JNPT plans to raise Rs 2,000 cr via tax-free bonds

The money raised will be utilised to complete Rs 1,500-cr dredging project and other development activities within the port

Jawaharlal Nehru Port Trust (JNPT), which operates the Navi Mumbai Port, plans to raise up to Rs 2,000 crore through tax-free bonds. The issue size would be Rs 500 crore, with an over-subscription option of up to Rs 1,500 crore.

The bonds, with a term of 10 years, would have a fixed interest of 6.28 per cent a year. Retail individual investors would get additional interest of 0.50 per cent a year (7.32 per cent). The issue opens on Monday and closes on Friday.

“The net proceeds will be primarily used for dredging works to deepen and widen the Mumbai harbour channel and JN Port’s navigational channel. These would also be used for capital expenditure for other projects, in relation to the port operations,” said Luxman Radhakrishnan, JNPT chairman. He added the primary dredging cost was Rs 1,571 crore and the estimated period of completion of the project was 25 months.

Kotak Mahindra Capital, ICICI Securities and SBI Capital Markets are the lead managers for the issue, which is open to qualified institutional buyers, domestic companies, high net worth individuals and retail individual investors.

This is the first time the company is carrying out a public issue of tax-free bonds. “We are reasonably hopeful of this issue. It is only a Rs 2,000-crore issue…This is the only issue from a port with an ‘AAA’ rating,” said Radhakrishnan.

The issue had been rated ‘CRISIL AAA/Stable’ by CRISIL and ‘BWR AAA’ by Brickwork. Instruments with such ratings are considered to have the highest degree of safety, in terms of the timely servicing of financial obligations. Also, these carry the lowest credit risk.