Directors Report of National Highways Infra Trust

Mar 31, 2024

The Management Discussion and Analysis section for the year under review, as stipulated under the SEBI Listing Regulations, provides a comprehensive overview of a company''s performance, operations, and future prospects. It aims to provide insights into the company''s strategic direction, financial health, risks,

challenges, and opportunities.

ABOUT NATIONAL HIGHWAYS INFRA TRUST

NHAI ("Sponsor") settled the National Highways Infra Trust ("NHIT") on 19^th October, 2020, as a contributory irrevocable Trust, pursuant to the Trust Deed executed under the provisions of the Indian Trusts Act, 1882. NHIT was registered with Securities and Exchange Board of India ("SEBI") on 28^th October, 2020, as an infrastructure investment trust ("InvIT") under Regulation 3(1) of the SEBI InvIT Regulations, 2014 having registration number IN/InvIT/20-21/0014. National Highways Infra Investment Managers Private Limited ("NHIIMPL") has been appointed as the Investment Manager to NHIT.

Currently, NHIT holds a diversified portfolio of fifteen (15) operating toll roads with an aggregate length of about 1,525 km spread across the 9 states of Assam, Gujarat, Karnataka, Madhya Pradesh (“MP”), Maharashtra, Rajasthan, Telangana, Uttar Pradesh (“UP”) and West Bengal (“WB”), with concession periods ranging between 20 to 30 years.

NHIT through its two wholly owned Special Purchase Vehicle ("SPV"), NHIT Western Projects Private Limited ("NWPPL") (formerly known as National Highways Infra Projects Private Limited) and NHIT Eastern Projects Private Limited ("NEPPL") has entered into 15 independent concession agreements with NHAI for toll roads against a concession fee of over '' 26,000 crore. The concession agreements for first bundle (5 operating toll roads) became effective on 16^th December, 2021, for second bundle (3 operating toll roads) on 29^th October, 2022 and for third bundle (7 operating toll roads) on 1^st April, 2024.

In order to acquire concession right for these roads, NHIT has cumulatively raised ~'' 14,713 crore from equity capital markets and balance through debt instruments, since November 2021. Historically, units of NHIT were issued at a price of '' 101.00 in November 2021 and were listed on both BSE and NSE on 10^th November, 2021. The additional units issued for funding second and third round of monetisation were listed on both BSE and NSE respectively on 12^th October, 2022 and 19^th March, 2024.

Additionally, NHIT has issued Non-Convertible Debentures ("NCDs") during the FY 2022-2023, which were listed on the BSE and NSE on 27^th October, 2022.

About National Highways Infra Investment Managers Private Limited ("NHIIMPL")

NHIIMPL was incorporated as a private limited company on 25^th July, 2020, under the Companies Act, 2013. The company was initially incorporated as a wholly owned subsidiary of NHAI. Subsequently, NHAI transferred its entire shareholding in the company to the President of India, acting through the Ministry of Road Transport and Highways (“MoRTH”), Government of India (“GoI”). Presently, NHIIMPL is a government company as defined under the Companies Act, 2013, as amended. The current paid up capital of the NHIIMPL is ''11.00 crore.

About NHIT Western Projects Private Limited ("NWPPL")

(formerly known as National Highways Infra Projects Private Limited ("NHIPPL"))

NWPPL is a private limited company incorporated on 23^rd July, 2020, under the Companies Act, 2013. The current paid up capital of the NWPPL is '' 1,294.10 crore. NHIT (jointly with its nominee) holds 100% of the issued, subscribed, and paid-up share capital of NWPPL.

NWPPL had entered into five (5) independent concession agreements with NHAI for concessions of each of the Roads, including Abu Road - Palanpur in Gujarat/Rajasthan, Abu Road - Swaroopganj in Rajasthan,

Kothakota Bypass - Kurnool in Telangana, Maharashtra/Karnataka Border - Belgaum and Chittorgarh - Kota & Chittorgarh Bypass in Rajasthan. The concession agreements provide NWPPL the right to collect tolls for a period of 30 years, from the declared appointed date of 16^th December, 2021, from users of each Road, with certain overlay activities and the construction of additional toll lanes in respect of certain Roads. In lieu of the concession rights, NWPPL had paid a concession fee of '' 7,350.40 crore to NHAI. Additionally, NHIT has paid '' 101.00 cr for purchasing equity of NWPPL from NHAI.

Subsequently during FY 2022-23, NWPPL had entered into three (3) additional independent concession agreements with NHAI for concessions of each of the roads including Agra Bypass in UP, Shivpuri - Jhansi in UP/MP and Borkhedi - Wadner - Kelapur in Maharashtra/Telangana. The concession agreements provide NWPPL, the right to collect tolls for a period of 20 years, from the declared appointed date of 29^th October, 2022, from the users of each road, with certain overlay activities, service roads, and the construction of structures/ toll plaza. In lieu of the concession rights, NWPPL had paid a total concession fee of '' 2,849.67 crore to NHAI (comprising base concession fee of '' 2,825.00 crore and an additional concession fee of '' 24.67 crore).

Responsibility for supervision of the operations and maintenance of the above-mentioned roads also vests with NWPPL.

The toll revenue of NWPPL was approx. '' 943.91 crore and other income was '' 7.05 crore for the last financial year.

About NHIT Eastern Projects Private Limited ("NEPPL")

NEPPL is a private limited company incorporated on 19^th April, 2023, under the Companies Act 2013. The current paid up capital of the NEPPL is '' 2,406.00 crore. NHIT (jointly with its nominee) holds 100% of the issued, subscribed and paid-up share capital of NEPPL. During the last FY 2023-24, NEPPL had entered into seven (7) independent concession agreements with NHAI for Chitradurga Bypass - Davanagere - Hubli in Karnataka, Lakhnadon - Mahagaon - Khawasa in MP, Rewa - Lakhnadon in MP, Orai - Barah in UP, Chichra - Kharagpur in WB, Kachugaon - Kaljhar and Kaljhar - Patacharkuchi in Assam. During FY 2023-24, NEPPL had paid a total concession fee of '' 15,699.88 to NHAI (comprising base concession fee of '' 15,624.90 crore and an additional concession fee of '' 74.98 crore) as consideration of the concession agreements.

The concession agreements provide NEPPL, the right to collect tolls for a period of 20 years, from the declared appointed date of 1^st April, 2024, from the users of each road, with certain overlay activities, service roads, and the construction of structures/ toll plaza Further, NEPPL is also responsible for supervision of the operations and maintenance of the above-mentioned roads.

About National Highways InvIT Project Managers Private Limited ("NHIPMPL")

NHIPMPL (“Project Manager”) was incorporated as a private limited company on 9^th March, 2021. The Project Manager is a wholly-owned subsidiary of NHAI. The Project Manager is mandated to assist NWPPL and NEPPL for the operations & maintenance as per the stipulated terms of the underlying project’s concession agreements. Further, duties of Project Manager also includes liaisoning with authorities and reporting service deficiencies of the underlying assets.

FINANCIAL STATEMENTS

Summary of Consolidated and Standalone Financial Statement of NHIT as of 31^st March, 2024

Particulars	Standalone		Consolidated
	FY 23-24	FY 22-23	FY 23-24	FY 22-23
Operating Expenses	-	-	136.66	90.25
Finance Cost	251.40	165.90	280.23	166.21
Depreciation & Amortization Expenses	-	-	247.71	175.61
Other Expenses	2.81	2.28	45.70	28.85
Total Expenditure	272.21	180.82	739.98	483.47
Profit Before Tax	975.14	777.07	234.65	217.41
Total Comprehensive Income for the Year	968.19	772.36	294.20	256.90

Outlook on Indian Economy

Indian economy has been on a steady growth trajectory, poised to become the 3^rd largest economy globally with a projected Gross Domestic Product(“GDP”) of USD 8 trillion by 2030 and USD 30-35 trillion by 2047¹. Over the past decade, significant policy actions by the Government of India have revolutionized the country’s infrastructure and financial sectors. These reforms have fostered inclusive development, elevating India to the 5^th largest economy with a GDP of USD 3.7 trillion.

Despite global economic uncertainties, geopolitical tensions from the Russia-Ukraine War, supply chain disruptions due to the Red Sea Crisis, and tightening financial conditions in major economies like the US, India’s domestic demand has remained relatively resilient.

For the FY 2023-24, India’s real GDP growth has settled at 8.2%. However, influenced by high interest rates and a strategic reduction in fiscal stimulus, the GDP is projected to moderate to 6.8% in fiscal 2025².

The proposed measures are part of a broader effort to maintain economic stability and long-term growth. Importantly, continued government support for capital expenditures and rural incomes is anticipated to play a significant role in sustaining economic momentum.

(All amounts are in '' crore unless otherwise stated)
	Standalone		Consolidated
Particulars	FY 23-24	FY 22-23	FY 23-24	FY 22-23
Total Income	1,247.35	957.89	974.63	700.88
Investment Manager Fee	18.00	12.64	18.00	12.64
Project Manager Fee	-	-	11.68	9.91

Outlook on Inflation (CPI):

Headline Consumer Price Index (“CPI”) inflation eased to an estimated 5.5% this fiscal from 6.7% in fiscal 2023. In FY25, inflation is expected to decline further to 4.5% on average³. Assuming a normal southwest monsoon and healthy agricultural output, food inflation, which forms 39% share in the CPI basket, is expected to trend downwards. Core inflation is forecasted to stay benign but could see some statistical uptick given the low base in the fiscal 2024.

Unpredictable weather shocks remain the biggest risk to the inflation outlook which will be partially cushioned through government interventions to minimise the adverse impact.

As per the Ministry of Commerce and Industry, Wholesale Price Index (“WPI”) inflation declined to 0.86% in December 2023; largely led by the WPI-food and core (manufactured non-food products) items.

India''s Push for Infrastructure

India has an ambitious vision for 2047, the year when it will celebrate 100 years of independence. The vision aspires transforming the nation into a developed country with world-class infrastructure and facilities. The Government of India is expected to undertake multiple initiatives to revolutionize the nation’s infrastructure which may include High Speed Road and Rail Network, Expansion and setting up new Major & Non-Major Ports and Multimodal Logistics Parks.

Government Focus on Infrastructure Spending 1. Capital Expenditure

The progress of National Highways (“NH”) in India has been a remarkable decadal growth story aligned with a significant increase in budget allocation and construction pace. In the last few years, the government’s capital expenditure (“capex”) has significantly increased, indicating a robust recovery in the investment cycle. The Centre’s budgetary capex surged from '' 2.5 lakh crore in fiscal 2016 to '' 9.6 lakh crore in fiscal 2024, nearly fourfold. At the same time, State capex also grew by 2.2 times during this period. From averaging 1.7% of GDP from fiscal 2016 to 2020, the Centre’s capex has nearly doubled to 3.4% of GDP, planned for the upcoming fiscal.

Further, the Government of India has been actively focusing on enhancing the transport infrastructure⁴, which is evident from 2.5 times increase in capital expenditure in transport infrastructure over the years from '' 2.1 lakh crore in 2021-22 to '' 5.3 lakh crore budgeted in 2024-2025⁵. This increase is particularly focused on enhancing physical connectivity enabling in reduction of the logistics costs and boost competitiveness. Primary areas of expenditure include rural roads, highways, airports, and railways.

³ CRISIL Research- MI&A

⁴ Budget pertains towards Ministry of Road, Transport and Highways and Ministry of Railways

⁵ https://www.indiabudget.gov.in/doc/bh1.pdf

Further, a raft of significant reforms has been introduced by the government in recent years to bolster Core Infrastructure growth in India includes streamlining of project identification and structuring through the National Infrastructure Pipeline (“NIP”), establishment of the dedicated National Bank for Financing Infrastructure and Development (“NaBFlD”) to facilitate financing for these projects, and introduction of the PM Gati Shakti scheme aimed to improve inter-ministerial coordination and project execution efficiency. Additionally, the National Monetisation Pipeline (“NMP”) has facilitated leveraging of the value of public assets for infrastructure development. Collectively, these reforms are targeted to create a favourable environment for the healthy growth of infrastructure in the country and achieve its 2047 targets.

2. Focus on Infrastructure Investment

Growth in India’s Infrastructure over the coming fiscals is expected to be driven by the government’s spending towards Core Infrastructure, including roads, railways and urban infrastructure. Cumulatively, Core Infrastructure sectors are projected to constitute 67% of the total infrastructure spending, of ? 143 lakh crore, planned for fiscals 2024-2030.

	Total Investments		Green Investments				Total Investment Core Infra
	2017-2023E	2024-2030P	2017-2023E	2024-2030P		Roads	2017-2023E	2024-2030P
Core Infra	X 50.4 lakh crore	X 96.8 lakh crore	NA	NA			718.3 lakh crore	7 37.3 lakh crore
						Railways	712.4 lakh crore	7 25.6 lakh crore
Energy	715.5 lakh crore	7 39.1 lakh crore	7 6.6 lakh crore	X 30.3 lakh crore
						Urban Infra	7 8.6 lakh crore	718.9 lakh crore
Transport	X 0.8 lakh crore	X 7.0 lakh crore	X 6.6 lakh crore	X 6.3 lakh crore
						Other Infra	X 11.1 lakh crore	X 15.0 lakh crore
Overall Infrastructure	7 66.7 lakh crore	7142.9 lakh crore	7 7.2 lakh crore	7 36.6 lakh crore
						Core Infra	X 50.4 lakh crore	X 96.8 lakh crore
Source: CRISIL MI&A Research

Development of the National Highways

National Highways constitute around 2% (1,46,145 km) of the country’s road network, but carry about 40% of the total road traffic. NHAI, the nodal agency under the MoRTH, is responsible for building, maintaining and upgrading over 82,000 kms of NHs. To develop the NH network, NHAI launched the National Highways Development Project (“NHDP”) in the year 1998 spread over seven phases and incorporates private sector involvement through Engineering Procurement and Construction (“EPC”), Build Operate Transfer (“BOT”), and Hybrid Annuity Model (“HAM”) contracts.

NHDP was followed by Bharatmala Pariyojana (“BMP” - flagship program for National Highways being implemented by MoRTH), 26,425 km in length has already been awarded with a total capital cost of '' 8.53 lakh crore (USD 103 billion) including ~6,800 km of high-speed corridors. Out of 26,425 km, ~52% of projects by total cost are being executed under PPP mode with '' 2 lakh crore (USD 24 billion) private investment.

Further, the MoRTH is expected to set out pipelines of assets under the Vision 2047 Master Plan which may include construction of over 750,00 km of highways including 50,000 km high-speed corridor (access controlled) by 2047 to cater high-speed corridor density of India, Equitable access to National Highways especially in underdeveloped regions, provide world class Passenger Amenities and target reduction in logistics cost. Vision 2047 is expected to incorporate the elements of BMP and take highway construction activity to a new level.

Stable NHAI Awarding

NHAI awarding has witnessed a rise from 2,222 km in fiscal 2019 to 6,003 km in fiscal 2023 due to favourable changes in the BOT and HAM agreements. Relaxation of bidder eligibility criteria by NHAI indicates a policy shift to enhance private-sector participation and consequently, catalyse the award of HAM projects. While the share of HAM in awarding increased slightly from 54% in fiscal 2022 to 56% in fiscal 2023 the EPC share remained unchanged at 43%.

NHAI is expected to award ~4,000-4,500 kms in fiscal 2025¹, however the respective shares of HAM, EPC and BOT in the total awarding are expected to remain at similar levels vis-vis fiscal 2024. Over the medium term, it is expected that the NHAI would continue to award -5,000 kms per year on an average between fiscals 2024 and 2028

Financing Trends

It is estimated that '' 17-19 lakh crore will be invested in national highways between fiscals 2023 and 2027, with public funds dominating the overall spending². The NHAI awarding under the HAM and on cash-contract basis is dependent on an active asset monetisation programme.

As part of asset monetisation initiatives, highway sector has been successful in monetization of completed assets (having operational history of atleast one year) through Toll-Operate-Transfer (“ToT”) and InvIT. Till date, USD 8.2 Bn (^ 0.68 lakh crore) has been raised by MoRTH/NHAI leveraging TOT & InvIT for over 3,800 km of highways. Further, NHAI is targeting to unlock over 2,700 km of its operating toll roads through TOT and InvIT during FY 2024-25.

According to SEBI Database³, InvIT and Real Estate Imvestment Trust (“REIT”) have raised over '' 39,023.6,000 crore during FY 2023-24. Further, going forward, the road sector is likely to be a major beneficiary of the new inflows.

Indian companies participating in the asset monetisation are part of the large developer/concessionaire groups and InvITs with their ability to raise funds from both foreign and domestic investors/markets at competitive rates. This could lead to stronger flow of funds from the Foreign Direct Investment (“FDI”) and capital / corporate bond markets.

It has been demonstrated through continued interest from the foreign investment inflows with India receiving a total FDI inflow of USD 70.9 billion in the financial year 2023-24.

Out of total FDI flows, FDI equity inflow received during FY 2023-24 stood at USD 44.4 billion. The FDI inflow in construction (infrastructure activities), construction development, and power sectors doubled in 2023-24. Construction (infrastructure activities) FDI equity inflow in FY 24 increased by 1.5 times standing at USD 4.2 billion from USD 3.2 billion in FY22⁹.

Going forward, support of the foreign and domestic investors, into asset categories within the National Monetisation Pipeline, will be crucial for achieving successful monetization goals set by the Government. Based on the anticipated investment trends, Roads InvITs are poised to make an attractive investment class for these funds, offering stable returns and aligning with their long-term investment strategies.

Positive changes in Model Concession Agreements ("MCA")

Recent amendments to the MCA for TOT and BOT toll models demonstrate openness to the views of the investor community and refinement of concession documents and bidding strategy from time to time.

Reform in TOT MCA for modification of traffic variance bands from 20% to 5% and revising the test points or target points to every fifth year during the concession period are expected to enhance the adaptability to traffic performance variations and revenue target evaluations.

Similarly, increasing the minimum vacant access and Right of Way (“RoW”) from 80% to 90% and stricter clauses are introduced to curb project implementation delays, are encouraging revisions for the serious BOT developers.

These strategic adjustments in both TOT and BOT Toll models are targeted to attract more investment by aligning project timelines more closely with investor and operational realities, ensuring that infrastructure development progresses efficiently and effectively.

Road Ahead

The Indian government has demonstrated robust commitment to enhancing the nation’s infrastructure through strategic capital expenditure and regulatory reforms. The modifications to the MCA for both TOT and BOT toll models, including more frequent evaluations and revised toll collection thresholds, are designed to bolster investor confidence and streamline project implementations. These changes, along with significant investment in core infrastructure sectors and a focused approach on smoother project delivery, are set to drive substantial growth across India’s highways sector. NHAI has actively played a crucial role in the NMP so far, which will be continued through TOT and InvIT. This holistic approach ensures that infrastructure development not only progresses efficiently but also aligns with the broader economic growth objective of becoming a USD

8 trillion economy by 2030.

⁹ Department of Promotion and Industrial Trade (DPIIT), March 2024

It starts from north of Palanpur in Gujarat at km 601 000 and ends at km 646 000, south of Abu Road in the state of Rajasthan. The asset has one toll plaza at Khemana (km 602 750).

This road is one of the key connectors between western Gujarat and Rajasthan and other northern and eastern Indian states. NH-27, the second-longest highway in India, starting from Porbandar in Gujarat and ending at Silchar in Assam, while passing through the states of Rajasthan, Madhya Pradesh, Uttar Pradesh, Bihar and West Bengal. The Asset caters to the north-west movement between Haryana, Punjab, Delhi, in the north and the different business centres of Gujarat. It also caters to east-west movement between Silchar, Guwahati, Siliguri, Lucknow and Udaipur in eastern India and industrial cities like Morbi, Jamnagar and Gandhidham, and ports such as Kandla and Mundra in Gujarat. Consequently, the commercial traffic on the road is of long-distance in nature. The local and short distance traffic is predominantly cars, jeeps and vans (cjv) traversing between Palanpur, Abu Road, Swaroopganj, Deesa and other small towns.

This road is adjacent to the Palanpur - Abu Road and starts near Abu Road in Rajasthan at km 646 000 and ends at km 677 000 near Swaroopganj in the state of Rajasthan. The asset has one toll plaza at Undavariya (km 670 750).

Abu Road - Swaroopganj has similar traffic pattern and connectivity as Palanpur - Abu Road.

The Dilwara Temples or Delvada Temples, a group of Svetambara Jain temples built between the 11^th and 16^th centuries, are located in close proximity to Palanpur -Abu Road and Abu Road - Swaroopganj

It starts near Chittorgarh in the state of Rajasthan at km 891 929 and ends near Kota in the state of Rajasthan at km 1052 429. The asset has three toll plazas at Bassi (km 929 629), Aroli (km 986 469), and Dhaneshwar (km 1032 979).

The road is part of the East - West corridor envisaged under National Highway Development Program (Phase - II). The road serves the east-west long-distance traffic which is majorly plying between Lucknow, Gorakhpur in eastern region and Palanpur, Rajkot in \ western region. Apart from long distance traffic, it also ^ serves the short distance traffic which is mainly J generated between Bundi, Kota, Baran, Udaipur and Chittorgarh areas.

The Chittorgarh Fort also known as Chittor Fort, a UNESCO World Heritage Site, is located at a distance of ~30 kms from the Bassi toll plaza of the asset. Chittorgarh Fort, covering an area of 280 ha sprawling over a 180 m high hill, is located in the present-day town of Chittorgarh. Further a temple of Meera Bai, a Krishna devout and a Rajput princess, is located within the premises of Chittorgarh Fort.

It starts at Shivpuri in the state of Madhya Pradesh at km 1305 087 and ends at Jhansi in the state of Uttar Pradesh at km 1380 387. The road connects the districts of Jhansi in the state of Uttar Pradesh and Shivpuri in the state of Madhya Pradesh. The asset has one toll plaza at Raksha near Jhansi (km 1374 570).

In continuation to “AP”, “AS” and “CK”, this asset also forms part of NH-27. The road stretch witnesses higher proportion of long route traffic between the eastern and western regions. Asset stretch is used by the traffic originating and destined in the regions such as Kanpur - Lucknow cluster, Indore cluster, Maharashtra and Gujarat.

The Ram Raja Temple of Orchha, is a sacred Hindu pilgrimage located at a distance of 30 km from the f Raksha toll plaza of the asset. Ram Raja Temple is the only place where Lord Shri Ram is worshipped both as a God and a King.

It starts near Orai village under district Jalaun in the state of Uttar Pradesh at km 1515 713 and ends near Barah under district Kanpur Dehat in the state of Uttar Pradesh at km 1578 36. The asset has one toll plaza at Usaka (km 1519 880)

In continuation to “AP”, “AS”, “CK” and “SJ”, this asset also forms part of the East - West corridor envisaged under National Highway Development Program (Phase - 10, connecting several prominent tourist and industrial cities, such as Porbandar (a port city), Rajkot, Palanpur, Udaipur, Chittorgarh, Jhansi, Kanpur, Lucknow, Muzaffarpur, Purnea, Siliguri, Jalpaiguri etc.

The project road serves as a major route for east-west long-distance traffic between Lucknow, Gorakhpur in the eastern region and Palanpur, Rajkot in western region. Apart from long distance traffic, it also serves to short distance traffic which is mainly generated between Orai, Jhansi, Kanpur, Lucknow and Unnao region.

Orai, a town in the Bundelkhand region, which witnessed the valour of legendary Rani Lakshmibai Newalkar from Jhansi, Warrior brothers Alah & Udal from Mahoba and Kalpi, the birthplace of Ved Vyas who authored Mahabharata.

It starts at Kachugaon in the state of Assam at km 30 000 of NH-27(old NH-31C) and passes through Rakhaldubi Bus Junction at km 92 671 / 961 500 of NH-27(old NH-30 and ends at Kaljhar in the state of Assam at km 1013 000. The asset has two toll plazas at Patgaon (km 49 600) and Dahalapara (KM 971 200) located 215 kms and 160 km west of Guwahati respectively.

The asset, is connected via the Siliguri corridor, also famously referred to as the Chicken Neck. The Siliguri Corridor and the asset connects the seven sisters of Northeast India to the rest of India. The asset acts as a feeder for NE India and caters to the long-distance traffic entering the region via Assam.

This road is adjacent to “KRK”and starts at Kaljhar in the state of Assam at km 1013 000 and ends at Patacharkuchi in the state of Assam at km 1040 300. The asset has one toll plaza at Galia (km 1017 350) located 120 kms west of Guwahati.

In continuation to other six assets, this asset is located near origin of east - west corridor of India under NH-27. The asset forms part of the most industrialized state (Assam) within northeast (ne) region of India.

Kaljhar - Patacharkuchi has similar traffic pattern and connectivity as “KRK".

“KRK” and “Galia” are in proximity to the famous Maa Kamakhya Temple of Guwahati - the oldest and one of the most sacred of the Ashtadasa (eighteen) Shakti Peethas.

A four -lane road originating on NH-19 (old NH-2) and terminating on NH-44 (old NH-3). The project length under the asset is 32.80 km.

The asset starts from junction of NH-2 (km 176 800) in the state of Uttar Pradesh at km 0 00 and ends at junction with NH-3 (km 13 030) in the state of Uttar Pradesh at km 32 800.The asset has one toll plaza at Raibha (km 10 800) and acts as a bypass to the city of Agra in the state of Uttar Pradesh and a key link between Delhi and the regions of Gwalior, Maharashtra and all southern states. It further connects the traffic originating from west from areas such as Gujarat and Jaipur to the cities in the East (Kanpur, Lucknow and beyond), thereby supporting the east-west movement. This road also acts as a connector between major highways in the state of Uttar Pradesh, branches out to NH-52 (old NH-3) and NH-44 (old NH-7) at Gwalior.

Agra’s Taj Mahal, one of the Seven Wonders of the World, built under the regime of the fifth Mughal emperor Shah Jahan in the memory of his beloved wife, is just 35 kms from the Asset.

The asset starts at km 546 420 and ends at km 653 770 in the state of Madhya Pradesh. The asset has two toll plazas at Madai (KM 549 200) and Khawasa (KM 651 718).

The asset is the part of longest highway (NH-44) in India connecting Srinagar with Kanyakumari and passing through the cities of Jammu, Jalandhar, Delhi, Faridabad, Agra, Gwalior, Jhansi, Sagar, Nagpur, Hyderabad, Bengaluru and Salem. NH-44 is part of North-South corridor envisaged under National Highway Development Program (Phase - ll).

The road forms part of north-south long-distance strategic corridor and is present in the state of Madhya Pradesh closer to Maharashtra border. It lies between L the urban centres of Jabalpur and Nagpur and has a divided section between Lakhnadon and Khawasa traversing through the districts of Mandai, Chhapara and Seoni in the state of Madhya Pradesh.

The Pench Tiger Reserve (“Pench”) and the Kanha-Pench Tiger Corridor are located in the vicinity/surrounding of the asset. Pench harbours a population of around 50 tigers residing in the prey-rich woodlands of park’s region. Besides this, the Pench also has 39 species of mammals 13 species of reptiles and 3 species of amphibians.

The asset starts from south of Nagpur at Borkhedi (km 36 600), traversing through the districts of Nagpur, Wardha and Yavatmal in the state of Maharashtra and ends near Maharashtra/Telangana Border (km 175 000). The asset has two toll plazas at Darodha (km 92.500) and Kelapur (km 150.450). The toll plaza at Kelapur is proposed to be shifted to km 156.650.

The asset is in vicinity of Nagpur, which is home to several manufacturing hubs, food processing units and CONCOR’s multi modal logistics hub. Yavatmal (textile/cotton), Butibori (MIDC), and Chandrapur (coal) are some of key traffic generators for the asset.

Kelapur toll plaza of the asset is in close proximity to the Tipeshwar Tiger Reserve & Wildlife Sanctuary; spanning across 148.63 square km in Pandarkawada in Yavatmal. With a beautiful ecosystem of rare birds, animals and plants, Tipeshwar Wildlife Sanctuary is situated amidst the picturesque Patanbori & Parwa Ranges of the Pandarkawada Forest Division. Further, this region produces finest quality cotton and a major cotton trading hub of India.

The asset starts at Kothakota (km 135 469) in the state of Telangana and ends at Kurnool (km 211 000) in the state of Andhra Pradesh. The asset has one toll plaza at Pullur (km 200 950).

The road serves the long distance traffic majorly plying between Hyderabad, Nagpur, Northern India and Bengaluru, Mysuru in southern India. Apart from serving the long distance traffic, it also serves the short distance traffic which is mainly generated between Mahbubnagar, Kothakota, Wannaparthy, Pebbair and Kurnool/Ananthpur areas.

Alampur Jogulamba temple, dedicated to Goddess Jogulamba, is one of the Maha Shakti Peethas is located at a distance of less than 20 kms from Pullur Toll plaza in Telangana.

The asset starts from north of Belgaum (km 515 000) in the state of Karnataka and ends at Kagal (km 592 705) near Karnataka - Maharashtra border in the state of Karnataka. The asset has two toll plazas at Hattargi (km 537 770) and Kognoli (km 591 240).

The road forms part of the Golden Quadrilateral connecting the four major metropolitan cities in India (Delhi-Mumbai-Chennai-Kolkata) and seven states. Regionally, it also connects the cities of Mumbai in the west to Bangalore/Chennai in the south, and also serves short distance traffic between the towns of Kolhapur, Belgaum, Hubli, Belur and Dharwad.

This road is under capacity augmentation and is being expanded to six lanes by NHAI, which shall improve the riding quality. The capacity augmentation work is expected to be completed by March, 2025.

Belgaum Fort, nestled in the heart of Belgaum city, stands as a silent witness to the tumultuous history and architectural grandeur of the region. The Historical tapestry of Belgaum Fort, built in the 13^th century, includes fortification by the Ratta Dynasty, the Yadavas, Bahmani Sultanate, and the Adil Shahi dynasty. Belgaum Fort lies at a distance of ~10 kms from the starting chainage of the Asset.

The asset starts at Chitradurga in the state of Karnataka at existing km 0 000 and ends at Hubli in the state of Karnataka at existing km 403 000. The asset has three toll plazas at Hebbalu (km 237 650), Chalageri (km 286 110) and Bankapur ( km 352 550)

Similar to “BK”, this road also forms part of the Golden Quadrilateral connecting many of the major industrial, agricultural and cultural centres of India.

“HHC” Project has similar traffic pattern and connectivity as Belgaum - Kagal.

Chitradurga Fort spreads across several hills and a peak, lies in Chitradurga. The closest point on the asset is -10 kms from the Chitradurga Fort. Locally known as Elusuttina Kote (fort of seven circles), was built between the 11^th and 13^th centuries by the Chalukyas and Hoysalas. Chitradurga Fort is also famous for its sophisticated water harvesting system.

A four-lane road on NH-49 with project length of 56.12 kms.

The asset starts at Chichra in the state of West Bengal at km 185 150 and ends near Kharagpur in the state of West Bengal at km 129 000. The asset has one toll plaza atBalibhasa (KM 157 915) nearGuptamoni.

The project stretch is a part of East - West connectivity which connects Mumbai and Kolkata.

Kharagpur received the distinction of holding first NT, established as part of the initial visions of independent India. The Balibhasa toll plaza of asset is located at a distance of -20 km from India’s first self-sufficient knowledge powerhouse. Further, Hijli Detention Camp, a former detention camp operated during the period of British colonial rule, now known as Shaheed Bhavan in NT Kharagpur is another piece of histroy.

The asset starts at km 656 000 of NH-30 (Km 242 400 of old NH-7) and ends at Km 1428 557 of NH 34 in the State of Madhya Pradesh. The asset has four toll plaza at Odhaki Paipkhar (Km 675 700 of NH 30), Kherwasani (Km 739 000 of NH 30), Mohtara (KM 840 567 of NH-30) and Boharipar (Km 1362 780 of NH-34).

The project stretch connects Rewa, Katni, Jabalpur and Lakhnadon districts of Madhya Pradesh. In the larger road network, the project stretch provides connectivity between East-West Corridor connecting Kolkata in West Bengal to Delhi and North-South corridor (NH-44) towards south at Jabalpur.

Maihar Devi Temple dedicated to a revered goddesses Sharda is situated in Maiher, Satna, Madhya Pradesh. The temple is set at the peak of Trikoota hill which is just 5 km from the closet point on the asset. Maihar is additionally known for the Indian Classical Musician -Ustad Allauddin Khan, the founder of the Maihar-Senia gharana.

ANNUAL EHSREPORT

As per its Mission statement, NHIT strives for continuous improvement with emphasis on Sustainability, Safety and Communities’ well-being.

Our objectives encompass minimizing our carbon footprint, ensuring the well-being of our employees and stakeholders with the aim of achieving Zero Harm, and reducing road accidents through effective safety measures and awareness programs. We integrate EHS and Sustainability considerations into all processes and provide comprehensive training to foster awareness among employees, workers, and contractors.

Through the integration of sustainability, health, and safety practices into our operations, we aim to create a safer, healthier, and more sustainable environment for all.

1. Strategy and Implementation

1.1 Sustainability Integration:

As part of our strategic plan, NHIT is dedicated to responsible and sustainable operations. Our key areas of focus include reducing carbon emissions, conserving natural resources, promoting the usage of renewable energy sources, easier accessibility, water conservation and superior hygiene standards.

These initiatives align with our overarching goal of minimizing our environmental footprint while ensuring long-term viability and resilience. Through targeted actions and continuous evaluation, NHIT aims to lead in environmental stewardship, contributing positively to the well-being of our planet and communities for generations to come.

1.2 Occupational Health and Safety:

Implementing comprehensive health and safety protocols is our top priority. We continuously evaluate and enhance measures to ensure the well-being of our workforce and stakeholders. The key focus areas of our operations include Work on Live roads, Toll Operations, and Incident Management & Route Patrolling.

As part of our continuous improvement efforts, we continuously track and monitor the health and safety performance of our operations through several Leading and Lagging indicators. This proactive approach enables us to identify risks and track performance for ongoing enhancements in health and safety.

I. Work on Live roads - Working on live roads presents significant safety challenges. We have a comprehensive safety management strategy to minimize risks and achieve ALARP (As Low As Reasonably Practicable) levels. Our traffic management plan adheres to IRC standards and is tailored to each road’s unique characteristics to ensure robust mitigation measures.

II. Toll Operations - Safety in toll operations is critical for both employees and commuters. NHIT prioritizes safety through rigorous training, strict protocol adherence, and regular inspections. We invest in advanced safety equipment and technology, including surveillance systems and protective gear, to create a secure environment.

III. Incident Management & Route Patrolling - NHIT’s Route Patrolling and Incident Management ensure operational safety and efficiency. Trained professionals conduct regular patrols to address hazards and maintain road conditions. In case of incidents, our team, equipped with ambulances, cranes, and protocols, responds promptly to ensure safety and minimize traffic disruptions. We analyze data from patrols and incidents to implement proactive safety measures.

1.3 Road Users'' Safety

At NHIT, Road Users’ Safety is at the heart of everything we do. We are committed to ensuring the highest level of safety for all road users across our assets. As part of our strategy, we proactively monitor accident-prone areas, conduct comprehensive analysis of accident data, and track identified black and emerging spots in real-time to promptly implement risk mitigation measures. Additionally, we are committed to increasing awareness about road safety among communities adjacent to our roads by organizing

awareness campaigns and leveraging digital communications, such as informative videos, to promote responsible road behaviour.

2. Metrics and Performance Oversight 2.1 Sustainability:

We are regularly monitoring the following parameters to define our carbon footprint abatement plan:

I. GHG Emissions in Main and Ancillary Functions

II. Water Consumption

A substantial part of our Scope 1 and Scope 2 GHG emissions arise from fuel consumption for both main and ancillary functions, as well as electricity consumption for powering facilities such as toll plazas, site offices, and highway lighting.

2.2 Occupational Health and Safety -

We measure OHS performance using several leading and lagging indicators to comprehensively assess and monitor our safety performance.

2.3 Road Users'' Safety

Our unwavering dedication to road safety underscores our commitment to safeguarding lives and ensuring safe travel experiences on our roads. Through our collective efforts and interventions, we

have successfully reduced Road User Fatal accidents by 27% year-over-year across Round 1 projects including Chhitorgarh-Kota, Belgaum-Kagal, Kothakota - Kurnool, and Palanpur-Aburoad-Swaropganj, demonstrating the substantial impact of our commitment to Road Safety.

3. Strategic Actions and Outcomes during the year

3.1 Replacement of HPSV (High-Pressure Sodium Vapor) lights by LED lights

Highway lightening/streetlights constitutes a significant portion of electrical energy consumption in highway assets, which forms part of our Scope 2 GHG emissions. To address this, we have replaced conventional 1557 HPSV, 214 high mast lights, and 124 canopy lights with more efficient LED light fixtures within project highways which are under NHIT’s O&M obligation. This has led to reduction of 388 TCO2e emissions.

3.2 Roof-Mounted Solar Panels

As an alternative energy resource, we have installed 125 kW capacity solar power plants at some of our toll plazas on the rooftops of administrative buildings, within administrative building premises, or atop canopies with an estimated production of 200,000 KWh units per year.

A net metering facility is available at all these sites, allowing them to consume electricity produced by the captive solar plants at any given point. Further, we are exploring opportunities to increase the installed capacities.

4. Awareness and Capacity Building programs 4.1 Collaboration with IIT Madras

In collaboration with the Centre of Excellence for Road Safety (coERS) at IIT Madras, we conduct the “Design Thinking for Operational Excellence in Road User Safety” program for our EHS personnel and Project Managers. This program leverages IIT Madras’ expertise and innovative methodologies, equipping our team with the skills to proactively address safety concerns and cultivate a lasting safety culture. The benefits of this program extend beyond current projects, influencing NHIT’s approach to safety and excellence in future endeavours.

4.2 Road Safety Week campaign

We conducted Road Safety Campaign across all sites from 15th January to 14^th February 2024, following guidelines from The Ministry of Road Transport & Highways, making a positive impact on local communities. The campaign reached over 20,000 people through awareness programs, street plays, and road rallies, and included activities such as eye check-up camps and first aid kit distributions. Over 250 road safety awareness sessions were conducted for students and heavy vehicle drivers.

3.3 Fuel Efficiency Programs:

NHIT has implemented fuel efficiency programs to reduce the consumption of petrol and diesel across our operations. This includes adopting fuel-efficient vehicles and machinery, optimizing routing and scheduling to minimize fuel usage, and implementing maintenance protocols to ensure peak engine performance.

4.3 National Safety Week campaign

We observed the 52^nd National Safety Week from 4^th to 10^th March, 2024 across the company to strengthen our safety culture and enhance EHS Awareness.

4.4 World Environment Day

We observed World Environment Day on 5^th June, 2023, with week-long campaigns across all project sites. Activities included pledges to avoid single-use plastic, tree plantation drives around toll plazas, reusable cotton bag distribution, and clean-up drives to promote sustainability and environmental preservation.

EXECUTIVE SUMMARY ON VALUATION OF NATIONAL HIGHWAYS INFRA PROJECTS PRIVATE LIMITED AND NHIT WESTERN PROJECTS PRIVATE LIMITED, WHOLLY OWNED SUBSIDIARIES OF NATIONAL HIGHWAYS INFRA TRUST, AS OF 31^st MARCH 2024

Private and Confidential

Date: 27^th May, 2024

National Highways Infra Investment Managers Private Limited G-5 & 6, Sector-10, Dwarka, Delhi - 110075

Sub: Executive Summary on Valuation of Specified SPVs (as defined below) of National Highways Infra Trust, pursuant to SEBI (Infrastructure Investment Trusts) Regulations, 2014, as amended ("the SEBI InvIT Regulations")

Dear Sir,

We refer to our appointment letter dated 17^th May, 2023 wherein RBSA Valuation Advisors LLP (“RBSA”) was appointed by National Highways Infra Investment Managers Private Limited (“NHIIMPL”/ the “Investment Manager”) for valuation of Specified SPVs (as defined below), as an independent valuer, as per Regulation 2(zzf) of the SEBI (Infrastructure Investment Trust) Regulations, 2014 (“SEBI InvIT Regulations”) as at 31^st March, 2024 (“Valuation Date”).

NHIT Western Projects Private Limited (“NWPPL”) (Formerly known as National Highways Infra Projects Private Limited (“NHIPPL”) and NHIT Eastern Projects Private Limited (“NEPPL”) are wholly owned subsidiaries of National Highways Infra Trust (“NHIT” or the “Trust” or “InvIT”) and have been incorporated as special purpose vehicles to operate and maintain the road projects. NHIT Western Projects Private Limited, formerly known as National Highways Infra Projects Private Limited, was renamed on 13^th May, 2024. NWPPL and NEPPL are together referred as the “Specified SPVs”.

NWPPL has entered into concession agreements with National Highway Authority of India (“NHAI” or “Sponsor”) to operate, maintain and transfer 8 Toll Road projects, under the Toll, Operate and Transfer (“TOT”) model (together referred to as “NWPPL Projects” and individually referred to as the “Project”). NHIT Eastern Projects Private Limited, have entered into concession agreement with NHAI to operate, maintain and transfer 7 Toll Road projects, under the TOT model (together referred to as “NEPPL Projects” and individually referred to as the “Project”). NHIPPL Projects and NEPPL Projects are together referred to as the “Specified Projects”.

The details NWPPL Projects are as under:

Sr. No	Name of Section	NH	Total Length (Kms)	Toll Plaza	Start Kms	End Kms
1	Abu Road - Swaroopganj	NH-27	31.000	Undavariya	646.000	677.000
2	Chittorgarh - Kota & Chittorgarh Bypass	NH-27	160.500	Bassi, Aroli and Dhaneshwar	891.929	1052.429

Sr. No	Name of Section	NH	Total Length (Kms)	Toll Plaza	Start Kms	End Kms
3	Palanpur/ Khemana - Abu Road	NH-27	45.000	Khemana	601.000	646.000
4	Kothakota Bypass - Kurnool Highway	NH-44	74.622	Pullur	135.469	211.000
5	Maharashtra / Karnataka Border (Kagal) Highway	NH-48	77.705	Hattargi and Kognoli	515.000	592.705
6	Agra Bypass	NH-2 -NH-3	32.800	Raibha	176.800 KM of NH-2	13.030 KM of NH-3
7	Shivpuri to Jhansi	NH-27	75.300	Raksha	1305.000 KM of NH-27	1380.387 KM of NH-27
8	Borkhedi-Wadner-Deodhari- Kelapur	NH-44	138.150	Daroda and Kelapur	36.600 KM of NH-44	175.600 KM of NH-44
Source: Information provided by the Management of NHIIMPL

The details of NEPPL Projects are as under:
Sr. No	Name of Section	NH	Total Length (Kms)	Toll Plaza	Start Kms	End Kms
1	Assam Package (AS-Patgaon & Dahalapara)	NH-27	114	Dahalapara	961.500 KM of NH-27	1013.000 KM of NH-27
				Patgaon	30.000 KM of NH-27	92.671 KM of NH-27
2	Orai-Bara	NH-27	63	Usaka	1515.713 KM of NH-27 (LHS) and 1578.360 KM of NH-27 (RHS)	1578.872 KM of NH-27 (LHS) and 1515.713 KM of NH-27 (RHS)
3	Assam (Galia)	NH-27	27	Galia	1013 000 KM of NH-27	1040.300 000 KM of NH-27
4	Chichra-Kharagpur	NH-49	56	Balibhasha	185.150 KM of NH-49	129.000 KM of NH-49
5	Rewa-Katni-Jabalpur- Lakhnadon	NH-30 & NH-34	287*	Odhaki Paipkhar	656.000 KM of NH-30	725.185 KM of NH-30
				Kherwasani	725.185 KM of NH-30	813.257 KM of NH-30
				Mohtara	813.257 KM of NH-30	880.600 KM of NH-30
				Boharipar	880.600 KM of NH-30	1428.557 KM of NH-34

Sr. No	Name of Section	NH	Total Length (Kms)	Toll Plaza	Start Kms	End Kms
6	Lakhnadon- Khawasa	NH-44	107	Madai	546.420 KM of NH-44	653.770 KM of NH-44
				Khawasa
7	Hubbali- Haveri-Chitradurga	NH-48	214	Chitradurga Bypass	0.000 KM of NH- 48	20.700 KM of NH- 48
				Chitradurga Davanagere	208.000 KM of NH- 48	260.000 KM of NH- 48
				Davangere Haveri	260.000 KM of NH- 48	338.923 KM of NH- 48
				Haveri Hubli	340.000 KM of NH- 48	403.000 KM of NH- 48

We have analyzed the information provided by/ on behalf of the Investment Manager through broad inquiry, analysis and review but have not carried out a due diligence or audit of such information. We have relied on the explanations and information provided by/ on behalf of the Investment Manager. We have no present or planned future interest in the Sponsor, the Specified SPVs or the Investment Manager except to the extent of our appointment as an independent valuer. Our professional fees for the valuation are not contingent upon the values reported herein. Our valuation analysis should not be construed as investment advice specifically, we do not express any opinion on the suitability or otherwise of entering into any financial or other transaction with the Trust, the Specified SPVs or the Investment Manager.

Our valuation analysis must be considered as a whole. Selecting portions of our analysis or the factors we considered, without considering all factors and analysis together could create a misleading view of the process underlying the valuation conclusions. Valuation is a complex process and is not necessarily susceptible to partial analysis or summary description. Any attempt to do so could lead to undue emphasis on any particular factor or analysis.

Valuation Analysis

The Discounted Cash Flow (“DCF”) method under the Income Approach has been adopted for the Enterprise Valuation of the Specified SPVs. Free Cash Flow to Firm method under DCF has been applied based on the projected financial statements of the Specified SPVs provided by the Management of NHIIMPL (the “Management”). The Enterprise Value has been computed by discounting the projected free cash flows to the firm beginning from 1^st April, 2024 until the end of the respective concession periods of the Specified Projects, using a Weighted Average Cost of Capital (“WACC”) of 10.50% for NHIPPL and 10.40% for NWPPL computed as of the Valuation Date.

The Enterprise Valuation of the Specified SPVs as of 31^st March, 2024 has been carried out considering inter-alia Traffic Study Reports and Technical Due Diligence Reports of independent consultants, Business plan/ Projected financial statements of the Specified SPVs and other information provided by/ on behalf of the Management, industry analysis and other relevant factors.

The Valuation summary of the Specified SPVs as of 31st March, 2024 is as follows:		(All amounts are in '' Cr)
Particulars	NHIPPL	NWPPL
Enterprise Value	12,202.0	15,512.2
Less: Debt	(9,945.3)	(13,327.5)
Less: Debt like items	(0.1)	-
Add: Cash and cash equivalent	149.1*	7.7
Equity Value	2,405.6	2,192.4

*Cash and cash equivalent as at 31^st March, 2024 excludes fixed deposits aggregating ~'' 5.1 Cr which was earmarked by the Bank of Maharashtra ("BoM") for issue of Performance Guarantee to NHAI. Management represented that this FD is expected to be released once non-fund limit by BoM is sanctioned. Considering the aforementioned, working capital as at 31^st March, 2024 includes the aforementioned FD and the same is projected to be released in the subsequent period.

This letter should be read in conjunction with our detailed Report for the valuation of the Specified SPVs, including the Assumptions and Limiting Conditions stated therein.

DETAILS OF CHANGES DURING THE YEAR PERTAINING TO:

a. Addition and divestment of assets including the identity of the buyers or sellers, purchase or sale prices and brief details of valuation for such transactions

The Project SPV-2, NHIT Eastern Projects Private Limited (NEPPL) had entered into seven concession agreements with National Highways Authority of India (“NHAI”) on 7^th March, 2024 at a consideration totalling to '' 15,699.88 Crores, for Tolling, Management, Maintenance and Transfer of seven toll road projects for a period of 20 years from the Appointed Date. The Appointed Date will commence on 1^st April, 2024. More details of the toll roads acquired are covered separately in this Report.

b. Valuation of assets and NAV (as per the full valuation reports)

The Valuation Report (as received from the valuer, RBSA Valuation Advisors LLP) provides the valuation of the assets of the trust as '' 27,714.2 Crores (Equity valuation of '' 4,598.0 Crores). The NAV as computed by the management on the basis of valuation done by the valuer is '' 125.46 per unit (pre-distribution)

c. Borrowings or repayment of borrowings (Standalone and Consolidated)

The Trust has during the year availed long term loans cumulating to '' 8,847 Crores from six banks/NBFCs for the purpose of investment or on- lending by the Trust in the Project SPV-1, NWPPL (formerly known as NHIPPL) and NEPPL.

Details of External Borrowings	(All amounts are in '' Crores)
Particulars	As on March 31, 2024	As on March 31, 2023
	(Long Term Borrowing)	(Long Term Borrowing)
Carrying amount of debt at the beginning of the year	2,941.58	1,465.38
Add:- Additional borrowings during the year	8,847.00	1,500.00
Less:- Repayments during the year	(37.60)	(10.11)
Ind AS adjustments
- Transaction Costs	(17.23)	(14.32)
- Unwinding of interest	0.74	0.64
Carrying amount of debt at the end of the year	11,734.49	2,941.58

(All amounts are in '' Crores)
As at March 31, 2024	Carrying Amount	<1 Yr.	1-3 Yrs.	>3 Yrs.
Term Loan	10,248.10	100.54	268.62	9,878.94
Non-Convertible Debentures	1,486.39	-	-	1,486.39
Total	11,734.49	100.54	268.62	11,365.33

- Mr. Vinay Kumar Rajawat, has assumed the charge of Member (Project) of NHAI w.e.f. 12^th September, 2023.

- Mr. Manoj Kumar has relinquished the charge of Member (Project) w.e.f. 12^th July, 2023, and Mr. Sudip Chaudhury has assumed the charge of Member (Project) of NHAI w.e.f. 13^th July, 2023 and relinquished the charge w.e.f. 26^th September, 2023 and thereafter Mr. Anil Chaudhary has assumed the charge of Member (Project) w.e.f. 27^th September, 2023.

- Mr. K Venkata Ramana, Member (ppp) of NHAI has relinquished the additional charge of Member (Admin) w.e.f. 3^rd October, 2023 and Mr. Vishal Chauhan, IAS has assumed the charge of Member (Admin) w.e.f. 4^th October, 2023.

Changes in Part time members

- Ms. Alka Upadhyaya has relinquished the charge of Secretary, Ministry of Road Transport & Highway w.e.f. 20^th April, 2023 and Mr. Anurag Jain has assumed the charge of Secretary, Ministry of Road Transport & Highway w.e.f. 21^st April, 2023.

- Mr. P.V.V.S. Ravi Prasad has relinquished the charge of DG(rd)&SS w.e.f. 17^th January 2024 and Mr. Dharmananda Sarangi has assumed the charge of DG(rd)&SS w.e.f. 15^th January 2024.

- Prof. Manoj Kumar Tiwari (Director IIM, Mumbai) and Mr. Rajnish Kumar (Former Chairman, State Bank of India) has assumed the Charge of Non-Government Part Time Members, w.e.f. 4^th April, 2024 and 5^th April 2024 respectively.

Details of the Investment Manager - National Highways Infra Investment Managers Private Limited

National Highways Infra Investment Managers Private Limited was incorporated as a Private Limited Company on 25^th July, 2020, under the Companies Act, 2013. The Investment Manager was initially incorporated as a wholly owned subsidiary of NHAI. Subsequently, NHAI transferred its entire shareholding in the Investment Manager to the President of India, acting through the Ministry of Road Transport and Highways, Government of India. Accordingly, at present, the Investment Manager is a Government Company as defined under the Companies Act, 2013, as amended. The CIN of the Investment Manager is U65929DL2020GOI366835.

The principal business of the Investment Manager in terms of its memorandum of association is, inter alia:

(a) to carry on the business of acting as investment manager investment adviser, trustee, settler, sponsor, promoter, portfolio manager, manager, administrator, attorney, agent, consultant, representative or nominee of or for any collective investment schemes, trusts, special purpose vehicles, infrastructure investment trusts, real estate investment trusts, properties and/or assets of any kind, including any fund set up, formed or established in India or in any other country by the Company or by any other person including bodies corporate, limited liability partnerships, partnerships, trusts, societies, associations of persons or by government, state or local authority (whether incorporated or not) of any other agency or organisation with respect to any class of assets, and to thereby settle, administer, manage, deploy funds, acquire, take up, manage, invest, hold, sell, deal or dispose of all or any property, investments, securities or other assets of any kind whatsoever, acting in such capacity;

(b) to negotiate and obtain concessions from the appropriate Government/ s for the rights to build, operate and own or transfer highways, interchangers, viaducts and bridges and any other structures, buildings and services that are ancillary thereto in India and upon such terms for such benefits as may be set forth in the concessions or negotiated from time to time and generally to carry on the business of owners, operators or toll collectors or concessionaires of highways, bridges, tunnels, railways, ports, airports, public utilities, telecommunication facilities and any other rights, properties, utilities and services wherever situated; and

(c) to carry on the business of builders and contractors for the construction, upgradation, maintenance and repairs of roads, highways, bridges, viaducts, buildings, interchangers, tunnels, railways, ports, airports, public utilities, telecommunication and other related works and generally to carry on the business of engineers, contractors, consultants, advisors, managers and administrators in all its branches, mechanical, electrical and telecommunication, engineering and incidental thereto, to provide financing or act as guarantors for project financing to owner where to required.

The Trustee i.e. IDBI Trusteeship Services Limited, vide their letter dated 31^st July, 2020, appointed NHIIMPL as the Investment Manager of the proposed Trust, based on the recommendation of the Sponsor.

List of Directors of Investment Manager Company

Mr. Suresh Goyal, Managing Director & CEO

Mr. Shailendra Narain Roy, Independent Director

Mr. Mahavir Parsad Sharma, Independent Director

Mr. Sumit Bose, Independent Director

Mr. Pradeep Singh Kharola, Independent Director

Ms. Usha Rao Monari, Independent Director

Mr. N R V V M K Rajendra Kumar, Nominee Director

Mr. Vinay Kumar, Nominee Director

Mr. Pushkar Kulkarni, Unitholder Nominee Director

Mr. Debapratim Hajara, Unitholder Nominee Director

Changes in Directors during the year till the date of this report:

- Mr. Bruce Ross Crane resigned as Non-Sponsor Director of the Company with effect from 7^th November, 2023

- Ms. Kavita Saha resigned as Non-Sponsor Director of the Company with effect from 8^th November, 2023

- Pursuant to the provisions of Regulation 4(2)(h) of SEBI InvIT Regulations, read with SEBI Circular dated 11^th September, 2023, Mr. Pushkar Vijay Kulkarni and Mr. Debapratim Hajara were appointed as Unitholder Nominee Directors with effect from 8^th November, 2023.

- Mr. Amit Kumar Ghosh resigned as a Nominee Director of the Company with effect from 15^th November, 2023

- Pursuant to the MoRTH letter dated 15^th March, 2024, Mr. Vinay Kumar has been appointed as a Nominee Director, representing MoRTH with effect from 27^th March, 2024

- Ms. Usha Rao Monari has been appointed as Independent Director for a term of 5 years with effect from 16^th April, 2024.

Details of the Trustee - IDBI Trusteeship Services Limited

IDBI Trusteeship Services Limited is the Trustee of the Trust. The Trustee is a registered intermediary with SEBI under the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, as a debenture trustee. The Trustee has obtained a certificate of registration dated 14^th February, 2017 (having registration code IND000000460), which is valid until suspended or cancelled by SEBI. The Trustee was incorporated in India under the Companies Act, 1956 with Corporate Identity Number(“CIN”) U65991MH2001GOI131154. The Trustee was originally incorporated on 8^th March, 2001 at Mumbai, Maharashtra. The Trustee’s registered office and principal place of business is situated at Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai 400 001, Maharashtra. The Trustee is jointly promoted by IDBI Bank Limited, Life Insurance Corporation and General Insurance Corporation for providing corporate and other trusteeship services.

List of Directors of the Trustee

Mr. Pradeep Kumar Jain

Mr. Pradeep Kumar Malhotra (MD & CEO)

Ms. Baljinder Kaur Mandal

Ms. Jayakumar S. Pillai (Chairman)

Changes in Directors of ITSL during the year till the date of this report:

- Mr. J. Samuel Joseph resigned as a Director with effect from 18^th April, 2023

- Mr. Jayakumar S. Pillai appointed as Chairman on 18^th July, 2023

- Ms. Jayashree Ranade resigned as a Director with effect from 18^th April, 2024

1

Crisil Research

2

Crisil Infra Yearbook, 2023

3

SEBI | Fund raising by REITs and InvITs

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Mar 31, 2023

The Management Discussion and Analysis section for the year under review, as stipulated under the SEBI Listing Regulations, provides a comprehensive overview of a company’s performance, operations, and future prospects. It aims to provide insights into the company’s strategic direction, financial health, risks, challenges,

and opportunities.

ABOUT NATIONAL HIGHWAYS INFRA TRUST

NHAI settled NHIT on 19^th October 2020, as a contributory irrevocable Trust, pursuant to the Trust Deed executed under the provisions of the Indian Trusts Act, 1882. The NHIT was registered with Securities and Exchange Board of India (“SEBI”) on 28^th October 2020, as an Infrastructure Investment Trust (“InvIT”) under Regulation 3(1) of the SEBI InvIT Regulations, 2014 having registration number IN/InvIT/20-21/0014. NHIIMPL has been appointed as the Investment Manager to NHIT.

NHIT had, pursuant to an initial Private Placement, raised unit capital from various investors on 3^rd November 2021 and the shareholding of the National Highways Infra Projects Private Limited (“NHIPPL’) was transfered to NHIT from NHAI. The said Units were listed on both BSE and NSE on 10^th November 2021.

NHIT further raised unit capital from various investors on 11^th October 2022 through private placement of units. The fresh units were listed on both BSE and NSE on 14^th October 2022. Further, NHIT also issued Non-Convertible Debentures during the year, which were also listed on the BSE and NSE on 28^th October 2022.

About National Highways Infra Investment Managers Private Limited (NHIIMPL)

NHIIMPL was incorporated as a private limited company on 25^th July 2020, under the Companies Act, 2013. The company was initially incorporated as a wholly owned subsidiary of NHAI. Subsequently, NHAI transferred its entire shareholding in the company to the President of India, acting through the Ministry of Road Transport and Highways, Government of India. Accordingly, at present, NHIIMPL is a Government Company as defined under the Companies Act, 2013, as amended. The current paid up capital of the NHIIMPL is ''11.00 crore.

About National Highways Infra Projects Private Limited (NHIPPL)

NHIPPL is a private limited company incorporated on 23^rd July 2020, under the Companies Act, 2013. The paid up capital of the NHIPPL is ''1294.10 crore. NHIT (jointly with its nominee) holds 100% of the issued, subscribed, and paid-up share capital of NHIPPL.

NHIPPL had entered into five (5) independent concession agreements with NHAI for concessions of each of the Roads, including Abu Road - Palanpur, Abu Road - Swaroopganj, Kothakota bypass - Kurnool, Maharashtra/Karnataka Border -Belgaum and Chittorgarh Kota & Chittorgarh Bypass. The concession agreements provide NHIPPL the right to collect tolls for a period of 30 years from users of each Road, with certain overlay activities and the construction of additional toll lanes in respect of certain Roads (“Initial Improvement Works”) to be completed by the NHIPPL within 24 months from 16^th December 2021 (“Appointed Date”). Responsibility for supervision of the operations and maintenance of the Roads also vests with NHIPPL. In lieu of concession rights, NHIPPL had paid a concession fee of ''7,350.40 crore to NHAI.

During the year, NHIPPL had entered into three (3) additional concession agreements with NHAI for concessions of each of the roads including Agra Bypass, Shivpuri Jhansi and Borkhedi - Wadner - Deodhari - Kelapur - Maharashtra/ Telangana Border. The concession agreements provide NHIPPL, the right to collect tolls for a period of 20 years from the users of each road, with certain overlay activities, service roads, and the construction of structures/ toll plaza (“Initial Improvement Works”) to be completed by NHIPPL within 12/18 months from 29^th October 2022 (“Appointed Date”).

In lieu of concession rights, NHIPPL had paid a total concession fee of ''2,849.67 crore to NHAI (including base concession fee of ''2,825 crore and an additional concession fee of ''24.67 crore).

The toll revenue of NHIPPL was approx. ''687.17 crore and other income was ''13.70 crore for the last financial year.

About NHIT Eastern Projects Private Limited (NEPPL)

NEPPL is a private limited company incorporated on 19^th April 2023, under the Companies Act 2013. The current paid up capital of the NEPPL is ''10 lakh. NHIT (jointly with its nominee) holds 100% of the issued, subscribed and paid up share capital of NEPPL. It is proposed that NEPPL would execute concession agreements for Bundle 3 of InvIT projects. These projects are currently under diligence and execution of concession agreements is subject to internal approvals and approval from unit holders as well as NHAI.

About National Highways InvIT Project Managers Private Limited (NHIPMPL)

NHIPMPL or “Project Manager” was incorporated as a private limited company on 9^th March 2021 under the Companies Act 2013. The Project Manager is a wholly-owned subsidiary of NHAI. The Project Manager (directly or through the appointment of appropriate agents) undertakes operations and maintenance of the Assets, including making arrangements for maintenance of the assets held by the Trust.

FINANCIAL STATEMENTS

Summary of Consolidated and Standalone Financial Statement of NHIT as of 31^st March 2023

For India, FY23 was special as it marked the 75^th anniversary of India’s Independence. India became the world''s fifth-largest economy, measured in current dollars. In real terms, it grew at 7.2% for the year ending March 2023¹. This follows an 8.7% growth in the previous financial year. The rise in consumer prices slowed considerably. The export of goods and services in the first nine months of the financial year (April - December) was up 16 per cent compared to the same period in FY22.

India’s economic growth in FY23 has been principally led by private consumption and capital formation. It has helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund².

India had a good monsoon, and reservoir levels are higher than last year and the 10-year average.

The Capital Expenditure (Capex) of the central government, increased by 63.4% in the first eight months of FY23, was another growth driver of the Indian economy³.

From an international perspective, US Fed’s policy rate is already at a decadal high, and more hikes are expected this year. Domestically, the transmission of the RBI’s rate hikes is likely to continue in fiscal 2024, which will moderate domestic demand. El Nino has emerged as another risk that could hit agriculture production and rural incomes.

(All amounts are in Rs. Crore unless otherwise stated)
Particulars	Consolidated		Standalone
	FY 22-23	FY 21-22	FY 22-23	FY 21-22
Total Income	700.88	149.75	957.89	238.37
Investment Manager Fee	12.64	19.32	12.64	19.32
Project Manager Fee	9.91	2.90	-	-
Operating Expenses	90.25	8.49	-	-
Finance Cost	166.21	31.54	165.90	31.54
Depreciation & Amortization Expenses	175.61	10.56	0	0
Other Expenses	28.85	6.83	2.28	1.1899
Total Expenditure	483.47	79.65	180.82	52.05
Profit Before Tax	217.41	70.10	777.07	186.32
Less: Taxes	-39.49	1.74	4.70	4.3951
Profit After Tax	256.90	68.36	772.36	181.92
Other Comprehensive Income	-	-	-	-
Total Comprehensive Income for the Period	256.90	68.36	772.36	181.92

India’s Economic Resilience and Growth Drivers

India’s economic resilience can be seen in the domestic stimulus to growth seamlessly replacing the external stimuli. While the growth in exports has moderated in the second half of FY23, the surge in FY22 and the first half of FY23 accelerated production processes to new levels. Manufacturing and investment activities consequently gained traction. By the time the growth of exports moderated, the rebound in domestic consumption had sufficiently matured to take forward the growth of India’s economy. Private consumption as a percentage of GDP stood at 58.4 per cent in Q2 of FY23, the highest among the second quarters of all the years since 2013-14, supported by a rebound in contact-intensive services such as trade, hotel and transport, which registered sequential growth of 16 per cent in real terms in Q2 of FY23 compared to the previous quarter⁵.

Consumer Price Index (CPI)-linked inflation moderated to 5.66% in March 2023 from 7.79% in April 2022. The easing was on account of the slowing pace of fuel inflation. Though, sticky core inflation is still above 6%. Rigidity in food inflation when climate risks threaten to put pressure on food prices this year, is also a cause for concern.

In fiscal 2024, CPI inflation is expected to moderate, helped by a reduction in fuel and core inflation. Food - a big mover of overall inflation - faces risks from weather disruptions and abnormal monsoons. The unseasonal rains earlier this year have damaged the then standing, ready-to-harvest rabi crops in several parts of the country. The damage to wheat, paddy, cumin, onion, tomato and mango would impact their prices. From a CPI inflation perspective, expected higher prices of wheat, paddy, tomato and onion will keep the pressure on inflation high, given their relative high weights in the index⁴.

The Government of India (GoI) has identified capital expenditure as a catalyst to support the economic recovery, post the pandemic. The GoI has budgeted for a strong capex of ''10 lakh crore in FY24, 37% higher than the revised estimate for FY23. The GoI’s capex (adjusted for defense capex) to GDP ratio is budgeted to rise to 2.7% in FY24 from 2.1% in FY23 and 1.1% in the pre-pandemic period of FY19. The central government capex, with a strong multiplier effect of around 2.5 (RBI 2020), is expected to further pull in private investment over a longer period⁶.Roads, railways, ports, power and urban

infrastructure are some of the key infrastructure sectors that will steer growth in the years to come. In the last 2 years, roads and railways accounted for more than 50% of the Centre’s total capex. The government’s capex in road transport and highways has grown by CAGR of around 40% in the last decade. Railways have seen the Government’s capex rising at a CAGR of 37% in the last four years (FY20-24) from 15% during FY15-FY19. There is also a significant increase in the Centre’s capex on energy, ports, civil aviation and telecommunication.

Table 1: Centre’s Capex Growth In Key Infrastructure Sectors
	% Share in Total Capex (Excluding Defence)	CAGR (FY15-19) %	CAGR (FY20-24) %
Road Transport & Highways	36.17	42.14	39.46
Railways	27.90	15.08	37.14
Telecommunications	6.53	22.50	88.09
Housing & Urban Affairs	4.15	20.86	7.72
Energy*	2.32	-0.32	49.43
Ports. Shipping & Waterways	0.12	-11.49	42.53
Civil Aviation	0.02	-9.07	41.92
Source: CMIE & CareEdge Ratings: ‘Energy includes power, petroleum & natural gas, atomic energy, new & renewable energy; Note: % share pertains to FY23 (RE)

infrastructure - Key driver of India’s Amrit Kaal March. (2023) 168499113 (careratings.com)

The state governments are the other crucial pillar for infrastructure development in the economy. States'' capex has a strong multiplier effect of 2 (RBI 2020) and plays a critical role in the nation’s economic development. A large part of the States'' capex goes into infrastructure sectors like energy, transport and communication and logistics. While the State Governments’ allocation towards capital spending (19 large states) as a percentage of SGDP increased to around 2.6% in FY23 (RE) from 2.3% in FY19, the actual capex for FY23 may turn out to be lower than the revised estimate. The states have been slow in their capex due to rising revenue uncertainties amidst other fiscal commitments. However, to supplement the Centre’s effort for infra push, states need to prioritize capex. Going forward, India’s infrastructure investment requirement is going to grow sharply. As per CareEdge’s estimate, India will require additional infrastructure investment of USD 18-20 trillion in the next 25 years as it becomes a USD 25-30 trillion economy by 2047. Currently, more than 70% of the financing for infrastructure projects comes from the government and public sector. However, owing to the limited flexibility of the government, it becomes important to encourage private investment in the infrastructure sector to bridge the infrastructure investment gap⁷.

Developments in Road Transport: Increased budgetary support by the government augmented road connectivity

Road infrastructure in the form of network of national highways, state highways, district roads, rural roads and urban roads acts as a major mode of transportation and connectivity for the country’s diverse population of consumers and businesses. Roads supplement the other modes of transport through last-mile connectivity to the far-flung regions of the country.

There has been an increase in the construction of National Highways (NHs)/roads over time, with 10,457 km of roads constructed in FY22 as compared to 6,061 km in FY16. In FY23 (until October 2022), 4,060 km of NHs/ roads were constructed, which was around 91 per cent of the achievement in the corresponding period of the previous financial year. Total budgetary support for investment in the sector has been increasing rapidly in the last four years and stood at around ''1.4 lakh crore during FY23 (as of 31^st October 2022)¹.

Investment and Trends in Roads & Highways

Over the period of FY15-FY23, the cumulative investment in the roads sector amounted to ''23.53 lakh crore. It is estimated that ''17-19 lakh crore will be invested in national highways between fiscals 2023 and 2027, with public funds dominating the overall spending. With the NHAI awarding more projects under the hybrid annuity model (HAM) and on cash-contract basis, it is now relying more on external borrowings and asset monetisation.

healthy Capital Outlay of ''23.53 lakh crore from FY15-FY23

Capital outlay for roads increased from 1.03% of GDP in FY15 to 1.57% during FY23.

Healthy Capital Outlay in State Capex for Roads Supported by NIP and Greenfield Expressways²

State capex on the roads grew at a healthy CAGR of 12% for FY15-FY23 with a CAGR of 14% for FY20-FY23 primarily due to the launch of the National Infrastructure Pipeline (NIP). Construction of prominent expressways like Purvanchal Expressways, Nagpur Mumbai Expressway etc. has bolstered state investments in Uttar Pradesh and Maharashtra. Capital outlay from the top 10 states constituted 66% of the total outlay of states in India as presented below:

National Monetisation Pipeline

ETC Collection Gaining Momentum¹⁰

To ensure seamless traffic movement through toll plazas and increase transparency in collection of user fees using FASTag, the National Electronic Toll Collection (NETC) programme has been implemented on a pan-India basis. FASTags are simple to use reloadable tags to enable automatic deduction of toll charges from a pre-paid account without having to stop at toll plazas for cash transactions.

Penetration of electronic toll collection reached 98% in September 2022 from 78% in January 2021 post introduction of FASTag. This has helped not only in curbing leakages but also bolstered investor confidence.

Financing Emerging Trends:

The budget for overall capex in 2023-24 has seen a significant increase of 33% to ''10 lakh crore (USD 122 billion), amounting to approximately 3.3% of GDP. Additionally, the establishment of the Infrastructure Finance Secretariat aims to facilitate private investment opportunities in various sectors, including railways, roads, urban infrastructure and power.

National Monetisation Pipeline (NMP) was announced in the Union Budget 2021. NITI Aayog has been entrusted with the mandate to develop National Monetisation Pipeline. Asset Monetisation being inextricably linked to new infrastructure creation, NMP has been planned to be co-terminus with the remaining four-year period of the National Infrastructure Pipeline (NIP) period of FY2020 to FY2025. NIP and NMP together give a comprehensive view to investors and developers of greenfield as well as brownfield investment opportunities in Infrastructure sector in India.

The aggregate value of assets under NMP is estimated at ''6,09,000 crore. The aggregate length of roads considered for monetisation over FY 2022 to 2025 aggregate to c.26,700 km. This is based on the length of already/ to-be operational, four-lane highways and above in the country, entailing potential for revenue generation and thereby monetisation.

Asset Monetisation

In the perspective of asset monetisation particularly for road sector, the two broad options considered are Toll-Operate-Transfer (TOT) and the InvIT (Infrastructure Investment Trusts) frameworks. Apart from these other options include structured bonds without or with restricted alternatives to the government and asset concessions like for instance, airport concessions and station redevelopment. One of the main advantages of all prevailing assets monetisation framework is that there is no construction risk involved, which otherwise is present initially in any large infrastructure project (new assets). Hence, it is anticipated that existing assets earn greater value than new projects.

• Asset monetisation critical to meet ambitious Bharatmala targets

NHAI introduced the TOT model with an objective of monetizing the operational national highways. As part of the comprehensive bidding process under the TOT model, the NHAI transfers the toll collection rights along with operation and maintenance obligations for pre-agreed concession period (typically 20/ 30 years) to a private developer in exchange for an upfront lump sum concession fees.

The government announced the TOT model in May 2016 to meet the large funding requirements of NHAI. Till 31^st March 2023, road projects with an aggregate length of 1615 km have been auctioned under TOT leading to a receipt of ''26,365 crore to NHAI¹¹.

TOT	Highest Bidder	EV (in '' Crore)
1	Macquarie	9,681
3	Cube Highways	5,011
5-A1	Adani	1,011
5-A2	DP Jain	1,251
7	CDPQ	6,267
9	NIIF	3,144
	Total	26,365

In line with the vision of monetisation of public sector assets, NHAI launched its InvIT in FY22 not only to facilitate the monetisation of roads but also to attract foreign and domestic institutional investors to invest in the roads sector. So far, NHAI has raised more than ''10,200 crore via InvIT route in the two rounds of monetisation.

Gaining momentum in InvIT

The launch of InvITs caught traction and until March 2023, 20 InvITs have been registered with SEBI. 11 of these 20 were registered between 2020-2023. With total Assets under Management (AUM) close to ''4.2 lakh crore, InvITs have been a major driver in India’s push for robust infrastructure across the country in recent times. So far, roads and transmission assets have dominated the InvIT space. Increased awareness and acceptance of the concept supplemented with a higher number of eligible infrastructure projects have facilitated this spurt. Over the years, FIIs and DIIs have played a pivotal role in capital raising to the tune of over ''75,000 crore by REITs/InvITs. With the rising push on green financing and ESG investments, renewable energy InvITs may become attractive opportunity thus boosting monetisation activity for the sector. Asset classes like gas pipelines, ports, telecom towers, airports and railways, etc. may also emerge as probable options to be taken under InvITs in the medium term¹².

101 road assets have already been transferred to 9 InvITs (upto 30^th April 2023), with a large asset under management (AUM) of ''1.2 lakh crore in short span of five years.

1

Economic Survey 2022-23. (2023) Ministry of Finance epreface.pdf (indiabudget.gov.in)

2

infrastructure - Key driver of India’s Amrit Kaal March. (2023) 168499113 (careratings.com)