IRB Infrastructure Developers Ltd Management Discussions

1. INDUSTRY REVIEW

1.1 Indias infrastructure opportunity

I ndias firm resolve to increase its current $ 3.7 Trillion economy to a $30-35 Trillion economy by 2047, necessarily requires that our infrastructure sector, a key driver to propel the country economic growth, should be of the world class. Growing urbanisation, increasing population, growing disposable income, increasing demand for energy and financing needs for sustainable living pose a challenge for the infrastructural setup to be modern and upto the expectation of the citizen. Lack of adequate infrastructural facility is the main primary growth constraint, while good infrastructure is widely recognised as an enabler of economic growth. In the coming era of supply chain disruptions, new technologies and reversal of financial deleveraging, infrastructure growth must keep pace with the need created for it.

The Government of India has taken several reforms and initiatives and given a significant push for capital expenditures for key infrastructure sectors, especially highways. The total allocation for the highways sector has increased to I 2.78 Lakhs Crores from I 2.17 Lakhs Crores in the Union Budget for Financial year 2024-25. (Out of the total I 2.78 Lakhs Crores, the National Highways Authority of India (NHAI) has been allocated around I 1.68 Lakhs Crores as part of MoRTHs capital expenditure plan for 2024-25, a 3.9% increase from 2023-24 (Source: Government of India, Ministry of Finance, Union Budget 2024-25). This substantial investment underscores the importance placed on enhancing the nations transportation infrastructure, which is crucial for boosting trade and connectivity.

1.2 Road and Highway sector

India has the second-largest road network in the world, spanning a total of 6.3 million kilometers (kms). Being the most preferred mode of transportation, the road network transports 64.5% of all goods in the country and 90% of Indias total passenger traffic. As of January 2024, the total length of National Highways in the country is 146,145 km. Road transportation has been gradually increasing over the years with improvement in connectivity between cities, towns and villages in the country.

India aims to accelerate the development of its national highways, including high-speed access-controlled routes, to establish a world-class road network by 2047 as part of its goal to transition into a Developed Nation by 2047. The plan involves expanding the national highways network to over 2,00,000 kilometers, with a significant increase in access-controlled highways to 50,000 kilometers from the current 4,000 kilometers within the next 13 years. Additionally, the government aims to reduce road accidents by 95% over the next 25 years.

According to the MoRTH, Financial Year 2023-24 was the year of consolidation of the gains that accrued from major policy decisions taken in the previous ten years, a time for monitoring of ongoing projects, tackling roadblocks and adding to the impressive pace of work achieved during the past years. During the year, the MoRTH and its associate organisations have expanded the national highways network in the country, taking various steps to make these highways safe for the commuters and undertaking effective steps to minimise adverse impact on the environment. The length of 4-laned National Highways has increased by 2.5 times, from 18,387 km in 2014 to 46,179 km, as of November 2023. The average pace of NH construction has also seen a remarkable increase, rising to 33.83 km/day in 2023 from the baseline 12.1 km/day in 2014.

1.3 Schemes

Bharatmala Pariyojana: This is the umbrella programme for the highways sector that aims to optimise the efficiency of road traffic movement across the country by bridging critical infrastructure gaps. The Phase I of the Bharatmala Pariyojana approved in October 2017, focuses on development of 34,800 km of National Highways. The Pariyojana emphasised on a "corridor based National Highway development" to ensure infrastructure symmetry and consistent road user experience. The key components of the Pariyojana are Economic Corridors development, Inter-corridor and feeder routes development, National Corridors Efficiency Improvement, Border and International Connectivity Roads, Coastal and Port Connectivity Roads and Expressways. The Bharatmala Pariyojana phase 1 is to be completed by FY 2027-28. 34,800 km of National Highway length was planned for development under Phase-I of Bharatmala Pariyojana. As of Dec- 2023, 26,418 km (i.e., 76% of 34,800 km) have been awarded for construction and 15,549 Km is constructed.

Under the Bharatmala Pariyojana, 60% projects have been envisaged on Hybrid Annuity Mode (HAM), 10% projects on BOT (Toll) Mode, and 30% projects on EPC mode.

Pradhan Mantri (PM) Gati Shakti National Master Plan

(NMP): The seven engines that drive PM Gati Shakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure. The scope of PM Gati Shakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency. The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with PM Gati Shakti framework. PM Gati Shakti National Master Plan is a critical tool for integrating economic & infrastructural planning and development. With multimodal infrastructure development, Indias logistics cost will

reduce further, improve ease of living and ease of doing business in the country. The main aim of this programme is to fasten the approval process which can now be done through the Gati Shakti portal and thus digitised the approval process completely.

National Electronic Toll Collection (FASTag) programme: the flagship initiative of MoRTH and NHAI has been implemented on pan India basis to remove bottlenecks and ensure seamless movement of traffic and collection of user fee as per the notified rates, using passive Radio Frequency Identification (RFID) technology which is made compulsory with effect from February 15, 2021. The implementation of the FASTag system for toll collection in India has been a resounding success, with a consistent growth trajectory. The daily revenue collected from tolls through the use of FASTag has reached an all-time high, of over I 193 Crores as on April 29, 2023 (Source: MoRTH press release dated November 21, 2019 and NHAI press release dated May 2, 2023). In FY 23-24 the total ETC collection was I 54,750 Crores with total ETC counts of 3,175 million. Average Daily collection via FASTag on NH fee plazas is I 147.31 Crores and Number of average daily ETC transactions on NH fee plazas is I 86.61 Lakhs in FY 2024 (Till November 2023). (Source: MoRTH press release titled "Year End Review 2023: Ministry of Road Transport and Highways" dated January 5, 2024)

1.4 Growth Drivers

To accelerate the pace of construction, several initiatives have been taken by the Government to revive the stalled projects and expedite completion of new projects:

• Identification of Model National Highway in the state for development by the Government

• Streamlining of land acquisition and acquisition of major portion of land prior to invitation of bids

• Award of projects after adequate project preparation in terms of land acquisition, clearances etc.

• Disposal of cases in respect of Change of Scope (CoS) and Extension of Time (EoT) in a time bound manner

• Procedure for approval of General Arrangement Drawing for ROBs simplified and made online

• Close coordination with other Ministries and State Governments

• One-time fund infusion

• Regular review at various levels and identification/ removal of bottlenecks in project execution

• Proposed exit for Equity Investors

• Securitisation of road sector loans

• Disputes Resolution mechanism revamped to avoid delays in completion of projects

• Mandatory Electronic toll collection through FASTag with effect from February 15, 2021

• For faster settlement of claims through conciliation and reduce liabilities, NHAI has rigorously started the process of conciliation by constituting three Conciliation Committees of Independent Experts (CCIE) of three members each

I n addition, the following initiatives will also add up to drive growth for the infrastructure sector in India:

Massive infrastructure push: The Union Budget has given much-needed impetus to infrastructure development which could reduce trade and transaction costs and improve factor productivity. Moreover, the focus on roads and railways will create a unified market in India for seamless movement of goods and human resources. The Government of India has given a massive push to the infrastructure sector. The Union Budgets are continuously giving an investment push to lift economic growth, for this fiscal, the governments revenue expenditure is budgeted to grow less than 1% after growing 2.7% in the previous fiscal. The total capex of the government (budgetary capex plus revenue grants for capital creation and capex by central public sector enterprises) is budgeted to rise 14.5% as compared with only 3.1% in the current fiscal. Hence, the government has tightened the belt around revenue expenditure and frontloaded infrastructure spending, which would lead to faster economic growth.

NH expansion: The Gati Shakti programme has consolidated a list of 81 high impact projects, out of which road infrastructure projects were the top priority. The major highway projects include the Delhi-Mumbai expressway (1,350 kilometres), Amritsar-Jamnagar expressway (1,257 kilometres) and Saharanpur- Dehradun expressway (210 kilometres). The main aim of this programme is to give faster approval and is done through the Gati shakti portal and digitised the approval process completely.

Growing demand: With the increase in consumer demand and nuclear families, need for two-wheelers and compact cars has been on the rise and is expected to grow even further. The market for roads and highways in India is projected to exhibit a CAGR of 36.16% during 2016-2025, on account of growing government initiatives to improve transportation infrastructure in the country.

1.5 Government initiatives:

The road networks enhancement also includes green initiatives, such as utilising recycled materials and integrating eco-friendly technologies. Additionally, technological advancements are set to redefine Indias highway transportation landscape, with the likely adoption of Global Navigation Satellite System (GNSS)- based tolling systems and the integration of loT, AI, and GIS in road infrastructure, the toll collection will become seamless.

The major initiatives undertaken by the Government such as National Infrastructure Pipeline (NIP) and the PM Gati Shakti National Master Plan will raise productivity and accelerate economic growth and sustainable development. The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. All seven engines will pull forward the economy in unison. The projects pertaining to these 7 engines in the NIP will be aligned with PM Gati Shakti framework. The major initiatives undertaken by MoRTH are described under:

1. MORTH, through its implementing agencies NHAI / NHLML and NHIDCL has kept pace with the work of implementing of 35 Multi-Modal Logistics Parks (MMLPs) Projects identified for development under Bharatmala Pariyojana - Phase I.

2. MoRTH developed a comprehensive Port Connectivity Masterplan to ensure adequate last-mile connectivity to all the operational/under implementation ports in the country. As part of the Masterplan, connectivity requirements of all the operational and under implementation ports were assessed and connectivity projects were identified. The 59 projects (1,249 km) will be taken up under PM Gati Shakti National Master Plan for improving last mile connectivity to ports in the country.

3. To improve the comfort and convenience of the highway users, the Ministry has planned development of state-of-the-art Way Side Amenities (WSA) at approximately every 40 kms along the National Highways.

4. Launch of Surety Bond Insurance: MoRTH launched Indias first-ever Surety Bond Insurance product from Bajaj Allianz on December 19, 2022. With this new instrument of Surety Bonds, the availability of both liquidity and capacity will be boosted, and the infrastructure sector will be strengthened.

5. To ensure seamless movement of traffic through fee plazas and increase transparency in collection of user fee using FASTag, the National Electronic Toll Collection (NETC) programme, the flagship initiative of MoRTH, has been implemented on pan-India basis. FASTag implementation has also reduced the wait time at National Highway fee plazas significantly, resulting in enhanced user experience. In order to ensure that the payment of fees at Toll Plazas is through Electronic means only and vehicles pass seamlessly through the Fee Plazas, the FASTag drive has been very well supported by the highway users as it has achieved over 95% penetration with more than three Crores users in the country.

6. Green Highways Policy 2015 was adopted to develop eco-friendly National Highways with participation by the community, farmers, NGOs, private sector, institutions, government agencies, and the Forest Department for the countrys economic growth and development.

7. MoRTH brought out changes in the Model Concession Agreement (MCA) & Request for Proposal (RFP) of the Road Construction Models such as HAM and BOT (Toll).

(i) Much needed changes have been made in the relevant clauses of the model RFP and MCA of the HAM project to allow the Lowest quoted Bid Project Cost (BPC) as the basis for awarding the HAM Project and O&M cost to be fixed as being done in EPC projects. It will now bring out the winner immediately after the opening of financial bids in a transparent manner as in EPC mode of bidding.

(ii) Changes have been made in the relevant clauses of the Model Concession Agreement of the BOT (Toll) project permitting the change of ownership from existing 2 years to 1 year after the Commercial Operation Date (COD). This move will free the equity/ funds of construction companies for taking up other projects.

8. In November 2020, the MoRTH in modified the change in ownership clause in the Hybrid Annuity Mode ("HAM") projects and permitted the bidders/ consortium members to dilute their equity after a period of six months from the commercial operations date ("COD"). Prior to the relaxation, the concessionaire/bidders/consortium members had to retain their equity for a period of two years from COD. Further, MoRTH in May 2022 approved changes in the model concession agreements of Build-Operate-Transfer projects and permitted the change of ownership from the existing two years to one year after COD/issuance of completion certificate and completion of punch list items.

Increasing investments: With the Government permitting 100% Foreign Direct Investment (FDI) in the road sector, several foreign companies has formed partnerships with Indian players to capitalise on the sectors growth.

1.6 Opportunities

The roads and highways sector has pioneered several innovative public-private partnership (PPP) models besides having a strong contractual framework compared with other sectors. These factors have led to significant investments from private players in the sector. Several incentives have also been announced by the Government to attract private sector participation and foreign direct investment, which include Government bearing the cost of project feasibility study, land for the right of way and way side amenities, shifting of utilities, environment clearances, etc.100% FDI in roads and highways is allowed under automatic route. The following few initiatives taken by the Government of India make the sector attractive for investment for the private players, namely:-

Electronic toll collection: National Electronic Toll Collection (FASTag) programme, the flagship initiative of MoRTH and NHAI has been implemented on pan India basis for ensuring seamless movement of traffic and collection of user fee as per the notified rates, using passive Radio Frequency Identification (RFID) technology since 2021 adding certainty to the toll collection figures.

Different models: Public-Private Partnership (PPP) models used in road projects are Build Operate Transfer (BOT) toll, TOT and HAM (Hybrid Annuity Model). The government of India keeps on innovating new flexible policies to create investor-friendly highway development initiatives. By permitting monetisation of highway assets under TOT mode and reviving the BOT model, the Government has provided an impetus to the highway infrastructure to be more investment-friendly and attractive for private partnerships. This will not only strengthen the road infrastructure but will have a ripple effect that will further strengthen the countrys economy, increase employment opportunities, and reduce logistics cost.

Asset Monetization: The National Highways Authority of India (NHAI) has drawn up an ambitious plan to monetise 46 operational highway stretches of total length of 2,742 kms in the Financial Year 2024-25 through TOT/ InvIT mode to beef up resources for its road building programme.

Other favourable policies: These include 100% exit policy for stressed BOT players, providing secured status for PPP projects while lending, and proposal to scrap slow-moving highway projects, among others.

1.7 Outlook

Indias infrastructure sector is rapidly growing and the key trends demonstrate positivity and optimism. The market for roads and highways in India is projected to exhibit a CAGR of 36.16% during 2016-2025, on account of growing Government initiatives to improve transportation infrastructure in the country. For the period of 2016-17 to 2021-22, the CAGR stands at 20%.

Development and maintenance of road infrastructure is a key Government priority, the sector has received strong budgetary support over the years. During the past years, the standardised processes for Public Private Partnership & public funded projects and a clear policy framework relating to bidding and tolling have also been developed. The major initiatives undertaken by the Government such as National Infrastructure Pipeline (NIP) and the PM Gati Shakti National Master Plan will raise productivity and accelerate economic growth and sustainable development.

Viksit Bharat @ 2047 is the vision of the Government of India to make India a developed nation by 2047. In line with the objective, the MoRTH is set to embark on an ambitious plan to construct 50,000 km of high-speed (access- controlled) corridors by the year 2047 The highways sector in India has been at the forefront of performance and innovation. The government is committed towards expanding the National Highway network over 2 Lakhs kilometers by 2047 emphasising the construction of the World Class Road infrastructure in time bound & target oriented way.

India has a well-developed framework for Public- Private-Partnerships (PPP) in the highway sector. The Asian Development Bank ranked India at the first spot in PPP operational maturity and also designated India as a developed market for PPPs. The Hybrid Annuity Model (HAM) has balanced risk appropriated between private and public partners and boosted PPP activity in the sector. In the recent past, the Build Operate Transfer (BOT) projects have witnessed renewed interest from private players, therefore NHAI has come out with more tenders on BOT mode in the current fiscal year. NHAI has identified 53 highway projects worth I 2.1 Trillion to be developed through BOT model.

Asset recycling, through the Toll Operate Transfer (TOT) model has also been taken up by the NHAI and other State Government agencies is garnering increased interest among the investors. Since its launch in 2018, NHAI has successfully completed 6 rounds of the Road Asset (bundle of roads) of monetisation through TOT mode and raised I 26,366 Crores. NHAI plans to monetise 33 operational highway stretches of total length of 2742 kms in the FY 2024-2025 through TOT/ InvIT mode. In the current FY 2023-24, NHAI has already awarded four TOT Bundles and monetised value of I 15,968 Crores. With this, MoRTH and NHAIs Total Asset Monetization Program has crossed I 1 Lakhs Crores (I 42,334 Crores through TOT, I 26,125 Crores through InvIT and I 42,000 Crores through Securitisation).

To improve the comfort and convenience of the highway users, the Ministry has planned development of state- of-the-art Way Side Amenities (WSA) at approximately every 40 kms along the National Highways. A total of

1,000+ sites are planned to be awarded by 2024-25 of which 198 Wayside Amenities (WSAs) have already been awarded.

A network of 35 Multimodal Logistics Parks is planned to be developed as part of Bharatmala Pariyojana, with a total investment of about I 46,000 Crores, which once operational, shall be able to handle around 700 million metric tonnes of cargo. Of this, MMLPs at 15 prioritised locations will be developed with a total investment of about I 22,000 Crores. These Multi-Modal Logistics Parks shall serve as regional cargo aggregation and distribution hubs for various industrial and agricultural nodes, consumer hubs and EXIM gateways such as seaports with multi-modal connectivity. In certain cases, the MMLPs are also being developed in tandem with the Inland Waterway Terminals under the Sagarmala Pariyojana to further reduce the cost of inland cargo movement at a much larger scale as compared to conventional road-based movement.

India currently has 87 operational and under implementation ports along its coastline. All major operational ports currently have 4 lane and above last mile road connectivity. MORTH and its implementing agencies have planned the development of 108 Port Connectivity Road (PCR) projects of length ~3,700 km to improve the last mile connectivity of all 87 operational and under implementation ports.

Working towards development of around 10,000 km of Optic Fibre Cables (OFC) infrastructure across the country by FY2024-25, National Highways Logistics Management Limited (NHLML), a fully owned SPV of NHAI, is implementing the network of Digital Highways by developing integrated utility corridors along the National Highways to develop OFC infrastructure. Around 1,367 km on Delhi - Mumbai Expressway and 512 km on Hyderabad - Bangalore Corridor have been identified for the Digital Highway Development.

Under Parvatmala Pariyojana, ropeway projects of ~60 kms length are planned for award by FY 2024. Ropeways have emerged as a convenient, safe and preferred mode of transportation to provide both, first as well as last mile connectivity to such hilly & inaccessible areas or to help de-congest urban congestion areas.

The second phase of the Government of Indias Bharatmala programme has been announced for launch. 5,000 km worth of projects are expected to be constructed under the aegis of this programme and Detailed Project Reports (DPRs) are being prepared prior to the approval of the projects so as to speed up the implementation process. In order to facilitate seamless travel between important economic centres, Bharatmala Phase-2 seeks to improve connectivity to

a number of infrastructure projects, including multi- modal logistics parks (MMLPs) and under-construction expressways. The new phase would also take up the construction of highways that decongest existing roads, ring roads around major industrial centres and bypasses. The simultaneous implementation of phase- II projects will help in operationalising the remaining projects under phase-I, which is now scheduled to be completed by 2027.

The highways sector in India has been at the forefront of performance and innovation. The government is committed towards expanding the National Highway network to 2 Lakhs kilometres by 2025 emphasising the construction of the World Class Road infrastructure in time bound & target oriented way. India has a well- developed framework for Public-Private-Partnerships (PPP) in the highway sector. The Asian Development Bank ranked India at the first spot in PPP operational maturity and also designated India as a developed market for PPPs. The Hybrid Annuity Model (HAM) has balanced risk appropriated between private and public partners and boosted PPP activity in the sector. In the recent past, the BOT projects have witnessed renewed interest from private players, therefore it is envisaged that the NHAI may come out with more tenders on BOT mode in the coming year. Asset recycling, through the TOT model has also been taken up by the NHAI and other State Government agencies.

2. COMPANY AND BUSINESS OVERVIEW

2.1 Company Overview

The Company is among Indias leading and the largest integrated infrastructure developers, specialising in roadways and highways. It enjoys robust in-house integrated project execution capabilities — Engineering, Procurement and Construction (EPC) and Operation and Maintenance (O&M) — across all its business verticals like Build Operate Transfer (BOT), Toll-Operate-Transfer (TOT) and Hybrid Annuity Model (HAM).

The Company is a pioneer in the road BOT business. It is Indias largest road BOT operator with a rich portfolio of 26 projects, including 18 BOT, 4 TOT and 4 HAM projects through the parent company and 2 InvITs. Operation and Maintenance of all projects is carried out by parent company. The Company also has the largest TOT - Mumbai-Pune Expressway - to its credit. The companys TOT portfolio aggregates to 38% of the total TOT market share of TOT projects awarded in India. Altogether, it has ~12% share in Indias North South Highway connectivity. The toll revenue that IRB group has collected across the listed company and the two InvITs is around 10% share of the total toll revenue collected across India.

Over the years, the Company has developed rich in-house expertise in both its EPC and O&M verticals. The Companys clients primarily comprise government authorities. Today, the Company is the only integrated Highways development platform in India providing a compelling business visibility for almost 3 decades through the projects under O&M in its umbrella and catering to the investors with diverse risk appetite through parent company and the two Investment Trusts (InvITs). The Infrastructure Investment Trusts (InvITs) are new avenues available in the market for Investors, which have been designed to pool money from various investors for investing in revenue generating assets. The group has three listed entities which caters to various kind of investors

1. Public InvIT - Investors seeking stable yield

2. Private InvIT - Its development platform for IRB Group for BOT and TOT Projects and has tied up with long term investors, GIC affiliates - Sovereign wealth fund of Singapore (25% partner) & Cintra (24% partner)

3. The company- Investor seeking regular divided and capital appreciation

The company acts as sponsor and project manager for both the InvITs. The Company, at this juncture of time, has reached the status of being fully integrated multi- national player with global marquee strategic investors on board and possesses rich in-house domain expertise and experience in designing, construction, operations, maintenance and tolling. With its own equipment and machinery bank, the Company has the ability to undertake world class quality construction of 500 to 600 kms at any given point of time. The investments by our global partners has opened the avenues of introducing world class technology and best industry practices in our operations while making available ready access to capital for growth. The Company, through its well devised policies in place has imbibed efficient O&M practices by deploying advanced technologies and systems with a strong focus on sustainability aspect.

On a per lane kms basis, IRBs geographic spread is 27% in Rajasthan and Madhya Pradesh, 16% in Maharashtra, 14% in Uttar Pradesh, 13% in Gujarat, 9% in Karnataka, 8% in Telangana, 4% in Haryana, 3% in Punjab, 3% in Tamil Nadu, 2% in West Bengal and 1% in Himachal Pradesh.

IRB Infrastructure Developers Ltd (IRB) is Indias first Integrated Multi-National Transport Infrastructure Developer in Roads & Highways segment. The Company has acquired ISO Certification in Quality (ISO 9001); Environment Management (ISO 14001), Occupational Health and Safety (ISO 45001) and IT Security (ISO 27001) from ISOQAR.

2.2 Business Overview

2.2.1 Construction and development (EPC)

Over the period of two and half decades IRB has successfully managed more than ~18,000 Lane Kms of highways on BOT, TOT and HAM basis.

15,444 Lane Kms are currently under Execution, O&M and Tolling. Company has successfully completed and handed over back to the nodal agency, 12 BOT Concessions in last two and half decades, the largest by any Indian private highways infrastructure developer.

Out of the 15,444 Lane Kms, 7,156 Lane Kms are operational, 928 Lane Kms are under construction and tolling at 75% and 2,483 Lane Kms are under development in Private InvIT Assets portfolio (from April 1, 2024 only 778 lane kms are under development) 2,421 Lane Kms are being operated under Public InvIT Assets on BOT and HAM basis. The Company is the project manager for both the InvITs. Balance 2,456 Lane Kms are under the parent Company on BOT, TOT and HAM basis. Out of which, 2001 Lane Kms are operational, and 455 Lane Kms are under development phase.

The Company has an integrated approach towards project execution and involves development, in-house construction, as well as O&M activities through the concession life. It owns a range of advanced equipment and deploys skilled workforce that enables it to complete projects within set time and budget. The expert talent pool also helps the organisation manage its entire tolling and maintenance functions in-house. Besides, its state-of-the-art IT infrastructure strengthens its integrated business model.

IRB Golconda Expressway Private Limited, the SPV incorporated to operate the prestigious Hyderabad Outer Ring Road TOT Project, received Appointed Date and commenced toll collection in the month of August ‘23.

Samakhiyali Tollway Private Limited achieved financial closure and commenced toll collection and construction in the month of December ‘23.

Taking forward the growth momentum, IRB Infrastructure Trust bagged two TOT projects, i.e.,. TOT-12 comprising Tolling, Operation, Maintenance and Transfer of four-lane Lalitpur-Sagar-Lakhnadon section in the states of Uttar Pradesh and Madhya Pradesh and TOT-13 comprising Gwalior-Jhansi section on NH-44 and Kota Bypass on NH-76 in Madhya Pradesh. These projects have received appointed date on April 1, 2024 upon upfront payment to the authority and commenced toll collection.

The aggregate asset base managed by the Parent Company and its two InvITs is around I 80,000 Crores.

IRB Infrastructure Trust has successfully refinanced 5 BOT project SPVs namely Kaithal Tollway Limited, IRB Westcoast Tollway Limited, Kishangarh Gulabpura Tollway Limited, AE Tollway Limited and IRB Hapur Moradabad Tollway Limited. This will significantly improve the cashflows for unitholders - given the back- ended amortisation, optimised tax treatment (owing to InvIT structure) and lower interest rate due to pooling of cashflows from completed projects at Trust level. These initiatives will result in savings in interest cost by 110 basis points and saving in amortisation of debt by 15% over a period of 5 years.

Your Company has, as always, endeavoured to ensure business stability by strengthening its liquidity position. IRB has successfully completed the issuance and allotment of US$ 540 million 7.11% Senior Secured Notes having final maturity in FY2032. Proceeds from issuance of notes were utilised towards repayment of existing indebtedness. Being the issuer, IRB was rated as Ba2 and BB+ by reputed international rating firms - Moodys and Fitch respectively. The Notes are listed on the India International Exchange (IFSC) Limited ("India INX").

IRB expects to earn a robust construction EBITDA margin from execution of these projects. IRB strengthened its order book to end FY 2024 at I 348,107 million. Of this, the construction EPC order book of I 57,331 million would be executed over the next two to three years.

2.2.2 Toll O&M

I n FY24, the aggregate toll revenue of IRB Infra and its two InvITs is I 6,177 Crores versus I 5,230 Crores in FY23; thus registering a robust growth of 18%. It needs to be appreciated that in todays scenario, Toll Revenue is one of the parameters to determine and measure the trend of economic growth of the region, as it reflects the Traffic Growth on the particular highway corridor in that region. In view of this, Companys toll revenue across all projects have witnessed and reflected the continued traffic growth, which is in line with the macro-economic indicators and demonstrates that its projects part Indias prime economic corridors. Further, In general, WPI linked toll tariffs provides a natural hedge against interest rate hikes (e.g., Tariff for Ahmedabad Vadodara & 9 assets of Private InvIT increased by 5% from April 2023).

2.2.3 Sponsor of IRB InvIT Fund

IRB launched Indias first public InvIT, IRB InvIT Fund, in May 2017 and continues to act as the sponsor and the project manager.

Initially, it transferred six assets at the time of IPO in May 2017 and seventh asset in September 2017. IRB owns 16% stake in the Trust, as on March 31, 2024. During the fiscal, Company received total distribution of I 74.1 Crores, of which I 63 Crores were received as interest and I 11.1 Crores as return on capital.

2.2.4 Sponsor of IRB Infrastructure Trust

IRB sponsored a private InvIT viz. IRB Infrastructure Trust in August 2019 and continues to act as the sponsor and the project manager.

I RB had initially transferred nine of its BOT assets into the Private InvIT in which IRB continues to hold stake of 51% while GIC affiliates hold balance 49% stake and infused more than I 4,000 Crores for initial 9 assets. We have added 2 BOT assets and 3 TOT assets to the portfolio later.

Further, the private InvIT was listed on the National Stock Exchange in line with SEBI InvIT Regulations, which mandates listing of all InvITs. With listing, it became the first Private InvIT listed on the National Stock Exchange after the regulator SEBIs guidelines on listing framework for the non-listed InvITs came into force during the fiscal. The listing made Trust, the third entity of the Company to get listed on the Stock Exchange. The idea behind listing of the Trust was to have better disclosure norms and bring more transparency and achieve highest standards of the Corporate Governance. In the last 5 years the project portfolio of the Trust has made stupendous progress and has achieved a size of almost I 51,979 Crores Enterprise Value for 15 assets as on March 31, 2024 with balance concession life of ~22 years. The valuation of trust units was determined basis third party independent valuer and further endorsed by Trusts investors as well.

3. FINANCIAL ANALYSIS

Debt from project lenders are the major source of funding for BOT Projects. These projects are funded normally in the ratio of 70:30 debt to equity. The project lenders have reposed trust in the Companys financial strength, demonstrated by healthy growth in internal accruals and net worth. Besides, they have also shown faith in the Companys project execution capabilities. This trust of the project lenders has played a primary role in helping IRB achieve the required financial closures ahead of the schedule.

The total consolidated income for FY24 stood at I 82,018 million as against I 67,033 million in FY23 registering a growth of 22%. The consolidated toll revenues for FY24 has increased to I 24,775 million from I 21,229 million in FY23 registering a growth of 17%. The consolidated construction revenues for FY24 has increased to I 57,242 million as against I 45,804 million in FY23 registering a growth of 25%.

EBITDA for FY24 increased to I 41,246 million from I 35,307 million in FY23 registering a growth of 17%.

Interest costs has increased to I 18,633 million in FY24 from I 15,146 million in FY23 increased by 23%.

Depreciation has increase to I 9,949 million in FY24 as against I 8,321 million in FY23 increased by 20%.

PBT has increased to I 12,663 million in FY24 from I 11,840 million in FY23, registering a growth by 7%.

PAT after share of loss from JV has decreased to I 6.058 million in FY24 from I 7,200 million in FY23, registering a degrowth by 16%.

Earnings per share on basic and diluted basis excluding extraordinary income decreased to I 1.00 for FY24 from I 1.19 in FY23, registering a degrowth of 16%.

Key Financial Ratios

Particulars	2023-24	2022-23
Return on Net Worth (%)	4%	5%
Return on Capital Employed (%)	10%	9%
Debtor turnover ratio	4.02	2.86
Inventory turnover ratio	1.37	1.36
Interest coverage ratio (in times)	2.61	2.79
Current ratio (in times)	1.24	1.62
Debt Equity ratio	1.06	0.99
Net Debt to Equity ratio	0.87	0.75
Operating Profit Margin (%)	45%	50%
Net profit margin (%)	8%	11%

4. KEY COMPETITIVE ADVANTAGE

IRBs competitive edge stems from the following:

• Proven track record of completing all phases of BOT projects in the highway sector within timeline

• Robust order book of I 348,107 million as on March 31, 2024

• Market leader with the largest domestic portfolios in the roads and highways sector

• Strong financial track record; healthy relationships with leading banks/financial institutions

• Integrated and efficient project execution, supported by a comprehensive equipment pool

• Professionally managed Company with a qualified and skilled employee base

• One of the few infrastructure companies to have successfully implemented SAP

• One of the leading global sovereign funds as a long- term partner for 49% stake in Pvt InvIT

5. RISKS AND CHALLENGES

The Companys ability to foresee and manage business risks is crucial to its efforts to achieve favourable results. Although management is positive about the Companys long-term outlook, it is subject to a few risks and uncertainties, as discussed below:

5.1 Competition risk

Attractive growth opportunities exist in the highway developement sector, especially with the government continued focus in the infrastructure development with the Bharatmala Pariyojana. This has increased the number of players operating in the industry competing for projects. However, the Company is confident about retaining its competitive edge, backed by its industry- leading experience in the roads and highways sector. Higher competencies including financial strength required for BOT & TOT segments create entry barriers, thereby serious players competing for these projects. As a prudent strategic initiative, IRB will continue to bid for projects based on their financial, operational and execution viability.

5.2 Availability of capital and interest rate risk

Infrastructure projects are typically capital intensive and require high levels of long-term debt financing. IRB intends to pursue a strategy of continued investments in infrastructure development projects. In the past, the Company has been able to infuse equity and arrange for debt financing on acceptable terms for the projects. However, IRB believes that its ability to continue to arrange capital requirements depends on various factors. These factors include timing and internal accruals, timing and size of the projects awarded, credit availability from banks and financial institutions, and the success of its current infrastructure development projects. Besides, there are several other factors outside its control.

The Companys strong track record has enabled it to raise funds at competitive rates thus far. In addition, the credit rating outlook has improved over the years, which has helped maintain the average cost of debt at ~ 9% per annum.

5.3 Toll Rates

Toll revenue is a function of toll rates and traffic growth.

Toll rates: The Government has linked toll rate increases to changes in the Wholesale Price Index (WPI). Toll rates of the Companys projects awarded after 2008 are decided based on a formula, which is 3% fixed plus 40% of WPI. On 4 to 6 lanning projects, toll collection starts from the appointed date with a 75% tariff and rate revision happens on completion of the asset. The Companys other projects including state highway projects have annual revision linked with WPI or periodical increase clause in their concession agreement.

5.4 Traffic

Rapid economic development increases traffic growth while low economic activity has a negative impact on traffic volume. Most of the Companys projects are part of Indias GQ corridor or are key connectors between Indias busiest highways or economic/social hubs and carries long distance freight - spread across the length of the country.

For their strategic connectivity, industrial growth and development of the Delhi-Mumbai industrial corridor, North - South corridor are expected to boost the traffic growth momentum in the coming years, partially offsetting the risk of reduction in traffic growth. Further, adding a large high growth urban corridor through Hyderabad Outer Ring Road project diversifies companys revenue stream while providing significant stability. A pickup in economic activity and the implementation of Bharatmala Pariyojana, as planned, will lead to higher traffic growth in the roads sector. With the passage of time, even road projects that have been witnessing muted traffic growth could benefit from the uptick in economic growth.

5.5 Input cost risk

Raw materials, such as bitumen, stone aggregates, cement and steel need to be supplied continuously to complete projects. There is also a risk of cost escalations or raw material shortages. The Companys extensive experience, its industry position and bulk purchases have helped it procure raw materials at competitive rates. Moreover, the Company procures stone aggregates from its leased mines, which ensures quality and lowers costs, as compared to buying aggregates from open markets. Captive sourcing also minimises supply disruptions or price escalations.

5.6 Labour risk

Timely availability of skilled and technical personnel is one of the key industry challenges. The Company maintains a healthy and motivating work environment through various initiatives. This has helped it recruit and retain skilled workforce and, in turn, complete projects in time.

5.7 Cybersecurity risk

With the increase in frequency of cyberattacks on vital digital infrastructure occurring globally, our IT function has proactively implemented substantial measures to safeguard the organisation against potential threats. Critical information is protected from unauthorised access, use, disclosure, modification, and disposal, whether intentional or unintentional. To safeguard the integrity of data and guarantee its uninterrupted and on demand availability to the users, suitable measures are in place for recovery of data. Thus, in event of any manmade or natural disaster, cyberattack, malfunctioning or failure of hardware at central location, our IT Team remain available with least amount of downtime or data loss. Additionally, we implement Vulnerability Assessment and Penetration Testing (VAPT) from third party to proactively identify and address potential cybersecurity risks, fortifying our highway construction and maintenance systems against cyber-attacks, data manipulation, and service disruptions.

5.8 Climate change risk

At IRB, we recognise the pressing challenges posed by climate change and the imperative need to transition towards a low carbon economy. Our commitment to environmental stewardship drives us to take proactive steps in reducing our carbon footprint and promoting sustainable practices across our operations. As part of our dedication to responsible business practices, we actively embrace additional regulatory changes and best practices prevailing in industry. We understand that compliance with these evolving regulations is crucial in creating a greener and more sustainable future. By adhering to these guidelines, we ensure our contributions to a collective effort in combatting climate change and safeguarding the planet for future generations. In our journey towards sustainability, we have adopted the Science-Based Targets initiative (SBTi) and embraced the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as part of adopting best industrial practices.

5.9 Health and Safety risk

The nature of business involves construction and maintenance of highways & toll plaza operations. The presence of heavy machinery, moving vehicles, and other construction activities exposes employees and workers to potential hazards, increasing the likelihood of injuries and accidents that could potentially lead to loss of human life. Implementation of robust health & safety measures, provision of adequate training, and adherence to safety protocols are ensured to safeguard the well-being of workers and to prevent potential catastrophic consequences associated with the construction and maintenance activities.

6. HUMAN RESOURCE MANAGEMENT

IRB has a large pool of experienced and skilled technical manpower, with which IRB executes world- class projects and delivers excellent quality. IRB aims to keep its employees abreast of the latest technical developments and emerging technologies related to the construction of roads and structures, toll operations, collection processes and road maintenance activities. The Company encourages its executives to attend seminars and symposiums conducted by professional bodies of global repute. Employees are also nominated to attend other professional skill-building programmes.

IRBs reputation of providing a congenial work environment that respects individuality and encourages professional growth, innovation and performance, acts as a strong pull to attract new industry talent. Human resources continue to be one of the core focus areas. Open work culture, effective communications, fair and equitable treatment and welfare of employees are significant value propositions, which help IRB to retain its highly engaged talent pool and generate trust among its employees. IRB remains the ‘employer of choice with one of the lowest attrition rates in the infrastructure sector and has won many awards like Dream Companies to work in construction Sector in India. Probably, thats the reason that even in the Covid pandemic situation, our attrition rates remained low and we were not only maintain the pace of project construction, but also able to recruit manpower for new projects of the company.

7. INTERNAL CONTROL SYSTEMS

IRB has become a SAP-complied organisation across all business functions - tolling as well as construction. IRB maintains adequate internal control systems, including internal financial control systems, which provide, among other things, reasonable assurance of recording transactions of its operations in all material aspects. This system also protects against significant misuse or loss of Company assets. IRB has a strong and independent internal audit function. The Internal Auditor reports directly to the Chairman of the Audit Committee. Periodic audits by professionally qualified, technical and financial personnel of the internal audit function ensure that the Companys internal control systems are adequate and are complied with.

8. CAUTIONARY STATEMENT

‘IRB, ‘the Company, ‘IRB Group and ‘the Group are interchangeably used and mean IRB Group or IRB Infrastructure Developers Limited as may be applicable.

This Annual Report contains certain forward-looking statements, and may contain certain projections. These forward-looking statements generally can be identified by words or phrases such as ‘aim, ‘anticipate, ‘believe, ‘expect, ‘estimate, ‘intend, ‘objective, ‘plan, ‘project, ‘will, ‘will continue, ‘will pursue, ‘seek to or other words or phrases of similar import. Similarly, statements that describe strategies, objectives, plans or goals are also forward-looking statements.

All forward-looking statements and projections are subject to risks, uncertainties and assumptions.

Actual results may differ materially from those suggested by forward-looking statements or projections due to risks or uncertainties associated without expectations with respect to, but not limited to, regulatory changes pertaining to the infrastructure sector in India and the Companys ability to respond to them, the Companys ability to successfully implement its strategy and objectives, the Companys growth and expansion plans, technological changes, the Companys exposure to market risks, general economic and political conditions in India that have an impact on the Companys business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes and changes in competition in the infrastructure sector. Certain important factors that could cause the Companys actual results to differ materially from expectations include, but are not limited to, the following:

• The business and investment strategy of the Company

• Expiry or termination of the project Special Purpose Vehicles (SPVs) respective concession Agreements

• Future earnings, cash flow and liquidity

• Potential growth opportunities

• Financing plans

• The competitive position and the effects of competition on the Companys investments

• The general transportation industry environment and traffic growth

• Regulatory changes and future government policy relating to the transportation industry in India

By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual gains or losses could materially differ from those that have been estimated. Forward-looking statements and projections reflect current views as of the date hereof and are not a guarantee of future performance or returns to investors. These statements and projections are based on certain beliefs and assumptions, which in turn are based on currently available information. Although the

Company believes the assumptions upon which these forward-looking statements and projections are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking statements and projections based on these assumptions could be incorrect. The Company and their respective affiliates/advisors do not have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. There can be no assurance that the expectations reflected in the forward-looking statements and projections will prove to be correct. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements and projections and not to regard such statements to be a guarantee or assurance of the Companys future performance or returns to investors.