With the interest rates dropping as low as 6-9 per cent, Sardar Sarovar Narmada Nigam (SSNNL) has placed its Deep Discount bonds for redemption.
Empowered by the SSNNL (Conferment of Power to Redeem Bonds) Act 2008, the company is now able to redeem the publicly issued outstanding bonds at an early stage.
Issued in 1993 and allotted in 1994, the bonds worth Rs 240.98 crore at current value were the only outstanding ones left to be redeemed.
According to N M Patel, company secretary of SSNNL, around 6.69 lakh bonds had been lying outstanding.
"When issued, these bonds were carrying an interest of 18 per cent, but 2000 onwards the interest rates had begun falling and touched 6-9 per cent. Following this, the Gujarat government passed an act that enabled the company to redeem these bonds early before the interest rates dropped further. This led to the company issuing notice to its investors to surrender their bonds," said Patel.
The bonds had been issued at a face value of Rs 1.11 lakh at a price of Rs 3,600 with a maturity period of 20 years. While Deep Discount bonds would have matured in 2014, the company has fixed the date of redemption as January 10, 2009 at a value of Rs 50,000 per bond.
Patel said that the company has honoured its investors' rights to withdraw these bonds at the end of 7, 11 and 15 years at deemed face value of Rs 12,500, Rs 25,000 and Rs 50,000 per bond. "These were the last publicly issued outstanding bonds. There are still some privately held outstanding bonds which are yet to be redeemed," added Patel.
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