India Grid Trust A Form_120520171949.pdf · Contact Person: Sandeep Maheshwari/ Anant Kharad sEBI registration no.: INM0000010650 Listing: The units of Indigrid are proposed …

IndIa GrId TrusT 3

This is an abridged version of the Offer document (“abridged Offer document”) containing salient features of the Offer document dated May 8, 2017 (the “Offer document”). You are encouraged to read further details available in the Offer document.

THIs dOCuMEnT COnsIsTs OF FOur PaGEs OF aPPLICaTIOn FOrM aLOnG WITH InsTruCTIOns and EIGHT PaGEs OF THE aBrIdGEd OFFEr dOCuMEnT. PLEasE EnsurE THaT YOu HaVE rECEIVEd aLL THE PaGEs.You may obtain copies of the Bid cum Application Form and the Abridged Offer Document from the Designated Intermediaries at the Bidding Centers, at the offices of the Lead Managers, the Syndicate Member and at the principal place of business of India Grid Trust. An electronic copy of the Bid cum Application Form will also be available for download on the websites of the NSE (www.nseindia.com) and the BSE (www.bseindia.com). You may download the Offer Document from the websites of the Securities and Exchange Board of India (the “sEBI”) at www. sebi.gov.in, the Lead Managers at www.morganstanley.com; www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm and www.edelweissfin.com and the respective websites of the Stock Exchanges at www.nseindia.com and www.bseindia.com. All capitalized terms used herein and not specifically defined shall have the same meaning as ascribed to them in the Offer Document. restrictions: This Abridged Offer Document may only be accessed by investors outside of India that have read the Preliminary Offering Memorandum of India Grid Trust dated May 8, 2017, a copy of which is available to eligible investors from the Lead Managers.

India Grid TrustPrincipal Place of Business: F-1, The Mira Corporate Suites, 1 & 2, Ishwar Nagar, Mathura Road, New Delhi 110 065

Tel: +91 11 4996 2200; Fax: +91 11 4996 2288; Compliance Officer: Swapnil PatilE-mail: [email protected]; Website: www.indigrid.co.in

sPOnsOrsTErLITE POWEr GrId VEnTurEs

LIMITEd

InVEsTMEnT ManaGErsTErLITE InVEsTMEnT ManaGErs LIMITEd*

*formerly, sterlite Infraventures Limited

TrusTEEaXIs TrusTEE sErVICEs LIMITEd

IndIa GrId TrusT (“IndIGrId”) IS ISSUING UP TO [●] UNITS OF IndIGrId (“unITs”) FOr CasH aT a PrICE OF ` [●] PER UNIT AGGREGATING uP TO ` 22,500 MILLIOn (THE “IssuE”). InITIaL PuBLIC IssuE In rELIanCE uPOn rEGuLaTIOn 14(4) OF THE sECurITIEs and EXCHanGE BOard OF IndIa (InFrasTruCTurE InVEsTMEnT TrusTs) rEGuLaTIOns, 2014, as aMEndEd (THE “InVIT rEGuLaTIOns”).THE PrICE Band and THE MInIMuM BId sIzE (as dETErMInEd BY THE InVEsTMEnT ManaGEr In COnsuLTaTIOn WITH THE LEad ManaGErs) WILL BE annOunCEd On THE WEBsITEs OF IndIGrId, THE sPOnsOr, THE InVEsTMEnT ManaGEr and THE sTOCK EXCHanGEs, and adVErTIsEd In (I) aLL EdITIOns OF BusInEss sTandard (a WIdELY CIrCuLaTEd EnGLIsH naTIOnaL daILY nEWsPaPEr) and (II) aLL EdITIOns OF BusInEss sTandard (a WIdELY CIrCuLaTEd HIndI naTIOnaL daILY nEWsPaPEr WITH WIdE CIrCuLaTIOn In nEW dELHI), aT LEasT FIVE WOrKInG daYs PrIOr TO THE BId/IssuE OPEnInG daTE. FOr FurTHEr InFOrMaTIOn, PLEasE sEE THE sECTIOn EnTITLEd “BASIS FOR ISSUE PRICE” On PaGE 84 OF THE OFFEr dOCuMEnT.In case of any revision to the Price Band, the Bid/Issue Period will be extended by at least one Working Day, subject to the total Bid/Issue Period not exceeding 30 days, provided that there shall not be more than two revisions to the Price Band during the Bid/Issue Period. Any revision to the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to the Stock Exchanges during the Bid/Issue Period and by indicating the change on the websites of IndiGrid, the Sponsor, the Investment Manager and Stock Exchanges.This Issue is being made through the Book Building Process and in compliance with the InvIT Regulations and the SEBI Guidelines, wherein not more than 75% of the Issue shall be available for allocation on a proportionate basis to Institutional Investors, provided that the Investment Manager may, in consultation with the Lead Managers, allocate up to 60% of the Institutional Investor Portion to Anchor Investors on a discretionary basis in accordance with the InvIT Regulations and the SEBI Guidelines. Further, not less than 25% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Investors, in accordance with the InvIT Regulations and the SEBI Guidelines, subject to valid Bids being received at or above the Issue Price. For details, please see the section entitled “Issue Information” on page 242 of the Offer Document.

IndICaTIVE IssuE TIMELInEsBId/IssuE OPEnInG daTE* May 17, 2017 dEsIGnaTEd daTE On or about June 1, 2017BId/IssuE CLOsInG daTE May 19, 2017 FInaLIsaTIOn OF THE BasIs OF aLLOTMEnT On or about May 30, 2017CLOsInG daTE On or about June 2, 2017 InITIaTIOn OF rEFunds On or about June 2, 2017

LIsTInG daTE On or about June 6, 2017*The Anchor Investor Bid/Issue Period shall be one Working Day prior to the Bid/Issue Opening Date, i.e. May 16, 2017.The above timetable is indicative and does not constitute any obligation or inability on IndiGrid, the Investment Manager, the Trustee or the Lead Managers.

GEnEraL rIsKsInvestments in Units involve a degree of risk and Bidders should not invest any funds in this Issue unless they can afford to take the risk of losing their entire investment. For taking an investment decision, Bidders must rely on their own examination of IndiGrid and this Issue. Bidders are advised to read the section entitled “Risk Factors” on page 42 of the Offer Document before making an investment decision relating to this Issue. Each Bidder is advised to consult its own advisors in respect of the consequences of an investment in the Units being issued pursuant to the Offer Document.

THE unITs HaVE nOT BEEn, and WILL nOT BE, rEGIsTErEd undEr THE sECurITIEs aCT, Or THE sECurITIEs LaWs OF anY sTaTE OF THE unITEd sTaTEs and MaY nOT BE OFFErEd Or sOLd WITHIn THE unITEd sTaTEs EXCEPT PursuanT TO an EXEMPTIOn FrOM, Or In a TransaCTIOn nOT suBJECT TO, THE rEGIsTraTIOn rEQuIrEMEnTs OF THE sECurITIEs aCT and anY aPPLICaBLE sTaTE sECurITIEs LaWs.

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In THE naTurE OF aBrIdGEd VErsIOn OF THE OFFEr dOCuMEnT - MEMOranduM COnTaInInG saLIEnT FEaTurEs OF THE OFFEr dOCuMEnT

suMMarY OF THE TErMs OF THE IssuE

Infrastructure Investment Trust India Grid TrustSponsor and Project Manager sterlite Power Grid Ventures LimitedInvestment Manager sterlite Investment Managers Limited*

*formerly, Sterlite Infraventures LimitedTrustee axis Trustee services Limited

Infrastructure Investment Trust

sponsor and Project Manager

Investment Manager Trustee registrar to the Issue

IndIa GrId TrusTF-1, The Mira Corporate Suites, 1 & 2, Ishwar Nagar, Mathura Road New Delhi 110 065Tel: +91 11 4996 2200Fax: +91 11 4996 2288Compliance Officer: Swapnil PatilE-mail: [email protected]: www.indigrid.co.in

sTErLITE POWEr GrId VEnTurEs LIMITEdF-1, The Mira Corporate Suites 1 & 2, Ishwar Nagar, Mathura RoadNew Delhi 110 065Tel: +91 11 4996 2200Fax: +91 11 4996 2288Contact Person: Kriti NarulaE-mail: [email protected]: www.sterlitepower.com

sTErLITE InVEsTMEnT ManaGErs LIMITEd**formerly, Sterlite Infraventures LimitedF-1, The Mira Corporate Suites 1 & 2, Ishwar Nagar, Mathura Road New Delhi 110 065Tel: +91 11 6539 9990Fax: +91 11 4996 2288Contact Person: Mithun GoleE-mail: [email protected]: www.indigrid.co.in

aXIs TrusTEE sErVICEs LIMITEdAxis House Bombay Dyeing Mills CompoundPandurang Budhkar MargWorli Mumbai 400 025Tel: +91 22 6226 0075/74Fax: +91 22 2425 3000Contact Person: Devraj RaoE-mail: [email protected]/[email protected]: www.axistrustee.com

KarVY COMPuTErsHarE PrIVaTE LIMITEd Karvy Selenium, Tower B Plot number 31 & 32 Gachibowli Financial District, Nanakramguda Hyderabad 500 032Tel : +9140 6716 2222Fax: +9140 2343 1551Contact Person: M. Murali KrishnaE-mail: [email protected] Grievance E-mail:[email protected]: https://karisma.karvy.comsEBI registration no.: INR000000221

LEad ManaGErs

Morgan stanley India Company Private Limited18F, Tower 2, One Indiabulls Centre 841, Senapati Bapat Marg, Mumbai 400 013Tel: +91 22 6118 1000Fax: +91 22 6118 1040E-mail: [email protected] Grievance E-mail: [email protected]: www.morganstanley.comContact Person: Satyam SinghalsEBI registration no.: INM000011203

Citigroup Global Markets India Private Limited1202, 12th Floor, First International Financial CenterG-Block, Bandra Kurla Complex Bandra East, Mumbai 400 051Tel: +91 22 6175 9999Fax: +91 22 6175 9898E-mail: [email protected] Grievance E-mail:[email protected]: www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htmContact Person: Nayan GoyalsEBI registration no.: INM000010718

Edelweiss Financial services Limited14th Floor, Edelweiss House Off. C.S.T. Road, Kalina, Mumbai 400 098Tel: +91 22 4009 4400Fax: +91 22 4086 3610E-mail: [email protected] Grievance E-mail:[email protected]: www.edelweissfin.comContact Person: Sandeep Maheshwari/Anant KharadsEBI registration no.: INM0000010650

Listing: The units of Indigrid are proposed to be listed on BSE Limited (“BsE”, as the “designated stock Exchange”) and National Stock Exchange of India Limtied (“nsE”). The ‘in-principle’ approvals of the BSE and the NSE for the listing of the Units have been received by IndiGrid pursuant to the letters dated February 17, 2017 and February 14, 2017 respectively. The Units are required to be listed within 12 Working Days from the Bid/Issue Closing Date. For an indicative timetable in relation to the Issue, see section entitled “Issue Structure” on page 240 of the Offer Document.syndicate Member: Edelweiss Securities LimitedSelf Certified Syndicate Banks: The list of banks that have been notified by SEBI to act as the SCSBs for the ASBA process is provided on the website of SEBI at http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries. For a list of branches of SCSBs named by the respective SCSBs to receive ASBA Forms from the Designated Intermediary, please refer to the above-mentioned link.registered Brokers: The list of the Registered Brokers, including details such as postal address, telephone number and e-mail address, is provided on the websites of the BSE and the NSE at http://www.bseindia.com/Markets/PublicIssues/brokercentres_new.aspx?expandable=3 and http://www.nseindia.com/products/content/equities/ipos/ipo_mem_terminal.htm, respectively, as updated from time to time.

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registrar and Transfer agents: The list of the RTAs eligible to accept ASBA Forms at the Designated RTA Locations, including details such as address, telephone number and e-mail address, are provided on the websites of Stock Exchanges at http://www.bseindia.com/Static/Markets/PublicIssues/RtaDp.aspx?expandable=6 and http://www.nseindia.com/products/content/equities/ipos/asba_procedures.htm, respectively, as updated from time to time.Collecting depository Participants: The list of the CDPs eligible to accept ASBA Forms at the Designated CDP Locations, including details such as name and contact details, are provided on the websites of Stock Exchanges at http://www.bseindia.com/Static/Markets/PublicIssues/RtaDp.aspx?expandable=6 and http://www.nseindia.com/products/content/equities/ipos/asba_procedures.htm, respectively, as updated from time to time.Issue size: IndiGrid is issuing up to [●] Units for cash at a price of [●] per Unit aggregating upto ` 22,500 millionOption to retain oversubscription: There is no oversubscription that is proposed to be retained in this Issue.Issue Price: The Issue Price shall be the final price at which Units are Allotted to successful Bidders (other than Anchor Investors). The Issue Price will be decided by the Investment Manager in consultation with the Lead Managers on the Pricing Date.Face Value: The Units of IndiGrid do not have any face value. Each Unit represents an undivided beneficial interest in IndiGrid.Minimum application: Minimum Application of such number of Units such that the minimum Bid size is not less than ̀ 1 million. The minimum application size for Anchor Investors, bidding in the Anchor Investor Portion shall be not less than ` 100 million.Pay-in date: The pay-in date for Anchor Investors will be as specified in the Anchor CAN. If the Issue Price is higher than the Anchor Investor Allocation Price, the additional amount being the difference between the Issue Price and the Anchor Investor Allocation Price will be payable by the Anchor Investors on the date mentioned in the Anchor CAN, being no later than two Working Days of the Bid/ Issue Closing Date.Expected date of allotment: On or about June 2, 2017Issuance mode of the Instrument: Units will be Allotted to all successful Bidders only in dematerialised formdepositories: NSDL and CDSLIsIn: INE219X23014

OBJECTs OF THE IssuEThe proceeds of this Issue will be up to ` 22,500 million (“Issue Proceeds”). The Issue Proceeds from this Issue will be utilised towards the following objects: providing loans to BDTCL and JTCL for repayment or pre-payment of debt (including any accrued interest and any applicable penalties) of banks, financial institutions, SGL1, SGL2 and repayment of any other long term and short term liabilities and capital expenditure creditors.

rELEVanT FInanCIaL raTIOsEnterprise Value / Cash flows from operations ratio in relation to Issue Price

(in ` million)Particulars amount EV/Cash flow from operations

at Floor Price at Cap Price at Issue PriceCash flows from operations for the financial year ended March 31, 2018 4,172.56** 8.74x 8.87x [●]Cash flows from operations for the financial year ended March 31, 2019 4,163.76** 8.76x 8.89x [●]Cash flows from operations for the financial year ended March 31, 2020 3,733.71** 9.77x 9.92x [●]

Cash flows from operations for the financial year ended March 31, 2017 in the above table is in accordance with the Combined Financial Statements.** In accordance with the Projections of Revenue from Operations and Cash Flow from Operating Activities prepared by the Investment Manager. For details of the projections and notes thereto, please see the section entitled “Projections of Revenue from Operations and Cash Flow from Operating Activities” on page 353 of the Offer Document. Further, please see the section entitled “Risk Factors” – Risk no. 8 and 12 in Risks relating to our business in the Offer Document.

BrIEF dEsCrIPTIOn OF THE assETs PrOPOsEd TO BE aCQuIrEd BY IndIGrIdThe Initial Portfolio Assets comprise two power transmission projects located across four states of India. The following table sets forth a summary description of the Initial Portfolio Assets:

Project name Transmission line / sub-station Configuration route length(ckms)

Expiry of term of the Tsa

Bhopal dhule Transmission Company Limited

Bhopal – Indore 765 kV S/C transmission line 176 March 31, 2049Dhule – Aurangabad 765 kV S/C transmission line 192Dhule – Vadodara 765 kV S/C transmission line 263Bhopal – Jabalpur 765 kV S/C transmission line 260Dhule – Dhule 400 kV D/C transmission line 36Bhopal – Bhopal 400 kV D/C transmission line 17Bhopal substation 2 x 1,500 MVA 765/400 kV -Dhule substation 2 x 1,500 MVA 765/400 kV -

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Project name Transmission line / sub-station Configuration route length(ckms)

Expiry of term of the Tsa

Jabalpur Transmission Company Limited

Jabalpur-Dharamjaygarh 765 kV D/C transmission line 757 March 31, 2049Jabalpur-Bina 765 kV S/C transmission line 235

CaPITaL sTruCTurE OF THE InITIaL POrTFOLIO assETsIndiGrid’s initial portfolio comprises BDTCL and JTCL, which are held by SGL1.Capital structure of SGL1

Particulars number of equity shares of ` 10 each on a pre-Issue basis as March 31, 2017

number of equity shares of ` 10 each on a post-Issue basis as on [●]*

Authorised capital 20,000,000 [●]Issued, subscribed and paid-up capital 17,673,250 [●]

*To be determined on finalisation of the Issue Price and updated in the Final Offer Document, prior to filing with SEBI and the Stock Exchanges.The Sponsor holds 100% of the issued, subscribed and paid-up share capital of SGL1.Capital structure of BDTCL

Particulars number of equity shares of ` 10 each on a pre-Issue basis as on March 31, 2017


Authorised capital 2,000,000 [●]Issued, subscribed and paid-up capital 600,000** [●]

*To be determined on finalisation of the Issue Price and updated in the Final Offer Document, prior to filing with SEBI and the Stock Exchanges.**51% of the equity shares of BDTCL have been pledged by SGL1 in favour of lenders of BDTCL, and shall continue to be pledged in favour of India Infrastructure Finance Company (UK) Limited and in relation the BDTCL NCDs. For details of the facility availed pursuant to which such equity shares were pledged, please see the section entitled “Use of Proceeds” on page 182 of the Offer Document. The Sponsor indirectly holds 100% of the issued, subscribed and paid-up share capital of BDTCL.Capital structure of JTCL

Particulars number of equity shares of ` 10 each on a pre-Issue basis as on March 31, 2017


Authorised capital 2,000,000 [●]Issued, subscribed and paid-up capital 550,000** [●]

*To be determined on finalisation of the Issue Price and updated in the Final Offer Document, prior to filing with SEBI and the Stock Exchanges.**51% of the equity shares of JTCL have been pledged by SGL1 in favour of lenders of JTCL, which are proposed to be released post repayment of loans from Issue Proceeds. For details of the facility availed pursuant to which such equity shares were pledged, please see the section entitled “Use of Proceeds” on page 182 of the Offer DocumentThe Sponsor indirectly holds 100% of the issued, subscribed and paid-up share capital of JTCL.

BrIEF dETaILs OF VaLuaTIOn OF THE InITIaL POrTFOLIO assETs

The valuation of the Initial Portfolio Assets has been done by Haribhakti & Co. LLP (the “Valuer”) and the valuation report issued by the Valuer sets out their opinion as to the fair enterprise value of the Initial Portfolio Assets as on March 31, 2017.The valuation of each of the Initial Portfolio Assets is estimated using the Discounted Cash Flow Method. Valuation The key assumptions of the projections provided to us by the management can be divided into two parts: Part a: Base Case This refers to the revenue estimated for the each of the Initial Portfolio Assets as per the existing provisions of TSA.Part B: Incremental revenue This refers to incremental transmission revenue based on the petition filed with commission as provided by the management of SPGVL. Key assumption under Part a: Base Case 1. Transmission revenue: The transmission revenue of the company comprises of non escalable transmission revenue and escalable transmission revenue as

provided in the TSA for the life of the project. 2. non Escalable Transmission revenue: The Non Escalable Transmission revenue remains fixed for the entire life of the project. We have corroborated the

revenue considered in the financial projections of the respective TSA and documents provided to us by the management of the Company. 3. Escalable Transmission revenue: Escalable Transmission revenue is the revenue component where the revenue is duly escalated based on the rationale

as provided in the respective TSA and documents provided to us by the management.


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4. Incentives: As provided in the respective TSA, if the annual availability exceeds 98%, the TSP shall be entitled to an annual incentive as provided in TSA. Provided no incentives shall be payable above the availability of 99.75%. As represented to us by the management, the annual availability shall be above 98% where the TSP shall be entitled to the incentives as provided in the TSA.

5. Penalty: If the annual availability in a contract year falls below 95%, the TSP shall be entitled for an annual penalty as provided in the TSA. As represented to us by the management, the annual availability shall not fall below 95% and thus the penalty has not been considered in the financial projections.

6. Operations & Maintenance (“O&M”): O&M expenditure are estimated by the management for the projected period based on the escalation rate as determined for each SPVs. We have relied on the projections provided by the management of the Company on the operating and maintenance expenses for the projected period.

7. depreciation: The book depreciation has been calculated using Straight Line Method over the life of the project. For calculating depreciation for the projected period, we have considered depreciation rate as specified in the Income Tax Act and WDV as per Income Tax Return filed by the Company. The Company/ SPVs are not expected to incur any capital expenditure in the projected period.

8. Tax Incentive: SPVs are eligible for tax holiday under section 80IA of Income Tax Act. Such tax holiday shall be available for any 10 consecutive years out of 15 years beginning from the date of COD.

9. Working Capital: The management and representatives of the Company have envisaged the working capital requirement of the SPVs for the projected period. The operating working capital assumptions for the projections as provided by the management comprises of trade receivables and trade payables for O&M Expenses.

Key assumption under Part B: Incremental revenue Case 1. Incremental Transmission revenue: As provided in the TSA, “every party shall be entitled to claim relief for a Force Majeure Event affecting its

performance in relation to its obligation under this agreement”. In the present case, BDTCL and JTCL has claimed relief by filing petition with the Central Electricity Regulatory Commission for the force majeure seeking an increase in transmission revenue to offset the additional cost incurred. The final verdict of the Commission is yet to come. We have considered this incremental transmission revenue as provided by the management of the Company for arriving at the Enterprise Value of the Initial Portfolio Assets.

2. Operations & Maintenance (“O&M”): No Operations & Maintenance (“O&M”) expenditure needs to be considered for Incremental Revenue. 3. depreciation: No depreciation needs to be considered for incremental revenue. Further, the Company/ SPVs are not expected to incur any capital

expenditure in the projected period. 4. Tax: We have considered full income tax @ 34.61% on the incremental revenue. 5. Working Capital: The management and representatives of the Company have envisaged the working capital requirement of the SPVs for the projected

period. The working capital assumptions for the projections as provided by the management comprises of trade receivables only. The Valuation of each SPV can be summarized as follows:

Particulars Value (In ` million)BdTCL JTCL Total

Valuation of sPV under Part a:Base Case (A)

20,406 14,949 35,355

Valuation of sPV under Part B:Incremental Revenue (B)

1,135 1,176 2,311

Enterprise Value (a + B) 21,541 16,125 37,666For further details in relation to the valuation of the Initial Portfolio Assets, please see the section entitled “Valuation Report” in Annexure A of the Offer Document.

BrIEF dEsCrIPTIOn OF rOFO assETsIndigrid has a ‘right of first offer’ in respect of eight existing projects of the Sponsor, as specified in the ROFO Deed. The following table sets forth a summary description of the ROFO Assets:

Project Location status description route length(ckms)

Term of Tsa

East-north Interconnection Limited

Assam,Bihar, West Bengal

Commissioned in November 2014 Two 400 kV D/C lines. 909 25 years

Purulia & Kharagpur Transmission Company Limited

Jharkhand,West Bengal

Kharagpur-Chaibasa line commissioned on June, 2016 and Purulia-Raachi Line commissioned on January 07, 2017

Two 400 kV D/C lines. 546 35 years

raPP TransmissionCompany Limited

Rajasthan,Madhya Pradesh

Commissioned in February, 2016 One 400 kV D/C line. 403 35 years

nrss XXIXTransmission Limited

Punjab,Jammu and Kashmir

One line commissioned in June, 2016 and other lines are expected to be in operation1 by October, 2018

Three 400 kV D/C lines and one 400/220 kV D/C GIS sub-stations with 630 MVA transmission capacity.

887 35 years


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MaheshwaramTransmission Limited

Telangana Expected operation by June, 2018 Two 400 kV D/C transmission lines and four 400 kV line bays.

477 35 years

Odisha Generation Phase II Transmission Limited

Odisha and Chhatisgarh

Expected operation by August, 2019 One 765 kV D/C transmission line and one 400 kV D/C transmission line.

715 35 years

Gurgaon-PalwalTransmission Limited

Rajasthan, Haryanaand Uttar Pradesh

Expected operation by September, 2019

Five 400 kV D/C transmission lines, three 400/220 kV GIS substations with 1,000 MVA transmission capacity each and two 400 kV line bays at 400 kV Dhonanda substation.

271 35 years

Khargone Transmission Limited

Madhya Pradesh andMaharashtra

Expected operation by July, 2019 Two 400 kV D/C transmission lines, two 765 kV D/C transmission line, one 765/400 kV substation with 2 x1,500 MVA transmission capacity at Khandwa and two 765 kV line bays and 7x80 MVAR Switchable line reactors (1 unit as spare) along 800Ω NGR and its auxilliaries for Khandwa Pool-Dhule 765 kV D/C at 765/400 kV Dhule substation.

624 35 years

1 Scheduled completion under the TSA

BrIEF dETaILs OF POLICY OF dIsTrIBuTIOns TO THE unITHOLdErsThe net distributable cash flows of IndiGrid (the “distributable Income”) are based on the cash flows generated from the underlying operations undertaken by the InvIT Assets. For details of the business and operations presently undertaken by the InvIT Assets, please see the section entitled “Our Business” on page 152 of the Offer Document. Presently, cash flows receivable by IndiGrid may be in the form of dividend, interest income or principal repayment received from the InvIT Assets in relation to any debt sanctioned by IndiGrid, or a combination of both.In terms of the InvIT Regulations, not less than 90% of the net distributable cash flows of each of the Initial Portfolio Assets, namely BDTCL and JTCL shall be distributed to IndiGrid or SGL1, subject to applicable provisions in the Companies Act, 2013 and not less than 90% of the net distributable cash flows of IndiGrid shall be distributed to the Unitholders. Further, with respect to the cash flows received by SGL1 from BDTCL and JTCL, 100% of such cash flows shall be distributed to IndiGrid unless required for debt servicing in any other loans of Initial Portfolio Assets or repair work in BDTCL and JTCL. Further, with respect to cash flows generated by SGL1 on its own, not less than 90% of such net distributable cash flows shall be distributed by SGL1 to IndiGrid. IndiGrid shall declare and distribute at least 90% of the Distributable Income to the Unitholders, at least once in every six months in every Fiscal. However, if any infrastructure asset is sold by IndiGrid or SGL1 or any of the Initial Portfolio Assets, or if the equity shares or interest in the SGL1 or any of the Initial Portfolio Assets are sold by IndiGrid; if IndiGrid proposes to re-invest the sale proceeds into another infrastructure asset within one year, it shall not be required to distribute any sales proceeds to IndiGrid or to the Unitholders. Further, if IndiGrid proposes not to invest the sale proceeds into any other infrastructure asset within one year, it shall be required to distribute the same in the manner specified above. In accordance with the InvIT Regulations, distributions by IndiGrid shall be made no later than 15 days from the date of such declarations. The distribution, when made, shall be made in Indian Rupees. For details on the risks relating to distribution, please see the section entitled “Risk Factors” on page 42 of the Offer Document.For further details in relation to the Distribution Policy, please see the section entitled “Distribution” on page 194 of the Offer Document.

BrIEF dETaILs OF FEE and EXPEnsEs CHarGEd Or CHarGEaBLE TO IndIGrIdFee and expensesAnnual ExpensesThe expenses in relation to IndiGrid, other than such expenses incurred in relation to operations of Initial Portfolio Assets, would broadly include fee payable to: (i) the Trustee; (ii) the Investment Manager; (iii) the Project Manager; (iv) the Auditor; (v) the Valuer; and (iv) other intermediaries and consultants. The estimated recurring expenses on an annual basis are as follows:

(` in million)Payable by IndiGrid Estimated ExpensesTrustee fee Please see Note 1 belowInvestment Manager fee Please see Note 2 belowProject Manager fee Please see Note 3 belowAuditor fee, Valuer fee and others 4.19

Note 1: The Trustee shall be entitled to an initial acceptance fee of ` 0.30 million. Further, the Trustee shall be entitled to annual fees of ` 0.40 million, and any out of pocket expenses, exclusive of any taxes. The annual fee is subject to revision every two years, subject to a cap of 10%.Note 2: The Investment Manager shall be entitled to fees aggregating to 1.75% of the difference between revenue from operations and operating expenses (other than the fee of the Investment Manager) of each Initial Portfolio Asset, per annum. For this purpose, the operating expenses would not include depreciation,


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finance cost and income tax expense. This fee will be exclusive of all taxes. For each Financial Year, such fee shall be payable every six months, based on actuals, within a period of 15 days from the date of declaration of financial results by IndiGrid (being the period ended March 31 and September 30, respectively, of each financial year).Note 3: The Project Manager shall be entitled to a fee amounting to 10% of the gross expenditure incurred by each Initial Portfolio Asset in relation to operation and maintenance costs, per annum. IndiGrid, or any or all of the Initial Portfolio Assets, as the case may be, shall bear any service tax and other applicable taxes payable on the fee and any other payments made to the Project Manager in terms of the Project Implementation and Management Agreement, provided that the Project Manager shall be liable to pay income tax on such fee and payments. For each Financial Year, the fee shall be payable every six months, based on actuals, within a period of 15 days from the date of declaration of financial results by IndiGrid (being the periods ending March 31 and September 30, respectively, of each financial year).allotment of units to the Project Manager after completion of the IssueBackground: (a). During the course of execution of the transmission projects, the project cost for the projects undertaken by JTCL and BDTCL, respectively, had

escalated due to force majeure events and change in law as described in the section entitled “Our Business – Bhopal Dhule Transmission Company Limited” and “Our Business – Jabalpur Transmission Company Limited” on pages 164 and 162 respectively, of the Offer Document. In order to ensure completion of the projects, the Project Manager, in its capacity as the holding company of BDTCL and JTCL, had contributed capital towards such additional costs. In order to recover such additional costs, the Project Manager believes, that BDTCL and JTCL are entitled to an upward revision of the levelised transmission charges, in accordance with the terms of their respective transmission services agreements.

(b). To compensate for the additional costs incurred and the hardship faced by the Project Manager during the course of execution of the projects, the Project Manager filed petitions (on behalf of JTCL and BDTCL) before the CERC (the “CErC Petitions”) for:(i). approving quantification of the increase of ` 803.70 million per annum in levelised transmission charges for JTCL after the CERC acknowledged

an increase in levelised transmission charges; and (ii). grant of increase of ` 212.3 million per annum in levelised transmission charges, payable with effect from the commercial operation date for

BDTCL. Apart from incurring additional costs for the projects, the Project Manager had facilitated the filing of petitions, including (i) incurring the necessary

costs related to the filing and pursuit of the petitions filed before CERC; and (ii) providing necessary evidence in relation to the escalation of project costs for the transmission lines being operated by JTCL and BDTCL, as permitted under the transmission services agreements. Further, even after completion of the Issue and listing of its Units, the Project Manager shall continue to interact with regulatory authorities and provide the necessary clarifications/ representations to facilitate the success of the aforementioned petitions.

(c). In view of the activities undertaken, costs incurred and the continuing involvement as explained in paragraphs (a) and (b) above, Sterlite Power Grid Ventures Limited (in its capacity as the Project Manager and not in its capacity as the Sponsor or a unitholder of IndiGrid) would be entitled to a one-time payment. Such payment shall be made only in the event the CERC passes an order within 18 months from the date of listing of the Units of IndiGrid (being the date of receipt of final listing and trading approvals for the Units), failing which, the entire benefit will accrue to all the Unitholders. Such payment to the Project Manager shall be made in the form of Units of IndiGrid. In view of the facts set out above and the following reasons, the Investment Manager believes that the aforestated fee arrangement does not result in: (i) providing differential rights to different categories of unitholders, (ii) creating multiple classes of units, or (iii) providing any special rights to the Sponsor:• As disclosed in the Valuation Report, the upward revision of levelised transmission charges pursuant to the CERC Petitions would result in

appreciation of valuation of BDTCL and JTCL. Further, the Investment Manager believes that this would benefit all the Unitholders since the Project Manager would be entitled to only 80% of the Cost Escalation (as defined below) and not 100%.

• The Units resulting from one-time payment shall rank pari passu to the existing Units of IndiGrid and shall not carry any differential rights (whether in respect of voting or distributions).

• The right to receive a one time payment is on account of activities undertaken, costs incurred and continuing involvement of Sterlite Power Grid Ventures Limited regarding approval of the Cost Escalation (as defined below) and the resultant revision of levelised transmission charges. Accordingly, such payment is not linked to Sterlite Power Grid Ventures Limited being the Sponsor, or on account of its Unitholding, or pursuant to any special rights.

(d). The parties to the PIMA acknowledge that the following petitions for upward revision of levelised transmission charges on account of project cost escalation have been filed before the CERC:(i). petition dated December 18, 2015 filed by JTCL for quantification and award of compensation seeking, amongst others, an increase of ` 803.70

million per annum in the levelised transmission charges pursuant to the judgment dated October 16, 2015 passed by CERC whereby it had allowed JTCL’s petition seeking declaration that delays in grant of forest clearance and authorisation under Section 164 of the Electricity Act, 2003 are covered under force majeure and change of law provisions of the transmission services agreement; and

(ii) petition dated October 15, 2016 filed by BDTCL seeking, amongst others, an increase of ` 212.3 million per annum in the levelised transmission charges (together with (i) above, the “CErC Petitions”).

Summary of the Arrangement in accordance with the PIMAA summary of the arrangement is set out below:(a). The quantum of the one-time fee payable to the Project Manager shall be based on the escalation in costs (due to change in law and force majeure

events) for execution of projects being undertaken by BDTCL and JTCL. The applicable cost escalation (the “Cost Escalation”) would be equal to the amounts set out in the CERC Petitions (as reduced, but shall not be increased, by the orders passed by the CERC pursuant to such petitions).


10 IndIa GrId TrusT

The quantum of the Cost Escalation set out in the CERC Petitions is reproduced below for ease of reference:(i) BDTCL = Rs.1,805.10 million; and(ii) JTCL = Rs. 6,604.69 million

The amount payable to the Project Manager shall be equivalent to 80% of the Cost Escalation for each of BDTCL and JTCL as set out above. The details of the Cost Escalation would be indicated in the Project Implementation and Management Agreement and disclosed in the Offer Document.

(b). The Project Manager would be entitled to Units equivalent in value to 80% of the Cost Escalation. The pricing for the Units to be issued to the Sponsor would be based on extant provisions of the InvIT Regulations governing preferential issue of units. In the absence of any specific provisions in this regard, the pricing of Units to be issued to the Project Manager shall be based on the pricing formula provided under Regulation 76 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

(c). The issue of Units of IndiGrid to the Project Manager would be contingent upon receipt of tariff orders from CERC related to Cost Escalation. Accordingly, there could be two instances of issue of Units for the one-time payment i.e. upon receipt of tariff order for BDTCL and upon receipt of tariff order for JTCL.

(d). In the event the cost escalation approved by CERC is less than 100% of the Cost Escalation sought under the petitions filed before CERC (i.e. Rs. 1,805.10 million for BDTCL and Rs. 6,604.69 million for JTCL), the amount of one-time payment to the Project Manager based on the Cost Escalation would be reduced proportionately.

(e). In the event the cost escalation approved by CERC is more than 100% of the Cost Escalation sought under the petitions filed before CERC (i.e. Rs. 1,805.10 million for BDTCL and Rs. 6,604.69 million for JTCL), the amount of one-time payment to the Project Manager would not be proportionately increased and shall be capped at 80% of the Cost Escalation set out under the petitions filed before CERC.

(f). The one-time payment shall be made only in the form of Units and there would be no cash payout.(g). The Project Manager would not be entitled to the one-time payment if the Cost Escalation and the resultant revision in levelised transmission charges

is not received within 18 months of listing of Units of IndiGrid (being the date of receipt of final listing and trading approvals for the Units).(h). An illustration of the one-time payment mechanism is provided below:

(In ` million)Cost Escalation as set out in the petitions filed before CERC (X)

actual Cost Escalation approved by CErC (Y)

Cost Escalation approved by CErC as a percentage of Cost

Escalation sought

amount of One-time payment to the Project Manager (80% of

lower of X or Y)For BDTCL

1,805.10 1,805.10 100% 1,444.081,805.10 1,624.59 90% 1,299.671,805.10 1,985.61 110% 1,444.08

For JTCL6,604.69 6,604.69 100% 5,283.756,604.69 5,944.22 90% 4,755.386,604.69 7,265.16 110% 5,283.75

TOP FIVE rIsK FaCTOrs1. IndiGrid is a new entity and does not have an established operating history, which will make it difficult for our future performance to be assessed.2. We may be unable to operate and maintain our power transmission projects to achieve the prescribed availability.3. We may lose tariff revenues and incur significant repair and replacement costs in the event our power transmission projects are rendered inoperable due to

force majeure events.4. Substantially all our revenues are derived from tariff payments received from LTTCs. A delay in payments of point of connection (“PoC”) charges to the

CTU by users and customers may adversely affect our cash flows and results of operations.5. As the terms and conditions, including the tariff structure under the TSAs are generally fixed, we may not be able to offset increase in costs, including

operation and maintenance costs, solely from tariffs payable to us under the TSAs.

dECLaraTIOn BY THE InVEsTMEnT ManaGErThe Investment Manager declares and certifies that all relevant provisions of the InvIT Regulations, SEBI Guidelines, SEBI Act and all rules, regulations and guidelines issued by the GoI or SEBI (as the case may be) have been complied with and no statement made in the Offer Document is contrary to the provisions of the InvIT Regulations, the SCRA, SEBI Guidelines, SEBI Act and all rules, regulations and guidelines issued by the GoI or SEBI (as the case may be). The Investment Manager further certifies that all the statements and disclosures in the Offer Document are material, true, correct, not misleading and adequate in order to enable the Bidders to make a well informed decision.

dECLaraTIOn BY THE sPOnsOrThe Sponsor declares and certifies that all relevant provisions of the InvIT Regulations, SEBI Guidelines, SEBI Act and all rules, regulations and guidelines issued by the GoI or SEBI (as the case may be) have been complied with and no statement made in the Offer Document is contrary to the provisions of the InvIT Regulations, the SCRA, SEBI Guidelines, SEBI Act and all rules, regulations and guidelines issued by the GoI or SEBI (as the case may be). The Sponsor further certifies that all the statements and disclosures in the Offer Document are material, true, correct, not misleading and adequate in order to enable the Bidders to make a well informed decision.


Documents

India Grid Trust A Form_120520171949.pdf · Contact Person: Sandeep Maheshwari/ Anant Kharad sEBI registration no.: INM0000010650 Listing: The units of Indigrid are proposed …