PTC India Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>

Forward Looking Overview Statement:

The report contains forward-looking statements, identified by words like ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’ and so on. All statements that address expectations or projections about the future, but not limited to the Company’s strategy for growth, product development, market position, expenditures and financial results, are forward looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realised. The Company’s actual results, performance or achievements could thus differ from those projected in any forward-looking statement. The Company assumes no responsibility to publicly amend, modify or revise any such statement based on subsequent developments, information, or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.

World Economy:

The global economy outlook for 2025-26 suggests moderate growth at 3.3% with a negative under tone because of trade barriers, policy uncertainties, and regional conflicts expanding in intensity as well as area. The growth in United States is expected to slower at 2.4% due to higher borrowing cost, moderating demand. The trade policies unveiled by new govt. and its impact on GDP will take time but in short run it is going to be disruptive and expected to slow the growth rate. The Euro Area is expected to grow at 1.0-1.2% buoyed by improved household incomes and concessions given by US to Euro Zones. The Chinese economy is primarily driven by fiscal stimulus and export orientation, but with trade barriers at their biggest market (US), the growth prospect looks to be tougher, hence The World Bank projects it at 4.6% - 4.1%. The tighter monetary policy and fading energy price pressures will manifest into milder inflation at 4.2% The trade tensions, geo-political risk and policy uncertainty poses key uncertainties in the global economy. The embracement of new technology (Artificial Intelligence) and its likely impact on global economic activities gives a new dimension to global growth prospects. An expected significant annual reduction in AI usage costs and future technological advancements, could boost productivity and consumption significantly. This may (integration of AI technologies) lead to knowledge spillovers across industries and regions, fostering innovation and driving down costs globally. The escalating electricity prices and consequent environmental costs can be mitigated if policymakers, in collaboration with businesses, seize the opportunity by embracing and incentivizing renewable energy sources and innovative production paradigms. [Source: World Bank Report, OECD, IMF].

Industry Structure and Developments

• Overview of the sector in which the company operates: A large capacity of 475 GW spread across diverse sources (thermal, Gas, Hydro, and renewable energy) with an estimated energy generation of 1829 Billion Units is the electricity energy ecosystem of the country. The renewable capacity represents around 48% of the total generation facility of India. The private sector owns more than 54% of this capacity. On the energy supply side, renewable energy (wind, solar and SHP) have contributed ~14% of the total energy demand of 1829.70 BUs. Along with energy from large hydro sources, the total renewable energy supply was 22% for FY 2024-25. The peak power demand for FY 2024-25 was 250 GW. Central Electricity Authority (CEA) projects electricity demand to grow at an average CAGR of 6.4% during the period 2022-27. The demand growth is attributed to expansion of industrial and commercial activities, urbanization, and increasing electrification of rural areas. The peak power demand is expected to grow to 297 GW by 2026-27. The less than expected heat wave days in North India may have kept the peak demand at almost same level but overall demand continues to maintain a up - trajectory.

Further, the peak timing has broadened from typical 7-9 PM to 7-11 PM and similarly peak window in morning has broadened from 2 to 4 hours. The extensive focus on behind the meter solar capacity installation is expected to be a major game changer in the electricity business. As per GoI portal, solar capacity, on 10 lac houses of more than 3000 MW aggregate capacity have been installed with a target to reach up to 30,000 MW by 2027. This coupled with battery storage and demand side management will provide a totally new set of services and data analytics for the stakeholders.

Key Government Initiatives Impacting Power Traders in India (FY 2024–25)

This document summarizes significant policy reforms, regulatory directives, and procedural amendments issued by key power sector institutions in India including the Central Electricity Regulatory Commission (CERC), Ministry of Power (MoP), Central Electricity Authority (CEA), Grid-India, and NLDC during FY 2024-25. These developments may directly or indirectly influence power traders by reshaping market design, enabling new trading products, and improving operational and financial frameworks.

1. CERC Suo-Motu Order on Term-Ahead and Contingency Market Contracts

CERC’s draft Suo-motu order in October 2024 seeking comments and issued the final order in April 2025, directing structural changes to the functioning of various contracts under the Power Market Regulations (PMR) 2021. Key directives include:

• Discontinuation of user-defined time blocks in TAM, including GTAM and HPTAM

• PXs must offer only pre-approved time slots aligned with RE profiles

• For ADSS contracts, timelines for bids, auctions, and acceptance have been standardized

• Anti-gaming measures include mandatory declaration of multi-exchange requisitions and non-refundable fees

• Intra-day contracts will continue with uniform delivery timelines of 2.5 hours across all PXs

• Price discovery in DAC may transition to a Uniform Price Step Auction model

• PXs are required to display bid and traded volumes publicly Regulator has bring out amendment in PMR to remove ambiguity in the different products on exchange and trading market.

2. Revised Procedure for LPS Rule Implementation by NLDC

To improve payment discipline in the power market, NLDC revised the implementation procedure of the Late Payment Surcharge (LPS) Rules 2022. Effective from January 1, 2025, generating companies may sell un-requisitioned surplus power without beneficiary consent in alternate market segments post Day-Ahead Market closure. This improves liquidity and lowers credit risk for traders. Generators must also comply with data and billing norms under NOAR and RPCs.

3. Draft First Amendment to IEGC 2023

CERC issued a draft amendment to the Indian Electricity Grid Code (IEGC) 2023 on 12^th June, 2024. Among other revisions, it allows regulated generating stations to sell un-requisitioned surplus power in the Day-Ahead Market without requiring beneficiary consent. This simplifies access for traders and enhances market volumes.

4. Market Coupling Shadow Pilot Directed by CERC

CERC has directed Grid-India to implement a four-month shadow pilot on market coupling. The pilot will simulate price-volume discovery across DAM and RTM segments without impacting actual market results. Data sharing, procedural integrity, and software development for bid aggregation are mandated under the pilot’s framework. The market coupling will enable your company to choose between competing exchanges in providing enhanced services to clients.

5. Carbon Credit Certificates (CCC) Trading Framework

CERC has issued draft regulations to enable trading of Carbon Credit Certificates (CCCs) on power exchanges. The Grid Controller will act as the central registry, and BEE will function as the administrator. Obligated and non-obligated entities will be able to register, transfer, and settle CCC transactions, thus allowing traders to diversify their portfolio into carbon markets.

6. Renewable Energy Implementing Agency (REIA)

In Feb 2025 saw the release of the Draft Guidelines for designating a Renewable Energy Implementing Agency (REIA) by the Ministry of Power (MoP), a step towards bringing electricity traders in renewable energy projects implementation, is expected to be game changer in pace of renewable energy adoption for the country.

These market oriented initiatives is expected to increase the market share of traded energy in total generation. As a front runner in the energy trading space, your company is expected to lead the process.

Segment-wise or Product-wise Performance

Performance of different business segments (e.g., trading, consultancy):

• PTC achieved the electricity trading volume of 82.75 BUs, and bilateral REC’s of 30.17 lacs during 2024-25. The volume growth has been 11% over volume of 74.84 BUs of the last financial year of 2023-24.

• PTC achieved short-term trading volume of 49.79 BUs during 2024-25 against the previous year’s volume of 42.43 BUs with a growth of 17%.

• Further, PTC has achieved long & medium-term trading volumes of 32.95 BUs against the previous year’s volume of 32.41 BUs. PTC managed to retain its leadership position in terms of the overall trading volumes in the power trading market.

• PTC’s short term bilateral trade volumes were 6.95 BUs against the previous year figure of 5.09 BUs and power exchanges volumes during the year were 42.84 BUs against the previous year volume of 37.35 BUs.

• PTC has in its portfolio Long-term Power Purchase Agreements (PPAs) with the generators for a cumulative capacity of around 8.5 GW for further sale of power to Discoms which includes Cross-Border power trade and most of them are already tied-up. The projects are based on domestic coal, imported coal, gas, hydro and renewable energy resources. In the current year, PTC has signed agreements with Haryana Utilities and a power generator on medium term basis for supply of 150 MW of power. The power supply has commenced in the current financial year.

• Cross-border transactions remain a vital part of our portfolio with total volume of 8,262 Mus. In the current year, total Cross-border trade with Bhutan witnessed a volume of 6,178 MUs. PTC continues to facilitate Bhutan’s power trade transactions on an Indian Power Exchange and has traded 1337 MUs for Bhutan in FY 2024-25 during as against 1,340 MUs in the previous year.

• PTC has a long term power purchase agreement for 118 MW Nikachu Hydroelectric Project in Bhutan. The project was commissioned, and power supply has commenced to State Utility of Assam in the current financial year. In FY 24-25, supply from Nikachu HEP has been 362 Mus.

• PTC has supplied 1,600 MUs to Bangladesh Power Development Board (BPDB) in the current financial year under the Long-term contract for 200 MW capacity.

• PTC Retail, set up to facilitate power supply to the industrial and commercial consumers on the power exchanges, has seen considerable growth this year. With the value-added services, fuelled by data analytics, our clientele is growing and has crossed a number of 873 clients out of which 295 are presently active in Power, REC and ESCerts Segments.

• PTC has a diversified and strong client base comprising of prominent entities like Central Government owned Administrative and Operative Authority (s), Public Sector entities who are leaders in oil refining, transportation, nuclear power generation and leading multinational companies engaged in the manufacture and sale of Fast moving consumer goods (FMCG), Pharmaceuticals, cement manufacturers, Shrimp farming industry, polymer chemistry tech company, steel and alloy manufacturer, sugar mills, textile industry, and other such entities Your Company has maintained its leadership position in the exchange products of DAM, TAM, RTM, G-DAM and G-TAM. The state utilities have continued to repose their faith in PTC’s service offering of energy portfolio management (EPM). Your Company also started its offering Energy Portfolio Management (EPM) services to state utilities like Electricity Department Puducherry and to other deemed distribution licensees across the country.

• The EPM service offerings include Demand Forecasting, Sales Planning and Power Scheduling, etc. Also, your Company has been awarded/ renewed utility contracts for trading of power on Power Exchanges for state utilities of Mizoram, Punjab, UT Chandigarh, Chhattisgarh, Haryana, Bihar, Dadra and Nagar Haveli, Tripura, Pondicherry, Jharkhand and Jammu & Kashmir. PTC has also facilitated the cross border power trading of Druk Green Power Corporation for procurement and sale of power. PTC has received a Portfolio Management assignment from one of the premier Petrochemical PSUs and aiming to achieve 100 percent renewable energy usage of the terminals of the PSU. PTC has been awarded Consultancy assignment from a leading PSU for supporting them in setting up renewable energy capacities for their captive consumption. Major customers were added to PTC’s growing clientele for sale/ purchase of renewable power to cater to the growing market demand for clean energy sources. Your Company has supported various corporates in reducing their carbon footprints. Renewable Energy PPAs / PSAs were executed with clients in states like Gujarat, Delhi, Tamil Nadu, Telangana, Andhra Pradesh, Kerala etc. helping these clients in their de-carbonization initiatives. With increased focus on power distribution performance improvement and reforms, your Company is providing a bouquet of services under power distribution management business which includes power portfolio optimization (power trading and scheduling), commercial optimization (metering and billing), network operations and maintenance, and regulatory support. Under this domain, PTC is supporting large government institutions in Madhya Pradesh, Gujarat, Maharashtra and Orissa and is continually trying to replicate the success for other identified customers. Your Company is also promoting the activities for optimization of cost of energy for the large maritime ports, Special Economic Zones, select Industrial Areas in some of the states under the existing regulatory framework of power distribution.

• Your Company is actively pursuing various opportunities and is in discussions with diverse institutional stakeholders for facilitating them in implementing suitable models in Smart Cities, Integrated Power Development Schemes, Energy Efficiency Programs, Renewable Energy Programs, etc. Your Company is also actively rendering advisory services for development of transmission and distribution (T&D) infrastructure by supporting key customers in preparation of detailed project reports (DPRs), engineering and estimation, bid process management and project supervision. Your Company has extended its portfolio to industries of Oil & Gas, Heavy Industries, and Special Economic Zones. Further, the consultancy business also continued to receive assignments for supporting clients in regulatory aspects, conducting feasibility studies, open access and support in procurement of renewable energy, etc. Your company recently received work orders from Odisha Urban Infrastructure Development Fund for supporting them Implementation of LED Street Lighting Project in 110 ULBs in Odisha. Your Company also received work orders for energy efficiency related assignments from corporate clients.

• Subsidiary & Associate companies of PTC India Limited:

• PTC India Financial Services Limited (PFS), an infrastructure finance company (IFC), recorded total income of INR 638 Crores ad loan book of INR 4746 Crores during FY25. The profit before tax and profit after tax for FY24 stood at INR 278.52 Crores and INR 217.05 Crores respectively. Earnings per share for FY24 stood at INR3.38 per share.

• PTC Energy Limited (PEL), a wholly owned subsidiary of your Company, has a renewable energy portfolio of 288.8 MW consisting of 50 MW wind power projects in Madhya Pradesh, 50 MW wind power project in Karnataka and 188.8 MW wind power projects in Andhra Pradesh. The projects use leading edge wind turbine technologies from reputed original equipment manufacturers (OEMs). In line with the divestment process, PEL has been sold to ONGC Green Limited and divestment process has been completed on 4^th Mar 2025.

• Associate company of PTC India Limited; PTC is a sponsor of Hindustan Power Exchange (HPX) which has been set up with the best-in-class technology and seeks to offer a credible alternative in the power exchange segment of the Indian Power Market. Since its launch in July 2022, it had already added 709 active members and introduced trading in all segments

Outlook

Outlook Looking ahead, your Company aims to consolidate its core trading business while incorporating innovative business models, particularly in the new and renewable energy sectors. Company is committed to expanding the value-added services as an integrated energy solutions provider. The Company’s focus areas will include energy portfolio management services, trading and advisory services related to the resolution of stressed assets, renewable energy solutions, and operations and maintenance (O&M) services for SEZs, industrial zones, and distribution utilities. Additionally, the company is venturing into emerging areas such as Green Hydrogen and Battery Energy Storage Systems through collaborations. The company is also planning to expand its technology vertical to develop advanced solutions for the evolving energy market. Your Company sponsored third Power Exchange Hindustan Power Exchange, established with state-of-the-art technology, provides a credible alternative in the power exchange sector. expectations, and your Company’s growth aspirations, the Company will continue to develop and enhance its offerings through technology-based solutions, advisory services, energy efficiency initiatives, and other related services.

Risks and Concerns

Your Company diligently adheres to a structured and disciplined approach to risk management as outlined in our Risk Management Policy. The

Company utilize Risk Reports and Risk Matrices for each business template to support the decision-making process. The Company’s overall approach to Risk Management is closely aligned with its business objectives to ensure sustainable growth. The Company is committed to fostering a proactive approach in evaluating, resolving, and reporting risks associated with its operations.

Internal Control Systems and Their Adequacy

• Description of systems in place to ensure accuracy of financial reporting, compliance, and operational efficiency.

• Audit mechanisms and improvements.

Internal Control System and their accuracy: The Company has established robust internal financial controls within a framework approved by the Board. These policies and procedures are designed to ensure the orderly and efficient conduct of the Company’s business, adherence to corporate policies, safeguarding of assets, prevention and detection of fraud and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial disclosures.

Financial Performance with Respect to Operational Performance

• Analysis of financial results such as revenue, profit, expenses, margins, cash flow, and balance sheet items: Your company has recorded a trading volume of 82.75 Billion Units during FY 2024-25 (an 11% growth over the previous financial year of 2023-24). The profit after tax (PAT) for the company has been INR 854.78 Crores (it includes profit from sale of PEL. The EPS for the company is INR 28.88. The total revenue for the FY2024-25 has been 15644.52 Crores as against 16079.09 Crores for the previous year.

• The sale of PEL to ONGC Green Limited was completed during the FY2024-25 at a total consideration of INR 1175.75 Crores that has resulted in pre-tax profit of INR 521.63 Crores as exceptional item in the total profit for the company.

• The return on net worth of the company for FY2024-25 was INR 4,766.69 Crore.

• On a consolidated basis PAT has been INR 976.24 Crores including profit from sale of PEL.

Human Resources / Industrial Relations

• Your Company follows the principle of People, Process and Technology for the better outcome from business processes. People encompass the human elements (employees) in its narrow definition but also applicable to other stakeholders. Your company lays extra emphasis on capable people who are trained & empowered for the successful implementation of new process or technology led growth.

• Given the transformative business environment and an evolving power sector, human resources play a critical role in enabling prompt and effective implementation of key strategic decisions. Your Company takes pride in "Inclusivity in Diversity" culture that fosters continuous learning and collaborative environment to meet the dynamic business environment.

• Your company focuses on process oriented outcome and to achieve this focuses on trainings on all type of platform including long durations courses from college/ universities of repute.

• Your Company also undertook various initiatives for the health and safety of its employees including organizing health checkup camps, NLP based trainings, ensuring availability of doctors in the office premise, engaging fitness trainers and health professionals towards holistic wellbeing. Your Company has 132 competent employees from diverse professional backgrounds having extra ordinary skill sets who continuously challenge themselves to achieve greater heights in organizational excellence.

Environmental, Social and Governance (ESG) / Sustainability (increasingly important):

Your company has well-defined ESG vision and sets of achievements for the year spread across different Sustainable Development Goals. They are classified as under:

• Sustainable Environment: Reducing carbon footprint, mitigating climate change, and optimizing energy consumption. Reduction in energy intensity by retrofitting all the fixtures with LED’s and energy efficient cooling system – all the fixtures and cooling systems are star rated and best in class for available technology. – the transition is on the way with compensatory green purchases (equivalent to twice in lieu of scope 1 & 2 emission.

• Empowered Community: Welfare and empowerment of communities by reducing inequalities, promoting education, health, and gender equality. Sustained focus on diversity has led to increase in the women work force to more than 20%.

• Rewarding Workplace: Creating a diverse and healthy workforce whereby the talent is recognized and rewarded.

• Secure Network: Ensuring network security by maintaining highest standards of data protection, IT security and customer privacy. In addition to the robust IT infrastructure Data security awareness training program is conducted for positive data culture of the company.

• Robust Governance: Maintaining transparency and business integrity while driving ESG ambitions reaches.

KEY RATIOS:

Sl. No. Ratios (standalone)	Numerator	Denominator	As on 31.03.2025	As on 31.03.2024	Remarks
1 Return on Investment - FDR & Mutual Fund	Net Return of Investment	Cost of Investment	7.03%	6.93%	Treasury yield improved on account of better return on FDR and Mutual fund investments
2 Debt Equity Ratio	Total Debt (Including lease liabiities)	Shareholder’s equity	0.02%	0.10%	Decrease in Debt Equity Ratio is on account of funding of working capital requirement from own sources
3 Return on Net worth	Profit after tax	Average shareholder’s equity	19.18%	8.91%	Increase in Return on Networth is due to increase in profit due to sale of subsidiary
4 Current ratio	Current Assets	Current liabilities	2.22	1.8	Due to inflow of funds from disinvestment of PEL during the year.
5 Debt Service coverage ratio	Earnings available for debt service	Debt service (including lease liabilities) to be served in a year	9.36	1.05	Due to lower debts and higher PAT on account of profit from disinvestment of PEL.
6 Net profit ratio	Profit after tax	Sales of electricity (including sale of electricity of agency nature)	0.0224	0.0107	Due to profit from disinvestment of PEL during the year
7 Return on capital employed	Earning before Interest and Tax	Capital Employed	22.49%	11.02%	Due to profit from disinvestment of PEL during the year
8 Return on investment- equity quoted	Net Return of Investment	Cost of investment	-	5.53%	No dividend was received from PFS during the year.
9 Return on investment- equity unquoted	Net Return of Investment	Cost of investment	6.63%	-	Due to profit from disinvestment of PEL during the year