Powergrid Infrastructure Investment Trust Management Discussions

india-remains-among-the-fastest-growing-economies

Indias growth is projected to remain steady, owing to improved household consumption, strong public investment, impacts of tax reform, and lower interest rates. Indias GDP growth will moderate but remain healthy at 6.6% in fiscal 2027. Although the recent unrest in West Asia may result in intermittent risks such as volatile crude oil prices and disruptions in global trade routes, their impact on India is expected to be contained by macroeconomic fundamentals, policy agility, and infrastructure-led growth.

The Indian Government has set an ambitious vision, targeting a US$ 30-35 trillion developed economy by 2047. Continued government spending on infrastructure, advancing digital infrastructure and a calibrated monetary stance are expected to support industrial activity and consumption-led sectors.

Indias exports are expected to reach $1 trillion in FY 2026-27, supported bythe recent tradeagreementwith the United States and the European Union. The surge is likely to be bolstered owing to the reduction of the US tariff on Indian products from 50% to 18%.

Indias Union Budget FY 2026-27 emphasises public investment by raising the capital expenditure (capex) outlay to a record Rs.12.2 lakhs crores. This nearly 9% increase from the previous years estimate of Rs.11.2 lakhs crores is intended to sustain economic momentum and fulfil the governments"Viksit Bharat" vision fora developed India. Capital expenditure is prioritised in the budget, with allocations directed towards roads, railways, ports, airports, power transmission and urban infrastructure.

[Source:Careratings, Economic Times Crisil Report, PIB]

Indian Power Industry

India is the third-largest producer and consumer of electricity globally, with a total installed power generation capacity of 532,740 MW as on 31^st March 2026. The Indian power sector continues to play a vital role in the countrys infrastructure development, supporting economic growth, industrialisation, and improving the quality of life

Owing to structural reforms and sustained investment, the industry has transitioned from a power-deficient position to surplus capacity with improved grid reliability. Capacity additions, grid integration, and policy-led reform supported this growth over the past decade. A unified national grid, modernised transmission and distribution infrastructure, and widespread household electrification have materially improved reliability and access. The ongoing policy supports energy transitions, renewable capacity additions, and grid stability, which are likely to drive reliability and growth.

As on 31^st March 2026, Fossil fuel-based power sources accounted for 2,49,272 MW, representing 47% of the total installed capacity, while non-fossil fuel sources accounted for

2,83,468 MW, representing 53.21% of Indias total installed power capacity. This highlights the countrys accelerated transition toward cleaner energy sources. Thermal power, particularly coal-based generation, continues to remain the backbone of Indias electricity supply and grid stability. However, the energy mix is steadily shifting toward cleaner sources in line with the countrys long-term sustainability and decarbonisation goals. By 2035-2036, renewable and clean energy sources are expected to contribute around 786 GW, accounting for nearly 70% of the total installed capacity.

The Aggregate Technical and Commercial (AT&C) Losses have reduced from 21.9% in FY2021 to 15.04% in FY2025, and the Average Cost of Supply and the Average Revenue Realised (ACS-ARR) gap has reduced from Rs. 0.69/kWh in FY2021 to Rs. 0.06/kWh in FY2025 at the pan-India level. The reduction in losses would help improve the services offered by the distribution utilities.

(Source: Ministry of Power, CEA Report Power Generation Capacity Thermal Power Segment

Thermal power remains the backbone of Indias electricity system, ensuring a reliable base-load supply and grid stability. Total fossil fuel-based installed capacity stood at 2,83,468 MW, contributing 53% of total installed capacity. Coal-based power dominated the segment with 2,21,898 MW (41 % share), followed by gas at 20,122 MW (4%), lignite at 6,620 MW (1.23%), and diesel at 589 MW (0.11%).

Renewable Energy Segment

Indias renewable energy sector has witnessed rapid growth driven by strong policy support, rising investments, and increasing focus on clean energy transition. Renewable Energy Sources (RES), including hydro, accounted for 274.68 GW as on 31⁵¹ March 2026, highlighting the increasing share of sustainable energy in the countrys power mix.

Solar Power

Solar power emerged as the largest contributor within the renewable energy segment, with installed capacity reaching 1,54,236 MW, accounting for 28.71% of total installed capacity. Growth in solar energy has been supported by large-scale solar parks, rooftop installations, falling equipment costs, and strong government initiatives promoting renewable energy adoption.

Wind Power

Wind energy continued to play a significant role in Indias renewable energy growth, with installed capacity standing at 56,437 MW, contributing 10.50% of total installed capacity. The sector continues to benefit from favourable wind corridors, technological advancements, and increasing investments in hybrid renewable projects.

Hydro Power

Hydropower, including Pumped Storage Projects (PSPs), remained an important source of clean and flexible energy generation. Installed hydro capacity stood at 51,665 MW,

accounting for 9.62% of the total installed capacity, supporting grid balancing and renewable energy integration.

Other Renewable Sources

Other renewable energy sources also contributed to the countrys clean energy transition, including Biomass power at 10,869 MW (2.02%), Small Hydro at 5,171 MW (0.96%), and Waste-to-Energy at 877 MW (0.16%), supporting decentralised and sustainable power generation.

Nuclear Power

Nuclear power contributed 8,780 MW to Indias installed capacity, accounting for 1.63% of the total power mix. The segment continues to support Indias long-term energy security and low-carbon power generation objectives.

Non-Fossil Fuel Capacity

India achieved a major milestone in its energy transition journey, with total non-fossil fuel installed capacity reaching 283.46 GW, as on 31^st March 2026. The increasing share of non-fossil fuel sources reflects the countrys strong focus on renewable energy expansion and sustainable development.

This shift is being shaped by government initiatives such as the National Green Hydrogen Mission, to modernise nuclear laws through the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, strengthening energy efficiency, power distribution, and digital energy infrastructure. As a part of its energy transition, the Government has set an ambitious target of achieving over 500 GW of non-fossil capacity by 2030. Further, the Central Electricity Authority (CEA) has brought out a comprehensive transmission plan in March 2026 for the integration of over 900 GW of non-fossil fuel capacity by 2035-36 highlighting its commitment to a resilient, diversified, and sustainable power ecosystem.

Additionally, the projected thermal (coal and lignite) capacity requirement by the year 2034-35 is estimated at approximately 3,07,000 MW. To meet this requirement, the Ministry of Power has envisaged setting up an additional minimum of 97,000 MW coal and lignite-based thermal capacity. The expansion is expected to incorporate advanced supercritical and ultra-supercritical systems, ensuring operational efficiency and lower carbon emissions, supporting environmental standards.

The Union Budget 2026-2027 increases the allocation for the Revamped Distribution Sector Scheme (RDSS) to Rs.18,000 crores, higher than earlier estimates. The enhanced funding supports ongoing power sector reforms, including reduction of AT&C losses, smart metering deployment, and measures to improve the financial stability of distribution companies (DISCOMs), strengthening operational efficiency and network modernisation.

Sustained growth in renewable energy requires strong grid connectivity, linking high-resource solar and wind regions with the Inter-State Transmission System (ISTS). This connectivity is

crucial for facilitating reliable power evacuation and delivering renewable energy to high-demand regions. With renewable projects progressing faster than transmission infrastructure, advanced grid planning is essential for efficient integration into the national grid.

Indias power sector recorded total generation of 1,845.921 BU in FY2025-26, with non-fossil fuel sources contributing 538.97

POWERING AHEAD

BU or 29.2% of total generation. India achieved the milestone of 50% installed power capacity from non-fossil fuel sources in June 2025, five years ahead of its Paris Agreement target. Renewable energy capacity increased 3.59 times from 76.38 GW in 2014 to 274.68 GW in March 2026, making India the worlds third-largest renewable energy market.

How installed capacity and peak demand grew in last five years

Transmission Sector

Indias power transmission network has continued to show steady growth, crossing 5 lakhs circuit kilometres (ckm) with transmission lines of 220 kV and above, while total transformation capacity has reached 1,407 Capitalize Giga Volt Ampere (GVA). Transmission lines of 220 kV and above have increased by 2.09 lakhs circuit kilometres, up 71.6% since 2014, and transformation capacity has risen by 876 GVA. This marks an expansion from earlier milestones and reflects grid strengthening to support electricity demand and renewable energy evacuation. Inter-state transmission projects are expected to add about 40,000 ckm of transmission lines and 399 GVA of transformation capacity. In addition, intra-state transmission projects are set to contribute another 27,500 ckm of lines and 134 GVA of capacity.

(Source: PIB)

Indias Power Transmission Outlook

Under the National Electricity Plan (NEP) 2023-2032 and the latest transmission roadmap released by the Central Electricity Authority (CEA) in March 2026, India is strengthening its power infrastructure to support rising electricity demand and

large-scale renewable energy integration. The newly released "Transmission Plan for Integration of over 900 GW Non-Fossil Fuel Capacity by 2035-36" outlines a comprehensive roadmap requiring an estimated investment of Rs.7.93 lakhs crores in transmission infrastructure. Peak power demand is projected to reach around 459 GW, while total installed capacity is expected to rise to nearly 1,121 GW by 2035-36.

The plan proposes the addition of nearly 1,37,500 circuit kilometres (ckm) of transmission lines and 8,27,600 MVA of substation capacity between 2026-27 and 2035-36 to strengthen grid reliability and renewable energy evacuation. The roadmap also focuses on expanding inter-state and intra-state transmission systems. Green Energy Corridors, and renewable integration across key renewable-rich states.

(Source: PIB, CEA Report)

The Indian power sector witnessed significant progress during FY2025-26, driven by strong growth in generation, transmission, and distribution infrastructure. India successfully met a record peak power demand of 256.1 GW, while national energy shortages declined sharply to just 0.03%, compared to 4.2% in FY2013-14, reflecting improved supply reliability and grid

resilience. The sector also recorded substantial progress in rural electrification, smart grid deployment, renewable energy integration, and transmission expansion, reinforcing Indias position as one of the worlds fastest-growing power markets. Rising electricity demand, supported by economic growth, industrialisation, urbanisation, and infrastructure development, continues to drive sustained expansion across the sector.

(Source: PIBJ

Business Overview

POWERGRID Infrastructure Investment Trust (PGInvIT) is a pioneering platform in Indias energy infrastructure ecosystem. Sponsored by POWERGRID, the countrys largest power transmission company and a Maharatna Central Public Sector Enterprise (CPSE), PGInvIT was settled as the first Infrastructure InvestmentTrust (InvIT), backed by a government entity.

Settled in September 2020 under the Indian Trusts Act, 1982, and registered with the Securities and Exchange Board of India (SEBI) in January 2021, the Trust emphasises owning, operating, maintaining, and investing in power transmission assets. PGInvIT leverages the managerial and operational expertise of POWERGRID with POWERGRID UnchaharTransmission Limited (PUTL) (a wholly owned subsidiary of POWERGRID) acting as Investment Managerand POWERGRID acting as Project Manager to PGInvIT. IDBI Trusteeship Services Limited acts as its trustee.

Initial Portfolio Assets

PGInvITs initial portfolio encompasses five operational Special Purpose Vehicles (SPVs), each holding a license issued by the Central Electricity Regulatory Commission (CERC) under the Electricity Act, 2003. Developed under the tariff-based competitive bidding (TBCB), these transmission projects have maintained high operational reliability. With 35 years of assured transmission charges from their respective commercial operation dates (CODs),the portfolio provides stable cash flows. PGInvIT continues to optimise the technical and managerial expertise of POWERGRID to improve asset performance and operational efficiency.

PGInvITs portfolio includes 3,699 circuit kilometres (ckm) of transmission line, of which 3174.49 ckm operate at 765 kV and 524.1 ckm operate at 400 kV. The trust manages three substations with a combined transformation capacity of 6630 MVA, alongside 1955.66 km of optical ground wire (OPGW). Additionally, two RTM projects were assigned to SPVs under the trust, viz. 125 MVAR, 420 kV Bus Reactor under KATL and 400 kV line bay at 765/400 kV Parli (New) Substation for Renewable Energy ("RE") Interconnection under PPTL. Both the assets have been completed.

These assets are strategically distributed across five states and categorised as grid-strengthening projects, generation-linked transmission, and inter-regional power transfer systems. With an average residual asset life exceeding 26 years, the portfolio provides operational excellence and financial and is well-positioned to contribute to Indias power transmission and energy infrastructure.

OPERATIONAL HIGHLIGHTS

Reliable operation and maintenance are critical to ensuring optimal asset availability in the transmission sector. As the Project Manager, Power Grid Corporation of India Limited handles the operation and maintenance (O&M) of the Initial Portfolio Assets (IPA), including routine, preventive, and breakdown maintenance, ensuring reliable performance.

Innovative technologies such as aerial surveillance, app-based patrolling, and Al-enabled defect detection have reduced shutdowns during routine maintenance and breakdowns. As a result, this has significantly improved the reliability of transmission systems.

Since its inception, PGInvITs initial portfolio assets have maintained availability above the 98% normative standard, ensuring full recovery of transmission charges and incentives. The Project Manager has also implemented new projects under the new Regulated Tariff Mechanism (RTM) through a Special Purpose Vehicle (SPV).

During FY 2025-26, Parli Power Transmission Limited (PPTL), an SPV of PGInvIT, completed the 400 kV line bay project at the 765/400 kV Parli (New) substation for renewable energy interconnection under the regulated tariff mechanism.

Supported by POWERGRID, the IPAs remain compliant with applicable regulations while promoting a healthy workplace for employees engaged in maintenance activities. In FY 2025-26, all IPAs recorded 100% safe man-hours and maintained accident-free operations, reflecting a commitment to safety and workforce well-being.

FINANCIAL OVERVIEW

Revenue and EBITDA

Revenue generation across PGInvITs Special Purpose Vehicles (SPVs)is shaped by availability-based transmission charges under the Transmission Service Agreements (TSAs) with designated ISTS customers. This framework provides revenue visibility as earnings are linked to asset availability rather than the transmitted power. By maintaining availability levels above 98%, the SPVs are eligible for additional performance-linked incentives, improving financial stability.

Transmission charges are secured over the tenure of the respective Transmission Service Agreements (TSAs), which generally extend up to 35 years from the COD of each project. With the long-term nature of these contracts, they provide strong revenue visibility. Any extension or renewal of the agreement is subject to the provision ofthe respective TSA and regulatory oversight of CERC.

(Rs. in Million)

Net Distributable Cash Flow (NDCF) and Distribution Per Unit (DPU)

Net Distributable Cash Flow (NDCF) reflects the free cash flows generated from PGInvITs underlying assets.These cash inflows comprise interest income, dividend income, and principal repayments from the SPVs. In line with the applicable InvIT Regulations and the Trusts Distribution Policy, PGInvIT is mandated to distribute a minimum of 90% of its Distributable Income to its Unitholders, that ensure consistent payout.

During FY 2025-26, PGInvIT reported a NDCF of Rs.10,906 million, translating into an aggregate Distribution Per Unit (DPU) of Rs. 12. Total cash distributions to Unitholders amounted to 10,920 million, reflecting the Trusts commitment to delivering consistent returns.

Assets Under Management (AUM)

As of March 31, 2026, the Trusts assets were independently valued by the registered valuer, M/s INMACS Valuers Private Limited, at a total Enterprise Value of Rs.86,718 million. The valuation reflects the quality and sustainability of PGInvITs portfolio, reinforcing its commitmentto financial management.

AUM is considered the Enterprise Value Less Cash and Cash Equivalents.

Borrowings

As of March 31,2026, PGInvIT reported consolidated borrowing ofRs.10,640 million. With its prudent leverage strategy, the Trust emphasises its focus on maintaining financial obligations while pursuing growth opportunities. On the capital structure front, as of March 31,2026, PGInvITs outstanding external borrowing stood at Rs.10,640 million. That includes Rs.5,756 million loan raised from HDFC Bank in March 2022 and Rs.5,060 million loan again raised from HDFC Bank in December 2024 to fund acquisitions. The net borrowing ratio stands at 5.00%, providing significant headroom to fund future acquisitions entirely through debt.

Credit Rating

PGInvITs financial position provides a strong foundation to execute a disciplined and growth-oriented acquisition.TheTrust is well-positioned to fund strategic acquisitions, supported by established lender relationships and a consistent repayment record. To reinforce its financial credibility further, PGInvIT has maintained a AAAcredit rating from CARE, CRISIL, and ICRA, showcasing its capital management.

Strategic Outlook

Going forward, PGInvITs growth strategy remains focused on acquiring operational transmission assets in line with InvIT regulations and unitholder interests. While the limited availability of transmission assets for acquisition in the near term can pose challenges, the long-term outlook for the transmission sector remains strong supported by an estimated investment of Rs.7.93 trillion, planned for transmission infrastructure under

the Central Electricity Authority (CEA)s "Transmission Plan for Integration of over 900 GW Non-Fossil Fuel Capacity by 2035-36". CEA also published a master plan recently for the evacuation of power from a hydroelectric plant in the Brahmaputra Basin, released in October 2025. It envisages an investment in the transmission system of Rs.6.43 trillion, out of which Rs.1.91 trillion is up to 2035 and Rs.4.52 trillion beyond 2035. Further, as per the Monthly progress Report of Under Construction Transmission Projects awarded through TBCB Route, May, 2026, 86 TBCB projects are under construction. Out of the above, private TSPs are executing 43 projects with an estimated cost of Rs. 1.18 trillion.These investments will convert into revenue-generating transmission assets, creating a meaningful pipeline of acquisition opportunities for PGInvIT.

PGInvIT is actively monitoring the monetisation initiative at the state level. If state utilities choose to monetise their operational transmission networks, it will expand acquisition opportunities available to PGInvIT.

Further it is evaluating a new pathway for value accretive growth by participating in a transmission project under tariff-based competitive bidding, the TBCB mechanism. In this context, the Board of Investment Manager of PGInvIT and POWERGRID has granted in principle approval forthe formation of a consortium with POWERGRID as a lead partner and PGInvIT as the other partner to participate in up to two TBCB projects with an aggregate project cost of around Rs.500 crores. Supported by strong fundamentals and a clear strategic direction, PGInvIT remains well-positioned to navigate the evolving transmission landscape.

CAUTIONARY STATEMENT