Stable cash flows from assets with minimal counter party risks

• Our revenues are derived out of contracted tariffs under long term contracts (up to 35 years) from assets with relatively low operating and maintenance costs.
• Inter-state power transmission projects receive tariffs on the basis of availability, irrespective of the quantum of power transmitted through the line.
• Power transmission projects are characterized by low levels of operating risk. The Initial Portfolio Assets are operational power transmission projects with an operating history of at least one year and no construction risks or major capital expenditure requirements.
• We have maintained an annual availability for each of the Initial Portfolio Assets in excess of 98% since commissioning for which we have earned maximum incentive revenues under the respective TSAs. Maintaining availability of the Initial Portfolio Assets in excess of 98%, gives us the right to claim incentives under the TSA, ensuring an adequate upside to maximize availability. The amount of incentive revenue earned increases as our availability levels increase, with a maximum incentive revenue earned for maintaining 99.75% availability.
• Tariffs under the TSAs are billed and collected pursuant to the PoC mechanism. Under the PoC mechanism, payments are made to a central payment pool and the proceeds are distributed proportionately to all transmission services providers, such as the Initial Portfolio Assets. Any shortfall in collection of transmission charges by the CTU is shared on a pro rata basis by all transmission service providers. Payment securities in the form of a revolving letter of credit, a surcharge of 1.25% for late payments and lack of alternate power infrastructure deter beneficiaries from defaulting. This mechanism diversifies counter party risk, ensures a stable cash flow independent of asset utilization and provides payment security.

Strong Financial Position

• IndiGrid has been given a Corporate Credit Rating AAA by CRISIL, ‘IND AAA’/Stable by India Ratings and “IrAAA”II (pronounced as IR triple A) with stable outlook by ICRA. Following the utilization of the Net Proceeds, our consolidated borrowings and deferred payments net of cash and cash equivalents will be below the 49% maximum prescribed by the InvIT Regulations and below the industry standard, which, according to the CRISIL Report, is 70% debt.

Ownership and location of assets

• Each of the Initial Portfolio Assets is located in strategically important areas for electricity transmission connectivity, delivering power from generating centers to load centers to meet inter-regional power deficits. Once a transmission project has been commissioned, it requires relatively low levels of expenditure to operate and maintain, which means that the relevant Initial Portfolio Assets will have the benefit of owning a critical asset without incurring significant operational costs. In particular, with periodic maintenance, our transmission assets will have a useful life of 50 years, according to Lahmeyer.
• The transmission lines of the Initial Portfolio Assets are predominantly located in areas where developing alternate lines may be challenging due to the terrain, challenges in obtaining rights of way, limited corridors and high construction costs. This puts us in an advantageous position to capitalize the opportunities to increase our power transmission capacity through the same corridor by upgrading our existing systems.

Strong lineage and support from the Sponsor

• Our Sponsor is one of the leading power transmission company in the private sector, with extensive experience in identifying, successfully bidding, designing, financing, constructing, operating and maintaining power transmission projects across India.
• As of the date of the Draft Offer Document, our Sponsor owns ten inter-state power transmission projects, comprising 29 power transmission lines and seven sub-stations, with a total network of approximately 6,767 ckms of power transmission lines with 12,630 MVA of transformation capacity, at different stages of development. The Sponsor has worked alongside third party contractors, vendors, financial institutions, government agencies and regulators for the proper execution, development and functioning of the Initial Portfolio Assets and the ROFO Assets.
• Our Sponsor has been awarded more projects through the TBCB process, for the development of transmission lines by the Government, than any other private player in the market.
• The experience of our Sponsor‘s operation and maintenance team lends significant expertise in respect of the operation and maintenance of our assets as our Sponsor has also been appointed as our Project Manager. Members of the Sponsor‘s board of directors and management team have extensive experience in the power transmission industry and have established track records in negotiating, structuring and financing investments in power transmission assets and managing those assets. For one of the Initial Portfolio Assets, BDTCL, the Ministry of Power awarded SGL1 a Silver Shield for the year 2013-2014 in the category of ‘Early Completion of Transmission Projects’.

Rights to our Sponsor‘s pipeline of power transmission projects

Pursuant to the ROFO Deed with our Sponsor, we have a ‘right of first offer’ in respect of eight inter-state power transmission projects, having a transmission network of 21 power transmission lines of 4,831 ckms and five substations, with a transformation capacity of 6,630 MVA. Of the eight ROFO Assets we have a ‘right of first offer’ to acquire, two have been commissioned, two are partially operational and four remain under various stages of development.

Under the ROFO Deed or otherwise, any potential acquisitions of power transmission projects will be assessed for their suitability with our investment mandate and is subject to mutual agreement between the Sponsor and the Investment Manager on behalf of

IndiGrid

, as well as approval by Unitholders.

Strong corporate governance and skilled and experienced Investment Manager.

We expect to benefit from the skills and experience of the board of directors and the management teams of our Investment Manager in investing and financially managing our power transmission assets. Members of our Investment Manager‘s boards of directors and management teams have extensive experience in operating the power transmission sector and have established track records in negotiating, structuring and financing investments in power transmission assets and financially managing those assets as well as governing similar trusts internationally.

The InvIT Regulations set out the statutory requirements for, among other things, the board composition of an investment manager. We believe that Unitholders will benefit from the strong corporate governance requirements of the InvIT Regulations. Key features of our corporate governance structure are as follows:

• The chairman of the board of our Investment Manager is an independent director with experience in governing international infrastructure trusts.
• The Investment Manager has constituted crucial committees of the board, including, the stakeholders‘ relationship committee, audit committee and the governance and investment committee. All these committees are chaired by independent directors.
• All related party transactions with the Sponsor are to be approved by the governance and investment committee of the Investment Manager, which is comprised of independent directors.

All acquisitions made by IndiGrid must be approved by a majority of our Unitholders excluding the Sponsor with respect to the ROFO Assets or any other proposed acquisition from the Sponsor.