National Highways Infra Trust Management Discussions

The Management Discussion and Analysis section for the year under review, as stipulated under the SEBI Listing Regulations, provides a comprehensive overview of a companys performance, operations and future prospects. It aims to provide insights into the companys strategic direction, financial health, risks, challenges and opportunities.

ABOUT NATIONAL HIGHWAYS INFRA TRUST

NHAI ("Sponsor") settled the National Highways Infra Trust ("NHIT") on 19th October 2020, as a contributory irrevocable Trust, pursuant to the Trust Deed executed under the provisions of the Indian Trusts Act, 1882. NHIT was registered with Securities and Exchange Board of India ("SEBI") on 28th October 2020, as an infrastructure investment trust ("InvIT") under Regulation 3(1) of the SEBI InvIT Regulations, 2014 having registration number IN/InvIT/20-21/0014. National Highways Infra Investment Managers Private Limited ("NHIIMPL") has been appointed as the Investment Manager to NHIT. twenty-six (26) operating toll roads with an aggregate length Currently, NHITholdsa diversified of about 2,345 km spread across the 12 states of Andhra Pradesh ("AP"), Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh ("MP"), Maharashtra, Rajasthan, Telangana, Uttar Pradesh ("UP"), Uttarakhand, and West Bengal ("WB"), with concession periods ranging between 20 to 30 years.

NHIT, through its three wholly owned Special Purpose Vehicles ("SPV")-NHIT Western Projects Private Limited (formerly National Highways Infra Projects Private Limited, "NWPPL"), NHIT Eastern Projects Private Limited ("NEPPL"), and NHIT Southern Projects Private Limited ("NSPPL") has signed 26 individual concession agreements with NHAI for toll road assets, involving a total concession fee of approximately 46,500 crore.

Appointed dates of the concession agreements for the four project bundles:

Bundle 1 (5 operating toll roads): Effective from 16th December 2021

Bundle 2 (3 operating toll roads): Effective from 29th October 2022

Bundle 3 (7 operating toll roads): Effective from 1st April 2024

Bundle 4 (11 operating toll roads): Effective from 1st April 2025

Since November 2021, NHIT has raised approximately 23,053 crore, through units issuance, to acquire concession rights for its toll road assets. The initial unit issuance, priced at 101.00, was completed in November 2021, with the units listed on both BSE and NSE on 10th November 2021.

To fund the acquisition of assets under the second, third, and fourth rounds of monetisation, additional units were listed respectively on 12th October 2022, 19th March 2024 and 26th March 2025 Further, NHIT has issued Non-Convertible Debentures ("NCDs") during the FY 2022-2023, which were listed on the BSE and NSE on 27th October 2022.

During FY 2024-2025, NHIT has issued Zero Coupon Bonds ("ZCB") with redemption in 9th/10th year, which were listed on the BSE and NSE on 30th January 2025.

About National Highways Infra Investment Managers Private Limited ("NHIIMPL")

NHIIMPL was incorporated as a private limited company on 25th July 2020, under the Companies Act, 2013.

The company was initially incorporated as a wholly owned subsidiary of NHAI. Subsequently, NHAI transferred its entire shareholding in the company to the President of India, acting through the Ministry of Road Transport and Highways ("MoRTH"), Government of India ("GoI"). Presently, NHIIMPL is a government company as defined under the Companies Act, 2013, as amended. The current paid up capital of the NHIIMPL is 11.00 crore.

About NHIT Western Projects Private Limited ("NWPPL") - SPV 1

NWPPL is a private limited company incorporated on 23rd July 2020, under the Companies Act, 2013. The current paid up capital of the NWPPL is 1,294.10 crore. NHIT (jointly with its nominee) holds 100% of the issued, subscribed, and paid-up share capital of NWPPL.

NWPPL had entered into five (5) independent concession agreements with NHAI for concessions of five Roads, including Abu Road – Palanpur in Gujarat/ Rajasthan, Abu Road – Swaroopganj in Rajasthan, Kothakota Bypass – Kurnool in Telangana, Maharashtra/ Karnataka Border – Belgaum and Chittorgarh – Kota & Chittorgarh Bypass in Rajasthan. The concession agreements provide NWPPL the right to collect tolls for a period of 30 years, from the declared appointed date of 16th December 2021, from users of each Road, with certain initial improvement works in respect of certain Roads. In lieu of concession rights, NWPPL had paid a concession fee of 7,350.40 crore to NHAI. Additionally, NHIT has paid 101.00 cr for purchasing equity of NWPPL from NHAI. During FY 2022-23, NWPPL had entered into three (3) additional independent concession agreements with

NHAI for concessions of each of the roads including Agra Bypass in UP, Shivpuri – Jhansi in UP/ MP and Borkhedi – Wadner – Kelapur in Maharashtra/ Telangana. The concession agreements provide NWPPL, the right to collect tolls for a period of 20 years, from the declared appointed date of 29th October 2022, from the users of each road, with certain overlay activities, service roads, and the construction of structures/ toll plaza.

In lieu of concession rights, NWPPL had paid a total concession fee of 2,849.67 crore to NHAI (comprising base concession fee of 2,825.00 crore and an additional concession fee of 24.67 crore).

NWPPL is also responsible for supervision of the operations and maintenance of the above mentioned roads.

The toll revenue of NWPPL was approx. 1,008.33 crore and other income was 15.73 crore for the financial year ending 31st March 2025.

About NHIT Eastern Projects Private Limited ("NEPPL") - SPV 2

NEPPL is a private limited company incorporated on 19th April 2023, under the Companies Act 2013. The current paid up capital of the NEPPL is 2,406.00 crore. NHIT (jointly with its nominee) holds 100% of the issued, subscribed and paid-up share capital of NEPPL. NEPPL had entered into seven (7) independent concession agreements with NHAI for Chitradurga Bypass – Davanagere – Hubli in Karnataka, Lakhnadon – Mahagaon – Khawasa in MP, Rewa – Lakhnadon in MP, Orai – Barah in UP, Chichra – Kharagpur in WB, Kachugaon – Kaljhar and Kaljhar

Patacharkuchi in Assam. During FY 2023-24, NEPPL had paid a total concession fee of 15,699.88 to NHAI (comprising base concession fee of 15,624.90 crore and an additional concession fee of 74.98 crore) as consideration of the concession agreements. The concession agreements provide NEPPL, the right to collect tolls for a period of 20 years, from the declared appointed date of 1st April 2024, from the users of each road, with certain initial improvement works. Further, NEPPL is also responsible for supervision of the operations and maintenance of the above-mentioned roads.

The toll revenue of NEPPL was approx. 1,355.49 crore and other income was 6.90 crore for the financial year ending 31st March 2025.

About NHIT Southern Projects Private Limited ("NSPPL") - SPV 3

NSPPL is a private limited company incorporated on 8th March 2025, under the Companies Act 2013. The current paid up capital of the NSPPL is 2,500.00 crore. NHIT (jointly with its nominee) holds 100% of the issued, subscribed and paid up share capital of NSPPL.

NSPPL had entered into eleven (11) independent concession agreements with NHAI for concessions of each of the roads, including (i) Gundugolanu-Devarapalli-Kovvuru in AP (ii) Narasannapeta Ranasthalam in AP (iii) Anandapuram Pendurthi - Anakapalle in AP (iv) Ranasthalam to Hanumanthvaka in AP (v) Chittoor to Mallavaram in AP (vi) AP Border to Nalagampalli AP Karnataka in AP (vii) Gandhidham - Mundra in Gujarat (viii) Muzaffarnagar to Haridwar in UP and Uttarakhand (ix) Bareilly Sitapur in UP (x) Raipur Simga in Chhattisgarh (xi) Simga Bilaspur in Chhattisgarh.

During FY 2024-25, NSPPL had paid a total concession fee of 17,737.94 to NHAI (comprising base concession fee of 17,640.50 crore and an additional concession fee of 97.44 crore) as consideration of the concession agreements.

The concession agreements provide NSPPL, the right to collect tolls for a period of 20 years, from the declared appointed date of 1st April 2025, from the users of each road, with certain Initial improvement works. Further, NSPPL is also responsible for supervision of the operations and maintenance of the above-mentioned roads.

About National Highways InvIT Project Managers Private Limited (NHIPMPL)

NHIPMPL ("Project Manager") was incorporated as a private limited company on 9th March 2021. The Project Manager is a wholly-owned subsidiary of NHAI. The Project Manager is mandated to assist NWPPL, NEPPL and NSPPL for the operations & maintenance as per the stipulated terms of the underlying projects concession agreements. Further, duties of Project Manager also includes liaisoning with authority and reporting service deficiencies of the underlying assets.

FINANCIAL STATEMENTS

Summary of Consolidated and Standalone Financial Statement of NHIT as of 31st March 2025

(All amounts are in crore unless otherwise stated)

	Standalone		Consolidated
Particulars	FY 24-25	FY 23-24	FY 24-25	FY 23-24
Total Income	3059.54	1,247.35	2415.58	974.63
Investment Manager Fee	21.58	18.00	21.58	18.00
Project Manager Fee	-	-	14.16	11.68
Operating Expenses	-	-	312.76	136.66
Finance Cost	987.91	251.40	1055.48	280.23
Depreciation & Amortization Expenses		-	797.20	247.71
Other Expenses	183.66	2.81	92.08	45.70
Total Expenditure	1193.15	272.21	2293.26	739.98
Profit Before Tax	1866.39	975.14	122.33	234.65
TotalComprehensiveIncomefortheYear	1854.91	968.19	325.00	294.20

Indian Economic Outlook

GDP Growth and Outlook

Resilience to External Shocks remains Critical for Near-Term Outlook

Indias real GDP grew by 9.2% in FY24 ( 176.5 lakh crore) which is the highest in the previous 12 years (excluding FY22 being 9.7% on account of end of pandemic) and is estimated to grow by 6.5% in FY25 ( 188 lakh crore), driven by double digit growth particularly in the Manufacturing sector, Construction sector and Financial, Real Estate &

Professional Services. This growth is also led by private consumption increasing by 7.6% and government spending increasing by 3.8% Y-o-Y. Real GDP growth is projected at 6.5% in FY26 as well, driven by strong rural demand, improving employment, and robust business activity.

Consumer Price Index

The CPI (general) and food inflation in March 2025 over March 2024 (4.7%, provisional) witnessed lowest Y-o-Y inflation since August 2019. The moderation was driven by decline of price inflation in Vegetables, Egg, Meat & fish, Cereals and Pulses and Milk.

The CPI is primarily factored in by RBI while preparing their bi-monthly monetary policy. At the bi-monthly meeting held in April 2025, RBI projected inflation at 4.0% for FY26 with inflation during Q1FY26 at 3.6%, Q2FY26 at 3.9% and Q3FY26 at 3.8% and Q4FY26 4.4%.

Indias Push on Road Infrastructure

Indias push on infrastructure is aimed at boosting economic growth and improving connectivity across the country. The government has increased its Capital Expenditure allocation on Infrastructure from 2.8 lakh crore in FY17 to 9.5 lakh crore in FY24 while 10.2 lakh crore is allocated in FY25 and 11.2 lakh crore in FY26 indicating a robust recovery in the investment cycle. Further, the Government of India has been actively focusing on enhancing the road infrastructure with capex of 2.6 lakh crores in FY24 up from 0.4 lakh crore in FY17, it has also further allocated 2.7 lakh crore in both FY25 and FY26 reflecting a strong commitment to improving national connectivity and fostering long-term economic growth.

National Highways Authority of India (NHAI) which is statutory body under the Ministry of Road Transport and Highways National Highway (MoRTH) has allocated a capex of 1.7 lakh crores in FY26E. The focus is on enhancing physical connectivity, with the goal of lowering logistics costs and increasing competitiveness. To achieve this, various initiative such as the Vision 2047 and Bharatmala Pariyojana are undertaken to enhance national connectivity. The ambitious Vision 2047 aims to transform India into a developed nation by its centenary of independence, emphasizing sustainable growth, inclusive development, and effective governance. Integral to this vision is the Bharatmala Pariyojana, a comprehensive highway development program launched in 2017.

Bharatmala Pariyojana

The Bharatmala Pariyojana aims primarily to optimise the efficiency of goods and passenger movement across the country. Approved in October 2017, Phase I of the Bharatmala Pariyojana focuses on addressing critical infrastructure gaps through the development of 34,800 km of National Highways. The Pariyojana adopts a "corridor-based National Highway development" approach to ensure infrastructure uniformity and a consistent road user experience. Its key components include the development of Economic Corridors, inter-corridor and feeder routes, National Corridors Efficiency Improvement, Border and International

Connectivity Roads, Coastal and Port Connectivity Roads, and Expressways.

Table 1: Types of Projects under Bharatmala Pariyojana

Sr. No. Scheme	Length (km)	Cost (Rs. crore)
1 Economic Corridors	9,000	1,20,000
2 Inter-Corridors & feeder roads	6,000	80,000
3 National Corridor Efficiency improvement	5,000	1,00,000
4 Border & International connectivity roads	2,000	25,000
5 Coastal & port connectivity roads	2,000	20,000
6 Expressways	800	40,000
Sub Total	24,800	3,85,000
7 Ongoing Projects, including NHDP*	10,000	1,50,000
Total	34,800	5,35,000

Source: Ministry of Road Transport and Highways of India, Annual Report 2023-24

As of December 2024, total aggregate length of 26,425 km with a total capital cost of 8.5 lakh crore has been approved and awarded under the scheme (including 6,758 km length of residual NHDP).

Vision 2047

Viksit Bharat @ 2047 represents the Indian governments ambitious vision to transform the country into a developed nation by the 100th anniversary of its independence in 2047. This transformative plan focuses on inclusive development, sustainable growth, and effective governance. The Ministry of Road Transport and

Highways (MoRTH) has laid out its own Vision 2047 for the National Highways sector, which serves as the foundation for the Master Plan of National Highways and related infrastructure. The goal of Vision 2047 for and strategic connectivity, such as providing access toNational Highways is to ensure equity, efficiency, high-speed corridors within 100-150 km for all citizens and reduce logistics costs as a share of GDP. Achieving these goals will require significant investment in road infrastructure.

Financing Trends in Roads and Railways

Road

With the GoI having a 100% stake in NHAI, it receives continuous support from them in the form of capital grants, allocation of cess funds, additional budgetary support, etc. The capital expenditure allocation for FY26E is at 1.7 lakh crore, including CIRF.

Apart from the government support and market borrowing, NHAI has been focusing on raising funds through monetisation of its operational assets through TOT and InvIT mode. In recent years, the operational asset monetisation model has gained traction, particularly with the introduction of the InvIT. Ministry of Road

Transport and Highways has target of 1.6 lakh crore out of which 1.1 lakh crore has been monetized as of December 2024. In March 2025, NHAI completed largest InvIT Monetization of over 18,000 crores where NHIT has successfully raised ~ 8,340 crores in unit capital from marquee domestic and international investors along with 10,040 crores in debt from domestic lenders.

NHAI Awarding

NHAI awarding saw a robust increase, rising from 2,228 km in FY19 to 5,962 km in FY24. The governments steadfast commitment to infrastructure developmenthasbeenhighlightedby significantincrease in project awards following Covid-19, particularly during FY22-FY23. This period accounted for nearly 50% of the projects awarded in the last five years ending in FY23. However, FY24 witnessed a downturn, with project awards declining by 31% compared to the previous fiscal year and way below Ministry target of 13,290 km for FY24.

Model Concession Agreement

The Model Concession Agreement (MCA) is a standardized contract framework developed by the Government of India to govern Public-Private Partnership (PPP) projects across key infrastructure sectors, such as roads, ports, airports, and logistics.

The Model Concession Agreement (MCA) for Hybrid Annuity Model (HAM) road projects has seen several updates to improve the efficiencyand attractiveness of the projects. The amendment to the Model Concession Agreement (MCA) for Capacity Augmentation on BOT (Toll) (4 to 6 Lane) aims to streamline the process and reduce litigation risks by introducing clearer guidelines and dispute resolution mechanisms. This will enhance investor confidenceand encourage more private sector participation in BOT (Toll) projects, ultimately leading to faster project implementation and improved road infrastructure. The changes also help in mitigating uncertainties related to toll revenue, making these projects more attractive to bidders.

Now on similar lines, the Ministry is under the process of changing the MCA of BOT (Toll). This will help reduce contractual dispute in BOT (Toll) project and will lead to increased investment by private sector.

Green Initiatives

The National Highways Authority of India (NHAI) has taken various initiatives such as largescale plantation drives, creation of Amrit Sarovars and innovative use of recycled construction material has helped to balance ecology while developing new corridors of growth for the nation.

Under the Government of India Green Highways (Plantation, Transplantation, Beautification and Maintenance Policy), 2015, NHAI is striving to develop green corridors along the national highways. As of August 2024, NHAI has planted around 4 crore trees along the National Highways post the Green Highways Policy. Notably, the authority has adopted the Japanese Miyawaki method of afforestation, planting 4 lakh trees across eight locations on 53 acres of land along the National Highways around the Delhi-NCR region.

NHAI has been developing wildlife corridors in various parts of the country. These wildlife corridors play a crucial role in preserving ecological balance by enabling animals to move freely between habitats. Under this, specially designed underpasses, overpasses, and elevated highways are being constructed near national parks and protected areas, ensuring safe crossings for animals. These structures reduce the man-animal conflict, contributing to safer and more ecologically friendly highways.

Additionally, NHAI has been encouraging the innovative use of new alternative materials like fly ash, steel slag, waste plastic, crumb rubber and other sustainable resources in National Highway projects. The use of such material in road construction shall make construction more economical and will promote circular economy and resource efficiency.

Future Ahead

The road infrastructure sector in India has witnessed a steady increase in capital expenditure allocations, reflectingits central role in the countrys development agenda. Programs such as Vision 2047 and Bharatmala

Pariyojana outline long-term plans for expanding national connectivity, reducing logistics costs, and improving access to transport networks. These initiatives aim to address existing infrastructure gaps through corridor-based development and targeted project categories.

Monetisation models like Toll-Operate-Transfer (TOT) and Infrastructure Investment Trusts (InvITs) have been used to diversify funding sources. Monetization efforts have progressed, with NHAI raising significant capital through both equity and debt instruments. The adoption of revised Model Concession Agreements also indicates a shift toward formalizing frameworks that may help reduce litigation and clarify risk-sharing arrangements in public-private partnership models.

Environmental aspects have been incorporated through initiatives such as plantation drives, the use of recycled materials, and the construction of wildlife corridors. These are intended to integrate ecological considerations into infrastructure planning.

While the awarding of projects declined in FY24, the overall focus on infrastructure expansion continues. The sectors progression will depend on continued investment, policy execution, and balancing financial viability with broader development goals. The current framework reflects an ongoing effort to align physical infrastructure with strategic national planning.