1

Executive Summary

National Highways Authority of India (NHAI) had invited bids for augmenting the capacity of a 244.12 km section of NH-14 in the state of Rajasthan, from existing two lane to four lane on Design, Build, Finance, Operate and Transfer (DBFOT) basis under NHDP Phase-III, in accordance with the terms and conditions of the Concession Agreement (CA). Hindustan Infra Projects Limited (HIPL) emerged as the Selected Bidder for the Project, by quoting the highest premium of Rs. 350 crores payable annually to NHAI.

2 2.1

Project Details Project

The Project Corridor is about 244.12 Km. long stretch. The Project Corridor is a transition link between ports located in Kachchh districts of Gujarat to the North India. The Project Corridor carries a sizeable personal and commercial passenger and freight traffic, which indicates an immediate requirement of four laning. The prominent urban centres along the Project Corridor are Beawar, Raipur, Sojat, Pali, Shivganj, Sirohi and Pindawara. Ports located in Kachchh district of Gujarat are the major traffic generators for the Project Corridor.

2.2

Developers

HIPL has, over a period of time, built up capabilities in identifying and developing Infrastructure Projects, operation & maintenance of these Projects. HIPL targets projects to be executed on Build-Own-Operate-Transfer (BOOT), Build-Operate-Transfer (BOT), Build-Own-Lease-and-Transfer (BOLT), Build-Own-Operate-Share-and-Transfer (BOOST) and through the annuity method. HIPL has in the past successfully promoted and executed many Infrastructure Projects through public-private partnership with the Central and various State Governments in India. Projects developed by HIPL include highways, bridges, seaports/terminals, airports, and metro and water supply projects. HIPL Tollway Private Limited (the Company) is the Special Purpose Vehicle (SPV) incorporated for the construction and maintenance of the Project on Design, Build, Finance, Operate, Transfer basis. The Company will also be the entity raising the required funds for the project and will enter into other contracts necessary for the design, construction, finance, operation, maintenance and management of the Project Corridor, wherever applicable.

2.3

Concession Agreement Key Features:

The Concession Agreement (CA) between National Highways Authority of India (NHAI) and the Company (Concessionaire) was signed on 1-Oct-2012. The key terms are listed below: Scope NHAI has granted to the Concessionaire the license and authority to design, build, finance, operate and transfer (DBFOT) a section of national highway, of length 244.12 km, from existing two lane to four lane. The concessionaire in return has been given the right to collect toll from the users of the section of the highway during the continuance of the Concession Agreement. Appointed Date Concession Period Concession Fee Additional Concession Fee 31-Mar-2013 23 years commencing from the Appointed Date In consideration of the grant of Concession, the Concessionaire shall pay to NHAI by way of concession fee a sum of Re. 1 per annum. The Concessionaire has agreed, to pay to NHAI on the commercial operation date (COD) date, an additional concession fee equal to Rs. 350 Crores. For each subsequent year of the Concession Period beyond COD, this fee amount payable to NHAI shall be increased by 5%. If payment of such additional concession fee is due and payable only for part of a financial year, then only pro-rata payments @ 1/12th of such fee shall be payable for each month of such part financial year. For the purpose of assessing the amount due for payment, part of a month shall be deemed to be a full month. User Fee / Toll From the COD till the end of the Concession Period, the Concessionaire shall have right to collect fee from the users (vehicle owners) using this section of the highway. The base toll rate for different category of vehicles are given below: Vehicle Category Car / Van / Jeep/Light Motor Vehicle Light Commercial Vehicle (LCV) /Light Goods Vehicle/ Mini Bus Bus or 2 axle truck 3 Axle truck Heavy Construction Machinery/ Earth Moving Equipment/ Multi Axle Vehicle (MAV) - 4 to 6 axles 2.20 2.40 3.45 Base Toll Fee (Rs/ Km) for FY 2007-08 0.65 1.05

Oversized Vehicles (7 or more axles)

4.20

The fee specified above will be collected at the toll plazas for the distance in Km specified for each toll plaza. Please note for ease of payment the fee so calculated shall be rounded off to the nearest 5 rupees. The location of the toll plazas is as specified below: Toll Plaza Toll Plaza 1 (TP 1) Toll Plaza 2 (TP 2) Toll Plaza 3 (TP 3) Toll Plaza 4 (TP 4) Annual Revision of Toll Fee Length in Km for which fee is payable 56.00 58.43 65.00 64.69

The Base Toll Fee specified above will be revised annually with effect of 1 st April of each year to reflect the increase in wholesale price index (WPI) between the base WPI value of 111.4 (corresponding to FY 2007-08) and the WPI index for the month of December of the immediately preceding year in which such revision is undertaken. Formula for calculating the applicable toll fee Applicable toll fee =base toll fee + base toll fee * ((WPI A WPI B) / WPI B) Where, Applicable toll fee is the toll fee for that vehicle category payable in that year Base toll fee for each vehicle category is specified above WPI A means the WPI for the month of December of the year immediately preceding the year in which the toll fee is being revised WPI B means the base WPI value of 111.4 (corresponding to FY 2007-08)

A sample calculation is given below for illustration purpose For revision that is to be made on 1-Apr-2008 which will be applicable for the financial year 2008-09 the calculation is as follows for the car/van/jeep category Land Base toll fee = Rs.0.65 per km WPI A (WPI for month of December of immediately preceding year i.e. 2007 is considered) = 116.7 WPI B = 111.4 Applicable toll fee = 0.65+0.65*((116.7-111.4)/111.4) = 0.6809 per km

About 85% of the land has been acquired to be made available to the

Concessionaire. The remaining 15% of the land would be handed over to the concessionaire once the notification for the land has been issued and compensation is distributed.

2.4

Traffic Study

In order to meet the study objectives and to determine various components of tollable traffic detailed traffic surveys were carried out. The traffic count information is extremely important to traffic planning, design, and operations. The traffic study has been carried out over a 7 day period (including weekend) and the traffic surveys were conducted in both directions using manual counting method.

The traffic data (in vehicles) collected during field surveys have been compiled to determine the Annual Average Daily Traffic (AADT) for the financial year 2011-2012, as can be seen from the below table Category Car/Jeep/ Van LCV/Mini Bus Bus 2-Axle Trucks 3-Axle Trucks MAV Total Vehicle TP-1 1025.0 411.0 226.0 435.0 1747.0 1912.0 5756 TP-2 1635.0 461.0 324.0 502.0 1960.0 2090.0 6972 TP-3 2409.0 584.0 471.0 778.0 2897.0 2462.0 9601 TP-4 2044.0 435.0 293.0 691.0 3054.0 2571.0 9088

AADT stands for the total volume passing a point or segment of a roadway facility, in both directions, during a 24-hour period. The base traffic growth rates assumed for different categories of vehicles for traffic projection at the proposed Toll Plazas are as shown in the below table Category Car/Jeep/ Van LCV/Mini Bus Bus 2-Axle Trucks 3-Axle Trucks MAV TP-1 7.50% 9.25% 4.00% 0.00% 9.00% 10.50% TP-2 7.50% 9.25% 4.00% 0.00% 9.00% 10.50% TP-3 7.50% 9.25% 4.00% 0.00% 9.00% 10.50% TP-4 7.50% 9.25% 4.00% 0.00% 9.00% 10.50%

The base traffic growth rates are assumed to be reducing at a rate of 7% every 5th year starting from the base financial year 2011-2012. The traffic study also mentioned the presence of non-tolled alternate

route after Toll Plaza - 1 and ending after Toll Plaza 3. However, the alternate road is a poorly maintained route and furthermore, it is a 2-lane road.

2.5

Project Cost:
Cost Head INR Crore 2539.1 81.7 293.4 285.8 3200.0

Engineering Procurement Construction Cost (EPC) Highway Toll Management System & Toll Equipment/Insurance/PMC Funding expenses including interest during construction Preliminary and Preoperative Expenses Escalation & Contingencies Total Project Cost

Please note that the EPC contract is a fixed time fixed price contract. The EPC contract will be executed by HIPL, the promoter of the SPV developing the project.

2.6

Project Cost Phasing

31-Mar-2013 1-Apr-2013 30-Sep-2015 1-Oct-2015

Appointed Date Construction Start Date Construction End Date Commercial Operations Date (COD)

Financial Year Ending % of Project Cost

2014 30%

2015 50%

2016 20%

2.7

Debt parameters

The project is proposed to be financed by a mix of debt and equity. Please find below main set of parameters are as regards to debt funding: Moratorium Period (Only interest is paid and no principal is repaid) Repayment Period Repayment Start Date Repayment End Date Interest Rate 1 year from COD 12 years from moratorium end 30-Oct-2016 31-Sep-2028 12%*

*Reduction in rates could be explored provided additional comforts / security are agreeable by the borrowers

2.8

Revenue

Revenue for the Project comprises toll collections. The projected toll revenue for each year is a product of the applicable toll rate and traffic volumes for that year.

2.9

Concession Fee

Concession fee and additional concession fee is payable as defined earlier in the section under key Concession terms.

2.10 Operation & Maintenance Expenses

INR Cr / Km Base O&M Cost for FY 2014-2015 Major Maintenance Cost for FY 2014-2015 (after COD to be incurred every 5 year till end of concession) The above expenses are escalated at the WPI rate year on year. A Major Maintenance Reserve is to be built up from project cash flows for 5 years. Actual cash outflow for Major Maintenance will only be incurred in the 5th year to meet Major Maintenance Cost.
th

0.12 0.27

2.11 Depreciation
Companies Act Method Rate Straight Line Method 4.87% Income-tax Act Written Down Value Method 25%

2.12 Taxation
MAT Rate Corporate Tax Rate 19.93% 33.22%

Annexure I Output Comments on the viability of the project Optimum Debt Amount (Rationale for the same) if viable kindly specify any deviations taken in the model from the assumptions provided in the case Upfront Equity to be brought in by the borrower before drawing any debt Principal Repayment Schedule (% of Principal repaid every year) Term Sheet - Conditions / Covenants / Borrower undertakings (Please limit to 5 most important) Top five risks associated with the project