Shrem InvIT Management Discussions

Global Economic Overview

The global economy demonstrated commendable endurance in CY 2025, recording a GDP growth of 3.3%. Yet, the pace is likely to soften. The IMF forecasts a slowdown to 2.8% in CY 2026, falling short of the pre-pandemic average of 3.7% seen between 2000 and 2019. This moderation reflects persistent inflationary pressures, continued monetary tightening by central banks, and heightened geopolitical tensions that have contributed to a more fragmented and protectionist trade environment.

Trade disruptions remain a major concern. Renewed tariff measures, particularly from the United States, have escalated tensions. Retaliatory actions have deepened the divide, further weakening trade prospects. Global trade volume is expected to grow by just 1.7% in CY 2025, trailing overall output growth.

Meanwhile, companies are adjusting their supply chain strategies through diversification, nearshoring, and friend-shoring.

These shifts promise greater strength over time but come with higher shortterm costs.

Growth across advanced economies is expected to stay modest yet stable at 1.4% in 2025. In contrast, emerging markets and developing economies (EMDEs) are anticipated to grow at a stronger pace of 3.7%, though regional differences remain stark. Financial markets are navigating several vulnerabilities, especially in EMDEs. These include exchange rate volatility, rising interest rate differentials, capital outflows, and elevated levels of sovereign and corporate debt.

Outlook

The current environment also presents opportunities for strengthening resilience through targeted reforms. Policymakers are encouraged to restore trade stability, advance debt resolution mechanisms, ensure clarity in monetary policy, and pursue structural reforms to enhance productivity, inclusivity, and international cooperation.

(Source: World Economic Outlook, by IMF, April 2025, Yale Budget Lab - US Tariffs 2025)

Indian Economy Overview

India sustained strong macroeconomic resilience through FY 2025, growth come despite a complex external environment shaped by uneven global recovery, geopolitical tensions, and tighter financial conditions.

As per IMF, the countrys GDP growth is projected at a robust 6.2% for FY 2025, with a slight increase in momentum projected for FY 2026, at 6.3%. In CY 2025, India also surpassed Japan to become the worlds fourth- largest economy. This performance rests on robust domestic demand, continued infrastructure investments, and disciplined fiscal management. Key drivers include steady private consumption, healthy rural demand, buoyed by a strong Rabi harvest, and stable urban consumption, supported by employment gains in the services sector.

Manufacturing growth is also gaining steam, supported by Production- Linked Incentive (PLI) schemes and a notable increase in new export orders, reaffirming Indias appeal as a global manufacturing base amid shifting trade patterns. In addition, accelerating digital transformation continues to enhance productivity and economic expansion.

Inflation dynamics have shown promising signs of moderation. Headline Consumer Price Index inflation dropped to a seven-month low of 3.16% in April 20252. This fall stems from softer food prices and a decline in global crude oil rates. Core inflation, which excludes food and fuel, remains somewhat high at 4.1%, indicating persistent pressures in services and discretionary spending categories. Food inflation also continues to pose challenges for policymakers, necessitating a cautious approach from the Reserve Bank of India (RBI).

In response, the RBI cut the repo rate by 25 basis points to 6.25% in February 2025, its first reduction in nearly five years. Further cut to 6% and 5.5% followed in April 2025 and June 2025 respectively3.

These deliberate moves aim to foster growth while guarding against inflation risks. Given the circumstances, the RBI remains prepared to ease further if inflation continues to ease.

Indias manufacturing sector posted its strongest growth in ten months in April 2025, with the Purchasing Managers Index (PMI) rising to 58.2%4. This surge was partly driven by higher export demand. Exports edged up by 0.1% to USD 395.6 billion in FY 2025, led by robust gains in electronics, engineering goods, and pharmaceuticals.

The governments continued emphasis on capital expenditure and targeted welfare spending has offered a reliable counter-cyclical support to the economy. Infrastructure development remains a key focus, with the Union Budget for FY 2026 allocating Rs. 11.21 Lakh Crores towards new public-private partnership pipelines, asset monetisation initiatives, and investments in regional connectivity, maritime infrastructure, and clean energy 5.

Outlook

Despite these positive developments, India faces ongoing structural challenges such as maintaining manufacturing momentum, accelerating private sector investment, and expanding employment opportunities for youth and semiskilled workers. External vulnerabilities have also intensified, with risks stemming from foreign portfolio outflows, currency pressures, and a fragile global trade environment, exacerbated by geopolitical tensions and reciprocal tariffs.

Even so, Indias long-term fundamentals remain strong, supported by a large and youthful workforce, rapid urbanisation, and increasing digital penetration. The governments Viksit Bharat 2047 agenda outlines a transformative aim centred on human capital development, infrastructure expansion, and technological innovation to drive inclusive and sustainable growth. With prudent macroeconomic management and strategic reforms, India is well-positioned to harness these strengths and achieve lasting economic progress in the years ahead.

Infrastructure Momentum in India

Infrastructure development in 2025 stands at a defining juncture, shaped by substantial investments and far- reaching policy reforms. Recognised as a core enabler of the Viksit Bharat@2047 vision, infrastructure plays a foundational role in the countrys developmental trajectory. A capital expenditure outlay of Rs. 11.21 Lakh Crores underscores the governments intent to drive inclusive growth at scale. From highways and railways to airports, ports, urban systems, renewables, and digital networks, every sector is scaling at an unmatched pace, establishing Indias rise as a formidable force in the global economy.

Enhancing logistics, urban transport, and energy security remains essential to this transformation. At the heart of this effort lies the National Infrastructure Pipeline (NIP), which targets an investment of Rs. 111 trillion by 20256. Its scale and scope have attracted substantial private capital into infrastructure financing. As a key pillar of industrial development, infrastructure expansion will remain a powerful lever for economic expansion, anchoring Indias rise on the global stage.

Importance of Road Infrastructure

Road Infrastructure remains central to the nations development agenda, acting as a catalyst for economic expansion, job creation, and regional integration. The Union Budget for FY 2026 reinforces this focus, with a record Rs. 2.87 Lakh Crores dedicated to road development. The allocation supports a sharper push towards highway expansion, expressway construction, and the integration of digital transport systems to enhance efficiency and connectivity.

Expansion of National Highways in India1

Indias National Highway system has grown substantially, unlocking fresh prospects in logistics, transportation, and industrial development. During the last nine years, the Ministry of Road Transport and Highways (MoRTH) and its agencies have prioritised increasing highway capacity to accommodate the surge in freight and passenger traffic. This growth has strengthened industries that depend on smooth connectivity by cutting transit times, boosting supply chain effectiveness, and widening access to markets.

Robust Asset Monetisation by NHAI

During FY 2025, the National Highways Authority of India (NHAI) demonstrated strong progress in its asset monetisation efforts through three key modes, Toll Operate Transfer (TOT), Infrastructure Investment Trust (InvIT), and Toll Securitisation.

28,724 Crores

Total asset monetisation achieved in FY 202514

17,738 Crores

Highest Single Round InvIT i receipt15

Fuelling Rural Prosperity through Better Connectivity

India has emerged as one of the worlds fastest highway builders, laying 34 kilometres of roads each day. The Pradhan Mantri Gram Sadak Yojana (PMGSY) has played a key role in improving rural links, opening up access to markets, healthcare, and education in remote regions. As the road network extends further, it fuels regional growth, boosts trade, and creates livelihood opportunities across the country.

34 Kms/day-

Indias daily road construction rate, among the fastest globally

Tackling Urban Traffic with Smarter Infrastructure

Indias urban population reached 36.36% in 2023, up from 31.1% in 2011, and is expected to hit 40% by 203017. This sharp rise demands stronger infrastructure and efficient transport to address congestion and pollution. Vehicle ownership, expanding at a 10% CAGR, has increased highway traffic and toll income. Projects like the Delhi-Mumbai and

Bengaluru-Chennai expressways play a vital role in easing movement, cutting congestion, and guiding urban expansion towards a more sustainable, connected future.

The National Electronic Toll Collection (NETC) programme,through FASTag and Digital Tolling, has revolutionised highway travel in India by enabling cashless, seamless toll payments. This initiative has greatly improved toll efficiency, reduced congestion, lowered fuel consumption, and enhanced revenue compliance. Further the government is also planing for GPS based tolling system using GNSS technology to enable seamless,barrier-free tolling.

Flagship Government Programmes Enabling Seamless Mobility

Bharatmala Pariyojana: Linking India with Purpose

Bharatmala Pariyojana stands as the Ministry of Road Transport and Highways premier initiative to upgrade Indias highway infrastructure. Its core objective is to strengthen connectivity, accelerate economic growth, and facilitate smoother movement of goods and passengers nationwide.

Mode-Wise Status of Works Awarded under Bharatmala Pariyojana as of FY 202519

Mode of Implementation	Length (Km)	Awarded Total Capital Cost ( Crore)	% Length
EPC	14,748	4,06,024	55.81%
HAM	11,269	4,36,522	42.64%
BOT Toll	408	11,111	1.55%
Grand Total	26,425	8,53,656	100%

Sagarmala

The Sagarmala programme is driving port-led development by enhancing coastal road infrastructure, improving logistics efficiency, and strengthening multimodal connectivity. With a focus on linking ports to industrial hubs through upgraded road, rail, and last-mile transport, the initiative covers 839 projects worth Rs. 5.5 Lakh Crores.

The Rising Momentum of Road InvITs

Infrastructure development in India has found a vital financing tool in InvITs. The InvITs allow investors to access revenue-generating infrastructure assets, offering them consistent income while enabling capital to be reinvested into new projects. Active support from the Indian government and regulators, such as SEBI, has encouraged the growth of InvITs. Rapid growth of InvITs have helped to ease financing bottlenecks and boost private sector involvement in infrastructure expansion.

With Indias extensive and growing road network, Road InvITs have emerged as an effective solution to unlock capital, enhance asset management, and speed up infrastructure growth. Assets under Management (AUM) in road InvITs are projected to increase by 68%, rising from Rs. 1.9 Lakh Crores in September 2024 to about Rs. 3.2 Lakh Crores by March 2026 21. This growth will be driven by existing InvITs adding new assets, the introduction of new trusts, and the monetisation of road infrastructure by the National Highways Authority of India (NHAI) and private players.

Growth in HAM monetisation23

The NH-HAM monetisation program has gained strong momentum over the past seven years, culminating on December 31, 2024. During this period, operational projects valued at over Rs. 70,000 Crores have been monetised, enabling sponsors to realise approximately Rs. 11,500 Crores through the sale of stakes in 58 HAM assets.

Projects with low leverage and those awarded at a healthy premium over NHAI cost estimates have delivered superior realisations. Additionally, the use of higher Price Index Multiples in assessing project completion costs, combined with rising bank rates, has contributed to a steady increase in valuation multiples ranging between 1.75 and 2.00 times in recent years.

Data Benchmarking Institutes (DBIs): Driving Transparency in Indias InvIT Market24

The establishment of Data Benchmarking Institutes (DBIs) is a transformative step for Indias InvIT market, aimed at enhancing transparency, comparability, and informed investment decisions. By providing reliable benchmarks on financial and operational metrics, DBIs will help investors make informed decisions, manage risks, and improve capital allocation. Led by SEBI and the Bharat InvIT Association, DBIs aim to boost market credibility, attract institutional investment, and support infrastructure growth.

Investment Managers Report on Activities of the Trust

Shrem InvIT (also referred to as The Trust or InvIT or We) is a leading infrastructure investment trust engaged in owning and operating completed road assets across India. As of FY 2025, our portfolio expanded to 37 operational, revenue-generating road projects. These projects span nearly 11,541.33 lane kms. across Madhya Pradesh, Maharashtra, Uttar Pradesh, Karnataka, Gujarat, Jharkhand, Andhra Pradesh, Odisha, and Chhattisgarh.

Each asset is held under a dedicated Special Purpose Vehicle (SPV). These SPVs operate under concession agreements signed with various government authorities. Income flows from annuity payments by these authorities, toll collections from road users, or both ensure consistent and diversified cash flows. Our portfolio comprises a mix of Hybrid Annuity (HAM), Annuity, Toll and Annuity cum Toll Projects, with a significant share awarded by the National Highways Authority of India (NHAI).

The Trust has built a record of accomplishment of timely annuity receipts and strong operational delivery. Behind this performance lies a careful asset acquisition strategy and disciplined project management. Furthermore, our diversified asset base, stable income streams, and focus on operational excellence position us as a key player in Indias road infrastructure sector.

Financial Summary

The Summary of financial information on Consolidated basis of the InvIT as on March 31, 2025, is as follows:

( in Crores)

Particulars	FY 2025	FY 2024
Total Revenue	2,590.24	2,035.86
EBIDTA	1,881.74	1,686.99
EBIDTA %	72.65 %	82.86 %
PAT	1,117.89	1,051.46
NDCF	1,005.28	751.38
Distribution (/Unit)	16.98	13.34
Net Asset Value ( /Unit)	102.71	109.19

New Acquisitions

During the year under review, Shrem InvIT completed the acquisition of remaining 51% stake in Pathrapali Kathghora Highways Private Limited, a project located in Chhattisgarh, from Dilip Buildcon Limited and its affiliates, making it a 100% subsidiary of the Trust.

The InvIT also acquired 100% stake in following HAM Assets during the Year from APCO Infratech Private Limited:

Particulars	APCO Arasavalli Expressway Private Limited	APCO Navkalyan Expressway Private Limited	Freedompoint Expressway Private Limited
Project Authority	NHAI	NHAI	NHAI
Length (km)	54.19	61.21	61.19
No. of Lanes	6-Lane	4-Lane	4-Lane
State	Andhra Pradesh	Uttar Pradesh	Uttar Pradesh
Concession End Date	19-Jan-2037	24-Oct-2036	13-Aug-2035

Further, Shrem InvIT has signed Binding Documents for the acquistion of two more HAM assets, namely APCO Chetak Ultraway Pvt Ltd (DM-2) and APCO Chetak Expressway Pvt Ltd (DM-3) from APCO Infratech Private Limited and Chetak Enterprises Limited and the process of acquisition is in progress.

Capital Raised

During the year under review, the InvIT raised fresh capital as under: ( in Crores)

Type	No. of Units	Issue Price	Amount
Preferential Issue	3,60,78,377	111.00	400.46

Assets under Management (AUM)

The AUM of the Trust as on March 31, 2025 was 14,997 Crores.

Distributions during FY 2025

Sr. No.	Payment date of distribution	Total amount of distribution (/Unit )	Distribution consists of
			Dividend (/Unit )	Interest (/Unit )	Return of Capital (/Unit )
1	17-05-2024	3.6932	0.1129	1.1621	2.4182
2	31-07-2024	5.2949	0.1719	2.6464	2.4766
3	29-10-2024	3.5000	1.1600	0.9863	1.3537
4	03-02-2025	4.5000	1.4798	1.4254	1.5948

Borrowings * (in Crores)

Opening	Fresh Borrowings	Repayments	Closing
7,417.36	1,765.04	729.37	8453.03**

* There are no external borrowings at individual SPVs. Hence, standalone and consolidated borrowings of the Trust are same. ** The closing balance may differ from financial statements due to actual adjustments as per relevant accounting standards.

Debt Maturity Profile ( in Crores)

Contractual cashflows (Debt Repayment)

Total Borrowings	Less Than 1 year	2 to 5 years	More than 5 years
8,453.03	845.20	2,900.57	4,707.26

Outlook

As we enter our fourth year of operations, we continue to strengthen our identity as a stable and growth-oriented InvIT. Our portfolio, built mainly on HAM and annuity-based road projects, delivers consistent cash flows, underpinned by fixed- price and inflation-protected O&M contracts. Together, these strengths allow us to generate healthy, risk-adjusted returns for our unitholders.

Operational excellence remains a core priority. To this end, we use advanced MIS systems and technology platforms to ensure seamless monitoring, high-quality asset maintenance, and full compliance with concession terms. Additionally, we invest continuously in process upgrades and digitalisation, integrating efficiency into every layer of our portfolio.

During FY 2025, we posted steady financial growth, with consolidated net profit at Rs. 1,117.89 Crores, and revenue increasing by 27.23% to Rs. 2,590.24 Crores. Staying true to our distribution policy, we declared a total distribution of Rs. 16.98 per unit for the year.

During the year, we successfully completed three strategic acquisitions, further strengthening the quality and resilience of our portfolio. These fully operational road assets ensure long-term cash flow visibility and also enhances our ability to deliver incremental returns to unitholders through accretive growth. We remain focused on broadening our investor base. We are exploring opportunities to diversify our capital sources through both debt and equity market channels, with a specific emphasis on attracting high-quality institutional investors. This will not only optimise our capital structure but also deepen market participation and reinforce long-term value creation.

Backed by our sponsor and a strong capital base, we are poised to pursue strategic acquisitions and broaden our asset base. Moreover, we remain focussed on delivering long-term value, ensuring stable distributions, and deepening our presence in Indias infrastructure investment space.

Comprehensive Insurance Coverage

We have established a strong insurance framework to protect our road assets and maintain seamless operational continuity.

All operational assets are insured under a combination of Industrial All Risk (IAR) and Bharat Laghu Udyam Suraksha policies, offering broader protection than standard fire and special perils coverage. These policies cover material damage from fire, accidental events, machinery breakdowns, and include business interruption protection.

To protect critical systems, we use Electronic Equipment Insurance. This covers high-value infrastructure like Toll and Traffic Management Systems, and protects against theft or equipment failure. Additionally, the insurance programme includes important ancillary covers such as escalation costs, professional fees (architects, surveyors, engineers), debris removal, and an underinsurance waiver, ensuring full 100% replacement cost coverage for physical assets and projected toll revenues in case of business interruption.

To further fortify the Trusts operations, we have added key layers of risk protection:

300 Crores terrorism cover across all road projects

25 Crores Commercial General Liability (CGL) insurance

50 Crores for Director and Officer Liabilities Insurance

This comprehensive insurance structure enables us to proactively manage operational and catastrophic risks, reinforcing the financial stability of our portfolio and enhancing confidence across our stakeholder community.

Summary of significant accounting policies

A summary of the significant accounting policies applied for the preparation of the financial statements of Shrem InvIT is provided in the notes of the Consolidated Financial Statements. Kindly refer note no. 2 of the Consolidated Financial Statements for the details.

Internal Controls and Systems

We have established a robust internal control framework that drives operational efficiency, ensures accurate financial reporting, and upholds regulatory compliance.

Clear roles and responsibilities across management levels foster accountability and transparency in our daily operations. Our Investment Manager monitors key business metrics continuously and takes proactive steps to maintain system integrity and process discipline.

Routine internal audits and checks assess the effectiveness of our controls and confirm that functional duties are performed as expected. The Audit Committee under our Board plays an active role in overseeing the internal control environment. It periodically reviews the adequacy of our internal control systems and offers strategic inputs to enhance the overall governance framework and risk mitigation capabilities.

This internal control ecosystem reflects our commitment to high standards of corporate governance, operational strength, and stakeholder trust.

Cautionary Statement

Certain statements in this Management Discussion and Analysis may constitute forward-looking statements. These include projections, estimates, expectations, or predictions regarding future performance, business prospects, or economic trends. While such statements are based on reasonable assumptions and internal assessments, actual results may differ materially due to various known and unknown risks, uncertainties, and other external factors beyond the control of Shrem InvIT.

Readers are advised to exercise caution and not place undue reliance on these forward-looking statements. Shrem InvIT undertakes no obligation to publicly update any such statements to reflect subsequent events or circumstances, except as required under applicable laws.

PROJECT WISE REVENUE

( In Crores)

Sr. No.	Name of the entities	Revenue (Including other income)				Enterprise Value as on March 31, 2025
		FY 2025	FY 2024	FY 2023	FY 2022
1	DLSHPL	150.72	160.82	165.73	80.56	834.84
2	DKZHPL	78.75	74.67	82.80	53.39	311.45
3	DYWHPL	87.31	99.59	101.59	46.84	293.45
4	DTAHPL	50.73	82.34	93.25	40.56	276.03
5	DWBHPL	96.03	101.73	107.39	53.50	363.29
6	DMYHPL	87.70	109.60	115.77	54.31	373.44
7	DAVTPL	5.82	6.42	6.92	7.41	22.49
8	DBSTPL	25.20	27.62	28.63	29.75	103.43
9	DHDTPL	11.52	12.22	12.28	12.66	46.95
10	DBL Silwani	11.48	11.09	11.85	14.06	19.69
11	DSSTPL	5.59	7.01	7.83	8.09	9.37
12	DMSTPL	16.45	13.84	13.28	13.39	22.10
13	DUNTPL	15.72	14.40	14.45	15.26	41.16
14	DSBTPL	4.59	4.71	4.75	5.32	3.39
15	DPRTPL	29.64	29.25	30.56	33.43	156.85
16	DTNTPL	15.05	15.85	16.12	16.17	57.00
17	DNMTPL	10.86	12.61	15.70	18.41	40.15
18	DBDTPL	7.66	9.21	10.78	12.31	40.05
19	DJSTPL	10.62	12.44	14.37	16.12	43.11
20	DMHTPL	19.89	24.63	31.22	30.38	57.82
21	DHPTPL	26.68	33.66	47.51	22.49	91.10
22	DHRTPL	21.23	26.53	35.53	34.85	69.25
23	JDTPL	175.21	167.99	154.46	74.10	1,893.24
24	SIPL	8.43	8.07	7.84	6.63	24.25
25	DAAHL	166.78	132.49	108.21	-	843.35
26	DBBHL	93.20	74.69	45.89	-	398.23
27	DBCHPL	75.49	57.54	-	-	242.91
28	DGKHL	64.13	73.06	35.22	-	344.88
29	DSBHL	112.23	106.03	67.86	-	570.18
30	DBNHPL	259.86	78.42	-	-	1,073.72
31	DNMHPL	264.18	30.61	-	-	1,140.30
32	DCBHL	148.04	85.25	-	-	650.91
33	DRSHPL	106.61	63.44	-	-	549.58
34	PKHPL	57.97	-	-	-	365.73
35	AAEPL	58.27	-	-	-	611.84
36	ANEPL	61.11	-	-	-	701.22
37	FEPL	40.36	-	-	-	387.63

Note: All figures are taken on the basis as considered for the purpose of consolidation.