genus power infrastructures ltd Management discussions

FORWARD-LOOKING STATEMENT

The report contains forward-looking statements, identified by words like plans, expects, will, anticipates, believes, intends, projects, estimates and so on. All statements that address expectations or projections about the future, but not limited to the Companys strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realised. The Companys actual results, performance, or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to publicly amend, modify, or revise any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.

OVERVIEW

Genus Power Infrastructures Limited ("Genus" or "the Company") is a leading smart metering solutions provider and manufacturer for the power distribution industry. The Company has developed a comprehensive range of metering solutions such as Multi-Functional Single Phase & Three Phase Meters, Pre-Payment Meters, Smart Meters, Net Meters, CT Operated Meters, ABT & Grid Meters, DT Meters, AMI, MDAS etc., with in-house R&D Centre.

Genus also offers customized & advanced Engineering, Construction, and Contracts (ECC) solutions to the power transmission and distribution sector. Genus ECC solutions include transmission lines, transmission towers, substations, switchyard, rural / household / industrial electrification infrastructure, and network refurbishment besides realtime energy accounting, monitoring and auditing for utilities.

Genus key customers are state electricity boards (SEBs) and private utilities (the power distribution companies known as DISCOMs). Genus also caters to overseas markets, where we deploy whole current meters, prepaid and Smart Meters for power distribution utilities / companies.

For constant growth, we focus on innovation and development of our products & services with our in-house R&D centre (recognized by the Ministry of Science & Technology, Government of India and accredited by National Accreditation Body for Testing Labs (NABL)) and state-of- the-art facilities coupled with complete forward and backward integration. This along with full-fledged tool room for making dies and molds, automated SMT lines, dedicated IT division for enabling advanced IT enabled solutions, advanced designs software and Lean Assembly techniques makes Genus self-sufficient in constant technology up-gradation, innovation activities and providing customized solutions to its customers. Furthermore, Genus has several national and international quality accreditations/certifications such as ISO 9001, ISO 14001, ISO 20000, ISO 27001, OHSAS 45001, BIS, NABL, STS, EMC, ISI, S mark, AEO-T1, among many others, that bear testimony of the quality of our products, services, and production process. Genus has also been proudly appraised for CMMI level-3 assessment. This keeps us ahead of our competitors and helps us to respond quickly to the changing requirements of the power utilities. This also enables the

Company to keep its products at par with international standards and requirements. Our innovation always underpins our core values and provides a trusted solution at reasonable price to our customers.

Genus mission is "Enable Utility Providers to efficiently serve the society with world class Metering Products, Solutions, and Services".

INDUSTRY STRUCTURE, DEVELOPMENTS, OPPORTUNITIES, AND THREATS

POWER TRANSMISSION & DISTRIBUTION (T&D) SECTOR

In the past couple of years, Indian power transmission and distribution (T&D) sector has seen notable progress with government reforms initiatives such as higher budgetary allocation, focus on modernisation of power T&D infrastructures, electrifying villages, railway electrification, enhanced public-private participation, and electricity for all.

In the FY 2019-20, the domestic power T&D sector has been adversely impacted by the prevailing slowdown in the Indian economy. During this period, this sector went on to suffer from substantial aggregate technical and commercial (AT&C) losses, gap between average cost of supply and average revenue realised (ACS-ARR), and rise in outstanding dues of DISCOMs. The financial position of the state distribution utilities/DISCOMs continued to worsen due to increase in T&D losses and rising outstanding dues of DISCOMs. The inability of states to hike tariffs, rising operational expenditure, high levels of outstanding dues and delays in receipt of subsidy from the government have also weakened the financial position of state distribution utilities. The AT&C loss of DISCOMs at the all India level at 19.1% is above the UDAY (Ujwal DISCOM Assurance Yojana) target of limiting the losses to 15% by FY19. The ACS-ARR gap at the national level is Rs. 0.36/unit against the target of elimination of the gap in FY19. The emerging economic disruption caused by the Covid-19 pandemic has further added to the already existing weakness in this sector.

With Ujwal DISCOM Assurance Yojana (UDAY) being expired in March 2020, the government has proposed another reform scheme, named ATAL Distribution System Improvement Yojana (ADITYA) aimed at investing funds in network infrastructure like smart meters. ADITYA scheme primarily involves the implementation of compulsory prepaid Smart Meters for 250 million households with an aim of lowering AT&C losses of DISCOMs to 12%. In its design to date, the scheme is planned to install Smart Meters in the first phase, starting from electricity feeders and then reaching to the consumers. The new scheme is likely to have central funding of up to 1.1 trillion (approximately USD 16.3 billion) over three phases and remaining balance of Rs. 2.9 trillion (around USD 42.5 billion) will be funded by states. Therefore, the scheme has envisaged funding of a huge amount. Thus, we foresee a lot of traction in our business, going forward. The proposed Electricity Bill 2020 may also usher in major distribution reforms. However, at the same time, these reform measures may be delayed if Covid-19 crisis sustains over a long period.

Impact of Covid-19 Pandemic

The domestic power T&D sector is being adversely impacted due to the prolonged disruptions caused by the Covid-19 pandemic and the

resultant lockdown. The virus outbreak has disrupted the manufacturing supply chain and sharply curtailed energy demand. Collection delay and defaults are likely by consumers (lower slab domestic category due to wage disruption, and commercial & industrial defaults due to business discontinuity) which will put more pressure on financially ailing Discoms. Tariff revision for utilities may be deferred, leading to revenue shortfall. Government budgets may also be challenged due to diversion on Covid-19 resulting in lower subsidy and possible delay in payment of government dues. However, measures like payment of state government departments dues and funding from NBFCs such as PFC and REC may help alleviate liquidity issues of distribution companies. Fall in industrial & commercial demand will impact cross-subsidies available to other consumers. Reform measures are likely to be delayed if Covid-19 sustains over a substantial period.

In recognition of the impact of the pandemic, the government and the RBI have announced some relief measures for the power sector, such as:

• Liquidity infusion of 90,000 crores for state power distribution utilities (DISCOMs). Under this, REC and PFC would extend special long-term transition loans up to 10 years to DISCOMs, as part of the Atmanirbhar Bharat Abhiyan.

• Delay on account of disruption of the supply chains due to the Covid-19 to be treated as Force Majeure for all renewable energy projects.

• 3-month moratorium on DISCOMs making payment to generating and transmission companies and waiver of penalty for late payment.

• Till May 31, 2020, the payment security mechanism to be maintained by the DISCOMs with the generators for dispatch of power to be reduced by 50%.

• Generation/Transmission Companies to continue supply / transmission of electricity even to DISCOMS which have large outstanding dues.

• Ensure adequate supply of coal to facilitate uninterrupted supply of electricity.

• 3 months moratorium in respect on all term loans of commercial banks, all India financial institutions and NBFCs outstanding as on March 01,2020.

• Deferment of interest on working capital facilities for a period of 3 months for all facilities outstanding as on March 20, 2020.

Power transmission and distribution segment is undoubtedly the backbone of the power supply system. The Government may consider providing additional relief or stimulus to this sector. The rising demand of power for ever-rising population, high T&D losses, government impetus on reforms of the power distribution sector, and increased participation of the private sector would continue to be major demand drivers for this sector. This sector is further expected to witness market growth as emerging economies like India continue to invest heavily in electricity generation, transmission, and distribution networks.

SMART ENERGY METERING

Smart energy meter is an advanced electronic device that measures and records consumers electricity usage at different times of the day and sends this information to the energy supplier. It offers consumers

better access to information and enables them to make more informed decisions on the use of power at their homes. It can immediately control AT&C losses, power pilferage, bypassing meters, defective meters, or errors in meter reading. Every kilowatt of power drawn from the grid is thus accounted for and billed, thereby boosting DISCOMs revenues.

Smart energy meter technology is an integral part of the overall advanced metering infrastructure (AMI) solution. It is very crucial for the modern power infrastructure sector and Indias ongoing power sector reforms as the nation aims to cut AT&C losses to below 12% by 2022, and below 10% by 2027.

Smart Meters will alleviate integration in the sector, while cutting capital costs and boosting efficiency in billing and collection. Customers will also benefit from correct bill readings, and real-time understanding of their electricity usage, offering a pan-India movement towards energy efficiency. Smart meters enable time of day metering and thus, play a key role in the integration of renewable power in India. It also helps reduce the carbon footprint through diminishing patrolling for meter reading, disconnection, reconnection, and outage detection.

The Governments Smart Meter National Programme (SNMP) aims to retrofit 25 crore conventional meters with Smart Meters leading to major improvement in billing efficiency. The Ministry of Powers (MoP) public sector undertaking, the Energy Efficiency Services Limited (EESL) recently announced that it has installed over 1.2 million smart meters in India under the Smart Meter National Program (SMNP). It enabled DISCOMs to generate a billing efficiency of 95% through use of its Smart Meters during the lockdown, resulting in a 15-20% average increase in monthly revenue per consumer. DISCOMs have been able to handle their operations smoothly during the ongoing Covid-19 crisis. Smart meters have mitigated a big problem for DISCOMs in these times where social distancing rules have prohibited them from physically collecting electricity bills from consumers, leading to revenue loss. In line with this, EESL has also been implementing prepaid meters under the smart metering program, which has allowed consumers to top-up their Smart Meters, remotely at their convenience. This has mitigated losses for DISCOMs.

Smart Meters have been, in essential, helping DISCOMs function smoothly, during the current situation with their ability to remotely monitor and collect meter readings. They truly help DISCOMs to reduce AT&C losses, improve their financial position, incentivize energy conservation, enhance ease of bill payments and ensure billing accuracy by getting rid of manual errors in meter reading.

Smart Metering also benefits local economies, as it facilitates new job creations required for the installation of Smart Meters.

Thus, Smart Meters have full potential to make the power sector more resilient, transparent, digitized, and accountable. A flawless and consumer-focused energy supply system is the way forward and thus the policymakers need to encourage the adoption of Smart Meters across the country. We believe that advent of the Smart Metering is imminent and would be the most noteworthy outcome post Covid-19.

The ongoing policies and reforms programs such as Deen Dayal Upadhyaya Gram Jyoti Yojana, Make in India Digital India, UDAY, IPDS, National Smart Grid Mission, Power Tariff Policy, Saubhagya and Smart Cities would be very crucial to accelerate the adoption of Smart

Metering solutions in India and shall continue to be the major driving factors for Smart Meters market.

PREPAID ENERGY METER

Prepaid Smart Electricity Meter, which requires customers to pay in advance for electricity, can prove a lifeline for the ailing DISCOMs with 100% collection efficiency. Prepaid Smart Meters save cost of manual metering, billing and collection and thereby improve efficiency of DISCOMs. Prepaid Smart Electricity Meter could be the best solution for the power sector to eliminate its most critical problems i.e. AT&C losses, power pilferage and delay in bill payments.

In Budget 2020, the honorable union finance minister has proposed a 22,000 crore outlay for 2020-21 to develop an ecosystem to achieve the goal of 24 X 7 electricity for all. Also, she urged all the states and UTs to replace the conventional electricity meters with Prepaid Smart Meters in the next three years so as to provide consumers a choice of service providers and rate of electricity.

EESL is currently undertaking Smart Prepaid Metering projects in numerous states of India and showcasing a wide chasm between Smart Prepaid users and otherwise. Smart Prepaid Meters are helping DISCOMs in handling the Covid-19 crisis effectively by enabling auto collection of meters readings over the air, reducing the need for manual intervention, remote connect/disconnect as per the state utility guidelines and enabling digital payments of electricity bills.

COMPANYS PRODUCTS/SOLUTIONS - PERFORMANCE AND OUTLOOK:

SMART ENERGY METERING SOLUTIONS:

Genus offers a complete range of trusted and innovative Smart Metering solutions with a unique combination of all solution layers such as Hardware & Devices, Data Communication, Data Acquisition and Data Analytics & Reporting. These include a portfolio of robust software and end-to-end solutions such as Prepaid Vending Software, Head-end System (HES) and others. The hardware components of the solutions include Smart Meters, Multifunction Single-Phase/Three- Phase Electricity Meter, LTCT Operated Meter, Smart Residential Meter with Integrated GSM/GPRS Modem/LTE-M/NBIOT/RF/Wi-Fi connectivity, Smart DT Meter with Integrated Communication Modules, High end Multifunction Panel Meter, Data Collector Unit (DCU), MultiChannel DC/AC Energy Meter. Some value-adding end-to-end solutions include Dual Prepayment Metering Solution, Automatic Power Factor Controller, Smart Group Metering Solution, Thread-Through Metering Solution for Distribution Transformer, Common Meter Reading Instrument, Grid & Sub-Station Meter and Net-metering Solutions for rooftop solar system. Genus also provides Smart Street Light Management Solutions for smart city initiatives. Genus also manufactures Gas Meters for domestic consumers.

With constant value-addition through its world-class in-house Research and Development Centre, Genus takes pride in providing a series of Smart Metering and end-to-end solutions/services to the power distribution sector. The broad range of indigenously developed products/services is as follows:

• Smart Prepayment Metering Solutions

- Prepayment Electricity Meter (AgrimTM)

- Dual Prepayment Solution (AgrimTM)

• Residential & Commercial Solutions

- Multifunction Single Phase Meter - ("Shikhar 100")

- Multifunction Three Phase Meter - ("Shikhar 300")

- Three Phase Four Wire LT/HT CT Operated Meter

• Smart Metering Solutions

- Smart Residential Single Phase Meter with Integrated GSM / GPRS Modem - ("Saksham 145")

- Three Phase Smart Meter with integrated GSM/GPRS - ("Saksham 345")

- Three Phase LTCT Meter with integrated GSM/GPRS - ("Saksham 340")

• Industrial Solutions

- HTCT Meter (Smart Meter with Integrated Communication)

- Automatic Power Factor Controller (APFC)

• Distribution Transformer Metering Solutions / Audit Metering Solutions

- Thread Through Metering Solution for Distribution Transformer - ("Sampoorna")

- Smart DT Meter with Integrated Communication ("Saksham 320")

• Calibration Equipment

- Portable Reference Meter for Single Phase ("Achook 1080")

- Portable Reference Meter for Three Phase ("Achook 3080")

• Smart City Light Management

- Smart Street Light Management System (SSLMS).

- Multifunctional Meter ("Samarth")

- Multi-Channel Direct Current Energy Meter ("Samarth-DC")

• Net Metering / Renewable Energy Management

- Bi-Directional (Net) Metering Solution

- Grid & Sub-Station Meter

• Grid / Open Access

- Grid & Sub-Station Meter ("Daksh")

- Communication Devices

- Common Meter Reading Instrument ("Samvaad+")

On the Software front, Genus continued to enhance its software product portfolio through scalable Head-End System (HES), Meter Data Management System (MDMS), Smart apps and other software tools required for AMI deployment. Architecture and design of our existing software products is being revamped to support large-scale deployments of Smart Meters. This includes various aspects, technologies, and features involved in AMI as follows:

• Smart Prepayment System (Token less): Prepay engine residing on HES to give flexibility of controlling prepay functions remotely and option to convert meter modes from prepaid to post-paid services and vice versa.

• STS (Standard Transfer Specification,) Token based vending System: A secure message protocol between a Point of sale

vending station and Meters, supported by a secure Key Management System and protocol. Being a global standard, it enhances our export segment capabilities.

• Communication technology support for NBIoT and RF module based Meters

• NUB offering for societies/sub-meters to support (Generator & Mains based inputs)

• Solution to integrate Precision Meters with 3rd party DCUs

• Mobile apps for consumer engagement, field deployments and alternate meter read mechanisms

In addition, Genus is working as a System Integrator (Lead bidder) to integrate Genus Meters with 3rd party Software Solutions and package it for large scale deployments as a stop gap arrangement wherever our products are not yet ready.

Thus with decades of experience in providing innovative metering solutions/services, Genus has acquired necessary domain expertise in AMI infrastructure, which is very crucial for modern power infrastructure, Smart grid, Smart cities, and ongoing power sector reforms, mainly to curtail AT&C losses and power pilferage.

Over the last three decades, Genus has gained the position of major & trusted player in the power infrastructure sector with over 62 million- installation base of energy meters around the world. Genus, by combination of matchless industry experience and cutting-edge technology, provides on-demand end-to-end metering solutions to the power utilities that fulfill complete requirements of the customers. During the year under review, the Company delivered annual production and sales of around 6.5 million units of electronic energy meters of different types. Genus has an annual manufacturing capacity of more than 10 million meters. Backed-up with years of experience, Genus has the ability to increase its manufacturing capacity very quickly and efficiently to meet the increased industry demand whenever required.

In the FY 2019-20, order inflow has remained subdued, as SEBs are in transition phase to draw out the detailed processes for shifting from procurement of conventional meters to Smart Meters. At the end of March 31, 2020 order book stood at Rs. 943 crore (net of taxes). Going forward, we expect the pace of ordering of Smart Meters to pick up sharply. There is likely to be no significant impact on the demand side due to COVID-19, as the state and central governments are persistently striving for reforms in the power sector, with focus on reducing aggregate technical and commercial (AT&C) losses by installation of Smart Meters.

Genus presence in overseas markets has also been rising steadily. In the FY 2019-20, the Company executed export orders for utilities /utility service providers in countries like Singapore, Malaysia, Nigeria, Tanzania, Zanzibar (Tanzania), Nepal, Oman, Chad, South Africa, Afghanisthan, RCA (Republic of Central Africa), US besides that to some renowned EPC players for their overseas clients. Genus foresees that North America, Europe, Asia Pacific, Middle East, Africa and Latin America have a high potential in a Smart Meter market. The driving factors for the global Smart Meters market are rising CO2 emissions, financing constraints for power sector development, energy resource constraints, growing demand for electricity, cost of electricity, and aging infrastructure for power supply. European Union 20-20-20 policy

aims to convert 80% of the installed meter base to Smart one, ensuring potential opportunity for the growth of the Smart Meters market. Many countries are driving the deployment of renewable energy technologies such as solar, wind, biomass, and other disruptive technologies, which contribute to Smart Metering technology utilization for better grid integration. With a dedicated export design team and manufacturing facility, which focus on execution of export orders only, Genus is determined to tap on the huge potential the overseas markets present and take advantage of Smart Grid / Smart Prepaid /Smart Meter rollout. Genus is also taking strategic initiatives to get a foothold in USA and European countries. Genus has continued to participate aggressively in overseas exhibitions/virtual exhibitions to expand its footprint in international markets through direct selling and through strategic tie-ups. It is also drawing up an Ad campaign in international journals, which are widely read by utility officials to increase its visibility among potential overseas customers.

‘ENGINEERING, CONSTRUCTIONS, AND CONTRACTS‘ (‘ECC‘) FOR POWER T&D SECTOR:

Genus offers one-stop solutions of Engineering, Constructions and Contracts to Indian power distribution utilities. In one integrated package (design-to-end), Genus provides complete power infrastructure, which includes setting up of switchyard / sub-stations (upto 400KV), transmission lines (upto 400KV), complete rural electrification, distribution lines & HVDS and industry plant electrification. Genus also offers restoration and upgradation of the existing power transmission and distribution network. Genus ECC solution is designed to satisfy the power utilitys requirements for the future grid.

Genus taps the most advanced engineering technology to provide total engineering and construction solutions from concept to commissioning with key differentiators such as Smart Metering solutions, automatic meter reading technology, IT-enabled communication technology, and AMI.

Genus takes pride to state that it has a proven record in accomplishing various ECC projects across the country. These include several electrical feeder lines/transmission lines, sub-stations and rural electrification at Uttar Pradesh, Rajasthan, Maharashtra, West Bengal, Chhattisgarh, Madhya Pradesh, Karnataka, Tamil Nadu, Orissa and Telangana and also several 33/11KV and 11KV/0.415KV sub-stations with associated feeder lines for NHPC and various other DISCOMs.

Genus is also proud to state that starting since 2005, it has created many landmarks, such as completion of 100 kilometers of 132KV transmission line and 132KV sub-station, one million plus BPL connections and counting under RGGVY Scheme, rural electrification of more than 10,000 villages & counting under RGGVY Scheme, 25,000 kilometers LT lines, more than 60 sub-stations of different ratings upto 220KV, 10,000 kilo meters HVDS project (Single phasing work), 220 KV LILO Transmission Line and 220/132/33 KV Sub-stations and many more.

In the FY 2019-20, the Company has successfully completed projects of 132 KV D/C Transmission Line of JUSNL-Jharkhand. The Company has also completed rural electrification work in Uttarakhand under RAPDRP and rural electrification work including 11KV Feeder Segregation, Sansad Adarsh Gram Yojna and other works on partial turnkey basis under Deen Dayal Upadhyaya Gram Jyoti Yojna PVVNL-UP, J.P. Nagar.

Currently, Genus is involved in completion of the following prestigious

ECC projects:

• Design, engineering, supply of equipments for Substation, Transmission Line and associated system for construction of 220 KV Substation at Chhatti Bariatu, 33 KV Substation at Kerandari, 33 KV D/C Line from Chhatti Bariatu to Kerendari, 200 KV D/C Line from Pakri Barwadih to Chhatti Bariatu and from Patratu to Pakri Barwadih along with installation of DG Sets (NTPC-Jharkhand).

• Rural electrification work including 11KV Feeder Segregation, Sansad Adarsh Gram Yojna and other works on partial turnkey basis under Deen Dayal Upadhyaya Gram Jyoti Yojna ( PVVNL- UP Bijnor)

Following the distinct business strategy, the Company has adopted a

conservative view in selecting its clientele, with security of payment and margin becoming key focal points.

RISKS AND CONCERNS

Overall macro & micro business environment related to our kind of business bring in considerable challenges and complexities. To respond to these challenges and complexities, the Company regularly reviews and evaluates potential risk exposures of the Company through a board-level risk management committee and a robust risk- management system. Risks are also assessed and managed at various levels with a top-down and bottom-up approach covering the enterprise, the business units, the geographies, the functions and projects. Some of the key risks, anticipated impacts on the company and mitigation strategies are as follows:

Key Risks	Impact on the Company	Mitigation
Disruption and uncertainty in business due to Covid-19 pandemic	• Covid-19 pandemic and the resultant lockdown caused unanticipated delay in production & supplies and increased costs to production.	• The Company has implemented stringent cost control measures across the organization to preserve liquidity to survive tough times and respond to any unexpected events in the future due to the pandemic.
	• The revenues and profitability of the Company have also been adversely affected.	• The Company is in a comfortable liquidity position to meet its commitments to service debt and other financial obligations. The Company does not foresee any challenge in maintaining operations at its factories / units / offices.
	• Due to the ongoing Covid-19 pandemic, a severe demand shock is underway across the discretionary spend category. The virus outbreak has disrupted the manufacturing supply chain and sharply curtailed energy demand. Collection delay and defaults are likely by consumers (lower slab domestic category due to wage disruption, and commercial & industrial defaults due to business discontinuity) which will put more pressure on financially ailing DISCOMs.	• The Company also does not foresee any challenge in realizing/recovering its assets.
		• The Company is also in constant discussion with its customers, vendors and other stakeholders to propel the business forward.
	Government budgets may also be challenged due to diversion on Covid-19 resulting in lower subsidy and stretching working capital cycle. Fall in industrial & commercial demand will impact cross-subsidies available to other consumers. Reform measures are likely to be delayed if Covid-19 sustains over a substantial period of time.	• The Company has taken all the possible steps to ensure smooth functioning of operations. All the establishments and offices are sanitized regularly to ensure safety and security of our staff members and other stakeholders. All safety protocols of temperature sensing, wearing of safety gears (masks, goggles, face shields), social distancing, sanitizing and washing hands are being adhered to very stringently.
		• The Company has taken all necessary steps to adhere to the guidelines for social distancing and other safety measures provided by the Ministry of Home Affairs along with the various directives issued by relevant Government authorities, keeping in mind safety, health, and well-being of the employees and other stakeholders across all our locations.
Raw material	• Non-availability of good quality electronics components and accessories could negate the qualitative and quantitative production of companys products and services.	• The Company has an adequate inventory management system, which ensures uninterrupted supply of electronics components and accessories used as raw material in the meters.
	• Some of the components and materials are procured from international suppliers, thus availability and pricing of such materials depend on global situation.	• In order to thwart the risk of delayed deliveries of some critical components like Multi-Layer Ceramic Capacitors (MLCCs) & Chip resistors following global shortages, the Company has signed long-term strategic supply agreements with some key distribution partners.
		• A separate dedicated function, "Production, Planning & Control" (PPC) ensures efficient operations in order to bring about the desired manufacturing results in terms of quality, quantity, timely deliveries, and cost.
		• The Company has complete forward and backward integration facilities to carry out manufacturing of sub-parts /assemblies inhouse.
		• Adoption of Kraljic Matrix has further improved supply-chain management of the Company.
		• The Companys hedging policy and practices enables it to reduce and/or adjust the impact of fluctuations in foreign exchange on raw materials costs.
Technology changes and obsolescence	• Rapidly evolving technology, change in its consumption patterns, and obsolescence of its existing forms offer a great challenge to survival of companies especially those in the field of electronics. Company needs to remain agile to keep pace with the changing customer expectations. Failure to cope may result in loss of market share and impact business growth.	• Genus adopts a customer centric approach in product development and focuses on providing customised solutions.
		• Genus has an in-house Research & Development Laboratory, which is recognised by the Ministry of Science & Technology, Government of India and accredited by National Accreditation Body for Testing Labs NABL to perform in-house technology development.
		• Genus has a full-fledged tool room for making dies and moulds, automated SMT lines, dedicated IT division for enabling advanced IT enabled solutions, advanced designs software and Lean Assembly techniques.
		• The above preparedness helps Genus to keep pace with changing customer expectations.
		• Genus has several national and international quality accreditations / certifications such as ISO 9001, ISO 14001, ISO 20000, ISO 27001, OHSAS 45001, BIS, NABL, STS, EMC, ISI, S mark, AEO-T1, among many others. Thus, Genus is self-sufficient in constant technology up- gradation, innovation activities, and providing customized solutions to its customers.
		Genus in-house R&D capability keeps it ahead of time in introducing new/improved products into the market.
Cost inflation	• Escalating raw material prices following growing demand and global shortages may cause cost inflation and affect the profitability of the Company.	• In order to de-risk the escalation in raw material prices, Genus enters into purchasing arrangements / agreements with key distributors on a yearly basis.
	• Increased freight could dent profitability.	• The company has embarked upon an improvement drive to reduce the bill of materials cost per product based on innovative R&D initiatives, engineering interventions and application of modern end to end supply chain management theories. The net result is that the Company is able to save about 5% on its raw material costs on a year-to-year basis. The process of estimation of projects is carried out in advance in the case of non-escalation contracts with the vision to protect the possible increase in the inputs of the contracts.
		• The Companys hedging policy and practices enables it to reduce and / or adjust the impact of fluctuation in foreign exchange on raw materials costs.
		• In order to minimize the risk of increased freight, the Company is optimizing the droppings/dispatch of consignments.
		• Our contacts are redefined to reflect the actual increase in input costs & accordingly only pay for the same.
Quality	• Highest quality parameters are necessary for any electronic/power related business or industry. Any reduction/failure on the quality front due to laxity or inferior raw material could lead to severe consumer attrition.	• The Company has an incoming test facility, fully automated & state-of-the-art manufacturing facilities, and tool rooms along with advanced software, equipment and automatic test systems and comprehensive quality checks, to ensure conformance of raw materials and products to the highest quality standards.
		• Genus ensures raw materials are properly checked as per Genus Quality standards at supplier premises and goes to the extent of helping suppliers in establishing a high quality test set up themselves.
		• Genus takes recourse to resolve its quality issues using the power of lean sigma methodologies. Adhering to continuous improvement is a constant feature of the Company.
		• The quality of the Companys products has not only led to better acceptance in even the fiercely competitive markets but also has resulted in high repeat orders/business because of increased customer loyalty.
		• Genus deploys PDI (Pre Delivery Inspection) to make sure the customer gets products as per its exact requirement.
		• The Company has various recognitions/ accreditations / certifications such as ISO 9001, ISO 14001, ISO 20000, ISO 27001, OHSAS 45001, BIS, NABL, STS, EMC, ISI, S mark, AEO-T1, etc. strengthening its quality commitment.
Competition	• The growing presence of global participants and local unorganized players in the field is a challenge for the Company. It may affect turnover and profitability of the Company.	• Driven by a spirit of innovation and armed with a globally competitive in-house R&D lab, the Company is able to constantly improve existing products and develop new products/services with distinct features at optimal cost to stay ahead of competition.
		• Use of IT software and latest technologies, provides the competitive advantage to the Company.
		• State-of-the-art manufacturing facilities strategically placed in tax holiday zones in India enables the Company to offer unmatched quality at a competitive price.
		• The Company believes that in the end, quality is the sole consideration of the consumers and has therefore never compromised on the quality of the products for short-term benefits.
Delays in execution of turnkey ECC projects	• The Companys turnkey ECC projects business may face challenges of delay in timely execution of projects mainly because of various procedural clearances/approvals and shortage of materials/equipment and work force. This could lead to delays in payments thereby disturbing the working capital cycle and increasing the overall cost of the project.	• With the experiences gained, the management periodically reviews the activities & development of projects to ensure timely & successful completion and adopts the appropriate strategies/techniques to minimise the anticipated risk / cost and time overrun.
Realizations and liquidity	• The liquidity position of the Company may be affected due to delays in recovery of dues and may negatively impact the operations and earnings of the Company.	• Since the Company does most of its business with government bodies / institutions / agencies, it foresees no risk of non-payment from clients.
	• Any decline in the realizations would directly affect the Companys performance.	• The management also formulates strategies and takes necessary actions to collect the dues from clients on time to ensure smooth flow of funds.
		• The short-term fund requirements are fulfilled by obtaining working capital facilities from Banks/FIs.
Currency volatility	• Since the Company receives a portion of its revenues and incurs a part of its expenses in different foreign currencies and therefore if there is an adverse change in the foreign currency exchange rates may negatively impact the Company.	• At Genus, most of the foreign currency exposures are hedged to the maximum extent.
		• The Company receives a portion of its revenues in foreign currency, which reduces the impact of any change in the foreign currency exchange rates.
		• The management adopts the appropriate strategies/techniques to minimise the negative impact of any adverse change in the foreign currency exchange rates.
Legislative changes	• Legislative changes resulting in a change in the duties and taxes and uncertainties with government policies and priorities can affect operations.	• The role of the power sector in the growth of the economy of India ensures the continuous attention and investment of the Government in this sector.
		• In order to accelerate the growth and for
		meaningful diversification, the management continues to put in place sustained efforts to explore newer and wider horizons in the power sector domain.
Non-compliance to complex and changing regulations	• With increased regulatory pressures and more complex legal requirements, there is a challenge for every company to protect its brand and mitigate the risk of non-compliance in a way that supports performance objectives, sustains value and protects the brand.	• The Companys compliance officers, advisors, and experts work closely with management to assess, improve, and enhance its compliance programs/procedures on an ongoing basis.
		• The Company has hired/employed the best available professionals for legal compliance and corporate governance.
		• The Companys compliance teams at all levels are regularly provided training for their improvement and updating.
		• The Companys internal audit department led by qualified personnel plays an important role in implementing and monitoring the compliance of statutory requirements.
Increase in borrowing cost	• The Company may feel the pressure of high borrowing costs due to increased interest on bank loans.	• The Company focuses on optimum utilisation of available credit limits (bank borrowings) and current assets through better management of borrowings & available funds.
	• The weakening rupee may also add to the woes of the Company in sourcing funds from the global markets as well.	• It focuses on reduction and/or reshuffling in the higher-cost debts.
	• The borrowing cost may increase because of increased working loans to execute higher amounts of orders.	• The Company continues to rely on short-term debt to meet its working capital requirements.
		• The long-term debt is used largely to support the capital expenditure incurred towards expansion.
Cyber attacks	• Cyber risk means any risk of financial loss, disruption, or damage to the business and reputation of an organisation from some sort of failure of its information technology systems e.g. data loss, ransomware attacks.	• The Company recognizes cyber risk as an enterprise business risk, not just an information technology (IT) problem.
	• Company needs to tackle the many security challenges it faces on a daily basis including reduction in costs related to managing security risk, and improvement in its overall cyber security posture.	• The Company has built appropriate skills and resources in-house to secure its information assets, effectively while optimizing business performance.
		• The Company has an in-house team to manage cyber security issues, which anticipates and detects the cyber threats it is about to face or facing and promptly responds to a cyber security incident.
Litigation risks	• Given the scale of the Companys operations, litigation risks can arise from commercial disputes, tax and employment related matters.	• The Company is strengthening its internal processes and controls to ensure compliance with contractual obligations, adequately.
	• This may incur legal costs, distract management, garner negative media attention and pose reputation.	• Potential disputes are promptly brought to the attention of management and dealt with appropriately.
	• Adverse rulings can result in substantive damages.	• The Company has a team of in-house counsels and has a network of highly reputed global law firms.
		• The Company has developed a robust mechanism to track and respond to notices as well as defend the Companys position in all claims and litigation.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT SYSTEM/POLICY

The Company is exposed to various business risks as described above and in response to that, it has developed a comprehensive risk management and control mechanism. It ensures achievement of the Companys strategic objectives with mandatory participation of every department/division in formulation and execution of appropriate control measures/techniques. The Company has also integrated its risk management and control mechanism with internal controls and audit, supported by SAP ERP, which ensures smooth running of day-to-day operations, regulatory standards and mitigates risk. The audit committee and the board periodically review the risks and suggest steps to be taken to manage/mitigate the same through a properly defined framework. The internal audit department audits all the key areas of operations to identify and report weak areas of operations. During the year, a risk analysis and assessment was conducted and no major risks were noticed, which may threaten the existence of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Genus has put in place effective and adequate internal control systems, which are commensurate with its size, nature, scale, and complexity of the business activities. It is designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. Genus internal control system, effected by the board of directors, management, and other personnel, involves everything that controls all potential risks to the Company. The Company has aligned its systems of internal financial control with the requirement of Companies Act 2013, on the lines of the globally accepted risk-based framework.

The chief executive officer of the Company has overall responsibility for designing and implementing effective internal control. He is accountable to the board of directors, which provides governance, guidance, and oversight. The internal auditors and external auditors of the Company also measure the effectiveness of internal control through their efforts. They assess whether the controls are properly designed, implemented and working effectively, and make recommendations on how to improve internal control. The audit committee also discusses with management, internal and external auditors, and major stakeholders the quality and adequacy of the Companys internal controls system and risk management process, and their effectiveness and outcomes, and meets regularly and privately with the Internal Auditor. All staff members are responsible for reporting problems of operations, monitoring and improving their performance, and monitoring non-compliance with the corporate policies and various professional codes, or violations of policies, standards, practices, and procedures. Their particular responsibilities are documented in their individual personnel files. Staff and junior managers are also involved in evaluating the controls within their own department using a control self-assessment.

Our management assessed the effectiveness of the companys internal control over financial reporting (as defined in Clause 17 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations")) as of March 31, 2020. The CEO and CFO certificate confirming the establishment, maintenance and the effectiveness of internal financial control systems of the company pertaining to financial reporting, has been provided in this Annual Report. The statutory auditors of the Company have audited the financial statements included in this annual report and have issued an attestation report on our internal control over financial reporting (as defined in Section 143 of Companies Act 2013). Based on its evaluation (as defined in Section 177 of Companies Act 2013 and Clause 18 of the Listing Regulations), our audit committee has concluded that, as of March 31, 2020, our internal financial controls were adequate and operating effectively.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

At Genus, we focus on attracting the best talent, developing and transforming the workforce and providing a motivating work environment, which is flexible, safe, and growth-oriented. Genus working culture, human resource management, and competency development programs enable it to attract and retain some of the best talent. Our ability to attract, motivate, develop, and retain talent is key to our sustained success.

In todays economic, legal, cultural and technological environment that emphasizes accountability, effective management of human talent is critical. During the year under review, Genus continued to invest in upgrading employees skills, empowering personnel, and realizing employees potential to get best results. The employees were given plenty of opportunities to develop their personal as well as organizational skills, knowledge, and abilities through various training/programs/sessions. Some of the training/sessions/webinars organised are as follows:

• Training on "Understanding Human Behavior for better Relationships"

• Webinars to address stress, leading and working virtually and staying connected when physically separated

• Training on "Lets Design Life"

• Training on "Google Spreadsheet (Fundamentals)"

• Training on "Importance of Mechanical in Metering"

• Training on "ISO 9001:2015"

• Training on "Google Spreadsheet (Advance)"

• Training on "Tendering"

• Training on "IS 16444"

• Training on "ABT Meter"

• Webinar on "Mental Health - How to get it right"

• Training on "NPS"

• Session on Analysis of Union Budget 2020-21"

• Training on "Cyber Security"

• Training on "Behavior Based Safety in Industries"

• Training on "Electrical Safety in Industries"

• Training on "Product Tune Up- Prepayment Meters"

• Training on "Safety in Chemical Storage & Its Handling"

• Training on "Implementation of Emergency Response Plan"

• Technical session on "Resistors, Pulse Load testing"

• Training on "Change Management"

• Training on "Role of 5S in Industrial Development"

• Training on "Failure Modes and Effects Analysis (FMEA) "

• Training on "Battery Charging Parameters"

• Training on "Occupational Risks & their Controls"

• Training on "Team Building"

• Training on "Personal Effectiveness"

• Training on "Importance of Lock out-Tag out in Industries"

• Training on "Safety in Robotics Engineering"

• Knowledge sharing session on "MLCC"

• Training on "SAP MM Module "

• Training on "Smart Meters"

• Knowledge sharing session by "KEMET"

• Training on "Root Cause Analysis & Problem Solving Skills"

• Training on "Golden Ratio"

• Training on "Cost Optimization"

• Training on "SAP F&A Module"

• Training on "Emergency Handling & Fire safety"

• Training on "Authorized Economic Operator"

• Training on "I am ok&You are ok"

• Training on "ISO 9001:2015"

• Training on "5S Training for Associates by Internal SME"

• Training on "Decision Making & Problem Solving Skills"

• Training on "Behaviour Based Safety"

Genus trusts that motivation of employees is indeed important for the health of our organisation. Only when employees are motivated sufficiently they can give their best. Hence, Genus promotes a collaborative, transparent, and participative culture, and rewards individual contribution. To keep our employees rejuvenated and motivated, during the year under review, Genus celebrated/organized -

• Diwali Celebration with Ethnic Wear

• Navratri 2019 Celebration by Color Codes

• Road Safety Week and organized many activities during this week like quiz, vehicle checking, awareness regarding helpmate & safety belt.

• Run GENUS 3K Run 2020 to achieve a fitness revolution in lives.

• 5th International Yoga Day-2019

• Founders Day to celebrate individual as well as collective achievements

• Annual Sports Tournaments

• 73rd Independence Day

• Blood Donation Camp

• Yoga Camp

• Swaccha Genus Day

• Genus Innovation Day

The Company has put in place well-defined policies that ensure prevention of discrimination and harassment. The Company has also put in place a whistleblower policy, vigil mechanism, and POSH policy to discourage any wrong practices at the workplace. The Company has adopted the Code of Conduct to reinforce the core values of the Company. The adoption of this Code affirms the Companys commitment to values of excellence and leadership.

As of March 31,2020, the employee strength of the Company was 1121 (on-roll). During the year under review, the attrition level continued to remain below 2%.

REVIEW OF FINANCIAL PERFORMANCE

The financial performance of the Company has been reviewed separately in the Directors Report.

For and on behalf of the Board of Directors

Ishwar Chand Agarwal

Chairman DIN: 00011152

Jaipur,

July 29, 2020