IRB InvIT Fund (BSE: 540526) Q4 2025 Earnings Call dated May. 09, 2025
Corporate Participants:
Rushabh Gandhi — Chief Financial Officer
Unidentified Speaker
Swapna Vengurlekar — Company Secretary & Compliance Officer
Analysts:
Dhvaneet Savla — Analyst
Sai Prashanthi Duvvuri — Analyst
Unidentified Participant
Rajiv Malhotra — Analyst
Ashwini Agarwal — Analyst
Ram Khanna Dass — Analyst
Presentation:
Operator
Good morning, ladies and gentlemen, and welcome to the IRB InvIT call hosted by the company for discussing the financial results for the quarter and year ended March 31, 2025. We have with us on the call today, Mr. Jitender K. Chauhan; Mr. Anil Yadav; Mr. Rushabh Gandhi; and Ms. Swapna Arya from IRB InvIT team. As a reminder, all participant lines will be in a listen-only mode and after the opening remarks by the management, there will be a question-and-answer session. Please note that the duration of the call would be 45 minutes, and any queries left unanswered after the call can be subsequently mailed to the management for adequate response and resolution. Please note that this conference is being recorded. I now request Mr. Gandhi to give an overview of the significant development during the quarter. Thank you and over to you, sir.
Rushabh Gandhi — Chief Financial Officer
Thank you. Good morning to all. I would like to welcome all the investors and the analysts on the call. Hope you have reviewed our detailed numbers as well as the presentation. Coming toll revenue performance: The general elections in India during the first half of FY 2024-25 initially impacted our performance. However, as the elections concluded, we witnessed a significant surge in activity during the second half, signaling a strong rebound. This uptick suggests that the temporary slowdown was largely election-related, and the underlying demand and momentum are robust. On an annual basis, we have witnessed revenue growth of 5% for the financial year. Financial year 24 was a leap year, resulting in an extra day. Conversely, fourth quarter of current financial year has one less day, which will also impact the growth comparison.
The sustained momentum in month of March 2025 is highly encouraging and underscores the robust economic activity across our corridors. On a portfolio basis, we have witnessed 10% year-on-year growth for April 2025. This performance was primarily driven by a 16% increase in the Tumkur Chitradurga project and a 10% growth in the Jaipur Deoli project. Coming to the tariff revision for the financial year 2025-26, for the financial year we have received a tariff revision of approximately 3.5% across four of our projects namely, the Talegaon-Amravati Project, Tumkur-Chitradurga Project, Jaipur-Deoli Project, and Amritsar-Pathankot Project.
On distribution for the quarter ending March 31, 2025, we are distributing INR2.00 per unit, in line with our past distribution trends. This includes INR1.69 per unit as interest INR0.26 per unit as dividend INR0.05 per unit as return of capital With this, the cumulative distribution for the financial year 2024-25 stands at INR8.00 per unit. This distribution comprises of INR4.98 per unit as interest INR2.00 per unit as return of capital INR1.02 per unit as dividend. Till date, since the Trust’s IPO way back in year 2018, its cumulative distribution has reached INR4,316 Crs which is INR74.35 per unit, i.e., 73% of the aggregate fund raised.
On the acquisition fee, the net debt to value of assets of the Trust is at 0.3:1 providing sufficient debt capacity for acquiring new assets. On the acquisition front, we are in receipt of the revised NBO from IRB Infrastructure Trust offering 3 BOT assets. We are currently evaluating the opportunity received from IRB Infrastructure Trust. With our MVR asset’s concession life ending in financial year 2026-27 and its contribution close to Rs. 110 crores i.e. 16% of the overall NDCF generation for FY25, the addition of new assets will facilitate a smooth transition, ensuring operational continuity, increasing the weighted average life of the assets, and minimizing potential disruptions.
Now I will take you through the financial performance for the year. The total consolidated income for the year ended FY25 stood at INR1,110 crores as compared to INR1,086 crores for the previous financial year. The consolidated toll revenues for the current year increased to INR945 crores as against INR915 crores for the previous financial year. EBITDA for the current financial year stood at INR916 crores as against INR886 crores for the previous financial year.
Interest costs which includes interest on premium deferment for the current financial year stood at INR294 crores as against INR272 crores for the previous financial year. Depreciation including amortization for the year ended FY25 stood at INR254 crores as against INR230 crores for the previous financial year. The profit after tax for the year ended FY25 stood at INR356 crores as against INR373 crores for the previous financial year. Now I will request the moderator to open the session for Q&A.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] We have a first question from the line of Dhvaneet Savla from Savla Family. Please go ahead.
Dhvaneet Savla
Hi, sir. Thank you for the presentation, my first question is with regards to the DPU, can you tell us what will be the impact of these new projects, from the Private InvIT, if we take, what kind of DPU can we look at going forward? And also, on the same front, this year, I think, we have had a significant part of the DPU coming from capital reduction. So, should it be a cause of worry or something? or is it a normal course of business? And my second question is with regards to the most recent activity which is happening near the border. I understand that this might adversely impact at least Pathankot Highway. So what are the built-in provisions between our agreement? And does it cover events such as wars or combats?
Unidentified Speaker
You have anything else?
Dhvaneet Savla
No, no, these are my questions.
Unidentified Speaker
Thank you. With respect to asset addition, our endeavor is to make the InvIT a perpetual vehicle. Adding assets will increase the InvIT’s life from 14 years to approximately 17 years, making it more attractive to long-term investors like insurance companies and pension funds, which typically consider InvITs with a life of over 15 years. Regarding payout, increasing the life from 14 to 17 years will have some impact. However, our aim is to maintain a steady payout. As this is currently a non-binding offer, we’re evaluating the opportunity. Once we approach unit holders for approval, we’ll have clarity on funding mix, pricing, and timelines. At that point, we’ll share revised payout details. Rest assured, there won’t be any significant reduction in payouts. Coming to your second question regarding capital reduction, as Rushabh mentioned in the opening remarks, the M.V.R. asset has just over a year of life left. As the project nears its end, debt repayment from the SPV to the Trust typically occurs, and the Trust distributes this to unit holders. You’ve likely seen this pattern with projects like Bharuch Surat and Surat Dahisar as they concluded their concession life. Regarding the Pathankot Amritsar project, our concession agreement includes provisions for unforeseen events, such as acts of war. I can assure you that, currently, activities are proceeding normally, with no disruptions to traffic flow on this or any other project.
Dhvaneet Savla
Sir, just a small follow-up. Sir, I just wanted to know, does the concession agreements cover damages caused to the highway due to the war? So for
Example, currently, the situation at the border is complex. So in case there is any damage caused to the highway, does the concession agreement also covers that cost? Or would that come out of the Trust’s pockets or something?
Unidentified Speaker
I can assure you that there is clear cut provision in the concession agreement and that will be covered as the concession agreement and the amount of loss less insurance coverage, we have insurance also. What ever we get from the insurance that will reduce from the compensation. The balance will get compensated. So, there are adequate provisions in concession area.
Dhvaneet Savla
Thank you very much sir and all the best for your coming quarters.
Unidentified Speaker
Thank you.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Prashanthi from Wealth First. Please go ahead.
Sai Prashanthi Duvvuri
Yes. We are from Wealth First, and the basic question is, in the presentation, you are showing that there is a revenue CAGR growth of 13%, which is not being registered in the distribution, number one. Number two, on the INR85 billion new acquisition, what we are trying to do? INR38 billion shown as a loan. And then what is your plan for the balance INR47 billion? And the third one is borrowing is proposed at 8.9% and whereas the market rate for borrowing for all the AAA rating entities, market borrowing rate is at around 7.3%. So, what is the necessity of actually going for the bank loan at 8.9%?
Rushabh Gandhi
So with regard to the — coming to the cost of debt, so the current cost of debt is linked to the MCLR rate. So we have observed two bank rate cuts. So way forward, the MCL rate should also go down and that benefit will be given available to the trust. And in October, a couple of years back, we had seen the lowest interest-rate of INR7.25 also. And with regard to the INR85 billion this opportunity, so that is the total enterprise value of those three assets and the net-debt of this INR336 billion and the differential would be the equity value. This is as per the valuation report published by them and KPMG is the valuer.
Operator
So we have the participant disconnected. We will move on to the next participant. The next question is from the line of Saurav, an individual investor. Please go ahead
Unidentified Participant
Hello, am I audible?
Rushabh Gandhi
Yes. Yeah.
Unidentified Participant
Okay. So I have a couple of questions. So, this is the third year where the DPU is constant at INR8.00 per unit. I understand endeavor from management that they want to keep it steady. But by when we can see any improvement in DPU? That’s one. Second is, like, we have now got a revised non-binding agreement, right, from our sponsor. What are the time lines to close this transaction if we go ahead? Because as I understood, the initial was like six to nine months. We looking at equity dilution to raise amount of money to fund this transaction? So those are my two questions.
Unidentified Speaker
So I think, Saurav, with respect to your first question that earlier with higher assets now opportunity is for the asset and the timeline. So I think timeline what we are looking at from close to two to three months from now and we are planning to close that transaction within 15 months now. And it also makes sense because the reduced size will also help the public invent to close the transaction quickly. So I think that has gone the timeline. The balance question will be taken — Rushabh will take care.
Rushabh Gandhi
Is it the second question?
Unidentified Participant
Yeah. So the second — actually the first question was that the third year — this is the third year where the DPU is constant and when we can see improvement? That was the first question. And the second part of the second question was like, are we looking at any equity dilution for closing this transaction for those three projects.
Rushabh Gandhi
Yeah. So basically, as we are acquiring these assets and there will be equity dilution because the — the debt on this project, as you have, I think mentioned that INR36 billion and there will be a INR49 to INR50 billion of the equity payout. So that will be funded in the — I think closer to in the debt and equity and largely it will be funded by the equity. But then there will be equity dilution. And with respect to the payout of — as you are aware that the — so we have seen improvement in the total culture, but simultaneously, there is increase in the payout of the liability of Tumkur Chitradurga. There is a premium payment in Tumkur Chitradurga, there also we have increased liabilities slightly over the period of time as per the agreement. And now from — after next year-after FY ’26, M.V.R. project’s life will be expiring. So we want to ensure that the payout will not drop before increasing the payout. So I think considering these things, we have kept the payout of rupee rate. And anyway, we are paying more than 95% of the cash generated as the — and 95% of the cash generated as a payout to the unit holder.
Unidentified Participant
So when we can see improvement, right? I mean, is there any timelines in management’s mind that you will be seeing improvement in DPU?
Rushabh Gandhi
I think that we will be able to share post the acquisition how the scenario will pan-out that we’ll be sharing once the asset acquisition plan.
Unidentified Participant
Okay. Sorry, one follow-up question small follow-up for a second. So you said that it would be an equity dilution. The instrument for this, have the management finalized that like whether it will be rights issue or qualified placement or that will be decided closer to the transaction.
Rushabh Gandhi
That will be decided closer to the transaction.
Unidentified Participant
Okay, got it. Thank you very much.
Operator
Thank you. We have our next question from the line of Vibhu Sharma, an Individual Investor. Please go-ahead.
Unidentified Participant
Hello. Yeah, am I audible?
Operator
Yes. Yes, you are audible. Please go-ahead.
Unidentified Participant
Hi, sir. Okay. Thank you for the opportunity. So, my question was in regard to the presentation that was given out yesterday where the number of assets that the Private InvIT is offering to the Public InvIT has reduced from 5 to 3. So I don’t know if it is possible for you to divulge more information on this. Why have the number of assets reduced? And my second part would be, is the management looking out for assets outside of the sponsored assets that might be available for the Public InvIT to be purchased by them?
Rushabh Gandhi
Sure. So, with regard to the offer from Private InvIT, so initially in the month of November, they offered 5 assets and recognizing the opportunities, they revised the offer from 5 to 3. So now we have received a revised non-binding offer from them for 3 assets. This revised offer will benefit us in two key ways. One, it has reduced the overall size. The enterprise value for 5 assets was approx. INR15,000 crores. Now it has been reduced to INR8,500 crores. And it is similar to our current enterprise value of the Public InvIT, and the other benefit would be the increase in life.
So, the Public InvIT’s current weighted average life is close to 14 years and M.V.R. is going end in a couple of years. The 3 assets under the non-binding offers have a weighted average life exceeding 20 years. So it will increase the overall life. If we consider the acquired assets in our portfolio, then the post acquisition’s weighted average life would be close to 17 years. And this acquisition will also fulfill the investment criteria of the minimum assets life of 15 years for certain classes of investors, like pension fund, insurance companies. As an Investment Manager, our goals are to align with this revision. Asset addition to the InvIT will make it perpetual as our aim is to generate sustainable payout, coupled with long-term growth, ensuring stability and returns over an extended period. And the second part will be the steady payout. So our aim is to expand the InvIT through strategic asset addition, while ensuring a steady payout to unitholders, providing them consistent and long-term value. This revised offer supports our objective, creating a win-win situation for all the stakeholders.
Unidentified Speaker
Now again, just to add, the — though the offer has reduced from 5 to 3, but I think those assets will be — we will have — still have a — whenever the private able decides to sell, we will have their first offer us and over gradual period of time, we are expecting total nine assets over the period of 1.5 years to two years and that up opportunity for us more opportunity from the sponsor side. With respect to the third-party assets, definitely time-to-time we are evaluating the third-party asset. And in fact more than 30%, 35% 35 assets are already evaluated by the management of the IM. And going-forward also, we will evaluate those assets. But just to share with you now most of the assets in the market or wherever the opportunities were there, those were already acquired by the first. In the secondary market, the number of transactions has gone down over the period of last one year. But whenever there is opportunity, then definitely we will evaluate the third-party asset.
Unidentified Participant
Okay. So just one follow-up. I am sure that other reasons would not be entirely available to the shareholders of the Public InvIT. In the earlier presentation it says that the portfolio average residual life will increase from 14 years to 19 years. And now in the newer presentation, with the decreased assets, it says that it will increase from 14 to 17 years. So apart from the decreased cost of the assets that we would be acquiring, if we acquire those assets, the number of weighted average life is also going down. And apart from that, there would not be too much to look into this is what you are saying.
Unidentified Speaker
Yes, I think anyway those assets in the subsequent period will be available for again for the evaluation. Anyway, those are — still will be the opportunity in near-future. So then definitely — whenever those will get acquired, then further will improve the life of the InvIT. Our aim is, as Rishabh was talking about with the consistent asset addition, our aim is to make InvIT as a perpetual.
Unidentified Participant
Okay. Thank you. I’ll follow-up if I have any other questions. Thank you.
Operator
Thank you. We have a follow-up question from the line of Prashanti from Wealth First. Please go-ahead.
Sai Prashanthi Duvvuri
Yeah. Basically we had asked question but the line got cut. I just wanted to interest upon this borrowing at 8%, 9% from the bank when the TPA institutions are able to raise the rates are.
Unidentified Speaker
Yeah. So I think we have to understand one aspect. I think last over the period of 1, 1.5 years, the MCLR rate has got high. And our rate were linked with the MCLR and it was the floating-rate. Though it was actually as this advantage to us being the floating-rate, but now the interest-rate is coming down, that will act as an advantage to the trust. So that the management has chosen that they want a protein rate. And since the MCLR itself is close to 8.5% or so, 30 basis 40 basis-point spread, it takes it to 8.9%. But from 8.9%, 50 basis-point reduction is already done by the RBI. Whenever the next rate reduction net rate revision will be there, then automatic, we will benefit. And whenever the RBI will be revising further interest-rate downwards, that will again benefit to the company.
Sai Prashanthi Duvvuri
Okay. One follow-on question. On the INR47 billion, what we have shown as a deficit for the new asset acquisition. We are looking at actually raising the equity, which means basically issuing new units, if you issue the units under the current market price, which is to discount to the NAV, will it not affect the entire organization assets? While we appreciate that you are trying to do the acquisition for elongating the maturity and then making it perpetual. So what is the impact on that by selling the units at a discount to the NAV?
Rushabh Gandhi
Sir, just on the first part, The enterprise value of the Private InvIT assets is INR85 billion, with a net debt of INR36 billion. The valuation was conducted by KPMG. The acquisition’s debt and equity structure will depend on our evaluation and discussions with potential investors, determining the optimal mix for the Public InvIT.
Sai Prashanthi Duvvuri
I know in the presentation; you have mentioned that INR38 billion is supposed to be the debt out of the INR85 billion. I’m asking about that what is mentioned in the presentation.
Rushabh Gandhi
Yeah. So basically what we are seeing of the target assets, the current debt available to those target assets is INR30 billion.
Unidentified Speaker
So this is the existing — existing debt on the project. This is not — we are saying that post-acquisition, the debt will be INR38 billion. This is the existing asset on existing debt on the asset and roughly INR48 billion to INR50 billion is the acquisition value and that will get funded further in the ratio of the debt and equity.
Sai Prashanthi Duvvuri
So even then, because our feeling is not going to permit the entire amount to be raised as a debt, there will be definitely — I assume that there will be the equity dilution, right?
Unidentified Speaker
Yes, that we have confirmed that there will be equity dilution because entire thing cannot be raised through debt and equity dilution will be predominantly decided based on the discussion with the investors and there are some stable driven formula on which the price gets determined.
Sai Prashanthi Duvvuri
I know that’s what I’m asking. Basically, if we are we are at a steep discount, it is going to be around the market price, then there will be too much of dissentment for the existing units on the side.
Unidentified Speaker
I think existing investors will always get the benefit of the expanded life of the asset. And definitely, if you look at elements which are basically making the asset addition, there — we have seen there is a capital appreciation on those InvIT side as against the InvIT, which is not making the asset addition, whether it’s the NHI or and even if you look at the power grid, which is not adding the asset, there have been decline in the prices. And in fact was why to discuss the other, let’s discuss the case of our inventory itself. We have added one asset and that time we have seen a significant improvement in the prices. We believe that asset addition will increase the life and overall payout to the unit holder. And also there will — there is expected capital depreciation with the asset addition.
Sai Prashanthi Duvvuri
So I fully agree with you that I think we are all doing the additions because we want to increase the BPU. What I’m saying is at the current discounted prices, if a new investor comes, we get a major advantage compared to the existing investors, we are holding at INR102 at the unit price. I’m asking about that.
Unidentified Speaker
Yes, sir, the existing investor always had opportunity. They feel that this price is at various account, they have opportunity to add the unit.
Sai Prashanthi Duvvuri
That is actually in case you have more capacity and talking about the — I mean, basically, you know what I’m asking about it, right? By selling a units at a discounted value, who is going to get benefited. That’s what I’m trying to ask you if you have any insight in that, you can just be.
Rushabh Gandhi
What we believe it will be a win-win situation for both the investors, even the current investor and the prosperty investor. And ultimately, this will be decided by the unitholders or will be recommended by the Board and ultimately approved by the unitholders.
Sai Prashanthi Duvvuri
So basically, our interest is also aligned to basically maximize the value for issuance of the new InvIT, but that is subject to — subject to basically the new investor which will be coming in. They will also do a diligence and they will also basically they have to agree on that particular price okay.
Unidentified Speaker
One thing to request is, first let it be offered to the existing unit holders in case actually they want to it, they enhance the equity they are trying to do so that they would be to it by the — maybe request you to rejoin the queue. Think we have some suggestions, we will try to implement that.
Sai Prashanthi Duvvuri
Okay. Thank you.
Unidentified Speaker
Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. We have our next question from the line of Rajiv Malhotra from Company. Please go-ahead.
Rajiv Malhotra
Good morning, gentlemen. I think nice set of results. May I address one question as politely as I can. You have seen trying to tell us that due to various reasons, the unit price needs to go up and has not gone up or gone down because of addition. I think the major point is you have to be more transparent to the unit holders. Exactly 4.5 months ago, you got an offer from the private, which is not too far off from the IRB management. And now it has gone to three. The question is, did you say no? I mean that’s — what I’m trying to say is that did they withdraw or you said no because it could not be financed.
Unidentified Speaker
I think that is well-covered by — that well-covered by the reply given by that considering the opportunity and since as you rightly mentioned, there is almost lapse of 5, 5.5 months. And accordingly, they have revised the timeline. And if you have — if you recollect, the timeline given by the private was six months only. And anyway the offer would have been expired I think middle of the May or towards the end-of-the May. So I think it’s a win-win kind of situation for the Board. And definitely, they have not said that they want to offer these assets to assets in third-party. I think in future, those assets will be offered to the public.
Rajiv Malhotra
So your answer is well appreciated, sir, as a holders of these units for over half a decade and with other similar holders of this unit. The problem of the price going down is not only a new asset, et-cetera, everybody is just looking at the IRR, right? Okay. And we have been trying to reach-out earlier also that our model, computer modeling, our Excel modeling showed that taking the five assets was almost near to impossible. Taking the three is also all right. And I think you have the same responsibility to IRB Infra and Mr family also.
Unidentified Speaker
I think that I would like to clarify the private managed by the IRB and there are two other prominent investors which includes the, which is a US-listed company and also followed by the. They have on the Board of the private. It’s not that IRB is solely deciding the things. And even on the Board of the IRB, it’s not about the particular name which you have mentioned that things are decided by the particular person as. I think there also the representation from Perovial is equal representation of the Perovial. And anyway on the public InvIT side, it will be decided by the majority of the minority. IRB will not be on this transaction. We will key to the jurisprudence of the unit holder whether they warn that this invIT should die in next 13, 13.5 years or they want this invIT to grow, it will be decided by only by the minority of the majority.
Rajiv Malhotra
Okay. So thank you for that. Lastly, the suggestion by a couple of the other investors was quite valid. Whenever you do make a decision, please be fair to tell us the process in-between and try to come up with the rights issue. That is the only way this unit price will increase over-time, otherwise, we see what is happening. So I mean that’s my humble suggestion to you. Please try to make this as a rights issue. When you give it as a rights issue, the price, discount or premium to the market price plays very little role into it.
Unidentified Speaker
Thanks, definitely your suggestion is well taken, but I think there is conflicting suggestion coming from the unitholder. One unitholder wants that it should be issued at a premium. And if I am — if we are going to issue — give the rights option, then rise typically what we have seen in the market, it’s ideally at maximum, it can be a value it is trading or it can be a discount to the price. But definitely, we will take the input from all the unit holder. Anyway we are acting on the any capacity. And whatever will be decided by the minority unit holder, we will be taking call on that business.
Rajiv Malhotra
Okay. Thank you. Hope you the best, sir.
Unidentified Speaker
Thank you.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Ashwini Agarwal from Advisors LLP. Please go-ahead.
Ashwini Agarwal
Hi, good morning. Thank you for the opportunity. One question, the three assets that have been offered to you based on the traffic projections and the underlying revenues. What kind of project IRRs are you looking at?
Unidentified Speaker
I think the IRR, which will translate to the public will be 13.5% to 14%.
Ashwini Agarwal
And 13.5% to 14% would be on an unlevered basis. So you would lever it up for — because.
Unidentified Speaker
It will be on the levered basis. On levered basis, it will be around INR12%.
Ashwini Agarwal
Okay. So 12.5% on a — on an unlevered basis. And okay. And these are all revenue-earning projects. So there is no project which is — which has still to be completed where work is to be completed or anything like that.
Unidentified Speaker
Yes, yes. Yes.
Ashwini Agarwal
And if I may ask, I mean, obviously, there has been a lot of discussion around this, and I support that. But see, rights issue is nondilutive in nature. So the pricing is immaterial, whether you price a rights issue at INR10 or at INR100, it doesn’t make any difference and if some shareholders don’t want to take up the rights, a third-party investor can choose to pick up those rights. So rather than operate on a preferential basis to a third party, my strong recommendation would be to consider a rights issue first. And the rejects from the rights can be offered to a third party. So that way shareholders at least have the opportunity to participate. Whether they choose to participate or not is up to each individual investors. So that’s just a comment.
The second thing I wanted to ask you is that the NAV dropped from 98-odd to 95-odd between September and March. I’m assuming this is just kind of a time catch-up because one of your projects is coming close to its end of life. Would that be correct? Or is there some other element in it?
Rushabh Gandhi
Yeah, definitely, you’re right. So one of the reasons you said and the main reason with regard to fall in MVR EV and the other part is the tariff revision. So earlier it was estimated the tariff revision of around 4.5% to 5%, but we have received the tariff revision of close to 3.5%. So that these two impacts have replaced the NAV.
Ashwini Agarwal
So the tariff revision, what is the basis of that? You have to apply to NHAI each year and then the NHAI agrees to a certain tariff revision or how does it work?
Rushabh Gandhi
That is linked to 3% of that is fixed and balance 40% is linked to WPI of the December month for previous year. So basically that is also calculation and we have to apply to NHA in the automated process. If we don’t get the approval from NHA, we can start implementing from 1st of April.
Ashwini Agarwal
So a low WPI would basically result in lower incremental tariffs for you. So in the NAV calculation, what kind of WPI is being assumed by the valuation committee or valuation agency?
Rushabh Gandhi
So for — if you look at the historical WPI or historical tariff revision, for the past five years or if you take seven years, the average WPI was close to 5%, the tariff revision. And for future period, the valuer has considered close to 4.5 to 4.75%.
Unidentified Speaker
And sir, just to mention that WPI also the cost of discounting also adds in-line with the WPI. So the moment there will be a — for a consistent period of time, there will be lower WPI that automatically cost of discounting will also fall. But the rate — the WPI is lower for this period of time and it was elevated in the earlier period of time Rushabh has explained. So I think it’s the largest period of time WPI remains lower and if there is a rate reduction by the RBI, then automatically will also come down and cost of discounting considered by the valuer will also come down. So ideally, it should go hand-in-hand, but for this quarter, we have some minor impact. In fact, just to share with you, there will be a some basis-point reduction in the cost of discounting also because of the GC coming down. But it was very minuscule as of now, but ideally it should go hand-in-hand.
Ashwini Agarwal
Okay. Sir, one last question from me is that the roughly INR4,000 INR4,500 crore INR4700 crores, whatever is the net investment required from the public invest that be a mix of debt and equity. Any broad indication of how much debt are you proposing to take because you have a lot of headroom given that assets to — debt to assets is only at 0.3 and you can go up to-1 times?
Unidentified Speaker
Yes, sir. So you are absolutely correct, sir. Our intention is to go debt to the extent of — as between 40% to 45% to 49% and we will try to keep as closer to one is to one debt-equity terms.
Ashwini Agarwal
Okay. Thank you so much.
Unidentified Speaker
Thank you.
Operator
Thank you. [Operator Instructions] We have our next question from the line of R.D. Khanna from Swadeshi Raiment Private Limited. Please go ahead.
Ram Khanna Dass
Thank you, sir. My question is with regard to the repayments of capital. You are repaying capital at the rate of INR2 per year. With this life of 14 years, the reduction of capital will be INR28 rupees, whereas our investment today stands about at-the-market where, let us say, even INR60 rupees. How are we ensuring that the — after the payment of the interest, the capital which we will be holding will be repaid towards in-full or at a loss. This is my question.
Unidentified Speaker
If you look at the calculation of the IRR is on the presumption that you will get your entire capital back and IRR is calculated on that basis. When as we have offered this issuance to the public in 2018, that time the IRR — resultant IRR was around 11.65%. And considering that, that considers the INR102 payout to the unitholder and 11.65% of kind of IRR to the unitholder. But now the price has gone down, so then definitely the IRR would have been improved. But IRR factors to whatever the investment one is doing and post recovering your investment, the balance — the IRR is your return on the investment.
Ram Khanna Dass
That is an income which gets taxed. But this way, my capital, I will be losing having huge capital loss. You reduce interest. You pay me, return my capital. But how are you ensuring that unitholders capital will be safe? You will be suffering a huge loss. Our capital is lost.
Unidentified Speaker
Sir, you will not be suffering capital loss just to share.
Ram Khanna Dass
But it is very clear, you will be returning INR28 event, today market is INR55, I will suffer a loss of INR20. How do you like I compensate the capital loss.
Unidentified Speaker
Sir, how you are calculating?
Ram Khanna Dass
You reduce my interest you reduce my interest today onwards, but at least my capital should be protected.
Unidentified Speaker
Sir, it’s not the case. The numbers are calculated by you may not be appropriate.
Ram Khanna Dass
You please let me know my only criteria is I make that and actually lost income. But my capital should remain protected.
Unidentified Speaker
Sir, can you can you allow me to complete my sentence and if you have any further query, you can add-on that. So sir, if you look at we have so-far handed over only two projects and MVR is about to getting handed over. We are — as the projects are — towards verge of handing over, there is capital repayment. And this — the distribution is not determined by the company. There is SEBI regulation, which says that the form of distribution will be the same form of distribution, which SPV receives SPV pays to the InvIT and InvIT pays to the unit holder. So I’m not changing the form of distribution. What is getting generated, I’m paying to the unit holder. I don’t have any right to change the form of distribution. And as the assets will be — will be — now I have a core asset which has a longer period of life. And the moment those assets will also be coming towards the end-of-life, there will be also consistent repayment of the capital. And these things, whether it’s a form of interest, dividend or capital is not determined by the IM, it’s purely driven by the regulatory requirement.
Ram Khanna Dass
Right, sir. My only question is it may be regulated by SEBI, but at least when you are giving fair value, I am unnecessarily get paid. You may actually request SEBI that you need to tell the reason that people are losing their capital. And SEBI is so open. If you will point out already capital is not lost, they will certainly advise you.
Operator
Sorry to interrupt. Please request you to rejoin the queue.
Rushabh Gandhi
Distributed in three forms. One is interest, second is dividend and third is capital. So based on the book profit, if MVR is generating book profit, we distribute in the form of dividend, which is since the underlying SPV, the falling old tax regime that is exempt in the hands of. Second part is the interest. The cash has been charging interest to the SPV and if the SPV is generating profit — generating the cash-flow, that is being getting distributed in the form of interest. Suppose thereafter also there is some surplus available in the underlying SPV, then the third form available is the capital. And that is the principal repayment and that goes to unit holder in the form of written-off capital.
So in previous financial year, MVR was one aspect. In case of we had — we have generated positive cash-flow. That amount was paid to the trust in the form of interest even thereafter there was a surplus amount. So that surplus, we had to pay in the form of principal repayment. So currently, we are awaiting the NHA approval for refinancing of debt. So once we get the refinancing, the debt will also go at trust level. So thereafter, even that distribution, instead of written off, it will go in the form of interest. So towards the back-end of the concession of a particular SPV, the return of capital will trigger otherwise it will be in the form of interest-only.
Ram Khanna Dass
Finally, I have told you my problem. I should not lose my capital. You are the best person to decide. I may get less income. It is the route before you decide these procedures taken by you because we do have a capital opportunity.
Operator
Sorry to interrupt RD. We are post the time of the call. We’ll close the call now.
Ram Khanna Dass
Okay, then I will write to you. Thank you.
Operator
Thank you. Ladies and gentlemen, any queries left unanswered after the call can be subsequently mailed to the management for adequate response and resolution. And I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Swapna Vengurlekar
Thank you for joining on this call. We appreciate your participation. If you have any further questions, please feel free-to reach-out to us. Thank you once again and have a great weekend.
Operator
(Operator Closing Remarks)