Right, Preference and restriction attached to shares

The equity share are the only class of Share capital having par value of Rs 10 per share. Every holder of equity share present at a meeting in person or by a proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Equity share carry voting right proportionate to the paid up value per share. In the event of liquidation of the company, holders of the equity share are entitled to be repaid the amounts credited as paid up on those equity share. All surplus assets after settelment of liabilities as at the commencement of winding up shall be paid to the holders of equity share in proportion of their shareholding.

1 These Financial Statements are presented in Indian Rupees (INR) which is the Company's functional currency.

2 Figures have been rounded off to nearest Rupees in lakhs. Previous year figures have, wherever necessary, been rearranged/regrouped to conform the presentation of the Current year.

3 License fee to DoT and Railways Revenue Share computed at prescribed rate of 8% and 7% respectively.

4 Employees benefit expenses and administrative expenses are apportioned to project works based on 2% and 1% respectively of expenses incurred on projects.

5 The Current Assets/ Liabilities have been determined if they are receivable / payable within 1 year from the date of Balance Sheet. Rest has been treated as Non-Current.

6 Self-Insurance Reserve has been provided @ 0.12% p.a. on the Gross Block of Property, Plant & Equipment's installed at PoP's and customer premises to meet future losses which may arise from uninsured risks.

Para-wise disclosure of Applicable Indian Accounting Standards are as below:

111. Financial Instruments FINANCIAL ASSETS Trade receivables

As per Ind AS 109, Company is following simplified approach of expected credit loss model for recognizing the allowance for doubtful debts.

Security Deposits

There are some deposits which are being kept with government authorities e.g., commercial taxes department, Railways, Electricity etc. which are considered as financial asset. A period of 10 years has been assumed for discounting these items.

Investments

Company makes investment in liquid mutual funds which are fair valued based on the unit price prevailing as at the period end and consequent gain/loss is taken to the profit and loss A/c.

FINANCIAL LIABILITIES

Security Deposits, Retention Money and Earnest Money Deposit are classified as Financial Liabilities.

12 IND AS 2: Inventories

i The total carrying amounts of inventories as at 31.03.2023 is '92 Lakhs ( March'22 - ' 94 Lakhs) as shown in Note No 9 of Balance Sheet.

ii There is no reversal or any write-down that is recognized as a reduction in the amounts of inventories recognized as expense in the year and presented in cost of sales.

iii Nothing out of carrying amounts of inventories has been pledged as security for liabilities.

13 Disclosures in respect of IND AS 8: Acounting Policies, Changes In Accounting Estimates And Errors

Any item of prior period error which exceeds 1% of revenue from operations is considered for materiality test which is in accordance with Schedule III of the Companies Act 2013. Accordingly, in compliance with Ind AS-8, there is no need to re-state financial statements of prior period, since prior period errors are not material in nature.

Reconciliation between the average effective tax rate and the applicable tax rate -

Effective tax rate is generally influenced by various factors, including differential tax rates, non-deductible expenses, provisions, and other tax deductions. The change in effective tax rate from Mar'2022 to Mar'2023 is mainly due to change in tax rates as tabulated here under:

15 Disclosures as required by Ind AS 16 - Property, Plant & Equipment & Ind AS 38 - Intangible Assets

i The depreciation / amortization has been charged at the straight-line method.

ii Company assessed the impairment of Assets and is of the opinion that since the Company is going concern and there is no indication exist for the impairment of the PPE except in case of NE project for which disclosure is given under Ind AS-36.

iii The useful life of all the PPE / Intangible Assets have been defined in the accounting policies.

iv A reconciliation of the carrying amount at the beginning and end of the period is as per Note No. 2 of Balance Sheet.

v No assets have been classified as held for sale in accordance with Ind AS 105.

vi Company has not revalued its property, plant & Equipment (including right of use assets ).There is no increase or decrease on account of impairment loss recognized or reversed in other comprehensive income in accordance with Ind AS 36.

vii No Capital expenses was incurred on Assets not owned by the Company during the period ended 31.03.2023.

viii There is no obsolete asset which has been so far held under CWIP/Fixed Asset.

ix Depreciation / amortization on all the PPE / Intangible assets have been disclosed separately.

x There is no restriction on title of PPE / Intangible Assets, and nothing has been pledged as security and liability.

xi The amount of contractual commitment for acquisition of PPE is ' 14522 lakhs (March'22 - ' 17004 Lakhs).

xii There is no amount to be received on account of compensation from third party for items of PPE / Intangible assets that were impaired, lost or given to Company that is to be recognized in the statement of profit & Loss account.

xiii Entire depreciation / amortization has been recognized in the statement of Profit & Loss account; nothing has been charged to cost of other assets. Accumulated depreciation at the end of the year has been shown separately.

xiv There are no temporarily idle PPE / intangible assets.

xv ' 53890 (FY22- 41072) Lakhs Gross Carrying value of assets have been fully depreciated, but still are in use.

xvi During the reporting year Assets having Net Book Value of ' 20 Lakh (Gross Book Value 53 Lakhs) has been retired with sale proceeds of ' 6 Lakh and loss of Rs 14 lakh has been booked.

xvii In the following asset category, depreciation is charged at different rates as compare to the rates prescribed in part C of Schedule II of the Companies Act'2013 on the basis of useful life determined by technical committee:

16 In terms of contractual Clause of agreement, if the customer terminates the services of the link during minimum subscription period, RailTel shall refund or adjust (against the future orders) the already paid IRU charges after deducting the termination penalty.

17 Disclosure Requirement as per IND AS 19 - Employee Benefits

Employee Benefits - Defined Contribution Plan National Pension Scheme:

RailTel pays an amount equal to 10% of Basic pay DA of the eligible employees in National pension scheme. Amount for FY 2022-23 is ' 530 Lakhs

Provident Fund:

All employees of the Company (excluding those on deputations) are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and employer make monthly contribution to the plan at a pre-determined rate (presently 12%) of the employees' salary consisting of Basic pay and Dearness allowance. These contributions are made to the fund administered and managed by Provident Fund Commissioner. The contributions of PF of the employee on deputation are made to the funds of their parent department. Amount for FY 2022-23 is ' 785 Lakhs

Employee Benefits - Defined Benefit Plan Gratuity

The Company has scheme of gratuity plan for its employees from LIC. Every employee who has completed at least five years of service are entitled for gratuity at the time of relinquishment of employment for 15 days of last drawn salary for each completed year of service. The scheme is funded through LIC in the form of qualifying insurance policy for its employees except outsourced Manpower.

Leave Encashment

The Company has scheme of Leave Encashment payable to eligible employees who have accumulated earned leave subject to maximum ceiling of 300 earned leave including half pay leave. Leave salary is provided for based on actuarial valuations, as at the Balance Sheet date. The scheme is funded through LIC.

Post-Retirement Medical:

The Company has Post-Retirement Medical Scheme (PRMS) to provide assistance for meeting a part of medical expenses incurred by retired members only after their retirement for dependent family members and self and dependent family members of the ex-employee in case of death of the employee. Post-Retirement Medical is provided for based on actuarial valuations, as at the Balance Sheet date. The following tables summaries the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the Balance Sheet for the above defined benefit plan.

Gratuity Note:

The closing net liability amount mentioned in Table XI of Section 9 reconciled with Zero difference.

The following material developments in the inter-investigation period have led to a significant variation in the liability.

i) There has been an increase in the number of employees due to outsourced employees covered under Employees gratuity scheme.

ii) The average salary over the period has decreased due to inclusion of outsourced employees.

Leave Encashment Note:

The closing net liability amount mentioned in Table XI of Section 9 reconciled with Zero difference.

The following material developments in the inter-investigation period have led to a significant variation in the liability.

"i) There has been an increase in the number of employees.

ii) The average salary over the period has increased.

iii) The leaves valued over the period has increased."

Grant/Subsidy on NE Project:

1. The Company had undertaken projects of NE-1 and NE-2 with a total capital outlay of ' 45125 Lakhs for which anticipated subsidy of Universal Service Obligation Fund of Department of Telecommunication, Government of India was pegged at ' 38800 Lakhs and net cash outflow of ' 6325 Lakhs. Against this, the Company has incurred total capital expenditure of ' 29520 Lakhs (Net of Recovery) out of which material of an amount of ' 2707 lakhs have been transferred to other projects/regions. Company has received subsidy of ' 3146 Lakhs with a net cash outflow of '23667 Lakhs up to 31.03.2023. In the opinion of the management, the Company has complied with all the conditions set out for the subsidy and accordingly, there is no liability to refund the subsidy already received."

2. During the period ended 31.03.23, depreciation of '767 Lakhs (March'22 - '1074 lakhs) have been charged to Statement of Profit and Loss due to capitalization and accordingly impact of amortization of subsidy is recognized in Statement of Profit and Loss for ' 151 Lakhs (March'22 - ' 104 lakhs) in proportion to depreciation which is shown under the head other operating revenue"

Grant/Subsidy on Rural Wi-Fi:

The Company had received Rural Wi-Fi Subsidy amounting to ' 1437 lakhs up to 31.03.2023 from Department of Telecommunication (DoT-USOF) for installation of Wi-Fi in rural areas. An amount of ' 1513 lakhs have been capitalized up to 31.03.2023 on account of partial commissioning of wi-fi services at the stations. The Company has amortized an amount of ' 208 lakhs out of the subsidy received in proportion to the depreciation on assets capitalized and the same has been recognized under the head other operating revenue.

20. IND-AS - 24: Related party disclosures Government Related Entities:

The Company is a Central Public Sector Enterprise (CPSE) under the Ministry of Railways. The Company is controlled by Government of India (GOI), by holding 72.84 % of equity shares in the name of President of India as at 31st March, 2023. Pursuant to Para 25 and 26 of Ind AS 24, entities over which the same government has control or joint control of, or significant influence, then the reporting entity and other entities shall be regarded as related parties.Transactions with these parties are carried out at market terms at arm length basis. The company has applied the exemption available for government related entities and have made limited disclosures in the financial statements.

Names of related parties and their relationship:

22 Disclosure as per Ind AS 36 and 113: Impairment of Assets, Fair Value Measurement

Based on an impairment study, the Company has recognized the impairment loss amounting ' 863 lakhs (March'22 - ' 1224 lakhs) during the current year in statement of profit and loss for NE Project. This project was halted for the long time due to difficult working conditions in north eastern region and various other reasons. The part of the project is currently accounted under the capital work in progress and contains mainly the plant and machinery. Hence, company has assessed and recognized the impairment loss on the project. Out of the total impairment loss as at 31.03.2023 of ' 9175 lakhs (as at 31.03.22 ' 8313 Lakhs), Impairment loss of ' 4709 Lakhs pertains to the assets totally damaged and no future economic benefits are expected from these assets. Impairment loss have been calculated by taking the whole project as "Cash Generating Unit".

Recoverable amount has been calculated as per Ind AS 36 and 113. Recoverable amount is calculated as the higher of an asset's fair value less costs of disposal and its value in use.

However, the Company will continue review and monitor the impairment assessment at every subsequent reporting period based on comprehensive review of further information that may be available during such reporting periods as required by Ind AS.

23 Disclosures as required by IND AS 37: Provisions, Contingent Liabilities and Contingent Assets

a. Provisions are recognized in respect of obligations, based on the evidence available, and wherever their existence on the Balance Sheet date is considered probable.

b. Contingent liabilities:

Contingent liabilities are determined based on available information. These liabilities are not provided for and are disclosed by way of notes on accounts.

* Hon'ble Supreme Court passed an order dated 11.06.2020 wherein it was held that definition of AGR as per the licenses given to the Public Sector Undertaking (PSUs) is different than the definition of AGR as per Universal Access Service License (UASL) given to other network service providers. It was also upheld that the Hon'ble Supreme Court Judgement dated 24.10.2019 never dealt with the issue of PSUs as their agreements are quite different and therefore, the judgement held on AGR issue could not have been made the basis for raising the demand against Public Sector Undertaking as they are not in the actual business of providing mobile services to the general Public . The Company has filed an application to Ministry of Railways for settlement of the dispute through administrative Mechanism for resolution of CPSE dispute (AMRCD). Department of public enterprises (DPE) wide its letter dated 10.02.2023 has notified the committee of secretaries for setttlement of disputes. considering the case in AMRCD, the amount has been shown under contingent liability.

(b) Bank Guarantees given by the Company to Customers/Government as on 31.03.2023 is ' 37704 lakhs (March'22 - ' 31510 lakhs).

24 Disclosure Requirements as per IND AS 108 - Operating Segments

The Company publishes this financial statement along with the consolidated financial statements, in accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

26 Disclosure as required by Ind AS 107, Ind AS 109 & Ind AS 113

Valuation techniques and process used to determine fair values

i. The carrying value of financial assets and liabilities with maturity less than 12 months are considered to be representative of their fair value.

ii. Fair value of other financial assets and liabilities carried at amortized cost is determined by discounting of cash flows using discount rate.

iii. A discount rate of 5.1% (SBI Rate) has been used for balances as on 31/03/2023.

Unbilled dues are provided for based on mercantile accounting system and are not due for payment as at the close of financial year.

* Age analysis is based on date of transaction as payment milestones are not yet achieved as per contractual terms.

Financial Risk Management

The Company has constituted Risk Management Committee in line with the requirement of Regulation 21 of the SEBI (LODR) Regulations, 2015 (as amended).

The role and responsibilities of Risk Management Committee is in line with the provisions of Regulation 21 of the SEBI (LODR) Regulations, 2015.

Risk Management frame work of the company is as follows:-

a. Apex level Risk Management committee

b. Functional Risk Management Committee

The Company has a risk management policy to identify and analyse the risks faced by the Company. The audit committee evaluates the internal financial controls and risk management system. The Audit Committee monitor the Risk assessment and minimization procedure across the company after review of the same by Risk Management Committee (Apex Level) The audit committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

The Company has exposure to the following risk from its use of financial instruments: -

1. Credit Risk

2. Liquidity Risk

3. Market Risk

4. Project Risk

5. Insurable Risk

1. Credit Risk:

Credit risk is the risk of financial losses to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation and arises principally from the Company's trade receivables, employee loans and other activities that are in the nature of leases.

The Company assesses on a forward-looking basis the expected credit loss associated with its financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company follows 'simplified approach' for recognition of impairment loss and always measures the loss allowance at an amount equal to lifetime expected credit losses. Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109 i.e. expected credit loss allowance as computed based on historical credit loss experience. Company have used the methodology of provisional matrix as per Ind AS 109 to compute the historical loss rate and adjust the impact of macroeconomic factors into the historical loss rate to compute the forward-looking rates.

Exposure to Credit Risk

In the current year, Company used expected credit loss model to assess the impairment loss or gain. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix considers historical credit loss experienced and adjusted for forward-looking information. The expected credit loss allowance is based on ageing of the days the receivables are due. The trade receivables which share the similar credit risk characteristics have been taken into the one bucket. Hence, company has divided the trade receivable into two categories as follows:

• Government & PSU Customers

• Private Customers

The company has rationalised the estimate of expected credit loss as per Ind AS-109, which has resulted into reduction of Expected credit loss provision of ' 4,498 Lakhs and corresponding increase in profit before tax.

2. Liquidity Risk:

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to manageing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company reputation, typically the Company ensures that it has sufficient cash on demand to meet expected operational expenses, servicing of financial obligations.

3. Market Risk:

Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments.

The Company makes investment in mutual fund which are subject to market risk. Hence, the investment is classified in the Balance Sheet at fair value through profit and loss (FVTPL) and resultant gain/loss on investment is classified as FVTPL. However, to manage the price risk, the Company invests in liquid funds and the level of the investments is insignificant in view of the level of the operation of the Company.

4. Project Risk:

A project risk is an uncertain event that may or may not occur during a project. There is risk of time overrun/cost overrun which is mitigated by ensuring time schedule for each activity of the project execution based on milestone and monitoring based on cost estimate..

5. Insurable Risk:

Insurable Risks are mitigated based on definite policy of the company in regard to insurance of assets, material, Risks during Project execution, workmen and Directors and officers liability as decided by the company from time to time.

6. Capital Management

The Company manages its capital to ensure that the Company will be able to continue as a going concern, while maximizing the return to stakeholders through efficient allocation of capital towards expansion of business, optimization of working capital requirements and deployment of surplus funds. The Company uses the operational cash flows to meet its working capital requirements. The funding requirements are met through internal accruals. The Company is not subject to any externally imposed capital requirements.

27 1. IND AS 115 - Revenue from Contracts with Customers Disaggregation of Revenue

The company disaggregates revenue from contract with customer into categories that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. In project business segment the company provides warranty to customer which is implicit in the contract revenue. The said warranty is provided by OEMs with back to back performance obligation and hence the company does not have additional obligation for warranty in addition to the same provided by OEMs. Since warranty is implicit in transaction price on back to back agreement with OEMs and hence not been accounted for separately.

The following table illustrates the disaggregation of disclosure by primary geographical region, major product line, market or type of customer, type of contract, contract duration, sales channel and timing of revenue recognition in accordance with Ind AS 115.

The Company's principal business is to provide neutral telecom infrastructure. The Company operates within India and does not have operations in economic environment with different risks and returns. Hence, it is considered operating in Pan India-single geographical segment.

* Includes trade receivable of ' 4278 lakhs recoverable from a customer out of which ' 2638 lakhs is disputed by the customer and management is of the opinion that it is fully recoverable. However, due to significant increase in credit risk, in addition to the ECL as per Ind AS requirement, the company has made additional provision under ECL in respect of outstanding for more than 3 years taking the underlying obligation into consideration on this project. Further, the Company has also claimed an amount of ' 2666 lakhs towards SLA deduction and interest for delayed payment. However, the same has not been recognized in the books of accounts on conservative basis as per Ind AS-115. Company has filed an application to Ministry of Railways for settlement of the dispute through administrative Mechanism for resolution of CPSE dispute (AMRCD). The same is under active consideration of AMRCD.

29 Other Disclosure-

a) There are no significant restrictions or covenants imposed by the leases.

b) There are no lease pending commencement to which the Company has committed as at year ended March 31, 2023.

c) The incremental borrowing rate considered is the SBI MCLR rate at the lease commencement date for new leases and April 1st, 2019 for pre-existing leases except NOIDA Land lease where there is inbuilt coupon rate in the future financial obligation.

Other Disclosures -

a) The Company has been offering NLD Services, infrastructure services (Dark Fibers, Tower space and co-location etc.) under IP-I registration, ILD and Internet services under unified license to its customers under respective operating lease.

b) The Company has entered into a non-cancellable long-term lease arrangement to provide optical fiber on indefeasible right of use (IRU) basis. The lease rental receivable proportionate to actual kilometers accepted by the customer is credited to the statement of profit and loss on a straight - line basis over the lease term. Due to the nature of the transaction, it is not possible to compute gross carrying amount, depreciation for the period and accumulated depreciation of the asset given on operating lease as of September, 2020 and accordingly respective disclosures required by IND AS 116 are not provided.

31 COVID -19 Impact & Assessment

The Covid-19 pandemic has resulted in economic slowdown throughout the world including India. The Company has evaluated the impact of this pandemic on its business operations and financial position while preparing these financial statements and has considered internal and external information for making this evaluation. The Company's assessment is based on its current estimates while assessing the provision towards employee benefits and assessing the realizability of trade receivables and other financial assets. The Company has also assessed the impact of this whole situation on its capital and financial resources, profitability, liquidity position, internal financial reporting and controls etc. However, Covid situation in india has improved significantly at the end of financial year, resulting in normailization of business activity to the great extent. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The Company will continue to closely monitor any material changes to future economic conditions.

32 Benami Property held : N.A

33 Willful Defaulter : N.A

34 Utilization of borrowed funds and share premium : N.A

35 Registration of Charges or satisfaction with Registrar of Companies (ROC) : N.A

36 Compliance with number of layers of companies : N.A

37 Compliance with approved scheme(s) of arrangements : N.A

38 Details of Crypto Currency or virtual currency : N.A

40 The Board of Directors in its meeting dated 17.05.2023 have approved the company's financial statements for the FY22-23. CMD and /or Director Finance of the company is authorised by the Board to make necessary correction/modification/alteration in the financial statements on behalf of the Board.

41 Board of Holding Company i.e. "Railtel Corporation of India Limited" and board of subsidiary Company i.e."Railtel Enterprises Ltd." has approved the merger of REL with RCIL. Same is pending for approval with NCLT and once approved by NCLT it will be merged with the Holding Company.