2.22 Provisions and Contingencies

a) Provisions

Provisions are recognised when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying 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. Unwinding of
the discount is recognised in the Statement of Profit
and Loss as a finance cost. Provisions are reviewed
at each Balance Sheet date and are adjusted to
reflect the current best estimate.

b) Contingencies

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.

Contingent liabilities are disclosed when there is
a possible obligation arising from past events, the
existence of which 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 where it is either not probable that
an outflow of resources will be required to settle or
a reliable estimate of the amount cannot be made.
Information on contingent liability is disclosed in the
Notes to the Financial Statements.

Contingent assets are possible assets that arise 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. Contingent assets are
disclosed in the financial statements when inflow
of economic benefits is probable on the basis of
judgment of management. These are assessed
continually to ensure that developments are
appropriately reflected in the financial statements.

2.23 Share capital and Other Equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue
of new shares are shown in equity as a deduction,
net of tax, from the proceeds.

Self-insurance reserve is created @ 0.12% p.a. on
Original Gross Block of Property, Plant and Equipment
(including considered as Lease receivables) and
value of Inventory except ROU assets and assets
covered under insurance as at the end of the year
by appropriation of current year profit to mitigate
future losses from un-insured risks and for taking
care of contingencies in future by procurement
of towers and other transmission line materials
including strengthening of towers and equipment
of AC substation. The Reserve created as above
is shown as "Self Insurance Reserve" under 'Other
Equity'.

2.24 Prior Period Items

Material prior period errors are corrected
retrospectively by restating the comparative
amounts for prior period presented in which the
error occurred or if the error occurred before the
earliest period presented, by restating the opening
balance sheet.

2.25 Operating Segments

The Board of Directors is the Company's 'Chief
Operating Decision Maker' or 'CODM' within the
meaning of Ind AS 108 'Operating Segments'.
CODM monitors the operating results of its
business segments separately for the purpose of
making decisions about resource allocation and
performance assessment. Segment performance

is evaluated based on profit or loss and is measured
consistently with profit or loss in the financial
statements.

The operating segments have been identified on
the basis of the nature of products / services.

• Segment revenue includes sales and other
income directly identifiable with / allocable
to the segment including inter-segment
transactions.

• Expenses that are directly identifiable with
/ allocable to segments are considered for
determining the segment result. Expenses
which relate to the Company as a whole
and not allocable to segments are included
under unallocable expenditure.

• Income which relates to the Company as
a whole and not allocable to segments is
included in unallocable income.

• Segment assets and liabilities include those
directly identifiable with the respective
segments. Unallocable assets and liabilities
represent the assets and liabilities that relate
to the Company as a whole and not allocable
to any segment.

• Segment capital expenditure is the total
cost incurred during the period to acquire
property, plant and equipment, and
intangible assets.

2.26 Earnings per Share

Basic earnings per share is computed using the
net profit or loss for the year attributable to the
shareholders and weighted average number of
shares outstanding during the year.

Diluted earnings per share is computed using the
net profit or loss for the year attributable to the
shareholders and weighted average number of
equity and potential equity shares outstanding
during the year, except where the result would be
anti-dilutive.

Additionally, basic and diluted earnings per
share are computed using the earnings amounts
excluding the movements in Regulatory Deferral
Account Balances.

2.27 Statement of Cash Flows

Statement of Cash flows is prepared as per indirect
method prescribed in the Ind AS 7 'Statement of
Cash Flows'.

2.28 Non-current assets (or disposal groups)
held for sale and Discontinued Operation

Non-current assets and 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. This condition
is regarded as met only when the asset (or disposal
group) is available for immediate sale in its present
condition subject only to terms that are usual and
customary for sale of such assets (or disposal
groups) and its sale is highly probable.

Assets and liabilities classified as held for sale are
measured at the lower of their carrying amount
and fair value less costs to sell and presented
separately in the Balance Sheet. An impairment
loss is recognised for any initial or subsequent
write-down of the asset (or disposal group) to fair
value less costs to sell. A gain is recognised for any
subsequent increases in fair value less costs to sell
of an asset (or disposal group), but not in excess
of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised
by the date of the sale of the non-current asset (or
disposal group) is recognised at the date of de¬
recognition.

A discontinued operation is a component of the
company that comprises the operations and cash
flows of which can be clearly distinguished from
the rest of the Company which either has been
disposed of, or classified as held for sale, and

• represents a separate major line of business
or geographic area of operations;

• is part of a single co-ordinated plan to
dispose of a separate major line of business
or geographic area of operations; or

• is a subsidiary acquired exclusively with a
view to resale.

Discontinued operations are excluded from the
results of continuing operations and are presented
as a single amount as profit or loss after tax from
discontinued operations in the statement of profit
and loss.

3. Critical Estimates and Judgments

The preparation of financial statements
requires the use of accounting estimates which
may significantly vary from the actual results.
Management also needs to exercise judgment
while applying the company's accounting policies.

This note provides an overview of the areas that
involved a higher degree of judgment or complexity,
and of items which are more likely to be materially
adjusted due to estimates and assumptions turning
out to be different than those originally assessed.

The areas involving critical estimates or
judgments are:

Revenue Recognition:

Transmission income is accounted for based
on tariff orders notified by the CERC. In case of
transmission projects where final tariff orders are
yet to be notified, transmission income is accounted
for as per tariff regulations and other orders of
the CERC in similar cases. Differences, if any, are
accounted on issuance of final tariff orders by the
CERC. Transmission income in respect of additional
capital expenditure incurred after the date of
commercial operation is accounted for based on
expenditure incurred on year to year basis as per
CERC tariff regulations.

Regulatory Deferral Balances:

Recognition of Regulatory Deferral Balances involves
significant judgments including about future tariff
regulations since these are based on estimation of
the amounts expected to be recoverable/payable
through tariff in future.

Estimation of defined benefit obligation:

Estimation of defined benefit obligation involves
certain significant actuarial assumptions which are
listed in Note 63.

Estimates and judgments are periodically
evaluated. They are based on historical experience
and other factors, including expectations of future
events that may have a financial impact on the
company and that are believed to be reasonable
under the circumstances.

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.

The Company reviews at the end of each reporting
date the useful life of plant and equipment, other
than the assets of transmission business which are
governed by CERC Regulations, and are adjusted
prospectively, if appropriate.

Provisions and contingencies:

The assessments undertaken in recognising
provisions and contingencies have been made in
accordance with Ind AS 37 "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.

Assets held for sale:

Significant judgment is required to apply the
accounting of non-current assets held for sale
under Ind AS 105 - "Noncurrent 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.

Income Taxes:

Significant estimates are involved in determining
the provision for current and deferred tax, including
amount expected to be paid/recovered for
uncertain tax positions.

Further Notes:

a) The Company owns 7,585 hectare (Previous Year 7,463 hectare) of land amounting to f3,135.38crore (Previous
Year f2,984.28crore) which has been classified into freehold land 6,321 hectare (Previous Year 6,320 hectare)
amounting to f2,515.03crore (Previous Year f2,471.82crore) and Right of Use - Land 1,264 hectare (Previous Year
1,143 hectare) amounting to f620.35crore (Previous Year f512.46crore) based on available documentation.

b) Freehold land acquired by the company includes 33.93 hectare (Previous Year 62.01 hectare) amounting to
f24.91crore (Previous Year f155.42crore) in respect of land acquired by the company for which only mutation
in revenue records is pending.

c) The transmission system situated in the state of Jammu and Kashmir have been taken over by the company
w.e.f. 01 April 1993 from National Hydroelectric Power Corporation of India Limited (NHPC) upon mutually agreed
terms pending completion of legal formalities.

d) Right of Use - Land includes area of 16.31 hectare (Previous Year 16.31 hectare) amounting to f107.52crore
(Previous Year f107.52crore) in respect of land acquired on perpetual lease basis and hence not amortised.

e) 5.63 hectare (Previous Year 5.63 hectare) having value of f0.04crore (Previous Year f0.04crore) has been
transferred to National High Power Test Laboratory Pvt. Ltd. on right to use without granting ownership.

f) During the previous year, freehold land of 106.47 hectare amounting to f1.84crore is re-classified as Investment
Property. Refer note no. 6 for disclosure on Investment Property.

g) "Disposals" of previous year includes assets having cost of f1,137.80crore and accumulated depreciation of
f505.56crore transferred to Powergrid Teleservices Limited.

h) Refer note no. 50 for disclosure on Right of Use Assets as per Ind AS 116 - "Leases".

i) Refer note no. 23 for information on property, plant and equipment pledged as security by the company.

j) Refer note no. 64 (a) for details of immovable properties where title deeds are not in the name of the company.

k) In previous year, the critical transmission assets including all cores of OPGW cables etc. are kept with the

company and not transferred to Powergrid Teleservices Limited at time of hiving off of Telecom Business (refer
note no. 65). Depreciation on these assets was charged and residual value was adopted as per the accounting
policy of the company which is applicable to Transmission Assets. This did not have a material impact on
profitability of the company.

Note 9: Investments (Contd.)

4) Refer remarks at Note No 11 for Powergrid Vemagiri Transmission Limited.

5) During the year, a provision of f 51.70 crore (previous year f 149.12 crore) has been made towards impairment
of investment in Energy Efficiency Services Limited. Refer note 61(A)(vi) for reconciliation of allowance for
impairment.

6) As part of revival plan of Joint venture (JV) Company, loan given by all JV partners to JV company was converted
to equity, additional loan of f94.71crore was provided by the company, shareholding of the company has
increased to 50% through additional equity contribution by the company and transfer of shares by other JV
partners at notional consideration. Impairment of investment in JV Company to the extent of f 25.65 crore has
been reversed during the current year. Refer note 61(A)(vi) for reconciliation of allowance for impairment.

7) The Board of Directors of the company have, in Its meeting held on 01.05.2022, approved the proposal for
purchase of 77,30,225 no. equity shares held by IL&FS Energy Development Company Limited in Cross Border
Power Transmission Company Limited (Joint venture of the company). The shares were subsequently
purchased by POWERGRID thereby shareholding of the company has increased from 26% to 41.94%.

8) The Company received during the current year f 29.62 crore (previous year f 26.62 crore) from PG InvIT towards
repayment of SPV Debt. Consequently, the same has been reduced from the cost of the investment.

9) Incorporated on 27.11.2024 for development of Intra-State Transmission System in the State of Rajasthan with
an equity participation of 74% by the company and 26% by Rajasthan Rajya Vidyut Prasaran Nigam Limited.

10) The Board of Directors of the company have, in its meeting held on 16 December 2023, approved the proposal
for purchase of 1,30,000 no. equity shares held by IL&FS Energy Development Co Ltd in Power Transmission
Company Nepal Limited (Joint venture of the company). Presently, approvals from relevant authorities is
awaited.

11) POWERGRID & Sikkim Urja Ltd are the Joint venture partners in Sikkim Power Transmission Limited & holds
26% & 74 % equity, respectively as per Shareholding agreement. On call of additional equity by Sikkim Power
Transmission limited, POWERGRID contributed their share while the other JV partner has not yet contributed
their share of money. Consequently, the holding of POWERGRID increased to 30.92% against 26% provided in
shareholding agreement.

Note 11: Other Non-current Financial Assets (Contd.)

No: 7/1/2018-OM dated 21st January, 2019 of Ministry of Power, Govt. of India (Gol) for meeting accrued liabilities
for creation of Capital Assets. The repayment of principal and the interest payment on such bonds shall be met
by Gol. An amount of f 3487.50 Crore from bond issue has been recognised as Grant in aid in earlier year.

* Details of advances to related parties are provided in Note 55.

** CERC vide order dated 06/04/2015 in petition no.127/2012 had directed that 80% of the acquisition price
incurred by the Company for Vemagiri Transmission Company Limited (VTSL) shall be reimbursed by
the Long-Term Transmission Customers (LTTCs) and balance 20% along with the expenditure incurred
by VTSL from the date of acquisition till the liquidation of the company shall be borne by the Company.
Subsequently, on a review petition filed by the Company, CERC vide order dated 20/10/2016 held
that there are sufficient reasons to review the liability of the Company to pay 20% of the acquisition
price and accordingly, directed that the issue shall be decided afresh by taking a holistic view in the
matter after disposal of appeals filed by the LTTCs on the issue in Appellate Tribunal of Electricity (ATE).
The final hearing in the appeals filed in APTEL was held on 02.03.2020 and Hon'ble APTEL directed all parties
to file written submission and reserved the Judgement. However, due to Covid pandemic lock down during
Mar'20-May'20, the matter was relisted & heard on 24.08.2020 and Hon'ble APTEL directed all the parties to file
concise comprehensive written submissions through email and reserved the Judgement again. Accordingly,
concise comprehensive written submissions were filed in APTEL.

As one of the Hon'ble Members of APTEL retired during Dec'20 before pronouncement of the judgement, the
matter may need to be heard again. An Early hearing application filed in the captioned matter was allowed
vide APTEL Order dated 05.07.2021 but due to subsequent vacancy of Chairperson in APTEL matter could not
be taken up. The new Chairperson in APTEL was appointed on 02.12.2022 since then the matter was listed on
several dates but could not be heard due to paucity of time. Presently, the hearing has been completed by
Hon'ble Tribunal on 22.07.2024 and Judgement is reserved.

Note 14: Trade receivables (Contd.)

b) Trade Receivables includes Unbilled Receivables relating to transmission segment amounting to f3,865.59crore
(Previous Year f3,810.06crore) out of which transmission charges for the month of March including arrear bills
for previous quarters, of the financial year amounting to f2,653.36crore (Previous Year f3,283.35crore) billed to
beneficiaries in the subsequent financial year. Trade receivable also includes non-tariff income to be passed
on to DICs and revenue from other business (telecom) to be passed on to DICs amounting to f104.79crore
(Previous Year f75.41crore) is netted off against unbilled receivables as the same will be billed on net basis.

c) Based on arrangements between the Company, banks and beneficiaries, the bills of the beneficiaries have been
discounted. Amount realised by the Company through discounting and yet to be settled by the beneficiaries to
banks as at the end of the year is shown as Borrowings (refer note no. 28) as bills are discounted with recourse
to the company. In case of any claim on the company from the banks in this regard, entire amount shall
be recoverable from the beneficiaries along with surcharge. The Outstanding Trade receivables includes the
amount of f209.37crore (Previous Year f2,693.52crore) that has been discounted with recourse to the company
& the same has been shown as Borrowings (refer note no. 28). Total Trade receivables (including non-current)
net off amount realised through discounting of bills is f7,105.60crore (Previous Year f8,415.23crore).

d) Aging of Trade Receivables is as follows:

Further Notes:

$ During the current year, the company has securitised its cashflows from Ten of its subsidiaries viz. Powergrid Bhind
Guna Transmission Limited, Powergrid Ajmer Phagi Transmission Limited, Powergrid Fatehgarh Transmission Limited,
Powergrid Bikaner Transmission System Limited, Powergrid Rampur Sambhal Transmission Limited, Powergrid
Ramgarh Transmission Ltd, Powergrid Jawaharpur Firozabad Transmission Limited, Powergrid Meerut Simbhavali
Transmission Limited, Powergrid Gomti Yamuna Transmission Limited, Powergrid Neemuch Transmission System
Limited and raised total f 5,705 crore in two tranches to part finance its capital expenditure in pursuance of new
National Monetization Pipeline (NMP).

@ During the previous year, the company has securitised its cashflows from four of its subsidiaries viz. Powergrid
Bhuj Transmission Limited, Powergrid Khetri Transmission System Limited, Powergrid Medinipur Jeerat Transmission
System Limited and Powergrid Varanasi Transmission System Limited and raised total f 5,700 crore in three
tranches to part finance its capital expenditure in pursuance of new National Monetization Pipeline (NMP).

# During the FY 2022-23, the company has securitised its cashflows from three of its subsidiaries viz. Powergrid
Southern Interconnector Transmission System Limited, Powergrid Mithilanchal Transmission Limited and Powergrid
NM Transmission Limited and raised total f 3,412 crore in three tranches to part finance its capital expenditure in
pursuance of new National Monetization Pipeline (NMP).

Details of terms of repayment and rate of interest

1 Secured Foreign Currency Loans (Guaranteed by Gol) carry floating rate of interest linked to Daily SOFR. These
loans are repayable in semi annual instalment, as per terms of the respective loan agreement, commencing
after moratorium period of 3 to 5 years except for one loan f 425.52 Crore (Previous year f 414.52 Crore) which
carry fixed rate of interest of 0.25% p.a.

2 Secured other Foreign Currency Loans carry floating rate of interest linked to 6M (EURIBOR). These loans are
repayable in semi annual instalment, as per terms of the respective loan agreements, commencing after
moratorium period of 3 to 5 years.

3 Secured Rupee loans from banks carry floating rate of interest linked to 3M MCLR. These loans are repayable
in semi annual instalments, as per terms of the respective loan agreements, commencing after moratorium
period of 5 years.

4 Unsecured Foreign Currency Loans (Guaranteed by Gol) carry fixed rate of interest ranging from 1.63% p.a.
to 2.30% p.a. These loans are repayable in semi annual instalments as per terms of the respective loan
agreements.

5 Unsecured Foreign Currency Loans carry floating rate of interest linked to 6M (STIBOR/EURIBOR). These loans
are repayable in semi annual instalments as per terms of the respective loan agreements, commencing after

Note 23: Borrowings (Contd.)

moratorium period as per terms of the respective loan agreements.

6 Unsecured Foreign Currency Loans carry floating rate of interest linked to 3M TONA. This loan is repayable in five
equal annual installments as per the terms of the loan agreement.

7 Unsecured Foreign Currency Loans carry floating rate of interest linked to 6M TONA. This loan is repayable in
three equal annual installments as per the terms of the loan agreement.

8 Unsecured Rupee loans from banks carry floating rate of interest linked to 3 months MCLR or Repo rate or 3
Months T Bill Rate. These loans are repayable in semi annual installments commencing after moratorium
period as per terms of the respective loan agreements.

9 There has been no default in repayment of loans or payment of interest thereon as at the end of the year.

10 The company has used the borrowings from banks and financial institutions for the specified purpose for which
it was taken as at balance sheet date. As on 31.03.2025, an amount of f 336.43 crore remained unutilised
from proceeds of Bonds LXXX Issue is invested in FDRs with scheduled commercial banks. (As on 31.03.2024,
an amount of f 646.00 crore remained unutilised from proceeds of Bonds LXXVI Issue is invested in FDRs with
scheduled commercial banks and mutual funds.)

Details of Securities

1 Domestic Bonds are Secured by way of Registered Bond Trust Deed ranking pari passu on immovable property
situated at Mouje Ambheti Taluka Kaparada in district Valsad Gujarat and floating charge on the assets of the
company.

2 Secured Foreign Currency Loans (Guaranteed by GoI) are secured by pari passu interest in the lien created on
the assets as security for the debts.

3 Secured Other Foreign Currency Loans and Rupee Loans are secured by the way of

(i) pari passu charge on the assets of the company except investments, land and building, roads and bridges,
water supply, drainage and sewerage and current assets or

(ii) pari passu charge on the assets of the company except investments and current assets or

(iii) floating charge on the immovable properties of the company.
as per the terms of respective loan agreements.

50. Disclosure as per Ind AS 116 - "Leases"

a) As a Lessor - Finance Leases:

The Company has classified and accounted for the arrangements for state sector ULDC assets and bilateral
assets as finance leases. Agreements for State Sector ULDC are for a period of 15 years and Bilateral Line Assets
with the beneficiary are for the period as specified in CERC Regulations.

Other Non-Current Financial Assets and Other Current Financial Assets include lease receivables representing
the present value of future lease rentals receivable on the finance lease transactions entered into by the
company with the constituents in respect of State Sector ULDC and Bilateral Line Assets. Disclosure requirements
of Ind AS 116 'Leases' notified under the Companies Act, 2013 are given as under:

(i) Details of gross investment in lease, un-earned finance income and present value of minimum lease
payments receivables at the end of financial year are given as under:

(iii) There are differences in balance lease receivable as at year end as per accounts and tariff records on account
of Undischarged liabilities & Unamortised FERV on loans amounting to f120.05crore (Previous Year f95.20crore).
Undischarged liabilities become part of project cost only on discharge of such liabilities & FERV are allowed to be
recovered as part of tariff on actual payment basis.

b) As a Lessee:

The company has taken assets on lease such as dark fibre, colocation & repeater shelter spaces and office
buildings etc. for various periods which are assessed and accounted as per the requirements of Ind AS 116 -
"Leases" and required disclosures as per the said Ind AS are as follows:

(i) ROU Assets:

Additions, termination/disposal and depreciation charge on right of use assets for the year and carrying
amount of the same as at the end of the financial year by class of underlying asset has been disclosed in
note no. 4 as a separate line item.

(ii) Lease Liabilities:

Interest expense on lease liabilities for the year is shown under note no. 38 and total cash outflow for leases
for the year has been disclosed in statement of cash flow under financing activities as separate line item
and maturity analysis of lease liabilities has been disclosed in note no. 61.

(iii) Short term leases:

The company, during the financial year, has incurred f14.37crore (Previous Year f21.79crore) with respect
to short term leases.

The company was committed to short term leases and the total commitment of such leases at the end of
financial year was f3.87crore (Previous Year f4.39crore).

i) Nature of rate regulated activities

The company is mainly engaged in the business of transmission of power. The tariff for transmission of power
is determined by the CERC through tariff regulations. The tariff is based on capital cost admitted by CERC and
provides for transmission charges recovery of annual fixed cost consisting of Return on equity, Interest on loan
capital, Depreciation, interest on working capital and Operation & Maintenance expenses.

ii) Recognition and measurement

FERV arising during the construction period for settlement/translation of monetary items (other than non¬
current loans) denominated in foreign currency to the extent recoverable/payable to the beneficiaries as
capital cost as per CERC Tariff Regulations are accounted as Regulatory Deferral Account Balances. In respect
of long term foreign currency loan drawn on or after 01 April 2016, exchange difference to the extent recoverable
as per CERC Tariff Regulations are recognised as Regulatory Deferral Account Balances. The company expects
to recover these amounts through depreciation component of the tariff over the life of the asset or as exchange
rate variation on repayment of the loan.

The tariff norms for the block period 2024-2029 notified by the Central Electricity Regulatory Commission (CERC)
provide for grossing up of the return on equity based on effective tax rate for the financial year based on the
actual tax paid during the year on the transmission income. Accordingly, deferred tax provided during the
year ended 31 March 2025 on the transmission income is accounted as 'Deferred Assets against Deferred Tax
Liability'. Deferred Assets against Deferred Tax Liability for the year will be reversed in future years (including
tax holiday period) when the related deferred tax liability forms a part of current tax.

CERC vide order dated 26 December 2022 has disallowed the claim amounting to S134.16 crore on account of
pay revision (2017) which was accounted as Regulatory Deferral Account Balances in earlier years. Accordingly,
the company has reversed the amount shown as recoverable from the beneficiaries in the FY 2022-23 under
the head Net Movement in Regulatory Deferral Account Balances-Income/(Expenses)(Net of Tax). An appeal
against order dated 26 December 2022 has been filed before Hon'ble Appellate Tribunal for Electricity bearing
Appeal No. 236 of 2023. The Appeal has been listed before APTEL on 29 August 2023 and APTEL has included the
same in the List of Short Matters. Date of hearing is yet to be notified.

The cumulative amount of f10.50crore (Previous Year f9.57crore) is recoverable on account of other expenses
which are not capitalised but allowed as capital cost as per CERC Tariff Regulations and was accounted as
Regulatory Deferral Account Balances. Amount of regulatory deferral account balances is on undiscounted
basis.

iii) Risk associated with future recovery/ reversal of regulatory deferral account balances

(a) regulatory risk on account of changes in regulations.

(b) other risks including currency or other market risks, if any.

Any change in the Tariff regulations beyond the current tariff period ending on 31 March 2029 may have an
impact on the recovery of Regulatory Deferral Account Balances.

The Regulatory Deferral Account Balances (assets) recognised in the books to be recovered from the
beneficiaries in future periods are as follows:

58. Contingent Liabilities and contingent assets

A. Contingent Liabilities

1. Claims against the Company not acknowledged as debts in respect of:

(i) Capital Works

Some of the contractors for supply and installation of equipment and execution of works at our projects have
lodged claims on the company seeking enhancement of the contract price, revision of work schedule with price
escalation, compensation for the extended period of work, idle charges etc. These claims are being contested
by the Company as being not admissible in terms of the provisions of the respective contracts.

The company is pursuing various options under the dispute resolution mechanism available in the contract for
settlement of these claims. In such cases, contingent liability of f3,174.07crore (Previous Year f3,334.31crore)
has been estimated. This includes f51.94 crore against original claim lodged by M/s Deepak Cables (India)
Limited which was revised by party to f585 crore before arbitrator. This was challenged by the company before
the Hon'ble Delhi High Court and an order dated 13.11.2019 was passed staying the arbitral proceedings in
effect staying the revised claims filed by Deepak Cables. The possibility of an outflow of resources embodying
economic benefits towards enhanced claim is remote.

(ii) Land/Tree/Crop/Other compensation cases

In respect of acquisition of land, cutting of trees or crops or other activities for the projects, the affected parties
(land losers, farmers, etc.) have claimed higher compensation before various authorities/courts which are
yet to be settled. In such cases, contingent liability of f2,994.01crore (Previous Year f3,680.56crore) has been
estimated.

(iii) Other claims

In respect of claims made by various State/Central Government Departments/Authorities towards building
permission fees, penalty on diversion of agriculture land to non-agriculture use, Nala tax, water royalty etc. and
by others, contingent liability of f180.61crore (Previous Year f406.86crore) has been estimated. Against claims
of f81.34 Crore (Previous Year f70.72 crore), provision of f38.74 Crore(Previous Year f36.55 Crore) has been
made and balance of f42.60 Crore(Previous Year f34.17 Crore) towards lease hold land's renewal demand by
SAIL (Durgapur Steel Plant) has been shown as contingent liability

(iv) Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters

Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters amounting to f644.15crore (Previous Year
f564.39crore) are being contested before various Appellate Authorities. Many of these matters have been
disposed of in favour of the company but are disputed before higher authorities by the concerned departments.
Against claims of f1.54crore (Previous Year f1.54crore), provision of f0.28crore (Previous Year f0.28crore) is
made and balance of f1.26crore (Previous Year f1.26crore) towards penalty is shown as contingent liability as
it is not a wilful default and in management opinion, same is not expected to be upheld by the court.

(v) Others

a) Other contingent liabilities amounts to f60.89crore (Previous Year f54.25crore) mainly related to Arbitration
cases, workmen compensation etc..

b) Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent
liability in this regard is not ascertainable.

c) Under the Transmission Service Agreement (TSA) with Powerlinks Transmission Ltd, the company has an
obligation to purchase the JV company (Powerlinks Transmission Ltd) at a buyout price determined in

B. Contingent Assets

While determining the tariff for some of the Company's Transmission Systems, CERC has disallowed certain capital
expenditure incurred by the Company. The Company aggrieved over such issues has filed appeals with the
Appellate Tribunal for Electricity (APTEL)/Hon'ble Supreme Court against the tariff orders issued by the CERC. Based
on past experience, the Company believes that a favourable outcome is probable. However, it is impracticable to
estimate the financial effect of the same as its receipt is dependent on the outcome of the judgement.

59. Capital management

a) Risk Management

The company's objectives when managing capital are to

• maximise the shareholder value;

• safeguard its ability to continue as a going concern;

• maintain an optimal capital structure to reduce the cost of capital.

For the purpose of the company's capital management, equity capital includes issued equity capital, securities
premium Account and all other equity reserves attributable to the equity holders of the company. The company
manages its capital structure and makes adjustments in light of changes in economic conditions, regulatory
framework and requirements of financial covenants with lenders. To maintain or adjust the capital structure, the
company may adjust the dividend payment to shareholders, regulate investments in new projects, return capital
to shareholders or issue new shares. The company monitors capital using debt-equity ratio, which is the ratio of
long-term debt to total net worth. The policy is to keep the debt-equity ratio wherein the debt is less than 75% of
total capital employed (i.e. debt to equity ratio less than 75:25). Total Borrowings include long term and short-term
debt, current maturities of long term debt, interest bearing loans and borrowings against bill discounting.

Risk management framework

The Company has a duly constituted Risk Management Committee headed by Director (Projects) with Director
(Operations), Director (Finance) and an independent director as members. For the purpose of evaluating and
managing the uncertainties the enterprise faces, Enterprise Risk Management framework has been implemented
in the Company. The framework is a structured, consistent and continuous process for identification, assessment,
monitoring and management of risks. As per this framework, the significant business processes / risks are monitored
and controlled through various Key Performance Indicators (KPIs). The Committee meets at regular intervals and
reviews KPIs and provides updates to the Audit Committee/Board.

The management of financial risks by the Company is summarised below:

(a) credit risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities on
account of trade receivables and loans and advances and from its financing activities due to deposits with
banks and financial institutions, foreign exchange transactions and other financial instruments.

A default on a financial asset is when the counterparty fails to make contractual payments within 3 years of
when they fall due. This definition of default is determined considering the business environment in which the
Company operates and other macro-economic factors.

Assets are written-off when there is no reasonable expectation of recovery, such as a debtor declaring
bankruptcy or failing to engage in a repayment plan with the Company. Where loans or receivables have been
written off, the Company continues to engage in enforcement activity to attempt to recover the receivable
due. Where such recoveries are made, these are recognised in the statement of profit and loss.

(i) Trade Receivables and Contract Assets

The Company primarily provides transmission facilities to inter-state transmission service customers (DICs)
comprising mainly state utilities owned by State Governments and the main revenue is from transmission
charges. CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020 ("CERC Sharing
Regulations") entrusts Central Transmission Utility (CTUIL) with the function of Billing, Collection and
disbursement functions on behalf of transmission licensees including POWERGRID.

CERC Sharing regulation allow payment against monthly bills towards transmission charges within due date
i.e., 45 days from the date of presentation of the bill and levy of surcharge on delayed payment beyond 45
days. However, in order to improve the cash flows of transmission licensee, CTUIL provides a graded rebate
for payments made within 45 days. If a DIC fails to pay any bill or part thereof by the Due Date, the Central
Transmission Utility (CTUIL) may encash the Letter of Credit provided by the DIC and utilise the same towards
the amount of the bill or part thereof that is overdue plus Late Payment Surcharge, if applicable.

CTUIL has a robust payment security mechanism in the form of Letter of Credit (LC) backed by the Tri¬
Partite Agreements (TPA). The TPA was signed among the GOI, Reserve Bank of India and the individual State
Governments subsequent to the issuance of the One Time Settlement Scheme of State Electricity Boards dues
during 2001-02 by the GOI. The TPA also provides that if there is any default in payment of current dues by any
State Utility and on fulfilment of condition under TPA, the outstanding dues can be deducted from the State's
RBI account and paid to the concerned CPSU including POWERGIRD.

As per provisions of CERC Sharing Regulations, in case tripartite agreement exists, the Letter of Credit to be
submitted to CTUIL shall be for an amount equal to 1.05 (one point zero five) times the average amount of the
first bill of a year; Provided that where such tripartite agreement does not exist, the DIC shall open the Letter of
Credit for an amount equal to 2.10 (two point one times) the average amount of the first bill of a year.

In addition to the encashment of letter of credit, on non-payment of outstanding dues, the CTUIL has power
to regulate the power supply or deny Short Term Open Access on the defaulting entity as per Electricity (LPS &
Related matter) Rules, 2022 notified by Ministry of Power.

Trade receivables consist of receivables relating to transmission services of f7,310.28crore (Previous Year
f11,223.00crore), receivables relating to consultancy services of f241.96crore (Previous Year f175.27crore).
Contract Assets primarily relates to the Company's right to consideration for work completed but not billed at
the reporting date and has substantially the same risk characteristics as the trade receivables for the same
type of contracts.

Movement in impairment majorly involves allowance for impairment amounting to f51.70 crore (Previous Year
f149.12 crore) has been provided towards impairment of investment in Energy Efficiency Services Limited. Further,
the provision for impairment of investment in National High Power Test Laboratory Private Ltd which was made in
previous years has been reassessed & reversed by Rs 25.65 crore. Based on historic default rates, the Company
believes that, apart from the above, no impairment allowance is necessary in respect of any other assets as the
amounts are insignificant.

(b) liquidity risk

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. The
Company monitors its risk of a shortage of funds using a liquidity planning tool. The Company has access
to a variety of sources of funding such as commercial paper, bank loans, bonds and external commercial
borrowings and retains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company's liquidity position comprising the undrawn borrowing
facilities below and cash and cash equivalents on the basis of expected cash flows.

The Company depends on both internal and external sources of liquidity to provide working capital and to fund
capital expenditure.

(c) market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprises three types of risk:

i) Currency risk

ii) Interest rate risk

iii) Other price risk, such as equity price risk and commodity risk.

(i) Currency risk

The Company is exposed to currency risk mainly in respect of foreign currency denominated loans and
borrowings and procurement of goods and services whose purchase consideration is denominated in foreign
currency. Transmission tariff is regulated by the CERC. According to the CERC tariff regulations for the block
2024-29 the Company may hedge foreign exchange exposure in respect of the interest on foreign currency
loan and repayment of foreign loan acquired for the transmission system, in part or full in its discretion and
recover the cost of hedging of foreign exchange rate variation corresponding to the normative foreign debt, in
the relevant year.

63. Employee Benefit Obligations (Contd.)

Sensitivities due to mortality & withdrawals are not material & hence impact of change due to these not
calculated.

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 has 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. The methods and types of assumptions used in preparing sensitivity
analysis did not change compared to previous year.

vii) Description of Risk exposures

Valuation is based on certain assumptions which are dynamic in nature and vary over time. As such company
is exposed to various risks as follows:

a) Salary Increases (except for PF) - Actual salary increase will increase the plan's liability. Increase in salary
increase rate assumptions in future valuation will also increase the liability.

b) Investment risk - If plan is funded then assets liabilities mismatch and actual investment return on assets
lower than the discount rate assumed at the last valuation date can impact the liability

c) Discount Rate - Reduction in discount rate in subsequent valuations can increase the plan's liability.

d) Mortality & disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation
can impact the liabilities.

e) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal
rates at subsequent valuations can impact Plan's liability.

viii) Maturity analysis of defined benefit schemes:

The weighted average duration of the post-employment defined benefit obligations is 38.33 years (Previous
Year 39.52 years) and expected contributions to the same during next financial year is f29.09crore (Previous
Year f28.96crore). The expected maturity analysis of undiscounted gratuity, PF, post-retirement medical facility
and other defined retirement benefit is as follows:

65. Discontinued Operations

The Board of directors in their meeting held on 14 July 2023 have approved the proposal for transfer of
Telecommunications Business of the company to Powergrid Teleservices Limited (PTL), a wholly owned subsidiary of
the company. The critical transmission assets including all cores of OPGW cables etc. were kept with the company
and depreciation was charged and residual value was adopted as per the accounting policy of the company.
This did not have a material impact on profitability of the company. Thus, Telecommunications Business of the
Company which was transferred to PTL w.e.f. 01 October 2023 on slump sale basis at a consideration of f655.02
crore was presented as Discontinued Operations and excluded from the Continuing Operations in the Statement of
Profit and Loss in previous year as per Ind AS 105- "Non-current Assets Held for Sale and Discontinued Operations".

66. Other Notes

A. Reclassifications in comparative years

In accordance with Ind AS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" and Ind AS
1 "Presentation of Financial Statements", the Company has reclassified/restated the amounts in financial
statements as at 31 March 2024 and 01 April 2023 (beginning of the previous year) as follows:

a) As per the opinion of Expert Advisory Committee of The Institute of Chartered Accountants of India (EAC of
ICAI), Grant has to be reclassified from "Deferred Revenue" to Liabilities. Applying this analogy, all amounts of
Deferred Revenue i.e., Advance against depreciation, Deferred income from foreign currency fluctuations (Net)
and Government grants are reclassified to 'Other Non Current Liabilities' and 'Other Current Liabilities'. Therefore,
'Deferred Revenue' of f 9461.86 crore and f 10163.52 crore is reclassified to 'Other Non Current Liabilities' by
f8530.37 crore and f 9257.33 crore and to 'Other Current Liabilities' by f 931.49 crore and f906.19crore as at end
of the previous year and at the beginning of previous year respectively.

b) Contract Assets have been reclassified from 'Other Current Financial Assets' to 'Other Non Current Financial
Assets' as at the end of the previous year amounting to f377.92crore and at the beginning of previous year
amounting to f528.73crore which were expected to be realised after 12 months from end of respective reporting
period.

c) The Bonds Redemption Reserve (BRR) has been recalculated for each ISIN of Bonds. This has resulted in increase
of BRR balance as at the beginning of the previous year by an amount of f726.28crore with a corresponding
reduction from Retained Earnings. Pursuant to the revised calculation of BRR, transfer of BRR to Retained earnings
during previous year has been reduced by an amount of f416.81crore (f1247.15crore - f830.34crore). Therefore,
the revised balances of Bond Redemption Reserve as at the end of the previous year and the beginning of the
previous year is f4064.11 crore and f4894.45 crore respectively.

These reclassifications have no effect on the reported Profit & Loss, Total Comprehensive Income, Equity & Basic

and diluted earnings per share of previous years.

B. Acquisitions under process:

The Company was the successful bidder in TBCB Projects under the SPVs namely Mel Power Transmission
Limited. Further, Letter of Intent (LoI) in respect of Mel Power Transmission Limited has been obtained from
concerned Bid Process Coordinator on 31.03.2025.

C. Central Electricity Regulatory Commission (CERC) vide regulation 99 of tariff regulations for the tariff block
2024-29 dated 15th March 2024, stated that the fees and charges of Central Transmission Utility of India Limited
(CTUIL) shall be allowed separately by the Commission through a separate regulation, provided that until such
regulation is issued by the Commission, the expenses of CTUIL shall be borne by Power Grid Corporation of
India Ltd. (PGCIL) which shall be recovered by PGCIL as additional O&M expenses through a separate petition.
Accordingly, O&M Charges of f 46.75 crores including Interest on Working capital of f 1.93 crore has been
recognised in Revenue from Operations.

D. The Board of Directors of the Company in their meeting held on July 26, 2024 had approved the schemes of
arrangement for merger/ amalgamation of -

• wholly owned subsidiaries of the company namely POWERGRID Khavda II-B Transmission Limited,
POWERGRID Khavda RE Transmission System Limited, POWERGRID KPS2 Transmission System Limited,
POWERGRID KPS3 Transmission Limited, POWERGRID ERWR Power Transmission Limited, POWERGRID Raipur
Pool Dhamtari Transmission Limited, POWERGRID Dharamjaigarh Transmission Limited, POWERGRID
Bhadla Sikar Transmission Limited, POWERGRID Ananthpuram Kurnool Transmission Limited, POWERGRID
Neemrana Bareilly Transmission Limited, POWERGRID Koppal Gadag Transmission Limited and POWERGRID

Bidar Transmission Limited (collectively "Transferor Companies") with wholly owned subsidiary namely
POWERGRID Khavda II-C Transmission Limited ("Transferee Company") and

• wholly owned subsidiaries of the company namely POWERGRID Bhadla III Transmission Limited, POWERGRID
Beawar Dausa Transmission Limited, POWERGRID Ramgarh II Transmission System Limited, POWERGRID
Bikaner Neemrana Transmission Limited and POWERGRID Sikar Khetri Transmission Limited (collectively
"Transferor Companies"), with wholly owned subsidiary namely POWERGRID Vataman Transmission Limited
("Transferee Company")

under section 230 to 232 of the Companies Act, 2013 and other statutory provisions as per the terms and conditions
mentioned in the schemes of arrangement of merger/amalgamation.

The first motion petition for approval of the Scheme had been filed before the Ministry of Corporate Affairs (MCA)
on 23 September 2024. Approval of the Ministry of Power, Government of India has been conveyed on 30 January
2025. In this regard MCA has issued certain directions and the Company is in the process of compliance of these
directions.

E. Recent accounting pronouncements and amendments:

(i) Amendments to Indian Accounting Standards (Ind AS):

On 12.08.2024, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting
Standards) Amendment Rules, 2024 applicable from 01.04.2024 introducing Ind AS 117 "Insurance Contracts",
and amendments to Ind AS 116 "Leases". The Company has assessed that the amendments have no effect
on the Accounts of the Company.

(ii) Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024

Central Electricity Regulatory Commission has notified new tariff regulations 'Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2024' for the next five years effective from 01
April 2024. The said Regulation has made certain changes in method & rate of depreciation, useful life,
etc. of assets commissioned on or after 01 April 2024. The Company has assessed and implemented the
regulations for accounting in FY 2024-25.

67. a) Figures have been rounded off to nearest rupees in crore up to two decimals.

b) Previous year figures have been regrouped/ rearranged wherever considered necessary.

For and on behalf of the Board of Directors

Satyaprakash Dash G Ravisankar R K Tyagi

Company Secretary Director (Finance) Chairman & Managing Director

DIN: 08816101 DIN: 09632316

As per our report of even date

For S. RAMANAND AIYAR & CO For SAGAR & ASSOCIATES For JAIN PARAS BILALA & CO For G. D. APTE & CO

Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants

FRN : 000990N FRN : 003510S FRN : 011046C FRN : 100515W

CA Puneet Jain CA B. Srinivasa Rao CA Paras Bilala CA Umesh S. Abhyankar

Partner Partner Partner Partner

M. No. 520928 M. No. 202352 M. No. 400917 M. No. 113053

Date: 19 May 2025
Place: Gurugram