Collins Stewart Limited - Noida Toll Bridge Company Ltd.

Transcription

Job: 13831G--
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Date: 15-03-06
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ID Number: 6245
TCP No. 7
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the
contents of this document or the action that you should take, you should consult a person authorised under the Financial Services and
Markets Act 2000 (“FSMA”) who specialises in advising on the acquisition of global depositary receipts and other securities.
This document, which comprises an AIM Admission Document, has been drawn up in accordance with the AIM Rules and has been
issued in connection with the application for admission to trading of global depositary receipts each representing 5 ordinary shares of
Rs 10 each in the capital of the Company (“GDRs”) on AIM. This document does not constitute a prospectus and contains no offer to
the public within the meaning of Schedule 11 of FSMA, the Prospectus Regulations 2005 or otherwise.
Application has been made for the GDRs to be admitted to trading on AIM. It is anticipated that Admission will become effective and
unconditional dealings in the GDRs will commence on 21 March 2006. No application has been made to list or quote the GDR’s on any
stock exchange other than AIM. The ordinary shares in the capital of the Company are currently listed on the Bombay Stock Exchange
Limited and the National Stock Exchange of India Limited. AIM is a market designed primarily for emerging or smaller companies to
which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the
Official List of the United Kingdom Listing Authority (“Official List”). A prospective investor should be aware of the risks of investing in
such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an
independent financial adviser. Neither the London Stock Exchange plc nor the United Kingdom Listing Authority has examined or
approved the contents of this document. The whole of this document should be read. An investment in the Company involves a
significant degree of risk, may result in the loss of the entire investment and may not be suitable for all recipients of this document. The
attention of investors is drawn in particular to the risk factors set out in Part II of this document.
The Directors, whose names appear on page 8 of this document, accept responsibility for the information contained in this document,
including individual and collective responsibility for compliance with the AIM Rules. To the best of the knowledge and belief of the
Directors, who have taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance
with the facts and does not omit anything likely to affect the import of such information.
Noida Toll Bridge Company Limited
(Incorporated in India as a public limited company under the Indian Companies Act 1956 with registered number 20-19759)
Placing
of 11,363,636 GDRs each representing 5 Ordinary Shares of
Rs 10 each at a Placing Price of $3.96 per GDR
and
Admission of GDRs to trading on AIM
Nominated Adviser, Co Financial Adviser & Broker
Collins Stewart Limited
Co Financial Adviser & Co Distributor
Edelweiss Capital Limited
The GDRs have not been, nor will be, registered under the United States Securities Act of 1933, as amended, or under any applicable
securities laws of Australia, the Republic of Ireland, South Africa, Canada or Japan. The GDRs may not be offered or sold or delivered,
directly or indirectly, in or into the United States, Australia, the Republic of Ireland, South Africa, Canada or Japan and may not be
offered, sold or pledged or otherwise transferred to any person located in India, residents of India or to or for the account of or benefit of,
such persons. This document must not be mailed or otherwise distributed or sent to or into the United States, Australia, the Republic of
Ireland, South Africa, Canada or Japan (including their territories, possessions and all areas subject to their jurisdiction) or any other
country where its distribution would require compliance by the Company with any governmental or regulatory procedure or any similar
formalities. This document does not constitute an offer for, or the solicitation of an offer to subscribe for or buy, any GDRs to any person
in any jurisdiction to whom it is unlawful to make such an offer or solicitation in such jurisdiction.
Collins Stewart Limited (“Collins Stewart”) is regulated by the Financial Services Authority and is acting exclusively for the Company as
nominated adviser in relation to the Admission and the Placing. Collins Stewart will not regard any other person as its customer or be
responsible to any other person for providing the protections afforded to customers of Collins Stewart nor for providing advice in
relation to the transactions and arrangements detailed in this document. Collins Stewart is not making any representation or warranty,
express or implied, as to the contents of this document.
Collins Stewart has been appointed nominated adviser and nominated broker to the Company. Under the AIM Rules, the nominated
adviser has certain responsibilities to the London Stock Exchange which are less onerous than the responsibilities of a sponsor of a
company applying for its securities to be admitted to the Official List. In accordance with the AIM Rules, Collins Stewart has confirmed
to the London Stock Exchange that it has satisfied itself that the directors of the Company have received independent advice and
guidance as to the nature of their responsibilities and obligations under the AIM Rules and that, to the best of its information and belief,
all relevant requirements of the AIM Rules have been complied with. In giving its confirmation to the London Stock Exchange, Collins
Stewart has not made its own enquiries except as to matters which have come to its attention on which it considers it necessary to satisfy
itself. Collins Stewart has not authorised the contents of, or any part of, this document and no liability whatsoever is accepted by Collins
Stewart for the accuracy of any information or opinions contained in this document or for the omission of any material information, for
which the Company and its directors are solely responsible.
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TCP No. 7
This document contains forward looking statements, including without limitation, statements containing the words “believe”,
“anticipated”, “expected” and similar expressions. Such forward looking statements involve unknown risk, uncertainties and other
factors which may cause the actual results, financial condition, performance or achievement of the Company, or industry results to be
materially different from any future results performance or achievements expressed or implied by such forward looking statements.
Factors that might cause such a difference include, but are not limited to, those discussed in “Risk Factors” set out in Part II of this
document. Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward looking
statements. Other than in accordance with the Company’s obligations under the AIM Rules or otherwise required by law, the Company
undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future
events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company, its directors or to persons
acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere is this
document. The information on the Company’s website does not form a part of this document.
Apart from the responsibilities and liabilities, if any, which may be imposed on Collins Stewart by FSMA or the regulatory regime
established thereunder Collins Stewart accepts no responsibility whatsoever for the contents of this document nor for any other
statement made or purported to be made by it or either of them or on its or their behalf in connection with the Company or the GDRs.
Collins Stewart accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above)
which it might otherwise have in respect of this document or any such statement.
No person is authorised to give any information or to make any representation not contained in this document and any information or
representation not so contained must not be relied upon as having been authorised on behalf of the Depositary. The Depositary has not
separately verified all of the information contained in this document. Accordingly, no representation, warranty or undertaking, express
or implied, is made and no responsibility is accepted by the Depositary as to the accuracy or completeness of the information contained in
this document or any other information supplied in connection with the GDRs or the Ordinary Shares and nothing contained herein is,
or shall be relied upon as, a promise or representation by the Depositary as to the past or the future. Each person receiving this document
acknowledges that such person has not relied on the Depositary in connection with its investigation of the accuracy of such information
or its investment decision and each such person must rely on their own examination of the Company and the merits and risks involved in
investing.
The Company has granted Collins Stewart an option pursuant to which Collins Stewart may require the Company to allot additional
Ordinary Shares up to a maximum of 10% of the total number of New Ordinary Shares to the Depositary and instruct the Depositary to
issue Collins Stewart with a representative number of GDRs at the Placing Price. This option is exercisable in whole or in part at any time
up to and including the 21st calendar day after commencement of conditional dealings in the GDRs on AIM. Any GDRs issued by the
Depositary pursuant to the exercise of this option will be issued on the same terms and conditions as the Placing GDRs and will form a
single class for all purposes with the Placing GDRs. Save as required by law or regulation, neither Collins Stewart nor any of its agents
intends to disclose the extent of any over-allotments. Collins Stewart may exercise the Over-allotment Option with a view to supporting
the market price of the Placing GDRs at a level higher than that which might otherwise prevail for a limited period after the
commencement of conditional dealings in the GDRs. However, there is no obligation on Collins Stewart to do this. Any such stabilising
activity undertaken by Collins Stewart may be discontinued at any time.
This document does not constitute, and may not be used for the purposes of, an offer or an invitation to subscribe for GDRs by any
person in any jurisdiction: (i) in which such offer or invitation is not authorised; or (ii) in which the person making such offer or invitation
is not qualified to do so; or (iii) to any person to whom it is unlawful to make such offer or invitation. The distribution of this document
and the offering of the GDRs in certain jurisdictions may be restricted. Accordingly, persons outside the United Kingdom into whose
possession this document comes are required by the Company and Collins Stewart to inform themselves about and to observe any
restrictions as to the offer or sale of GDRs and the distribution of this document under the laws and regulations of any territory in
connection with any applications for GDRs, including obtaining any requisite governmental or other consent and observing any other
formality prescribed in such territory. No action has been taken or will be taken in any jurisdiction by the Company or Collins Stewart
that would permit a public offering of the GDRs in any jurisdiction where action for that purpose is required, nor has any such action
been taken with respect to the possession or distribution of this document other than in any jurisdiction where actions for that purpose is
required.
Pursuant to the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies) Regulations 2003
(the “OCB Regulations”), any Overseas Corporate Body which was in existence as at 16 September 2003 and which was placed on the
adverse list of the RBI or which is not eligible to invest in India through the portfolio investment route is prohibited from buying, selling
or dealing in securities of Indian companies and is not eligible to subscribe for the GDRs. The OCB Regulations also provide that any
Overseas Corporate Body which was in existence prior as at 16 September 2003 and which had previously availed itself of certain special
benefits may only buy, sell or deal in securities of Indian companies with RBI approval, and any such person is not eligible to subscribe for
the GDRs without RBI approval. Any Overseas Corporate Body or other person which is prohibited by SEBI from buying, selling or
dealing in securities of Indian companies is not eligible to subscribe for the GDRs. An Overseas Corporate Body is defined under the
relevant regulations to mean a company, partnership or society or other corporate body that is owned, directly or indirectly, to the extent
of at least 60% by Non Resident Indians (NRIs), including trusts, in which not less than 60% of beneficial interest is irrevocably held by
NRIs, directly or indirectly.
Copies of this document will be available free of charge during normal business hours on any weekday (except Saturdays, Sundays and
public holidays) at the offices of Collins Stewart Limited, 9th Floor, 88 Wood Street, London EC2V 7QR from the date of this document
for the period of one month from Admission.
Prospective investors are advised to read, in particular, Part I “Information on the Company” and Part II “Risk Factors”, for a more
complete discussion of the factors that could affect the Company’s future performance and the industry in which it operates.
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TCP No. 7
Notice to Prospective Investors in the European Economic Area
In relation to each member state of the European Economic Area that has implemented the
Prospectus Directive (each, a relevant member state) with effect from and including the date on
which the Prospectus Directive is implemented in that relevant member state (the “relevant
implementation date”), an offer of GDRs described in this document may not be made to the public
in that relevant member state prior to the publication of a prospectus in relation to the GDRs
approved by the competent authority in that relevant member state or, where appropriate,
approved in another relevant member state and notified to the competent authority in that relevant
member state, all in accordance with the Prospectus Directive, except that, with effect from and
including the relevant implementation date, an offer of securities may be offered to the public in
that relevant member state at any time:
앫
to any legal entity that is authorised or regulated to operate in the financial markets or, if not
so authorised or regulated, whose corporate purpose is solely to invest in securities; or
앫
to any legal entity that has two or more of (1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than (43 million and (3) an annual net
turnover of more than (50 million, as shown in its last annual or consolidated accounts; or
앫
in any other circumstances that do not require the publication of a prospectus pursuant to
Article 3 of the Prospectus Directive.
Each purchaser of GDRs described in this document located within a relevant member state will be
deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the
meaning of Article 2(1)(e) of the Prospectus Directive.
For purposes of this provision, the expression an “offer to the public” in any relevant member state
means the communication in any form and by any means of sufficient information on the terms of
the Placing and the GDRs to be offered so as to enable an investor to decide to purchase or subscribe
for the GDRs, as the expression may be varied in that member state by any measure implementing
the Prospectus Directive in that member state, and the expression “Prospectus Directive” means
Directive 2003/71/EC and includes any relevant implementing measure in each relevant member
state.
No purchaser of the GDRs other than Collins Stewart and Edelweiss Capital is authorised to make
any further offer of the GDRs on behalf of any other person.
Notice to Prospective Investors in Hong Kong
The contents of this document have not been reviewed by any regulatory authority in Hong Kong.
You are advised to exercise caution in relation to the Issue. If you are in any doubt about any of the
contents of this document, you should obtain independent professional advice.
This document has not been registered by the Registrar of Companies in Hong Kong pursuant to
the Companies Ordinance (“CO”).
Accordingly, this document must not be issued, circulated or distributed in Hong Kong other than
(1) to professional investors within the meaning of section 1 of Part 1 of the Seventeenth Schedule of
the Companies Ordinance, Chapter 32 of the Laws of Hong Kong, and section 103(3)(k) and
section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance, Chapter 571 of the Laws
of Hong Kong (“SFO”) and any rules made thereunder, (2) to persons and in circumstances which
do not result in the document being a “prospectus” as defined in section 2(1) of the CO or which do
not constitute an offer to the public within the meaning of the CO or an invitation to the public
within the meaning of the SFO or (3) otherwise pursuant to, and in accordance with the conditions
of, any other applicable provisions of the SFO and the CO.
Notice to Prospective Investors in Singapore
This document has not been registered as a prospectus with the Monetary Authority of Singapore
under the Securities and Futures Act, Chapter 289 of Singapore (“SFA”). Accordingly, statutory
liability under the SFA in relation to prospectus contents would not apply. Prospective investors
should consider carefully whether the investment is suitable for them.
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This document and any other document or material in connection with the offer or sale, or
invitation for subscription or purchase, of the GDRs may not be circulated or distributed, nor may
the GDRs be offered or sold, or be made the subject of an invitation for subscription or purchase,
whether directly or indirectly, to the persons in Singapore other than:
앫
to an institutional investor or other person specified in Section 274 of the SFA;
앫
to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance
with the conditions specified in Section 275 of the SFA; or
앫
otherwise pursuant to, and in accordance with the conditions of, any other applicable
provision of the SFA and the regulations passed thereunder.
Where GDRs are subscribed or purchased under Section 275 of the SFA by a relevant person which
is:
앫
a corporation (which is not an accredited investor) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of
whom is an accredited investor; or
앫
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold
investments and each beneficiary is an accredited investor;
shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights
and interests (however described) in that trust shall not be transferable for six months after that
corporation or trust has acquired the GDRs pursuant to an offer made, under Section 275 of the
SFA, except:
앫
to an institutional investor under Section 274 of the SFA or to a relevant person defined in
Section 275(2) of the SFA or any person pursuant to Section 275(1A) and in accordance with
the conditions specified in Section 275 of the SFA;
앫
where no consideration is given for the transfer; or
앫
where the transfer is by operation of law.
Notice to Prospective Investors in India
The GDRs may not be offered or sold directly or indirectly in India or to, or for the account or
benefit of, any resident of India except eligible domestic mutual funds subject to the rules,
regulations and guidelines issued by the Reserve Bank of India (“RBI”) and the Securities and
Exchange Board of India (“SEBI”).
This document has not been and will not be reviewed or approved by any statutory or regulatory
authority in India or by any stock exchanges in India. The issue of the GDRs should not be
construed as a public issue in India. This document may not comply with all the disclosure
requirements prescribed by SEBI in relation to a public issue of securities on the Indian stock
exchanges.
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TCP No. 7
CONTENTS
Page
6
Placing Statistics
Expected Timetable
7
Directors, Secretary and Advisers
8
Definitions and Glossary
10
Key information
15
PART I
Information on the Company
20
1.
Introduction
20
2.
History and Background
21
3.
Economic and Transport Background
23
4.
Structure of the Company and its Subsidiary
23
5.
Substantial Shareholder
24
6.
Relationships with Key Shareholders
24
7.
Concession and Support Agreements
25
8.
Operation and Maintenance
26
9.
Corporate Debt Restructuring
28
10.
Competition
31
11.
Property Development
32
12.
Summary Financial Information
32
13.
Dividend Policy
33
14.
Taxation
34
15.
Current Trading and Prospects
34
16.
Reasons for Admission and the Use of Proceeds
35
17.
Directors, Senior Management and Employees
35
18.
Corporate Governance
38
19.
Details of the Placing
44
20.
Over-allotment Arrangements
44
21.
Allocation and Pricing
45
22.
Admission to AIM
45
23.
Dealing Arrangements and Settlement
45
24.
Fees of the Depositary
46
PART II
Risk Factors
47
PART III
Information on the GDRs
58
PART IV
Traffic Consultants’ Report and Business Valuation
77
PART V
Accountants’ Report
128
PART VI
Additional Information
180
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PLACING STATISTICS
(in each case assuming no exercise of the Over-allotment Option)
Placing Price per GDR
$3.96
Number of GDRs in issue following Admission
11,363,636
Number of Ordinary Shares in issue following Admission
Number of New Ordinary Shares represented by GDRs
Percentage of enlarged issued share capital represented by GDRs
180,397,687
56,818,180
31.5%
Notional market capitalisation of the enlarged issued share
capital based on the Placing Price on Admission
$142.87 million
Net proceeds of the Placing to be received by the Company
$42.43 million
GDR Security Numbers:
Master GDR Cusip Number
Master GDR ISIN
Master GDR Common Code
65527N 10 6
US65527N1063
024722643
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EXPECTED TIMETABLE
Publication of this document
15 March 2006
Admission of GDRs effective and dealings commence on AIM
21 March 2006
CREST accounts credited in respect of GDRs
21 March 2006
Note: Each of the times and dates above is subject to change
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DIRECTORS, SECRETARY AND ADVISERS
Directors (Non-executives):
Gopi Arora (Chairman)
Raj Kumar Bhargava
Piyush G Mankad
Pandankallunkel T Thomas
Ravi Parthasarathy
Hari Sankaran
Arun Kumar Saha
Karunakaran Ramchand
Deepak Premnarayen
all of Toll Plaza, DND Flyway, Noida – 201 301,
Uttar Pradesh, India
Key Management and
Company Secretary:
Pradeep Puri (President & Chief Executive Officer)
Tarun K Banerjee (Chief Financial Officer)
Ajai Mathur (Vice President – Marketing)
Monisha Macedo (Senior Vice President and
Company Secretary)
all of Toll Plaza, DND Flyway, Noida – 201 301,
Registered Office:
Toll Plaza,
DND Flyway,
Noida – 201 301,
Nominated Adviser,
Co Financial Adviser and
Broker to the Company:
9th Floor
88 Wood Street
London EC2V 7QR
Co Financial Adviser and Co
Distributor to the Company:
Edelweiss Capital Limited
14th Floor Express Towers,
Nariman Point,
Mumbai – 400021, India
Legal Advisers to the
Company:
As to English Law:
Mishcon de Reya
Summit House
12 Red Lion Square
London WC1R 4QD
As to Indian Law:
Luthra & Luthra Law Offices
103 Ashoka Estate
Barakhamba Road
New Delhi – 110 001, India
Legal Advisers to the
Nominated Adviser and
Broker:
Olswang
90 High Holborn
London WC1V 6XX
Reporting Accountants:
S.R. Batliboi & Co.
(a member firm of Ernst & Young Global Limited)
Ernst & Young Tower
B-26, Qutab Institutional Area
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Statutory Auditors:
Luthra & Luthra Chartered Accountants
A – 16/9 Vasant Vihar
Traffic Consultants:
Halcrow Consulting India Ltd
38 Ring Road
Lajpat Nagar III
Depositary Bank:
Deutsche Bank Trust Company Americas
60 Wall Street
New York, NY 10005
USA
Custodian Bank
ICICI Bank Limited
Securities Processing Division
North Tower 2nd Floor,
ICICI Towers
Bandra Kurla Complex
Mumbai – 400 051, India
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DEFINITIONS AND GLOSSARY
The following definitions and terms apply throughout this document, unless the context requires
otherwise:
“Act”
the Companies Act, 1956 (of India) and amendments thereto
“Admission”
admission of GDRs to trading on AIM and such admission
becoming effective in accordance with the AIM Rules
“AIM”
AIM, the market of that name operated by the London Stock
Exchange
“AIM Rules”
the rules for AIM companies and their nominated advisers issued
by the London Stock Exchange
“AIMCF”
Asian Infrastructure Mezzanine Capital Fund
“Articles”
the articles of association of the Company
“Ashram Flyover”
the Ashram flyover located at the junction of the Ring Road and
Mathura Road at Delhi
“AVC”
automatic vehicle classification system used by the toll collection
system installed at the Delhi Noida Toll Bridge for independently
verifying the transactions
“Board”
the board of Directors of the Company, including a duly
constituted committee thereof
“BOOT”
build, own, operate and transfer
“BSE”
Bombay Stock Exchange Limited
“CDI”
CREST Depositary Interest
“CDR”
corporate debt restructuring
“CDR Empowered Group”
the corporate debt restructuring empowered group constituted
by the RBI on 23 August 2001
“Clearstream”
Clearstream banking, societe anonyme
“Closing”
The date on which payment for the GDRs will be required
“Collins Stewart”
Collins Stewart Limited of 9th Floor, 88 Wood Street, London
EC2V 7QR
“Combined Code”
the code of best practice published in July 2003 by the Financial
Reporting Council and including the principles of good
governance appended to, but not forming part of the Listing
Rules of the UK Listing Authority
“Company” or “NTBCL”
“Concession Agreement”
the concession agreement dated 12 November 1997 between the
Company, NOIDA and IL&FS
“Conditions”
the terms and conditions of the GDRs, as set out in Part III
Section 3
“CPI”
consumer price index
“CREST”
the computerised settlement system in accordance with which
securities may be held and transferred in uncertified form,
operated by CRESTCo
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“CRESTCo”
CRESTCo Limited, a company incorporated under the laws of
England and Wales and the operator of CREST
“Custodian”
ICICI Bank Limited, North Tower 2nd Floor, Bandra Kurla
Complex, Mumbai 40005, India
“Deep Discount Bond” or
“DDB”
the deep discount bonds issued by the Company
“Deposit Agreement”
the agreement to be dated on or about the date of Admission
between the Depositary and the Company
“Depositary”
Deutsche Bank Trust Company Americas, 60 Wall Street, New
York, NY 10005 USA
“Depositary Receipt Scheme”
the Issue of Foreign Currency Convertible Bonds and Ordinary
Shares (through Depositary Receipt Mechanism) Scheme 1993
of India
“Directors”
the directors for the time being of the Company or as the case may
be, the Directors assembled at a Board meeting, or acting under a
resolution under the Articles
“DND Flyway”
Delhi Noida Toll Bridge
“DP”
depositary participant
“Edelweiss Capital”
Edelweiss Capital Limited of 14th Floor Express Towers,
Nariman Point, Mumbai 400021, India
“EPC”
engineering, procurement and construction
“ETC”
electronic toll collection
“Euroclear”
Euroclear Bank SA/NV, as operator of the Euroclear System
“Existing Ordinary Shares”
the 123,579,507 existing Ordinary Shares in the capital of the
Company as at the date of this document
“Fairwood Consultants”
Fairwood Consultants Pvt Limited
“FSA”
the Financial Services Authority of the United Kingdom
“FSMA”
the Financial Services and Markets Act 2000 (as amended)
“GDRs”
global depositary receipts
“GoI”
the Government of India
“Government of Delhi” or
“DG”
the Government of National Capital Territory of Delhi
“Group”
the Company and its subsidiary DND Flyway Limited
“Halcrow Consulting”
Halcrow Consulting India Ltd
“Holder”
a holder of GDRs
“IAS”
International Accounting Standards
“IDFC”
Infrastructure Development Finance Company Limited
“IFCI”
Industrial Finance Corporation of India Limited (now known as
IFCI Limited)
“IFRS”
International Financial Reporting Standards
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“IIL”
IL&FS Investsmart Limited
“IL&FS”
Infrastructure Leasing & Financial Services Limited
“Indian Administrative
Services”
the highest cadre of professional civil servants in India
“Indian AS”
Indian Accounting Standard
“Indian Stock Exchanges”
the BSE, the NSE, and such other stock exchanges in India where
the Ordinary Shares may be listed from time to time
“Intertoll India”
Intertoll India Consultants Private Limited
“Intertoll Netherlands”
Intertoll Management Services BV
“IT Act”
Income Tax Act, 1961 (of India) and amendments thereto
“ITNL”
IL&FS Transportation Networks Limited
“Jones Lang LaSalle”
Jones Lang LaSalle, New Delhi
“Km ph”
kilometres per hour
“Lending Banks”
Vijaya Bank, Bank of Baroda, State Bank of India, Canara Bank,
Punjab National Bank, State Bank of Patiala, Central Bank of
India and Union Bank of India
“Lending Institutions”
Industrial Development Bank of India, Life Insurance Corporate
of India, Industrial Finance Corporation of India, IL&FS and
Infrastructure Development Finance Corporation
“London Stock Exchange”
London Stock Exchange plc or its successor
“Master GDR”
one or more Master GDR certificate(s) representing the GDRs
registered in the name of a common nominee
“Mayur Vihar Link”
proposed new link to the Delhi Noida Toll Bridge from Mayur
Vihar
“New Ordinary Shares”
the 56,818,180 new Ordinary Shares, to be represented by the
Placing GDRs, which are to be issued by the Company under the
Placing
“NOIDA”
New Okhla Industrial Development Authority
“Noida”
NOIDA area
“Non-Executive Directors”
the non-executive directors of the Company
“NSE”
The National Stock Exchange of India Limited
“O&M”
operation and maintenance
“O&M Contract”
the O&M Contract dated 21 December 1998 (as amended) and
currently between the Company and Intertoll India
“Official List”
the Official List maintained by the FSA
“Ordinary Shares”
ordinary shares of Rs10 each in the capital of the Company
“Over-allotment Option”
the option granted to Collins Stewart to require the Company to
issue up to 5,681,815 additional Ordinary Shares to the
Depositary and instruct the Depositary to issue Collins Stewart
with a representative number of global depositary receipts at the
Placing Price, inter alia, to cover over-allotments or further
allotments, if any, in connection with the Placing
“Over-allotment GDRs”
up to 1,136,363 additional global depositary receipts to be made
available by Collins Stewart under the Over-allotment Option or
otherwise
“PCUs”
passenger car units
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“Person”
any person, firm, trust, partnership, body, corporate, other
business entity or statutory corporation
“Placing”
the placing of the Placing GDRs by Collins Stewart on behalf of
the Company, at the Placing Price as described in this document
“Placing GDRs”
the 11,363,636 global depositary receipts (representing the New
Ordinary Shares) to be issued under the Placing
“Placing Agreement”
the conditional agreement dated 15 March 2006 between the
Company, the Directors, the senior management, Collins
Stewart and Edelweiss Capital, details of which are set out in
paragraph 7.1 of Part VI of this document
“Placing Price”
$3.96 per Placing GDR
“Prohibited Territories”
USA, Australia, Canada, Japan, the Republic of Ireland and the
Republic of South Africa
“Project”
the project for the construction and operation of the Delhi Noida
Toll Bridge
“RBI”
Reserve Bank of India
“RoC”
Registrar of Companies
“Rs” or “INR”
Indian rupees, the legal currency of India
“SEBI”
Securities and Exchange Board of India
“SEBI Act”
Securities and Exchange Board of India Act, 1992 and
amendments thereto
“SEBI DIP Guidelines”
The SEBI (Disclosure and Investor Protection) Guidelines, 2000
and amendments thereto
“SEBI Takeover Code”
or “Takeover Code”
The SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 and amendments thereto
“Secretary”
any individual possessing the prescribed qualifications under the
Companies (Secretary’s Qualifications) Rules, 1975 (of India),
appointed by the Board to perform the duties of a Secretary
“Security Agent”
Infrastructure Development and Finance Company Limited
“Shareholder(s)”
the holder(s) of Existing Ordinary Shares
“Shareholders’ Agreement”
the shareholders’ ageement dated 9 December 1998 (as
subsequently amended) and currently between the Company,
NOIDA, IL&FS and Intertoll India, Intertoll Netherlands and
IFCI
“Support Agreement”
the support agreement dated 14 January 1998 between the
Government of Uttar Pradesh and the Government of Delhi
“Take-out Lenders”
IDFC and IL&FS
“UK” or “United Kingdom”
the United Kingdom of Great Britain and Northern Ireland
“United States”, “US”
or “USA”
the United States of America, its territories and possessions, any
state or political sub-division of the United States of America and
the District of Columbia
“US Dollar” or “US$” or “$”
the legal currency of the United States
“VOC”
vehicle operating cost
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“WPI”
the Wholesale Price Index, being an indicator to measure change
in price levels of commodities in the wholesale market
“WSA”
Wilbur Smith Associates
“ZCB”
zero coupon bond
All references to times in this document are to Greenwich Mean Time unless otherwise stated.
References to the singular shall include references to the plural, where applicable, and vice versa.
References to “Rs” or “INR” are to Indian Rupees and all references to “dollars”, “US$”, “$” and
“US dollars” are to United States dollars. Unless otherwise stated, this document translates figures
in Rs into US$, or vice versa, at the exchange rate of $1 equals Rs 44.47, being the closing spot
exchange rate on 14 March 2006, the latest practicable date prior to the publication of this
document.
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KEY INFORMATION
This summary should be read and construed solely as an introduction to the other information
contained in this document. Any decision to invest in GDRs should be based on the information
contained in the whole of this document and not just in this summary. In particular, your attention
is drawn to the Risk Factors, set out in Part II.
Company Overview
Noida Toll Bridge Company Limited (“NTBCL” or the “Company”) is a company set up to
construct and operate the Delhi Noida Toll Bridge on a build, own, operate and transfer (BOOT)
basis. The Delhi Noida Toll Bridge is a tolled facility connecting Noida to South Delhi across the
Yamuna river.
The Delhi Noida Toll Bridge (commonly known as the DND Flyway) is an eight-lane bridge which
measures approximately 552.5 meters in length across the Yamuna river and includes the approach
roads on the South Delhi and Noida ends. The project to construct the Delhi Noida Toll Bridge was
completed in 25 months, four months ahead of schedule and within budgeted costs. The Delhi
Noida Toll Bridge became operational in February 2001.
The Company principally generates revenues through the levy of toll charges for the use of the Delhi
Noida Toll Bridge by commuters. The maximum capacity of the Delhi Noida Toll Bridge is circa
222,000 vehicles per day. The traffic on the bridge has grown from approximately 17,000 vehicles
per day in March 2001 to more than 65,000 vehicles per day in February 2006. The Directors
believe that the outlook for continued growth in traffic using the Delhi Noida Toll Bridge is
positive. On 21 February 2006 the Company announced the results of an independent traffic
forecast and business valuation review commissioned by the Company and undertaken by Halcrow
Consulting, an independent consultant, (as contained in Part IV of this document) in which it is
estimated that daily vehicle trips on the Delhi Noida Toll Bridge will increase to 200,504 in the
financial year ending 2021. Based on this forecast and other operating assumptions reviewed by
Halcrow Consulting, the present value of the bridge based on discounted cashflow analysis has
been determined as approximately US$402.5 million (Rs 17.9 billion).
Traffic levels on the Delhi Noida Toll Bridge are expected to increase as Noida and Greater Noida
experience development and population growth. In its review, Halcrow Consulting estimate total
population growth of an additional 2 million people in the Noida and Greater Noida areas by
2021.
The Company’s traffic forecasts, reviewed by Halcrow Consulting, assume that the Mayur Vihar
Link, a new link to the Delhi Noida Toll Bridge from Mayur Vihar in the north, commences
operations in January 2007. The Directors believe that construction of this new link would reduce
the travel distance to the Delhi Noida Toll Bridge for people in Mayur Vihar and areas north of
Noida, who want to access the southern part of Delhi, by approximately 3-4 km (depending upon
point of origin/destination). The link would intersect the Delhi-Noida Link road at the main
intersection of the proposed Mayur Vihar District Centre. Construction of this link is contingent
upon the Government of Uttar Pradesh leasing the required land to the Company.
On 12 November 1997, the Company, NOIDA and IL&FS entered into a Concession Agreement
granting the Company the right to construct, operate and maintain the Delhi Noida Toll Bridge.
The Concession Agreement gives the Company the right to commercially exploit the Delhi Noida
Toll Bridge by levying tolls (the “Concession”). In the event of revenue shortfall, NOIDA may grant
Development Rights to enable the Company to generate income through property development
and other commercial exploitation of the land held by the Company which is not required for the
Delhi Noida Toll Bridge project. To date the Company has principally derived revenues by levying
tolls upon the users of the Delhi Noida Toll Bridge. The Company has also gained income by
licensing the right to advertise on the Delhi Noida Toll Bridge to various advertisers.
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The Concession Agreement provides that the Concession shall last until such time as the Company
has recovered the total cost of the project (“Total Project Cost”) and returns each year of 20% of
the Total Project Cost (the “Returns”). The Concession Agreement provides that the Total Project
Cost is the aggregate of the cost of the project, any major maintenance expenses, and any shortfalls
in the recovery of the Returns for previous years. The cost of the project consists of the cost of
construction and other costs of commissioning as determined by an independent auditor in
consultation with an independent engineer, who are appointed in accordance with the terms of the
Concession Agreement. The Directors currently expect that the concession period will be in excess
of 70 years, as a result of the shortfalls in the recovery by the Company of the Total Project Cost and
the Returns to date.
The Government of Uttar Pradesh and the Government of Delhi entered into a Support Agreement
dated 14 January 1998 to support and extend cooperation to NOIDA and the Company with
respect to the implementation of the Delhi Noida Toll Bridge project. The Support Agreement is
intended to remain in force for the same period as the Concession Agreement.
Pursuant to the terms of the Support Agreement, the Government of Delhi leased the land required
on the Delhi side for the construction of the Delhi Noida Toll Bridge to NOIDA, which in turn has
subleased the land to the Company.
Property Development
The land required for the Delhi Noida Toll Bridge has been leased/subleased to the Company from
NOIDA. Three lease agreements, namely the Delhi Land Lease Deed, the Delhi Lands Sub-Lease
Deed, and the Noida Land Lease Deed, were signed on 23 October 1998. In addition, the Company
entered into the Ashram Flyover Site Lease Deed on 31 August 1999 with the Government of Delhi.
In addition to the land required for the construction of the Delhi Noida Toll Bridge, the Company
also has leasehold title to approximately 99 acres of land which is currently not required for the
operation of the Delhi Noida Toll Bridge. This ‘surplus’ land consists of (a) 65 acres of land on the
Delhi side of the Delhi Noida Toll Bridge (leased to the Company pursuant to a sub-lease from
NOIDA dated October 23, 1998) and (b) 34.408 acres of land on the Noida side of the Delhi Noida
Toll Bridge (leased to the Company pursuant to a lease from NOIDA dated 23 October 1998).
Jones Lang LaSalle estimated (in 2002 and 2004) that 99 acres of land could potentially be
developed and estimated the potential value of such land at US$82 million if it were developed.
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Summary Financial Information
Set out below is a summary of the financial record of the Company for the three years ended
31 March 2003, 2004, 2005 and the 9 months to 31 December 2005 which has been extracted,
without material adjustment, from the Accountants’ report contained in Part V of this document.
9 Month Period
Ended
31 December
2005
US($)
Year ended
31 March
2005
US($)
Year ended
31 March
2004
US($)
Year ended
31 March
2003
US($)
Toll Revenue
License Fee
Other Income
5,492,826
993,937
29,553
6,015,930
789,429
84,343
4,917,216
426,939
162,408
3,430,563
281,456
52,399
Total Income
6,516,316
6,889,702
5,506,563
3,764,418
Operating and
Administrative Expenses
– Operating Expenses
– Administrative Expenses
– Depreciation
– Amortization
1,061,849
1,063,341
37,623
1,292,928
1,524,971
1,166,112
51,837
1,696,675
1,047,877
812,036
49,147
1,660,835
899,498
958,888
41,426
1,575,408
Total Operating and
3,455,741
4,439,595
3,569,895
3,475,220
Group Operating Profit
from Continuing
Operations
3,060,575
2,450,107
1,936,668
289,198
40,750
(7,610,794)
170,648
(9,276,215)
125,790
(8,243,441)
105,561
(7,777,824)
(7,570,044)
(9,105,567)
(8,117,651)
(7,672,263)
(4,509,469)
(6,655,460)
(6,180,983)
(7,383,065)
—
1,018,067
—
2,237,005
—
2,678,284
(5,637,393)
(3,943,978)
(4,704,781)
Finance Income
– Profit on Sale of
Investments
Finance Charges
Loss from Continuing
Operations before taxation
Income Taxes:
– Current Taxes
– Deferred Tax Reversal
Loss after tax for the year
—
0
(4,509,469)
The summary financial information set out above and the Accountants’ Report in Part V of this
document have been prepared under IFRS. All other figures and financial information mentioned
elsewhere in this document are stated in accordance with Indian AS. The Company will in future
prepare accounts under IFRS as well as Indian AS.
Dividend policy
The Company has not declared any dividends since incorporation, and currently has accumulated
losses. In the short term the Directors do not intend to declare a dividend but intend to commence
the payment of dividends when the growth and profitability of the Company develops. The
declaration and payment of any future dividends by the Company and the amount will depend
upon the Company’s results, financial position, cash requirements, future prospects, profits
available for distribution and other factors deemed by the Directors to be relevant at the time.
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Current Trading Prospects
The Company has met the traffic forecasts prepared in connection with the corporate debt
restructuring, despite the Mayur Vihar Link not having been constructed as had been assumed. The
Company’s actual toll income for the year ended 31 March 2005 was 16% higher than the income
projected by those forecasts. This is primarily due to higher traffic and average toll realisation than
projected. The average toll per vehicle has increased from Rs 12.41 (US$0.28) for the year ended
31 March 2003 to Rs 13.94 (US$0.31) for the year ended 31 March 2005, registering a compound
growth of 6% per annum.
The average daily traffic on the Delhi Noida Toll Bridge for the 9 months ended 31 December 2005
has further improved to 60,184, an increase of 15% over the corresponding period in the previous
year. The Company’s traffic forecasts are set out in the independent traffic forecast and business
valuation review undertaken by Halcrow Consulting contained in Part IV of this document.
Assuming the completion of the construction of the Mayur Vihar Link and its commencement of
operations as expected in January 2007, the projected forecast is for 200,504 daily vehicle trips on
the Delhi Noida Toll Bridge including Mayur Vihar Link Road Project in the financial year ending
2021. The Company is awaiting receipt of approval from the Government of Uttar Pradesh for
lease of the land for the Mayur Vihar Link. Based on this forecast and other operating assumptions
reviewed by Halcrow Consulting the present value of the bridge based on discounted cashflow
analysis has been determined as Rs 17.9 billion ($402.5 million).
The Placing
The Company has chosen to apply for the GDRs to be admitted to trading on AIM and not its
Ordinary Shares, because Indian law does not allow an Indian company to have an overseas listing
of its shares. The Company is issuing 11,363,636 GDRs by way of the Placing by Collins Stewart
and Edelweiss Capital to institutional investors to raise approximately $45 million gross of
expenses with an over-allotment option of up to 10% of the gross funds. The GDRs (not including
the Over-allotment GDRs) will represent approximately 31.5% of the enlarged issued share capital
of the Company.
Reasons for Admission and Use of Proceeds
The Company is seeking Admission in order to raise funds through the Placing, diversify the
Company’s shareholder base and enhance its corporate profile.
The Company intends, subject to the approval of the CDR Empowered Group, to apply the net
proceeds of the Placing receivable by the Company (assuming no exercise of the Over-allotment
Option) approximately as follows:
앫
US$11.3 million (Rs 501.5 million) to repay term loans falling due on 31 March 2006;
앫
US$23.2 million (Rs 1,032 million) for the prepayment of loans to reduce interest costs along
with any agreed prepayment charges; and
앫
US$7.9 million (Rs 350 million) to fund the construction of the Mayur Vihar link to the Delhi
Noida Toll Bridge (contingent upon grant of the required lease of land from the Government
of Uttar Pradesh).
The use of the proceeds by the Company will be subject to the approval of the CDR Empowered
Group regarding the details of the Company’s proposed prepayment programme, and agreeing
prepayment charges. It has been suggested at the meeting of the CDR Monitoring Committee
appointed by the CDR Empowered Group for the Company that the prepayment charge would be
in the region of 1% to 2% of the amount prepaid; however, no formal decision on the prepayment
charge has been taken by the CDR Empowered Group, and the CDR Empowered Group may
decide that a higher prepayment charge is in order.
The intended use of the Placing proceeds for the construction of the Mayur Vihar Link is subject to
the approval of the Government of Uttar Pradesh being obtained for the lease to the Company of
the lands required for the construction of the Mayur Vihar Link. The Directors believe that such
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lease will be granted, although it may be subject to delays beyond the control of the Company.
Pending such approval, the Company intends to use such funds for the prepayment of loans (along
with any agreed prepayment charges) to reduce interest costs. In the event that the required lease is
granted, the Company would then reborrow the funds, subject to agreement of suitable terms,
required for the construction of the Mayur Vihar Link.
The Company intends to apply the net proceeds receivable by the Company pursuant to any
exercise of the Over-allotment Option for the prepayment of loans (along with any agreed
prepayment charges) to reduce interest costs.
The attention of prospective investors is drawn to the Risk Factors set out in Part II of this
document.
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PART I
1.
Introduction
Noida Toll Bridge Company Limited (NTBCL or the Company) is a company set up to construct
and operate the Delhi Noida Toll Bridge on a build, own, operate and transfer (BOOT) basis. The
Delhi Noida Toll Bridge is a tolled facility connecting Noida to South Delhi across the Yamuna
river.
The Company is a public listed company incorporated in India in 1996. The Existing Ordinary
Shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India
Limited. The Company is seeking admission to AIM of the GDRs which are being issued in order
principally to (i) enable the Company to repay term loans totalling US$11.3 million (Rs 501.5
million) in aggregate which fall due on 31 March 2006 (ii) enable the Company to reduce its
borrowing costs by prepaying loans; and (iii) provide funding for the construction of the Mayur
Vihar link to the Delhi Noida Toll Bridge.
The Delhi Noida Toll Bridge (commonly known as the DND Flyway) is an eight-lane bridge which
measures approximately 552.5 meters in length across the Yamuna river and includes the approach
roads on the South Delhi side and Noida side. The project to construct the Delhi Noida Toll Bridge
was completed in 25 months, four months ahead of schedule and within budgeted costs. The Delhi
Noida Toll Bridge became operational in February 2001.
There are two other bridges which cross the Yamuna river in the same area as the Delhi Noida Toll
Bridge, both of which are toll free. The Directors believe that these bridges are close to saturation at
peak hours and as a result, commuters often have to bear increased congestion and extended travel
times.
The Directors believe that the Delhi Noida Toll Bridge offers advantages in terms of saving in
distance and time, fuel costs and convenience as compared to the toll free roads in the vicinity.
There has also been a rapid increase in fuel prices in the past 2 years, circa 14% per annum for petrol
and 20% per annum for diesel.
The Company principally generates revenues through the levy of toll charges for the use of the Delhi
Noida Toll Bridge by commuters. The maximum capacity of the Delhi Noida Toll Bridge is circa
222,000 vehicles per day. The traffic on the bridge has grown from approximately 17,000 vehicles
per day in March 2001 to more than 65,000 vehicles per day in February 2006. The Directors
believe that the outlook for continued growth in traffic using the Delhi Noida Toll Bridge is
positive. On 21 February 2006 the Company announced the results of an independent traffic
forecast and business valuation review commissioned by the Company and undertaken by Halcrow
Consulting, an independent consultant, (as contained in Part IV of this document) in which it is
estimated that daily vehicle trips on the Delhi Noida Toll Bridge will increase to 200,504 in the
financial year ending 2021. Based on this forecast and other operating assumptions reviewed by
Halcrow Consulting, the present value of the bridge based on discounted cashflow analysis has
been determined as approximately US$402.5 million (Rs 17.9 billion).
Traffic levels on the Delhi Noida Toll Bridge are expected to increase as Noida and Greater Noida
experience development and population growth. In its review, Halcrow Consulting estimate total
population growth of an additional 2 million people in the Noida and Greater Noida areas by
2021. There has been significant recent growth in residential developments in the areas of Noida,
Greater Noida and the Indirapuram area and it was estimated in 2004 by Fairwood Consultants
that approximately 77,000 new housing units along the Noida-Greater Noida Expressway and
within Greater Noida are likely to be constructed by the end of 2009 (Source: ‘Traffic Impact Study
of Residential Developments along the Noida-Greater Noida Expressway’ by Fairwood
Consultants Private Ltd).
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The Company’s traffic forecasts, reviewed by Halcrow Consulting, assume that the Mayur Vihar
Link, a new link to the Delhi Noida Toll Bridge from Mayur Vihar in the north, commences
operations in January 2007. The Directors believe that construction of this new link would reduce
the travel distance to the Delhi Noida Toll Bridge for people in Mayur Vihar and areas north of
Noida, who want to access the southern part of Delhi, by approximately 3-4 km (depending upon
point of origin/destination). The link is planned to intersect the Delhi-Noida Link road at the main
intersection of the proposed Mayur Vihar District Centre.
The Company has obtained all of the necessary construction permits for the proposed Mayur Vihar
Link. However, approval from the Government of Uttar Pradesh for the lease to the Company of
the land required to construct the link is still awaited. The Directors believe that the Government of
Uttar Pradesh will grant this approval although this may be subject to delays beyond the control of
the Company.
2.
History and Background
Delhi extends over an area of 1,500 sq km and has a population of over 13 million people. The
Yamuna river runs north-south through Delhi, and forms a natural barrier that historically
constrained the expansion of Delhi to the East. The New Okhla Industrial Development Authority
(NOIDA) established a new integrated industrial township (also called ‘Noida’) in close proximity
to Delhi. Noida, located east of the Yamuna river, is a township that has been under development
since 1976 and is one of the satellite towns of Delhi. 30% of Delhi’s population lives across the
Yamuna river. Noida alone accommodates approximately 450,000 people, approximately half of
whom commute to Delhi for work daily. High vehicle density in Delhi, which exceeds aggregate
vehicle population of Mumbai, Kolkata and Chennai, requires adequate road infrastructure.
However, transportation links between Noida and Delhi were inadequate. The traffic between East
Delhi, Noida and Greater Noida is serviced by four bridges, including the DND Flyway. The
aggregate traffic on the four bridges was estimated to be in the order of 370,000 PCUs in 2002
(Source: Traffic Revalidation Study for Delhi Noida Direct Flyway by WSA Engineers India,
October, 2002).
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In order to provide better transportation services to the people of Delhi and Noida, IL&FS, NOIDA
and the Delhi Administration signed a memorandum of understanding dated 7 April 1992 for the
construction and operation of the Delhi Noida Toll Bridge. The memorandum of understanding
recognised IL&FS as the developer of the project. Pursuant to the memorandum of understanding,
a steering committee consisting of representatives of the Government of Uttar Pradesh, the Delhi
Government, the Ministry of Urban Affairs and Employment, the Government of India, the Delhi
Development Authority, NOIDA and IL&FS was established for monitoring the project and taking
decisions relating to the development of the Delhi Noida Toll Bridge. The Company was
incorporated on 8 April 1996, pursuant to the decision of the steering committee, for the purposes
of developing, establishing, designing, constructing, operating and maintaining the Delhi Noida
Toll Bridge.
On 12 November 1997 a Concession Agreement was entered into by NOIDA, NTBCL and IL&FS
granting the right of building and operating the Delhi Noida Toll Bridge to the Company. Under the
Concession Agreement, the Company has been given the right to commercially exploit the Delhi
Noida Toll Bridge by levying tolls (the “Concession”). The Concession Agreement provides that
the Concession shall last until such time as the Company has recovered the Total Project Cost plus
the Return. The Return is defined in the Concession Agreement to mean 20% on an annual basis of
the Total Project Cost. The Total Project Cost is defined in the Concession Agreement to mean the
aggregate cost of the project, any major maintenance expenses plus any shortfall in the Return in
any specific year. Therefore, to the extent that the Return is not achieved in any given year, this
shortfall is added to the amount of the Total Project Cost thus increasing the amount of the required
Return in the following year.
At the time the Concession Agreement was entered into, the relevant traffic projection figures
indicated that the Company would derive revenues from the Concession at such a rate that the
Company would have recovered the Total Project Cost and the Returns thereon within a period of
30 years. The Concession Agreement therefore provides that the concession period is 30 years or, if
sooner, such time as the Total Project Cost and the Returns thereon have been recovered. However,
the Concession Agreement provides that if such recovery is not achieved within the initial
concession period of 30 years, then the concession period shall be extended by 2 years at a time until
such time as such recovery is achieved. The Directors currently estimate that the concession period
will be in excess of 70 years, as a result of the shortfalls in the recovery by the Company of the Total
Project Cost and the Returns to date. The Concession Agreement also provides that once the
Company has derived revenues equal to the Total Project Cost and the Returns, then the
Concession shall be terminated and all of the Company’s interest in the Delhi Noida Toll Bridge
shall be transferred back to NOIDA for the nominal sum of Rs 1.
Construction of the Delhi Noida Toll Bridge was completed after 25 months, 4 months ahead of
schedule. The Delhi Noida Toll Bridge was opened to traffic on 7 February 2001. The Company
also constructed a further intersection, known as the Ashram Flyover, with the intention of
providing effective dispersal of traffic at the Delhi end of the Delhi Noida Toll Bridge. The Ashram
Flyover was opened to traffic on 30 October 2001.
The major components of the Delhi Noida Toll Bridge are a 552.5 metres long, eight lane bridge
across the Yamuna river, approach ways to the bridge with interchange points at both ends to inter
face with the existing road network, three minor bridges over existing watercourses, a 27 lane toll
collection plaza at the Noida end.
The Company has used a combination of equity and debt financing to fund the construction of the
Delhi Noida Toll Bridge. The total funding requirement for the project of US$91.8 million
(Rs 4082 million) was financed through equity financing of US$27.5 million (Rs 1224 million) and
debt financing of US$64.3 million (Rs 2858 million). The debt financing consisted of term loans
from various Indian banks and financial institutions totalling US$53 million (Rs 2358 million) in
aggregate, and the issue by the Company of deep discount bonds totalling US$11.2 million
(Rs 500 million) in aggregate. The World Bank also participated in the financing of the project
through a line-of-credit granted to IL&FS out of which IL&FS used US$13.5 million (Rs 600
million) for providing a rupee term loan facility to the Company.
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In the initial years of operations, the revenue from collection of toll fees at the Delhi Noida Toll
Bridge fell below the originally projected levels and below break-even level. The shortfall was due
to a number of factors including the rate of growth of Noida being lower than expected. As a result
of the financial losses incurred, the Company approached its lenders in 2002 for the restructuring of
its debt. The State Bank of India in conjunction with the Company, prepared a corporate debt
restructuring proposal, the key features of which were:
(i)
rescheduling of interest and repayments;
(ii)
reduction in interest rate for loans; and
(iii) construction of new links in order to augment the Company’s revenues to be funded by
additional equity capital.
Further details of the Company’s corporate debt restructuring are set out in paragraph 9 below.
In connection with the corporate debt restructuring, the Company appointed Wilbur Smith
Associates to reassess its traffic forecasts. Traffic on the Delhi Noida Toll Bridge has grown in line
with the revised traffic projections. Traffic using the bridge showed a positive growth rate of 11%
per annum to the year ended 31 March 2005 over the previous year, with average daily traffic of
52,838 vehicles per day. The average daily traffic for the 9 months to 31 December 2005 has further
improved to 60,184, an increase of 15% over the corresponding period in the previous year.
(Source: Wilbur Smith Associates (2002) and Intertoll).
3.
Economic and Transport Background
The Indian economy has grown strongly over recent years reaching GDP growth rates of 8.5% in
the fiscal year 2003/4 and 6.9% in the fiscal year 2004/5. During the same period inflation has been
kept under control with the Wholesale Price Index growing by 5.5% and 6.4% respectively over the
same periods.
Noida has seen the emergence of major shopping and recreational facilities with the opening of the
Centre Stage Mall/Multiplex. Various other recreational and commercial projects are in
construction phase and are due for completion by the end of 2006. Whereas the focus in 2003 to
2004 was the emergence of shopping and entertainment developments in Noida, 2004 to 2005 has
seen a significant growth in residential developments both in Noida, Greater Noida and
Indirapuram area on the Delhi-Ghaziabad border. In 2004 it was estimated that approximately
77,000 new housing units along the Noida-Greater Noida Expressway and within Greater Noida
are likely to be constructed by the end of 2009 (Source: ‘Traffic Impact Study of Residential
Developments along the Noida-Greater Noida Expressway’ by Fairwood Consultants Private Ltd).
The Directors believe that these housing units, once fully occupied, will provide incremental traffic
to the Delhi Noida Toll Bridge.
The development of the Mayur Vihar District Centre is also progressing and should add to the
traffic in the area. The commissioning of the Srinivaspuri Flyover, which became operational in
October 2004, has had a positive impact on the traffic on the Delhi Noida Toll Bridge as it has
reduced congestion, to some extent, on the approach to Delhi Noida Toll Bridge. The underpass
under construction at Moolchand, once completed, should also improve the throughput of traffic
and should have a positive impact on the traffic levels on the Delhi Noida Toll Bridge.
The Directors believe that this background results in a favourable environment to conduct the toll
bridge operations.
4.
Structure of the Company and its Subsidiary
The Company is a company incorporated for the purpose of development, construction, operation
and maintenance of the Delhi Noida Toll Bridge. The Company has a wholly-owned subsidiary,
DND Flyway Limited, through which it intends to carry out development activities on the surplus
land around the Delhi Noida Toll Bridge.
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The Company proposes to transfer the surplus land to the subsidiary in several tranches. The first
tranche of land of approximately 30.493 acres has been transferred by the Company to DND
Flyway Limited, under a sub-lease agreement.
5.
Substantial Shareholder
IL&FS is the promoter of the Company and as at 10 March 2006 (being the last practicable date
before publication of this document) held 33.18% of the Existing Ordinary Shares. In the accounts
of IL&FS up to 31 March 2005, the Company is treated as a company over which IL&FS has joint
control.
IL&FS is a investment and finance company, promoted by the Central Bank of India, the Housing
Development Finance Corporation Limited and the Unit Trust of India.
The business operations of IL&FS fall broadly within the following areas:
(1)
infrastructure project development and advisory services; and
(2)
investment banking and corporate advisory services.
IL&FS has developed and implemented several road projects in addition to the Delhi Noida Toll
Bridge, including the Vadodara-Halol and Ahmedabad-Mehsana Toll Roads in Gujarat; the North
Karnataka Expressway in Karnataka; the East Coast Road in Tamil Nadu. IL&FS has several other
projects under development in the road sector including the West Gujarat Expressway Limited in
Gujarat; the Thiruvananthapuram City Road Improvement Project in Kerala; the IT Expressway
Limited in Tamil Nadu; and the Mega Highway Project in Rajasthan.
IL&FS, subject to obtaining the requisite approvals and in compliance with the relevant
regulations, is proposing to transfer its entire shareholding of Existing Ordinary Shares in the
Company to IL&FS Transportation Networks Limited (ITNL) which is a subsidiary of IL&FS. The
transfer of Existing Ordinary Shares from IL&FS to ITNL is expected to take place after
Admission. The objective of this transfer is to consolidate all of IL&FS’s investments in road sector
projects in one entity.
6.
Relationships with Key Shareholders
As at 10 March 2006 (being the latest practicable date before publication of this document) IL&FS
held 33.18% of the Existing Ordinary Shares. As the largest shareholder, IL&FS may have the
ability to determine the outcome of certain shareholder resolutions. IL&FS has appointed four
Nominee directors to the board of the Company.
The Company has entered into a Shareholders’ Agreement with certain key shareholders including
IL&FS, NOIDA, Intertoll Netherlands and Intertoll India. The Company’s Articles have also been
amended to incorporate certain provisions of the Shareholders’ Agreement.
The Shareholders’ Agreement and Articles confer upon the principal Shareholders the right to
appoint nominee directors, and veto rights in respect of certain specified matters (such as the
declaration of any dividends and the approval of the Company’s budgets and financing plans)
provided they hold the threshold shareholding specified therein. The principal Shareholders will
lose their right to appoint nominee directors and affirmative voting rights if their shareholding falls
below the specified threshold and will cease to be a party to the Shareholders’ Agreement if their
entire shareholdings are disposed of. IL&FS has the right to appoint a managing director, who will
be responsible for the day-to-day affairs of the Company. The principal Shareholders have
pre-emption rights over any new issues of equity/convertible equity shares by the Company. In
addition, the principal Shareholders have a right of first refusal amongst themselves on the sale of
shares by any of them and in the event that IL&FS desires to transfer all or any of its shareholding to
a third party, the other principal Shareholders have ‘tag along’ rights to sell their shares to the same
third party as IL&FS.
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The Shareholders Agreement and Articles are described in more detail in paragraphs 7.10 and 4.2
respectively of Part VI in this document.
7.
I.
Concession Agreement
On 12 November 1997 NOIDA, NTBCL and IL&FS entered into a Concession Agreement
granting the Company the right to construct, operate and maintain the Delhi Noida Toll Bridge.
The Concession Agreement gives the Company the right to commercially exploit the Delhi Noida
Toll Bridge by levying tolls (the “Concession”). In the event of revenue shortfall, NOIDA may grant
development rights to enable the Company to generate income through property development and
other commercial exploitation of the land held by the Company which is not required for the Delhi
Noida Toll Bridge project. To date the Company has principally derived revenues by levying tolls
upon the users of the Delhi Noida Toll Bridge. The Company has also gained income by licensing
the right to advertise on the bridge to various advertisers.
The Concession Agreement provides that the Concession shall last until such time as the Company
has recovered the total cost of the project (“Total Project Cost”) and returns each year of 20% of
the Total Project Cost (the “Returns”). The Concession Agreement provides that the Total Project
Cost is the aggregate of the cost of the project, any major maintenance expenses, and any shortfalls
in the recovery of the Returns for previous years. The cost of the project consists of the cost of
construction and other costs of commissioning as determined by an independent auditor in
consultation with an independent engineer, who are appointed in accordance with the terms of the
Concession Agreement.
The amount of revenue to which the Company is entitled under the Concession for the purpose of
recovering the Total Project Cost and the Returns thereon is to be calculated at annual intervals by
an independent auditor. The last calculation dated 31 March 2005 indicated that the Company is
entitled to recover approximately US$183.3 million (Rs 8.15 billion). Based on the Company’s
current forecasts of returns, and the shortfalls in the recovery by the Company of the Total Project
Cost and the Returns thereon to date, the Directors believe that the Concession Period will be in
excess of 70 years. The level of fees which the Company is entitled to charge to the users of the Delhi
Noida Toll Bridge is fixed under the Concession Agreement, and reviewed annually by a fee review
committee. This committee consists of 3 members, namely a Company representative, a NOIDA
representative and one representative appointed by the representatives of NOIDA and the
Company. The toll rates are revised annually and are derived from a formula specified in the
Concession Agreement. The rates are revised by the fee review committee on 1 February of each
year. The Company cannot charge tolls which exceed the levels set by the fee review committee.
However, in order to increase commuter loyalty, the Company does offer various discounts
schemes to its pre-paid users at levels set by the marketing committee of Directors from time to time.
The Concession Agreement is described in more detail in paragraph 7.3 of Part VI of this document.
II.
Support Agreement
The Government of Uttar Pradesh and the Government of Delhi entered into a Support Agreement
dated 14 January 1998 to support and extend cooperation to NOIDA and the Company with
respect to the implementation of the Delhi Noida Toll Bridge project. The Support Agreement is
intended to remain in force for the same period as the Concession Agreement.
Under the terms of the Support Agreement, the Government of Uttar Pradesh and the Government
of Delhi leased the land required for the construction of the Delhi Noida Toll Bridge to NOIDA,
which in turn has subleased the land to the Company.
The Government of Uttar Pradesh and the Government of Delhi have also agreed:
(i)
not to propose or require at any time any change in the geographical alignment of the Delhi
Noida Toll Bridge;
(ii)
not to levy any additional toll, fee, charge or tax on the use of the Delhi Noida Toll Bridge or
cause any diversion of traffic or close down the approach to the Delhi Noida Toll Bridge in a
manner so as to detrimentally affect the free flow of traffic to and from the Delhi Noida Toll
Bridge;
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(iii) to consider granting additional development rights to the Company in the event the revenues
generated are not sufficient to cover the Total Project Cost and the Returns thereon upon the
request of NTBCL or NOIDA or both; and
(iv)
the Government of Uttar Pradesh has agreed not to propose, recommend or implement
without the written consent of the Company (which is not to be unreasonably withheld) any
bridge or other service network which does not charge toll fees or charges toll fees which are
lower than the fee charged on the Delhi Noida Toll Bridge across the Yamuna river within the
area between the Okhla Barrage to the south of the Delhi Noida Toll Bridge site and the
existing Nizamuddin Bridge to the north of the Delhi Noida Toll Bridge for a period of 10
years or until such time the traffic using the Delhi Noida Toll Bridge has reached its full rated
capacity, whichever is later. The Government of Delhi has given a similar undertaking which
lasts for 10 years or until the traffic using the Delhi Noida Toll Bridge has reached partial
capacity (being 60% of full rated capacity), whichever is later.
The Government of Uttar Pradesh has undertaken to assist the Company, on a best effort basis, to
obtain all clearances, if any, as may be required for the due implementation of the Delhi Noida Toll
Bridge project by the Company, in accordance with the terms of the Concession Agreement. The
Government of Delhi has undertaken that it will ensure that the Company obtains all clearances,
including those as may be required from the Municipal Corporation of Delhi, for the due
implementation of the project by the Company, in accordance with the terms of the Concession
Agreement.
In the event of any breach of the Support Agreement, the Government of Uttar Pradesh and/or the
Government of Delhi (as relevant) are contractually obliged to compensate NOIDA for any
payments that NOIDA has to make to the Company under the terms of Concession Agreement.
The Support Agreement is described in more detail in paragraph 7.4 of Part VI of this document.
8.
Operation and Maintenance
On 21 December 1998, the Company and Intertoll Management Services BV (“Intertoll
Netherlands”, a wholly-owned subsidiary of M/s Intertoll Holdings (Pty) Ltd) entered into an
operation and maintenance agreement for the operation, maintenance and management of the
Delhi Noida Toll Bridge (the “O&M Contract”). Intertoll Netherlands assigned the O&M
Contract to its Indian subsidiary Intertoll India Consultants Private Limited (“Intertoll India”) on
14 August 2000.
The O&M Contract requires Intertoll India to provide:
앫
maintenance including road surface overlays, and the replacement and maintenance of bridge
equipment; and
앫
toll collection and management.
The O&M Contract provided that (i) for the period until 2011, Intertoll India shall be entitled to a
fixed fee of 11% of the actual gross tolls collected from users of the bridge, and (ii) thereafter
Intertoll India shall be entitled to a fee of Rs 0.725 per vehicle crossing the Delhi Noida Toll Bridge
and a fixed fee of Rs 2.656 million (US$59,725) per month to be escalated annually in line with the
Consumer Price Index using a base of November 1998. The costs of periodic maintenance are
reimbursable additionally.
Intertoll India and Intertoll Netherlands currently hold 10.62 million Ordinary Shares in aggregate
in the Company, representing approximately 8.6% of the Existing Ordinary Shares immediately
prior to Admission and the Placing. The Shareholders’ Agreement currently imposes share sale
restrictions upon Intertoll India and Intertoll Netherlands, which have undertaken not to dispose of
their equity shareholding in the Company during the entire term of the O&M Contract (subject to
the conditional Variation Agreement described below).
The Company, IL&FS, Intertoll (Pty) Limited, Intertoll Netherlands and Intertoll India entered
into a conditional agreement on 7 February 2006 to vary certain aspects of the original O&M
Contract, including the fee structure and the share sale restrictions (the “Variation Agreement”).
The Variation Agreement is conditional upon the Company obtaining the consent of certain of its
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lenders and certain of its key Shareholders, within the time limit specified (which may be extended
by Intertoll Netherlands or Intertoll India), failing which the Variation Agreement shall lapse and
shall be of no further force and effect. The Directors believe that such consents shall be obtained in
due course.
Pursuant to the Variation Agreement, Intertoll India will be entitled to receive a monthly fee of
approximately US$47,785 (Rs 2.125 million) to be revised annually in line with the Consumer
Price Index with a base of December 2005 as well as the reimbursement of certain costs.
Subject to the Variation Agreement becoming unconditional, Intertoll India and Intertoll
Netherlands shall become entitled to sell their holdings of Ordinary Shares in the Company, subject
to the following orderly market conditions:
(i)
Intertoll India may only sell their Ordinary Shares on a recognised stock exchange with the
formal appointment of IL&FS Investsmart Limited (“Investsmart”) as broker;
(ii)
pending Admission or 30 May 2006, whichever is earlier, Intertoll Netherlands and Intertoll
India shall not sell their Ordinary Shares except through Investsmart acting as the broker,
alternatively, with the prior consent of IL&FS (which shall not be unreasonably withheld or
delayed); and
(iii) following Admission or 30 May 2006, whichever is earlier, Intertoll Netherlands and
Intertoll India shall not sell more than 100,000 Ordinary Shares per business day or more
than 300,000 Ordinary Shares per week other than through Investsmart acting as broker,
alternatively with the prior consent of IL&FS (which shall not be unreasonably withheld or
delayed).
Intertoll Netherlands and Intertoll India shall be entitled to sell their Ordinary Shares on a
recognised stock exchange, with the formal appointment of Investsmart as broker for transacting
the sales. In the event that Investsmart is unable to offer Intertoll Netherlands and Intertoll India
competitive market related terms on the brokerage sale of the Ordinary Shares, or alternatively fails
to carry out its mandate in a professionally competent and expeditious manner, Intertoll
Netherlands and Intertoll India shall, with prior notice to IL&FS, be at liberty to terminate
Investsmart’s mandate and/or appoint any other recognised stock broker for this purpose.
The O&M expenses of the Company have grown at an annualised rate of approximately 34% over
the last 4 years and the Directors believe that such fees would grow at approximately 20% per
annum in the future under the current fee structure. The Directors believe that the Variation
Agreement, in the event that it becomes unconditional, will help control the fees payable by the
Company to Intertoll India with effect from 1 January 2006.
The O&M Contract is described in more detail in paragraph 7.11 of Part VI of this document.
Toll Collection
Most users pay the toll in cash at the toll plaza on the Delhi Noida Toll Bridge but the Company also
offers the facility of Electronic Toll Collection (ETC) where the users deposit money in advance into
a prepaid account from which toll charges are automatically debited at the toll plaza. The prepaid
accounts can be topped up/recharged by the user as and when necessary. The Company offers a
significant discount (5% – 22%) to prepaid users in order to incentivise regular users. The users of
the ETC also benefit from reduced waiting times at the toll plaza as compared to cash users. The
Company also offers facilities for online transactions.
Income from Advertising
The Company generates income from the sale of outdoor advertising on both the Delhi and the
Noida side of the Delhi Noida Toll Bridge. The Company generated advertising income of
approximately US$0.80 million (Rs 35.4 million) during the year ended 31 March 2005 and
approximately US$0.99 million (Rs 43.9 million) for the 9 months ended 31 December 2005. The
Company has obtained permission for advertising on the Delhi side from the Municipal
Corporation of Delhi, which is the civic agency authorised to grant such permission. The Company
has not yet received formal approval from NOIDA for advertising on the Noida side, but the
Company has notified NOIDA of the fact that the Company is generating income from advertising
on the Noida side.
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9.
Corporate Debt Restructuring
Restructuring of Term Loans
In order to finance the construction and initial operating costs of the Delhi Noida Toll Bridge, the
Company entered into a series of term loan agreements (the “Term Loans”) with certain domestic
banks (“the Lending Banks”) and certain financial institutions (the “Lending Institutions”)
between 1998 and 1999. The average interest rate payable by the Company under the Term Loans
was 14.7% per annum. The Company drew down approximately US$53 million (Rs 2,357.7
million) under the Term Loans.
As a result of the financial losses incurred by the Company in its first years of operation, the
Company approached the Lending Banks and Lending Institutions in 2002 for the restructuring of
its debt.
The State Bank of India (the lead bank) (“SBI”), in consultation with the Company, the Industrial
Development Bank of India (“IDBI”) and IL&FS, prepared the restructuring proposal under CDR
mechanism and forwarded the same to the CDR Empowered Group on 29 July 2002 and again on
17 October 2002. The proposal was approved at the meeting of the CDR Empowered Group on
29 October 2002 and had an effective date of 1 April 2002.
The key features of restructured debt package were as follows:
(a)
Lending Institutions: the outstanding balance of the Term Loans with the Lending
Institutions aggregating Rs 1027.70 million was bifurcated equally into Part A and Part B.
Part A (with an aggregate balance of Rs 513.85 million) was converted into Zero Coupon
Bonds (Series A). Part B (with an aggregate balance of Rs 513.85 million) was retained as a
term loan carrying a reduced interest rate of 12.5% per annum.
(b)
Lending Banks: The total loan outstanding of Rs 1330 million shall carry interest at 8.5% per
annum.
The principal repayment and interest payment schedules for the Lending Institutions and the
Lending Banks are given in the tables below:
Schedule for Repayment of Principal
Lending Banks
(Term Loans)
Lending Institutions
(Term Loans)
ZCB(A)
16%
16%
—
7.5%
12.5%
12.5%
12.5%
12.5%
12.5%
50%
50%
Financial Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
10%
20%
25%
45%
Schedule for Payment of Interest
Lending Banks
Interest
Interest
Paid Capitalised
Financial Year
2003
2004
2005
2006 onwards
2%
4%
5.5%
8.5%
6.5%
4.5%
3%
Nil
Lending Institutions
Interest
Interest
Paid Capitalised
4%
8%
11%
12.5%
8.5%
4.5%
1.5%
Nil
The total interest capitalised in respect of the Lending Banks of Rs 198.47 million was added to the
principal amount and was to be repaid as per the schedule given above. The total interest capitalised
in respect of the Lending Institutions of Rs 74.5 million was converted into a term loan carrying 0%
interest to be repayable during 2006 – 2007 out of income from property development.
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The corporate debt restructuring was subject to the following terms and conditions with which the
Company was required to comply:
(a)
a requirement that the Company raise Rs 250 million for network improvement by way of
equity infusion from promoters/others by March 2003;
(b)
a requirement that the Company create pari passu charges on the surplus land valued at Rs
3.6 billion to secure the ZCBs;
(c)
a requirement that the Company complete the Mayur Vihar Link by March 2004 and the
South Link by March 2006;
(d)
a requirement that the Company enter into a development rights agreement to the
satisfaction of the lenders;
(e)
a requirement that the Company issue the ZCBs in order to compensate loss of interest to the
Lending Institutions and Lending Banks due to the reduction in rate of interest from the
document rate, and that the same be redeemed by 31 March 2014.
For the purposes of implementing the approved corporate debt restructuring package, and also to
ensure compliance with the post implementation requirements, the State Bank of India was
appointed as the monitoring agent to oversee the implementation and also to send the relevant
creditors periodical reports on the progress in the implementation of the approved package.
The Company has issued Series B ZCBs of Rs 100 each for an aggregate amount of Rs 555.4 million
to the Lending Banks and Lending Institutions, which are repayable no later than 31 March 2014 as
compensation for the net present value of the sacrifice made by the Lending Banks and Lending
Institutions by way of reduction of interest rates from the contracted terms. These ZCBs are secured
by pari passu first charges on the Company’s assets, both present and future.
The Company has not complied with certain of these post-implementation terms and conditions
after the corporate debt restructuring by the required deadlines, and from time to time has advised
the Lending Banks and Lending Institutions of the same.
Further, the Company has implemented a Scheme of Arrangement under sections 391 to 393 of the
Act, which has been approved by the Honorable Allahabad High Court by an order dated
24 October 2005. The same was filed with the RoC, Uttar Pradesh and Uttaranchal on
24 November 2005. In terms of the above-mentioned Scheme of Arrangement, the project debt of
the Company including terms loans from various Lending Banks and Lending Institutions and the
DDBs have been restructured.
Details of the Debt Restructuring in respect of Deep Discount Bonds
The Company also raised approximately US$11.2 million (Rs 500 million) through a public issue
of deep discount bonds (DDBs) with an effective annual interest rate of 16.3%. A total of 100,000
DDBs were issued by the Company in November 1999 with a face value of Rs 5,000 each (the face
value of all the DDBs amounting to Rs 500 million in aggregate). Each DDB was stated to have a
maturity value of Rs 45,000 per bond in November 2015 (the maturity value of all the DDBs being
Rs 4,500 million in aggregate).
The DDBs are secured by a pari passu first charge in favour of the trustees along with the other
senior lenders of the Company on all the project assets which include the Delhi Noida Toll Bridge
and all tangible and intangible assets including but not limited to rights over the project site, project
documents, financial assets such as receivables, cash, investments, insurance proceeds and so forth.
Pursuant to a “take-out” financing arrangement made by the Company with IDFC and IL&FS, the
holders of the DDBs were given the option to sell the DDBs issued by the Company in November
1999 to IDFC (60%)/IL&FS (40%) at predetermined prices of Rs 9,500 per bond at the end of 5th
year i.e. November 2004 (at a yield of 13.7% per annum) and Rs 16,500 per bond at the end of the
9th year i.e. November 2008 (at a yield of 14.2% per annum).
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The Company approached the CDR Empowered Group in January 2004 for restructuring of the
DDBs. The CDR Empowered Group at its meeting held in February 2004 approved the Company’s
proposal and the same was communicated in their letter dated 17 May 2004. The said proposal
was consented to by a majority of 54% of the DDB holders (by value).
Scheme of Arrangement
The Company filed a Scheme of Arrangement (Scheme) under section 391-393 of the Act with the
Honorable Allahabad High Court in July 2004 for approval of the debt restructuring package as
approved by the CDR Empowered Group under the CDR Scheme to give a statutory and binding
force to the restructuring of the DDBs.
Under the Scheme of Arrangement with respect to restructuring of the DDBs, the Company was to
provide to every DDB Holder an option to either reschedule the contracted annual yield (i.e. the
interest rate) and also vary the terms and conditions in respect thereof with effect from the
Appointed Date (“Appointed Date” to mean 1 April 2002) in the manner specified in Option-I or
elect the exit option of the Company in the manner specified under Option-II, hereunder.
The details of the options are as follows:
(a) Option-I: DDB Holders electing this would be entitled to the following: (i) contracted rate of
interest i.e. at 13.6974% per annum until 31 March 2002 and thereafter the effective yield to
be reduced to 8.5% per annum; (ii) the date of maturity for the DDB will be 3 November 2015
and the maturity value per DDB calculated at the revised interest would be Rs 20,715 per
bond (subject to deduction of tax, if applicable); (iii) the Company to have a right to
call/purchase DDBs from the DDB Holders at any time after the Effective Date
(24 November 2005 i.e. the date on which the certified copy of the order of the High Court
sanctioning the Scheme was filed with the RoC, Uttar Pradesh) with interest calculated at the
rate of 13.697% per annum until 31 March 2002 and at 8.5% per annum thereafter up to the
date of such payment; (iv) the DDBs will have no credit enhancement and the Take-Out
Obligations of the Take-Out Lenders will not be exercisable.
(b) Option-II: DDB Holders who are not willing to accept the revised terms and conditions as set
out in Option-I above will be entitled to encash the DDBs by submitting them to the Take-Out
Lenders for the take out offer at a predetermined price of Rs 9,500 per DDB (subject to
deduction of tax, if applicable) on the take out date i.e. 3 November 2004 plus an interest at
the rate of 8.5% for delay, if any, thereafter up to the date of payment.
Under the Scheme of Arrangement, the Company had to send letters to the DDB holders to exercise
the options, immediately after the record date and in any case within 15 days therefrom. If a DDB
holder did not exercise the option within 21 days, the DDB holder would be deemed to have
exercised Option-II. Payments are to be made to the DDB holders, within a period of 60 days of the
record date, fixed by the Company for this purpose, subject to applicable terms and conditions,
laws and regulations.
The Scheme was approved by the High Court on 24 October 2005 and the Company has completed
implementation of the Scheme. The Scheme as approved by the Honorable High Court has an
overriding effect over the terms of the offer document through which the DDBs were offered
including but not limited to the procedure mentioned therein for effecting the take out offer. The
restructuring of the DDBs is expected to yield a net saving in interest costs in the region of Rs 91
million per annum to the Company.
The Company had fixed 30 December 2005 as the record date to determine the DDB holders who
were entitled to receive option letters for implementation of aforesaid scheme and 28 February
2006 as the date of payment. The Company sent letters to the DDB holders and the last date for
exercise of options by the DDB holders was 7 February 2006.
Status of DDBs
As on 7 February 2006, a total of 142 DDB holders have exercised Option-I, (amounting to 10,815
DDBs) and 1,837 DDB holders have exercised or have, by default, fallen under Option-II, (amounting
to 52,087 DDBs). In terms of the Scheme of Arrangement, all the rights attached to the DDBs, in
relation to which the DDB holders who have exercised their options or have, by default, fallen under
Option-II, have been extinguished with effect from the payment date, i.e. 28 February 2006.
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As per the takeout schedule specified in the terms and conditions of the offer document in terms of
which the Company had offered the DDBs, the DDB holders holding 37,098 DDBs exercised Put
Option on the take out date i.e. on 3 November 2004. These have not been considered for the
Take-out option, but have been extinguished as on 28 February 2006.
The Company has agreed to recompense IL&FS Rs 128.8 million towards the cost incurred for the
completion of the DDB restructuring.
The Company had requested the Uttar Pradesh Stock Exchange (“UPSE”), the BSE and the NSE to
suspend the trading of the DDBs, and trading of the DDBs was suspended with effect from
19 December 2005. The Company now intends to apply for the remaining DDBs, in respect of
those DDB holders who exercised Option-I, to be readmitted to trading on the UPSE, the BSE and
the NSE.
Current and Future Debt Repayment and Refinancing Plans
The Directors intend to use part of the Placing proceeds for the purpose of financing the repayment
of the Series A ZCBs which is due on 31 March 2006 and prepayment of term loans.
The Directors believe that it would be in the Company’s best interests to refinance its existing Term
Loans following Admission. The Company has begun the process of obtaining the approvals
required for the issue of non-convertible 20 year bonds to raise up to Rs 1,750 million for the
purposes of such refinancing. Based on current market conditions, the Directors expect that the
long term bonds will be issued at an interest rate of around 8.5% per annum although the interest
rate will be based on the prevailing market conditions at the time of issue. The Company has
received a LAA (SO) rating from ICRA Ltd. and a AA (SO) rating from CARE for its proposed long
term bond issue. The rating is subject to the condition that the Company obtains further equity
financing in the amount of Rs 2 billion and completes the DDB restructuring under the Scheme of
Arrangement.
Further details of the corporate debt restructuring can be found in paragraphs 7.15 and 7.16 of
Part VI.
10. Competition
The Directors believe that the major competition faced by the Delhi Noida Toll Bridge is from the
two neighbouring bridges, Nizamuddin Bridge and Okhla Barrage. Nizamuddin Bridge is
approximately 3 km upstream of the Delhi Noida Toll Bridge and the Okhla Barrage is about 1 km
downstream. The Nizamuddin Bridge and Okhla Barrage carried approximately 130,000 and
80,000 PCUs per day, in 2002 respectively (source: Wilbur Smith Associates (2002)). The Directors
believe that these bridges are close to saturation at peak hours. The Nizamuddin Bridge and Okhla
Barrage are toll free, whereas the Delhi Noida Toll Bridge is a tolled facility.
Nizamuddin Bridge
This 8 lane bridge lies to the North of the Delhi Noida Toll Bridge and is used by Noida/Mayur
Vihar residents to reach Central/South/West Delhi. The bridge is the main arterial connection to
other populated areas in East Delhi.
Okhla Barrage
This 2 lane dual carriageway is the southern-most bridge lying farthest from East Delhi and is used
by commuters travelling to areas south of Sarita Vihar and Badarpur.
Metro
The Delhi Metro Rail Corporation is proposing to extend the Connaught Place to Anand Vihar
ISBT line to Noida Sector 32 via Mayur Vihar. This metroline which is scheduled to open in 2010,
will cater to commuters travelling between Central Delhi and the Noida region. However, the
Directors believe that the extension of the metroline to Noida is unlikely to reduce significantly the
amount of traffic using the Delhi Noida Toll Bridge and that its main effect will be to reduce the
numbers of commuters using other forms of public transport such as buses, with commuters
switching from using public buses to using the Metro. See the Risk Factors set out in Part II for
further details.
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11. Property Development
The land required for the Delhi Noida Toll Bridge has been leased/subleased to the Company from
NOIDA. Three lease agreements, namely the Delhi Land Lease Deed, the Delhi Lands Sub-Lease
Deed, and the Noida Land Lease Deed, were signed on 23 October 1998. In addition, the Company
entered into the Ashram Flyover Site Lease Deed on 31 August 1999 with the Government of Delhi.
In addition to the land required for the construction of the Delhi Noida Toll Bridge, the Company
also has approximately 99 acres of land which is currently not required for the operation of the
Delhi Noida Toll Bridge. This ‘surplus’ land consists of (a) 65 acres of land on the Delhi side of the
Delhi Noida Toll Bridge (leased to the Company pursuant to a sub-lease from NOIDA dated 23
October 1998) and (b) 34.408 acres of land on the Noida side of the Delhi Noida Toll Bridge (leased
to the Company pursuant to a lease from NOIDA dated 23 October 1998). Jones Lang LaSalle
estimated (in 2002 and 2004) that 99 acres of land could potentially be developed and estimated the
potential value of such land at US$82 million if it were developed.
Under the Concession Agreement, the Company has the ability to request NOIDA to grant it
development rights over the land surrounding the Delhi Noida Toll Bridge which is not anticipated
to be required for the operation of the Delhi Noida Toll Bridge. The Company may request the
grant of development rights where the Independent Auditor upon reference by the Company
determines that there has been a shortfall in the toll revenues derived by the Company from the
Delhi Noida Toll Bridge project. The Company has requested the grant of development rights
under the Concession Agreement. The ‘in principle’ approval dated 16 May 2001 received by the
Company indicates that the grant of any development rights is subject to the Company reverting
with detailed proposals as to how it intends to commercially exploit the land surrounding the Delhi
Noida Toll Bridge, and such proposals being approved by NOIDA. The Company has acquired a
wholly-owned subsidiary, DND Flyway Limited, with the intention that this subsidiary would
undertake any future exploitation of any development rights granted to the Company.
In the financial year ended 31 March 2004, the Company revalued 34.408 acres of land on the
Noida side of the Delhi Noida Toll Bridge (the “Revalued Land”), in accordance with a valuation
carried out by a professional valuer on a realisable value basis. As a result of the revaluation, the net
book value of the Revalued Land was increased to approximately US$30 million (Rs 1,350
million). The Company only has ‘in principle’ approval for development rights to commercially
exploit the land, and any final grant of development rights may be subject to further terms and
conditions; the terms and conditions attached to such grant of development rights may affect the
valuation of the land.
The Company has begun to liase with real estate developers in addition to various Government
departments, to explore the ways in which the Company could commercially exploit the land. The
Directors believe that the association of a leading real estate developer will provide impetus to the
process of procuring development rights. The realisation of development income in the near term is
contingent upon receipt of government approvals and the nature and extent of developments
permitted.
12. Summary Financial Information
Set out below is a summary of the financial record of the Company for the three years ended
31 March 2003, 2004, 2005 and the 9 months to 31 December 2005 which has been extracted,
without material adjustment, from the Accountants’ report contained in Part V of this document.
In order to make a proper assessment of the results and financial position of the Company, investors
should read the whole of this document, including the complete Accountants’ report set out in
Part V.
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9 MonthPeriod
Ended
31 December
2005
US($)
Year ended
31 March
2005
US($)
Year ended
31 March
2004
US($)
Year ended
31 March
2003
US($)
Toll Revenue
License Fee
Other Income
5,492,826
993,937
29,553
6,015,930
789,429
84,343
4,917,216
426,939
162,408
3,430,563
281,456
52,399
Total Income
6,516,316
6,889,702
5,506,563
3,764,418
Operating and
– Depreciation
– Amortization
1,061,849
1,063,341
37,623
1,292,928
1,524,971
1,166,112
51,837
1,696,675
1,047,877
812,036
49,147
1,660,835
899,498
958,888
41,426
1,575,408
Total Operating and
3,455,741
4,439,595
3,569,895
3,475,220
from Continuing
Operations
3,060,575
2,450,107
1,936,668
289,198
40,750
(7,610,794)
170,648
(9,276,215)
125,790
(8,243,441)
105,561
(7,777,824)
(7,570,044)
(9,105,567)
(8,117,651)
(7,672,263)
(4,509,469)
(6,655,460)
(6,180,983)
(7,383,065)
—
1,018,067
—
2,237,005
—
2,678,284
(5,637,393)
(3,943,978)
(4,704,781)
Finance Income
Investments
Finance Charges
Income Taxes:
– Current Taxes
—
0
(4,509,469)
The summary financial information set out above and the Accountants’ Report in Part V of this
document have been prepared under IFRS. All other figures and financial information mentioned
elsewhere in this document are stated in accordance with Indian AS. The Company will in future
prepare accounts under IFRS as well as Indian AS.
13. Dividend Policy
The Company has not declared any dividends since incorporation, and currently has accumulated
losses. In the short term the Directors do not intend to declare a dividend but intend to commence
the payment of dividends when the growth and profitability of the Company develops. The
declaration and payment of any future dividends by the Company and the amount will depend
upon the Company’s results, financial position, cash requirements, future prospects, profits
available for distribution and other factors deemed by the Directors to be relevant at the time.
Under the Act, an Indian company may declare dividends in a financial year out of its profits arrived
at after providing for depreciation in accordance with the Act and which remain undistributed. The
profits may be of the year for which dividend is proposed to be declared or of previous years.
However, if a company has accumulated losses, before declaring dividends for any financial year it
is required to set off an amount equivalent to the amount of accumulated losses or depreciation
provided for the years of losses, whichever is less. Further, before declaring a dividend for any
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financial year, a company is obliged to transfer a certain percentage of its profits to its reserves (the
amount which must be transferred to the reserves depends on the ratio between the proposed
dividend and the company’s paid up share capital). As at December 2005, the depreciation for the
years of losses was in aggregate Rs 139.4 million (US$3.13 million). Further details are given under
the heading ‘Company Law in India’ below.
The Company is subject to a number of contractual restraints on its ability to declare dividends. The
Company may not declare any dividend without the prior written approval of Punjab National
Bank, UTI Bank (in its capacity as trustee in respect of the DDBs), IL&FS and Industrial Finance
Corporation of India. In addition, pursuant to the term loans between the Company and a number
of its lenders, the Company has agreed not to make any distributions without written consent
unless the Company is properly servicing its loans. Further details of the term loans are given in
paragraphs 7.15 and 7.16 of Part VI of this document.
14. Taxation
Information regarding taxation is set out in paragraph 8 of Part VI of this document. These details
are, however, intended only as a general guide to the current tax position under UK and Indian
taxation law. If you are in any doubt as to your tax position you should consult an appropriate
professional adviser immediately.
15. Current Trading and Prospects
The Company has met the traffic forecasts prepared in connection with the corporate debt
restructuring, despite the Mayur Vihar Link not having been constructed as had been assumed. The
Company’s actual toll income for the year ended 31 March 2005 was 16% higher than the income
projected by those forecasts. This is primarily due to higher traffic and average toll realisation than
projected. The average toll per vehicle has increased from Rs 12.41 (US$0.28) for the year ended
31 March 2003 to Rs 13.94 (US$0.31) for the year ended 31 March 2005, registering a compound
growth of 6% per annum.
The average daily traffic on the Delhi Noida Toll Bridge for the 9 months ended 31 December 2005
has further improved to 60,184, an increase of 15% over the corresponding period in the previous
year. The Company’s traffic forecasts are set out in the independent traffic forecast and business
valuation review undertaken by Halcrow Consulting contained in Part IV of this document.
Assuming the completion of the construction of the Mayur Vihar Link and its commencement of
operations as expected in January 2007, the projected forecast is for 200,504 daily vehicle trips on
the Delhi Noida Toll Bridge including Mayur Vihar Link Road Project in the financial year ending
2021. The Company is awaiting receipt of approval from the Government of Uttar Pradesh for
lease of the land for the Mayur Vihar Link. Based on this forecast and other operating assumptions
reviewed by Halcrow Consulting the present value of the bridge based on discounted cashflow
analysis has been determined as Rs 17.9 billion ($402.5 million).
The Company has entered into a conditional Variation Agreement which will, subject to the
conditions being satisfied, alter the O&M Contract fee structure. The Directors expect that the
revised fee structure will become unconditional and that it will result in annual savings in O&M
expenses of approximately US$251,855 (Rs 11.2 million) in the year ending 31 March 2007 and
the savings are expected to increase gradually to approximately US$1.61 million (Rs 71.5 million)
per annum by the year ending 31 March 2012. Since O&M expenses constitute a major component
of the total costs of the Company, any savings are expected to have a positive impact on the
profitability of the Company.
The Company intends to pursue the following additional revenue opportunities:
앫
in addition to the Mayur Vihar Link, NTBCL intends in due course to implement the
construction of a further new link to augment the traffic flow on the Delhi Noida Toll Bridge,
the South Link. The South Link is currently intended to be a short 1.45 km link connecting the
Delhi Noida Toll Bridge with the proposed Kalindi Bypass project of the Delhi Government,
which would further reduce the distance via the bridge between Noida/Mayur Vihar and
South/South-West Delhi. The Directors expect that the construction of the South Link would
accelerate the forecasted traffic and revenue growth for the Delhi Noida Toll Bridge;
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앫
NTBCL also intends to progress the property development opportunities arising out of the
use of the total of approximately 99 acres of usable surplus land surrounding the Delhi Noida
Toll Bridge; and
앫
the Company will seek to increase the income generated from licensing of rights for outdoor
advertising on both the Delhi and the Noida side of the Delhi Noida Toll Bridge.
The Directors view the Company’s prospects, which are underpinned by the terms of the
Concession Agreement, with confidence.
16. Reasons for Admission and the Use of Proceeds
The Company is seeking Admission in order to raise funds through the Placing, diversify the
Company’s shareholder base and enhance its corporate profile.
The Company intends, subject to the approval of the CDR Empowered Group, to apply the net
proceeds of the Placing receivable by the Company (assuming no exercise of the Over-allotment
Option) in order of priority approximately as follows:
앫
US$11.3 million (Rs 501.5 million) to repay term loans falling due on 31 March 2006;
앫
US$23.2 million (Rs 1,032 million) for the prepayment of loans (along with any agreed
prepayment charges) to reduce interest costs; and
앫
US$7.9 million (Rs 350 million) to fund the construction of the Mayur Vihar link to the Delhi
Noida Toll Bridge.
The use of the proceeds by the Company will be subject to the approval of the CDR Empowered
Group regarding the details of the Company’s proposed prepayment programme, and agreeing
prepayment charges. It has been suggested at the meeting of the CDR Monitoring Committee
appointed by the CDR Empowered Group for the Company that the prepayment charge would be
in the region of 1% to 2% of the amount prepaid; however, no formal decision on the prepayment
charge has been taken by the CDR Empowered Group, and the CDR Empowered Group may
decide that a higher prepayment charge is in order.
The intended use of the Placing proceeds for the construction of the Mayur Vihar link is subject to
the approval of the Government of Uttar Pradesh being obtained for the lease to the Company of
the lands required for the construction of the Mayur Vihar Link. The Directors believe that such
lease will be granted, although it may be subject to delays beyond the control of the Company.
Pending such approval, the Company intends to use such funds for the prepayment of loans (along
with any agreed prepayment charges) to reduce interest costs. In the event that the required lease is
granted, the Company would then reborrow the funds, subject to agreement of suitable terms,
required for the construction of the Mayur Vihar Link.
17. Directors, senior management and employees
The Board consists of nine Directors, out of which one is nominee of IDBI, a Lending Institution,
one is a nominee of Intertoll India and Intertoll Netherlands and four are nominees of IL&FS. The
remaining three directors are independent directors. The nominee director appointed by IDBI is
considered to be an independent director for the purposes of Indian corporate governance because
IDBI has appointed its nominee director by virtue of its rights as a lender rather than pursuant to the
Shareholders’ Agreement. Mr Gopi Arora (a director of both the Company and IL&FS) was
appointed to the board of the Company before being appointed to the board of IL&FS, and is
considered to be an independent director for the purposes of Indian corporate governance as he is
not a nominee appointed by IL&FS.
Directors
Mr Gopi Arora (72) Non-executive Chairman (Independent Director)
Mr Arora holds a Masters degree in History from Allahabad University and a Masters Diploma in
Public Administration from Harvard University, Boston. Mr Arora’s career in the Indian
Administrative Services stretches over 35 years in a wide range of fields. He was Finance Secretary
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in the Ministry of Finance, Government of India, from 1989 to 1990 and Secretary in the Ministry
of Information & Broadcasting, Government of India, in 1988. He has also acted as Executive
Director to the International Monetary Fund representing India/Bangladesh/Bhutan/Sri Lanka for
3 years and was the Economic Minister, Embassy of India in Moscow during 1975 to1978. He has
also held the posts of Joint Secretary (1983), Additional Secretary (1984 to 1987) and Special
Secretary (1987) in the Office of the Prime Minister, Government of India.
Mr Raj Kumar Bhargava (70) Non-executive Director (Independent Director)
Mr Bhargava holds an MA and is a retired Indian Administrative Services officer. He has 35 years of
experience in holding positions in Government Administration and industry. He was Chief
Secretary, Uttar Pradesh and Home Secretary, Government of India. During his career he has
served in the Department of Industry, Petroleum, Power and Finance. He also served as Secretary to
Government of India in various departments including Urban Development.
Mr Piyush G Mankad (64) Non-executive Director (Independent Director)
Mr Mankad is a retired IAS officer with a distinguished career of nearly 40 years in the Civil Service.
He graduated with a Masters Degree from St.Stephen’s College, Delhi University, and a
post-graduate Diploma in Development Studies from Cambridge University, U.K. He has held a
number of important official positions including Counsellor (Economic) in the Indian Embassy,
Tokyo; Controller of Capital Issues, Ministry of Finance; and Finance Secretary, Government of
India. He was the Executive Director for India (and four other countries), and Board Member, for
the Asian Development Bank, Manila until July 2004. His areas of experience and expertise include
public finance and policy, capital market regulation and development, promotion of industry, FDI
and infrastructure and public administration.
Mr Pandankallunkel T Thomas (58) Non-executive Director (IDBI Nominee)
Mr Thomas holds a BSc degree in Engineering. Mr Thomas is currently the General Manager of
IDBI Limited and has 23 years experience working in All India Financial Institutions. He is also a
Director on the National Scheduled Tribes Finance and Development Corporation and Gujarat
Siddhee Cements Ltd.
Mr Ravi Parthasarathy (54) Non-executive Director (IL&FS Nominee)
Mr Parthasarathy holds a Bachelors degree in Science (BSc) from Madras University and a
Postgraduate degree in Management from IIM-Ahmedabad. Mr Parthasarathy has varied
experience in the infrastructure, banking and financial services sector for over three decades. He has
worked with private sector companies such as 20th Century Finance Corporation and Citibank
N.A. He heads IL&FS as the Chairman & Managing Director and has been at the helm of affairs
since the organization commenced operations in 1988. He has worked with 20th Century Finance
Corporation Limited as its Executive Director. Prior to that he gained exposure to merchant
banking as well as corporate banking functions at Citibank N.A. Mr Parthasarthy is on the board
of several companies. In addition, he is a member of various committees of the government and
trade associations in relation to development of new structures in the financial sector,
infrastructure and overall economic development. He is also a member of the Expert Committee on
infrastructure, constituted by the Government of India.
Mr Hari Sankaran (44) Non-executive Director (IL&FS Nominee)
Mr Sankaran holds a Bachelor’s degree in Economics and a Masters degree in Economics from the
London School of Economics and Political Science. He is also a Shell Research Associate,
Department of Economics in University of Dundee, UK. He has experience in managing the
development of infrastructure projects on a Public-Private-Partnership (PPP) basis and in
developing appropriate financing and contractual strategies to finance projects and generate
stakeholder value. He has worked as a Project Analyst in the Industrial Credit & Investment
Corporation of India (ICICI), Mumbai, focussing on the evaluation of industrial projects. He is
currently the Joint Managing Director and Member of the Board of Directors of IL&FS.
Mr Sankaran is on the Board of several companies.
Mr Arun Kumar Saha (52) Non-executive Director (IL&FS Nominee)
Mr Saha holds a Masters degree in Commerce (M.Com) and is a Chartered Accountant and a
Company Secretary. He has over two decades of experience in the financial sector in the areas of
financial services, infrastructure and asset management. He has been associated with IL&FS for
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approximately 15 years and is currently working as the Executive Director and Company Secretary
of IL&FS and is in charge of finance, operations, compliance and risk management portfolios for
the IL&FS group. His responsibilities at IL&FS include contribution to the strategic growth and
development of the institution, building expertise in the area of corporate law in respect of
infrastructure projects, managing relationships with the domestic and international shareholders
of IL&FS, management of multilateral agencies and various government agencies and enabling and
facilitating cost effective resource management, mobilisation and deployment. Prior to joining
IL&FS he worked for 4 years at WIMCO Limited, where he handled finance, accounts, budgets,
MIS and dealing with banks and financial institutions.
Mr Karunakaran Ramchand (51) Non-executive Director (IL&FS Nominee)
Mr Ramchand holds a postgraduate Degree in Development Planning and is a Civil Engineer. He
has over 25 years of work experience in the Urban & Transport sector and has been actively
engaged in creating and developing frameworks to enable commercialisation of the Transport and
Urban Infrastructure sector in India. In the recent past he has been involved in large number of
private infrastructure initiatives including the successful commissioning on time and to budget of
various Toll Road projects in Gujarat and for the NHAI. Mr Ramchand is currently the President
and Chief Executive Officer of IL&FS Transportation Networks Pvt. Ltd. (ITNL), a company set
up by the IL&FS. Prior to joining IL&FS, Mr Ramchand has also worked on consulting projects
with ORG, Dalal Consultants, MMRDA and CIDCO.
Mr Deepak Premnarayen (60) Non-executive Director (Intertoll Nominee)
Mr Premnarayen has more than 3 decades of experience in the Corporate and Banking industry. He
was Co-founder, Chairman and Managing Director of ICS Group. Mr Premnarayen was also a
senior advisor to Rand Merchant Bank, one of the leading corporate finance banks in South Africa
and part of the First Rand Group. He pioneered various initiatives to promote International Trade
Co-operations with countries like South Africa, United Kingdom and other European Countries.
He has also been an active member of the Confederation of Indian Industry (CII) Infrastructure
committee.
Senior Management
Mr Pradeep Puri (49) President & Chief Executive Officer
Mr Puri Pradeep graduated with an MA, Delhi University. He joined the Indian Administrative
Service in 1979. Mr Puri’s career to date spans 27 years including 9 years with the
Company/IL&FS. His present responsibilities in the Company include looking after the day-to-day
affairs of the Company under the direct control and supervision of the Board of Directors. Mr Puri
has also worked for the Government of India with the Ministries of Commerce and Finance,
focusing on International Trade and Investment in India.
Mr Tarun K Banerjee (54) Chief Financial Officer
Mr Banerjee holds a Masters degree in Commerce (M.Com), University of Calcutta (1977) and is a
Chartered Accountant. He joined the Company 5 years ago and has work experience of 27 years.
His present responsibilities include functioning as a CFO. Prior to joining NTBCL, Mr Banerjee
worked as Financial Controller with M/s Electrical Manufacturing Co. Ltd.
Ms Monisha Macedo (40) Senior Vice President & Company Secretary
Ms Macedo graduated with a BA (Hons.) Economics, St. Stephens College, Delhi University (1987)
and is a fellow member of the Institute of Company Secretaries of India. Ms Macedo began her
career 14 yeas ago and has been with the Company for the past 7 years. Prior to joining the
Company, she ran her own practise as a Company Secretary after completing four and a half years
with IL&FS. Her present responsibilities in the Company include functioning as a Company
Secretary and Compliance Officer under the Listing Agreement and Manager under the Companies
Act, 1956. Ms Macedo reports to the President & CEO.
Mr Ajai Mathur (47) Vice President, Marketing
Mr Mathur graduated with a Masters in Business Administration, University of Lucknow (1981).
He has total work experience of 23 years including 5 years with the Company. His present
responsibilities in the Company include marketing, overseeing operations and maintenance,
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corporate affairs, all administrative and commercial matters, relief and rehabilitation and business
development. Prior to joining the Company, Mr Mathur was heading Business Development in
India for Voith Hydro GmbH & Co. KG, Germany.
Employees
The day-to-day affairs of the Company are being looked after by the President & CEO under the
direction, control and supervision of the Board of Directors. The Company has a total staff of 14
qualified personnel.
18. Corporate Governance
The Directors support high standards of corporate governance. Pursuant to its listing agreement,
the Company has filed a compliance report on corporate governance for the quarter ended
31 December 2005 on 9 January 2006 with the Bombay Stock Exchange and The National Stock
Exchange of India.
The Board
Presently, the Board of Directors comprises nine directors. All the Directors on the Board are
non-executive. The Board comprises of one Independent Chairman and 3 Independent Directors.
The Board has, inter-alia, established an Audit Committee, a Remuneration Committee and an
Investor Grievance Committee. The Board meets regularly throughout the year. To enable the
Board to perform its duties, each Director will have access to all relevant information and to the
services of the Secretary of the Company. The Board has delegated the specific responsibilities to the
committees described below.
The Remuneration Committee (known as The HRD Committee)
The HRD Committee consists of Mr Ravi Parthasarathy and Mr Hari Sankaran (both
non-executive directors of the Company) and is chaired by Mr Gopi Arora. The HRD Committee’s
scope of work include review of the HRD policy, review of the compensation policy relating to
salary, performance related pay, increments, promotions, allowances, perquisites, loan and interest
subsidy facilities and other compensation for the employees of the Company. The Company’s
remuneration policy has been specified in its employee handbook which has been approved by the
HRD Committee. Any amendments to the employee handbook must by approved by the HRD
Committee. The HRD Committee is responsible for the administration and supervision of the
Employees Stock Option Plans (present and future) of the Company.
The Audit Committee
The Audit Committee consists of Mr Raj Kumar Bhargava, Mr Arun Kumar Saha and
Mr Pandankallunkel T Thomas (each a non-executive Director of the Company), and is chaired by
Mr Gopi Arora, the Non-Executive Independent Chairman of the Company. Ms. Monisha
Macedo, the Company Secretary acts as the Secretary to the Audit Committee. The Audit
Committee will meet at least four times every year. The terms of reference of the Audit Committee,
inter alia, include overseeing the Company’s financial reporting process and the disclosure of its
financial information to ensure that the financial statement are correct, sufficient and credible. The
Audit Committee also oversees appointment of auditors and reviews the Company’s internal audit
reports, relating to accounts and internal controls systems. The Audit Committee met five times
during the year ended 31 March 2005. The Audit Committee is inter alia, empowered to investigate
any activity within its terms of reference. It can seek information from any employee, obtain outside
legal or professional advice and secure the attendance of external advisers with relevant expertise.
The Audit Committee is also responsible for recommending the appointment of, and reviewing the
fees of, the external auditors and discussing the scope of the audit and its findings. The Audit
Committee is also responsible for monitoring compliance with accounting and legal requirements
and for reviewing the annual and interim financial statements. The Audit Committee will have
unrestricted access to the Company’s auditors.
The Investor Grievance Committee
The Company has constituted an Investor Grievance Committee with the following Directors as its
members: Mr Raj Kumar Bhargava (Chairman) and Mr Gopi Arora. Ms Monisha Macedo,
Company Secretary, is the secretary for the Investor Grievance Committee as well.
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The Investor Grievance Committee is responsible for investor relations. The Committee is the
authority for issue of duplicate certificates and approving authority under the code of conduct
framed in terms of SEBI (Prohibition of Insider Trading) Regulations, 1992 (as amended from time
to time) (the “Insider Regulations”).
The Investor Grievance Committee comprises of two non-executive directors of the Company and
the Committee has met six times during the financial year 2004/2005. The Company Secretary has
been designated as Compliance Officer for the stock exchanges as well as the investor
queries/complaints.
Dealings Code
The Company will comply with Rule 21 of the AIM Rules regarding dealings in the Company’s
securities and will ensure compliance by the Directors and applicable employees. The Company
will operate a securities dealing code appropriate for companies whose securities have been
admitted to trading on AIM.
Takeover Code
The Company is incorporated in India and is not subject to the UK City Code on Takeovers and
Mergers in the UK. GDR holders will not therefore be afforded protections under the City Code.
SEBI Takeover Code
The Securities and Exchange Board of India (“SEBI”) has been granted powers under the SEBI Act,
1992 to regulate the business of Indian securities markets, including stock exchanges and other
financial intermediaries. SEBI promotes and monitors self-regulatory organizations, prohibits
fraudulent and unfair trade practices and insider trading and regulates substantial acquisitions of
shares and takeovers of companies in India. The SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 (the “Takeover Code”) governs the disclosure and mandatory bid
obligations for listed Indian companies under Indian law. It further prescribes certain thresholds or
trigger points that give rise to these obligations, as applicable.
Any acquirer (defined as a person who, directly or indirectly, acquires or agrees to acquire shares or
voting rights in, or control of, a company, either by himself or with any person acting in concert)
who acquires shares or voting rights that would entitle the acquirer to more than 5%, 10%, 14%,
54% or 74% of the shares or voting rights, respectively, in a company is required to disclose the
aggregate of his shareholding or voting rights in that company to the company and to each of the
stock exchanges on which the company’s shares are listed, at every such stage within two days of
i.
the receipt of intimation of allotment; or
ii.
the acquisition of shares or voting rights, as the case may be.
The term “shares” has been defined under the Takeover Code to mean equity shares or any other
security that entitles a person to receive shares with voting rights.
A person who holds more than 15% of the shares or voting rights in any company is required to
make annual disclosure of his holdings to that company within 21 days from financial year ending
March 31 (which in turn is required to disclose the same to each of the stock exchanges on which the
company’s shares are listed). Further, such person who holds 15% or more but less than 55% of the
shares or voting rights in any company is required to disclose any purchase or sale of shares
aggregating 2% or more of the share capital of the company, to the company and to each of the
stock exchanges where the shares of the company are listed within two days of:
(i)
the receipt of allotment information; or
(ii)
the sale or acquisition of shares or voting rights, as the case may be.
A holder of GDRs would be subject to these notification requirements.
Promoters or persons in control of a company are also required to make annual disclosure of shares
or voting rights held by them (along with persons acting in concert with them) in the same manner
as above, annually, within 21 days of the end of the financial year as well as from the record date for
entitlement for dividends.
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An acquirer who, along with persons acting in concert, acquires or agrees to acquire shares or
voting rights, which together with shares or voting rights, if any, already held by such acquirer (and
persons acting in concert with him) entitle such acquirer to exercise 15% or more of the shares or
voting rights in a company, is required to make a public announcement to acquire a further
minimum 20% of the shares of the company. However, no acquirer may acquire shares or voting
rights through market purchases or preferential allotment which taken together with the shares
held by such acquirer, entitle him to exercise more than 55% of the voting rights in the company.
An acquirer who, together with persons acting in concert with him, holds 15% or more but less
than 55% of the shares or voting rights in a company cannot acquire additional shares or voting
rights that would entitle him to exercise more than 5% of the voting rights in any financial year
starting 1 April and ending 31 March, unless such acquirer makes a public announcement offering
to acquire a further minimum 20% of the shares of the company. Any further acquisition of shares
or voting rights by an acquirer, together with persons acting in concert with him, who holds 55% or
more but less than 75% of the shares or voting also requires the making of an open offer. In the
event, such acquisition of shares or voting rights results in reduction of the public shareholding in
the target company to a level below the limit specified in the listing agreement with the stock
exchange for the purpose of listing on continuous basis, the acquisition will have to be in
accordance with the SEBI (Delisting of Securities) Guidelines, 2003 (as amended from time to time).
However, if the acquisition beyond 55% is pursuant to an agreement or memorandum of
understanding, the mandatory open offer as mentioned above will be only for such number of
shares that would not result in the public shareholding being reduced to below the minimum
specified under the listing agreement. Acquisition of shares or voting rights beyond 55% through
market purchases and preferential allotment is not permitted and in the event of such acquisition
the acquirer is required to divest the shares acquired in excess of 55% within one year in the manner
provided in the Takeover Code.
In addition, regardless of whether there has been any acquisition of shares or voting rights in a
company, an acquirer cannot directly or indirectly acquire control over a company (for example, by
way of acquiring the right to appoint a majority of the directors or to control the management or the
policy decisions of the company), unless such acquirer makes a public announcement offering to
acquire a minimum of 20% of the voting capital of the company. However, the public
announcement requirement will not apply to any change in control, which takes place pursuant to a
special resolution passed by the shareholders of the company including by way of postal ballot.
The Takeover Code sets forth the contents of the required public announcement as well as the
minimum offer price. The minimum offer price depends on whether the shares of the company are
“frequently” or “infrequently” traded (as defined in the Takeover Code). In case the shares of the
company are frequently traded, the minimum offer price shall be the highest of:
앫
the negotiated price under the agreement for the acquisition of shares or voting rights in the
company;
앫
the highest price paid by the acquirer or persons acting in concert with him for any
acquisitions, including through an allotment in a public, preferential or rights issue, during
the 26-week period prior to the date of public announcement; and
앫
the average of the weekly high and low of the closing prices of the shares of the company
quoted on the stock exchange where the shares of the company are most frequently traded
during the 26 weeks period prior to the date of public announcement, or the average of the
daily high and low of the closing price of the shares as quoted on the stock exchange where the
shares of the company are most frequently traded during the two weeks preceding the date of
public announcement, whichever is higher.
The open offer for acquisition of a further minimum of 20% of the shares of the company has to be
made by way of a public announcement which is to be made within four working days of entering
into an agreement for acquisition or deciding to acquire shares or voting rights, exceeding the
relevant percentages, or within four working days after any such change(s) are decided to be made
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as would result in acquisition of control. The obligation to make an open offer arises even in case of
indirect acquisition by virtue of acquisition of companies whether listed or unlisted, whether in
India or abroad.
The Takeover Code permits conditional offers as well as the acquisition and subsequent delisting of
all shares of a company and provides specific guidelines for the gradual acquisition of shares or
voting rights. Specific obligations of the acquirer and the board of directors of the target company in
the offer process have also been set out. Acquirers making a public offer are also required to deposit
into an escrow account a percentage of the total consideration which amount will be forfeited in the
event that the acquirer does not fulfill his/her obligations. In addition, the Takeover Code
introduces the “chain principle” by which indirect acquisition of a company listed in India by virtue
of the acquisition of a company, whether listed or unlisted, whether in India or abroad, will oblige
the acquirer to make a public offer to the shareholders of each such company which is indirectly
acquired. On account of any such public offer if the public shareholding of the company falls below
the limit specified in the listing agreement with the stock exchange(s) for continuous listing, the
acquirer is required to raise the level of public shareholding to the level specified for continuous
listing in the listing agreement within a period of 12 months from the date of closure of the open
offer by the issue of new shares of the company or divestment through an offer for sale in
compliance with the Companies Act and the SEBI DIP Guidelines or sale of shares through stock
exchanges.
The obligation to make a public announcement of an open offer to public shareholders under the
Takeover Code does not apply to, inter alia, certain specified acquisitions. An application may also
be filed with the Takeover Panel seeking exemption from the requirements of the Takeover Code.
The Takeover Code provides that an acquirer who seeks to acquire any shares or voting rights
whereby the public shareholding in the target company is reduced to a level below the limit specified
in the listing agreement with the stock exchange for the purpose of listing on continuous basis, may
acquire such shares or voting rights only in accordance with the SEBI (Delisting of Securities)
Guidelines 2003.
Because the Company is a listed Indian company, the provisions of the Takeover Code apply in
respect of its securities. The obligation to make an open offer under the Takeover Code does not
apply to the acquisition of GDRs, so long as they are not converted into shares carrying voting
rights.
The SEBI Act and the Takeover Code contain penal provisions for violation of the Takeover Code.
SEBI Insider Trading
The SEBI (Prohibition of Insider Trading) Regulations, 1992 (“Insider Trading Regulations”) seek
to prevent insider trading in India by prohibiting an insider from dealing, either on his own behalf
or on behalf of any other person, in the securities of a company listed on any stock exchange when
in possession of unpublished price sensitive information. The insider is also prohibited from
communicating, counseling or procuring any unpublished price sensitive information while in
possession of such information. The prohibition under Regulation 3A of the Insider Trading
Regulations also extends to a company dealing, while in the possession of unpublished price
sensitive information, in securities of another company or its associate and is not restricted to
insiders alone. It is to be noted that recently SEBI has amended the Insider Trading Regulations to
provide for certain defenses to the above stated prohibition on insiders in possession of unpublished
price sensitive information dealing in securities.
The Insider Trading Regulations make it compulsory for listed companies and certain other entities
associated with the securities market to establish an internal code of conduct to prevent insider
trading deals and also to regulate disclosure of unpublished price sensitive information within such
entities so as to minimise misuse thereof. To this end, the Insider Trading Regulations provide a
model code of conduct. Further, the Insider Trading Regulations specify a model code of corporate
disclosure practices to prevent insider trading, which is to be implemented by all listed companies
and other such entities.
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Section 395 of the Act provides a mechanism whereby the shares of minority shareholders may be
acquired compulsorily by third parties. Section 395 provides that where an Indian company agrees
to buy shares representing 90% of a company’s issued share capital, it may compulsorily acquire
the remaining 10%.
Company Law in India
Companies in India are governed by the Companies Act. The Act distinguishes between “public
companies” and “private companies”.
A private company is a company, which has a minimum paid-up capital of Rs 100,000 and by its
articles of association, restricts the right of members to transfer its shares, limits the number of its
members to fifty and prohibits an invitation to the public to subscribe to any shares in or the
debentures of the company or to accept public deposits. A public company is a company which is
not a private company and has a minimum paid up capital of Rs 500,000. It also includes a private
company which is a subsidiary of a public company.
A public company which has any of its securities listed on a recognised stock exchange is a listed
company. Listed companies are also governed by the Securities and Exchange Board of India (SEBI)
and by the Listing Agreement with the Stock Exchange on which their securities are listed.
The Company is a public company and a listed company with its shares currently being traded on
the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.
Under the Act, the regulatory authority is the Registrar of Companies (RoC) and the GOI through
the Ministry of Company Affairs. The Company Law Board is presently the judicial forum for
adjudicating matters under the Act though a National Company Law Tribunal (“Tribunal”) is in
the process of being set up which would replace the Company Law Board.
Under Indian law, a company has a separate legal personality, perpetual succession, limited liability
of its members and its property is separate and distinct from its members. Shares may be held in
physical certificates or in dematerialised form through a depository. There is a stamp duty of 0.25%
of the sale consideration on the transfer of shares held in physical form.
A company is governed by its memorandum and articles of association and cannot undertake any
transaction which is outside the scope of the powers specified in the objects clause of the
memorandum or is not incidental or necessary to the attainment of the objects.
A company is managed by its board of directors and the Act provides the procedures for
appointment and removal of directors and conducting board meetings. Unless the articles of the
company provide for retirement of all the directors at every AGM, the term of two-third of the
directors is liable to determination by retirement by rotation and directors can be appointed by the
company in general meeting. The articles of association may provide for the manner of
appointment of the remaining directors. Board meetings held by telephone or video conferencing
are presently not permitted. Directors owe a fiduciary duty to the company and are required to
disclose their interests in any contract which a company enters into and have to abstain from voting
on matters in which they are interested. Directors cannot hold an office of profit in the company
except with the consent of the general meeting by a special resolution and there are controls on the
company advancing loans and giving guarantees for directors or other entities owned by the
directors. Listed companies are required to have an optimum combination of executive and
non-executive directors with not less than 50% of the board of directors comprising of
non-executive directors. The number of independent directors would depend on whether the
chairman is executive or non-executive. In case of a non-executive chairman, at least one-third of
the board should comprise of independent directors and in case of an executive chairman, at least
half of the board should comprise of independent directors. Decisions by the Board are to be taken
by majority vote (except where the Act provides for a unanimous Board resolution) and certain
important matters require approval of the shareholders in a general meeting. A Board is required to
meet at least once every quarter. There are limits prescribed on the total remuneration which a
company can pay to the directors and managing directors and any remuneration beyond these
limits can only be paid upon approval of the shareholders and/or GOI.
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Shareholders are the owners of the company and are the final decision makers. In certain
circumstances directors can be removed by a majority vote of the shareholders. Certain decisions
can be taken only on a special resolution of the shareholders (i.e. by a 75% majority vote). The Act
provides for two kinds of share capital, equity share capital and preference share capital. Equity
shares may be issued with differential rights as to dividend or voting if the same is permitted by the
articles of association and the issue is approved by the shareholders in general meeting. Such shares
with differential voting rights are allowed to the extent of 25% of the total issued share capital.
Preference shareholders have a preferential right to dividend and to return of capital on winding up
in preference to equity shareholders. Their right to vote is generally limited to resolutions directly
affecting their rights or to situations when the dividend payable on such shares remains unpaid for
the period specified in the Act. Further shares are normally to be issued to the existing shareholders
in proportion to their shareholding only, but if the shareholders pass a special resolution, the board
of directors may be given the authority to issue/allot shares on a preferential basis to any person. An
annual general meeting of the shareholders is required to be held once a year. Voting at
shareholders’ meetings is, in the first instance by show of hands, but a poll may be ordered by the
chairman or demanded by shareholders holding more than 10% of the voting power or holding
shares on which an aggregate sum of not less than Rs 50,000 has been paid-up. In the case of a poll,
the voting power of each member is in proportion to the voting power attached to the shares held by
the member.
Board and shareholder meetings are to be minuted and annual returns filed by every company with
the Registrar of Companies. Accounts of a company are required to be audited.
Companies are required to maintain certain registers including a register of members, a register of
charges and a register of debenture holders. The Act requires a company to maintain a register of
members and a company may ask the recorded members to disclose their beneficial ownership.
Protection is available to minority shareholders such as in the case of oppression and
mismanagement. The shareholder(s) holding 10% or more of voting power, or shareholders
numbering at least 100 or one-tenth of the total number of members, whichever is less, have been
granted certain rights under the Act and can approach the Tribunal/Company Law Board for relief.
The Tribunal/Company Law Board has wide powers of directing how the company is to be
managed so that the minority is not oppressed.
Winding up, mergers, amalgamations and restructurings of companies can be carried out as per the
prescribed procedures and under supervision of the High Court.
Listed companies are also subject to a takeover code as per the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 (SEBI Takeover Code) as detailed on page 39.
Under Indian law, the shareholding interests above certain thresholds are required to be disclosed.
Section 187C of the Act, together with the Companies (Declaration of Beneficial Interest in Shares)
Rules, 1975, stipulates that a person who holds a beneficial interest in a share or class of shares of a
company must, within thirty days after his becoming such beneficial owner, make a declaration to
the company, specifying the nature of his interest, particulars of the person in whose name the
shares stand registered in the books of the company (such person also needs to make a similar
disclosure regarding the person holding beneficial interest within such time and in the form
prescribed) and such other particulars as may be prescribed. In addition, the listing agreement
signed by the Company with the BSE and NSE, requires the Company to disclose to the concerned
stock exchange(s) the name, number of shares held and percentage shareholding of entities/persons
holding more than 1% of the shares of the Company on a quarterly basis within 15 days of end of
each quarter. In addition, the SEBI (Prohibition of Insider Trading) Regulations, 1992 provide that
any person who holds more than 5% of the shares or voting rights in any listed company is required
to disclose to the company the number of shares or voting rights held and also change in
shareholding or voting rights if such change results in shareholding falling below 5% and the
change exceeds 2% of the shareholding within 4 working days of the acquisition or change of the
shareholding. Thereafter, the listed company is required to disclose to all stock exchanges on which
such company is listed within 5 days of receipt of the information. Further, under the SEBI
(Substantial Acquisition of Shares and Takeover) Regulations, 1997, any acquirer who acquires
shares or voting rights (taken together with the shares or voting rights already held) which would
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entitle the acquirer more than 5% or 10% or 14% or 54% or 74% of the shares or voting rights of a
company, is required to disclose at every stage the aggregate of the shareholding or voting rights to
the company within two days of such acquisition of shares or voting rights. The company, which
receives such disclosures, is required to disclose the same to the stock exchange(s) on which the
shares of such company are listed, within seven days of receipt of such information.
19. Details of the Placing
The Company has chosen to apply for the GDRs to be admitted to trading on AIM and not its
Ordinary Shares, because Indian law does not allow an Indian company to have an overseas listing
of its shares.
The Company is issuing 56,818,180 New Ordinary Shares, and 11,363,636 GDRs representing
those New Ordinary Shares will be issued through the Depositary by way of the Placing by Collins
Stewart and Edelweiss Capital to institutional investors to raise approximately $45 million gross of
expenses with an over-allotment option of up to 10% of the gross funds. The Placing GDRs will
represent approximately 31.5% of the enlarged issued share capital of the Company. It is expected
that the Placing GDRs will be issued on 21 March 2006.
Under the Placing Agreement, Collins Stewart has agreed to act as broker to the Company and,
conditional on (i) Admission taking place not later than 21 March 2006 or such later date as Collins
Stewart and the Company may agree, but not later than 31 March 2006, and (ii) no material
adverse change (and no event occurring which could be reasonably be expected to result in such a
material adverse change) in the condition (financial or otherwise), business assets, operations or
performance of the Company having occurred, as its agent to procure Placees for the GDRs in each
case at the Placing Price. The Placing is conditional amongst other things, on Admission. Further
details are set out in paragraph 7.1 of Part VI of this document. Edelweiss Capital has been
appointed by the Company as Co Financial Adviser and Co Distributor with Collins Stewart to the
Placing and has agreed with Collins Stewart to assist in using reasonable endeavours to procure
placees. Neither Collins Stewart nor Edelweiss Capital is underwriting the Placing.
On Admission of the Placing GDRs, based on the Placing Price, the Company’s notional market
capitalisation will be $142.87m.
20. Over-allotment Arrangements
In connection with the Placing, Collins Stewart, or any of its agents, may for price stabilisation
purposes or otherwise (but will be under no obligation to), to the extent permitted by applicable
law, over-allot GDRs. Collins Stewart is not required to enter into such transactions and such
transactions may be effected on any stock market, over-the-counter market or otherwise. Such
over-allotment measures, if commenced, may be discontinued at any time and may only be taken
during the period from 21 March 2006 up to and including 11 April 2006. Save as required by law
or regulation, neither Collins Stewart nor any of its agents intends to disclose the extent of any
over-allotments.
In connection with the Placing, Collins Stewart may over-allot GDRs up to a maximum of 10% of
the total number of Placing GDRs. For the purposes of allowing it to cover short positions resulting
from any such over-allotments and/or from sales of GDRs, the Company has granted to Collins
Stewart the Over-allotment Option, pursuant to which Collins Stewart may require the Company
to allot additional Ordinary Shares up to a maximum of 10% of the total number of New Ordinary
Shares to the Depositary and instruct the Depositary to issue Collins Stewart with a representative
number of GDRs at the Placing Price. The Over-allotment Option is exercisable in whole or in part
at any time up to and including the 21st calendar day after commencement of conditional dealings
in the GDRs on AIM. Following the expiry of this period, the Company will endeavour to make a
single filing with the RBI regarding the issue of Ordinary Shares, which will incorporate the New
Ordinary Shares and any additional Ordinary Shares to be issued under the Over-allotment
Option. Any Over-allotment GDRs issued by the Depositary pursuant to the exercise of this option
will be issued on the same terms and conditions as the Placing GDRs and will form a single class for
all purposes with the Placing GDRs. Placing of the Over-allotment GDRs may result in a market
price for the GDRs which is higher than would otherwise prevail.
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21. Allocation and Pricing
The Placing Price and the basis of allocation has been determined by Collins Stewart and Edelweiss
Capital after consultation with the Company. In doing so, they have taken into account various
matters, including the level and the nature of the demand for GDRs and the desire for an orderly
after market. All Placing GDRs and any Over-allotment GDRs are being sold at the Placing Price.
The rights attaching to the GDRs will be uniform in all respects (save as provided pursuant to “Fees
of the Depositary” below) and all of the GDRs will form a single class for all purposes. Further
details on the terms and conditions of the GDRs set out in Part III of this document.
Collins Stewart, Edelweiss Capital and any of their affiliates acting as an investor for its own
account may purchase GDRs and, in that capacity, may retain, purchase, sell, offer to sell or
otherwise deal for its or their own account(s) in such securities or any other related investments in
connection with the Placing or otherwise.
Accordingly, references in this document to the GDRs being offered or otherwise dealt with should
be read as including any offer to purchase or dealing by Collins Stewart, Edelweiss Capital and any
of their affiliates acting as an investor for its own account. Collins Stewart and Edelweiss Capital do
not intend to disclose the extent of any such investment or transaction otherwise than in accordance
with any legal or regulatory obligation to do so.
Under the terms of the Depositary Receipt Scheme (see section 3 of Part III of this document for
further information) each Ordinary Share represented by the GDRs must be priced at a minimum of
Rs 35.14 (US$0.79) and therefore each GDR must be priced at a minimum of Rs 175.7 (US$3.95).
22. Admission to AIM
Application has been made for the GDRs to be admitted to trading on AIM. It is expected that
Admission will become effective, and that unconditional dealings will commence, on 21 March
2006. The Company’s Existing Ordinary Shares are listed on the Bombay Stock Exchange Limited
and the National Stock Exchange of India Limited. No application has been made to admit the
GDRs to listing or trading on any other stock exchange and no application has been made in respect
of the New Ordinary Shares for any listing or quotation on any stock exchange. The Company has
applied to the BSE and NSE, for their in-principle approval, for the listing of the New Ordinary
Shares underlying the GDRs
23. Dealing Arrangements and Settlement
The GDRs will be eligible for trading through Euroclear and Clearstream, but are not eligible for
settlement in CREST, and will not be admitted to CREST directly. However, the Company has
established arrangements which will enable investors to receive their interest in the Company via
the CREST International Settlement Links Service and to be issued with CREST Depositary
Interests (CDIs) accordingly. CDIs are dematerialised depositary interests which will represent
entitlements to GDRs and are independent securities constituted under English law which may be
held and transferred through the CREST system. The CDIs will have the same security code (ISIN)
as the underlying GDRs and will not require a separate admission to trading on AIM.
The GDRs will be made available for delivery via CDIs through the facilities of CREST against
payment thereof in immediately available funds. It is expected that CREST accounts should be
credited on or about 21 March 2006.
In order to enable investors to hold their GDRs through CDIs, the relevant GDRs will be
transferred to CRESTCo’s Euroclear account and re-registered in the name of CREST International
Nominees Limited, a wholly owned subsidiary of CRESTCo, which will hold them on trust.
CREST Depositary Limited will issue CDIs representing entitlements to the GDRs. CDI holders
will not be legal owners of the GDRs to which they are entitled. However, the Company and the
Depositary wish to ensure that holders of CDIs are able to enjoy all rights associated with holding
GDRs. CRESTCo maintain a list of the CDI holders. The Company and/or the Depositary will thus
be able to provide CDI holders with the same information as the legal owners of the GDRs, and the
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Depositary will also seek to take into account the voting instructions of CDI holders in exercising
the votes attaching to the underlying Ordinary Shares at general meetings of the Company subject
to applicable law and the Articles, (see “Terms and Conditions of GDRs” in Part III of this
document). Investors who hold their interests in the GDRs via CDIs will be able to have dividends
paid to them by CRESTCo. Unless CDI holders notify CRESTCo to the contrary, dividends
received by CRESTCo will be paid in US Dollars to the CDI holders.
Under the Conditions of the GDRs (see Part III of this document for further information), Holders
of GDRs will not be able to exchange their GDRs for the Ordinary Shares represented by them until
the Company has confirmed that the Ordinary Shares underlying the GDRs (including any
Over-allotment GDRs) have been listed on the BSE and the NSE. This is expected to occur within 30
to 45 days of Closing, but there can be no assurance that listing will occur within this period or at
all. See the Risk Factors in Part II of this document for further information.
24. Fees of the Depositary
The Company and the Depositary have agreed to waive certain fees of the Depositary that the
Depositary is otherwise entitled to charge pursuant to Condition 16(A) of the Terms and
Conditions of the GDRs (see further “Information on GDRs” set out in Part III of this document)
with respect to the GDRs held in CDI form through CRESTCo. The Depositary and the Company
have separately agreed that the Depositary will waive certain fees otherwise payable by the Holders
of GDRs. The Company has agreed to pay a fee to the Depositary for the provision of services by the
Depositary to the Company. The ability of the Depositary to charge Holders of GDRs (other than
those GDRs held in CDI form) standard fees of the Depositary as set forth under Condition 16(A)(i)
through (vii) of the Terms and Conditions of GDRs remains, and such fees may be imposed in
accordance with Condition 16(A)(i) through (vii) in the circumstances agreed between the
Company and the Depositary.
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PART II
Risk factors
The attention of prospective investors is drawn to the fact that ownership of GDRs will involve a
variety of risks which, if they occur, may have a materially adverse effect on the Company’s
business or financial condition, results or future operations. In such case, the market price of the
GDRs could decline and an investor might lose all or part of his or her investment.
In addition to the information set out in this document, the following risk factors should be
considered carefully in evaluating whether to make an investment in the Company. The following
factors do not purport to be an exhaustive list or explanation of all the risk factors involved in
investing in the Company and they are not set out in any order or priority. In particular, the
Company’s performance might be affected by changes in market and/or economic conditions and
in legal, regulatory and tax requirements. Additionally, there may be risks of which the Board is not
aware or believes to be immaterial which may, in the future, adversely effect the Company’s
business and the market price of the GDRs.
Before making a final investment decision, prospective investors should consider carefully whether
an investment in the Company is suitable for them and, if they are in any doubt, should consult with
an independent financial adviser authorised under the Financial Services and Markets Act 2000
who specialises in advising on the acquisition of global depositary receipts and other securities in
the UK.
Dependence upon Key Executives and Personnel
In common with many smaller companies, the Company’s future success is substantially dependent
upon its senior management. The contracts of employment of the senior management may be
terminated by one month’s notice on either side. The loss of any member of the Company’s senior
management could harm or delay the plans of the business either whilst management time is
directed to finding suitable replacements or if no suitable replacement is available to the Company.
In either case, this may have a material adverse effect on the future of the Company’s business.
Government Policies
The Delhi Noida Toll Bridge connects the State of Delhi and the State of Uttar Pradesh. There
remains a possibility of nationalization of the infrastructure services provided by the Company.
Nationalization of the infrastructure services provided by the Company could impact the financial
health or operational performance of the Company.
Development Rights
Under the Concession Agreement, the Company has a right to invoke certain development rights,
subject to the discretion of NOIDA, for development of property that consists of surplus land in the
vicinity of the Delhi Noida Toll Bridge, in order to augment the toll revenues, in case of a shortfall in
the same. The right to exploit such development rights is subject to NOIDA’s discretion.
The Company requires certain approvals and permits from government and regulatory authorities
for implementing the development rights. If it fails to obtain approval for implementation of the
land development rights, the Company’s ability to generate additional income to make up for the
shortfall in toll revenues may be adversely affected, which may have a material effect on the
performance of the company.
DND Flyway Limited has already received a sub-lease of a certain amount of land from the
Company for the purpose of exploring development opportunities. The value attributed to such
land was Rs 1,034.84 million which has not been paid. DND Flyway Limited will make the
repayment to the Company for the sub-lease of this land after it earns revenues from developing the
property. The Company has received ‘in principle’ approval for development rights. DND Flyway
Limited will only be permitted to commence commercial activities after the Company receives final
approval and executes a formal agreement with NOIDA in this regard. As a result, the Company
has not received any consideration for the transfer of land to date and will not receive any
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consideration until the property is developed and revenues are earned by DND Flyway Limited.
Non-receipt of consideration from DND Flyway Limited would have a material adverse effect on
the financials of the Company.
The Company has generated income by licensing to third parties the right to advertise on the lands
surrounding the Delhi Noida Toll Bridge. The advertising rights have been licensed for both the
Delhi and Noida sides of the Delhi Noida Toll Bridge. There remains a risk that NOIDA may take
action to prevent the Company from licensing advertising rights on the Noida side of the bridge.
NOIDA has granted an “in principle” approval for Development Rights which would include
provision of advertisement services as defined in the Concession Agreement.
Company’s indebtedness and events of default
The Company has entered into loan agreements with certain banks and financial institutions for
long term borrowings. These loan agreements contain certain restrictive covenants, such as
requiring consent of the lenders, inter alia, for issuance of new shares, creating further
encumbrances on its assets, disposing of its assets and declaring dividends or incurring capital
expenditures beyond certain limits. Some of these loan agreements also contain covenants which
limit the Company’s ability to make any change or alteration in the Company’s capital structure,
make investments and effect any scheme of amalgamation or restructuring. In addition, certain of
these loan agreements contain financial covenants, which require the Company to maintain, among
other matters, specified net worth to assets ratio, debt service cover ratio, and maintenance of
security coverage. On account of the accumulated losses incurred by the Company, the Company
has not been able to adhere to certain financial covenants prescribed under the loan agreements.
Breach of these financial covenants gives rise to an event of default which entitles the lenders to
enforce the security which they have against the Company’s assets, or to exercise step-in rights
under the Concession Agreement and replace the Company as the concessionaire. To date no
enforcement action has been taken by any of the Company’s lenders in respect of such events of
default to enforce the security which the lenders have against the Company’s assets. There can
however be no guarantee that such enforcement proceedings will not be initiated in the future if the
Company remains in breach of the financial and other covenants contained in the loan agreements.
There can be no assurance that the Company will be able to comply with the financial and other
covenants imposed by the loan agreements in the future.
The corporate debt restructuring package which was approved by the CDR Empowered Group on
28 October 2002 was subject to certain terms and conditions which needed to be satisfied within
certain time-limits as follows: (a) construction of the Mayur Vihar link to connect the Delhi Noida
Toll Bridge with Mayur Vihar by March 2004; (b) construction of the South Link, which will
connect the Delhi Noida Toll Bridge with the Kalindi Bypass (which is presently under
implementation by the Government of Delhi) by March 2006; (c) entering into a development
rights agreement to the satisfaction of the lenders; and (d) the raising of capital (Rs 250 million)
including SEBI formalities to be completed by March 2003. The Company has not complied with
these conditions although it has complied with its debt service obligations under the corporate debt
restructuring package. The Company has kept the lenders informed about the Company’s
non-compliance with certain terms and conditions. Breach of these terms and conditions may be
treated as an event of default by the lenders which entitles the lenders to enforce the security they
have against the Company’s assets or to exercise step-in rights under the Concession Agreement
and replace the Company as the concessionaire. It should be noted that the Company’s ability to
comply with the conditions regarding (i) construction of the Mayur Vihar Link (ii) construction of
the South Link and (iii) entering into a development rights agreement is dependent upon third party
consents, and therefore not within the control of the Company. The events of default caused by
non-compliance with those terms may therefore be continued for some time. To date no
enforcement action has been taken by any of the Company’s lenders in respect of such events of
default to enforce the security which the lenders have against the Company’s assets. There can
however be no guarantee that such enforcement proceedings will not be initiated in the future if the
Company continues to breach the terms and conditions of the corporate debt restructuring.
Given that the ability of the Company to meet its obligations with respect to the restructured Term
Loans and the DDBs relates to its successful trading it is inevitable that there is a risk that the
Company will be in breach of the aforementioned provisions.
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In addition, the Company intends to refinance its debt arrangements in the future. There can be no
guarantee that the Company will be able to obtain the consents of its lenders which are required in
order to implement such debt refinancing. The Company may need to negotiate an early
prepayment fee in order to prepay certain of its debts, and there can be no guarantee that the
Company will be able to negotiate a fee which is reasonable or acceptable. This may impact the
Company’s intended use of the proceeds of the Placing.
Dividends
Dividend payment will rely among other things on the underlying growth and profitability of the
business and, in particular, the dividend policy mentioned in Part I of this document should not be
construed as a dividend forecast. Any change in the tax treatment of dividends received from
subsidiaries or interest received by the Company on intra-group loans may reduce the ability of the
Company to pay dividends. The Company has incurred accumulated losses to date, and therefore it
may not be financially viable for the Company to pay out any dividends. In addition, the covenants
imposed by the Company’s lenders contain restrictions on the Company’s ability to pay dividends.
There is a risk that the Company will still incur losses in the future and will not be able to pay any
dividends.
Influence of Substantial Shareholder and Shareholders Agreement
The promoter of the Company, IL&FS, currently holds 33.18% of the Existing Ordinary Shares,
and following Admission and the Placing (assuming no exercise of the Over-allotment Option) will
be interested in 22.73% of the enlarged share capital of the Company. As the largest shareholder,
IL&FS may have the ability to determine the outcome of certain shareholder resolutions. IL&FS is
likely to continue to remain a substantial shareholder able to influence the outcome of any
shareholders resolution for the foreseeable future.
Further the Shareholders’ Agreement grants certain rights to a number of institutional investors
(including IL&FS) with regard to the appointment of directors, conduct of board meetings, and
veto rights (as described in the summary of the Shareholders’ Agreement in paragraph 7.10 of Part
VI). There can be no assurance that the principal shareholders in the shareholders agreement will
not have conflicts of interest. Any such conflicts may adversely affect the Company’s ability to
execute its business strategy or to operate its business. Such conflicts may also result in a delay or
prevention of significant corporate actions, which might otherwise have been beneficial to the
Company.
Dependence upon Support of IL&FS
The shortfall in the projected levels of toll collections has resulted in losses for the Company since
inception. These losses have meant that the Company has been unable to service its existing
borrowings and its debts have been restructured. The Company has also been dependent upon the
financial support of IL&FS since incorporation. IL&FS has set up a number of companies in the
infrastructure sector, a number of which are loss-making or which have negative net worth. In the
event that IL&FS were to cease to provide financial support to the Company, the Company may
face difficulties in obtaining any future funding or may not be able to raise any such future funding
on favourable terms. The Company has been notified that IL&FS intends to transfer its
shareholding in the Company to one of its subsidiaries in order to consolidate all its investments in
road sector projects into one entity. It is not known what, if any, effect this may have on the
Company’s relationship with IL&FS in the future.
Termination or breach of the Concession and Support Agreements
The Concession Agreement and the Support Agreement are essential to the Delhi Noida Toll Bridge
project. Termination or breach of the Concession Agreement by NOIDA or the Company could
adversely affect the operations and financial condition of the Company. In certain circumstances
the Company’s lenders are able to exercise step in rights and remove the Concession from the
Company by replacing it with another entity. Further, breach or termination of the Support
Agreement executed by Government of Uttar Pradesh or Delhi Government for extending
co-operation to NOIDA in relation to the Noida Toll Bridge project could adversely affect the
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operation of the Delhi Noida Toll Bridge. Because the Company is a special purpose vehicle with a
limited defects clause in its Memorandum of Association, any termination of the Concession
Agreement would force the Company to cease any commercial operations.
Projected level of traffic
The level of commercial traffic on the Delhi Noida Toll Bridge originally projected has not
materialised since inception. This has adversely affected the revenues from toll collection. Traffic
levels have been increasing and this may continue in the near future. However there is no guarantee
that the levels of traffic will be sustained at their current levels or increase further. If traffic levels
decrease or slowdown, this is likely to have a material adverse effect on the Company’s business,
future revenue, profitability and prospects.
Delay or cost over-run in the construction of new link
Any delay or possible problems (including any delay or non-receipt of the necessary approvals and
transfer of the requisite land) with the construction of the Mayur Vihar Link, could have an effect of
the projected traffic levels on the Delhi Noida Toll Bridge and in turn affect the revenues of the
Company. The Company requires the Government of Uttar Pradesh to lease the land required for
the construction of the Mayur Vihar Link to the Company. The Company has currently been given
no indication as to when it may expect the relevant land to be leased to it. The Traffic Consultant’s
Report and Business Valuation contained in Part IV of this document assumes that the Mayur
Vihar Link will be operational in January 2007 and that this would increase the traffic using the
Delhi Noida Toll Bridge. The Directors believe that it would take approximately 9 months to
complete the construction of the Mayur Vihar Link, once the relevant land has been leased to the
Company by the Government of Uttar Pradesh. Any delay in the lease of the relevant land to the
Company would result in ongoing breaches of the financial covenants imposed by the Company’s
lenders, and would adversely affect the Company’s business and profitability. Considerable capital
expenditure may be required for the construction of road projects, and the length of the
construction period and the capital required to complete any given project may be affected by
different factors such as, inter alia, disputes with workers or contractors, price increases, shortages
of construction materials, accidents or unforseen difficulties or changes in governmental policies.
Such events may give rise to delays or cost over-runs, and there can be no guarantee that the
proposed Mayur Vihar Link will be built within the expected timeframe or within the budgeted
cost. This could have a material effect on the Company’s revenue.
Toll Revenue collection
Intertoll India is the O&M contractor contractually responsible for operations and maintenance of
the Delhi Noida Toll Bridge as well as for toll collections. Intertoll India uses an Automatic Vehicle
Classification System, which has demonstrated accuracy levels of 99.5% for classification of
vehicles. However, there exists a risk of underreporting of toll revenues collected, which could have
a bearing on the financials of the Company.
Maintenance
The O&M Contract with Intertoll India provides for routine and periodic maintenance of the Delhi
Noida Toll Bridge including road surface overlays, replacement and maintenance of bridge
equipment. Poor maintenance of the Delhi Noida Toll Bridge might affect the flow of traffic on it
and consequently could have a bearing on the toll collections of the Company.
Under the terms of the O&M Contract, Intertoll India shall undertake repair works such as road
surface overlays, and the Company is responsible for reimbursing the expenditure incurred to
Intertoll India. Road surface overlay work will need to be carried out in respect of the Delhi Noida
Toll Bridge on a periodic basis, and the next road surface overlay is scheduled for 2009; the cost of
the road surface overlay scheduled for 2009 is expected to be in the region of Rs 58.75 million. In
the event that such work is delayed or not undertaken satisfactorily, then this may affect the flow of
traffic using the Delhi Noida Toll Bridge, and decrease the toll revenues available to the Company.
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Under the terms of the O&M Contract, the Company is also required to bear the cost of any major
repairs. The Concession Agreement provides that the cost of any major repairs shall be added to the
Total Project Cost which the Company is entitled to recoup; however, the Company would be
required to fund the cost of such major repairs itself, and then look to subsequently recoup such
amounts from the revenues derived from operating the Delhi Noida Toll Bridge.
There can be no guarantee that the Company will be able to find financing for any major repairs or
other repairs (such road surface overlays) on satisfactory terms or at all, and there can be no
guarantee that the Company will be adequately covered by insurance in respect of the events which
gave rise to the need for any such repairs. In the event that repairs or other works are required to be
undertaken, the profitability and operating results of the Company may be adversely affected. The
Directors do not currently anticipate the need for major repairs to be undertaken, although the
designer of the Delhi Noida Toll Bridge estimated its useful life at 70 years. There is therefore a risk
that major repairs will be required in the future.
Risk of termination of O&M contract
Intertoll Netherlands and Intertoll India are obligated to maintain their shareholdings in the
Company during the entire term of the O&M Contract. Intertoll India and Intertoll Netherlands
currently hold 10.62 million Ordinary Shares in the Company, representing approximately 8.6%
of the Existing Ordinary Shares. The Company, IL&FS, Intertoll (Pty) Limited, Intertoll
Netherlands and Intertoll India entered into a conditional agreement on 7 February 2006 to vary
certain aspects of the original O&M Contract, including the fee structure and the share sale
restrictions, which are beneficial to the business of the Company and its revenue generation
capacity (the “Variation Agreement”). The Variation Agreement is conditional upon the Company
and IL&FS obtaining the consent of certain of its lenders and certain of its key shareholders, within
the time limit specified or any time period as may be extended by Intertoll or Intertoll India, failing
which the Variation Agreement shall lapse and shall be of no further force and effect.
In the event that the Variation Agreement does not become unconditional the original fee structure
will continue to apply which would have an adverse impact on the financials of the Company,
including its debt servicing capacity. In addition, any termination of the O&M Contract by the
Intertoll India may temporarily halt the operations of the Company and consequently have a
bearing on the financials of the Company.
Assumption of temporary control
Under the terms of the Concession Agreement, NOIDA can assume temporary control of the Delhi
Noida Toll Bridge in the event of national or state emergency upon seven days written notice to the
Company.
Competition through extension of the Metro
The Delhi Metro Rail Corporation is proposing to extend the Connaught Place to Anand Vihar
ISBT line to Noida Sector 32 via Mayur Vihar. This metroline, which is scheduled to become
operational in 2010, will cater to traffic from the Central Delhi to Noida region. The Directors
believe that it is unlikely to impact traffic on Delhi Noida Toll Bridge as the Delhi Noida Toll Bridge
mainly caters to the Noida-South Delhi traffic comprising mainly of private modes of transport.
The Directors expect that the shift by commuters to Metro will primarily be from using other means
of public transport such as buses, to the Metro. However there are no guarantees that the metro will
not affect traffic levels on the Delhi Noida Toll Bridge. This in turn could have a material adverse
effect on the Company’s business, future revenue, profitability and prospects.
Competition
The Delhi Noida Toll Bridge is the only tolled facility, whereas, the other two bridges in the
influence area are toll free. The major competition is from the parallel bridges, Nizamuddin Bridge
and Okhla Barrage, primarily because they are free to use. An increase in capacity or traffic on
either of the Nizamuddin Bridge or the Ohkla Barrage may reduce the traffic levels of the Delhi
Noida Toll Bridge and in turn affect the revenues of the Company. This could have a material
adverse effect on the Company’s business, future revenue, profitability and prospects. However,
clause 5.4(a) of Support Agreement provides some protection against implementation of new
bridges, as summarised in paragraph 7.4 of Part VI of this Document.
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Kalindi Bypass Project
The Public Works Department of the Government of Delhi is proposing the alignment of the
Kalindi Bypass road project which would result in the Ring Road traffic traversing almost 1km of
the Toll Road leading to traffic congestion on the Delhi Noida Toll Bridge which may adversely
impact on traffic flow on the Delhi Noida Toll Bridge. The Government of Delhi has covenanted in
the Support Agreement that the alignment for the Delhi Noida Toll Bridge is of fundamental
importance and has undertaken not to propose or require any change in alignment at any point of
time.
The Company issued a legal notice on 15 December 2005 to the Public Works Department, the
Government of Delhi and their contractor, asking them to stop the work on the Kalindi Bypass
Road. The Company has proposed that the Government of Delhi finalise an alignment
configuration, which would be beneficial to the users of both the Delhi Noida Toll Bridge as well as
the public road.
Income from Advertising
The Company has obtained permission for all outdoor advertising within the municipal limits of
Delhi, from the Municipal Corporation of Delhi, which is the civic agency authorised to grant such
permission. However, the Company has not received any express approval for advertisements on
the Noida side. NOIDA has been kept informed of the Company’s activities. There remains a risk
that NOIDA may not approve of licensing of advertising rights on the Noida side of the Delhi
Noida Toll Bridge. In case advertisements on the Noida side are not permitted by NOIDA, the
revenue from the same will not accrue to the company. NOIDA has granted an ‘in principle’
approval for Development Rights, which would include provision of advertisement services as
defined in the Concession Agreement.
Company is involved in several litigation proceedings and cannot assure that it will prevail in these
actions
There are outstanding litigation proceedings against the Company. These legal proceedings are
pending at different levels of adjudication before various courts and tribunals. Should any new
developments arise, such as a change in Indian law or rulings against the Company by appellate
courts or tribunals, the Company may need to make provisions in its financial statements, which
could adversely impact its business results. Furthermore, if significant claims are determined
against the Company and it is required to pay all or a portion of the disputed amounts, it could have
a material adverse effect on its business and profitability. In particular, certain claims made against
the Company by the Indian governmental authorities, Mitsui Marubeni Corporation and
AFCONS are for significant amounts of money, and any ruling against the Company in connection
with any of those proceedings would have a material adverse impact upon the Company’s business
and profitability (details of such litigation are given respectively in paragraphs 11.2, 11.8 and 11.9
of Part VI). The Company regards the claims made by the Indian governmental authority and
AFCONS as remote and has not made any provision in respect of them. The Company does have a
provision of Rs 43 million which is currently allocated against the dispute with Mitsui Marubeni
Corporation. Details of such litigation are given in Section 11 of Part VI of this document.
Problems in implementation of the debt restructuring with respect to DDBs
The Company may face difficulties in implementation of the debt restructuring with respect to
DDBs especially from those DDB holders who have gone into Option two by default on account of
non-submission of documents with respect to exercise options granted to them under the Scheme of
Arrangement. The Company at the time of admission and placing has received certain legal notices
from certain DDB holders, in this respect.
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Demand for balance payment for acquisition of lands
The Land & Building Department of the Government of Delhi had acquired 151 acres of land for
the Delhi Noida Bridge project which was transferred to the Company. The amount of
compensation to be paid in respect of the land was Rs 73.7 million, out of which the Company had
remitted a sum of Rs 48.5 million in 1997 to the Land & Building Department. The Company has
received a letter, dated 10 March 2000, from the Land & Building Department, Government of
Delhi seeking remittance of the balance amount of Rs 25.2 million.
The Company has represented to the Land & Building Department that some of the lands currently
in possession of the Company would be required to be taken over for the Kalandi Bypass Project
being implemented by the Government of Delhi as well as for the Sports complex being
implemented by the Delhi Development Authority (DDA). The Company is not certain as to the
extent of land which may be required to be transferred to the Government of Delhi and DDA for
these projects. On determination of land to be transferred to the Government of Delhi and DDA,
the Company shall remit the balance due, if any. There is a risk that the Government of Delhi may
demand the payment of interest on the balance due, if any, which could increase the liability of the
Company.
Force Majeure
The operation of the existing Delhi Noida Toll Bridge and new projects that may be undertaken are
subject to events of force majeure, like earthquakes, epidemics, natural disasters and floods etc. The
occurrence of any of such events could have a material adverse effect on the business and
profitability of the Company. The Company has an insurance policy in respect of damage to the
Delhi Noida Toll Bridge; however, this policy contains exclusions in respect of certain causes of
damage such as war or radiation.
Environmental risks
The Company’s operations are, and will be, subject to environmental regulation. Environmental
regulations may evolve in a manner that will require stricter standards and enforcement measures
being implemented, increases in fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of responsibility for
companies and their directors and employees. Compliance with environmental regulations could
increase the Company’s costs and may have a material adverse effect on the business of the
company.
Economic and Political Risk
The Company’s current assets and operations are located in India where there may be risks over
which it will have no, or limited, control. These may include economic, social, or political
instability or change, hyperinflation, currency non-convertibility or instability and national interest
rates and changes of laws affecting foreign ownership, government participation, taxation,
working conditions, exchange control and customs duties as well as government control over
domestic production.
Hostilities in India and other countries in Asia
India has from time to time experienced instances of hostilities with neighbouring countries,
including Pakistan and China. Military activity or terrorist attacks in the future could influence the
Indian economy by disrupting communications and making travel more difficult and such political
tensions could create a greater perception that investments in Indian companies involve higher
degrees of risk. Events of this nature in the future, as well as social and civil unrest within other
countries in Asia, could influence the Indian economy and could have a material adverse effect on
the market for securities of Indian companies, including the GDRs and the Ordinary Shares, and on
the Company’s financial condition and results of operations. In addition, India has from time to
time experienced social and civil unrest due to religious strife. Such incidents could also create a
greater perception that investment in Indian companies involves a higher degree of risk and could
have a material adverse effect on the Company’s financial condition and results of operations and
the price of the Ordinary Shares and the GDRs.
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Dependence on consistent oil costs
The Company’s performance is necessarily dependent vehicle usage in India and consequently the
flow of user traffic on the Delhi Noida Toll Bridge. In particular, because India depends
significantly on imported oil for its energy needs, the vehicular traffic on the Delhi Noida Toll
Bridge could be adversely affected by the continuing upward trend in oil prices. This may adversely
affect the Company’s business and the results of its operations.
Financial instability in other countries, particularly emerging market countries
Although economic conditions are different in each country, investors’ reactions to developments
in one country may have an adverse effect on the securities of companies in other countries
including India. A loss of investor confidence in the financial systems of other emerging markets
may cause increased volatility in Indian financial markets and the Indian economy in general. Any
worldwide financial instability could also have a negative impact on the Indian economy, including
the movement of exchange rates, interest rates, the price of the shares and the GDRs.
Changes in the policies of the Government of India or political instability
Since 1991, successive Indian governments have pursued policies of economic liberalisation,
including significantly relaxing restrictions on the private sector and significantly reducing the roles
of the state governments in the Indian economy as producers, consumers and regulators. The
current Government of India, formed in May 2004, has announced policies and taken initiatives
that support the continued economic liberalisation pursued by previous governments. However,
this trend of liberalisation may not continue in the future. The rate of economic liberalisation could
change, and specific laws and policies affecting the civil infrastructure industry, foreign investment,
currency exchange and other matters affecting investment in the Company’s securities could
change as well. A significant change in India’s economic liberalisation and deregulation policies
could adversely affect business and economic conditions in India generally, as well as the
Company’s business.
The current Indian government is a coalition of several parties. The withdrawal of one or more of
these parties from the coalition could result in political instability. Any such instability could delay
the progress of the Indian economy and could have a material adverse effect on the market for
securities of Indian companies, including the GDRs and the shares.
There is a difference between the level of regulation and monitoring of the Indian securities markets
and the activities of investors, brokers and other participants in such markets and that of the
markets in the United Kingdom and other more developed countries. The SEBI is responsible for
setting standards for disclosure and other regulatory standards for the Indian securities markets.
While SEBI has issued regulations and guidelines on disclosure requirements, insider trading and
other matters, there may be less publicly available information about Indian companies than is
regularly made available by public companies in many more developed countries. As a result,
investors may have access to less information about the Company’s business, results of operations
and financial condition, and those of the Company’s competitors that are listed on Indian stock
exchanges, on an ongoing basis, than may be available in the case of companies subject to the
reporting requirements of other more developed countries.
Investors may have difficulty enforcing judgments against the Company or the Company’s
management
The Company is a limited liability company incorporated under the laws of India. All of the
Company’s Directors and executive officers named in this document are residents of India. Further,
all of the Company’s assets and the assets of such persons are located in India. As a result, it may not
be possible for investors to effect service of process upon the Company or such persons in
jurisdictions outside India or to enforce judgments obtained against the Company or such persons
outside India. India is not a party to any international treaty in relation to the recognition or
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enforcement of foreign judgments. Instead, recognition and enforcement of foreign judgments is
provided for under Section 13 of the Code of Civil Procedure, 1908 (the “Civil Code”). Section 13
of the Civil Code provides that a foreign judgment shall be conclusive as to any matter thereby
directly adjudicated upon except (i) where it has not been pronounced by a court of competent
jurisdiction, (ii) where it has not been given on the merits of the case, (iii) where it appears on the
face of the proceedings to be founded on an incorrect view of international law or a refusal to
recognise the law of India in cases where such law is applicable, (iv) where the proceedings in which
the judgment was obtained were opposed to natural justice, (v) where it has been obtained by fraud
or (vi) where it sustains a claim founded on a breach of any law in force in India.
Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a
superior court in any country or territory outside India which the Government has by notification
declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if
the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil
Code is applicable only to monetary decrees not being in the nature of any amounts payable in
respect of taxes or other charges of a like nature or in respect of a fine or other penalty.
The UK has been declared by the Government of India to be a reciprocating territory. Accordingly,
a judgment of a court in the UK may be enforced in India by proceedings in execution. The suit must
be brought in India within three years from the date of the judgment in the same manner as any
other suit filed to enforce a civil liability in India. A party seeking to enforce a foreign judgment in
India is required to obtain approval from the RBI to repatriate outside India any amount recovered.
Currency risk
The price of the GDRs is quoted in US dollars. The Company’s revenues and costs are denominated
in US dollars and Rs therefore a fluctuation in the exchange rate between US dollars or Rs could
result in a material adverse effect on the market price of the GDRs.
The price of the GDRs will be quoted in US dollars. The Ordinary Shares are quoted in Rs on the
stock exchanges in India. Any dividends in respect of the Ordinary Shares will be paid in Rs and
subsequently converted into US dollars for distribution to GDR Holders. GDR Holders who seek
to convert the Rs proceeds from a sale of shares in India into foreign currency and repatriate that
foreign currency from India may have to obtain RBI approval. A delay in obtaining such approval
could adversely affect the rate of exchange available for such conversion.
The exchange rate between the Rs and the US dollar has changed substantially in the last two
decades and could fluctuate substantially in the future resulting in a material adverse effect on the
value of the GDRs and the Ordinary Shares represented by the GDRs. In addition, any delay in
obtaining any necessary approvals from the RBI for such conversion could adversely affect the rate
of exchange available for such conversion.
Indian dividend taxes or surcharges could negatively affect the Company’s tax liability
The Finance Act, 2005 has fixed the tax on dividends declared, distributed or paid by Indian
companies at 12.5%, and levied a surcharge of 10% on tax and education cess of 2% on tax and
surcharge. The dividends are taxable in the hands of the companies at the rates applicable to them.
Presently the corporate tax rates applied to the income of the company in India is 30% plus a
surcharge of 10% of such tax and education cess of 2% on tax and surcharge, aggregating to
33.66%. If the Company declare/distributes a dividend, the Company is required to pay additional
income tax at a rate of 14.025% (including a surcharge of 10% and education cess of 2% on tax
and surcharge) on the dividend so declared or distributed. Any future changes in tax rates in India
on income or the imposition of any additional taxes or surcharges could adversely affect the
Company’s tax liability.
The Government of India may in the future increase the surcharges and dividend distribution taxes
it imposes. Any future increase in dividend distribution taxes or surcharges could negatively affect
the Company’s tax liability.
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Differences between Indian GAAP and IFRS
Indian GAAP differs from accounting principles with which prospective investors may be familiar
in other countries, such as IFRS. Although the financial statements included in this AIM Document
are prepared and presented in conformity with IFRS, investors should rely upon their own
examination of the Company, the terms and the financial information contained in this Document.
There is no guarantee that the Ordinary Shares underlying the GDRs will be listed on the BSE and
NSE
Application for listing of the Company’s Ordinary Shares underlying the GDRs will not be made
until after such Ordinary Shares and the GDRs representing such Ordinary Shares have been issued
and allotted.
The Company’s Ordinary Shares are listed on the BSE and the NSE. The Company has applied for
and received in-principle listing approvals for the listing of the Company’s Ordinary Shares
underlying the GDRs with the BSE and the NSE. Final application for listing of the Company’s
Ordinary Shares underlying the GDRs will not, in accordance with Indian law and practice, be
made until after such Ordinary Shares and the GDRs representing them have been issued and
allotted. The Company’s Ordinary Shares evidenced by the GDRs may be withdrawn from the
depositary facility only after the listing of the underlying Ordinary Shares on the Indian Stock
Exchanges and only after such Ordinary Shares have been dematerialised. Listing on the Indian
Stock Exchange is expected to occur within 30 to 45 days from the Closing but there can be no
assurance that such listing will occur within such period, or at all.
Future issues or sales of the Company’s shares may significantly affect the trading price of the GDRs
or the Company’s Shares
The future issue of the Company’s shares or the disposal of shares by any of the Company’s
significant shareholders or the perception that such issues or sales may occur, may significantly
affect the trading price of the GDRs or the shares. Except for such restrictions in the Act or the
Articles, there is no restriction on the Company’s ability to issue shares or on its significant
shareholders to sell their shares. The Company can make no prediction as to the timing of any sales
of the Company’s shares or the effect, if any, that future sales of shares, or the availability of the
Company’s shares for future sale will have on the market price of shares or GDRs prevailing from
time to time.
Holders of GDRs may be restricted in their ability to exercise pre-emptive rights under Indian law
and thereby may suffer future dilution of their ownership position
Under the Act, a company incorporated in India must offer its holders of equity shares pre-emptive
rights to subscribe and pay for a proportionate number of shares to maintain their existing
ownership percentages prior to the issuance of any new equity shares, unless the pre-emptive rights
have been waived by adopting a special resolution passed by 75% of the shareholders present and
voting at a general meeting. Holders of the GDRs may be unable to exercise pre-emptive rights for
equity shares underlying GDRs. In the case of future issuances, pre-emptive rights may be exercised
by the Depositary, which may sell the securities for the benefit of the holders of the GDRs. The
value, if any, the Depositary would receive upon the sale of such securities, or whether the
Depositary would be able to sell such securities at all, cannot be predicted. To the extent that
holders of GDRs are unable to exercise pre-emptive rights granted in respect of the equity shares
represented by their GDRs, their proportional interests in the Company would be reduced.
A third party could be prevented from acquiring control of the Company because of the takeover
regulations under Indian law
Indian takeover regulations contain certain provisions that may delay, deter or prevent a future
takeover or change in control of the Company. These provisions may discourage or prevent a third
party from attempting to take control of the Company, even if a change in control would result in
the purchase of the GDRs or underlying shares at a premium to the market price or would otherwise
be beneficial to the GDR holders or the Company’s shareholders.
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Taxation
The Company believes that adequate provisions have been made in the IFRS accounts for tax
liabilities which may arise if the relevant tax authorities view the Company’s or its subsidiaries’
historic tax affairs in an unfavourable light. The Company’s business, results of operations and
prospects and the value of its Ordinary Shares could be adversely affected if actual tax liabilities
exceed such provisions.
The Company, and the rights of its shareholders, are governed by Indian law
The Company is incorporated under the laws of India and the Company and the rights of
shareholders are governed by Indian law and regulation and by the Articles. The rights of the GDR
Holders will, accordingly and in certain respects, be governed or affected by Indian law and
regulation, and by the Articles. These shareholder rights, and the rights of the Holders of GDRs,
may differ from the typical rights of shareholders or the Holders of securities in the United Kingdom
and other jurisdictions.
Investment Risk and AIM
The GDRs will be quoted on AIM rather than the Official List. The AIM Rules are less demanding
than those of the Official List and an investment in securities quoted on AIM may carry a higher risk
than an investment in securities quoted on the Official List. AIM has been in existence since June
1995 but its future success and liquidity in the market for the Company’s securities cannot be
guaranteed. Investors should be aware that the value of the GDRs may be volatile and may go down
as well as up and investors may therefore not recover their original investment.
The market price of the GDRs may not reflect the underlying value of the Company’s net assets. The
price at which investors may dispose of their GDRs in the Company may be influenced by a number
of factors, some of which may be outside the Company’s control. On any disposal investors may
realise less than the original amount invested.
Stock markets have also from time to time experienced extreme price and volume fluctuations,
which have affected the market prices of securities and which have been unrelated to the operating
performance of the companies affected. These broad market fluctuations, as well as general
economic and political conditions could adversely affect the market price of the GDRs.
There are very few GDRs admitted to trading on AIM, and there can be no assurance that this will
not have an adverse effect on the liquidity of the GDRs in the secondary market following
Admission. In addition, the regulatory requirements for trading GDRs on AIM may change
following Admission, and compliance with any such new or additional requirements could prove
costly and time consuming to the Company.
Admission to AIM should not be taken as implying that there will be a liquid market for the GDRs.
Prior to Admission, there has been no public market for the GDRs and there is no guarantee that an
active market will develop or be sustained after Admission.
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PART III
Information on the GDRs
1.
The Deposit Agreement
The GDRs are constituted by the Deposit Agreement as made between the Company and the
Depositary dated on or about the date of Admission, pursuant to the Depositary Receipt Scheme.
Under the terms of the Deposit Agreement, the Company issues the New Ordinary Shares (and any
Ordinary Shares issued under the Over-allotment Option) to the Depositary and delivers the share
certificate(s) for the New Ordinary Shares (and any Ordinary Shares issued under the
Over-allotment Option) to the Custodian, acting on behalf of the Depositary. Initially, the
Depositary will issue a single “Master GDR” registered in the name of a common nominee, so that
each individual Holder will hold an interest in such Master GDR. Individual Holders may
subsequently, in accordance with the terms and conditions of the Deposit Agreement and the
GDRs, exchange their interest in the Master GDR for definitive certificates representing their
individual interest in the GDRs. The terms and conditions applicable to the GDRs are set out in
Schedule One to the Deposit Agreement, and will be attached to each definitive certificate issued to
a Holder. These Conditions are set out in their entirety at Section 3 below. Further details of the
Deposit Agreement are set out in paragraph 7.2 of Part VI of this document.
2.
Information Relating to the Depositary
The Depositary was incorporated in 1903 as a bank with limited liability in the State of New York
and is an indirect wholly owned subsidiary of Deutsche Bank AG. The Depositary is subject to
regulation and supervision by the New York State Banking Department, the Federal Reserve Board
and the Federal Deposit Insurance Corporation. The registered office of the Depositary is located at
60 Wall Street, New York NY 10005, and the registered number is BR1026. A copy of the
Depositary’s By-laws, as amended, together with copies of the most recent financial statements and
annual report of the Depositary will be available for inspection at the principal administrative
establishment of the Depositary located at 60 Wall Street, DR Department, 27th Floor, New York
NY10005, and at the office of the Depositary located at Winchester House, 1 Great Winchester
Street, London EC2N 2DB. Such information will be updated as long as the GDRs are admitted to
trading on AIM and Deutsche Bank Trust Company Americas is the Depositary.
3.
Terms and Conditions of the Global Depositary Receipts
The GDRs are each issued in respect of 5 Ordinary Shares of par value Rs10 each (the “Shares”) in
the ‘Company pursuant to and subject to the Deposit Agreement. Pursuant to the provisions of the
Deposit Agreement, the Depositary has appointed the Custodian (as defined below) to receive and
hold on its behalf the share certificates (if any) in respect of the Ordinary Shares registered in the
name of the Depositary (the “Deposited Shares”) and all rights, securities, property and cash
deposited with the Custodian which are attributable to the Deposited Shares (together with the
Deposited Shares, the “Deposited Property”). The Depositary shall hold Deposited Shares for the
benefit of the Holders in proportion to the number of New Ordinary Shares in respect of which the
GDRs held by them are issued. In the terms and conditions of the GDRs (the “Conditions”),
references to the “Depositary” are to Deutsche Bank Trust Company Americas and/or any other
Depositary which may from time to time be appointed under the Deposit Agreement, references to
the “Custodian” are to ICICI Bank Limited or any other Custodian from time to time appointed
under the Deposit Agreement and references to the “Office” mean, in relation to the Custodian, its
office at North Tower 2nd Floor, ICICI Towers, Banda Kurla Complex Mumbai 400051 India (or
such other office as from time to time may be designated by the Custodian with the approval of the
Depositary).
The Company has granted Collins Stewart Limited (“Collins Stewart”) an option pursuant to
which Collins Stewart may require the Company to allot additional Shares (the “Over-allotment
Shares”), up to a maximum of 10% of the total number of Shares placed by Collins Stewart (the
“Placement Shares”) pursuant to a placing agreement dated 15 March 2006, between, amongst
others the Company and Collins Stewart (the “Over-allotment Option”) and instruct the
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Depositary to issue Collins Stewart with a representative number of GDRs (the “Over-allotment
GDRs”). The Over-allotment Option is exercisable in whole or in part at any time up to and
including the date which is the 21st calendar day after commencement of conditional dealings in the
GDRs on AIM (the “Option Expiry Date”). Any Over-allotment GDRs issued by the Depositary
will be issued on the same terms and conditions as the GDRs issued in respect of the Placement
Shares (the “Placement GDRs”) and will form a single class for all purposes with the Placement
GDRs. In the event the Over-allotment Option is exercised references in these Conditions to
“GDRs” shall be deemed to include the Over-allotment GDRs and the Placement GDRs and
references to “Deposited Shares” shall be deemed to include the Placement Shares and the
Over-allotment Shares.
GDRs may take the form of GDRs evidenced by one or more Master GDRs (each a “Master
GDR”) registered in the name of a common nominee for, and held by the common depositary for,
Clearstream, Luxembourg and Euroclear, and held for the account of accountholders in
Clearstream, Luxembourg or Euroclear, as the case may be, exchangeable, at the option of the
Holder of such Master GDR and at the expense of any person shown in the records of Clearstream,
Luxembourg or Euroclear as the owner of a GDR and upon delivery to the Depositary of a
certificate substantially in the form of Schedule 3, Part A of the Deposit Agreement, for a certificate
in definitive registered form in respect of GDRs evidenced all or part of the interest of such person in
such Master GDR.
If at any time when Deposited Shares are evidenced by a Master GDR, the Holder of such Master
GDR is unwilling or unable to continue as a common depositary or a nominee thereof and a
successor common depositary is not appointed within 90 calendar days or the Depositary has
determined that, on the occasion of the next payment in respect of the GDRs, the Depositary or its
Agent would be required to make any deduction or withholding (in respect of any tax or
governmental charges) from any payment in respect of the GDRs which would not be required
were the GDRs represented by certificates in definitive registered form, the Depositary will make
available certificates in definitive form in respect of GDRs. If at any time when Deposited Shares are
evidenced by a Master GDR, Clearstream, Luxembourg or Euroclear announces an intention to
cease business or does in fact do so, the Company will consult with the Depositary regarding other
arrangements for book-entry settlement of interests in such Master GDR. If no alternative clearing
system satisfactory to the Depositary is available, the Company will instruct the Depositary to
make available certificates in definitive registered form in respect of GDRs.
Under the terms of the GDRs, each purchaser of GDRs is deemed to have represented and agreed,
among other things, that (a) the GDRs have not been and will not be registered under the US
Securities Act of 1933, as amended (“Securities Act”) and may be offered, sold, pledged or
otherwise transferred only in a transaction exempt from the registration requirements of the
Securities Act and (b) the GDRs may not be offered, sold, pledged or otherwise transferred to any
person located in India, residents of India, or to, or for the account or benefit of, such persons. Each
GDR will contain a legend to the foregoing effect.
References in the Conditions to the “Holder” of any GDR shall mean the person registered as
Holder on the books of the Depositary maintained for such purpose. The Conditions include
summaries of, and are subject to, the detailed provisions of the Deposit Agreement, which includes
the forms of the certificate in respect of the GDRs. Copies of the Deposit Agreement are available
for inspection at the specified office of the Depositary and each Agent (as defined in Condition 17)
and at the Office of the Custodian. Holders are deemed to have notice of and be bound by all of the
provisions of the Deposit Agreement. Terms used in these Conditions and not defined therein but
which are defined in the Deposit Agreement have the meanings ascribed to them in the Deposit
Agreement.
Condition 1 Deposit of Shares and Other Securities
(A) After the initial deposit of Shares by the Company in respect of each GDR, unless otherwise
agreed by the Depositary and the Company and permitted by applicable law, only the
following may be deposited under the Deposit Agreement in respect of such GDR:
(i)
Shares issued as a dividend or free distribution on Deposited Shares pursuant to
Condition 5;
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Shares subscribed or acquired by Holders from the Company through the exercise of
rights distributed by the Company to such persons in respect of Deposited Shares
pursuant to Condition 7;
(iii) securities issued by the Company to the Holders in respect of Deposited Shares as a
result of any change in the par value, sub-division, consolidation or other
reclassification of Deposited Shares or otherwise pursuant to Condition 10. References
in these Conditions to “Deposited Shares” or “Shares” shall include any such
securities, where the context permits; and
(iv)
(B)
(to the extent permitted by applicable law and regulation) any other Shares in issue.
The Depositary will issue GDRs in respect of Shares accepted for deposit under this
Condition. Under the Deposit Agreement, the Company must inform the Depositary if any
Shares issued by it which may be deposited under this Condition do not, by reason of the date
of issue or otherwise, rank pari passu in all respects with the other Deposited Shares. Subject
to the provisions of Conditions 5, 7 and 10, if the Depositary accepts such Shares for deposit it
will arrange for the issue of temporary GDRs in respect of such Shares which will form a
different class of GDRs from the other GDRs until such time as the Shares which they
represent become fully fungible with the other Deposited Shares.
Shares may not be deposited by such persons who are not authorised to do so under Indian
regulations. Subject to the terms and conditions of the Deposit Agreement and applicable
law, upon physical delivery to the Custodian of Shares, delivery to the Depositary of a
certificate substantially in the form of Schedule 3, Part C of the Deposit Agreement and
available from the Depositary or the Custodian and payment of necessary taxes,
governmental charges (including transfer taxes) and other charges as set forth in the Deposit
Agreement, the Depositary will adjust its records for the number of GDRs issued in respect of
the Shares so deposited and will notify the Common Depositary, as the case may be, as to the
increase in the number of GDRs evidenced by a Master GDR. Each person receiving a GDR
or interest therein will be deemed to make the representations, covenants and
acknowledgements set forth under “Transfer Restrictions”.
(C)
The Depositary will refuse to accept Shares for deposit whenever it is notified in writing that
the Company has restricted the transfer of such Shares to comply with ownership restrictions
under applicable Indian law or that such deposit would result in any violation of any
applicable Indian laws or governmental or stock exchange regulations. The Depositary may
also refuse to accept Shares for deposit in certain other circumstances as set out in the Deposit
Agreement.
(D)
Subject to the limitations set forth in the Deposit Agreement, the Depositary may (but is not
required to) issue GDRs prior to the delivery to it of Shares in respect of which such GDRs are
to be issued.
Condition 2 Withdrawal of Deposited Property
(A) Deposited Property may not be withdrawn before: (a) if the Over-allotment Option is
exercised, the date the Depositary has received written confirmations from the Company that
the Placement Shares and the Over-allotment Shares are listed on the Indian Stock
Exchanges; and (b) if the Over-allotment Option is not exercised, the later of the day after the
Option Expiry Date and the date the Depositary has received written confirmation from the
Company that the Deposited Shares are listed on the Indian Stock Exchanges. In any case the
Deposited Property may not be withdrawn before the day after the Option Expiry Date. The
Depositary shall notify the Holders of such listings in accordance with Condition 23 as soon
as is practically possible after receiving such written confirmation.
Subject as set out above, any Holder may request withdrawal of, and the Depositary shall
thereupon relinquish, the Deposited Property attributable to any GDR upon production of
such evidence that such person is the Holder of, and entitled to, the relative GDR as the
Depositary may reasonably require at the specified office of the Depositary or any Agent
accompanied by:
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(i)
a duly executed order (in a form approved by the Depositary) requesting the Depositary
to cause the Deposited Property being withdrawn to be delivered at the Office of the
Custodian, or (at the request, risk and expense of the Holder) at the specified office
from time to time of the Depositary or any Agent (located in India or such other place as
permitted under applicable law from time to time) to, or to the order in writing of, the
person or persons designated in such order and a certificate substantially in the form of
Schedule 3, Part B of the Deposit Agreement and available from the Depositary or the
Custodian;
(ii)
the payment of such fees, duties, charges and expenses as may be required under these
Conditions or the Deposit Agreement; and
(iii) the surrender (if appropriate) of GDR certificates in definitive registered form to which
the Deposited Property being withdrawn is attributable.
(B)
Certificates for withdrawn Deposited Shares will contain such legends and withdrawals of
Deposited Shares may be subject to such transfer restrictions or certifications, as the
Company or the Depositary may from time to time determine to be necessary for compliance
with applicable laws.
The Board of Directors of the Company may in certain circumstances refuse to register the
transfer of Deposited Shares from the name of the Depositary or its nominee. A stamp duty of
0.25% of the market value of Shares is currently payable in respect of any transfer of Shares in
physical form. This duty is payable by the relevant Holder. Currently, in accordance with
Indian regulations – for companies listed on an Indian stock exchange, the delivery of
underlying Shares of GDRs shall only be in the dematerialised form and stock exchanges may
not accept delivery of underlying Shares of GDRs in physical form. In addition, it may be
necessary to obtain the approval of (i) the Reserve Bank of India for Shares, such as
withdrawn Deposited Shares, to be registered in the name of a person who is a resident of
India and (ii) the Foreign Investment Promotion Board for Shares such as withdrawn
Deposited Shares, to be registered in the name of certain categories of persons who are not
residents of India. Holders are advised to seek independent legal advice in relation to transfer
and requirement of approval issues.
(C)
Upon production of such documentation and the making of such payment as aforesaid in
accordance with paragraph (A) of this Condition, the Depositary will direct the Custodian,
within a reasonable time after receiving such direction from such Holder, to deliver at its
office to, or to the order in writing of, the person or persons designated in the accompanying
order:
(i)
a certificate for, or other appropriate instrument of title to, the relevant Deposited
Shares, registered in the name of the Depositary or its nominee and accompanied by
such instruments of transfer in blank or to the person or persons specified in the order
for withdrawal and such other documents, if any, as are required by law for the transfer
thereof; and
(ii)
all other property forming part of the Deposited Property attributable to such GDR,
accompanied, if required by law, by one or more duly executed endorsements or
instruments of transfer in respect thereof as aforesaid;
provided that the Depositary (at the request, risk and expense of any Holder so surrendering a
GDR)
(a)
will direct the Custodian to deliver the certificates for, or other instruments of title to,
the relevant Deposited Shares and any document relative thereto and any other
documents referred to in sub-paragraph (C)(i) of this Condition (together with any
other property forming part of the Deposited Property which may be held by the
Custodian or its Agent and is attributable to such Deposited Shares); and/or
(b)
will deliver any other property forming part of the Deposited Property which may be
held by the Depositary and is attributable to such GDR (accompanied by such
instruments of transfer in blank or to the person or persons specified in such order and
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ID Number: 6306
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such other documents, if any, as are required by law for the transfer thereto), in each
case to the specified office from time to time of the Depositary or, if any, any Agent
(located in India or such other place as is permitted under applicable law from time to
time) as designated by the surrendering Holder in such accompanying order as
aforesaid.
(D)
Delivery by the Depositary, any Agent and the Custodian of all certificates, instruments,
dividends or other property forming part of the Deposited Property as specified in this
Condition will be made subject to any laws or regulations applicable thereto.
(E)
The Depositary may suspend the withdrawal of all or any category of Deposited Property
during any period when the register of shareholders or other relevant holders of other
securities of the Company is closed, generally or in one or more localities, or in order to
comply with any applicable Indian law or governmental or stock exchange regulations. The
Depositary shall restrict the withdrawal of Deposited Shares whenever it is notified in writing
that such withdrawal would result in a breach of ownership restrictions under applicable
Indian law.
Condition 3 Transfer and Ownership
GDRs are in registered form each issued in respect of 5 Shares. Title to the GDRs passes by
registration in the records of the Depositary. The Depositary will refuse to accept for transfer any
GDRs if it reasonably believes that such transfer would result in a violation of applicable laws. The
Holder of any GDR will (except as otherwise required by law) be treated as its absolute owner for
all purposes (whether or not any payment or other distribution in respect of such GDR is overdue
and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or
loss of, any certificate issued in respect of it) and no person will be liable for so treating the Holder.
The Deposit Agreement defines the “owner of GDRs” as, in respect of any GDR represented by a
Master GDR, such person whose name appears in the records of Clearstream, Luxembourg or
Euroclear and, in respect of any other GDR, the Holder thereof and “beneficial owner of GDRs” as
a person holding beneficial title to such GDRs or interests therein.
Condition 4 Cash Distributions
Whenever the Depositary shall receive from the Company any cash dividend or other cash
distribution on or in respect of the Deposited Shares (including any amounts received in the
liquidation of the Company) or otherwise in connection with the Deposited Property, the
Depositary, its Agent or Custodian shall as soon as practicable convert the same into US Dollars in
accordance with Condition 8. The Depositary shall, if practicable in the reasonable opinion of the
Depositary, give notice to the Holders of its receipt of such payment in accordance with Condition
23, specifying the amount per Deposited Share payable in respect of such dividend or distribution
and the date, determined by the Depositary, for such payment and shall as soon as practicable
distribute any such amounts to the Holders in proportion to the number of Deposited Shares
represented by the GDRs so held by them respectively, subject to and in accordance with the
provisions of Conditions 9 and 11; provided that:
(a)
in the event that any Deposited Shares shall not be entitled, by reason of the date of issue or
transfer or otherwise, to such full proportionate amount, the amount so distributed to the
relative Holders shall be adjusted accordingly; and
(b)
the Depositary will distribute only such amounts of cash dividends and other distributions as
may be distributed without attributing to any GDR a fraction of the lowest integral unit of
currency in which the distribution is made by the Depositary and any balance remaining shall
be retained by the Depositary beneficially as an additional fee under Condition 16(A)(iv).
Condition 5 Distributions of Shares
Whenever the Depositary shall receive from the Company any distribution in respect of Deposited
Shares which consists of a dividend in, or free distribution or bonus issue of, Shares, the Depositary
shall cause to be distributed to the Holders entitled thereto, in proportion to the number of
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Deposited Shares represented by the GDRs held by them respectively, additional GDRs
representing an aggregate number of Shares received pursuant to such dividend or distribution by
an increase in the number of GDRs evidenced by the Master GDR or an issue of certificates in
definitive registered form in respect of GDRs, according to the manner in which the Holders hold
their GDRs; provided that, if and in so far as the Depositary deems any such distribution to all or
any Holders not to be reasonably practicable (including, without limitation, owing to the fractions
which would otherwise result or to any requirement that the Company, the Custodian or the
Depositary withhold an amount on account of taxes or other governmental charges) or to be
unlawful, the Depositary shall sell such Shares so received (either by public or private sale and
otherwise at its discretion, subject to Indian laws and regulations) and distribute the net proceeds of
such sale as a cash distribution pursuant to Condition 4 to the Holders entitled thereto.
Condition 6 Distributions Other than in Cash or Shares
Whenever the Depositary shall receive from the Company any dividend or distribution in securities
(other than Shares) or in other property (other than cash) on or in respect of the Deposited Property,
the Depositary shall distribute or cause to be distributed such securities or other property to the
Holders entitled thereto, in proportion to the number of Deposited Shares represented by the GDRs
held by them respectively, in any manner that the Depositary may deem equitable and practicable
for effecting such distribution; provided that, if and in so far as the Depositary deems any such
distribution to all or any Holders not to be reasonably practicable (including, without limitation,
due to the fractions which would otherwise result or to any requirement that the Company, the
Custodian or the Depositary withhold an amount on account of taxes or other governmental
charges) or to be unlawful, the Depositary shall sell the securities or property so received, or any
part thereof, (either by public or private sale and otherwise at its discretion, subject to Indian laws
and regulations) and distribute the net proceeds of such sale as a cash distribution pursuant to
Condition 4 to the Holders entitled thereto.
Condition 7 Rights Issues
If and whenever the Company announces its intention to make any offer or invitation to the holders
of Shares to subscribe for or to acquire Shares, securities or other assets by way of rights, the
Depositary shall as soon as practicable give notice to the Holders in accordance with Condition 23
of such offer or invitation specifying, if applicable, the earliest date established for acceptance
thereof, the last date established for acceptance thereof and the manner by which and time during
which Holders may request the Depositary to exercise such rights as provided below or, if such be
the case, give details of how the Depositary proposes to distribute the rights or the proceeds of sale.
The Depositary will deal with such rights in the manner described below:
(i)
if at its discretion, the Depositary shall be satisfied that it is lawful and reasonably practicable
and, to the extent that it is so satisfied, the Depositary shall make arrangements whereby the
Holders may, upon payment of the subscription price in Rupees or other currency (where
appropriate) together with such fees, taxes, duties, charges, costs and expenses as may be
required under the Deposit Agreement and completion of such undertakings, declarations,
certifications and other documents as the Depositary may reasonably require, request the
Depositary to exercise such rights on their behalf with respect to the Deposited Shares and in
the case of Shares so subscribed or acquired to distribute them to the Holders entitled thereto
by an increase in the numbers of GDRs evidenced by the Master GDR or an issue of
certificates in definitive form in respect of GDRs, according to the manner in which the
Holders hold their GDRs; or
(ii)
if, at its discretion, the Depositary shall be satisfied that it is lawful and reasonably practicable
and to the extent that it is so satisfied, the Depositary shall distribute such securities or other
assets by way of rights or the rights themselves to the Holders entitled thereto in proportion to
the number of Deposited Shares represented by the GDRs held by them respectively in such
manner as the Depositary may at its discretion determine; or
(iii) if and in so far as the Depositary is not satisfied that any such arrangement and distribution to
all or any Holders is lawful and reasonably practicable (including, without limitation, owing
to the fractions which would otherwise result or to any requirement that the Company, the
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Custodian or the Depositary withhold an amount on account of taxes or other governmental
charges) or is so satisfied that it is unlawful, the Depositary will, provided that Holders have
not taken up rights through the Depositary as provided in (i) above, sell such rights (either by
public or private sale and otherwise at its discretion subject to Indian laws and regulations)
and distribute the net proceeds of such sale as a cash distribution pursuant to Condition 4 to
the Holders entitled thereto except to the extent prohibited by applicable law.
If at the time of the offering of any rights, at its discretion, the Depositary shall be satisfied that it is
not lawful or practicable (for reasons outside its control) to dispose of the rights in any manner
provided in (i), (ii) or (iii) above the Depositary shall permit the rights to lapse. In the absence of its
own wilful default, negligence or bad faith the Depositary will not be responsible for any failure to
determine that it may be lawful or practicable to make rights available to Holders in general or to
any Holder in particular.
The Company has agreed in the Deposit Agreement that it will, unless prohibited by applicable law,
give its consent to, and, if requested, use all reasonable endeavours (subject to the next paragraph)
to facilitate any such distribution, sale or subscription by the Depositary or the Holders, as the case
may be, pursuant to Condition 4, 5, 6, 7 or 10.
If the Company notifies the Depositary that registration is required in any jurisdiction under any
applicable law of the rights, securities or other property to be distributed under Condition 4, 5, 6, 7
or 10 or the securities to which such rights relate, in order for the Depositary to offer such rights or
distribute such securities or other property to the Holders or owners of GDRs and to sell the
securities represented by such rights, the Depositary will not offer such rights or distribute such
securities or other property to Holders of GDRs unless and until the Company procures at the
Company’s expense, the receipt by the Depositary of an opinion from counsel satisfactory to the
Depositary that the necessary registration has been effected or that the offer and sale of such rights,
securities or property to Holders of GDRs are exempt of registration. Neither the Company nor the
Depositary shall be liable to register such rights, securities or other property or the securities to
which such rights relate and they shall not be liable for any losses, damages or expenses resulting
from any failure to do so.
Condition 8 Conversion of Foreign Currency
Whenever the Depositary shall receive any currency other than US Dollars by way of dividend or
other distribution or as the net proceeds from the sale of securities, other property or rights, and if at
the time of the receipt thereof the currency so received can in the judgement of the Depositary be
converted on a reasonable basis into US Dollars and distributed to the Holders entitled thereto, the
Depositary shall as soon as practicable itself convert or cause to be converted by another bank, by
sale or in any other manner that it may determine, the currency so received into US Dollars. If such
conversion or distribution can be effected only with the approval or license of any government or
agency thereof, the Depositary, with the assistance of the Company, shall make reasonable efforts
to apply, or procure that an application be made, for such approval or license, if any, as it may
consider necessary. If at any time the Depositary shall determine that in its judgment any currency
other than US Dollars is not convertible on a reasonable basis into US Dollars and distributable to
the Holders entitled thereto, or if any approval or license of any government or agency thereof
which is required for such conversion is denied or, in the opinion of the Depositary, is not
obtainable, or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute such other currency received by it (or
an appropriate document evidencing the right to receive such other currency) to the Holders
entitled thereto to the extent permitted under applicable law, or the Depositary may in its discretion
hold such other currency for the benefit of the Holders entitled thereto. If any conversion of any
such currency can be effected in whole or in part for distribution to some (but not all) Holders
entitled thereto, the Depositary may in its discretion make such conversion and distribution in US
Dollars to the extent possible to the Holders entitled thereto and may distribute the balance of such
other currency received by the Depositary to, or hold such balance on non-interest bearing accounts
for the account of, the Holders entitled thereto and notify the Holders accordingly.
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Condition 9 Distribution of any Payments
(A) Any distribution of cash under Condition 4, 5, 6, 7 or 10 will be made by the Depositary to
those Holders who are Holders of record on the record date established by the Depositary
(which shall be the same date as the corresponding record date set by the Company or, if
different from the record date set by the Company, shall be set after consultation with the
Company and shall be as near as practicable to any record date set by the Company) for that
purpose and, if practicable in the opinion of the Depositary, notice shall be given promptly to
Holders in accordance with Condition 23, in each case subject to any laws or regulations
applicable thereto and (subject to the provisions of Condition 8) distributions will be made in
US Dollars by cheque drawn upon a bank in London or, in the case of the Master GDR,
according to usual practice between the Depositary and Clearstream Banking société
anonyme (“Clearstream, Luxembourg”) and Euroclear Bank S.A./N.V., as operator of the
Euroclear System (“Euroclear”), as the case may be. The Depositary or the Agent, as the case
may be, may deduct and retain from all moneys due in respect of such GDR in accordance
with the Deposit Agreement all fees, taxes, duties, charges, costs and expenses which may
become or have become payable under the Deposit Agreement or under applicable law in
respect of such GDR or the relative Deposited Property.
(B) Delivery of any securities or other property or rights other than cash shall be made as soon as
practicable to the entitled Holder, subject to any laws or regulations applicable thereto. If any
distribution made by the Company with respect to the Deposited Property and received by
the Depositary shall remain unclaimed at the end of 12 years from the first date upon which
such distribution is made available to Holders in accordance with the Deposit Agreement, all
rights of the Holders to such distribution or the proceeds of the sale thereof shall be
extinguished and the Depositary shall (except for any distribution upon the liquidation of the
Company, which remains unclaimed for such period as aforesaid, when the Depositary shall
retain the same) return the same to the Company for its own use and benefit.
Condition 10 Capital Reorganisation
Upon any change in the par value, sub-division, consolidation or other reclassification of Deposited
Shares or any other part of the Deposited Property or upon any reduction of capital or upon any
reorganisation, merger or consolidation of the Company or to which it is a party (except where the
Company is the continuing corporation), the Depositary shall as soon as practicable give notice of
such event to the Holders in accordance with Condition 23 and, at its discretion, may treat such
event as a distribution and comply with the relevant provisions of Conditions 4, 5, 6 and 9 with
respect thereto or may execute and deliver additional GDRs in respect of Shares or may require the
exchange of existing GDRs for new GDRs which reflect the effect of such change.
Condition 11 Taxation and Applicable Laws
(A) Payments to Holders of dividends or other distributions made to Holders on or in respect of
the Deposited Shares will be subject to deduction of Indian and other withholding taxes, if
any, at the applicable rates.
(B) If any governmental or administrative authorisation, consent, registration or permit or any
report to any governmental or administrative authority is required under any applicable law
in India in order for the Depositary to receive from the Company Shares to be deposited under
the Conditions or in order for Shares, other securities or other property to be distributed
under Condition 4, 5, 6 or 10 or to be subscribed under Condition 7, the Depositary shall
request that the Company apply for such authorisation, consent, registration or permit or file
such report on behalf of the Holders within the time required under such law. In this
connection, the Company has undertaken in the Deposit Agreement, to the extent reasonably
practicable and that it does not involve unreasonable expense on behalf of the Company, to
take such action as may be required in obtaining or filing the same. The Depositary shall not
distribute GDRs, Shares, other securities or other property with respect to which such
authorisation, consent or permit or such report has not been obtained or filed, as the case may
be, and shall have no duties to obtain any such authorisation, consent or permit or to file any
such report except in circumstances where the same may only be obtained or filed by the
Depositary without, in the opinion of the Depositary, unreasonable burden or expense.
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Condition 12 Voting Rights
(A) Voting rights with respect to the Deposited Shares shall be solely as set out in this Condition
12. The Company shall provide to the Depositary notices for meetings of the shareholders of
the Company. The Depositary shall, as soon as practicable thereafter, mail to each person
who is a Holder on the record date established by the Depositary (which shall be the same as
the record date set by the Company or, if different from the record date set by the Company,
shall be set after consultation with the Company and shall be as close as practicable to any
record date set by the Company) a notice, the form of which notice shall be in the sole
discretion of the Depositary, which shall contain (a) such information as is contained in such
notice of meeting, and (b) a statement that the Holders as at the close of business on the
specified record date will be entitled, subject to any applicable provision of Indian law and of
the constitutive documents of the Company, to instruct the Depositary as to the exercise of
the voting rights, if any, pertaining to the number of Shares represented by their respective
GDRs. In relation to the relevant vote, the Depositary shall:
(i)
if the vote in respect of a particular resolution is on a show of hands, (a) vote in the
direction that a majority (if any) of those Holders that have submitted written voting
requests to the Depositary, have requested the Depositary to vote and (b) if, of the
voting instructions received by the Depositary, those instructions directing the
Depositary to vote against such resolution account for 10% or more of the aggregate
voting share capital of the Company (as determined by the Depositary in its absolute
discretion), then the Depositary shall, so long as permitted by relevant law and the
constitutive documents of the Company (supported by the provision of an opinion of
the Company’s Indian legal counsel in form acceptable to the Depositary that such
arrangement is valid and binding under applicable Indian law and that the Depositary
will not be deemed to be exercising voting discretion in so doing), request a vote on the
basis of a poll for that particular resolution;
(ii)
if the vote in respect of a particular resolution is on the basis of poll, endeavour, in so far
as practicable, to vote or cause to be voted, in respect of each written request of a
Holder on such record date, the amount of Shares represented by the GDRs in
accordance with the instructions set forth in such request.
(B)
In order for each voting instruction to be valid, the voting instructions form must be
completed and duly signed by the respective Holder and returned to the Depositary by such
date as specified by the Depositary. If a Holder holding GDRs outstanding at the relevant
record date shall instruct the Depositary to vote in respect of one or more resolutions to be
proposed at the meeting, the Depositary shall, or such other person designated by him as the
representative of the Depositary and the Holders shall, vote the Deposited Shares represented
by the GDR or GDRs held by each Holder in the direction so instructed by such Holder in
relation to such resolution or resolutions or otherwise in accordance with paragraph (A)
above.
(C)
If, for whatever reason, the Depositary has not by the date specified by the Depositary
received instructions from any Holder to vote in respect of any resolution, or if the Depositary
determines that it is not permitted by applicable law to vote the Deposited Shares represented
by the GDR or GDRs of the respective Holder at the relevant shareholders’ meeting in the
manner provided for in this Condition, the Depositary shall promptly advise the Company of
the same and the Deposited Shares represented by the GDR or GDRs of such respective
Holder shall not be voted.
(D)
By continuing to hold GDRs, all Holders shall be deemed to have agreed to the provisions of
this Condition as it may be amended from time to time in order to comply with applicable
Indian law.
(E)
The Depositary shall not, and the Depositary shall use its reasonable endeavours to ensure
that the Custodian and its nominees do not, vote or attempt to exercise the right to vote that
attaches to the Deposited Shares, other than in accordance with instructions given in
accordance with this Condition.
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Notwithstanding any other provision of these Conditions, the Deposit Agreement, the
constitutive documents of the Company and applicable law, each Holder and owner of GDRs
agrees to provide such information as the Company or the Depositary may request pursuant
to (a) applicable law, the constitutive documents of the Company, the requirements of any
markets or exchanges upon which the Shares or GDRs are listed or traded, or to any
requirements of any electronic book-entry system by which the GDRs may be transferred, or
(b) Clause 5.3 of the Deposit Agreement, to the same extent as if such Holder and owner of
GDRs held Shares directly, in each case irrespective of whether or not they are Holders or
owners of GDRs at the time such request is made. The Depositary agrees to use its reasonable
efforts to forward upon the request of the Company any such request from the Company to
the Holders and to forward to the Company any such responses to such requests received by
the Depositary.
Shares which have been withdrawn from the depositary facility and transferred on the
Company’s register of members to a person other than the Depositary or its nominee may be
voted by the holders thereof. However, Holders or owners of GDRs may not receive
sufficient advance notice of shareholder meetings to enable them to withdraw the Shares and
vote at such meetings.
Condition 13 Documents to be Furnished, Recovery of Taxes, Duties and Other Charges
The Depositary shall not be liable for any taxes, duties, charges, costs or expenses which may
become payable in respect of the Deposited Shares or other Deposited Property or the GDRs,
whether under any present or future fiscal or other laws or regulations, and such part thereof as is
proportionate or referable to a GDR shall be payable by the Holder thereof to the Depositary at any
time on request or may be deducted from any amount due or becoming due on such GDR in respect
of any dividend or other distribution. In default thereof, the Depositary may, for the account of the
Holder, discharge the same out of the proceeds of sale and subject to Indian law and regulations, of
an appropriate number of Deposited Shares (being an integral multiple of the number of Shares in
respect of which a single GDR is issued) or other Deposited Property and subsequently pay any
surplus to the Holder. Any such request shall be made by giving notice pursuant to Condition 23.
Condition 14 Liability
(A) In acting hereunder the Depositary shall have only those duties, obligations and
responsibilities expressly specified in the Deposit Agreement and these Conditions other than
holding the Deposited Property for the benefit of Holders as bare trustee, does not assume any
relationship of trust for or with the Holders or the owners of GDRs except that any funds
received by the Depositary for the payment of any amount due, in accordance with these
Conditions, on the GDRs shall, subject to Condition 9(B) be held by it in trust for the relevant
Holder until duly paid thereto.
(B)
None of the Depositary, the Custodian, the Company, nor any of their agents, officers,
directors or employees nor any Agent shall incur any liability to any other of them or to any
Holder or owner of a GDR if, by reason of any provision of any present or future law or
regulation of India or any other country or of any relevant governmental authority or by
reason of the interpretation or application of any such present or future law or regulation or
any change therein or by reason of any other circumstances beyond their control or, in the
case of the Depositary, the Custodian, any of their agents, officers, directors or employees or
any Agent, by reason of any provision, present or future, of the constitutive documents of the
Company, any of them shall be prevented, delayed or forbidden from doing or performing
any act or thing which the terms of the Deposit Agreement or these Conditions provide shall
or may be done or performed; nor (save in the case of wilful default, negligence or bad faith)
shall any of them incur any liability to any Holder, owner of a GDR or person with an interest
in any GDR by reason of any non-performance or delay, caused as aforesaid, in performance
of any act or thing which the terms of the Deposit Agreement or these Conditions provide
shall or may be done or performed, or by reason of any exercise of, or failure to exercise,
caused as aforesaid, any voting rights attached to the Deposited Shares or any of them or any
other discretion or power provided for in the Deposit Agreement. Any such party may rely
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on, and shall be protected in acting upon, any written notice, request, direction or other
document believed by it to be genuine and to have been duly signed or presented (including a
translation which is made by a translator believed by it to be competent or which appears to
be authentic).
(C)
Neither the Depositary, the Custodian nor any Agent shall be liable (except by reason of its
own wilful default, negligence or bad faith or that of its agent, officers, directors or
employees) to the Company or any Holder or owner of a GDR, by reason of having accepted
as valid or not having rejected any certificate for Shares or GDRs purporting to be such and
subsequently found to be forged or not authentic.
(D)
Neither the Company nor the Depositary nor any of their respective agents shall be liable to
Holders of GDRs for any indirect, special, punitive or consequential damages.
(E)
The Depositary and each of its Agents (and any holding, subsidiary or associated company of
the Depositary) may engage or be interested in any financial or other business transactions
with the Company or any of its subsidiaries or affiliates or in relation to the Deposited
Property (including, without prejudice to the generality of the foregoing, the conversion of
any part of the Deposited Property from one currency to another), may at any time hold
GDRs for its own account, and shall be entitled to charge and be paid all usual fees,
commission and other charges for business transacted and acts done by it as a bank or in any
other capacity, and not in the capacity of Depositary, in relation to matters arising under the
Deposit Agreement (including, without prejudice to the generality of the foregoing, charges
on the conversion of any part of the Deposited Property from one currency to another and any
sales of property) without accounting to Holders or any other person for any profit arising
therefrom.
(F)
The Depositary shall endeavour to effect any such sale as is referred to or contemplated in
Condition 5, 6, 7, 10, 13 or 21 or any such conversion as is referred to in Condition 8 in
accordance with the Depositary’s normal practices and procedures, but shall have no liability
(in the absence of its own wilful default, negligence or bad faith or that of its agents, officers,
directors or employees) with respect to the terms of such sale or conversion or if such sale or
conversion shall not be possible. In the absence of its own wilful default, negligence or bad
faith the Depositary will not be responsible for any failure to determine that it may be lawful
or practicable to make rights available to Holders in general or to any Holder in particular
pursuant to Condition 7.
Condition 15 Issue and Delivery of Replacement GDRs and Exchange of GDRs
Subject to the payment of the relevant fees, taxes, duties, charges, costs and expenses and such terms
as to evidence and indemnity as the Depositary may require, replacement GDRs will be issued by
the Depositary and will be delivered in exchange for or in replacement of outstanding lost, stolen,
mutilated, defaced or destroyed GDRs upon surrender thereof (except in the case of destruction,
loss or theft) at the specified office of the Depositary or (at the request, risk and expense of the
holder) at the specified office of any Agent.
Condition 16 Depositary’s Fees, Costs and Expenses
(A) The Depositary shall be entitled to charge the following remuneration and receive the
following remuneration and reimbursement (such remuneration and reimbursement being
payable on demand) from the Holders in respect of its services under the Deposit Agreement:
(i)
for the issue of GDRs (other than upon the issue of GDRs on the date hereof) or the
cancellation of GDRs upon the withdrawal of Deposited Property: US$0.05 or less per
GDR issued or cancelled;
(ii)
for issuing GDR certificates in definitive registered form in replacement for mutilated,
defaced, lost, stolen or destroyed GDR certificates: a sum per GDR certificate which is
determined by the Depositary to be a reasonable charge to reflect the work, costs and
expenses involved;
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(iii) for issuing GDR certificates in definitive registered form (other than pursuant to (ii)
above): a sum per GDR certificate which is determined by the Depositary to be a
reasonable charge to reflect the work, costs (including, but not limited to, printing
costs) and expenses involved;
(iv)
for receiving and paying any cash dividend or other cash distribution on or in respect of
the Deposited Shares: a fee of US$0.02 or less per GDR for each such dividend or
distribution;
(v)
in respect of any issue of rights or distribution of Shares (whether or not evidenced by
GDRs) or other securities or other property (other than cash) upon exercise of any
rights, any free distribution, stock dividend or other distribution (except where
converted to cash): US$0.05 or less per outstanding GDR for each such issue of rights,
dividend or distribution;
(vi)
for the operation and maintenance in administering the GDRs an annual fee of
US$0.02 or less per GDR; and
(vii) in connection with inspections of the relevant share register maintained by the local
registrar, if applicable undertaken by the Depositary, the Custodian or their respective
agents: an annual fee of US$0.01 or less per GDR (such fee to be assessed against
Holders of record as of the date or dates set by the Depositary as it sees fit and collected
at the sole discretion of the Depositary by billing such Holders for such fee or by
deducting such fee from one or more cash dividends or other cash distributions);
together with all expenses, transfer and registration fees, taxes, duties and charges incurred
by the Depositary, any Agent or the Custodian in connection with any of the above including,
but not limited to charges imposed by a central depositary and such customary expenses as
are incurred by the Depositary in the conversion of currencies other than US Dollars into US
Dollars and fees imposed by any relevant regulatory authority.
Such expenses, transfer and registration fees, taxes, duties, charges, remuneration and
reimbursement shall only apply in respect of direct holdings of GDRs and shall not apply to
holdings of CREST Depositary Interests (CDIs) in the GDRs.
(B)
The Depositary is entitled to receive from the Company such fees, taxes, duties, charges,
costs, expenses and other payments as agreed between them in any agreement concerning
such fees, taxes, duties, charges, costs, expenses and other payments.
Condition 17 Agents
(A) The Depositary shall be entitled to appoint one or more agents (the “Agents”) for the
purpose, inter alia, of making distributions to the Holders.
(B)
Notice of appointment or removal of any Agent or of any change in the specified office of the
Depositary or any Agent will be duly given by the Depositary to the Holders.
Condition 18 Listing
The Company has undertaken in the Deposit Agreement to use its best endeavours to obtain and
thereafter maintain, so long as any GDR is outstanding, a listing for GDRs on AIM, a market of that
named operated by London Stock Exchange plc and a listing of the Shares on one or more stock
exchanges in India. For that purpose the Company will pay all fees and sign and deliver all
undertakings required by AIM in connection with such listing. In the event that such GDR listing is
not obtained and maintained, the Company has undertaken in the Deposit Agreement to use its best
endeavours, with the reasonable assistance of the Depositary, to obtain and maintain a listing of the
GDRs on another internationally recognised investment exchange designated as a “recognised
investment exchange” for the purposes of s.841 (1) (b) of the United Kingdom Income and
Corporation Taxes Act (ICTA) 1988.
Condition 19 The Custodian
The Depositary has, pursuant to the Deposit Agreement, agreed with the Custodian that the
Custodian will receive and hold (or appoint agents approved by the Depositary to receive and hold)
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all Deposited Property for the account and to the order of the Depositary in accordance with the
applicable terms of the Deposit Agreement, which include a requirement to segregate the Deposited
Property from the other property of, or held by, the Custodian. The Custodian shall be responsible
solely to the Depositary; provided that, if at any time the Depositary and the Custodian are the same
legal entity, references to them separately in these Conditions and the Deposit Agreement are for
convenience only and that legal entity shall be responsible for discharging both functions directly to
the Holders and the Company. Upon receiving notice of the resignation of the Custodian, the
Depositary shall promptly appoint a successor custodian, which appointment shall comply in all
respects with Indian law, which shall, upon acceptance of such appointment, become the
Custodian under the Deposit Agreement. Whenever the Depositary in its discretion determines that
it is in the best interest of the Holders to do so, it may terminate the appointment of the Custodian
and, in the event of the termination of the appointment of the Custodian, the Depositary shall
promptly appoint a successor custodian, which appointment shall comply in all respects with
Indian law, which shall, upon acceptance of such appointment, become the Custodian under the
Deposit Agreement on the effective date of such termination. The Depositary shall notify Holders
of such change as soon as is practically possible following such change taking effect in accordance
with Condition 23. Notwithstanding the foregoing, subject to compliance with Indian law, the
Depositary may temporarily deposit the Deposited Property in a manner or a place other than as
herein specified; provided that, in the case of such temporary deposit in another place, the
Company shall have consented in writing to such deposit and such consent of the Company shall
have been delivered to the Custodian. In case of transportation of the Deposited Property under this
Condition, the Depositary shall obtain appropriate insurance at the expense of the Company if, and
to the extent that, the obtaining of such insurance is reasonably practicable and the premiums
payable are, in the opinion of the Depositary, of a reasonable amount.
Condition 20 Resignation and Termination of Appointment of the Depositary
(A) Unless otherwise agreed to in writing between the Company and Depositary from time to
time, the Company may terminate the appointment of the Depositary under the Deposit
Agreement by giving at least 90 days’ notice in writing to the Depositary and the Custodian,
and the Depositary may resign as Depositary by giving 90 days’ notice in writing to the
Company and the Custodian. Within 30 days after the giving of such notice, notice thereof
shall be duly given by the Depositary to the Holders in accordance with Condition 23. Such
resignation by the Depositary shall be subject to the terms and conditions of any other
agreement executed between the Depositary and the Company.
The termination of the appointment or the resignation of the Depositary shall take effect on
the date specified in the relevant notice provided that no such termination of appointment or
resignation shall take effect until the appointment by the Company of a successor depositary,
the grant of such approvals as may be necessary to comply with applicable laws and with the
constitutive documents of the Company for the transfer of the Deposited Property to such
successor depositary, the acceptance of such appointment to act in accordance with the terms
thereof by the successor depositary and the payment to the Depositary of all fees, taxes,
duties, charges, costs, expenses and other payments as agreed by the Depositary and the
Company in any agreement concerning such fees, taxes, duties, charges, costs, expenses and
other payments. The Company has undertaken in the Deposit Agreement to use its best
endeavours to procure the appointment of a successor depositary with effect from the date of
termination specified in such notice as soon as reasonably possible following notice of such
termination or resignation. Upon any such appointment and acceptance, notice thereof shall
be duly given by the successor depositary to the Holders in accordance with Condition 23.
(B)
Upon the termination of appointment or resignation of the Depositary, the Depositary shall
deliver to its successor depositary sufficient information and records to enable such successor
efficiently to perform its obligations under the Deposit Agreement and shall deliver and pay
to such successor depositary all Deposited Property held by it under the Deposit Agreement.
Upon the date when such termination of appointment or resignation takes effect, the Deposit
Agreement provides that the Custodian shall be deemed to be the Custodian thereunder for
such successor depositary and shall hold the Deposited Property for such successor
depositary and the Depositary shall thereafter have no obligation thereunder.
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Condition 21 Termination of Deposit Agreement
(A) Subject as set out below, either the Company or the Depositary but, in the case of the
Depositary, only if the Company has failed to appoint a replacement Depositary within 90
days of the date on which the Depositary has given notice pursuant to Condition 20 that it
wishes to resign, may terminate the Deposit Agreement by giving 90 days’ notice in writing to
the other and to the Custodian. Within 30 days after the giving of such notice, notice of such
termination shall be duly given by the Depositary to Holders of all GDRs then outstanding in
accordance with Condition 23. If the Company terminates the Deposit Agreement, it will
(unless the termination is due to the wilful default, negligence or fraud of the Depositary) be
obligated, prior to such termination, to reimburse to the Depositary all amounts owed to the
Depositary as set out in the Deposit Agreement and in any agreement between the Depositary
and the Company.
(B)
During the period beginning on the date of the giving of such notice by the Depositary to the
Holders and ending on the date on which such termination takes effect, each Holder shall be
entitled to obtain delivery of the Deposited Property relative to each GDR held by it, subject
to the provisions of paragraph (D) of Condition 2 and upon compliance with Condition 2,
and further upon payment by the Holder of any sums payable by the Depositary to the
Custodian in connection therewith for such delivery and surrender but otherwise in
accordance with the Deposit Agreement.
(C)
If any GDRs remain outstanding after the date of termination, the Depositary shall as soon as
reasonably practicable sell the Deposited Property then held by it under the Deposit
Agreement and shall not register transfers, shall not pass on dividends or distributions or take
any other action except that it will deliver the net proceeds of any such sale, together with any
other cash then held by it under the Deposit Agreement, pro rata to Holders of GDRs which
have not previously been so surrendered by reference to that proportion of the Deposited
Property which is represented by the GDRs of which they are Holders. After making such
sale, the Depositary shall be discharged from all obligations under the Deposit Agreement
and these Conditions, except its obligations to account to Holders for such net proceeds of
sale and other cash comprising the Deposited Property without interest.
(D)
The Company has agreed not to appoint any other depositary for the issue of depositary
receipts so long as Deutsche Bank Trust Company Americas is acting as Depositary under the
Deposit Agreement.
Condition 22 Amendment of Deposit Agreement and Conditions
All and any of the provisions of the Deposit Agreement and these Conditions (other than this
Condition 22 and Clause 12 of the Deposit Agreement) may at any time and from time to time be
amended by written agreement between the Company and the Depositary and if required, the
London Stock Exchange and/or the Securities and Exchange Board of India (or its successor
organisation) in any respect which they may deem necessary or desirable. Notice of any amendment
of these Conditions (except to correct a manifest error) shall be duly given to the Holders by the
Depositary and any amendment (except as aforesaid) which shall increase or impose fees or charges
payable by Holders or which shall otherwise, in the opinion of the Depositary, be materially
prejudicial to the interests of the Holders (as a class) shall not become effective so as to impose any
obligation on the Holders of the outstanding GDRs until the expiry of three months after such
notice shall have been given. During such period of three months, each Holder shall be entitled to
obtain, subject to and upon compliance with Condition 2, delivery of the Deposited Property
relative to each GDR held by it upon surrender thereof, free of the charge specified in paragraph
(A)(i) of Condition 16 for such delivery and surrender but otherwise in accordance with the Deposit
Agreement. Each Holder at the time when any such amendment so becomes effective shall be
deemed, by continuing to hold a GDR, to approve such amendment and to be bound by the terms
thereof in so far as they affect the rights of the Holders. In no event shall any amendment impair the
right of any Holder to receive, subject to and upon compliance with Condition 2, the Deposited
Property attributable to the relevant GDR.
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Condition 23 Notices
All notices to Holders shall be validly given if mailed to them at their respective addresses in the
register of Holders maintained by the Depositary or furnished to them by electronic transmission as
agreed between the Company and the Depositary and, so long as the GDRs are listed on the
Alternative Investment Market of The London Stock Exchange and the rules of the Alternative
Investment Market of The London Stock Exchange so require, published in a leading newspaper
having general circulation in London (which is expected to be the Financial Times). Any such notice
shall be deemed to have been given on the later of such publication and the seventh day after being
so mailed.
All notices required to be given by the Company to the Holders pursuant to any applicable laws,
regulations or other agreements shall be given by the Company to the Depositary and upon receipt
of any such notices, the Depositary shall forward such notices to the Holders. The Depositary shall
not be liable for any notices required to be given by the Company which the Depositary has not
received from the Company, nor shall the Depositary be liable to monitor the obligations of the
Company to provide such notices to the Holders.
Condition 24 Reports and Information on the Company
(A) The Company has undertaken in the Deposit Agreement (so long as any GDR is outstanding)
to furnish the Depositary with six copies in the English language by mail, facsimile or
electronic transmission as agreed between the Company and the Depositary (and to make
available to the Depositary, the Custodian and each Agent as many further copies as they may
reasonably require to satisfy requests from Holders) of:
(B)
(i)
in respect of the financial year ending on 31 March 2005 and in respect of each financial
year thereafter, the non-consolidated (or, if published for holders of Shares,
consolidated) balance sheets as at the end of such financial year and the
non-consolidated (or, if published for holders of Shares, consolidated) statements of
income for such financial year in respect of the Company, prepared in conformity with
either generally accepted accounting principles in India or, at the option of the
Company, in accordance with International Accounting Standards and reported upon
by independent public accountants selected by the Company, as soon as practicable
(and in any event within six months) after the end of such year; and
(ii)
semi-annual non-consolidated (or, if published for holders of Shares, consolidated)
financial statements as soon as practicable (and in any event, not later than three
months after the date to which they relate) after the same are published.
The Depositary shall, upon receipt thereof, give due notice to the Holders that such copies are
available upon request at its specified office and the specified office of any Agent.
Condition 25 Copies of Company Notices
On or before the day when the Company first gives notice, by mail, publication or otherwise, to
holders of any Shares or other Deposited Property, whether in relation to the taking of any action in
respect thereof or in respect of any dividend or other distribution thereon or of any meeting or
adjourned meeting of such holders or otherwise, the Company has undertaken in the Deposit
Agreement to transmit to the Custodian and the Depositary such number of copies of such notice
and any other material (which in the opinion of the Company contains information having a
material bearing on the interests of the Holders) furnished to such holders by the Company in
connection therewith as the Depositary may reasonably request. If such notice is not furnished to
the Depositary in English, either by the Company or the Custodian, the Depositary shall, at the
Company’s expense, arrange for an English translation thereof (which may be in such summarised
form as the Depositary may deem adequate to provide sufficient information) to be prepared. The
Depositary shall, as soon as practicable after receiving notice of such transmission or (where
appropriate) upon completion of translation thereof, give due notice to the Holders which notice
may be given together with a notice pursuant to paragraph (A) of Condition 9, and shall make the
same available to Holders in such manner as it may determine.
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Condition 26 Moneys Held by the Depositary
The Depositary shall be entitled to deal with moneys paid to it by the Company for the purposes of
the Deposit Agreement in the same manner as other moneys paid to it as a banker by its customers
and shall not be liable to account to the Company or any Holder or any other person for any interest
thereon, except as otherwise agreed.
Condition 27 Disclosure of Beneficial Ownership and Other Information
The Depositary may from time to time request Holders or former Holders or any clearing system in
which the GDRs are from time to time cleared to provide information as to the capacity in which
they hold or held GDRs and regarding the identity of any other persons then or previously
interested in such GDRs and the nature of such interest and various other matters. Each such
Holder agrees to provide any such information reasonably requested by the Depositary pursuant to
the Deposit Agreement whether or not still a Holder at the time of such request, provided that
where such Holder is a clearing system, it shall not be obliged to provide any information other than
name and address of its accountholders who hold an interest in the GDRs.
Condition 28 Severability
If any one or more of the provisions contained in the Deposit Agreement or in these Conditions shall
be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained therein or herein shall in no way be affected, prejudiced or
otherwise disturbed thereby.
Condition 29 Governing Law
(A) The Deposit Agreement and the GDRs are governed by, and shall be construed in accordance
with, English law. The rights and obligations attaching to the Deposited Property will be
governed by Indian Law. The Company has submitted in respect of the Deposit Agreement
and these Conditions to the jurisdiction of the English courts.
(B)
The courts of England are to have jurisdiction to settle any disputes which may arise out of or
in connection with the GDRs and accordingly any legal action or proceedings arising out of
or in connection with the GDRs (“Proceedings”) may be brought in such courts. This
submission is made for the benefit of each of the Holders and shall not limit the right of any of
them to take Proceedings in any other court of competent jurisdiction nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction (whether concurrently or not).
(C)
The Depositary irrevocably appoints the Managing Director for the time being of Deutsche
Trustee Company Limited, currently situated at Winchester House, 1 Great Winchester
Street, London EC2N 2DB as its authorised agent for service of process in England. If for any
reason the Depositary does not have such an agent in England, it will promptly appoint a
substitute process agent and notify the Company of such appointment. Nothing herein shall
affect the right to serve process in any other manner permitted by law.
Condition 30 Contracts (Rights of Third Parties) Act 1999
No person shall have any right to enforce these terms and conditions under the Contracts (Rights of
Third Parties) Act 1999 except and to the extent (if any) that these terms and conditions expressly
provide for such Act to apply.
4.
The Depositary Receipt Scheme
The Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993 (“Depositary Receipt Scheme”), as amended from time to time,
regulates, inter alia, the issue of global depositary receipts by companies in India (including the
issue of the GDRs by the Company). An Indian company issuing global depositary receipts is
required to comply with the requirements specified therein, including, inter alia, the following:
Under the Depositary Receipt Scheme the issue price of global depositary receipts is required to be
ascertained by reference to the price of the related shares, being not less than the higher of the
following two averages:
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(i)
the average of the weekly high and low of the closing prices of the related shares quoted on a
stock exchange during the six months preceding the relevant date;
(ii)
the average of the weekly high and low of the closing prices of the related shares quoted on a
stock exchange during the two weeks preceding the relevant date.
For the purpose of computation of the price, the “relevant date” is the date thirty days prior to the
date on which the meeting of the general body of shareholders is held, in terms of section 81 (IA) of
the Act, to consider the proposed issue.
Pursuant to the above formula, each New Ordinary Share represented by the GDRs, would be
priced at a minimum of Rs 35.14, and each GDR would be priced at a minimum of Rs 175.7.
The Depositary Receipt Scheme further stipulates that a company in India, which is not eligible to
raise funds from the Indian capital market, including a company which has been restrained from
accessing the securities market by SEBI will not be eligible to issue global depositary receipts. These
restrictions do not currently apply to the Company.
A person resident in India (other than an eligible domestic mutual fund subject to the rules and
regulations and guidelines issued by RBI and SEBI) is not permitted to hold global depositary
receipts of an Indian company. Erstwhile “Overseas Corporate Bodies” that are not eligible to
invest in India through the portfolio route and entities prohibited to buy, sell or deal in securities by
SEBI are not be eligible to participate in an issue of global depositary receipts. An “Overseas
Corporate Body” is defined under the relevant regulations to mean a company, partnership or
society or other corporate body that is owned, directly or indirectly, to the extent of at least 60% by
Non Resident Indians (NRIs), including trusts, in which not less than 60% of beneficial interest is
irrevocably held by NRIs, directly or indirectly.
5.
Foreign Investment Restrictions on global depositary receipts
The investment in global depositary receipts of an Indian company is treated as Foreign Direct
Investment (“FDI”) and the company issuing global depositary receipts should be a company
eligible to raise FDI under the Foreign Exchange Management (Transfer or Issue of Security by a
Person resident Outside India) Regulations, 2000 (as amended from time to time) and the extant
FDI Policy. The issuance of global depositary receipts by an Indian company must also comply with
the sectoral caps applicable under the FDI policy. These restrictions do not currently apply to the
Company as FDI in the sector in which the Company operates is allowed under the “automatic
route” up to 100%.
There is no limit on the amount of capital which an Indian company can raise through the issue of
global depositary receipts. However, the aggregate foreign investment made directly or indirectly
through global depositary receipts must not exceed 51% of the issued and subscribed capital of the
issuing company. However, this cap does not include investments made by offshore funds and
Foreign Institutional Investors.
6.
Transfer Restrictions on global depositary receipts and underlying shares
A person resident outside India may transfer global depositary receipts in Indian companies to
another person resident outside India without obtaining any permission. A holder of global
depositary receipts is permitted to surrender global depositary receipts in an Indian company and to
receive the underlying equity shares, subject to the terms of the relevant deposit agreement. A
holder of global depositary receipts who surrenders global depositary receipts and withdraws
equity shares is permitted to re-deposit such shares subject to the total issued global depositary
receipts and obtain global depositary receipts at a later time (subject to certain conditions as
detailed below). This ability to exchange global depositary receipts for the underlying shares, and
vice versa, is known as “two-way fungibility”.
Under extant Indian regulations, subject to certain conditions, no prior regulatory approval is
required for the sale of any equity shares (including any equity shares withdrawn from the
Company’s global depositary receipts facilities) by a non-resident, to a resident of India. However,
any such sale must be at a price based on a specified formula, and a higher price per equity share may
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not be permitted. Additionally, shareholders who seek to convert the proceeds in Indian Rupees
from a sale of equity shares in India into foreign currency and repatriate that foreign currency from
India may have to obtain RBI approval and a no objection/tax clearance certificate from the income
tax authority may be required.
There are certain limitations on re-deposits of withdrawn shares under the global depositary
arrangements. The RBI has permitted the re-conversion of shares of Indian companies into global
depositary receipts, subject to the following conditions:
(i)
the Indian company has issued global depositary receipts;
(ii)
the shares of the Indian company are purchased by a registered stockbroker in India in the
name of the depositary on behalf of the non-resident holder of global depositary receipts who
wishes to convert such shares into global depositary receipts;
(iii) the shares are purchased on a recognised stock exchange;
(iv)
the shares are purchased with the permission of the custodian of the global depositary
receipts of the Indian company and are deposited with the custodian;
(v)
the issuer company has authorised the custodian to accept shares from non-resident investors
for reissuance of global depositary receipts;
(vi)
the number of equity shares so purchased does not exceed the global depositary receipts
converted into underlying equity shares, and are in compliance with the sectoral caps
applicable under the FDI regime; and
(vii) the non-resident holder of global depositary receipts, the broker, the custodian and the
overseas depositary comply with the provisions of the Depository Receipt Scheme and the
guidelines issued thereunder, from time to time.
The RBI has prescribed that the domestic custodians (such as the Custodian) are the entities
required to ensure compliance with the RBI guidelines and to file reports with the RBI from time to
time. The domestic custodians are also required to perform certain functions, including:
(i)
to monitor the re-issuance of global depositary receipts and provide a certificate to the RBI
and the SEBI stating that the sectoral caps for foreign investment in the relevant company
have not been breached;
(ii)
to record the total number of global depositary receipts that have been issued and redeemed
and sold in the domestic market;
(iii) to ascertain the extent of registration in favour of global depositary receipts holders/
non-residents based on the advice of the relevant depositary for the purposes of transfer of the
underlying equity shares in the books of account of the relevant company in the name of the
relevant holder of global depositary receipts/non-resident on redemption of the global
depositary receipts;
(iv)
to verify with the Company Secretary/National Securities Depository Limited/Central
Depository Services Limited, if the total sectoral cap on foreign investment in the relevant
company is being breached;
(v)
to notify the extent up to which re-issuance of global depositary receipts would be
permissible;
(vi)
to advise the relevant depositary on the custody of equity shares and on issuance of
corresponding global depositary receipts to the non-resident investor;
(vii) to ensure that the advices to the relevant depositary are issued on the first come first serve
basis, i.e., the first deposit of underlying equity shares with the custodian shall be eligible for
the first re-issuance of global depositary receipts to the non-resident investor;
(viii) to ensure that shares only to the extent of the depletion in global depositary receipts stock are
deposited with it;
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(ix) to coordinate with the relevant depositary on a daily basis in computing the head room;
(x)
to liaise with the issuer company to ensure that the foreign investment restrictions, if any, are
not being breached; and
(xi) to file a monthly report about the transactions of global depositary receipts under the
“two-way fungibility arrangement” with RBI and SEBI
7.
The Depositaries Act 1996 – Depositary arrangements applicable to the Ordinary Shares
Under the Depositories Act 1996 of India and the SEBI (Disclosure and Investor Protection)
Guidelines, 2000 of India (as amended from time to time), public companies are required to give the
option to subscribers/shareholders, to either receive the relevant security certificates or to hold
securities in dematerialised form with a depositary. SEBI has also provided that the shares subject to
issue and allotment to the public, or under rights issues, or subject to offer for sale, in each case up to
a certain value, shall only be in dematerialised form, and that subscribers shall be compulsorily
required to open a deposit account with a depository participant. However, even in a case of
compulsory dematerialised trading, small investors (other than institutional investors) are
permitted to trade in physical shares not exceeding 500 shares.
Transfers of shares in dematerialised book-entry form require both the seller and the purchaser of
the equity shares to establish accounts with depositary participants registered with depositories
established under the Depositories Act, 1996. Charges for opening an account with a depositary
participant, transaction charges for each trade and custodian charges for securities held in each
account vary depending upon the practice of each depositary participant and must be borne by the
account holder. Upon delivery, the shares shall be registered in the name of the relevant depositary
on the company’s books and this depositary shall enter the name of the investor in its records as the
beneficial owner, thus effecting the transfer of beneficial ownership. The beneficial owner shall be
entitled to all rights and benefits and be subject to all liabilities in respect of his /her securities held by
a depositary.
A Holder of GDRs who converts his GDRs into Ordinary Shares in order to receive such shares in
dematerialised format, subject to the relevant regulations, would consequently be required to open
a “demat” account with such a depositary participant.
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PART IV
Traffic Consultants’ Report and Business Valuation
Halcrow Consulting India Limited
38, Ring Road, Lajapat Nagar-III,
New Delhi 110 024, India
Tel: 쎴91 11 2983 4944, 4945; Fax: 쎴91 11 2984 5881
Email: HCIL왁halcrow.com
www.halcrow.com
Toll Plaza
DND FlyWay
NOIDA-201301
To whom it may Concern
Executive Summary
At the request of NTBCL, Halcrow Consulting India Limited has prepared a traffic
revalidation and cash flow analysis of DND flyway along its proposed development
of Mayur Vihar link road as on dated 17 Feb 2006.
The scope of work includes review of the traffic forecasts and development of
revenue forecasts and cash flow analysis.
Previously, there are four forecasts that have been prepared for DND Flyway since
2002. The first was prepared by WSA Engineers India Pvt Ltd in 2002. Further
forecasts, primarily based on the 2002 study were presented in the 2004 study by
Wilbur Smith Associates Private Limited. Additionally, Fairwood Consultants
performed a study that evaluated the impact of the residential developments on
Noida-Greater Noida Expressway on the DND Flyway. Finally, NTBCL developed
traffic forecasts based on the earlier studies, other developments occurring primarily
on the eastern side of Yamuna, and the traffic counted on DND Flyway. The
comparative analysis of DND flyway traffic forecast has been shown in Table 1
Year
2002 Traffic
Study
NTBCL
Forecast, 2005
Current Study
Forecast
2011
90,780
136,453
126,841
2021
122,233
199,611
200,504
Table 1
DND Flyway Average Daily Traffic Forecast Comparison (vehicles)
The traffic forecast for the DND Flyway and the proposed Mayur Vihar Link Road
has been reviewed in light of the pervious studies and substantial population
growth in the region. The Mayur Vihar Link Road is proposed to be developed by
NTBCL to shorten the travel distance for people living in Mayur Vihar and others
accessing areas in its vicinity. A recent study had estimated the impact of
developments in a narrow stretch along the Noida-Greater Noida Expressway. This
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www.halcrow.com
was extended to other undeveloped areas of Noida and Greater Noida, and it is
estimated that these developments will result in an additional population of 1.6
million. Other developments in recently and earlier developed areas will result in
another 0.4 million for a total population growth of 2.0 million.
This population increase is significantly greater than a previous estimate of 0.64
million by 2002 traffic study. Therefore, the traffic is also expected to grow
significantly more than that estimated in the 2002 traffic study. It is expected that
in the financial year ending 2021, there will be 200,504 daily vehicle trips on
DND Flyway. This is more than the 2002 traffic study estimate of 122,233 and the
2005 estimate of 199,613. The roadway capacity of 222,000 vehicles is adequate
for the expected traffic. The toll plaza capacity is about 25% higher than this, and
thus none of these components are expected to constrain the traffic flow or its
growth.
There are other developments occurring in the influence area which can impact the
traffic on DND Flyway. These include changes to the public transport system and
provision of a metro connection to parts of Noida, the Commonwealth Games in
the year 2010 which will result in significant developments on the eastern side of
Yamuna.
The condition of the existing facility and in particular the pavement and
embankment has also been reviewed. The pavement was designed for a load of 50
MSA, but the expected load is less than 4 MSA. The physical review also
established that the pavement condition is good, and therefore the first overlay is
expected only in the financial year ending 2009. The overlay is expected to cost Rs
58.75 million (at year 2006 prices).
As the traffic increases, it is expected that technology changes will be needed to the
toll plaza on an incremental basis. This will help improve the throughput of the
toll plaza and is expected to cost Rs 10 million per year. The electronic toll
collection facility is being used by a growing number of facility users and varies
between 20 and 33 percent for the three primary classes. It is expected that after
2010 no discount will need to be provided for users of the ETC system.
The toll fee is expected to increase by 6% annually over the future years. This is a
conservative estimate, given that the CPI has increased by 7.7% annually in the
past ten years. A discounted cash flow analysis has been performed and the present
value of the project has been determined as Rs 17.9 billion.
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Introduction
DND Flyway, the direct connection between Delhi and Noida was opened to traffic
in February 2001. The traffic on this facility has steadily increased and has now
exceeded 65,000 vehicles on a daily basis. The facility is owned and operated by the
Noida Toll Bridge Company Limited (NTBCL). NTBCL has evaluated options for
increasing the traffic flows on this facility and is pursuing the development of a
link to Mayur Vihar, which is to the north east of the existing facility.
Previously, NTBCL had a traffic validation study performed to get a better
estimate of the traffic forecast after opening of the DND Flyway. This study,
performed by WSA Engineers India Private Limited resulted in Delhi Noida Direct
Flyway – Traffic Revalidation Study – Final Report, October 2002. Subsequently,
NTBCL had a further study performed to study the impact of the rapid residential
developments in Noida and Greater Noida, along the Greater Noida Expressway.
This study resulted in the Residential Development on Noida-Greater Noida Expressway
– Traffic Impact Study, Fairwood Consultants, December 2004. NTBCL then
developed future forecasts of traffic based on these studies and considering the
impact of other commercial and industrial developments.
NTBCL is now placing a Global Depository Receipt (GDR) in the London Stock
Exchange for the Mayur Vihar Link Road project, and has asked Halcrow
Consulting India Limited (HCIL) to perform a review of the traffic forecasts
prepared by NTBCL and also develop the revenue forecasts. This work has been
performed by HCIL in an independent manner.
1.1
Scope of Work
The scope of work includes review of the traffic forecasts and development of
revenue forecasts. The following reports are to be reviewed as part of this study:
1.
Traffic revalidation study final report, WSA Engineers India Pvt Ltd, October
2002
2.
Augmentation of Traffic on DND Flyway, Wilbur Smith Associates Private
Limited, November 2004
3.
Residential development on Noida-Greater Noida Expressway – Traffic
impact study, Fairwood Consultants, December 2004
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4.
Traffic forecasts for DND Flyway prepared by Noida Toll Bridge Company
Limited, 2005
5.
Pavement performance data for DND Flyway – 2002 to 2005
Specifically, the scope of work of this study will include
1.2
1.
Review of the traffic forecasts for the next 15 years presented in the earlier
reports and comments on the same. We will review both the production and
attraction side of trips (employment and residential data). Additionally,
changes in fuel prices, land and other developments and road network changes
will also be considered. Based on these, if needed, revised forecasts will be
presented.
2.
Review of operations and maintenance (O&M) costs for the facility for the
next 15 years. This will be based on the costs expended to date, a review of
the condition of the facility (primarily the pavement condition), the contract
with the toll facility operator, and the forecasted increases in the toll. In
relation to this review, we will obtain the pavement condition data and also a
copy of the relevant portions of the O&M agreement with the toll facility
operator.
3.
To prepare the discounted cash flow analyses based on the traffic and O&M
expense projections.
Report Structure
The report is presented in 5 chapters. The second chapter provides a summary of
the assumptions of the previous studies and the traffic forecasts presented. An
update on the commercial and residential developments is provided in the third
chapter. Additionally, the resulting impact on traffic expected on DND Flyway and
a review of the previous forecasts is provided in this chapter. The forecasted O&M
expenses are presented in Chapter 4, and the discounted cash flows for the project
are subsequently presented. This chapter also includes a review of the pavement
condition. The summary of the study is presented in Chapter 5.
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2
Transportation Network and Earlier
Traffic Forecasts
2.1
Existing Transportation System
The present transport system is characterized by road traffic congestion with
declining ambient air quality accompanied by a rising trend in road accidents.
There have been recent efforts to combat this, including conversion of all
commercial vehicles to Compressed Natural Gas (CNG) and the metro rail started
in 2003. However, the situation is likely to worsen due to increasing population
and economic growth.
Efforts are being made to improve the transportation system. A number of flyovers,
bridges and pedestrian subways are under construction and many more are being
contemplated. In addition, existing roads are being widened and new roads
constructed. The peripheral expressway and NH2 bypass are being taken up to
siphon off inter-city traffic passing through Delhi. Within Delhi, in addition to the
metro, bus rapid transit corridors are also being planned. Several low cost and
quickly implementable transport system management (TSM) measures are being
given a lot of importance in order to improve traffic flow. TSM plans are being
prepared for various corridors and will be taken up for implementation.
The river Yamuna that runs North-South forms a natural barrier that restrains
expansion of Delhi to the East. Noida located east of Yamuna is a township that is
under development since 1976. Today it has become one of the satellite towns of
Delhi. The traffic that is generated by this satellite town is substantial and the
interaction with Delhi is also substantial. The traffic between the East of river
Yamuna including Noida and Delhi was of the order of 3,70,000 PCUs daily in
2002 (Traffic revalidation study final report, WSA Engineers India Pvt Ltd,
October 2002) and is serviced by four bridges including the Delhi Noida Direct
(DND) Flyway, which are shown in Figure 1
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Four Major Bridges Connecting Trans Yamuna Area
It is seen that on the eastern side of Yamuna, the residential areas are fast
developing. The Mayur Vihar and Noida areas are developing very fast and so is the
traffic volume. Similarly, there are many destinations in South Delhi that attract
significant amount of traffic, and these will be more accessible with the
development of the Kalindi Kunj Bypass. Hence it is expected that there will be
great demand for bridges to cross the river to reach the business districts of Delhi
and thus both the north and south links are critical to providing for this traffic.
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2.2
Earlier Traffic Forecasts
As detailed previously, there are four forecasts that have been prepared for DND
Flyway since 2002. The first was prepared by WSA Engineers India Pvt Ltd in
2002. Further forecasts, primarily based on the 2002 study were presented in the
2004 study by Wilbur Smith Associates Private Limited. Additionally, Fairwood
Consultants performed a study that evaluated the impact of the residential
developments on Noida-Greater Noida Expressway on the DND Flyway. Finally,
NTBCL developed traffic forecasts based on the earlier studies, other developments
occurring primarily on the eastern side of Yamuna, and the traffic counted on
DND Flyway.
2.2.1
Traffic revalidation study final report, WSA Engineers India Pvt Ltd, October 2002
A conventional gravity model was developed in order to model traffic on the DND
Flyway in the earlier study has been used. This model includes a traffic assignment
process with a combined partial distribution and mode choice function. The
transport model was developed in SATURN (Simulation and Assignment of Traffic
in Urban Road Networks) for an average morning peak hour (to capture the
journey to work period).
The study area was divided into 179 zones. Primary traffic surveys were performed
on the four major bridges, capturing the traffic on both sides of Yamuna River.
Detailed intersection turning movement counts were performed at nine locations,
two of which were on the east side of Yamuna. A detailed origin-destination
analysis was performed for the users of each of the four major bridges. Additionally,
speed and delay surveys were performed on the major roads in the vicinity of the
bridge. The model was calibrated based on the available data for each of the bridges.
The base network considered for the model is presented in Figure 2.
Changes to the transportation network were considered for the future years, and
forecasts were accordingly developed for the years 2011 and 2021. Population and
employment forecasts were also made for the areas under consideration. A summary
of the population growth rates considered are presented in Table 2.
Area
2001-2011
2011-2021
Noida
5%
3%
Greater Noida
6%
4%
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2011-2021
Ghaziabad
4%
3%
East and North-East Delhi
3%
1.8%
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Annual Population Growth Rates (%) in 2002 Traffic Study
These growth rates result in the population forecast of 8.08 million in the above
areas in 2021, as compared to 4.55 million in 2001. Employment is expected to
grow at a slightly faster rate, from 1.08 million in 2001 to 2.2 million in 2021 in
the same areas.
As links to the north and south of the DND Flyway were being considered, the
impacts of these links were also evaluated and traffic forecasts were developed for a
range of combinations. The results for relevant ones are presented in Table 3 for
reference. The original report referenced the link to the north as the link to Sector
14A. As this link is now named Mayur Vihar link, the changed name is presented
in the table.
Option
Year
2004
2011
2021
Base Case
48,507
78,125
107,551
Mayur Vihar
58,200
90,780
122,233
Mayur Vihar and
South Link
75,929
106,765
137,143
Table 3
Forecasted Traffic on DND Flyway – 2002 Traffic Study
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2.2.2
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Base Network for 2002 Traffic Revalidation Study
Residential development on Noida-Greater Noida Expressway – Traffic impact
study, Fairwood Consultants, December 2004
A study was performed in 2004 to evaluate the impact of residential developments
within 1 km of the Noida-Greater Noida Expressway on the traffic on DND
Flyway. Ten sectors in Noida (889 hectares [Ha]) and eight areas of Greater Noida
(321 Ha) were considered for this study. The existing developments within each of
these developments were reviewed and additionally the planned density of
development was also reviewed. Based on this, an estimate of new units expected to
be developed by 2007 and 2009 was developed, and subsequently based on
occupancy assumptions, the number of occupied households were estimated for
those forecast years.
Simultaneously, a random household survey was performed for 50 households to
primarily determine the trip making propensity and travel patterns of those trips.
Based on this survey, the following average characteristics were determined:
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Working trips per household per week = 16.8 one-way trips
앩
Proportion of working trips to Delhi = 20%
앩
Proportion of working trips to Delhi via DND Flyway = 21%
Non-walking non-working trips per household per week = 4.2 one-way trips
앩
Proportion of these trips to Delhi = 44%
앩
Proportion of the trips to Delhi via toll bridge = 22%
Thus, the resulting weekly impact on DND Flyway is 0.706 one-way working trips
and 0.407 one-way non-working trips per household.
The area expected to be developed by 2007 and 2009, the estimated household,
population and the resulting trips on DND Flyway are presented in Table 4.
Year
2007
2009
281
844
Population capacity (persons)
128,266
428,539
Actual residents expected (persons)
59,841
306,181
New households
13,916
71,205
Daily trips on DND Flyway
2,212
11,314
Area which will be developed in
Noida and Greater Noida (Ha)
Table 4 Impact of Estimated Developments in Noida and Greater Noida
(Fairwood, 2004)
As summarized in the table, the expected residential developments are estimated to
result in 2,212 one-way trips on DND Flyway in year 2007 and 11,314 one-way
trips in year 2009.
2.2.3
NTBCL Traffic Forecast, 2005
NTBCL has developed traffic forecasts based on the traffic growth observed on
DND Flyway, and also based on the commercial and residential developments that
are happening on the eastern side of Yamuna. The traffic on DND Flyway was just
a little over 20,000 vehicles when it opened in 2001. However, the traffic has
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steadily grown since then. A summary of the traffic data for each of the years and
the growth experienced is presented in Table 5
Year ending 31 March Buses/ 2-wheelers
Trucks
Cars
Total
Annual
Growth (%)
2001*
278
4,833
12,050 17,161
2002
652
6548
15309
22,509
31.2%
2003
861
10973
26632
38,467
70.9%
2004
1129
12934
33489
47,552
23.6%
2005
1211
14587
37040
52,838
11.1%
2006**
1299
16828
42056
60,184
13.9%
* Part year, from start of facility operation – 7 February 2001
** For the period April 2005 to December 2005
Table 5 Traffic Growth on DND Flyway – 2001 to 2006
As can be seen in Table 5 there was significant growth in the initial period, and
although the growth in 2005 was lower at 11.2%, it is expected to increase to
17.3% for the financial year ending 31 March 2006. The month wise increase in
traffic is depicted in Figure 3.
As expected, the revenue realization has grown at a faster rate. This is partly
because of toll rate increases, due to which the average revenue realized per vehicle
has increased. The average revenue realized per vehicle for each financial year and
also the total increase in revenue is presented in Table 6.
Year
ending
31 March
Average Revenue
per vehicle
(Indian Rupees)
Average Daily
Revenue (Indian
Rupees)
Annual Growth
of Revenue (%)
2001*
12.85
220,461
2002
11.66
262,495
19%
2003
11.68
449,340
71%
2004
12.92
614,279
37%
2005
13.94
736,722
20%
2006**
14.62
879,942
19.1%
* Part year, from start of facility operation – 7 February 2001
** For the period April-December 2005
Table 6
Revenue Growth for Traffic on DND Flyway – 2001 to 2006
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The traffic forecast prepared by NTBCL can be segregated into two parts, as is
presented in Table 7. The first is related to the growth expected on the facility
without any additional links. This growth is forecasted to be 17.5% annually for
the next three years, then decreasing to 12% in the fourth year and further
reducing by 2% every year, till it stabilizes at 4% in the 2014 financial year ending
31 March of that year for three years. From 2017, the growth rate is expected to
reduce to about 3%.
The only additional link considered by NTBCL is the Mayur Vihar link. The
forecast due to the Mayur Vihar link is 11,285 vehicles in the first year (year
ending 31 March 2008), then growing by 3.9% annually for the first three years,
1.5% for the following years.
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5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Figure 3
Vehicles per day
Buses/ Trucks
2 Wheelers
Month
Average Daily Traffic on DND Flyway (vehicles)
February-01
April-01
June-01
August-01
October-01
December-01
February-02
April-02
June-02
August-02
October-02
December-02
February-03
April-03
June-03
August-03
October-03
December-03
February-04
Cars
April-04
June-04
August-04
October-04
December-04
February-05
April-05
June-05
August-05
October-05
December-05
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2007
2008
51,111
20,060
72,816
17.5%
Cars
2-Wheelers
Total
Growth Rate
27,682
70,533
2,270
3,629
2-Wheelers
90
23,689
83,680
2-Wheelers
Total
Table 7
57,964
Cars
3,462
2015
3,601
2016
3,717
2017
3,833
2018
2020
4,065
2021
4,181
(Vehicles/day)
3,949
2019
39,043
40,605
42,229
43,918
45,334
46,751
48,167
49,583
51,000
17.5%
17.5%
31,598
77,928
2,682
4%
11,723
3,916
7,394
412
35,072
86,678
2,970
4%
12,177
4,068
7,681
428
3,472
2%
12,846
4,291
8,103
452
8.0%
3,660
2%
13,040
4,356
8,225
459
6.0%
3,795
2%
13,237
4,422
8,350
466
4.0%
3,935
2%
13,437
4,489
8,476
473
4.0%
4,081
2%
13,640
4,557
8,604
480
4.0%
4,204
2%
13,847
4,626
8,734
487
3.2%
4,327
2%
14,056
4,695
8,866
494
3.1%
4,451
2%
14,268
4,766
9,000
502
3.0%
4,575
2%
14,484
4,838
9,136
510
2.9%
4,691
0%
14,484
4,838
9,136
510
3%
38,332
41,124
43,399
45,027
46,718
48,475
49,960
51,446
52,933
54,422
55,838
94,879 101,952 107,705 111,808 116,073 120,505 124,244 127,985 131,728 135,473 139,082
3,241
4%
12,655
4,227
7,982
445
10.0%
16%
11%
9%
7%
6%
4%
4%
4%
3%
3%
3%
3%
3%
TCP No. 7
Traffic Forecast by NTBCL, 2007-2021 (vehicles)
16%
96,824 112,208 124,720 136,453 146,548 154,764 160,630 166,725 173,060 178,408 183,758 189,112 194,469 199,611
27,335
67,161
2,329
4%
11,285
3,770
7,118
397
12.0%
ID Number: 6334
Growth Rate
2,027
4%
3,329
2014
99,480 103,459 107,597 111,901 115,510 119,119 122,728 126,337 129,946
3,201
2013
Trucks/Buses
Total Traffic
Growth Rate
10,864
6,853
Cars
36,833
93,849
3,020
2012
Operator: MC
Total
382
34,104
86,897
2,796
2011
Area: A1
Trucks/Buses
31,004
78,997
2,542
2010
85,539 100,485 112,543 123,798 133,701 141,723 147,392 153,288 159,420 164,561 169,703 174,844 179,985 185,127
23,565
60,042
1,932
2009
Date: 15-03-06
Additional Traffic due to Mayur Vihar Link
1,645
Trucks/Buses
Existing Delhi Noida Toll Bridge
Financial Year
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3
Population and Employment Growth and
Impact on Traffic
3.1
Population Forecasts
The population of Delhi is expected to grow from 13.8 million in 2001 to 23
million by year 2021 (Traffic revalidation study final report, WSA Engineers India
Pvt Ltd, October 2002). This estimate appears to be based on the broad assumption
that the population of Delhi will grow at a similar rate as that of urban population
in the rest of India. Population forecasts for all of India and the urban population
have been prepared by the Registrar General and Census Commissioner and are
presented in Table 30, Projected Population of India 1996-2016,
(http://www.censusindia.net/cendat/datatable30.html) and these forecasts and the
resulting annual growth rates are presented in Table 8.
Year
Table 8
Total Population
Urban Population
(in ’000s)
Annual Growth (in ’000s) Annual Growth
Rate (%)
Rate (%)
1996
934,218
27.73
2001
1,012,386
1.62%
28.77
2.37%
2006
1,094,126
1.57%
30.35
2.66%
2011
1,178,889
1.50%
31.99
2.58%
2016
1,263,543
1.40%
33.67
2.44%
Population Forecast for India (1996-2016)
Considering that the population of Delhi will continue to grow at a rate of 2.44%
annually, the population in 2021 will be 22.7 million.
3.2
Residential Development in Noida and Greater Noida
As mentioned in Chapter 2, a study was performed in 2004 to evaluate the impact
of residential developments within 1 km of the Noida-Greater Noida Expressway
on the traffic on DND Flyway by Fairwood Consultants in December 2004.
However, as both Noida and Greater Noida have other developments which will
impact the traffic on DND Flyway, a larger study area was considered. The
methodology considered in the earlier study was extended to cover the other Sectors
of Noida which are undergoing development or are likely to be developed in the
coming years.
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The key assumptions made while extending the study area were:
앫
The previous study’s results which had been derived from the household
survey of 50 houses in the vicinity of Noida-Greater Noida Expressway also
apply to the other parts of Noida and Greater Noida.
앫
The average population density per hectare for Noida has been taken as 500.
This has been done after referencing the Noida Master Plan 2021.
For Noida, the areas have been grouped in four different zones relative to their
distance from the Noida-Greater Noida Expressway. Zone I includes sectors that
are adjacent to the expressway (쏝 1 km). Zone II and III comprise of sectors that
are in the ranges of 1 – 3 km and 3 – 5 km respectively. The sectors further east
(쏜 6 km) have been grouped under Zone IV. All these residential sectors are the
ones where major development is planned for the coming decade. The sectors/zones
and the planned land use is shown in Figure 4 and those considered in this study
are presented in Table 9.
Each of the sectors were categorized based on the density of development expected.
As detailed sector wise data were not available from the Noida Authority, a check
was made with the earlier study to ensure that this assumption would lead to
realistic results. Additionally, a site visit along with review of recent satellite
imagery (see Figure 5) was used to check the level of developments in these
additional sectors.
Zone
Sectors
Area (Ha)
Population
Capacity
I
92, 96 – 99, 106, 128, 133 – 136
650
325,000
II
42, 43, 45 – 48, 82, 104, 107, 109, 110
626
313,000
III
49, 50, 101,
254
127,000
IV
72 – 79, 114 – 120, 122
1,013
506,500
Total
1,271,500
No. of Households (Household size of 4.3 persons/household)
295,697
Table 9
Additional Residential Developments in Noida till 2021
It is expected that all this development will take place in the next 15 years (by
2021). Typically, the occupancy rate of developments ranges from 85% to 95%, as
there are always certain units unoccupied either because of a pending sale or
because of a change in the tenant renting the place. An occupancy rate of 90% is
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considered for the Noida and Greater Noida developments at full buildout. It is
expected that in Noida the growth will be rapid first and will gradually slow down,
and 75% of the households are expected to be developed and 90% of those
Figure 4
Noida Masterplan
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Recent Satellite Image of Noida
occupied in the next 10 years (199,595 occupied households by year 2016). In the
Fairwood study, it was determined that the weekly impact on DND Flyway of
residential developments in Noida and Greater Noida was 1.113 trips per
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household. A similar rate is appropriate for these additional residential
developments and the net impact is expected to be 31,736 daily trips by the year
2016 and 42,314 daily trips by the year 2021.
In Greater Noida, layout plans have been approved for 29 sectors. Of these, 24
sectors are residential, and there are three industrial and one each of institutional
and institutional green sectors. In addition, there are 8 recreational green and 13
commercial sectors. Almost 30% of the total area of about 6,000 Ha has been
allocated for residential areas. As noted in the Fairwood report, only 321 Ha which
is within 1 km of the Greater Noida Expressway has been considered in that study.
The balance of 1,398.58 Ha is also expected to have a significant impact on the
traffic on DND Flyway. The density of population for Greater Noida has been
considered as 350 per Ha, as in the Fairwood report. All the land is expected to be
developed and 90% of the households occupied by the end of the plan period by
the year 2021. As the growth in Greater Noida is not as rapid as in Noida, it is
estimated that 67% of the balance land will be developed by the year 2016 (that is
in ten of the next fifteen years). Considering the same trip generation rate, these
developments will result in 10,914 daily trips by the year 2016 and 16,290 daily
trips by the year 2021 on the DND Flyway. Thus, the net impact of the residential
developments in Noida/Greater Noida is estimated to be 42,650 daily trips by the
year 2016 and 58,604 daily trips by the year 2021 as is summarized in Table 10.
Development
Noida
Greater Noida
2016
2021
2016
2021
Additional Population
858,261
1,144,347
295,170
440,553
Additional Occupied
Households
199,595
266,127
68,644
102,454
Additional Daily Traffic
on DND Flyway
31,736
42,314
10,914
16,290
Table 10 Additional Traffic on DND Flyway due to Additional Residential
Developments in Noida and Greater Noida
3.3
Other Developments East of Yamuna
Other than residential development in Noida and Greater Noida, there are many
other developments that will have a significant impact on the travel across the
river, and in particular on DND Flyway.
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There are significant commercial and institutional developments that have taken
place in the past few years in Noida, and more recently along the Greater Noida
Expressway. Additionally, there have been significant commercial developments in
east Delhi, in the areas of Kausambhi, Vaishali and further to the east in
Ghaziabad. There is a planned mega amusement park in Noida, which alone has
the ability to attract significant traffic.
Also, due to shortage of commercial space in Delhi, many businesses are relocating
or taking their growth to the suburbs. For example, many new offices are being
developed in Noida, and the sector 18 market has developed as a prime destination
place attracting many people from Delhi. Although the development of office space
in Noida could result in a decrease in some trips towards Delhi (from Noida), it is
estimated that these trips will be replaced by reverse trips by Delhi residents, with
the net impact of this being close to nil.
3.4
Impact of Development on Traffic Forecasts
The impact of the developments is considered in two principal ways. Firstly, the
growth considered in the 2002 traffic study by WSA Engineers India Pvt Ltd was
5% and 6% respectively for the Noida and Greater Noida areas till the year 2011.
It was estimated that these growth rates would decrease to 3% and 4% respectively
in the period 2011-2021. Considering the 2001 population data for Noida (0.29
million) and Greater Noida (0.24 million) as reported in that study, the population
forecast for 2021 for each of these areas is 0.635 million, for a total population of
1.27 million. Based on the same data, the estimated population in 2005 is 0.66
million.
However, it appears that the growth rates have been underestimated in the 2002
traffic study. As has been presented earlier, considering only the new areas that are
expected to develop in Noida and Greater Noida, an increase in population of 1.6
million is expected. Additionally, it is estimated that the sectors considered in the
Fairwood study would also fully develop by 2021, and this will result in an
additional population of 215,000, thus taking the total population growth in these
new areas to 1.815 million. It is also expected that the density in the existing
developed areas will increase marginally by 10%, such that the total population
increase will be about 2 million. Therefore, the expected growth in population in
the period 2005 to 2021 will be almost three times of that considered in the 2002
traffic study.
Based on a review of the interaction between the developments on the western and
eastern side of Yamuna, it is estimated that the developments on the eastern side
contribute to about half of the traffic. As presented in the 2002 traffic study,
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considering that links are developed, the traffic is expected to increase by about
110% to 122,233 vehicles. As the population growth is underestimated, if the
expected population develops by 2021, the actual growth realized will be 220%
and thus the expected traffic in 2021 will be 186,000 vehicles.
Secondly, as noted in the previous section, the additional areas that are expected to
develop will likely result in 58,604 daily trips on DND Flyway. The areas
considered in the Fairwood study are expected to result in 11,300 daily trips by
year 2009, and 16,950 daily trips when they are fully developed. Thus, it is
expected that these residential developments alone will result in a total of over
75,554 daily trips. Further developments in existing residential sectors are expected
to result in 20% more trips, and therefore based on these changes alone, the traffic
is expected to increase by about 90,660 vehicles. Considering that the 2002 traffic
study considered only one-third of this growth, it would appear that the 2021
traffic estimate was underestimated by 55,400 vehicles, and that the 2021 traffic
estimate with the Mayur Vihar link should be 177,633 vehicles.
As two alternate methodologies have been considered, and both of them are
conservative in that the impact of other commercial and residential developments
are not considered, it is proper to consider the average of the two estimates, and
therefore the 2021 daily estimate for traffic on DND Flyway is 181,950 vehicles.
However, this estimate does not account for the additional trips expected to be
generated by the commercial developments, and considering a conservative
estimate of 10% additional trips due to these developments, the revised 2021 daily
estimate is 200,000 vehicles.
3.5
Mayur Vihar Link Traffic Forecast Review
The NTBCL traffic forecast for Mayur Vihar Link is as presented in the earlier
traffic study. As per this forecast, when the facility starts operation in January
2007, it will result in additional traffic of about 11,000 vehicles per day on DND
Flyway. Further, a growth of 3.9% of additional traffic is forecast till 2011,
followed by a growth of 1.5% for the following years. This will result in a total
growth of about 35% from the expected start of the facility (1 January 2007) till
the year 2021. This forecast appears to be appropriate, given that the link will
primarily service areas of Mayur Vihar that are significantly developed. The one
major development in the immediate vicinity that is currently underway is the
Mayur Vihar District Centre, which is located just north of the Chilla Regulator
and directly opposite from where the Mayur Vihar link will join the Delhi Noida
link road. The impact of the traffic expected to be generated by this development is
within the forecast traffic.
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DND Flyway Capacity
The capacity of the DND Flyway is dependent on two primary constituents – the
first being the road and the second being the toll plaza. The basic capacity of an
uninterrupted facility for Indian conditions is 525 passenger car units/hr/m
(PCU/hr/m) of road width (Guidelines for Capacity of Urban Roads in Plain Areas,
Indian Roads Congress, 1990 [IRC: 106-1990]). DND Flyway is 4 lanes wide in
each direction, with a pavement width of 14 m. Thus, the theoretical capacity is
7,350 PCUs per direction per hour or 1,837.5 PCU/lane. It should be noted that
the theoretical capacity of roadways in other countries is considered to be higher.
For example in the US, the maximum service flow rate for freeway segments varies
from 2,250 to 2,400 passenger cars/hr/lane (Highway Capacity Manual 2000,
Transportation Research Board, 2000). It is expected that the capacity of DND
Flyway would be atleast 2,000 PCU/hr/lane or 8,000 PCU/hr/direction.
Currently, during the peak period there is a significant directional split. However,
as this is an urban facility and as the developments increase east of Yamuna and
become more varied, the directional split is expected to converge to 50:50. The
average peak hour traffic on Indian urban roads varies from 6% to 9% of the daily
traffic, and it is expected that on this facility it will be about 8%. Thus, the
capacity of each side of the roadway will be 100,000 PCUs for a total capacity of
200,000 PCUs. It should be noted that with the current and expected traffic
composition, the weighted PCU equivalent is 0.9, and therefore for this
composition the capacity is about 222,000 vehicles per day.
The toll plaza has 34 total lanes, which includes the following
앫
Two-wheelers = 12
앫
Cars = 17
앫
Extra wide = 1
앫
Future – Two-wheeler lanes = 4 or Cars = 2
Considering the peak direction, there can be 9 car/truck lanes and 6 two-wheeler
lanes available at a minimum. The least capacity of the lane is when it is operated
manually, and that is 300 vehicles per hour. The capacity is 1,000 vehicles per hour
for the automatic/electronic toll collection lanes. Currently, over 30% of the
transactions are handled electronically. Although the processing rate is slower than
1,000 vehicles per hour (silver lane – contactless card), in the future it is expected
that a majority of the traffic will use the transponders (gold lane) and therefore the
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higher processing rate will be achieved. Considering that in the future at least
two-thirds of the traffic will use automatic toll lanes, the capacity in the peak
direction will be 11,500 vehicles per hour (10,000 in ten automatic lanes, and
1,500 in five manual lanes). This capacity, together with the additional capacity to
be created through the Mayur Vihar Link Toll Plaza is greater than the road
capacity of 8,900 vehicles per hour, and thus the toll plaza will not be a constraint.
3.7
Traffic Forecast for DND Flyway and Comparison with Earlier Forecasts
As presented in Section 3.4, it is estimated that with the Mayur Vihar link in
place, the daily traffic on DND Flyway will be 200,000 vehicles for the year ending
31 March 2021.
As has been presented earlier in Section 2.2.3, NTBCL has estimated the traffic for
year ending 31 March 2006 as 61,985 vehicles, which includes 43,509
cars/auto-rickshaws, 17,076 two-wheelers and 1,400 trucks and buses. Detailed
data obtained from NTBCL shows that the average daily traffic for the first nine
months (starting April 2005) is 60,183 vehicles, which includes 41,991
cars/auto-rickshaws, 16,783 two-wheelers and 1,295 trucks and buses. It has also
been noted that the average traffic during the months of January to March is
greater than that in the preceding nine months. An analysis of this was performed
for the past three years, and the results are presented in Table 11. On an average,
the traffic in the January to March period is 7.5% more than that in the preceding
nine months. On this basis, the traffic for January to March 2006 is estimated, and
the average traffic for the year 2006 is estimated as 61,193 vehicles, as compared to
the 61,985 vehicles in the NTBCL forecast.
Year
2003
2004
2005
Financial year ending 31 March,
Average Daily Traffic (vehicles)
April-Dec
Jan-March
37,374
47,402
52,081
41,773
47,980
55,198
Growth
11.8%
1.2%
6.0%
Table 11 Average Daily Traffic on DND Flyway in last 3 months vs first 9
months of each Year
Given that the average traffic in the financial year ending 31 March 2005 was
52,860 vehicles, a growth of 15.8% is expected for the financial year ending 31
March 2006. This is significantly higher than the 11.2% growth achieved in the
previous year. It should be noted that as presented in Section 2.2.1, if no link was
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developed, the traffic on DND Flyway was expected to increase from 48,507
vehicles in 2004 to 78,125 vehicles in 2011, at an annual rate of almost 7%.
However, the growth achieved has been 50 to 130% higher than the forecasted
growth. This is primarily because of two reasons. Firstly, there have been
significant commercial developments in the Noida area in the past two years, which
have resulted in attracting more traffic. Secondly, the fuel prices have increased
rapidly in the past two years. As shown in Table 12, the price of petrol has
increased by almost 14% annually for the past two years, and that of diesel by
almost 20% annually for the past two years.
Petrol
Diesel
Financial Year
ending 31 Mar
WPI
2002
158.1
2003
163.4
3.35
273.5
8.40
2004
178.7
9.36
300.4
9.84
2005
203.5
13.88
360.4
19.97
2006
231
13.51
430.2
19.37
Table 12
Annual
Growth (%)
WPI
Annual
Growth (%)
252.3
Historical Increase in Fuel Price Indices (2002 to 2006)
Two years ago, the operating cost for a typical car was Rs 3/km. A person who
saved 5 km by using the DND Flyway would think twice before using it, given the
toll of Rs 15 at that time. However, as the operating cost has increased to Rs 5/km,
there is a net savings of Rs 8 per trip, as the toll has only increased to Rs 17. This
has resulted in additional motorists shifting to DND Flyway. The same logic also
applies for two-wheelers and other vehicle types, where the operating costs have
increased rapidly because of the increase in the fuel cost.
Based on the current review performed, the traffic in year 2021 is forecasted to be
200,000 vehicles. Given the rapid growth of development in the recent past and
the various planned developments, it is expected that the growth will be
significantly higher in the initial years. Although it will be difficult to achieve a
sustained growth of 15.8% as is expected in the year 2006, it is estimated that the
growth rate will be 15% in the next three years. As noted in the Fairwood report,
over 11,000 daily vehicle trips are expected to be added due to the new
developments within 1 km of the Noida-Greater Noida Expressway, and coupled
with the current growth being experienced, this 15% estimate is conservative.
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In the fourth year, a growth of 12% is estimated, and in following years the growth
will be lesser as the developments get built out and fully occupied. A 2% reduction
in the growth rate is expected to 10% for 2011 and 2012, followed by an annual
reduction of 2% till it reduces to 6% in the year 2014. It is expected to further
reduce to 5% in 2015, 4% in 2016, finally stabilizing at 3% in 2019. The forecasted
traffic in year 2021 is 200,504 vehicles on this basis. A summary of the forecasted
growth rates is presented in Table 13 and the resulting traffic in Table 15.
Year
Forecast growth
rate (%)
2007 to 2009
15
2010
12
2011-12
10
2013
8
2014
6
2015
5
2016-2018
4
2019-2021
2
Table 13
Forecasted Growth Rate for Traffic on DND Flyway
The traffic forecast as part of this study is compared with the earlier forecasts
prepared as part of the 2002 traffic study and the forecasts prepared by NTBCL in
2005. This comparison is presented in Table 14. As detailed previously, there are
two primary reasons why the forecasts have increased significantly over the 2002
traffic study. Firstly, there is significant additional growth taking place on the
eastern side of Yamuna as compared to the earlier forecast. For example, the
population growth expected is three times that forecasted in the previous study.
The reason why the traffic is expected to grow more initially is because of the
recent developments that have either already taken place or are in the
planning/execution stage. Additionally, the increase in fuel prices and the
subsequent increase in operating costs have accelerated the shift from alternate
facilities to DND Flyway.
Year2002
NTBCL
Current Study
Traffic Study Forecast, 2005
Forecast
2011
2021
Table 14
90,870
122,233
136,453
199,611
126,841
200,504
DND Flyway Average Daily Traffic Forecast Comparison (vehicles)
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102
72,951
91,792
26,240
63,424
446
1,347
158
177
104,352
29,772
72,175
504
1,522
178
200
115,958
33,039
80,258
558
1,685
197
221
126,841
36,105
87,835
608
1,837
215
241
4,070
7,684
90
271
32
36
429
12,183
4%
138,491
39,370
95,966
662
1,998
234
262
4,131
7,801
91
275
32
36
435
12,367
2%
2012
35,238
88,165
570
1722
202
226
2,721
126124
10.0%
148,768
42,251
103,137
709
2,140
250
281
4,194
7,918
93
280
33
37
442
12,554
2%
2013
38,058
95,218
616
1860
218
244
2,938
136214
8.0%
157,131
44,598
108,970
747
2,256
264
296
4,257
8,038
94
284
33
37
448
12,743
2%
2014
40,341
100,931
653
1972
231
259
3,115
144387
6.0%
164,542
46,679
114,138
781
2,358
276
310
4,321
8,160
95
288
34
38
455
12,936
2%
2015
42,358
105,978
686
2070
242
272
3,270
151606
5.0%
170,802
48,439
118,500
810
2,446
286
321
4,387
8,283
97
292
34
38
462
13,132
2%
2016
44,052
110,217
713
2153
252
283
3,401
157671
4.0%
177,307
50,267
123,034
840
2,536
297
333
4,453
8,408
98
297
35
39
469
13,330
2%
184,068
52,167
127,746
871
2,630
308
346
4,520
8,535
100
301
35
40
476
13,531
2%
189,388
53,665
131,451
896
2,705
317
355
4,588
8,664
101
306
36
40
483
13,736
2%
(Vehicles/day)
2017
2018
2019
45,814
47,647
49,076
114,626 119,211 122,787
742
771
794
2239
2329
2399
262
273
281
294
306
315
3,537
3,679
3,789
163977 170537 175653
4.0%
4.0%
3.0%
194,866
55,207
135,266
921
2,781
326
365
4,658
8,795
103
311
36
41
491
13,943
2%
2020
50,549
126,471
818
2471
289
325
3,903
180922
3.0%
200,504
56,793
139,193
947
2,860
335
376
4,728
8,928
104
315
37
41
498
14,154
2%
2021
52,065
130,265
843
2545
298
334
4,020
186350
3.0%
ID Number: 6346
Revised Forecast of Average Daily Traffic for DND Flyway (vehicles)
61,193
Total
20,523
50,819
337
1,018
119
134
3,916
7,394
86
261
31
34
412
11,723
4%
2011
32,035
80,150
519
1566
183
206
2,473
114658
10.0%
Table 15
17,097
42,776
277
836
98
110
3,770
7,118
83
251
29
33
397
11,285
4%
2010
29,123
72,864
471
1423
167
187
2,248
104235
12.0%
Operator: MC
Total
Growth Rate
TOTAL TRAFFIC
Two wheelers
Car/Autos
LCVs
Truck/Buses
Heavy Vehicles with 3 axles
All Heavy Vehicles > 4 Axles
3,629
6,853
80
242
28
32
382
10,864
4%
2009
26,002
65,057
421
1271
149
167
2,008
93067
15.0%
Area: A1
3,494
6,597
77
233
27
31
368
10,459
4%
2008
22,611
56,571
366
1105
129
145
1,746
80928
15.0%
Date: 15-03-06
Two wheelers
Car/Autos
LCVs
Truck/Buses
Traffic Projections for Existing Delhi Noida Toll Bridge
Year Ending 31st March
2006
2007
Two wheelers
17,097
19,662
Car/Autos
42,776
49,192
LCVs
277
318
Truck/Buses
836
961
98
112
110
126
Total Commercial and Buses
1,320
1,518
Total
61193
70372
Growth Rate
15.8%
15.0%
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Other Factors with potential impacts on Traffic Forecasts
There are some factors which can have a significant impact on travel patterns and
proportion of travel on different modes. Some of them are listed below:
앫
Noida and Greater Noida currently lack good public transport facilities. In
the future, this scenario is possibly going to change with the advent of Metro
rail and other improvements. Although the proposed alignment of Metro rail
is for Noida via Mayur Vihar to Central Delhi whereas the potential
commuters of DND Flyway travel from Noida / Mayur Vihar to South Delhi,
there is likely to be a change in pattern in commuting and consequently it
may effect traffic on the DND Flyway.
앫
Many offices in Delhi are in the process of relocating to Noida and Greater
Noida. It will nullify the need of residents of Noida and Greater Noida to
travel to Delhi for work purposes but at the same time people who reside in
Delhi will be traveling to Noida and Greater Noida for work.
앫
The Commonwealth Games are planned to be held in India in 2010. The
Games village and other important facilities are currently being planned on
the eastern side of Yamuna. It is likely that in these facilities will in turn
result in additional developments in the vicinity, thus increasing the
attractiveness of the area and the possibility of more trips across the river
Yamuna. The existing major stadiums located west of Yamuna will continue
to be used for the Games, and this will also result in significant traffic across
Yamuna.
앫
All other bridges across Yamuna are maintained and operated by the
government (Public Works Department in most cases). Typically there is a
paucity of resources to perform the maintenance activities which results in
disrepair of these facilities. Also, funds are not easily available for capacity
enhancement, and all these bridges are currently operating at capacity during
the peak periods. As the DND Flyway has residual capacity available, it is
possible that traffic from the other bridges will shift to DND Flyway, thus
resulting in a more rapid growth in the next few years.
The impact of these and other changes can be evaluated with a comprehensive
transportation model, after making due consideration for the planning variables.
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Operation & Maintenance and
Discounted Cash Flows
DND Flyway is a 6 km long eight-lane facility that has been operational since
February 2001. Interchanges are provided at the two ends where it meets with the
Ring Road on the west and with the Delhi-Noida link road on the east. There are
three ramps on the west side (Ramps A, C, and E) and four ramps on the east side
(Ramps A to D). Currently there is one toll plaza which has 27 operational lanes
and eight future planned lanes for two-wheelers.
4.1
Design Characteristics
The facility is a flexible pavement road, constructed on embankment with soil
dredged from the adjacent Yamuna river. As per the Delhi-Noida Bridge Project,
Draft Detailed Project Report, Volume 2 – Design Report, Kampsax International
A/S, March 1995, the main facility pavement has an asphalt thickness of 190 mm
consisting of 40 mm asphaltic concrete, 65 mm bituminous macadam, and 85 mm
dense bituminous macadam. This is built on base thickness of 225 mm and
sub-base of 200 mm. According to Indian Road Congress standards for a 20-year
design life, the pavement can adequately handle upto 50 million standard axles
(MSA) traffic.
The facility includes one major bridge (552.5 m long, which has 13 spans of 42.5
m) over Yamuna river which is a precast segmental twin box girder bridge. The
box girder is 2.75 m deep and each 4 m segment weighs 90 T. The superstructure
is supported on hollow box piers cast-in-place. There is one minor bridge (2 spans
of 15 m) over the Hindon cut which is a simply supported bridge.
4.2
Toll System and Facilities
The vehicles are classified in six different classes for toll collection, and these classes
are detailed in Table 16.
Class
Description
Class I
Two Wheelers (Scooters and Motor Cycles)
Class II
Light Vehicles: All light motor vehicles with 2/3 axles including
3 wheelers
Class III
Light Commercial Vehicles – All LCVs with 2 or more axles
Class IV
Medium Vehicles – All heavy vehicles with 2 axles (including
buses/trucks)
104
Rev: 0
Gal: 0104
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
Class
ID Number: 6349
TCP No. 7
Time: 09:10
Description
Class V
Large Vehicles – All heavy vehicles with 3 axles
Class VI
Extra Large Vehicles – All Heavy Vehicles with 4 or more axles
Table 16
Toll Classes and Vehicle Types
There are three different methods of toll collection – manual, semi-automatic and
fully automatic. These systems are detailed next.
4.2.1
Manual Toll Collection
In this system the toll is collected manually in cash at the toll plaza on per trip
basis. The toll is collected for all the categories, and the current rates for respective
categories are detailed in Table 17.
Vehicle
Class
Vehicle Description
Cash Tariff Rs. Per Passage
1
Two Wheelers
9
2
Cars/Jeeps
18
3
LCV’s
35
4
Buses/ Trucks
45
5
Large Vehicles
60
6
Extra Large Vehicles
80
Table 17
4.2.2
Existing Toll Rates (Valid up to 31 January, 2007)
Electronic Toll Collection – Silver Lane
The Company offers discounted tariffs to regular users through pre-paid contactless
smart cards. The dedicated lanes for smart card users known as Silver Lanes ensure
that the transactions are processed faster with reduced waiting time for regular
users. The applicable tariff is deducted from the pre-paid account on every usage
and the users can recharge/top-up the account when the account balance gets
used up.
105
Rev: 0
Gal: 0105
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6350
TCP No. 7
Time: 09:10
4.2.3
Electronic Toll Collection – Gold Lane
This is also a pre-paid facility for class II vehicles (for cars and jeeps) where an
electronic tag /On-Board-Unit (OBU) is installed on the windscreen of the vehicle
and the OBU interacts with the toll management system through radio frequency
for debit of the applicable amount of toll into the pre-paid account for every
passage. The user is not required to stop and the vehicle can cross the toll plaza
through the Gold Lane at a speed of around 30 kmph. Under the Gold Lane also,
per trip rate is currently discounted for the commuters. An initial fee of Rs 2,000
is charged towards the cost of the OBU.
4.2.4
Increase in Toll Rates
The toll rates on DND Flyway are revised annually based on the increase in the
Consumer Price Index (CPI) for urban non-manual employees. The toll rate is first
calculated based on the increase in CPI and is then rounded off to the nearest rupee
for Class I and II vehicles and to the nearest 5 rupees for the remaining classes of
vehicles.
Class
2001
2002
2003
2004
2005
2006
I
7
7
8
8
8
9
II
15
15
15
16
17
18
III
30
30
30
30
35
35
IV
35
35
40
40
40
45
V
50
50
55
55
60
60
VI
60
65
70
70
75
80
Table 18
History of Toll Rate Revisions on DND Flyway (Rs/Trip)
When the facility first started operating, significant discounts were given for the
vehicles using the electronic toll collection, to encourage its usage. However, these
discounts have been steadily decreased and now vary from only 5 to 22% for
different classes. Even with this low level of discount the use of ETC is significant
for three classes as shown in Table 19.
I
II
III
IV
V
VI
19.2%
32.8%
19.5%
7.1%
0.0%
0.0%
Table 19
ETC Usage in Year 2005 by Vehicle Classes
106
Rev: 0
Gal: 0106
Job: 13831G--
Date: 15-03-06
4.3
Area: A1
Operator: MC
ID Number: 6351
TCP No. 7
Time: 09:10
Pavement Condition and Performance
It is noted that the number of heavy vehicles is significantly small. The commercial
vehicles are in Classes III to VI mainly comprising of light commercial vehicles and
trucks. However, buses / mini buses are also classified as Class IV/III. Although
there is no separate data available on number of trucks, as there are a significant
number of bus movements observed, it is estimated that 25% of Class IV vehicles,
and all of Class V and VI vehicles are trucks. The current average daily volume of
trucks is 400.
It has also been observed that the number of buses and trucks are growing at a
significantly lower rate than cars and two-wheelers. This can be seen from the fact
that in the past two years, the growth for buses/trucks is 7% and 8%, whereas for
cars it is 11% and 15%. For performing a worst case analysis, a 10% growth rate is
considered for trucks for the next five years, and 5% for the following ten years. As
per Guidelines for the Design of Flexible Pavements (Second Revision), Indian Roads
Congress, 2001 (IRC:37-2001), a vehicle damage factor of 3.5 is considered.
Additionally, as this is a four-lane facility in one direction, 45% trucks in one
direction are considered to ply in the critical lane. The resulting equivalent
standard axles for the 20 year design period are 3.6 million. This is significantly
less than the 50 MSA design provided.
Pavement roughness is regarded as an important measure of pavement performance
as it directly evident to the facility users. A detailed study of pavement roughness
was performed in 2003 (Roughness Survey for DND, Technical Report, STUP
Consultants Pvt Ltd, November 2003) after the facility had been operating for
almost three years. A summary of the results is presented in Table 20.
From (km)
0.2
1
2
3
4
5
Table 20
To (km)
Roughness
(m/km)
1
2
3
4
5
5.3
1.724
1.904
1.876
1.980
2.109
1.925
Pavement Performance Data, November 2003
107
Rev: 0
Gal: 0107
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6352
TCP No. 7
Time: 09:10
The recommended threshold value for national highways in India is 3.47 mm/km.
The observed values on DND Flyway are less than 60% of the threshold value,
which demonstrates that the pavement is performing well. A recent site visit has
confirmed this and the current pavement condition is as depicted in Figure 6.
Figure 6
4.4
Existing Pavement Condition of DND Flyway
Facility Operation and Maintenance
NTBCL has contracted with Intertoll Consultants to operate and maintain the
facility. Intertoll has significant staff and equipment based at the site for this
purpose. These staff patrol the facility, perform routine maintenance, and are also
responsible for the operation which includes collection of toll.
The facility appears to be in good working order. The primary elements studied on
a recent site visit included a visual inspection of the main bridge and embankment,
the two other major features of this facility. The embankment height varies from 3
to 5 m. Detailed soil penetration tests had been performed on the embankment in
2000. Subsequently liquefaction analysis has been done, which has shown that the
embankment is in very good condition. A view of the existing embankment
condition is depicted in Figure 7.
108
Rev: 0
Gal: 0108
Job: 13831G--
Date: 15-03-06
Area: A1
Figure 7
4.5
Operator: MC
ID Number: 6353
TCP No. 7
Time: 09:10
Existing Embankment Condition
O&M Expenses
As per the latest agreement signed on dated 8 Feb. 2006, with NTBCL, Intertoll
will receive Rs 2.12 million as O&M expenses per month basis. Besides that,
NTBCL will also reimburse as power expenses and as other expenses for main
Flyway to Intertoll for each of the month currently aggregating to 0.7 million per
month. These expenses shall be escalated based on Consumer Price Index for urban
non-manual employees. The O & M cost for Mayur Vihar link road has been
estimated at Rs 5.1 million from 2008 onwards and escalated on the basis of
Consumer Price Index for urban non-manual employees.
As noted previously, the pavement condition is also good, and therefore no overlay
is anticipated to be needed for the next two years. It is expected that in the year
2009, a periodic overlay would have to be carried out and thereafter repeated every
five years. A summary of the pavement area is provided in Table 21.
109
Rev: 0
Gal: 0109
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6354
TCP No. 7
Component
Length (m)
Width (m)
Area (sq m)
Main Road
11,282
14.5
163,589
Time: 09:10
Delhi Side
Ramp-A
1600
11
6,600
Ramp-B
520
11
5,720
Ramp-C
600
7.5
4,500
Ramp-D
940
11
10,340
Ramp-E
519
7.5
3,893
Noida Side
Ramp-A
517
7.5
3,878
Ramp-B
433
7.5
3,248
Ramp-C
460
7.5
3,450
Ramp-D
430
7.5
3,225
Mayur Vihar
Link Road
2,800
7.5
21,000
Table 21
Mayur Vihar Toll Plaza area
1,500
Main Toll Plaza area
42,000
Total
272,942
DND Flyway Pavement Area (sq m)
As per the design, a 30 mm overlay is required to be provided. The cost for the
overlay will include the cost of cleaning the pavement surface, applying the tack
coat and the cost of the bitumen concrete. At year 2006 prices, the cost of the
overlay will be Rs 58.75 million, which includes the cost of supervision for this
activity.
There will be additional expenses related to the toll plaza. As noted previously, the
ETC is currently used by 20 to 33 percent of the three main classes of vehicles.
However, it is expected that its use will grow to over 65 percent in the future. This
will increase the throughput of the toll plaza and will ensure that it does not
become a bottleneck for traffic flows. However, technology upgrades will be
needed, typically on a lane by lane basis, to ensure that this facility is affordable
and attractive to consumers. This technology upgradation and regular system
upgradation is expected to cost Rs 10 million per year.
110
Rev: 0
Gal: 0110
Job: 13831G--
Date: 15-03-06
4.6
Area: A1
Operator: MC
ID Number: 6355
TCP No. 7
Time: 09:10
Discounted Cash Flows
The cash flow analysis is prepared with the objective of estimating the revenue
forecast, additional capital cost due to development of new links and review of
operation and maintenance expenses.
Accordingly, the scope of services of the study is to review the financial model of
the project including estimation of the cash flow analysis including the additional
capital expenditure due to new development of Mayur Vihar link.
4.6.1
Basic Assumptions and Inputs of the Cash Flow Analysis (CFA)
This CFA has been specially developed for this project. The basic assumptions of
the models are as follows
앫
As per the Concession Agreement the toll rates are revised annually on the
basis of change in consumer price index (CPI) for urban non manual
employees published by RBI. The CPI has increased from 156 in 1991 to 477
in November, 2005 indicating a compounded annual growth rate of 7.7%.
However, for the purpose of cash flow analysis a conservative escalation rate of
6% per annum has been assumed.
앫
The escalation rate for operation and maintenance expenses has been
considered 2% higher than the CPI inflation rate i.e. at 8% per year for the
operation period.
앫
The construction schedule for the Mayur Vihar is being considered for 9
months, such that this facility is operational from 1 January 2007.
앫
The traffic growth rate has been taken as presented earlier in the report. The
growth rate for specific modes has been estimated separately for different
periods as mentioned in the revenue section of this report.
앫
The traffic has been separately estimated for electronic and regular users.
111
Rev: 0
Gal: 0111
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6356
TCP No. 7
Time: 09:10
The following tax rates have been assumed for the project analysis:
4.6.2
앫
Income tax as 30% of base rate, surcharge of 10 %, education cess of 2%,
effective rate of 33.66%, minimum alternate tax of 7.65%. The project being
in the infrastructure sector covered under section 80 IA of the Income Tax Act
is eligible for a tax holiday for a continuous block of 10 years to be opted by
the Company within the first 20 years. Since the Company is carrying forward
significant amount of business loss and unabsorbed depreciation, there will be
no tax payable till FY 2010. The Company is assumed to avail of the tax
holiday during the period FY 2011 to 2020 (years 11th to 20th from start of
operations) and only MAT will be payable during this period. Tax at normal
tax rate has been provided in FY 2021.
앫
The rate of depreciation for tax computations has been assumed @ 10% per
annum on written down value basis with a salvage value of 5%.
Additional Capital Expenditure and Phasing
The additional cost for Mayur Vihar link road shall be Rs 300 million which will
be fully spent in 2007. The construction and commencement of operations
schedule is presented in Table 22.
Start of Construction
1 April 2006
Construction Period
9 Months
Start of Operations
1 January 2007
Table 22
4.6.3
Schedule of Mayur Vihar Link Construction
Revenue from the Project
The total revenue of the project comes from toll collection, advertisement and
interest earned from investments. This report only includes the revenues earned
from toll collection. The toll rates have been escalated based on CPI of urban
non-manual workers for Delhi. The revenue during 2008 after completion of
Mayur Vihar link is expected to be Rs 555.86 million.
112
Rev: 0
Gal: 0112
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6357
TCP No. 7
Time: 09:10
1)
For the purpose of estimating the future cash flows, the revenue has been
computed on the basis of traffic forecast presented in chapter III and the
applicable toll rates effective February 1, 2006 with an annual escalation of
6% per annum. Interest on cash surpluses and advertisement income /
expenses relating thereto have not been considered since the same is not part
of the terms of reference.
2)
Out of the gross income estimated above O & M expenses comprising the fees
payable to the O & M operator has been provided Rs 34 million for FY 2007
for main project and Rs. 5.1 mn. for Mayur Vihar Link Road for FY 2008.
The periodic overlay expenses has been escalated at the assumed rate of CPI
inflation i.e. 6% and establishment and other O & M expenses of the
Company have been projected using the estimated costs for 2006 provided by
the Company as the base with an annual escalation of 2% above the inflation
rate i.e. 8% per annum.
3)
The capital expenses anticipated for the Mayur Vihar Link has been netted out
for estimating annual net cash flow. No adjustment has been made with
respect to increase and decrease in current assets since the Company does not
have any debtors relating to the toll income and the level of inventories in
respect of the smart cards / ETC tags are expected to remain constant.
4)
Discount rate used for the DCF analyses is the cost of capital of the company :
The cost of equity for the company has been determined using the capital
asset pricing model. The prevailing yield on the 10 year G-Sec has been taken
as Risk-free rate which works out to 7.2% (Source : The Economic Times,
New Delhi January 24, 2006). The Market return is determined by averaging
the annualised growth rate in NSE Nifty and BSE Sensex over last 10 years
which works out to 10.75%. The beta (β) for the Company is 0.91. Thus cost
of equity works out to approximately 10.5%.
5)
Assuming a debt equity ratio of 1:1 and cost of debt @ 8.5% pa. for similar
projects, the weighted average Cost of Capital is calculated as 9.5%.
6)
Terminal Multiplier: The net cash flow (post tax) for the year 2021 has been
assumed for estimating terminal value of the project. Assuming a conservative
growth rate of 4% in toll rates and a 1% rate of growth in traffic, the terminal
multiplier works out to 22.4 times.
7)
Thus the present value of the future cash flows of the Company has been
estimated as presented next.
113
Rev: 0
Gal: 0113
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6358
TCP No. 7
Time: 09:10
Rs. Million
Discount Factor
9.5%
NPV of net cashflows till 2021
7,450
Rate of growth in toll rates
4.0%
Rate of Growth in traffic
1.0%
Multiplier
22.4
Terminal Value
37,146
PV of Terminal Value
10,426
Value of Project
17,875
The detailed computations have been placed at Appendix A.
5
Conclusions
The traffic forecast for the DND Flyway and the proposed Mayur Vihar Link Road
has been reviewed in light of the previous studies and substantial population
growth in the region. The Mayur Vihar Link Road is proposed to be developed by
NTBCL to shorten the travel distance for people living in Mayur Vihar and others
accessing areas in its vicinity. A recent study had estimated the impact of
developments in a narrow stretch along the Noida-Greater Noida Expressway. This
was extended to other undeveloped areas of Noida and Greater Noida, and it is
estimated that these developments will result in an additional population of 1.6
million. Other developments in recently and older developed areas will result in
another 0.4 million for a total population growth of 2.0 million.
This population increase is significantly greater than a previous estimate of 0.64
million. Therefore, the traffic is also expected to grow significantly more than that
estimated in the 2002 traffic study. It is expected that in the financial year ending
2021, there will be 200,504 daily vehicle trips on DND Flyway. This is more than
the 2002 traffic study estimate of 122,233 but less than the 2005 estimate of
199,613. The roadway capacity of 222,000 vehicles is adequate for the expected
traffic. The toll plaza capacity is about 25% higher than this, and thus none of
these components are expected to constrain the traffic flow or its growth.
114
Rev: 0
Gal: 0114
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6359
TCP No. 7
Time: 09:10
There are other developments occurring in the influence area which can impact the
traffic on DND Flyway. These include changes to the public transport system and
provision of a metro connection to parts of Noida, the Commonwealth Games in
the year 2010 which will result in significant developments on the eastern side of
Yamuna.
The condition of the existing facility and in particular the pavement and
embankment has also been reviewed. The pavement was designed for a load of 50
MSA, but the expected load is less than 4 MSA. The physical review also
established that the pavement condition is good, and therefore the first overlay is
expected only in the financial year ending 2009. The overlay is expected to cost
Rs 46 million (at year 2006 prices).
As the traffic increases, it is expected that technology changes will be needed to the
toll plaza on an incremental basis. This will help improve the throughput of the
toll plaza and is expected to cost Rs 10 million per year. The electronic toll
collection facility is being used by a growing number of facility users and varies
between 20 and 33 percent for the three primary classes. It is expected that after
2010 no discount will need to be provided for users of the ETC system.
The toll fee is expected to increase by 6% annually over the future years. This is a
conservative estimate, given that the CPI has increased by 7.7% annually in the
past ten years. A discounted cash flow analysis has been performed and the present
value of the project has been determined as Rs 17.9 billion.
115
Rev: 0
Gal: 0115
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6360
TCP No. 7
Time: 09:10
Appendix A: Traffic Forecast and Cash Flow Analysis
116
Rev: 0
Gal: 0116
35.3
44.2
61.8
79.5
LCVs
Truck/Buses
All Heavy Vehicles 쏜 4 Axles
35
45
60
80
LCVs
117
Truck/Buses
30
45
55
65
LCVs
Truck/Buses
65
55
45
30
17
70
60
45
30
18
8
75
65
45
35
19
9
90
70
50
40
20
80
70
50
35
20
10
95
75
55
40
21
11
100
80
55
45
22
11
100
80
55
45
22
11
100.4
78.1
55.7
44.6
22.3
105
85
60
45
24
12
105
85
60
45
24
12
106.4
82.7
59.1
47.3
23.6
115
90
65
50
25
13
115
90
65
50
25
13
112.8
87.7
62.6
50.1
25.1
12.5
6.0%
2013
120
95
65
55
27
13
120
95
65
55
27
13
119.5
93.0
66.4
53.1
26.6
13.3
6.0%
2014
125
100
70
55
28
14
125
100
70
55
28
14
126.7
98.5
70.4
56.3
28.1
14.1
6.0%
2015
135
105
75
60
30
15
135
105
75
60
30
15
134.3
104.5
74.6
59.7
29.8
14.9
6.0%
2016
140
110
80
65
32
16
140
110
80
65
32
16
142.4
110.7
79.1
63.3
31.6
15.8
6.0%
2017
150
115
85
65
34
17
150
115
85
65
34
17
150.9
117.4
83.8
67.1
33.5
16.8
6.0%
2018
160
125
90
70
36
18
160
125
90
70
36
18
159.9
124.4
88.8
71.1
35.5
17.8
6.0%
2019
170
130
95
75
38
19
170
130
95
75
38
19
169.5
131.9
94.2
75.3
37.7
18.8
6.0%
2020
180
140
100
80
40
20
180
140
100
80
40
20
179.7
139.8
99.8
79.9
39.9
20.0
6.0%
2021
TCP No. 7
Time: 09:10
Forecast of Toll User Charges on DND Flyway (Rs/Trip)
17
Car/Autos
8
85
65
45
35
19
10
94.7
73.6
52.6
42.1
21.0
11.8
6.0%
2012
ID Number: 6361
Appendix 1
7
Two wheelers
80
60
45
35
18
9
89.3
69.5
49.6
39.7
19.8
11.1
6.0%
2011
ETC- Silver/Gold
18
Car/Autos
9
84.3
65.5
46.8
37.4
18.7
10.5
6.0%
2010
Operator: MC
Two wheelers
79.5
61.8
44.2
35.3
17.7
9.9
6.0%
2009
Area: A1
9
17.7
Car/Autos
9.4
6.0%
2008
Date: 15-03-06
Toll Rounded Off
8.8
Two wheelers
8.8
6.0%
Annual Increase of User Charges 6.0%
Maximum Permissible Toll
2007
2006
Job: 13831G-Rev: 0
Gal: 0117
118
3,166
4,969
70
243
31
34
8,512
3.9%
3,290
5,164
72
252
32
36
8,846
3.9%
25,899
53,858
418
1,455
183
206
82,019
10.0%
3,340
5,242
73
256
32
36
8,980
1.5%
28,489
59,244
459
1,601
202
226
90,221
10.0%
3,390
5,321
75
260
33
37
9,115
1.5%
30,768
63,983
496
1,729
218
244
97,438
8.0%
2013
3,442
5,401
76
264
33
37
9,253
1.5%
32,614
67,822
526
1,833
231
259
103,284
6.0%
2014
3,494
5,483
77
268
34
38
9,393
1.5%
34,244
71,214
552
1,924
242
272
108,449
5.0%
2015
3,546
5,566
78
272
34
38
9,535
1.5%
35,614
74,062
574
2,001
252
283
112,787
4.0%
2016
3,600
5,650
79
276
35
39
9,679
1.5%
3,654
5,735
80
280
35
40
9,825
1.5%
3,710
5,822
82
284
36
40
9,973
1.5%
2017
2018
2019
(Vehicles/day)
37,039
38,520
39,676
77,025
80,106
82,509
597
621
640
2,081
2,164
2,229
262
273
281
294
306
315
117,298 121,990 125,650
4.0%
4.0%
3.0%
3,766
5,910
83
289
36
41
10,124
1.5%
40,866
84,984
659
2,296
289
325
129,419
3.0%
2020
3,823
5,999
84
293
37
41
10,277
1.5%
42,092
87,534
679
2,365
298
334
133,302
3.0%
2021
ID Number: 6362
Average Daily Traffic (vehicles) Traffic Forecast for 2006 to 2021 – Cash Users
3,048
4,783
67
234
29
33
8,194
3.9%
2,934
4,605
65
225
28
32
7,889
3.9%
23,544
48,962
380
1,323
167
187
74,562
12.0%
2012
Operator: MC
Appendix 2
21,022
43,716
339
1,181
149
167
66,574
15.0%
2011
Area: A1
18,280
38,014
295
1,027
129
145
57,890
15.0%
TRAFFIC PROJECTIONS
2008
2009
2010
Date: 15-03-06
Cash Users
2006
2007
Two wheelers
13,822
15,895
Car/Autos
28,744
33,056
LCVs
223
256
Truck/Buses
777
893
98
112
110
126
Total
43,773
50,339
Growth Rate
15.8%
15%
Two wheelers
2,825
Car/Autos
4,433
LCVs
62
Truck/Buses
216
27
31
Total
—
7,594
Traffic Growth Rate
3.9%
Time: 09:10
Rev: 0
Gal: 0118
119
803
2,598
18
20
—
—
3,439
1.5%
815
2,637
18
20
—
—
3,491
1.5%
828
2,677
19
20
—
—
3,543
1.5%
8,114
34,764
134
146
—
—
43,158
5.0%
840
2,717
19
21
—
—
3,597
1.5%
8,438
36,155
139
152
—
—
44,884
4.0%
2016
853
2,758
19
21
—
—
3,651
1.5%
866
2,800
19
21
—
—
3,706
1.5%
879
2,842
20
22
—
—
3,762
1.5%
2018
2019
(Vehicles/day)
8,776
9,127
9,400
37,601
39,105
40,278
145
150
155
158
164
169
—
—
—
—
—
—
46,679
48,547
50,003
4.0%
4.0%
3.0%
2017
892
2,885
20
22
—
—
3,819
1.5%
9,683
41,487
159
174
—
—
51,503
3.0%
2020
906
2,929
20
22
—
—
3,877
1.5%
9,973
42,731
164
180
—
—
53,048
3.0%
2021
ID Number: 6363
Average Daily Traffic (vehicles) Traffic Forecast for 2006 to 2021 – ETC Users
791
2,559
18
19
—
—
3,387
1.5%
7,727
33,109
127
139
—
—
41,103
6.0%
2015
Appendix 3
750
2,426
17
18
—
—
3,211
3.9%
780
2,521
18
19
—
—
3,337
3.9%
722
2,335
16
18
—
—
3,091
3.9%
Two wheelers
Car/Autos
LCVs
Truck/Buses
Total
Growth Rate
7,290
31,235
120
131
—
—
38,776
8.0%
2014
Operator: MC
695
2,248
16
17
—
—
2,976
3.9%
6,750
28,921
111
121
—
—
35,904
10.0%
6,136
26,292
101
110
—
—
32,640
10.0%
2013
Area: A1
669
2,164
15
16
—
—
2,865
2012
2011
Date: 15-03-06
ETC
TRAFFIC PROJECTIONS FOR ETC
2006
2007
2008
2009
2010
Two wheelers
3,275
3,766
4,331
4,981
5,578
Car/Autos
14,032
16,137
18,557
21,341
23,902
LCVs
54
62
71
82
92
Truck/Buses
59
68
78
90
100
—
—
—
—
—
—
—
—
—
—
Total
17,420
20,033
23,038
26,493
29,673
Growth Rate
15.7%
15.0%
15.0%
15.0%
12.0%
Time: 09:10
Rev: 0
Gal: 0119
120
72,951
91,792
26,240
63,424
446
1,347
158
177
104,352
29,772
72,175
504
1,522
178
200
115,958
33,039
80,258
558
1,685
197
221
126,841
36,105
87,835
608
1,837
215
241
4,070
7,684
90
271
32
36
429
12,183
4%
138,491
39,370
95,966
662
1,998
234
262
4,131
7,801
91
275
32
36
435
12,367
2%
2012
35,238
88,165
570
1722
202
226
2,721
126124
10.0%
148,768
42,251
103,137
709
2,140
250
281
4,194
7,918
93
280
33
37
442
12,554
2%
2013
38,058
95,218
616
1860
218
244
2,938
136214
8.0%
157,131
44,598
108,970
747
2,256
264
296
4,257
8,038
94
284
33
37
448
12,743
2%
2014
40,341
100,931
653
1972
231
259
3,115
144387
6.0%
164,542
46,679
114,138
781
2,358
276
310
4,321
8,160
95
288
34
38
455
12,936
2%
2015
42,358
105,978
686
2070
242
272
3,270
151606
5.0%
170,802
48,439
118,500
810
2,446
286
321
4,387
8,283
97
292
34
38
462
13,132
2%
2016
44,052
110,217
713
2153
252
283
3,401
157671
4.0%
177,307
50,267
123,034
840
2,536
297
333
4,453
8,408
98
297
35
39
469
13,330
2%
2017
45,814
114,626
742
2239
262
294
3,537
163977
4.0%
184,068
52,167
127,746
871
2,630
308
346
4,520
8,535
100
301
35
40
476
13,531
2%
189,388
53,665
131,451
896
2,705
317
355
4,588
8,664
101
306
36
40
483
13,736
2%
(Vehicles/day)
2018
2019
47,647
49,076
119,211 122,787
771
794
2329
2399
273
281
306
315
3,679
3,789
170537 175653
4.0%
3.0%
194,866
55,207
135,266
921
2,781
326
365
4,658
8,795
103
311
36
41
491
13,943
2%
2020
50,549
126,471
818
2471
289
325
3,903
180922
3.0%
200,504
56,793
139,193
947
2,860
335
376
4,728
8,928
104
315
37
41
498
14,154
2%
2021
52,065
130,265
843
2545
298
334
4,020
186350
3.0%
ID Number: 6364
Total Traffic Forecast (Year 2006 to 2021) in vehicles.
61,193
Total
20,523
50,819
337
1,018
119
134
3,916
7,394
86
261
31
34
412
11,723
4%
2011
32,035
80,150
519
1566
183
206
2,473
114658
10.0%
Appendix 4
17,097
42,776
277
836
98
110
3,770
7,118
83
251
29
33
397
11,285
4%
2010
29,123
72,864
471
1423
167
187
2,248
104235
12.0%
Operator: MC
Total
Growth Rate
TOTAL TRAFFIC
Two wheelers
Car/Autos
LCVs
Truck/Buses
3,629
6,853
80
242
28
32
382
10,864
4%
2009
26,002
65,057
421
1271
149
167
2,008
93067
15.0%
Area: A1
3,494
6,597
77
233
27
31
368
10,459
4%
2008
22,611
56,571
366
1105
129
145
1,746
80928
15.0%
Date: 15-03-06
Two wheelers
Car/Autos
LCVs
Truck/Buses
2006
2007
Two wheelers
17,097
19,662
Car/Autos
42,776
49,192
LCVs
277
318
Truck/Buses
836
961
98
112
110
126
Total Commercial and Buses
1,320
1,518
Total
61193
70372
Growth Rate
15.8%
15.0%
Time: 09:10
Rev: 0
Gal: 0120
2
3
121
0
0
0
0
0
LCVs
Truck/Buses
Total
11
0
0
1
0
7
48
1
1
4
1
32
10
53
1
1
4
1
35
11
432
5
4
22
59
1
1
5
1
38
13
513
6
5
27
6
375
95
2010
63
1
1
5
1
41
13
585
8
5
29
7
432
104
2011
70
1
1
6
1
46
15
701
9
6
35
8
519
125
2012
75
2
1
6
1
49
16
797
10
7
41
9
584
146
2013
80
2
1
6
2
53
16
897
11
8
43
11
668
155
2014
85
2
1
7
2
56
18
984
12
9
49
11
728
175
2015
93
2
1
7
2
61
19
1097
14
10
55
13
811
195
2016
100
2
1
8
2
66
21
1216
15
11
61
14
900
216
2017
108
2
1
9
2
71
23
1343
17
11
67
15
994
239
Rs.
Million
2018
116
2
2
9
2
76
24
1466
18
13
73
16
1084
261
2019
125
3
2
10
2
82
26
1594
20
14
80
18
1179
283
2020
133
3
2
11
2
88
28
1729
22
15
86
20
1278
307
2021
ID Number: 6365
TCP No. 7
Detailed Annual Revenue Forecasts for Cash Users (Rs in millions)
0
Car/Autos
2
352
5
3
17
5
319
77
2009
Appendix 5
0
Two wheelers
Additional Revenue due to
Mayur Vihar Link
293
4
2
15
4
264
60
2008
Operator: MC
255
13
Truck/Buses
3
217
52
2007
Area: A1
Total
3
189
Car/Autos
LCVs
45
2006
Date: 15-03-06
Two wheelers
Revenue Projections for
Existing Delhi Noida Toll
Bridge
Cash Users
Ending 31st March
Job: 13831G-Time: 09:10
Rev: 0
Gal: 0121
2006
87
1
1
0
0
98
Car/Autos
LCVs
Truck/Buses
Total
113
0
0
1
1
100
11
0
0
0
0
0
LCVs
122
Truck/Buses
Total
2
3
Appendix 6
554
5
4
22
671
7
5
28
7
518
791
8
5
34
8
606
130
912
9
6
37
10
705
145
24
0
0
0
0
20
3
1085
10
7
44
11
841
172
27
0
0
0
0
22
3
287
0
0
3
2
253
1225
12
8
51
13
941
200
28
0
0
0
0
24
4
325
0
0
3
2
285
35
Detailed Annual Revenue Forecasts for ETC Users and Total Revenue (Rs in million)
421
4
3
17
6
432
107
21
0
0
0
0
18
3
240
0
0
2
2
211
30
1376
13
9
54
15
1074
212
31
0
0
0
0
26
4
369
0
0
3
3
326
37
2014
1505
14
10
60
16
1166
239
32
0
0
1
0
27
4
403
0
0
4
3
355
41
2015
1674
16
11
67
18
1298
265
35
0
0
1
0
30
5
449
0
0
4
3
396
46
2016
1854
17
12
74
20
1437
294
38
0
0
1
0
32
5
498
0
0
5
3
439
51
2017
2043
19
13
82
21
1585
324
41
0
0
1
0
35
5
551
0
0
5
4
485
57
2018
2227
21
14
89
23
1727
353
44
0
0
1
1
37
6
601
0
0
6
4
529
62
2019
2419
23
15
96
25
1876
383
48
0
0
1
1
40
6
653
0
0
6
4
575
67
2020
2621
25
17
104
28
2032
415
51
0
0
1
1
43
7
708
0
0
7
5
624
73
2021
Time: 09:10
353
14
Truck/Buses
4
328
84
19
0
0
0
0
16
2
198
0
0
2
1
174
20
2013
TCP No. 7
Total
3
276
Car/Autos
66
17
0
0
0
0
15
2
167
0
0
2
1
148
16
2012
ID Number: 6366
LCVs
55
Two wheelers
4
0
0
0
0
3
0
137
0
0
1
1
122
13
25
2011
TOTAL REVENUE
0
Car/Autos
2010
Operator: MC
0
2009
Area: A1
Two wheelers
2008
Revenue Projections for ETC
2007
Date: 15-03-06
Additional Revenue due to Mayur Vihar Link
10
Two wheelers
Existing Delhi Noida Toll Bridge
ETC
Job: 13831G-Rev: 0
Gal: 0122
249
312
109
123
7450
NPV till 2021
0.83
1.0%
5.0%
22.4
Rate of Growth in traffic
Rate of Growth in income
Discounted Cash Flow Analysis (Rs in Millions)
Multiplier
Appendix 7
0.76
614
17875
10426
37146
0.70
714
714
37
161
0.64
863
863
50
173
0.58
981
981
60
185
7
13
51
114
1225
2013
0.53
1039
69
69
1108
70
199
7
14
54
123
1376
2014
0.48
1222
1222
71
213
8
15
57
133
1505
2015
0.44
1362
1362
84
228
8
16
61
144
1674
2016
0.40
1511
1511
98
245
9
17
64
155
1854
2017
0.37
1658
1658
122
263
9
18
68
168
2043
2018
0.34
1718
92
92
1809
136
282
10
19
72
181
2227
2019
0.31
1966
1966
150
302
10
20
77
195
2419
2020
0.28
1577
1577
719
324
11
21
81
211
2621
2021
TCP No. 7
Value of Project
PV of Terminal
Value
4.0%
Terminal Value
0.91
461
614
26
150
6
13
48
106
1085
2012
ID Number: 6367
Rate of growth in toll rates
1.00
419
51
51
512
18
140
6
12
45
98
912
2011
Terminal Value Multiplier
9.5%
Discount Factor
12
300
Total Capital and Periodic Expenditure
NET CASH FLOW
300
New Links
419
4
131
6
11
43
91
791
2010
Operator: MC
Overlay Expenses (w/off)
CAPITAL AND PERIODIC EXPENDITURE
OPERATING SURPLUS
Income Tax/MAT
104
5
11
40
84
671
2009
Area: A1
Total O&M Cost
5
1
38
Mayur Vihar Link Exp
36
78
553
2008
10
38
O&M Fee-DND Flyway
72
421
2007
Date: 15-03-06
Other expenses
67
353
2006
Establishment Costs
Operating Expenses
Toll Revenue
Year Ending March 31
Job: 13831G-Time: 09:10
Rev: 0
Gal: 0123
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6368
TCP No. 7
Time: 09:10
We appreciate the opportunity to perform this evaluation and are available should
you need further assistance in this matter.
................................................
Dr Pawan Maini
Director
................................................
Prakash Gaur
Senior Infrastructure Planner
124
Rev: 0
Gal: 0124
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6369
TCP No. 7
Appendix B: Certificate of Qualification
125
Time: 09:10
Rev: 0
Gal: 0125
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6370
TCP No. 7
Time: 09:10
Tel: 쎴91 11 2983 4944, 4945; Fax: 쎴91 11 2984 5881
www.halcrow.com
CERTIFICATE OF QUALIFICATION
I, Pawan Maini, Director, Halcrow Consulting India Limited, 38, Ring
Road, Lajpat Nagar III, New Delhi – 110 024, INDIA, hereby certify:
1.
I am an employee of Halcrow Consulting India Limited, which
prepared Traffic Re-validation and Cash Flow Analysis Report of
Delhi – Noida – Direct Flyway for Noida Toll Bridge Company
Limited (NTBCL). The effective date of this evaluation is
20th February, 2006.
2.
I do not have, nor do I expect to receive, any direct or indirect
interest in the securities of NTBCL.
3.
I am a Post Graduate and Doctorate in Transportation Engineering
from University of Colorado, USA; I am Member of Indian Road
Congress, India, Life Time Member Institute of Urban Transport,
India, having more than 15 years of professional experience in the
field of transportation engineering.
4.
The report is based on specific assumptions including
socio-economic forecast of region and land use data derived from
secondary sources. These assumptions are specified in the report
Dr. Pawan Maini
New Delhi, India
20th February, 2006
126
Rev: 0
Gal: 0126
Job: 13831G--
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6371
TCP No. 7
Time: 09:10
Tel: 쎴91 11 2983 4944, 4945; Fax: 쎴91 11 2984 5881
www.halcrow.com
CERTIFICATE OF QUALIFICATION
I, Prakash Gaur, Senior Infrastructure Engineer, Halcrow Consulting
India Limited, 38, Ring Road, Lajpat Nagar III, New Delhi – 110 024,
INDIA, hereby certify:
1.
I am an employee of Halcrow Consulting India Limited, which
prepared Traffic Re-validation and Cash Flow Analysis Report of
Delhi – Noida – Direct Flyway for Noida Toll Bridge Company
Limited (NTBCL). The effective date of this evaluation is
20th February, 2006.
2.
I do not have, nor do I expect to receive, any direct or indirect
interest in the securities of NTBCL.
3.
I have done Masters in Economics, Transportation Planning,
Transport and Maritime Economics (Institute of Transport and
Maritime Management Antwerp, University of Antwerp, Belgium )
and Currently Pursuing Doctor of Philosophy (Ph. D.) in Capacity
Planning of Port (ITMMA); I am Member of Indian Road Congress,
India, Member of Institute of Rail Transport and Member of
Chartered Institute of Transport, having more than 11 years of
professional experience in the field of Transportation Economics.
4.
The report is based on specific assumptions including
socio-economic forecast of region and land use data derived from
secondary sources. These assumptions are specified in the report.
Prakash Gaur
New Delhi, India
20th February, 2006
127
Rev: 0
Gal: 0127
Job: 13831G--
Wedgewood
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6372
TCP No. 7
PART V
Accountant’s Report
The Board of Directors,
Toll Plaza
DND Flyway
Noida – 201 301
The Board of Directors
9th Floor
88 Wood Street
London
EC2V 7QR
14 March 2006
Dear Sirs
We report on the financial information set out on pages 130 to 179 for the 9 months period ended
31 December 2005 and the years ended 31 March 2005, 2004 and 2003. This financial
information has been prepared for inclusion in the admission document of Noida Toll Bridge
Company Limited on the basis of the accounting policies set out in note 1 to the financial
information. This report is required by Schedule Two of the AIM rules and is given for the purpose
of complying with that schedule and for no other purpose.
Responsibilities
As described in note 1 to the financial information, the Directors of Noida Toll Bridge Company
Limited are responsible for preparing the financial information on the basis set out in note 1 to the
financial information and in accordance with International Financial Reporting Standards.
It is our responsibility to form an opinion on the financial information as to whether the financial
information gives a true and fair view, for the purposes of the admission document and to report
our opinion to you.
Basis of Opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an assessment
of significant estimates and judgments made by those responsible for the preparation of the
financial statements underlying the financial information and whether the accounting policies are
appropriate to the entity’s circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the financial information is free from material misstatement whether caused by fraud or other
irregularity or error.
We report that the financial information for the 9 months period ended 31 December 2005 has not
been prepared in accordance with the requirements of IAS 34 (Interim Financial reporting) in so far
it relates to non-presentation of comparative figures for the corresponding period of the previous
year. Our opinion has been qualified in this respect.
Offices: New Delhi, Mumbai, Chennai, Hyderabad, Bagalore & Pune
128
Time: 09:10
Rev: 0
Gal: 0128
Job: 13831G--
Wedgewood
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6373
TCP No. 7
Opinion
In our opinion, the financial information gives, for the purpose of the admission document dated
15 March 2006, a true and fair view of the state of affairs of Noida Toll Bridge Company Limited
as at the dates stated and of its profits, cash flows and changes in equity for the periods then ended in
accordance with the basis of preparation set out in note 1 and in accordance with International
Financial Reporting Standards as described in note 1, except for non-presentation of appropriate
comparative information for the 9 months’ period ended 31 December 2005, as per IAS 34.
Declaration
For the purposes of Paragraph a of Schedule Two of the AIM rules we are responsible for this report
as part of the admission document and declare that we have taken all reasonable care to ensure that
the information contained in this report is, to the best of our knowledge, in accordance with the
facts and contains no omission likely to affect its import. This declaration is included in the
admission document in compliance with Schedule Two of the AIM Rules.
Yours faithfully
S.R. Batliboi & Co.
Chartered Accountants
Per Manoj Gupta
Partner
New Delhi, India
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Consolidated Balance Sheet as at 31 December 2005, 31 March 2005, 2004 and 2003
Note
Assets
Non Current Assets
Property, Plant and
Equipment
Capital Work in Progress
Intangible Asset
Employee Benefits
Loans and Advances
Current Assets
Inventories
Trade Receivables
Loans and Advances
Prepayments
Available-for-Sale Investments
Cash and Cash Equivalents
2
3
4
19
5
Current Liabilities
Interest-bearing Loans and
Borrowings
Trade and Other Payables
Provisions
Provision for Taxes
31 March
2004
US($)
31 March
2003
US($)
290,577
—
114,798,862
42,134
47,195
115,375
133,465
117,509,005
32,202
62,239
77,622
3,439
108,946,974
25,162
129,542
110,610,774
115,178,768
117,852,286
109,182,739
12,353
175,446
256,090
69,450
1,517,072
104,356
17,338
143,395
165,037
64,998
841,490
39,538
10,242
53,352
291,454
160,260
2,840,251
234,287
42,009
67,791
357,833
174,653
2,101,808
42,457
2,134,767
1,271,796
3,589,846
2,786,551
112,745,541
116,450,564
121,442,132
111,969,290
8
9
10
11
11
11
11
11
28,320,665
125,356
12,275
12,853
11,159
(831,968)
28,055,363
—
—
4,443
—
831,549
28,055,363
—
—
6,783
—
(2,377,074)
678,102
5,637,850
9,671,962
23,612,379
28,568,387
34,529,205
35,357,034
12
13
14
74,318,041
885,918
—
72,984,866
841,149
—
70,529,231
781,685
1,054,669
69,964,208
658,109
3,126,008
12
15
13
10,999,841
2,896,992
26,921
5,449
10,914,422
3,107,468
34,005
267
11,568,353
2,957,140
21,632
217
—
2,842,900
20,902
129
89,133,162
87,882,177
86,912,927
76,612,256
112,745,541
116,450,564
121,442,132
111,969,290
(4,037,961)
Total Equity
Non Current Liabilities
Borrowings
Provisions
Deferred Tax Liability
31 March
2005
US($)
278,284
68,118
110,167,541
38,144
58,687
6
7
5
Total Assets
Equity and Liabilities
Issued Capital
Securities Premium
Stock Option Account
Net Unrealised Gains Reserve
General Reserve
Effect of Currency Translation
Retained earnings (Profit &
Loss Account )
31 December
2005
US($)
Total Liabilities
Total Equity and Liabilities
28,055,363
—
118,474
1,259
—
(284,811)
In terms of our report of even date
For S.R. Batliboi & Co.
On Behalf of the Board of Directors
per Manoj Gupta
Partner
Hari Sankaran
Director
Arun K Saha
Director
T K Banerjee
CFO
Place: New Delhi
Mumbai
Mumbai
New Delhi
Date: 14 March 2006
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Consolidated Income Statement for the 9 month period ended 31 December 2005 and for the years
ended 31 March 2005, 2004 and 2003
9 Month Period
Ended
31 December
2005
Note
US($)
Year ended
31 March
2005
US($)
Year ended
31 March
2004
US($)
Year ended
31 March
2003
US($)
Toll Revenue
License Fee
Other Income
5,492,826
993,937
29,553
6,015,930
789,429
84,343
4,917,216
426,939
162,408
3,430,563
281,456
52,399
Total Income
6,516,316
6,889,702
5,506,563
3,764,418
1,061,849
1,063,341
37,623
1,292,928
1,524,971
1,166,112
51,837
1,696,675
1,047,877
812,036
49,147
1,660,835
899,498
958,888
41,426
1,575,408
Total Operating and
3,455,741
4,439,595
3,569,895
3,475,220
from Continuing
Operations
3,060,575
2,450,107
1,936,668
289,198
40,750
(7,610,794)
170,648
(9,276,215)
125,790
(8,243,441)
105,561
(7,777,824)
(7,570,044)
(9,105,567)
(8,117,651)
(7,672,263)
(4,509,469)
(6,655,460)
(6,180,983)
(7,383,065)
—
1,018,067
—
2,237,005
—
2,678,284
(4,509,469)
(5,637,393)
(3,943,978)
(4,704,781)
(0.037)
(0.046)
(0.032)
(0.043)
Operating and
– Depreciation
– Amortisation
Finance Income
Investments
Finance Charges
Income Taxes:
– Current Taxes
16
16
2
4
17
Loss per share
– basic and diluted for the
year
—
0
14
18
per Manoj Gupta
Partner
Hari Sankaran
Director
Arnu K Saha
Director
T K Banerjee
CFO
Place: New Delhi
Mumbai
Mumbai
New Delhi
Date: 14 March 2006
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TCP No. 7
Consolidated Cash Flow for the 9 month period ended 31 December 2005 and years ended
31 March 2005, 2004 and 2003
9 Month Period
Ended
31 December
2005
US($)
A. Cash Flow from Operating Activities
Receipts from Customers
6,509,707
Payment to Suppliers and
Employees
(2,675,443)
Deposits, Advances and Staff Loan
(111,214)
Purchase of Inventories
(19,516)
Income Taxes Paid
727
Net Cash from Operating
Activities (A)
3,704,261
B.
Cash Flow from Investment Activities
Purchase of Fixed Assets
(112,473)
Purchase of ‘Available for Sale’
Investments
(3,482,151)
Proceeds from sale of ‘Available
for Sale’ Investments
2,821,386
Proceeds from Sale of Fixed Assets
1,358
Net Cash from/ (used in)
Investment Activities (B)
(771,880)
Year Ended
31 March
2005
US($)
Year Ended
31 March
2004
US($)
Year Ended
31 March
2003
US($)
6,809,285
5,512,572
3,785,428
(2,237,094)
166,215
(35,098)
(21,223)
(1,873,625)
185,483
(14,893)
(16,064)
(2,641,746)
81,598
(25,291)
(531)
4,682,085
3,793,473
1,199,458
(106,668)
(190,503)
(27,350)
(4,004,039)
(3,318,815)
(3,912,415)
6,094,277
2,193
2,932,148
18,886
2,099,095
8,044
1,985,763
(558,284)
C. Cash flow from Financing Activities
Proceeds from Issue of Share
265,302
—
Term Loans from Banks, Financial
Institutions and Others
—
7,786,430
Repayment of Term Loan to
Banks, Financial Institutions and
Others
— (10,158,581)
Interest and Finance Charges Paid
(3,131,781) (4,483,370)
—
(3,057,728)
Net Cash from/ (used in)
Financing Activities (C)
(3,057,728)
Net Increase/ (Decrease) in Cash
and Cash Equivalents (A쎴B쎴C)
Net Foreign Exchange Difference
(Opening Balance) – Refer
Note – 9
(Closing Balance) – Refer Note – 9
(1,832,626)
—
—
—
1,947,141
—
(1,644,507)
(2,866,479)
(6,855,521)
302,634
65,902
(1,084)
(187,673)
(7,076)
177,461
14,369
(330,534)
(6,331)
39,538
234,287
42,457
379,322
104,356
39,538
234,287
42,457
per Manoj Gupta
Partner
Hari Sankaran
Director
Arun K Saha
Director
T K Banerjee
CFO
Place: New Delhi
Mumbai
Mumbai
New Delhi
Date: 14 March 2006
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TCP No. 7
Consolidated Statement of changes in Equity for the 9 month period ended 31 December 2005 and
years ended 31 March 2005, 2004 and 2003
Issued
capital
US($)
At 1 April 2002
(restated)
Loss for the year
Issue of Share
Capital
Realisation of gains
on disposal of
securities
Net gains on
available for sale
Financial Assets
Difference for
Currency
Translation
At 31 March 2003
Loss for the year
on disposal of
securities
Net gains on
available for sale
financial assets
Difference for
currency translation
At 31 March 2004
Loss for the year
Share option
expense during
vesting period
on disposal of
securities
Net gains on
available for sale
financial assets
Difference for
At 31 March 2005
Loss for the period
Share option
expense during
vesting period
Issue of Share
Capital
Transfer on issue of
shares
Transfer of lapsed
shares
on disposal of
securities
Net gains on
available for sale
financial assets
Difference for
At 31 December
2005
Securities
Premium
US($)
Effect of
Stock
Currency
Option Translation
Account
Reserve
US($)
US($)
23,273,955
—
—
—
—
—
(1,880,268)
—
4,781,408
—
—
—
—
—
—
—
—
—
—
—
Net
Unrealised
Gains
Reserve
US($)
2,855
—
—
General
Reserve
US($)
Retained
Earnings
US($)
Total
equity
US($)
— 14,376,743 35,773,285
— (4,704,781) (4,704,781)
—
—
(2,855)
—
—
(2,855)
6,783
—
—
6,783
—
4,781,408
—
—
—
(496,806)
—
—
28,055,363
—
—
(2,377,074)
6,783
—
9,671,962 35,357,034
—
—
—
—
—
—
(3,943,978) (3,943,978)
—
—
—
—
(6,783)
—
—
(6,783)
—
—
—
—
4,443
—
—
4,443
—
—
—
3,208,623
—
—
28,055,363
—
—
831,549
4,443
—
5,637,850 34,529,205
—
—
—
—
—
—
(5,637,393) (5,637,393)
—
—
118,474
—
—
—
—
—
—
—
—
(4,443)
—
—
(4,443)
—
—
—
—
1,259
—
—
1,259
—
—
—
(1,116,360)
—
—
677,645
28,055,363
—
118,474
(284,811)
1,259
—
678,102 28,568,387
—
—
—
—
—
—
—
—
34,420
—
—
—
—
34,420
265,302
—
—
—
—
—
—
265,302
—
125,356
(125,356)
—
—
—
—
—
—
—
(11,159)
—
—
11,159
—
—
—
—
—
—
(1,259)
—
—
(1,259)
—
—
—
—
12,853
—
—
12,853
—
—
28,320,665
125,356
(4,104)
(547,157)
—
—
12,275
(831,968)
12,853
11,159
133
(90,134)
(496,806)
3,118,489
118,474
(438,715)
(4,509,469) (4,509,469)
(206,593)
(757,855)
(4,037,961) 23,612,379
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TCP No. 7
1.
Summary of significant accounting policies
(a) Corporate Information
Noida Toll Bridge Company Limited (NTBCL) is a public limited company incorporated and
domiciled in India on 8 April 1996 with its registered office at Toll Plaza, DND Flyway, Noida –
201301, Uttar Pradesh, India. The shares of NTBCL are publicly traded in India on the National
Stock Exchange and Bombay Stock Exchange. The financial statements of the NTBCL for nine
month period ended 31 December 2005 and years ended 31 March 2003, 31 March 2004 and
31 March 2005 are the responsibility of the Directors of the company and were authorised for issue
in accordance with a resolution of the directors on 7 March 2006.
The NTBCL has been set up to develop, establish, construct, operate and maintain a project
relating to the construction of the Delhi Noida Toll Bridge under the
“Build-Own-Operate-Transfer” (BOOT) basis. The Delhi Noida Toll Bridge comprises the Delhi
Noida Toll Bridge, adjoining roads and other related facilities and the Ashram flyover which has
been constructed at the landfall of the Delhi Noida Toll Bridge and it operates under a single
business and geographical segment (Refer Note 27).
NTBCL has promoted a 100% subsidiary i.e. DND Flyway Limited on 17 February 2004 with the
object of carrying out development activities on the surplus land around the Delhi Noida Toll
Bridge (DND Flyway). While the subsidiary has been formed to generate revenue by developing the
land, it can commence commercial activity only after execution of a formal agreement with New
Okhla Industrial Development Authority (NOIDA). Hence even though no commercial operations
have begun the financial statements of the subsidiary have been prepared on a going concern basis.
(b) Service Concession Arrangement entered into between IL&FS, NTBCL and NOIDA
A ‘Concession Agreement’ entered into between the NTBCL, Infrastructure Leasing and Financial
Services Limited (IL&FS, the promoter company) and the New Okhla Industrial Development
Authority, Government of Uttar Pradesh, conferred the right to the Company to implement the
project and recover the project cost, through the levy of fees/ toll revenue, with a designated rate of
return over the 30 years concession period commencing from 30 December 1998 i.e. the date of
Certificate of Commencement, or till such time the designated return is recovered, whichever is
earlier. The Concession Agreement further provides that in the event the project cost with the
designated return is not recovered at the end of 30 years, the concession period shall be extended by
2 years at a time until the project cost and the return thereon is recovered. The rate of return is
computed with reference to the project costs, cost of major repairs and the shortfall in the recovery
of the assured returns in earlier years. As per the certification by the independent auditors, the total
recoverable amount comprises project cost and 20% designated return. NTBCL shall transfer the
Project Assets to the New Okhla Industrial Development Authority in accordance with the
Concession Agreement upon the full recovery of the total cost of project and the returns thereon.
Further details of concession agreement are given in Note 29.
(c) Basis of preparation
The consolidated financial statements of Noida Toll Bridge Company Limited and its subsidiary
(‘the Group’) have been prepared on a historical cost basis, except for available-for sale investments
that have been measured at fair value. The consolidated financial statements are presented in US$
and all values are rounded to the nearest US dollar except when otherwise indicated.
(d) Statement of compliance
These consolidated financial statements for the nine month period ended 31 December 2005 and
the years ended 31 March 2005, 2004 and 2003 have been prepared in accordance with
International Financial Reporting Standards and on the basis of accounting policies that the Group
expects to apply for the year ending 31 March 2006.
IFRS 1 requires the preparation of an opening balance sheet as on the date of transition, which in
the case of the Group is 1 April 2002. Adjustments made to the accounts under Indian GAAP in
order to arrive at IFRS’s financial statements are shown in the explanatory notes to the equity
reconciliation as on 1 April 2002, which forms an integral part of this financial statement (see
note 28).
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(e) Early adoption of other International Financial Reporting Standards
The Group has decided to early adopt the following revised standards during the year and
comparative figures have been amended as required:
앫
IFRS 2 Share Based Payments (issued 2004);
앫
IAS 1 Presentation of Financial Statements (amended 2004);
앫
IAS 2 Inventories (revised 2003);
앫
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (revised 2003);
앫
IAS 10 Events after the Balance Sheet Date (amended 2004);
앫
IAS 16 Property, Plant and Equipment (amended 2004)
앫
IAS 17 Leases (amended 2004);
앫
IAS 19 Employees Benefits (amended 2005);
앫
IAS 21 The Effects of changes in Foreign Exchange Rates;
앫
IAS 24 Related Party Disclosures (revised 2003);
앫
IAS 27 Consolidated and Separate Financial Statements (amended 2004);
앫
IAS 32 Financial Instruments: Disclosure and Presentation;
앫
IAS 33 Earnings per Share (amended 2004);
앫
IAS 36 Impairment of Assets (amended 2003);
앫
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amended 2004);
앫
IAS 38 Intangible Assets (amended 2003);
앫
IAS 39 Financial Instruments – Recognition and Measurement;
앫
SIC -29 Service Concession Arrangements – Disclosure;
앫
IFRIC D 12 Service Concession Arrangements – Determining the Accounting Model (Draft);
앫
IFRIC D 14 Service Concession Arrangement – The Intangible Assets Model (Draft);
(f)
Significant accounting judgements and estimates
Judgements and estimates are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Judgements
In the process of applying the Group’s accounting policies, management has made the following
judgements, apart from those involving estimations, which have the most significant effect on the
amounts recognised in the financial statements:
Recognition of Concession Agreement as an Intangible Asset
(i)
Basis of accounting for the service concession
The Group has determined that IFRIC D 12 Service Concession Arrangements – Determining the
Accounting Model (Draft) is applicable to the Concession Agreement and hence has applied this
draft in accounting for the concession.
The directors have determined that the intangible asset model in IFRIC D 14 Service Concession
Arrangements – the Intangible Asset Model (Draft) is applicable to the concession. In particular,
they note that users pay tolls directly so the granter does not have the primary responsibility to pay
the operator.
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In order to facilitate the recovery of the project cost and 20% designated returns through collection
of toll and development rights, the grantor has guaranteed extensions to the terms of the
Concession, initially set at 30 years. The Group has received an “in-principle” approval for
development rights from the grantor. However the Group has not yet entered into any agreement
with the grantor which would constitute an assurance from the grantor to facilitate the recovery of
shortfalls. Management recognizes that the development right agreement when executed will give
rise to financial assets in their own right. At present, developmental rights have not been recognised.
Management recognizes the fact that both of the IFRIC Interpretations that have been applied by
the Group are still in a draft stage and the final versions may differ from the drafts that have been
applied in preparing the financial statements. On finalisation of the IFRICs, management will
revisit the assumptions and premises used, determine the appropriate model for the concession and
make necessary adjustments, effected in accordance with IFRS guidelines and in particular, IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
Disclosures for Service Concession Arrangement as prescribed under SIC 29 Service Concession
Arrangements – Disclosure have been incorporated into the financial statements.
(ii) Significant assumptions in accounting for the intangible asset
On completion of construction of the Delhi Noida Toll Bridge (6 February 2001), the rights under
the Concession Agreement have been recognised as an intangible asset, received in exchange for the
construction services provided. Construction costs include expenditure incurred and provisions for
outstanding capital commitments on the Ashram Flyover, which was significantly completed on the
date of recognition of the intangible asset. This section of the bridge was commissioned on
30 October 2001. The intangible asset received has been measured at fair value of the construction
services as of $112,391,294. The Group has recognised a profit of $32,591,491, which is the
difference between the cost of construction services rendered (the cost of the project asset of
$79,799,802) and the fair value of the construction services.
The Directors have concluded that as operators of the bridge, they have provided construction
services to NOIDA, the grantor, in exchange for an intangible asset, i.e. the right to collect toll from
road-users during the Concession period.
Accordingly, the Group has measured the intangible asset at cost, i.e. the fair value of the
construction services as at 6 February 2001, the date of completion of construction and
commissioning of the asset. Transition requirements of the draft IFRIC have been applied as of that
date and changes in accounting policies have been accounted for in accordance with IAS 8,
Accounting Policies, Changes in Accounting Estimates and Errors.
The key assumptions used in establishing the cost of the intangible asset are as follows:
➢
Construction commenced in 1998 and was completed on 6 February 2001. The exchange of
construction services for an intangible asset is regarded as a transaction that generates
revenue and costs, which have been recognised by reference to the stage of completion of the
construction. Contract revenue has been measured at the fair value of the consideration
receivable. Hence in each of the years of construction, construction revenue has been
calculated at cost plus 17.5% and the corresponding construction profit has been recognised
through retained earnings.
➢
Management has capitalised qualifying finance expenses until the completion of
construction.
➢
The intangible asset is assumed to be received only upon completion of construction. Until
then, management has recognised a receivable for its construction services. The fair value of
construction services have been estimated to be equal to the construction costs plus margin of
17.5% and the effective interest rate of 13.5% for lending by the grantor. The construction
industry margins range between 15-20% and management has determined that a margin of
17.5% is both conservative and appropriate. The effective interest rate used on the receivable
during construction is the normal interest rate which grantor would have paid on delayed
payments.
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➢
The intangible asset has been recognised on the completion of construction, i.e. 6 February
2001.
➢
The management considers that they will not be able to earn the assured return under the
Concession Agreement over 30 years. The company has an assured extension of the
concession as required to achieve project cost and designated returns (see Note 1(b) above).
An independent engineer has certified the useful life of the Bridge as 70 years. The intangible
asset is being amortised over the same period.
➢
Development rights will be accounted for as and when exercised.
(g) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Noida Toll Bridge
Company Limited and its wholly owned subsidiary DND Flyway Limited (“the Group”) as at
31 March each year. The financial statements of the subsidiary are prepared for the same reporting
year as the parent company, using consistent accounting policies.
All intercompany balances and transactions, including unrealized profits arising from intra-group
transactions, have been eliminated in full.
Subsidiary is fully consolidated from the date of acquisition, being the date on which the Group
obtains control and continue to be consolidated until the date that such control ceases.
(h) Foreign Currency Translation
The functional currency of both Noida Toll Bridge Company Limited and DND Flyway Limited is
INR. Transactions in foreign currencies are initially recorded in the functional currency rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the
income statement.
The presentation currency is US$. For the purpose of translation from functional currency to
presentation currency, assets and liabilities for each balance sheet presented is translated at the
closing rate at the date of that balance sheet. Income and expense for each income statement and
cash flow statement presented is translated using a weighted average rate and all resulting exchange
difference is recognised as a separate component of equity.
(i)
Intangible Assets
Construction on the Delhi Noida Toll Bridge was completed and made operational on 6 February
2001. The Ashram Flyover’s construction, which was significantly complete on that date, was
commissioned on 30 October 2001. Collectively referred to as the “Bridge”, the completed
construction which was originally accounted for as Property, Plant and Equipment under local
GAAP, has now been recognised as an intangible asset on 6 February 2001, in accordance with the
guidelines given for recognition and measurement for service concession agreements on adoption
of IFRIC D 14, Service Concession Arrangement – The Intangible Assets Model (Draft).
The value of the intangible asset was measured on the date of completion of construction at the fair
value of the construction services provided which has been recognised as the intangible asset’s cost.
It is being amortised on a straight-line basis over its estimated useful life of 70 years. The
amortisation expense is recognised in the income statement as part of operating and administrative
expenses. The carrying value is reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
Specific policies that apply to the intangible assets are as follows:
➢
Construction services
Construction services exchanged for the intangible asset included all costs that related directly to
the construction of the Bridge, including valuation of all work done by subcontractors, whether
certified or not, and all overheads other than those relating to the general administration of the
Group.
137
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➢
Construction profit
Construction profit is the difference between the fair value of the consideration receivable and the
construction services provided in building the Bridge.
➢
Borrowing costs
Project specific borrowing costs were capitalised until the completion of construction services.
Where funds are temporarily invested pending their expenditures on the qualifying asset, any such
investment income, earned on such fund is deducted from the borrowing cost incurred.
➢
Maintenance obligations
Contractual obligations to maintain, replace or restore the infrastructure (principally resurfacing
costs and major repairs and unscheduled maintenance which are required to maintain the Bridge in
operational condition except for any enhancement element) are recognised and measured at the
best estimate of the expenditure required to settle the present obligation at the balance sheet date.
The provision is discounted to its present value at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
(j)
Property, Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment in
value. Such cost includes the cost of replacing part of such plant and equipment when that cost is
incurred if the recognition criteria are met.
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in the income statement in the year the asset is derecognised.
The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at
each financial year end.
(k) Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as
follows:
Building
62 years
Data Processing Equipment
3 years
Office Equipment
5 years
Vehicles
5 years
Furniture & Fixtures
7 years
(l)
Investments and other financial assets
Financial assets in the scope of IAS 39 are classified as either loans and receivables or
available-for-sale financial assets, as appropriate. When financial assets are recognised initially,
they are measured at fair value, plus, in the case of investments not at fair value through profit or
loss, directly attributable transaction costs. The Group determines the classification of its financial
assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at
each financial year-end.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are carried at amortised cost using the effective
interest method. Gains and losses are recognised in income when the loans and receivables are
derecognised or impaired, as well as through the amortisation process.
Investments (Available-for-sale financial assets)
All investments are initially recognised at cost, being the fair value of the consideration given and
including acquisition charges associated with the investment.
138
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ID Number: 6383
TCP No. 7
After initial recognition available-for sale financial assets are measured at fair value with gains or
losses being recognised as a separate component of equity until the investment is sold, collected or
otherwise disposed of or until the investment is determined to be impaired at which time the
cumulative gain or loss previously reported in equity is included in the income statement.
The fair value of investments that are actively traded in organised financial markets is determined
by reference to quoted market bid prices at the close of business on the balance sheet date. For
investments where there is no quoted market price, fair value is determined by reference to the
current market value of another instrument which is substantially the same or is calculated based
on the expected cash flows of the underlying net asset base of the investment.
(m) Inventories
Inventories of Electronic Cards (prepaid cards) and “On Board Units” are valued at the lower of
cost or net realisable value. Cost is recognised on First In First Out basis.
(n) Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprises of cash at bank and in hand.
(o) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less
directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest method. Amortised cost is calculated by taking into
account any transaction costs, and any discount or premium on settlement.
On refinancing of debt or where the terms of an existing debt are amended, the derecognition
criteria in IAS 39 are applied and existing issue cost may be written off. Where new debt is arranged,
the capitalised debt issue costs on retiring debt are written off and the debt issue costs of the new
debt are capitalised and amortised over the term of the new debt.
(p) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the income
statement net of any reimbursement. If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as other finance expense
(q) Employee costs, Pensions and other post-employment benefits
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued
in the year in which the associated services are rendered by employees of the Group.
The Group has three funded retirement benefit plans in operation viz. Gratuity, Provident Fund and
Superannuation. The Superannuation Fund and Provident Fund are defined contribution schemes
whereby the Group has to deposit a fixed amount to the fund every year / month respectively.
The Gratuity plan for the Group is a defined benefit scheme. The cost of providing benefits under
gratuity is determined using the projected unit credit actuarial valuation method. Actuarial gains
and losses are recognised in full in the period in which they occur and directly in equity through the
income statement.
(r) Leases
Finance leases which transfer substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if
139
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ID Number: 6384
TCP No. 7
lower, at the present value of the minimum lease payments. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are charged directly against
income.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments are recognised as an expense in the income
statement on the straight line basis over the lease term.
(s) Impairment
Where an indication of impairment exists, or when annual impairment testing for an asset is
required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in
use and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets. Where the carrying amount of an
asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. Impairment losses of continuing operations are
recognised in the income statement in those expense categories consistent with the function of the
impaired asset.
(t)
Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets) is derecognised where:
➢
the rights to receive cash flows from the asset have expired;
➢
the Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a ‘pass-through’
arrangement; or
➢
the Group has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of
the asset.
Where the Group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control
of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration
that the Group could be required to repay.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised in the income
statement.
(u) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. Revenue comprises:
140
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Job: 13831G--
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Date: 15-03-06
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Operator: MC
ID Number: 6385
TCP No. 7
Toll Revenue
Toll Revenue is recognised in respect of toll collected at the Delhi Noida Toll Bridge and the
attributed share revenue from prepaid cards.
License Fee
License fee income from advertisement hoardings is recognised on an accruals basis in accordance
with contractual obligations.
Interest income
Revenue is recognised as interest accrues (using the effective interest method that is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset).
Investment income
The profit or loss on sale of investments is the difference between the net sale consideration and the
carrying amount. Related fair value movements are derecognised from net unrealised gains reserve
and transferred to the income statement at the time of sale.
Other Income
Other income comprises service fee and miscellaneous income which are recognised on receipt
basis.
(v) Income tax
Current tax represents the amount that would be payable based on computation of tax as per
prevailing taxation laws under the Indian Income Tax Act, 1961.
Deferred income tax is provided using the liability method, on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward
of unused tax assets and unused tax losses (where such right has not been forgone), to the extent
that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax assets and unused tax losses can be utilized, except
where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each balance sheet and reduced to
the extent it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance sheet date.
(w) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use. Where funds are temporarily invested pending their expenditures on
the qualifying asset, any such investment income, earned on such fund is deducted from the
borrowing cost incurred.
All other borrowing costs are recognised as interest expense in the income statement in the period in
which they are incurred.
141
Time: 09:10
Rev: 0
Gal: 0141
Job: 13831G--
Wedgewood
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6386
TCP No. 7
(x) Share based payment transactions
The Group operates an equity-settled, share option plan for eligible employees which includes
directors of the Group whether full time or not and such other persons eligible under applicable
laws. The options are valued at fair value at the date of the grant and are expensed over the vesting
period, based on the Group’s estimate of shares that will eventually vest. The total amount to be
expensed over the vesting period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions. At each balance sheet date, the entity
revises its estimates of the number of options that are expected to become exercisable. The share
awards are valued using the Black-Scholes option valuation method.
The Group recognises the impact of the revision of original estimates, if any, in the income
statement, with a corresponding adjustment to equity. The proceeds received net of any directly
attributable transaction costs are credited to share capital (nominal value) and share premium
when the options are exercised.
The dilutive effect of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
(y) Equity Instruments
Equity instruments, convertible into a fixed number of equity shares at a fixed pre-determined
price, and which are exercisable after a specific period, are accounted for as and when such
instruments are exercised. The transaction costs pertaining to such instruments are adjusted against
equity.
Notes to Consolidated Balance Sheet
2.
Property, Plant and Equipment
31 December 2005
Office and
Data
Processing
Building Equipment
US($)
US($)
Furniture
and
Fixtures
US($)
Vehicles
US($)
35,833
24,894
65,232
290,577
(1,019)
10,627
(221)
(12,074)
(749)
5,813
(110)
(4,614)
(1,887)
18,190
(530)
(18,933)
(8,439)
34,630
(861)
(37,623)
157,832
33,146
25,234
62,072
278,284
At 1 April 2005
Cost
Accumulated depreciation
167,317
(2,699)
115,389
(79,556)
37,671
(12,777)
118,419
(53,187)
438,796
(148,219)
Net carrying amount
164,618
35,833
24,894
65,232
290,577
At 31 December 2005
Cost
162,416
(4,584)
115,375
(82,229)
41,673
(16,439)
129,286
(67,214)
448,750
(170,466)
Net carrying amount
157,832
33,146
25,234
62,072
278,284
At 1 April 2005 net of
accumulated depreciation
Exchange difference on
Conversion
Additions
Disposals
Depreciation charge for the year
At 31 December 2005 net of
164,618
(4,784)
—
—
(2,002)
142
Total
US($)
Time: 09:10
Rev: 0
Gal: 0142
Job: 13831G--
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Date: 15-03-06
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Operator: MC
ID Number: 6387
TCP No. 7
Vehicles
US($)
Total
US($)
31 March 2005
Office and
Data
Processing
Building Equipment
US($)
US($)
Conversion
Additions
Disposals
—
Furniture
and
Fixtures
US($)
30,210
9,340
75,825
115,375
4,395
162,850
—
(2,627)
(92)
28,309
(1,698)
(20,896)
340
20,527
(50)
(5,263)
(890)
13,348
—
(23,051)
3,753
225,034
(1,748)
(51,837)
At 31 March 2005, net of
164,618
35,833
24,894
65,232
290,577
At 1 April 2004
Cost
—
—
95,798
(65,588)
16,899
(7,559)
105,573
(29,748)
218,270
(102,895)
Net carrying amount
—
30,210
9,340
75,825
115,375
At 31 March 2005
Cost
167,317
(2,699)
115,389
(79,556)
37,671
(12,777)
118,419
(53,187)
438,796
(148,219)
Net carrying amount
164,618
35,833
24,894
65,232
290,577
Furniture
and
Fixtures
US($)
Vehicles
US($)
31 March 2004
Office and
Data
Processing
Building Equipment
US($)
US($)
Total
US($)
Conversion
Additions
Disposals
—
32,488
18,253
26,881
77,622
—
—
—
2,782
15,935
(3,396)
(17,599)
1,142
920
(6,595)
(4,380)
5,103
78,226
(7,217)
(27,168)
9,027
95,081
(17,208)
(49,147)
At 31 March 2004 net of
—
30,210
9,340
75,825
115,375
At 1 April 2003
Cost
—
—
89,288
(56,800)
28,751
(10,498)
55,697
(28,816)
173,736
(96,114)
Net carrying amount
—
32,488
18,253
26,881
77,622
At 31 March 2004
Cost
—
—
95,798
(65,588)
16,899
(7,559)
105,573
(29,748)
218,270
(102,895)
Net carrying amount
—
30,210
9,340
75,825
115,375
143
Time: 09:10
Rev: 0
Gal: 0143
Job: 13831G--
Wedgewood
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6388
TCP No. 7
Furniture
and
Fixtures
US($)
Vehicles
US($)
Total
US($)
31 March 2003
Office and
Data
Processing
Building Equipment
US($)
US($)
Conversion
Additions
Disposals
—
43,024
21,993
37,036
102,053
—
—
—
—
(198)
14,515
(1,706)
(23,147)
(70)
3,986
(2,935)
(4,721)
(191)
8,849
(5,255)
(13,558)
(459)
27,350
(9,896)
(41,426)
At 31 March 2003 net of
—
32,488
18,253
26,881
77,622
At 1 April 2002
Cost
—
—
79,413
(36,389)
29,625
(7,632)
60,068
(23,032)
169,106
(67,053)
Net carrying amount
—
43,024
21,993
37,036
102,053
At 31 March 2003
Cost
—
—
89,288
(56,800)
28,751
(10,498)
55,697
(28,816)
173,736
(96,114)
Net carrying amount
—
32,488
18,253
26,881
77,622
Vehicle includes a car for which a loan was taken. The loan has been secured by a hypothecation of
the vehicle from banks/ others. (Note 12)
3.
31 December
2005
US($)
Cost as at 1 April 2005
Exchange difference on Conversion
Additions
Capitalised during the year
—
—
68,118
—
At 31 December 2005
68,118
31 March
2005
US($)
Exchange difference on Translation
Capitalised during the year
Additions
133,465
(1,098)
(132,367)
—
At 31 March 2005
—
144
Time: 09:10
Rev: 0
Gal: 0144
Job: 13831G--
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Date: 15-03-06
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Operator: MC
ID Number: 6389
TCP No. 7
31 March
2004
US($)
Additions
3,439
325
129,701
At 31 March 2004
133,465
31 March
2003
US($)
Additions
3,439
—
—
At 31 March 2003
3,439
4.
Intangible Assets
31 December
2005
US($)
At 1 April 2005, net of accumulated amortisation
Exchange difference on translation
Amortisation charge for the year
114,798,862
(3,338,393)
(1,292,928)
At 31 December 2005, net of accumulated amortisation
110,167,541
At 1 April 2005
Cost
Accumulated amortisation
122,024,833
(7,225,971)
Net carrying amount
114,798,862
At 31 December 2005
Cost
118,450,998
(8,283,457)
Net carrying amount
110,167,541
31 March
2005
US($)
117,509,005
(1,013,468)
(1,696,675)
At 31 March 2005, net of accumulated amortisation
114,798,862
At 1 April 2004
Cost
123,037,254
(5,528,249)
Net carrying amount
117,509,005
At 31 March 2005
Cost
122,024,833
(7,225,971)
Net carrying amount
114,798,862
145
Time: 09:10
Rev: 0
Gal: 0145
Job: 13831G--
Wedgewood
Date: 15-03-06
Area: A1
Operator: MC
ID Number: 6390
TCP No. 7
31 March
2004
US($)
108,946,974
10,222,866
(1,660,835)
117,509,005
At 1 April 2003
Cost
112,391,294
(3,444,320)
Net carrying amount
108,946,974
At 31 March 2004
Cost
123,037,254
(5,528,249)
Net carrying amount
117,509,005
31 March
2003
US($)
At 1 April 2002, net of accumulated amortisation*
110,552,564
(30,182)
(1,575,408)
108,946,974
At 1 April 2002
Cost
112,391,294
(1,838,730)
Net carrying amount
110,552,564
At 31 March 2003
Cost
112,391,294
(3,444,320)
Net carrying amount
108,946,974
* Borrowing costs of US$13,164,390, net of interest income incurred during the construction period has been capitalised in the asset.
5.
Loans & Advances
31 December
2005
US($)
Non Current – Loans and
Advances
Advance recoverable in cash or
kind or for value to be received
Loans to staff
Sundry deposit
Related Parties:
– Advance recoverable in cash or
– Loan
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
1,058
20,274
35,273
1,744
9,214
32,511
25,972
7,888
22,591
86,883
7,567
32,288
—
2,082
—
3,726
—
5,788
—
2,804
58,687
47,195
62,239
129,542
146
Time: 09:10
Rev: 0
Gal: 0146
Job: 13831G--
Wedgewood
Date: 15-03-06
Area: A1
Operator: MC
31 December
2005
US($)
Current – Loans and Advances
Advance recoverable in cash or
Loans to staff
Sundry deposit
Advance tax including Tax
Deducted at Source
Related Parties:
– Advance recoverable in cash or
– Loan
ID Number: 6391
TCP No. 7
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
174,570
3,207
—
65,415
754
—
135,013
395
13,286
350,895
329
1,263
46,281
43,066
21,384
3,935
29,999
2,033
53,787
2,015
5,208
116,168
526
885
256,090
165,037
291,454
357,833
The carrying values of loans and advances are representative of their fair values at respective
balance sheet dates. The loans and advances having a maturity period of more than a year are
classified as non current assets and those that have an original maturity period of 1 year or less are
classified as current assets.
6.
Inventories
31 December
2005
US($)
Electronic Cards and ‘On Board
Units’
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
12,353
17,338
10,242
42,009
12,353
17,338
10,242
42,009
Electronic cards are prepaid smart cards with an inbuilt sensor which record passages through toll
road. On Board Units (machines) are installations in customer cars which facilitate an
uninterrupted drive through the toll plaza.
7.
Trade Receivables
31 December
2005
US($)
Trade Receivable
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
175,446
143,395
53,352
67,791
175,446
143,395
53,352
67,791
Trade receivable pertains to advertising revenue. These receivables are non-interest bearing and are
generally on 30-60 day’s terms. The carrying values of these receivables are representative of their
fair values at respective balance sheet dates.
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31 December
2005
US($)
Quoted Investments
Prudential ICICI Liquid Plan
IL&FS Liquid Account Growth
Plan
Templeton India Treasury
Management Account Growth
Plan
SBI Mutual Fund Magnum Insta
Cash Fund Account
HSBC Mutual Fund OCFG Cash
Fund Growth
HDFC Cash Management Fund
Savings Plan Growth
Chola Liquid Inst. Plus –
Cumulative
UTI Liquid Cash Plan Regular
Growth
UTI Liquid Cash Plan Institutional
Growth
TLSG01 Tata Liquid Super High
Inv. Fund – Appreciation
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
181,746
—
572,821
493,218
—
—
710,697
998,048
436,685
435,787
1,312,283
610,542
—
—
244,450
—
—
148,983
—
—
108,868
256,720
—
—
331,515
—
—
—
89,666
—
—
—
144,265
—
—
—
224,327
—
—
—
1,517,072
841,490
2,840,251
2,101,808
Available-for-sale investments are being carried at fair values at respective balance sheet dates.
9.
Cash and cash equivalents
31 December
2005
US($)
Cash in Hand
Cash at Bank (Current Accounts)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
3,844
100,512
1,122
38,416
3,156
231,131
850
41,607
104,356
39,538
234,287
42,457
The carrying value of cash and current account balances in banks are representative of fair values at
respective balance sheet dates.
10.
Issued Capital
31 December
2005
US($)
Authorised
Ordinary Shares of INR 10 each
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
35,166,469
35,166,469
35,166,469
29,460,010
35,166,469
35,166,469
35,166,469
29,460,010
On 16 September 2003, the authorised share capital was increased by $5,706,460 by the creation
of 25,000,000 ordinary shares of INR 10 each.
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Ordinary Shares
Issued and fully paid
Share
(Number)
Value
US($)
At 1 April 2002
Issued on 3 November 2002 for Fully Conversion of Fully
Convertible Debentures of INR 10 each (US$ equivalent 0.230)
101,620,007
23,273,955
20,780,000
4,781,408
At 31 March 2003
122,400,007
28,055,363
At 1 April 2003
122,400,007
28,055,363
At 31 March 2004
122,400,007
28,055,363
At 1 April 2004
122,400,007
28,055,363
At 31 March 2005
122,400,007
28,055,363
At 1 April 2005
Issued on 10 August 2005 on exercise of share options for cash
for INR 10 each (US$ equivalent 0.230)
Issued on 18 October 2005 on exercise of share options for cash
for INR 10 each (US$ equivalent 0.222)
122,400,007
28,055,363
476,000
109,350
703,500
155,952
At 31 December 2005
123,579,507
28,320,665
Fully Convertible Debentures
On 3 November 1999, NTBCL issued Secured Fully Convertible Debentures (FCDs) $4,781,408
(207,800 of $23.01 each). The interest rate on the FCDs up to the time of the conversion was 14%
p.a. Each FCD was compulsorily and fully convertible in one instalment into 100 equity shares of
$0.230 each at par at the end of 36 months from the date of the allotment. Accordingly, on
3 November 2002 the FCDs were converted into equity shares.
Share Option Scheme
NTBCL has an Employee Stock Option Plan under which options to subscribe for the Company’s
shares have been granted to directors, senior executive and general employees. (Note 22).
11. Reserves
Nature and purpose of other reserves
The Stock Option Account is used to record the fair value of the stock options issued, as determined
using the Black-Scholes Model at the grant date over the vesting period of these options. On
exercise of the options, the value of the Option is transferred to the Securities Premium Account.
The value of options that lapse after the vesting period are transferred to the General Reserve.
Securities Premium Account
The Securities Premium Account is used to record the value of the stock option upon exercise by the
employee. Transfers are made from the Stock Option Account. Under the Indian Companies Act,
1956 such reserve has restricted usage.
General Reserve
The General Reserve is used to account for the value of stock options that lapse after the vesting
period.
Effect of Currency Translation Reserve
The currency translation reserve is used to record exchange differences arising from the translation
of the financial statements from the functional currency INR to the presentation currency of US$
for reporting purposes.
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Net Unrealized Gains Reserve
This reserve records fair value changes on available-for-sale investments.
12.
Interest-bearing Loans and Borrowings
Effective
Interest
Rate %
Non Current
Deep Discount Bonds
(Net of transaction cost)
Zero Coupon Bond
Series A
Zero Coupon Bond
Series B
Term Loan from Banks
Term Loan from
Financial Institutions
Funded Interest
Vehicle Loan (Refer
Note 2)
Related Party:
– Deep Discount Bonds
(Net of transaction cost)
– ZCB A Series
– ZCB B Series
– Term Loan
– Funded Interest
Current
Zero Coupon Bond
Series A
Vehicle Loan (Refer
Note 2)
Related Party – Zero
Coupon Bond Series A
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
*
19,464,261
19,903,050
20,540,221
16,267,626
10.53%
—
—
1,782,341
3,509,612
10.32%
8.50%
3,370,255
23,061,021
3,190,955
23,756,806
2,875,013
28,556,428
2,747,374
29,861,387
12.50%
10.53%
4,744,840
605,939
4,888,000
577,409
4,928,556
469,268
4,502,105
255,062
—
6,239
17,871
—
3,440,305
—
1,499,169
17,279,108
853,143
3,567,609
—
1,419,412
14,860,831
814,555
—
2,500,362
1,278,874
6,914,034
666,263
—
4,923,468
1,222,098
6,315,789
359,687
74,318,041
72,984,866
70,529,231
69,964,208
2,315,917
5,426,122
2,211,164
5,589,837
2,464,277
5,636,214
—
—
8,913
11,484
10,844
—
3,248,889
3,101,937
3,457,018
—
10,999,841
10,914,422
11,568,353
—
*
10.53%
10.32%
**
10.53%
10.53%
8.50%
10.53%
* Refer Note on Deep Discount Bonds
** Refer Note on Rupee Loan Agreement from IL&FS and Term Loan from Related Party
Debt Restructuring
During the initial years of commencing operations, actual cash inflows were significantly lower
than anticipated as toll traffic/revenue did not meet the levels anticipated in the projections,
resulting in the Group’s inability to comply with certain financial covenants stipulated in the
original borrowing agreements with its lenders. The cash flow situation also impacted the Group’s
ability to complete the links to augment traffic and to continue servicing its then repayment
schedule for debt obligation. The Group, decided to rationalise its debt structure and commenced
negotiations with lenders to restructure the debt, in particular, the interest rate, in order to align its
debt servicing requirements more closely to its available cash flows.
At a meeting of the Senior Lenders of NTBCL on 26 March 2002, the Lenders approved the
formation of a Debt Restructuring Committee, as per the Reserve Bank of India Guidelines
comprising of the Industrial Development Bank of India (IDBI), State Bank of India (SBI) and the
IL&FS for finalisation of the restructuring proposal within 30 days of the meeting.
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An application was filed on 23 July 2002 for the restructuring of the debts of the company under the
Corporate Debt Restructuring (CDR) mechanism. On 6 January 2003, the Company received
communication from the CDR Cell approving the proposed restructuring programme at the CDR
Empowered Group Meeting on 29 October 2002. On approval, the CDR scheme became effective
from 1 April 2002.
The above restructuring covered the term loans from financial institutions, banks and others.
For Deep Discount Bond Holders, who were not within the above restructuring arrangement, the
Group, with the consent of this class of creditors applied for and filed a petition in the Allahabad
High Court for approval of a restructuring proposal. The restructuring arrangement was
sanctioned by the Court on 24 October 2005.
The impact on the financial statements due to the above restructuring and the changes in the interest
rates of the various financial instruments are detailed below.
Deep Discount Bonds
NTBCL issued Deep Discount Bonds (DDBs) of $11,504,832 (100,000 DDB of $115.05 each) on
3 November 1999 with redemption value $1,035.43 at the end of 16th year. Annualised yield is
14.67%. Nominal Value and Issue Amount were at par.
DDB holders had the option to tender the DDBs for takeout which would be purchased by Takeout
Lenders – IDFC and IL&FS on the anniversary date falling on the 5th and 9th anniversary from the
allotment of DDB. The maximum limits for IDFC and IL&FS are 60% and 40% respectively of the
number of DDBs issued. The takeout price and effective yields are as follows:
5 years from date of allotment (3 November 2004)
9 years from date of allotment (3 November 2008)
Takeout price
Yield
$218.59
$379.66
13.70%
14.19%
Restructuring of Deep Discount Bonds
Under the debt restructuring, there were two options available to the DDB holders, to be exercised
by 7 February 2006, namely:
Option I – DDB holders would be entitled to the contracted rate of interest of 13.70% per annum
till the Appointed Date of 1 April 2002 and thereafter the effective yield would stand reduced to
8.50% per annum. The bonds would mature on 3 November 2015 and maturity value of the bond
as per the revised interest would be $476.65. However, NTBCL would have the right to call/
purchase DDBs from the holders at any time after effective date of 24 November 2005 with interest
calculated at 13.70% per annum till 31 March 2002 and at 8.5% per annum thereafter up to the
date of the payment.
Option II – Encashment of bonds by submitting the DDBs to the takeout lenders (IL&FS and
IDFC). This is as per the original takeout offer for the first takeout i.e. 3 November 2004 (5 years
from date of allotment) where the takeout lenders would buy the DDBs at a predetermined price of
$218.59 per DDB. All DDB holders who opted for this option would be paid within the period of 60
days of the Record Date.
Record date for the above options was 30 December 2005.
DDB holders who did not elect an option by that date automatically defaulted into Option I.
The DDB holders opted for the options as follows:
Number of
Bonds
Option I
Option II
DDB with the takeout lenders
10,815
52,087
37,098
As a result of restructuring of the DDBs and the options exercised by the holders, the obligation
related to the DDBs has been accounted for on post restructuring rates and the effect of the same has
been recognised by crediting the finance charges in the income statement by $3,070,757 during the
period of 9 months ended 31 December 2005.
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DDB issue expenses
In applying the effective interest method for building up the DDBs, fees and transaction costs were
included in the calculation of the effective interest rate over the expected life of the instrument.
Accordingly, the issue costs were amortised on the ratio of build up of bond over the years till
31 March 2005 and netted off with the DDBs.
Post restructuring and holders opting for the new options, the modification of the terms of the
DDBs was considered significant and material and the issue cost to the extent not amortised
amounting to $571,438 have been expensed in the income statement of the nine months period
ended 31 December 2005.
Term Loan from Financial Institutions and Others
As per the restructuring of term loans, fifty percent of the outstanding loan of the Financial
Institutions and others aggregating $21,635,790 was bifurcated equally into Part A and Part B.
Part A - For fifty percent, the lenders were issued Zero Coupon Bond – “Series A” amounting to
$10,817,895 with the following repayment terms:
앫
Bonds will bear Zero interest
앫
Bonds will be paid in two equal instalments
앫
First instalment – 31 March 2005 of $5,408,947
앫
Second instalment – 31 March 2006 of $5,408,947
Zero Coupon Bonds – Series A have been recognised on 1 April 2002 at the fair value using the
effective interest rate of 10.53%. Effective interest rate has been calculated on the basis of post
restructuring cost of debt, from financial institutions and others. As a result finance charges have
been credited by $3,128,288 on 1 April 2002. In subsequent years and until payment of the final
instalment, the Group has built up the bonds at the effective rate of 10.53%, through finance
charges.
First instalment was paid, as agreed, on the 31 March 2005.
Part B – The balance 50% of $10,817,895 has been retained as term loan carrying interest of 12.5%
per annum and the same is repayable by 2010 – 2014. The effective rate of interest, considering the
payment schedule, is 8.5% per annum.
As per the restructuring agreement, the interest payments, related to the Part B above, are partially
deferred till 2004-05. The same is being accumulated as “Funded Interest” and paid in the year
2006-07. The Funded Interest bears zero interest. The Company has recognised the funded interest
in the books at fair value using the effective interest rate of 10.53% per annum.
NTBCL had taken term loans from a consortium of eight banks at interest ranging from 13.50% to
14.50% per annum. Post restructuring, the term loans from banks, amounting to $28,000,000
carry interest at a rate of 8.5%. The term loans from banks are payable during 2004-13.
Zero Coupon Bond – “Series B”
As a part of Debt Restructuring, NTBCL issued Zero Coupon Bond – “Series B” of $2.11 each for
an aggregate amount of $11,693,095 to the Banks, Financial Institutions and Others, repayable no
later than 31 March 2014. This was done towards Net Present Value of the sacrifice made by them
by way of reduction in interest rates from contracted terms. This instrument is a zero coupon bond
and is interest free. The bonds have been recognised on 1 April 2002, at fair value using the effective
interest rate of 10.32%. Effective interest rate has been calculated on the basis of cost of debt, from
financial institutions, banks and others, to the Company post restructuring. As a result, $3,598,143
has been recognised as the fair value of the ZCB – B on 1 April 2002. In the subsequent years, till the
payment of final instalment, the Company has built up the bonds at the effective rate of 10.32%, as
finance charges.
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Rupee Loan Agreement with IL&FS
NTBCL on 29 March 2005, took financial assistance of $8,000,000 from IL&FS to repay certain
amounts to the existing lenders, which had fallen due on 31 March 2005. The loan is repayable by
31 March 2017 as per the agreed payment schedule; however the lender is entitled to exercise the
Put Option, for such sums as the cash flow of the borrower may permit. As the interest on the loan is
stepping up in certain years and there is a redemption premium to be paid in the last three years, the
effective rate of interest, taking into account the repayment schedule, is 12.48% per annum.
Term Loan from Related Party
IL&FS incurred certain costs for the purpose of restructuring the Group’s DDBs. The amount of
cost incurred for the same is $2,361,235. The Group is in the process of securing borrowings for
reimbursing costs incurred by IL&FS and is negotiating terms with lenders including IL&FS. The
Board in its meeting held on 21 February 2006 approved the additional borrowing. Interest on the
borrowing till 31 December 2005 amounts to $278,004 and the same has been grouped under
Trade & Other Payables as interest accrued but not due under Non – Current liabilities.
The carrying values of all interest bearing loans and borrowings are representative of their fair
values at respective balance sheet dates. The interest bearing loans & borrowings having a maturity
period of more than a year are classified as non current liabilities and those that have an original
maturity period of 1 year or less are classified as current liabilities.
All interest bearing loans and borrowings are secured by a charge on all tangible and intangible
assets of the Group. The Group has recognised the right to receive toll income as an intangible asset
at fair value of construction services rendered to the grantor in compliance with IFRIC D 14 Service
Concession Arrangement – The Intangible Assets Model (Draft) in exchange of toll bridge
appearing in the books of Accounts under Indian GAAP. The charge on the Delhi Noida Toll Bridge
(Project Assets) created in favor of lenders for interest bearing loans and borrowings continue to
remain against project assets now classified as intangible asset.
13. Provisions
Provision for Resurfacing Expenses (Non Current)
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
Opening Balance
Utilised During the Year
Accretion During the Year
(Note 16)
translation
841,149
—
781,685
—
658,109
—
606,553
—
70,706
64,137
57,864
50,588
(25,937)
(4,673)
65,712
968
Closing Balance
885,918
781,685
658,109
841,149
Provision for Resurfacing: The Group has a contractual obligation to maintain, replace or restore
infrastructure, except for any enhancement element. The Group has recognised the provision at the
best estimate of the expenditure required to settle the present obligation at the balance sheet date.
The first resurfacing is due to be performed in the year ended 31 March 2009.
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Provision for Holiday Pay (Current)
31 December
2005
US($)
Opening Balance
Utilized during the year
Provided during the year
Translation
34,005
21,792
15,590
Closing Balance
26,921
(882)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
21,632
7,402
19,618
20,902
11,344
10,163
18,711
10,640
12,790
157
1,911
41
34,005
21,632
20,902
Provision for Holiday Pay: The Group has computed the provision for holiday pay based on
outstanding leave balance as at the year end.
14. Deferred Income Tax
Balance Sheet
31 December
2005
US($)
Deferred Income Tax Liabilities
Difference in written down value
of Property, Plant & Equipment
and amortisation of Intangible
Asset*
Fair Value Change on Recognition
of Intangible Asset
Difference in amortisation of
Preliminary Expenses
Deferred Income Tax Assets**
Losses available for off set against
future taxable income
Timing difference in allowance of
Operation & Maintenance
Expense
Borrowing Cost
Net Deferred Tax (Liability)
(8,048,207)
31 March
2005
US($)
(7,240,881)
31 March
2004
US($)
31 March
2003
US($)
(7,239,439)
(5,521,459)
(9,676,774) (10,096,350) (10,644,330)
(9,821,669)
171
265
37,347
67,919
15,212,003
15,670,971
15,745,057
11,410,003
580,685
502,369
340,083
279,324
1,932,122
1,163,626
706,613
459,874
—
—
154
(1,054,669)
(3,126,008)
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Income Statement
31 December
2005
US($)
Deferred Income Tax Liabilities
Difference in written down value
of Property, Plant & Equipment
and amortisation of Intangible
Asset*
Difference in amortisation of
Preliminary Expenses
Deferred Income Tax Assets**
Losses available for off set against
future taxable income
Amortisation Fair Value Change
on Recognition of Intangible Assets
Operation & Maintenance
Expense
Borrowing Cost
Adjustment of Tax Rate Change
Deferred Tax Reversal
*
**
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
(1,038,521)
(896,999)
(1,087,810)
(2,022,382)
(87)
(33,752)
(35,833)
(33,316)
—
1,094,620
2,988,407
4,005,740
126,200
165,609
176,270
163,892
94,775
187,701
31,064
62,559
817,633
—
470,957
29,931
188,512
(23,605)
451,230
50,561
—
1,018,067
2,237,005
2,678,284
The Delhi Noida Toll Bridge is classified as Property, Plant & Equipment under the Indian tax jurisdiction whereas in the IFRS
financial statement, the same has been classified as an Intangible Asset.
Deferred tax asset on account of unutilized tax losses of $2,499,956 as at 31 December 2005 and $1,253,280 as at 31 March 2005
is not being recognised as the Group is of the opinion that this asset will not be utilized in the near future.
Reconciliation of Tax Expense:
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
Accounting Loss for the year
before tax
4,509,470
6,655,460
6,180,983
7,383,065
Less: Non Deductible Expenses
Loss to be considered for tax
Indian statutory income tax rate
(625,158)
3,884,312
33.660%
(95,871)
6,559,589
33.660%
(4,453)
6,176,530
36.600%
(58,400)
7,324,665
35.875%
1,307,460
2,207,958
2,260,610
2,627,723
—
(1,307,460)
29,931
(1,219,822)
Deferred Tax Reversal before
adjustments
Adjustment in respect of change in
tax rate
Deferred Tax Asset not recognised
Deferred Tax Reversal for the year
Effective Tax Rate
—
0.000%
155
1,018,067
15.520%
(23,605)
—
2,237,005
36.218%
50,561
—
2,678,284
36.565%
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Reconciliation of Deferred Tax Asset/(Liability)
31 December
2005
US($)
31 March
2005
US($)
(3,126,008)
2,237,005
31 March
2003
US($)
Opening Balance
Deferred Tax Reversal
Translation
—
—
—
36,602
(165,666)
Closing Balance
—
—
(1,054,669)
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
76,051
14,765
2,288,146
93,284
14,819
2,957,743
31,298
17,631
2,906,297
33,031
6,429
2,802,802
513,740
4,290
1,753
39,869
—
1,914
—
638
2,896,992
3,107,468
2,957,140
2,842,900
15.
(1,054,669)
1,018,067
31 March
2004
US($)
(5,855,602)
2,678,284
51,310
(3,126,008)
Trade Payables
Interest accrued but not due
Other Liabilities*
Related Parties
– Interest accrued but not due
– Other Liabilities*
The carrying values of all trade creditors and other payable are representative of their fair values at
respective balance sheet dates. All the trade creditors and other payables have an original maturity
period of 1 year or less are classified as current liabilities.
Trade Creditors are non-interest bearing and are normally settled on 60 day terms.
* Other Liabilities primarily include amount payable to creditors for capital items, accruals for
general day to day expenses, advance payments from customers. All other liabilities are
non-interest bearing and are normally settled on 60 day terms.
NOTES TO CONSOLIDATED INCOME STATEMENT
16. Operating and Administrative Expenses
Operating Expenses
Fees Paid to O&M Contractor
Consumption of Prepaid Cards
and On Board Units
Repairs and Maintenance
Provision for Resurfacing
(Note 13)
Insurance
Advertisement and Business
Promotion Expenses
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
602,192
658,759
537,582
374,103
24,077
239,116
28,109
566,273
48,672
81,702
53,154
171,440
70,706
108,193
64,137
137,007
57,864
143,896
50,588
132,110
17,565
70,686
178,161
118,103
1,061,849
1,524,971
1,047,877
899,498
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TCP No. 7
Employee Benefit Expense
(Note 19(a))
Rent
Rates and Taxes
Professional Charges
Audit Fees
Directors Sitting Fees
Loss/(Gain) on Sale of
Fixed Assets
Travelling and Conveyance
Other Administrative Expenses
17.
2.
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
502,573
15,262
11,593
310,199
35,183
7,979
610,590
9,344
9,697
338,410
17,073
3,115
334,332
52,983
34,748
252,080
11,818
3,310
307,040
56,327
7,280
460,438
7,615
3,222
(497)
89,967
91,082
(445)
95,739
82,589
(1,678)
70,291
54,152
1,852
52,765
62,349
1,063,341
1,166,112
812,036
958,888
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
(441,523)
3,796,507
2,994,996
4,351,180
2,562,604
4,013,411
2,113,887
3,422,086
414,955
1,037,191
918,557
(2,339,985)
401,477
477,563
423,745
3,894,854
—
3,439,378
—
415,285
—
325,124
355,650
331,332
7,610,794
9,276,215
8,243,441
7,777,824
Finance Charges
Interest on Deep Discount Bonds1
Interest on Term Loans
Interest expense on Zero Coupon
Bond Series A2
Amortisation of Zero Coupon
Bond Series B
Interest on Fully Convertible
Debentures
Other Finance Charges
1.
31 December
2005
US($)
As a result of restructuring of the DDBs and the options exercised by the holders, the obligation related to the DDBs has been
accounted for on post restructuring rates and the effect of the same has been recognised by crediting the finance charges. As a result
the finance charges have been credited by $3,070,757 during the nine month period ended 31 December 2005.
Zero Coupon Bonds – Series A have been recognised on 1 April 2002 at the fair value using the effective interest rate of 10.53%,
resulting in a credit of $3,128,288 to the finance charges on 1 April 2002. In the subsequent years, till the payment of final
instalment, the Company has been building up the bonds at the effective rate of 10.53%, by recognising the charge through finance
charges.
18. Earning Per Share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding during
the year plus the weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
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The following reflects the income and share data used in the basic and diluted earning per share
computations:
31 December
2005
US($)
Net Loss attributable to equity
share holders
31 March
2004
US($)
31 March
2003
US($)
(4,509,469)
(5,637,393)
(3,943,978)
(4,704,781)
(4,509,469)
(5,637,393)
(3,943,978)
(4,704,781)
31 December
2005
US($)
Weighted average number of
ordinary shares for basic/diluted
earning per share
Share Options (not included in the
calculation of the diluted Earning
Per Share because they are anti
dilutive for the period)
31 March
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
122,841,122 122,400,007 122,400,007 110,102,802
78,833
552,744
—
—
There have been no other transactions involving ordinary shares or potential ordinary shares
between the reporting date and the date of completion of these financial statements.
19.
(a)
Employee Benefits
Employee Benefits Expenses
Salaries and Allowances
Pension Cost
Post-employment benefits other
than pensions – Provident Fund
Post-employment benefits other
than pensions – Gratuity
Expenses of share based payments
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
436,837
5,550
466,853
4,696
317,818
—
290,307
—
13,259
14,742
12,345
11,355
12,507
34,420
8,988
115,311
4,169
—
5,378
—
502,573
610,590
334,332
307,040
(b) Pension and other post-employment benefit plans
The Group has three post employment funded benefit plans, namely gratuity, superannuation and
provident fund.
Gratuity is computed as 30 days salary, for every completed year of service or part thereof in excess
of 6 months and is payable on retirement/termination/resignation. The benefit vests on the
employee completing 3 years of service. The Gratuity plan for the Group is a defined benefit scheme
where annual contributions as demanded by the insurer are deposited to a Gratuity Trust Fund
established to provide gratuity benefits. The Trust Fund has taken a Scheme of Insurance, whereby
these contributions are transferred to the insurer. The Group makes provision of such gratuity
asset/liability in the books of accounts on the basis of actuarial valuation.
The Superannuation (pension) plan for the Group is a defined contribution scheme where annual
contribution as determined by the management (Maximum limit being 15% of salary) is paid to a
Superannuation Trust Fund established to provide pension benefits. The benefits vests on employee
completing 5 years of service. The management has the authority to waive or reduce this vesting
condition. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are
transferred to the insurer. These contributions will accumulate at the rate to be determined by the
insurer as at the close of each financial year. At the time of exit of employee, accumulated
contribution will be utilized to buy pension annuity from an insurance company.
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The Provident Fund (being administered by a trust) is a defined contribution scheme whereby the
Group deposits an amount determined as a fixed percentage of basic pay to the fund every month.
The benefit vests upon commencement of employment.
The following table summarises the components of net expense recognised in the income statement
and amounts recognised in the balance sheet for gratuity.
Net Benefit expense
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
6,486
1,801
(3,908)
31 March
2003
US($)
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Net actuarial(gain)/loss recognised
in year
7,206
2,569
(4,757)
7,837
2,419
(4,627)
7,489
3,359
Annual expenses
Actual return on plan assets
12,507
5,011
8,988
4,627
4,169
3,919
5,378
2,757
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
(210)
5,780
1,413
(2,381)
566
Benefit asset
Defined benefit obligation
Fair value of plan assets
Benefit asset
(65,233)
103,377
(49,487)
91,621
(35,792)
67,994
(24,877)
50,039
38,144
42,134
32,202
25,162
Changes in the present value of the defined benefit obligation are as follows:
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
Opening defined benefit obligation
Interest cost
Current service cost
Benefits paid
Actuarial (gains)/losses on obligation
49,487
2,569
(1,772)
7,206
—
7,743
35,792
2,419
80
7,837
—
3,359
24,877
1,801
2,828
6,486
—
(200)
20,578
1,413
82
5,780
(3,917)
941
Closing defined benefit obligation
65,233
49,487
35,792
24,877
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
67,994
4,627
87
18,913
50,039
3,908
5,467
8,569
255
—
11
103,377
91,621
67,994
Changes in the fair value of plan assets are as follows:
31 December
2005
US($)
Opening fair value of plan assets
Expected return
Contributions
Benefits paid
Actuarial gains/(losses) on fund
Closing fair value of plan assets
91,621
4,757
(2,955)
9,699
159
29,413
2,381
388
21,398
(3,917)
376
50,039
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The plan asset consists of a scheme of insurance taken by the Trust, which is a qualifying insurance
policy. Break down of individual investments that comprise the total plan assets is not supplied by
the Insurer.
The principal assumptions used in determining pension and post-employment benefit obligations
for the Group’s plans are shown below:
31 December
2005
(%)
31 March
2005
(%)
31 March
2004
(%)
31 March
2003
(%)
7
5
7
7
5
7.05
7
5
7.55
7
5
8.25
Discount rate
Future salary increases
Rate of interest
OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20. Translation to Presentation Currency
NTBCL is proposing to obtain admission of its Global Depository Receipts to trading on AIM, a
market operated by the London Stock Exchange and for the said purpose is using US$ as its
presentation currency. The Group has converted INR balances to US$ equivalent balances on the
following basis:
앫
For conversion of all assets and liabilities, other than equity, as at the reporting dates, the
exchange rates prevailing as at the reporting date have been used, which are as follows:
–
as at 31 March 2003:
US$ 1 = INR 47.50
–
US$ 1 = INR 43.39
–
US$ 1 = INR 43.75
–
as at 31 December 2005:
US$ 1 = INR 45.07
For converting the opening balances as at 1 April 2002, wherever applicable, exchange rates
prevailing as at 31 March 2003 have been used.
앫
For conversion of all expenses and income for the respective years, yearly average exchange
rates have been used, which are as follows:
–
For the year ended 31 March 2003:
US$ 1 = INR 48.41
–
US$ 1 = INR 45.92
–
US$ 1 = INR 44.95
앫
For the period ended 31st December 2005: US$ 1 = INR 44.24
앫
For conversion of issued share capital, historical exchange rates prevailing on the respective
dates of issue of shares have been taken into consideration.
앫
For conversion of authorised share capital, historical exchange rates prevailing on the
respective dates of authorisation of such share capital have been taken into consideration.
앫
For cash flow purpose, opening and closing cash and cash equivalents have been converted
into presentation currency using year end conversion rates for the respective years.
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Date: 15-03-06
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Operator: MC
ID Number: 6405
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Contingent Liabilities:
Nature
(a) Claims made by contractors
Mitsui Marubeni
Corporation
(b) Claims made by contractors
AFCONS Infrastructure
Limited
31 December
2005
US($)
31 March
2005
US($)
31 March
2004
US($)
31 March
2003
US($)
5,574,884
5,743,086
5,790,735
5,289,684
439,662
182,857
—
—
(a)
Claims made by Mitsui Marubeni Corporation is in respect of certain disputes ranging inter
alia from escalation payments, delays in payment, subsequent change in applicable taxes etc.
The matter is under arbitration and therefore it is not practicable to state the timing of
settlement/ payment. The management is of the opinion that it is possible, but not probable,
that the action will succeed and accordingly no provision for any liability has been made in
the financial statements.
(b)
Claims of AFCONS Infrastructure Limited are pertaining to the construction of the Ashram
Flyover. The claims pertain to delayed payments and incentives etc. The adjudication
proceeding has been concluded and the adjudicator has ruled that the claims are time barred.
However, the matter can be referred to arbitration. The Group is of the view that it is possible,
but not probable that the liability would arise and accordingly no provision for any liability
has been made in the financial statement.
Service Tax exposure of income from renting of advertisement space
NTBCL has set up various billboards, signboards etc on and around the Delhi Noida Toll Bridge,
which are rented out to advertisement agencies/ advertisers for display of advertisements, against
valuable consideration.
Until recently, based on judicial precedents and circulars issued by the Government in this regard,
the activity of selling space for display of advertisements was not regarded as a taxable activity for
purposes of service tax. However, in December 2005, the Service Tax Advance Ruling Authority
has ruled in a particular case that selling of advertisement space on the website is liable to Service
Tax under the category of ‘advertisement agency services’.
In view of the above, there is a possibility that the Revenue authorities may start demanding service
tax from persons engaged in selling space for advertisements. However, based on the judicial
precedents in this regard and circulars issued by the Government, a position may be taken that the
Revenue authorities are bound by circulars issued by it and unless specifically included in the
legislation, the activity of renting out of space for display of advertisements is presently not covered
within the scope of ‘advertisement agency services’. The chances of an exposure arising on the
rental income appear possible. The liability if it devolves may be around $250,000 plus interest and
penalties.
In the opinion of the management it is possible, but not probable that the liability would arise and
accordingly no provision for any liability has been made in the financial statement.
Sales Tax/VAT on sale of Gold/Silver pre-paid cards
NTBCL also provides smart cards to customers who wish to use the ETC facility for payment of
toll. The smart cards known as Silver/Gold cards are issued to the customers against payment of a
one-time non-refundable fixed fee, presently at $1.11 for Silver card and $44.38 for Gold card
(including value for On Board Unit). The Group is recognising the same as service income. The
Group is of the view that the issue of the smart card to the users is merely an extension of a facility,
and does not constitute a sale of card. Accordingly, no sales tax is being paid on the fixed amount
received as non-refundable fee against the issue of the card (including On Board Unit).
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Revenue authorities may however adopt a position that since part of the value of the cards is the
intrinsic value of the card itself which, once given to the customers for a price becomes the property
of the customer, the transaction has an element of sale involved along with services rendered.
Further, in view of judicial precedents on the subject, where a service includes an element of sale of
movable property, the entire consideration can be subjected to sales tax. Therefore, there is a
possible exposure of sales tax arising out of the abovementioned transaction.
The service fee collected by the Group for the period February 2001 until December 2005
amounted to $144.89 thousand. Accordingly, tax exposure on the above is $14.42 thousand
(computed at the sales tax rate on non-scheduled goods i.e. 10%) plus interest and penalty. Further,
it maybe noted that in case the Department holds such income to be liable to sales tax, the Group
may be exposed to additional penalty for failure to seek sales tax registration and comply with other
procedural requirements.
The Group is of the view that the issue of the smart card to the users is merely an extension of a
facility, and does not constitute a sale of card. Therefore, it is possible, but not probable that the
liability would arise and accordingly no provision for any liability has been made in the financial
statement.
The domestic tax laws provide that the cost of acquisition of a capital asset in case of transfer to a
100% subsidiary is the cost at which it was acquired by the parent company. In case the position
taken by NTBCL in respect of admissibility of depreciation on land (as integral part of the bridge)
sustains, it is possible that in the hands of subsidiary company, there is a deferred tax liability on the
difference between the purchase price in the hands of subsidiary and cost of acquisition in the hands
of the parent. The Company’s case is that it has reduced its block of depreciable asset by the selling
price. Hence in the hands of subsidiary, the cost of acquisition cannot be historical cost. In support
of its contention, the Group has taken opinion from two senior counsels. The issue is subject matter
of litigation.
If the position taken by the Group on sale of land sustains and the cost of acquisition of land in the
hands of the subsidiary is taken to be the cost to the previous owner, deferred tax liability of $7.69
million may arise in the hands of the subsidiary.
The Group is of the opinion that it is possible, but not probable, that the liability would arise based
on the legal opinion taken by the Group and accordingly no provision for any liability has been
made in the financial statement.
Minimum Alternate Tax (MAT) Liability
With reference to the year ended 31 March 2004, under Indian Tax Laws, in case, the taxable
income of a Company under normal provisions is less than 7.5% of accounting profits, 8.415% of
accounting profit is tax liability for the year. This is referred to as the Minimum Alternate Tax
(MAT).
During the year ended 31 March 2004, NTBCL carried out the revaluation of 34 acres of land (in its
Indian GAAP accounts) on the Noida side of the Delhi Noida Toll Bridge by $31.00 million. The
original cost of this land was $0.13 million. The difference was recognised in the accounts as a
revaluation reserve. In the same financial year a portion of revalued land i.e. 30.493 acres was sold
to wholly-owned subsidiary namely DND Flyway Limited at the revalued price. Post sale, $23.74
million of revaluation reserve pertaining to the transferred portion of land was transferred to
general reserve.
In the accounts for 2004, NTBCL kept the accumulated loss of $23.11 million intact and in the
income statement for the year ended 31 March 2005, NTBCL offset the loss against the general
reserve by restating the comparative figures for 31 March 2004. Had the loss been offset in the
income statement for the year ended 31 March 2004 itself instead of this restatement, withdrawal
from general reserve may have formed part of accounting profits liable to tax. Restatement of the
previous year’s figures may be considered as withdrawal from General Reserve to Income
Statement by the revenue authorities. However, NTBCL has sought an opinion from a senior
counsel wherein it has been opined that such withdrawals from general reserve are not chargeable
to MAT.
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In the event that the tax authorities do not agree to the opinion, there would be a MAT liability of
$1.28 million on accounting profits of $15.16 million for the year ended 31 March 2004.
The Group is of the opinion that it is possible, but not probable, that the liability would arise based
on the legal opinion taken by the Group and accordingly no provision for any liability has been
made in the financial statement.
Provision for Admission to AIM Transaction Cost
The Group will be incurring transaction costs in connection with the proposed admission to trading
on AIM. These would include but not be limited to fees of the consultants, reporting accountants,
lawyers and nominated adviser. The Group has currently estimated that the same would
approximate to $2.42 million plus taxes as applicable. However, the Group has not provided for
the same in the financial statements for the nine months ended 31 December 2005. These costs will
be accounted for appropriately on determination of the proposed admission to AIM.
22. Share based payment plans
Employee Stock Option Plan (ESOP) 2004
At the Extraordinary General Meeting of the Shareholders of NTBCL held on 25 March 2004,
approval of the shareholders was obtained for the launch of the Employees Stock Option Plan 2004
(ESOP 2004) for the issue of stock options in respect of 1,500,000 Equity Shares of INR 10 each
(USD 0.224), to the Directors and Employees of NTBCL.
Of these options, 1,335,000 options were granted on 12 April 2004 and 100,000 options were
granted on 5 May 2004. Pursuant to the provisions of the approved ESOP 2004, the stock options
were granted at the face value of the shares, i.e. INR 10 each (US$0.229), as the Exercise Price of the
options, with price being based on the average of the weekly highs and lows in the six months
preceding the month of Grant, quoted at the Stock Exchange, Mumbai, (where the volume of
trading was highest) worked out to INR 7.22 (US$0.165) being below par.
The vesting period for the options was determined at 15 months from the grant date. The Exercise
Period of the Options is 4 years from the date of vesting of the Option with no cash settlement
alternatives.
Of the options granted, 35,000 had been granted to an Alternate Director. These lapsed during the
vesting period as the concerned Director resigned from the Board of NTBCL. In addition, of the
options that vested, 105,000 lapsed as the Directors to whom the options were granted resigned
and did not exercise their options within the stipulated period following cessation of employment.
The expense recognised for employee services received arising from equity settled share based
payment transactions during the year ended 31 March 2005 is US$115,311 and during the nine
months ended 31 December 2005 is US$34,420.
The following table illustrates the number (No.) of, and movements in, share options during the
year.
31 December
2005
Number
Outstanding at the beginning of
the Year/period
Granted during the year/period
Expired during the year/period
Exercised during the year/period
Outstanding at the end of the year/
period
1.
31 March
2005
Number
31 March
2004
Number
31 March
2003
Number
1,400,000
—
105,000
1,179,5001
—
1,435,000
35,000
—
—
—
—
—
—
—
115,500
1,400,000
—
—
The weighted average share price at the date of exercise for the options exercised is $0.569 (INR 24.79) and $0.785 (INR 35.38)
respectively on the two dates which are 10 August 2005 and 18 October 2005.
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The exercise price of the option is $0.229 (INR 10)
The fair value of equity-settled share options granted is estimated as at the date of grant using a
Black-Scholes model, taking into account the terms and conditions upon which the options were
granted. The following table lists the inputs to the model used for the option granted on 12 April
2004.
Dividend yield (%)
Historical volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Weighted average share price ($)
Nil
101%
4%
4 years
0.165
The fair value of the option granted during the year ended 31 March 2005 is $0.110
The expected life of the options is based on assumptions made by NTBCL and is not necessarily
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that
the historical volatility is indicative of future trends, which may also not necessarily be the actual
outcome.
No other features of options grant were incorporated into the measurement of fair value.
Employee Stock Option Plan (ESOP) 2005
At the Extraordinary General Meeting held on 24 January 2006, shareholders of NTBCL adopted a
Special Resolution to launch an Employee Stock Options Scheme – “The Employees Stock Option
Plan 2005” to issue and allot Stock Options within the aggregate limit of 1,250,000 equity shares to
its employees and directors entitling the holders of such stock options to apply for equity shares of
NTBCL and on conversion/exercise of such Stock Options, to issue and allot equity shares of
NTBCL pari passu with the existing equity shares of NTBCL.
The terms and conditions relating to the scheme are to be determined at a later date.
23. Capital Commitments
Nature
31 December
2005
US($)
Office Building
Others
191,117
—
31 March
2005
US($)
—
—
31 March
2004
US($)
20,557
60,071
31 March
2003
US($)
—
—
24. Related Party Disclosure
The consolidated financial statements include the financial statements of Noida Toll Bridge
Company Limited and the subsidiary listed in the following table.
Country of
incorporation
31 December
2005
India
100%
% equity interest
31 March
31 March
2005
2004
31 March
2003
Name
DND Flyway
Limited
100%
100%
—
The Group has following related parties with whom Group made transaction during the relevant
financial year:
(a) Shareholder having significant influence
The following shareholder, which is also the Promoter of the Group has had a significant influence
in all periods under review:
– Infrastructure Leasing & Financial Services Limited
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Key Management Personnel
31 December 2005
31 March 2005
31 March 2004
31 March 2003
Non Executive Directors
Mr Arun Kumar Saha
Mr Awnish Awashthi†
Mr Deepak Prem Narayan
Mr Gopi Arora
Mr Hari Sankaran
Mr Julion Thomas
Mr K Ramchand
Mr Manoj Borkar
Mr P K Sethi*
Mr Piyush G Mankand
Mr R K Bhargava
Mr Ravi Parthasaranthy
Mr Shahzaad Dalal*
Mr T Thomas
Dr Archana Hingorani
Mr Arun K Saha**
Mr Gopi Arora
Mr Hari Sankaran
Mr Julion Thomas
Mr K Ramchand
Mr P K Sethi(IDBI Ltd)
Mr Prabil Raj*(IFCI Ltd)
Mr R K Bhargava
Mr Santosh Senapati
Mr Shahzaad Dalal
Mr Stephen Temple
Mr Timothy Woodhead
Mr Gopi Arora
Mr Hari Sankaran
Mr Julion Thomas
Mr K Ramchand
Mr Om Prakash*
Mr P K Sethi(IDBI Ltd)
Mr Prabil Raj*(IFCI Ltd)
Mr R K Bhargava
Mr Ross Ronald George
Mr Shahzaad Dalal
Mr Stephen Temple
Mr T T Joseph*
Mr David Wiliams
Mr Dharmendra Deo†
Mr Dharmendra*
Mr Gopi Arora
Mr Graham Jang*
Mr Hari Sankaran
Mr K Ramchand
Mr Om Prakash**
Mr P K Sethi**
Mr Prabil Raj**
Mr R K Bhargava
Mr R S Sandhu*
Mr Shahzaad Dalal
Mr Stephen Temple
Mr Timothy Woodhead
Mr Pradeep Puri (CEO)
Ms Monisha Macedo
Ms Monisha Macedo
Mr G Vishwanathan
Chief Executive Officer and
Key Managers
Ms Monisha Macedo
Ms Monisha Macedo
* Resigned during the year
** Appointed during the year
† Appointed and resigned during the year
(c) Other related Parties
The following employee benefit funds have been related parties in all periods under review
–
Noida Toll Bridge Company Limited Employees Group Gratuity Fund.
–
Noida Toll Bridge Company Limited Employees Superannuation Fund.
–
Noida Toll Bridge Company Limited Provident Fund Trust
(i)
The following table provides the total amount of transactions which have been entered into
with related parties for the relevant financial year:
(a) Infrastructure Leasing & Financial Services Limited
Transaction/outstanding balances
Reimbursement of expenses
incurred on behalf of the Group
Take out fees
Interest expenses
Amount owed to
Amount receivable
31 December
2005
31 March
2005
31 March
2004
31 March
2003
7,512
87,743
4,704,609
26,838,644
29,999
10,795
176,853
2,112,084
23,805,966
53,787
6,330
117,611
1,545,591
14,818,465
5,208
2,576
94,164
1,380,663
12,821,680
—
31 December
2005
31 March
2005
31 March
2004
31 March
2003
7,979
3,115
3,310
3,222
4,115
139,105
5,741
144,253
121,956
126,833
4,215
100,995
(b) Key management persons-Directors
Sitting fees paid
Amount receivable from key
management persons
Deep Discount Bonds
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(c) Other related Parties
Contribution to employees post
employment benefit fund
(ii)
31 December
2005
31 March
2005
31 March
2004
31 March
2003
32,918
53,092
33,437
35,706
Compensation to key management personnel of the Group:
Short term employee benefits
Post employment benefits*
Share based payments
Total compensation paid to key
management personnel
31 December
2005
31 March
2005
31 March
2004
31 March
2003
238,588
238,513
189,908
155,833
10,037
—
10,477
—
199,945
166,310
15,212
14,693**
268,493
14,015
87,307**
339,835
* Includes contributions made to Provident Fund, Superannuation Scheme and Gratuity Contribution.
** Include $ 7,316 (2004-05 – $ 62,597) for the share option granted to non-executive directors.
(iii) Guarantees
Infrastructure Leasing & Financial Services Limited (IL&FS), a promoter company, guaranteed the
take out option conferred by NTBCL to the Deep Discount Bond (DDB) holders, who under the
terms of the issue of this instrument, may tender the DDBs at the end of 5th and 9th years from the
date of allotment at predetermined yield. IL&FS’s guarantee is limited to the extent of 40% of the
number of DDBs issued. The balance 60% has been guaranteed by IDFC, another take out lender.
(Refer note 12 for detail note)
The following table provides the total amount of guarantee outstanding from IL&FS as at the end
of the relevant financial period/ year:
Guarantee Outstanding
31 December
2005
31 March
2005
31 March
2004
31 March
2003
4,894,787
9,489,291
8,757,778
8,000,000
The guarantees on 31 March 2003 and 31 March 2004 are based on the maximum take out liability
guaranteed, on the assumption that all DDB holders would tender their holdings to the take out
lenders on the first take out date of 3 November 2004 at $218.59 per DDB.
The guarantee on 31 March 2005 has been determined on the share of IL&FS, post first take out. It
has been assumed that the remaining DDB holders who had not availed of the first take out would
now tender their holdings to the take out lenders on the second take out date of 3 November 2008 at
$379.66 per DDB.
Following the restructuring of the DDB, the guarantee as on 31 December 2005 has been adjusted
to account for the options actually exercised by the holders. (Refer note 12 for detail note)
Terms and conditions of transactions with related parties:
The transactions with Infrastructure Leasing and Financial Services Limited are made at normal
market prices. Amount owed to on account of loan/ bonds are secured and settlement occurs in
cash.
Amounts receivable from key management personnel include staff loans and medical advance given
to Chief executive officer which is as per his entitlement and in accordance with the Group policy.
The loans given are unsecured in nature and on subsidised interest. Loans are repayable in monthly
instalments and settlement occurs in cash.
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Key management personnel’s interests in an employee share option plan:
During 2004-05 option were granted to the key management persons to purchase 995,000
ordinary shares at a price of US$0.229 each, exercisable between 12 July 2005 and 11 July 2009;
and 100,000 ordinary shares at a price of US$0.229 each, exercisable between 5 August 2005 and 4
August 2009. During the period ended 31 December 2005 the Key management personals
exercised options over 855,000 ordinary shares at a price of US$0.225 per share, with a total
consideration received by the Group from the key management personal of US$192,313 in cash.
During the vesting period ended 31 March 2005, 35,000 options lapsed due to the resignation of a
non-executive director. Further 105,000 vested options lapsed during the period ended
31 December 2005 because 3 non-executive directors, who resigned, did not exercise their options.
There were few transactions during the year between the company and its subsidiary undertakings,
which are eliminated on consolidation and therefore not disclosed.
25. Financial Risk Management Objectives and Policies
The Group’s financial risk management objectives and policies are aimed at procuring funding for
the construction of the bridge and additional links and to provide working capital to operate the
bridge. The Group manages its financial risk by securing cost effective funding for the Group’s
operations and minimizing the adverse effects of fluctuations in the financial markets on the value
of the Group’s financial assets and liabilities, on reported profitability and on the cash flows of the
Group. The principal financial instruments comprise deep discount bonds, zero coupon bonds,
term loans from banks and other financial institutions, current accounts with banks and cash and
short-term investments. The Group has various other financial assets and liabilities such as trade
receivables and trade payables, which arise directly from its operations.
The main risk arising from the Group’s financial instruments are cash flow interest rate risk,
liquidity risk and credit risk. The board reviews and agrees policies for managing these risks as
summarized below.
Cash flow interest rate risk
The Group’s exposure to the risk for changes in market interest rates relates primarily to the
Group’s long term debt obligations. The Group’s policy is to manage its interest cost using only
fixed rate debts or step up rates with fixed period for related party debts.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of term loans with banks and other financial institutions, and other loan
instruments. The Group has in the past undertaken necessary restructuring of its loans and
obligations to ensure its ability to service interest and debt repayments effectively.
Credit risk
The Group trades only with recognised creditworthy third parties. It is the Group’s policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s
exposure to bad debts is not significant.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash
and cash equivalents, loans and advances and available-for-sale financial assets, the Group’s
exposure to credit risk arises from default of the counterparty, with maximum exposure equal to
the carrying amount of these instruments.
Since the Group trades only with recognised third parties, there is no requirement for collateral.
26. Financial Instruments
Fair Values
The carrying value of all financial assets and liabilities are representatives of their fair values at
respective balance sheet date. The carrying value of the fixed rate debts of the Group are considered
to be equal to their fair value following debt restructuring, which resulted in a reduction of the
effective interest rate of all debt (Note 12).
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Interest Rate Risk
The following table set out the carrying amount, by maturity, of the Group’s financial instruments
that are exposed to interest rate risk:
As at 31 December 2005:
Assets
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
5,240
4,216
4,342
3,656
2,409
7,733
27,596
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
5,564,806
—
—
—
—
1,459,082
—
—
—
—
—
—
—
—
—
—
4,869,424
—
5,564,806
4,869,424
1,459,082
—
—
—
—
— 22,904,566 22,904,566
5,426,122
1,398,922
3,645,676
3,772,851
3,730,459 10,513,112 28,487,142
—
—
—
—
354,582
—
—
—
—
497,426 16,781,682 17,279,108
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
2,769
2,603
1,772
1,837
911
5,817
15,709
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
5,313,102
—
—
—
—
1,391,963
—
—
—
—
—
—
—
—
—
—
4,610,368
—
5,313,102
4,610,368
1,391,963
—
—
—
—
— 23,470,659 23,470,659
5,589,836
—
1,921,506
4,367,060
4,367,060 13,101,180 29,346,642
—
—
—
—
—
—
—
—
—
— 14,860,831 14,860,831
Loans to staff
Borrowings
ZCB – Series A
ZCB – Series B
Funded Interest
Deep Discount
Bonds
Term Loan from
Banks
Term Loan from
Financial
Institutions
Term Loan from
Others
4,390,259
4,744,841
As at 31 March 2005:
Assets
Loans to staff
Borrowings
ZCB – Series A
ZCB – Series B
Funded Interest
Deep Discount
Bonds
Term Loan from
Banks
Term Loan from
Financial
Institutions
Term Loan from
Others
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Assets
Loans to staff
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
116,563
2,467
2,275
1,411
1,446
6,077
130,239
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
5,921,295
—
—
4,282,703
—
—
—
—
1,135,532
—
—
—
—
—
—
—
—
—
—
— 20,540,220 20,540,220
5,636,214
5,470,823
—
1,880,595
4,274,080 16,930,930 34,192,642
—
—
—
—
—
4,928,555
4,928,555
—
—
—
—
—
6,914,035
6,914,035
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
1,214
1,315
1,426
1,230
419
5,981
11,585
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than
5 years
Total
—
—
—
5,408,947
—
—
3,024,133
—
—
—
—
614,750
—
—
—
—
3,969,471
—
8,433,080
3,969,471
614,750
—
—
—
—
— 16,267,626 16,267,626
—
4,777,822
4,777,822
—
1,642,376 18,663,367 29,861,387
—
—
—
—
—
4,502,105
4,502,105
—
—
—
—
—
6,315,789
6,315,789
Borrowings
ZCB – Series A
ZCB – Series B
Funded Interest
Deep Discount
Bonds
Term Loan from
Banks
Term Loan from
Financial
Institutions
Term Loan from
Others
— 10,203,998
4,153,887
4,153,887
—
1,135,532
Assets
Loans to staff
Borrowings
ZCB – Series A
ZCB – Series B
Funded Interest
Deep Discount
Bonds
Term Loan from
Banks
Term Loan from
Financial
Institutions
Term Loan from
Others
Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument.
The other financial instruments of the Group that are not included in the above tables are
non-interest bearing and are therefore not subject to interest rate risk. There are no instruments at
floating rates of interest.
Credit risk
There are no significant concentrations of credit risk within the Group.
27. Segment Reporting
The Concession Agreement with NOIDA confers certain economic rights to the Group. These
include rights to charge tolls, and earn advertisement revenue, development income and other
economic rights. The income stream of the Group comprises of toll income and advertising income
for the period for which IFRS compliant financial statements of the Group have been prepared.
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Both these rights are directly or indirectly linked to traffic on the Delhi Noida Toll Bridge and are
broadly subject to similar risks. Toll revenue is fully variable while license fee from advertisement is
fixed to a certain extent. The operating risk in both the cases is similar and the expenses cannot be
segregated as the Company does not have separate departments for the management of each
activity. The Management Information System also does not capture both activities separately. As
both emanate from the same Concession Agreement and together form a part of the Return as
specified in the Concession Agreement, the Group does not have different business reporting
segments.
Similarly, the Group operates under a single geographical segment.
28. Transition to IFRSs
For all periods up to and including the period ended 31 December 2005, the Group prepared its
financial statements in accordance with Indian generally accepted accounting practice (Indian
GAAP).
The financial statements, for the nine month period ended 31 December 2005 and for the financial
years ended 31 March 2003, 31 March 2004 and 31 March 2005 are the first the Group is required
to prepare in accordance with International Financial Reporting Standards (IFRSs) as required
under Schedule Two of the AIM rules and for inclusion in the AIM admission document.
Accordingly, the Group has prepared financial statements which comply with IFRSs applicable for
periods beginning on or after 1 January 2005 and the significant accounting policies meeting those
requirements are described in Notes 1(h) to 1(y). The Group has also decided on early adoption of
revised standards detailed in Note 1(e) in preparation of the financial information in this report.
In preparing these financial statements, the Group has started from an opening balance sheet as at
1 April 2002, the Group’s date of transition to IFRSs, and made those changes in accounting
policies and other restatements required by IFRS 1 for the first-time adoption of IFRSs. This note
explains the principal adjustments made by the Group in restating its Indian GAAP balance sheet as
at 1 April 2002 and its previously published Indian GAAP financial statements for the year ended
31 March 2005. The adjustments to IFRSs are classified as remeasurements.
Exemptions applied
IFRS 1 allows first-time adopters certain exemptions from the general requirement to apply IFRSs
as effective for December 2005 year ends retrospectively. The Group has taken the following
exemption:
앫
The Group has recognised all cumulative actuarial gains and losses on defined benefit
postretirement benefits as at 1 April 2002 directly in equity. Accordingly, the Group discloses
prospectively from 1 April 2002 the information required by IAS 19 on scheme obligations,
scheme assets and experience adjustments on scheme assets and liabilities, as those amounts
are determined.
Restatement of cash flow statement from Indian GAAP to IFRS
The transition from Indian GAAP to IFRS has no effect upon the reported cash flows generated by
the Group. The reconciling items between the Indian GAAP presentation and the IFRS presentation
have no net impact on the cash flows generated.
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Reconciliation of equity at 1 April 2002
Explanatory
Notes
Intangible Assets
Employee Benefits
Deferred Revenue Expenditure
Loans and Advances
1
2
3
4
5
Total Non Current Assets
Inventories
Trade Receivables
Loans and Advances
Prepayments
6
Total Assets
Total Non Current Liabilities
Borrowings
Provisions
Provision for Taxes
7
4
Total Current Liabilities
IFRS
US($)
30,844,200 110,768,133
70,408
18,822
525,381
168,642
139,383
379,322
—
—
—
—
2,855
—
70,408
18,822
525,381
168,642
142,238
379,322
1,301,958
2,855
1,304,813
81,225,891
7
8
9
Effect of
transition
to IFRS
US($)
78,483,268 (78,381,215)
102,053
108,279
(104,840)
3,439
— 110,552,564 110,552,564
—
8,835
8,835
1,231,144
(1,231,144)
—
101,242
—
101,242
79,923,933
Total Current Assets
Borrowings
Provisions
INDIAN
GAAP
US($)
30,847,055 112,072,946
62,329,422
—
—
(580,456)
606,553
5,855,602
61,748,966
606,553
5,855,602
62,329,422
5,881,699
68,211,121
4,374,738
3,694,618
18,711
58,824
(49,787)
(8,564)
—
—
4,324,951
3,686,054
18,711
58,824
8,146,891
(58,351)
8,088,540
Total Liabilities
70,476,313
5,823,348
76,299,661
Total Assets less Total Liabilities
10,749,578
25,023,707
35,773,285
23,273,955
—
—
2,855
23,273,955
2,855
Issued Capital
Net Unrealised Gains Reserve
Retained Earnings/ (Debit balance
of Profit and Loss Account)
6
Total Equity
(10,644,109)
(1,880,268)
25,020,852
—
14,376,743
(1,880,268)
10,749,578
25,023,707
35,773,285
Explanatory Notes to the Reconciliation:
1.
The cost of the Delhi Noida Toll Bridge has been transferred to Intangible Assets on the
adoption of IFRIC D 14 Service Concession Arrangements – The Intangible Asset Model. The
accumulated depreciation accounted for under the PPE model has now been reversed.
2.
Capital Work in Progress of $ 104,840 previously capitalised under Indian GAAP has now
been analysed as revenue nature and hence been expensed through retained earnings.
3.
The Intangible Asset has been accounted for in accordance with IAS 38, Intangible Assets,
and has been measured on completion of construction on 6 February 2001 at cost, which is
the fair value of the construction services provided following the adoption of IFRIC D 14
Service Concession Arrangements – The Intangible Asset Model. The asset is being amortised
on a straight line basis over a period of 70 years, which is the estimated useful life of the Delhi
Noida Toll Bridge.
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4.
As at 1 April 2002, the transition date, the Group has adopted IAS 19, Employee Benefits,
and has recognised gratuity asset based on actuarial valuation as prescribed by this standard.
Additionally disclosures are made providing information about trends in the assets and
liabilities in the defined benefit plan Gratuity and the assumptions underlying the
components of the defined benefit cost.
5.
On transition to IFRS, the amount of $630,243 relating to Public Issue Expenses of Deep
Discount Bonds (refer note 7 below), has been netted off from Interest Bearing Loans and
Borrowings (Debt) and $35,953 (charge till March 2002) has been expensed off. Preliminary
and incorporation expenses, including stamps and registration expenses of $ 61,501, which
did not meet the recognition criteria of IAS 38, Intangible Assets have been written off.
Similarly, the balance of deferred revenue expenditure pertaining to pre-operating
expenditure of $503,447 has been written off.
6.
Quoted investments measured at cost under Indian GAAP have been classified as
available-for-sale financial assets under IAS 39, Financial Instruments – Recognition and
Measurement and have been re-measured at fair value. Changes in the fair value of these
financial assets are recognised directly in equity through the statement of changes in equity.
7.
Under Indian GAAP, Public Issue Expenses pertaining to Fully Convertible Debentures
(FCDs) and Deep Discount Bonds (DDBs) were being amortised over a period of 5 years on a
straight-line basis commencing 7 February 2001. On adoption of IAS 39, Financial
Instruments – Recognition and Measurement, the expenses pertaining to both instruments
have been separated. Expenses relating to the FCDs have been amortised over the three year
duration of the financial instrument. Expenses relating to the DDBs are being amortised over
16 years using the effective interest rate method.
8.
The Group has recognised a provision for road resurfacing upon adoption of IFRIC D 14
Service Concession Arrangements – The Intangible Asset Model. The provision for the first
resurfacing, which is due in year ended 31 March 2009, is being built up in accordance with
the provisions of IAS 37, Provisions, Contingent Liabilities and Contingent Assets.
9.
As of 31 March 2002, the Group has adopted IAS 12, Income Taxes, and has recognised a
deferred tax liability arising from temporary timing differences following adoption of IFRS.
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Reconciliation of Equity
at 31 March 2005
Explanatory
Notes
Intangible Assets
Employee Benefits
Deferred Revenue Expenditure
Loans and Advances
115,846,738
6
Total Current Assets
Total Assets
Borrowings
Provisions
IFRS
($)
7
8
7
(667,970) 115,178,768
17,338
143,395
165,037
64,998
840,231
39,538
—
—
—
—
1,259
—
17,338
143,395
165,037
64,998
841,490
39,538
1,270,537
1,259
1,271,796
117,117,275
Total Non Current Liabilities
Borrowings
Provisions
Provision for Taxes
Effect of
transition
to IFRS
($)
1 115,316,345 (115,025,768)
290,577
2
186,794
(186,794)
—
3
— 114,798,862 114,798,862
4
—
42,134
42,134
5
296,404
(296,404)
—
47,195
—
47,195
Total Non Current Assets
Inventories
Trade Receivables
Loans and Advances
Prepayments
INDIAN
GAAP
($)
(666,711) 116,450,564
70,466,218
—
—
2,518,648
841,149
—
72,984,866
841,149
—
70,466,218
3,359,797
73,826,015
11,480,131
3,107,468
34,005
267
(565,709)
—
—
—
10,914,422
3,107,468
34,005
267
Total Current Liabilities
Total Liabilities
14,621,871
85,088,089
(565,709)
2,794,088
14,056,162
87,882,177
Total Assets less Total Liabilities
32,029,186
(3,460,799)
28,568,387
Issued Capital
Reserves and Surplus
Revaluation Reserve
Net Unrealised Gains Reserves
Retained Earnings/(Debit balance
of Profit and Loss Account)
28,055,363
—
—
30,743,863
—
—
118,474
—
(30,743,863)
1,259
28,055,363
118,474
—
—
1,259
(26,691,822)
(78,218)
27,369,924
(206,593)
32,029,186
(3,460,799)
9
10
6
Total Equity
173
678,102
(284,811)
28,568,387
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Explanatory Notes to the Reconciliation:
1.
Costs of $114,632,549 pertaining to the Delhi Noida Toll Bridge, previously capitalised
under the PPE model, revaluation of land and accumulated depreciation have been
derecognised on adoption of IFRIC D 14 Service Concession Arrangements – The Intangible
Asset Model. In addition $393,219 of advertising structures, previously capitalised under
Indian GAAP has been expensed on adoption of the same draft interpretation.
2.
Capital Work in Progress of $186,794 previously capitalised under Indian GAAP has now
been analysed as revenue nature and hence been expensed through the retained
earnings/income statement.
3.
Intangible Asset of $114,798,862 is the net book value of the Delhi Noida Toll Bridge as at
31 March 2005. The Bridge is being amortised on a straight-line basis over the estimated
useful life of the intangible asset as per the provisions of IFRIC D 14 Service Concession
Arrangements – The Intangible Asset Model.
4.
As of 31 March 2002, the Group had adopted IAS 19, Employee Benefits. As a result,
additional disclosures are made providing information about trends in the assets and
liabilities in the defined benefit plan Gratuity and the assumptions underlying the
components of the defined benefit cost.
5.
The amount of $160,391 relating to Public Issue Expenses of Deep Discount Bonds (refer
note 7 below), has been netted off from Interest Bearing Loans and Borrowings (Debt).
Preliminary and incorporation expenses, including stamps and registration expenses of
$14,807, which did not meet the recognition criteria of IAS 38, Intangible Assets have been
written off. Similarly, the balance of deferred revenue expenditure pertaining to
pre-operating expenditure of $121,206 has been written off.
6.
Quoted investments measured at cost under Indian GAAP have been classified as
available-for-sale financial assets under IAS 39, Financial Instruments – Recognition and
Measurement and remeasured at fair value. Changes in the fair value of these financial assets
are recognised directly in equity through the statement of changes in equity.
7.
Interest-bearing loans and borrowings have been restated to amortised cost using the
effective interest rate method under IAS 39, Financial Instruments – Recognition and
Measurement with the discount being accreted through the Profit and Loss account. Further,
under Indian GAAP, Public Issue Expenses pertaining to Deep Discount Bonds (DDBs) were
being amortised over a period of 5 years on a straight-line basis commencing 7 February
2001. On adoption of IAS 39, Financial Instruments – Recognition and Measurement, the
expenses relating to the the DDBs are being amortised over 16 years using the effective
interest rate method
8.
The Group has recognised a provision for road resurfacing upon adoption of IFRIC D 14
Service Concession Arrangements – The Intangible Asset Model. The provision for the first
resurfacing, which is due in year ended 31 March 2009, is being built up in accordance with
the provisions of IAS 37, Provisions, Contingent Liabilities and Contingent Assets.
9.
Stock Option expense has been recognised with a corresponding entry to equity over the
vesting period of the Option under IFRS 2, Share-based Payments.
10.
Under Indian GAAP, Property, Plant & Equipment had been revalued. This Revaluation
Reserve pertaining to land received under the Concession Agreement has been reversed on the
adoption of IFRIC D 14 Service Concession Arrangements – The Intangible Asset Model as
the Delhi Noida Toll Bridge is being accounted for as an intangible asset.
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Reconciliation of Income Statement for the year ended 31 March 2005
INDIAN
GAAP
($)
Effect of
transition
to IFRS
($)
IFRS
($)
Toll Revenue
License Fee
Other Income
6,015,930
789,429
84,343
—
—
—
6,015,930
789,429
84,343
Total Income
6,889,702
—
6,889,702
Explanatory
Notes
Operating and Administrative
Expenses
– Depreciation
– Amortisation
– Miscellaneous Expenditure
Written Off
1
2
3
4
966,889
1,064,275
52,015
—
558,082
101,837
(178)
1,696,675
1,524,971
1,166,112
51,837
1,696,675
5
337,499
(337,499)
—
Total of Operating and
2,420,678
2,018,917
4,439,595
Group Operating Profit from
Continuing Operations
4,469,024
(2,018,917)
2,450,107
Finance Income
– Profit on Sale of Investments
Finance Charges
6
Loss from Continuing Operations
Before Taxation
Income Taxes:
– Current Taxes
7
Loss After Tax for the Year
170,648
(8,311,357)
—
(964,858)
170,648
(9,276,215)
(8,140,709)
(964,858)
(9,105,567)
(3,671,685)
(2,983,775)
(6,655,460)
—
1,018,067
—
1,018,067
(1,965,708)
(5,637,393)
—
—
(3,671,685)
Explanatory notes to reconciliation:
1.
Operating Expenses as per Indian GAAP have been adjusted for recognition of expenses
under IFRS. Major movements include $451,365 of expenditure in the nature of repairs and
maintenance and $42,580 of capital work in progress, previously capitalised under Indian
GAAP, which has now been expensed off. An amount of $64,137 has been charged for the
build up of resurfacing provisions.
2.
Administrative Expenses as per Indian GAAP have been adjusted for recognition of expenses
under IFRS. Employer contributions of $18,913 paid for gratuity obligation have been
transferred to Gratuity asset in accordance with IAS 19, Employee Benefits and gratuity
expenses computed by the actuary under the same standard of $8,988 have been recognised.
Stock Option expense of $115,312 has been recognised under IFRS 2, Share-based Payment.
The previously recognised loss on sale of fixed asset has been reduced by $3,550 due to the
change in depreciation method adopted by the Group.
3.
Depreciation charge adjustment of $178 to the Indian GAAP amount has arisen due to
change in method of depreciation from written down value to straight line method.
4.
Amortization charge of $1,696,675 pertains to the intangible asset recognised on the
adoption of IFRIC D 14 Service Concession Arrangements – The Intangible Asset Model.
This asset is being amortised on a straight-line basis over a period of 70 years, the estimated
useful life of the asset.
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5.
Miscellaneous expenditure relates to Public Issue Expenses of Deep Discount Bonds and
other deferred expenditure previously recognised as a deferred asset under Indian GAAP. On
transition to IFRS as on 1 April 2002, the asset was analysed and components were either
reclassified or expensed off. Hence, expenditure previously recognised under Indian GAAP
has been reversed.
6.
Finance charges pertain to accretion of interest on loans and borrowings using the effective
interest rate method and amortisation of debt issue expenses for Deep Discount Bonds in
accordance with IAS 39, Financial Instruments- Recognition and Measurement.
7.
The Group had recognised a deferred tax liability arising from temporary timing differences
following adoption of IFRS. As at 31 March 2005, this liability has been reversed completely
and the corresponding entry has been taken to the income statement.
29. Salient aspects of Service Concession Arrangement
NOIDA has irrevocably granted to NTBCL the exclusive right and authority during the concession
period to develop, establish, finance, design, construct, operate, and maintain the Delhi Noida Toll
Bridge as an infrastructure facility.
NOIDA has further granted the exclusive right and authority during the concession period in
accordance with the terms and conditions of the agreement to:
(1)
Enjoy complete and uninterrupted possession and control of the lands identified constituting
the Delhi Noida Toll Bridge site.
(2)
Own all or any part of the project assets.
(3)
Determine, demand, collect, retain and appropriate a Fee from users of the Delhi Noida Toll
Bridge and apply the same in order to recover the Total Cost of Project and the Returns
thereon.
(4)
Restrict the use of the Delhi Noida Toll Bridge by pedestrians, cycle Rickshaws etc from the
(5)
Develop, establish, finance, design, construct, operate, maintain and use any facilities to
generate development income arising out of the Development Rights that may be granted in
accordance with the provisions of the Concession agreement.
(6)
Appoint subcontractors or agents on Company’s behalf to assist it in fulfilling its obligations
under the agreement.
Significant terms of the arrangement that may affect the amount, timing and certainty of future cash
flow
Concession Period
The Concession Period shall commence on 30 December 1998 (the Effective Date) and shall extend
until the earlier of:
앫
A period of 30 years from the Effective Date;
앫
The date on which the Concessionaire shall recover the total cost of the project and the
returns as determined by the independent auditor and the independent engineer through the
demand and collection of fee, the receipt, retention and appropriation of development
income and any other method as determined by the parties.
In the event of NTBCL not recovering the total project cost and the returns thereon within the
specified time the Concession Period shall be extended by NOIDA for a period of 2 years at a time
until the total project cost and the returns thereon have not been recovered by the Concessionaire.
Return
Return means the return on the Total Cost of the project recoverable by the concessionaire from the
effective date at the designated rate of 20% per annum.
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Independent Auditor
An Independent Auditor shall be appointed for the entire term of the Concession Agreement. The
Independent Auditor shall approve the format for the maintenance of accounts, the accounting
standards and the method of cost accounting to be followed by the Concessionaire. The
Independent Auditor shall audit, on a quarterly basis the Concessionaire’s accounts.
The Independent Auditor shall also certify the Total Cost of Project outstanding and compute the
returns thereon from time to time on a per annum basis.
Fees
The Concession Agreement had determined the Base Fee Rates which have been determined and set
according to 1996 figures and shall be revised to determine the initial fee to be applied to the users of
the project on the Project Commissioning Date (the “Initial Fee Rate”). The following are the Base
Fee Rates:
One Way Fee
in INR
Vehicle Type
Earth moving/construction vehicle
For each additional axle beyond 2 axle
Truck – 2 axles
Bus – 2 axles
Light Commercial Vehicle
Cars and other four wheelers
Three wheelers
Two wheelers
Non-motorised vehicles
30
10
20
30
20
10
10
5
—
The Initial Fee Rate shall be determined strictly in accordance with the increase in the CPI, based
upon the Base Fee Rates as determined in the Concession Agreement and shall be revised in
accordance with the following formula:
IFR = CPI (I)*Base Fee Rate/CPI (B)
Where
IFR = Initial Fee Rate
CPI (I) = Consumer Price Index for the month previous to the month of setting the Initial Fee Rate
CPI (B) = Consumer Price Index of the month in which this Agreement is entered into
The Fee Rates are to be revised annually by the Fee Review Committee. Fee rates are revised as per
the following formula:
RFR = CPI (R)*IFR/CPI (I)
where
RFR = Revised Fee Rate
CPI (R) = Consumer Price Index for the month previous to the month in which the revision is taking
place
CPI (I) = Consumer Price Index for the month previous to the month of setting the initial fee rate
IFR = Initial Fee Rate
Fee Review Committee
A Fee Review Committee was established which comprised of one representative each of NOIDA,
the Concessionaire and a duly qualified person appointed by the representatives of NOIDA and
Concessionaire who shall also be the Chairman of the Committee. The Fee Review Committee shall
앫
review the need for a revision to existing rates of Fee upon occurrence of unexpected
circumstances;
앫
review the formula for revision of fees.
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Cost of Project and calculations of return
The total project cost shall be the aggregate of:
앫
Project Cost
앫
Major Maintenance Expenses
앫
Shortfalls in recovery of Returns in a specific financial year
The Project Cost had to be determined on the Project Commissioning date by the Independent
Auditor with the assistance of the Independent Engineer.
The amounts available for appropriation by NTBCL for the purpose of recovering the total project
cost and the returns thereon shall be calculated at annual intervals from the Effective Date in the
following manner:
Gross revenues from Fee collections, income from advertising and development income
Less: O&M expenses
Less:
Taxes (excluding any customs or import duties)
Major Maintenance Expenses
‘Major Maintenance Expenses’ refer to all expenses incurred by NTBCL for any overhaul of, or
major maintenance procedure for, the Delhi Noida Toll Bridge or any portion thereof that require
significant disassembly or shutdown the Delhi Noida Toll Bridge including those teardowns
overhauls, capital improvements and replacements to major component thereof), which are (i) to
be conducted upon the passage of the number of million standard axels or (ii) not regularly
schedule. The Independent Engineer shall determine the necessity, of conducting the major
maintenance and certify that the work has been executed in accordance with specifications.
Transfer of the project upon termination of concession period
On the transfer date, NTBCL shall transfer and assign the project assets to NOIDA or its nominated
agency and shall also deliver to NOIDA on such dates such operating manuals, plans, design
drawings and other information as may reasonably be required by NOIDA to enable it to continue
the operation of the bridge.
On the transfer date, the bridge shall be in fair condition subject to normal wear and tear having
regard for the nature of asset, construction and life of the bridge as determined by the Independent
Engineer. NTBCL shall ensure that on the transfer date, the bridge is in the condition so as to
operate at the full rated capacity and the surface riding quality of the bridge will have a minimum
performance level of 3000 – 3500 mm per Km when measured by bump integrator.
The asset shall be transferred to NOIDA for a sum of Rs 1. NOIDA shall be responsible for the cost
and expenses in connection with the transfer of the asset.
Other obligations during the contract term
Major Repairs and Unscheduled Maintenance
NTBCL shall inform the Independent Engineer when the work is necessary and use materials that
allow for rapid return to normal service and organize work cruise to minimize disruptions. The
Independent Engineer to approve work prior to commencement and after repairs are completed
Independent Engineer shall confirm that maintenance/ repairs confirm to the required standards.
Overlay
Based on traffic projections and overlay and design Million Standard Axel (MSA), NTBCL shall
indicate, in annual report vis-à-vis the MSA projections, the point of time at which the pavement
shall require an ‘overlay’.
Overlay is defined as a strengthening layer which is require over the entire extent of pavement of the
main carriageway and cycle track without in any way effecting the safety of structures. This
‘Overlay’ shall be carried out by NTBCL upon receipt of Independent Engineer approval. The
Independent Engineer can also decide an overlay on particular sections based on pavement
specifications.
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Liability to Third Parties
NTBCL shall during the Concession period use reasonable endeavours to mitigate any liabilities to
third parties as is foreseeable arising out of loss or damage to the bridge or the project site.
30.
Figures of the previous year have been regrouped/rearranged wherever considered necessary.
per Manoj Gupta
Partner
Hari Sankaran
Director
Arun K Saha
Director
T K Banerjee
CFO
Place: New Delhi
Mumbai
Mumbai
New Delhi
Date: 14 March 2006
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PART VI
Additional Information
1.
1.1
Responsibility statement and reports/statements by Experts
The Company, whose name and registered office appears on page 181, and the Directors,
whose names and functions appear on page 8, accept responsibility for the information
contained in this document. To the best of the knowledge and belief of the Company and the
Directors (each of whom has taken all reasonable care to ensure that such is the case) the
information contained in this document is in accordance with the facts and makes no
omission likely to affect the import of such information. The information in this document
which has been sourced from a third party, being the information reproduced in Parts IV and
V of this document, has been accurately reproduced and, so far as the Company is aware and
is able to ascertain from information published by such third party, no facts have been
omitted which would render the reproduced information inaccurate or misleading.
1.2
Halcrow Consulting India Limited of 38 Ring Road, Lajpat Nagar III, New Delhi 110 024,
India (“Halcrow Consulting”), has given and not withdrawn its written consent to the
inclusion of its report on the Company in the form and in the context set out in Part IV of this
document and the references to that report and to its name in the form and in the context in
which they appear in Part I and Part VI of this document. Halcrow Consulting has not
become aware, since the date of the report of any matter affecting the validity of that report at
that date and has authorised the contents of Part IV of this document. Save in respect of the fee
paid by the Company to Halcrow Consulting for the preparation of the report contained in
Part IV of this document, Halcrow Consulting has no material interest in the Company. As
mentioned in paragraph 2.3 of Part VI of this document, the Company is likely to appoint
Halcrow Consulting to design and supervise the construction of the Mayur Vihar Link at a
cost of Rs 3.8 million. Halcrow Consulting has also been paid the sum of Rs 224,000 for
conducting geotechnical investigations and preparing bid documentation in respect of the
Mayur Vihar Link, and has been paid the sum of Rs 75,000 for the preparation of certain
conceptual plans and providing cost estimates in respect of alternative methods of integrating
the Kalindi Bypass with the Delhi Noida Toll Bridge.
1.3
Halcrow Consulting whose address is set out in paragraph 1.2 above, accepts responsibility
for the information contained in Part IV of this document. To the best of the knowledge and
belief of Halcrow Consulting (which has taken all reasonable care to ensure that such is the
case) the information contained in Part IV of this document is in accordance with the facts
and makes no omission likely to affect the import of such information.
1.4
S.R. Batliboi & Co. of Ernst & Young Tower, B-26 Qutab Institutional Area, New Delhi
110016, India, has given and not withdrawn its written consent to the inclusion of its report
on the Company in the form and in the context set out in Part V of this document and the
references to that report and to its name in the form and context in which they appear in Part I
of this document. S.R. Batliboi & Co has not become aware, since the date of the report of any
matter affecting the validity of that report at that date and has authorised the contents of Part
V of this document. S.R. Batliboi & Co has no material interest in the Company.
1.5
S.R. Batliboi & Co, whose address appears at paragraph 1.4 above, accepts responsibility for
the information contained in Part V of this document. To the best of the knowledge and belief
of S.R. Batliboi & Co (which has taken all reasonable care to ensure that such is the case) the
information contained in Part V of this document is in accordance with the facts and makes
no omission likely to affect the import of such information.
2.
2.1
The Company
Incorporation
2.1.1 The Company was incorporated in India on 8 April 1996 under the Companies Act,
1956 (the “Act”) as a public company limited by shares with registration number
20-19759 and with the name “Noida Toll Bridge Company Limited”. The
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Certificate for Commencement of Business was received on 21 January 1997.
Presently, the Company is registered with the Registrar of Companies, Uttar Pradesh
and Uttaranchal at Kanpur.
2.1.2
The Act (and the regulations made thereunder) is the principal legislation under
which the Company was formed and now operates.
2.1.3
The address of the registered office of the Company is currently Toll Plaza, DND
Flyway, Noida – 201301, Uttar Pradesh and the telephone number is 0091 (0120)
2516438/47. The registered office of the Company was initially located at C/o
Housing Development Finance Corporation Limited, Philibhit House, 2nd Floor,
6 Shahnajaf Road, Lucknow-226001 and was moved to Sector 15A, Near Apeejay
School, Noida-201301 and then to Toll Plaza, DND Flyway, Opp. Sector 15A,
Noida-201301. Subsequently the registered office was moved to 205, 2nd Floor,
Ocean Plaza, Sector 18, Noida – 201301. The registered office was again moved
from 205, 2nd Floor, Ocean Plaza, Sector 18, Noida – 201301, to Toll Plaza, DND
Flyway, Opp. Sector 15A, Noida-201301.
2.1.4
The address and the telephone numbers of the principal place of business of the
Company are as follows:
2.1.4.1 Registered/Main Office: Toll Plaza, DND Flyway, Noida – 201301, Uttar
Pradesh and the telephone number is 0091 (0120) 2516438/47.
2.2
2.1.5
The Company conducts business under the name Noida Toll Bridge Company
Limited.
2.1.6
The liability of the members of the Company is limited.
The Company and Principal Activities
2.2.1 The Company’s principal activity is that of promoting, developing, financing,
establishing, designing, constructing, equipping, operating, maintaining, modifying
and upgrading the Delhi Noida Toll Bridge across the river Yamuna which links
Maharani Bagh, New Delhi with Sector 15A-16A of Noida, Uttar Pradesh on a Build
Own Operate Transfer (BOOT) basis and to charge and collect tolls, fees, rents from
the users of the Delhi Noida Toll Bridge.
2.2.2
The Company has one wholly-owned subsidiary company which is DND Flyway
Limited (“DFL”), incorporated on 17 February 2004 under the Act as a public
company limited by shares with registration number U45203DL2004PLC124710.
DFL received its Certificate for Commencement of Business on 5 March 2004 and its
registered office is located at A – 16/9 Vasant Vihar, New Dehli 110057. Presently,
DFL is registered with the Registrar of Companies, Delhi & Haryana. The issued
share capital of DFL is 50,000 shares. DFL is not listed on any exchange. The
Company holds 49,994 shares in DFL in its own name, and holds a further 6 shares
jointly as the first named holder with six other shareholders. The joint holding with
six other shareholders is to satisfy the requirement of a minimum of seven members
for a public company. As the first named holder, the Company is entitled to vote the
said 6 shares and to receive all distributions in respect thereof.
2.2.3
DFL was acquired by the Company for the purposes of carrying out development
activities on the surplus land around the Delhi Noida Toll Bridge. The Company was
left with possession of surplus land situated partly in Delhi and partly in Noida after
utilizing the lands required for the construction and operation of the Delhi Noida
Toll Bridge. A part of this surplus land measuring 30.493 acres with the Company in
Noida was sub leased to DFL (with an existing pari passu first charge in favour of
certain senior lenders, including the trustees for the DDBs and ZCBs, Takeout
Lenders and banks and financial institutions which have lent money to the
Company) by means of a sub lease deed dated 31 March 2004. DFL applied for
stamp duty exemption on transfer of land under the deed from the Company, which
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was approved vide an order dated 30 September 2004, passed by Additional District
Magistrate (Finance), Gautumbudh Nagar, Uttar Pradesh. The amount of stamp
duty so exempted was approximately Rs 80 million. Following this order, the land
sub leased under the deed was registered in the name of DFL on 14 October 2004.
2.2.4
Although DFL was formed to generate revenue by developing the land, DFL can
commence commercial activity only after the Company has obtained final approval
from NOIDA for development rights and has executed a formal agreement with
NOIDA in this regard. As of the date of this document, only ‘in principle’ approval
for the grant of development rights has been obtained by the Company.
2.3
The Company intends to build the Mayur Vihar Link in order to improve the flow of traffic to
the Delhi Noida Toll Bridge from Mayur Vihar. The estimated cost of constructing the
Mayur Vihar Link is Rs 350 million, including the sum of Rs 23.4 million which is estimated
to be required for the acquisition of the leasehold land required for the construction of the
link. The Directors believe that construction of this new link would reduce the travel distance
to the Delhi Noida Toll Bridge for people in Mayur Vihar and areas north of Noida, who
want to access the southern part of Delhi, by approximately 3-4 km (depending upon point of
origin/destination). The link would intersect the Delhi-Noida Link road at the main
intersection of the proposed Mayur Vihar District Centre. The Company has undertaken to
construct the Mayur Vihar Link under the terms of its debt restructuring (as referred to in
paragraph 9 above). The construction of this link is contingent upon the Government of Uttar
Pradesh leasing the required land to the Company. The Directors expect that the lease of this
additional land will cost the Company Rs 23.4 million. The Company has received all other
necessary approvals, and has spent some Rs 10 million to date on project preparation
expenses. The Directors believe that construction of the Mayur Vihar Link would take
approximately 9 months, and that construction could start within one month from the date
on which the Government of Uttar Pradesh leases the required land to the Company. The
Company has not yet appointed any of the independent contractors required for the
construction of the Mayur Vihar Link, although it is in the advanced stages of negotiation
with the relevant parties. It is likely that the Company will appoint Halcrow Consulting
(whose report is set out in Part IV of this document) to design and supervise the construction
of the Mayur Vihar Link at a cost of Rs 3.8 million.
2.4
The Company has begun construction work designed to extend its existing office premises by
the construction of an additional 3 floors of office space measuring some 14,203 square feet.
The Directors believe that the Company will be able to derive additional revenues by leasing
the additional office space for commercial rents. The budgeted cost of the extension to the
office block is Rs 60 million. As at 31 December 2005, the Company had spent some Rs 3
million in respect of the extension of the office space, and has contracted to spend a further 8
million. Certain of the contractors required for the construction of the additional office space
have yet to be appointed by the Company. The Directors expect that construction of the
additional office space will be completed by June 2006.
3.
3.1
Share and other capital
The following table shows the authorised and issued share capital of the Company as at
10 March 2006 (being the most practicable date before publication of this document) and as
it will be immediately following Admission and the Placing (assuming no exercise of the
Over-allotment Option):
Authorised
(Ordinary Shares of Rs 10 each)
Nominal Value
Number
Rs 2,000,000,000
200,000,000
182
Issued and Paid up
Nominal Value
Number
Rs 1,235,795,070 123,579,507 (fully paid)
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Immediately following Admission and the Placing (assuming no exercise of the
Over-allotment Option)
Authorised
(Ordinary Shares including GDRs representing
Ordinary Shares of Rs 10 each)
Issued and Paid up
(Ordinary Shares including GDRs representing
Ordinary Shares of Rs 10 each)
Nominal Value
Number
Nominal Value
Number (fully paid)
Rs 2,000,000,000
200,000,000
Rs 1,803,976,870
180,397,687
Immediately following Admission and the Placing (assuming no exercise of the
Over-allotment Option) the Company’s authorised but unissued share capital will be
Rs 196,023,130.
3.2
The holders of Existing Ordinary Shares will be diluted by the issue of 56,818,180 New
Ordinary Shares (assuming no exercise of the Over-allotment Option). The effective dilution
rate, assuming none of those holders participate in the Placing, is 31.5%.
3.3
The following table shows the issued share capital of the Company as at the beginning and the
end of the last financial year of the Company:
Issued and Paid up as at 1 April 2004
122,400,007
Issued and Paid up as at 31 March 2005
122,400,007
No part of the capital of the Company has been paid for with assets other than cash within the
period beginning on 1 April 2004 and ending on 31 March 2005.
3.4
The following changes have been made in the authorised and issued share capital of the
Company since incorporation until 10 March 2006 (being the most recent practicable date
before publication of this document):
Authorised share capital
3.4.1 The Company was incorporated on 8 April 1996, with an authorised share capital of
Rs 2,500,000 divided into 250,000 equity shares of Rs 10 each.
3.4.2
On 18 December 1997, at the EGM of the Company, the authorised share capital
was increased from Rs 2,500,000 divided into 250,000 equity shares of Rs 10 each to
Rs 1,250,000,000 divided into 125,000,000 equity shares of Rs 10 each.
3.4.3
On 16 September 2003, at the AGM of the Company, the authorised share capital of
the Company was increased from Rs 1,250,000,000 divided into 125,000,000
equity shares of Rs 10 each to Rs 1,500,000,000 divided into 150,000,000 equity
shares of Rs 10 each.
3.4.4
On 24 January 2006, at the EGM of the Company, the authorised share capital of
the Company was increased from Rs 1,500,000,000 divided into 150,000,000
equity shares of Rs 10 each to Rs 2,000,000,000 divided into 200,000,000 equity
shares of Rs 10 each.
Issued and Paid up Capital
3.4.5 On 31 March 1999, the paid up capital of the Company was increased to Rs
250,000,070.
3.4.6
On 10 November 1999, the paid up capital of the Company was increased to
Rs 485,000,070.
3.4.7
On 10 December 1999, the paid up capital of the Company was increased to
Rs 591,200,070.
3.4.8
On 22 February 2000, the paid up capital of the Company was increased to
Rs 616,200,070.
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On 29 June 2000, the paid up capital of the Company was increased to
Rs 816,200,070.
3.4.10 On 12 July 2000, the paid up capital of the Company was increased to
Rs 1,016,200,070.
3.4.11 On 3 November 2002, the paid up capital of the Company was increased to
Rs 1,224,000,070.
3.4.12 On 10 August 2005, the paid up capital of the Company was increased to
Rs 1,228,760,070.
3.4.13 On 18 October 2005, the paid up capital of the Company was increased to
Rs 1,235,795,070.
3.5
In connection with the Placing the Company proposes to issue 56,818,180 New Ordinary
Shares and up to 5,681,815 Ordinary Shares under the Over-allotment Option, in each case
under the Act. The New Ordinary Shares and any Ordinary Shares issued under the
Over-allotment Option will be governed by Indian Law and the provisions of the Act and the
Company’s Articles. The New Ordinary Shares and any Ordinary Shares issued under
Over-allotment Option will be deposited with the Depositary, which will in turn issue up to
12,449,999 GDRs (each GDR representing 5 Ordinary Shares). The legislation governing the
issue of the GDRs is the Foreign Exchange Management Act, 1999 and the regulations made
there under, read with the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depositary Receipt Mechanism) Scheme, 1993 (as amended from time to time) as
issued by the Ministry of Finance, the Government of India. The AIM Rules will also be
applicable for the proposed Admission of the GDRs.
3.6
At a meeting of the Board on 30 December 2005, it was resolved that the Company be
authorised to issue GDRs not exceeding US$45 million excluding the Over-allotment option
to the extent of 10% of the issue size and admit the GDRs to trading on AIM.
3.7
On 24 January 2006, the shareholders of the Company approved and authorised the issue of
the New Ordinary Shares by the Board without the application of pre-emption rights set out
in section 81 of the Act and the issue of GDRs.
It was further resolved that for the purpose of giving effect to the Placing, the Board be
authorised to undertake all such acts as may be required and as it may at its discretion deem
necessary or desirable for such purpose.
3.8
Save in connection with the allotment of equity shares of the Company pursuant to any
exercise of options under the stock options schemes of the Company and the issue of the New
Ordinary Shares representing the Placing GDRs, there is no present intention to issue any of
the authorised but unissued share capital of the Company or to utilize any of the authorities
referred to in paragraph 3 of this Part VI.
3.9
The New Ordinary Shares and any Ordinary Shares issued under the Over-allotment Option
will rank pari passu in all respects with the Existing Ordinary Shares including (without
limitation to the generality of the foregoing) in relation to voting rights and the right to receive
all dividends or other distributions declared, paid or made after Admission. The holders of
GDRs will hold such GDRs subject to the terms of the Deposit Agreement.
3.10 There have been no public takeover bids by third parties for all or any part of the Company’s
equity share capital during the last financial year of the Company or the period up to and
including the date immediately prior to the date of this document.
4.
4.1
Memorandum and Articles of Association
Memorandum of Association
The principal objects of the Company as set out in the memorandum of association of the
Company are to promote, develop, finance, establish, design, construct, equip, operate,
maintain, modify and upgrade the Delhi Noida Toll Bridge across river Yamuna by linking
Maharani Bagh with Sector 15A-16A of Noida area and its ancillary facilities including the
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approach roads, minor and major bridges, flyovers, inter-changes, culverts, links, buildings,
restaurants, commercial premises, hoardings, toll booths, electric fittings, drains, waterways
etc on a Build Own Operate Transfer (BOOT) basis and to charge and collect tolls, fees, and
rents from the users of the Delhi Noida Toll Bridge and its ancillary facilities and to retain and
appropriate receivables under a concession received from the Government.
4.2
Articles of Association
The Articles contain, inter alia, provisions in relation to the following:
(a)
4.2.1
Board of Directors:
Number of Directors
The total number of Directors shall not be less than three nor more than eighteen.
4.2.2. Appointment of Nominee Directors
As long as IL&FS holds not less than 25% of the paid-up share capital of the
Company, IL&FS shall be entitled to appoint 4 persons (including the Managing
Director) as its Nominee Directors of the Company. Out of the four Directors
appointed, 3 Directors shall not be liable to retire by rotation (subject to the right of
NOIDA to appoint a non-retiring Director). In the event the total number of
Directors on the Board falls below 18 at any time and the Board is unable to ensure
the statutory limit on the number of non-retiring Directors, IL&FS shall relinquish
the non-retiring status of its Directors.
As long as NOIDA holds not less than 8% of the paid-up share capital of the
Company, NOIDA shall be entitled to appoint 2 persons as its Nominee Directors
out of which 1 Director shall not be liable to retire by rotation.
As long as Intertoll Netherlands/Intertoll India hold not less than 8% of the paid-up
share capital they shall be entitled to appoint 1 person as their Nominee Director of
the Company.
4.2.3
Power of Directors to appoint additional Directors
Subject to the conditions for the appointment of Nominee Directors, the Directors
shall have the power at any time and from time to time to appoint any person as an
Additional Director or to fill a casual vacancy provided that the total number of
Directors shall not at any time exceed the maximum number as fixed by the Articles.
Any Director(s) so appointed shall hold office only until the next following annual
general meeting of the Company and shall then be eligible for re-election.
4.2.4
Appointment of Debenture Directors
Any trust deed securing and covering the issue of debentures of the Company may
provide for the appointment of a Director, for and on behalf of the debenture
holders, for such period as may be provided therein, but not exceeding the period for
which the debenture shall remain outstanding. Upon the removal of such Debenture
Director from office and on a vacancy being caused whether by resignation, death,
removal or otherwise, a Director appointed in the vacant place shall be known as the
Debenture Director. The Debenture Director shall not be liable to retire by rotation
except as aforesaid.
4.2.5
Appointment of Alternate Directors
The Board of the Company may, subject to the appointment of Nominee Directors as
has been provided hereinabove, appoint an Alternate Director to act for a Director
(‘Original Director’) during his absence for a period of not less than three months
from the state in which the meetings of the Board are ordinarily held. An Alternate
Director appointed shall not hold office for a period longer than that permissible to
the Original Director in whose place he has been appointed and shall vacate office
when the Original Director returns to that state. Any provision in the Act for the
appointment of retiring Directors in default shall apply to the Original Director.
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Appointment and Term of Special Directors
The Company shall, subject to the provisions of the Act, be entitled to agree with any
Government, person, firm or body corporate that he or it shall have the right to
appoint his or its nominee on the Board of Directors of the Company upon such
terms and conditions as the Company may deem fit. Such nominee and their
successors in office appointed shall be called ‘Special Directors’ of the Company.
The Special Directors appointed shall be entitled to hold office until retired by the
Government, person, firm or body corporate who may have appointed them and will
not be bound to retire by rotation or be subject to the Articles. Further, the Special
Directors shall not be required to have any qualification shareholding. The Special
Directors shall be entitled to the same rights and privileges and subject to the same
obligations as any other Director of the Company.
4.2.7
Share Qualification
No Director shall be required to hold any shares or qualification shares in the
Company.
4.2.8
Rotation of Directors
Not less than two-thirds of the total number of Directors of the Company shall be the
persons whose period of office is liable to determination by retirement of Directors
by rotation and except as otherwise expressly provided in the Act, be appointed by
the Company in a general meeting.
Under the provisions of the Act, except in a case where the Articles provide for the
retirement of all the directors at every annual general meeting, at least two-thirds of
the directors must be directors retiring by rotation and then as regards the other
one-third it may be determined by the Articles. Out of the two-thirds whose term is
liable to determination by rotation, one-third of the directors are required to retire at
every annual general meeting. The directors to retire by rotation at every annual
general meeting shall be those who have been longest in office since their last
appointment.
4.2.9
Retirement of Directors
At every annual general meeting of the Company held after the first annual general
meeting of the Company, one-third of the total number of Directors who are for the
time being liable to retire by rotation or if their number is not three or a multiple of
three, then the number nearest to one-third but not exceeding one-third shall retire
from office.
4.2.10 Eligibility for re-appointment
A director retiring by rotation shall be eligible for re-appointment.
4.2.11 Removal of Directors
The Company may by an ordinary resolution remove any Director before the expiry
of his period of office and appoint another person in his stead. Special notice shall be
required of any resolution to remove a Director and to appoint a person in his place at
the meeting at which he is removed. On receipt of a notice of a resolution to remove a
Director, the Company shall send a copy of the resolution to the Director concerned
and the Director (whether or not he is a member of the Company) shall be entitled to
be heard at the meeting. The vacancy created by the removal of the Director may be
filled by the appointment of another Director at the same meeting or subsequently as
a casual vacancy. A Director who is removed from office as mentioned in this
paragraph shall not be re-appointed as a Director by the Board. Removal of a
Director shall not deprive him of the right to any compensation or damages payable
to him in respect of termination of his appointment as Director.
A vacancy created by the removal of a Director may, if he had been appointed by the
Company in a general meeting or by the Board, be filled by the appointment of
another Director in his stead at the meeting at which the Director is removed.
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Provided that special notice of the intended appointment has been given, a Director
so appointed shall hold office up to the date upon which his predecessor would have
held office if he had not been removed under this Article.
4.2.12 Managing Director/Whole-Time Director
Subject to the provisions of the Act, the Directors may from time to time appoint one
or more of their body to be a Whole-Time Director or Whole-Time Directors of the
Company on such conditions and for such term not exceeding five years at a time as
the Board may think fit, and may, from time to time (subject to the provisions of any
contract between him or them and the Company) remove or dismiss him or them
from office and appoint another in his place. The Managing Director would be
responsible for the day-to-day management of the Company, subject to the
supervision, control and direction of the Board of Directors.
IL&FS shall be entitled to get one of its Nominee Directors on the Board of the
Company to be appointed as the Managing Director as per the terms of appointment
to be finalised by the Board at the time of the appointment.
The Managing Director or the Whole-Time Director shall not whilst they hold office,
be subject to retirement by rotation. However, he shall, subject to the provisions of
any contract between him and the Company, be subject to the same provisions
regarding resignation and removal in the same manner as the other Directors of the
Company. He shall immediately cease to be a Managing Director/ Whole-Time
Director if he ceases to hold the office of Director for any cause.
If, at any time, the number of Directors (including the Managing Director/
Whole-Time Director) who are not subject to retirement by rotation exceeds
one-third of the total number of the Directors for the time being, then the Managing
Director or the Whole-Time Director shall be liable to retire by rotation to the extent
that the number of Directors not liable to retire by rotation shall not exceed one-third
of the total number of Directors for the time being.
4.2.13 Remuneration of Managing Director/ Whole-Time Director
Subject to the provisions of the Act and approval of the Company in a general
meeting, the remuneration of a Managing Director/Whole-Time Director shall from
time to time be fixed by the Directors, and it may be by way of fixed salary, or
commission on profits of the Company, or by participation in any such profits or by
any or all of those modes.
(b)
Powers of the Board of Directors:
4.2.14 General Power of the Board
The Board of Directors have the responsibility, power and authority to manage and
supervise the business and affairs of the Company, in accordance with the
Shareholders’ Agreement, the Memorandum and Articles of the Company, the Act
and other applicable laws. However, certain matters as specified in the Articles of the
Company and the Act require approval of the Company in a general meeting. The
Board of Directors may exercise powers on behalf of the Company at the meeting of
the Board of Directors or by way of a circular resolution. However, certain matters
are to be resolved only at the meeting of the Board of Directors as provided under the
Act and the Articles of the Company and as regards others the Board of Directors
may by a resolution passed at the meeting be delegated to any Committee of
Directors, the Managing Director, the Manager or any other principal officer of the
Company.
(c)
Voting on Specified Matters
4.2.15 Specified Matters
The Articles provide that the Company cannot take any action at shareholder or
board level in relation to certain specified matters (as listed below) without the
approval of certain shareholders or their nominee directors.
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The board of Directors cannot approve any of the specified matters without the
affirmative vote of at least one nominee director appointed by IL&FS (except with
the matters listed at v, xv, xxi and xxiii below where IL&FS has relinquished its
affirmative voting rights) and also the affirmative votes of the nominee directors
appointed by NOIDA and Intertoll Netherlands/Intertoll India.
If a specified matter is before the Company in a general meeting of the members for a
decision, then approval of the specified matter shall require the affirmative vote of the
following shareholders: IL&FS (except with respect to matters listed at v, xv, xxi and
xxiii below where IL&FS has relinquished its affirmative voting rights), NOIDA and
Intertoll Netherlands/Intertoll India.
If a specified matter is due to be considered at a board meeting or a general meeting of
the shareholders, and due notice has been given thereof, then an affirmative vote shall
be deemed to have been given by any person with affirmative voting rights who fails
to attend the meeting.
The specified matters are as follows:
i.
any consolidation, combination or merger of the Company, if such
re-organisation results in a business, which is unrelated to the original
business, as set forth in the Memorandum and Articles.
ii.
any sale, mortgage, lease, license, charge, lien, pledge or encumbrance of any
of the Company’s assets, including any intellectual property rights, other
than for the purpose of securing borrowings made by the Company in the
ordinary course of its business excepting the purchase or sale of immovable
property up to Rs 100,000,000 and lease up to 10 years involving payments
thereunder not exceeding Rs 100,000,000 including lease of premises for use
of employees or for the Company’s use.
iii.
any acquisition, formation or promotion of a new subsidiary or a new
venture company or the making of any investments in the form of equity
and/or loan in any other, entity or business.
iv.
any redemption or cancellation of any debt or equity of the Company except
any repayments or redemption on any contractual liabilities previously
approved by the Board.
v.
any determination, selection and acquisition, grant or disposal of
technology, process know-how, intellectual property rights, technology
partners and any agreements related to technology and process know-how.
vi.
any sale, transfer, or encumbrance of any shares of the Company issued to
the Parties except as expressly provided in the Shareholders Agreement.
vii.
the declaration and payment of any dividends, otherwise than as provided in
the loan agreements, security agreements and other necessary agreements
relating to the financing or refinancing of the Delhi Noida Toll Bridge
project.
viii.
entering into any transaction other than in the ordinary course of business,
which would be outside the scope of the then-current, approved business
plan of the Company and any disbursement of funds against such
transaction.
ix.
any change of the authorised Share Capital of the Company, capital
structure and changes in the debt equity ratio, including issuance of
additional capital except those specifically required as per the financing plan,
including any proposal of the buy back of shares by the Company.
x.
the appointment or replacement of auditors of the Company, the
independent auditor and the independent project engineer under the
Concession Agreement, which would all be firms of repute.
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xi.
any change in the Company’s accounting year.
xii.
any changes to the Memorandum and/or Articles.
xiii.
any disposal or sale of any assets (other than immovable properties) whose
original cost exceeds Rs 100,000,000.
xiv.
any change in the Delhi Noida Toll Bridge project cost during the
construction phase or any capital expenditure during operation phase,
which, in each case, exceeds Rs 100,000,000 and is outside the approved
budget.
xv.
the acquisition, grant or disposal of any intellectual property rights.
xvi.
the grant of any loans in excess of Rs 5,000,000 except as set forth in the
budgets.
xvii.
entering into of any agreement or undertaking to assign, license or provide in
any manner to a third party any rights or information, other than public
information, embodied in any patents, trade secrets, know-how, technical or
engineering information or other intellectual property owned by or licensed
to the Company and any agreement to receive any of the foregoing owned or
possessed by or licensed to a third party.
xviii.
the issuance of corporate guarantees (other than trade warranties) or
incurring any contingent liability, except as set forth in the annual operating
and capital budgets or as required in the ordinary course of business,
including the procurement of working capital needs, or as may be required
by any governmental authorities for the procurement of licenses,.
xix.
the settlement of any litigation by the Company including arbitration where
amount of such settlement exceeds Rs 50,000,000 by way of liability on the
Company.
xx.
any material amendment to any of the agreements entered into in connection
with the Delhi Noida Toll Bridge project.
xxi.
the creation and specification of the functions of any committee of the Board
xxii.
the engagement (directly or indirectly) by the Company or any of its
subsidiaries in any line of business other than, or a substantial expansion of,
the business of the Company on the date of the Shareholders Agreement and
any reasonably related extensions thereto or the purchase, lease or
development of any new toll road, toll bridge, transportation infrastructure
project, transportation services project or similar project.
xxiii.
the approval of (i) any budgets or financing plans of the Company or any
changes or amendments thereto or (ii) any amendments or changes to the
financing plan.
xxiv.
any termination by the Company of the Concession Agreement, any claim
made by the Company of a force majeure event under the Concession
Agreement or any exercise by the Company of any other material rights or
remedies under any agreements entered into in connection with the Delhi
Noida Toll Bridge project.
xxv.
the entering into of any transaction or a series of similar or related
transactions by the Company or any of its subsidiaries with any affiliate of
IL&FS or any company affiliated with IL&FS unless (i) in the ordinary
course of the Company’s or such subsidiary’s business and (ii) on terms no
less favourable to the Company or such subsidiary than would be obtainable
at that time by the Company or such subsidiary, as the case may be, for a
comparable transaction or a series of similar or related transactions in arms
length dealings with an unrelated third person.
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(d)
Proceedings of Directors:
4.2.16 Meetings of Directors
The Directors may meet together for the purposes of despatch of business, adjourn
and otherwise regulate their meetings and proceedings as they think fit. A meeting of
the Board of Directors shall be held at least once in every three months and at least
four such meetings shall be held in every year.
4.2.17 Notice of Meetings
Unless otherwise agreed to by the Directors, the notice with respect to every meeting
of Directors, together with a written agenda for such meeting, shall be given in
writing, at least seven business days before the date on which the meeting is proposed
to be held to every Director, all Alternate Directors and all other Directors in each
case at his usual or appointed address. The meeting of the Board shall be held at a
place mutually decided by the Directors.
4.2.18 Quorum
The quorum for a meeting of the Board shall be one-third of its total strength
excluding the Directors whose office may be vacant at the time (any fraction
contained in that one third being rounded off as one) or two Directors, whichever is
higher, provided however that a quorum shall not be present unless at least one
Director nominated and appointed by each of NOIDA, IL&FS and Intertoll
Netherlands/Intertoll India are present at the meeting.
In case a due notice has been given for the meeting (seven days notice or shorter notice
if consent has been taken from each of the Directors) and the representatives of
NOIDA, IL&FS and Intertoll Netherlands/Intertoll India fail to attend the meeting
then the quorum for such meeting would exclude such Director.
4.2.19 Chairman
The Board of Directors shall mutually elect a Chairman from amongst the Board of
Directors who may or may not be a Whole Time Director of the Company. The
Chairman shall hold office for such time as may be stipulated by the Board at the time
of appointment and shall not have a casting vote. If at any meeting of the Board, the
Chairman is not present at the time appointed for holding such meeting, then only for
the purposes of such meeting, the Directors may choose one of their number to chair
such meeting.
4.2.20 Voting
Other than in relation to the specified matters described in paragraph 4.2.15 above,
any action to be taken by the Board or any of the Committee(s) of the Board shall be
duly and validly taken by a resolution adopted by the affirmative vote of a majority of
the Directors present at a meeting where a quorum is present.
4.2.21 Disclosure of interests of Directors and interested Directors not to participate or vote
in the Board’s proceedings
Any Director of the Company who is in any way whether directly or indirectly
concerned or interested in a contract or arrangement entered into or proposed to be
entered into by or on behalf of the Company shall disclose the nature of his interest or
concern at the Board Meeting.
No Director who is interested in any contract or arrangement as aforesaid shall take
part in any discussion or vote on nor shall his presence shall be counted for the
purpose of forming a quorum while discussing or voting on such contract or
arrangement.
(e)
Proceedings at General Meetings:
4.2.22 Annual General Meetings
The Annual General Meetings of the Company shall be held in accordance with the
Act and shall be called for a time during the business hours on a day that is not a
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public holiday and shall be held either at the registered office of the Company or at
such place as the Board may determine and the notices calling the meeting shall
specify it as the Annual General Meeting.
4.2.23 Right to attend General Meetings
Every member of the Company shall be entitled to attend every general meeting
either in person or by proxy; the Auditor of the Company shall have the right to
attend and to be heard at any general meeting on any part of the business which
concerns the Auditor.
4.2.24 Extraordinary General Meetings
All general meetings other than Annual General Meetings shall be called
Extraordinary General Meetings
4.2.25 Convening Extraordinary General Meetings
The Board may whenever it shall think fit convene an extraordinary general meeting.
If at any time there are no Directors within India capable of acting who are sufficient
in number to form a quorum, any Director or such number of members as specified
under the Act may call an Extraordinary General Meeting. An Extraordinary
General Meeting may also be convened upon requisition by such number of members
who hold not less than one-tenth of the paid-up capital of the Company.
4.2.26 Notice of General Meetings
A general meeting of the Company may be called by giving not less than 21 days
notice in writing. However, a general meeting may be called after giving a shorter
notice than that specified above if consent is accorded thereto (i) in case of an Annual
General Meeting by all the members entitled to vote thereat, or (ii) in case of any
other meeting, by the members of the Company holding not less than 95% of such
part of the paid-up share capital of the Company as gives them a right to vote at the
meeting.
4.2.27 Quorum at General Meetings
No business of the Company shall be transacted at any General Meeting unless a
quorum requisite is present at the commencement of the business. Five members
present in person shall be a quorum for a General Meeting.
4.2.28 Lack of Quorum
If within half an hour from the time appointed for the meeting a quorum is not
present, the meeting if called upon requisition, shall be dissolved; but in any other
case it shall stand adjourned to the same day in the next week at the same time and
place or such other day, time and place, as the Directors may by notice to the
shareholders appoint. If at such an adjourned meeting a quorum is not present, those
members who are present shall be a quorum and may transact the business for which
purpose the business was called.
4.2.29 Chairman of general meeting
The chairman of the Board of Directors or in his absence the Vice-Chairman of the
Board shall, take the chair at every general meeting of the Company. If there is no
such chairman or if at any meeting he shall not be present within fifteen minutes after
the time appointed for holding such meeting, or being present declines to take the
chair, the Directors present shall elect one of their number as Chairman of the
meeting and in default of them doing so, the members who are present shall choose
one of their Directors to be Chairman and if no Director present be willing to take
chair, the members shall on show of hands elect one of the members to be Chairman
of the meeting. If a poll is demanded on the election of the Chairman, it shall be taken
in accordance with the provisions of the Act and the Chairman elected on show of
hands shall exercise all the powers of the Chairman and if some other person is
elected as Chairman as a result of the poll, he shall be the Chairman for the rest of the
meeting.
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4.2.30 Voting by show of hands
At any general meeting a resolution put to the vote of the meeting shall be decided on
a show of hands unless a poll is demanded. The Chairman shall have a casting vote.
4.2.31 Result of voting: decision of the Chairman
A declaration by the Chairman that on a show of hands, a resolution has or has not
been carried either unanimously or by a particular majority and an entry to that
effect in the books containing the minutes of the proceedings of the Company shall be
conclusive evidence of passing of such resolution
4.2.32 Demand for Poll
Before or on the declaration of the result of the voting on any resolution by a show of
hands, a poll may be ordered to be taken by the Chairman of the meeting on his own
motion or on a demand made by members present in person or by proxy and holding
shares of the Company representing not less than one-tenth of the voting power in
respect of such resolution or holding shares on which an aggregate sum of not less
than Rs 50,000 has been paid up. The persons who made the demand may withdraw
the demand for poll at any time.
4.2.33 Appointment of scrutinizers at poll
When a poll is to be taken, the Chairman of the meeting is to appoint two scrutinizers
out of which one scrutinizer shall always be a member (not being an officer or
employee of the Company) present at the meeting, provided such a member is
available and willing to be appointed.
4.2.34 Decision of the chairman: Result on Poll
The Chairman of any meeting shall be the sole judge of the validity of every vote
tendered at such meeting.
4.2.35 Right of member to use his vote
On a poll taken at meeting of the Company, a member entitled to vote or use his
proxy or any other person entitled to vote for him, as the case may be, need not, if he
votes, use all his votes or cast in the same way as all of the votes he uses.
4.2.36 Votes may be given by proxy or attorney
Votes may be given personally or by an attorney duly authorised under power of
attorney or by proxy or in case of a body corporate, by a representative duly
authorised or by proxy of such representative of the body corporate in accordance
with the provisions of the Act.
4.2.37 Votes of members
Every member shall have one vote on a show of hands and on a poll shall have voting
rights in proportion to his share of the paid up equity capital of the Company. A
proxy is entitled to vote only on poll.
4.2.38 Proxies
A person may be appointed a proxy though he is not a member but such proxy shall
not have any right to speak at any meeting and is not entitled to vote on a show of
hands. A vote in accordance with the terms of the instrument of proxy shall be valid
notwithstanding the previous death of the Principal revocation of the proxy or
transfer of the shares in respect of which the vote is given provided no intimation in
writing of the death, revocation or transfer has been received by the Company or by
the Chairman of the meeting before the vote is given.
4.2.39 No vote while a call is due to Company
No member shall be entitled to vote either in person or by proxy at any general
meeting of a class of shareholders either upon a show of hands or on a poll in respect
of any shares registered in his name on which any calls or other sums presumably
payable by him have not been paid or in respect of which the Company has exercised
any right of lien.
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(f)
Share Capital
4.2.40 Increase and reduction of Capital
The Company in General Meeting may from time to time by ordinary resolution
increase the capital by creation of new shares of such amount as it thinks expedient.
However, the Company may from time to time reduce its share capital, capital
reduction reserve account or share premium account by the affirmative vote of at
least 75% of the Members subject to confirmation of Court and in accordance with
the provisions of the Act and the Articles of the Company.
The aforementioned restrictions in relation to reduction in capital are more stringent
than required by law, as the Act prescribes the assent of only the members present
and voting.
4.2.41 Issue of redeemable Preference shares/Cumulative Convertible Preference shares
The Company has the power to issue preference shares or cumulative convertible
preference shares carrying a right of redemption out of the profits of the Company or
out of the share premium account of the Company in accordance with the provisions
of the Act.
4.2.42 Buy Back of shares
The Board of the Company may buy back such of the Company’s own shares or
securities as it may think necessary subject to limits, upon such terms and conditions
and subject to such approvals, permissions and consents as may be permitted by law.
4.2.43 New shares to be offered to existing members
If the Company intends to issue new equity shares or securities convertible into or
exercisable or exchangeable for equity shares (“New Securities”), the Company shall
provide IL&FS, NOIDA, Intertoll and IFCI a written notice of such intention
(“Issuance Notice”) describing the type of New Securities to be issued and price
thereof and the general terms upon which the Company proposes to effect such
issuance. Each of the aforesaid parties shall have a right but not the obligation to
purchase (or, in case of IFCI, to cause an affiliate to purchase) a pro rata share of such
New Securities which the Company intends to issue (such pro rata share to be
calculated by reference to the shareholding of the relevant Party and its Affiliates
relative to the total shareholding of all the Parties) within 30 days from the date of
such Issuance Notice. If any of the aforesaid parties fails to purchase (or cause their
affiliates to purchase) its pro rata share of such New Securities as the case may be, it
shall renounce its right to purchase the remaining proportion of its total pro rata
share in favour of the other aforesaid parties. Each of the aforesaid parties has a right
to purchase the remaining part of the non-subscribing party’s pro rata portion on a
pro rata basis by giving written notice to the Company.
The abovementioned pre-emption rights were incorporated in the Articles while the
shareholders of the Company consisted predominantly of the principal shareholders.
However, since then the Company has become a listed company with widespread
public shareholding. The Directors believe that the abovementioned special rights in
favour of the principal shareholders are contrary to the provisions contained in
Section 81 of the Act and hence void under law.
4.2.44 Shares at the disposal of the Directors
Subject to the provisions of the Act, the shares in the capital of the Company for the
time being shall be under the control of the Directors who may issue, allot or
otherwise dispose of the same or any of them to such persons, in such proportion and
on such terms and conditions and either at a premium or at par or (subject to
compliance with the provisions of the Act) at a discount and at such time as they may
from time to time think fit, and with the sanction of the Company in a general
meeting, to give any person the option or right to call for shares either at par or
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premium during such time and for such consideration as the Directors may think fit,
and may issue and allot shares in the Company on payment in full or part of any
property sold and transferred or for any services rendered to the Company in the
conduct of its business and any shares, if so issued, shall be deemed to be fully paid
shares.
4.2.45 Forfeiture of shares by the Company and Company’s lien on shares
If any member fails to pay any call or instalment on or before the day appointed for
the payment of the same, the Board of Directors may at any time thereafter, during
such time as the call or instalment remains unpaid, serve a notice on such member
requiring him to pay the same together with any interests that may have accrued and
all expenses that may have been incurred by the Company by reason of such
non-payment. The notice requiring the member to pay shall specify the date (a period
not less than 30 days from the date of service of notice) and to specify the place or
places on and at which, such call or instalment and such interest and expenses are due
and to be paid. The notice is also required to state that in the event of non-payment on
or before the time and at the place appointed, the shares in respect of which, the call
was made or instalment is payable would be liable to be forfeited. If the requisition of
any such notice has not been complied with, any shares in respect of which notice has
been given may at any time thereafter, before payment on all calls or instalments due
in respect thereof, be forfeited by a resolution of the Board of Directors to that effect.
Such forfeiture shall include all dividends declared in respect of the forfeited shares
but not actually paid before the forfeiture. Any shares so forfeited shall be deemed to
be the property of the Company and the Directors may sell, re-allot and otherwise
dispose of the same in such manner as they think fit. The Directors may at any time
before any shares so forfeited are sold, re-allotted or otherwise disposed of, annul the
forfeiture thereof as a matter of grace and favour but not as a matter of right upon
such terms and conditions as they think fit. Any member whose shares shall have
been forfeited shall, notwithstanding the forfeiture, be liable to pay and shall
forthwith pay to the Company all calls, instalments, interest and expenses owing
upon or in respect shares at the time of forfeiture together with interest thereon from
the time of the forfeiture until payment, at the rate of 12% per annum and the
Directors may enforce the payment of moneys or any part thereof as they think fit but
shall not be under any obligation to do so. Further, the Company shall have a lien on
partly paid up shares only to the extent of all moneys called or payable at a fixed time
in respect of such shares. However, the Company shall not have any lien on its fully
paid up shares.
4.2.46 Issue of further shares not to effect the rights of shares already issued
The rights conferred upon the holders of the shares of any class issued with preferred
or other rights shall not unless otherwise expressly provided by the terms of the issue
of that class, be deemed to have varied by the creation or issue of further shares
ranking pari passu therewith.
4.2.47 Power to vary shareholders’ rights
The rights attached to the different classes of shares can only be varied in accordance
with the provisions of the Act.
(g)
Borrowing Powers:
4.2.48 Power to borrow
The Board of Directors may from time to time by a resolution passed at a meeting of
the Board accept deposits from members, either in advance of calls or otherwise and
may generally raise or borrow or secure the payment of any sum or sums of money
for the Company in accordance with the provisions of the Articles and the Act. (By an
ordinary resolution passed at the EGM of the Company held on March 25, 2004, the
Board of Directors of the Company has been authorised pursuant to Section
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293(1)(d) of the Companies Act, 1956, to borrow, from time to time, any sums of
monies not exceeding Rs 8 billion on such terms and conditions as the Board of
Directors may deem fit, with or without security, notwithstanding that the aggregate
amounts of monies borrowed (apart from temporary loans obtained or to be
obtained from the Company’s bankers in the ordinary course of business) exceeds
the aggregate paid up capital and the free reserves of the Company.)
4.2.49 Conditions for repayments of moneys borrowed
The payments or repayment of the moneys borrowed may be secured in a manner and
upon such terms and conditions in all respects as the Board of Directors think fit
including by way of issue of debentures or debenture stock of the Company charged
upon all or any part of the undertakings or property of the Company (both present and
future) including its uncalled share capital for the time being pursuant to a resolution
passed at the meeting of the Board of Directors but not by its circular resolution.
4.2.50 Issuance of debentures and securities
Any debentures, debenture stock, bonds or other securities issued or to be issued by
the Company shall be under the control of the Board of Directors who may issue
them upon such terms and conditions as they consider for the benefit of the
Company. However, debentures with the right of conversion into or allotment of
shares shall be issued only with the consent of the Company in the General Meeting
by a Special Resolution.
4.2.51 Transfer and encumbrance of shares and Rights or First Refusal
The transfer of shares or debentures shall not be registered unless it is in accordance
with the provisions of the Act and the Articles.
Each of IL&FS, NOIDA and Intertoll shall not at any time create any charge,
mortgage, lien, or pledge over or hypothecate or encumber in any manner its
respective Ordinary Shares, whether in whole or in part or grant options against the
same as a result of which the rights and obligations to the aforesaid parties under the
Shareholders Agreement should be altered, varied or modified in any manner
whatsoever. Each of IL&FS, NOIDA and Intertoll shall not at any time transfer their
Ordinary Shares while certain senior lenders (including the trustees for the DDBs and
ZCBs, Takeout Lenders and banks and financial institutions which have lent money
to the Company) have dues outstanding from the Company without the written
consent of all such lenders and IFCI.
If IL&FS, NOIDA, Intertoll Netherlands/Intertoll India or IFCI decides to sell its
Ordinary Shares, or any part or parts thereof, in the Company, it will offer the first
right of purchase/refusal to the other parties, in proportion to their equity holding
and such offering party will notify to the other parties and the Board in writing. (The
accepting party has a right to purchase the non-subscribing party’s portion on a pro
rata basis.) If none of the other parties accept the initial offer within 30 days of receipt
of the notice from the offering party or fail to make the payments within 30 days of
accepting the offer, the party may sell the shares or part or parts thereof to a third
party, provided that under no circumstances shall the number and sale price of the
shares and the terms upon which the shares are proposed to be sold to such a third
party be more favourable than that on which they were offered to the parties.
However, each of the parties may sell its shares to a third party if a waiver in writing is
obtained from all of the other parties.
The Act provides that the shares of a public company are freely transferable and the
public company can refuse registration of transfer only on limited grounds such as
defects in transfer instrument, violation of any securities laws for the time being in
force and so forth. The restriction on transfer of shares is void under law to the extent
it is contrary to the provisions of the Act.
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4.2.52 Transmission
Subject to the provisions of the Act and the Articles, any person becoming entitled to
a share in consequence of death, bankruptcy or insolvency of any member or by any
lawful means other than a transfer in accordance with the Articles, may with the
consent of the Directors (which they shall not be under any obligation to give), upon
producing such evidence as the Board thinks sufficient either be registered himself as
the holder of the share or elect to have some person nominated by him and approved
by the Board, registered as such holder; provided that if such person shall elect to
have his nominee registered he shall testify the election by executing to his nominee
an instrument of transfer of the share in accordance with the provisions contained in
the Articles and until he does so, he shall not be freed from any liability in respect of
the share.
4.2.53 Nomination
Every holder of shares or debentures may, at any time nominate, in the prescribed
manner, a person to whom his shares, or debentures shall vest in the event of his
death. If the shares are held jointly, the joint holders, may together nominate, in the
prescribed manner, a person to whom all the rights in the shares or debentures shall
vest in the event of death of all the joint holders.
Notwithstanding anything contained in any other law for the time being in force or in
any disposition, whether testamentary or otherwise, in respect of such shares or
debentures, where a nomination made in the prescribed manner purports to confer
on any person the right to vest the shares or debentures, the nominee shall, on the
death of the joint holders become entitled to all the rights in such shares or
debentures or as the case may be, all the joint holders, in relation to such shares or
debentures to the exclusion of all the other persons, unless the nomination is varied
or cancelled in the prescribed manner.
(h)
Dividends and Distribution of Assets:
4.2.54 Dividends
The profits of the Company, subject to any special rights relating thereto to the
creation of any reserve fund shall be divisible among the members in proportion to
the amount of capital paid up on the shares held by them respectively.
The Company in general meeting may declare a dividend to be paid to the members
according to their rights and interests in the profits and may fix the time for payment.
No larger dividend shall be declared than is recommended by the Directors, but the
Company in general meeting may declare a smaller dividend.
No dividend shall be paid otherwise than out of the profits of the year or any other
undistributed profits of the Company and no dividend shall carry interest as against
the Company. The declaration of the Directors as to the amount of net profits of the
Company shall be conclusive. The Company shall pay dividends in proportion to the
amount paid up or credited as paid up on each share, where a larger amount is paid
up or credited as paid up on some shares than on others. The Directors may from time
to time pay to the members such interim dividends as in their judgement the position
of the Company justifies. The Directors may retain any dividends payable on shares
on which the Company has a lien and may apply the same in or towards satisfaction
of the debts, liabilities or engagements in respect of which the lien exists.
Any general meeting declaring a dividend may make a call on the members of such
amount as the meeting fixes, but so that the call on each member shall not exceed the
dividend payable to him and so that the call be made payable at the same time as the
dividend and the dividend may, if so arranged between the Company and the
member, be set off against the call. The making of a call under this Article shall be
deemed ordinary business of an annual general meeting which declares a dividend.
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A transfer of shares shall not pass the right to any dividend declared thereon after
such transfer and before the registration of the transfer.
No member shall be entitled to receive payment of any interest or dividend in respect
of his share or shares, whilst any money may be due or owing from him to the
Company in respect of such share or shares or otherwise howsoever, either alone or
jointly with any other person or persons; and the Directors may deduct from the
interest or dividend payable to any member all sums of money so due from him to the
Company.
If the Company has declared a dividend but which has not been paid within 30 days
from the date of declaration to any shareholder entitled to payment of the dividend,
the Company shall within 7 days from the date of expiry of the said period of
30 days, open a special account in that behalf in any Scheduled Bank called “the
unpaid dividend account of Noida Toll Bridge Company Limited”, and deposit the
amount of such unclaimed dividend in the said account. Any money transferred to
the unpaid dividend account of the Company which remains unpaid or unclaimed
for a period of seven years from the date of such transfer, shall be transferred by the
Company to the Fund established under section 205C(1) of the Act.
4.2.55 Reserve Fund
The Directors of the Company may from time to time before recommendation of any
dividend set apart any and such portion of profits of the Company as they think fit as
a Reserve Fund to meet contingencies or for the liquidation of any debentures, debts
or other liabilities of the Company, for equalisation of dividends or for repairing,
improving and maintaining any of the property of the Company and for such other
purpose of the Company as the Directors in their absolute discretion think conducive
to the interest of the Company.
4.2.56 Depreciation Fund
The Directors may from time to time before the recommendation of any dividend, set
apart any such portion of the profits of the Company, as they think fit, as a
depreciation fund applicable at the discretion of the Directors, for providing against
any depreciation in the investments of the Company or for rebuilding, restoring,
replacing, or for altering any part of the buildings, work, plant, machinery or other
property of the Company.
4.2.57 Distribution Of Assets
If in a winding up the assets available for distribution among the members shall be
more than sufficient to repay the whole of the capital paid up at the commencement
of the winding up, the excess shall be distributed amongst the members in proportion
to the capital, at the commencement of the winding up, paid up or which ought to
have been paid up on the shares issued upon special terms and conditions.
If the Company shall be wound up and the assets available for distribution among the
members as such shall be insufficient to repay the whole of the paid up capital, such
assets shall be distributed so that as nearly as may be, the losses shall be borne by the
members in proportion to the capital paid up, or which ought to have been paid up, at
the commencement of the winding up on the shares held by them respectively.
4.2.58 Calls
Each member shall pay the amount of every call so made on him to the persons and at
the time and place appointed by the Directors, which may be done so only by way of a
resolution passed at a meeting of the Board and not by way of a circular resolution.
4.3
The Shareholders’ Agreement (as summarised in paragraph 7.10 of Part VI) gives special
rights to certain parties, which have been incorporated into the Articles. These special rights
include, inter alia, the right to appoint nominee directors and certain affirmative rights in
respect of certain specified matters. Certain of the provisions in the Articles refer to parties
who were parties to the Shareholders’ Agreement, but who have subsequently ceased to hold
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any Ordinary Shares in the Company. The Articles therefore indicate that DAI (India)
Limited, Asian Infrastructure Mezzanine Capital Fund (AIMCF) and IL&FS Trust Company
Limited (the “Excluded Parties”) have the special rights referred to above, even though such
parties have disposed of their entire shareholdings in the Company. The Excluded Parties
have acknowledged and confirmed in writing to the Company that they have waived their
rights, if any, under the Shareholders’ Agreement as well as under the Articles. The Excluded
Parties have requested the Company to remove all references to the Excluded Parties in the
Articles. The Directors intend to implement this request by convening an EGM to amend the
Articles.
5.
5.1
Interests of the Directors and others, major and controlling shareholders and related party
transactions
Directors’ Interests
5.1.1 As at the date of this document, the following Directors hold Ordinary Shares in the
Company. The shareholdings of the aforesaid Directors as at the date of this
document and as they will be immediately after Admission and the Placing (assuming
no exercise of the Over-allotment Option) are as follows:
Name
Mr Hari Sankaran
Mr Raj Kumar Bhargava
Mr Ravi Parthasarathy
Mr Arun Kumar Saha
Mr Karunakaran
Ramchand
Following Admission
No. of
% of
Ordinary
issued Share
Shares
Capital
250,000
35,000
35,000
100,000
0.20
0.03
0.03
0.08
250,000
35,000
35,000
100,000
0.14
0.02
0.02
0.06
100,000
0.08
100,000
0.06
5.1.2
Certain of the Directors are also interested in the Ordinary Shares of the Company as
a result of options granted to them under the terms of the ESOP 2004 (details of
which are given in paragraph 6.1 of Part VI below).
5.1.3
As at the date of this document, the following members of the key management team
hold Ordinary shares in the Company. The shareholdings of the aforesaid members
of the key management team as at the date of this document and as they will be
immediately after Admission and the Placing (assuming no exercise of the
Over-allotment Option) are as follows:
5.1.4
5.2
Before Admission
No. of
% of
Ordinary
issued Share
Shares
Capital
Name
Before Admission
No. of
% of
Ordinary
issued Share
Shares
Capital
Following Admission
No. of
% of
Ordinary
issued Share
Shares
Capital
Mr Pradeep Puri
Ms Monisha Macedo
Mr Ajai Mathur
Mr Tarun Banerjee
270,000
31,000
24,500
17,500
270,000
31,000
24,500
17,500
0.22
0.03
0.02
0.01
0.15
0.02
0.01
0.01
Certain of the key management team are also interested in the Ordinary Shares of the
Company as a result of options granted to them under the terms of the ESOP 2004
(details of which are given in paragraph 6.1 of Part VI below).
Terms of Appointment of Directors and Terms of Employment of Key Management
Terms of Appointment of Directors
5.2.1 The Company does not have any service contracts with any of its Directors, all of
whom are non-executive. Except for sitting fees, travel and lodging expenses for
attending Board meetings or committee meetings of the Board, the Directors of the
Company do not receive any other remuneration. Under the Act, a director of a
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company occupies a fiduciary position and must act in the best interests of the
company. The appointment and removal of each of the Directors is governed by the
Act (summarised in paragraph 18 of Part I), the Articles (summarised in paragraph
4.2 of Part VI) and the Shareholders Agreement (summarised in paragraph 7.10 of
Part VI). The Directors have all been appointed for an indefinite period; however, all
Directors (other than the Nominee Director appointed by IDBI from time to time) are
required to retire by rotation at the annual general meetings of the Company,
although they may stand for re-election immediately (as summarised under
paragraph 4.2.8 of Part VI). It should be noted that certain shareholders and lenders
of the Company have the right to appoint Directors pursuant to the Shareholders
Agreement and Articles of Association (as summarised in paragraphs 7.10 and 4.2 of
Part VI, respectively), and would be able to reappoint their Nominee Director if he
retired or was removed by a resolution passed at a general meeting of the Company.
Although NOIDA has the right to appoint Nominee Directors under the
Shareholders Agreement and the Articles (one of whom would be non-retiring), it has
not currently appointed any Nominee Directors. IL&FS, subject to the right of
NOIDA to appoint non-retiring Directors, is entitled to appoint 3 non-retiring
directors.
The non-executive directors are not entitled to claim compensation for loss of office.
5.2.2
On 18 December 1997 Mr Gopi Arora was appointed as non-executive director and
has served as the Chairman of the Board of Directors of the Company for 8 years and
2 months. Mr Gopi Arora receives sitting fees of Rs 5,000 per meeting for attending
meetings of the Board or any committee thereof, together with board and lodging
and travelling expenses. The Company also provides an office for the use of Mr Gopi
Arora.
5.2.3
On 18 December 1997, Mr Raj Kumar Bhargava was appointed as non-executive
director and, accordingly, has served in that office for 8 years and 2 months. Mr Raj
Kumar Bhargava receives sitting fees of Rs 5,000 per meeting for attending meetings
of the Board or any committee thereof, together with board and lodging and
travelling expenses. The Company, subject to approval of the Central Government,
has obtained the approval of the shareholders of the Company at the annual general
meeting of the Company held on 16 September 2003 for providing Mr. Bhargava
with a chauffeur driven car on a full time basis. Pursuant to the said approval, the
Company has made an application to the Central Government and the same is still
pending.
5.2.4
On 21 April 2005, Mr Piyush G Mankad was appointed as non-executive director
and, accordingly, has served in that office for 10 months. Mr Piyush G Mankad
receives sitting fees of Rs 5,000 per meeting for attending meetings of the Board or
any committee thereof, together with board and lodging and travelling expenses.
5.2.5
On 17 August 2005, Mr Pandankallunkel T Thomas was appointed as
non-executive director and, accordingly, has served in that office for 6 months. IDBI
(which has appointed Mr Thomas as its nominee director) is paid a sitting fee of Rs
5,000 per board or committee meeting attended by Mr Thomas, together with board
and lodging and travelling expenses.
5.2.6
On 8 April 1996, Mr Ravi Parthasarathy was appointed as non-executive director
and, accordingly, has served in that office for 9 years and 10 months. Mr Ravi
Parthasarathy receives sitting fees of Rs 5,000 per meeting for attending meetings of
the Board or any committee thereof, together with board and lodging and travelling
expenses.
5.2.7
On 8 April 1996, Mr Hari Sankaran was appointed as non-executive director and,
accordingly, has served in that office for 9 years and 10 months. Mr Hari Sankaran
receives sitting fees of Rs 5,000 per meeting for attending various meetings of the
Board or any committee thereof, together with board and lodging and travelling
expenses.
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5.2.8
On 25 January 2005, Mr Arun Kumar Saha was appointed as non-executive director
and, accordingly, has served in that office for 1 year and 1 month. Mr Arun Kumar
Saha receives sitting fees of Rs 5,000 per meeting for attending various meetings of
the Board or any committee thereof, together with board and lodging and travelling
expenses.
5.2.9
On 8 September 1998, Mr Karunakaran Ramchand was appointed as non-executive
director and, accordingly, has served in that office for 7 years and 5 months. Mr
Karunakaran Ramchand receives sitting fees of Rs 5,000 for attending various
and travelling expenses.
5.2.10 On 30 December 2005, Mr Deepak Premnarayen was appointed as non-executive
director and, accordingly, has served in that office for 2 months. Mr Deepak
Premnarayen receives sitting fees of Rs 5,000 per meeting for attending various
and travelling expenses.
5.2.11 Save as set out above, there are no existing or proposed service contracts between any
of the Directors and the Company providing for benefits upon termination of
employment.
The total aggregate fees (including reimbursement of travel and lodging expenses
vehicle running and maintenance expenses and Chairman’s office expenses) payable
to the Directors for the provision of services to the Company for the financial year
ended on 31 March 2005, amounted to Rs 1,093,305.50.
Terms of Employment of Key Management
5.2.12 Mr Pradeep Puri joined the Company on 20 August 1998 and has served the
Company for 7 years and 6 months. Currently he serves as President and Chief
Executive Officer. He was originally appointed as the Company’s managing director
with effect from 20 August 1998. Mr Puri is entitled to receive Rs 8.53 million per
annum by way of remuneration and benefits worth Rs 1.57 million per annum. The
employment may be terminated by either the employee or the Company on one
month’s written notice. Mr Puri has been given a loan by the Company to acquire a
car; the outstanding amount of such loan is Rs 55,000 as at 30 December 2005.
5.2.13 Mr Tarun K Banerjee joined the Company on 11 September 2000 and has served the
Company for 5 years and 5 months. Currently he serves as Chief Financial Officer in
the grade of a Vice President. Mr Banerjee is entitled to receive Rs 1.72 million per
annum by way of remuneration and benefits worth Rs 30,000 per annum. The
employment may be terminated by either the employee or the Company on one
month’s written notice.
5.2.14 Mr Ajai Mathur joined the Company on 1 August 2000 and has served the Company
for 5 years and 7 months. Currently he serves as Vice President – Marketing.
Mr Mathur is entitled to receive Rs 2.54 million per annum by way of remuneration
and benefits worth Rs 40,000 per annum. The employment may be terminated by
either the employee or the Company on one month’s written notice.
5.2.15 Ms Monisha Macedo joined the Company on 11 December 1998 and has served the
Company for 7 years and 2 months. Currently she serves as Senior Vice President and
Company Secretary. Ms Macedo is entitled to receive Rs 2.02 million per annum by
way of remuneration and benefits worth Rs 60,000 per annum. The employment
may be terminated by either the employee or the Company on one month’s written
notice.
The total aggregate salary and benefits (including rent allowance, child education allowance,
company car, leave travel allowance, medical expenses, health insurance, utilities,
transportation, and other allowances) payable to the key management team for the provision
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of services to the Company for the financial year ended on 31 March 2005, amounted to
Rs 14.09 million. The key management team are also entitled to receive a performance
related bonus of between 3 months and 10 months salary depending upon performance. The
key management are also eligible to apply for loans in respect of housing and vehicles.
Upon termination of their employment each member of the key management team is entitled
to receive benefits including a ‘gratuity’ payment of 30 days’ salary for each completed year of
service. The Company also contributes to a superannuation plan and a defined benefits
provident fund.
5.3
Major Shareholders
5.3.1 Save as set out below, the Company and the Directors are not aware of any person,
who was at 10 March 2006 (being the last practicable date before the publication of
this document) or who will, immediately following Admission and the Placing
(assuming no exercise of the Over-allotment Option, and assuming that none of such
persons dispose of any Ordinary Shares between 10 March 2006 and the date of
Admission), be interested (within the meaning of the Companies Act 1985 of
England), directly or indirectly, in 3% or more of the issued share capital of the
Company.
Interested Person
As at 10 March 2006
No. of
Ordinary
Shares
% of
in which
Issued share
interested
capital
IL&FS*
41,000,007
NOIDA
10,000,000
Intertoll India
Consultants Pvt. Ltd.** 9,142,940
Life Insurance
Corporation of India
9,003,836
Merrill Lynch
Capital Markets
6,549,893
Goldman Sachs
Investment
(Mauritius) Ltd
4,177,658
IFCI
3,800,000
Following Admission
(assuming no exercise of the
Over-allotment Option)
No. of
Ordinary
Shares
% of
in which
Issued share
interested
capital
33.18
8.09
41,000,007
10,000,000
22.73
5.54
7.40
9,142,940
5.07
7.29
9,003,836
4.99
5.30
6,549,893
3.63
3.38
3.07
4,177,658
3,800,000
2.32
2.11
* Certain directors of the Company are also directors of IL&FS, although they do not control the affairs of IL&FS.
** Intertoll Management Services BV, an associated company of Intertoll India Consultants PVT. Ltd also held
1,477,060 Ordinary Shares in the Company as at 10 March 2006
5.3.2
The principal Shareholders of the Company have entered into a Shareholders
Agreement on 9 December 1998, and which was subsequently amended and restated
on 5 May 2000, which was subsequently amended twice on 28 November 2000 and
28 June 2004. The Shareholders Agreement records the terms and conditions for
management and control of the Company. The Articles of the Company were
amended to incorporate the terms and conditions as agreed to amongst the principal
Shareholders under the Shareholders Agreement. The Articles of the Company
confer certain rights to the principal Shareholders with regard to appointment of
directors, conduct of board meetings, affirmative voting rights. The Shareholders
Agreement is summarised at paragraph 7.10 of Part VI, and the rights of the principal
Shareholders under the Articles are summarised at paragraph 4.2 of Part VI. Save as
described in this paragraph, the principal Shareholders of the Company do not have
voting rights in respect of the share capital of the Company (issued or to be issued)
which differ from any other shareholder of the Company.
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5.3.3
As at 10 March 2006 IL&FS held 33.18% of the Existing Ordinary Shares. Being the
largest shareholder, IL&FS may have the ability to determine the outcome of certain
shareholders resolutions. Save as set out in paragraph 5.3.2 above and this
paragraph, the Company and the Directors are not aware of any person, who directly
or indirectly, jointly or severally, exercises or could exercise control over the
Company.
5.3.4
IL&FS is proposing to transfer its entire shareholding in the Company to IL&FS
Transportation Networks Limited which is a subsidiary of IL&FS. The purpose of
this transfer is to consolidate all of IL&FS’s investments in road sector projects into
one entity. IL&FS shall obtain all necessary approvals including compliance with the
SEBI Takeover Code provisions. The Variation Agreement executed with Intertoll
Netherlands and Intertoll India, as referred to in paragraph 7.11 below, releases
those parties from restrictions on their ability to sell their shares, subject to certain
other restrictive covenants.
5.3.5
Save as aforesaid, the Company and the Directors are not aware of any arrangements
the operation of which may at a subsequent date result in a change of control of the
Company.
5.3.6
Certain of the loan agreements entered into by the Company grant the relevant
lenders the right to convert their loans into Ordinary Shares in certain default
situations. Both the loan agreement dated 17 December 1998, entered into by the
Company with IFCI, and the loan agreement dated 30 October 1998, entered into by
the Company with IDBI contain identical terms. They provide that if the Company
commits a default in payment or repayment of three consecutive instalments of
principal amounts of the loans or interest or both thereon, the relevant lender will
have the right to convert, at its option, the whole of the outstanding amount of the
loans or a part thereof not exceeding 20% of the amount advanced under the loan,
whichever is lower, into fully paid-up equity shares of the Company, at par. The
relevant lender may exercise this right of conversion on one or more occasions,
during the currency of the loan on the happening of the default as specified within the
loan facility agreement. The loan agreement dated 23 August 1999, entered into by
the Company with the Life Insurance Corporation of India Limited, is in similar
terms to those mentioned above; however, it also provides that the loan may be
converted (on the same terms as mentioned above) if the affairs of the Company
pertaining to the project are, in the opinion of the lender, being mismanaged in a
manner which is likely to affect prejudicially the lender’s interest. Further details of
the amounts outstanding under each of these loans are given below in paragraph
7.16.
Other Interests
5.4.1 Over the five years preceding the date of this document, the Directors have been
directors or partners of the following companies and partnerships:
Name
Present Directorships
Mr Gopi Arora Bengal Ambuja Housing Dev.
Limited
Jaiprakash Associates Limited
Jaiprakash Hydro Power
Limited
Alps Industries Limited
HGS India Limited
IL&FS Transportation
Networks Limited
Sunil Synchem Limited
Infrastructure Leasing &
Financial Services Limited
DND Flyway Limited
202
Past Directorships
Alliance Capital (ACAM) Trust
Company Private Limited
Shalimar Wires Industries
Limited, Kolkata
First Capital India Limited
Indo – Gulf Explosives Limited,
Delhi
VLS Finance Limited
Jaiprakash Industries Limited
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Past Directorships
Mr Gopi Arora Jaypee Karcham Hydro
(continued)
Corporation Limited
Roto Pumps Limited
SARA Fund Trustee Company
Pvt. Limited
Television Eighteen India
Limited
Mr Raj Kumar Asian Hotels Limited
Bhargava
WBW Consultants Pvt. Limited
Kajaria Cermaics Limited
Duncan’s Limited
Innova Securities Limited
JCL International Limited
H. B. Portfolio Limited
Vidhi Vedika Heritage (Pvt.)
Limited
NTC (APKK)
Cement Corporation of India
Limited
Gujarat Sidhee Cement Co.
Limited
J.K. Spinning Mills Limited
SOL Pharmaceuticals Limited
Andhra Cement Limited
F.C.I
Jay Cylinders Limited
F.S. Advertising Limited
Lexicon Limited
Jay International Limited
HDFC Limited
Mr Piyush G
Mankad
Tata International Limited
Tata Elxsi Limited
DSP Merrill Lynch Fund
Managers Limited
Max India Limited
Mahindra & Mahindra
United Breweries (Holding)
Limited
Kingfisher Airlines Limited
Mr
Pandankallunkel
T Thomas
National Scheduled Tribes
Finance & Development
Corporation
Gujarat Siddhee Cements
Limited
Bhushan Limited
Mr Ravi
Parthasarathy
Infrastructure Leasing and
IL&FS Education and
Technology Services Limited
Tamil Nadu Road Dev.
Co. Limited
IL&FS Infrastructure
Development Corporation
Limited
Integrated Property
Management & Services Limited
IL&FS Ecosmart Limited
National Stock Exchange of
India Limited
IL&FS Investment Managers
Limited
Telstra Vishesh
Communications Limited
Kampsax India Limited
IL&FS Merchant Banking
Services Limited
IL&FS Asset Management
Company Limited
Iridium India Telecom Limited
Petronet India Limited
Healthcare & Wellness
Foundation Limited
Integrated Property
Management & Services Limited
Digital Global Soft Limited
IPFonline Limited
Tamil Nadu Water Investment
Company Limited
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Name
Past Directorships
Mr Ravi
Parthasarathy
(continued)
New Tirupur Area Dev. Corp.
Limited
ORIX Auto & Business
Solutions Limited
Haldia Integrated Development
Agency Limited
Pipavav Shipyard Limited
Manipal Acunova Limited
Manipal Enterprises Private
Limited
Pathfinder Investment Co
Limited
Ambit Corporate Finance Pte
Limited
Mahindra Industrial Park
Limited
PDCOR Limited
Networks Limited
Tata Finance Limited
Kerala High Speed Corridor Co
Limited
Mr Hari
Sankaran
IL&FS Education and
Financial Services Limitd
PDCOR Limited
Tamil Nadu Road Dev.
Co. Limited
Tamil Nadu Water Investment
Company Limited
Limited
Networks Limited
North Karnataka Expressway
Limited
Thiruvananthapuram Road
Development Company Limited
Road Infrastructure
Development Company of
Rajasthan Limited
Wilbur Smith Associates Private
Limited
Federation of Indian Chamber
of Commerce and Industry
IL&FS Trust Company Limited
Panvel Toll Road Network
Limited
MP Toll Roads Limited
New Tirupur Area Dev. Corp.
Limited
Adityapur Toll Bridge Company
Limited
Tamil Nadu Urban Infra.
Financial Serv. Limited
IL&FS Wind Farms Limited
Mahindra Industrial Park
Limited
Vadodara-Halol Toll Road Co
Limited Ceased (Merged With
Gujarat Toll Road Investment
Company Limited)
Bhubaneswar Integrated Road
Network Limited
Dewas Industrial Water Supply
Limited
Visakhapatnam Water Supply
Co Limited (Formerly
Visakhapatnam Industrial Water
Supply Co Limited)
Ahmedabad-Mehsana Toll Road
Co Limited Ceased (Merged
With Gujarat Toll Road
Investment Company Limited)
Co Limited
India Water Infrastructure Co
Limited
Gujarat State Road
Development Corpn Limited
Kampsax India Limited
Infrastructure & Technology
Consultants (I) P Limited
Tamil Nadu Urban Infra.
Trustee Co Limited
Learnet India Limited
Kerala High Speed Corridor
Company Limited
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Name
Mr Arun
Kumar Saha
IL&FS Investsmart Commodity Tamil Nadu Urban Infrastructure
Brokers Limited
Trustee Co.Limited
Vadodara-Halol Toll Road Co.
Limited Ceased (Merged With
Co. Limited)
IL&FS Merchant Banking
Company Limited. Ceased
Limited
(Merged With IL&FS
IL&FS Education &
Investsmart Limited)
Investor Services Of India
IL&FS Investment Managers
Limited
Limited
IL&FS Trust Company Limited Bhubaneshwar Integrated Road
Network Limited
ORIX Auto and Business
Vizag Industrial Water Supply
Solutions Limited
IL&FS Tansportation Networks Company Limited
India Water Infrastructure
Limited
North Karnataka Expressway Company Limited
Limited
Gupta & Syal Limited
Taj Lands End Limited
The Schoolnet Trust
Andhra Pradesh Expressway
Management Company Limited
Limited
Intime Registry Private Limited
Integrated Property
Ahmedabad-Mehsana Toll Road
Management & Services
Co. Limited. Ceased (Merged
Limited
With Gujarat Toll Road
IL&FS Investsmart Securities
Investment Co. Limited)
Limited
Co. Limited
IL&FS Academy for Insurance
and Finance Limited
IL&FS Investsmart Insurance
And Risk Management Services
Limited
Kampsax India Private Limited
Free Trade Warehousing Private
Limited
Mr
Karunakaran
Ramchand
North Karnataka Expressway
Limited
Company Limited
Gujarat State Road Dev Corp
Limited
Tamil Nadu Road Development
Co Limited
Narmada Infrastructure
Construction Enterprise
Limited
Thiruvananthpuram Road
Development Company
Limited
Road Infrastructure
Development Company of
Rajasthan Limited
Kerala High Speed Corridor
Company Limited
205
Past Directorships
Mp Toll Roads Limited
Jas Toll Road Limited
Ahmedabad – Mehsana Toll
Road Company Limited Ceased
(Merged with Gujarat Toll Road
Vadodara – Halol Toll Road
Company Limited Ceased
(Merged with Gujarat Toll Road
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5.4.3
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Name
Mr
Karunakaran
Ramchand
(continued)
Pipavav Shipyard Limited
Trans Harbour Link Private
Limited
Kohinoor CTNL infrastructure
Company Limited
Rewas Port Development
Company Limited
West Gujarat Expressway
Limited
IT Expressway Limited
Mr Deepak
Premnarayen
ICS Infrastructure Pvt Limited
Intertoll ICS India Pvt. Limited
Intertoll ICS Ahmedabad –
Mehsana Toll Management
Company Pvt. Limited
Blackstone Franks Premnarayen
Corporate Finance Pvt Limited
Interpark ICS India Pvt Limited
Pioneer Property Zone Services
Pvt Limited
Premnarayen Finance Services
Pvt Limited
Sigem Jewellery and Watches
Trading Pvt Limited
Intertoll ICS C.E. Cons O&M
Company Pvt Limited
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Past Directorships
Save as described in paragraph 5.4.3 below, or as mentioned elsewhere in this
document, none of the Directors has:
(a)
any unspent convictions in relation to indictable offences;
(b)
at any time been adjudged bankrupt or been the subject of any form of
individual voluntary arrangement;
(c)
been a director of a company at the time of, or within the 12 months
preceding the date of, its receivership, compulsory liquidation, creditors’
voluntary liquidation, administration, company voluntary arrangement or
composition or arrangement with its creditors generally or any class of
creditors;
(d)
been a partner in a partnership at the time of, or within the 12 months
preceding the date of, its compulsory liquidation, administration or
partnership voluntary arrangement;
(e)
owned any asset which has been placed in receivership or been a partner of
any partnership at the time at which, or within the 12 months preceding the
date on which, any asset of that partnership has been placed in receivership;
(f)
been subject to any public criticism by any statutory or regulatory authority
(including a recognised professional body); or
(g)
been disqualified by a court from acting as a director of a company or from
acting in the management or conduct of the affairs of any company.
(a)
Mr Raj Kumar Bhargava was appointed as a director of Duncan Industries
Limited (“Duncan”) in December 1993. During the period when he was a
director, the RBI added the name of Duncan to its defaulters list as a result of
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creditor(s) of Duncan filing notice of default on debts with the RBI. The
debts of Duncan were subsequently restructured by its lenders pursuant to a
corporate debt restructuring mechanism. No show cause notice was issued
to Mr Bhargava in this respect.
(b)
Mr Raj Kumar Bhargava was appointed by the Board for Industrial and
Financial Restructuring as a special director to the board of Genelec Limited
(“Genelec”). During the period when he was a director, the RBI added the
name of Genelec to its defaulters list as a result of creditor(s) of Genelec filing
notice of default on debts with the RBI. Subsequently, he resigned as a
director of Genelec. No show cause notice was issued to Mr Bhargava in this
respect.
(c)
Mr Gopi Arora was a director of Shalimar Wire Industries Limited
(“Shalimar”) from 27 July 1999 to 19 October 2004. During the period
when he was a director, the RBI added the name of Shalimar to its defaulters
list as a result of the following creditors of Shalimar filing notice of default on
debts with the RBI: (i) Unit Trust of India referred Shalimar as a wilful
defaulter during the year 2002, and this notice is still continuing; the total
amount owed to Unit Trust of India as on 31 March 2005 stood at Rs 106.1
million; (ii) Life Insurance Corporation of India (“LIC”) referred Shalimar
as a wilful defaulter during the year 2004, and this notice is still continuing;
the total amount owed to LIC as on 31 March 2005 stands at Rs 97.2
million. As on 15 December 2005, a proposal for the restructuring of the
debts of Shalimar was pending before lenders for reference to the corporate
debt restructuring cell (CDR Cell). No show cause notice was issued to Mr
Gopi Arora in this respect. Gopi Arora is no longer on the board of directors
of Shalimar.
(d)
Mr Gopi Arora was a director of Alliance Capital Asset Management Trust
Company Private Limited (“ACAM-TCP”) from 27 July 1999 until
23 December 2005. During his tenure as director of ACAM-TCP,
adjudication proceedings were initiated against ACAM-TCP in the matter of
Alliance Capital Mutual Fund, for violation of SEBI (Substantial Acquisition
of Shares & Takeovers) Regulations, 1997, SEBI (Prohibition of Insider
Trading) Regulations and SEBI (Prohibition of Fraudulent and Unfair
Trading Practices relating to the Securities Markets) Regulations, for the
time period between 11 October 2002 and 10 June 2003. However, no
Show Cause Notice was issued to Mr Gopi Arora in this respect. The
adjudicating officer at SEBI passed an order on 12 May 2004 against
Alliance Capital Asset Management (India) Private Limited (“ACAM
India”), Alliance Capital Mutual Fund (“ACMF’) and Alliance Capital
Management LP (“ACMLP”) for failing to make the requisite disclosures
pursuant to Regulation 7 of the Takeover Regulations and imposed a
monetary penalty of Rs 28,650,000 pursuant to Section 15A(b) of the SEBI
Act which ACMLP and ACAM India were jointly or severally liable to pay.
On 29 June 2004 ACAM India, ACMF and ACMLP filed an appeal before
the Securities Appellate Tribunal (“SAT”) against the order dated 12 May
2004. SAT asked ACAM India to pay an amount of Rs 2,000,000 to SEBI,
which will be kept in a fixed deposit with a nationalized bank. ACAM India
paid the said amount to SEBI. The matter has come up for hearing from time
to time but has been last adjourned on 15 November 2005. SAT will inform
ACAM India of the date of the next hearing. The Adjudicating Officer at
SEBI passed an order on 18 August 2004 against ACMF, ACAM India and
ACMLP for violating Sections 150 and 15HA of the SEBI Act and imposed a
monetary penalty of Rs 150 million on ACAM India and ACMLP to be
payable jointly or severally. ACAM India, ACMF and ACMLP filed an
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appeal against the order dated 18 August 2004 before SAT on 6 October
2004. SAT asked ACAM, ACMF and ACMLP to deposit a sum of
Rs 5,000,000 with SEBI, which will be kept in a fixed deposit with a
nationalized bank for a period of six months. ACAM India deposited the
said amount with SEBI. The matter has come up for hearing from time to
time but has been last adjourned on 15 November 2005. SAT will inform
ACAM India the date of the next hearing.
5.5
(e)
Mr Arun Kumar Saha has been a director of IL&FS Investment Limited since
2 April 1998. During his tenure as a Director of IL&FS Investment, enquiry
proceedings were initiated against the company in the matter of Adani
Exports Limited for the time periods January 1999 to March 1999, October
1999 to December 1999 and December 2000 to February 2001. Enquiry
proceedings are under progress. However, no show cause notice has been
issued to him in this behalf.
(f)
A complaint was filed by the Registrar of Companies, Delhi & Haryana, in
1995, before the Additional Sessions Judge, Delhi, against HB Holdings
Limited, Delhi, pertaining to disclosures made in the prospectus for a public
issue, at a time when the Chairman of the Company, Mr Gopi Arora, was a
director of HB Holdings Limited, for a few months in 1994 to 1995.
Currently, the proceedings are stayed before the High Court, Delhi.
(g)
Mr Arun Saha was a director on the board of Gujarat Toll Road Investment
Company Limited (“GTRICL”). Mr Karaunakaran Ramchand was a
director on the board of Vadodara Halol Toll Road Company Limited
(“VHTRL”). Mr Hari Sankaran was a director on the board of Ahmedabad
Mehsana Toll Road Company Limited (“AMTRL”). Pursuant to a debt
restructuring scheme approved by secured lenders (including the holders of
deep discount bonds) and a corporate debt restructuring empowered group,
GTRICL, VHTRL and AMTRL filed applications in the High Court of
Gujarat on 28 December 2004 for approval of a scheme of merger under
Sections 391 to 394 of the Act of VHTRL and AMTRL with GTRICL. The
High Court of Gujarat heard the matter and by an order dated 18 May 2005
approved the scheme of merger of VHTRL and AMTRL with GTRICL
retrospectively from 1 October 2003.
Related Party Transactions
5.5.1 Save as disclosed in Part V of this document, there are no related party transactions,
which may be material to the Company.
5.5.2
As at 10 March 2006 (being the last practicable date before the publication of this
document) there were no outstanding loans granted by the Company to any
Director, nor by any Director to the Company, nor was any guarantee which had
been provided by the Company for the benefit of any Director, or by any Director for
the benefit of the Company, outstanding.
6.
Share Option Arrangements
The Company has granted options over shares pursuant to the following employee stock option
plans to certain of its employees and Directors:
6.1
ESOP 2004
At the EGM of the Company held on 25 March 2004, shareholder approval was obtained for
the grant of options in respect of 1,500,000 Ordinary Shares to the Directors and employees
of the Company on the terms of the Employee Stock Option Plan, 2004 (ESOP 2004). The
Company granted options in respect of 1,335,000 Ordinary Shares on 12 April 2004 and
options in respect of 100,000 Ordinary Shares on 5 May 2004, each with an exercise price of
Rs 10 per Ordinary Share, on the terms of the ESOP 2004. The options vested after a period of
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15 months from the date of grant of the options. ESOP 2004 provides that vested options will
lapse (i) unless exercised within four years of vesting and/or (ii) unless exercised within 1
month of the option holder ceasing to be an employee or director of the Company. Any
unvested options lapse immediately upon the option holder ceasing to be an employee or
director of the Company. As at the date of this document, a total of 1,179,500 of the options
granted pursuant to the ESOP 2004 have been exercised, and 140,000 options have lapsed.
There continue to be 115,500 vested options which are capable of being exercised at an
exercise price of Rs 10 per share.
The Company has the authority to grant a further 205,000 options under the terms of the
ESOP 2004 (being the 140,000 options which lapsed and the 65,000 options which have not
yet been granted). Under the ESOP 2004, the maximum number of options which can be
granted to any particular employee is capped at 1% of the Company’s issued capital at the
time of grant.
The exercise price for any options granted by the Company shall be based on the average of
the weekly highs and lows of the share price of the Company’s Ordinary Shares on the BSE or
the NSE (the stock exchange which had the highest trading volume would be used for the
purposes of the calculation) in the six months preceding the month of the grant of options
(provided that the exercise price cannot be lower than the par value for the Ordinary Shares of
Rs 10 per share).
In the event of any bonus issue or rights issue or similar corporate actions, the HRD
Committee of the Board has the discretion to provide for such adjustment, whether by way of
grant of additional options to existing option holders or otherwise, which in its opinion
would provide for a fair and reasonable adjustment to the option holders.
As of 10 March 2006 (being the last practicable date before publication of this document),
the Directors and key managerial held the following vested options and had exercised the
following number pursuant to exercise of options under the ESOP 2004:
6.2
Number of
vested Options
capable of being
exercised at Rs
10 per Option
Number of
Options
already
exercised
Directors of Company
Mr Gopi Arora
Mr Hari Sankaran
Mr Raj Kumar Bhargava
Mr Ravi Parthasarathy
Mr Arun Kumar Saha
Mr Karunakaran Ramchand
100,000
250,000
35,000
35,000
100,000
100,000
Nil
250,000
35,000
35,000
100,000
100,000
Key Management Personnel
Mr Pradeep Puri
Mr Ajai Mathur
Mr Tarun K Banerjee
Ms Monisha Macedo
250,000
50,000
50,000
50,000
250,000
50,000
50,000
50,000
ESOP 2005
At the EGM of the Company held on 24 January 2006, shareholder approval was obtained
for the grant of options in respect of up to 1,250,000 Ordinary Shares to the directors and
employees of the Company on the terms of the Employees Stock Option Plan, 2005 (ESOP
2005). As at the date of this document, the Company has not granted any options pursuant to
the ESOP 2005.
Under ESOP 2005, the maximum number of options which may be granted to an employee is
capped at 1% of the Company’s issued capital (excluding outstanding options) at the time of
grant of options. The maximum number of options which may be granted to Directors is
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capped at 600,000 options in any financial year and 600,000 options in aggregate. Any
options which are granted under the ESOP 2005 vest over a one-year period and must be
exercised within four years of vesting. The ESOP 2005 provides that vested options will lapse
(i) unless exercised within four years of vesting, and/or (ii) unless exercised within 1 month of
the option holder ceasing to be an employee or director of the Company. Any unvested
options lapse immediately upon the option holder ceasing to be an employee or director of the
Company.
The exercise price for the options is to be set by the HRD Committee at the time of the grant of
the options and cannot be less than the higher of the following two averages:
앫
the average of the weekly high and low of the closing prices of the shares of the
Company on the BSE or the NSE (the stock exchange which had the highest trading
volume would be used for the purposes of the calculation), during the six months
preceding the month of the grant.
앫
the average of the weekly high and low of the closing prices of the shares of the
Company on the BSE or the NSE (the stock exchange which had the highest trading
volume would be used for the purposes of the calculation), during the two weeks
preceding the month of the grant.
In the event of any bonus issue or rights issue or similar corporate actions, the HRD
Committee of the Board has the discretion to provide for such adjustment, whether by way of
grant of additional options to existing option holders or otherwise, which in its opinion
would provide for a fair and reasonable adjustment to the option holders.
7.
Material Contracts
The following contracts not being contracts entered into in the ordinary course of business, are
contracts which (a) are or may be material and have been entered into by the Company within the
two years immediately preceding the date of this document; or (ii) have been entered into by the
Company at any time before the date of this document where those contracts contain provisions
under which the Company has an obligation or entitlement which is or may be material to the
Company as at the date of this document.
7.1
Placing Agreement
A placing agreement dated 15 March 2006 made between (1) the Company (2) the Directors
(3) certain members of the senior management team and (4) Collins Stewart pursuant to
which upon, inter alia, Admission taking place on or before 3.00 p.m. on 21 March 2006 (or
such later time and/or date as Collins Stewart may determine, being not later than 31 March
2006) Collins Stewart has agreed to use its reasonable endeavours to procure placees for the
GDRs at the Placing Price. The Placing Agreement contains indemnities and warranties from
the Company and warranties from the Directors and members of senior management in
favour of Collins Stewart together with provisions which enable Collins Stewart to terminate
the Placing Agreement in certain circumstances prior to Admission, including, but not limited
to, circumstances where the Company is in material breach of the Deposit Agreement, or
where any warranties in the placing agreement are found to be untrue or misleading in any
material respect, or in certain events of force majeure. If Admission takes place, Collins
Stewart will receive from the Company a commission of 4% of the sum resulting from
multiplying the Placing Price by the number of GDRs issued pursuant to the Placing, out of
which it will account to Edelweiss Capital for 50% of such commission as co-distributor.
Collins Stewart is entitled to a further commission being an amount equal to 10% of the sum
resulting from the amount by which the Placing Price exceeds Rs 175.7, multiplied by the
number of GDRs issued pursuant to the Placing and Collins Stewart will account to Edelweiss
Capital for 50% of the amount of such further commission as co-distributor. To the extent
that a placee defaults on its payments obligations to subscribe for GDRs Collins Stewart has
agreed to itself subscribe (or to procure someone else to subscribe) for such number of GDRs
at the Placing Price.
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Deposit Agreement
Certain details of the Deposit Agreement including the terms and conditions of the GDRs are
set out in Part III of this document. Certain provisions of the Deposit Agreement which are
not specifically set out in Part III of this document are summarised below. Capitalised terms
used in the summary below have the meaning given in the conditions in Part III of this
document (save where defined in the Definitions section of this document).
7.2.1
The Deposit Agreement is made between the Company and the Depositary shall be
dated on or about the date of Admission. The Deposit Agreement provides for the
Company to issue the New Ordinary Shares to the Depositary and deliver the
certificates relating to the New Ordinary Shares to the Custodian acting on behalf of
the Depositary. The Depositary shall initially issue a Master GDR in registered form
in the name of a nominee acting for the Holders. Holders may subsequently give
notice to the Depositary that they wish to exchange their interest in the Master GDR
for a definitive certificate representing their holding of GDRs. The Depositary will
maintain a register showing the number of GDRs represented by the Master GDR
and the number of GDRs in respect of which definitive certificates have been issued
together with, in each case, the date of issue and all subsequent transfers and changes
of ownership, and the names and addresses of Holders. The Depositary holds all
Deposited Property for the benefit of the Holders as bare trustee, and the Holders will
accordingly be tenants in common of the Deposited Property corresponding to the
GDRs in respect of which they are the Holders. Title to the GDRs passes by
registration in the register held by the Depositary.
7.2.2
The Company is obliged to pay stamp duties and other similar duties or taxes
payable in connection with the issue of the Master GDR, the Deposit Agreement and
the initial distribution of the GDRs.
7.2.3
The New Ordinary Shares and any other property deposited with the Custodian on
behalf of the Depositary may not be withdrawn until the Depositary has received
written confirmation from the Company that the New Ordinary Shares are listed on
the BSE. A Holder may request, in accordance with the Conditions, for withdrawal
of the Deposited Property (as defined in the Conditions) provided that the transfer of
New Ordinary Shares has not been blocked and/or does not comply with any
applicable law or regulation or is otherwise undesirable in the opinion of the
Depositary.
7.2.4
The Company undertakes to use its best endeavours to obtain and maintain as long
as any GDR is outstanding, a listing for the GDRs on AIM and to maintain a listing of
the New Ordinary Shares on one or more stock exchanges in India. In the event that a
GDR listing is not obtained and maintained on AIM, the Company will use its best
endeavours to obtain and maintain a listing of the GDRs on another internationally
recognised investment exchange designated as a “recognised stock exchange” for the
purposes of 841(1)(b) of the United Kingdom Income and Corporation Taxes Act
1988. The Company also undertakes to give all necessary information and assistance
to the Depositary, including copies of annual accounts and semi-annual financial
statements.
7.2.5
Neither the Depositary, the Custodian, the Company nor any of their agents,
officers, directors or employees will be liable to a Holder in any event for any indirect,
special, punitive or consequential damages, any tax liability associated with the
Deposited Property or for any losses caused by matters outside of their control, any
non-performance or delay in performance of any act (except in the circumstances of
wilful default, negligence or bad faith). The Depositary is under no obligation to
check, monitor or enforce compliance with ownership restrictions in respect of
GDRs or Ordinary Shares. The duties of the Depositary may be delegated or
sub-delegated. Neither the Company nor the Depositary shall be liable for any loss or
liability caused by such delegate except that the Depositary shall be responsible for
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any such loss in the event the delegate is an “affiliate” of the Depositary or the
Depositary has not exercised reasonable care in the selection of and any interaction
with the delegate. The Company indemnifies the Depositary and any of its respective
directors, officers, employees, agents and affiliates against any losses suffered by
them and taxes thereon except in the event of wilful default, negligence or bad faith of
the Depositary or its directors, officers, employees, agents or affiliates. The
Depositary indemnifies the Company and any of its respective directors, officers,
employees and agents and affiliates against any losses caused by the wilful default,
negligence or bad faith of the Depositary or Custodian or any of their respective
agents, directors, officers or employees.
7.2.6
The Deposit Agreement may be terminated by giving 90 days notice by either party.
Termination shall take effect on the date specified in the notice provided that no
termination shall take effect until the Company has appointed a successor
depositary. The Company has separately agreed with the Depositary that it will not
terminate the Deposit Agreement for a period of ten years from the date of Closing
except in the event of the Depositary’s fraud, negligence, wilful misconduct or
material unremedied breach.
The Deposit Agreement incorporates the Conditions which are set out in their
entirety at paragraph 3 of Part III of this document.
7.3
Concession Agreement
On 12 November 1997 a Concession Agreement was entered into by NOIDA, the Company
and IL&FS granting the right of building and operating the Delhi Noida Toll Bridge to the
Company (the “Project”). Under the Concession Agreement, the Company has been given
the right to commercially exploit the Delhi Noida Toll Bridge by levying tolls, by obtaining
development income (subject to the grant of development rights) and by any other method
that the parties might agree (the “Concession”). NOIDA has the discretion of granting land
development rights to support any shortfall in the fees required to recover the total cost of the
Project and the designated returns thereon.
The Concession Agreement provides that the Concession shall last until such time as the
Company has recovered aggregate of the total cost of the project (“Total Project Cost”) and
returns each year of 20% of the Total Project Cost as determined by the independent engineer
and independent auditor (the “Returns”). The Total Project Cost is defined as the aggregate
of the cost of the project, any major maintenance expenses, and any shortfalls in the recovery
of the Returns for previous years.
The Concession Agreement provides that the concession period is 30 years (which
commenced on 30 December 1998) or, if sooner, such time as the Total Project Cost and the
Returns thereon have been recovered (the “Concession Period”). However, the Concession
Agreement provides that if such recovery is not achieved within the initial Concession Period
of 30 years, then the Concession Period shall without qualification be extended by 2 years at a
time until such time as such recovery is achieved. The Concession Agreement also provides
that once the Company has derived revenues equal to the Total Project Cost and the Returns,
then the Concession shall be terminated and all of the Company’s interest in the Delhi Noida
Toll Bridge shall be transferred back to NOIDA for the nominal sum of Rs 1.
The toll fees charged to users of the bridge may be revised by the fee review committee (FRC),
comprising of one NOIDA representative, one Company representative and a duly qualified
person appointed by the representatives of NOIDA and the Company, who shall be the
Chairman of the Committee. The toll rates are revised annually and are derived from a
formula specified in the Concession Agreement. The rates are revised on February 1 of each
year. The revised fee is to be rounded off to a full rupee. The FRC can also institute a
temporary adjustment to the fee rates upon occurrence of a change in law having a material
adverse effect on the Company, upon an event of force majeure or upon circumstances
involving requisition of the Delhi Noida Toll Bridge by NOIDA. Upon receipt of the revised
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fee report from the FRC, NOIDA has to pass the appropriate notification, without demur, for
effecting the revision to the fees and in any event shall revise the fee rates within 15 days from
the date of annual fee revision.
Upon reference by the Company, if the Independent Auditor (as appointed under the
Concession Agreement by the Company) determines that the Project is not generating
sufficient revenues for the Company, then the Company may request that NOIDA grant or
cause the Governments of Uttar Pradesh or Delhi, as the case may be, to grant to it
Development Rights (i.e. additional rights, property and assets which are not part of and not
anticipated to be part of the Project as on the date of the Concession Agreement, which may
include without limitation the provision of advertising services, the right to develop hotels, or
other facilities) for the purposes of generating income. In this regard, NOIDA has the sole
discretion to grant Development Rights in favour of the Company.
Performance of the respective obligations of the Company or NOIDA under the Concession
Agreement can be suspended or excused to the extent that such performance is directly made
impossible or unviable by an event of force majeure, unless such difficulty results from the
negligence of such party or the failure of such party to perform its obligations under the
Concession Agreement. The Concession Agreement provides for 3 different classes of force
majeure, namely “Natural Force Majeure Events”, “Direct Political Event” and “Indirect
Political Event”. Each of these can lead to termination of the Concession Agreement,
although the financial consequences are different in each case, as summarised below.
Events such as earthquakes, epidemics, natural disasters and floods etc, will be treated as
“Natural Force Majeure Events” under the Concession Agreement. If the force majeure
events continue beyond a period of 14 days, the parties may instruct the Independent
Engineer and the Independent Auditor to submit a detailed report dealing inter alia, with the
effect of the force majeure event including that on the financial viability of the Project and the
steps that can be taken to mitigate such effect. Within two days of receipt of such report, the
parties are required to submit the same to the Project Oversight Board for determination as to
as to what steps should be taken by the parties. If the Project Oversight Board determines,
based upon the joint report of the Independent Auditor and as a result of the deliberations of
the senior officers appointed by each party on the Project Oversight Board, that the Delhi
Noida Toll Bridge project is no longer viable as a consequence of the force majeure events, the
affected party has a right to terminate the Concession Agreement. If either the Company or
NOIDA elect to terminate the Concession Agreement NOIDA shall pay to the Company an
amount equivalent to the aggregate (as determined by an Independent Auditor) of the
Lenders’ dues, the cost of transferring the Project assets to NOIDA (or any agency nominated
by NOIDA) less the Debt Service Reserve (provided the reserve has been utilized for the
purpose for which it was created) and less the Insurance proceeds.
Events such as any change in law, or any decisions or orders of the Court restraining all or any
part of the activities or any discriminatory revocation or refusal to renew any clearance,
which may be required by the Company, are treated as “Direct Political Events”. If the force
majeure events continue beyond a period of 14 days, the parties may instruct the Independent
Engineer and the Independent Auditor to submit a detailed report dealing inter alia, with the
effect of the force majeure event including that on the financial viability of the Project and the
steps that can be taken to mitigate such effect. Within two days of receipt of such report, the
parties are required to submit the same to the Project Oversight Board for determination as to
as to what steps should be taken by the parties. If the Project Oversight Board determines,
based upon the joint report of the Independent Auditor and a result of the deliberations of the
senior officers appointed by each party on the Project Oversight Board, that the Delhi Noida
Toll Bridge project is no longer viable as a consequence of the force majeure events, the
affected party has a right to terminate the Concession Agreement. If either the Company or
NOIDA elect to terminate the Concession Agreement on the continuance of a Direct Political
Event NOIDA shall pay to the Company amount (as determined by an Independent Auditor)
equivalent to the aggregate of the Lenders’ dues, the cost of transferring the Project assets to
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NOIDA (or any agency nominated by NOIDA) and a 20% equity return less Debt Service
Reserve (provided the reserve has been utilized for the purpose for which it was created) and
less the Insurance proceeds.
Events such as war, strikes, lockouts etc will be treated as an event of force majeure under the
head “Indirect Political Event” under the Concession Agreement. If the force majeure events
continue beyond a period of 14 days, the parties may instruct the Independent Engineer and
the Independent Auditor to submit a detailed report dealing inter alia, with the effect of the
force majeure event including that on the financial viability of the Project and the steps that
can be taken to mitigate such effect. Within two days of receipt of such report, the parties are
required to submit the same to the Project Oversight Board for determination as to as to what
steps that would be taken by the parties. If the Project Oversight Board determines, based
upon the joint report of the Independent Auditor and a result of the deliberations of the senior
officers appointed by each party on the Project Oversight Board, that the Noida Toll Bridge
project is no longer viable as a consequence of the force majeure events, the affected party has
a right to terminate the Concession Agreement. If either the Company or NOIDA elect to
terminate the Concession Agreement NOIDA shall pay to the Company an amount
(determined by an Independent Auditor) equivalent to the aggregate of the Lenders’ dues, the
cost of transferring the Project assets to NOIDA (or any agency nominated by NOIDA) and a
10% equity return less the Debt Service Reserve (provided the reserve has been utilized for the
purpose for which it was created) and less the Insurance proceeds.
Under the Concession Agreement, NOIDA can assume temporary control of the Delhi Noida
Toll Bridge in the event of national or state emergency upon seven days written notice to the
Company. However, within three days of the termination of the circumstances giving rise to
the assumption of control over the Delhi Noida Toll Bridge, NOIDA is required to give back
the same to the Company. If NOIDA fails to return control of the Delhi Noida Toll Bridge
within the specified period of three days, or if such national or state emergencies extend
beyond three months, it will be treated as an event of force majeure.
Events or circumstances to the extent not caused by a default of the Company or force
majeure shall be considered a “NOIDA Event of Default” and if not cured within the time
period permitted, the Company shall have the right to terminate the Concession Agreement
as provided therein. A NOIDA Event of Default shall include events or circumstances
involving (i) changes in law or change in policies by NOIDA having a material adverse effect
or materially affecting the Lenders, (ii) any breach of NOIDA’s obligations under the
Concession Agreement which has a material adverse effect, (iii) any breach of representations
and warranties by NOIDA which affects adversely NOIDA’s ability to perform its obligation
under the Concession Agreement, (iv) any repudiation of the Concession Agreement by
NOIDA, and (v) any breach by either the Government of Uttar Pradesh or the Government of
Delhi of the terms of their Support Agreement materially affecting the Company.
In the event that the Company terminates the Concession Agreement upon a NOIDA Event of
Default, NOIDA is obligated to pay the Company the aggregate of all sums due to the
Lenders, the Total Project Cost and the 20% return thereon outstanding as on the date of
termination and the costs of transferring the project assets after deducting the aggregate of
any cash reserves created for debt service obligations of the Company (provided such reserves
have been utilised for the purpose for which they were created) and the proceeds from
insurance.
Events or circumstances to the extent not caused by a default of NOIDA shall be considered
as a “Company Event of Default” and if not cured within the time period permitted, NOIDA
shall have the right to terminate the Concession Agreement as provided therein. A Company
Event of Default shall include events or circumstances involving (i) any breach of the
Company’s obligations under the Concession Agreement which has a material adverse effect
on NOIDA or the project, (ii) any breach of representations and warranties by the Company
which affects adversely its ability to perform its obligation under the Concession Agreement,
(iii) any repudiation of the Concession Agreement by the Company, (iv) the Independent
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Engineer notifying the parties of a failure by the Company to operate and maintain the Delhi
Noida Toll Bridge in accordance with the operating practices laid down, (v) suspension by the
Company of the performance of its obligations under the Concession Agreement for a period
exceeding 90 consecutive days (except during the subsistence of an event of Force Majeure),
and (vi) any liquidation, dissolution, winding-up, amalgamation, reorganisation or
reconstruction of the Company so as to materially bring about a change in the ownership
which has a materially adverse effect on the project.
In the event that NOIDA terminates the Concession Agreement upon a Company Event of
Default, it shall pay the Company a sum equivalent to the aggregate of all sums due to the
Lenders and the costs of transferring the project assets after deducting the aggregate of any
cash reserves created for debt service obligations of the Company (provided such reserves
have been utilised for the purpose for which they was created) and the proceeds from
insurance.
In the event of a NOIDA Event of Default or a Company Event of Default, each of them is
required to promptly provide copies to the Lenders of all notices with respect to such Event of
Default received or delivered to each of them. The Lenders have a right to designate a
representative to assume the obligations of the Company if the Company fails to discharge its
obligations to repay the loans and amounts payable to Lenders in accordance with the
financing agreements or fails to rectify such default within a period of 120 days or upon
exhaustion of the available cure period, in case of a Company Event of Default. However,
such assumption is limited for the exclusive and limited purpose of curing such Company
Event of Default. The Lenders have a period of 90 days from the date of receipt of notice of
Company Event of Default in addition to the cure periods available to the Company upon
occurrence of Company Event of Default. In addition, the Lenders, during the assumption of
the obligations of the Company, may make any payment or perform any act which is required
to be made or performed by the Company.
So long as the financing agreements are in effect, NOIDA is required to provide the Lenders
with an opportunity to cure the Company Event of Default, within the cure periods available.
In the event the Lenders fail to cure any Company Event of Default within the available cure
periods and NOIDA has issued its notice of intention to terminate the Concession
Agreement, the Lenders have a right to nominate a Substitute Entity within 30 days of receipt
of such notice to replace the Company and perform the obligations of the Company. NOIDA
is to consent to nomination of such Substitute Entity within 15 days of such nomination or
elect to terminate the Concession Agreement in accordance with the provisions provided
therein. Upon confirmation by NOIDA of the substitute entity, the Concession Agreement is
to be novated in favour of the substitute entity releasing the Company from its existing rights
and obligations under the Concession Agreement and the Substitute Entity assuming the
rights and obligations of the Company. The Substitute Entity nominated is required to have
the legal, financial and technical capability reasonably necessary to perform the obligations
under the Concession Agreement.
7.4
Support Agreement
On 14 January 1998, the Government of Uttar Pradesh and the Government of Delhi entered
into a support agreement to support and extend complete cooperation to NOIDA and the
Company with respect to implementation of the Project (the “Support Agreement”). The
Support Agreement provides that it shall continue in full force and effect for the same period
of time as the Concession Period (as defined in the Concession Agreement) and is required to
be extended or terminated with the extension or prior termination of the Concession
Agreement.
Under the terms of this agreement the Government of Uttar Pradesh and the Government of
Delhi have covenanted that they shall not: (i) take any action in contravention of this
agreement or that could result in termination of certain other project contracts, (ii) issue any
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direction that could materially impair the viability of the project or result in cost overruns of
the project, (iii) impede the enforcement of any security interest held by the parties to the
project.
Further, the Government of Uttar Pradesh and the Government of Delhi have undertaken to
provide the following support with respect to construction and implementation of the Delhi
Noida Toll Bridge: (i) in particular the Government of Uttar Pradesh to assist on a best effort
basis to obtain all clearances, (ii) in particular the Government of Delhi to ensure that the
Company obtains all clearances and exemptions from the imposition of any property tax
from Municipal Corporation of Delhi and hold the Company harmless against any costs,
liabilities or losses that may arise as a consequence of any act or omission of the Municipal
Corporation of Delhi in contravention of the terms of the Concession Agreement, (iii) shall
not at any point of time propose or require any change in alignment for the Project and the
Government of Delhi acknowledges that the alignment of the Project is of fundamental
importance to the project and the Delhi Land shall be acquired on the basis of such alignment;
(iv) the Government of Delhi and the Government of Uttar Pradesh not to propose,
recommend, implement or permit to be implemented without prior written consent of the
Company (which is not to be unreasonably withheld) any toll-free bridge or other service
network, which does or does not involve the collection of tolls, fee or other charges or fee or
other charges which are lower than the fee being charged on the Delhi Noida Toll Bridge and
which spans across the Yamuna river within the area between the Okhla Barrage to the south
of the Delhi Noida Toll Bridge site and the existing Nizamuddin Bridge to the north of the
bridge site for a period of 10 years or till the Delhi Noida Toll Bridge achieves full rated
capacity (a peak hour movement of 16,000 passenger car units), whichever is later (however,
see below for the amendment subsequently agreed with the Government of Delhi), (v) not to
levy any additional toll, fee, charge or tax on the use of the Delhi Noida Toll Bridge or cause
any diversion of traffic or close down the approach to the Delhi Noida Toll Bridge in a
manner so as to detrimentally affect the free flow of traffic to and from the Delhi Noida Toll
Bridge, (vi) to consider granting such additional Development Rights to the Company for the
purpose of generating development income, in the event that the Delhi Noida Toll Bridge is
not generating sufficient revenues to cover total cost of constructing the Delhi Noida Toll
Bridge and Returns upon request of the Company or NOIDA or both; (vii) to take all steps to
ensure that the relevant government instrumentalities consider and favourably view all
applications by the Company for exemption, waiver or remission of stamp duty and other
similar documentary taxes and levies which may be required to be paid in connection with the
creation of security interests over the assets of the project and in securing loans made for
financing the project.
Pursuant to a letter dated 14 January 1997, the Company confirmed the understanding
reached under the Support Agreement with the Government of Delhi, that the Government of
Delhi shall have the right, inter alia, under the Support Agreement, to propose, recommend
and implement or permit to be implemented a bridge, toll free or otherwise, or other service
network spanning across Yamuna river between the existing Nizammuddin Bridge and
Okhla Barrage, for a period of 10 years or till the Delhi Noida Toll Bridge achieves partial
capacity (60% of the full rated capacity), whichever is later. Partial capacity would be
deemed to have occurred when the daily peak hour traffic registered on the Delhi Noida Toll
Bride equals to or exceeds 60% of the full rated capacity on a daily basis for a consecutive
period of 180 days.
7.5
Delhi Land Lease Deed & Delhi Land Sub-Lease Deed
On 23 October 1998, the Government of Delhi and NOIDA entered into a land lease deed
(the ‘Lease’), to lease the land in Delhi (‘Delhi Land’) to NOIDA for NOIDA to sub-lease the
same to the Company for the purposes of implementation of the Delhi Noida Toll Bridge
project. The term of the Lease is for a period of 31 years, which period is to be co-terminus
with the term of the Concession Agreement and is to be extended or terminated at a prior date
to coincide with the term of the Concession Agreement. The annual rent is of Rs 1. The Delhi
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Government has covenanted that it shall not, inter alia, carry on the following with respect to
the Delhi Land: (i) interfere with, or impede in any manner or otherwise limit, restrict or
impose any restrictions on the complete free and full enjoyment and use of the Delhi Lands for
the purposes of implementation of the project (this non-interference extends to the
establishment, design, construction, operation and maintenance of the project, and
possession, control and use of the lands by the Company); (ii) increase the lease rentals
payable; (iii) charge any fee, rental, tax or any other charge on NOIDA or the Company for
lease of the Delhi Land.
Further, under the Lease, the Delhi Government has vested NOIDA with the right for
NOIDA to vest the Company with the right, without requiring any prior permission from the
Delhi Government or NOIDA in this regard, to mortgage, transfer, assign or otherwise
encumber the Delhi Lands and any or all of its rights in relation thereto or otherwise create a
security interest in favour of the lenders over the Delhi Lands for the purposes of enabling
financing of the project.
On the same day as the Lease, NOIDA has executed a sub-lease deed in favour of the
Company for the sub-lease of Delhi Land. The terms of the sub-lease deed are on substantially
the same terms as the Lease. The term of the sub-lease is also for a period of 31 years, which
period is to be co-terminus with the term of the Concession Agreement and is to be extended
or terminated to coincide with the term of the Concession Agreement. The annual rent is of Rs
1. NOIDA has covenanted that it shall not, inter alia, carry on the following with respect to
the sub-leased land: (i) not increase the sub-lease rental; (ii) shall not interfere with or impede
in any manner or otherwise limit, restrict or impose any restrictions on the complete free and
full enjoyment and use of the Delhi Lands for the purposes of implementation of the project
(this non-interference would extend to the establishment, design, construction, operation
and maintenance of the project, and possession, control and use of the land by the Company);
(iii) not charge any fee, rental, tax or any other charge on the Company for the sub-lease of the
Delhi Lands; and (iv) not to terminate the lease except upon due and valid termination of the
Concession Agreement in accordance with the terms thereof.
Under the Sub-Lease, NOIDA has vested the Company with the right, without requiring any
prior permission from NOIDA, to mortgage, transfer, assign or otherwise encumber the
Delhi Lands and any or all of its rights in relation thereto or otherwise create a security
interest in favour of the lenders for the purposes of enabling financing of the Project. The
lands and the structures built on the Delhi Land will vest with the Company during the term
of the Concession Agreement. On termination of the sublease at the end of the Concession
Period, the Delhi Lands shall revert back to the Delhi Government, but all the structures and
constructions built or erected pursuant to the implementation of the project shall continue to
be, in perpetuity, the property of NOIDA.
7.6
NOIDA Land Lease Deed
On 23 October 1998, NOIDA and the Company entered into a land lease deed for lease of
land in Noida (‘Noida Land’) in discharge of the obligations specified in the Concession
Agreement as a condition precedent to the Company undertaking implementation of the
Project.
The lease of the Noida Land was for a period of 31 years, which period is to be co-terminus
with the term of the Concession Agreement and is to be extended or terminated earlier to
coincide with the term of the Concession Agreement. The annual rent is of Rs 1.
NOIDA has covenanted that it shall not, inter alia, carry on the following with respect to the
leased lands: (i) increase the lease rental; (ii) shall not interfere with or impede in any manner
or otherwise limit, restrict or impose any restrictions on the complete free and full enjoyment
and use of the Delhi Lands for the purposes of implementation of the project (this
non-interference would extend to the establishment, design, construction, operation and
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maintenance of the project, and possession, control and use of the land by the Company); (iii)
charge any fee, rental, tax or any other charge on the Company for lease of the Delhi Land;
(iv) to terminate the lease except upon due and valid termination of the Concession
Agreement in accordance with the terms thereof.
The Company under the terms of the lease of the Noida Land has the right to develop any
further facility or structure as may be authorised under the Development Rights, which may
be granted to it under the Concession Agreement. Further, NOIDA vests the Company with
the right, without requiring any prior permission from NOIDA, to mortgage, transfer, assign
or otherwise encumber the Noida Lands and any or all of its rights in relation thereto or
otherwise create a security interest in favour of the lenders for the purposes of enabling
financing of the Project.
The land and the structures built on the Noida Land would vest with the Company during the
term of the Concession Agreement, following which the Noida Land would revert back to
NOIDA.
7.7
Sub Lease Deed between the Company and DND Flyway Ltd
The Company was left with possession of surplus land situated partly in Delhi and partly in
Noida after utilising the lands required for the construction and operation of the Delhi Noida
Toll Bridge. On 31 March 2004, the Company entered into a sub-lease agreement with DND
Flyway Limited, its wholly owned subsidiary for sub-lease of part of the surplus lands on the
Noida side measuring 30.493 acres for a consideration of Rs 1,034,841,881 and an annual
rent of Rs 1. Subject to the security interest created by the Company in favour of the lenders,
who financed the construction of the Delhi Noida Toll Bridge, the Company sub-leased the
land to DND Flyway free from any and all encumbrances.
The surplus land was sub-leased for a period of 24 years commencing from 31 March 2004 so
that the term remained co-terminus with the term of the Noida land lease deed. The sub-lease
will automatically be terminated on the expiry or termination of the Noida land lease deed. In
the event the Noida land lease deed is renewed or extended, the sub-lease is to be
correspondingly renewed/extended on mutual terms and conditions agreed upon by the
parties at the time of such renewal/extension.
Further, DND Flyway is not to use the sub-leased land for any other purpose other than the
purposes stipulated in the Concession Agreement and the Development Rights Agreement, if any,
executed by the Company and not to commence any developmental activities on the sub-leased
land till such time the Company obtains the Development Rights as provided under the
Concession Agreement. After the termination of the agreement, all the structures, constructions,
buildings built or erected on the sub-leased land shall revert to the Company.
7.8
Ashram Flyover Construction Agreement
Pursuant to the terms of the Support Agreement and in order to enable the implementation of
the Delhi Noida Toll Bridge project, the Government of Delhi entered into an agreement with
the Company on 31 August 1999 for construction of the Ashram flyover (the “Ashram
Flyover Construction Contract”). The property in the Ashram flyover (including its
superstructure and any materials affixed thereto) (“Ashram Flyover”) is vested in the
Company for the term of the Support Agreement. Upon prior termination or due expiry of the
Support Agreement, the legal title and property in the Ashram Flyover will be transferred to
the Government of Delhi.
The Ashram Flyover Construction Contract required the Company to deliver vacant
possession and complete control of the Ashram Flyover and the Ashram Flyover Site to the
Government of Delhi upon completion of the construction of the Ashram Flyover (the
“Transfer”), whereupon the operation and maintenance of the Ashram Flyover became the
sole responsibility of the Government of Delhi. The Government of Delhi has undertaken
that it shall cause the Municipal Corporation of Delhi to adhere to the terms and conditions
of the Ashram Flyover Construction Contract.
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The lease of the land over which the Ashram flyover is constructed (“Ashram Flyover Site”)
(described in paragraph 7.9) will continue to subsist and the legal title and property of the
Ashram Flyover will continue to vest with the Company, for the term of the Ashram Flyover
Construction Contract, notwithstanding the Transfer. All risks will lie with the Government
of Delhi in respect of the loss or damage to the whole or any part of the Ashram Flyover, from
the date of the Transfer.
The costs of construction of the Ashram Flyover constitute part of the Total Cost of the
Project and the Company is entitled to recover the Return on the Total Cost of the Project
inclusive of the cost of construction of the Ashram Flyover under the terms of the Concession
Agreement.
If the Company terminates the Ashram Flyover Construction Contract due to the occurrence
and continuation of a direct political event of force majeure or an event of indirect political
event of force majeure, or both, the Government of Delhi shall compensate the Company for
the cost of construction of the Ashram Flyover and in such circumstances, upon due payment
by the Government of Delhi, the same would not form part of the Total Cost of the Project.
The Ashram Flyover Construction Contract can only be terminated upon due termination of
the Support Agreement and in the event that any of the force majeure events continue to exist
for a continuous period of 120 days.
7.9
Ashram Flyover Site Lease Deed
Under the terms of the Ashram Flyover Construction Contract, the Government of Delhi has
leased the Ashram Flyover Site (as described above) for an annual rent of Rs 1 pursuant to a
lease deed dated 31 August 1999 (the “Ashram Flyover Site Lease Deed”) and for a term
commencing from 31 August 1999, for a period of 31 years, which period shall be
co-terminus with the Support Agreement and the Ashram Flyover Construction Contract and
shall be extended or terminated earlier to coincide with the term of the Support Agreement
and the Ashram Flyover Construction Contract.
Under the terms of the Ashram Flyover Site Lease Deed, the Government of Delhi has, inter
alia, covenanted that it will not interfere with the possession, control and use of the Ashram
Flyover Site by the Company and that the Company will have complete, lawful and
uninterrupted possession, control and use of the Ashram Flyover Site. The Company has inter
alia covenanted that it shall not claim ownership to or any rights to the structure built on the
Ashram Flyover Site under the terms of the Ashram Flyover Construction Contract, which
will vest with the Company for the duration of the term (as explained above) and thereafter,
with the Government of Delhi.
7.10 Shareholders’ Agreement
On 9 December 1998, a shareholders’ agreement was entered into amongst the Company,
NOIDA, IL&FS and Intertoll Netherlands. The said agreement was amended and restated vide
an Amended and Restated Shareholders’ Agreement dated 5 May 2000, recording the terms and
conditions governing the investment of the principal shareholders and other related matters
including control and management of the Company (the ‘Shareholders’ Agreement’).
The Shareholders’ Agreement was subsequently amended twice i.e. on 28 November 2000
and 28 June 2004. Pursuant to execution of the Shareholders’ Agreement, the Articles of the
Company were amended to incorporate the terms and conditions as agreed to amongst the
principal shareholders in the amended Shareholders’ Agreement. A number of the provisions
of the Shareholders’ Agreement are replicated in the Articles, and are therefore summarised in
paragraph 4.2 of Part VI above. In particular the provisions in the Shareholders’ Agreement
relating to appointment of nominee directors, quorum for board meetings, affirmative votes,
rights of first refusal, and pre-emptive rights are replicated in the Articles and are summarised
at paragraphs 4.2.2, 4.2.18, 4.2.15, 4.2.51 and 4.2.43 respectively above.
The following are the current parties to the Shareholders’ Agreement: the Company,
NOIDA, IL&FS, Intertoll Netherlands, Intertoll India, and IFCI.
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The Shareholders’ Agreement is to remain valid until it is terminated with reference to any
party or if any of the parties withdraws its shareholding in the Company by way of transfer or
sale in accordance with the terms of the Shareholders’ Agreement, the Shareholders’
Agreement stands terminated only with reference to such Party.
If any IL&FS, NOIDA, Intertoll or IFCI cease voluntarily to hold 8% of the paid-up share
capital of the Company, such party shall cease to have the affirmative voting rights and the
right to nominate directors.
If at any time through sale or transfer of shares as provided in the Shareholders’ Agreement,
the relative shareholding of IL&FS becomes less than 300,000,000 (three hundred million),
then the special rights and privileges of IL&FS for the nomination of the directors to the
Board shall be amended by agreement between the parties.
Management
For so long as the following parties continue to hold a specified percentage of the paid up
share capital of the Company (details of these percentages are also contained in the
Company’s Articles, and are summarised in paragraph 4.2.2 above), they shall be entitled to
appoint Nominee directors to the Board of the Company in the following numbers:
4 nominee Directors (inclusive of the Managing Director) appointed by IL&FS;
2 nominee Directors appointed by NOIDA;
1 nominee Director appointed by Intertoll Netherlands;
5 Independent Directors; and
3 nominee Directors appointed by the Senior Lenders.
No more than one third of the Directors comprising the Board shall be non-retiring Directors.
As long as IL&FS holds not less than 25% of the paid-up share capital of the Company,
IL&FS shall be entitled to appoint 4 persons (including the Managing Director) as the
Nominee Directors of the Company. Out of the four directors appointed, 3 Directors shall
not be liable to retire by rotation. In the event the total number of Directors on the Board falls
below 18 and the Board is unable to ensure the statutory limit on the number of non-retiring
Directors, IL&FS shall relinquish the non-retiring status of its Directors.
The directors (excluding the nominee directors of IL&FS and NOIDA, as detailed above and
in paragraph 4.2 above) shall be directors retiring by rotation.
In addition to the above, the following shall comprise on the Board:
(i)
5 Independent Directors; and
(ii)
3 nominee Directors appointed by the Senior Lenders.
The appointment or removal of the directors of IL&FS, NOIDA and Intertoll Netherlands
shall be by way of notice in writing addressed to the Company in writing by each of those
parties and shall take effect immediately upon such receipt. The variation in the number of
independent Directors to be appointed on the Board after the date of the Shareholders’
Agreement shall be arrived at by a consensus of the parties.
Managing Director
IL&FS and IFCI shall instruct their nominee Directors to cast their votes in favour of the
person nominated by IL&FS for enabling his appointment as Managing Director of the
Company. The Managing Director shall be responsible for managing the day-to-day affairs
of the Company.
Tag-Along Rights of the Investors
In addition to the pre-emption rights on transfers of Ordinary Shares by certain shareholders
(as summarised in paragraph 4.2.51 above), the Shareholders’ Agreement grants tag-along to
the parties to the Shareholders’ Agreement. If IL&FS wishes to transfer all or any part of its
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Ordinary Shares to any third party, each of the parties to the Shareholders’ Agreement has the
right to require that some or all of its shares (on a pro rata basis) are included in the sale to the
proposed third party transferee(s).
7.11 O&M Agreement
On 21 December 1998, Intertoll Netherlands, a wholly-owned subsidiary of M/s Intertoll
Holdings (Pty) Ltd., South Africa and the Company entered into an operation and
maintenance agreement for operation, maintenance, management of the Delhi Noida Toll
Bridge and the associated facilities (‘Facility’) and to charge and collect fees from the users of
the Facility (the ‘O&M Contract’). The agreement is governed by Indian law.
Intertoll assigned the O&M Contract in favour of its Indian subsidiary Intertoll India on
14 August 2000.
The O&M Contract shall continue to be in force until either the date when the O&M
Contract is terminated in accordance with the terms provided therein or the date of the
expiration or termination of the Concession Period (as provided under the Concession
Agreement), whichever is earlier.
The O&M Contract, requires Intertoll India to fulfil its obligation to manage, operate and
maintain the Facility in accordance with the O&M Contract and the applicable law in three
distinct components:
앫
Fixed equipment supply by Intertoll India including systems hardware, related
software, and traffic & telecommunications systems inclusive of insurance and
freight charges;
앫
Routine and Periodic maintenance including road surface overlays, replacement and
maintenance of bridge equipment; and
앫
Toll collection and management.
In the event of failure of Intertoll India to perform its obligations in the above said manner,
the Company may carry out the same after giving a notice of not less than 5 days to Intertoll
India, the cost and expenses of which will be borne by Intertoll India.
The O&M Contract provides for a fixed fee and a variable fee. The variable fee is on per
transaction basis. The O&M Fees for year 1 to 10 will be 11% of actual gross fees and from
year 11 to end of the concession period, O&M fees shall consist of an annual fixed fee and
variable calculated on per transaction basis. In the event of the actual traffic flow falling
below or being less than the projected estimates, as provided in the O&M Contract, for a
period in excess of 3 consecutive months, and result in the revenues of Intertoll India being
75% or less of the projected revenues, the parties would review the performance standards
specified in the O&M Contract in order to reduce the operating costs. In absence of any
agreement on new performance standards, applicable dispute resolution under the O&M
Contract would be resorted to.
Intertoll India is liable to pay liquidated damages for failure to meet certain performance
standards (as specified in the O&M Contract). For the purposes of calculating the liquidated
damages, the annual fixed fee (as provided under the O&M Contract) will be applied and
escalated in accordance with the escalation clause to the point when the liquidated damages
are applied. Intertoll India will have to guarantee performance with respect to the waiting
time, leakage percentages etc.
Intertoll India is required to act as trustee for all moneys collected as fees. Intertoll India shall
neither have the right of lien/charge/set-off over any toll collections in its control or custody,
nor have the right to make any withdrawals from the fee account, as per the terms of the
O&M Contract.
The Company will provide a copy of the notification and any subsequent amendments/
changes thereto to Intertoll India, which authorizes the levy collection and appropriation of
fees from the users of the facility, issued and published by NOIDA under the Uttar Pradesh
Industrial Area Development Act, 1976.
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Intertoll India is liable for the safekeeping, security and transport of the tolls collected until
they are deposited into a tolls account. This includes liability for loss of tolls prior to deposit
into the tolls account due to any reason whatsoever, including fraud, misappropriation, theft,
accident, and force majeure.
Further, the O&M Contract provides that if any payment or part of that payment, due to
Intertoll India by the Company, is disputed or questioned by the Company, the remainder of
that amount shall not be withheld on such grounds.
The non-defaulting party is entitled to receive from the defaulting party, on account of delay
in payment of any sum payable, interest on such amount at the rate of 500 basis points above
the State Bank of India Prime Lending Rate as prevailing from time to time, from the time
when such payments are due up to the date of payment.
Failure by Intertoll India to deposit fees due to the Company, if resulting in a loss of fees
greater than the permitted 0.1%, shall result in the following remedies to the Company:
앫
Liquidated damages amounting to 2% of the monthly fee per day, for the period in
which revenues are affected. The payment of liquidated damages, however, will not
relieve Intertoll India of its obligation to remedy or discontinue the breach in
question or prejudice the Company’s right to exercise any other remedy it may have
under the O&M Contract.
앫
Reimbursement of the lost revenues so due plus applicable interest.
The Company has the right, without prejudice to other remedies, to deduct such amount
from any payment due to Intertoll India, if any sum is to be paid to or reimbursed to the
Company by Intertoll India under the O&M Contract or if any cost incurred by the Company
is for the account of the Operator. If such amount has not been ascertained, the Company
may, pending ascertainment, deduct an amount reasonably estimated by the Company in
that regard and upon ascertainment, the payment will be adjusted accordingly.
The Company, Intertoll (Pty) Ltd, Intertoll Netherlands, Intertoll India and IL&FS entered
into a conditional agreement (the “Variation Agreement”) dated 7 February 2006 to revise
their contractual relationship in terms of the Shareholders’ Agreement and the O&M
Contract. Under the Variation Agreement both the Company and IL&FS have undertaken to
procure approvals/waivers in relation to the restrictive provisions on its shareholding in the
Company within sixty days of signature of the Variation Agreement (or such extended period
as may be agreed) so as to enable Intertoll Netherlands and Intertoll India to freely dispose,
transfer or encumber their Ordinary Shares in the Company.
Conditional upon the procurement of such approvals/waivers, the Company and Intertoll
India have agreed for amendment of the O&M Contract to provide for the following:
앫
Payment of monthly fixed payment in the sum of Rs 2,125,000 with effect from
1 January 2006 in the place of the earlier O&M fee structure. The monthly fixed fee
is to be adjusted if the collection of toll tax on behalf of Municipal Corporation of
Delhi increases or decreases from the present level of Rs 275,000 and revised
annually in January every year.
앫
The Company, inter-alia, to be responsible for direct settlement or reimbursement,
free of set off, for utility power costs for the Delhi Noida Toll Bridge, fees
payable to Compsis–Computadores e Sistemas for support towards operations and
maintenance of the toll management system and service tax assessed on the monthly
fixed payment.
앫
To reduce the Performance Security to be furnished by Intertoll India to the
Company to Rs 20,000,000.
앫
To dispense with the requirement of Intertoll India having a net worth of
Rs 50,000,000.
Except as provided above, the other terms and conditions of the O&M Contract are to
remain unchanged.
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Under the Variation Agreement, Intertoll India or the Company, may notify the other party
but not earlier than 12 months from the date of the Variation Agreement for review of the
monthly fixed payment and payment of service fees and other charges under the O&M
Contract and the Variation Agreement. If Intertoll India and the Company fail to reach an
agreement within three months of such notification, the parties have a right to terminate the
O&M Contract on 90 days notice without any further recourse between the parties arising
from such termination.
7.12 Agreement with Karvy Computershare Private Limited and CDSL
On 25 July 2002, the Company entered into a tripartite agreement with Karvy
Computershare Private Limited as the Registrar and Transfer Agent (RTA) and the Central
Depositary Services (India) Limited (CDSL) to hold the Company’s equity in dematerialised
form in CDSL and to facilitate the transfer of securities in dematerialised form. The Company
is bound by the bye-laws and the business rules of CDSL and comply with all the procedures
recommended by CDSL. The Registrar and Transfer Agent (RTA) shall inform CDSL of any
further issues, book closures, record dates for payment of interest or dividend, dates of AGM
amalgamation and mergers. All dematerialization and rematerialisation requests will have to
be processed within a period of 15 days and 30 days respectively by the RTA. CDSL shall
provide reports updating the details of the beneficial owners to the Company and the RTA.
7.13 Agreement with Karvy Computershare Private Limited and NSDL
On 6 November 2000 the Company entered into a tripartite agreement with Karvy
Computershare Private Limited as the Registrar and Transfer Agent (RTA) and the National
Securities Depositary Limited (NSDL) to hold the Company’s equity in dematerialised form
in NSDL and to facilitate the transfer of securities in dematerialised form. The Company is
bound by the bye-laws and the business rules of NSDL and comply with all the procedures
recommended by NSDL. The Company shall inform NSDL of any further issues, book
closures, record dates for payment of interest or dividend, dates of AGM amalgamation and
mergers. All dematerialisation and rematerialisation requests will have to be processed
within a period of 15 days and 30 days respectively by the RTA. NSDL shall provide reports
updating the details of the beneficial owners to the Company and the RTA on a fortnightly
basis.
7.14 Registrar agreement with Karvy Computershare Private Limited
Under a registrar and transfer arrangement agreement between the Company and Karvy
Computershare Private Limited as the Registrar and Transfer Agent, which commenced on
30 April 2005, Karvy Computershare Private Limited provides services relating to the
transfer and transmission to the Company’s shareholders. The Company has to form a
transfer committee, which considers all requests and is required to give their approval within
48 hours of the submission of the memorandum of transfer to enable the Registrar and
Transfer Agent to complete the despatch on time. The Company is required to pay Rs 50,000
at the time of signing the agreement. The agreement is valid for a period of two years from
1 May 2005 to 30 April 2007 and can be extended by mutual consent. The agreement is
governed by Indian law.
7.15 Term Loans from Lending Banks and Lending Institutions
The Company has entered into Term Loans with the Lending Banks and the Lending
Institutions of which Rs 2,707.70 million has been made available and Rs 2,357.7 million
has been drawn down. The Term Loans whilst not all identical contain certain terms and
conditions that are replicated in the lending documentation as follows:
Interest
The Lending Banks and the Lending Institutions charged commercial rates of interest based
upon their own lending rates. However, following the debt restructuring, the rate of interest
payable to Lending Banks for the secured term loans, has been fixed at 8.5% and that to
Lending Institutions, for the retained part of the secured term loans, has been fixed at 12.5%.
Liquidated damages at the rate of 2% per annum (for the period of default) are payable to
Lending Institutions in case of default in payment of any instalment.
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Security
The Lending Banks and Lending Institutions took pari passu first ranking legal mortgages
over all of the assets of the Company (both present and future) including its immovable
properties, charges over the Company’s book debts, insurance contracts, project agreements
and intellectual property.
Security Documents
The security documents evidencing the security for each of the Term Loans with the Lending
Banks and Lending Institutions are as follows:- Deed of Hypothecation dated 30 October
1998, (the particulars of the charge having been filed with the Register of Companies on
23 November 1998), in favour of the respective Lending Banks and Lending Institutions,
pursuant to which the whole of the movable properties of the Company have been
hypothecated by way of first charge in favour of the Lending Banks and Lending Institutions,
as security for repayment of all monies due. All immovable properties of the Company were
charged in favour of the Lending Banks and Lending Institutions through a joint mortgage by
deposit of title deeds created on 23 December 1998 and the particulars of the charge were
filed with the Register of Companies on 22 January 1999. Assignment in favour of the
Security Agent (IDFC) by way of charge of all the rights, title and interest of the Company in
and under the Project Agreements (defined as the Concession Agreement, the Support
Agreement, the EPC Contract, the O&M Contract, the Ashram Flyover Construction
Agreement, the project site lease agreements and any other material contract or agreement
relating to the ownership, development, construction, maintenance, repair, operation,
disposition or use of the Project or any part thereof or any financing relating thereto and
entered into by the Company) through a joint unattested Deed of Hypothecation dated
18 December 1999 and the particulars of the charge were filed with the Register of
Companies on 24 December 1999.
General Covenants and Undertakings
The Company shall only use funds for specified purposes. The Company shall insure all its
assets against all risks stipulated by the Lending Banks and Lending Institutions from time to
time. The Company cannot alter its capital structure without the written consent of the
Lending Banks and Lending Institutions. The Company will indemnify the Lending Banks
and Lending Institutions against all losses caused due to any default of the Company in
respect of property pledged to the Lending Banks and Lending Institutions. The Company
shall pay all toll collections into a trust and retention account to be utilised by the Company to
meet its operating expenses and thereafter to service the debt due to the Lending Banks and
Lending Institutions. Prior approval of the Lending Institutions is required, for prepayment
of the outstanding debt before the due dates, in full or in part.
Negative Covenants
The Company may not declare a dividend, nor enter into any scheme of arrangement or
reconstruction, without the consent of the Lending Banks and Lending Institutions. The
Company may not implement any new scheme of expansion or enter into a new line of
business without the consent of the Lending Banks and Lending Institutions. The Company
may not repay any moneys due to the promoters and directors or persons, their friends and
relatives without the consent of the Lending Banks and Lending Institutions.
Power of Attorney
The Company has granted powers of attorney to the Lending Banks and Lending Institutions,
till all the dues are fully satisfied, to take over and carry on the business of the Company, to
sign any forms, contracts and documents, to demand debts, to realise assets and to wind up
the Company in the event of default on the part of the Company.
Events of Default
The events which entitle the Lending Banks and Lending Institutions to accelerate their loans
include, inter alia, the following: (i) default in any instalment of principal or interest
exceeding one month after the due date for payment; (ii) breach of covenant of any
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other term of loan agreement; (iii) the Company entering into a scheme with its creditors; (iv)
the Company entering into insolvency proceedings; (v) the Company ceasing or threatening
to cease to carry on business; (vi) the occurrence of any event or circumstance, which
prejudicially or adversely affects in any manner the ability of the Company to repay the loans.
If the Company commits a default in payment or repayment of three consecutive instalments,
certain of the Lending Institutions (namely IFCI, IDBI and LIC India) have the right to
convert, at their option, the whole of the outstanding amount of the loans or a part (such part,
particularly in the case of IFCI, not to exceed 20% of the loan amount disbursed), into fully
paid-up equity shares of the Company, at par. In addition, certain Lending Institutions
(namely IFCI, IDBI, IDFC and LIC India) are entitled to appoint and remove, from time to
time, one whole-time nominee director on the board of directors of the Company. Such
whole-time nominee director will not be required to hold qualification shares and will not be
liable to retire by rotation. Such whole-time nominee director shall have the right to receive
notices of and attend all general meetings and board meetings or any committee(s) of the
Company, of which they are members. Further, certain Lending Institutions (namely IL&FS,
IDBI, IDFC and LIC India) have the right to review the management structure of the
Company and direct necessary changes, including those relating to the Managing Director
and nominee directors, in case of a default by the Company.
A brief summary of amounts of the loans to the Company from the Lending Banks and
Lending Institutions is set out below:
Bank of Baroda
Canara Bank
Central Bank of India
Industrial Development Bank of India
Industrial Finance Corporation of India
IL&FS
Life Insurance Corporation of India
Punjab National Bank
State Bank of India
State Bank of Patiala
Union Bank of India
Vijaya Bank
Total
Loans
Made (in Rs)
Loans Outstanding
(in Rs) plus ZCBs
as at
31 December 2005
165,000,000
165,000,000
100,000,000
277,700,000
50,000,000
950,000,000
100,000,000
165,000,000
410,000,000
60,000,000
165,000,000
100,000,000
163,805,131
164,085,624
99,359,925
238,895,037
43,501,717
867,568,461
85,756,552
164,365,486
405,913,068
59,897,024
165,134,926
98,940,692
2,707,700,000
2,557,223,643
The above table does not include details of the term loans from IL&FS and IDFC entered into
in connection with the conversion of certain DDBs pursuant to Option-II as described in
detail in paragraph 7.15 below.
In relation to the loans made available by IL&FS, out of the total loans of Rs 950,000,000 a
loan of Rs 350,000,000, is outside the terms of the corporate debt restructuring (referred to
below). Interest is due on such loan from 31 March 2006 but repayments of principal are not
due until 31 March 2015.
The following material agreements are also in place between the Company, the Lending
Banks and the Lending Institutions:
Risk Participation Agreement dated 30 October 1998: The Company, IL&FS and IDFC
entered into the agreement for the purpose of IDFC to assume 40% of the credit risk in the
IL&FS loan to the Company. IDFC took pari passu security from the Company ranking
equally with all of the other Lending Banks and Lending Institutions. IDFC have the right to
appoint a nominee director to the board of the Company.
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Inter Se Agreement dated 13 November 1998 as subsequently amended 19 June 1999: The
Company and the Lending Banks and Lending Institutions entered into the agreement to
provide for the orderly monitoring and implementation of all the relevant term loans. In
addition, the agreement dealt with the administration of the secured property and any
potential enforcement of the Lending Banks and Lending Institutions’ rights. Canara Bank
was appointed trust and retention agent, Industrial Finance Corporation of India Limited
was appointed monitoring agent and IDFC was appointed security agent. The three
aforementioned representatives could be appointed to the board of the Company.
Take out Assistance Agreement dated 30 October 1998: The Company, IDFC and IL&FS
entered into the agreement for the purposes of a takeout of the DDBs issued by the Company
at the end of the fifth year and at the end of the ninth year from the date of allotment. Upon a
takeout IDFC and IL&FS have the right to convert the DDBs to a term loan or income bonds.
IDFC and IL&FS are also granted first raking pari passu security with all the other Lending
Banks and Lending Institutions.
Trustee Agreement dated 29 November 1999: The Company appointed IDFC as trustee of
the DDBs for the holders of the DDBs. The trustee was granted a first ranking pari passu
security for the obligations of the Company under the DDBs and the trustee’s own costs and
remuneration. UTI Bank Limited was appointed as a substitute Trustee for the holders of the
DDBs with effect from 31 May 2002 in terms of the Memorandum recording change of
Trusteeship dated 31 May 2002.
Trustee Agreement & Supplemental Trustee Agreement (with respect to the ZCBs) dated
14 August 2003 and 12 May 2004: The Company appointed UTI Bank Limited as trustee for
the benefit of and on behalf of all ZCB holders to hold all proceeds and realisations thereof
upon trust for the benefit of the ZCB holders. The trustee was granted a first ranking pari
passu security for the obligations of the Company under the ZCBs and the trustee’s own costs
and remuneration.
Direct Agreement dated 22 December 1998: Pursuant to the terms of the Concession
Agreement, the Company entered into an agreement (the “Direct Agreement”) with NOIDA
and IDFC, on 22 December 1998, for the obtaining, holding and enforcement of the security
created under the various loan agreements entered into by the Company with the Lending
Banks and the Lending Institutions, and other rights granted to the various persons providing
secured or unsecured credit facilities to the Company (“Lenders”) including inter alia, the
Lenders’ Step-In Rights and the Lenders’ Rights to Appoint a Substitute Entity, as have been
granted under the Concession Agreement. Under the terms of the Direct Agreement, IDFC, as
a Security Agent, acting for itself and as agent for Lenders, is entitled to exercise the Lender’s
rights under the Concession Agreement. The Company has undertaken that it shall be bound
by the actions taken by NOIDA or the Lenders or the security agent, IDFC, acting for or on
behalf of all the Lenders, in pursuance of or as a consequence of the Direct Agreement.
Further, NOIDA has consented to execution of a ‘consent and novation agreement’ and such
other documents/ agreements as may be necessary and required by the Senior Lenders, at the
request and to the satisfaction of IDFC acting as security agent, for the due substitution of the
Company by a substitute entity and for the vesting of the Project and all residual rights under
the Concession Agreement with the substitute entity.
Agreement for Take-Out procedure dated 2 February 2006: This Agreement has been
entered into between the Company, IDFC, IL&FS (“Take-Out Lenders”) and Karvy
Computer Share Private Limited (“Karvy”) for the purpose of facilitating the process of the
Take-Out of the DDBs by the Take-Out Lenders in terms of exercising Option-II under the
Scheme of Arrangement. For the purpose of the takeout of the DDBs, Karvy is required to
open a demat escrow account for facilitating the payment to the DDB holders. All the DDB
holders would be eligible to avail either of the options made available to them under the
Scheme of Arrangement. Karvy shall verify the details of the DDB holders and give due notice
to IDFC and IL&FS for the purpose of payment to the DDB holders. Both IDFC and IL&FS
shall be liable to the pay the DDB holders Rs 9,500 per bond (subject to deduction of taxes) as
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on 3 November 2004 and interest thereafter at the rate of 8.5% per annum up to the date of
payment. Pursuant to the Option-II procedure being completed the cheques/drafts shall be
dispatched by Karvy to reach the DDB holders within 60 days of the record date (i.e.
30 December 2005). With respect to the liability of the Take-Out Lenders, in case of any
dispute, the provisions of the Take-Out Assistance Agreement, to the extent modified by the
Scheme of Arrangement, will prevail.
Conversion and Confirmation Agreement dated 23 February 2006: The Company, IDFC
and IL&FS have entered into this agreement for the purpose of giving effect to the order of
High Court of Allahbad in terms of the Scheme of Arrangement for the takeout of the DDBs
issued by the Company and to deposit in the bank account the amounts which would be
required to pay to the DDB holders exercising Option-II as per the Scheme of Arrangement.
Upon conversion of the DDBs as funded by IDFC and IL&FS, the DDBs shall stand cancelled
and the amounts of the DDBs funded by IDFC and IL&FS shall be converted into term loans
and further IDFC and IL&FS shall be discharged from all their obligations under the Take
out Assistance Agreement. The Company is required to obtain the approval of the CDR Cell
for the conversion of the DDBs funded by IL&FS and IDFC into a term loan. IDFC and
IL&FS have been granted first ranking pari passu security with all the other Lending Banks
and Lending Institutions, by way of a first mortgage and charge, in the form and manner
satisfactory to IDFC and IL&FS, of all the Company’s immovable and movable properties
(both present and future); assignment of all rights, title, interest, benefits and claims
whatsoever of the Company in the Project Documents; charges on the Debt Service Reserve
Account, Trust and Retention Account and bank accounts in the name of the Company. The
Company is required to obtain the requisite approval of the CDR Cell for the conversion of
the DDBs funded by IDFC and IL&FS, into a Term Loan. The provisions of the Take-Out
Assistance Agreement relating to the obligations of IDFC and IL&FS to takeout the DDBs
upon the exercise of the put option by the DDB holders, shall stand deleted, cancelled and
extinguished upon payments of the takeout price by IDFC and IL&FS to the DDB holders,
under the Court Order and IDFC and IL&FS will be relieved and discharged from all the
obligations with respect to takeout under the Take-Out Assistance Agreement.
An event of default would arise upon occurrence of, inter alia, the following events: (a)
Default by the Company in payment of any instalment of the principal of the Term Loan on
the due date and the payment of any interest on the Term Loan on any interest payment date
and the default continuing for a period of 30 days; (b) Default in performance of any
conditions and covenants contained in this Agreement or any Financing Document/ Security
Document; (c) Company voluntarily/involuntarily becoming the subject of proceedings
under any bankruptcy/ insolvency law or the Company is voluntarily or involuntarily
dissolved; (d) In case of any extraordinary circumstances having occurred whereby the
Company cannot fulfill its obligations under the Confirmation Agreement or any other
transaction documents; (e) if in the reasonable judgment of the Takeout Lenders the security
interest created in favour of the Takeout Lenders is in jeopardy.
Upon the occurrence of an event of default, IL&FS and IDFC may: (a) Accelerate the payment
of the monies due under the Conversion Agreement, and any other financing document or
security document whereby IL&FS and IDFC may upon a notice in writing to the Company,
declare all the principal, interest and other monies due to be payable forthwith; (b) Enter
upon and take possession of the mortgaged/hypothecated/assigned assets of the Company;
(c) Substitute themselves or any one of them or its nominees and its designee for the Company
under any or all of the Project Documents and the Company’s residual interest in the Trust
and Retention Account and to pursue any other legal remedy or right provided under any law
including but not limited to taking appropriate action under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d)
appoint and remove from time to time one or more whole-time directors so long as the events
of default continue; (e) if in the opinion of IL&FS and IDFC, the business of the Company is
conducted in a manner prejudicial to the to the interest of IL&FS and IDFC or opposed to
public policy, IL&FS and IDFC will have the right to review the management set-up or the
organization of the Company as may be considered necessary by IL&FS and IDFC.
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7.16 Corporate Debt Restructuring
The Term Loans and DDBs have been restructured pursuant to the corporate debt
restructuring scheme. The Lending Banks and Lending Institutions have accepted the terms
of the restructuring pursuant to certain sanction letters the terms of which are summarised
below. The State Bank of India has been appointed to oversee the implementation of the
restructuring. Further, the Company has implemented a Scheme of Arrangement under
sections 391 to 393 of the Act the purpose of which was to restructure the Term Loans and
DDBs as below. The scheme has been approved by the Honourable Allahabad High Court on
24 October 2005.
7.16.1 Restructured Term Loans with the Lending Banks
Each of the borrowing arrangements with the Lending Banks has three components
namely (i) a Term Loan, (ii) Funded Interest which is convertible into a Term Loan,
and (iii) Zero Coupon Bonds Series B. The interest rate of each Term Loan is 8.5%
per annum.
(a)
Name of Lender: Vijaya Bank (VB)
(i)
Date of Loan Agreement: 30 October 1998
(ii)
Date of Modification of Terms & Conditions due to CDR Mechanism:
16 April 2003
(iii)
Current Loan Amount Rs 98.94 million (inclusive of Funded Interest which
has been already added to the Term Loan)
(iv)
Amount Repaid Rs 18.39 million
(v)
Repayment Schedule/Due date: From 31 March 2005 to 31 March 2013
(vi)
Amount of Zero Coupon Bonds — Series B (ZCB-B) Rs 2.39 million
(vii)
Security: A pari passu first charge on the following: (a) Immovable property
of the Company, both present and future, situated in the states of Delhi and
Uttar Pradesh; (b) The whole of the moveable property of the Company,
both present and future; (c) Company’s book debts, receivables, revenues of
whatsoever nature and wheresoever arising, both present and future; (d) All
the rights, titles, interest, benefits, claims and demands, whatsoever of the
Company, under any agreement entered into by the Company in relation to
the project, as amended, varied or supplemented; (e) All the rights, title,
interest of the Company, in relation to the trust and retention account
proceeds, being the bank account, established by the Company for crediting
all the revenue from the project; (f) All the right title, interest, benefits, claims
and demands, whatsoever of the Company in the government permits,
authorizations, approvals, licenses pertaining to the project and to any
claims or proceeds arising in relation to or under the insurance policies taken
out by the Company. In addition to the foregoing security, further security
has been proposed (but not yet granted) in the form of (a) a mortgage charge
on the surplus land owned by the Company valued at Rs 3,600 million, and
also (b) personal guarantees of directors of the Company, as and when called
upon by VB.
(viii)
Security for ZCB-B: The ZCBs shall be secured by way of a pari passu charge
on all the Company’s assets, present and future, along with existing
chargeholders. The security would become enforceable only in the event of
the Company not repaying debt out of proceeds of development income
earned.
(ix)
Special Conditions/Restrictive Covenants: During the subsistence of any
loan to VB, the Company will not, without the prior written consent of VB:(a) effect any change in the Company’s capital structure and change in
management; (b) formulate any scheme of amalgamation or reconstitution;
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(c) implement any scheme of expansion or acquire fixed assets in excess of
the levels stipulated/ budgeted/ projected as per technical data provided to
VB; (d) invest by way of share capital in or lend or advance funds to or place
deposits with any other concern, including its associate concern(s), other
than the normal credit or security deposit in the normal course of business;
(e) enter into borrowing arrangements either secured or unsecured with any
other bank or financial institution; (f) undertake guarantee obligations on
behalf of any other company; (g) declare dividends for any year except out of
profits relating to that year after making all due and necessary provisions
and provided further that no default has occurred in any repayment
obligations.
(x)
Other Terms and Conditions: (a) moneys brought in by any promoters/
partners/ principal shareholders/ directors/ depositors, will not be allowed to
be withdrawn without VB’s permission; (b) the Company to maintain such
minimum net working capital/ current ratio/ debt-equity ratio, as may be
stipulated by VB, from time to time (no such ratios have been stipulated as at
the date of this document);(c) the Company to inform VB of the happening
of any event likely to have a substantial effect on its profits or business and
any circumstance adversely affecting its financial position; (d) VB has the
right to call upon the Company concern to maintain/ improve its equity and/
or other long term funds by way of unsecured loans/ deposits, etc. and
withdraw its investment/ lending in/ to its associates/ affiliates/ subsidiaries
or other concerns.
(xi)
Conditions for Debt Restructuring: (a) The Company shall raise funds
required for the network improvement by way of the infusion of equity to
the extent of Rs 250 million by the IL&FS as set out in the scheme (as at the
date of this document, this condition has not been complied with); (b) The
Company shall extend pari passu charge on the surplus land valued at Rs
3,600 million to secure the ZCBs (and such security has been created by the
Company); (c) the Company shall complete the envisaged connectivity of
Sector 14A link to Noida Toll Bridge by March 2004 and South Link 2 way
which will connect NH2, by March 2006; (d) the Company shall enter into a
development rights agreement to the satisfaction of the Lending Banks and
Lending Institutions; (e) the loss of interest to the Lending Banks and
Lending Institutions due to the reduction in the return on investment from
the documented rate, as set out in the scheme, shall be compensated by the
issue of ZCBs and the same shall be redeemed by 3 December 2014.
(b)
Name of Lender: Bank of Baroda (BoB)
(i)
(ii)
11 June 2003
(iii)
Current Loan Amount outstanding Rs 163.80 million (inclusive of Funded
Interest)
(iv)
Amount Repaid Rs 30.34 million
(v)
(vi)
Amount of Zero Coupon Bonds — Series B (ZCB-B): Rs 4.50 million
(vii)
Security: (a) First charge over the fixed plant, machinery and equipment of
the Company, both present and future, pari passu with the Lending Banks
and Lending Institutions participating in the financing of the project; (b)
Lien and first charge on the Company’s right, title and interest in the
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assigned project and financial agreements; (c) Assignment of leasehold rights
of the land leased to the Company and assignment of all insurance policies in
favour of the Lending Banks and Lending Institutions as loss payee; (d)
Charge on all current and future cash flows of the project; (e) Lien and
charge on all other residual assets of the project.
(viii)
Security for ZCB-B: same as VB
(ix)
Special Conditions/Restrictive Covenants: Any terms and conditions, as
stipulated by the lead bank, the State Bank of India (SBI) shall be applicable
mutatis-mutandis, for such facilities (no such terms have been stipulated as
at the date of this document).
(x)
Other Terms and Conditions: (a) if the Company gets any development
income arising out of development rights, the Company is required to open
an escrow account and deposit all the cash inflows in that account. The
escrow account shall be assigned in favour of all the Lending Banks and
Lending Institutions The Company shall undertake to utilize the proceeds of
the escrow account in a manner and priority to be decided by the lead
institution/bank on behalf of all the Lending Banks and Lending Institutions;
(b) In the event of any cost overrun, the Company will bring in the requisite
funds to complete the project from its own sources/ through IL&FS.
(xi)
Conditions for Debt Restructuring: same as VB.
(c)
Name of Lender: State Bank of Patiala (SBP)
(i)
(ii)
15 February 2003
(iii)
Repayment Schedule / Due date: From 30 June 2004 to 31 March 2013
(iv)
Current Amount of Loan Outstanding inclusive of Funded Interest:
Rs 57.93 million
(v)
(vi)
Security: (a) Existing terms and conditions including the security and other
covenants continue as per original sanction; (b) Any other terms and
conditions, sanctioned by the SBI/ other Lending Banks and Lending
Institutions, in line with the proposal approved by CDR empowered group
will also be applicable to the loan.
(viii)
Security for ZCB-B: same as VB.
(ix)
Special Conditions/Restrictive Covenants: (a) Existing terms and conditions
including the security and other covenants continue as per original sanction;
(b) Any other terms and conditions, sanctioned by the SBI/ other Lending
Banks and Lending Institutions, in line with the proposal approved by CDR
Empowered Group will also be applicable to the loan.
(x)
Other Terms and Conditions: (a) Existing terms and conditions including
the security and other covenants continue as per original sanction; (b) Any
other terms and conditions, sanctioned by the SBI/ other Lending Banks and
Lending Institutions, in line with the proposal approved by CDR
Empowered Group will also be applicable to the loan.
(x)
Conditions for Debt Restructuring: Any other terms and conditions,
sanctioned by the SBI/other Lending Bank and Lending Institutions, in line
with the proposal approved by CDR Empowered Group will also be
applicable to the loan.
(d)
Name of Lender: State Bank of India (SBI)
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(i)
(ii)
31 January 2003, 26 February 2003, 16 January 2003 and 6 January 2003
(iii)
Amount Repaid: Rs 75.36 million
(iv)
Repayment Schedule / Due date: 31 March 2005 to 31 March 2013
(v)
Current Amount of Loan Outstanding inclusive of Funded Interest
Rs 395.65 million
(vi)
(vii)
Security: Existing terms and conditions including the security and other
covenants continue as per the original sanction.
(viii)
(ix)
Special Conditions/Restrictive Covenants: Existing terms and conditions
including the security and other covenants continue as per the original
sanction in addition to the same conditions imposed in the case of VB.
(x)
Other Terms and Conditions: Existing terms and conditions including the
security and other covenants continue as per the original sanction in
addition to the same conditions imposed in the case of VB.
(xi)
Conditions for Debt Restructuring: Existing terms and conditions including
the security and other covenants continue as per the original sanction in
addition to the same conditions imposed in the case of VB.
(e)
Name of Lender: Canara Bank
(i)
(ii)
20 March 2003
(iii)
(iv)
Repayment Schedule / Due date: From 31 March 2005 until 31 March 2013
(v)
Rs 159.31 million
(vi)
Amount of Zero Coupon Bonds – Series B (ZCB-B): Rs 4.78 million
(vii)
covenants continue as per original sanction.
(viii)
(ix)
Special Conditions/Restrictive Covenants: Existing terms and conditions
including the security and other covenants continue as per the original
sanction.
(x)
Other Terms and Conditions: Existing terms and conditions including the
security and other covenants continue as per original sanction.
(xi)
Conditions for Debt Restructuring: same as VB
(f)
Name of Lender: Punjab National Bank (PNB)
(i)
(ii)
25 March 2003
(iii)
(iv)
Repayment Schedule / Due date: From 31 March 2005 to 31 March 2013
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(v)
Rs 159.31 million
(vi)
Amount of Zero Coupon Bonds: Rs 5.05 million
(vii)
Security: (a) First pari passu charge over all the assets of the Company’s
Delhi Noida Toll Bridge project; (b) All the terms and conditions, stipulated
in the earlier sanction letter for term loan of Rs 165 million would apply
mutatis-mutandis, to the restructured loans also, except to the extent
modified by the sanction letter dated 25 March 2003; (c) other terms and
conditions, as per SBI sanction of detailed restructuring scheme to be
complied with.
Additional Security: Specific charge on the surplus lands valued at Rs 3,600
million on pari passu basis with other term lenders.
(viii)
(ix)
Special Conditions/Restrictive Covenants: During the currency of the bank’s
credit facilities, the borrower shall not, without the prior written consent of
the bank:- (a) Effect any change in their capital structure; (b) Formulate any
scheme of amalgamation or reconstruction; (c) Undertake any new project
or expansion or modernization schemes or made any capital expenditure
other than those estimated/projected in the Restructuring Scheme; (d) Create
any charge, lien or encumbrance over its undertaking or any part thereof in
favour of any financial institution, bank, borrower, firm or persons; (e) Sell,
assign, mortgage, alienate or otherwise dispose of any of the assets of the
borrower charged to the bank; (f) Declare equity dividend without written
approval of institutions/lenders during the period of implementation of the
package; (g) Make investments in or grant loans/advances to
group/subsidiary companies or other companies or undertake any
commitments which might result in financial obligation to the companies
covered under the package; (h) All the terms and conditions, stipulated in the
earlier sanction letter for term loan of Rs 165 million would apply mutatismutandis, to the restructured loans also, except to the extent modified by the
sanction letter dated 25 March 2003; (i) Other terms and conditions, as per
SBI sanction of the restructuring scheme to be complied with.
(x)
Other Terms and Conditions: (a) Any escalation/overrun in the cost of the
Restructuring Scheme or shortfall in cash flows if any to be met by the
Company from its own sources; (b) Penal interest, at the applicable rate, to
be charged in case of default in payment/interest on due date; (c) Any
favourable terms including rate of interest to any lender will be applicable to
all the lenders.
(xi)
Conditions for Debt Restructuring: (a) The Company shall raise funds
required for the net work improvement (Rs 250 million) by way of equity
infusion from Promoters/others. The requisite formalities should be
completed by March 2003; (b) Company shall complete the envisaged
connectivity of Sector 14A link to Noida Toll Bridge by March 2004 and
South Link 2 way which will connect NH2, by March 2006; (c) Company
shall enter into Development Rights Agreement to the satisfaction of the
Lenders; (d) The Company has to obtain the required Government
approvals for developmental rights of land in terms of the detailed
restructuring scheme.
(g)
Name of Lender: Central Bank of India
(i)
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(ii)
30 April 2003
(iii)
Current Loan Amount outstanding: Rs 96.55 million
(iv)
Amount Repaid (Rs in millions): 18.39
(v)
Repayment Schedule / Due Date: From 31 March 2005 to 31 March 2013
(vi)
(vii)
covenants continue as per the original sanction.
(viii)
(ix)
Special Conditions/Restrictive Covenants: All other existing terms and
conditions remain the same as per the original sanction.
(x)
Other Terms and Conditions: All other existing terms and conditions remain
the same as per the original sanction.
(xi)
Conditions for Debt Restructuring: same as VB.
(h)
Name of Lender: Union Bank of India
(i)
(ii)
3 April 2003
(iii)
Current Loan Amount outstanding: Rs 159.3 million
(iv)
Amount Repaid (Rs in millions): 30.34
(v)
(vi)
(vii)
Security: The rupee term loan would be primarily secured by hypothecation
of both present and future immovable assets
(viii)
(ix)
Special Conditions/Restrictive Covenants: All other existing terms and
conditions remain the same as per the original sanction.
(x)
Other Terms and Conditions: In the event of any cost overrun, the Company
will bring in the requisite funds for the same; no additional finance will be
made.
(xi)
Conditions for Debt Restructuring: The Company should raise funds
required for the network improvement (Rs 250 million) by way of equity
infusion from the promoters as proposed; The loss of interest due to the
reduction in rate of interest from the documented rate, as set out in the
scheme, shall be compensated by issue of ZCBs.
The security documents for each of the Term Loans with the Banks were augmented
in the same manner, as follows:- Hypothecation of all movable property by means of
the Trustee Agreement dated 14 August 2003 and Deed of Hypothecation dated
20 August 2003 in favour of UTI Bank as Trustee acting on behalf of SBI, and the
particulars of the charge were filed with the ROC on 20 August 2003. A joint
mortgage by deposit of title deeds of the whole of the immovable property of the
Company was created by the Company in favour of the Security Agent and UTI Bank
acting as Trustee on 5 September 2003 and the particulars of the charge were filed
with the RoC on 16 September 2003.
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The ZCB Series B issued to each Lending Bank have the same terms, as follows:
(a)
The ZCBs are issued at par and do not carry any interest or a redemption
premium.
(b)
The redemption of these ZCBs on 31 March 2014. The Debenture Trustee
would be empowered to enforce the security in the event of the Company not
utilizing the development income for the purposes of redemption on due date.
(c)
These ZCBs shall not be transferable.
(d)
ZCBs (Maturity Date): 31 March 2014 with a right for earlier redemption if
cash flows permit.
17.16.2 Restructured Term Loans with Lending Institutions
The Company has accepted the following sanction letters from the Lending
Institutions, sanctioning the loan facilities detailed as follows:
Each of the borrowing arrangements with the Lending Institutions involves four
components, namely (1) a Term Loan, (2) a Funded Interest Term Loan, (3) Zero
Coupon Bonds – Series A and (4) Zero Coupon Bonds – Series B. The interest rate of
each Term Loan is 12.5% per annum. The Funded Interest Term Loan is kept
separately and no interest accrues on the same. The funded interest is to be repaid in
2006-07.
(a)
Name of Lender: Industrial Development Bank of India (IDBI)
(i)
(ii)
Date of Modification of Terms & Conditions: 17 February 2003
(iii)
Loan Amount: Term Loan = Rs 277.70 million plus a Funded Interest Term
Loan = Rs 20.07 million
(iv)
(v)
Repayment Schedule/Due date: (a) From 1 July 2010 to 1 April 2014 (b)
Funded Interest to be repaid in 2006 — 07 (c) ZCBs — Series B (Maturity
Date): 31 March 2014 with a right for earlier redemption if cash flows
permit
(vi)
Current Term Loan Outstanding: Rs 138.85 million
(vii)
Amount of ZCBs (Series A 쎴 Series B): Rs 79.97 million
(viii)
Security: Creation of pari passu specific charge in favour of IDBI on the land
parcels in the possession of the Company, which will be developed for
commercial/other purposes.
(ix)
Security for ZCBs – Series A & Series B: The ZCBs shall be secured by way of
a pari passu charge on all the Company’s assets, present and future, along
with existing chargeholders. The security would become enforceable only in
the event of the Company not repaying out of the proceeds of the
Development Income earned.
(x)
Special Conditions/Restrictive Covenants: (i) IL&FS would fund the
construction of the proposed Mayur Vihar Link and South Link from its
own sources; (ii) The progress of the Company on the development rights,
the additional links and traffic realization will be monitored on a
semi-annual basis; (iii) IDBI shall have a right to accelerate the repayment
schedule and increase the rate of interest on the rupee term loan/ZCBs in case
the cash flows of the Company so warrant; (iv) IDBI shall have a right of
recompense in respect of the monetary value of sacrifices of the reliefs and
concessions extended by them and the Company undertakes to make good
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the sacrifices made by the banks/Lending Institutions if in the view of IDBI,
the profitability of the Company and its cash flows so warrant; (v) In case the
ZCBs are not redeemed by the scheduled date (due to delay in the
development and sale of land), the package would be suitably modified to
ensure that the sacrifices of IDBI remain as projected.
(b)
Name of Lender: Life Insurance Corporation of India (LIC India)
(i)
Date of Loan Agreement: 23 August 1999
(ii)
Date of Modification of Terms & Conditions: 14 July 2003
(iii)
Loan Amount: Term Loan = Rs 100 million plus a Funded Interest Term
Loan = Rs 7.24 million
(iv)
Amount Repaid: Rs 25 million
(v)
Repayment Schedule/Due date: (a) Same as IDBI (b) Funded Interest to be
repaid in 2006 — 07 (c) ZCBs ( Series B) (Maturity Date): 31 March 2014
with a right for earlier redemption if cash flows permit
(vi)
Current Term Loan Outstanding: Rs 50 million
(vii)
(viii)
Security: Creation of pari passu specific charge in favour of LIC India on the
land parcels in the possession of the Company, valued at Rs 3,600 million,
which will be developed for commercial/other purposes, within a period of 3
months.
(ix)
Security for ZCBs – Series A & Series B: same as IDBI
(x)
Special Conditions/ Restrictive Covenants: (a) The promoters would fund
the construction of the proposed additional links Mayur Vihar Link, South
Link (one way) and South Link (two way) from its own sources; (b) The
Company shall raise funds required for the network improvement (Rs
250 million) by way of equity infusion from promoters/others. The requisite
formalities, including SEBI formalities should be completed by March,
2003. As at the date of this document, the requisite formalities had not been
completed; (c) Company shall complete the envisaged connectivity of Sector
14A link to the Delhi Noida Toll Bridge by March 2004 and South Link 2
way which will connect NH2, by March 2006; (d) Company shall enter into
development rights agreement to the satisfaction of the Lenders; (e) The
progress of the Company on the development rights, the additional links and
traffic realization will be monitored on a semi-annual basis; (f) LIC shall
have a right to accelerate the repayment schedule and increase the rate of
interest on the rupee term loan/ZCBs in case the cash flows of the Company
so warrant; (g) LIC shall have a right of recompense in respect of the
monetary value of sacrifices of the reliefs and concessions.
(c)
Name of Lender: Industrial Finance Corporation of India (IFCI)
(i)
Date of Loan Agreement: 17 December 1998
(ii)
Date of Modification of Terms & Conditions: 27 June 2003, 26 February
2003
(iii)
Loan Amount: Term Loan = Rs 50 million plus a Funded Interest Term Loan
= Rs 3.63 million
(iv)
(v)
Repayment Schedule/Due date: (a) Same as IDBI; (b) Funded Interest to be
repaid in 2006 – 07; (c) ZCBs (Maturity Date): 31 March 2014 with a right
for earlier redemption if cash flows permit
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(vi)
Current Term Loan Outstanding: Rs 25 million
(vii)
(viii)
Security: Creation of pari passu specific charge in favour of IFCI on the land
parcels in the possession of the Company, valued at Rs 3,600 million,
(ix)
Security for ZCBs – Series A & Series B: same as IDBI
(x)
Special Conditions/Restrictive Covenants: (a) The Company shall raise
funds required for the network improvement (Rs 250 million) by way of
equity infusion from promoters/others. The requisite formalities, including
SEBI formalities should be completed by March, 2003; (b) Company shall
complete the envisaged connectivity of Sector 14A link to Noida Toll Bridge
by March 2004 and South Link 2 way, which will connect NH2, by March
2006; (c) Company shall enter into a development rights agreement to the
satisfaction of the Lenders; (d) The Company shall not declare any dividend
on equity/preference shares without the prior written approval of IFCI; (e)
The Company shall not undertake any new project or expansion or make
any investment or capital expenditure other than normal capital expenditure
or take assets on lease without the prior written approval of IFCI during the
currency of IFCI assistance; (f) IFCI reserves the right to recompense the
sacrifices made by IFCI in case the company’s profitability/cash flow
position so warrants.
(d)
Name of Lender: Infrastructure Leasing & Financial Services Limited
(IL&FS)
(i)
(ii)
Date of Modification of Terms & Conditions: 31 March 2003
(iii)
Loan Amount: Term Loan = Rs 950 million (Rs 350 million is outside the
purview of CDR) Funded Interest Term Loan = Rs 43.54 million
(iv)
(v)
Repayment Schedule/Due date: (a); Same as IDBI; (b) Funded Interest to be
repaid in 2006 –07; (c) ZCBs (Maturity Date): 31 March 2014 with a right
for earlier redemption if cash flows permit
(vi)
Current Term Loan Outstanding: Rs 650 million (Rs 350 million is outside
the purview of CDR)
(vii)
(viii)
Security: same as IDBI
(ix)
Security for ZCBs – Series A & Series B: The ZCBs shall be secured by way of
a pari passu charge on all the Company’s assets, present and future,
including the surplus land admeasuring about 99 acres in possession of the
Company, along with existing chargeholders.
(x)
Special Conditions/ Restrictive Covenants: (a) The Company shall execute
the requisite documents as may be required by the UTI Bank Limited (as
security agent); (b) The Company shall comply with the post
implementation requirements of the Restructuring Scheme and shall submit
periodical reports as mandated by the CDR Cell on the progress in
implementation of the Restructuring Scheme; (c) Company shall complete
the envisaged connectivity of Sector 14A link to Noida Toll Bridge by March
2004 and South Link 2 way, which will connect NH2, by March 2006; (d)
The cost in meeting the capital expenditure shall be met by the Company by
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raising the required funds from promoters/ others. The requisite formalities,
including SEBI formalities should be completed by March, 2003; (e)
Company shall, in respect of surplus land admeasuring 99 acres, enter into a
development rights agreement to the satisfaction of the IL&FS; (f) All other
terms and conditions, as specified in the sanction letter dated 18 September
1998, remain unchanged.
Each of the borrowing arrangements with the Lending Institutions has the same
security documents: (a) Hypothecation of all movable property by means of the
Trustee Agreement dated 14 August 2003 and Deed of Hypothecation dated
20 August 2003 in favour of UTI Bank Limited as Trustee, and the particulars of the
charge were filed with the RoC on 20 August 2003; (b) A joint mortgage by deposit
of title deeds of the whole of the immovable property of the Company was created by
the Company in favour of the Security Agent and UTI Bank Limited acting as Trustee
on 5 September 2003 and particulars of the charge were filed with the RoC on
16 September 2003.
Terms of the ZCB Series A: (a) The ZCBs are issued at par and do not carry any
interest or redemption premium; (b) The ZCBs will be due for redemption in two
tranches (50% of the total amount will be paid on 31 March 2005 and the balance
on 31 March 2006). The Debenture Trustee (UTI Bank Limited) would be
empowered to enforce the security in the event of the Company not utilising the
development income for purposes of redemption on the due dates. The Development
Income up to Rs 1,000 million will be applied towards the redemption of these ZCBs
and shared between the Lending Institutions and banks in the ratio of 51.4% and
48.6%; (c) These ZCBs shall not be transferable.
Terms of the ZCB Series B: as above
7.16.3 Restructuring of the DDBs
The Company approached the CDR Empowered Group in January 2004, for
restructuring of the DDBs as on 31 March 2004. The said proposal was consented to
by a majority of 54% of the DDB Holders (by value).
Under the Scheme of Arrangement, with respect to restructuring of the DDBs, the
Company were to provide to every DDB Holder an option to either reschedule the
contracted annual yield (i.e. the interest rate) and also vary the terms and conditions
in respect thereof with effect from the Appointed Date (“Appointed Date” to mean
1 April 2002) in the manner specified in Option-I or elect the exit option of the
Company in the manner specified under Option-II, hereunder.
(a)
Option-I
DDB Holders electing this will be entitled for the following:
앫
contracted rate of interest at 13.6974% per annum until 31 March
2002 (the Appointed Date) and thereafter the effective yield shall
stand reduced to 8.5% per annum.
앫
the date of maturity for the DDB will be 3 November 2015 (as per
original terms) and the maturity value per DDB calculated at the
revised interest would be Rs 20,715 per bond (subject to deduction
of tax, if applicable).
앫
the Company to have a right to call/purchase DDBs from the DDB
Holders at any time after the Effective Date (24 November 2005 i.e.
the date on which the certified copy of the order of the High Court
sanctioning the Scheme was filed with the RoC, Uttar Pradesh) with
interest calculated at the rate of 13.697% per annum until
31 March 2002 and at 8.5% per annum thereafter up to the date of
such payment.
앫
the DDBs will have no credit enhancement.
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Option-II
DDB Holders who are not willing to accept the revised terms and conditions
as set out in Option-I above will be entitled to encash the DDBs by
submitting them to the Take-Out lenders for the take out offer at a
predetermined price of Rs 9,500 per DDB (subject to deduction of tax, if
applicable) on the take out date i.e. 3 November 2004 plus an interest at the
rate of 8.5% for delay, if any, thereafter up to the date of payment.
Under the Scheme of Arrangement, the Company sent letters to the DDB holders to
exercise the option.
The Scheme was approved by the High Court on 24 October 2005 and the Company
has implemented the Scheme. The Scheme as approved by the Honourable High
Court has an overriding effect over the terms of the offer document through which
the DDBs were offered including but not limited to the procedure mentioned therein
for effecting the take out offer. The restructuring of the DDBs is expected to yield a
net saving in interest costs of approximately Rs 91 million per annum to the
Company.
The Company fixed 30 December 2005 as the record date to determine the DDB
holders who are entitled to receive option letters. The date set for payment is 28
February 2006 with the option to be exercised by 7 February 2006.
Status of DDBs
The Company by a letter dated 19 December 2005 requested that the BSE, NSE and
the Uttar Pradesh Stock Exchange (UPSE), suspend trading of the DDBs pursuant to
which the trading of the DDBs has been suspended with effect from 19 December
2005. The Company intends to apply for the remaining DDBs, in respect of those
DDB holders who exercised Option-I, to be readmitted to trading on the BSE, the
NSE and the UPSE.
As of 7 February 2006, a total of 142 DDB holders have exercised Option-I
(amounting to 10,815 DDBs) and 1,837 DDB holders have or are deemed to have
exercised Option-II (amounting to 52,087 DDBs). In terms of the Scheme of
Arrangement, all the rights attached to the DDBs, in relation to which the DDB
holders have exercised their options, have been extinguished with effect from the
payment date, being 28 February 2006.
Conversion and Confirmation Agreement dated 23 February 2006
The Company, IDFC and IL&FS have entered into the agreement for the purpose of
giving effect to order of High Court of Allahbad in terms of the Scheme of
Arrangement for the takeout of the DDBs issued by the Company and deposit in the
bank account the amounts which would be required to pay to the DDB holders
exercising Option-II as per the Scheme of Arrangement. Upon conversion of the
DDBs pursuant to Option-II as funded by IDFC and IL&FS, the DDBs have been
cancelled and the amounts of the DDBs funded by IDFC and IL&FS have been
converted into term loans and further IDFC and IL&FS shall be discharged from all
its obligations under the Take Out Assistance Agreement. IDFC and IL&FS have
been granted first ranking pari passu security with all the other Lending Banks and
Lending Institutions. The Company is required to obtain the approval of the CDR
Cell for the conversion of the DDBs funded by IL&FS and IDFC into a term loan.
7.16.4 Current Status of Borrowing Arrangements
The Company has not complied with a number of conditions namely: the Mayur
Vihar Link has yet to be started (it was due March 2004), the South Link has yet to be
started (it was due March 2006), and a development rights agreement has yet to be
executed. The Company has not maintained some of the financial covenants as
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stipulated by some of the Lending Banks and Lending Institutions. Notwithstanding
the aforementioned and the breaches of existing credit documentation no default has
been called on the Company.
8.
Taxation
The following statements are intended to act as a general guide to the current tax law and practice
in India and the UK. No statements are made with respect to the tax treatment of the ownership or
disposal of GDRs in any other jurisdiction. They are not intended to be exhaustive and investors
are strongly advised to seek independent professional advice in connection with the tax
consequences of investing in, trading in and disposing of GDRs.
(a)
Indian Tax
Set out below is a summary of the principal Indian tax consequences for non-resident
investors of the GDRs. The summary is based on the taxation law and practice in force at the
time of this Admission Document and is subject to change. Further, it only addresses the tax
consequences for persons who are non-resident as defined in the IT Act, who acquire GDRs
representing shares pursuant to this Admission Document and who hold such GDRs
representing shares as capital assets. This summary does not address the tax consequences
which may be relevant to other classes of non-resident investors, including dealers. The
summary proceeds on the basis that the person continues to remain a non-resident while the
income by way of dividends and capital gains is earned.
This summary is based on the provisions of section 115AC and other applicable provisions of
the Income Tax Act, the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(through Depositary Receipt Mechanism) Scheme 1993 (as amended) promulgated by the
Government of India (together the “Section 115AC Regime”).
This summary is not intended to constitute a complete analysis of the tax consequences under
Indian law of the acquisition, ownership and sale of the GDRs representing Shares by
non-resident investors. Potential investors should, therefore, consult their own tax advisors
on the tax consequences of such acquisition, ownership and sale including, specifically, tax
consequences under Indian law, the laws of the jurisdiction of their residence, any tax treaty
between India and their country of residence or the country of residence of the Depositary as
applicable and, in particular, the application of the provisions of the Income Tax Act and the
Section 115AC Regime. The IT Act is amended every year by the Finance Act of the relevant
year. Some or all of the tax consequences of the 115AC Regime may be modified or amended
by future amendments to the IT Act.
Taxation of Dividends
Dividends are not taxable in India in the hands of the recipient. Consequently, holders of the
GDRs or the non-resident holders of shares upon withdrawal of shares from the depositary
facility under the Depositary Agreement will not be liable to tax in India in respect of the
dividend received. However, the Company will be subject to a “dividend distribution tax”
currently at the rate of 12.5% (plus applicable surcharge and education cess) on the total
amount distributed as dividend.
Distribution to non-residents investors of additional GDRs or bonus shares or rights to
subscribe for shares (for the purposes of this section, “Rights”) made with respect to GDRs or
shares are not subject to Indian tax.
Taxation of Capital gains
Any gain realised on the sale of the GDRs representing shares from one non-resident to
another non-resident is not subject to Indian capital gains tax.
Upon conversion of the GDRs into underlying shares, after withdrawal from the Depositary,
any gains made from the transfer of shares will be subject to Indian capital gains tax (subject
to the discussions under the heading “Securities Transaction Tax”). For the purpose of
calculating capital gains tax on the sale of the shares under Section 115AC, the cost of the
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acquisition of shares received in exchange for GDRs will be determined on the basis of the
prevailing price of the shares on the BSE or NSE as at the date on which the relevant
Depositary gives notice to its custodian for the delivery of such shares upon redemption of the
GDRs. A non-resident holder’s holding period (for purposes of determining the applicable
Indian capital gains tax rate) in respect of shares received in exchange for GDRs commences
on the date of the advice of the withdrawal of such shares by the relevant Depositary to its
custodian.
Capital gains realised in respect of Shares held for more than 12 months are subject to tax at
the rate of 10% (plus applicable surcharge and education cess). Capital gain realised in
respect of shares held for 12 months or less is subject to tax at variable rates with a maximum
rate of 40% (plus applicable surcharge and education cess). The actual rate of tax on
short-term gains depends on a number of factors, including the legal status of the
non-resident holder and the type of income tax chargeable in India.
Tax on capital gains is to be withheld at source by the person paying for the shares in
accordance with the provisions of the Income Tax Act.
Securities Transaction Tax (“STT”)
Transactions for the purchase and sale of securities on any recognised stock exchange shall be
chargeable to STT. Any delivery based purchase and sale of equity share through a recognised
stock exchange in India is liable to STT at 0.1% of the value payable by both the buyer and the
seller.
Capital gains arising on the transfer of long-term capital assets being equity shares, which are
sold on and after 1 October 2004 on a recognised stock exchange in Inida which are subject to
the STT are exempt from tax. Further, short term capital gains on the transfer of equity shares
will be taxable at the reduced rate of 10% (plus applicable surcharge and education cess)
when sold on a recognised stock exchange in India and are subject to STT.
Capital Losses
The Section 115AC Regime does not deal with losses arising from the transfer of GDRs in
India.
Under the normal provisions of the Act, losses arising from a transfer of a capital asset in India
can only be set off against capital gains and not against any other income. Any loss on the sale
of long-term capital assets can only be set off against any gains on the sale of long term capital
assets. However, any loss on the sale of short-term capital assets can be set off against any
capital gain arising on any other capital assets.
To the extent the losses are not absorbed in the year of transfer, they may be carried forward
for a period of eight assessment years immediately succeeding the assessment year for which
the loss was first calculated and may be set off against the capital gains assessable for such
subsequent assessment years. In order to utilise the loss from the sale of shares in this manner,
the non-resident investor would be required to file appropriate and timely tax returns in
India.
The above provisions shall apply only in the case of a transfer from a non-resident to a
resident. Any loss arising on the sale of GDRs from a non-resident to another non-resident is
not allowed to be carried forward and set off against any income.
Any long term capital loss arising on the sale of equity shares on a recognised stock exchange
in India and where STT is paid would not be eligible to carry forward or set off against any
other income.
Tax Treaties
Under the provisions of the Indian Income Tax Act while determining the tax liability of a
person who is a resident of a country with which India has entered into a Double Taxation
Avoidance Agreement, the provisions of the Indian Income Tax Act shall apply only to the
extent they are more beneficial.
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Where any shares are held by a non-resident investor following withdrawal thereof from the
depositary facility under the Deposit Agreement, provisions of the double taxation treaty, if
any, entered into by India with the country of residence of such non-resident investor can be
applied to taxation of any capital gain arising from transfer of such shares.
Wealth tax, gift tax and inheritance tax
At present there are no taxes on wealth, gifts and inheritances, which apply to the GDRs and
the underlying shares.
Stamp Duty
Under Indian law, any transfer of GDRs is exempt from liability to Indian stamp duty.
Purchasers of shares who seek to register such shares on the share register of a company are
required to pay Indian stamp duty at the rate of Rs 025 for every Rs 100 or part thereof of the
market value of such shares. In order to register transfer of shares in the physical form with
the company, it is necessary to present a stamped deed of transfer. An acquisition of shares in
physical form from the Depositary in exchange for GDRs representing such shares will not
render an investor liable to Indian stamp duty but the company will be required to pay stamp
duty at the applicable rate on the Share Certificate. Where the shares are compulsorily
deliverable in dematerialised form (except for trades of up to 500 shares which may be
delivered in physical form), no stamp duty is payable on the acquisition or transfer of shares
in dematerialised form.
Service Tax
Brokerage or commission fees paid to stockbrokers in India in connection with the sale or
purchase of shares are subject to an Indian service tax of 10% plus applicable education cess.
A stockbroker is responsible for collecting such service tax at such rate and for paying the
same to the relevant authority. Every year tax provisions and/or tax rates undergo changes as
per the Finance Act of the relevant year. The service tax rate could therefore be modified as a
consequence of amendment by the Finance Act.
(b)
UK Tax
The statements set out below are intended to act as a general guide to certain aspects of UK
tax and HM Revenue and Customs practice as they apply to prospective holders of GDRs or
CDIs who are resident or ordinarily resident and domiciled in the UK for tax purposes do
not have a presence for tax purposes in any other jurisdiction, who are not employees or
directors of the Company or that of any person connected with the Company, have not
acquired their GDRs or CDIs (nor are deemed to have acquired their GDRs or CDIs) by
virtue of any right or opportunity made available to them by any person’s (including their
own) employment or directorship and who hold GDRs or CDIs beneficially for themselves
as investments. Except where expressly mentioned the statements do not apply to other
categories of persons such as dealers, intermediaries, persons connected with voluntary
arrangements or trustees of certain trusts.
If you fall into any of the above excluded situations or you are in any doubt as to your tax
position or you are subject to tax in a jurisdiction other than the United Kingdom, you
should consult your professional advisers without delay.
(i)
UK tax on dividends
Holders of GDRs or CDIs will, for UK tax purposes, be treated as if they owned the
underlying Ordinary Shares and will be taxed on dividends and other distributions
accordingly.
Under the terms of the double taxation agreement (the “Treaty”) between the UK
and India (dated 25 January 1993), tax at a rate of up to 15% of the gross amount of
the dividend may be withheld in India from any dividends paid in respect of Ordinary
Shares which are beneficially owned by a person resident in the UK for Treaty
purposes. In practice, this reduced rate of withholding tax pursuant to the terms of
the Treaty will only be relevant to the extent that withholding tax on dividends at a
rate in excess of 15% is levied under domestic law from time to time.
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The reduced rate of withholding under the Treaty will not apply if the beneficial
owner of the dividends carries on its business in India through a permanent
establishment or fixed base in India and the holding of the Ordinary Shares
represented by the GDRs or CDIs is effectively connected to the business carried on
through such permanent establishment or fixed base.
UK taxpayers who are entitled to receive dividends in respect of Ordinary Shares
represented by GDRs or CDIs will generally be liable to pay tax in the UK on those
dividends but will usually be entitled to a credit for any Indian tax withheld at source
on such dividends up to an amount not exceeding their UK tax liability on such
dividends.
(ii)
Taxation of chargeable gains
Liability to UK tax on chargeable gains arising in connection with disposals of GDRs
or CDIs will depend on the individual circumstances of the holder of the GDRs or
CDIs.
Depending on their circumstances, holders of GDRs or CDIs who are resident (or, in
the case of individuals, ordinarily resident) in the UK for taxation purposes, may be
subject to capital gains tax (or, in the case of corporate holders of GDRs or CDIs,
corporation tax on chargeable gains) in respect of any gain arising on a disposal of
GDRs or CDIs.
For holders of GDRs and CDIs who are individuals, taper relief, and for GDRs and
CDIs who are within the charge to UK corporation tax, indexation allowance, may
be available to reduce the amount of any chargeable gain.
Holders of GDRs and CDIs who are taxed as dealers in securities are likely to be
charged tax on profit derived from dealing in GDRs and CDIs.
Holders of GDRs and CDIs who are not resident (or, in the case of individuals, also
not ordinarily resident) in the UK for taxation purposes will not normally be liable to
UK tax on chargeable gains arising from a disposal of GDRs or CDIs unless they
carry on a trade, profession or vocation in the UK through a branch or agency or
permanent establishment in connection with which the GDRs or CDIs are held. Such
persons may be subject to charges to foreign tax depending upon their personal
circumstances.
Individual holders of GDRs and CDIs who are only temporarily non-UK resident
and make disposals when they are non-resident may (depending on the length of the
period during which they remained non resident) be liable to UK capital gains tax in
the year in which they become UK resident once more.
(iii)
Stamp Duty/Stamp Duty Reserve Tax
No stamp duty or stamp duty reserve tax (SDRT) will be payable on the issue or
registration of the GDRs on the basis that none of the relevant documents are signed
or executed in the UK.
A written instrument transferring GDRs will not attract stamp duty unless it is
executed in the UK or, if executed outside the UK, it relates to any matter or thing
done or to be done in the UK. A written instrument of transfer of GDRs attracting UK
stamp duty in the circumstances described above will attract stamp duty at the rate of
0.5% of the value of the consideration for the transfer.
The transfer of GDRs to Crest International Nominees Ltd and the issue of CDIs
should not result in any UK stamp duty or SDRT on the basis that the Depositary and
the nominee in whose name the Master GDR is issued are not incorporated in the
UK, have no tax presence in the UK and no register will be maintained in the UK in
respect of the GDRs.
CDIs transferred via CREST will attract SDRT at the rate of 0.5% of the amount or
value of the consideration for the transfer.
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9.
Working Capital
The Directors (having made due and careful enquiry) are of the opinion that taking into account
existing cash, bank and other facilities available to the Company and the net proceeds of the Placing
receivable by the Company, the working capital available to the Group is sufficient for its present
requirements, that is for at least 12 months from the date of Admission.
10. Corporate Governance
In relation to the financial year of the Company which ended on 31 March 2005, the Company did
not comply with the requirements of the English corporate governance regime because those
requirements only apply to listed companies. The Company’s future intentions regarding
compliance with the English corporate governance regime are set out in the paragraph marked
‘Corporate Governance’ in Part I of this document.
Provisions in respect of Indian corporate governance are set out in the paragraph marked
‘Corporate Governance’ in Part I of this document.
11. Litigation
11.1 Save as disclosed below, the Company has not at any time in the 12 months immediately prior
to the date of this document been engaged in any governmental, legal or arbitration
proceedings, and the Company is not aware of any governmental, legal or arbitration
proceedings pending or threatened by or against the Company, nor of any such proceedings
having been pending or threatened at any time in the last 12 months immediately preceding
the date of this document in each case which may have been, or have had in the recent past, a
significant effect on the Company’s financial position or profitability. Where reference is
made below to an amount claimed by any party, it should be noted that this may not include
the interest claimed on the sum, which will only be determined once the claim is decided.
11.2 Stamp Duty Dispute: The Company was served with a show cause notice dated 5 March
2003 under Section 47-A/33 of the Indian Stamp Act, 1899, seeking to compute stamp duty
on the O&M Contract. The show cause notice alleged that the Company was liable to pay
stamp duty in the amount of Rs 320 million on the O&M Contract on the basis that it is a
lease. The Company appeared at a number of hearings between 22 March 2003 and 22 June
2004 before the Assistant Stamp Collector, Gautam Budh Nagar, Uttar Pradesh, at which the
Company argued that stamp duty is not payable in the amount of Rs 320 million in respect of
the O&M Contract and provided clarifications on the nature of the transaction and the
inapplicability of such high stamp duty. The issue was examined by the Assistant Stamp
Collector and the matter is currently in abeyance.
11.3 Criminal Defamation Proceedings against NCR Land Developers: The Company filed a
criminal petition on 8 December 1999 against NCR Land Developers and certain other
defendants under Section 499 and 500 of the Indian Penal Code. The Company alleges that
NCR Land Developers and the other defendants have criminally defamed the Company and
made a false and defamatory complaint to SEBI by virtue of a complaint letter sent by NCR
Land Developers to SEBI dated 14 September 1998. In this letter, it was alleged that the
Company did not have clear title or possession of the land required to undertake the Delhi
Noida Toll Bridge project. It was further alleged that the land required by the Company on
the Delhi side of the bridge was owned by many people and was in their possession for which
various writ petitions had been filed to the Delhi High Court since 1991. It was alleged that
the land acquisition was being acquired at nominal amounts. Further, it was alleged that since
there was litigation, the Company would suffer adverse consequences if it continued with the
Delhi Noida Toll Bridge project. In the letter, SEBI was requested to consider these
circumstances before allowing public funds to be invested in the Company. A copy of the said
letter was forwarded by SEBI to SBI Capital Markets (who were acting as the lead manager
for the purposes of a public issue by the Company of deep discount bonds and fully
convertible debentures). SBI Capital Markets wrote to the Company regarding the said letter
and asked for an explanation. The public issue of the deep discount bonds and fully
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convertible debentures nevertheless proceeded on 5 January 1999. The Company alleges that
further letters dated 28 September 1998 containing allegations similar to the aforesaid were
sent by NCR Land Developers to certain directors of IL&FS and the Chairman of the
Company. The Company alleges that the complaints made against the Company were
malicious in nature, and that they were deliberately released just prior to the public offering
of the Company’s securities in India. The Company’s claim was dismissed on 4 June 2003,
but an appeal by the Company against the dismissal was successful on 1 February 2004. The
matter is pending before the Metropolitan Magistrate, Patiala House Courts, New Delhi, and
is at the stage of issuance of summons to those arrayed as accused. The next date set for
proceedings is 25 July 2006.
11.4 Civil Writ Petition in respect of compulsory land acquisition: Ms Razia Sultana & certain
other individuals claiming to have ownership rights over lands acquired for the construction
of the Delhi Noida Toll Bridge filed a civil writ petition in 2001 against the Union of India and
certain other government departments. The civil writ petition was filed under Article 226 of
the Constitution of India before the Delhi High Court and challenges the land acquisition
proceedings initiated for the Delhi Noida Toll Bridge project. The Company has been added
as a respondent to the proceedings. The matter was last listed for hearing on 16 December
2004, at which time the court posted the matter for hearing under regular matters after
directing the respondents to show cause as to why the reliefs sought in the petition should not
be granted. There is no monetary claim involved in these proceedings and the relief sought is
for the de-notification of the acquired land and for the land acquisition proceedings to be
declared null and void.
11.5 Disputes with Klassic Ad Mod in respect of advertising rights: The Company obtained two
interim ex parte injunctions against Klassic Ad Mod, an advertising agency, before the High
Court of Delhi. The injunctions were granted on 6 July 2003 and 7 August 2003 respectively.
The first injunction prevents Klassic Ad Mod from erecting advertising hoardings on certain
land in the possession of the Company. The second injunction prevents Klassic Ad Mod and
its officials, agents, assigns, representatives or employees from in any manner entering into,
encroaching upon and/or preventing, obstructing or interfering in the peaceful use and
occupation of the Company in respect of other land not covered by the first injunction. Both
ex parte interim injunctions are currently in force, and a further hearing is listed for 10 April
2006. Klassic Ad Mod claims that it is entitled to install advertisements on the land in
question pursuant to a memorandum of understanding dated 1 May 2003 between the
Irrigation Department, the Government of Uttar Pradesh and Klassic Ad Mod. On 26 March
2004 Klassic Ad Mod made a counterclaim against the Company before the High Court of
Delhi, seeking an order to restrain the Company from issuing stop notices to advertisers, and
to permit the installation of advertising hoardings on the land in question. No damages are
claimed by Klassic Ad Mod in this counterclaim. The counterclaim was heard on 7 April
2004 but no restraint order was granted against the Company. The counterclaim made by
Klassic Ad Mod is also listed for hearing on 10 April 2006. The Company is currently
appealing against an order dated 20 July 2004 in which High Court of Delhi ruled that (i) it
did not have jurisdiction to hear the claims brought by the Company against Klassic Ad Mod
and (ii) the claims would need to be reissued in another court. The Company’s appeal against
the order declining jurisdiction is listed for hearing on 18 April 2006.
11.6 Dispute with Prime Communications: Prime Communications filed an arbitration
application on 21 June 2005 seeking appointment of an arbitrator, and made an application
for interim relief, alleging that the Department of Irrigation, the Government of Uttar
Pradesh and the Company were interfering with the rights of Prime Communications to
conduct advertising activities. Prime Communications claims to have the right to install
advertisements on the Company’s land pursuant to a memorandum of understanding dated
11 February 2004 between the Department of Irrigation, the Government of Uttar Pradesh
and Prime Communications. No monetary claims were made, since the petition was seeking
reference of the said disputes to arbitration. After several hearings, the application was
dismissed for non-prosecution on 23 August 2005. As at the date of this document, the
Company has not received any notification that any application for revival has been filed.
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11.7 Objections to Scheme of Arrangement: The Company had filed a company petition before
High Court of Judicature at Allahabad, under Section 391 of the Companies Act for
confirmation of a Scheme of Arrangement with its Deep Discount Bond (DDB) Holders.
Certain DDB Holders had filed their objections against the said Scheme. The Honourable
High Court had heard the objections and on 24 October 2005, passed the Order sanctioning
the Scheme of Arrangement. On 24 November 2005, a certified copy of the Order of the
Honourable High Court was filed with the Registrar of Companies, Kanpur and the Scheme
of Arrangement is now effective. Further details of the Scheme of Arrangement and its
background are given above in Part I under the heading ‘Corporate Debt Restructuring’.
11.8 Objections by DDB holders: Four DDB holders, who purchased the DDBs while the
Confirmation Petition filed before the Honorable High Court of Allahabad was still pending,
have raised certain objections in respect of the letters sent to them inviting them to exercise
Option-I or Option-II (as summarised in paragraph 7.16.3 above) and have sent letters to the
Company stating, inter alia, that the options given to them under the Scheme of Arrangement
are not acceptable to them in light of the fact that they were unaware of the Scheme of
Arrangement. The Company in its reply has clarified that the DDB holders in question, who
had purchased the DDBs while the Confirmation Petition was pending, ought to have
exercised due care and caution before investing in the said DDBs, which were part of the debt
restructuring package under the Scheme of Arrangement and in respect of which the
following public disclosures were made in accordance with law: (a) The Company had
notified the concerned Stock Exchanges about the proposed Scheme of Arrangement and the
said Stock Exchanges conveyed their approval of the Scheme of Arrangement; (b) That
pursuant to the order passed by the Honorable High Court of Judicature at Allahabad, a
meeting of the Secured Creditors of the Company (including the Deep Discount Bond
Holders) was convened on 18 September 2004 after giving due notice to all the secured
creditors of the Company, (including the DDB holders) along with copies of the proposed
Scheme of Arrangement; and (c) that a duly approved notice of said meeting was also
advertised in two daily newspapers on 25 August 2004.
Three of the DDB holders mentioned above (who together hold 7,712 DDBs) have elected
Option-I under the Scheme of Arrangement. The original maturity value of each bond was Rs
45,000 payable on 3 September 2015. Pursuant to the Scheme of Arrangement, the maturity
value of each Bond is Rs 20,715 payable on the same date. In the event that these DDB holders
were to claim the difference in value of Rs 24,285 per bond, the total amount claimed would
be roughly Rs 187,285,920, as on date of maturity i.e. 3 November 2015, together with
interest.
One of the three DDB holders mentioned above (who holds 1,027 DDBs) has served a legal
notice on the Company stating that if either of the Options given under the Scheme is elected,
the DDB Holder in question would suffer a loss. In a separate letter sent directly by the DDB
holder, the DDB holder has elected Option-I under the Scheme while reserving its right to
initiate appropriate legal proceedings against the Company. The claim, based on the
difference in maturity value would be Rs 24,940,695.
None of the above DDB holders were amongst the parties who had filed any objections to the
Scheme of Arrangement before the Honorable High Court of Judicature at Allahabad (as
referred to in 11.7 above).
Further, one DDB holder has returned the cheque issued by the Company towards the value
of the DDBs held by him. This DDB holder was deemed to have exercised Option-II as a result
of his failure to exercise of any option under the Scheme of Arrangement. This DDB holder
has claimed, inter alia, that the DDBs could only have been redeemed in terms of the
Prospectus issued in 1999. The Company is in the process of addressing the abovementioned
objections and clarifying the status of the DDBs, that in light of the Scheme of Arrangement
the said DDB holder is deemed to have exercised Option-II. The cheque is being re-sent to the
DDB holder.
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11.9 Disputes with Mitsui Marubeni Corporation in respect of the EPC Contract: A number of
claims and counterclaims have been made between the Company and Mitsui Marubeni
Corporation (“MMC”) under the terms of the engineering, procurement and construction
contract dated 19 January 1998 (the “EPC Contract”) pursuant to which MMC was engaged
to construct the Delhi Noida Toll Bridge. The disputes fall under three main headings:
(a)
Claims and counterclaims relating to liability to pay a works contract tax brought
into effect after the EPC Contract was signed, escalation payments, recovery of
mobilization advances and underpayment. MMC has filed a series of claims against
the Company. MMC has also made a number of additional claims against the
Company which are currently unquantified (as the claims are formula-based, and the
correct formula is yet to be determined). Although certain aspects of the claim have
not yet been quantified, the Directors believe that the amount claimed is
approximately Rs 251 million together with interest. The claims made by MMC
allege seven heads of loss, the primary head being for recovery of amounts underpaid
to them during the contract, with the other heads including matters such as
escalation payments, delays, subsequent legislation, foreign currency inputs,
underpayment of bonus and delay in release of retention monies and so forth. The
Company has filed counter-claims aggregating Rs 60.3 million against MMC
(certain elements of the Company’s counter-claim have yet to be quantified). Interest
is also claimed by both MMC and the Company. Under the terms of the EPC
Contract, the disputes were initially referred to the project engineer, were then
referred to a dispute review board and were finally referred to arbitration. An
arbitration tribunal was constituted to decide the first set of disputes. The Company
challenged the competence of the Contractor to file claims before the arbitration
tribunal. This challenge was dismissed by way of an order/interim award dated 17
November 2004, against which the Company appealed. The Company’s appeal was
dismissed by the High Court on 16 September 2005. On 26 October 2005 the
Company made a further appeal to the Division Bench of the High Court of Delhi,
and the appeal is listed for hearing on 18 April 2006. In the meantime, the arbitration
tribunal has set a date of 10 April 2006 for the recording of evidence in the dispute.
(b)
Claim relating to delay in issue of the defect liability certificate. Under the terms of the
EPC Contract, the project engineer is required to issue a defect liability certificate
upon the later of completion of the defect liability period or rectification of defects
notified by the engineer. The issue of the certificate was delayed due to certain alleged
defects in the construction of the bridge, which the Company alleged should be
rectified by MMC. The defect liability certificate was subsequently issued. MMC has
issued a claim before the arbitration tribunal claiming for losses incurred as a result
of the delay in issuing the defect liability certificate. On 11 March 2005, the
arbitration tribunal referred the matter to a dispute review board for the
quantification of MMC’s claims. MMC has claimed a total cumulative sum split into
Rs 53,204,256.67, US$36,071.59 and Japanese Yen 16,234,605.97. The claim has
currently been adjourned, pending directions to hear the claim of the Company that
MMC’s claim is premature.
11.10Dispute with AFCONS in relation to construction of Ashram Flyover: The Company entered
into an agreement with AFCONS Infrastructure Ltd (“AFCONS”) on 22 February 2000 for
the construction of the Ashram Flyover. The construction of the Ashram Flyover was
completed on 30 October 2001. On 5 October 2005 AFCONS issued claims against the
Company alleging that the Company had failed to make certain payments on time, and that
the Company has failed to pay certain incentive amounts which AFCONS claims are owed to
it. The principal amount claimed by AFCONS was Rs 19.82 million (approximate) with
interest being claimed in addition. The Company has asserted that the claims made by
AFCONS were issued after the expiry of the relevant time limits and are now time-barred.
The claims were heard by an adjudicator, and on 20 February 2006 the adjudicator upheld
the Company’s contention that the reference to adjudication was time barred. However,
AFCONS was given leave to seek redress by other remedial measures.
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11.11Disputed Income Tax Assessment: The Company claimed a loss for income tax purposes of
Rs 733,364,016 in the financial year ended 31 March 2002. The Deputy Commissioner of
Income Tax issued an order reducing the amount of the loss to Rs 361,805,710. The
Company filed an appeal on 25 April 2005 against that income tax assessment order. The
Company is disputing (i) the disallowance of depreciation amounting to Rs 354,727,717, (ii)
the disallowance of the Company’s claim that some Rs 10,626,975 paid by the Company in
connection with a loan be regarded as revenue expenditure, and (iii) the disallowance of a
deduction of Rs 6,203,611 claimed by the Company as deferred revenue expenditure. In the
event that the Company’s appeal is unsuccessful, the amount of tax losses available to the
Company in respect of income the financial year ended 31 March 2002 will remain at the
level set by the Deputy Commissioner.
11.12Threatened Dispute in respect of the Kalindi Bypass: The Public Works Department of the
Government of Delhi has proposed to build the Kalindi Bypass road along a route which the
Company believes would lead to traffic congestion on the Delhi Noida Toll Bridge. The
Company considers that the proposed route of the Kalindi Bypass road is contrary to the
Support Agreement, under which the Government of Delhi has covenanted not to cause any
change in the alignment of the Delhi Noida Bridge Project. The Company issued a legal notice
on 15 December 2005 to the Public Works Department, the Government of Delhi and their
contractor, Rani Construction Limited, asking them to stop the work on the Kalindi Bypass
Road and to refrain from encroaching upon the Company’s land. The Company has
proposed that the Government of Delhi should build the Kalindi Bypass Road along an
alternative route which the Company believes would be beneficial to the users of both the
Delhi Noida Toll Bridge as well as the adjacent public roads. No further action has been
initiated as of now.
11.13Threatened disputes in relation to advertising rights: The Company issued legal notices on
21 February 2005 to M/s. Omaxe Construction and Reliance Industries Limited; on
23 February 2005 to Samsung India Electronics; on 26 February 2005 to M/s. Kirloskar
Bros. & M/s. Subros; on 18 April 2005 to M/s. Madhyam Housing; M/s. Maple, M/s. Sify,
M/s. Jaipuria, M/s. Women Era. The notices were issued to all the aforesaid persons to refrain
from advertising upon the land of the Company in light of the injunction orders obtained by
the Company from the Delhi High Court on 8 August 2003. Most of the aforesaid advertisers
removed their hoardings following receipt of the notices informing them of the interim
injunctions. No further action has been initiated as of now.
11.14Receipt of Caveat Notice: The Company received a caveat notice on 12 January 2006 from
M/s. Power Grid Corporation, New Delhi. M/s. Power Grid Corporation envisages that the
Company may initiate proceedings to obtain restraint orders against it from installing power
transmission lines. The Company and Power Grid Corporation are currently liaising to
decide the location of the proposed power transmission lines. As yet no action has been
initiated against the Company as of now.
12. Third Party Information
12.1 The information set out in Part IV of this document has been sourced from Halcrow
Consulting and the information set out in Part V of this document has been sourced from S.R.
Batliboi & Co. The Company confirms that that information has been accurately reproduced
and that as far as it is aware and is able to ascertain from information published by each of
those third parties, no facts have been omitted which would render the information
reproduced inaccurate or misleading.
13. Use of Proceeds, Expenses and General
13.1 The total proceeds expected to be raised by the Placing by the Company (assuming no
exercise of the Over-allotment Option) amount to approximately US$45 million and the net
proceeds of the Placing (following the deduction of the expenses of Admission and the Placing
referred to in paragraph 13.2 below) receivable by the Company are estimated to amount to
approximately US$42.43 million.
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13.2 The overall costs and expenses payable by the Company in connection with Admission and
the Placing (including professional fees, commissions, underwriting commission, the costs of
printing and the fees payable to the Depositary) are estimated to amount to approximately
US$2.57 million. Included within this amount are sums of approximately US$1.8 million
(excluding VAT and/or service tax, where applicable) payable by the Company to financial
intermediaries, including all underwriting commission or margin, guarantee commission,
placing commission and selling agent’s commission.
13.3 The estimated net proceeds of the Placing referred to in paragraph 13.1 above are intended
for the following principal uses (subject to the approval of the CDR Empowered Group and
assuming no exercise of the Over-allotment Option), presented in descending order of
priority:
(i)
Repayment of term loans falling due on 31 March 2006
Rs 501.5 million
(ii)
Prepayment of loans (along with any agreed prepayment
charges) to reduce interest cost
Rs 1,032 million
Funding the construction of the Mayur Vihar Link to the
Rs 350 million
(iii)
The use of the proceeds by the Company will be subject to the approval of the CDR
Empowered Group regarding the details of the Company’s proposed prepayment
programme, and agreeing prepayment charges. It has been suggested at the meeting of the
CDR Monitoring Committee appointed by the CDR Empowered Group for the Company
that the prepayment charge would be in the region of 1% to 2% of the amount prepaid;
however, no formal decision on the prepayment charge has been taken by the CDR
Empowered Group, and the CDR Empowered Group may decide that a higher prepayment
charge is in order.
The intended use of the Placing proceeds for the construction of the Mayur Vihar Link is
subject to the approval of the Government of Uttar Pradesh being obtained for the lease to the
Company of the lands required for the construction of the Mayur Vihar Link. The Directors
believe that such lease will be granted, although it may be subject to delays beyond the control
of the Company. Pending such approval, the Company intends to use such funds for the
prepayment of loans (along with any agreed prepayment charges) to reduce interest costs. In
the event that the required lease is granted, the Company would then reborrow the funds,
subject to agreement of suitable terms, required for the construction of the Mayur Vihar
Link.
13.4 Save as disclosed in this Part VI (and save in relation to arrangements with trade suppliers) no
person has received, directly or indirectly, from the Company within the 12 months
preceding the application for Admission, or entered into contractual arrangements to receive,
directly or indirectly, on or after Admission:
(i)
fees totalling £10,000 or more;
(ii)
securities of the Company having a value of £10,000 or more calculated by reference
to the Placing Price; or
(iii)
any other benefit with a value of £10,000 or more at the date of Admission.
13.5 The business and profitability of the Company are dependent on certain key commercial and
financial contracts, namely the Concession Agreement, the Support Agreement, the O&M
Contract, and the Term Loans, which are summarised above in paragraph 7 of Part VI of this
document. The profitability of the Company is also dependent on certain licences, namely the
advertising licences and the possible grant of development rights which are described in Part I
of this document. The business and profitability of the Company are not dependent on any
patents or new manufacturing processes.
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13.6 The Existing Ordinary Shares are listed on the National Stock Exchange of India (NSE) and
the Bombay Stock Exchange (BSE). In terms of the listing agreement entered into by the
Company with NSE and BSE, the Company will be required to make an application to NSE
and BSE for listing of the New Ordinary Shares representing the GDRs on the aforesaid stock
exchanges. Save as set out above, the GDRs have not been admitted to dealings to any other
recognised investment exchange and, save in relation to the application for Admission of the
GDRs, no application for such admission has been made.
13.7 Save in respect of the exercise by the DDB holders of the options accorded to them under the
Scheme of Arrangement (as referred to in Section 9 of Part I of this document) there has been
no significant change in the financial or trading position of the Company which has occurred
since the end of the last financial period for which either audited financial information or
interim financial information has been published.
13.8 The weighted average monthly number of employees, including directors and individuals
employed by the Company was:
Years ended 31 March
2003
2004
2005
Management and administration
Operations
10
4
10
4
10
4
14. Auditors and Nature of Financial Information
The auditors of the Company for the financial year ending 31 March 2003 were M/s SB Billimoria
& Co., Chartered Accountants. M/s SB Billimoria & Co resigned as auditors of the Company with
effect from the annual general meeting of the Company held on 16 September 2003, and at the same
meeting M/s Luthra & Luthra, Chartered Accountants were appointed as the Company’s auditors.
M/s Luthra & Luthra, Chartered Accountants, were the auditors of the Company for the financial
years ending 31 March 2004 and 31 March 2005.
The Accountant’s Report set out in Part V of this document, and summarised in the “Key
Information” section of this document and in Part I, does not constitute statutory annual accounts
for the purposes of sections 210 and 211 of the Indian Companies Act 1956.
15. Documents on display
Copies of this document will be available free of charge at the offices of Collins Stewart Limited,
9th Floor, 88 Wood Street, London EC2V 7QR during normal business hours on any weekday
(Saturdays and public holidays excepted) until the date falling one month after the date of
Admission.
Physical copies of the following documents will be available for inspection during normal business
hours on any weekday (Saturdays, Sundays and public holidays excepted) at the offices of Mishcon
de Reya, Summit House, 12 Red Lion Square, London WC1R 4QD from the date of this document
until Admission:
1.
The Memorandum and Articles of Association of the Company;
2.
The report of Halcrow Consulting set out in Part IV of this document;
3.
The accountants’ report set out in Part V of this document;
4.
The audited consolidated accounts of the Company for the three years ended 2005;
5.
The consent letters referred to in paragraphs 1.2 and 1.4 of this Part VI; and
6.
The Deposit Agreement.
Dated: 15 March 2006
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Collins Stewart Limited - Noida Toll Bridge Company Ltd.

Transcription

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