4.22 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a
provision is presented in the statement of profit and loss.

Reimbursements expected in respect of expenditure required to settle a provision is recognized only when it is
virtually certain that the reimbursement will be received.

4.23 Contingent liabilities and assets

The Company does not recognize a contingent liability but discloses its existence in the financial statements
Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will be
required to settle the obligation

• A present obligation arising from past events, when no reliable estimate is possible

• A possible obligation arising from past events, unless the probability of outflow of resources is remote.

• Contingent assets are not recognised. A contingent asset is disclosed, as required by Ind AS 37, where
an inflow of economic benefits is probable.

4.24 "Materiality of Events / Information"

“Financial impact of events / information relating to prior years identified in the current year which are not
material are accounted for in the current year and are not corrected retrospectively through restatement
of comparative amounts. Events or information are considered to be material if they could, individually or
collectively, influence the economic decisions of the users of the financial statements and on the basis of
governing laws, rules, regulations or recommendations issued by competent authorities.”

Events after Balance sheet date are evaluated and adjusting /non adjusting events dealt as per IND AS 10 .

4.25 Earnings per Share

The basic earnings per share is computed by dividing the net profit after tax by the weighted average number
of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing adjusted net profit after tax by the aggregate of weighted
average number of equity shares and dilutive potential equity shares outstanding during the year. The number
of equity shares and potentially dilutive equity shares are adjusted for share splits /reverse share splits and
bonus shares, as appropriate.

4.26 Asset Held for Sale

Assets are classified as Held for Sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use and the sale is highly probable. A sale is considered as highly
probable when such assets have been decided to be sold by the Company; are available for immediate sale
in their present condition; are being actively marketed for sale at a price and the sale has been agreed or is
expected to be concluded within one year of the date of classification. Such assets are measured at lower of
carrying amount or fair value less selling costs. Assets held for sale are presented separately from other assets
in the Balance Sheet and are not depreciated or amortised while they are classified as held for sale. (IND AS
105)

5. Significant accounting judgements, estimates and assumptions.

• The preparation of Standalone financial statements in conformity with Ind AS requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of the reporting period.

• Management believes that the estimates used in the preparation of financial statement are prudent and reasonable.

Future result could differ from these estimates. Any revision to accounting estimate is recognized prospectively in
current and future period.

Judgements

In the process of applying the company's accounting policies, management has made the following judgements, which
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.

5.1 Business model assessment

• Classification and measurement of financial assets depends on the results of the SPPI and the business
model test. The Company determines the business model at a level that reflects how Companies of financial
assets are managed together to achieve a particular business objective. This assessment includes judgement
reflecting all relevant evidence including how the performance of the assets is evaluated and their performance
measured, the risks that affect the performance of the assets and how these are managed and how the
managers of the assets are compensated. The Company monitors financial assets measured at amortised cost
or fair value through other comprehensive income that are derecognised prior to their maturity to understand
the reason for their disposal and whether the reasons are consistent with the objective of the business for
which the asset was held. Monitoring is part of the Company's continuous assessment of whether the business
model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate
whether there has been a change in business model and so a prospective change to the classification of those
assets

Estimates and Assumptions

• The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below. The Company based its assumptions and estimates on
parameters available when the financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising that are
beyond the control of the company. Such changes are reflected in the assumptions when they occur

5.2 Fair value of financial instruments

The fair value of financial instruments 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 (i.e., an exit price) regardless of whether that price is directly observable or
estimated using another valuation technique. When the fair values of financial assets and financial liabilities
recorded in the balance sheet cannot be derived from active markets, they are determined using a variety
of valuation techniques that include the use of valuation models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, estimation is required in establishing fair
values. Judgements and estimates include considerations of liquidity and model inputs related to items such
as credit risk (both own and counterparty), correlation and volatility.

5.3 Effective Interest Rate (EIR) method

The company's EIR methodology recognises interest income / expense using a rate of return that represents
the best estimate of a constant rate of return over the expected behavioral life of loans given / taken and
recognises the effect of potentially different interest rates at various stages and other characteristics of the
product life cycle (including prepayments and penalty interest and charges).

This estimation, by nature, requires an element of judgement regarding the expected behaviour and life-cycle
of the instruments, as well expected changes to India's base rate and other fee income/expense that are
integral parts of the instrument.

5.4 Impairment of financial asset

The measurement of impairment losses across all categories of financial assets requires judgement, in
particular, the estimation of the amount and timing of future cash flows and collateral values when determining
impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a
number of factors, changes in which can result in different levels of allowances.

The company's ECL calculations are outputs of complex models with a number of underlying assumptions
regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are
considered accounting judgements and estimates include:

- The Company's grading model, which assigns PDs to the individual grades

- The Company's criteria for assessing if there has been a significant increase in credit risk and so
allowances for financial assets should be measured on a LTECL basis and the qualitative assessment

- The segmentation of financial assets when their ECL is assessed on a collective basis - Development of
ECL models, including the various formulas and the choice of inputs

- Determination of associations between macroeconomic scenarios and, economic inputs, such as
unemployment levels and collateral values, and the effect on PDs, EADs and LGDs

- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the
economic inputs into the ECL models

It has been the Company's policy to regularly review its models in the context of actual loss experience and
adjust when necessary.

5.5 Provisions and other contingent liabilities

The Company operates in a regulatory and legal environment that, by nature, has a heightened element of
litigation risk inherent to its operations. As a result, it is involved in various litigation, arbitration and regulatory
investigations and proceedings in the ordinary course of the Company's busine.

Given the subjectivity and uncertainty of determining the probability and amount of losses, the Company takes
into account a number of factors including legal advice, the stage of the matter and historical evidence from
similar incidents. Significant judgement is required to conclude on these estimates.

5.6 Revenue from contract with Customers

The Company's contracts with customers include promises to transfer services to a customer. The Company
assesses the services promised in a contract and identifies performance obligation involves judgement to
determine the deliverables and the ability of the customer to benefit independently from such deliverables.
The Company exercises judgement in determining whether the performance obligation is satisfied at a point in
time or over a period of time. The Company considers indicators such as how customer benefits as services
are rendered or who controls the asset as it is being created or existence of enforceable right to payment for
performance to date and alternate use of such product or services, transfer of significant risks and rewards to
the customer, etc.

5.7 Leases

Ind AS-116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted
with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company
makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or terminate the contract will be exercised. The lease term
in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Company also used judgement in determining the low value assets as given under the Ind AS-116.

5.8 Income Taxes

Significant estimates are involved in determining the provision for income taxes, including amount expected to
be paid/recovered for uncertain tax positions and in respect of expected future profitability to assess deferred
tax asset.

Further, the Company's Management has no intention to make withdrawal from the Special Reserve created
and maintained under section 36(1)(viii) of the Income tax Act, 1961 and thus, the special reserve created and
maintained is not capable of being reversed. Hence, the company does not create any deferred tax liability on
the said reserve.

NOTE 10: (Contd.)

NOTE: 10(a)(1):LOANS

Impairment allowance for loans and advances to customers

The table below shows the credit quality and the maximum exposure to credit risk based on the Company's internal credit
rating system and year-end stage classification. The amounts presented are gross of impairment allowances. Details of the
Company's internal grading system are explained in Note 10(a)(4)(ii) and policies on whether ECL allowances are calculated
on an individual or collective basis are set out in Note 10(a)(4)(vi).

NOTE: 10(a)(3) Impairment assessment

The references below show where the Company's impairment assessment and measurement approach is set out in
these notes. It should be read in conjunction with the Summary of significant accounting policies.

- The Company's definition and assessment of default and cure.

- How the Company defines, calculates and monitors the probability of default, exposure at default and loss given
default.

- When the Company considers there has been a significant increase in credit risk of an exposure.

- The Company's policy of segmenting financial assets where ECL is assessed on a collective basis.

- The details of the ECL calculations for Stage 1, Stage 2 and Stage 3 assets.

NOTE 10: (Contd.)

NOTE: 10(a)(4)(i) Definition of default

The Company considers a financial instrument as defaulted and considered it as Stage 3 (credit-impaired) for ECL
calculations in all cases, when the borrower becomes 90 days past due on its contractual payments.

NOTE: 10(a)(4)(ii) Probability of default

The estimation of Probability of Default (PD) shall be carried out in accordance with the following principles:

a. Through-the-Cycle PD (TTC-PD): TTC-PD shall be calculated using an incremental Non-Performing Asset (NPA)
approach. In cases where there is limited default history for a specific portfolio, a credit rating-based default study
shall be utilized to derive the TTC-PD.

b. Point-in-Time PD (PiT-PD): Through-the-Cycle Probability of Default (TTC-PD) shall be converted into Point-in¬
Time Probability of Default (PiT-PD) using a forward-looking model. This model shall incorporate portfolio-specific
macroeconomic variables to ensure that the estimate reflects current and anticipated economic conditions
relevant to the portfolio.

c. Stage-II Loans - Lifetime PD: For loans classified under Stage-II, Lifetime Probability of Default shall be estimated
using survival analysis techniques over the remaining contractual tenure of the loans.

d. Stage-III Loans: Loans classified under Stage-III shall be assigned a Probability of Default of 100%.

NOTE: 10(a)(4)(iii) Exposure at default

The exposure at default (EAD) represents the gross carrying amount of the financial instruments subject to the
impairment calculation, addressing both the borrower's ability to increase its exposure while approaching default and
potential early repayments too.

NOTE: 10(a)(4)(iv) Loss given default

The Company segments its lending products into smaller, homogeneous portfolios to facilitate accurate estimation of
credit risk parameters. For all portfolios except Government Loans Backed by Government Guarantee, the Loss Given
Default (LGD) is estimated based on historical recovery experience, taking into account actual recoveries observed
over time. In the case of Government Loans Backed by Government Guarantee, a bucket-level LGD approach is
adopted. These buckets are defined using state-level fiscal deficit data, which serves as a proxy for the fiscal strength
of each state and the corresponding credit risk associated with the guarantees provided.

NOTE: 10(a)(4)(v) Significant increase in credit risk

The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a
portfolio of instruments is subject to 12 months ECL or lifetime ECL, the Company assesses whether there has been
a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly
increased in credit risk when contractual payments are more than 30 days past due. When estimating ECLs on a
collective basis for a group of similar assets, the Company applies the same principles for assessing whether there has
been a significant increase in credit risk since initial recognition.

Other SICR criteria:

a) If any particular agency has delayed payments by more than 30 days

- for two instances in the past 6 months or

- Any of the payments in the past two billing cycle then, the agency would be classified as Stage II for a
minimum period of 6 months or two billing cycle which is higher. If the performance is satisfactory for the
given period, then the agency would be moved back to Stage I.

NOTE: 10(a)(4)(vi) Grouping financial assets measured on a collective basis

The Company calculates ECLs on collective basis for all Stage I and II Loans and on an individual basis for Stage III
Loans .

The asset held for sale as on March 31, 2026 is under the various stages of E Auction/Tendering, process of which is expected to
be concluded in coming financial year. There is no significant change in the plan of management and Assets are still held for sale.

With a view to monetise its idle assets, during the year company has disposed assets through e auction process/Tendering,
Classified as Property Plant and Equipment with carrying value of '1.58 Crore, Such sale has resulted in gain of '25.42 Crore
during the current year

In the opinion of management, there are no events or changes in circumstances that indicate the impairment of Assets Held for Sale
in terms of Ind AS 36 'Impairment of Assets'. Accordingly, no provision for impairment has been made.

Till the previous year, the construction of the qualifying asset was considered to be funded entirely through the Company's
own resources, and accordingly, no borrowing costs were capitalised. During the current year, the Company revisited its
approach regarding the utilisation of funds for construction of qualifying assets.

# The resultant effect has been reflected in the financial statements. The impact so determined was assessed to be not
material to the financial statements and has therefore been recognised in the Statement of Profit and Loss for the current
period. Further, while the Company has not raised any specific borrowings for the construction of a qualifying asset, it has
capitalised borrowing costs amounting to ?6.15 Crore (Previous Year: Nil) on account of general borrowings, applying an
average borrowing rate of 7.25% (Previous Year: 7.25%), in accordance with Ind AS 23 Borrowing Costs.

NOTE 34: Capital

Capital Management

For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other
equity reserves attributable to the equity holders of the Company. The primary objectives of the Company's capital management
are safety and security of share capital and maximize the shareholders' wealth.

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital
adequacy requirements of the regulator viz., RBI. The adequacy of the Company's capital is monitored using, among other
measures, the regulations issued by RBI.

Company has complied in full with all its externally imposed capital requirements over the reporting period.

Capital to Risk-weighted Assets Ratio (CRAR)

RBI vide letter dated August 23, 2024 granted Certificate of Registration (CoR) as NBFC-IFC to HUDCO. Accordingly, Company
being a NBFC-IFC now, is complying with the Capital Adequacy requirements as prescribed by the Master Directions -
Reserve Bank of India (Non-Banking Financial Companies - Prudential Norms on Capital Adequacy) Directions, 2025 dated
November 28, 2025 and updated from time to time.

Being an NBFC-IFC, HUDCO is required to maintain Capital Adequacy Ratio or Capital to Risk Weighted Assets Ratio
(CRAR) of 15% (with a minimum Tier I Capital of 10%), computed by dividing company's Tier-I and Tier-II capital by Risk
Weighted Assets.

Dividend Distribution Policy

BOD monitors the dividend pay-out to the shareholders of the Company. Dividend distribution policy of the Company focuses
on various factors including but not limited to the present & future capital requirements, profits earned during the financial
year, Capital to Risk-weighted Assets Ratio (CRAR), cost of raising funds from alternate sources, cash flow position and
applicable taxes if any and net worth of the Company, subject to the applicable circulars/ guidelines issued by RBI, DIPAM
etc. as applicable from time to time.

As per the extant guidelines issued by DIPAM, Government of India, Company is required to pay a minimum annual dividend
of 30% of PAT or 5% of the net-worth, whichever is higher. Though the Company endeavours to declare the dividend as per
these guidelines, the Company may propose lower dividend after analysis of various financial parameters, cash flow position
and funds required for future growth.

Other Policies

The Company has also adopted various policies for the management of the Company which inter-alia include Comprehensive
Risk Management Policy, Whistle Blower Policy, Code of Conduct for Regulating, Monitoring & Reporting of Trading by
Designated Persons & their Immediate Relatives and for Fair Disclosure, Policy for prevention of Fraud, The Code of Business
Conduct and Ethics for Board Members and Senior Management, Fair Practices Code, Internal Guidelines on Corporate
Governance, Policy on 'fit & proper' criteria of Directors etc.

NOTE 36: Fair Value Measurement

36.1. Valuation principles

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 (i.e., an exit price),
regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, Financial Instruments are classified based on a hierarchy of
valuation techniques.

36.2. Valuation governance

The Company's Fair Value methodology and the governance over its models include a number of controls and other
procedures to ensure enough safeguards and maintain its quality and adequacy. All new product initiatives (including
their valuation methodologies) are as per the approved policy of the Company. The ongoing measurement on fair value
estimates is reviewed by the appropriate functional department of the Risk management and related finance functions.

36.3. Assets and liabilities by fair value hierarchy

The following table shows an analysis of financial instruments recorded at fair value by the level of the fair value
hierarchy:

available, such instruments are classified as Level 2. Other equity instruments are fair valued based on the average
of the Discounted Cash Flow (DCF) method and Net Assets Value (NAV) (as provided by independent valuer). It is
classified as Level 3.

Interest Rate Swaps, Currency Swaps and Forward Rate Contracts

The most frequently applied Valuation techniques include Forward Pricing and Swap Models and Forward Contract
using Present Value calculations by estimating future cash flows and discounting them with the appropriate yield curves
incorporating funding costs relevant for the position. These contracts are classified under Level 2.

Investment Property

The Company obtains independent valuations for its investment properties annually. The fair values of investment
property are determined by an independent registered valuer and the valuation technique adopted are Income approach,
Market Approach and Composite Approach. All resulting fair value estimates for investment property are included in
Level 2 (refer 14A).

36.5. Transfer between level 1 and level 2

There have been no transfers between Level 1 and Level 2 for the year ended 31^st March, 2025 and 31^st March,2026.

36.6. Movements in Level 3 Financial Instruments measured at Fair Value

The following tables show a reconciliation of the opening and closing amounts of Level 3 financial assets and liabilities
which are recorded at fair value. The Company requires significant unobservable inputs to calculate their fair value.

36.7. Key assumptions and range of inputs

(a) Net Asset Value (NAV) Method:

The Net Asset Value Method represents the value with reference to historical cost of assets owned by the company and
the attached liabilities on the valuation date.

(b) Discounted Projected Cash Flow:

Discounted Projected Cash Flow valuation technique is used to calculate Impact on fair value of level 3 financial
instruments measured at fair value using the following unobservable input such as Discount Rate, Recovery rates,
Interest Rate and Revenue from operations to ascertain the change.

(c) To arrive at fair value of unquoted investments average of Net Asset Value (NAV) and Discounted Projected Cash flow
as on 31^st March, 2026 is taken.

The range of values indicates the highest and lowest level input used in the valuation technique and, as such, only reflects the
characteristics of the instruments as opposed to the level of uncertainty to their valuation.

All changes in the fair market value would be reflected in the Statement of profit and loss based on the classification FVTPL.

The table summarises the valuation techniques together with the significant unobservable inputs used to calculate the fair
value of the Company's Level 3 assets and liabilities.

36.8. Quantitative analysis of Significant Unobservable inputs
Interest rate volatility

Interest Rate volatility measures the expected future variability of a market price. It is generally quoted as a percentage;
a higher number represents a more volatile instrument, for which larger swings in price (or interest rate) are expected.
Volatility is a key input used to estimate the future prices for the underlying instrument (equity share). Interest rate
volatility varies from time to time and therefore, it is not viable to make reliable and meaningful general statements about
volatility levels.

Discount Rates

Discount rates are used for calculating the present value of future cash flows. In discounted cash flow models, discount
rates are used as the direct reflection of the expected rate of return of the investments made by the company in the
due course of the business. Hence, these rates reflect the net present value of an asset. They generally reflect the
premium an investor expects to achieve over the benchmark interest rate to compensate for the higher risk driven by
the uncertainty of the cash flows caused by the credit quality of the asset. They can be implied from market prices and
are usually unobservable for illiquid or complex instruments.

Recovery Rates

Recovery rates reflect the estimated loss that the company will suffer given expected defaults (Non-performing Assets).
The recovery rate is given as a percentage and reflects the opposite of loss severity (i.e., 100% recovery reflects 0%
loss severity). In line with the operation of the Company, probability of non-performing assets to loss assets plays
an important role to ascertain the recovery rates. Higher loss severity levels / lower recovery rates indicate lower
expected cash flows upon the default of the instruments. Recovery rates for complex, less liquid instruments are usually
unobservable and are estimated based on historical data.

Revenue from operations

Revenue is the value of all sales of goods and services recognized by a company in a period. Revenue (also referred to
as Sales, Turnover, or Income) forms the beginning of a company's Income Statement and often considered the “Top
Line” of a business. Growth in revenue from operation directly impacts the profitability of the company, as operation
expenses are deducted from a company's revenue to arrive at its profit.

36.9. Sensitivity of fair value measurements to changes in unobservable market data

Sensitivity of fair value measurements to changes in unobservable market data cannot be ascertained due to potential
off-sets from economic or accounting hedge relationships in place.

36.10. Carrying amount and Fair value of financial instruments

The following table indicates the carrying amounts and fair values of the Company's financial instruments, by class, that
are not carried at fair value in the financial statements. This table does not include the fair values of non-financial assets
and non-financial liabilities.

Trade Receivable, Other Receivables and Trade Payables and Other Payables are carried at Carrying amount which
equals fair values, these are not carried at fair value in the financial statements.

36.11 Valuation Methodology of Financial Instruments not measured at Fair Value

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which
are not recorded and measured at fair value in the Company's financial statements. These fair values were calculated
for disclosure purposes only. The below methodologies and assumptions relate only to the instruments in the above
tables and, as such, may differ from the techniques and assumptions explained in Note 36.4.

Short-term financial assets and liabilities

For financial assets and financial liabilities, that have a short-term maturity (less than twelve months), the carrying
amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include:
Trade receivables and trade payables without a specific maturity.

Loans and advances to customers

The carrying amount of fixed interest rate bearing loans and floating interest rate bearing loans are taken as fair values.
Financial asset at amortised cost

The fair values of financial assets at amortised cost are the carrying amount of the financial asset.

Debt Securities

Fair value of traded bonds is market price of the bonds as on the balance sheet date or close to balance sheet date. In
case of Commercial Paper which is Current Liability i.e., short term maturity (less than or equal to twelve months), the
face value of outstanding commercial paper is considered as fair value.

Borrowing other than debt securities

The carrying amount of fixed interest rate bearing borrowings and floating interest rate bearing borrowings are taken as
fair values, since these are reasonable approximation of their fair value.

37. Risk Management

37.1. Introduction and risk management structure

HUDCO being an Infrastructure Finance Company is exposed to various kinds of risks such as credit risk, operational
risk, liquidity risk, market risk, foreign currency risk etc. The Company is fully committed to manage these risks in an
effective and proactive manner, for which the Company has in place a Comprehensive Risk Management Policy and
Risk Register cum Early Warning Signals aligned with its business objectives covering risk arising from both internal and
external environments.

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management
framework. With a view to minimize the impact of various risks, the Company has in place a Board Level Committee i.e.
'Risk Management Committee' (RMC) which reviews various suggestions/recommendations/reports and action taken
by the sub-committees namely:

• Credit & Operational Risk Management Sub-Committee (CORMSC); and

• Assets & Liabilities Committee (ALCO)

The Credit & Operational Risk Management Sub-Committee (CORMSC) oversees and ensures that the institution's
credit policies are complied with and the laid down procedures are being consistently applied. The CORMSC also
oversees and ensures the implementation of operational risk management framework to explicitly identify, assess, and
manage various sources of operational risk including Technology risk, Employee risk, Customer risk, Capital Assets risk
and External risk.

Assets and Liabilities Committee (ALCO) reviews the liquidity and market risks and ensures management of mismatches
through liquidity gap analysis, interest rate sensitivity analysis. ALCO ensures that the ALM risks, if any, are managed
within the permissible limits.

37.2. Credit risk

To effectively manage credit risk in the business at different levels including at appraisal, disbursement and post- disbursement,
the Company has in place a strong and effective credit appraisal mechanism containing comprehensive appraisal techniques/
guidelines, and Comprehensive Risk Management Policy and Risk Register cum Early Warning Signals to identify and mitigate
stress in the credit portfolio. The Company has also undertaken review of risk rating models and policy to ensure alignment
with evolving market dynamics and best industry practices.

37.2.1. Derivative financial instruments

Credit risk arising from derivative financial instruments is, at any time, limited to those with positive fair values, as
recorded on the balance sheet.

With gross-settled derivatives, the Company is also exposed to a settlement risk, being the risk that the company
honours its obligation, but the counterparty fails to deliver the counter value

37.2.2. Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk

was ? 1,60,547.15 Crore and ? 1,24,340.71 Crore as of 31^st March, 2026 and 31^st March, 2025 respectively, being the
total of the carrying amount of balances with loans.

37.2.3. Analysis of risk concentration

HUDCO takes into consideration NHB/RBI norms for risk categorisation and the norms adopted for extending loan under
HUDCO Niwas. Higher LTV is permissible for lower loan amounts while LTV reduces with the higher loan amounts.
[Refer Note:10(a)(1)]

During the year, the Company undertook a strategic review of its Retail Finance vertical (HUDCO Niwas) and observed
its negligible contribution to the overall loan portfolio (0.05% as at 31^st March 2025 and 0.03% as at 31^st March 2026),
along with a negligible contribution to income compared to the associated overheads; further, revival would require
substantial investment in a highly competitive environment and is constrained by limited presence in Tier II and Tier
III cities. Accordingly, in line with the Company's transition to an NBFC-IFC and its strategic focus on infrastructure
and bulk housing finance, it has been decided to discontinue the Retail Finance vertical, while the existing portfolio will
continue to be serviced in the normal course until it is divested or fully wound down.

37.3. Liquidity Risk

To manage the liquidity risk, Company has in place an effective Asset Liability Management System. The liquidity risk
is being monitored with the help of liquidity gap analysis. Further, the funds are mobilized at competitive rates through
various strategies viz. bonds, public deposits, term loans etc.

The Company maintains a pool of liquid assets which represents the primary source of liquidity in stress scenarios. Its
composition is subject to limits designed to reduce concentration risks which are monitored on an on-going basis.

37.4.3. Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument, denominated in currency
other than functional currency, will fluctuate because of changes in foreign exchange rates.

(i) Foreign currency risk monitoring and management

Foreign Currency risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the company's functional currency i.e. INR. The company has overseas
foreign currency borrowings and is exposed to foreign exchange risk primarily with respect to the USD, CHF and
JPY. In order to mitigate the risks associated with foreign currency fluctuations, Company has a Foreign Currency
Risk Management policy. It uses a combination of currency swaps and options to hedge its exposure to foreign
currency risk. These derivative transactions are done for hedging purpose and not for trading or speculative
purpose. The policy lays down the appropriate systems and controls to identify, measure and monitors, the
currency risk for reporting to the Management.

(ii) Foreign currency exposure

The Company is exposed to foreign currency risk mainly on its borrowings denominated in foreign currency. The
carrying amount of the Company's foreign currency denominated borrowings is as follows:

37.4.4. Price risk in the investment in equity

Price Risk in the investment in equity is the risk that the fair value of investment in equity decreases as a result of
changes in the level of equity indices and individual stocks. At increase in the value of the Company's investment in
Equities at 31^st March, 2026 would have increased Equity by ? 30.03 Crore. An equivalent decrease would have resulted
in an equivalent but opposite impact and would cause a potential impairment, which would reduce profit before tax by
approximately by ? 30.03 Crore.

37.4.5. Operational Risk

Operational Risk Management Framework covers managing each and every source of Operational Risk as a distinct risk
to the Company's safety and soundness. In order to mitigate the Operational Risk(s) of the organization, both internal
as well as external, including Technology Risk, Cyber Security Risk, Employee Risk, Capital Asset Risk, Compliance
Risks, Fraud Risk ,Legal Risk, etc. the Company has established a strong reporting and monitoring mechanism.To
manage the operational risks effectively, the Company has implemented a Comprehensive Risk Management Policy
and Risk Register cum Early Warning Signals, through which all operational risks are measured and categorised as
high, moderate or low and necessary steps are taken to manage these risks.

NOTE 38: HEDGE ACCOUNTING

1. 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.

The Company has used hypothetical derivative method for effectiveness assessment. Under this method, the hedged
risk is modelled as a derivative called the hypothetical derivative which has the same terms as the hedged item. The
hypothetical derivative approach compares the change in fair value of the hedging instrument with the change in the fair
value of the hypothetical derivative. Prospective hedge effectiveness testing has been performed using the sensitivity
analysis approach. Under this approach, the impact of a uniform /- 5% shock on the forward curve has been performed
to assess the effectiveness of the hedge.

The currency swap and option contracts are denominated in the same currency as the highly probable future foreign
currency principal and interest payments, therefore the hedge ratio is 1:1.

B) Disclosure with respect to DTL on Special reserve

HUDCO has been making Special Reserve as per Section 36(1)(viii) of Income Tax Act, 1961 and availing tax benefits
of the same. HUDCO was treating the deduction of special reserve from taxable income as a timing difference and was
creating DTL on the same in accordance with applicable Accounting Standards and Ind AS.

The Company during the Financial Year 2004-05 had started recognising DTL on Special Reserve created and
maintained under Section 36(1)(viii) of the Income Tax Act, 1961 due to first time adoption of Accounting Standard 22.
Hence, additional deferred tax liability on Special Reserve created and maintained upto 31.03.2004 of Rs. 315.21 Crore
was recognised (Rs. 267.52 Crore recognised out of general reserve & Rs. 47.69 Crore out of profit of the year), which
was duly disclosed in Annual Report of F. Y 2004-05.

The Company has now passed the Board Resolutions that it has no intention to make withdrawal from the Special
Reserve created and maintained under section 36(1)(viii) of the Income Tax Act 1961. Therefore, no future taxable
consequences are expected to be arise from recovery or settlement of any asset or liability. Hence, the special reserve

created and maintained has become permanent difference in nature as per Ind AS 12 issued by the ICAI. Henceforth,
the Company is not recognising any deferred tax liability on the said Special Reserve.

Now, considering the opinion obtained and also the practice followed by the other similarly placed institutions of not
recognising Deferred Tax Liability (DTL) on account of special reserve created and maintained under Section 36(1)
(viii) of Income Tax Act, 1961, the management is of the view that there is no requirement of DTL as per Ind AS 12.
Accordingly, the company has not recognised deferred tax liability (DTL) of Rs. 132.13 Crore during the financial year
2025-26 on account of special reserve of Rs. 525 Crore created and maintained under Section 36(1)(viii) of Income
Tax Act, 1961, during the financial year 2025-26 and has also derecognised the DTL of Rs. 1800.38 Crore which was
recognised upto 31.03.2025.

Prior to financial year 2025-2026, an amount of ?7,153.44 Crores was transferred to the Special Reserve and same was
created and maintained under section 36(1)(viii) of the Income Tax Act,1961, resulting in recognition of DTL of ?1800.38
Crore (i.e. @ 25.168 % of Special Reserve of ?7,153.44) upto 31.03.2025 and the same has been derecognised from its
originating source i.e., ?1532.86 Crore through Profit and Loss Statement and ?267.52 Crore through General Reserve.
This will result in increase of ?1532.86 Crores in Profit After Tax (PAT), ?267.52 Crore increase in general reserve &
reduction of DTL by ?1800.38 Crore. Similarly, during the financial year 2025-26 special reserve of ?525 Crore was
created on which DTL of ?132.13 Crore was not required to be recognised during the financial year 2025-26.

Had the Company followed the same accounting treatment as in the earlier years the position would have been as
follows: -

NOTE 40: Ind AS-116 Leases

A. Company as a Lessee

The Company has Leasehold Properties allotted to it by Central/State Govt Agencies for term period of 30-999 years
and Perpetual leases. In case of Perpetual lease, the treatment is same as freehold and no lease asset is created.

Further, the Company has Lease Contracts for the Office Building, Flats & Vehicles which are cancellable by either
lessor or lessee., since there is no estimation by the Company to continue or discontinue the same, Hence Right of Use
asset and corresponding lease liability has not been created.

Besides Company used hindsight in determining the Lease Term, where the Contract contained options to extend or
terminate the lease and therefore its leases are covered under the Short-Term Leases as per the guidance under the
Ind AS-116.

The company has revisited its accounting treatment relating to Right-of-Use (ROU) Assets and corresponding lease
liabilities under Indian Accounting Standards Ind AS 116 and, based on the calculations carried out from April 1, 2019,
the resultant effect has been considered in the financial statements of the current year. The impact so determined
was assessed to be not material to the financial statements and, accordingly, the same has been recognized in the
Statement of Profit and Loss of the current period.

Lease payments relating to short-term leases recognised in the Statement of Profit and Loss amounted to ?1.69 Crore
during the financial year 2025-26 (Previous Year: ?1.81 Crore). Right of Use Assets is depreciated on Straight Line
Basis (SLM) over period of Lease or useful life of assets in terms of Company Act 2013, whichever is less.

The movement of Right of Use Assets and Depreciation charged during the year is as per Note No 14 of the financial
statement.

Total Cash outflow of leases during the financial is ?0.56 Crores (Previous Year ?0.56 Crore).

iii. As per Perpetual Lease Deed dated 04^th July, 1997, the Company is liable to make available “Net Resources”
from the development and disposal of properties of the AGP to then MoUD and accordingly the Company was
crediting interest on Net Resources generated on the project upto 03^rd November, 2004. Subsequently, a separate
“No Lien AGP Account” has been opened under the name of “HUDCO AGP Account”, in which the surplus lying
to the credit of the then MoUD was credited and interest accrued/ earned on “No Lien AGP Account” was also
credited to that account.

iv. HUDCO contends that as per minutes of the meeting held on 07^th September, 1995 and in terms of Perpetual
Lease Deed dated 04^th July, 1997, the status of the Company is “Agent of MoUD”. The contention of HUDCO is
that it is working as an agent and as such total ownership rights and responsibilities of AGP are of MoHUA-GOI
(erstwhile MoUD) and there is no financial liability of HUDCO in respect of AGP This has been upheld by learned
Shri GE Vahanvati, the then Solicitor General of India, vide his opinion dated 12^th April, 2005. This opinion was
re-confirmed by learned Shri GE Vahanvati as Attorney General of India vide his opinion dated 19^th August, 2009.
The opinion was also duly endorsed by the then Law Secretary and Law Minister of Government of India.

v. Keeping this position in view and in accordance with HUDCO's Board decision in 459^th meeting dated 24^th August,
2009, HUDCO has been making payments / settling claims on Ministry's behalf and accounting them in “No Lien
AGP Account” being separately maintained by HUDCO. As on 31^st March, 2026, this account has a deficit in the
form of debit balance of ? 685.64 Crore, recoverable from MoHUA (erstwhile MoUD). This represents amount
paid by HUDCO on behalf of the Ministry for the capital and revenue expenditures on AGP project over and above
the recoveries and the accumulated interest amounting to ? 376.85 Crore charged @ 10.75% p.a (simple) till
31^st March 2025 and @8.75% p.a from 01^st April 2025. (simple), on excess of expenditure over recoveries. The
MoHUA (erstwhile MoUD) in a meeting held on 27^th April, 2015 have also asserted that HUDCO shall continue to
implement and manage the AGP in terms of Perpetual Lease Deed and all the pending issues shall be looked into
for resolution by the Ministry. The MoHUA (erstwhile MoUD) in the said meeting has also decided that HUDCO as
a Lessee will bear all the liabilities including the liabilities generated out of compliance of various court orders in
cases related to the project. The company vide its letter dated 30^th September, 2015, conveyed its reservation to
accept the decision for bearing the liabilities of Andrews Ganj project as HUDCO is acting as an agent of MoHUA,
Government of India, for AGP, in terms of perpetual lease deed conditions and other agreed terms.

vi. The Ministry has been informed specifically of the above facts and figures on various occasions through
correspondence as also in the meetings. A communication was received from Dy. L&DO vide letter dated
22^nd March, 2016 wherein Dy. L&DO had conveyed that HUDCO may continue to implement Andrews Ganj project
and manage “No Lien AGP Account” in line with the terms and conditions as stipulated in the Perpetual Lease
Deed dated 04^th July, 1997. The Ministry again informed in specific vide Dy L&DO letter dated 31^st May, 2018 that
HUDCO as a lessee is permitted to incur/book maintenance and legal expenditure in respect to Andrews Ganj
Project from “No Lien AGP Account”. Like earlier years, in-line with the minutes of meeting dated 07^th September,
1995, the perpetual lease deed dated 04^th July, 1997, income of ? 26.57 Crore on account of interest accrued
on AGP Project has been credited to Statement of Profit and Loss for the period year ended 31^st March, 2026.

vii. As decided by HUDCO Board in its 596^th meeting held on 14^th June, 2018, Ministry of Housing and Urban Affairs
has been requested vide letter dated 09^th July, 2018 to consider taking over the Andrews Ganj project with assets
and liabilities and pay the amount incurred / to be incurred by HUDCO, towards implementing the project. It has
also been conveyed that “till the project is taken over by Ministry”, HUDCO shall be continuing implementing the
project as per existing arrangements and continue booking maintenance and legal expenses,interest @ 10.75%
p.a. till 31^st March 2025 and @ 8.75 % p.a from 01^st April 2025, and administrative charges @1.5% in “No Lien
AGP Account”.

viii. The company, in its aforesaid capacity as an agent of MoHUA (erstwhile MoUD), relating to AGP, is in possession
of real estate properties (9 guest houses blocks and hotel site) which command much higher realizable market
value sufficient to recover aforesaid amount of ? 685.64 Crore, as on 31^st March, 2026.

ix. MoHUA was requested vide letter dated 13^th January, 2021 to make arrangement towards reimbursement of the
amount recoverable endorsement for settling the same from the project proceeds as and when the same are
realized, which is also in line with the Lease agreement and well settled and agreed.

In reply to the same, Ministry vide letter dated 10^th March, 2021 had requested for certain additional information including

the breakup details of principal amount and interest amount as contained in the “No Lien AGP Account” to process

HUDCO's request.

Ministry vide letter dated 28^th June, 2021 had stated that the “HUDCO’s proposal is under examination in consultation
with IFD, MoHUA. Till the proposal of HUDCO vide their letter dated 13^th January, 2021 is approved, the existing
arrangement may be continued as conveyed vide this office letter dated 22^nd March, 2016 and 31^st May, 2018”.

In the review meeting held by JS (L&E), MoHUA on 19^th March 2025 it was desired to lower the applicable Rate of
Interest charged by HUDCO on outstanding balance of 'No lien AGP account’. Pursuant thereto, HUDCO vide letter
dated 28^th March 2025 to Ministry has suggested 8.75% rate of interest with prospective effect from 1^st April 2025; the
confirmation on the same by the Ministry is awaited.

HUDCO vide letter dated 13^th March 2025 informed the Ministry about the Judgement and order dated 13^th February
2025 of the Hon’ble Supreme Court, which has been noted by the Ministry vide its letter dated 24^th April 2025.

Hence, in view of the facts and circumstances stated above, the Company does not expect any liability on this account
and any expenditure related thereof. In case of any liability by virtue of any court order or otherwise, the same shall be
in the account of 'No lien AGP Account’, based on the facts and documents and the legal opinions obtained by HUDCO.

B) Litigation status

i.) Tomorrowland Technologies Exports Ltd

The Company had allotted a hotel site including car parking space to M/s Tomorrowland Technologies Exports Ltd.
i.e., TTEL (formerly known as M/s. M S Shoes East Limited). Due to default in payment of instalments by TTEL, the
Company cancelled the allotment of hotel site including car parking space and forfeited the amount paid by TTEL in
terms of the allotment letter.

TTEL started litigation regarding hotel site and filed suit for declaration in lower courts that cancellation of allotment letter
by HUDCO, be declared as null & void. The Sr. Civil Judge passed final order dated 03^rd July, 2010 against HUDCO.
HUDCO filed first appeal against the Order dated 03.07.2010 of Sr. Civil Judge before the Additional District Judge
(ADJ) Delhi. The ADJ vide Order dated 18^th July, 2014 dismissed the first appeal of HUDCO and passed the judgment
in favour of TTEL. HUDCO filed Regular Second Appeal (RSA) before the Hon'ble High Court of Delhi which vide its
judgement dated 03^rd June, 2016 allowed the second appeal of HUDCO and upheld the cancellation of allotment by
HUDCO w.r.t. Hotel Site & car Parking slots. TTEL challenged the High Court Order dated 03.06.2016 by filing SLP (C)
No.: 34338 / 2016 before the Hon’ble Supreme Court of India. The Hon’ble Supreme Court vide its judgment and order
dated 13.02.2025 has decided the said SLP and has directed for refund of the forfeited amount of Rs.28,11,31,939/- to
TTEL within three months from the date of the order, failing which, TTEL shall be entitled to interest @ 6% per annum
till the date of payment. This said amount has been paid on 01^st May 2025

The allotment of 9 blocks of guest houses, restaurants, kitchens, and shops, which were allotted to TTEL, was cancelled
due to default in payment of instalment by TTEL and amount of first instalment paid by TTEL was forfeited as per
terms of allotment letter. TTEL filed civil suit challenging the cancellation of allotment, for permanent injunction and
possession, against HUDCO & Union of India. The Hon’ble High Court, vide Order dated 10^th August, 2016, directed
that HUDCO & Union of India should consider the proposal given by TTEL for refund of entire amount deposited by way
of 1^st instalment by it with HUDCO along with interest at such rate which may be deemed appropriate by Court.

In view of Hon’ble High Court of Delhi order dated 10^th August, 2016, the Board in its 568^th meeting held on
23^rd August, 2016 resolved to approve the proposal to refund first instalment forfeited by HUDCO excluding earnest
money & the interest for delayed payment paid thereof by TTEL for guest house blocks after adjusting the commercial
losses caused to HUDCO and other expenses incurred by HUDCO since 1997-98 from the date of completion of project
and subject to necessary approval / NOC of MoUD, Govt. of India.

The Hon’ble High Court passed a decree dated 13^th January, 2017 for refund of the first instalment excluding the earnest
money to TTEL along-with interest @ 6% p.a., w.e.f. 30^th January, 1995 till date of payment and directed HUDCO to
refund the interest paid by TTEL (?0.99 Crore) on the delayed period of payment of 1^st instalment (from 30^th November,
1994 till 30^th January, 1995). If the entire amount is not paid on or before 31^st December, 2017, the rate of interest would
then stand enhanced to 11% p.a. However, the decree was made in-executable till 30^th June, 2017. Both HUDCO and
TTEL challenged the said decree dated 13.01.2017.

TTEL filed Review Petition in the month of May, 2017, before Hon'ble High Court of Delhi for review of the Decree

dated 13^th January, 2017, praying inter-alia for refund of EMD, grant of interest @ 16.48% p.a. on quarterly rests.
Subsequently, Review Petition filed by TTEL was disposed off by the High Court on 12^th December, 2017. Thereafter,
TTEL has filed Special Leave Petition (SLP No 10752/53 of 2018) in Hon'ble Supreme Court against the Decree dated
13^th January, 2017 and Hon'ble High Court Order dated 12^th December, 2017. The same have been disposed off by the
Hon'ble Supreme Court of India vide its Order dated 10.12.2024 and referred them to Delhi High Court where they are
listed as Regular First Appeal No. 1/2025 & 2/2025 of TTEL. The said two RFAs of TTEL are listed with the RFA No.
79/2018 of HUDCO. The matters were lastly listed on 20.03.2026 and after hearing the submissions, the Hon'ble
Court has reserved the Judgement / Orders.

The Company also filed application for recalling the Hon'ble High Court Order dated 13^th January, 2017, in view of the
Review Petition filed by TTEL and directions of Govt. of India. The matter was listed on 28^th August, 2018, after hearing
all parties, Hon'ble High Court dismissed the “Recall Application” of HUDCO. HUDCO filed SLP in Supreme Court
challenging the High Court Order dated 28^th August, 2018 and 13^th January, 2017. Vide Order dated 18^th September,
2018, the Hon'ble Supreme Court dismissed the SLP as withdrawn, with liberty to HUDCO to file all legal objections
regarding the executability of the decree in the executing Court.

Further, TTEL also filed first Execution Petition in Delhi High Court and later on, the same was also withdrawn by
TTEL on 23^rd December, 2017. Thereafter, TTEL has filed Revised Execution Petition, making Govt. of India also a
party and claiming rate of interest @ 11% p.a. as per the decree dated 13^th January, 2017.The matter was listed on
3^rd May, 2018, wherein the Hon'ble High Court first directed for attachment of HUDCO Property i.e. HUDCO Bhawan,
IHC, Lodhi Road, New Delhi. However, after hearing the submission of HUDCO, vide the same order, Hon'ble High
Court kept the attachment order of HUDCO Property in abeyance till the next date and also directed that HUDCO will
not sell the property at Andrews Ganj, Delhi.

Further, the learned Justice V.N. Khare, former Chief Justice of India, has opined that, “HUDCO's consent to perform
the terms of the Order dated 13^th January, 2017 was conditional on UOI's support and in the event any liability is indeed
ascribed to HUDCO, the same should then be recoverable from the UOI”.

In view of the Supreme Court's Order dated 18^th September, 2018, HUDCO filed objection in the Execution Petition,
pending in Delhi High Court. The matter was listed on 29^th October, 2018. After hearing the submission of HUDCO's
Counsel, the Hon'ble Court dismissed the objections. HUDCO filed two appeals in Delhi High Court as under:

1. Regular first Appeal (RFA 79/2018) against the final order/ decree 13^th January, 2017 and order dated 28^th August,
2018 (Dismissal of Recall application by High Court). The said Regular First Appeal of HUDCO was lastly listed
on 20.03.2026. After hearing the submissions, the Hon'ble Court has reserved the Judgement / Orders.

2. Execution First Appeal (EFA No 19/2018) against the order dated 29^th October, 2018, wherein objections of
HUDCO in execution petition were dismissed. The matter was listed on 27^th November, 2018. After hearing the
matter, the Hon'ble Court stayed the execution proceeding pending in Delhi High Court till the next date. The
matter was listed again on the application of the M/s TTEL for vacation of stay on 08^th July, 2020 before Division
Bench, Delhi High Court, after hearing the matter, the Hon'ble Court directed that Execution First Appeal (EFA)
19/2018) shall be adjourned sine die and will be listed after the final disposal of the Regular First appeal (RFA
79/2018). The parties are at liberty to move the application for revival of EFA after final disposal of RFA 79/2018.
Till the further order, the stay on the Execution proceedings shall be continued. All the matters were listed on
20.03.2026 and after hearing the submissions, the Hon'ble Court has reserved the Judgement / Orders.

TTEL filed SLP in Supreme Court, against the High Court Order dated 27^th November, 2018, wherein High Court stayed
the execution proceedings. However, the same has been withdrawn by TTEL on 14^th January, 2019.

(ii) M/s. Ansal Properties and Industries Ltd. (APIL)

The arbitrator had passed an award in favour of M/s. Ansal Properties and Industries Ltd. (APIL) amounting to ?8.84
Crore along with interest @ 18% p.a. on 28^th July, 2005 in respect of the property leased to APIL at AGP. The Arbitrator
had also allowed the counter claim of HUDCO amounting to approximately ?0.85 Crore along with interest @ 18% p.a.
on account of maintenance charges w.e.f. 1^st January, 2001 upto 31^st July, 2005. HUDCO challenged the award before
the Hon'ble High Court of Delhi and, as per the directions of the court, deposited a sum of ?7.99 Crore in the court out
of “No Lien AGP Account”.

APIL invoked arbitration for refund of ground rent paid by it from November, 1995 to October, 1999 and the arbitrator
pronounced the award on 21^st July, 2006 holding therein that APIL is not liable to pay the ground rent up to October,
1999 i.e. till the shopping arcade was constructed and became operational in October, 1999. The amount of ?3.93
Crore deposited earlier by APIL has been directed to be adjusted towards the future ground rent payment dues w.e.f.
November,1999 along-with Interest @ 7% p.a. for delayed payment. HUDCO filed petition challenging the award before
the Hon'ble High Court of Delhi. The Hon'ble High Court on 10^th May, 2012 set aside the arbitration award dated
21^st July, 2006. APIL filed an appeal against the above-mentioned order before Division Bench of Hon'ble High Court,
Delhi. Division Bench vide its order dated 24^th January, 2013, allowed APIL appeal and upheld the Arbitrators award.
HUDCO filed SLP on 10^th May, 2013 before Hon'ble Supreme Court against this order which is currently pending.

On the last day of hearing, i.e., 5^th January, 2023, APIL's counsel informed the court that vide Order dated 16^th November
2022, APIL was declared insolvent by NCLT and therefore, now the APIL is under Moratorium. Hence as per the law, all
the proceedings pending against APIL are automatically stayed by virtue of law. Further, HUDCO filed its total claims
due against APIL before the Resolution Professional appointed for the above purpose. The claim of HUDCO was not
considered as the matter was related to specific property only.

Application of the IL&FS under Section 7 of the IBC, 2016 was admitted by the NCLT, New Delhi against Ansal Properties
& Infrastructure Ltd. (APIL) on 25.02.2025 and Sh. Navneet Kumar Gupta appointed as the IRP As moratorium also
imposed, all the proceedings pending against APIL were under moratorium. IRP issued a public notice on 28.02.2025 for
filing of claim by the claimants of APIL on or before 11.03.2025. Accordingly, HUDCO had filed claim of Rs. 401.54 Crore
(till 25th Feb 2025) on APIL in the stipulated timeline. Now NCLAT vide order dated 07.01.2026 in the appeal filed
by the suspended Director of APIL has clarified that proceedings under IBC (CIRP proceedings) are restricted
to the certain identified projects of APIL and the Shopping Arcade site, Andrews Ganj Project is not part of the
identified project of APIL . Hence all the pending cases / proceedings against APIL with respect to the Shopping
Arcade site, Andrews Ganj Project shall continue before the respective Courts / Tribunals in accordance with
Law.

4) HUDCO had allotted 6435 sq. mtr. of built-up space in 1993 at HUDCO Vishala, Bhikaji Cama Place, New Delhi to EPFO
on Long Term Sub-lease basis. The sub-lease in favour of EPFO is yet to be executed and ?0.35 Crore is recoverable
from EPFO.

5) (a) The Company has a procedure for seeking confirmation of outstanding balances at each quarter end from all the
borrowers of project loans except cases under litigation. In case of receipt of balance confirmation from the agency for
any Quarter of the year, the same is treated as confirmed during the year. The summary of the balance confirmations
received from the borrowers is as under:

10) The Company had made Long Term Investments at a total cost of ?1978.65 Crore (Previous Year: ?1,090.14 Crore) which
represents Debt instruments, Government securities, Trade Investment in Equity Shares, Investments in Associates.
As per the applicable Ind AS, Investments as on 31^st March, 2026 are being shown at fair value through profit or loss of
?2228.66 Crore (Previous Year: ?1319.62 Crore).

11) Loans granted by the company directly to individuals under HUDCO Niwas Scheme are secured fully/partly by:

(i) Equitable Mortgage of the property and /or

(ii) Undertaking to create security through execution of Tripartite Agreement between the Company, borrower, and
the Developing Authority / Developer;

In addition to (i) and (ii) above, the assignment of Life Insurance Policies, pledge of National Saving Certificates, Fixed
Deposits, etc. are also obtained.

12) DISCLOSURE PURSUANT TO INDIAN ACCOUNTING STANDARD (IND AS) 19 - EMPLOYEE BENEFITS:

All short-term employee benefits include wages & salaries, incentives, performance related pay, non-monetary benefits
such as medical care, etc are valued on undiscounted basis and recognized as an expense in the statement of profit
and loss of the period in which the employee renders the related service.

Apart from the short-term employee benefits, post-employment benefit plans are classified & accounted as under:

(i) Defined Contribution Plan

A defined contribution plan is a plan under which the company only pays fixed contributions in respect of the employees
into a separate fund and does not have any legal or constructive obligations to pay any further amount, after its payment
of the fixed contribution.

The Defined Contribution Pension Scheme for its employees which is managed by a duly constituted trust. The Trust in
turn manages the scheme through National Pension System (NPS) and partly through LIC. The Company periodically
contributes a defined percentage of salary to the trust and recognizes the same as an expense in the statement of profit
and loss account.

During the year, the Company has contributed ?6.40 Crore (Previous Year: ?7.34 Crore) to HUDCO Employees Defined
Contribution Superannuation Pension and charged to Statement of Profit and Loss.

(ii) Defined Benefit Plans

The net obligation in respect of defined benefit plans such as provident fund, gratuity, other post-employment benefits
etc., are calculated separately for each plan, by estimating the amount of future benefits that the employees have
earned in the current and prior periods, discounting that amount and deducting the fair value of the underlaying plan
asset, if any.

The defined benefit obligation is calculated using the Projected Unit Credit method (except in case of PF) at the end
of each reporting period, by a qualified member of the Institute of Actuaries of India. When the calculation results in
a potential asset for the Corporation, the asset is recognized limited to the present value of the economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan.

The current service cost of the defined benefit plan, recognized in the Statement of Profit and Loss as part of employee
benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current
year, benefit changes, curtailments, and settlements. Past service costs are recognized immediately in the Statement
of Profit and Loss. The net interest is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This net interest is included in employee benefit expense in the Statement
of Profit and Loss.

Re-measurements which comprise of actuarial gains and losses, the return on plan assets (excluding amounts included
in the net interest on the net defined benefit liability (asset)) and the effect of the asset ceiling (if any, excluding amounts
included in the net interest on the net defined benefit liability (asset)), are recognized in Other Comprehensive Income.

(a) Provident Fund

The Corporation has established a Trust specifically for managing the Fund in accordance with the provisions of
the Employee Provident Funds and Miscellaneous Provisions Act, 1952. The monthly contribution of Corporation's
share (a fixed percentage of the eligible employees' salary) is remitted to the Trust on monthly basis and charged
to Statement of Profit and Loss. A part of the Corporation's contribution is directly remitted to EPFO in respect of
employees, who are members of the Employees' Pension Scheme 1995.

Further, the Corporation has an obligation to fund any shortfall in the revenues of the Trust, to match the interest
rate declared by the Government under EPF scheme. Similarly, any loss suffered by the Trust, on account of bad
investment, is also required to be borne by the Corporation. All these additional obligations by the Corporation, on
account of shortfall in yield or loss of investment/assets, are to be charged to Statement of Profit and Loss.

(b) Gratuity

The Company has a defined benefit gratuity plan for its employees. Every employee is entitled to gratuity as per
the provisions of the payment of Gratuity Act, 1972. The scheme is managed by a separate trust. The trust has
also taken up a group insurance plan from LIC to cover the future service gratuity in the unfortunate of death while
in service and the premium paid by the Trust is funded by the Company.

(c) Post-Retirement Medical Benefit Scheme (PRMBS)

The Company provides for the defined benefit plans for Post-Retirement Medical Scheme. Under the scheme
eligible ex-employees and eligible dependent family members are provided medical facilities. Presently, the
scheme is unfunded and liability is being recognised on the basis of actuarial valuation, using projected unit credit
method.

(d) Family Economic Rehabilitation Scheme (ERS)

During the current financial year, The Company introduced a Family Economic Rehabilitation Scheme (ERS), to
provide financial indemnity to families in the event of an employee's death or permanent disability during their
tenure. The scheme is unfunded and associated liability is periodically assessed via actuarial valuation.

Provision for Family Economic Rehabilitation Scheme amounting to ?0.91 Crores (previous year ? Nil) for the year
have been made on the basis of actuarial valuation at the year end and debited to the statement of profit and loss

(iii) Other Long Term Benefit Plans:

Liability towards other long term employee benefits like encashment of accumulated leave and long service awards etc.,
are determined on the basis of actuarial valuation by qualified actuary by using Projected Unit Credit method.

Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to
Consolidated Statement of Profit and Loss in the period in which such gains or losses are determined.

(a) Earned Leave Benefits (EL)

Employees are entitled for 30 days of Earned Leave per year, which can be availed or encashed by the concerned
employees. Any un-availed balance of EL is carried forward & can be accumulated maximum up to 300 days at
any point of time. At the time of superannuation, an employee is entitled to encash the entire accumulated balance
not exceeding 300 days.

(b) Half Pay Leave benefit (HPL)

Employees are entitled for 20 days of Half-Pay leave for every completed year of service. There is no provision
for encashment of HPL while in service. However, encashment is permissible at the time of superannuation, only
to the extent of shortfall in his/her EL Balance, subject to total encashment of HPL together with EL not exceeding
300 days.

(c) Long service Award (LSA)

As per approved policy of the Company, on completion of specified period of service with the company and at the
time of retirement, employees are rewarded monetarily based on the duration of service completed. The scheme
above is unfunded and liability for the same is recognised on the basis of actuarial valuation.

Provision for long service award amounting to ?1.29 Crores (previous year ?1.37 Crores) for the year have been
made on the basis of actuarial valuation at the year end and (credited)/debited to the statement of profit and loss.

(d) Retirement Gift

At the time of superannuation of employees, company provides retirement gift to employee as per policy framed
for this purpose. The scheme above is unfunded and liability for the same is recognised on the basis of actuarial
valuation.

Provision for retirement gift amounting to ?0.21 Crores (previous year ?0.22 Crores) for the year have been made
on the basis of actuarial valuation at the year end and (credited)/debited to the statement of profit and loss.

14) A. RBI vide letter No.S510/Reg. New/09.10.001/2024-25 dated 23^rd August, 2024 and CoR vide Registration No.N-
14.03626 dated 23^rd August, 2024, had granted registration to HUDCO as a Non-Banking Financial Company -
Infrastructure Finance Company (NBFC-IFC). RBI has further advised HUDCO to comply with certain conditions by
March 31^st, 2026.The company has undertaken sincere and continuous efforts to comply with all the conditions attached
to the CoR. However, the following two conditions could not be fully achieved within the stipulated timeline:-

“The company to divest from the four non-operative group companies.”

“The company shall ensure that it meets Principal Business Criteria as an NBFC-IFC.”

In this regard, the process of divestment is currently underway in adherence to the due process prescribed by DIPAM
and other regulatory norms. Further, the company took forward the process of aligning its asset profile to meet the
prescribed Principal Business Criteria, i.e., achieving the required threshold of infrastructure loans. Accordingly, the
company vide letter dated May 4^th, 2026, has requested Reserve Bank of India to grant extension of time up to March
31^st, 2027, along with a roadmap outlining the strategy and approach to achieve the conditions by March 31^st, 2027.

B. RBI has issued Master Direction - Reserve Bank of India (Non-Banking Financial Companies - Registration,
Exemptions and Framework for Scale Based Regulation) Directions, 2025, HUDCO falls under the category of
Middle Layer NBFC. Further, as per Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk
Management) Directions, 2025, the NBFC-IFC shall not have exposure (credit/investment taken together) exceeding
30% of its Tier 1 capital to a single party and 50% of its Tier 1 capital to a single group of parties. As per Reserve Bank
of India (Non-Banking Financial Companies - Concentration Risk Management) Directions, 2025, the exposure norms
not apply to:

1) Investments of an NBFC in shares of its subsidiaries companies in the same group, to the extent they have been
reduced from Owned Funds for the calculation of NOF; and

2) The book value of debentures, bonds, outstanding loans and advances (including hire-purchase and lease
finance) made to, and deposits with-

a. subsidiaries of the NBFC; and

b. companies in the same group,

to the extent they have been reduced from Owned Funds for the calculation of NOF.

3) The exposures listed below shall also be exempt from exposure norms:

a. Exposure to the Government of India and State Governments which are eligible for zero per cent risk weight
under capital regulations applicable to an NBFC.

Note: To the extent of State Government guarantee used for offsetting exposures by NBFC-ML, the exposure
shall shift to the State Government with applicable risk weight of 20 percent. No cap has been fixed for
shifting of exposure on the State Government.

b. Exposure where the principal and interest are fully guaranteed by the Government of India.

Currently, HUDCO is computing exposure and complying with credit concentration norms as per RBI
Circular No. RBI/DOR/2025-26/351, DOR.CRE.REC.270/07-03-008/2025-26 dated November 28, 2025, on
Concentration Risk Management.

16) The Company in terms of SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendments) Regulations
2021 dated 07/09/2021, is presently transferring principal and/or interest, or both (if any) which remains unclaimed for
7 years from the date of payment to Investor Education and Protection Fund (IEPF) constituted in terms of Section 125
of the Companies Act, 2013. The bondholders, whose unclaimed principal and/or interest has been transferred to IEPF,
may claim the same by making an online application in the prescribed “Form No. IEPF-5” available on the IEPF website
(www.iepf.gov.in) and sending a physical copy of the same, duly signed by all the bondholders to the Company, along
with requisite documents enumerated in “Form No. IEPF-5”. No claims shall lie against the Company in respect of the
amounts, so transferred to the IEPF Authority.

Dividend on equity shares and Principal & interest on Debentures/Bonds/PDS aggregating to ?23.52 Crore (Previous
Year ? 19.63 Crore) were due and unclaimed as on 31^st March, 2026. During the year 2025-26, an amount of 1.05 Crore
(previous year ? 0.79 Crore) has been transferred to IEPF after completion of statutory period of seven years.

17) The Company is in the continuous process of obtaining confirmation from its suppliers regarding their status under the
“Micro, Small and Medium Enterprises Development Act, 2006”. The company has outstanding due Rs. 0.86 Crore of
MSME as on 31.03.2026 (previous year Rs.1.02 Crore).

18) The Company is engaged in the business of providing loans/finance for Housing/ Infrastructure projects and all other
activities of the Company revolve around the main business within India. Accordingly, the company does not have
separate reportable segments in terms of Indian Accounting Standard (Ind AS-108) on “Operating Segments”.

19) (i) The company has tested Impairment on fixed assets in detail as per Ind-As 36 and as a result of assessment/testing,
there is no Impairment of fixed assets during the Financial Year 2025-26.

(ii) Vide gazette notification no. 26/2019 dated 20^th March, 2019, the Company was notified for the purposes of Section
194A(3)(iii)(f) of the Income Tax Act, 1961 for non-deduction of Tax at source.

20) HUDCO had discontinued accepting / renewing Public Deposit under the Public Deposit Scheme w.e.f. 1^st July, 2019,
no fresh deposits were accepted/renewed by HUDCO thereafter. No Deposits were matured/paid to depositors in the
Financial Year 2025-26 as the outstanding amount under HUDCO Public Deposit Scheme was NIL as on 31^st March,
2026 (Previous year NIL) except Unclaimed amount under HUDCO Public Deposit Scheme.

21) The company, while raising resources, is incurring expenses of recurring nature such as debenture trusteeship fees,
listing fees to stock exchanges, custodian charges to depositories, R&T Charges etc., which are not amortized over
life of resource raised. The aforesaid expenses are charged to Statement of Profit and Loss under the Head “Fees and
Commission Expense".

22) An amount of '3.85 Crore has been received during current FY 2025-2026 (Previous Year - '1.78 Crore) from
Company's maintained PF Trust as against the amount of Rs.31.10 Crore recouped by the Company in FY 2022-2023
to the Trust.

23) Disclosure regarding Large Corporate (LCs) under the “Revised Framework for 'Large Corporates' (LCs)”

24) A. During the year ended 31^st March 2026, the Company has raised funds through issue of listed non-convertible debt
security on private placement basis. The issue proceeds of non-convertible debt securities issued during the period,
have been fully utilized for the purpose(s)/ objects stated in the offer documents/ Information memorandum and there
has been no deviation / variation in the use of proceeds of non-convertible debt securities from the objects stated in
the offer documents/ Information memorandum. Further, there has been no default in repayment of debt securities,
borrowings and other liabilities and the Company has met all its debt servicing obligations, both towards principal and
interest, during the period in a timely manner.

B. During the year, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance vide Notification No. S.O.
1644(E) dated 7^th April, 2025, has permitted Housing and Urban Development Corporation Limited (HUDCO) to issue
Capital Gain Tax Exemption bonds under Section 54EC of the Income-tax Act, 1961 w.e.f. 1^st April, 2025 to raise funds
from the markets by way of private placement route through 54EC Capital Gain Bonds in the nature of non-convertible
non-transferable secured bonds redeemable after five years having benefits of the section 54EC of the Income Tax
Act, 1961.The Company launched its maiden issue of 54EC Capital Gain Bonds in May 2025 and mobilized a sum of
? 121.12 Crore during the year 2025-26.

C. During the year, the Company issued Perpetual Debt Instruments of face value of ?1 Crore each aggregating to
?1,442 Crore. The instruments are perpetual in nature with no contractual maturity and are callable at the option of the
Company after completion of 10 years from the date of allotment, subject to approval of the Reserve Bank of India.
Coupon payments on these instruments are subject to regulatory conditions and may be deferred under specified
circumstances. Non-payment of coupon does not constitute an event of default. Based on the contractual terms and the
requirements of Ind AS 32, the instruments have been classified as instrument entirely in nature equity.

During the year, Company has issued Perpetual Debt Instruments of face value of ? 1 Crore each, with no maturity
and callable only at the option of the Company after 10 years. The claims of the holders of the securities shall be (a)
Superior to the claims of the holders of the equity shares issued by the company; and (b) Subordinated to the claims
of all other creditors of the Issuer. The instruments carry a step-up provision if not called after 10 years. The Bonds
shall be subjected to a lock-in clause pursuant to which the Issuer may defer payment of coupon where (i) the Capital
to Risk Assets Ratio (“CRAR”) of the Issuer is below the minimum regulatory requirement prescribed by the Reserve
Bank of India (“RBI”); or (ii) the impact of such payment results in CRAR of the Issuer falling below or remaining below
the minimum regulatory requirement prescribed by RBI. Further, in the event that payment of coupon may result in or
increase the net loss of the Issuer, such payment shall only be subject to prior approval of RBI and shall be made only
upon receipt of such approval, provided that the CRAR remains above the prescribed regulatory requirement after such
payment. Coupon shall not be cumulative, in cases where non-payment arises on account of loss. The invocation of
the lock-in clause by the Issuer shall not be construed as a default committed by the Issuer and shall not result in the
occurrence of an Event of Default. As these securities are perpetual in nature and the Company does not have any
redemption obligation and discretion on payment of coupon, these have been classified as equity.

July,2025. A cabinet note was forwarded by the administrative Ministry to the DIPAM on 16^th September,2025. Thereafter,
a round of clarifications were provided to the DIPAM who vide OM F.NO 12/11/2025-DIPAM-V dated 11^th February,2026
granted the In principal approval of the Alternative Mechanism for sale of stake/exit by HUDCO.

A committee was constituted to carry out the due-diligence to arrive at the offer price to be offered to the JV partners. The
committee examined the valuation reports etc and submitted the report recommending issuing the Offer for proposal
to all the existing shareholders or their nominees in the JV company for purchase of HUDCO's shares in writing with
a 30/60 days' time to respond from the date of receipt of the proposal. The associate wise status current status is as
follows:

1. Shristi Urban infrastructure Development Limited (SUIDL):

The company had decided to exit from Shristi Urban Infrastructure Development Ltd.-SUIDL with Shristi infrastructure
Development Corporation Ltd. In this regard, the underlying assets i.e., SARGA Udaipur Hotels and Resorts Pvt.
Ltd. (Being subsidiary of Shristi Urban Infrastructure Development Ltd.-SUIDL) has voluntarily approached NCLT for
Insolvency Proceedings. Upon failure of the CIRP the Resolution professional has filled liquidation application with
NCLT.

SUIDL being a non-operative company with negative net-worth, the value of each equity share was valued at Rs. (4.66)
by the IBBI valuer. The offer for sale at the investment value of Rs. 3 Crore (1.5 times of the Hudco's investment, in line
with JV clause) was issued with a 30 days' notice period on 26^th Feb 2026. The notice period has expired, however the
company did not respond to HUDCO's offer.

2. Signa infrastructure India Limited (SllL):

The company has decided to exit Signa Infrastructure India Ltd. With Marg Construction Ltd. In pursuance of the Board's
approval, the valuer was appointed by the Associate Company i.e., SIIL and indicated the value of the shares (Rs.10
each) at Rs.76.22 per share. HUDCO has made an offer to the Associate Partner to purchase HUDCO shares in SIIL.
The company has not responded to HUDCO offer. The board of HUDCO was updated of the latest status and HUDCO
Board in its meeting held on 19^th December, 2019 decided that steps be taken for termination of joint venture agreement
with M/s. Marg construction Ltd. (Promoter of Signa Infrastructure India Ltd) & withdrawal of HUDCO Nominee Director,
in pursuance of Board Decision, HUDCO Nominee Director had submitted his resignation to the Company.

SIIL being a non-operative company with negative net-worth, the value of each equity share was valued at Rs. (12.64)
by the IBBI valuer. The offer for sale at the investment value of Rs. 1.30 lacs was issued with a 30 days' notice period
on 26^th Feb 2026. The notice period has expired, however the company did not respond to HUDCO's offer.

3. Pragati Social infrastructure Development Ltd (PSIDL)

HUDCO has decided to exit from Pragati Social Infrastructure & Development Ltd.-PSIDL. PSIDL is not providing any
financial information for the purpose of valuation of shares because of court injunction. HUDCO has filed a Petition u/s 397
& 398 of the Companies Act 1956 before National Company Law Tribunal (NCLT) for oppression and mismanagement
of operations, against Pragati Social Infrastructure & Development Limited (PSIDL). Pragati is a non-operative company
has not filed its annual regulatory filings since 2009. In the absence of books of accounts for a very long time it is not
possible to estimate the releasable value, if any.

As per the JV agreement RoFR was applicable for a period of 7 years. Since the RoFR clause has expired, due process
for the disposal of the shares needs to be considered.

4. lnd Bank Housing Limited (IBHL): value of investment

The company had decided to exit from Ind Bank Housing Limited. The Company had invested Rs.2.50 Crore in the shares
of the Ind bank Housing Ltd. (IBHL) more than 30 years back. There is no shareholder agreement of JV agreement.
Considering the fact that IBHL has highly negative Net Worth and meagre volume of trading (500 to 7000 shares ) in the
share of the company, even though market price of the share as on 31^st March, 2026 is 40 per share .HUDCO continues
to reflect the investment of Rs.2.50 Crore in IBHL at diminished value of Rs.1 only as on 31^st March, 2026. Besides RBI
vide letter dated 10^th October 2023 has informed that CoR granted by NHB to IBHL has been cancelled vide order dated
21^st September 2023 hence no longer an HFC.

The offer for sale was issued with a 30 days' notice period, however the company has stated that Indian Bank is not able
to consider HUDCO's offer due to regulatory constraints.

HUDCO will continue to initiate the further course of action involving public auction etc. while adhering to the due
process. The time being taken in the process is on account of the regulatory requirements to be adhered to by HUDCO

information in respect of Investments in Associate viz., Pragati Social Infrastructure & Development Ltd, Signa Infrastructure India Ltd and Indbank
Housing Limited have not been incorporated as HUDCO has decided to exit from the Associate and has provided for full diminution in the value of
investment.

$ Information Includes consolidation on the basis of last available audited financials for March 2024 of SARGA Udaipur hotels & resorts Ltd., associate
company of Shristi Urban Infrastructure Development Ltd., as the company is under liquidation.

35) Corporate Social Responsibility

The Company has formulated a CSR Policy in line with the guidelines issued by the Department of Public Enterprises
(DPE) via Office Memorandum No. CSR-15/0008/2014-Dir (CSR) dated August 1,2016, and the relevant provisions
of the Companies Act, 2013. The policy was approved by HUDCO's Board based on the recommendations of the
Committee of the Board. It was further amended in April 2025 and shall continue to be revised as and when required by
the Board.

In accordance with the Companies Act, 2013, the Company approved a CSR budget allocation for FY 2025-26 equivalent
to 2% of the average profit before tax of the three immediately preceding financial years, amounting to ?57.89 Crore.

vide Office Memorandum No. M-05/0012/2014-DPE(MoU) dated 17^th July, 2019, DPE informed that the guidelines
prescribed vide above Office Memorandum dated 20.09.2011 have become redundant and stood withdrawn. The Board
of Directors of HUDCO in its meeting held on 19.02.2020 noted the above development and has also approved to
continue with HUDCO's own R&D policy formulated in 2012. The Board of Directors also approved to discontinue with
earmarking 0.5% of PAT until the accumulated non-lapsable R&D funds are fully utilized. However, during the FY 2025¬
26, no amount was spent on R&D activities. Accordingly, an amount of ? 9.13 Crore was available as on 31^st March 2026
(Previous Year: ? 9.13 Crore) with HUDCO as non-lapsable R&D funds. Further, during the current year, HUDCO Board
of Directors have approved a proposal of Technical Assistance scheme for Project Formulation, Capacity Building and
Research & Development activities for the Government Agencies and ULBs etc. with an initial corpus of Rs. 5.00 Crore
from the unspent balance and the Board has also approved Revised Guidelines for setting up HUDCO Chairs at various
institutions in the country.

37) The Company has not advanced or lent or invested any funds which are material either individually or in the aggregate
(either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person(s) or
entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise,
that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the
like on behalf of the Ultimate Beneficiaries.

The Company has not received any fund which are material either individually or in the aggregate from any person(s)
or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or
otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified
in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.

(b) Statutory Reserve u/s 45-IC of Reserve Bank of India Act, 1934

The Company is creating the Reserve Fund as required u/s 45IC of Reserve Bank of India Act, 1934, wherein at least
20% of net profit is required to 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 Reserve Bank of India from time to time and
further, any such appropriation is also required to be reported to the Reserve Bank of India within 21 days from the date
of such withdrawal.

iii. Disclosures on Risk Exposure in Derivatives

1. Qualitative Disclosure

The Company has in place Foreign Currency Risk Management Policy which covers management of currency
risks including interest rate risk. The Policy lays down the risk philosophy, risk appetite and appropriate systems
and controls to identify, measure, monitor, report and manage the currency risks including interest rate risk. The
Policy provides the guiding parameters within which the Company can take decisions for managing the Currency
Risk that it is exposed to on account of foreign currency loans.

2. Risk Management Structure:

a. The Company enters into derivatives viz. Principal only Swaps, Currency and Interest Rate Swaps/ Forward
rate contract for hedging the interest/ exchange rate risk in foreign currency liabilities. An Asset Liability
Committee (ALCO) is currently functioning under the chairmanship of Director Finance with Director
(Corporate Planning) as member along with other members i.e. Head of Resource, Head of Operations,
Head of Loan accounts, Head of Corporate Accounts & Taxation, Head of Risk Management, and any
other officer as desired by the Chairman of the Committee. ALCO monitors effectiveness of existing and
new hedging instruments/ strategies being used/ to be used for management of the Currency risk and for
taking stock of the market movements. The decisions of the ALCO are reviewed by the Risk Management
Committee (RMC) for managing the risks. The decisions taken by the RMC are subsequently reported to the
Board.

b. These derivative transactions are done for hedging purpose and not for trading or speculative purpose.

c. Reference may be drawn to Sub Point No. 4.6 of para 4 of Notes forming part of accounts under Significant
Accounting Policies for relevant accounting policy on Transactions in Foreign Currency.

Foot Notes:

1. Significant counterparty/ Significant instrument/ product is defined as single counterparty/ single instrument/
product or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the total
liabilities.

2. “Public Deposits” are as defined in the Reserve Bank of India (Non-Banking Financial Companies - Acceptance
of Public Deposits) Directions, 2025.

3. Total Liabilities has been computed as sum of all financial and non-financial liabilities (extracted from the Audited
Standalone Financial Statements prepared as per IND-AS for the period ended 31.03.2026) and does not include
equities and Reserve & Surplus.

4. “Public Funds” are as defined in Reserve Bank of India (Non-Banking Financial Companies - Registration,
Exemptions and Framework for Scale Based Regulation) Directions, 2025, which states that “Public funds”
includes funds raised either directly or indirectly through public deposits, inter-corporate deposits, bank finance
and all funds received from outside sources such as funds raised by issue of Commercial Papers, debentures etc.
but excludes funds raised by issue of instruments compulsorily convertible into equity shares within a period not
exceeding 5 years from the date of issue

5. The information stated in this disclosure is based on the Audited Standalone Financial Statements (prepared as
per IND-AS) for the period ended 31.03.2026.

40) Disclosure on Liquidity Coverage Ratio
Qualitative Disclosure

HUDCO has implemented an integrated risk management approach through which it reviews and assesses significant
risks on a regular basis to ensure that there is a robust system of risk controls and mitigation in place. HUDCO has a
well-structured robust Risk Management Policy and Operating Manual in line with its objectives to address the various
risks.

In compliance with the SEBI (LODR) Regulations, 2015, HUDCO has in place a Board level Committee under the
nomenclature 'Risk Management Committee' (RMC) headed by a member of the Board of Directors, which reviews
various decisions/recommendations of the two (2) sub-committees namely:

• Credit & Operational Risk Management Sub-Committee (CORMSC);

• Assets Liabilities Management Sub-Committee (ALCO);

The Risk Management Committee (RMC), which is a committee of the Board, that ensures risks are effectively managed
and aligned. The ALCO is responsible for ensuring adherence to the liquidity risk tolerance/limits set out in the board
approved Risk Management policy. The role of the ALCO with respect to liquidity risk includes, inter alia, decision on
desired maturity profile for assets & liabilities, responsibilities and controls for managing liquidity risk, and overseeing
the liquidity position of the company.

Management regularly reviews the position of cash and cash equivalents by aligning the same with the projected
maturity of financial assets and financial liabilities, economic environment, liquidity position in the financial market,
anticipated pipeline of future borrowing & future liabilities and threshold of minimum liquidity defined in the ALM policy
with additional liquidity buffers as management overlay.

Quantitative Disclosure

Liquidity Coverage Ratio (LCR) aims to promote resilience of NBFCs to potential liquidity disruptions by ensuring that
they have sufficient unencumbered High Quality Liquid Asset (HQLA) to survive any acute liquidity stress scenario
lasting for 30 days.

“HQLA” means liquid assets that can be readily sold or immediately converted into cash at little or no loss of value
or used as collateral to obtain funds in a range of stress scenarios. “Unencumbered” means free of legal, regulatory,
contractual or other restrictions on the ability of the NBFC to liquidate, sell, transfer or assign the asset. Assets to be
included in the computation of HQLAs are those that the NBFC is holding on the first day of the stress period. Such
assets shall be valued at an amount not greater than their current market value for the purpose of computing the
LCR. Depending upon the nature of assets, they have been assigned different haircuts, which are to be applied while
calculating the HQLA for the purpose of calculation of LCR.

Liquidity Coverage Ratio (LCR) is represented by the following ratio:

Stock of High-Quality Liquid Assets (HQLAs)

Total Net Cash Outflows over the next 30 calendar days

In order to determine Net Cash Outflows, the Company considers total expected cash outflow minus total expected cash
inflows for the subsequent 30 calendar days by assigning a predefined stress percentage to the overall cash inflows and
cash outflows. Total expected cash outflows (stressed outflows) are calculated by multiplying the outstanding balances
of various categories or types of liabilities and off-balance sheet commitments by 115% (15% being the rate at which
they are expected to run off further or be drawn down). Total expected cash inflows (stressed inflows) are calculated
by multiplying the outstanding balances of various categories of contractual receivables by 75% (25% being the rate at
which they are expected to under-flow). However, total cash inflows will be subjected to an aggregate cap of 75% of total
expected cash outflows. In other words:

Total Net Cash Outflows over the next 30 days = Stressed Outflows - Lower of (Stressed Inflows or 75% of Stressed
Outflows).

The Company computes the LCR and reports the same to the Asset Liability Management Committee (ALCO) every
month for review and approval.

The Company was granted a Certificate of Registration (CoR) as a Non-Banking Financial Company - Infrastructure
Finance Company (NBFC-IFC) in August 2024. Pursuant to its classification as an NBFC-IFC, the Company is now
governed by the applicable regulatory framework issued by the Reserve Bank of India.

In terms of the RBI (Non-Banking Financial Company - Asset Liability Management) Directions, 2025 dated November
28, 2025, all non-deposit taking NBFCs with an asset size of ?5,000 Crore and above are required to maintain an
adequate level of unencumbered High Quality Liquid Assets (HQLA), which can be readily converted into cash to meet
liquidity requirements over a 30-calendar day horizon under a significantly severe liquidity stress scenario. Further, as
per Chapter III, Paragraph 62 of the aforesaid Directions, the Company is required to maintain a Liquidity Coverage
Ratio (LCR) of not less than 100 per cent on an ongoing basis.

Prior to the issuance of the above Directions, the Company was governed by the provisions of the RBI (Non-Banking
Financial Company - Scale Based Regulation) Directions, 2023, wherein, as per Paragraph 3.3, all non-deposit taking
NBFCs with an asset size of ?10,000 Crore and above were required to maintain a minimum LCR of 100 per cent with
effect from December 1, 2024.

The Company has invested in High Quality Liquid Assets (HQLAs) in line with the relevant regulatory requirements and,
in the opinion of the management, maintains adequate liquidity buffers to meet foreseeable short-term obligations.

46) Additional information

I. No proceedings have been initiated or pending against the Company for holding any benami property under the
Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made there under, as at March 31,2026
and March 31, 2025.

II. The Company is not a declared willful defaulter by any bank or financial Institution or other lender, in accordance
with the guidelines on willful defaulters issued by the Reserve Bank of India, during the year ended March 31,
2026 and March 31, 2025.

III. There was no delay in the registration or satisfaction of any charges with Registrar of Companies during the year
ended March 31,2026 and March 31,2025.

IV. The company does not have any investment in any subsidiary company. Therefore, there is no requirement to
comply with the number of layers prescribed under clause (87) of section 2 of Companies Act, 2013 read with
Companies (Restriction on number of Layers) Rules, 2017.

V. The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended March 31,
2026 and March 31, 2025.

VI. There is no instance of breach of covenant of loan availed / debt securities issued.

VII. There are no undisclosed incomes that has been surrendered or disclosed as income during the year in the tax
assessments under the Income Tax Act, 1961.

VIII. Analytical Ratios

a. Capital to Risk-weighted Assets Ratio: -Refer Note No. 41(38)(a)

b. Liquidity Coverage Ratio: - Refer Note No. 41(40)

c. Loan disbursed to total fund available:- 100%

47) (a) Figures of the previous year have been regrouped/ rearranged/ re-casted wherever considered necessary to make
them comparable with figures for current year.

(b) Figures in rupees have been rounded off to Crore upto two decimals except where specifically indicated.