IRB InvIT Fund - Business · PDF fileIRB InvIT Fund Private & Confidential ... on behalf of and in its capacity as the investment manager of the IRB InvIT Fund ... Talegaon – Amravati

IRB InvIT Fund

Corporate Presentation

April 2017

IRB InvIT Fund Private & Confidential

Disclaimer

This presentation is issued by IRB Infrastructure Private Limited (the “Investment Manager”) on behalf of and in its capacity as the investment manager of the IRB InvIT Fund (the “Trust”) for general information purposes only, without regard to specific objectives, suitability, financial situations and needs of any particular person. This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation

of any offer to purchase or subscribe for, any Units of the Trust, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment therefor. No person is authorized to give any information or to make any representation not contained in or inconsistent with this presentation and if given or made, such information or representation must not be relied upon as having been authorized by any person. This presentation includes projections and statements which may constitute forward-looking statements. All statements that address expectations or projections about the future, including, but not limited to,

statements about any plan or strategy for growth, business development, market position, expenditures, and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events. All forward looking statements are subject to risks, uncertainties and assumptions that could cause actual results, performance or events to differ materially from the outcome contemplated by the relevant forward looking statement.

This presentation should not be relied upon as a recommendation or forecast by the Investment Manager or the Trust. Please note that the past performance of the Trust or the financial information provided by way of the combined financial statements, which are prepared in accordance with the requirements of the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, as amended, is not, and should not be considered as, indicative of future results. The Investment Manager or the Trust cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements, could

thus differ materially from those projected in any such forward-looking statements. The Investment Manager, the Trust or any of their respective affiliates, do not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Trust. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward looking statements. This presentation may not be copied or disseminated, in whole or in part, and in any manner or for any purpose. Failure to comply with this restriction may constitute a violation of applicable laws.The information contained in these materials has

not been independently verified. None of the Sponsor, Trust, Investment Manager, Trustee, or their respective Directors, or associates, nor any of its or their respective employees, advisers or representatives or any other person accepts any responsibility or liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise in connection with this presentation, and makes no representation or warranty, express or implied, for the contents of this

presentation including its accuracy, fairness, completeness or verification or for any other statement made or purported to be made by any of them, or on behalf of them, and nothing in this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future. The information and opinions contained in this presentation are current, and if not stated otherwise, as of the date of this presentation. The

Investment Manager, the Trust or any of their respective affiliates, undertake no obligation to update or revise any information or the opinions expressed in this presentation as a result of new information, future events or otherwise. Any opinions or information expressed in this presentation are subject to change without notice.

The IRB InvIT Fund is proposing, subject to receipt of requisite approvals, market conditions and other considerations, to undertake an initial public offering of its units and has filed an offer document dated April 20, 2017 with the

Securities and Exchange Board of India and the BSE Limited and the National Stock Exchange of India Limited. The offer document is available on the website of the Securities and Exchange Board of India at www.sebi.gov.in, the websites of the stock exchanges at www.bseindia.com and www.nseindia.com and the respective websites of the Global Coordinators and Book Running Lead Managers at www.idfcbank.com, www.credit-suisse.com and www.icicisecurities.com and the Book Running Lead Manager at www.iiflcap.com. Investors should note that investment in the units involves a degree of risk and for details relating to the same, please refer to the offer document,

including the section 'Risk Factors‘ on page 17 of the Offer Document and the section “Forward Looking Statements and Financial Projections” on page 15 of the Offer Document.

These materials are not for publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia). These materials are not an offer of securities for sale into the United States, Canada or Japan. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in

the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

This presentation is not intended to be an offer or placement for the purposes of the Alternative Investment Fund Managers Directive (“AIFMD”), and any “marketing” as defined under AIFMD will take place in accordance with

the national private placement regimes of the applicable European Economic Area jurisdictions in which it is intended to offer the Interests.

The communication of this presentation is exempt from the general restriction in section 21 of the Financial Services and Markets Act 2000 which prohibits the communication of an invitation or inducement to engage in investment activity on the grounds that the communication of this presentation is directed at the following persons in the United Kingdom, namely (i) persons falling within any of the categories of “Investment Professionals” as

defined in article 19(5) of the Financial Promotion Order, (ii) persons falling within any of the categories of persons described in article 49(2) of the Financial Promotion Order, (iii) persons falling within the categories of “certified high net worth individual” described in article 48(2) of the Financial Promotion Order and “self-certified sophisticated investor” described in article 50A(1) of the Financial Promotion Order and (iv) any person to whom it may otherwise lawfully be made. Persons of any other description should not act upon this presentation.

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Offer Summary

InvIT

Offer Type

Allocation

GCBRLMs & BRLM

Listing OnStock Exchanges

IRB InvIT Fund

Initial Public Offering of units

Institutional Bidders portion: Not more than 75% of the Offer, available for allocation*

Other Bidders portion: Not less than 25% of the Offer, available for allocation

Offer Structure

Price band of Rs. 100 – Rs. 102 per unit

Fresh Issue of up to Rs. 43,000 mn.

Offer for sale of up to 34,761,770 units

Option to retain oversubscription of up to 25% of the issue size

Bid / Issue Period Anchor bid issue opens and closes on Tuesday, May 2, 2017

Wednesday, May 3, 2017 – Friday, May 5, 2017

*Anchor portion upto 60% of the Institutional Bidders portion on discretionary basis

Enterprise Value At lower end of price band – Rs. 58,050 Mn

At higher end of price band – Rs. 59,211 Mn

Credit Rating of the Debt of InvIT

The Trust has been assigned a rating of “CARE AAA(Is); Stable” by CARE Ratings, the rationale is available on www.careratings.co.in. The rating is an opinion on the general creditworthiness of the Trust and it has not rated the Units of the Trust

The Trust’s external senior debt has been assigned a long-term rating of “IND AAA; Outlook Stable” by India Ratings, the rationale is available www.indiaratings.co.in. The rating assigned by India Ratings is a reflection of the combined credit quality of the underlying assets and it has not rated the Units of the Trust

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IRB InvIT Fund – Overview

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1


Proposed Structure of IRB InvIT Fund

5

Investors In Units Of TrustInvestors In Units Of Trust

*Subject to applicable provisions of Companies Act, 2013

IRB InvIT FundIRB InvIT Fund

TrusteeIDBI Trusteeship Services Ltd.

TrusteeIDBI Trusteeship Services Ltd.

SponsorIRB Infrastructure Developers Ltd.

SponsorIRB Infrastructure Developers Ltd.

Investment ManagerIRB Infrastructure Pvt. Ltd.

Investment ManagerIRB Infrastructure Pvt. Ltd.

Project ManagerModern Road Makers Pvt. Ltd.

Project ManagerModern Road Makers Pvt. Ltd.

Surat – Dahisar NH 8 Project


Bharuch – Surat NH 8 Project


Talegaon – AmravatiNH 6 Project

Talegaon – AmravatiNH 6 Project

Jaipur – Deoli NH 12 Project


Tumkur – Chitradurga NH 4 Project


Omallur - Salem – Namakkal

NH 7 Project

Omallur - Salem – Namakkal

NH 7 Project

Project Assets Acquired From Sponsor

O&M

Will Hold Minimum 15% units

Distributions:

Minimum 90% of NDCF

Distributions:

Minimum 90% of NDCF*

Investment:

Equity

Issue of Debt

Invest in units

Each Project SPV is required to distribute atleast 90% of its net distributable cash flows to the InvIT, semi-annually which comprises:

Post tax cash generated during the year

Proceeds from sale of infrastructure assets (net of tax)

Adjusted for:

Repayment of debt to external lenders, and

Any premium / negative grant payments to NHAI

InvIT is required to in turn distribute atleast 90% of its net distributable cash flows to its unit holders, semi-annually, comprising:

Dividend received from the SPV

Interest received from the SPV (net of witholding tax)

Cash flows from repayment of debt principal by SPVs, and proceeds from sale of assets of SPV

Buyback of units

Adjusted for:

Expenses (including IM fees) at Trust level

Income tax

Repayment of external debt at Trust level


Details of Projects Forming Part of Initial Portfolio

Project LaneKms

Commencement of toll collection

End of concession

period

Trust's equity

interest upon the

listing of the Units

Gross toll revenue in

FY 2016 (Rs. Mn)

Gross toll revenue in 9m FY 2017

(Rs. Mn)6

Surat – Dahisar NH 8(ISDTPL) 1,434 Feb-09 Jan-221 100% 6,135 4,208

Tumkur – Chitradurga NH 4 (ITCTPL) 684 Jun-11 Jun-372 100% 2,0193 1,426

Bharuch – Surat NH 8(IDAAIPL) 390 Sep-09 Jan-22 100% 1,936 1,336

Jaipur – Deoli NH 12(IJDTPL) 595 Sep-134 Sep-371 100% 1,206 812

Omalur – Salem – Namakkal NH 7 (MITPL) 275 Aug-09 Aug-26 100% 749 544

Talegaon – Amravati NH 6(ITATPL) 267 Apr-135 Jan-371 100% 472 346

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Notes:

The Map is for illustrative purposes only, is not to scale and is subject to change at any time

1. This is the most likely extension date estimated in the Traffic Reports based on the terms of the concession agreements and the projections made by the Traffic Consultant.

2. ITCTPL's concession agreement provides that, if the actual traffic volume falls short of or exceeds the target traffic volume on a defined date, the concession period will be extended or reduced, respectively, according to a formula specified in the agreement. According to projections in the Traffic Reports, we believe that the traffic volume on the target date will exceed the target traffic volume by 10,078 PCUs, which, according to the Traffic Reports, may warrant a reduction in the concession period of approximately 2.6 years. However, because NHAI may at its discretion cause ITCTPL to undertake suitable capacity augmentation of the project instead of reducing the concession period, the concession period under the concession agreement with ITCTPL is expected to end in June 2037 without any reduction.

3. Gross toll revenues for the Tumkur–Chitradurga NH 4 Project in financial year 2016 excludes toll fees collected in relation to the Tumkur Bypass as per the supplementary agreement to the concession agreement dated January 20, 2015, with the NHAI.

4. Toll collection for partial length of 119.75 km began on September 27, 2013 and toll collection for the stretch of 25.22 km began on May 20, 2014. A final completion certificate was issued on April 1, 2016.

5. Toll collection for partial length of 45.31 km began on April 24, 2013 and toll collection for the stretch of 63.70 km began on April 1, 2015.

6. Pursuant to the demonetization of certain high-value currency denominations in November 2016, the Government of India announced a temporary suspension of toll collection at all our toll roads from November 9, 2016 until December 2, 2016. The NHAI issued office orders dated November 29, 2016 and December 6, 2016 and a circular dated November 21, 2016 to specify the compensation mechanism for toll road operators in relation to such demonetization. Hence, toll collection for the nine months ended December 31, 2016 is only for 251 days

Dahisar

Surat

Bharuch

Deoli

Jaipur

Amravati

Talegaon

Tumkur

Chitradurga

Namakkal

Omalur


Brief Overview of the Investment Manager

The IM has ~18 years experience in operating a road BOT project, & in developing, operating and maintaining toll plazas in the infrastructure sector

The IM constructed a 1,400 meter high-level bridge across the Patalganga river, wherein the IM

Constructed approach roads to the bridge,

Widened the footpath relating to the bridge, &

Constructed a six lane toll plaza

The net-worth of the IM as on March 31, 2016 was Rs. 391.44 Mn

The Chairman of the Board is Mr. R.P. Singh, who has previously held the office of Chairman of the NHAI.

The IM has adequate infrastructure, personnel & resources to perform its functions, duties & responsibilities with respect to management of the Trust in accordance with the InvIT Regulations

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Background & Past Experience

Mr. R.P. Singh – Chairman of the Board He was previously the Chairman of the

National Highways Authority of India (June 2012-June 2015)

Has experience in the fields of Finance, Industry, Urban and Infrastructure Development, and has held the office of Chairman and MD of Punjab and Sind Bank

Presently, he is also a director at Maruti Suzuki India Limited, Bharti Infratel and Lodha Developers Pvt. Ltd.

Mr. Vinod Kumar Menon – Whole Time Director He was previously President (Business

Development) of the Sponsor Has experience in fields of infrastructure

development & management Has a B.Tech degree in Civil Engineering

Mr. B. L. Gupta – Independent Director He was previously Chief General Manager

of IIFCL Has experience in banking, corporate &

project finance Has a B.Com & MBA; also is a certified

associate of Indian Institute of Bankers

Brief Profiles of Directors & Key Managerial Personnel

Mr. Sumit Banerjee – Independent Director He was previously the Managing

Director of ACC Limited Has experience in management Has a B.Tech in Mechanical Engineering

Mr. Madhav Kale – Head Corporate Strategy Planning Previously was in same function of the

Sponsor group Has experience in audit, taxation &

consultancy B.Com, FCA

Mr. Tushar Kawedia – CFO Previously served as Deputy CFO of

the Sponsor Has experience in accounts & finance B.Com, CA

Mr. Urmil Shah – Company Secretary Previously served as Assistant

Company Secretary of the Sponsor Has experience in secretarial &

compliance function B.Com, ACS


Combined Financials of InvIT

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Combined Historical Financials Projected Summary of the Trust Group

Profit & Loss (INR Mn) FY14 FY15 FY16 9MFY17

Income 7,625 9,164 10,038 7,511

Expenditure 757 1,723 1,605 1,263

EBITDA 6,868 7,441 8,433 6,248

Depreciation & Amortisation 3,564 4,254 4,676 3,204

Finance Costs 3,756 4,448 4,348 3,098

PBT (452) (1,261) (591) (54)

Tax 24 (24) 173 76

PAT (475) (1,238) (764) (130)

Balance Sheet (INR Mn) FY14 FY15 FY16 9MFY17

Fixed Assets 138,970 134,180 129,936 126,906

Other Non-Current Assets 914 986 906 375

Current Assets 2,085 3,304 3,781 4,373

Total Assets 141,969 138,469 134,623 131,654

Equity 20,227 19,047 18,282 18,153

Borrowings 40,069 38,682 36,552 33,257

Other Financial Liabilities (Premium) 69,592 68,673 66,626 62,543

Other Non-Current Liabilities 1,218 735 1,094 1,487

Current Liabilities 10,861 11,333 12,069 16,213

Total Equity & Liabilities 141,969 138,469 134,623 131,654

•Out of the above cash flows, distributions shall be made to unitholders in the form of interest, dividend & buyback of units. The distributions shall be subject to InvIT regulations as well as restrictions provided under the applicable laws

Cash Flow Information (INR Mn) FY18 FY19 FY20Net profit before tax 2,654 3,025 3,194Adjustments to reconcile PBT to net cash flows

Finance costs - interest on loans from banks/institutions 583 504 428

Finance costs - interest on loans from InvIT – – –Depreciation & amortisation expenses 5,554 6,093 6,706Provision for resurfacing expenses 605 605 605 Actual outflow for major maintenance (158) (532) (1,606)

Cash generated from/(used in) operations 9,238 9,695 9,327Direct taxes paid (net of refunds) (10) (40) (112)Premium Paid to NHAI (2,059) (1,382) (2,077)

Net cash flows from/(used in) operating activities 7,168 8,272 7,138

Finance costs - interest on loans from banks/institutions (583) (504) (428)

Repayment of bank debt (712) (1,189) (626)Cash generated during the year * 5,874 6,579 6,084

Profit & Loss Information (INR Mn) FY18 FY19 FY20

Total income 10,782 11,762 12,911

Expenditure

O&M Expenses 1,840 1,985 2,422

InvIT Expenses (incl IM, Trustee, Valuer Fees) 151 156 161

EBITDA 8,790 9,621 10,328

Depreciation & amortisation 5,554 6,093 6,706

Finance costs - interest on loans from banks/institutions 583 504 428

PBT 2,654 3,025 3,194

Tax Expense 10 40 112

PAT 2,644 2,985 3,082


Competitive Strengths of IRB InvIT Fund

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Low leverage upon listing, providing debt capacity to finance future growthLow leverage upon listing, providing debt capacity to finance future growth

Growth opportunities and access to Sponsor’s portfolio through ROFO / ROFRGrowth opportunities and access to Sponsor’s portfolio through ROFO / ROFR

Experienced Sponsor, Investment Manager & Project Manager with consistent track records in operating & maintaining projects in

roads & highways sector in India

Experienced Sponsor, Investment Manager & Project Manager with consistent track records in operating & maintaining projects in

roads & highways sector in India

Portfolio of income generating assets in key growth markets with expected growth in traffic volumes (due to regional growth) and toll

fees (due to inflation adjustments)

Portfolio of income generating assets in key growth markets with expected growth in traffic volumes (due to regional growth) and toll

fees (due to inflation adjustments)

Geographically and temporally diverse project portfolio reducing reliance on any specific region / projectGeographically and temporally diverse project portfolio reducing reliance on any specific region / project

Attractive sector with strong underlying fundamentalsAttractive sector with strong underlying fundamentals


About the Sponsor

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Sponsor is one of the Largest Infrastructure Development & Construction Cos.# in India

IRB Infrastructure Developers Ltd (IRB) was incorporated in 1998 and has been listed on the Stock Exchanges since 2008

Successfully executed numerous BOT projects in roads & highways sector, including improvement of National highways and sections of Golden Quadrilateral

Has a large project portfolio of 8,183 lane kms of roads & highways in operation, under construction or under development, excluding the Initial Road Assets of the Trust

The Sponsor’s key projects (excluding the Initial Road Assets of the Trust) include:

Yashwantrao Chavan Mumbai – Pune Expressway

Ahmedabad Vadodara NH 8 and NE-1 project

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Overview

Key Competitive Advantages

(INR Mn) FY14 FY15 FY16

Revenue 38,533 39,619 52,541

Growth (%) 2.8% 32.6%

EBITDA 18,751 23,247 27,846

EBITDA Margin 48.7% 58.7% 53.0%

PAT (after MI) 4,591 5,429 6,358

PAT Margin 11.9% 13.7% 12.1%

Net-worth 35,607 43,609 48,272

Financial Snapshot

Shareholding Pattern as on December 31, 2016

Market Cap as on April 18, 2017: Rs. 87,405 Mn

57.55%27.87%

7.71%

6.86%

Promoter & Promoter Group

FII / FPI

DII

Others

One of the largest BOT Project portfolio in the Roads & Highways sector

22 BOT projects as on December 31, 2016, out of which: 14 are Operational 5 are Under Construction 3 are Under Development

Integrated project execution capabilities

Consistent financial track record & relationship with leading financial institutions

Professionally managed company with qualified & skilled employee base

# In terms of networth in Roads & Highways sector according to the NHAI’s annual pre-qualification for public private partnerships in national highway projects report for 2016


Operational Under ConstructionPart of Initial Portfolio of the Trust

Large Portfolio of 11,828 lane kms including 3,645 lane kms of Initial Portfolio of the Trust

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Kaithal – Rajasthan Border BOT 100%

Lane kms: 665

Concession period ends: July-2042

Agra Etawah BOT Project 100%

Lane kms: 747


Pathankot Amritsar BOT 100%

Lane kms: 410

Concession period ends: Dec-2030

Goa Kundapur BOT 100%

Lane kms: 758

Concession period ends: Mar-2042

Surat Dahisar BOT 100%

Lane kms: 1,434

Concession period ends: Jan-2022

Bharuch Surat BOT 100%

Lane kms: 390


Ahmedabad Vadodara BOT 100%

Lane kms: 987


Tumkur Chitradurga BOT 100%

Lane kms: 684

Concession period ends: June-2037

Omalur – Salem - Namakkal BOT 100%

Lane kms: 275

Concession period ends: Aug-2026

Yedeshi Aurangabad BOT 100%

Lane kms: 756

Concession period ends: June-2041

IRDP Kolhapur BOT 100%

Lane kms: 100


Pune Solapur BOT 100%

Lane kms: 104

Concession period ends: Mar-2019

Pune Nashik BOT 100%

Lane kms: 119

Concession period ends: Sept-2021

Solapur Yedeshi BOT 100%

Lane kms: 395


Talegaon – Amravati BOT 100%

Lane kms: 267

Concession period ends: Sep-2032

Thane Bhiwandi Bypass 100%

Lane kms: 96

Concession period ends: May-2017

Thane Ghodbunder BOT 100%

Lane kms: 60


Mumbai Pune BOT 100%

Lane kms: 1,014

Concession period ends: Aug-2019

Gulabpura – Chittorgarh BOT 100%Lane kms: 749

Concession period ends: 20 years from appointed date

Udaipur – Gujarat Border BOT 100%

Lane kms: 683


Kishangarh – Gulabpura BOT 100%Lane kms: 540

Concession period ends: 20 years from appointed date

Jaipur Deoli BOT 100%

Lane kms: 595

Concession period ends: Sep-2037

IRB InvIT Fund Private & Confidential 13


Annexure - Details of Projects

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15

Project Highlights Tollable Annual Average Daily Traffic Volume

Gross Toll Revenue (INR Mn)

4 to 6 lane widening under NHDP Phase V: DBFOT for a 12 yr concession period

239 kms between Surat and Dahisar in the states of Gujarat and Maharashtra

4 toll plazas operated by ISDTPL: Boriyach (Km 297.3), Bhagwada (Km 356.2), Charoti (Km 420.3) and Khanivade (Km 470.0)

Location Highlights:

Connects Surat in Gujarat to Dahisar in Maharashtra

Connects two key metro cities – New Delhi to Mumbai as well as major cities like Gurgaon, Jaipur, Ajmer, Udaipur, Ahmedabad, Vadodara & Surat

Main traffic influence areas are: Surat, Navsari, Valsad, Vapi and Dahisar

Upcoming developments along Project Corridor – Developments around Surat & Mumbai region, Delhi Mumbai Industrial Corridor, Virar-Alibaug Multi Modal Corridor

No alternative short or long distance routes with comparable riding quality, cost efficiency and service

Project Cost – Rs. 25.3 Bn

Outstanding Debt as on December 31, 2016 – Rs. 7.4 Bn

Recommended most likely growth rates of traffic as per the traffic consultant:

Vehicle TypeMaharashtra Gujarat

2015-20 2020-25 2015-20 2020-25

Car 8.0% 7.5% 7.5% 7.0%

LCV 6.5% 6.0% 7.5% 7.0%

Bus / Truck 7.0% 6.5% 7.0% 6.5%

Multi Axle 7.5% 7.0% 8.0% 7.5%

FY14 FY15 FY16 9MFY17

6,805 8,810 9,620 9,237

4,198 4,827 5,416 5,499 3,690 4,024

4,081 3,959 7,033

7,490 7,995 7,956

Multi Axle Bus / Truck LCV Car

55,821 61,825 65,962

Total PCU

CAGR: 8.7%

FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P*

4,879 5,549

6,135

4,208

7,417

8,396

9,512

CAGR: 12.1%

CAGR: 13.2%

* As per gross toll revenue projected by the traffic consultant in the most likely scenario

65,162



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114 kms between Tumkur and Chitradurga on NH-4 in the state of Karnataka

2 toll plazas operated by ITCTPL, exist on the project road


Connects Tumkur to Chitradurga in Karnataka

Connects two key metro cities – Thane to Chennai as well as major cities

such as Pune, Kolhapur, Belgaum, Dharwad, Hubli & Bangalore

Main traffic influence areas are - Tumkur, Sira, Hiriyur & Chitradurga

Upcoming developments along Project Corridor – Suvarna Karnataka

Development Corridor Programme, Mumbai-Bangalore Industrial Corridor, Integrated Machine Tool Park near Tumkur, Solar Parks with 500 MW

capacity, Defense and Atomic Research Projects under Chitradurga Techno

Hub

No alternative short or long distance routes with comparable riding quality, cost

efficiency and service





2,951 3,687 4,618 5,4992,136 2,109

2,3522,3692,593

2,9363,081

3,2625,0165,460

5,8395,693


36,508 40,228 43,666

Total PCU

CAGR: 9.3%


1,630 1,841

2,231

1,609

2,498

2,834

3,240

CAGR: 17.0%

CAGR: 13.9%

Vehicle Type 2015-20 2020-25 2025-30 2030-35 2035-40

Car 8.0% 7.5% 7.0% 6.5% 6.0%

LCV 8.0% 7.5% 7.0% 6.5% 6.0%

Bus / Truck 7.0% 6.5% 6.0% 5.5% 5.0%

Multi Axle 8.0% 7.5% 7.0% 6.5% 6.5%

# Includes toll fee collected in relation to Tumkur Bypass as per the supplementary agreement to the concession agreement dated January 20, 2015 * As per gross toll revenue projected by the traffic consultant in the most likely scenario, excluding toll revenue from Tumkur Bypass which accrues to the NHAI

44,457



17




65 kms between Bharuch and Surat on NH-8 from in the state of Gujarat

1 toll plaza operated by IDAAIPL, exists on the project road at Km 246.1


Connects Bharuch to Surat in Gujarat

Highway connects two key metro cities – New Delhi to Mumbai as well as major cities Gurgaon, Jaipur, Ajmer, Udaipur, Ahmedabad, Vadodara & Surat

Main traffic influence areas are – Bharuch, Ankleshwar, Palod & Surat

Upcoming developments along Project Corridor – Developments around Bharuch & Surat, Delhi Mumbai Industrial Corridor, Cargo Terminal by AAI near Surat, Diamond Research & Mercantile (DREAM) City in Surat

No alternative short or long distance routes with comparable riding quality, cost efficiency and service





5,464 5,438 5,980 5,902

3,763 4,023 4,461 4,619

4,623 4,6184,769 4,666

8,459 8,9559,472 9,623


63,044 65,623 69,601

Total PCU

CAGR: 5.1%


1,666 1,857 1,935

1,336

2,327

2,653

3,007

CAGR: 7.8%

CAGR: 13.7%

Vehicle Type 2015-20 2020-25

Car 8.00% 7.50%

LCV 7.50% 7.00%

Bus / Truck 6.25% 5.75%

Multi Axle 7.50% 7.50%


70,132



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2 to 4 lane widening under NHDP Phase III: DBFOT for a 25 yr concession period

148.7 kms between Jaipur and Deoli on NH-12 in the state of Rajasthan

2 toll plazas operated by IJDTPL on the project road at Km 30.5 & Km 105.0


Connects Jaipur to Deoli in Rajasthan

Highway connects two key cities – Jaipur to Jabalpur via Tonk, Kota & Bhopal

Main traffic influence areas are – Shivdaspura, Chaksu, Tonk & Deoli

Upcoming developments along Project Corridor – Delhi Mumbai Industrial

Corridor, Mahindra World City Jaipur, Export Promotion Industrial Park in

Sitapura region of Jaipur, Sitapura Educational Hub







2,549 3,015 3,670 4,115924

9681150

11671,9761,770

2,166 1,8651,601 1,518

1,908 1,930


17,066 16,610 20,478

Total PCU

CAGR: 9.5%


342

1,015 1,206

812

1,495 1,696

1,924

CAGR: 87.7%

CAGR: 13.4%

Vehicle Type 2015-20 2020-25 2025-30 2030-35 2035-40

Car 7.5% 7.0% 6.5% 6.0% 5.5%

LCV 7.5% 7.0% 6.5% 6.0% 5.5%

Bus / Truck 6.5% 6.0% 5.5% 5.0% 4.5%

Multi Axle 8.0% 7.5% 7.0% 6.5% 6.0%


20,145


Omallur – Salem – Namakkal NH 7 Project

19




69 kms between Omallur and Namakkal on NH-7 from in the state of Tamil Nadu

1 toll plaza operated by MITPL, exists on the project road at Km 191.8


Connects Omallur to Namakkal in Tamil Nadu

NH-7 is a major North-South National Highway and runs through UP, MP,

Maharashtra, Telangana, Andhra Pradesh, Karnataka & Tamil Nadu

Main traffic influence areas are – Omallur, Salem, Rasipuram & Namakkal

Upcoming developments along Project Corridor – Coimbatore Salem

Industrial Corridor, Salem Steel Plant & Steel SEZ by SAIL, Power plant by

MALCO







6,395 8,27510,298 10,414

32083778

4105 40192,059

3,351

4,375 4,257

1,936

3,381

2,832 2,809


26,099 39,210 42,324

Total PCU

CAGR: 27.3%


613

756 749

544

956

1075

1216

CAGR: 10.6%

CAGR: 12.8%

Vehicle Type 2015-20 2020-25 2025-30

Car 8.0% 7.5% 7.0%

LCV 6.5% 6.0% 5.5%

Bus / Truck 7.5% 7.0% 6.5%

Multi Axle 8.0% 7.5% 7.0%


41,854


Talegaon – Amravati NH 6 Project

20



2 to 4 lane widening under NHDP Phase III: DBFOT for a 22 yr concession period

67 kms between Talegaon and Amravati on NH-6 in the state of Maharashtra

1 toll plaza operated by ITATPL, exists on the project road at Km 142.8


Connects Talegaon to Amravati in Maharashtra

NH-6 connects two major ports of Hazira and Kolkata via Surat, Dhule,

Amravati, Nagpur, Raipur and Sambalpur

Main traffic influence areas are – Talegaon, Tivasa, Mozri & Amravati

Upcoming developments along Project Corridor – Amravati Thermal Power

Plant, Amravati Integrated Textile Park, Missiles Factory by Bharat Dynamics

Ltd, Amravati Educational Hub







3,353 3,496 4,118 4,451

1133 10751201 12781,285 1,2141,228 1,196

2,091 1,8861,733

1,804


18,319 17,237 17,402

Total PCU

CAGR: (-2.5%)


264

461 472

346

585

664

754

CAGR: 33.7%

CAGR: 13.5%

Vehicle Type 2015-20 2020-25 2025-30 2030-35 2035-40

Car 7.5% 7.0% 6.5% 6.0% 5.5%

LCV 6.5% 6.0% 5.5% 5.0% 4.5%

Bus / Truck 7.0% 6.5% 6.0% 5.5% 5.0%

Multi Axle 8.0% 7.5% 7.0% 6.5% 6.0%


18,071


Annexure - InvIT Regulations Summary

21

4


SEBI (Infrastructure Investment Trust) Regulation, 2014, as amended

22

Registration The InvIT has to be registered with SEBI The InvIT has to be registered with SEBI

Invest at least 80% of the value of the assets in completed and revenue generating infrastructure assets

Balance 20% can be invested in under-construction infrastructure projects and securities of infrastructure companies in India (cannot invest in

units of other InvITs)

InvIT should hold (directly or through SPVs) the infrastructure assets for at least 3 years from the date of purchase of the asset by the InvIT

(except investment in securities of infrastructure companies)

Investment into SPVs is subject to the InvIT holding a controlling interest (at least 51% of equity share capital) in the SPVs

Invest at least 80% of the value of the assets in completed and revenue generating infrastructure assets

Balance 20% can be invested in under-construction infrastructure projects and securities of infrastructure companies in India (cannot invest in

units of other InvITs)

InvIT should hold (directly or through SPVs) the infrastructure assets for at least 3 years from the date of purchase of the asset by the InvIT

(except investment in securities of infrastructure companies)

Investment into SPVs is subject to the InvIT holding a controlling interest (at least 51% of equity share capital) in the SPVs

Key investment conditions

Infrastructure as defined

All infrastructure sub-sectors defined by the Cabinet Committee on Infrastructure; vide the Notification of Ministry of Finance dated 1 March 2012 (i.e. under the categories - transport, energy, water sanitation, communication and social and commercial infrastructure)

All infrastructure sub-sectors defined by the Cabinet Committee on Infrastructure; vide the Notification of Ministry of Finance dated 1 March 2012 (i.e. under the categories - transport, energy, water sanitation, communication and social and commercial infrastructure)

Parties in an InvIT Structure & Key Responsibilities

Sponsor

Net worth of at least Rs. 1 Bn

in case of body corporate or

a company or net intangible

assets of Rs. 1 Bn in case of a

LLP

Ensuring aggregate minimum

post-issue holding of at least

15% (with a three-year lock-

in)

Divestment of 15% holding:

- Possible only after 3 yrs

from the date of listing

Sponsor

Net worth of at least Rs. 1 Bn

in case of body corporate or

a company or net intangible

assets of Rs. 1 Bn in case of a

LLP

Ensuring aggregate minimum

post-issue holding of at least

15% (with a three-year lock-

in)

Divestment of 15% holding:

- Possible only after 3 yrs

from the date of listing

Investment Manager (IM)

Decision-making w.r.t.

investments in assets

Overseeing Project Manager’s

activities

Ensuring assets have legally

enforceable titles & that

material contracts are legally

enforceable

Declaring and making

distributions to unit holders

Coordinate with Trustee for

operations of InvIT

Investment Manager (IM)

Decision-making w.r.t.

investments in assets

Overseeing Project Manager’s

activities

Ensuring assets have legally

enforceable titles & that

material contracts are legally

enforceable

Declaring and making

distributions to unit holders

Coordinate with Trustee for

operations of InvIT

Trustee

Holds the InvIT assets in trust

for the benefit of unit holders

Execution of Investment

Management Agreement with

the IM

Overseeing Investment

Manager or Project

Manager’s activities as

provided

Reviewing of transactions

between the Investment

Manager and associates

Trustee

Holds the InvIT assets in trust

for the benefit of unit holders

Execution of Investment

Management Agreement with

the IM

Overseeing Investment

Manager or Project

Manager’s activities as

provided

Reviewing of transactions

between the Investment

Manager and associates

Project Manager

Undertaking the

operation, management,

maintenance and

supervision of assets

Ensuring compliance with

the concession agreement

Undertaking all obligation

of project implementation

in compliance with the

terms of the project

management agreement

Project Manager

Undertaking the

operation, management,

maintenance and

supervision of assets

Ensuring compliance with

the concession agreement

Undertaking all obligation

of project implementation

in compliance with the

terms of the project

management agreement


InvIT Regulations – Dividend Policy, Leveraging and Other Aspects

23

Distribution Policy

At least 90% of distributable cash flow of the SPV shall be distributed to the InvIT in proportion to its holding in the SPV

At least 90% of distributable cash flow of the InvIT shall be distributed to the unit holders

Dividend declared to be paid within 15 days; distributions to the unit holders to be made on a half yearly basis

At least 90% of distributable cash flow of the SPV shall be distributed to the InvIT in proportion to its holding in the SPV

At least 90% of distributable cash flow of the InvIT shall be distributed to the unit holders

Dividend declared to be paid within 15 days; distributions to the unit holders to be made on a half yearly basis

Borrowings and deferred payments not to be more than 49% of value of InvIT assets (excluding any borrowings made by the InvIT to the SPVs)

Borrowings and deferred payments more than 25% of the value of assets are subject to:

Credit rating;

Approvals of unit holders where the votes cast in favor should be more than the votes cast against the resolution

Borrowings and deferred payments not to be more than 49% of value of InvIT assets (excluding any borrowings made by the InvIT to the SPVs)

Borrowings and deferred payments more than 25% of the value of assets are subject to:

Credit rating;

Approvals of unit holders where the votes cast in favor should be more than the votes cast against the resolution

Related parties of InvIT shall include (i) parties to the InvIT; (ii) promoters, directors and partners of the persons mentioned in (i) and as per

Companies Act, 2013 and as per Accounting Standards;

Transactions with related parties to be disclosed in the offer document w.r.t. transactions prior & proposed after the offer

The Sponsor will not have voting rights on matters pertaining to related party transactions

Related parties of InvIT shall include (i) parties to the InvIT; (ii) promoters, directors and partners of the persons mentioned in (i) and as per

Companies Act, 2013 and as per Accounting Standards;

Transactions with related parties to be disclosed in the offer document w.r.t. transactions prior & proposed after the offer

The Sponsor will not have voting rights on matters pertaining to related party transactions

Related Party Transactions

Leveraging

Approval by way of votes cast in favor of the resolution shall be at least 1.5 times the votes cast against for certain cases

Change in Investment Manager or Auditor or Valuer or Trustee

Prior approval of at least 60% of unit holders

Special approval by way of votes cast in favor of the resolution should be at least 1.5 times the votes cast against

Annual report for unit holders within 3 months from the end of the financial year; half-yearly report within 1 month

Price sensitive information to be disclosed to stock exchange

Approval by way of votes cast in favor of the resolution shall be at least 1.5 times the votes cast against for certain cases

Change in Investment Manager or Auditor or Valuer or Trustee

Prior approval of at least 60% of unit holders

Special approval by way of votes cast in favor of the resolution should be at least 1.5 times the votes cast against

Annual report for unit holders within 3 months from the end of the financial year; half-yearly report within 1 month

Price sensitive information to be disclosed to stock exchange

Governance


The Trust will have Right of First Refusal (RoFR) to acquire Sponsor’s existing operational and future assets

Also, the Trust can purchase Non-Sponsor assets as per its investment strategy

Prior approval of the unit holders will be required at the time of any purchase / divestment of assets

The Trust will have Right of First Refusal (RoFR) to acquire Sponsor’s existing operational and future assets

Also, the Trust can purchase Non-Sponsor assets as per its investment strategy

Prior approval of the unit holders will be required at the time of any purchase / divestment of assets

Key Rights of Investors & Investment Manager

24

Unit holders shall have right to receive income through distributions from the Trust

With respect to any matter requiring approval of the unit holders

A resolution shall be considered as passed when the votes cast by unit holders in favour of the resolution exceeds those casting against the resolution

For removal of the IM, an approval from the Unitholders shall be required where the votes cast in favour of the resolution shall not be less than one and a half times the votes cast against the resolution

Unit holders shall have right to receive income through distributions from the Trust

With respect to any matter requiring approval of the unit holders

A resolution shall be considered as passed when the votes cast by unit holders in favour of the resolution exceeds those casting against the resolution

For removal of the IM, an approval from the Unitholders shall be required where the votes cast in favour of the resolution shall not be less than one and a half times the votes cast against the resolution

The investment manager shall make the investment decisions with respect to the underlying assets or projects of the

Trust including any further investment or divestment of the assets

The Board of Directors of the investment manager will have at least 50% of the Directors as Independent

The investment manager shall ensure adequate and timely redressal of all unit holders’ grievances pertaining to

activities of the Trust

The investment manager shall make the investment decisions with respect to the underlying assets or projects of the

Trust including any further investment or divestment of the assets

The Board of Directors of the investment manager will have at least 50% of the Directors as Independent

The investment manager shall ensure adequate and timely redressal of all unit holders’ grievances pertaining to

activities of the Trust

Rights of Unit HoldersRights of Unit Holders

RoFR / Future AssetsRoFR / Future Assets

Rights & Responsibilities of

Investment Manager

Rights & Responsibilities of

Investment Manager


InvIT Regulations – Public Offer, Listing, Delisting & Valuation Norms

25

Public Offer Delisting

Valuation Norms

Public Offer

Minimum value of assets held by InvIT should be Rs.

5.0 Bn

Minimum offer size of Rs. 2.5 Bn

Minimum value of assets held by InvIT should be Rs.

5.0 Bn

Minimum offer size of Rs. 2.5 Bn

Minimum float – 25%

Minimum subscription – Rs. 1.0 Mn

Minimum trading lot – Rs. 0.5 Mn

Foreign investment permitted

Minimum float – 25%

Minimum subscription – Rs. 1.0 Mn

Minimum trading lot – Rs. 0.5 Mn

Foreign investment permitted

Mandatory listing within 12 working days from date of

closure of initial offer

Mandatory listing within 12 working days from date of

closure of initial offer

Mandatory Listing

Requirement

Minimum Float and

Subscription Requirements

Trading of units permissible only through stock

exchange

InvIT shall not redeem units to the unit holders other

than by way of buyback or at the time of delisting of

units

Trading of units permissible only through stock

exchange

InvIT shall not redeem units to the unit holders other

than by way of buyback or at the time of delisting of

units

Listing

If public float is less than 25% of total outstanding units

Number of unit holders (other than sponsor) is less than 20 (each holding not more than 25% of units of InvIT)

Where no projects / assets are remaining under the InvIT for more than six months, and where there is no proposal to invest in projects in future

If public float is less than 25% of total outstanding units

Number of unit holders (other than sponsor) is less than 20 (each holding not more than 25% of units of InvIT)

Where no projects / assets are remaining under the InvIT for more than six months, and where there is no proposal to invest in projects in future

Voluntary delisting subject to approval of unit holders where votes cast in favor shall be not less than one and half times votes cast against

Voluntary delisting subject to approval of unit holders where votes cast in favor shall be not less than one and half times votes cast against

Voluntary Delisting

Events Triggering

Compulsory Delisting

Purchase & sale of assets

Acquisition price – cap of 110% of valuer’s valuation

Sale price – floor of 90% of valuer’s valuation

Full valuation (in prescribed format) to be undertaken by Valuer / Principal Valuer at least once in a year within two months from the date end of such financial year

Half yearly valuation for a publicly offered InvIT

Purchase & sale of assets

Acquisition price – cap of 110% of valuer’s valuation

Sale price – floor of 90% of valuer’s valuation

Full valuation (in prescribed format) to be undertaken by Valuer / Principal Valuer at least once in a year within two months from the date end of such financial year

Half yearly valuation for a publicly offered InvIT


Tax Implications at Various Levels

26

SPV

Interest on debt from InvIT

Distribution of dividend to InvIT

Interest on debt from InvIT

Distribution of dividend to InvIT

InvIT

Dividend income of the InvIT

Tax on other income

Gains on disposal of assets

Dividend income of the InvIT

Tax on other income

Gains on disposal of assets

Interest income received from InvIT

Dividend income distributed by the InvIT

Capital gains on sale of units

Any other income distributed by the InvIT

Interest income received from InvIT

Dividend income distributed by the InvIT

Capital gains on sale of units

Any other income distributed by the InvIT

Unit Holder

No. Entity Issue

1 SPV

Interest on loans from InvIT – not subject to witholding tax obligations at SPV level

Distribution of dividend to trust – not subject to DDT if InvIT holds 100% interest in the SPV

2 InvIT

Income of trust

Dividend and Interest received by trust from SPV – Tax Exempt

Capital gains on disposal of assets - taxable in the hands of InvIT

Any other income – taxable at maximum marginal rate

Interest component of income distributed by trust to the unit holders would attract withholding tax @ 5%/ 10% for non-resident and resident unit holders respectively

3 Unit-holder

Interest income shall be taxable in the hands of Unit Holders as if they have received the interest directly

At applicable rates for resident unit holders

At 5% for non-resident / offshore investors; benefits under DTAA, if any, shall be available

Dividend Income distributed by the Trust is exempt in the hands of Unit Holders

Sale of listed units of InvIT on the exchange to attract levy of STT at par with that of listed equity shares

Long term capital gains (LTCG), where units held for over 36 months, would be tax exempt and short term capital gains (STCG) would be taxable @ 15%

Where sale of units is off the exchange LTCG taxable at 20% and STCG @ applicable rates

For Non-Resident Unit Holders, benefits under respective DTAA, if any, shall be available

11

22

33

11

22

33


Annexure - Key Risks

27

5


Risks Associated with Operational Road Projects

28

WPI Risk

Toll pricing is linked to WPI movement and can get affected in periods of negative WPI changes

Traffic Risk

Traffic of Tollable vehicles and growth in this traffic has a direct impact on toll revenues

NHAI provides for following protections to the concessionaire against Traffic growth risk

• Increase in concession period if the actual traffic is less than target traffic

• Restriction on construction of alternate routes for a pre-specified time

Concerns of termination of concession agreements of operational roads by government

Developer and investors of NHAI toll road concessions are completely protected through pre-defined compensation payments in case of an unlikely event of termination of contract

Toll RiskToll Risk

Regulatory RiskRegulatory Risk


WPI and Toll Rates

29

WPI Movement Factored into Pricing

Project SPV Lane Kms Tariff Hike Clause

IRB SD - Surat - Dahisar section of NH-8 1,434 Tariff hike is directly linked to the increase in Wholesale Price Inflation

IDAA - Bharuch - Surat section of NH-8 390 Tariff hike is directly linked to the increase in Wholesale Price Inflation

IRB JD - Jaipur - Tonk - Deoli section of NH-12 585 3% fixed increase + 40% of the increase in Wholesale Price Inflation1

IRB TC - Tumkur - Chitradurga section of NH-4 684 3% fixed increase + 40% of the increase in Wholesale Price Inflation1

IRB TA - Talegoan - Amravati section of NH-6 267 3% fixed increase + 40% of the increase in Wholesale Price Inflation1

MVR - Omallur Salem Namakkal section of NH-7 275 Tariff hike is directly linked to the increase in Wholesale Price Inflation

Total 3,635

1 Eg. If WPI for the year is 5%, the increase is [3% + 0.40*(5%)] = 5% Tariff Hike for the year

Average WPI inflation over last 10 years is at 5.5%Average WPI inflation over last 10 years is at 5.5%


Termination payments

30

Concession Termination payment

Bharuch Surat (IDAA) & Omallur Salem Namakkal (MVR)

Upon termination of the Concession Agreement on account of occurrence of NHAI Default, NHAI shall pay by way of termination payments

i. the total debt due, plus

ii. 120% the total subordinated debt, plus

iii. 150% of the equity if such termination occurs at any time during three years commencing from the Appointed Date and for each successive year. Thereafter, such amount shall be adjusted every year to fully reflect the changes in wholesale price index during such year and the adjusted amount so arrived at shall be reduced every year by 7.5% per annum.

Jaipur Deoli, Talegaon Amravati, Tumkur Chitradurga, Surat Dahisar

Upon termination of the Concession Agreement on account of occurrence of NHAI Default, NHAI shall pay by way of termination payments, an amount equal to

(i) debt due and

(ii) 150% of the adjusted equity.


Target Traffic and Design Capacity Details

31

Projects Target Date as per Concession Agreement

Target Traffic as per Concession Agreement

(PCU)

Design Capacity as per Concession Agreement

(PCU)

Traffic - FY 16(PCU)

Traffic – 9MFY17(PCU)

Surat - Dahisar 01.01.2017 82,043 90,000 65,962 65,162

Jaipur - Deoli 01.10.2018 30,344 60,000 20,478 20,145

Talegaon - Amravati 01.04.2020 41,052 60,000 17,402 18,071

Tumkur - Chitradurga 01.04.2020 54,558 120,000 43,666 44,457

Notes:

Bharuch – Surat and Omallur – Namakkal are projects with fixed concession periods

Source: Traffic Reports & respective Concession Agreements

Documents

IRB InvIT Fund - Business · PDF fileIRB InvIT Fund Private & Confidential ... on behalf of and in its capacity as the investment manager of the IRB InvIT Fund ... Talegaon – Amravati