2.2.2 Expenditure attributable to Construction (EAC) includes ' 2002.88 Crore (Previous year ' 1645.62 Crore) towards borrowing cost capitalised during the year. (Also refer Note-32)

2.2.3 Capital Work in Progress (CWIP) includes a cumulative expenditure of ' 1355.07 Crore (Previous Year ' 1082.90 Crore) on projects under Survey & Investigation stage. Out of this, a sum of ' 554.98 Crore has been provided for. This includes Kotli Bhel Projects ' 379.52 Crore (Previous Year ' 374.26 Crore), Goriganga Project ' 46.72 Crore (Previous Year ' 46.71 Crore) & Bursar Project ' 128.74 Crore. Remaining amount of ' 800.09 Crore pertaining to other projects having reasonable certainty of getting clearance, is carried forward under Capital Work in Progress (CWIP). (Also Refer Note 34(24), 34(25), 34(27b) and 34 (28)).

2.2.4 Refer Note no. 34(9) of Standalone Financial Statements for information on non-current assets mortgaged/ hypothecated with banks as security against borrowings.

2.2.5 Refer Note no. 34(18) of Standalone Financial Statements for information regarding Impairment of Assets.

2.2.6 Expenditure Attributable to Construction (EAC) includes ' 304.64 Crore (Previous Year ' 256.83 Crore) towards downstream protection work in respect of Subansiri Lower Project, against which cumulative grant amounting to ' 175.03 Crore (up to Previous Year ' 135.03 Crore) has been received from Government of India. Refer Note 19.1 for details of grant received from Government of India for earmarked projects.

2.2.3 Capital Work in Progress (CWIP) includes a cumulative expenditure of ' 1082.90 Crore (Previous Year ' 1293.90 Crore) on projects under Survey & Investigation stage. Out of this, a sum of ' 457.07 Crore (Previous Year ' 964.21 Crore) has been provided for. This includes Kotli Bhel Projects ' 374.26 Crore (Previous Year ' 374.12 Crore), Dhauliganga Intermediate Project & Goriganga Project ' 82.53 Crore (Previous Year ' 82.28 Crore) and Wind Power Project, Palakkad ' 0.28 Crore (Previous Year ' Nil). Remaining amount of ' 625.83 Crore (Previous Year ' 329.69 Crore) pertaining to other projects having reasonable certainty of getting clearance, is carried forward under Capital Work in Progress (CWIP). (Also Refer Note 34(25)and 34(27)).

2.2.4 Adjustment in respect of Capital Work in Progress and Construction Stores Provided for :-

(a) An expenditure of ' 226.94 crore was incurred on the Survey and Investigation of Bursar Projects. However, in view of significant uncertainties, the expenditure amounting to ' 226.94 Crore lying under Capital Work in Progress was provided for in earlier years. During the year, NHPC has requested Ministry of Jal Shakti (MoJS) to release the amount incurred on preparation of DPR of Bursar Projects. Accordingly, the said amount of ' 226.94 crore has been reclassified from Capital Work in Progress to Financial Assets (Recoverable). Also Refer Note 34(24).

(b) An expenditure of ' 237.15 crore was incurred on Tawang Stage-I and Stage-II Hydroelectric Projects and carried forward as Capital Work in Progress. In view of significant uncertainties provision amounting to ' 237.15 crore was made in the accounts as an abundant precaution. Since the Company is in the process of handing over these projects to NEEPCO subject to fulfilment of requisite conditions the said amount has been reclassified from Capital Work in Progress to Financial Assets (Recoverable). Also Refer Note 34(26).

(c) During the year, provision against CWIP of ' 43.72 crore incurred on Subansiri Upper Project which was handed over to private developer in earlier years by the Government of Arunachal Pradesh has been reversed consequent upon allotment of the project to the Company for execution.

2.2.5 Refer Note no. 34(9) of Standalone Financial Statements for information on non-current assets mortgaged/ hypothecated with banks as security against borrowings.

2.2.6 Refer Note no. 34(18) of Standalone Financial Statements for information regarding Impairment of Assets.

2.2.7 Expenditure Attributable to Construction (EAC) includes ' 256.83 Crore (Previous Year ' 202.93 Crore) towards downstream protection work in respect of Subansiri Lower Project, against which cumulative grant amounting to ' 135.03 Crore (up to Previous Year ' 78.05 Crore) has been received from Government of India. Refer Note 19.1 for details of grant received from Government of India for earmarked projects.

3.1.1 (i) Aggregate amount and market value of quoted investments 427.16 454.29

(ii) Aggregate amount of unquoted investments 5,499.23 4,177.16

3.1.2 NHPC is exploring options regarding sale of stake / acquiring additional shares of other Promoters / continuing with existing stake. Pending final decision in the matter, the investment in PTC India Ltd. has been continued to be classified as a non-current financial asset.

3.1.3 Market Value of quoted debt instruments in respect of which quotations are not available has been considered based on the value published by Fixed Income Money Market and Derivatives Association of India (FIMMDA).

3.1.4 In pursuance to Supplementary Joint Venture Agreement entered into by the Joint Venture partners of NHPTL on 23rd April, 2024, NHPC Ltd., has transferred 13163750 shares to Power Grid Corporation of India Limited (PGCIL), for a nominal consideration of ' 1. Post transfer of shares and infusion of further capital by PGCIL, the shareholding of NHPC Ltd. in NHPTL has reduced from 21.63% to 12.5% of the paid up share capital. Accordingly, Investment in NHPTL has been classified as 'Investment in Associate'.

7.7 Due to the short-term nature of the current Trade Receivables, the carrying amount of ' 4411.09 Crore (Previous Year ' 3975.67 Crore) is equivalent to their transaction price.

7.8 Trade Receivables amounting to ' Nil (Previous Year ' 191.10 Crore ) liquidated by way of discounting of bills from various banks have not been derecognised in view of terms of the bill discounting agreement as per which the Company guarantees to compensate the banks for credit losses that may occur in case of default by the respective beneficiaries. Refer Note 20.1.2 with regard to liability recognised in respect of discounted bills.

7.9 Central Electricity Regulatory Commission (CERC) in its order dated 05.02.2020 in petition no. 281/GT/2018 allowed NAPAF of 90% for the period 2010-14 against 80% as allowed in its earlier order dated 06.09.2010 in petition No. 57/2010 with the stipulation that recovery of Incentive shall be allowed beyond 90% instead of beyond 80%. Since the said stipulation is ultra vires to the Tariff Regulations 2009-14, appeal has been filed with the Hon'ble Appellate Tribunal for Electricity (APTEL) against the review order dated 05.02.2020. Pending decision of APTEL, unbilled revenue booked in FY 2021-2022 amounting to ' 32.97 Crore being the incentive in respect of NAPAF beyond 80% and upto 90%, has not been reversed.

7.10 Power Purchase Agreement (PPA) in respect of 50 MW Wind Power Project, Jaisalmer with Jodhpur Vidyut Vitran Nigam Limited (JdVVNL) is pending for renewal/ extension w.e.f 01.04.2019. However, power is being supplied to the beneficiary, being a must run power plant and the DISCOM is being billed @ ' 3.67 per KWh being the tariff agreed upon as per last PPA. The matter regarding renewal/ extension of PPA is sub-judice in Hon'ble High Court of Rajasthan since tariff of ' 2.44 per KWh offered by the Rajasthan Renewable Energy Corporation Limited is not acceptable to the Company. The issue has been reviewed during the current year and pending decision of the Hon'ble High Court, amount billed beyond tariff of ' 2.44 per KWh w.e.f. 01.04.2019 has been considered as credit impaired. Accordingly, provision of ' 46.51 Crore has been recognized towards credit-impaired Trade Receivables as a matter of abundant precaution.

(A) Details of Repayment: During FY 2024-25, loan of ' 112.00 crore @ 8.44% p.a. rate of interest was given to JPCL with condition that subsidiary company shall repay the loan once the term loan facility is tied up the banks/FI but not later than one year from the date of disbursement of the loan. During the year ended 31.03.2025, the borrower has repaid the entire loan of ' 112.00 crore. The outstanding interest of ' 1.36 Crore has been repaid on 01.04.2025.

(B) Details of Repayment: During FY 2024-25, BSUL has repaid the entire opening outstanding amount of ' 35.42 crore along with interest. Further, loan of ' 24.53 crore has been given to BSUL @ 8.47% p.a. rate of interest, with condition that BSUL shall repay the loan once the project is completed but not later than one year from the date of disbursement of the loan . Out of ' 24.53 Crores, BSUL has repaid ' 5.00 Crores (Principal amount) till 31.3.2025. As on 31.3.2025, ' 20.32 was outstanding including interest amounting to ' 0.79 Crore.

(C) Details of Repayment: LDHCL has repaid the entire outstanding loan amount along with interest during FY 2024-25.

15.1.2 The authorised share capital of the Company has increased from ' 15000 crore to ' 17500 crore pursuant to Merger of LTHPL (a subsidiary of NHPC Ltd.) with the Company vide MCA, GOI order dated 2nd January 2025. Refer note 34(34).

15.1.3 The Company has issued only one kind of equity shares with voting rights proportionate to the share holding of the shareholders. These voting rights are exercisable at meetings of shareholders. The holders of the equity shares are also entitled to receive dividend as declared from time to time. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

15.2.1 Nature and Purpose of Reserves

(i) Capital Reserve : This reserve was created on acquisition of LTHPL through National Law Tribunal (NCLT) and represents the fair value of the assets acquired over and above the amount paid for acquisition of LTHPL. In Financial Year 2024-25, LTHPL was merged with NHPC Limited pursuant to approval of the Scheme of Amalgamation by Ministry of Corporate Affairs (MCA) between LTHPL, the Transferor Company and NHPC Limited, the Transferee Company with the Appointed Date being April 1, 2022. Consequent to the merger, LTHPL has been accounted for as a part of NHPC Limited in its Standalone Financial Statements with retrospective effect from the appointed date. Accordingly, Capital reserve on acquisition of LTHPL earlier appearing in consolidated accounts, has now been accounted for as Capital Reserve in the Standalone Financial Statements. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.

(ii) Capital Redemption Reserve : Capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium, as required by Companies Act, 2013. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. This reserve will be utilised in accordance with the provisions of the Companies Act, 2013.

(iii) Bond Redemption Reserve : As per the Companies (Share Capital and Debentures) Rules, 2014, the Company was required to create a Bond Redemption Reserve out of available profits for the purpose of redemption of bonds. The Companies (Share Capital and Debentures) Amendment Rules, 2019 exempts the Company from creation of Bond Redemption Reserve. The Amendment Rules, 2019 further stipulate that the amount credited.

to Debenture Redemption Reserve shall not be utilized by the company except for the purpose ofredemption of debentures. Accordingly, though the Bond Redemption Reserve created till 31.03.2019 has been carried forward and further utilised for bonds redeemed during the current year, no further accrual to thereserve has been made

(iv) General Reserve : The General Reserve is used from time to time to transfer profits from retained earnings for appropriation purposes, as the same is created by transfer from one component of equity to another. The same will be utilised as per the provisions of the Companies Act, 2013

(v) Retained Earnings : Retained earnings generally represent the undistributed profit/ amount of accumulated earnings of the company and includes remeasurement gain/ losses on defined benefit obligations.

(vi) Fair value through Other Comprehensive Income (FVTOCI)-Debt Instruments : The Company has elected to recognise changes in the fair value of certain investments in debt securities in Other Comprehensive Income (OCI). This reserve represents the cumulative gains and losses arising on the revaluation of debt instruments measured at fair value through OCI. On derecognition of the assets, cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss.

(vii) Fair value through Other Comprehensive Income (FVTOCI)-Equity Instruments : The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income. The Company transfers amounts from this reserve directly to retained earnings when the relevant equity securities are disposed off.

(viii) Fair value through Other Comprehensive Income (FVTOCI)- Cost of Hedge Reserve: The Company designates the intrinsic value of foreign currency option contracts as hedging instruments in 'a Fair Value Hedge'. The changes in time value of an option are recognised in OCI under Cost of Hedge Reserve. The option premium payable is also recognised under Cost of Hedge Reserve, gradually impacting the finance cost through amortization, over the life of the hedging instrument.

16.1.1 Debt Covenants : Refer Note 33(3) with regard to capital Management.

16.1.2 Term Loan From Government of India (Subordinate Debts) is at fair value since these loans carry interest rate which is lower than the prevailing market rate. Total Subordinate Debts outstanding as on 31.3.2025 is ' 4690.95 Crore (Previous Year ' 4714.06 Crore) including ' 52.21 Crore (Previous Year ' 23.11 Crore) which is repayable within the next 12 months.

Refer Note 16.1.3 for particulars of Redemption, Repayments, Securities and Rate of Interest of borrowings.

Regulatory Commission (CERC) through Annual Fixed Charges (AFC) comprising of the following five components: 1. Return on Equity (RoE), 2. Depreciation, 3. Interest on Loans, 4. Operation & Maintenance Expenses and 5. Interest on Working Capital Loans. In addition to the above, Foreign Exchange rate variations and Taxes are also recoverable from Beneficiaries in terms of the Tariff Regulations. Hence variation in interest rate, currency exchange rate variations and other price risk variations are recoverable from tariff and do not impact the profitability of the company. Further, the company also hedges its medium term foreign currency borrowings by way of interest rate hedge and currency swaps.

(B) Credit Risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

Trade Receivables, unbilled revenue and lease receivables

The Company extends credit to customers in normal course of business. The Company monitors the payment track record of the customers. Outstanding receivables are regularly monitored. In the case of the Company, the concentration of risk with respect to trade receivables is low, as its customers are mainly state government companies/DISCOMS and operate in largely independent markets. Unbilled revenue primarily relates to the Company's right to consideration for work completed but not billed at the reporting date and have substantially the same risk characteristics as trade receivables for the same type of contracts.

Lease receivables of the company are with regard to Power Purchase Agreements classified as finance lease as per Ind AS 116- 'Leases' as referred to in Note No. 34. The power purchase agreements are for sale of power to single beneficiary and recoverability of interest income and principal on leased assets i.e. PPE of the power stations are assessed on the same basis as applied for trade receivables.

Financial assets at amortised cost :-

Employee Loans: The Company has given loans to employees at concessional rates as per the Company's policy which have been measured at amortised cost at Balance Sheet date. The recovery of the loan is on fixed instalment basis from the monthly salary of the employees. Long term loans for acquisition of assets are secured by way of mortgage/hypothecation of the assets for which such loans are given. Management has assessed the past data and does not envisage any probability of default on these loans.

Loans to Government of Arunanchal Pradesh : The Company has given loan to Government of Arunachal Pradesh at 9% rate of interest (compounded annually) as per the terms and conditions of Memorandum of understanding signed between the Company and Government of Arunachal Pradesh for construction of hydroelectric projects in the state. The loan has been measured at amortised cost and is recoverable from the share of free power of the state government from the first hydroelectric project to be commissioned in the state. Management does not envisage any probability of default on the loan.

Financial instruments and cash deposits :-

The Company considers factors such as track record, size of the bank, market reputation and service standards to select banks with which balances and deposits are maintained. Generally, the balances are maintained with banks with which the Company has also availed borrowings. The Company invests surplus cash in short term deposits with scheduled banks. The company has balances and deposits with banks which are well diversified across private and public sector banks with limited exposure to any single bank.

Corporate Guarantee issued by the Company: -

The Company has issued following irrevocable and unconditional Corporate Guarantees to Subsidiary Companies of NHPC Limited for a Guarantee Fee of 1.20% plus applicable GST. Exposure of the Company from the Guarantee shall be the principal outstanding under the said credit facility including any interest, commission, charges etc. payable to the Bank by subsidiaries.

(a) Initially Company had issued Corporate Guarantee in favour of HDFC Bank Limited for Term Loan Facility for

BSUL amounting to ' 213.25 Crores. However as on 31.03.2025, Corporate Guarantee is for outstanding balance of ' 199.85 Crores (outstanding balance of said term loan is ' 198.43 Crores and outstanding interest is ' 1.42 Crores as on 31.03.2025).

(b) (i) Initially Company had issued Corporate Guarantee in favour of J&K Bank Limited for Term Loan Facility

for JPCL amounting to ' 313.00 Crores and as on 31.03.2025, Corporate Guarantee remains same since the outstanding balance of said term loan is also same.

(ii) Initially Company had also issued Corporate Guarantee in favour of Bank of Baroda for Term Loan Facility -1 for JPCL amounting to ' 344.00 Crores and as on 31.03.2025, Corporate Guarantee remains same since the outstanding balance of said term loan is also same.

(iii) Initially Company had also issued Corporate Guarantee in favour of Bank of Baroda for Term Loan Facility -2 for JPCL amounting to ' 179.00 Crores and as on 31.03.2025, Corporate Guarantee is for outstanding balance of ' 140.00 Crores.

However, on the reporting date management does not envisage any probability of the default by the Subsidiary Company.

(ii) Provision for expected credit losses

(a) Financial assets for which loss allowance is measured using 12 month expected credit losses

The Company assesses outstanding receivables on an ongoing basis considering changes in payment behaviour and provides for expected credit loss on case-to-case basis.

(b) Financial assets for which loss allowance is measured using life time expected credit losses

A default in recovery of financial assets occurs when in there is no significant possibility of recovery of receivables after considering all available options for recovery as per assessment of the management. As the power stations and beneficiaries of the company are spread over various states of India, geographically there is no concentration of credit risk.

The Company primarily sells electricity to bulk customers comprising mainly of state utilities owned by State Governments. The Company has a robust payment security mechanism in the form of Letters of Credit (LC) backed by the Tri-Partite Agreements (TPA) signed among the Govt. of India, RBI and the individual State Governments subsequent to the issuance of the One Time Settlement Scheme of SEBs dues during 2001-02 by the GOI, which was valid till October 2016. Government of India has approved the extension of these TPAs for another period of 10 years and the same has been signed by most of the States. As per the provisions of the TPA and Power Purchase Agreements (PPA), the customers are required to open LCs covering 105% of the average monthly billing of the Company for last 12 months. The TPA also provides that if there is any default in payment of current dues by any State Utility, the outstanding dues can be deducted from the Central Plan Assistance of the State and paid to the concerned CPSU. Also, Electricity (Late Payment Surcharge & Related Matters) Rules, 2022 provides for regulation of power by the Company in a gradual manner in case of non-payment of dues beyond 30 days of the due date, i.e. when payment is not made by any beneficiary even after 75 days (being due period of 45 days plus 30 days) from the date of presentation of the bill.

CERC Tariff Regulations 2024-29 allow the Company to raise bills on beneficiaries for late-payment surcharge, which adequately compensates the Company for time value of money due to delay in payment. Further, the fact that beneficiaries are primarily State Governments/ State Discoms and considering the historical credit loss experience for trade receivables, the Company does not envisage either impairment in the value of receivables from beneficiaries or loss due to time value of money due to delay in realization of trade receivables. However, the Company assesses outstanding trade receivables on an ongoing basis considering changes in operating results and payment behaviour and provides for expected credit loss on case-to-case basis. As at the reporting date company does not envisage any default risk on account of nonrealization of trade receivables.

Based on historical default rates, the company believes that no impairment allowance is necessary in respect of any other financial assets as the amounts of such allowances are not significant.

(C) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due.

i) The Company's objective is to maintain optimum levels of liquidity at all times to meet its cash and collateral requirements. The Company relies on a mix of borrowings and excess operating cash flows to meet its need for funds. The current committed lines of credit and internal accruals are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure that it has sufficient cash to meet capital expenditure and operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the borrowing limits or covenants (where applicable) are not breached on any of its borrowing facilities.

The company had access to the following undrawn borrowing facilities at the end of the reporting year:

(D) Market Risk:

The sensitivity analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligation provisions and on the non-financial assets and liabilities. The sensitivity of the relevant item of the Statement of Profit and Loss is the effect of the assumed changes in the respective market risks. The Company's activities expose it to a variety of financial risks, including the effects of changes in interest rates.

(i) Interest rate risk and sensitivity

The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long term debt obligations with floating interest rates. Company's policy is to maintain most of its borrowings at fixed rate. Company's fixed rate borrowings are carried at amortised cost and are not subject to interest rate risk. Further the company refinances these debts as and when favourable terms are available. The company is also compensated for variability in floating rate through recovery by way of tariff adjustments under CERC tariff regulations.

Interest Rate Sensitivity Analysis

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of change in interest rates. The majority of the borrowings of the company are at fixed interest rate. In case of floating rate borrowings there is no impact on Statement of Profit and Loss of the company due to increase/decrease in interest rates, as the same is recoverable from beneficiaries through tariff .

(ii) Price Risk:

(a) Exposure

The company's exposure to price risk arises from investment in equity shares and debt instruments classified in the financial statements as Fair Value Through OCI. Company's investment in equity shares are listed in recognised stock exchange and are publicly traded in the stock exchanges. Company's investment in debt instruments comprise quoted Government Securities and Public Sector Bonds and are publicly traded in the market. The investment has been classified under current / non-current investment in Balance Sheet.

Out of the above, loan from MUFG bank and Japan Bank for International Corporation is hedged. For balance exposure gain/(loss) on account of exchange variation is recoverable from beneficiaries as per Tariff Regulation 2024-29. Therefore, currency risk in respect of such exposure would not be significant.

(b) Sensitivity Analysis

There is no impact of foreign currency fluctuations on the profit of the company as these are either adjusted to the carrying cost of respective fixed asset/Capital Work-in-Progress or recovered through tariff as per CERC Tariff Regulation. Accordingly, sensitivity analysis for currency risk is not disclosed. iv) Disclosure regarding Hedging Activities

The Company has entered into an External Commercial Borrowing (ECB) arrangement with the Japan Bank for International Cooperation (JBIC). The total lending commitment amounts to JPY 2000,00,00,000 of which JPY 905,94,46,980 (Equivalent INR has been drawn by the company during the current year. The loan carries an interest rate of TONA (Tokyo Overnight Average Rate) 0.90%, and interest payments are to be made on a semi-annual basis. To mitigate the foreign exchange risk arising from the JPY-denominated loan, NHPC Ltd has entered into a JPY-INR Call Spread Option, with a notional amount of JPY 905,94,46,980. This call-spread option is designated as a hedging instrument against the JPY-denominated ECB, which is the hedged item.

Disclosures regarding Risk management in respect of Hedging Transactions:

The Company adheres to Indian Accounting Standards (Ind AS) in designation of derivative instruments into hedging relationship, as part of financial reporting process. The Company's comprehensive framework reflects the risk management strategy, defining the risks targeted for mitigation, including foreign exchange fluctuation risk. The hedging strategy defines contracting Call Spread Options, a financial instrument chosen for its efficacy in managing the foreign exchange fluctuation risk.

Call spread options serve as a strategic shield against the volatilities of foreign currency fluctuations, providing a reliable means to safeguard financial positions amidst uncertain market conditions. These options allow for the purchase of a call option at a lower strike price while simultaneously selling a call option at a higher strike price, effectively creating a range for which volatilities can be hedged. By employing call spread options, the Company effectively hedges against adverse currency movements, ensuring that financial outcomes remain within acceptable parameters despite the unpredictability of global currency markets.

By integrating Call Spread Options into its hedging framework, the Company enhances its risk management strategy and optimizes financial performance. The use of call spread options underscores a commitment to disciplined risk management practices, in alignment with the requirements of Indian Accounting Standards (Ind AS).

Details of Currency Derivatives held for hedging and risk management purposes are as follows:

1. Disclosures relating to Contingent Liabilities:

Contingent Liabilities to the extent not provided for -

a) Claims against the Company not acknowledged as debts in respect of:

(i) Capital works

Contractors have lodged claims aggregating to ' 8677.41 Crore (Previous year ' 9376.11 Crore) against the Company on account of rate and quantity deviation, cost relating to extension of time, idling charges due to stoppage of work, extraordinary geological occurrences, etc. These claims are being contested by the Company as being not admissible in terms of provisions of the respective contracts and are currently pending with arbitration tribunal/ other forums or are under examination by the Company. These include ' 4888.63 Crore (Previous year ' 5861.46 Crore) towards arbitration awards including updated interest thereon, against the Company, which have been challenged/ decided to be challenged in the Court of Law.

Management has assessed the above claims and recognized a provision of ' 2615.36 Crore (Previous year ' 1104.23 Crore) based on probability of outflow of resources embodying economic benefits and estimated ' 4967.35 Crore (Previous year ' 7643.84 Crore) as the amount of contingent liability i.e., amounts for which Company may be held contingently liable. In respect of such estimated contingent claims, either the outflow of resources embodying economic benefits is not probable or a reliable estimate of the amount required for settling the obligation cannot be made. In respect of the rest of the claims/obligations, possibility of any outflow in settlement is considered remote.

(ii) Land Compensation cases

In respect of land acquired for the projects, some of the erstwhile land owners have filed claims for higher compensation amounting to ' 72.69 Crore (Previous year ' 156.85 Crore) before various authorities/ Courts. Pending settlement, the Company has assessed and provided an amount of ' 3.65 Crore (Previous year ' 2.99 Crore) based on probability of outflow of resources embodying economic benefits and estimated ' 69.04 Crore (Previous year ' 153.86 Crore) as the amount of contingent liability as outflow of resources is considered not probable.

(iii) Disputed Tax Demands

Disputed Income Tax/Sales Tax/Service Tax/Goods & Services Tax/Water Cess/ Green Energy Cess/ other taxes/duties pending before various appellate authorities amount to ' 2920.98 Crore (Previous year ' 1872.87 Crore). Pending settlement, the Company has assessed and provided an amount of ' 17.52 Crore (Previous year ' 17.52 Crore) based on probability of outflow of resources embodying economic benefits and ' 2730.01 Crore (Previous year ' 670.00 Crore) are being disclosed as contingent liability as outflow of resources is considered not probable. In respect of the rest of the claims/obligations, possibility of any outflow in settlement is considered remote.

(iv) Others

Claims on account of other miscellaneous matters amount to ' 651.79 Crore (Previous year ' 940.76 Crore). These claims are pending before various forums. Pending settlement, the Company has assessed and provided an amount of ' 99.99 Crore (Previous year ' 102.40 Crore) based on probability of outflow of resources embodying economic benefits and estimated ' 504.09 Crore (Previous year ' 797.76 Crore) as the amount of contingent liability as outflow of resources is considered not probable. In respect of the rest of the claims/obligations, possibility of any outflow in settlement is considered remote.

The above do not include contingent liabilities on account of pending cases in respect of service matters relating to employees (including ex-employees) and others where the amount cannot be quantified.

(b) It is not practicable to ascertain and disclose the uncertainties relating to outflow in respect of contingent liabilities.

(c) There is possibility of reimbursement to the Company of ' 2781.64 Crore (Previous year ' 691.17 Crore) against the above Contingent Liabilities.

(d) The Management does not expect that the above claims/obligations (including those under litigation), when ultimately concluded and determined, will have a material and adverse effect on the Company's financial results or operations or financial condition.

(e) During the year, certain claims against Capital Works have been settled under the Vivad se Vishwas II Scheme (Contractual Disputes) notified by the Government of India vide Office Memorandum dated 29.05.2023. Accordingly, Contingent liability in respect of Capital Works for the year has reduced by ' 732.32 Crore (Previous year ' 676.32 Crore).

2. Contingent Assets: Contingent assets in respect of the Company are on account of the following:

a) Counter Claims lodged by the Company on other entities:

The Company has lodged counter claims aggregating to ' 7.90 Crore (Previous year ' 44.69 Crore) against claims of other entities. These claims have been lodged on the basis of contractual provisions and are being contested at arbitration tribunal/other forums or are under examination with the counterparty. It includes counter claims of ' 6.64 Crore (Previous year ' 16.02 Crore) towards arbitration awards including updated interest thereon.

Based on Management assessment, a favourable outcome is probable in respect of claims aggregating ' 7.90 Crore (Previous year ' 44.69 Crore) and for rest of the claims, possibility of inflow is remote. Accordingly, these claims have not been recognised.

b) Late Payment Surcharge:

CERC (Terms and Conditions of Tariff) Regulations 2019-24/24-29 provide for levy of Late Payment Surcharge by generating company in case of delay in payment by beneficiaries beyond specified days from the date of presentation of bill. In view of significant uncertainties in ultimate collection from beneficiaries, an amount of ' 38.63 Crore (previous year ' 39.27 Crore) as per management estimate has not been recognised.

c) Revenue to the extent not recognised in respect of power stations:

Management had assessed Contingent Assets of ' 2.40 Crore (previous year ' NIL) in respect of petition fees in respect of tariff petitions filed for tariff period 2024-29.

d) Business Interruption Losses

Insurance Claims due to Business Interruption Losses in respect of Power Stations are recognised when no significant uncertainty of ultimate collection exists. Management has assessed claims of ' 243.36 Crore (Previous Year ' 518.81 Crore) in this respect which have not been recognised. Power Station-wise details of claims are given at Note 34(23) of the Standalone Financial Statements.

e) Other Cases

Claims on account of other miscellaneous matters in respect of cases pending in Court, liquidated damages, dues from ex- employees, grant etc. estimated by Management at ' 337.28 Crore (Previous year ' 1245.14 Crore) have not been recognised.

(b) The Company has commitments of ' 728.17 Crore (Previous year ' 1151.01 Crore) towards further investment in Subsidiary Companies as at 31^st March 2025.

(c) The Company has commitments of ' 0.05 Crore as at 31^st March 2025 towards initial investment in APGENCO NHPC Green Energy Limited (ANGEL), a Joint Venture Company incorporated on 23.01.2025.

(d) Restrictions on disposal of investments in Subsidiary and Joint Venture/Associate companies (including share application money pending allotment) as at 31^st March 2025 are as under:

4. Commitments regarding Corporate Guarantees issued by the Company: For funding the Capital Expenditure (CAPEX) requirements of its subsidiaries, the Company has provided Corporate Guarantees to Bank as per details below against their lending to these subsidiaries for which Guarantee Fee is being charged. The Company does not expect that these Guarantees shall be invoked by the Bank(s) for servicing of loan including repayment of principal within the next 12 months from reporting date.

Note: Corporate Guarantee given in favour of Lanco Teesta Hydro Power Limited (LTHPL) is no longer valid due to merger of the Company with NHPC Limited with appointed date of 1^st April, 2022.

5. Disclosures as per IND AS 115 'Revenue from contracts with customers':

(A) Nature of goods and services

Revenue of the Company comprises of income from sale of power/electricity, trading of power, consultancy and other services. The following is a description of the principal revenue generating activities:

(a) Revenue from sale of power

Major revenue of the Company comes from sale of power. The Company sells power to bulk customers, mainly electricity utilities owned by State Governments as well as private DISCOMs. Sale of power is generally made pursuant to long-term Power Purchase Agreements (PPAs) entered into with the beneficiaries.

The details of nature, timing of satisfaction of performance obligations and significant payment terms under contracts for sale of power are as under:

The Company has recognised revenue of ' 1.38 crore (Previous Year ' 3.46 Crore) from opening contract liabilities.

(D) Transaction price allocated to the remaining performance obligations is either not applicable or not material to the Company's operations.

(E) Practical expedients applied as per Ind AS 115 'Revenue from Contracts with Customers':

(i) The Company has not disclosed information about remaining performance obligations that have original expected duration of one year or less and where the revenue recognised corresponds directly with the value to the customer of the entity's performance completed to date.

(ii) The Company generally does not have any contracts in the normal course of business where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Accordingly, transaction price has been adjusted for time value of money only when such time value of money is significant.

(F) The Company has not incurred any incremental cost of obtaining contracts with a customer and has therefore, not recognised any asset for such cost.

7. Operating Segments:

a) Electricity generation (including income from Power Stations considered as embedded Finance/ Operating leases) is the principal business activity of the Company. Other operations viz., Contracts, Project Management, Consultancy Works and Power Trading Business do not form a reportable segment as per Ind AS 108- Operating Segments.

b) The Company has a single geographical segment as all its Power Stations/ Power-generating units are located within the Country.

c) Information about major customers: The Company derives more than 10 percent of its revenue from 3 customers (beneficiaries). Details of revenue of ' 3859.19 Crore (Previous year ' 4484.23 Crore) derived from these 3 customers are provided below:

(C) Other notes to related party transactions:

(i) Terms and conditions of transactions with the related parties:

(a) (1) Transactions with the State Governments and entities controlled by the Government of India

are carried out at market terms on arms- length basis (except subordinate debts received from Central Government at concessional rate) through a transparent price discovery process against open tenders, except in a few cases of procurement of spares/ services from Original Equipment

Manufacturers (OEMs) for proprietary items on single tender basis due to urgency, compatibility or other reasons. Such single tender procurements are also done through a process of negotiation with prices benchmarked against available price data of same/ similar items.

(2) The company is executing contracts on agency basis with the Indian Army and the Border Road Organisation (BRO). Transactions and balances with these parties have been disclosed above under transactions and balances with entities controlled by the Government of India.

(b) Pursuant to Supplementary Joint Venture Agreement entered into by the Joint Venture partners of NHPTL dated 23^rd April, 2024 the Company has transferred 1,31,63,750 equity shares of NHPTL to PGCIL for a nominal consideration of ' 1 during the year.

(c) Outstanding Short-Term Loan of ' 19.53 crore was granted to BSUL during FY 2024-25 at the rate 8.47 % p.a. compounded annually.

(d) Consultancy services provided by the Company to subsidiary and Joint Ventures/Associate companies are generally on nomination basis at the terms, conditions and principles applicable for consultancy services provided to other parties.

(e) Outstanding balances of subsidiary and Joint Ventures/Associate companies are unsecured and settlement occurs through banking transactions. These balances other than loans are interest free. Assessment of impairment is undertaken at each financial year through examining the financial position of the related party and the market in which the related party operates.

(f) Contributions to post-employment benefit plans are net of refunds from trusts.

(g) Amount recoverable from Government that has control over the Company and entities controlled by the same Government, where the outstanding balances are appearing at NIL value due to uncertainty in realization has not been included in amount receivable from related parties disclosed above.

(ii) Commitment towards further investments in the Subsidiary Companies and Joint Ventures/Associate companies are disclosed at Note 34(3).

(iii) During FY 2024-25, the Company has incorporated a Joint Venture company with M/s Andhra Pradesh Power Generation Corporation Limited in the name of APGENCO NHPC Green Energy Limited (ANGEL) on 23.01.2025 for development of pumped storage projects in the State of Andhra Pradesh. No Equity investment has been made in ANGEL during FY 2024-25.

10. Disclosures Under Ind AS-19 " Employee Benefits":

(A) Defined Contribution Plans-

(i) Social Security Scheme: The Company has a Social Security Scheme which has been in operation since 01.06.2007. Contribution to the fund is made by employees at a fixed amount per month and a matching contribution for the same amount is also made by the Company. The scheme has been created to provide financial help to the family in the event of death or permanent total disability of the employee. The expenses recognised during the year towards the scheme is ' 2.43 Crore (Previous year ' 2.40 Crore). The funds of the scheme have been invested in the NHPC Limited Employees Social Security Scheme Trust and the same is managed by the Life Insurance Corporation (LIC) of India.

(ii) Employees Defined Contribution Superannuation Scheme (EDCSS): The scheme has been created for providing pension benefits to employees. As per the scheme, each employee contributes @ 5% of Basic Pay and Dearness Allowance. The company contributes to the extent of balance available after deducting employers' contribution to Provident Fund, contribution to Gratuity Trust and REHS Trust, from the amount worked out @ 30% of the Basic Pay and DA. The Scheme is managed through Life Insurance Corporation (LIC) of India / NPS. Expense recognised during the year towards EDCSS are ' 77.04 Crore (Previous year ' 84.80 Crore).

(B) Defined Benefit Plans- Company has following defined post-employment benefit obligations :

(a) Description of Plans:

(i) Provident Fund: The Company pays fixed contribution to Provident Fund at predetermined rates to the National Hydroelectric Power Corporation Limited Employees Provident Fund, which invests the funds in permitted securities. The contribution to the fund for the year is recognised as an expense and is charged to the Statement of Profit and Loss/ Expenditure Attributable to Construction, as applicable. The obligation of the Company is to make a fixed contribution and to ensure a rate of return to the members not lower than that specified by the Government of India (GoI).

(ii) Gratuity: The Company has a defined benefit gratuity plan. The ceiling limit of gratuity is fixed as per the Payment of Gratuity Act, 1972, whereby every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of ' 0.20 Crore on superannuation, resignation, termination, disablement or death. Such ceiling limit of gratuity shall, however, increase by 25% when Industrial Dearness Allowance increases by 50%. The plan is being managed by the NHPC Limited Employees Group Gratuity Assurance Fund and obligation of the Company is to make contributions to the Trust based on actuarial valuation. The funds of the trust are managed by the LIC of India.

(iii) Retired Employees Health Scheme (REHS): The Company has a Retired Employees Health Scheme, under which retired employee, his/ her spouse, eligible dependent children and dependent parents are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patients subject to a ceiling limit fixed by the Company. The liability for REHS is recognised on the basis of actuarial valuation. The Scheme is being managed by the NHPC Limited Retired Employees Health Scheme Trust and obligation of the company is to make contributions to the Trust based on such actuarial valuation. The funds of the Trust are managed by the LIC of India.

(iv) Allowances on Retirement/Death: Actual cost of shifting from place of duty at which an employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the Company. In case of death, family of deceased employee can also avail this facility. Liability for the same is recognised based on actuarial valuation. The scheme is currently unfunded.

(v) Memento to employees on attaining the age of superannuation: The Company has a policy of providing Memento valuing ' 10,000/- to employees on superannuation. Liability for the same is recognised based on actuarial valuation. The scheme is currently unfunded.

(vi) NHPC Employees Family Economic Rehabilitation Scheme: NHPC Limited has introduced "NHPC Employees Family Economic Rehabilitation Scheme" w.e.f. 01.04.2021. The objective of this scheme is to provide monetary assistance and support to an employee in case of permanent total disablement of the employee and to his family in case of death of the employee, provided the permanent total disablement/ death as the case may be, takes place while the employee is in service of the Company. On the separation of an employee from the service of the Company on account of death/ permanent total disablement, the beneficiary is entitled to monthly payment equivalent to 50% of one-month Basic Pay & DA last drawn by the employee and other benefits including HRA, Children's Education Allowance, etc. provided the beneficiary surrenders to the Company the death/ disablement benefits received under Social Security Scheme. Liability for the Scheme is recognised on the basis of actuarial valuation. The scheme is currently unfunded.

As per the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of ' 27.55 Crore determined through actuarial valuation. Accordingly, the Company has not recognised the surplus as an asset, and the actuarial gains in Other Comprehensive Income, as these pertain to the Provident Fund Trust and not to the Company.

(e) Risk Exposure: Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such, the company is exposed to various risks as follows:

A) Salary Increase- Actual salary increase will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - For funded plans, asset-liability mismatch and actual return on assets at a rate lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan's liability.

D) Mortality and disability - Actual deaths and disability cases proving to be lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving to be higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan's liability.

(f) Defined benefit liability and employer contributions: Funding levels are monitored on an annual basis and the current contribution rate is 30% of basic salary and dearness allowance. The Company considers that the contribution rates set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs, will not increase significantly.

Expected contributions to defined-benefit plans for the year ending March 31, 2026 are ' 154.94 Crore.

The weighted average duration of the defined benefit obligations is 10.39 Years as at 31^st March, 2025 (31^st March, 2024: 11.50 years).

The expected maturity analysis of undiscounted defined benefit plans is as follows:

(C) Other long-term employee benefits (Leave Benefit): The Company provides for earned leave and halfpay leave to the employees, which accrue annually @ 30 days and 20 days respectively. Earned Leave (EL) is also encashable while in service. The maximum ceiling of encashment of earned leave is limited to 300 days. However, any shortfall in the maximum limit of 300 days in earned leave on superannuation can be fulfilled through half pay leave to that extent. The liability for the same is recognised on the basis of actuarial valuation. The expenses recognised during the year on the basis of actuarial valuation are ' 68.29 Crore (Previous Year ' 54.81 Crore).

Note: The Company has not issued any instrument that could potentially dilute basic earnings per share in the future.

13. Disclosure related to Confirmation of Balances:

The Company has a system of obtaining periodic confirmation of balances from banks and other parties. There are no unconfirmed balances in respect of bank accounts and borrowings from banks & financial institutions. With regard to receivables for sale of power, the Company sends demand intimations to the beneficiaries with details of amount paid and balance outstanding, which can be said to be automatically confirmed on receipt of subsequent payment from such beneficiaries. In addition, reconciliation with beneficiaries and other customers is generally done on quarterly basis. So far as trade/other payables and loans and advances are concerned, the confirmation letters/ emails for outstanding balances of ' 0.05 crore or above in respect of each party as at 31st December, 2024 were sent to the parties. Some of these balances are subject to confirmation/ reconciliation. In the opinion of the management, unconfirmed balances will not require any adjustment having a material impact on the Financial Statements of the Company.

14. Disclosure related to Corporate Social Responsibility (CSR) (Refer Note 29)

(i) As per Section 135 of the Companies Act, 2013 read with the guidelines issued by the Department of Public Enterprises, GoI, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company over the three immediately preceding financial years in accordance with its CSR Policy. The details of CSR expenses for the year are as under:

16. Disclosures regarding leases as per IND AS -116 "Leases":

A) Company as Lessee:

(i) Accounting Treatment of Leases as per Ind AS 116:

The Company assesses whether a contract is or contains a lease, at the inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For such short-term leases or lease of assets where the underlying asset is of low value, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.

The Company had applied the following practical expedients on initial application of Ind AS 116:

a. Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.

b. Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial application.

c. Excluded the initial direct costs, if any from the measurement of the right-of-use asset at the date of recognition of right-of-use asset.

d. Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

The weighted average incremental borrowing rate applied to leases recognised during FY 2024-25 is 7.47%.

(ii) Nature of lease: The Company's significant leasing arrangements are in respect of the following assets:

(a) Premises under cancellable lease arrangements for residential use of employees ranging from 3-4 months to three years.

(b) Premises for offices, guest houses and transit camps on lease which are not non-cancellable and are usually renewable on mutually agreeable terms.

(c) Land obtained on lease for construction of projects and / or administrative offices.

(d) Vehicles under cancellable operating leases generally for a period of 1 to 2 years.

B) Finance Lease - Company as Lessor Power Stations as Finance Lease

The Company enters into power purchase agreements with beneficiaries. Power Purchase Agreements (PPA) in the nature of an embedded lease with a single beneficiary where the minimum lease term is for the major part of the plant's economic life and the minimum lease payments amount to substantially all the fair value of the plant are considered as a Finance Lease. Other embedded leases are considered as Operating Lease. For embedded leases in the nature of a Finance Lease, the investment in the power station is recognised as a Lease Receivable. The minimum lease payments are identified by segregating the embedded lease payments from the rest of the contract amounts. Each lease receipt is allocated between the receivable and finance lease income so as to achieve a constant rate of return on the Lease Receivable outstanding.

The Company has entered into lease arrangements with a single beneficiary namely M/s Power Development Department, Jammu & Kashmir for sale of the entire power generated by two power stations, namely Nimmo Bazgo and Chutak Power Stations for a substantial period of the stipulated life of these Power Stations. Under the agreements, the customer is obligated to purchase the entire output at prices determined by the Central Electricity Regulatory Commission (CERC). Further, the Company has entered into a supplementary PPA with

M/s West Bengal State Electricity Development Corporation Limited (WBSEDCL) for offtake of the entire power generated by TLDP-III Power Station for its balance useful life of 35 years on mutually agreed tariff w.e.f 1st April, 2019. The arrangements have been assessed by the Company and classified as a Finance Lease. Other financial assets (Current and Non-Current) include lease receivables representing the present value of future lease rentals receivable on the finance lease arrangements entered into by the company.

Income from Finance Lease for the year is ' 282.12 Crore (previous year ' 297.31 Crore).

C) Operating Lease - Company as Lessor:

In the case of operating leases or embedded operating leases, the lease income from the operating lease is recognised in revenue on a straight-line basis over the lease term. The respective leased assets are included in the Balance Sheet based on their nature.

The Company has entered into Power Purchase Agreements (PPA) with WBSEDCL for sale of power from TLDP-IV power station for a period of 10 years and with Jodhpur Vidyut Vitran Nigam Limited (JVVNL) for sale of power from 50 MW Wind Power Project, Jaisalmer for a period of 3 years. Power Purchase Agreement with JVVNL has expired on March 31, 2019 and extension of PPA is under process, though power is being scheduled to the customer. As per the PPAs, the customer is obligated to purchase the entire output of these Power Stations/Power Projects at mutually agreed tariff in case of TLDP-IV Power Station and on the basis of pooled cost of power for 50 MW Wind Power Project. The Company has determined that these arrangements are in the nature of an Operating Lease.

Income from Operating Lease for the year is ' 287.29 Crore (previous year ' 332.22 Crore).

The following table sets out the maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the end of the financial year as per Power Purchase Agreement:

Equity investments in Subsidiaries and Joint Ventures/Associates are measured at cost as per the provisions of Ind AS 27 - Separate Financial Statements.

17.1 The Board of Directors of the Company in its meeting held on September 24, 2021 has approved the proposal to initiate the process of merger of Jalpower Corporation Limited (a wholly owned subsidiary of NHPC Limited) with NHPC Limited as per applicable provisions of the Companies Act, 2013. Approval of the Ministry of Power, Government of India has been conveyed on 26^th April, 2023. NHPC and JPCL have filed 1^st motion application with MCA on February 08, 2024 for the said merger. The Ministry of Corporate Affairs (MCA) conducted the first Hearing on April 30, 2025.

17.2 Pursuant to Supplementary Joint Venture Agreement entered into by the Joint Venture partners of NHPTL dated 23^rd April, 2024 the Company has transferred 1,31,63,750 equity shares of NHPTL to PGCIL for a nominal consideration of ' 1 during the year. Accordingly, shareholding of the Company in NHPTL has decreased from 21.63% to 12.50%.

18. Disclosure under Ind AS 36 "Impairment of Assets":

Ind AS 36- Impairment of Assets requires an entity to assess on each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the entity is required to estimate the recoverable amount of the asset. If there is no indication of a potential impairment loss, the Standard does not require an enterprise to make a formal estimate of the recoverable amount.

Management has determined that each Project / Power Station of the Company is the smallest identifiable group of assets that generate cash inflows from continuing use that is largely independent of the cash inflows from other assets or groups of assets and accordingly qualifies to be designated as a Cash Generating Unit (CGU). Impairment indicators applicable to these CGUs have been assessed and based on such assessment, Management is of the opinion that no significant change with an adverse effect on the Company has taken place during the year, or is expected to take place in the near future, in the technological, economic or legal environment in which the Company and its Subsidiaries and Joint Ventures/Associates operate. This includes the regulations notified by CERC for the tariff period 2024-29 where there are no major amendments that can have a significantly adverse impact on the future cash flow from the CGUs. There is no evidence available from internal reporting that indicates that the economic performance of a CGU is, or will be, worse than expected.

Further, Eight CGUs of the Company and CGUs of the subsidiaries were assessed for impairment as on 31st March, 2025. The CGUs of the Company were selected based on criteria like capital cost per MW, tariff, etc. and include the two major construction projects of the Company, one Renewable Energy Generation Station and the five most recently commissioned Power Stations over 100 MW capacity. Regulatory Deferral Account balances to be recovered in future through tariff as part of capital cost recognised in one of the CGUs has also been considered along with the carrying amount of the CGU for impairment assessment. In respect of the subsidiaries, all operating power stations and projects under construction have been considered for impairment assessment.

The impairment analysis was carried out on the basis of value-in-use calculation by measuring the recoverable amount of the CGUs as per cash flow projections based on the applicable CERC Tariff Regulations adjusted for the risks specific to each CGU and a pre-tax discount rate arrived at on the basis of the Capital Asset Pricing Model that reflects market assessments of the time value of money.

Based on the assessment, there exists no significant indicator that would suggest an impairment of the carrying amounts of the CGUs of the company including Regulatory Deferral Account Balances and its investment in subsidiaries and Joint Ventures/Associate during FY 2024-25 except impairment provision already created in respect of investments in Loktak Downstream Hydroelectric Corporation Limited (LDHCL), a Subsidiary Company and National High Power Test Laboratory Private Limited. (NHPTL), an Associate Company.

During the previous year, there was no impairment in respect of the Projects / Power Stations of the company and its investment in subsidiaries, except for impairment of investment in National High Power Test Laboratory Pvt. Ltd. amounting to ' 6.08 crore.

19. As per Hydro Policy 2008, 100 units of electricity is to be provided to each Project Affected Family (PAF) notified by the State Government for a period of 10 years from the date of commissioning of a project. Notification by the respective State Governments regarding PAFs is yet to be made. Since the electricity to be provided to the PAFs is to be deducted from free power to the State Government, there shall not be any impact on the profit of the Company.

20. The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020 and has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will account for any related impact in the year the Code becomes effective.

21. Disclosure as per Ind AS 37 'Provisions, Contingent Liabilities and Contingent Assets: Nature and details of provisions (refer Note No. 17 and 22)

(i) General

Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When a provision is discounted, the increase in the provision due to the passage of time is recognised as a Finance Cost.

ii) Provision for employee benefits (Other than provisions for defined contribution and defined benefit plans which have been disclosed as per Ind AS-19 at S. No. 10 of Note No. 34 of Standalone Financial Statements):

a) Provision for Performance Related Pay/Incentive:

Short-term Provision has been recognised in the accounts towards Performance Related Pay/ incentive to employees on the basis of Management estimates and the guidelines of the Department of Public Enterprises, Government of India in this regard.

b) Provision for Employee Remuneration-Pay Anomaly

Short term provision for pay anomaly of the employees of the company has been recognised pursuant to judgement of the Hon'ble Punjab & Haryana High Court in the matter of NHPC Officers Association Vs. Union of India & Others and All India Diploma Engineers Council & Others Vs. Union of India & Others.

(iii) Other Provisions:

a) Provision for Tariff Adjustment:

Provision for tariff adjustment is made on estimated basis against probable refund to beneficiaries on reassessment of tariff billed, pending approval of Tariff/ truing up for the Year 2019-24/ 2024-29 by the Central Electricity Regulatory Commission (CERC).

b) Provision for Livelihood Assistance:

Provision has been recognised at discounted value adjusted for average inflation in the accounts towards special financial package finalised in consultation with the State Government and approved by the Board of Directors of NHPC for livelihood assistance to the project affected families (PAFs) in Parbati-II and Parbati-III. As per the package, pending finalisation of modalities of payment, one eligible person from each PAF shall be provided livelihood assistance equivalent to minimum wage of unskilled category as per the Government of Himachal Pradesh/ Central Government whichever is higher, on monthly instalment basis.

c) Provision for Committed Capital Expenditure:

Provision has been recognised at discounted value in case ofnon- current amount of Capital Expenditure to be incurred towards environment, compensatory afforestation, local area development, etc. which was a pre-condition for granting approval for construction of the project and expenditure towards which had not been completed till commissioning of the project. Such provisions are adjusted against

the incurrence of actual expenditure as per demand raised by the concerned State Government Authorities.

d) Provision for restoration expenses of insured assets:

Provision has been recognised in the accounts based on Management Estimates for restoration of damaged assets insured under Mega Policy and Construction Plant and Machinery Policy. The provision is adjusted against incurrence of actual expenditure towards restoration of the assets.

e) Provisions for expenditure in respect of Arbitration Award/Court cases:

This includes provisions created on the basis of management assessment as to probable outflow in respect of contractors claims against which arbitration award/Court decision have been received and which have been further challenged in a Court of Law. Utilization/outflow of the provision is to be made on the outcome of the case.

f) Provisions- Others: This includes provisions towards:-

(i) Contractor claims, Land compensation cases, disputed tax demands and other cases created on the basis of management assessment towards probable outflow. Utilization/outflow of the provision is to be made on the outcome of the case.

(ii) Wage revision of Central Government Employees whose services are utilised by the company.

(iii) Provision for interest to beneficiaries on excess tariff recovered in terms of Tariff Regulations for the Year 2024-29 where the capital cost considered for fixation of tariff by the CERC on the basis of projected capital cost as on Commercial Operation Date or the projected additional capital expenditure exceeds the actual capital cost incurred.

(iv) Upfront provision for rebate towards interest on House Building Advance provided to employees based on the historical trend of rebate allowed.

(v) Upfront provision for rebate to customers for sale of power based on the historical trend of rebate allowed.

(vi) Provision for impairment of investment by Employees Provident Fund Trust in certain interestbearing Financial Instruments including interest accrued thereon but not received.

(vii) Provision for cost of Carbon Credits / Certified Emission Reductions (CERs)/ Verified Carbon Units (VCUs) as per Management estimate.

22. Disclosures relating to creation of Regulatory Deferral Account (RDA) balances as per Ind AS 114:

The Company is primarily engaged in the construction and operation of hydroelectric power projects. The price (tariff) to be charged by the company for electricity sold to its customers is determined by Central Electricity Regulatory Commission (CERC) under applicable CERC (terms and conditions of tariff) Regulations. The said price (tariff) is based on allowable costs like interest costs, depreciation, operation and maintenance charges plus a stipulated return. This form of rate regulation is known as cost-of-service regulations. The basic objective of such regulations is to give the entity the opportunity to recover its costs of providing the goods or services plus a fair return.

For the purpose, the Company is required to make an application to CERC based on capital expenditure incurred duly certified by the Auditors or already admitted by CERC or projected to be incurred upto the date of commercial operation and additional capital expenditure duly certified by the Auditor or projected to be incurred during tariff year. The tariff determined by CERC is recovered from the customers (beneficiaries) on whom the same is binding.

The above rate regulation results in creation of a right (asset) or an obligation (liability) as envisaged in the accounting framework which is not the case in other industries. Guidance Note on Accounting for Rate Regulated Activities (Previous GAAP) issued by the ICAI is applicable to entities that provide goods or services whose prices are subject to cost-of-service regulations and the tariff determined by the regulator is binding on the customers (beneficiaries). As per guidance note, a regulatory asset is recognized when it is probable (a reasonable assurance) that the future economic benefits associated with it will flow to the entity as a result of the actual or expected actions of the regulator under applicable regulatory framework and the amount can be measured reliably.

The Guidance Note also provides that in some cases, a regulator permits an entity to include in the rate base, as

part of the cost of self-constructed (tangible) fixed assets or internally generated intangible assets, amounts that would otherwise be recognized as expense in the statement of profit and loss in accordance with Accounting Standards.

With effect from 01.04.2016, such rate regulated items are to be accounted for as per Ind AS 114 'Regulatory Deferral Accounts.' Ind AS 114 allows an entity to continue to apply previous GAAP accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances. For this purpose, Guidance Note of the ICAI on 'Accounting for Rate Regulated Activities' shall be considered to be the previous GAAP.

A) Regulatory Deferral Account balances in respect of Subansiri Lower Project:

Construction activities at site of Subansiri Lower Project were interrupted from 16.12.2011 to 30.09.2019 due to cases filed before the National Green Tribunal. Technical and administrative work at the project, however, continued.

Vide order dated 31st July 2019, the Hon'ble NGT held that there is no justification in the petitions of the applicants pleading bias in the constitution of the Expert Committee by the MoEF & CC and accordingly, the cases against Subansiri Lower Project pending with the NGT were dismissed. Active construction work at the project was resumed from October 2019.

In line with the opinion of Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), borrowing cost of ' 2735.61 Crore (upto Previous year ' 2735.61 Crore), employee benefits expense, depreciation and other expense of ' 1427.67 crore (upto Previous year ' 1427.67 Crore), net of other income of ' 322.60 Crore (upto Previous year ' 322.60 Crore) incurred till 30th September 2019 was charged to the Statement of Profit and Loss.

CERC Tariff Regulations allows inclusion of such costs for fixation of tariff in case the cessation of construction activities were beyond the control of the Project Developer. Accordingly, and in line with Guidance Note on Rate Regulated Activities and Ind AS 114, the aforesaid expenditure has further been recognized as Regulatory Deferral Account (Debit) balances

As active construction work at the project has been resumed during FY 2019-20, borrowing cost, employee benefits expense, depreciation and other expense (net of other income) incurred with effect from 01.10.2019 has been capitalized as Expenditure attributable to Construction.

The total Regulatory Deferral Account Debit balances recognised in respect of Subansiri Lower Project for and upto the year ended 31.03.2025 are as under:

No regulatory deferral account balances in respect of Subansiri Lower Project has been recognized during the year 2024-25.

As per management assessment, there is no impairment in the carrying amount of ' 19467.91 crore (Previous Year ' 16614.06 crore) included under Capital Work in Progress of the Project including the regulatory deferral account balances recognized therein.

After Commercial Operation Date (COD) of the Project, amount recognized as Regulatory Deferral Account balances in respect of Subansiri Lower Project shall be amortized/ liquidated in proportion to depreciation following the rates and methodology notified under CERC Tariff Regulations over the life of the Project, i.e. 40 years.

Tariff Regulations for the period 2024-29 have been notified by the CERC. These regulations allow capitalisation of borrowing and other attributable costs incurred due to uncontrollable factors including force majeure events like blockade/ embargo, delay in obtaining statutory approval for projects etc. in line with the earlier Tariff Regulations. Accordingly, Management considers that adverse changes in Tariff Regulations are not likely to be a significant area of risk for the future recovery of RDA balances recognized in respect of Subansiri Lower Project.

Risks and uncertainties that might affect the future recovery of the Regulatory Deferral Account balances being created in respect of Subansiri Lower Project are:

a) Demand Risk: Recovery of the Regulatory Deferral Account Balances shall be by way of depreciation through tariff. Accordingly, the same is affected by the normal risks and uncertainties impacting sale of electricity in India like difficulty in signing of long term Power Purchase Agreements (PPAs), at the rate covering the cost and required return ensuring the viability of the Project.

b) Regulatory Risk: Tariff regulations further provide that if the delay is not attributable to the generating company but is due to uncontrollable factors, IEDC may be allowed after due prudence check. Any disallowance of expenditure after prudence check can affect the quantum of regulatory deferral account balances to be recovered from beneficiaries.

B) Regulatory Deferral Account balances due to moderation of tariff of Kishanganga Power Station:

As per CERC Tariff Regulations 2014-19/2019-24/2024-29, depreciation on capital cost of a Power Station forms one of the components of tariff. Depreciation is charged in the books as per the rates provided in the Tariff Regulations 2014-19/2019-24/2024-29 in the initial operating period of 12 years and thereafter the balance depreciation is spread equally over the remaining life so as to recover 90 percent of the capital cost of the Power Station by way of depreciation. As per Tariff regulations 2019-24/2024-29, the useful life of a hydropower station is 40 years.

As per CERC Tariff Regulations, 2019-24/2024-29, tariff for sale of electricity by the generating company may also be determined in deviation of the norms specified in the Regulations provided the levelised tariff over the useful life of the project on the basis of the norms in deviation does not exceed the levelised tariff calculated on the basis of the norms specified in the Regulations.

In the case of Kishanganga Power Station (Commercial Operation Date: 17^th May, 2018), the Company has made moderation in tariff by fixing lower tariff in the initial ten years and then fixing higher tariff in the remaining 30 years by way of charging 1.5% depreciation from the 1^st to the 10^th year and 2.5% depreciation from 11th to the 40th year, thus aggregating 90 percent of the Capital Cost of the Power Station. This moderation, with the intent to reduce tariff in the initial years of operation, has been duly approved by the CERC.

Moderation of depreciation rates for tariff determination in Kishanganga Power Station gives rise to a significant mismatch by way of higher depreciation charged in the books (as per CERC Tariff Regulations, 2024-29) during the first 12 years of commercial operation and recovery by way of tariff as per Tariff Order of the Power Station approved by the CERC. The lower recovery during the first 12 years would, however, be compensated over the balance period of the operational life of the Power Station by way of higher recovery of depreciation through tariff than that charged in the books. This deferment of recovery of costs with the intent to reduce tariff in the initial years and its recovery in subsequent years demonstrates that an asset exists by way of the right to recover current costs in future through tariff and such right is enforceable.

Keeping in view the provisions of Ind AS 114- "Regulatory Deferral Accounts', difference between depreciation charged to the Statement of Profit and Loss Account as per Tariff Regulations 2024-29 and the depreciation allowed by way of tariff and which is recoverable from the beneficiaries in subsequent periods is being recognized as 'Regulatory Deferral Account balances' with effect from Commercial Operation Date of the Power Station. RDA balances created during the first 12 years of commercial operation shall be recovered from beneficiaries by way of higher depreciation as a component of tariff over the balance useful life of the Power Station, i.e. over a period of 28 years.

The Company has long term Power Purchase Agreements in respect of Kishanganga Power Station. Since the proposal for moderation of tariff already stands approved by the CERC, the Company does not envisage any significant risk as regards recoverability of the Regulatory Deferral Account balances created in respect of Kishanganga Power Station.

However, as depreciation charge in the books and recovery thereof through tariff are dependent on the Capital Cost of the Power Station as allowed by CERC, recovery of the regulatory deferral account balances in respect of Kishanganga Power Station would be subject to Regulatory Risk. Approval of actual capital expenditure on the Power Station including expenditure on account of time and cost overruns etc. are subject to prudence check by the CERC. Any disallowance of expenditure after prudence check can affect the quantum of regulatory deferral account balances to be recovered from beneficiaries.

C) Regulatory Deferral Account balances in respect of exchange differences on Foreign Currency Monetary items:

As per Ind AS 23- "Borrowing Costs'; borrowing cost on foreign currency loans to the extent treated as an adjustment to interest costs is allowed to be capitalised during construction period. Further, Ind AS 21-"The Effects of Changes in Foreign Exchange Rates" provides that exchange differences arising on settlement or translation of monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized in the Profit and Loss in the period in which they arise.

Para D13AA of Ind AS 101- "First Time Adoption of Ind AS" provides that a first-time adopter may continue the existing accounting policy adopted for accounting of exchange differences arising from translation of longterm foreign currency monetary items. Accordingly, for periods beginning on or after 01.04.2016, all exchange differences arising on translation/ settlement of monetary items other than exchange difference on borrowings to the extent treated as an adjustment to interest cost during construction period are to be charged to the Statement of Profit and Loss.

As per the CERC Tariff Regulations 2014-19, any gain or loss on account of exchange risk variation shall be recoverable as part of capital cost for calculation of tariff on Commercial Operation Date (COD) of a project and on actual payment basis during Operation and Maintenance (O&M) period. Further, CERC in previous tariff orders has allowed exchange differences incurred during the construction period as a part of capital cost.

Keeping in view the provisions of Ind AS 114- "Regulatory Deferral Accounts" as regards recognition and CERC Tariff Regulations 2014-19 as regards recoverability, exchange differences arising on translation/ settlement of foreign currency monetary items to the extent charged to the Statement of Profit and Loss are being recognized as 'Regulatory Deferral Account balances' with effect from 01.04.2016. These balances are adjusted from the year in which the same become recoverable from or payable to the beneficiaries after Commercial Operation Date (COD) of the Project.

Regulations regarding recoverability of Foreign Exchange rate Variation (FERV) as part of capital cost for calculation of tariff on Commercial Operation Date (COD) of a project and on actual payment basis during O&M period of a Power Station as per Tariff Regulations 2019-24 have been continued for the tariff period 2024-29 also. Accordingly, Management considers that adverse changes in Tariff Regulations are not likely to be a significant area of risk for the future recovery of RDA balances recognized in respect of exchange differences on Foreign Currency Monetary items.

Recoverability of the Regulatory Deferral account balances is however, subject to Demand Risk since recovery/ payment of the regulatory deferral debit/credit balance shall be by way of billing to the beneficiaries. Accordingly, the same is affected by the normal risks and uncertainties impacting sale of electricity in India like difficulty in signing of long term PPAs, etc

D) Regulatory Deferral Account balances on account of settlement of Court/Arbitration cases ( Under Vivad Se Viswas Scheme)

Vide Office Memorandum dated 29.05.2023, the Ministry of Finance, Government of India has notified the "Vivad se Viswas II (Contractual Disputes) Scheme" (the Scheme) for settlement of contractual disputes between, CPSEs (the 'Procurer') and the counter-party to the dispute (the 'Contractor'). Disputes where the award by Court/ Arbitral Tribunal (AT) is only for monetary value are eligible for settlement under this scheme. Cases where the award stipulates specific performance of contract (either fully or partially) shall not be eligible for settlement through this scheme.

As per regulation 24, 25 & 26 of CERC Tariff Regulations, 2019-24, any expenditure incurred (principal amount of award) to meet award of arbitration or for compliance of order or directions of any Statutory Authority, or Order or decree of any Court of Law is allowed through tariff in the form of additional capitalization. Further, expenditure towards interest is allowed as reimbursement by CERC as per the approach adopted by CERC in their order dated 30.11.2022 in Petition no 145/GT/2020 in respect of Chamera-I Power Station.

As per Regulation 91 of CERC Tariff Regulations, 2024-29, in cases where there is a liability with respect to capital works on account of award of arbitration having principal amount along with interest payment, the principal amount actually paid shall be capitalised. Provided that any interest amount associated with the arbitration award and actually paid shall be recovered in instalments.

Since, expenditure towards interest in case of award of arbitration or for compliance of order or directions of any Statutory Authority, or Order or decree of any Court of Law was allowed as reimbursement by CERC during tariff period 2019-24 and tariff regulation 2024-29 also allows for recovery of interest expenditure on arbitration award, the interest paid/to be paid in respect of cases being settled under the Scheme has been charged to the Statement of Profit and Loss. Further, keeping in view the provisions of Ind AS 114-"Regulatory Deferral Accounts', such interest amount to the extent charged to the Statement of Profit and Loss till 31^st March 2025, amounting to ' 135.51 Crore have been recognized as 'Regulatory Deferral Account (Debit) Balances'.

Recoverability of the Regulatory Deferral account balances is however, subject to Demand Risk since recovery/ payment of the regulatory deferral debit/credit balance shall be by way of billing to the beneficiaries. Accordingly, the same is affected by the normal risks and uncertainties impacting sale of electricity in India like difficulty in signing of long term PPAs, etc

E) Regulatory Deferral Account balances on account of deferred tax recoverable from beneficiaries / Payable to beneficiaries:

As per CERC Tariff Regulations, deferred tax arising out of generating income for the tariff period 2004-09 is recoverable from beneficiaries in the year the same materializes as current tax. For the tariff period 2014-19, deferred tax is recoverable by way of grossing up the Return on Equity by the effective tax rate based on actual tax paid. Till 31st March, 2018 the deferred tax recoverable from beneficiaries in future years was presented as an adjustment to deferred tax liability and was not recognised as a RDA.

The practice was reviewed based on an opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India (EAC of the ICAI) obtained during FY 2018-19. As per the said opinion, deferred tax recoverable is not a deductible temporary difference resulting into deferred tax asset under Ind AS 12 but rather fulfils the definition of regulatory deferral account balance in terms of Ind AS 114.

Accordingly, the Company had reclassified the deferred tax recoverable up to 2009 and deferred tax adjustment against deferred tax liabilities pertaining to tariff period 2014-19 earlier presented as an adjustment to Deferred Tax Liability, as a Regulatory Deferral Account balance during FY 2019-20.

There is no change in mode of recovery of current tax and deferred tax as provided in the Tariff Regulations 201419 and onwards.

The regulated assets ( )/liability (-) recognized in the books to be recovered from or payable to beneficiaries in future periods are as follows:

Regulatory Deferral Account Credit balances on account of Minimum Alternative Tax (MAT) Credit:

The Company has recognised Deferred Tax Assets on account of MAT Credit entitlement amounting to ' 2424.58 Crore up to FY 2024-25 (up to previous year ' 2424.58 crore) based on management estimate that sufficient taxable profit will be available in future to utilize the amount of recognised MAT Credit in the Books of Accounts. Out of the same an amount of ' 954.22 crore (up to previous year ' 683.46 crore) has been utilised till FY 2024-25.

MAT Credit arising out of generating income as and when utilized by the Company is to be passed on to the beneficiaries. Accordingly, Regulatory Deferral Account (Credit) Balance of ' 1048.79 crore up to the current year (previous year ' 1048.79 crore) has been recognised in respect of MAT Credit to be utilised in future and further passed on to the beneficiaries. Out of the same an amount of ' 125.59 crore (up to previous year ' 125.59 crore) has been passed on to beneficiaries till FY 2024-25.

Recoverability of Regulatory Deferral Account (Debit) balance recognised on account of deferred tax recoverable up to tariff period 2004-2009, Deferred Tax adjustment against Deferred Tax Liabilities pertaining to tariff period 2014-19 and onwards and discharge of Regulatory Deferral Account (Credit) balance created on MAT Credit are dependent upon the future operating performance of the Company. Further, since these Regulatory Deferral Account (Debit) balances relate to past tariff periods, recoverability is also subject to the regulatory risk of CERC allowing recovery of such balances in future tariff regulations.

24. Expenditure of ' 226.94 Crore incurred on Bursar Project accounted for as Capital Work in Progress was provided for in earlier years due to significant uncertainties related to viability of tariff. Till FY 2022-23, CWIP in respect of ibid expenditure was carried forward at NIL value. During FY 2023-24, Ministry of Water Resources (MoWR) was approached to reimburse the expenditure amounting to ' 226.94 Crore (previous year ' 226.94 Crore) incurred on the Project and the said amount was reclassified as recoverable from MoWR during the year. During the year, an amount of ' 99.26 Crore has been received from the MoWR as an amicable settlement. Since no further reimbursement is receivable from the MoWR on this account, the balance expenditure on Bursar Project amounting to ' 128.74 Crore incurred till 31.03.2025 has been reclassified as CWIP in the books of accounts and the same has further been fully provided for.

25. Kotlibhel-IA, Kotlibhel-IB and Kotlibhel-II projects are three of the 24 hydro-electric projects located in the State of Uttarakhand which are covered by the order of Hon'ble Supreme Court of India dated 13.08.2013 directing MoEF not to grant environmental/ forest clearance to these projects until further orders. In accordance with the direction of Hon'ble Supreme Court dated 24.11.2015, MoEF&CC has filed an affidavit in the Hon'ble Court on 17.08.2021, based on consensus of MoEF&CC, Ministry of Power, Ministry of Jal Shakti and State Govt. of Uttarakhand for construction of 7 hydroelectric projects, which does not include Kotli Bhel IA, IB & II projects. Pending final decision of the Hon'ble Supreme Court, the expenditure incurred upto 31.03.2025 amounting to ' 285.15 crore (previous year ' 279.89 Crore), ' 42.95 crore (previous year ' 42.95 Crore) and ' 51.42 crore (previous year ' 51.42 Crore) have been carried forward as Capital Work in Progress in respect of Kotlibhel-1A,

Kotlibhel-IB and Kotlibhel-II projects respectively. However, as an abundant precaution, provision for these amounts totalling ' 379.52 crore (previous year ' 374.26 Crore) up to 31.03.2025 has been made in the books of accounts.

26. Expenditure incurred on Tawang Stage-I and Stage-II Hydroelectric Projects amounting to ' 253.79 crore (previous year ' 237.15 Crore) has been recognised as recoverable from NEEPCO. However, pending execution of Tripartite Agreement amongst GoArP, NHPC and NEEPCO Ltd and in view of the significant uncertainties in realisation, such amount recoverable has been fully provided for in the books of accounts.

27. a) Expenditure of ' 35.82 Crore on Survey & Investigation of Dhauliganga Intermediate, Chungar Chal and

Kharmoli Lumti Tulli Hydroelectric Projects accounted for as Capital Work in Progress and provided for in earlier years has been written off during the year with the approval of the Board of Directors of the Company.

b) Measures to reduce capital cost and optimise tariff of Goriganga IIIA Project are being explored. Pending decision on the same, the expenditure incurred upto 31.03.2025 amounting to ' 46.72 Crore (previous year ' 46.71 Crore) have been carried forward as Capital Work in Progress. However, as an abundant precaution, provision for ' 46.72 Crore (previous year ' 46.71 Crore) has been made in the books of accounts.

28. (i) As per MoU signed between NHPC & Government of Himachal Pradesh (GoHP) on 25.09.2019 and

Implementation Agreement (IA) signed on 26.08.2022 for implementation of Dugar HE Project, certain concessions were extended as regards free power, reimbursement of SGST, etc. so as to make the tariff of the Project commercially viable. Vide Cabinet decision dated 25.08.2024, GoHP has unilaterally altered the terms & conditions and withdrawn the concessions agreed in the IA which renders the tariff of the project unviable. NHPC has filed a writ petition in the Hon'ble High Court of Shimla to quash the changes in the said Cabinet decision and to honour the original MoU and IA so that implementation of the project could commence. The Hon'ble High Court of Shimla, vide order dated 20th March, 2025 had directed that the State Government is required to take a decision either to restore the terms and conditions as mutually agreed by the Government of Himahcal Pradesh with NHPC and facilitate the expeditious implementation of the project or to take the decision to take over the project after reimbursing the expenditure incurred along with the interest. In compliance to the aforesaid order, Additional Advocate General on behalf of the respondent (GoHP) has placed on record instructions dated 10.04.2025 as per which the Government has decided to take over Dugar Project allotted to NHPC Ltd and further to appoint an independent evaluator for evaluating the actual expenditure incurred on this project. Pending final decision of the Hon'ble High Court, expenditure of ' 83.28 Crore (Previous Year ' 73.66 Crore) incurred on Dugar Project has been carried forward in the Financial Statements for FY 2024-25 as Capital Work in Progress.

(ii) The State of Himachal Pradesh vide Cabinet Decision dated 05th April, 2025 took a decision to take over Bairasiul Power Station, since period of forty years has been completed since commissioning. The matter has been contested by the company on the ground that the porject was handed over to NHPC by the Government of India vide Sale Deed on perpetual basis. Pursuant to hearing on the Writ Petition filed in this regard, The Hon'ble High Court of Shimla has stayed the decision of the State of Himachal Pradesh and ordered to maintain status quo with regard to the project.

29. Disclosure regarding Monetization/ Securitisation:

Monetization/ Securitisation during FY 2024-25 :

During FY 2024-25, the Company had entered into an agreement with Bank of Baroda for Monetization of Free Cash Component (Return on Equity) of Dulhasti Power Station for next 8 years under the National Monetization Pipeline issued by the NITI Aayog for an amount of ' 2348.45 Crore for funding of CAPEX of the Company. The amount is repayable over a period of 8 years at ' 33.08 Crore per month @ 7.90% interest rate (1 Year G-Sec plus spread of 1.07%). The first applicable interest rate shall be calculated based on benchmark rate one day before the first disbursement plus quoted spread. The benchmark rate (1 Yr G Sec) shall be reset every 3 months on the first day of each calendar quarter. First such reset was done on 1^st January 2025.

Monetization/ Securitisation during FY 2023-24:

During FY 2023-24, the Company has entered into an agreement with HDFC Bank Limited for securitization of free cash (Return on Equity) of Kishanganga Power Station for 8 years under the National Monetisation Pipeline issued

by the NITI Aayog for an amount of ' 2046.94 Crore for funding of CAPEX of the Company. The amount is repayable over a period of 8 years at ' 28.75 Crore per month @ 7.82% discount rate (1 Month T BILL plus spread of 1.00%). The applicable discount rate from the date of disbursement till date of next reset shall be the rate based on benchmark rate one day prior to date of disbursement and spread as quoted by bidder. The discount rate shall be reset every month. First such reset was done on 1st March 2024.

The Company has classified the outstanding amount as a Financial Liability (Refer Note No. 16.1 of the Financial Statements).

33. Impact of change in the accounting policies and estimates: During the year, following changes to the accounting policies have been made:

(i) Accounting Policy on derivative Financial Instruments designated as Hedge has been added under material accounting policies for the contracts designated as Hedge during the year. Impact of Hedge accounting has been disclosed under Note 33(2)(D) (iv) of the Standalone Financial Statements.

(ii) Minor modifications have been carried out in the Material accounting policy on depreciation & amortisation of Land-Right of Use and Computer software. Impact on profit due to such change is insignificant.

(iii) Consequent to the notification of CERC Tariff Regulation 2024-29, capital spares exceeding Rs 10 Lakh be allowed for reimbursement in Tariff. Accordingly, management has changed its estimate for evaluating an item of inventory qualifies as a capital spare forming part of Property, Plant & Equipment. Such change in the estimate did not have any material impact on the profit in current period and are not expected to significantly affect the future periods. However, spares costing less than ' 10 Lakh, amounting to ' 46.97 crore have been reclassified to Inventory during the year due to such change.

34. Disclosure as per Ind AS 103 -Business Combinations:

Merger of Lanco Teesta Hydro Power Limited (LTHPL) with NHPC Limited, (the "Company"):

NHPC Limited had acquired Lanco Teesta Hydro Power Limited (LTHPL) as a wholly owned subsidiary in FY 201920. The Company is engaged in construction of 500 MW Teesta-VI Hydroelectric Project in the state of Sikkim.

The Board of Directors of the company in its meeting dated 7^th December, 2021, approved a composite scheme for amalgamation of wholly owned subsidiary i.e., LTHPL ("Transferor Company") with NHPC Ltd ("Transferee Company" or "the Company") pursuant to Sections 230-232 and other applicable provisions of the Companies Act, 2013. The merger was conducted in accordance with the terms and conditions specified in the scheme of amalgamation ("the Scheme").

Approval of the Scheme of Amalgamation was conveyed vide Ministry of Corporate Affairs (MCA) Order dated 2^nd January 2025 with 1^st April, 2022 being the appointed date. The Scheme has become effective on 27th January 2025 upon filing of the certified copy of the orders passed by NCLT with the Registrar of Companies. The transferor company was dissolved without winding up on the effective date.

Accounting Treatment:

The Transferee Company has accounted for the Scheme in accordance with the approved Scheme as a common

control business combination as per the "Pooling of Interest Method" as laid down in Appendix C of Ind AS-103: Business Combinations, notified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015. Accordingly, the Transferee Company has accounted for the merger in its books of accounts as on 31st March, 2025 as under:

(i) All assets, liabilities and reserves of LTHPL which were appearing in the consolidated financial statements of the Group immediately before the merger was accounted for as a part of the separate financial statements of NHPC Limited.

(ii) Inter-company balances such as investments in the equity shares of LTHPL or loan and advances held inter se, in the respective books of accounts, stood cancelled.

(iii) The identity of the reserves was preserved and appears in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor. Accordingly, all the reserves of LTHPL under different heads appearing in the consolidated financial statements immediately before the merger was accounted for as the corresponding reserves of NHPC Limited.

(iv) No adjustments were made to reflect fair values, or recognise any new assets or liabilities. No equity shares of either entity were exchanged to effect the merger.

The appointed date for the merger being 1^st April, 2022, the figures in the Balance Sheet of the Transferee Company for the year ended 31^st March 2024 and 31^st March, 2023 have been restated w.e.f. 1^st April, 2022. The said restatement has been carried out as if the business combination had occurred from the beginning of the preceding period in accordance with Appendix C to Ind-AS 103. Summarized Balance Sheets of LTHPL along with eliminations for the previous years from the Appointed date are as under:

35. Order of the Hon'ble Punjab & Haryana High Court in the matter of NHPC Officers Association vs. Union of India & Others and All India Diploma Engineers Council and Others vs. Union of India & Others as per which pay anomalies in certain scales of pay were to be resolved w.e.f January 1, 1997 was received during the year ended 31st March, 2025. Pursuant to the said Order, arrears payable to employees/ ex-employees has been estimated at ' 562.29 Crore. Out of the same, ' 168.20 Crore has been capitalized while ' 394.09 Crore has been charged to the Statement of Profit & Loss, out of which ' 299.19 Crore has been recognized as Unbilled Revenue, being the amount recoverable from beneficiaries as per applicable CERC Tariff regulations and earlier Tariff Orders.

36. Other Disclosure required under Schedule-III of the Companies Act, 2013:

(i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the or the like on behalf of the Ultimate Beneficiaries.

(ii) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the

Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(iii) The Company has not been declared wilful defaulter by any bank or financial institution or any other lender.

(iv) The scheme of amalgamation of LTHPL with the Company approved by the competent authority during the year in terms of sections 230 to 237 of the Companies Act, 2013 has been implemented. (Refer Note 34 (34)). Further no other arrangements approved by the competent authority during the year in terms of sections 230 to 237 of the Companies Act, 2013. However current status of the ongoing amalgamation process of JPCL (100% subsidiary of the Company) are given at Note No. 17.1 of Note 34 the Standalone Financial Statements.

(v) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(vi) The provisions of clause (87) of Section 2 of the Act read with the Companies (Restriction on Number of Layers) Rules, 2017 are not applicable to the company as per Section 2(45) of the Companies Act,2013

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

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

(ix) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

(x) During the Financial year, there is no delay by the Company in the registration of charges or satisfaction with Registrar of Companies beyond statutory period.

37. The Company has commissioned following projects in the month of April-2025:

(i) 800 MW Parbati-II HE Project.

(ii) 107.14 MW out of total 300 MW Karnisar Solar Power Plant, Bikaner

38. Figures for the previous year have been re-grouped/re-arranged/re-classified/re-stated wherever necessary.