Notes to Accounts of Indian Railway Finance Corporation Ltd.

Mar 31, 2025

2.12 Provisions, contingent liabilities and contingent assets

A provision is recognized if, as a result of a past event, the
Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow
of economic benefits will be required to settle the obligation.
If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of

the time value of money and the risks specific to the liability.
When discounting is used, the increase in the provision due to
the passage of time is recognized as a finance costs.

The amount recognized as a provision is the best estimate of
the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties
surrounding the obligation.

When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party,
the receivable is recognized as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably. The expense relating to a
provision is presented in the statement of profit and loss net
of any reimbursement.

Contingent liabilities are possible obligations that arise from
past events and whose existence will only be confirmed by
the occurrence or non-occurrence of one or more future
events not wholly within the control of the Company. Where
it is not probable that an outflow of economic benefits will
be required, or the amount cannot be estimated reliably,
the obligation is disclosed as a contingent liability, unless
the probability of outflow of economic benefits is remote.
Contingent liabilities are disclosed on the basis of judgment
of the management/independent experts. These are reviewed
at each balance sheet date and are adjusted to reflect the
current management estimate.

Contingent assets are possible assets that arise from past
events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company.
Contingent assets are disclosed in the financial statements
when inflow of economic benefits is probable on the basis of
judgment of management. These are assessed continually to
ensure that developments are appropriately reflected in the
financial statements.

2.13 Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets
are reviewed at each reporting date to determine whether there
is any indication of impairment considering the provisions of
Ind AS 36 ''Impairment of Assets''. If any such indication exists,
then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is
the higher of its fair value less costs to disposal and its value

in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For the
purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that
are largely independent of the cash inflows of other assets or
groups of assets (the “cash-generating unit”, or “CGU”).

An impairment loss is recognized if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognized in profit or loss. Impairment
losses recognized in respect of CGUs are reduced from the
carrying amounts of the assets of the CGU.

Impairment losses recognized in prior periods are assessed
at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only
to the extent that the asset''s carrying amount does not exceed
the carrying amount that would have been determined, net
of depreciation or amortization, if no impairment loss had
been recognized.

2.14 Leases

At inception of a contract, the Company assesses whether the
contract is, or contains a lease. A contract is, or contains a lease if
the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.

Company as a lessor

The Company classifies each of its leases as either an operating
lease or a finance lease.

Leases in which the Company does not transfer substantially
all the risks and rewards of ownership of an asset are classified
as operating leases. Rental income from operating lease is
recognised on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of the
leased asset and recognised over the lease term on the same
basis as rental income. The depreciation policy for depreciable
underlying assets subject to operating leases is consistent with
the Company''s normal depreciation policy for similar assets.

Contingent rents are recognised as revenue in the period in
which they are earned.

Leases are classified as finance leases when substantially all of
the risks and rewards of ownership transfer from the Company
to the lessee. Amounts due from lessees under finance leases
are recorded as receivables at the Company''s net investment
in the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on
the net investment outstanding in respect of the lease.

Company as a lessee

At the contract commencement date, the Company recognizes
right - of - use asset and a lease liability. A right - of - use
asset is an asset that represents a lessee''s right to use an
underlying asset for the lease term. The Company has elected
not to apply the aforesaid requirements to short term leases
(leases which at the commencement date has a lease term of
12 months or less) and leases for which the underlying asset is
of low value as described in paragraphs B3 - B9 of Ind AS 116.

A right of use asset is initially measured at cost and
subsequently applies the cost mode ie less any accumulated
depreciation and any accumulated impairment losses and
adjusted for any remeasurement of lease liability. Ind AS 16,
Property, Plant and Equipment is applied in depreciating the
right - of - use asset.

A lease liability is initially measured at the present value of
the lease payments that are not paid at that date. The lease
payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, the Company''s
incremental borrowing rate is used. Subsequently, the carrying
amount of the lease liability is increased to reflect interest
on lease liability; reduced to reflect the lease payments; and
remeasured to reflect any reassessment or lease modifications
or to reflect revised in - substance fixed lease payments.

2.15 Securitisation of Finance Lease Receivable

Lease Receivables securitised out to Special Purpose Vehicle in
a securitisation transactions are de-recognised in the balance
sheet when they are transferred and consideration has been
received by the Company.

The resultant gain/loss arising on securitization is recognised
in the Statement of Profit & Loss in the year in which
transaction takes place.

Lease Receivables assigned through direct assignment
route are de-recognised in the balance sheet when they
are transferred and consideration has been received by the

Company. Profit or loss resulting from such assignment is
accounted for in the year of transaction.

2.16 Leasing of Railway Infrastructure Assets

In terms of Indian Accounting Standard116, the inception
of lease takes place at the earlier of the date of the lease
agreement and the date of a commitment by the parties to the
principal provisions of the lease.

The commencement of the lease term is the date from which
the lessee is entitled to exercise its right to use the leased
asset. It is the date of initial recognition of the lease.

As such, in respect of Railway Infrastructure Assets, which
are under construction and where the Memorandum of
Understanding / terms containing the principal provisions of
the lease are in effect with the Lessee, pending execution of
the lease agreement, the transactions relating to the lease are:

(a) presented as “Advance against Railway Infrastructure
Assets to be leased”; and thereafter

(b) transferred to “Project Infrastructure Assets under
Finance Lease Arrangement” on receipt of utilization
report from the lessee; and thereafter

(c) transferred to lease receivable as per Ind AS 116 on
execution of lease agreement.

2.17 Dividends

Dividends and interim dividends payable to the Company''s
shareholders are recognized as changes in equity in the period
in which they are approved by the shareholders'' meeting and
the Board of Directors respectively.

2.18 Material Prior Period Errors

Material prior period errors are corrected retrospectively
by restating the comparative amounts for the prior periods
presented in which the error occurred. If the error occurred
before the earliest period presented, the opening balances
of assets, liabilities and equity for the earliest period
presented, are restated.

2.19 Earnings per share

Basic earnings per equity share is computed by dividing the
net profit or loss attributable to equity shareholders of the
Company by the weighted average number of equity shares
outstanding during the financial year.

Diluted earnings per equity share is computed by dividing
the net profit or loss attributable to equity shareholders of
the Company by the weighted average number of equity
shares considered for deriving basic earnings per equity
share and also the weighted average number of equity shares
that could have been issued upon conversion of all dilutive
potential equity shares.

2.20 Statement of Cash Flows

Statement of cash flows is prepared in accordance with the
indirect method prescribed in Ind AS 7 ''Statement of cashflows''.

2.21 Operating Segments

The Managing Director (MD) of the Company has been
identified as the Chief Operating Decision Maker (CODM) as
defined by Ind AS 108, “Operating Segments”.

The Company has identified ''Leasing and Finance'' as its sole
reporting segment.

2.22 Financial Instruments

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.

2.22.1. Financial Assets

Initial recognition and measurement

All financial assets are recognized initially at fair value
plus, in the case of financial assets not recorded at
fair value through profit or loss, transaction costs
that are attributable to the acquisition or issue of the
financial asset.

Subsequent measurement
Debt instruments at amortized cost

A ''debt instrument'' is measured at the amortized cost if
both the following conditions are met:

(a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and

(b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal
amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortized cost using the
Effective Interest Rate (EIR) method. Amortized cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization is included
in finance income in the profit or loss. The losses arising
from impairment are recognized in the profit or loss. This
category generally applies to trade and other receivables.

Debt instrument at Fair value through Other
Comprehensive Income (FVTOCI)

A ''debt instrument'' is classified as at the FVTOCI if both
of the following criteria are met:

(a) The objective of the business model is achieved
both by collecting contractual cash flows and
selling the financial assets, and

(b) The asset''s contractual cash flows represent SPPI

Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in the
OCI. However, the Company recognizes interest income,
impairment losses & reversals and foreign exchange gain
or loss in the profit and loss. On derecognition of the
asset, cumulative gain or loss previously recognized in
OCI is reclassified from the equity to profit and loss.

Debt instrument at Fair value through profit or loss
(FVTPL)

FVTPL is a residual category for debt instruments. Any
debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.

In addition, the Company may elect to classify a debt
instrument, which otherwise meets amortized cost or
FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred to
as ''accounting mismatch''). Debt instruments included
within the FVTPL category are measured at fair value
with all changes recognized in the profit and loss.

Equity investments

All equity investments in entities other than subsidiaries
and joint venture companies are measured at fair value.
Equity instruments which are held for trading are
classified as at FVTPL. For all other equity instruments,
the Company decides to classify the same either as at
FVTOCI or FVTPL. The Company makes such election
on an instrument by instrument basis. The classification
is made on initial recognition and is irrevocable. The
Company has decided to classify its investments
into equity shares of IRCON International Limited
through FVTOCI.

If the Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in the
OCI. There is no recycling of the amounts from OCI to
statement of profit and loss, even on sale of investment.
However, the Company may transfer the cumulative gain
or loss within equity.

Equity instruments included within the FVTPL category
are measured at fair value with all changes recognized in
the profit and loss.

De-recognition

A financial asset (or, where applicable, a part of a
financial asset or part of a Company of similar financial
assets)is primarily derecognized (i.e. removed from the
Company''s balance sheet) when:

• The rights to receive cash flows from the asset
have expired, or

• The Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to
a third party under a ''pass-through’ arrangement; and
either (a) the Company has transferred substantially all
the risks and rewards of the asset, or (b) the Company
has neither transferred nor retained substantially all

the risks and rewards of the asset, but has transferred
control of the asset.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial
assets and credit risk exposure:

(a) Financial assets that are debt instruments, and
are measured at amortized cost e.g., loans, debt
securities, deposits and bank balance.

(b) Financial assets that are debt instruments and are
measured as at FVTOCI.

(c) Lease receivables under Ind AS 116.

(d) Loan commitments which are not measured
as at FVTPL.

(e) Financial guarantee contracts which are not
measured as at FVTPL.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
that whether there has been a material increase in the
credit risk since initial recognition. If credit risk has not
increased materially, 12 month ECL is used to provide
for impairment loss. However, if credit risk has increased
materially, lifetime ECL is used. If, in a subsequent period,
credit quality of the instrument improves such that
there is no longer a material increase in credit risk since
initial recognition, then the entity reverts to recognizing
impairment loss allowance based on 12 month ECL.

2.22.2. Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, borrowings, payables, or as derivatives designated
as hedging instruments in an effective hedge, as
appropriate. All financial liabilities are recognized initially
at fair value and, in the case of borrowings and payables,
net of directly attributable transaction costs. The

Company''s financial liabilities include trade and other
payables, borrowings including bank overdrafts, financial
guarantee contracts and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their
classification, as described below:

Financial liabilities at amortized cost

After initial measurement, such financial liabilities are
subsequently measured at amortized cost using the
EIR method. Gains and losses are recognized in profit
or loss when the liabilities are derecognized as well as
through the EIR amortization process Amortized cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization is included
in finance costs in the profit or loss. This category
generally applies to borrowings, trade payables and
other contractual liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair
value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the
purpose of repurchasing in the near term. This category
also includes derivative financial instruments entered
into by the Company that are not designated as hedging
instruments in hedge relationships as defined by Ind AS
109. Separated embedded derivatives are also classified
as held for trading unless they are designated as effective
hedging instruments.

Gains or losses on liabilities held for trading are
recognized in the statement of profit and loss.

Financial liabilities designated upon initial recognition
at fair value through profit or loss are designated at the
initial date of recognition, and only if the criteria in Ind
AS 109 are satisfied. For liabilities designated as FVTPL,
fair value gains/losses attributable to changes in own
credit risks are recognized in OCI. These gains/losses
are not subsequently transferred to profit and loss.
However, the Company may transfer the cumulative

gain or loss within equity. All other changes in fair value
of such liability are recognized in the statement of profit
and loss. The Company has not designated any financial
liability as at fair value through profit and loss.

De-recognition

A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms,
or the terms of an existing liability are substantially
modified, such an exchange or modification is treated
as the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognized in the
statement of profit and loss.

Derivative financial instruments

Initial recognition and subsequent measurement

The Company uses derivative financial instruments,
such as forward currency contracts, cross currency
swaps and interest rate swaps to hedge its foreign
currency risks and interest rate risks of foreign currency
loans. Such derivative financial instruments are initially
recognized at fair value on the date on which a
derivative contract is entered into and are subsequently
re-measured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as
financial liabilities when the fair value is negative. Any
gains or losses arising from changes in the fair value
of derivatives are taken to statement of profit and
loss. Where the derivative is designated as a hedging
instrument, the accounting for subsequent changes in
fair value depends on the nature of item being hedged
and the type of hedge relationship designated. Where
the difference is a pass through the lessee, the amount
is received/ reimbursed to the lessee.

2.23 Standards issued but not yet effective:

Accounting Standards notified, either not yet effective or not
applicable to the Company::

Ministry of Corporate Affairs (“MCA”) notifies new standards or
amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time. For the year
ended March 31, 2025, MCA has notified the below amendments:

The following major amendments have been made;

1. Insertion of Ind AS 117 - Insurance Contracts by
notification dated 12^th August 2024

This is applicable from the date of publication in
the official gazette (i.e. 12^th August 2024). This is
related to Insurance Companies and is not applicable
to the Company.

2. Amendment of Ind AS 116- Lease by notification dated
9^th September 2024

This amendment has clarified the Lease Liability in a Sale
and Leaseback transactions This amendment is applicable
from the date of publication in the official gazette
(i.e. 9^th September 2024). However, the Company has no
sale and leaseback transactions during the period ended
31^st March,2025

3. Amendment of Ind AS 104- Insurance Contracts by
notification dated 28^th September 2024

This amendment is applicable from the date of
publication in the official gazette (i.e. 28^th September
2024). This is related to Insurance Companies and is not
applicable to the Company.

Note 33 : Leases

Receivables (Note No. 6) include lease receivables representing the present value of future Lease Rentals receivables on the finance lease
transactions entered into by the Company.

The lease agreement in respect of these assets is executed at the year-end based on the lease rentals and Implicit rate of return (IRR) with
reference to average cost of annual incremental borrowings plus margin decided at that time. Any variation in the lease rental rate or the
implicit rate of return for the year is accordingly adjusted at the year end.

IRFC commenced project funding to MoR (Ministry of Railways) for creation & development of railway infrastructure projects in October 2015
under finance lease model with commencement of lease rentals after a gestation period of 5 years as per memorandum of understanding
entered with MoR on 23^th May,2017. The amount advanced to MoR has been shown as ''Advance to MoR for Railway Infrastructure Projects''.
From the said account, the company on receipt of confirmation/utilization reports from ministry of railways, transfers amount actually
utilised to "project infrastructure asset under finance lease". Company has till date has executed the Lease Agreement(s) for EBR IF 2015-16,
EBR IF 2016-17, EBR IF 2017-18, EBR IF 2018-19 and lease agreements for National Projects 2018-19 & 2019-20 with MoR with respect
to aforesaid infrastructure assets. Also, the execution of Lease Agreement for EBR IF 2019-20 is under process and the lease recievables
have been recognised with effect from 24^th March 2025. The lease agreements for funding for EBR_IF from FY 2020-21 to FY 2022-23 shall
be executed on completion of moritorium period.

IRFC board has approved financing of 20 BOBR rakes under General Purpose Wagon Investment Scheme (GPWIS) of Indian Railways to
NTPC for up to H 700 crore on finance lease basis on 8^th October 2024. Under the above-board sanction, IRFC has signed a lease agreement
with NTPC Ltd for 8 BOBR rakes amounting to H 250.12 crore in the first phase

Reconciliation of the lease receivable amount on the gross value of leased assets worth H 4,40,657.35 crore (31 March 2024 :
H 3,95,606.17 crore) owned by the Company and leased to the Ministry of Railways(MoR) is as under:

Note 33.1

Company as a Lessee

The Company has lease contracts for office premises. The Company has recognised Right of Use Asset and Lease Liability for all the leases.
Refer to Note 2.14 material accounting policy on leases.

Lease term includes the renewal term wherever the lessee has the option to renew the lease as it is reasonably certain for the lessee to
exercise the option. However, the Company is not reasonably certain to exercise the termination option after the expiry of lock in period.
There are no restrictions imposed by lease arrangements.

b. Claims against the Company not acknowledged as debt - relating to service matters pending in Court - amount not ascertainable.

c. The procurement/acquisition of assets leased out by the Company to the Indian Railways is done by Ministry of Railways (MOR),
Government of India. As per the lease agreements entered into between the Company and MOR, the Sales Tax/ VAT liability, if
any, on procurement/acquisition and leasing is recoverable from MOR. Since, there is no sales tax/ VAT demand and the amount is
unascertainable, no provision is considered necessary.

d. The disputed demand of tax (including interest thereon) for the AY 2015-16 was H 0.95 crore. Against the said demand, the company
has filed a rectification application u/s 154. Based on the decisions of the Appellate Authority in similar matters and the interpretation
of relevant provisions, the Company is confident that the demand will be either deleted or substantially reduced, and accordingly, no
provision is considered necessary. However, the said demand of H0.95 crore has been adjusted by the department, out of the refund
to IRFC for the AY 2016-17.

e. An intimation u/s 143 (1) for AY 2022-23 was received from the CPC on 16.03.23. The company also received a notice u/s 142 (1)
on 20.10.23 for the submission of information. Order u/s 143(3) dt 19.03.24 was received, which disallowed certain expenditures
amounting to H0.76 crore, and raised the demand of H 0.21 crore. Against the order, the company has filed an appeal before the CIT
(Appeal) on 18.04.24, and management is of the view that no provision is required.

f. An intimation u/s 143 (3) for AY 2023-24 was received from the CPC on 11.03.2025. During the year, the company has provided all the
information. The order u/s 143(3) dt 25.03.2025 was received, disallowing certain expenditures amounting to H0.25 crore. Against the
order, IRFC is in the process of filing an appeal before the appropriate forum. Management is of the view that no provision is required.

g. Asst. Commissioner, (ST), Chennai issued a demand order of H353.18 crore along with interest and penalty in respect of ITC available
in GSTR-2A but not claimed (lapsed), ITC availed on RCM invoices, etc for the FY 2020-21. The company filed a writ and stay petition
before the Hon''ble High Court of Madras in June-23 against the said demand order. The Honourable High Court of Madras, through
its order dt 04.07.23 granted a Stay on the demand order and the proceedings are still ongoing. Management is of the view that no
provision is required.

h. Asst. Commissioner (ST), Chennai, issued a demand order of H230.55 crore along with penalty for non-remittance of RCM and excess
availment of ITC for FY 2020-21. Against the order, the Company filed a writ and stay petition before the Hon''ble High Court of

Madras in March-25. After hearing the parties, the Hon''ble Court set aside the demand order, and the matter was remanded to the
respondent for fresh consideration and the impugned order shall be treated as SCN, and the company to submit its reply/objection
along with the supporting documents/materials. Management is of the view that no provision is required.

i. The Asst. Commissioner of (ST), Chennai, issued a demand order of H237.04 crore along with interest and penalty for the disallowance
of partial ITC for the year 2021-22. The Company filed an appeal before the Dy. Commissioner, (ST), Appeal, Chennai on 22.02.24. As
the hearing was conducted during the year, the company explained that the ITC was claimed in accordance with the GST law, and an
adequate amount of ITC is also available in the electronic credit ledger. Management is of the view that no provision is required.

j. The Assistant Commissioner, (ST), Chennai issued show cause notices for FY 21-22 to FY 23-24 for H 216.27 crore along with interest
and penalty on the grounds of excess/wrong ITC availment, short payment of tax etc. along with interest and penalty thereon. The
company filed replies against the said notices, stating that ITC has been claimed as per GST law, and no interest and penalty shall be
applicable. The Company also explained the same during the hearings held in the above matter. Management is of the view that no
provision is required.

k. IRFC received a demand order from the GST audit department, Karnataka, for FY 2020-21, H3.77 crore, regarding availment of ineligible
ITC etc. Against the demand order, IRFC is in the process of filing an appeal. Management is of the view that no provision is required.

l. IRFC received a demand order from the GST Department, Delhi, for FY 2020-21, H3.88 crore, regarding availment of ineligible ITC etc.
Against the demand order, IRFC is in the process of filing an appeal. Management is of the view that no provision is required.

Note 36: Segment reporting

The Company has identified "Leasing and Finance"as its sole reporting segment. Thus, there is no inter-segment revenue and the entire
revenue is presented in the statement of profit and loss is derived from external customers all of whom are domiciled in India, the Company''s
country of domicile.

All non-current assets other than financial instruments are also located in India.

38.2.2: Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market conditions, regardless of whether that price is directly observable or
estimated using a valuation technique.

In order to show how fair value have been derived, financial instruments are classified based on hierarchy of valuation techniques as
explained below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices in
markets that are not active) or indirectly (i.e. quoted prices for similar assets or liabilities);

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Set below is a comparison, by class, of the carrying amounts and fair value of the financial instruments. This table does not include the fair
value of non-financial assets and non-financial liabilities.

Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required).

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate
their fair values.

38.3 Financial risk management

The Company''s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and
other price risk), credit risk and liquidity risk.

The Company''s focus is to ensure liquidity which is sufficient to meet the Company''s operational requirements. The Company monitors and
manages key financial risks so as to minimise potential adverse effects on its financial Performance. The Company has a risk management policy
which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarised ahead.

38.4: Market risk

Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices.
The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Company use derivative instruments to manage market risk against the volatility in foreign exchange rates and interest rates in order to
minimize their impact on its results and financial position. Company policy is not to utilize any derivative financial instruments for trading
or speculative purposes.

In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end
of the reporting period does not reflect the exposure during the year. Further the gain/(loss) on account of exchange rate variations on all
foreign currency loans and foreign currency monetary items along with hedging cost is recoverable from MoR as per the lease agreements
executed with them.

38.6: Interest rate risk management

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the
Company by maintaining an appropriate mix between fixed and floating rate borrowings. Company use financial instruments to manage its
exposure to changing interest rates and to adjust its mix of fixed and floating interest rate debt on long-term debt.

The Company''s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management
section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative
instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability
outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents
management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/ lower and all other variables were held constant, the Company''s:

i) Profit for the year ended 31 March 2025 would decrease/increase by H 1184.81 crore (31 March 2024: decrease/increase H 1,102.97
crore). This is mainly attributable to the Company''s exposure to interest rates on its rate debt securities;

ii) Profit for the year ended 31 March 2025 would decrease/increase by H 875.59 crore (31 March 2024: decrease/increase H 974.43
crore). This is mainly attributable to the Company''s exposure to interest rates on its rate borrowings.

Interest Rate Benchmark Reform:

Exposure directly affected by the interest rate benchmark reform as required by Ind-AS 107, para 24-I and 24-J

The total amount of exposure that is directly affected by Interest Rate Benchmark Reform (IBOR) i.e. after June 2023 is USD 3,300 million
(Amount in H 28,556.94 crore) as on 31.03.2025. Out of this, the amount of the derivative exposure linked with such liabilities and accounted
for under hedge accounting is USD 225 million (Amount in H 328.17crore)

Managing the process of transition to alternative benchmark rates.

The Standard ISDA IBOR Fallback Protocol has been followed by the Company for transition from USD LIBOR to alternate reference rate/
benchmark. For certain facilities, the Company has executed bilateral agreements with the lender to transition from USD LIBOR. For these
bilaterally negotiated agreements, the Company has negotiated slight alterations in certain standard terms mentioned in the ISDA IBOR
Fallback Protocol for operational purposes.

Significant assumptions for exposure affected by the interest rate benchmark reform

The alternative reference rate/benchmarks for the LIBOR linked loans and their derivatives have been agreed with the lenders and the
derivative bankers. As a result of such reform there has been no change in the relationship of the hedged items, hedged instruments and its
corresponding hedge effectiveness.

The hedge accounting relationships that are affected by the adoption of the temporary exceptions are presented in the balance sheet in
note 5, ''Derivatives Financial Instruments''.

38.7: Other price risks

The Company has a small amount of investment in equity instruments, price risk of which is not considered material.

38.8: Credit risk management

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current
economic trends, and analysis of historical bad debts and ageing of accounts receivable.

The Company consider the probability of default upon initial recognition of assets and whether there has been a significant increase in credit
risk on an ongoing basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable
and supportive forward looking information such as:

(i) Actual or expected significant adverse change in business.

(ii) Actual or expected significant changes in the operating results of the counterparty.

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligation.

(iv) Significant increase in credit risk and other financial instruments of the same counterparty.

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements.

RBI vide its circular dated 13 March 2020 “Implementation of Indian Accounting Standards by Non-Banking Financial Companies and assets
Reconstruction Companies”, required the Board of Directors to approve sound methodologies for computation of Expected Credit Losses
(ECL). .As such company has formed a ECL policy to manage its credit risk.

The Company''s major exposure is from lease receivables from the Ministry of Railways, Government of India; lease receivables from NTPC
Limited; and loans to Rail Vikas Nigam Limited, IRCON International Limited which are under the control of Ministry of Railways, and NTPC
Renewable Energy Limited. There is no credit risk on lease receivables being due from sovereign. With respect to the lease receivables from
NTPC Limited and loans given to Rail Vikas Nigam Limited, IRCON International Limited, and NTPC Renewable Energy Limited, the Company
considers the Reserve Bank of India Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation)
Directions, 2023 [DOR.FIN.REC.NO.45/03.10.119/2023-24 dated 19/10/2023] to be adequate compliance with the impairment norms as
per Ind AS 109, Financial Instruments, as these entities are either under the Ministry of Railways or are public sector undertakings backed
by the Government of India. The Company does not expect any concern regarding the repayment of the aforesaid loans.

38.9: Liquidity risk management

Liquidity risk is defined as the potential risk that the Company cannot meet the cash obligations as they become due.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity
risk management framework for the management of the company''s short, medium, and long-term funding and liquidity management
requirements. The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring
forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Besides, there is a provision in the
lease agreements with the Ministry of Railways (MOR) whereby MOR undertakes to provide lease rentals in advance (to be adjusted from
future payments) in case the Company doesn''t have adequate liquidity to meet its debt service obligations.

38.10: Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in
exchange rates on foreign currency exposures. The objective of hedges is to minimize the volatility of INR cash flows of highly probable
forecast transaction.

However, the gain/(loss) on account of exchange rate variations on all foreign currency loans and foreign currency monetary items along
with hedging cost is recoverable from MoR as per the lease agreements executed with them.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments
to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument
is expected to offset changes in cash flows of hedged items.

Note 41: Other Disclosures

(a) Lease rental is charged on the assets leased from the first day of the month in which the Rolling Stock assets have been identified and
placed on line as per the Standard Lease Agreements executed between the Company and MOR from year to year.

(b) Ministry of Railways (MOR) charges interest on the value of the assets identified prior to the payments made by the Company, from
the first day of the month in which the assets have been identified and placed on line to the first day of the month in which the money
is paid to the MOR. However, no interest is charged from the MOR on the amount paid by the company prior to identification of
Rolling stock by them.

(c) (i) Interest rate variation on the floating rate linked rupee borrowings and interest rate and exchange rate variations on interest

payments in the case of foreign currency borrowings are adjusted against the lease income/ pre-commencement lease income
in terms of the variation clauses in the lease agreements for Rolling Stock/ memorandum of understanding (MoU) for funding of
Infrastructure assets executed with the Ministry of Railways. During the year ended 31 March 2025, such differential has resulted
in an amount of H 3617.34 crore refundable to the Company ( 31 March 2024: H 3,658.20 crore, refundable to the Company)
which has been accounted for in the lease income/pre-commencement lease income.

(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause have been incorporated in the lease
agreements specifying notional hedging cost adopted for working out the cost of funds on the leases executed with MOR.
Hedging cost in respect of these foreign currency borrowings is compared with the amount recovered by the company on such
account on notional cost basis and accordingly, the same is adjusted against the lease income. During the year ended 31 March
2025 in respect of these foreign currency borrowings, the Company has recovered a sum of H1,536.32 crore (31 March 2024:
H 1,583.54 crore) on this account from MOR against a sum of H Nil crore (31 March 2024: H Nil crore) incurred towards hedging
cost and the balance amount of H1,536.32 crore (31 March 2024: H 1,583.54 crore ) is refundable to MOR.

(d) For computing the Lease Rental, in respect of the rolling stock assets acquired and leased to the Ministry of Railways amounting to
H Nil crore during the period ended 31^st Mar 2025 (31^st Mar 2024: H Nil crore), the Lease Rental Rate and the Internal Rate of Return
have been worked out with reference to the average cost of incremental borrowings made during the year plus the margin.

(e) The Leases executed for Rolling Stock in the year 1994-95, 1993-94, 1992-93,1991-92, 1990-91, 1989-90 and 1988-89 for
H 1050.10 crore, H 900.38 crore, H 961.82 crore, H 1,500.49 crore, H 1,170.04 crore, H 1,072.56 crore & H 860.73 crore have expired
on 31 March 2025, 31 March 2024, 31 March 2023, 31 March 2022, 31 March 2021, 31 March 2020 & 31 March 2019 respectively.
During the primary and secondary lease periods full value of assets (including interest) has been recovered from the lessee ( MOR).
These assets have outlived their useful economic life.

Note 42:

(a) (i) The Reserve Bank of India has issued Master Direction - Non- Banking Financial Company- Scale Based Regulation) Directions,

2023 vide notification DoR.FIN.REC.No.45/03.10.119/2023-24 dated 19^th October 2023 (updated as on November 10, 2023).
The Reserve Bank of India has granted exemption to the Company in respect of classification of asset, provisioning norms and
credit concentration norms to the extent of direct exposure to sovereign.

(a) (ii) Till the financial year 2017-18, the Company, being a government NBFC, was exempt from creation and maintenance of Reserve
Fund as specified u/s 45-IC of Reserve Bank of India Act, 1934. However, the said exemption has been withdrawn by the
erstwhile Reserve Bank of India (RBI) vide Notification No. DNBR (PD) CC.NO.092/0310.001/2017-18 dated 31^st May 2018.
Accordingly, the Company is now creating the Reserve Fund as required u/s 45IC of RBI Act, 1934, wherein at least 20% of net
profit every year will be transferred before the declaration of dividend. No appropriation is allowed to be made from the reserve
fund except for the purpose as may be specified by the Bank from time to time and further, any such appropriation is also required
to be reported to the Bank within 21 days from the date of such withdrawal.

The Company has a reserve of H1300.4 crore for the year ended 31^st March 2025 (H 1,282.42 crore in 31 March 2024) u/s 45IC.

(a) (i) The Finance Act, 2001 provides for the levy of service tax on the finance and interest charges recovered through lease rental

instalments on the Financial Leases entered on or after 16-07-2001. The Central Government vide Order No.1/1/2003-ST
dated 30 April 2003 and subsequent clarification dated 15-12-2006 issued by the Ministry of Finance has exempted the Lease
Agreements entered into between the Company and the Ministry of Railways from the levy of Service Tax thereon u/s 93(2) of
the Finance Act, 1994.

(ii) The GST Council in their meeting held on 19 May, 2017 has exempted the services of leasing of assets (rolling stock assets
including wagons, coaches, locos) by Indian Railways Finance Corporation to Indian Railways from the levy of Goods & Service Tax
(GST), Notification No. 12/2017 (Heading 9973) which has been made applicable with effect from 1 July, 2017. Vide notification
no. 07/2021 dated 30.09.2021 issued by the Ministry of Finance, the said GST exemption on leasing of rolling stock by Indian
Railways Finance Corporation to Indian Railways is withdrawn w.e.f. 01.10.2021

(b) (i) The Company had deposited a sum of H1,466.45 crore towards GST under the reverse charge mechanism for funds transferred

to MoR for making payments on behalf of the Company to contractors for the construction of projects for the period November
2017 to June 2018. As opined by the tax consultant, the above transaction did not involve any supply from MoR to the company,
and accordingly, no GST under RCM was payable by the Company, and hence, refund applications were filed with the GST
department for the refund of said deposit of H 1,466.45 crore. However, vide orders dated 22-09-2020 and 30-09-2020, the
said refund applications have been rejected by the additional commissioner (Department of Trade and Taxes), GNCT of Delhi. The
Company has filed 6 appeals before the first appellate authority through its attorney, New Delhi, against the rejection of refund
orders on 24 December 2020 and 29 December 2020. Hearing of the case is going on, and the last hearing was scheduled for
21^st January 2025 but the same was adjourned and the next date of hearing is yet to be received by the Company.

(ii) In the ultimate event of non-admissibility of refund claims by the GST department, the amount would be adjusted by the Company
against the GST liability on lease rentals from infrastructure assets to be leased to MoR or other GST liability in future.

Note 44:

Increase/(Decrease) in liability due to exchange rate variation on foreign currency loans for purchase of leased assets/creation of
Infrastructure assets amounting to H 1913.60 crore (31 March 2024: H 957.38 crore (payable)) has not been charged to the Statement of
Profit and Loss as the same is recoverable from the Ministry of Railways (lessee) separately as per lease agreements in respect of rolling
stock assets/memorandum of understanding (MoU) for funding of Infrastructure assets to be leased. The notional hedging cost on external
commercial borrowings inbuilt into the Lease Rentals amounting to H 232.33 crore (31 March 2024: H 232.33 crore) is refundable to
Ministry of Railways for the year ended 31 March 2025 (Ref of Note 41 C (ii)). Further, a sum of H 700.57 (31 March 2024: HNil crore) has
been recovered towards crystallised exchange rate variation on foreign currency loans repaid during the year ended 31^st March 2025. The
amount recoverable from MoR on account of exchange rate variation net of notional hedging cost and crystallised exchange rate variation
is H 6730.61 crore (31 March 2024: H 5794.75 crore).

Effective portion of (loss)/gain on account of decrease/increase in the fair value of the derivative assets (hedging instruments) amounting to
H 41.24 crore (31 March 2024:H 92.30 crore) classified as cash flow hedges has not been recognised in the other comprehensive income as the
same is recoverable/refundable to the MOR (Lessee) since the derivatives have been contracted to hedge the financial risk of MOR (Lessee).

Note 45:

The Ministry of Railways (MOR) vide letter dated 23 July 2015 had authorized the Company to draw funds from Life Insurance Corporation
of India (LIC) in consultation with MOR for funding of Railway Projects in line with finance leasing methodology adopted by Company for
funding Railway Projects in past. In addition to funds raised from LIC, the Company has also funded MoR from other borrowings and internal
accruals. Pending execution of the Lease Documents, the Company had entered into a Memorandum of Understanding with the Ministry
of Railways on 23 May 2017 containing principal terms of the lease transactions. The Company has now entered a fresh Memorandum of
Understanding with Ministry of Railways on 2 March 2021 superseding all earlier MoU/arrangement.

During FY 2021-22, the Lease Agreement(s) for Project assets funded under EBR IF 2015-16 and National Projects 2018-19 between MOR and
the Company with respect to aforesaid infrastructure assets was executed on 28^th March 2022. Similarly, during financial year 2022-23, the Lease
Agreement(s) for EBR IF 2016-17 and National Projects 2019-20 and in Financial Year 2023-24 and Financial Year 2024-25, the Lease Agreements
for EBR IF 2017-18 and EBR IF 2018-19, between MOR and the Company with respect to infrastructure assets have been executed, respectively.
Also,the execution of the Lease Agreement for EBR IF 2019-20 is under process and accordingly, the lease recievables have been recognised with
effect from 24^th March 2025. The accounting as per Ind AS 116 has been carried out for the same during the current financial year

During the year ended 31 March 2025 a sum of H 8557.46 crore (31 March 2024 H 9,490.02 crore) incurred by the Company on account
of interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the ''Project
Infrastructure Asset under Finance Lease Arrangements-EBR-IF'' , ''Project Infrastructure Asset under Finance Lease Arrangements-EBR
Special'' and ''Advance funding against National Project''. The same would be recovered through lease rentals in future over the life of the
leases as per lease agreement(s) to be entered. Details are as under:

i Ministry of Railways, Government of India is the Parent of the Company. The Company leases various assets including rolling stock,
locomotives, project infrastructure assets such as railway tracks, signaling system, railways stations, bridges etc to Ministry of Railways
under finance lease model as per IndAS 116. The computation of lease income requires estimation of a number of financial metrics
such as source of borrowings, weighted average cost of capital, approved margins, exchange and interest rate variations etc which is
determined on a continuous basis in consultation with Ministry of Railways.The weighted average cost of capital and margin have been
finalised for the disburment made till FY 2022-23. No disbursement made to the MoR for the FY 2023-24 and FY 2024-25.

ii The reconciliation with the Ministry of Railways uptill FY 2023-2024 has been completed. The reconcilation of balances with MoR as
on 31^st March 2025 will be carried out in due cousre based on audited accounts of FY 2024-25. The disbursement to MOR for project
infrasturure assets for which Lease Agreements are yet to be executed stand at H1,32,876.98 crore as on 31^st March 2025 against
which utilisation statement has been received from MoR.

Note 47:

(a) The Company discharges its obligation towards payment of interest, redemption of bonds and payment of dividend, by depositing the
respective amounts in the designated bank accounts. Reconciliation of such accounts is an ongoing process and has been completed
upto 31 March 2025. The Company does not foresee any additional liability on this account. The total balance held in such specified
bank accounts as on 31 March 2025 is H 32.65 crore (31 March 2024 is H 31.99 crore)

(b) The Company is required to transfer any amount remaining unclaimed and unpaid in such interest and redemption accounts after
completion of 7 years to Investor Education Protection Fund (IEPF) administered by the Ministry of Corporate Affairs, Government of
India. During the year ended 31 March 2025, a sum of H 0.47 crore (31 March 2024:H2.81 crore) was deposited in IEPF.

Mar 31, 2024

2.12 Provisions, contingent liabilities and contingent assets

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance costs.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.

Contingent assets are possible assets that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are disclosed in the financial statements when inflow of economic benefits is probable on the basis of judgment of management. These are assessed continually to ensure that developments are appropriately reflected in the financial statements.

2.13 Impairment of non-financial assets

The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ‘Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit", or “CGU”).

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are reduced from the carrying amounts of the assets of the CGU.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

2.14 Leases

At inception of a contract, the Company assesses whether the contract is, or contains a lease. A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as a lessor

• The Company classifies each of its leases as either an operating lease or a finance lease.

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. The depreciation policy for depreciable underlying assets subject to operating leases is consistent with the Company''s normal depreciation policy for similar assets.

Contingent rents are recognised as revenue in the period in which they are earned.

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

Company as a lessee

At the contract commencement date, the Company recognizes right - of - use asset and a lease liability. A right - of - use asset is an asset that represents a lessee''s right to use an underlying asset for the lease term. The Company has elected not to apply the aforesaid requirements to short term leases (leases which at the commencement date has a lease term of 12 months or less) and leases for which the underlying asset is of low value as described in paragraphs B3 - B9 of Ind AS 116.

A right of use asset is initially measured at cost and subsequently applies the cost mode ie less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of lease liability. Ind AS 16, Property, Plant and Equipment is applied in depreciating the right - of - use asset.

A lease liability is initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Company''s incremental borrowing rate is used. Subsequently, the carrying amount of the lease liability is increased to reflect interest on lease liability; reduced to reflect the lease payments; and remeasured to reflect any reassessment or lease modifications or to reflect revised in - substance fixed lease payments.

2.15 Securitisation of Finance Lease Receivable

Lease Receivables securitised out to Special Purpose Vehicle in a securitisation transactions are de-recognised in the balance sheet when they are transferred and consideration has been received by the Company.

The resultant gain/loss arising on securitization is recognised in the Statement of Profit & Loss in the year in which transaction takes place.

Lease Receivables assigned through direct assignment route are de-recognised in the balance sheet when they are transferred and consideration has been received by the Company. Profit or loss resulting from such assignment is accounted for in the year of transaction.

2.16 Leasing of Railway Infrastructure Assets

In terms of Indian Accounting Standard116, the inception of lease takes place at the earlier of the date of the lease agreement and the date of a commitment by the parties to the principal provisions of the lease.

The commencement of the lease term is the date from which the lessee is entitled to exercise its right to use the leased asset. It is the date of initial recognition of the lease.

As such, in respect of Railway Infrastructure Assets, which are under construction and where the Memorandum of Understanding / terms containing the principal provisions of the lease are in effect with the Lessee, pending execution of the lease agreement, the transactions relating to the lease are:

(a) presented as “Advance against Railway Infrastructure Assets to be leased”; and thereafter

(b) transferred to “Project Infrastructure Assets under Finance Lease Arrangement” on receipt of utilization report from the lessee; and thereafter

(c) transferred to lease receivable as per Ind AS 116 on execution of lease agreement.

2.17Dividends

Dividends and interim dividends payable to the Company''s shareholders are recognized as changes in equity in the period in which they are approved by the shareholders'' meeting and the Board of Directors respectively.

2.18 Material Prior Period Errors

Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

2.19 Earnings per share

Basic earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year.

Diluted earnings per equity share is computed by dividing the net profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

2.20 Statement of Cash Flows

Statement of cash flows is prepared in accordance with the indirect method prescribed in Ind AS 7 ‘Statement of cashflows''.

2.21 Operating Segments

The Managing Director (MD) of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108, “Operating Segments”.

The Company has identified ‘Leasing and Finance'' as its sole reporting segment.

2.22 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

2.22.1.Financial Assets

Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition or issue of the financial asset.

Subsequent measurement Debt instruments at amortized cost

A ‘debt instrument'' is measured at the amortized cost if both the following conditions are met:

(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.

Debt instrument at Fair value through Other Comprehensive Income (FVTOCI)

A ‘debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:

(a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and

(b) The asset''s contractual cash flows represent SPPI

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the OCI. However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to profit and loss.

Debt instrument at Fair value through profit or loss (FVTPL)

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch''). Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.

Equity investments

All equity investments in entities other than subsidiaries and joint venture companies are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable. The Company has decided to classify its investments into equity shares of IRCON International Limited through FVTOCI.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets)is primarily derecognized (i.e. removed from the Company''s balance sheet) when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits and bank balance.

(b) Financial assets that are debt instruments and are measured as at FVTOCI.

(c) Lease receivables under Ind AS 116.

(d) Loan commitments which are not measured as at FVTPL.

(e) Financial guarantee contracts which are not measured as at FVTPL.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a material increase in the credit risk since initial recognition. If credit risk has not increased materially, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased materially, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a material increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12 month ECL.

2.22.2.Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at amortized cost

After initial measurement, such financial liabilities are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the profit or loss. This category generally applies to borrowings, trade payables and other contractual liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/losses attributable to changes in own credit risks are recognized in OCI. These gains/losses are not subsequently transferred to profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit and loss. The Company has not designated any financial liability as at fair value through profit and loss.

De-recognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.

Derivative financial instruments

Initial recognition and subsequent measurement

The Company uses derivative financial instruments, such as forward currency contracts, cross currency swaps and interest rate swaps to hedge its foreign currency risks and interest rate risks of foreign currency loans. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss. Where the derivative is designated as a hedging instrument, the accounting for subsequent changes in fair value depends on the nature of item being hedged and the type of hedge relationship designated. Where the difference is a pass through the lessee, the amount is received/ reimbursed to the lessee.

2.23 Standards issued but not yet effective:

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

Note 33: Leases

Receivables (Note No. 6) include lease receivables representing the present value of future Lease Rentals receivables on the finance lease transactions entered into by the Company.

The lease agreement in respect of these assets is executed at the year-end based on the lease rentals and Implicit rate of return (IRR) with reference to average cost of annual incremental borrowings plus margin decided at that time. Any variation in the lease rental rate or the implicit rate of return for the year is accordingly adjusted at the year end.

Reconciliation of the lease receivable amount on the gross value of leased assets worth Rs. 39,56,061.73 millions (31 March 2023 : Rs. 36,09,576.41 millions, 1^st April 2022: Rs. 30,12,490.62 millions) owned by the Company and leased to the Ministry of Railways(MoR) is as under:

Note 33.1

Company as a Lessee

The Company has lease contracts for office premises. The Company has recognised Right of Use Asset and Lease Liability for all the leases. Refer to Note 2.14 material accounting policy on leases.

Lease term includes the renewal term wherever the lessee has the option to renew the lease as it is reasonably certain for the lessee to exercise the option. However, the Company is not reasonably certain to exercise the termination option after the expiry of lock in period. There are no restrictions imposed by lease arrangements.

b. Claims against the Company not acknowledge as debt - relating to service matter pending in Court - amount not ascertainable.

c. The procurement/acquisition of assets leased out by the Company to the Indian Railways is done by Ministry of Railways (MOR), Government of India. As per the lease agreements entered into between the Company and MOR, the Sales Tax/ VAT liability, if any, on procurement/acquisition and leasing is recoverable from MOR. Since, there is no sales tax/ VAT demand and the amount is unascertainable, no provision is considered necessary.

d. Director-General of GST Intelligence (DGGI), Chennai Zonal unit has served a show cause notice dated 16-4-2019 on the company alleging contravention of the provision of sec 67,68 and 70 of the Finance Act, 1994 by the company and as to why service tax of H26,537.65 million along with interest and penalty be not demanded from the company. The company has submitted a reply to Commissioner, CGST, Delhi East (Adjudicating Authority) stating that there is no contravention of the provision of any of the above-stated sections of the Finance Act, 1994. Further, the company has also filed counter comments against the comments given by the department and the hearing is going on. Management is of the view that the company is not liable to pay the tax. However, if any liability arises that would be recoverable from the Ministry of Railways, Government of India.

e. The disputed demand of tax (including interest thereon) for the AY 2015-16 was Rs. 9.48 million. Against the said demand, the company has filed a rectification application u/s 154. Based on the decisions of the Appellate Authority in similar matters and the interpretation of relevant provisions, the Company is confident that the demand will be either deleted or substantially reduced, and accordingly, no provision is considered necessary. However, the said demand of H9.48 million has been adjusted by the department, out of the refund to IRFC for the AY 2016-17.

f. During the Financial year 2021-22, an intimation u/s 143(1) for AY 2019-20 was received from the CPC. In the said intimation, TDS credit has been short-granted by Rs. 1502.46 million despite it appearing in Form 26AS. Further Book Profit has been increased by Rs. 1462.42 million without any reason and additional tax and interest thereon has been raised. The demand of Rs. 2043.26 million has been adjusted against the refund claimed for AY 2020-21. Against the said demand issued by the CPC u/s 143 (1), an appeal was filed at CIT (A) on 28-1-2022, which has considered TDS credit which was short granted and also made an addition of Rs. 6135.12 million on account of income tax paid (the company has already added provision for tax in the computation of taxable income) and Rs. 154790.38 million on account of General reserves, etc, in book profit, against which the company has filed an appeal before the Honourable Income Tax Appellate Tribunal (ITAT) on 17-4-23 for the total addition of Rs. 162387.93 million. During the hearings, the company submitted all the details and documents against the additional demands raised. Management is of the view that no provision is required.

g. An intimation u/s 143 (1) for AY 2022-23 was received from the CPC on 16-3-23. During the year, the company also received a notice u/s 142 (1) on 20-10-23 for the submission of information. Order u/s 143(3) dt 19-3-24 was received which, disallowed certain expenditures amounting to H7.59 million, and raised the demand of H2.14 million. Against the order, the company has filed an appeal before the CIT (Appeal) on 18-4-24, and Management is of the view that no provision is required.

h. During the FY 23-24, Asst. Commissioner, State Tax, Chennai issued a demand order of H3531.79 million in respect of ITC available in GSTR-2A but not claimed (lapsed), ITC availed on RCM invoices, etc for the FY 20-21. The company filed a writ and stay petition before the Hon''ble High Court of Madras in June-23 against the said demand order. The Honourable High Court of Madras, through its order dt 04-07-23 granted a Stay on the demand order and the proceedings are still ongoing. Further, Asst. Commissioner, State Tax, Chennai also issued a demand order of H2370.35 million for disallowance of partial ITC for the year 21-22. The Company filed an appeal before the Dy. Commissioner, State Tax, Appeal, Chennai on 22-02-24. At the personal hearing conducted on 14-3-24, the company elucidated that the ITC was claimed in accordance with the GST law and adequate amount of ITC is also available in the electronic credit ledger. The management holds the perspective that no provision is deemed necessary in either scenario.

i. During the FY 23-24, The Assistant Commissioner, State Tax, Chennai issued show cause notices for FY 20-21 to FY 22-23 for Rs. 6689.78 million on the grounds of excess/wrong ITC availment, short payment of tax etc. along with interest and penalty thereon. The company filed replies against the said notices during Oct-23 and Nov-23 stating that ITC has been claimed as per GST law and no interest and penalty shall be applicable. The Company also elucidated the same during personal hearings held in the above matter. The management holds the perspective that no provision is deemed necessary for the above.

Note 36: Segment reporting

The Company has identified "Leasing and Finance"as its sole reporting segment. Thus, there is no inter-segment revenue and the entire revenue is presented in the statement of profit and loss is derived from external customers all of whom are domiciled in India, the Company''s country of domicile.

All non-current assets other than financial instruments are also located in India.

The Company derives more than 10% of its revenue from a single customer (ie. Ministry of Railways, Government of India (MOR) and entities under the control of MOR). The break up of the revenue is an under:

38.2.2: Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair value have been derived, financial instruments are classified based on hierarchy of valuation techniques as explained below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices in markets that are not active) or indirectly (i.e. quoted prices for similar assets or liabilities);

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Set below is a comparison, by class, of the carrying amounts and fair value of the financial instruments. This table does not include the fair value of non-financial assets and non-financial liabilities.

Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required).

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.

38.3 Financial risk management

The Company''s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company''s focus is to ensure liquidity which is sufficient to meet the Company''s operational requirements. The Company monitors and manages key financial risks so as to minimise potential adverse effects on its financial Performance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarised ahead.

38.4: Market risk

Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Company use derivative instruments to manage market risk against the volatility in foreign exchange rates and interest rates in order to minimize their impact on its results and financial position. Company policy is not to utilize any derivative financial instruments for trading or speculative purposes.

38.5: Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.

38.6: Interest rate risk management

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Company use financial instruments to manage its exposure to changing interest rates and to adjust its mix of fixed and floating interest rate debt on long-term debt.

The Company''s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/ lower and all other variables were held constant, the Company''s:

i) Profit for the year ended 31 March 2024 would decrease/increase by Rs. 11029.71 millions (31 March 2023: decrease increase Rs. 10,256.73 millions, 01 April 2022: decrease/increase Rs. 9,318.74 millions). This is mainly attributable to the Company''s exposure to interest rates on its rate debt securities;

ii) Profit for the year ended 31 March 2024 would decrease/increase by Rs. 9744.32 millions (31 March 2023: decrease increase Rs. 9,926.92 millions, 01 April 2022: decrease/increase Rs. 8,469.44 millions). This is mainly attributable to the Company''s exposure to interest rates on its rate borrowings.

Interest Rate Benchmark Reform:

Exposure directly affected by the interest rate benchmark reform as required by Ind-AS 107, para 24-I and 24-J

The total amount of exposure that is directly affected by Interest Rate Benchmark Reform (IBOR) i.e. after June 2023 is USD 3,300 million (Amount in H 2,77,357.32million) as on 31.03.2024. Out of this, the amount of the derivative exposure linked with such liabilities and accounted for under hedge accounting is USD 225 million (Amount in H 3,130.70 million)

Significant assumptions for exposure affected by the interest rate benchmark reform

The alternative reference rate/benchmarks for the LIBOR linked loans and their derivatives have been agreed with the lenders and the derivative bankers. As a result of such reform there has been no change in the relationship of the hedged items, hedged instruments and its corresponding hedge effectiveness.

The hedge accounting relationships that are affected by the adoption of the temporary exceptions are presented in the balance sheet in note 5, ‘Derivatives Financial Instruments''.

38.7: Other price risks

The Company has a small amount of investment in equity instruments, price risk of which is not considered material.

38.8: Credit risk management

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.

The Company consider the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse change in business.

(ii) Actual or expected significant changes in the operating results of the counterparty.

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligation.

(iv) Significant increase in credit risk and other financial instruments of the same counterparty.

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements.

RBI vide its circular dated 13 March 2020 “Implementation of Indian Accounting Standards by Non-Banking Financial Companies and assets Reconstruction Companies”, required the Board of Directors to approve sound methodologies for computation of Expected Credit Losses (ECL). As such company has formed a ECL policy to manage its credit risk.

The Company''s major exposure is from lease receivables from Ministry of Railways, Government of India and loans to Rail Vikas Nigam Limited and IRCON International Limited which are under the control of Ministry of Railways. There is no credit risk on lease receivables being due from sovereign. With respect to loan given to Rail Vikas Nigam Limited and IRCON International Limited, the company consider the Reserve Bank of India MASTER DIRECTION - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL COMPANY -SCALE BASED REGULATION) DIRECTIONS, 2023), DOR.FIN.REC.NO.45/03.10.119/2023-24, DATED 19/10/2023, to be adequate compliance with the impairment norms as per Ind AS 109, Financial Instruments, as IRCON International Limited and Rail Vikas Nigam Limited, both, are under Ministry of Railways, Government of India and the Company do not expect any concern in the repayment of aforesaid loans.

38.9: Liquidity risk management

Liquidity risk is defined as the potential risk that the Company cannot meet the cash obligations as they become due.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company''s short, medium, and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Besides, there is a provision in the lease agreements with the Ministry of Railways (MOR) whereby MOR undertakes to provide lease rentals in advance (to be adjusted from future payments) in case the Company doesn''t have adequate liquidity to meet its debt service obligations.

38.10: Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The objective of hedges is to minimize the volatility of INR cash flows of highly probable forecast transaction.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

(a) Lease rental is charged on the assets leased from the first day of the month in which the Rolling Stock assets have been identified and placed on line as per the Standard Lease Agreements executed between the Company and MOR from year to year.

(b) Ministry of Railways (MOR) charges interest on the value of the assets identified prior to the payments made by the Company, from the first day of the month in which the assets have been identified and placed on line to the first day of the month in which the money is paid to the MOR. However, no interest is charged from the MOR on the amount paid by the company prior to identification of Rolling stock by them.

(c) (i) Interest rate variation on the floating rate linked rupee borrowings and interest rate and exchange rate variations on interest

payments in the case of foreign currency borrowings are adjusted against the lease income/ pre-commencement lease income in terms of the variation clauses in the lease agreements for Rolling Stock/ memorandum of understanding (MoU) for funding of Infrastructure assets executed with the Ministry of Railways. During the year ended 31 March 2024, such differential has resulted in an amount of Rs. 36,581.97 millions refundable to the Company (31 March 2023: Rs. Rs. 17,928.97 millions, 1 April 2022: Rs. 684.66 millions refundable to MoR) which has been accounted for in the lease income/ pre-commencement lease income.

(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause have been incorporated in the lease agreements specifying notional hedging cost adopted for working out the cost of funds on the leases executed with MOR. Hedging cost in respect of these foreign currency borrowings is compared with the amount recovered by the company on such account on notional cost basis and accordingly, the same is adjusted against the lease income. During the year ended 31 March 2024 in respect of these foreign currency borrowings, the Company has recovered a sum of Rs. 15,835.43 millions (31 March 2023: Rs. 17,148.78 millions, 1 April 2022: H14,117.53 millions) on this account from MOR against a sum of Rs. Nil millions (31 March 2023: Rs. Nil millions, 1 April 2022 :Rs. NIL millions) incurred towards hedging cost and the balance amount of Rs. 15,799.76 millions (31 March 2023: Rs. 17,148.78 million, 1 April 2022: Rs. 14,117.53 millions) is refundable to MOR.

(d) (d)For computing the Lease Rental, in respect of the rolling stock assets acquired and leased to the Ministry of Railways amounting to Rs. Nil millions during the period ended 31^st Mar 2024 (31^st Mar 2023: Rs. 1,66,341.94 millions, Year ended 1^st April 2022: Rs.

2,84,930.23 millions), the Lease Rental Rate and the Internal Rate of Return have been worked out with reference to the average cost of incremental borrowings made during the year plus the margin.

(e) The Leases executed for Rolling Stock in the year 1993-94, 1992-93,1991-92, 1990-91, 1989-90 and 1988-89 for Rs. 9003.80 millions, Rs. 9,618.24 millions, Rs. 15,004. 92 millions, Rs. 11,700.35 millions, Rs. 10,725.60 millions & Rs. 8607.27 millions have expired on 31 March 2024, 31 March 2023, 31 March 2022, 31 March 2021,31 March 2020 & 31 March 2019 respectively. During the primary and secondary lease periods full value of assets (including interest) has been recovered from the lessee (MOR). These assets have outlived their useful economic life.

Note 42:

(a) (i) The Reserve Bank of India has issued Master Direction - Non- Banking Financial Company- Scale Based Regulation)

Directions, 2023 vide notification DoR.FIN.REC.No.45/03.10.119/2023-24 dated 19^th October 2023 (updated as on November 10, 2023). The Reserve Bank of India has granted exemption to the Company in respect of classification of asset, provisioning norms and credit concentration norms to the extent of direct exposure to sovereign.

(a) (ii) Till the financial year 2017-18, the Company, being a government NBFC, was exempt from creation and maintenance of Reserve Fund as specified u/s 45-IC of Reserve Bank of India Act, 1934. However, the said exemption has been withdrawn by the erstwhile Reserve Bank of India (RBI) vide Notification No. DNBR (PD) CC.NO.092/0310.001/2017-18 dated 31^st May 2018. Accordingly, the Company is now creating the Reserve Fund as required u/s 45IC of RBI Act, 1934, wherein at least 20% of net profit every year will be transferred before the declaration of dividend. No appropriation is allowed to be made from the reserve fund except for the purpose as may be specified by the Bank from time to time and further, any such appropriation is also required to be reported to the Bank within 21 days from the date of such withdrawal.

The Company created a reserve of H12824.21 millions for the year ended 31^st March 2024 (Rs. 12674.03 in 31 March 2023) u/s 45IC.

(a) (i) The Finance Act, 2001 provides for levy of service tax on the finance and interest charges recovered through lease rental

instalments on the Financial Leases entered on or after 16-07-2001. The Central Government vide Order No.1/1/2003-ST dated 30 April 2003 and subsequent clarification dated 15-12-2006 issued by Ministry of Finance has exempted the Lease Agreements entered between the Company and Ministry of Railways from levy of Service Tax thereon u/s 93(2) of Finance Act, 1994.

(ii) The GST Council in their meeting held on 19 May, 2017 has exempted the services of leasing of assets (rolling stock assets including wagons, coaches, locos) by Indian Railways Finance Corporation to Indian Railways from the levy of Goods & Service Tax (GST), Notification No. 12/2017 (Heading 9973) which has been made applicable with effect from 1 July, 2017. Vide notification no. 07/2021 dated 30.09.2021 issued by Ministry of Finance, the said GST exemption on leasing of rolling stock by Indian Railways Finance Corporation to Indian Railways is withdrawn w.e.f. 01.10.2021

(b) (i) The Company had deposited a sum of H14,664.47 million towards GST under reverse charge mechanism for funds

transferred to MoR for making payments on behalf of Company to contractors for construction of projects for the period November 2017 to June 2018. As opined by the tax consultant, the above transaction did not involve any supply from MoR to the company and accordingly, no GST under RCM was payable by the Company and hence, refund applications were filed with the GST department for the refund of said deposit of H14,664.47 millions. However, vide orders dated 22-09-2020 and 30-09-2020, the said refund applications have been rejected by the additional commissioner (Department of Trade and Taxes), GNCT of Delhi. The Company has filed 6 appeals before first appellate authority through its attorney, New Delhi against the rejection of refund orders on 24 December 2020 and 29 December 2020.

(ii) In the ultimate event of non-admissibility of refund claims by the GST department, the amount would be adjusted by the Company against the GST liability on lease rentals from infrastructure assets to be lease to MoR or other GST liability in future.

Note 44:

Increase/(Decrease) in liability due to exchange rate variation on foreign currency loans for purchase of leased assets/creation of Infrastructure assets amounting to Rs. 9573.79 millions (31 March 2023: Rs. 42,651.63 millions (recoverable), 01 April 2022 : Rs. 11,188.84 million (recoverable)) has not been charged to the Statement of Profit and Loss as the same is recoverable from the Ministry of Railways (lessee) separately as per lease agreements in respect of rolling stock assets/memorandum of understanding (MoU) for funding of Infrastructure assets to be leased. The notional hedging cost on external commercial borrowings inbuilt into the Lease Rentals amounting to Rs. 2,323.26 millions (31 March 2023: Rs. 817.80 millions, 01 April 2022 : Rs. 16,441.20 millions) is refundable to Ministry of Railways for the year ended 31 March 2023 (Ref of Note 41 C (ii)). Further, a sum of Rs. NIL (31 March 2023: HNil millions, 01 April 2022 : Rs. 105.87 millions) has been recovered towards crystallised exchange rate variation on foreign currency loans repaid during the year ended 31^st March 2024. The amount recoverable from MoR on account of exchange rate variation net of notional hedging cost and crystallised exchange rate variation is Rs. 57,947.51 million (31 March 2023: Rs. 69,844.62 millions, 01 April 2022: Rs. 11,448.24 million).

Effective portion of (loss)/gain on account of decrease/increase in the fair value of the derivative assets (hedging instruments) amounting to Rs. 923.06 millions (31 March 2023:H626.47 million, 1 April 2022: H112.75 million) classified as cash flow hedges has not been recognised in the other comprehensive income as the same is recoverable/refundable to the MOR (Lessee) since the derivatives have been contracted to hedge the financial risk of MOR (Lessee).

The Ministry of Railways (MOR) vide letter dated 23 July 2015 had authorized the Company to draw funds from Life Insurance Corporation of India (LIC) in consultation with MOR for funding of Railway Projects in line with finance leasing methodology adopted by Company for funding Railway Projects in past. In addition to funds raised from LIC, the Company has also funded MoR from other borrowings and internal accruals. Pending execution of the Lease Documents, the Company had entered into a Memorandum of Understanding with the Ministry of Railways on 23 May 2017 containing principal terms of the lease transactions. The Company has now entered a fresh Memorandum of Understanding with Ministry of Railways on 2 March 2021 superseding all earlier MoU/arrangement.

During FY 2021-22, the Lease Agreement(s) for Project assets funded under EBR IF 2015-16 and National Projects 2018-19 between MOR and the Company with respect to aforesaid infrastructure assets was executed on 28^th March 2022. Similarly, during financial year 2022-23, the Lease Agreement(s) for EBR IF 2016-17 and National Projects 2019-20 and in Financial Year 2023-24, the Lease Agreement for EBR IF 2017-18, between MOR and the Company with respect to infrastructure assets have been executed. Also,the execution of the Lease Agreement for EBR IF 2018-19 is under process and accordingly, the lease recievables have been recognised with effect from 24^th March 2024. The accounting as per Ind AS 116 has been carried out for the same during the current financial year

During the year ended 31 March 2024 a sum of Rs. 94,900.21 millions (31 March 2023 Rs. 91,664.39 millions) incurred by the Company on account of interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the ''Project Infrastructure Asset under Finance Lease Arrangements-EBR-IF'', ‘Project Infrastructure Asset under Finance Lease Arrangements-EBR Special'' and ''Advance funding against National Project''. The same would be recovered through lease rentals in future over the life of the leases as per lease agreement(s) to be entered. Details are as under:

i Ministry of Railways, Government of India is the Parent of the Company. The Company leases various assets including rolling stock, locomotives, project infrastructure assets such as railway tracks, signaling system, railways stations, bridges etc to Ministry of Railways under finance lease model as per IndAS 116. The computation of lease income requires estimation of a number of financial metrics such as source of borrowings, weighted average cost of capital, approved margins, exchange and interest rate variations etc which is determined on a continuous basis in consultation with Ministry of Railways.The weighted average cost of capital and margin have been finalised for the disburment made till FY 2022-23. No disbursement made to the MoR for the FY 2023-24.

ii The reconciliation with the Ministry of Railways uptill FY 2022-2023 has been completed. The reconcilation of balances with MoR as on 31^st March 2024 will be carried out in due cousre based on audited accounts of FY 2023-24. The disbursement to MOR for project infrasturure assets for which Lease Agreements are yet to be executed stand at Rs. 17,00,794.85 millions as on 31^st March 2024 against which utilisation statement has been received from MoR.

iii Impact of material prior period adjustments

IRFC''s principal business is to borrow funds from the financial markets to finance acquisition/creation of rolling stock/ project assets which are then leased out to the Indian Railways (i.e., MoR).

IRFC is currently in the process of implementing the ERP During the transition of data from the legacy system to the ERR it was observed that there was an overstatement by Rs. 7901.36 million in lease receivables, due to variances in capital recovery in the terminal year of the lease agreements which have completed their primary lease period.

Accordingly, the lease receivables and retained earnings as at 1 April 2022 were overstated by H6202.79 million each. The error has also resulted in reduction of profit for the year ended 31 March 2023 by H1698.57 million. The lease receivable and retained earnings as at 31 March 2023 were overstated each by Rs. 7901.36 million and the comparitive figures as at 31 March 2023 and 01 April 2022 have been restated.

(a) The Company discharges its obligation towards payment of interest, redemption of bonds and payment of dividend, by depositing the respective amounts in the designated bank accounts. Reconciliation of such accounts is an ongoing process and has been completed upto 31 March 2024. The Company does not foresee any additional liability on this account. The total balance held in such specified bank accounts as on 31 March 2024 is Rs. 319.85 millions (31 March 2023 is Rs. 119.43 millions, 01 April 2022: Rs. 127.58 millions)

(b) The Company is required to transfer any amount remaining unclaimed and unpaid in such interest and redemption accounts after completion of 7 years to Investor Education Protection Fund (IEPF) administered by the Ministry of Corporate Affairs, Government of India. During the year ended 31 March 2024, a sum of H28.10 millions (31 March 2023:H7.52 millions,01 April 2022: Rs. 5.30 million) was deposited in IEPF.

Note 48: Corporate Social Responsibility

As required under section Section 135 of the Companies Act 2013, the Company has formed a Corporate Social Responsibility Committee. The Company has undertaken Corporate Social Responsibility activities during the year, which have been approved by the CSR Committee and are specified in Schedule VII of the Companies Act 2013.

In the year 2020-21, the Ministry of Corporate Affairs (MCA) issued the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the ""Amendment""), and the effective date of the amendments to Section 135 of the Companies Act, as made by the Companies Amendment Act, 2019 and Companies Amendment Act, 2020, was notified as 22.01.2021. In accordance with the amendment under the said notifications, any unspent CSR amount, other than for any ongoing project, shall be transferred to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year. Any unspent amount pursuant to any ongoing project must be transferred to unspent CSR Account in any scheduled bank within a period of thirty days from the end of the financial year, to be utilised within a period of three financial years, failing which it shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year. Further, if the company spends an amount in excess of the requirement under statute, the excess amount may be set off for three succeeding financial years against the amount to be spent.

As the notification became effective during the FY 2020-21, the Company is complying with the amended provisions of Section 135 of the Companies Act, 2013 from the financial year 2021-22 onwards. Consequently, the Company has set aside provisions for an unspent amount related to ongoing projects totaling H809.38 million for the FY 2023-24 (H590.05 million in FY 2022-23).

(i) For the financial year ended 31.03.2024, the Company paid a gross amount of Rs. 549.58 million (Rs. 236.26 million relates to prior years), while for the year ended 31.03.2023, the Company paid a gross amount of Rs. 675.31 million (Rs. 352.27 million relates to prior years) towards CSR projects. The gross amount required to be spent for the year ended 31.03.2024 was Rs. 1122.70 million, for which the Board approved an amount of Rs. 1122.70 million, which includes H809.38 million towards the CSR projects, H223.32 million towards PM CARES, H45 million each towards Swach Bharat Kosh and Clean Ganga Fund. For the year ended 31/03/2023, the gross amount required to be spent was H913.10 million, for which the Board approved an amount of H913.10 million, which includes H590.05 million towards the CSR projects, H303.05 million towards PM CARES, H10 million each towards Swach Bharat Kosh and Clean Ganga Fund.

As of 31.03.2024, the unspent CSR amount allocated towards various CSR Projects for the Financial Year(s) 2020-21,2021-22, 2022-23 and 2023-24 are H158.92 million, H141.25 million, H487.42 million and 809.38 respectively.

(a) Loans to Directors, Senior Officers and Relatives of Directors

The Company has not given any loan to directors,senior officers and relatives of directors.

Note 61: Applicability of approvals/acknowledgements previously given by the Reserve Bank of India

The Reserve Bank of India has issued Master Directions - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, DOR.FIN.REC.NO.45/03.10.119/2023-24, Dated 19/10/2023 (referred to as ''the new Directions''). With the issue of ''the new Directions'', the instructions/ guidelines contained in various circulars/ Directions issued

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Mar 31, 2023

Note 33: Leases

Hitherto Company had been presenting ‘lease receivables'', being assets under finance lease to Ministry of Railways, Government of India, under the line item, ‘receivables'' in its Balance sheet since transition to Companies Indian Accounting Standards 2015. While reviewing the financial statements of previous financial year ended 31st March 2022, the Controller and Audit General of India had opined that the lease receivable be presented under the sub-line item ‘Leasing'' below the main line item of ‘Loans''. The Company sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India which as per its opinion has agreed with the suggestion of the Controller and Audit General of India. Accordingly, the said item has been reclassified in these financial statements.

Receivables (Note No. 6) include lease receivables representing the present value of future Lease Rentals receivables on the finance lease transactions entered into by the Company.

The lease agreement in respect of these assets is executed at the year-end based on the lease rentals and Implicit rate of return (IRR) with reference to average cost of annual incremental borrowings plus margin decided at that time. Any variation in the lease rental rate or the implicit rate of return for the year is accordingly adjusted at the year end.

Also, the execution of Lease Agreement for EBR IF 2017-18 is under process and the lease recievables have been recognised with effect from 24th March 2023.

Note 33.1

Company as a Lessee

The Company has lease contracts for office premises. The Company has recognised Right of Use Asset and Lease Liability for all the leases. Refer to Note 2.14 significant accounting policy on leases.

The escalation clause includes escalations generally ranging from 7% to 10%. Lease term includes the renewal term wherever the lessee has the option to renew the lease as it is reasonably certain for the lessee to exercise the option. However, the Company is not reasonably certain to exercise the termination option after the expiry of lock in period. There are no restrictions imposed by lease arrangements.

d. Director-General of GST Intelligence (DGGI), Chennai Zonal unit has served a show cause notice dated 16-4-2019 on the company alleging contravention of the provision of sec 67,68 and 70 of the Finance Act, 1994 by the company and as to why service tax of Rs26,537.65 million along with interest and penalty be not demanded from the company. The company has submitted reply against the Show Cause notice stating that there is no contravention of the provision of any of the above-stated section of the Finance Act, 1994. Against the reply given by the company, vide letter dt 21-10-20, Commissioner, CGST Delhi East, seeking comments given by the DGGI, Chennai Zonal unit and the company filed the counter comments to the department and the company is not liable to pay the tax. However, if any liability arises that would be recoverable from the Ministry of Railways, Government of India.

e. The disputed demand of tax including interest thereon for the AY 2015-16 was Rs. 9.48 million. Against the said demand, the company has filed a rectification application u/s 154. Based on the decisions of the Appellate Authority in similar matters and the interpretation of relevant provisions, the Company is confident that the demands will be either deleted or substantially reduced, and accordingly, no provision is considered necessary. However, the said demand of Rs.9.48 million has been adjusted by the department, out of the refund to IRFC for the AY 2016-17.

f. During the Financial year 2021-22, an intimation u/s 143(1) for AY 2019-20 was received from the CPC. In the said intimation, TDS credit has been short-granted by Rs. 1502.46 million despite it appearing in Form 26AS. Further Book Profit has been increased by Rs. 1462.42 million without any reason and additional tax and interest thereon has been raised. The demand of Rs. 2043.26 million has been adjusted against the refund claimed for AY 2020-21. Against the said demand issued by the CPC u/s 143 (1), an appeal was filed at CIT (A) on 28-1-2022, who has considered TDS credit which was short granted and also made an addition of Rs. 6135.12 million on account of income tax paid (the company has already added provision for tax in the computation of taxable income) and Rs. 154790.38 million on account of General reserves, etc, in book profit, against which the company has filed an appeal before the Honorable Income Tax Appellate Tribunal (ITAT) on 17-4-23 for the total addition of Rs. 162387.93 million. Pending disposal of the appeal, management is of the view that no provision is required.

g. Show cause notice (SCN) in Form GST DRC 01 was received from the office of the Assistant Commissioner, GST, Chennai on 283-23 for a demand of Rs. 2222.68 million related to ITC available in GSTR2A but not claimed (lapsed), ITC against RCM invoices paid and availed during the year FY 21-22, etc., along with interest and penalty thereon. Against the said SCN, the company had filed an online reply on 27-4-23 stating that ITC claimed as per GST rules and there is no interest and penalty applicable for the said transaction. Further, a personal hearing is scheduled by the authorities on 26-5-23 to explain the response submitted in this regard. Considering the personal hearing scheduled for said SCN and also sufficient ITC available in the Electronic Credit Ledger, management is of the view that no provision is required.

Note 36: Segment reporting

The Company has identified "Leasing and Finance"as its sole reporting segment. Thus, there is no inter-segment revenue and the entire revenue is presented in the statement of profit and loss is derived from external customers all of whom are domiciled in India, the Company''s country of domicile.

All non-current assets other than financial instruments are also located in India.

Note 38: Financial Instruments 38.1: Capital management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (Debt Securities & Borrowings as detailed in Note 15 & 16 offset by cash and bank balances as detailed in Note 3 ) and total equity of the Company.

38.2.2: Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair value have been derived, financial instruments are classified based on hierarchy of valuation techniques as explained below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices in markets that are not active) or indirectly (i.e. quoted prices for similar assets or liabilities);

Level 3: Inputs for the asset or liability that are not based on observable market data.

Set below is a comparison, by class, of the carrying amounts and fair value of the financial instruments. This table does not include the fair value of non-financial assets and non-financial liabilities.

Valuation technique used to determine fair value

For financial assets and financial liabilities that have a short term maturity (less than twelve months), the carrying amount which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and cash equivalents, balance other than cash and cash equivalents, trade payables, short term loans and borrowings.

The fair value of Investment in IRCON International Limited is measured as per the quoted on National Stock Exchange (Level 1 Input) as on 31 March 2023 and 31 March 2022.

Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required).

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.

38.3 Financial risk management

The Company''s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company''s focus is to ensure liquidity which is sufficient to meet the Company''s operational requirements. The Company monitors and manages key financial risks so as to minimise potential adverse effects on its financial Performance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarised ahead.

38.4: Market risk

Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Company use derivative instruments to manage market risk against the volatility in foreign exchange rates and interest rates in order to minimize their impact on its results and financial position. Company policy is not to utilize any derivative financial instruments for trading or speculative purposes.

In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

38.6: Interest rate risk management

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Company use financial instruments to manage its exposure to changing interest rates and to adjust its mix of fixed and floating interest rate debt on long-term debt.

The Company''s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/ lower and all other variables were held constant, the Company''s:

i) Profit for the year ended 31 March 2023 would decrease/increase by Rs. 10256.73 millions (31 March 2022: decrease/increase Rs. 9,318.74 millions). This is mainly attributable to the Company''s exposure to interest rates on its variable rate debt securities;

ii) Profit for the year ended 31 March 2023 would decrease/increase by Rs. 9926.92 millions (31 March 2022: decrease/increase Rs. 8,469.44 millions). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

Interest Rate Benchmark Reform:

Following the request received by the Financial Stability Board from the G20, a fundamental review and reform of the major interest rate benchmarks is underway across the world''s largest financial market, This reform was not contemplated when Ind AS 107 & Ind AS 109 were notified and consequently the Ministry of Corporate Affairs, Government of India has notified a set of temporary exceptions from applying specific hedge accounting requirements to provide clarifications on how the standard should be applied in these circumstances.

Following are the temporary exceptions provided from applying specific hedge accounting requirements:

(i) For assessing highly probable requirement for cash flow hedges: For the purpose of determining whether a forecast transaction (or a component thereof) is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

(ii) Reclassifying the amount accumulated in the cash flow hedge reserve: For the purpose of determining whether the hedged future cash flows are expected to occur, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

(iii) Assessing the economic relationship between the hedged item and the hedging instrument: An entity shall assume that the interest rate benchmark on which the hedged cash flows and/or the hedged risk (contractually or non-contractually specified) are based, or the interest rate benchmark on which the cash flows of the hedging instrument are based, is not altered as a result of interest rate benchmark reform.

(iv) Designating a component of an item as a hedged item: Subject to certain exemptions, for a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement - that the risk component shall be separately identifiable - only at the inception of the hedging relationship.

Under these temporary exceptions, interbank offered rates (IBORs) are assumed to continue unaltered for the purposes of hedge accounting until such time as the uncertainty is resolved. The application of this set of temporary exceptions is mandatory for accounting periods starting on after 1st April 2020. Significant judgements will be required in determining when uncertainty is expected to be resolved and therefore when the temporary exceptions will cease to apply. However, as at 31st March 2023, the uncertainty continued to exist and so the temporary exceptions apply to the Company''s hedge accounting relationships that reference benchmarks subject to reform or replacement.

The Company has cash flow and fair value hedge accounting relationships that are exposed to different IBORs, predominantly US dollar Libor and JPY Libor. The existing derivatives and some of the loans, bonds and other financial instruments designated in relationships referencing these benchmarks will transition to new risk - free rates (RFRs) in different ways and at different types. External progress on the transition to RFRs is being monitored, with the objective of ensuring a smooth transition for the Company''s hedge accounting relationship. The specific issues arising will vary with the details of each hedging relationship, but may arise due to the transition of existing products included in the designation, a change in expected volumes of products to be issued, a change in contractual terms of new products issued, or a combination of these factors. Some hedges may need to be de - designated and new relationships entered into, while others may survive the market - wide benchmark reforms.

The hedge accounting relationships that are affected by the adoption of the temporary exceptions are presented in the balance sheet in note 5, ‘Derivatives Financial Instruments''.

38.7: Other price risks

The Company has a small amount of investment in equity instruments, price risk of which is not considered material.

38.8: Credit risk management

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.

The Company consider the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse change in business.

(ii) Actual or expected significant changes in the operating results of the counterparty.

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligation.

(iv) Significant increase in credit risk and other financial instruments of the same counterparty.

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements.

Credit risk is managed through approvals, establishing credit limits, continuous monitoring of creditworthiness of customers to which the company grants credit terms in the normal course of business. The company also assesses the financial reliability of customers taking into account the financial condition, current economic trends and historical bad debts and ageing of accounts receivables.

The Company''s major exposure is from lease receivables from Ministry of Railways, Government of India and loans to Rail Vikas Nigam Limited and IRCON International Limited which are under the control of Ministry of Railways. There is no credit risk on lease receivables being due from sovereign. With respect to loan given to Rail Vikas Nigam Limited and IRCON International Limited, the company consider the Reserve Bank of India directions in terms of its circular no. RBI/2017-18/181_DNBR (PD) CC. No. 092/03.10.001/2017-18 dated 31-May-2018 read with letter no. DNRB (PD). CO.No.1271/03.10.001/2018-19 dated 21-December-2018, to be adequate compliance with the impairment norms as per Ind AS 109, Financial Instruments, as IRCON International Limited and Rail Vikas Nigam Limited, both, are under Ministry of Railways, Government of India and the Company do not expect any concern in the repayment of aforesaid loans.

38.9: Liquidity risk management

Liquidity risk is defined as the potential risk that the Company cannot meet the cash obligations as they become due.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company''s short, medium, and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Besides, there is a provision in the lease agreements with the Ministry of Railways (MOR) whereby MOR undertakes to provide lease rentals in advance (to be adjusted from future payments) in case the Company doesn''t have adequate liquidity to meet its debt service obligations.

(a) Lease rental is charged on the assets leased from the first day of the month in which the Rolling Stock assets have been identified and placed on line as per the Standard Lease Agreements executed between the Company and MOR from year to year.

(b) Ministry of Railways (MOR) charges interest on the value of the assets identified prior to the payments made by the Company, from the first day of the month in which the assets have been identified and placed on line to the first day of the month in which the money is paid to the MOR. However, no interest is charged from the MOR on the amount paid by the company prior to identification of Rolling stock by them.

(c) (i) Interest rate variation on the floating rate linked rupee borrowings and interest rate and exchange rate variations on interest

payments in the case of foreign currency borrowings are adjusted against the lease income/ pre-commencement lease income in terms of the variation clauses in the lease agreements for Rolling Stock/ memorandum of understanding (MoU) for funding of Infrastructure assets executed with the Ministry of Railways. During the year ended 31 March 2023, such differential has resulted in an amount of Rs. 17,928.97 millions refundable to the Company (31 March 2022: Rs. 684.66 millions refundable to MoR) which has been accounted for in the lease income/pre-commencement lease income.

(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause have been incorporated in the lease agreements specifying notional hedging cost adopted for working out the cost of funds on the leases executed with MOR. Hedging cost in respect of these foreign currency borrowings is compared with the amount recovered by the company on such account on notional cost basis and accordingly, the same is adjusted against the lease income. During the year ended 31 March 2023 in respect of these foreign currency borrowings, the Company has recovered a sum of Rs. 17,148.78 millions (31 March 2022: Rs.14,117.53 millions) on this account from MOR against a sum of Rs. Nil millions (31 March 2022 :Rs. NIL millions) incurred towards hedging cost and the balance amount of Rs. 17,148.78 millions (31 March 2022: Rs. 14,117.53 millions) is refundable to MOR.

(d) For computing the Lease Rental in respect of the rolling stock assets acquired and leased to the Ministry of Railways amounting to Rs. 1,66,341.94 millions during the year ended 31st March 2023 (Previous year ended 31 March 2022: Rs. 2,84,930.23 millions), the Lease Rental Rate and the Internal Rate of Return have been worked out with reference to the average cost of incremental borrowings made during the current year plus the margin equivalent to the margin as decided for the financial year 2022-23. The lease agreement in respect of these assets will be executed in due course of time.

(e) The Leases executed for Rolling Stock in the year 1992-93,1991-92, 1990-91, 1989-90 & 1988-89 for Rs. 9,618.24 millions, Rs. 15,004. 92 millions, Rs. 11,700.35 millions, Rs. 10,725.60 millions & Rs. 8607.27 millions have expired on 31 March 2023, 31 March 2022, 31 March 2021,31 March 2020 & 31 March 2019 respectively. During the primary and secondary lease periods full value of assets (including interest) has been recovered from the lessee ( MOR). These assets have outlived their useful economic life.

Note 42:

(a) (i) The Reserve Bank of India has issued Master Direction - Non- Banking Financial Company- Systemically Important Non Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions, 2016 vide notification DNBR. PD.008/03.10.119/2016-17 dated 1st September 2016 as amended from time to time have become mandatory with effect from 31 May, 2018. The Reserve Bank of India has granted exemption to the Company in respect of classification of asset, provisioning norms and credit concentration norms to the extent of direct exposure to sovereign.

(a) (ii) Till the financial year 2017-18, the Company, being a government NBFC, was exempt from creation and maintenance of Reserve Fund as specified u/s 45-IC of Reserve Bank of India Act, 1934. However, the said exemption has been withdrawn by the Reserve Bank of India (RBI) vide Notification No. DNBR (PD) CC.N0.092/0310.001/2017-18 dated 31st May 2018. Accordingly, the Company is now creating the Reserve Fund as required u/s 45IC of RBI Act, 1934, wherein at least 20% of net profit every year will be transferred before the declaration of dividend. No appropriation is allowed to be made from the reserve fund except for the purpose as may be specified by the Bank from time to time and further, any such appropriation is also required to be reported to the Bank within 21 days from the date of such withdrawal.

The Company created a reserve of Rs.12674.03 millions as on 31st March 2023 (Rs. 12179.67 in 31 March 2022) u/s 45IC.

Note 43:

i The Finance Act, 2001 provides for levy of service tax on the finance and interest charges recovered through lease rental instalments on the Financial Leases entered on or after 16-07-2001. The Central Government vide Order No.1/1/2003-ST dated 30 April 2003 and subsequent clarification dated 15-12-2006 issued by Ministry of Finance has exempted the Lease Agreements entered between the Company and Ministry of Railways from levy of Service Tax thereon u/s 93(2) of Finance Act, 1994.

ii The GST Council in their meeting held on 19 May, 2017 has exempted the services of leasing of assets (rolling stock assets including wagons, coaches, locos) by Indian Railways Finance Corporation to Indian Railways from the levy of Goods & Service Tax (GST), Notification No. 12/2017 (Heading 9973) which has been made applicable with effect from 1 July, 2017. Vide notification no. 07/2021 dated 30.09.2021 issued by Ministry of Finance, the said GST exemption on leasing of rolling stock by Indian Railways Finance Corporation to Indian Railways is withdrawn w.e.f. 01.10.2021

iii. The Company had deposited a sum of Rs.14,664.47 million towards GST under reverse charge mechanism for funds transferred to MoR for making payments on behalf of Company to contractors for construction of projects for the period November 2017 to June 2018. As opined by the tax consultant, the above transaction did not involve any supply from MoR to the company and accordingly, no GST under RCM was payable by the Company and hence, refund applications were filed with the GST department for the refund of said deposit of Rs 14,664.47 millions. However, vide orders dated 22-09-2020 and 30-09-2020, the said refund applications have been rejected by the additional commissioner (Department of Trade and Taxes), GNCT of Delhi. The Company has filed 6 appeals before first appellate authority through its attorney, New Delhi against the rejection of refund orders on 24 December 2020 and 29 December 2020.

In the ultimate event of non-admissibility of refund claims by the GST department, the amount would be adjusted by the Company against the GST liability on lease rentals from infrastructure assets to be lease to MoR or other GST liability in future.

Increase/(Decrease) in liability due to exchange rate variation on foreign currency loans for purchase of leased assets/creation of Infrastructure assets amounting to Rs. 42,651.63 millions (31 March 2022 : Rs. 11,188.84 million) has not been charged to the Statement of Profit and Loss as the same is recoverable from the Ministry of Railways (lessee) separately as per lease agreements in respect of rolling stock assets/memorandum of understanding (MoU) for funding of Infrastructure assets to be leased. The notional hedging cost on external commercial borrowings inbuilt into the Lease Rentals amounting to Rs. 817.80 millions (31 March 2022 : Rs. 16,441.20 millions) is refundable to Ministry of Railways for the year ended 31 March 2023 (Ref of Note 41 C (ii)). Further, a sum of Rs. NIL (31 March 2022 : Rs. 105.87 millions) has been recovered towards crystallised exchange rate variation on foreign currency loans repaid during the year ended 31st March 2023. The amount recoverable from MoR on account of exchange rate variation net of notional hedging cost and crystallised exchange rate variation is Rs. 69,844.62 million (31 March 2022: Rs. 11,448.24 million).

Effective portion of (loss)/gain on account of decrease/increase in the fair value of the derivative assets (hedging instruments) amounting to Rs.626.47 million (March, 2023),Rs.112.75 million (March 2022) classified as cash flow hedges has not been recognised in the other comprehensive income as the same is recoverable/refundable to the MOR (Lessee) since the derivatives have been contracted to hedge the financial risk of MOR (Lessee).

Note 45:

The Ministry of Railways (MOR) vide letter dated 23 July 2015 had authorized the Company to draw funds from Life Insurance Corporation of India (LIC) in consultation with MOR for funding of Railway Projects in line with finance leasing methodology adopted by Company for funding Railway Projects in past. In addition to funds raised from LIC, the Company has also funded MoR from other borrowings and internal accruals. Pending execution of the Lease Documents, the Company had entered into a Memorandum of Understanding with the Ministry of Railways on 23 May 2017 containing principal terms of the lease transactions. The Company has now entered a fresh Memorandum of Understanding with Ministry of Railways on 2 March 2021 superseding all earlier MoU/arrangement.

During FY 2021-22, the Lease Agreement(s) for Project assets funded under EBR IF 2015-16 and National Projects 2018-19 between MOR and the Company with respect to aforesaid infrastructure assets was executed on 28th March 2022. Similarly, during financial year 2022-23, the Lease Agreement(s) for EBR IF 2016-17 and National Projects 2019-20 between MOR and the Company with respect to infrastructure assets have been executed. Also, the Lease Agreement for EBR IF 2017-18 shall be executed and the lease recievables have been recognised with effect from 24th March 2023. The accounting as per Ind AS 116 has been carried out for the same during the current financial year.

During the year ended 31 March 2023 a sum of Rs. 91,664.39 millions (31 March 2022: Rs. 80,724.51 millions) incurred by the Company on account of interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the ''Project Infrastructure Asset under Finance Lease Arrangements-EBR-IF'' , ‘Project Infrastructure Asset under Finance Lease Arrangements-EBR Special'' and ''Advance funding against National Project''. The same would be recovered through lease rentals in future over the life of the leases as per lease agreement(s) to be entered. Details are as under:

i While reviewing the financial statements of previous financial year ended 31st March 2022, the Comptroller and Auditor General of India had opined that IndAS 116 is not applicable to ‘Project Infrastructure Assets under Finance Lease'' as there is no identifiable asset. The Company sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India which has affirmed that Ind AS 116 is applicable to ‘Project Infrastructure Assets under Finance Lease'' as there is an identifiable asset. Hence, the Company is continuing with its existing accounting treatment.

ii Ministry of Railways, Government of India is the Parent of the Company. The Company leases various assets including rolling stock, locomotives, project infrastructure assets such as railway tracks, signaling system, railways stations, bridges etc to Ministry of Railways under finance lease model as per IndAS 116. The computation of lease income requires estimation of a number of financial metrics such as source of borrowings, weighted average cost of capital, margin etc which is determined on a continuous basis in consultation with Ministry of Railways. At the time of finalization of these financial statements, few of these metrics may be in discussion with Ministry of Railways and yet to be finalized. In such cases these are computed by the Company on best estimate basis subject to change, when finalized by the Ministry of Railways.

iii The reconcilaition with the Ministry of Railways uptill FY 2021-22 has been completed. The reconcilation of balances with MoR as on 31st March 2023 will be carried out in due course after finalisation of accounts. The disbursement to MOR for project infrastructure assets for which Lease Agreements are yet to be executed is Rs. 19,19,607.60 millions against which utilistation of Rs.19,21,077.40 million has been received from MoR till 31st March 2022.

iv Estimation of uncertainty relating to the Global Health Pandemic COVID-I9

The outbreak of Coronavirus (COVID -19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity. The Company has adopted measures to curb the spread of infection in order to protect the health of our employees and ensure business continuity with minimal disruption

The Company has evaluated impact of this pandemic on its business operations and based on its review and current indicators of future economic conditions, there is no significant Impact on its financial results. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration and accordingly the impact may be different from that estimated as at the date of approval of these financial statements. The Company will continue monitoring any material changes to future economic conditions.

Note 47:

(a) The Company discharges its obligation towards payment of interest and redemption of bonds, for which warrants are issued, by depositing the respective amounts in the designated bank accounts. Reconciliation of such accounts is an ongoing process and has been completed upto 31 March 2023. The Company does not foresee any additional liability on this account. The total balance held in such specified bank accounts as on 31 March 2023 is Rs. 107.62 millions (31 March 2022: Rs. 117.62 millions)

(b) The Company is required to transfer any amount remaining unclaimed and unpaid in such interest and redemption accounts after completion of 7 years to Investor Education Protection Fund (IEPF) administered by the Ministry of Corporate Affairs, Government of India. During the year ended 31 March 2023, a sum of Rs.7.52 millions was deposited in IEPF (31 March 2022: Rs. 5.30 million)

Note 48:

The Company, in the earlier years, had executed Asset Securitisation Transactions by securitising an identified portion of future lease

rentals originating on its assets leased to Ministry of Railways. As part of the securitisation transaction, future lease rentals were

transferred to a bankruptcy remote Special Purpose Vehicle (SPV) which, in turn, issued Pass Through Certificates (PTCs) to the

investors. The lease receivables, accordingly, were derecognised in the books of account of the company.

In terms of the Reserve Bank of India (RBI) Guidelines on Minimum Retention Requirement issued by the Reserve Bank of India as applicable to the Non-Banking Finance Companies, the company being the originator, had opted to retain a minimum of 5% of the book value of the receivables being securitised. Accordingly, the Company had invested Rs. 169.77 millions in the Pass Through Certificates (PTCs) issued by the ‘Special Purpose Vehicle'' towards Minimum Retention Requirement. Out of the amount invested in Pass Through Certificates (PTCs), Rs. 169.77 millions have matured till 31 March 2023 ( 31 March 2022: Rs. 166.84 millions) leaving a balance of Rs. Nil millions ( 31 March 2022: 2.93 millions). Details of the amount invested in Pass Through Certificates (PTCs) and outstanding as on 31st March, 2023 is as follows

Note 49: Corporate Social Responsibility

As per Section 135 of the Companies Act 2013, the Company has established a Corporate Social Responsibility Committee. The Company has undertaken Corporate Social Responsibility activities during the year, which have been approved by the CSR Committee and are specified in Schedule VII of the Companies Act 2013.

In the year 2020-21, the Ministry of Corporate Affairs (MCA) issued the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the "Amendment"), and the effective date of the amendments to Section 135 of the Companies Act, as made by the Companies Amendment Act, 2019 and Companies Amendment Act, 2020, was notified as 22.01.2021. In accordance with the amendment under the said notifications, any unspent CSR amount, other than for any ongoing project, shall be transferred to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year. Any unspent amount pursuant to any ongoing project must be transferred to unspent CSR Account in any scheduled bank within a period of thirty days from the end of the financial year, to be utilised within a period of three financial years, failing which it shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year. Further, if the company spends an amount in excess of the requirement under statute, the excess amount may be set off for three succeeding financial years against the amount to be spent.

As the notification became effective during the FY 2020-21, the Company is complying with the amended provisions of Section 135 of the Companies Act, 2013 from the financial year 2021-22 onwards. Consequently, the Company has set aside provisions for an unspent amount related to ongoing projects totaling Rs.590.05 million for the FY 2022-23 (Rs.250.42 million in FY 2021-22).

(i) For the financial year ended 31.03.2023, the Company paid a gross amount of Rs.675.31 million (Rs.352.27 million relates to prior years), while for the year ended 31.03.2022, the Company paid a gross amount of Rs.700.30 million (Rs.250.12 million relates to prior years). The gross amount required to be spent for the year ended 31.03.2023 was Rs.913.10 million, for which the Board approved an amount of Rs.913.10 million, which includes Rs.590.05 million towards the CSR projects, Rs.303.05 million towards PM CARES, Rs.10 million each towards Swach Bharat Kosh and Clean Ganga Fund. For the year ended 31/03/2022, the gross amount required to be spent was Rs.700.60 million, for which the Board approved an amount of Rs.700.60 million, which includes Rs.261.55 million towards the CSR projects, Rs.389.05 million towards PM CARES, Rs.30 million towards Clean Ganga Fund, and Rs.20 million towards Swach Bharat Kosh.

As of 31.03.2023, the unspent CSR amount allocated towards various CSR Projects for the Financial Year(s) 2020-21,2021-22, and 2022-23 are Rs.158.92 million, Rs.178.76 million, and Rs.590.05 million, respectively.

53.2 Transaction with Government related entities

i. The Company is a Government related entity as 86.36% of equity shareholding of the Company is held by the President of India through Ministry of Railways, Government of India. The Company is also related to Rail Vikas Nigam Limited and IRCON International Limited which are also government related entities and with whom the Company has transactions. The Company has exempted from disclosure in para 25 of Ind AS 24, ''Related Party Transactions'' being a government related entity.

(ii) The company does not hold any Investment Property in its books of accounts, so fair valuation of investment property is not applicable.

(iii) During the year the company has not revalued any of its Property, plant and equipment.

(iv) During the year, the company has not revalued any of its Intangible assets.

(v) The company has not granted any loans or advances to promoters, directors, KMP''s and the related parties that are repayable on demand or without specifying any terms or period of repayment.

(vi) The company does not hold any Capital Work-in-Progress in its books of accounts, so ageing of Capital Work-in-Progress is not applicable.

(vii) The company does not hold any Intangible Assets under Development in its books of accounts, so ageing of Intangible Assets under Development is not applicable.

(viii) No proceedings have been initiated or pending against the company under the Benami Transactions (Prohibition) Act,1988.

(ix) The quarterly returns / statement of current assets filed by the company with banks / financial institutions are in agreement with the books of accounts.

(x) The company has not been declared as a wilful defaulter by any bank or financial institution or any other lender.

C) Risk Exposure in Derivatives (currency and interest rate derivatives)

Qualitative disclosure

The Company enters into derivatives for the purpose of hedging and not for trading/speculation purposes.

The Company has framed a risk management policy duly approved by the board in respect of its External Commercial Borrowings (ECBs). A risk management committee comprising the Managing Director and Director Finance has been formed to monitor, analyse and control the currency and interest rate risk in respect of ECBs.

The Company avails various derivative products like currency forwards, Cross Currency swap, Interest rate swap etc. for hedging the risks associated with its ECBs.

D) Derivative Instruments

The Company judiciously contracts financial derivative instruments in order to hedge currency and / or interest rate risk. All derivative transactions contracted by the Company are in the nature of hedging instruments with a defined underlying liability. The Company does not deploy any financial derivative for speculative or trading purposes.

(a) The Company uses foreign currency forward contracts to hedge its risk associated with foreign currency fluctuations in respect its External Commercial Borrowings.

(e) Securitization/Assignments

The Company has not entered into any securitization transaction during the year. However, the Company had entered into two securitization transactions in respect of its lease receivables from MoR on 25 January 2010 and 24 March 2011. As per IND AS 109, financial instruments, the gain on these transactions was recognised in the year of transactions, itself.

B) Detail of financial assets sold to securitisation/reconstruction company for asset reconstruction

Company has not sold any financial assets to Securitization / Reconstruction Company for asset construction during the year ended on 31 March 2023. (31 March 2022: Rs. NIL).

C) Detail of assignments transection undertaken by company

Company has not undertaken any assignment transaction during the year ended on 31 March 2023. (31 March 2022: Rs. NIL,).

(f) Details of non-Performing financial assets purchased or sold

Company has neither purchased nor sold any non-performing financial assets during the year ended on 31 March 2023. (31 March 2022: Rs. NIL)

(h) Details of financing of parent company product

The company has no parent company hence this detail is not applicable to company.

(i) Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC

The Reserve Bank of India has issued Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 vide notification no.DNBR.009/CGM(CDS)-2015 dated 27th March 2015. The Company, being a Government Company, these Directions, except the provisions contained in Paragraph 25 thereof, are not applicable to the Company.

Since the total impairment allowances under Ind AS 109 is equal to the total provisioning required under IRACP (including standard asset provisioning) as at 31 March 2023, no amount is required to be transferred to ‘Impairment Reserve''. The gross carrying amount of asset as per Ind AS 109 and Loss allowances (Provisions) thereon includes interest accrual on net carrying value of stage - 3 assets as permitted under Ind AS 109. While, the provisions required as per IRACP norms does not include any such interest as interest accrual on NPAs is not permitted under IRACP norms.

The balance in the ‘Impairment Reserve'' (as and when created) shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

(C) Disclosure of complaints

Please Refer Note No. 56(s)(VII).

(D) Corporate governance

Refer Annexure-II of Corporate Governance.

(E) Breach of covenant

Company has not defaulted in making repayment of loans or borrowing or in the payment of interest thereon from a Financial Institution, Banks or dues to debenture holders/bond holders or government as at Balance Sheet date. Further there are no instances of breach of covenant of loan availed or debt securities issued.

Note 61: Disclosure as per Ind AS 8 - ‘Accounting Policies, Changes in Accounting Estimates and Errors’

Recent accounting pronouncements

Standards / amendments issued but not yet effective:

The Ministry of Corporate Affairs ,vide notification dated 31 March 2023, has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 which amends certain accounting standards which are effective 1 April 2023. Below is a summary of such amendments:

Ind AS 1 - Presentation of Financial Statements

This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

This amendment has introduced a definition of ‘accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.

Ind AS 12 - Income Taxes

This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

The Company has evaluated the requirements of the above amendments and the effect on the financial statements is not material. Note 62:

a) Previous year figures have been regrouped/ rearranged, whenever necessary, in order to make them comparable with those of the current year.

---

Mar 31, 2022

Note 34: Contingent liabilities and Commitments Contingent liabilities a.
Particulars	As at	As at
	31 March 2022	31 March 2021
Claims against the Company not acknowledged as debt - Claims by bondholders in the consumer / civil courts	4.22	4.22

b. Claims against the Company not acknowledge as debt - relating to service matter pending in Hon''ble Supreme Court - amount not ascertainable.

c. The procurement/acquisition of assets leased out by the Company to the Indian Railways is done by Ministry of Railways (MOR), Government of India. As per the lease agreements entered into between the Company and MOR, the Sales Tax/ VAT liability, if any, on procurement/acquisition and leasing is recoverable from MOR. Since, there is no sales tax/ VAT demand and the amount is unascertainable, no provision is considered necessary.

d. Director-General of GST Intelligence (DGGI), Chennai Zonal unit has served a show cause notice dated 16-4-2019 on the company alleging contravention of the provision of sec 67,68 and 70 of the Finance Act, 1994 by the company and as to why service tax of Rs26,537.65 million along with interest and penalty be not demanded from the company. The company has submitted reply against the Show Cause notice stating that there is no contravention of the provision of any of the above-stated section of the Finance Act, 1994. Against the reply given by the company, vide letter dt 21-10-20, Commissioner, CGST Delhi East, seeking comments given by the DGGI, Chennai Zonal unit and the company filed the counter comments to the department and the company is not liable to pay the tax. However, if any liability arises that would be recoverable from the Ministry of Railways, Government of India.

e. The disputed demand of tax including interest thereon for the AY 2015-16 was Rs. 9.48 million. Against the said demand, the Company has filed a rectification application u/s 154. Based on the decisions of the Appellate Authority in similar matters and interpretation of relevant provisions, the Company is confident that the demands will be either deleted or substantially reduced, and accordingly, no provision is considered necessary. However, the said demand of Rs.9.48 million has been adjusted by the department, out of the refund to IRFC for the AY 2016-17.

f. The income tax assessment of the Company has been completed up to the AY 2019-20. During the year, an intimation u/s 143(1) for FY 2018-19 was received from the CPC . In the said intimation, TDS credit has been short granted by Rs.1502.46 million despite it appearing in Form 26AS. Further, the book profit has been increased by Rs.1,462.42 million without any reason and a demand of additional tax and interest thereon has been raised. The demand of Rs.2,043.26 million has been adjusted against the refund claimed for AY 2020-21. Against the said demand issued by the CPC u/s 143 (1), an appeal was filed at CIT (A) on 28 January 2022 for consideration of TDS credit and removal of additional demand, and also rectification application u/s 154 was filed on 1 February 2022 for consideration of TDS credit. Pending disposal of the appeal, management is of the view that no provision is required.

Note 36: Segment reporting

The Company has identified "Leasing and Finance"as its sole reporting segment. Thus, there is no inter-segment revenue and the entire revenue is presented in the statement of profit and loss is derived from external customers all of whom are domiciled in India, the Company''s country of domicile.

All non-current assets other than financial instruments are also located in India.

1. The discount rate is based on the prevailing market yield of India Government securities as at the balance sheet date for the estimated term of obligations.

2. The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and in the employment market.

3. The expected return is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (Debt Securities & Borrowings as detailed in Note 15 & 16 offset by cash and bank balances as detailed in Note 3 ) and total equity of the Company.

38.2.2: Fair value measurements

Fair value hierarchy

The Fair value hirarchy reflects the significance of the input used in making the measurements and hence the following levels:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices in markets that are not active) or indirectly (i.e. quoted prices for similar assets or liabilities);

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Valuation technique used to determine fair value

The Company maintains policies and procedures to value financials assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values:

The Company holds nominal Equity (less than 0.26%) in IRCON International Limited. The equity shares of IRCON International Limited were listed on National Stock Exchange (NSE) with effect from 28 September 2018. The Company had elected to classify its investment in IRCON International Limited as fair value through other comprehensive income(OCI). The fair value as on 31 March 2022, 31 March 2021 has been measured as per the quoted on National Stock Exchange (Level 1 Input).

Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required):

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.

38.3 Financial risk management

The Company''s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company''s focus is to ensure liquidity which is sufficient to meet the Company''s operational requirements. The Company monitors and manages key financial risks so as to minimise potential adverse effects on its financial Performance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarised ahead.

38.4: Market risk

"Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Company use derivative instruments to manage market risk against the volatility in foreign exchange rates and interest rates in order to minimize their impact on its results and financial position. Company policy is not to utilize any derivative financial instruments for trading or speculative purposes.

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

Foreign currency sensitivity analysis

The following table details the company''s sensitivity to a 10% increase and decrease in the INR against the relevant outstanding foreign currency denominated monetary items. 10% sensitivity indicates management''s assessment of the reasonable possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit or equity where Rupee appreciates 10% against the relevant currency. A negative number below indicates a decrease in profit or equity where the Rupee depreciates 10% against the relevant currency.

In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

38.6: Interest rate risk management

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Company use financial instruments to manage its exposure to changing interest rates and to adjust its mix of fixed and floating interest rate debt on long-term debt.

The Company''s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/ lower and all other variables were held constant, the Company''s:

i) Profit for the year ended 31 March 2022 would decrease/increase by Rs. 9318.74 millions (31 March 2021: decrease/increase Rs. 8,346.63 millions). This is mainly attributable to the Company''s exposure to interest rates on its variable rate debt securities;

ii) Profit for the year ended 31 March 2022 would decrease/increase by Rs. 8469.44 millions (31 March 2021: decrease/increase Rs. 5,590.55 millions). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

Interest Rate Benchmark Reform:

Following the request received by the Financial Stability Board from the G20, a fundamental review and reform of the major interest rate benchmarks is underway across the world''s largest financial market, This reform was not contemplated when Ind AS 107 & Ind AS 109 were notified and consequently the Ministry of Corporate Affairs, Government of India has notified a set of temporary exceptions from applying specific hedge accounting requirements to provide clarifications on how the standard should be applied in these circumstances.

Following are the temporary exceptions provided from applying specific hedge accounting requirements:

(i) For assessing highly probable requirement for cash flow hedges: For the purpose of determining whether a forecast transaction (or a component thereof) is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

(ii) Reclassifying the amount accumulated in the cash flow hedge reserve: For the purpose of determining whether the hedged future cash flows are expected to occur, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

(iii) Assessing the economic relationship between the hedged item and the hedging instrument: An entity shall assume that the interest rate benchmark on which the hedged cash flows and/or the hedged risk (contractually or non-contractually specified) are based, or the interest rate benchmark on which the cash flows of the hedging instrument are based, is not altered as a result of interest rate benchmark reform.

(iv) Designating a component of an item as a hedged item: Subject to certain exemptions, for a hedge of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the requirement - that the risk component shall be separately identifiable - only at the inception of the hedging relationship.

Under these temporary exceptions, interbank offered rates (IBORs) are assumed to continue unaltered for the purposes of hedge accounting until such time as the uncertainty is resolved. The application of this set of temporary exceptions is mandatory for accounting periods starting on after 1st April 2020. Significant judgements will be required in determining when uncertainty is expected to be resolved and therefore when the temporary exceptions will cease to apply. However, as at 31st March 2022, the uncertainty continued to exist and so the temporary exceptions apply to the Company''s hedge accounting relationships that reference benchmarks subject to reform or replacement.

The Company has cash flow and fair value hedge accounting relationships that are exposed to different IBORs, predominantly US dollar Libor and JPY Libor. The existing derivatives and some of the loans, bonds and other financial instruments designated in relationships referencing these benchmarks will transition to new risk - free rates (RFRs) in different ways and at different types. External progress on the transition to RFRs is being monitored, with the objective of ensuring a smooth transition for the Company''s hedge accounting relationship. The specific issues arising will vary with the details of each hedging relationship, but may arise due to the transition of existing products included in the designation, a change in expected volumes of products to be issued, a change in contractual terms of new products issued, or a combination of these factors. Some hedges may need to be de - designated and new relationships entered into, while others may survive the market - wide benchmark reforms.

The hedge accounting relationships that are affected by the adoption of the temporary exceptions are presented in the balance sheet in note 5, ‘Derivatives Financial Instruments''.

38.7: Other price risks

The Company has a small amount of investment in equity instruments, price risk of which is not considered material.

38.8: Credit risk management

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.

The Company consider the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse change in business.

(ii) Actual or expected significant changes in the operating results of the counterparty.

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligation.

(iv) Significant increase in credit risk and other financial instruments of the same counterparty.

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements.

Credit risk is managed through approvals, establishing credit limits, continuous monitoring of creditworthiness of customers to which the company grants credit terms in the normal course of business. The company also assesses the financial reliability of customers taking into account the financial condition, current economic trends and historical bad debts and ageing of accounts receivables.

The Company''s major exposure is from lease receivables from Ministry of Railways, Government of India and loans to Rail Vikas Nigam Limited and IRCON International Limited which are under the control of Ministry of Railways. There is no credit risk on lease receivables being due from sovereign. With respect to loan given to Rail Vikas Nigam Limited and IRCON International Limited, the company consider the Reserve Bank of India directions in terms of its circular no. RBI/2017-18/181_DNBR (PD) CC. No. 092/03.10.001/2017-18 dated 31-May-2018 read with letter no. DNRB (PD). CO.No.1271/03.10.001/2018-19 dated 21-December-2018, to be adequate compliance with the impairment norms as per Ind AS 109, Financial Instruments, as IRCON International Limited and Rail Vikas Nigam Limited, both, are under Ministry of Railways, Government of India and the Company do not expect any concern in the repayment of aforesaid loans.

38.9: Liquidity risk management

Liquidity risk is defined as the potential risk that the Company cannot meet the cash obligations as they become due.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company''s short, medium, and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Besides, there is a provision in the lease agreements with the Ministry of Railways (MOR) whereby MOR undertakes to provide lease rentals in advance (to be adjusted from future payments) in case the Company doesn''t have adequate liquidity to meet its debt service obligations.

38.10: Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The objective of hedges is to minimize the volatility of INR cash flows of highly probable forecast transaction.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

Note 41: Other Disclosures

(a) Lease rental is charged on the assets leased from the first day of the month in which the Rolling Stock assets have been identified and placed on line as per the Standard Lease Agreements executed between the Company and MOR from year to year.

(b) Ministry of Railways (MOR) charges interest on the value of the assets identified prior to the payments made by the Company, from the first day of the month in which the assets have been identified and placed on line to the first day of the month in which the money is paid to the MOR. However, no interest is charged from the MOR on the amount paid by the company prior to identification of Rolling stock by them.

(c) (i) Interest rate variation on the floating rate linked rupee borrowings and interest rate and exchange rate variations on interest

payments in the case of foreign currency borrowings are adjusted against the lease income/ pre-commencement lease income in terms of the variation clauses in the lease agreements for Rolling Stock/ memorandum of understanding (MoU) for funding of Infrastructure assets executed with the Ministry of Railways. During the year ended 31 March 2022, such differential has resulted in an amount of Rs. 1,453.75 millions refundable by the Company (31 March 2021: Rs. 1198.93 millions accruing to the Company) which has been accounted for in the lease income/pre-commencement lease income.

(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause have been incorporated in the lease agreements specifying notional hedging cost adopted for working out the cost of funds on the leases executed with MOR. Hedging cost in respect of these foreign currency borrowings is compared with the amount recovered by the company on such account on notional cost basis and accordingly, the same is adjusted against the lease income. During the year ended 31 March 2022 in respect of these foreign currency borrowings, the Company has recovered a sum of Rs. 14,117.53 millions (31 March 2021: Rs.5,254.72 millions) on this account from MOR against a sum of Rs. NIL millions (31 March 2021 :Rs. NIL millions) incurred towards hedging cost and the balance amount of Rs. 14,117.53 millions (31 March 2021: Rs. 5,254.72 millions) is refundable from MOR.

(d) For computing the Lease Rental in respect of the rolling stock assets acquired and leased to the Ministry of Railways amounting to Rs. 2,74,839.73 millions during the year ended 31st March 2022 (Previous year ended 31 March 2021: Rs. 2,85,610.85 millions), the Lease Rental Rate and the Internal Rate of Return have been worked out with reference to the average cost of incremental borrowings made during the current year plus the margin equivalent to the margin as decided for the financial year 2021-22. The lease agreement in respect of these assets will be executed in due course of time.

(a) (i) The Reserve Bank of India has issued Master Direction - Non- Banking Financial Company- Systemically Important Non Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions, 2016 vide notification DNBR. PD.008/03.10.119/2016-17 dated 1st September 2016 as amended from time to time have become mandatory with effect from 31 May 2018. The Reserve Bank of India has granted exemption to the Company in respect of classification of asset, provisioning norms and credit concentration norms to the extent of direct exposure to sovereign.

(a) (ii) Till the financial year 2017-18, the Company, being a government NBFC, was exempt from creation and maintenance of Reserve Fund as specified u/s 45-IC of Reserve Bank of India Act, 1934. However, the said exemption has been withdrawn by the Reserve Bank of India (RBI) vide Notification No. DNBR (PD) CC.NO.092/0310.001/2017-18 dated 31st May 2018. Accordingly, the Company is now creating the Reserve Fund as required u/s 45IC of RBI Act, 1934, wherein at least 20% of net profit every year will be transferred before the declaration of dividend. No appropriation is allowed to be made from the reserve fund except for the purpose as may be specified by the Bank from time to time and further, any such appropriation is also required to be reported to the Bank within 21 days from the date of such withdrawal.

The Company created a reserve of Rs.12179.67 millions as on 31st March 2022 (Rs. 8832.26 in 31 March 2021) u/s 45IC.

Note 43:

i The Finance Act, 2001 provides for levy of service tax on the finance and interest charges recovered through lease rental instalments on the Financial Leases entered on or after 16-07-2001. The Central Government vide Order No.1/1/2003-ST dated 30 April 2003 and subsequent clarification dated 15-12-2006 issued by Ministry of Finance has exempted the Lease Agreements entered between the Company and Ministry of Railways from levy of Service Tax thereon u/s 93(2) of Finance Act, 1994.

ii The GST Council in their meeting held on 19 May 2017 has exempted the services of leasing of assets (rolling stock assets including wagons, coaches, locos) by Indian Railways Finance Corporation to Indian Railways from the levy of Goods & Service Tax (GST), Notification No. 12/2017 (Heading 9973) which has been made applicable with effect from 1 July 2017. Vide notification no. 07/2021 dated 30.09.2021 issued by Ministry of Finance, the said GST exemption on leasing of rolling stock by Indian Railways Finance Corporation to Indian Railways is withdrawn w.e.f. 1 October 2021.

iii. The Company had deposited a sum of Rs.14,664.47 million towards GST under reverse charge mechanism for funds transferred to MoR for making payments on behalf of Company to contractors for construction of projects for the period from November 2017 to June 2018. As opined by the tax consultant, the above transaction did not involve any supply from MoR to the Company and accordingly, no GST under RCM was payable by the Company and hence, refund applications were filed with the GST department for the refund of the said deposit of Rs 14,664.47 millions. However, vide orders dated 22 September 2020 and 30 September 2020, the said refund applications have been rejected by the additional commissioner (Department of Trade and Taxes), GNCT of Delhi. The Company has filed 6 appeals before first appellate authority through its attorney, New Delhi against the rejection of refund orders on 24 December 2020 and 29 December 2020.

In the ultimate event of non-admissibility of refund claims by the GST department, the amount would be adjusted by the Company against the GST liability on lease rentals from infrastructure assets to be leased to MoR or other GST liability in future.

Increase/(Decrease) in liability due to exchange rate variation on foreign currency loans for purchase of leased assets/creation of Infrastructure assets amounting to Rs. 11,188.84 millions (31 March 2021 : (Rs. 3,009.70 million)) has not been charged to the Statement of Profit and Loss as the same is recoverable from the Ministry of Railways (lessee) separately as per lease agreements in respect of rolling stock assets/memorandum of understanding (MoU) for funding of Infrastructure assets to be leased. The notional hedging cost on external commercial borrowings inbuilt into the Lease Rentals amounting to Rs. 16,441.20 millions (31 March 2021 : Rs. 8,145.93 millions) is refundable to Ministry of Railways for the year ended 31 March 2022. Further, a sum of Rs. 105.87 Millions (31 March 2021 : Rs. 106.82 millions) has been recovered towards crystallised exchange rate variation on foreign currency loans repaid during the year ended 31st March 2022. The amount recoverable from MoR on account of exchange rate variation net of notional hedging cost and crystallised exchange rate variation is Rs. 11,448.24 million (31 March 2021: Rs. 5,796.59 million).

Effective portion of (loss)/gain on account of decrease/increase in the fair value of the derivative assets (hedging instruments) amounting to Rs. 112.75 million for the year ended 31st March 2022 (31st March 2021 : Rs.1,273.27 million) classified as cash flow hedges has not been recognised in the other comprehensive income as the same is recoverable/refundable to the MOR (Lessee) since the derivatives have been contracted to hedge the financial risk of MOR (Lessee).

Note 45:

The Ministry of Railways (MOR) vide letter dated 23 July 2015 had authorized the Company to draw funds from Life Insurance Corporation of India (LIC) in consultation with MOR for funding of Railway Projects in line with finance leasing methodology adopted by Company for funding Railway Projects in past. In addition to funds raised from LIC, the Company has also funded MoR from other borrowings and internal accruals. Pending execution of the Lease Documents, the Company had entered into a Memorandum of Understanding with the Ministry of Railways on 23 May 2017 containing principal terms of the lease transactions. The Company has now entered into a fresh Memorandum of Understanding with Ministry of Railways on 2 March 2021 superseding all te earlier MoU''s/ arrangement''s.

The Lease Agreement(s) for Project assets funded under EBR IF 2015-16 and National Projects 2018-19 between MOR and the Company with respect to aforesaid infrastructure assets have been executed on 28th March 2022. The accounting as per Ind AS 116 has been carried out for the same during the current financial year.

During the year ended 31 March 2022 a sum of Rs. 80,724.51 millions (31 March 2021: Rs. 64,704.73 millions) incurred by the Company on account of interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the ''Project Infrastructure Asset under Finance Lease Arrangements-EBR-IF'' , ‘Project Infrastructure Asset under Finance Lease Arrangements-EBR Special'' and ''Advance funding against National Project''. The same would be recovered through lease rentals in future over the life of the leases as per lease agreement(s) to be entered. Details are as under:

(b) Estimation of uncertainty relating to the Global Health Pandemic COVID-I9

The outbreak of Coronavirus (COVID -19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity. The Company has adopted measures to curb the spread of infection in order to protect the health of our employees and ensure business continuity with minimal disruption.

The Company has evaluated impact of this pandemic on its business operations and based on its review and current indicators of future economic conditions, there is no significant Impact on its financial results. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration and accordingly the impact may be different from that estimated as at the date of approval of these financial statements. The Company will continue monitoring any material changes to future economic conditions.

Note 47:

(a) The Company discharges its obligation towards payment of interest and redemption of bonds, for which warrants are issued, by depositing the respective amounts in the designated bank accounts. Reconciliation of such accounts is an ongoing process and has been completed upto 31 March 2022. The Company does not foresee any additional liability on this account. The total balance held in such specified bank accounts as on 31 March 2022 is Rs. 117.62 millions (31 March 2021: Rs. 86.90 millions).

(b) The Company is required to transfer any amount remaining unclaimed and unpaid in such interest and redemption accounts after completion of 7 years to Investor Education Protection Fund (IEPF) administered by the Ministry of Corporate Affairs, Government of India. During the year ended 31 March 2022, a sum of Rs.5.30 millions was deposited in IEPF (31 March 2021: Rs. 0.15 million)

Note 48:

The Company, in the earlier years, had executed Asset Securitisation Transactions by securitising an identified portion of future lease rentals originating on its assets leased to Ministry of Railways. As part of the securitisation transaction, future lease rentals were transferred to a bankruptcy remote Special Purpose Vehicle (SPV) which, in turn, issued Pass Through Certificates (PTCs) to the investors. The lease receivables, accordingly, were derecognised in the books of account of the company.

In terms of the Reserve Bank of India (RBI) Guidelines on Minimum Retention Requirement issued by the Reserve Bank of India as applicable to the Non-Banking Finance Companies, the company being the originator, had opted to retain a minimum of 5% of the book value of the receivables being securitised. Accordingly, the Company had invested Rs. 169.77 millions in the Pass Through Certificates (PTCs) issued by the ‘Special Purpose Vehicle'' towards Minimum Retention Requirement. Out of the amount invested in Pass Through Certificates (PTCs), Rs. 166.84 millions have matured till 31 March 2022 ( 31 March 2021: Rs. 157.63 millions) leaving a balance of Rs. 2.93 millions ( 31 March 2021: 12.14 millions). Details of the amount invested in Pass Through Certificates (PTCs) and outstanding as on 31st March 2022 is as follows:

As per Section 135 of Companies Act 2013 a Corporate Social responsibility Committee has been formed by the Company. During the year the Company has undertaken Corporate Social Responsibility activities as approved by the CSR Committee which are specified in Schedule VII of the Companies Act 2013.

Ministry of Corporate Affairs (MCA) has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 ("amendment") and had also notified the effective date as 22.01.2021 for the amendments of section 135 of the Companies Act made vide companies Amendment Act, 2019 and Companies Amendment Act, 2020.

In accordance with the amendment under the said notifications, any unspent CSR amount, other than for any ongoing project, shall be transferred to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year. Any unspent amount pursuant to any ongoing project must be transferred to unspent CSR Account in any scheduled bank within a period of thirty days from the end of the financial year, to be utilised within a period of three financial years, failing which it shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year. Further, if the company spends an amount in excess of the requirement under statute, the excess amount may be set off for three succeeding financial years against the amount to be spent.

The Company is complying with the aforesaid amended provisions of Section 135 of the Companies Act, 2013. Accordingly, the company created provision towards unspent amount for ongoing projects amounting to Rs.250.42 million for the FY 2021-22 (Rs. 197.71 million in FY 2020-21).

i) Gross amount paid by the company for the year ended 31.03.2022 is Rs 700.30 million (Rs. 250.12 million pertains to prior years) ; 31/03/2021 Rs. 729.18 million (Rs. 314.06 million pertains to prior years) ; Gross amount required to be spent for the year ended 31.03.2022 Rs.700.60 million against which the Board approved total CSR projects for amounting to Rs.700.60 million (As on 31/03/2021, Gross amount required to be spent by the company was Rs. 612.30 million against which the Board approved total CSR projects for amounting to Rs.612.83 million). As on 31.03.2022, CSR Unspent amount allocated towards various CSR Projects for the Financial Year(s) 2018-19, 2019-20, 2020-21 and 2021-22 are Rs.86.97 million, Rs. 96.12 million, Rs. 189.36 million and 250.42 million respectively.

53.2 Transaction with Government related entities

i. The Company is a Government related entity as the entire equity shareholding of the Company is held by the President of India through Ministry of Railways, Government of India. The Company is also related to Rail Vikas Nigam Limited and IRCON International Limited which are also government related entities and with whom the Company has transactions. The Company has exempted from disclosure in para 25 of Ind AS 24, ''Related Party Transactions'' being a government related entity.

C) Risk Exposure in Derivatives (currency and interest rate derivatives)

Qualitative disclosure

The Company enters into derivatives for the purpose of hedging and not for trading/speculation purposes.

The Company has framed a risk management policy duly approved by the board in respect of its External Commercial Borrowings (ECBs). A risk management committee comprising the Managing Director and Director Finance has been formed to monitor, analyse and control the currency and interest rate risk in respect of ECBs.

The Company avails various derivative products like currency forwards, Cross Currency swap, Interest rate swap etc. for hedging the risks associated with its ECBs.

D) Derivative Instruments

The Company judiciously contracts financial derivative instruments in order to hedge currency and / or interest rate risk. All derivative transactions contracted by the Company are in the nature of hedging instruments with a defined underlying liability. The Company does not deploy any financial derivative for speculative or trading purposes.

(e ) Securitization/Assignments

The Company has not entered into any securitization transaction during the year. However, the Company had entered into two securitization transactions in respect of its lease receivables from MoR on 25 January 2010 and 24 March 2011. As per IND AS 109, financial instruments, the gain on these transactions was recognised in the year of transactions, itself.

B) Detail of financial assets sold to securitisation/reconstruction company for asset reconstruction

Company has not sold any financial assets to Securitization / Reconstruction Company for asset construction during the year ended on 31 March 2022. (31 March 2021: Rs. NIL).

C) Detail of assignments transection undertaken by company

Company has not undertaken any assignment transaction during the year ended on 31 March 2022. (31 March 2021: Rs. NIL,).

(f) Details of non-Performing financial assets purchased or sold

Company has neither purchased nor sold any non-performing financial assets during the year ended on 31 March 2022. (31 March 2021: Rs. NIL)

(g) Exposures

(I): Exposure to real Estate sector

The Company does not have any exposure to real estate sector.

(h) Details of financing of parent company product

The company has no parent company hence this detail is not applicable to company.

(i) Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC

The Reserve Bank of India has issued Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 vide notification no.DNBR.009/CGM(CDS)-2015 dated 27th March 2015. The Company, being a Government Company, these Directions, except the provisions contained in Paragraph 25 thereof, are not applicable to the Company.

Since the total impairment allowances under Ind AS 109 is equal to the total provisioning required under IRACP (including standard asset provisioning) as at 31 March 2022, no amount is required to be transferred to ‘Impairment Reserve''. The gross carrying amount of asset as per Ind AS 109 and Loss allowances (Provisions) thereon includes interest accrual on net carrying value of stage - 3 assets as permitted under Ind AS 109. While, the provisions required as per IRACP norms does not include any such interest as interest accrual on NPAs is not permitted under IRACP norms.

The balance in the ‘Impairment Reserve'' (as and when created) shall not be reckoned for regulatory capital. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

As per RBI Notification No. RBI/2019-20/88 DOR.NBFC (PD) CC. NO. 102 /03.10.001/2019-20 DATED 4 November 2019 A “Significant counterparty” is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the NBFC-NDSI''s, NBFC-Ds total liabilities and 10% for other non-deposit taking NBFCs

Note 60:

a) Previous year figures have been regrouped/ rearranged, whenever necessary, in order to make them comparable with those of the current year.

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Mar 31, 2021

b. Claims against the Company not acknowledged as debt - relating to service matter pending with Hon’ble Supreme Court - amount not ascertainable.

c. The procurement/acquisition of assets leased out by the Company to the Indian Railways is done by Ministry of Railways (MOR), Government of India. As per the lease agreements entered into between the Company and MOR, the Sales Tax/ VAT liability, if any, on procurement/acquisition and leasing is recoverable from MOR. Since, there is no sales tax/ VAT demand and the amount is unascertainable, no provision is considered necessary.

d. Director-General of GST Intelligence (DGGI), Chennai Zonal unit has served a show cause notice dated 16-4-2019 on the company alleging contravention of the provision of sec 67,68 and 70 of the Finance Act, 1994 by the company and as to why service tax of H 26,537.65 million along with interest and penalty be not demanded from the company. The company has submitted reply against the Show Cause notice stating that there is no contravention of the provision of any of the above-stated section of the Finance Act, 1994. Against the reply given by the company, vide letter dt 21-1020, Commissioner, CGST, Delhi East, seeking comments given by the DGGI, Chennai Zonal unit and the company filed the counter comments to the department and the company is not liable to pay the tax. However, if any liability arises that would be recoverable from the Ministry of Railways, Government of India.

e. The income tax assessments of the Company have been completed up to the Assessment Year 2018-19. The disputed demand of tax including interest thereon for the AY 2015-16 was H 9.48 million. Against the said demand, the company has filed a rectification application u/s 154. Based on the decisions of the Appellate Authority in similar matters and interpretation of relevant provisions, the Company is confident that the demands will be either deleted or substantially reduced, and accordingly, no provision is considered necessary. However, the said demand of H 9.48 million has been adjusted by the department, out of the refund to IRFC for the AY 2016-17.

Note 36: Segment reporting

The Company has identified “Leasing and Finance”as its sole reporting segment. Thus, there is no inter-segment revenue and the entire revenue is presented in the statement of profit and loss is derived from external customers all of whom are domiciled in India, the Company’s country of domicile.

All non-current assets other than financial instruments are also located in India.

The Company derives more than 10% of its revenue from a single customer (ie. Ministry of Railways , Government of India (MOR) and entities under the control of MOR). The break up of the revenue is as under:

1. The discount rate is based on the prevailing market yield of India Government securities as at the balance sheet date for the estimated term of obligations.

2. The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and in the employment market.

3. The expected return is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

M) These plans typically expose the Company to Actuarial Risks such as Investment Risk, Liquidity Risk, Market Risk and Legislative Risk.
Actuarial Risk	It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons: Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected. Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
Investment Risk	For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Liquidity Risk	Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.
Market Risk	Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Legislative Risk	Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

L) These plans typically expose the Company to actuarial risks such as Investment Risk, Liquidity Risk and Market Risk.
Actuarial Risk	It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons: Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected. Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the leave benefit will be paid earlier than expected. The acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the leave benefit will be paid earlier than expected. The impact of this will depend on the relative values of the assumed salary growth and discount rate. Variability in availment rates: If actual availment rates are higher than assumed availment rate assumption then leave balances will be utilised earlier than expected. This will result in reduction in leave balances and Obligation.
Investment Risk	For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Liquidity Risk	Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.
Market Risk	Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

L) These plans typically expose the Company to actuarial risks such as Investment Risk, Liquidity Risk and Market Risk.
Actuarial Risk	It is the risk that benefits will cost more than expected.This can arise due to one of the following reasons: Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected. Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Employees'' Family Benefit Scheme will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Employees'' Family Benefit Scheme will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
Investment Risk	For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
Liquidity Risk	Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cashflows.
Market Risk	Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Legislative Risk	Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

38.1: Capital management

The Company manages its capital to ensure that the Company will be able to continue as going concern while maximizing the return to shareholders and also complying with the ratios stipulated in the loan agreements through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (Debt Securities & Borrowings as detailed in Note 15 & 16 offset by cash and bank balances as detailed in Note 3 ) and total equity of the Company.

The Company is not subject to any externally imposed capital requirements.

38.2.2: Fair value measurements Fair value hierarchy

The fair value hierarchy reflects the significance of the inputs used in making the measurements and has the following levels:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices in markets that are not active) or indirectly (i.e. quoted prices for similar assets or liabilities); Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Valuation technique used to determine fair value

The Company maintains policies and procedures to value financials assets or financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values:

The Company holds nominal Equity (less than 0.26%) in IRCON International Limited. The equity shares of IRCON International Limited were listed on National Stock Exchange (NSE) with effect from 28 September 2018. The Company had elected to classify its investment in IRCON International Limited as fair value through other comprehensive income(OCI). The fair value as on 31 March 2021, 31 March 2020, 1st April 2019 has been measured as per the quoted on National Stock Exchange (Level 1 Input).

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate to their fair values.

38.3 Financial risk management

The Company’s activities expose it to a variety of financial risks which includes market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company’s focus is to ensure liquidity which is sufficient to meet the Company’s operational requirements. The Company monitors and manages key financial risks so as to minimise potential adverse effects on its financial Proformance. The Company has a risk management policy which covers the risks associated with the financial assets and liabilities. The details for managing each of these risks are summarised ahead.

38.4: Market risk

Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market prices.The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Company use derivative instruments to manage market risk against the volatility in foreign exchange rates and interest rates in order to minimize their impact on its results and financial position. Company policy is not to utilize any derivative financial instruments for trading or speculative purposes.

38.5: Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

Foreign currency sensitivity analysis

The following table details the company’s sensitivity to a 10% increase and decrease in the INR against the relevant outstanding foreign currency denominated monetary items. 10% sensitivity indicates management’s assessment of the reasonable possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit or equity where Rupee appreciates 10% against the relevant currency. A negative number below indicates a decrease in profit or equity where the Rupee depreciates 10% against the relevant currency.

38.6: Interest rate risk management

The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Company use financial instruments to manage its exposure to changing interest rates and to adjust its mix of fixed and floating interest rate debt on long-term borrwing.

The Company’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/ lower and all other variables were held constant, the Company’s:

i) Profit for the year ended 31 March 2021 would decrease/increase by H 8,346.63 millions (31 March 2020: decrease/ increase H 6,972.21 millions). This is mainly attributable to the Company’s exposure to interest rates on its variable rate debt securities;

ii) Profit for the year ended 31 March 2021 would decrease/increase by H 5,590.55 million (31 March 2020: decrease/ increase H 3,253.53 millions). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings.

Interest Rate Benchmark Reform:

Following the request received by the Financial Stability Board from the G20, a fundamental review and reform of the major interest rate benchmarks is underway across the world’s largest financial market, This reform was not contemplated when Ind AS 107 & Ind AS 109 were notified and consequently the Ministry of Corporate Affairs, Government of India has notified a set of temporary exceptions from applying specific hedge accounting requirements to provide clarifications on how the standard should be applied in these circumstances.

Following are the temporary exceptions provided from applying specific hedge accounting requirements:

(i) For assessing highly probable requirement for cash flow hedges: For the purpose of determining whether a forecast transaction (or a component thereof) is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

(ii) Reclassifying the amount accumulated in the cash flow hedge reserve: For the purpose of determining whether the hedged future cash flows are expected to occur, an entity shall assume that the interest rate benchmark on which the hedged cash flows (contractually or non-contractually specified) are based is not altered as a result of interest rate benchmark reform.

(iii) Assessing the economic relationship between the hedged item and the hedging instrument: An entity shall assume that the interest rate benchmark on which the hedged cash flows and/or the hedged risk (contractually or non-contractually specified) are based, or the interest rate benchmark on which the cash flows of the hedging instrument are based, is not altered as a result of interest rate benchmark reform.

(iv) Designating a component of an item as a hedged item: Subject to certain exemptions, for a hedge of a noncontractually specified benchmark component of interest rate risk, an entity shall apply the requirement - that the risk component shall be separately identifiable - only at the inception of the hedging relationship.

Under these temporary exceptions, interbank offered rates (IBORs) are assumed to continue unaltered for the purposes of hedge accounting until such time as the uncertainty is resolved. The application of this set of temporary exceptions is mandatory for accounting periods starting on or after 1st April 2020. Significant judgements will be required in determining when uncertainty is expected to be resolved and therefore when the temporary exceptions will cease to apply. However, as at 30th September 2020, the uncertainty continued to exist and so the temporary exceptions apply to the Company’s hedge accounting relationships that reference benchmarks subject to reform or replacement.

The Company has cash flow and fair value hedge accounting relationships that are exposed to different IBORs, predominantly US dollar LIBOR and JPY LIBOR. The existing derivatives and some of the loans, bonds and other financial instruments designated in relationships referencing these benchmarks will transition to new risk - free rates (RFRs) in different ways and at different types. External progress on the transition to RFRs is being monitored, with the objective of ensuring a smooth transition for the Company’s hedge accounting relationship. The specific issues arising will vary with the details of each hedging relationship, but may arise due to the transition of existing products included in the designation, a change in expected volumes of products to be issued, a change in contractual terms of new products issued, or a combination of these factors. Some hedges may need to be de - designated and new relationships entered into, while others may survive the market - wide benchmark reforms.

The hedge accounting relationships that are affected by the adoption of the temporary exceptions are presented in the balance sheet in note 5, ‘Derivatives Financial Instruments’.

38.7: Other price risks

The Company has a small amount of investment in equity instruments, price risk of which is not considered material. 38.8: Credit risk management

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, current economic trends, and analysis of historical bad debts and ageing of accounts receivable.

The Company considers the probability of default upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is significant increase in credit risk, it considers reasonable and supportive forward looking information such as:

(i) Actual or expected significant adverse change in business.

(ii) Actual or expected significant changes in the operating results of the counterparty.

(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty’s ability to meet its obligation.

(iv) Significant increase in credit risk and other financial instruments of the same counterparty.

(v) Significant changes in the value of collateral supporting the obligation or in the quality of third party guarantees or credit enhancements.

Credit risk is managed through approvals, establishing credit limits, continuous monitoring of creditworthiness of customers to which the company grants credit terms in the normal course of business. The company also assesses the financial reliability of customers taking into account the financial condition, current economic trends and historical bad debts and ageing of accounts receivables.

The Company’s major exposure is from lease receivables from Ministry of Railways, Government of India and loans to Rail Vikas Nigam Limited and IRCON International Limited which are under the control of Ministry of Railways. There is no credit risk on lease receivables being due from sovereign. With respect to loan given to Rail Vikas Nigam Limited and IRCON International Limited, the company considers the Reserve Bank of India directions in terms of its circular no. RBI/2017-18/181_DNBR (PD) CC. No. 092/03.10.001/2017-18 dated 31-May-2018 read with letter no. DNRB (PD). CO.No.1271/03.10.001/2018-19 dated 21-December-2018, to be adequately compliant with the impairment norms as per Ind AS 109, Financial Instruments, as IRCON International Limited and Rail Vikas Nigam Limited, both, are under Ministry of Railways, Government of India and the Company does not expect any concern in the repayment of aforesaid loans.

38.9: Liquidity risk management

Liquidity risk is defined as the potential risk that the Company cannot meet the cash obligations as they become due.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the company’s short, medium, and longterm funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Besides, there is a provision in the lease agreements with the Ministry of Railways (MOR) whereby MOR undertakes to provide lease rentals in advance (to be adjusted from future payments) in case the Company doesn’t have adequate liquidity to meet its debt service obligations.

Liquidity and interest risk tables

The following tables detail the company’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the company may be required to pay.

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The objective of hedges is to minimize the volatility of INR cash flows of highly probable forecast transaction.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

(a) Lease rental is charged on the assets leased from the first day of the month in which the Rolling Stock assets have been identified and placed on line as per the Standard Lease Agreements executed between the Company and MOR from year to year.

(b) Ministry of Railways (MOR) charges interest on the value of the assets identified prior to the payments made by the Company, from the first day of the month in which the assets have been identified and placed on line to the first day of the month in which the money is paid to the MOR. However, no interest is charged from the MOR on the amount paid by the company prior to identification of Rolling stock by them.

(c) (i) Interest rate variation on the floating rate linked rupee borrowings and interest rate and exchange rate variations

on interest payments in the case of foreign currency borrowings are adjusted against the lease income/ precommencement lease income in terms of the variation clauses in the lease agreements for Rolling Stock/ memorandum of understanding (MoU) for funding of Infrastructure assets executed with the Ministry of Railways. During the year ended 31 March 2021, such differential has resulted in an amount of H 1,198.93 millions refundable by the Company (31 March 2020: H 583.35 millions, 1 April 2019: H 707.98 millions accruing to the Company) which has been accounted for in the lease income/pre-commencement lease income.

(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause have been incorporated in the lease agreements specifying notional hedging cost adopted for working out the cost of funds on the leases executed with MOR. Hedging cost in respect of these foreign currency borrowings is compared with the amount recovered by the company on such account on notional cost basis and accordingly, the same is adjusted against the lease income. During the year ended 31 March 2021 in respect of these foreign currency borrowings, the Company has recovered a sum of H 5,254.72 millions (31 March 2020: H 4344.84 millions, 1 April 2019: H 2,269.78 millions) on this account from MOR against a sum of H NIL millions (31 March 2020 :H NIL millions, 1 April 2019: H 1,732.43 millions) incurred towards hedging cost and the balance amount of H 5,254.72 millions (31 March 2020: H 4344.84 millions, 1 April 2019: H 537.35 millions) is refundable to MOR.

(d) For computing the Lease Rental in respect of the rolling stock assets acquired and leased to the Ministry of Railways amounting to H 2,85,610.85 millions during the year ended 31st March 2021 (Previous year ended 31 March 2020: H 3,35,441.09 millions, 1 April 2019: H 2,40,550.85 millions), the Lease Rental Rate and the Internal Rate of Return have been worked out with reference to the average cost of incremental borrowings made during the current year plus the margin equivalent to the previous year. The lease agreement in respect of these assets will be executed at the year end based on the lease rentals and IRR with reference to average cost of annual incremental borrowings during the year plus margin decided at that time. Any variation in the lease rental rate or the internal rate of return for the year will be accordingly adjusted at the year end.

(e) The Leases executed for Rolling Stock in the year 1990-91, 1989-90 ,1988-89 & 1987-88 for H 11,700.35 millions, H 10,725.60 millions, H 8607.27 millions & H 7,703.27 millions have expired on 31 March 2021, 31 March 2020, 31 March 2019 & 31 March 2018 respectively. During the primary and secondary lease periods full value of assets (including interest) has been recovered from the lessee ( MOR). These assets have outlived their useful economic life. Formalities for the transfer of these assets to MOR are under progress and neccessary adjustments in the accounts if required, will be carried out on transfer of Rolling Stock to MOR.

Note 42:

(a) (i) The Reserve Bank of India has issued Master Direction - Non- Banking Financial Company- Systemically Important

Non Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions, 2016 vide notification DNBR.PD.008/03.10.119/2016-17 dated 1st September 2016 as amended from time to time have become mandatory with effect from 31 May 2018. The Reserve Bank of India has granted exemption to the Company in respect of classification of asset, provisioning norms and credit concentration norms to the extent of direct exposure to sovereign.

(ii) Till the financial year 2017-18, the Company, being a government NBFC, was exempt from creation and maintenance of Reserve Fund as specified u/s 45-IC of Reserve Bank of India Act, 1934. However, the said exemption has been withdrawn by the Reserve Bank of India (RBI) vide Notification No. DNBR (PD) CC.NO.092/0310.001/2017-18 dated 31st May 2018. Accordingly, the Company is now creating the Reserve Fund as required u/s 45IC of RBI Act, 1934, wherein at least 20% of net profit every year will be transferred before the declaration of dividend. No appropriation is allowed to be made from the reserve fund except for the purpose as may be specified by the Bank from time to time and further, any such appropriation is also required to be reported to the Bank within 21 days from the date of such withdrawal. The Company created a reserve of H 8,832.26 millions for the year ended 31st March 2021 u/s 45IC.

(b) In terms of the Ministry of Corporate Affairs circular dated 18th April 2002, the Company, being a Non-Banking Finance Company registered with RBI, is required to create Bond Redemption Reserve equivalent to 50% of the value of the bonds raised through Public issue by the redemption date of such Bonds. Subsequently, the requirement for creation of Bond Redemption Reserve in case of Public Issue of bonds by Non-Banking Finance Company registered with RBI was brought down to 25% by MCA vide their circular dated 11th February 2013. Further, the Companies (Share Capital and Debentures) Rules, 2014 dated 3rd April 2014 also mandates the Non- Banking Finance Companies registered with RBI to create Bond Redemption Reserve equivalent to 25% of the value of the Bonds raised through public issue by the redemption dates of such bonds. Accordingly, the Company was required to transfer 50% of the value of the bonds raised through public issue during FY 2011-12 and 25% of the value of Bonds raised through Public Issue during 2012-13, FY 2013-14 and FY 2015-16 to Bond Redemption Reserve by the redemption dates of such Bonds. The Company has raised H 2,48,816.74 millions through public issue of bonds in FY 2011-12, FY 2012-13, FY 2013-14 and FY 2015-16. The average residual maturity of the above mentioned bonds is more than 7 years as on 31st March 2019. The Company had transferred an amount of H 57,145.59 millions to the Bond Redemption Reserve till the end of F.Y. 201819.

The Ministry of Corporate Affairs has notified the Companies (Share Capital and Debentures) Amendments Rules, 2019 on 16th August, 2019 which exempts NBFC listed companies registered with Reserve Bank of India u/s 45-IA of the RBI Act, 1934 from creation of Debenture Redemption reserve. Accordingly, the balance outstanding against Bond Redemption Reserve as on 31st March 2019 amounting to H 57,145.59 million has been transferred to retained earnings.

(c ) The Comptroller & Auditor General of India (C&AG) during the course of their supplementary review of accounts for the Financial year 2018-19 had made an observation that the ‘Advance against the Railway infrastructure Assets to be leased.’ should have been classified under other non financial assets. Based on the reply furnished by the Company, the C&AG had decided to drop the observation. However, as agreed, during the course of discussion with the C&AG, it was decided to refer the aforesaid matter to the Expert Advisory Committee(EAC) of the Institute of Chartered Accountants of India(ICAI) for an expert opinion. The EAC, ICAI has since furnished its opinion and upheld the accounting classification of ‘Advance against the Railway infrastructure Assets to be leased.’ as other financial assets currently being shown by the Company in the financial statements

Note 43:

i The Finance Act, 2001 provides for levy of service tax on the finance and interest charges recovered through lease rental installments on the Financial Leases entered on or after 16 July 2001. The Central Government vide Order No.1/1/2003-ST dated 30 April 2003 and subsequent clarification dated 15 December 2006 issued by Ministry of Finance has exempted the Lease Agreements entered between the Company and Ministry of Railways from levy of Service Tax thereon u/s 93(2) of Finance Act, 1994.

ii The GST Council in their meeting held on 19 May, 2017 has exempted the services of leasing of assets (rolling stock assets including wagons, coaches, locos) by Indian Railways Finance Corporation to Indian Railways from the levy of Goods & Service Tax (GST), Notification No. 12/2017 (Heading 9973) which has been made applicable with effect from 1 July 2017.

iii. The Company had deposited a sum of H 14,664.47 million towards GST under reverse charge mechanism for funds transferred to MoR for making payments on behalf of Company to contractors for construction of projects for the period November 2017 to June 2018. As opined by the tax consultant, the above transaction did not involve any supply from MoR to the company and accordingly, no GST under RCM was payable by the Company and hence, refund applications were filed with the GST department for the refund of said deposit of H 14,664.47 millions. However, vide orders dated 22 September 2020 and 30 September 2020, the said refund applications have been rejected by the additional commissioner (Department of Trade and Taxes), GNCT of Delhi. The Company has filed 6 appeals before first appelate authority through its attorney, New Delhi against the rejection of refund orders on 24 December 2020 and 29 December 2020.

In the ultimate event of non-admissibility of refund claims by the GST department, the amount would be adjusted by the Company against the GST liability on lease rentals from infrastructure assets to be lease to MoR or other GST liability in future.

Further, an amount of H 6,32,384.00 million was transferred to MoR between July 2018 and March 2021 for making payments on behalf of Company to the contractors for construction of projects. GST under RCM of H 75,886.08 million thereon has not been deposited as the funds transfer does not involve any supply from MOR as per the opinion of GST consultant.

Note 44:

Increase/(Decrease) in liability due to exchange rate variation on foreign currency loans for purchase of leased assets/ creation of Infrastructure assets amounting to (H 3,009.70 millions) (31 March 2020 : H 16,784.85 million, 1 April, 2019: H 2,670.04 millions) has not been charged to the Statement of Profit and Loss as the same is recoverable from the Ministry of Railways (lessee) separately as per lease agreements in respect of rolling stock assets/memorandum of understanding (MoU) for funding of Infrastructure assets to be leased. The notional hedging cost on external commercial borrowings inbuilt into the Lease Rentals amounting to H 8,145.93 millions (31 March 2020 : H 4,344.84 millions, 1 April 2019: H 537.35 millions) is refundable to Ministry of Railways for the year ended 31 March 2021 (Ref of Note 41 C (ii)). Further, a sum of H 106.82 Millions (31 March 2020 : H 92.86 million, 1 April 2019: H 2,664.02 million) has been recovered towards crystallised exchange rate variation on foreign currency loans repaid during the year ended 31st March 2021. The amount recoverable from MoR on account of exchange rate variation net of notional hedging cost and crystallised exchange rate variation is H 5,796.59 million (31 March 2020: H 17,059.04 million, 1st April 2019: H 4,711.88 million).

Effective portion of (loss)/gain on account of decrease/increase in the fair value of the derivative assets (hedging instruments) amounting to H 1,273.27 million (March, 2021),( H (1441.83) million) (March 2020), ((H 501.57) millions) (April 2019) classified as cash flow hedges has not been recognised in the other comprehensive income as the same is recoverable/refundable to the MOR (Lessee) since the derivatives have been contracted to hedge the financial risk of MOR (Lessee).

Note 45:

The Ministry of Railways (MOR) vide letter dated 23 July 2015 had authorized the Company to draw funds from Life Insurance Corporation of India (LIC) in consultation with MOR for funding of Railway Projects in line with finance leasing methodology adopted by Company for funding Railway Projects in past. In addition to funds raised from LIC, the Company has also funded MoR from other borrowings and internal accruals. Pending execution of the Lease Documents, the Company had entered into a Memorandum of Understanding with the Ministry of Railways on 23 May 2017 containing principal terms of the lease transactions. The Company has now entered a fresh Memorandum of Understanding with Ministry of Railways on 2 March 2021 superseding all earlier MoU/arrangement.

The total sum of H 11,54,949.70 millions disbursed to MOR till the end of 31 March 2021 (31 March 2020 :H 9,36,552.90 millions, 1 April 2019 : H 5,97,152.90 million) is recognised as ‘Advance against Railway Infrastructure Assets to be Leased’.

During the year ended 31 March 2021 a sum of H 58,203.09 millions (31 March 2020: H 42,706.88 millions, 31st March 2019 : H 27,283.86 millions) incurred by the Company on account of interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the Advance paid against Infrastructure assets to be leased out to MOR.

Further, during the current year ended 31 March 2021, in addition to above, the Company has also disbursed H 5,05,509.51 millions to MOR in line with the aforesaid finance leasing methodology for Railway Infrastructure Projects under a similar arrangement and recognised as ‘Advance against Railway Infrastructure Assets -Special - to be leased’. The Company capitalised therein a sum of H 1,578.88 millions on account of interest cost on the funds borrowed for the purpose of making aforesaid advance.

The Company is now in receipt of certain information and details of the utilization of advance to MOR for creation of infrastructure assets to be leased for which advance funding has been made to MOR as mentioned above. As per these details certain infrastructure projects have been completed and already commissioned by MoR. Complete information/details are being sought from MoR. These are still awaited. Pending above information & based on the utilization details, the Company has transferred H 13,07,795.17 millions from ‘Advance against Railway Infrastructures EBR-IF Projects to be leased’ and H 5,07,088.39 millions for ‘Advance against Railway Infrastructures Projects - Special -to be Leased’ to ‘Project Infrastructure Asset under lease arrangement EBR-IF’ and “Project Infrastructure Asset under lease arrangement EBR Special”, respectively. Project Infrastructure asset under lease arrangements EBR-IF & EBR-S is measured at amount transferred for advance against railway infrastructure projects EBR-IF/EBR-S to be leased, subject to adjustment of Input Tax Credit under GST and actual utilization by MOR.

The requisite Lease Agreement(s) between MOR and the Company with respect to aforesaid infrastructure assets is (are) yet to be executed as certain key terms and conditions are being finalised. The accounting as per Ind AS 116, Leases and other applicable Ind AS can be proceeded with only on execution of lease agreement(s). On application of Ind AS 116 / other applicable standards, there will be accounting and disclosure implications in the financial statements. In the absence of complete information / details as mentioned above, the impact whereof on these financial statements presently cannot be ascertained. The Company expects to execute necessary agreements / documents within the current financial year.

In respect of National Project, a total sum of H 84,815.82 millions disbursed to MoR under finance lease methodology till the end of 31 March 2021 ( 31 March 2020: 79,884.94 millions, 1 April 2019 : H 50,828.17 milions) has been shown as ‘Advance funding against National Project’ on which a sum of H 4,930.88 millions (31 March 2020: 4,056.77 millions, 1 April 2019: H 41.17 milions) has been incurred by the Company on account of interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the Advance funding against National Project to be leased out to MoR. The same would be recovered through lease rentals in future over the life of the leases as per lease agreement(s) to be entered. Details are as under:

(a) Office building including parking area has been capitalised from the date of taking possession. However, the sale/ transfer deed is still pending for execution in favour of the Company. Stamp duty payable on the registration of office building works out to about H 9.15 millions( as certified by approved valuer) ( 31 March 2020: H 9.15 millions, 1 April 2019: H 9.15 millions), which will be accounted for on registration.

(b) An amount of H 72.45 millions on account of the benefit accruing due to reduction in the interest rate pertaining to the financial year 2017-18 has been passed on to MOR during the year ended on 31st March 2020, by way of reduction of equivalent amount from the Lease Income instead of recognising the same as a prior period item.The amount involved is not considered material in terms of the extant policy of the Company and accordingly, the effect of the same has been considered in the current reporting period.

(c) The Company has made a provision of H 118.80 millions in the financial statements for the year ended on 31st March 2020 towards the stamp duty on account of increase in the Equity Capital infused by MOR from time to time in the earlier years. The aforesaid stamp duty has been computed at the basic rate. The Company is in the process of getting the stamp duty adjudicated by the Collector of Stamps. The actual liability will be known upon receipt of adjudication order and differential amount, if any, will be provided for and paid in the year of adjudication.

(d) The Company leases rolling stock to MOR under a finance lease model. In the recent past the Company has also entered into an arrangement with MOR whereby leasing of Railway Infrastructure asset is undertaken again under a finance lease model (for details refer note 45). In addition to transactions with MoR related to receipt of lease rentals, advance or reimbursements for acquisition of rolling stock & project infrastructure assets, amounts are payable to / receivable from MOR on account of exchange and MCLR variations. These amounts are settled on periodic basis through finance lease rentals adjustments. The aforesaid transactions are based on memorandum of understanding, lease agreements and other formal communications with the MOR. The Company in this financial year undertook a reconciliation of these transactions that required adjustments in the financial statements (refer note 9) which were made in accordance with applicable Ind AS. However, the reconciliation exercise could not be concluded due to massive disruptions caused by Covid 19 pandemic in the form of extended lockdowns when offices were closed and key staff members responsible for the reconciliation got effected by Covid 19 virus and suffered, severe post Covid 19 complications & unfortunately despite best efforts could not conclude the reconciliation. The Company expects to conclude the exercise within the current financial year. The Company also expects no material adjustments in the financial statements on conclusion of the reconciliation.

(e) Impact of material prior period adjustments

The Company during the current financial year initiated a detailed reconciliation of various ledgers of Ministry of Railways, Government of India (MoR) maintained in its books of accounts. The reconciliation could not be completed earlier owing to unprecedented situation arising out of Covid 19 and for want of additional information from MoR. The Company noted certain items that required adjustments in financial statements / information of earlier years as per Ind AS 8, Accounting Policies, Changes in Accounting Estimates & Errors as under:

(f) Estimation of uncertainty relating to the Global Health Pandemic COVID-I9

The outbreak of Coronavirus (COVID -19) pandemic globally and in India is causing significant disturbance and slowdown of economic activity. The Company has adopted measures to curb the spread of infection in order to protect the health of our employees and ensure business continuity with minimal disruption.

The Company has evaluated impact of this pandemic on its business operations and based on its review and current indicators of future economic conditions, there is no significant Impact on its financial results. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration and accordingly the impact may be different from that estimated as at the date of approval of these financial statements. The Company will continue monitoring any material changes to future economic conditions.

Note 47:

(a) The Company discharges its obligation towards payment of interest and redemption of bonds, for which warrants are issued, by depositing the respective amounts in the designated bank accounts. Reconciliation of such accounts is an ongoing process and has been completed upto 31 March 2021. The Company does not foresee any additional liability on this account. The total balance held in such specified bank accounts as on 31 March 2021 is H 86.90 millions (31 March 2020: H 96.82 millions, 1 April, 2019: H 80.91 millions).

(b) The Company is required to transfer any amount remaining unclaimed and unpaid in such interest and redemption accounts after completion of 7 years to Investor Education Protection Fund (IEPF) administered by the Ministry of Corporate Affairs, Government of India. During the year ended 31 March 2021, a sum of H 0.15 millions was deposited in IEPF (31 March 2020: H NIL million, 1 April, 2019: H 0.07 millions.)

Note 48:

The Company, in the earlier years, had executed Asset Securitisation Transactions by securitising an identified portion of future lease rentals originating on its assets leased to Ministry of Railways. As part of the securitisation transaction, future lease rentals were transferred to a bankruptcy remote Special Purpose Vehicle (SPV) which, in turn, issued Pass Through Certificates (PTCs) to the investors. The lease receivables, accordingly, were derecognised in the books of account of the company.

In terms of the Reserve Bank of India (RBI) Guidelines on Minimum Retention Requirement issued by the Reserve Bank of India as applicable to the Non-Banking Finance Companies, the company being the originator, had opted to retain a minimum of 5% of the book value of the receivables being securitised. Accordingly, the Company had invested H 169.77 millions in the Pass Through Certificates (PTCs) issued by the ‘Special Purpose Vehicle’ towards Minimum Retention Requirement. Out of the amount invested in Pass Through Certificates (PTCs), H 157.63 millions have matured till 31

As per Section 135 of Companies Act 2013 a Corporate Social Responsibility Committee has been formed by the Company. During the year the Company has undertaken Corporate Social Responsibility activities as approved by the CSR Committee which are specified in Schedule VII of the Companies Act 2013.

During the year, Ministry of Corporate Affairs (MCA) has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“amendment”) and has also notified the effective date as 22.01.2021 for the amendments of section 135 of the Companies Act made vide Companies Amendment Act, 2019 and Companies Amendment Act, 2020.

In accordance with the amendment under the said notifications, any unspent CSR amount, other than for any ongoing project, shall be transferred to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year. Any unspent amount pursuant to any ongoing project must be transferred to unspent CSR Account in any scheduled bank within a period of thirty days from the end of the financial year, to be utilised within a period of three financial years, failing which it shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year. Further, if the company spends an amount in excess of the requirement under statute, the excess amount may be set off for three succeeding financial years against the amount to be spent.

As the notification is made effective during FY 2020-21, the Company is complying with the amended provisions of Section 135 of the Companies Act, 2013 with effect from the current financial year. accordingly, the company created provision towards unspent amount for ongoing projects amounting to H 197.71 million for the FY 2020-21.

i) Gross amount paid by the company for the year ended 31^st March 2021 is H 729.18 million (H 314.06 million pertains to prior years) ; 31^st March 2020 H 454.44 million (H 113.39 million pertains to prior years) ; Gross amount required to be spent for the year ended 31^st March 2021 H 612.30 million against which the Board approved total CSR projects for amounting to H 612.83 million (As on 31^st March 2020, Gross amount required to be spent by the company was H 505.24 million against which the Board approved total CSR projects for amounting to H 505.29 million). As on 31^st March 2021, CSR Unspent amount for the Financial Year(s) 2017-18, 2018-19, 2019-20 and 2020-21 are H 203 million, H 178.94 million, H 96.12 million, and H 197.71 million, respectively.

The Company enters into derivatives for the purpose of hedging and not for trading/speculation purposes.

The Company has framed a risk management policy duly approved by the board in respect of its External Commercial Borrowings (ECBs). A risk management committee comprising the Managing Director and Director Finance has been formed to monitor, analyze and control the currency and interest rate risk in respect of ECBs.

The Company avails various derivative products like currency forwards, Cross Currency swap, Interest rate swap etc. for hedging the risks associated with its ECBs.

(d) Other than currency forward contracts, the Company also resorts to interest rate derivatives like Cross Currency Interest Rate Swap and Interest Rate Swap for hedging the interest rate risk associated with its external commercial borrowings.

The Company recognizes these derivatives in its Financial Statements at their Fair Values. Further, in view of the fact that these derivatives are Over the Counter (OTC) contracts customized to match the residual tenor and value of the underlying liability, the Company relies on the valuations done by the counter parties to the derivative transactions using the theoretical valuation models.

54.3: Disclosures relating to securitisation

The Company has not entered into any securitization transaction during the year. However, the Company had entered into two securitization transactions in respect of its lease receivables from MoR on 25 January 2010 and 24 March 2011. As per IND AS 109, financial instruments, the gain on these transactions was recognised in the year of transactions, itself.

54.3.1: In terms of the Minimum Retention Requirement (MRR) as contained in the draft guidelines issued by RBI in April 2010, the Company had invested 5% of the total securitized amount towards MMR in respect of its second securitization transaction executed in 2011. The present exposure on account of securitization transaction at 31 March 2021 is H 12.14 millions (31 March 2020: H 22.23 millions; 1 April 2019: H 33.30 millions). The details are as below: 54.3.2: Company has not sold any financial assets to Securitization / Reconstruction Company for asset construction during the year ended on 31 March 2021. (31 March 2020: H NIL, 1 April 2019: H Nil).

54.3.3: Company has not undertaken any assignment transaction during the year ended on 31 March 2021. (31 March 2020: H NIL, 1 April 2019: H Nil).

54.3.4 : Company has neither purchased nor sold any non-performing financial assets during the year ended on 31 March 2021. (31 March 2020: H NIL, 1 April 2019: H Nil)

54.4 : Asset liability management maturity pattern of certain items of Assets and Liabilities

Refer financial instrument notes 38.9 54.5: Exposures

54.5.1: Exposure to real Estate sector

The Company does not have any exposure to real estate sector.

54.5.4: Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC

The Reserve Bank of India has issued Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 vide notification no.DNBR.009/CGM(CDS)-2015 dated 27th March 2015. The Company, being a Government Company, these Directions, except the provisions contained in Paragraph 25 thereof, are not applicable to the Company.

For the purpose of this note:-

i) The Company classify an assets as current when,

- It expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;

- It holds the asset primarily for the purpose of trading;

- It expects to realise the asset within twelve months after the reporting period or;

- The asset is cash or a cash equivalents (as defined in Ind AS 7) unless the asset is restricted from been exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non current.

ii) The Company classify a liability as current when,

- It expects to settle the liability in its normal operating cycle;

- It holds the liability primarily for the purpose of trading;

- The liability is due to be settled within twelve months