j) Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be
made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted
to their present values, where the time value of money is material.
Contingent liability is disclosed for:
• Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
• Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
k) Leases
For any new contracts entered into on or after 1 April 2019, the Company considers whether a contract is, or contains a lease. A lease is defined as ‘a
contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
For leases entered into as a lessee
Recognition and initial measurement
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured
at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to
dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any
incentives received).
Subsequent measurement
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the Company’s incremental borrowing rate. Lease payments included in the measurement
of the lease liability are made up of fixed payments, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any
reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is re-measured, the corresponding adjustment
is reflected in the right-of-use asset.
The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use
asset and lease liability, the payments in relation to these are recognised as an expense in statement of profit and loss on a straight-line basis over the lease
term.
The Company does not have any leases as a lessor.
l) Financial instruments
A Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and
are measured initially at fair value adjusted for transaction costs. Subsequent measurement of financial assets and financial liabilities is described below.
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised cost if both the following conditions are met:
• The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal
amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised
cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in interest income in the Statement of Profit and Loss.
ii. Investments in equity instruments - Investments in equity instruments which are held for trading are classified as at fair value through profit or
loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument
basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). Amounts
presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or
loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost
of the investment.
iii. Investments in Security Receipts - Investments in security receipts are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
Financial assets (or where applicable, a part of financial asset or part of a group of similar financial assets) are derecognised (i.e. removed from the
Company’s balance sheet) when the contractual rights to receive the cash flows from the financial asset have expired, or when the financial asset and
substantially all the risks and rewards are transferred. Further, if the Company has not retained control, it shall also derecognise the financial asset and
recognise separately as assets or liabilities any rights and obligations created or retained in the transfer.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange
or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Derivative financial instruments and hedge accounting
Initial and subsequent measurement
The Company uses derivative financial instruments to hedge its foreign currency risks and interest rate risks. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow
hedges, which is recognised in OCI and later reclassified to profit or loss when the hedge item affects profit or loss. For the purpose of hedge accounting,
hedges are classified as cash flow hedges where Company hedges its exposure to variability in cash flows that is attributable to foreign currency risk and
interest rate risk associated with recognised liabilities in the financial statements.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to
apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company’s risk
management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk
being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to
changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in
cash flows and are assessed on an ongoing basis to determine that they continue to be highly effective throughout the financial reporting periods for which
they are designated.
Accounting for cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is
recognised immediately in the statement of profit and loss.
At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit
or loss and presented as a reclassification adjustment within other comprehensive income.
m) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes)
by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the
period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss (interest and other finance cost associated) for the period attributable to
equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity
shares.
n) Segment reporting
The Company identifies segment basis the internal organization and management structure. The operating segments are the segments for which separate
financial information is available and for which operating profit/loss amounts are regularly reviewed by the CODM (‘chief operating decision maker’) in
deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting
policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their
relationship with the operating activities of the segment.
o) Foreign currency
Functional and presentation currency
Items included in the financial statement of the Company are measured using the currency of the primary economic environment in which the entity
operates (‘the functional currency’). The financial statements have been prepared and presented in Indian Rupees (INR), which is the Company’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency, by applying the exchange rates on the foreign currency amounts at the date of
the transaction. Foreign currency monetary items outstanding at the balance sheet date are converted to functional currency using the closing rate. Non¬
monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially
recorded, are recognized in the Statement of Profit and Loss in the year in which they arise.
p) Government grants
Grants and subsidies from the government are recognised when there is reasonable assurance that (i) the Company will comply with the conditions
attached to them, and (ii) the grant/subsidy will be received.
Grant or subsidy relates to revenue, it is recognised as income on a systematic basis in profit or loss over the periods necessary to match them with the
related costs, which they are intended to compensate.
q) Significant management judgement in applying accounting policies and estimation uncertainty
The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities, and the related disclosures. Actual results may differ from these estimates.
Significant management judgements
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future
taxable income against which the deferred tax assets can be utilized.
Business model assessment - The Company determines the business model at a level that reflects how groups of financial assets are managed together to
achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is
evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the
assets are compensated. The Company monitors financial assets measured at amortised cost that are derecognised prior to their maturity to understand
the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of
the Company’s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if
it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.
Expected credit loss (‘ECL’) - The measurement of expected credit loss allowance for financial assets measured at amortised cost requires use of complex
models and significant assumptions about future economic conditions and credit behaviour (e.g. likelihood of customers defaulting and resulting losses).
The Company makes significant judgements with regard to the following while assessing expected credit loss:
• Determining criteria for significant increase in credit risk;
• Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and
• Establishing groups of similar financial assets for the purposes of measuring ECL.
Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of
provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant management estimates
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting
date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility
of assets.
Defined benefit obligation (DBO) - Management’s estimate of the DBO is based on a number of underlying assumptions such as standard rates of
inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount
and the annual defined benefit expenses.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are
not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
r) Statement of Cash Flows
The above Statement of Cash Flows has been prepared under the indirect method as set out in Ind AS 7 ‘Statement of Cash Flows’ as specified in the
Companies (Indian Accounting Standards) Rules, 2015, as amended.
s) Dividend on equity shares
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at
the discretion of the Company. As per the Companies Act, 2013, a distribution is authorised when it is approved by the shareholders. A corresponding
amount is recognised directly in other equity
t) Borrowing Cost
Borrowing costs, attributable to acquisition and construction of qualifying assets, are capitalised as a part of the cost of such assets up to the date when
such assets are ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss in the period in which they are incurred.
u) Material Prior Period Errors
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred.
If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.
(ii) Investments acquired through, invocation of pledge shares (collaterals) has not been considered as an investment.
(iii) As per NCLT order dated July 17, 2023, the entire existing share capital of the Athena Chhattisgarh Power Ltd (held by Existing Promoters as well as public
shareholders and other shareholders) existing as on the Transfer Date other than the Fresh Equity shall be deemed to stand cancelled and extinguished
without any further act or deed therefore investment amounting to Rs 39.83 Crores have been written off during the previous year through OCI against
the provision made in earlier years (net impact is 0 Nil).
(iv) The Company has technical written off Rs. 4.39 crore of Varam Bio Energy Private Limited in equity investment during the year (fully impaired in earlier
years).
(v) The Company has done technical written off of partial amount of Rs. 2.17 crore of Varam Bio Energy Private Limited in debenture during the year (fully
impaired in earlier years).
(vi) Pursuant to NCLAT order, loan account of IL&FS Tamil Nadu Power Company Limited was restructured effective from September 30, 2023. As per
the restructure scheme total loan was bifurcated between sustainable and unsustainable loan. Sustainable Loan amounting to Rs 125.91 Crores carry
an interest rate @8.5% (which is linked to PNB MCLR) and unsustainable portion amounting to ' 86.14 Crores was converted into non convertible
debentures with interest rate of 0.01% during earlier year.
(vii) The loan account of Meenakshi Energy Private Limited was resolved under IBC which was effective from October 17, 2023. As per the said resolution
plan, non convertible debenture amounting to ' 53.98 Crores were issued against the loan outstanding of ' 150.00 Crores which will be repaid in 5 yearly
equal installment.
**The Company has exercised the option permitted under Section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment)
Ordinance, 2019 and accordingly, has recognised tax for the year ended March 31, 2023 onwards. Also, deferred tax assets/liabilities has been remeasured on
the basis of the rate prescribed under Section 115BAA and recognised the effect of change over the financial years by revising the annual effective income tax
rate.
17,165 (March. 31, 2025: 17,373) privately placed 9.15% secured redeemable non-convertible long-term infrastructure bonds of ' 5,000 each (Infra Series
2) amounting to ' 8.58 Crores (March 31, 2025: ' 8.69 Crores) allotted on March 30, 2012 redeemable at par in 5 to 15 years commencing from March
30, 2017 are secured by way of first charge on the receivables of the assets created from the proceeds of infrastructure bonds and other unencumbered
receivables of the Company to provide the 100% security coverage. During the year, the company has repaid ' 0.10 Crores (March 31, 2025: ' 0.10
Crores) under buyback scheme exercised by eligible holders of infrastructure bonds of Options III and IV in FY2025-26 as per terms of Infra Series 2.
NIL (March 31, 2025: 2,135) privately placed 9.62% secured redeemable non-convertible debentures of ‘NIL each (March 31, 2025 : '3,40,000 each)
(Series 4) amounting to ‘ NIL Crores (March 31, 2025 : '72.59 Crores) were allotted on June 03, 2015 redeemable at par in 3 tranches divided in 33% of
face value on May 28, 2019, 33% of face value on May 28, 2021 and balance 34% of face value on May 28, 2025.
#Net of Ind AS adjustments in respect of transaction costs at Effective Interest Rate (EIR) amounting to ' Nil Crores (March 31, 2025: Rs 0.03 Crores)
(i) Term loan from bank
Term loans from banks carry interest ranging from 8.85% to 10% p.a. The loans carry various repayment schedules according to their respective sanctions
and thus are repayable in 16 to 48 quarterly instalments. The loans were secured by first pari-passu charge on receivables of loan assets by way of
hypothecation (other than assets created/ to be created in favour of specific lenders) so that lenders should have at least 100%/ 110%/111% security
coverage on its outstanding loan at all times during the currency of the loan. Refer note No 65.7 (IX) for maturity profile of borrowings.
(ii) External commercial borrowings
External Commercial Borrowings (“ECB”) carried interest ranging from O/N SOFR CAS 1.90% p.a during FY25-26. The loan was repayable in 32 equal
quarterly instalments as per the due dates specified in the respective loan agreements and stands fully repaid as on March 31, 2026. The borrowings are
secured by way of first ranking exclusive charge on all present and future receivables of the eligible loan assets created by the proceeds of ECB. During the
year ended March 31, 2026, repayments of ECB loan have been made amounting to USD 25,00,000 (' 16.72 Crores)
As at March 31, 2026, the Company had undrawn sanctioned borrowing facilities of ' 100 Crores (March 31, 2025 : '100 Crores)
Defined benefit plans:
The Company has following defined benefit plans for its employees
- Gratuity: The Company has a defined benefit gratuity plan. Every employee is entitled to gratuity as per the provisions of the Payment of Gratuity Act, 1972.
The liability of Gratuity is recognized on the basis of actuarial valuation.
- Post-Retirement Medical Benefit: The Company operates post-employment medical benefits scheme. The liability is recognised on the basis of actuarial
valuation.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk , longevity risk and salary risk
Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase, mortality, etc. The sensitivity
analysis below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period,
while holding all other assumptions constant.
Sensitivity Analysis
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in
assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit
method at the end of reporting period, which is same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
42. Capital
The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the Reserve
Bank of India (RBI). The adequacy of the Company’s capital is monitored using, among other measures, the regulations issued by RBI.
The Company has complied in full with all its externally imposed capital requirements over the reported period.
42.1 Capital management
The capital management objectives of the Company are:
- to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios
- to ensure the ability to continue as a going concern
- to provide an adequate return to shareholders
Management assesses the capital requirements of the Company in order to maintain an efficient overall financing structure. This takes into account the
subordination levels of the Company’s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes
in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the
amount of dividends paid to shareholders, return on capital to shareholders, issue new shares or sell assets to reduce debt.
42.2 Regulatory capital
As contained in RBI Master Directions - (Non-Banking Financial Company - Prudential Noms on Capital Adequacy) Directions, 2025 (hereinafter referred
to as “RBI Master Directions”), the Company is required to maintain a capital ratio consisting of Tier I and Tier II capital not less than 15% of its aggregate
risk weighted assets on-balance sheet and of risk adjusted value of off- balance sheet items. Out of this, Tier I capital shall not be less than 10%. The BoDs
regularly monitors the maintenance of prescribed levels of Capital Risk Adjusted Ratio (CRAR). Further, the Company also ensures compliance of guidelines on
“Capital Restructuring of Central Public Sector Enterprises” issued by Department of Investment and Public Asset Management (DIPAM), Ministry of Finance,
Department of Public Enterprises in respect of issue of bonus shares, dividend distribution, buy back of equity shares etc.
-Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments are as described below:
a) Security receipts are valued with reference to sale price observable in the market on the basis of external rating provided by credit rating agencies.
b) The Company’s foreign currency and interest rate derivative contracts are not traded in active markets. Fair valuation of such instruments are provided by
the dealer which are recognised banks and use widely acceptable techniques. The effects of non-observable inputs are not significant for foreign currency
forward contracts.
The Company performs valuations in consultation with third party valuation specialists for complex valuations. Valuation techniques are selected based
on the characteristics of each instrument with the overall objective of maximising the use of market-based information.
-Trade receivables, Cash and Cash equivalents, other bank balances, other current financial Assets, current borrowings, trade payables and other current
financial liabilities: approximate their carrying amounts largely due to the short-Term maturities of these instruments.
-Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique.
Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company
could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting
dates may be different from the amounts reported at each year end.
45 Financial risk management
i) Risk Management
The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and
how the entity manages the risk and the related impact in the financial statements.
The Board has the overall responsibility of risk management which take care of manageing overall risk in the organization. In accordance with the RBI
guidelines to enable NBFCs to adopt best practices and greater transparency in their operations, the Board of Directors of the Company has constituted a Risk
Management Committee to review risk management in relation to various risks, namely market risk, credit risk and operational risk including Asset Liability
Management.
A) Credit risk
Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Company has established various internal risk management
processes to provide early identification of possible deterioration in the creditworthiness of counterparties, including regular collateral revisions.
Counterparty limits are established by the use of a credit risk classification system which assigns each counterparty a risk rating. Risk ratings are subject to
regular revision. The credit quality review process aims to allow the Company to assess the potential loss as a result of the risks to which it is exposed and
take corrective actions.
Cash and cash equivalents and bank deposits
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits
and accounts in different banks across the country.
Trade receivables
Trade receivables measured at amortized cost and credit risk related to these are managed by monitoring the recoverability of such amounts
continuously.
Loans
Credit risk related to borrower’s are mitigated by considering collateral’s from borrower’s. The Company closely monitors the credit-worthiness of the
borrowers through internal systems and project appraisal process to assess the credit risk and define credit limits of borrower, thereby, limiting the
credit risk to pre-calculated amounts. These processes include a detailed appraisal methodology, identification of risks and suitable structuring and
credit risk mitigation measures. The Company assesses increase in credit risk on an ongoing basis for loan receivables amounts that become past due
and default is considered to have occurred when amounts receivable become one year past due.
Other financial assets measured at amortized cost
Other financial assets measured at amortized cost include security deposits and others. Credit risk related to these other financial assets is managed
by monitoring the recoverability of such amounts continuously.
b) Credit risk exposure
b) i) Expected credit loss for loans
A.1 Credit risk measurement
The Company measures credit risk of its exposure using:
(a) Internal Rating: Internal ratings are based on board approved policy that guides credit analysis to place borrowers in watch list based on specific
risk factors such as project progress schedule, promoter’s contribution, PPA status etc. and for state utility companies rating issued by Ministry
of Power (MOP).
(b) External rating: PFS also captures external rating of its borrowers done by RBI approved credit rating agencies like ICRA, CARE, CRISIL and
India rating etc.
These two together helps the Company in better monitoring of its borrowers. The Stageing criteria for ECL computation is also driven by these two
criteria. Stageing of an account gets impacted by taking into consideration both internal rating and external rating.
A.2 Expected credit loss measurement
A.2.1 Significant increase in credit risk and credit impaired financial assets
The Company considers a financial instrument to have experienced a significant increase in credit risk based on the stageing criteria, which is aligned
with ECL policy of the Company.
As per ECL policy, stage 2 contains all loan assets that are not defaulted as at reporting date, but have experienced a significant increase in credit risk
since initial recognition (i.e. two notch downgrade in internal/ external risk rating or loan account with overdue of more than 30 days) or classified
as high risk as per internal risk assessment.
A.2.2 Definition of default
The Company defines a financial instrument as in default, if any borrower whose contractual payments are due for more than 90 days, which is in
line with RBI guidelines.
A.2.3 Explanation of inputs, assumptions and estimation techniques
Probability of default (PD) computation model
Probability of Default is the likelihood that the borrower will not be able to meets its obligations as and when it falls due.
Year-on-Year transition matrices are created starting from FY 2019-20 to 2025-26, and through the cycle (TTC) PD is computed by averaging the
yearly default rate transition matrices. A minimum of 6-years DPD data has been considered to compute the 12 months average probability of default
(PD) which is used to forecast the lifetime PDs by establishing a relationship between TTC and point in time (PIT) PDs.
Stage 1: DPD-bucket specific marginal probability of the financial instrument within the next 12 months from ECL computation date.
Stage 2: For each year, marginal PD is used in case cash flows/repayment schedule is available, else cumulative PD.
Stage 3: As the accounts classified into stage 3 are non-performing assets, so probability of default is assumed to be 100%.
Loss given default (LGD) computation model
Loss Given Default is the percentage of total exposure which the borrower would not be able to recover in case of default.
Workout LGD approach has been used for LGD estimation.
LGD= (Economic loss Cost of Recovery)/EAD
For loans under stage I, stage II & Stage III, the management has determined the value of secured portion, on the basis of best information available
with the Company, including value of assets/ projects in the available balance sheets of the borrowers, technical and cost certificates provided by
the experts and valuation exercise performed by external professionals either appointed by the Company or consortium of lenders, including the
Company.
The conclusive assessment of the impact in the subsequent period, related to expected credit loss allowance of loan assets, is dependent upon the
circumstances as they evolve, including final settlement of resolution of projects/ assets of borrowers under IBC.
Basis of calculating loss rates
First step involved in ECL computation is stageing of the assets into three categories. Stageing of the financial assets depend on the deterioration of
the credit quality of the assets over its lifetime. Performing assets fall under Stage I, underperforming assets fall under Stage II and impaired assets
(non-performing) fall under Stage III.
The following points are considered for stage wise classification of credit exposures:
1. Stage III exposures are exposures where actual default events have occurred i.e. all credit exposures classified as Doubtful or Sub-Standard, or
where significant deterioration in credit quality is envisaged.
2. Stage II exposure are exposures which are not considered impaired asset but were classified as ‘Stressed Accounts’ or are flagged as High-Risk
Category.
3. All other accounts not meeting the first two criteria are classified as Stage 1 accounts.
Quantitative and qualitative factors considered along with quantification w.r.t loss rates
Impact of specific risk factors are taken into account while stageing of accounts and computation of PD. External credit rating is also used for stageing
criteria.
For computation of loss given default, haircuts on collateral, based on subjective parameters are used.
- Property/Land
- Equity/Shares
- Gurantees
- Plant & Machinery
- Any Other Collateral
A.2.4 Forward looking information incorporated in ECL models
The PDs are derived using the relationship of historic default rates of the portfolio and respective macroeconomic variable . Worst, Base and
Best scenarios are created for all the macroeconomic variable and default rates are estimated for all the three scenarios. A normal distribution is a
continuous probability distribution, like the real word macro scenarios, and looks like a symmetric bell-shaped curve. A plus/minus one standard
deviation is the average value of the macro-economic variable on a standard normal distribution curve, which would define a region that includes
68% of all the data points.
Using this approximation, a weight of 68.27% is assigned to the base case. However, in case of extreme scenarios that lie along the tail i.e., the
worst and the best outcome, the ECL movement is non-linear. To capture for this non-linear movement of ECL estimates a higher weight has been
assigned to the worst-case scenario i.e. (100% - 68.27%) * (2/3) = 21.15%. The remaining 10.58 % weight has been given to the base-case for ECL
computation.
iii. Trust and retention account and /or
iv. Bank guarantee, Company guarantee, Government guarantee or personal guarantee and / or
v. Assignment of receivables or rights and / or
vi. Pledge of shares and / or
vii. Undertaking to create a security
A.4 Loss allowance
The loss allowance recognized in the period is impacted by a variety of factors, as described below:
- Transfers between stage 1 and Stage 2 or stage 3 due to financial instruments experiencing significant increase (or decrease) of credit risk or
becoming credit-impaired in the period and the consequent “step up” (or “step down”) between 12-month and Lifetime ECL.
- Additional allowances for new financial instruments recognised during the period as well as releases for financial instruments de-recognised in the
period.
- Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period arising from regular refreshing of inputs to models.
- Financial assets derecognised during the period and write-offs of allowances related to assets that were written off during the period.
A.6 Write off policy
Financial assets are written off either partially or in their entirety to the extent that there is no realistic prospect of recovery. Any subsequent recoveries
equivalent to write off amount is credited to impairment on financial instruments and recoveries over and above the write off amount are credited
to other income in statement of profit and loss.
i) Expected credit losses for financial assets other than loans
Company provides for expected credit losses on financial assets other than loans by assessing individual financial instruments for expectation
of any credit losses:
- For cash and cash equivalents and other bank balances - Since the Company deals with only high-rated banks and financial institutions, credit
risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low.
- For loans comprising security deposits paid - Credit risk is considered low because the Company is in possession of the underlying asset.
- For other financial assets - Credit risk is evaluated based on Company’s knowledge of the credit worthiness of those parties and loss allowance
is measured for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses upon significant increase
in credit risk. The Company does not have any expected loss based impairment recognised on such assets considering their low credit risk
nature, though the reconciliation of expected credit loss for all sub categories of financial assets (other than loans) are disclosed below:
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate
amount of committed credit facilities to meet obligations when due.
Management of the Company monitors forecast of liquidity position and cash and cash equivalents on the basis of expected cash flows (including
interest income and interest expense). The Asset Liability Management Policy aims to align market risk management with overall strategic objectives,
articulate current interest rate view and determine pricing, mix and maturity profile of assets and liabilities. The asset liability management policy involves
preparation and analysis of liquidity gap reports and ensuring preventive and corrective measures. It also addresses the interest rate risk by providing for
duration gap analysis and control by providing limits to the gaps.
The tables below analyse the financial assets and liabilities of the Company into relevant maturity groupings based on their contractual maturities for all
non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact
of discounting is not significant
C) Market Risk
a) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions. The policy on foreign exchange risk management
covers the management of foreign exchange risk related to existing and future foreign currency loans or any other foreign exchange risks derived
from borrowing and lending. The objective of the policy is to serve as a guideline for transactions to be undertaken for hedging of foreign exchange
related risks. It also provides guiding parameters within which the Asset Liability Management Committee can take decisions for manageing the above
mentioned risks. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of
the Company. The Company as per its overall strategy uses derivative contracts to mitigate its risks associated with fluctuations in foreign currency
and interest rates on borrowings. The Company does not use derivative contracts for speculative purposes.
b) Interest rate risk
i) Liabilities
The policy of the Company is to minimise interest rate cash flow risk exposures on long-term loans and borrowings. As at March 31, 2026, the
Company is exposed to changes in market interest rates through loans and bank borrowings at variable interest rates.
Interest rate risk exposure
c) Price risk
Exposure
The Company’s exposure to price risk arises from investments held and classified in the balance sheet at fair value through other comprehensive
income. To manage the price risk arising from investments in equity securities, the Company diversifies its portfolio of assets.
Price sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to equity price risk at the end of the reporting period.
If equity price have been 10% higher/ lower:
- Other comprehensive income for the year ended March 31, 2026 would increase / decrease by 'Nil (for the year ended March 31, 2025: 'Nil)
as a result of the changes in fair value of equity investments measured at FVTOCI.
C) Legal and operational risk
i) Legal risk
Legal and operational risk Legal risk
Legal risk is the risk relating to losses due to legal or regulatory action that invalidates or otherwise precludes performance by the end user or its
counterparty under the terms of the contract or related netting agreements.
The Company has developed preventive controls and formalised procedures to identify legal risks so that potential losses arising from non-adherence
to laws and regulations, negative publicity,etc. are significantly reduced, As at March 31, 2026, there are no material legal cases pending against the
Company. The management believes that no substantial liability is likely to arise from these cases.
ii) Operational risk
Operational risk framework is designed to cover all functions and verticals towards identifying the key risks in the underlaying processes. The
framework at its core, has the following elements:
1. Documented Operational Risk Management Policy.
2. Well defined Governance Structure.
3. Use of identification and Monltonng tools such as Loss Data “Capture, Key Risk Indicators. BRisk Operation Grading of branches every
quarter.
4. Standardized reporting templates . reporting structure and frequency.
The Company has adopted the internationally accepted 3-lines of defence approach to operational risk management.
First line - Field Operations, Central Operation & Product function. Credlt and Internal Control & Quality vertical exercise & also evaluate
internal compliance and thereby lay down/calibrates processes & policies for further improvement. Thus, the approach is “Bottom-up”.
ensuring acceptance of findings and faster adoption of corrective actions. if any. to ensure mitigation of perceived risks.
Second line - Independent risk management vertical supports the first line in providing deep analytics insights. Influencing risk mitigation
strategies and provides oversight through regular monitoring. All key risks are presented to the Risk Management Committee on a quarterly
basis.
Third line - Internal Audit conducts periodic risk-based audits of all functions and process to provide an independent assurance to the Audit
Committee.
46 Ind AS 116 Leases
The Company has leases for office building. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the
balance sheet as a right-of-use asset and a lease liability. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.
(a) The weighted average incremental borrowing rate applied to lease liabilities recognised was 8.11%. (previous year 8.11%)
(b) The following are amounts recognised in profit or loss:
54 The following additional information (other than what is already disclosed elsewhere) is disclosed in terms of amendments dated March 24, 2021 in Schedule
III to the Companies Act 2013 with effect from 1st day of April, 2021:-
a) The title deeds of Immovable properties of the Company are held in the name of the Company.
b) There is no proceeding initiated or pending against the Company during the year for holding any benami property under the Benami Transactions
(Prohibition) Act, 1988 and rules made thereunder.
c) The Company is not declared wilful defaulter by any bank or financial Institution or any other lenders.
d) Being a systemically important non-banking financial company registered with the Reserve Bank of India as per Reserve Bank of India Act, 1934 (2 of
1934), the provisions prescribed under clause (87) of Section 2 of the companies Act 2013 read with Companies (Restriction on number of Layers) Rules,
2017 is not applicable to the Company.
e) There is no scheme of arrangement which has been approved during the year by the Competent Authority in terms of Sections 230 to 237 of the
Companies Act, 2013.
f) There were no transaction that had not been recorded in the books of accounts and surrendered or disclosed as income during the year in the tax
assessments under the Income Tax Act, 1961.
g) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
h) The Company does not have borrowings from banks or financial institutions on the basis of security of current assets. The loans are secured by first pari-
passu charge on receivables of loan assets by way of hypothecation.
i) The Company being a non-banking finance company, as part of its normal business, grants loans and advances to its customers, other entities and persons
ensuring adherence to all regulatory requirements. Further, the company has also borrowed funds from banks, financial institutions in compliance with
regulatory requirements in the ordinary course of business other than transactions described above, the Company has not advanced or loan or invested
funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other
persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the
like to or on behalf of the Ultimate Beneficiaries;
The Company has not received any funds from any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding
(whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate
Beneficiaries;
j) All the charges with respect to borrowings have been created in favor of lenders with ROC within statutory timeline during the financial year FY 2025-26.
k) The Company has not entered into any transactions with the companies struck off under section 248 of the Act or section 560 of the Companies Act,
1956.
l) The Company has not granted loans or advances in the nature of loans to promoters, directors, KMPs and the related parties either severally or jointly with
any other person, that are: (a)repayable on demand or (b) without specifying any terms or period of repayment
55 As of March 31, 2026, the Company was not in compliance with the minimum infrastructure exposure requirement of 75% prescribed for classification as an
NBFC-IFC. The Company is undertaking necessary measures to restore compliance within the stipulated timeline of September 30, 2026. The same has been
duly intimated to the Reserve Bank of India (RBI), and the requisite approval/extension has been obtained.
56 On March 30, 2026, the Managing Director & CEO of the company tendered his resignation, effective from June 30, 2026. Subsequently, on April 8,2026,
the Board of Directors, based on recommendation of the Nomination and Remuneration Committee, approved the appointment of Mr. Rajiv Malhotra as an
Additional Director, in the category of Nominee Director, nominated by PTC India Limited, the holding company.
In view of the above, the Company has initiated the process of appointment of new Managing Director and CEO and one more independent director.
57 The Company does not have any subsidiary but has two associates viz; M/s R.S. India Wind Energy Private Limited (RSIWEPL) and M/s Varam Bioenergy
Private Limited (VBPL). The consolidated financial results have been prepared by the Company in accordance with the requirements of Ind-AS 28 “Investments
in Associates and Joint Ventures” prescribed under section 133 of the Companies Act, 2013. The Company had fully impaired Rs. 65.51 crores value of its
investments in these two associates in earlier years and does not have any further obligation over and above the cost of investment and therefore, in view of
the management, there is no impact on the consolidated financial results for the quarter and year ended March 31,2026. Further, VBPL is presently under
liquidation. Hence, Company’s share of net profit/loss after tax and total comprehensive income/loss of its associates has been considered as Rs. Nil in the
consolidated financial results. Also, the equity investment in Varam Bio Energy Private Limited stands fully written-off in the FY 2025-26. Further, on account
of above, PFS has decided to stop consolidating the above, accordingly no consolidated financials will be prepared from FY 2026-27 onwards.
58 In the year 2008-09, the Company financed M/s East Coast Energy Private Limited (“ECEPL”) through a mix of debt and equity, and subsequently converted
the debentures into equity shares in FY 2009-10. These investments were fair valued at Rs. Nil through OCI in earlier years. Pursuant to the NCLT order
dated October 16, 2024, ECEPL was dissolved under the Insolvency and Bankruptcy Code, 2016, and the Company’s equity investment of Rs. 133.39 crore
was cancelled and extinguished during the quarter ended March 31, 2025. Following internal evaluation and consultation with tax advisors, the write-off was
concluded to be a revenue loss qualifying as a business loss under the Income Tax Act, 1961. Accordingly, the Company has claimed Rs. 133.39 crore as a
business loss for FY 2024-25. The corresponding tax benefit of Rs. 29.49 crore have been recognised under “Earlier Year Taxes” in the financial results for the
quarter ended June 30, 2025 and year ended March 31, 2026.
59 Pursuant to resolution plan dated July 06, 2024 in respect of M/s NSL Nagapatnam Power and Infratech Limited, as approved by NCLT vide order dated May
27, 2025, M/s Rungta Mines Limited, the Successful Resolution Applicant, paid Rs. 125 crore on May 31, 2025 towards the full settlement of principal amount.
The financial impact of same was recognised in the financial results for the quarter ended June 30, 2025. Accordingly, the effect of the said transaction stands
reflected in the financial results for the year ended March 31, 2026.
60 Pursuant to recovery measures and resolution process for M/s Vento Power Infra Private Limited (VIPL), after an elaborate price discovery process, PFS issued
a Letter of Intent (“LoI”) on June 23, 2025 to the highest bidder namely M/s Enviro Infra Engineers Limited (EIEL) for resolution of NPA debt of VIPL. The
gross transaction value of Rs. 115.61 crores was received and the effect of the same has been considered in the financial results for the for the quarter ended
September 30, 2025. Accordingly, the effect of the said transaction stands reflected in the financial results for the year ended March 31, 2026.
61 In case of M/s IL&FS Tamilnadu Power Co. Limited (ITPCL), RBI had permitted special dispensation as to clause 34 of RBI guideline vide letter dated
December 31,2020 with regard to restructuring in this account and all necessary restructuring guidelines have since been complied with by the lenders including
the Company. Subsequently, the Lead Bank (PNB), vide its latest letter dated June 16, 2025, submitted a letter to regulator mentioning compliances for
upgradation of the account to standard and same was permitted on July 04, 2025. In line with above, the Company had upgraded ITPCL to standard category
in the quarter ended June 30, 2025. The Company has received Rs. 12.48 crore and continued to maintain 100% provision against the balance unsustainable
loan (debenture) amounting to Rs. 62.29 crore.
62 As at March 31, 2026, for loans under stage I and stage II, the management has considered the value of secured portion on the basis of best available information
including book value of underlying assets/projects as per latest available audited financial statements of the borrowers. For loans classified under stage III, the
management has considered the latest valuation reports for valuing the security and best estimate of realization available with the Company.
63 During the quarter ended September 30, 2025, the company had technically written off 5 nos. of loan accounts amounting to Rs. 134.19 crores and Rs. 4.39
crores in equity investment in compliance of Reserve Bank of India (NBFC - Resolution of Stressed Assets) Directions, 2025. These loan assets were classified
as Stage-III with 100% impairment loss allowance. Accordingly, the effect of the same stands reflected in the financial results for the year ended March 31, 2026.
64 There are no case of loans transferred/acquired during the year ended March 31, 2026 (corresponding previous year ended March 31, 2025- Nil) under Reserve
Bank of India (Non-Banking Financial Companies -Financial Statements: Presentation and Disclosures) Directions, 2025 dated November 28,2025.
65 In July 2025, Company implemented an updated Expected Credit Loss (ECL) policy, effective from April 01, 2025, which has been duly reviewed and adopted
by the Audit Committee and approved by the Board of Directors. This updated policy has been considered for the preparation of financial results for all the
quarters and annual accounts for the year ended 31st March,2026. The updated policy is duly amended where ever needed in the accounting policy. The
updated policy aims to enhance the accuracy and reliability of credit loss provisioning by aligning it with various critical parameters, including Borrowers’
repayment history, Past delinquency trends, Internal credit ratings, Prevailing industry practices. This harmonized approach ensures a more risk-sensitive
and forward-looking assessment of credit risk. However, the final impact of the expected credit loss allowance will be influenced by the outcomes of ongoing
borrower resolutions, particularly those under the Insolvency and Bankruptcy Code (IBC), which continue to evolve and may affect recoverable amounts.
66 As per Regulation 54(2) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 (“Listing Regulations”), all secured non-convertible
debentures (“NCDs / Bond”) issued by the Company were secured by way of an exclusive charge on identified receivables to the extent of at least 100% of
outstanding secured NCDs and pursuant to the terms of respective information memorandum. As on March 31, 2026, it has been fully redeemed.
67 As per SEBI Circular No. SEBI/HO/DDHS/PoD1/P/CIR/2023/119 dated August 10, 2021 (updated as on July 07, 2023) read with Circular No. SEBI/HO/
DDHS/DDHS-RACPOD1/P/CIR/2023/172 dated October 19, 2023 - Company does not fall under the criteria of Large Corporate as per the applicability
criteria. The required disclosure of information is as follows:
68 On November 21, 2025, The Government of India notified provisions of the Labour Codes which consolidate twenty-nine existing labour laws into a unified
framework governing employee benefits during employment and post-employment. The Labour Codes, amongst other things introduces changes, including a
uniform definition of wages and enhanced benefits relating to leave.
The Company has assessed the financial implications of these changes which has resulted in estimated increase in gratuity and leave liability by Rs. 2.43 crore
due to change in cost of past services. Considering that the impact arising from the enactment of the new legislation is non-recurring in nature, the Company has
presented the incremental amount as “Impact of Labour Codes” under “Exceptional Items” in the Statement of Profit and Loss for the quarter ended December
31, 2025. Accordingly, the effect of the same is included in the financial results for the year ended March 31, 2026.
69 As on March 31, 2026, the Company has assessed its financial position, including expected realization of assets and payment of liabilities including borrowings,
and believes that sufficient funds will be available to pay-off the liabilities through availability of High-Quality Liquid Assets (HQLA) and undrawn lines of credit
to meet its financial obligations in at least 12 months from the reporting date.
70 During the earlier financial year, the Company had incurred expenses of Rs. 0.39 crore towards legal assistance (in the matter of SCNs issued by SEBI/ RBI)
provided to EX-MD & CEO pursuant to the Board decision dated May 18, 2023. Based on the subsequent legal opinion and decision of the Board, the
Company has initiated steps including issuing legal notice to EX-MD & CEO. The Company has fully provided provision against the said recoverable amount
in its books of account.
71 Compliance with audit trail for accounting software.
The Company is using an ERP which is internationally reputed, for maintaining its books of account. The ERP software is having an audit trail (edit log) feature,
that is enabled at Global settings level, database level and the custom table levels. The audit trail feature is operational throughout the year for all financial
transactions recorded in the software. Audit trails are preserved according to statutory record retention requirements.
72 Previous quarter/year’s figures have been regrouped/reclassified wherever necessary to correspond with the current quarter/year’s classification / disclosure.
B Resolution plan and restructuring
I. NSL Nagapatnam Power & Infratech Pvt Ltd (NNPIL)
•NCLT Hyderabad, vide order dated May 27, 2025, approved the resolution plan of Rungta Mines Ltd (RML). Subsequently, PFS received Rs. 125 crores on
May 31, 2025 as per its share mentioned in the approved resolution plan. PFS has issued NDC in favour of RML, and original security documents have been
released to RML. Further, PFS has also transferred the shares (approx. 4.419 crore shares at FV Rs. 10/-), issued by NNPIL against the unsustainable debt of
approx. Rs. 44.19 crores (difference of claim of Rs. 169.19 crores & amount received under CIRP of Rs. 125 crores) for consideration of Re. 1 as per approved
resolution plan, to Rungta Mines Ltd as at Sept 30, 2025.
II. Vento Power Infra Pvt. Ltd. (VPIPL)
• Based on change in management process initiated in January 2025 (post December 17, 2024 Board approval), an elaborate bidding process concluded on
June 22, 2025 with M/s Enviro Infra Engineers Ltd (EIEL) quoting the highest bid of Rs. 115,60,60,660/-. as per the Bid Process document, it was mentioned
that any amount appropriated by PFS from VPIPL post cut- off date (i.e. April 1, 2025) would be adjusted from the final winning bid amount, and balance
would be payable to PFS. Accordingly, since PFS had appropriated Rs. 2.00 crores from VPIPL post April 1, 2025, the final amount payable to PFS was Rs.
113,60,60,660/-. Further, the final documents like assignment agreement, share transfer agreement etc. were executed on Aug 20, 2025, post receipt of entire
consideration from EIE Renewables Pvt Ltd (wholly owned subsidiary of Enviro Infra Engineers Ltd).
74.3 (‘Disclosures in Financial Statements- Notes to Accounts of NBFCs RBI/2025-26/359 DOR.ACC.REC.No.278/21.04.018/2025-26 dated November 28 2025)
A. Exposure
1. Exposure to real estate sector, both direct and indirect
The Company does not have any direct or indirect exposure to the real estate sector as at March 31, 2026 as well as in the previous year ended March 31, 2025.
(a) Other short-term liabilities is calculated considering Trade Payable, Current lease liability, Other financial liability, Non-financial liabilities and other
current liability
(b) Public fund is calculated considering all borrowings except external commercial borrowing
B Credit Default Swaps
The Company does not have any credit default swaps as at March 31,2026 as well as in the previous year ended March 31, 2025.
C Comparison between provisions required under IRACP and impairment allowances made under Ind AS 109
Comparision between provision required under IRACP and impairment Allowance made under Ind As 109 has been disclosed in note No 47
(b) Exchange traded interest rate(IR) derivatives
The Company has not undertaken any Exchange Traded Interest Rate (IR) Derivatives during the year ended March 31, 2026 as well as in the
previous year ended March 31, 2025.
IV. Disclosures on risk exposure in derivatives
(a) Qualitative disclosures
An NBFC shall describe its risk management policies pertaining to derivatives with particular reference to the extent to which derivatives are used,
the associated risks and business purposes served. The discussion shall also include:
i) The structure and organisation for management of risk in derivatives trading,
The overall responsibility for management of derivative-related risks lies with the Asset Liability Management Committee (ALCO), which
operates within the framework of the approved Policy. ALCO reviews risk exposures, approves hedging strategies, and ensures adherence to
prescribed risk limits. The Treasury function executes derivative transactions in line with approved policies and delegated authorities.
ii) The scope and nature of risk measurement, risk reporting and risk monitoring systems,
The Company has established systems for identification, measurement, and monitoring of foreign exchange and interest rate risks. Exposures
are periodically assessed, and risk positions are reported to ALCO. Appropriate limits are defined for open exposures, and compliance with
these limits is monitored on an ongoing basis to ensure that risk levels remain within acceptable thresholds.
iii) Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants
The Company follows a prudent hedging strategy aimed at minimising exposure to currency fluctuations. Forward exchange contracts and other
permitted derivative instruments are used to hedge firm commitments and recognised exposures. The policy prescribes limits on unhedged
exposures, with an objective to maintain minimal or no material residual risk. The effectiveness of hedging strategies is periodically reviewed to
ensure alignment with underlying exposures.
iv) Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of
outstanding contracts; provisioning, collateral and credit risk mitigation.
Derivative transactions are accounted for in accordance with applicable accounting standards and regulatory guidelines.
XII. Remuneration of Directors
Remuneration of Directors has been disclosed with related party transaction in note No 40
XIII. Net Profit or Loss for the period, prior period items and changes in accounting policies
Net Profit/(Loss) for the year ended March 31, 2026 amounts to Rs. 319.70 Crores (Previous Year: Rs. 215.42 Crores for the year ended March 31, 2025).
There are no prior period items during the year ended March 31, 2026 and for the previous year ended March 31, 2025. Further, there have been changes
in accounting policies during the year ended March 31, 2026 and no changes in the previous year ended March 31, 2025.
XIV. Revenue Recognition
Interest and processing fee income on loans
Interest and processing fee income is recorded on accrual basis using the effective interest rate (EIR) method. Interest income on impaired loans are
accounted for to the extent of recovery certainty. Additional interest/overdue interest/penal charges, if any, are recognised only when it is reasonable
certain that the ultimate collection will be made.
Fee & Commission income
Income from business correspondent services is recognised as and when the services are rendered as per agreed terms and conditions of the contract.
Dividend income
Dividend income is recognised at the time when the right to receive is established by the reporting date.
Miscellaneous income
All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realization/collection.
XIX. The Company does not have any joint ventures and subsidiaries abroad as at March 31,2026 as well as in the previous year ended March 31, 2025.
XX. The Company does not have any SPVs sponsored as at March 31,2026 as well as in the previous year ended March 31, 2025.
XIX. Off-balance sheet exposure and structured products
Rs. 978.05 crores represents sanctioned but undisbursed commitments and off-balance sheet exposures as at March 31, 2026
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