1. 金属並びにｴﾈﾙ ｷﾞｰ総括部魂 モンテカルロ シミュレー ション万歳 Track 3 : Capital Investments, Project Financing and Legal Frameworks “Capital Investments in Rolling Stock and Logistics Platform; Developer & Investor’s Perspective” UIC Global Rail Freight Conference New Delhi, India 23 March 2007

2. Prologue: Passenger vs. Freight Rail Business Passenger Rail –Strong public nature –Difficult to raise fares (sometimes supported by subsidies) –Difficult to control passenger use (ridership risk) 2 Easier to attract capital into freight rail by “Direct linkage between return on investment and economic dynamism of freight rail business” Freight Rail –Market-oriented –End users (shippers or forwarders) are connected to the economic activities of the area –Easier to set the fare level based on a economic reality (e.g. material cost, supply-demand situation, cost of capital) Copyright 2007 © Mitsui & Co., Ltd.

3. North America Approx. 500,000 wagons and 3,000 locomotives under lease The world major freight rolling stock leasing market and background of the development 3 Copyright 2007 © Mitsui & Co., Ltd. Railways have been owned and managed by the private sector Railways exchange wagons with each other (Interchange system) Shippers also have supplied the wagons, by fulfilling the large amount of capital needs in the industry; – 1900’s: tank cars (discovery of and transportation demand for oil) – 2000’s: Aluminum coal wagons (Increase of western coal) Today, –More than 130 railroads & –more than 150 shippers & leasing companies own freight wagons

4. Continental Europe Approx 150,000 wagons and 500 locomotives under lease The world major freight rolling stock leasing market and background of their development 4 Copyright 2007 © Mitsui & Co., Ltd. More than 100 private rail operators have emerged in the last 4-5 years after liberalization of freight railways under the following EU initiative; –Separation of business unit between passenger and freight –Separation between track ownership (public) and rail transport operation (private) –Fair and non-discriminatory trackage to any operators –Standardization of rail infrastructure among EU countries to improve interchangeability of rolling stock across the border New private operators acquire rolling stock by means of; –For core traffic volume: Own or finance-type lease –For surge traffic volume: Operating-type lease (In order to hedge the risk of not being able to prolong the transportation contract.)

5. Opportunities and challenges for the development of freight rolling stock leasing market (Lessons learned) 1.Attractiveness as investment product –Higher liquidity/tradability of equipment Diversification of rolling stock users –Shipper supplied wagons –New private operators after liberalization Standardization of model and specification Standard maintenance practice well established in the industry –Fair Risk-Return Profile Different demand patterns among equipment users Return for taking the risk as market arbitrager Sufficient traffic volume in the area 5 Copyright 2007 © Mitsui & Co., Ltd. 2.Legal system –Repossession right (No requisition by the government) 3.Accounting standard (e.g. off-balance) 4.Stability of the financial system of the country –Moderate level of interest rate –Stable currency exchange rate

6. Mitsui’s Rolling Stock Leasing / Rental Business MRC Lat-Am (Sao Paulo) Operation started: 2004 Fleet size: 4,000 wagons Mitsui Rail Capital Europe (Amsterdam) Operation started: 2004 Fleet size: 100 locomotives Mitsui Rail Capital (Chicago) Operation started: 1996 Fleet size: 10,000 wagons Dispolok (Munich) Operation started: 2001 Acquired from Siemens: 2006 Fleet size: 100 locomotives Europe North America Brazil 6 Copyright 2007 © Mitsui & Co., Ltd.

7. Capital Investments in Logistics Platform Possible types of properties for investment Onshore and Inland Intermodal Terminal (with container yard and lifting equipment) Container Freight Station and Warehouse 7 Copyright 2007 © Mitsui & Co., Ltd. Investors Traditional: Railway operators or Government Recent Development: Private Finance Initiative (“PFI”)

8. Mitsui’s recent activities in development and investment in logistics platforms 8 Hibiki Container Terminal (Japan) Size: 43ha Handling Capacity: 500,000 TEU/year Scheme: PFI (25 years concession) Start Date: April 2005 Copyright © Hibiki Container Terminal K.K. (3) Cranes (3) (2) Yard Pavement (2) Yard Site (2) Lighting facility (3) Office building, Gate, Substation, Operation systems (1) Wharf (3) Loading equipment (1) Anchorage (1) Seawall (1): Provided by the national or local government (2): Provided by the local government (3): Provided by the PFI operator Share of responsibilities Copyright © Hibiki Container Terminal K.K. Copyright 2007 © Mitsui & Co., Ltd.

9. This is not the proposal by the company and the contents may change without notice. Copyright, 2006 © Tokyo International Air Cargo Terminal Ltd. Mitsui’s recent activities in development and investment in logistics platforms Tokyo International Airport Cargo Terminal (Japan) Size: 170,000 m 2 Volume: 500,000 tons/year Scheme: PFI (30 years concession) Start Date: December 2009 Copyright 2007 © Mitsui & Co., Ltd.

10. Opportunities and challenges for the development and investment in logistics platform (Lessons learned) OPPORTUTNITIES: Attractiveness as Investment Product Availability of site at the suitable location Stable economic background of the targeted area, including tenant availability and traffic volume Reasonable fare system for common facilities (e.g. container handling charge) CHALLENGES: 1.Liquidity (salability) of the asset is sometimes limited due to; –Less developed investors market –Restriction on the transfer due to the public nature of the business 2.Suitable Legal Framework –PFI legislation or guideline is made at the national level. –However, often times there is no suitable legal framework to be applied for the concession contract. –Or, unfamiliarity at the local government level. 3.Duration of Concession Period Sometimes the concession period is too long for the private sector to undertake 4.Stability of the financial system of the country –Moderate level of interest rate –Stable currency exchange rate 10 Copyright 2007 © Mitsui & Co., Ltd.

11. Growth of India & Infrastructure Demand

12. Mitsui’s plan to build logistics platform in India with partnership of IL&FS + MMTC Copyright 2007 © Mitsui & Co., Ltd.

13. 金属並びにｴﾈﾙ ｷﾞｰ総括部魂 モンテカルロ シミュレー ション万歳 THANK YOU Copyright 2007 © Mitsui & Co., Ltd.