2.12 Provisions, contingent liabilities and contingent assets

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

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

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

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

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

2.13 Impairment of non-financial assets

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

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

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

Impairment losses recognized in prior periods are assessed
at each reporting date for any indications that the loss has

decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only
to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net
of depreciation or amortization, if no impairment loss had
been recognized.

2.14 Leases

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

Company as a lessor

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

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

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

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

Company as a lessee

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

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

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

2.15 Securitisation of Finance Lease Receivable

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

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

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

2.16 Leasing of Railway Infrastructure Assets

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

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

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

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

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

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

2.17 Dividends

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

2.18 Material Prior Period Errors

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

2.19 Earnings per share

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

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

2.20 Statement of Cash Flows

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

2.21 Operating Segments

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

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

2.22 Financial Instruments

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

2.22.1. Financial Assets

Initial recognition and measurement

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

Subsequent measurement

Debt instruments at amortized cost

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

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

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

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

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

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

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

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

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

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

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

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

Equity investments

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

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

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

De-recognition

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

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

• The Company has transferred its rights to receive
cash flows from the asset or has assumed an

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

Impairment of financial assets

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

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

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

(c) Lease receivables under Ind AS 116.

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

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

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

2.22.2. Financial liabilities

Initial recognition and measurement

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

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

Subsequent measurement

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

Financial liabilities at amortized cost

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

Financial liabilities at fair value through profit or loss

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

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

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

De-recognition

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

Derivative financial instruments

Initial recognition and subsequent measurement

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

Hedge Accounting

To qualify for hedge accounting, the hedging relationship
must meet all of the following requirements:

- there is an economic relationship between the
hedged item and the hedging instrument

- the effect of credit risk does not dominate the value
changes that result from that economic relationship

- the hedge ratio of the hedging relationship is the
same as that resulting from the quantity of the
hedged item that the entity actually hedges and the
quantity of the hedging instrument that the entity
actually uses to hedge that quantity of hedged item.

All derivative financial instruments designated under
hedge accounting are recognised initially at fair value and
reported subsequently at fair value at each reporting date.
To the extent that the hedge is effective, changes in the fair

value of derivatives designated as hedging instruments in
cash flow hedges are recognised in other comprehensive
income and included within the cash flow hedge reserve
in equity. Any ineffectiveness in the hedge relationship is
recognised immediately in Statement of profit and loss.

At the time the hedged item affects Statement of
profit and loss, any gain or loss previously recognised
in other comprehensive income is reclassified from
equity to Statement of Profit and Loss and presented
as a reclassification adjustment within other
comprehensive income.

At the inception of each hedging relationship, the
company formally designates and documents the hedge
relationship, in accordance with the company's risk
management objective and strategies. The documentation
includes identification of the hedged item, hedging
instrument, the nature of risk(s) being hedged, the hedge
ratio and how the hedging relationship meets the hedging
effectiveness requirements.

2.23 Standards issued but not yet effective:

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

Ministry of Corporate Affairs (“MCA”) notifies new standards
or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to
time. For the year ended March 31,2026, MCA has notified the
below amendments:

The following major amendments have been made;

Amendment of Ind AS 1 - Presentation of Financial
Statements by Notification Dated 13^th August 2025

The amendment relates to classification of liabilities as current
or non-current and non-current liabilities with covenants. In
the context of classifying a liability as current, it removes the
requirement of existence of a right to defer settlement for at
least 12 months after the reporting date, and instead requires
that the said right should exist on the reporting date and have
substance. The amendment also introduces guidance on
classification of liabilities with covenants. The Company has
no material impact of these amendments in its classification
criteria of current and non-current liabilities.

Amendment of Ind AS 21 - The Effects of Changes in Foreign
Exchange Rates by Notification Dated 7^th May 2025

In May 2025, the Ministry of Corporate Affairs (MCA) notified
amendments to Ind AS 21, The Effects of Changes in Foreign

Exchange Rates, applicable with effect from April 1, 2025. The
amendment provides additional guidance in situations where
a currency is not exchangeable and clarifies the determination
of exchange rates to be used in such circumstances, along with
related disclosure requirements. The Company has evaluated
the amendment and concluded that it does not have any
impact on its financial statements.

Amendment of Ind AS 7 - Statement of Cash Flows by
Notification Dated 13^th August 2025

In August 2025, the Ministry of Corporate Affairs (MCA) notified
amendments to Ind AS 7, Statement of Cash Flows, applicable
with effect from April 1,2025. The amendments require entities
to provide enhanced disclosures relating to supplier finance
arrangements, including the nature of such arrangements, the
carrying amount of related financial liabilities, and the range
of payment due dates. The objective of the amendment is to
enable users of financial statements to assess the impact of
supplier finance arrangements on an entity's liabilities, cash
flows, and liquidity risk. The Company has evaluated the
amendment and concluded that it does not have any impact on
its financial statements.

Amendment of Ind AS 107 - Financial Instruments:
Disclosures by Notification Dated 13^th August 2025

In August 2025, the MCA notified amendments to Ind AS
107, Financial Instruments: Disclosures, applicable with
effect from April 1, 2025. The amendments require entities
to include supplier finance arrangements as a factor in
evaluating concentration of liquidity risk and to provide related
qualitative and quantitative disclosures. These disclosures are
intended to enhance transparency regarding the effect of such
arrangements on an entity's risk exposure and financial position.
The Company has reviewed the amendment and determined
that it does not have any impact on its financial statements.

Amendment of Ind AS 12 - Income Taxes by Notification
Dated 13^th August 2025

The MCA also notified amendments to Ind AS 12, Income Taxes,
relating to the International Tax Reform - Pillar Two Model
Rules. The amendments introduce a temporary mandatory
exception from accounting for deferred taxes arising from the
implementation of the Pillar Two rules and require entities to
disclose the application of such exception. The amendment
is effective immediately and applies retrospectively. The
Company has reviewed the amendment and determined that it
does not have any impact on its financial statements.

*Note

(i) No impairment loss has been recognised on lease receivables from Ministry of Railways, Government of India, a sovereign receivable as
per Reserve Bank of India letter no. DNRB (PD). CO.No.1271/03.10.001/2018-19 dated 21-December-2018. (Refer note-18)

(ii) For lease receivables from other then from Ministry of Railways, the Company has computed expected credit loss as per Ind AS
109, Financial Instruments in accordance with the erstwhile Reserve Bank of India direction RBI/2019-20/170 DOR(NBFC).CC.PD.
No.109/22.10.106/2019-20 dated 13^th March 2020, based on Reserve Bank of India circular no. RBI/2017-18/181_DNBR (PD) CC No.
092/03.10.001/2017-18 dated 31 May 2018 read with letter no. DNRB (PD) CO No. 1271/03.10.001/2018-19 dated 21 December 2018,
which was earlier exempted vide notification DNBR.PD.008/03.10.119/2016-17 dated 1^st September 2016 for all government NBFC
company. (Refer note-18).

(v) The company has not, for a period of 5 years immediately preceding the balance sheet date:- issued equity share without payment being
received in cash.

- issued equity share by way of bonus share.

- bought back any of its share.

(vi) The company has no equity share reserve for issue under options/contracts

(vii) The Company has completed its Initial Public Offering (IPO) of 1,78,20,69,000 equity shares of face value of H10/- each at an issue price
of H26/- per equity share aggregating to H 4,633.38 crores, consisting of fresh issue 1,18,80,46,000 equity shares aggregating to H 3,088.92
crores and an offer for sale of 59,40,23,000 equity shares aggregating to H 1,544.46 crores by the Government of India. The equity shares
of the Company were listed on BSE Limited and National Stock Exchange of India Limited on 29^th January 2021. Further The President of
India, acting through and represented by the Ministry of Railways, disinvested 1.71% of its holdings through an Offer for Sale (OFS) to non¬
retail and retail investors on February 25, 2026 and February 26, 2026. The total holding of the Government of India as of March 31,2026,
is 84.65% (compared to 86.36% in the previous year).

Note 33 : Leases

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

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

IRFC commenced project funding to MoR (Ministry of Railways) for creation & development of railway infrastructure projects in October 2015
under finance lease model with commencement of lease rentals after a gestation period of 5 years as per memorandum of understanding
entered with MoR on 23^rd May, 2017. The amount advanced to MoR has been shown as “Advance to MoR for Railway Infrastructure Projects”.
From the said account, the Company on receipt of confirmation/utilization reports from ministry of railways, transfers amount actually utilised
to “project infrastructure asset under finance lease”. Company has till date has executed the Lease Agreement(s) for EBR IF 2015-16, EBR IF

2016-17, EBR IF 2017-18, EBR IF 2018-19 and lease agreements for National Projects 2018-19 & 2019-20 with MoR with respect to aforesaid
infrastructure assets. As at 31^st March 2025, the execution of Lease Agreement for EBR IF 2019-20 was under process. However, during FY 2025¬
26 based on the mutual discussion between IRFC and MoR, the gestation period of 5 years was increased by another 1 year for EBR IF 2019-20
as the assets to be leased under the agreement were still in final stage of development. Accordingly, the execution of Lease Agreement for EBR
IF 2019-20, EBR_IF 2020-21 & EBR_S 2020-21 is under process and suitably the lease receivables have been recognised with effect from 24^th
March 2026. The lease agreements for funding for EBR_IF from FY 2021-22 to FY 2022-23 shall be executed on completion of moratorium period.

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

Reconciliation of the lease receivable amount on the gross value of leased assets worth H 5,60,500.07 crore (31 March 2025 : H 4,40,657.35
crore) owned by the Company and leased to the Ministry of Railways (MoR) is as under:

Note 33.1

Company as a Lessee

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

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

(b) The Income Tax Authority have raised demands on account of various disallowances of expenditure of different assessment years, which
company is contesting and management believes that its position will likely be upheld in the appellate process.

(c) GST authorities have raised demands on the Input Tax Credit (ITC) availed on assets relating to railway projects. The Company has
contested the demands on merit and has filed appeals before the appropriate Appellate Authorities. The Company has also deposited the
requisite pre-deposit amounts in accordance with the provisions of the GST Act. Management believes there is a reasonable likelihood
of success in these appeals. Further, as per the lease agreements executed with the Ministry of Railways (MoR), GST or other tax liability
arising from these transactions is contractually recoverable from the MoR. Accordingly, there is no expected net outflow of economic
resources from the Company. The demand includes T353.18 crores raised by the Assistant Commissioner (State Tax), Chennai, on ITC
available in GSTR 2A but not claimed (lapsed), etc. Against the demand, a writ petition was filed before the Hon'ble High Court of Madras,
vide order dated 04.07.2023, which granted a stay on the demand order, and the proceedings are still going on.

An appeal is to be filed before the Hon'ble GST Appellate Tribunal, Bengaluru, Karnataka, for an amount of T3.77 crores against the order
issued by the First Appellate Authority, Hubballi, on ineligible ITC, etc.

Further, the Company has filed appeals before the First Appellate Authorities, and the proceedings are going on in the states for the
balance of the demands.

Note 36: Segment reporting

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

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

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

Notes:

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

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

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

Note 38: Financial Instruments

38.1: Capital management

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

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

38.1.1 Gearing ratio

The gearing ratio at the end of the reporting period was as follows:

38.2.2: Fair value measurements

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

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

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

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

Valuation technique used to determine fair value

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

The fair value of Investment in IRCON International Limited is measured as per the quoted on National Stock Exchange (Level 1 Input)as on
31 March 2026 & 31 March 2025

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

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

38.3 Financial risk management

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

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

38.4: Market risk

Market risk is the risk that the expected cash flows or fair value of a financial instrument could change owing to changes in market
prices. The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Company use derivative instruments to manage market risk against the volatility in foreign exchange rates and interest rates in order to
minimize their impact on its results and financial position. Company policy is not to utilize any derivative financial instruments for trading or
speculative purposes.

38.5: Foreign currency risk management

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

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

Foreign currency sensitivity analysis

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

38.6: Interest rate risk management

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

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

Interest rate sensitivity analysis

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

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

i) Profit for the year ended 31 March 2026 would decrease/increase by H 1278.84 crore (31 March 2025: decrease/increase H 1184.81 crore).
This is mainly attributable to the Company's exposure to interest rates on its rate debt securities;

ii) Profit for the year ended 31 March 2026 would decrease/increase by H 842.66 crore (31 March 2025: decrease/increase H 875.59 crore).
This is mainly attributable to the Company's exposure to interest rates on its rate borrowings.

Interest Rate Benchmark Reform:

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

The total amount of exposure that is directly affected by Interest Rate Benchmark Reform (IBOR) i.e. after June 2023 is USD 3,300 million
(Amount in H 31,375.92 crore) as on 31.03.2026. Out of this, the amount of the derivative exposure linked with such liabilities and accounted
for under hedge accounting is USD 225 million (Amount in H 550.29 crore)

Managing the process of transition to alternative benchmark rates.

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

Significant assumptions for exposure affected by the interest rate benchmark reform

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

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

38.7: Other price risks

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

38.8: Credit risk management

Credit risk arises from the possibility that the counterparty will default on its contractual obligations resulting in financial loss to the company.
To manage this, the Company has established a comprehensive credit risk management framework covering appraisal, sanction, disbursement
and post-disbursement monitoring of exposures. Credit risk is continuously monitored through internal assessment, external ratings and
periodic evaluation of borrower performance, including Government support mechanisms, where applicable.

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

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

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

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

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

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

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

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

The Company's major exposure is from lease receivables from the Ministry of Railways, Government of India; lease receivables from NTPC
Limited; and loans to other Government related entities. There is no credit risk on lease receivables being due from sovereign. With respect to
the lease receivables from NTPC Limited and loans given to other government related entities, the Company considers the Reserve Bank of
India Master Direction - Reserve Bank of India (Non-Banking Financial Company - Income Recognition, Asset Classification and Provisioning)
Directions, 2025 [DOR.STR.REC.NO.275/21.04.048/2025-26 dated 28/11/2025 as updated time to time] to be adequate compliance with the
impairment norms as per Ind AS 109, Financial Instruments, as these entities are either under the Ministry of Railways or are public sector
undertakings backed by the Government of India. The Company does not expect any concern regarding the repayment of the aforesaid loans.

38.8.2: Measurement of Expected Credit Loss

a) Three-stage impairment model

In accordance with Ind AS 109, the Company applies a three-stage approach for classification of financial assets:

• Stage 1: Financial assets with no significant increase in credit risk since initial recognition. These are considered performing assets
and subject to 12-month ECL.

• Stage 2: Financial assets that have experienced a significant increase in credit risk since initial recognition. These are considered
under-performing assets and subject to lifetime ECL.

• Stage 3: Financial assets that are credit impaired. These are considered non-performing assets and subject to lifetime ECL.

b) Significant Increase in Credit Risk (SICR)

Assessment of SICR is performed at each reporting date at the instrument level. The Company considers both quantitative and qualitative
indicators, including:

• Changes in internal or external credit ratings

• Actual or expected significant changes in the borrower's financial results

• Significant changes in the expected performance and behaviour of the borrower

• Changes in the economic, regulatory, or technological environment of the borrower

• Past-due information

c) Definition of default / credit-impaired assets

A financial asset is considered credit-impaired when one or more events occur that adversely affect the estimated future cash flows.
Borrowers classified under restructuring arrangements are also considered credit-impaired irrespective of DPD status, where applicable.

d) ECL methodology

ECL represents an unbiased, probability-weighted estimate of credit losses, being the present value of all expected cash shortfalls over
the life of the financial instrument.

ECL is computed using the following key parameters:

• Probability of Default (PD)

• Loss Given Default (LGD)

• Exposure at Default (EAD)

The computation incorporates the time value of money using the effective interest rate.

e) Probability of Default (PD)

PD estimation follows a forward-looking Point-in-Time (PIT) approach derived from Through-the-Cycle (TTC) PDs. Given the PSU-
dominated portfolio with negligible historical defaults, external transition matrices are used as proxies. These are adjusted using
macroeconomic variables such as Gross Domestic Product (GDP) and Government revenue, which are key drivers of credit risk for
Government-supported entities.

f) Loss Given Default (LGD)

In the absence of sufficient internal default history, LGD is determined based on regulatory guidance and represents a conservative
estimate of loss, factoring in limited historical loss experience and inherent sovereign support characteristics of the portfolio.

g) Exposure at Default (EAD)

EAD represents the expected exposure at the time of default and includes outstanding principal, accrued interest and probable utilization
of undrawn commitments adjusted using Credit Conversion Factors (CCF). The estimation reflects contractual cash flows, amortization
schedules and behavioral factors.

38.8.3: Forward-looking Information and Scenario Analysis

The Company incorporates forward-looking macroeconomic information through a multi-scenario approach, including base, optimistic and
stressed scenarios. Macroeconomic forecasts are sourced from external agencies and adjusted for internal expectations.

Scenario probabilities are assigned based on management judgement, ensuring appropriate representation of downside risks considering the
macroeconomic sensitivity of Government-linked entities.

38.8.6: Key Judgements and Estimates:

The computation of ECL involves significant judgements, including:

• Determination of SICR

• Estimation of PD incorporating macroeconomic overlays

• Selection of LGD in absence of default experience

• Assessment of Government support and sovereign backing

• Determination of scenario weights and forward-looking assumptions

38.9: Liquidity risk management

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

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

38.10: Derivative financial instruments

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

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

However, the gain/(loss) on account of exchange rate variations on all foreign currency loans and foreign currency monetary items along
with hedging cost is recoverable from MoR as per the lease agreements executed with them, except foreign currency borrowings raised
during FY 25-26 (refer note 38.10 b)

b) Hedge Accounting

The Company designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risk in cash flow
hedges. For option contracts, the Company designates only the intrinsic value of option contracts as a hedged item by excluding the time
value of the option. The changes in the fair value of the aligned time value of the option are recognised in Other Comprehensive Income
and accumulated in the cost of hedging reserve. The time value of the options at the inception of the hedging relationship is reclassified
to Profit or Loss on a straight-line basis.

Hedge ineffectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company applies
the following effectiveness testing strategies.

For option structures, the Company analyses the behaviour of the hedging instrument and hedged item using Critical Terms Match Method.

The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk and notional amount of the hedging
instruments are identical to the hedged items.

Note 40: Offer for sale(OFS)

The President of India, acting through and represented by the Ministry of Railways, disinvested 1.71% of its holdings through an Offer for Sale

(OFS) to non-retail and retail investors on February 25, 2026 and February 26, 2026. The total holding of the Government of India as of March

31,2026, is 84.65% (compared to 86.36% in the previous year).

Other Disclosures

Note 41:

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

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

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

in the case of foreign currency borrowings are adjusted against the lease income/ pre-commencement lease income in terms of
the variation clauses in the lease agreements for Rolling Stock/ memorandum of understanding (MoU) for funding of Infrastructure
assets executed with the Ministry of Railways. During the year ended 31 March 2026, such differential has resulted in an amount of
H 2,623.58 crore refundable to the Company ( 31 March 2025: H 3617.34 crore crore, refundable to the Company) which has been
accounted for in the lease income/pre-commencement lease income.

(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause have been incorporated in the lease
agreements specifying notional hedging cost adopted for working out the cost of funds on the leases executed with MOR. Hedging
cost in respect of these foreign currency borrowings is compared with the amount recovered by the company on such account on
notional cost basis and accordingly, the same is adjusted against the lease income. During the year ended 31 March 2026 in respect
of these foreign currency borrowings, the Company has recovered a sum of H 1,506.74 crore (31 March 2025: H 1,536.32 crore) on
this account from MoR against a sum of H Nil crore (31 March 2025: H Nil crore) incurred towards hedging cost and the balance
amount of H 1,506.74 crore (31 March 2025: H 1,536.32 crore) is refundable to MoR.

(d) For computing the Lease Rental, in respect of the rolling stock assets acquired and leased to the Ministry of Railways amounting to H Nil
crore during the period ended 31^st Mar 2026 (31^st Mar 2025: H Nil crore), the Lease Rental Rate and the Internal Rate of Return have been
worked out with reference to the average cost of incremental borrowings made during the year plus the margin.

(e) The Leases executed for Rolling Stock in the year 1995-96, 1994-95, 1993-94, 1992-93,1991-92, 1990-91, 1989-90 and 1988-89 for
H 658.75 crore, H 1050.10 crore, H 900.38 crore, H 961.82 crore, H 1,500.49 crore, H 1,170.04 crore, H 1,072.56 crore & H 860.73 crore have
expired on 31 March 2025, 31 March 2024, 31 March 2023, 31 March 2022, 31 March 2021, 31 March 2020 & 31 March 2019 respectively.
During the primary and secondary lease periods full value of assets (including interest) has been recovered from the lessee ( MOR). These
assets have outlived their useful economic life.

Note 42:

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

(b) The Company is creating the Reserve Fund as required u/s 45IC of RBI Act, 1934, wherein at least 20% of net profit every year will be
transferred before the declaration of dividend. No appropriation is allowed to be made from the reserve fund except for the purpose as

may be specified by the Bank from time to time and further, any such appropriation is also required to be reported to the Bank within 21
days from the date of such withdrawal.

The Company has created a reserve of H1401.83 & crore for the year ended 31^st March 2026 (H 1300.4 crore in 31 March 2025) u/s 45IC.

Note 43:

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

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

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

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

MoR for making payments on behalf of the Company to contractors for the construction of projects for the period November 2017
to June 2018. As opined by the tax consultant, the above transaction did not involve any supply from MoR to the company, and
accordingly, no GST under RCM was payable by the Company, and hence, refund applications were filed with the GST department for
the refund of said deposit of H 1,466.45 crore. However, vide orders dated 22-09-2020 and 30-09-2020, the said refund applications
have been rejected by the additional commissioner (Department of Trade and Taxes), GNCT of Delhi. The Company has filed 6
appeals before the first appellate authority through its attorney, New Delhi, against the rejection of refund orders on 24 December
2020 and 29 December 2020. Further, DGGI, Delhi raised demand of Service tax under RCM on funds transferred to MoR for the
development of project assets from April 16 to June 17 (in the Pre-GST period) on similar grounds and IRFC received a favourable
order from DGGI, Delhi on 27-03-25 towards dropping the demand for service tax. On similar lines, it is expected that IRFC would
get the refund of GST along with Interest. Hearing of the case is progressing smoothly, with the last hearing on December 10, 2025,
allowing us to explain the matter in detail to the Special Commissioner. As a result, proceedings are actively advancing.

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

Note 44:

Increase/(Decrease) in liability due to exchange rate variation on foreign currency loans for purchase of leased assets/creation of Infrastructure
assets leased to MoR amounting to H 5,750.88 crore (31 March 2025: H 1913.60 crore) has not been charged to the Statement of Profit and
Loss as the same is recoverable from the Ministry of Railways (lessee) separately as per lease agreements in respect of rolling stock assets/
memorandum of understanding (MoU) for funding of Infrastructure assets to be leased. The notional hedging cost on external commercial
borrowings inbuilt into the Lease Rentals amounting to H 232.39 crore (31 March 2025: H 232.39 crore) is refundable to Ministry of Railways
for the year ended 31 March 2026 (Ref of Note 41 C (ii)). Further, a sum of H 862.70 Crore (31 March 2025: H702.83 crore) has been recovered
towards crystallised exchange rate variation on foreign currency loans repaid during the year ended 31^st March 2026. The amount recoverable
from MoR on account of exchange rate variation net of notional hedging cost and crystallised exchange rate variation is H 11,386.41 crore (31
March 2025: H 6730.61 crore).

Effective portion of (loss)/gain on account of decrease/increase in the fair value of the interest rate derivative assets (hedging instruments)
amounting to H 41.24 crore (31 March 2025:H 50.79 crore) classified as cash flow hedges has not been recognised in the other comprehensive
income as the same is recoverable/refundable to the MOR (Lessee) since the derivatives have been contracted to hedge the financial risk of
MOR (Lessee). The same does not include decrease/increase in the fair value the designated foreign currency option contracts. Ref (38.10 (b))

Note 45:

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

During FY 2021-22, the Lease Agreement(s) for Project assets funded under EBR IF 2015-16 and National Projects 2018-19 between MOR and the
Company with respect to aforesaid infrastructure assets was executed on 28^th March 2022. Similarly, during financial year 2022-23, the Lease
Agreement(s) for EBR IF 2016-17 and National Projects 2019-20 and in Financial Year 2023-24 and Financial Year 2024-25, the Lease Agreements
for EBR IF 2017-18 and EBR IF 2018-19, between MOR and the Company with respect to infrastructure assets have been executed, respectively.
As at 31^st March 2025, the execution of Lease Agreement for EBR IF 2019-20 was under process. However, during FY 2025-26 based on the mutual
discussion between IRFC and MoR, the gestation period of 5 years was increased by another 1 year for EBR_IF 2019-20 as the assets to be leased
under the agreement were still in final stage of development. Accordingly, the execution of Lease Agreement for EBR IF 2019-20, EBR_IF 2020-21
& EBR_S 2020-21 is under process and suitably the lease receivables have been recognised with effect from 24^th March 2026.

During the year ended 31 March 2026 a sum of H 7,689.80 crore (31 March 2025 H 8,557.46 crore) incurred by the Company on account of
interest cost on the funds borrowed for the purpose of making aforesaid advances has been capitalised and added to the 'Project Infrastructure
Asset under Finance Lease Arrangements-EBR-IF' , ‘Project Infrastructure Asset under Finance Lease Arrangements-EBR Special' and
'Advance funding against National Project'. The same would be recovered through lease rentals in future over the life of the leases as per lease
agreement(s) to be entered. Details are as under:

Note 46:

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

ii The reconciliation with the Ministry of Railways uptill FY 2024-2025 has been completed. The reconciliation of balances with MoR as
on 31^st March 2026 will be carried out in due course based on audited accounts of FY 2025-26. The disbursement to MOR for project
infrastructure assets for which Lease Agreements are yet to be executed stand at H53,192.09 crore as on 31^st March 2026 against which
utilisation statement has been received from MoR.

Note 47:

(a) The Company discharges its obligation towards payment of interest, redemption of bonds and payment of dividend, by depositing the
respective amounts in the designated bank accounts. Reconciliation of such accounts is an ongoing process and has been completed
upto 31 March 2026. The Company does not foresee any additional liability on this account. The total balance held in such specified bank
accounts as on 31 March 2026 is H 57.12 crore (31 March 2025 is H 32.65 crore).

(b) The Company is required to transfer any amount remaining unclaimed and unpaid in such interest and redemption accounts after
completion of 7 years to Investor Education Protection Fund (IEPF) administered by the Ministry of Corporate Affairs, Government of
India. During the year ended 31 March 2026, a sum of H 2.39 crore (31 March 2025:H0.47 crore) was deposited in IEPF.

Note 48: Corporate Social Responsibility

As required under section Section 135 of the Companies Act 2013, the Company has formed a Corporate Social Responsibility Committee. The

Company has undertaken Corporate Social Responsibility activities during the year, which have been approved by the CSR Committee and are

specified in Schedule VII of the Companies Act 2013.

In the year 2020-21, the Ministry of Corporate Affairs (MCA) issued the Companies (Corporate Social Responsibility Policy) Amendment

Rules, 2021 (the "Amendment"), and the effective date of the amendments to Section 135 of the Companies Act, as made by the Companies

Amendment Act, 2019 and Companies Amendment Act, 2020, was notified as 22.01.2021.

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

As the notification became effective during the FY 2020-21, the Company is complying with the amended provisions of Section 135 of the
Companies Act, 2013 from the financial year 2021-22 onwards. Consequently, the Company has set aside provisions for an unspent amount
related to ongoing projects totalling H119.93 Cr (H 111.35 crores plus H 8.58 Cr which is transferred to IRFC Foundation Account) for the FY
2025-26 (H124.47 crores in FY 2024-25 ).

IRFC Foundation is a Society registered under Societies Registration Act, 1860, on 30^th day of June 2025, having its registered office at UG
Floor, East Tower “B” Wing NBCC Place, Bhisham Pitamah Marg, Pragati Vihar, Lodhi Road, New Delhi - 110003. It was formed to effectively
implement the company's Corporate Social Responsibility (CSR) obligations. A Separate Account has been opened for IRFC Foundation for
meeting payment obligations in respect of its CSR Projects.

(i) For the financial year ended 31.03.2026, the Company paid a gross amount of H 78.92 crores (H 70.51 crores relates to prior years), while
for the year ended 31.03.2025, the Company paid a gross amount of H 28.28 crores (H 27.18 crores relates to prior years) towards CSR
projects. The gross amount required to be spent for the year ended 31.03.2026 was H 128.33 crores, for which the Board approved an
amount of H 128.33 crores towards the CSR projects. For the year ended 31.03.2025, the gross amount required to be spent was H125.58
crores, for which the Board approved an amount of H125.58 crores towards the CSR projects.

For the purpose of this note:-

i) The Company classifies an assets as current when,

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

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

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

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

All other assets are classified as non current.

*Stamp duty payable on the registration of office building works out to about H 0.92 crore( as certified by approved valuer) ( 31 March 2025: H 0.92 crore ) which will be
accounted for on registration.

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

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

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

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

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

(vii) For Intangible assets under development refer note 11.1 of the financial statements.

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

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

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

Note: RBI vide its erstwhile liquidity framework dated 04^th November, 2019 has stipulated the implementation of liquidity coverage
ratio (LCR) for non-deposit taking NBFCs with asset size of more than H 10,000 crore w.e.f. 01 December, 2020. LCR aims to ensure
that company has an adequate stock of unencumbered High-Quality Liquid Assets (HQLA) that can be converted into cash easily and
immediately to meet its liquidity needs for a 30 calendar day liquidity stress scenario.

However with reference to the RBI's letter no. S62/21.07.007/2021/22 dated April 26, 2021, IRFC is exempted from applicability of Liquidity
Coverage Ratio (LCR) Norms.

(xv) No scheme of Arrangements has been approved by competent authority in terms of sections 230 to 237 of the Companies Act,2013 in
respect of the Company.

(xvi) The company has neither provided nor taken any loan or advance to/from any other person or entity with the understanding that benefit
of the transaction will go to a third party, the ultimate beneficiary.

(xvii) The Company records all the transaction in the books of accounts properly and has no undisclosed income during the year or in previous
years in the tax assessments under the Income Tax Act, 1961.

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

(a) (ii) Capital

As contained in Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions,
2023, as amended from time to time (hereinafter referred to as “RBI Master Directions”), the Company is required to maintain a
capital ratio consisting of Tier I and Tier II capital which shall not be less than 15% of its aggregate risk weighted assets on-balance
sheet and of risk adjusted value of off-balance sheet items. Out of this, Tier I capital shall not be less than 10%. The Company
regularly monitors the maintenance of prescribed levels of Capital to Risk Weighted Assets Ratio (CRAR).

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

Qualitative disclosure

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

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

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

D) Derivative Instruments

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

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

Outstanding foreign exchange forward contracts entered into by the Company which have been used for hedging the foreign
currency risk on repayment of external commercial borrowings (principal portion):

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

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

(i) Details of financing of parent company product

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

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

The Company being a Government Company, the exposure norms not applicable for its financing to Ministry of Railways.

(k) Details of unsecured loans, advances, lease income and interest income receivables

The outstanding amounts against unsecured loans, advances & lease receivables are as under:

(n) Related Party Transections

For Related party transactions, refer note no. 52 of the financial statements

(o) Remuneration of Directors

For Remuneration of directors, refer note no. 52 of the financial statements

(p) Ratings assigned by credit rating agencies and migration of ratings during the year

a. Rating assigned by credit rating agencies and migration of ratings during the year:

* Standard assets includes amount recoverable from ministry of railways being due from sovereign. The Reserve Bank of India has granted exemption to the Company
in respect of classification of asset, provisioning norms and credit concentration norms to the extent of direct exposure to sovereign ( refer note no. 42(a) (i) )

The Company compares impairment allowances computed under Ind AS 109 with provisions required under regulatory norms (IRACP)
and recognizes the higher amount as a prudential floor.

Since the total impairment allowances under Ind AS 109 is equal to the total provisioning required under IRACP (including standard asset
provisioning) as at 31 March 2025, no amount is required to be transferred to ‘Impairment Reserve'. The gross carrying amount of asset as
per Ind AS 109 and Loss allowances (Provisions) thereon includes interest accrual on net carrying value of stage - 3 assets as permitted
under Ind AS 109. While, the provisions required as per IRACP norms does not include any such interest as interest accrual on NPAs is not
permitted under IRACP norms.

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

(iii) Investments in Pass Through Certificates under securitization transactions

As at 31 March 2026, there are no loan accounts that are past due beyond 90 days but not treated as impaired.

Note 61: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS: PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Non-Fund Based Credit Facilities

The company has not sanctioned any Non-Fund Based Credit Facilities

Note 62: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS: PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Co-Lending Arrangements

The Company has not entered in any Co-lending Arrangemnets during the Year

Note 63: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Securitisation

The Company has not entered into any contract related to securitisation of it's Assets.

Note 64: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Transfer of Loan Exposure

The Company has not transfer any loan during the year

Note 65: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Restructuring of advances

The company has not restructure any advance during the year

Note 66: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Credit Default swaps

The company has not any entered any transaction related to credit default swaps during the Year

Note 67: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Area of operation

The company does not have any Joint venture or subsidiary company.

Note 68: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Prior Period Items

The Company has not booked any prior period item in books of accounts.

Note 69: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025

Off-Balance Sheet Exposure

The Company has Off-Balance Sheet Exposure of H16,733.00 Cr apart from derivatives.

Note-70: Disclosure on The Labour Code 2025

The Company has assessed the potential impact of ‘The New Labour Codes 2025' on staff costs and employee benefit liabilities. Based on the
assessment, the Company believes that the enactment of these Codes does not have a material impact on its financial position or results for
the period ended March 31, 2026

Note 71: DISCLOSURES TO FINANCIAL STATEMENTS - RESERVE BANK OF INDIA (NON-BANKING FINANCIAL
COMPANIES -FINANCIAL STATEMENTS:PRESENTATION AND DISCLOSURES) DIRECTIONS, 2025, DOR.ACC.REC.
NO.278/21.04.018/2025-26, DATED 28/11/2025, AS UPDATED FROM TIME TO TIME

Loans to Directors, Senior Officers and Relatives of Directors

The Company has not given any loan to directors or senior officers or their relatives (except loan & advances sanctioned under scheme
applicable generally to the emloyees of the company) or entities associated with directors and their relatives, refer note 52 & 58 (b).

Note 72: Applicability of approvals/acknowledgements previously given by the Reserve Bank of India

“The Reserve Bank of India has issued Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and
Framework for Scale Based Regulation) Directions, 2025 and various other Directions on November 25, 2025. With the issue of these
Directions, the instructions/ guidelines contained in various circulars/ Directions issued earlier by Reserve Bank of India stand repealed.
Notwithstanding such repeal, any action taken/purported to have been taken or initiated under the earlier instructions/guidelines now repealed
shall continue to be valid and guided by the provisions of new instructions/guidelines.”

Note 73: Disclosure as per Ind AS 8 - ‘Accounting Policies, Changes in Accounting Estimates and Errors’

Recent accounting pronouncements

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

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting
Standards) Rules as issued from time to time. For the year ended March 31, 2026, MCA has notified the below amendments:

The following major amendments have been made;

Amendment of Ind AS 1 - Presentation of Financial Statements by Notification Dated 13^th August 2025

The amendment relates to classification of liabilities as current or non-current and non-current liabilities with covenants. In the context of
classifying a liability as current, it removes the requirement of existence of a right to defer settlement for at least 12 months after the reporting
date, and instead requires that the said right should exist on the reporting date and have substance. The amendment also introduces guidance
on classification of liabilities with covenants. The Company has no material impact of these amendments in its classification criteria of current
and non-current liabilities.

Amendment of Ind AS 21 - The Effects of Changes in Foreign Exchange Rates by Notification Dated 7^th May 2025

In May 2025, the Ministry of Corporate Affairs (MCA) notified amendments to Ind AS 21, The Effects of Changes in Foreign Exchange Rates,
applicable with effect from April 1,2025. The amendment provides additional guidance in situations where a currency is not exchangeable and
clarifies the determination of exchange rates to be used in such circumstances, along with related disclosure requirements. The Company has
evaluated the amendment and concluded that it does not have any impact on its financial statements.

Amendment of Ind AS 7 - Statement of Cash Flows by Notification Dated 13^th August 2025

In August 2025, the Ministry of Corporate Affairs (MCA) notified amendments to Ind AS 7, Statement of Cash Flows, applicable with effect from
April 1,2025. The amendments require entities to provide enhanced disclosures relating to supplier finance arrangements, including the nature
of such arrangements, the carrying amount of related financial liabilities, and the range of payment due dates. The objective of the amendment
is to enable users of financial statements to assess the impact of supplier finance arrangements on an entity's liabilities, cash flows, and
liquidity risk. The Company has evaluated the amendment and concluded that it does not have any impact on its financial statements.”

Amendment of Ind AS 107 - Financial Instruments: Disclosures by Notification Dated 13^th August 2025

In August 2025, the MCA notified amendments to Ind AS 107, Financial Instruments: Disclosures, applicable with effect from April 1, 2025.
The amendments require entities to include supplier finance arrangements as a factor in evaluating concentration of liquidity risk and to
provide related qualitative and quantitative disclosures. These disclosures are intended to enhance transparency regarding the effect of such
arrangements on an entity's risk exposure and financial position. The Company has reviewed the amendment and determined that it does not
have any impact on its financial statements.

It is effective immediately and applies retrospectively. The Company has reviewed the amendment and determined that it does not have any
impact on its financial statements.”

Amendment of Ind AS 12 - Income Taxes by Notification Dated 13^th August 2025

The MCA also notified amendments to Ind AS 12, Income Taxes, relating to the International Tax Reform - Pillar Two Model Rules. The
amendments introduce a temporary mandatory exception from accounting for deferred taxes arising from the implementation of the Pillar Two
rules and require entities to disclose the application of such exception. The amendment is effective immediately and applies retrospectively.
The Company has reviewed the amendment and determined that it does not have any impact on its financial statements.

Note 74:

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