Jaypee Infratech Ltd Management Discussions

Macro Economic Environment:

Global Economy

The year 2022 was a mixed bag for the economy. Mass vaccination drives, easing of restrictions, revival of demand and fiscal stimulus packages were some of the key positives during the year.

The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. Economic damage from the conflict will contribute to a significant slowdown in global growth in 2022. A severe double-digit drop in GDP for Ukraine and a large contraction in Russia due to sanctions and European countries decisions to scale back energy imports are more than likely, along with worldwide spillovers through commodity markets, trade, and financial channels. Even as the war reduces growth, it will add to inflation. Fuel and food prices have increased rapidly, with vulnerable populations—particularly in low-income countries— most affected.

The invasion has contributed to economic fragmentation as a significant number of countries sever commercial ties with Russia and risks derailing the post-pandemic recovery.

Although many parts of the world appear to be moving past the acute phase of the COVID-19 crisis, deaths remain high, especially among the unvaccinated. Moreover, recent lockdowns in key manufacturing and trade hubs in China will likely compound supply disruptions elsewhere.

Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than in the January World Economic Outlook Update. Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term. Crucially, this forecast assumes that the conflict remains confined to Ukraine. (IMF World Economic Outlook)

Indian Economy

Two years into the COVID-19 pandemic, the global economy continues to be plagued by uncertainty, with resurgent waves of mutant variants, supply-chain disruptions, and a return of inflation in both advanced and emerging economies. Moreover, the likely withdrawal of liquidity by major central banks over the next year may also make global capital flows more volatile. In this context, it is important to evaluate both the pace of growth revival in India as well as the strength of macro-economic stability indicators. It is also essential to look at progress in vaccination as this is not just a health response but also a buffer against economic disruptions caused by repeated waves of the pandemic.

Vaccination has played a critical role in minimizing loss of lives, boosting confidence in the economy towards resumption of activity and containing the sequential decline in output due to second wave. As India completed one year of its COVID-19 vaccination drive on 16th January, 2022, it crossed the historic milestone of administrating more than 156 crore doses of vaccine. More than 88 crore people (93 per cent of the adult population) have received

at least one dose of which around 66 crore people (70 per cent of the adult population) stands fully vaccinated. With vaccination drive further extended to the age group of 15-18 years starting 3rd January, 2022, more than 50 per cent of Indias population in this age group have received their first dose of the vaccine as on 19th January.

The Indian economy is estimated to grow by 9.2 per cent in real terms in 2021-22, after a contraction of 7.3 per cent in 2020-21. Growth in 2022-23 will be supported by widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending. The year ahead is also well poised for a pick-up in private sector investment with the financial system in a good position to provide support to the revival of the economy. Thus, Indias GDP is projected to grow in real terms by 8.0-8.5 per cent in 2022-23. This projection is based on the assumption that there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be broadly orderly, oil prices will be in the range of US$70-$75/ bbl, and global supply chain disruptions will steadily ease over the course of the year. (Economic Survey 2022)

Expressways:

India has the second-largest road network in the world, spanning a total of 5.89 million kilometres (kms). This road network transports 64.5% of all goods in the country and 90% of Indias total passenger traffic uses road network to commute. Road transportation has gradually increased over the years with improvement in connectivity between cities, towns and villages in the country.

Highway construction in India increased at 17.00% CAGR between FY16-FY21. Despite pandemic and lockdown, India has constructed 13,298 km of highways in FY21.

Under the Union Budget 2022-23, the Government of India has allocated Rs. 199,107.71 crore (US$ 26.04 billion) to the Ministry of Road Transport and Highways.

The Government of India has allocated Rs. 111 lakh crore (US$ 1.4 trillion) under the National Infrastructure Pipeline for FY 2019-25. The roads sector is likely to account for 18% capital expenditure over FY 2019-25.

The Government, through a series of initiatives, is working on policies to attract significant investor interest. A total of 200,000 km of national highways is expected to be completed by 2022. Below are some of the other major Government initiatives: (IBEF)

• NHAI plans to construct 25,000 kilometres of national highways in 2022-23 at a pace of 50 km per day.

• Indias Gati Shakti program 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 program is

a faster approval process which can be done through the Gati shakti portal and digitized the approval process completely.

• In the Union Budget 2022-23, government has planned for an increase in allocation for the central road fund by 19%, the total fund was Rs. 2,95,150 crores (US$ 38.86 million).

• Under the Union Budget 2021-22, the Government of India has allocated Rs. 108,230 crore (US$ 14.85 billion) to the Ministry of Road Transport and Highways.

Real Estate:

Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. (IBEF)

By 2040, real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.(IBEF)

Government of India along with the government of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. Below are some of the other major Government initiatives: (IBEF)

• Under Union Budget 2021-22, tax deduction up to Rs. 1.5 lakh on interest on housing loan, and tax holiday for affordable housing projects have been extended until the end of fiscal 2021-22.

• In October 2021, the RBI announced to keep benchmark interest rate unchanged at 4%, giving a major boost to the real estate sector in the country. The low home loan interest rates regime is expected to drive the housing demand and increase sales by 35-40% in the festive season in 2021.

• The Atmanirbhar Bharat 3.0 package announced by Government of India in November 2020 included income tax relief measures for real estate developers and home buyers for primary purchase/sale of residential units of value (up to Rs. 2 crore) from November 12, 2020 to June 30, 2021).

• In order to revive around 1,600 stalled housing projects across top cities in the country, the Government of India has approved the setting up of Rs. 25,000 crore Alternative Investment Fund (AIF).

• Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.

Review of Operations:

The Jaypee Infratech Limited is undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code 2016. Its affairs, business and assets are being managed by Mr. Anuj Jain, the Interim Resolution Professional.

The Yamuna Expressway was opened for public on 09.08.2012 and commenced toll collection w.e.f. 16.08.2012.

The revenue from Toll Collection for the year ended 31st March, 2022 aggregated to Rs 380.03 crores as compared to Rs 334.18 Crores for the corresponding previous year ended 31st March, 2021. The cumulative toll revenue as off 31.03.2022 aggregated to Rs. 2612 Crores with a CAGR of 16.78%.

The Average Annual Daily Traffic (AADT) for the year ended 31st March, 2022, aggregated to 30685 PCUs as compared to 26,767 PCUs for the corresponding previous year ended 31st March, 2021. The AADT has registered a CAGR of 13.41% since commencement of the commercial operations on 16th August, 2012.

The company has launched 37,510 Units till 31st March 2022 (37,510 Units till 31st March 2021) across its land parcel 1 i.e. Noida; Land parcel 3 i.e. Mirzapur & land parcel 5 i.e. Agra. Out of the said 37,510 Units, the company has sold 32,728 Units (Out of the same, Occupancy Certificate (OC) applied/received for 13,390 Units and Offer of Possession were issued for 13,215 Units) till 31st March 2022.

The Financial Performance of the Company for the year 2021-22 is already given in the Report to the Shareholders.

Jaypee Healthcare Ltd (JHCL), a wholly owned subsidiary of your company is consistently striving to meet the healthcare needs of the population in the region. Though the gross revenue for the year ended 31st March, 2022 aggregated to Rs. 293.09 Crores as compared to Rs.188.35 Crores for the corresponding previous year ended 31st March, 2021. However, due to lower capacity utilization, the net loss for the year under review, after taxation and exceptional items, stood at Rs. 92.51 Crores.

Outlook and opportunities:

Situated at Jewar in Uttar Pradesh, the upcoming airport (Noida International Airport) would cater to all international flights and ease the burden put on the Indira Gandhi International Airport in recent years.

Prime Minister Narendra Modi laid the foundation stone on November 25, 2021 of what would be the fourth largest international airport in the world.

As part of the relentless efforts made by the Government of India to integrate and streamline air, rail and road connectivity of people, goods and services, with the advent of the Noida International Airport, Uttar Pradesh would become the only state in India to have five functional airports.

Paving the way towards becoming a gateway to northern India, the airport would be able to facilitate trade as well as tourism in parts of India that it aims to connect by the time the first flight takes off from the airport by September 2024.

It will also accelerate the economic development in the region across different segments - Residential, Commercial, Institutional, Industrial & Recreational. The Uttar Pradesh government had earmarked about 5,000 hectares of land in Jewar on Yamuna Expressway for an aviation and transport hub, linking the Indian capital to a greenfield airport that is expected to serve the eastern and southeastern suburbs of the sprawling metropolis. UP Government informed 1334 hectare land has been acquired for the first phase, which will have two runways. In the second phase, 1365 hectare, 1318 hectare and 735 hectare will be acquired in phases, taking the total land for Noida International Airport to be 4752 hectare.

It is expected that the completion of the project would further fast- track the construction of the Film City, the Medical Device Park and the Uttar Pradesh Defence Industrial Corridor. Interestingly, the airport would also become the first in India to operate with net zero emissions and entirely based on digital technology. In a new age India, the airport would give a fresh impetus to the development of a wide region.

Experts say that the upcoming airport will not just boost infrastructure in areas surrounding the airport but also give an impetus to the property market in Noida, Greater Noida, and Yamuna Expressway.

Threats

The completion of the ongoing real estate projects continues to pose major challenge more particularly in view of the ongoing Corporate Insolvency Resolution Process (CIRP). It is expected that the projects will be completed according to the timelines of new Resolution Plan.

Besides, the operation and maintenance of the Yamuna Expressway is historically faced with inherent threats from the farmers and inhabitants of the areas through which the expressway passes.

Risk & Concerns

Besides the economic, regulatory, taxation and environmental risks and also the investment outlook towards Indian real estate sector, your company is currently exposed to liquidity risk. The banks are reluctant to provide credit to this industry due to rising NPAs and lower profit in property business.

Internal Control System and their adequacy.

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss due to unauthorized use or disposition, and that the transactions are properly authorized, recorded and reported.

Internal controls are supplemented by an extensive programme of internal audits, review by management and documented policies, guidelines and procedures. These controls are designed to ensure that financial information and other reports, are for maintaining regular accountability of the companys assets.

Corporate Insolvency Resolution Process (CIRP)

Jaypee Infratech Limited (JIL) is undergoing Corporate Insolvency Resolution Process ("CIRP") vide order dated 09.08.2017 and

14.08.2018 passed by the Honble National Company Law Tribunal ("NCLT") Allahabad read with order dated 09.08.2018 passed by the Honble Supreme Court of India in Writ Petition (Civil) No. 744/2017 and order dated 06.11.2019 passed by the Honble Supreme Court of India in the matter (Civil Appeal bearing Diary No 27229 of 2019 and Civil Appeal No 6486 of 2019).

The Honble NCLT, Principal Bench (Delhi) vide its order dated 03.03.2020 approved the Resolution Plan of NBCC (India) Ltd (NBCC) with certain modifications. The successful Resolution Applicant (NBCC) preferred to file an appeal before the Honble National Company Law Appellate Tribunal ("NCLAT") against the Honble NCLT order dated 03.03.2020 against certain modifications made to its Resolution Plan. Honble NCLAT heard the appeal by (NBCC) on 22.04.2020 and passed interim directions that the approved ‘Resolution Plan may be implemented subject to outcome of this Appeal and also constituting an Interim Monitoring Committee ("IMC"). Accordingly, the IRP constituted the IMC comprising of NBCC India Limited, three lenders and IRP Meanwhile Honble Supreme Court in the Civil Appeal Diary No(s). 14741/2020 vide its order dated 06.08.2020 has ordered transfer of all cases pending with NCLAT with itself i.e. Supreme Court for avoidance of any further delay in the implementation of the scheme. Meanwhile Court directed the Interim Resolution Professional to continue to manage the affairs of the subject company.

The arguments in the matter concluded on 8th October, 2020 and Honble Supreme Court of India vide its order dated 24th March, 2021 directed to complete CIRP within 45 days from the date of the order while inviting fresh/modified resolution plans from Suraksha and NBCC only. Pursuant to the directions of Honble Supreme Court, the Interim Resolution Professional invited fresh/modified Resolution Plan from NBCC and Suraksha Realty Limited, which were put to vote by the Committee of Creditors (CoC). The final Resolution Plan of Suraksha Realty Limited along with Lakshdeep Investments and Finance Private Limited ("Suraksha") was passed with 98.66% votes. The Interim Resolution Professional has filed the resolution plan of Suraksha as approved by Committee of Creditors with the Adjudicating Authority i.e. Honble National Company Law Tribunal, Principal Bench, New Delhi on 07.07.2021 and the same is pending adjudication before Adjudicating Authority.

The Honble Supreme Court has also allowed the time extension application of CoC to complete the CIRP

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore:

S. No.	Description	F. Y 2021-22	F. Y 2020-21
1	Debtors Turnover	*3.09	*2.83
2	Inventory Turnover	*0.04	*0.02
3	Interest Coverage Ratio	0.04	(0.09)
4	Current Ratio	0.58	0.66
5	Debt Equity Ratio	(3.32)	(4.96)
6	Operating Profit Margin	0.04	(0.37)
7	Net Profit Margin	(2.95)	(3.68)

*The Yamuna Expressway Project is an integrated project which inter-alia includes construction, operation and maintenance of Yamuna Expressway and right for land development of 25 million sq. mtrs. along the Expressway. Keeping this in view, the said ratios do not truly reflect the operational performance of the company.

The change in ratios is primarily due to interest charged by the lenders during CIRP and the resultant loss for the year under reference.

Details of change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

S. No.	Description	F. Y 2021-22	F. Y 2020-21
1	Return on net worth	(0.42)	(0.70)

The above change in net-worth is primarily due to interest charged by the lenders during CIRP and the resultant loss for the year under reference.

Material Development in Human Resources/Industrial Relations, including number of people employed.

The company has a pool of motivated professionals and skilled workforce and adopts effective techniques in evaluating the potential and training needs of the employees at all levels. As at 31st March 2022 the company had a total workforce of approximately 150 persons, including managers, staff and regular workers. Industrial relation in the organization continued to be cordial and progressive.

Forward Looking/ Cautionary Statement

Certain statements in the Management Discussion & Analysis Report may be forward looking statement within the meaning of applicable securities laws and regulations. These statement being based on certain assumptions and expectations of future event, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting domestic demand supply conditions, finished goods prices, changes in Government Regulations and Tax regime, etc. The Company assumes no responsibility to publically amend, modify or revise any forward looking statement on the basis of subsequent developments, information or events.