reporting mechanism relating to these is not entirely systematic and such laws may

be published in publications not having wide circulation and not necessarily in a timely manner.

There are limited and unsatisfactory facilities for verification of such laws. Such laws are not

always consistent or comprehensive, and precedent to enable interpretation is limited. It is also

possible that such laws may have retrospective effect. The application of such laws can therefore

be uncertain.

Future legal and regulatory obstructions

Future government policies and changes in laws and regulations in India and comments,

statements or policy changes by any regulator, including but not limited to the SEBI or the RBI,

may adversely affect the NCDs, and restrict the Company’s ability to do business in its target

markets. The timing and content of any new law or regulation is not within the Company’s




20

control and such new law, regulation, comment, statement or policy change could have an

adverse effect on its business, results of operations and financial condition. There can be no

assurance that the laws governing the Indian financial services sector will not change in the future

or that such changes or the interpretation or enforcement of existing and future laws and rules by

governmental and regulatory authorities will not adversely affect its business and future financial

performance.

Further, the SEBI, the BSE or other regulatory authorities may require clarifications on this

Information Memorandum, which may cause a delay in the issuance of NCDs or may result in the

NCDs being materially affected or even rejected.

A slowdown in economic growth in India could cause the Company’s business to suffer

The Company’s performance and the quality and growth of its assets are necessarily dependent

on the health of the overall Indian economy. A slowdown in the Indian economy may adversely

affect its business, including its ability to enhance its asset portfolio and the quality of its assets,

and its ability to implement certain measures could be adversely affected by a movement in

interest rates, or various other factors affecting the growth of industrial, manufacturing and

services sector or a general down trend in the economy.

Political instability or changes in the government could delay further liberalization of the

Indian economy and adversely affect economic conditions in India generally, which could

impact the Company’s financial results and prospects

Since 1991, successive Indian governments have pursued policies of economic liberalization. The

role of the Central and State governments in the Indian economy as producers, consumers and

regulators has remained significant. If there was to be any slowdown in the economic

liberalization, or a reversal of steps already taken, it could have an adverse effect on the

Company’s business. Financial difficulties and other problems in certain financial institutions in

India could cause the Company’s business to suffer. The Company is exposed to the risks of the

Indian financial system, which in turn may be affected by financial difficulties, trends and other

problems faced by certain Indian financial institutions. The problems faced by such Indian

financial institutions and any instability in or difficulties faced by the Indian financial system

generally could create an adverse market perception about Indian financial institutions, banks and

NBFCs. This in turn could adversely affect the Company’s business, its future financial

performance and its shareholders’ funds.

Specific laws and policies affecting financial services companies, foreign investment, currency

exchange rates and other matters affecting investments in Indian companies could change.

The Company’s business may be adversely impacted by natural calamities or unfavourable

climatic changes.

India in the recent years has experienced natural calamities such as earthquakes, floods, droughts

and pandemics including the outbreak of avian flu. The extent and severity of these natural

disasters and pandemics determines its impact on India’s economy and in turn affects its financial

services sector. Prolonged spells of abnormal rainfall and other natural calamities could have an

adverse impact on the Indian economy which could adversely affect its business and the price of

its NCDs.




21

OFFERING INFORMATION- REGULATORY DISCLOSURES

I. NAME AND ADDRESS OF THE REGISTERED OFFICE OF THE COMPANY

IFMR Capital Finance Private Limited



Phone No.: + 91-44-6668 7000

Fax No.: + 91-44-6668 7010

II. NAMES AND ADDRESSES OF DIRECTORS OF THE COMPANY

S.No. Name of the Director Address

1 Bindu Ananth

36, F- 1 Krishna Kutia,

5th Avenue,

Besant Nagar

Chennai 600 090

2 Sucharita Mukherjee

Flat no.1-A,

First Floor,

Anugraha Apartments,

Door no:5, 4th Seaward Road,

Valmiki Nagar, Thiruvanmiyur,

Chennai – 600 041.

3 Charles David Silberstein

Flat 8,

45 Queens Gate Terrance

London

UK

4 Puneet Gupta

No.35,9th Cross Street,

Trustpuram,

Kodambakkam

Chennai - 600 024

5 Dave Ira Wallack

No.6, IInd

Floor,

I Lane, Nungambakkam High Road,

Chennai - 600 034




22

6 Dr. Susan Thomas

Indira Gandhi Institute of Development

Research

Gen A K Vaidya Marg Film City Road,

Goregaon - East Mumbai

Maharashtra - 400065

III. SUMMARY OF THE BUSINESS/ACTIVITIES OF THE COMPANY

IFMR Capital Finance Private Limited is a non-banking financial company (NBFC) promoted by

the Chennai-based IFMR Trust.

The Company is engaged in providing diversified financing options, particularly from debt

capital markets, to high quality originators, largely microfinance institutions (MFIs) in India

IFMR Capital invests in the capital market transactions arranged by the Company, typically in the

subordinated tranches. The Company also provides loans to its partner institutions to originate

portfolio that can be securitized at a later date.

IFMR Capital achieves the above by:

Identifying high quality originators using its stringent underwriting framework

Enabling debt capital markets access to its partner institutions by investing its debt capital

and providing funded / unfunded second loss support

Using its financial structuring expertise to achieve efficient pricing for clients

Utilizing financial tools such as repackaging, securitisation, and credit enhancement to

customize products and structures to match the risk profiles of different categories of

investors

The Company has attracted and hired employees with experience in capital markets, structuring,

risk management and microfinance to achieve its mission of enabling access to debt capital for

institutions that have an impact on low income households. The Company has a strong and

experienced Board and management team comprising largely of professional directors. It also

has access to a group of people who are stalwarts in banking and finance. Dr Nachiket Mor

(founder, IFMR Trust), Mr. H N Sinor (former MD of ICICI Bank, currently CEO of AMFI) and

Dr Tilman Ehrbeck (partner, McKinsey and CEO, CGAP) are strategic advisors to the Company.

The Company has stringent underwriting guidelines for selection of its MFI partners and loan

pools. This includes an in-depth evaluation framework, a detailed due diligence process and

robust risk management systems. This approach has enabled the Company to maintain the quality

of its portfolio and achieve efficient geographical diversification by limiting average district

exposures to 1.5 percent.

The Company currently offers the following to its clients are:

Single originator securitization

Multi originator securitization – a structure that combines pools from multiple MFIs to

achieve critical portfolio size and diversification




23

Loans to originate – loan is utilized by MFIs to create portfolios that may be pooled into a

securitization transaction arranged by the Company

Non convertible debentures

The Company has a well established risk management function consisting of risk analytics, risk

monitoring and risk modeling. The risk team consists of qualified risk professionals. Keeping in

line with best practices in risk management, the Board maintains oversight of risk through a Risk

Committee, which reports on a quarterly basis to the Board. The Risk Committee consists of the

Chief Risk Officer, the Chief Executive Officer and two independent members of the Board. The

risk management function consists of risk analytics and monitoring & surveillance.

The risk analytics team maintains a comprehensive database of transactions, both live and

completed. Data is maintained and pool performance is tracked at a granular level on a daily

basis. This enables pool analysis and selection of future pools based on performance at

district and entity levels.

The monitoring & surveillance team conducts quarterly field monitoring visits to ascertain

compliance and evaluate the risks on the ground using an exhaustive stress metrics

framework. Visits are conducted in groups of two across states and districts to ensure

maximum coverage and heterogeneity. A typical monitoring visit is carried out over four

days and covers 8-10 districts across 2-3 states. The risk modeling team uses past pool

performance data to build predictive risk models that would enable a better and more

scientific understanding of risks in this sector.

Feedback from the risk team is incorporated in entity, geography and pool selection for future

transactions.

Summary Financial Information

Balance Sheet (Amount in Rs.)

As at

30th

September

2011

(Unaudited

)

As at

30

September

2010

(Unaudited)

As at

30th June

2011

(Unaudited)

As at

30 June

2010

(Unaudited

)

As at

31st March

2011

(Audited)

As at

31 March 2010

(Audited)

SOURCES

OF FUNDS

Shareholder'

s Funds

Share

Capital 600,000,000 600,000,000

600,000,000

600,000,000

600,000,000

600,000,000

Share

Application

Money

-

-

-

-

-

Reserves

& Surplus

28,653,693

8,314,393

23,879,175

5,682,592

16,814,714

589,006

Loan Funds

Secured

Loans

240,683,683

390,000,000

209,830,471

300,000,000

119,902,673

150,000,000

Unsecured




24

Loans - - - - -

Deferred

Tax Liability

(Net)

76,875

412,347

76,875

412,347

76,875

412,347

TOTAL

869,414,251

998,726,740

833,786,521

906,094,939

736,794,263

751,001,353

0

(0)

(0)

APPLICATI

ON OF

FUNDS

Fixed Assets

Gross

Block

8,823,877

2,476,684

8,823,877

1,349,185

8,775,930

1,338,902

Less:

Accumulated

Depreciation

4,862,514

948,451

4,006,879

871,892

3,160,545

711,072

Net Block

3,961,363

1,528,233

4,816,998

477,293

5,615,385

627,830

Add:

Capital Work

In Progress

-

4,766,702

5,887,970

2,388,848

3,961,363

6,294,935

4,816,998

6,365,263

5,615,385

3,016,678

Investments

743,516,782

404,435,592

560,539,959

429,233,916

378,629,817

332,755,959

Current

Assets,

Loans &

Advances

Receivable

s under

Financing

Activity

77,158,297

501,744,419

237,629,338

374,605,698

228,310,898

331,443,095

Cash &

Bank

Balances

43,265,844

141,234,694

47,987,189

125,510,920

146,201,793

119,211,260

Other

Current

Assets

31,173,754

19,180,487

20,124,115

19,478,932

25,606,677

12,052,531

Other

Loans &

10,832,589

6,301,055

14,235,874

6,170,657

11,055,152

5,376,339




25

Advances

162,430,484

668,460,655

319,976,516

525,766,207

411,174,520

468,083,225

Less:

Current

Liabilities &

Provisions

Current

Liabilities

37,295,391

77,110,726

48,577,779

53,721,955

56,173,108

52,521,509

Provisions

3,198,987

3,353,716

2,969,173

1,548,492

2,452,352

333,000

40,494,378

80,464,442

51,546,952

55,270,447

58,625,460

52,854,509

Net Current

Assets

121,936,106

587,996,213

268,429,564

470,495,760

352,549,060

415,228,716

TOTAL

869,414,251

998,726,740

833,786,521

906,094,939

736,794,263

751,001,353

Profit and Loss Statement (Amount in Rupees)

As at

30th

September

2011

(Unaudite

d)

As at

30

September

2010

(Unaudite

d)

As at

30th June

2011

(Unaudited

)

As at

30 June

2010

(Unaudite

d)

As at

31st March

2011

(Audited)

As at

31 March

2010

(Audited)

INCOME

Income from

Operations

78,940,412

51,749,944

38,716,332

23,666,889

123,526,594

31,494,810

Other Income

3,399,325

6,991,452

1,786,960

3,218,295

13,432,532

9,801,812

TOTAL

82,339,737

58,741,396

40,503,292

26,885,184

136,959,126

41,296,622

EXPENDITURE

Finance

Expenses

12,752,530

13,490,419

4,722,993

4,664,178

32,119,850

1,523,064

Provisions for

Standard Assets

236,635

-

261,821

-

1,517,352




26

Employee Cost

24,325,936

16,903,278

11,254,860

8,301,341

39,173,491

19,245,772

Operating &

Other Expenses

25,132,486

17,329,636

12,670,499

6,979,199

40,994,763

18,199,382

Depreciation

1,701,969

241,669

846,334

160,820

2,515,903

502,593

TOTAL

64,149,557

47,965,003

29,756,507

20,105,538

116,321,359

39,470,812

Profit before

Taxation

18,190,180

10,776,393

10,746,785

6,779,646

20,637,767

1,825,811

(0)

(0)

(0)

Provision for

Taxation

- Current Tax

6,351,203

3,051,007

3,682,326

1,686,059

4,742,700

1,013,204

- Deferred Tax

-

-

-

(335,472)

441,349

- Fringe Benefit

Tax

-

-

-

4,830

-

Total Tax

Expense

6,351,203

3,051,007

3,682,326

1,686,059

4,412,058

1,454,553

(0)

0

(0)

Profit after Tax

11,838,977

7,725,386

7,064,459

5,093,587

16,225,708

371,258

Transfer to

Statutory Reserve

(2,367,795)

(1,545,077)

(1,412,892)

(1,018,717)

(3,245,142)

(74,252)

Brought Forward

from Previous

Year

13,449,924

469,356

13,449,924

469,356

469,356

172,350

Profit carried to

Balance Sheet

22,921,105

6,649,665

19,101,491

4,544,225

13,449,923

469,356

IV. BRIEF HISTORY OF THE COMPANY SINCE ITS INCORPORATION AND CHANGES

IN ITS CAPITAL STRUCTURE AND BORROWINGS, IF ANY

Highland Leasing and Finance was set up in 1989 and acquired by the Company in 2008 with an

objective to provide efficient and reliable access to debt capital for institutions that impact low




27

income households. IFMR Trust, which owns 100% of the equity of IFMR Capital, has been

funded by a combination of long term loans and grants.

In March 2009, IFMR Capital completed the first rated securitisation of a pool of micro-loans in

India. The underlying micro-loan receivables were originated by Equitas Micro Finance, a

leading MFI that in a short period of time has established itself as a high-quality originator of

microfinance loans. The transaction involved securitisation of loan receivables worth Rs. 160

million, which were sold to a Special Purpose Vehicle, which in turn issued Pass Through

Certificates (PTCs) that were subscribed to by investors. The senior tranche of the PTCs was

rated AA by CRISIL and the subordinated tranche, which was subscribed to by IFMR Capital,

was rated BBB. Within six months both tranches of securities were upgraded by CRISIL to AAA

and A, respectively, based upon the performance of the underlying loan pool and the available

credit enhancement.

Following on the success of this first transaction, IFMR Capital and Equitas completed another

securitisation of a pool of micro-loans in November 2009. The transaction, ‘IFMR Trust Pioneer

II’, represented a few ‘firsts’ for the Indian microfinance sector including the first investment by

a mutual fund in micro-loan backed securities.

The Company scaled up its operations substantially in FY 2011. Total volume of financing

enabled for its clients rose from Rs 6.2 billion from Rs 1.8 billion. The Company scaled up its

relationships with key clients and, in several cases, provided financing in excess of 40% of its

clients’ financing raised. In April 2011, the Company completed its first NCD placement with an

offshore investor. Volume of transactions in H1 2012 is Rs 3,860 Million, which represents

around 100% growth over the corresponding period in the previous financial year. The Company

enhanced financing for smaller clients by completing its largest multi originator securitization

with seven originators in September 2011.

Over the past three years, the Company has significantly enhanced investor appetite for the

microfinance sector. Three of the top mutual funds in the country invested in securitizations

arranged by IFMR Capital, with a total investment of over Rs 1.4 billion. The first private wealth

investment in microfinance pools was enabled in August 2010 and subsequently scaled up over

the period June-October 2011.

Our corporate particulars are presented below:

Particulars Description

Constitution Incorporated as a Private Limited Company under the Act

Rating A(-) with a stable outlook from ICRA

Date of Incorporation 09.03.1989

Nature of Business Operating as NBFC-ND

Start of Operations as IFMR

Capital April 1, 2008

Registered Office

IIT Research Park, 10th Floor

No. 1, Kanagam Village, Tharamani

Chennai - 600 113, India




28

Auditors Current Auditors: Deloitte, Haskins and Sells, Chennai

Email [email protected]

Website http://capital.ifmr.co.in

Capital Structure as on date:

Particulars Rs. million

Authorized Share Capital

65,000,000 Equity Shares of Rs. 10 each

650.00

Issued and Subscribed and Paid up Capital

60,000,000 Equity Shares of Rs. 10 each

600.00

Share Capital History:

Date of

Allotment

No. of

Shares

issued

Cumulative

Paid up

Capital (Rs.)

Mode of

Allotment

Identity of Allottees Face Value

(Rs)

01-12-2008 319,991 3,199,910 Physical IFMR Trusteeship

Services P Ltd

10

28-12-2009 1 3,199,920 Physical Bindu Ananth 10

28-12-2009 8 3,200,000 Physical IFMR Trusteeship

Services P Ltd

10

29-09-2009 36,000,000 39,200,000 Physical IFMR Trusteeship

Services P Ltd

10

25-03-2010 23,680,000 Physical IFMR Trusteeship

Services P Ltd

10

Equity Shareholding Pattern of the Company on the date of filing this Disclosure

Document:

(as on date)

Equity Shares

No. of Shares % Shareholding

IFMR Trusteeship Services Pvt. Ltd. 59,999,999 99.999998

Bindu Ananth 1 0.000002

Details of existing borrowings (both secured and unsecured) as on the date of filing this

Disclosure Document:

Name of the Bank / Lender Amount in Rupees

mailto:[email protected]

http://capital.ifmr.co.in/




29

Secured Loan

The Ratnakar Bank 199,990,828

Mahindra Finance 31,037,419

Unsecured Borrowing

Commercial paper 74,500,000

V. SECURITIES ISSUED AND SOUGHT TO BE LISTED UNDER THE CURRENT

DOCUMENT

The Company proposes to raise an amount upto Rs. 360,000,000 by way of issue of secured,

rated, listed, taxable, redeemable, non convertible Debentures of the face value of Rs

1,000,000 /- (Rupees Ten Lakhs only) each on a private placement basis not open for public

subscription.

VI. DETAILS OF THE ISSUE SIZE

Rs. 360 million

VII. DETAILS OF UTILIZATION OF THE ISSUE PROCEEDS

a. The Company shall apply the proceeds of the issue of Debentures for direct or indirect

financing of microfinance, small and medium enterprises and agriculture, a maximum of

20 % of which can be invested towards Andhra Pradesh. All Issue related expenses,

including any arrangement fees that may be paid in relation to the subscription of the

Debentures, credit rating fees, costs payable to the Debenture Trustee shall also be paid

from the Issue proceeds. The proceeds will not be used by the Issuer for activities which

are not eligible for bank credit to NBFCs under the Master Circular on Bank Finance to

Non-Banking Financial Companies dated July 1, 2011 issued by RBI.

b. The Company shall provide to the Debenture Holders by 30th June of every year, a

certificate and signed by the auditor’s of the Company evidencing end use in relation to

the issuance of the Debentures.

The Main Objects clause of the Memorandum of Association of the Company enables it to

undertake the activities for which the funds are being raised through the Issue and also the

activities which the Company has been carrying out till date.

VIII. MATERIAL CONTRACTS AND AGREEMENTS INVOLVING FINANCIAL

OBLIGATIONS

List of Material Contracts and documents and Inspection thereof




30

Certified copy of the Memorandum & Articles of Association of the Issuer.

Certified copy of the Certificate of incorporation of the Issuer

Credit Rating Letter dated December 2011 from ICRA Limited

Consent from IDBI Trusteeship Services Limited to act as Debenture Trustee vide their letter

dated December 02, 2011.

Consent of Sharepro Services (India) Pvt Limited to act as Registrar and Transfer Agent vide

their Letter dated December 02, 2011.

Annual reports for the last 3 years

Certified true copy of resolution dated December 6, 2011, of the Board of Directors,

authorizing the issue of the Debentures and further authorizing the Committee to take all

action and to finalize the terms and conditions of the Debentures.

The above material documents and contracts are available for inspection between 10AM-5PM on

all working days at the registered office of the Company.

IX. DETAILS OF OTHER BORROWINGS INCLUDING ANY OTHER ISSUE OF DEBT

SECURITIES IN THE PAST

Borrowings

Name of the Lender Amount (as on December 16, 2011) in Rupees

The Ratnakar Bank 199,990,828

Mahindra Finance 31,037,419

Holders of commercial

papers (as mentioned under

clause XII hereinbelow)

74,500,000

Total 305,528,247

X. MATERIAL EVENT / DEVELOPMENT

Since March 31, 2011, in the opinion of the Issuer, other than as disclosed in this Information

Memorandum, there has not arisen any circumstance that materially or adversely affects the

profitability of the Issuer taken as a whole or the value of their consolidated assets or their ability

to pay their material liabilities over the next 12 months.

Other than as disclosed in this Information Memorandum, there are no other material events or

developments or changes at the time of this Issue or subsequent to the Issue which may affect the

Issue or the investors’ decision to invest/ continue to invest in the Issue.

XI. DEBT SECURITIES ISSUED (I) FOR CONSIDERATION OTHER THAN CASH,

WHETHER IN WHOLE OR PART. (II) AT A PREMIUM OR DISCOUNT, OR (III) IN

PURSUANCE OF AN OPTION




31

As of the date of this Information Memorandum, the Issuer has not issued any debt securities, for

consideration other than cash, whether in whole or in part, at a premium or discount, or in

pursuance of an option

XII. DETAILS OF HIGHEST TEN HOLDERS OF EACH KIND OF SECURITIES OF THE

COMPANY AS ON DATE

Top Ten Shareholders of the Company as on date of the Information Memorandum

S.NO. NAME & ADDRESS SHARES %

1 IFMR Trusteeship Services Pvt. Ltd. 59,999,999 99.999998

2 Bindu Ananth 1 0.000002

Top ten debenture holders of the Company as on date of the Information Memorandum

Not applicable

Details of holders of debt securities of the Company - Commercial Paper issuance of INR

74,500,000

Name of the Lender Address

Holding (No. of

securities)

Dadi Bejonji Engineer Shiv Shanti Bhuvan, 146 Maharshi

Karve Road, Churchgate

Reclamation, Mumbai

10

Greenstone Investments

Private Limited

Office No.502, 5th Floor Raheja

Chambers, Nariman Point, Mumbai

42

TCFC Finance Limited 502 5th Floor, Raheja Chamber

213, Nariman Point, Mumbai

85

Zarir Jehangir Nagarwalla

Sleater House no. 2,

Flat no. 3, Naushir Bharucha Rd

10

Meher Zarir Nagarwalla Sleater House no.2,

Flat no. 3, Naushir Bharucha Rd

2

XIII. UNDERTAKING TO USE A COMMON TRANSFER FORM

The Issuer shall issue Debentures in dematerialised form only and there will not be any

Debentures in physical mode. The Debentures shall be transferred subject to and in accordance

with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the

transferor/ transferee and any other applicable laws and rules notified in respect thereof and

subject to the terms and conditions of issuance as contained in this Information Memorandum.

The normal procedure followed for transfer of securities held in dematerialized form shall be

followed for transfer of these Debentures held in electronic form. The seller should give delivery

instructions containing details of the buyer’s DP account to his depository participant.




32

However, the Issuer would use a standard transfer form for physical holdings, if at a later stage

there is any holding in physical form due to the depository giving the rematerialisation option to

any investor.

XIV. REDEMPTION AMOUNT, PERIOD OF MATURITY AND YIELD ON REDEMPTION

Redemption Date 30 June 2015

Redemption Amount Rs 360,000,000/-

Coupon 12.35% per annum

Period of Maturity 3.5 years from the Deemed Date of Allotment

XV. TERMS OF OFFER OR PURCHASE

Issuer IFMR Capital Finance Pvt. Ltd

Instrument Secured, Redeemable, Taxable, Listed, Non-Convertible

Debentures on a private placement basis

Issue Size Rs. 360 million

Use of Proceeds For direct or indirect financing of microfinance, small and

medium enterprises and agriculture, a maximum of 20 % of

which can be invested towards Andhra Pradesh.

Credit Rating A- from ICRA Limited

Tenor 3.5 years

Redemption Quarterly repayments with grace period of 1 year in accordance

with the schedule below:

Redemption Date Redemption

Amount

30th March, 2013 36,000,000

30th June, 2013 36,000,000

30th September, 2013 36,000,000

30th December, 2013 36,000,000

30th March, 2014 36,000,000

30th June, 2014 36,000,000

30th September, 2014 36,000,000

30th December, 2014 36,000,000

30th March, 2015 36,000,000

30th June, 2015 36,000,000

Total 360,000,000

Coupon / Interest Rate 12.35% per annum

Interest Payment Period On a quarterly basis as follows:

30 March, 2012

30 June, 2012

30 September, 2012

30 December, 2012

30 March, 2013

30 June, 2013




33

30 September, 2013

30 December, 2013

30 March, 2014

30 June, 2014

30 September, 2014

30 December, 2014

30 March, 2015

30 June, 2015

Security a) Exclusive floating charge over the (i) loans, guarantees, bonds

and commercial paper; (ii) investment into or credit enhancement

for asset pools (Securitization Transaction) originated by the

MFI; and (iii) any form of credit exposure in the new asset

classes.;

of IFMR Capital with a security cover of 1.25x;

b) Debt Service Reserve Account (“DSRA”): The Issuer to

maintain a DSRA for its future obligations (including both

interest and principal) based on following table:

From the Deemed Date of Allotment No of months

Up to 18 months 3.0

Between 19 -24 months 2.5

Between 25 - 30 months 2.0


Between 37 – 42 months 1.0

Listing BSE

Negative Covenants (i) IFMR Trust shall not transfer, sell, assign or otherwise dispose

of the shares aggregating to 51% of the issued and fully paid up

share capital of the Issuer held by IFMR Trust.

(ii) IFMR Trust shall not create any encumbrance on the shares of

the Issuer held by IFMR Trust.

Debenture Trustee IDBI Trusteeship Services Limited

Depository NSDL / CDSL

R&T Agent

Listing

Sharepro Services (India) Pvt Limited

Put/ Call Option None

Mode of Issue Dematerialized

Business Days Chennai

Governing Law India

XVI. DISCOUNT ON THE OFFER PRICE

The Debentures are issued at par.

XVII. DEBT EQUITY RATIO




34

The debt equity ratio prior to and after the Issue

Prior to the Issue After the Issue

Debt Equity Ratio* 0.487 1.060

Calculations

As on December 16, 2011, debt-to-equity ratio is calculated as follows:-

Subsequent to the issue, debt-to-equity ratio shall be calculated as follows:-

XVIII. SERVICING BEHAVIOR OF THE EXISTING DEBT SECURITIES

The Company has discharged all its liabilities on term loans and debt securities in time and would

continue doing so in future as well. The Company has been regular in payment of interest and

principal amounts, as and when due, and has not defaulted in any such payments.

XIX. PERMISSION / CONSENT FROM THE PRIOR CREDITORS

The Company is not required to obtain any consent from its creditors for this Issue and the

Company has procured, where ever required, consents from its existing charge holders for

creation of security for the Debentures being issued on pari-pasu basis.

XX. NAME OF THE DEBENTURE TRUSTEE

The Debenture Trustee for this Issue of Debentures shall be IDBI Trusteeship Services Limited.

The Debenture Trustee has given its written consent for its appointment and inclusion of its name

in the form and context in which it appears in this Information Memorandum. IDBI Trusteeship

Services Limited has given their consent to the Issuer to act as Debenture Trustee for the

Debenture Holders under Regulation 4 (4) of the SEBI Debt Regulations.

The consent letter from the Debenture Trustee is attached as Annexure 2.

XXI. RATING RATIONALE ADOPTED BY THE RATING AGENCIES

CREDIT RATING: “A-” pronounced (A Minus) by ICRA Limited




35

Symbols Rating Definition

ICRA A Instruments with this rating are considered to have

adequate degree of safety regarding timely servicing of

financial obligations. Such instruments carry low credit

risk.

(-) modifier represents comparative standing in that category

The 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 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 agency

has the right to suspend, withdraw the rating at any time on the basis of new information etc.

The rating rationale has been provided in Annexure 1.

XXII. LISTING OF DEBENTURES

The Debentures are proposed to be listed on the Wholesale Debt Market segment of the Bombay

Stock Exchange. The Issuer has obtained in-principle approval from BSE for the listing of

Debentures on December 19, 2011.

XXIII. TERM SHEET

Issuer IFMR Capital Finance Pvt. Ltd

Instrument Secured, Redeemable, Taxable, Listed, Non-Convertible

Debentures on a private placement basis

Issue Size Rs. 360 million

Use of Proceeds For direct or indirect financing of microfinance, small and

medium enterprises and agriculture, a maximum of 20 % of

which can be invested towards Andhra Pradesh.

Credit Rating A- from ICRA Limited

Tenor 3.5 years

Redemption Quarterly repayments with grace period of 1 year in accordance

with the schedule below:

Redemption Date Redemption

Amount

30th March, 2013 36,000,000

30th June, 2013 36,000,000

30th September, 2013 36,000,000

30th December, 2013 36,000,000

30th March, 2014 36,000,000

30th June, 2014 36,000,000

30th September, 2014 36,000,000

30th December, 2014 36,000,000




36

30th March, 2015 36,000,000

30th June, 2015 36,000,000

Total 360,000,000

Coupon / Interest Rate 12.35% per annum

Interest Payment Period Quarterly on the following dates:

30 March, 2012

30 June, 2012

30 September, 2012

30 December, 2012

30 March, 2013

30 June, 2013

30 September, 2013

30 December, 2013

30 March, 2014

30 June, 2014

30 September, 2014

30 December, 2014

30 March, 2015

30 June, 2015

Security a) Exclusive floating charge over the (i) loans, guarantees, bonds

and commercial paper; (ii) investment into or credit enhancement

for asset pools (Securitization Transaction) originated by the

MFI; and (iii) any form of credit exposure in the new asset

classes.;

of the IFMR Capital with a security cover of 1.25x;

b) Debt Service Reserve Account (“DSRA”): The Issuer to

maintain a DSRA for its future obligations (including both

interest and principal) based on following table:

From the Deemed Date of Allotment No of months

Up to 18 months 3.0





Listing BSE

Negative Covenants (i) IFMR Trust shall not transfer, sell, assign or otherwise dispose

of the shares aggregating to 51% of the issued and fully paid up

share capital of the Issuer held by IFMR Trust.

(ii) IFMR Trust shall not create any encumbrance on the shares of

the Issuer held by IFMR Trust.

Debenture Trustee IDBI Trusteeship Services Limited

Depository NSDL / CDSL

R&T Agent

Listing

Sharepro Services India Pvt Limited

Put/ Call Option None




37

Mode of Issue Dematerialized

Business Days Chennai

Governing Law India




38

OTHER INFORMATION AND ISSUE PROCEDURE

Issue:

Issue of the Debentures of the face value Rs. 1,000,000/- (Rupees one millon each, aggregating to

Rs. 360,000,000 (Rupees Three Hundred Sixty million) on a private placement basis not open for

public subscription.

Who Can Apply

Only the Eligible Investors who are specifically addressed through a communication by or on

behalf of the Company directly are eligible to apply for the Debentures. An application made by

any other person will be deemed as an invalid application and rejected. In order to subscribe to

the Debentures a person must be either

h. Commercial Banks, Eligible Financial Institutions* and Insurance Companies;

i. Companies;

j. Non Banking Finance Companies (NBFCs) and Residuary NBFCs and

k. Mutual Funds

l. Foreign Institutional Investors

m. Provident Funds , Gratuity, Superannuation & Pension Funds, subject to their Investment

guidelines

n. Any other investor authorised to invest in these Debentures

*Eligible Financial Institution means such financial institutions from whom monies borrowed

even under an unsecured debenture would not constitute a ‘deposit’ within the meaning of the

term as defined under Section 2(b) of the Companies (Acceptance Of Deposits) Rules, 1975.

a. Application by Scheduled Commercial Banks/ Eligible Financial Institutions

The application must be accompanied by certified true copies of (i) Board Resolution

authorising investments or letter of authorization or Power of Attorney and (ii) specimen

signatures of authorized signatories.

b. Application by Insurance Companies

The applications must be accompanied by certified true copies of (i) Memorandum and

Articles of Association/Constitution/Bye-laws, (ii) Resolution authorising investment and

containing operating instructions, (iii) Specimen signatures of authorised signatories and (iv)

Form 15 AA for claiming exemption from deduction of Tax on the interest income (including

interest on application money), if applicable.

c. Applications by Corporate Bodies/ Companies/ Statutory Corporations/ NBFCs and

RNBCs

The applications must be accompanied by certified true copies of (i) Memorandum and

Articles of Association (ii) resolution authorizing investment and containing operating

instructions, and (iii) specimen signatures of authorized signatories.




39

d. Application by Mutual Funds

(i) a separate application can be made in respect of each scheme of an Indian mutual fund

registered with SEBI and that such applications shall not be treated as multiple

applications.

(ii) the applications made by the asset management companies or custodians of a Mutual

Fund shall clearly indicate the name of the concerned scheme for which application is

being made.

(iii) The applications must be accompanied by certified true copies of (i) SEBI registration

certificate and trust deed (ii) resolution authorizing investment and containing operating

instructions and (iii) specimen signatures of authorized signatories.

DISCLAIMER: PLEASE NOTE THAT ONLY THOSE PERSONS TO WHOM THIS

INFORMATION MEMORANDUM HAS BEEN SPECIFICALLY ADDRESSED ARE

ELIGIBLE TO APPLY. HOWEVER, AN APPLICATION, EVEN IF COMPLETE IN ALL

RESPECTS, IS LIABLE TO BE REJECTED WITHOUT ASSIGNING ANY REASON FOR

THE SAME. THE LIST OF DOCUMENTS PROVIDED ABOVE IS ONLY INDICATIVE,

AND AN INVESTOR IS REQUIRED TO PROVIDE ALL THOSE DOCUMENTS /

AUTHORIZATIONS / INFORMATION, WHICH ARE LIKELY TO BE REQUIRED BY THE

COMPANY. THE COMPANY MAY, BUT IS NOT BOUND TO REVERT TO ANY

INVESTOR FOR ANY ADDITIONAL DOCUMENTS / INFORMATION, AND CAN

ACCEPT OR REJECT AN APPLICATION AS IT DEEMS FIT. INVESTMENT BY

INVESTORS FALLING IN THE CATEGORIES MENTIONED ABOVE ARE MERELY

INDICATIVE AND THE COMPANY DOES NOT WARRANT THAT THEY ARE

PERMITTED TO INVEST AS PER EXTANT LAWS, REGULATIONS, ETC. EACH OF THE

ABOVE CATEGORIES OF INVESTORS IS REQUIRED TO CHECK AND COMPLY WITH

EXTANT RULES/REGULATIONS/ GUIDELINES, ETC. GOVERNING OR REGULATING

THEIR INVESTMENTS AS APPLICABLE TO THEM AND THE COMPANY IS NOT, IN

ANY WAY, DIRECTLY OR INDIRECTLY, RESPONSIBLE FOR ANY STATUTORY OR

REGULATORY BREACHES BY ANY INVESTOR, NEITHER IS THE COMPANY

REQUIRED TO CHECK OR CONFIRM THE SAME.

How to Apply

Application(s) for the Debentures must be made submitting the Application Forms (the

“Application Form”) which must be completed in block letters in English.

Application Form(s) must be accompanied by either a demand draft or cheque, drawn or made

payable in favour of “IFMR Capital Finance Private Limited”, payable at Chennai and crossed

Account Payee only. The payment can also be made by Real Time Gross Settlement (RTGS) by

crediting the funds to the account given below:

Beneficiary Name IFMR CAPITAL FINANCE PRIVATE LIMITED

Bank Name KOTAK MAHINDRA BANK LTD.

C/a No 04632090002180

Branch Address Krishna Manasi, Old D/No.45, New D/No.97




40

First Main Road, Gandhi Nagar, Adyar

Chennai - 600 020.

IFSC Code KKBK0000463

The applications must be accompanied by certified true copies of (i) a letter of authorization, and

(ii) specimen signatures of authorised signatories.

Instructions For Application

1) Application Forms must be completed in BLOCK LETTERS IN ENGLISH. A blank

must be left between two or more parts of the name.

2) Signatures should be made in English.

3) Minimum application shall be for 1 (one) Debenture and in multiples of 1 (one)

Debenture(s) thereafter.

4) The Debentures are being issued at par to the face value. Full amount has to be paid on

application per Debenture applied for. Applications for incorrect amounts are liable to be

rejected. Face Value: Rs. 1,000,000/-.

5) Cheques/drafts must be made in the favour of “IFMR Capital Finance Private Limited”

and crossed “Account Payee only” payable at Chennai. Money orders or postal orders

will not be accepted. The payments can be made by RTGS, the details of which are given

above.

6) No cash will be accepted.

7) The Applicant should mention its permanent account number or the GIR number allotted

to it under the Income Tax Act, 1961 and also the relevant Income-tax

circle/ward/District.

8) Applications under Power of Attorney/Relevant Authority

In case of an application made under a power of attorney or resolution or authority to

make the application a certified true copy of such power of attorney or resolution or

authority to make the application and the Memorandum and Articles of Association

and/or bye-laws of the Investor must be attached to the Application Form at the time of

making the application, failing which, the Company 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 therefore. Further any modifications / additions in the

power of attorney or authority should be notified to the Company at its registered office.

Names and specimen signatures of all the authorised signatories must also be lodged

along with the submission of the completed application.

9) An application once submitted cannot be withdrawn. The applications should be

submitted during normal banking hours at the registered office of the Company,

mentioned below:




41



10) The applications would be scrutinised and accepted as per the terms and conditions

specified in this Information Memorandum.

11) The Company is entitled at its sole and absolute discretion to accept or reject any

application, in part or in full without assigning any reason whatsoever. Any application,

which is not complete in any respect, is liable to be rejected.

12) Applicants residing or situate at places other than in Chennai, may send their application

along with cheques or demand drafts to the centre mentioned above. The demand drafts

must be payable at par at Chennai. The demand draft charges will have to be borne by the

Applicant.

13) The Investor/Applicant shall apply for the Debentures in electronic, i.e., dematerialised

form only. Applicants should mention their Depository Participant’s name, DP-ID and

Beneficiary Account Number in the Application Form. In case of any discrepancy in the

information of Depository/Beneficiary Account, the Company shall be entitled to not

credit the beneficiary’s demat account pending resolution of the discrepancy.

The Applicant is requested to contact the office of the Company as mentioned above for any

clarifications.

Succession

In case the investor is an individual, in the event of the demise of a registered Debenture Holder

or the first holder in the case of joint holders, the Company will recognize the executor or

administrator of the deceased Debenture Holder or the holder of succession certificate or other

legal representative of the deceased Debenture Holder as having title to the Debenture. The

Company shall not be bound to recognize such executor, administrator or holder of the succession

certificate unless such a person obtains probate or letter of administration or 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 and delivers a copy of the same to the Company. The

Company may at its absolute discretion, where it thinks fit, dispense with the production of the

probate or letter of administration or succession certificate or other legal representation, in order

to recognize such holder as being entitled to the Debenture standing in the name of the deceased

Debenture Holder on production of sufficient documentary proof or indemnity. In case the

Debentures are held by a person other than an individual, the rights in the Debenture shall vest

with the successor acquiring interest therein, including a liquidator or such any person appointed

as per the applicable laws.

Over and above the aforesaid terms and conditions, the Debentures, if any issued under this

Information Memorandum, shall be subject to this Information Memorandum, the relevant

debenture trust deed and also be subject to the provisions of the Memorandum and Articles of

Association of the Company.

Option to Subscribe




42

The Company has made arrangements for issue and holding of the Debentures in dematerialized

form.

Nomination Facility

The Company does not offer any nomination facility to the investors of the Debentures issued

under this Information Memorandum.

Right to accept or reject applications

The Company is entitled at its sole and absolute discretion, to accept or reject any application in

part or in full, without assigning any reason. Incomplete Application Forms are liable to be

rejected. The full amount of Debenture has to be submitted along with the Application Form.

Also, in case of over subscription, the Company reserves the right to increase the size of the

placement subject to necessary approvals/certifications, and the basis of allotment shall be

decided by the Company.

Refunds

For applicants whose applications have been rejected or allotted in part, refund orders will be

dispatched within 7 working days from the Deemed Date of Allotment of the Debentures.

In case the Issuer has received money from applicants for Debentures in excess of the aggregate

of the application money relating to the Debentures in respect of which allotments have been

made, the Registrar shall upon receiving instructions in relation to the same from the Issuer repay

the moneys to the extent of such excess, if any.

Interest on Application Money

Interest on the application money (if any) at the applicable coupon, will be paid via interest

cheques / credit to the allottee’s bank account. Such interest will be paid for the period

commencing from the date of realization of the cheque(s) / draft(s) up to but excluding the

Deemed Date of Allotment. The interest cheques / instruction to credit allottees bank account for

interest payable on application money will be dispatched by Registered Post / courier / hand

delivery on or before the working day of the Deemed Date of Allotment. It is clarified that

interest shall not be paid on invalid and incomplete applications. Tax exemption certificates, if

applicable, in respect of non-deduction of tax at source on interest on application money must be

submitted along with the Application Form.

For applicants whose applications have been refunded/rejected or allotted in part, interest on their

refundable application money (if any) will be dispatched within 7 working days of Issue closure

and the Company shall ensure adequate funds for the same. Interest will be computed at

applicable rate, on refundable application money from the date of realization of cheque/draft/

RTGS inflow to the date of dispatch by the Company.

The interest on application money (if any) will be computed on 365 days a year basis.

Allotment Intimation




43

The Company has made necessary arrangements with the National Securities Depository Limited

(NSDL)/ Central Depository Services (India) Limited (CDSL) for the issue of these Debentures

in electronic (dematerialised) form. The investors holding these Debentures in the electronic

(dematerialised) 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 from time to time and other applicable laws and rules notified in

respect thereof. Investors should mention their NSDL/ CDSL depository participant’s name, DP-

ID and beneficiary account number at the appropriate place in the Application Form. The

Company shall take reasonable steps to credit the beneficiary account of the allotee(s), with the

NSDL/ CDSL depository participant as mentioned in the Application Form, with the number of

Debentures allotted. The applicant is responsible for the correctness of its details given in the

Application Form vis-à-vis those with its depository participant. In case the information is

incorrect or insufficient, the Company would not be liable for losses, if any. The Company shall

credit the letter(s) of allotment in electronic form to the demat account of the investors as per the

details furnished in the Application Form. The allotment intimation will be sent to the allottee(s).

This allotment intimation should neither be construed as a letter(s) of allotment nor as a credit

advice; and hence it is non-transferable/non-transmittable and not tradable. The Company will

dispatch the allotment intimation to allottee(s) within 2 working days of the Deemed Date of

Allotment and credit the investor(s) demat account with the investor(s) depository participant

within 7 working days from Deemed Date of Allotment.

After completion of all legal formalities, the securities held by the investor, under the ISIN

representing the letter(s) of allotment, shall be converted into Debentures as per the procedure

laid down by NSDL/ CDSL in this behalf.

The Company shall request the Depository to provide a list of beneficial owners. This shall be the

list, which shall be considered for payment of interest, repayment of principal, etc. as the case

may be.

The Company also proposes to make depository arrangement with Central Depository Services

(India) Limited (CDSL) in due course. The allotment process for crediting the Beneficiary

Account of the Allottee(s) with the CDSL Depository Participant will be communicated at such

time.

Register of Debentures holder(s)

A register of all Debenture Holder(s) containing necessary particulars will be maintained by the

Company at its Registered Office. A copy of the register of all Debenture Holder(s) will also be

maintained by the Company at its Corporate Office.

Transfer / Transmission

The Debentures shall be freely transferable subject to applicable law. Further, any dispute in

regard to the sale, transfer or assignment of any Debentures or in respect to any principal/interest

claim, shall be settled between the transferor(s) and the transferee(s), and the Company shall not

be liable in this regard in any manner, whatsoever.

(a) Debentures held in Physical Form




44

Request for registration of transfer along with the Debentures /letter(s) of allotment and

proper transfer documents with appropriate stamp duty should be sent to the Registered

Office of Company. The transferee shall also intimate the name, address and wherever

necessary, authority to purchase the Debentures. The Company on verification and if

satisfied with the documents shall register the transfer on its books.

(b) Debentures held in Electronic (Dematerialised) Form

Debentures held in electronic form (dematerialized) form shall be transferred subject to

and in accordance with the rules / procedures as prescribed by the NSDL or CDSL /

depository participant of the transferor/ transferee and any other applicable laws and rules

notified in respect thereof.

Authority for the Placement

This private placement of Debentures is being made pursuant to the resolution of the Board of

Directors passed at its meeting held on December 6, 2011, which has approved the placement of

Debentures upto Rs. 375 million. The borrowings under these Debentures will be within the

prescribed limits as aforesaid.

The Company can carry on its existing activities and future activities planned by it in view of the

existing approvals, and no further approvals from any Government Authority are required by the

Company to carry on its said activities.

Security

The Debentures, interest thereon, trustees’ remuneration and all other monies relating thereto

shall be secured by way of

a. Exclusive floating charge over the (i) loans, guarantees, bonds and commercial paper; (ii)

investment into or credit enhancement for asset pools (Securitization Transaction) originated

by the MFI; and (iii) any form of credit exposure in the new asset classes;

of IFMR Capital with a security cover of 1.25x;

b. Debt service reserve account (“DSRA”): The Issuer to maintain a DSRA for its future

obligations (including both interest and principal) based on following table:

Loan period after disbursement No of months

Up to 18 months 3.0





The security has been created by the Company as aforesaid in favour of the Debenture Trustee.

Negative Covenants

(i) IFMR Trust shall not transfer, sell, assign or otherwise dispose of the shares aggregating to

51% of the issued and fully paid up share capital of the Issuer held by IFMR Trust.

(ii) IFMR Trust shall not create any encumbrance on the shares of the Issuer held by IFMR Trust.




45

Record Date

The list of beneficial owner(s) provided by the Depository shall be used to determine the name(s)

of person(s) to whom the interest and/or principal installment is to be paid.

Effect of Holidays

Should the interest or principal payment date fall on a day which is not a Business Day, the next

Business Day shall be considered as the effective date(s) for that payment.

Tax Deduction at Source

Tax as applicable under the Income Tax Act, 1961 will be deducted at source. Tax exemption

certificate/document, under Section 195(3) or Section 197(1) of the Income Tax Act, 1961, if any,

must be lodged at the office of the Company before the payment date. Tax exemption certificate

for interest on application money, if any, should be lodged along with the Application Form.

Redemption on Maturity of Debenture

Payment on redemption will be made by way of credit through RTGS system/ funds transfer in

the name of Debenture Holder(s) whose names appear on the list of beneficial owners setting out

the relevant beneficiaries’ name and account number, address, bank details and depository

participant’s identification number given by the Depositories to the Issuer and the Registrar as on

the payment date. All such Debentures will be simultaneously redeemed through appropriate

debit corporate action.

The Debentures shall be taken as discharged on payment of the Redemption Amount by the

Issuer on maturity to the registered Debenture Holder(s) whose name appears in the Register of

Debenture Holder(s). Such payment will be a legal discharge of the liability of the Issuer towards

the Debenture Holder(s). On such payment being made, the Issuer will inform NSDL/CDSL and

accordingly the account of the Debenture Holder(s) with NSDL /CDSL will be adjusted.

The Issuer's liability to the Debenture Holder(s) towards all their rights including for payment or

otherwise shall cease and stand extinguished from the due dates of redemption in all events.

Further the Issuer will not be liable to pay any compensation from the dates of such redemption.

On the Issuer dispatching the amount as specified above in respect of the Debentures, the liability

of the Issuer shall stand extinguished.

The Debentures shall be redeemed quarterly in ten equal installments starting from the end of the

15th month from the Deemed Date of Allotment on the 30th day of that month and finally at the

end of the 42nd month from the Deemed Date of Allotment in accordance with the schedule

below:

Redemption Date Redemption Amount

30th March, 2013 36,000,000

30th June, 2013 36,000,000

30th September, 2013 36,000,000

30th December, 2013 36,000,000

30th March, 2014 36,000,000




46

30th June, 2014 36,000,000

30th September, 2014 36,000,000

30th December, 2014 36,000,000

30th March, 2015 36,000,000

30th June, 2015 36,000,000

Total 360,000,000

Compliance Officer

The Investor may contact the Company in case of any pre -issue / post-issue related problems

such as non-receipt of letters of allotment / Debenture certificates / refund orders / interest

cheques.

Sharing of Information

The Issuer may, at its option, but subject to applicable laws, use on its own, as well as exchange,

share or part with any financial or other information about the Debenture Holder(s) available with

the Issuer, with its subsidiaries and affiliates and other banks, financial institutions, credit

bureaus, agencies, statutory bodies, as may be required and neither the Issuer nor its subsidiaries

and affiliates nor their agents shall be liable for use of the aforesaid information.

Debenture Holder not a Shareholder

The Debenture Holder(s) will not be entitled to any of the rights and privileges available to the

shareholders of the Issuer. The Debentures shall not confer upon the Debenture Holders the right

to receive notice(s) or to attend and to vote at any general meeting(s) of the shareholders of the

Issuer.

Splitting and Consolidation

Splitting and consolidation of the Debentures is not applicable in the demat mode form since the

saleable lot is one Debenture.

Notices

All notices to the Debenture Holder(s) required to be given by the Company shall be sent to the

Debenture Holder(s) at the address stated in the Application Form, or at the address as notified by

the Debenture Holder(s) from time to time. In case of Debentures held in electronic

(dematerialised) form, notices will be sent to those whose names appear on the last list of

beneficial owner(s), provided to the Company by Depository (ies)

All notices to the Company by the Debenture Holder(s) must be sent by registered post or by

hand delivery to the Company at its Corporate Office or to such person(s) at such address as may

be notified by the Company from time to time.

Debentures to Rank Pari-Passu

The Debentures of this Issue shall rank pari-passu inter-se without preference or priority of one

other or others.




47

Payments at Par

Payment of the principal, all interest and other monies will be made to the registered Debenture

Holder(s)/ beneficial owner(s) and in case of joint holders to the one whose name stands first in

the register of Debenture Holder(s) / in the list of beneficial owner(s) provided to the Company

by the Depository (NSDL or CDSL). Such payments shall be made by cheque or warrant drawn

by the Company on its bankers. Interest and the principal amount shall be paid through

instruments payable at par at Ahmadabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad,

Baroda, Mumbai, and Pune only subject to applicable RBI regulations. Investors not residing in

any of the above locations are advised to indicate their preference of any one location from the

above list to receive the redemption / interests warrant payable at that location otherwise their

application is liable to be rejected.

The Company upon request from the investor, as stated above, may make the interest and

principal payment through RTGS.

Right to Re-Purchase and Re-Issue Debenture(s)

Repurchase of the Debentures by the Company shall only be with Majority Consent.

Prepayment of Debentures

Prepayment of the Debentures by the Company shall only be with Majority Consent.

Future Borrowing

The Company shall be entitled to make further issue of secured non convertible debentures and/or

raise term loans or raise further funds, in any manner as deemed fit by the Company, from time to

time from any persons/banks/financial institutions/body corporate or any other agency as per the

prevailing guidelines/regulations of Reserve Bank of India and other authorities. However, until

the Debentures for which the Debenture Trustee have agreed to act as trustee, are fully redeemed,

the Company shall not create any mortgage or charge on any of its properties on which security

has been created by the Company in favour of the Debenture Trustee or the said assets or

properties without obtaining prior written approval of the Debenture Trustee.

Tax Benefits

There are no specific tax benefits attached to the Debentures. Investors are advised to consider the

tax implications of their respective investment in the Debentures.

Trustees

IDBI Trusteeship Services Limited have agreed to act as the trustees for and on behalf of the

Debenture Holder(s). The Debentures holder(s) shall, by signing the Application Form and

without any 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 inter-alia all acts, deeds and things necessary in

respect of or relating to the security to be created for securing the Debentures being offered on the

terms and conditions of the private placement. All the rights and remedies of the Debenture

Holder(s) shall vest in and shall be exercised by the said trustees without having it referred to the

Debentures holder(s).




48

Loss of Letter(s) of Allotment / Principal and Interest Payment Instruments

Loss of letter(s) of allotment and/ or principal payment instrument / interest payment instrument

should be intimated to the Company along with the request for issue of a duplicate letter(s) of

allotment/ payment instrument(s). If any letter(s) of allotment/ payment instrument(s) is lost,

stolen, or destroyed, then upon production of proof thereof, to the satisfaction of the Company

and upon furnishing such indemnity, as the Company may deem adequate and upon payment of

any expenses incurred by the Company in connection thereof, new letter(s) of allotment /

payment instrument(s) shall be issued. A fee will be charged by the Company, not exceeding such

sum as may be prescribed by law.

Debentures subject to the Information Memorandum, Debenture Trust Deed, etc.

Over and above the aforesaid terms and conditions, the Debentures, issued under this Information

Memorandum, shall be subject to prevailing guidelines/regulations of Reserve Bank of India and

other authorities and also be subject to the provisions of the Memorandum and Articles of

Association of the Company and all documents to be entered into by the Company in relation to

the issue of Debentures including this Information Memorandum, the Debenture Trust Deed and

the Deed of Hypothecation, as applicable (“Transaction Documents”).

Governing Law

The Debentures are governed by and will be construed in accordance with the Indian Law. The

Company and Company’s obligations under the Debentures shall, at all times, be subject to the

directions of Department of Company Affairs, RBI, SEBI and Stock Exchanges and other

applicable regulations from time to time. Applicants, by purchasing the Debentures, agree that the

High Court of Judicature at Chennai shall have exclusive jurisdiction with respect to matters

relating to the Debentures.

Others

The Company shall at all times during the term of the Debentures comply with the

representations, warranties, financial covenants, undertakings of the Issuer under the Transaction

Documents.

Conflict

In case of any repugnancy, inconsistency or where there is a conflict between the conditions as

are stipulated in this Information Memorandum and any of the Transaction Documents to be

executed by the Company, the provisions as contained in the Debenture Trust Deed shall prevail

and override the provisions of such Transaction Document.

Listing

The Issuer shall list the Debentures at the WDM segment of the Bombay Stock Exchange within

7 (seven) days from the Deemed Date of Allotment and maintain continuous listing till the term

of the Debentures. Till such time that the Debentures have been listed on the WDM segment of

the Bombay Stock Exchange, the subscription amount shall be retained in a specified account




49

with Kotak Mahindra Bank Limited and lien marked in favour of and to the satisfaction of the

Debenture Trustee. The Debenture Trustee shall release such amount to the Issuer after the listing

shall be completed and only with Majority Consent.




51

ANNEXURE 1: CREDIT RATING LETTER FROM ICRA LIMITED




52




53

ANNEXURE 2: CONSENT LETTER FROM DEBENTURE TRUSTEE




54

ANNEXURE 3: APPLICATION FORM

IFMR CAPITAL FINANCE PRIVATE LIMITED

Registered Office: IITM Research Park, Phase 1, 10th Floor, No. 1 Kanagam Village (Behind Tidel

Park), Taramani, Chennai-600 113

Tel. No.: +91-44-6668 7000; Fax: +91-44-6668 7010

APPLICATION FORM FOR PRIVATE PLACEMENT OF

NON CONVERTIBLE DEBENTURES ("Debentures")

ISSUE OPENS ON: December 22, 2011 CLOSING ON December 22, 2011

Date of Application __________

Dear Sirs,

Having read and understood the contents of the Information Memorandum, I/We apply for

allotment to me/us of the Debentures. The amount payable on application as shown below is

remitted herewith. On allotment, please place my/our name(s) on the Register of Debenture

Holders under the issue. I/We bind myself/ourselves by the terms and conditions as contained in the

Memorandum of Private Placement.

DEBENTURES APPLIED FOR (Rs. 1,000,000/- per debenture)

FOR BANK USE ONLY

Amount (Rs.) (in

figures)

Date of clearance of

cheque

Amount (Rs.) (In

words)

PARTICULARS OF DP ID

RTGS/Cheque/Fund

Transfer/ Demand

Draft drawn on

(Name of Bank and

Branch)

Cheque/Dem

and Draft

No./UTR

No. in case

of RTGS/

A/c no

incase of FT

RTGS/Chequ

e/ Demand

Draft/ fund

transfer Date

DP ID No.

Client ID No.

Tax status of the Applicant (please tick one)

1. Non Exempt 2. Exempt under Self-declaration Under Statute Certificate from I.T.

Authority

We apply as (tick whichever is applicable) PAYMENT

PREFERENCE

1. Financial Institution 7. Mutual Fund

2. Company 8. Religious/Charitable Trust

3. Insurance Company 9. Provident/Superannuation/Gratuity Fund

4. NBFC/ RNBFC 10. Commercial Bank/RRB/Co-op.Bank/UCB

5. Body Corporate 11. Society

6. FII

Cheque Draft RTGS Payable at ________________




55

APPLICANT’S NAME IN FULL:

Tax payer’s PAN or GIR No. if

allotted

IT Circle/ Ward/

District

MAILING ADDRESS IN FULL (Do not repeat name) (Post Box No. alone is not sufficient)

Pi

n

Tel Fax

CONTACT PERSON

NAME DESIGNATION TEL. NO. FAX

NO.

Email

TO BE FILLED IN BY THE APPLICANT

Name of the Authorized

Signatory(ies)

Designation Signature

……………………………………………..………………… TEAR

……………………………………..................................

1. Application must be completed in full BLOCK LETTERS IN ENGLISH except in case of

signature. Applications, which are not complete in every respect, are liable to be rejected.

2. Payments must be made by RTGS or cheque marked ‘A/c Payee only’ or bank draft drawn in

favour of “IFMR Capital Finance Private Limited” and as per the following details:

Bank : KOTAK MAHINDRA BANK LTD

IFMR CAPITAL FINANCE PRIVATE LIMITED Registered Office: IITM Research Park, Phase 1, 10th Floor, No. 1 Kanagam Village (Behind Tidel

Park), Taramani, Chennai-600 113

APPLICATION FORM FOR PRIVATE PLACEMENT OF NON CONVERTIBLE DEBENTURES (SERIES __)

(To be filled by the Applicant) ACKNOWLEDGEMENT SLIP Received from _________________________________ an application for _____________ debentures under Series __ Address_______________________________________ cheque/ draft No.________________ dated _______________ _____________________________________________ Drawn on __________________________________________ _________________________________________ for Rs. (in figures)____________________________________ _______________ Pin Code ______________________ for Rs. (in words) ____________________________________




56

Branch : Krishna Manasi, Old D/No.45, New D/No.97, First Main Road,

Gandhi Nagar, Adyar, Chennai - 600 020

Account No. : 04632090002180

IFSC Code No. : KKBK0000463

3. Cheque or bank draft should be drawn on a scheduled bank payable at Chennai

4. In cases of PF, Pension Fund, Gratuity Fund etc., exemption from TDS shall be granted against

Income Tax Recognition Certificate granted by Income Tax Authorities. In case of mutual funds,

exemption from TDS shall be granted only against Certificate u/s 10(23D) of the Income Tax Act

or self declaration made by the Investors in Form 15G (in Duplicate).

5. The Original Application Form along with relevant documents should be forwarded to the

Registered Office of the Issuer to the attention of Mr Kalyanasundaram C, on the same day the

application money is deposited in the Bank. A copy of PAN Card must accompany the

application.

6. In the event of debentures offered being over-subscribed, the same will be allotted in such manner

and proportion as may be decided by the Issuer.

7. The debentures shall be issued in demat form only and subscribers may carefully fill in the details

of Client ID/ DP ID.

8. In the case of application made under Power of Attorney or by limited companies, corporate

bodies registered societies, trusts etc., following documents (attested by Company Secretary

/Directors) must be lodged along with the application or sent directly to the Issuer at its

Registered Office to the attention of Mr Kalyanasundaram C along with a copy of the Application

Form.

a. Certificate of Incorporation and Memorandum & Articles of Association;

b. Resolution of the Board of Directors/Trustee and identification of those who have

authority to operate;

c. Power of attorney granted to its managers, officers or employees to transact business on

its behalf;

d. Any officially valid document to identify the trustees, settlers, beneficiaries and those

holding Power of Attorney;

e. Resolution of the managing body of the foundation / association;

f. Certificate of registration;

g. Telephone Bill;

h. PAN (otherwise exemption certificate by IT authorities).

9. The attention of applicants is drawn to Sub-Section (i) of Section 68-A of the Companies Act,




57

1956, which is reproduced below:

Any person who

a. make in a fictitious name an application to a Corporation for acquiring for any shares

therein; or

b. otherwise induces a Corporation to allot or register any transfer of shares therein to him

or any other person in fictitious name, shall be punishable with imprisonment for a term

which may extend to five years.

10. The applicant represents and confirms that it has understood the terms and conditions of the

Debentures and is authorised and eligible to invest in the same and perform any obligations

related to such investment.

11. Interest on application money will be payable at the rate of 12.35% per annum from the date on

which such application monies are realized by the Issuer till the day prior to the allotment date

and the interest amount shall be paid immediately on allotment. Interest on application monies

shall not be payable if the date on which such funds are realized by the Issuer and Date of

Allotment (or the deemed date of Allotment) are the same.