CORPORATE WISDOM · INVIT AND INFRASTRUCTURE

Net Distributable Cash Flow (NDCF)

In One Sentence

NDCF is cash available for distribution calculated under the applicable SEBI framework at the relevant entity level; minimum distribution requirements apply to NDCF, not accounting profit.

NDCF = cash flows adjusted under SEBI’s separate HoldCo/SPV and trust-level computation tables and applicable notes; not EBITDA minus a short list of costs.

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PRACTICAL FRAMEWORK

Executive Perspectives & Ground Reality

Literal Meaning

SEBI’s July 2025 Master Circular, paragraph 3.19, sets separate NDCF computation tables and notes for HoldCo/SPV and trust levels. Subsequent circulars must also be applied, including the 14 August 2026 conditional add-back for externally debt-funded major maintenance of road projects.

Plain Language

NDCF is the money that is truly free to be put into investors' pockets. It is what remains after the highway or power plant pays its operating bills, services its bank loans, and sets aside money for resurfacing roads or maintaining equipment.

Picture It

Picture a cash-flow reconciliation with prescribed additions, deductions and notes—not a single EBITDA subtraction. Debt-funded road major maintenance may qualify for the August 2026 add-back only with the required project-specific approval, disclosures and auditor certification. Restricted cash and combined entity-level retention also require attention.

See the Numbers

If annual NDCF is ₹250 Cr across 25 Cr issued units, the NDCF per unit is ₹10. At a 90% payout ratio, distribution is ₹9.00 per unit per year, providing a transparent 9.0% distribution yield on a ₹100 unit price.

Ground Reality

SEBI requires NDCF to be computed at both the SPV level and the Trust level. If cash is trapped in an SPV due to bank covenants, Trust-level NDCF suffers even if aggregate earnings are high.

Decision View

Establish clear, standardized NDCF computation policies across all SPVs to avoid unexpected distribution fluctuations that alarm institutional unitholders.

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What Net Distributable Cash Flow (NDCF) Is Not

NDCF and Accounting Net Profit

NDCF is reconciled from the applicable cash-flow statement using SEBI’s prescribed tables and notes. It is not accounting net profit, EBITDA, or gross cash collections minus selected expenses.

NDCF and Discretionary Dividend Pool

Distributing at least 90% of calculated NDCF to unitholders is a statutory requirement under SEBI InvIT Regulations, not a board option.

NDCF and Gross Operating Revenue

Gross toll collections or utility billings must first fund SPV debt repayment, statutory reserves, and maintenance before reaching distributable cash.

NDCF and Fixed Guaranteed Payout

NDCF fluctuates based on real operational factors such as traffic volume, maintenance capital expenditure, and interest rate movements.

Questions Business Leaders Ask About Net Distributable Cash Flow (NDCF)

Is our NDCF formula consistent with current SEBI standardized guidelines?

SEBI issued standardized frameworks for NDCF computation at HoldCo and SPV levels.

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