Power Finance Corporation Ltd Auditor Reports

Independent Auditors Report

To the Members of Power Finance Corporation Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

1. OPINION:

We have audited the accompanying Standalone Financial Statements of Power Finance Corporation Limited (the Company), which comprise the Balance Sheet as at March 31, 2026, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and Notes to the Standalone Financial Statements, including a summary of Material Accounting Policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026, and its profit (including Other Comprehensive Income), changes in equity and its cash flows for the year ended on that date.

2. BASIS FOR OPINION:

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

3. KEY AUDIT MATTERS:

Key audit matters ("KAM") are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current year. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our report. For each matter below, description of how our audit addressed the matter is provided in that context:

Sr. No. Key Audit Matter	Auditors Response
(i) Impairment of financial instruments - Loan Assets and Undisbursed letter of comfort	Our audit procedures included:
In this regard, the Company follows a Board approved methodology wherein assessment for allowance is carried out by an External Agency for Impairment based on certain guidelines and procedures in respect of criterion/framework classifying the assets into various stages depending upon credit risk and level of evidence of Impairment.	• The Company has availed services of an External Agency for assessment of ECL, whose report has been provided to us. We verified the criterion/framework with applicable regulatory requirements along with Companys internal guidelines and procedures in respect of the impairment allowance.
Impairment loss measurement requires use of statistical models to estimate the Probabilities of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD). These models are key driver to measure Impairment loss.	• Verified loan assets by applying the standard audit procedures with respect to the credit appraisal, sanctioning, documentation, review and monitoring process of the Company. Also, loan balances were verified basis external confirmation from the borrowers and assessed quality of the borrower based on recovery and other criteria as per the credit policy of the Company.
The key indicators underlying for assessment of impairment allowance are appraised on the ongoing basis by the management.	• Reviewed the underlying assumptions and broad methodology of ECL assessment.
	• Components and calculations in the study for impairment allowance carried out by the independent expert have been test checked, discussed with the management and relied upon by us. Also, our audit procedure in this regard is limited since certain parameters of study being considered confidential have not been shared by the aforesaid expert.
	We considered the credit impairment charge and provision recognized and the related disclosures to be acceptable and satisfactory.
The most significant areas where we identified greater levels of management Judgments are:
Significant Increase in Credit Risk (SICR) - Company has classified SICR based on the indicator defined in Ind AS, estimate the Probabilities of Default (PD), Loss Given Default (LGD) and Individually assessed Stage 3 carrying value. The carrying value of loans and advances to borrowers may be materially misstated if individual impairments are not appropriately estimated based upon certain assumptions, future cash flow and asset valuations.
Considering the effect of these matters, as part of our risk assessment, we determined that the value of Expected Credit Loss (ECL) has a high degree of estimation & uncertainty. In view of the significance of the amount of loan assets out of total assets in the Standalone Financial Statements, impairments of loan assets have been considered as key audit matter in our audit.
[Refer Note No. 40.1.2 and 40.1.3 to the Standalone Financial Statements read with Note No. 5.3.1 (iii) and Note.6.2 (ii)]

 

(ii) Fair Valuation of Derivative financial instruments	Our audit procedures included:
The Company enters into derivative contracts in accordance with RBI guidelines to mitigate its currency and interest rate risk in accordance with currency risk management policy approved by the Board of Directors of the Company.	The Company has availed services of an independent expert for preparation of a model for derivative accounting as per Ind AS 109. Discussed with management to have an understanding of its perception and also reviewed policy of the Company for risk management.
Derivative contracts are either categorized at Fair Value through P&L (FVTPL) or under cash flow hedge (Hedge Accounting). Mark to market gain/loss on derivatives categorized at FVTPL is recognized in Statement of Profit and Loss and that of Hedge Accounting is recognized in the Other Comprehensive Income.	Evaluated key internal controls over classification of derivative instruments.
	The Company obtains fair value of derivative from the counterparty banks as on the reporting date, which are relied upon by us. Our procedure included evaluation of details of various financial derivative contracts outstanding as on March 31, 2026 and fair value thereof.
We consider the valuation of the derivative financial instruments and hedge accounting as a key audit matter due to material exposure and the fact that the inappropriate application of these requirements /assumptions/estimate by contracting bank could lead to a material effect on the income statement. [Refer Note No. 41 and 40.4 to the Standalone Financial Statements read with Note No. 5.3.3]	Additionally, we verified the accounting of gain or loss on mark to market basis of derivative contracts in Statement of Profit & Loss and Other Comprehensive Income in case of derivatives contracts under cash flow hedge.
	Based on the aforesaid procedure, we have reviewed accounting of derivatives in the books of account and assessed that the related disclosures are given in the financial statements.

4. INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON:

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Directors Report including Annexures to Directors Report, Management Discussion and Analysis, Business Responsibility Report and Sustainability Report and Report on Corporate Governance (collectively referred to as "other information") but does not include the Standalone Financial Statements and our auditors report thereon. The above-referred information is expected to be made available to us after the date of this Auditors report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we concluded that there is a material misstatement of this other information, we are required to report that fact, we have nothing to report in this regard.

5. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS:

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone

Financial Statements that give a true and fair view of the financial position, financial performance (including comprehensive income), changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Companys financial reporting process.

6. AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS:

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risksof material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatement in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work and (ii) to evaluate the effect of any identified misstatements in the Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current year and are therefore, the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

7. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS:

I As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013 and on the basis of such examination of the books and records of the Company as we considered appropriate and according to information and explanation given to us, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

II The Comptroller and Auditor General of India has issued the directions indicating the areas to be examined in term of Sub-section 5 of Section 143 of the Act, the compliance of which is set out in "Annexure B".

III As required by Section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and Standalone Statement of Cash flows, dealt with by this Report are in agreement with the books of account;

d. In our opinion and to the best of our information and explanation given to us, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended;

e. As per notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the Company, since it is a Government Company;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure C";

g. As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act regarding remuneration to Directors is not applicable to the Company, since it is a Government Company; and

h. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at March 31, 2026 on its financial position in its Standalone Financial Statements - Refer Note No.46 to the Standalone Financial Statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, on long-term contracts including derivative contracts.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. (a) The Management has represented (refer Note No.11.4) that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented, that (refer Note No. 18.16), to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understaing, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on audit procedures that we have considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above contain any material mis-statement.

v. As stated in Note No.24.2(iii) to the Standalone Financial Statements:

(a) The final dividend proposed for the previous year, declared and paid by the Company during the year is in accordance with section 123 of the Companies Act, 2013, as applicable.

(b) The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with section 123 of the Companies Act, 2013.

(c) The Board of Directors of the Company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

vi. Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account for the year ended March 31,2026 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 the software systems. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with and the audit trail has been preserved, from the date it was enabled, by the Company as per the statutory requirements for record retention.

For Thakur, Vaidyanath Aiyar & Co.	For Mehra Goel &Co.
Chartered Accountants	Chartered Accountants
Firms Registration No.: 000038N	Firms Registration No.: 000517N
Sd/-	Sd/-
(Kamlesh Kumar Upadhyay)	(Vaibhav Jain)
Partner	Partner
Membership No. 096584	Membership No. 515700
UDIN: 26096584BNNXAG4785	UDIN: 26515700BTBDEX6371
Date: 13.05.2026
Place: Mumbai

Annexure A

to Independent Auditors Report on the Audit of the Standalone Financial Statements

(Referred to in Para 7 (I) under the heading Report on other Legal and Regulatory Requirements of our report of even date to The Members of Power Finance Corporation Limited on the Standalone Financial Statements for the year ended March 31, 2026)

To the best of our information and according to the explanations provided to us by the Company and the books of account and records examined by us in the normal course of audit, we state that:

(i) In respect of Property, Plant and Equipment and Intangible Assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment and relevant details of right-of-use assets.

The Company has maintained proper records showing full particulars, of intangible assets.

(b) Based on the information and explanation given to us, the Companys management carries out the physical verification of Property, Plant and Equipment once in a year. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. As explained to us, no material discrepancies were noticed by the management on such physical verification.

(c) Based on our examination of the records of the Company we report that, the title deeds, comprising all immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) which are free hold, are held in the name of the Company as at the balance sheet date. Further, in respect of immovable properties that have been taken on lease, the lease agreements are in the name of the Company.

(d) The Company has not revalued any of its Property, Plant and Equipment (including Right of Use assets) and intangible assets during the year.

(e) As informed to us, no proceedings have been initiated or are pending against the Company as at the date of Balance Sheet for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

(ii) In respect of Inventory:

(a) The Company is a Non-Banking Financial Company and does not have any inventory. Thus, clause 3(ii)(a) of the Companies (Auditors Report) Order, 2020 is not applicable.

(b) The Company has been sanctioned working capital limits in excess of five crore rupees, during the year, in aggregate, from banks or financial institutions which are unsecured and do not require any filing of quarterly returns or statements with the banks by the Company.

(iii) In respect of Investment, Loans, Advances, Guarantee & Security by the Company:

During the year, the Company has made investments in, provided guarantees and granted loans/advances in the nature of loans, secured/unsecured to Companies, firms, limited liability partnerships, and other parties. In this regard, we report hereunder:

(a) The Company is a registered NBFC with Reserve Bank of India with principal business of giving loans hence clause 3(iii)(a) of the Order is not applicable

(b) In our opinion, the investments made, guarantees provided, if any, and the terms and conditions of the grant of all loans and advances in the nature of loans, during the year are, prima facie, not prejudicial to the Companys interest.

(c) Being a registered Non-Banking Financial Company (NBFC), the Company grants its loans on stipulated terms and conditions for repayment of principal and interest. In respect of Loan assets except credit impaired assets, the repayments of principal amounts and receipts of interest are generally regular as per stipulation.

(d) In respect of loans and advances in the nature of loans, the total amount overdue for more than ninety days are as under. The Company takes steps for recovery of the principal and interest as per its defined procedures, which in our opinion are reasonable.

No. of borrowers	Principal amount overdue (Rs. in crore)	Interest overdue* (Rs. in crore)	Total overdue (Rs. in crore)
19	5,595.37	6,721.03	12,316.40

* The same has not been recognised as income as a matter of prudence as per practices of the Company.

(e) Reporting under clause 3(iii)(e) of the Order is not applicable, since the principal business of the Company is to give loans.

(f) To the best of our knowledge and according to information and explanation given to us, the Company has not granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment. Hence, reporting under clause 3(iii)

(f) is not applicable.

(iv) In respect of compliances of provision of Sections 185 & 186 of the Companies Act

a) In our opinion and according to information and explanation given to us the Company has not given any loan or given any guarantee or provided any security in contravention of Section 185 of the Companies Act, 2013 to the extent applicable to the Company.

b) Further in our opinion and according to information and explanation given to us, the Company being a Non-Banking Financial Company (NBFC), the Company is exempt from section 186 of the Companies Act, 2013 and relevant rules in respect of loans & guarantees. In respect of investments the Company has complied with the provisions of section 186(1) of the Companies Act, 2013.

(v) In respect of acceptance of Deposit

According to information and explanations given to us, the Company has not accepted any deposit from public to which the directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of Companies Act, 2013 and rules made thereunder are applicable.

(vi) In respect of maintenance of Cost Records

The Central Government has not prescribed the maintenance of cost records under Sub-section (1) of Section 148 of the Companies Act, for any of the services rendered by the Company. Accordingly, clause 3(vi) of the Companies (Auditors Report) Order 2020 is not applicable to the Company.

(vii) In respect of Statutory Dues

(a) As per information & explanation given to us by the management and on the basis of our examination of the books of account, the Company is regular in depositing with appropriate Authorities, undisputed statutory dues including Goods and Services Tax, Provident Fund, Employees State Insurance, Income Tax, Service Tax, and other statutory dues as applicable to it and there is no undisputed amount payable in respect of aforesaid dues outstanding for a period of more than six months from the date they become payable as on March 31,2026, as per the accounts of the Company.

(b) According to the information and explanations given to us and as certified by the management on which we have relied upon, the disputed statutory dues aggregating to Rs. 43.21 crore have been deposited/on account of disputes/deposited under protest and the matters are pending before appropriate authorities as detailed below:

Name of the Statute	Nature of the Dues	Total Disputed Amount (Rs. in crore)	Amount Paid under protest/ adjusted by IT Authorities (Rs. in crore)	Pending Amount (Rs. in crore)	Period to which the amount relates	Forum where dispute is pending
Income Tax Act, 1961	Income Tax*	22.77	22.77	-	AY 2016-17	ITAT, Delhi
		20.44	20.44	-	AY 2018-19

* Including interest

(viii) In respect of unrecorded transactions:

As per information and explanation given to us and on the basis of our examination of the books of accounts of company, we confirm that there were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

(ix) In respect of default in repayments of loans/ other borrowings and interest thereon

(a) In our opinion, the Company has not defaulted in repayment of loans or other borrowing or on the payment of interest thereon to any lender.

(b) The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

(c) In our opinion, the term loans availed were availed by the company for the purpose for which the loans were intended.

(d) According to the information and explanations given to us, and the procedures performed by us, no funds raised on short-term basis have been used for long-term purposes by the Company other than temporary usage pending receipts from long term sources.

(e) According to the information and explanations given to us and on an overall examination of the Standalone Financial Statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

(f) The Company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate Companies.

(x) In respect of money raised through public offer/preferential allotment

(a) The Company has raised Rs.600.77 crore through Public Issue of non-convertible debentures during FY 2025-26 and fully utilized the proceeds towards the purposes for which it was raised.

(b) The Company has not made any preferential allotment or private placement of shares or convertible debentures during the year.

(xi) In respect of fraud during the year

(a) As per the information & explanations given to us by the management, no fraud by the Company or any fraud on the Company has been noticed or reported during the year except, one of the borrowers suspected to have committed fraud on the company during the FY 2024-25 has been reported as committed fraud during the FY 2025-26. The Company has downgraded the borrower loan account to Stage-III as per Ind AS and provided adequately against the outstanding loan amount.

(b) As informed to us, no report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government during the year and up to the date of this report.

(c) We have been informed by the management that no whistle blower complaints have been received by the Company during the year.

(xii) In respect of Nidhi Company

The Company is not a Nidhi Company. Accordingly, clause 3(xii) of the Companies (Auditors Report) Order 2020 is not applicable to the Company.

(xiii) In respect of Related parties transactions

According to information and explanations given to us and on the basis of our examination of the records of the Company, all transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable. The details have been disclosed in the Standalone Financial Statements (Note No.43) as per the requirement of the applicable accounting standards.

(xiv) In respect of Internal Audit

(a) In our opinion and based on our examination, the Company has an internal audit system commensurate with the size and nature of its business.

(b) We have considered the internal audit reports provided to us by the management for the year under audit in determining the nature, timing and extent of audit.

(xv) In respect of Non-cash transactions

According to the information and explanations given to us, in our opinion during the year the Company has not entered into any non-cash transactions with its directors or persons connected with its directors and hence provisions of section 192 of the Companies Act, 2013 are not applicable.

(xvi) In respect of registration with RBI

(a) The Company is a Non- Banking Financial Company and has obtained registration under section 45-IA of the Reserve Bank of India Act, 1934. The registration number issued to the Company is B- 14.00004 dated 28-07-2010.

(b) The Company has not conducted any non-banking financial or housing finance activities without a valid certificate of registration from the Reserve Bank of India as per Reserve Bank of India Act, 1934.

(c) The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank Of India, hence reporting under clause 3 (xvi) (c) of the order is not applicable.

(d) In our opinion, there is no Core Investment Company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under clause 3 (xvi) (d) of the Order is not applicable to the company.

(xvii) In respect of Cash Loss

On the basis of our examination of the records of the Company, the Company has not incurred any cash losses in the financial year and in the immediately preceding financial year.

(xviii) In respect of Resignation of the Statutory Auditor

There has been no resignation of statutory auditors of the Company during the year.

(xix) In respect of Material-uncertainty on the basis of financial ratios

On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the Standalone Financial Statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) In respect of Corporate Social Responsibility

(a) There are no unspent amounts towards Corporate Social Responsibility (CSR) on other than ongoing projects requiring a transfer to a Fund specified in Schedule VII to the Companies Act in compliance with second proviso to sub-section (5) of Section 135 of the said Act. Accordingly, reporting under clause 3(xx)(a) of the Order is not applicable for the year.

(b) In respect of ongoing projects, the Company has transferred unspent Corporate Social Responsibility (CSR) amount as at the Balance Sheet date to a special account, within a period of thirty days from the end of the financial year in compliance with section 135(6) of the Companies Act. (Note No.35).

For Thakur, Vaidyanath Aiyar & Co.	For Mehra Goel &Co.
Chartered Accountants	Chartered Accountants
Firms Registration No.: 000038N	Firms Registration No.: 000517N
Sd/-	Sd/-
(Kamlesh Kumar Upadhyay)	(Vaibhav Jain)
Partner	Partner
Membership No. 096584	Membership No. 515700
UDIN: 26096584BNNXAG4785	UDIN: 26515700BTBDEX6371
Date: 13.05.2026
Place: Mumbai

Annexure B

To the Independent Auditors Report on the Audit of the Standalone Financial Statements

(Referred to in Para 7 (II) under the heading Report on other Legal and Regulatory Requirements of our report of even date to The Members of Power Finance Corporation Limited on the Standalone Financial Statements for the year ended March 31, 2026)

As required under Section 143(5) of the Companies Act, 2013 with respect to the directions issued by The Comptroller & Auditor General of India, we report that:

Sr. No. Directions	Replies
1. Assess the fair valuation of all the investments, both quoted and unquoted, made directly by the Company or through Trusts, for Post-retirement benefits of the employees.	Investment of the Funds against Post-retirement benefits are being made and managed by the respective Trust as per applicable law/ requirement for the same applicable to the respective Trust. These Trust are registered under Indian Trust Act.
This includes verifying valuation methodologies, ensuring consistency with Ind AS and reviewing supporting documentation. The auditor shall provide a brief note on the valuation approach, its reasonability, and compliance with applicable regulations, reporting any material deviations or misstatements.	Valuation of the Investments by these trusts is made as per its approved policies.
	However, Company, as an employer, assess the fair value of such Investments in accordance with the prescribed guidelines. A brief methodology followed by the company for the same are as under:
	• Central Govt. Securities/State Government Securities (formerly State Development Loans) are valued using prices and yields published by the Financial Benchmarks India Private Limited (FBIL) under the administration mandate received from the Reserve Bank of India.
	• Corporate Bonds securities are valued using Fixed Income Money Market and Derivatives Association of India (FIMMDA) published prices, spread matrices, and traded data available on BSE/NSE platforms as applicable.
	• Equity or Equity linked mutual funds unit are valued using traded data available on BSE/NSE platforms as applicable.
	• In our opinion and as per information and explanation given to us, the valuation method adopted is reasonable in compliance with the applicable regulation and there is no material deviation or misstatement.
2. Whether the Company has a system in place to process all the accounting transactions through IT system? If yes, whether review of this system and controls that are significant to the Companies, financial reporting process as well as cyber security has been done by information security auditing organization empaneled by Cert - In at a minimum frequency of once in a year and material discrepancies found, if any, have been suitably reported? The implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications may also be reported.	Yes, the Company has a system to process all the accounting transactions through IT system, except the following where significant accounting transactions/workings are processed manually through excel spreadsheets and the resulting impact are then recorded in IT system manually viz.
	(i) Expected Credit Loss, (ii) Hedge Accounting, (iii) Consolidation entries and (iv) Tax Expense.
	As per information and explanation provided to us, the company has empaneled information system auditors for the IT Controls and cyber security audits. However, System Audit for the year is still in progress and report has not yet been submitted by such auditor. Based on audit procedure followed by us and information and explanations provided to us, we have not come across any instance having significant implications on the integrity of accounts.
3. Whether funds (grants/subsidy etc.) received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for as per the applicable accounting standards or norms and whether the received funds were utilised as per its terms and conditions? Whether accounting of interest earned on grants received has been done as per terms and conditions of the Grant. List the cases of deviation.	The Company has not received any Grants/Subsidy etc. for the specific Schemes from Central/State Governments or its Agencies. However, Company is acting as a nodal agency for the operationalization of RDSS Scheme, Government of India and such Fund is also provided by the Govt. to the beneficiary and not through the Company.
4. Whether the Company has identified the key Risk areas? If yes, whether the Company has formulated any Risk Management Policy to mitigate these risks? If yes, (a) whether the Risk Management Policy has been formulated considering global best practices? (b) whether the Company has identified its data assets and whether it has been valued appropriately?	As per information & explanation provided to us, company has identified the key risk areas and has formulated an Integrated Risk Management Policy to ensure that these risks are monitored and managed. Further, as per ISO 9001:2015 and ISO 45001:2018 certification, the said policy is based on global best practices.
	As per information and explanation provided to us no separately identifiable data assets requiring valuation are recognised in the books of account.
5. Whether the Company is complying with the Securities and Exchange Board of lndia (SEBI) (Listing Obligation and Disclosure Requirements) Regulations 2015, and other applicable rules and regulations of SEBI, Department of Investment and Public Asset Management, Ministry of Corporate Affairs, Department of Public Enterprises, Reserve Bank of India, Telecom Regulatory Authority of India, CERT-lN, Ministry of Electronics and Information Technology and National Payments Corporation of India wherever applicable? If not, the cases of deviation may be highlighted.	Based on audit procedure followed by us and information and explanations given to us, we have not come across any instance of deviation from such compliance except in the case of minimum requirement of independent directors.

 

For Thakur, Vaidyanath Aiyar & Co.	For Mehra Goel &Co.
Chartered Accountants	Chartered Accountants
Firms Registration No.: 000038N	Firms Registration No.: 000517N
Sd/-	Sd/-
(Kamlesh Kumar Upadhyay)	(Vaibhav Jain)
Partner	Partner
Membership No. 096584	Membership No. 515700
UDIN: 26096584BNNXAG4785	UDIN: 26515700BTBDEX6371
Date: 13.05.2026
Place: Mumbai

Annexure C

to the Independent Auditors Report on the Audit of the Standalone Financial Statements

(Referred to in Para 7 111(f) under the heading Report on other Legal and Regulatory Requirements of our report of even date to The Members of Power Finance Corporation Limited on the Standalone Financial Statements for the year ended March 31, 2026)

Report on the Internal Financial Controls with reference to Standalone Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls with reference to the Standalone Financial Statements of Power Finance Corporation Limited ("the Company") as of March 31, 2026 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

1. MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Companys management is responsible for establishing and maintaining internal financial controls based on the 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 (ICAI). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Companys policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Act.

2. AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on the Companys internal financial controls with reference to Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI prescribed under Sub-section 10 of Section 143 of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

3. MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Financial Statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Standalone Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of the Management of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the Standalone Financial Statements.

4. INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

5. OPINION

In our opinion, the Company has, in all material respects, an internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31,2026, based on the 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.

For Thakur, Vaidyanath Aiyar & Co.	For Mehra Goel &Co.
Chartered Accountants	Chartered Accountants
Firms Registration No.: 000038N	Firms Registration No.: 000517N
Sd/-	Sd/-
(Kamlesh Kumar Upadhyay)	(Vaibhav Jain)
Partner	Partner
Membership No. 096584	Membership No. 515700
UDIN: 26096584BNNXAG4785	UDIN: 26515700BTBDEX6371
Date: 13.05.2026
Place: Mumbai

Non-Banking Financial Companies Auditors Report

For The Year Ended March 31, 2026

To The Board of Directors of Power Finance Corporation Limited

Urjanidhi, 1, Barakhamba Lane,

Connaught Place, New Delhi-110 001 .

We have audited the accompanying Standalone Financial Statements of Power Finance Corporation Limited (the Company), which comprises the Balance Sheet as at 31.03.2026, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and Notes to the Standalone Financial Statements, including a summary of Material Accounting Policies and Other Explanatory Information (hereinafter referred to as "the Standalone Financial Statements") and issued our audit report dated 13.05.2026. These financial statements are the responsibility of the Companys management. Our responsibility was to express an opinion on these financial statements based on our audit. Our audit was conducted in the manner specified under the section "Auditors Responsibility for the Audit of the Financial Statements" of the said audit report. We also draw reference to the section "Responsibilities of Management and Those Charged with Governance for the Financial Statements" in the Audit Report which applies to this report.

As required by the "Non-Banking Financial Companies Auditors Report (Reserve Bank) Directions, 2016" issued by the Reserve Bank of India (RBI), on the matters specified in Chapter - II of the said Directions to the extent applicable to the Company, based on our audit referred to the aforesaid paragraph and according to the information and explanations given to us, which to the best of our knowledge and belief were necessary for this purpose, we report that:

1. The Company is engaged in the business of Non-Banking Financial Institution, having valid certificate of registration as an Infrastructure Finance Company issued by Reserve Bank of India vide No. B-14.00004 dated 28.07.2010 in lieu of earlier certificate no. 14.00004 dated 10.02.1998. Further, the Company is entitled to continue to hold such registration in terms of its asset/income pattern as on 31.03.2026.

2. The Company is meeting the requirement of net owned funds applicable to an Infrastructure Finance Company as contained in Reserve Bank of India (Non-Banking Financial Companies) Directions, 2025.

3. The Company is registered as non-deposit accepting Infrastructure Finance Company with RBI. The Board of Directors has passed resolution in its meeting held on 17.03.2026 for non-acceptance of any public deposit in future without obtaining prior written permission of Reserve Bank of India.

4. The Company has not accepted any public deposits during the financial year 2025-26.

5. The Standalone Financial Statements of the Company for the year 2025-26 have been prepared in accordance with the recognition and measurement principles of Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 (the Act) read with relevant rules issued thereunder. Accordingly, the Company is following Board approved methodology for computation of Impairment Allowance towards provisioning for its loan assets and classification thereof. In view of regulatory compliance of the Act for adoption of a mechanism for preparation of Standalone Financial Statements, the Company is required to make provision of impairment loss as per Ind AS 109 and not required to follow the Prudential norms relating to income recognition, asset classification and provisioning (IRACP norms) for Bad and Doubtful debts in terms of Directions 2025. However, in this regard, in compliance of Reserve Bank of India (Non-Banking Financial Companies) Directions, 2025, the Company has calculated provision required under IRACP Norms (including standard assets provisions) and the Company is not required to appropriate any amount to "Impairment Reserve".

6. As per information and explanation given to us, the Statement of capital funds, risk assets/exposure and risk asset ratio (DNBS 03 Return) has been filed by the Company for all the quarters of FY 2025-26 based on provisional Standalone Financial Results, including CRAR of respective quarters, drawn on the date of filing within the stipulated period, in compliance with RBI norms. Further, CRAR based on audited Standalone Financial Statements for the year ended 31.03.2026 has been correctly arrived at and it is in compliance with minimum prescribed CRAR by RBI.

We have no responsibility to update this report for events occurring after the date of submission of signed copy of this report. Also, this report is issued solely for reference of the Company pursuant to the requirement as per the said Directions and is not to be used or distributed for any other purpose.

For Thakur, Vaidyanath Aiyar & Co.	For Mehra Goel &Co.
Chartered Accountants	Chartered Accountants
Firms Registration No.: 000038N	Firms Registration No.: 000517N
Sd/-	Sd/-
(Kamlesh Kumar Upadhyay)	(Vaibhav Jain)
Partner	Partner
Membership No. 096584	Membership No. 515700
UDIN: 26096584BNNXAG4785	UDIN: 26515700BTBDEX6371
Date: 13.05.2026
Place: Mumbai

Comments of the Comptroller and Auditor General of India

Under Section 143(6)(b) of the Companies Act, 2013 on The Financial Statements of Power Finance Corporation Limited for the Year Ended 31 March 2026

The preparation of financial statements of Power Finance Corporation Limited for the year ended 31 March 2026 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller and Auditor General of India under section 139(5) of the Act are responsible for expressing opinion on the financial statements under section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 13 May 2026.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the financial statements of Power Finance Corporation Limited for the year ended 31 March 2026 under Section 143(6)(a) of the Act. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records.

On the basis of my supplementary audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to statutory auditors report under section 143(6)(b) of the Act.

For and on behalf of the

Comptroller & Auditor General of India

Sd/-

(Ashutosh Joshi)

Director General of Audit (Power)

New Delhi

Place: New Delhi

Date: 31.07.2026.