Capital Infra Trust Management Discussions

You should read the following discussion and analysis of our financial condition, results of operations and cash flows in conjunction with "Summary Special Purpose Combined Financial Statements" and "Special Purpose Combined Financial Statements" on pages 54 and 221, respectively. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in "Risk Factors" on page 21. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, please refer to "Forward Looking Statements and Financial Projections" on page 15. The Special Purpose Combined Financial Statements are prepared in accordance with Ind AS and adjustment/rectification/reclassification wherever necessary read with the SEBI InvIT Regulations and the circulars issued thereunder and the Guidance Note on Combined and Carve-Out Financial Statements issued by the Institute of Chartered Accountants of India, which differs in certain respects from Indian GAAP, IFRS and U.S. GAAP. Our fiscal year ends on March 31 of each year and references to a particular fiscal are to the twelve months ended March 31 of that year. For the sole purposes of the Special Purpose Combined Financial

Statements, references to "we", "us" and "our" are to the Project SPVs on a combined basis.

Unless otherwise indicated or unless the context requires otherwise, the financial information included herein is based on our Special Purpose Combined Financial Statements included in this Draft Offer Document. For further details, see "Special Purpose Combined Financial Statements" on page 221.

Overview

National Infrastructure Trust is an infrastructure investment trust sponsored by Gawar Construction Limited ("GCL" or

"Sponsor"), established on September 25, 2023 with the objective to carry on the activities of, and to make investments as, an infrastructure investment trust, as permissible under the SEBI InvIT Regulations. We were settled by way of the Trust Deed, by GCL (the Sponsor), and registered as an infrastructure investment trust with SEBI on March 7, 2024 pursuant to the SEBI InvIT Regulations.

Our Sponsor is an infrastructure development and construction company in India, with over 15 years of experience, primarily engaged in the construction of road and highway projects across 19 states in India for various government/ semi -government bodies and statutory authorities including National Highway Authority of India (NHAI), Ministry of Road Transport & Highways (MoRTH), Mumbai Metropolitan Regional Development Authority (MMRDA) and Central Public Works Department (CPWD). Since 2008, our Sponsor undertaken more than100 road construction projects. As on the date of this

Draft Offer Document, our Sponsor has a portfolio of 26 road projects on a hybrid annuity mode ("HAM") with National

Highways Authority of India ("NHAI"), of which 11 are completed projects, including the five acquired assets which were erstwhile owned by Sadbhav Infrastructure Project Limited, and 15 under-construction projects.

Our Sponsor has an established track record of efficient project management and execution involving trained and skilled manpower, efficient deployment of equipment and an in-house integrated business model. We believe that these attributes have enabled to complete projects on or ahead of the scheduled period of completion. The in-house materials supply chain management ensures that key construction materials are delivered in a timely manner to the facilities and construction sites thereby enabling our Sponsor to manage its processes effectively and maintain its key raw material inventory to an optimal manner. The project management team working in conjunction with the design and engineering team, ensures operational efficiencies through overall supervision of the development and project execution process. Five out of the seven indigenous HAM projects were completed before scheduled time and have received early completion bonus from NHAI.

Our Sponsor complies with the eligibility requirements under the SEBI InvIT Regulations of requisite track record in development of infrastructure projects.

We primarily intend to acquire, manage and invest in the nine completed and revenue generating Initial Portfolio Assets, aggregating to approximately 683.875 kms, operated and maintained pursuant to concessions granted by the NHAI and are owned and operated by the Project SPVs. These roads are located in the states of Haryana, Rajasthan, Bihar, Uttarakhand, Himachal Pradesh, Madhya Pradesh and Karnataka. Our Initial Portfolio of Assets has a weighted average residual concession life of 12 years as of June 30, 2024. For more information about the Initial Portfolio Assets, see " Details of the Project SPVs and the Initial Portfolio Assets" on page 153.

In addition to the Initial Portfolio Assets, the Trust, through the Investment Manager, will also have the right to acquire n ew projects through a right of first offer with our Sponsor in accordance with the Right of First Offer Agreement (" ROFO Agreement"). For more details, see "Business Assets under ROFO" and "Formation Transactions in relation to the Trust Acquisition of future assets by the Trust- ROFO Agreement" on pages 166 and 107, respectively.

The Formation Transactions

Subject to the receipt of requisite approvals, the Trust intends to acquire 100% of the equity shares in each of the Project SPVs from the Sponsor. As consideration for the acquisition of the equity shares of the Project SPVs, the Trust will issue Units, in accordance with the relevant Share Purchase Agreements, to the Sponsor after the Bid/Issue Closing Date and prior to the Allotment in the Offer, i.e., the closing date pursuant to the Share Purchase Agreements. For more information about the Formation Transactions and key terms of the Share Purchase Agreements, see "Formation Transactions in relation to the Trust" on page 97.

As of June 30, 2024, the following projects, which are owned, operated and maintained by the Project SPVs, comprise the Initial Portfolio Assets consisting of approximately 683.875 km of constructed and operational roads across seven states in India:

Name of the Initial Portfolio Assets	Rohna Jhajjar Highway Asset	Khajuwala Bap Highway Asset	Narnaul Highway Asset	Rohna Sonepat Highways Asset	Hardiya Hasanpur Highway Asset	Kiratpur Nerchowk Highway Asset	Dewas Ujjain Highway Asset	Bangalore Highways Asset	Nainital Highways Asset
Brief Description	GRJHPL is a special purpose vehicle which was incorporated to undertake redesigning, rehabilitation, upgradation and development of road of Rohna/Hassangarh to Jhajjar section from km 44.80 to km 80.250 (Design Chainage) (Length 35.450 Km) of NH- 334B in Haryana by four laning on a HAM basis.	GKBHPL is a special purpose vehicle which was incorporated to undertake upgradation of road from km 0.00 of NH 911 to km 30.812 of NH 911 via Khajuwala- Poogal Section and the road from km 1.430 of NH 911 to km 182.725 of NH 911 via Poogal Dantour Jaggasar Gokul Goddu Ranjeetpura Charanwala Naukh Bap section under Bharatmala Pariyojna for the stretch of 212.107 km in Rajasthan by two laning on a HAM basis.	GNHPL is a special purpose vehicle which was incorporated for the development of road of 4/6 lanningNarnaul Bypass Crossing to Paniyala Mor (NH-148 B) at NH-48 Junction for a stretch of 31.24 km Nizampur Link Road for a stretch of 2.76 km and Narnaul Bypass crossing to Pacheri Kalan=11.30 km of NH-11 in Haryana on a HAM basis.	GRSHPL is a special purpose vehicle which was incorporated for redesigning, rehabilitation and upgradation road from km 0.00 of NH-334B to km 44.80 of NH- 334B via Uttar Pradesh /Haryana border to Rohna section for the stretch of 40.500 km in Haryana by four laning on a HAM basis.	HHHPL is a special purpose vehicle which was incorporated for development of the road from km 54.405 of NH 20 to km 101.630 of NH 31 (New NH 20) via Rajauli- Bakhtiyarpur Section for the stretch of 47.225 km in Bihar by four laning on a HAM basis.	GKNHPL is a special purpose vehicle was incorporated for undertaking development of balance work for the road from km 12.750 of NH 21 to km 26.500 of NH 21, km 126.500 to km 158.500 including ACC link road from km 0.00 of NH 21 to km 2.003 of NH 21 via Kiratpur to Nerchowk Section under greenfield alignment (excluding Sunder Nagar Bypass) for the stretch of47.753 km in Himachal Pradesh by four laning on a HAM	DUHPL is a special purpose vehicle which was incorporated for the development of the road from km 0.00 of NH 148 to km 19.733 of NH 148, the road from km 19.733 of NH 148 to km 26.90 of NH 148 and the road from km 0.00 of NH 148 to km 14.52 via Dewas Ujjain Section and thereof for the stretch of 41.42 km in Madhya Pradesh by four laning on a HAM basis.	GBHPL is a special purpose vehicle which was incorporated for the development of road from km 287.52 of NH 209 to km 461.55 of NH 209 via BRT Tiger Reserve Boundary to Bangalore Section under National Highways Development Project Phase- IV for the stretch of 164.34 km in Karnataka by two/ four laning on a HAM by. way of harmonious substitution of SBHPL (the erstwhile concessionaire) under the SBHPL Concession Agreement.1	GNHPL II is a special purpose vehicle which was incorporated for the development of road from km 42.791 of NH 87 (New NH 09, 109) to km 88 of NH 87 (New NH 09, 109) via Rampur Kathgodam Section under NHDP Phase- III for the stretch of 49.78 km in Uttarakhand by four laning on a HAM basis by way of harmonious substitution of SNHL (the erstwhile concessionaire) under the SNHL Concessionaire Agreement.2
State	Haryana	Rajasthan	Haryana	Haryana	Bihar	Himachal Pradesh	Madhya Pradesh	Karnataka	Uttarakhand
Design length (in kms )	35.450	212.107	45.300	40.500	47.225	47.753	41.420	164.340	49.78
Awarding Authority	NHAI	NHAI	NHAI	NHAI	NHAI	NHAI	NHAI	NHAI	NHAI

1 SBHPL is a wholly owned subsidiary of Sadbhav Infrastructure Projects Limited formed for undertaking development of Bangalore Highway Limited. However, due to persisting issues leading to delay in project completion, the project was endorsed to GBHPL through endorsement agreement on February 13, 2023.

2 SNHL was incorporated by Sadbhav Infrastructure Projects Limited for undertaking development of Nainital Highway Asset. However, due to persisting issues leading to delay in project completion, the project was endorsed to GNHPL II through endorsement agreement on July 14, 2023

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Name of the Initial Portfolio Assets	Rohna Jhajjar Highway Asset	Khajuwala Bap Highway Asset	Narnaul Highway Asset	Rohna Sonepat Highways Asset	Hardiya Hasanpur Highway Asset	Kiratpur Nerchowk Highway Asset	Dewas Ujjain Highway Asset	Bangalore Highways Asset	Nainital Highways Asset
Date of signing of Concession Agreement	May 09, 2018 (amendment to Concession Agreement on February 13, 2019)	September 28, 2018	February 28, 2019	May 27, 2019	October 28, 2020	November 26, 2020	December 11, 2020	December 08, 2016	June 2, 2016
Date of Signing of Endorsement Agreement	NA	NA	NA	NA	NA	NA	NA	February 13, 2023	July 14, 2023
PCOD	July 10, 2020	January 20, 2021	January 9, 2021	January 29, 2022	April 27, 2023	June 7, 2023	July 5, 2023	December 31, 2020	October 27, 2019
COD	July 31, 2020	October 30, 2021	January 09, 2021	April 5, 2022	To be notified.	September 5, 2023	January 16, 2024	To be notified	To be notified
Operations and maintenance period (in years)	15	15	15	15	15	15	15	15	15
Bid Project Cost (in millions)	7,180	8,950	11,370	10,200	10,650	20,980	7,160	9,442.30	5,601.10
Completion cost (in million)**	7,571.31	9,657.88	11,779.32	10,998.10	12,090.88	24,431.21	8,233.30	10,495.62	7,684.70
Total annuities receivable until the concession end date (in million)	4,510.73	5,794.73	7,013.02	6,656.99	7,304.64	14,746.84	4,968.34	5,500.10	3,705.62
Annuities received until the concession end date or as on June 30, 2024 whichever is earlier) (in million)	686.76	745.06	907.09	565.76	311.91	629.69	100.80	476.49	219.97

 

Name of the Initial Portfolio Assets	Rohna Jhajjar Highway Asset	Khajuwala Bap Highway Asset	Narnaul Highway Asset	Rohna Sonepat Highways Asset	Hardiya Hasanpur Highway Asset	Kiratpur Nerchowk Highway Asset	Dewas Ujjain Highway Asset	Bangalore Highways Asset	Nainital Highways Asset
Cash Inflows* received as on June 30, 2024 (in millions)	-	-	-	-	380.09	739.30	-	-	172.19

* Cash Inflows include interest on annuity and O&M payments.

** Completion Cost may be adjusted due to changes in the weighted price index, consumer price index, and any modifications to the reference date as per NHAIs evaluation under the Concession Agreeme nt.

All of the Initial Portfolio Assets are HAM projects awarded by NHAI. The Sponsor will be monetizing future annuity payments (including interest payable thereon) and O&M income receivable from the NHAI by transferring the Initial Portfolio Assets to the Trust. Our revenue stream primarily comprises interest income on financial assets receivable from NHAI, as well as revenue from operations, maintenance of roads, construction services, and operating revenues received from NHAI.The revenue from operations of the Initial Portfolio Assets based on the Special Purpose Combined Financial Statements for the Financial Years ended March 31, 2024, 2023 and 2022 was 14,850.91 million, 20,330.90 million and 19,081.51 million respectively.

Factors Affecting Results of Operations

The Project SPVs business, prospects, results of operations and financial conditions are affected by a number of factors, including the following:

Interest rate fluctuations

As our infrastructure business is capital intensive, our projects are funded to a large extent by debt, and as a result we ar e exposed to interest rate risks. Our current debt facilities carry interest at fixed and variable rates with the provision for periodic reset of interest rates. As at June 30, 2024, the majority of our indebtedness was subject to variable interest rates. Considering the capital-intensive nature of the infrastructure business, an increase in interest expense at the Project SPV level i s likely to have a significant adverse effect on our financial results.

Inflation and interest risk

In all the Concession Agreements, the interest payable to us on balance completion cost is linked with the applicable bank ra te plus 3% and income arising out of O&M payments is linked with the movements of inflation indices in the relevant period. However, there are no specific provisions in the Concession Agreements protecting us against increases in interest rates on our borrowings or cost of raw materials, except to the extent of rates linked to applicable Bank Rate and the inflation index. Th e loan facilities availed by the Project SPVs typically carry a floating rate of interest specified by the lender (benchmarked to MCLR). Our lenders may have the right to periodically adjust our interest rates and our applicable interest rates may increas e based on their review of our credit profile and perceived risks in our operations. Our operational costs may change if our Project Manager fails to perform its O&M duties and responsibilities under the Project Management Agreement. Many factors causing such adverse changes are beyond our control and we are not permitted to demand matching increases in our annuities to account for the impact of inflation and interest rate adjustments on our costs.

Strategic expansions through acquisitions including under the Right of First Offer

The Investment Manager intends to develop and expand our Initial Portfolio Assets by capitalizing on opportunities provided by our Sponsor to undertake strategic acquisitions of road assets. For details, please see the section entitled "Business Assets

292 under ROFO" on page 166. To achieve this objective, in addition to the Initial Portfolio Assets, the Investment Manager will also have the ability to acquire new projects through (i) a right of first offer with our Sponsor in accordance with the ROFO Agreement; and (ii) through other acquisitions from third parties. Any acquisitions will have a direct impact on our revenue growth as well as having a corresponding increase in any operating and financial expenses that we will incur. Any acquisitions in the future are expected to be financed by incurring additional debt and/or through the issuance of fresh Units, which could affect our cash flows or could lead to dilution of holdings of existing holders that do not maintain their percentage interes ts upon the issuance of fresh Units.

The road sector in India

We derive and expect to continue to derive in the foreseeable future, our revenues and operating profits are from India. Changes in macroeconomic conditions generally impact the road industry and could negatively impact our business. Accordingly, our business is highly dependent on the state of development of the Indian economy and the macroeconomic environment prevailing in India. Since the use of our Projects, our expansion plans and future projects depend or will depend on macroeconomic factors that may negatively impact demand of the development of road infrastructure projects in India, or the timely commencement of their operations could in turn have a material adverse effect on our growth prospects, business and cash flows. Furthermore, during economic downturns, financing may become more expensive or unavailable on terms that are acceptable to businesses .

General economic conditions in India, economic conditions in the areas in which the Project SPVs operate and the level of investment and activity in the road infrastructure sector

Demand for roads in India and consequently, the performance and growth of road projects are impacted by economic conditions in India and government policies relating to infrastructure development to support long-term growth plans of the Indian economy.

The Indian economy has been affected by the recent global economic uncertainties, volatility in interest rates, currency exchange rates, commodity and electricity prices, adverse conditions affecting agriculture and various other macroeconomic factors. Since the Project SPVs focus on the road and highways sectors, any slowdown or perceived slowdown in the Indian economy, or in those sectors of the Indian economy, could materially and adversely impact the business, financial performance and results of operation of the Project SPVs. Similarly, the health and sustained economic development in the regions in which the Project SPVs operate could have a significant impact on the revenues and growth prospects of the Project SPVs. Additionally, an increase in trade deficit or a decline in Indias foreign exchange reserves could negatively impact interest rates and liquidity, which could adversely impact the Indian economy and our business. Any downturn in the macroeconomic environment in India could materially and adversely affect our business.

Due to increased budgetary allocations by the Government and its road development initiatives as well as investments by the private sector in the infrastructure projects, the road and highways sectors have developed significantly in the last decade. While recent Indian governments have been focused on encouraging private participation in the industrial sector, any adverse change in policy could result in a further slowdown of the Indian economy. The rate of economic liberalisation could decrease, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment in India could change as well. In the road sector, there can be no assurance that the GoIs engagement with and outreach to private sector operators, including InvIT, will continue in the future. A significant change in Indias economic liberalisation and deregulation policies, in particular, those relating to the road sector, could disrupt business and economic conditions in In dia generally and our business in particular.

Dependence on support from governmental entities

Any significant changes in a particular governments policy for the road infrastructure sector could have a significant effec t on the InvITs revenues, expenditure and growth prospects as they relate to future projects. The results of operations of future projects are likely to be affected by budgetary allocations made by the various central and state government agencies for the infrastructure sector as well as funding provided by international and multilateral development finance institutions for road infrastructure projects. Any adverse change in focus or policy framework regarding infrastructure development or the surface transportation industry, or the InvITs relationship with the government or various governmental entities in India could adversely affect the InvITs business, financial condition and results of operations. Changing political or social imperatives can also affect the InvITs and the Project SPVs businesses.

Competition

The InvIT faces competition from other road operators, financial investors and other infrastructure investment trusts in acquiring profitable concessions for future projects. The competition for road projects varies depending on the size, nature and comple xity of the project and on the geographical region in which the project is to be executed. Some competitors may have, greater financial resources, economies of scale and operating efficiencies than the InvIT. In respect of new and eligible acquisition opportunities, the InvIT may rely on the experience and qualifications of our Sponsor, which faces competition from both domestic and international entities in the roads and highways infrastructure sector, as most of the contracts awarded by the Government of India and State Governments are awarded on a competitive bidding basis and subject to satisfaction of other prescribed pre-qualification criteria. There can be no assurance that our Sponsor can effectively compete with its competitors in relation to the acquisition of future projects, and any failure to compete effectively may have a material adverse effect on the InvITs financial condition and results of operations.

Critical Accounting Policies

The preparation of the Special Purpose Combined Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

While all aspects of the Special Purpose Combined Financial Statements should be read and understood in assessing their current and expected financial condition and results, we believe that the following critical accounting policies warrant part icular attention:

Basis of preparation and presentation

The Investment Manager of the Trust have prepared Special Purpose Combined Financial Statements of the Project SPVs which comprise of the special purpose combined balance sheets as at March 31, 2024, March 31, 2023, March 31, 2022; the special purpose combined statements of profit and loss (including other comprehensive income); the special purpose combined cash flow statements; and the special purpose combined statements of changes in equity for the respective years; special purpose combined statements of net assets at fair value as at March 31, 2024; special purpose combined statements of total returns at fair value for the year ended March 31, 2024 and notes to the combined financial statements including a material accounting policy information and other explanatory information.

Basis of Combination

These Special Purpose Combined Financial Statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances. The financial statements of all the SPV Group used for the purpose of combination are drawn up to the same reporting date i.e. year ended on March 31 each year. The financial statements of the Project SPVs have been prepared in accordance with the Ind AS and/or any addendum thereto as defined in the Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rule, 2015 and other relevant provisions of the Companies Act.

Summary of material accounting policies

The following is the summary of material accounting policy information applied by the SPV Group in preparing its Special Purpose Combined Financial Statements:

Business combination

Business combinations have been accounted for using the acquisition method under the provisions of Ind AS 103, Business Combinations. The purchase price in an acquisition is measured at the fair value of the assets transferred and liabilities incurred or assumed at the date of acquisition, which is the date on which control is transferred to the Project SPV. The purchase price also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition. Contingent considera tion is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recogni zed in the combined statement of profit and loss.

Goodwill is measured as excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair val ue of the net assets acquired is in excess of the aggregate consideration transferred, the resulting gain on bargain purchase is recognised in other comprehensive income and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity transfers the gain directly in equity as capital reserve, without routing the same through other comprehensive income.

Basis of classification as current and non-current

The SPV Group presents assets and liabilities in the combined balance sheet based on current/non-current classification. An asset is current when it is:

- Expected to be realized or intended to be sold or consumed in the normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realized within twelve months after the reporting period or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets have been classified as non-current. A liability is current when:

- It is expected to be settled in the normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The SPV Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Operating cycle of the SPV Group is the time between the acquisition of assets for processing and their realization in cash o r cash equivalents. As the SPV Groups normal operating cycle is not clearly identifiable, it is assumed to be twelve months.

Fair value measurement

The SPV Group measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the SPV Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing t he asset or liability, assuming that market participants act in their economic best interest. See "Note 34 Special Purpose Combined Financial Statements" on page 260 for fair value hierarchy.

All assets and liabilities for which fair value is measured or disclosed in the Special Purpose Combined Financial Statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the Special Purpose Combined Financial Statements on a recurring basis, the SPV Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

External valuers are involved for valuation of significant assets such as annuity receivable, where required. Involvement of external valuers is decided by each Project SPV management on a need basis and relevant approvals. The valuers involved are selected based on criteria like market knowledge, reputation, independence and professional standards.

Revenue Recognition

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To determine whether to recognize revenue, the Project SPV Group follows a 5-step process:

Identifying the contract with a customer

Identifying the performance obligations

Determining the transaction price

Allocating the transaction price to the performance obligations

Recognizing revenue when/as performance obligation(s) are satisfied.

In all cases, the total transaction price is allocated amongst the various performance obligations based on their relative standalone selling price. The transaction price excludes amounts collected on behalf of third parties. The consideration prom ised include fixed amounts, variable amounts, or both. The specific recognition criteria described below must also be met before revenue is recognized.

Taxation

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting da te.

Current income tax relating to items recognized outside statement of profit or loss is recognized outside statement of profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respe ct to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (MAT) paid as per Indian Income Tax Act, 1961 is in the nature of unused tax credit which can be carried forward and utilised when the SPV Group will pay normal income tax during the specified period. Minimum alternate tax ("MAT") credit entitlement is recognized as an asset only when and to the extent there is convincing evidence that normal income tax will be paid during the specified period. The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Borrowing costs

Borrowing cost include interest calculated using the effective interest method, amortization of ancillary costs and other cos ts the SPV Group incurs in connection with the borrowing of funds. Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption. All other borrowing costs are charged to the combined statement of profit and loss as incurred.

Use of estimates and judgements

The preparation of Special Purpose Combined Financial Statements requires management to make certain estimates and assumptions that affect the amounts reported in the Special Purpose Combined Financial Statements and notes thereto. The management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future period. An overview of the areas that involve a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed have been disclosed below. Detailed information about each of these estimates and judgments is included in the relevant notes together

296 with information about the basis of calculation for each affected line item in the Special Purpose Combined Financial Statements.

Estimate and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under circumstances.

The SPV Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom be equal to the related actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amount of assets and liabilities are disclosed below:

Service concession agreement

"Service concession arrangements" applies to "public to private" service concession arrangements, which can be defined as contracts under which the grantor transfers to a concession holder the right to deliver public services that give access to m ain public facilities for a specified period of time in return of managing the infrastructure used to deliver those public services.

More specifically, it applies to public to private service concession arrangement if the grantor:

a) Controls or regulates what services the operators must provide with the infrastructure, to whom it must provide them, and at what price; and

b) Controls through ownership or otherwise any significant residual interest in the infrastructure at the end of the term of the arrangement.

Refer Note 2.2.C which explains revenue recognition where the estimates are involved to determine the relative selling prices of performance obligations under service concessions arrangements. The HAM revenue model based on which the revenue and finance income are recognized under the service concessions arrangements assumes certain estimates and assumptions based which the project effective internal rate of return (IRR) is calculated for finance income recognition. The key inputs of the model comprise of annuity and interest on annuity inflows, estimations on cost to build and maintain the asset and other operational costs. These inputs are based on circumstances existing and management judgement / assumption on the future expectations based on current situations. Judgements include management view on expected earnings in future years, changes in interest rates, cost inflation, government policy changes, etc.

Provisions and liabilities

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subjec t to change.

Fair value measurements

Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. The SPV Group engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of assets are disclosed in the notes to Special Purpose Combined Financial Statements.

Impairment of financial assets

The impairment provision for financial assets is based on assumptions about risk of default and expected loss rates. The SPV Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the SPV Groups history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Fair valuation and disclosures

SEBI Guidelines issued under the SEBI InvIT Regulations requires disclosures relating to net assets at fair value and total returns at fair value. In estimating the fair value of investments in subsidiaries (which constitute substantial portion of t he net assets), the Trust engages independent qualified external valuers to perform the valuation. The Investment Manager of the Trust works closely with the valuers to establish the appropriate valuation techniques and inputs to the model. The inputs to the valuation models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as Weighted average cost of capital ("WACC"), tax rates, inflation rates etc. Changes in assumptions about these factors could affect the fair value.

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Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized.

Income taxes

Significant judgements are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions. The extent to which deferred tax assets/minimum alternate tax credit can be recognized is based on managements assessment of the probability of the future taxable income against which the deferred tax assets/minimum alternate tax credit can be utilized.

Contingent liabilities

The SPV Group is subject to legal proceedings and tax issues covering a range of matters, which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the SPV Group often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction a nd the differences in applicable law. In the normal course of business management of each Project SPV consults with legal counsel and certain other experts on matters related to litigation and taxes. The SPV Group accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.

Evaluation of indicators for impairment of assets

The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Recoverability of advances/ receivables

At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expect ed credit losses on outstanding receivables and advances.

Results of Operations

The following table sets forth certain information with respect to the results of operations of the InvIT (on a combined basi s) for the financial years indicated:

Particulars	Year Ended March 31, 2024		Year Ended March 31, 2023		Year Ended March 31, 2022
	(in million)	Percentage of Total Income (%)	(in million)	Percentage of Total Income (%)	(in million)	Percentage of Total Income (%)
Income and gains
Revenue from operations	14,850.91	96.22	20,330.90	80.71	19,081.51	96.30
Interest income on bank deposits	102.21	0.66	41.44	0.17	23.98	0.12
Profit on sale of investments	-	-	1.18	-	8.47	0.04
Other income	481.96	3.12	4,815.71	19.12	700.23	3.54
Total Income (I)	15,435.08	100	25,189.23	100	19,814.19	100
Expenses and loss
Operating expenses	9,812.64	63.57	16,779.78	66.61	17,061.84	86.11
Audit fee (statutory auditors of respective project SPVs)	4.31	0.03	3.96	0.02	3.40	0.02
Insurance expenses	32.14	0.21	40.69	0.16	36.36	0.18
Employee benefits expense	15.74	0.10	4.76	0.02	1.80	0.01
Project management fees	301.09	1.95	146.82	0.58	53.55	0.27
Finance costs	2,853.16	18.48	1,519.34	6.03	951.82	4.80
Other expenses	667.32	4.32	43.05	0.17	24.67	0.12
Total Expenses (II)	13,686.40	88.66	18,538.40	73.59	18,133.44	91.51
Profit before tax (I-II) (III)	1,748.68	11.34	6,650.83	26.41	1,680.75	8.49
Tax expenses
Current tax	578.59	3.75	364.88	1.45	135.17	0.68
Current taxes of earlier years	30.74	0.20	-	-	-	-
Deferred tax (credit)/charge	(118.32)	(0.77)	1,314.06	5.22	290.02	1.46
Total tax expenses (IV)	491.01	3.18	1,678.94	6.67	425.19	2.14
Net profit for the year (V) = (III) (IV)	1,257.67	8.16	4,971.89	19.74	1255.56	6.35

Fiscal 2024 compared to Fiscal 2023

Total Income

Total income decreased by 9754.15 million, or 38.72%, from 25,189.23 million for Fiscal 2023 to 15,435.08 million for Fiscal 2024, primarily due to a decrease in revenue from operations and other income.

Revenue from operations

Revenue from operations decreased by 5,479.99 million, or 26.95%, from 20,330.90 million for Fiscal 2023 to 14,850.91 million for Fiscal 2024, primarily due to a decrease in revenue from construction work which was principally attributable to two projects, namely GKNHPL and DUHPL, achieving COD and one of our project HHHPL achieving PCOD in Fiscal 2023, as a result of which the construction cost in Fiscal 2023 was higher as compared to Fiscal 2024 (resulting in lower revenues for Fiscal 2024). Revenue from operations represented 96.22% and 80.71% of our total income in Fiscals 2024 and 2023, respectively.

Interest income on financial assets receivable from National Highways Authority of India (NHAI): Interest income on financial assets receivable from NHAI increased by 1,806.36 million or 67.11%, from 2,691.61 million in Fiscal 2023 to 4,497.97 million in Fiscal 2024 which was principally attributable to (i) acquisition of two new projects namely GBHPL and GNHPL II and (ii) the projects undertaken by two of our Project SPVs, namely GKNHPL and DUHPL, achieving COD and the project undertaken by HHHPL achieving PCOD in Fiscal 2023.

Revenue from operations and maintenance of road: Revenue from operations and maintenance of road increased by

509.51 million or 133.77 % from 380.89 million in Fiscal 2023 to 890.40 million in Fiscal 2024, which was principally attributable to the increase in scope of O&M works in respect of (i) two new SPVs acquired namely GBHPL and GNHPL II in Fiscal 2023 and Fiscal 2024, respectively (ii) the projects undertaken by two of our Project SPVs, namely GKNHPL and DUHPL, achieving COD and one of our project HHHPL achieving PCOD in Fiscal 2023.

Revenue from construction services: Revenue from construction services decreased by 7,361.26 million or 51.16%, from 14,389.88 million in Fiscal 2023 to 7,028.62 million in Fiscal 2024, which was principally attributable to decrease in construction services on account of projects undertaken by two of our Project SPVs, namely GKNHPL and DUHPL, achieving COD and the project undertaken by HHHPL achieving PCOD in Fiscal 2023.

Other operating revenues: Other operating revenue decreased by 434.60 million or 15.15%, from 2,868.52 million in Fiscal 2023 to 2,433.92 million in Fiscal 2024, which was principally attributable to non-receipt of any bonus on early completion of our projects in Fiscal 2024 (as opposed to 30.99 million as early completion bonus for our projects received in Fiscal 2023) and a decrease in the change of scope and utility income which decreased from 2,837.53 million in Fiscal 2023 to 2,433.92 million in Fiscal 2024, primarily on account of no major change in scope of work allotted by NHAI.

Interest income on bank deposits

Interest income on bank deposits increased by 60.77 million or 146.65%, from 41.44 million in Fiscal 2023 to 102.21 million in Fiscal 2024, which was principally attributable to an increase in the deposits placed with banks for creating debt service reserve accounts, debenture redemption reserve and major maintenance reserve.

Profit on Sale of Investments

Profit on sale of investments decreased by 1.18 million or 100 %, from 1.18 million in Fiscal 2023 to nil in Fiscal 2024, which was principally attributable to the redemption of the surplus funds invested in mutual funds in Fiscal 2023.

Other income

Other income decreased by 4,333.75 million or 89.99%, from 4,815.71 million in Fiscal 2023 to 481.96 million in Fiscal 2024, which was principally attributable to a recognition of gain on modification of financial assets in fiscal year 2023 due to increase in interest rate from NHAI.

Expenses

Total expenses decreased by 4,852.00 million, or 26.17%, from 18,538.40 million in Fiscal 2023 to 13,686.40 million in Fiscal 2024, primarily due to a reduction in operating expenses on account of decrease in construction expenses netted off by the increase in employee cost, finance cost and project management fees.

Operating expenses: Operating expenses decreased by 6,967.14 million or 41.52%, from 16,779.78 million in Fiscal 2023 to 9,812.64 million in Fiscal 2024, which was principally attributable to decrease in construction costs on account of reduction of construction work attributable to the projects undertaken by two of our Project SPVs, namely GKNHPL and DUHPL, achieving COD and the project undertaken by HHHPL achieving PCOD in Fiscal 2023, as a result of which our construction expenses decreased by 6,941.76 million or 50.71%, from 13,688.19 million in Fiscal 2023 to 6,746.43 million in Fiscal 2024.

Employee benefits expenses: Employee benefits expenses increased by 10.98 million or 230.67%, from 4.76 million in Fiscal 2023 to 15.74 million in Fiscal 2024, which was principally attributable to an increase in the number of employees in certain projects and increase in salary of existing employees.

Finance costs: Finance costs increased by 1,333.82 million or 87.79%, from 1,519.34 million in Fiscal 2023 to 2,853.16 million in Fiscal 2024, which was principally attributable to (i) acquisition of two Project SPVs namely

GBHPL and GNHPL II, which resulted in an overall increase in borrowings and consequent increase in interest costs; (ii) additional borrowings availed from banks towards completion of construction in existing projects undertaken by certain projects, namely GKNHPL, HHHPL and DUHPL and (iii) increase in finance costs on account of increase in the MCLR rates by lenders.

Project management fees: Project management fees increased by 154.27 million or 105.07%, from 146.82 million in Fiscal 2023 to 301.09 million in Fiscal 2024, which was principally attributable to project management fees charged in the additional project acquired namely GBHPL and projects undertaken by GKNHPL, HHHPL and DUHPL achieving PCOD/COD in Fiscal 2023.

Other expenses: Other expenses increased by 624.27 million or 1,450.10%, from 43.05 million in Fiscal 2023 to 667.32 million in Fiscal 2024, which was principally attributable to an increase in loss on modification of financial assets, increase in legal and professional fees, CSR expenses and fees and subscription.

Profit before tax

As a result of the factors outlined above, our profit before tax was 1,748.68 million for Fiscal 2024 compared to 6,650.83 million for Fiscal 2023.

Tax expenses

Total tax expenses decreased by 1,187.93 million or 70.75%, from 1,678.94 million for Fiscal 2023 to 491.01 million for Fiscal 2024, which was principally attributable to a reduction in profit before tax.

Net profit for the year

As a result of the factors outlined above, our net profit for the year was 1,257.67 million for Fiscal 2024 compared to 4,971.89 million for Fiscal 2023.

Fiscal 2023 compared to Fiscal 2022

Total Income

Total income increased by 5,375.04 million or 27.13%, from 19,814.19 million for Fiscal 2022 to 25,189.23 million for Fiscal 2023, primarily due to an increase in revenue from operations and other income.

Revenue from operations

Revenue from operations increased by 1,249.39 million, or 6.55%, from 19,081.51 million for Fiscal 2022 to 20,330.90 million for Fiscal 2023, due to (i) increase in financials assets primarily on account of projects undertaken by GKNHPL, HHHPL and DUHPL achieving pre-agreed milestones under the relevant concession agreements and (ii) an increase in the scope of work and utility shifting by NHAI. Revenue from operations represented 80.71 % and 96.30% of our total income in Fiscals 2023 and 2022, respectively.

Interest income on financial assets receivable from National Highways Authority of India (NHAI): Interest income on financial assets receivable from NHAI increased by 1,042.55 million or 63.22%, from 1,649.06 million in Fiscal 2022 to 2,691.61 million in Fiscal 2023 which was principally attributable projects undertaken by GKNHPL, HHHPL and DUHPL achieving pre-agreed milestones under the relevant concession agreements leading to increase in financial assets.

Revenue from operations and maintenance of road: Revenue from operations and maintenance of road increased by

138.68 million or 57.26 % from 242.21 million in Fiscal 2022 to 380.89 million, which was principally attributable to the project undertaken by GRSHPL achieving COD in Fiscal 2023.

Revenue from construction services: Revenue from construction services decreased by 1,203.60 million or 7.72% from 15,593.48 million in Fiscal 2022 to 14,389.88 million in Fiscal 2023, which was principally attributable to reduction of construction services on account of the project undertaken by GRSHPL achieving COD in Fiscal 2023.

Other operating revenues: Other operating revenue increased by 1,271.76 million or 79.65%, from 1,596.76 million in Fiscal 2022 to 2,868.52 million in Fiscal 2023, which was principally attributable to an increase in the change of scope and utility income which increased from 908.27 million in Fiscal 2022 to 2,837.53 million in Fiscal 2023, primarily on account of additional scope of work allotted by NHAI of 1,929.26 million, which was offset by a decrease in the bonus on early completion of our projects from 688.49 million in Fiscal 2022 to 30.99 million in Fiscal 2023.

Interest income on bank deposits

Interest income on bank deposits with banks increased by 17.46 million or 72.81%, from 23.98 million in Fiscal 2022 to 41.44 million in Fiscal 2023, which was principally attributable to an increase in the deposits placed with banks for creating debt service reserve accounts, debenture redemption reserve and major maintenance reserve.

Profit on Sale of Investments

Profit on sale of investments decreased by 7.29 million or 86.07%, from 8.47 million in Fiscal 2022 to 1.18 million in Fiscal 2023, which was principally attributable to gain in fair valuation of investments as per accounting standards in Fiscal 2022.

Other income

Other income increased by 4,115.48 million or 587.73%, from 700.23 million in Fiscal 2022 to 4,815.71 million in Fiscal 2023, which was principally attributable to a recognition of gain on modification of financial assets in Fiscal 2023 due to increase in interest rate.

Expenses

Total expenses increased by 404.96 million, or 2.23%, from 18,133.44 million in Fiscal 2022 to 18,538.40 million in Fiscal 2023, primarily due to an increase in operating expenses, project management fees and an increase in finance cost on account of additional borrowings taken.

Operating expenses: Operating expenses decreased by 282.06 million or 1.65%, from 17,061.84 million in Fiscal 2022 to 16,779.78 million in Fiscal 2023 which was principally attributable to an increase in change of scope, utility shifting expenses and escalation cost on account of additional work allotted by NHAI, which was partially offset by a decrease in construction expenses.

Employee benefits expenses: Employee benefits expenses increased by 2.96 million or 164.44%, from 1.80 million in Fiscal 2023 to 4.76 million in Fiscal 2023, which was principally attributable to an increase in the number of employees in certain projects and increase in salary of existing employees.

Finance costs: Finance costs increased by 567.52 million or 59.62%, from 951.82 million in Fiscal 2022 to

1,519.34 million in Fiscal 2023, which was principally attributable to cost increase in borrowings on account of additional borrowings were taken from banks towards completion of construction in existing projects undertaken by certain Project SPVs, namely GRSHPL, GKNHPL, HHHPL and DUHPL.

Project management fees: Project management fees increased by 93.27 million or 174.17%, from 53.55 million in Fiscal 2022 to 146.82 million in Fiscal 2023, which was principally attributable to project management fees charged in GRSHPL and GRJHPL on becoming fully operational.

Other expenses: Other expenses increased by 18.38 million or 74.50%, from 24.67 million in Fiscal 2022 to 43.05 million in Fiscal 2023, which was principally attributable to a decrease in legal and professional fees, fee and subscription expenses and miscellaneous expenses.

Profit before tax

As a result of the factors outlined above, our profit before tax was 6,650.83 million for Fiscal 2023 compared to 1,680.75 million for Fiscal 2022.

Tax expenses

Total tax expenses increased by 1,253.75 million or 294.87%, from 425.19 million for Fiscal 2022 to 1,678.94 million for Fiscal 2023, which was principally attributable to additional deferred tax liability on account of increase in financial assets during the Fiscal 2023.

Net profit for the year

As a result of the factors outlined above, our net profit for the year was 4,971.89 million for Fiscal 2023 compared to 1,255.56 million for Fiscal 2022.

Cash Flows

The following table sets forth certain information relating to the cash flows of the SPV Group on a combined basis for the ye ars ended March 31, 2024, March 31, 2023 and March 31, 2022:

Particulars	Year Ended March 31, 2024	Year Ended March 31, 2023	Year Ended March 31, 2022
Net cash generated from / (used in) operating activities	1,101.45	(5,102.80)	(6,666.98)
Net cash (used in) investing activities	(3,046.62)	(3,865.00)	(517.43)
Net cash flow from financing activities	2,742.91	8,799.97	7,463.11

Operating activities

Net cash flow from operating activities for Fiscal 2024 was 1,101.45 million which was principally attributable to receipts from NHAI, working capital changes and non-current financial assets, non-current financial liabilities.

Net cash flow used in operating activities for Fiscal 2023 was 5,102.80 million, which was principally attributable to receipts from NHAI, working capital changes and non-current financial assets.

Net cash flow used in operating activities for Fiscal 2022 was 6,666.98 million, which was principally attributable to receipts from NHAI, working capital changes and non-current financial assets.

Investing activities

Net cash flow used in investing activities for Fiscal 2024 was 3,046.62 million, which was principally attributable to investments in bank deposits and redemption of bank deposits.

Net cash flow used in investing activities for Fiscal 2023 was 3,865.00 million, which was principally attributable to investments in bank deposits and redemption of bank deposits and acquisition financial asset (receivables under service concession agreement).

Net cash flow used in investing activities for Fiscal 2022 was 517.43 million, which was principally attributable to investments in bank deposits.

Financing activities

Net cash flow generated from financing activities for Fiscal 2024 was 2,742.91 million, which was principally attributable to proceeds from term loans from banks, loan taken from related parties restricted to the extent of repayment of external debt .

Net cash flow generated from financing activities for Fiscal 2023 was 8,799.97 million, which was principally attributable to proceeds from term loans from banks, loan taken from related parties.

Net cash flow generated from financing activities for Fiscal 2022 was 7,463.11 million, which was principally attributable to proceeds from term loans from banks, proceeds from non-convertible debentures, loan taken from related parties.

Contingent Liabilities

As of March 31, 2024, our contingent liabilities primarily comprised of income tax demands raised against the Project SPV amounting to 111.78 million. For details, see note 33 of the Special Purpose Combined Financial Statements in relation to

" Contingent Liabilities and Contingent Assets" on page 260. 303

Related Party Transactions

The Project SPVs have, in the course of their business and operations, entered into various transactions with related parties, such as operation and maintenance charges, project management fees, loans and advances, EPC costs, investment by way of equity share capital, CSR expenses, bank guarantees and other reimbursement expenses.

For further information on our related party transactions, see "Related Party Transactions" on page 208.

Known Trends or Uncertainties

Other than as described in "Risk Factors" on page 21 and this section, to our knowledge there are no known trends or uncertainties that have had or are expected have a material adverse impact on our revenues or income from continuing operations.

Sufficiency of working capital

The Investment Manager has confirmed that the Trust has the ability to meet the working capital requirements for a period of at least 12 months from the date of listing of the Units.

Seasonality

All the Initial Portfolio Assets comprise HAM projects and accordingly, our business is not seasonal.

Unusual or infrequent transactions

Except as disclosed in this Draft Offer Document, there have been no events or transactions to our knowledge which could be categorized as unusual or infrequent.

Total turnover from each major segment of the InvIT

All the Project SPVs currently operate only road projects and therefore we have only one business segment.

Quantitative and Qualitative Disclosures on Market Risks

Interest rate risk

As the infrastructure development and construction business is capital intensive, the Project SPVs are exposed to interest ra te risk. Interest rates for borrowings have been volatile in India in recent periods. The Project SPVs infrastructure developmen t and construction projects were funded to a large extent by debt and increases in interest expense could have an adverse effect on their results of operations and financial condition. As of June 30, 2024, the majority of the Project SPVs total indebtedness was subject to variable rates. Although from time to time we may engage in interest rate hedging transactions and enter into new financing arrangements, there can be no assurance that we will be able to do so on commercially reasonable terms, that our counterparties will perform their obligations, or that these agreements, if entered into, will protect us adequately against interest rate risks.

Credit Risk

The Project SPVs are engaged in infrastructure development business under HAM project. It currently derives its revenue primarily from hybrid annuity business. Since the annuity receivables are from NHAI and various Government authorities, the credit risk with respect to such receivables from government institutions is expected to be very low and hence, no provision for expected credit loss is deemed necessary except in the case where individual receivables are known to be uncollectable.

Liquidity Risk

Liquidity risk relates to the risk that the Trust or the Project SPVs will not be able to meet their respective obligations associated with its financial liabilities. The Trust and the Project SPVs are exposed to liquidity risk in respect of financing arrangements and short-term and long-term investment programs mainly in their growth projects.

It is expected that the InvIT, through the Investment Manager, will regularly monitor liquidity requirements to ensure that i t maintains adequate means of obtaining funds necessary in order to meet liquidity requirements in the short and longer term. Further, the InvIT and the Project SPVs aim to minimize the risk by generating sufficient cash flows from their current operations, cash and cash equivalents, liquid investments and by deploying a robust cash management system.

304

Significant Developments since March 31, 2024

Except as disclosed in this Draft Offer Document and except in the ordinary course of business of the Project SPVs, we are not aware of any circumstances that have arisen since March 31, 2024 that materially and adversely affect, or are likely to affec t, our operations or profitability, the values of our respective assets or our ability to pay our respective liabilities in the next twelve months.

The InvIT and the Investment Manager confirm that there has been no material change in contingent liabilities since March 31, 2024, which is the date of the latest financial information included by way of the Special Purpose Combined Financial Statements.

The InvIT and the Investment Manager confirm that there has been no material change in the capital and other commitments since March 31, 2024, which is the date of the latest financial information included by way of the Special Purpose Combined Financial Statements.

Further, the following table sets forth the monthly revenue of the Project SPVs since March 31, 2024:

Project SPV	Annuity received/ receivable from NHAI for the month of
	April 2024	May 2024	June 2024	July 2024
Dewas Ujjain Highway Private Limited	63.15	63.15	63.15	54.66
Gawar Bangalore Highways Private Limited	110.93	110.93	110.93	144.81
Gawar Khajuwala Bap Highway Private Limited	67.90	67.90	67.90	67.04
Gawar Kiratpur Nerchowk Highway Private Limited	176.55	176.55	173.73	172.88
Gawar Narnaul Highway Private Limited	81.45	81.45	81.45	80.62
Gawar Nainital Highways Private Limited	63.14	160.03	160.03	160.03
Gawar Rohna Jhajjar Highway Private Limited	53.25	53.25	53.25	52.30
Gawar Rohna Sonepat Highways Private Limited	73.09	73.09	73.09	95.20
Hardiya Hasanpur Highway Private Limited	89.63	89.09	89.09	89.09
Total	779.09	875.44	872.62	916.63

Note: The amount was determined by averaging the bi-annual annuity payments on a daily basis over six-month period as of the due date and the interest on annuity receivable, which is based on the closing financial assets receivable from NHAI.