February 02, 2016

Sardar Sarovar Bonds- Appeal in SC by Aggrieved Investors - BS Report

Sardar Sarovar Narmada Nigam Ltd- Deep Discount Bonds

SSNNL, fully owned by the Gujarat State government, had issued over seven lakh DDBs in 1994. The bonds, which were to mature in 2014, would have resulted in a pay out of over Rs 7,000 crore at the face value of Rs 1,11,000 a piece.
Under the conditions mentioned in the Prospectus, the Bonds were redeemable at the option of the Bond-holder at the end of 7th, 11th and 15th years commencing from 1993, for Rs 12,500, Rs 25,000 and Rs.50,000 at the end of respective dates.
More than 700,000 deep discount bonds issued to the public as above and they were listed in 10 Stock Exchanges across the country.

 On 29th March, 2008, the State of Gujarat promulgated the controversial law, whereby, the powers were conferred on the company to redeem the Bonds notwithstanding anything contained in the conditions relating to redemption of Bonds in the Prospectus.
On November 3, 2008, when SSNNL board cleared the premature redemption, 6.69 lakh bonds were outstanding. Of this, 1,29,841 investors in Gujarat were holding 170,462 DDBs, while 2,79,335 investors outside Gujarat had 498,909 DDBs.
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