RED HERRING PROSPECTUS Dated October 23, 2006 Please read Section 60B of the Companies Act, 1956 100% Book Building Issue LANCO INFRATECH LIMITED (Our Company was originally incorporated on March 26, 1993 as “Lanco Constructions Limited” in Andhra Pradesh with its registered office at 1-8-50/G, 2nd Floor, Krishna Nagar Colony, Prenderghast Road, Secunderabad – 500 003 and received its certificate of commencement of business on March 31, 1993. With effect from June 2, 1994, the Company shifted its registered office to Ground Floor, Visaka Towers, 1-8-303/69/3, Sardar Patel Road, Secunderabad – 500 003. The Company further shifted its registered office, with effect from July 12, 1998, to Lanco House, 141, Avenue #8 Road #2, Banjara Hills, Hyderabad – 500 034. On November 24, 2000 the Company’s name was changed to “Lanco Infratech Limited”). Registered Office: Lanco House, 141, Avenue #8, Road #2, Banjara Hills, Hyderabad – 500 034, Andhra Pradesh, India; Tel: (91 40) 235 40695/697/701/703; Fax: (91 40) 2354 0699; Contact Person and Compliance Officer: C. Krishnakumar; Email: [email protected]; Website: www. lancogroup.com PUBLIC ISSUE OF 44,472,381 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS. [●] PER EQUITY SHARE AGGREGATING RS. [●] MILLION BY LANCO INFRATECH LIMITED (THE “COMPANY”) (“THE ISSUE”). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF 43,972,381 EQUITY SHARES OF RS. 10 EACH (THE “NET ISSUE”) AND A RESERVATION FOR ELIGIBLE EMPLOYEES OF UP TO 500,000 EQUITY SHARES OF RS. 10 EACH, AT THE ISSUE PRICE. THE ISSUE WOULD CONSTITUTE 20.00% OF THE FULLY DILUTED POST ISSUE PAID-UP EQUITY CAPITAL OF THE COMPANY.THE NET ISSUE WOULD CONSTITUTE 19.78% OF THE FULLY DILUTED POST ISSUE PAID UP EQUITY CAPITAL OF THE COMPANY. PRICE BAND: RS. 200 TO RS. 240 PER EQUITY SHARE OF FACE VALUE RS. 10.00 THE FACE VALUE OF THE SHARE IS RS. 10.00 AND THE FLOOR PRICE IS 20.0 TIMES OF THE FACE VALUE AND THE CAP PRICE IS 24.0 TIMES OF THE FACE VALUE. In case of revision in the Price Band, the Bidding Period/Issue Period shall be extended for three additional days after such revision, subject to the Bidding/ Issue Period not exceeding ten working days. Any revision in the Price Band, and the revised Bidding Period/ Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), by issuing a press release and by indicating the change on the web sites of the Book Running Lead Managers and the terminals of the Syndicate. In terms of Rule 19(2)(b) of the SCRR, this being an Issue for less than 25% of the post Issue capital, the Issue is being made through the 100% book building process with an allocation of at least 60% of the Net Issue size to Qualified Institutional Buyers, with a minimum of two million securities being offered to the public and the minimum Net Issue size being at least Rs. 1,000 million. Out of the 60% of the Net Issue allocated to Qualified Institutional Buyers on a proportionate basis, 5% shall be available for allocation to Mutual Funds. Also, up to 10% of the Net Issue would be available for allocation to Non- Institutional Bidders and up to 30% of the Net Issue would be available for allocation to Retail Individual Bidders on a proportionate basis, subject to valid bids being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allotted to Qualified Institutional Buyers, the entire application money will be refunded. RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Share is Rs. 10 per Equity Share and the Issue Price is [●] times of the face value. The Issue Price (as determined by the Company, in consultation with the Book Running Lead Managers, on the basis of assessment of market demand for the Equity Shares offered by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing. We have not opted for the grading of this Issue. GENERAL RISKS Investment in equity and equity related securities involves a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue, including the risks involved. The Equity Shares have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Red Herring Prospectus. Specific attention of investors is invited to the section titled “Risk Factors” beginning on page xv of this Red Herring Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in the Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares are proposed to be listed on the BSE and the NSE and the Company has received in-principle approvals from these Stock Exchanges for the listing of its Equity Shares pursuant to letters dated August 22, 2006 and August 30, 2006 respectively. For purposes of this Issue, the Designated Stock Exchange is the NSE. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE JM Morgan Stanley Enam Financial ICICI Securities Limited Kotak Mahindra Capital Intime Spectrum Private Limited Consultants Private Limited ICICI Centre, Company Limited Registry Limited 141, Maker Chambers III 801, Dalamal Towers H.T. Parekh Marg 3rd Floor, Bakhtawar C-13, Pannalal Silk Mills Nariman Point , Nariman Point Churchgate, 229 Nariman Point Compound, LBS Marg, Mumbai 400 021, India Mumbai 400 021 Mumbai 400 020 Mumbai 400 021 Bhandup, Mumbai 400 078 Tel: (91 22) 6630 3030 India India India India Fax: (91 22) 2204 7185 Tel: (91 22) 6638 1800 Tel: (91 22) 2288 2460 Tel: (91 22) 6634 1100 Tel: (91 22) 2596 3838 Email: Fax: (91 22) 2284 6824 Fax: (91 22) 2282 6580 Fax: (91 22) 2284 0492 Fax: (91 22) 2594 6969 [email protected] Email: [email protected] Email: [email protected] Email: Website: Web site: Website: www.enam.com Website: [email protected] www.intimespectrum.com www.jmmorganstanley.com Contact Person: Ashish www.icicisecurities.com Web site: www.kotak.com E-mail: Contact Person: Vibhor Kumar / Kumbhat Contact Person: Vaishnavi Contact Person : Ajay [email protected] Mayank Jain Reddy/ Ratnadeep Acharyya Vaidya Contact Person: Haren Modi BID ISSUE PROGRAM BID/ ISSUE OPENS ON : MONDAY, NOVEMBER 6, 2006 BID/ ISSUE CLOSES ON : FRIDAY, NOVEMBER 10, 2006 TABLE OF CONTENTS Page SECTION I – GENERAL ............................................................................................................................ i DEFINITIONS AND ABBREVIATIONS ............................................................................................ i CERTAIN CONVENTIONS; USE OF MARKET DATA ..................................................................... xiii FORWARD-LOOKING STATEMENTS ............................................................................................ xiv SECTION II – RISK FACTORS .................................................................................................................. xv SECTION III – INTRODUCTION ................................................................................................................ 1 SUMMARY ..................................................................................................................................... 1 SUMMARY FINANCIAL INFORMATION ........................................................................................ 4 THE ISSUE ...................................................................................................................................... 6 GENERAL INFORMATION .............................................................................................................. 7 CAPITAL STRUCTURE .................................................................................................................... 16 OBJECTS OF THE ISSUE ................................................................................................................ 27 BASIS FOR ISSUE PRICE ............................................................................................................... 38 STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS 41 SECTION IV – ABOUT US ........................................................................................................................ 49 INDUSTRY OVERVIEW ..................................................................................................................