Interise Trust's record is clean on its face: six years of unqualified audit opinions and no fraud or regulatory exceptions. Three things deserve attention: impairment losses recur across road-project SPVs and goodwill, loans to loss-making subsidiaries carry a 13.00% p.a. interest rate with repayment subject to sufficient SPV cashflows, and multiple SPVs are in active arbitration with NHAI and state authorities while the Trustee faces third-party suits exceeding USD 103 million.
Key findings
- Persistent impairment losses signal acquisition values are not supported by toll-road cash flows
Major- Consolidated goodwill impairment of ₹57.67 crore was recorded in FY2025 for IHPL, following ₹134.1 crore in FY2024. Standalone impairment on investments in subsidiaries was ₹105.91 crore in FY2025, ₹305.89 crore in FY2023, and ₹161.65 crore in FY2022. The Investment Manager assumed concession-period extensions for SPVs when estimating recoverable amounts, despite extensions being subject to authority approval and, for four SPVs, being under arbitration. - Multiple SPVs are in active arbitration with NHAI, and the Trustee faces third-party suits exceeding USD 103 million
Major- BPPTPL is in arbitration against NHAI over a demand for advancement of deferred premium of ₹360.51 crore plus interest and penalty, with the matter reserved for Award as of March 31, 2026. A suit in the Supreme Court of Mauritius seeks compensation of USD 103,699,976 from ITSL and others, adjourned to May 7, 2026. Consolidated contingent liabilities as at March 31, 2025 include NHAI claims of 1,395 crore for BPPTPL and 182.06 crore for KWTPL. - Operating cash flow consistently exceeds profit, but distributions rely on capital returns and post-period receipts
Minor- Consolidated CFO exceeded PAT every year from FY21 to FY26, with FY26 CFO of ₹1,867 crore against PAT of ₹42 crore. The Trust's distribution policy explicitly states that distributions to unitholders include repayment of capital, as they are based on Net Distributable Cash Flows under SEBI InvIT Regulations. FY26 NDCF computation included ₹143.27 crore of cash receipts from project SPVs received after March 31, 2026 to meet distribution requirements. - The Trust's economics are dominated by cost-plus fees to its own Investment Manager and Project Manager
Minor- The Investment Manager's fee is set at 110% of its costs, reducing to 105% if L&T IDPL ceases to hold 100% of the Investment Manager, a revision approved by unitholders in September 2022. The auditor has identified related-party transactions, specifically loans to investee SPVs, interest, and other transactions, as a Key Audit Matter in every year from FY2021 through FY2026 due to their quantum and percentage of the balance sheet and profit and loss. Loans to subsidiaries carry an interest rate of 13.00% p.a., with repayment subject to sufficient SPV cashflows. - The group operates through 18 subsidiaries with a layered holding structure after the original sponsor exited in FY24
Minor- As at FY26, the consolidated group comprised 18 subsidiaries, all listed in the auditor's report annexure. L&T Infrastructure Development Projects Limited, the original Sponsor, held 0.00% of units as at March 31, 2023, down from 6.05% as at March 31, 2022. The Sponsor was de-classified and disassociated effective April 15, 2024, and Interise Investment Manager Limited became a self-sponsored investment manager on that date. - The Trust and its Investment Manager received SEBI advisory and deficiency letters with an administrative warning in FY2024-25
Minor- In FY2024-25, the InvIT received letters from SEBI providing advisories and indicating a deficiency and an administrative warning, disclosed in Schedule 1 of the Secretarial Compliance Report. In FY2025-26, no action was taken or initiated against the InvIT in relation to any fine, warning letter, or debarment from SEBI. A SEBI Adjudicating Officer order dated February 3, 2021 directed Future Corporate Resources Ltd. ESOP Trust and FCRL Employee Welfare Trust to disgorge ₹2,75,68,650 for insider trading; an appeal remains before the Securities Appellate Tribunal with the last known hearing date of April 18, 2023. - Concession-period extensions reduced amortisation charges, and unit capital is classified as equity under SEBI mandate despite Ind AS 32 liability features
Minor- NHAI granted concession extensions to three SPVs: SUTPL (5.56 years), REPL (6.16 years), and BRTPL (6.17 years), resulting in amortisation charge reductions of ₹66.99 lakhs, ₹15.08 crore, and ₹2.33 crore respectively during FY2025-26. The Trust classifies unit holders' funds as equity per SEBI Master Circular dated July 11, 2025, overriding the compound financial instrument classification that would apply under Ind AS 32. The difference between the fair value of liabilities and their book value was ₹441.96 crore as at March 31, 2026. - Audit opinions have been consistently unqualified across all years with no adverse CARO-type findings or fraud reported
Clean- The standalone and consolidated audit opinions were unqualified in FY2021, FY2022, FY2023, FY2025, and FY2026. No Emphasis of Matter, a special call-out in the audit report, or material-uncertainty paragraphs were included in any standalone or consolidated auditor's report from FY2021 through FY2026. In FY2026, the consolidated auditor's report relied on other auditors for 10 subsidiaries with combined total assets of ₹6,655.59 crore and combined total loss after tax of ₹460.23 crore.
What to watch
- BPPTPL arbitration Award. Hearings on COVID-19 force majeure and other claims were completed and the matter was reserved for Award as of the FY2025-26 Annual Report.
- Mauritius suit hearing. The next hearing in J Patel & 68 Others vs ITSL in the Supreme Court of Mauritius was adjourned to May 7, 2026.
- Financial covenant compliance. Compliance with financial covenants due between April 1, 2026 and March 31, 2027 determines whether non-current borrowings can continue to be deferred beyond twelve months.
Bottom line: This is a disclosed and audited record with six years of clean audit opinions and operating cash flow that consistently exceeds profit. The risk sits in three places: impairment losses that recur because acquisition values are not supported by actual toll-road cash flows, loans to subsidiaries that carry a 13.00% p.a. interest rate with repayment subject to sufficient SPV cashflows, and multiple SPVs in active arbitration with NHAI whose outcomes will determine whether contested concession extensions and premium demands stand. Watch the BPPTPL and KWTPL arbitration Awards, and read the subsidiary loan book with the impairment trajectory in mind.