MP Border Checkpost Development Company Ltd.

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LSI Financial Services Pvt. Ltd. proposes to acquire a 74% stake of IL&FS in January 2023. This acquisition will have a significant impact on the financial services industry.

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MP Border Checkpost Development Company Ltd.

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  1. LSI FINANCIAL SERVICES PRIVATE LIMITED MP Border Checkpost Development Company Ltd. Acquisition Proposition of 74% stake of IL&FS JANUARY 2023

  2. BUSINESS OVERVIEW IL&FS Transportation Networks Limited (ITNL) is engaged in the development, commissioning and management of Transportation Infrastructure Projects with presence in roads, highways, metro rail, bus transportation and border checkposts in India and abroad. Spanco Limited (SPANCO) a leading Telecom System Integration and IT services company engaged in the implementation of Turnkey Solutions Projects for Govt in India. The service portfolio covers design, development, commissioning, management, support & operations of large IT systems in India & abroad. ITNL & Spanco formed a consortium to participate in a tender floated by M.P. Road Development Corporation Limited (MPRDCL) for construction, operation & maintenance of 24 State Border Check Posts in Madhya Pradesh and became the successful bidder. The consortium of ITNL & Spanco incorporated an SPV namely MP Boarder Checkpost Development Company Limited (MPBCDCL) in November 2010. MPBCDCL entered into concession agreement with Madhya Pradesh Road Development Corporation Limited on 10th November 2010 Company Overview Spanco Limited, 26% Shareholding Pattern Proposition ITNL seeks to divest its Holding of 74% in MPBCDCL IL&FS Transportation Networks Limited, 74% *source: Audited BS F.Y. 2020-21 2

  3. ABOUT IL&FS TRANSPORTATION NETWORKS LIMITED (ITNL) IL&FS Transportation Networks India Limited (ITNL) is an integrated platform with the technical, managerial, financial, and governance framework to support and participate in the highway development programme in India and abroad. After successfully demonstrating the viability of the PPP approach to develop, finance, and implement road projects, IL&FS incorporated ITNL in 2000 to domicile all the projects undertaken in the transportation sector. ITNL has implemented benchmark projects across India, from the country s first PPP toll bridge, to India s longest road tunnel, built in the Himalayas. It has pioneered best-in-class standards of technology and facilities on its highways, bridges, flyovers and roads connecting major industrial and social centres. ITNL has also ventured into other transportation sub-sectors such as Railways, Urban Transportation Systems along with Border Checkposts. Having implemented projects across 17 states within India, ITNL has also expanded its footprint internationally, covering Spain, Portugal, Latin America and USA in the West, China in the East, as well as Africa and the UAE. To strengthen its capacities and broaden its capabilities, ITNL acquired Elsamex S.A., a Spanish company with specialist skills in O&M of infrastructure assets, especially roads. 3

  4. KEY INVESTMENT HIGHLIGHTS Revenue from User fee income was Rs 105.13 Cr. in F.Y. 2021-22 Around 19% increase in total traffic volume of 19 check posts has been observed during F.Y. 2021-22 compared to F.Y. 2020-21. 19 Operational check posts in Madhya Pradesh Border Out of 24 check posts awarded, 19 have been completed and 5 is pending with encumbrances. Average vehicle volume is around 30000 per day Total claim of Rs 2774 crore filled by the company against the Authority is yet to be resolved. Average monthly collection of Rs 7.10 Cr from 19 check posts. Concession period till 4th November 2023 Agra Mumbai road, one of the busiest boarder in MP, handles around 23 lakhs of vehicles per year. 4

  5. BRIEF BACKGROUND OF THE PROJECT ITNL consortium was awarded the project of upgradation, construction and maintenance of 24 border check posts in the state of Madhya Pradesh on BOT basis by MP Road Corporation Ltd Authority. Concession Agreement was executed in November 2010 which envisaged a Concession Period of 4566 days including construction period of 730 days. The Concession Period commenced from the Appointed Date. However, there was delay in implementation of the project of about 25 months as land could not be handed over by the Authority in time. The project has been partially implemented at a Project Cost of Rs 1342 crores as against estimated cost of Rs 1080 crores. Pursuant to mutual agreement and on the request of the Concessionaire the project was split in three phases Phase I (19 check posts), Phase II (2 check posts) and Phase III (3 check posts). While 19 check posts have been constructed, for which completion certificate was issued on February 18, 2016 (as against Scheduled Project Completion Date of May 4, 2013), the remaining 5 check posts could not be constructed. Some amount was also spent on 2 check posts of Phase -II. As a result of non-compliance with the terms of the Concession Agreement, the Company issued a letter in November 2016 claiming damages to the extent of Rs 1340 crores in addition to claim of Rs 97 crores for Change in Scope. The Company, vide its letter dated July 27, 2017 indicated material defaults on the part of the Authority and requested for curing of the same. However, the Authority did not take any action. Hence, vide letter dated October 27, 2017, the Company intimated the Authority of its intention to terminate the Concession Agreement. responded to the same in November 2017 refuting the contents of the letter. MPBCDCL issued a letter in January 2018 invoking dispute resolution clause. As there was no outcome from the conciliation process, the Company issued a letter dated October 31, 2018 intimating termination of the Concession Agreement with immediate effect and for payment of termination payment of Rs 1337 crores towards Debt Due and Adjusted Equity for Authority Event of Default. modernization, operation and Development (MPRDC) the MPRDC In accordance with the provisions of Concession Agreement, the matter required adjudication under MP Madhyastham Adhikaran Adhiniyam, 1983. The claim petition has been filed with MP Arbitration Tribunal (MPAT). The matter is under arbitration with MPAT. 5

  6. Neither the issue of this Teaser nor any part of its contents is to be taken as any form of commitment on the part of M/s LSI Financial Services Private Limited (LSI) and IL&FS Group to proceed with any transaction which may be envisaged by the issue of this Teaser. LSI, IL&FS and/or IL&FS Group reserve the right in their absolute discretion at any time and in any respect, without any liability on their part and/or their respective affiliates or representatives, to amend, suspend or terminate the process or to terminate any discussions and negotiations with any prospective purchaser at any time and without giving any reason and to proceed in any manner in relation to the potential transaction. While the information disclosed has been prepared by LSI, IL&FS Group and the management of IL&FS Group in good faith, there is no implicit or explicit representation as to the accuracy of the information and no responsibility or liability for any loss, cost, expense, damage or otherwise is accepted. Any and all responsibility and liability are expressly disclaimed, by LSI, IL&FS Group, and their respective shareholders, subsidiaries, affiliates, directors, officers, agents, advisers and employees for any errors, mis-statements, misrepresentations or omissions in any document or information supplied at any time to the recipient or its advisers in the course of the recipient's evaluation of the potential transaction. This Teaser only contains selective summaries of information and is not a substitute for due diligence to be undertaken by a potential bidder. Interested parties should carry out their own independent due diligence, investigations and analysis and should consult their own advisers before reaching to any decision. This Teaser may contain forward looking statements and LSI, IL&FS and the management of IL&FS Group do not accept any liability or responsibility in relation to the same. In no circumstances will LSI, IL&FS Group, or any of their respective shareholders, subsidiaries or affiliates be responsible for any costs or expenses incurred by prospective purchasers in connection with any appraisal or investigation of the potential transaction and you acknowledge that you shall bear all of your own such costs and expenses. This Teaser does not purport to be comprehensive, nor does it constitute or form part of any offer to consummate the transaction which may be envisaged by the issue of this Teaser or the basis of any contract to consummate the transaction which may be envisaged by the issue of this Teaser. Specifically, this Teaser does not constitute an offer letter, offering document, invitation or a prospectus or an advertisement as defined under the (Indian) Companies Act, 2013, as amended, together with the rules and regulations made thereunder, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended, or any other applicable law in India or any other laws applicable to LSI, IL&FS Group, the shareholders of IL&FS Group and/or their respective affiliates. Consummation of any transaction will be subject to all requisite approvals, including, the approval of the IL&FS board of directors, approvals required under applicable law and approval of the National Company Law Tribunal. This Teaser has not been filed, approved or registered in any jurisdiction. It s possession and use in any manner contrary to its contents or applicable law is prohibited. This teaser is private and confidential and must not be copied, reproduced, distributed or passed (in whole or in part) to any other person or used for any other purpose, at any time without the prior written consent of IL&FS Group. Should this Teaser (through the act or default of the recipient) reach other persons without the written consent of IL&FS Group, the recipient shall indemnify the IL&FS Group, including their respective directors, officers, affiliates, employees, advisors or agents against any loss or damage or other liabilities (including all costs), which they may suffer as a result. By accepting a copy of this Teaser, the recipient is deemed to have acknowledged and accepted the terms and conditions of the disclaimer notice and that it formed an integral/material part of this Teaser. LSI Financial Services Pvt Limited 6 6


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