Aurang –Raipur Toll Road Projectof

Raipur Expressways Limited

A Group Company of

D S Constructions LIMITED

GROUP MEMBERSArun Kedia (9)Ashis Kumar Chattopadhyay (10)

About DSC Group

MISSION‘CREATING INFRAWEALTH’

- infrastructure that creates wealth for the nation.

The DSC Group is a diversified global business with varied interests spread across the world. Starting as an Indian construction company 70 years ago, it shifted focus overseas in the 1980s with the aim of seizing the construction opportunities abroad. However, since 2002, the Group is again re-focussing on the infrastructure sector in India. Diversified across multiple verticals - from developing, financing and constructing infrastructure projects, to hospitality, trading, real estate and retailing, the Group’s major operations span projects across infrastructure sectors in India and abroad through the various Group companies.Armed with a talented workforce of around 20,000 employees across 11 locations, coupled with extensive experience spanning seven decades, the Group has been delivering excellence across the globe, notably in India, North Africa, Middle East, USA and UK.

With a balanced portfolio of high margin EPC construction projects and investment in lucrative BOT oriented infrastructure projects, the DSC Group is well positioned to leverage the opportunities in the infrastructure sector, globally.

About DSC Limited

The flagship company of the DSC Group, DSC Limited’s illustrious odyssey in India dates back three decades when, in 1978, it commenced operations as D.S. Constructions. Uniquely placed as a high quality, international-grade infrastructure company, it steadfastly pursued lucrative opportunities in North Africa and Middle East. Vindicating its efforts, D.S. Constructions won its first project in Libya in 1979 and from thereon has ranked as one of the foremost and most trusted construction companies in that country.

The next thirty years saw it delivering myriad prestigious projects across various sectors including roads & highways, hospitals, power substations, sewage & water treatment plants and other commercial projects. Reinforcing its scale, size and commitment, D.S. Constructions emerged as one of the largest overseas construction companies and was conferred the President of India’s “Building the Nation” Award in recognition of its contribution in the construction space.  

Capitalising on the post liberalisation opportunities which opened up the Indian Infrastructure sector in the late 1990s, D.S. Constructions commenced

its operations in the country in 2002. The organization has since then been rechristened as DSC Limited and is built on its mission of ‘Creating Infrawealth’ - infrastructure that creates wealth for the nation.  To deliver on its promise, DSC Limited has been creating assets that span diverse verticals comprising Concessions, EPC, Power and Real Estate & Urban Infrastructure and straddles a broad spectrum of sectors namely roads and expressways, railways, pipelines, power, urban infrastructure and real estate.

Steered by a visionary management and guided by a futuristic strategy, DSC Limited ranks as a pioneer in the BOT (Build, Operate and Transfer) space and is one of the fastest growing infrastructure developers in India. As a testament of its differentiated approach and agility, DSC Limited, today, features as one of Indias leading vertically integrated infrastructure companies through its full service capabilities in both EPC (Engineering, Procurement & Construction) and Asset Management. Right from planning to investing and constructing, and after completion, to managing and operating the projects, DSC Limited’s vertical integration capabilities are demonstrated in its turnkey solutions and end-to-end involvement across the project lifecycle.  

Committed to quality and timely completion & delivery of projects, DSC Limited is an ISO 9001:2000 certified company, coupled with ISO 9000 & 14000 accreditation. It has health and safety systems in place across all its major project locations.

Our VisionTo be the leading infrastructure developer of choice.

Our MissionEfficient, rapid and innovative development of quality infrastructure to create infrastructure wealth for the nation.

ConcessionsRealizing the critical importance of BOT projects in infrastructure development, DSC Limited has emerged as an active participant in this growth model, which facilitates direct private sector investment in large scale infrastructure projects.

Within the framework of BOT projects, the Company has selected Transportation as its focus sector given that an efficient and well-integrated transport system not only sustains and drives economic development but more importantly promotes and strengthens national integration, axiomatic for a geographically large country like India.

With an impeccable track record of successful execution and operation of unique mega BOT projects, the Company’s project portfolio in this sector extends across Roads, Expressways and Railways.

Strengthening DSC Limited’s presence in this space is the fact that it was among the

first companies in India to offer a negative grant for a BOT project and among the first private sector companies to undertake a Railway BOT project.

WHAT IS A BOT PROJECT

Build-operate-transfer (BOT) is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract. This enables the project proponent to recover its investment, operating and maintenance expenses in the project.

Due to the long-term nature of the arrangement, the fees are usually raised during the concession period. The rate of increase is often tied to a combination of internal and external variables, allowing the proponent to reach a satisfactory internal rate of return for its investment. Traditionally, such projects provide for the infrastructure to be transferred to the government at the end of the concession period

BOT finds extensively application in the infrastructure projects and in Public- private partnership. In the BOT framework a third party, for example the Public administration, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period the private party has the responsibly to raise the finance for the project and is entitled to retain all revenues generated by the project but is not the owner of the regarded facility. The facility will be then transferred to the public administration at the end of the concession agreement, without any remuneration of the private entity involved. Some or even all of the following different parties could be involved in any BOT project:

The host government: Normally, the government is the initiator of the infrastructure project and decides if the BOT model is appropriate to meet its needs. In addition, the political and economic circumstances are main factors for this decision. The government provides normally support for the project in some form. (provision of the land/ changed laws)

The concessionaire: The project sponsors who act as concessionaire create a special purpose entity which is capitalised through their financial contributions.

Lending banks: Most BOT project are funded to a big extent by commercial debt. The bank will be expected to finance the project on “non-recourse” basis meaning that it has recourse to the special purpose entity and all its assets for the repayment of the debt.

Other lenders: The special purpose entity might have other lenders such as national or regional development banks

Parties to the project contracts: Because the special purpose entity has only limited workforce, it will subcontract a third party to perform its

obligations under the concession agreement. Additionally, it has to assure that it has adequate supply contracts in place for the supply of raw materials and other resources necessary for the project

BOT Model

In general, a project is financially viable for the private entity if the revenues generated by the project cover its cost and provide sufficient return on investment. On the other hand, the viability of the project for the host government depends on its efficiency in comparison with the economics of financing the project with public funds. .Even the host government could borrow money on better conditions compared to that of the public sector other factors could offset this particular advantage. For example, the expertise and efficiency that that the private entity is expected to bring as well as the risk transfer.Therefore the private entity bears a substantial part of the risk.

RISKS INVOLVED:

Political risk : especially in the developing countries because of the possibility of dramatic overnight political change.

Technical risk: construction difficulties, for example unforeseen soil conditions, breakdown of equipment

Financing risk: foreign exchange rate risk and interest rate fluctuation, market risk (change in the price of raw materials) , income risk (Cash flow forecasts are overoptimistically) and cost overrun risk

Table 7.1 Major Projects of DSCName of Project Client Contract

Price (Rs. Crore)

Completed Projects Viramgam Mehsana Project Ltd Railways 93Raipur Durg Project MoRT&H 97.4

In Progress ProjectsDelhi-Gurgaon Highway NHAI 797Kundli Manesar Palwal Expressway

HSIDC 1648.4

Aurang-Raipur Highway NHAI 243.7Lucknow Sitapur Road Project NHAI 395.2Sandur Bypass, Karnataka PWD, Karnataka 33.51000 MW Naying Hydro-Electric Project

Govt. of Arunachal Pradesh

3500

PROJECT NAME- Aurang –Raipur Toll Road Project

Objective of Raipur-Aurang Toll Road Project

The Raipur Aurang Road  will upgrade the Raipur Aurang Section on NH -6 in Chattisgarh from the existing 2-lane road into a 4-lane road. This 43.5 km long road project, combined with the Raipur-Durg Expressway will be the first high speed urban expressway in Chhattisgarh linking Raipur with the surrounding industrial areas like Raigarh, Chapa, Korba and Sipat. The project involves construction of 1 major bridge, 6 minor bridges, 2 railways over-bridges, 1 flyover and 6 underpasses.

Project Location Chhattisgarh

Project Type Build ,Operate and Transfer (BOT)

Project Length 43.5 kms

Project Owner National Highway Authority Of India (NHAI)

Concessionaire Raipur Expressways Ltd. (SPV)

Concession Period

25 yrs

Brief Details of the Company (Special Purpose Vehicle-SPV)

Name of the Company : Raipur Expressways Limited (REL)

Date of Incorporation : May 06, 2005

Constitution : Limited Company.

Sector : Infrastructure – Roads & Highways.

Registered Office : C-66, South Extension Part II, New Delhi -

110049

Site Location : Districts: Raipur

State: Chhattisgarh

Authorized Capital : Rs. 100,00,000/- (Rs. One Crore Only) divided

into 10,00,000 equity shares of Rs.10 each (to

be enhanced later to the requisite amount)

Project Description :The proposed project envisages the

improvement, operation, maintenance,

rehabilitation and strengthening of the existing

2-lane road and widening it to a 4-lane divided

highway from Raipur to Aurang section of

National Highway 6 (NH 6) from Km 239.00 to

Km 281.00 in the state of Chhattisgarh on Build,

Operate and Transfer (BOT) basis.

Executive Summary

The consortium of D. S. Constructions Ltd., New Delhi (DSC), Apollo Enterprises

Limited, Isle of Man UK (APOLLO), John Laing International Limited, Kent, UK (JLI)

and Laing O'Rourke PLC, Kent, UK (LOR) has been awarded the Concession by

National Highways Authority of India (NHAI) for four laning of Aurang-Raipur

section (from Km 239.00 to Km 281.00) of National Highway 6 (NH-6), in the

state of Chhattisgarh (hereinafter referred as “Project Highway”), connecting

Kolkata – Surat, on Build, Operate and Transfer (BOT) basis. The consortium has

incorporated a Special Purpose Vehicle, by the name of Raipur Expressways

Limited (REL), the Concessionaire, for undertaking, inter alia, the design,

engineering, financing, procurement, construction, operation and maintenance of

the aforesaid project.

Terms and Tenure of Concession

The Concession Agreement (CA), based on the Model Concession Agreement of

NHAI, has already been executed between REL and NHAI on October 13, 2005.

The Concession has been granted to REL for a period of 25 years from the

Appointed Date (i.e. 180 days from the date of signing the CA), including a

construction period of 30 months. The CA provides the Concessionaire the right to

collect and retain toll from various users over the entire concession period from

the Commercial Operations Date (COD) of the Project Highway. On completion of

the concession period, REL would hand over the Project Highway to NHAI.

Project Description

Scope of the ProjectNHAI has awarded the concession to REL for improvement,

rehabilitation/strengthening of existing 2-lane road, widening to 4-

lane divided carriageway and operations & maintenance of Km 239 to

Km 281 (Aurang - Raipur Section of NH-6 connecting Kolkata to

Surat), a distance of about 42 km, in the State of Chhattisgarh.

The Project is to be implemented on a BOT basis. Under the BOT

framework, REL shall be responsible for the following:

a. Build

To provide financing and to undertake the design & construction of

the widening, upgrading and rehabilitation works on the Project

Highway.

b. Operate

Upon completion of the Project Highway, to manage, operate &

maintain the Project Highway and regulate the use thereof by third

parties during the agreed concession period. In return, it will be given

the rights to levy, demand, collect and appropriate the Fees from

vehicles and persons liable to payment of fees for using the Project

Highway or any part thereof and refuse entry of any vehicle to the

Project Highway if the due fee is not paid.

c. Transfer

To hand over the Project Highway to NHAI upon expiry of the

concession period.

Project Location

The State of Chhattisgarh, through which the Project Highway passes,

was carved out of erstwhile Madhya Pradesh. Chhattisgarh, a 21st

century State, came into existence on November 1, 2000. It covers

1/4th part of erstwhile Madhya Pradesh with an area of 1,35,195 sq.

km. It is located between 17°14' to 24° North longitude and 80° 15'

to

84° 24' East latitude. It is bounded by Andhra Pradesh, Orissa, Uttar

Pradesh, Madhya Pradesh and Jharkhand. Chhattisgarh state as

compared to Madhya Pradesh has a much lower population density of

130 persons to the 158 of Madhya Pradesh. While Chhattisgarh has

30.49 percent of the land area of the undivided Madhya Pradesh, only

26.7 percent of the total villages are in Chhattisgarh. Both of these,

when taken together point to a state with relatively longer distances.

NH-6 is an important link between Kolkata and Dhule and also

connecting places like Sambalpur, Raipur, Nagpur and Akola. The

Aurang-Raipur section also receives traffic from NH-2 and NH-3 as it

links business city Surat in west and important city like Kolkata in the

east. Along with the through traffic, the project road section also

collects the local traffic of Raipur city while it passes through it. The

section of NH-6 under consideration carries mixed freight traffic and

medium passenger volume. The project is expected to gain significant

advantage due to the connectivity with Raipur-Durg project and the

complementary schedules of the projects. Further, significant growth

is being experienced on the travel corridors given the rapid

development at Chhattisgarh. Traffic volume has increased many fold

compared to the capacity of a two-lane road and frequent accidents

have become a common phenomenon in this section. Therefore, it

becomes necessary to develop a 4-lane road and improve the road

condition at the earliest in this stretch.

Milestones

In its infrawealth creation odyssey the company has several accomplishments to its credit. Some significant milestones are as follows:

  D.S. Constructions set up in 1978 as an overseas

construction company High quality prestigious projects delivered in North Africa

and Middle East Projects executed include roads and highways, hospitals,

power substations, sewage and water treatment plants and commercial plants

Commenced India operations with award of two World Bank funded road projects in UP

Was awarded one of Indias first projects in rail sector - the Viramgam-Mahesana Project in PPP format

Was awarded the prestigious access-controlled expressway - the Delhi-Gurgaon Expressway

Awarded project for widening of NH-6 between Raipur and Durg

    Received completion certificate for Viramgam-

Mahesana Rail Project Completed road project between Bijnor and Najibabad.

    Awarded project for widening and

upgradation of the Raipur-Aurang section

Concession agreement signed for Sandur Bypass Road Project

Awarded road project for widening the Lucknow-Sitapur section

 

Received COD for widening of NH-6 between Raipur and Durg

Concession agreement signed for Gwalior-Jhansi Highway Project

Awarded Kundli-Manesar-Palwal Expressway Project

Acquired Hydro Concessions for 4 projects in Arunachal Pradesh

Received LOI for Automated Multi-Level Car Parking project at Kasturba Gandhi Marg in Delhi

Completed the Delhi-Gurgaon Expressway Project

Received LOIs for Barapullah Elevated Road and UP Link Road projects on cash contract basis

Received LOIs for construction of drain and pipeline projects in Delhi & Jodhpur

Awarded project for doubling of track for Bilaspur Railway section in Chhattisgarh

  Received COD for Sandur Bypass

Road, Phase-I Completed Attur-Salem Railway

Project

Awarded 2 Automated Multi-Level Car Parking projects in Rohini and Nehru Place in Delhi

Received COD for Sandur Bypass Road, Phase-II

Shareholding Structure of REL

APOLLO

94.9% 0.2%4.8% 0.1%

LORJLIDSC

REL

Concession

Project Structure

The relationships among the Project’s various key parties are set out

hereunder:

Project Structure

State Govt. of

Chhattisga

Raipur Expressways Limited (REL)

GOI/ NHAI

Independent

Consultant

Insurers

Lenders

JLI LORAPOLLO

DSC

Insurance Policies

State Support Agreement

94.9%

4.8% 0.1%

DSC

0.2%

Independent Consultant

EPC Contract

Financing Agreeme

Concession Agreeme

RAIPUR EXPRESSWAYS LTD

Mar' 09

Mar' 10

Mar' 11

Mar' 12

Mar' 13

Mar' 14

Mar' 15

Mar' 16

Mar' 17

Mar' 18

Mar' 19

Mar' 20

Equity share capital82.5

382.5

382.5

382.5

3 82.5382.5

382.5

382.5

3 82.53 82.53 82.53 82.53

Capital Reserve 3.40 3.24 3.09 2.94 2.78 2.63 2.47 2.32 2.16 2.01 1.85 1.70

General/ Profit Reserves -0.57 0.08 0.37 1.06 2.16 2.41 4.45 7.05 24.16 50.30 54.02 69.40

Net Worth85.3

685.8

585.9

986.5

3 87.4787.5

789.4

591.9

0108.8

5134.8

4138.4

0153.6

3

RAIPUR EXPRESSWAYS LTD

 Mar' 09

Mar' 10

Mar' 11

Mar' 12

Mar' 13

Mar' 14

Mar' 15

Mar' 16

Mar' 17

Mar' 18

Mar' 19

Mar' 20

                         

Total Income17.0

836.7

339.8

845.4

7 50.9856.1

2 62.32 69.13 73.00 79.96 88.73 97.44

Total O&M Exp. 2.06 4.34 4.54 4.74 4.9524.2

5 5.41 5.65 5.91 6.17 30.22 6.74

PBDIT15.0

232.3

935.3

440.7

3 46.0331.8

7 56.91 63.48 67.09 73.79 58.51 90.70Depreciation 6.09 12.2

912.2

912.2

912.29 12.2

912.29 12.29 12.29 12.29 12.29 12.29

Interest 9.50 18.96

18.64

18.08

17.15 15.75

13.95 11.88 9.42 6.76 4.10 1.44

PBT -0.57 1.14 4.41 10.36

16.59 3.83 30.67 39.31 45.38 54.74 42.12 76.97

Taxes   0.38 1.49 3.49 5.58 1.29 10.32 13.23   -0.62 -1.14 2.50Profit after Tax (PAT)

-0.57

0.76 2.92 6.87 11.01

2.54 20.35 26.08

45.38

55.36

43.26

74.47

RAIPUR EXPRESSWAYS LTD

 Mar' 09

Mar' 10

Mar' 11

Mar' 12

Mar' 13

Mar' 14

Mar' 15

Mar' 16

Mar' 17

Mar' 18

                     Net cash Accruals 1.63 9.33 12.25 17.52 23.05 29.86 34.61 42.29 47.67 55.98Int. on Term Loan 9.50 18.96 18.64 18.08 17.15 15.75 13.95 11.88 9.42 6.76Total I 11.13 28.29 30.89 35.60 40.20 45.61 48.56 54.17 57.09 62.74Repayment of Term Loan 9.50 18.96 18.64 18.08 17.15 15.75 13.95 11.88 9.42 6.76Int. on Term Loan 0.00 2.00 4.00 8.00 12.00 18.00 20.00 24.00 28.00 28.00Total II 9.50 20.96 22.64 26.08 29.15 33.75 33.95 35.88 37.42 34.76DSCR (Total I/Total II) 1.17 1.35 1.36 1.37 1.38 1.35 1.43 1.51 1.53 1.80