PTC India Financial Services Ltd Management Discussions

The Management of the Company is pleased to present its Report on Industry scenario including Companys performance during the FY 2025-26.

A. INDUSTRY STRUCTURE AND DEVELOPMENT OPPORTUNITIES

1. Infrastructure pipeline to provide a large addressable financing market

Indias infrastructure sector continues to offer a sizeable long-term financing opportunity, supported by public capital expenditure, policy reforms, private participation and a growing focus on sustainable and resilient infrastructure. The National Infrastructure Pipeline projected total infrastructure investment of around Rs. 111 lakh crore during FY 2020-25, covering more than 9,000 projects across 34 infrastructure sub-sectors. Further, the Union Budget FY26 continued its infrastructure focus with a capital expenditure outlay of approximately Rs.11.2 lakh crore and sustained emphasis on renewable energy, transmission, rail and logistics modernization, urban infrastructure and green energy transition initiatives. The scale of this pipeline indicates a large addressable market for long-tenor project finance, refinancing, take-out finance, acquisition funding and structured infrastructure debt.

For PFS, the addressable opportunity lies in selectively capturing exposure across power, renewable energy, transmission, roads, ports, water, e-mobility, urban infrastructure and other sustainable infrastructure segments. Considering the size of the identified infrastructure pipeline, even a conservative participation range of 0.10% to 0.25% of the Rs. 111 lakh crore infrastructure opportunity may indicate an addressable exposure opportunity of around Rs. 11,100 crore to Rs. 27,750 crore over the medium to long term, subject to capital availability, risk appetite, regulatory norms, sectoral limits and availability of bankable projects.

2. Renewable energy capacity expansion to create one of the largest exposure pools for financiers

I ndias renewable energy capacity expansion is expected to remain one of the largest sector-specific financing opportunities up to 2030. The Government of India is working towards achieving 500 GW of non-fossil fuel capacity by 2030 and net zero emissions by 2070. A Government release has indicated an estimated financing requirement of about USD 300-350 billion, approximately Rs. 30 lakh crore, to reach 500 GW of non-fossil capacity by 2030.

As on the referenced Government release, India had achieved 267 GW of non-fossil fuel-based installed electricity capacity and attained 50% non-fossil capacity, five years ahead of the 2030 target. The large balance funding requirement up to 2030 creates a repeatable financing exposure pool across solar, wind, hybrid, storage-linked, rooftop, distributed, captive and commercial and industrial renewable projects.

For PFS, renewable energy is closely aligned with its historical focus on power, clean infrastructure and sustainable finance. On a conservative indicative basis, even 0.10% to 0.25% participation in the estimated Rs. 30 lakh crore financing requirements for non-fossil capacity may indicate an addressable exposure range of around Rs. 3,000 crore to Rs. 7,500 crore, subject to project bankability, internal credit parameters, availability of security and acceptable risk-adjusted returns.

3. Transmission expansion to provide stable long-tenor financing exposure

Transmission infrastructure will be critical for integrating renewable capacity and supporting future power demand. The National Electricity Plan for transmission envisages meeting peak demand of 458 GW by 2032 and expanding the transmission network from 4.98 lakh circuit km in November 2025 to 6.48 lakh circuit km by 2032.

The total cost of the National Electricity Plan for Central and State transmission systems for 2023-2032 is estimated at Rs. 9.16 lakh crore.

This provides a sizeable financing market across inter-state transmission systems, intra-state networks, pooling substations, renewable evacuation lines, green energy corridors, HVDC systems and grid strengthening. For PFS, transmission can provide relatively stable long-tenor exposure where projects are supported by regulated returns, tariff-based competitive bidding frameworks, availability- based payments, strong counterparties or operational cash-flow visibility. Conservatively, 0.50% to 1.00% participation in the Rs. 9.16 lakh crore transmission plan may indicate an addressable exposure opportunity of around Rs. 4,580 crore to Rs. 9,160 crore.

4. Storage, hydro and round-the-clock renewable power to create emerging grid-balancing exposure

With increasing renewable energy penetration, the sector is witnessing a shift from simple capacity addition to firm, reliable and dispatchable renewable power. Recent bidding trends indicate growing emphasis on round-the-clock power, hybrid renewable projects and storage- linked supply structures. In this context, the focus is no longer limited to the quantum of electricity generated; the timing, reliability and dispatchability of such electricity are becoming equally important.

Renewable energy is evolving from a supplementary source of power to a mainstream component of Indias energy basket. As a result, round- the-clock supply, grid balancing and flexible capacity are expected to become critical for integrating higher renewable capacity. The Central Electricity Authority has estimated energy storage requirement of about 336 GWh by 2029-30 and about 411 GWh by 2031-32 to facilitate reliable renewable energy integration. Further, under the National Electricity Plan, storage capacity requirement is projected at 73.93 GW by 2031-32, comprising 26.69 GW of pumped storage projects and 47.24 GW of battery energy storage systems.

Government data also indicates that 12,973.5 MW of hydro-electric projects are under construction, 4,274 MW are under various stages of planning, and 10 pumped storage projects aggregating 11,870 MW are under construction. In addition, the transmission system up to 2031-32 has been planned for 35.6 GW of pumped storage projects, while around 47 GW of battery energy storage systems has been considered for integration by 2031-32.

PFS brings established lineage and sectoral experience in power and infrastructure financing, with long-standing exposure to renewable energy, transmission and allied infrastructure segments. This experience provides the Company with an understanding of project appraisal, power- sector cash flows, offtaker risk, escrow structuring, security creation, regulatory considerations and monitoring requirements across the power value chain. Such domain knowledge is expected to be relevant as the sector moves towards more complex structures involving hybrid projects, RTC supply, storage integration and grid-balancing assets.

This creates an emerging financing market in pumped storage, hydro, battery energy storage systems, hybrid renewable projects, RTC renewable projects and other grid-balancing infrastructure. For PFS, this may become a selective future exposure area, particularly where projects demonstrate revenue visibility, sponsor strength, implementation capability, offtake certainty, payment security and long-term cash-flow support. Given the scale of projected storage requirement, even a conservative participation range of 0.10% to 0.25% in the storage and grid-balancing infrastructure opportunity can represent a meaningful addressable exposure pool, subject to bankability, contractual structure and internal credit parameters.

5. Distribution-sector improvement to support power-sector bankability

The distribution segment remains central to the overall bankability of the power sector. Government data indicates that outstanding dues in the power sector reduced from Rs. 1.40 lakh crore in June 2022 to Rs. 4,109 crore in February 2026, while distribution companies recorded aggregate profit after tax of Rs. 2,701 crore in FY25.

Improved discom liquidity can strengthen payment discipline across the power value chain and enhance the bankability of generation, renewable and transmission assets. For PFS, this supports broader power-sector exposure, particularly where projects have payment security mechanisms, escrow structures, state support, tariff visibility and identifiable cash-flow sources. Stronger distribution-sector performance can also support the growth of sustainable energy assets by improving confidence in long-term offtake and payment discipline.

6. Roads and highways to provide a sizeable transport infrastructure market

Roads and highways remain one of the largest infrastructure segments for long-tenor financing. The national highway network expanded from 91,287 km in FY14 to 1,46,572 km up to December FY26, while operational high-speed corridors increased from 550 km to 5,364 km during the same period.

The Ministry of Road Transport and Highways has identified a PPP project pipeline of 13,400 km, with an estimated cost of Rs. 8.3 lakh crore, to be developed over the next three years. Further, 35 Multimodal Logistics Parks are planned under Bharatmala Pariyojana with investment of about Rs. 46,000 crore and cargo handling capacity of around 700 million metric tonnes once operational.

This provides financing exposure across PPP roads, hybrid annuity projects, operational toll assets, logistics parks, completed road refinancing and transport-linked infrastructure. For PFS, the segment can provide diversification beyond power where projects have strong concession frameworks, predictable authority receivables, annuity-style cash flows and established sponsors. Conservatively, 0.10% to 0.25% participation in the Rs. 8.3 lakh cioie roads PPP pipeline may indicate an addressable exposure range of around Rs. 830 crore to Rs. 2,075 crore.

7. Ports, logistics and maritime infrastructure to provide diversified exposure opportunities

Port-led infrastructure, maritime logistics and multimodal connectivity are expected to remain important for improving Indias logistics competitiveness. Under the Sagarmala Programme, 845 projects worth around Rs. 6.06 lakh crore have been identified for implementation, aligned with Maritime India Vision 2030 and Maritime Amrit Kaal Vision 2047. As of March 2026, 315 projects worth around Rs.1.57 lakh crore had been completed, while 210 projects were under implementation and 320 projects were at various stages of planning across port modernisation, port connectivity, coastal shipping, inland waterways and port-led industrialisation.

This creates financing opportunities in port modernisation, cargo terminals, port connectivity, warehousing, coastal shipping, inland waterways and logistics-linked infrastructure. These sectors also align with the broader theme of efficient, lower-cost and sustainable logistics infrastructure.

For PFS, port and maritime-linked assets can provide selective diversification, subject to demand visibility, concession strength, sponsor quality, security package and operating track record. Conservatively, 0.10% to 0.25% participation in the overall Sagarmala opportunity of Rs. 6.06 lakh crore may indicate an addressable exposure range of around Rs. 606 crore to Rs. 1,515 crore.

8. E-mobility and clean transport to expand sustainable infrastructure exposure

Clean transport and e-mobility are emerging as important sustainable infrastructure segments. Under PM e-Bus Sewa, 10,000 electric buses have been sanctioned across 116 cities, with deployment targeted over FY25-FY27. Further, under PM E-DRIVE Scheme, approved in 2024 with an outlay of Rs. 10,900 crore for implementation up to March 2026, Rs. 4,391 crore has been allocated for deployment of 14,028 electric buses and Rs. 2,000 crore for public EV charging infrastructure. In aggregate, 23,800 electric buses have been sanctioned under PM E-DRIVE and PM e-Bus Sewa.

This expands financing exposure into electric buses, charging infrastructure, depot infrastructure, battery-linked systems, fleet financing and related clean transport assets.

For PFS, the opportunity is relevant where projects are supported by public authority contracts, payment security mechanisms, long-term service arrangements, escrow structures and predictable cash flows. The segment also provides an avenue to deepen exposure to climate- aligned infrastructure and low-carbon mobility solutions.

9. Water and urban infrastructure to provide public infrastructure exposure

Water infrastructure remains a key public infrastructure requirement. Under AMRUT 2.0, 3,531 water supply projects worth Rs. 1,19,670.51 crore have been approved. Separately, under Jal Jeevan Mission, around 15.82 crore rural households, representing 81.71% of total rural households, were reported to have tap water supply as on 31st March 2026, compared with 3.23 crore households at the start of the Mission.

This creates financing exposure in water treatment plants, distribution networks, wastewater management, reuse projects and municipal infrastructure.

For PFS, the sector can provide selective opportunities where projects are backed by municipal or government counterparties, annuity or service- payment structures, escrow mechanisms, performance-linked contracts and established operators. Conservatively, 0.10% to 0.25% participation in the approved AMRUT 2.0 water project pool may indicate an addressable exposure range of around Rs. 120 crore to Rs. 299 crore.

10. Digital Infrastructure

During the year, the Company sharpened its strategic focus on financing digital infrastructure that underpins Indias evolving data and connectivity ecosystem. Indias data centre market, currently estimated at USD 10 billion, is projected to more than double to around USD 22 billion by 2030, with installed capacity expected to increase to approximately 4-5 GW on the back of rapid growth in cloud, AI workloads, 5G rollout and data localisation norms. In parallel, the optical fibre footprint has expanded to over 4.2 million route km as of 2025 and OFC demand is expected to grow at a CAGR through 2030, driven by fibre-to-the-home (FTTx), 5G backhaul requirements and the need to interconnect data centres and hyperscale facilities, establishing fibre networks as the critical backbone of Digital India. PFS sanctioned facilities to Borrowers, which are engaged in developing optical fibre and network infrastructure for national long-distance routes, metropolitan area networks and in-building digital connectivity, enabling multiple ISPs and service providers to deliver high-speed broadband and smart-building services over shared fibre backbones. The Company is also evaluating proposals in supporting the creation of hyperscale, energy-efficient data centre capacity in line with the growing demand for cloud, AI and other digital services across the country. These initiatives, position the Company as a differentiated financier of next-generation digital and energy infrastructure and reinforce its commitment to supporting Indias digital transformation.

THREATS

The infrastructure financing opportunity remains subject to capital availability, risk appetite, regulatory norms, sectoral limits, availability ofbankable projects, internal credit parameters, availability of security, demand visibility, sponsor quality, security package, implementation capability, offtake certainty, payment security, contractual structure, concession strength, operating track record and acceptable risk-adjusted returns.

OUTLOOK

1. Sustainable finance to broaden PFSs future opportunity set

The infrastructure financing landscape is increasingly moving towards sustainable finance, climate-aligned assets, green infrastructure and ESG-linked capital allocation. Sectors such as renewable energy, energy storage, transmission, e-mobility, clean transport, water treatment, waste management, efficient logistics and resilient urban infrastructure are expected to form a growing share of the future infrastructure financing market.

For PFS, this presents an opportunity to align its business focus with Indias sustainability priorities while maintaining credit discipline. The Companys existing sectoral experience in power and infrastructure provides a platform to evaluate sustainable infrastructure projects with a focus on cash-flow visibility, counterparty strength, security creation, escrow-based repayment structures and long-term asset performance.

2. PFS positioned for conservative capture of a sizeable infrastructure exposure pool

The infrastructure financing opportunity is supported by multiple Government backed projects, including the Rs. 111 lakh crore National Infrastructure Pipeline, approximately Rs. 30 lakh crore financing requirements for 500 GW non-fossil capacity by 2030, Rs. 9.16 lakh crore transmission plan up to 2032, Rs. 8.3 lakh crore roads PPP pipeline, Rs. 6.06 lakh crore Sagarmala pipeline, Rs. 46,000 crore Multimodal Logistics Parks investment and Rs. 1.20 lakh crore approved AMRUT 2.0 water projects.

Based on these published opportunity pools, the sectors most relevant to PFS indicate a cumulative opportunity of more than Rs. 55 lakh crores over the medium to long term. On a conservative indicative basis, selective participation of 0.10% to 0.25% in this relevant sectoral opportunity pool may indicate a conservative addressable exposure range of approximately Rs. 5,500 crores to Rs. 13,750 crores. This is only a conservative market-sizing assessment and not a business target or guidance.

PFS, with its experience in power and infrastructure financing, is positioned to selectively capture exposure across greenfield project finance, brownfield refinancing, structured debt, acquisition finance, take-out finance, operational asset funding and sustainable infrastructure financing. The Companys focus would remain on projects with visible cash flows, adequate security, escrow-based repayments, strong counterparties, sustainability alignment and acceptable risk-adjusted returns.

(B) FINANCIAL AND OPERATION PERFORMANCE

The summarized financial performance of the Company:

In FY 2025-26, the total income of the Company declined by 18.77%, from Rs. 638.00 Crore in FY 2024-25 to Rs. 518.25 Crore in FY 202526 However, this impact was significantly offset by a 30.08% reduction in finance costs, which decreased to Rs. 224.49 Crore in FY 2025-26 from Rs. 321.06 Crore in FY 2024-25.

The spread on the earning portfolio (Stage I & II) declined to 1.33% in FY 2025-26, compared to 1.92% in FY 2024-25. The Net Interest Margin (NIM) on Stage I & II earning assets increased slightly to 4.49% in FY 202526, as against 4.25% in FY 2024-25.

EBITDA increased by 2.55%, amounting to Rs 621.62 crore in FY 2025-26 as compared to Rs 606.14 crore in FY 2024-25, other expenses reduced by 12.99%, amounting to Rs. 20.90 Crore in FY 2025-26 as compared to Rs. 24.02 Crore in FY 2024-25 and reduction in Impairment of financial instrument amounting to Rs. (151.03) crores in FY 2025-26 as compared to Rs (11.06) Crore in FY 2024-25. Total comprehensive income has increased by 48.41% from Rs. 215.42 Crore to Rs. 319.70 Crore, mainly due to reduction in impairment cost.

During the year, the Debt/ Equity ratio of the Company improved to 0.57 in FY 2025-26 from 1.03 in FY 2024-25. Further, all the borrowings are long-term borrowings in FY 2025-26. The Company is contemplating to maintain majority of its borrowings in the form of long term credit lines to have better ALM and cash flow. The Company has maintained sufficient liquidity in the form of High Quality Liquid Assets (HQLA) as per RBI guidelines and undrawn lines of credit to meet its financial obligations. However, the Company is in the process of raising credit lines/funds to improve the liquidity and achieve growth.

During the FY 2025-26, with the focused efforts of the management, the portfolio quality improved. During the year, gross NPA have decreased from Rs. 429 Crore in FY 2024-25 to Rs. 190.03 Crore in FY 2025-26 and net NPAs have decreased from Rs. 117 Crore in FY 2024-25 to Rs. 46.98 Crore in FY 2025-26. Further, the Companys focus on enhancing business resulted in disbursements increasing to Rs. 1235 Crore in FY 2025-26 compared to Rs. 916 Crore in FY 2024-25, a growth of about ~35%.

No new NPAs were reported in FY 26. While the Companys exposure to thermal power projects increased to 11.90% as at March 31, 2026 from 7.16% as at March 31, 2025, this was accompanied by continued portfolio diversification. The increase in thermal exposure reflects selective opportunities in the sector, alongside calibrated growth in emerging segments. During FY 2025-26, disbursements towards telecom/optic fibre and CBG sectors constituted 7.16% of total disbursements, underscoring the Companys focus on expanding its presence in new-age and sustainable infrastructure segments.

The profit before tax (PBT) for FY 2025-26 stood at Rs. 389.70 Crore visa-vis Rs. 278.52 Crore in FY 2024-25. The profit after tax (PAT) for FY 2025-26 stood at Rs. 319.36 Crore against Rs. 217.05 Crore in FY 2024-25.

(C) CHANGES IN KEY FINANCIAL RATIOS

The key changes in applicable financial Ratios are as follows:

(D) INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Statutory Auditors of the Company i.e. Ravi Rajan & Co. LLP, Chartered Accountants have given their Report on the Internal Financial Controls stating that the Company has, in all material respects, adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 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.

(E) RISK MANAGEMENT

PFSs comprehensive risk management is overseen by the Board of Directors. The Risk Management Committee (RMC) is a Board-level committee that supervises the implementation of the risk strategy, has been formed as per the guidelines of Reserve Bank of India on Asset Liability Management/ Risk Management Systems. The RMC monitors compliance with risk parameters and aggregate exposures within the appetite set by the Board. It also reviews the enterprise-wide risk frameworks viz. Risk Appetite framework (RAF), Internal Capital Adequacy Assessment Process (ICAAP), and the stress testing framework for the PFSs borrowers. The RMC guides the development of policies, procedures, and systems, constantly assessing their suitability for our evolving business landscape.

Heading the independent Risk Management function is the Chief Risk Officer (CRO), who maintains regular communication with RMC members.

The Risk Management function is responsible for executing the approved risk strategy, developing policies, procedures, and systems to manage risks effectively. The risk management function of PFS is independent from business and reports directly to the Managing Director and Chief Executive Officer.

Given the nature of our business and the regulatory landscape, we are exposed to a spectrum of risks. Among our principal risks are credit, liquidity, operational, cybersecurity, and technology risks. Moreover, our operations encompass compliance and reputation risks. To manage these, weve instituted an overarching risk appetite framework. We have implemented specific policies, limits, and triggers tailored to each risk category to operationalise our risk appetite. Our structured management framework, the Internal Capital Adequacy Assessment Process (ICAAP), is designed to identify, assess, and manage all risks that could significantly affect our business, financial position, or capital adequacy. Ensuring informed decision-making, we regularly capture and report risk exposures, initiating appropriate mitigation measures.

PFS has an independent Internal Audit Department for assessing the adequacy and effectiveness of all internal controls, risk management practices, governance systems, and processes. We are intensifying our attention on nonfinancial risks by amplifying discussions within our Risk Management and Board committees. These discussions encompass compliance, personnel, technology, reputation risks, and others. This involves enhancing our policies, procedures, and risk assessment frameworks to effectively manage these risks, with an ongoing commitment to improvement.

Credit Risk is the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. Losses stem from outright default or reduction in portfolio value. PFS has a comprehensive credit risk architecture, policies, procedures, and systems for managing credit risk in its wholesale lending businesses. In wholesale loans, credit risk is managed by capping exposures based on borrower group, industry, credit rating grades and country among others. This is backed by portfolio diversification, stringent credit approval processes, periodic post-disbursement monitoring and remedial measures. PFS has ensured strong asset quality through volatile times in the lending environment by stringently adhering to prudent norms and institutionalised processes.

Liquidity risk is the risk that the PFS may not be able to meet its financial obligations as they fall due without incurring unacceptable losses. PFSs liquidity and interest rate risk management framework is spelt out through a well-defined Board approved Asset Liability Management Policy and Interest Rate Policy. The Asset Liability Committee (ALCO) is a decision-making unit responsible for implementing the liquidity risk management strategy of PFS in line with its risk management objectives and ensures adherence to the risk tolerance / limits set by the Board. ALCO reviews the policys implementation and monitoring of limits. The LCR, a global standard, is also used to measure your PFSs liquidity position. LCR seeks to ensure that PFS has an adequate stock of unencumbered High-Quality Liquid Assets (HQLA) that can be converted into cash easily and immediately to meet its liquidity needs under a 30-day calendar liquidity stress scenario.

This is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It also includes risk of loss due to legal risk but excludes strategic and reputational risk.

PFS is strengthening Operational Risk Management Framework wherein under the framework, the PFS has three lines of defence. The first line of defence is the business line (including support and operations). The first line is primarily responsible for developing risk mitigation strategies in managing operational risk for their respective units. The second line of defence is the Risk Management Function which is responsible for implementing the operational risk management framework across PFS. It designs and develops tools required for implementing the framework including policies and processes, guidelines towards implementation and maintenance of

the framework. In order to achieve the aforesaid objective pertaining to operational risk management framework, the Risk Management function guides and oversees the functioning, implementation, and maintenance of operational risk management activities of PFS. Internal Audit is the third line of defence. The internal audit team reviews the effectiveness of governance, risk management and internal controls within PFS

PFS has structured management framework in Internal Capital Adequacy Assessment Process (ICAAP) for the identification and evaluation of the significance of the risks that the PFS faces, which may have a material adverse impact on its business and financial position. The ICAAP framework is guided by Board approved ICAAP Policy.

(F) POLICY FOR INVESTMENT OF TREASURY FUNDS

The Policy For investment of Treasury Funds i.e. Treasury Policy provides a structured framework for the investment of surplus funds. Given that the Companys primary objective is to mobilize resources for onward lending to projects, the policy emphasizes capital preservation while aiming to generate optimal returns on surplus funds.

(G) Human Resources

The Company is supported by a committed, experienced, and dedicated team of professionals. It fosters a work environment that encourages continuous learning and open communication across all levels of the organisation.

A structured Performance Management System is in place to objectively assess both individual and organisational performance, with the overall remuneration framework closely aligned to this system. The Company also ensures strict adherence to all applicable safety norms across its operations. As on 31st March 2026, the employee strength stood at fifty-two (52).

(H) 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.