Shrem InvIT is a listed infrastructure trust that owns a portfolio of Indian highways and collects the steady, contractually fixed payments those roads generate - it is, in essence, a tollbooth on government-backed cash flows, not a construction company. It was formed in 2020 by the Shrem Group, which had been buying operational road assets since 2017, and listed on the National Stock Exchange in 2021 with 24 completed projects, a number that has since grown to 37. The recurring approach is to acquire only roads that are already built and collecting revenue, eliminating construction risk so that every new asset adds immediate, predictable income. # Business segments A single-engine business - a portfolio of 37 operational road assets that earn fixed annuity payments from government bodies and tolls from users, with more than 90% of revenue coming from those annuities. ## 1. Road concessions: a portfolio of government-backed highway income **The Trust owns 37 completed highways across nine states and collects semi-annual annuity cheques from NHAI and state authorities, plus tolls - over 90% of revenue is fixed and contracted, making cash flows predictable rather than traffic-dependent.** - **Fixed annuity backbone** - 19 NHAI Hybrid Annuity Model (HAM) projects and 16 state annuity or toll-plus-annuity projects generate 74 annuity payments spread across the year, with the annuity amounts pre-determined and adjusted only for inflation as specified in the concession agreements. - **Sovereign-grade counterparties** - the payers are NHAI, MoRTH, and state government authorities, and the Trust has received all 513 annuity collections on time since the roads began operating, so payment risk sits with the government, not with traffic volumes. - **Three-part revenue engine on HAM projects** - each NHAI HAM asset earns a construction annuity that repays the bid project cost, an interest annuity linked to the RBI Bank Rate plus a 3% spread (which hedges against rate changes), and an inflation-indexed operations and maintenance component. - **One toll road with a built-in stabiliser** - the single NHAI toll asset, a 93.5 km stretch in Madhya Pradesh, has a mechanism that adjusts the concession length if traffic deviates from a target of 27,136 passenger car units by more than 2.5%; if traffic rises, the concession shortens, and the Trust can instead opt to pay NHAI a share of revenue from the revised end date onward. - **Bought, not built** - every asset was acquired after its Commercial Operations Date, most recently adding three HAM projects from APCO Infratech in September 2024 and signing a term sheet for one more from BSCPL Infrastructure in May 2026, so the portfolio grows without taking on construction risk. ## 2. Operations and maintenance: fixed-price contracts that protect the cash flow **All 37 projects are maintained under lump-sum, fixed-price O&M contracts for the full concession life, with contractors bearing any cost overruns and penalties - the Trust’s margin is insulated from inflation and operational surprises.** - **Cost-overrun protection** - O&M contracts are fixed-price and lump-sum, so the contractor absorbs any increase in salaries, materials, utilities, or repairs, while back-to-back indemnity clauses mean any penalty levied by the highway authority for poor maintenance is paid by the contractor, not the Trust. - **Payment linked to performance** - O&M fees are tied to actual annuity receipts, which aligns the contractor’s incentive with the Trust’s: if the road is not maintained to standard and the annuity is withheld, the contractor does not get paid either. - **AI-enabled oversight** - a network of cameras and specialised inspection vehicles with Falling Weight Deflectometer and Network Survey Vehicle technology monitor pavement condition in real time, while a digital defect system tracks every issue by chainage with photographic evidence and GIS mapping. - **Leakage control on toll roads** - 97% of toll transactions are captured electronically through FASTag, which reduces cash handling and the risk of revenue leakage at toll plazas. # Group structure and partners **A three-tier SEBI-mandated structure separates ownership, management, and custody, with the Sponsor holding over 71% of units and providing a pipeline of future assets through a right-of-first-offer agreement.** - **Three-tier governance** - the Sponsor (Shrem Infra Structure Private Limited (SISPL)) sets strategy, the Investment Manager runs day-to-day operations and acquisitions with a board that includes four independent directors, and Axis Trustee Services Limited acts as legal custodian to ensure the Trust operates in unitholders’ interests. - **Built-in acquisition pipeline** - a formal Right of First Offer agreement gives the Trust the first chance to buy future road assets developed by the Sponsor or its group companies, which were recently awarded two new projects worth over ₹24,000 million combined. - **Direct control of subsidiaries** - the Trust holds 100% economic ownership in its SPVs; a previous two-layer holding-company structure was eliminated in FY23, giving the InvIT direct ownership of its road assets. - **Conservative funding with bank backing** - borrowings are at the Trust level, not inside individual SPVs, with State Bank of India and Union Bank of India as lenders; the debt is a mix of fixed and floating rates, with the floating portion providing a natural hedge against the bank-rate-linked annuity receivables.