Subject: Mark-to-Market
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked]
Date: Mon, 24 Jan 2000 05:36:00 -0800 (PST)

Bob,

I wanted to continue the analysis on mark-to-market that I had spoken to you 
about on the phone.  

I thought that it was getting very difficult explaining the whole transaction 
by phone, so I am having Krishnarao who is in Vince's group explain the 
transaction to you.

Krishna has been helping us structure the deal here in India, and he has just 
returned to Houston from India after working with the team here.

He will seek an appointment with you to explain the transaction.  I would 
like you to please spend some time with him, and then based on the discussion 
please send us a note detailing how sucha a transaction would be marked to 
market.

Please cosider the fact that currently there are no such transactions from 
the Indian side.  This is a very important transaction for us, and we may 
need to repeat this in coming months, hence setting up the system to account 
for these maybe well worth it.  Also, what I am concerned about is that there 
will be an Enron India (EIPL) account in India based on Indian GAAP, and upon 
consolidation there will be a US GAAP accounting in the US.  It is here that 
we would like to have mark-to-market accounting.  EIPL is structured through 
Mauritius, and then Caymen Islands.

Another key question to consider is that when we m-t-m the transaction in the 
US there will be a tax accruing in the year of m-t-m (say 2000).  However, in 
India, as a result of the accrual accounting, there will not be any income 
showing till the year 2002 or 2003.  We will need to know how that would get 
treated, and whether there is a way to get credit for the tax payable in the 
US.  I am also confused about whether US tax would be levied, since none of 
the income is being brought back into the US (remains overseas - subpart-F 
and other concerns).

Finally, we have been working hard in structuring a fixed price contract and 
getting a fixed for floating swap in the US (this is still not allowed to 
Indian Corporates).  I need you to think about this too, and see if some type 
of accounting will solve this issue.  Krishna knows what I am talking about, 
and will brief you on the same.

Krishna - Please walk Bob through the three structures we had worked here.

Look forward to your help and comments.  This is going to be an exciting 
project for us all.

Regards,
Sandeep.