8. Provisions

Provisions are recognized when the Company has a present obligation (legal
or constructive) as a result of a past event, it is probable that outflow of
economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, when appropriate, the risks specific
to the liability. When discounting is used, the increase in the provision due
to the passage of time is recognized as a finance cost.

The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at reporting date,
taking into account the risks and uncertainties surrounding the obligation.

When some or all of the economic benefits required to settle a provision
are expected to be recovered from a third party, a receivable is recognized
as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably. The expense relating
to a provision is presented net of any reimbursement in the statement of
profit and loss.

9. Contingent liabilities and contingent assets
Contingent Liability

Contingent liability is a possible obligation that arises from past events
and whose existence will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly within the
control of the company or a present obligation that arises from past events
but is not recognised because

i) it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or

ii) the amount of the obligation cannot be measured with sufficient
reliability.

Contingent liabilities are disclosed on the basis of judgment of the
management/independent experts. These are reviewed at each balance
sheet date and are adjusted to reflect the current management estimate.

A contingent liability is not recognized but disclosed as per requirements of
Ind (AS) 37. The related asset is recognized when the realisation of income
becomes virtually certain.

Contingent Asset

A contingent asset is a possible asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of
one or more uncertain future events not wholly within the control of the
entity.

10. Employee Benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under
which an entity pays fixed contributions into separate entities and will have
no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an employee
benefits expense in profit or loss in the period during which services are
rendered by employees. Prepaid contributions are recognized as an asset to
the extent that a cash refund or a reduction in future payments is available.
Contributions to a defined contribution plan that are due after more than
12 months after the end of the period in which the employees render the
service are discounted to their present value.

The Company pays fixed contribution to Employees’ Provident Fund. The
contributions to the fund for the year are recognized as expense and are
charged to the profit or loss. The Company’s only obligation is to pay a
fixed amount with no obligation to pay further contributions if the fund
does not hold sufficient assets to pay all employee benefits.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a
defined contribution plan. The Company’s liability is towards gratuity and
post-retirement medical facility. The gratuity is funded by the Company and
is managed by separate trust PTC INDIA Gratuity Trust. The Company
has Post-Retirement Medical Scheme (PRMS), under which eligible retired
employee and the spouse are provided medical facilities and avail treatment
as out-patient subject to a ceiling fixed by the Company.

The Company’s net obligation in respect of defined benefit plans is
calculated separately for each plan by estimating the amount of future
benefit that employees have earned in return for their service in the current
and prior periods; that benefit is discounted to determine its present value.
Any unrecognized past service costs is recognised and the fair value of any
plan assets is deducted. The discount rate is based on the prevailing market
yields of Indian government securities as at the reporting date that have
maturity dates approximating the terms of the Company’s obligations
and that are denominated in the same currency in which the benefits are
expected to be paid.

The calculation is performed annually by a qualified actuary using the
projected unit credit method. When the calculation results in a benefit
to the Company, the recognized asset is limited to the total of any
unrecognized past service costs and the present value of economic benefits
available in the form of any future refunds from the plan or reductions in
future contributions to the plan. An economic benefit is available to the
Company if it is realizable during the life of the plan, or on settlement of
the plan liabilities. Any actuarial gains or losses are recognized in OCI in
the period in which they arise.

Other long-term employee benefits

Benefits under the Company’s leave encashment constitute other long term
employee benefits.

The Company’s obligation in respect of leave encashment is the amount
of future benefit that employees have earned in return for their service
in the current and prior periods; that benefit is discounted to determine
its present value. The discount rate is based on the prevailing market
yields of Indian government securities as at the reporting date that have
maturity dates approximating the terms of the Company’s obligations.
The calculation is performed using the projected unit credit method. Any

actuarial gains or losses are recognized in profit or loss in the period in
which they arise.

Short-term benefits

Short term employee benefits are that are expected to be settled wholly
before twelve months after the end of the reporting periods in which the
employee rendered the related services.

Short-term employee benefit obligations are measured on an undiscounted
basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under
performance related pay if the Company has a present legal or constructive
obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.

Liability in respect of gratuity, leave encashment and provident fund of
employees on deputation with the Company are accounted for on the basis
of terms and conditions of deputation of the parent organizations.

11. 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.

Financial assets and financial liabilities are recognized when a Company
entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value
except trade receivables and trade payable which are initially measured at
transaction price.

Transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognized immediately in profit or loss.

Financial Assets

Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of
financial assets not recorded at fair value through profit or loss, transaction
costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within
a time frame established by regulation or convention in the market place
(regular way trades) are recognized on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified as
under:

a) Debt instruments at amortized cost

b) Debt instruments and equity instruments at fair value through profit
or loss (FVTPL)

c) Equity instruments measured at fair value through other
comprehensive income (FVTOCI)

Debt instruments at amortized cost

A debt instrument is measured at the amortized cost if both the following
conditions are met:

a) The asset is held within a business model whose objective is to hold
assets for collecting contractual cash flows, and

b) 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 amortized cost using the effective interest rate (EIR) method. Amortized
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
amortization is included in finance income in the profit or loss. The losses
arising from impairment are recognized in the profit or loss. This category
generally applies to trade and other receivables.

Effective interest method

The effective interest method is a method of calculating the amortised cost
of a debt instrument and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or received that form
an integral part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the debt instrument,
or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.

Income is recognised on an effective interest basis for debt instruments
other than those financial assets classified as at FVTPL. Interest income is
recognised in profit or loss and is included in the “Other income” line item.

Debt instruments and equity instruments at fair value through profit or
loss (FVTPL)

Debt Instruments at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument,
which does not meet the criteria for categorization as at amortized cost or
as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to classify a debt instrument, which
otherwise meets amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so reduces or eliminates
a measurement or recognition inconsistency (referred to as ‘accounting
mismatch’).

Debt instruments included within the FVTPL category are measured at fair
value with all changes recognized in the P&L.

Equity Investments at FVTPL or FVTOCI

All equity investments in scope of Ind-AS 109 are measured at fair value.
Equity instruments which are held for trading are classified as at FVTPL.
For all other equity instruments, the Company decides to classify the same
either as at FVTOCI or FVTPL. The Company makes such election on
an instrument-by-instrument basis. The classification is made on initial
recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI,
then all fair value changes on the instrument, excluding dividends, are
recognized in the OCI. There is no recycling of the amounts from OCI to
P&L, even on sale of Investment. However, the Company may transfer the
cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at
fair value with all changes recognized in the P&L.

Derivatives for trading purposes

Derivatives for trading purpose are initially recognised at fair value on the
date a derivative contract is entered into and are subsequently remeasured
to their fair value at the end of each reporting period. Derivative financial
instruments are carried as assets when the fair value is positive and as
liabilities when the fair value is negative. Changes in fair value of derivatives
are recognised in profit or loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a
group of similar financial assets) is primarily derecognized when:

a) The rights to receive cash flows from the asset have expired, or

b) The Company has transferred its rights to receive cash flows from
the asset or has assumed an obligation to pay the received cash flows
in full without material delay to a third party under a ‘pass-through
arrangement; and either (i) the Company has transferred substantially
all the. risks and rewards of the asset, or (ii) the Company has neither
transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset

When the Company has transferred its rights to receive cash-flows from an
asset or has entered into a pass-through arrangement, it evaluates if and to
what extent it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Company continues to
recognize the transferred asset to the extent of the Company’s continuing
involvement. In that case, the Company also recognizes an associated
liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount
of the asset and the maximum amount of consideration that the Company
could be required to repay.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies expected credit loss
(ECL) model for measurement and recognition of impairment loss on the
following financial assets and credit risk exposure-

• Financial assets that are debt instruments, and are measured at
amortised cost e.g., loans, debt securities, deposits, trade receivables
and bank balance

• Financial assets that are debt instruments and are measured as at

FVTOCI

• Financial guarantee contracts which are not measured as at FVTPL

The Company follows ‘simplified approach’ for recognition of impairment
loss allowance on:

• Trade receivables, and/or any contractual right to receive cash or
another financial asset that result from transactions that are within
the scope of Ind AS 115

• All lease receivables resulting from transactions within the scope of

Ind AS 116

The application of simplified approach does not require the Company
to track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from its
initial recognition.

For recognition of impairment loss on other financial assets and Credit
risk exposure, the Company determines that whether there has been
a significant increase in the credit risk since initial recognition. If credit
risk has not increased significantly, 12-month ECL is used to provide for
impairment loss. However, if credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit quality of the instrument
improves such that there is no longer a significant increase in credit risk
since initial recognition, then the entity reverts to recognising impairment
loss allowance based on 12-month ECL.

ECL impairment loss allowance (or reversal) recognized during the period
is recognized as income/expense in the statement of profit and loss (P&L).
This amount is reflected in a separate line in the P&L as an impairment
gain or loss.

The balance sheet presentation for various financial instruments is
described below:

Financial assets measured as at amortised cost, contract assets and lease
held receivables

ECL is presented as an allowance, i.e., as an integral part of the measurement
of those assets in the balance sheet. The allowance reduces the net carrying
amount. Until the asset meets write-off criteria, the Company does

not reduce impairment allowance from the gross carrying amount.

For assessing increase in credit risk and impairment loss, the Company
combines financial instruments on the basis of shared credit risk
characteristics with the objective of facilitating an analysis that is designed
to enable significant increases in credit risk to be identified on a timely basis.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities
at fair value through profit or loss, loans and borrowings or payables, as
appropriate.

All financial liabilities are recognised initially at fair value and, in the case of
loans and borrowings and payables, net of directly attributable transaction
costs.

The Company’s financial liabilities include trade and other payables, loans
and borrowings including bank overdrafts and financial guarantee contracts.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as
described below:

Financial liabilities at amortised cost

After initial recognition, Interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process.

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 as finance costs in the statement of
profit and loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Company are those contracts
that require a payment to be made to reimburse the holder for a loss it
incurs because the specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognised initially as a liability at fair value, adjusted
for transaction costs that are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured at the higher of the
amount of loss allowance determined as per impairment requirements of
Ind-AS 109 and the amount recognised less cumulative amortisation.

Derecognition

A financial liability is derecognised 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 derecognition 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 or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated 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.

Reclassification of financial assets

The Company determines the classification of financial assets and liabilities
on initial recognition. After initial recognition, no reclassification is
made for financial assets which are categorised as equity instruments at
FVTOCI and financial assets or financial liabilities that are specifically
designated at FVTPL. For financial assets, which are debt instruments, a
reclassification is made only if there is a change in the business model for
managing those assets. Changes to the business model are expected to be
infrequent. The management determines change in the business model
as a result of external or internal changes which are significant to the
Company’s operations. A change in the business model occurs when the
Company either begins or ceases to perform an activity that is significant
to its operations. If the Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification date which is the first
day of immediately next reporting period following the change in business
model. The Company does not restate any previously recognised gains,
losses (including impairment gains or losses) or interest.

L2. Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and
on hand and short-term deposits with an original maturity of three months
or less, which are subject to an insignificant risk of changes in value.

L3. Dividend to equity holders

The company recognises a liability of dividend to equity holders when the
distribution is authorised and the distribution is no longer at the discretion
of the Company. As per the corporate laws in India, a distribution is
authorised when it is approved by the shareholders. A corresponding
amount is recognised directly in equity.

L4. Inventories

Inventories are valued at the lower of cost and net realizable value. Cost
includes cost of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition.

Cost of inventories is measured on First in and First out (FIFO) basis.

Costs of purchased inventory are determined after deducting rebates and
discounts.

Net realizable value is the estimated selling price in the ordinary course
of business, less estimated costs of completion and the estimated costs
necessary to make the sale.

L5. Property, plant and equipment

Recognition and initial measurement

Property, Plant and equipment (PP&E) are carried in the balance sheet
on the basis of at cost of acquisition including incidental costs related
to acquisition and installation, net of accumulated depreciation and
accumulated impairment losses, if any.

Property, Plant and Equipment is recognized when it is probable that
future economic benefits associated with the item will flow to the Company
and the cost of each item can be measured reliably. Property, Plant and
Equipment are initially stated at cost.

Cost of asset includes

(a) Purchase price, net of any trade discount and rebates.

(b) Borrowing cost if capitalization criteria is met.

(c) Cost directly attributable to the acquisition of the assets which
incurred in bringing asset to its working condition for the intended
use.

(d) Incidental expenditure during the construction period is capitalized
as part of the indirect construction cost to the extent the expenditure
is directly related to construction or is incidental thereto.

(e) Present value of the estimated costs of dismantling & removing the
items & restoring the site on which it is located if recognition criteria
are met.

When significant parts of plant and equipment are required to be replaced
at intervals, the Company depreciates them separately based on their
specific useful lives. Likewise, when a major inspection is performed, its
cost is recognized in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.

Subsequent Measurement

Subsequent cost relating to Property, plant and equipment shall be
recognized as an asset if:

a) it is probable that future economic benefits associated with the item
will flow to the entity; and

b) the cost of the item can be measured reliably.

All other repair and maintenance costs are recognized in profit or loss as
incurred.

Depreciation and useful lives

The Company depreciates property, plant and equipment over their
estimated useful lives using written down method except wind mill and
leasehold land. The useful lives are at the rates and in the manner provided
in Schedule II of the Companies Act, 2013

The depreciation on Wind Mills has been changed on Straight Line
Method (SLM) at rates worked out based on the useful life and in the
manner prescribed in the Schedule II to the Companies Act, 2013.

Depreciation on additions to/deductions from property, plant &
equipment during the year is charged on pro-rata basis from/up to the
month in which the asset is available for use/disposed.

Advance paid towards the acquisition of property, plant and equipment
outstanding at each balance sheet date is shown under the head non¬
financial assets in the balance sheet.

The cost of assets not available for use is disclosed under Capital Work in
Progress till the time they are ready for use.

Where the cost of depreciable assets has undergone a change during
the year due to increase/decrease in long term liabilities on account of
exchange fluctuation, price adjustment, change in duties or similar factors,
the unamortized balance of such asset is charged off prospectively over
the remaining useful life determined following the applicable accounting
policies relating to depreciation/ amortization.

Where it is probable that future economic benefits deriving from the cost
incurred will flow to the enterprise and the cost of the item can be measured
reliably, subsequent expenditure on a PPE along-with its unamortized
depreciable amount is charged off prospectively over the revised useful life
determined by technical assessment.

In circumstance, where a property is abandoned, the cumulative capitalized
costs relating to the property are written off in the same period.

An item of property, plant and equipment and any significant part initially
recognized is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset is included in the income statement when the
asset is derecognized.

Depreciation methods, useful lives and residual values are reviewed
periodically, including at each financial year end and adjusted prospectively,
if appropriate.

The Company follows component approach as envisaged in Schedule
II to the Companies Act, 2013. The approach involves identification of
components of the asset whose cost is significant to the total cost of the asset
and have useful life different from the useful life of the remaining assets
and in respect of such identified components, useful life is determined
separately from the useful life of the main asset.

Modification or extension to an existing asset, which is of capital nature
and which becomes an integral part thereof is depreciated prospectively
over the remaining useful life of that asset.

Asset costing less than Rs. 5000/- is fully depreciated in the year of
capitalization.

Derecognition

An item of Property, Plant and Equipment and any significant part initially
recognized is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the
statement of profit and loss when the asset is derecognized.

16. Earnings per equity share

In determining basic earnings per share, the Company considers the net
profit attributable to equity shareholders. The number of shares used in
computing basic earnings per share is the weighted average number of
shares outstanding during the period/year. In determining diluted earnings
per share, the net profit attributable to equity shareholders and weighted
average number of shares outstanding during the period/year are adjusted
for the effect of all dilutive potential equity shares.

17. Share based payments
Equity settled transactions

The excess of market price of underlying equity shares as of the date of the
grant of options over the exercise price of the options given to employees
under the employee stock option plan is recognize as deferred stock
compensation cost and amortized over the vesting period, on a straight line
basis. The cumulative expense recognised for equity-settled transactions at
each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the company’s best estimate of the number
of equity instruments that will ultimately vest. The statement of profit and
loss expense or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period and is
recognised in employee benefits expense

18. Revenue Recognition

Revenue from contracts with customers is recognised when control of the
goods or services are transferred to the customer at an amount that reflects
the consideration to which the Company expects to be entitled in exchange
for those goods or services. The Company has generally concluded that
it is the principal in its revenue arrangements, except for the agency
nature transactions, because it typically controls the goods or services
before transferring them to the customer. The specific recognition criteria

described below must also be met before revenue is recognised. Revenue
from other income comprises interest from banks, employees, etc., dividend
from investments in associates and subsidiary companies, dividend from
mutual fund investments, surcharge received from customers for delayed
payments, other miscellaneous income, etc.

Sale of power

Sale is recognized when the power is delivered by the Company at the
delivery point in conformity with the parameters and technical limits and
fulfilment of other conditions specified in the Power Sales Agreement.
Sale of power is accounted for as per tariff specified in the Power Sales
Agreement. The sale of power is accounted for net of all local taxes and
duties as may be leviable on sale of electricity for all electricity made
available and sold to customers.

The Company considers whether there are other promises in the contract
that are separate performance obligations to which a portion of the
transaction price needs to be allocated. In determining the transaction
price for the sale of power, the Company considers the effects of variable
consideration, the existence of significant financing components, non-cash
consideration, and consideration payable to the customer (if any).

Rendering of services

The company provides consultancy services to its customers. The Company
recognises revenue over time, using the output method measuring the
completion of different stages of consultancy project relative to the total
completion the service, because the customer receives and consumes the
benefits provided by the Company over the time.

Revenue from transactions identified as of agency nature

When another party is involved in providing goods or services to the
customers, the Company determines whether it is a principal or an agent in
these transactions by evaluating the nature of its promise to the customer.
The company is a principal and records revenue on a gross basis if it controls
the promised goods or services before transferring them to the customer.
However, the company is an agent and records revenue on net basis if it
does not control the promised goods or services before transferring them
to the customer.

Variable consideration

If the consideration in a contract includes a variable amount, the Company
estimates the amount of consideration to which it will be entitled in exchange
for transferring the goods to the customer. The variable consideration is
estimated at contract inception and constrained until it is highly probable
that a significant revenue reversal in the amount of cumulative revenue
recognised will not occur when the associated uncertainty with the variable
consideration is subsequently resolved.

Contract assets

A contract asset is the right to consideration in exchange for goods or services
transferred to the customer. If the Company performs by transferring goods
or services to a customer before the customer pays consideration or before
payment is due, a contract asset is recognised for the earned consideration
that is conditional.

Trade receivables

A receivable represents the Company’s right to an amount of consideration
that is unconditional (i.e., only the passage of time is required before
payment of the consideration is due).

Contract liabilities

A contract liability is the obligation to transfer goods or services to a
customer for which the Company has received consideration (or an amount
of consideration is due) from the customer. If a customer pays consideration

before the Company transfers goods or services to the customer, a contract
liability is recognised when the payment is made or the payment is due
(whichever is earlier). Contract liabilities are recognised as revenue when
the Company performs under the contract.

Surcharge Income

The surcharge on late payment/ non- payment from customers is recognized
when:

i) the amount of surcharge can be measured reliably; and

ii) there is no significant uncertainty that the economic benefits
associated with the surcharge transaction will flow to the entity.

Interest income

Interest income from a financial asset is recognized when it is probable
that the economic benefits will flow to the company and the amount of
income can be measured reliably. Interest income is accrued on a time
basis by reference to the principal outstanding and at the effective interest
applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that asset’s net
carrying amount on initial recognition. When calculating the effective
interest rate, the company estimates the expected cash flows by considering
all the contractual terms of the financial instrument (for example,
prepayment, extension, call and similar options) but does not consider the
expected credit losses. Interest income is included in finance income in the
statement of profit and loss.

Dividends

Dividend income is recognized when the Company’s right to receive the
payment is established, which is generally when shareholders approve the
dividend, provided that it is probable that the economic benefits will flow
to the company and the amount of income can be measured reliably.

Rental income

Rental income arising from operating leases is accounted for on a straight¬
line basis over the lease terms unless the lease payments are structured
to increase in line with expected general inflation to compensate for the
lessor’s expected inflationary cost. Rental Income is included in revenue in
the statement of profit and loss.

19. Cash flow statement

Cash flow statement is prepared in accordance with the indirect method
prescribed in Ind AS 7 ‘Statement of Cash Flows’

20. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction
or production of a qualifying asset are capitalized as a part of that asset.
Other borrowing costs are recognized as expenses in the period in which
they are incurred.

21. Business Combinations

Business Combinations are accounted for using the acquisition method of
accounting, except for common control transactions which are accounted
using the pooling of interest method that is accounted at carrying values.
The consideration transferred in the acquisition and the identifiable
assets acquired and liabilities assumed are recognized at fair values on
their acquisition date, which is the date at which control is transferred
to the Company. Goodwill is initially measured at cost, being the excess
of the consideration transferred over the net identifiable assets acquired
and liabilities assumed. Where the fair value of net identifiable assets
acquired and liabilities assumed exceed the consideration transferred,
after reassessing the fair values of the net assets and contingent liabilities,
the excess is recognized as capital reserve. Acquisition related costs are
expensed as incurred.

22. Assets held for Sale

Non-current assets (or disposal groups) are classified as held for sale if their
carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable.
They are measured at the lower of their carrying amount and fair value less
costs to sell, except for assets such as deferred tax assets, assets arising from
employee benefits, financial assets and contractual rights under insurance
contracts, which are specifically exempt from this requirement.

A discontinued operation is a component of the entity that has been
disposed of or is classified as held for sale and that represents a separate
major line of business or geographical area of operations, is part of a single
coordinated plan to dispose of such a line of business or area of operations,
or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the Statement of Profit
and Loss.

2.3 Use of estimates and management judgments

The preparation of financial statements requires management to make
judgments, estimates and assumptions that may impact the application
of accounting policies and the reported value of assets, liabilities, income,
expenses and related disclosures concerning the items involved as well as
contingent assets and liabilities at the balance sheet date. The estimates
and management’s judgments are based on previous experience and other
factors considered reasonable and prudent in the circumstances. Actual
results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.

In order to enhance understanding of the financial statements, information
about significant areas of estimation, uncertainty and critical judgments in
applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements is as under:

a) Useful life of property, plant and equipment

The estimated useful life of property, plant and equipment is based
on a number of factors including the effects of obsolescence, demand,
competition and other economic factors (such as the stability of
the industry and known technological advances) and the level of
maintenance expenditures required to obtain the expected future
cash flows from the asset.

b) Recoverable amount of property, plant and equipment

The recoverable amount of plant and equipment is based on estimates
and assumptions regarding in particular the expected market outlook
and future cash flows. Any changes in these assumptions may have a
material impact on the measurement of the recoverable amount and
could result in impairment.

c) Impairment of non-financial assets

The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or CGU’s fair value less
costs of disposal and its value in use. It is determined for an individual
asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. Where the
carrying amount of an asset or CGU exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable
amount.

In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current

market assessments of the time value of money and the risks specific
to the asset. In determining fair value less costs of disposal, recent
market transactions are taken into account. If no such transactions
can be identified, an appropriate valuation model is used.

d) Defined benefit plans

The cost of the defined benefit plan and other post-employment
benefits and the present value of such obligation are determined using
actuarial valuations. An actuarial valuation involves making various
assumptions that may differ from actual developments in the future.
These include the determination of the discount rate, future salary
increases, mortality rates and attrition rate. Due to the complexities
involved in the valuation and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.

e) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities
recorded in the balance sheet cannot be measured based on quoted
prices in active markets, their fair value is measured using valuation
techniques including the Discounted Cash Flow (DCF) model. The
inputs to these models are taken from observable markets where
possible, but where this is not feasible, a degree of judgement is
required in establishing fair values. Judgements include considerations
of inputs such as liquidity risk, credit risk and volatility. Changes in
assumptions about these factors could affect the reported fair value of
financial instruments.

f) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions
about risk of default and expected loss rates. The Company uses judgement
in making these assumptions and selecting the inputs to the impairment
calculation, based on Company’s past history, existing market conditions
as well as forward looking estimates at the end of each reporting period.

g) Deferred Tax

Deferred tax assets are recognized for unused tax losses to the extent that
it is probable that taxable profit will be available against which the losses
can be utilized. Significant management judgment is required to determine
the amount of deferred tax assets that can be recognized, based upon the
likely timing and the level of future taxable profits together with future tax
planning strategies.

h) Provisions and contingencies

The assessments undertaken in recognizing provisions and
contingencies have been made in accordance with Ind AS 3 7,
‘Provisions, Contingent Liabilities and Contingent Assets’. The
evaluation of the likelihood of the contingent events has required best
judgment by management regarding the probability of exposure to
potential loss. Should circumstances change following unforeseeable
developments, this likelihood could alter.

In the normal course of business, contingent liabilities may arise from
litigation and other claims against the Company. There are certain
obligations which managements have concluded based on all available
facts and circumstances are not probable of payment or difficult to
quantify reliably and such obligations are treated as contingent
liabilities and disclosed in notes

i) Leases

Significant judgment is required to apply lease accounting to Ind
AS 116 ‘Determining whether an arrangement contains a lease’. In
assessing the applicability to arrangements entered into by the Group,
management has exercised judgment to evaluate the right to use
the underlying asset, substance of the transactions including legally

enforceable agreements and other significant terms and conditions
of the arrangements to conclude whether the arrangement needs the
criteria under Appendix C to Ind AS 116.

j) Assets held for sale

Significant judgment is required to apply the accounting of non-current
assets held for sale under Ind AS 105 ‘Non-current Assets Held for Sale and
Discontinued Operations’. In assessing the applicability, management has
exercised judgment to evaluate the availability of the asset for immediate
sale, management’s commitment for the sale and probability of sale within
one year to conclude if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use.

k) Revenue from contracts with customers

The Company applied the following judgements that significantly affect
the determination of the amount and timing of revenue from contracts
with customers:-

Determining method to estimate variable consideration and assessing the
constraint

Certain contracts for the sale of electricity give rise to variable consideration.
In estimating the variable consideration, the Company is required to use
either the expected value method or the most likely amount method based
on which method better predicts the amount of consideration to which it
will be entitled. The most likely amount method is used for those contracts
with a single volume threshold, while the expected value method is used for
contracts with more than one volume threshold.

Before including any amount of variable consideration in the transaction
price, the Company considers whether the amount of variable consideration
is constrained and the uncertainty on the variable consideration will be
resolved within a short time frame.

Principal versus agent considerations

The company enters into agreements with its customers for sales of power
at power exchanges. Under these contracts, the company determines that
it does not control the goods before they are transferred on the basic that
it does not have inventory risk, therefore the company determines the
transactions at exchange are of agency nature.

2.4 Recent accounting pronouncements

Standards issued but not yet effective

Recent accounting pronouncements

Amendments to Ind AS 1 - Classification of Liabilities as Current or Non¬
current and Non-current Liabilities with Covenants and Ind AS 10 Events
after the Reporting Period

Prior to this amendment, where there is a breach of a material covenant
of a long-term loan arrangement on or before the end of the reporting
period with the effect that the liability becomes payable on demand on
the reporting date and the lender, after the reporting date and before
the approval of the financial statements for issue, agreed not to demand
payment as a consequence of the breach, this would be treated as an
adjusting event and the entity would not classify the liability as current as
on the reporting date.

Subsequent to the amendment effective for annual reporting periods
beginning on or after 1 April, 2026, any waiver obtained by the entity from
the lender after the reporting date will be treated as non-adjusting event and
the liability would be classified as current as on the reporting date.

a) The Company holds equity investment in Sikkim Urja Limited (SUL)
(formerly Teesta Urja Limited), which operates a 1,200 MW hydroelectric
project in Sikkim.

Following a flash flood caused by a cloudburst on October 4, 2023, which
severely impacted the project, the Company reassessed the fair value of its
investment at ' 99.03 Crore as on March 31, 2024, down from ' 221.10
Crore as on March 31, 2023. The resulting decline of ' 122.07 Crore was
recorded in Other Comprehensive Income for FY 2023-24.

During FY 2024-25, the major stakeholder of SUL i.e. Sikkim Power
Investment Corporation Limited (SPICL), holding 60.08% of the
shareholding, transferred its entire shareholding to Geenko Energies
Private Limited. Based on the value of abovementioned transaction, status
of the project and other relevant information available with the Company,
the fair value of investment in SUL was assessed by the Company at ' 93.45
Crore as on March 31, 2025, resulting in an additional reduction of ' 5.58
Crore from the carrying value as at March 31, 2024. This adjustment was
also recognised in Other Comprehensive Income during the year ended
March 31, 2025.

Although the plant is making progress and It is expected that the Plant
will start partial generation in FY 2026-27 and full generation in FY 2029¬
30, considering that the power generation from the project has not yet
started and there are uncertainties involved in the project, the Company
has concluded to continue the investment at the same value of ' 93.45
crore.

b) The Company had invested ' 150 Crore in Athena Energy Ventures Pvt.
Ltd (AEVPL). Pursuant to fair value loss recognised in FY 2016-17, 2017-18
and FY 2025-26, the carrying value of its investment in (AEVPL) stood at
NIL Crore. Following NCLT’s order extinguishing all shareholdings, the
Company has written off the investment during the year.

c) Restrictions against the disposal of investments held by the Company are
disclosed in Note 35(B).

a) Trade receivables are hypothecated to the banks for availing the fund based
and non- fund based working capital facilities.

b) Trade receivables include an amount of ' 16.23 Crore due from Tamil
Nadu Electricity Board (TNEB), now TANGEDCO, towards compensation
claim. Sole arbitrator gave an Award against the company which had been
set aside by Single Judge of Madras High Court giving an option to the
Company to invoke the Arbitration afresh to recover its dues. Meanwhile,
TNEB filed an Appeal in Madras HC against the order of the single
judge and the Hon’ble Madras High court on 28.04.2026 had dismissed
the Appeal of TANGEDCO for non prosecution. The management
assessed that the chances of a decision in favor of the company is high
as the compensation amount has not been paid by TNEB in terms of the
Agreement.

c) Trade receivables include ' NIL Crore (March 31, 2025 ' 100.78 crore)
of bills of exchange drawn on state utilities (customers) and discounted
with banks based on arrangements between the Company, banks and state
utilities.

d) Refer note no. 43 for ageing of trade receivables as on 31.03.2026 and
31.03.2025.

Nature and purpose of reserves:

Securities premium

Securities premium account is used to record the premium on issue of shares/
securities. This amount is utilised in accordance with the provisions of the
Companies Act, 2013.

General reserve

General Reserve is a free reserve which is created from retained earnings. The
Company may pay dividend and issue fully paid-up bonus shares to its members
out of the general reserve account, and company can use this reserve for buy-back
of shares.

Contingent reserve

Contingent Reserve is a free reserve which is created from retained earnings. The
company may use it to meet any contingency.

Retained earnings

Retained earnings comprise of the Company’s undistributed earnings after taxes.
FVOCI-Equity investment reserve

The Company has elected to recognise changes in the fair value of certain
investments in equity securities in other comprehensive income. These changes
are accumulated within FVTOCI reserve within equity. The Company transfers
amounts from this reserve to retained earnings when the relevant equity securities
are derecognised.

(a) On November 21, 2025, the Government of India notified four Labour
Codes i.e. the Code on Wages, 2019, the Code on Social Security, 2020,
the Industrial Relations Code, 2020 and the Occupational Safety, Health
and Working Conditions Code, 2020 (collectively, the “Labour Codes”),
consolidating 29 erstwhile labour laws. Subsequently, the Ministry of
Labour & Employment issued draft Central Rules and FAQs to facilitate
assessment of the financial implications arising from changes in the
regulatory framework. The code, amongst other things, introduced changes,
including a uniform definition of wages and enhanced benefits relating to
leaves.

Based on management’s assessment of the impact of the notified provisions
of the Labour Codes, supported by FAQs, the Company has recognised
an additional expense of ' 3.20 Crore towards gratuity and compensated
absences due to change in cost of past services.

The Company continues to monitor the developing regulatory scenario and
further clarifications from the Government in respect of other aspects of
the Labour Codes. Any additional impact arising from such developments
will be assessed and appropriately accounted for as and when such rules are
notified or clarifications are issued.

(b) In pursuant of orders of Court(s)/ APTEL/ CERC, the Company has
recognized surcharge income of ' 1,492.36 Crore for the year ended March
31, 2026 on tariff revision/ additional cost/ O&M Charges etc.. Out of
the aforesaid amount, the Company has recognized surcharge expense of
' 1,491.08 Crore paid / payable to its suppliers as per provisions of power
purchase agreements/ orders.

Notes

i) Claims against the Company not acknowledged as debt include:

a) The Company had filed an appeal with the Hon’ble Supreme Court
in 2014 against the Hon’ble APTEL’s Order dated April 4, 2013,
which required the Company to pay the compensation of ' 41-70
Crore (along with simple interest @ 6% p.a.) to the power supplier
due to the non-offtake of power by the Company as per the “Take
or Pay” clause of the arrangement- As per the Court’s directions, the
Company deposited ' 20.85 Crore (50% of the compensation, against
which provision existed for ' 20.48 crore) with the supplier in April
2013. The Hon’ble Supreme Court, vide order dated October 27,
2014 admitted the case and directed the parties to maintain status
quo.

b) Pursuant to dispute with one of the suppliers, the supplier agreed to
pay the long term open access (LTA) charges but subsequently refuted
its liability to pay the same. The Central Transmission Utility (CTU)
raised a claim of ' 31.68 Crore (March 31, 2025: ' 31.68 crore)
on the Company towards the outstanding LTA charges. However
subsequently the Company surrendered the long term open access.
The claim of CTU is being contested before Appellate Tribunal of
Electricity, which has granted a stay on the order of CERC, which had
earlier allowed the claim of CTU.

c) The Company had a PPA of 1200 MW of power with one of its
suppliers, out of which 840 MW was to be sold on long term basis,
216 MW on Merchant trade basis and 144 MW was the free power of
the home state. For sale of 840 MW on long term basis, the Company
had PSAs with four DISCOMS. However there was considerable
delay on account of certain Force Majeure Events and two DISCOMs
illegally terminated the said PSAs and refused to off-take power under
the PSAs. The Company had relinquished Long Term Open Access
(LTA) in respect of these two DISCOMS.

Though the Company took the LTA but it was agreed that it was
being taken on behalf of DISCOMS which were liable to pay the
transmission charges. However, PGCIL claimed charges of ' 209.51
Crore (March 31, 2025: ' 209.51 crore) from the Company against

relinquishment of LTA along with relinquishment charges for
Merchant Power and Free Power computed as per formula approved
by CERC. The formula approved by CERC is under challenge in
APTEL. As per PSAs, the liability for payment of transmission charges
was of DISCOMs. In case of one of Discoms, CERC held that the
termination of PPA by the Discom was illegal and the Company has
to pay to CTU and the Discom is liable to reimburse the same to
the Company. Liability towards relinquishment charges regarding the
merchant power on the Company is being contested in APTEL. The
cases relating to other DISCOMs are pending before CERC.

In respect of Free Power, CERC held that the Company is liable to
pay to PGCIL and the amount paid will be reimbursed by Energy
and Power Department of Sikkim. The Company has filed an appeal
against CERC order in APTEL.

d) One of the suppliers provided power to the Company from another
source. The customer did not pay to the Company for power supplied
from the another source. Further, the customer also deducted
compensation from the Company for short supply of power by not
considering power supplied from the another source. Consequently,
the Company also deducted the corresponding amounts from the
supplier. This deduction was challenged by the supplier before
TNERC which directed the Company to pay ' 19.87 Crore (March
31, 2025: ' 19.87 crore) against the principal amount including
interest. The Company has filed Appeal in APTEL against the order
of TNERC.

e) The Resolution Professional (RP) had filed a claim against the
Company to refund ' 136.66 Crores (March 31, 2025: ' 136.66
crore) pleading that the amount has been deducted by the Company
from the bills of the supplier. NCLT, Hyderabad dismissed the RP’s
claim but held that the Company should have not invoked the Bank
Guarantee (BG) of ' 27 Crores (March 31, 2025: ' 27 crore) from the
supplier and the same is to be returned by the Company along with
penal interest.

The Company filed Appeal in NCLAT Chennai against the NCLT
order regarding BG. Further, the financial creditors of the suppliers
also filed the appeal against the NCLT order.

The Company is of view that that deductions from bills were as per the
agreements and it was well within its rights to make the deductions.
Though, PTC has a strong ground in Appeal before NCLAT, as an
abundant caution, the Company had created a provision of ' 27
Crore against the amount of BG invoked in FY 2024-25.

f) One of the customers of the Company filed a petition at Delhi
Electricity Regulatory Commission (DERC) against the Company
and its supplier to pay the additional costs of ' 34.63 Crore (March
31, 2025: ' 34.63 crore) incurred by it (the customer) due to breach
and unilateral withdrawal of power. In the opinion of the Company,
it had fulfilled all its obligations under the agreement and applicable
regulations.

g) The Company has filed an Appeal against the order of APTEL
whereby the order passed by the CERC was set aside and held
that the Company is liable to pay the transmission charges of ' 33
Crore from the date of commissioning of Pooling Station of PGCIL
(01.11.2011) till the date of commissioning of Hydro Power Plant of
the generator (24.05.2012) disregarding the fact that the transmission
lines of PGCIL were preponed at the behest of the generator and
became operational from 01.11.2011, but the project of generator did
not commence operation until 24.05.2012 for reasons attributable to
the generator itself and thus, the Company could not be made liable
to pay transmission charges for a period prior to the commissioning of
the project. The Company has filed appeal against the APTEL order
at Hon’ble Supreme Court, which has granted a stay on the order of

APTEL.

h) The Petitioner has claimed an amount of ' 19.05 crores from the
Company on account of supply of power to DISCOMs and also
towards the open access charges. The Company is of the view that it
has strong ground to defend the claim.

i) Other claims against the Company not acknowledged as debts ' Nil
crore (March 31, 2025: ' 125.54 crore)

j) In two cases, the suppliers have raised various issues concerning
interpretation of various clauses of PPAs. The suppliers have filed
the Petition before CERC. As the issues are at initial stage and still
pending before CERC, the measurement of financial effects of the
same is impracticable as on date. Further, in the opinion of the
Company, it had fulfilled all its obligations under the agreement and
regulations.

k) There are various cases at various forums in respect of the
determination/ revision of tariff/compensation/change in law. In
such cases there is no likely liability on the Company as the payment
will be pass-through.

ii) Disputed income tax/ custom duty/service tax pending before various
forums/ authorities amount to ' 201.15 crore (March 31, 2025:
' 395.91 crore). Many of income tax matters were adjudicated in favour
of the Company but are disputed before higher forums/ authorities by the
concerned departments.

In respect of service tax, the dispute pertains to applicability of service tax on
compensation received by the Company which is passed by it to generators/
discoms. Further, the Company is only acting as an intermediary in the
transactions and generators/discoms are the ultimate beneficiary of the
compensation received. The Company has filed a writ against the Order
of the Commissioner, CGST in Delhi High Court. Further, the Ministry
of Finance has issued Circular No. 178/10/2022- GST dated August 03,
2022 clarifying that Service tax/ GST is not applicable on compensation
since the compensation is not by way of consideration for any other
independent activity; it is just an event in the course of performance of
that contract. Therefore, the company believes that it has good grounds on
merits to defend itself

Commissioner of Customs, Guntur passed an order confirming duty
demand stating that coal imported by the Company had CV (Or m, mmf
basis) and VM (on dry, mmf basis) more than 5833 kcal/kg and 14%
respectively with reference to the certain vessels and fell under the category
of bituminous instead of steam coal. The appeal was filed before CESTAT,
Bangalore including stay application for deposit of duty. CESTAT has
granted the stay and directed to deposit 50% of the differential duty, along

with interest The company paid a deposit amounting to ' 6.45 crore against
custom duty/interest in July, 2015 which is subject to the outcome of the
appeal.

iii) Pending resolution of the respective proceedings, it is not practicable for
the company to estimate the timings of cash outflows, if any, in respect
of the above as it is determinable only on receipt of judgements/decisions
pending with various forums/authorities.

iv) Amount above does not include the contingencies the likelihood of which
is remote.

A. Commitments

a) Estimated amount of contracts remaining to be executed on capital account
(property, plant & equipment and intangible assets) and not provided are
as under:

Note No.38 - Disclosure as per Ind AS 19 ‘Employee benefits’

(i) Defined contribution plans:

A. Provident fund

The Company pays fixed contribution to provident fund to the
appropriate authorities. The contributions to the fund for the year
are recognized as expense and are charged to the profit or loss. An
amount of ' 1.65 crore (March 31, 2025: ' 1.47 crore) for the year is
recognised as expense on this account and charged to the Statement
of Profit and Loss.

B. National Pension System (NPS)

The Company pays fixed contribution to NPS to the appropriate
authorities. The contributions to the NPS for the year are recognized as
expense and are charged to the profit or loss. An amount of ' 1.33 crore
(March 31, 2025: ' 0.88 crore) for the year is recognised as expense on
this account and charged to the Statement of Profit and Loss.

(ii) Defined benefit plans:

A. Gratuity-Funded

The Company has a defined benefit gratuity plan. Every employee
who has rendered continuous service of five years/one year or more,
as the case may be, is entitled to gratuity at 15 days salary (15/26 X last
drawn wages) for each completed year/ pro rata, as the case may be,
of service subject to a maximum of ' 0.20 crore on superannuation,
resignation, termination, disablement or on death.

Based on the actuarial valuation obtained in this respect, the following
table sets out the status of the gratuity and the amounts recognised in
the Company’s financial statements as at balance sheet date:

B. Post-Retirement Medical Benefits (PRMB)- Non-funded

The Company has Post-Retirement Medical Facility Benefits (PRMB),
under which the eligible retired employees and their spouses
are provided medical facilities and an out-patient actual medical
reimbursement subject to a ceiling fixed by the Company. The liability
for the same is recognised annually on the basis of actuarial valuation.

Based on the actuarial valuation obtained in this respect, the following
table sets out the status of the PRMB and the amounts recognised in
the Company’s financial statements as at balance sheet date:

b. Sensitivity analysis

Reasonably possible changes at the reporting date to one of
the relevant actuarial assumptions, holding other assumptions
constant, would have affected the defined benefit obligation by
the amounts shown below:

Although the analysis does not take account of the full
distribution of cash flows expected under the plan, it does
provide an approximation of the sensitivity of the assumptions
shown.

The sensitivity analysis above have been determined based
on a method that extrapolates the impact on defined benefit
obligation as a result of reasonable changes in key assumptions
occurring at the end of the reporting period. This analysis may
not be representative of the actual change in the defined benefit
obligations as it is unlikely that the change in assumptions would
occur in isolation of one another as some of the assumptions
may be correlated.

E. Risk exposure

Through its defined benefit plans, the Company is exposed to a

number of risks, the most significant of which are detailed below:

a) Asset volatility

The plan liabilities are calculated using a discount rate set with
reference to bond yields; if plan assets underperform this yield,
this will create a deficit. Most of the plan asset investments are
in fixed income securities with high grades and in government
securities. These are subject to interest rate risk and the fund
manages interest rate risk with derivatives to minimise risk to an
acceptable. The equity securities are expected to earn a return
in excess of the discount rate and contribute to the plan deficit.
Any deviations from the range are corrected by rebalancing
the portfolio. The Company intends to maintain the above
investment mix in the continuing years.

b) Changes in discount rate

A decrease in discount rate will increase plan liabilities, although
this will be partially offset by an increase in the value of the
plans’ assets holdings.

The Company actively monitors how the duration and the
expected yield of the investments are matching the expected
cash outflows arising from the employee benefit obligations. The
Company has not changed the processes used to manage its risks
from previous periods.

Terms and conditions of transactions with the related parties

(a) Transactions with the related parties are made on normal commercial
terms and conditions and at market rates.

(b) The Company is deputing its employees to its trust. The cost incurred
by the company towards superannuation and employee benefits are
recovered from the trust.

(c) The company has given office space on lease to subsidiary company.
The rent and other terms and conditions are fixed after mutual
discussion and after taking into account the prevailing market
conditions.

(d) Outstanding balances of subsidiary and other related parties, if any,
at the year-end, are unsecured and interest free and settlement occurs
through banking transaction. For the year ended March 31, 2026, the
company has recorded ' 13.05 Crore (March 31, 2025: ' 16.17 crore)
on account of impairment against receivable from related parties .
This assessment is undertaken each financial year through examining
the financial position of the related party and the market in which the
related party operates.

There have been no other transactions involving Equity shares or potential
Equity shares between the reporting date and the date of authorisation of these
Financial Statements.

* includes exceptional expense (net of tax) of ' 1.43 Crore (March 31, 2025
exception income (net of tax) of ' 457.39 Crore) refer note no. 34.

Note No.42 - Impairment provision against capital advance

The Company and its subsidiary (PTC India Financial Services Limited) had
signed an agreement in March, 2017 for acquisition of land (share of 50%
each) situated at Greater Noida Expressway, Noida, Uttar Pradesh to be used
for construction of office building of PTC Group. Accordingly, the Company
deposited its share (50%) of the transfer charges of ' 10.26 Crores with Yamuna
Expressway Industrial Development Authority (YEIDA) for transfer of the land.
Subsequently, YEIDA cancelled the approval for transfer and forfeited the
transfer charges deposited, citing the reason as delay in registration, however, the
delay was not attributable to the Company. The Company has filed an appeal
before Principal Secretary, Urban Development, Government of UP as per
directions of Allahabad High Court for retrieving the forfeited amount.

Presently, the matter is pending before Principal Secretary, Government of UP.
As the Company had cancelled the land deal, as a matter of abundant caution, a
provision against the amount deposited with YEIDA was created in FY 2020-21.

Note No.43 . Financial Risk Management

The Company’s principal financial liabilities comprise trade payables, borrowings
and other payables including financial obligations. The main purpose of these
financial liabilities is to finance the Company’s operations. The Company’s
principal financial assets are trade & other receivables, current investments
and cash and short-term deposits that derive directly from its operations. The
Company also holds equity investments in subsidiaries, associate companies and
other companies.

This note presents information about the sources of financial risk and Company’s
exposure to the risks, Company’s objectives, policies and processes for measuring
and managing risk.

Sources of Risks : The sources of risks (not exhaustive) which may impact
Company’s trading business and identified by the company are listed as under:

Risk management framework

The Company’s business activities make risk an integral and unavoidable
component of business. The company manages risks in a proactive and
effective manner and has taken adequate measures to address such concerns
by developing adequate systems and practices. The company has formulated a
detailed framework in the form of Risk Management Policy for identification
of internal and external risks including financial, operational, sectoral,
sustainability (particularly, ESG related risks), information, cyber security
risks etc.

Governance Framework

In order to institutionalize the risk management process in the Company,
there is a detailed governance framework elaborated in the Risk Management
Policy (RMP). A cross functional team approach has been followed to
establish a workable and business focused Risk Management process in
PTC India. The Governance framework of the Risk Management process is
constituted by three layers of authority:

i) Board of Directors, Risk Management Committee and Audit Committee

ii) Executive Management Team

iii) Functional Head(s)

The process of escalation to and monitoring of risks by the three layers in the
Governance framework is built around the following key facilitating roles.
A cross functional team approach has been followed to establish a workable
and business focused risk management process in the PTC Group.

i) Chief Risk Officer

ii) Risk Owners (Either Functional Head or Vice President level functionaries
reporting to Functional Heads)

Roles and Responsibilities

Board, Risk Management Committee and Audit Committee: Terms of
reference of Risk Management Committee, inter-alia, include the following:

(i) To formulate, review and monitor risk management policy;

(ii) To implement, monitor and review the risk management framework, the
risk management plan and related matters;

(iii) To ensure that appropriate methodology, processes and systems are in place
to monitor and evaluate risks; and

(iv) Any other matter as the Audit Committee may deem appropriate after
approval of the Board of Directors or as may be directed by the Board of
Directors from time to time.

Chief Risk Officer (CRO): The CRO provides inputs and insights in the
establishment, monitoring and structuring risk management process and
further monitors its compliance in accordance with relevant provisions of
the policy. CRO coordinates between the Risk Management Committee
and Executive Management Team to establish an advance / proactive risk
reporting system, based on ethical principles, so that risks are understood in
a simple and transparent manner.

Executive Management Team: The CEO, Whole Time Directors and
other Functional heads of respective Business Units / Functions constitute
the Executive Management Team. By virtue of their roles, they are the best
equipped to have knowledge and understanding of their respective business
functions. Hence, they constitute the first layer of risk review and escalation
by risk owners.

Risk Management Group or RMG: Members of the Risk Management
Group, supporting the CRO, monitor effective implementation and
compliance of the risk management policy. They coordinate among various
managerial levels of PTC and the Group Companies to establish processes
and ensure smooth and timely flow of information.

Risk Owners: Risk Owners have been given the ownership of risks. Risk
owners constitute a cross functional team that works closely to deploy an
active risk management process. Risk Owner shall a) initiate identification and
assessment of new risks; b) develop early warning indicators and mitigation
plans; c) evolve risk responses; d) update and maintain Risk Register for their
area of functioning; and e) work as an extension of Risk Management Group
in the Business Unit / Function in managing and reporting risks.

The RMG meets as and when needed. Risks are regularly monitored
through reporting of key performance indicators and tools like Risk Matrix
at transaction level. Outcomes/exceptions and aggregate level reports are
submitted for information to the top management and if required, to the
Board.

Guiding Principles for PTC India’s Subsidiaries :

PTC India recommends adoption of the following risk management template
for its subsidiaries:

(a) Formulate a risk management policy

(b) Ensure independence of Risk Management function

(c) Ensure compliance with applicable regulations

(d) Create a risk management framework.

The guiding principles for risk management at subsidiaries, to ensure value
creation & protection for the group are:

(a) Ensure governance (Ensure that the Board of Directors provides the
oversight of the risk management activities and establish a risk governance
structure)

(b) Analyze business context (Analyze the internal and external business
environment to consider potential impact and likelihood of risks)

(c) Assess performance (Identify, prioritise and mitigate risks)

(d) Assess changes and pursue improvement in risk management

(e) Communicate risk information (Communicate risk information such as
desired risk culture, risk management policy, and procedures to relevant
stakeholders).

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or
counterparty to a financial instrument fails to meet its contractual obligations
resulting in a financial loss to the Company. Credit risk arises principally from
trade receivables, investment in debt securities, loans & advances, cash & cash
equivalents and deposits with banks and financial institutions.

The company has Risk Governance System. To determine whether operations
are within the risk appetite of the organisation at any given time, the following
parameters are reported to the appropriate layer of the Risk Governance system,
and in particular to the Board of Directors and Audit Committee periodically:-

For Marketing -

a) Short Term: List of all open positions and periods involved in each such
position; this is reported on a periodic basis to ensure timely corrective
action in case of exigency.

b) Long-Term: List of all agreements where take-or-pay liability was taken by
PTC and periods involved in each such position; this is reported on atleast
a periodic basis to ensure timely corrective action in case of exigency.

Trade receivables

The company primarily sells electricity to bulk customers comprising mainly state
power utilities owned by State Governments generally with security mechanism
in the form of Letters of Credit. The company has no experience of significant
impairment losses in respect of trade receivables in the past years.

For purchase of power through Power Exchange(s), for clients other than state
owned power utilities, the company either takes payments from the parties on
advance basis or ensures security mechanism in the form of Bank Guarantee/
Letter of Credits. Transactions with state owned power utilities are generally
made without security mechanism, however transactions being with state owned
power utilities, the risk is insignificant

Investments in marketable securities

The company invests in marketable securities to churn its short term working
capital funds.

The Board of directors has established an investment policy by taking into
account liquidity risk as well as credit risk. The investment policy prescribes
guidelines for investible funds on fulfilment of certain conditions i.e. investment
in AMC who invest as per SEBI Guidelines, limit of investment in single AMC,
performance rating etc. The Company’s treasury department operates in line
with such policy. The treasury department actively monitors the return rate and
maturity period of the investments. The Company has not experienced any
significant impairment losses in respect of any of the investments.

Loans & advances

The Company has given open access advances and security deposits. There is
insignificant risk in case of open access advances paid on account of state owned
power utilities. In case of open access advances are paid on account of generators,
the Company generally takes irrevocable undertaking from the generators
to adjust the amounts against their running accounts in case of default. The
company has no experience of significant impairment losses in respect of open
access advances in the past years.

Cash and cash equivalents

The Company held cash and cash equivalents of ' 214.04 crore (March 31,
2025: ' 947.30 crore). The cash and cash equivalents are held with banks with
high credit ratings.

Deposits with banks and financial institutions

The Company held deposits with banks and financial institutions of ' 2661.73
Crore (March 31, 2025: ' 1883.25 crore). In order to manage the risk, the
Company makes these deposit with high credit rating as per investment policy
of the company. Deposits with banks and financial institutions includes cash &
cash equivalent, as mentioned above, of ' NIL crore (March 31, 2025: ' 685.05
crore) (refer note no. 12).

(i) Exposure to credit risk

The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was:

(ii) Provision for expected credit losses

(a) Financial assets for which loss allowance is measured using 12
month expected credit losses

The company has assets where the counter- parties have sufficient
capacity to meet the obligations and where the risk of default is very
low. Accordingly, loss allowance for impairment has been recognised
as disclosed later in this note under “Reconciliation of impairment
loss provisions.

(b) Financial assets for which loss allowance is measured using life time
expected credit losses

In case of energy customers, the major customers are State government
utilities which have sufficient capacity to meet the obligations and
therefore the risk of default is negligible or low. Further, management
believes that the unimpaired overdue amounts are still collectible
in full, based on historical payment behaviour. However, the
management makes provision for expected impairment loss for the
parties identified on case to case basis.

In case of consultancy customers, the Company applies expected
credit loss (ECL) model for measurement and recognition of
impairment loss.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by delivering
cash or another financial asset. The Company’s approach to managing liquidity
is to ensure, as far as possible, that it will always have sufficient liquidity to meet

its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company’s reputation.

The Company has an appropriate liquidity risk management framework for the
management of short, medium and long term funding and liquidity management
requirements. The Company manages liquidity risk by maintaining adequate
cash re serve s/banking facilities/ reserve borrowing facilities by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of
financial assets and liabilities.

The Company’s treasury department is responsible for managing the short term
and long term liquidity requirements of the Company. Short term liquidity
situation is reviewed daily by Treasury. The Board of directors has established
an investment policy by taking into account liquidity risk as well as credit risk.
The Company’s treasury department operates in line with such policy. Long term
liquidity position is reviewed by the Board of Directors and appropriate decisions
are taken according to the situation.

Commercial department and Financial department monitor the company’s
net liquidity position by monitoring the level of expected cash inflows on trade
and other receivables together with expected cash outflows on trade and other
payables.

Typically the Company ensures that it has sufficient cash on demand to meet
expected operational expenses and payments to trade payables including the
servicing of financial obligations, this excludes the potential impact of extreme
circumstances that cannot reasonably be predicted, such as natural disasters.

Fair values are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as follows.

Level 1: Level 1 hierarchy includes financial instruments measured using
quoted prices. This includes investments in quoted equity instruments.
Quoted equity instruments are valued using quoted prices at stock
exchanges.

Level 2: The fair value of financial instruments that are not traded in an
active market is determined using valuation techniques which maximise the
use of observable market data and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are
observable, the instrument is included in level 2. This level includes mutual
funds which are valued using the closing NAV.

Level 3: If one or more of the significant inputs is not based on observable
market data, the instrument is included in level 3. This is the case for
unquoted equity instruments included in level 3.

There have been no transfers in either direction for the years ended March
31, 2026 and March 31, 2025

Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices

- the fair value of the remaining financial instruments is determined using
discounted cash flow/net adjusted asset value/ book value analysis/ NAV.

(c) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of trade receivables, cash and cash equivalents, loans,
other bank balances, Investment (other than investment in subsidiaries,
associates and joint ventures accounted at the cost in accordance with
Ind AS 27 ‘Separate Financial Statements’), other financial assets, trade
payables and other financial liabilities are considered to be the same as their
fair values, due to their short-term nature.

The carrying values for finance lease receivables, if any, approximates the
fair value as these are periodically evaluated based on credit worthiness
of customer and allowance for estimated losses is recorded based on this
evaluation.

The fair values for lease obligation were calculated based on cash flows
discounted using a discount rate. The carrying amount of finance lease
obligations approximate its fair value.

For financial assets and liabilities that are measured at fair value, the
carrying amounts are equal to the fair values.

Note No.45 . Capital Management & Gearing Ratio

For the purpose of the Company’s capital management, capital includes issued
equity capital, share premium and all other equity reserves attributable to the
equity holders of the company. The primary objective of the Company’s capital
management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of
changes in economic conditions. To maintain or adjust the capital structure, the

Company may adjust the dividend payment to shareholders, return capital to
shareholders, raise debts or issue new shares.

The Company’s capital management is intended to create value for shareholders
by facilitating the meeting of its long-term and short-term goals. Its Capital
structure consists of net debt and total equity. The Company monitors Gearing
Ratio, which is total net debt divided by total equity. The objective for managing
capital are being achieved by the way of maintaining an optimal gearing ratio as
given in the below table.

ii) Rendering of Service

The performance obligation is satisfied over-time and payment is generally
due upon completion of stage of service and acceptance of the customer.
In some contracts, short-term advances are required before the consultancy
is provided.

iii) Transactions identified as of agency nature

There are contracts with customers where the company acts in accordance
with timely instruction of the customer and bids at Exchange platform
in accordance with the procedures laid down by the Exchange. The
performance obligation is satisfied and payment is due upon delivery of
power to the customer.

Note No. 49 - Other information

a) The company is engaged in the business of power which in context of Ind
AS 108- “Operating Segments”, is considered as the operating segment of
the company.

b) Expenditure in foreign currency (on accrual basis)

d) Some of the balances of trade payables, trade receivables and advances
are subject to confirmation/ reconciliation. Adjustment, if any will be
accounted for on confirmation/ reconciliation of the same, which in the
opinion of the management will not have a material impact.

Performance obligation

Information about the Company’s performance obligations are summarised
below:

i) Sale of Power

The performance obligation is satisfied upon delivery of power and
payment is generally due within 30 to 60 days from delivery. The contract
generally provide customers with a right to early payment rebate which give
rise to variable consideration subject to constraint.

(ii) During the year, the Company has reclassified Surcharge Income
from “Other Operating Income” to “Other Income” and Surcharge
Expense from “Operating Expenses” to “Finance Costs” considering
that the said classification would be more appropriate for the users of
the financial results in understanding the financial performance of
the company. This change doesn’t result in any impact on the total
income, expense and profits of the Company.

(iii) During the year, the Company has recognized surcharge income of
' 181.03 (March 31, 2025, ' 561.17 crore) from the customers on
amounts overdue against sale of power which has been included in
“Other income”. Correspondingly, surcharge expense of ' 76.56
crore paid / payable to the suppliers ( March 31, 2025, ' 293.48 crore)
has been included in “Finance costs”

g) Amount in the financial statements are presented in ' crore (upto two
decimals) except for per share data and as other-wise stated.

h) Movements in provision for litigation

i) The Company has filed an appeal with Hon’ble Supreme Court against
the APTEL’s order received after the balance sheet date. Although, the
Company is of the view that it has a good chance to succeed in the matter,
on prudent basis, a provision of ' 40.12 Crore has been created and
included in Other Expenses.

j) The Company has signed a JV Agreement with NLC India Renewables
Limited (NIRL), a wholly-owned subsidiary of NLC India Limited (NLCIL),
for development of 2000 MW of green energy capacity.

k) The composition of Board of the Company was not in accordance with
the requirement of SEBI (LODR), 2015 in terms of minimum number
of independent directors during the period from January 13, 2025 to
June 06, 2025. The composition of the Board is in compliance with the
requirements of SEBI (LODR), 2015 w.e.f. June 07, 2025.

l) Additional Information

1. The Company does not have any Benami property, where any
proceeding has been initiated or pending against the Company for
holding any Benami property.

2. The Company does not have any charges or satisfaction which is yet
to be registered with ROC beyond the statutory period,

3. The Company has not traded or invested in Crypto currency or
Virtual Currency during the financial year.

4. The Company has not advanced or loaned or invested funds to any
other person(s) or entity, including foreign entities (Intermediaries)
with the understanding that the Intermediary shall:

a) 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

b) provide any guarantee, security or the like to or on behalf of the
Ultimate Beneficiaries

5. The Company has not received any fund from any person or entity,
including foreign entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that the Company shall:

a) 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

b) provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries

6. The Company has no such transaction which is not recorded in the
books of accounts that has been surrendered or disclosed as income
during the year in the tax assessments under the Income-tax Act,
1961 (such as, search or survey or any other relevant provisions of the
Income-tax Act, 1961)

7. The Company has not done any transaction with Struck off
Companies during the year ended March 31, 2026

8. The title deed of immovable prosperities of the Company are held in
the name of the Company.

9. The Company is not declared wilful defaulter by any bank or financial
institution of any other lenders.

) The Company has used 02 accounting software (SAP and BiAS) for
maintaining its books of account which have a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all
relevant transactions recorded in these software except that in case of BiAS,
the audit trail feature was not enabled at the database level to log any direct
data changes.

However, the Company had implemented adequate controls to prevent
direct data changes and none of the users were given rights to make changes
to those tables and accordingly, no direct data changes were made that
impacted financial records of the Company for the year.

Further, no instance of audit trail feature being tampered with, was noted
in respect of accounting software.

Additionally, the audit trail of relevant previous year has been preserved by
the Company as per the statutory requirements for record retention, to the
extent it was enabled and recorded in the previous year.