Aurang Raipur PIM Finalizing 1

Strictly Private & Confidential
Project Information Memorandum
Syndication of Rupee Term Loan

For
Aurang –Raipur Toll Road Project

of
Raipur Expressways Limited
A Group Company of
D S Constructions LIMITED

Financial Advisors & Fund Arrangers
SBI CAPITAL MARKETS LTD.

RAIPUR EXPRESSWAYS LIMITED Project
202, Maker Tower ‘E’, Cuffe Parade, M Information Memorandum
umbai 400 005
June - 2006
IMPORTANT NOTICE
This Project Information Memorandum (PIM) contains

proprietary and confidential information regarding Raipur
Expressways Limited (‘REL’ or ‘the Company’). This PIM has
been prepared by SBI Capital Markets Ltd. (‘SBICAP’), on the
basis of information provided by the Company.
There are financial projections presented in this PIM, which

have been prepared for the limited purpose of circulation to the
potential lenders to REL based on information made available by
REL. A financial projection presents, to the best of
management’s knowledge and belief, a company’s expected
position, results of operations and cash flow for the projection
period. Financial projections require the exercise of judgment
and are subject to uncertainties concerning the effect that
changes in legislation or economic or other circumstances may
have on future events and different people may have a different
view in future. There will usually be differences between
projected and actual results because events and circumstances
do not occur as expected, and those differences may be material.
Under the circumstances, no assurance can be provided that the
assumptions or data upon which these projections have been
based are accurate or whether these business-plan projections
will actually materialize.
Neither SBICAP nor State Bank of India or any of its associates,

nor any of their respective Directors, employees or advisors
make any expressed or implied representation or warranty and
no responsibility or liability is accepted by any of them with
respect to the accuracy, completeness or reasonableness of the
facts, opinions, estimates, forecasts, projections, or other
information set forth in this PIM, or the underlying assumptions
on which they are based and nothing contained herein is, or
shall be relied upon as a promise or representation regarding
the historic or current position or performance of the company
or any future events or performance of the Company. This PIM is
divided into chapters & sub-sections only for the purpose of
reading convenience. Any partial reading of this PIM may lead to
RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

inferences, which may be at divergence with the conclusions

and opinions based on the entirety of this PIM.
The information set forth in this document is intended solely for

the use of potential lenders to REL to whom it has been
delivered and recipients must undertake such investigations as
they see fit before making any commitment or entering into a
contract. SBICAP will not regard any person other than REL as
its client.
This PIM is furnished on a strictly confidential basis and is for

the sole use of the person to whom it is addressed. Neither this
PIM, nor the information contained herein, may be reproduced
or passed to any person or used for any purpose other than
stated above. By accepting a copy of this PIM, the recipient
accepts the terms of this Notice, which forms an integral part of
this PIM.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................................I
1. INTRODUCTION..................................................................................................................................1
2. THE COMPANY....................................................................................................................................4
2.1 BRIEF DETAILS OF THE COMPANY....................................................................................................4
2.2 BUSINESS AREAS OF REL.................................................................................................................5
2.3 PRESENT ARRANGEMENT WITH BANKS AND FINANCIAL INSTITUTIONS..........................................5
2.4 EXISTING OPERATIONS AND PAST FINANCIALS................................................................................5
3. SPONSORS PROFILE..........................................................................................................................6
3.1 PROFILE OF DSC GROUP..................................................................................................................7
3.1.1 Indian Companies....................................................................................................................7
3.1.2 Companies in the Middle East.................................................................................................8
3.1.3 Companies in UK & US...........................................................................................................8
3.2 PROFILE OF DS CONSTRUCTIONS LIMITED.......................................................................................9
3.2.1 Background..............................................................................................................................9
3.2.2 Shareholding Pattern of DSC.................................................................................................10
3.2.3 Major BOT Infrastructure Projects of DSC...........................................................................11
3.2.4 Financials of DSC..................................................................................................................11
3.3 PROFILE OF APOLLO ENTERPRISES LIMITED...................................................................................12
3.4 PROFILE OF JLI...............................................................................................................................13
3.5 PROFILE OF LOR.............................................................................................................................13
4. MANAGEMENT, ORGANIZATION & SHAREHOLDING PATTERN......................................14
4.1 BOARD OF DIRECTORS....................................................................................................................14
4.2 PROJECT MANAGEMENT TEAM.......................................................................................................16
4.3 ORGANIZATIONAL STRUCTURE DURING OPERATIONS.....................................................................16
4.4 CAPITAL STRUCTURE & SHAREHOLDING PATTERN........................................................................16
5. PROJECT DESCRIPTION.................................................................................................................19
5.1 SCOPE OF THE PROJECT..................................................................................................................19
5.2 SITE & PROJECT LOCATION............................................................................................................19
5.3 CURRENT STATUS OF LAND AVAILABILITY / ACQUISITION............................................................21
5.4 EXISTING PROJECT HIGHWAY CHARACTERISTICS...........................................................................22
5.5 PROPOSED SCOPE OF WORK UNDER CA.........................................................................................23
5.6 PROJECT TIMETABLE.......................................................................................................................28
6. PROJECT AGREEMENTS AND CONTRACTING PARTIES......................................................29
6.1 PROJECT STRUCTURE......................................................................................................................29
6.2 PROJECT AGREEMENTS...................................................................................................................29
6.2.1 Concession Agreement...........................................................................................................29
6.2.2 EPC Contract.........................................................................................................................40
6.2.3 Independent Consultant Contract..........................................................................................43
7. DESIGN & CONSTRUCTION OF THE PROJECT.......................................................................44
7.1 PROFILE OF EPC CONTRACTOR......................................................................................................45
8. OPERATION & MAINTENANCE OF THE PROJECT.................................................................47

8.1 OPERATION......................................................................................................................................48
8.2 MAINTENANCE................................................................................................................................49
8.3 TOLL FEE & COLLECTION SYSTEM.................................................................................................50
9. INSURANCE ARRANGEMENTS.....................................................................................................54
9.1 CONSTRUCTION PERIOD..................................................................................................................54
9.2 OPERATIONS PERIOD.......................................................................................................................54
10. PROJECT COST..............................................................................................................................56
11. PROJECT FUNDING......................................................................................................................58
11.1 FUNDING / CAPITAL STRUCTURE....................................................................................................58
11.2 PROMOTERS’ EQUITY......................................................................................................................58
11.3 NHAI GRANT..................................................................................................................................58
11.4 RUPEE TERM LOAN FROM BANKS/FIS............................................................................................59
11.5 SOURCES & APPLICATION OF FUNDS..............................................................................................60
12. TRAFFIC ASSESSMENT...............................................................................................................61
12.1 ROAD SECTOR IN INDIA..................................................................................................................61
12.2 PROJECT HIGHWAY..........................................................................................................................63
12.3 SCOPE OF THE TRAFFIC STUDY.......................................................................................................64
12.4 TRAFFIC STUDY..............................................................................................................................64
12.4.1 Traffic Surveys........................................................................................................................65
12.4.2 Average Daily Traffic (ADT)..................................................................................................65
12.4.3 Comparison with Earlier Counts...........................................................................................66
12.4.4 Seasonal Variations................................................................................................................67
12.4.5 Alternate Route Analysis........................................................................................................68
12.4.6 Other Exemptions...................................................................................................................70
12.4.7 Traffic on Project Highway....................................................................................................70
12.4.8 Traffic Growth Rates..............................................................................................................72
12.4.9 Traffic Forecast......................................................................................................................73
13. FINANCIAL PROJECTIONS AND INDICATORS.....................................................................76
14. SENSITIVITY ANALYSIS..............................................................................................................78
15. APPROVALS & CLEARANCES...................................................................................................80
16. RISK AND SWOT ANALYSIS.......................................................................................................82
16.1 RISK ANALYSIS – ALLOCATION & MITIGATION..............................................................................82
16.2 SWOT ANALYSIS............................................................................................................................89
17. CONCLUSION..................................................................................................................................93

LIST OF TABLES
Board of Directors of REL............................................................................................................................viii

Capital Structure of REL.................................................................................................................................ix
Forecasted Tollable Traffic (AADT) on Project Highway.............................................................................xx
Table 3.1 Shareholding Pattern of DSC.....................................................................................................10
Table 3.2 Major BOT Projects of DSC.......................................................................................................11
Table 3.3 Financial Performance of DSC...................................................................................................12
Table 4.1 Board of Directors of REL.........................................................................................................14
Table 4.2 Capital Structure of REL............................................................................................................16
Table 5.1 Project Timetable........................................................................................................................28
Table 6.1 Grant Schedule as per the CA....................................................................................................35
Table 7.1 Major Projects of DSC...............................................................................................................45
Table 8.2 Unit Toll Rates – Through Traffic (Rs per Km)........................................................................51
Table 8.3 Unit Toll Rates – Local Traffic (Rs per Km).............................................................................51
Table 8.4 Toll Fees as on October 2008 (i.e. COD)- Through Traffic (in Rs.)..........................................52
Table 8.5 Toll Fees as on April 2008 (i.e.COD) - Local Traffic (in Rs.)....................................................52
Table 10.1 Breakdown of the Project Cost...............................................................................................56
Table 10.2 Annual Construction Cost......................................................................................................56
Table 11.1 Financing Structure................................................................................................................58
Table 11.2 Profile of Rupee Term Loans..................................................................................................59
Table 11.3 Sources & Uses of Funds (Rs. Cr)..........................................................................................60
Table 12.1 Road Network in India...........................................................................................................61
Table 12.2 Average Daily Traffic...............................................................................................................66
Table 12.3 Comparison between Bid Document and HCIL traffic on the Project Road...........................66
Table 12.4 Summary of AADT for the Project Road...............................................................................68
Table 12.5 Net Tollable Average Daily Traffic (ADT) – 2005.................................................................71
Table 12.6 Net Tollable Annual Average Daily Traffic (AADT) – 2005.................................................72
Table 12.7 Forecasted Traffic (AADT) on Project Highway – Km 263..................................................74
Table 12.8 Forecasted Traffic (AADT) on Project Highway – Km 278..................................................75
Table 13.1 Projected Profitability Statements of REL (Rs. Cr.)...............................................................76
Table 13.2 Projected Balance Sheet of REL (Rs.Cr.)...............................................................................77
Table 13.3 Financial Indicators of REL...................................................................................................77
Table 14.1 Results of Sensitivity Analysis...............................................................................................79
Table 15.1 Status of Statutory Approvals / Clearances............................................................................80
LIST OF FIGURES
Figure 3.1 Shareholding Structure of REL................................................................................................6
Figure 5.1 Aurang Raipur Project Stretch................................................................................................21
Figure 6.1 Project Structure.....................................................................................................................29
Figure 7.1 Relationship of the Prom. Mgt. team with the Principal Parties during Constr.....................44
Figure 12.1 Alternative Route 1.................................................................................................................68
Figure 12.2 Alternative Route 2.................................................................................................................69

LIST OF APPENDIX
Appendix 1. Major BOT projects implemented / being implemented by DS

Constructions Ltd.
Appendix 2. Indicative Term Sheet proposed for Lenders’
Appendix 3. Profile of Halcrow, the Traffic Consultant
Appendix 4. Assumptions underlying the Financial Projections
Appendix 5. Projected Profit & Loss Account of REL
Appendix 6. Projected Cash Flow Statements of REL
Appendix 7. Projected Balance Sheet of REL
Appendix 8. Debt Service Coverage Ratio of REL

LIST OF ABBREVIATIONS
AADT : Average Annual Daily Traffic
ADT : Average Daily Traffic
ALOP : Advance Loss of Profit
AoA : Articles of Association
APOLLO : Apollo Enterprises Limited
ASCF : Average Seasonal Correction Factor
AVC : Automated Vehicle Classification
BOT : Build, Operate & Transfer
BOOT : Build, Own, Operate & Transfer
BSE : Bombay Stock Exchange
CA : Concession Agreement
CAR : Contractors “All Risks” (Insurance Cover)
CIBIL : Credit Information Bureau (India) Limited
COD : Commercial Operations Date
CWIP : Capital Work in Progress
DPR : Detailed Project Report
DSC : D. S. Constructions Ltd
DSCR : Debt Service Coverage Ratio
DSRA : Debt Service Reserve Account
EDP : Electronic Data Processing
EPC : Engineering, Procurement & Construction
FI : Financial Institutions
International Federation of Consulting
FIDIC :
Engineers
FME : Force Majeure Event
GDP : Gross Domestic Product
GFA : Gross Fixed Assets
GM : General Manager
GOI : Government of India
HRD : Human Resource Department
IC : Independent Consultant
IDC : Interest During Construction
IIT : Indian Institute of Technology
IRC : Indian Road Congress
IRR : Internal Rate of Return
JLI : John Laing International Limited
Km : Kilometre
LCV : Light Commercial Vehicles
LD : Liquidated Damages
LoA : Letter of Award
LoI : Letter of Intent

LoR : Laing O'Rourke PLC

MAT : Minimum Alternative Tax
MAV : Multi Axle Vehicles
MLN : Million
MoA : Memorandum of Association
MoEF : Ministry of Environment and Forest
MoSRT& Ministry of Shipping, Road Transport and
:
H Highways
MSA : Million Standard Axles
MW : MegaWatt
NFA : Net Fixed Assets
NH : National Highway
NHAI : National Highways Authority of India
NHDP : National Highway Development Project
NSDP : Net State Domestic Product
O&M : Operations and Maintenance
O-D
: Origin Destination Survey
Survey
PAT : Profit After Tax
PBDIT : Profit Before Depreciation Interest and Tax
PBT : Profit Before Tax
PCU : Passenger Car Units
PLR : Prime Lending Rate
PMC : Project Management Committee
QA : Quality Assurance
QC : Quality Control
Rs : Rupees
REL : Raipur Expressways Limited
ROB : Rail Over Bridge
RoW : Right of Way
SBI : State Bank of India
SBICAP : SBI Capital Markets Limited
SCF : Seasonal Correction Factor
SGoC : State Government of Chhattisgarh
SH : State Highway
SLM : Straight Line Method
SPCD : Scheduled Project Completion Date
SPV : Special Purpose Vehicle
SSA : State Support Agreement
TRA : Trust & Retention Account
VOC : Vehicle Operating Costs
WDV : Written Down Value

WPI : Wholesale Price Index

WTP
: Willingness to Pay Survey
Survey

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.
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.
Brief Details of the Company
RAIPUR EXPRESSWAYS LIMITED -i- Executive Summary

Name of the Company : Raipur Expressways Limited

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.
RAIPUR EXPRESSWAYS LIMITED - ii - Executive Summary

SPONSORS of REL
REL is promoted by DSC Group. The DSC Group commenced

operations as a local construction company in India 70 years ago and
has now grown to a US$1 bn conglomerate with interests in diverse
fields including hotels, retailing, trading, real estate, infrastructure
projects, engineering and construction, with over 10,000 people
manning its operations across 11 business locations worldwide.
As per the terms of CA, APOLLO, DSC, JLI and LOR are the members
of the Consortium, who along with their associates, have to hold a
minimum of 51% equity in the concessionaire during COD+3 years
and thereafter minimum of 26% during the balance concession period.
The proposed shareholding pattern in the Concessionaire will be as
under :
Shareholding Structure of REL
APOLLO DSC JLI LOR
4.8% 94.9% 0.2% 0.1%
REL
Concession
RAIPUR EXPRESSWAYS LIMITED - iii - Executive Summary

Profile of DS Constructions Limited
DS Constructions Ltd., a part of the US$1bn DSC Group, is one of the

fastest growing and most profitable construction companies, which
has built up a high-margin EPC construction business complemented
by an excellent portfolio of investments in flagship BOT projects,
which are arguably some of the best in the country.
The company’s strategy of focusing on BOT projects at a time when

the industry was focusing on cash contracts has paid off very well, in
that it now has a very profitable, high margin construction business
which is supported by a portfolio of high IRR BOT investments. Few of
the company’s pioneering efforts in Indian Infrastructure include:
 Developed India’s first Railway Project on a BOT basis
– the Viramgam Mehasana Project Ltd: completed and handed-
over to Railways
 Developing India’s first fully access controlled 28 km
urban expressway on a BOT basis: the Delhi-Gurgaon
Expressway. Also the first project in India to be won on a
negative grant.
 Awarded India’s longest/largest Toll Road Project on
BOT basis – a 135 km Access Control Expressway – also
considered as the Western Peripheral Expressway for Delhi: The
Kundli-Manesar-Palwal Expressway.
 Selected for and awarded a 1000 MW, Mega Power
Project being one of the first three Hydro Power Projects
awarded in Arunachal Pradesh: Naying Hydropower Project
 Amongst the only three consortiums which were
technically pre-qualified for both the Mumbai as well as Delhi
RAIPUR EXPRESSWAYS LIMITED - iv - Executive Summary

Airports in the elaborate Airport Privatisation exercise

concluded recently, which laid significant emphasis on the
technical and financial prequalification cut-off being quite
stringent.
RAIPUR EXPRESSWAYS LIMITED -v- Executive Summary

Major BOT Infrastructure Projects of DSC
DSC has been actively involved in private sector participation in

developing Infrastructure Projects. The major infrastructure projects of DSC on BOT basis are as
under:
EPC Cost Natur

Project
(Estimated e of
Project Client Cost
) Projec
(Rs Mn)
(Rs. Mn) t
Completed BOT Projects
Viramgam Mehsana
1. Railways 1,022 930 BOT
Project Ltd
2. Raipur Durg Project MoRT&H 1,190 974 BOT
On-going Projects
3. Delhi-Gurgaon Highway NHAI 9,971 7,970 BOT
Kundli Manesar Palwal
4. HSIDC 20,000 16,484 BOT
Expressway
5. Aurang-Raipur Highway NHAI 2,860 2,437 BOT
Lucknow Sitapur Road
6. NHAI 4,480 3,952 BOT
Project
Sandur Bypass, PWD,
7. 359 335 BOT
Karnataka Karnataka
Govt. of
1000 MW Naying Hydro-
8. Arunachal 50,000 35,000 IPP
Electric Project
Pradesh
L1 Projects
Gangapur Rail
9. Railways 740 651 BOT
Conversion
BOT
Jhansi-Gwalior Road
10. NHAI 6500 5750 (Annui
Project based on Annuity
ty)
RAIPUR EXPRESSWAYS LIMITED - vi - Executive Summary

Financial Highlight of DSC
The financial highlights of DSC for last three audited accounting

periods are set out in Table below:
Financial Performance of DSC
Year (ended Mar 2004 2005 Nine Months
31) ended Dec 2005
Total Income 257.16 362.30 243.79
EBDIT 53.85 71.18 57.69
Interest 5.14 12.02 18.05
Depreciation 10.41 9.91 8.38
Taxation 12.06 22.31 11.25
PAT 26.24 26.95 20.02
Cash Profits 36.65 36.86 28.40
Equity Share Capital 49.35 49.35 50.00
Net Worth 141.96 172.30 193.87
Total Debt 70.23 110.56 200.69
Total Debt/ Equity 0.49 0.64 1.04
Ratio
(All Figures
except Ratios in Rs. Crore)
Profile of Apollo Enterprises Limited
Apollo Enterprises leads the group’s interests in the Middle East and
is a leading sourcing and trading company with a turnover of over
US$700 million. Apollo began twelve years ago as a sourcing
specialist of quality construction equipment and components for the
building industry specifically catering to the African and Middle East
markets. Apollo also provides specialist services in handling, quality
control and installing & assembly of heavy equipment, both electrical
and mechanical in addition to money market operations, portfolio
investments and business in real estate under its wholly owned
subsidiary Alpamatics Ltd. Key industries / sectors catered to include:
RAIPUR EXPRESSWAYS LIMITED - vii - Executive Summary

Construction Plant & equipment, Building Industry, Heavy Industries,

Hospitals & Medicare, Hospitality & Services Industry, FMCG &
Lifestyle Products, Agro Products, Processed Foods and Textiles.
Apollo Enterprises will be holding 4,000,000 equity shares (4.8% of
the total shareholding) in the Concessionaire, which has already been
brought in.
Profile of JLI
The group undertakes civil engineering, building, construction

management and management contracting projects overseas on a
traditional design and build or turnkey basis. The group operates
predominantly in the Middle East where it has been long established
and is also undertaking significant work in the Asia Pacific region,
Turkey, Egypt and Nigeria. JLI will be holding 125,000 equity shares
(0.2% of the total shareholding) in the Concessionaire, which has
already been brought in.
Profile of LOR
Laing O’ Rourke Plc is a wholly owned subsidiary of O’Rourke

Investment Ltd, a company registered in England and Wales. The
Group’s principal activities are construction (building, civil
engineering, mechanical & electrical engineering, infrastructure &
support services, construction & repair of utilities, architectural &
environmental services, property development), plant hire &
operations and building products. LOR will be holding 50,000 equity
shares (0.1% of the total shareholding) in the Concessionaire, which
has already been brought in.
RAIPUR EXPRESSWAYS LIMITED - viii - Executive Summary

Brief Profile of REL
Raipur Expressways Limited (REL), a Special-Purpose Vehicle (SPV),

is established to undertake the implementation of Aurang-Raipur
Road Project on BOT basis and as such has not and will not engage in
any other business/activity. The Concessionaire will also be the entity
raising the required debt financing for the project and will enter into
other contracts necessary for the design, construction, finance,
operation, maintenance and management of the Project Highway.
As per the Memorandum and Articles of Association of REL, it is duly

authorized to execute the proposed Project.
RAIPUR EXPRESSWAYS LIMITED - ix - Executive Summary

Management & Organization
As per the Memorandum & Articles of Association of REL, the number

of Directors on the Board of the Company shall not be less than 3
(Three) and not more than 12 (Twelve).
REL’s present Board comprises 3 (Three) Directors. The details of the

Directors as on May 31, 2006 are as under:
Board of Directors of REL

S. Name of Designati Other Directorship
N. Director on
1 Mr. Wholetime  Delhi
Mohinder Director Gurgaon Superconnectivity Ltd.
Singh (formerly, Jaypee-DSC Ventures
Narula Limited )
 D.S.Constru
ctions Limited
 Viramgam
Mehasana Projects Ltd.
 DSC –
Vicon Ventures Private Ltd.
 Lucknow
Sitapur Expressways Ltd.
 Sandur
Bypass Project Ltd.
 KMP
Expressways Ltd.
2 Mr. Chairman  Lucknow
Harvinder Sitapur Expressways Ltd
Singh Kohli  Sandur
Bypass Project Ltd.
 KMP
Expressways Ltd.
3 Mr. Dhiraj Director  Laing
Singh O’Rourke Technical Services
India Private Limited
 Vipul Laing
O’Rourke India Limited
RAIPUR EXPRESSWAYS LIMITED -x- Executive Summary

 Trans
Harbour Link Private Limited
 John Laing
International Limited
 Laing
O’Rourke Holdings Limited
 DLF Laing
O’Rourke India Private limited
A perusal of Reserve Bank of India’s list of defaulters as available on

Credit Information Bureau (India) Limited website www.cibil.com (as
on December 31, 2005) does not indicate the name of the Company,
sponsors or of any of the Directors currently on its Board.
RAIPUR EXPRESSWAYS LIMITED - xi - Executive Summary

Project Management Team
A Project Management team comprising personnel from DSC with the

required expertise will be formed to supervise the construction of the
Project Highway as well as to ensure that the obligations of REL as
per the CA are met. The responsibilities of the Project Management
team will include the following:
 Overseeing all matters of technical nature;
 Recommending for progress payments to the EPC Contractor;
 Liaison with NHAI personnel on contractual and technical
matters;
 Smooth implementation of the project;
 Working closely with the EPC Contractor;
 Coordination with external consultants appointed to provide
contractual and technical advice;
 Preparing plans, procedures and systems for the O&M of the
Project Highway after completion of the EPC Contract; and
 Setting up QA/QC systems and controls.
The project management team will be drawn from the pool of

experienced personnel within the DSC Group.
Capital Structure & Shareholding Pattern
REL is an unlisted company set up as a Special Purpose Vehicle to

implement the proposed Project Highway. The capital structure of
REL as on May 31, 2006 was as under:
Capital Structure of REL
Share Capital Particulars No.s Rs. In lakh
Authorized Equity shares of
10,00,000 100.00
Capital Rs.10 each
Issued, Equity shares of 10,00,000 100.00
Subscribed & Rs.10 each
RAIPUR EXPRESSWAYS LIMITED - xii - Executive Summary

Paid up Capital
Considering the equity requirement of Rs.8252 lakh for the Project,

the authorized share capital of Rs. 100 lakh will be suitably increased.
The proposed shareholding pattern for REL will be as under:
RAIPUR EXPRESSWAYS LIMITED - xiii - Executive Summary

Sl Name of the No. of Amount % of total

No Shareholder Shares (Rs. Lakh) shareholdi
. ng
1 D.S.Construction 78,345,000 783,450,00 94.9%
Limited 0
2 Apollo Enterprises 4,000,000 40,000,000 4.8%
Limited
3 John Laing 125,000 1,250,000 0.2%
4 Laing O’Rourke Plc 50,000 500,000 0.1%
Total 82,520,000 825,200,00 100.0%
0
DSC, Apollo Enterprises, JLI and LOR have entered into a

Shareholders Agreement (SA) on May 09, 2005. The salient features
of the SA are mentioned later in the PIM.
Present Arrangement with Banks and Financial

Institutions
REL has currently no fund-based limits with any bank or financial

institution.
Project Description
Scope of the Project
NHAI 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.
RAIPUR EXPRESSWAYS LIMITED - xiv - Executive Summary

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.
RAIPUR EXPRESSWAYS LIMITED - xv - Executive Summary

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.
RAIPUR EXPRESSWAYS LIMITED - xvi - Executive Summary

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.
Project Structure
The relationships among the Project’s various key parties are set out
hereunder:
Project Structure
RAIPUR EXPRESSWAYS LIMITED - xvii - Executive Summary

DSC APOLLO JLI LOR
94.9% 4.8% 0.2% 0.1%
State Govt.
of
Chhattisga
Raipur GOI/ NHAI

Expressways
Limited
DSC Independe
nt
Consultant
RAIPUR EXPRESSWAYS LIMITED - xviii - Executive Summary

Financing Concession
Agreements Agreement
Independent Insurance
Consultant EPC Policies
Contract Contract
State Support
Agreement
RAIPUR EXPRESSWAYS LIMITED - xix - Executive Summary

Concession Agreement
The Concession Agreement (“CA”) between NHAI and REL was signed
on October 13, 2005 based on the Model Concession Agreement of
NHAI. The key terms and conditions of the CA are summarized below:
 The Concession shall be for a period of 25 years from the
Appointed Date (i.e. 180 days from the date of signing of CA).
 The Concessionaire has furnished Performance Security in the
form of bank guarantee of Rs.5.70 crores from Jammu & Kashmir
Bank for due and faithful performance of its obligations during the
construction period.
 The Concessionaire shall be entitled during the Operations Period
to levy and collect the Fees from the users of the Project Highway
in accordance with the Fee Notification set forth in Schedule G of
the CA.
 The CA provides that the fee shall be revised once every year with
effect from 1st July of each year based on the variation in the WPI.
 The Concession Fee payable by the Concessionaire to the NHAI
shall be Re.1.00 per year during the term of the CA.
 The CA provides that NHAI, GoI or State Government of
Chhattisgarh may construct and operate, either itself or have the
same, inter alia, built and operated on BOT basis or otherwise, any
expressway or other toll road, not being a by-pass, between inter
alia, Aurang and Raipur section (Km 239.00 to 281.00) of NH6,
provided that such Additional Tollway shall not be opened to traffic
before expiry of 8 (eight) years from the Appointed Date.
 The CA provides that NHAI may, following a detailed traffic study
conducted by it, at any time after 8 years following COD decide to
augment/increase the capacity of the Project (Capacity
RAIPUR EXPRESSWAYS LIMITED - xx - Executive Summary

Augmentation) with a view to provide the desired level of services

to the users of the Project Highway. NHAI shall invite proposals
from eligible persons for Capacity Augmentation and the
Concessionaire will have the option to submit its proposal for
Capacity Augmentation. In case the Concessionaire chooses not to
submit its proposal or is not the preferred bidder and also fails or
declines to match the preferred offer, NHAI will make the
Termination Payment (applicable for NHAI’s event of default) to the
Concessionaire and terminate the Concession Agreement.
 As per the terms of the CA, NHAI shall procure access to the
existing right of way, free of encumbrances, at no cost to the
Concessionaire, not later than 150 days from the date of the CA.
NHAI has already made available to REL, the existing ROW of the
Project Highway to commence the Construction work.
 The Scheduled Project Completion Date has been set for as 30

months from the Appointed Date (The Appointed Date being 180
days from date of signing of CA).
 An Independent Consultant shall be appointed by NHAI, in

consultation with the Concessionaire, to monitor and supervise the
construction and O&M of the Project Highway.
 NHAI may require the provision of such additional works and

services on or about the Project Highway which is beyond the
scope of the Project provided such changes do not require any
increase/reduction in expenditure exceeding 5% of the Total
Project Cost and do not adversely affect the COD.
 The Concessionaire shall operate and maintain the Project

Highway by itself, or through O&M Contractors in accordance with
RAIPUR EXPRESSWAYS LIMITED - xxi - Executive Summary

the Specifications and Standards as set forth in the CA, Good

Industry Practice, Applicable Laws & Permits.
 The NHAI has agreed to provide to the Concessionaire cash

support by way of Grant (the “Grant”) of Rs.13.8255 Crore during
the Concession Period. NHAI shall pay to the Concessionaire yearly
Grant as proposed in the Concessionaire's Bid as set forth below:
Grant Schedule as per the CA

Constructi Operations Period
on Period
Concession 1 2 3 4 5 6 7 8 9 10 Total
Year
Yearly Grant
from NHAI 1.15 1.270 13.825
1.05 0.00 0.00 1.40 1.70 2.25 2.50 2.50
(Rs. Crores) 5 5 5
13.825
Total 3.4755 10.35
5
 In cases of Indirect Political or Political Force Majeure Event
situations, NHAI shall provide the Concessionaire with a Revenue
Shortfall Loan should the revenue received fall below the
Subsistence Revenue Level (i.e. sufficient to cover O&M expenses
and debt service payments to the senior lenders) in any accounting
year.
 The Concessionaire shall prior to the Appointed Date, open and
establish an Escrow Account with a bank and all funds constituting
the Financing Package for meeting the total project cost as well as
the toll revenues during the operating period shall be credited to
such account.
 The CA provides for signing of the State Support Agreement with
the State Government of Chhattisgarh (SGoC) on or before
Financial Close.
 The CA provides for termination payments in the Force Majeure
Events (FME). Under any event of Termination of the CA due to
RAIPUR EXPRESSWAYS LIMITED - xxii - Executive Summary

FME, at least 90% of the outstanding debt dues of Lenders would

be settled by NHAI.
 The CA provides for various events of defaults of the
Concessionaire (including owing to default of MNEL in servicing
the debt liabilities) in which NHAI has the right to terminate the
CA. Even in case of termination of the CA due to Concessionaire
Event of Default, during operations period, 90% of the outstanding
debt dues of Lenders would be paid by NHAI directly to the
Lenders.
 The CA provides for execution of a tripartite substitution
agreement between NHAI, the Concessionaire and the Lenders
providing for the substitution of the Concessionaire, in the Event of
Default under the Financing Agreements.
 The CA provides for charging and assignment of the project
documents, including the CA, with prior permission of NHAI and
rights & titles of the project in favour of the Lenders for obtaining
financing for the project.
EPC Contract
To meet the design and construction obligations under the CA, REL
has entered into Engineering, Procurement and Construction (“EPC”)
Contract with D.S.Constructions Limited (DSC). The EPC Contract is
on fixed time, fixed price lump-sum turnkey basis, with liquidated
damages in the event of delayed completion by DSC. The total cost of
the EPC Contract has been worked out at Rs.243.70 crore.
Profile of EPC Contractor
The EPC Contractor for the Project, DSC, is the major Sponsor of the
Concessionaire and has completed several major construction projects
RAIPUR EXPRESSWAYS LIMITED - xxiii - Executive Summary

in India and abroad. Some of the projects in hand with DSC as on

March 31, 2006 are as under:
Major Projects of DSC
Name of Project Client Contract
Price (Rs.
Mn)
Completed Projects
Viramgam Mehsana Project Ltd Railways 930
Raipur Durg Project MoRT&H 974
In Progress Projects
Delhi-Gurgaon Highway NHAI 7,970
HSIDC 16,484
Expressway
Aurang-Raipur Highway NHAI 2,437
Lucknow Sitapur Road Project NHAI 3,952
Sandur Bypass, Karnataka PWD, Karnataka 335
1000 MW Naying Hydro-Electric Govt. of Arunachal
35,000
Project Pradesh
DSC has been a relatively recent entrant in the Indian Infrastructure

space given its overseas focus, but in the last four years it has set up
an enviable track record of some pioneering efforts in the Indian
Infrastructure space. It may be mentioned that DSC was amongst the
only three consortiums which were technically pre-qualified for both
the Mumbai as well as Delhi Airports in the elaborate Airport
Privatisation exercise concluded recently, which laid significant
emphasis on the technical prequalification cut-off being quite
stringent. It may be seen from the above that DSC has got vast
experience across various sectors. Hence, the appointment of DSC as
the EPC contractor on a fixed time, fixed price EPC contract will
mitigate the construction risk in the project.
RAIPUR EXPRESSWAYS LIMITED - xxiv - Executive Summary

Operations & Management
Under the BOT framework, the Concessionaire shall be responsible

for the O&M of the Project Highway throughout the Concession
Period. The CA provides for O & M responsibilities of the
Concessionaire. REL intends to undertake the O&M tasks itself by
drawing on the experience of the DSC Group who has the experience
in the operation and maintenance of their other toll concessions in
India and abroad. Certain key and experienced technical personnel
from DSC will be seconded to the Concessionaire at the appropriate
time to oversee the O&M aspects of the Project.
REL shall be adopting the O&M programme that has been used in
similar projects undertaken by DSC Group, which will be customized
to take into account the local conditions to ensure that the O&M for
the Project Highway will be effective and efficient. In addition, the
O&M programme will be tailored based on the specifications set out
in the CA.
Insurance Arrangements
REL will be adopting a comprehensive insurance programme

necessary for the successful management of risks for the Project. The
proposed insurance programme will be arranged with separate
coverage for construction and operation.
Construction Period
REL will effect and maintain or cause to be effected and maintained
the following insurance during the construction period:
 Contractor’s all risk policy for the full contract value;

 Policy against third party liability of Rs.5 Cr aggregate for all
incidents; and
RAIPUR EXPRESSWAYS LIMITED - xxv - Executive Summary

 Advance loss of profit (“ALOP”) policy to cover for the first six-
month standing operation profits.
Out of the above-mentioned policies, the Concessionaire will

undertake the ALOP policy, whereas the EPC Contractor will be
undertaking all other necessary policies via a block policy.
Operations Period
REL intends to take out insurance policies (jointly with the Lenders)
to cover the following during the operation of the Project Highway:
 Fire policies to cover for all the completed building/toll plazas
and other structures;
 Public liability policy to cover against third-parties property
damage and bodily injury for up to Rs. 5 Cr aggregate for all
incidents;
 Standard Fire and Special Perils policy to cover all
engineering completed works against losses of catastrophe in
nature or other physical/accidental means;
 Money policy for the toll collections at the toll plazas, whilst
under transit and whilst kept on premise in locked
compartments;
 Fidelity guarantee policy on the infidelity of the employees
handling cash or materials resulting in loss;
 Electronic equipment policy to cover for the IT systems whiles
being utilized for the tolling;
 All risks policy for all equipment/lease equipment and other
necessary equipment used at the premises; and
 Personal accident policy to cover for accidental death and
bodying injury to the employees.
Project Timetable
Particulars Date
Signing of Concession Agreement October 13, 2005
RAIPUR EXPRESSWAYS LIMITED - xxvi - Executive Summary

Appointed Date April 11, 2006

Construction Start Date April 01, 2006
Construction Completion Date September 30, 2008
Tolling Start Date October 01, 2008
End of Concession period April 10, 2031
RAIPUR EXPRESSWAYS LIMITED - xxvii - Executive Summary

PROJECT COST & FUNDING

Components of Project Cost
The cost of the project is expected to be Rs.286 crore. A summary of

various components of cost is presented below:
Breakdown of the Project Cost
Rs In
Item Crore %
EPC Cost 243.70 85.2%
Financial Fees & Expense 3.00 1.0%
Admin. & Pre-operative Expenses. 4.87 1.7%
Engineering & Supervision Charges 5.06 1.8%
Interest during Constr. (IDC) 19.72 6.9%
Insurance during Construction 0.15 0.1%
(ALOP)
Debt Service Reserve Creation 9.50 3.3%
Total 286.00 100.0%
Project Funding
The cost of the Project at Rs.286 crores is proposed to be financed as

under:
Capital Structure
Source of Fund Rs in Crore % of total
Promoters Equity 82.52 28.9%
NHAI Grant 3.48 1.2%
Rupee Term Loan 200.00 69.9%
100.0
Total 286.00 %
The debt / equity ratio of the project is at 2.32:1 after taking into
account the Grant from NHAI as quasi equity. This ratio was arrived at
after taking into account of factors such as the Debt Service Coverage
Ratio (“DSCR”), qualitative factors such as risk profile of the Project
RAIPUR EXPRESSWAYS LIMITED - xxviii - Executive Summary

and overall reasonableness within the prevailing project finance

practices in India.
RAIPUR EXPRESSWAYS LIMITED - xxix - Executive Summary

TRAFFIC FORECAST
Halcrow Consulting India Limited (“HCIL”) was commissioned to
undertake a comprehensive and independent traffic study on the
Project Highway to assess the prevailing traffic & travel
characteristics and undertake the data analysis for establishing
project revenue through direct tolling. The study was done in June
2005.
The forecasted Annual Average Daily Traffic (AADT) based on the base
year traffic, seasonality factors and the annualised growth rates, as
estimated by HCIL at the respective toll plaza, is presented below:
Forecasted Tollable Traffic (AADT) on Project Highway
KM. 263 Toll Plaza
Calendar Year 2020
Ending 2008 2010 2012 2014 2016 2018
Through Traffic
Car / Van / Jeep 176 199 224 253 285 321 362
Mini-bus 2 2 2 3 3 3 4
Bus 7 8 8 9 10 11 12
LCV 110 122 136 149 165 181 199
Truck: 2-axles 466 524 589 653 724 802 886
Multi-axle Truck 536 608 690 771 861 959 1,065
Local Traffic – Registered
Car / Van / Jeep 207 234 264 297 335 378 426
Mini-bus 25 28 30 33 37 40 44
Bus 13 14 16 17 19 21 23
LCV 65 72 80 88 97 107 117
Truck: 2-axles 175 197 221 245 272 301 333
Multi-axle Truck 5 6 6 7 8 9 10
Traffic Crossing One Toll Plaza – Non Registered
Car / Van / Jeep 1,312 1,481 1,671 1,884 2,124 2,394 2,698
Mini-bus 227 250 275 302 332 365 400
Bus 117 129 142 156 171 188 206
LCV 317 352 392 431 474 521 573
Truck: 2-axles 1,138 1,279 1,438 1,595 1,769 1,958 2,164
Multi-axle Truck 76 86 98 109 122 136 151
KM. 278 Toll Plaza
RAIPUR EXPRESSWAYS LIMITED - xxx - Executive Summary

Calendar Year 2020

Ending 2008 2010 2012 2014 2016 2018
Through Traffic
Car / Van / Jeep 176 199 224 253 285 321 362
Mini-bus 2 2 2 3 3 3 4
Bus 7 8 8 9 10 11 12
LCV 110 122 136 149 165 181 199
Truck: 2-axles 466 524 589 653 724 802 886
Multi-axle Truck 536 608 690 771 861 959 1,065
Car / Van / Jeep 316 357 403 454 512 577 650
Mini-bus 2 2 2 3 3 3 4
Bus 6 7 7 8 9 10 11
LCV 234 260 289 318 350 385 423
Truck: 2-axles 357 401 451 500 555 614 679
Multi-axle Truck 136 154 175 196 218 243 270
Traffic Crossing One Toll Plaza – Non Registered
Car / Van / Jeep 1,398 1,578 1,781 2,008 2,263 2,551 2,875
Mini-bus 22 24 27 29 32 35 39
Bus 54 59 65 72 79 87 95
LCV 815 906 1,007 1,108 1,219 1,340 1,472
Truck: 2-axles 1,593 1,791 2,013 2,232 2,476 2,741 3,029
Multi-axle Truck 879 998 1,132 1,264 1,412 1,573 1,747
FINANCIAL PROJECTIONS
The key financial parameters for cardinal years, ending 31 st March
every year, are given below:
Projected Profitability Statements of REL (Rs. Cr.)
FYE Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-20
Toll Revenues 36.57 43.92 53.71 66.48 79.81 97.29
Grant Payments from NHAI - 1.40 2.25 2.50 - -
Constr. Grant written back 0.15 0.15 0.15 0.15 0.15 0.15
Total Income 36.73 45.47 56.12 69.13 79.96 97.44
O&M Expenses 4.34 4.74 24.25 5.65 6.17 6.74
PBDIT 32.39 40.73 31.87 63.48 73.79 90.70
Interest on RTL 18.96 18.08 15.75 11.88 6.76 1.44
Depreciation 12.29 12.29 12.29 12.29 12.29 12.29
PBT 1.13 10.36 3.83 39.31 54.74 76.97
Income Tax (including
deferred tax) 0.38 3.49 1.29 13.23 (0.62) 2.50
PAT 0.75 6.87 2.54 26.08 55.36 74.47
RAIPUR EXPRESSWAYS LIMITED - xxxi - Executive Summary

Projected Balance Sheet of REL (Rs.Cr.)

FYE Mar-10Mar-12Mar-14Mar-16Mar-18Mar-20
Promoters Equity 82.53 82.53 82.53 82.53 82.53 82.53
Constr. Grant 3.24 2.94 2.63 2.32 2.01 1.70
Reserves & Surplus 0.08 1.06 2.41 7.05 50.30 69.40
Rupee Term Loan 198.00 186.00 156.00 112.00 56.00 0.00
Deferred Tax Liabilities 0.25 3.57 8.15 23.86 12.01 -
284. 276. 251. 227. 202. 153.
Total Liabilities 10 09 72 76 85 62
Gross Fixed Assets 276.50 276.50 276.50 276.50 276.50 276.50

Depreciation 18.38 42.96 67.55 92.13 116.71 141.29
Net Block 258.12 233.54 208.96 184.38 159.79 135.21
Cash & Money in Reserve 42.5 43. 43. 18.
A/c.'s 25.98 5 42.76 38 06 41
2 276. 251. 227. 202. 153.
Total Assets 84.10 09 72 76 85 62
Financial Indicators of REL

Financial
Indicators
17.22
Project IRR %
DSCR - Debt (Avg) 1.63

DSCR - Debt (Min) 1.17
Total Toll Rev* (Rs.

Cr) 2687
* during the Concession Period
RAIPUR EXPRESSWAYS LIMITED - xxxii - Executive Summary

Sensitivity Analysis
Sensitivity analysis has been performed to assess the robustness of

the cashflows (especially in terms of meeting debt service obligations)
under adverse changes in key parameters. Based on the analysis done
on the sensitivity of the cashflows to changes in key parameters, it
was found that the cashflows were more sensitive to variations in base
case traffic and less sensitive to variations in WPI. The results of the
analysis on the above-mentioned parameters are summarized in Table
below:
Scenario a. Reduction of base case traffic by 10%

Scenario b. O&M expenses – increase by 10%
Scenario c. WPI Growth Rate lower by 10%
Scenario d. Combined Adverse Case
Results of Sensitivity Analysis

Toll Rev.
Min Avg ( Rs.
Type of Case Proj. IRR DSCR DSCR Cr.)
BASE CASE 17.22% 1.63 1.17 2687
Base Traffic reduced by
10% 15.94% 1.46 1.10 2418
O&M Expenses – increase
by 10% 17.05% 1.60 1.11 2687
WPI Growth Rate lower by
10% 16.70% 1.57 1.13 2479
Comb. of all 3 adverse
scenarios 15.24% 1.38 1.10 2231
The financial performance of REL is projected to be adequate under

each of the various sensitivity analyses. The minimum DSCR remains
above one even under the combined scenario of all the above-
mentioned three adverse cases happening together.
RAIPUR EXPRESSWAYS LIMITED - xxxiii - Executive Summary

APPROVALS & CLEARANCES

Majority statutory/regulatory approvals and clearances, essential for Project and their status are
summarized below:
Permits Necessity Status
Ministry of Finance/RBI:
 Approval for foreign Investment / Not Required -
loans, if required
 Approval for import of equipment
and machinery for construction Required Will be applied in
and operation, if required due course, if
 Exemption of excise duty on Not Required required
constr. material, if req. -
Department of Telecommunications
 Permission / clearance for setting Required EPC Contractor to
up of wireless system, if required initiate
 Clearance / permission for the Not Required
use of optical fibre cables of DOT, -
if required
Quarrying Permits:
 Permits for extraction of boulder Required EPC Contractor to
from quarry from ADM Mines initiate
 Permit for installation of crusher Required
from village panchayat and EPC Contractor to
Pollution Control Board initiate
 License for explosives from Required
Explosive controller
 Explosive license for storing Required EPC Contractor to
Diesel initiate
EPC Contractor to
initiate
Electricity:
 Permission from SEB for Required EPC Contractor to
installation of DG Required initiate
 Permission for electrical EPC Contractor to
connection, if power source is initiate
available
Water: If water has to be taken
EPC Contractor to
from river/ reservoir, permission Required
initiate
from State Irrigation Department
Batching Plant:
 License from inspection of Not Required -
RAIPUR EXPRESSWAYS LIMITED - xxxiv - Executive Summary


factories Required EPC Contractor to
 NOC consent from pollution initiate
department
Asphalt Plant: Clearance required
EPC Contractor to
from village panchayats & Pollution Required
initiate
Control Board
Borrow Earth:
 Permission from irrigation -
department if land taken from Not Required
irrigation land
EPC Contractor to
 Permission required from village Required
initiate
panchayat and ADM Mines for
Government & private land
 Permission from Local Not Required
-
Municipalities and Development
Authorities
Cutting of trees: Permission from EPC Contractor to
Required
Forest Department initiate
Sewage Lines and Water Mains:
Permission from Local EPC Contractor to
Required
Municipalities and Development initiate
Authorities
RISK ANALYSIS – Allocation & Mitigation

The key risks of the Project during the construction period, the operation period and throughout the
concession period as well as the mitigation measurers are set out next.
Construction Period
Allocated
Risk Factor Risk Mitigation Measures
to
Construction EPC  The Project Highway involves four
and Contractor laning of an existing two-lane
Completion road, therefore majority of the
risk ROW/land required is already
available.
 The State Support Agreement to
be executed with the SGoC will
enable early clearances / issue of
permits to REL, thus mitigating
RAIPUR EXPRESSWAYS LIMITED - xxxv - Executive Summary

the risk of delay on that count.

 REL has awarded the EPC
contract to DSC on a fixed price
and fixed time basis. The EPC
Contractor has vast experience in
the construction of roads.
 The construction contractor
would also be bearing the
construction risk in its capacity as
shareholder of the Project
Sponsor.
 Adequate performance security
and damages / penalties have
been built into the EPC contract
to ensure timely completion of
works and achievement of COD.
 The EPC Contractor is also
required to take adequate
insurance cover for insurable
risks during the implementation
period and assign them in favour
of Lenders.
 REL also proposes to take up
ALOP insurance to ensure that
the standing operating profits
during the first six-month period
will be covered.
 Road construction methodologies
and technologies are simple,
proven and standardized.
Cost Over-run EPC  As the EPC contract is on a fixed
Contractor price basis, there is no scope of
/Sponsors increase in project cost on this
account.
 In case of cost over-runs, the
Lenders may stipulate conditions
as suggested in the Appendix 3 on
Indicative Term Sheet.
RAIPUR EXPRESSWAYS LIMITED - xxxvi - Executive Summary

Land NHAI  As per the CA, NHAI would

Acquisition acquire the Existing Right of Way
and timely and provide it to the
availability of Concessionaire free from all
land encumbrances within 150 days
from the date of signing of the
CA. Existing Right of Way has
already been handed over to the
Concessionaire by NHAI. There is
a provision of penalty on NHAI in
case of delay in handing over the
necessary land for the project.
 As regards the additional land
wherever required for the Project
Highway including land for Base
Camp, the same will be handed
over to the Concessionaire within
10 months from the date of
signing of CA.
Obtaining REL  Application for Environmental

statutory clearance that is required to be
clearances and taken from Ministry of
approvals Environment & Forest has already
been made. All other permits and
approvals under applicable laws
and permits need to be obtained
by REL.
Funding Risk REL  The Sponsors of REL are reputed
Construction & Engineering
Companies with sound financial
health and have the resources to
bring in the entire equity required
for the project. The Sponsors
propose to bring in 80% of their
equity contribution upfront before
approaching the lenders for the
first debt drawl.
RAIPUR EXPRESSWAYS LIMITED - xxxvii - Executive Summary

Concessionair REL  In case of termination of the

e Event of Concession Agreement due to
Default Concessionaire Event of Default
during the construction period,
NHAI will not offer any
termination payments to the
Lenders. The Concessionaire
Events of Default are mentioned
at sub para t of para 6.2.1 of this
Memorandum. It may be observed
from there that taking into
account the experience &
expertise of DSC in development
of roads on BOT basis, the
possibility of occurrence of
Concessionaire Event of Default
during the construction period is
very remote. However, DSC is
providing an irrevocable and
unconditional Corporate
Guarantee to cover for total debt
outstanding, in the event of
termination of the Concession
Agreement due to Concessionaire
Events of Default during the
Operations Period
Allocated
To
Traffic / REL  The Project Highway is an
market risk existing road that is being made a
higher level of service facility.
 The DPR study conducted by
NHAI (through its consultant
Consulting Engineering Services
India Ltd.) shows that based on
the existing traffic, there is an
immediate need for widening the
Project Highway from 2-lane to 4-
lane.
RAIPUR EXPRESSWAYS LIMITED - xxxviii - Executive Summary

 The traffic volume used in the

financial projections is based on
the traffic study conducted by
Halcrow Consulting India Ltd. in
June 2005.
 The forecasting procedures used
by the Traffic Consultant are well-
established and the model used
for the forecasting has been
validated by comparing its output
to actual observed traffic flows.
 The Project Highway has high
traffic volumes and has high
traffic growth rates.
 NH-6 traverses through 3 states
namely Chhattisgarh,
Maharashtra and West Bengal.
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 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 to
make the project attractive for
DSC.
 A sensitivity analysis has been
undertaken and the project cash
flows are found to be robust to
handle a 10 % fall in base traffic
RAIPUR EXPRESSWAYS LIMITED - xxxix - Executive Summary

quite comfortably.
Toll rates REL  The vehicle category wise toll
rates and escalation in toll rates
have been specified in the CA,
which are fixed. The toll rates
would increase every year based
on the WPI Index. It may be
mentioned that during last 8
years, the Compounded Annual
Growth Rate of WPI Index was in
the region of 4.8%. However, in
the projections, we have assumed
a conservative WPI growth rate of
4.5%.
 Sensitivity analysis on the impact
of about 10% decrease in the WPI
at 4.0% has been tested and the
result indicates that the Project
cash flows are robust enough to
withstand this test.
 The actual toll collection would
depend on the final toll
notification to be issued by NHAI
before COD, for each category of
traffic. As mentioned earlier, the
tolling strategy proposed to be
adopted by REL envisages
charging of full toll to the users
(which is not local in nature)at
the first toll plaza itself,
irrespective of the extent of usage
of the road. We understand that
this tolling strategy is in place at
Jaipur –Kishangarh Toll Road
Project, where the CA terms are
similar to this project CA.
However, in order to mitigate the
risk of proposed tolling strategy
not approved by NHAI, it is
proposed to offer Corporate
Guarantee of DSC. In the event of
RAIPUR EXPRESSWAYS LIMITED - xl - Executive Summary

shortfall in revenue below 85% of

the projections on account of
lower traffic/toll rates, DSC would
have to meet the shortfall or
lenders would have the right to
invoke its guarantee.
Competing REL  As per the traffic study there are
facility and no credible alternative /
capacity competing routes to the Project
augmentation Highway.
 The CA provides that NHAI and
the SGoC shall not construct and
operate either itself or through
some other agency/person, on
BOT basis or otherwise a
competing facility, either toll free
or otherwise during the first 8
years of the Concession Period.
 In case NHAI/SGoC builds and
operates such a facility after the
expiry of 8 years from the
Appointed date, the Concession
Period for this Project shall be
increased by half the number of
years by which such
commissioning precedes the
expiry of the Concession Period.
In addition to this, the CA also
stipulates that the fee charged for
vehicles using such competing
facility shall not at any time be
less than 133% of the fee being
charged at the Project Highway.
 The CA provides that NHAI may,
following a detailed traffic study
conducted by it, at any time after
8 years following COD decide to
augment/increase the capacity of
the Project (Capacity
Augmentation) with a view to
RAIPUR EXPRESSWAYS LIMITED - xli - Executive Summary

provide the desired level of

services to the users of the
Project Highway. NHAI shall
invite proposals from eligible
persons for Capacity
Augmentation and the
Concessionaire will have the
option to submit its proposal for
Capacity Augmentation. In case
the Concessionaire chooses not to
submit its proposal or fails or
declines to match the preferred
offer, NHAI will make the
Termination Payment (applicable
for NHAI’s event of default) to the
Concessionaire.
O&M risks O&M  The CA specifies the O&M
Contractor standards and specification and
the manner in which the
Concessionaire would carry out
O&M of the facility.
 There are provisions in the CA
that specify the role of IC and
SGoC in supervision and
monitoring of the facility
throughout the concession period.
 REL intends to undertake the
O&M tasks itself by drawing on
the experience of the DSC Group
who has the experience in the
operation and maintenance of
their other toll concessions in
India & abroad.
 The CA and SSA provide for REL
to control and regulate traffic on
the project road, thereby
reducing leakage.
Force Majeure REL Cost allocation under Force Majeure
Risks  When the Force Majeure Event is
RAIPUR EXPRESSWAYS LIMITED - xlii - Executive Summary

a Non Political Event, the Parties

shall bear their respective costs.
 For Indirect Political Event, the
costs attributable shall be borne
by the Concessionaire to the
extent of the Insurance Claims,
and to the extent such Force
Majeure Costs as duly certified by
the Statutory Auditors exceed the
Insurance Claim, one half of the
same shall be reimbursed by
NHAI to the Concessionaire.
 For Political Event, the Force
Majeure Costs to the extent
actually incurred and certified by
the statutory Auditors of
Concessionaire shall be
reimbursed by NHAI to the
Concessionaire.
Termination payments under FM
 For non-political FM events, 90%
of debt due and the entire
subordinate debt, net of insurance
claims.
 For indirect-political FM events,
100% of debt due and the
outstanding subordinate debt is
covered, net of insurance claims.
For political FM events, 100% of
debt due and 120% of subordinate
debt is covered.
 In case of indirect and direct
political force majeure events,
termination payment to the
sponsors shall be 110% and 150%
respectively of the Equity
(subscribed in cash and actually
spent on the Project) if such
Termination occurs at any time
during three years commencing
RAIPUR EXPRESSWAYS LIMITED - xliii - Executive Summary

from the Appointed Date and for

each successive year thereafter,
such amount shall be adjusted
every year to fully reflect the
changes in WPI during such year,
and the adjusted amount so
arrived at shall be reduced every
year by 7.5% p.a.
 During the implementation and
operations period, REL is
required to take Comprehensive
insurance package for all
insurable events or any other
insurance required by lenders.
 All the termination payments due
to FM events would be made
through Escrow Account.
 Under any FM event, the Lenders
will be protected by the provision
that they shall be repaid at least
90% of the Debt Due directly by
NHAI.
 In order to cover the balance
amount of the Lenders, DSC shall
provide an irrevocable and
Guarantee to cover for shortfall in
termination payment to be made
by NHAI to the extent of 10% of
the Debt Due in case of
termination of the CA due to any
FM event.
Concessionair REL  In case of termination of
during the operations period, the
lenders would be 90% of Debt
Due, net of insurance claims.
Further, Corporate Guarantee of
RAIPUR EXPRESSWAYS LIMITED - xliv - Executive Summary

DSC will be available to the

extent of 10% of Debt Due to the
Lenders in the event of
termination of the CA due to
during the operations phase.
SWOT ANALYSIS
 This project is an outcome of the conscious recognition by NHAI
to improve the Road Transport Network in the country. The
project is thus, assured of political and administrative support,
which is important for projects of this nature.
 The project is sponsored by DSC Group, which is one of the

major shareholders of REL and is one of the fastest growing
construction companies in India with vast experience in highway
construction, operation and management.
 NHAI commitment to the project is further demonstrated in the

form of Grant of Rs.13.8255 crores for meeting the capital cost
of the project and for meeting the operating expense.
 NH-6 is an important link between Kolkata and Dhule and also

connecting places like Sambalpur, Raipur, Nagpur and Akola. It
traverses through 3 states namely Chhattisgarh, Maharashtra
and West Bengal. 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 .As a result,
traffic intensity on the road is very high.
 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
RAIPUR EXPRESSWAYS LIMITED - xlv - Executive Summary

at Chhattisgarh to make the project attractive for DSC. 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. All these developments will further
increase the traffic on the Project Highway.
 The EPC contract is a fixed price & fixed time contract.

Liquidated Damages for any delay shall be equivalent to any loss
and damage suffered by REL.
 The Concession Agreement is based on the Model Concession

Agreement of NHAI that offers a high degree of security to
lenders.
 In case of termination of the CA due to any Force Majeure Event

or Events of Default during operations period, at least 90% of
the outstanding debt dues of Lenders would be provided by
NHAI and for the balance 10%, DSC is providing an irrevocable
and unconditional Corporate Guarantee.
 The financial projections of the project are satisfactory with an

average DSCR of 1.63 for the lenders and are comfortable
enough to handle various adverse scenarios.
Weaknesses
 NHAI is not entitled to pay any termination payment, on account
of Concessionaire Event of Default, during the Construction
Period.
The termination of the CA due to Concessionaire’s Event of

Default during the construction period is a highly unlikely
scenario, given the expertise of the promoters and the various
contractual agreements that are proposed to be undertaken by
REL. The proposed EPC Contractor, DSC has expertise in the
RAIPUR EXPRESSWAYS LIMITED - xlvi - Executive Summary

construction of road projects and is a very reputed player in the

Indian construction industry. Also, the EPC contract is a fixed-
price, fixed-time contract with provisions for Liquidated
Damages, which further mitigates the chances of
Concessionaire’s Event of Default during the construction
period.
Further to that, DSC is providing an irrevocable and

unconditional Corporate Guarantee to cover for the payment of
outstanding debt to the lenders in the event of termination of
the CA due to Concessionaire’s Event of Default during the
 The project is exposed to traffic risk, as NHAI is not providing

any traffic guarantee.
The traffic study has been conducted by Halcrow Consulting

India Limited, a renowned traffic consultant. The Project
Highway is a part of NH-6 which is an important link between
Kolkata and Dhule. It traverses through 3 states namely
Chhattisgarh, Maharashtra and West Bengal. 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. The comparative analysis of the traffic studies of the
past and that of HCIL shows a robust growth in traffic. With
GDP growth of India showing a healthy trend, the traffic on the
project road is bound to grow and hence the traffic risk is
minimal.
Further, the project cashflows are quite adequate to

comfortably meet the debt servicing obligations even in case of
a drop in base traffic by 10%. Moreover, the Lenders money is
secured by way of termination payments from NHAI covering
at-least 90% of the Debt Due, and the balance 10% being
covered by the Corporate Guarantee of DSC.
RAIPUR EXPRESSWAYS LIMITED - xlvii - Executive Summary

Opportunities
 The Project Highway already has substantial traffic movement.
With improvement and widening to 4-lane highway, there will be
substantial savings in Vehicle Operating Costs leading to higher
usage of the Project Highway. Also the development of
substantial portion of NH-6 (4 laning) will further increase the
traffic on the Project Highway.
Threats
 Despite the expected improvement to the road with completion
of the Project Highway, there will be a section of the present
users who detest paying toll.
The “Willingness to Pay” study conducted by the traffic

consultant shows satisfactory results though some of those
eligible users will opt for concessionary rates. As more stretches
in the country comes under tolling by BOT operators, the road
users will get accustomed to the tolling concept and there may
not be much resistance to toll payment.
 Construction of competing facility in the future.
As per the Concession Agreement, no competing facility shall be

built till the expiry of eight (8) years from the Appointed Date.
In case a competing facility is built after the expiry of 8 years,
the Concession Period for the Project shall be increased by half
the number of years by which such commissioning precedes the
expiry of the Concession Period. NHAI shall ensure that the per
Km fee to be levied for the Competing Road Facility shall at
least be 33% more.
RAIPUR EXPRESSWAYS LIMITED - xlviii - Executive Summary

CONCLUSIONS
NHAI has awarded the concession to REL for Improvement, Operation
and Maintenance, Rehabilitation and Strengthening of the existing 2-
lane road and widening it to 4-lane divided highway of Aurang to
Raipur section of NH-6 from Km 239.00 to Km 281.00 in the State of
Chhattisgarh on Build Operate and Transfer (BOT) basis to the
consortium of M/s. D.S.Constructions Ltd., New Delhi (DSC), M/s.
Apollo Enterprises Limited, Isle of Man UK (APOLLO), M/s. John Laing
International Limited, Kent, UK (JLI), and M/s. Laing O'Rourke PLC,
Kent, UK (LOR). With the consent of NHAI, the award has been
assigned to an SPV, Raipur Expressways Limited (“REL”), formed
specially for implementing the proposed Project by DSC, APOLLO, JLI
and LOR.
DS Construction Limited (DSC), who will be the largest shareholder of

REL, is the construction arm of the DSC Group of Companies. DSC is
one of the fastest growing construction companies in India setting a
scorching growth of revenues since focusing on India in 2002. The
company has been accredited with ISO 9001:2000 by DNV,
Netherlands for Construction of Highway Bridges, Runways, Railway
Tracks and other Infrastructure Development. DSC was incorporated
in 1978 and has been active in the construction business in India and
abroad for the past 25 years. DSC has the required technical expertise
and financial strength to ensure the successful implementation of the
Project.
REL has executed the EPC Contract with the EPC Contractor, DSC,
under which it will design, procure, execute, complete and
RAIPUR EXPRESSWAYS LIMITED - xlix - Executive Summary

commission the Project. The EPC contract is a fixed time, fixed price
lump sum contract at a total contract price of Rs.243.70 crore.
The cost of the Project Highway is estimated at Rs.286 crore, and is

proposed to be funded at a debt equity ratio of 2.32:1 (treating the
NHAI Grant as quasi-equity). REL now proposes to approach the
lenders for rupee term loans aggregating Rs. 200 crore towards part-
financing the project.
The development of the Project Highway was initiated based on traffic

density. The Project Highway NH-6 is an important link between
Kolkata and Dhule and also connecting places like Sambalpur, Raipur,
Nagpur and Akola. It traverses through 3 states namely Chhattisgarh,
Maharashtra and West Bengal. The Aurang-Raipur section also
receives traffic from NH-2 and NH-3 as it links business city Surat in
through traffic, the project road section also collects the local traffic
of Raipur city while it passes through it .As a result, traffic intensity
on the road is very high. The project is expected to gain significant
development at Chhattisgarh to make the project attractive for DSC.
Traffic volume has increased many fold compared to the capacity of a
develop a 4-lane road and improve the road condition at the earliest in
this stretch. All these developments will further increase the traffic on
the Project Highway. The Project Highway is a well-established travel
corridor in the region. Traffic study conducted for the section shows
that the traffic generation capacity of the Project Highway is going to
be pretty robust and will foresee significant growth in future years.
RAIPUR EXPRESSWAYS LIMITED -l- Executive Summary

The traffic projections for the purpose of profitability projections are

based on the traffic study conducted by Independent Traffic
Consultant viz. Halcrow Consulting India Limited (HCIL) and as per
the projected financials, DSCR has been found to be comfortable.
On the basis of above and subject to the risks, weakness and threats
enumerated herein, the overall debt servicing capability of the project
is considered satisfactory and adequate. Based on the various
operating, financing and regulatory assumptions, barring unforeseen
circumstances, the Project Highway is expected to achieve the
projected profitability.
RAIPUR EXPRESSWAYS LIMITED - li - Executive Summary

1. INTRODUCTION
The unprecedented growth of vehicular population, both in passenger

vehicles and commercial vehicles using highways was observed in the
recent years due to the spectacular growth in goods and passenger
movements. In addition, industrial and agricultural developments
have led to higher transport demand. This has created a mismatch
between vehicle population and availability of road infrastructure
resulting in increased congestion, reduced level of service, delays and
increase in the occurrence of accidents. The deficiencies cause
enormous loss to the economy of the country by way of higher vehicle
operating cost, increase in pollution level, delay in passenger & goods
movements and higher accidents.
Recognizing the need for the improvement of arterial routes, the

Ministry of Shipping, Road Transport & Highways (MoSRT&H),
earlier called Ministry of Road Transport & Highways, had identified
certain National Highway stretches for 4-laning on Build, Operate and
Transfer (BOT) basis during 2003-04. These stretches are covered
under the National Highways Development Programme called NHDP
Phase III (earlier called Non-NHDP). The NHDP Phase III includes
10,000 kms of roads that are to be taken up for widening from 2-lane
to 4-lane standards on BOT basis, based on traffic density,
connectivity to state capitals, important centres of tourist & economic
importance with highways under NHDP Phase I & II.
Pursuant to this, MoSRT&H invited applications from reputed

construction contractors and project developers for their
empanelment as entrepreneurs for the execution of NHDP Phase III
programme on BOT basis. M/s. Apollo Enterprises Limited, Isle of
RAIPUR EXPRESSWAYS LIMITED -1- Project Information Memorandum

Man UK (APOLLO), M/s. D. S. Constructions Ltd., New Delhi (DSC),

M/s. John Laing International Limited, Kent, UK (JLI) and M/s. Laing
O'Rourke PLC, Kent, UK (LOR) formed a consortium (hereinafter
referred to as “Consortium”) with M/s. Apollo Enterprises Limited,
Isle of Man UK (Apollo) as its Lead Member and got the Consortium
empanelled to bid for the proposed project.
As part of the implementation process, during September 2003,

MoSRT&H invited Request for Proposals from empanelled
Entrepreneurs for four laning of Aurang-Raipur section (from km 239
to km 281) of NH-6 (the Project Highway), in the state of
Chhattisgarh, under BOT basis. In November 2003, MoSRT&H
assigned the work of award of this project to NHAI. Subsequently,
NHAI invited the bids from the empanelled Entrepreneurs for
undertaking the above-mentioned project work in February 2004. The
Consortium submitted its bid for the Project Highway
Subsequently, based on competitive bidding (lowest grant of Rs.13.82

crore), the concession for four laning of the Aurang-Raipur section of
NH-6 was awarded to the Consortium, on March 07, 2005. The
Consortium has incorporated a Special Purpose Vehicle, by the name
of Raipur Expressways Limited (REL), the Concessionaire, for
implementing the aforesaid project. The Concession Agreement (CA),
based on the Model Concession Agreement of NHAI, was 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.
The scope of project includes investigation, study, design,

engineering, finance, procurement, construction, operation and
maintenance of the Project Highway. The Concessionaire i.e. REL is
expected to recover its project cost and returns through toll collected
from the users of the Project Highway. While project design involves
construction, operation and maintenance of two toll plazas, the CA
also provides an option to REL for developing its own tolling strategy.
The Project Highway, having a length of about 42 kms, is strategically

located on NH-6 that provides connectivity between Aurang and
Raipur. NH-6 is an important link between Kolkata and Dhule and also
traverses through 3 states namely Chhattisgarh, Maharashtra and
West Bengal. The Project Highway traverses through district of
Raipur, capital city of Chhattisgarh. The Project Highway starts at Km
239 (just after the proposed Aurang Bypass Project ends) and ends at
Km 282 (right at the start of the ongoing Raipur Durg project) on NH-
6. 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 Project is expected to gain significant advantage due to the
schedules of the projects.

The total cost of the project estimated at Rs.286 crores is proposed to

be funded through a Debt: Equity mix of 2.32:1 (including the Grant
from NHAI). The Sponsors will bring 80% of their equity contribution
upfront before the first debt drawl.
REL has appointed SBI Capital Markets Limited (“SBICAP”) as its

Sole Financial Advisor & Fund Arranger to undertake a broad due
diligence of the Project for its overall financial/economic feasibility
and to assist REL in raising the envisaged debt.

2. THE COMPANY
Raipur Expressways Limited (REL), a Special-Purpose Vehicle (SPV),

is established to undertake the implementation of Aurang-Raipur
Road Project on BOT basis and as such has not and will not engage in
any other business/activity. The Concessionaire will also be the entity
raising the required debt financing for the project and will enter into
other contracts necessary for the design, construction, finance,
operation, maintenance and management of the Project Highway,
wherever applicable.
2.1 Brief Details of the Company
Name of the Company : Raipur Expressways Limited

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

(hereinafter referred to as “Project”).
2.2 Business Areas of REL
As per the Memorandum and Articles of Association of REL, the

Company’s business activities primarily include:
 To construct, design, execute, develop, maintain, operate,

undertake, erect, establish, carry – out, improve, repair, work,
own, administer or manage on commission or on “Build – Own –
Transfer” (BOT) basis or otherwise of the Road Project viz.
Improvement, Operation and Maintenance, Rehabilitation and
strengthening of existing two lane road and four laning of
Aurang-Raipur Section of National Highway-6 (NH-6) from Km
239.00 to Km 281.00 in the State of Chhattisgarh, India, under
Build, Operate and Transfer (BOT) basis.
Thus as per Memorandum and Articles of Association, REL is duly

authorized to execute the proposed Project.
2.3 Present Arrangement with Banks and Financial

Institutions
REL has currently no fund-based limits with any bank or financial

institution.
2.4 Existing Operations and Past Financials
REL has been formed for the purpose of implementation of the

proposed Project and as of now, there are no existing operations or
past financials of the company.

3. SPONSORS PROFILE
REL is promoted by DSC Group. The DSC Group commenced

operations as a local construction company in India 70 years ago and
has now grown to a US$1 bn conglomerate with interests in diverse
fields including hotels, retailing, trading, real estate, infrastructure
projects, engineering and construction, with over 10,000 people
manning its operations across 11 business locations worldwide.
As per the terms of CA, APOLLO, DSC, JLI and LOR are the members
of the Consortium, who have to hold along with their associates, a
minimum of 51% equity in the concessionaire during COD+3 years
and thereafter minimum of 26% during the balance concession period.
The proposed shareholding pattern in the Concessionaire will be as
under :
Figure 3.1 Shareholding Structure of REL
APOLLO DSC JLI LOR
4.8% 94.9% 0.2% 0.1%
REL
Concession

3.1 Profile of DSC Group
3.1.1 Indian Companies
D S Constructions Limited, a major BOT/BOOT player in the Indian

construction industry, is the flagship company of the DSC Group. Its
expertise spans across all infrastructure sectors viz. Urban
Infrastructure, Industrial Projects, Oil & Gas pipeline projects,
Highways and Bridges, waste water treatment and environmental
projects, airports, marine infrastructure and multi-storeyed buildings.
The company, which hitherto was also carrying out construction
activities in Libya, is now focused on concentrating on the
construction business in India, and the Libyan part of the construction
business is being housed in another group company DSC FZE. The
group does not have any other arm engaged in the construction or
related businesses in India.
Ebony is the group’s lead into the retailing business with

departmental stores spread over 7 cities viz. Delhi, Noida,
Chandigarh, Ludhiana, Amritsar, Faridabad and Chennai. Ebony, with
revenues exceeding the Rs.1 bn mark is today among the key
emerging players in the retail sector in India. Having gradually
expanded its coverage in Northern India, Ebony is now poised for a
major expansion plan riding the wave of policy changes and initiatives
of the Government of India in the booming retail sector.
DS Infra Developers Limited (“DSIDL”) has been incorporated

with the objective of being an infrastructure development company
and holding majority stakes in complex infrastructure projects such as
land banks, real estate, SEZ, hydropower projects and airports. The
company does not have any activities at present.

DSC Infrastructure Pvt. Ltd. and DS Exports Pvt. Ltd. are

investment companies and do not have any operational activities. The
group intends to change the name of DSC Infrastructure Pvt. Ltd. to
avoid confusion with the newly incorporated DSIDL. DS Global Pvt.
Ltd. is engaged primarily in the export of granite & marble and
import activities for the Ebony chain of stores. DS Developers &
Promoters Pvt. Ltd. is in the business of operating a restaurant in
the name and style of “Gourmet Gallery” in the elite locality of South
Extension in New Delhi.
3.1.2 Companies in the Middle East
Apollo Enterprises Limited leads the group’s interests in the

Middle East and is a leading sourcing and trading company with a
turnover of over US$700 million. The details of the company are given
in para 3.3 below.
DSC FZE, incorporated in Dubai in 1999, since April 2005 houses the
group’s thriving construction business in Libya to enable the company
to address the specific business and governance requirements of the
region. The company is one of the largest construction companies in
Libya with a presence since the last 25 years and over 350 trained
professionals and a workforce of over 3000.
3.1.3 Companies in UK & US
Elegant English Hotels, the DSC Group hospitality company, has

interests in UK since the last 15 years and owns 3 specialty hotels
viz., “The Gallery”, “The Gainsborough” and “The Willett”, which are
heritage special hotels in South Kensington, London. Elegant is
engaged in the development and management of these boutique
hotels in UK, with capacity aggregating over 250 rooms. The UK
group operations, with about 35 professionals, also focus on

equipment procurement, real estate and investments in shares and

securities, which are carried out through a company called
Alphamatic Investments Ltd., which is incorporated in the Isle of
Man, U.K.
Universal Granite and Marble, the DSC Group Company, has a

presence in the granite & marble business, which has clocked annual
sales of over US$ 125 Million. It has an excellent network of stone
distribution throughout the region. It has an established presence in
Midwest US. The US business portfolio includes trading, financial
investments and real estate development and marketing of
construction projects.
3.2 Profile of DS Constructions Limited
3.1.4 Background
DS Constructions Ltd., a part of the US$1bn DSC Group, is one of the

fastest growing and most profitable construction companies, which
has built up a high-margin EPC construction business complemented
by an excellent portfolio of investments in flagship BOT projects,
which are arguably some of the best in the country.
DSC was incorporated in 1978 and has been active in the construction
business in India and abroad for the past 25 years. It started its
construction operations in India with Military Hospitals at Siliguri and
Srinagar. However, in early eighties, DSC shifted focus overseas to
take advantage of the construction opportunities and executed a
number of prestigious projects. DSC undertook projects in Libya in a
whole range of infrastructure sectors including highways, railways,
sea ports and airports, urban infrastructure, industrial estates and
parks, high-rise buildings, waste water treatment etc. DSC offers
RAIPUR EXPRESSWAYS LIMITED - 10 - Project Information Memorandum

turnkey solutions for large and complex infrastructure projects with

capabilities that range from design and construction to financing &
operations.
The company shifted its focus back to India in 2002 taking into
consideration the boom in the Indian Infrastructure and the vast
opportunities in infrastructure development in the country. Utilizing
the experience it has gained, the company has rapidly grown its
construction business in India and in a short time span has become
one of the largest and most competitive players in the Indian
Construction space.
The company’s strategy of focusing on BOT projects at a time when

the industry was focusing on cash contracts has paid off very well, in
that it now has a very profitable, high margin construction business
which is supported by a portfolio of high IRR BOT investments. Few of
the company’s pioneering efforts in Indian Infrastructure include:
 Developed India’s first Railway Project on a BOT basis
– the Viramgam Mehsana Project Ltd: completed and handed-
over to Railways
 Developing India’s first fully access controlled 28 km
urban expressway on a BOT basis: the Delhi-Gurgaon
Expressway. Also the first project in India to be won on a
negative grant.
 Awarded India’s longest/largest Toll Road Project on
BOT basis – a 135 km Access Control Expressway – also
considered as the Western Peripheral Expressway for Delhi: The
Kundli-Manesar-Palwal Expressway.

 Selected for and awarded a 1000 MW, Mega Power

Project being one of the first three Hydro Power Projects
awarded in Arunachal Pradesh: Naying Hydropower Project
 Amongst the only three consortiums which were
technically pre-qualified for both the Mumbai as well as Delhi
Airports in the elaborate Airport Privatisation exercise
concluded recently, which laid significant emphasis on the
technical and financial prequalification cut-off being quite
stringent.
3.1.5 Shareholding Pattern of DSC
DSC is a closely held company. The shareholding pattern of DSC is

given hereunder:
Table 3.1 Shareholding Pattern of DSC

(As on May 31,
2006)
Sr Particulars No of Shares % holding
No
Shri. H S Narula &
1
Associates (A) 36319575 73.44
2 Institutional Investors
D.S. Exports Private
Limited 195000 0.39
Alphamatics
Investments Ltd. 10465416 21.16
D.S.Global Pvt. Ltd. 600002 1.21
D.S. Developers &
Promoters Pvt Ltd. 521937 1.06
DSC Infrastructure
Private Limited 1354041 2.74
Subtotal (B) 13136396 26.56
Total (A) + (B) 49455971 100.00

3.1.6 Major BOT Infrastructure Projects of DSC
DSC has been actively involved in private sector participation in

developing Infrastructure Projects. The major infrastructure projects
of DSC on BOT basis are as under:
Table 3.2 Major BOT Projects of DSC

EPC Cost Natur
Project
(Estimated e of
Project Client Cost
) Projec
(Rs Mn)
(Rs. Mn) t
Completed BOT Projects
Viramgam Mehsana
11. Railways 1,022 930 BOT
Project Ltd
12. Raipur Durg Project MoRT&H 1,190 974 BOT
On-going Projects
13. Delhi-Gurgaon Highway NHAI 9,971 7,970 BOT
14. HSIDC 20,000 16,484 BOT
Expressway
15. Aurang-Raipur Highway NHAI 2,860 2,437 BOT
Lucknow Sitapur Road
16. NHAI 4,480 3,952 BOT
Project
Sandur Bypass, PWD,
17. 359 335 BOT
Karnataka Karnataka
Govt. of
1000 MW Naying Hydro-
18. Arunachal 50,000 35,000 IPP
Electric Project
Pradesh
L1 Projects
Gangapur Rail
19. Railways 740 651 BOT
Conversion
BOT
Jhansi-Gwalior Road
20. NHAI 6500 5750 (Annui
Project based on Annuity
ty)
A brief profile of the above-mentioned projects is furnished at

Appendix – 1.

3.1.7 Financials of DSC
Over the last three years, DSC has managed to record consistent
growth in its business. The total income for the period of nine months
ended December 31, 2005 was Rs.243.79 crore (without any income
from Libya operation) as against Rs.362.30 Crores, (including income
of Rs.97.83 Crores from Libya Operation) for FY 2005. The total
income of the company during nine month period ended December 31,
2005 has registered an increase of 23% over the corresponding period
in the previous FY (after excluding the income from Libya operation).
However, the Profit after tax during the period of nine months ended
December 31, 2005 was Rs.20.02 Crores as against Rs.26.95 crore for
the FY 2005. The company, which hitherto was also carrying out
construction activities in Libya, is now focused on concentrating on
the construction business in India, and the Libyan part of the
construction business is housed since in another group company DSC
FZE.
The financial highlights of DSC for last three audited accounting

periods are set out in Table below:
Table 3.3 Financial Performance of DSC
Year (ended Mar 2004 2005 Nine Months

31) ending Dec 2005
Total Income 257.16 362.30 243.79
EBDIT 53.85 71.18 57.69
Interest 5.14 12.02 18.05
Depreciation 10.41 9.91 8.38
Taxation 12.06 22.31 11.25
PAT 26.24 26.95 20.02
Cash Profits 36.65 36.86 28.40
Equity Share Capital 49.35 49.35 50.00
Net Worth 141.96 172.30 193.87

Total Debt 70.23 110.56 200.69

Total Debt/ Equity 0.49 0.64 1.04
Ratio
(All Figures except Ratios
in Rs. Crore)
As on March 31, 2006, DSC had orders in hand worth Rs.6618 crore.
3.3 Profile of Apollo Enterprises Limited
Apollo Enterprises leads the group’s interests in the Middle East and
is a leading sourcing and trading company with a turnover of over
US$700 million. Apollo began twelve years ago as a sourcing
specialist of quality construction equipment and components for the
building industry specifically catering to the African and Middle East
markets. Apollo also provides specialist services in handling, quality
control and installing & assembly of heavy equipments, both electrical
and mechanical in addition to money market operations, portfolio
investments and business in real estate under its wholly owned
subsidiary Alpamatics Ltd. Key industries / sectors catered to include:
Construction Plant & equipment, Building Industry, Heavy Industries,
Hospitals & Medicare, Hospitality & Services Industry, FMCG &
Lifestyle Products, Agro Products, Processed Foods and Textiles.
Apollo Enterprises will be holding 4,000,000 equity shares (4.8% of
the total shareholding) in the Concessionaire.
3.4 Profile of JLI
The group undertakes civil engineering, building, construction

management and management contracting projects overseas on a
traditional design and build or turnkey basis. The group operates

predominantly in the Middle East where it has been long established

and is also well represented and is undertaking significant work, in
the Asia Pacific region, Turkey, Egypt and Nigeria. JLI will be holding
125,000 equity shares (0.2% of the total shareholding) in the
Concessionaire, which has already been brought in.
3.5 Profile of LOR
Laing O’ Rourke Plc is a wholly owned subsidiary of O’Rourke

Investment Ltd, a company registered in England and Wales. The
Group’s principal activities are construction (building, civil
engineering, mechanical & electrical engineering, infrastructure &
support services, construction & repair of utilities, architectural &
environmental services, property development), plant hire &
operations and building products. LOR will be holding 50,000 equity
shares (0.1% of the total shareholding) in the Concessionaire, which
has already been brought in.

4. MANAGEMENT, ORGANIZATION & SHAREHOLDING

PATTERN
4.1 Board of Directors
As per the Memorandum & Articles of Association of REL, the number

of Directors on the Board of the Company shall not be less than 3
(Three) and not more than 12 (Twelve).
REL’s present Board comprises 3 (Three) Directors. The details of the

Directors as on May 31, 2006 are as under:
Table 4.1 Board of Directors of REL

S. Name of Designati Other Directorship
N. Director on
1 Mr. Wholetime  Delhi
Mohinder Director Gurgaon Superconnectivity Ltd.
Singh (formerly, Jaypee-DSC Ventures
Narula Limited )
 D.S.Constru
ctions Limited
 Viramgam
Mehasana Projects Ltd.
 DSC –
Vicon Ventures Private Ltd.
 Lucknow
Sitapur Expressways Ltd.
 Sandur
Bypass Project Ltd.
 KMP
Expressways Ltd.
2 Mr. Chairman  Lucknow
Harvinder Sitapur Expressways Ltd
Singh Kohli  Sandur
Bypass Project Ltd.
 KMP
Expressways Ltd.
3 Mr. Dhiraj Director  Laing
Singh O’Rourke Technical Services

India Private Limited

 Vipul Laing
O’Rourke India Limited
 Trans
Harbour Link Private Limited
 John Laing
 Laing
O’Rourke Holdings Limited
 DLF Laing
O’Rourke India Private limited
The brief profile of the directors of REL is as follows:
Mr. M.S. Narula, the Managing Director of DSC, is a Civil Engineer

and has been instrumental in execution of all the overseas and Indian
assignments of the DSC Group. He joined the company in 1985 in
North Africa Operations and within an year of hands on experience he
took the full responsibility for all construction activity in leading
projects in North. He has been instrumental in forming consortiums of
DSC with other leading companies for big-ticket international projects
with an idea to pool in the financial and technical competences and
bid as EPC contractors, where margins and volumes are higher.
Mr. H.S. Kohli, Director- Marketing and Corporate Affairs of DSC,

has done his graduation from Kashmir University and higher
education specializing in international trading from UK. He has over
23 years experience in the group in the trading and retail business
spanning the various offices of the group world wide. Presently, the
Marketing Department of the D.S. Constructions Limited is headed by
Mr. H.S. Kohli. He also looks after corporate affairs of the group. He
has also been on the advisory panel to the Ministry of Commerce on a
select basis.

Mr. Dhiraj Singh, 37 years old, is a Mechanical Engineer from IIT

Mumbai. He is also having couple of Masters Degrees in Finance
(MBA) and International Management (MIM) from Tulane and
Thunderbird respectively in USA. In his earlier years, he has had the
experience of working in diverse industries like automobiles (Eicher),
steel (Tata) and plastics (Laitram, USA) in the areas of manufacturing,
international trading, IT, and business analysis. In 2002, he joined
Laing O'Rourke group to start their operations in India. Over the past
few years, he has helped establish various businesses for Laing
O'Rourke in India - for the development & construction and for
engineering / process outsourcing. Mr. Dhiraj has also been elevated
to the role of an international Director and is actively involved in the
growth of international business worldwide for the group, as well as
in key strategic initiatives at the group headoffice level in UK.
A perusal of Reserve Bank of India’s list of defaulters, as available on

Credit Information Bureau (India) Limited website www.cibil.com (as
on December 31, 2005), does not indicate the name of the Company,
sponsors or of any of the Directors currently on its Board.
4.2 Project Management Team
A Project Management team comprising personnel from DSC with the

required expertise will be formed to supervise the construction of the
Project Highway as well as to ensure that the obligations of REL as
per the CA are met. The responsibilities of the Project Management
team will include the following:
 Overseeing all matters of technical nature;

 Recommending for progress payments to the EPC Contractor;

 Liaison with NHAI personnel on contractual and technical

matters;
 Smooth implementation of the project;
 Working closely with the EPC Contractor;
 Coordination with external consultants appointed to provide
contractual and technical advice;
 Preparing plans, procedures and systems for the O&M of the
Project Highway after completion of the EPC Contract; and
 Setting up QA/QC systems and controls.
The project management team will be drawn from the pool of

experienced personnel within the DSC Group.
4.3 Organizational Structure during Operations
During the operational period, the management and day-to-day

operations of REL will be handled by Mr. M. S. Narula, Director. DSC
will deploy a team of experienced personnel drawn from technical and
finance (including accounts & administration) disciplines for operation
& maintenance activities.
4.4 Capital Structure & Shareholding Pattern
REL is an unlisted company set up as a Special Purpose Vehicle to

implement the proposed Project Highway. The capital structure of
REL as on May 31, 2006 was as under:
Table 4.2 Capital Structure of REL
Share Capital Particulars No.s Rs. In lakh
Authorized Equity shares of
10,00,000 100.00
Capital Rs.10 each
Issued,
Equity shares of
Subscribed & 10,00,000 100.00
Rs.10 each
Paid up Capital

Considering the equity requirement of Rs.8252 lakh for the Project, the authorized share capital of Rs. 100
lakh will be suitably increased. The proposed shareholding pattern for REL will be as under:
Sl Name of the No. of Amount % of total
No Shareholder Shares (Rs. Lakh) shareholdi
. ng
1 D.S.Construction 78,345,000 783,450,00 94.9%
Limited 0
2 Apollo Enterprises 4,000,000 40,000,000 4.8%
Limited
3 John Laing 125,000 1,250,000 0.2%
4 Laing O’Rourke Plc 50,000 500,000 0.1%
Total 82,520,000 825,200,00 100.0%
0
Shareholders’ Agreement
DSC, Apollo Enterprises, JLI and LOR have entered into a

Shareholders Agreement (SA) on May 09, 2005. The salient features
of the SA are as under:
 The parties should hold the shares in the initial issued and paid-up equity share capital of REL in the
following proportions:
Name of the Shareholder % of the shareholding

D.S.Construction Limited 25%
Apollo Enterprises Limited 40%
John Laing International Limited 25%
Laing O’Rourke Plc 10%
 In the event any party is unable to subscribe to its shares against

the Share Subscription Option Notice, fully or partly or any
increase / right issues made thereafter, REL shall offer the said
shares to the other parties. In the event the other parties accept
the offer and subscribes to the said shares within a period of 15
days of the receipt of the said notice, REL shall allot the said
shares to the subscribing party.

 The Board shall consist of not less than 3 and not more than 12
directors. The appointment of the directors on the Board of REL
shall be in the proportion to the shares held by the parties at the
relevant time.
 The aggregate equity shareholding of any one party/all parties

collectively along with their affiliates in the issued and paid up
equity share capital of REL shall not be less than (a) 51% during
the Construction Period and for 3 years following COD and (b) 26%
during the balance remaining Operation period of the project.
 If any one Party decides to sell its Shares, or any part or parts
thereof, in the company, it can offer the shares to the other
party/parties only and such offering party will notify the other
parties and the Board of the company in writing of the proposed
sales of such shares, including the number of shares to be sold and
the other terms & conditions.
 Apollo Enterprises and/or DSC shall provide necessary financing,

to REL from time to time to the extent necessary so as to ensure
that REL carries on its business with a view to be financially self-
sufficient and be able to operate and borrow and raise funds
independently. Any debt to the company shall be arranged by
Apollo and/or DSC by providing necessary guarantees for securing
loans for the company, if required.
As per the terms of Concession Agreement, the Consortium has to

hold minimum of 51% of the equity of the Concessionaire upto COD +
3 years and 26% of the equity thereafter. With the proposed
shareholding pattern, the Consortium will be holding 100% of the
equity to start with. We have proposed a pre-disbursement condition
for pledge of 51% of the equity shares of the company for COD+3

years and 26% thereafter, in order to ensure that during the currency
of the loan, the shareholding stipulation of CA should be complied
with.

5. PROJECT DESCRIPTION
5.1 Scope of the Project
NHAI 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:
d. Build
To provide financing and to undertake the design & construction of
the widening, upgrading and rehabilitation works on the Project
Highway.
e. 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.
f. Transfer
To hand over the Project Highway to NHAI upon expiry of the
concession period.

5.2 Site & 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.
The road infrastructure of Chhattisgarh, despite these large distances,

is in fact better than other parts of the undivided Madhya Pradesh.
Chhattisgarh currently has 24.6 kilometres of road for every 100
square kilometres of area whereas the undivided Madhya Pradesh has
22.8 kilometres for every 100 square kilometres of area. In terms of
village roads Chhattisgarh has 1.3 kilometres of village roads for
every village, compared to 0.92 kilometre for undivided Madhya
Pradesh and 0.78 kilometres for the state of Madhya Pradesh. The
Project Highway lies on NH-6, which originates from West Bengal and
traverses through the states of Chhattisgarh, Madhya Pradesh and
Maharashtra, connecting Kolkata to Surat in Gujarat.

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
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.
The Project envisages the improvement, operation & maintenance,

rehabilitation and strengthening of the existing 2-lane road and
widening it to 4-lane divided highway of Aurang to Raipur section of
NH 6 from Km 239 to Km 281 in the State of Chhattisgarh on Build
Operate and Transfer (BOT) basis. The road passes through Baihar,
Rasni, Lakholi, Gujra, Navagaon, Mandir-Hasand, Cheri-Khedi, Zora,
Labhandi, Bhatagaon, Khushalpur, Raipura and Sarona villages and
towns in Raipur district of Chhattisgarh.
A site map of the Project Highway is as under:

Figure 5.1 Aurang Raipur Project Stretch

5.3 Current Status of Land Availability / Acquisition
As per the terms of the CA, NHAI has to acquire and provide land to
REL as per the following schedule:
Stretch Length Remarks

Existing ROW from Chainage
238.275 to 281.740 except
from Chainage 241.300 to
244.000 where realignment is 40.765 Within One month of
involved Km signing of CA
From Chainage 241.300 to 2.700 Within Ten months of
244.000 (Realigned portion) Km signing of CA
The existing ROW has already been made available to REL to start the
construction work.
5.4 Existing Project Highway Characteristics
a. Existing Carriageway

The Project Highway shall be widened to have a 4-lane divided

carriageway with 1.5m wide paved shoulder facility. The present road
has mild curves with radius varying from 200 m to 3000 m and low
avg. longitudinal gradients of 0.36 % (1 in 277). The existing road of
Project Highway has a width of 7.0 m with 2.5 m of earthen shoulder.
The height of embankment varies from 0 to 3.0 m. In general, the
condition of the pavement varies from poor to fair. The present
pavement stretch has inadequate strength for few stretches.
Generally the subgrade soil is in good condition. The entire project
highway falls in the plain terrain region.
b. Land Details
The Project Highway is characterized by a mix of habituated area and
agricultural lands.
The details of the available Right of Way is given below:
S. No. Old Chainage (as per Existing ROW From

Km stone) Existing C/L
From To
1 239/0 252/0 24.4 m
2 252/0 252/800 24.4 m
3 252/800 256/800 45.72 m
4 256/800 269/800 24.40 m
5 269/800 281/000 60.00 m
Acquisition of land is proposed to be done by Government to make

right of way 45-60 m so as to have future provision for expansion.
Land acquisition plans have been submitted to NHAI and process of
acquisition is in progress.
c. Geometry

The Project Highway predominantly has a straight alignment and

traverses through plain terrain for most of its length. There are 128
curves. Out of which there are 12 deficient curves (radius < 360 m)
which needs improvement. The flat gradients shall be corrected in
such a way so as to attain an appropriate longitudinal gradient in
order to achieve longitudinal drainage. Also vertical curves shall be
improved /introduced so that the vertical curves meet IRC:73
standards. The horizontal alignment of the Project Highway shall be
improved in consultation with the IC/NHAI ensuring that the proposed
improvements are accommodated with in the land width available
d. Existing Structure
There are 41 cross drainage structures along the Project Highway, out
of which 1 is major bridge, 6 are minor bridges and the remaining 34
are culverts. There are two railway level crossings along the project
highway out of which one is of narrow gauge and one is of broad
gauge. Besides, one 2-lane ROB also exists on project highway.
e. Intersections
There are 6 major and 33 minor junctions along the Project Highway.
f. Drainage
The roadside drainage along the Project Highway needs improvement,
predominantly in urban stretches. In urban areas open lined / closed
drains, have choked. Occasionally overflows occurring during
excessive rains and insufficient waterway of cross drainage
structures.
5.5 Proposed Scope of Work under CA
a. Highway Design

As the scheme involves on-line improvements of an existing highway,

various factors were taken into consideration in the design approach.
Apart from taking into consideration the existing salient features
recorded along the Project Highway, the local design standards and
specifications based on Indian Road Congress (“IRC”) codes and
MoSRT&H Specifications were used for the design. All the designs
and drawings shall be reviewed by the Independent Consultant/NHAI
prior to execution.
b. Cross-sections
The Project Highway shall be widened to have a 4-lane divided
carriageway with 1.5m wide paved shoulder facility. The typical cross
section of four lane divided highway (wide median) is applicable for
all the rural sections, the typical cross section with narrow median
and service road is applicable for the urban areas, which shall be
followed along with the minimum design criterion stipulated for the
development of the Project Highway. The widening of the carriageway
in the urban reaches shall be symmetrical with respect to the existing
centre line of the road, while in rural sections the widening of the
carriageway will be generally eccentric so that the existing
carriageway could be utilized fully; depending upon the ROW
available and the side of the existing railway line adjacent to Project
Highway.
c. Service Roads
Service roads shall be provided on both side locations along the
Project Highway. Total length of service road shall be 19.06 Kms on
each side of the mainline.
d. Junctions

The following improvements have been envisaged for the existing/

proposed junctions along the project highway:
 Adequately designed junctions with channelisations, all right turn
and left turn (acceleration and deceleration) lanes (auxiliary) at
major intersections for safe and smooth movement of traffic.
 Auxiliary acceleration and deceleration lanes for left turning traffic

at entrances to major roadside facilities such as wayside amenities,
service area and truck lay-bys.
 Typical intersection treatments to be applied as specified in Project

Report.
 Improvement to all the existing intersections/ junctions and

provision of new intersections/ junctions shall be done.
e. Pavement
The pavement would be designed for the minimum design traffic of
100MSA and 25MSA for service roads. The design life of flexible and
rigid pavement will be 20 and 30 years respectively. The pavement
will be refurbished once every 5 years.
f. Underpasses
Considering cross movement of traffic at village locations, minor
underpasses of span 10 m and vertical clearance of 3.5-4.0 m suitable
for low height traffic shall be provided at village locations, where the
cross roads are meeting with the Project Highway to avoid conflict
between local traffic and Highway traffic. Six underpasses shall be
provided.

g. Geometric Improvement
The flat gradient shall be corrected in such a way so as to attain an
appropriate longitudinal gradient in order to achieve longitudinal
drainage. Also vertical curves shall be improved/introduced so that
the vertical curves meet IRC:73 standards. The horizontal alignment
of the Project Highway shall be improved as per the standards set out
in CA. The improvement shall be done in consultation with the
Independent Consultant ensuring that the proposed improvements are
accommodated within the available land width as far as practical
otherwise action to acquire more land shall be resorted to through
NHAI.
h. Drainage System
An effective surface and sub-surface drainage system of pavement
structure shall be designed as stipulated in IRC SP: 42. Some of the
important features of the drainage system are as follows:
 Storm water will be directed away from the bridge deck by
providing kerb and gutter on the approaches for a minimum
distance of 50m beyond the bridge and carried by a chute to
the roadside channel to avoid embankment erosion;
 In rural stretches, roadside channels will remove surface run-
off from the highway and the adjacent areas and will be
drained to the nearest natural watercourse;
 Concrete lined/ masonry drains under foot-path in urban
stretches where service roads have been provided;
 Drainage channels and pipe shall be installed at crossings with
service pipes and utilities ensuring that conflict do not occur.

i. Bridges and Other Structures

There are 41 cross drainage structures along the Project Highway, out
of which 1 is major bridge, 6 are minor bridges and the remaining 34
are culverts. There are two railway level crossings along the project
highway out of which one is of narrow gauge and one is of broad
gauge. Besides, one 2-lane ROB also exists on project highway.
Existing and new culverts & bridges shall be constructed wide
enough to accommodate the adjacent road cross section. One 6-lane
divided carriageway Fly Over at km 273/2(old chainage) shall be
provided where a major intersection exists between NH-6 (Project
Highway) and NH-43 (Raipur - Natawalasa). In addition to the
above, one new 6-lane ROB at Km 262/4 (old chainage) and a new 3-
lane ROB shall be provided for the new carriageway along side of the
existing 2-lane ROB at km 281/8 (old chainage).
j. Slope Protection and Drainage

The improvements in the drainage and the slope erosion shall be
made as per the following norms:
Drainage Measures:
 Side ditches of required cross section for area drainage on
both side of carriageway in rural section;
 Covered Pucca drains underneath the sidewalk in the urban
sections;
 Open Pucca drains underneath the median between main
carriageway and service road with proper connection to the
outfall location in the urban sections;
 Chute drains along with shoulder drains in high embankment
(3m and above);

 Median drains at super elevated sections with proper outfall

connections; and
 Covered Pucca drains underneath the sidewalk of proposed
facility (bus bays, truck lay bys, etc.) in rural sections.
Slope Protection Measures:

 Side Slope of embankments 3m high or more shall
be protected by pitching or geo-meshes or geo-nets or geo-grids
in consultation with the Independent Consultant/NHAI.
k. Toll Plazas
A maximum of two (2) toll plazas will be constructed. Their location
and layout shall be finalised in consultation with the Independent
Engineer such that there is no possibility of the traffic bypassing.
l. Toll System
An open toll system will be implemented. Tolls will be collected upon
entry at the toll plaza. There will be a total of minimum 8 lanes having
semi-automatic system of toll collection comprising equipments of
vehicle classification, ticket issuing, data processing and power
supply. One toll lane in each direction shall be provided for traffic not
required to pay fees. Appropriate technology shall be used in this
regard so that not more than 6 vehicles per lane queue up during the
peak hours.
m. Right-of-Way
In addition to the existing available land width, which varies between
24.4-60 m along the Project Highway, extra land is to be acquired by
NHAI to make it 45-60 m so as to have future provision for expansion.
n. Road furniture and markings

Road furniture such as traffic signs, kilometre posts, hectometre

stones, ROW pillar etc on the Project Highway will be provided as per
IRC Codes.
o. Truck Lay-byes
3 locations have been identified to site truck bays on both sides of the
carriageways. The truck lay-byes shall have necessary facilities like
repairing, eating and resting and shall be suitably landscaped. Basic
facilities such as drinking water and toilets, with proper disposal
system, shall be provided at suitable locations for the lay-bys.
p. Bus Bays
27 locations have been identified to site bus bays on both sides of the
carriageways. The layout of the Bus Bays will be in accordance with
IRC 80. Adequate drainage shall be provided at bus bays.
q. Highway Lighting
Lighting shall be provided at the location of rest areas, toll plaza and
at interchanges. At the major Junctions, location of ROB/Flyover,
Mast lighting system will be provided.
r. Landscaping
The finished road facility will exhibit adequate landscaping of
aesthetically pleasing view. Trees will be planted in rows and on
either side of the road with staggered pitch as per IRC: SP-21.
s. Administrative, Operation and Maintenance Base Camp

The main administrative, operation and maintenance base camp will
be provided to cater to the requirement of the following services:
 Fee Collection
 Highway Maintenance

 Facilities for storage and repair of maintenance equipments,

vehicles, and materials
 Any other requirement
5.6 Project Timetable
The main milestones and the corresponding critical dates for the
implementation of Project are summarized in the timetable given
below:
Table 5.1 Project Timetable
Particulars Date
Signing of Concession October 13, 2005
Agreement
Appointed Date April 11, 2006
Construction Start Date April 01, 2006
Construction Completion Date September 30,
2008
Tolling Start Date October 01, 2008
End of Concession period April 10, 2031

6. PROJECT AGREEMENTS AND CONTRACTING

PARTIES
6.1 Project Structure
The relationships among the Project’s various key parties are set out
hereunder:
Figure 6.1 Project Structure

DSC APOLLO JLI LOR
94.9% 4.8% 0.2% 0.1%
State Govt.
of
Chhattisga
Raipur GOI/ NHAI

Expressways
Limited
DSC Independe
nt
Consultant

Lenders
Insurers
Contract Contract

Contract Contract
State Support
Agreement
6.2 Project Agreements
3.1.8 Concession Agreement
The Concession Agreement (“CA”) between NHAI and REL was signed
on October 13, 2005 based on the Model Concession Agreement of
NHAI. The key terms and conditions of the CA are summarized below:
a. The Concession
In consideration of the Concessionaire’s undertaking to develop,
design, engineer, finance, procure, construct, operate and maintain

the Project Highway, NHAI agrees to grant REL the exclusive rights
and authority to levy, demand, collect and appropriate tolls for its own
benefit from tollable vehicles using the Project Highway.
b. Scope of the Project

The scope of the Project shall include the improvement,
rehabilitation/strengthening of existing two-lane roads, widening into
4 lanes divided carriageway and operation & maintenance of the
existing 2 lanes stretches from Km 239 to Km 281 (Aurang - Raipur
Section) of NH-6, in the state of Chhattisgarh, India on BOT basis.
c. Concession Period
The Concession shall be for a period of twenty-five (25) years,
including the 2.5 year construction period. It shall commence from
the Appointed Date (i.e. 180 days from the date of signing of CA) and
shall end on the Termination date (i.e. 25 years from the Appointed
Date).
d. Performance Security
The Concessionaire has furnished Performance Security in the form of
bank guarantee of Rs.5.70 crores from Jammu & Kashmir Bank for
due and faithful performance of its obligations during the construction
period. The Performance Security shall be released by NHAI to the
Concessionaire upon 100% contribution of the equity by the
Shareholders of the Concessionaire and upon the Concessionaire
having expended on the Project and paid out an aggregate sum of not
less than 20% of the total project cost as certified by the Statutory
Auditors of the Concessionaire and provided the Concessionaire is not
in breach of CA. If the Concessionaire is in breach of this CA, the

Performance Security shall be continued till COD or until the breach

is cured; whichever is earlier.
e. Fees/Tolls
The Concessionaire shall be entitled during the Operations Period
after completing the entire Project Highway stretch of 42 kms as
certified by the Independent Consultant, to levy and collect the Fees
from the users of the Project Highway in accordance with the Fee
Notification set forth in Schedule G of the CA. The Fees shall be
rounded off to the nearest five (5) rupees for ensuring ease of
payment and collection.
The Fee Notification provides for annual revision in the Fees based on
variation of the WPI. The computation for the fees revision with effect
from July 1 of each year is as follows:
Toll Fees = Base Fee x WPI 1
WPI 0
Where:
 WPI 0 = the WPI on March 31,1997; and
 WPI 1 = the WPI on March 31st preceding the
fee revision date
f. Concession Fee
The Concession Fee payable by the Concessionaire to the NHAI shall
be Rs.1.00 per year during the term of the CA.
g. Competing/Additional Road Facility

NHAI, GoI or State Government of Chhattisgarh (SGoC) may

construct and operate, either itself or have the same, inter alia, built
and operated on BOT basis or otherwise, any expressway or other toll
road, not being a by-pass, between inter alia, Aurang and Raipur
section (Km 239.00 to 281.00) of NH6 (“Additional Tollway”) provided
that such Additional Tollway shall not be opened to traffic before
expiry of 8 (eight) years from the Appointed Date.
In the event of such Additional Tollway is commissioned at any time

after 8 (eight) years from the Appointed Date, then the Concession
Period for this Project shall be increased by half the number of years
by which such commissioning precedes the expiry of the Concession
Period (e.g. if the commissioning of the Additional Tollway occurs
after 10 years from the Appointed Date, the balance Concession
Period shall be increased by 7.5 years to 22.5 years).
NHAI shall ensure that the per kilometre fee to be levied and
collected for the Additional Tollway shall at no time be less than an
amount which is 133% of the per kilometre Fee of that levied and
collected from similar vehicles or class of vehicles using the Project
Highway.
h. Capacity Augmentation
NHAI may, following a detailed traffic study conducted by it, at any
time after 8 years following COD decide to augment/increase the
capacity of the Project (Capacity Augmentation) with a view to
provide the desired level of services to the users of the Project
Highway. NHAI shall invite proposals from eligible persons for
Capacity Augmentation and the Concessionaire will have the option to
submit its proposal for Capacity Augmentation. In case the
Concessionaire chooses not to submit its proposal or is not the

preferred bidder and also fails or declines to match the preferred

offer, NHAI will make the Termination Payment (applicable for NHAI’s
event of default) to the Concessionaire and terminate the Concession
Agreement.
In case the Concessionaire after participating in the bidding

procedure, fails to give the lowest offer, the Concessionaire shall be
given the first right of refusal to match the preferred offer. If the
Concessionaire matches the preferred offer, the Parties shall enter
into a suitable agreement supplemental to this Agreement to give
effect to the changes in scope of the Project, Concession Period and
all other necessary and consequential changes. In such an event, the
Concessionaire shall pay to the bidder who had made the lowest offer,
a sum of Rs.10 lakh towards bidding costs incurred by such bidder.
i. Land/Site
The Concessionaire shall be given the right and license to enter upon
and occupy all land/site required, in relation to the Concession. NHAI
shall procure access to the existing right of way, free of
encumbrances, at no cost to the Concessionaire, not later than 150
days from the date of the CA. In the event, there is delay in the
provision of the land/site to the Concessionaire for any reason other
than Force Majeure Event or breach of CA by the Concessionaire,
NHAI will provide compensation at the rate of Rs.1,000 per month per
1000 sq.m. or part thereof if such area is required by the
Concessionaire for construction works. Such damages shall be raised
to Rs.2,000 per month after COD if such area is essential for the
smooth and efficient operation of the Project Highway.

Additional Right-of-way shall be made available to the Concessionaire,

free of encumbrances, at no cost to the Concessionaire provided
Concessionaire has fulfilled his obligations of:
a. working in optimising the use of existing Right of Way

handed over to him;
b. identify and submit proposal for acquisition of additional
land in accordance with the requirement of concerned State
Government Revenue Department or the relevant Land
Acquisition Act; and
c. pursue with the State Government of Chhattisgarh (SGoC)
for early accomplishment of Land Acquisition.
NHAI has already made available to REL, the existing ROW of the
Project Highway to commence the Construction work. The remaining
land and the area for toll plaza will be handed over to REL within ten
months of the date of signing of the CA.
j. Construction
The Scheduled Project Completion Date (SPCD) has been set for as 30
months from the Appointed Date (The Appointed Date being 180 days
from date of signing of CA). The project shall be deemed to be
complete and open to traffic only when the Independent Consultant
has issued the Completion Certificate or the Provisional Completion
Certificate, as the case may be. If the SCPD is not achieved for
reasons other than force majeure or events attributable to NHAI or
any government agency, the concessionaire shall pay to NHAI weekly
damages at the rate of 0.01% of the total project cost.
k. Independent Consultant

Within 120 days of signing of CA, an Independent Consultant (IC)

shall be appointed by NHAI to monitor and supervise the construction
and operation & maintenance of the Project Highway. The
remuneration, cost and expenses of the Independent Consultant shall
be paid by NHAI and 50% of which shall be reimbursed by the
Concessionaire to NHAI. The IC is yet to be appointed by NHAI.
l. Change of Scope
NHAI may require the provision of such additional works and services
on or about the Project Highway which is beyond the scope of the
Project provided such changes do not require any increase/reduction
in expenditure exceeding 5% of the Total Project Cost and do not
adversely affect the COD.
m. Operation and Maintenance

The Concessionaire shall operate and maintain the Project Highway
by itself, or through O&M Contractors in accordance with the
Specifications and Standards as set forth in the CA, Good Industry
Practice, Applicable Laws & Permits. The Concessionaire in
consultation with the Independent Consultant shall prepare a
maintenance manual for the regular and periodic maintenance of the
Project Highway.
n. Financial Close
The Financial Close shall be achieved within 180 days from the date of
signing of the CA. If the Concessionaire fails to achieve Financial
Close within the said 180 days period, the Concessionaire shall be
entitled to a further period of 180 days subject to an advance weekly
payment to NHAI of a sum of Rs 100,000 per week or part thereof for
any delay beyond the said first 180 day period. Should the

Concessionaire fail to achieve Financial Close within 360 days from

the date of signing of the CA, the CA shall be deemed to have been
terminated by mutual agreement of the parties.
Although the initial time period of 180 days for achieving the financial
close has already expired on April 12, 2006, however, as the NHAI is
yet to appoint the IC & arrange to execute the State Support
Agreement, the company has requested for additional time for
achieving the Financial Close. However, it is proposed to stipulate a
pre-disbursement condition that any penalty payable to NHAI, due to
delay in achieving the financial close, will be directly paid by DSC,
without having any recourse to REL.
o. Grant
NHAI has agreed to provide to the Concessionaire cash support by
way of Grant (the “Grant”) of Rs.13.8255 Crore during the Concession
Period. The Grant shall be applied by the Concessionaire for meeting
the capital cost of the project and expenditure during Operations
period and shall be treated as part of the shareholders’ funds (the
“Equity Support”). NHAI shall pay to the Concessionaire yearly Grant
as proposed in the Concessionaire's Bid as set forth below:
Table 6.1 Grant Schedule as per the CA

Constructi Operations Period
on Period
Concessio 1 2 3 4 5 6 7 8 9 10 Total
n Year
Yearly
Grant 1.0 1.1 1.27 0.0 1.4 1.7 2.2 2.5 2.5 13.82
0.00
5 55 05 0 0 0 5 0 0 55
from
NHAI
13.82
Total 3.4755 10.35
55
The Concessionaire shall be entitled to draw down the Grant

progressively during the Construction Period after it has contributed

and spent on the Project at least 80% (eighty percent) of the total
Equity (excluding Equity Support) required to be provided as part of
the total project cost. The disbursement of the Grant shall be made by
NHAI to the Concessionaire proportionately along with the balance
loan funds to be disbursed by the lenders. NHAI shall disburse each
tranche of the Equity Support by credit to the Escrow Account within
15 days of the release of each loan instalment by the Senior Lenders
to the Concessionaire.
The Grant during Operating Period shall be disbursed by NHAI to

Concessionaire by credit to the Escrow Account in quarterly
instalments as specified in clause 23.2 of CA and indicated in Table
6.1. Such instalments shall be paid by NHAI until the Grant is fully
disbursed to the Concessionaire. If NHAI fails to disburse any tranche
of the Equity Support within the period set forth, NHAI shall pay
interest on such delayed tranche at SBI PLR plus two (2%) percent
per annum.
p. Revenue Shortfall
In cases of Indirect Political or Political Force Majeure Event
situations, NHAI shall provide the Concessionaire with a Revenue
Shortfall Loan should the revenue received fall below the Subsistence
Revenue Level (i.e. sufficient to cover O&M expenses and Debt
Service Payments) in any accounting year. The Concessionaire shall
repay the loan to NHAI with interest (at SBI PLR per annum) at least
2 years before the expiry of the Concession Period.
q. Escrow Account
The Concessionaire shall prior to the Appointed Date, open and
establish an Escrow Account with a bank and all funds constituting

the Financing Package for meeting the total project cost as well as the
toll revenues during the operating period shall be credited to such
account and all capital as well as revenue expenditure of the project
shall be made from this account.
r. State Support Agreement

In carrying out its obligations under this Agreement, the
Concessionaire will require the support and certain services from the
SGoC. In this respect, a State Support Agreement (SSA) has been
provided and the obligations of the SGoC are similar to that of NHAI
in the Agreement including in ensuring that no competing facility is
put up without being subject to the conditions set out earlier. In
addition, support in terms of requisite infrastructure facilities, police
assistance, and assistance in not interrupting free flow of traffic on
the Project Highway is specified. NHAI has warranted in the CA that
the SSA will be entered into before Financial Close.
s. Force Majeure
The Concessionaire shall, wherever reasonably practicable, effect
insurance to cover the occurrence of an event of force majeure.
Nevertheless, the CA provides that in the instance of a force majeure
event subsisting for a period of 180 days or more within a continuous
period of 365 days, either party may in its sole discretion terminate
this CA by giving 30 days notice.
As per the CA, a Force Majeure Event (FME) shall mean occurrence in
India of any or all of Non Political Event, Indirect Political Event
and/or Political Event as defined as follows:
Non-Political Events include acts of God or events beyond the

reasonable control of the Affected Party (such as adverse weather

conditions, earthquake, cyclone, flood, volcanic eruption or fire);

radioactive contamination or ionizing radiation; strikes or boycotts
(other than those involving the Concessionaire or EPC Contractor);
any failure or delay of the EPC Contractor but only to the extent
caused by another Non-Political Event; any judgment or order of any
court in India made against the Concessionaire (other than failure of
the Concessionaire to comply with any applicable Law); or any event
or circumstance of a nature analogous to any of the foregoing.
Indirect Political Events include an act of war, invasion, armed conflict

or act of foreign enemy, blockage, embargo, riot, insurrection,
terrorist or military action, civil commotion or politically motivated
sabotage which prevents the collection of Fees; industry wide or state
wide or country wide strikes or industrial action which prevents the
collection of Fees; any public agitation which prevents the collection
of Fees. All these events must occur for a duration exceeding a
continuous period of 7 days to be considered as force majeure events.
Political Events include change in law, expropriation or compulsory

acquisition by any Governmental agency; unlawful or un-authorized or
without jurisdiction revocation of, or refusal to renew or grant without
valid cause any consent or approval required by the Concessionaire or
EPC Contractor to perform their respective obligations.
The details of the termination payments for the above-mentioned FME are as under:
Termination payments under Force Majeure events:
Force Majeure Termination payments to concessionaire by NHAI

Event
1 Non Political Event An amount equal to 90% of the Debt Due and 100% of
subordinated debt less due insurance claims and 90% of
amount of such claims not admitted shall qualify for
being included in the computation of Debt Due.
2 Indirect Political (a) The total Debt Due, less due Insurance claims and
Event 80%(eighty percent) of such claims not admitted, plus

(b) 100% of the outstanding subordinated debt; plus

(c) 110% of the Equity subscribed in cash (excluding the
Grant amount) and actually spent on the Project if such
Termination occurs at any time during three years
commencing from the Appointed Date and for each
successive year thereafter, such amount shall be
adjusted every year to fully reflect the changes in WPI
during such year, and the adjusted amount so arrived
shall be reduced every year by 7.5%(seven and half
percent) per annum.
3 Political Event (a) The total Debt Due, plus
(b) 120% of the Subordinated Debt; plus
Grant amount) and actually spent on the Project if such
commencing from the Appointed Date and for each
successive year thereafter, such amount shall be
adjusted every year to fully reflect the changes in WPI
during such year, and the adjusted amount so arrived
shall be reduced every year by 7.5% per annum.
t. Events of Default and Termination Payments

The CA may be terminated by either party under event of defaults by
the other party, subject to a cure period.
Concessionaire Events of Default

Some of the events constituting the Concessionaire’s default are:
 Failure to achieve Financial Close within prescribed period;
 Failure to achieve any project milestone other than Scheduled
Project Completion Date within the period specified and failure
to cure such default within 180 days;
 Material breach of and failure to comply with CA;
 Concessionaire commits default in complying with any of the
terms of CA, save and except those defaults in respect of which
Cure Period has been provided.
 Concessionaire creates encumbrances, charges, and lien other
than those expressly permitted in the CA,
 Shareholding of the Consortium Members falls below the
minimum stipulation as per the CA;
 Transfer of the Concessionaire’s rights and/or obligations
under any of the Project Agreements or all or material part of

the assets which may affect the Concessionaire’s ability to

perform;
 Winding up, bankruptcy or appointment of receiver for the
Concessionaire;
 Material breach of any of the Project Agreements;
 Default under any of the Financing Documents or any of the
Senior Lenders has recalled its loans;
 The Concessionaire abandons the operations of the Project
Highway for more than fifteen (15) days without the prior
consent of NHAI; and
 The Concessionaire fails to repay the Revenue Shortfall Loans.
Should the Concessionaire fail to remedy the breach within a one (1)
month period, NHAI may evoke termination proceeding by issuing a
notice of its intention to the Concessionaire. Following this, the
Concessionaire will have a further fifteen (15) days to make its
representation. After the expiry of the said period, NHAI may at its
sole discretion proceed to issue the termination notice.
NHAI’s Event of Default

The Concessionaire may terminate the CA pursuant to a ninety (90)
days notice in writing to NHAI upon the occurrence of the following
events deemed as NHAI’s default:
 NHAI’s breach of this Agreement and failure to remedy the

breach within ninety (90) days of notice and such breach has a
material adverse effect on the Concessionaire;
 NHAI repudiates this CA;
 NHAI/GoI or SGoC or any governmental agency have caused
circumstances that have a material adverse effect on the
performance of the Concessionaire and have failed to remedy
within ninety (90) days of notice; and

 NHAI has delayed any payment that has fallen due under this
CA for a period exceeding ninety (90) days.
The details of the termination payments for the above termination events are as under:
Termination payments under Events of Default:
Events of Default Termination payments to concessionaire by NHAI

1 Concessionaire An amount equal to 90% of the Debt Due less due insurance
Events of Default claims and 80% of amount of such claims not admitted during
the Operations Period.
2 NHAI Events of (a) The total Debt Due, plus
Default (b) 120% of the total Subordinated Debt; plus
Equity Support) and actually spent on the Project if such
commencing from the Appointed Date and for each successive
year thereafter, such amount shall be adjusted every year to
fully reflect the changes in WPI during such year, and the
adjusted amount so arrived shall be reduced every year by
7.5% per annum.
u. Change in law
If as a result of Change in Law, the Concessionaire suffers an increase
in costs or reduction in net profit after tax return or other financial
burden, the aggregate financial effect of which exceeds Rs.10 million
in any Accounting Year, the Concessionaire may notify NHAI and
propose amendments to CA so as to put the Concessionaire in the
same financial position as it would have occupied had there been no
such Change in Law resulting in such cost increase, reduction in
return or other financial burden.
v. Arbitration
Any dispute between the Concessionaire & NHAI, which is not
resolved amicably shall be finally decided by reference to arbitration
by a Board of Arbitrators, which will consist of three Arbitrators of
whom each party shall select one and the third Arbitrator shall be

appointed in accordance with the Rules of Arbitration of the Indian

Council of Arbitration.
w. Governing Law and Jurisdiction

The CA is governed by the Laws of India and the Courts at New Delhi,
India shall have jurisdiction over all matters arising out of or relating
to the CA.
x. Financing Arrangements and Security to Lenders

Substitution Agreement: A tripartite substitution agreement would
be signed among NHAI, the concessionaire and the senior lenders
(represented through Lenders’ Agent) providing that the senior
lenders shall have the right to substitute the Concessionaire by a
selectee for the residual period of the concession, in case of
Concessionaire’s event of default under any of the Financing
Documents.
Charges & assignment: The CA provides for charging and

assignment of project contracts, including the CA, with prior
permission of NHAI and rights and titles of the project in favour of the
lenders for obtaining financing for the Project.
3.1.9 EPC Contract
REL has entered into the EPC Contract with the EPC Contractor, M/s
D. S. Constructions Limited, under which it will design, procure,
execute, complete and commission the Project. A summary of the key
terms of the EPC Contract has been furnished as under:
a. General Scope of Work

Design, engineering, construction and completion of the widening,
upgrading and improvement of the existing 2-Lane highway from Km.

239.00 to Km. 281.00 on Aurang-Raipur Section of the NH-6, in the

State of Chhattisgarh, to 4 lanes.
b. Contract Price
The EPC contract is fixed time and fixed price lump sum contract at
a total contract value of Rs.243.70crore.
c. Commencement Date
The construction commencement date is April 01, 2006. REL has
already handed over the possession of site to EPC Contractor for
commencement of work.
d. Completion Date
The completion date has been fixed at or earlier than September 30,
2008, i.e.30 months from the construction commencement date.
e. Certification for Completion of Work

The Work shall be certified complete only when the IC issues relevant
certificate(s) under the CA.
f. Damages for Failure to complete by Completion Date

The penalty payment payable by the EPC Contractor shall be based on
actual loss in terms of revenue and / or damage incurred by the
Concessionaire.
g. Maintenance of Existing Highways

The EPC Contractor shall maintain the existing highways during the
construction period to the same extent required of the Concessionaire
under the CA.
h. Defects Liability Period

There shall be a 12-month defects liability period from the commercial
operations date.

i. Performance Guarantee
The EPC Contractor shall provide performance guarantee equivalent
to 5% of the EPC Contract Price by way of Corporate Guarantee
j. Design Responsibility
The EPC Contractor is responsible for the design, including that
provided by the Concessionaire as part of its requirements.
k. Variations/Change in Scope of Works

If NHAI changes the scope of work then work under the EPC Contract
shall be changed accordingly.
l. Governing Law
The governing law shall be Indian law.
m.Obtaining Permits
The Concessionaire shall be responsible for obtaining Applicable
Permits as defined by the CA, with the assistance of the EPC
Contractor. The EPC Contractor shall be responsible for obtaining any
other permits, licenses and approvals for the design, execution and
completion of the work.
n. Payment
Payment will be based on a pre-agreed monthly payment schedule,
which shall be reviewed every 6 months and adjusted if variance is
more than 5%. There shall be a Setting out & mobilization works
payment of 10% of the Contract Price, against the Corporate
Guarantee of the EPC Contractor.
o. Insurance
The EPC Contractor shall take out Contractor’s All Risk insurance
policy. The EPC Contractor shall take up workmen’s compensation
and any additional/ other insurance coverage required.

p. Definition of Effects of Force Majeure

The definition and consequences of force majeure generally follow
those in the CA.
q. Termination
Termination by the Concessionaire generally follows the provisions in
the CA. The EPC Contractor may terminate if the Concessionaire fails
to pay on time, substantially fails to perform its obligations, assigns
without express provisions under the Contract, suspends the work for
a prolonged period (except where such suspension is due to NHAI
suspension) or becomes bankrupt/insolvent. The EPC Contractor must
give 14 days notice to terminate.
3.1.10 Independent Consultant Contract
NHAI will appoint an IC to monitor the construction of the Project

Highway and advise NHAI on the issuance of the Completion
Certificate. The IC will ensure that REL fulfils all its obligations under
the CA. In principle, the key responsibilities of the IC are as follows:
 Review the designs, drawings, and construction, progress

monitoring, affirmation of all certifications done by the
Concessionaire, etc.;
 Supervise that all requirements of the CA and the various
schedules are met by the Concessionaire and inform NHAI and
the Concessionaire in case of any discrepancy/deviation; and
As prescribed in the CA, selection of the IC shall consist of the

following steps:
 Short-listing of the consultants by NHAI.

 Issuance of letter of invitation along with Terms of Reference
(Schedule O of the CA) to short-listed consultants by the NHAI.

 Evaluation of Technical Proposal and selection of five (5)

consultants.
 Forwarding the list of five (5) consultants to the
Concessionaire to select three (3) consultants.
 Evaluation of Financial Proposal of the three (3) selected
consultants by the Concessionaire.
 Negotiation and selection of the Independent Consultant.
The appointment of the IC shall be initially for a period of 4 years.

Subsequently, NHAI shall appoint as IC either the same party or a
different party, based on the same selection process, for a term of 3
years at a time. The process for appointment of IC has already been
initiated by NHAI.

7. DESIGN & CONSTRUCTION OF THE PROJECT
The Concessionaire will enter into EPC Contract with DSC for the
design, engineering, procurement of materials & equipment,
construction and completion of the Project Highway. The EPC
Contract will be fixed price lump-sum contract with fixed completion
date. The total contract sum of the EPC Contract will amount to
Rs.243.70 Crore.
A Project Management team will be established by the Concessionaire

to supervise the construction of the Project Highway. In addition,
NHAI will appoint an IC to monitor the construction of the Project
Highway and to advise NHAI in relation to the issuance of the
Completion Certificate. The Independent Consultant will ensure that
the Concessionaire fulfils all its obligations under the CA. The
relationships of the abovementioned parties are set out as per Figure
7.1 given hereunder:
Figure 7.1 Relationship of the Prom. Mgt. team with the Principal
Parties during Constr.

NHAI
Liaison Concessio Repor

and n ts
Independent
submissio Agreemen
Consultant’s
ns t
Contract
Concession Independen
aire Monitors and instructs t
(Project in event of non- Consultant
Manageme compliance
nt) Lenders
Supervises Independen
and t Engineer
instructs Financing
Documents Repor
EPC ts
Contractor Lenders
The construction of the Project Highway shall be completed within 30

months from the Appointed Date, as per the time period provided in
CA. Provisions are made in the EPC Contract for liquidated damages
to be paid to the Concessionaire, in the event that completion of
construction is delayed.
The engineering and design works forms part of the EPC Contract
undertaken by the EPC Contractor for which purpose, it will engage
the services of reputable engineering consulting company. The EPC
Contractor shall be responsible for the detailed design of the Project
Highway. All design will comply with the design criteria set out in the
CA and with statutory design standards applicable in India.

7.1 Profile of EPC Contractor
The EPC Contractor for the Project, DSC, is the major Sponsor of the
Concessionaire and has completed several major construction projects
in India and abroad. Some of the projects in hand with DSC as on May
31, 2006 are as under:
Table 7.1 Major Projects of DSC
Name of Project Client Contract
Price (Rs.
Mn)
Completed Projects
Viramgam Mehsana Project Ltd Railways 930
Raipur Durg Project MoRT&H 974
In Progress Projects
Delhi-Gurgaon Highway NHAI 7,970
HSIDC 16,484
Expressway
Aurang-Raipur Highway NHAI 2,437
Lucknow Sitapur Road Project NHAI 3,952
Sandur Bypass, Karnataka PWD, Karnataka 335
1000 MW Naying Hydro-Electric Govt. of Arunachal
35,000
Project Pradesh
DSC has been a relatively recent entrant in the Indian Infrastructure

space given its overseas focus, but in the last four years it has set up
an enviable track record of some pioneering efforts in the Indian
Infrastructure space. The company has been able to win some of the
good BOT projects and it has followed a conscious policy of basing its
EPC construction business primarily on BOT projects at a time when
the market was tilting heavily on cash contracts. The company’s
strategy has paid off very well in that it now has a very profitable,
high margin construction business, which is supported in no low
measure by a portfolio of good BOT investments. It may be mentioned
that DSC was amongst the only three consortiums which were
technically pre-qualified for both the Mumbai as well as Delhi Airports

in the elaborate Airport Privatisation exercise concluded recently,

which laid significant emphasis on the technical prequalification cut-
off being quite stringent.
It may be seen from the above that DSC has got vast experience
across various sectors. Hence, the appointment of DSC as the EPC
contractor on a fixed time, fixed price EPC contract will mitigate the
construction risk in the project.

8. OPERATION & MAINTENANCE OF THE PROJECT
Under the BOT framework, the Concessionaire shall be responsible

for the O&M of the Project Highway throughout the concession
period. As provided in Clause XVIII of the CA, the O&M
responsibilities of the Concessionaire have been described to include
the following:
 Ensuring smooth and uninterrupted flow of traffic during

normal operating conditions;
 Charging, collecting and retaining the Fees;
 Minimizing disruption to traffic in the event of accidents or
other incidents affecting the safety and use of the Project
Highway;
 Undertaking routine and major maintenance including repairs
and preventive actions;
 Preventing, with the assistance of relevant law enforcement
agencies, unauthorized entry to and exit from the Project
Highway, encroachments on the Project Highway and
preserving the right of way of the Project Highway;
 Maintaining a public relations unit to interface with and
attend to suggestions from users of the Project Highway, the
media, Government Agencies and other external agencies; and
 Ensuring adherence to the safety standards.
The Concessionaire intends to undertake the O&M tasks itself by

drawing on the experience of the DSC Group who has the experience
in the operation and maintenance of their other toll concessions in
India and abroad. Certain key and experienced technical personnel
from DSC will be seconded to the Concessionaire at the appropriate
time to oversee the O&M aspects of the Project.

The Concessionaire shall be adopting the O&M programme that has

been used in similar projects undertaken by DSC Group, which will be
customized to take into account the local conditions to ensure that the
O&M for the Project Highway will be effective and efficient. In
addition, the O&M programme will be tailored based on the
specifications set out in the CA.
8.1 Operation
The operational activities will principally comprise 1) operation of toll

collection system, 2) traffic management and 3) emergency and
recovery functions as further detailed below:
Toll Collection System
Toll collection activities shall be directed from each toll plaza which in
turn will be linked to a central location to facilitate the administration,
accounting and reconciliation functions. In the event of system
failure, each set of equipment in each lane of a toll plaza shall be able
to function independently on a “stand alone” mode until restoration of
the equipment to an on-line condition.
The toll collection system will be of a manual open type design with
electronic toll collection facilities at selected lanes. As such,
payments of the Fees may be made by cash or through the electronic
toll collection. With regards to the Local Traffic, dedicated lane(s)
shall be provided to differentiate these from the Through Traffic. For
the users of the Project Highway to be entitled to be classified as
Local Traffic, a system of registration with the applicable toll plaza
need to be undertaken and a special identification tag/pass provided.

To cater for the Non-Tollable Traffic, a special lane will also be

provided.
To ensure that optimal toll collection is achieved, appropriate

operating procedures and policies will be implemented with special
emphasis on internal controls. In addition, the Concessionaire will be
setting up an Independent Toll Monitoring unit to monitor and report
the toll collection activities.
The Toll Monitoring unit will be equipped with all the necessary
surveillance equipment/tools and will be trained and supported by the
Concessionaire to ensure an efficient and effective toll collection
system is put in place for this Project. In addition to these measures,
the Concessionaire will install cameras on every toll lane complete
with recording facilities. Toll collection operations on the lanes will be
recorded round the clock and comparisons will be made on a random
basis.
Traffic Management
The Concessionaire shall draw up a comprehensive traffic

management procedure to ensure traffic safety and smooth traffic
flow along the Project Highway. A key component of traffic
management is the emergency and recovery procedures as described
below. Highway patrolling will also be put in place to facilitate traffic
management at all time. Smooth traffic flow will enable the users of
the Project Highway to benefit from safe travel as well as
predictability of their journey in terms of time and conditions of the
road.
Emergency and Recovery Functions

This relates to prompt handling of emergency situations such as

accidents or traffic congestion to minimize traffic disruption and
restore the Project Highway to their original state. In the event of
emergency situations, the Concessionaire shall require the
cooperation of the traffic police, fire services and the hospital
emergency rescue unit.
8.2 Maintenance
Procedures will be drawn up to provide a rapid and effective response

and facilitate communication to all the required authorities in the
event of an accident. The traffic aid post will feature as an integral
component as it shall house the ambulance, fire services, tow away
trucks and cranes necessary to handle emergency situations. It shall
also be equipped with adequate communication system, information
collection and data processing system to respond and monitor the
situation.
A comprehensive maintenance programme will be followed to ensure

the expected performance of the Project Highway. The maintenance
is broadly classified into two (2) type of activities namely, routine and
major maintenance. Routine maintenance work consists of generally
repetitive in nature such as grass cutting, roadway clearing, desilting
and drainage system cleaning and prompt repairs of potholes, cracks,
lighting, etc. Major maintenance consists mainly of road resurfacing,
repairs to structures, equipment refurbishment & replacement and
heavy maintenance. The Major maintenance works will be carried out
once in every 5 year from the COD.

8.3 Toll Fee & Collection System
Toll System
The location and number of toll plazas depend on the type of toll
system. Open System of toll collection shall be provided on the Project
Highway with collection of user fee from vehicles only at the toll
plaza. There shall be a total of minimum 8 (Eight) lanes having a semi-
automatic system of toll collection comprising equipments for
registering of vehicle classification, ticket issuing, data processing
and power supply. One toll lane in each direction shall be provided for
traffic not required to pay fees. Appropriate technology shall be used
in this regard so that not more than 6 vehicles/Lane queue up during
the peak hours. Since local traffic cannot be completely isolated, the
open toll system is more suitable.
Location of toll plazas
Two toll plaza have been considered for tolling the project road. The
location and number of toll plazas have been proposed after taking
into consideration the accumulation of traffic from different streams,
the cost of developing, operating & maintenance of toll plazas and
land availability for additional lanes. To achieve the optimal balance
between maximizing capture of traffic and maintaining reasonable
costs, it is proposed that the toll plazas are situated at the following
locations of the Project Highway as follows:
 First toll plaza at Km 263 (near Zora Village)
 Second toll plaza at Km 278 (near Raipur)
Under the proposed open toll system, the aggregate Fees to be

collected along the Project Highway will be as per the provisions of
the CA.


Toll Fee
The proposed toll fee for the different classes of vehicles are based on
the schedule of fees for 4-laning in the CA as per Year 1997. The unit
toll rates are then adjusted annually to reflect the changes in the
Wholesale Price Index (the “WPI”) from 31st March 1997 onwards.
In terms of local traffic, there is provision for discounted Fees in the

CA as follows:
 For local personal traffic – the applicable toll rate is 25% of
the unit toll rate; and
 For local commercial traffic – the applicable toll rate is 50% of
the unit toll rate.
The forecasted unit toll rates for October 01, 2008 (COD date) in
comparison with July 1997 and July 2006 for both local and through
traffic are given below:
Table 8.2 Unit Toll Rates – Through Traffic (Rs per Km)
Class of Vehicles Jul’ 97 Jul’ 06 Oct’ 08
Car / Van / Jeep 0.40 0.61 0.64
Mini-Bus 0.70 1.07 1.12
Bus 1.40 2.14 2.24
LCV 0.70 1.07 1.12
Truck 2 Axle 1.40 2.14 2.24
MAV (> 2 Axle) 2.25 3.44 3.60
Table 8.3 Unit Toll Rates – Local Traffic (Rs per Km)
Class of Vehicles Jul’ 97 Jul’ 06 Oct’ 08
Car / Van / Jeep 0.10 0.15 0.16
Mini-Bus 0.35 0.54 0.56
Bus 0.70 1.07 1.12
LCV 0.35 0.54 0.56
Truck 2 Axle 0.70 1.07 1.12
MAV (> 2 Axle) 1.13 1.72 1.80

The Fees determined using the unit toll rates indicated above and the
length of the Project Highway is rounded to the nearest five (5)
Rupees. The estimated starting Fees at each tolling point along the
Project Highway for through and local traffic are given below:

Table 8.4 Toll Fees as on October 2008 (i.e. COD)- Through Traffic
(in Rs.)
Class of Vehicles At Km 263 At Km 278
Car/Van/Jeep 30 30
Mini-Bus 50 50
Bus 100 100
LCV 50 50
Truck 2 Axle 100 100
MAV (> 2 Axle) 160 160
It is proposed to follow the tolling strategy wherein the company will

charge full toll to the users (which is not local in nature) at the first
toll plaza itself, irrespective of the extent of usage of the road. In case
the user has to cross the second toll plaza, on producing the toll
ticket, no toll will be charged at the second toll plaza. We understand
that such tolling strategy is in existence at Jaipur-Kishangarh Toll
Road Project, where the provisions of CA are similar to the provisions
of this CA. However, it is proposed to offer Corporate Guarantee of
DSC for taking care of any major shortfall in the toll revenues owing
to non acceptance of this tolling strategy by NHAI, while issuing the
toll notification. The actual fees to be charged to users shall
be computed by the Concessionaire and sent to the NHAI for
validation as soon as possible after March 31, in every year, but at
least forty-five days before the rate increase is to be effective.
Table 8.5 Toll Fees as on April 2008 (i.e.COD) - Local Traffic (in Rs.)
Class of Vehicles At Km 263 At Km 278
Car/Van/Jeep 5 5
Mini-Bus 10 10
Bus 25 25
LCV 10 10
Truck 2 Axle 25 25
MAV (> 2 Axle) 40 40

Local Personal Traffic means and includes a vehicle which is

registered with the Concessionaire by any person who normally
resides or works at a place that can normally be approached only by
using a part of the section and such person is therefore, required
to use such vehicles for commuting on a part of the said section,
without crossing more than one of the Plazas, in the course of
normal travel to and from his place of work or residence. Local
Commercial Traffic means any commercial vehicle including
buses, trucks, light motor vehicles or taxis engaged in transporting
goods and passengers, registered with the concessionaire, as plying
routinely on the said section without crossing more than one of the
Plazas.
Schedule G of the CA specifies that the Fees shall be revised effective
from July 1 of each year.

9. INSURANCE ARRANGEMENTS
The Concessionaire will be adopting a comprehensive insurance

programme necessary for the successful management of risks for the
Project. The proposed insurance programme will be arranged with
separate coverage for construction and operation.
9.1 Construction Period
The Concessionaire will effect and maintain or cause to be effected

and maintained the following insurance during the construction
period:
 Contractor’s all risk policy for the full contract value;

 Policy against third party liability of Rs.5 Cr aggregate for all
incidents; and
 Advance loss of profit (“ALOP”) policy to cover for the first six-
month standing operation profits.
Out of the above-mentioned policies, the Concessionaire will

undertake the ALOP policy, whereas the EPC Contractor will be
undertaking all other necessary policies via a block policy.
9.2 Operations Period
The Concessionaire intends to take out insurance policies (jointly with

the Lenders) to cover the following during the operation of the Project
Highway:
 Fire policies to cover for all the completed building/toll plazas
and other structures;
 Public liability policy to cover against third-parties property
damage and bodily injury for up to Rs. 5 Cr aggregate for all
incidents;

 Standard Fire and Special Perils policy to cover all

engineering completed works against losses of catastrophe in
nature or other physical/accidental means;
 Money policy for the toll collections at the toll plazas, whilst
under transit and whilst kept on premise in locked
compartments;
 Fidelity guarantee policy on the infidelity of the employees
handling cash or materials resulting in loss;
 Electronic equipment policy to cover for the IT systems whiles
being utilized for the tolling;
 All risks policy for all equipment/lease equipment and other
necessary equipment used at the premises; and
 Personal accident policy to cover for accidental death and
bodying injury to the employees.

10. PROJECT COST
The Project Cost comprises the EPC cost, Financial Fees & Expenses,
Administrative & Pre-operative expenses, Engineering & Supervision
Charges, Interest during construction, Insurance during construction
and Debt Service Reserve.
The breakdown of the Project Cost is set out below:
Table 10.1 Breakdown of the Project Cost

Rs In
Item Crore %
EPC Cost 243.70 85.2%
Financial Fees & Expense 3.00 1.0%
Admin. & Pre-operative Expenses. 4.87 1.7%
Engineering & Supervision Charges 5.06 1.8%
Interest during Constr. (IDC) 19.72 6.9%
Insurance during Construction 0.15 0.1%
(ALOP)
Debt Service Reserve Creation 9.50 3.3%
Total 286.00 100.0%
a. EPC Cost
REL has awarded the EPC Contract for the construction of the Project
Highway to DSC. The EPC Contract covers the construction of road
works, major and minor bridges, at-grade junctions, underpasses, rail
over-bridges, toll plazas, toll equipments, lay-bys and the installation
of other fixed assets. The EPC cost has been fixed at Rs.243.70 Cr. The
year-wise breakdown of this cost over the construction period is as
follows:
Table 10.2 Annual Construction Cost
March- March- March-
07 08 09 Total
Phasing of EPC Cost (Rs
Cr) 92.65 126.44 24.61 243.70

b. Financial Fee & Expenses

REL has provided for the payment of various financial fee & expenses
amounting to Rs.3.00 crore, which will cover lenders fees, financial
advisory fee, debt syndication fee, legal fee and other costs proposed
to be incurred for the purpose of financial closure & loan
disbursement.
c. Admin. & Pre-Operative Expenses

REL has provided for the administrative & supervision expenses
during the construction period amounting to Rs.4.87 crore. This
includes the expenses incurred during bidding for the project,
company formation expenses and other administrative expenses,
which include, the cost of monitoring of the activities during the
construction period and other related costs associated with opening
the Project Highway for tolling.
d. Engineering & Supervision Charges

REL has provided for the payment of various outside consultant fees
& supervision charges amounting to Rs.5.06 Cr. These include the
fees for the engineering, design, and monitoring of the construction
by the Independent Consultant and the lenders’ independent
engineer, fees to the auditor and supervision charges.
e. Interest Costs (during construction)

Interest during construction is projected to be Rs.19.72 Cr or about
6.9% of the total Project Cost based on the schedule of drawdown of
the finance facilities. It is assumed that the debt draw-down will
commence from November 2006 (i.e. after deployment of 80% equity
contribution of the promoters).

f. Insurance Premium (during construction)

REL will be taking an Advance Loss of Profit (ALOP) policy during the
construction period, to cover for the first six-month of standing
operating profits. The insurance premium has been estimated at
Rs.0.15 crore.
g. Debt Service Reserve Account (DSRA) Creation

The DSRA has been provided to cover for six months of subsequent
debt service obligations, which includes interest payments and
repayment of debt principal. The DSR amount to be funded as part of
the Project Cost amounts to Rs.9.50 Cr or about 3.3% of the total
Project Cost and is scheduled to be drawn in the last month of the
Construction period.

11. PROJECT FUNDING
The funding of the Project Cost will be met by a combination of the

Promoters’ Equity, NHAI Grant and Rupee Term Loan (RTL) from
Banks/FIs.
11.1 Funding / Capital Structure
Taking into account the overall funding requirements and the project
cash flows, the proposed funding structure is shown in the table
below:
Table 11.1 Financing Structure
Source of Fund Rs in Crore % of total
Promoters Equity 82.52 28.9%
NHAI Grant 3.48 1.2%
Rupee Term Loan 200.00 69.9%
100.0
Total 286.00 %
The debt / equity ratio is at 2.32:1 after taking into account the Grant
from NHAI as the quasi equity. This ratio was arrived at after taking
into account of factors such as the Debt Service Coverage Ratio
(“DSCR”), qualitative factors such as risk profile of the Project and
overall reasonableness within the prevailing project finance practices
in India.

11.2 Promoters’ Equity
Based on the proposed capital structure, the level of promoters’

equity in REL is Rs.82.52 Cr. The promoters propose to bring in the
80% of their contribution before the draw down of the Rupee Term
Loan or Grant commences. The promoters’ equity will be brought in
by DSC to the extent of 95% and the balance 5% will be held by
Apollo, JLI and LOR.
11.3 NHAI Grant
NHAI has agreed to provide Rs.3.48 crore of Construction Grant for

the Project, for the purpose of part-financing the construction of the
Project and is to be drawn during the construction period. The whole
or any part of the Grant shall be disbursed by NHAI on the fulfilment
of the following conditions:
 the Concessionaire is not in Material Breach of this Agreement at
the time of such
disbursement
 upon the injection of at least 80% of the equity; and
 Grant shall be disbursed by NHAI to the Concessionaire
proportionately along with the balance loan funds to be
disbursed by the lenders.
As per the Concession Agreement, apart from this construction grant,
NHAI also has to provide for operations grant during the first 7 years
of operation amounting to Rs.10.35 crore, which will be utilised for
the purpose of partially meeting the O & M expenses.
11.4 Rupee Term Loan from Banks/FIs
REL proposes to approach domestic banks and financial institutions to

raise Rs.200 crore of Rupee Term Loan as project finance amounting

to 69.9% of the total project cost. The term loan is to be contracted

for 13.7 years from the Appointed Date including a moratorium period
of 12 months from COD and a repayment period of 126 months, on
step-up basis.
The profile of the term loan showing the timing for the draw down and
their repayments, based on the above parameters is set out below:
Table 11.2 Profile of Rupee Term Loans
The debt repayment has been structured on ballooning basis to

synchronize the same with the traffic built-up and ensure reasonable
year-to-year DSCR. The residual concession period after final
repayment to lenders would be around 11 years.
An indicative detailed term sheet for the proposed rupee term loan is
enclosed in Appendix 2.

11.5 Sources & Application of Funds
The estimated timing of the sources and applications of funds during

the construction period of the Project is set out in the next table.
Table 11.3 Sources & Uses of Funds (Rs. Cr)

March- March- March-
07 08 09 Total
Sources of Funds
Promoters Equity 66.02 3.15 13.36 82.52

NHAI Grant 0.81 2.10 0.56 3.48
200.0
Rupee Term Loan 46.72 120.90 32.38 0
113.5 126.1 286.

Total 5 5 46.30 00
Uses of Funds
266.2
Capex Payments excl. IDC 112.68 116.02 37.58 8
Interest During Constr 0.87 10.13 8.72 19.72
113.5 126.1 286.

Total 5 5 46.30 00

12. TRAFFIC ASSESSMENT
12.1 Road Sector in India
Transportation of goods and people is a prerequisite for trade

between various regions and sustained economic development. In
India, the transport system comprises roads, railways, waterways
(shipping, ports and inland waterways), and civil aviation. Out of
these, roads are the most important means of transport handling
around 85% of passenger traffic and 70% of the freight traffic in India.
Road networks comprise (in decreasing order of the volume of traffic

movement) expressways, highways (national and state), inter-city
roads, urban, and rural roads. Highways provide connectivity across
the length and breadth of a country by facilitating medium and long-
range freight and passenger traffic. They also provide connectivity to
ports for the transportation of cargo to the hinterland.
India has an existing road network in excess of 3.3 million Km., which
is the second largest in the world. The road network in India can be
divided into the following broad categories:
Table 12.1 Road Network in India
Type of Road Network Length (Km.) % of Total

Length
National highways 65,569 2.0 %
State highways 1,31,899 4.0 %
Major district roads 4,67,763 14.1 %
Other Urban / Village 26,50,000 79.9 %
roads
Total Road Network 33,15,231 100.0%
Source: NHAI

National highways, which carry medium and long-range freight and

passenger traffic, constitute only 2 per cent of the total road network
and carry approximately 40 per cent of the total traffic volume. Less
than 10% of the total length of national highways is 4-laned, with most
of them being two lane, single lane or intermediate lane.
NHAI was set up in 1989 in order to implement major highway

projects in India and became fully operational in 1995. It has been
entrusted with the supervision and coordination of the National
Highway Development Programme (NHDP).
The NHDP project includes the following components:

 The Golden Quadrilateral (GQ) project involving 4-laning of
around 5,846 km of NH connecting the four metros (Delhi-
Kolkata-Chennai-Mumbai-Delhi) – NHDP Phase I.
 The North-South & East-West (NSEW) Corridor project
involving the upgradation of the existing 2-lane highways and
4-laning of around 7,300 km of NH, connecting Srinagar to
Kanyakumari (North-South) and Silchar to Porbandar (East-
West) – NHDP Phase II.
 Port Connectivity and Other Projects, which involves
connecting all major ports (Haldia, Paradeep, Vishakapatnam,
Chennai & Ennore, Tuticorn, Cochin, New Mangalore,
Marmagoa, Jawaharlal Nehru Port Trust and Kandla) to the
GQ, through around 363 km of road network. Other projects
involve about 779 km of road development (mainly bypass
projects).
 Four-Laning of 10,000 kms of existing National Highways
(other than NHDP Phase –I&II) under the NHDP Phase III
(earlier known as non-NHDP). NHDP Phase-III will provide
connectivity between number of State Capitals with NHDP
Phase-I&II, high-density corridors, places of tourist and
economic importance etc.

 NHDP Phase III-A.

GOI has approved 4/6 laning of 4000 km on BOT basis and
preparation of DPRs of the balance 6000 km in first phase is
under progress and targeted to be completed by December
2009.
 NHDP Phase III-B

In the 2nd Phase, 4/6 laning of balance 6000 km will be
taken up and completed by December 2012.
 NHDP IV
This phase will entail converting an additional 20,000 km of
highway (which are not covered under GQ, NSEW or NHDP
III) into two-lanes with paved shoulders.

 NHDP V
It would cover highways on GQ and NSEW of 5,000 km length,
which would be converted into six-lane highways over the next
6-7 years on BOT basis. NHAI is currently appointing
consultants to make detailed project reports for the various
stretches covered under NHDP V.
 NHDP VI
This phase would cover 1,000 kms of expressways, which
would connect major commercial and industrial townships.
 NHDP VII
In this phase, the intra-city road networks would be beefed up
by constructing ring roads, flyovers, bypasses and providing
connectivity to highways. Investment plans for this phase is
yet to be finalized.
The Project Highway is on National Highway - 6, connecting Aurang

to Raipur, and is a part of the NHDP Phase III of NHAI.
12.2 Project Highway
The Project envisages the improvement, operation & maintenance,

rehabilitation & strengthening of the existing 2-lane road and
widening it to 4-lane divided highway of Aurang to Raipur section of
NH 6 from Km 239.00 to Km 281.00 in the State of Chhattisgarh on
Build Operate and Transfer (BOT) basis. The road passes through
Baihar, Rasni, Lakholi, Gujra, Navagaon, Mandir-Hasand, Cheri-Khedi,
Zora, Labhandi, Bhatagaon, Khushalpur, Raipura and Sarona villages
and towns in Raipur district of Chhattisgarh.

traverses through 3 states namely Chhattisgarh, Maharashtra and

West Bengal. 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 project is expected to gain significant advantage due
to the connectivity with Raipur-Durg project and the complementary
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.
12.3 Scope of the Traffic Study
Halcrow Consulting India Limited (“HCIL”) was commissioned to

undertake a comprehensive and independent traffic study on the
Project Highway to assess the prevailing traffic & travel
characteristics and undertake the data analysis for establishing
project revenue through direct tolling. The study was done in June
2005.
The scope of the study includes :

 To conduct traffic surveys to determine Average Daily Traffic
(ADT) and Annual Average Daily Traffic (AADT) on the Project
Road.
 To assess traffic growth rates applicable for the project.
 To estimate toll traffic at proposed toll plaza locations after
identification of competing routes and analysis of network

conditions, traffic characteristics and levels of tolls (if any)

charged on the competing corridors.
 To categorise toll traffic into local and through traffic for the
entire concession period.
 To advise on tolling strategy with the objective of maximising
toll revenue and minimising leakages.
A profile of the HCIL has been furnished in Appendix 3.
12.4 Traffic Study
The first step in the approach involved was undertaking an extensive

traffic study to survey and appreciate the existing traffic and travel
characteristics and for estimation of the tollable traffic streams on the
project corridor. To generate the traffic projections, traffic growth
rates are established based on elasticity approach by establishing
relationship between past traffic volume data and socio-economic
indicators. Wherever necessary, information or data from other
relevant traffic surveys were also used in the execution of the study.
3.1.11 Traffic Surveys
In order to understand the characteristics and the volume of traffic

using the project road, data on road network, traffic volume, turning
movement patterns at important junctions, origin-destination of trips
and willingness to pay of tollable vehicles plying on the project road
were collected through primary surveys. For this purpose, a detailed
reconnaissance survey was conducted to identify the appropriate
location for carrying out the mid-block, origin-destination and
willingness to pay surveys.
The following table lists the traffic surveys carried out for the study.
Sr. Type of Survey No. of Location

No Locatio
. ns
1. Link Classified Traffic 3 Km 240.8, Km 263.0
Volume Survey and Km 278.4
(7 days)
2. Origin-Destination Survey 2 Km 263.0 and Km
(1 day) 278.4
3. Intersection Turning 6 Km 258.4, Km 268.4,
Movement Survey (1 day) Km 269, Km 273, Km
274 and Km 282.0
4. Pedestrian Counts (12 7 Villages Rasni,
hours) Lakhauli, Nawagaon,
Sedi Khedi, Zora and
Sarons and at
Telibanda
5. Speed and Delay Survey Project road and
alternative roads
3.1.12 Average Daily Traffic (ADT)
Average Daily Traffic (ADT) is average of seven-day traffic volume

count. The traffic volume data collected at mid block locations (for
seven days) at the survey locations was averaged out to arrive at the
ADT on the project road. The summary of ADT in terms of vehicles
and PCU is given in the following table:

Table 12.2 Average Daily Traffic

Vehicle At Km At Km At Km
240.8 263.0 278.4
Passenger Car (Pvt) 1111 1565 1870
Car (Govt) 15 36 52
Vehicles
Public Mini Bus 347 219 24
Transport (Pvt)
Bus (Pvt) 49 109 57
Bus (Govt) 9 14 6
Commercial LCV (Pvt) 335 535 1165
2 Axle Truck 1627 1977 2511
Vehicles
(P)
MAV (Pvt) 689 967 1753
3.1.13 Comparison with Earlier Counts
A comparison is presented in the following table between the May

2002 ADT given in the Bid document and June 2005 ADT (HCIL traffic
study).
Table 12.3 Comparison between Bid Document and HCIL

traffic on the Project Road
Bid
Document HCIL Junction
HCIL Mid-
Traffic (Mid- count
Vehicle Type Block Traffic
Block (June 2005)
(June 2005)
Traffic) (Km 268.4)
(Km 263.0)
(May 2002)
Km 268.8
Two Wheeler 8226 2534 9269
Auto-Rickshaw 1193 652 1379
Car/Jeep/Light
4350 1601 6475
Vehicle
Buses (Mini) 202 219 238
Buses (Full) 194 123 393
LCV 389 535 904

Bid
Document HCIL Junction
HCIL Mid-
Traffic (Mid- count
Vehicle Type Block Traffic
Block (June 2005)
(June 2005)
Traffic) (Km 268.4)
(Km 263.0)
(May 2002)
Km 268.8
2-Axle Truck 2755 1977 2818
Multi Axle Truck 158 967 1176
Tractor without
153 35 21
Trailor
Tractor with Trailor 24 122 234
Cycle 6960 758 5557
Cycle Rickshaw 522 36 314
Bullock Cart 5 15 5
Other Slow 42 - -
Total Vehicle 25172 9573 28873
Tractor Volume
25393 15179 31900
(PCU)
The inferences drawn from the analysis are as follows:

• The mid-block volumes as given in bid document and that observed
during the survey by HCIL are varying. It should be noted that the
two locations considered are at a significant distance. However, traffic
counts observed at VIP Road Junction (268.400) show little variation
in the total traffic.
3.1.14 Seasonal Variations
The traffic plying on any road generally varies over the different
periods of the year depending on the cycle of different socio-economic
activities in the regions through which it passes. Therefore, in order
to have more realistic picture of the traffic on the Project Highway, it
is required to assess seasonal variation in traffic to estimate Annual
Average Daily Traffic (AADT). Therefore, the ADT observed during the

survey duration is multiplied by a Seasonal Correction Factor (SCF) to

derive AADT.
For the present study, three year (financial year basis) data on sale of
diesel at two outlets and four year (financial year basis) data on petrol
sale at one outlet along the Project Highway was collected and
analyzed for estimation of SCF and Average Seasonal Correction
Factor (ASCF). As the traffic surveys were conducted from June 08,
2005 to June 24, 2005, a weighted average of SCF for the month of
June is considered. A weighted ASCF of 0.94 based on diesel sale and
1.01 based on petrol sale for the month of June is derived from the
collected data. This will imply that the Annual Average Daily Traffic
(AADT) will be obtained by the multiplication of ADT of diesel vehicles
with factor 0.94 and ADT of petrol vehicles with factor 1.01. The
summary of AADT is shown in the table below:
Table 12.4 Summary of AADT for the Project Road
3.1.15 Alternate Route Analysis

In order to identify competing routes to the project road, an
inventory of the road network in the project influence area has
been carried out. The alternative routes identified for toll plaza
at Km 263 and Km 278 have been illustrated in Figures 12.1 and
12.2 respectively.

Figure 12.1 Alternative Route 1
As shown in Figure 12.1, the project road section (from Junction

at Km 259.4 to Junction at Km 269.4, i.e, Section A-D in the
figure) is about 9.5km long while the alternative (A-B-C-D) is
about 15km long and takes about 21min. The alternative route
is therefore longer by about 5.5km. Further, the alternative road
is of intermediate lane configuration for about 5.5km and of two
lane configuration for the remaining portion.
Figure 12.2 Alternative Route 2

As given in figure 12.2, the project road is 11.4km long from

Junction at Km 272.0 to Junction at Km 283.4 (section Z-A-D in
the figure). There are two alternatives to this section of the
project road as under:
 Alternative 1: section A-B-C-D in Figure 12.1, measuring

8.7km.
 Alternative 2: section Z-C-D in Figure 12.2, measuring

11.7km.
Both the above alternatives (through Raipur City) have 4-lane

divided carriageways, but are heavily encroached and have very
less traffic speeds. While it takes about 15 minutes by
Alternative 1, the Alternative 2 takes nearly half an hour.

The above alternatives, available for traffic at each of the toll

plaza locations, have been considered while finalizing the toll
plaza locations.
3.1.16 Other Exemptions

Apart from the above, the CA provides exemption to certain category
of vehicles, which are mainly Government, Defence, etc from paying
the toll. The toll exempted traffic (mainly Government vehicles) on the
project road were counted separately during the traffic count surveys
for capacity analysis purpose (as these form the part of the total
project road traffic) and were considered in toll traffic estimation
3.1.17 Traffic on Project Highway

The traffic on the Project Highway has been classified, based on the
travel pattern, into two components, namely :
(i) Through Traffic crossing both toll plazas
(ii) Traffic crossing only one toll plaza
Also to enable the evaluation of the impact of the local concessions on

the toll revenue, the traffic crossing only one toll plaza has been split
into two components, namely :
(i) Local Toll Traffic that is eligible for benefits under local
commercial traffic and local passenger traffic
(ii) Normal Traffic that pays full toll.
Local traffic
Local traffic in close vicinity of the Project Highway shall have
different toll rates and its estimation has been undertaken separately.
Local traffic is defined as the vehicles, which are passing through only

one toll plaza. This traffic has been classified into the following
categories:
 Local Personal Traffic – registered with the Concessionaire; and

 Local Commercial Traffic – registered with the Concessionaire.
Local personal traffic – Registered includes personal/private vehicles
owned by any person who normally resides or works at a place that
can normally be approached only by using a part of the Project
Highway.
Local commercial traffic – Registered includes trucks and LCVs

engaged in routinely carrying goods and passengers for part of the
Project Highway.
Induced traffic
Since the Project Highway has been in existence for a long time, the
component of induced traffic will be negligible and is thus not
considered.
Through traffic
All traffic, other than toll-exempted vehicles, local personal and
commercial – registered traffic, is considered as through traffic.
Tollable Traffic
Based on the traffic analysis detailed above, tollable traffic along the
Project Highway sections is estimated for Through and Local traffic –
Registered. Through traffic will pay regular toll rates. This consists of
Average Daily Traffic excluding traffic that is local traffic, induced
traffic and toll exempted vehicles. Local Traffic – Registered will pay
Concessional toll rates.
The traffic at the two toll plazas for the year 2005 is given below:
Table 12.5 Net Tollable Average Daily Traffic (ADT) – 2005

Total Total
Local Local Non-
Tollable Tollable
Throu Registered Registered
Modes Traffic Traffic
gh
Km Km Km Km
Km 263 Km 278
263 278 263 278
Auto-
rickshaw 0 586 132 65 15 651 147
Car/
Jeep/Van 270 159 243 1007 1073 1437 1586
Mini Bus 3 21 2 194 19 218 24
Bus 12 11 5 100 47 122 64
LCV 185 54 198 267 687 506 1070
2-Axle
Truck 770 145 295 940 1316 1855 2381
3-Axle
Truck 755 3 100 52 635 811 1490
MAV 116 1 11 10 80 127 206
Table 12.6 Net Tollable Annual Average Daily Traffic (AADT) – 2005
Total Total
Local Local Non-
Tollable Tollable
Throu Registered Registered
Modes Traffic Traffic
gh
Km Km Km Km
Km 263 Km 278
263 278 263 278
Auto-
rickshaw 0 592 133 66 15 658 148
Car/
Jeep/Van 273 161 245 1017 1084 1451 1602
Mini Bus 3 20 2 182 18 205 23
Bus 11 10 5 94 44 115 60
LCV 174 51 186 251 646 476 1006
2-Axle
Truck 724 136 277 884 1237 1744 2238
3-Axle
Truck 710 3 94 49 597 762 1401
MAV 109 1 10 9 75 119 194

3.1.18 Traffic Growth Rates
Traffic growth rates for the study, to be used subsequently for

forecasting traffic on the project road, have been estimated by
adopting the “Elasticity of Transport Demand” method which is a
proven technique worldwide and is the preferred technique in India.
The method relies on the correlation between :
(i) the past trends in traffic growth on the project road / vehicle
registration in the state ; and
(ii) time series data on population, state income (NSDP) and per
capita income (PCI) for project influence area.
Regression analysis has been done using past trends of traffic/vehicle

registration and socio-economic indicators for the period 1994-2002
to estimate elasticities of growth for each vehicle type. The elasticity
values estimated in this study are then compared with those
suggested in “Road Development Plan: 2021” (IRC publication 2001,
for Ministry of Road Transport and Highways, GoI and best
combination of elasticities are recommended for deriving traffic
growth rates and traffic forecasts.
The projected growth rates estimated for major vehicle groups,

namely - car, bus, two-wheelers and trucks were moderated based on
future economic prospects of the project influence area and the likely
future shift among the vehicle categories, like, the probable shift of
vehicle ownership from 2-axle trucks to 3-axle trucks and MAVs and
2/3 wheeler market to car. These factors have been considered while
moderating the elasticity values. This is considered necessary because
as the purchasing power increases there will be a shift from low cost
vehicles to high speed, more expensive and more comfortable

vehicles. Further, with the road improvement and realization of

economics of scale, goods operators will tend to transfer from 2-axle
trucks to Multi-axle vehicles. These market driven forces have been
realistically considered in the traffic forecast.
Based on past experience, the proposed growth rates for the Project
Highway are found to be in line with the estimated growth rates for
other road projects in India. It is proposed to select the normal growth
rates for the financial projections keeping in mind the conservative
approach.
Weighted Projected Traffic Growth Rates (%) for the Project Road
Car Bus
2005 2008 2013 > 2005 2008 2013 >
-07 -12 -17 201 -07 -12 -17 201
7 7
Optimis 6.84 7.17 7.10 7.09 5.50 5.68 5.53 5.43
tic
Normal 5.95 6.24 6.17 6.17 4.78 4.94 4.81 4.72
Truck LGV MAV

200 200 201 > 200 200 201 > 200 200 201 >
5- 8- 3- 20 5- 8- 3- 20 5- 8- 3- 20
07 12 17 17 07 12 17 17 07 12 17 17
Optimis 6.85 6.93 6.1 5.8 6.00 6.24 5.64 5.5 7.55 7.51 6.53 6.1
tic 2 8 3 9
Normal 5.96 6.02 5.3 5.1 5.22 5.42 4.90 4.8 6.57 6.53 5.68 5.3
2 1 1 9
3.1.19 Traffic Forecast
The mode-wise traffic growth rates (as mentioned above) were applied
to the tollable traffic streams (as mentioned above) to obtain the

AADT figures for each year over a period of next 23 years. The
sectional projected traffic for the cardinal year is as under:

Table 12.7 Forecasted Traffic (AADT) on Project Highway – Km

263
Calendar Year
Ending 2009 2012 2015 2018 2021 2024
Through Traffic
Auto-rickshaw 0 0 0 0 0 0
Car / Van / Jeep 381 457 547 655 784 938
Mini-bus 4 5 5 6 7 8
Bus 15 17 20 22 26 30
LCV 236 277 319 368 424 488
Truck - 2-axle 1008 1201 1403 1636 1900 2206
Truck - 3-axle 1010 1221 1441 1696 1985 2323
Multi-axle Vehicle 155 187 221 260 305 357
Total Vehicles 2809 3365 3957 4644 5430 6350
1062 1245 1453 1696
Total PCUs 7536 9039 1 1 3 5
Auto-rickshaw 666 728 795 869 950 1038
Car / Van / Jeep 225 269 322 386 462 553
Mini-bus 27 31 36 41 47 54
Bus 14 16 19 21 24 28
LCV 70 82 94 109 125 144
Truck - 2-axle 189 225 263 307 356 414
Truck - 3-axle 4 5 6 7 9 10
Total Vehicles 1196 1358 1537 1742 1975 2243
Total PCUs 1661 1911 2182 2493 2846 3253
Local Traffic – Non Registered
Auto-rickshaw 74 81 88 97 106 115
Car / Van / Jeep 1422 1705 2040 2442 2922 3497
Mini-bus 243 281 323 372 427 490
Bus 125 145 167 192 220 253
LCV 341 399 461 532 612 705
Truck - 2-axle 1231 1467 1713 1997 2320 2694
Truck - 3-axle 69 84 99 116 136 159
Total Vehicles 3517 4176 4909 5768 6767 7942
1090 1272 1485
Total PCUs 6703 7959 9323 5 5 3


Table 12.8 Forecasted Traffic (AADT) on Project Highway – Km

278
Calendar Year
Ending 2009 2012 2015 2018 2021 2024
Through Traffic
Auto-rickshaw 0 0 0 0 0 0
Car / Van / Jeep 381 457 547 655 784 938
Mini-bus 4 5 5 6 7 8
Bus 15 17 20 22 26 30
LCV 236 277 319 368 424 488
Truck - 2-axle 1008 1201 1403 1636 1900 2206
Truck - 3-axle 1010 1221 1441 1696 1985 2323
Total Vehicles 2809 3365 3957 4644 5430 6350
1062 1245 1453 1696
Total PCUs 7536 9039 1 1 3 5
Auto-rickshaw 150 163 179 195 213 233
Car / Van / Jeep 342 410 491 587 703 841
Mini-bus 3 3 3 4 5 5
Bus 6 7 9 10 11 13
LCV 252 295 341 393 452 521
Truck - 2-axle 386 460 538 627 728 846
Truck - 3-axle 134 162 191 225 264 309
Total Vehicles 1286 1518 1771 2064 2403 2799
Total PCUs 2515 2985 3487 4068 4732 5507
Local Traffic – Non Registered
Auto-rickshaw 17 18 20 22 24 26
Car / Van / Jeep 1515 1816 2174 2601 3113 3725
Mini-bus 23 27 31 36 41 47
Bus 58 67 77 89 102 117
LCV 877 1027 1186 1368 1575 1813
Truck - 2-axle 1722 2053 2398 2796 3247 3770
Truck - 3-axle 849 1026 1211 1426 1669 1953
1169
Total Vehicles 5168 6164 7250 8517 9980 8

1125 1343 1576 1846 2156 2517

Total PCUs 1 7 6 9 0 2
13. FINANCIAL PROJECTIONS AND INDICATORS
A series of financial projections has been prepared to assist in the

analysis of the Project’s economics. These projections have been
based upon the terms of the CA, EPC Contract, traffic projections
(based on traffic study report of Halcrow Consulting India Ltd., the
traffic consultant), the expected operating environment of the
Project, assumptions of economic variables and the proposed
financing plan. The technical assumptions used have been provided
or agreed by REL, and are also meeting the requirements of the CA.
The key assumptions underlying the profitability for the proposed

Project Highway are presented in Appendix 4. Based on the same,
the detailed projected profitability statement; projected balance
sheet, projected cash flow statement and DSCR statement are
enclosed at Appendix 5, 6, 7, & 8 respectively. A summary of
project financial indicators is presented below:
Table 13.1 Projected Profitability Statements of REL (Rs. Cr.)
FYE Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-20
Toll Revenues 36.57 43.92 53.71 66.48 79.81 97.29
Grant Payments from NHAI - 1.40 2.25 2.50 - -
Constr. Grant written back 0.15 0.15 0.15 0.15 0.15 0.15
Total Income 36.73 45.47 56.12 69.13 79.96 97.44
O&M Expenses 4.34 4.74 24.25 5.65 6.17 6.74
PBDIT 32.39 40.73 31.87 63.48 73.79 90.70
Interest on RTL 18.96 18.08 15.75 11.88 6.76 1.44
Depreciation 12.29 12.29 12.29 12.29 12.29 12.29
PBT 1.13 10.36 3.83 39.31 54.74 76.97
Income Tax (including
deferred tax) 0.38 3.49 1.29 13.23 (0.62) 2.50
PAT 0.75 6.87 2.54 26.08 55.36 74.47

Table 13.2 Projected Balance Sheet of REL (Rs.Cr.)

FYE Mar-10Mar-12Mar-14Mar-16Mar-18Mar-20
Promoters Equity 82.53 82.53 82.53 82.53 82.53 82.53
Constr. Grant 3.24 2.94 2.63 2.32 2.01 1.70
Reserves & Surplus 0.08 1.06 2.41 7.05 50.30 69.40
Rupee Term Loan 198.00 186.00 156.00 112.00 56.00 0.00
Deferred Tax Liabilities 0.25 3.57 8.15 23.86 12.01 -
2 276. 251. 227. 202. 153.
Total Liabilities 84.10 09 72 76 85 62
Gross Fixed Assets 276.50 276.50 276.50 276.50 276.50 276.50

Depreciation 18.38 42.96 67.55 92.13 116.71 141.29
Net Block 258.12 233.54 208.96 184.38 159.79 135.21
Cash & Money in Reserve 42. 42. 43. 43. 18.
A/c.'s 25.98 55 76 38 06 41
2 276. 251. 227. 202. 153.
Total Assets 84.10 09 72 76 85 62
Table 13.3 Financial Indicators of REL

Financial
Indicators
17.22
Project IRR %
DSCR - Debt (Avg) 1.63

DSCR - Debt (Min) 1.17
Total Toll Rev* (Rs.

Cr) 2687
* during the Concession Period

From the above summary, it may be observed that the project

generates positive and healthy net cash flows right from year one.
The projections are quite comfortable with respect to debt service
obligations. The average DSCR during the tenure of the loan is 1.63
with the minimum DSCR at 1.17. To provide further comfort, an
initial fund based DSRA would be maintained for 6 months of
subsequent debt service obligations, which includes interest
payments and repayment of debt principal. Subsequently, the DSRA
will be funded out of surplus project cash flows. As regards the
Project IRR at 17.22 %, the same is considered quite adequate.

14. SENSITIVITY ANALYSIS
Sensitivity analysis has been performed to assess the robustness of

the cashflows (especially in terms of meeting debt service obligations)
under adverse changes in key parameters. Based on the analysis done
on the sensitivity of the cashflows to changes in key parameters, it
was found that the cashflows were more sensitive to variations in base
case traffic and less sensitive to variations in WPI.
The following scenarios were projected, keeping other factors

constant, in addition to the Base Case:
Scenario a. Reduction of base case traffic by 10%

This sensitivity addresses the impact of lower than expected toll
revenues arising due to lower than projected traffic plying on the
Project Highway.
Scenario b. Lower WPI Adjustment

This sensitivity tests the effect of about 10% reduction in WPI vis-à-vis
the assumed rate of 4.5% p.a. In this case, the WPI is assumed at
4.00% p.a. However given the current inflation rate scenario, it is
expected that during the initial years, WPI rate will remain on the
higher side only.
Scenario c. Increase in O & M Costs:

It is assumed that initial O & M cost is 10% higher than that assumed
in the Base Case. On the increased O&M costs an escalation of 4.5%
is applied every year, similar to the base case.
Scenario d. Combined Adverse Case

This is a combination of all the above three adverse scenarios

happening together: Reduction in base traffic by 10%, lower WPI of
4.0% p.a. and starting O&M costs 10% higher than estimated.
The results of the analysis on the above-mentioned parameters are

summarized in Table below:
Table 14.1 Results of Sensitivity Analysis
Toll Rev.
Min Avg ( Rs.
Type of Case Proj. IRR DSCR DSCR Cr.)
BASE CASE 17.22% 1.63 1.17 2687
Base Traffic reduced by
10% 15.94% 1.46 1.10 2418
O&M Expenses – increase
by 10% 17.05% 1.60 1.11 2687
WPI Growth Rate lower by
10% 16.70% 1.57 1.13 2479
Comb. of all 3 adverse
scenarios 15.24% 1.38 1.10 2231
The financial performance of REL is projected to be adequate under

each of the various sensitivity analyses. The minimum DSCR remains
above one even under the combined scenario of all the above-
mentioned three adverse cases happening together, and the project
cashflows are adequate to meet all the O&M expenses obligations and
the Debt servicing obligations comfortably.

15. APPROVALS & CLEARANCES
The Concessionaire is required to obtain all the required permits and

approvals as per applicable laws. The project relating to improvement
of works including widening and strengthening, along with marginal
land acquisition along the existing alignment, also requires
environment clearances by Ministry of Environment & Forest, the
process of which has already been initiated. The present status of the
major statutory approvals and clearances is given below:
Table 15.1 Status of Statutory Approvals / Clearances
Ministry of Finance/RBI:
 Approval for foreign Investment / Not Required -
loans, if required
 Approval for import of equipment
and machinery for construction Required Will be applied in
and operation, if required due course, if
 Exemption of excise duty on Not Required required
constr. material, if req. -
Department of Telecommunications
 Permission / clearance for setting Required EPC Contractor to
up of wireless system, if required initiate
 Clearance / permission for the Not Required
use of optical fibre cables of DOT, -
if required
Quarrying Permits:
 Permits for extraction of boulder Required EPC Contractor to
from quarry from ADM Mines initiate
 Permit for installation of crusher Required
from village panchayat and EPC Contractor to
Pollution Control Board initiate
 License for explosives from Required
Explosive controller
 Explosive license for storing Required EPC Contractor to
Diesel initiate
EPC Contractor to
initiate
Electricity:


 Permission from SEB for Required EPC Contractor to
installation of DG Required initiate
 Permission for electrical EPC Contractor to
connection, if power source is initiate
available
Water: If water has to be taken
EPC Contractor to
from river/ reservoir, permission Required
initiate
from State Irrigation Department
Batching Plant:
 License from inspection of Not Required -
factories Required EPC Contractor to
 NOC consent from pollution initiate
department
Asphalt Plant: Clearance required
EPC Contractor to
from village panchayats & Pollution Required
initiate
Control Board
Borrow Earth:
 Permission from irrigation -
department if land taken from Not Required
irrigation land
EPC Contractor to
 Permission required from village Required
initiate
panchayat and ADM Mines for
Government & private land
 Permission from Local Not Required
-
Municipalities and Development
Authorities
Cutting of trees: Permission from EPC Contractor to
Required
Forest Department initiate
Sewage Lines and Water Mains:
Permission from Local EPC Contractor to
Required
Municipalities and Development initiate
Authorities

16. RISK AND SWOT ANALYSIS
16.1 Risk Analysis – Allocation & Mitigation
The ability of REL to service its debt services obligations to the

Lenders in a timely manner will depend on its financial performance
over the loan life. The probability that the projected financial
performance will be achieved is a function of the risks inherent in
each aspect of the Project and the extent to which REL is exposed to
the same.
An assessment of some of the main risks to the effective performance

by REL of its obligations has been carried out and where possible,
these risks have been assigned to the party most competent to bear
them. This is achieved mainly through the commercial and legal
framework afforded to the Project i.e. the terms of the CA, the EPC
Contract and insurance policies.
The key risks of the Project during the construction period, the
operation period and throughout the concession period as well as the
mitigation measurers are set out next.
Construction Period
Allocated
to
Construction EPC  The Project Highway involves four
and Contractor laning of an existing two-lane
Completion road, therefore majority of the
risk ROW/land required is already
available.
 The State Support Agreement to
be executed with the SGoC will
enable early clearances / issue of

permits to REL, thus mitigating

the risk of delay on that count.
 REL has awarded the EPC
contract to DSC on a fixed price
and fixed time basis. The EPC
Contractor has vast experience in
the construction of roads.
 The construction contractor
would also be bearing the
construction risk in its capacity as
shareholder of the Project
Sponsor.
 Adequate performance security
and damages / penalties have
been built into the EPC contract
to ensure timely completion of
works and achievement of COD.
 The EPC Contractor is also
required to take adequate
insurance cover for insurable
risks during the implementation
period and assign them in favour
of Lenders.
 REL also proposes to take up
ALOP insurance to ensure that
the standing operating profits
during the first six-month period
will be covered.
 Road construction methodologies
and technologies are simple,
proven and standardized.
Cost Over-run EPC  As the EPC contract is on a fixed
Contractor price basis, there is no scope of
/Sponsors increase in project cost on this
account.
 In case of cost over-runs, the
Lenders may stipulate conditions
as suggested in the Appendix 2 on

Indicative Term Sheet.

Land NHAI  As per the CA, NHAI would
Acquisition acquire the Existing Right of Way
and timely and provide it to the
availability of Concessionaire free from all
land encumbrances within 150 days
from the date of signing of the
CA. Existing Right of Way has
already been handed over to the
Concessionaire by NHAI. There is
a provision of penalty on NHAI in
case of delay in handing over the
necessary land for the project.
 As regards the additional land
wherever required for the Project
Highway including land for Base
Camp, the same will be handed
over to the Concessionaire within
10 months from the date of
signing of CA.
Obtaining REL  Application for Environmental

statutory clearance that is required to be
clearances and taken from Ministry of
approvals Environment & Forest has already
been made. All other permits and
approvals under applicable laws
and permits need to be obtained
by REL.
Funding Risk REL  The Sponsors of REL are reputed
Construction & Engineering
Companies with sound financial
health and have the resources to
bring in the entire equity required
for the project. The Sponsors
propose to bring in 80% of their
equity contribution upfront before
approaching the lenders for the
first debt drawl.

Concessionair REL  In case of termination of the

during the construction period,
NHAI will not offer any
termination payments to the
Lenders. The Concessionaire
Events of Default are mentioned
at sub para t of para 6.2.1 of this
Memorandum. It may be observed
from there that taking into
account the experience &
expertise of DSC in development
of roads on BOT basis, the
possibility of occurrence of
during the construction period is
very remote. However, DSC is
providing an irrevocable and
Guarantee to cover for total debt
outstanding, in the event of
termination of the Concession
Agreement due to Concessionaire
Events of Default during the
Operations Period
Allocated
To
Traffic / REL  The Project Highway is an
market risk existing road that is being made a
higher level of service facility.
 The DPR study conducted by
NHAI (through its consultant
Consulting Engineering Services
India Ltd.) shows that based on
the existing traffic, there is an
immediate need for widening the
Project Highway from 2-lane to 4-

lane.
 The traffic volume used in the
financial projections is based on
the traffic study conducted by
Halcrow Consulting India Ltd. in
June 2005.
 The forecasting procedures used
by the Traffic Consultant are well-
established and the model used
for the forecasting has been
validated by comparing its output
to actual observed traffic flows.
 The Project Highway has high
traffic volumes and has high
traffic growth rates.
 NH-6 traverses through 3 states
namely Chhattisgarh,
Maharashtra and West Bengal.
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 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 to
make the project attractive for
DSC.
 A sensitivity analysis has been
undertaken and the project cash
flows are found to be robust to

handle a 10 % fall in base traffic

quite comfortably.
Toll rates REL  The vehicle category wise toll
rates and escalation in toll rates
have been specified in the CA,
which are fixed. The toll rates
would increase every year based
on the WPI Index. It may be
mentioned that during last 8
years, the Compounded Annual
Growth Rate of WPI Index was in
the region of 4.8%. However, in
the projections, we have assumed
a conservative WPI growth rate of
4.5%.
 Sensitivity analysis on the impact
of about 10% decrease in the WPI
at 4.0% has been tested and the
result indicates that the Project
cash flows are robust enough to
withstand this test.
 The actual toll collection would
depend on the final toll
notification to be issued by NHAI
before COD, for each category of
traffic. As mentioned earlier, the
tolling strategy proposed to be
adopted by REL envisages
charging of full toll to the users
(which is not local in nature)at
the first toll plaza itself,
irrespective of the extent of usage
of the road. We understand that
this tolling strategy is in place at
Jaipur –Kishangarh Toll Road
Project, where the CA terms are
similar to this project CA.
However, in order to mitigate the
risk of proposed tolling strategy
not approved by NHAI, it is
proposed to offer Corporate

Guarantee of DSC. In the event of

shortfall in revenue below 85% of
the projections on account of
lower traffic/toll rates, DSC would
have to meet the shortfall or
lenders would have the right to
invoke its guarantee.
Competing REL  As per the traffic study there are
facility and no credible alternative /
capacity competing routes to the Project
augmentation Highway.
 The CA provides that NHAI and
the SGoC shall not construct and
operate either itself or through
some other agency/person, on
BOT basis or otherwise a
competing facility, either toll free
or otherwise during the first 8
years of the Concession Period.
 In case NHAI/SGoC builds and
operates such a facility after the
expiry of 8 years from the
Appointed date, the Concession
Period for this Project shall be
increased by half the number of
years by which such
commissioning precedes the
expiry of the Concession Period.
In addition to this, the CA also
stipulates that the fee charged for
vehicles using such competing
facility shall not at any time be
less than 133% of the fee being
charged at the Project Highway.
 The CA provides that NHAI may,
following a detailed traffic study
conducted by it, at any time after
8 years following COD decide to
augment/increase the capacity of
the Project (Capacity

Augmentation) with a view to

provide the desired level of
services to the users of the
Project Highway. NHAI shall
invite proposals from eligible
persons for Capacity
Augmentation and the
Concessionaire will have the
option to submit its proposal for
Capacity Augmentation. In case
the Concessionaire chooses not to
submit its proposal or fails or
declines to match the preferred
offer, NHAI will make the
Termination Payment (applicable
for NHAI’s event of default) to the
Concessionaire.
O&M risks O&M  The CA specifies the O&M
Contractor standards and specification and
the manner in which the
Concessionaire would carry out
O&M of the facility.
 There are provisions in the CA
that specify the role of IC and
SGoC in supervision and
monitoring of the facility
throughout the concession period.
 REL intends to undertake the
O&M tasks itself by drawing on
the experience of the DSC Group
who has the experience in the
operation and maintenance of
their other toll concessions in
India & abroad.
 The CA and SSA provide for REL
to control and regulate traffic on
the project road, thereby
reducing leakage.
Force Majeure REL Cost allocation under Force Majeure
Risks

 When the Force Majeure Event is

a Non Political Event, the Parties
shall bear their respective costs.
 For Indirect Political Event, the
costs attributable shall be borne
by the Concessionaire to the
extent of the Insurance Claims,
and to the extent such Force
Majeure Costs as duly certified by
the Statutory Auditors exceed the
Insurance Claim, one half of the
same shall be reimbursed by
NHAI to the Concessionaire.
 For Political Event, the Force
Majeure Costs to the extent
actually incurred and certified by
the statutory Auditors of
Concessionaire shall be
reimbursed by NHAI to the
Concessionaire.
Termination payments under FM
 For non-political FM events, 90%
of debt due and the entire
subordinate debt, net of insurance
claims.
 For indirect-political FM events,
100% of debt due and the
outstanding subordinate debt is
covered, net of insurance claims.
For political FM events, 100% of
debt due and 120% of subordinate
debt is covered.
 In case of indirect and direct
political force majeure events,
sponsors shall be 110% and 150%
respectively of the Equity
(subscribed in cash and actually
spent on the Project) if such
Termination occurs at any time

during three years commencing

from the Appointed Date and for
each successive year thereafter,
such amount shall be adjusted
every year to fully reflect the
changes in WPI during such year,
and the adjusted amount so
arrived at shall be reduced every
year by 7.5% p.a.
 During the implementation and
operations period, REL is
required to take Comprehensive
insurance package for all
insurable events or any other
insurance required by lenders.
 All the termination payments due
to FM events would be made
 Under any FM event, the Lenders
will be protected by the provision
that they shall be repaid at least
90% of the Debt Due directly by
NHAI.
 In order to cover the balance
amount of the Lenders, DSC shall
provide an irrevocable and
Guarantee to cover for shortfall in
termination payment to be made
by NHAI to the extent of 10% of
the Debt Due in case of
termination of the CA due to any
FM event.
Concessionair REL  In case of termination of
during the operations period, the
lenders would be 90% of Debt
Due, net of insurance claims.

Further, Corporate Guarantee of

DSC will be available to the
extent of 10% of Debt Due to the
Lenders in the event of
termination of the CA due to
during the operations phase.
16.2 SWOT Analysis
Strengths
 This project is an outcome of the conscious recognition by NHAI

to improve the Road Transport Network in the country. The
project is thus, assured of political and administrative support,
which is important for projects of this nature.
 The project is sponsored by DSC Group, which is one of the

major shareholders of REL and is one of the fastest growing
construction companies in India with vast experience in highway
construction, operation and management.
 NHAI commitment to the project is further demonstrated in the

form of Grant of Rs.13.8255 crores for meeting the capital cost
of the project and for meeting the operating expense.
 NH-6 is an important link between Kolkata and Dhule and also

traverses through 3 states namely Chhattisgarh, Maharashtra
and West Bengal. The Aurang-Raipur section also receives
traffic from NH-2 and NH-3 as it links business city Surat in
through traffic, the project road section also collects the local
traffic of Raipur city while it passes through it .As a result,
traffic intensity on the road is very high.
 The project is expected to gain significant advantage due to the



experienced on the travel corridors given the rapid development
at Chhattisgarh to make the project attractive for DSC. Traffic
volume has increased many fold compared to the capacity of a
develop a 4-lane road and improve the road condition at the
earliest in this stretch. All these developments will further
increase the traffic on the Project Highway.
 The EPC contract is a fixed price & fixed time contract.

Liquidated Damages for any delay shall be equivalent to any loss
and damage suffered by REL.
 The Concession Agreement is based on the Model Concession

Agreement of NHAI that offers a high degree of security to
lenders.
 In case of termination of the CA due to any Force Majeure Event

or Events of Default during operations period, at least 90% of
the outstanding debt dues of Lenders would be provided by
NHAI and for the balance 10%, DSC is providing an irrevocable
and unconditional Corporate Guarantee.
 The financial projections of the project are satisfactory with an

average DSCR of 1.63 for the lenders and are comfortable
enough to handle various adverse scenarios.
Weaknesses
 NHAI is not entitled to pay any termination payment, on account
of Concessionaire Event of Default, during the Construction
Period.
The termination of the CA due to Concessionaire’s Event of

Default during the construction period is a highly unlikely
scenario, given the expertise of the promoters and the various

contractual agreements that are proposed to be undertaken by

REL. The proposed EPC Contractor, DSC has expertise in the
construction of road projects and is a very reputed player in the
Indian construction industry. Also, the EPC contract is a fixed-
price, fixed-time contract with provisions for Liquidated
Damages, which further mitigates the chances of
Concessionaire’s Event of Default during the construction
period.
Further to that, DSC is providing an irrevocable and

unconditional Corporate Guarantee to cover for the payment of
outstanding debt to the lenders in the event of termination of
the CA due to Concessionaire’s Event of Default during the
 The project is exposed to traffic risk, as NHAI is not providing

any traffic guarantee.
The traffic study has been conducted by Halcrow Consulting

India Limited, a renowned traffic consultant. The Project
Highway is a part of NH-6 which is an important link between
Kolkata and Dhule. It traverses through 3 states namely
Chhattisgarh, Maharashtra and West Bengal. 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. The comparative analysis of the traffic studies of the
past and that of HCIL shows a robust growth in traffic. With
GDP growth of India showing a healthy trend, the traffic on the
project road is bound to grow and hence the traffic risk is
minimal.
Further, the project cashflows are quite adequate to

comfortably meet the debt servicing obligations even in case of
a drop in base traffic by 10%. Moreover, the Lenders money is
secured by way of termination payments from NHAI covering

at-least 90% of the Debt Due, and the balance 10% being
covered by the Corporate Guarantee of DSC.
Opportunities
 The Project Highway already has substantial traffic movement.
With improvement and widening to 4-lane highway, there will be
substantial savings in Vehicle Operating Costs leading to higher
usage of the Project Highway. Also the development of
substantial portion of NH-6 (4 laning) will further increase the
traffic on the Project Highway.
Threats
 Despite the expected improvement to the road with completion
of the Project Highway, there will be a section of the present
users who detest paying toll.
The “Willingness to Pay” study conducted by the traffic

consultant shows satisfactory results though some of those
eligible users will opt for concessionary rates. As more stretches
in the country comes under tolling by BOT operators, the road
users will get accustomed to the tolling concept and there may
not be much resistance to toll payment.
 Construction of competing facility in the future.
As per the Concession Agreement, no competing facility shall be

built till the expiry of eight (8) years from the Appointed Date.
In case a competing facility is built after the expiry of 8 years,
the Concession Period for the Project shall be increased by half
the number of years by which such commissioning precedes the
expiry of the Concession Period. NHAI shall ensure that the per
Km fee to be levied for the Competing Road Facility shall at
least be 33% more.

17. CONCLUSION
NHAI has awarded the concession to REL for Improvement, Operation

and Maintenance, Rehabilitation and Strengthening of the existing 2-
lane road and widening it to 4-lane divided highway of Aurang to
Raipur section of NH-6 from Km 239.00 to Km 281.00 in the State of
Chhattisgarh on Build Operate and Transfer (BOT) basis to the
consortium of M/s. D.S.Constructions Ltd., New Delhi (DSC), M/s.
Apollo Enterprises Limited, Isle of Man UK (APOLLO), M/s. John Laing
International Limited, Kent, UK (JLI), and M/s. Laing O'Rourke PLC,
Kent, UK (LOR). With the consent of NHAI, the award has been
assigned to an SPV, Raipur Expressways Limited (“REL”), formed
specially for implementing the proposed Project by DSC, APOLLO, JLI
and LOR.
DS Construction Limited (DSC), who will be the largest shareholder of

REL, is the construction arm of the DSC Group of Companies. DSC is
one of the fastest growing construction companies in India setting a
scorching growth of revenues since focusing on India in 2002. The
company has been accredited with ISO 9001:2000 by DNV,
Netherlands for Construction of Highway Bridges, Runways, Railway
Tracks and other Infrastructure Development. DSC was incorporated
in 1978 and has been active in the construction business in India and
abroad for the past 25 years. DSC has the required technical expertise
and financial strength to ensure the successful implementation of the
Project.
REL has executed the EPC Contract with the EPC Contractor, DSC,
under which it will design, procure, execute, complete and

commission the Project. The EPC contract is a fixed time, fixed price
lump sum contract at a total contract price of Rs.243.70 crore.
The cost of the Project Highway is estimated at Rs.286 crore, and is

proposed to be funded at a debt equity ratio of 2.32:1 (treating the
NHAI Grant as the quasi-equity). REL now proposes to approach the
lenders for rupee term loans aggregating Rs. 200 crore towards part-
financing the project.
The development of the Project Highway was initiated based on traffic

density. The Project Highway NH-6 is an important link between
Kolkata and Dhule and also connecting places like Sambalpur, Raipur,
Nagpur and Akola. It traverses through 3 states namely Chhattisgarh,
Maharashtra and West Bengal. The Aurang-Raipur section also
receives traffic from NH-2 and NH-3 as it links business city Surat in
through traffic, the project road section also collects the local traffic
of Raipur city while it passes through it .As a result, traffic intensity
on the road is very high. The project is expected to gain significant
development at Chhattisgarh to make the project attractive for DSC.
Traffic volume has increased many fold compared to the capacity of a
develop a 4-lane road and improve the road condition at the earliest in
this stretch. All these developments will further increase the traffic on
the Project Highway. The Project Highway is a well-established travel
corridor in the region. Traffic study conducted for the section shows
that the traffic generation capacity of the Project Highway is going to
be pretty robust and will foresee significant growth in future years.

The traffic projections for the purpose of profitability projections are

based on the traffic study conducted by Independent Traffic
Consultant viz. Halcrow Consulting India Limited (HCIL) and as per
the projected financials, DSCR has been found to be comfortable.
On the basis of above and subject to the risks, weakness and threats
enumerated herein, the overall debt servicing capability of the project
is considered satisfactory and adequate. Based on the various
operating, financing and regulatory assumptions, barring unforeseen
circumstances, the Project Highway is expected to achieve the
projected profitability.

Appendix – 1
Brief Profile of the Projects of DSC Group in India
Viramgam Mehsana Project Ltd. (VMPL)
VMPL is a Project SPV set up to undertake the 65 km Gauge

Conversion project from Viramgam to Mehsana on a BOT basis. This
is India’s first Rail BOT Project modelled on the lines of NHAI BOT
Projects, and has been successfully completed. The Viramgam-
Mehsana Gauge Conversion project is of a strategic importance to the
Railways, being the first to be implemented through BOT route and
with private sector participation. The broad gauge line reduces the
distance between the West Gujarat ports and North/North-West India
by about 70 kms and also avoids the congested Ahmedabad section.
Delhi-Gurgaon Super Connectivity Limited
Delhi-Gurgaon Super Connectivity Limited (formerly Jaypee-DSC

Ventures Ltd.) (“DG”) is a project SPV that is undertaking the
development of the Delhi Gurgaon Highway. The project is for
conversion of the Delhi Gurgaon Section of NH-8 into an access
controlled 6/8 Lane Highway with service lane along certain sections
& strengthening of existing lane from Km 14.3 to Km 42.0 falling
partly in Delhi & Haryana to be executed at site, including
maintenance of the existing lanes during construction Period as well
as the concession period. The revised project cost is estimated at Rs
9971mn now and located in one of the fastest developing urban
township regions, in the national capital territory; the Delhi-Gurgaon
Expressway Project has the potential to be arguably India’s best BOT
asset in the roadways sector.
RAIPUR EXPRESSWAYS LIMITED -i- Appendix

DSC Vicon Ventures Private Limited
The project is a 27 Km - Widening of NH-6 between Raipur and Durg

cities in the state of Chhattisgarh from 2-lane to 4-lane on a BOT
basis. The concession period is 11 yrs and 9 Months with a project
cost of Rs.1190 million being wholly executed by DSC Vicon Ventures
Pvt. Ltd. (DVVPL), a SPV. Upon completion of the concession period
DVVPL would hand over the project highway to MoRTH.
NH-6 provides connectivity between Mumbai and Kolkata and other

important regions of West, Central and Eastern/North–Eastern India.
It is located in the state of Chhattisgarh and provides connectivity to
the important cities of the urban and industrial complex of the state,
such as Raipur, which is the capital of Chhattisgarh, Bhilai, the steel
town and Durg, the industrial town. Therefore, in addition to
providing connectivity to Western and Eastern regions of India, the
project highway also carries high volumes of urban/local and
commercial/through traffic.
Kundli-Manesar-Palwal Expressway Limited
The project is for the development of access controlled 4/6 lane

Kundli-Manesar-Palwal Expressway in the State of Haryana on Build
Own and Transfer (BOT) basis for Haryana State Industrial
Development Corporation (HSIDC). The length of proposed
Expressway is around 135.65 km with a project cost of Rs.18.2 billion
with a concession period of 23 years 9 months. The stretch of 135 km
access controlled expressway is one of the longest stretches in the
country. The project lies in the NCR, which has experienced major
industrial and urban development in the satellite towns like Gurgaon
RAIPUR EXPRESSWAYS LIMITED - ii - Appendix

and Noida. This exponential growth around NCR has brought all
surrounding areas into focus.
Lucknow - Sitapur Expressways Limited

The project involves strengthening and widening to 4-lanes of the
existing 2-lane section of NH24 between Lucknow and Sitapur (Km
413.600 to Km 489.000) in the state of Uttar Pradesh on a BOT basis.
The project cost is Rs. 4.4 billion and the concession is for a period of
20 years. The National Highway 24 (NH24) originates at New Delhi
and ends at Lucknow, covering approximately 500Km. Except for
initial 15Km in Delhi, the entire NH24 is in UP State, in the northern
part of Indian Peninsula. The project enhances the accessibility of
western UP, Uttaranchal, Northern Haryana, Punjab, Himachal
Pradesh and Jammu & Kashmir States to the EW corridor and GQ.
Due to its connectivity to EW corridor, high economic growth of area
along NH24 and accordingly rapid traffic growth on NH24 are likely
in the future. Lucknow, the capital of UP State, at one end is likely to
add to the traffic growth on the project road.
Sandur Bypass Project Ltd.
The project is the development of a bypass road to Sandur town,

which would help divert the heavy iron ore traffic moving from mines
situated in and around Sandur away from the town. The town is
surrounded by Bellary and Hospet, two of the important cities in the
area. The project has been taken with a view to establishing a base in
South India and increasing its presence and understanding of nuances
in the region. The Project Cost is Rs. 35.9 crore with a Concession
period of 20 years.
RAIPUR EXPRESSWAYS LIMITED - iii - Appendix

Appendix – 2
Indicative Term Sheet proposed for Senior Lenders
General Terms & Conditions

1. Interest:
The Borrower shall pay interest on the principal amounts of the RTL
outstanding from time to time, monthly in arrears on the last day of
each month at the rate equivalent to 9.50% p.a. (fixed for first 3 years)
with a reset at the end of every 3-years from the date of first
disbursement, linked to the PLRs of the respective lenders.
For arriving at the reset interest rate, the Spread between the PLR of
the respective Lenders prevailing on the date of first disbursement
and 9.50% would be fixed. The reset rate would be calculated by
deducting the Spread from PLR of the respective Lenders prevailing
on each interest-reset date.
During the operations period, the Borrower shall have the right to
prepay the outstanding loan on each of the Interest Reset Dates
without any prepayment premium, after giving a prior written notice
of 90 days.
2. Additional Interest:
If the loan is disbursed pending creation of mortgage and security is
not created within 6 months from the date of documentation,
additional interest @1% would be charged thereafter till the date of
creation of security.
3. Lenders Upfront fees:

The Borrower shall pay a one time up-front fee of 0.10% of the loan
amount.
RAIPUR EXPRESSWAYS LIMITED - iv - Appendix

4. Liquidated Damages:
In the event of default in payment of interest and/or installments of
principal amount on due dates, the Borrower shall pay additional
interest @ 1% p.a. on the defaulted amount for the period of such
default, during the currency of the loan.
RAIPUR EXPRESSWAYS LIMITED -v- Appendix

5. Repayment:
The loan shall be repaid in 126 monthly instalments on step-up basis, commencing from October 31, 2009
(after a Moratorium period of 12 months from COD) such that the total door-to-door tenor (financial close
to last repayment) does not exceed 13.7 years. The senior debt repayment schedule is as follows:
Debt Repayment Repaym Repymt No of

Schedule ent Amt Instmt
FYE % Rs. Cr. Monthly
31-Mar-10 1.0% 2.00 6
31-Mar-11 2.0% 4.00 12
31-Mar-12 4.0% 8.00 12
31-Mar-13 6.0% 12.00 12
31-Mar-14 9.0% 18.00 12
31-Mar-15 10.0% 20.00 12
31-Mar-16 12.0% 24.00 12
31-Mar-17 14.0% 28.00 12
31-Mar-18 14.0% 28.00 12
31-Mar-19 14.0% 28.00 12
31-Mar-20 14.0% 28.00 12
Total 100% 200.00 126
6. Commitment Fees:
The Borrower shall additionally pay a commitment fee of 1.00% for
drawings not made on the scheduled dates. The fees will be calculated
on the basis of drawings not made and the number of days deviated
from the scheduled dates. However, the commitment fee would not be
applicable if the borrower gives a notice of atleast 1 month before the
drawdown date for variation.
7. Prepayment Premium:
On dates other than the Interest Reset Dates, the Borrower shall have
the right to prepay, in part or full, the outstanding loan, which shall be
adjusted in the inverse order of maturity of the Loans and pro rata on
a pari-passu basis amongst all the Lenders. In this event, the
RAIPUR EXPRESSWAYS LIMITED - vi - Appendix

Borrower shall be liable to pay a pre-payment penalty @ 1% of the

amount prepaid.
Notwithstanding the above, no pre-payment penalty will be payable

for prepayments, in part or full under the following circumstances:
a) Prepayment of loan on invocation of Guarantee at Guarantee

Review Date, subject to a prior written notice of 7 days by the
Borrower from the Guarantee Review Date and thereby review of
the toll revenues of the Project by the lenders for
invocation/release of the Guarantee within 30 days of such notice.
The Borrower shall arrange for the funds in case the Guarantee is
invoked within 120 days from the Guarantee Review Date.
b) Prepayment of loan on an Interest Reset Date as detailed in
clause 1 above; and
c) Prepayment of loan if prepayment is done from the internal
accruals of the Company with 30 days prior written notice to the
lenders.
8. Insurance:
Comprehensive insurance covering force majeure risks having usual
bank clause and duly examined and vetted by the Lenders’ Insurance
Advisor.
9. Financials Covenants – Term Loan:

The Borrower shall pay an additional interest of 1.0% on the total
outstanding in case the DSCR for the immediate previous year is less
than 1.1 times or 20% lower than the projected DSCR numbers in the
base case financial model, whichever is lower. The levy of additional
interest would continue till the time it improves above the minimum
RAIPUR EXPRESSWAYS LIMITED - vii - Appendix

stipulated level as above, the review of which would be undertaken

based on audited quarterly data.
10. Security Stipulations

The main security stipulations are as under –
Charges / Mortgages / Pledge
 A first mortgage and charge over all the Borrower’s properties
and assets, both present and future, except the project assets (as
defined in Concession Agreement).
 A first charge on all intangible assets of the Borrower including
but not limited to the goodwill, undertaking and uncalled capital
of the Borrower.
 A first charge/assignment of all the receivables/ revenues of the
Borrower from the project or otherwise.
 Pledge of 51% shares of the Borrower upto COD+3 years and
26% thereafter during the currency of the loan, to the satisfaction
of the lenders.
 A first charge on all Borrower’s bank accounts including,
without limitation, the Escrow Account and the Debt Service
Reserve Account to be established by the Borrower and each of
the other accounts required to be created by the Borrower under
any project document or contract.
 A first charge / assignment/ security interest on the Borrower’s
rights under the Project Documents, Contracts and all licences,
permits, approvals, consents and insurance policies in respect of
the Project.
 Assignment of contractor guarantees, liquidated damages, letter
of credit, guarantee or performance bond that may be provided
RAIPUR EXPRESSWAYS LIMITED - viii - Appendix

by any counter-party under any Project Agreement or contract in

favour of the Borrower.
Reserve Accounts
 From the COD, the Borrower shall maintain in the Debt Service
Reserve Account (“DSRA”) an amount equivalent to next 6 months
of principal and interest (“DSRA Amount”).
 The DSRA Amount shall be maintained either in fund based or
by way of Bank Guarantee.
Guarantees & Undertakings

 DSC shall furnish a Corporate Guarantee to cover the shortfall
in the term loan repayment in the event of termination of the
Concession Agreement due to Concessionaire event of default or
Force Majeure Event during the currency of the loan.
 DSC shall furnish a Corporate Guarantee for entire Rupee Term
Loan in a form and manner satisfactory to the Lenders to cover
any substantial shortfall in the toll revenues. The project
cashflows will be reviewed by the Lenders on expiry of 6 months
from scheduled toll operation date (Guarantee Review Date, i.e.
at the end of FY2009). On such Guarantee Review Date, when
compared to the Base Case, if the aggregate actual average toll
revenue is 85% or more of the projected toll revenue, the
Corporate Guarantee of DSC shall be released. In case the actual
toll revenues are less than 85% of the projected toll revenue, DSC
would have to arrange for infusion of requisite funds (i.e. Rs.3
crore per 1% decrease in aggregate actual toll revenue below
85% p.a.), failing which, the DSC Guarantee can be invoked by
the lenders proportionately.
RAIPUR EXPRESSWAYS LIMITED - ix - Appendix

 DSC shall furnish a shortfall undertaking (to bring in additional

funds in a form & manner satisfactory to the lenders) for cases of
any cost overrun, gap in means of financing and /or delay in
receipt of grant from NHAI during construction phase.
All the charges on security shall be ranked pari passu with the
participating lenders.
11. Special Terms and Conditions
I. Pre-disbursement Conditions
Before seeking disbursement of the term loan, the Borrower shall, to

the satisfaction of the lenders, ensure the following:
a) Appoint the Lenders Independent Engineer ("LIE"), Lenders
Legal Counsel ("LLC") and Lenders Insurance Advisor ("LIA")
(collectively, the “Consultants”) in consultation with the Lenders
and satisfactorily resolve/ address all issues raised by them.
However, the cost for the same will be borne by the Borrower,
subject to any letters or agreements being issued or entered into
in relation to such appointment with the consent of the Borrower.
b) In the event of any penalty/liquidated damages levied by NHAI
for delay in financial closure, REL would arrange to meet the
same out of its own sources.
c) The Borrower shall arrange from EPC Contractor the necessary
guarantees/support towards the fulfilment of obligations under
the EPC contract, to the satisfaction of the lenders.
d) Tie up the entire debt requirement for the Project to the
satisfaction of Lenders and in conformity with the requirements
of the Project Contracts/ Agreements entered into by the
Borrower.
RAIPUR EXPRESSWAYS LIMITED -x- Appendix

e) Submit undertakings from the respective companies that during

the tenor of the loan:
 DSC shall not reduce its holding in Raipur Expressways
Limited (REL) below 51% upto COD + 3 years; and below
26% thereafter.
f) The Borrower shall suitably increase the authorized share
capital.
g) Amend the Memorandum and Articles of Association of the
Borrower to incorporate any change, if required, by the lenders.
h) Enter into a State Support Agreement with the Government of

Chhattisgarh. The agreement will be in line with that envisaged
in the Concession Agreement.
i) Acquire the land required for smooth implementation of the

project.
j) Ensure that 80% of the envisaged equity by the promoters is

brought up front.
k) Open an Escrow Account in a bank to deposit all the cash inflows

of the Borrower in the said account. The proceeds shall be
utilised in a manner and priority to be decided by the lenders. All
the project disbursement/grant/toll collections shall be routed
l) Carry out necessary amendments in other project

contracts/documents as may be required by the lenders provided
the same is permissible as per the Concession Agreement.
m) Finalise the insurance package and agree to take a

comprehensive insurance package in consultation with the
independent insurance consultant and to the satisfaction of the
RAIPUR EXPRESSWAYS LIMITED - xi - Appendix

lenders. The name of the participating lenders would be included

in the loss payee clause of all the insurance policies pertaining to
the project.
n) Agree that the lenders shall have the right to review the cost of
the project any time during the implementation of the project and
also before the final disbursements of the loan amount.
o) Obtain all statutory/ non-statutory clearances necessary for

completion and operation of the project.
p) Demonstrate the fulfilment by all the contracted parties of all the

conditions precedent to the Concession Agreement, the financing
agreements and any other contract and agreements deemed
essential for construction and operation of the proposed project.
q) Agree to maintain the Debt Service Reserve Account at the level

as stipulated in the sanction from the start of commercial
operations till complete repayment of the loan to the lenders.
II. Other Special Conditions
The Borrower shall, to the satisfaction of the lenders:
a) Implement the project within the overall project cost of Rs.286

crores and in accordance with the Financing plan as agreed to
between the Borrower and the Lenders. The grant received
during the construction period shall form part of equity.
b) Any additional funding required for the project due to project
cost overrun will be borne by the Promoters.
RAIPUR EXPRESSWAYS LIMITED - xii - Appendix

c) Any disinvestment by the Promoters of the REL of the equity

capital in the company will have to be with the specific prior
permission of the lenders during the currency of the loan.
d) Agree that any excess cash, if available, will be utilized for
repayment of debt without prepayment penalty to that extent, if
the lenders so require.
e) Ensure that the physical progress as well as expenditure
incurred on the project is as per the original schedule. To this
end, the Borrower shall agree and undertake to furnish to the
lenders such information and data as may be required by them.
f) The Borrower may declare dividend including interim dividend
with the following covenants:
(i) No event of default or Potential event of default has occurred
and is continuing;
(ii) DSRA is maintained to the required amount;
(iii) MMR is maintained to the required amount; and
(iv) DSCR should not be less than 1.15 times for the immediate
previous year (for which dividend is proposed to be declared)
g) Not undertake any new project or expansion of the existing
projects or make any investment or take assets on lease without
prior approval of the lenders during the currency of the
proposed loans from the lenders.
h) Ensure that the equipment installed / proposed to be installed
are adequate and appropriate to the pollution control
requirements and that all conditions mentioned in the
environmental clearances granted by the appropriate
authorities are fulfilled.
i) Agree that its receivables shall not be escrowed to any other
party other than the project lenders.
RAIPUR EXPRESSWAYS LIMITED - xiii - Appendix

j) Agree that during the currency of facilities accorded by the

lenders, any loans to the promoters from funds of Borrower
shall be made only after approval of the lenders.
k) Appoint technical, financial and executive personnel of proper
qualification and experience for the key posts and ensure that
the organisation set up is adequate enough for smooth
implementation and operation of the project.
l) Agree that the preliminary and pre-operative expenses shall be

allowed as a part of the cost of project only to the extent that
they are certified by auditors of repute that they relate to the
proposed project only.
m) Constitute a project management committee consisting of
professionals from the technical & financial streams for the
purpose of supervising and monitoring the progress in the
implementation of the project. The committee shall be
responsible for the management of the project during
construction period and monitoring the implementation of the
project.
n) Agree and undertake to furnish to the lenders such information
and data as may be required by the lenders to ensure that the
physical progress as well as expenditure incurred on the project
are as per the schedule.
o) Agree that in the event of the Borrower committing default in
the payment of principal and/or interest on due dates, the
lenders shall have an unqualified right to disclose the name of
the Borrower and its directors to the Reserve Bank of India /
Credit Information Bureau of India Ltd. The Borrower shall give
its consent to the lenders / RBI / CIBIL to publish its name and
the name of its directors as defaulters in such manner and
RAIPUR EXPRESSWAYS LIMITED - xiv - Appendix

through such medium as the lenders in their absolute discretion

may think fit.
III. Normal Terms and Conditions
a) The lenders will have the right to examine the books of accounts
of the Borrower and to have their project assets inspected from
time to time by officers of the Bank and /or outside consultants
and the expenses incurred by the Bank in this regard will be
borne by the Borrower.
b) During the currency of the lender’s credit facilities, the Borrower
shall not, without prior approval of the lender in writing: -
 Effect any change in their capital structure;
 Formulate any scheme of amalgamation or reconstruction;
 Undertake any new project or expansion scheme, unless the
expenditure on such expansion, etc is covered by the company’s
net cash accruals after providing for dividends, investments,
etc. or from long term funds received for financing such new
projects or expansion;
 Invest by way of share capital in or lend or advance funds to or
place deposits with any other concern. Normal trade credit or
security deposits in usual course of business or advances to
employees or investment of short term surplus funds in
TRA/Escrow Account into Mutual Funds, FDs with Banks and
AAA rated securities are however, not covered by this covenant;
 Enter into borrowing arrangements, either secured or
unsecured, with any other bank, financial institution, company
or otherwise, except for those arranged as part of means of
finance of the present project;
RAIPUR EXPRESSWAYS LIMITED - xv - Appendix

 Undertake guarantee obligations on behalf of any other

company.
c) Monies brought in by principal shareholders/ directors/
depositors will not be allowed to be withdrawn without the
lender’s permission.
d) The Borrower should not make any drastic change in their
management set up without the lenders’ permission.
e) The Borrower will keep the lenders informed of the happening of
any event likely to have a substantial effect on their revenues,
profits etc. along with the remedial steps proposed to be taken by
the Borrower.
11. Registration of charges, etc.

The Borrower shall pay on demand to the Bank the cost between
Solicitors/ Advocates/ Company Secretaries and Client, incurred by
them or any of them in connection with the creation/ registration of
this security and certification, charge thereof with the Registrar of
Companies, compilation of Search/Status Reports and/or any other
matter incidentally arising out of or in connection with this
transaction of Borrower with the lender.
12. Right to Call up Loan

The lenders reserve the right to call up the loan upon the happening
of any of the under noted or other events, considered likely to
jeopardize the interests of the lenders:
a) Any instalment/ interest/ other costs remaining unpaid for a period
of 1 quarter from the due date.
RAIPUR EXPRESSWAYS LIMITED - xvi - Appendix

b) The Borrower committing any breach or default in the performance

or observance of the covenants of the documents executed by them
or any other terms and conditions relating to the advance.
c) Execution or distress being enforced or levied against the whole or
any part of the Borrower’s property.
d) The Borrower ceasing or threatening to cease to carry on their
business.
e) A receiver being appointed in respect of the whole or any part of
the property of the Borrower.
f) The occurrence of any event or circumstance which is prejudicial
to or imperils or depreciates or is likely to prejudice, impair,
imperil or depreciate the security given to the Borrower.
g) The occurrence of any event or circumstance, which would or is
likely to prejudicially or adversely affect in any manner the
capacity of the borrower to repay the loan.
13. Miscellaneous
The Borrower is required
a) to furnish to the lenders every year three copies of audited/
printed/balance sheet and profit and loss account statements of the
Borrower immediately on these being published/ signed by the
auditors, alongwith the usual renewal particulars.
b) to submit to the lenders a quarterly progress report on the
implementation of the project or whenever desired by the lenders.
c) The Borrower shall also have to comply with customary covenants
such as Representation & Warranties from the Borrower,
Conditions Precedent to the effectiveness of the loan and condition
precedents to each disbursement, Affirmative covenants by
Borrower, Negative Covenants, Additional Covenants, Information
RAIPUR EXPRESSWAYS LIMITED - xvii - Appendix

Covenants, Events of Defaults by the Borrower and the

Consequences of the Event of Default, RBI disclosure norms, as
applicable etc.
14. Negative Lien

The Borrower should not create, without prior written consent of the
lenders, charges on any or all their properties or assets during the
currency of the credit facilities granted by the lenders.
RAIPUR EXPRESSWAYS LIMITED - xviii - Appendix

Appendix – 3
Experience of Halcrow Consulting India Limited
Halcrow’s international operations have had particular focus in

selected regions including in South and Southeast Asia. To facilitate
the Halcrow Group’s development and expansion in India, the 100%
wholly owned national company Halcrow Consulting India Ltd (HCIL)
was incorporated in August 2001, with a view to expand long term
involvement in India to provide Infrastructure based business
solutions.
Notable achievements of Halcrow in India during the past few years

include the following:
 Involved with the Government’s National Highway Development
Programme with projects in Gujarat, West Bengal, Delhi, Haryana
and Jharkhand on supervision of construction;
 Currently working on major State Highway development projects
in Madhya Pradesh and West Bengal;
 Significant contribution to the development of new hydro electric
projects with involvement in over ten projects in Himachal Pradesh
and Uttranchal;
 In Ports sector undertook feasibility and DPR for development of
deep water port at Pondicherry, project review of Rewas Port
Development and currently involved in project review of
Development of Dighi Port.
 Involved in the Government’s railway improvement and
modernisation programme (as Project Management Consultants),
which is of a similar scale to the NHDP programme for highways;
RAIPUR EXPRESSWAYS LIMITED - xix - Appendix

 Undertook a comprehensive water resources management study

for Madhya Pradesh under Asian Development Bank technical
assistance (where poverty alleviation and environmental
management were key concepts), which has led to the current
World Bank led Madhya Pradesh Water Sector Restructuring
Project;
 Established significant capacity and skills in transport planning
and traffic engineering, with wide ranging assignments for public
and private sector clients;
 Transferring skills of Halcrow Group’s extensive experience in UK
and Europe on PFI in private infrastructure and undertaking
assignments with private sector developers and lending agencies
on major infrastructure Build-Operate-Transfer projects in
Highways, Hydroelectric Power and Ports;
 Established an Engineering Design Centre in Delhi, which can
provide services to Halcrow’s India projects as well as to its wider
international business;
 Developing the capacity of Halcrow Consulting India Ltd with
appropriate skills that can also be utilised in the wider Halcrow
operations, including in the South and Southeast Asia regions
(HCIL engineers have been recently working on Halcrow projects
in Sri Lanka and Bangladesh).
RAIPUR EXPRESSWAYS LIMITED - xx - Appendix

Appendix 4
Assumptions underlying the Financial Projections
1. Date of Financial Closure : July 31, 2006

2. Construction Start Date : April 1, 2006
3. Construction Period : 30 months
4. Commercial Operation Date : October 1, 2008
5. Revenue Assumptions
Revenue for the Project comprises mainly the revenue from toll
collections. The projected toll revenue for each year is a product of
the applicable toll rate and traffic volumes for that year. For purposes
of the financial projections, tolling for the Project Highway on NH-6 is
assumed to begin October 1, 2008.
Toll Fees
The toll structure for the Project is set out in the CA and described in
Chapter 8 of this Memorandum. The toll fee is revised every year (on
July 1) to reflect the changes in the Wholesale Price Index. The toll
notification also provides for discounted rates for local vehicles & toll
exemption for some specific category of vehicles.
Traffic volume
The AADT for the calendar year 2008 has been estimated by applying
the seasonality correction factor to the ADT of April 2006 and normal
growth rates, which were estimated from the primary survey and
study conducted by Halcrow Consulting India Limited. The basis and
assumptions of the traffic projections are highlighted in Chapter 12 of
this Memorandum. Based on the toll structure and traffic
assumptions, the profile of total toll revenue for the entire period of
the concession is portrayed as follows:
RAIPUR EXPRESSWAYS LIMITED - xxi - Appendix

Profile of Toll Revenue for the Concession (Rs.

Crores)
Toll Revenue Mar- Mar- Mar- Mar- Mar-
profile Mar-10 12 14 16 18 20
Amount in Rs.
Crores 36.57 43.92 53.71 66.48 79.81 97.29
RAIPUR EXPRESSWAYS LIMITED - xxii - Appendix

6. Operation and Maintenance Assumptions

O&M costs are projected based on the initial starting figures derived
by REL and escalated at 4.50% p.a. from Year 2007 in the Base Case.
The initial costs are summarized in the table below.
Details of O & M Expenses (Rs. Crore)

Components FY 2007
Administration Expense 0.75
Routine Maint. Expenses 0.85
Insurance Costs 1.10
Fin. Fees & Consultancy
Fee 0.25
Power & Lighting
charges 0.75
Supervision fees for ROB 0.10
Total O & M 3.80
The major maintenance costs will be undertaken every 5 years from

the date of COD and will be spread over a period of two years, but the
costs are assumed to be set aside from the first year of operation in
the Major Maintenance Reserve Account. The major maintenance is
taken as 5.75% of the EPC Cost every 5 years.
7. Financial and Economic Assumptions

Other financial and economic assumptions used in the financial
projections are as under:
Taxation
The following categories of taxation have been adopted to be
applicable:
 Corporate tax rate of 33.66% (inclusive of surcharge &
cess) on the net business income of the Concessionaire;
RAIPUR EXPRESSWAYS LIMITED - xxiii - Appendix

 Tax of 14.03% (inclusive of surcharge & cess) on dividend

payouts made to the equity holders;
 Minimum Alternate Tax (MAT) has been assumed at
11.22% (inclusive of surcharge & cess); and
 No other tax or duties are assumed to be payable by the
REL or its Shareholders.
Depreciation under Income Tax Act

Depreciation under Income Tax Act has been assumed on Written Down Value method. The Depreciation
rates assumed to be applicable are set out in the following table.
Depreciation Rates as per IT Act

Item Rate
Construction Work 15.00%
Preliminary Expenses 20.00%
Tax incentives
Since REL can be classified as an Infrastructure Undertaking, it is
entitled for tax exemption for a continuous period of 10 years after
carry-over of operating losses. Carry-over business losses are deemed
available for up to 8 years to offset taxable income in future periods
whilst the tax incentives may be utilized within a period of twenty (20)
years from the operation start date.
Depreciation as per Companies Act

Depreciation has been provided for in the Profit and Loss calculation
using the straight-line method to write-off the assets over the
expected useful life of the assets. The depreciation rates based on
Companies Act for the different asset types are as set out below.
Depreciation Rate based on

Companies
Item Act Rate
Construction Work 4.44%
RAIPUR EXPRESSWAYS LIMITED - xxiv - Appendix

Preliminary Expenses 20.00%
8. Funds Drawdown Phasing

The promoters are bringing in 80% of the promoters’ equity upfront,
before the drawdown of debt or NHAI Grant begins. The NHAI Grant
will be drawn in the 1st year of construction (as per the terms of the
CA) and will be drawn proportionately with the balance loan.
9. Interest Rate on the Finance Facilities

Based on the prevailing financial market conditions in India, the
robustness of the Project cashflows & the promoters’ profile, the
interest rate has been assumed at 9.50% p.a. for the debt for the
duration of the Finance Facilities.
10. Debt Service Reserve Account

DSRA provisions have been assumed for 2 quarters repayment of
principal and interest payments.
RAIPUR EXPRESSWAYS LIMITED - xxv - Appendix

Appendix 5
Projected Profit & Loss Statement
(Rs. Cr.)
PROFIT & LOSS STMNT Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Toll Revenue 17.00 36.57 39.73 43.92 49.13 53.71 59.67 66.48 72.84 79.81 88.58 97.29
Ancilliary Revenue - - - - - - - - - - - -
NHAI +ve Construction Grant written back 0.08 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
NHAI +ve Operation Grant - - - 1.40 1.70 2.25 2.50 2.50 - - - -
Interest Income on Cash Balances - - - - - - - - - - - -
Total Income 17.08 36.73 39.88 45.47 50.98 56.12 62.32 69.13 73.00 79.96 88.73 97.44
Toll / Admin Exp. 0.41 0.86 0.90 0.94 0.98 1.02 1.07 1.12 1.17 1.22 1.27 1.33
Routine Maintenance Expense 0.46 0.97 1.02 1.06 1.11 1.16 1.21 1.27 1.33 1.39 1.45 1.51
Insurance during operation 0.59 1.25 1.31 1.37 1.43 1.49 1.56 1.63 1.71 1.78 1.86 1.95
Fin. Fees & Consultant Fees 0.14 0.29 0.30 0.31 0.33 0.34 0.36 0.37 0.39 0.41 0.42 0.44
Power & Lighting 0.41 0.86 0.90 0.94 0.98 1.02 1.07 1.12 1.17 1.22 1.27 1.33
Supervision Fees for ROB 0.05 0.11 0.12 0.12 0.13 0.14 0.14 0.15 0.16 0.16 0.17 0.18
Major Maintenance Expense - - - - - 19.07 - - - - 23.76 -
Total O&M Exp 2.06 4.34 4.54 4.74 4.95 24.25 5.41 5.65 5.91 6.17 30.22 6.74
PBDIT 15.02 32.39 35.35 40.73 46.03 31.87 56.91 63.48 67.09 73.79 58.52 90.70
Interest on Debt 9.50 18.96 18.64 18.08 17.15 15.75 13.95 11.88 9.42 6.76 4.10 1.44
Fixed Asset Depreciation 6.09 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29
PBT (0.57) 1.13 4.42 10.36 16.59 3.83 30.67 39.31 45.38 54.74 42.12 76.97
less: Income tax payable - 0.13 0.50 1.16 1.86 0.43 3.44 4.41 5.09 6.14 4.73 8.64
less: Deferred tax - 0.25 0.99 2.33 3.72 0.86 6.88 8.82 (5.09) (6.76) (5.87) (6.14)
PAT (0.57) 0.75 2.93 6.87 11.00 2.54 20.35 26.08 45.38 55.36 43.27 74.47
less: Terminal Loss on Capex Transfer - - - - - - - - - - - -
less: Gross Dividends declared (incld Div. Distr. Ta
- x) 0.10 2.64 6.19 9.90 2.29 18.31 23.47 28.27 29.21 39.56 59.10
Transfer to Profit reserve (0.57) 0.65 0.29 0.69 1.10 0.25 2.03 2.61 17.10 26.15 3.72 15.38
RAIPUR EXPRESSWAYS LIMITED -i- Appendix

Appendix 6
Projected Balance Sheet
(Rs. Cr.)
BALANCE SHEET Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Liabilities
Equity Shares 82.53 82.53 82.53 82.53 82.53 82.53 82.53 82.53 82.53 82.53 82.53 82.53
Capital Reserve (Construction Grant) 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
Senior Debt 200.00 198.00 194.00 186.00 174.00 156.00 136.00 112.00 84.00 56.00 28.00 0.00
Deferred Tax Liability - 0.25 1.25 3.57 7.29 8.15 15.04 23.86 18.77 12.01 6.14 -
Total Liabilities 285.35 284.10 281.23 276.09 268.76 251.72 240.48 227.76 211.62 202.85 172.54 153.62
Assets
Gross Fixed Assets 276.50 276.50 276.50 276.50 276.50 276.50 276.50 276.50 276.50 276.50 276.50 276.50
less: Disposal on termination of concession - - - - - - - - - - - -
less: Accumulated Depreciation 6.09 18.38 30.67 42.96 55.25 67.55 79.84 92.13 104.42 116.71 129.00 141.29
Net Block 270.41 258.12 245.83 233.54 221.25 208.96 196.67 184.38 172.09 159.79 147.50 135.21
Work in progress - - - - - - - - - - - -
Adv to EPC Contractor (Deffered Paym) - - - - - - - - - - - -
Cash in DSRA 10.48 11.32 13.04 14.57 16.87 16.97 17.94 18.71 17.38 16.05 14.72 -
Cash in Maintenance Reserve 3.81 7.63 11.44 15.26 19.07 4.75 9.51 14.26 19.01 23.76 5.92 11.85
Cash in Bank 0.65 7.03 10.92 12.72 11.57 21.03 16.37 10.41 3.14 3.25 4.40 6.57
Total Assets 285.35 284.10 281.23 276.09 268.76 251.72 240.48 227.76 211.62 202.85 172.54 153.62
RAIPUR EXPRESSWAYS LIMITED - ii - Appendix

Appendix 7
Projected Cash Flow Statement
(Rs. Cr.)
CASHFLOWSTMNT Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Sources of Cash
PAT (0.57) 0.75 2.93 6.87 11.00 2.54 20.35 26.08 45.38 55.36 43.27 74.47
add: Depreciation 6.09 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29 12.29
add: Deferred Tax - 0.25 0.99 2.33 3.72 0.86 6.88 8.82 (5.09) (6.76) (5.87) (6.14)
less: Constr. Grant writ/ back 0.08 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
Total Cash Inflow 5.44 13.14 16.06 21.34 26.86 15.54 39.37 47.04 52.42 60.73 49.53 80.47
Applications of Cash
Senior Debt Repayment - 2.00 4.00 8.00 12.00 18.00 20.00 24.00 28.00 28.00 28.00 28.00
Total Cash Outflow - 2.00 4.00 8.00 12.00 18.00 20.00 24.00 28.00 28.00 28.00 28.00
Cash Avail. for Res. A/ c.'s 5.44 11.79 19.10 24.26 27.59 9.11 40.40 39.41 34.84 35.87 24.78 56.86
less: Transfer to DSRA 0.98 0.84 1.72 1.53 2.30 0.10 0.96 0.77 - - - -
add: Inflow from DSRA - - - - - - - - 1.33 1.33 1.33 14.72
less: Transfer to MMR Ac 3.81 3.81 3.81 3.81 3.81 4.75 4.75 4.75 4.75 4.75 5.92 5.92
add: Inflow from Maj Maint Res Ac - - - - - 19.07 - - - - 23.76 -
Cash Available for Dividend 0.65 7.14 13.56 18.91 21.47 23.32 34.69 33.89 31.41 32.45 43.95 65.66
less: Dividend Paid - 0.10 2.64 6.19 9.90 2.29 18.31 23.47 28.27 29.21 39.56 59.10
Closing Cash Balance 0.65 7.03 10.92 12.72 11.57 21.03 16.37 10.41 3.14 3.25 4.40 6.57
RAIPUR EXPRESSWAYS LIMITED - iii - Appendix

Appendix 8
DSCR Calculations
(Rs. Cr.)
DSCR - Rupee Term Loan 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 55.98
Interest on Term Loan 9.50 18.96 18.64 18.08 17.15 15.75 13.95 11.88 9.42 6.76
Total 1 11.13 28.29 30.88 35.60 40.20 45.60 48.56 54.16 57.09 62.74
Repayment of Term Loan 9.50 18.96 18.64 18.08 17.15 15.75 13.95 11.88 9.42 6.76
Interest on Term Loan - 2.00 4.00 8.00 12.00 18.00 20.00 24.00 28.00 28.00
Total 2 9.50 20.96 22.64 26.08 29.15 33.75 33.95 35.88 37.42 34.76
DSCR (Total 1/ Total 2) 1.17 1.35 1.36 1.37 1.38 1.35 1.43 1.51 1.53 1.80
Avg. DSCR - Senior lenders 1.63
Min. DSCR - Senior lenders 1.17
* Net Cash Accr = PAT + Depr. + Def. Tax - Constr. Grant written back - Transfer to DSRA + Transfer from DSRA
RAIPUR EXPRESSWAYS LIMITED - iv - Appendix

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Strictly Private & Confidential

Project Information Memorandum

Syndication of Rupee Term Loan

Aurang –Raipur Toll Road Project

Strictly Private & Confidential

SBI CAPITAL MARKETS LTD.

This Project Information Memorandum (PIM) contains

There are financial projections presented in this PIM, which

Neither SBICAP nor State Bank of India or any of its associates,

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

inferences, which may be at divergence with the conclusions

The information set forth in this document is intended solely for

This PIM is furnished on a strictly confidential basis and is for

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

Board of Directors of REL............................................................................................................................viii

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

Appendix 1. Major BOT projects implemented / being implemented by DS

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

LoR : Laing O'Rourke PLC

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

WPI : Wholesale Price Index

RAIPUR EXPRESSWAYS LIMITED Project Information Memorandum

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

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

Brief Details of the Company

RAIPUR EXPRESSWAYS LIMITED -i- Executive Summary

Name of the Company : Raipur Expressways Limited

RAIPUR EXPRESSWAYS LIMITED - ii - Executive Summary

REL is promoted by DSC Group. The DSC Group commenced

Shareholding Structure of REL

APOLLO DSC JLI LOR

4.8% 94.9% 0.2% 0.1%

RAIPUR EXPRESSWAYS LIMITED - iii - Executive Summary

Profile of DS Constructions Limited

DS Constructions Ltd., a part of the US$1bn DSC Group, is one of the

The company’s strategy of focusing on BOT projects at a time when

RAIPUR EXPRESSWAYS LIMITED - iv - Executive Summary

Airports in the elaborate Airport Privatisation exercise

RAIPUR EXPRESSWAYS LIMITED -v- Executive Summary

Major BOT Infrastructure Projects of DSC

DSC has been actively involved in private sector participation in

EPC Cost Natur

RAIPUR EXPRESSWAYS LIMITED - vi - Executive Summary

Financial Highlight of DSC

The financial highlights of DSC for last three audited accounting

Profile of Apollo Enterprises Limited

RAIPUR EXPRESSWAYS LIMITED - vii - Executive Summary

Construction Plant & equipment, Building Industry, Heavy Industries,

The group undertakes civil engineering, building, construction

Laing O’ Rourke Plc is a wholly owned subsidiary of O’Rourke

RAIPUR EXPRESSWAYS LIMITED - viii - Executive Summary

Brief Profile of REL

Raipur Expressways Limited (REL), a Special-Purpose Vehicle (SPV),

As per the Memorandum and Articles of Association of REL, it is duly

RAIPUR EXPRESSWAYS LIMITED - ix - Executive Summary

Management & Organization

As per the Memorandum & Articles of Association of REL, the number

REL’s present Board comprises 3 (Three) Directors. The details of the

Board of Directors of REL

RAIPUR EXPRESSWAYS LIMITED -x- Executive Summary