Bharat Highways InvIT Management Discussions

Global Economy¹

The Global economy grew by 3.3% in CY 2024, reflecting a stable yet uneven recovery across regions. The performance was underpinned by easing inflationary pressures, accommodative monetary policies and resilient consumption in key markets. Advanced economies recorded modest growth of 1.8%, with the United States of America leading at 2.8%, supported by strong domestic demand and a favourable policy environment. In contrast, growth in the euro area remained subdued at 0.9%, weighed down by weak manufacturing activity and heightened political uncertainty. Emerging Market and Developing Economies (EMDEs) outperformed, expanding by 4.3%, driven by robust momentum in countries like India (6.5%) and China (5.0%).

Outlook

Based on the World Economic Outlook, issued by IMF in April 2025, the Global economic growth is expected to take a slight dip and is estimated to be around 2.8% in CY 2025 and 3.0% in CY 2026 which although shows resilience amidst the economic turbulence, however remains below the historical average (2000-19) of 3.7%. The growth in US is projected to be at 1.8% in CY 2025, which got downgraded mainly because of the economic uncertainty in the US that came up after their announcement related to reciprocal tariffs. To counter this and boost economic growth the US government is pushing for less restrictive monetary policies and supportive financial conditions which will help to strengthen domestic demand. The Growth in Euro area is expected to be 0.8% in CY 2025 and 1.2% in CY 2026. In other advanced economies, two offsetting forces keep growth forecasts relatively stable. On one hand, recovering real incomes are expected to support cyclical recovery in consumption on the other hand, trade headwinds including the sharp uptick in trade policy uncertainty are expected to keep investment subdued.

However, The uncertainty around the reciprocal tariffs imposed by the US on its import is disrupting global trade which can lead to increased costs, supply chain uncertainties and heightened recession risks. In response businesses all around the world are delaying investments and restructuring operations. To stabilise the impact of the tariffs, leaders around the world are undertaking diplomatic and economic steps through dialogue, trade alliances and strategic negotiations to ease rising tariff tensions and stabilise global trade.

World GDP Growth Trends

1https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025

2https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025

Indian Economy³

Overview

The Indian economy was successful in maintaining its status as one of the worlds fastest growing major economy by achieving a GDP growth rate of 6.5% in FY 2025. This growth was achieved amidst a turbulent global economic landscape and geopolitical tensions in Europe and the Middle East. One of the major factors facilitating this growth was the targeted government initiatives aimed at stimulating economic activity through infrastructure development.

In the first half of FY 2025, Indias growth was primarily driven by the agriculture and services sectors, supported by improved rural demand due to record Kharif crop production and favourable agricultural conditions. In contrast, the manufacturing sector faced challenges stemming from weak global demand and seasonal domestic factors. Despite these pressures, private consumption remained stable, reflecting consistent domestic demand. Macroeconomic stability was further bolstered by fiscal discipline, a positive services trade balance and healthy remittance growth, laying a strong foundation for sustained growth amid external uncertainties.⁴ During H1 FY 2025, the industrial sector grew by 6%. The first quarter recorded robust growth of 8.3%, but this momentum slowed in the second quarter for three main reasons. Firstly, manufacturing exports declined significantly due to weaker demand from major trading partners, compounded by aggressive trade and industrial policies in key markets. Secondly, the above-average monsoon had a mixed impact, while it replenished reservoirs and supported agriculture, it also disrupted sectors like mining, construction, and, to some extent, manufacturing. Thirdly, the variation in the timing of festivals between September and October in the previous and current years contributed to a modest slowdown in Q2 growth.⁵

Despite these challenges, data indicates that while some manufacturing sub-sectors grew, others faced difficulties largely due to global and seasonal factors. According to the RBIs Industrial Outlook Survey, manufacturing firms reported improved demand conditions in Q3 FY25 and expect further positive trends in Q4 FY25 and Q1 FY26. The survey also highlighted better expectations for production, order books, employment, capacity utilization and the overall business environment during the upcoming quarters.⁶ As Indias economy continues to expand, growth has been strongly supported by stability in key areas such as inflation, fiscal health, and the balance of payments, allowing the country to navigate external uncertainties with resilience.

Additionally, the growth was further propelled by declining inflation from 5.4% in FY 2024⁷ to 4.7% in FY 2025⁸ which is easing towards the RBIs target of 4%⁹, driven by slowing non-food inflation due to benign global commodity prices and the impact of past rate hikes, despite persistent food inflation. This reinforced consumer confidence, stimulating both urban and rural consumption. The easing inflation has pushed RBI to infuse 1.5 trillion into the banking system to support the demand for liquidity and propel economic activity.¹⁰

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4https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf

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8https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/0BULL22042025F03F83AE118C4B3B84E662D980C8DE33.PDF

9https://www.crisil.com/content/dam/crisil/our-analysis/reports/corporate/documents/2024/11/india-progress-report.pdf

10https://www.livemint.com/economy/rbi-1-5-trillion-liquidity-boost-how-will-it-help-dollar-rupee-rate-cut-mint-primer-11738086455919.html

Outlook¹¹

Indias Union Budget 2025–26 has allocated a substantial capital expenditure outlay of 11.21 lakh crore , underscoring the Governments strong push for infrastructure-led growth. Key ministries with large capex components include the Ministry of

Road Transport and Highways ( 2.87 lakh crore)¹² , Ministry of Railways ( 2.52 lakh crore), and the Ministry of Defence ( 1.82 lakh crore). This significant public investment is expected to crowd in private sector participation, stimulate employment in construction and manufacturing, and enhance productivity through improved logistics and connectivity. Empirical evidence suggests that government capex has a high multiplier effect on GDP, with every 1 spent generating an estimated 2.5 3 in economic output over time. Moreover, continued focus on capital formation supports long-term economic resilience by creating durable assets and fostering inclusive growth. By maintaining elevated capex, the Government aims to sustain Indias growth momentum and support its target of becoming a $5 trillion economy.

Indias real GDP is projected to sustain at 6.5% in FY 2026. Indias economy continues to demonstrate strong fundamentals backed by robust domestic demand, improved corporate & banking sector balance sheets and targeted policy reforms. The major contributor to this projected growth is public capital expenditure, particularly in infrastructure. This capex push is expected to catalyze private investment, enhance productivity, and generate employment, thereby supporting both short-term demand and long-term growth. In addition, this strong growth will be backed by the Governments income tax reform, which has exempted salaried individuals earning up to 12.75 lakh from income tax.¹³ Inline with the Government, the Reserve Bank of India (RBI) is also aiming to augment economic activity by implementing expansionary monetary strategies. The RBI has reduced the repo rate by 50 basis points through consecutive cuts¹⁴ to further boost consumption and inject liquidity.

The tariff imposed by United States of America on India may create a negative sentiment in the export market for the nation as USA is a major importer of several Indian products. In FY 2024, the USA traded a total of USD 12,920 crore worth of goods with India. USA exported USD 4,180 crore worth of goods to India, which was 3.4% more than that of FY 2023. At the same time, the US imported USD 8,740 crore worth of goods from India, a 4.5% increase from the year before, leading to a trade deficit of USD 4,570 crore for the United States of America.¹⁵ Bilateral talks between the officials of both the economies is creating a sign of optimism and has the potential to place India in a much superior place in comparison to other economies in terms of trade with USA.

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12https://www.indiabudget.gov.in/doc/eb/sbe86.pdf

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If uncertainty around the tariff eases, then the inflation is expected to fall further to 4% in FY 2026¹⁶ , which will strengthen the economic growth momentum by enhancing purchasing power. With strong foreign reserves, smart government spending, and stable policies, the Indian economy is perfectly positioned for a continued growth, making it an even bigger player on the global stage.

GDP growth trend of India (IN %)¹⁷

18 9.2 6.5 6.5 7.6

2023 2024 2025 2026 (P)

P – Projected Source: RBI

Indian Industry

Indian Infrastructure sector¹⁹

The infrastructure sector comprises roads, railways, power, ports, telecommunication and civil aviation among others. The size and magnitude of major infrastructure development projects dictate substantial capital investment. Many reforms have been initiated in the infrastructure sector, resulting in a robust growth. In FY 2025, Indias infrastructure sector registered accelerated growth thanks to strong government support and large public investments. With a record budgetary allocation of 11.11 lakh crore²⁰ which is 3.4% of the GDP, towards infrastructure development, the sector saw swift expansion across key areas, including roads, highways, railways and airports.

The Union Budget 2025-26 directs each infrastructure-related ministry to develop a three-year project pipeline for Public-Private Partnership (PPP) implementation, while states are encouraged to prepare PPP proposals with support from the

India Infrastructure Project Development Fund (IIPDF). To boost state-level infrastructure, the Government has proposed 1.5 lakh crore in 50-year interest-free loans for capital expenditure and reforms. Building on the first Asset Monetization Plan from 2021, a second plan (2025-30) aims to generate 10 lakh crore by monetizing government assets and reinvesting the funds into new projects, with improved regulatory and fiscal measures for smooth execution. Additionally, to attract investment from Sovereign Wealth Funds (SWFs) and Pension Funds (PFs), the deadline for investments has been extended by five years to 31^st March 2030, providing a stable investment window for global investors.²⁰

Capital Expenditure as % of GDP

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The Indian government is undertaking several large-scale projects aimed at improving the Countrys infrastructure. Some of the key initiatives by government are as follows:

• PM Gati Shakti: Initiated in 2021 to integrate roads, railways, and ports, this plan has reviewed 115 road projects covering 13,500 km, with a total investment of

6.38 lakh crore.

• Bharatmala: Focused on constructing highways and expressways, this project has approved 26,425 km of roads out of a planned 34,800 km, with 19,826 km already constructed by February 28, 2025, and a total expenditure of 4.93 lakh crore.

• Sagarmala: Aimed at enhancing port infrastructure for efficient ship loading and unloading, this programme seeks to boost trade.

• Smart Cities Mission: This mission is improving urban living by providing clean water, efficient transport, and green spaces.

• National Industrial Corridor Development Programme (NICDP): Supporting industrial growth, this programme approved 12 new industrial areas in 10 states in 2024, with a budget allocation of 28,602 crore.

According to the CRISIL report²⁵ India is projected to invest nearly 143 lakh crore in infrastructure between FY 2024 and FY 2030, more than doubling the 67 lakh crore spent during FY 2017 and FY 2023. Of this, approximately 36.6 lakh crore will be allocated to green investments, marking a five-fold increase over the previous period. The outlook for the Indian infrastructure is very optimistic with heightened government spending and an expanding pipeline of projects. Meanwhile, innovative financing mechanisms such as InvITs and green bonds are ensuring access to long-term capital for infrastructure building. The focus is expected to remain on scaling up transportation infrastructure, especially roads, railways and metro systems, while placing equal emphasis on sustainability through clean energy and EV charging stations. With strong government support and growing investor confidence, Indias infrastructure sector is set to grow, bolster industrial competitiveness and elevate the quality of life for millions.

Indian Roads and Highways Network²⁶

Road transport is vital for a countrys economic development, influencing its growth and structure. In India, it is the primary mode of transport, significantly contributing to the economy by facilitating the movement of goods and passengers. Additionally, road transport supports socio-economic development and regional integration.

Road Networks in India

India has the second largest road network in the world, spanning a total of 6.3 million km. This road network primarily comprises national highways, expressways, state highways, major district roads, other district roads and village roads. Road network in India can be classified into the following categories:

• National Highways constitute the primary system of road transportation in India, which facilitates medium and long-distance inter-city passenger and freight traffic across the country

• State Highways constitute the secondary system of road transportation in India, which facilitates the traffic across major centers within the states

• District Roads primarily link and provide accessibility within the districts and provide the secondary function of linkage between the highways and rural roads

• Rural Roads are a key component of rural development providing accessibility to the villages to meet their social needs as also act as the means to transport agriculture produce from village to nearby markets

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Road Network in India by Category (length in km) ²⁸

Category	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025
National Highways	132,995	136,440	140,995	144,955	146,145	146,195
State Highways	194,900	176,818	171,039	167,079	179,535*	179,535*
Other Roads	6,165,660	5,902,539	6,059,813	6,019,757	6,019,723*	6,019,723*
Total	6,493,555	6,215,797	6,371,847	6,331,791	6,345,403	6,345,453

* as per Basic Road Statistics of India (2018-19)

In recent years, Indias roads and highways have undergone significant expansion, emerging as one of the fastest-growing infrastructure segments in the country.

2.87 lakh crore has been allocated for the road sector in the Union Budget 2025-2026²⁹ out of which nearly 60% of the total allocation is set aside for the National Highways

Authority of India (NHAI) at 1.7 lakh crore.³⁰ Between 2014 to 2024, the length of national highways increased by 60%, from about 91,287 km to over 1,46,145 km. Also the pace of construction of national highways reached an all-time high of 33.8 km per day in 2024 which is up from the limit of 12.1 km per day in 2015, indicating improved execution and streamlined approvals.³¹

A rapid upsurge has also been witnessed in the development of high-speed corridors, with the numbers going up from just 93 km to more than 2,400 km. This shows that Indias focus is on road building to enhance interconnectivity and facilitate more efficient logistics than ever before.

The National Highway Authority of India (NHAI) has been working towards the development of National Highway infrastructure in the country, achieving significant milestones during the Financial Year 2024-25. NHAI constructed 5,614 km of National Highways, surpassing the target of 5,150 km set for the year. Additionally, the capital expenditure for the development of National Highway infrastructure reached an all-time high of over

2,50,000 crore (provisional), exceeding the targeted expenditure of 2,40,000 crore, reflecting the authoritys commitment to enhancing the countrys road network.³²

Award and Construction of National Highways

Year	Award (in km)	Construction (in km)	Construction (in km/day)
2014-15	7972	4,410	12.1
2015-16	10098	6,061	16.6
2016-17	15948	8,231	22.6
2017-18	17055	9,829	26.9
2018-19	5493	10,855	29.7
2019-20	8948	10,237	28.1
2020-21	10964	13,327	36.5
2021-22	12731	10,457	28.6
2022-23	12376	10,331	28.3
2023-24	8581	12349	33.83
2024-25	3100	5853	21.28
(till Dec24)

 

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29https://www.indiabudget.gov.in/doc/eb/sbe86.pdf

30https://www.thehindu.com/business/budget/union-budget-2025-hikes-funds-for-roads-by-24/article69169067.ece

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Development and Maintenance of Roads and Highways

The Government has taken several initiatives for development of roads and highways in India.

Bharatmala Pariyojana

Bharatmala Pariyojana is an umbrella program for the highways sector that focuses on optimizing efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps through interventions including development of economic corridors, inter corridors and feeder routes, national corridor efficiency improvement, border and international connectivity roads, coastal and port connectivity roads and green-field expressways. It envisages a corridor approach in place of the existing package-based approach which has, in many cases, resulted in skewed development. Bharatmala Pariyojana envisages development of about 26,000 km length of economic corridors, which along with Golden Quadrilateral and North-South and East-West Corridors are expected to carry majority of the freight traffic on roads. The scheme will include the existing NHDP programme as well.

Total aggregate length of 26,425 km with a total capital cost of 8,53,656 crore has been approved and awarded till date under Bharatmala Pariyojana (including 6,758 km length of residual NHDP). No further projects are now being taken up under Bharatmala Pariyojana ³⁵.

Mode wise status of works awarded under Bharatmala Pariyojana is as under:

Mode of Implementation	Length (km)	Awarded Total Capital Cost ( Crore)	% Length
EPC	14,748	4,06,024	55.81%
HAM	11,269	4,36,522	42.64%
BOT Toll	408	11,111	1.55%
Grand Total	26,425	8,53,656	100%

 

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Other Government of India initiatives towards National Highways Network

Initiative	Description
Pradhan Mantri Gram Sadak Yojana (PMGSY)	Focuses on providing all-weather road access to rural and unconnected areas, improving connectivity to markets, healthcare and education by building durable road infrastructure.
National Highway Development Project (NHDP)	A flagship project to develop, upgrade, and expand National Highways, including the Golden Quadrilateral, North-South and East-West corridors, and expressways, aimed at supporting economic growth through better road infrastructure.
Special Accelerated Road	Aims to improve road connectivity in the North-East by linking state capitals, districttd>
Development Programme for North- East Region (SARDP-NE)	headquarters and remote areas, fostering economic and social development in the region.
Special Programme for Development of Roads in Left Wing Extremism	Focuses on constructing and upgrading roads in left-wing extremism-affected areas to improve connectivity and foster development, including the key Vijayawada-Ranchi
Affected Areas (LWE), including Vijayawada-Ranchi Road	Road project to link Andhra Pradesh, Odisha, Chhattisgarh and Jharkhand.
Externally Aided Projects (EAP)	Involves road infrastructure projects funded through external assistance from international agencies, aiming to improve connectivity with advanced technology and financial support.

Asset Monetisation Strategy³⁷

To support MoRTHs increased funding requirements with the accelerated pace of highway construction, new innovative models of monetization have been successfully explored and implemented to reduce dependence on the Central Government budget and external debt. The asset monetization program of the road sector is managed entirely by NHAI. The objectives of NHAIs Asset Monetization Programme are derived from the National Monetization Pipeline of the NITI Aayog, Govt. of India, which aims to unlock the value of investments in public sector assets by tapping into private sector capital and efficiencies that can be leveraged for capacity augmentation and greenfield infrastructure creation.

NHAI monetizes assets through three modes: Toll-Operate-Transfer (ToT), Infrastructure Investment Trusts (InvIT), and Securitization (Project-based Financing through SPV). Under ToT and InvIT, operational assets with stable cash flow are offered to investors, freeing them from pre-construction and construction risks. The concessionaires are exposed to revenue risk and operations and maintenance obligations. In each of these three modes, the allocation of risks across pre-construction, construction, financing, operations and maintenance (O&M), and revenue generation varies.

The goal of asset monetization is to maximize value for completed national highways and develop markets for public road assets. The objective of this strategy document is to attain the goals of asset monetization of national highway assets in India and maximize outcomes from different modes of monetization in the future. Specifically, the objectives of this strategy document are to:

1. Streamline Processes: Strategy for simplification and standardization of processes involved in asset monetization, to ensure activities are conducted as per defined timelines in an efficient manner.

2. Enhance Transparency: Strategy for development of measures to enhance transparency in all transactions and operations.

3. Mitigate Risks: Identification of potential risks associated with asset monetization and development of strategies for risk mitigation.

Asset monetization is expected to play a key role in supporting the sectors balanced growth. MoRTH has successfully raised approximately 1.4 lakh crore through various modes of monetization. The National Monetization Pipeline (NMP) 2.0 is projected to provide a further opportunity of 3-3.5 lakh crore for road asset monetization over the coming 5-6 years. Steady traffic growth and toll collection are expected to support the investment momentum going forward.

The road sector has emerged as a frontrunner in asset monetization. So far, MoRTH has raised 1.4 lakh crore through various modes of asset monetization, demonstrating the sectors potential to generate revenue through innovative financing models. The funds were raised as follows:

• Toll-Operate-Transfer (ToT) mode: 48,995 crore has been raised till FY25 through the ToT mode, which involves the transfer of toll collection rights to a private operator for a specified period.

• InvIT listings of NHAI: 43,638 crore has been raised till FY25 through the listing of Infrastructure Investment Trusts (InvITs) of the NHAI, which allows investments in a portfolio of infrastructure assets.

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• Project-based financing: 46,847 crore has been raised through project-based financing for the Delhi-Mumbai Expressway, one of the most ambitious infrastructure projects in the country.

The success of asset monetization in the road sector can be attributed to the Governments efforts to create a favorable environment for private sector investment and participation. The use of innovative financing models such as ToT and InvITs has helped unlock the value of existing infrastructure assets and attract new investors to the sector.

Financing of Road Projects in India under Public Private Partnership

The Public Private Partnership ("PPP") framework was introduced to increase the efficiency of infrastructure projects through a long-term collaboration between the public and private sectors. Discussed below are the frameworks which are widely used in order to execute and implement roads and highway projects by the NHAI:

• Build Operate Transfer ("BOT"):

Under the BOT model, the authority/ government agency provides the concessionaire with the rights to build, operate and maintain a facility on public land for a fixed period, after which the assets are transferred back to the authority. Funding for the project is arranged by the concessionaire. The concessionaire charges toll from the users of the project and the concessionaire may either transfer the toll collected to the authority or may retain the entire amount as revenue. Contracts under the BOT model are further classified as under: o Build Operate Transfer (BOT) Toll:

Under this model, the concessionaire is responsible for the construction and maintenance of the project, after which the ownership of the project is transferred to the public authority. However, the toll collected is retained by the concessionaire and not transferred to the authority. Therefore, the concessionaire bears the revenue risk during the concession period. Toll charged under these contracts are regulated by NHAI.

o Build Operate Transfer (BOT) Annuity:

Under this model, the concessionaire is responsible for construction and maintenance of the project during the concession period. The concessionaire collects the toll and transfers it to the authority. Variability in the toll gives rise to revenue risk, which is borne by the authority. However, the concessionaire generates revenue through fixed annuity payments received from the authority over the concession period. As this annuity payment is a cost to the authority, the contract is awarded to the lowest bidder.

• Engineering, Procurement and Construction ("EPC"):

EPC contracts are fixed price contracts. The contractor undertakes the responsibility for investigation, design and construction of roads on the basis of specifications and performance standards provided by the authority. Based on the project parameters and specifications, the contractor draws up cost estimates and accordingly bids for the project, which is determined through competitive bidding process.

• Toll Operate Transfer:

This is a new model introduced by the MoRTH for the maintenance of roads. The model involves leasing out of operational national highways for periods as long as 30 years to collect toll revenue in return for one-time upfront payment to the Government.

• Hybrid Annuity Model ("HAM"):

HAM combines the features of EPC and BOT models. Under this model, the concessionaire receives 40% of the project cost from the authority during the construction period. The concessionaire is responsible for designing, building, financing (60% of the total project cost), operating and transferring the project. Under this model, toll is collected by the authority. The amount financed by the concessionaire is to be recovered from the authority through semi-annual payments. The bidding parameter for a contract under HAM is the lifecycle cost, which is the sum of the net present value ("NPV") of the project cost and the NPV of the O&M cost for the entire O&M period.

Outlook ³⁸

In the coming years, Indias road and highway network is expected to keep growing. The Government is planning to continue public spending on more big projects, including 35 new multimodal logistics parks that will help goods move faster and cheaper. Additionally, there are plans to improve the road links to ports, which will facilitate trade and transport better. Key factors that will support future growth include continued government funding, forward-looking policy frameworks, and the adoption of advanced construction technologies. Programs such as Gati Shakti will help speed up projects. With these strategic efforts in place, Indias roads are set to become safer, faster, and more future-ready.

ICRA expects the Ministry of Road Transport and Highways (MoRTH) to award 9,500-10,000 km of road projects in FY2026, noting that while awards in the first 10 months of FY2025 were around 20.8% higher year-on-year at about 4,204 km, they were still 38% lower compared to the same period in FY2023, and anticipates road construction to slow down to 9,500-10,000 km (26-27 km per day) in FY2026 after a subdued execution of 10,000-10,500 km (27-28 km per day) in FY2025 due to slow project awarding over the past two years, while toll rates are expected to increase by 2.5-3.9%, combined with 3-5% traffic growth, leading to a 7-9% rise in toll collections, and road monetisation is projected to remain strong as the NHAI plans to monetise 24 assets across 12 states through TOT and InvIT modes, potentially raising 21,000-24,000 crore.39

InvITs in India⁴⁰

Infrastructure Investment Trusts (InvITs) have emerged as an important enabler in financing large-scale infrastructure projects. They offer a structured and transparent platform to participate in big infrastructure assets such as roads, transmission lines, and transport systems. In recent years, InvITs have gained considerable popularity. Between April 2019 and March 2025, InvITs raised over 1.35 lakh crore, according to SEBI, indicating their rising popularity among investors. The sheer success of this model reflects growing investor confidence and the attractiveness of infrastructure as an asset class offering long-term returns.

Funds raised by Infrastructure Investment Trusts (InvITs) from FY 2020 to FY 2025⁴¹

In FY 2020, there were 4 InvIT fund-raising issues, with 3 listed and 1 unlisted, raising a total of 10,772 crore. In FY 2021, there were 3 issues, 1 listed and 2 unlisted raising a total of

40,431 crore. Then in FY 2022, there were 8 issues, with 6 listed and 2 unlisted, totalling 20,612 crore. In FY 2023, there were 7 issues out of which 4 were listed and 3 unlisted, raising a total of 6,360 crore. In FY 2024, there were 14 issues, all listed, which raised a total of 33,118.60 crore. Finally, in

FY 2025, there were 11 listed issues, which raised a total of

26,714.53 crore.

Indias road sector InvITs have also witnessed considerable growth in recent years, emerging as a powerful financial vehicle. As of September 2024, the total InvIT assets (AUM) reached around 1.9 lakh crore. This growth was mainly driven by the addition of new roads to the existing InvIT portfolio and the launch of new InvITs in the market. Currently, 11 road InvITs are managing around 145 road assets, covering more than 12,500 km of highways across India.⁴²

A major trend in this sector is the increased participation of both private and public players in using InvITs as a preferred model for financing the infrastructure s. This approach enables long-capital infusion and reduces pressure on the Government budget. Supportive government policies aimed at facilitating monetisation, improving ease of doing business, and attracting patient capital have also enabled the sectors consistent expansion.

Looking ahead, Infrastructure Investment Trusts (InvITs) are set to play a bigger role in funding Indias infrastructure growth. With the Government focusing on building better infrastructure and SEBI creating supportive rules, more people and institutions are expected to invest in these trusts. The launch of Small and Medium REITs (SM REITs) will make it easier for smaller investors to take part, helping to spread the benefits more widely. As India continues on its development journey, InvITs will help maintain important asset like roads, thereby improving the quality of life of people. The road sector, in particular, is promising, in this by March 2026, the total assets under management (AUM) of road InvITs are expected to grow by 68% to 3.2 trillion.⁴³ This growth will be driven by adding more roads to existing InvITs and launching new ones. Sustained governmental support, growing interest of private investors and active road projects across states will further fuel the momentum. InvITs are also likely to expand into more regions and take on a wider range of project types, making them even more appealing for long-term investment.

38https://www.pib.gov.in/PressReleasePage.aspx?PRID=2091508

39https://www.icra.in/Research/AllResearchReports?isSpecialComments=false

40https://www.sebi.gov.in/statistics/reits-invits/funds-raised-reits-invits.html

41https://www.sebi.gov.in/statistics/reits-invits/funds-raised-reits-invits.html

42https://www.crisilratings.com/en/home/newsroom/press-releases/2024/12/road-invit-aum-to-rev-up-68percent-to-rs-3-2-lakh-crore-by-march-2026.html

43https://www.crisilratings.com/en/home/newsroom/press-releases/2024/12/road-invit-aum-to-rev-up-68percent-to-rs-3-2-lakh-crore-by-march-2026.html

Overview of the Trust

About the Trust

Indus Infra Trust (formerly Bharat Highways InvIT) is a SEBI- registered infrastructure investment trust established to acquire, manage and invest in infrastructure assets in India, with a focus on road sector. Indus Infra Trust has been settled by G R Infraprojects Limited, the Settlor, as an irrevocable trust under the provisions of the Trusts and has been registered with the SEBI as an infrastructure investment trust under Regulation 3(1) of the SEBI InvIT Regulations on August 3, 2022, having registration number IN/InvIT/22-23/0023. Pursuant to change in name from Bharat Highways InvIT to Indus Infra Trust the Trust was issued a revised registration certificate by SEBI with effect from 13^th December 2024, bearing registration number IN/ InvIT/22-23/0023. Aadharshila Infratech Private Limited, IDBI Trusteeship Services Limited, and GR Highways Investment Manager Private Limited are the Sponsor and Project Manager, Trustee and Investment Manager of the Trust respectively.

The Trust was listed on NSE and BSE on March 12, 2024 and has successfully completed its first complete financial year post listing on March 31, 2025. At the time of listing the Trust had a portfolio of 7 HAM road assets. Further, as part of formation transaction of the Trust, Indus Infra Trust had entered into a ROFO Agreement with G R Infraprojects Limited (GRIL), pursuant to which GRIL has granted a right of first offer to the

Trust to acquire 23 HAM road assets, providing robust pipeline of assets available for acquisition by the Trust. Pursuant to the ROFO agreement, the Trust has successfully completed acquisition of 2 ROFO assets during the financial year ended March 31, 2025.

Trust currently has a portfolio of nine road assets, all operating on Hybrid Annuity Mode (HAM), in the states of Punjab, Gujarat, Andhra Pradesh, Maharashtra, Uttar Pradesh and Bihar. Trust operates and maintains the assets pursuant to concession rights granted by the National Highways Authority of India (NHAI) under respective Concession Agreements. These projects cover approximately 2,614 lane kilometres and have a cumulative Bid Project Cost of ~ 12,935.80 Crore and balance annuity receivable of ~ 7,335.38 Crore as on March

31,2025. On a collective basis, the Trust assets had a weighted average residual project life of ~11.38 years as on March 31, 2025. All assets, provides an assured revenue in form of annuities, interest on balance annuity receivables and O&M payments linked to inflation in the operational phase.

During the fiscal year, Indus Infra Trust has displayed sound financial performance, based on steady income from NHAI in the form of annuities and acquiring assets with optimum capital structure. Since listing on March 12,2024, Trust has made cumulative distribution of 14.20/unit to our unitholders, aggregating to cumulative distribution of ~ 628.97 Crore.

Strengths

Key Feature	Explanation
Portfolio of stable revenue generating assets	The Trust has a portfolio consisting of nine HAM Assets with an aggregate length of approximately 617 Kms and residual operation period of between 9.91 years to 14.02 years as on March 31, 2025. During the operational phase, NHAI provides assured revenue through annuities, interest on the reducing balance of the completion cost (BCC), and O&M payments linked to inflation, which eliminates the risk of income fluctuations resulting from changes in traffic volume. This model of assured revenue streams from annuities provides long term visibility and stability to cash flows of the Trust.
Hedge against adverse interest rate movements	The NHAI hybrid annuity projects provide a natural hedge against the risk of adverse interest rate movement. In addition to the annuity payments due under the respective Concession Agreements during the operations period, NHAI is required to pay interest on the reducing balance of the completion cost (equivalent to 60.00% of the bid project cost) throughout the operation period at the rate of 3.00% above the RBI Bank Rate or at the rate of 1.25% above the average MCLR of top 5 banks. Currently, our portfolio has 8 HAM assets, wherein interest on annuity is linked to RBI Bank Rate and 1 asset is linked to average MCLR of top 5 banks. Accordingly, any increase in the interest payable on loans with floating interest rates by the InvIT due to an increase in interest rates gets offset by the increased revenues as a result of increase in interest on reducing balance of completion cost.
Growth opportunities and right to expand portfolio of assets	Through the ROFO Agreement, the Trust will have a right of first offer to acquire certain assets of GRIL, including the projects currently owned by GRIL or which may be acquired or developed by GRIL or its existing or future subsidiaries. We believe that this access to future road assets of GRIL or its existing or future subsidiaries will be an important source of the InvITs growth in the future.
Strong O&M Arrangement for the portfolio	Project Manager of the Trust has an established track record of assessing the roughness and balance life of road projects, which enables it to determine the appropriate maintenance activity to be undertaken on the road projects. Further, project SPVs have entered into back to back O&M contract with GRIL to carry out the O&M and Major Maintenance of the existing Project SPVs. GRIL is externally rated CRISIL AA/A1+/Stable and has an established track record of development, operation, and management of road project, through its trained and skilled manpower, efficient deployment of equipment and an in-house integrated model. GRILs in-house materials supply chain management ensures that key construction materials are timely delivered to its manufacturing facilities and construction sites, thereby enabling them to manage the project management processes effectively and maintain key raw material inventory in an optimal manner.
Attractive industry sector with strong underlying fundamentals and favourable government policies	The roads and highways sectors play an important role in the overall economy of India. The development of the infrastructure sector has been a priority area for the Government and has witnessed enhanced public investment over the years. In the Union Budget for Fiscal Year 2025-26, a total of approximately 2.87 trillion has been budgeted for the MoRTH, which is 2% higher than the revised estimates for Fiscal Year 2024-25.
Experienced Management Team	The Investment Manager (IM), with their strong management team, bring extensive experience, in depth understanding, and a proven track record of performance in the road and highways sector. Collectively, the IM Team possesses over 30 years of experience in fund management / advisory services / development in the infrastructure sector.
	Their expertise encompasses business strategy an operational and financial capabilities.
	This wealth of experience is crucial for executing growth strategies effectively. The leadership and experience of these teams are expected to contribute significantly to the organisations growth and success, enabling efficient operation and management of road assets.
	The IM Board has adopted and will continue to adopt corporate governance policies in accordance with applicable laws and SEBI InvIT Regulations.
Strong Counterparty	Trust SPVs receive stable cash flows from a strong counterparty, National Highways Authority of India (‘ICRA AAA/Stable), which is the nodal agency for developing and maintaining road assets in India. Apart from being the promoter, the Government of India ("GoI") has statutory and regulatory powers over the NHAI and supports it in major policy decisions. The GoI provides financial support to the authority in the form of budgetary allocations.

Key highlights for FY 2025

In FY 2025, on a standalone basis, our total income stood at

1,450.87 Crore which includes interest income on loans given to subsidiaries and deposits with banks VVVV and gain on sale of liquid investments The total expenses excluding impairment of investment ( 751.76 Crore) stood at 147.53

Crore, finance costs constitute 77.98% of the total expenses.

The PBT stood at 551.58 Crore and PAT amounted to 541.52

Crore. The impairment of investment value is on account of difference in fair value and book value of investments. The reduction in fair value of investments is on account of cash up streamed by SPVs.

On a consolidated basis, our total income stood at 855.60 Crore, which includes revenue from operations of 744.60 Crore and interest and other income amounting to 111.00 Crore. The total expenses stood at 352.74 Crore, the subcontractor expenses and the finance cost, constitute 44% and 37%, respectively, of the total expenses. The PBT stood at

502.86 Crore and PAT amounted to 481.67 Crore.

On consolidated basis, outstanding Debt as on March 31,2025 was 2,144.27 crore.

Acquisitions

During the fiscal year ended March 31, 2025, Trust has added 2 ROFO assets viz. GR Aligarh Kanpur Highway Private Limited and GR Galgalia Bahadurganj Highway Private Limited, with an aggregate enterprise value of 1,809.3 crore. With additional of these 2 assets, AUM of the Trust increased by 909.60 crore even after distribution of 628.97 crore to unitholders.

Investments Managed by Investment Manager

7,036.20 crore as of March 31,2025

Distributions

The Cumulative Distribution as of March 31, 2025, is 14.20/unit.

Outlook

Investment Strategy and Capital Management:

The Investment Manager of the Trust pursues a strategy to maximise distributions to Unitholders while optimising capital structure in order for us to retain enough flexibility to make acquisitions in the future. The consolidated borrowings of the Trust will not exceed 70% of the total value of InvIT assets, in accordance with the SEBI InvIT Regulations.

Growth of Existing Portfolio through yield accretive asset addition:

In addition to the ROFO assets, the Investment Manager believes that certain acquisition opportunities are available in the industry and intends to take advantage of these opportunities by sourcing and acquiring assets from third parties on a case-by-case basis in accordance with the SEBI InvIT Regulations.

Considering the project progress and expected completion timelines to meet out investment criteria, during this year, we intend to add ROFO assets from GRIL and will target to add third party assets from market.

Active Asset Management:

As part of our operations and maintenance systems and processes, the Investment Manager intends to work with the Project Manager to employ both preventive and corrective measures in order to optimise the long-term performance of each project, to minimize downtime or defects with respect to the InvIT Assets.

Stakeholder Engagement:

At the core of our Trusts outlook is a commitment to building and sustaining strong stakeholder relationships. We recognize that our long-term success depends not only on financial performancebutalsoonthetrustandcollaborationwemaintain with all our unitholders. By fostering open communication and transparency, we aim to align our business goals with the expectations of our unitholders. This approach enables us to operate responsibly, adapt to changing environments, and drive sustainable growth for the benefit of all unitholders.

Internal Control Systems and Their Adequacy

The trust has established a strong internal audit system designed to protect assets, ensure regulatory compliance, and address issues quickly. The Audit Committee plays an important role in overseeing the effectiveness of the internal control mechanisms. It reviews audit reports, monitors implementation of corrective actions and encourages open communication with both statutory and internal auditors. This system helps to uphold integrity, transparency, and accountability, which enhances risk mitigation and stakeholder confidence.

Cautionary Statement

We understand that, in accordance with applicable securities laws and regulations, statements in this section that outline goals, estimates, and expectations may be considered forward-looking statements. Although they are predicated on assumptions and expectations, the InvIT cannot ensure that they will be accurate or realised. Actual outcomes may be impacted by outside variables outside the InvITs control, and the InvIT is under no duty to publicly update forward-looking statements in light of new information.