Corporate Presentation April 2017
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 (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. 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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 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. 2
Offer Summary InvIT Offer Type Offer Structure Enterprise Value Initial Public Offering of units 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 At lower end of price band Rs. 58,050 Mn At higher end of price band Rs. 59,211 Mn Bid / Issue Period Anchor bid issue opens and closes on Tuesday, May 2, 2017 Wednesday, May 3, 2017 Friday, May 5, 2017 Allocation Credit Rating of the Debt of InvIT 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 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 GCBRLMs & BRLM Listing On Stock Exchanges *Anchor portion upto 60% of the Institutional Bidders portion on discretionary basis 3
1 Overview 4
Proposed Structure of Trustee IDBI Trusteeship Services Ltd. Invest in units Investors In In Units Of Trust Distributions: Minimum 90% of NDCF 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 Sponsor IRB Infrastructure Developers Ltd. O&M Investment Manager IRB Infrastructure Pvt. Ltd. Project Manager Modern Road Makers Pvt. Ltd. Investment: Equity Issue of Debt Distributions: Minimum 90% of NDCF* Will Hold Minimum 15% 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 Project Assets Acquired From Sponsor Surat Dahisar NH 8 Project Bharuch Surat NH 8 Project Talegaon Amravati NH 6 Project Jaipur Deoli NH 12 Project Tumkur Chitradurga NH 4 Project Omallur - Salem Namakkal NH 7 Project *Subject to applicable provisions of Companies Act, 2013 5
Details of Projects Forming Part of Initial Portfolio Project Lane Kms Commence ment 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) Tumkur Chitradurga NH 4 (ITCTPL) 1,434 Feb-09 Jan-22 1 100% 6,135 4,208 684 Jun-11 Jun-37 2 100% 2,019 3 1,426 Jaipur Deoli Bharuch Surat NH 8 (IDAAIPL) 390 Sep-09 Jan-22 100% 1,936 1,336 Bharuch Surat Talegaon Jaipur Deoli NH 12 (IJDTPL) 595 Sep-13 4 Sep-37 1 100% 1,206 812 Dahisar Amravati Omalur Salem Namakkal NH 7 (MITPL) Talegaon Amravati NH 6 (ITATPL) 275 Aug-09 Aug-26 100% 749 544 267 Apr-13 5 Jan-37 1 100% 472 346 Chitradurga Tumkur Omalur Namakkal 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 6
Brief Overview of the Investment Manager Background & Past Experience Brief Profiles of Directors & Key Managerial Personnel 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 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. 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. 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 Mr. Urmil Shah Company Secretary Previously served as Assistant Company Secretary of the Sponsor Has experience in secretarial & compliance function B.Com, ACS 7
Combined Financials of InvIT Combined Historical Financials Profit & Loss (INR Mn) Income FY14 7,625 FY15 9,164 Projected Summary of the Trust Group FY16 10,038 9MFY17 7,511 Profit & Loss Information (INR Mn) FY18 FY19 FY20 Total income 10,782 11,762 12,911 1,840 1,985 2,422 151 156 161 8,790 9,621 10,328 5,554 6,093 6,706 583 504 428 2,654 3,025 3,194 10 40 112 2,644 2,985 3,082 FY18 2,654 FY19 3,025 FY20 3,194 583 504 428 5,554 605 (158) 9,238 (10) (2,059) 7,168 6,093 605 (532) 9,695 (40) (1,382) 8,272 6,706 605 (1,606) 9,327 (112) (2,077) 7,138 (583) (504) (428) (712) 5,874 (1,189) 6,579 (626) 6,084 Expenditure 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 138,970 134,180 129,936 126,906 914 986 906 375 2,085 3,304 3,781 4,373 141,969 138,469 134,623 131,654 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 10,861 11,333 12,069 16,213 141,969 138,469 134,623 131,654 Fixed Assets Other Non-Current Assets Current Assets Total Assets Current Liabilities Total Equity & Liabilities 9MFY17 O&M Expenses InvIT Expenses (incl IM, Trustee, Valuer Fees) EBITDA Depreciation & amortisation Finance costs - interest on loans from banks/institutions PBT Tax Expense PAT Cash Flow Information (INR Mn) Net profit before tax Adjustments to reconcile PBT to net cash flows Finance costs - interest on loans from banks/institutions Finance costs - interest on loans from InvIT Depreciation & amortisation expenses Provision for resurfacing expenses Actual outflow for major maintenance Cash generated from/(used in) operations Direct taxes paid (net of refunds) Premium Paid to NHAI Net cash flows from/(used in) operating activities Finance costs - interest on loans from banks/institutions Repayment of bank debt Cash generated during the year * 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 8
Competitive Strengths of 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 / project Experienced Sponsor, Investment Manager & Project Manager with consistent track records in operating & maintaining projects in roads & highways sector in India Low leverage upon listing, providing debt capacity to finance future growth Growth opportunities and access to Sponsor s portfolio through ROFO / ROFR Attractive sector with strong underlying fundamentals 9
2 About the Sponsor 10
Sponsor is one of the Largest Infrastructure Development & Construction Cos. # in India Overview 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 Financial Snapshot (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 Key Competitive Advantages 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 Shareholding Pattern as on December 31, 2016 6.86% 7.71% 27.87% 57.55% Promoter & Promoter Group FII / FPI DII Others Market Cap as on April 18, 2017: Rs. 87,405 Mn # 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 11
Large Portfolio of 11,828 lane kms including 3,645 lane kms of Initial Portfolio of the Trust Agra Etawah BOT Project 100% Lane kms: 747 July-2040 Pathankot Amritsar BOT 100% Lane kms: 410 Dec-2030 Kaithal Rajasthan Border BOT 100% Lane kms: 665 July-2042 Jaipur Deoli BOT 100% Lane kms: 595 Sep-2037 Kishangarh Gulabpura BOT 100% Lane kms: 540 20 years from appointed date Gulabpura Chittorgarh BOT 100% Lane kms: 749 20 years from appointed date Udaipur Gujarat Border BOT 100% Lane kms: 683 July-2038 Ahmedabad Vadodara BOT 100% Lane kms: 987 Dec-2037 Bharuch Surat BOT 100% Lane kms: 390 Jan-2022 Surat Dahisar BOT 100% Lane kms: 1,434 Jan-2022 Goa Kundapur BOT 100% Lane kms: 758 Mar-2042 Yedeshi Aurangabad BOT 100% Lane kms: 756 June-2041 Talegaon Amravati BOT 100% Lane kms: 267 Sep-2032 Thane Bhiwandi Bypass 100% Lane kms: 96 May-2017 Thane Ghodbunder BOT 100% Lane kms: 60 Dec-2020 Mumbai Pune BOT 100% Lane kms: 1,014 Aug-2019 Solapur Yedeshi BOT 100% Lane kms: 395 Jan-2043 Pune Solapur BOT 100% Lane kms: 104 Mar-2019 Pune Nashik BOT 100% Lane kms: 119 Sept-2021 IRDP Kolhapur BOT 100% Lane kms: 100 Jan-2039 Tumkur Chitradurga BOT 100% Lane kms: 684 June-2037 Omalur Salem - Namakkal BOT 100% Lane kms: 275 Aug-2026 Operational Part of Initial Portfolio of the Trust Under Construction 12
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3 Annexure - Details of Projects 14
Surat Dahisar NH 8 Project Project Highlights 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 Type Maharashtra 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% * As per gross toll revenue projected by the traffic consultant in the most likely scenario Tollable Annual Average Daily Traffic Volume 55,821 61,825 65,962 65,162 CAGR: 8.7% 7,490 7,995 7,956 7,033 4,024 4,081 3,959 3,690 4,827 5,416 5,499 4,198 6,805 8,810 9,620 9,237 FY14 FY15 FY16 9MFY17 Multi Axle Bus / Truck LCV Car Total PCU CAGR: 12.1% Gross Toll Revenue (INR Mn) 7,417 CAGR: 13.2% 8,396 9,512 5,549 6,135 4,879 4,208 FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P* 15
Tumkur Chitradurga NH 4 Project Project Highlights 4 to 6 lane widening under NHDP Phase V: DBFOT for a 26 yr concession period 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 Location Highlights: 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 Project Cost Rs. 11.4 Bn Outstanding Debt as on December 31, 2016 Rs. 9.6 Bn Recommended most likely growth rates of traffic as per the traffic consultant: 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% Tollable Annual Average Daily Traffic Volume 36,508 40,228 43,666 44,457 CAGR: 9.3% 5,693 5,839 5,460 5,016 3,262 3,081 2,936 2,593 2,369 2,352 2,136 2,109 2,951 3,687 4,618 5,499 FY14 FY15 FY16 9MFY17 Multi Axle Bus / Truck LCV Car Total PCU CAGR: 17.0% Gross Toll Revenue (INR Mn) 1,841 1,630 1,609 3,240 2,834 2,498 2,231 CAGR: 13.9% # 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 FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P* 16
Bharuch Surat NH 8 Project Project Highlights 4 to 6 lane widening under NHDP Phase V: DBFOT for a 15 yr concession period 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 Tollable Annual Average Daily Traffic Volume 63,044 65,623 69,601 CAGR: 5.1% 70,132 Location Highlights: 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 Project Cost Rs. 14.0 Bn 8,459 8,955 9,472 9,623 4,623 4,618 4,769 4,666 3,763 4,023 4,461 4,619 5,464 5,438 5,980 5,902 FY14 FY15 FY16 9MFY17 Multi Axle Bus / Truck LCV Car Total PCU Gross Toll Revenue (INR Mn) Outstanding Debt as on December 31, 2016 Rs. 2.8 Bn Recommended most likely growth rates of traffic as per the traffic consultant: 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% * As per gross toll revenue projected by the traffic consultant in the most likely scenario CAGR: 7.8% 3,007 2,653 2,327 CAGR: 13.7% 1,857 1,935 1,666 1,336 FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P* 17
Jaipur Deoli NH 12 Project Project Highlights 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 Location Highlights: 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 Tollable Annual Average Daily Traffic Volume 17,066 16,610 20,478 20,145 CAGR: 9.5% 1,908 1,930 1,601 1,518 2,166 1,865 1,770 1,976 1167 1150 968 924 2,549 3,015 3,670 4,115 FY14 FY15 FY16 9MFY17 Multi Axle Bus / Truck LCV Car Total PCU No alternative short or long distance routes with comparable riding quality, cost efficiency and service Gross Toll Revenue (INR Mn) Project Cost Rs. 17.8 Bn Outstanding Debt as on December 31, 2016 Rs. 9.4 Bn Recommended most likely growth rates of traffic as per the traffic consultant: 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% * As per gross toll revenue projected by the traffic consultant in the most likely scenario CAGR: 87.7% 1,015 CAGR: 13.4% 1,696 1,495 1,206 812 1,924 342 FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P* 18
Omallur Salem Namakkal NH 7 Project Project Highlights Tollable Annual Average Daily Traffic Volume 2 to 4 lane widening under NHDP Phase V: DBFOT for a 20 yr concession period 26,099 39,210 42,324 41,854 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 Location Highlights: 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 No alternative short or long distance routes with comparable riding quality, cost efficiency and service Project Cost Rs. 3.1 Bn Outstanding Debt as on December 31, 2016 Rs. 2.1 Bn Recommended most likely growth rates of traffic as per the traffic consultant: 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% * As per gross toll revenue projected by the traffic consultant in the most likely scenario CAGR: 27.3% Gross Toll Revenue (INR Mn) 2,832 2,809 3,381 4,375 4,257 1,936 3,351 2,059 3778 4105 4019 3208 6,395 8,275 10,298 10,414 FY14 FY15 FY16 9MFY17 Multi Axle Bus / Truck LCV Car Total PCU CAGR: 10.6% 756 749 613 544 FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P* 19 956 CAGR: 12.8% 1075 1216
Talegaon Amravati NH 6 Project Project Highlights Tollable Annual Average Daily Traffic Volume 2 to 4 lane widening under NHDP Phase III: DBFOT for a 22 yr concession period 18,319 17,237 17,402 18,071 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 Location Highlights: 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 No alternative short or long distance routes with comparable riding quality, cost efficiency and service Project Cost Rs. 8.9 Bn Outstanding Debt as on December 31, 2016 Rs. 3.8 Bn Recommended most likely growth rates of traffic as per the traffic consultant: 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% * As per gross toll revenue projected by the traffic consultant in the most likely scenario CAGR: (-2.5%) 2,091 1,886 1,733 1,228 1,285 1,214 1133 1075 1201 Gross Toll Revenue (INR Mn) 1,804 1,196 1278 3,353 3,496 4,118 4,451 FY14 FY15 FY16 9MFY17 Multi Axle Bus / Truck LCV Car Total PCU CAGR: 33.7% 461 472 346 264 FY14 FY15 FY16 9MFY17 FY18P* FY19P* FY20P* 20 585 CAGR: 13.5% 664 754
4 Annexure - InvIT Regulations Summary 21
SEBI (Infrastructure Investment Trust) Regulation, 2014, as amended Infrastructure as defined All infrastructure sub-sectors defined by the Cabinet Committee on Infrastructure; vide the Notification of of Ministry of of Finance dated 1 March 2012 (i.e. under the categories - transport, energy, water sanitation, communication and social and commercial infrastructure) Registration The InvIT has to to be registered with SEBI Parties in an InvIT Structure & Key Responsibilities Trustee Holds the InvIT assets in in trust for the benefit of of unit holders Execution of of Investment Management Agreement with the IM Overseeing Investment Manager or Project Manager s activities as provided Reviewing of of transactions between the Investment Manager and associates Sponsor Net worth of of at at least Rs. 1 Bn in in case of of body corporate or a company or or net intangible assets of of Rs. 1 Bn in in case of of a LLP Ensuring aggregate minimum post-issue holding of of at at least 15% (with a three-year lockin) Divestment of of 15% holding: - Possible only after 3 yrs from the date of of listing Investment Manager (IM) Decision-making w.r.t. investments in in assets Overseeing Project Manager s activities Ensuring assets have legally enforceable titles & that material contracts are legally enforceable Declaring and making distributions to to unit holders Coordinate with Trustee for operations of of InvIT Project Manager Undertaking the operation, management, maintenance and supervision of of assets Ensuring compliance with the concession agreement Undertaking all obligation of of project implementation in in compliance with the terms of of the project management agreement Key investment conditions Invest at at least 80% of of the value of of the assets in in completed and revenue generating infrastructure assets Balance 20% can be invested in in under-construction infrastructure projects and securities of of infrastructure companies in in India (cannot invest in in units of of other InvITs) InvIT should hold (directly or or through SPVs) the infrastructure assets for at at least 3 years from the date of of purchase of of the asset by the InvIT (except investment in in securities of of infrastructure companies) Investment into SPVs is is subject to to the InvIT holding a controlling interest (at least 51% of of equity share capital) in in the SPVs 22
InvIT Regulations Dividend Policy, Leveraging and Other Aspects Distribution Policy At least 90% of of distributable cash flow of of the SPV shall be distributed to to the InvIT in in proportion to to its holding in in the SPV At least 90% of of distributable cash flow of of the InvIT shall be distributed to the unit holders Dividend declared to be paid within 15 days; distributions to to the unit holders to to be made on a half yearly basis Leveraging Borrowings and deferred payments not to to be more than 49% of of value of of InvIT assets (excluding any borrowings made by the InvIT to to the SPVs) Borrowings and deferred payments more than 25% of of the value of of assets are subject to: Credit rating; Approvals of of unit holders where the votes cast in in favor should be more than the votes cast against the resolution Related Party Transactions Related parties of of InvIT shall include (i) (i) parties to to the InvIT; (ii) promoters, directors and partners of of the persons mentioned in in (i) (i) and as as per Companies Act, 2013 and as as per Accounting Standards; Transactions with related parties to to be disclosed in in the offer document w.r.t. transactions prior & proposed after the offer The Sponsor will not have voting rights on matters pertaining to to related party transactions Governance Approval by way of of votes cast in in favor of of the resolution shall be at at least 1.5 times the votes cast against for certain cases Change in in Investment Manager or Auditor or Valuer or Trustee Prior approval of of at at least 60% of of unit holders Special approval by way of of votes cast in in favor of of the resolution should be at at least 1.5 times the votes cast against Annual report for unit holders within 3 months from the end of of the financial year; half-yearly report within 1 month Price sensitive information to to be disclosed to stock exchange 23
Key Rights of Investors & Investment Manager Rights of Unit Holders 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 Rights & Responsibilities of Investment Manager 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 RoFR / Future 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 24
InvIT Regulations Public Offer, Listing, Delisting & Valuation Norms Public Offer Delisting Public Offer Minimum Float and Subscription Requirements Minimum value of of assets held by InvIT should be Rs. 5.0 Bn Minimum offer size of of Rs. 2.5 Bn Minimum float 25% Minimum subscription Rs. 1.0 Mn Minimum trading lot Rs. 0.5 Mn Foreign investment permitted Events Triggering Compulsory Delisting If If public float is is less than 25% of of total outstanding units Number of of unit holders (other than sponsor) is is less than 20 (each holding not more than 25% of of units of of InvIT) Where no projects / assets are remaining under the InvIT for more than six months, and where there is is no proposal to to invest in in projects in in future Mandatory Listing Requirement Mandatory listing within 12 working days from date of of closure of of initial offer Voluntary Delisting Voluntary delisting subject to to approval of of unit holders where votes cast in in favor shall be not less than one and half times votes cast against Valuation Norms Listing Trading of of units permissible only through stock exchange InvIT shall not redeem units to to the unit holders other than by way of of buyback or at at the time of of delisting of of units Purchase & sale of of assets Acquisition price cap of of 110% of of valuer s valuation Sale price floor of of 90% of of valuer s valuation Full valuation (in prescribed format) to to be undertaken by Valuer / Principal Valuer at at least once in in a year within two months from the date end of of such financial year Half yearly valuation for a publicly offered InvIT 25
Tax Implications at Various Levels No. Entity Issue 1 SPV Interest on debt from InvIT Distribution of of dividend to to InvIT 2 InvIT 1 1 SPV 2 2 InvIT 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 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 Dividend income of of the InvIT Tax on other income Gains on disposal of of assets 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 3 Unit Holder Interest income received from InvIT Dividend income distributed by the InvIT Capital gains on sale of of units Any other income distributed by the InvIT 3 3 Unit-holder 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 26
5 Annexure - Key Risks 27
Risks Associated with Operational Road Projects Toll Risk 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 Regulatory Risk 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 28
WPI and Toll Rates 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 Inflation 1 IRB TC - Tumkur - Chitradurga section of NH-4 684 3% fixed increase + 40% of the increase in Wholesale Price Inflation 1 IRB TA - Talegoan - Amravati section of NH-6 267 3% fixed increase + 40% of the increase in Wholesale Price Inflation 1 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 is at at 5.5% 29
Termination payments 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. 30
Target Traffic and Design Capacity Details 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 31