Nxt-Infra Trust Management Discussions

Indian Economic Overview

Indias economy is the worlds fastest-growing major economy, projected to grow at 6.5% in the fiscal year 2024-25. Further India became the fourth-largest global economy in 2025. This momentum comes despite global headwinds and is anchored in strong domestic demand, increased capital expenditure, and the continued strength of the services sector.

Contributing 55.3% to the Gross Value Added (GVA), services is witnessing notable double-digit growth in exports, particularly in information and computer- related services.

On the industrial front, electricity and construction are gaining ground, adding to the sectors growth. At the same time, the real estate market is experiencing renewed momentum, with heightened housing demand in urban areas. Furthermore, the digital economy is on track to surpass USD 1 trillion by 2025, further accelerating economic transformation.

Inflation is expected to remain stable, underpinned by prudent fiscal and monetary measures. This stability supports a conducive environment for sustained infrastructure development.

Indias long-term vision of Viksit Bharat by 2047 hinges on maintaining an 8% annual growth rate, with infrastructure investments playing a central role. Strategic initiatives such as the Production- Linked Incentive (PLI) scheme have I significantly boosted investment in key infrastructure-linked ; manufacturing sectors. Parallelly, comprehensive policy reforms, including Ease of Doing Business 2.0, have increased the ease of project execution.

The simplification of over 39,000 ; compliance and the decriminalisation of more than 3,400 legal provisions have helped streamline approvals and accelerate infrastructure rollouts. These efforts, combined with systemic deregulation, tax rationalisation, labour law reforms, and digital governance, are paving the way for sustained infrastructure- led growth, enhanced productivity, and increased private sector participation.

(Source: https://www.india-brieflng.com/ news/economic-survey-of-india-2024-25-key-highlights-36004.html/)

Indian Infrastructure Sector Overview

Indias infrastructure sector is undergoing a strategic transformation in 2025, emerging as a key driver of the countrys long-term development agenda under Viksit Bharat @ 2047. The Union Budget 2025-26 allocated INR 11.21 trillion to infrastructure, accelerating growth across highways, railways, urban mobility, ports, renewable energy, and digital connectivity. This investment builds a solid foundation for development that is both sustainable and inclusive.

Rapid urbanisation, rising freight demand and the need for integrated transport and logistics solutions are driving large-scale investments in future-ready infrastructure. Projects under the National Infrastructure Pipeline (NIP), enhanced private sector participation, and reforms like Ease of Doing Business 2.0 and the PLI scheme are creating an environment ripe for long-term capital deployment. Expansion of metro networks, stronger highway infrastructure, regional air connectivity through UDAN, and digital integration across sectors are making this trend evident.

The governments policy clarity, coupled with robust demand-side fundamentals, position India to compete globally. As a growth multiplier, infrastructure not only supports industrial and economic expansion but also enhances quality of life. With focussed execution, supportive reforms, and strategic investments, India is building the physical and digital backbone that will power its next phase of transformation.

(Source: PIB, Morth Report 2024-25, Union Budget 2025-26 from National Portal of India, February 2025)

Indian Road and Highway Overview

A well-developed road infrastructure forms a crucial pillar of a nations economic growth and connectivity. India possesses one of the worlds largest road networks, second only to the US. This extensive system carries 60% of the countrys freight and nearly 87% of passenger traffic. The Government of India continues to prioritise this sectors development and modernisation, evident from significant construction and capital expenditure trends seen in recent years.

In 2024-25, national highways remained a top priority, reflecting the governments pledge to build world-class infrastructure. Total highway construction reached 5,852 kilometres till December 2024, slightly below the 6,215 kilometres completed till December 2024.

The dip primarily resulted from prolonged election processes and the implementation of the model code of conduct, which temporarily slowed approvals. Nonetheless, the sector has set an ambitious overall road construction target of 10,000 km for 2025-26, underscoring the governments continued focus on infrastructure growth.

The year also saw a significant milestone in capital investment. The National Highways Authority of India (NHAI) recorded its highest-ever expenditure at INR 2.5 trillion, an impressive 21% increase over the INR 2.07 trillion spent in 2023-24.

In parallel, the government is increasingly focussing on the upgradation and enhancement of existing roadways. Nearly 30% of the construction target, about 3,000 km, was dedicated to strengthening current infrastructure, ensuring improved safety, durability, and connectivity. These efforts highlight the governments strategic vision of creating a modern, efficient, and future-ready highway network that will power Indias economic progress for years to come.

(Source: https://www.pib. gov.in/PressReleasePage. aspx?PRID=2117781#:~:text=In%20addition%2C%20the%20Capital%20Expenditure,growth%20of%20the%20Indian%20economy.)

Growth Drivers of Road Sector Robust Demand Dynamics

Indias road sector remains the backbone of national mobility, handling nearly 60% of freight and 87% of passenger traffic. This dominance has steadily risen from a modest 13.8% share in 1951, reflecting the growing reliance on road transport. With over 343 million registered vehicles as of 2023 and rising sales across passenger, two-wheeler, and three-wheeler segments, the pressure on existing infrastructure continues to mount. Rapid urbanisation, along with schemes like PM Gram Sadak Yojana, is fuelling demand for all-weather roads, bridging rural-urban gaps. Simultaneously, the booming e-commerce and logistics sectors are increasing the need for faster, more reliable highway networks.

Rising Investment Momentum

The governments strong commitment to infrastructure is evident in the INR 2.78 trillion allocation to the Ministry of Road Transport and Highways in the Union Budget 2024-25, a 2.7% year-on-year increase. Roads form a cornerstone of the National Infrastructure Pipeline (NIP), which aims to mobilise INR 111 trillion by FY 2024-25. Under the National Monetisation Pipeline, MoRTH has raised 1.1 trillion so far, leveraging models like Toll-Operate-Transfer (TOT). The Hybrid Annuity Model (HAM) continues to attract private developers by balancing risk and returns. Multilateral institutions like the World Bank and Asian Development Bank also remain pivotal partners in funding green and strategic highway projects.

Strong Policy and Regulatory Support

The policy environment for road infrastructure is robust and forward-looking. 100% FDI is permitted under the automatic route, with streamlined norms for project bidding and tolling. Flagship initiatives like Bharatmala Pariyojana (Phase-1) have already delivered over 20,378 km of highway construction, against the approved 26,425 km. Platforms like PM Gati Shakti are transforming infrastructure execution by fostering inter-ministerial coordination and reducing project delays. States are increasingly engaging in public-private partnerships (PPPs) to boost regional connectivity, particularly along key economic corridors. Additionally, the National Bank for Financing Infrastructure and Development (NaBFID) is emerging as a crucial enabler, offering long-term financing solutions that enhance project viability and accelerate development.

Government Initiatives

Record Budget Allocation

In a continued push to boost Indias infrastructure, the Government has aUocated a record INR 2.87 trillion to the Ministry of Road Transport and Highways (MoRTH) for 2025-26. This marks a 2.4% increase over the previous year. Of this, INR 1.70 trillion, approximately 59% of the total outlay, has been earmarked for the NHAI. The funding aims to fast-track highway development, improve logistics efficiency, and support the execution of strategic national road projects.

Bharatmala

Pariyojana

Under Phase-I of the Bharatmala Pariyojana, the Government continues to make remarkable progress in expanding the national highway network, as reflected in the following milestones:

26,425 km of road projects have been awarded as of March 2025.

20,378 km of highways have been constructed as of March 2025, reflecting a significant rise from 17,411 km in the previous year.

This progress highlights the programmes pivotal role in enhancing national connectivity, decongesting key corridors, and boosting logistics efficiency across the country.

Highway

Construction

Targets

After the construction of 12,349 km of highways in 2023-24, the Government has recalibrated its strategy for 2025-26. The new target stands at 10,000 km of national highways. While this marks the lowest target since 2018-19, the focus has shifted towards quality over quantity, prioritising high-capacity, access-controlled corridors over total length.

Of the targeted 10,000 km, approximately 5,800 km will comprise high-speed corridors, including multi-lane expressways built to increase safety, reduce travel time, and support seamless freight movement. This refined approach reflects the Governments commitment to building a road infrastructure network that is more efficient, durable, and future-ready.

Asset

Monetisation through InvITs

During 2024-25, NHAI has raised 43,000 crores through asset monetization. For 2025-26 NHAI plans to monetize road of length 1,472 km having annual revenue of 1,863 crores through Infrastructure Investment Trusts (InvITs) and the remaining through the Toll-Operate-Transfer (ToT) model.

The National Electronic Toll Collection (NETC) FASTag has become a foundation of Indias digital payment infrastructure. By linking a FASTag to a bank account, drivers can pay tolls on national highways seamlessly, without stopping at toll plazas, saving time and fuel.

^ As on December 31, 2024, collectively banks have issued over 10.30 crore FASTags; the average daily collection through ETC is around Rs. 192 crore with penetration of about 98.5% in total fee collection. This growth in digital transactions, driven by technologies like UPI, IMPS, and NETC FASTag, underscores Indias commitment to a digital-first economy, making financial transactions more efficient and secure for users nationwide.

(Source: https://nhai.gov.in/nhai/sites/default/files/mix_file/Asset-Monetization_Strategy_Document.pdf, chrome-extension:// efaidnbmnnnibpcajpcglclefindmkaj/https://sansad.in/getFile/loksabhaquestions/annex/184/AU2385_aHlSRV.pdf?source=pqals&utm, https:// prsindia.org/budgets/parliament/demand-for-grants-2025-26-analysis-road-transport-and-highways?)

https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=154624&ModuleId=3

https://nhai.gov.in/nhai/sites/default/files/mix_file/Office_order_for_Tentative_List_of_Road_assets_for_monetisation.pdf

https://morth.nic.in/sites/default/files/Annual-Report-English-with-Cover.pdf

Outlook

Indias road infrastructure outlook appears exceptionally promising, driven by robust investments and transformative development initiatives that are set to redefine the nations transportation ecosystem. Flagship projects like Bharatmala Pariyojana, alongside increased budgetary allocations to the MoRTH and the NHAI, underscore a determined push towards infrastructure modernisation.

The strategic emphasis on constructing economic corridors, inter-corridors, and feeder routes will not only enhance connectivity across regions but also facilitate smoother freight movement, thereby reducing logistics costs and boosting economic efficiency. This holistic approach positions Indias road infrastructure for sustainable growth and seamless integration into the global supply chain.

Trust Overview

Nxt-Infra Trust (also referred to as Nxt-Infra or The Trust) was incorporated on October 26, 2023, under the Indian Trusts Act, 1882, and operates as a format investment vehicle through its trust deed. It secured its registration as InvIT from the Securities and Exchange Board of India (SEBI) on November 8, 2023.

The Trust is sponsored by Actis Highway Infra Limited. Nxt-Infra is managed by Walter Infra Manager Private Limited, an affiliate of the Sponsor. It acts as the Investment

Manager responsible for overseeing the Trusts strategic direction and financial performance and handles the execution and management of the underlying infrastructure assets. Walter Infra Project Manager Private Limited, an affiliate of the Sponsor, is acting as the Project Manager of the Trust responsible for undertaking the activities of operations and management of the InvIT assets, including planning for the appropriate maintenance. The Trustee, Catalyst Trusteeship Limited, ensures compliance, governance, and protects the interests of all stakeholders.

With its focus on road infrastructure investments, Nxt-Infra aims to play a pivotal role in enhancing Indias connectivity and logistics efficiency. It also seeks to offer risk-adjusted stable income streams to investors while supporting the countrys infrastructure development goals.

Risk Management

At Nxt-Infra, prudent risk management shapes every financial choice and strengthens operations. The Trust actively identifies, evaluates, and mitigates risks across all areas to protect assets, preserve long-term value, and maintain uninterrupted operations.

Credit Risk

The Trusts exposure to credit risk primarily arises from its accounts receivable, and cash and cash equivalents (CCEs). To manage this, Nxt-Infra continuously monitors the creditworthiness of counterparties and adopts stringent internal controls and policies. This ongoing oversight helps limit exposure to potential delays and safeguards capital.

Liquidity Risk

Liquidity risk involves the potential difficulty in meeting financial obligations as they become due. It mainly stems from borrowings, trade payables, and other liabilities. The Trust counters this by maintaining robust cash flow forecasting mechanisms and ensuring the availability of adequate liquid assets. The Trusts objective is to ensure sufficient liquidity to meet all operational and financial obligations without incurring significant losses or reputational risk.

Market Risk

Market risk encompasses risks related to interest rates, prices, and foreign currencies, each carefully managed through targeted strategies:

Interest Rate Risk

On the liabilities side, borrowings at variable interest rates expose Nxt-Infra to rate fluctuations. The Trusts policy aims to minimise exposure to such volatility, particularly in long-term financing About one-third of the debt is repo-linked, and the balance is benchmark-linked, thereby providing a hedge against interest rate fluctuations. On the asset side, the Trusts interest on annuities are linked to bank rate and the toll rates are inflation- adjusted which provides a natural hedge against cost inflation.

Price Risk

Nxt-Infra relies heavily on materials such as cement, steel, and bitumen for operation and maintenance. Price volatility in these commodities poses a significant risk. To counter this, the Trust employs strong supplier negotiations and maintains a wider supplier network.

Foreign Currency Risk

Exposure to foreign currency fluctuations remains negligible. Consequently, exchange rate movements have little to no impact on the Trusts operations or financial statements.

Internal Control Systems and their Adequacy

Nxt-Infra has implemented a robust internal control system to ensure that all future-related party transactions comply with InvIT regulations and applicable accounting standards. Furthermore, the Investment Manager is responsible for ensuring adherence to any additional guidelines issued by SEBI, as well as other relevant regulatory, statutory, or governmental authorities.

Cautionary Statement

This annual report contains certain forward-looking statements, which may include projections about the future. These statements are generally identifiable by terms such as aim, anticipate, believe, expect, estimate, intend, objective, plan, project, will, will continue, will pursue, seek to, or similar expressions. Statements outlining strategies, objectives, plans, or goals are also considered forward-looking.

It is important to note that all forward-looking statements are subject to various risks, uncertainties, and assumptions. As a result, actual outcomes may differ materially from those anticipated in these statements due to several factors. These factors include, but are not limited to, regulatory changes These factors include, but are not limited to, regulatory changes impacting the infrastructure sector in India and the Trusts ability to adapt; the successful execution of the Trusts strategy, growth, and expansion plans; technological advancements; market risks; and general economic and political conditions in India. Other risks may include changes in monetary and fiscal policies, inflation, deflation, equity prices, performance of global financial markets, modifications in domestic laws, taxes, regulations, and increased competition within the infrastructure sector.