The Indore Municipal Corporation (IMC) in Madhya Pradesh will issue green bonds as a public issue on February 10 to raise funds for building a solar power plant. This will be a first of its kind in India.
The green bond issue will open on February 10 and close on February 14. the bond is expected to list on the National Stock Exchange after February 22.
What is a Green Bond?
A green bond is a type of debt security that a company issues to finance or refinance projects that have a beneficial impact on the environment and the climate. A climate bond is another name for a green bond.
The chief municipal corporation for the city of Indore is the Indore Municipal Corporation (IMC). The Commissioner (Nagar Aayukt) of the Issuer is Smt. Pratibha Pal, an IAS, and the Mayor are Shri Pushyamitra Bhargav. IMC is secured under the AMRUT Scheme of the Indian Government. Additionally, Indore Municipal Corporation owns 50% of Indore Smart City Development Limited (ISCDL), a Special Purpose Vehicle established under the Companies Act of 2013 to carry out Indore Municipal Corporation’s Smart City Mission plan to build a smart city (SCM). ISCDL has contributed to the successful execution of a number of projects.
IMC Green Bond Details
According to DRHP, the corporation would issue four individually transferable and redeemable principal parts non-convertible debentures (NCDs) with a face value of Rs 1,000 each (STRPP). Each NCD of Rs 1,000 will include one STRPP A, one STRPP B, one STRPP C, and one STRPP D, each with a face value of Rs 250. The duration of STRPP A is 3 years, STRPP B is 5, STRPP C is 7, and STRPP D is 9 years.
The green bond issue would need a minimum application size of Rs 10,000 (or 10 NCDs), with subsequent applications coming in multiples of Rs 1,000.
India Ratings & Research gave the proposed green bonds an AA+ rating with a stable outlook. Care Ratings has given the issue an AA rating with a stable outlook, nonetheless.
According to the Income Tax Act of 1961, NCD holders are not entitled to any special tax benefits. If the NCD is held for less than 12 months the holder must pay short-term capital gains on interest income or for more than 12 months, the holder must pay long-term capital gains on interest income.
The book-running lead managers for the issue are AK Capital Services Limited, SBI Capital Markets Limited, and Vistra ITCL (India) Limited, while KFin Technologies is the registrar.
According to the source, the civic corporation of the nation’s cleanest city hopes to raise at least Rs 245 crore through green bonds that will be utilized to build a 60 MW solar power at the villages of Samraj and Ashukhedi in the Madhya Pradesh district of Khargone and the electricity from it will be used to pump water to Indore from the Narmada river in Jalud village, which is located in the nearby Khargone district and is around 80 km distant.
The official projected that Rs 300 crore will be needed to build up the solar power facility.
A solar power plant building tender has already been announced, and once it is approved, construction will take two years, the municipality will save Rs 25 crore per month after the projected solar power facility at Jaludis constructed.
Financials of IMC Bond
The corporation’s revenue income for the financial year 2021–2022 was Rs 1,739.95 crore as compared to Rs 1,508.10 crore in the same time the previous year.
While the corporation expenditure was Rs 1,107.88 crore in FY22, excluding interest and depreciation.
The total debt in 2021–22 was Rs 579.43 crore, down from Rs 648.45 crore in the same time the previous year.
Return & Ratings
The Green Bonds Issue offers an effective return of 8.42% annually and a coupon rate of 8.25% p.a. payable every six months. the NCDs are intended to be listed on both NSE and BSE. CARE Ratings Limited and India Ratings & Research Private Limited have rated the Green Bonds as “CARE AA: Stable” and “IND AA+/Stable,” respectively.
To Invest in IMC green Bond Issue with the Justrade2.0 app or visit the link or apply through the Indore 311 App.