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KERALA FINANCIAL CORPORATION (Incorporated under the State Financial Corporations Act No. LXIII of 1951)

H.O.: Vellayambalam, Thiruvananthapuram, Kerala-695033 Phone: 0471- 2737500, 2311750, 2318319 Fax : 0471- 2313813

Email : [email protected], Website : www.kfc.org

PRIVATE PLACEMENT OF TAXABLE, REDEEMABLE, NON CONVERTIBLE BONDS OF 100 CRORE WITH A GREEN SHOE OPTION OF TO RETAIN 100 CRORE

( Irrevocably and unconditionally guaranteed by Govt. of Kerala)

(This document is neither a “Prospectus” nor a “Statement in Lieu of Prospectus”. This is a Disclosure Document prepared in conformity with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008). And Issue and listing of Debt Securities (amendment) Regulations, 2012)

GENERAL RISK Investment in debt instruments involves a degree of risk and investors should invest any funds in the issue only after reading the risk factors in the Information Memorandum carefully including the risk involved. The Securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document.

ISSUER’S ABSOLUTE RESPONSIBILITY The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document 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 the 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.

PROFILE OF THE CORPORATION Incorporated under the State Financial Corporations Act of 1951 by Government of Kerala on December 01, 1953. Promotes rapid industrialization of Kerala by extending financial assistance mainly to Micro, Small and Medium

Enterprises (MSME) in manufacturing and services sector. Provides finance in the form of term loans, working capital loans and special schemes. Member of Credit Guarantee Fund Trust for Micro & Small Enterprises. Profit making and Dividend paying organization One of the top PSUs’ in Kerala and No. 1 SFC in the country in terms of profitability and low level of NPA. Managed by an expert panel comprising of senior IAS officers/professionals as Directors under the guidance of the

Chairman and Managing Director, Mr. P.Joy Oommen, former Chief Secretary, Chhatisgarh. BOND HIGHLIGHTS

State Government guaranteed, Rated, Listed Redeemable, and Non- Convertible Bonds in the form of debentures (Bonds).

Coupon rate of 8.72% payable semi annually from the date of allotment. Annualized YTM 8.91% Maturity : 10 years with 25% redemption at the end of 7th / 8th/9th and 10th year each. Put/call Option: at the end of 4th year. In case exercised , 25% redemption at the end of 4th / 5th/6th and 7th

year each.


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SOLE ARRANGER TO THE ISSUE

Real Growth Securities Private Ltd., 112A, Jyoti Shikhar Building, District Centre, Janak Puri, New Delhi 110 058 Tel : (011) 25513114, 25513115 Fax : (011) 25532212 TRUSTEE TO THE ISSUE

GDA Trusteeship Ltd. GDA House, Plot No. 85, Bhusari Colony ( Right) , Paud Road, Pune -411038 Ph. 020-25280081 Fax: 020- 25280275 REGISTRAR TO THE ISSUE

Karvy Computershare Private Ltd.

Karvy House, 46, Avenue 4, Street No. 4, Banjara Hills, Hyderabad – 500 034 Ph. 040- 23312454 Fax: 040- 23311968 Email: [email protected]

ISSUE SCHEDULE Placement Opening Date May 07, 2013 Placement Closing Date May 27, 2013 Deemed Date of Allotment Within 10 working days of closure of the issue. The issuer reserves the right to close the issue earlier from the aforesaid date or change the issue time table including the Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice.


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DISCLAIMERS GENERAL DISCLAIMER This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06,2008 and as amended in the Regulations dated 12th October 2012. This document does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds to be issued KERALA FINANCIAL CORPORATION (the “Issuer”/ the “Corporation”/ the “Issuer Corporation”). The document is for the exclusive use of the Institutions to whom it is delivered and it should not be circulated or distributed to third party (ies). KERALA FINANCIAL CORPORATION certifies that the disclosures made in this document are generally adequate and are in conformity with the captioned SEBI Regulations. This requirement is to facilitate investors to take an informed decision for making investment in the proposed Issue. DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA This Disclosure Document has not been filed with Securities & Exchange Board of India (SEBI). The Securities 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 document should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this document. The issue of Bonds being made on private placement basis, filing of this document is not required with SEBI; however SEBI reserves the right to take up at any point of time, with the Corporation, any irregularities or lapses in this document. DISCLAIMER OF THE ARRANGER It is advised that the Corporation has exercised self due-diligence to ensure complete compliance of prescribed disclosure norms in this Disclosure Document. The role of the Arranger in the assignment is confined to marketing and placement of the bonds on the basis of this Disclosure Document as prepared by the Corporation. The Arranger have neither scrutinized/ vetted nor have they done any due-diligence for verification of the contents of this Disclosure Document. The Arranger shall use this document for the purpose of soliciting subscription from qualified institutional investors in the bonds to be issued by the Corporation on private placement basis. It is to be distinctly understood that the aforesaid use of this document by the Lead Arrangers should not in any way be deemed or construed that the document has been prepared, cleared, approved or vetted by the Lead Arrangers; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Corporation. The Arranger or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this document.


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DISCLAIMER OF THE ISSUER The Issuer confirms that the information contained in this Disclosure Document is true and correct in all material respects and is not misleading in any material respect. All information considered adequate and relevant about the Issue and the Corporation has been made available in this Disclosure Document for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. The Corporation accepts no responsibility for statements made otherwise than in this Disclosure Document or any other material issued by or at the instance of the Issuer Corporation and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. DISCLAIMER OF THE STOCK EXCHANGE As required, a copy of this Disclosure Document has been submitted to the Bombay Stock Exchange. (Here in after referred to as “BSE”) for hosting the same on its website. It is to be distinctly understood that such submission of the document with “BSE”) or hosting the same on its website should not in any way be deemed or construed that the document has been cleared or approved by “BSE”); nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Corporation. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. DISCLAIMER IN RESPECT OF JURISDICTION The private placement of Bonds is made in India to Companies, Corporate Bodies, Trusts registered under the Indian Trusts Act, 1882, Societies registered under the Societies Registration Act, 1860 or any other applicable laws, provided that such Trust/ Society is authorised under constitution/ rules/ byelaws to hold bonds in a Corporation, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Insurance Companies, Commercial Banks including Regional Rural Banks and Cooperative Banks, Provident, Pension, Gratuity, Superannuation Funds as defined under Indian laws. The Information Memorandum does not, however, constitute an offer to sell or an invitation to subscribe to securities offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Information Memorandum comes is required to inform him about and to observe any such restrictions. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of Honourable High Court of Kerala at Ernakulam. All information considered adequate and relevant about the Issuer Corporation has been made available in this Information Memorandum for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever. DISCLAIMER BY DEBENTURE TRUSTEE The debenture trustee is not a guarantor and will not be responsible for any non-payment of interest and redemption and/or any loss or claim.


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A. Issuer Information

a. Name and Address of the Issuer:

I. Registered & Corporate office of the Issuer

Head Office: Kerala Financial Corporation Vellayambalam Thiruvananthapuram – 695 033 Phone : +91 471 2318319(7 Lines) Fax : +91 471 2311750, 2318541, 2313813, 2722090 Email : [email protected] Website: www.kfc.org

II. Compliance Officer details

Sri. Premnath Ravindranath General Manager ( F & M) Kerala Financial Corporation Vellayambalam, Thiruvananthapuram – 695033 Kerala Ph. 0471-2737777 Mob: 09496030120

The investors can contact the Compliance Officer in case of any pre-issue / post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s),interest warrant(s)/ cheque(s) etc.

III. Sole Arranger:

Real Growth Securities Private Ltd., 112A, Jyoti Shikhar Building, District Centre, Janak Puri, New Delhi 110 058. Tel : (011) 25513114, 25513115 Fax : (011) 25532212

IV. TRUSTEE TO THE ISSUE

GDA Trusteeship Ltd. GDA House, Plot No. 85, Bhusari Colony ( Right) , Paud Road, Pune -411038 Ph. 020-25280081


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V. REGISTRAR OF THE ISSUE

Karvy Computershare Private Ltd.

Karvy House, 46, Avenue 4, Street No. 4, Banjara Hills, Hyderabad – 500 034 Ph. 040- 23312454 Fax: 040- 23311968 Email: [email protected]

VI. CREDIT RATING AGENCY

Brickwork Ratings India Pvt ltd 3rd Floor, Raj Alkaa Park, Kalena Agrahara, Bannerghatta Road, Bengaluru – 560076 Tel: 080 – 40409940, Fax: 080 – 40409990, www.brickworkratings.com

VII. AUDITORS OF THE ISSUER

M/s. Jose & Hemachandran Chartered Accountants

TC 6/686(3), Vattiyoorkavu PO: Thiruvananthapuram-695 013,

Kerala Mob: 9447123625

B. Brief summary of the business / activities of the Issuer and its line of business :

i. OVERVIEW

Activities of the Corporation

Sanction of Term Loans to new Micro,Small and Medium enterprises in the manufacturing and Services Sector.

Sanction of Term Loans to existing industrial concerns and Services sector units for expansion/Modernisation/diversification.

Sanction of Working Capital Loans to meet working capital requirements of industrial/service enterprises under special schemes.

Special scheme for Financial Assistance to Civil Contractors. Special scheme for Financial Assistance for producing Feature Film and TV serials


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Special scheme for Modernization, upgradation and expansion of existing cinema theatres and establishment of new muliplexes.

Special scheme for Purchase of Lab Equipments/Waste Management.

During F.Y. 2013-14, which is the 60th year of its incorporation KFC will implement an innovative interest subvention scheme for manufacturing sector announced by the Hon. Finance Minister of Kerala and will also give special thrust to the following sectors.

SC/ST Entrepreneurs. Women entrepreneurs starting manufacturing concern. Micro, Small, Medium enterprises (MSME) in manufacturing sector (starting new units or

expansion of existing units). Renewable energy/Solar energy/Wind energy. Entrepreneur development through KSEDM (Kerala State Entrepreneur Development

Mission)

Functioning of the Corporation.

The main objective of KFC is to promote rapid industrialization of the state by extending financial assistance to Micro, Small and Medium Enterprises(MSME) in manufacturing and service sector. The financial assistance is provided in from of term loans, working capital loans and special schemes. KFC is a member of Credit Guarantee Fund Trust for Micro & Small Enterprises and provides credit facility upto Rs.50 lakhs without collaterals and third party guarantees to MSMEs. KFC has 16 Branch Offices with its Head Quarters at Thiruvananthapuram and Zonal Offices at Kozhikode, Ernakulam and Thiruvananthapuram.

KFC is today offering term loans at the most easy terms and lowest rates of interest and with increased flow of funds, intend to increase the portfolio size substantially giving a big push to much needed investment and development activities in the State. With better monitoring mechanism, objective appraisal and sanction, the recoveries and collection of KFC are also showing an upward trend. Further besides the size of portfolio, emphasis is now being laid on improving the quality of its advances.

Performance

When compared to the previous year, Kerala Financial Corporation has achieved substantial growth in terms of sanction, disbursement and recovery of financial assistance. An analysis of the operational performance of the Corporation during the last five years is shown in the Table below:


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(Amounts in Rs. crores)

FY Sanction Disbursement Recovery Interest Income

Net Profit

Gross NPA

(%)

Net NPA

(%) 2008-09 349.10 293.94 269.25 91.04 11.70 21.00 13.22 2009-10 615.93 419.53 299.57 108.54 33.72 9.04 2.40 2010-11 507.06 443.44 354.73 131.84 36.40 8.20 1.88 2011-12 539.01 464.57 467.17 173.98 45.65 3.60 1.30

2012-13* 661.39 475.94 540.22 208.94 68.19 3.51 0.36 Provisional Figures

The growth, when compared to the previous financial year is 22.70% in sanction and 2.44% in disbursement, indicating the healthy contribution of the Corporation to the development of the industrial activity in the State. On the recovery front, the total amount collected has gone up by 15.64%. The interest income, which is an indicator of profitability and net efficiencies, has gone up by 20.08%. The high level of growth in these areas throw light on the effective functioning of the organization in terms of quality lending, highly efficient collection of current dues and scientific & practical compromise settlement policies in place for realization of non-performing advances. These are also reflected in the fall in the level of non-performing assets to 0.36% in terms of Net NPA and to around 3.51% at the Gross Level at par with banking standards.

Strengths and Feats

Only SFC in India which has given dividend out of profits during the last 3 years with a portfolio size of Rs. 1400 crores.

KFC has been adjudged as second in the FACT MKK Nayar Memorial Productivity Award for the FY 2009-10 in the category of service organizations.

Assisted over 40000 units. Positive attitude towards first generation entrepreneurs/green field projects. Longer gestation and repayment period Lowest Interest rates in the market. Wide delegation of powers to the 16 Branches and 3 Zonal Offices. Easy access and hassle-free procedures. Hand-holding and friendly services, besides finance. Time-bound sanction and disbursement. Only 0.5% processing fee and no hidden charges. Dedicated and professionally qualified personnel. Technology driven appraisal, monitoring and MIS. An ISO Certified organization.


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ii. MANAGEMENT TEAM Sl. No.

Name & Address Telephone (office)

1. Shri P Joy Oommen,IAS Chairman & Managing Director,

Kerala Financial Corporation, Vellayambalam, Thiruvananthapuram.

Phone: 0471-2737555, 2315891, 2315694 Email: [email protected]

2. Shri Rajesh Kumar Sinha, IAS, Secretary, Finance Department

Finance Department, Government of Kerala, Thiruvananthapuram.

(Office): 0471 2326436, 2518695 (Res): 0471 2317211 (Fax): 0471 2328980 Email:[email protected]

3. Shri K.S. Sreenivas, IAS, Special Secretary, Industries (IP) Department,

Industries (IP) Department, Government of Kerala, Thiruvananthapuram.

(Office): 0471 2336602, 2518444 (Res): 0471 2733783 (Fax): 0471 2336602 Email:[email protected]

4. Shri Namgial, Chief General Manager,SIDBI

Small Industries Dev. Bank of India,(SIDBI), SME Develop-ment Centre, C-11, G Block Bandra- Kurla Complex, Mumbai – 400 051.

5. Shri S. Chandrasekharan, General Manager (Treasury),SBT

State Bank of Travancore, Head Office, Poojappura, Thiruvananthapuram. Office) : 0471-2351906 (Fax): 0471-2357324 Email : [email protected]

6. Smt. Indumathi Sridhar, Deputy General Manager,SIDBI

Small Industries Dev. Bank of India,Finance Towers, 2nd Floor, Kaloor, Kochi – 682 017.

Mob : 9446067811 Ph:0484-2401791/ 2401792

7. Smt. Lekshmy Kylas, Senior Divisional Manager,LIC

Life Insurance Corpn. Of India, Pattom, Thiruvananthapuram.

(Office): 0471-2541631, 2540851 (Fax): 0471-2541405 Email: [email protected]

8. Smt. Premilla V. Nair, FCA, DISA(ICAI), Director

T.C.4/1274, ‘ Krishna’, Kuravankonam, Kawdiar.P.O., Thiruvananthapuram.

Phone: (Res): 0471-2437320, 2437321


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Mob: 9495937320

9. Adv. Ponnachan, Director

Kizhakkethil,Palayam, Thiruvananthapuram.

Mob: 9446748315

Principal Officers

Sno. Name & Designation Address & Telephone 1 Shri P Joy Oommen,IAS

Chairman & Managing Director,


Phone: 0471-2737555, 2315891, 2315694 Email: [email protected]

2 Sri. Premnath Ravindranath, General Manager(F&M)


Mob: 9496030120 [email protected]

3 Sri. N. Asok Kumar , General Manager(A&R)


Mob : 9496030155 [email protected]

4 Sri. A. G. Dinesh , General Manager(Credit)



5 Sri. Sabu Thomas , Financial Controller



i. Key operational and Financial parameters for last 3 Audited years :

Parameters FY 2011-12 ( amt in Lacs)

FY 2010-11 ( amt in Lacs)

FY 2009-2010 ( amt in Lacs)

Net worth 32585.42 29736.23 26996.00 Total Debt 94636.99 76969.96 57651.76

of which - Non Current Maturities of Long Term Borrowing 63871.49 49814.96 54010.66 Short Term Borrowing 28312.50 23500.00 - Current Maturities of Long term Borrowing 2453.00 3655.00 3641.10


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Net Fixed Assets 274.81 275.98 246.43 Non Current Assets 5145.77 5817.70 3830.22 Cash and Cash Equivalents 7116.83 768.47 1041.63 Currents Investments 885.00 185.00 199.25 Current Assets 123983.89 112481.40 88869.11 Current Liabilities 10183.89 12822.36 9539.62 Assets Under Management - - - Off Balance Sheet Assets - - - Interest Income 15775.08 12120.65 9670.01 Interest Expense 8208.75 5829.83 4739.23 Provisioning & Write offs 3559.79 1913.81 3860.82 PAT 4565.19 3640.02 3372.25 Gross NPA( %) 3.60 8.20 9.04 Net NPA (%) 1.30 1.88 2.41 Tier I Capital Adequacy Ratio 20.51 22.20 27.88 Tier II Capital Adequacy Ratio - - -

Gross Debt: Equity Ratio of the Corporation

Before the issue of debt securities 2.64 After the issue of debt securities 3.17

A. Brief history of the Issuer since its incorporation: Kerala Financial Corporation (KFC) incorporated under the State Financial Corporations Act of 1951,is a trend setter and path breaker in the field of long term finance, playing a major role in the development and industrialization of Kerala. It was established as the Travancore Cochin Financial Corporation on 01.12.1953.

Consequent to the reorganization of states on linguistic basis in November 1956, Kerala State was formed and the Travancore Cochin Financial Corporation was renamed as Kerala Financial Corporation.

I. Details of Share Capital as on last quarter end:- as on 31.03.13

Share Capital Rs. ( in lacs)

Authorized Share Capital 3,50,00,000 shares of Rs. 100 each 35000

Issued, Subscribed and Paid up Share Capital 21197303 shares of Rs. 100 each 21197.30


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I. Changes in its Capital structure as on last quarter end for the last five years:-

As on Rs. Particulars 31.03.2009 Rs. 740,600,300 2008-2009

31.03.2010 Rs. 2,040,600,300 2009-2010

31.03.2011 Rs.2,040,600,300 2010-2011

31.03.2012 Rs. 2,119,730,300 2011-2012 31.03.2013 Rs. 2,119,730,300 2012-2013

II. Equity Share Capital history of the Corporation as on last quarter end for the last five years

Date of Allotment Name of Allottees

No. of equity shares of Rs.100/- each

Share Amount (Rs)

Cumulative shares

26/06/10 Government of Kerala 19782512 1978251200 19782512

26/06/10 Small Industries Development Bank of India 613327 61332700 20395839

26/06/10 LIC of India 7103 710300 20402942 26/06/10 State Bank of Travancore 2099 209900 20405041

26/06/10 Kerala State Co-op. Agr. & Rural Dev. Bank Ltd. 207 20700 20405248

26/06/10 C. Chandramohan, B.E. 124 12400 20405372 18/07/12 N. Jayakrishnan 31 3100 20405403 18/07/12 N. Rajkumar 101 10100 20405504 26/06/10 The Thrissur Dist. Co-op. Bank Ltd. 41 4100 20405545

26/06/10 Kuttanad Agricultural Co-op. Society Ltd. 41 4100 20405586

26/06/10 K. Mytheenkunju & Sons (P) Ltd. 41 4100 20405627

26/06/10 The Trustees, The Kerala Balers Ltd. Staff P.F. 41 4100 20405668

26/06/10 N. Harikrishnan 41 4100 20405709 18/07/12 Sree Latha C. Mohan 0 0 20405709 26/06/10 The Trustees, The Alleppey Co. Ltd. 25 2500 20405734

26/06/10 The Kanjirappally Service Co-op. Bank Ltd. 21 2100 20405755

26/06/10 Sree Karunakaran Charitable Trust 21 2100 20405776 26/06/10 Sree Karunakaran Charitable Trust 21 2100 20405797 18/07/12 N. Radhakumari 6 6 20405803 26/06/10 N. Narendran 19 1900 20405822


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26/06/10 C. Rajamohan 17 1700 20405839 26/06/10 Pandiath R. Chandran 10 1000 20405849 26/06/10 N. Harikrishnan 10 1000 20405859 26/06/10 Sree Karunakaran Charitable Trust 10 1000 20405869 26/06/10 V.S. Natarajan 10 1000 20405879 26/06/10 Sree Karunakaran Charitable Trust 8 800 20405887 26/06/10 M.K. Jacob 4 400 20405891

26/06/10 Sree Ramavilas Press & Publications Ltd. 4 400 20405895

26/06/10 Parukutty Amma Ammini Amma 4 400 20405899 26/06/10 N. Radhabhai Amma 4 400 20405903 26/06/10 Abbasbhoy Abdul Taybe Olai 4 400 20405907 26/06/10 M.K. Jacob 4 400 20405911 26/06/10 T.M. Hassan Rawther 4 400 20405915 26/06/10 Joseph Cherian 4 400 20405919 26/06/10 The South Travancore Plantation Ltd. 4 400 20405923 26/06/10 M. Raghava Iyer 4 400 20405927 26/06/10 Koodal Manickam Devaswom 4 400 20405931 26/06/10 Smt. Molly Varkey 4 400 20405935 26/06/10 M.D. Devassia 4 400 20405939 26/06/10 The Kottayam Co-operative Bank Ltd. 2 200 20405941 26/06/10 Ramalingam Ganesh 2 200 20405943

26/06/10 National Tyre & Rubber Co. of India Ltd. 2 200 20405945

26/06/10 Navarathna Pharmaceutical Laboratory Ltd. 2 200 20405947

26/06/10 P.S. George 2 200 20405949 26/06/10 N.C. John & Sons Ltd. 2 200 20405951

26/06/10 The Cochin Chemicals & Refineries Ltd. 2 200 20405953

26/06/10 K. Chandrasekhara Pillai 2 200 20405955 26/06/10 Paratex Corporation (P) Ltd. 2 200 20405957 26/06/10 P.C. Abraham, Advocate 2 200 20405959 26/06/10 K. Narendranathan 2 200 20405961 26/06/10 P.T. Paul Bros. 2 200 20405963 26/06/10 K.R. Elamkath 2 200 20405965 26/06/10 P.A.P. Sahib 2 200 20405967 26/06/10 H. Kunjukrishnan Nadar 2 200 20405969 26/06/10 S.M. Mohammed Kannu 2 200 20405971 26/06/10 R. Venkitakrishna Iyer 2 200 20405973 26/06/10 V. Kuttalam Pillai 2 200 20405975


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26/06/10 Kumaravelu Pillai 2 200 20405977 26/06/10 Parameswaran Pillai 2 200 20405979 26/06/10 Sivanu Chettiar 2 200 20405981 26/06/10 Kunangani Pillai 2 200 20405983 26/06/10 B. Krishnamoorthy 2 200 20405985 26/06/10 K. Rajangom Iyer 2 200 20405987 26/06/10 L. Padmavathy Kovilamma 2 200 20405989 26/06/10 M.K. Sainuddin 2 200 20405991 26/06/10 M.J. Nair 2 200 20405993 26/06/10 N. Sreenivasan 2 200 20405995 26/06/10 T.D. Sebastian 2 200 20405997 26/06/10 George Thomas 2 200 20405999 26/06/10 A.P. Thampi & Susheela P. Thampi 2 200 20406001 26/06/10 Subhadra Ravi Karunakaran 2 200 20406003 1/9/2011 Government of Kerala 791300 79130000 21197303 TOTAL 21197303 2119730300 21197303

IV. Details of any Acquisition or Amalgamation in the last 1 year

NIL

V. Details of any Reorganization or reconstruction in the last 1 year:-

NIL

C. Details of the shareholding of the Corporation as on the latest quarter end:-

i. The Share holding composition of KFC as on 31ST March, 2013 is as follows;

Shareholders Rs. in crores % of Shareholding

Government of Kerala 205.74 97.06

SIDBI 6.13 2.89

LIC 0.07 0.03

SBT 0.02 0.01

Others 0.01 0.01

Total 211.97 100.00


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ii. List of top 10 holders of equity shares of the Corporation as on the latest quarter end:

Sl No. Name of Allottees No. of equity

shares of Rs.100/- each

Share Amount (Rs)

1 Government of Kerala 20573812

2057381200

2 Small Industries Development Bank of India 613327 61332700

3 LIC of India 7103 710300

4 State Bank of Travancore 2099 209900

5 Kerala State Co-op. Agr. & Rural Dev. Bank Ltd. 207 20700

6 C. Chandramohan, B.E. 124 12400

7 N. Rajkumar 101 10100

8 The Thrissur Dist. Co-op. Bank Ltd. 41 4100

9 Kuttanad Agricultural Co-op. Society Ltd. 41 4100

10 K. Mytheenkunju & Sons (P) Ltd. 41 4100

D. Following details regarding the directors of the Corporation:-

i. Details of the current Directors of the Corporation:

Name, Designation

Address Directors of the Corporation Since

Sri. P. Joy Oommen, Chairman & Managing Director

Kerala Financial Corporation Vellayambalam, P.O. Thiruvananthapuram- 695033.

23- Feb-2013

Shri Rajesh Kumar Sinha , IAS Secretary

Finance Department, Govt. OF Kerala Thiruvananthapuram

12-Dec-2012

Shri Namgial Chief General Manager, Small Industries Development Bank of India

SME Develop-ment Centre, C-11, G Block Bandra- Kurla Complex, Mumbai – 400 051. Ph: 022 -26541128 022-67221465

21-Aug-2012

Shri. S. Chandrasekharan, General Manager (Treasury),

SBT, Head Office, Poojappura, Thiruvananthapuram (Office) : 0471-2351906 (Fax): 0471-2357324 Email

21-Aug-2012


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Smt. Indumathi Sridhar Deputy General Manager Small Industries Development Bank of India

SIDBI, Finance Tower, 2nd Floor, Kaloor Kochi - 682017 Mob : 9446067811 Ph:0484-2401791/ 2401792

18-June-2010

Smt. Lakshmy Kylas Senior Divisional Manager LIC of India

LIC of India, Pattom Thiruvananthapuram (Office): 0471-2541631, 2540851 (Fax): 0471-2541405

7-June-2011

Smt. Premilla. V. Nair Director

T.C. 4/1274, "Krishna" Kuravankonam, Kawdiar. P.O. Thiruvananthapuram. Phone: (Res): 0471-2437320, 2437321 Mob: 9495937320

26-Sept 2011

Adv Ponnachan

Kizhakkethil, Palayam, Thiruvananthapuram

i. Details of change in directors since last three years:

Name, Designation

Date of Appointment / Resignation

Shri Yogesh Gupta IPS, Chairman & Managing Director

07.09.11-22.02.13

Dr. M.P.Sukumaran Nair , Special Secretary to Chief Minister, Govt. of Kerala

22.07.10 – 26.09.11

Prof Sushil Khanna Chairman

20.03.07- 16.05.11

Shri S V G Nandagopal Chief General Manager, SIDBI

20.01.12-21.08.12

Shri A K Dubey IAS Principal Secretary

08.08.11- 07.09.11

Shri Sanjay Garg IAS Expenditure Secretary

15.12.10 - 12.12.12

Shri Ravi Jha General Manager (treasury) State Bank of Travancore

18.05.11 – 21.08.12

Shri Namgial Chief General Manager, SIDBI

20.06.11-20.01.12

Shri Saswata Chaudhuri, General Manager (treasury) State Bank of Travancore

3.12.09- 18.05.11

Shri Saji Paul, Senior Divisional Manager , LIC

01.10.09 – 07.06.11

Shri. K. Sathianandan, General Manager, SIDBI

18.06.10 – 20.06.11

Shri K.M.Nair, Chief General Manager , SIDBI

01.12.10 – 25.07.11


18

Sri A.Vikraman , (CGM Rtd. , SIDBI)

25.05.08 – 18.06.10

Dr. Debashish Chatterjee, Director , IIM Kozhikode

06.02.10 - 25.01.11

E. Following details regarding the auditors of the Corporation:-

i. Details of the auditor of the Corporation:-

Name Address Auditor Since M/s. Jose & Hemachandran

TC 6/686(3), Vattiyoorkavu PO: Thiruvananthapuram-695013,Kerala Mob: 9447123625

6th Oct 2010

ii. Details of change in auditor since last three years:-

Name Address Date of Appointment / Resignation

Auditor of the Company since (in case of resignation)

Remarks

M/S Kumar & Biju Associates

‘CHORUS’ F-1, KOCHAR ROAD SASTHAMANGALAM P O TRIVANDRUM – 695 010 Phone: (0471) 2725830, Fax: (0471) 2722996

06-07-2009 / 05-10-2010

G . Details of borrowings of the Corporation, as on the latest quarter end:-

I. Details of Secured Loan Facilities ( as on 31.03.13):-

Lender’s Name

Type of Facility

Amount Sanctioned ( in lacs)

Principal Amount Outstanding ( in lacs)

Repayment Date / Schedule ( in lacs)

Security

SIDBI Term loan

Running sanctions

33771.49 Quarterly repayment

Hypothecation of receivables

Federal Bank

Term loan 10000.00 8125.00 Quarterly repayment in 5 years with 1 year moratorium


South Indian Bank

Term loan 10000.00 5725.76

Quarterly repayment in 5 years with 1 year



19

moratorium Indian Bank Term loan 10000.00 7187.50 Quarterly

repayment in 5 years with 1 year moratorium


Canara Bank

Term loan 10000.00 10000.00 Quarterly repayment in 5 years with 15 months moratorium


State Bank of Travancore

Term Loan 5000.00 5000.00 Yearly repayment in 7 years with 1 year moratorium


South Indian bank

Over Draft 5000.00 4986.83 Running Account Hypothecation of receivables

Federal Bank

Over Draft 5000.00 4766.81 Running Account Hypothecation of receivables

II. Details of Unsecured Loan Facilities: NIL

Lender’s Name Type of Facility Amount Sanctioned

Principal Amount Outstanding

Repayment Date / Schedule

III. Details of NCD: - Debenture Series

Tenor/ Period of Maturity

Coupon Amount Date of allotment

Redemtion Date/ Schedule

Credit Rating

Secured/ Unsecured

1/2011 10 Years 9.99% 200 cr. 28-12-2011

25% every year at the end of 7th, 8th, 9th & 10th year on 27-12-2018, 27-12-2019, 27-12-2020 & 27-12-2021.

A-(SO) from Brickworks

Unsecured

IV. List of Top 10 debenture Holders (as on 26-04-13 ):

Sl No Name of Bond Holder Amount

1 Food Corporation of India CPF Trust 29,70,00,000

2 Gujrat Electricity Board C P Fund 20,00,00,000


20

3 Canara Bank Pension Fund 20,00,00,000

4 Hindustan Steel Limited CPF, Rourkela 15,00,00,000

5 Canara Bank Gratuity Fund 10,00,00,000

6 Canara Bank Provident Fund 10,00,00,000

7 Hindustan Steel Limited PF, Bhilai 10,00,00,000

8 Dena Bank Pension Fund 8,00,00,000

9 Dena Bank Gratuity Fund 7,00,00,000

10 Bharat Electronics Limited PF 6,00,00,000

Total 1,35,70,00,000

V. The amount of corporate guarantee issued by the Issuer along with name of the counterparty (like name of the subsidiary, JV entity, group Corporation, etc) on behalf of whom it has been issued.

NIL

VI. Details of Commercial Paper:- The total Face Value of Commercial Papers Outstanding as on the latest quarter end to be provided and its breakup in following table:- NIL

VII. Details of Rest of the borrowing (if any including hybrid debt like FCCB, Optionally

Convertible Debentures/Preference Shares) as on :- NIL

VIII. Details of all default/s and/or delay in payments of interest and principal of any kind of

term loans, debt securities and other financial indebtedness including corporate guarantee issued by the Corporation, in the past 5 years: NIL

IX. Details of any outstanding borrowings taken / debt securities issued where taken / issued

(i) for consideration other than cash, whether in whole or part, (ii) at a premium or discount or (iii) in pursuance of an option: NIL


21

H. Details of Promoters of the Corporation i. Details of Promoter Holding in the Corporation as on the latest quarter end:-

S.No. Name of

Shareholders Total No. of Equity Shares

No. of shares in demat form

Total Shareholding as % of total no. of equity shares

No. of Shares Pledged

% of Shares pledged with respect to shares owned

1 Govt. of Kerala

20573812

- 97.06 % - -

2 SIDBI 613327 - 2.89 % - - 3 LIC 7103 - 0.03% - - 4 SBT 2099 - 0.01% - - 5 Others 962 - 0.01% - -

I. Abridged Version of Audited consolidated (wherever available) and Standalone Financial Information (like Profit & Loss statement, Balance Sheet and Cash Flow State) for at least last three years and auditor qualifications, if any.

BALANCE SHEET as at 31.03.2012

Particulars In Lacs as at 31.03.2012

In Lacs as at 31.03.2011

SOURCES OF FUNDS Shareholder's Fund Share Capital 21197.3 20406 Share Capital Advance 0 791.3 Reserves & Surplus 11388.12 8538.93 Loan Funds Secured Loans 72183.99 70861.97 Bonds( Guaranteed By Government of Kerala ) 22453 6108 Deferred Tax Liability (Net) 368.83 500.63 Other Liabilities 3848.2 2065.16 Provisions 5966.86 10256.56 Total 137406.3 119528.55 APPLICATION OF FUNDS Cash & Bank Balances 3366.83 664.91 Loans & Advances 123983.89 112481.4 Investments 4635 288.56 Fixed Assets 274.81 275.98 Other Assets 5145.77 5817.7 Total 137406.3 119528.55


22

Profit & Loss Account for the year ended 31st March 2012



INCOME Income from Operations 19809.12 16459.39 Other Income 1615.85 138.64 TOTAL 21424.97 16598.03 EXPENDITURE Operating Expenses 8452.59 6044.49 Employee Cost 1792.4 2464.08 Administrative Cost 401.86 409.52 Interest rebate on Loans 1378.06 951.38 Depreciation 58.41 64.17 Bad Debts Written Off 3078.23 494.62 TOTAL 15161.55 10428.26 Operating Profit ( C ) 6263.42 6169.77 Less: Provision for Income Tax 1216.67 1110.56 Provision for Bad & Doubtful Debts 481.56 1419.19 TOTAL ( D ) 1698.23 2529.75 Net Profit for the year ( C-D) 4565.19 3640.02 Add: Provision for deferred tax liability 131.8 3.61 Provision for FBT written back 0.02 0 Less: Appropriations

Proposed Dividend 1589.8 1020.3 Provision for Dividend Tax 258.02 169.46 Transfer to Reserve u/s 36(1)

(viii) 1252.68 1233.95 Balance Profit after appropriations 1596.51 1219.92 Add: Balance in Profit & Loss A/C B/f 3333.63 2113.71 Balance Profit carried to Balance Sheet 4930.14 3333.63

Cash Flow Statement for the period 2011-12

FOR THE PERIOD 2011-12 ( amt in lacs)

2010-11 ( amt in lacs)

Cash flows from operating activities Interest and other Revenue receipts (A) 17341.08 15577.77 Interest and other Financial Charges (B) -8452.58 -6044.49 Payment to employees and Administrative expenses (C ) -5272.49 -3872.44 Operating Profit before charges in operating assets (A+B+C) 3616.01 5660.84


23

Increase in operating assets (Loans and advances) -16247.21 -23612.29 Net cash from operating activities before Income Tax -12631.2 -17951.45 Income Tax paid -1218 -1568.28 Net Cash from Operating activities after tax (X) -13849.2 -19519.73 Cash flows from investing activities Interest received on deposits/ investments in Mutual Funds 314.84 63.63 Purchase of Fixed Assets -59.84 -93.72 Sale of Fixed Assets 2.59 Investment in Shares & Debentures -4450 19.5 Decrease in other current assets 671.92 -419.19 Increase in Other Liabilities 1501.66 521.8 Net cash from investing activities (Y) -2018.83 92.02 Cash Flows from Financing Activities Share capital from State Government / Other Advance from Government 989.13 791.3 KSSEDM Advance 1000 Long term Borrowings ( Refinance from SIDBI) 7900 16000 Repayment SIDBI Finance -11390.48 Non SLR Bond issued 20000 Repayment of Long Term borrowings ( Bonds ) -3655 -20181.79 LOC from Banks 11500 26100 Repayment of LOC from Banks -6687.5 -2600 Dividend and Dividend Tax Paid -1189.76 -954.96 Net Cash from financing activities (Z) 18466.39 19154.55 Net increase in cash and cash equivalents 2598.36 -273.16 Cash and cash equivalent at the beginning of the Financial year 768.47 1041.63 Cash and cash equivalent at the end of the Financial year 3366.83 768.47




SOURCES OF FUNDS Shareholder's Fund Share Capital 20406 20406 Share Capital Advance 791.3 0 Reserves & Surplus 8538.93 6589.26 Loan Funds Secured Loans 70861.97 47902.66


24

Bonds( Guaranteed By Government of Kerala ) 6108 9749.1 Deferred Tax Liability (Net) 500.63 504.24 Other Liabilities 2065.16 1335.38 Provisions 10256.56 7700 Total 119528.55 94186.64 APPLICATION OF FUNDS Cash & Bank Balances 664.91 1041.63 Loans & Advances 112481.4 88869.11 Investments 288.56 199.25 Fixed Assets 275.98 246.43 Other Assets 5817.7 3830.22 Total 119528.55 94186.64




INCOME Income from Operations 16459.39 14131.7 Other Income 138.64 2104.42 TOTAL 16598.03 16236.12 EXPENDITURE Operating Expenses 6044.49 4912.94 Employee Cost 2464.08 1977.99 Administrative Cost 409.52 430.82 Interest rebate on Loans 951.38 441.24 Depreciation 64.17 36.07 Bad Debts Written Off 494.62 3772.41 TOTAL 10428.26 11571.47 Operating Profit ( C ) 6169.77 4664.65 Less: Provision for Income Tax 1110.56 699.7

Provision for Deferred Tax Liability 0 504.24

Provision for Wealth Tax 0 0.05 Provision for Bad & Doubtful

Debts 1419.19 88.41 TOTAL ( D ) 2529.75 1292.4 Net Profit for the year ( C-D) 3640.02 3372.25 Less: Prior Period Expenses 0 26.55 Less: Dividend deficit written off 0 327.58 Add: Provision for deferred tax liability 3.61 0 Less: Appropriations

Proposed Dividend 1020.3 816.24 Provision for Dividend Tax 169.46 138.72 Transfer to Reserve u/s 36(1) (viia) 0 233.23


25

Transfer to Reserve u/s 36(1) (viii) 1233.95 886.29 Balance Profit after appropriations 1219.92 943.64 Add: Balance in Profit & Loss A/C B/f 2113.71 1170.07 Balance Profit carried to Balance Sheet 3333.63 2113.71




Cash flows from operating activities Interest and other Revenue receipts (A) 15577.77 15523.9 Interest and other Financial Charges (B) -6044.49 -4929.98 Payment to employees and Administrative expenses (C ) -3872.44 -2237.38 Operating Profit before charges in operating assets (A+B+C) 5660.84 8356.54 Increase in operating assets (Loans and advances) -23612.29 -27639.64 Net cash from operating activities before Income Tax -17951.45 -19283.1 Income Tax paid -1568.28 -233 Net Cash from Operating activities after tax (X) -19519.73 -19516 Cash flows from investing activities Interest received on deposits/ investments in Mutual Funds 63.63 54.19 Purchase of Fixed Assets -93.72 -24.81 Investment in Shares & Debentures 19.5 - Decrease in other current assets -419.19 -34.62 Increase in Other Liabilities 521.8 140.76 Net cash from investing activities (Y) 92.02 135.52 Cash Flows from Financing Activities Share capital from State Government / Other Advance from Government 791.3 -

Long term Borrowings ( Refinance from SIDBI) 16000 20988.52

Repayment of Long Term borrowings ( Bonds ) -20181.79 -14696.94 LOC from Banks 26100 - Repayment of LOC from Banks -2600 - Dividend and Dividend Tax Paid -954.96 - Net Cash from financing activities (Z) 19154.55 6291.58 Net increase in cash and cash equivalents -273.16 -13089 Cash and cash equivalent at the beginning of the Financial year 1041.63 14130.62


26

Cash and cash equivalent at the end of the Financial year 768.47 1041.63


LIABILITIES As at 31.03.2010 As at 31.03.2009

Authorized Capital 3,50,00,00,000.00

3,50,00,00,000.00

Issued Subscribed & Paid UP Capital 2,04,06,00,300.00

74,06,00,300.00

Advance for Shares - 1,30,00,00,000.00

Reserve Fund & other reserves 44,75,54,313.32

33,56,02,607.00

Bonds & Debentures 97,49,10,000.00

1,07,26,10,000.00

Other Borrowings 4,79,02,66,180.00

4,06,34,08,110.00

Subvention - 2,51,47,740.00

Other Liabilities 13,35,38,337.00

9,64,47,331.00

Provisions 21,65,55,442.93

6,65,864.00

Profit & loss account 21,13,71,178.75

11,70,07,510.00

Total 8,81,47,95,752.00

7,75,14,89,462.00

ASSETS

Cash & Bank Balances 10,41,62,590.00

1,41,30,61,804.00

Loans & Advances 8,28,30,42,871.00

5,89,81,79,492.00

Investments 1,99,25,000.00

1,67,75,000.00

Fixed Assets 2,46,42,787.00

2,57,68,112.00

Dividend Deficit - 5,79,06,120.00

Other Assets 38,30,22,504.00

33,97,98,934.00

Total 8,81,47,95,752.00

7,75,14,89,462.00


27


Particulars As at 31.03.2010 As at 31.03.2009 INCOME

Interest Income 91,95,93,079.00 1,01,92,10,666.00

Other Income 65,98,94,660.00 7,34,06,223.00

TOTAL 1,57,94,87,739.00 1,09,26,16,889.00

EXPENDITURE

Interest on Borrowings 47,39,23,085.00 40,46,63,008.00

Fund Raising Expenses 1,73,70,708.00

98,46,863.00

Employee Expenses 19,77,99,196.00 24,08,22,063.00

Establishment Expenses 1,37,64,682.00 1,19,80,795.00

Miscellaneous Expenses 2,93,17,138.00

91,53,621.00

Depreciation 36,06,611.00

33,35,653.00

Bad Debts Written Off 37,72,40,876.00 1,17,57,71,153.00

TOTAL 1,11,30,22,296.00 1,85,55,73,156.00

Operating Profit ( C ) 46,64,65,443.00 -76,29,56,267.00

Less: Provision for Income Tax 6,99,69,816.45 -

Provision for Deferred Tax Liability 5,04,23,749.64 -

Provision for Fringe Benefit Tax 6,50,000.00

Wealth Tax 5,001.00

7,309.00

Provision for Bad &Doubtful Debts 88,41,637.00 -

TOTAL ( D ) 12,92,40,204.09

6,57,309.00

Net Profit for the year ( C-D) 33,72,25,238.91 -76,36,13,576.00

Add: Provision for EL Encash Liability Written Back - 5,10,80,631.00 Add: NPA Provision written back - 84,32,60,792.00

Add: Prior Period Income - 2,61,715.00

Less: Prior Period Expenses 26,55,471.00 1,39,82,046.00


28

Less: Dividend deficit written off 3,27,58,380.00 -

Less: Appropriations

Proposed Dividend 8,16,24,012.00 -

Provision for Dividend Tax 1,38,72,000.84 -

Transfer to Reserve u/s 36(1) (viia) 2,33,23,272.15 -

Transfer to Reserve u/s 36(1) (viii) 8,86,28,434.17 -

Add: Balance in Profit & Loss A/C B/d 11,70,07,510.00 -1,05,00,41,206.00

Set off against share capital 1,05,00,41,200.00

Balance Profit carried to Balance Sheet 21,13,71,178.75

11,70,07,510.00




Cash flows from operating activities Interest and other Revenue receipts (A) 15523.90 9454.00 Interest and other Financial Charges (B) -4929.98 -4139.00 Payment to employees and Administrative expenses (C ) -2237.38 -3575.00 Operating Profit before charges in operating assets (A+B+C) 8356.54 1740.00 Increase in operating assets (Loans and advances) -27639.64 -11439.00 Net cash from operating activities before Income Tax -19283.10 -9699.00 Income Tax paid -233.00 - Net Cash from Operating activities after tax (X) -19516.00 -9699.00 Cash flows from investing activities Interest received on deposits/ investments in Mutual Funds 54.19 145.00 Purchase of Fixed Assets -24.81 -21.00 Proceeds from sale of fixed assets 16.00 Decrease in other current assets -34.62 -566.00 Increase in Other Liabilities 140.76 -1215.00 Net cash from investing activities (Y) 135.52 -1641.00 Cash Flows from Financing Activities


29

Share capital from State Government / Other Advance from Government - 15000.00 Long term Borrowings ( Refinance from SIDBI) 20988.52 16000.00 Repayment of Long Term borrowings ( Bonds ) -14696.94 -7861.00 Net Cash from financing activities (Z) 6291.58 23139.00 Net increase in cash and cash equivalents -13089.00 11799.00 Cash and cash equivalent at the beginning of the Financial year 14130.62 2332.00 Cash and cash equivalent at the end of the Financial year 1041.63 14131.00

J. Abridged version of Latest Audited/Limited Review Half Years consolidated (Wherever available) and Standalone Financial Information (life Profit & Loss Statement, and Balance Sheet) and auditors qualifications, if any.

PROVISIONAL BALANCE SHEET AS AT 31.03.2013

Amount in Rs. Amount in Rs. As at As at

31.03.2013 31.03.12 1. SOURCES OF FUNDS 1. Shareholders' Fund a) Share Capital 2,119,730,300 2,119,730,300 b) Share Capital Advance 0 0 c) Reserves and Surplus 1,813,037,773 1,138,812,242 2. Loan Funds a)Secured Loans 7,956,339,409 7,218,398,969 b) Bonds (Guaranteed by Government of Kerala) 2,000,000,000 2,245,300,000 3. Deferred Tax Liability (Net) 36,882,499 36,882,499 4. Other Liabilities 430,460,290 384,819,229 5. Provisions 768,183,988 596,686,268 TOTAL 15,124,634,259 13,740,629,507 II. APPLICATION OF FUNDS

1. Cash & Bank Balances 172,901,267 336,682,952 2. Loans & Advances 14,014,295,931 12,398,388,704 3. Investments . 210,100,000 463,500,000 4. Fixed Assets 24,292,781 27,480,332 Dividend Deficit 0 0 5. Other Assets 703,044,280 514,577,519 TOTAL 15,124,634,259 13,740,629,507


30

KERALA FINANCIAL CORPORATION PROVISIONAL PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2013 INCOME

Year ended Year ended

31.03.2013 31.03.12

Income from Operations 2,529,239,921 1,980,912,117 Other Income 46,375,106 161,584,784 TOTAL 2,575,615,027 2,142,496,901 EXPENDITURE Operating Expenses 884,326,283 845,258,613 Employee Cost 229,852,342 179,240,208 Administrative Cost 43,208,019 40,186,218 Interest rebate on Loans 107,968,271 137,805,650 Depreciation 5,500,000 5,840,939 Bad Debts Written Off 256,641,191 307,823,009 TOTAL 1,527,496,106 1,516,154,637 OPERATING PROFIT 1,048,118,921 626,342,264 Less : Less: Provision for Income Tax 203,597,100 121,666,985 Provision for Deferred Tax Liability 0 0 Provision for Wealth Tax 0 Provision for Bad & Doubtful Debts 162,638,547 48,156,134 TOTAL 366,235,647 169,823,119 Net Profit (+) / Loss (-) for the year (C-D) 681,883,274 456,519,145 Less: Prior Period Expenses 0 0 Less:Dividend Deficit written off 0 0 Add: Provision for deferred tax liability 13,180,366 Provision for FBT written back 2,221 Less:Appropriations Proposed Dividend 158,979,772 Provision for Dividend tax 0 25,802,417 Transfer to Reserve u/s 36 (1) (viia) 0 0 Transfer to Reserve u/s 36 (1) (viii) 209,623,784 125,268,453 Balance Profit after appropriations 472,259,490 159,651,090 Add: Balance in Profit & Loss A/C B/f 485,355,962 333,362,615 Balance Profit carried to Balance sheet 957,615,452 493,013,705


31

K. Any material event/ development or change having implications on the financials/credit quality (e.g. any material regulatory proceedings against the Issuer/promoters, tax litigations resulting in material liabilities, corporate restructuring event etc) at the time of issue which may affect the issue or the investor’s decision to invest/continue to invest in the debt securities.

NIL

L. The name of the debenture trustee(s) shall be mentioned with statement to the effect that debenture trustee(s) has given his consent to the Issuer for his appointment under regulation 4 (4) and in all the subsequent periodical communications sent to the holders of debt securities.

Enclosed in the Annexure

M. The detailed rating rationale (s) adopted (not older than one year on the date of opening of

the issue)/credit rating letter issued (not older the one month on the date of opening of the issue) by the rating agencies shall be disclosed. Enclosed in the Annexure

N. If the security is backed by a guarantee or letter of comfort or any other document/letter with similar intent, a copy of the same shall be disclosed. In case such document does not contain detailed payment structure (procedure of invocation of guarantee and receipt of payment by the investor along with timelines), the same shall be disclosed in the offer document. Enclosed in the Annexure.

O. Copy of consent letter from the Debenture Trustee

Enclosed in the Annexure

P. Names of all the recognized stock exchanges where the debt securities are proposed to be listed clearly indicating the designated stock exchange.

Proposed to be listed in Bombay Stock Exchange (BSE)

Q. Other Details

I) Application Process

WHO CAN APPLY

Persons who have been addressed through a communication directly are only eligible to apply No other person can apply. The bonds are eligible for investment by:


32

a. Individuals. b. Companies and Bodies Corporate c. Commercial Banks d. Primary Urban Co-operative Banks e. Regional Rural Banks (RRBs) f. Financial Institutions and Mutual Funds g. Insurance Companies h. Non Banking Finance Companies and Residuary Non Banking Finance Companies i. Provident Funds, Superannuation Funds, Pension Funds and Gratuity Funds j. Charitable and Religious Trusts, Port Trusts k. Co-operative Societies & Institutions.

Application by Individuals

Individuals are also entitled to apply to the bond issue subject to the application qualifying for the minimum application amount and are valid in all other respects. Those desirous of claiming tax exemptions on interest on application money are compulsorily required to submit relevant declaration Form (as per I.T. Act 1961) along with the Application Form. For subsequent interest payments, such Forms have to be submitted periodically.

In the case of joint applications, the number of such applicants should not be more than three. All communications and cheques for interest/redemption will be addressed to the applicant whose name appears first, at the address stated in the application form/register of Bondholders.

Nomination Facility As per Section 109 A of the Companies Act, 1956, only individuals applying as sole applicant/Joint Applicant can nominate, in the prescribed manner, a person to whom his Bonds shall vest in the event of his death. Non-individuals including holders of Power of Attorney cannot nominate.

Application by Company/ Corporate bodies/ Financial institutions & Statutory companies

The application must be accompanied by certified true copies of 1} Memorandum of Articles of Association / constitution /bye laws 2} Resolution authorising investment and containing operating instruction 3} Specimen signature of authorised signatories 4} Relevant certificates in the prescribed form (s) under Income Tax Rules, 1962, if exemption is sought from deduction of tax at source on interest income.

Application by Charitable / Religious Trusts

The bonds being unconditionally and irrevocably guaranteed by the Government of Kerala fall within Section 20 (a) of the Indian Trust Act, 1882 and hence are considered as eligible investments for trusts, which are registered under the said Act. Other trusts, whose trust deeds provide for investment in bonds may apply to this issue of bonds, subject to the approval of the charity


33

commissioner or other appropriate authority as the case may. Investment in bonds of KFC will qualify as eligible investments under clause (6) Section 11 (5) of the Income Tax Act,1961 by religious /charitable trusts.

The application must be accompanied by certified true copies of 1) Trust Deed / bye laws 2) Certificate of Registration 3) Resolution authorising investment and containing operating instruction 4) Specimen signature of authorised signatories 5) Relevant certificates in the prescribed form (s) under Income Tax Rules, 1962, if exemption is sought from deduction of tax at source on interest income.

Application by Commercial Banks/ Mutual Funds

The Reserve Bank of India vide its Circular DBOD No.DIR: BC.4/13.7.05/94 dated 25th January 1994 to all scheduled commercial banks, has withdrawn the ceiling of 5 % of incremental deposits of the previous year for investments in equity shares and Bonds of Public Sector Undertakings. The Reserve Bank of India has vide its Circular No. DP.BD.3221.01.018/98 dated April 29, 1998 clarified that investment in bonds and debentures where payment of interest and principal is quarantined by the Central/State Government shall carry zero risk weight for the purpose of capital adequacy. The Reserve Bank of India has however, vide Circular No.MPD- BC 181/07.01. 279 /98-99 dated 30.10.1998 introduced a 2.5% risk weight on Central /State Government securities and in securities guaranteed by them by the year ending March 2000. Further, an additional risk weight of 20% is introduced in the Government guaranteed securities of Government undertakings with effect from financial year 2000-01.

The application must be accompanied by certified true copies of 1) Power of Attorney 2) Resolution authorising investment and containing operating instruction 3) SEBI registration certificate 4) Specimen signature of authorised signatories.

Application by Co-operative Banks

The Reserve Bank of India vide its Circular No.BR.CIR.72/16.20.00/93-04 dated May 16,1994 has allowed primary co-operative banks to invest their surplus funds upto 10% of deposits in bonds of Public Sector Undertakings provided inter-alia, that a provision exist for such investments in the respective State Co-operative Societies Act/ Multi State Co-operative Societies Act and Banks should intimate the Registrar of Co-operative Societies of the State. Hence, the bonds are eligible securities for investments by primary co-operative banks. The application must be accompanied by certified true copies of 1) Government notification / certificate of incorporation /other documents governing constitutions 2} Resolution authorising investment and containing operating instruction 3) Specimen signature of authorised signatories 4) Relevant certificates in the prescribed form (s) under Income Tax Rules, 1962, if exemption is sought from deduction of tax at source on interest income.

Application by Regional Rural Banks (RRBs)

The RBI vide Circular No. RPCD RRB.BC.882/03.05.34/96-97 dated December 13, 1996 has permitted RRBs to invest their surplus non-SLR funds in bonds of Public Sector Undertakings. The RBI has, vide circular no. RPCD(H)/04.03.06/98-99 dated November 2, 1998 clarified that single exposure norms would be applicable in respect of investments in debentures and bonds of Public Sector


34

Undertakings. The applications must be accompanied by certified true copes of (I) Government notification/ Certificate of Incorporation/ Memorandum & Articles of Association/ Other documents governing constitution (ii) resolution authorising investment and containing operating instructions (iii) Specimen signatures of authorised signatories (iv) Form 15 AA for claiming exemption from deduction of tax at source on interest income and (v) Form 15 H for claiming exemption of deduction of tax at source on interest on application money.

Application by Provident Funds, Superannuation Funds, Pension Funds and Gratuity Funds

The Government of India has, vide its Gazette notification dated 06.03.2003, in partial modification of notification no. F.11 (3-PD/98) dated March 31, 1999 has permitted Provident, Superannuation Funds, Gratuity Funds & Pension Funds to invest up to 30% of incremental accretions in the bonds/securities of “public sector companies” as defined under Section 2 (36-A) of the Income Tax Act, 1961.

KFC is a “Public Sector Corporation” within the meaning of the said notification as more than 51% of the paid up share capital is held by Government of Kerala. The bond issue has the additional credit enhancement of an unconditional and irrevocable guarantee from the Government of Kerala for the repayment of the principal and for the payment of the interest.

As per Notification dated July 9, 2003 issued by Ministry of Labour/ Shram Mantralaya, Government of India, in exercise of the powers conferred by sub-paragraph (1) of paragraph 52 of the Employees’ Provident Funds Scheme, 1952 and in Supersession of the Notification of the Government of India in the Ministry of Labour No.S.O. 1398 dated the 11th July 1998 the Central Government directed funds to invest incremental accretions in these avenues as under:

• 15%: under category (ii) (b), the Bonds being fully and unconditionally guaranteed by the State Government of Kerala for payment of interest and repayment of principal.

• 30%: under category (iv), for investment at the discretion of the Trustees in the above categories.

The applications must be accompanied by certified true copies of (i) Trust Deed/ByeLaws/Resolutions, (ii) Resolution authorizing investment and (iii) specimen signatures of theauthorized signatories. Those desirous of claiming tax exemptions on interest on application money are compulsorily required to submit a certificate issued by the Income Tax Officer along with the Application Form. For subsequent interest payments, such certificates have to be submitted periodically.

RETIREMENT FUNDS FOLLOWING MINISTRY OF FINANCE GUIDELINES

As per the latest notification issued by the Ministry of Finance vide its Notification No- 5 (88)/2006 –PR. dated 14th August, 2008 thereby effecting partial modification in the Notification No.5(53)/2002-ECB & PR dated 24th January, 2005, the pattern of investment to be followed by Non-Government Provident Funds, Superannuation Funds and Gratuity Funds shall be as follows, effective from 1st April, 2009:

Upto 55%: in Government Securities the principal whereof and interest whereon is fully and


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unconditionally guaranteed by the Central Government or any State Government

OR

Upto 40%: in Debt securities with maturity of not less than three years tenure issued by Bodies Corporate including banks and public financial institutions(Public Financial Institutions’ as specified under Section 4A of the Companies Act, 1956.)

Enclosure required:

The applications must be accompanied by certified true copies of (I) Trust Deed/Bye laws (ii) resolution authorising investment and containing operating instructions (iii) specimen signatures of authorized signatories (iv) Recognition Certificate from Income Tax Department.

Application by Port Trusts

As per section 88 of the Major Port Trusts Act, 1963 the bonds being guaranteed by the Government of Kerala are categorized as public security for the purpose of investments by Port Trusts.

Application by Non Banking Finance Companies (NBFCs)/ Residuary Non-Banking Finance Companies (RNBFCs)

As per Circular No. DFC (COC) No. 2/02.04/96-97 dated July 24, 1996 issued by the Reserve Bank of India, NBFCs and RNBFCs are required to invest, inter alia, upto 10% of their deposits in Government Guaranteed Bonds to meet their liquidity requirements. The Reserve Bank of India has vide its Circular No: DFC.121/ED/(G)-98 dated January 31, 1998 has specified that NBFCs are required to maintain liquid assets of 15.00% on and from April, 26 1999.

The applications, must be accompanied by certified true copies of (I) Memorandum and Articles of Association (ii) Power of Attorney (iii) resolution authorizing investment and containing operating instructions (iv) specimen signatures of authorised signatories. Application By Insurance Companies As per Circular No. 32(I)/INVT/93 dated September 20, 1994 issued by Insurance Division, Department of Economic Affairs, Ministry of Finance, Government of India, insurance companies are required to invest upto 10% of their net surplus funds in State Government Securities or Government Guaranteed bonds.

Application by Insurance Companies

As per IRDA Circular F.No.IRDA/Reg./5/47/2008 dated August 30, 2008 insurance Companies can invest in these State Government guaranteed bonds within the meaning of Section 27A of Insurance Act’ 1938 and as per investment policy approved by the Board of Directors/ Investment Committee.

The application must be accompanied by certified true copies of (i) Certificate of Information and Memorandum & Articles of Association (ii) Resolution of the Board of Directors and Identification of those who have authority to operate (iii) Power of Attorney granted to its managers, officers or employee to transact on its behalf (iv) Copy of PAN allotment letter and (v) copy of the Telephone bill.


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DOCUMENTATION TO BE PROVIDED BY INVESTORS Investors need to submit the following documentation, along with the application form, as applicable in addition to documents under ‘Know Your Customer (KYC) Guidelines-Anti Money Laundering Standards’ • Memorandum and Articles of Association/ Documents Governing Constitution • Resolution authorizing investment. • Certified True Copy of the Power of Attorney • Specimen signatures of the authorized signatories duly certified by an appropriate authority. • Proof of Income tax exemption certificate seeking exemption from Tax deducted at source from interest.

II. Issue details a. Summary term sheet :

Security Name 8.72% Kerala Financial Corporation Bonds 2023

Issuer Kerala Financial Corporation Type of Instrument Rated , Listed, Redeemable, Non

Convertible Nature of Instrument Unsecured Seniority Senior Mode of Issue Private Placement Eligible Investors a. Individuals.

b. Companies and Bodies Corporate

c. Commercial Banks d. Primary Urban Co-operative

Banks e. Regional Rural Banks (RRBs) f. Financial Institutions and Mutual

Funds g. Insurance Companies h. Non Banking Finance Companies

and Residuary Non Banking Finance Companies

i. Provident Funds, Superannuation Funds, Pension Funds and Gratuity Funds

j. Charitable and Religious Trusts, Port Trusts

Co-operative Societies & Institutions Listing ( including name of Stock Exchange where it will be listed and timeline of listing)

Bombay Stock Exchange

Rating of the Instrument ‘A-(SO)’ by Brickworks Rating Agency Pvt. Ltd.

Issue Size 100 cr Option to retain oversubscription ( 100 cr


37

Amount) Objects of the Issue To Augment resources for KFC’s

operations Details of Utilization of the proceeds As Above Coupon Rate 8.72%p.a. payable semi annually ,

annualized yield : 8.91% Step Up / Step Down Coupon Rate Not Applicable Coupon Payment Frequency Semi Annual Coupon Payment Dates Six months from the date of Allotment Coupon Type Fixed Coupon Reset Process ( including rates, spread, effective date, interest rate cap and floor etc)

Not Applicable

Day Count Basis Actual/Actual Interest on Application Money From the date of credit of amount into

KFC’s account through cheque/ DD/ RTGS till one day prior to the date of allotment

Default Interest rate Additional interest rate of 2% over the coupon rate for the defaulting period.

Tenor 120 months from the Deemed Date of Allotment

Redemption Date 1. 25% at the end of 7th year 2. 25% at the end of 8th year 3. 25% at the end of 9th year 4. 25% at the end of 10th year

Redemption Amount At Par Redemption Premium / Discount Nil Issue Price At Par Discount at which security is issued and the effective yield as a result of the such discount

Not Applicable

Put Option Date At the end of 4th year ( 25% Face Value at the end of 4th, 5th , 6th and 7th year each)

Put Option Price At Par Call Option Date At the end of 4th year ( 25% Face Value at

the end of 4th, 5th , 6th and 7th year each Call Option Price At Par Put Notification Time Timelines by which the investor need to

intimate Issuer before exercising the put option 60 days prior to the due date

Call Notification Time Timelines by which the Issuer needs to intimate the investor before exercising the Call option 60 days prior to the due date

Face Value Rs 10 lakhs per instrument for all the issues

Minimum Application and in multiples of one bond thereafter

One Bond & in multiples of one bond thereafter

Issue Timing


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1. Issue Opening Date 2. Issue Closing Date 3. Pay in Date 4. Deemed Date of Allotment

1. May 07, 2013 2. May 27, 2013 3. May 07- May 27, 2013 4. Within 10 working days from

issue closure Issuance mode of the Instrument Demat only ( for private placement) Trading mode of the Instrument Demat only ( for private placement) Settlement Mode of the Instrument Demat only ( for private placement) Depository NSDL/CDSL Business Day Convention Means a day (other than a Sunday or a

Kerala Govt. /Bank holiday) on which banks are open for general business in Kerala. If the due date for payment falls on a day that is not a Business Day, then the due date in respect of such payment shall be succeeding Business Day of the Issuer.

Record Date 30 Days prior to each coupon payment/ Put option date/Call option date / Redemption Date

Security (where applicable )(including description , type of security, type of charge, likely date of creation of security, minimum security cover, revaluation, replacement of security).

Unconditional and irrevocable guarantee by Government of Kerala.

Transaction Documents Information Memorandum Debenture Trustee Agreement Tripartite Agreement between Trustee, Issuer and Guarantor

Conditions Precedent to Disbursements Nil Conditions Subsequent to Disbursements

Nil

Events of Default Delay in payment of interest and redemption of principal on the respective due dates.

Provisions related to Cross Default Clause

Not Applicable

Roles & Responsibility of Debenture Trustee

To oversee and monitor the overall transaction for and on behalf of the Bond Holders.

Governing Law & Jurisdiction The Bonds are governed by and shall be construed in accordance with the existing Indian Law. Any dispute arising thereof on any account whatsoever will be subject to the jurisdiction of the Honourable High Court of Kerala at Ernakulam only.


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BANKING DETAILS: All Application Forms, duly completed, together with cheque/ demand draft for the amount payable on application must be delivered before the closing of the issue to the Arrangers to the Issue. The remittances can be made by way of electronic transfer of funds through RTGS mechanism as per following details: Name of the Bank HDFC Bank Details: Account No. : 15960350000034 Account Name : Kerala Financial Corporation Non SLR Bond Issue 2013 IFSC Code : HDFC0001596 Federal Bank Details: Account No. : 10300200053538 Account Name : Kerala Financial Corporation Non SLR Bond Issue 2013 IFSC Code : FDRL0001030 C. Terms of Offer

a. Issue price Issue of the Debentures of the face value of Rs10,00,000/- (Rupees Ten Lakhs only) each, aggregating upto Rs100 crores (one hundred crores only) on private placement basis at par.

b. Deemed Date of Allotment The deemed date of allotment shall be within 10 working days from the closure of the Issue . All benefits related to the debentures will be available to the allotees from the deemed date of allotment

c. Authority for the Placement

The issue is made pursuant to sub section (1) of section 7 of SFCs Amendment Act 2000. The Board of Directors of KFC at its Meeting held on 12.06.2012, passed the resolution approving the borrowings through issue of private placement bonds of Rs 400.00 crores.

d. Security

Unconditional and irrevocable guarantee by the Government of Kerala.

e. Debenture trustee GDA Trusteeship Ltd.


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f. Record Date

Record date of interest shall be 30 days prior to each interest payment date, and 30 days prior to the date of maturity. Interest shall be paid to the person whose name appears as sole/first in the register of bondholders/beneficiaries position of the Depositories on record date.

Record date for the purpose of payment of redemption would be 30 days before the due date of payment of redemption of maturity proceeds. The persons acquiring the bonds by transfer should pay specific attention to the aforesaid Record dates. The record date for the purpose of put and call option will be 60 days prior to the date when the option becomes due.

Payment of interest/principal will be made to the registered first named bondholder as on the record date. If the bond has been transferred, the transferor(s) jointly with the transferee(s) shall notify the Corporation.

g. Maturity & Yield on Redemption 10 years from the date of allotment.

Coupon @ 8.72%p.a payable semi-annually i. MATERIAL CONTRACTS & DOCUMENT

A. MATERIAL CONTRACTS The Copies of the contracts, agreements and documents, referred to below, may be inspected at the Registered Office of the Corporation between 10.00 a.m. to 12.00 noon on any working day until the date of closing of the issue.

Sr. No Type of Contract / Material Document

1 Copy of Government of Kerala Order for providing unconditional and irrevocable guarantee to KFC for issue of Bonds for Rs. 400 Crores.

2 Certified true copy of the resolution passed by the Board of Directors at the meeting held on 12.06.2012 for the issue of Bonds.

3 Credit rating Letter issued by Brickwork Ratings India Pvt. Ltd.

4 Letter appointing GDA Trusteeship Ltd. as Bond/Debenture Trustee.

5 Consent Letter from Karvy Computershare Private Ltd. to act as Registrar & Transfer Agent.

6 Consent Letter from HDFC Bank and Federal Bank to act as Bankers to the Issue.


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B. Documents

(i) Credit Rating Letters for the current placement (ii) Board resolution approving the current private placement of bonds (iii) Consent letters of the registrar and the trustee of the Bond holders j. ANY MATERIAL EVENT/ DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE OR SUBSEQUENT TO THE ISSUE WHICH MAY AFFECT THE ISSUE OR THE INVESTOR’S DECISION TO INVEST / CONTINUE TO INVEST IN THE DEBT SECUTITIES. The Corporation hereby declares that there has been no material event, development or change at the time of issue which may affect the issue or the investor’s decision to invest/continue to invest in the debt/securities of the Corporation.

k. UNDERTAKING THAT THE ISSUER SHALL USE A COMMON FORM OF TRANSFER

The Corporation would be issuing the bonds in demat form. It shall use a common transfer form for physical holdings if at a later stage there is some holding in physical form due to the depository giving the rematerialization option to any investor.

k. INFORMATION RELATING TO THE TERMS OF OFFER OR PURCHASE.

1. PRESENT PLACEMENT

KFC proposes to raise Rs. 100 Crores and to retain over subscription up to Rs.100 crores through private placement of 1000 Bonds of face value of Rs. 10,00,000/- each.

2. AUTHORITY FOR THE PLACEMENT The present placement of Bonds is being made pursuant to the resolution passed by the Board of Directors of the Corporation at its meeting held on 12.06.2012.

3. NATURE OF INSTRUMENT

State Government guaranteed Rated, Listed Redeemable, and Non- Convertible Bonds in the form of debentures.

4. GUARANTEE

The Bonds are unconditionally and irrevocably guaranteed by Government of Kerala.

5. FACE VALUE Each Bond shall have a face value of Rs. 10,00,000/- (Rupees Ten lacs only).


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6. CREDIT RATING

BWR A- (SO) (Outlook : Stable) has been assigned by M/s Brickwork Rating Agency Pvt. Ltd. vide their letter no. BWR/BNG/RL/2012-13/0415 dated Feb 01, 2013 and has been revalidated on April 22, 2013 vide their letter no. BWR/BNG/RL/2013-14/ NS/0008.

7. LISTING

The Bonds of the Corporation are proposed be listed on Bombay Stock Exchange Ltd. (BSE). The corporation shall comply with the requirements of the listing agreement.

8. BONDS TO BE ISSUED ONLY IN DEMATERIALISED FORM

The Corporation has appointed Karvy Computershare Private Ltd. as Registrars & Transfer Agent for the present Bond Issue. The Corporation has made necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of Bonds in dematerialised form. In this context the Corporation has entered into two tripartite agreements as under:

a. Tripartite Agreement between KFC, Karvy Computershare Private Ltd. and National Securities Depository Limited (NSDL) for offering depository option to the investors.

b. Tripartite Agreement between KFC, Karvy Computershare Private Ltd. and Central Depository Services (India) Limited (CDSL) for offering depository option to the investors.

Investors can hold the Bonds in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time.

The applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application.

The applicant must necessarily fill in the details, including the beneficiary account number and Depository Participant’s ID in the Application Form.

Bonds allotted to an applicant will be credited directly to the applicant’s respective Beneficiary Account(s) with the DP.

For subscribing the Bonds, names in the application form should be identical to those appearing in the account details in the depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the depository.

If incomplete/ incorrect details are given in the application form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Corporation.

For allotment of Bonds, the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In


43

case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any.

It may be noted that Bonds being issued in electronic form, the same can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. Bombay Stock Exchange Limited where the Bonds of the Corporation are proposed to be listed has connectivity with NSDL and CDSL.

Interest or other benefits would be paid to those Bondholders whose names appear on the list of beneficial owners given by the Depositories to the Corporation as on Record Date. In case of those Bonds for which the beneficial owner is not identified by the Depository as on the Record Date, the Corporation would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to the Corporation, whereupon the interest or benefits will be paid to the beneficiaries, as identified.

9. UNDERWRITING

The present issue is not underwritten.

10. LETTER OF ALLOTMENT

The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 10 days from the Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.

The bonds will be issued in electronic (dematerialized) form. It will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof, if it is issued in dematerialised form.

11. MINIMUM APPLICATION

The application should be for a minimum of one bond.

12. HOW TO APPLY

The full face value of the Bond is payable on application. The application should be accompanied with the cheque(s)/ RTGS details, Demand draft(s) for the total amount of face value of Bonds applied for subscription. All applications for the bonds must be made in the prescribed form, and must be completed in block letters in English. The completed Application form along with cheque(s)/ RTGS details, Demand draft(s) for the requisite amount, and other necessary documents may either be submitted with the Arrangers or may be deposited directly with the Collecting Banker.

For detailed instruction, please see the enclosed Application Form.


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13. UNDERTAKINGS FROM THE ISSUER:

KFC hereby undertakes : i) That the complaints received in respect of the issue shall be attended expeditiously and satisfactorily. ii) That all steps for completion of the necessary formalities and commencement of trading at BSE will be taken within 15 working days of finalisation of the allotment of securities. iii) That KFC shall apply in advance for listing of the securities at BSE. iv) That the funds required for despatch of refund orders/allotment letters/certificates by registered post shall be made available to the Registrar to the issue. v) That the certificates of the securities/ refund orders to the non-resident Indians shall be despatched within specified time. vi) That no further issue of securities shall be made till the securities offered through this Information Memorandum are listed or till the application moneys are refunded on account of non-listing etc. vii) That KFC shall forward the details of utilisation of the funds raised through the Bonds duly certified by the statutory auditors of KFC, to the Bond Trustees at the end of each half-year. viii) That KFC shall disclose the complete name and address of the Bond Trustee in the annual report. ix) That KFC shall provide a compliance certificate to the Bondholders (on yearly basis) in respect of compliance with the terms and conditions of issue of Information Memorandum as contained in the Information Memorandum, duly certified by the Bond Trustee. x) That necessary cooperation with the credit rating agency (ies) shall be extended in providing true and adequate information till the debt obligations in respect of the

instrument are outstanding.

14. PAN/GIR NUMBER All the applicants should mention their Permanent Account Number (PAN) allotted under the IT Act or where the same has not been allotted, the GIR No and the Income Tax Circle/Ward/District. In case neither the PAN nor the GIR No has been allotted, or the Applicant is not assessed to income tax, the appropriate information should be mentioned in the space provided.

15. SIGNATURES

Signatures should be made in English or in any of the Indian Languages. If the signature is in any other language then it must be attested by an authorized official of a Bank or by a Magistrate/Notary Public under his/her official seal. 16. INTEREST ON APPLICATION MONEY

Successful applicants will be paid interest on their application money, at the coupon rate for the Bonds from the date of realization of cheque/DD/ RTGS by KFC up to one day prior to


45

the Date of Allotment. Refund cheques/Warrants/Demand Drafts will be mailed within seven days of Date of Allotment. Interest at the coupon rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. The interest on application money will be computed on an Actual/Actual day basis. Interest on application money will be dispatched by Post/Courier at the allottees’ risk. Income Tax as applicable will be deducted at source at the time of payment of interest on application money. Those desirous of claiming exemption from tax are required to submit a certificate issued by the income-tax officer concerned in form 15AA or submit Form 15G in duplicate as applicable along with the application form and PF Trusts/ superannuation trusts would be required to give Income Tax Recognition Certificate issued by the Income Tax Department. Where the entire subscription amount has been refunded, the interest on application money will be paid along with the Refund Orders. Where an applicant is allotted lesser number of Bonds than applied for, the excess amount paid on application will be refunded to the applicant along with the interest on refunded money. The interest cheque(s)/ demand draft(s) for interest on application money along with Refund Orders, in case of refund of application money, if any shall be dispatched by the Corporation within 7 days from the Date of Allotment by courier/registered post to the sole/ first applicant, at the sole risk of the applicant.

17. ACKNOWLEDGEMENTS

No separate receipts will be issued for the application money. However, the Arranger to the Issue receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the Acknowledgement slip at the bottom of each Application Form. 18. AMENDMENT OF THE TERMS OF THE BONDS:

KFC may amend the terms of the Bond(s) at any time by a resolution passed at a meeting of the bondholders with the consent of the bondholders holding in the aggregate more than 75% in nominal value of the Bonds outstanding out of those present and voting.

19. ALLOTMENT PROCEDURE

Allotment will be made on day basis amongst such investors based on the credit given by the collecting banker. Subsequently, if the issue gets subscribed on any single day, mode of payment shall be the priority for allotment on proportionate basis. In case of over-subscription in the issue on the closing day, allotment would be done on a proportionate


46

basis among the investors. The Corporation reserves the right to decide on the allotment suitably in case of over /under-subscription.

20. BONDHOLDER NOT A SHAREHOLDER

The Bondholders will not be entitled to any of the rights and privileges available to the shareholders. If, however, any resolution affecting the rights attached to the Bonds is placed before the members of the Corporation, such resolution will first be placed before the Bondholders for their consideration. 21. CONSENTS

Consents in writing from the Trustees to the Bondholders, Registrars and the Bankers to the Issue to act in their respective capacities have been obtained and none of them have withdrawn their consent up to the date of delivery of a copy of this Information Memorandum to the BSE.

22. FORCE MAJEURE

If the performance in whole or in part by the contract or any obligation under this contract is prevented or delayed by reasons of any eventuality for a period not exceeding 20 working days, the KFC may at its option to terminate this contract by notice in writing. 23. MODIFICATION OF RIGHTS

The rights, privileges, terms and conditions attached to the Bond may be varied, modified or abrogated with the consent, in writing, of those holders of the Bond who hold at least three fourth of the outstanding amount of the Bond or with the sanction accorded pursuant to a resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall be operative against the KFC where such consent or resolution modifies or varies the terms and conditions of the Bond, if the same are not acceptable to the KFC. 24. INTEREST RATE

The Bonds will carry interest at the coupon rate for tenure of 10 years, from the Deemed Date of Allotment. The interest will be paid from the Deemed Date of Allotment (subject to deduction of tax at source at the rates prevailing from time to time under the Income Tax Act, 1961 or any other statutory modification or re-enactment thereof) and is payable half yearly. The interest payable shall be calculated by multiplying the coupon rate by the principal amount, multiplying such product by actual number of days in the interest period concerned dividing by 365 (in case of leap year by 366 days).The day count convention is actual/actual basis. 25. INTEREST PERIOD

1. The first interest period is defined as the actual number of days falling between the


47

Deemed Date of Allotment to the last day of the six month from that date including both the first date and the last date. 2. The last interest payment would be made on the redemption date along with the redemption of principal amount or where-in the put/call option is exercised the last interest payment date shall be the 10th year from the deemed date of allotment. 26. PAYMENT OF INTEREST

Interest for each of the interest periods shall be computed on an actual/365 days a year basis on the principal outstanding on the Bonds at the Coupon rate. If the interest period from start date to end date includes February 29, then interest shall be paid on the basis of 366 days basis.

Payment of interest/principal will be made to the registered first named bondholder as on the record date. If the bond has been transferred, the transferor(s) jointly with the transferee(s) shall notify the Corporation.

27. PUT OPTION AND CALL OPTION

CALL OPTION The Corporation will have the right of exercising the call option at the end of 4th year from the date of allotment. However, notice to the effect of exercising the call option by the Corporation would be given 60 days before the end of 4th year from the date of allotment of the Bonds failing which the Corporation shall not be entitled to exercise call option in future. Thus, if the Corporation gives due notice to the bondholders and exercises the call option , it will redeem 25% every year at the end of 4th, 5th , 6th and 7th year.

PUT OPTION The Investor will have the right of exercising the put option at the end of 4th year from the date of allotment. However, notice to the effect of exercising the put option by the Investor would be given 60 days before the end of 4th year from the date of allotment of the Bonds, failing which the Investor shall not be entitled to exercise put option in future. Thus, if the Investor gives due notice to the Corporation and exercise the put option ,the investor will receive redemption of 25% every year on at the end of 4th, 5th , 6th and 7th year.

TAX DEDUCTED AT SOURCE

Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re- enactment thereof will be deducted at source. For seeking TDS exemption/ lower rate of TDS relevant certificate/ document must be lodged by the Instrument Holders at the registered office of the Corporation at least 30 days before the interest payment becoming due and if required, be submitted a fresh annually and/or as and when called upon for the same by the Corporation.

Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application money, should be submitted along with the application form. Failure to comply


48

with the above shall entitle the Corporation to deduct tax at source as may be advised to it. TDS once deducted by Corporation and deposited with the Income Tax Department shall not be refunded by Corporation under any circumstances and the concerned Bondholders will have to seek refund of the amount from the Income Tax Department alone. Bondholder(s) should also consult their own tax advisers on the tax implications of the acquisition, ownership and sale of Bonds, and income arising thereon.

28. REDEMPTION

The face value of the Bonds will be redeemed at par at the end 7th, 8th , 9th and 10th year in the ratio of 25:25:25:25 from the deemed date of allotment. The interest on the bonds will cease to accrue from the date of redemption. The Bonds held in the Dematerialised Form shall be taken as discharged on payment of the redemption amount by the Corporation on maturity to the registered Bondholders whose name appears in the Register of bondholders on the record date. Such payment will be a legal discharge of the liability of the Corporation towards the Bondholders. On such payment being made, the Corporation will inform NSDL/ CDSL and accordingly the account of the Bondholders with NSDL /CDSL will be adjusted.

29. REGISTER OF BONDHOLDERS

The Register of bondholders containing necessary particulars will be maintained by Finance Division in KFC at its Registered Office and all enquiries / correspondence relating thereto may be addressed to the compliance officer at the above mentioned address. 30. SPLITTING AND CONSOLIDATION

The request from the Registered Bondholders for split /consolidation of bond certificates will be handled by the R&T Agent as per procedures laid under the Depositories Act, 1996. 31. BUY BACK

KFC may buy back the bonds before maturity. Also KFC reserves the right to prematurely redeem the Bonds at its sole discretion at the express request of the bond holder in exceptional cases, subject to regulatory provisions.

32. REGISTRATION AND GOVERNMENT APPROVALS

This present issue of Bonds is being made in accordance with extant guidelines for floatation of State Government guaranteed Bonds as amended from time to time. The KFC can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority/(ies) is required by the KFC to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time. 33. RIGHT TO REPURCHASE/REPLACEMENT OF BOND(S) KFC shall have the power exercisable at its absolute discretion, from time to time, to repurchase from the open market, through market makers or otherwise at par, discount or premium, all or any of the Bonds at any time prior to the specified date of redemption. Such


49

bonds may be cancelled (extinguished), held, resold or replaced. Where KFC purchases bonds, KFC shall have and shall be deemed always to have had the right to keep such Bonds alive for the purposes of resale or replace and in exercising such right, KFC shall have and deemed always to have had the power to resell or replace the same bonds or by issuing other bonds in lieu thereof.

34. SUCCESSION

In the event of the demise of the sole/ first holder of the Bond(s) or the last survivor, in case of joint holders for the time being, the Corporation will recognize the executor or administrator of the deceased Bondholder, or the holder of succession certificate or other legal representative as having title to the Bond(s). The Corporation shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Corporation may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the deceased

Where a non-resident Indian becomes entitled to the Bond by way of succession, the following steps have to be complied with:

a. Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the Bond was acquired by the NRI as part of the legacy left by the deceased holder.

b. Proof that the NRI is an Indian National or is of Indian origin. Such holding by the NRI will be on a non-repatriation basis.

35. FURTHER BORROWINGS

KFC will be entitled to borrow/raise loans or avail financial assistance in whatever form as also issue of debentures/bonds/ other securities in any manner having such ranking in priority, pari-passu or otherwise and change the capital structure including issue of shares of any class or redemption or reduction of any class of paid-up capital on such terms and conditions as KFC may think appropriate without the consent of or intimation to the bondholders.

36. RIGHT TO ACCEPT/ REJECT APPLICATIONS The Corporation reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realization of the cheque(s)/demand drafts(s) till one day prior to the date of refund. The application forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application


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money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to:

i. Number of Bonds applied for is less than the minimum application size; ii. Applications exceeding the issue size; iii. Bank account details not given; iv. Details for issue of Bonds in electronic/ dematerialised form not given; PAN/GIR and IT

Circle/Ward/District not given; v. In case of applications under Power of Attorney by limited companies, corporate bodies,

trusts, etc. relevant documents not submitted; In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded.

37. REGISTRATION OF TRANSFER

Bonds 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. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. Transfer of Bonds to and from NRIs/ OCBs, in case they seek to hold the Bonds and are eligible to do so, will be governed by the then prevailing guidelines of RBI. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Corporation. 38. REFUNDS

The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. . Refund cheques/Warrants/Demand Drafts will be mailed within seven days of Date of Allotment. 39. PAYMENTS AT PAR

Interest as well as the redemption amount, shall be paid through RTGS/ instruments payable at par. 40. DESPATCH OF DOCUMENTS

All the correspondence shall be dispatched by registered post to the address of the holder whose name appears first in the Register of Bond holders. This will be at the sole risk of the addressee.


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41. GOVERNING LAW

The Bonds are governed by and shall be construed in accordance with the existing Indian Law. Any dispute arising thereof on any account whatsoever will be subject to the jurisdiction of Honourable High Court of Kerala at Ernakulam only. 42. NOTICES All notices to the Bond holder(s) required to be given by KFC or by the Trustees shall be deemed to have been given if published in one English and one regional language daily newspaper, or may, at the sole discretion of KFC, but without any obligation, be sent to the Bonds holder(s) at the address stated in the Application Form, or at the address as notified by the Bonds holder(s) in due course. All notices to KFC by the Bonds holder(s) must be sent by registered post or by hand delivery to KFC at its Head Office or to such person(s) at such address as may be notified by KFC from time to time. 43. GENERAL Over and above the aforesaid Terms and Conditions, the said Bonds shall be subject to the Terms and Conditions incorporated in the Application. 44. SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES, PAYMENT OF DUE INTEREST ON

DUE DATES ON TERM LOANS AND DEBT SECURITIES. There has been no delay in servicing of interest due.

45. PERMISSION AND CONSENT FROM CREDITORS

The Corporation hereby confirms that it is entitled to raise money through current issue of Debentures without the consent/ permission/ approval from the Debenture holders/ Trustees/ Lenders/ other creditors of the Corporation. 46. TRUSTEES OF THE BONDHOLDERS:

KFC has appointed “GDA Trusteeship Ltd.” to act as Trustees to the Bondholders. KFC and the Trustees will enter into a Trustee Agreement, specifying inter alia, the powers, authorities and obligations of the Trustees and KFC. The bondholders shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorised officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the bondholders. It is proposed that in terms of the agreement, the Trustees will endeavour to protect the interest of the bondholders, in the event of default in regard to timely payment of interest or repayment of principal by KFC. Any payment made by KFC to the Trustees on behalf of the bondholders shall discharge KFC of its obligations to the bondholders. No Bondholder shall be entitled to proceed directly against KFC unless the Trustees, having become so bound to proceed, fail to do so. A copy of letter from GDA Trusteeship Ltd conveying their consent to act as Trustee for the current issue of Bonds is enclosed elsewhere in this Disclosure Document.


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53

Board Resolution


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Letter from Debenture Trustee


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Letter from Registrar and Transfer Agent


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Credit Rating Letter


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58

Government Guarantee Letter


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60

Structured Payment Mechanism


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