MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Noida Toll Bridge Company Limited (NTBCL) was promoted by Infrastructure Leasing & Financial Services Ltd. (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, Promoter and New Okhla Industrial Development Authority (NOIDA) in November 1997, gives 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 and hereinafter referred to 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 with a four lane, 1.7 km link to Mayur Vihar commissioned in June 2007 (Phase I)/January 2008 (Phase II).

NTBCL began operations in February 2001 with an average daily traffic of 18,294 in FY 2002 which has grown to 1,15,162 in FY 2015.

NTBCL is a public company with Equity Shares listed on the National Stock Exchange and the Bombay Stock Exchange in India and GDRs listed on the AIM segment of the London Stock Exchange.

Industry Structure and Development / Competition and Threats

Although the facility caters specifically to traffic between Noida/Mayur Vihar and South Delhi, it continues to compete with two free bridges which cross the Yamuna River, namely, Nizamuddin Bridge and Okhla Barrage/Kalindi Kunj Bridge.

The Okhla Barrage / Kalindi Kunj Bridge is extremely congested during peak hours, which had lead the Noida Authority to explore the option of expanding the capacity downstream. The work of construction of a new bridge over river Yamuna, downstream of the Okhla barrage - Kalindi Kunj, has been awarded.

The Government of Delhi has been considering extending the Barapullah Nullah Elevated Road (BPNER) across the Yamuna River. The Company continues to follow up with the Government of Delhi with an alternative proposal of a direct integration of the BPNER with the DND (rather than extending BPNER across the Yamuna river) as this integration will more efficiently utilize existing infrastructure as well as save public funds which can be utilised elsewhere. It seems that the Delhi Government is most likely proceeding with this Phase III of the BPNER Project.

Phase II of the BPNER project, however, which includes additional entry and exit ramps on the Ring Road at Sarai Kale Khan, will provide easier access to and from BPNER and DND via the Ring Road and is expected to be completed in a few months. These ramps are likely to increase traffic on DND as well as reduce congestion on the Ring Road at Sarai Kale Khan.

The Delhi Metro Rail Corporation commenced its metro services in Noida from November 13, 2009. The current line caters mainly to commuters travelling between Noida and Central Delhi. Two new Metro lines, one from Hauz Khas (South Delhi) - Kalkaji -Kalindi Kunj, crossing the river at Okhla and proceeding to Botanical Gardens in Noida and the other from Ashram and crossing the river at Mayur Vihar Phase 1 are under construction. These could have a negative impact on two wheeler traffic on the DND, when completed.

Risks and Concerns

The congestion at Ashram crossing, at the Delhi end of the facility, continues to be an area of concern for commuters, especially during peak hours. The additional ramps being built on the Ring Road at Sarai Kale Khan in Phase II of the BPNER project, as well as the Ashram Improvement Plan and the Kalindi Bypass Projects, are likely to eventually ease the congestion at Ashram crossing. Direct connectivity between BPNER and DND or alternatively even the extension of BPNER across the Yamuna will also ease the congestion at Sarai Kale Khan/Ashram.

Waiting time at the toll plaza during peak hours can reach 3-5 minutes, while the Concession Agreement allows a waiting time upto 10 minutes. The toll technology change being implemented will reduce waiting time from the current level. This will be achieved by greater penetration of Electronic Toll Collection (ETC) methods of payment by users (which is currently limited due to the limited capacity of the existing system). ETC methods ensure faster processing as compared to cash payments.

The toll technology is now over 14 years old, making hardware replacements difficult. After an open competitive bidding process, the Company has selected an internationally reputed firm, Efkon India Ltd., to implement the change in the toll technology. The implementation is expected to be completed within financial year 2015-2016. With the new technology the Company will be able to increase the processing capacity of the toll plaza, handle the existing and future traffic more efficiently and provide better services to its users.

The Company is entitled to annual CPI linked/formula driven increases in User Fees which have not been forthcoming on a regular basis. Lately the increases have been partial increases and have also been delayed.

The public protests against paying toll on the facility have been a repercussion of similar protests across the country as well as in Gurgaon. The local resident welfare associations (Federation of Noida Resident Welfare Associations - FONRWA) have filed a PIL in the Allahabad High Court against the toll collection. New Okhla Industrial Development Authority has in turn set up Committees for assessing the Concession Agreement and land transferred to the Company for the project.

The Board of Directors of the Company at their meeting held on July 9, 2015, considered and approved a draft proposal which inter alia includes modifications to clauses in the Concession Agreement dated November 12, 1997, pertaining to a fixed period concession, including bringing an end to the concession period on March 31, 2031. The proposal, after concurrence of NOIDA will be brsented to the Shareholders for approval.

Segment-Wise Performance

The traffic mix has remained more or less the same with cars at 77%, two wheelers (19%) and commercial vehicles at (3%). The marginal drop in share of two wheelers can be attributed to construction of an underpass from Kalindi to Okhla, which was opened to traffic on December 19, 2014. The car traffic has increased by 1.76%, commercial traffic by 6%, while the two wheeler traffic dropped marginally by 1%.

Outlook

The average daily traffic on the DND was 1,15,162 vehicles per day in FY 2014-15 (brvious year 113,591). There has been a growth in traffic of 1.38% and revenue of 4.53% during the year. The revenue growth is attributable to the increase in user fees on December 20, 2014.

In the long run, the traffic on the Delhi Noida Toll Bridge is expected to increase. The plans for improvement of infrastructure and road network in and around the NOIDA/Greater Noida region are likely to be implemented on priority and will provide the necessary boost to real estate development and consequently to traffic on the DND.

The completion of phase II of the BPNER, which includes additional entry and exit ramps on the Ring Road at Sarai Kale Khan, will give commuters on the BPNER (from South Delhi) easier access (via a short stretch of the Ring Road) to and from DND and will add to traffic. Commuters from the DND will then be able to travel, signal free from Noida / Mayur Vihar to Moolchand, Defence Colony, Lajpat Nagar, and Jawahar Lal Nehru Stadium / INA Market. These ramps are expected to be completed shortly. Phase II of BPNER is also likely to decongest Ashram crossing and the surrounding areas, which will have a positive impact on DND traffic.

Internal Control Systems and their Adequacy

The toll collection and management system has inbuilt self audit capabilities. It is equipped with an Automatic Vehicle Classification system which safeguards against revenue leakage.

The Company has adequate internal control systems to monitor business and operational performance, which are aimed at ensuring business integrity and promoting operational efficiency.

The Company has appointed an independent firm of Chartered Accountants as Internal Auditors to ensure that the Company's systems and practices are designed with adequate Internal controls to match the size and nature of operations of the Company.

The Internal Auditors conduct a periodic audit and review, covering all areas of operations, based on an audit program approved by the Audit Committee of Directors. The Reports of the Auditors along with the management's responses are placed before the Audit Committee for discussion and necessary action.

Financial and Operational Performance

The Noida Toll Bridge was the first green-field toll bridge and road network project implemented in the country on an SPV format without recourse to sponsors or financial guarantees from the Government/NOIDA. With initial traffic being far below projections, the Company had to go through a series of restructuring measures and was able to pay its maiden dividend to its Equity Shareholders only in 2010-11.

Human Resources

The Company is a lean organization with a strength of 8 employees as on March 31, 2015.

Cautionary Statement

Certain statements in the Management Discussion and Analysis Report describing the Company's objectives, estimates and expectations or brdictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ from those exbrssed or implied. Important factors which could make a difference to the Company's 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.