IFCI stake sale update

IFCI Ltd has informed that the Board of Directors of the Company at its meeting held on December 01, 2007, inter alia, has transacted the following:

1. Resolution of issues relating to recompensation and conversion of Rs 1,479 Crore held in the form of Zero Coupon Optionally Convertible Debentures (ZCOCDs) by banks and financial institutions repayable on April 01, 2022.

A need had arisen to obtain clarity on convertibility and recompensation clauses in light of IFCI's proposal to induct a strategic investor through sale of fresh equity amounting to 26% on a post-diluted basis. Public Sector Banks and Financial Institutions had converted 50% of their non SLR Investments in IFCI into 20 year ZCOCDS, as a part of the exercise under the aegis of the Government of India, in November and December 2002, to restructure liabilities of IFCI. Accordingly, a meeting was held, under the aegis of the government, presided by the Joint Secretary to Government of India on Oct 11, 2007. Thereafter, a consensus amongst the Public Sector Banks and Financial Institutions regarding convertibility and recompensation of the ZCOCDs was sought to be achieved through one-on-one meetings and finally a meeting of all the Banks and Financial Institutions on IFCI.

The consensus, which emerged, is as follows:

- LIC, GIC and associates agreed to convert that part of ZCOCDs into equity which would retain their holding in IFCI in percentage terms at existing levels. The balance amount held by LIC and other FIs would carry an interest rate of 75 basis points below 15 year G—Sec from the first 3 years and 75 basis points above 15 years G-Sec, after 3 years post induction of strategic investors.

- Public Sector Banks have agreed to convert their entire holdings in ZCOCDs into equity.

The Board of Directors of IFCI have approved the above arrangement.

2. IFCI is also in discussion with multilateral institutions to take a stake in IFCI.

3. Induction of Strategic Investor: Out of 10 applicants from whom Expressions of Interest were received. IFCI had shortlisted 8 bidders. Out of 8 shortlisted bidders, 4 have carried out due diligence on IFCI. These are

v. Sterlite Industries and Morgan Stanley and Co.

vi. WL Ross, US Capital Partners VI Fund, Standard Chartered Bank and HDFC.

vii. Cargill Financial Services Corporation and Texas Pacific Group

viii. Shinsei Bank Ltd, PNB and JC Flowers & Co.

The last date of submission for financial bids has been fixed as Dec 14, 2007.