Assignment

Name of the company: Grasim industries ltd.

Issued on: July 2009
PART-A
1. What is the type of the security offered?
A) Debentures

Features of debentures:
Debenture is redeemed after a fixed period of time.
Debenture holders do not enjoy any voting right.
Interest on debenture is payable even if there is a loss.
Debenture holders are the creditors of the company.

2. What is the mode of issue?

A) Private placement

3. What is the size of issue?

A)Rs.200 crores

4. What is the rating of the instrument? Which agency/ organisation have rated it?

A) AAA (stable) by CRISIL and AAA by CARE

5. What are the disclosed risk factors in the issue?

A)

6. where are they going to be listed ?

A) On the WDM segment of NSE

7. How would the proceeds of the issue is going to be used?

A) The proceeds of the issue shall be utilized for Capex and/or general corporate purpose
Of the company.
8. Is there a plan to monitor the utilisation of the funds?

A)

9. What is the amount secured & unsecured loans outstanding for the company as on the
offer date?

A) Total Secured loans 1965.38

Total Unsecured loans 1016.24

10. Who can apply for these securities and what is the market lot for the issue?
A) Only those investors, who have been addressed through a communication directly are
eligible to apply. No
other investor can apply. The categories of the investors, to whom the communication has
been directed,
are:
Companies and bodies corporate
Commercial banks
Regional rural banks
Financial institutions
Investment Institutions
Mutual funds
Insurance companies
Provident Funds & Gratuity Funds (Dual Rated Bonds Category)

Market lot: 1 NCD( Non- convertible debentures)and in multiples of 1 thereafter

2000 Secured Redeemable Non-Convertible Debentures f the
face value of Rs.10 Lacs each for an amount aggregating Rs.200 crores.

PART-B

Coupon rate (C) = 8.01 % (Annually)=80,100

Maturity value (M)= 10,00,000

Number of years to maturity(n) =7

Assuming required rate of return (r)= 10% or 0.1

c M
+
( 1+r ) ( 1+r )n
t

P0 = n

t =1

P0 = 389960.3 + 903118.5
P0 = 903118.5

Debenture should not be bought if required rate of return =10% , if bond is available for
less than 903118.5 it can be bought.