Noida Toll Bridge Company Ltd Management Discussions

The Noida Toll Bridge Company Limited ("NTBCL/the Company") was promoted by Infrastructure Leasing & Financial Services Limited, ("IL&FS") as a special purpose vehicle for the implementation of the Delhi Noida bridge project on a Build, Own, Operate and Transfer ("BOOT") basis. The Concession Agreement (Concession) executed between the Company, IL&FS and New Okhla Industrial Development Authority ("NOIDA") in November 1997, has given the Company the right to levy a User Fee. The Governments of Uttar Pradesh and National Capital Territory of Delhi have, in January 1998, executed a Support Agreement in favour of the Project/ Concessionaire.

The Delhi Noida Bridge (commonly known as the DND Flyway or DND) was opened to traffic in February, 2001 and is an eight lane, 7.5 kms tolled facility across the Yamuna River, connecting Noida to South Delhi. A 1.7 km link connecting the DND Flyway to Mayur Vihar was commissioned in June 2007 (Phase I)/January 2008 (Phase II).NTBCL is a public Company with Equity Shares listed on the National Stock Exchange and the Bombay Stock Exchange in India.

The Union of India on October 1, 2018 filed a petition with the National Company Law Tribunal ("NCLT") seeking an order under section 242(2) and section 246 read with section 339 of the Companies Act, 2013 on the basis of the interim reports of the ROC and on the following grounds: (i) The precarious and critical financial condition of the IL&FS

Group and their inability to service their debt obligations had rattled the money market.

(ii) On a careful consideration of the Union of India, it was of the opinion that affairs of the IL&FS Group were conducted in a manner contrary to the public interest due to its misgovernance; and (iii) The intervention of the Union of India is necessary to prevent the downfall of the IL&FS Group and the financial markets.

It was felt that the governance and management change is required to bring back the IL&FS Group from financial collapse, which may require, among other things, a change in the existing Board and management and appointment of a new management.

The current composition of the Board of Directors is thus as follows:

Executive Director

Mr. Dheeraj Kumar (since December 5, 2022)

Non-Executive Directors

Mr. Nand Kishore

Mr. Dilip Lalchand Bhatia

Mr. Manish Kumar Agarwal

Mr. Kazim Raza Khan

Mr. Rakesh Chatterjee

The National Company Law Appellate Tribunal ("NCLAT") vide its Order dated October 15, 2018 gave a moratorium to IL&FS and its group entities including NTBCL which inter-alia stated that no creditors can proceed against it except under article 226 of the Constitution. Accordingly, the Company has not been servicing the debt obligations since October 15, 2018. The New Board, as part of the resolution process, has submitted several progress reports to the NCLT. This includes framework for a resolution plan and process, steps undertaken for monetization of assets, appointment of consultants, and classification of group entities based on their abilities to meet various financial and operational obligations, measures for cost optimization and protocol for making payments beyond certain limits.

The resolution plan seeks a fair and transparent resolution for the Company while keeping in mind larger public interest, financial stability, various stakeholders interest, compliance with legal framework and commercial feasibility. It is proposed to have a timely Resolution Process which in turn mitigates the fallout on the financial markets of the country and restore investor confidence in the financial markets thereby serving larger public interest. The Company being an associate company of transportation vertical of IL&FS having projects through various group entities, depends on its group entities to continue operating as a going concern. The resolution plan and processes for various verticals are under way and options of restructuring business, as well as exits are planned. The assessment of the New Board, based on analysis of the current position of and challenges facing the IL&FS group, is that an Asset Level Resolution Approach serves the best interest of all stakeholders to achieve final resolution. The entities in the IL&FS group, have been classified into Indian and offshore entities. Further, the Indian IL&FS entities have been classified by an independent third party, into three categories of entities based on a 12-month cash flow based solvency test viz. "Green", "Amber" and "Red", indicating their ability to repay both financial and operating creditors, only operating creditors, or only going concern respectively. The Company is classified as a "Red" entity, indicating that it is not able to meet all obligations (financial and operational) including the payment obligations to senior secured financial creditors. Accordingly, the Company is permitted to make only those payments necessary to maintain and preserve the going concern status.

INDIAN ECONOMIC OVERVIEW

The Indian Economy continues to show resilience amid Global Uncertainties. Despite significant challenges in the global environment, India was one of the fastest growing economies in the world. Indias overall growth remains robust and is estimated to be 6.9% for the financial year 2022-23. (Source: www.worldbank.org) Growth was driven by strong investment activity augmented by the governments capex push and buoyant private consumption.

Structural reforms like the National Infrastructure Pipeline and National Monetization Plan by the Government is expected to further boost infrastructure development. It is paving the path for further development and continues to encourage projects across sectors, including reforms for improving labour laws. V-shaped economic recovery is due to mega vaccination drive, robust recovery in the services sector and growth in consumption and investment. This is being demonstrated in high frequency indicators such as power demand, rail freight, GST collection etc. Almost all emerging economies are reeling under external shocks, but Indias underlying economic fundamentals are strong and despite the short-term headwinds, the impact on the long-term outlook is expected to be marginal. Dwelling on the outlook for FY2023-24, the Economic Survey 2022-23 issued by Ministry of Finance projects that, Indias recovery from the pandemic was relatively quick, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment. It further affirms that aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible and more importantly, compensating for the private sectors caution in capital expenditure, the government raised capital expenditure substantially.

CONSOLIDATED FINANCIAL PERFORMANCE

The Consolidated Gross Revenue from operations for FY 2022-23 was Rs. 2372.43 lakhs (Previous Year: Rs. 1613.68 lakhs), registering an increase of 47.02%. The Consolidated loss of the Company is Rs. 3513.25 lakhs (Previous Year: Rs. 4114.91 lakhs).

Key Ratios

As per provisions of SEBI Listing Regulations, 2015, the significant financial rations (calculated on standalone basis) are given below:

Particulars	FY 22-23	FY 21-22	Explanation of Y-o-Y variance higher than 25%
Current Ratio	0.457	0.300	The current ratio has increased on account of increase in investments in FD being ‘other bank balance, during the year.
Debt Equity Ratio:	0.282	0.246	-
Debt Service Coverage Ratio	N.A	N.A	-
Return on Equity Ratio	(0.139)	(0.142)	-
Inventory Turnover Ratio	N.A	N.A	-
Trade Receivable Turnover Ratio	5.188	1.704	The ratio has increased on account of increased revenue from operations and cash realisation from debtors during the year
Trade Payable Turnover Ratio	12.200	4.549	The ratio has increased on account of increase in expenditure as compared to previous year
Net Capital Turnover Ratio	0.093	0.058	Ratio has increased primarily on account of increase in revenue from operations in the current year
Net Profit Ratio	(1.487)	(2.570)	Ratio has improved on account of increase in revenue from operations in the current year
Return on Capital employed	(0.138)	(0.149)
Return on investment	(0.149)	(0.153)

Industry Structure and Development / Competition and Threats

The Noida Toll Bridge competes for traffic with two other free bridges across the Yamuna River. located on either side of the facility i.e. the Nizamuddin Bridge which is 2 kms upstream and the Okhla Barrage/KalindiKunj Bridge which is 1 km downstream.

To cater to the growing need for improved connectivity between Noida and Delhi, NOIDA is implementing a 6 lane road bridge parallel to the existing Okhla Barrage bridge.

The National Capital Region Transport Corporation (NCRTC) is implementing the Delhi to Meerut Rapid Rail Transit Systems (RRTS) and the alignment of the proposed corridor would cross the Mayur Vihar Link Road (MVLR) near the MVLR Toll Plaza. PWD Delhi-Flyover Division (PWD) is implementing the Extension of Ashram Flyover to DND Flyway. The proposed work was approved by the Unified Traffic and Transportation Infrastructure (Planning & Engineering) Centre (UTTIPEC) considering the traffic problem between DND to Ashram Chowk. The proposed extension on the AIIMS- Noida arm of flyover will merge with DND Flyover before Delhi Interchange Bridge and additional lanes will be provided on LHS of DND Flyway for at grade traffic going to Noida.

National Highways Authority of India (NHAI) is implementing the project for Development of economic Corridors, Inter Corridors and Feeder routes to improve the efficiency of freight movement in India under Bharatmala Pariyojana (Lot-4/ Package-1) Faridabad-Ballabhgarh Bypass Junction with Delhi-Vadodara expressway KMP-interchange. The project has been accorded priority-1 & has been approved by MoRT&H. New elevated proposed corridor crossing Delhi Interchange North to South direction to bypass the NH- 2 bound traffic in ITO/ Faridabad direction and vice versa and additional lanes will be provided on RHS arm at Km.1000 of DND Flyway to provide access to NH-2 bypass for the traffic coming from Noida.

Further, Government of Delhi is extending the Barapullah Nallah Elevated Road (BPNER) across the Yamuna River, to connect to the UP Link Road at a point less than 1 km upstream from the Mayur Vihar link Road.

There was also a proposal of Ghaziabad Development Authority to extend the Hindon Elevated Road to UP Link Road and connecting to the Mayur Vihar Link road. The proposed connector road also built along the Hindon Canal.

At present, pursuant to the judgement of the Allahabad High Court and interim order of the Supreme Court, the Company is not collecting toll from the users, However, in the event the toll is restored, the traffic and toll collections will have some impact by the above developments which cannot be quantified currently.

Strength and weakness:

Since 2016, when the tolling has been stopped due to Honble Allahabad High Court Order, the primary source of income is the income generated through lease of advertising space. DND Flyway has rebranded itself as a premium destination in the matter and commands significant premium. pursuant to the intervention of New Board, and by means of careful market survey, Company has awarded the contract for leasing of advertisement space to a new licensee. This would lead to a significant increase in the income of Company post stabilisation of business and receipt of all approvals.

Reliance on single source of income is always subject to lot of external factors and can be impacted by adverse development. The income of company, in past, had come down significantly during the Covid period.

RISK AND CONCERNS

Income Tax Matters

The Company has been contesting an income tax demand including penalty of Rs. 23,127/- Crores for period from AY 2006-07 to AY 2014-15 at ITAT. Such hearing were greatly delayed on account of limited functioning of Tribunal on account of Covid related restrictions.

Subsequent to lifting of such restrictions and by means of pro-active approach of the New Board in calling for early hearing, Company has been able to secure hearing in the matter. Accordingly, the matter was heard, argued and counter argued on July 26, 2023, August 1, 2023 and was concluded on August 2, 2023. Consequently, vide its Order dated August 8, 2023, the Honble ITAT has pronounced its judgment for Assessment Years 2006-07 to 2011-12, wherein the appeals of the Revenue were dismissed and appeal of Company was allowed. As a result of this, approximately 72% of the total Demand of Rs. 23,127/- crores has been addressed by means of the ITAT Order dated August 8, 2023. For pending appeals pertaining to Assessment Years 2012-13 to 2014-15, the next date of hearing has been fixed as October 11, 2023.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

SLP before Supreme Court

The Honble HC of Allahabad in a judgement dated October 26, 2016 held that the two specific provisions relating to levy and collection of fee to be inoperative but refused to quash the Concession Agreement. Consequently, collection of user fee from the users of the NOIDA Bridge was suspended from October 26, 2016. However, the Company continues to fulfil its obligations as per the Concession Agreement, including maintenance of Project Assets.

The Company had challenged the HC Judgment before the Honble Supreme Court of India ("SC") by way of Special Leave Petition (SLP No. 33403 of 2016). The Honble SC had on November 11, 2016, passed an order in the aforesaid matter, requesting the Comptroller and Auditor General of India ("CAG") to assist the court in the matter by verifying the claim of the Company that the Total Cost of the Project has not been recovered in accordance with the terms of the Concession Agreement dated 12.11.1997. The CAG filed an Affidavit along with sealed cover report to SC on March 22, 2017. The CAG report clearly specified that Total Cost of Project had not been recovered by the Company. The CAG report also contained some other observations by the CAG, which were outside the scope of its remit. The SC Bench directed that the CAG Report be kept in a sealed cover and need not be provided to the Respondents in the case. The SC stated that the CAG report would continue to remain in a sealed cover.

The matter was taken up for hearing on several occasion however, on account of paucity of time the matter couldnt be taken up by the Honble Court.

After lot of effort by the Company, the matter was last heard on July 27, 2023. As per the recorder, the Honble Supreme Court has requested the Learned Additional Solicitor General of India to examine the report submitted by the CAG and assist the Honble Supreme Court on next date ie September, 5, 2023.

Arbitration Matters:

New Okhla Industrial Development Authority

The Judgment of the Honble HC of Allahabad had constituted a Change in Law as per the Concession Agreement, which obligates NOIDA to modify or cause to modify the Concession Agreement so as to place the Company in substantially the same legal, commercial and economic position as it was prior to such Change in Law. Accordingly, the Company had sent a proposal dated November 17, 2016 under Section 6.3B(a) of the Concession Agreement notifying NOIDA of the resultant Change in Law and occurrence of Events of Default. However, NOIDA failed to take any steps in pursuance of the said proposal. The Company then sent a Notice of Arbitration to NOIDA on February 14, 2017 pursuant to Section 26.1 of the Concession Agreement. The Company had appointed Mr. Justice Vikramajit Sen (Retd.) as its designated Arbitrator. However, NOIDA had not nominated its Arbitrator. In light of the foregoing, the Company had filed a petition on July 20, 2017 under Section 11(4) of the Arbitration and Conciliation Act, 1996 ("A & C Act") in the Honble HC of Delhi which heard the said petition on October 24, 2017 and appointed Mr. Justice S.B Sinha (Retd.) as the Arbitrator on NOIDAs behalf. The Arbitral Panel comprising of Mr. Justice (Retd.) Satya Brata Sinha and Mr. Justice (Retd.) Vikramjit Sen and Honble Justice (Retd.) R.C. Lahoti as Presiding Arbitrator had been constituted on November 15, 2017. At the preliminary hearing of the Arbitral Tribunal on December 2, 2017, schedule of steps to be followed upon had been agreed upon.

In compliance with the schedule, NTBCL had submitted their Statement of Claim aggregating to approximately Rs. 7000,00,00,000/- (Rupees Seven Thousand Crores) excluding interest and costs. Separately, IL&FS as the project sponsor and party to the Concession Agreement had filed an impleadment application with the Arbitral Tribunal along with a Statement of Claim. NOIDA had also filed a Counterclaim Statement of Defence and an Application under Section 16 of the A & C Act raising jurisdictional objections before the Arbitral Tribunal. The Company and IL&FS have filed their reply to the application of NOIDA under Section 16 objecting to the maintainability of the claims within the stipulated time. NOIDA too has filed its written submissions on May 18, 2018 for arguments on application under Section 16 of the A & C Act. On May 19, 2018, the Arbitral Tribunal heard the arguments of the legal counsel of NOIDA and on June 2, 2018 the Arbitral Tribunal heard the objections and arguments of the legal counsel of IL&FS. On September 12, 2018, NOIDA had moved an application for the amendment of their counter claim which was opposed by the Companys Legal Counsel. On September 20, 2018 the Arbitrators stated that (a) amendment of the counter claim filed by NOIDA be left open to be considered at the final hearing and the Company has been given time to file its reply to the said counter claims on or before October 31, 2018, (b) The next date of hearing is November 13, 2018 for (i) settling the points for determination, (ii) determining the order of production of witnesses and issuing such further directions as needed, (c) March 5, 2019 to March 9, 2019 are appointed for recording evidence and (d) April 8, 2019 to April 13, 2019 and April 15, 2019 are appointed for final hearing.

Due to the Order of NCLAT dated October 15, 2018, passed in the matter of IL&FS and its Group Companies including NTBCL, the arbitration proceedings by NOIDA against the Company were kept in abeyance by the Arbitral Panel. NOIDA had also filed an Application for Directions in the Honble Supreme Court (SC) seeking a stay on the arbitral proceedings and the stay of the interim award dated August 10, 2018 (rejecting NOIDAs Section 16 application) passed by the Arbitral Tribunal. On account of the sad demise of Justice (Retd.) S. B. Sinha on March 19, 2019 who was representing NOIDA, the NOIDA had nominated Justice (Retd.) G. P. Mathur to replace late Justice (Retd.) S.B. Sinha and the Arbitration Tribunal had been re-constituted on April 25, 2019. Due to reconstitution of the Tribunal the following revised schedule of hearing was decided by the Arbitration Tribunal: During the proceedings on 12.04.2019 in the matter of NTBCL v FONRWA & Ors. (SLP(C) No. 33403 of 2016), the Supreme Court has granted a stay on the arbitration proceedings.

Arbitration Matter - M/s NAKS Creators and M/s Anant Solutions

The Company has terminated the contract with its erstwhile Licensee M/s Naks Creators as per terms of the License agreements. Subsequently, Company has awarded the Contract for Lease of Advertisement space to another Company at a much higher price. Pursuant to the termination of Contract, M/s Naks Creators have filed and application in Honble Delhi High Court, who in turn have directed for settlement of matter by means of Arbitration, a method prescribed under the Contract. On April 12, 2023 hearing have been completed and both parties have submitted their claims and counter claims.

The Ld. Arbitral Tribunal vide order dated 03.03.2023 had: (a) dismissed the Claimants prayer seeking an injunction on the termination of the License Agreements; and (b) directed

NTBCL to submit a fixed deposit of INR 5 crores with the Arbitral Tribunal as security in the event an adverse award was passed against NTBCL.

On a limited appeal filed by NTBCL against the direction to make a deposit, the Honble Delhi High Court vide order dated April 12, 2023 (Arb. A (COMM) 8 of 2023) granted an interim stay in favour of NTBCL. The next date of hearing is October 16, 2023.

Another application filed by Claimants under Section 17 of the Arbitration Act seeking stay on encashment of Bank Guarantee dated 1.06.2018 was dismissed as withdrawn vide order dated April 19, 2023, since the Ld. Arbitral Tribunal was not inclined to stay the said encashment.

Resolution process of IL&FS and its Group Companies

Pursuant to the proceedings filed by the Union of India under Sections 241 and 242 of the Companies Act, 2013, the National Company Law Tribunal, Mumbai Bench ("NCLT"), by way of an Order dated October 1, 2018, suspended the erstwhile Board of Directors of Infrastructure Leasing & Financial Services Limited ("IL&FS") and re-constituted the same with persons proposed by the Union of India (such reconstituted Board, referred to as the "New Board"). The National Company Law Appellate Tribunal ("NCLAT") by way of its order on October 15, 2018 ("Interim Order") in the Company Appeal (AT) 346 of 2018, after taking into consideration the nature of the case, larger public interest and economy of the nation and interest of IL&FS and its group companies (including NTBCL) has stayed certain coercive and precipitate actions against IL&FS and its group companies including NTBCL. IL&FS and its group companies are currently undergoing resolution process under the aegis of the NCLAT and NCLT which will impact the going concern status of the Company. Moreover, NCLT, Mumbai Bench vide its Order dated April 26, 2019 has also granted exemption to IL&FS and its Group Companies NTBCL, regarding appointment of Independent Directors and Women Directors. Further, the Honble NCLAT vide its Order dated March 12, 2020 has approved the revised Resolution Framework submitted by New Board alongwith its amendments. In the said Order, Honble NCLAT has also approved October 15, 2018 as the Cut-off date for initiation for Resolution Process of IL&FS and its Group Companies. Accordingly, the Company has not accrued any interest on all its loans and borrowings with effect from October 15, 2018 ("Cut-off date").

It may be noted that as on August 21, 2023, ICICI Bank, the secured creditor to the Company has filed an application with National Company Law Appellate Tribunal ("NCLAT") where they have sought permission to appropriate the Fixed Deposits and Current Account balances of the Company available with its other Bank.

Segment-Wise Performance

The Automatic Vehicle Classification Systems installed at the toll plaza were made in-operational post suspension of collection of user charges from the users of DND Flyway. However, the traffic count by means of visual inspection was conducted by an Independent Professional on March 15, 2023. As per Report the traffic count on Delhi-Noida-Delhi was 1.76 Lakhs and on MVLR was 59 thousand i.e. total traffic on DND was 2.35 Lakhs.

The non-toll revenue during FY 2022-23 is Rs. 2372.43 lakhs as compared to Rs. 1613.68 lakhs for FY 2021-22 which is an increase of 47.02%.

Outlook

Outlook has to be appreciated in light two significant development, one pertaining to stoppage of charging user fee and the other, a huge demand from Income tax. The ITAT decision dated August 8, 2023 has provided significant relief in terms of bringing clarity on Income tax matter (having addressed the demand to the extent of 72%) and it is highly likely that balance amount will also be addressed given it is but an extrapolation of demands that have been set aside. The commencement of hearing at Honble Supreme Court will provide the much needed clarity in terms of collection of user fee and the ensuing Arbitration.

Financial and Operational Performance

Post stoppage of charging user fee, the Company has focussed on taking steps to maximize non toll revenues. It may be apt to note the contribution of new Board in taking steps to augment the revenue base of Company significantly through award of Advertisement Contract to a new licensee. Company has also made significant progress in terms of cost reduction, leaner and far more efficient organization. Further, the Company continues to maintain the Project Assets as permitted by the limited resources available at its disposal.

The Financial and Operational Performance of the Company for year under review and the previous year is given below:

(Rs. in lakhs)

Particulars	March 31, 2023	March 31, 2022
User Fee Income	N.A.	N.A.
Advertisement Income*	2372.43	1613.68
Profit / (Loss) before tax	(3527.51)	(4146.59)
Profit / (Loss) after tax	(3527.51)	(4146.59)
Average Toll realisation per	N.A.	N.A.
vehicle (Rs)

*For March 31, 2022 numbers were greatly impacted by Covid induced Lockdown and non-display of advertisement at Noida side due to issues with NOIDA.

Company, is responsible for upkeep of the DND Flyway as per the Concession Agreement. Pursuant to the Honble Hight Court order dated October 26, 2016, Company was stopped from charging user fee. Despite of significant reduction in its income, the Company in wider public interest and to cater to the safety and security of commuters, has awarded work for repair and maintenance of the DND Flyway in the month of August, 2023. The work among others includes change of street furniture and micro surfacing. This will enhance the ridership experience of the commuters.

Internal Control Systems and their Adequacy

The Company has an effective internal control which is constantly assessed and areas of improvement are identified and gaps filled. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal audit for the year under review was entrusted to M/s Thakur Vaidyanath Aiyer & Co., Chartered Accountants.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the Internal Audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

Human Resources

The Company considers its employees the most valuable resource and ensures the strategic alignment of HR practices to business priorities and objectives. The Company strongly believes in fostering a culture of trust and mutual respect amongst its employees and seeks to ensure that values and ethos are understood by everyone and are the reference point in all people matters.

Cautionary Statement

Certain statements in the Management Discussion and Analysis Report describing the Companys objectives, estimates and expectations or predictions 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 which could make a difference to the Companys operations include traffic, government concession, network improvements, changes in government regulations and other incidental factors over which the Company does not have any direct control.

By order of the Board

For Noida Toll Bridge Company Limited

Nand Kishore

Chairman

DIN: 08267502

Date: August 29, 2023