Nexus Select Trust Management Discussions

The discussion and analysis of our financial condition and results of operations that follow are based on Audited Consolidated Financial Statements of Nexus Select Trust REIT and the REIT assets/SPVs (together known as the Group) for the year ended March 31, 2024 (‘FY24) prepared in accordance with Indian Accounting Standards (Ind AS) and applicable REIT regulations.

EXECUTIVE SUMMARY

Sponsored by Wynford Investments Limited, an affiliate of Blackstone Incorporation, Nexus Select Trust (NXST) is Indias first retail REIT and a leading urban consumption centre platform. Our strategy involves identifying and evaluating properties and transforming them into long-term, high-value investments, post acquisition. Our portfolio includes 17 Grade A consumption centres across 14 cities, bringing unique and seamless shopping experiences to customers. These best-in-class centres include a total leasable area of 9.9mn sf, two complementary hotel assets (354 keys) and three office assets spanning 1.3mn sf as of March 31,2024.

OUR COMPETITIVE STRENGTHS

• Located in India, one of the worlds fastest- growing, consumption-led major economies

• Indias leading retail platform of best-in-class assets with a presence in 14 key consumption cities

• Strong track record of acquiring and turning around under-performing retail assets

• Renowned sponsor with global expertise and local knowledge

• Diversified tenant base of renowned domestic and international brands

• Strong embedded growth with inflation-hedged cash flows

• Strategically located in-prime, in-fill locations with high barriers to entry

• Fully integrated platform with a highly experienced management team

• Proprietary insights and access to industry-leading technology initiatives

• Long-term ESG commitment

RETAIL BUSINESS: TENANTS AND LEASE CONTRACTS

The growth in consumption, led by an expanding middle class, has propelled the Indian economy over the last decade and we believe our Portfolio is well-positioned to benefit from the uptick in domestic demand and rapid urbanization. Our robust business model and a diversified asset base — that can serve as a natural hedge against inflation — hold us in good stead.

Our Portfolio has a high-quality and diversified tenant base of -1,000+ domestic and international brands across -3,000 stores. Our retail portfolio occupancy has gone up by 130 bps in a year to achieve an all time high of 97.6% occupancy. During the year, -350+ new stores totalling 700k+ sf commenced trading.

-46%

Rentals from international brands

Lease Expiry Profile:

Our retail portfolio has a stable lease expiry profile over the next 3 years with MTM potential of -20%.

	FY25	FY26	FY27
Area Expiring (mn sf)	0.7	0.7	1.0
Cross Rental Expiring	10%	11%	12%
Avg. MTM Potential		-20%

Our tenants achieved highest ever sales of 120 Bn during the year. We have curated a healthy mix of tenants across sectors such as apparel and accessories, electronics, entertainment, and food & beverages("F&B") in order to provide a holistic shopping and entertainment experience to consumers.

Rental from Tenants Split by Trade Categories (%)

• Apparel and Accessories	40.3%
• F&B	12.7%
Entertainment	8.9%
Footwear and Fitness	10.1%
Departmental Store	6.7%
Beauty and Personal care	6.5%
• Electronics	4.4%
Hypermarket	3.1%
Homeware	2.2%
Jewellery	1.6%
• Other	3.5%

HOSPITALITY BUSINESS

Our hospitality business includes two assets - Hyatt Regency, Chandigarh with 211 keys and Oakwood Residence, Bengaluru with 143 keys.

OFFICE PORTFOLIO

Office portfolio includes 3 properties — Westend Icon Off ice, Vijaya office and Elante office with leasable area of 1.3mn sf.

	Westend Icon Office	Vijaya office	Elante office
Leasable Area (mnsf)	1.0	0.2	-0.1
Overall Occupancy (%)	73%	100%	86%
WALE (years) - Based on gross rentals	3.2	5.1	4.4
In-Place Rent (Rs. psf)	91	56	107
NOI (Rs.Mn)	579	79	85

CURRENT BUSINESS ENVIRONMENT

The positive curve of Indias real estate sector in 2024 is underpinned by robust market growth observed in the preceding year, particularly in 2023. Latest reports from the Indian real estate industry indicate a continuation of this upward trend, showcasing resilience and promise.

INDIA CONTINUES TO BE THE FASTEST GROWING AMONG LARGE ECONOMIES

Indias growth momentum is sustained by a strong consumer demand, moderate inflation, demographic dividend, and rapid urbanization, among other factors. Indias Gross Domestic Product (GDP) growth rate in the quarter ending March 31, 2024 grew by 8.2%, according to the data released by the National Statistical Office (NSO) of Ministry of Statistics and Programme Implementation (MoSPI). The Reserve Bank of India expects Indian economy to grow at 7.2% for FY25.

Retail inflation in India stood at 4.85% in March 2024. The RBI expects retail inflation to be at 4.5% for FY25.

The Global Consumer Confidence Index for March 2024 stood at 48.6. India, with the score of 72.2, sits at the top of this national index, signifying growth and optimism.

DEMOGRAPHIC DIVIDEND

For India, the demographic factors like a rising middle class, a young and aspirational population and rapid urbanization have bolstered consumption.

Young Population: India is the worlds most populous country with a population of above 1.4 billion. 27.3% of this population belongs to the age group of 15-29, making it the largest youth population globally. The median age in India is projected to remain below 30 until 2030. The younger population is inclined to higher consumption and adopting newer trends.

Rising Middle Class: The number of middle- class households grew at a CAGR of 14.8% between FY10 and FY20, increasing its mix from 23.7% to 73.1% over the period.

As per Technopak estimates and analysis, this segment is further projected to grow to represent approximately 79.0% of households by FY30.

Urbanization: The mix of Indias urban population has increased from 27.7% in CY20 to 35.0% in CY21 but remains low relative to the world average of 57.0% in CY21. As per Technopak estimates, Indias urban population mix is expected to grow from 35.0% in CY21 to 40.9% by CY30E and 50.0% by CY50E, while urban GDP contribution is expected to grow from 63.0% in FY20 to 75.0% by FY30E.

LARGEST YOUTH POPULATION IN THE WORLD

OUTLOOK

The IMF expects the Indian economy to grow by 6.8% in FY25 following resilience in domestic demand. S&P Global Ratings expects India to remain the fastest-growing major economy for the next three years, putting India on track to become the worlds third-largest economy by 2030.

RETAIL INDUSTRY

Indias retail market is poised for transformative growth, with projections indicating a leap to an impressive $2.0 trillion within the next decade, up from $0.8 trillion in 2023, according to a report by the Boston

Consulting Group (BCG). As per BMI Consumer and Retail Industry Research, India will become the third-largest consumer market in the world by 2027, following a 29% growth in real household spending over the coming five years. The growth in per-capita household spending is expected to be 7.8% YoY, higher than similarly fast-growing developing Asian economies such as Indonesia, the Philippines and Thailand.

Organized retail (Brick-and-Mortar and E-commerce) in India is in nascent stage of growth and continues to capture share from unorganized retail. Organized retail in India currently accounts for -18% share (up from 12% in FY20) of Indias retail market and it is expected to grow to 24% by FY28

RETAIL REAL ESTATE KEY FEATURES

After a strong year in 2023, Indias retail sector continued its momentum in 2024. Introductior of newer formats, increasing institutional investment and entry of new global brands are catalyzing transformation of the industry. The success of retail sector augurs well for the retai real estate industry, which is buoyed by the following factors:

Favorable Demand-supply Dynamics: As per CBRE, the demand for retail real estate is 2.5x the supply in 2024 with Tier-ll expected to garner higher share.

Omnichannel Presence: Considering the tremendous potential of omnichannel marketing. E-commerce/D2C brands continue to expand their offline presence in India to provide superior shopping and social-connect experiences to consumers.

Entry of International Brands: Increased consumption, rising institutional participation, strategic partnerships with Indian retail chains and regulatory support have led to many international brands making a beeline for superior quality malls in India. International brands continue to expand their presence in India with ~25 new brands expected to enter in 2024 which is ~2.3x of 2022 (Source: CBRE).

India remains on top of the radar of international brands like Zara Home, Foot Locker, D&G, Sandro, Dockers, YSL, Gucci Beauty etc. Some of them are in discussion with us to open their first store in the country.

A brand called NARS opened their first store in Nexus Select Citywalk in 2024.

Rising Luxury Demand: In view of evolving lifestyles and the aspirations of young, wealthy, and well-traveled Indians, the demand for luxury/ premium brands in India has increased gradually. According to CBRE, The share of luxury retail absorption as compared to total absorption has grown rapidly from ~5% in 2022 to 9% in 2023.

Existing luxury brands in India looking to expand to metro cities wherein they have negligible presence and also expanding their existing presence in a city by taking up larger space in that city.

2x

Rise in Luxury Demand

Expansion in Tier II Cities: While Tier I cities have been in the forefront of the countrys economic and real estate growth trajectory, the needle has been moving towards the relatively under penetrated tier II cities.

These relatively smaller markets have fast emerged as catalysts for economic growth and employment, leading to a rise in their disposable incomes. What has followed is a change in the consumption patterns, resulting in the change of retail dynamics of these cities.

According CBRE, over 30 major domestic and international brands entered 14 tier-ll cities between January and September 2023. The total retail space supply recorded in these 14 cities stood at 2.4mn sf during this period. These cities include Chandigarh, Jaipur and Lucknow, Kochi, and Goa among others.

COMMERCIAL REAL ESTATE

Commercial real estate had a strong year with office space leasing, recording a four-year high as more and more businesses started returning to office. According to CBRE, this resulted in 7% YoY increase across top 9 cities, with an absorption of 61.6mn sf in 2023 led by technology, BFSI and flexible spaces. Geographically, cities like Chennai, Pune, and Hyderabad experienced substantial office space take-up, showcasing a broader regional interest.

FACTORS AFFECTING OUR PERFORMANCE

Lease Rentals

We usually enter into three-to-nine-year leases for in-line tenants, nine-to-twenty-five-year leases for anchor tenants, and five to nine-year leases for office tenants. Our leases typically have contractual rent escalations of 12%-15% over a period of three to five years. Most of our tenant leases consist of minimum guaranteed rentals as well as turnover rentals - 5%-25% of tenants turnover - that give us participatory rights in the upside of growth in our tenants sales. Low occupancy of our urban consumption centres, hotels and commercial office spaces as well as slow performance of our tenants may affect our revenues, and cash flows.

Govt Regulations and Policies

The real estate sector in India is highly regulated and there are many laws and regulations that apply to our business. These regulations relate to land acquisition, funding sources, the ratio of built-up area to land area, land usage, the suitability of building sites, road access, necessary community facilities, open spaces, water supply, sewage disposal systems, electricity supply, environmental suitability, and the size of the project. We strive to continuously maintain compliance with these regulations, incurring various costs in the process, including fees to government authorities, lawyers and consultants, property tax, and other rates and taxes.

Future Acquisitions

We intend to continue to acquire assets that meet our investment criteria. Each new acquisition that we complete may materially affect our overall results of operations and financial position. In addition, our acquisition strategy may require a significant amount of working capital and long-term funding.

We are excited to expand our footprint with the proposed acquisition of 3 malls in Hyderabad, a market which continues to perform strongly and deliver growth. We have completed due diligence and see no material red flags. The deal closure will happen immediately after regulatory approvals are in place.

Competition

We operate in competitive markets for the acquisition, ownership, and leasing of urban consumption centres. We compete for tenants with numerous real estate owners and operators who own properties similar to our own in our markets. Many factors like location, rental rates, building quality and upkeep of property and maintenance provided to tenants impact competition. Increased competition can result in price and supply volatility, which could materially adversely affect our results of operations.

OUR BUSINESS AND FINANCIAL PERFORMANCE

The Indian retail markets growth and resilience have helped us register a strong performance in FY24.

PROFIT AND LOSS ACCOUNT

(in Rs million)

	FY24
Income
Revenue from operations	19,163.78
Interest Income	248.56
Other income	567.64
Total Income	19,979.98
Expenses
Cost of material and components consumed	156.15
Employee benefits expense	796.40
Operating and maintenance expenses	1,662.27
Repairs and maintenance	831.90
Investment management fees	803.80
Insurance expenses	95.68
Audit fees	36.05
Valuation fees	4.63
Trustee fees	1.74
Other expenses	1,933.58
Total Expenses	6,322.20
Earnings before finance costs, depreciation, amortization and tax	13,657.78
Finance costs	3,370.95
Depreciation and amortization expenses	5,201.64
Profit before share of net profit of investment accounted for using equity method and tax	5,085.19
Share of net profit of investment accounted for using equity method	62.57
Profit / (Loss) before tax	5,147.76
Tax expense (income)	(837.77)
Profit / (Loss) for the period	5,985.52
Other comprehensive income (expense)	(7.07)
Total comprehensive income/ (loss) for the period	5,978.46

PRINCIPAL COMPONENTS OF OUR CONSOLIDATED STATEMENT OF PROFIT AND LOSS

Total Income

Our total income comprises revenue from operations and other income.

Revenue from Operations

• Our revenue from operations primarily comes from the following sources:

• Lease rentals

• Maintenance services

• Marketing activities

• Parking

• Hospitality

• Renewable energy

Lease Rentals: Our revenue from lease rentals is generated by leasing our assets. This is typically a sum of Minimum Guaranteed Rentals and Turnover Rentals for the relevant period, as per the relevant lease agreement.

Maintenance Services: This comprises the revenue for the maintenance services (including heating, ventilation, and air conditioning (HVAC)) provided to our customers at relevant assets in our Portfolio. Our revenue from maintenance services is generally a function of our maintenance expenses, including common area maintenance services, HVAC services, refurbishment and upgradation works, among others.

Marketing Activities: Our revenue from marketing income primarily comprises income that we receive in connection with signage, space on hire, collaborative marketing charges and marketing vouchers.

Parking Income: Our revenue from parking income primarily comprises income from parking facilitation services that we provide at relevant assets in our Portfolio.

Hospitality business: Our revenue from hospitality business primarily comprises revenue from rentals and food and beverage sales at the hotel assets in our Portfolio, namely Hyatt Regency Chandigarh and Oakwood Residence Whitefield Bangalore.

Renewable Energy: Our revenue from renewable energy comprises income in connection with the generation and sale of solar and wind energy.

(in Rs million)

	FY24
Revenue from Lease Rentals	12,895.79
Maintenance Services	3,517.81
Marketing Activities	940.03
Parking income	537.52
Renewable energy	25.57
Hospitality business	1,146.61
Other revenue	100.45
Revenue from Operations	19,163.78

Interest Income

Interest income comprises of Interest income on (i) fixed deposits, (ii) security deposits;

(iii) inter-corporate deposits; (iv) income tax refunds; and (v) others

(in Rs million)

	FY24
Interest Income on
- bank deposits	130.45
- security deposits	12.86
- inter corporate deposits	66.29
- income tax refund	38.21
- others	0.75
Total	248.56

OTHER INCOME

Our other income primarily comprises the following sources:

• Liabilities written back

• Gain on fair valuation of financial instruments at FVTPL

• Gain on sale of financial assets measured at amortised cost

• Gain on sale of financial assets classified at FVTPL

• Miscellaneous income.

BREAKDOWN OF OTHER INCOME

(in Rs million)

	FY24
Gain on sale of financial assets classified at FVTPL	319.45
Net gain on fair value changes	208.95
Liabilities written back	25.26
Provision for expected credit loss written back	2.33
Sale of Scrap	5.11
Miscellaneous income	6.54
Total	567.64

EXPENSES

Our expenses comprise:

• Cost of material and components consumed

• Employee benefits expense

• Operating and maintenance expenses

• Repairs and maintenance

• Investment management fees

• Insurance expenses

• Audit fees

• Valuation fees

• Trustee fees

• Other expenses

Cost of materials and components consumed

Our cost of materials and components consumed was Rs. 156 million for FY24 which comprised cost of food, beverages and other consumables sold at Hyatt Regency Chandigarh and Oakwood Residence Whitefield Bangalore.

Employee benefits expense

Our employee benefits expense was Rs. 796 million for FY24 which primarily comprised (i) salaries, bonus and allowances of Rs. 619 million, and (ii) staff welfare expenses of Rs. 114 million.

Operating and maintenance expenses

Our operating and maintenance expenses was Rs. 1,662 million for FY24 which primarily comprised (i) power and fuel expenses (net of recoveries) ofRs. 606 million; and (ii) manpower charges ofRs. 1,056 million.

Other expenses

Our other expenses were Rs. 1,934 million for FY24, which primarily comprised (i) marketing and promotional expenses ofRs. 807 million; (ii) legal and professional fees ofRs. 368 million; and (Hi) property tax ofRs. 345 million.

Earnings before finance costs, depreciation, amortization, share of net profit/(loss) of investment accounted for using equity method, exceptional items and tax ("EBITDA").

We have elected to present EBITDA as a separate line item on the face of the Consolidated Statement of Profit and Loss.

In its measurement, we do not include finance costs, depreciation, amortization, share of net profits / (losses) of investments accounted for using equity method, exceptional items and tax our EBITDA was Rs. 13,658 million for FY24.

Earnings before finance costs, depreciation, amortization, share of net prof it/(loss) of investment accounted for using equity method, exceptional items and tax (EBITDA): We have elected to present EBITDA as a separate line item on the face of the Consolidated Statement of Profit and Loss. In its measurement, we do not include finance costs, depreciation, amortization, share of net profits / (losses) of investments accounted for using equity method, exceptional items and tax.

Finance costs

Our finance costs was Rs. 3,371 million for FY24 primarily comprised of the following:

• Interest expense on term loans of Rs. 2,525 million

• Interest expense on debentures of Rs. 652 million

• Interest expense on Lease Deposits collected from customers Rs. 178 million

Finance costs amounted 18% of our revenue from operations for FY24.

Depreciation and Amortization Expense:

Our depreciation and amortization expense was Rs. 5,202 million for FY24, which primarily comprised depreciation expenses relating to (i) property, plant and equipment ofRs. 198 million, and (ii) investment property of Rs. 1,621 million, (iii) Intangibles ofRs. 3,372 million.

Prof it/(loss) before share of net prof it/(loss) of investment accounted for using equity method, exceptional items and tax.

As a result of the foregoing, our profit/(loss) before share of net prof it/(loss) of investment accounted for using equity method, exceptional items and tax was Rs. 5,085 million for FY24.

Share of net profit/(loss) of investment accounted for using equity method:

Our 50% investment in the equity shares of ITIPL (which owns Treasure Island) is accounted for in consolidated financial statements using the equity method, and accordingly our consolidated financial statements include our share of ITIPLs profit or loss including other comprehensive income ofRs. 63 million for FY24.

Profit before exceptional items and tax:

As a result of the foregoing, our profit before exceptional items and tax was Rs. 5,148 million for FY24.

Tax expense/(credit):

Our tax credit was Rs. 838 million for FY24 which primarily comprised the following:

• Current tax of Rs. 1,006 million

• Tax adjustment relating to earlier years amounting to Rs. 9 million

• Deferred tax credit ofRs. 1,836 million.

NET OPERATING INCOME (NOI)

NOI as calculated by us is a primary driver of our managerial assessments and decisionmaking process. We believe NOI is helpful to investors in understanding the performance of our Portfolio because it provides a direct measure of the operating results of our core businesses.

We define NOI for each of our segments as follows:

• Urban Consumption Centre: NOI for our Urban Consumption Centre business is defined as revenue from operations, which includes (i) revenue from lease rentals, (ii) maintenance income, (iii) marketing income and (iv) parking income and other operating income less other operating expenses which includes (i) employee benefits expense,

(ii) operating and maintenance expenses excluding business support service and non- recurring repairs and maintenance, (iii) other expenses excluding certain non-recurring (a) legal and professional fees, (b) bad debts, allowances for expected credit losses, (c) Ind AS adjustments and (d) any other gains / losses etc.

• Office: NOI for our Office business is defined as revenue from operations, which includes (i) revenue from lease rentals,

(ii) maintenance service and (iii) parking income less other operating expenses which includes (i) employee benefits expense,

(ii) operating and maintenance expenses excluding business support service and non-recurring repairs and maintenance, and

(iii) other expenses excluding certain nonrecurring (a) legal and professional fees, (b) bad debts, allowances for expected credit losses, (c) Ind AS adjustments and (d) any other gains / losses etc.

• Hospitality: NOI for our Hospitality business is defined as revenue from operations, which includes (i) room income, (ii) food and beverage revenue, and (iii) other operating revenue less other operating expenses which includes (i) employee benefits expense,

(ii) food, beverage and operating supplies consumed, (iii) operating and maintenance expenses excluding management fees, and

(iv) other expenses.

• Others: NOI for our Others segment is defined as revenue from operations which includes (i) sale of inventories (office units and land), (ii) income from generation of renewable energy, and (iii) other operating revenue less other operating expenses which include (i) changes in inventories of finished goods and work-in-progress,

(ii) employee benefits expenses, (iii) other expenses excluding business support service, bad debts, allowances for expected credit losses, and (iv) any other notional gains/losses.

(in Rs million)

	FY24
Urban Consumption Centre	12,827.30
Office	743.48
Hospitality	550.71
Others	226.40
Total	14,347.88

RECONCILIATION OF NOI WITH EBITDA AND PBT

The following table presents a reconciliation of our profit before tax for the year ended March 31, 2024, for EBITDA, NOI and NOI Margin.

(In Rs. million except NOI Margin)

Particulars	March 31, 2024
Profit before tax	5,148
Less: Share of net prof it/(loss) of investments accounted for using equity method (net of tax)	(63)
Add: Depreciation and amortization expense	5,202
Add: Finance costs	3,371
Earnings before finance costs, depreciation, amortization, share of net prof it/(loss) of investment accounted for using equity method, exceptional items and tax (EBITDA)	13,658
Less: Unallocated non-operating income*	(1,023)
Add: Unallocated non-operating expenses"	1,713
NOI (A)	14,348
Revenue from operations (B)	19,164
NOI Margin (%) - (A/B)	75%

• Majorly comprises of Treasury income viz; Interest income, Fair value gam on investments etc and other miscellaneous income.

• Majorly comprises of property management fee, legal expenses and one-time repairs.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources: We have in the past met our working capital and other capital requirements primarily from

• internal cash flows

• short-term and long-term borrowings from banks and other financial institutions and

• issue of non- convertible debentures

Financial Resources: As of March 31, 2024, we had cash and cash equivalents ofRs. 394 million, investment ofRs. 9,734 million in liquid mutual fund and other bank balances ofRs. 789 million. Cash and cash equivalents primarily consist of cash and cheques on hand, balances with banks in current accounts, and deposit accounts with original maturity of less than three months. Other bank balances comprise of balances with banks in deposit accounts with original maturity of more than three months, escrow accounts. Primarily, our liquidity requirements have been to fund operating expenses and asset upgrades.

We expect to meet our working capital and other liquidity requirements for the next 12 months from (i) cash and cash equivalents and liquid investments (ii) cash flows from our business operations and (iii) short-term and long-term borrowing. We believe that we will have sufficient working capital to fulfil our requirements for the next 12 months.

The following table summarizes the changes in the cash and cash equivalent during the year:

(in Rs million)

	FY24
Net cash generated from operating activities	12,173.31
Net cash generated from/(used in) investing activities	(3,975.79)
Net cash generated from/(used in) financing activities	(7,803.58)
Net increase/(decrease) in cash and cash equivalents	393.94
Cash and cash equivalents at the beginning of theyear	0.10
Cash and cash equivalents at the end of theyear	394.04

CASH FLOW FROM OPERATING ACTIVITIES FOR FY24

Net cash generated from operating activities for the year ended March 31, 2024, was Rs. 12,731 million. Our profit before tax was Rs. 5,148 million, which was adjusted for share of net prof it/(loss) of investment accounted using equity method, non-cash and items relating to financing and investing activities, by a net amount ofRs. 7,525 million, primarily for the following:

• finance costs amounting to Rs. 3,371 million;

• gain on sale of financial assets classified at FVTPL Rs. 319 million;

• depreciation and amortization expenses amounting to Rs. 5,202 million; and

• interest income amounting to Rs. 249 million.

There were also changes in working capital ofRs. 290 million primarily due to increase in security deposit received from tenant of Rs. 399 Million, recovery of unit issue expenses Rs. 608 Million compensated by payments made to vendors Rs. 336 million and statutory due paid Rs. 313 million. In addition, we have paid income taxes (net of refunds) ofRs. 789 million.

BORROWINGS

The following table presents a breakdown of the total debt as of March 31, 2024.

(in Rs million)

	FY 24
Non-current borrowings (including current maturities of long-term borrowings)	41,698.11
Current borrowings	937.20
Interest accrued	137.40
Lease liabilities (current and non-current)	78.01
Unpaid processing fees (part of Other current financial liability)	1.07
Total borrowings	42,851.79

Apart from the repayment of external borrowings made during initial formation transaction, we refinanced 18,900 million in debt during the year at cost of 8.05%, resulting in an annual saving of ~150 million. As of March 31, 2024, our borrowings comprises of fixed and floating-rate borrowings. As of March 31, 2024, all of our borrowings were secured.

The following table summarizes our contractual obligations as of March 31, 2024

(in Rs million)

	Within one year	After one but within 5 years	More than five years	Total
Borrowings - including current maturities and interest accrued	3,563.39	13,463.65	40,743.93	57,770.97
Non-convertible debentures	790.20	11,436.90	-	12,227.10
Trade payables	924.39	-	-	924.39
Lease deposits (current and non-current)	5,857.01	1,156.62	2.24	7,015.87
Lease liability (current and non-current)	18.04	54.59	67.43	140.06
Other financial liabilities (current and non-current)	191.18	292.67	-	483.85

CAPITAL EXPENDITURES AND CAPITAL INVESTMENTS

Historical Capital Expenditures: Capital expenditure comprises cash outflows during the year relating to purchase of property, plant and equipment, investment property and intangible assets. In the year ended March 31, 2024, cash outflow relating to purchase of property, plant and equipment, investment property and intangible assets was 862 million, which was primarily towards renovation and upgrade work at Nexus Vijaya, Solar and Windmill plant at Nexus Ahmedabad and Rooftop solar plants at south based retail assets.

Planned Capital Expenditures: Our capital and other commitments, as of March 31, 2024, towards the acquisition, construction and upgrade of our assets was 180 million. We expect to undertake certain asset upgrade projects across the Portfolio and expect to incur 210 million over the next 12 to 18 months.

We expect to fund the above-planned capital expenditure through sanctioned financing and internal cash flows. Our actual capital expenditure may differ from the amounts set out above due to various factors, including our future cash flows, results of operations and financial condition, changes in the local economy in India, the availability of financing on terms acceptable to us, problems in relation to possible construction/ development delays, defects or cost overrun, delays in obtaining or receipt of governmental approval, changes in the legislative and regulatory environment and other factors that are beyond our control.

OFF BALANCE SHEET ARRANGEMENTS AND CONTINGENT LIABILITIES

We do not have any material off-balance sheet arrangements. The table below sets forth our contingent liabilities as per Ind AS 37—Provisions, Contingent Liabilities and Contingent Assets as at March 31, 2024.

(in Rs million)

Claims against the SPVs not acknowledged as debts in respect of	March 31, 2024
GST/Input Tax credit	993.56
Service-Tax matters	309.13
Income-Tax matters	779.42
Property-Tax matter	286.32
Bank guarantee	107.48

Based on the fact of the case and legal representatives representation for certain matters, we believe that there are merits in the above-mentioned cases and accordingly no liability is recognized in the consolidated financial statements.

NAV (NET ASSET VALUE)

Statement of NAV

(in Rs. million, unless otherwise specified)

	As of March 31, 2024
	Book value	Fair value
(A) Total Assets	201,105	270,837
(B) Total Liabilities	51,756	51,756
(C) Net Assets (A-B)	149,349	219,081
(D) No. of Units (millions)	1,515	1,515
(E) NAV (C) / (D) (per unit)	98.58	144.61

MEASUREMENT OF FAIR VALUE

The fair value of Investment Property, Property, Plant and Equipment, Investment Property under development and Capital work-in-progress have been determined by independent external property valuer, having appropriately recognized professional qualifications and recent experience in the location and category of the property being valued.

DISTRIBUTION PER UNIT

Under the provisions of the REIT Regulations, we are required to distribute to the unitholders not less than ninety percent of the net distributable cash flows (‘NDCF). The NDCF is calculated in accordance with the REIT Regulations and in the manner defined by the Manager. NDCF shall be declared and made not less than once every six months in every financial year and shall be made not later than fifteen days from the date of such declaration.

The aforesaid NDCF are made available to the unitholders in the form of (i) interest (ii) amortization of debt, (iii) dividends (net of applicable taxes) (iv) other income or in such other form as may be permissible under the applicable law.

During the year, we distributed Rs. 7.075 per unit aggregating to Rs. 10,718.63 million. The distributions of Rs. 7.075 per unit comprises Rs. 2.059 per unit in the form of interest, Rs. 3.956 per unit in the form of dividend, Rs. 0.035 per unit in the form of other income and the balance Rs. 1.023 per unit in the form of amortization of debt.

The following table summarizes the reconciliation of cash flow from operating activities to the NDCF:

CREDIT RATING OF NON- CONVERTIBLE DEBENTURES (NCD)

CRISIL AAA/Stable ICRA AAA/Stable

CREDIT RATING OF NXST

CRISIL AAA/Stable ICRA AAA/Stable

CREDIT RATING OF COMMERCIAL PAPERS

IND A1+

INTERNAL CONTROL SYSTEMS

Nexus Select Trust has a strong internal financial control system to manage its operations, financial reporting, and compliance requirements. The Manager has clearly defined roles and responsibilities for all managerial positions. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. All business parameters are regularly monitored, and effective steps are taken to control them.

Nexus Select Trust has appointed one of the Big4 firms to conduct internal audit of its activities. The internal audit plan is reviewed each year and is approved by the Audit Committee. The internal audit is focused on review of internal controls and operational risk in the business of Nexus Select Trust. Nexus Select Trust takes a proactive approach to risk management, making it an integral part of our business both strategically and operationally. Our objective is optimization of opportunities within the known and agreed risk appetite levels set by our Board. We take measured risks in a prudent manner for justifiable business reasons. Our ERM framework encompasses all our risks such as strategic, operational, and compliance risks. Appropriate risk indicators are used to identify these risks proactively. A robust internal control system and an effective, independent review and audit process underpin our ERM Framework.

While management is responsible for the design and implementation of effective internal controls using a risk-based approach, external consultant reviews such design and implementation to provide reasonable assurance on the adequacy and effectiveness of the risk management and internal control systems. The Audit Committee and the Board of Directors periodically reviews the adequacy and effectiveness of internal financial control systems and suggests improvements to further strengthen them. The internal financial control systems are adequate and operating effectively as at March 31, 2024. The effectiveness of the internal control over financial reporting for each of the SPVs as at March 31, 2024 has been attested by the respective statutory auditors of SPVs who expressed an unqualified opinion on the effectiveness of each SPVs internal control over financial reporting as of March 31, 2024.

Cautionary Statement

Statement made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax laws, other statutes and other incidental factors.

Disclaimer

Each of NOI and NOI Margin does not have a standardized meaning, nor is it a recognized measure under Ind AS or IFRS and may not be comparable with measures with similar names presented by other companies/REITs. Each of NOI and NOI Margin should not be considered by itself or as a substitute for comparable measures under Ind AS or IFRS or other measures of operating performance, liquidity or ability to pay dividends. Our NOI and NOI Margin may not be comparable to the NOI and NOI Margin of other companies/REITs due to the fact that not all companies/REITs use the same definition of NOI and NOI Margin. Accordingly, there can be no assurance that our basis for computing this non-GAAP measure is comparable with that of other companies/REITs.

EBITDA does not have a standardized definition under Ind AS or IFRS, and our method of calculating EBITDA may be different from the method used by most other companies/ REITs to calculate EBITDA. We cannot assure you that our EBITDA calculation will always be comparable with similarly named measures presented by other companies/REITs. EBITDA is not a recognized measure under Ind AS or IFRS. EBITDA should not be considered by itself or as a substitute for net income, operating income or cash flow from operations or related margins or other measures of operating performance, liquidity or ability to pay dividends.