INDIA INFOLINE FINANCE LIMITED - Securities and Exchange ...

India Infoline Finance Limited
from its existing lenders.
Our Company may, subject to receipt of all necessary consents from its existing lenders and the Debenture
Trustee to the Issue, raise further borrowings and charge its assets. Our Company is free to decide the
nature of security that may be provided for future borrowings. In such a scenario, the Bondholders will rank
pari passu with other creditors and to that extent, may reduce the amounts recoverable by the NCD holders
upon our Company’s bankruptcy, winding-up or liquidation.
52. You may be subject to Indian taxes arising on the sale of the NCDs.
Sales of NCDs by any holder may give rise to tax liability in India, as discussed in section entitled
“Statement of Tax Benefits” on page 45 of this Draft Prospectus.
53. There is no active market for the NCDs on the WDM segment of the stock exchanges. As a result the
liquidity and market prices of the NCDs may fail to develop and may accordingly be adversely affected.
There can be no assurance that an active market for the NCDs will develop. If an active market for the
NCDs fails to develop or be sustained, the liquidity and market prices of the NCDs may be adversely
affected. The market price of the NCDs would depend on various factors inter alia including (i) the interest
rate on similar securities available in the market and the general interest rate scenario in the country,(ii) the
market for listed debt securities, (iii) general economic conditions, and, (iv) our financial performance,
growth prospects and results of operations. The aforementioned factors may adversely affect the liquidity
and market price of the NCDs, which may trade at a discount to the price at which you purchase the NCDs
and/or be relatively illiquid.
54. Our Company has been in violation of one of the covenants contained relating to one of our prior
debenture issues.
Our Company has been in violation of the maximum permissible gearing (i.e. Total Debt/ Total Networth)
as prescribed under the offer document for issue of Secured Redeemable Non-Convertible Debentures
issued on April 20, 2010, during the Financial Year 2011-2012. Our Company’s gearing had grown upto
2.9 times during the FY 2011-12 as against maximum permissible gearing of 2.5 times on a Consolidated
and Standalone basis. There is no guarantee that such a violation may not happen again. In the event that
there are similar events of default under the terms of offer documents, it can have significant consequences
on our business and operations.
External Risk Factors
55. Our results of operations have been, and may continue to be, adversely affected by Indian and
international financial market and economic conditions.
Our business is highly dependent on Indian and international markets and economic conditions. Such
conditions in India include fluctuations in interest rates; changes in consumer spending; the level of
consumer confidence; housing prices; corporate or other scandals that reduce confidence in the financial
markets, among others. International markets and economic conditions include the liquidity of global
financial markets, the level and volatility of debt and equity prices and interest rates, investor sentiment,
inflation, the availability and cost of capital and credit, and the degree to which international economies are
expanding or experiencing recessionary pressures. The independent and/or collective fluctuation of these
conditions can directly and indirectly affect demand for our lending finance and other financial products, or
increase the cost to provide such products. In addition, adverse economic conditions, such as declines in
housing values, could lead to an increase in mortgage and other home loan delinquencies and higher writeoffs,
which can adversely affect our earnings.
Global financial markets were and continue to be extremely volatile and were materially and adversely
affected by a significant lack of liquidity, decreased confidence in the financial sector, disruptions in the
credit markets, reduced business activity, rising unemployment, declining home prices and erosion of
consumer confidence. These factors have contributed to and may continue to adversely affect our business,
financial condition and results of operations.
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