Power Finance Corporation Ltd Management Discussions

The Management of the Company (PFC) is pleased to present its Report on Industry scenario including Companys performance during the FY 2024-25.

(A) INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian power sector has undergone a dynamic transformation, marked by significant growth in generation capacity, particularly from renewable energy sources which now account for nearly half of the total installed capacity, signaling a strong move toward clean energy leadership on the global stage. This rapid expansion, coupled with improvements in transmission and distribution infrastructure through schemes like the RDSS and increased adoption of smart metering, is enabling India to meet surging power demand with greater efficiency and a significantly narrower demand- supply gap.

The year 2024 marked a landmark period for Indias power sector, with historic advancements in energy generation, transmission, and distribution. From meeting record power demand of 250 GW to reducing energy shortages at the national level to a mere 0.1% in FY 2024-25, the sector demonstrated resilience and commitment to sustainable growth. Significant strides in energy conservation, consumer empowerment, and infrastructure development underscore the governments efforts to ensure reliable, affordable, and clean energy for all.

With some of the groundbreaking initiatives by Government of India, such as universal electrification, enhanced rural power availability and the adoption of cutting-edge technologies, India is firmly on the path to becoming a global energy leader. Some schemes/ initiatives by Government of India are as follows:

• In FY 2023, the Union Cabinet approved the Viability Gap Funding (VGF) Scheme for Battery Energy Storage Systems (BESS), to support the development of BESS. As per the Scheme, VGF support will be provided for BESS approved during 2023-26. The National Electricity Plan estimates that 236 GWh BESS would be required by 2031-32. This scheme will support integration of renewable energy and help minimize costs during peak demand periods in non-solar hours. With the decline in battery prices, the scheme capacity has been increased from 4000 MWh to 13,200 MWh while staying within the approved budgetary allocation of RS. 3,760 crore.

A budgetary provision of RS. 96 crore was made for 1000 MWh BESS in 2024-25, assuming 10% disbursement upon financial closure. However, with falling BESS costs, the VGF amount reduced from RS. 96 lakh per MWh (estimated in 2023-24) to RS. 46 lakh per MWh or 30% of capital cost, whichever is lower. As a result, the budgetary allocation was revised from RS. 96 crore to RS. 46 crore. As per scheme guidelines, 10% of VGF is to be disbursed after financial closure.

In FY 2024, Guidelines for Installation and Operation of Electric Vehicle Charging Infrastructure were issued to support creation of a nationwide connected and inter operable EV charging network. These guidelines are expected to create a robust, safe, reliable, and accessible EV charging network, enhance the viability of charging stations, encourage use of solar energy for electric vehicle charging, and prepare the electricity grid to handle increased demand of EV charging.

• In FY 24, India took a major step towards a greener future with the introduction of two new building codes: the Energy Conservation and Sustainable Building Code (ECSBC) for commercial buildings and the Eco Niwas Samhita (ENS) for residential buildings. The revised codes apply with a connected electricity load of 100 kW or more which will help in reduction of 18% electricity consumption. Additionally, it incorporates sustainability features related to natural cooling, ventilation, water, and wastewater disposal. States may adopt these building codes.

• In FY 24, the Ministry of Power has notified the Carbon Credit Trading Scheme, empowering industries to reduce greenhouse gas emissions and earn carbon credits. This initiative fosters investments in transformative technologies, positioning India as a leader in global green finance. It is intended to operationalize the trading of certificates of mandatory sectors by October 2026 and of voluntary sectors by April 2026.

• A dominant theme in Budget 2024 for the power sector was the accelerated transition to clean energy. The PM Surya Ghar Muft Bijli Yojana, stands out as the worlds largest domestic rooftop solar initiative, which has achieved a historic milestone with 10 lakh homes now solar-powered as of 10th March, 2025. Every solar installation under PMSGMBY offsets carbon emissions equal to planting 100 trees, driving India towards a cleaner, greener, and self-reliant future. The Government is actively monitoring the progress across all states to ensure the smooth and timely execution of the scheme, with the goal of reaching 1 crore households by 2026-27.

• In FY 23, The Union Cabinet approved the National Green Hydrogen Mission with an overarching objective of the Mission is to make India a Global Hub for production, usage and export of Green Hydrogen and its derivatives, by targeting production of 5 MMT per annum of Green Hydrogen by 2030. The National Green Hydrogen Mission has an outlay of RS. 600 crore for the FY 2024 - 25 under various heads. The Green Hydrogen production capacity envisaged by 2030 is likely to leverage over RS. 8 lakh crore in total investments in the Green Hydrogen industry. Green Hydrogen has the potential to replace the utilization of imported fossil fuels across various sectors including fertilizer production, petroleum refining, the mobility sector, steel production and shipping propulsion applications. The Mission is expected to reduce a cumulative RS. 1 lakh crore worth of fossil fuel imports by 2030.

Improvement in Power Supply Position:

• India successfully met an all-time maximum power demand of 250 GW during FY 2024-25.

• Due to significant additions in generation and transmission capacities, energy shortages at the national level have reduced to a mere 0.1% in FY 2024-25, a major improvement from 4.2% in FY 2013-14.

• Per capita electricity consumption in India has surged to 1,395 kWh in 2023-24, marking a 45.8% increase (438 kWh) from 957 kWh in 2013-14. •

• Villages and households across the country have been electrified, marking a significant milestone in Indias power sector.

• The average availability of electricity in rural areas has increased from 12.5 hours in 2014 to 21.9 hours, while urban areas now enjoy up to 23.4 hours of power supply, reflecting substantial improvements in the reliability and reach of electricity services.

Generation Installed Capacity

For the fiscal year 2024-25, Indias power generation capacity, saw unprecedented growth, particularly in the renewable energy sector. The nation achieved its highest-ever annual capacity addition, with a remarkable cumulative power generation capacity reaching 475.2 gigawatts (GW) by the end of the fiscal year. This expansion signifies a substantial increase from the 249 GW recorded in 2014, reflecting an almost doubling of capacity over a decade.

The standout performance was in renewable energy which alone contributed a record 29.52 GW of new capacity in FY 2024-25. This brought the total installed renewable energy capacity to 220.10 GW as of March 31, 2025, up from 198.75 GW in the previous fiscal year demonstrating a strong commitment to a greener energy mix. Solar power was the primary driver of this growth, with 23.83 GW added during the fiscal year, pushing its total installed capacity to 105.65 GW. Similarly, wind power saw a significant boost with 4.15 GW added, culminating in a total installed capacity of 50.04 GW. While thermal power, predominantly coal-based, also experienced additions, its proportional share in the overall mix continued to decrease, settling at around 46.7% by the close of the fiscal year. These comprehensive additions underscore Indias accelerated progress towards its ambitious target of achieving 500 GW of non-fossil fuel-based energy capacity by 2030. The pictorial representation of the same is as under:

The strong performance in FY 2024-25 highlights several key trends in the Indian power sector. The accelerated deployment of renewable energy technologies reaffirms Indias dedication to its clean energy goals.

RE-Bundling

For the purpose of promoting the Energy Transition and enabling the recipient DISCOM to achieve RPO at the lowest costs while working towards the NET Zero Emissions goal of 2070 by achieving target generation of 500 GW from Non-Fossil fuels based sources, the MoP, GoI announced the scheme for flexibility in generation and scheduling of thermal/hydro power stations through bundling with renewable energy and storage power.

The Ministry of Power has nominated PFCCL (Wholly Owned Subsidiary of Your Company) as the Bid Process Coordinator for the schemes execution.

For NTPC, DVC, HPGCL, MAHAGENCO and UPRVUNL, PFCCL is serving as the Bid Process Coordinator in order to bundle RE power with thermal electricity.

Transmission

Indias power transmission sector demonstrated remarkable progress in FY 2024-25, aligning its expansion with the countrys ambitious renewable energy targets and burgeoning electricity demand. This period saw substantial additions to the transmission network, crucial for evacuating power from remote generation sites, particularly renewable energy projects, to consumption centers across the nation.

A key highlight of FY 2024-25 was the significant increase in commissioned transmission projects and line lengths. India added an impressive 8,830 circuit kilometers (ckm) of transmission lines. This shift towards higher capacity lines is a strategic move to optimize power flow and reduce corridor constraints, showcasing a pivot towards more efficient transmission and asset utilization.

The government also took proactive measures to facilitate this rapid expansion. Govt. of India has finalised National Electricity Plan from 2023 to 2032 for Central and State transmission systems to meet a peak demand of 458 GW by 2032. The total cost of the plan is RS. 9.15 lakh crore. Under the previous plan 2017-22, about 17,700 circuit kilometers (ckm) lines and 73 GVA transformation capacity were added annually. Inter-Regional transfer capacity will increase from 119 GW to 168 GW. This plan covers the network of 220 kV and above. This plan will help in meeting the increasing electricity demand, facilitate RE integration and green hydrogen loads into the grid.

Further, 50.9 GW of Inter State Transmission Projects costing RS. 60,676 crore has been approved. The transmission network required to connect 280 GW of Variable Renewable Energy (VRE) to the Inter-State Transmission System (ISTS) by 2030 is planned to be 335 GW. The pictorial representation of the same is as under:

MoP has also initiated Tariff Based Competitive Bidding Process for development and strengthening of transmission system through private sector participation.

The objective of this initiative is to develop transmission capacities in India and to bring in the potential investors after developing such projects to a stage having preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required etc.

As on March 31, 2025, 101 SPVs (89 are related to interstate transmission scheme and 12 are related to intrastate transmission scheme), 2 by your company and other 99 by its wholly-owned subsidiary (PFC Consulting Ltd.) have been established for ITPs.

Distribution

Electricity distribution is a critically important segment of the power sector. While generation plants produce electricity and transmission lines move it over long distances, its the distribution system that brings electricity directly to homes, businesses, and industries, making it the final and most crucial link in the entire power delivery chain.

The Government of India focused on power distribution sector through reforms and initiatives. As a part of it, Electricity Rules were notified in February 2024 to empower electricity consumers. This framework lays down their rights and provides mechanisms to enforce them. The rules ensure timely access to services such as new connections, grievance redressal, and billing transparency while facilitating rooftop solar adoption and electric vehicle (EV) integration. Key provisions include: simplifying rooftop solar installation processes with exemptions from technical feasibility study for systems up to 10 kW; allowing separate connections for EV charging stations to promote clean mobility; reducing timelines for new connections: 3 days in metros, 7 days in municipal areas, and 15 days in rural regions (30 days for hilly terrain); mandating consumer rights for separate metering and billing in residential colonies, enhancing transparency and fairness; introducing mandatory check meters to verify consumption in case of complaints.

Moreover, the Electricity Rules, 2005 have been amended in 2024 to rationalise open access charges. New rules now allow large consumers (open access consumers) to buy electricity from the cheapest sources across India, not just from their local Distribution Licensee. Some State regulators charge large consumers heavily to buy electricity from other sources. In an effort to reduce these charges, the additional surcharge levied is now being gradually reduced and will be completely removed within four years. Importantly, large consumers who have never bought electricity from their distribution licensee are not required to pay additional surcharge.

Revamped Distribution Sector Scheme (RDSS)

The Company is involved in various GoI programs for the power sector including acting as the Nodal Agency for operationalization and implementation of Revamped Distribution Sector Scheme (RDSS) launched by Government of India in July, 2021. PFC was also the designated nodal agency for operationalization of IPDS and R-APDRP Schemes. Both of the Schemes have been Sunset in March, 2022.

MoP/ Gol launched the "Revamped Distribution Sector Scheme (RDSS) - A reforms-based and results-linked, Distribution Sector Scheme" in July 2021 to improve the operational efficiencies and financial sustainability of DISCOMs, by providing financial assistance to DISCOMs for upgradation of the Distribution Infrastructure and Prepaid Smart Metering & System Metering based on meeting pre-qualifying criteria and achieving basic minimum benchmarks in reforms. PFC and our subsidiary REC are the designated nodal agencies for operationalization of the Scheme, as per RDSS guidelines and directions of inter-ministerial Monitoring Committee/ MoP from time to time.

Nodal agencies are eligible for 0.5% of the sum total of the Gross Budgetary Support (GBS) component of the various projects approved by Monitoring Committee as its fee. PFC is the nodal agency for 17 States/ UTs under the Scheme. The present implementation period of the Scheme is five Years (FY 2021-22 to FY 2025-26). The Scheme has an outlay of RS. 3,03,758 crore with an estimated gross budgetary support of RS. 97,631 crore from the Gol. RDSS also envisages electrification of balance/ left-out households.

Late Payment Surcharge Rule, 2022

Ministry of Power (MoP) vide Gazette Notification dated June 3, 2022, notified "The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022" (LPS Rules). These rules provide a mechanism for settlement of outstanding dues of Generating Companies, Inter-State Transmission Licensees and Electricity Trading Licensees.

Power Finance Corporation Limited (PFC) has been designated by MoP as the Nodal Agency for implementation of LPS Rules, 2022. PFC shall be responsible for all the activities related to implementation of the said rules including regular review and monitoring.

For operationalisation of rules, PRAAPTI Portal (developed and managed by PFC Consulting Ltd.) acts as an information portal wherein suppliers enter invoice details and DISCOMs update the corresponding payment information to ensure invoice and payment tracking of power bills in the country. Based on the information available on PRAAPTI, regulations are imposed on defaulting DISCOMs as per LPS Rules, 2022 by Grid controller of India Limited.

With the implementation of Electricity (LPS and Related Matters) Rules, 2022, remarkable improvement has been seen in recovery of outstanding dues of suppliers including

Generating Companies, Transmission Companies and Traders. Against legacy dues of RS. 1,39,947 crore as on June 03, 2022, 13 States/UTs have paid instalment of RS. 1,24,768 crore (35 EMIs) upto June 2025 i.e. 90% of total legacy dues. Further, 20 States/ UTs reported to have no outstanding dues as on June 03, 2022. Now the legacy dues (overdues) have reduced from RS. 1,39,947 crore to RS. 13,698 crore and as on date there is no default in payment of instalments for legacy dues by States.

In view of provision of regulation under LPS Rules, 2022, the Distribution companies are paying their current dues in time. Since implementation of the rule, as on June 10, 2025, total bills amounting to RS. 13,77,668 crore have been settled against total billed amount of RS. 14,58,480 crore from May 2022(excluding EMI payments against legacy dues and including disputed invoices).

Smart Metering

PFCCL is handling projects on implementation of Advanced Metering Infrastructure (AMI) for state DISCOMs which includes procurement of Smart Meters, AMI Communication System,

Back-End IT System, Meter Data Management System (MDMS), integration of Head End System (HES) with MDMS and MDMS with existing DISCOM applications, Data Analytics, capacity building of DISCOMs Manpower, O&M of the complete system and handover of the System to DISCOMs.

PFCCL is undertaking implementation of Smart Metering for about 6.58 lakh consumers in the following States/ UTs:

i. Shimla & Dharamshala Towns of Himachal Pradesh for about 1.51 lakh consumers under IPDS Scheme of Govt. of India. The Smart Meters have been successfully commissioned and are in operation.

ii. UT of Puducherry for about 4.07 lakh consumers under RDSS Scheme of Govt. of India. The project implementation activities would commence shortly.

For States allocated to PFC, projects for loss reduction (including household electrification works) and smart metering have been sanctioned for 24 Distribution Utilities across 13 States. Details as on March 31, 2025 are tabulated below (amount in H crore):

(B) OPPORTUNITIES & THREATS Opportunities

Your company is a leading financial institution in Indias power sector, and FY 2024-25 presented significant opportunities for the company, particularly given the dynamic shifts and ambitious targets within the Indian energy landscape. PFCs strategic positioning as a primary lender for various government schemes allowed it to capitalize on these trends.

During FY 2024-25, Power Finance Corporation (PFC) capitalized on the immense opportunities presented by Indias ambitious clean energy transition and overall power sector expansion. A significant highlight was PFCs role in renewable energy financing, where its renewable book crossed RS. 80,000 crore, marking an impressive 35% year-on-year growth by March 31, 2025 of RS. 81,031 crore.

Furthermore, initiatives like establishing a subsidiary in GIFT City to tap into global capital underscored PFCs proactive approach in leveraging every opportunity to fuel Indias energy future.

The long term business strategy of PFC

As the largest Government-owned Non-Banking Financial Company (NBFC) dedicated to funding the power sector, Power Finance Corporation (PFC) is envisaged to play a pivotal role in Indias energy transformation and meeting the Net Zero Targets by funding power and infrastructure projects at reasonable costs to ensure sustainable growth across the Power, Energy, and Infrastructure sectors.

PFCs strategic objectives will be on the following lines:

• Preferred Lending Partner: Consolidate its position as the lender of choice in the Power, Energy, and Infrastructure sectors, financing solutions to government and private borrowers at reasonable costs.

• Net-Zero Leadership: Lead investments towards achieving Indias Net-Zero emissions goal by prioritizing investments in green infrastructure projects. Leverage the expertise to catalyze sustainable energy solutions that align with global climate objectives.

• Sectoral Reforms and Innovation: Spearhead

transformative reforms in the Power, Energy, and Climate sectors, collaborating closely with the Government of India to implement policies and programmes of GoI for power sector.

• Diversified Growth: Expand the lending portfolio into new and emerging areas in power and infrastructure sector and adapt to evolving market dynamics to capitalize on new opportunities which can help in reducing the cost of power to the end consumer and to ensure viability of emerging technologies.

The long term business strategy of PFC going forward is:-

• Grow lending by maintaining share in conventional and non-conventional sectors expanding portfolio to emerging power sectors as well as infrastructure sectors.

• Adapt a paradigm shift in account management and customer experience principles by providing differentiated services, innovative products and re-imagining existing processes to cater to the changing customer mix.

• Optimize the cost of funds by increasing the share of 54EC bonds, institutionalizing a dedicated team for sourcing MDB loans, re-imagining the hedging strategy and fine-tuning resource mobilization process.

• Position to become the focal agency for Net-Zero, to pursue immediate dispensations in the interim to lower the cost of funds.

• Re-align organization as per the key objectives of PFC

• Tap new talent resources and revamp performance management system.

Threats, Risks & Concerns

PFC, as a major financial institution in the Indian power sector, is inherently exposed to various financial and operational risks. PFC faces a multifaceted array of threats and risks within the dynamic Indian power sector, primarily stemming from the inherent complexities of the industry and its ongoing transformation. Understanding these specific risks and concerns faced by your company are crucial:

Credit Risk

Credit risk includes both the possibility of a borrower defaulting on contractual obligations under a loan or advance and the risk of loss resulting from a borrowers declining credit rating. To evaluate and reduce credit risk, your business uses a methodical institutional and project appraisal approach.A thorough appraisal approach, risk identification and appropriate structuring, and credit risk mitigation techniques are some of these procedures.

Liquidity Risk

The maturity mismatch between the companys assets and obligations is the main cause of liquidity risk.The incapacity of the business to finance asset growth, handle unforeseen shifts in funding sources, and fulfill commitments when needed are all examples of liquidity risk. We might have to sell assets on unfavorable terms or raise money. We use a variety of tactics to control liquidity risk, such as proactive resource mobilization based on anticipated payments and maturing commitments.

Foreign Currency Exchange Risk

Exchange rate fluctuations between currencies that could negatively affect the value of assets, liabilities, and of balance sheet arrangements denominated in foreign currencies are known as foreign currency exchange risk. We may be subject to foreign exchange rate risk as a result of our foreign currency borrowings. Lending in foreign currencies and using derivative instruments (such currency futures, options, principal-only swaps, interest rate swaps, and forward rate agreements) provided by banks that are authorized dealers are two ways to manage foreign exchange risk.

Legal Risk

The uncertainty surrounding the legality of contracts pertaining to our borrowers responsibilities gives rise to legal risk. This can be the result of a delayed enforcement process or a problem with the application of contractual responsibilities. By creating legal documents that are as protective of our interests as possible, we aim to reduce legal risk.

Interest Rate Risk

Interest rates fluctuate and are influenced by a number of internal and external factors, such as the cost of borrowing, market liquidity, competitive rates, changes in benchmarks like AAA bond/GSEC yields, and changes to RBI policy. The companys financial situation will suffer from changes in market interest rates. Timing discrepancies represent the companys main interest rate- related concerns. By analyzing interest rate sensitivity gap statements and assessing the development of assets and liabilities with a combination of fixed and floating interest rates, interest rate risk is controlled.

Changes in Legislation

According tothe Companies Act, PFC isa financial institution under the Companies Act. It was designated as an IFC in July 2010 and is registered with the RBI as a non-deposit taking systemically important NBFC. Consequently, PFC is subject to a number of laws, including the Companies Act of 2013, the Securities and Exchange Board of India Regulations, the DPEs Guidelines for CPSEs, the RBI Act and Guidelines, and tax laws, among others. Modifications to these laws may have an impact on the operations and outcomes of our business.

(C) SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Companys main business is to provide financial assistance to the power and infrastructure sector and Company does not have any separate reportable segments.

(D) OUTLOOK

Your organization is a prominent Maharatna Central Public Sector Enterprise (CPSE) and Non-Banking Financial Company (NBFC). Since its founding in 1986, it has been instrumental in the development of Indias essential power-related infrastructure. In addition to managing a sizable loan portfolio and mobilizing extensive resources, it possesses great competence in the electricity sector.

Embracing the motto Nayi Soch Nayi Raahein - PFC steering into new directions, PFC is boldly moving into new directions, shaping the future through innovative ideas and forward-looking perspectives. With the amendment in the Memorandum of Association, PFCs lending capabilities have been extended to encompass the wider infrastructure and logistics sectors with focus on e-vehicle fleets, charging infrastructure, roads, ports, metro rail, smart cities, and other large infrastructure projects.

Your Company plays a crucial role in helping the government implement policies and schemes in the power sector. It has served as the nodal agency for a number of government programs, including the Late Payment Surcharge Scheme (LPS), Liquidity Infusion Scheme (LIS), RDSS/IPDS/(RAPDRP included in it), and UMPP. It has also coordinated the bidding process for the ITP scheme through its wholly owned subsidiary PFC Consulting Limited.

From project conception to the post-commissioning phase, PFC offers our clients in the power sector a wide range of financial products, related advisory services, and other services. These include transmission, distribution, and generation (both conventional and renewable) projects, as well as related modernization and renovation projects. PFC offers a range of fund-based financial services, such as buyers lines of credit, short-term loans, long-term project finance, debt underwriting, and debt refinance plans, in addition to non-fund-based services including letters of comfort and credit enhancement guarantees. Through our wholly owned subsidiary, your organization also offers a range of fee-based technical advising and consultancy services for projects in the power sector.

Whether it is financing new sectors like solar, wind, electric vehicles, etc., or accessing global markets through green bonds, PFC has consistently been at the forefront of innovation throughout the years.

It has now expanded its business to include infrastructure and logistics funding, which will be a component of our future loan operations. By creating a wholly owned subsidiary, PFC Infra Finance IFSC Limited, at Indias first International Financial Services Centre (IFSC) in GIFT City, Gujarat, your Company will be able to provide even more efficient and innovative financing solutions to the clients. PFCs entry into the IFSC shall open up new business opportunities and establish its global presence. This Company will focus on providing financial solutions for infrastructure projects across various sectors, including renewable energy.

(E) INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

M/s. ASA & Associates LLP, Chartered Accountants, appointed for testing adequacy and operative effectiveness of Internal financial control over financial reporting, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies Act, 2013.

The Statutory Auditors of the Company i.e. Thakur, Vaidyanath Aiyar & Co., Chartered Accountants and Mehra Goel & Co., Chartered Accountants have also given their Report on Internal Financial Controls stating that the Company has, in all material respects, internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2025 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

PFCs ISO certification reflects its commitment to stringent internal controls and credit review mechanisms. These processes effectively reduce defaults and foster strong stakeholder confidence.

(F) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Your company continued to accomplish a healthy growth during the FY 2024-25. The total income stood at RS. 53,127.76 crore and the net profit earned was RS. 17,352.19 crore.

Further, Net Worth (share capital plus all reserves) of your company grew by 15% in FY 2024-25 to RS. 90,937 crore as compared to RS. 79,203 crore in FY 2023-24. The gross loan assets recorded a growth of 12.86%, RS. 5,43,120 crore as at March 31, 2025 from RS. 4,81,462 crore as at March 31, 2024.

The net Debt Equity Ratio was 5.12 times in FY 2024-25 as compared to 5.14 times in FY 2023-24. The Operating Margin % has increased from 38.27% in FY 2023-24 to 39.82% in FY 2024-25 and the Net Profit Margin % has increased from 31.21% in FY 2023-24 to 32.66% in FY 2024-25.

In the preparation of financial statements, the Company has followed Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) with effect from April 1, 2018, issued by the Ministry of Corporate Affairs, to the extent applicable.

(G) ESG AT PFC

In FY 2024-25, Power Finance Corporation (PFC) has demonstrated a strong commitment to ESG principles. Environmentally, PFC continued its leadership in Indias green energy transition by significantly expanding its financing for renewable energy projects, solidifying its position as a major lender in this sector. On the social front, PFC has been actively involved in various Corporate Social Responsibility (CSR) initiatives, particularly in areas like health and skill development.

(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

Your company has put in place effective talent acquisition and retention practices, which are benchmarked with best corporate practices designed to meet the organizational needs. This apart from other strategic interventions leads to an effective management of Human Resources thereby ensuring high level of productivity.

The Industrial Relations within the company have been very cordial and harmonious with the employees committing themselves entirely to the objectives of the company. There were no man-days lost during the year under review. The attrition during the period from April 1, 2024 to March 31, 2025 was 0.73%.

(I) CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT (CSR&SD)

Your Company has formulated its CSR Policy in line with Section 135 of the Companies Act, 2013 and the Companies (CSR) Rules, 2014 (as amended from time to time) and DPE guidelines issued from time to time. The aim of PFCs Corporate Social Responsibility Policy (CSR Policy) is to ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of society at large by undertaking projects for Sustainable Development, mainly focusing on Health, Education and Energy needs of the society.

Your Company has implemented wide range of activities throughout the Country in the field of Environment Sustainability, Healthcare, Education, PM Internship, Rural Development, contribution to Swachh Bharat Kosh and other areas as specified under Schedule VII of the Companies Act, 2013.

(J) RENEWABLE AND CLEAN DEVELOPMENT MECHANISM

The growth of renewable energy sector in India is critical for ensuring energy security, environmental sustainability, economic growth, technological innovation, improved access to energy, reduced pollution, and global leadership in sustainable development. Investing in renewable energy is not only a strategic necessity but also a significant opportunity for India to achieve long-term sustainable growth.

Power Finance Corporation (PFC) significantly boosted its role in Indias clean energy transition during FY 2024-25. Its renewable energy loan portfolio surged by 35% year- on-year, crossing RS. 80,000 crore, solidifying its position as the nations largest green energy financier. PFC actively funded large-scale solar, wind, and hydro projects, alongside emerging technologies like green hydrogen and battery storage.

PFCs efforts in FY 2024-25 directly supported Indias record-breaking additions to its clean energy capacity. India witnessed a historic 29.52 GW increase in renewable energy capacity, reaching a total of 220.10 GW by March 31, 2025, largely driven by solar and wind power. PFCs financial backing is instrumental in facilitating the development and execution of these projects, which are essential for India to meet its ambitious climate goals.

The gross loan assets recorded a growth of 12.86%, RS. 5,43,120 crore as at March 31, 2025 from RS. 4,81,462 crore as at March 31, 2024.

(K) KEY FINANCIAL RATIOS

The below illustrative images outlines the companys essential key ratios, for the year ended March 31, 2025. A complete breakdown of these financial outcomes is available elsewhere within this annual report:

Cautionary Note

Certain statements in the "Management Discussion and Analysis" section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Management envisages in terms of future performance and outlook. Readers are cautioned not to place undue reliance on these forward-looking statements.