IndInfravit Trust Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

Economic Outlook

Global growth is projected to moderate and India continue to be fastest growing economy¹

Global GDP growth is expected to moderate from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026, with higher trade barriers in several G20 economies and increased policy uncertainty weighing on investment and household spending. India to remain fastest growing economy in the world and is projected to grow at 6.4% in 2025 and 6.6% in 2026.

Indias Growth - consumption driven²

Recently, India has become the worlds fourth-largest economy. With sharp growth in overall economy, Indias per capita income has been growing at a healthy rate and has crossed a pivotal mark of US$2000 per capita recently. By 2030, the OECD expects 68.4% of Indias population to be classified as one level higher to "middle class" - more than twice the level it was in 2019, resulting in higher consumptions and change in spending pattern with higher discretionary spending. This has fuelled growth in sectors such as consumer durables, retail, auto, transport, healthcare, telecom, media & entertainment, tourism, etc.

By 2030, India is expected to be the third largest consumer market in the world. India is a consumption-driven economy, as reflected by the 60% contribution by private consumption in the GDP and its consumption story remains one of the most compelling narratives.

Indias Structural Growth

India has significantly reduced its fiscal deficit from a high of 9.2% of GDP in FY2020-21 to an estimated 5.6% in FY2023- 24, with a target of 4.9% for FY2024-25. The government aims to reduce its debt to 50% (plus/minus 1%) of GDP by March 2031, from an estimated 57.1% now.

Govt reiterates commitment to lowering FD; debt/GDP targeted at 50% by FY31

This shift prioritises debt reduction as a primary anchor for fiscal management, moving away from annual deficit targets. The government continues to focus on capital expenditure and aims to improve the quality of both expenditure and deficits.

Sector Outlook

Indias Target of Third Largest Economy - Infrastructure Upscaling

To achieve Indias target of becoming $7 trillion economy and third largest by 2030, an estimated $2.2 trillion infrastructure investment required³. Therefore, the current infrastructure spending by the Government as percentage of GDP is set to increase multi-fold from the current level of 3.2%. Building infrastructure under PPP mode and monetisation of assets identified as key sources for meeting infrastructure investments, which is reflecting in the Governments National Monetisation Plan (NMP) 2.0 which was announced in the budget for FY26.⁴

Highway - a road to Infrastructure impetus (Sector in which Interise Trust operates)

The Highway and Road sector are the largest contributor to infrastructure impetus targeted by the Government. This sector was contributing to about 26.6% of total NMP 1.0 and the same has significantly increased to about 35% in NMP 2.0.

The Ministry of Road Transport and Highway (MoRTH)/ National Highways Authority of India (NHAI) has raised INR 1.35 trillion since 2018 out of total monetisation potential 3k of INR 3.8 trillion, through various modes, including build- " operate-transfer (BOT), toll-operate-transfer (TOT), InvIT platform, securitisation. More than 60% of monetizable- assets of MoRTH/NHAI are yet to be monetised valuing H over INR 2.4 trillion. V

Growth Potential & Interise - Way Forward⁵

MoRTH/NHAI has construction target of 10,000 kms of highways during FY26, of which ~30% are awarded under PPP model with revival of BOT structure wherein 53 projects worth INR 2.1 trillion are identified. In order to improve NHAIs financial position, NHAI has prepaid INR 560 billion of debt during FY25 with an aim to further reduce its debt through asset monetisation.

The MoRTH has an aggregate of ~33,000 kms of proposed expressway network across the length and breadth of the country, of which ~2,312 kms is operational and ~ 8,733 kms will operational by 2028 and ~ 5,472 kms by 2030.

Interise Trust (‘Interise), established pre-covid in 2018, is the oldest privately placed infrastructure investment trust (InvIT) and Interise Investment Managers Limited, acting as an Investment Manager (IM) of Interise, is countrys first self-sponsored investment manager. Over the past 8 years, Interise has gained valuable experience in Asset Management of its portfolio of 17 assets.

With the aforesaid potential acquisitions, Interise is scouting for opportunities for building a robust portfolio of assets with optimum mix of BOT, HAM and TOT assets backed by its marquee of investors of international repute. Interise has also performed network analysis of existing and emerging growth corridors to enhance preparedness for future bidding opportunities.

Financial Performance

				(Rs. in Mn)
	Consolidated Performance		Standalone Performance
	FY 2024-25	FY 2023-24	FY 2024-25	FY 2023-24
Revenue from Operations	33,717	29,949	15,142	12,778
Other Operating Income	1,044	1,479	-	-
Other Income	1,625	3,211	41	2,168
Total Revenue & Incomes	36,387	34,639	15,183	14,947
COS & Construction Expenses	1,022	1,455	-	-
Operating Expenses	8,529	7,237	543	445
Employee Costs	845	722	-	-
Other Expenses	1,208	1,558	217	395
EBITDA	24,784	23,668	14,424	14,107
Loss on sale of investments	-	-	-	146
Provision for expected credit losses	-	-	1,429	1,176
Provision for Impairment	811	1,762	1,059	2,329
Depreciation & amortisation	11,312	10,795	1	1
EBIT	12,661	11,110	11,934	10,457
Finance & Interest	14,215	13,478	6,825	6,293
PBT	-1,554	-2,368	5,109	4,163
Tax	-840	-797	5	98
PAT	-714	-1,571	5,104	4,065
Unit Capital	1,08,858	1,08,858	1,08,858	1,08,858
Networth	53,157	61,541	70,450	73,008
Enterprise Value (as per valuation report)	1,87,243	1,86,041	1,87,243	1,86,041
Borrowings* (Term Loans & NCDs)	77,914	80,638	77,740	80,317

* Includes accrued interest and paid subsequently as per due date

During the year under review, the consolidated income registered a growth of 5% over the previous year, from INR 34,639 million in FY24 to INR 36,387 million in FY25 through institutionalising better mechanisms across the InvIT platform for efficient and effective toll management. During the year under review, the Trust has incurred about INR 1,720 million towards O&M costs and about INR 8,168 million towards MM costs which is the highest over the last seven years thereby depicting our increased capacity and improved capability to handle road operations and also improving road user experience leader to sustained traffic growth better traffic. EBITDA also clocked a growth of 5% over the previous to INR 24,784 million in FY25 from INR 23,668 million in FY24.

Interise has been able to sustain its O&M/MM costs after its comprehensive benchmarking exercise on operations and cost escalations, value engineering and innovation, leading to the optimisation of lifetime O&M costs. Interise has also carried out focused workshop for sustainable and longterm road maintenance methodologies. Apart from the innovation and value engineering, Interise has carried out slew of measures to optimise costs in the areas of financial management, insurance & security and administration as part of its value creation plan and value preservation plan.

Operating Expenses		(Rs. in Mn)
Particulars	FY 2024-25	FY 2023-24
Provision for MMR	3,996	3,255
Repairs & Maintenance (O & M)	1,720	1,335
Toll management fees (PM)	1,394	1,206
Employee Benefit expenses	845	722
Investment Managers fees	543	445
Insurance & Security Fee	478	557
Directors Remuneration	0.80	0.40
Professional Fees	425	621
Valuer Fees	5	5
Trustee Fees	3	3
Custodian Fee	0.20	0.20
Auditors Fees (Incl subsidiaries)	61	41
Other Expenses	713	888
Power & Fuel	303	316
Repairs & Maintenance (others)	95	122
	10,581	9,517

Operating Expenses Breakup

The comparative analysis of Operative Expenses as percentage of operating expenses in aggregate is depicted herein below:

Financial Discipline

Debt Management

Details of Outstanding borrowings & deferred payments

With a flexibility to capitalise on lower interest rates and ability to raise additional/top-up funds, the IM has maintained diversified lenders base, which is reflected in the following table:

				(Rs. in Mn)
Sr. No Lenders	Type of Lender	Type of Facility	Borrowing Year	Total OS
1 IOO Bank	Bank	RTL	2018	31,092.1
2 State Bank of India	PSU Bank	RTL	2023	13,655.6
3 Axis Bank	Bank	RTL	2023	9,468.9
4 IIFCL	NBFC	RTL	2023	6,680.8
5 Kotal Mahindra Bank	Bank	RTL	2023	3,216.3
6 Debenture Holders	DFI	NCD	NA	13,123.0
7 Commercial Paper	CP	CP	2025	850.0
8 Debenture Holders*	DFI/PF	NCD*	NA	172.0
9 Barclays Bank PLC	Bank	Non - Fund	2023	1,360.0
10 Indusind Bank	Bank	Non - Fund	2023	1,620.0
11 Deferred Premium*	NA	NA	NA	19,258.7

* borrowings availed by Project SPV

Gearing Ratios

Particulars	FY 2024-25	FY 2023-24
Debt equity ratio	1.83	1.60
Debt service coverage ratio	2.18	2.47
Interest service coverage ratio	2.99	3.03
Asset coverage ratio	1.98	2.07
Debt to Enterprise Value	45.20%	44.93%

The IM has maintained the debt at optimised levels and thereby leading to range-bound gearing ratios as aforesaid. For more information, also refer relevant notes in the Financial Statements (note no. 21 of Consolidated Financial Statements and no. 12 of Standalone Financial Statements), which are forming part of this Annual Report.

Debt Maturity Profile

The IM of Interise has maintained & optimised the debt maturity profile by managing its debt obligations, optimising its financing strategies, and mitigating financial risks as per the following:

						(Rs. in Mn)
Sr. No	Total borrowing	Less Than 1 year	1 to 2 Years	2 to 5 years	More than 5 years	Remarks
1	78,086.8	9,734.3	4,078.2	9,122.2	55,152.1	NCDs and Debt
2	172.0	-	42.0	130.0	-	SPV Level NCDs
3	19,258.7	-	-	7,669.2	11,589.5	SPV Level Deferred Premium

For more information on the debt and details thereof including changes during the year under review, refer note no. 21(h) of consolidated financial statements and note no. 12(g) of standalone financial statements, being part of this Annual Report.

Total Borrowing Repayment percentage

Credit Rating

Agency	Entity	Rating	Date
ICRA	Interise Trust	ICRA AAA/Stable/ICRA A1 +	Feb 12,2025
ICRA	Interise Trust	ICRA AAA/Stable/ICRA A1 +	March 11, 2025
India Ratings	Interise Trust	IND AAA/Stable	July 12, 2024
India Ratings	NSEPL	IND AAA/Stable	December 11, 2024
Care	NSEPL	CARE AAA/Stable	November 27, 2024

The IM of Interise has maintained the credit rating of Interise with robust controls and appropriate governance framework.

The rating letter / rationale thereof, as periodically reviewed by rating agencies in accordance with SEBI CRA Regulations, has been communicated to the stock exchanges (BSE and NSE) and the same is also placed on the website of the Trust (www.interiseworld.com)

Related Party Transactions

During the year under review, all Related Party Transactions (RPTs) entered by the Trust were in the ordinary course of business and in respect of transactions with related parties (as defined in InvIT Regulations), are at arms length basis and were reviewed and approved by the Investment and Finance Committee (‘IFC), (Chaired by the Independent Director) and the Audit Committee.

The Investment Manager of the Trust has adopted a Policy on Related Party Transactions, which is available on Trusts website, https://www.interiseworld.com/investor-centre/codes-and-policies. The objective of this Policy is: to ensure transparency and fairness of related party transactions; and to ensure proper approval, supervision and review of the transactions and regulate the manner of dealing with the transactions between the Trust and its related parties.

The Trusts principal related parties (with whom the transactions are carried out) consist of its wholly owned Project SPVs (primarily for loans, investment, interest, dividend, reimbursements), wholly owned Project Manager entity (primarily

for loans, investment, interest, dividend, reimbursements), Investment Manager (primarily, investment managers fees, reimbursements), Trustee (towards trustees fees) and unitholders having more than 20% of units (towards distributions).

Further, the fees payable to the Investment Manager has been approved by the IFC, Audit Committee and Board and also by the unitholders at their meeting held on September 28, 2022. Furthermore, the related party transactions are periodically reviewed by the IFC, Audit Committee and the Board.

The related party transactions during the year under reviewed are disclosed in note no. 30 of Standalone Financial Statements and note no. 54 Consolidated Financial Statements, for FY 2024-25, as forming part of this Annual Report.

For more information, also refer ‘Related Party transactions in Other disclosures section, mentioned herein the Annual Report.

Investors Return

Details of Unit Price movement (over last 5 FYs)

Stock Exchange	Particulars	FY21	FY22	FY23	FY24	FY25
BSE	Unit Price
	Opening	-	124.65	129.69	-	113.00
	High	-	124.65	135.10	-	113.00
	Low	-	124.65	129.69	-	113.00
	Closing	-	124.65	135.10	-	113.00
NSE	Unit Price
	Opening	-	101.00	-	-	115.00
	High	-	101.00	-	-	115.00
	Low	-	101.00	-	-	112.85
	Closing	-	101.00	-	-	112.85

Trading Volume (FY2025)

	BSE	NSE
Total Trade Volume*	900,000	1,300,000
Total Trading Days	249	249
Average Daily Trading Volume	3,614	5,221

*Note: The units of Interise are traded infrequently on both the exchanges. There were certain trades that were executed on NSE in the month of August, 2024 and also executed on NSE & BSE in the month of March, 2025.

Distributions to the Unitholders

Particulars	FY 2024-25	FY 2023-24	FY 2022-23	FY 2021-22	FY 2020-21
Total Distribution per unit	7.73	12.35	11.06	7.49	6.35
Interest per unit	3.43	4.85	6.73	6.06	3.26
Return of capital per unit	2.44	5.65	2.14	1.35	2.45
Dividend per unit	1.84	1.85	2.05	-	0.55
Others, if any	0.02	-	0.14	0.08	0.09
Yield per Annum	7.45%	12.08%	10.94%	7.49%	6.18%

Details of issuance/Buyback of units during the FY 2024-25, if any:

During the year under review there were no new fresh issuance of units/ buyback of units.

Cautionary statement

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, which may be "forward-looking statements" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand-supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors.