IFCI Updates

In terms of the restructuring, a part of bonds held by FIs & Banks, amounting to Rs 1479 crore, was converted into Zero Coupon Optionally Convertible Debentures/ Bonds (ZCOCDs) w.e.f. April 01, 2002. Accordingly, a special resolution, under section 81 of the Companies Act, 1956, was passed by the shareholders of the Company at the Annual General Meeting held on September 12, 2003. As per the resolution, these Zero Coupon Optionally Convertible Debentures/ Bonds are convertible into equity at anytime after five years from the date of issuance, at the option of the holder, at a price to be determined in accordance with the prevailing pricing norms under SEBI (Disclosure & Investor Protection) Guidelines, 2000 at the time of such conversion.

Recently, a meeting of FIs and Banks holding ZCOCDs was convened on October 11, 2007 under the lead of Ministry of Finance, Government of India followed by another meeting held on November 07, 2007 where, the Banks proposed to convert 100% of their Zero Coupons Optionally Convertible Debentures/ Bonds into equity and LIC & other Insurance Companies desired to convert as much of their ZCOCD-holding as would be require to maintain their existing equity holding percentage, post dilution of equity.

The Board of Directors of the Company at its meeting held on December 01, 2007, has approved, in principle, the conversion of the ZCOCDs into equity and constituted a Committee of Directors for such conversion and compliance of such regulatory requirements, as required. Accordingly, ZCOCDs amounting to about Rs 1,300 crore would be converted into such number of equity at a price to be determined in accordance with the prevailing pricing norms under SEBI (Disclosure & Investor Protection) Guidelines, 2000. For determination of price, December 17, 2007 has been fixed as the relevant date. The proposed equity shares would be issued on pari passu basis with the existing equity shares of the Company. The exact number of equity shares proposed to be issued on conversion would be determined after the relevant date i.e., December 17, 2007.

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.

IFCI AGM Update

IFCI Ltd has informed that the members at the 14th Annual General Meeting (AGM) of the Company held on September 21, 2007, inter alia, have accorded to the following:

1. Adoption of the Balance Sheet of the Company as at March 31, 2007, and the Profit & Loss Account for the financial year ended March 31, 2007, together with the Directors Report and Auditors Report thereon.

2. Re-appointment of Shri. Thomas Mathew T as a Director of the Company, liable to retire by rotation.

3. The vacancy caused by retirement by rotation of Prof. I M Pandey, a Director, at this Annual General Meeting be not filled up.

4. Appointment of M/s. Ray & Ray, Chartered Accountants, as Auditors of the Company from the conclusion of this Annual General Meeting until the conclusion of the Annual General Meeting of the Company, on remuneration, terms & conditions.

5. a. Appointment of Shri. PG Muralidharan, Prof. Shobit Mahajan & Shri. Atul Kumar Rai, as Directors of the Company, liable to retire by rotation.

b. Appointment of Shri. Atul Kumar Rai as Whole Time Director w.e.f. June 01, 2007 and redesignated as Managing Director w.e.f. July 11, 2007 upto May 31, 2012 of the Company on remuneration, terms & conditions.

6. Accorded for investment by Foreign Institutional Investors including their Securities and Exchange Board of India (SEBI) approved sub-accounts ("FIIs"), in the equity shares, by acquiring the equity shares from Company or purchasing the same from the market under the Portfolio Investment Scheme under FEMA subject to the condition that the total holding of all FIIs put together shall not exceed 74% of the paid up equity share capital of the Company, subject to necessary provisions & approvals.

7. The proposal for the appointment of Shri. Shri Suresh Kumar Goyal as a director of the Company was put to vote and on show of hands was rejected by overwhelming majority.

IFCI

Ifci Limited has informed the Exchange vide its letter dated September 15, 2007 that: "Pursuant to inviting Expression of Interest from Strategic investors, following applications have been received : 1) General Electric Capital Corporation. 2) Kotak Mahindra Bank Limited. 3) Consortium of Sterlite Industries (India) Limited and Morgan Stanley & Co. 4) Infrastructure Development Finance Company Limited. 5) Newbridge Asia IV, L. P. 6) Consortium of WL Ross & Co. LLC, GS Capital Partners VI Fund, Standard Chartered Bank & Housing Development Finance Corporation Limited. 7) Cargill Financial Services Corporation. 8) Consortium of Shinsei Bank Limited, Punjab National Bank and J.C. Flowers & Co. LLC. 9) Natixis 10) The Blackstone Group L.P."