Series-5 IM dated February 4, 2019 NATIONAL HIGHWAYS ... · recommendation by the Issuer to the Issue to subscribers to the Bonds. Prospective subscribers should also consult their

Serial No.: [______]

Addressed to: ______________________________________

Private & Confidential –For Private Circulation Only

Series-5 IM dated February 4, 2019

NATIONAL HIGHWAYS AUTHORITY OF INDIA (An Autonomous Body under the Ministry of Road Transport & Highways, Government of India)

(Constituted on June 15, 1989 by an Act of Parliament - The National Highways Authority of India Act, 1988) Head Office: G - 5 & 6, Sector 10, Dwarka, New Delhi – 110075 Tel: (011) 25074100, 25074200; Fax: +91-11-25093517, 25093515 Website: www.nhai.gov.in; E-mail: [email protected]

(This Series-5 IM is neither a Prospectus nor a Statement in lieu of Prospectus. This Series-5 IM is prepared in conformity

with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular No.

LAD-NRO/GN/2008/13/127878 dated June 06, 2008 as amended from time to time.

(PRIVATE & CONFIDENTIAL)

SERIES-5 IM DATED February 4, 2019

SERIES-5 IM FOR PRIVATE PLACEMENT OF SECURED, NONCONVERTIBLE, NON-CUMULATIVE, REDEEMABLE,

TAXABLE BONDS IN THE NATURE OF DEBENTURES OF FACE VALUE OF RS.10 LAKHS EACH FOR AN AMOUNT OF

Rs.500 CRORES AND GREEN SHOE OPTION OF Rs. 1500 CRORES AGGREGATING to Rs.2000 CRORES BY NATIONAL

HIGHWAYS AUTHORITY OF INDIA (“NHAI” OR THE “ISSUER” OR THE “AUTHORITY”)

ISSUE PROGRAM

ISSUE/BID OPENING DATE ISSUE/BID CLOSING DATE PAY-IN DATE DATE OF ALLOTMENT

February 4, 2019 February 4, 2019 February 5, 2019 February 5, 2019

TRUSTEE FOR THE BONDHOLDERS

Vistra ITCL (India)Ltd. The IL&FS Financial Centre Plot C-22, G-Block, 7th Floor, Bandra Kurla Complex Bandra East, Mumbai - 400 051 Tel: +91 (022) 28593535 Fax: +91+91 (022) 26533207 E-mail: [email protected]

REGISTRAR TO THE ISSUE

Beetal Financial & Computer Services 99, Beetal House, Madangir, Behind Local Shopping Centre Near Harsukhdas Mandir New Delhi – 110062 Tel: +91 11 2996 1281 - 83 Fax: +91 11 2996 1284 E-mail: [email protected]

mailto:[email protected]



TABLE OF CONTENTS

PARTICULARS PAGE NO

I. DISCLAIMER 1

II. DEFINITIONS/ ABBREVIATIONS 5

III. ISSUER INFORMATION 7

IV. DETAILS OF MEMBERS OF THE ISSUER 9

V. DETAILS OF STATUTORY AUDITOR OF THE ISSUER 13

1) STATUTORY AUDITOR OF THE ISSUER 13

2) CHANGE IN STATUTORY AUDITOR OF THE ISSUER SINCE LAST THREE YEARS

13

VI. MANAGEMENT PERCEPTION OF RISK FACTORS 14

VII. BRIEF SUMMARY OF BUSINESS/ ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS

37

1) OVERVIEW 37

2) STRENGTHS 38

3) STRATEGIES 40

4) ISSUER PROJECTS 41

5) FINANCING 44

6) CORPORATE STRUCTURE 54

VIII. KEY OPERATIONAL & FINANCIAL PARAMETERS OF THE ISSUER FOR THE LAST 3 AUDITED YEARS

55

IX. BRIEF HISTORY OF ISSUER SINCE INCORPORATION, DETAILS OF ACTIVITIES INCLUDING ANY REORGANIZATION, RECONSTRUCTION OR AMALGAMATION, CHANGES IN CAPITAL STRUCTURE, (AUTHORIZED, ISSUED AND SUBSCRIBED) AND BORROWINGS

55

1) BRIEF BACKGROUND 55

2) CHANGE IN HEAD OFFICE 55

3) VISION 55

4) MAIN OBJECTS 55

5) MAJOR EVENTS 56

6) HOLDING COMPANY 56

7) THE PROMOTER 56

8) SPVs AND ASSOCIATE COMPANY 57

X. CAPITAL STRUCTURE 59

1) CAPITAL HISTORY 59

2) DETAILS OF ANY ACQUISITION OR AMALGAMATION IN THE LAST 1 YEAR

61

3) DETAILS OF ANY REORGANIZATION OR RECONSTRUCTION IN THELAST 1 YEAR

61

4) DISCLOSURES PERTAINING TO WILFUL DEFAULT 62

5) SHAREHOLDING PATTERN OF THE ISSUER 62

PARTICULARS PAGE NO

6) TOP 10 EQUITY SHARE HOLDERS OF THE ISSUER 62

7) PROMOTER HOLDING IN THE ISSUER 62

8) BORROWINGS OF THE ISSUER 62

A) DEBT OUTSTANDING 62

B) TERMS OF ASSETS CHARGED AS SECURITY 69

C) TOP 10 BONDHOLDERS OF THE ISSUER 76

9) AMOUNT OF CORPORATE GUARANTEES ISSUED BY THE ISSUER IN FAVOUR OF VARIOUS COUNTER PARTIES INCLUDING ITS SPVs AND ASSOCIATE COMPANY

76

10) COMMERCIAL PAPER ISSUED BY THE ISSUER 76

11) OTHER BORROWINGS (INCLUDING HYBRID DEBT LIKE FOREIGN CURRENCY CONVERTIBLE BONDS (“FCCBS”), OPTIONALLY CONVERTIBLE BONDS/ DEBENTURES/ PREFERENCE SHARES)

76

12) SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES, DEFAULT(S) AND/OR DELAY(S) IN PAYMENTS OF INTEREST AND PRINCIPAL OF ANY KIND OF TERM LOANS, DEBT SECURITIES AND OTHER FINANCIAL INDEBTEDNESS INCLUDING CORPORATE GUARANTEE ISSUED BY THE ISSUER, IN THE PAST 5 YEARS

76

13) OUTSTANDING BORROWINGS/ DEBT SECURITIES ISSUED FOR CONSIDERATION OTHER THAN CASH, WHETHER IN WHOLE OR PART, AT A PREMIUM OR DISCOUNT, OR IN PURSUANCE OF AN OPTION

77

XI. MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE 78

XII. SUMMARY TERM SHEET 79

XIII. TERMS OF OFFER 84

XIV. CREDIT RATING FOR THE BONDS 99

XV. TRUSTEES FOR THE BONDHOLDERS 100

XVI. STOCK EXCHANGE WHERE BONDS ARE PROPOSED TO BE LISTED 101

XVII. MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER

102

XVIII. DECLARATION 103

ANNEXURES

1. Financial Information 2. Credit Rating Letters 3. Consent of the Trustee 4. Limited review report for half year ended 30 September 2018 5. Application Form-To be sent separate

1

I. DISCLAIMERS 1. DISCLAIMER OF THE ISSUER This Series-5 IM is neither a Prospectus nor a Statement in Lieu of Prospectus. This Series-5 IM

Document is prepared in conformity with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008 as amended from time to time. This Series-5 IM does not constitute an offer to public in general to subscribe for or otherwise acquire the Bonds to be issued by National Highways Authority of India (“NHAI” or the “Issuer” or the “Authority”). This Series-5 IM for the exclusive use of the addressee and it should not be circulated or distributed to third party(ies). It is not and shall not be deemed to constitute an offer or an invitation to the public in general to subscribe to the Bonds issued by the Issuer. This bond issue is made strictly on private placement basis. Apart from this Series-5 IM, no offer document or prospectus has been prepared in connection with the offering of this bond issue or in relation to the issuer.

This Series-5 IM does not intend to form the basis of evaluation for the prospective subscribers to whom it is addressed and who are willing and eligible to subscribe to the bonds issued by NHAI. This Series-5 IM has been prepared to give general information regarding NHAI to parties proposing to invest in this issue of Bonds and it does not purport to contain all the information that any such party mayrequire. NHAI believes that the information contained in This Series-5 IM is true and correct asof the date hereof NHAI does not undertake to update this Series-5 IM to reflect subsequentevents and thus prospective subscribers must confirm about the accuracy and relevancy of any information contained herein with NHAI. However, NHAI reserves its right for providing the information at its absolute discretion. NHAI accepts no responsibility for statements made in any advertisement or any other material land anyone placing reliance on any other source of information would be doing so at his own risk and responsibility. Prospective subscribers must make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in Bonds. It is the responsibility of the prospective subscriber to have obtained all consents, approvalsor authorizations required by them to make an offer to subscribe for, and purchase the Bonds. It is theresponsibility of the prospective subscriber to verify if they have necessary power and competence to apply for the Bonds under the relevant laws and regulations in force. Prospective subscribers should conduct their own investigation, due diligence and analysis before applying for the Bonds. Nothing in this Series-5IM should be construed as advice or recommendation by the Issuer to the Issue to subscribers to the Bonds. Prospective subscribers should also consult their own advisors on the implications of application, allotment, sale, holding, ownershipand redemption of these Bonds and matters incidental thereto. This Series-5 IM is not intended for distribution. It is meant for the consideration of the personto whom it is addressed and should not be reproduced by the recipient. The securities mentioned herein are being issued on private placement basis and this offer does not constitute a public offer/invitation. This Series-5 IM shall be accompanied by application form serially numbered and addressed specifically to the person to whom the offer ismade and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the names of such persons.

2. DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA This Series-5 IM shall not be filed with Securities & Exchange Board of India (“SEBI”) for their approval. The Bonds have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or

2

adequacy of this Series-5 IM. It is to be distinctly understood that this Series-5 IM should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this Series-5 IM. The Issue of Bonds being made on private placement basis, filing of this Series- 5 IM is not required with SEBI. However, SEBI reserves the right to take up at any point of time, with the Issuer, any irregularities or lapses in this Series-5 IM. 4. DISCLAIMER OF THE ARRANGERS TO THE ISSUE

The role of the Arranger in the assignment is confined to marketing and placement of the Debentures/Bonds (Debentures and Bonds have been used interchangeably in this Disclaimer) on the basis of this Series-5 IM (hereinafter collectively referred to as “Information Memorandum”) as prepared by the Issuer. The Arranger has neither scrutinized nor vetted nor reviewed nor has it done any due-diligence for verification of the contents of this Information Memorandum. The Arranger shall use this Information Memorandum for the purpose of soliciting subscription(s) from Eligible Investors in the Debentures to be issued by the Issuer on a private placement basis. It is to be distinctly understood that the use and distribution of this Information Memorandum by the Arranger should not in any way be deemed or construed to mean that the Information Memorandum has been endorsed by the Arranger in any manner. It is responsibility of the Issuer to comply with all laws, rules and regulations and obtain all regulatory, governmental, corporate and other necessary approvals for the issuance of the Bonds. The Arranger has not verified whether the regulatory requirements have been fulfilled and necessary approvals have been obtained by the Issuer. The Issuer has prepared this Information Memorandum and the Issuer is solely responsible and liable for its contents. The Issuer confirms that all the information contained in this Information Memorandum has been provided by the Issuer or is from publicly available information, the use of which isn’t regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise and that such information has not been independently verified by the Arranger. No representation or warranty, expressed or implied, is or will be made, and no responsibility or liability is or will be accepted, by the Arranger or any of their employees, directors or their Affiliates for the accuracy, completeness, reliability, correctness or fairness of this Information Memorandum or any of the information or opinions contained therein, and the Arranger hereby expressly disclaims any responsibility or liability to the fullest extent for the contents of this Information memorandum, whether arising in tort or contract or otherwise, relating to or resulting from this Information Memorandum or any information or errors contained therein or any omissions there from. Neither Arranger and its affiliates, nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of this document. By accepting this Information Memorandum, the Eligible Investor accepts this Disclaimer of the Arranger, which forms an integral part of this Information Memorandum and agrees that the Arranger will not have any such liability. The Eligible Investors should carefully read this Series-5 IM. This Information Memorandum is for general information purposes only, without regard to specific objectives, suitability, financial situations and needs of any particular person and does not constitute any recommendation and the Eligible Investors are not to construe the contents of this Series-5 IM as investment, legal, accounting, regulatory or tax advice, and the Eligible Investors should consult with its own advisors as to all legal, accounting, regulatory, tax, financial and related matters concerning an investment in the Bonds. This Information

3

Memorandum should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities mentioned therein, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This Information Memorandum is confidential and is made available to potential investors in the Bonds on the understanding that it is confidential. Recipients are not entitled to use any of the information contained in this Information Memorandum for any purpose other than in assisting to decide whether or not to participate in the Bonds. This document and information contained herein or any part of it does not constitute or purport to constitute investment advice in publicly accessible media and should not be printed, reproduced, transmitted, sold, distributed or published by the recipient without the prior written approval from the Arranger and the Issuer. This Information Memorandum has not been approved and will or may not be reviewed or approved by any statutory or regulatory authority in India or by any Stock Exchange in India. This document may not be all inclusive and may not contain all of the information that the recipient may consider material. Please note that: (a) The Arranger and/or their affiliates may, now and/or in the future, have other investment and

commercial banking, trust and other relationships with the Issuer and other entities related to the Issuer;

(b) As a result of those other relationships, the Arranger and/or their affiliates may get

information about the Issuer and/or the Issue or that may be relevant to any of them. Despite this, the Arranger and/or their affiliates will not be required to disclose such information, or the fact that it is in possession of such information, to any recipient of this Information Memorandum;

(c) The Arranger and/or their affiliates may, now and in the future, have fiduciary or other

relationships under which it, or they, may exercise voting power over securities of various persons. Those securities may, from time to time, include securities of the Issuer;

(d) The Arranger and/or their affiliates may exercise such voting powers, and otherwise perform

its functions in connection with such fiduciary or other relationships, without regard to its relationship to the Issuer and/or the securities;

(e) The Arranger is not acting as trustee or fiduciary for the investors or any other person; and (f) The Arranger is under no obligation to conduct any "know your customer" or other procedures

in relation to any person. NOTHING IN THIS INFORMATION MEMORANDUM CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OF AMERICA OR ANY OTHER JURISDICTION WHERE SUCH OFFER OR PLACEMENT WOULD BE IN VIOLATION OF ANY LAW, RULE OR REGULATION. NO ACTION IS BEING TAKEN TO PERMIT AN OFFERING OF THE BONDS IN THE NATURE OF DEBENTURES OR THE DISTRIBUTION OF THIS INFORMATION MEMORANDUM IN ANY JURISDICTION WHERE SUCH ACTION IS REQUIRED. THE DISTRIBUTION/TAKING/SENDING/DISPATCHING/TRANSMITTING OF THIS INFORMATION MEMORANDUM AND THE OFFERING AND SALE OF THE BONDS MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND

4

OBSERVE, ANY SUCH RESTRICTIONS. 5. DISCLAIMER OF THE STOCK EXCHANGE As required, a copy of this Series-5 IM shall be submitted to BSE Limited (hereinafter referred to as “BSE”) for hosting the same on its website. It is to be distinctly understood that such submission of the Series-5 IM with BSE or hosting the same on its website should not in any way be deemed or construed that the Series-5 IM has been cleared or approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Series-5 IM; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

5

II. DEFINITIONS/ ABBREVIATIONS

AY Assessment Year

Allotment/ Allot/ Allotted

The issue and allotment of the Bonds to the successful Applicant(s) in the Issue

Allottee A successful Applicant to whom the Bonds are allotted pursuant to the Issue, either in full or in part

Applicant/Investor A person who makes an offer to subscribe the Bonds pursuant to the terms of this Series-5 IM and the Application Form

Application Form The form in terms of which the Applicant shall make an offer to subscribe to the Bonds and which will be considered as the application for allotment of Bonds in the Issue

Bondholder(s) Any person holding Bonds and whose name appears on the beneficial owners list provided by the Depositories

Beneficial Owner(s) Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996)

Members of the Board

The Members of the Board of National Highways Authority of India or Committee thereof

BSE/ Designated Stock Exchange

BSE being the stock exchange in which Bonds of the Issuer are proposed to be listed

Record Date Reference date for payment of interest/ repayment of principal

CAR Capital Adequacy Ratio

CAG Comptroller and Auditor General of India

IRRPL India Ratings and Research Private Limited

ICRA Investment Information and Credit Rating Agency of India Limited

CDSL Central Depository Services (India) Limited

CCEA Cabinet Committee on Economic Affairs

CRISIL CRISIL Limited

CARE CARE Ratings Limited

Depository A Depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time

Depositories Act The Depositories Act, 1996, as amended from time to time

Depository Participant

A Depository participant as defined under Depositories Act

DP Depository Participant

DRR Bond/ Debenture Redemption Reserve

EPS Earnings Per Share

FIs Financial Institutions

FIIs/ FPIs Foreign Institutional Investors / Foreign Portfolio Investors

Financial Year/ FY Period of twelve months ending March 31, of that particular year

GoI/ GOI Government of India/ Central Government

Trustees Trustees for the Bondholders in this case being Vistra ITCL (India) Limited

Issuer/ NHAI/Authority

National Highways Authority of India, an autonomous body under the Ministry of Road Transport & Highways, Government of India, constituted by an act of Parliament - The National Highways Authority of India Act, 1988 and having its

6

head office at G - 5 & 6, Sector 10, Dwarka, New Delhi – 110075

I.T. Act The Income Tax Act, 1961, as amended from time to time

Km kilo meter

MF Mutual Fund

MoF Ministry of Finance

NECS National Electronic Clearing Service

NEFT National Electronic Funds Transfer

NSDL National Securities Depository Limited

NHDP National Highways Development Programme

PAN Permanent Account Number

GIR General Index Registration Number

Rs./ INR Indian National Rupee

RBI Reserve Bank of India

RTGS Real Time Gross Settlement

Registrar Registrar to the Issue, in this case being Beetal Financial & Computer Services (P) Ltd.

SEBI The Securities and Exchange Board of India, constituted under the SEBI Act, 1992

SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time

SEBI Debt Regulations

Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended from time to time.

TDS Tax Deducted at Source under provisions of the I.T. Act

Series-5 IM This Information Memorandum dated February 4, 2019containing necessary terms and conditions of the specific issue and other necessary disclosure

The Act The National Highways Authority of India Act, 1988 (“NHAI Act”)

7

III. ISSUER INFORMATION Name of the Issuer : National Highways Authority of India Head Office : G - 5 & 6, Sector - 10, Dwarka, New Delhi - 110075

Tel. : (011)25074100, 25074200

Fax : +91-11-25093507

Website : www.nhai.gov.in

E-mail : [email protected]

Compliance Officer* for : Mr. S. Q. Ahmad the Issue General Manager (Finance)

National Highways Authority of India Head Office G – 5&6, Sector 10, Dwarka, New Delhi - 110075 Tel: +91 11 25074100, 25074200 E-mail: [email protected]

* The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account etc. Chief Financial Officer : Mr. Asheesh Sharma, IAS of the Issuer* Member (Finance)

National Highways Authority of India Head Office G – 5 & 6, Sector 10, Dwarka, New Delhi - 110075 Tel.: +91 11 25074100, 25074200

Fax: +91 1125093542 E-mail: [email protected]

* The Issuer does not have a designated Chief Financial Officer. The finance function is headed byMr. Asheesh Sharma, IAS,who is the Member (Finance) of the Issuer, whose particulars are given above.

Investors/Arrangers to the Issue: S.No. Name of the Arrangers/QIBs/Investors Amount in Rs.

Cr.

1 NPS TRUST AC SBI PENSION FUND SCHEME CENTRAL GOVT

80

2 CBT EPF A/C HSBC ASSET MANAGEMENT INDIA PVT LTD

75

3 CBT EPF 05 C DM 60

4 CBT EPF - 05-A-DM 50

5 AXIS BANK LIMITED 50

6 HDFC BANK LIMITED 50

7 YES BANK 50



10 YES BANK 50

11 CBT EPF - 05-A-DM 50


8

12 YES BANK 50

13 ICICI BANK 5

14 ANDHRA BANK 5

15 A. K. CAPITAL SERVICES LIMITED 5

16 TRUST INVESTMENT ADVISORS PRIVATE LIMITED 5

17 ICICI SECURITIES PRIMARY DEALERSHIP LIMITED 5


19 TIPSONS CONSULTANCY SERVICES PVT LTD 5



22 KOTAK MAHINDRA BANK LTD 5


45

24 CBT EPF 05 E 35



30



29 ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED

200

30 YES BANK 20



20

33 CBT EPF 05 E 15

34 A. K. CAPITAL SERVICES LIMITED 15

35 HDFC Ergo General Insurance Company Limited 15


37 SBI EMPLOYEES GRATUITY FUND 100


39 CBT EPF - 05-A-DM 100


100

41 HDFC Ergo General Insurance Company Limited 10

Total :

2000

Trustees for theBondholders: Vistra ITCL (India) Limited

The IL&FS Financial Centre Plot C-22, G-Block, 7th Floor, Bandra Kurla Complex Bandra (East)

9

Mumbai - 400 051 Tel:+91 22 28593535 Fax:+91 22 26533207 E-mail: [email protected] Registrar to the : M/s Beetal Financial & Computer Services (P) Ltd.

Issue 99, Beetal House, Madangir, Behind Local Shopping Centre

Near Harsukhdas Mandir New Delhi-110062 Tel :+91 1129961281-83 Fax:+91 1129961284 Email: [email protected]

Credit Rating : India Ratings & Research Private Limited

Agencies A Fitch Group Company Wockhardt Tower, Level 4, West Wing BandraKurla Complex, Bandra (E) Mumbai – 400051 Tel:+91 2240001700 Fax:+91 22 40001701 E-mail: [email protected] Website: www.indiaratings.co.in CARE Ratings Limited

13th floor, E-1 Videocon Towers, Jhandewala extansion , New Delhi 110055 Tel:+91 11 45333201 Fax:+91 1145333238 E-mail: [email protected] Website: www.careratings.com CRISIL Limited Registered Office CRISIL House, Central Avenue Hiranandani Business Park Powai, Mumbai – 400 076 Tel.:+91 22 33423000 Fax:+91 2233423050 E-mail:[email protected] Website: www.crisil.com

ICRA Limited

Registered Office 1105, Kailash Building

11th Floor, 26, Kasturba Gandhi Marg New Delhi—110001

Tel.: +91 11 23357940-50 Fax: +911123357014 E-mail:[email protected] Website: www.icra.in


http://www.indiaratings/

mailto:jatin.babbar@careratings

http://www.careratings/

mailto:rohit.chugh@crisilrating

http://www.crisil/

mailto:abhishek.gupta@icraindia

http://www.icra.in/

10

Stautory Auditors : Comptroller and Auditor General of India Indian Audit & Accounts Department Office of the Principal Director of Commercial Audit & Ex-Officio Member, Audit Board - 1 3rd Floor, A-Wing, Indraprastha Bhawan New Delhi - 110002 Tel:+91 11 23378473 Fax:+91 1123378432 E-mail:[email protected]

IV. DETAILS OF MEMBERS OF THE BOARD OF THE ISSUER

MEMBERS OF THE BOARD OF THE ISSUER The Issuer was constituted by the NHAI Act to develop, maintain and manage the national highways vested in or entrusted to it by the Central Government. As per the NHAI Act, the Issuer is managed by Members of the Authority, which consists of:

(i) a Chairman; (ii) not more than six full-time Members; and (iii) not more than six part-time Members. Each Member is appointed by the Central Government by notification in the official gazette. Presently, the Issuer has five full time Members (excluding the Chairman) and four part time Members. Every meeting of the Issuer must be attended by at least two-thirds of total members and three-quarters of the part-time Members. The NHAI Act provides that for the purpose of discharging its functions, the Issuer shall appoint such number of officers and other employees as it may consider necessary. Details of the Chairman and full-time Members of the Authority:

Sl. No. Description

1. Name Shri Sanjeev Ranjan, IAS

Designation Chairman, NHAI

Date of Appointment October 5, 2018

Other Directorships Nil

Age 55 years

2 Name Shri R. K. Chaturvedi

Designation Member (Administration)

Date of Appointment 28 May, 2018

Other Directorships None

Age 56 years

3. Name Shri R. K. Pandey

Designation Member (Projects)

Date of Appointment 4 November 2015


Age 56 years

11

Sl. No. Description

4. Name Shri D. O.Tawade

Designation Member (Technical)

Date of Appointment 30 August 2016


Age 60 years

6. Name Shri Anand Kumar Singh

Designation Member (Projects)

Date of Appointment 12 February 2016


Age 52 years

7 Name Shri Asheesh Sharma, IAS

Designation Member (Finance)

Date of Appointment June 5 2018

Other Directorships Chairman & Managing Director of Indian Highways Management Company Ltd.

Age 47 years

Details of part-time Members of the Authority:

SI. No. Description

1. Name Shri Yudhvir Singh Malik, IAS

Designation Secretary to the Government of India, Department of Road Transport & Highways, Government of India

Date of Appointment 27 June 2017

Other Directorships Haryana Tanneries Limited (in the process of Strike off) Haryana State Handloom and Handicrafts Corporation Limited (in the process of Strike off) National Highways & Infrastructure Development Corporation Limited Harayana State Small Industries and Export Corporation Limited (in the process of Strike off)

Age 58 years

2. Name Sh. Amitabh Kant, IAS (Retd)

Designation CEO, NITI Aayog


Other Directorships India International Convention and Exhibition Centre Limited

Age 62 years

Name Sh. Ajay Narayan Jha, IAS

12

SI. No. Description

3. Designation Secretary to the Government of India, Department of Expenditure, Ministry of Finance, Government of India.


Other Directorships India International Convention and Exhibition Centre Limited

Age 59 years

4. Name Shri I. K. Pandey

Designation Director General (RD) & Special Secretary

Date of Appointment [●]

Other Directorships [●]

Age [●]

NONE OF THE CURRENT MEMBERS OF THE AUTHORITY OF THE ISSUER APPEAR IN THE

RBI'S DEFAULTER LIST OR ECGC'S DEFAULT LIST. Changes to the Members of the Issuer during the last three years The following changes have occurred to the membership of the Issuer in the three years preceding the date of this Prospectus:

Name Date of Appointment

Date of retirement /

relinquishing charge

R.K. Chaturvedi, Additional Secretary and

Member (Administration)

May 18, 2018 Continuing

Asheesh Sharma Member (Finance)

May 18, 2018 Continuing

Subhash Chandra Garg, IAS July 2017 November 06, 2017

Ajay Narayan Jha, IAS Secretary, Department of

Expenditure

October 31, 2017 Continuing as a Member

Shri Rajeeve Kumar, IAS May 16, 2017 June 27, 2017

Shri Ashok Lavasa, IAS

Secretary, Department of

Expenditure

April 30, 2016 October 31, 2017

Sh. Deepak Kumar Chairman, NHAI

June 27, 2017 May 16, 2018

Shri Shashikanta Das Secretary, Department of

Economic Affairs, Ministry of

Finance

August 31, 2015 February 28, 2017

Shri R.K.Pandey Member (Projects)

November 04, 2015 Continuing as a Member

Shri Sanjay Mitra Secretary, MoRTH

January 01, 2016 May 24, 2017

Shri Anand Kumar Singh February 12, 2016 Continuing as a Member

13




Member (Project)

Shri Niraj Verma, IAS, Member (PPP)

March 14, 2016 August 23, 2018

Mrs. Veena Ish, IAS Member (Admin)

August 04, 2016 September 07, 2017

Shri D O Tawade Member (Technical)

August 30, 2016 Continuing as a Member

Shri Yudhvir Singh Malik, IAS Secretary to the Government of

India, Department of Road

Transport & Highways,

Government of India

November 28, 2016 Continuing as part time member from 27 June

2017

Shri Rohit Kumar Singh, IAS Member (Finance)

December 21, 2016 May 17, 2018

Smt. Sindushree Khullar Secretary, Planning Commission

April 2, 2012 March 09, 2015

Shri R. P. Singh Chairman, NHAI

June 12, 2012 June 11, 2015

Shri Rajiv Mehrishi Secretary, Department of

Economic Affairs, Ministry of

Finance

March 09, 2015 August 31, 2015

Shri Sudhir Kumar Member (PPP)

April 15, 2013 September 8, 2015.

Shri V. K Chibber Secretary, MoRTH

February 01, 2013 December 31, 2015

Shri M. P. Sharma Member (Technical)

February 08, 2013 February 29, 2016

Shri Satish Chandra Member (Finance)

April 03, 2013 April 02, 2016

Shri R. P. Watal Secretary, Department of

Expenditure

November 30, 2013 April 30, 2016

Shri Raghav Chandra Chairman, NHAI

August 31, 2015 November 28, 2016

Shri S.N.Das General (Road Development &

Special Secretary)

August 01, 2015 February 28, 2017

Shri Amitabh Kant CEO, NITI Aayog

November 06, 2017 Continuing as part time member

Shri Manoj Kumar Director General (RD) & Special

Secretary

March 01, 2017 June 30, 2017

Shri Bhesha Nand Singh, IES July 1, 2018 [●]

14




Director General (RD) & Special

Secretary

Shri Sanjeev Ranjan, Chairman, National Highways

Authority of India

September 17, 2018 Continuing as Chairman

Shri I. K. Pandey

Director General (RD) & Special Secretary

[●] Continuing as Member

15

V. DETAILS OF STATUTORY AUDITOR OF THE ISSUER 1. STATUTORY AUDITOR OF THE ISSUER (FY 2016-17)

Name of Statutory Auditor Address& Contact Details Auditor since

Comptroller and Auditor General of India Indian Audit & Accounts Department, Office of the Principal Director of Commercial Audit & Ex-Officio Member, Audit Board – 1

3rdFloor, A-Wing Indraprastha Bhawan New Delhi - 110002 Tel: (011) 23378473 Fax: (011) 23378432 E-mail: [email protected]

Since establishment as per The National Highways Authority of India Act, 1988

2. CHANGE IN STATUTORY AUDITOR OF THE ISSUER SINCE LAST THREE YEARS

There is no change in the Statutory Auditors of the Issuer during the last three financial years.

16

VI. MANAGEMENT PERCEPTION OF RISK FACTORS

RISKS RELATING TO THE ISSUER'S BUSINESS The Issuer is presently involved in a number of civil proceedings, including arbitration, environmental and land acquisition cases. In the event that these cases are decided against the Issuer or if there is a failure by the Issuer to adequately recover its claims against the other parties it may have an adverse effect on the Issuer's operations. The Issuer is a party to various legal proceedings and claims relating to its business and operations in India. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. These legal proceedings include civil suits, arbitration claims, environmental proceedings and proceedings involving the acquisition of land for its operations. No assurance can be given that these legal proceedings will be decided in the Issuer’s favour. Any adverse decision in these proceedings may have a significant adverse effect on the Issuer’s business and results of operations. There is also no assurance that similar proceedings will not be initiated against the Issuer in the future. Further, should any new developments arise, such as a change in Indian law or rulings against the Issuer by appellate courts or tribunals, the Issuer may face an increase in the costs of construction which could in turn increase the Issuer's expenditure. The Issuer may need to make provisions in its financial statements, to reflect its increased expenses and liabilities. Additionally, the Central Government has made a direction to all concerned entities, including the Issuer, that in relation to arbitration proceedings where the Issuer is challenging the arbitral awards, it should make a payment of up to 75 per cent. of the amount claimed against a bank guarantee pending final adjudication of the appeal proceedings. The Issuer started accepting claims under this scheme on December 2016, the further implementation of this scheme may affect the Issuer's financial condition and limit its ability to allocate its financial resources towards the implementation of its projects. See - "Legal and Other Information, Outstanding Litigation and Material Developments" The Issuer's operations are significantly dependent on the funding received from the Central Government and any delay or decrease in the funding plan by the Central Government or any Government entities may adversely affect the Issuer's operations. The Issuer's operations are very capital intensive and any reduction in the budgetary allocation of capital, funding or grants by the Central Government may materially affect the Issuer's performance and operations. As the Issuer's growth plans are mainly determined by the amount of Central Government’s support in the form of budgetary allocations, any adverse developments in the policy of the Central Government in the manner in which it seeks to address the development of the infrastructure needs of India will have a material and adverse effect on the Issuer's business. If funding from the Central Government reduces or if there is any adverse change in the pattern of allocation of the cess collected by the Central Government or if there is a downturn in the macroeconomic environment in India or in sectors which are directly dependent on the road infrastructure, the results of the Issuer's operations and future performance could be materially and adversely affected. The Issuer's operations are dependent on the policies of the Central Government and the State Governments and the initiatives implemented by them to develop the road infrastructure in India. Any lack of support or any delay in the implementation of regulatory initiatives will adversely affect the Issuer's operations. The Issuer believes that the development of India's infrastructure is dependent on the formulation and effective implementation of State Government and Central Government’s programs and policies that facilitate and encourage private sector investment in the infrastructure sectors in India. Many of these programs and policies are evolving and their successful implementation may depend on whether they

17

are properly designed to address the infrastructure development needs in India. Additionally, these programs will need continued support from stable and experienced regulatory regimes that not only encourage the continued movement of private capital into infrastructure development but also lead to increased competition, appropriate allocation of risk, transparency, effective dispute resolution and more efficient and cost-effective services to the end-consumer. Additionally, policies of the Central Government and State Governments which mandate development in certain specific sectors, or areas, including but not limited to rural, coastal and/or border areas may not be economically remunerative. In the event that State Government and Central Government's initiatives and regulations in the infrastructure industry do not proceed or progress in the anticipated manner, the results of the Issuer's operations could be materially affected. Further, for a successful implementation of a project, an efficient process for the acquisition of land is necessary. Whilst a modified land acquisition policy is presently being formulated by the Central Government in conjunction with the State Governments, it is yet to be finalised. Any delay in the acquisition of land will lead to delays in the implementation of the relevant projects which could materially affect the Issuer's operation and growth. The Issuer's operations may also be affected by an increase in the prices of raw materials or shortages of raw materials which may lead to an increase in the cost of construction of road projects. Any increase in the prices of raw materials or a shortage of raw materials necessary for a project may affect the financial viability of a project or cause delays in the implementation of a project. Additionally, some engineering, procurement and construction ("EPC") contracts may contain provisions where the payment made to the contractor will need to be adjusted to the wholesale prices index or the consumer prices index in India. These adjustments may lead to further increases in the construction cost for the projects. The Issuer's operations are dependent on forecasting traffic volumes. In some of the Issuer's projects, the user fee generated from highway stretches tolled by the Issuer is remitted to the Central Government and is received back by the Issuer from the Central Government. Any material decrease between the actual traffic volume and the forecasted traffic volume on account of inaccurate forecasting or (any other reason which may cause a difference between actual traffic volume and forecasts) may therefore have a material adverse effect on the Issuer's capital flows and performance. During Fiscal 2018, the Issuer deposited an amount of INR 88.40 billion including toll revenue received by the Issuer from roads operated by it to the Consolidated Fund of India ("Consolidated Fund of

India"). This amount excludes any amounts raised by concessionaires under the Issuer's public private partnership ("PPP") projects. Toll revenues depend on toll receipts and are affected by changes in traffic volumes. Factors that affect traffic volumes include:

i) toll rates; ii) fuel prices in India; iii) the affordability of automobiles; iv) the quality, convenience and travel time on alternate routes outside the Issuer's network; v) the availability of alternative means of transportation, including rail networks and air

transport; vi) the level of commercial, industrial and residential development in areas served by the Issuer's

projects; vii) growth of the Indian economy; viii) adverse weather conditions; and

18

ix) seasonal holidays. Revenue from toll receipts is affected by traffic volume and tariff rates, both of which are beyond the Issuer's control. The user fee structure is laid down under National Highways (Rate of Fee) Rules, 1997 and National Highways Fee (Determination of Rates and Collection) Rules, 2008 as amended and is uniformly applicable. Reduced growth of traffic on account of an economic slowdown, restrictions on mining, a decline in manufacturing and/or exports may decrease the Issuer's toll revenues. Further, any change in the applicable toll policies or other applicable laws which affects the category of vehicle or fuel, may lead to an increase or a decrease in the toll revenue and may affect the Issuer's capital inflows thereby affecting the Issuer's results. In the event of significant decrease in traffic volumes on such stretches of the road network, the Issuer may experience a corresponding decrease in the capital which the Issuer receives from the Central Government, which may reduce its future execution capabilities. Leakage of traffic and toll collection on roads operated by the Issuer may affect the volume of collections and inflows which may in turn affect the capital which the Issuer receives from the Central Government and the Issuer's future project execution capabilities. The success of toll road projects is dependent on the toll rates that are levied from the users. Any material decrease between the actual traffic volume and forecast traffic volume, or increase between the actual operation and maintenance expenses for such roads will lead to a decrease in toll receipts. Toll receipts are also primarily dependent on the integrity of toll collection systems. The revenues derived from the collection of tolls may be reduced by leakage through toll evasion, fraud, theft or technical faults in toll collection systems. If toll collection is not adequately monitored, leakage may reduce toll revenue. Although the Issuer has systems in place to minimise leakage through fraud and theft, any significant failure by the Issuer to control leakage in toll collection could have a material adverse effect on the Issuer's operations and prospects. Further, there may be situations where toll collection is disrupted or stopped due to public disturbances which may result in reduced revenue collection by the relevant concessionaires or contractors or by the Issuer. Any such disruption or stoppage of toll collection may adversely affect revenue collections. Fluctuations in interest rates and exchange rates on the Issuer's external borrowings may adversely affect its operations. As of 30 September 2018, the Issuer has outstanding multilateral external borrowings of Rs. 56,388.17 lakh from the ADB. The final instalment of such borrowings is payable on 1 July 2025. Because this loan is not hedged for repayment of principal and interest and repayment of principal and interest is made in foreign currency, any increase in the interest rates and/or any adverse fluctuation in the exchange rates may increase the cost of the Issuer's borrowings, thereby increasing the cost of the relevant projects. The Issuer may raise further borrowings for funding various projects under the NHDP and other related programmes. Any increase in domestic and/or international interest rates may have adverse impact on the Issuer's cost of borrowings and projects. The Issuer's financial condition and physical performance could be materially affected if the Issuer does not complete its projects as planned or if its projects experience delay.

The Issuer has experienced time and cost overruns in the past. There may be a delay in implementation or completion of projects or a change of scope of work, due to factors such as delays or failures to obtain necessary permits, or authorisations which are beyond the Issuer's control or the control of the relevant contractors or concessionaires. Delays in the completion of a project may also lead to cost overruns.

19

Such delays in the completion of projects may delay the commencement of the Issuer's toll collections thereby affecting its operations and physical performance. Any delay in the completion of the projects may also trigger the delay mechanism in the underlying contracts and adverse consequences under the relevant contracts could follow. The Issuer's operations and financials may be adversely affected due to any delay in completion of the relevant projects and resulting in an increase in the costs for the relevant concessionaires or contractors and in some situations delaying the accrual of revenue to the Issuer. A change in Central Government’s equity stake in the Issuer or a change in the administrative structure of the Issuer may adversely affect its operations. The Issuer is an Authority constituted by a Special Act i.e. NHAI Act and it is wholly owned, controlled and administered by the Ministry of Road Transport and Highways, Government of India. 100 per cent of the Issuer’s equity is funded by the Government of India. Any change in the Government’s shareholdings or any change in the structure of the Issuer could materially adversely affect the financial status and performance of the Issuer. The Central Government can, pursuant to the powers vested in it under Section 32 of the NHAI Act supersede the Issuer. If, at any time, the Central Government is of the opinion that (i) on account of a grave emergency, the Issuer is unable to discharge the functions and duties imposed on it by or under the provisions of the NHAI Act; (ii) the Issuer has persistently defaulted in complying with any direction issued by the Central Government under the NHAI Act; (iii) in the discharge of the functions and duties imposed on it by or under the provisions of the NHAI Act; or (iv) circumstances exist which render it necessary in the public interest to do so, the Central Government may supersede the Issuer. Should the Central Government therefore exercise its power to supersede the Issuer pursuant to the power vested in it under the NHAI Act, the Issuer may not be able to carry out its business impacting its financial condition or may not be able to carry out its obligations under the Notes. The Issuer's operations may also be adversely affected if it is unable to manage its business as it grows. The Issuer's business operations may be affected by shortcomings and failures in the Issuer's internal processes and systems. The Issuer's business is highly dependent on its ability to process and monitor a large number of projects. As the Issuer develops its business, the inability of its systems to accommodate an increasing volume of projects could also constrain its ability to expand its businesses. Additionally, shortcomings or failures in the Issuer's internal processes or systems could lead to an impairment of its financial condition, financial loss, disruption of its business and reputational damage. Any inability of the Issuer to successfully scale up its resources will adversely affect its business and results of operations. The Issuer's ability to operate will depend in part on its ability to maintain and upgrade its contract management systems and policies on a timely and cost-effective basis. The information made available to the Issuer's management through its existing systems may not be timely and sufficient to manage risks or to plan for and respond to changes in market conditions and other developments in the Issuer's operations. The Issuer may experience difficulties in upgrading, developing and expanding its systems quickly enough to accommodate its growing requirements. The Issuer's failure to maintain or improve or upgrade its management information systems in a timely manner could materially and adversely affect its operations.

20

The Issuer may also be subject to disruptions of its operating systems, arising from events that are wholly or partially beyond the Issuer's control, including but not limited to, computer viruses or electrical or telecommunication service disruptions, which may result in a loss or liability to it.

The Comptroller and Auditor General of India ("CAG") has expressed serious reservations regarding the maintenance of proper books of accounts and other relevant records by the Issuer. In its audit report for Fiscal 2015 and Fiscal 2014, the CAG has expressed serious reservations regarding the maintenance of proper books of accounts and other relevant records by the Issuer. The CAG has observed that the Issuer, inter alia, has not followed the applicable accounting policies and has not maintained proper records in respect of the utilisation of project based borrowed funds. In their audit report for Fiscal 2014, the CAG noted, inter alia, that (i) the Issuer did not maintain records in respect of the utilisation of project-based borrowed funds and the total borrowed costs allocated to completed and incomplete projects could not be verified; (ii) the allocation of “net establishment expenses for the year” to completed projects was against generally accepted accounting principles; (iii) adjustments had not been made in the accounts for 16 road projects passed to concessionaires for upgrade and five other road projects transferred to State Governments; and (iv) depreciation had not been accounted for in stretches of highways of completed projects, leading to an overstatement of assets. The CAG also noted in their audit report for Fiscal 2015 that due to books of the Issuer not being maintained in a proper manner, there has been an overstatement of its fixed assets capital work in progress. In some instances the CAG was also not able to verify the capital work in progress due to the absence of project-based details of expenditure on ongoing as well as completed projects. The CAG has in their audit report for Fiscal 2015 and Fiscal 2014 stated that they are not able to provide an audit opinion as to whether the financial statements of the Issuer for these periods give a true and fair view in accordance with the generally accepted accounting principles in India. In its audit report for Fiscal 2016, the CAG has provided an audit opinion that the Issuer's balance sheet and profit and loss account give a true and fair view in conformity with the generally accepted accounting principles of India. However, the CAG has made a number of observations. The observations from the CAG include, inter alia, statements that (i) the Issuer has not maintained proper books of accounts and other relevant records; and (ii) certain statements made by the Issuer in the offering documents relating to the Tax Free Bonds (as defined below) were not complied with. The audit report for Fiscal 2016 also includes other observations from the CAG which includes (i) non-adherence by the Issuer to certain NHAI Rules; (ii) the need for the internal control systems of the Issuer to be strengthened; and (iii) that are some instances in which the Issuer has not taken corrective action following observations or comments in their past audit reports. The audit report for Fiscal 2017 also includes other observations from the CAG which includes (i) non-adherence by the Issuer to certain NHAI Rules; and (ii) that the Balance Sheet and Profit and Loss Account Statements of the Issuer have not been drawn up in the format approved by the Central Government. Although the Issuer believes that it has complied with the undertakings provided by it in the issue documents of the Tax Free Bonds, the CAG in its audit report has remarked that that the Issuer has not complied with certain undertakings. In the event that the Issuer is determined by the trustee or otherwise to have breached such undertakings, this could have a material adverse impact on the Issuer's prospects, operations, financial condition and/or reputation. The Issuer has issued the Tax Free Bonds and had provided certain undertakings in the issue documents for the Tax Free Bonds stating that (i) all proceeds received out of each tranche issue of the bonds to the public shall be transferred to a separate bank account; (ii) details of all proceeds utilised

21

out of each tranche shall be disclosed under an appropriate separate heading in its balance sheet indicating the purpose for which such proceeds were utilised; and (iii) details of all unutilised proceeds from each tranche issue, if any, shall be disclosed under an appropriate separate head in its balance sheet indicating the form in which such unutilised proceeds have been invested. Under the terms of the Tax Free Bonds, it is an event of default if inter alia, any information provided by the Issuer in its issue documents and any other information furnished, and the warranties given or deemed to be given by the Issuer to bondholders or beneficial owners relating to the issue of the Tax Free Bonds is found to be misleading or incorrect in any material respect or any warranty is found to be incorrect. The Issuer believes that it has complied with the undertaking to transfer proceeds from the offerings of the Tax Free Bonds to a separate bank account by crediting the issue proceeds to an escrow account established under the terms of the respective escrow agreements. The proceeds were further transferred to the NHAI Fund upon receipt of written notice from the Issuer and the managers to the issue confirming execution of the respective security documents under the Tax Free Bonds. The details of the respective escrow agreements along with details of transfer of proceeds is as provided below:

1. For 2011 Tax Free Bonds:

Escrow agreement dated 15 December 2011 entered into between the Issuer, SBI Capital Markets Limited, A. K. Capital Services Limited, ICICI Securities Limited, Kotak Mahindra Capital Company Limited, MCS Limited and State Bank of India, Axis Bank Limited, ICICI Bank Limited, Syndicate Bank Limited, Union Bank of India and HDFC Bank Limited.

Escrow bank Escrow account number(s)

Date of credit into escrow account

Amount credited in INR

Date of transfer to the NHAI Fund

Axis Bank (i) 911020066736591 (ii) 911020066736748 (iii) 911020066736832

28 December 2011 to 5 January 2012

31,150,852,000 7 February 2012

HDFC Bank (i) 00030350015081 (ii) 00030350015106 (iii) 00030350015098


16,674,435,000 7 February 2012

ICICI Bank (i) 000405100352 (ii) 000405100353 (iii) 000405100354


46,761,066,000 7 February 2012

State Bank of India

(i) 32107995792 (ii) 32107996525 (iii) 32107997132


4,036,184,000 7 February 2012

Syndicate Bank (i) 90623170000046 (ii) 90623170000050 (iii) 90623170000065


618,040,000 7 February 2012

Union Bank (i) 536401010000585 (ii) 536401010000583 (iii) 536401010000584


759,423,000 7 February 2012


Escrow agreement dated 9 January 2014 entered into between the Issuer, Edelweiss Financial Services Limited, A.K Capital Services Limited, Axis Capital Limited, ICICI Securities Limited,

22

Axis Bank Limited, HDFC Bank Limited, ICICI Bank Limited, IndusInd Bank Limited, IDBI Bank Limited, Syndicate Bank Limited and Karvy Computershare Private Limited.





IndusInd Bank (i) 200999371420 (ii) 200999371437

15 January 2014 to 27 January 2014

27,381,777,000 12 February 2014

Axis Bank (i) 914020001457427 (ii) 914020001457621


4,441,969,000 12 February 2014

HDFC Bank (i) 00030350018544 (ii) 00030350018554


3,288,555,000 12 February 2014

IDBI Bank (i) 0127103000014234 (ii) 0127103000014243


80,262,000 12 February 2014

ICICI Bank (i) 000405104456 (ii) 000405104457


1,791,437,000 12 February 2014


Escrow agreement dated 20 October 2015 entered into between the Issuer, A.K. Capital Services Limited, SBI Capital Markets Limited, Axis Capital Limited, Edelweiss Financial Services Limited, ICICI Securities Limited, IndusInd Bank Limited, HDFC Bank Limited, ICICI Bank Limited, IDBI Bank Limited, Axis Bank Limited, State Bank of India, Syndicate Bank Limited and Karvy Computershare Private Limited.

(a) 2016 Tax Free Bonds issued through tranche Offering Circular dated 11 December 2015





Axis Bank (i) 915020056420736 (ii) 915020056421373

17 December 2015 to 31 December 2015

5,890,467,000 14 January 2016

HDFC Bank (i) 00030350022021 (ii) 00030350022031

17 December2015 to 31 December 2015

20,813,071,000 14 January 2016

IDBI Bank (i) 0011103000013545 (ii) 0011103000013554


213,753,000 14 January 2016

ICICI Bank (i) 000405110068 (ii) 000405110067


21,456,244,000 14 January 2016

IndusInd Bank (Including ASBA)

(i) 201000264609 (ii) 201000264618


43,368,435,000 14 January 2016

State Bank of India

(i) 35344311018 (ii) 35344314756


8,255,330,000 14 January 2016

Syndicate Bank (i) 90623170000104 (ii) 90623170000119


2,700,000 14 January 2016

(b) 2016 Tax Free Bonds issued through tranche Offering Circular dated 22 February 2016

Escrow bank Escrow account

number(s) Date of credit into

escrow account Amount

credited in INR


Axis Bank (i) 915020056420736 (ii) 915020056421373

24 February 2016 to 26 February 2016

453,814,000 11 March 2016

23

HDFC Bank (i) 00030350022021 (ii) 00030350022031


1,395,731,000 11 March 2016

IDBI Bank (i) 0011103000013545 (ii) 0011103000013554


73,908,000 11 March 2016

ICICI Bank (i) 00405110068 (ii) 000405110067


3,141,349,000 11 March 2016

IndusInd Bank (Including ASBA)

(i) 201000264609 (ii) 201000264618


22,541,132,000 11 March 2016

State Bank of India

(i) 35344311018 (ii) 35344314756


5,391,056,000 11 March 2016

Syndicate Bank (i) 90623170000104 (ii) 90623170000119


3,010,000 11 March 2016

However, the CAG's observations in its audit reports for Fiscals 2013, 2014, 2015 and 2016 were that the Issuer has not complied with the above undertaking as no separate accounts were maintained by the Issuer for the Tax Free Bonds. The Issuer, in its management reply has provided responses to each of the remarks of the CAG.. The Issuer believes that it has complied with the undertakings to provide details under an appropriate head in its balance sheet disclosing (a) the purpose for which the proceeds from the Tax Free Bonds have been utilised and (b) the details of investment of the unutilised proceeds from the Tax Free Bonds. Further, the proceeds from the Tax Free Bonds have been utilised for financing various projects implemented by the Issuer. This is in accordance with the objects of the issue provided under the issue documents for the Tax Free Bonds and therefore the requirement to disclose the use separately is satisfied as the utilisation of proceeds from the Tax Free Bonds have been disclosed as part of the capital work in progress in the balance sheet of the Issuer. Further, the Issuer believes that it has complied with the undertaking in relation to it providing the details of investment of the unutilised proceeds from each of the Tax Free Bonds in its financial statements by disclosing such investments as part of balances with scheduled banks in its balance sheet. Therefore, the Issuer is of the opinion that it has duly complied with the undertakings provided by it under the Tax Free Bonds notwithstanding adverse remarks of the CAG. In the event that the Issuer is determined by the relevant trustees under the Tax Free Bonds or otherwise to have breached such undertakings, this could have a material adverse impact on the Issuer's prospects, operations, financial condition and/or reputation. Such adverse material effect may include but is not limited to default, cross-default, acceleration and/or enforcement of the Tax Free Bonds and litigation and/or other disputes. As described above, any determination by the trustee under the relevant issue documents relating to the Tax Free Bonds that the Issuer had not complied with the terms of the Tax Free Bonds (as reported by the CAG) may result in an event of default being called by the trustee. If the trustee gives a notice of occurrence of an event of default, it may not be possible for the Issuer to cure such a breach which will result in an event of default occurring and may have a material adverse impact on the financial condition and reputation of the Issuer. Further, in the audit reports for the year Fiscals 2014 and 2015, the CAG has also remarked that the response to the CAG’s remarks provided in the notes to accounts of the financial statements of the Issuer were inadequate. The CAG further remarked that the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") provide that if an auditor, in his audit report, in respect of the financial results of any previous financial year has any remarks, the listed entity, in its notes to accounts, should provide how the reservation has been resolved or if the same has not been resolved, the reason thereof and the steps which the listed entity intends to take in the matter. As the Issuer had not included a statement satisfying the above, the CAG

24

has remarked that the disclosures in the notes to accounts of the financial statements of the Issuer are inadequate and violates the Listing Regulations. The audit report for the Fiscal 2016, however, does not contain an adverse remark from the CAG in connection with the violation of the Listing Regulations by the Issuer, as the Issuer believes that its responses to the CAG (in relation to the audit report for Fiscal 2015) in relation to its compliance with the Listing Regulations was found to be satisfactory by the CAG. The audit report for Fiscal year 2017 includes the following observations from the CAG (i) non-adherence by the Issuer to certain NHAI Rules; and (ii) that the Balance Sheet and Profit and Loss Account Statements of the Issuer have not been drawn up in the format approved by the Central Government. The Listing Regulations provide that an entity which is in violation is liable to a penalty of INR 100,000 for each day during which such failure continues or INR 10,000,000 whichever is less. As of the date of this Offering Circular, no such penalty has been imposed on the Issuer for violating the Listing Regulations. For the purposes of the above paragraphs of this risk factor: 2011 Tax Free Bonds means the bonds issued pursuant to the shelf Offering Circular dated 13 December 2011 and tranche Offering Circular dated 22 December 2011. 2014 Tax Free Bonds means the bonds issued pursuant to the shelf Offering Circular and tranche Offering Circular, each dated 9 January 2014.

2016 Tax Free Bonds means the bonds issued pursuant to the shelf Offering Circular dated 11 December 2015, tranche Offering Circular dated 11 December 2015 and 22 February 2016. Tax Free Bonds means collectively, the 2011 Tax Free Bonds, the 2014 Tax Free Bonds and the 2016 Tax Free Bonds. The Issuer has certain contingent liabilities that may adversely affect its financial condition. The Issuer has contingent liabilities, which may affect its financial condition. As at 31 March 2018, there

were 1014 arbitration cases and 730 court cases involving Rs. 55,34,497.00 lakh and USD 4.30 lakh in Arbitration

and Rs. 7,43,905.00 lakh and Euros 2.62 lakh in Court cases pending against the Issuer. Further, Issuer has also

arranged bank guarantee to the tune of Rs. 7,051.00 lakh and fixed deposits of Rs.90,749.00 lakh as per various

court orders. Issuer has issued letters of credits to the tune of Rs. 61,948.00 lakh for payment of annuities. The

contingent liabilities consist primarily of liabilities on account of legal disputes, bank guarantees, letters of credit

etc. Further, the contingent liability of Issuer in respect of total project cost pertaining to EPC, consultancy and

O&M contracts under implementation is Rs. 63,99,707.00 lakh, Rs. 4,03,886.00 lakh and Rs. 43,673.00 lakh

respectively. These contingent liabilities, if determined against us in the future, may impact our business and the

results of operations.. The Issuer is exposed to the risks associated with the non-performance of underlying assets/projects of certain SPVs). The issuer has taken up development of port connectivity projects and expressways by setting up Special Purpose Vehicles(SPVs) where the Issuer contributes toward a portion of the project cost by way of an equity participation or through loans and advances. Some of these SPVs also have an equity participation by port trusts, State Government or their representative entities. The SPVs also raise loans for financing the projects. The SPVs are authorised to collect user fees on the developed stretches to cover repayment of debts and for meeting the costs of operations and maintenance.

25

The Issuer has 11 project specific SPVs and 1 associate company. Each SPV has been formed with the specific purpose of raising funds and the development of a project. The Issuer has shareholdings which range from 37 per cent to 100 per cent. in the various SPVs. The Issuer's equity participation is exposed to the risk of non-performance of the SPV's assets and the business decisions of the other members of the SPV's board which represent other entities such as the Central Government or State Government and in some cases, certain port trusts. Some SPVs have incurred losses during the last three Fiscals. Some of the SPVs have incurred losses during the last three Fiscals, as set out below:

(INR in lakh)

S. No. Name of SPV Fiscal 2017 Fiscal 2016 Fiscal 2015

1. Calcutta Haldia Port Road Company Limited (2,106.84) (2,968.57) (2,793.56)

2. Cochin Port Road Company Limited (2,252.02) (2,018.93) (1,728.76)

3. Moradabad Toll Road Company Limited 4.55 (28.93) (7.24)

4. New Mangalore Port Road Company Limited (1,717.46) (4,187.34) (2,921.84)

5. Paradip Port Road Company Limited (4,750.99) (5,793.83) (5,166.11)

6. Tuticorin Port Road Company Limited (1,881.46) (1,893.39) (2,184.83)

7. Ahmedabad Vadodra Expressway Company

Limited 225.72 (213.82) (266.62)

8. Vishakhapatnam Port Road Company Limited 488.45 (717.16) 140.19

There can be no assurance that the SPVs will achieve or sustain profitability in the future. Any losses incurred by these SPVs may have an effect on the successful execution of the Issuer's projects, its business and results of operations. The auditors for some of the SPVs have provided qualified opinions in relation to their audit reports for Fiscal 2015 and Fiscal 2016. The auditors for the above SPVs have provided qualified opinions in relation to certain SPVs. Accounts for the half year ended 30 September 2018 for the Issuer have been subject to limited review and have not been audited. Audited performance may be materially different from the present results. The accounts of the Issuer and the SPVs are audited annually by the CAG and the auditors appointed by the CAG respectively and they are not subject to any interim audit. Accounts for the half year ended 30 September 2018 have been prepared by the Issuer and are subject to limited review by PSMG & Associates (the "Auditors") and have not been audited. The Auditors have reviewed the unaudited limited review financial performance of the Issuer for the half year ended 30 September 2018. However, the actual audited performance may be materially different from the limited review results. The Issuer has disclosed a limited review report for the half year ended 30 September, 2018. The Issuer's projects under development are subject to construction, financing and operational risks. Some of the internal processes of the Issuer for the monitoring of its projects and enforcement of its contracts are subject to continuous revision and improvement and are in some instances evolving.

26

At present arrangements for the regular monitoring of projects during both the construction phase and the operations phase are being carried out through regional offices and project implementation units of the Issuer. The existing risks include those relating to non-compliance with the conditions in the model concession agreement ("MCA") as well as the following:

(i) construction of the relevant projects as per the specified time schedule and agreed standards; (ii) levy of user charges strictly within the limits specified in the relevant concession agreements; (iii) protection of user interests by ensuring that performance standards, safety and other

requirements are adhered to; (iv) preventing misuse of public assets transferred to the relevant concessionaires; (v) preventing any leakage, diversion or mis-classification of Government revenues; (vi) imposing and recovering penalties for breach of contract; (vii) operating the relevant escrow accounts in accordance with the terms of the relevant concession

agreements; (viii) effective communication and exchange of information for monitoring and enforcement of

obligations; and (ix) supervision of the functioning of the relevant independent engineers with a view to ensuring

that the engineer is discharging all its duties. Thus, any inadequate reporting or monitoring of the Issuer's projects may affect its ability to implement the projects effectively. The Issuer's inability to adhere to its obligations in its project agreements could also have a material adverse effect on the cost of its projects. The Issuer's insurance coverage may not adequately protect it against all losses it incurs in its operations or otherwise. The Issuer maintains or contractually provides for insurance coverage of the type and in the amounts that it believes is adequate for its operations. In addition, not all risks may be insurable on commercially reasonable terms or at all. Although the Issuer believes that it has obtained insurance coverage customary for its business, such insurance may not provide adequate coverage in certain circumstances and is subject to certain deductibles, exclusions and limits on coverage. Therefore, to the extent that the Issuer suffers damage or losses which are not insured, or exceeds its insurance coverage, the loss would have to be borne by the Issuer. There can also be no assurance that the Issuer's claims will be paid, and the proceeds of any insurance claim may also not be sufficient to cover the reinstatement costs as a result of inflation, changes in regulations regarding infrastructure projects, environmental and other factors. The Issuer cannot make any assurances that material losses in excess of insurance proceeds will not occur in the future, potentially having an adverse effect on the Issuer's operations, business and financial conditions. A successful assertion of one or more large claims against the Issuer that exceeds its available insurance coverage or results in changes in its insurance policies, including premium increases or the imposition of a larger deduction or co-insurance requirement, could adversely affect its performance and operations. Further, as an internal policy, the Issuer on some occasions makes pay-outs for the relevant concessionaire's workforce, such as if the concessionaire fails to keep in force all insurances for which it is responsible. The Issuer may, at its option, obtain the insurance policies and/or pay the insurance premium and keep the relevant policy in force. The Issuer does, however, have the option to recover the premium from the relevant concessionaires or contractors. The Issuer may be unable to obtain environmental clearances from competent authorities in a timely manner or at all, and the lack of such permissions could adversely affect its projects. The Issuer's ability to commence its projects depends on it obtaining certain environmental approvals from the relevant governmental authorities. In the event that any such environmental approvals are

27

not received on a timely basis or at all, the commencement of the relevant projects or ongoing construction in such projects will be adversely affected, which may have a material adverse impact on the Issuer's business, financial condition and results of operations. The Issuer does not own the premises from which most of its regional offices and project implementation unit offices operate. The Issuer's offices including regional offices and project implementation unit offices are on a lease or a leave and licence basis. The Issuer does not own most of its regional offices, project implementation offices. Any failure on the Issuer's part to execute and/or renew leave and licence agreements and/or lease deeds in connection with such offices or the failure to locate alternative offices in case of termination of the leases and/or leave and license agreements in connection with any branch could adversely affect the ability of the Issuer to efficiently carry out its operations. The Issuer's operations are subject to physical hazards and similar risks that could expose it to material liabilities, reduced inflows and increased execution costs. The Issuer's operations are subject to operational risks as well as project implementation risks. There are hazards inherent in construction projects such as the risk of equipment failure, impact from falling objects, collision, work accidents, fire or explosion and other hazards that may cause injury and loss of life, severe damage to and destruction of property and equipment, and environmental damage. The Issuer also does not have a structured and documented environmental and social management system to address the issues relevant to its sector. Further, the Issuer also assumes liability for defects in connection with any design or engineering work provided by the contractors. Although the Issuer sub-contracts its construction work, it may still be liable for accidents during the construction and operation of its projects. Any of the foregoing factors could have a material adverse effect on the financial condition, reputation and results of the Issuer's operations. There have been instances where certain present and past employees of the Issuer have been found to have indulged in criminal behaviour detrimental to the Issuer's business and reputation. There have been instances where certain present and past employees of the Issuer have been found to have indulged in criminal behaviour detrimental to the Issuer's business and reputation. The allegations against such present and past employees include (i) an employee being involved in allocating land to a third party at a concessional price; (ii) certain employees being involved in irregularities in the construction work on certain national highways; (iii) certain employees being involved in diversion of money allocated for land compensation; (iv) certain employees causing loss to the Issuer as a result of a discrepancy a financial bid not being corrected; and (v) certain employees abusing their official position and favouring a particular construction company. There is a set procedure to deal with such cases by the Investigating Agency or the Commission as the case may be. It may not be possible to get the details of such cases as these may be under investigation by different agencies and may be closed or pending at different stages. The allegations against the Issuer’s employees also involve a bribery incident in connection with a U.S.-based firm, CDM Smith. It is alleged that CDM Smith through its Indian subsidiary, CDM Smith India Private Limited, paid over U.S.$ 1.18 million in bribes to the Issuer’s officials to secure construction contracts between 2011 and 2016. The Central Bureau of Investigation and the Central Vigilance Commission are investigating into this bribery incident. In relation to some of these matters, the Issuer and the relevant authorities have taken actions, including disciplinary actions and/or initiation of criminal proceedings against the individuals concerned. Any loss incurred by such disciplinary actions will be borne by the Issuer. While the Issuer maintains training programmes, codes of conduct and other safeguards designed to prevent the occurrence of

28

every instance of bribery or corruption, it may not be possible for the Issuer to detect or prevent every instance of bribery and corruption by its employees or joint venture partners. Incidents such as those described above will affect the Issuer's reputation, its financial condition and its results of operations. There have been adverse media reports in relation to the Issuer, its business, and its employees There have also been various adverse media reports concerning certain present and past employees of the Issuer, oppositions from local communities and other parties to the Issuer's projects and oppositions from special interest groups such as environmental groups relating to the perceived negative impact such activities are having on the local community and the environment. Such adverse media reports can affect the Issuer's reputation, its ability to implement its projects successfully and therefore its financial condition and results of operations. The Issuer's operations could be adversely affected by strikes, work stoppages or increased wage demands by its own or its contractors' work force or any other kind of disputes involving the Issuer's work force. As of 31 March 2018, on an unconsolidated basis, the Issuer had 1079 employees. While the Issuer considers its current labour relations to be good, there can be no assurance that future disruptions in the form of strikes or work stoppages may not be experienced due to disputes or other problems with its work force. Such disruptions may adversely affect its business and results of operations. On many of the Issuer's projects, the Issuer engages external contractors and third parties for construction work and other services in connection with its projects. The number of contract labourers employed by the Issuer varies from time to time based on the nature and extent of work contracted to independent contractors. These third parties include engineers, contractors, suppliers of labour and materials and maintenance service agencies. They may not perform their services in a satisfactory manner and thereby exposing the Issuer to certain risks including delays and an inability to complete its projects in a timely manner. The quality of construction of the projects developed by the Issuer depends on the availability and skills of third parties, which may be adversely affected by strikes and lock-outs. There can be no assurance that skilled contractors and third parties will continue to be available at reasonable rates and in the areas in which the projects are being implemented. As a result, the Issuer may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of contracted services. Any delay in project execution could adversely affect its profitability.

29

Any inability to attract, recruit and retain skilled personnel could adversely affect results of the Issuer's operations. The Issuer is highly dependent on its Members, senior management and other key personnel including skilled project management personnel for managing its business. The Issuer may also face strong competition in recruiting and retaining skilled and professionally qualified staff. Due to the limited pool of skilled personnel in the Issuer's industry, competition for retaining senior management, commercial and finance professionals and engineers in the Issuer's industry is intense. The loss of the services of the Issuer's Members, senior management or other key personnel or the Issuer's inability to recruit or train a sufficient number of experienced personnel or its inability to manage the attrition levels in different employee categories may have an adverse effect on the Issuer's results of operations. Opposition from local communities and other parties may adversely affect the Issuer's operations and financial condition. The construction and operation of the Issuer's current and future projects may face opposition from local communities and other parties where these projects are located and from special interest groups such as environmental groups. Such opposition may arise in response to any proposed land acquisition, the intended operations of the Issuer in that particular area and the perceived negative impact such activities may have on the local community and the environment. Any significant opposition by local communities, environmental groups, non-governmental organisations and other parties to the projects of the Issuer may delay project implementation and adversely affect the Issuer's operations and financial condition. The Issuer is subject to risks arising from construction contracts. The risks associated with the Issuer's contractual arrangements are directly linked to the risks of non-performance, default and disputes arising from the underlying construction contracts. The different kinds of contracts which the Issuer manages for its construction activities and the associated risks relate to its PPP projects for which MCAs have been developed, its Operate, Maintain and Transfer (the "OMT") projects and its EPC projects Build, Operate and Toll (BOT) Land acquisition risk: The Issuer is responsible for acquiring land for a project on behalf of MoRTH and the Issuer provides all reasonable support and assistance to the concessionaire in procuring applicable permits required from any government authority. In the event of a delay in procuring the applicable permits, the Issuer may have to compensate the concessionaire which may be in form of an increase in the concession period. Force Majeure Risk: Force majeure covers, among others, the following events which pose a risk to the execution of construction projects:

Non-Political Events

Act of God,

Epidemic,

Extremely adverse weather conditions,

Radioactive contamination,

Ionising radiation,

Fire or explosion;

Strikes or boycotts; and

30

the discovery of geological conditions, toxic contamination or archaeological remains on the site (together, "Non-Political Events").

Indirect Political Events a. an act of war, invasion, armed conflict or act of foreign enemy, blockade, embargo, riot,

insurrection, terrorist or military action; civil commotion or politically motivated sabotage which prevents collection of tolls and/or fees;

b. industry-wide or state-wide or India-wide strikes or industrial action which prevent collection

of tolls and/or fees; and c. any failure or delay of a contractor to the extent caused by any Indirect Political Event and

which does not result in any offsetting compensation being payable by the concessionaire by or on behalf of such contractor; (together, "Indirect Political Events").

Political Events

a) change in law affected by any governmental agency, if consequences thereof cannot be dealt

with under and in accordance with the provisions of the relevant concession agreement; b) compulsory acquisition in national interest or expropriation of any project assets or rights of

the concessionaires or of the contractors by any governmental agency; c) unlawful or unauthorised or without jurisdiction revocation of or refusal to renew or grant

without valid cause any consent or approval required by developer; d) any failure or delay of a contractors but only to the extent caused by another Political Event

and which does not result in any offsetting compensation being payable to the concessionaire by or on behalf of such contractor (together, "Political Events").

Issuer Event of Default: In the event of the occurrence of a default specified in the relevant concession agreement which has not been cured within the applicable cure or remedy period as specified in the relevant concession agreement, the Issuer shall be deemed to be in default and the concessionaire shall have the right to terminate the relevant concession agreement. Any default by the Issuer under the concession agreement poses a risk of non-completion of a project or a risk of delay in the completion of a project. Concessionaire Event of Default: A default by a concessionaire may result in delays to the completion of a project or in the effective management of an already completed project.

Termination Payment Liability: The MCA sometimes provides for payment to the project lender(s), in the event of a termination of the concession after the completion of the construction, of an amount equal to the debt due on the date of termination, and thereafter the project highway is transferred to the Issuer. This puts additional liability on the Issuer to directly or indirectly operate and maintain the project highway. Contract Monitoring Risk: Although there are detailed guidelines for the award of contracts to concessionaires, the institutional mechanisms for the monitoring and enforcement of PPP contracts is yet to be implemented. There is a risk that the implementation of PPP projects may not be sufficiently monitored owing to a satisfactory reporting process for monitoring on-site performance of contracts not being in place.

31

Risk arising from the international competitive bidding process and consultant selection: There is a risk arising from any misstatement or misrepresentation being made by a prospective concessionaire during the bidding process. If the disclosure made by a concessionaire is not true and they do not have the relevant expertise to implement a project, it may negatively affect the successful execution of the relevant project. Insurance liability for the employees of concessionaires in case of default: If the concessionaire fails to keep in force all insurances for which it is responsible, the Issuer may be required to keep the insurance policies effective to pay the insurance premium. The Issuer does, however, have the option to recover the premium from the concessionaire or to deduct it from subsequent payments. i) OMT contracts: Under OMT agreements, the Issuer is exposed to the following risks:

a) Under the relevant OMT agreement, the Issuer has to procure the right of way to the site as a

condition precedent within a specified period of time. Any delay in procuring this right of way may entitle the concessionaire to claim damages at a specified percentage of the performance security.

b) The Issuer undertakes the risk of maintaining and protecting the construction works during any suspension of the concessionaire.

c) In the event of default or breach of the relevant OMT agreement by the Issuer, its liability is calculated based on all direct costs suffered by the concessionaire as a consequence of such breach. This compensation may also include interest payment on debt.

d) If the concessionaire fails to keep in force all insurances for which it is responsible, the Issuer is bound to pay the insurance premium and keep the policies effective. The Issuer does, however, have the option to recover the premium from the concessionaire or to deduct it from subsequent payments.

ii) EPC contracts In addition to the above types of construction contracts, the Issuer has also awarded selected highway projects to private sector participants under EPC contracts. Some of the risks the Issuer may be exposed to under EPC contracts would include the following:

a) Under the relevant EPC contract the Issuer has to procure the right of way to the site as a

condition precedent within a specified period of time. Any delay in procuring this right of way will entitle the relevant contractor to claim damages from the Issuer.

b) Additionally, the Issuer has to ensure that traffic worthiness and safety of the relevant road or highway is maintained. In the case of unforeseen events, such as floods or earthquakes causing excessive deterioration or damage to a particular highway, the Issuer also has to maintain and protect the construction works during the period of suspension of the relevant contractor. Such a liability to maintain may lead to increased works costs.

c) If the relevant contractor fails to keep in force all insurances for which it is responsible, the Issuer, shall be bound to pay the insurance premium and keep the insurance policies effective. The Issuer does, however, have the option to recover the premium from the contractor or to deduct it from subsequent payments.

d) Any dispute arising out of or in relation to the relevant EPC contracts between the parties is a risk for the Issuer. The mechanism for dispute resolution is typically provided in the relevant EPC contracts. Such disputes materially affect project completion and execution and are a major risk.

32

e) The price quoted by a contractor is to be paid by the Issuer and the Issuer is exposed to the risk of price escalation related to labour or other materials necessary to carry out the project.

f) The Issuer is liable to compensate the relevant contractors for any increase in costs to the contractors due to a change and/or modification in any applicable law.

g) Upon termination of an EPC contract, the Issuer is bound to pay to the contractor a portion of the cost of those works that would not have commenced or have not been completed. Also, on the date of termination or suspension, as the case may be, the maintenance and operation of the project highway is transferred to the Issuer. This puts additional liability on the Issuer to directly or indirectly operate and maintain the project highway.

iii) Hybrid Annuity Model:

The Finance Minister during his budget speech for Fiscal 2016 announced the Government's intentions to revisit the existing PPP models. Following the announcement by the Finance Minister, broad guidelines for a Hybrid Annuity model were announced by the Issuer. The Hybrid Annuity model combines the EPC and BOT (Annuity) models, whereby Government and private enterprises share the bid project cost in the ratio of 40:60 during the construction period. The project is awarded to the developer quoting the lowest project life cycle cost, where "project life cycle cost" means the net present value of the quoted bid project cost plus the net present value of the operations and maintenance costs for the operational period. The Government funds 40 per cent. of the bid project cost, as determined by the bidder, in five equal instalments during the construction period. The private party bears the remaining 60 per cent. of the project cost, through a combination of equity contributions and debt. The proportion borne by the private party during the construction period is expected to be recovered from the Issuer through annuity payments spread over a period of time. Project costs are inflation linked (through a price index multiple) ("PIM"), which is the weighted average of the wholesale price index ("WPI") and consumer price index ("CPI") in the ratio of 70:30. The bid project cost adjusted for variation between the price index occurring between the reference index preceding the bid date and reference index date immediately preceding the appointed date shall be deemed to be the bid project cost at the commencement of construction. Bid project cost shall be adjusted to variations in PIM on a monthly basis until the commencement of operations. Further, the Government also retains the revenue risk as it remains responsible for the collection of toll revenue upon completion. On the other hand, the private participant will bear construction, operations and maintenance risks. Since the Government will bear 40 per cent. of the project cost during the construction phase, the returns to the private developer in the form of annuities during the operating phase will be proportionately lower when compared with normal annuity projects fully funded by a private developer. When compared with EPC projects, it is expected that a shift to the Hybrid Annuity model would ease the cash flow pressure on the Issuer as it would have to provide only 40 per cent, upfront funding spread over the 30-36 months of the construction period, and the private participant would be required to bear the balance 60 per cent. of the project cost through a combination of its equity contribution and debt raised from the market. Further, the 60 per cent. of the project cost borne by the private participant during the construction period is to be recovered from the Issuer in terms of annuity payments spread over a period of 15 years. Therefore, the Issuer's own upfront funding requirement will be lower in the case of the Hybrid Annuity Model compared with EPC model. Further, the annuity nature of the projects would eliminate traffic related risks thereby improving ease of financial close and refinancing ability post project completion. However, a lot would depend on the Issuer's ability to ensure right of way availability and approvals before awarding these projects.

33

The inherent risks comprised of in the Hybrid MCA include amongst others:

Force Majeure Risk

Force majeure covers events which pose a risk to the construction projects execution, namely any or all of Non-Political Event(s), Indirect Political Event(s) and Political Event(s) occurring in India as previously discussed under "Build, Operate and Toll - Force Majeure Risk".

Termination Risk

There is also the risk of termination arising from either Political Events or Non-Political Events. The MCA provides for payment to the relevant concessionaires in the case of a termination of the relevant concession agreements and the project highway being transferred to the Issuer. This puts additional liability on the Issuer to directly or indirectly operate and maintain the project highway. iv) Toll-Operate Transfer (TOT):

Government of India has approved Toll Operate and Transfer (TOT) model under which the Public funded projects operational for two years shall be put to bid wherein the right of collection and appropriation of fee shall be assigned for a pre-determined concession period (30 years) to Concessionaires (Developers/Investors) against upfront payment of a lump sum amount to NHAI. Operation and Maintenance (O&M) obligation of such projects shall be with the concessionaire till the completion of the concession period. Projects to be undertaken in the TOT model are to be treated as Public-private-partnership (PPP) projects. The first bundle of TOT projects comprising of 9 project stretches aggregating to a length of 680km has already finalised and Letter of Award (LOA) has been issued. Apart from TOT Bundle-I, NHAI has also identified stretches of approximate length of 1640 kms under TOT in which condition survey and traffic studies is under progress.

The inherent risks comprised of in the TOT MCA include amongst others:

Force Majeure Risk

Force Majeure risk pervades all through the specific provisions in the TOT MCAs and it is a major

source of risk which directly affects the projects of NHAI and affects the output of the organization.

Force Majeure cover the following events which pose a risk to the construction projects execution,

namely any or all of Non-Political Event(s), Indirect Political Event(s) and Political Event(s) occurring

in India which include the following:

Non-Political Events

act of God, epidemic, extremely adverse weather conditions or radioactive contamination or

ionizing radiation, fire or explosion;

strikes or boycotts;

the discovery of geological conditions, toxic contamination or archaeological remains on the Site;

any failure or delay of a Contractor but only to the extent caused by another Non-Political Event

and which does not result in any offsetting compensation being payable to the concessionaire by

or on behalf of such Contractor;

any judgement or order of any court of competent jurisdiction or statutory authority made against

the Concessionaire;

any event or circumstances of a nature analogous to any of the foregoing.

34

Indirect Political Events

an act of war, invasion, armed conflict or act of foreign enemy, blockade, embargo, riot,

insurrection, terrorist or military action;

civil commotion or politically motivated sabotage which prevents collection of toll/fees;

industry-wide or state-wide or India-wide strikes or industrial action which prevent collection of

toll/fees;

any failure of delay of a contractor to the extent caused by any Indirect Political Event and which

does not result in any offsetting compensation being payable by the concessionaire by or on behalf

of such contractor;

any Indirect Political Event that causes a Non-Political Event; or

any event or circumstances of a nature analogous to any of the foregoing

Political Events

change in Law effected by any governmental agency, only if consequences thereof cannot be dealt

with under and in accordance with the provisions of the concession agreement;

compulsory acquisition, in national interest, or expropriation of any project assets or rights of the

concessionaire or of the contractors by any governmental agency.

unlawful or unauthorised or without jurisdiction revocation of or refusal to renew or grant without

valid cause any consent or approval required by developer.

any failure or delay of a contractor but only to the extent caused by another Political Event and

which does not result in any offsetting compensation being payable to the concessionaire by or on

behalf of such contractor; or

any event or circumstance of a nature analogous to any of the foregoing.

RISKS RELATING TO INDIA Financial instability in other countries may cause increased volatility in Indian financial markets The Indian market and the Indian economy are influenced by economic and market conditions in other countries, particularly emerging market countries in Asia. Financial turmoil in Asia, Russia, the Middle East and elsewhere in the world in recent years has affected the Indian economy. Although economic conditions are different in each country, investors' reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy. Financial disruptions may occur again and could harm the Issuer's business, its future financial performance and the trading price of the Notes. Developments in the Eurozone have exacerbated the on-going global economic crisis. Large budget deficits and rising public debts in Europe triggered sovereign debt finance crises that resulted in the bailouts of some European economies and elevated the risk of government debt defaults, thereby forcing governments to undertake aggressive budget cuts and austerity measures, in turn underscoring the risk of global economic and financial market volatility. Moreover, in 2012, the sovereign ratings of various European Union countries were downgraded. Financial markets and the supply of credit could continue to be negatively impacted by on-going concerns surrounding the sovereign debts and/or fiscal deficits of several countries in Europe, the possibility of further downgrades of, or defaults on, sovereign debt, concerns about a slowdown in growth in certain economies and uncertainties regarding the stability and overall standing of the European Monetary Union.

35

In response to such developments, legislators and financial regulators in the United States, Europe and other jurisdictions, including India, have implemented several policy measures designed to add stability to the financial markets. However, the overall impact of these and other legislative and regulatory efforts on the global financial markets is uncertain, and they may not have the intended stabilising effects. In the event that the current adverse conditions in the global credit markets continue or if there is any significant financial disruption, this could have an adverse effect on the Issuer's business and future financial performance. On 23 June 2016, the United Kingdom held a referendum on its membership of the European Union and voted to leave ("Brexit"). On 29 March 2017 the UK government gave notice (the "Article 50

Notice") to the President of the European Council of its intention to withdraw from the EU pursuant to Article 50 of the Treaty on European Union ("Article 50"). The delivery of the Article 50 Notice triggered the commencement of a negotiation process between the UK and the EU in respect of the arrangements for such withdrawal. Article 50 provides for a two year period for such negotiations to take place. The delivery of the Article 50 Notice introduces significant new uncertainties and instabilities in the financial markets. There is significant uncertainty at this stage as to the impact of Brexit on general economic conditions in the United Kingdom and the European Union and any consequential impact on global financial markets. For example, Brexit could give rise to increased volatility in foreign exchange rate movements and the value of equity and debt investments. A lack of clarity over the process for managing the exit and uncertainties surrounding the economic impact could lead to a further slowdown and instability in financial markets. These and other related events have had a significant impact on the global credit and financial markets as a whole, including reduced liquidity, greater volatility, widening of credit spreads and a lack of price transparency in the United States, Europe and global credit and financial markets. In the event that the current adverse conditions in the global credit markets continue or if there are any significant financial disruption, this could have an adverse effect on the Issuer’s business, future financial performance and the trading price of the Notes. The Issuer may be adversely affected by the Central Government's decision to withdraw the legal tender status of Rs. 500 and Rs. 1,000 denominations of banknotes issued by the RBI, which could have a material adverse effect on the Issuer's business, results of operations and financial condition. Through notifications issued by the Ministry of Finance and the RBI, banknotes of denomination of Rs. 500 and Rs. 1000 have ceased to be legal tender (the "Demonetisation of Banknotes"). According to the RBI, the Demonetisation of Banknotes is aimed at the reduction of cash hoarding, redressing the counterfeiting of Indian banknotes and other counterfeit activities relating to the funding of terrorism. The revenue of the Issuer depends on the collection of toll from highways developed by it. Due to Demonetisation of Banknotes, the Government had suspended toll-collection from 9 November 2016 to 30 December 2016. While the Central Government shall indemnify us for the loss of such revenue, there has been a significant drop in the toll revenue collected as a result of the suspension of toll-collection due to the Demonetisation of Banknotes. Any similar action by the Government in the future may adversely affect the business and financial condition of the Issuer.

36

Any adverse change in India's credit rating by an international rating agency could adversely affect the Issuer's business and profitability In May 2013, Standard & Poor's, an international rating agency, reiterated its negative outlook on India's credit rating. It identified India's high fiscal deficit and heavy government borrowing as the most significant constraints on its ratings, and recommended the implementation of reforms and containment of deficits. In June 2013, Fitch, another international rating agency, returned India's sovereign outlook to "stable" from "negative" a year after its initial downgrade of the outlook, stating that the authorities had been successful in containing the upward pressure on the Central Government budget deficit in the face of a weaker-than-expected economy and that the authorities had also begun to address structural factors that have weakened the investment climate and growth prospects. Similarly, Standard & Poor's upgraded its outlook on India's sovereign debt rating to "stable" in September 2014 and reaffirmed such rating in November 2016, while reaffirming the "BBB-" long-term rating on bonds. Standard & Poor's stated that the revision reflects the view that India's improved political setting offers an environment which is conducive to reforms that could boost growth prospects and improve fiscal management. Going forward, the sovereign ratings outlook will remain dependent on whether the Central Government is able to transition the economy out of a low-growth and high inflation environment, as well as exercise adequate fiscal restraint. In July 2016, Fitch revised its outlook for the Indian banking sector to “Negative” from “Stable” due to the increase in non-performing loans. However, in November 2017, Moody’s upgraded India’s credit rating to “Baa2” from “Baa3” and changed its India rating outlook to “stable” from “positive” citing reforms such as GST, demonetisation, the inflation-targeting monetary policy framework, the Bankruptcy Act, bank recapitalisation, Aadhaar and the Direct Benefits Transfer system. There can be no assurance that these ratings will not be further revised or changed by Standard and Poor’s, Fitch or Moody’s or that any of the other global rating agencies will not downgrade India’s credit rating. Any adverse change in India's credit ratings by international rating agencies may adversely impact the Issuer's business, financial condition and results of operations and limit its access to capital markets. Any volatility in the exchange rate may lead to a decline in India's foreign exchange reserves and may affect liquidity and interest rates in the Indian economy, which may impact the Issuer Capital inflows into India have remained extremely volatile responding to concerns about the domestic macroeconomic landscape and changes in the global risk environment. A substantial decline in the import bill, mainly on account of lower crude oil prices led to a significant narrowing in the trade deficit that in turn reduced the size of the current account deficit. However, the primary challenge for the Rupee was the volatile swings in capital flows. The Rupee recorded a high of 68.7 to the U.S. dollar and a low of 64.84 to the U.S. dollar during the 12 month period up to 30 September 2017. The Rupee may come under pressure given the increased likelihood of a gradual reversal in US monetary policy that may result in a rotation of global fund flows from emerging markets to the US markets over the medium term programme. Although the Rupee is less vulnerable given the improvements in the current account deficit and visible moderation in inflation rates, there remains a possibility of needing to intervene in the foreign exchange market to control volatility of the exchange rate. The need to intervene at that point in time may result in a decline in India's foreign exchange reserves and subsequently reduce the amount of liquidity in the domestic financial system. This in turn could impact domestic interest rates. Political instability or changes in the Government in India could delay the liberalisation of the Indian economy and adversely affect economic conditions in India generally, which would impact the Issuer's financial results and prospects Since 1991, successive Indian Governments have pursued policies of economic liberalisation, including significantly relaxing restrictions on the private sector. Nevertheless, the roles of the Central

37

Government and State Governments in the Indian economy as producers, consumers and regulators remain significant as independent factors in the Indian economy. In 2014, further to the election of a pro-business majority Government, there has been a distinct increase in expectations for policy and economic reforms of the Indian economy. There is no guarantee that the new Government will be able to enact an optimal set of reforms or that any such reforms would continue or succeed if there were a change in the current majority leadership in the Government in the future. There is also no guarantee that the Government will announce an optimal set of reforms or policies in the future. The rate of economic liberalisation is subject to change and specific laws, and policies affecting banking and finance companies, foreign investment, currency exchange and other matters affecting investment in the Issuer's securities are continuously evolving as well. Other major reforms that have been proposed are the direct tax code and provisions relating to the General Anti-Avoidance Rule (the "GAAR"). Any significant change in India's economic liberalisation, deregulation policies or other major economic reforms could adversely affect business and economic conditions in India generally and the Issuer's business in particular. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries could adversely impact the Issuer's business, the trading price of the Notes could decrease and lead to a loss of confidence and impair travel, which could reduce its customers' appetite for its products and services Terrorist attacks, such as those which took place in Mumbai in November 2008, and other acts of violence or war may negatively affect the Issuer's business, the trading price of the Notes and the worldwide financial markets. These acts may also result in a loss of business confidence, make travel and other services more difficult, and as a result, ultimately adversely affect its business. In addition, any deterioration in relations between India and Pakistan or between India and China might result in investors’ concern about stability in the region, which could adversely affect the trading price of the Notes. India has also witnessed civil disturbances in recent years, and future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on the Issuer. Such incidents also create a greater perception about investment in Indian companies involving a greater degree of risk, which in turn could have an adverse impact on the Issuer's business. Natural disasters could have a negative impact on the Indian economy and damage the Issuer's facilities. Natural disasters such as floods, cyclones, earthquakes or famines have in the past had a negative impact on the Indian economy. If any such event were to occur, the business of the Issuer could be affected due to the event itself or due to our inability to effectively manage the effects of the particular event. Potential effects include the damage to infrastructure and the loss of business continuity or business information. In the event that the facilities of the Issuer are affected by any of these factors, its operations may be significantly interrupted, which may materially and adversely affect its business, financial condition and results of operations. The proposed new taxation system in India could adversely affect the business of the Issuer. The Government has proposed a major reform in Indian tax laws, namely the provisions relating to the GAAR. The provisions of GAAR have been introduced in the Finance Act, 2012 and have come into effect from 1 April, 2017. The GAAR provisions intend to target and tax arrangements declared as "impermissible avoidance arrangements", which is any arrangement, the main purpose or one of the main purposes of which is to obtain a tax benefit and which satisfies at least one of the following tests: (i) creates rights or obligations which are not ordinarily created between persons dealing at arm's

38

length; (ii) results, directly or indirectly, in misuse, or abuse, of the provisions of the IT ACT; (iii) lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or (iv) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. If GAAR provisions are invoked, then the tax authorities have wide powers, including denial of tax benefit or a benefit under a tax treaty. The consequences of the implementation of GAAR cannot be determined at present and there can be no assurance that such effects would not adversely affect the business of the Issuer and its future financial performance. RISK IN RELATION TO BONDS

Any downgrading in credit rating of the Bonds may affect the value of Bonds and thus our ability to raise further debts. Investors may not be able to recover, on a timely basis or at all, the full value of the outstanding amount and/or the interest accrued thereon in connection with the Bonds. Changes in interest rate/exchange rates may affect the prices of the Bonds. Payments made on the Bonds will be subordinated to certain tax and other liabilities preferred bylaw. There is a risk of volatility in the price of the Bonds. Any adverse change in India's credit rating by an international rating agency could adversely affect the Issuer's business and profitability

39

VII. BRIEF SUMMARY OF BUSINESS/ACTIVITIES OF THE ISSUER AND ITS LINE OF

BUSINESS

OVERVIEW

The Issuer is an autonomous Authority of the Government of India under the Ministry of Road, Transport & Highways (MoRTH) and was constituted on 15 June 1989 by the NHAI Act, 1988. The NHAI Act governs the functions of the Issuer and frames the rules and regulations pursuant to which it operates. It commenced operations in February 1995. The Issuer was established by the Government of India for the provision and maintenance of a national highway network consistent with global standards, to meet road users' expectations in the most efficient and cost effective manner and to provide a national infrastructure system capable of supporting a sustainable economic growth. The objectives of the Issuer are provided in the NHAI Act pursuant to which the Issuer is responsible for the development, maintenance and management of the national highways entrusted to it by the Government and for matters connected or incidental thereto. The Issuer's functions include the survey, development, maintenance and management of the national highways and, inter alia, to construct offices or workshops, to establish and maintain hotels, restaurants and rest rooms on or near the highways entrusted to it, to regulate and control regular traffic volume, to develop and provide consultancy and construction services and to collect service and usage fees in accordance with the NHAI Act. The Issuer's original mandate was limited to a number of pilot projects, undertaken with the assistance of the Asian Development Bank (ADB) and Japan Bank of International Cooperation (JBIC). Subsequently, in 1998, the Government, in conjunction with the Issuer, announced the National Highways Development Programme (NHDP) comprising two initial major phases. The First Phase comprised the Golden Quadrilateral project, which established modern road transportation links between a number of major Indian cities including New Delhi, Chennai, Kolkatta, Mumbai, Bangalore and Jaipur. The Golden Quadrilateral project was split into four sections totalling 5,846 km of road network. The Second Phase involved development of the North South corridor and the East West corridor ("NS-EW Corridors"), which established highways through central India connecting Srinagar (North), Kanyakumari (South), Porbandar (West) and Silchar (East), totalling approximately 7,142 km. As of 30 September 2017, over 92 per cent. of the NS-EW Corridor projects totalling 7,142 km were completed. Since the inception of the NHDP programme, the approach to implement the NHDP has changed significantly. Initially NHDP projects were implemented through EPC contracts. Since 2005, as a policy, the Government has been implementing NHDP projects through PPP models. The various PPP models followed include BOT models, being the BOT (Toll), BOT (Annuity) and BOT (Hybrid Annuity) models. As of 30 September 2017, the Issuer has awarded 155 BOT (Toll) based contracts at a total project cost of INR 1,260.12 billion, 47 BOT (Annuity) based contracts at a total project cost of INR 288.12 billion, 49 BOT (Hybrid Annuity) based contracted at a total project cost of INR 526.34 billion and 462 EPC contracts at a projected cost of INR 1511.42 billion. The Issuer has adopted a business model that relies on outsourcing a number of activities including design, construction, supervision, operation and maintenance of national highways, rather than undertaking such activities through its own employees. This has allowed the Issuer to maintain an efficient organisational structure which focuses on operational decision-making. The Issuer is also involved in the implementation of the Special Accelerated Road Development Programme for Development –North East (SARDP-NE) to provide connectivity to all the State Capitals

40

and district headquarters in the north-east region of India. The proposal would include upgrading other stretches of national highways and state highways considered critical for the economic development of the north-east region. In December 2000, a mandate was given by the Central Government to the Issuer under NHDP Phase-I to upgrade the road connectivity to the Major Ports in the Country. Port-road connectivity projects are being implemented by setting up SPVs where the Issuer contributes to the project cost by way of an equity investment or equity participation. On 9 October 2017, the Issuer was assigned a rating of Baa3 with positive outlook from Moody's Investor Service ("Moody's"), the same rating as the Government of India. Moody's also highlighted the strong link between the Issuer and the Indian Government, adding that the Issuer’s baseline risk is the same as the default risk of India and indicating a strong correlation of the Issuer's credit rating with the credit rating of the Government of India. Subsequently, on 17 November 2017, Moody's upgraded India's rating from Baa3 to Baa2, also changing the outlook from Stable to Positive. The Issuer was also assigned BBB- rating with stable outlook from S&P Global Ratings. This rating is the same with the rating of the Indian Government. As of the date of this Offering Circular, the Issuer has set up 11 (eleven) SPVs and 1 (one) associate company. STRENGTHS Central role in Government initiatives in policy making in the infrastructure sector

The Issuer believes that it has a strategic advantage owing to its strong relationship with the Central Government and the central position it occupies in the plans of the Central Government for the development and implementation of various programmes, policies and structural and procedural reforms for the roads and highway infrastructure sector in India. The Issuer is the primary agency responsible for the development of the national highways infrastructure projects under the NHDP

The NHAI Act has designated the Issuer as the primary agency responsible for the development of the national highway infrastructure under the NHDP and related programmes approved by the Central Government. The Issuer manages the development of the NHDP under the mandate of MoRTH and the Central Government. There are no comparable agencies within the Central Government for the development of the national highway infrastructure. This ensures that funds can be deployed to the various infrastructure projects under the NHDP relatively efficiently and also allows the Issuer to enable private sector participation in the development of the national highway infrastructure in India. The PPP models implemented by the Issuer vary from short-term simple management contracts (with or without investment requirements) to long-term and very complex BOT forms like Design, Build, Finance, Operate and Transfer ("DBFOT"). As well as the NHDP, the Issuer has implemented several other highway projects commissioned together with the Government, such as the SARDP-NE, the Port Connectivity projects and other projects. The Issuer believes that the absence of direct competition for the implementation of the projects under the NHDP places it in a unique position as the developer of the national highway infrastructure.

41

Track record of consistent operational performance and growth The Issuer believes that it has established a track record for consistent growth. Pioneering initiatives in the road sector in India

The Issuer believes that it has initiated several innovative processes which are different from the practices generally followed in the infrastructure industry. Further to the adoption of performance based contracts with bonus and penalty provisions in both EPC and PPP projects, the Issuer believes that there has been an improvement in construction and service quality associated with such EPC and PPP projects. Detailed project reports ("DPRs") relating to each project currently undergo peer reviews by specialist engineers, selected from a panel of consultants, in order to enhance quality and efficiency. Mechanisms have been implemented to accelerate the process of dispute resolution, especially in relation to EPC projects. Umbrella state support agreements have also been put in place for projects undertaken within a single State. Each State support agreement executed between the Issuer and the State Government provides a legal framework for providing support and services to executing agencies to procure necessary support from the State Government for implementation of the projects in accordance with their defined schedule. Some of the other innovations introduced by the Issuer include e-tendering, e-procurement, introduction and implementation of Wayside Amenities on highways, road asset management systems, advanced traffic management systems, road user applications, green highways, safety engineering and adaptation of the some of the national highways to provide emergency landing facilities for military aircraft. The Issuer has also recently entered into a memorandum of understanding with the Indian Space Research Organisation and the North East Center for Technology Application and Research for the use of spatial technology for the monitoring and managing of national highways. Recently, the Issuer has also been involved in the plans by the Central Government and the Delhi Development Authority to enable the decongestion of Delhi-NCR region. Recently, the Issuer has placed its efforts on a proposal to decongest Delhi through the creation of various radial routes Experienced and committed management and employee base with in-depth sector expertise. The Issuer believes that it has an experienced, qualified and committed management and employee base. The Issuer believes that it is one of the few organisations where people with extensive experience in the road and highways and finance sectors are regularly seconded from various central or state services, departments and organisations to share their expertise. As on March 31, 2018, NHAI has a total

strength of 1079 employees. The Issuer is organised in a manner so as to facilitate faster operational decision-making. Supervision consultants and independent engineers are appointed through a rigorous recruitment process in order to select the most qualified professionals. Furthermore, all projects are monitored centrally at the Issuer's headquarters by both a technical and a financial division. These divisions are operated separately, each with their own management and sub-management structure. Economies of scale

Given the scale of operations of the Issuer and the legislative mandate to the Issuer pursuant to the NHAI Act, the Issuer benefits from a large volume of commercial projects. The Issuer enjoys significant cost benefits as a result of its centralised decision making system. The Issuer aims to manage its projects efficiently so that equipment is stored more efficiently, manpower is deployed appropriately and redundant assets are minimised. The Issuer therefore, achieves large scale efficiencies and benefits from economies of scale owing to the size of its operations.

42

STRATEGIES The Issuer's long term goal is to develop a highly-advanced highway network suitable for meeting the increasing demands of commercial transportation and heavy industrial use. The Issuer aims to achieve this goal through the following areas of strategic focus. Decentralisation of local level decisions and activities The Issuer is aiming to decentralise its field level decisions and activities in order to achieve a greater level of operational efficiency. To this end the Issuer has set up 25 Regional Offices and 179 Project Implementation Units, each with an appropriate management structure for the effective co-ordination and monitoring of local projects. Each Regional Office has been delegated the necessary powers and capacity to engage, where necessary, such technical experts as are required to achieve the most efficient outcome in the implementation of such regional office's projects. Strengthening of core processes for the NHDP implementation and management The Issuer believes that it pays significant attention to institutionalising knowledge and best practices within the project cycle. This includes preparing guidelines of best practice in land acquisition and preconstruction activities adopted in different Indian states, adopting "Resettlement and Rehabilitation" practices, in particular for externally aided projects, and preparing guidelines and standardised procedures for implementing amendments to existing project scopes and timelines. The Issuer has also developed an e-procurement system and an online platform for interaction with various service providers. These steps, the Issuer believes, will enhance its productivity and ability to implement its projects more efficiently. Strengthening of the quality audit and review processes As the Issuer relies frequently on outsourcing in the implementation of projects, its strategy is to invest resources in infrastructure required to carry out advanced audits and performance reviews of its service providers. This strategy includes improving the review process of project designs, greater involvement of the Issuer's field unit and supervision consultants at an earlier stage in a project, strengthening independent quality audits during the construction stage of EPC and PPP projects and receiving continuous feedback from stakeholders which enables it to enhance its wider monitoring framework. Greater focus on human resources The Issuer expects an increase in the scale and complexity of future national highways projects, which will require continued growth within its human resources both in terms of size and expertise. The Issuer plans to extend its outsourcing of personnel to its different areas of operation in order that the right level of expertise is available where necessary. On occasions, especially in relation to projects where land acquisition matters are involved, the Issuer is hiring retired officers who were working in the various state and national level government bodies and also other third party service providers. The Issuer believes that by doing so it shall be able to utilise the experience and expertise of these personnel to enhance its business and areas of operation.

43

Developing strong institutional relationships with external stakeholders The Issuer's strategy is to engage with and build strong relationships with a variety of stakeholders across various aspects of its operations. These include, but are not limited to, the Central Government, the NitiAayog, State and local Governments and agencies, implementing authorities such as the police and health service, contractors, concessionaires, technical, financial and legal consultants, audit firms, financial institutions, investors, industry associations, academic institutions, the media, and both multilateral and bilateral funding agencies such as the World Bank, the ADB and the JBIC. Greater use of information technology ("IT") The rapid advance in IT resources across various aspects of highway Development and management has resulted in a stronger incentive for the Issuer to maximise the application of these resources within its operations. Significant focus on IT is one of the key strategies for the Issuer in its plans for corporate growth. The Issuer has already instituted various information technology systems across its various operations. Examples include e-tendering, electronic tolling, advanced traffic management systems and road asset management systems. The Issuer expects to expend more resources towards the implementation of information technology across it operations to enhance its productivity and its results of operations. THE ISSUER'S PROJECTS

The national highways are an integral component of the Indian economy and are fundamental to ensuring the efficient inter-state movement of both passengers and goods. The national highways connect the National and State Capitals of India, the Country's major ports and rail junctions, and provide links with border roads and international highways. The total length of the national highways (including expressways) of India stands at 120,144 km as per the NHAI Annual Report for Fiscal 2017. Whilst highways and expressways constitute only 1.9 per cent. of the length of all roads in India, they are responsible for carrying around 40 percent of the road traffic throughout the country. The progress of the NHDP and other similar projects, as of July 31, 2018, are as follows:

Total Length

(Km.)

Already 4/6

Laned (Km.)

Under

Implementation

(Km.)

Contracts under

Implementation

(No.)

Balance length

for award (Km.)

NHDP Golden Quadrilateral 5,846 5,846 0 0 -

North/South-

East/West Phase I &

II

7,142 6625 318 28 199

Port Connectivity 435 400 35 6 -

NHDP Phase III 11,809 8269 2454 91 1086

NHDP Phase IV 13,203 6255 5318 126 1630

NHDP Phase V 6,500 2900 1927 46 1673

NHDP Phase VI 1,000 143 197 9 660

NHDP Phase VII 700 70 391 13 239

NHDP Total

Other 5,560 1,862 3,698 92 -

SARDP-NE 110 110 110 - 1

Total by the Issuer 52,305* 32,480 14,338 412 5,487

* Total 20,000 km was approved under NHDP Phase IV. Out of which 13,203 km as assigned to the Issuer and the

remaining 6,791 km with MoRTH.

44

Connectivity to Major Ports In December 2000, a mandate was given by the Central Government to the Issuer under NHDP Phase-I to upgrade the road connectivity to the major ports in the country. Port-road connectivity projects are being implemented by setting up SPV companies where the Issuer contributes to the project cost by way of an equity investment or equity participation. The following SPVs have been incorporated for developing port connectivity projects:

No. Name of Port Length (km) Name of the SPV

1 Mormugao 18.3 Mormugao Port Road Company Limited

2 Haldia 52.2 Calcutta-Haldia Port Road Company Limited

3 JNPT Package-I 30 Mumbai JNPT Port Road Company Limited

JNPT Package-II 14.4 Mumbai JNPT Port Road Company Limited

4 Vishakapatnam 12.5 Viskhapatnam Port Road Company Limited

5 Chennai-Ennore 30 Chennai-Ennore Port Road Company Limited

6 Cochin 10.4 Cochin Port Road Company Limited

7 Tuticorin 47.2 Tuiticorin Port Road Company Limited

8 Paradip 77 Paradip Port Road Company Limited

9 New Mangalore 37.5 New Mangalore Port Road Company Limited

Total : 329.5

In addition to the above projects, there are two projects being implemented by the Issuer to provide the port connectivity for Chennai Port Gate No. 10 and ICTT Vallarpadam (Cochin) port, as follows:

S. No. Name of Stretch/Port Length (km)

1 Elevated Road from Chennai Port Gate No.10 to Maduravoyal (NH-4) 19

2 NH-47(Km. 337.15) (Cochin) to ICTT Vallarpadam (NH-47C) 17.2

Total: 36.2

SPECIAL ACCELERATED ROAD DEVELOPMENT PROGRAMME FOR NORTH EASTERN REGION ("SARDP-NE")

The Issuer is also involved in the implementation of SARDP-NE to provide connectivity to all the State capitals and district headquarters in the north-east region of India. The proposal would include upgrading other stretches of national highways and state highways considered critical for the economic development of the north-east region. The SARDP-NE envisages improvement of road connectivity to the State capitals with district headquarters in the north eastern region. The proposed programme includes improvement of 10,141 km of roads comprising national highways and state roads to be implemented under Phase 'A', Phase 'B' and Arunachal Pradesh Package. Phase A Phase A consists of improvements to 4,099 km of roads consisting of 3,014 km of national highways and 1,085 km of State roads at an estimated cost of Rs. 217.69 billion. Out of 4,099 km, BRO, State PWDs and the National Highways and Infrastructure Development Corporation Limited ("NHIDCL") have

45

been entrusted with responsibility for the development of 3,213 km of roads. The works are in various stages of progress. Phase B Phase B involves adding extra lanes to 3,723 km of national highways and further improvements to state roads. Arunachal Pradesh Package for Roads and Highways

The Arunachal Pradesh Package of Roads and Highways covering 2,319 km of road was approved by the Government as part of SARDP-NE on 9 January 2009. Out of this, 776 km has been approved by the Government for execution on a BOT (Annuity) basis and for the remaining 1,543 km approval for tendering under the EPC basis. BharatmalaPariyojana As per the MoRTH Government of India the Issuer will develop 34,800 Km of highways under

BharatmalaPariyojana. The total length of 34,800 Km entrusted to NHAI consists of BharatmalaPariyojana under

Ph-I, (24,800 Km); existing NHDP projects under implementation (10,000 Km)

The objective of the project is to optimize the efficiency of freight and passenger movement across India by

bridging critical infrastructure gaps while simultaneously creating direct and indirect employment and enhancing

economic activity. The project lays a special emphasis on fulfilling the connectivity needs of backward and tribal

areas, areas of economic activity, places of religious and tourist interest, border areas, coastal areas and trade

routes with neighbouring countries. Therefore, the Issuer will be responsible for the development and maintenance

of economic corridors, inter corridors and feeder routes, national corridor efficiency improvement, border and

international connectivity roads, coastal and port connectivity roads and green-field expressways among others.

The overall fund requirementis of approximately Rs. 6,92,324 crore (Rs. 3,85,000 Crore for

BharatmalaPariyojana, Rs.1,50,000 crore for existing NHDP Projects executed by NHAI and Rs. 1,57,324 crore

for other schemes being executed by other agencies for the five years period starting from Fiscal 2018 upto Fiscal

2023.NHAI has availed certain borrowings from Life Insurance Fund and Employees Provident Fund, rupee

denominated Masala Bonds and is proposing to issue BharatmalaBonds and private placement of long term bonds

etc. For the total requirement of Rs. 6,92,324 crore NHAI intends to borrow Rs. 3,77,045 crore from GoI, Rs.

209279 crore by way of market borrowings and Rs. 1,06,000 crore from private investment (PPP).

EASTERN PERIPHERAL EXPRESSWAY

Eastern Peripheral Expressway having a length of 135 Kms was completed in a record time of 500 days much

before the stipulated period of completion. This is a prestigious project of the Government of India which was

inaugurated by the Hon’ble Prime Minister in the last week of May’2018. This expressway is an access control

expressway and the only expressway in India where the toll is charged for the actual journey undertaken by the

users.

TOLL OPERATE TRANSFER MODEL (TOT)

NHAI bided a bundle of ten projects for ToT and the NHAI could fetch Rs. 9682 crore. This is the beginning of

ToT model and NHAI in due course would be awarding the work of ToT for many more projects in the time to

come. The ToTproceeds which has been deposited to Consolidated Fund of India (CFI) is ring fenced for road

projects and thus will be utilized by NHAI for this purpose.

46

OVERSEAS PROJECT The Central Government has mandated that the Issuer undertakes management and consultancy services in connection with construction and improvement of a two-lane highway in the Kalewa-Yargi section of the proposed India-Myanmar-Thailand Trilateral Highway. The highway will connect India with Thailand through Myanmar. The cost of this overseas project is estimated to be Rs. 11.70 billion and is fully funded by the Central Government through the Ministry of External Affairs (the “MEA”). According to an agreement between the Issuer and the MEA, the MEA will reimburse construction cost to the Issuer in phases and the Issuer will receive a service fee amounting to 6 per cent. of the lower of the estimated cost of construction and the tendered construction bid. As of the date of this Offering Circular, the Issuer has issued the letter of award to Punj Lloyd and Varaha Infra joint venture, the successful bidder, for the construction of the highway. The project is expected to be completed within 36 months from the date of the award. Government as the policy maker Pursuant to the NHAI Act, the Central Government may direct that any function in relation to thedevelopment or maintenance of national highways shall also be exercisable, among others, by any officer or authority subordinate to the Central Government. Accordingly, some of the functions were delegated by the Central Government to the respective State Governments. The NHAI Act was passed providing for the constitution of the Issuer for the development maintenance and management of the national highways and for matters connected therewith or incidental thereto. The Central Government appoints the Chairman and may also appoint up to four part-time members. The Central Government is empowered to vest in, or entrust to, the Issuer such national highways or any stretch thereof, as are vested in the Central Government under the NHAI Act. As per the NHAI Act, the Central Government provides funds to the Issuer for the discharge of its functions. Further to this, the fee collected by the Issuer is on behalf of the Government for services or benefits rendered by it under the NHAI Act. FINANCING As the Issuer has been created to act as an authority for the development, maintenance and management of national highways in India, the Government of India has the responsibility of providing funds to the Issuer for the discharge of its functions. The Issuer receives its funding through (i) support from the Government of India in the form of capital investment, additional budgetary support (cess and toll plough back), (ii) loans from multilateral agencies and (iii) Internal and External Borrowing Recourses (IEBR) i.e. market borrowings (both domestic and international). The development and maintenance of National Highways is financed through, (i) Government’s Gross Budgetary Support (GBS) and Additional Budgetary Support (ABS); (ii) Dedicated accruals under Central Road Fund (share in the levy of cess on fuel); (iii) Lending by international institutions (World Bank, ADB and JBIC); (iv) private financing through PPP framework including in DBFOT pattern – investment by private firm and return through levy and retention of user fee, BOT (annuity) pattern – investment by private firm and return through semi-annual pre-determined payments from NHAI as per bid, and special purpose vehicle with equity participation by NHAI; and (v) market borrowing (including funds raised through capital gain tax exemption bonds under section 54EC of the Income

47

Tax Act and long term tax free bonds, taxable bonds, loans from GoI, NSSF fund). During the year 2017-2018, a sum of Rs. 12,429.45 crore was received as Cess Funds.

Loan assistance from multilateral agencies NHAI is implementing some projects under NHDP with external assistance in the form of loan from multilateral development agencies like World Bank (WB), Asian Development Bank (ADB) and Japan Bank of International Cooperation (JBIC). The loans for NHAI projects tied up with these multilateral agencies, except for one ADB loan for Surat Manor projects, are passed on to NHAI by the GoI in Rupees as 80% grant and 20% loan. The loan component is repaid to the Government by NHAI and repayments to these agencies are in turn done by GoI. The following table sets out the externally aided projects of the Issuer as of 30 September 2017: Summary of Externally Aided Projects

Category

Awarded Awarded Cost

(Rs. in Crore)

Completed

No. of Contracts Length in km No. of

Contracts

Length in km

World Bank Funded Projects

NHDP Phase I 18 983 5,538 18 982

GQ 18 983 5,538 18 982

Others - - - - -

NHDP Phase II

(EW Corridors)

10 408 2,587 10 409

Sub-Total A 28 1,391 8,125 28 1,391

ADB Funded Projects

NHDP Phase I 10 615 1,866 10 615

GQ 9 567 1,807 9 567

Others 1 48 59 1 48

NHDP Phase II

(NS & EW

Corridors)

31 1,638 7,565 30 1,584

Sub-Total B 41 2,253 9,431 40 2,199

JBIC Funded Projects

NHDP Phase I 7 150 634 7 150

GQ 5 111 333 5 111

Others 2 39 301 2 39

Sub-Total C 7 150 634 7 150

JICA ODA Funded Projects

NHDP Phase III 1 127 1027 - -

Sub-Total D 1 127 1027 - -

Total (A+B+C+D) 77 3921 19217 75 3740

WB/NHAI 2 79 621 0 0

Grand Total 79 4000 19838 75 3740

NHAI also has a provision for providing grant upto 40% of the project cost to make projects commercially viable. However, the quantum of grant is decided on a case to case basis and typically

48

constitutes the bid parameter in BOT projects. The disbursement of such grant is subject to the provisions of project concession agreements.

NHAI projects, with higher traffic volumes, have also received Negative Grant (upfront payment payable by successful bidder to NHAI) instead of grant/VGF as an outcome of the competitive bidding process. Further, under the revised MCA, projects under BOT/DBFOT framework have also been awarded on a revenue share/premium basis, where the bidder offering the highest revenue share/premium is awarded the project. These revenues are also ploughed back for the development and maintenance of National Highways. Market Borrowing The Issuer is authorised to raise funds through the issue of bonds both on the domestic and international capital markets. Summary of Indebtedness The following table sets forth the details of the Issuers' indebtedness as of the dates mentioned:

31 March 2016 (INR in billions)

31 March 2017 (INR in billions)

30 September 2018

(INR in billions)

Long Term Borrowings

Secured Loans

Capital Gains Tax Free Bonds- 54EC 105.67 131.97 162.47

Tax Free Secured Redeemable Non- Convertible Bonds (10Yr & 15Yr) 11-12 100.00 100.00 100.00

Tax Free Secured Redeemable Non- Convertible Bonds (10Yr & 15Yr) 13¬14 50.00 50.00

50.00

Tax Free Secured Redeemable Non- Convertible Bonds (10Yr & 15Yr) 15-16 190.00 190.00

190.00

Taxable Bonds (25Yrs, 5Yrs & 30Yrs) 2016-17 0.00 275.45 275.45

Taxable Bonds (15Yrs, 5Yrs & 30Yrs) 2017-18 0.00 0.00 208.75

Taxable Bonds (30 Yrs with call option after 10 Yrs) 2018-19 0.00 0.00 42.55

Rupee Denominated Offshore (Masala) Bonds 2017-18 0.00 0.00 30.00

Loan from ADB - (Surat Manor Project) (US$ 105,500,802.74 @ Rs.66.70) 7.04 6.42

5.64

Taxable Bonds (5yrs) (Approval and no objection certificate provided by Government of India for raising taxable bonds)

Total 452.71 753.84 1064.6

PUBLIC PRIVATE PARTNERSHIP ("PPP") IN HIGHWAY DEVELOPMENT PPP is the Issuer's preferred mode of delivery for future phases of the BharatmalaPariyojana and NHDP. There are a number of forms of PPP which are popular in India and have been used by the Issuer for development of the national highways: Build, Operate and Transfer ("BOT") (Toll) Under the BOT (Toll) model, private developers and operators are awarded project contracts where they are entitled to collect and retain toll revenues for a certain tenure known as the concession period. Toll revenues are prescribed by the Issuer on a "per vehicle per km" basis for different types of vehicles. A model concession agreement for BOT projects has been developed and is regularly revised as required to facilitate the efficient award of contracts to prospective operators.

49

50

Build, Operate and Transfer ("BOT") (Annuity) In the BOT (Annuity) model, the concessionaire bids for projects on the basis of annuity payments to be received from the Issuer that would cover the construction, operational and maintenance costs of the project and cater for an expected return on the investment. The annuities are paid semi-annually by the Issuer to the concessionaire and are linked to performance covenants. The concessionaire does not bear the traffic or tolling risk in these contracts. Design, Build, Finance, Operate and Transfer ("DBFOT") The DBFOT model is similar to the BOT (Toll) and BOT (Annuity) model. However, in the DBFOT model, the concessionaire is also responsible for the design, building, financing, operation and maintenance aspects of the project. A model concession agreement for DBFOT projects has been developed and is regularly revised as required to facilitate the efficient award of contracts to prospective operators. Hybrid Annuity Model ("HAM") The Finance Minister during his budget speech for Fiscal 2016 announced the Government's intentions to revisit the existing PPP models. Following the announcement by the Finance Minister, broad guidelines for a Hybrid Annuity model were announced by the Issuer. The Hybrid Annuity Model combines the EPC and BOT (Annuity) models, whereby Government and private enterprises share the bid project cost in the ratio of 40:60 during the construction period. Project life cycle cost defined as net present value ("NPV") of the quoted bid project cost plus NPV of the operations and maintenance (O&M) cost for the entire operations period is the bid parameter. The project is awarded to the developer quoting the lowest project life cycle cost where "project life cycle

cost" means the net present value of the quoted bid project cost plus the net present value of the operations and maintenance costs for the operational period. The Government funds 40 per cent. of the bid project cost, as determined by the bidder, in five equal instalments during the construction period. The private party bears the remaining 60 per cent of the project cost, through a combination of equity contributions and debt. The proportion borne by the private party during the construction period is expected to be recovered from the Issuer through annuity payments spread over a period of time. Project costs are inflation linked (through a price index multiple) ("PIM"), which is the weighted average of the wholesale price index ("WPI") and consumer price index ("CPI") in the ratio of 70:30. The bid project cost adjusted for variation between the price index occurring between the reference index preceding the bid date and reference index date immediately preceding the appointed date shall be deemed to be the bid project cost at the commencement of construction. Bid project cost shall be adjusted to variations in PIM on a monthly basis until the commencement of operations. Further, the Government also retains the revenue risk as it remains responsible for the collection of toll revenue upon completion. On the other hand, the private participant will bear construction, operations and maintenance risks. Since the Government will bear 40 per cent of the project cost during the construction phase, the returns to the private developer in the form of annuities during the operating phase will be proportionately lower when compared with normal annuity projects fully funded by a private developer. When compared with EPC projects, it is expected that a shift to the Hybrid Annuity model would ease the cash flow pressure on the Issuer as it would have to provide only 40 per cent. upfront funding spread over the 30-36 months of construction period, and the private participant would be required to bear the balance 60 per cent of the project cost through a combination of its equity contribution and debt raised from the market. Further, the 60 per cent of the project cost borne by the private participant during the construction period is to be recovered from the Issuer in terms of annuity payments spread over a period of 15 years. Therefore, the Issuer's own upfront funding requirement

51

will be lower in the case of Hybrid Annuity Model compared with EPC model. Further, the annuity nature of the projects would eliminate traffic related risks thereby improving ease of financial close and refinancing ability post project completion. Operate, Maintain and Transfer ("OMT") Under the OMT model, toll collection and highway maintenance are integrated and awarded to one private operator (traditionally, tolling agents have been responsible for the collection of toll revenue, with various subcontractors undertaking road maintenance). Project construction and development will remain to be the responsibility of a separately appointed EPC contractor until completion, at which point such private operator will assume responsibility for collection of tolls in return for their maintenance of the highways and the provision of essential facilities such as emergency and safety services. The Issuer has recently awarded a number of highway projects to the private sector under the OMT model. Engineering, Procurement and Construction ("EPC") Under the EPC model, a single contractor takes responsibility for all elements of the engineering, procurement, construction and maintenance aspects of the project. This is different from a traditional EPC contract, whereby the contractor does not provide for maintenance under the initial contract. Under the EPC model, the contractor will quote for the cost of upgrading and maintaining the highway at the outsetand will be required to provide such maintenance for two years' post completion of the construction. The cost of the project is borne by the Issuer.

Refinancing and Re-structuring: Refinancing and restructuring of a project is undertaken by the concessionaire to take advantage among others of the lower rate of interest, elongated tenure of payment. Infrastructure Debt Funds: IDF are an investment vehicle which can be sponsored by commercial banks and NBFCs in which domestic/off shore institutional investors and in particular insurance and pension funds can invest through units and bonds issued by IDF. It offers among others the benefit of lower interest rates improving the viability of projects and offering a better return on equity. Since 2014, IDF have been established by ICICI Bank, L&T and IDBI. Change of ownership: The provision of divestment in PPP projects are not uniformed overall concession agreement. Before 2009 concessions promoters has to hold at least 26% of the equity throughout the concession period. After 2009 the concessionaire can divest 100% of its equity two years after the completion of the said construction. The CCEA has allowed such divestment in all PPP Projects two years after the completion of the said construction subject to a subsequent investment in certain projects such as incomplete NHAI Projects, other Highway Projects, Power Sector Project and to retire debt to Financial Institution in any other Infrastructure Project.

Premium Deferment: The cost of a BOT (Toll) project awarded on premium includes other than cost of construction committed premium payment to the Government, operation and maintenance cost and debt servicing cost. The primary object of the deferment is to revive any projects bid during 2011-12 that were facing financial stress due to the economic down turn. Pursuant the CCEA decision (MoRTH letter no.37012/22/2011/H(pt.III) dated 04/03/2014) the premium has been deferred in 21 cases.

One-time Fund Infusion Scheme: The CCEA has approved a scheme to revive and quickly bring languishing project to physical completion by providing financial assistance as loan at bank rate + 2%.

52

Infrastructure Investment Trust (InVIT) for Concessionaires: InvIT is a mechanism that enables developers of infrastructure assets to monetise their assets by pooling multiple projects under a single entity (trust structure). Currently, Government Securities or G-secs are the only other instruments with such a long life. The sponsor shall hold minimum 15% of the units issued by the InvIT with a lock-in period of three years from the date of issuance of units. The Minimum Investment limit is Rs.10 lac per investor helps monetize revenue generating road assets thereby increasing the propensity of bidders to invest in new road projects. It will lower the cost of capital by attracting long term investors (particularly pension and insurance funds) in completed projects. It will help reduce NPA incidence in commercial Banks, in respect of highway projects. InvIT for IRB, Reliance Infra and ILFS were approved by NHAI. Incentives for Private Sector Participation The Government has put in place financial incentives to encourage increased private sector participation in the road sector. Initiatives taken by the Government include:

i) a declaration of the road sector as an industry; ii) the provision of a capital grants subsidy of up to 40 percent of a project's costs to enhance the

viability of a project on a case-by-case basis; iii) a duty-free import of specifically identified high-quality construction plant and equipment; iv) a 100 percenttax exemption in any consecutive 10 years within a period of 20 years after

completion of construction projects which involve an addition of new lanes; v) an undertaking by the Government to meet all expenses relating to land acquisition and other

preconstruction activities (which, in essence, allows for construction and development on encumbrance-free land); and

vi) an allowance for foreign direct investment of up to 100 percent in the road sector. Bidding Process The general procedure for the selection of concessionaires adopted by the Issuer involves a two-stage bidding process. Projects are awarded as per the model documents prepared by the Issuer and the Central Government such as Request for Qualification ("RFQ"), Request for Proposal ("RFP") and concession agreements. The Issuer amends these model documents based on project specific requirements. The two stage process involves: Stage 1: Pre-qualification on the basis of technical expertise and financial position of the firm and its track record in similar projects which meets the minimum criteria set out in the RFQ document.

Stage 2: Commercial bids from pre-qualified bidders are invited through issue of RFPs. For BOT (Toll) projects the bid parameter is the premium offered to the Issuer or the grant sought from the Issuer. In BOT (Annuity) projects the bid parameter is the semi-annual annuity sought from the Issuer. The Government has put in place appropriate policies and other institutional and regulatory mechanisms including a set of fiscal and financial incentives to encourage increased private sector participation in the road sector. Bidding process for Engineering, Procurement and Construction ("EPC") projects The Issuer has also adopted a single stage two part system for the selection of the bidder for award of a project. Under this process, the bid shall be invited under two parts. Eligibility and qualification of the bidder will be first examined based on the details submitted under the technical bid with respect

53

to eligibility and qualifications criteria prescribed in the RFP. The financial bid shall only be opened to those bidders whose technical bids satisfy the eligibility and qualifications requirements as per the RFP. RELATIONSHIP WITH THE GOVERNMENT NHAI has relationships with the Government in several contexts as described below:

Government as the policy maker

Statutory Powers of the Government over NHAI

Government as the Lender

Government as the Regulator Government as the policy maker Pursuant to the NHAI Act, the Central Government may direct that any function in relation to the development or maintenance of national highways shall also be exercisable, among others, by any officer or authority subordinate to the Central Government. Accordingly, some of the functions were delegated by the Central Government to the respective State Governments. The NHAI Act was passed providing for the constitution of the Issuer for the development maintenance and management of the national highways and for matters connected therewith or incidental thereto. The Central Government appoints the Chairman and may also appoint up to four part-time members. The Central Government is empowered to vest in, or entrust to, the Issuer such national highways or any stretch thereof, as are vested in the Central Government under the NHAI Act. As per the NHAI Act, the Central Government provides funds to the Issuer for the discharge of its functions. Further to this, the fee collected by the Issuer is on behalf of the Government for services or benefits rendered by it under the NHAI Act. Statutory powers of the Government over the Issuer Under Section 11 of NHAI Act,the Central Government is empowered to vest or entrust any national highway or stretch thereof to the Issuer by publishing a notification in the Official Gazette. On and from the date of publication of the said Notification, all assets, rights or liabilities of the Central Government in respect of such national highway or stretch thereof stands transferred to the Issuer including but not limited to all debts, contracts, capital expenditure, all sums of money due to the Central Government, suits and any other legal proceedings. Financial Support from the Government

Financial support to the Issuer from the Government comes primarily in the form of yearly budgetary allocations and cess collected by the Government under the CRF Act, part of which is specially allocated for national highways and capital infusion in the form of loans. The NHAI Act provides for the Central Government to provide any capital that may be required by the Issuer or pay by way of loans or grants such sums of money as it may consider necessary to ensure the efficient discharge of the Issuer's functions. The NHAI Act also provides for the constitution of the National Highways Authority of India Fund, a provider of capital for the collection of any grants, aid, loan facilities or any other sums received by the Issuer, under which it can draw down to meet project expenses, procurement and other ongoing costs. Alternatively, the Central Government regularly provides consent to the Issuer to raise funds through the issuance of bonds and other debt securities both on the domestic and international capital markets.

54

As the Issuer has been set up to act as an authority for the development, maintenance and management of national highways in India, the Government of India has the responsibility of providing funds to the Issuer for the discharge of its functions. The Issuer receives its funding through (i) support from the Government in the form of capital investment, additional budgetary support (cess and toll plough back), (ii) loans from multilateral agencies and (iii) market borrowings. The development and maintenance of the national highways is financed through (i) the Government's gross budgetary support and ABS, (ii) dedicated accruals under Central Road Fund (share in the levy of cess on fuel),(iii) lending by international institutions, (iv) private financing through PPP framework including DBFOT and SPVs with equity participation by the Issuer and (v) market borrowing (including funds raised through capital gain tax exemption bonds, Masala Bondsand long term tax free bonds). The Government as the regulator The NHAI Act also designates the Central Government as the principal regulator of the Issuer. The Central Government has a range of powers enabling it to exercise a broad degree of control over the functioning of the Issuer, including over the manner in which the Issuer may invest its funds or maintain its accounts. The NHAI Act stipulates that the Issuer shall remain bound by the directions of the Central Government on questions of policy. The Central Government may suspend the Issuer from its management role on any of its national highways projects, or alternatively replace the Issuer in its management role entirely if it is of the opinion that the Issuer is either unable to discharge its functions and duties effectively, or if it persistently fails to comply with any direction of the Central Government. The Central Government is further empowered to make rules for giving effect to the provisions of the NHAI Act in certain matters which include but are not limited to matters relating to manner in which the Issuer may invest its funds or maintain its accounts. B. K. Chaturvedi Committee Report In order to resolve the procedural hurdles to the national highways projects as well as to address the financing needs of the road sector, the Central Government established the B. K. Chaturvedi Committee ("Committee") headed by Shri B.K. Chaturvedi, Member, Planning Commission. Amongst the other recommendations the Committee made the following recommendations which also has had the in-principle approval of the Central Government:

i) issuance of tax exempted bonds; ii) guarantee cover for any borrowing by the Issuer; iii) out of the borrowing approval of Rs. 300 billion earlier provided to Indian Infrastructure

Finance Company Limited ("IIFCL"), Rs. 100 billion under a fiscal stimulus package to be transferred to the Issuer, as per the its borrowing requirement;

iv) assistance in negotiating non-sovereign multilateral loans from organisations such as the World Bank, the ADB and the JBIC by providing back to back support, if necessary; and

v) providing a letter of comfort from the Ministry of Finance confirming the availability of cess at least till 2030-31.

Risk Management Since the Issuer is the implementing agency of the NHDP/Bharatmala, steps have been taken for restructuring and strengthening the Issuer. Institutional mechanisms have been established to address delays in, amongst other things, environmental clearances and land acquisition. There is a particular

55

focus on traffic management and safety related issues through the proposed Directorate of Safety and Traffic Management to be set up by the Central Government. It is expected that these initiatives, once fulfilled, would deliver an efficient and safe highway network across the country. In order to specify the policy and regulatory framework on a fair and transparent basis, a Model concession agreement (MCA) for PPP in respect of the national highways has been prescribed. It is expected that this common framework, based on international best practices, will significantly accelerate the pace of project awards as well as ensure an optimal balance of risk and reward among all project participants. Revenue realisation in BOT (Toll) projects is subject to some risks including, but not limited to variation in traffic, variation in toll rates, additional toll ways and occurrence of premature termination on account of certain events. The relevant concession agreement provides for various risk mitigation mechanisms including changing the concession period, differential toll rates that are linked to the cost of different roads structures and providing for termination payments upon the occurrence of any force majeure event. Risk of Early Termination of Concession: In the event of a default by a concessionaire under the relevant concession agreement and if the concessionaire has failed to cure such default within the specified cure period, the Issuer shall have the right to terminate the agreement. If such default takes place within the relevant construction period, generally no payment is made to the concessionaire and if such default takes place during the operation period, the Issuer generally will only make payment of up to 90 per cent. of the debt due as on the date of such termination to the lender of the concessionaire, less any insurance claim further to which the Issuer will get the right over the relevant asset. Land acquisition risk: The Issuer is responsible for acquiring lands required for the projects. The Issuer acquires land under the National Highways Act, 1956 ("NH Act"). In various parts of the country, the process for lands acquisition is affected by a large number of factors, including but not limited to Government policies and the social and political environment. Also, the process of land acquisition can result in litigations. However, the risk of delay associated with the land acquisition process is mitigated by the Issuer as it generally awards only those projects where land acquisition has already taken place. Approval Risk: The obligation of obtaining approvals and/or permissions is on the concessionaires/contractors. In order to manage these risks, the Issuer provides assistance to the concessionaires/contractors in seeking the approval and/or permission from the relevant authorities. Although the Issuer tries to provide all reasonable support and assistance to the concessionaires/contractors in procuring applicable approvals and/or permissions required from any Government entity, such approvals or permissions may be delayed due to various reasons resulting in delay in completion of the projects. The Issuer generally assists concessionaires/contractors in obtaining the approvals and/or permissions in relation to the following among others:

i) permission of the State Government for extraction of boulders from quarries; ii) permissions of village Panchayats and the Pollution Control Board for installation of crushers; iii) licences for use of explosives; iv) permission of the State Government for drawing water from rivers and/or reservoirs; v) licence(s) from inspectors of factories or other competent authorities and clearance of the

Pollution Control Board for setting up concrete batching plants; vi) clearance from village Panchayats and the Pollution Control Board for setting up asphalt

plants; vii) applicable permits, as required, relating to environmental protection and conservation; viii) permission of State Government for the cutting of trees; and ix) any other permits or clearances required under applicable laws.

56

Force majeure risk: Force majeure risk is applicable across all the business of the Issuer. Factors such as acts of God, epidemics, adverse weather conditions, radioactive contamination, ionising radiation, fire or explosion, strikes or boycotts, the discovery of geological conditions, toxic contamination or archaeological remains on the relevant site, Indirect Political Event(s) and Political Event(s) and change in law are often threats to various projects undertaken by the Issuer. In order to mitigate the losses due to force majeure, the Issuer has a separate mechanism of payment upon the occurrence of a force majeure event. HUMAN RESOURCES

The Issuer employed 1079 employees as of 31 March 2018. The employees include professionals in business management, accountancy, engineering, law, computer science, economics and other relevant disciplines. The Issuer believes that its employees are its most valuable asset and the management believes it has a good relationship with the employees. The Issuer aims to develop a collaborative culture and an ongoing consultative process at various levels of administration within the organisation. The Issuer believes that it has amicable relations with its employees. The management of the Issuer is also in constant dialogue with the employees to avoid any industrial relations actions, including strikes or work stoppages. The computerisation of the Issuer has reduced employee workloads and allowed the Issuer to maintain a relatively lean workforce during the past five to six years despite growing its business. The details of employees of the Issuer as on March 31, 2018 are as follows:

Category of Employees Number of Employees

Regular 394

Deputation 293

Contract 392

Social Awareness programmes promoted by the Issuer

The Issuer actively participates on social reform or national initiatives such as road safety, rehabilitation and resettlement and AIDS awareness. In addition, the Issuer is working towards the concept of "Green Highways" for future projects. In furtherance of the concept of Green Highways, the Issuer is contemplating development of horticulture and greenbelts along highways. INSURANCE

The Issuer's policy is to insure its properties adequately against fire and other usual risks. The Issuer's insurance policies are subject to exclusions which are customary for those insurance policies, including those exclusions which relate to war and terrorism-related events. The Issuer believes that its insurance policies as described above are appropriate for its business. COMPETITION Responsibility for all of the national highways vest in the Government, and such responsibility has been designated to the Issuer under the NHDP/Bharatmala and the other programmes entrusted to it. The Issuer aims to build and upgrade the national highways to the highest international standard and is the sole appointed authority in India for overseeing the implementations of national highway projects by private parties or state agencies. Although the Issuer is the sole delegate for this role, roads

57

authorities such as PWDs and other road construction corporations under the control of State or Union Territory governments are also working towards the development and maintenance of roads and certain other national highways, some of which also form part of the NHDP. PROPERTIES

The Issuer holds certain properties in Delhi on a perpetual lease basis. The Issuer also leases 25 Regional Offices and 179Project Implementation Units throughout India. INFORMATION TECHNOLOGY ("IT") The Issuer is continuing to invest in IT designed to help it better monitor and run its business. The Issuer has deployed the IT system across its organisation. The Issuer's website is designed to provide a comprehensive description of its business. CORPORATE STRUCTURE

The organisation structure of the Issuer is as follows:

CHAIRMAN

MEMBER (A)MEMBER

(PPP)MEMBER (F) CVO

MEMBER

(PROJ)

MEMBER

(Tech)

MEMBER

(PROJ)

CGM

(Admin/HR-I & II)CGM (T)

CGM (Fin) &

CGM (FA)CGM (Vig)CGM (T)CGM (T)CGM (T)

GM

(Admin/HR)GM (T)GM (Fin) DGM (Vig)GM (T)GM (T)GM (T)

DGM/Manager

(Admin/HR)

DGM/Manager

(T)

DGM/Manager

(Fin)Manager (Vig)

DGM/Manager

(T)

DGM/Manager

(T)

DGM/Manager

(T)

58

VIII. KEY OPERATIONAL & FINANCIAL PARAMETERS OF THE ISSUER FOR THE LAST 3 AUDITED YEARS

(Rs. in lacs)

Sr. No.

Particulars FY 2016-17 (audited)

FY 2015-16 (audited)

FY 2014-15 (audited)

1. Capital 13,959,380.47 12,551,457.89 10,452,040.18

2. Reserves & Surplus 0.00 748.68 45.46

3. Capital Grants 1,365,643.01 1,366,280.32 1,366,901.41

4. Borrowings 7,538,464.71 4,527,036.70 2,489,285.59

5. Total Fixed Assets 21,776,720.00 17,649,443.14 14,083,894.32

6. Investments (at cost) 90,959.00 121,652.89 121,625.00

7. Current Assets, Loans & Advance 4,187,028.21 3,314,307.25 1,733,237.32

8. Current Liabilities & Provisions 3,191,219.03 2,639,879.69 1,630,484.00

9. Net Current Assets 995,809.18 674,427.56 102,753.32

10. Total Income 1,354.40 1,294.24 1,696.01

11. Total Expenditure 28,090.30 23,436.89 21,507.14

12. (Profit) / Loss for the Year 26,735.89 22,142.65 19,811.13

13. Surplus brought forward - - -

14. Surplus carried to Balance Sheet - - -

IX. BRIEF HISTORY OF ISSUER SINCE INCORPORATION, DETAILS OF ACTIVITIES

INCLUDING ANYREORGANIZATION, RECONSTRUCTION OR AMALGAMATION, CHANGES IN CAPITAL STRUCTURE, (AUTHORIZED, ISSUED AND SUBSCRIBED) AND BORROWINGS

1. BRIEF BACKGROUND

NHAI is an autonomous organisation of the Government of India under the Ministry of Road Transport & Highways and was constituted on June 15, 1989 by an Act of Parliament – The National Highways Authority of India Act, 1988, and was made operational in February, 1995 with the appointment of full time Chairman and other Members. NHAI has an all India presence through its different offices (Regional Offices/Project implementation Units/Corridor Management Units) in different cities. The functioning of NHAI is thus governed by NHAI Act and rules, and regulations framed thereunder. It succeeds the previous Ministry of Surface Transport. 2. CHANGE IN HEAD OFFICE

On September 21, 2000, the Head Office of NHAI was shifted from 1, Eastern Avenue, Maharani Bagh, New Delhi - 110 065 to G - 5 & 6, Sector-10, Dwarka, New Delhi - 110 075 for administrative and operational efficiency. 3. VISION To meet the nation‘s need for the provision and maintenance of National Highways network to global standards and to meet user‘s expectations in the most time bound and cost effective manner, within the strategic policy frame work set by the GoI and thus promote economic well-being and quality of life of the people. The long term vision of NHAI is to meet the challenges of developing the Nation by providing an unparalleled network of physical connectivity both to the common man as well as to the commercial transportation and for other heavy industrial use. This commitment results in a greater

59

public good and NHAI is a means for achieving that public good for Indian industry as well as the common people at the grassroots level. 4. MAIN OBJECTS

The main objects of NHAI are provided in the NHAI Act as per which NHAI is responsible for the development, maintenance and management of National Highways entrusted to it, by the GoI and for matters connected or incidental thereto. NHAI was constituted to survey, develop, maintain and manage National Highways and inter alia to construct offices or workshops, to establish and maintain hotels, restaurants and rest rooms at or near the highways vested in or entrusted to it, to regulate and control plying of vehicles, to develop and promote consultancy and construction services and to collect fees for services and benefits rendered in accordance with NHAI Act. 5. MAJOR EVENTS

Year: Event:

1989 Establishment of the Issuer under the NHAI Act.

1995 The Issuer became fully operational with the appointment of a full-time Chairman and other Members.

1998 Announcement of the NHDP programme, whereby the Issuer would be entrusted with road construction totalling 46,200 km to be completed in seven phases.

2000 Government approval obtained from the Cabinet Committee on Economic Affairs ("CCEA") for Phase I of the NHDP.

2003 Government approval obtained from CCEA for NHDP Phase II

2005 Government approval obtained from CCEA for NHDP Phase III and IV

2006 Government approval obtained from CCEA for NHDP Phase V and VI

2007 Government approval obtained from CCEA for NHDP Phase VII

2009 Approval received from the Government of India for a revised strategy to implement the NHDP, based on the B. K. Chaturvedi Committee Report.

2012 The Issuer successfully raised the first public issue of tax free bonds under the IT Act totalling an aggregate sum of INR 100 billion.

2014 The Issuer successfully raised a further INR 50 billion through tax free bonds.

2016 The Issuer successfully raised an additional INR 190 billion through tax free bonds.

2017 The Issuer successfully raised an additional INR 275 billion through taxable bonds.

2018

The Issuer successfully raised INR 30 billion through Rupee denominated offshore bonds (Masala bonds) and INR 120 billion as unsecured loan from State Bank of India.

The Issuer registered its logo.

6. HOLDING COMPANY

NHAI does not have any holding company. 7. THE PROMOTER

Under Entry 23 of the Union List of the Seventh Schedule to the Constitution of India the development and maintenance of National Highways is vested in Central Government. Further, Section 5 of NHAI Act provides that the Central Government may direct that any function in relation to the development or maintenance of National Highways shall also be exercisable among other by any officer or authority subordinate to the Central Government.

60

In exercise of the above powers vested in the Central Government vide Entry 23 of the Union List of the Seventh Schedule to the Constitution of India and under Section 5 of the NHAI Act, the President of India gave his assent to The National Highways Authority of India Bill, 1988 which was passed by both the Houses of Parliament on December 16, 1988. Accordingly National Highways Authority of India was established on June 15, 1989 as an autonomous body under the Ministry of Road Transport and Highways, Government of India. 8. BRIEF INFORMATION OF SPVs AND ASSOCIATE COMPANY AS ON JUNE 30, 2018

Name Ahmedabad Vadodara Expressway Company Limited

Date of Incorporation April 05, 2000

Registered Office NHAI Corporate Office, Plot G - 5 & 6, Sector -10, Dwarka, New Delhi-110065

Name Calcatta-Haldia Port Road Company limited

Date of Incorporation December 26, 2000

Registered Office G 566, Sector-10, Dwarka, New Delhi-110 075

Name Cochin Port Road Company Limited

Date of Incorporation January 19, 2004

Registered Office Room No. 101 5 & Sector 10 Dwarka, New Delhi – 110045

Name Moradabad Toll Road Company Limited

Date of Incorporation August 13, 1998

Registered Office 1 Eastern Avenue Maharani Bagh, Sector 10, Dwarka, New Delhi – 110075,

India

Name Mormugao Port Road Company Limited


Registered Office G-586, Sector 10, Dwarka, New Delhi - 110045

Name Tuticorin Port Road Company Limited


Registered Office Room No. 101 G 5 & 6 Sector 10, Dwarka, New Delhi-110045

Name Paradip Port Road Company Limited



Name Vishakhapatnam Port Road Company Limited


Registered Office G-526, Sector 10, Dwarka, New Delhi-110075

Name New Mangalore Port Road Company Limited



Name Mumbai-JNPT Port Road Company Limited


Registered Office G 566, Sector 10 Dwarka, Delhi - 110075

61

Name Chennai-Ennore Port Road Company Limited


Registered Office G 526, Sector -10, Dwarka, New Delhi-110 075

Name Indian Highways Management Company Limited


Registered Office Room No-402, NHAI HQ, Plot G-5 & 6, Sector -10, Dwarka, New Delhi-

110075

62

X. CAPITAL STRUCTURE NHAI has not issued any shares against capital and capital grants invested by GoI (in pursuance of NHAI Act). The capital of NHAI as on September 30, 2018, is set forth below:

Details of Capital of NHAI

NHAI has not issued any shares against Capital and Capital Grants invested by GoI (in pursuance of NHAI Act).

The Capital of NHAI as on September 30, 2018, is set forth below:

Particulars Amount

(` in lakhs)

i) Capital u/s 12(i)(b) - Commencing Capital

ii) Capital u/s 17

a) Capital Base 80,100.00

b) Cess Fund (up to March 31, 2018) 1,05,91,865.00

Add:

Cess fund received during Financial Year 2018-19

(up to September 30, 2018)

11,06,900.00

c) Additional Budgetary Support (NHDP and

others)

17,98,254

d) Capital – Net off toll collection, negative

grant etc. upto March 31, 2010

6,18,355.88

e) Plough back of Toll Remittance, etc. w.e.f.

April 01, 2010

45,95,203.00

Less:

1) Expenditure on Toll Collection Activities (up to

w.e.f. April 1, 2010)

(1,65,996.51)

2) 17(Excess)/Surplus of Expenditure on Maintenance

of Highways over Maintenance Grant Received

(w.e.f. April 1, 2010).

(4,05,513.76)

3) Plough back transferred to SPVs (17,407.23)

4) Transfer of Exceptional item from P & L A/c (40,310.88)

Sub-Total 1,80,81,349.51

Total 1,81,61,449.51

Capital History of NHAI upto September 30, 2018

1) Capital Base build-up

There have been no changes in the Capital base build-up of NHAI in the last five years.

2) Cess Fund Build-up

(` In lakhs)

S. No. Date* Investor Amount Cumulative Amount

1. July 5, 2013 MoRTH, GoI 1,71,436.00 63,71,372.00

2. September 17, 2013 MoRTH, GoI 1,71,436.00 65,42,808.00

3. October 28, 2013 MoRTH, GoI 1,71,436.00 67,14,244.00

4. February 04, 2014 MoRTH, GoI 1,71,437.00 68,85,681.00

63

S. No. Date* Investor Amount Cumulative Amount


6. November 05, 2014 MoRTH, GoI 2,10,299.00 75,74,270.00

7. May 20, 2015 MoRTH, GoI 4,60,500.00 80,34,770.00

8. July 23, 2015 MoRTH, GoI 4,60,500.00 84,95,270.00


10. December 28, 2015 MoRTH, GoI 16,05,00.00 91,16,270.00

11. June 9, 2016 MoRTH, GoI 2,00,000.00 93,16,270.00

12. July 5, 2016 MoRTH, GoI 2,00,000.00 95,16,270.00

13. August 5, 2016 MoRTH, GoI 2,07,650.00 97,23,920.00

14. January 18, 2017 MoRTH, GoI (375,000.00) 93,48,920.00

15. April 17, 2017 MoRTH, GoI 3,85,736.00 97,34,656.00

16. July 17, 2017 MoRTH, GoI 3,85,736.00 1,01,20,392.00

17. September 26, 2017 MoRTH, GoI 3,71,473.00 1,04,91,865.00

18. December 20, 2017 MoRTH, GoI 1,00,000.00 1,05,91,865.00

19. April 12, 2018 MoRTH, GoI 4,02,300.00 1,09,94,165.00

20. June 15, 2018 MoRTH, GoI 4,02,300.00 1,13,96,465.00

21. September 19, 2018 MoRTH, GoI 3,02,300.00 1,16,98,765.00

* Date of Sanction and not the date of release of funds.

3) Additional Budgetary Support (NHDP and others) Build-up

(` In lakhs)

S.

No.

Date* Investor Amount Cumulative Amount

1. March 26, 2013 MoRTH 20,074.00 508,462.00

2. March 26, 2013 MoRTH 4,811.00 513,273.00

3. February 18, 2013 MoRTH 115,954.00 629,227.00

4. March 31, 2013 MoRTH 7,058.00 636,285.00

5. May 08, 2013 MoRTH 10,000.00 646,285.00

6. June 27, 2013 MoRTH 40,000.00 686,285.00

7. January 13, 2014 MoRTH 17,826.00 704,111.00

8. January 13, 2014 MoRTH 17,214.00 721,325.00

9. 31-Mar-15 MoRTH 60,000.00 781,325.00

10. March 29, 2016 MoRTH 37,027.00 818,352.00

11. April 29, 2016 MoRTH 1,000.00 819,352.00

12. Jun 02, 2016 MoRTH 10,000.00 829,352.00

13. September 23, 2016 MoRTH 375,000.00 1,204,352.00

14. January 12, 2017 MoRTH 4,000.00 1,208,352.00

15. March 09, 2017 MoRTH 100,000.00 1,308,352.00

16. March 23, 2017 MoRTH 50,902.00 1,359,254.00

17. 31-Mar-17 MoRTH 24,000.00 1,383,254.00

18. April 03, 2017 MoRTH 13,000.00 1,396,254.00

19. December 26, 2017 MoRTH 150,000.00 1,546,254.00

20. February 23, 2017 MoRTH 150,000.00 1,696,254.00

21. March 07, 2018 MoRTH 90,000.00 1,786,254.00

22. March 19, 2018 MoRTH 12,000.00 1,798,254.00

64

*Date of Sanction and not the date of release of funds.

4) Capital – Net off toll collection, negative grant etc. upto March 31, 2010

The GoI has decided that from April 1, 2010 onwards, the toll revenue, shared revenue and negative grant

collected by NHAI should be deposited in the Consolidated Fund of India and additional budgetary

provisions would be provided for expenditure from the Consolidated Fund of India in line with the amount

deposited by NHAI in Consolidated Fund of India.

Accordingly, net current liability of pre April 1 2010 period on account of toll and negative grant etc. stood

at Rs. 618,355.88 lakhs. This amount had already been utilised on project development and was no longer

payable to GoI. During Financial Year 2012-13, the same has been transferred to capital.

5) Additional Budgetary Support (Plough back of Toll Remittance, etc.) Build-up

(` in lakhs)

S.

No.

Date* Investor Amount Cumulative Amount

1. June 26, 2013 MoRTH, GoI 1,19,250.00 7,28,539.00




5. July 26, 2014 MoRTH, GoI 1,36,200.00 12,22,489.00




9. May 25, 2015 MoRTH, GoI 1,62,500.00 17,93,589.00

10. July 30, 2015 MoRTH, GoI 1,62,500.00 19,56,089.00



13. May 17, 2016 MoRTH, GoI 1,25,000.00 24,06,089.00

14. July 28, 2016 MoRTH, GoI 1,25,000.00 25,31,089.00


16. January 18, 2017 MoRTH, GoI 3,75,000.00 30,31,089.00

17. April 20, 2017 MoRTH, GoI 2,11,553.00 32,42,642.00

18. July 17,2017 MoRTH, GoI 2,11,554.00 3,454,196.00



21. April 12, 2018 MoRTH, GoI 2,39,300.00 41,16,603.00

22. June 15, 2018 MoRTH, GoI 2,39,300.00 43,55,903.00


* Date of Sanction and not the date of release of funds.

2. DETAILS OF ANY ACQUISITION OR AMALGAMATION IN THE LAST 1 YEAR

None 3. DETAILS OF ANY REORGANIZATION OR RECONSTRUCTION IN THE LAST 1 YEAR None

65

4. DISCLOSURES PERTAINING TO WILFUL DEFAULT None of our members are wilful defaulter 5. SHAREHOLDING PATTERN OF THE ISSUER (as on September 30, 2018)

NHAI is an autonomous body constituted by an act of Parliament - The National Highways Authority of India Act, 1988, under the Ministry of Road Transport & Highways, Government of India. NHAI has not issued any shares against capital and capital grants invested by Government of India (in pursuance of NHAI Act). The entire capital base of NHAI is contributed by the Ministry of Road Transport & Highways, Government of India and as such, 100% owner’s capital in NHAI is held by the Government of India. The promoters have not pledged or encumbered by their shareholding in the Issuer.

6. TOP 10 EQUITY SHARE HOLDERS OF THE ISSUER (AS ON SEPTEMBER 30, 2018)

NHAI is an entity constituted under the NHAI Act and therefore does not have any equity shares.

7. PROMOTER HOLDING IN THE ISSUER (AS ON SEPTEMBER 30, 2018)

The entire capital base of NHAI is contributed by the Ministry of Road Transport & Highways, Government of India and as such, 100% capital in NHAI is held by the Government of India.

8. GROSS BORROWINGS OF THE ISSUER (AS ON SEPTEMBER 30, 2018) A) DEBT OUTSTANDING As on September 30, 2018, we had outstanding secured borrowings of approximately Rs. 98,27,569.40 lakh

and unsecured borrowings of Rs. 50,00,000 lakh.

Bonds Outstanding as on September 30, 2018, Issued by the Authority: Set forth below is a brief summary of our significant outstanding bonds as on June 30, 2018, together with a brief description of certain significant terms of such financing arrangements. (i) SECURED BORROWINGS a) BONDS ISSUED BY NHAI

Capital gains tax exemption bonds under Section 54EC of the Income Tax Act.

Set forth below is a brief summary of our outstanding capital gains tax exemption bonds issued under Section 54EC of the IT Act as on September 30, 2018, together with a brief description of certain significant terms of such financing arrangements. These bonds are not listed on any stock exchange. The bonds are secured by mortgage over NHAI’s immovable property, located in Gujarat, or such other immovable property that may be agreed between NHAI and the Trustees for the bondholders ranking pari-passu with the mortgages created and/or to be created on the said property for securing bonds or any other instrument.

66

Sl.

No.

Debenture Series

Tenor/Period of Maturity

Coupon Total Value of Outstanding

Bonds (in lakhs Rs.)

Date of

Allotment

Redemption Date/

Schedule

Credit Rating Trustee

1. NHAI Bonds Series -XVI (2015-16)

3 years from the Deemed Date of Allotment

6.00% payable annually

25,13,83.40 On Tap basis

Bullet, at the time of maturity i.e. 3 years

“IND AAA” (Assigned) by IRRPL

IL&FS Trustee Company Limited1

2. NHAI Bonds Series -XVII (2016-17)


6.00% p.a. till 30-11-16 5.25% w.e.f 01-12-16 Payable annually



AAA by CRISIL, AAA by CARE AAA by India Ratings AAA by ICRA

SBICAP Trustee Company Limited1

3. NHAI Bonds Series -XVIII (2017-18)


5.25% payable annually.




SBICAP Trustee Company Limited2

4. NHAI Bonds Series -XIX (2018-19)


5.75% payable annually.

1,50,308.60* On Tap basis



Vistra ITCL India Limited

* Allotment against amount of Rs. 3,52,91.40 lakh has not yet been completed and hence not included.

Tax Free Bonds issued under Section 10(15)(iv)(h) of the Income Tax Act. Set forth below is a brief summary of our outstanding Tax Free Bonds issued under Section 10(15)(iv)(h) of the Income Tax Act, together with a brief description of certain significant terms. The bonds are secured by way of pari-passu mortgage over the property of NHAI situated at Ahmedabad along with fixed assets of NHAI, being highway projects comprising of all superstructures constructed on national highways except those under Surat-Manor Tollways Project, in favor of SBICAP Trustee Company Limited.

Sl. No

.

Debenture Series


Coupon Amount (in lakh

Rs. )

Date of Allotmen

t

Redemption Date/

Schedule

Credit Rating Security

1. Tax free secured redeemable non –convertible bonds, in the nature of debentures. (2011-12)

10 years from deemed date of allotment


6,71,408.12

January 25, 2012

January 25, 2022

CRISILAAA/ Stable by CRISIL “CARE AAA” by CARE "Fitch AAA(IND) with Stable Outlook” by FITCH

The bonds are secured by way of pari-passu mortgage over the property of NHAI situated at Ahmedabad along with fixed assets of NHAI, being

15 years from Deemed Date of Allotment


3,28,591.88

January 25, 2012

January 25, 2027

2. Tax free secured Redeemable non –

10 years from deemed date of allotment (Private Placement)


45,200.00 November 25, 2013

November 25, 2023

“CRISIL AAA/Stable” by

67

Sl. No

.

Debenture Series



Rs. )

Date of Allotmen

t

Redemption Date/

Schedule


convertible bonds, in the nature of debentures.** (2013-14)

15 years from Deemed Date of Allotment (Private Placement)


84,960.00 November 25, 2013

November 25, 2028

CRISIL,“CARE AAA” by CARE"Fitch AAA(ind) with Stable Outlook” by FITCH

highway projects comprising of all superstructures constructed on national highways except those under Surat-Manor Tollways Project, in favor of SBICAP Trustee Company Limited.


Public –Retail


30,132.21 February 5, 2014

February 5, 2024

“CRISIL AAA/Stable” by CRISIL,“CARE AAA” by CARE, “BWR AAA with Stable Outlook” by BRICKWORK

Public – Others


47,524.71 February 5, 2014

February 5, 2024


Public –Retail


1,18,980.75

February 5, 2014

February 5, 2029

Public – Others


1,73,202.33

February 5, 2014

February 5, 2029

3. Tax free secured Redeemable non –convertible bonds, in the nature of debentures.*** (2015-16)



54,900.00 September 18, 2015

September 18, 2025




3,32,300.00

September 18, 2015

September 18, 2030



Public –Retail


65,576.03 January 11, 2016

January 11, 2026



Public –Others


68,640.24 January 11, 2016

January 11, 2026



Public –Retail


2,67,526.27

January 11, 2016

January 11, 2031



Public –Others


5,98,257.46

January 11, 2016

January 11, 2031


68

Sl. No

.

Debenture Series



Rs. )

Date of Allotmen

t

Redemption Date/

Schedule




45,500.00 February 18, 2016

February 18, 2026




1,37,300.00

February 18, 2016

February 18, 2031



Public –Retail


19,233.40 March 9, 2016

March 9, 2026



Public –Others


97,88.07 March 9, 2016

March 9, 2026



Public –Retail


1,12,766.60

March 9, 2016

March 9, 2031



Public –Others


1,88,211.93

March 9, 2016

March 9, 2031


** At premium of Rs. 45.45 Lakh.

*** At a premium of Rs. 169.83 Lakh.

Taxable Bonds

Sl. No.

Debenture Series

Tenor/ Period of Maturity

Coupon Amount (in lakh Rs. )

Date of Allotment Redemption

Date/ Schedul

e


1. Taxable secured Redeemable non –convertible bonds, in the nature of debentures**



5,00,000.00 August 3, 2016 August 3, 2041


Bonds have been secured against immovable Property situated at Ahmedabad and fixed assets of NHAI being highway

2.o. Taxable secured Redeemable non –convertible bonds, in the

25 years from Deemed Date of Allotment (Private


5,00,000.00 September 1, 2016 August 30, 2041


69

Sl. No.

Debenture Series




Date/ Schedul

e


nature of debentures**

Placement)

projects comprising of all superstructures including highway lightings, road barriers and dividers, culverts, bridges, flyovers and all other super structures constructed on national highways as entrusted to NHAI[except those under the Surat – Manor Tollway Project in favour of SBICAP Trustee Compnay Limited.




5,02,000.00 December 23, 2016

December 23, 2021





8,50,000.00 January 24, 2017 January 24, 2047





4,02,500.00 March 20, 2017 March 18, 2022





1,52,500.00 June 06, 2017 June 06, 2022





5,00,000.00 June 16, 2017 June 14, 2047





3,50,000.00 July 14, 2017 July 12, 2047


9. Taxable secured Redeemable non –convertible bonds, in the

15 years from Deemed Date of Allotment (Private


5,00,000.00 August 24, 2017 August 24, 2032


70

Sl. No.

Debenture Series




Date/ Schedul

e


nature of debentures**

Placement)

10. Taxable secured Redeemable non –convertible bonds, in the nature of debentures



85,000.00 November 6, 2017 November 6, 2022


11. Taxable secured Redeemable non –convertible bonds, in the nature of debentures



219500.00 June 28, 2018 June 28, 2048


Bonds have been secured against immovable Property situated at Ahmedabad and fixed assets of NHAI being highway projects comprising of all superstructures including highway lightings, road barriers and dividers, culverts, bridges, flyovers and all other super structures constructed on national highways as entrusted to NHAI[except those under the Surat – Manor Tollway Project and

12. Taxable secured

Redeemable non –convertible

bonds, in the

nature of debentures

30 years

from Deemed

Date of

Allotment (Private

Placement)

8.4535

% payable

annuall

y

2,06,020.00 August 2,2018 August

2, 2048 AAA by CRISIL,

AAA by CARE AAA by India Ratings

AAA by ICRA

71

Sl. No.

Debenture Series




Date/ Schedul

e


Projects awarded under TOT.

(ii) UNSECURED BORROWINGS

Debenture Series Tenor/ Period of Maturity


Date of Allotment

Redemption Date/

Schedule

Credit Rating

Taxable unsecured Redeemable non –convertible bonds, in the nature of debentures



5,00,000.00 22.11.2017 22.11.2032 AAA by CRISIL, AAA by CARE AAA by India Ratings AAA by ICRA

Unsecured loan from State Bank of India

Amount (in lakh Rs.)

Name of the

Bank Type

of Facility Loan

Documentation Interest/Coupon

Rate Repayment Facility

Sanctioned Amount

availed

State Bank of

India

Term Loan Loan

Agreement

dated August

02, 2018

Monthly MCLR

Rate + 9 bps

Door to door tenor of 10

years (Availability plus

moratorium period of 3

years and repayment

period of 7 years)

25,00,000.00

12,00,000

Details of Foreign Currency un-secured loans

National Highways Authority of India has secured loan from ADB vide a Loan Agreement dated October 5, 2000 for an amount of $ 180,000,000. However, the total loan availed is $ 149,749,847.25. The loan is secured by the Government of India vide guarantee agreement dated October 5, 2000. The objective for availing the loan was to remove capacity constraints and improve road safety of critical section of the Western Transport corridor connecting Delhi to Mumbai (Surat- Manor Tollway Project).

Name of the Bank

Type of

Facility

Loan Documentation

Interest/Coupon Rate Repayment Facility/ Amount Sanctioned/Availed

Outstanding Amount as

on September 30, 2018 (in Rs. Lakhs)

Asian Development Bank

Term Loan

Loan Agreement dated October 5, 2000

Based on the cost to the bank of such currency or currencies plus a spread, both as reasonably determine by the bank from time to time.

Principal Payment Half Yearly on January 1 and July 1.

$149,749,847.25 56,338.17

72

Foreign Currency bonds facilities (Unsecured) National Highways Authority of India has raised an amount of Rs. 3,00,000.00 lakh through Masala Bonds in May 2017.

Debenture Series Tenor/ Period of Maturity Coupon Amount (in lakh Rs. )

Date of Allotment

Redemption Date/ Schedule

Credit Rating

Masala Bond -2021

5 years from Deemed Date of Allotment

7.30% 3,00,000.00 May 18, 2017 Bullet repayment On May 18, 2022

Unrated

Loan from NSSF

Debenture Series



Date of Loan

Redemption Date/ Schedule

Credit Rating

Loan 10 Years 7.70% Payable half yearly

10,00,000.00 18.01.2018 Bullet repayment On 18.01.2028

Unrated



Unrated



Unrated

Loan 10 years 8.33% Payable half yearly


Unrated

B) TERMS OF ASSETS CHARGED AS SECURITY

Principal terms of issue in brief Details of assets charged as security

Debt Facility Tax Free Bonds (10 years) Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Gujarat, along with first charge on fixed assets of NHAI (as reflected in the Balance Sheet for the financial year ended March 31, 2011), being highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI

Amount Rs. 6,71,408.12 lacs

Raised in Financial Year 2011-2012

Credit Rating “AAA/Stable” by CRISIL, “AAA” by CARE and “AAA(ind) with Stable Outlook” by FITCH

Coupon Rate 8.20% p.a.

Interest Payment Annual

Maturing in Financial Year 2021-22

Bond Trustee SBICAP Trustee Company Limited


Amount Rs. 3,28,591.88 lac







Debt Facility Tax Free Bonds (10 years) Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Amount Rs. 45,200.00 lacs

73


Raised in Financial Year 2013-2014 Gujarat, along with first charge on fixed assets of NHAI (as reflected in the Balance Sheet for the financial year ended March 31, 2013), being highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI

Credit Rating “AAA/Stable” by CRISIL, “AAA” by CARE and “and BWR AAA by Brickwork






Amount Rs. 84,960.00 lac








Amount Rs. 77,656.92 lacs



Coupon Rate 8.27% p.a. (others); 8.52% p.a. (retail)












Debt Facility Bond Series XVI Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on



Credit Rating ‘IND AAA by IRRPL

74


Coupon Rate 6.00% p.a. the said property for securing the bonds or any other instruments Interest Payment Annual


Bond Trustee IL& FS Trustee Co. Limited

Debt Facility Tax Free Bonds (10 years) (Private Placement)

Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Gujarat, along with first charge on fixed assets of NHAI, being highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI

Amount Rs. 54,900.00 lacs


Credit Rating “IND AAA” by IRRPL, “CARE AAA” by CARE, "[ICRA] AAA” by ICRA “CRISIL AAA/Stable” by CRISIL

Coupon Rate 7.11%













Debt Facility Tax Free Bonds (10 years) (Public Issue)

Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Gujarat, along with first charge on fixed assets of NHAI being highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI

Amount Retail Rs. 65,576.03 lacs

Non Retail 68,640.24 lacs







Debt Facility Tax Free Bonds (15 years)

(Public Issue)

Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Gujarat, along with first charge on fixed assets of NHAI (as reflected in the Balance Sheet for the financial year ended March 31, 2013), being

Amount Retail Rs. 2,67,526.27 lacs

Non retail Rs. 5,98,257.46 lacs


75


Credit Rating IND AAA” by IRRPL, “CARE AAA” by CARE, "[ICRA] AAA” by ICRA “CRISIL AAA/Stable” by CRISIL

highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI









Credit Rating ““IND AAA” by IRRPL, “CARE AAA” by CARE, "[ICRA] AAA” by ICRA “CRISIL AAA/Stable” by CRISIL

Coupon Rate 7.02%













Debt Facility Tax Free Bonds (10 years) (Public Issue)

Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Gujarat, along with first charge on fixed assets of NHAI being highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI

Amount Retail Rs. 19,233.40 lacs

Non Retail 9,788.07 lacs







Debt Facility Tax Free Bonds (15 years)

76


(Public Issue) Secured by a legal mortgage over NHAI’s immovable property situated at Ahmedabad, Gujarat, along with first charge on fixed assets of NHAI (as reflected in the Balance Sheet for the financial year ended March 31, 2013), being highway projects comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI

Amount Retail Rs. 1,12,766.60 lac

Non retail Rs. 1,88,211.93 lac


Credit Rating IND AAA” by IRRPL, “CARE AAA” by CARE, "[ICRA] AAA” by ICRA “CRISIL AAA/Stable” by CRISIL





Debt Facility Bond Series XVII Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments



Credit Rating AAA by CRISIL, CARE, ICRA, IRRPL

Coupon Rate 6.00% p.a. till 30-11-2016

5.25% p.a. w.e.f 01-12-2016




Debt Facility Bond Series XVIII

Secured by a legal mortgage over NHAI’s

immovable property located at Ahmedabad,

Gujarat ranking pari-passu with the

mortgage(s) created and/ or to be created on the

said property for securing the bonds or any

other instruments



Credit Rating AAA by CRISIL, CARE, ICRA,

IRRPL





Debt Facility Bond Series XIX

Secured by a legal mortgage over NHAI’s

immovable property located at Ahmedabad,

Gujarat ranking pari-passu with the

mortgage(s) created and/ or to be created on the

said property for securing the bonds or any

other instruments

Amount Rs. 150308.60 lacs*



IRRPL




Bond Trustee Vistra ITCL India Ltd

* Allotment against amount of Rs. 3,52,91.40 lakh has not yet been completed and hence not included.

Debt Facility Bond Series I Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the



77


Credit Rating AAA by CRISIL, CARE, ICRA, IRRPL mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments





Debt Facility Bond Series II Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series III Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series IV Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series V Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series I Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on




78


Coupon Rate 7.27% p.a. the said property for securing the bonds or any other instruments Interest Payment Annual



Debt Facility Bond Series II Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series III Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series IV Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Bond Series V Secured by a legal mortgage over NHAI’s immovable property located at Ahmedabad, Gujarat ranking pari-passu with the mortgage(s) created and/ or to be created on the said property for securing the bonds or any other instruments








Debt Facility Series-I 2018-19 Bonds have been secured against immovable Property situated at Ahmedabad and fixed assets of NHAI being highway projects comprising of all superstructures including highway lightings, road barriers and dividers,





79


Interest Payment Annual culverts, bridges, flyovers and all other super structures constructed on national highways as entrusted to NHAI [except those under the Surat – Manor Tollway Project and Projects awarded under ToT.


Bond Trustee VISTRA (ITCL) India Limited

Debt Facility Series-II 2018-19 Bonds have been secured against immovable

Property situated at Ahmedabad and fixed

assets of NHAI being highway projects

comprising of all superstructures including

highway lightings, road barriers and dividers,

culverts, bridges, flyovers and all other super

structures constructed on national highways as

entrusted to NHAI[except those under the Surat

– Manor Tollway Project and Projects awarded

under ToT.

Amount Rs. 206020.00 lacs



IRRPL




Bond Trustee VISTRA (ITCL) India Limited

C) TOP 10 BONDHOLDERS OF THE ISSUER AS ON SEPTEMBER 30, 2018

S. NO. NAME VALUE (in Rs.)

1 LIFE INSURANCE CORPORATION OF INDIA 2,10,00,00,00,000

2 CBT EPF 2,00,00,00,00,000

3 WIPRO LIMITED 15,76,41,88,000

4 STATE BANK OF INDIA 14,96,08,44,000

5

THE HONGKONG AND SHANGHAI BANKING

CORP. LTD. 14,58,26,94,000

6 NPS TRUST 13,95,60,00,000

7 HDFC TRUSTEE COMPANY LTD. MUTUAL FUNDS 11,60,00,00,000

8 IDFC BANK LIMITED 9,91,15,46,000

9 BANK OF INDIA 9,80,00,00,000

10 PUNJAB NATIONAL BANK 9,18,00,00,000

The investments by above entities through their sub-schemes with same PAN have been clubbed

9. AMOUNT OF CORPORATE GUARANTEES ISSUED BY THE ISSUER IN FAVOUR OF VARIOUS COUNTER PARTIES INCLUDING ITS SPVs AND ASSOCIATE COMPANY

The Issuer has not issued, in any form, any corporate guarantee in favour of any counter party including its SPVs and associate company.

10. COMMERCIAL PAPER ISSUED BY THE ISSUER (as on September 30, 2018) The Issuer has not issued any Commercial Paper till the date of this Series-5 IM. 11. OTHER BORROWINGS (INCLUDING HYBRID DEBT LIKE FOREIGN CURRENCY

CONVERTIBLE BONDS (“FCCBS”), OPTIONALLY CONVERTIBLE BONDS/ DEBENTURES/PREFERENCE SHARES) (AS ON SEPTEMBER 30, 2018) The Issuer has not issued any hybrid debt like Foreign Currency Convertible Bonds (“FCCBs”), Optionally Convertible Bonds/ Debentures/ Preference Shares etc.

12. SERVICING BEHAVIOR ON EXISTING DEBT SECURITIES, DEFAULT(S) AND/OR

DELAY(S) IN PAYMENTS OF INTEREST AND PRINCIPAL OF ANY KIND OF TERM

LOANS, DEBT SECURITIES AND OTHER FINANCIAL INDEBTEDNESS INCLUDING

80

CORPORATE GUARANTEE ISSUED BY THE ISSUER, IN THE PAST 5 YEARS

a. The main constituents of the Issuer’s borrowings are generally in the form of loans from banks and financial institutions, assistance from multilateral and bilateral financing agencies, bonds, debentures etc.

b. The Issuer has been servicing all its principal and interest liabilities on time and there has

been no instance of delay or default since inception. c. The Issuer has neither defaulted in repayment/ redemption of any of its borrowings nor

affected any kind of roll over against any of its borrowings in the past. d. The Issuer has not issued, in any form, any corporate guarantee in favour of any counter

party including its SPVs and associate company.

13. OUTSTANDING BORROWINGS/ DEBT SECURITIES ISSUED FOR CONSIDERATION

OTHER THAN CASH, WHETHER IN WHOLE OR PART, AT A PREMIUM OR DISCOUNT, OR IN PURSUANCE OF AN OPTION

NHAI issued bonds at a premium of Rs. 45,45,656.00 for private placement of tax free bonds during Financial Year 2013-14. Further, NHAI has issued bonds at a premium of Rs. 7,03,22,000.00 for private placement of tax free bonds during Financial Year 2015-16. As on September 30, 2018, NHAI has no outstanding borrowings taken/debt securities issued for consideration other than cash, whether in whole or part; at a premium or discount; or in pursuance of an option except as mentioned.

The Issuer hereby confirms that apart from above there has been no material event, development or change having implications on the financials/ credit quality of the Issuer (e.g. any material regulatory proceedings against the Issuer/ promoters of the Issuer, tax litigations resulting in material liabilities, corporate restructuring event etc) at the time of Issue which may affect the Issue or the investor’s decision to invest/ continue to invest in the debt securities of the Issuer.

81

XI. MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE

The Issuer hereby confirms that, except for any information disclosed in this Series- 5 IM, there has been no material event, development or change having implications on the financial condition or credit quality of the Issuer at the time of issue of the Notes which may affect the issue of the Notes or an investor's decision to invest or continue to invest in the debt securities of the Issuer.

82

XII. SUMMARY TERM SHEET

Issuer National Highways Authority of India (“NHAI”/ the “Authority”/ the “Issuer”)

Issue Size Rs.500 crores with Green shoe option up to Rs.1500 crores aggregating to Rs. 2000 crores

Base issue Size Rs.500 crores

Green Shoe Option Rs.1500 crores

Issue Subscribed Rs. 2000 crores

Security name NHAI Taxable Bonds 2018-19 Series -5

Objects of the Issue Part financing of the various projects being implemented by NHAI under the NHDP and other national highway projects as approved by the Government of India

Instrument Taxable Secured Redeemable Non-Convertible Bonds in the nature of Debentures

Issuance Mode In Demat mode only

Trading Mode In Demat mode only

Credit Rating “CRISIL AAA/Stable” by CRISIL, “[ICRA]AAA/Stable” by ICRA, “IND AAA/Stable” by IRRPL and “CARE AAA” by CARE

Seniority Secured, Senior and Unsubordinated

Mode of Issue Private Placement under electronic book mechanism of BSE under SEBI Circular ref SEBI/HO/DDHS/CIR/P/2018/05 dated January 5, 2018 read with “Operational Guidelines for issuance of Securities on Private Placement basis through an Electronic Book Mechanism” issued by BSE.

Security Mortgage over the property of NHAI situated at Ahmedabad along with fixed assets of NHAI, being highway projects comprising of all superstructures including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI and projects awarded under TOTs with a minimum security cover of one time of the aggregate face value amount of Bonds outstanding at all times. Such security creation requires prior approval and authorization by the Government of India as owner of the land. The No-Objection Certificate has been received by the NHAI from the Government of India in this respect.

The Issuer states that it has executed necessary Bond/ Debenture Trust Deed and will be submit the same to with BSE within five working days of execution of the same for uploading on its website. The creation of such security shall be sufficient compliance of the Issuer’s obligation to create security.

Eligible Investors All QIBs, and any non-QIB Investors specifically mapped by the Issuer on the BSE BOND – EBP Platform, are eligible to bid / invest / apply for this Issue.

All investors are required to comply with the relevant regulations/ guidelines applicable to them for investing in this Issue.

Bond Series NHAI Taxable Bonds 18-19 Series-5

Face Value Rs. 10 lacs per Bond

Minimum bid size and in multiples thereafter

1 Debenture of Rs. 10,00,000 (Rupees Ten Lakhs) each and in multiple of 1 Debenture of Rs. 10,00,000 (Rupees Ten Lakhs) each thereafter

Issue Price At par

Redemption At par (Rs. 10 lacs) per Bond

83

Amount

Minimum Application

1 Debenture of Rs. 10,00,000 (Rupees Ten Lakhs) each and in multiple of 1 Debenture of Rs. 10,00,000 (Rupees Ten Lakhs) each thereafter

Tenor 10 years from the Deemed Date of Allotment

Put Option Not applicable

Put Option Price Not applicable

Put Option Date Not applicable

Put Notification Time Not applicable

Call Option Not applicable

Call Option Price Not applicable

Call Option Date Not applicable

Call Notification Time

Not applicable

Redemption/ Maturity

10 years from deemed Date ofAllotment February 5, 2019


Step Up/ Step Down Coupon Rate

Not applicable

Coupon Payment Frequency

Annual

Coupon Payment Dates

First interest payment on February 5, 2020and thereafter annually every year

Coupon Type Fixed

Coupon Reset Process

Not applicable

Day Count Basis Actual/ Actual

Interest shall be computed on an “actual/actual basis”. In case of a leap year, if February 29 falls during the tenor of a security, then the number of days shall be reckoned as 366 days (Actual/Actual day count convention) for a whole one year period, irrespective of whether the interest is payable annually, half yearly, quarterly or monthly etc. It is thus emphasized that for a half yearly interest payment, 366 days would be reckoned twice as the denominator; for quarterly interest, four times and for monthly interest payment, twelve times.

Interest on Application Money

Interest at the respective Coupon Rate (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to the applicants on the application money for the Bonds for the period starting from and including the date of realization of application money in Issuer’s Bank Account up to one day prior to the Deemed Date of Allotment

Listing Proposed on the Wholesale Debt Market (WDM) segment of BSE Ltd (“BSE”)

Trustees Vistra ITCL (India) Limited

Depository National Securities Depository Limited and Central Depository Services (India) Limited

Registrars M/s Beetal Financial & Computer Services (P) Ltd.

Settlement Payment of interest and repayment of principal shall be made by way of cheque(s)/ interest/ redemption warrant(s)/ demand draft(s)/ credit through direct credit/ NECS/ RTGS/ NEFT mechanism

84

Business Day/ Working Day Convention

Working Days shall be all days on which commercial banks are open for business in the city of Delhi. Further, Sundays, have also been considered as non-Business Days. We have not considered the effect of public holidays as it is difficult to ascertain for future dates.

If any of date(s) defined in the Series-5 IM, except the Deemed Date of Allotment, the next working day shall be considered as the effective date(s) in line with SEBI circular No CIR/IMD/DF-1/122/2016 dated November 11, 2016.

Record Date 15 days prior to each Coupon Payment Date and Redemption Date

Effect of holidays

If the interest payment date falls on a holiday, the payment may be made on the following working day however the dates of the future coupon payments would be as per the schedule originally stipulated at the time of issuing the security in line with SEBI circular No CIR/IMD/DF-1/122/2016 dated November 11, 2016.

If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment.

Transaction Documents

The Issuer has executed/ shall execute the documents including but not limited to the following in connection with the Issue:

1. Letter appointing Trustees to the Bondholders;

2. Bond/ Debenture Trust Deed;

3. Rating letter from CRISIL;

4. Rating letter from ICRA;

5. Rating letter from IRRPL;

6. Rating letter from CARE;

7. Tripartite Agreement between the Issuer; Registrar and NSDL for issue of Bonds in dematerialized form;

8. Tripartite Agreement between the Issuer, Registrar and CDSL for issue of Bonds in dematerialized form;

9. Letter appointing Registrar;

10. Application made to BSE for seeking its in-principle approval for listing of Bonds;

11. Trustee Consent Letter.

12. Board Resolution authorizing issue of Bonds.

Conditions precedent to subscription of Bonds

The subscription from investors shall be accepted for allocation and allotment by the Issuer subject to the following:

1. Rating letters from the aforesaid rating agencies not being more than one month old from the issue opening date;

2. Letter from the Trustees conveying their consent to act as Trustees for the Bondholder(s);

3. Application to BSE for seeking its in-principle approval for listing of Bonds.

4. Execution of bond trust deed

Conditions subsequent to subscription of Bonds

The Issuer shall ensure that the following documents are executed/ activities are completed as per time frame mentioned elsewhere in this Series-5 IM:

1. Credit of demat account(s) of the allottee(s) by number of Bonds allotted within 1 working days from Bid Closing date;

2. Making listing application to BSE within 15 days from the Deemed Date of

85

Allotment of Bonds and seeking listing permission within 20 days from the Deemed Date of Allotment of Bonds in pursuance of SEBI Debt Regulations. In case of delay in listing of the Bonds beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest at the rate of 1.00% p.a. over the respective Coupon Rates of the Bonds from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the bondholders.

Besides, the Issuer shall perform all activities, whether mandatory or otherwise, as mentioned elsewhere in this Series-5 IM.

Future Borrowings and Automatic Approvals to the Issuer

As long as the Company maintains the stipulated security cover in respect NCD’s, the Company shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form and also issue Debentures / Notes / other securities in any manner and to change its capital structure without the consent of Debenture holders/Debenture Trustee.

Further, the Company shall not be required to obtain debenture holders/ debenture trustee consent for creating pari-passu charge on the assets given as a security for further borrowings till the time stipulated security cover is maintained. In case, pari-passu letter for any charge creation is requested by the Issuer, Debenture Trustee shall be empowered to issue the same without seeking consent from the Debenture holders, as long as the Issuer satisfies the above requirement of minimum security cover maintenance.

Events of Default If the Issuer commits a default in making payment of any instalment of interest or repayment of principal amount of the Bonds on the respective due date(s), the same shall constitute an “Event of Default” by the Issuer. In case of default in payment of interest and/or principal redemption on the due dates, the Issuer shall pay an additional interest at the rate of 2.00% p.a. over the respective Coupon Rates of the Bonds for the defaulting period

Remedies Upon the occurrence of any of the Events of Default, the Trustees shall on instructions from majority Bondholder(s), declare the amounts outstanding to be due and payable forthwith and the security created under the security documents shall become enforceable, and the Trustees shall have the right to enforce any security created pursuant to the security documents towards repayment of the amounts outstanding and/or exercise such other rights as the Trustees may deem fit under the applicable laws.

Cross Default Not Applicable

Role and Responsibilities of Trustees

The Trustees shall protect the interest of the Bondholders in the event of default by the Issuer in regard to timely payment of interest and repayment of principal and shall take necessary action at the cost of the Issuer. No Bondholder shall be entitled to proceed directly against the Issuer unless the Trustees, having become so bound to proceed, fail to do so.

The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Bond/ Debenture Trusteeship Agreement, the Bond/ Debenture Trust Deed, Offer Letter Document and all other related transaction documents, with due care, diligence and loyalty. The Trustees shall ensure disclosure of all material events on an ongoing basis and shall supervise the implementation of the conditions regarding creation of security for the Bonds.

86

The Issuer shall, till the redemption of Bonds, submit its latest audited/ limited review half yearly consolidated (wherever available) and standalone financial information such as Statement of Profit & Loss, Balance Sheet and Cash Flow Statement and auditor qualifications, if any, to the Trustees within the timelines as mentioned in Simplified Listing Agreement issued by SEBI vide circular No. SEBI/IMD/BOND/1/2009/11/05 dated May 11, 2009 as amended. Besides, the Issuer shall within 180 days from the end of the financial year, submit a copy of the latest annual report to the Trustees and the Trustees shall be obliged to share the details so submitted with all ‘Qualified Institutional Buyers’ (QIBs) and other existing Bondholder(s) within two working days of their specific request.

Governing Law and Jurisdiction

The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof shall be subject to the jurisdiction of the competent court of New Delhi, India

Additional Covenants

1. Security Creation: The Issuer states that it has executed the necessary documents for creation of the charge, including the Debenture/ Bond Trust Deed and will be submitting the same with BSE within five working days of execution of the same for uploading on its website.

2. Default in Payment: In case of default in payment of interest and/or principal redemption on the due dates, the Issuer shall pay an additional interest at the rate of 2.00% p.a. over the respective Coupon Rates of the Bonds for the defaulting period.

3. Listing: The Issuer shall complete all the formalities and seek listing permission within 20 days from the Deemed Date of Allotment. In case of delay in listing of the Bonds beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest at the rate of 1.00% p.a. over the respective Coupon Rates of the Bonds from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the bondholders.

Mode of Subscription

As per SEBI circular dated January 5th, 2018 and operational guidelines of BSE

Issue/Bid Opening Date

February 4, 2019

Issue/Bid Closing Date

February 4, 2019

Pay-in Date February 5, 2019

Date of Allotment February 5, 2019

Debt Equity Ratio Before the Issue –0.82 After the Issue*–0.83 * Post issue numbers have been calculated after increasing the debt by Rs. 2,000 crore but

nocorresponding change has been made in capital.

87

XIII. TERMS OF OFFER (DETAILS OF DEBT SECURITIES PROPOSED TO BE ISSUED, MODE OF ISSUANCE, ISSUE SIZE, UTILIZATION OF ISSUE PROCEEDS, STOCK EXCHANGE WHERE SECURITIES ARE PROPOSED TO BE LISTED, REDEMPTION AMOUNT, PERIOD OF MATURITY, YIELD ON REDEMPTION, DISCOUNT AT WHICH OFFER IS MADE AND EFFECTIVE YIELD FOR INVESTOR) PRIVATE PLACEMENT OF TAXABLE SECURED REDEEMABLE NON CONVERTIBLE BONDS OF FACE VALUE OF RS.10.00 LACEACH IN THE NATURE OF DEBENTURES FOR AN AMOUNTING TO RS. 500 CRORES WITH GREEN SHOE OPTION TO RS. 1500 CRORES AGGREGATING RS. 2000 CRORE BY NATIONAL HIGHWAYS AUTHORITY OF INDIA (“NHAI” OR THE “ISSUER” OR THE “AUTHORITY”) 1. ISSUE SIZE

National Highways Authority of India (“NHAI” or the “Issuer” or the “Authority”) to raise Rs. 500 crores with green shoe option to Rs.1500 crores aggregating to Rs. 2000 crores through issue of Taxable Secured Redeemable Non-Convertible Bonds in the nature of Debentures (“Bonds”) of face value of Rs. 10.00 lacs each under this Series-5IM.

2. ELIGIBILITY TO COME OUT WITH THE ISSUE

The Issuer or the person in control of the Issuer, or its promoter, has not been restrained or prohibited or debarred by SEBI/any other Government authority from accessing the securities market or dealing in securities and such direction or order is in force.

3. REGISTRATION AND GOVERNMENT APPROVALS

NHAI can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(ies) is required byNHAIto undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time.

4. AUTHORITY FOR THE ISSUE

The present Issue is being made pursuant to announcement in Union Budget, NHAI Act and resolution passed by the Members of the Board of NHAI on February 15, 2018,approving the Issue and delegation provided thereunder.

5. OBJECTS OF THE ISSUE

The funds raised through this Issue will be utilized for part financing of the various projects being implemented by NHAI under the NHDP and other national highway projects as approved by the Government of India.

Further, in accordance with the SEBI Debt Regulations, NHAI shall not utilize the proceeds of the Issue for providing loans to or acquisition of shares of any person who is part of the same group or who is under the same management. Further, NHAI is a statutory authority and, as such, it does not have any identifiable group companiesorcompanies under the same management though it does have shareholding interest in certain Special PurposeVehicles which are engaged in area specific development of port roads.

88

6. UTILISATION OF ISSUE PROCEEDS

The funds being raised by the Issuer through present issue of Bonds are not meant for financing any particular project. In terms of the SEBI Debt Regulations, there is no requirement for appointment of a monitoring agency in relation to the use of proceeds of the Issue. Members of the Authority shall monitor the utilisation of the proceeds of the Issue. NHAI shall disclose in its financial statements, the utilization of the proceeds of the issue under a separate head along with any details in relation to all such proceeds of the issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue. NHAI shall utilize the proceeds of the issue only upon the execution of the documents for creation of security as stated in this Series-5 IM and upon the listing of the Bonds. The objects of NHAI as specified in NHAI Act permits it to undertake its existing activities as well as the activities for which the funds are being raised through the Issue.

NHAI undertakes that proceeds of the present issue shall not be used for any purpose which may be in contravention of the regulations/ guidelines/ norms issued by the RBI/ SEBI/ RoC/ Stock Exchange(s).

7. MINIMUM SUBSCRIPTION

In terms of the SEBI Debt Regulations, the Issuer may decide the amount of minimum subscription which it seeks to raise by issue of Bonds and disclose the same in the Series-5 IM. The Issuer has decided not to stipulate any minimum subscription for the present Issue and therefore the Issuer shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of issue size or certain percentage of issue size.

8. UNDERWRITING

The present Issue of Bonds is not underwritten. 9. NATURE OF BONDS

The Bonds are to be issued in the form ofTaxable Secured Redeemable Non-Convertible Bonds in the nature of Debentures.

10. FACE VALUE

Each Bond has a face value of Rs. 10 lacs. The Bonds are redeemable at par i.e. for Rs. 10 lacs. 11. SECURITY

The Bonds has been secured by way of mortgage over the property of NHAI situated at Ahmedabad along with fixed assets of NHAI, being highway projects comprising of all superstructures including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways except those under the Surat-Manor Tollway Project entrusted to NHAI and projects awarded under ToT with a minimum security cover of one time of the aggregate face value amount of Bonds outstanding at all times. Such security creation requires prior approval and authorization by the Government of India as owner of the land. The No-Objection Certificate has been received by the NHAI from the Government of India in this respect.

89

Security document has been executed in respect of the proposed bond issue.

The Issuer submits that it has executed the Bond/ Debenture Trust Deed and submit with BSE within five working days of execution of the same for uploading on its website. The creation of such security shall be sufficient compliance of the Issuer’s obligation to create security.

13. DEEMED DATE OF ALLOTMENT

All benefits under the Bonds including payment of interest will accrue to the Bondholders from and including date of allotment, February 5 ,2019, which shall be the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. The Issuer reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date/ pay in dates is/are changed (pre-poned/ postponed), the Deemed Date of Allotment may also be changed (pre-pond/ postponed) by the Issuer at its sole and absolute discretion.

14. LETTER(S) OF ALLOTMENT/ BOND CERTIFICATE(S)/ REFUND ORDER(S)/ ISSUE OF

LETTER(S) OF ALLOTMENT

The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 2 working days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.

15. ISSUE OF BOND CERTIFICATE(S)

The initial credit in the account willbe akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.However, in case , if all formalities are not completed the same will be akin to letter of allotment , which on completion of the all statutory formalities, such credit will be akin to a Bond Certificate. The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof. The Bonds shall be allotted in dematerialized form only.

16. DEPOSITORY ARRANGEMENTS

The Issuer has appointed M/s Beetal Financial & Computer Services (P) Ltd. (Address: 99, Beetal House, Madangir, Behind Local Shopping Centre, Near HarsukhdasMandir, New Delhi-110062)as theRegistrar (“Registrar”) for the present Bond Issue. The Issuer has entered into necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for dematerialization of the Bonds offered under the present Issue, in accordance with the Depositories Act, 1996 and regulations made thereunder. In this context, the Issuer has signed two tripartite agreements as under:

Tripartite Agreement between the Issuer, National Securities Depository Limited

(“NSDL”) and the Registrar for dematerialization of the Bonds offered under the

90

present Issue.

Tripartite Agreement between the Issuer, Central Depository Services (India) Limited (“CDSL”) and the Registrar for dematerialization of the Bonds offered under the present Issue.

Investors can hold the bonds only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time.

17. PROCEDURE FOR APPLYING FOR DEMAT FACILITY

a. Applicant(s) should have/ open a Beneficiary Account with any Depository Participant of NSDL or CDSL.

b. The applicant(s) must specify their beneficiary account number and depository

participants ID in the relevant columns of the Application Form. c. If incomplete/incorrect beneficiary account details are given in the Application Form

which does not match with the details in the depository system, the allotment of Bonds shall be held in abeyance till such time satisfactory demataccount details are provided by the applicant.

d. The Bonds shall be directly credited to the Beneficiary Account as given in the

Application Form and after due verification, allotment advice/refund order, if any, would be sent directly to the applicant by the Registrars to the Issue but the confirmation of the credit of the Bonds to the applicant’s Depository Account will be provided to the applicant by the Depository Participant of the applicant.

e. Interest or other benefits with respect to the Bonds would be paid to those bondholders

whose names appear on the list of beneficial owners given by the depositories to the Issueras on the Record Date. In case, the beneficial owner is not identified by the depository on the Record Date due to any reason whatsoever,the Issuer shall keep in abeyance the payment of interest or other benefits, till such time the beneficial owner is identified by the depository and intimated to the Issuer. On receiving such intimation, the Issuer shall pay the interest or other benefits to the beneficiaries identified, within a period of 15 days from the date of receiving such intimation.

f. Applicants may please note that the Bonds shall be allotted and traded on the stock

exchange(s) only in dematerialized form. 18. FICTITIOUS APPLICATIONS

Any person who makes, in fictitious name, any application to a body corporate for acquiring, or subscribing to, the Bonds, or otherwise induced a body corporate to allot, register any transfer of Bonds therein to them or any other person in a fictitious name, shall be punishable as per provisions of extant laws.

19. MARKET LOT

The market lot will be one Bond (“Market Lot”). Since the Bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of Bonds.

91

20. TRADING OF BONDS

The marketable lot for the purpose of trading of Bonds shall be 1 (one) Bond of face value of Rs.10 lacs each. Trading of Bonds would be permitted in demat mode only in standard denomination of Rs.10 lacs and such trades shall be cleared and settled in recognised stock exchange(s) subject to conditions specified by SEBI. In case of trading in Bonds which has been made over the counter, the trades shall be reported on a recognized stock exchange having a nationwide trading terminal or such other platform as may be specified by SEBI.

21. MODE OF TRANSFER OF BONDS

The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/ redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Issuer.

22. BASIS OF ALLOCATION / ALLOTMENT

Allotment to the bidders shall be done on yield priority basis in the following manner as per SEBI circular dated January 5, 2018 and operational guidelines of BSE:-

a) All the bids shall be arranged in the ascending order of the yields, and a cut-off yield

shall be determined. b) All the bids below the cut-off yield shall be accepted and full allotment should be made

to such bidders. c) For all the bids received at cut-off yield, allotment shall be made on pro-rata basis.

23. COMMON FORM OF TRANSFER

The Issuer undertakes that it shall use a common form/ procedure for transfer of Bonds issued under terms of this Series-5 IM.

24. INTEREST ON APPLICATION MONEY

a. In case of change in deemed date of allotment and in respect of investors who get

allotment in the bond issue , interest on application money shall be paid at the coupon rate applicable for bond series (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) from the date of receipt of application money in NHAI’s account till one day prior to the date of allotment on the aggregate face value amount of Bonds The interest on Application Money shall be computed as per “Actual/Actual” day count convention. The payment shall be made only through electronic mode. However, in case of rejection of electronic mode, due to incomplete / in correct detail

92

provided by applicant payment may be made through cheque /demand draft. The cheque /demand draft for interest on application money shall be dispatched by the Issuer within 15 days from the Deemed Date of Allotment by registered post to the sole/ first applicant, at the sole risk of the applicant.

b. No interest on Application Money will be paid in respect of applications which are

rejected due to any reason. 25. INTEREST ON THE BONDS

The face value of the Bonds outstanding shall carry interest at the coupon rate from deemed date of allotment and the coupon rate & frequency of payment (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) are mentioned at summary term sheet.

The interest payment shall be made through electronic mode to the bondholders whose names appear on the list of beneficial owners given by the depository participant to R&TAas on the record date fixed by Issuer in the bank account which is linked to the demat of the bondholder. However, in absence of complete bank details i.e. correct/updated bank account number, IFSC/RTGS code /NEFTcode etc., issuer shall be required to make payment through cheques / DDs on the due date at the sole risk of the bondholders. Interest or other benefits with respect to the Bonds would be paid to those Bondholders whose names appear on the list of beneficial owners given by the depository participant to R&TA as on the Record Date.

26. COMPUTATION OF INTEREST

Interest for each of the interest periods shall be computed as per Actual/ Actual day count convention on the face value amount of Bonds outstanding at the respective Coupon Rate rounded off to the nearest Rupee. Where the interest period (start date to end date) includes February 29, interest shall be computed on 366 days-a-year basis, on the face value amount of Bonds outstanding.

27. RECORD DATE

The ‘Record Date’ for the Bonds shall be 15 days prior to each Coupon Payment Date and Redemption Date. In case of redemption of Bonds, the trading in the Bonds shall remain suspended between the Record Date and the Redemption Date. Interest payment and principal repayment shall be made to the person whose name appears as beneficiary with the Depositories as on Record Date. In the event of the Issuer not receiving any notice of transfer at least 15 days before the respective Coupon Payment Date and Redemption Date, the transferees for the Bonds shall not have any claim against the Issuer in respect of amount so paid to the registered Bondholders.

93

28. DEDUCTION OF TAX AT SOURCE

Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source out of interest payable on Bonds.

Tax exemption certificate/ declaration of non-deduction of tax at source, if applicable, on interest on application money should be submitted along with the Application Form. Regarding deduction of tax at source and the requisite declaration forms to be submitted, prospective investors are advised to consult their own tax consultant(s).In case of tax deducted at source, the Company will issue the TDS certificate to the investors.

29. PUT & CALL OPTION

There is no put option. Bondholders shall have right to exercise call option at the end of 10 th year and 20the year. For details please refer to term sheet

30. REDEMPTION

The face value of the Bonds shall be redeemed at par, on the respective Redemption Dates. The Bonds will not carry any obligation, for interest or otherwise, after the Redemption Date. The Bonds shall be taken as discharged on payment of the redemption amount by the Issuer on the Redemption Date to the registered Bondholders whose name appear in the Register of Bondholders on the Record Date. Such payment will be a legal discharge of the liability of the Issuer towards the Bondholders.

In case any Redemption Date falls on a day which is not a Working Day, the payment due shall be made on the immediately preceding Working Day along with interest accrued on the Bonds until but excluding the date of such payment.

31. ADDITIONAL COVENANTS

a. Security Creation: The Issuer submits that it has executed the necessary documents for creation of the charge, including the Debenture/ Bond Trust Deed and shall submit with BSE within five working days of execution of the same for uploading on its website.

b. Default in Payment: In case of default in payment of interest and/or principal

redemption on the due dates, the Issuer shall pay an additional interest at the rate of 2.00% p.a. over the respective Coupon Rates of the Bonds for the defaulting period.

c. Listing: The Issuer shall complete all the formalities and seek listing permission within

20 days from the Deemed Date of Allotment. In case of delay in listing of the Bonds beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest at the rate of 1.00% p.a. over the respective Coupon Rates of the Bonds from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the bondholders.

32. SETTLEMENT/ PAYMENT ON REDEMPTION

Payment of interest and repayment of principal shall be made by way of cheque(s)/ interest/ redemption warrant(s)/ demand draft(s)/ credit through direct credit/ NECS/ RTGS/ NEFT

94

mechanism in the name of the Bondholders whose name appear on the List of Beneficial Owners given by Depository to the Issuer as on the Record Date.

The Bonds shall be taken as discharged on payment of the redemption amount by the Issuer on the Redemption Date to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository Participant as on Record Date. Such payment will be a legal discharge of the liability of the Issuer towards the Bondholders. On such payment being made, the Issuer shall inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant shall be adjusted.

The Issuer’s liability to the Bondholders towards all their rights including for payment or

otherwise shall cease and stand extinguished from the due date of redemption in all events. Further the Issuer will not be liable to pay any interest or compensation from the Redemption Date. On the Issuer’s dispatching/ crediting the amount to the Beneficiary(ies) as specified above in respect of the Bonds, the liability of the Issuer shall stand extinguished.

33. EFFECT OF HOLIDAYS

If the interest payment date falls on a holiday, the payment may be made on the following working day however the dates of the future coupon payments would be as per the schedule originally stipulated at the time of issuing the security in line with SEBI circular No CIR/IMD/DF-1/122/2016 dated November 11, 2016.

If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment. ‘Business Day’ shall be a day on which commercial banks are open for business in the city of Delhi and the days when the money market is functioning in Mumbai. The interest/redemption payments shall be made only on the days when the money market is functioning in Mumbai.

Set forth below is an illustration for guidance in respect of the day count convention and effect of holidays on payments. Investors should note that this example is solely for illustrative purposes. We have not considered the effect of public holidays as it is difficult to ascertain for future dates.

Face Value of the Bond (in Rs) – 10,00,000/- Deemed Date of Allotment – February 5, 2019 Redemption date– February 5, 2029 Coupon rate – 8.49% p.a.

Cash Flows Day, Date Day count (Actual/

Actual) No. of Days in Coupon Period

Amount (Rupees in Crore)

1st Coupon 05 February 2020 Actual/Actual 365 84,900

2nd Coupon 05 February 2021 Actual/Actual 365 84,900

3rd Coupon 05 February 2022 Actual/Actual 365 84,900

4th Coupon 06 February 2023 Actual/Actual 365 84,900





95

Cash Flows Day, Date Day count (Actual/

Actual) No. of Days in Coupon Period

Amount (Rupees in Crore)



Principal Redemption 05 February 2029 Actual/Actual 10,00,000

NHAI Taxable Bonds 18-19, Series-5

Assumptions and Notes:

1. The aggregate coupon payable to each Bondholder shall be rounded off to the nearest rupee as per

the Fixed Income Money Market and Derivatives Association handbook on market practices. 2. The actual dates and maturity amount will be in accordance to and in compliance with the

provisions of SEBI circular CIR/IMD/DF-1/122/2016 dated November 11, 2016 giving effect to actual holidays and dates of maturity which qualifies the SEBI requirement.

3. For the purposes of the above illustration, as per notification dated 20 August 2015, only such dates that fall on second and fourth Saturday of every month have been considered as non business day. Further, Sundays, have also been considered as non-Business Days.

4. Since, last coupon date along with maturity date for Tranche I is falling on a non-Business day, the respective coupon payments shall be made on the immediately succeeding Business Day.

34. LIST OF BENEFICIAL OWNERS

The Issuer shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be.

35. SUCCESSION

In the event of the demise of the sole/first holder of the Bond(s) or the last survivor, in case of joint holders for the time being, the Issuer shall recognize the executor or administrator of the deceased Bondholder, or the holder of succession certificate or other legal representative as having title to the Bond(s).the Issuer shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Issuer may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the deceased Bondholder on production of sufficient documentary proof or indemnity.

Where a non-resident Indian becomes entitled to the Bond by way of succession, the following steps have to be complied:

a. Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that

the Bond was acquired by the NRI as part of the legacy left by the deceased holder. b. Proof that the NRI is an Indian National or is of Indian origin.

Such holding by the NRI will be on a non-repatriation basis.

96

38. DOCUMENTS TO BE PROVIDED BY SUCCESSFUL BIDDER(S)

Successful bidder(s) need to submit the following documents, along with the Application Form, as applicable:

Certified true copy of the Memorandum and Articles of Association

Certified true copy of the Board Resolution / letter authorizing the investment

Certified true copy of the Power of Attorney

Form 15G/ 15H for investors seeking exemption from TDS –on interest payments

Relevant certificate(s)/ order(s)/ declaration(s)/ document(s) including order under Section195/ 197 of the Income-tax Act, 1961 on which the Debenture Holder wishes to place reliance for non-deduction of tax at source

SEBI registration certificate

IRDA registration certificate

Specimen signature of the authorised signatories, duly certified by an appropriate authority

Certified true copy of PAN 39. HOW TO APPLY

This Series-5 IM is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds issued by the Company. The document is for the exclusive use of the institution(s) to whom it is delivered and it should not be circulated/ distributed to third parties. This being a private placement Issue, the eligible investors who have been addressed through this communication directly, only are eligible to apply. Applications for the Bonds must be in the prescribed form and completed in BLOCK LETTERS in English and as per the instructions contained therein.

40. APPLICATION PROCESS

Who can bid / invest / apply?

All QIBs, and any non-QIB Investors specifically mapped by the Issuer on the BSE BOND – EBP Platform, are eligible to bid / invest / apply for this Issue.

All investors are required to comply with the relevant regulations/ guidelines applicable to them for investing in this Issue.

Eligible participants bidding on proprietary basis, for an amount equal to or more than Rs.15 crore or 5% of the base issue size, whichever is lower, shall bid directly i.e. shall enter the bids directly on EBP platform.

Provided that the foreign portfolio investors may bid through their custodians.

How to bid?

All Eligible Investors will have to register themselves as a one-time exercise (if not already registered) under the BSE BOND – EBP Platform offered by BSE for participating in the electronic book mechanism. Eligible Investors will also have to complete the mandatory KYC verification process. Investors should refer to the Operational

97

Guidelines.

The details of the Issue shall be entered on the BSE BOND – EBP Platform by the Issuer at least 2 (two) working days prior to the Issue / Bid Opening Date, in accordance with the Operational Guidelines.

The Issue will be open for bidding for the duration of the bidding window that would be communicated through the Issuer’s bidding announcement on the BSE BOND – EBP Platform, at least 1 (one) working day before the start of the Issue / Bid Opening Date.

A bidder will only be able to enter the amount & percentage while placing their bids in the BSE BOND. Some of the key guidelines in terms of the current Operational Guidelines on issuance of securities on private placement basis through an electronic book mechanism, are as follows:

(a) Modification of Bid:

Investors may note that modification of bid is allowed during the bidding period / window.

However, in the last 10 minutes of the bidding period / window, revision of bid is only allowed for upward revision of the bid amount placed by the Investor.

(b) Cancellation of Bid

Investors may note that cancellation of bid is allowed during the bidding period / window. However, in the last 10 minutes of the bidding period / window, no cancellation of bids is permitted.

(c) Multiple Bids

Investors may note that multiple bid is not permitted. If multiple bids are entered by the same Investor, only the first bid will be considered as valid.

(d) Withdrawal of Issue

The Issuer may, at its discretion, withdraw the issue process on the following conditions: i. non-receipt of bids upto the Issue Size; ii. bidder has defaulted on payment towards the allotment, within the stipulated

timeframe, due to which the Issuer is unable to fulfil the Issue Size.

Provided that the Issuer shall accept or withdraw the Issue on the BSE BOND – EBP Platform within 1 (one) hour of the closing of the bidding window, and not later than 6 pm on the Issue/Bidding Closing Date.

However, Investors should refer to the Operational Guidelines as prevailing on the date of thebid.

98

Provisional/ Final Allocation

Allocation shall be made on a pro rata basis in the multiples of the bidding lot size, i.e., in multiples of Rs. 10,00,000 (Rupees Ten Lakhs).

Post completion of bidding process, the Issuer will upload the provisional allocation on the BSE BOND – EBP Platform. Post receipt of investor details, the Issuer will upload the final allocation file on the BSE BOND – EBP Platform.

Payment Mechanism

Subscription should be as per the final allocation made to the successful bidder(s) as notified by the Issuer by 10:30 am next date of Closing Date.

Successful bidders should do the funds pay-in in the bank account of as appearing on EBP Platform of BSE.

Successful bidders must do the funds pay-in to the Designated Bank Account as mentioned above in accordance with operational guidelines of BSE EBP PLATFORM. Successful bidders should ensure to do the funds pay-in from their same bank account which is updated by them in the BSE BOND - EBP Platform while placing the bids. In case of mismatch in the bank account details between BSE BOND – EBP Platform and the bank account from which payment is done by the successful bidder, the payment would be returned back.

Note: In case of failure of any successful bidder to complete the funds pay-in by the Pay-in

Time or the funds are not received in the ICCL’s Designated Bank Account by the Pay-in Time for any reason whatsoever, the bid will liable to be rejected and the Issuer shall not be liable to the successful bidder.

Funds pay-out on February 5, 2019 would be made to the bank account as appearing on the EBP Platform of BSE.

Application by Successful Bidder(s)

All Application Forms, duly completed, must be delivered by the Pay-in Time to the Issuer by the successful bidder(s), to the attention of Mr. S.Q.Ahmad, GM (Fin) at G-5& 6, Sector 10, Dwarka, Delhi India.Applications for the Debentures must be in the prescribed form and completed in BLOCK LETTERS in English and as per theinstructions contained therein.

41. FORCE MAJEURE

The Issuer reserves the right to withdraw the issue prior to the Issue Closing Date in the event of any unforeseen development adversely affecting the economic and regulatory environment.

42. APPLICATIONS UNDER POWER OF ATTORNEY

A certified true copy of the power of attorney or the relevant authority as the case may be alongwith the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Issuer or to the Registrars or to such other person(s) at such

99

other address(es) as may be specified by theIssuer from time to time through a suitable communication.

43. APPLICATION BY MUTUAL FUNDS

In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has been made.

43. ACKNOWLEDGEMENTS

No separate receipts will be issued for the application money. 45. PAN

Every applicant should mention its Permanent Account Number (“PAN”) allotted under the Income Tax Act, 1961, on the Application Form and attach a self-attested copy as evidence. Application Forms without PAN will be considered as incomplete and are liable to be rejected.

46. SIGNATURES

Signatures should be made in English or in any of the Indian Languages. Thumb impressions must be attested by an authorized official of a Bank or by a Magistrate/ Notary Public under his/her official seal.

47. NOMINATION FACILITY

As per extant provisions of law, only individuals holding the Bonds as Sole/Joint holder of Bonds can nominate, in the prescribed manner, a person to whom his/ their Bonds shall vest in the event of his/ their death. Non-individuals including holders of Power of Attorney cannot nominate.

48. RIGHT OF BONDHOLDER(S)

Bondholder is not a shareholder. The Bondholders will not be entitled to any other rights and privilege of shareholders other than those available to them under statutory requirements. The principal amount and interest on the Bonds will be paid to the registered Bondholders only, and in case of Joint holders, to the one whose name stands first.Besides, the Bonds shall be subject to the provisions of NHAI Act, the terms of this Series-5 IM and other terms and conditions as may be incorporated in the Bond/ Debenture Trusteeship Agreement and other documents that may be executed in respect of these Bonds.

49. MODIFICATION OF RIGHTS

The rights, privileges, terms and conditions attached to the Bonds may be varied, modified or abrogated with the consent, in writing, of those holders of the Bonds who hold at least three fourth of the outstanding amount of the Bonds or with the sanction accorded pursuant to a resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall be operative againstthe Issuer where such consent or resolution modifies or varies the terms and conditions of the Bonds, if the same are not acceptable to the Issuer.

100

50. FUTURE BORROWINGS

The Issuer shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds/ Debentures/ Notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Issuer may think appropriate, without the consent of, or intimation to, the Bondholder(s) or the Trustees in this connection.

51. BOND/ DEBENTURE REDEMPTION RESERVE (“DRR”)

The Corporation is a statutory body constituted under The National Highways Authority of India Act, 1988 and is not a public/ private limited company incorporated under The Companies Act. Therefore creation of Bond/ Debenture Redemption Reserve is not envisaged for the proposed issue of Bonds. The Corporation has also appointed a Trustee to protect the interest of the Bondholders.

52. NOTICES

All notices required to be given by the Issuer or by the Trustees to the Bondholders shall be deemed to have been given if sent by ordinary post/ courier to the original sole/ first allottees of the Bonds and/ or if published in one All India English daily newspaper and one regional language newspaper.

All notices required to be given by the Bondholder(s), including notices referred to under “Payment of Interest” and “Payment on Redemption” shall be sent by registered post or by hand delivery to the Issuer or to such persons at such address as may be notified by the Issuer from time to time.

53. JOINT-HOLDERS

Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship subject to provisions of Law.

54. DISPUTES & GOVERNING LAW

The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof shall be subject to the jurisdiction of the competent court of New Delhi, India.

55. INVESTOR RELATIONS AND GRIEVANCE REDRESSAL

Arrangements have been made to redress investor grievances expeditiously as far as possible, the Issuer endeavours to resolve the investor’s grievances within 30 days of its receipt. All grievances related to the issue quoting the Application Number (including prefix), number of Bonds applied for, amount paid on application and details of collection centre where the Application was submitted, may be addressed to the Compliance Officer at head office of the Issuer. All investors are hereby informed that the Issuer has appointed a Compliance Officer who may be contracted in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund

101

order(s), interest warrant(s)/ cheque(s) etc. Contact details of the Compliance Officer are given elsewhere in this Series-5 IM.

Date of Subscription The Date of Subscription shall be the date of realisation of proceeds of subscription money in the Designated Bank Account as appearing in the EBP Platform of BSE. Rejection of Applications

The Company may reject any application on one or more technical grounds, including but not restricted to:

Bank account details not given

Details for issue of debentures in electronic/ dematerialised form not given

PAN not mentioned in appropriate place

In case of applications under Power of Attorney by limited companies, corporate bodies, etc. relevant documents not submitted

In the event that the number of Debentures applied for are not allotted in full, the excess application money of such applicant will be refunded, as may be permitted.

Settlement Process Upon final allocation by the Issuer, the Issuer or the Registrar on behalf of the Issue shall instruct the depositories within 1 (one) day of the Date of Subscription, and the Depositories shall accordingly credit the allocated Debentures to the demat account of the successful bidder(s). Within 2 (two) days of the Date of Subscription, the Depositories shall confirm to ICCL the transfer of debentures in the demat account(s) of the successful bidder(s). Post-Allocation Disclosures by the EBP Upon final allocation by the Issuer, the Issuer shall disclose the Issue Size, coupon rate, ISIN,number of successful bidders, category of the successful bidder(s), etc., in accordance with theSEBI EBP Circular. The EBP shall upload such data, as provided by the Issuer, on its websiteto make it available to the public.

102

XIV. CREDIT RATING FOR THE BONDS CRISIL Limited (“CRISIL”) has vide its letter dated January 14, 2019, assigned a credit rating of “CRISIL AAA/Stable” to the Bonds of the Issuer. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from CRISIL is enclosed elsewhere in this Series-5 IM. CARE Ratings Limited(“CARE”) has vide its letter dated January 15, 2019, assigned the credit rating of “CARE AAA”to the Bonds of the Issuer. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from CARE is enclosed elsewhere in this Series-5 IM. ICRALimited (“ICRA”) has vide its letter dated January 14, 2019 assigned the credit rating of “[ICRA]

AAA/Stable” to the Bonds of the Issuer. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from ICRA is enclosed elsewhere in this Series-5 IM. India Ratings and Research Private Limited (“IRRPL”) has vide its letter dated January 14, 2018, assigned a credit rating of “IND AAA/Stable” to the Bonds of the Issuer. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. A copy of rating letter from IRRPL is enclosed elsewhere in this Series-5 IM. Other than the credit ratings mentioned hereinabove, NHAIhas not sought any other credit rating from any other credit rating agency(ies) for the Bonds offered for subscription under the terms of this Series-5 IM. The above ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc.

103

XV. TRUSTEES FOR THE BONDHOLDERS

The Issuer has appointed Vistra ITCL (India) Limitedto act as trustee for the Debenture Holder(s).The address and contact details of the Trustees are as under: Vistra ITCL (India) Limited

The IL&FS Financial Centre Plot C-22, G-Block, 7th Floor, Bandra Kurla Complex Bandra (East) Mumbai - 400 051 Tel: +91 (022) 28593535 Fax: +91 (022) 26533207 E-mail: [email protected] A copy of letter from Vistra ITCL (India) Limitedconveying their consent to act as Trustees for the issue of Bonds is enclosed elsewhere in this Series-5 IM. The Issuer hereby undertakes that a Debenture/ Bond Trust Deedinter alia, specifying the powers, authorities and obligations of the Debenture Trustee and the Issuer has been executed in favour of the Trustees within permissible time frame as per statutory laws. The Debenture Holder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Debenture Trustee or any of its agents or authorised officials to do all such acts, deeds, matters and things in respect of or relating to the Debentures as the Debenture Trustee may in its absolute discretion deem necessary or require to be done in the interest of the Debenture Holder(s).Any payment made by the Issuer to the Debenture Trustee on behalf of the Debenture Holder(s) shall discharge the Issuer pro tanto to the Debenture Holder(s). The Debenture Trustee will protect the interest of the Debenture Holder(s) in regard to the repayment of the principal and yield thereon and the Debenture Trustee will take necessary action, subject to and in accordance with the Debenture Trust Deed, at the cost of the Issuer. The Debenture Trust Deed shall more specifically set out the rights and remedies of the Debenture Holder and the manner of enforcement thereof. The Trustees shall perform its duties and obligations and exercise its rights and discretions, in keeping with the trust reposed in the Trustees by the holder(s) of the Bonds and shall further conduct itself, and comply with the provisions of all applicable laws, provided that, the provisions of Section 20 of the Indian Trusts Act, 1882, shall not be applicable to the Trustees. The Trusteesshall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture/ Bond Trusteeship Agreement, the Debenture/ Bond Trust Deed, Series-5 IM and all other related transaction documents, with due care, diligence and loyalty. The Trustees shall be vested with the requisite powers for protecting the interest of holder(s) of the Bonds including but not limited to the right to appoint a nominee director on the Board of the Issuer in consultation with institutional holders of such Bonds. The Trustees shall ensure disclosure of all material events on an on-going basis and shall supervise the implementation of the conditions regarding creation of security for the Bonds.

104

XVI. STOCK EXCHANGE WHERE BONDS ARE PROPOSED TO BE LISTED The Bonds are proposed to be listed on the Wholesale Debt Market (WDM) segment of BSE Limited (“BSE”). The Issuer has obtained BSE in-principle approval for listing of Bonds offered under the terms of this Series-5 IM. The Issuer shall make listing application to BSE and seek listing permission within 15 days of Deemed Date of Allotment. In case of delay in listing of the Bonds beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest at the rate of 1.00% p.a. over the respective Coupon Rates of the Bonds from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the bondholders.

105

XVII. MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER

By very nature of its business, the Issuer is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of the Issuer. However, the contracts referred to in Para A below (not being contracts entered into in the ordinary course of the business carried on by the Issuer) which are or may be deemed to be material have been entered into by the Issuer. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the head officeof the Issuer between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date.

A. MATERIAL CONTRACTS

a. Copy of letter appointing Registrars b. Copy of letter appointing Trustees to the Bondholders.

B. DOCUMENTS

a. The National Highways Authority of India Act, 1988, as amended. b. Board Resolution dated15.2.2018 authorizing issue of Bonds c. Letter of consent from the Trustees for acting as trustees for and on behalf of

the holder(s) of the Bonds. d. Letter of consent from the Registrars for acting as Registrars to the Issue. e. Application made to the BSE for grant of in-principle approval for listing of

Bonds. f. Letter from BSE conveying their in-principle approval for listing of Bonds. g. Letter from CRISIL conveying the credit rating for the Bonds. h. Letter from CARE conveying the credit rating for the Bonds. i. Letter from ICRA conveying the credit rating for the Bonds. j. Letter from IRRPL conveying the credit rating for the Bonds. k. Tripartite Agreement between the Issuer, NSDL and Registrars for issue of

Bonds in dematerialised form. l. Tripartite Agreement between the Issuer, CDSL and Registrars for issue of

Bonds in dematerialised form.

106

ANNEXURE – 1 FINANCIAL INFORMATION

ABRIDGED FINANCIAL INFORMATION

REFORMATTED STATEMENT OF ASSETS AND LIABILITIES

(Rs in lakhs)

SL.

Nos.

Particulars Schedule AS AT MARCH 31

2017 2016 2015

(1) (2) (3) (4) (5)

I.

SOURCES OF FUNDS

1

Shareholders' Fund

a) Capital 1 13,959,380.47 12,551,457.89 10,452,040.18 b) Reserves & Surplus 2 0.00 748.68 45.46

2

Grants

a) Capital 3 1,365,643.01 1,366,280.32 1,366,901.41 3 Borrowings 4 7,538,464.71 4,527,036.70 2,489,285.59 TOTAL 22,863,488.18 18,445,523.58 14,308,272.64

II.

APPLICATION OF FUNDS

1

Fixed Assets

5

a) Gross Block 12,533.36 11,870.62 11,238.39 b) Less: Depreciation 7,857.39 7,217.40 6,462.96 c) Net Block 4,675.97 4,653.21 4,775.43

d) Less: Assets created out of

Grants 612.58 612.58 612.58

e) Assets held on behalf of GOI (Completed & ongoing)

21,772,656.62 17,645,402.50 14,079,731.46

Total 21,776,720.00 17,649,443.14 14,083,894.32

2 Investment (At cost) 6 90,959.00 121,652.89 121,625.00

3 Current Assets, Loans and

Advance

7

a) Inventories - - b) Sundry Debtors - -

c) Deposits, Loans &

Advances 3,295,320.19 2,577,831.04 1,426,624.21

d) Interest accrued on deposit 1,399.71 2,826.98 4,402.19

e) Interest accrued and due on

CALA deposits

52,628.05 59,569.52 34,975.69

f) Cash & Bank Balance 837,680.26 674,079.72 267,235.23 sub total 4,187,028.21 3,314,307.25 1,733,237.32

Less: Current Liabilities

and Provisions

a) Liabilities 8 3,187,098.88 2,636,198.49 1,627,412.69 b) Provisions 9 4,120.15 3,681.20 3,071.31

SL.

Nos.

Particulars Schedule AS AT MARCH 31

2017 2016 2015

(1) (2) (3) (4) (5)

sub total 3,191,219.03 2,639,879.69 1,630,484.00

Net Current Assets 995,809.18 674,427.56 102,753.32

4 Misc. Expenditure (to the

extent not written off) 10

- - -

5 Profit & Loss Account

(Debit balance, if any) - - -

6 Significant Accounting

Policies 18

- - -

7 Notes on Accounts 19 - - - TOTAL 22,863,488.18 18,445,523.58 14,308,272.64

REFORMATTED STATEMENT OF PROFIT AND LOSS ACCOUNT

(Rs In Lacs)

Sl.Nos.

Particulars Schedule

FOR THE YEAR ENDED MARCH 31

2017 2016

2015

(1) (2) (3) (4)

(5)

I.

INCOME

a) Value of Work done - - - b) Other income 11 1,353.35 1,293.36 1,694.84 c) Interest (Gross) 12 1.06 0.88 1.18

d) Grant-in-aid for maintenance of Highways -

-

e) Net Increase/Decrease in work-in-progress (+)/(-)

13 - - -

TOTAL INCOME 1,354.40 1,294.24 1,696.01

II.

EXPENDITURE

a) Construction Stores/ Material consumed Other stores, spares & tools etc. consumed

- -

Work Expenses: 14 - -

-

a) Personnel & Administrative Expenses

15 27,282.06 22,537.20 20,799.86

b) Finance Charges 16 14.71 7.76 7.18 c) Depreciation 771.52 870.43 683.27

d) Assets of Small Value Charged Off

22.01 21.50 16.83

Exceptional Item

Provision for diminution in the value of investment

40,310.88 -

Less: Provision transferred to capital (Sch-1)

(40310.88) -

TOTAL EXPENDITURE 28,090.3 23,436.89 21,507.14

Profit (+)/Loss (-) for the

year (26,735.89) (22,142.65) (19,811.00)

Add: Prior Period Items net(+/-) 17 (1135.83) (747.01) (832.30)

Less: Net Establishment

Expenses for the year

transferred to CWIP (Sch-

5)

27,871.73 22,889.66 20,643.43

Less/Add: Provision for Taxation - -

-

Net Profit

-

-

-

Less: Transfer to Capital Reserve

- - -

Less: Transfer to other specific Reserve/Fund

- - -

Less/Add: Transfer to/Transfer from General Reserve (+/-)

- - -

Less/Add: Surplus brought forward from previous year

- - -

Surplus carried to Balance

Sheet

- - -

REFORMATTED STATEMENT OF CASH FLOW

(Rs. in lakhs)

SL.Nos. Particulars


2017 2016 2015

(1) (3) (4) (5)

A.

Cash flow from operating activities:

Net profit before tax (26,735.89) (22,142.65) (19,811.13)

Adjustments for:

Depreciation 771.52 870.43 683.27 Profit/(Loss )on sale of assets (2.77) (3.55) (8.33) Interest income (1.06) (0.88) (1.18)

Operating profit before working

capital changes

(25,968.20) (21,276.65) (19,137.36)

Adjustments for:

(Increase)/Decrease in Deposits, Loans & Advances

(717,489.15) (1,151,472.74) (427,786.46)

Increase in liabilities 550,900.39 1,008,785.80 321,133.65

Increase in Provision for gratuity and Leave encashment

438.95 609.89 673.60

Cash flow before extraordinary item

& prior period items

(192,118.01) (163,353.7) (125,116.57)

Prior period items (1135.83) (747.01) (832.30)

Net cash generated from operating

activities

(193,253.85) (164,110.71) (125,948.87)

B.

Cash flow from investing activities:

Purchase of fixed assets (803.66) (757.79) (1905.46) Realization from sale of assets 12.16 13.13 25.25 Increase in Capital Work in progress (3,866,631.06) (3,450,701.69) (1,698,326.15) Increase in investment (9617.00) (27.88) (722.12) Interest Income 162,085.61 96,759.82 110,727.53 Capital Reserve (Receipts) 20,349.00 11,188.98 10,769.86 Interest and other expenditure on 54EC - (222,770.32) (1,178,087.42)

Net cash used in investing activities (3,694,604.95) (3,566,295.75) (1,757,518.50)

C.

Cash flow from financing activities:

Cess funds received from Govt of India

232,650.00 1,542,000.00 688,589.00

Capital additional budgetary receipts 564,902.00 37,027.00 60,000.00

SL.Nos. Particulars


2017 2016 2015

(1) (3) (4) (5)

EAP Grant utilized towards revenue expenditure

(637.31) (621.09) (445.03)

Transfer of ” Premium on bonds” to

“Capital Reserve” (748.68) - -

Adjusted Plough back of Toll Remittance, etc

650,681.46 520,390.71 433,072.96

Net decrease in loan from ADBdue to exchange loss after adjustment of pre payments

(6,133.29) (159.09) (683.98)

Proceeds from issue of 54 EC Capital Gains Tax Free Bonds

557,274.20 428,117.00 334,340.40

Proceeds from issue of Tax Free Bonds 2015-16, including premium

- 1,900,703.22 -

Proceeds from issue of Taxable Bonds 2,754,500.00 - -

Redemption of Capital Gains Tax Free Bonds

(294,212.90) (290,206.80) (251,151.50)

Interest and other expenditure on Bonds

(406,816.15)

Net cash used in financing activities 4,051,459.33 4,137,250.94 1,263,721.84

Net increase/(decrease) in cash and

cash equivalents

203,911.43 406,844.49 (619,745.53)

Opening cash and cash equivalents 674,079.72 267,235.23 886,980.76

Closing cash and cash equivalents 877,991.14 674,079.72 267,235.23

Notes:

Cash and cash equivalents include:

Cash and cheques in hand / in transit 114.81 4.39 38.57

Balance with banks: -In Current Account

811,682.59 73,702.27 98,690.56

- In FD account 25,882.86 600,372.95 168,506.10 Balance as per books of account 837,680.26 674,079.72 267,235.23

ANNEXURE – 2 CREDIT RATE LETTERS

1

Rating Rationale

National Highways Authority of India

Ratings

Instrument Amount

(Rs. crore) Rating1 Remarks

Long term tax free bonds 10,000 CARE AAA; Stable

(Triple A; Outlook: Stable) Reaffirmed





Total 34,000

(Rs. Thirty Four Thousand Crore only)

Long-term Borrowing Programme for FY16-17

33,118 (Rupees Thirty Three

Thousand One Hundred and Eighteen Crore only)

CARE AAA; Stable (Triple A; Outlook: Stable)

Reaffirmed


59,000 (Rupees Fifty Nine

Thousand crore only)


Reaffirmed


62,000 (Rupees Sixty Two

Thousand crore only)


Assigned

Details of instruments in Annexure-1

Rating Rationale The ratings assigned to the various instruments of National Highways Authority of India (NHAI)

take into account the high level of support that NHAI receives from the Government of India

(GoI) in the form of capital grants, allocation of cess funds and Additional Budgetary Support

(ABS) due to its strategic importance as the country’s nodal agency for implementing various

road sector projects including various phases of the National Highways Development

Programme (NHDP). The outlook on NHAI reflects the outlook on the sovereign whose direct and

indirect support is the key driver of the rating. NHAI was incorporated as an autonomous body

under the National Highways Authority of India Act, 1988 and the rating takes into account the

constitutional status imparting credit strength to the authority.

Going forward, the fund-based and non-fund-based support that NHAI receives from GoI and

successful execution of its mandate would remain the key rating sensitivities.

1Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.

http://www.careratings.com/

2

Background

National Highway Authority of India (NHAI) was constituted u/s 3(1) of the National Highways

Authority of India Act, 1988 and started operations in February, 1995 to develop, maintain and

manage national highways in the country. NHAI is vested with executive powers for developing

national highways in India by the Ministry of Road Transport & Highways (MoRTH). The mission

of NHAI is to meet the nation’s need for the provision and maintenance of national highway

networks to world standards within the strategic policy framework set by the Government of

India (GoI). NHAI has a well-defined organization structure and is managed by Board Members

(whole-time and part-time). The board is currently headed by Mr. Deepak Kumar, IAS, who was

appointed as Chairman of NHAI in June 2017. In addition, the board has experienced full-time

members individually looking after the functions of finance, technical and administration.

During FY17, NHAI has awarded projects for a length 4,335 km (as against 4,344 km in FY16 and

3,067 km in FY15).

Credit Risk Assessment

Support from the Government of India

The Government of India (GoI) has a 100% stake in NHAI. NHAI receives continuous support

from GoI in the form of capital grants, allocation of cess funds, Additional Budgetary Support

(ABS) and guarantees for its market borrowing programmes.

Strategic importance as the country’s nodal agency for road projects

NHAI is the nodal agency responsible for the development and maintenance of National

Highways. NHAI is vested with executive powers for developing national highways in India by

the Ministry of Road Transport & Highways (MoRTH). The charter of NHAI is set out in the

National Highways Act, 1956 and National Highways Authority of India Act, 1988 which cover

delegation of power and functions of the highway administration to NHAI, enhanced powers for

land acquisition and right to collect tolls for road projects on its own or through third parties.

3

Current operational performance

After the announcement of NHDP in 1999 and with the approval of NHDP Phase-I in 2000, the

scope of NHDP has been enlarged substantially over the years with NHDP Phase-VII also

launched. During FY17, NHAI has awarded projects for a length of 4,335 km (as against 4,344

km in FY16 and 3,067 km in FY15). NHAI has set itself an award target of 6,502.74 km for FY18.

Out of the total projects under NHDP, NHAI has completed the work on about 28,479 km till

March 31, 2017 (PY till Jan-17: 23,922 km) of road length while almost 9,208 km of the road

length is yet to be awarded as on March 31, 2017. A brief snapshot of the projects awarded

over the past few years is given below –

The award activity was sluggish in FY13 and FY14 due to the economic slowdown and issues

pertaining to environment & forest clearance and land acquisition problems. However, after a

challenging operating environment, the prospects for infrastructure/construction sector are

looking better on account of a stable government with an increased thrust on the infrastructure

sector, as well as easing of policy logjams and regulatory hurdles. This can be evidenced from

the fact that award activity has improved in FY15, FY16 and FY17.

4

Future plans and steps taken to rejuvenate award activity

The government had launched the Hybrid Annuity Model (HAM) to propel the sector further

due to issues with BOT projects in the past. The Hybrid Annuity Model (HAM) is a new model

of awarding projects and is a mix of the EPC and BOT formats, wherein NHAI would bear 40% of

the project cost while the private player would fund the remaining 60% of the project cost

(through debt or equity). NHAI would be responsible for toll collection and would reimburse

the private player by way of regular semi-annual annuity payments. This model will reduce the

financial burden on the concessionaire due to lower upfront costs while NHAI would face less

cash flow pressure compared to the EPC model.

The government is also looking at introducing innovative financing methods like the Toll-

Operate-Transfer (TOT) model. Under this model, already constructed stretches of national

highways will be awarded to private players for toll collection for a fixed period in lieu of an

upfront fee which would be based on future toll projections, thereby helping in mobilizing

additional resources for construction of new highways. Thus, in essence private tolls would be

used to fund new roads via securitization of future cash flows.

A snapshot comparison of the various modes is given below –

Mode Financing Revenue Source for Developer Construction

BOT – Toll Developer Toll Collection Developer

BOT – Annuity Developer Semi-Annual Annuity Developer

EPC NHAI NHAI Developer

Hybrid Annuity Developer - 60%, NHAI - 40% Semi-Annual Annuity Developer

Some other measures which the government has taken are creating a more liberalised process

for grant of forest clearances, streamlining of processes within NHAI so as to ensure

transparency and coming out with an exit policy for unlocking capital for investment by

allowing developers to exit highway projects 2 years after they are completed

Strong financial flexibility

During FY16, NHAI was allocated cess funds of Rs. 15,420 crore (Rs.6,886 crore in FY15 and Rs.

6,857 crore in FY14) out of the Central Road Fund (CRF). Further, NHAI also receives funds from

GoI by way of additional budgetary support for the development of national highways, and by

way of grants and loans for execution of externally aided projects. The tangible Net-worth has

risen by 17.75% (y-o-y) to Rs. 1,39,177 crore as on March 31, 2016. This has further gone up by

5

18% to Rs. 1,40,001 crore as on March 31, 2017 (UA) due to additional cess funds/budgetary

support from the government. Due to strong Net-worth base and 100% stake by GoI, NHAI has

strong financial flexibility resulting into inflow of unsecured loans from multilateral financing

institutions (viz. ADB, World Bank, JBIC) and private sector participation (via the PPP model) to

execute projects within India. However, the government has reduced fuel cess of NHAI. Further,

union budget for FY19 has scraped central road fund to be allocated to MORTH. The ministry

shall now have the flexibility to utilize it in other sectors like railways, ports, hospital etc., which

is likely to increase funding requirement for NHAI from other sources.

Furthermore, NHAI has been authorized under National Highways Act, 1956 to raise funds from

capital market through bonds, debentures etc.

The long-term borrowing programme for FY18 of Rs.59,279 crores had an outstanding of Rs.

50,533 crore as on March 31, 2018. Out of the said programme, NHAI raised Rs.10,000 crore

from EPFO through Taxable bonds, Rs.2375 crore from the bond market, Rs.8500 crore from

LIC, Rs.3,000 cr from Masala bonds, Rs.20,000 through NSSF loan and Rs.6,658 crore through

54EC capital gain bonds.

Prospects

Over the years, NHAI has played a key role in the government’s aim to provide better road

connectivity across the country. NHAI being a statutory authority, the importance of NHAI is

only expected to remain significant moving forward with the renewed push by the government

to speed up road construction by employing new and innovative means of awarding projects

and raising funds.

Therefore, the growth prospects of NHAI shall be governed by the fund and non-fund-based

support extended by the Government of India (GoI), increasing infrastructure investment as

envisaged, speeding up of the statutory approval process to attract private investment and

continuing the momentum of road construction.

6

Financial Performance

(Rs. Cr)

Year ended / as on March 31, 2014 2015 2016

12m, A 12m, A 12m, A

Total Income 11 17 13

PBILDT before prior period items -182 -191 -212

PBILDT after prior period items -189 -200 -220

Net Profit -194 -206 -229

CWIP 123,065 140,797 1,76,454

Equity Share Capital 801 801 801

Cess Funds/ Budgetary Support 91,903 1,03,719 1,24,714

Capital Grants 13,674 13,669 13,663

Tangible Net-worth 106,378 118,190 1,39,185

Total Borrowings 24,068 24,893 45,270

Total Capital Employed 1,30,446 1,43,083 1,84,455

Total Investments 1,209 1,216 1,217

Cash & Bank balances 8,870 2,672 6,741

A: Audited, NM: Not Meaningful

Disclaimer

CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.

In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.

Ratings

NATHIAUl196797rrFB/05170 1945/1 3January 14,2019

Mr. Sal1jccv KumarGM FinanceNatiom:llllighw3Ys Authority of IndiaG 5&6, Sector-I 0, DwarkaDelhi - 110075

Dear Mr. Sanjeev Kumar,

CONFIDENTIALCRISILAn S&P Global Company

Re: CRISIL Rating on the Rs.62000 Crofe Long-Term Borrowing Programme of National HighwaysAuthority of India

All ratings assigned by CRISIL are kept under continuous surveillance and review.Please refer to our rating letter dated December 03, 2018NATHIAU/196797rrFB/05170 1945/1 2

Please find in the table below the rating outstanding for your company.

bearing Ref. no:

Rated Amount Rs. in Crore Ratin ' Outstandin J

CRISIL AAA/Stable

In the event of your company not making the issue within a period of 180 days from the above date, or in theevent of any change in the size or structure of your proposed issue, a fresh letter of revalidation from CRISILwill be necessary.

As per our Rating Agreement, CRISIL would disseminate the rating along with outlook through its publicationsand other media, and keep the rating along with outlook under surveillance for the life of the instrument.CRISIL reserves the right to withdraw or revise the ratings assigned to the captioned instrument at any time, onthe basis of new information, or unavailability of information or other circumstances, which CRISIL believes,may have an impact on the rating.

As per the latest SEI3I circular (reference number: CIRlIMD/DF/l712013; dated October 22, 2013) oncentralized database for corporate bonds/debentures, you arc required to provide international securitiesidentification number (ISIN; along with the reference number and the date of the rating letter) of allbond/debenture issuances made against this rating letter to us. The circular also requires you to share thisinforn1ation with us within 2 days after the allotment of the ISIN. \Ve request you to mail us all the necessaryand relevant information at [email protected]. This will enable CRISIL to verify and confim1 to thedepositories, including NSDL and CDSL, the ISIN details of debt rated by us, as required by SEBI. Feel free tocontact us for any clarifications you may have at [email protected]

Should you require any clarifications, please feel free to get in touch with us.

With warm regards,

Yours sincerely,

f\ . - ts.r~Sushmita MajumdarDirector - CRISIL Ratings

- ~~----.... ~ --- .~~v.;.--_,Nivcdita ShibuAssociate Director - CRISIL Ratings

A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument anddoes not constitute an audit of the rated entity by CRIS/L. CRIS/L ratings are based on information provided by the issuer or obtainedby CRJSIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which therating is based. A CRISIL rating is not a recommendation to buy. sell, or hold the rated instrument; it does not comment on the marketprice or suitability for a particular investor. Alf CRISIL ratings are under surveiflance. CRISIL or its associates may have othercommercial transactions with the company/entity. Ratings are revised as and when circumstances so warrant. CRISIL is not responsiblefor any errors and especia/fy states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors ofthis product. CRISIL Ratings rating criteria are available 'eWlsw.~l't1I1~~he public on the CRlSIL web site, www.crisif.com.Forthelatest rating information on any instrument of any company rated I!. I , oJease CQnta~tfustomer Service Helpdesk at 1800-267-1301, Corporate Identity Nllmber: l) 1 19B7PLC04236

CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai - 400076. Phone: +91 2233423000 I Fax: +91 2240405800www.crisil.com

mailto:[email protected].

http://www.crlsil.com

Rating RationaleMarch 29, 2018 | Mumbai

National Highways Authority of India 'CRISIL AAA/Stable' assigned to Long-Term Borrowing Programme

Rating ActionRs.62000 Crore Long-Term Borrowing Programme CRISIL AAA/Stable (Assigned)

Rs.59000 Crore Long-Term Borrowing Programme CRISIL AAA/Stable (Reaffirmed)

Rs.33118 Crore Long-Term Borrowing Programme CRISIL AAA/Stable (Reaffirmed)

Rs.19000 Crore Tax Free Bonds CRISIL AAA/Stable (Reaffirmed)

Rs.10000 Crore Tax Free Bonds CRISIL AAA/Stable (Reaffirmed)

Rs.5000 Crore Tax Free Bonds CRISIL AAA/Stable (Reaffirmed)1 crore = 10 millionRefer to annexure for Details of Instruments & Bank Facilities

Detailed RationaleCRISIL has assigned its 'CRISIL AAA/Stable' rating on the long-term borrowing programme of Rs 62,000 crore andreaffirmed its 'CRISIL AAA/Stable' rating on the tax-free bonds of Rs 34,000 crore and Rs 92,118 crore tax-freebonds and long-term borrowing programme of National Highways Authority of India (NHAI). The rating continues to reflect NHAI's strategic importance to the Government of India (GoI), and strong financial riskprofile, driven by continued support from GoI.

Key Rating Drivers & Detailed Description* Strategic Importance to GOINHAI, constituted by an act of the Indian Parliament, is the nodal agency for implementing the National HighwaysDevelopment Project (NHDP) for the government. NHDP, worth over Rs.247000 Crore, is one of the largest projectsin the country. GoI has identified road sector reforms as a key area for removing infrastructure bottlenecks. Thegovernment's thrust on building roads and highway infrastructure is reflected in the 11% increase in total outlay(budgetary allocation & internal and extra budgetary resources) to Ministry of Road Transport in the Budget 2017-18over the revised estimates for 2016-17. * Strong financial risk profile, driven by continued support from GoINHAI has a strong financial position, predominantly because of the continuous GoI support for its projects, by way ofallocation of fuel cess funds and budgetary resources, as well as flexibility to raise funds through capital gains bondsand tax-free infrastructure bonds. NHAI received Rs 2326.5 crore of the cess funds in fiscal 2017. Cess allocationwas reduced in fiscal 2017 and therefore, reliance on external borrowing was also increased in the same fiscal. Cessincome till September 2017 has been around Rs 11,249 crore while borrowings for the same period have beenaround Rs 20,400 crore. As per the budgetary allocation for 2018-19, cess allocation would be around Rs 21,100crore. NHAI also receives additional budgetary support for the development of national highways, and grants and loans forexecution of externally aided projects. The funds provided by GoI are also used for servicing NHAI's debt andmeeting other capital and operational expenses. NHAI is one of the two bodies authorised to float bonds that qualify for capital gains tax exemption under Section 54EC of the Income Tax Act, 1961.

1

Outlook: StableCRISIL believes NHAI will continue to receive the Government of India's direct and indirect support in implementationof National Highway Development Programme (NHDP). The outlook may be revised to 'Negative' in case of anyreduction in NHAI's strategic importance to, and support from GoI.

About NHAINHAI, set up under the National Highways Authority of India Act, 1988, began operations in February 1995. It isresponsible for developing, maintaining, and managing national highways. NHAI is mandated to implement NHDP,India's largest-ever highways project. The project originally had five phases, and two phases'covering expressways(Phase VI), and construction of ring roads, grade-separated intersections, flyovers, and bypasses (Phase VII)'wereadded later. As on May 31, 2017, the project covered 48,793 kilometre (km). The Golden Quadrilateral project, whichcovers 5846 km, is complete. The North-South-East-West (NSEW) corridor was 92% complete. Of the 11,809 kmunder Phase III (connecting state capitals and places of tourist and commercial importance with NHDP Phases I andII), 65% is complete, while 18% is under implementation. Phases IV, V and VII are 31%, 39% and 3% complete,respectively, while Phase VI is in the early stages of awarding and implementation. NHAI is also responsible for implementing other national highway projects, mainly those ensuring connectivity withmajor ports. NHAI awards projects for development on an engineering-procurement-construction and build-operate-transfer (BOT) toll and annuity basis; as well as projects on a BOT hybrid'annuity basis and also on TOT basis.

Key Financial IndicatorsAs on / for the period ended March 31 2017 2016Revenue Rs crore NA NAProfit after tax Rs crore NA NAPAT margins % NA NAAdjusted Debt/Adjusted networth Times NA 0.33Interest coverage Times NA NA

Any other information: Not applicable

Note on complexity levels of the rated instrument:CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels areavailable on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments thatthey consider for investment. Users may also call the Customer Service Helpdesk with queries on specificinstruments.

2

http://www.crisil.com/complexity-levels

Annexure - Details of Instrument(s)

ISIN Name ofinstrument

Date ofallotment

Couponrate (%) Maturity date Issue size

(Rs Crore)

Ratingassigned with

outlook

INE906B07CA1 Tax Free Bonds 25-Jan-12 8.20% 24-Jan-22 6714CRISIL

AAA/Stable

INE906B07CB9 Tax Free Bonds 25-Jan-12 8.30% 24-Jan-27 3286CRISIL

AAA/Stable

INE906B07DA9 Tax Free Bonds 22-Nov-13 8.35% 21-Nov-23 452CRISIL

AAA/Stable

INE906B07DB7 Tax Free Bonds 22-Nov-13 8.48% 21-Nov-28 850CRISIL

AAA/Stable

INE906B07DC5 Tax Free Bonds 5-Feb-14 8.27% 4-Feb-24 475CRISIL

AAA/Stable

INE906B07DD3 Tax Free Bonds 5-Feb-14 8.52% 4-Feb-24 301CRISIL

AAA/Stable

INE906B07DE1 Tax Free Bonds 5-Feb-14 8.50% 4-Feb-29 1732CRISIL

AAA/Stable

INE906B07DF8 Tax Free Bonds 5-Feb-14 8.75% 4-Feb-29 1190CRISIL

AAA/Stable

INE906B07EE9 Tax Free Bonds 18-Sep-15 7.11% 17-Sep-25 549CRISIL

AAA/Stable

INE906B07EF6 Tax Free Bonds 18-Sep-15 7.28% 17-Sep-30 3323CRISIL

AAA/Stable

INE906B07EG4 Tax Free Bonds 11-Jan-16 7.14% 10-Jan-26 686CRISIL

AAA/Stable

INE906B07EH2 Tax Free Bonds 11-Jan-16 7.39% 10-Jan-26 656CRISIL

AAA/Stable

INE906B07EI0 Tax Free Bonds 11-Jan-16 7.35% 10-Jan-31 5983CRISIL

AAA/Stable

INE906B07EJ8 Tax Free Bonds 11-Jan-16 7.60% 10-Jan-31 2675CRISIL

AAA/Stable

INE906B07EK6 Tax Free Bonds 18-Feb-16 7.02% 17-Feb-26 455CRISIL

AAA/Stable

INE906B07EL4 Tax Free Bonds 18-Feb-16 7.39% 17-Feb-31 1373CRISIL

AAA/Stable

INE906B07EM2 Tax Free Bonds 9-Mar-16 7.04% 8-Mar-26 98CRISIL

AAA/Stable

INE906B07EN0 Tax Free Bonds 9-Mar-16 7.29% 8-Mar-26 192CRISIL

AAA/Stable

INE906B07EO8 Tax Free Bonds 9-Mar-16 7.39% 8-Mar-31 1882CRISIL

AAA/Stable

INE906B07EP5 Tax Free Bonds 9-Mar-16 7.69% 8-Mar-31 1128CRISIL

AAA/Stable

INE906B07FB2NHAI TaxableBond Series-I

3-Aug-16 8.03% 3-Aug-41 5000CRISIL

AAA/Stable

INE906B07FD8NHAI TaxableBond Series-I

1-Sep-16 7.68% 30-Aug-41 5000CRISIL

AAA/Stable

INE906B07FE6NHAI TaxableBond Series-I

23-Dec-16 7.17% 23-Dec-21 5020CRISIL

AAA/Stable

INE906B07FF3NHAI Taxable

24-Jan-17 7.22% 24-Jan-47 8500CRISIL

3

Bond Series-I AAA/Stable

INE906B07FG1NHAI TaxableBond Series-I

20-Mar-17 7.60% 18-Mar-22 4025CRISIL

AAA/StableINE906B07FT4

NHAI Taxable

Bonds06-June-2017 7.27% 06-June-2022 1525

CRISILAAA/Stable

INE906B07FU2

NHAI TaxableBonds

16-June-2017 7.24% 16-June-2047 5000CRISIL

AAA/StableINE906B07FV0

NHAI Taxable

Bonds14-July-2017 7.14% 14-July-2047 3500

CRISILAAA/Stable

INE906B07FW8

NHAI TaxableBonds

24-Aug-2017 7.38% 24-Aug-2038 5000CRISIL

AAA/StableINE906B07FX6

NHAI Taxable

Bonds06-

November-20177.11% 06-Nov-2022 850

CRISILAAA/Stable

INE906B08021

NHAI TaxableBonds

22-Nov-2017 7.64%22-

November-20325000

CRISILAAA/Stable

INE906B07EQ3

54EC CapitalGain Tax

ExemptionBonds

30-Apr-16 6.00% 30-Apr-19 270CRISIL

AAA/Stable

INE906B07ER1


ExemptionBonds

31-May-16 6.00% 31-May-19 367CRISIL

AAA/Stable

INE906B07ES9


ExemptionBonds

30-Jun-16 6.00% 30-Jun-19 441CRISIL

AAA/Stable

INE906B07ET7


ExemptionBonds

31-July-16 6.00% 31-July-19 521CRISIL

AAA/Stable

INE906B07EU5


ExemptionBonds

31-Aug-16 6.00% 31-Aug-19 417CRISIL

AAA/Stable

INE906B07FC0


ExemptionBonds

30-Sep-16 6.00% 30-Sep-19 455CRISIL

AAA/Stable

INE906B07EV3


ExemptionBonds

31-Oct-16 6.00% 31-Oct-19 433CRISIL

AAA/Stable

INE906B07EW1


ExemptionBonds

30-Nov-16 6.00% 30-Nov-19 566CRISIL

AAA/Stable

INE906B07EX9


ExemptionBonds

31-Dec-16 5.25% 31-Dec-19 455CRISIL

AAA/Stable

INE906B07EY7


Exemption31-Jan-17 5.25% 31-Jan-20 392

CRISILAAA/Stable

4

Bonds

INE906B07EZ4


ExemptionBonds

28-Feb-17 5.25% 28-Feb-20 376CRISIL

AAA/Stable

INE906B07FA4


ExemptionBonds

31-Mar-17 5.25% 31-Mar-20 880CRISIL

AAA/Stable

INE906B07FH954EC Bonds

-2017-1830-Apr-2017 5.25 30-Apr-2020 277.94

CRISILAAA/Stable

INE906B07FI7

54EC Bonds-2017-18

31-May-2017 5.25 31-May-2020 345.07

CRISILAAA/Stable

INE906B07FJ5

54EC Bonds-2017-18

30-June-2017 5.25 30-June-2020 379.11

CRISILAAA/Stable

INE906B07FK3

54EC Bonds-2017-18

31-July-2017 5.25 31-July-2020 515.3

CRISILAAA/Stable

INE906B07FL1

54EC Bonds-2017-18

31-Aug-2017 5.25 31-Aug-2020 418.72

CRISILAAA/Stable

INE906B07FM9

54EC Bonds-2017-18

30-Sep-2017 5.25 30-Sep-2020 470.06

CRISILAAA/Stable

INE906B07FN7

54EC Bonds-2017-18

31-Oct-2017 5.25 31-Oct-2020 456.99

CRISILAAA/Stable

INE906B07FO5

54EC Bonds-2017-18

30-Nov-2017 5.25 30-Nov-2020 508.7

CRISILAAA/Stable

INE906B07FP2

54EC Bonds-2017-18

31-Dec-2017 5.25 30-Dec-2020 544.02

CRISILAAA/Stable

INE906B07FQ0

54EC Bonds-2017-18

31-Jan-2018 5.25 31-Jan-2021 536.88

CRISILAAA/Stable

INE906B07FR8

54EC Bonds-2017-18

28-Feb-2018 5.25 28-Feb-2021 565.31

CRISILAAA/Stable

NA Masala Bonds* 18-May-2017 7.3% 18-May-2022 3000CRISIL

AAA/Stable

NA NSSF Loan* 17-Jan-2018 7.7% 17-Jan-2028 10000CRISIL

AAA/Stable

NALong termborrowing

programme^NA NA NA 20106.9

CRISILAAA/Stable

NALong termborrowing

programme^NA NA NA 62000

CRISILAAA/Stable

^Not raised*Indicates Not Applicable

5

Annexure - Rating History for last 3 Years Current 2018 (History) 2017 2016 2015 Start of

2015

Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating

Long-TermBorrowingProgramme

LT 154118 CRISIL

AAA/Stable

No RatingChange

No RatingChange

No RatingChange

No RatingChange

CRISILAAA/Stabl

e

Non ConvertibleDebentures LT -- -- 26-05-17

Withdrawal

No RatingChange

No RatingChange

CRISILAAA/Stabl

e

Tax Free Bond LT 34000 CRISIL

AAA/Stable

No RatingChange

No RatingChange

No RatingChange

No RatingChange

CRISILAAA/Stabl

e

Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.

Links to related criteria

CRISILs Approach to Financial Ratios

CRISILs Bank Loan Ratings - process, scale and default recognition

Rating Criteria for Construction Industry

Rating Criteria for Toll Road Projects

Criteria for Notching up Stand Alone Ratings of Entities Based on Government Support

For further information contact:Media Relations Analytical Contacts Customer Service Helpdesk

Saman KhanMedia RelationsCRISIL LimitedD: +91 22 3342 3895B: +91 22 3342 [email protected]

Naireen AhmedMedia RelationsCRISIL LimitedD: +91 22 3342 1818B: +91 22 3342 [email protected]

Jyoti ParmarMedia RelationsCRISIL LimitedD: +91 22 3342 1835B: +91 22 3342 3000 [email protected]

Sachin GuptaSenior Director - CRISIL RatingsCRISIL LimitedD:+91 22 3342 [email protected]

Sushmita MajumdarDirector - CRISIL RatingsCRISIL LimitedD:+91 22 3342 [email protected]

Vinay YadavRating Analyst - CRISIL RatingsCRISIL LimitedB:+91 124 672 [email protected]

Timings: 10.00 am to 7.00 pmToll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:[email protected] For Analytical queries:[email protected]

6

http:\\www.crisil.com\Ratings\SectorMethodology\MethodologyDocs\criteria\CRISILs Approach to Financial Ratios.pdf

http:\\www.crisil.com\Ratings\SectorMethodology\MethodologyDocs\criteria\CRISILs Bank Loan Ratings - process, scale and default recognition.pdf

http:\\www.crisil.com\Ratings\SectorMethodology\MethodologyDocs\criteria\Rating Criteria for Construction Industry.pdf

http:\\www.crisil.com\Ratings\SectorMethodology\MethodologyDocs\criteria\Rating Criteria for Toll Road Projects.pdf

http:\\www.crisil.com\Ratings\SectorMethodology\MethodologyDocs\criteria\Criteria for Notching up Stand Alone Ratings of Entities Based on Government Support.pdf









Note for Media:This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you infull or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly orindirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.

About CRISIL Limited

CRISIL is a leading agile and innovative, global analytics company driven by its mission of making markets function better. We are India’sforemost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and globalfootprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 1,00,000 customers. We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data tothe capital and commodity markets worldwide. For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

About CRISIL RatingsCRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered inIndia as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analyticalrigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bankloans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetualbonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debtinstruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted severalinnovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions.We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended theaccessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.

CRISIL PRIVACY NOTICE

CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provideyou with additional information from CRISIL and other parts of S&P Global Inc. and its subsidiaries (collectively, the “Company) you may find of interest.

For further information, or to let us know your preferences with respect to receiving marketing materials, please visit https://www.crisil.com/en/home/privacy-and-cookie-notice.html. You can view the Company’s Customer Privacy at https://www.spglobal.com/corporate-privacy-policy

Last updated: April 2016

DISCLAIMER

This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term“Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does notconstitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide anyservices in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of thisReport does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken intoconsideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investmentadvice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind orotherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decisionwithin the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell anysecurities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current asof the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate itsopinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisorsand/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professionaladvice before acting on the Report in any way.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee theaccuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the

7

http://www.crisil.com

https://twitter.com/CRISILLimited

http://www.linkedin.com/company/crisil

https://www.youtube.com/user/CRISILLimited

https://www.facebook.com/CRISILLimited

https://www.crisil.com/en/home/privacy-and-cookie-notice.html

https://www.crisil.com/en/home/privacy-and-cookie-notice.html

https://www.spglobal.com/corporate-privacy-policy

cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES,INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no eventshall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses,legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised ofthe possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securitiesor from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and otherapplicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be availablefor subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit andundertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its businessunits separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may haveinformation that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-publicinformation received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managingconflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrumentof any company rated by CRISIL you may contact CRISIL RATING DESK at [email protected], or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL

8

http://www.crisilratings.com

https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

1

National Highways Authority of India

April 04, 2018

Summary of rated instruments

Instrument* Previous Rated Amount (Rs. crore)

Current Rated Amount (Rs. crore)

Rating Action

Long Term Borrowing Programme for 2018-19 - 62,000.0 [ICRA]AAA (Stable); Assigned Long-term Borrowing Programme for 2017-18

59,000.0 59,000.0 [ICRA]AAA (Stable); Reaffirmed

Long-term Borrowing Programme for 2016-17 33,118.0 33,118.0 [ICRA]AAA (Stable); Reaffirmed

Tax-free Bonds – 2015-16 19,000.0 19,000.0 [ICRA]AAA (Stable); Reaffirmed

54EC bonds – 2014-15 3,343.0 3,343.0 [ICRA]AAA (Stable); Reaffirmed

Fund based- Overdraft 5,000.0 5,000.0 [ICRA]A1+; Reaffirmed Total 119,461.0 181,461.0 *Instrument details are provided in Annexure-1

Rating action

ICRA has assigned a long-term rating of [ICRA]AAA (pronounced ICRA Triple A) to the Rs. 62,000.0-crore1 proposed long

term borrowing programme for 2018-19 of National Highways Authority of India (NHAI) 2

. The outlook on the long-term

rating is ‘Stable’.

ICRA has also reaffirmed the long-term rating of [ICRA]AAA (pronounced ICRA Triple A) with ‘Stable’ outlook for the Rs.

59,000-crore long-term borrowing programme for 2017-18, Rs. 33,118-crore long-term borrowing programme of 2016-

17, Rs. 19,000-crore tax-free bond programme of 2015-16, and Rs. 3,343-crore 54EC bond programme of 2014-15 of

NHAI. ICRA has also reaffirmed the short-term rating of [ICRA]A1+ for the Rs. 5,000-crore fund-based overdraft bank

lines of NHAI.

Rationale

The ratings take support from NHAI’s strong operational and financial linkages with the Government of India (GoI). NHAI

is responsible for the development and maintenance of national highways in the country. The ratings also take comfort

from NHAI’s stable funding sources including fuel cess, project revenues (ploughing back of funds from toll collection,

negative grant, and revenue sharing) and budgetary allocations. NHAI’s competitive cost of borrowings (through tax-free

and 54EC bonds) further supports its financial risk profile.

1 100 lakh = 1 crore = 10 million

2 For complete rating scale and definitions, please refer to ICRA's website www.icra.in or other ICRA Rating Publications

2

ICRA has noted the increase in NHAI’s budgeted expenditure towards implementation of highway projects on account of

higher land acquisition costs as well as shift towards engineering, procurement and construction (EPC) and Hybrid

Annuity Model (HAM) mode of project award considering the limited response of private developers for build-operate-

transfer (BOT) projects. This, along with moderate allocation of cess towards NHAI, has resulted in increased dependence

on Internal and Extra Budgetary Resources (IEBR) to be arranged by NHAI and the consequent increase in its borrowings

to ~Rs. 1.1 lakh crore as of February 2018. This is likely to increase further over the medium term with the proposed

borrowing program. Nevertheless, ICRA draws comfort from NHAI’s stable funding sources, support from GoI, limited

debt repayments over the medium term and ability to raise long-term funds that would enable it to undertake the

increased project expenses over the medium term. With more projects awarded using the EPC mode, the inflows from

toll collections are expected to increase over the long term. ICRA has also noted NHAI’s plans of monetising operational

road assets through the toll-operate-toll (TOT) model, which can provide sizeable funds and reduce dependence on

borrowings. The response for the first set of projects offered on TOT basis has been strong and could result in higher

than expected inflows to NHAI through this route.

Going forward, support from the GoI (both financially and operationally) would be crucial for improving the pace of

highway development as well as maintaining the financial risk profile of NHAI and would remain a key rating sensitivity.

Outlook: Stable

ICRA believes that due to its strategic importance and strong linkage with GoI, NHAI will continue to get GoI’s support both financially and operationally. This would be critical in maintaining the credit profile of NHAI. The outlook may be revised to 'Negative' if there is any weakness in linkage with GoI or reduction in its strategic importance.

Key rating drivers

Credit strengths

Strategic importance to GoI - NHAI is an autonomous GoI authority under the Ministry of Road Transport and Highway

(MoRTH). NHAI was established on June 15, 1989 as per the National Highways Authority of India Bill, 1988. NHAI is the

nodal agency for development of national highway projects under National Highway Development Programme (NHDP)

and allied programmes approved by the GoI. Given the significance of national highway infrastructure, NHAI is

strategically important to the GoI.

Strong operational and financial linkages with GoI - Being a part of the GoI, NHAI has strong financial and operational

linkage with the same. Apart from being the promoter, the GoI has statutory and regulatory powers over NHAI and

supports it in major policy decisions. The GoI also provides financial support to NHAI in the form of budgetary allocations.

Stable funding sources - NHAI has stable funding sources owing to allocation of fuel cess, earmark of budgetary

resources, project revenues (toll collections, revenue share, negative grant and premium receivables), and flexibility to

raise funds (through capital gains bonds and tax-free bonds) at competitive borrowing cost.

Credit challenges

Increasing expenditure and debt funding - NHAI’s project implementation cost is likely to increase with more projects

awarded on EPC basis and increasing land acquisition costs. This coupled with reduced share of fuel cess may result in

increased dependence on external borrowing by NHAI. However, over the longer term, with the completion of projects

awarded under EPC mode, NHAI’s toll collections would increase and can be monetised.

3

Sizeable contingent liabilities - NHAI has sizeable contingent liabilities, most of which are from disputed claims filed by

contractors/developers. The final quantum and timing of the settlement of the remaining claims will have a bearing on

NHAI’s cash flows.

Analytical approach: For arriving at the ratings, ICRA has applied its rating methodologies as indicated below.

Links to applicable criteria:

Corporate Credit Rating Methodology

Rating Methodology for Primary Non-Ferrous Metals Manufacturers

About the issuer:

NHAI is an autonomous authority constituted by an Act of Parliament, the National Highways Authority of India Act,

1988. It operates under the MoRTH and is responsible for the development, maintenance and management of the

national highways in India.

NHAI is also entrusted with the responsibility of implementing NHDP, which covers about 54,500 km of highways with

estimated expenditure of Rs. 4.7 lakh crore over seven phases. NHDP is in advanced stage with majority of contracts

already completed/awarded.

Apart from NHDP, NHAI is undertaking other programmes approved by the GoI such as SARDP-NE and special projects in

Madhya Pradesh, Maharashtra, Tamil Nadu, West Bengal, Haryana, Delhi, Rajasthan & Uttar Pradesh.

Recently, the GoI has approved Phase-1 of Bharatmala Pariyojana with a total length of 24,800 km to be developed over

FY2018-FY2022. Under this scheme, NHAI is responsible for the construction of 19,800 km of roads. This brings a total of

34,800 km of roads to be constructed by NHAI over the next 5 year period with a total planned expenditure of Rs. 7.66

lakh crore.

Key financial indicators (audited)

FY 2016 FY 2017*

Operating Income (Rs. crore) 12.2

PAT (Rs. crore) -220.6

OPBDIT/ OI (%) -ve

RoCE (%) -4.3%

Total Debt/ TNW (times) 0.33

Total Debt/ OPBDIT (times) -ve

Interest coverage (times) -ve

NWC/ OI (%) -ve

OI: Operating Income; PAT: Profit after Tax; OPBDIT: Operating Profit before Depreciation, Interest, Taxes and Amortisation; ROCE:

PBIT/Avg (Total Debt + Tangible Net-Worth + Deferred Tax Liability - Capital Work - in Progress);

NWC: Net Working Capital

* FY2017 financials are not published yet /to be approved by GoI

https://www.icra.in/Rating/ShowMethodologyReport/?id=464&Title=Corporate%20Credit%20Rating%20Methodology&Report=Corporate%20Credit%20Rating,%20Methodology,%20Mar%202017.pdf

https://www.icra.in/Rating/ShowMethodologyReport/?id=373&Title=Primary%20Non%20Ferrous%20Metals%20Manufacturers&Report=Primary%20Non-Ferrous%20Metals,%20Rating%20Methodology,%20September%202015.pdf

4

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for last three years:

Instrument

Current Rating (FY2019)

Chronology of Rating History for the past 3 years

Type

Amount Rated (Rs. crore)

Amount Outstanding (Rs Crore)

Date & Rating

Date & Rating in FY2018



Apr-2018

Nov-2017

Apr-2017

Jun/Aug-2016

May-2016

Sep-2015

May-2015

1 54EC Bonds – 2014-15

Long Term

3,343.0 648 cr as of 27-Mar-2018

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

2 Tax Free Bonds 2015-16

Long Term

19,000.0 19,000 [ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

-

3 Long Term Borrowing Programme for 2016-17

Long Term

33,118.0 33,118.0 [ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

- -

4 Fund-based (Overdraft)

Short Term

5,000.0 NA [ICRA] A1+

[ICRA] A1+

[ICRA] A1+

[ICRA] A1+

- - -


Long Term

59,000.0 25,893 placed till Feb-2018

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

[ICRA] AAA (Stable)

- - - -


Long Term

62,000.0 - [ICRA] AAA (Stable)

- - - - - -

Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The

classification of instruments according to their complexity levels is available on the website www.icra.in

http://www.icra.in/

5

Annexure-1: Instrument Details

ISIN No Instrument Name

Date of Issuance / Sanction

Coupon Rate

Maturity Date


Current Rating and Outlook

INE906B07DG6

54-EC Bonds (2014-15)

30.04.2014 6.0% 30.04.2017* 220 [ICRA]AAA(stable)

INE906B07DH4 31.05.2014 6.0% 31.05.2017* 229 [ICRA]AAA(stable)

INE906B07DI2 30.06.2014 6.0% 30.06.2017* 191 [ICRA]AAA(stable)

INE906B07DJ0 31.07.2014 6.0% 31.07.2017* 297 [ICRA]AAA(stable)

INE906B07DK8 31.08.2014 6.0% 31.08.2017* 219 [ICRA]AAA(stable)

INE906B07DL6 30.09.2014 6.0% 30.09.2017* 245 [ICRA]AAA(stable)

INE906B07DM4 31.10.2014 6.0% 31.10.2017* 206 [ICRA]AAA(stable)

INE906B07DN2 30.11.2014 6.0% 30.11.2017* 248 [ICRA]AAA(stable)

INE906B07DO0 31.12.2014 6.0% 31.12.2017* 268 [ICRA]AAA(stable)

INE906B07DP7 31.01.2015 6.0% 31.01.2018* 284 [ICRA]AAA(stable)

INE906B07DQ5 28.02.2015 6.0% 28.02.2018* 289 [ICRA]AAA(stable)

INE906B07DR3 31.03.2015 6.0% 31.03.2018 648 [ICRA]AAA(stable)

INE906B07EE9

Tax-Free Bonds (2015-16)

18.09.2015 7.11% 18.09.2025 549 [ICRA]AAA(stable)

INE906B07EF6 18.09.2015 7.28% 18.09.2030 3,323 [ICRA]AAA(stable)

INE906B07EG4 11.01.2016 7.14% 11.01.2026 686 [ICRA]AAA(stable)

INE906B07EH2 11.01.2016 7.39% 11.01.2026 656 [ICRA]AAA(stable)

INE906B07EI0 11.01.2016 7.35% 11.01.2031 5,983 [ICRA]AAA(stable)

INE906B07EJ8 11.01.2016 7.60% 11.01.2031 2,675 [ICRA]AAA(stable)

INE906B07EK6 18.02.2016 7.02% 18.02.2026 455 [ICRA]AAA(stable)

INE906B07EL4 18.02.2016 7.39% 18.02.2031 1,373 [ICRA]AAA(stable)

INE906B07EM2 09.03.2016 7.04% 09.03.2026 98 [ICRA]AAA(stable)

INE906B07EN0 09.03.2016 7.29% 09.03.2026 192 [ICRA]AAA(stable)

INE906B07EO8 09.03.2016 7.39% 09.03.2031 1,882 [ICRA]AAA(stable)

INE906B07EP5 09.03.2016 7.69% 09.03.2031 1,128 [ICRA]AAA(stable)

INE906B07EQ3

54-EC Bonds (2016-17) under Long Term Borrowing Programme for 2016-17

30.04.2016 6.0% 30.04.2019 270 [ICRA]AAA(stable)

INE906B07ER1 31.05.2016 6.0% 31.05.2019 367 [ICRA]AAA(stable)

INE906B07ES9 30.06.2016 6.0% 30.06.2019 441 [ICRA]AAA(stable)

INE906B07ET7 31.07.2016 6.0% 31.07.2019 521 [ICRA]AAA(stable)

INE906B07EU5 31.08.2016 6.0% 31.08.2019 417 [ICRA]AAA(stable)

INE906B07FC0 30.09.2016 6.0% 30.09.2019 455 [ICRA]AAA(stable)

INE906B07EV3 31.10.2016 6.0% 31.10.2019 433 [ICRA]AAA(stable)

INE906B07EW1 30.11.2016 6.0% 30.11.2019 566 [ICRA]AAA(stable)

INE906B07EX9 31.12.2016 5.25% 31.12.2019 455 [ICRA]AAA(stable)

INE906B07EY7 31.01.2017 5.25% 31.01.2020 392 [ICRA]AAA(stable)

INE906B07EZ4 28.02.2017 5.25% 28.02.2020 376 [ICRA]AAA(stable)

INE906B07FA4 31.03.2017 5.25% 31.03.2020 880 [ICRA]AAA(stable)

INE906B07FB2 Taxable Bonds under Long Term Borrowing Programme for 2016-17

08.03.2016 8.03% 03.08.2041 5,000 [ICRA]AAA(stable)

INE906B07FD8 09.01.2016 7.68% 01.09.2041 5,000 [ICRA]AAA(stable)

INE906B07FE6 23.12.2016 7.17% 23.12.2021 5,020 [ICRA]AAA(stable)

INE906B07FF3 24.01.2017 7.22% 24.01.2047 8,500 [ICRA]AAA(stable)

INE906B07FG1 20.03.2017 7.60% 02.03.2022 4,025 [ICRA]AAA(stable)

NA Fund-based Overdraft

- - - 5,000 [ICRA]A1+

6

ISIN No Instrument Name

Date of Issuance / Sanction

Coupon Rate

Maturity Date


Current Rating and Outlook

Limit

INE906B07FH9

54-EC Bonds (2017-18) raised till Feb-2018 under Long Term Borrowing Programme for 2017-18

30.04.2017 5.25% 30.04.2020 278 [ICRA]AAA(stable)

INE906B07FI7 30.05.2017 5.25% 30.05.2020 345 [ICRA]AAA(stable)

INE906B07FJ5 30.06.2017 5.25% 30.06.2020 379 [ICRA]AAA(stable)

INE906B07FK3 31.07.2017 5.25% 31.07.2020 515 [ICRA]AAA(stable)

INE906B07FL1 31.08.2017 5.25% 31.08.2020 419 [ICRA]AAA(stable)

INE906B07FM9 30.09.2017 5.25% 30.09.2020 470 [ICRA]AAA(stable)

INE906B07FN7 31.10.2020 5.25% 31.10.2020 457 [ICRA]AAA(stable)

INE906B07FO5 30.11.2020 5.25% 30.11.2020 509 [ICRA]AAA(stable)

INE906B07FP2 31.12.2020 5.25% 31.12.2020 544 [ICRA]AAA(stable)

INE906B07FQ0 31.01.2021 5.25% 31.01.2021 537 [ICRA]AAA(stable)

INE906B07FR8 28.02.2021 5.25% 28.02.2021 565 [ICRA]AAA(stable)

INE906B07FT4 Taxable Bonds (till Feb-2018) under Long Term Borrowing Programme for 2017-18

06.06.2017 7.27% 06.06.2022 1,525 [ICRA]AAA(stable)

INE906B07FU2 16.06.2017 7.24% 16.06.2047 5,000 [ICRA]AAA(stable)

INE906B07FV0 14.07.2017 7.14% 14.07.2047 3,500 [ICRA]AAA(stable)

INE906B07FW8 24.08.2017 7.38% 24.08.2032 5,000 [ICRA]AAA(stable)

INE906B07FX6 06.11.2017 7.11% 06.11.2022 850 [ICRA]AAA(stable)

INE906B08021 22.11.2017 7.64% 22.11.2032 5,000 [ICRA]AAA(stable)

NA

Balance of Long Term Borrowing Programme for 2017-18 - - -

33,107 [ICRA]AAA(stable)

NA

Long Term Borrowing Programme for 2018-19 - - -

62,000 [ICRA]AAA(stable)

Source: NHAI

*redeemed till 27-Mar-2018

7

ANALYST CONTACTS

Mr. Shubham Jain +91 124 4545 306 [email protected]

Mr. Abhishek Gupta

+91 124 4545 863 [email protected]

RELATIONSHIP CONTACT

Mr. L. Shivakumar

++91-22-30470000 [email protected]

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani Tel: +91 124 4545 860 [email protected]

Helpline for business queries:

+91-124-2866928 (open Monday to Friday, from 9:30 am to 6 pm)

[email protected]

About ICRA Limited:

ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services

companies as an independent and professional investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited

Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit

Rating Agency Moody’s Investors Service is ICRA’s largest shareholder.

For more information, visit www.icra.in




http://www.icra.in/

8

ICRA Limited

Corporate Office Building No. 8, 2nd Floor, Tower A; DLF Cyber City, Phase II; Gurgaon 122 002 Tel: +91 124 4545300 Email: [email protected] Website: www.icra.in

Registered Office 1105, Kailash Building, 11th Floor; 26 Kasturba Gandhi Marg; New Delhi 110001 Tel: +91 11 23357940-50

Branches

Mumbai + (91 22) 24331046/53/62/74/86/87

Chennai + (91 44) 2434 0043/9659/8080, 2433 0724/ 3293/3294, Kolkata + (91 33) 2287 8839 /2287 6617/ 2283 1411/ 2280 0008, Bangalore + (91 80) 2559 7401/4049

Ahmedabad + (91 79) 2658 4924/5049/2008

Hyderabad + (91 40) 2373 5061/7251

Pune + (91 20) 6606 9999

© Copyright, 2018 ICRA Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA.

ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to a process of

surveillance, which may lead to revision in ratings. An ICRA rating is a symbolic indicator of ICRA’s current opinion on the relative capability of the issuer

concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icra.in or contact any ICRA

office for the latest information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA from sources believed by it to

be accurate and reliable, including the rated issuer. ICRA however has not conducted any audit of the rated issuer or of the information provided by it.

While reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any

kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such

information. Also, ICRA or any of its group companies may have provided services other than rating to the issuer rated. All information contained

herein must be construed solely as statements of opinion, and ICRA shall not be liable for any losses incurred by users from any use of this publication

or its contents


29MAR 2018

By Deepanshu Goyal

India Ratings and Research (Ind-Ra) has affirmed National Highways Authority of India's (NHAI) Long-Term Issuer Rating at

'IND AAA' with a Stable Outlook. The instrument-wise rating actions are given below:

Instrument Type Date of

Issuance

Coupon

Rate

Maturity

Date

Size of Issue (billion) Rating/Outlook Rating

Action

FY19 borrowing programme (including 54EC bonds for FY19) - - - INR620 IND AAA/Stable Assigned

FY18 borrowing programme (including 54EC bonds for FY18) - - - INR590 IND AAA/Stable Affirmed

FY17 borrowing programme - - - INR331.18 IND AAA/Stable Affirmed

Tax-free bonds (FY12 and FY16) - - - INR290 IND AAA/Stable Affirmed

54 EC bonds (FY16) - - - INR42.81 IND AAA/Stable Affirmed

54 EC bonds (FY15) - - - INR6.48 (reduced from INR33.43) IND AAA/Stable Affirmed

KEY RATING DRIVERS

Public Policy Institution: NHAI, being the sole agency responsible for the development of national highways in India, is strategically important to the

government of India (GoI). NHAI’s fundamental purpose is to improve the national road transit infrastructure, better serve the national economy, and

improve the country’s standard of living. Its mandate highlights the GoI’s priority on economic development, while retaining an underlying social welfare

function. Its tax exemption status and privilege to raise funds through Section 54EC capital gains bonds and tax-free bonds reiterate its importance to the

GoI.

Robust Sovereign Control: NHAI's ratings factor in its significant financial, operational and managerial linkages with the GoI, as well as its statutory

status. Strong federal control, with the GoI monitoring its annual budget (including borrowings) and operational performance, supports the ratings.

Financial Support: The NHAI is well placed on the funding side with the GoI extending substantial budgetary support of INR296.63 billion in FY19, of

which fuel cess remains the major source of finances. Allocations from fuel cess have increased at a CAGR of 23.98% to INR200.93 billion during FY14-

FY19 (budget estimates).

NHAI is one of the only two institutions allowed by the GoI to raise finances at competitive rates through bond issuances under Section 54EC of the

Income Tax Act. These bonds allow investors to secure tax exemption on the capital gains earned on the sale of assets and are open for subscription

throughout the year. NHAI’s FY18’s funding bucket comprised of bonds subscribed by Life Insurance Corporation of India (INR8.5 billion) and Employees'

Provident Fund Organisation (INR100 billion) apart from other institutional retail investors. This helps NHAI in lowering its cost of funds and thus the

projects costs. NHAI expects to raise INR620 billion in the extra budgetary resources in FY19.

Expected Pick-up in Operational Performance: NHAI’s FY18 performance with regard to project completion (annual road length completed as a

percentage of annual road completion targets) was lower than FY17’s. The NHAI completed construction of 30.65% (1,839km at 5.04km/day) of its

targeted road stretches by end-December 2017, as against the target of 6,000km at 16.44km/day.

Further, NHAI has awarded only 26.97% (2,697km; 7.39km/day) of its target stretch by end-December 2017, as against the target of 10,000km at

27.40km/day.

However, Ind-Ra believes the pace will accelerate in FY19 due to (i) a sustained focus of the Ministry of Road Transport and Highways on this sector, (ii)

new models such as hybrid annuity model (HAM) and toll-operate-transfer picking up smoothly, and (iii) the renewed interest shown by the private sector

in road projects.

Bharatmala Pariyojana: NHAI has been identified as one of the few agencies/ departments implementing the 53,000km project. Majority of the project

India Ratings A�rms National Highways Authority of India at 'IND AAA'/Stable;Rates FY19 Borrowing Programme

https://www.indiaratings.co.in/Analyst?analystID=249&analystName=Deepanshu%20Goyal

appraisals will be carried out by NHAI with some support from the Ministry of Road Transport and Highways over FY18-FY22. Though part of the funding

would have to be done by NHAI, it would not constrain its existing projects. As per NHAI Act, it can raise the necessary funds in consultation for the

central government, without any cap on its borrowing.

Performance of EPC & HAM: HAM and EPC models are becoming the preferred mode of awarding road projects since build, operate and transfer has

taken a back seat due to the weak financial position of private players and over leveraged balance sheet in some cases. Ind-Ra believes the EPC mode

along with HAM will increase the allocation rate over any other mode on the back of the limited upfront capital requirement and lesser risk involved over

any other mode.

Also, NHAI awarded 50 projects with a total length of 2,697km and equivalent total cost of INR422.75 billion during April-January 2018. Of these, 13

projects with a total length of 706km were taken up under HAM and 37 projects with 1,991km were taken up under EPC. Further, there are plans to

award 5,000km in March 2018.

RATING SENSITIVITIES

Weakening of NHAI’s financial, operational and managerial linkages with the GoI is a negative rating trigger.

COMPANY PROFILE

NHAI, an autonomous body of the GoI, was constituted by an act of Parliament - NHAI Act, 1988 - to develop, maintain and manage the national

highways entrusted to it.

FINANCIAL SUMMARY

(INR million) FY15 FY16

Operating Balance -1,981.35 -2,213.93

Current Balance -8,717.94 -14,815.67

Capital Balance -50,894.17 -134,148.86

Current balance/Current revenue (%) -53.99 -53.99

Overall results/Total revenue (%) -39.36 24.85

Direct debt/Current revenue (x) 22.14 46.17

Source: Ind-Ra; NHAI

RATING HISTORY

Instrument Type Current Rating/Outlook Historical Rating/Outlook

Rating Type Rated

Limits

(billion)

Rating 10 April 2017 11 April 2016 2 September 2015

Issuer Rating Long term IND AAA/Stable IND AAA/Stable IND AAA/Stable IND AAA/Stable

Tax-free bonds (FY12 and FY16) Long term INR290 IND AAA/Stable IND AAA/Stable IND AAA/Stable IND AAA/Stable

Long-term bonds (FY15) Long term INR6.48 IND AAA/Stable IND AAA/Stable IND AAA/Stable IND AAA/Stable

Long-term bonds (FY16) Long term INR42.81 IND AAA/Stable IND AAA/Stable IND AAA/Stable IND AAA/Stable

FY17 borrowing programme Long term INR331.18 IND AAA/Stable IND AAA/Stable IND AAA/Stable -

FY18 borrowing programme

(including 54EC bonds for FY18)

Long term INR590 IND AAA/Stable IND AAA/Stable - -

FY19 borrowing programme

(including 54EC bonds for FY19)

Long term INR620 IND AAA/Stable - - -

ANNEXURE

Instrument ISIN Date of Issuance Coupon Rate Maturity Date Size of Issue (INR billion) Rating/Outlook

Tax-free bonds (FY12) INE906B07CA1 25 January 2012 8.2 25 January 2022 67.14 IND AAA/Stable

Tax-free bonds (FY12) INE906B07CB9 25 January 2012 8.3 25 January 2027 32.89 IND AAA/Stable

Total 100.03

54 EC Bonds (FY15) INE906B07DR3 1 March 2015 6 31 March 2018 6.48 IND AAA/Stable

Total 6.48

54 EC Bonds (FY16) INE906B07DS1 1 April 2015 6 1 April 2018 2.26 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DT9 1 May 2015 6 1 May 2018 2.69 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DU7 1 June 2015 6 1 June 2018 2.76 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DV5 1 July 2015 6 1 July 2018 3.26 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DW3 1 August 2015 6 1 August 2018 3.27 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DX1 1 September 2015 6 1 September 2018 3.43 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DY9 1 October 2015 6 1 October 2018 3.16 IND AAA/Stable

54 EC Bonds (FY16) INE906B07DZ6 1 November 2015 6 1 November 2018 2.64 IND AAA/Stable

54 EC Bonds (FY16) INE906B07EA7 1 December 2015 6 1 December 2018 3.35 IND AAA/Stable

54 EC Bonds (FY16) INE906B07EB5 1 January 2016 6 1 January 2019 3.52 IND AAA/Stable

54 EC Bonds (FY16) INE906B07EC3 1 February 2016 6 1 February 2019 3.84 IND AAA/Stable

54 EC Bonds (FY16) INE906B07ED1 1 March 2016 6 1 March 2019 8.63 IND AAA/Stable

Total 42.81

Tax-free bonds (FY16) INE906B07EE9 18 September 2015 7.11 18 September 2025 5.49 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EF6 18 September 2015 7.28 18 September 2030 33.23 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EG4 11 January 2016 7.14 11 January 2026 6.86 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EH2 11 January 2016 7.39 11 January 2026 6.56 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EI0 11 January 2016 7.35 11 January 2031 59.83 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EJ8 11 January 2016 7.6 11 January 2031 26.75 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EK6 18 February 2016 7.02 18 February 2026 4.55 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EL4 11 January 2016 7.39 18 February 2031 13.73 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EM2 9 March 2016 7.04 9 March 2026 0.98 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EN0 9 March 2016 7.29 9 March 2026 1.92 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EO8 9 March 2016 7.39 9 March 2031 18.82 IND AAA/Stable

Tax-free bonds (FY16) INE906B07EP5 9 March 2016 7.69 9 March 2031 11.28 IND AAA/Stable

Total 190

54 EC Bonds (FY17) INE906B07EQ3 1 April 2016 6 1 April 2019 2.7 IND AAA/Stable

54 EC Bonds (FY17) INE906B07ER1 1 May 2016 6 1 May 2019 3.67 IND AAA/Stable

54 EC Bonds (FY17) INE906B07ES9 1 June 2016 6 1 June 2019 4.41 IND AAA/Stable

54 EC Bonds (FY17) INE906B07ET7 1 July 2016 6 1 July 2019 5.21 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EU5 1 August 2016 6 1 August 2019 4.17 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EC0 1 September 2016 6 1 September 2019 4.55 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EV3 1 October 2016 6 1 October 2019 4.33 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EW1 1 November 2016 6 1 November 2019 5.66 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EX9 1 December 2016 5.25 1 December 2019 4.55 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EY7 1 January 2017 5.25 1 January 2020 3.92 IND AAA/Stable

54 EC Bonds (FY17) INE906B07EZ4 1 February 2017 5.25 1 February 2020 3.76 IND AAA/Stable

54 EC Bonds (FY17) INE906B07FA4 1 March 2017 5.25 1 March 2020 8.8 IND AAA/Stable

Total 55.73

Taxable bonds (FY17) INE906B07FB2 3 August 2016 8.03 3 August 2041 50 IND AAA/Stable

Taxable bonds (FY17) INE906B07FD8 1 September 2016 7.68 30 August 2041 50 IND AAA/Stable

Taxable bonds (FY17) INE906B07FE6 23 December 2016 7.17 23 December 2021 50.2 IND AAA/Stable

Taxable bonds (FY17) INE906B07FF3 24 January 2017 7.22 24 January 2047 85 IND AAA/Stable

Taxable bonds (FY17) INE906B07FG1 20 March 2017 7.6 18 March 2022 40.25 IND AAA/Stable

Total 275.45

54 EC Bonds (FY18) INE906B07FH9 30 April 2017 5.25 30 April 2020 2.78 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FI7 31 May 2017 5.25 31 May 2020 3.45 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FJ5 30 June 2017 5.25 30 June 2020 3.79 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FK3 31 July 2017 5.25 31 July 2020 5.15 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FL1 31 August 2017 5.25 31 August 2020 4.19 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FM9 30 September 2017 5.25 30 September 2020 4.7 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FN7 31 October 2017 5.25 31 October 2020 4.57 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FO5 30 November 2017 5.25 30 November 2020 5.09 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FP2 31 December 2017 5.25 31 December 2020 5.44 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FQ0 31 January 2018 5.25 31 January 2021 5.37 IND AAA/Stable

54 EC Bonds (FY18) INE906B07FR8 28 February 2018 5.25 28 February 2021 5.65 IND AAA/Stable

Total 50.18

Taxable bonds (FY18) INE906B07FT4 6 June 2017 7.27 6 June 2022 15.25 IND AAA/Stable

Taxable bonds (FY18) INE906B07FU2 16 June 2017 7.24 16 June 2047 50 IND AAA/Stable

Taxable bonds (FY18) INE906B07FV0 14 July 2017 7.14 14 July 2047 35 IND AAA/Stable

Taxable bonds (FY18) INE906B07FW8 24 August 2017 7.38 24 August 2032 50 IND AAA/Stable

Taxable bonds (FY18) INE906B07FX6 6 November 2017 7.11 6 November 2022 8.5 IND AAA/Stable

Taxable bonds (FY18) INE906B08021 22 November 2017 7.64 22 November 2032 50 IND AAA/Stable

Total 208.75

Unutilised amount (FY18) 331.07 IND AAA/Stable

Unutilised amount (FY19) 620 IND AAA/Stable

COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings

has been compensated for the provision of the ratings.

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or

security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and

prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit

research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market.

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies,

managed funds, urban local bodies, structured finance and project finance companies.

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is

recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank.

Ind-Ra is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

DISCLAIMER

ALL CREDIT RATINGS ASSIGNED BY INDIA RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS

AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.INDIARATINGS.CO.IN/RATING-DEFINITIONS. IN ADDITION, RATING DEFINITIONS AND

THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.INDIARATINGS.CO.IN. PUBLISHED RATINGS,

CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. INDIA RATINGS’ CODE OF CONDUCT, CONFIDENTIALITY,

CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE

CODE OF CONDUCT SECTION OF THIS SITE.

https://www.indiaratings.co.in/complexity-indicators

http://www.indiaratings.co.in/

https://www.indiaratings.co.in/rating-definitions

http://www.indiaratings.co.in/

Applicable Criteria

Analyst Names

Rating of Public Sector Entities

Primary AnalystDeepanshu Goyal

Analyst

India Ratings and Research Pvt Ltd 601-9 Prakashdeep Building 7 Tolstoy Marg New Delhi 110001

011 43567289

Secondary AnalystDevika Malik

Senior Analyst

040 67661911

Committee ChairpersonDr. Sunil Kumar Sinha

Principal Economist and Director Public Finance

+91 11 43567255

Media RelationNamita Sharma

Manager – Corporate Communication

+91 22 40356121

https://www.indiaratings.co.in/Uploads/CriteriaReport/Rating%20of%20Public%20Sector%20Entities.pdf

ANNEXURE – 3 CONSENT OF THE TRUSTEE

1

ANNEXURE – 4 LIMITED REVIEW REPORT FOR

MARCH 2018