On behalf of the Board of Directors of Investment Manager it is indeed my pleasure toshare the performance and highlights of IRB InvIT Fund (the Trust) as wecomplete our first year post listing.
The Trust is country's first publicly listed Infrastructure Investment Trust nowcomprising seven income generating road projects having length of 4055 lane Kms with fourof the road projects forming part of Golden Quadrilateral and one being part of theEast-West corridor. The average residual concession period for the Trust is around 17years. The Trust acquired the Pathankot-Amritsar Project in September 2017 and thisacquisition was entirely funded by debt at the Trust level amounting to Rs 15.5 bn at acompetitive rate.
The last financial year saw the introduction of GST; India's biggest tax reforminitiative since Independence. The introduction of GST and the resulting withdrawal ofEntry tax at check-posts did increase the pace of inter-State road cargo movement. Therewas however a temporary setback in H1 FY18 in the shape of a drop in commercial vehicletraffic as vendors and suppliers were still in the process of complying with GST and hencehesitant to despatch due to lack of clarity on tax implications. Fortunately thistransitionary phase was soon over and the subsequent quarters recorded sharper thanexpected traffic growth allowing for the guided 9.58% year-on-year growth in revenues forFY 2017-18.
Going forward we draw comfort for sustained growth from multiple developments. On onehand the robust rise in traffic assures strong visibility of performance and growth indistribution on existing portfolio. On the other hand the new Government initiatives likeBharatmala and a quantum jump in the award of new projects by NHAI and other Govt.agencies throw up huge opportunities to grow multiple-fold from our present size and be aperpetual investment instrument. Our Sponsor IRB
Infrastructure Developers Ltd. itself has a large portfolio of BOT and HAM projectswhich will qualify for acquisition over a period of time.
InvITs as an investment vehicle have slowly but surely gathered broaderacceptance. With another Toll Road InvIT now listed we expect a deeper understanding ofthe product by the market which will ensure reflection of performance and intrinsicstrength of the Trust in the valuation.
The total payout for FY 2017-18 (for 318 days) has been at Rs 10.55 /unit. Thistranslates to an implied IRR of 12.1% on issue price of Rs 102/unit. The Trust has met theguided payout and on the basis of revenue growth is confident of improving itconsistently going forward.
R. P. Singh
Chairman of the Board Investment Manager of the Trust