Pune Municipal Corporation Plans To Raise Rs 200 Crore Via Bond Issue

The Pune Municipal Corporation is likely to issue its first bond on June 21, with an aim to mop up around Rs 200 crore, two people aware of the development told BloombergQuint on condition of anonymity.

The municipal body would raise money in tranches rather than at one go, one of the two officials cited above said.

The second official said that the municipal body had approached the Securities and Exchange Board of India (SEBI) to grant some changes in formats of financial statements of the municipal corporation.

Ulka Kalaskar, chief accounting and finance officer at Pune Municipal Corporation, confirmed to BloombergQuint that these exemptions were sought by the civic body, and the capital market regulator has granted these exemptions.

The income and expenditure statement will not be in the format followed by corporates, she said adding, that the issue date of bonds will be before June 23.

The SEBI guidelines ask municipal bodies to submit audited accounts of last four years, with the half yearly audited and unaudited accounts of the immediately preceding financial year.

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For example, if a municipal body is issuing securities in financial year 2017-18, it will have to submit audited accounts of FY14, FY15, FY16 and audited or unaudited results for April-September period of FY17, as accounts of financial year 2016-17 are not immediately available and come with a delay.

The accounts of municipal body for a financial year get approved by the standing committee, and governing body along with the budget for the next financial year. This leads to time lag of over a financial year.

This will not be the first time when municipal corporation would issue securities. The earliest such bond dates back to 1998, when Ahmedabad raised Rs 100 crore. Others such as Hyderabad, Nasik and Visakhapatnam have also tested the market with small issues.