Nitty-Gritty of covered call in zerodha

How does one execute a covered call in zerodha? I guess, I understand most of it but the expiry day. I was not able to get the Nitty-Gritty of the covered calls in previous threads. Please correct me if I am wrong in the below example.

Example:

Step 1: I hold 300 shares of TCS which is equivalent of 1 lot size.

Step 2: I pledge 300 TCS shares to obtain a 50% margin. Remaining 50% margin I hold in CASH/LIQUIDBEES

Step 3: I sell a single call option of my choice.

Step 4: Throughout the lifetime of the position, I need to maintain 50% margin in CASH/LIQUIDBEES

2 DAYS BEFORE EXPIRY:

ZERODHA increases the margin to double the amount of exchange defined margin.

Do I still need to maintain this new ZERODHA defined margin in 50% CASH/LIQUIDBEES and 50% from pledged TCS shares?

ON THE EXPIRY DAY:

My call ends ITM, so I have to physically deliver 1 lot (300) of TCS shares.

How does ZERODHA handle physical delivery now?

Do I have to unpledge the shares that I had pledged earlier in order to ready them for the delivery?

OR

Can I leave them pledged, and zerodha would physically deliver the pledged shares?

Are there any other missing steps in the above example?

Thank you & Best Regards
GR

You don’t have to maintain the increased margin in 50 - 50 proportion.

You will have to unpledge the shares before expiry day for physical settlement, pledged shares will not be considered for physical settlement, and not having sufficient shares to deliver will result in Short Delivery. Appropriate auction penalties from the Exchange shall be charged on your account for such short deliveries. Read more on the consequences of short delivery here..

You can read more on physical settlement here.

Thanks @ShubhS9 for the quick and helpful reply. This makes it quite clear. I have one last question, a special use-case.

If E is the day of expiry, and I unpledge my shares (used for 50% margin) a day before expiry (E-1) for physical settlement. Then on the day of expiry (E), I will not have necessary margin available from the pledged shares. I still have an open position for a written call. Would I receive a margin call AND my position squared off? How is this use-case handled?

Yes, if you don’t have sufficient margins to hold your position, you will receive margin call to add funds, failing to do so can result in square-off of your position.