As of December 27, 2024, the Sponsor manages a portfolio of 26 hybrid annuity mode (HAM) road projects with the NHAI. This includes 11 completed projects—five of which were previously owned by Sadbhav Infrastructure Project Limited—and 15 currently under construction.
The Sponsor has a proven track record in efficient project management and execution, supported by a skilled workforce, optimal equipment utilisation, and an integrated in-house business model. These capabilities have allowed for the completion of projects within or ahead of scheduled timelines. Additionally, the Sponsor's in-house supply chain management ensures timely delivery of key construction materials to sites, maintaining optimal inventory levels for smooth operations.
Beyond the initial portfolio assets, the Trust, through its Investment Manager, has the right to acquire new projects under the Right of First Offer (ROFO) Agreement with the Sponsor.
The Trust's initial portfolio consists of nine assets with a total length of approximately 682.425 kilometres, equating to 2,059 lane kilometres. These assets are situated on national highways spanning seven states in India, catering to both commercial and passenger traffic.
Certain assets within the initial portfolio have been receiving regular semi-annual annuity payments from NHAI since January 6, 2021. As of September 30, 2024, the cumulative annuity payments received amount to Rs 554.46 crore. The residual concession terms for these projects range from 10.09 years to 13.84 years.
The hybrid annuity projects with NHAI provide a natural hedge against adverse interest rate fluctuations. In addition to annuity payments during the operations phase, NHAI pays interest on the reducing balance of 60% of the Bid Project Cost throughout the operational period at a rate that is 3% higher than the Reserve Bank of India’s Bank Rate.
Capital Infra Trust was registered as an infrastructure investment trust with SEBI on March 7, 2024. Being a newly established entity with no operating history, it is challenging to predict with any degree of accuracy its future growth prospects.
Premature termination of any Initial Portfolio Assets could result in the loss of payments due, which could negatively impact the Trust’s financial condition.
Projected revenues from operations for the nine Initial Portfolio Assets are Rs 1,044.43 crore for FY25, Rs 695.36 crore for FY26, and Rs 686.46 crore for FY27. These revenues rely heavily on consistent annuity payments and interest income from NHAI. Changes in taxation laws applicable to the Trust could also affect revenue. Any negative impact on the revenue from these assets could harm the Trust’s business and overall operations.
Certain Project SPVs, the Sponsor, and the Trustee are involved in ongoing legal proceedings. Any adverse judgment in any of the cases could harm the company’s business prospects.
As of September 30, 2024, the Trust reported a contingent liability of Rs 11.04 crore, which if materialises, could adversely affect its financial condition.
Any unexpected reduction in cash flows from Project SPVs or unanticipated increases in payments from their escrow accounts may hinder their ability to meet payment obligations. This could affect their capacity to repay unsecured subordinate loans provided by the Sponsor and loans owed to senior lenders.
The Trust relies on the Investment Manager, Project Manager, and Trustee to oversee its business and assets. If any of these entities fail to perform effectively, it could harm the Trust’s financial condition, cash flow, and ability to distribute earnings. Additionally, the rights of the Trust and its unitholders to recover claims from these entities may be limited.
As of September 30, 2024, financial covenants under certain financing agreements amounted to Rs 3,355.29 crore. Any inability to repay or fulfil these financial agreements could be detrimental to the company’s financial position.