Sadbhav Infrastructure Project Limited (**SIPL**), a subsidiary of **Sadbhav Engineering Limited (SEL)**, is a specialized Indian infrastructure developer focused on the **Design, Build, Operate, and Transfer (DBOT)** and **Hybrid Annuity Model (HAM)** of roadways and highways. The company operates through **Special Purpose Vehicles (SPVs)** under concession agreements with the **National Highways Authority of India (NHAI)** and various state authorities. --- ### **Core Revenue Models and Operational Framework** SIPL operates under a single reportable segment: **Infrastructure Development**. Its revenue streams are dictated by the specific concession model of each project: * **Build-Operate-Transfer (BOT) Model:** Revenue is recognized via **Toll Collection Rights** (Intangible Assets). SIPL collects user fees directly over the concession period. * **Hybrid Annuity Model (HAM):** Revenue is recognized as a **Financial Asset**. The group receives **40%** of the Bid Project Cost in **5 equal installments** during construction. The remaining **60%** is paid in **30 bi-annual installments** post-COD, plus interest at the **Bank Rate + 3%**. * **Operational Infrastructure:** The company maintains in-house **Operation and Maintenance (O&M)** capabilities, supported by **SAP S/4 HANA** for process controls and a dedicated technical team. --- ### **Strategic Realignment: The "Harmonious Substitution" Program** To address funding gaps and execution delays, SIPL is executing a massive strategic exit from several underperforming or capital-intensive assets. This is primarily achieved through **Harmonious Substitution**, where project rights and liabilities are transferred to new concessionaires. | Subsidiary / Project | Status (as of Feb 2026) | Counterparty | Financial Impact / Consideration | | :--- | :--- | :--- | :--- | | **Sadbhav Kim Expressway (SKEPL)** | Completed (Jan 2024) | **Gawar Construction** | **₹85.38 Cr** impairment; **₹77.33 Cr** loss. | | **Sadbhav Vidarbha Highway (SVHL)** | Completed (Oct 2023) | **Gawar Construction** | **₹25.8 Cr** impairment; **₹47.49 Cr** write-off. | | **Sadbhav Nainital Highway (SNHL)** | Completed (Aug 2023) | **Gawar Construction** | **₹90 Cr** consideration; **₹1 Cr** impairment. | | **Bhavnagar (SBHL) & Una (SUHL)** | Completed (2023-24) | **Kalthia Engineering** | **₹175 Cr** for 100% stake; EV of **₹751.82 Cr**. | | **Sadbhav Udaipur Highway (SUDHL)** | In-Principal Approval | **Gawar Construction** | **₹100 Cr** provision made in FY25. | | **Sadbhav Rudrapur Highway (SRHL)** | In-Principal Approval | **RKCIPL-ARCPL (JV)** | **₹100 Cr** provision; **₹2 Cr** advance received. | | **Maharashtra Border Check Post** | Ongoing Divestment | **Adani Road Transport** | **49%** sold for **₹357.5 Cr**; **51%** held for sale. | --- ### **Financial Position and Debt Restructuring** The company’s balance sheet reflects significant deleveraging efforts amidst net worth erosion. As of **March 31, 2024**, the **Debt-Equity Ratio** stood at **0.81**. #### **Capital Structure Summary (INR in Millions)** | Metric | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | **Non-Current Borrowings** | **3,385.96** | **4,820.37** | | **Current Borrowings** | **2,364.85** | **2,782.32** | | **Total Debt** | **5,750.82** | **7,602.69** | | **Total Equity** | **7,117.75** | **12,741.73** | * **Debt Assignment to NARCL:** Lenders for major subsidiaries **Rohtak-Panipat (RPTPL)** and **Rohtak Hissar (RHTPL)** have assigned outstanding debts to the **National Asset Reconstruction Company Limited (NARCL)**. * **Non-Convertible Debentures (NCDs):** SIPL held **₹330.94 Cr** in unlisted NCDs as of Sept 2023. **Series A (₹262.89 Cr)** was fully repaid in **May 2024**. A finance cost write-back of **₹50.23 Cr** was recognized in FY25 following a Debenture Trust Deed amendment. * **Promoter Support:** Holding company **SEL** has committed an interest-free loan of **₹77.96 Cr** through **November 2025**. --- ### **Operational Risks and Legal Contingencies** SIPL is currently navigating a high-risk environment characterized by litigation and liquidity constraints. * **Material Uncertainty:** Accumulated losses reached **₹5,111.71 Million** by **December 2025**, exceeding paid-up capital. Auditors have issued qualified opinions regarding the recoverability of **₹804 Cr** in subsidiary investments. * **NHAI Arbitration (RPTPL & RHTPL):** * **RPTPL:** Terminated in 2021. An arbitral award in **Jan 2025** granted a net **₹1,080.55 Cr**, though both SIPL and NHAI have challenged this. * **RHTPL:** Net worth is fully eroded; management is pursuing conciliation with NHAI for receivable recovery. * **Maharashtra Border Check Post (MBCPNL):** Received a termination notice from the state government in **June 2025**. The project also faced a **malicious cyber-attack** in **Sept 2025**, disrupting **FASTag** services. * **Tax Assets:** The group has **₹3,003 Cr** in carried-forward business losses. However, **Deferred Tax Assets** have not been recognized due to uncertainty over future profits. --- ### **Future Growth Strategy and Market Outlook** Despite current distress, SIPL is positioning for a recovery aligned with India’s infrastructure pipeline. * **Targeting BOT Projects:** The company is eyeing a share of the **5,214 km** of high-traffic stretches to be developed under the BOT model, specifically in **Maharashtra** and **Uttar Pradesh**. * **NHAI Pipeline:** SIPL aims to participate in the **6,036 km** annual awarding target, provided it can restore its credit rating to the required **'BBB'** level (currently **IND C**). * **Fiscal Incentives:** The company seeks to leverage **100% tax exemptions** for 10-year blocks and government subsidies of up to **40%** of project costs. * **Human Capital:** To retain talent during this restructuring, the **ESOP 2024** plan was introduced, creating a pool of **3,52,00,000 equity shares** for employees. ### **Internal Controls and Compliance** The company is addressing identified material weaknesses in internal financial controls, including the lack of a "maker-checker" system for journal entries. Furthermore, SIPL is preparing for the implementation of the **New Labour Codes** (effective **Nov 2025**), which may impact future actuarial valuations and employee benefit expenses.