PTC India Financial Services Ltd Management Discussions

MANAGEMENT DISCUSSION ANALYSIS

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

(A) INDUSTRY STRUCTURE AND DEVELOPMENT

With estimated GDP growth at 6.4% for FY25 for Indian economy, maintaining a strong domestic economic momentum, Infrastructure development is expected to play a vital role in driving Indias economic growth and job creation. Over the past decade, with robust government support, investment in key sectors has surged significantly and is poised to accelerate further. Continued focus on transport, energy and urban development is expected to drive economic expansion. The infrastructure sector is a key driver of the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from the Government for initiating policies that would ensure the time-bound creation of world-class infrastructure in the country.. In other words, the infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the allied sectors like townships, housing, built-up infrastructure, and construction development projects.

In the Union Budget 2025-26, capital investment outlay for infrastructure has been increased to Rs.11.21 lakh crore (US$ 128.64 billion), which would be 3.1% of GDP. Indias infrastructure sector is poised for robust growth, with planned investments of US$ 1.4 trillion by 2025. The governments National Infrastructure Pipeline (NIP) program aims to channel significant capital into key areas such as energy, roads, railways, and urban development. Focus on PPP projects in Railways, Ports, Power Distribution and Transmission sector, focus on development of Multimodal transport, Dedicated Freight Corridor etc. is likely to further provide a great impetus and opportunities for investments in the Infrastructure Sector.

Renewable energy (RE):

India is projected to add approximately 332 GW of RE capacity in by FY 2027, thus driving the demand for RE in India at a CAGR of nearly 17%, an addition of roughly 48 GW every year. The investments for RE in India are required to be more than doubled per year to meet these targets. Energy consumption in the country has almost doubled since 2000 and is set to grow further. This calls for huge investments over the next few years. It also entails segment specific reforms in power generation, transmission, distribution and storage to ensure uninterrupted power supply to urban and rural areas and meet the massive infrastructure needs of what may soon become the worlds most populous country.

India is the third largest producer of Renewable Energy after China and USA and second largest consumer of electricity in the world. India had an installed power capacity of 444.76 GW as of May 2024. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. According to the amended Nationally Determined Contributions (NDC), India is now committed to achieving around half of total installed capacity from nonfossil fuel-based energy resources by 2030. Furthermore, the government selected four renewable energy implementing agencies (REIAs) to establish a well-defined pathway for its tender issuance goals.

The Ministry of New and Renewable Energy (MNRE) selected SECI, the National Thermal Power Corporation (NTPC), Satluj Jal Vidyut Nigam (SJVN) and the National Hydroelectric Power Company (NHPC) are for achieving mandated renewable energy issuance targets of 15GW, 15GW, 10GW and 10GW respectively, to implement its annual 50GW trajectory. It is to be noticed that the above four had collectively tendered renewable energy capacity of more than 69 GW thereby surpassing the set target for the calendar year.

The Government of Indias focus on attaining Power for all has accelerated capacity addition mainly through renewable sources in the country. India has set up an ambitious target of 280 GW of installed solar capacity by 2030. Further, the government has also decided to invite bidders to bid on 50 GW of renewable energy capacity per year for the next five years i.e., from FY24 till FY-28. These annual bids of ISTS (Inter-State Transmission) connected renewable energy capacity will also include development of wind power capacity of at least 10 GW per annum. Commitments made at the COP26 summit such as increasing non-fossil fuel power capacity to 500 GW and meeting 50 percent energy requirement through renewables by 2030, strengthen prospects for the renewable energy sector. There remains large under-development solar, wind and hybrid capacities of more than 55 GW.

While there are ambitions for growing Renewable Power, the Renewable Sector is having limitations in terms of grid infrastructure, which requires a significant revamp to accommodate the fluctuating and intermittent nature of power from renewables. Other major challenges are Indias EPC capability to carry out execution of solar and wind projects at a scale of 50s to 100s of GW per year. Land acquisition for large- scale renewable projects has always been a concern. Availability of adequate funding avenues at cost competitive rates remains critical to achieve these capacity targets. Govt. of India has made an additional allocation of Rs.19,500 Crore in the budget for PLI scheme for domestic manufacture of high efficiency modules (with priority to fully integrated manufacturing units from polysilicon to solar PV modules), This will provide further opportunities for PFS to partner in the sun-shine sector as a credible partner for the overall development of the sector.

Power Transmission Sector:

The countrys power transmission sector has witnessed unprecedented growth in the past five years. Further, both operational and financial performances of the transmission utilities have witnessed an improvement in the past few years. The transmission system has expanded over the years for evacuation of power for evacuation of power from generating stations to load centre through Intra State and Inter State Transmission System. During April-March 2024, 14203 ckm of transmission lines were set up, which was below the target of 16682 ckm in FY24. As of March 2025, Indias power transmission sector has experienced a notable deceleration in capacity expansion. During FY 2024-25, only 8,830 circuit kilometers (ckm) of transmission lines were added, marking a 37.8% decline from the 14,203 ckm added in FY2023-24. This addition also fell significantly short of the fiscal years target of 15,253 ckm. In March 2025 alone, 1,950 ckm of transmission lines were commissioned. The shortfall was observed across various ownership sectors. Central government entities, primarily the Power Grid Corporation of India Ltd (PGCIL), achieved only 45% of their target by adding 1,858 ckm against a goal of 4,118 ckm. State utilities added 4,761 ckm, meeting 57% of their 8,254 ckm target, while private sector entities contributed 1,483 ckm, achieving 93.5% of their 1,586 ckm target. Despite these challenges, Indias transmission network has continued to expand. As of April 30, 2025, the country boasts approximately 494,732 ckm of transmission lines and a transformation capacity of 13,50,953 MVA. This extensive network positions India as one of the largest synchronous interconnected electricity grids globally.

The above transmission capacity addition has benefitted in development of power sector in the country. Further, Government of India has focused on development of green and dedicated corridor for evacuation of generated power from renewable energy projects. The augmentation of transmission and distribution network capacity is required to meet the generation demand from various sources, which will lead to enough business potential in the sector for PFS in coming years. Looking ahead, the Central Electricity Authority (CEA) has outlined an ambitious plan to add 114,687 ckm of transmission lines and 776,330 MVA of transformation capacity by 2027. This expansion aims to accommodate the anticipated increase in renewable energy capacity and ensure efficient power distribution across the nation. The plan outlines a substantial investment of Rs.4.75 trillion by 2027 for developing transmission infrastructure. Ministry of Power has accepted the Recommendations of the Task Force Report to adopt the Future-Ready Transmission System in India. The Task Force has recommended Centralized Remote Monitoring, Operation of Substations including SCADA (supervisory control and data acquisition), Flexible AC Transmission devices (FACTs), Cyber Security, Drones & Robots in construction/inspection of transmission assets etc. A future- ready transmission system can help improve grid stability by enabling the integration of advanced technologies such as smart grids, energy storage systems, and demand response systems.

The Intra-State Transmission System (InSTS) under GEC-I scheme is being implemented by eight renewable rich States, namely Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu. The scheme is implemented by respective State Transmission Utilities (STUs). The scheme is for setting up approx. 9700 ckm transmission lines and 22600 MVA substations in order to facilitate integration of approx. 24 GW of renewable generation capacity. The total project cost is Rs.10141.68 crore with funding mechanism consisting of 40% Central Financial Assistance from MNRE ( 4056.67 crores), 40% loan from KfW Germany (EUR 500 Million) and 20% Equity from STU. Going forward, an estimated Rs.2.6 trillion investment is required in the transmission sector to meet future peak load. The private sector is expected to play an important role in achieving the countrys grid expansion targets as competitive bidding gains momentum at both interstate and intra-state levels. Several grid expansion programmes such as the GEC and crossborder links are underway to expand the physical grid infrastructure. Further, transmission utilities, at the central and state level, are expected to invest significantly in new technologies to make grids more reliable, resilient, secure and smart. The sector is also expected to immensely benefit from major policy reforms including the Electricity Act amendments and the Tariff Policy amendments.

Transportation and Logistics:

The transportation and logistics industry is set to expand at a CAGR of over 10%, reaching around USD 320 billion by 2025. Development of DFI, Multimodal Hubs, tech driven Warehouses and Logistics Parks has given a great boost to the Transportation Sector.

Urban Infrastructure:

By 2036, 600 million people will be living in India, representing 40% of the population. India will need to invest USD 840 billion over the next 15 years - or an average of USD 55 per into urban Infrastructure if it needs to effectively meet the needs of Urban population.

PFS is progressively shifting its strategic focus towards sustainable infrastructure sectors that align with green development goals. Among the emerging areas of emphasis are e-mobility, sewage treatment, waste management, desalination of water, and e-waste management. Recognizing the growing relevance and opportunity in green and sustainable infrastructure, PFS remains committed to identifying and prioritizing financing opportunities in these sectors. The Companys policy encourages proactive engagement with evolving infrastructure segments, with a view to funding projects that contribute to long-term environmental sustainability and inclusive growth.

E-Mobility: Transportation is a basic requirement of modern life. It also contributes significantly to greenhouse gas emissions. Transportation is expected to account for around 20%-25% of all energy-related greenhouse gas emissions. It has become essential to adopt electric car to curb the carbon emission. It is also critical to transition to electric vehicles (EV) in order to satisfy national emission targets and the global 1.5-degree

Celsius climate change objective. Fortunately, over 50% of Indian states have EV policies that provide perks such as monetary subsidies for EV purchases, exemption from road tax, car registration costs, and reduced EV loan interest rates. Furthermore, the policies encompass measures for public transit. The future of E mobility is set to shift as a result of climatic change, growing fuel prices, and urban transportation issues. According to NITI Aayog and Rocky Mountain Institute, Indias EV market could touch US$152.2 billion by 2030. Moreover, about 80% of two- and threewheelers and 50% of the countrys four-wheelers would be electric vehicles. This trend demonstrates an enormous possibility for Financial Institution to look at funding viable projects. Indias electric vehicle sector achieves record sales across all vehicle segments, accounting around 5.50% of total car sales. In FY2024, India witnessed a significant surge in electric vehicle (EV) sales, reaching a total of 17,52,406 units, marking a robust year-on- year (y-o-y) growth of 40.31% compared to the previous fiscal year across all vehicle classes. Annual EV sales crossed 1.7 million vehicles in FY2024, with more than 55% of the share accounted for by registered electric two- wheelers (E2W), followed by passenger electric three-wheeler (E3W P) with 32% market share. Also, on an annual basis, E-Bus sales witnessed a jump of 84% in FY2024 over that in FY2023. Tata Motors, JBM Auto, PMI and Olectra Greentech were the top E-Bus players accounting for more than 75% of market share in E-bus category. PFS has been a pioneer in funding one of the first projects in the electric vehicle public transportation sector by assisting manufacturing and operations of more than 350 e-Buses across 6 major cities in the country. PFS intends to leverage its experience in funding this sun-shine sector by funding more projects leading to reduction in vehicular pollution and sustainable development.

Waste Water Treatment: The India wastewater treatment plants market stood at USD 2.6 billion in 2020 and is further projected to reach USD 5.3 billion by the year 2027, growing at the CAGR of 10.8% in the forecast period. Indias wastewater treatment plants market is growing rapidly due to stringent government regulations in India and increasing water pollution. Further, NMCG is the Cabinet approved nodal agency has laid out a total outlay of Rs.20,000 crore for implementing Namami Gange in India for cleaning, rejuvenation, and protection of the river Ganga. A total of 153 sewerage infrastructure projects have been sanctioned in eight (8) States (Uttarakhand, Uttar Pradesh, Bihar, Jharkhand, West Bengal, Delhi, Haryana, and Himachal Pradesh) till date to create/rehabilitate 5065 MLD sewage treatment capacities and Sewer network of 4972 Km at a cost of Rs.23,305 crore along Ganga and its tributaries. Out of 153 sewerage infrastructure projects, 56 projects are completed which have created, 670 MLD sewage treatment capacity and are presently in operation. There is a budgetary allocation of Rs.65,549 crores in FY 23 under various program of Sewage and Waste water Treatment across India.

Solid Waste Management: The Indian waste management market is witnessing a healthy growth rate, owing to the high population density and increased industrial activity, which is generating high amounts of wastes, both hazardous and non-hazardous. Waste Type includes Municipal Solid Waste, Hazardous Waste, E-waste, Plastic Waste, Bio-Medical Waste. The Indian waste management industry offers huge potential, as only 30% of the 75% recyclable waste is being recycled currently. Shortage of proper policies for collection, disposal, and recycling and the lack of efficient infrastructure are few of the many reasons leading to poor waste management in the country. Many companies are coming up with innovative ideas to manage wastes, as well as convert them into valuable resources. While the above sector will be the focus for PFS, the company will continue to look to diversify its portfolio in green and sustainable businesses.

PFS over the years has moved away from the traditional power business of thermal and hydro and built a robust book around green and sustainable business and other govt focused sectors such as ports, transmission, HAM Road projects etc. The focus will continue to be on green energy and sustainable sunshine sectors. While a large part of AUM constitutes renewable and road business in FY 2025,with the advent of new sectors like E-mobility, water management; HAM projects in various sectors including road, water; airports; ports; transmission and many more, the company has diversified into other infrastructure Sector

With government focus on revival of the economy, infrastructure sector is expected to play a pivotal role and we will continue to see huge funding opportunities in this sector in the next few years. India is the fastest- growing large economy in the world driven by key structural reforms focusing on huge capex investment in infra sectors. It is impossible to overstate how important infrastructure is to economic progress. The key to acceleration and long-term sustainability of economic growth is to invest in high-quality infrastructure. This benefits the productivity and efficiency of Indian manufacturing enterprises, according to the empirical findings. It also encourages agricultural and rural development and plays a key part in reducing poverty. Additionally, empirical data supports the idea that Indias infrastructure will contribute to the countrys overall economic growth. International Monetary Fund (IMF) expects Indias growth forecast for 202425 to 6.5% on the back of strong domestic demand and a rising working-age population, supported by increased public investment in infrastructure and a pickup in private investment. Power, roads, telecommunications, railways, irrigation and urban infra accounted for majority of the infrastructure investment. Centre and States are the major funding sources with participation from the private sector. Under the Budget 2024, capital investment outlay for infrastructure is provided a humongous Rs.11.11 lakh Crore. The Government of Indias policy to improve logistics infrastructure, incentives to facilitate industrial production, and measures to improve farmers income will support the countrys accelerated economic growth. Government of India has retained its focus on fiscal consolidation and implemented structural reforms for further growth in the infrastructure sector in general. Global financial markets volatility has decreased, while threats to financial stability from a few banks failing in some industrialized economies have increased. Following its resilience to numerous and frequently converging shocks in 2022, including the war in Ukraine, persistently elevated food and energy inflation, and the tightening of financial conditions in response to aggressive and synchronized monetary policy tightening worldwide, available projections point to a weaker outlook for the global economy. The conflict has derailed the recovery from the COVID-19 pandemic, with the adverse effects on the terms of trade reducing consumer purchasing power, and the higher inflation forcing central banks to tighten monetary policy. In Dec 2019, Government of India has envisaged expenditure of Rs.25.90 Lakh Crore on aggregating 9,798 Infrastructure projects till FY2025 under National Infrastructure Pipeline (NIP) to build infrastructure projects and drive economic growth, energy, roads, railways and urban projects are estimated to account for the bulk of projects (around 70%) etc. As of mid- 2025, the National Infrastructure Pipeline (NIP)—Indias flagship Rs.111 lakh crore infrastructure investment program spanning 2020-2025—has made substantial progress. According to recent government data, out of approximately 9,666 projects, 21% (2,062 projects) have been completed, while 46% (4,413 projects) are under active implementation. The remaining projects are in various stages of development, including planning and tendering.

The NIP encompasses 37 sub-sectors, with a significant focus on energy, roads, railways, and urban infrastructure, which collectively account for over 70% of the total investment. Notable advancements include the inauguration of several expressways, such as the Amritsar-Jamnagar Economic Corridor and the Delhi-Mumbai Expressway, which have enhanced regional connectivity and reduced travel times. Additionally, the Amrit Bharat Station Scheme has seen the redevelopment of numerous railway stations across the country, further bolstering the transportation infrastructure.

The governments focus on building infrastructure of the future has been evident given the slew of initiatives launched. The US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. Out of the above, the government has allocated Rs.1 trillion for providing 50-year tenure interest-free loans to the state governments for catalyzing investments, which would further lead to creation of infrastructure projects at the local level. A major component of the governments campaign to create an Atmanirbhar Bharat is the PLI Schemes. The PLI Scheme is made to encourage increased production for a small number of suitable anchor businesses in each of the chosen sectors who will spend money on R&D, equipment, and technology. The formation of a broad supplier base for the anchor units developed under the strategy, which will result in a significant increase in primary and secondary job opportunities, will have positive spillover effects as well. The Governments policy to increase private sector participation, with the Government permitting 100% Foreign Direct Investment (FDI) has proved to be a boon for the infrastructure industry with many private players entering the business through the public-private partnership (PPP) model.

Indian infrastructure sector is facing a paradigm shift moving towards timely completion of projects as against the general phenomenon of delay in completion of projects due to the delay in obtaining approval and clearances, lack of co-ordination between various departments and the resultant delay in project completion. The mix of Public Private Participation model is continuously increasing, thereby, increasing confidence, support and investment in the infrastructure sector. The Public Private Partnership Appraisal Committee (PPPAC), the apex body for appraisal of PPP projects in the Central Sector has streamlined appraisal mechanism to ensure speedy appraisal of projects, eliminate delays, adopt international best practices and have uniformity in appraisal mechanism and guidelines. The PPPAC is chaired by Secretary, Department of Economic Affairs (DEA) with Secretaries of Department of Expenditure, Department of Legal Affairs, the Sponsoring Ministry/Department and CEO, NITI Aayog as members to consider and appraise the proposals for Central Sector PPP Projects.

Roads and Highways Sector:

With an approximate length of 6.2 million km, India has the second- largest road network in the entire world. The Road sector continues to be the largest Infrastructure sector in India. The Union Budget raised the allocation by 36%, approximately amounting to USD 34 billion.

Roads are part of an integrated multimodal system of transport which influences the pace, structure and pattern of economic development. Road provides crucial links to airports, railway stations, ports and other logistical hubs and acts as a catalyst for economic growth by playing a critical role in the supply chain management. In terms of the worlds largest road network, India is currently second only to the United States. China has fallen to third place as Indias road network has grown 59% in the last 9 years to become the second largest only after USA. The countrys road infrastructure now stands at 1,45,240 km as compared to 91287 km in 2013-14. The share of roads sector investment in the overall infrastructure investment was 17% between fiscals 2019 and 2022, rising at 19% CAGR. As part of bolstering infrastructure in the country, which aims to become a USD 5 trillion economy in the coming times, building high quality roads and ensuring smooth connectivity is a key priority. This road network delivers 60% of the countrys commodities and 87% of its passenger traffic in India. National highways, expressways, state highways, main district roads, other district roads, and village roads make up Indias road network. While national highway building has been a priority, state highways, district roads, and rural roads continue to account for the majority of the road network. The market for roads and highways in India is expected to increase at a CAGR of 36.16% between 2016 and 2025, owing to increasing government measures to upgrade the countrys transportation infrastructure. The National Highways Authority of India (NHAI) is expected to raise Rs.15,000 crore via Investment Trusts (InvITs) in FY24. The total expenditure of the Road Transport and Highway Ministry in 2023-24 is estimated at Rs.2,70,435 crore. This is 25% higher than the revised estimates for 2022-23. The highest expenditure (60% of the total expenditure) is towards NHAI. In 2023-24, NHAI is allocated Rs.1,62,207 crore, all of which is budgetary support. NHAI has a high debt burden due to increased borrowings in the past few years. Upon the recommendations of several Committees, the Ministry has increased the budgetary allocation towards NHAI, and reduced its need to borrow from the market. PM Gati Shakti National Master Plan to encompass the engines for economic transformation, seamless multimodal connectivity, and logistics efficiency. Expressways to be augmented in 2023-24 to facilitate faster movement of people and goods.

Outlook for NBFC Sector

The credit growth of NBFCs slowed down to 16.0 per cent from 22.1 per cent a year ago, due to the high base effect and the increased risk weight for consumer lending prescribed by the Reserve Bank of India. This impact was especially pronounced for NBFC-UL, comprising mostly of NBFC- ICCs whose portfolios are dominated by retail lending In September 2024, credit growth for the largest category of NBFCs, viz., investment and credit companies (NBFC-ICCs), remained strong. The second largest category of NBFCs (viz., NBFC-IFCs) continued to slow down further in H1: 2024-25 and recorded low single digit credit growth. Though NBFCs have recorded a slower credit growth in FY 2024, NBFCs have grown in importance in recent years, playing an essential role in providing finance to individuals and enterprises that are under served by traditional banks. This is particularly true in rural and semi-urban areas, where NBFCs have filled the void left by banks. The ability of NBFCs to be flexible in their lending processes is one of their primary advantages. Unlike banks, which have rigid lending criteria, NBFCs can be flexible in their lending operations to suit the requirement of their clients. This has made them an appealing choice for people seeking more personalized financial services. They are financial institutions that offer a variety of banking services such as loans, and investments. The Report of the Task Force National Infrastructure Pipeline (NIP) expects that out of the total sources of funding for the National Investment pipeline, 15%-17% of the funding is expected to come from the NBFCs and the balance is expected to come from a judicious mix of Centre-State Budget, PSUs, Banks, Equity, Bond markets etc.

Capital outlay by Public Sector. NBFCs are therefore projected to grow at 12% and the private sector NBFCs are projected to grow at 15% given the lower base. NBFCs have played a crucial role as one of the key contributors to Indias economy by providing a fillip to infrastructure, employment generation, wealth creation and access to financial services for the rural and weaker sections of society. In the last few years, NBFCs have contributed more to infrastructure lending than banks. As Indias economy grows further, requirement for credit is bound to surge, and NBFCs, along with banks, can act as the key credit facilitators, which is likely to give a strong push to the growth and development of the Indian economy.. Banks are lending to NBFCs again, thanks to increased credit demand and better asset quality, which is causing an increase in lending. The banks share in the funding mix of NBFCs has jumped from 47.5% in December 2018 to 55.1 per cent in March 2024. Similarly, the long term funds provided by banks and AIFs have increased from 40.7% to 45.9% in the same period. This is because of increased loan demand, stable asset quality trends, and improved collection effectiveness. Thus a balance between development and growth leading to sustainable development has not only remained a buzzword but has become a modus operandi for many businesses across the globe. Climate change has today emerged as an unprecedented existential crisis. Emerging countries like India will need greater access to green finance and appropriate green instruments to facilitate this transition particularly to support climate change vulnerabilities. As overwhelming as the challenges are, PFSs unshakable belief that business possesses immense capability to make a transformational contribution has become a driving force behind making sustainability the bedrock of our business strategy, leading towards sustainable and inclusive growth in a unified dimension. Pursuing a proactive strategy of decarbonization PFS is increasing its renewable energy footprint in answering green infrastructure by scaling up carbon neutral projects. PFS is now scaling up the efforts in E-mobility sector, which would enable us to move a step closer towards meeting our Countrys ambitious targets under the NDCs sustainable development goals within the energy, transportation, roads and water treatment projects.

With exit of some of the focussed infrastructure NBFCs from the Financing space and reduction in exposure of Private Sector Banks in providing Funding for Infrastructure Sector, Large Public Sector Banks and NBFC -IFCs such as PFS remain the main source of Funding for the Infrastructure Sector. Your Company is geared to take the advantage of the opportunities emanating the Infrastructure growth Story of India.

(B) Financial and Operation Performance

The summarized financial performance of the Company:

Particulars	Standalone (Rs.. in Crore)
	FY2024-25	FY2023-24
Total Income	638.00	776.57
Profit/(loss) before Finance Charges, Depreciation & Tax (EBITDA)	606.14	632.46
Finance Charges	321.06	410.00
Depreciation and Amortization	6.56	6.48
Provision for Income Tax (including for earlier years)	61.47	55.23
Net Profit/(Loss) After Tax	217.05	160.75
Other Comprehensive Profit /(Loss) for the year	(1.63)	(0.82)
Total Comprehensive Profit /(Loss) for the year	215.42	159.93

In FY 2024-25, the total income of the Company declined by 17.84%, from Rs.776.57 Crore in FY 2023-24 to Rs.638.00 Crore. However, this impact was significantly offset by a 21.69% reduction in finance costs, which decreased to Rs.321.06 Crore from Rs.410.00 Crore in the previous financial year.

The spread on the earning portfolio (Stage I & II) declined to 1.92% in FY 2024-25, compared to 2.37% in FY 2023-24. Similarly, the Net Interest Margin (NIM) on Stage I & II assets declined slightly to 4.25%, as against 4.45% in the previous year.

EBITDA reduced by 4.16%, amounting to Rs.606.14 crore in FY 2024-25 as compared to Rs.632.46 crore in FY 2023-24, mainly due to reduction in total income by Rs.138.57 crores, other expenses reduced by 31.14%, amounting to Rs.24.02 Crore in FY 2024-25 as compared to Rs.34.88 Crore in FY 202324 and reduction in Impairment of a financial instrument amounting to Rs.(11.06) crores in FY 2024-25 as compared to Rs.87.57 Crore in FY 2023-24 .

Total comprehensive income has increased by 34.69% from Rs.159.93 Crore to Rs.215.42 Crore due to reduction in impairment cost.

During the year, the Debt/ Equity ratio of the Company improved to 1.03 from 1.54 in FY 2024-25. Further, all the outstanding borrowings are long-term borrowings in FY 2024-25. 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. However, the Company is in the process of raising credit lines/ funds to improve the liquidity and achieve growth.

During the FY 2024-25, with the focused efforts of the management, the portfolio quality improved. During the year, gross NPAs have decreased from Rs.489 Crore to Rs.429 crore and net NPAs have decreased from Rs.142 Crore to Rs.117 Crore as at March 31, 2025. All the NPA accounts comprises legacy assets. The Company has shifted its focus on other areas, including renewable energy, because of which the companys exposure to thermal projects has reduced to 7.16% as at March 31, 2025 in FY 2024-25 in comparison to 18% as at March 31, 2019.

The profit before tax (PBT) for FY 2024-25 stood at Rs.278.52 crore compared to Rs.215.98 crore in FY 2023-24. The profit after tax (PAT) for FY 2024-25 stood at Rs.217.05 crore against Rs.160.75 crore in FY 2023-24.

(C) Changes in Key Financial Ratios

The key changes in applicable financial Ratios are as follows:

Sr. No. Particulars	FY 2024-25	FY 2023 24	Change in %	Reason of change
1. Debt equity ratio	1.03	1.54	-33.12%	The reduction in outstanding debt.
2. Operating profit margin	43.24%	26.35%	64.10%	Operating profit margin is increased on account of the reduction in impairment on loan portfolio and reduction in other expenses
3. Net profit	217.05 Crore	160.74 Crore	35.03%	Due to reduction in the impairment cost and partially reduction in other expense, Net profit has been Increased
4. Return on net worth	8.20%	6.45%	27.13%	With the reduction in NPA and decreased impairment cost, the Return on Net Worth has improved.

(D) INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Statutory Auditors of the Company i.e. Ravi Raj an & 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 2025 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 non-financial 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

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

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 decisionmaking 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.

Operational Risk

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

ICAAP

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 financing equity and loans to infrastructure 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 2025, the regular employee strength stood at forty-three (43).