India Grid Trust (NSE: INDIGRID) Q3 2025 Earnings Call dated Jan. 24, 2025
Corporate Participants:
Harsh Shah — Chief Executive Officer and Whole-Time Director
Satish Talmale — Chief Operating Officer
Navin Sharma — Chief Financial Officer
Meghana Pandit — Chief Investment Officer
Analysts:
Vikram Datwani — Analyst
Ketan Jain — Analyst
Unidentified Participant
Ravish Chandra — Analyst
Dhvanil Raut — Analyst
Pratik Kothari — Analyst
Tanveer — Analyst
Krishna Kumar — Analyst
Sachin Jog — Analyst
Sarvesh Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Third Quarter FY ’25 Results Conference Call of IndiGrid Infrastructure Trust hosted by Nuvama Institutional Equities.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Vikram Datwani from Nuvama Institutional Equities. Thank you, and over to you.
Vikram Datwani — Analyst
Thank you. Good evening, everyone. On behalf of Nuvama Institutional Equities, I welcome you all to the 3rd-quarter FY ’25 Results Conference Call of IndiGrid Infrastructure Trust.
We are joined today by the top management of the company, represented by Mr. Harsh Shah, CEO and Whole-Time Director; Mr Navin Sharma, Chief Financial Officer; Ms. Meghana Pandit, Chief Investment Officer; and Mr. Satish Talmale, Chief Operating Officer.
I would now like to hand over the call to Mr. Harsh Shah for his opening remarks. Over to you, sir.
Harsh Shah — Chief Executive Officer and Whole-Time Director
Hi, thank you, and thank you everyone for joining in the quarter three FY ’25 call. We’ll follow the agenda of going through the presentation and subsequently answering any questions that you may have.
And starting with the presentation on Slide number three, which is to reiterate our vision to become the most admired vehicle in Asia by focusing on the long-term contract business model, value-accretive growth, predictable distribution and optimal capital structure.
Based on these, as you can see on Slide number four, we have built a portfolio of approximately INR29,400 crores across India, across transmission lines, substations, solar and battery energy projects.
Coming to the quarterly highlights on Slide 6. The — in this quarter we have signed battery storage purchase agreement, battery storage, battery energy storage service purchase agreement, which is called for NVVN battery energy storage project of the capacity of 250 megawatt, 500 megawatt-hours. Now we had won the bid in the earlier quarter, the agreements for which are signed. So we will be building this project.
We also signed definitive agreements with British International Investment BII and Norfund to set-up which will be a $300 million equity interest platform, which will focus on greenfield transmission opportunities and best opportunities in India. This will allow us to do more than $1.2 billion to $1.5 billion of projects in this space, which will eventually become the pipeline for to grow. In this quarter, we also commissioned PM projects which were awarded to us for the augmentation of our current assets in PTCL, which is Transmission Company Limited and.
We’re happy to commission these projects that these are the first under-construction RTM projects which are awarded to and this is the third project that we have commissioned since we started doing anything under-construction. In terms of financial performance, I FY quarter three FY ’25 revenue and EBITDA is witnessed 2.4% and 2% year-on-year growth respectively.
Our AUM and net-debt stands at INR29,400 crores and 59.6% respectively, which leaves us some sizable headroom for us to grow. Collection for the quarter was 100% for transmission assets and business, 105% for solar business, which has for us for this quarter. And on DPU for the run-rate that we are providing, we had committed to INR3.75 a unit and this is the 3rd-quarter for the financial year where we are paying INR3.75 a unit, which will be in-line with our guidance of INR15 a unit for FY ’25.
Our average transmission availability is at is marginally lower due to a couple of shutdowns that we have seen and experienced in the portfolio. And as soon as-is in the range of 20.2%. In which we are able to deliver the sustainable increase in DPU and stable operations.
Coming to Slide 7, as an industry update, the peak demand capacity — that peak demand in capacity has been consistently growing. Peak demand growth has reduced marginally because of the winters, but we believe the long-term trend remains intact and we will see sizable growth.
Within the sector, augmenting the overall consumption for electricity in transmission and renewables, we are seeing sizable amount of investment in growth happening in this business. Electricity plan for transmission, we are seeing a massive investment opportunity of INR15,000 crores till 2032. This offers a sizable opportunity for players to participate and build assets and to deliver. Out-of-the overall…
Operator
Sorry to interrupt. Your voice is getting muffled sometimes. Can you just repeat the last part, please?
Harsh Shah — Chief Executive Officer and Whole-Time Director
Sure. Thank you. So this overall pipeline of INR9,15,000 crores in the transmission segment over next seven, eight years, we believe that players like us have significant advantage capture parts of this growth and grow unitholders value and provide higher distributions.
And as you can see on Slide 8, out-of-the larger pipeline of INR9 lakh crores, we are already seeing active bids worth INR58,000 crores, which is currently out for bidding and which will be a target segment for us to evaluate, to explore and grow. So we are seeing overall a very thriving sector and very good opportunities of players like us to grow.
And coming to our quarter three FY ’25 operating performance, I would invite Satish, our COO, to speak about the updates on that front.
Satish Talmale — Chief Operating Officer
Yeah. Hi, everyone. Thanks, Harsh. So on quarterly operational performance to start with HEC, so we had no major incident as far as HEC performance is concerned, zero fatility, zero medical treatment cases and zero. We had one minor lost-time injury event, which was very, very of minor nature. On overall performance, power transmission, we achieved average availability of 98.55%. This is slightly lower than our run-rate because of two specific events as highlighted on the chart for GPTL and JKPTL, that is laid by transformer events, which are largely mitigated under insurance coverage.
On solar generation, we achieved 380.6 million units, which is generated at 20.2% CUS. Reliability point-of-view, trips per-line is one of the lowest performance means in terms of record performance among several quarters and substation trips are also lowest as far as reliability is concerned. Solar average plant availability is at 98%.
Key updates, increased reliability of which we have taken in last two, three years of activity is showing in the line as well as overall performance. All assets are now on integrated digital platform, which is a digital assmat platform for predictor maintenance and we are trying to maintain consistent track-record for superior availability and performance.
I will hand over to Navin.
Navin Sharma — Chief Financial Officer
Thank you, Satish, and good evening, everyone. We are on Slide 10. We recorded revenue and EBITDA of INR772 crores and INR694 crores respectively, reflecting 2% Y-o-Y growth. Net distributable cash-flow for the quarter was INR33 crores and the Board has approved a distribution of INR3.7 crores per unit, representing a 5.6% Y-o-Y increase in DPU. For quarterly corrections, we achieved 100% for the transmission business and 105% for solar. Over the trailing-12 months, collection performance at the entity level remained above 100% with both business segments showing similar strength. The DSO as of December 31 stood at 48 days for transmission and 50 days for solar, marking substantial Y-o-Y improvement across both segments.
Next slide number 11. The DPU for the quarter stands at INR3.75 per unit. This will be distributed as interest, dividend, capital repayment and other income amounting to INR2.75, 0.13, 0.82 and 0.05 respectively. With outstanding units totaling INR83.45 crores as on recorded, the gross distribution to all unit holders comes to INR313 crores. The record date for this distribution is Jan 28 and unit holders are expected to receive their distribution by Feb 4. As of December 31, the energy per unit was INR142.3. Following this quarter’s distribution, will have distributed INR97.22 per unit, totaling INR5,866 crores. On the right, you can see the Y-o-Y distribution trend, reflecting stable and scalable growth of 6% over the years.
Moving on to Slide 12, there was a typographical error in the slide uploaded earlier, which has since been corrected and re-uploaded. Here we have a waterfall chart detailing the progression from EBITDA to NDCF generation and distribution. At the SPV level, we recorded a consolidated EBITDA of INR704 crores. After accounting for finance income, working capital changes, capex and taxes at the SPV level, the NDCF generation comes to INR736 crores. After adjusting for trust level expenses, finance costs dressa, working capital changes, taxes and tax repayment, the NDCF is INR33 crores. In Q3 FY ’25, we added INR20 crores to reserves, bringing the closing reserve to INR510 crores, which exceeds one quarter’s based on current guidance.
That’s all from my side. I will now hand it over to Meghana to continue with the next slides. Over to you, Meghana. Thank you.
Meghana Pandit — Chief Investment Officer
Thanks, Navin. Hi, good evening, everyone. I’m on Slide 13, which provides an overview of Indigrid’s balance sheet. We continue to remain AAA-rated by all the three rating agencies, and India Ratings. And the average cost of debt as on 31st of December 2024 was recorded at around 7.65%. The cash balance was around INR2,175-odd crores, slightly on the higher side basically because there was about INR660 odd crores of debt which we had raised in December and which got utilized in January, part of it which got utilized in January and rest is getting utilized. It also includes around INR313 odd crores for this quarter’s distribution and almost INR483 odd crores for and Bak.
Almost 75 or three-fourths of the borrowing book is reflected in terms of fixed-rate borrowing and the net-debt to AUM or the leverage ratio is about 59.6 odd percent and a very healthy interest coverage ratio of 1.87 times. The gross borrowing for Indigrid stands at around INR19,300-odd crores split equally between NCDs, bank loans and ECB. And on the NCD side also, diversified across various investor classes from mutual funds, banks, financial institutions, retail H&I and so forth.
The bar graph that you see at the bottom of the chart reflects the repayment or refinancing schedule over the next few years. For FY ’25, almost everything is almost refinanced. What you see is the scheduled repayment which is coming up. And FY ’26 onwards, as you can see, it’s a well-diversified and termed-out borrowing profile, ensuring that we have not bunched up any maturities in any particular year and tried to remain approximately — approximately between 12% to 13% of gross borrowing, which will come up for refinancing every year.
Moving to Slide number 14, which talks about the total returns, which Indigrid has been provided since the time we got listed, total returns being reflected in the form of distribution plus price change. And as you can see on the graph, the total absolute return which Integrid has delivered since the time we got listed in 2017 is about 140%, translating into an annualized return of about 12%, which when compared with pure debt as well as pure equity emphasis on a risk-adjusted basis, you can see has provided superior risk-adjusted returns. Risk being demonstrated through beta, which you can see is 0.08 for Integral, whereas for all the other equity indices is quite close to-1 one.
Moving forward on Slide number 15, talk about the business outlook. Our portfolio strategy continues to remain focused on ensuring stable operations and for a predictable and sustainable distribution, while of course, focusing on value-accretive acquisitions across transmission and solar. The greenfield development, which we have taken-up in Indigrid is enabling us to completely focus on executing the balance augmentation work which — which is there as well as the three new transmission projects that we have won, plus the three best projects that is also under execution and within timelines for us to execute.
In addition to that, given the huge industry opportunity available on both transmission and battery, we are looking to participate in these greenfield opportunities through the Energrid platform and also ensure on delivering the DPU guidance of INR15 for FY ’25. Parallel to this, of course, ensuring that the balance sheet strength continues to remain, we are looking at optimizing the interest cost and ensuring how the duration of our debt book continues to — how we are able to elongate that with respect to the future acquisitions and the refinancing opportunities with — which come through and consciously managing the leverage ratio with about a 59.6% leverage ratio, it has left a significant headroom for us for business growth.
Resilient asset management again continues to be our forte and focus area to see to it that we maintain at least 99.5% availability across the portfolio, similarly trying to improvise on the self-reliant or practices across the portfolio. I’m seeing to it how we utilize digital tools in terms of predictive analytics and ensuring again world-class EHS and ESG practices. On industry stewardship, we continue to participate in various industry forums, one on the electricity sector side to ensure how private sector participation can improve. And on the other side, through Bharat Inves Association also focusing on increasing awareness about and overall about InvIT.
Slide number 16, this slide basically depicts how since the beginning of FY ’18, various acquisitions that we have done, accretive acquisitions that we have done has enabled us to increase the DPU on a year-on-year basis and at the same time, elongate the tenor of maintaining the DPU and the various colors that you see on the graph reflect various acquisitions that we have done, basically ensuring that the increased GPU we are able to maintain for a much longer period of time and also increase going-forward.
We’ll take a pause here and move on the Q&A section, please.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchdown telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
We’ll take our first question from the line of Ketan Jain from Avendus Spark. Please go-ahead.
Ketan Jain
Yeah, hi. Hi, ma’am. Good evening. My question was on the battery storage project. We recently signed with NVVN of 250 megawatt. Ma’am, what does the capex look like for this project and how much of the capex goes into buying the battery and EPC or other components, if you could share some light or color on the capex and on the project? And also just a second question to this is how is it imported like is the battery alert imported or the container fully gets imported? If you can just throw some light on these things.
Harsh Shah
Thank you. I think the — to answer your question, first is we are still finalizing the capex. It’s a dynamic market, it is in the range of I would say INR1,700 — sorry, INR700 crores INR800 crores that we are expecting. Majority of the capex or other sizable, more than 50% of the capex is battery, right, and battery systems. There are obviously AC components, civil services, IDC, otherworks, but the substantial company remains the battery.
To your next question whether you import battery, we can explore both. We can import modules assembly in India and use the container or we can also import container itself. We are exploring both options. We have both options and both options have its own advantage and disadvantage. At least at this point in time in India, we do not have any capacity of module manufacturing. The battery modules or cells do come from China. The assembly — we have some capabilities in India. So we are evaluating that. We are evaluating that option. And based on the overall pros and cons, we’ll have to make that decision. But for our first project, for our first project,, which is a small one, we have imported containers.
Ketan Jain
Understood, understood. So is it fair to assume like out of INR800 crores estimated around as you said, 55% to 60% is battery. EPC would be around 20% to 30%.
Harsh Shah
I don’t think I can share those details. I said it is more than 50%. So just to give a ballpark that this is the largest item. What is the exact capex? I think we’ll disclose along with our financials, that’s the best time to look at it.
Ketan Jain
Understood. And just another question with it. How does your strategy or what is your strategy on in terms of when you plan to order the batteries? Are you looking to wait further or going to order now [Technical Issues]
Harsh Shah
[Technical Issues] We don’t play in the game of waiting for further reduction, etc. So whether it’s interest rates. We try to factor-in what is the right market conditions and build based on that. And once we bid and win, we want to lock-in the as early really. [Technical Issues].
Operator
Thank you. Next question is from the line of [Technical Issues]. Please go-ahead.
Unidentified Participant
[Technical Issues]
Harsh Shah
[Technical Issues] Thank so the project is absolutely invested in NII and directly and that time was not. So EI and invested in these projects directly but actually investor to. So it takes half of the joint-venture, because they are the investors, current investors. And the third would be the third investor which is a contract at, we are also investor in the.
Unidentified Participant
Of the three, two projects we don’t have a at this point in time.
Harsh Shah
No, we do have a…
Unidentified Participant
And what is your stake-in that?
Harsh Shah
I don’t know the exact number, but I think our stake will be in the range of 30% — 30% to 35% in-between that in all three projects.
Unidentified Participant
Okay.
Harsh Shah
From equity contribution perspective.
Unidentified Participant
This is for all three projects?
Unidentified Participant
Yes. And what is the mandate for this? I mean, what is the size of investment that you’re looking to do, say, over next two or three years through this plan?
Harsh Shah
So I think — see, okay. So there are two-ways to look at it. One is, the regulation allows us to approximately 10% of our assets, which comes to around $300 million of total size. We don’t plan to do that much. And therefore, our contribution to our grid is going to be in the range of $100 million. So at this point in time, we have committed $100 million and the other $200 million is coming from BI and. So our capital contribution is locked-in at $100 million in this joint-venture.
Unidentified Participant
Okay. So this is the platform with equity investment of $300 million.
Harsh Shah
That’s correct.
Unidentified Participant
That’s how one should think about it. And if you lever it 75 25 or 25 potentially…
Harsh Shah
1.2, 1.5 correct.
Unidentified Participant
And over three years is what one should think this money will be deployed or is it a longer period?
Harsh Shah
Three years is a long-time with the current status of the sector, we are seeing a lot of opportunities. But even if we win $1 billion of project, the usual construction timeline is two years, right? So it’s reasonable to assume that we will take three years to deploy it and then therefore acquire back-in Indie grid when it’s commissioned. So I think, yeah, it’s a reasonable assumption two or three years. But if we see more opportunities, I think people will be happy to contribute more capital and make it even larger.
Unidentified Participant
Okay. And nonetheless, whenever you acquire, this money will be reinvested, I presume by the other partners again.
Harsh Shah
Yes, possible. Correct. Correct. Correct. It’s everyone’s choice. But yes, that’s logical as long as they see more opportunities.
Unidentified Participant
Okay. So — and does it mean — say that you have to invest up to 200 million or can it be lower amount as well is there a what kind of agreement is it just trying to understand how big that agreement is.
Harsh Shah
Agreement is everybody at par, we are depending on the size of the project that everyone agrees to build and win will contribute, but the contribution is at par from all partners. So if we win a big project, everybody will share appropriately in the same manner. If you don’t win, then nobody will contribute. It’s linked to the bids that come across.
Unidentified Participant
And who is the leading partner in terms of deciding on what is the price to bid.
Harsh Shah
There is no lead. It’s a consortium, it’s an independent platform. We are putting a separate management team for that. So Indigrid is not the lead is again a significant minority investor. Similarly, the two investors are there. So it’s an independent platform. We are just seeding it, but it’s not platform, it’s an independent platform that we are seeing it.
Unidentified Participant
Understood. But that understanding is definite that everything will have to be sold to you or can you…
Harsh Shah
Yes. No, yes. That is the reason why Indigrid is contributing. It has to be sold to.
Unidentified Participant
Yeah. So that’s a part of the agreement.
Harsh Shah
Yes, yes, correct. But we are in the lead, but that’s part of the agreement.
Unidentified Participant
And how do you decide that price? Is there a formula carried early-on it?
Harsh Shah
It gets decided at the time of the bid between all partners upfront, right?
Unidentified Participant
Okay. So at the time of bidding for the project, you will decide at what value you will buy.
Harsh Shah
Yes.
Unidentified Participant
Okay. So you in a position to disclose for these projects? What is the potential value that can come in?
Harsh Shah
I think we’ll have to check disclosures because we — I don’t remember how much we have disclosed in the agreements around that. We will check, but without knowing whether we have disclosed or not, it’s difficult to disclose right now on the call.
Unidentified Participant
Okay. Understood. That’s helpful. And lastly, just on broader sector, do you still see the momentum on bidding continuing for next two years, similar level to what we saw last year, close to INR1 lakh crore of bidding or you think — do you think it will potentially slow-down since a lot has been done already?
Harsh Shah
No, I think next two years will also be exciting. There’ll be significant investment continue in this sector. Now I don’t know year-on-year because see year-on-year is impossible to track, right? Nobody looks at this business year-on-year. We look at in three to five-year trends. So sometimes bids that are going to be done in this year get preponed to last year or last year bids get postponed to next year. So all the calendar and financial year may move. But in general, as we ask two, three-year bucket, we are pretty excited there is sizable amount of bids coming.
Unidentified Participant
Okay. Okay. And would you see potential impact of put a slowdown that we are seeing in signing PPAs, et-cetera on the grid investment as well or that is largely independent of that?
Harsh Shah
I think it’s largely independent because, see, if you link the two, then when you sign PPA, you will not have the grid, right? So effectively, if you slow the investment on grid side and best side, eventually when you need it, you will not have it. So I think that policymakers understand that. So I don’t see any material impact on the rollout of transmission lines because of a little bit of delay here and there in signing best part — signing PPAs.
Unidentified Participant
Understood. That’s very helpful. Thank you so much and all the best.
Operator
Thank you. Next question is from the line of Ravish Chandra, an Individual Investor. Please go-ahead.
Ravish Chandra
Yeah. Good afternoon, Mr. Harsha and the team. Congratulations once again for the consistency. I have two questions. One is to Mr. Satish regarding this operational efficiency, slightly reduced this quarter to 98.5%. Will it affect on our incentive what we get when we maintain the availability? That is the first question. And he also mentioned that it is covered under the insurance, means there is some damage to the equipment or something maybe. And the second question, Mr. Harsha, this KKR now sponsor their percentage has drastically reduced to 1%. So is it okay to have 1% as per the — I think so. But in the slide number 21, we are having GIC 17% and other FY ’17, but in the left-side, KKR and JIC put together 35%. So that’s the second question. Maybe that’s it. Thank you.
Satish Talmale
Yeah, thanks for the question.
Harsh Shah
I’ll answer your first question and Satish you can go for the operations. I think to your first question, KKR, is there a need to worry because KKR’s of sponsor has less has less right now, just a 1%, 3% stake now. My response is no, the business is not run by sponsor, the business is run by investment manager, which is me, Satish, Meghana, all of us are part of investment managers. The entire management team runs the business, the Board — the independent Board runs the business. And that is 100% owned by KKR. KKR, like many other institutional capital manager is a capital manager and there is a global control of judiciary rules.
So I don’t think there is an impact on business or governance of any kind just because of KKR or rather KKR funds investment reducing to 1% because even the investment at integrated level was not KKR balance sheet, it was the fund of KKR in which KKR itself was not a majority owner. There were other investors, right? So KKR’s role, whether the sponsor or integrated investment managers is to manage the infrastructure money and capital well. So that has not changed. They continue to remain 100% manager of the investment manager. So I don’t think there will be any impact on the business just because of shareholding reduction.
Our other, I would say the liquidity event of one investor monetizing has resulted into several investors, new investors’ ability to participate and in general, liquidity has gone up. So I think there is no negative impact of that.
To your second question, GIC remains invested. Is FII holding is at 35%, which includes GIC, other FIIs put together. So that’s the description. Like there are other FIIs like, like InCo, like GIC showed variety of names over there. So put together, they own about 35%. That’s what the slide is trying to communicate.
Ravish Chandra
Okay. Clear. Clear. Thank you, Harsha.
Harsh Shah
Yeah, thank you. I think, Satish, you’re — over to you.
Satish Talmale
Yeah. Thanks, Harsh. Yeah, you are right. Actually, this particular two asset, GPTL and JKPTL and that is attributing to the availability drop-in this quarter and this is mainly due to transformer breakdown events. And to your point, yes, it is impacting incentive as well as revenue, but it is largely covered by business interruption policy coverage via insurance.
Ravish Chandra
Okay. Okay. Thank you, Mr. Satish. Thank you and best wishes to the team. Good to continue to have a similar good performance. Thank you.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press R&1 to ask a question. Next question is from the line of Dhvanil Raut from Dalal & Broacha. Please go-ahead.
Dhvanil Raut
Hi, good evening. I just wanted a brief overview on your distributions and why the SPV debt repayment was a bit more than what it is usually. And I just want to know why you all have given such a bifurcation, some more light on that. Thank you.
Harsh Shah
Navin, you want to answer that?
Dhvanil Raut
Hello?
Navin Sharma
Subsidiary debt repayment, it was in this slide, subsidiary debt payment — debt repayment is limited to INR10 crores. So considering the debt, et-cetera, it’s not that significant. And just talking about this waterfall, it’s just to give investor more visibility on how operational performance like EBITDA is converted into how from EBITDA we are working out NDCF generation and distribution, et-cetera. If you have any specific question on this, I can help you with that. But largely this detail or is to educate, that’s how operation numbers are converting into NDCF.
Dhvanil Raut
Yeah. Just like I wanted to say that the SPV repayment was almost more than double the same of what it was.
Harsh Shah
So to answer that question, very simply put, it’s management’s discretion whether to pay interest or capital repayment is almost zero, okay. There is — we as InvIT has to pass-through is the manner in which SPV distributes money to unitholders or to itself. Under — under the tax regulation, we are supposed to exactly mirror that, right? So in some SPV, sometimes in some quarter you earn more cash than interest, then we have to upstream cash as capital repayment. It’s not that Navin decide that this time we want to do more capital repayments or less interest payment, right? It’s a — it’s the cash-flow of that FPV is higher than the interest for that quarter, you will see more. Next quarter, if the cash-flow is lower, you will see more interest in capital repayment.
So it’s completely driven by accounting and the tax regulation. It’s not a discretion that we increase. And now I think in the number of SPVs that we see is sizable in our portfolio. So first level of variability happens on SPV. The second is the second is sum of part, right, of 30 SPV. So it’s not that we decide what we want to do. It is it is done by the same formula, same process as being required by tax and so I think that’s how I’d answer. It does not impact investors greatly because if the capability is higher, probably the tax impact is deferred and it’s in the form of capital nature. But it’s not that we have ability to change all that, right? So I think it’s just the way the tax and the accounting is structured.
Dhvanil Raut
Okay. Thank you so much and all the best.
Navin Sharma
Thanks, sir. And my bad, Dhvanil, I could not understand your question appropriately.
Dhvanil Raut
Oh, I’m sorry. No, I just wanted some clarification on how you bifurcate your distribution. And I guess, sir, has already mentioned that.
Navin Sharma
Yeah, yeah. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Pratik Kothari from Unique PMS. Please go-ahead.
Pratik Kothari
Yes. Hi, Harsh. Hi Meghana, and thank you. Just one question, Harsh. How should we think about the role of sponsor and what part do they play in our trust structure?
Harsh Shah
Okay, very interesting. See I mean there is a very specific role that maybe regulations have described or sponsor like it’s a list of activity they need to do and the biggest one, okay, is biggest one is to contribute assets because when they start the business, the sponsor is the one who has established the trust and you know, starts the business. Subsequent to that right? The role of sponsor is very, very limited. Because the investment manager is the one entity which makes decisions about the business, the operations, the investments, everything to do with the trust. So there is — if we compare role between sponsor and investor, it’s investment manager, it’s I would say I don’t know-how to say proportion, but it’s like sponsor has no role to that extent, right.
Now in many of the cases, depending on the size of the, the longevity of the evolution of the need, the sponsor’s own investment manager, right, in many times. In that scenario, people do tend to assume that they are same, right? And therefore sponsor and investment managers are used interchangeably. But if you dig one-level deeper, you realize that the rules are different and the business is run by the investment manager, not the sponsor. Yeah. So in at least in our context, where the sponsor does not own the investment manager because the sponsor is a fund of KKR, rather investment manager and its parent control the sponsor, right, in our case, that’s the reality. So if the role is pretty small or negligible in my…
Pratik Kothari
Correct. And is it mandatory now by-law to have a sponsor? I mean, always or we are past that.
Harsh Shah
It is not mandatory to have the sponsor by-law. However, SEBI has changed the regulation several times. So it is possibility that you can have investment managers sponsored InvIT, okay. So there is no sponsor, but the investment manager itself is sponsor, right? It’s possible. But there are variety of steps and lock-ins and all that. So the original sponsor lock-ins have been extended to a perpetual lock-in of 1%, right. So it needs to be seen. And if you want to become a investment manager sponsored entity, you need to go back to unit holders and take 75% unit holders needs to agree to that, which is a very steep threshold. So any such change is extremely difficult, but it is possible.
Pratik Kothari
Correct. Correct. Second on this battery storage, given until now the assets that we were acquiring were either 35 years or 25 in solar. From an asset-liability perspective, I mean, would battery incrementally make more sense for us given the kind of liability profile that we have here in our country?
Harsh Shah
I mean, see, we look at IRR, okay. And when we are looking at IRR to acquire a particular project, I mean, yes, I would like to make the same IRR for 35-year project because of the same amount of work we are assuring return for a longer period. So I would still prefer long-term concession because that offers you a longer-term visibility. Having said so, that is not possible to have very long concessions on batteries because the lights are relatively shorter. So you don’t want to take that risk. But I don’t think ALM is a decision-making criteria and investment in battery. I think the decision-making criteria remains of getting good risk-return rewards and good-quality cash flows. That’s the focus from our side.
Pratik Kothari
Correct. Correct. And last one, I mean, this tie-up that we have done with and BII, and this is basically all incrementally new greenfield assets that we’ll bid for and eventually acquire. But in terms of existing assets, I mean, do you see any activity happening in there or for us incrementally, it is this route which will kind of get us assets?
Harsh Shah
No, I mean, see, we are — other than the under-construction as our assets are operating portfolios, right? So there is limited activity happening over there and it’s an annuity contract. So there is limited activity happening over there. So the growth driver remains new assets and remains the engine for us to acquire more operating assets.
Pratik Kothari
No, sir, actually my question was earlier we used to get these assets from other asset owners, light or whatever else in the market and the one which is already in operation for a while. So do you see any activity happening in there or that has kind of stabilized and now this might be the route for us to go-ahead?
Harsh Shah
See, I think there are always M&A activity happening, okay. And we — these activities result into signing, that’s when we can announce that we have done something, right. But so I would rather look at it that M&A activity can always happen, but the control is not in the our hand, right, and to two people to the decision-making. So we have to wait and wait for the right opportunity. So I would rather look at it as these are two engines. One is a normal M&A products and the second is going to acquire the mix of projects and executes, which we acquire. So it’s a new — I would say it’s a dual-engine aircraft and you figure out which one fires first and more then we work on that as well.
Pratik Kothari
Correct. Great. Thank you and all the best.
Operator
Thank you. We’ll take our next question from the line of Tanveer, an independent investor. Please go-ahead.
Tanveer
Yeah, hi. Thanks. Am I audible?
Operator
Yes. Please go-ahead.
Tanveer
Okay. So hi, I just wanted to know, Harsh, when are we on — in terms of including as a part of index. I know it’s been spoken about a lot since a long while now. I just wanted to understand what is the hesitation from SEBI’s point-of-view or any regulator point-of-view and actually I’ve written to sell you also matter. So just want to understand where we are in terms of that because I know there was some talk about including rates with as a part of frontline entities. Any idea where we are now?
Harsh Shah
No, I think for writing to SEBI and we are pretty keen that this happens and we believe that’s the right thing to do. However, there are many decision-makers. There is SEBI, there is AMC, there are mutual funds, there are exchanges, right? So there are many stakeholders of this problem and there are there used to be a variety of issues holding it up. One of the issues was that InvIT and REIT had a different tax treatment in terms of holding period. And therefore, for funds of funds, it caused tax issue to invest into index in which there is one constituent having a different holding period for tax, right? So it includes some issues. Last year, we have removed that and bring brings that brought everything at par, which is great. So one issue is resolved.
There are other issues with respect to liquidity, tacking error, how mutual fund will do it and associated impacts, which at this point in time, all the stakeholders Bharat Inveit Association, India REIT Association is pursuing it actively with all stakeholders. Up beyond, we are more at the receiving end. So we are waiting for it, but there is activity happening on this front and right to SEBI exchanges, I think the more the regulators will be keen to make decision, I would say.
Tanveer
Yeah, because the Dhabi has been talking about this, you know about the potential of potential growth in West in India, but there’s — I mean this inclusion has already happened. So I just thought, do you have any idea of ballparks if it will be a year, two years, anything?
Harsh Shah
No, no, I don’t have idea only if it will happen or not, right? Eventually, it’s a decision of regulators. So I can’t — I can’t give a timeline to that. I would want it to happen yesterday, but it’s not in my hands, right? It is authority of regulators that operate.. And normally, as I said, we are making representations. Association is making representation Indian REIT Association.
Tanveer
So you all are having active conversation, maybe quarterly or actually on this matter yes, correct?
Harsh Shah
Yes. It’s not the frequency right to them, we meet them, we explain them and you know, ad hoc meetings keeps getting conducted. So we are trying. But as I said, outcome is not in our hand, right. Outcome is the decision-making of the educators. We’ve got to wait for that.
Tanveer
Okay. Okay. Thanks a lot.
Operator
Thank you. We’ll take our next question from the line of, Krishna Kumar [Phonetic] an Individual Investor. Please go-ahead.
Krishna Kumar
I have been an investor in Indigrid since since that time and I’m pleased with the I have received to meet. As I plan for the future, I would like to kindly request an estimate of the total expected distribution per unit for next 25 years based on the current portfolio. I fully appreciate that providing such an estimate is inherently challenging, particularly given the dynamic nature of various influencing factors such as interest rates, government policies, technological advancement, physical performance, et-cetera. These elements are subject to change and are difficult to predict with certainty. While I understand the complexities are involved in such projections, I would be grateful for any conservative estimates or insights you may be able to provide considering the existing portfolio? Thanks.
Harsh Shah
Thank you, Krishnaji, for remaining investor of IndiGrid for such a long-time. See, as you rightly put, it is very difficult for us to project as a guidance for 25 years. However, we have enough disclosures for you to make it. Our valuation reports that are available for each asset provides you the EBITDA flow by revenue, EBITDA flow for 25 — 35 years or so that entire life. It provides a full cash-flow revenue generation. If you or somebody of your advisor can make a basic financial model-based on that and other finance cost, interest cost, you’ll be able to reach a very good estimate, right. And management for us to commit anything beyond what publicly-disclosed within in the right format, right?
So very difficult. But the independent valuer works with us and all operating and financial retails in the value-adation network, which allows you to build the same, right? So I would recommend doing that because that information is already available. And the difference is the information is there. What we cannot share is interest-rate, leverage, tax that we are not allowed to share. But we already shared all the operating assumptions, availability generation, everything publicly. So you can very well download that and apply some prudent measures of interest-rate to come to that conclusion. I think that’s more appropriate.
Beyond that, we are not authorization share.
Krishna Kumar
I am senior citizen. So a substantial part of my retirement corpus is invested in this InvIT, so should I be expected around 400 rupees for next 25 years?
Harsh Shah
A sizable amount of corpus of mine is also invested in IndiGrid. So — but I don’t think I can answer that saying what you can expect, right? It is an, it’s not a bond. So I cannot answer that. I’m sorry. But as I can say, even substantial part of my investment is also in IndiGrid, right? So I think that’s a easier way to answer that.
Krishna Kumar
Okay, sir. Thank you.
Harsh Shah
Thank you.
Operator
Thank you. We’ll move on to the next question from the line of Ketan Jain from Avendus Spark. Please go-ahead.
Ketan Jain
Thank you. Thank you for the opportunity. I just had a follow-up, sir on the battery project of NBVN. What capex you mentioned that is that project eligible for VGF funding? And/or does it include the VGF funding?
Harsh Shah
The project is eligible for VGF funding. I am not able to comment right now exactly how much VGF is included in that. That’s two final details. Including the VGF funding, yes.
Ketan Jain
Yeah. So any VGF you get will reduced — I mean, will be a repayment of your capex, right, like I mean, they will fund you or does that — is that excluding the INR800 crores?
Harsh Shah
No, that’s what I’m saying. I don’t know exactly whether it is net of it or it will be after. I need to check that. So that’s not a capex number I have provided. Yeah.
Ketan Jain
Okay. So anyone who wins the VGF tender is — will certainly get a VGF. That’s right understanding, right?
Harsh Shah
Yes, there are obviously parameters of your performance here from day-one five years, right, the first year milestone, second year milestone, etc. So you need to — it’s like a hybrid annuity, right? It’s not like you get it from commission and you get it back.
Ketan Jain
Yeah. Thank you.
Operator
Thank you. We’ll take our next question from the line of Sachin Jog [Phonetic], a retail investor. Please go-ahead.
Sachin Jog
Good evening. Can you hear me?
Operator
Yes, please go-ahead.
Sachin Jog
Good evening to everyone. Like the previous speaker, I’m also a long-term investor and I have reinvested with Indigrade for a long, long-time. And I’m very happy with the returns that have been delivered till-date. Thank you for the performance of the till-date and congratulations again on a very good quarterly result. While it may sound repetitive, my question is around the KKR holding falling to 1%. Does it raise any concerns of conflict of interest because KKR does hold 100% in the investment manager, but has a very small holding now in the trust as such?
Harsh Shah
Yeah. No, certainly. I think you have the right question. Thank you for being a long-term investor. I would — I would give you a slightly different context, both from regulatory and practical aspect. When you invest in any mutual fund, right, any mutual funds. The placement from the sponsor of the mutual fund is almost zero, right, in any of the schemes that you invest in. But we invest in the mutual fund because we know that the investment manager or the asset management company has the capability to run that business as the capability and the governance framework to run that business well in governance in the right way and there is an oversight of regulator on the investment manager, which is the AMC.
So if they are doing anything wrong, there will be immediate action from the regulator, right? That’s the philosophy because of its mutual fund industry work, right? You are a — there is an AMC which invests for the mutual fund, right? And the mutual fund industry today has over INR30 lakh crores of assets, right? But out of INR30 lakh crore, how much is the mutual fund themselves or the AMC’s own, it would not be 1% also, right? So it is similar to that. The InvITs are the fund — the investment manager is the AMC asset management company and why do InvITs or other asset management company run the business because it is a knowledge-based business where you have the knowledge of investment management business running the business.
So it is entirely ran by professionals who — and the independent boards under the strict governance of our governance framework of SEBI. So there is — there are incentives of doing right things. So we earn more fee if we keep doing the right things and grow and reputation. And if we do wrong things, then we get fired, right, because from finance, unit holders can change the investment manager. So there is adequate incentive and disincentives in this model to work for.
And to answer your earlier question the same way I answered earlier, KKR was not the sponsor, KKR’s fund was the sponsor, in which KKR was not the majority investor. Other investors were invested in the fund, right? So like KKR owned investment manager is managing InvIT KKR also managed other global funds who were the sponsor and those are the funds you have sold, not KKR balance sheet. KKR balance sheet remains invested in the manager and therefore, the business has not changed, but changed and therefore, I don’t see any worry about governments or conflict of interest just because the stake has reduced from the fund. I said earlier also KKR fund owned 23% out of that fund, KKR was not a material investor in the fund itself, right? So it is a global business which is ran on the governance and the trust and skill of asset management and that’s what drives the business.
Sachin Jog
So thank you for the reply. But is KKR going to make more now through fees as an investment manager than through the DPUs that you pay-out. And in that context, having two members of KKR on the Board, that is really the point in terms of corporate governance.
Harsh Shah
No, I think it’s a very good thing. See, if KKR wants to change the fees of investment manager than before, they were charging the same fees before that and the same fees now. If they want to change, we’ll have to come for unitholder voting, right? It’s not that KKR can decide how much fees they want to charge. Second, I would say that KKR presence on the Board of IIML is a great positive for IndiGrid because KKR is not presenting over here the presence to make more money out of. KKR Board members are there as global experts on money management and ensuring that the governance framework is implemented, right, as they will do for other trillions of dollars they manage, right? Sorry, billions of dollars.
They have overall globally $300 billion of money that KKR manages, right? And if is INR3 billion, it’s 1% of the overall global AUM. So KKR expertise is a great help to IndieGrid and investment manager. And I would say it is taken positively by institutional investor, retail investors, credit rating agencies, debt investors, everyone. So I would rather say it’s a great positive. And the amount of fee that we earn is anyways very small, right? So I don’t think that fees are public, but I don’t think that’s sufficient for me to really make people change their standard. There is a much bigger speak of reputation in global business for KKI to manage.
Sachin Jog
Thank you. So is there any other listed or unlisted that has that kind of a structure where you know the percentage — percentage holding in the Invit as such or a REIT and total management 100% holding in the IM are you aware of that? Because I have not seen it in any other. Are we unique in that sense?
Harsh Shah
No, I don’t know, honestly, I have to study, but honestly, every is different, right? We have a track-record of seven years, eight years now. No other also has a track-record of eight years now. Maybe one has, other than us, but so I don’t think they are comparable, right? Because eventually one got to look at not just the shareholding, the track-record, the business delivery, performance, all of it put together. But again, having said so, I have not studied it. So difficult for me to answer what other in the chart.
Sachin Jog
Whatever — whatever I did try to find out as the needed investor best can, I honestly, at least in the listed environment, did not find any such structure and that is why this KKR stake falling was a bit of a concern. But I…
Harsh Shah
But tell why do we have to — why do we have to compare percentage of shareholding in different InvITs? How is it relevant?
Sachin Jog
No, no, that is the shareholding of the investment manager versus the shareholders.
Harsh Shah
I understand, but I understand, but how is it relevant?
Sachin Jog
It is skin in the game.
Harsh Shah
Skin in the game is not important over here, but once you have delivered a seven, eight-year performance and especially if you talk about skin in the game, therefore, it’s important to understand that there are different unitholders. If, who is the current sponsor was unitholder of IndieGrade, itself is not KKR. Behind Esoteric, there were other LPs, which are not KKR. So by that logic, even six months ago KKR was not invested here, they are not investors today, right? It’s their fund, which is the investor. So you got to understand that level of detail to understand the skin in the game. Just looking at percentages superficiary will not give you the full picture.
Sachin Jog
So as a retail investor, I am hopefully getting that assurance from the management that there is nothing to worry in this 1%…
Harsh Shah
[Indecipherable]
Sachin Jog
Okay. Okay. So again, the next question is, why are we holding such a large reserves of no payout? It is close to over INR6 now. So why is it that we are holding such a large reserve?
Harsh Shah
Okay. No, I think a good — very good question was. I think, see, our business, as I said, is of conservatism, predictability our principle is that come what may, we have to meet our predictions and predictability, predictable distribution. So INR6 is 1.5 quarter worth of distribution, right? So we — just four years ago in COVID in-quarter one of March ’20 — financial year ’21, there was zero cash flows, right, because nobody went to office, but still paid the distribution. How do you think we paid the distribution, right, because we saved the distribution from earlier distribution and kept the cushion of anything going wrong in the business up or down that can happen in the business, we should have ability to meet our obligations to our unitholders.
And that’s very simple, right? We want to keep a quarter, quarter and a half of distribution. The world is volatile. Our capital markets are volatile. We have seen COVID, a variety of things can happen. So having a 1.5 quarter of distribution is in my mind the prudent practice and the Board’s mind is prudent practice. So that’s where we are continuing with it, honestly, right? We don’t want to shock. We want to be able to deliver to you and the other unit holders in the most volatile scenarios also.
Sachin Jog
Okay. So I think in some previous calls, you had mentioned very clearly that 1/4 DPO was something that you would want to maintain. So they are INR2 extra on that. So can we expect maybe a payout extra in the next quarter?
Harsh Shah
No, we do not believe in bonus payouts. We believe in predictable payouts and guidance on that. So we don’t usually do bonus payout because it does not help anyone. Second is, there is a little bit of additional NDCF that we have gathered because this year’s collection has been more than what we expect, okay? More than 100% actually in nine months, which is rare. But one got to be careful that when you receive more than 100%, that means in the next quarter or next year, we’ll receive less than 100%, right? So the INR2 will be used over there then, right, because [Foreign Speech] So you’ve got to be ready for those quarter-on-quarter movements. So we don’t think that this is a long-term strategy that we will have one and a half quarter, two-quarter, 3/4 distribution.
But on the other hand, we have — our job is to ensure balancing risk versus predictability. So we always go for predictability. And if at all, we are increasing the distribution, we increase the distribution for entire year and that we usually do in the quarter-four of the year.
Sachin Jog
Okay. So with such a strong reserve, that means can we then safely assume that the 3% to 6% incremental DPU, we can expect it in the next year.
Harsh Shah
That has to be your assumption, sir. We cannot comment on that till quarter-four results.
Sachin Jog
Because we are holding a large reserves of DPU and not and predictability. So if it is predictability, then logically we can expect that, right? As a…
Harsh Shah
It is your assumption and expectation. As management we cannot commit on the predict on future payouts right.
Sachin Jog
Thank you so much for being so patient with the questions.
Harsh Shah
Thank you.
Operator
Thank you. We’ll take our last question from the line of Sarvesh Gupta from Maximal Capital. Please go-ahead.
Sarvesh Gupta
Hi, Harsh. Thanks for giving the opportunity.
Operator
Sarvesh, can you use your handset mode, please? Your voice is not very clear.
Sarvesh Gupta
Yeah, hello. Are you able to hear me?
Operator
Yes.
Harsh Shah
Yeah.
Sarvesh Gupta
Yeah, yeah. So just one question. So now I think we are allowed to go up to 10% on the under-construction assets. So currently, I see that AUM is very small, but now you are beginning to get into all these newer things like energate grid, etc. So how do you envisage? This is something unlike acquisition is a bit more under your control. So given the market opportunities, how do you envisage this percentage going up.
Harsh Shah
See, it again depends on how much bids we win. But as I said, to, we will contribute $100 million, which is around INR850 crores of capital in next three years. Whether it gets contributed, whether it’s INR600, INR400 or 850 depends on how much we win, right? That’s not in our hands. But — but yeah, the commitment today is $100 million, which is around INR850 crores.
Sarvesh Gupta
No, apart from given that you might be having some sense of the opportunities in this space. Do we expect this to reach to the maximum possible limit, which is 10%?
Harsh Shah
Yeah. So we are doing all incremental development at innergrade. So whatever we will do, we will do integrate — in, that’s our preference. So that we’ll start. So we are not doing half of it here and half of it in integrate separately, right? So our goal is to do all of it at integrate at one-go. So at this point in time, our commitment is to cap at $100 million depending on how much that get used and build it, we will see the next tranche.
Sarvesh Gupta
Okay. Okay. And there are three partners. So I think the BII, they are contributing the capital. Techno will do EPC and then gain the EPC margin and you will take all these assets under their book — under your book after the assets are operationalized. Is that the right?
Harsh Shah
That’s correct. But Techno is only for two projects, which is and. Techno is not the only contractor at in. They can be for future projects, but the current investor and unit and equity holder for only two projects with and Dulley.
Sarvesh Gupta
Okay. Okay, understood. And what is there for BIA in Norfund because now these assets will also get released after a while to you to integrate. So what are they for apart from the funding for the under-construction assets, what are the gaining out of this?
Harsh Shah
They are — they are — they are financial and multilateral institution. Their investment philosophy is to invest in debt, right? So they are investing in these projects to develop capacity in India. They will make returns projects too. So they are a financial investor. So that’s what they are doing here.
Sarvesh Gupta
Okay. And finally, on this under-construction assets, so when you calculate your NAV, since they are not contributing anything, but there will be a drag of debt against these investments. So does it negatively impact your NAV you know, being in the under-construction assets?
Harsh Shah
They do not because we do the NAV or the valuation of under-construction project at-cost when we are investing that. So it is canceling the debt invested in that. It is not a drag.
Sarvesh Gupta
Okay. Okay. Understood. Understood. Thank you very much. Congratulations for the coming quarters.
Harsh Shah
Thank you.
Operator
Thank you. As there are no further questions, I now hand the conference over to management for closing comments. Over to you. Any closing comments, sir?
Harsh Shah
Give me a minute.
Operator
Sure.
Harsh Shah
Yeah, so thank you very much for all the investors to join the call today. Thank you for all the support for owning units as well as understanding our business well and asking the questions every quarter to understand the business model even better. So we welcome these questions. We believe our role is to explain our business to our unitholders and others. So these are the calls in which we have the opportunity to talk and describe our business. So we really look-forward to this every quarter. And I think we believe this is a very exciting time to be in this business and hope that will — hope as well as we’ll work towards contributing the predictable growth that we have been able to deliver over the last eight years and looking-forward for the next quarterly call with all of you. Thank you.
Operator
Thank you. On behalf of Nuvama Institutional Equities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.