CIRCULAR
SEBI/HO/DDHS/DDHS-PoD/P/CIR/2023/184 December 06, 2023
To,
All Infrastructure Investment Trusts (InvITs)
All Parties to InvITs
Madam/Sir,
Sub: Revised framework for computation of Net Distributable Cash Flow (NDCF) by
Infrastructure Investment Trusts (InvITs)
1. Regulation 18(6) of SEBI (Infrastructure Investment Trust) Regulations, 2014 (“InvIT
Regulations”), provides that the Net Distributable Cash Flow (NDCF) shall be
computed at the level of InvIT and HoldCo/SPV. Further, the minimum distribution shall
be 90% of the NDFC at the Trust level as well as the HoldCo/SPV level, subject to
applicable provisions in the Companies Act, 2013 or the Limited Liability Partnership
Act, 2008. Paragraph F of Chapter 3 of the Master Circular for Infrastructure
Investment Trusts provides an indicative framework for calculating NDCF at SPV level
and at the InvIT level.
2. In order to promote Ease of Doing Business, it has been decided to standardize the
framework for calculation of available Net Distributable Cash Flows. Accordingly, the
revised framework for computation of NDCF by InvITs and its Holdcos/SPVs shall be
as per Annexure A.
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Applicability of revised NDCF Framework:
3. The revised framework shall be applicable with effect from April 1, 2024 and
supersedes the Framework for calculation of Net Distributable Cash Flows provided in
Paragraph F of Chapter 3 of the Master Circular for Infrastructure Investment Trusts
(InvITs) dated July 06, 2023.
4. This circular is being issued in exercise of powers conferred under Section 11(1) of
the Securities and Exchange Board of India Act, 1992 and Regulation 33 of the InvIT
Regulations. This circular is issued with the approval of the competent authority.
5. This Circular is available on the website of the Securities and Exchange Board of India
at www.sebi.gov.in under the category “Legal” and under the drop down “Circulars”.
Yours faithfully
Ritesh Nandwani
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No.022-26449696
Email id - riteshn@sebi.gov.in
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Annexure- A
A. Computation of Net Distributable Cash Flow at HoldCo/ SPV level:
Particulars
Cash flow from operating activities as per Cash Flow Statement of HoldCo/ SPV
(+) Cash Flows received from SPV’s which represent distributions of NDCF computed
as per relevant framework (refer note 1 and 9 below) (relevant in case of HoldCos)
(+) Treasury income / income from investing activities (interest income received from
FD, tax refund, any other income in the nature of interest, profit on sale of Mutual funds,
investments, assets etc., dividend income etc., excluding any Ind AS adjustments.
Further clarified that these amounts will be considered on a cash receipt basis)
(+) Proceeds from sale of infrastructure investments, infrastructure assets or shares of
SPVs or Investment Entity adjusted for the following
• Applicable capital gains and other taxes
• Related debts settled or due to be settled from sale proceeds
• Directly attributable transaction costs
• Proceeds reinvested or planned to be reinvested as per Regulation 18(7) of InvIT
Regulations or any other relevant provisions of the InvIT Regulations
(+) Proceeds from sale of infrastructure investments, infrastructure assets or sale of
shares of SPVs or Investment Entity not distributed pursuant to an earlier plan to re-
invest as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of
the InvIT Regulations, if such proceeds are not intended to be invested subsequently
(-) Finance cost on Borrowings, excluding amortisation of any transaction costs as per
Profit and Loss Account and any shareholder debt / loan from Trust
(-) Debt repayment (to include principal repayments as per scheduled EMI’s except if
refinanced through new debt including overdraft facilities and to exclude any debt
repayments / debt refinanced through new debt, in any form or equity raise as well as
repayment of any shareholder debt / loan from Trust)
(-) any reserve required to be created under the terms of, or pursuant to the obligations
arising in accordance with, any: (i). loan agreement entered with banks / financial
institution from whom the Trust or any of its SPVs/ HoldCos have availed debt, or (ii).
terms and conditions, covenants or any other stipulations applicable to debt securities
issued by the Trust or any of its SPVs/ HoldCos, or (iii). terms and conditions, covenants
or any other stipulations applicable to external commercial borrowings availed by the
Trust or any of its SPVs/ HoldCos, (iv). agreement pursuant to which the SPV/ HoldCo
operates or owns the infrastructure asset, or generates revenue or cashflows from such
asset (such as, concession agreement, transmission services agreement, power
purchase agreement, lease agreement, and any other agreement of a like nature, by
whatever name called); or (v). statutory, judicial, regulatory, or governmental
stipulations; or – (refer note 2)
(-) any capital expenditure on existing assets owned / leased by the SPV or Holdco, to
the extent not funded by debt / equity or from reserves created in the earlier years (refer
note 10)
NDCF for HoldCo/SPV’s
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B. Computation of Net Distributable Cash Flow at Trust level: -
Particulars
Cashflows from operating activities of the Trust
(+) Cash flows received from SPV’s / Investment entities which represent distributions
of NDCF computed as per relevant framework (refer note 1 and 9 below)
(+) Treasury income / income from investing activities of the Trust (interest income
received from FD, any investment entities as defined in Regulation 18(5), tax refund,
any other income in the nature of interest, profit on sale of Mutual funds, investments,
assets etc., dividend income etc., excluding any Ind AS adjustments. Further clarified
that these amounts will be considered on a cash receipt basis)
(+) Proceeds from sale of infrastructure investments, infrastructure assets or shares
of SPVs/Holdcos or Investment Entity adjusted for the following
• Applicable capital gains and other taxes
• Related debts settled or due to be settled from sale proceeds
• Directly attributable transaction costs
• Proceeds reinvested or planned to be reinvested as per Regulation 18(7) of InvIT
Regulations or any other relevant provisions of the InvIT Regulations
(+) Proceeds from sale of infrastructure investments, infrastructure assets or sale of
shares of SPVs/ Hold cos or Investment Entity not distributed pursuant to an earlier
plan to re-invest as per Regulation 18(7) of InvIT Regulations or any other relevant
provisions of the InvIT Regulations, if such proceeds are not intended to be invested
subsequently
(-) Finance cost on Borrowings, excluding amortisation of any transaction costs as per
Profit and Loss account of the Trust
(-) Debt repayment at Trust level (to include principal repayments as per scheduled
EMI’s except if refinanced through new debt including overdraft facilities and to
exclude any debt repayments / debt refinanced through new debt in any form or funds
raised through issuance of units)
(-) any reserve required to be created under the terms of, or pursuant to the obligations
arising in accordance with, any: (i). loan agreement entered with financial institution,
or (ii). terms and conditions, covenants or any other stipulations applicable to debt
securities issued by the Trust or any of its SPVs/ HoldCos, or (iii). terms and
conditions, covenants or any other stipulations applicable to external commercial
borrowings availed by the Trust or any of its SPVs/ HoldCos, or (iv). agreement
pursuant to which the Trust operates or owns the infrastructure asset, or generates
revenue or cashflows from such asset (such as, concession agreement, transmission
services agreement, power purchase agreement, lease agreement, and any other
agreement of a like nature, by whatever name called); or (v). statutory, judicial,
regulatory, or governmental stipulations; or – (refer note 2)
(-) any capital expenditure on existing assets owned / leased by the InvIT, to the extent
not funded by debt / equity or from contractual reserves created in the earlier years
(refer note 10)
NDCF at Trust Level
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Notes/ Other Rules:
1. NDCF computed at SPV level for a particular period to be added under this line
item, even if the actual cashflows from SPV to InvIT has taken place post that
particular period, but before finalization and adoption of accounts of the InvIT.
2. The specified agreements could be for either PPP or non-PPP projects. The Trust
retains the option to distribute any surplus amounts, unless such surplus is
required to create reserves for any subsequent period.
3. The option to retain 10% distribution under Regulation 18(6) needs to be
computed by taking together the retention done at SPV level and Trust level.
Refer Illustration below:
Illustration:
Particulars SPV A SPV B Total at SPV level
NDCF as computed 100 150 250
Amount retained by SPV 5 10 15
Net amount distributed to Trust 95 140 235
InvIT Scenario 1 Scenario 2
Received from SPV 235 235
Add:- other items at Trust level for computation
of NDCF 65 (35)
Total NDCF 300 200
Combined NDCF for computing Max retention
NDCF of Trust (A) 300 200
NDCF of SPV’s (B) 250 250
Less: - Amount distributed by SPV’s (C ) (235) (235)
D = A + B -C 315 215
Max retention amount – 10% of D 31.5 21.5
Amount already retained by SPV 15 15
Max amount that can be retained by Trust 16.5 6.5
4. Further, Trust along with its SPVs needs to ensure that minimum 90% distribution
of NDCF be met for a given financial year on a cumulative periodic basis as
specified for mandatory distributions in the InvIT regulations (subject to
provisions of Note 1 above).
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5. Surplus cash available in SPVs due to:
(i) 10% of NDCF withheld in line with the Regulations in any earlier year or half
year or
(ii) Such surplus being available in a new SPV on acquisition of such SPV by
InvIT
(iii) Any other reason, excluding if such surplus cash is available due to any
debt raise could be considered for distribution by the SPV to the InvIT, or
by the Trust to its Unitholders in part or in full, but needs to be disclosed
separately in the NDCF computation and Distribution.
6. Similarly, any restricted cash (disclosed as such) should not be considered for
NDCF computation by the SPV or InvIT (e.g. unspent CSR balance for any year
deposited in a separate account as per Companies Act which will be utilized in
subsequent years, DSRA reserve, major maintenance reserve etc)
7. Further, it is expressly provided that no Trust or SPVs can distribute any
cashflows by obtaining external debt, except to the extent clarified in note 2
above (this will exclude any working capital / OD facilities obtained by Trust/
SPVs as part of Treasury management / working capital purposes as long as
they are squared off within the quarter).
8. Further, it is also clarified that Proceeds from sale of infrastructure investments,
infrastructure assets or shares of SPVs or Investment Entity adjusted for
transaction costs or repayment of debt taken for such assets or other items as
mentioned above which is intended to be reinvested or planned to be reinvested
as per Regulation 18(7) of InvIT Regulations, could be temporarily parked in
Overdraft accounts or used to repay any additional/ unrelated debt. Further if
such proceeds are not intended to be reinvested as per the timeline provided in
the Regulations and such net proceeds are to be distributed back to Unitholders,
then redrawing such temporarily parked funds to distribute such net proceeds will
not be considered as a contravention of note 7 above.
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9. Cash flows received from SPV’s / Investment entities which represent
distributions of NDCF computed as per relevant framework at the Trust level for
further distribution to Unitholders shall exclude any such cash flows used by the
Trust for onward lending to any other SPVs / Investment entities to meet
operational / interest expenses or debt servicing of such other SPVs / Investment
entities.
10. Capital expenditure include amounts incurred and paid towards asset
enhancement and are capitalized to asset value in the financial statements
including lease payments. It is further clarified that Existing Assets as referred to
in this line item includes any new structure / building / other infrastructure
constructed on an existing infrastructure asset which is already a part of the InvIT.
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