IL&FS Infrastructure Development Corporation Ltd. May 2008 A Presentation By Madhya Pradesh – Destination Unveiled Possibilities of development of tourism project through PPP in MP

In this presentation 1.Tourism in India 2. Tourism in Madhya Pradesh 3. Public Private Partnership ( PPP) 4. Project Development 5. About IL&FS 6. Project Development & Promotion Partnership PDPP 7. Select Success Stories 8. Conclusion

Tourism in India – Some Facts & Figures

Tourism in India JBIC ranked India as the fifth most attractive investment destinations. Conde Nast Traveler, one of the world’s most celebrated travel magazines ranked India amongst the top tourist destinations of the world. Tourism is one of the third largest net earner of foreign exchange for the country and also one of the sectors, which employs the largest number of manpower. India has significant potential for becoming a major global tourist destination.

Tourism in India – Figures 0.8% share of world market Tourists (2006) 4.6 million (International) 382 million (domestic) Employment Direct million Indirect – 24.4 million Export earnings ~ US $ 9.6 bn 2006 Contribution to GDP Direct 2% Overall 5.9%

FOREIGN EXCHANGE Tourism is one of the third largest net earner of foreign exchange for the country ( ): - Gem & JewelryUS$ 7.40 Bn. - Readymade GarmentsUS$ 5.50 Bn. - Tourism US$ 3.30 Bn.

EMPLOYMENT Every Rs.1 million ($25,000) invested creates… Tourism (directly)47.5 Jobs Tourism (indirectly)89 Jobs (sub-sector of hotels and restaurants, transportation etc.) Agriculture 44.6 Jobs Manufacturing12.6 Jobs

Tourism in India : Key Potential World class cultural and natural heritage tourism assets Multi-themed product development opportunities Strong global, regional and national tourism market growth prospects Strong potential to increase market share Potential to go beyond the 3 S’s of tourism – experience tourism

Tourism in India – Major concerns Need – Make projects lucrative for private sector Investment  Approach & Connectivity  Lack of Proper Infrastructure  Lack of Information - Marketing  Mismatch between demand and supply  Poor availability of trained manpower (guides, hospitality) . Regulatory issues – coordination between departments

Tourism in Madhya Pradesh

A Glimpse of Tourism in Madhya Pradesh  Kanha is the largest Wildlife Sanctuary in Asia  Kahjuraho has some of the most famous Sculptures in the world  Bhimbeteka is the oldest Cave Paintings in the world  Sanchi houses the oldest Buddhist Stupa in the world  9 national parks and 25 game sanctuaries out of which four are major tiger reserves.  Sacred rivers of Narmada, Tapti, Son and Kshipra have a string of religious places located on their banks.  Pachmarhi one of the most beautiful hill stations.  Tourist festivals displaying variety of folk and performing arts at Khajuraho, Orchha, Pachmarhi, Indore-Ujjain (Malwa) and Bhopal. Kanha National Park Bhimbeteka KhajurahoSanchi Pachmarhi

On the basis of the proximity of destinations and linkages between them, State Government has identified 4 major tourist circuits in the State:  Gwalior - Shivpuri - Orchha - Khajuraho  Indore - Ujjain - Maheshwar - Omkareshware - Mandu  Jabalpur - Bhedaghat - Mandla - Kanha - Bandhavgarh  Bhopal -Sanchi - Bhojpur - Bhimbetka - Panchmarhi Major Tourism Circuits

Attractions along key circuits Heritage TourismGwalior, Orchha, Khajuraho, Sanchi, Mandu,Datia, Burhanpur etc Pilgrim TourismUjjain, Maheshwar, Omkareshwar, Chitrakoot, Amarkantak, Sanchi, Orchha, Amarkantak etc. Eco & Adventure Tourism Pachmarhi, Kanha, Bandhavgarh, Panna, Satpura, Pench Valley National Parks, Tigra Lake (Gwalior), Upper Lake (Bhopal), Gandhi Sagar (Mandsaur) etc Leisure & Business Tourism Pachmarhi, Khajuraho, Bhopal, Gwalior, Indore, Mainpat, Tamia, Jabalpur etc.

Investment Requirements – Tourism Perspective Plan & ADB Study PERIODINVESTMENT REQUIREMENTS (RS. CRORE) Short Term (1-5 years) Medium Term (6-10 years) Long Term (11-20 years) Total (Rs. Crore) (Rs. Crore) Source : Tourism Perspective Plan, MoT Source : ADB India Tourism Infrastructure Study, 2007

MP has numerous tourist attractions. Focus on positioning MP in the national & International media. MP was awarded the National Tourism Award Some of its recent initiatives include: – Heritage Meet for heritage property owners – Carnival in ‘Tourist Hubs’ – Integrated national media campaign Initiatives Of Madhya Pradesh Tourism

Public Private Partnership ( PPP )

PPP Approach Leverage Budgetary Resources Need to improve efficiency in service delivery Need PPP approach Attract private investments for infrastructure projects Goal Attracts market investments Reduces cost to public sector Improves service delivery Advantages Private Sector contribution for: - Financial investments - Management practices - Efficiency in service delivery Public Sector contribution limited to: - Financial gap funding - Providing institutional commitment to project

Why Public Private Partnership ? “ PPPs enable the public sector to benefit from commercial dynamism, the ability to raise finances in an environment of budgetary restrictions, innovation and efficiencies, harnessed through the introduction of private sector investors who contribute their own capital, skills and experience ”

Acceleration of Infrastructure Provision Faster Implementation Value for Money Partnership Building Enhanced Public Management Genuine Risk Transfer Output Specification Asset Performance & Reduced Costs Performance-Related Reward Private Investment Promotion Improved Quality of Service Advantages of PPP

In Short, The Key Objective: Government Private Sector Partnership Investments that are economically & socially beneficial Expanding the possibilities for efficient infrastructure provision through ‘Public-Private Partnership’

Project Development – A step beyond consultancy

Challenge of PPP Projects Capital The Missing Link – Project Development

Project Development: What it is (1/2) Project concept Technical & Financial Evaluation Statutory & Regulatory Approvals Approvals for various grants & subsidies Development of various contracts Setting up of a Project Company (SPV)

Project Development: What it is (2/2) Vendor Development Interaction with FIs Bid Documents & Bid Process Management Selection of Operator Facilitation for financial closure Hand holding during implementation

Project Development: What it is not Construction and operation of a project: That is to be done by the selected bidder Mechanism leading to privatization

Project Development: Why To mitigate technical and financial risks by association of expert bodies To manage bottlenecks related to approvals To obtain best value of the project for the state To minimize the implementation time for a project To leverage resources of government:PPP PPP leads to building up of capacity of local people

Project Development: What it needs A project anchor like State Government A project development agency A project development fund 1-3% of the project cost and To be recovered from the successful bidder Upfront finalization of legal agreements and bidding criteria by the project anchor

Project Development and Promotion Partnership (PDPP)

PDPP Arrangement  Key Features  Partnership for development with State Governments  Hands on mode of operations  Sharing of Risks and Rewards (result-oriented)  Mixture of Govt. approach & Private efficiency  Key objectives  Need assessment for development  Integrated development  Public Private Partnership  Leveraging limited public resources with private investments  Bringing in private sector efficiency and management skills

PDPP Approach  Identification of key development needs & potential projects  Integrated Development through Project Development  Phased implementation  Potential benefits to be staggered  6-12 m, 1-3 years, more than 3 years

About IL&FS Infrastructure Development Corporation

Genesis Mandate: Commercialization of infrastructure projects Value added financial services Initial JV format: Central Bank of India (CBI) Unit Trust of India (UTI) Housing Development Finance Company Limited (HDFC) IL&FS formally commenced business in 1988

Name% Government Shareholding -Life Insurance Corporation OF India Central Bank of India 9.18 State Bank of India 7.68 Abhu Dhabi Investment Authority Sub-total Private Shareholding Housing Development Finance Corporation ORIX Corporation, Japan23.82 IL&FS Employees Welfare Trust 6.51 Sub-total TOTAL Current Shareholding

IL&FS Infrastructure Development. Corp. Ltd. (IL&FS IDC)  100% subsidiary of IL&FS  Project Development Advisory arm  More than 200 professionals  Executing Project Development Mandates in ~ 20 states  IL&FS / IIDC provides Complete Process and Programme Management from the ‘Concept’ Stage to ‘Implementation’ We are ‘Project Developers’ & not just Consultants

Sectoral Expertise PowerWater Special Economic Zones TelecomSanitation Solid Waste Mgt PortsSewerage Environment AirportsUrban Infrastructure Rehabilitation of Assets Roads & BridgesHealth E Governance Tourism Education Municipal Finance In each sector, IL&FS has established specific replicable, stand alone, prototypes

Representative Government Partnerships Government of India (Ministries)  Commerce  Textiles  Information Technology Central Public Sector Undertaking  ONGC  Coal India Limited  MMTC State Governments  TripuraAssamNagaland  UttranchalJharkhandChattisgarh  Tamil NaduAndhra PradeshKerala  KarnatakaOrissaMadhya Pradesh  MaharashtraGujaratRajasthan

IL&FS IDC has offices at: Mahindra Towers, New Delhi (corporate head office) Front offices at: Jaipur, Raipur, Patna, Guwahati, Calcutta,Ahmedabad, Mumbai, Bhopal, Vadodara, Rajkot, Shimla, Ranchi, Tirupur, Bhubaneshwar, Banagalore, Hyderabad, Chennai, Chandigarh, Dehradun,Thiruvanthapuram, & Kathmandu (Nepal) Delhi Mumbai Chennai Kolkata Hyderabad Ahmedabad Bangalor e Bhopal Jaipur Go a Vadodara Gangtok Srinagar Thiruvananthapuram Belgaum Agartala Chandigar h Raipur Rajkot Tirupur Kota Guwahati Shimla Patna Ranchi Bhubaneswar Dehradun Kathmandu Geographical spread

Select PDPP Arrangements Andhra Pradesh Assam Bodoland Territorial Council (BTC) Chhattisgarh Himachal Pradesh Jharkhand Kerala Orissa Punjab Tripura Uttaranchal Gujrat West Bengal Karnataka

Strengths of IL&FS IDC Have several Success Stories to tell Experience in structuring projects in PPP formats Linkages with Major Private Sector Developers - Good will in the market and confidence of industry in IL&FS Strong relationships with Central Government Associations with State Government clients Associations with Financial Institutions and multi laterals Ability to draw upon diversified services from IL&FS Group companies Ability to tie up and utilise local resources

Select Success Stories

Jal Mahal Integrated Tourism Project Project Scope: Development of Jal Mahal and Mansagar Lake area into a sustainable, eco friendly tourism destination Including lake restoration, monument conservation and lake precincts development Project Cost: Rs. 200 Crores Concession agreement signed

Development of Tijara Fort Project Scope: Development of tourism and hospitality facilities within Tijara Fort Project Cost: Rs crores Private Sector partner selected

Albert Hall Museum: O&M The Project: restoration and conservation of the Museum building and conservation and documentation of the antiquities contained therein. PSP to co-finance the facilities and O&M Govt of Rajasthan would continue to hold the museum inventory on its books.

Lakes’ Restoration and Management GoR has identified 5 lakes for undertaking Detailed studies: Nakki – Mt. Abu Fatehsagar, Pichola – Udaipur Annasagar – Ajmer Sarovar - Pushkar

Conservation of Quila Nabha Quila is 18th century historical fort located in the heart of the walled city of Nabha, Punjab. Unsolicited Proposal received from Nabha Foundation, a Trust incorporated by Khemka Family Project structured on Swiss Challenge Restoration and Conservation of Quila Complex and Reuse as the Business School Lease Period : 66 years Minimum Investment for Restoration : Rs 15 Cr

Rajinder Kothi Redevelopment of Rajinder Kothi at Patiala in Punjab as Heritage Hotel Restoration and Conservation of the Property Reuse of Property as Heritage Hotel Lease Period : 30 years Nimrana Hotels Pvt Limited selected as concessionaire through competitive bidding

Agartala Budget Hotel: Milestones Land Allotment from GoT Roots Corporation Limited set up “Ginger” Hotel. Project Started Commercial Operation from 21 st August, NEC Grant of Rs. 9 million through State Government as Viability Gap Funding. Already released to Roots Corporation. 1 st hotel project promoted by reputed Hospitality chain in the NER

Guwahati Budget Hotel: Milestones Land Identification & Allotment Roots Corporation agreed to set up “Ginger” Hotel. Agreement signed with GoA in January 07. Project construction started – foundation completed. Hotel to be commissioned by October 2009.

Tezpur Budget Hotel: Milestones Feasibility Studies completed Land Identification & Allotment Sarovar Group agreed to set up three star category hotel in Management Contract. Developer identified - Mentok RI Projects Pvt. Ltd has tied up with Sarovar. Hotel to be commissioned in 24 months.

Crowborrough Hotel: Milestones Mandate received from MTDC Feasibility Studies Completed Project Structuring – approved by GoM/MTDC Bid Process Management completed Private Developer selected. However the 3 rd highest bidder went to court and presently the matter is subjudice

Budget Hotel at Dimapur GoN has given mandate for conversion of existing Dimapur Tourist Lodge into a Hotel & Commercial Complex. Feasibility Study Completed. Project Structuring in process Bid Documents approved by GoN. Awating clearace of part land with Indian Airlines

Solang Nala Ropeway Project Project Size: Rs 1200 mio Project links Solang to Manali Passenger Ropeway with provisions ski accessories Restaurants at Lower and Upper Terminal Points. Upgradation of existing Bar Lift Preparation of Ski slopes Establishment of Ski-centre Area Management including Environment Management IIDC partnered with Himachal Govt. to identify developer. Agreements signed with Govt. realising higher share of revenues from project compared to suo moto bid received initially

International Convention Center, Hyderabad Hyderabad International Convention Center Project developed by IL&FS IDC is operational since January 2006 Developer: Emaar Properties PJSC, Dubai Convention and Exhibition- 3,000+ pax Business hotel- 300 room A residential community encompassed around a 18 hole world-class golf course Implementation by 2 SPVs through a Private Sector Developer Project Cost : Rs. 308 Crore Role of IL&FS IDC : Comprehensive Project Development advisory to GoAP

International Convention Center, Thiruvananthapuram Status - At award stage: Preferred bidder has been identified (July 2006) Project Structure Convention Center-1500 pax plenary, 500 pax hi- tech hall, Exhibition spaces Hotel/Resort/Service Apartment- 150 rooms Retail space/Theme Park- upto 7000 sq.m. Implementation by a private sector led SPV with equity holding by Government of Kerala Project Cost: Rs. 140 Crore Role of IIDC: Comprehensive Project Development advisory services to GoK

Conclusion

Conclusions Need to develop tourism infrastructure PPP is the best mode PDPP and Project Development are the tools for converting projects from paper to ground Government’s role should be limited to providing land, regulatory issues to avoid over exposure and exploitation This approach has financial benefits as well as improvement in the service sector