PowerGrid Infrastructure Investment Trust के निदेशक की रिपोर्ट

Mar 31, 2025

INDIAN ECONOMY

The Indian economy demonstrated consistent expansion and stability throughout FY 2024-25, reinforcing its status as one of the world's fastest-growing major economies. The National Statistical Office's (NSO) Second Advanced Estimate (SAE) data indicate an estimated real Gross Domestic Product (GDP) growth of 6.5% for FY 2024-25, following a substantial 9.2% increase reported in the First Revised Estimates for the preceding financial year. This sustained growth trend underscores the nation's strong economic fundamentals, supportive governmental policies, a vibrant services sector, and resilient domestic demand, collectively strengthening confidence in India's long-term growth prospects.

Key governmental reforms and substantial investments in both tangible and digital infrastructure, along with initiatives such as 'Make in India' and the Production-Linked Incentive (PLI) scheme, have played a crucial role in enhancing the country's growth momentum and fostering greater self-reliance.

The services sector recorded a steady expansion of 7.2% throughout FY 2024-25, fuelled by strong performance across diverse areas such as finance, property, professional services, public administration, and defence.

India's economic standing continues its upward trajectory. As on March 31,2025, it is positioned as the world's fifth-largest economy by nominal Gross Domestic Product (GDP) and the third-largest based on purchasing power parity (PPP). The nation has established ambitious targets of achieving a US$ 5 trillion economy by FY 2027-28 and a US$ 30 trillion economy by 2047. These aims are to be accomplished through substantial infrastructure investments, ongoing reform initiatives, and the extensive adoption of technology. Reflecting this commitment, the capital investment budget for 2025-26 has been increased to ?11.21 lakh crores, representing 3.1% of GDP.

OUTLOOK

The Indian economy is projected to grow at 6.8% in FY 2025-26. It is anticipated to become the world's third-largest economy in the coming years, propelled by investments in infrastructure, increased private capital expenditure, and the expansion of

financial services. Continued reforms are expected to underpin this long-term growth trajectory.

This favourable outlook is supported by India's demographic strengths, increasing capital investments, proactive governmental initiatives, and robust consumer demand. Improved rural consumption, aided by moderating inflation, further strengthened this growth path. The government's emphasis on capital expenditure, fiscal responsibility, and enhancing business and consumer confidence is expected to foster both investment and consumption.

Government programmes such as Make in India 2.0, reforms aimed at improving the Ease of Doing Business, and the Production-Linked Incentive (PLI) scheme are designed to strengthen infrastructure, manufacturing, and exports, positioning India as a significant participant in global manufacturing. With inflation projected to align with targets by 2025, a more accommodative monetary policy is anticipated. Infrastructure development and supportive public policies will facilitate capital formation, while rural demand will be supported by initiatives such as the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

(Source: PIB, Economic Survey)

INDIAN POWER INDUSTRY

India holds the position of the third-largest producer and consumer of electricity worldwide, with a total installed capacity of 475.2 GW as of March 31, 2025. The power sector is fundamental to the development of the nation's infrastructure, driving economic advancement, and enhancing the quality of life for its citizens.

The Indian power industry has undergone a notable evolution, transitioning from a state of power deficit to one of surplus capacity. This achievement has been facilitated by the integration of a unified national grid, improvements in distribution networks, and the achievement of universal household electrification. With a diversified energy portfolio encompassing conventional sources such as coal, natural gas, and hydro, alongside renewable energy sources like solar, wind, and biomass, India is steadily progressing towards a sustainable energy future.

As of March 31,2025, India's installed thermal energy capacity reached 246.9 GW, and its renewable energy capacity amounted to 220 GW. These sources collectively represent 98.25% of the total installed power capacity, excluding nuclear energy.

Driven by population growth, increasing electrification rates, and rising per capita electricity consumption, the nation's energy demand continues on an upward trend. India has set a commitment to exceed 500 GW of non-fossil fuel-based installed

Power Generation Capacity

capacity by 2030, highlighting its strategic focus on establishing a resilient and sustainable power ecosystem.

The Central Electricity Authority (CEA) recorded a peak power demand across India of 250 GW during FY 2024-25, representing a significant increase from FY 2023-24. This surge in demand is attributed to heightened industrial activity and an exceptionally dry August, which resulted in increased utilisation of pump sets for irrigation purposes due to inadequate rainfall. In terms of energy consumption, the total generation for 2024-25 is 1,829.70 Biliion Units.

 

India's power generation sector is highly varied, drawing on both traditional sources like coal, gas, and nuclear, as well as renewable sources such as wind, solar, and hydro.

Electricity generation grew to 1,829 BU in FY 2024-25 from 1,739 BU in FY 2023-24, reflecting a growth rate of around 5.2%. As of September 2024, power generation reached 951 BU. Thermal power continues to dominate, contributing 74.5% of the nation's electricity.

Thermal power generation is predominantly coal-based, contributing 87.6% of the total share, followed by gas at 10.3%, lignite at 2.7%, and diesel at 0.2%. The western region holds the largest thermal capacity, accounting for 35.7% of the total.

Renewable energy's share in installed capacity increased from 35.9% in FY 2019-20 to 46.3% in FY 2024-25, reflecting significant growth in solar, wind, and hydropower investments. This shift underscores India's commitment to cleaner energy, decarbonization, and building a sustainable energy future.

The total installed power capacity has grown significantly from 248,554 MW in March 2014 to 475,212 MW by March 2025. Coal-based power capacity has expanded from 139,663 MW to 221,813 MW over the same period. The renewable energy sector has seen a remarkable increase, with capacity rising from 75,519 MW to 220,096 MW in March 2025.

The distribution and transmission sectors witnessed notable advancements in FY 2023-24. Aggregate Technical & Commercial (AT&C) losses were reduced to 15.4% in FY 2023-24, driven by improvements in billing efficiency (86.9%) and collection efficiency (96.4%). The AT&C losses in 2024-25 is expected to be in the range of 12-15%..

To address increasing energy demand and facilitate the integration of renewable energy sources, India intends to add 80 GW of coal-based thermal power capacity by FY 2031-32. This new capacity is considered essential for stabilising the national energy grid, particularly during periods of peak demand or lower renewable energy generation. The deployment of ultra-supercritical and supercritical technologies will ensure that this expansion is undertaken with enhanced environmental efficiency, resulting in lower emissions intensity per unit of electricity generated.

India's power generation sector demonstrates significant diversification, drawing upon both conventional sources such as coal, gas, and nuclear energy, as well as unconventional sources including wind, solar, and hydroelectric power.

Electricity generation has shown consistent growth, increasing from 1,350 billion units (BU) in FY 2018-19 to 1,829 BU in FY 2024-25, representing a compound annual growth rate (CAGR) of approximately 5.9%.

Thermal power remains the backbone of India's electricity generation, supplying around 75% of total output in FY 2023-24 and 2024-25, with coal accounting for the vast majority. Renewables have steadily increased their contribution to about 21%, up from 19.1% in FY 2018-19 but thermal dominance continues, especially as coal usage surged to a record in FY 2024-25.

India's commitment to a sustainable energy future is clearly demonstrated by the growth in its renewable energy (RE) capacity. As of March 31, 2022, a substantial 157 GW of power was generated from renewable sources, including 46.72 GW from large hydro projects, representing about 39% of the country's total power infrastructure. This commitment has gained momentum, with installed renewable capacity reaching 226.74 GW by May 31,2025, of which 47.72 GW was from large hydro. This remarkable increase now accounts for approximately 43.5% of India's total electricity-generating capacity.

Sustaining this positive trajectory in renewable energy necessitates effective grid connectivity, particularly linking high-potential solar and wind regions to the Inter-State Transmission System (ISTS). Such connections are vital for efficiently transporting generated power to areas of high demand. Given that wind and solar projects typically have shorter development cycles compared to their associated transmission lines, proactive planning of this infrastructure is paramount for a smooth integration of renewables into the national grid.

In pursuit of these ambitious renewable energy goals, considerable advancements are underway. A strategically designed, comprehensive transmission system aims to handle the evacuation of power from an estimated 613 GW of renewable energy capacity by 2032. This crucial initiative not only highlights our dedication to increasing renewable energy production but also solidifies our resolve to build a future energy ecosystem that is both sustainable and efficient (Source - CEA, NEP-Volume II).

Transmission and Distribution Sector

The power distribution sector is undergoing a major transformation through the Revamped Distribution Sector Scheme (RDSS). This scheme has approved the rollout of 19.79 crore prepaid smart meters, 52.52 lakh DT meters, and 2.10 lakh feeder meters, with a total cost of ?1,30,670.88 crore. Efforts to reduce losses, amounting to ?1.46 lakh crore, have been approved, and ?18,379.24 crore has already been provided for these. These changes are successfully bringing down AT&C losses and reducing the gap between the cost of supplying power and the revenue earned. Furthermore, the scheme is focussed on providing on-grid electricity to all households of Particularly

Vulnerable Tribal Groups (PVTGs) and tribal communities, with ?4,355 crore allocated to connect 9.61 lakh homes.

(Source: PIB.gov.in)

India's transmission line network has seen consistent expansion, reaching 491,871 circuit kilometres (ckm) as of January 2025. This represents a compound annual growth rate (CAGR) of 3% since March 2019, when the network stood at 413,407 ckm. During the financial year 2024-25, an additional 8,830 ckm were added to the network, bringing the total to the aforementioned 494,374 ckm by March 2025. The total transformation capacity of the grid stood at 1,337 GVA as of the same period.

These enhancements are vital for accommodating the growing electricity demands across the nation and ensuring an uninterrupted power supply between different regions.

National Electricity Plan (2023-2032)

The Government of India has finalised its National Electricity Plan for the decade spanning 2023 to 2032. A key objective of this plan is the modernisation of both central and state transmission systems to effectively support a projected peak electricity demand of 458 GW by the year 2032. This ambitious undertaking, with an estimated investment of ?9.16 lakh crore, will expand the national transmission network from its 4.91 lakh circuit kilometres (ckm) in 2024 to 6.48 lakh ckm by 2032.

Simultaneously, transformation capacity is scheduled to increase from 1,290 GVA to 2,342 GVA within the same timeframe. To further enhance grid infrastructure, nine new High Voltage

Direct Current (HVDC) lines, contributing an additional capacity of 33.25 GW, will supplement the existing 33.5 GW HVDC network. Inter-regional power transfer capacity is also projected to rise from 119 GW to 168 GW. This strategic plan focussed on transmission networks operating at 220 kV and above, thereby supporting the nation's increasing electricity needs and enabling the integration of renewable energy (RE) sources and green hydrogen initiatives.

Enhancements to the Transmission System

During the preceding calendar year, 2024, significant enhancements were implemented within India's transmission infrastructure. These included the addition of 10,273 ckm of transmission lines (at 220 kV and above), an increase of 71,197 MVA in transformation capacity, and the augmentation of inter-regional transfer capacity by 2,200 MW. These upgrades are crucial for effectively meeting the growing electricity demands across various regions and ensuring a seamless and reliable flow of power.

India has experienced a substantial surge in power demand over the last ten years, primarily driven by rapid economic expansion, industrial growth, and increasing urbanisation. PGInvIT provides power to several of India's most economically advanced states, which have historically demonstrated strong and consistent growth in power consumption, underscoring their vital contribution to meeting the nation's energy requirements.

BUSINESS OVERVIEW

POWERGRID Infrastructure Investment Trust (PGInvIT) stands as a major initiative in India's energy landscape, established by POWERGRID, the country's largest transmission company and a Maharatna Central Public Sector Enterprise (CPSE). As the first infrastructure investment trust sponsored by a government entity in India, PGInvIT is dedicated to owning, constructing, operating, maintaining, and investing in power and transmission assets.

Founded in September 2020 under the Indian Trusts Act, 1882, and registered with the Securities and Exchange Board of India (SEBI) in January 2021, PGInvIT is backed by the expertise of POWERGRID, an experienced investment manager, and IDBI Trusteeship Services Limited, a respected trustee.

Initial Portfolio Assets

The initial portfolio of PGInvIT comprises five operational Special Purpose Vehicles (SPVs), each holding a transmission licence granted by the Central Electricity Regulatory Commission under the Electricity Act, 2003. These projects, executed through a tariff-based competitive bidding mechanism, boast a strong operational track record with high availability. They are eligible for assured transmission charges and incentives for a duration of 35 years from their respective commercial operation dates. PGInvIT is committed to optimising the performance of these assets through its project management team at POWERGRID.

The assets within PGInvIT include 11 transmission lines - six at 765 kV and five at 400 kV - spanning a total length of 3,699

circuit kilometres (ckm). Additionally, the Trust manages three substations with a combined transformation capacity of 6,630 MVA and 1,955.66 km of optical ground wire. These assets are strategically located across five states in India and are classified into grid-strengthening links, generation-linked projects, and those facilitating inter-regional power flow. With an average residual life of over 27 years, these SPVs are well-positioned to contribute significantly to India's energy infrastructure.

For more details, please refer to Page 21-26 of this Report.

OPERATIONAL HIGHLIGHTS

Effective operation and maintenance are crucial for the transmission sector to deliver value to key stakeholders through optimal availability of transmission assets. In its role as Project Manager, POWERGRID oversees the operation and maintenance (O&M) activities of the Initial Portfolio Assets (IPAs), which include routine maintenance, as well as preventive and breakdown maintenance tasks. POWERGRID is dedicated to ensuring the efficient operation and maintenance of these assets.

The integration of innovative technologies - such as aerial surveillance, app-based patrolling, and AI-driven defect identification software - has been instrumental in minimising shutdown periods for routine maintenance checks and breakdown incidents. This technological advancement has significantly enhanced the availability of transmission systems.

Since the inception of PGInvIT, the initial portfolio assets have consistently exceeded the normative availability standard of 98%, thereby ensuring the recovery of full transmission charges and related incentives. Furthermore, the Project Manager is actively involved in implementing new Regulated Tariff Mechanism (RTM) projects undertaken by a Special Purpose Vehicle (SPV).

With the support of POWERGRID, the IPAs uphold compliance with relevant laws and regulations, while also promoting a safe, healthy, and enriching environment for the workforce engaged in operations, maintenance, and other activities.

During FY 2024-25, all the IPAs reported 100% safe man-hours and maintained accident-free operations. This achievement underscores the commitment to safety and operational excellence across the board, reflecting a strong culture of prioritising the well-being of all personnel involved in the projects.

FINANCIAL REVIEW

Revenue and EBITDA

Revenue generation in PGInvIT's Special Purpose Vehicles (SPVs) is primarily achieved through availability-based transmission charges as stipulated in the Transmission Service Agreements (TSAs) with Designated ISTS Customers. This revenue model operates independently of the actual volume of power transmitted. By ensuring asset availability exceeds 98%, the SPVs qualify for additional incentives under these agreements.

 

The transmission charges are secured for the duration of the relevant TSAs, which typically extend for 35 years from the Commercial Operation Date (COD) of each power transmission project. These agreements are subject to renewal in line with the terms of the TSA and the regulations established by the Central Electricity Regulatory Commission (CERC).

(' in million)
Particulars	FY 2024-25 Consolidated
Total Income	13,050.55
Operating Expenses	886.14
EBITDA	12,164.41
EBITDA Margin (%)	93.21%
Net Distributable Cash Flows (NDCF)	10,810.15
Distribution per unit (?) for FY 2024-25	12
Market Capitalisation*	69,150.84
*4s per the closing price on NSE on March 31,2025

Net Distributable Cash Flow (NDCF) and Distribution Per Unit (DPU)

Net Distributable Cash Flow (NDCF) represents the free cash flow generated from the underlying operations of PGInvIT. The cash flows received typically include interest income, dividend income, and principal repayments. In accordance with the InvIT Regulations and PGInvIT's Distribution Policy, the Trust is required to distribute at least 90% of its Distributable Income to Unitholders.

For FY 2024-25, the NDCF amounted to ? 10,810.15 million, resulting in an aggregate Distribution Per Unit (DPU) of ? 12. The DPU reflects the cash flow distributed on a per unit basis to Unitholders, with total cash distributions for the fiscal year reaching ? 10,919.99 million.

Assets Under Management (AUM)

The valuation of PGInvIT's assets was conducted by the registered valuer, M/s INMACS Valuers Private Limited, which assessed the total Enterprise value at ? 90,041.83 million as of March 31,2025. This valuation underscores the Trust's sound asset base and its commitment to maintaining a strong financial position.

(? in million)
Assets	Enterprise Value
VTL	20,861.54
KATL	3,941.04
PPTL	21,762.33
WTL	24,753.15
JPTL	18,723.77
Total	90,041.83

AUM is considered as Enterprise Value Less Cash and Cash Equivalents.

Borrowings

As of March 31,2025, PGInvIT's consolidated borrowings totalled ?10,723.19 million. During the year ended March 31, 2025, PGInvIT secured additional borrowings amounting to ?5,060 million to facilitate the acquisition of the remaining 26% equity stake in PPTL, WTL, KATL, and JPTL in December 2024. It made a loan repayment of ?35.10 million in accordance with the Facility Agreement and amendments thereto established with HDFC Bank Limited. This prudent management of borrowings reflects PGInvIT's commitment to maintaining a stable financial position while fulfilling its obligations.

Credit Rating

PGInvIT's strong financial position enables it to pursue an aggressive but structured growth strategy. PGInvIT has significant capacity to leverage debt for acquisitions, supported by strong lender confidence and a consistent payment track record.

Additionally, its 'AAA' credit rating from CARE, CRISIL, and ICRA since its IPO underscores its financial stability and credibility in the market.

Strategic Outlook

PGInvIT is strategically positioned to capitalise on the growing opportunities in India's power transmission sector. With the completion of the acquisition of the remaining 26% stake in KATL, PPTL, JPTL, and WTL in December 2024, PGInvIT has further strengthened control on its asset portfolio. This move aligns with its long-term vision of expanding its transmission network and enhancing operational efficiency.

PGInvIT's acquisition strategy remains focussed on identifying and securing transmission assets through a structured, debt-funded approach. The trust follows a disciplined evaluation process, ensuring that all acquisitions undergo independent valuation to maintain transparency and financial prudence. The corporate governance framework of PGInvIT provides a strong foundation for sustainable growth while adhering to strict compliance and regulatory standards.

The trust acknowledges the limited acquisition opportunities in the transmission sector at present. However, with an estimated ?9 lakh crore investment potential in the transmission sector up to 2032, as outlined in the National Electricity Plan (Transmission), PGInvIT is well-positioned to tap into this expansion. By strategically targeting assets and optimising its portfolio, PGInvIT aims to maximise shareholder value while strengthening India's power infrastructure.

PGInvIT is also actively engaging with state governments to align with the Government of India's monetisation guidelines. A key step in this direction was the policy advocacy workshop conducted by the Central Electricity Authority (CEA) in association with PGInvIT, NIIF and PFCCL on December 6, 2024, in New Delhi. Also, PGInvIT participated in the SEBI and GIDB's Workshop on REITs, InvITs and Municipal Debt Securities at Gandhinagar on December 7, 2024. These discussions are expected to pave the

way for new opportunities in the sector and facilitate further growth through asset monetisation initiatives.

Key industry trends continue to support PGInvIT's expansion strategy. Rising energy demand across India necessitates a well-developed transmission infrastructure to ensure uninterrupted power supply. The rapid growth in renewable energy capacity requires efficient grid integration, making transmission expansion a critical component of India's clean energy transition. Additionally, system strengthening initiatives are being prioritised to enhance reliability and reduce transmission losses.

PGInvIT remains committed to optimising its portfolio while leveraging policy-driven opportunities. By maintaining financial discipline, pursuing strategic acquisitions, and aligning with the country's evolving power sector dynamics, PGInvIT aims to solidify its position as a leading player in India's transmission sector.

CAUTIONARY STATEMENT

This Management Discussion and Analysis may include statements concerning the Trust's objectives, projections, estimates, and expectations, which could be considered forward-looking. These statements are made in accordance with relevant laws and regulations and are based on the management's informed judgements and current estimates. Words such as 'may', 'will', 'should', 'expects', 'plans', 'intends', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', or

'continue', and similar expressions, are intended to identify such forward-looking statements.

It is important to note that the actual results or future prospects of the Trust could differ significantly from those expressed or implied in these forward-looking statements. Future performance is subject to various risks, uncertainties, and changes that are beyond the Trust's control. Key factors that could influence the Trust's operations include macroeconomic trends within the country, improvements in capital market conditions, changes in government policies, regulations, taxation, laws, and other statutory requirements, as well as other unforeseen factors.

The Trust assumes no obligation to publicly update, modify, or revise any forward-looking statements to reflect future events or circumstances that may arise.

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Mar 31, 2022

INDIAN ECONOMY OVERVIEW

India''s underlying economic fundamentals are believed to remain strong despite the short-term turbulences caused by the emergence of newer COVID variants, geopolitical crisis, supply-chain disruptions, and rising inflationary pressures. Growth has surpassed the pre-pandemic levels on the back of improved performance in the manufacturing and construction sectors. India''s Gross Domestic Product (GDP) has grown by 8.7% in FY 2021-22 as against a contraction of 6.6% in the previous fiscal. Faced with headwinds from rising inflation, RBI, in its latest estimates, has projected the real GDP growth for FY 2022-23 at 7.2%. The global agencies also peg the Indian economy''s growth in FY 2022-23 between 7.5% and 7.8%.

The results of growth-enhancing policies and schemes such as production-linked incentives, Atmanirbhar Bharat and increased infrastructure spending are expected to start showing going forward, leading to a stronger multiplier effect on jobs and income, higher productivity, and efficiency - all leading to accelerated economic growth.

Backed by several efforts such as National Infrastructure Pipeline (NIP), technology-enabled development, energy transition, and climate change initiatives taken by the government, the Indian economy is poised to grow at the fastest rate amongst the large nations in the world.

Power Sector in India

Electricity is an essential requirement for all facets of life and has been recognised as a basic human need. It is amongst the most critical components of infrastructure and crucial for socio-economic development and welfare of nations. A thriving power infrastructure is imperative for the sustained growth of the Indian economy. It has been recognised as a strategic and critical sector and the power supply system supports the entire economy and day-to-day life of the citizens of India. Despite consistent increase over the years, the country''s per

capita electricity consumption continues to be significantly lower than the world average.

The demand for electricity in the country has, however, been growing rapidly over the past years and the peak demand has grown from 160 GW in FY 2017 to 203 GW in FY 2023. During the first three months of FY 2023, the country has witnessed steep rise in the peak demand which touched a high of 210.79 GW on June 9, 2022.

To meet the growing electricity demand, India has embarked on a focussed energy transition journey and at the COP26 in Glasgow, Hon''ble Prime Minister of India declared India''s commitments to energy transition mainly including achieving the target of Net-Zero emissions by 2070, 500 GW non-fossil fuel energy capacity by 2030 and meeting 50% energy requirement from Renewable Energy (RE) by 2030.

Panchamrits'' unprecedented contribution of India to climate action

• India will reach its non-fossil energy capacity to 500 GW by 2030

• India will meet 50% of its energy requirements from renewable energy by 2030

• India will reduce the total projected carbon emissions by one billion tonnes from now onwards till 2030

• By 2030, India will reduce the carbon intensity of its economy by less than 45%

• By the year 2070, India will achieve the target of Net-Zero

Source: pib.gov.in

The RE capacity which has witnessed significant growth in the past five years contributing largely to the increase in installed capacity in the country, and is poised for a quantum jump by 2030.

Propelled by a growing population, rapid urbanisation, and industrialisation, Government''s efforts towards achieving energy access, the demand for electricity is likely to see accelerated growth in the coming years. Further, demand for electricity is also envisaged to increase due to Govt. of India''s thrust on increasing the share of electricity in total energy consumption and efforts towards improving financial and operational performance of the distribution sector.

Power Transmission Sector in India

The transmission sector plays a vital role in the power system value chain linking supply i.e. generation facilities with demand centres and a resilient grid is critical for increasing RE penetration into the grid, and for enabling an unconstrained power market. In India, the transmission system is a two-tier structure comprising intra-state transmission systems (InSTS) and inter-state transmission system (ISTS), with Power Grid Corporation of India Limited, the Trust''s Sponsor, being the largest power transmission company in India.

Power Transmission infrastructure in the country has registered strong growth over the past decade, largely driven by growing demand for electricity, capacity additions and enhancing interregional connectivity. During the period FY 2012 to FY 2022, total Transmission Line (220 kV & above) has grown from 257 thousand ckm to 457 thousand ckm and Transformation Capacity (220 kV & above) has grown from 410 GVA to 1,104 GVA. This has led to increase in Inter-Regional Power Transfer Capacity (MW) from 27,150 MW to 1,12,250 MW and increase in total Inter-Regional Power Transfer (BU) from 59 BU to 228 BU during the same period.

The transmission system expansion has led to the creation of a synchronous National Grid, achievement of ''One Nation-One Grid-One Frequency'', and has enabled a vibrant power market in the country.

Rising power demand coupled with Government''s focus on addition of RE capacity; increasing cross-border linkages; adoption of new technologies like Battery Storage Systems, Pumped Storage to address RE linked challenges; Govt. schemes to improve distribution sector are driving the growth of power transmission in India.

Govt. of India has recently introduced reforms in power transmission sector aimed at creating a robust transmission infrastructure while also attracting investments in the sector. In this direction, to overhaul the transmission system planning, the recently promulgated new rules, the General Network Access, are directed towards giving power utilities easier access to the transmission network. The rules also require Govt. agencies to prepare an implementation plan for the ISTS every year on a rolling basis, giving visibility to transmission system development. Further, the new standard bidding document finalised by the Govt. of India for competitively bid out transmission projects has reduced the lock-in period for transmission projects, increasing opportunities for faster recycling of capital.

National Infrastructure Pipeline (NIP) and National Monetisation Pipeline (NMP)

The '' 111 trillion National Infrastructure Pipeline for

FY 2020-25 is a one-of-its-kind government initiative to attract investments and provide world-class infrastructure to citizens. The power sector together with renewable accounts for a share of more than 20% of the NIP, and this will provide further impetus to power transmission infrastructure. Further, the NIP envisages a capital investment of '' 3 trillion in power transmission during FY 2020-25 which includes '' 1.9 trillion by the States.

NIP''s Vision 2025 for Power

124/7 clean and affordable power for all

Total capacity of 583 GW (Renewable 39%)

Reduction in share of Thermal; Increase in Renewable Energy

Renewable share in consumption to increase to ~20% per capita consumption 1,616 units

[Promotion of grid storage and offshore wind energy

Reforms in distribution

Electric vehicle charging infrastructure

Source: NIP

The Rolling Plan (2026-27) for ISTS, March 2022, prepared by the CTUIL, estimates significant investments in ISTS between FY2022 and FY2027.

The National Monetisation Pipeline (NMP) formulated by the Government is a crucial initiative targeted at kickstarting investment cycle which will be crucial in funding the infrastructure projects. It envisages monetisation of brownfield revenue earning operational infrastructure assets worth '' 6 trillion over a four-year period from FY 2020-25, running co-terminus with the NIP. Assets worth '' 852 billion have been earmarked for monetisation in the power sector, of which '' 452 billion i.e. more than 50% is envisaged for power transmission through POWERGRID. The NMP lays emphasis on InvITs as one of the modes for asset monetisation of power transmission assets. The government has also introduced several favourable regulatory and taxation norms aimed at making InvITs an attractive investment vehicle in India for global investors.

(Source: National Monetisation Pipeline)

Business Overview

POWERGRID Infrastructure Investment Trust (PGInvIT) is set up by Power Grid Corporation of India Limited (POWERGRID), a Maharatna Central Public Sector Enterprise (CPSE) and India''s largest transmission player, to own, construct, operate, maintain, and invest, as an infrastructure investment trust, in power and power transmission assets in India. It is the first InvIT sponsored by any Government entity in our country

PGInvIT was set up as a Trust under the Indian Trusts Act, 1882 in September 2020 and was registered as an infrastructure investment trust with the Securities and Exchange Board of India (SEBI) in January 2021 under the InvIT Regulations.

For ensuring safe operations, safety drills including mock drills for fire, snake bite, and use of first-aid are regularly conducted at the SPVs. During FY 2021-22, all the SPVs reported 100% safe man-hours and accident-free operations. Various functional and behavioural trainings were imparted to the personnel associated with the operations and maintenance of the IPAs.

The Trust has one of India''s most experienced and reputed Sponsor and Project Manager POWERGRID, an experienced Investment Manager POWERGRID Unchahar Transmission Limited, and Trustee IDBI Trusteeship Services Limited (ITSL). It intends to leverage the expertise and the experience of its Sponsor and the IM to deliver consistent, stable, and visible returns to its Unitholders.

Initial Portfolio Assets

The initial portfolio comprises five fully operational and revenue-generating assets housed in five Special Purpose Vehicles (SPVs) with a sound operational track record and high availability. The SPVs are entitled for assured transmission charges and incentives, subject to maintaining operational parameters, for a period of 35 years from the date of respective commercial operation. The Trust, through its Project Manager, focusses on maintaining and optimising the performance of these assets.

The Emergency Restoration System available with POWERGRID and placed strategically at various locations across India along with related skilled manpower can be deployed for uninterrupted operations and quick restoration of transmission services, in case of exigencies.

The assets comprising 11 transmission lines aggregating 3,698.59 ckm and 3 substations with an aggregate transformation capacity of 6,630 MVA include grid strengthening links, generation-linked assets, and assets linked with inter-regional power flow covering five states in India. The residual life of the SPVs as per the respective Transmission Service Agreements is more than 30 years.

Please refer to Page 21 of this Report for further details.

Operational Highlights

Efficient Operation and Maintenance plays an important role in the transmission sector, delivering value to various key stakeholders. Maximum availability of transmission assets while ensuring continuous power supply to the customers ensures incentive income, in addition to steady transmission charges, benefiting unitholders.

The operation and maintenance of the IPAs is being carried out by POWERGRID, one of the largest transmission utilities globally. While undertaking routine and breakdown maintenance, the Project Manager also implements various latest techniques to minimise shutdown time for periodic maintenance checks and breakdown maintenance and for better availability of transmission systems. Through the Project Manager, the IPAs ensure compliance with applicable environmental regulations and in providing a safe and healthy working environment to the personnel involved in operation and maintenance, through safety drills, and trainings.

Undertaking value accretive acquisitions

PGInvIT aims to provide stable, consistent, and visible returns to its unitholders and acquisition of assets are an important means to achieve that. During the year, the Trust acquired the balance 26% equity shareholding in PVTL for a consideration of '' 3,307.85 million following the completion of its lock-in period of five years of operations. Further, following the approval by Hon''ble CERC and prudence check by LTTC, the Trust through its SPVs acquired rights for additional revenues accruing to three of its SPVs viz., PPTL, PWTL & PJTL for an aggregate consideration of '' 3,041.50 million. With this PPTL, PWTL and PJTL will now earn additional annual transmission charges at the rate of 2.787%, 3.445% and 5.226% respectively.

The acquisitions were funded by a mix of internal resources and external debt. For the external debt portion, PGInvIT tied a loan facility for '' 7,000 million from HDFC Bank Limited.

FINANCIAL REVIEWRevenue, EBITDA and PAT

The SPVs of PGInvIT are in the business of power transmission. These SPVs earn revenues, i.e. availability based transmission charges, pursuant to the TSAs, from the DICs irrespective of the quantum of power transmitted through the transmission line. In addition, maintaining availability of the assets in excess of 98%, gives them the right to claim incentives under the TSAs. The transmission charges are contracted for the period of the relevant TSAs, which is 35 years from the COD of the relevant power transmission project, and is subject to renewal in accordance with the relevant TSA and the CERC regulations.

The total income of the Trust at a consolidated level was '' 12,434.13 million in FY 2021-22. Of this, '' 260.74 million was other income. EBITDA and PAT for the year stood at '' 11,653.53 million and '' 4,633.14 million respectively. EBITDA margin on consolidated basis is around 93.72% for power transmission assets with key cost components being repair & maintenance, insurance expenses, and IM fees.

('' in million)
Particulars	FY 2021-22 Consolidated
Total Revenue	12,434.13
Operating Expenses	780.60
EBITDA	11,653.53
EBITDA Margin (%)	93.72%
PAT	4,633.14
PAT Margin (%)	37.26%
Net Distributable Cash Flows (NDCF)	9,629.45
Distribution per unit (?) for FY 2021-22	10.50
Market Capitalisation*	1,21,848.89
*^s per closing price on NSE on March 31,2022.

Net Distributable Cash Flow (NDCF) and Distribution Per Unit (DPU)

Net Distributable Cash Flows (NDCF) is the free cash flow generated from underlying operations. Cash flows received by PGInvIT can be typically in the form of interest income, dividend income and principal repayment. In line with InvIT Regulations and Distribution Policy of PGInvIT, it is required to distribute at least 90% of the cash flows received by it, to its Unitholders. During the period, the Net Distributable Cash Flow was '' 9,629.45 million. DPU amounts to the cash flows distributed on a "per unit" basis to the Unitholders. The Trust distributed DPU of '' 10.50 per unit for FY 2021-22. Total cash distribution to unitholders for FY 2021-22 was ~ '' 9,554.99 million.

Assets Under Management

The registered valuer, RBSA Capital Advisors LLP, carried out the valuation as an independent valuer and valued assets of PGInvIT at '' 1,02,295.30 million as on March 31,2022.

Assets	AUM ('' in million)
PVTL	21,832.20
PKATL	4,515.90
PPTL	25,508.50
PWTL	28,701.20
PJTL	21,737.50
Total	1,02,295.30

Borrowings

The consolidated borrowings as on March 31, 2022 stood at '' 5,755.85 million. The borrowing is a part of '' 7,000 million loan facility tied up by PGInvIT with HDFC Bank Limited.

Credit Rating

PGInvIT is rated as "CCR AAA/Stable'''' from CRISIL, ''''ICRA AAA/ Stable'''' from ICRA and "CARE AAA(Is)/Stable" from CARE.

Further, the Long-Term Bank facility for an amount of '' 7,000 million has been assigned a rating of CARE AAA; Stable (Triple A; Outlook: Stable) by CARE.

Strategies and Outlook

PGInvIT''s business strategies are structured around a focussed business model with operational efficiencies to enhance returns while capitalising on value-accretive growth through acquisitions and maintaining an efficient capital structure - all this towards a single-minded focus of providing consistent, stable, and visible returns to the unitholders.

Power transmission projects characterised by low levels of operating risk and enjoying the benefit of a well-established regulatory regime with minimal counterparty risk ensure long-term visibility on returns and predictable cash flows.

Sustained investments in transmission sector will enable creation of a pipeline of transmission assets, which will create opportunities for PGInvIT to enhance its portfolio delivering value to unitholders.

Further, the National Monetisation Pipeline (NMP) formulated by Govt. of India envisages monetisation of power transmission assets of POWERGRID to the tune of about '' 452 billion during FY2022 to FY2025 with emphasis on InvITs as one of the options for monetisation.

(Source: National Monetisation Pipeline)

PGInvIT with its robust foundation built around its core strengths which include a world-class Sponsor, an experienced Investment Manager, consistent cash flows, and a strong financial position is well-positioned to acquire new assets without substantially diluting unitholders'' interest for the benefit of unitholders.

Cautionary Statement

The Management Discussion and Analysis contains statements for describing the Trust''s objectives, projections, estimates, expectations, or predictions. These statements are ''forward-looking'' in nature and are within the meaning of applicable securities laws and regulations. The Trust has undertaken various assessments and analysis to make assumptions on future expectations on business development. However, various risks and unknown factors could cause differences in the actual developments from our expectations. Important factors that could make a difference to the Trust''s operations include macro-economic developments in the country and improvement in the state of capital markets, changes in the Governmental regulations, taxes, laws, and other statutes, and other incidental factors. The Trust undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances.