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Rajiv B. Lall Managing Director & CEO Infrastructure Development Finance Company Limited

THE INFRASTRUCTURE OPPORTUNITY : A MACRO PERSPECTIVE. Rajiv B. Lall Managing Director & CEO Infrastructure Development Finance Company Limited. JAPAN MAY 2007. The Context : India vs China. Consumption vs Investment led growth Bottom Up vs Top Down

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Rajiv B. Lall Managing Director & CEO Infrastructure Development Finance Company Limited

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  1. THE INFRASTRUCTURE OPPORTUNITY : A MACRO PERSPECTIVE Rajiv B. Lall Managing Director & CEO Infrastructure Development Finance Company Limited JAPAN MAY 2007

  2. The Context : India vs China • Consumption vs Investment led growth • Bottom Up vs Top Down • Private vs Government led build out of infrastructure

  3. India Infrastructure Investment (% of GDP) 33 Year Low

  4. INFRASTRUCTURE SPENDING & FINANCING (% OF GDP AT CONSTANT 2005 / 06 PRICES) ~ $ 360 billion over 5 years or > $ 70 billion / year • Bulk of spending will have to come from non-government sources. • Will need an average of at least $ 5 billion a year in overseas funding just for infrastructure over next 5 years.

  5. Sustainable Reform & Infrastructure Development Reform Impulse “Tipping Point” Competition Resistance from incumbents Declining Cost Support from consumers Irrevocable change sustainable reform

  6. Telecommunication Reforms • Telecommunications • In 1994 – Telecom policy – mobile phone licenses for major metros (2 in each city), followed by licenses for mobile and fixed line services in 15 circles (1 each) – major imbroglio due to unrealistic bidding • Resolved by a New Telecom Policy in 1999 – migration to a revenue share regime, more players, universal access service – challenge now is rural connectivity • Regulator (TRAI) established – initial hiccups but now functioning well • Private investment has grown the market - over 200 million subscribers; growing at over 5 million per month • Prices – mobile from 37 cents per minute to 0.01 cents per minute

  7. Mobile Growth and Effective Charge per minute Source : TRAI (2005C and 2006C)

  8. Foreign Direct Investment Source: Investing in India-FDI Manual, DIPP

  9. Opportunities • Highways : $ 48 billion • Total emphasis on BOT roads • NHDP 1 to 7 (40,000 kms of new road) • Railways : $ 12 billion • Private container trains • Dedicated Freight Corridors • Logistic Parks / Railway Stations • Ports : $ 12 billion • Concession at major ports and development of minor ports • Airports : $ 9 billion • Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata & 35 non-metro airports • Power : $ 130 billion • Generation and transmission • Wind, hydro

  10. IDFC : Who we are • Project finance : Debt, Sub-debt, Mezzanine • Equity Finance – principal investments and asset management • IDFC Private Equity – 2 funds aggregating USD 630 million • Project Equity Funds USD 1 billion by March ’08 • Investment Banking and Advisory Services • Focus areas : Energy, Telecom, Transport & Industrial / Commercial Infrastructure • Total Loan Assets of close to USD 4 billion + USD 0.5 billion in equity investments • Market cap : USD 2.2 billion • Track record of performance and consistent growth • 25% of the loans to private infrastructure projects • Net Non Performing Assets: Nil • FY 2002 – 2007 CAGR in Balance Sheet – 42%, Infrastructure loans: 48%, Total Income: 31%, PAT: 22% Unique Public Private Partnership delivering innovative financial solution to Indian Infrastructure Sector

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