About the issue
1. The issue is open from August 18, 2009 to September 4, 2009.
2. It offers a coupon rate of 9.5 per cent to 10.50 per cent depending on the period chosen.
3. The minimum amount you can invest is Rs 10,000 for retail investors, ie, 10 applications of Rs 1,000 each.
4. The interest earned will be fully taxed as per your tax slab.
5. The debentures are offered in four options: quarterly, semi-annual, cumulative, and semi-annual with 120 months redemption period.
Four investment options:
| Options | I | II | III | IV |
| Interest payment | Quarterly | Semi-annual | Cumulative | Semi-annual |
| Minimum Application | Rs 10,000 | Rs 10,000 | Rs 10,000 | Rs 10,000 |
| Face value of NCDs | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 |
| Coupon | 9.51 % | 9.62 % | 9.95 % | 10.24 % |
| Yield on redemption | 9.85 % | 9.85% | 9.95 % | 10.50 % |
| Redemption date | 60 months from date of allotment | 60 months from date of allotment | 88 months from date of allotment | 120 months from date of allotment |
Senior citizens, who are 65 or more years of age, at any time during the financial year 2009-10, enjoy the special privilege to submit a self declaration in the prescribed Form 15H for non-deduction of tax at source in accordance with the provisions of section 197A (1C) of the IT Act even if the aggregate income credited or paid or likely to be credited or paid does not exceed the maximum amount not chargeable to tax; ie, Rs. 225,000 for FY 2008-09 (proposed Rs. 240,000 from FY 2009-10).
Also check: Bank fixed deposit rates
Should you invest?
Investment advisor, Sandeep Shanbhag says, "It's a good bet to subscribe to it. Since it's a NCD issue, it's got fixed interest, which means there is not going to be any variability in the rate of interest. However, the interest earned is fully taxable. Those who are looking for alternative instruments besides bank fixed deposits (FDs) and company fixed deposits, can subscribe to it. It gives better returns than bank FDs."
Echoing Shanbhag's thoughts, certified financial planner Kartik Jhaveri says, "Nothing wrong in subscribing to L&T. Cupon rate of 9.5 per cent for 5 yrs and 10.5 per cent for 10 yrs. It's got a good rating: AA+. The company is also reputed. So, there's no principal risk in subscribing to the issue."
Dilemma: Should I subscribe or should I put my money into a FD?
1. Higher interest on NCD
Your fixed deposits and company fixed deposits will give you much lesser yield than L&T issue. For a period of 5 years, say, State Bank of India or ICICI Bank will give you 7.5 per cent to 8 per cent per annum on deposits. L&T Finance's NCD offers you an interest rate of 9.5 per cent per annum.
2. Safety at par
Shanbhag says, "L&T has a very good pedigree and that's what matters." A company with a pedigree like that and sustainability shouldn't be the cause of worry for you. Also, NCD is secured borrowings for the company. That is, if the company were to wind up, NCD holders will rank above all unsecured creditors and other investors."
Conclusion
Like all debt investments, subscribe to this issue, if you are looking to conserve and protect your money and make a slightly higher return than bank deposits. If your goal is to create wealth, a strict NO.
By: Moneycontrol
--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---
No comments:
Post a Comment