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CS Professional · Strategic Management and Corporate Finance · Infrastructure Investment Trusts

An InvIT has net distributable cash flows of ₹200 crore for a year at its own level. It distributes ₹174 crore to unitholders in that year. The InvIT is bound by the 90% minimum distribution norm. Which statement is correct?

The required minimum is 90% of ₹200 crore, which is ₹180 crore. The InvIT distributed only ₹174 crore (87%), so it is non-compliant with a ₹6 crore shortfall. The shortfall cannot simply be carried forward at will.

  1. ACompliant, because 87% exceeds the six-month norm
  2. BCompliant, because the shortfall can be carried to the next year freely
  3. CNot compliant, because the minimum distribution was ₹180 crore, leaving a shortfall of ₹6 croreCorrect
  4. DNot compliant, because the minimum distribution was ₹190 crore, leaving a shortfall of ₹16 crore

Explanation

90% of ₹200 crore = ₹180 crore. Distribution of ₹174 crore is 87%, short by ₹6 crore. Check: 174 + 6 = 180. The ₹190 crore option wrongly uses 95%. Carry-forward is not a free exemption.

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