ESDS Software Solution Limited's STPI deals set payment floor

ESDS Software Solution Limited has a contractual payment floor under four Software Technology Parks of India partnerships: ESDS must pay annual guaranteed minimum charges or an 18% revenue share, whichever is higher. The arrangements cover data-centre operating rights in Bengaluru, Mohali, Kolkata and Noida, with stated terms ending from June 2030 to September 2035.

What does ESDS owe under its STPI data-centre partnerships?

ESDS owes Software Technology Parks of India, Bengaluru, or STPI, the higher of annual guaranteed minimum charges and an 18% revenue share as consideration for continued operation of four data centres. The formula applies under master service agreements for the Bengaluru Data Centre, Mohali Data Centre, Proposed Kolkata Data Centre and Noida Data Centre.

The filing does not disclose the rupee amount of any annual guaranteed minimum charge, the definition of revenue used for the 18% calculation, or historical payments to STPI. The obligation is therefore identifiable as a contractual mechanism, but its absolute cost and its share of ESDS revenue or expenses cannot be calculated from the disclosed information.

The payment structure differs from a revenue share with no minimum payment because the payable amount is the higher of two measures. If the calculated 18% revenue share is lower than the annual guaranteed minimum charge, the minimum charge remains payable; if it is higher, the revenue-share amount applies.

Which STPI data-centre rights does ESDS hold and for how long?

ESDS holds STPI operating rights for four locations, with Bengaluru ending first on June 30, 2030 and the Kolkata and Noida rights running into 2035. The master service agreements were signed from February 19, 2020 through September 2, 2025, expanding the disclosed STPI contractual footprint over that period.

STPI may extend each stated operating period by an additional five years at its discretion. The extension is a disclosed possibility rather than an entitlement exercisable by ESDS, so the 2030, 2032 and 2035 dates remain the stated end points of the current rights.

The operating status differs across the four locations. ESDS lists the Bengaluru Data Centre as launched in 2020 and the Mohali Data Centre as launched in 2022, while it continues to call Kolkata the Proposed Kolkata Data Centre after the August 1, 2025 agreement; its milestones list says a Noida data centre launched in 2025.

How do the STPI agreements support ESDS's expansion model?

The STPI agreements give ESDS the right to set up and operate data centres on premises allocated by STPI under a public-private partnership model. In return, ESDS must meet certain performance standards and make the higher of the annual guaranteed minimum charge or 18% revenue-share payment.

STPI is also required to assist ESDS in marketing activities under the four master service agreements. The filing does not quantify that assistance, disclose customer leads or occupancy arising from it, or define the performance standards that ESDS must meet at Bengaluru, Mohali, Kolkata and Noida.

The sequence of agreements shows a shift from the Bengaluru agreement of February 2020 to three additional STPI arrangements dated July 2022, August 2025 and September 2025. That expansion increases the number of facilities subject to the disclosed payment formula from the single Bengaluru arrangement to four named locations, although the filing gives no location-level revenue or capacity figures.

Why does the annual payment floor matter to ESDS operations?

The annual payment floor matters because ESDS's payment to STPI is not determined solely by the 18% revenue-share calculation. The annual guaranteed minimum charge can set the payable amount when it exceeds the calculated revenue share, while the filing does not disclose the charge for any of the four locations.

The disclosed dependency is concentrated in four STPI-allocated premises: Bengaluru, Mohali, Kolkata and Noida. Their rights run to June 30, 2030, July 4, 2032, July 31, 2035 and September 1, 2035, respectively, making the obligation relevant over different remaining contractual periods rather than ending on one common date.

The agreements also link site rights to continuing operating conditions. ESDS is required to adhere to certain performance standards, and STPI must provide marketing assistance, but the filing supplies neither compliance measures nor facility-specific revenue, costs or utilisation data; those omissions prevent assessment of the financial effect at any individual location.

How does Sahibabad differ from the STPI arrangement?

ESDS's proposed Sahibabad data centre uses a different revenue-sharing mechanism with Central Electronics Limited, or CEL. Under the October 1, 2025 agreement, CEL will retain 10.50% of customer payments after realisation and release the balance to ESDS, rather than receiving the higher of an annual minimum charge or 18% of revenue.

CEL has granted ESDS the right to set up, maintain and operate a tier III data centre, a stated data-centre classification, on CEL land for 10 years and 18 months, including construction. CEL will invoice end customers and settle the retained share quarterly after receiving customer payments, making its stated payment sequence dependent on payment realisation.

CEL may provide construction funding assistance of up to Rs 18 crore, excluding goods and services tax, for the Sahibabad data-centre building. That assistance is specific to the CEL agreement and is not disclosed for the four STPI facilities; ESDS also states that it had no time or cost overruns in projects or operations as of the prospectus date.

Conclusion

ESDS's four STPI partnerships combine operating rights on allocated premises, STPI marketing assistance and performance requirements with a recurring payment formula. The higher-of structure means the annual guaranteed minimum charge or the 18% revenue share determines the payment, while undisclosed minimum-charge amounts and revenue definitions prevent a monetary estimate.

The next disclosed milestones are the current end dates, beginning with Bengaluru on June 30, 2030 and followed by Mohali in 2032 and Kolkata and Noida in 2035. STPI may extend each agreement by five years at its discretion, while the unresolved matters are the minimum charges, the applicable revenue base and financial performance of the four locations.