A. INDUSTRY STRUCTURE AND DEVELOPMENTS

1. Global Economy Overview

Global Economic growth in 2014 was little subdued, continuing a pattern of disappointing growth over the past several years. Growth picked up only marginally in 2014, to 2.6 percent, from 2.5 percent in 2013. Geographical break-down of these headline numbers show increasingly divergent trends in major economies.

While activity in the United States and the United Kingdom has gathered momentum due to the revival in labour market condition along with the fact that monetary policy remains extremely accommodative, the recovery has been muted in the Euro Area and Japan as legacies of the financial crisis linger, intertwined with structural bottlenecks. China is expected to see a growth slowdown as a result of structural reforms, sustained housing crisis and increasing manpower cost.

Several major forces are driving the global outlook: soft commodity prices; persistently low interest rates but increasingly divergent monetary policies across major economies; and weak world trade. In particular, the sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing developing economies. However, it will dampen growth prospects for oil-exporting countries, with significant regional repercussions.

Overall, global growth is expected to rise moderately. High-income countries are likely to grow, on the back of gradually recovering labour markets, subsiding fiscal consolidation, and still-low financing costs. In developing countries, as the domestic headwinds that held back growth in 2014 ease and the recovery in high-income countries slowly strengthen, growth is projected to gradually accelerate. Lower oil prices will contribute to diverging prospects for oil-exporting and - importing countries, particularly in 2015.

Source: (International Monetary Fund, World Economic Outlook— Recovery Strengthens, Research & Markets, Business Wire)

2. Global Renewable Sector

Countries around the world are realizing the significance of renewable energy and energy efficiency. Focus on these areas can lead to energy access for large section of the world's population without energy access and new economic opportunities. Various factors such as policy support, capacity expansion, and advances in renewable technology has led to economies of scale and the adoption of renewable energy technology.

With the increasing shift to low carbon energy sources, there are signs that growth in the economy and energy-related emissions are starting to decouple. In 2014, the global economy grew by nearly 3%, but carbon dioxide emissions stayed flat which has occurred for the first time in 40 years. Led by China, United States, Japan and Germany, nearly half of all new power generation capacity in 2014 was by renewables (at $270 billion). Costs have continued to fall in the renewable sector and investments continue to grow with encouraging signs from the European Union with the Emissions Trading Scheme and lowering of fossil fuel subsidies in countries like Indonesia, Malaysia and Thailand.

World oil prices, along with natural gas and coal prices has seen a substantial drop from 2014 to 2015. Oil prices dropped from $100 per barrel in 2014 to sub $50 per barrel in 2015. Natural gas prices declined to $60/tonne (t) in 2015 from $73/t due to overcapacity in the market.

While renewable technologies have become cost competitive, it still requires government support for deployment in many countries. Renewables-based power generation capacity is estimated to have increased by 128 GW in 2014, of which 37% is wind power, almost one-third solar power and more than a quarter from hydropower. Solar photovoltaic (PV) expanded strongly in Asia, particularly in China and Japan, the Japanese expansion being supported by generous feed-in tariffs.

3. Indian Economy Overview

India has become one of the most attractive destinations for investment owing to favorable government policies and reforms in the past few months. The approval of foreign direct investment (FDI) in several sectors has allowed investments to pour into the economy. According to the data provided by Department of Industrial Policy and Promotion (DIPP), the cumulative amount of FDI inflows in the country in the period April 2000-September 2014 was US$ 345,073 million.

The International Monetary Fund (IMF) estimated that the country's economy is likely to grow at 7.2% in FY15 and will exceed combined total of Japan and Germany by 2019. Using India's new GDP series, the IMF expects growth to pick up to 7.2% this fiscal year and accelerate further to 7.5% next year, making India the fastest growing large economy in the world.

Sectors projected to do well in the coming years include automotive, technology, life sciences and consumer products. Engineering and research and development (ER&D) export revenue from India is expected to reach US$ 37-45 billion by 2020, from an estimated US$ 12.4 billion in FY14, according to Nasscom.

Furthermore, the US$ 1.2 trillion investment that the government has planned for the infrastructure sector in the 12th Five- Year Plan is set to help in further improving the export performance of Indian companies and the Indian growth story, which will consequently improve the overall Indian economy.

According to the renowned rating agency Fitch, India is the only BRIC country, where growth will accelerate, to 8% in FY16 and 8.3% in FY17, based on revised data series. The agency's earlier forecasts were 6.5% for 2015-16 and 6.8% for 201617, based on the old series.

A plenty of policy initiatives taken by the new Government will likely to have a positive effect on real GDP growth, including structural reforms and some fiscal and monetary policy loosening. However, the impact of such measures takes time to show up in higher growth.

Source: (IBEF, International Monetary Fund, World Economic Outlook Recovery Strengthens, Fitch rating Agency)

4. Indian Renewable Sector

The Indian economy faces significant challenges in terms of meeting its energy needs in the coming decade. The country's increasing reliance on fuel imports in our energy mix increases the exposure of energy security. Oil imports are a significant portion of total oil consumption. Coal imports are expected to rise to around 30 percent of the total coal requirement by 2017 from negligible a few years back. India's increasing exposure to the volatile global fuel market exacerbated by its increasing energy demand and related issues like delayed environmental approvals, land acquisition challenges makes it difficult to be competitive as a manufacturing hub globally. Around 300 million Indians lack access to electricity in a country where per capita electricity consumption is one-fourth of the world's average.

Until recently, policymakers, regulators and grid operators had limited choices to meet this demand. However, over the last decade, with solar and wind power becoming commercially available in the marketplace, there are now additional choices available to policymakers and stakeholders concerned with the technical, economic and environmental characteristics of any future power system.

One of India's major strategic advantages is its renewable energy potential which is vast and largely untapped. As per recent estimates, India's solar potential is greater than 10,000 GW and its wind potential could be higher than 2,000 GW.

India's renewable energy market is showing the first signs of revival as the installed capacity jumped by 12.9% during the 12 months to 31 March 2015. India added 4,089 MW renewable energy capacity in financial year 2014-15, a capacity addition of 8.5% more than the targeted figure of 3,770 MW. All three leading renewable sub-sectors overachieved on the allocated targets during the year. 2.3 GW wind energy capacity was added as against a target of 2 GW. Government had planned to add 1.1 GW of solar power capacity, 12 MW capacity in addition to this target was added during the last financial year. Solar power technology also surpassed biomass-based power generation as the third-largest renewable energy source in terms of installed capacity in India. Solar power capacity now has a share of 10.5%, up from 8.3% at the end of FY 2013-14.

The capacity addition target of 250 MW for the small hydro power technology was also achieved. In India, hydro power projects with less than 25 MW installed capacity are considered renewable energy projects. Capacity addition target was overachieved in bagasse-based cogeneration where projects worth 360 MW were added as against a target of 300 MW.

Biomass-based power generation missed the capacity addition target, adding only 45% percent of the targeted value. Just 4% of the capacity addition target was achieved in waste-to-power category. The total renewable energy installed capacity in India at the end of FY 2014-15 stood at 35.77 GW.

On the climate change front, India has taken significant steps to eliminate oil subsidies and gone beyond to impose taxes on petroleum products, taking it from a carbon subsidization regime to one of carbon taxation. India is also among the few countries in the world to have introduced a carbon tax. This comes in the backdrop of a plan to reduce borrowing costs and improve the viability of solar and wind power projects by extending hedging support for foreign loans, leveraging the National Clean Energy Fund.

5. Indian Solar Sector Overview

India ranks amongst the highest recipients of solar irradiation in the world with average solar irradiation of 5.10 kWh/m2. Given the high amount of solar irradiation with more than 300 sunny days, solar energy has emerged as a preferred choice to meet the country's increasing energy requirements. There has been increasing focus on development of solar energy in India for reasons such as limited and depleting reserves of conventional energy generating fossil fuels, their impact on environment as well as on economy, apart from issues of high losses in transmission and distribution and need for a diversified basket of energy generation sources. In recent years, particularly with the adoption of the National Action Plan on Climate Change (NAPCC), the Jawaharlal Nehru National Solar Mission (JNNSM), and solar policies by several states, India has taken several steps towards increasing the share of renewable energy in its energy mix.

Source: Rising Sun KPMG

Big Changes This Year

a) Removal of proposed Anti-Dumping Duty

To protect the struggling domestic industry, the Ministry of Commerce and Industry in May had recommended imposing a restrictive duty in the range of USD 0.11-0.81 per watt on solar cells imported from the US, China, Malaysia and Chinese Taipei. The Ministry of New and Renewable Energy along with your company and other stakeholders in the renewable energy industry, however, had been lobbying against the proposed duties, arguing that they would increase the cost of solar power production. In their wisdom, the government decided against notifying the duties that the Directorate General of AntiDumping (DGAD), a statutory body under the Commerce Ministry, had recommended to protect domestic manufacturers from cheap imports.

The government was of the view that the domestic solar equipment manufacturing capacity was not sufficient to meet the government's ambitious plans of adding more power generation capacity through renewable energy sources. Instead, they chose to promote the 'Make in India' initiative - a move to make India a manufacturing hub by encouraging domestic and global companies to invest in India's manufacturing sector. b)Changes in REC Mechanism

The Central Electricity Regulatory Commission (CERC) has lowered the band of prices within which 'renewable energy certificates' issued to eligible solar power producers could be traded in the market. The 'floor' and 'forbearance' prices are now Rs 3,500 and Rs 5,800 respectively for each solar REC. Earlier, they were Rs 9,300 and Rs 13,400, respectively. The CERC notification lowering the price band is significant and the company expects this to be a big boost for investors looking to invest under the REC mechanism which is part of the company's offering. Ever since the prices were reduced, there have been consecutive record high trading sessions of solar RECs (both in year on year comparison as well as throughout the year) as you can see in the chart.

A total of 68,982 solar RECs were traded in March 2015 as compared to 44,869 solar RECs in February 2015 and 32,140 solar RECs in January 2015. This jump in traded volumes can be attributed to better RPO compliance and this trend is a good indicator for the future and the company as well.

c) RE-INVEST 2015

The Ministry of New and Renewable Energy, Government of India organized the first Renewable Energy Global Investors Meet & Expo (RE-Invest) on 15-17 February 2015 in New Delhi, as a follow-up to the 'Make in India' initiative launched by the Prime Minister of India. The central theme of RE-Invest was to attract large scale investments for the renewable energy sector in India. Close to 300 global and domestic companies have committed to generate 266,000 megawatts (or 266 gigawatts) of solar, wind, mini-hydel and bio-mass based power in India over the next 5-10 years.

d) Amendments to Electricity Act

The Electricity (Amendment) Bill 2014, was presented in parliament in Dec 2014. The bill is currently under consideration of standing committee on Energy (2014-15). The aim of bill is to make fundamental changes to the organization & structure of the sector. The bill is strongly considering promoting Renewable Energy generation in the country. The main highlights of proposed amendments are as below:

• Target of 100 GW of grid connected solar power by 2022

• Open Access will be available to consumer with load of 1MW or more, by default. Such consumer can enter in to bilateral agreement.

• Renewable Energy Generation Obligation (RGO) concept is introduced for Coal/Lignite based power generators. Generators are required to generate RE power, which is more than 10% of thermal power installed capacity.

• Obligated entities are subjected to penalties for non-compliance of Renewable Purchase Obligation (RPO). The accountability of regulators is also considered in this amendment.

• No cross subsidy will be applicable if power is procured from Renewable Energy Sources, under Open Access.

• Violating norms under Electricity Act will attract penalties. Penalty may go up to INR 1crore for an entity. In case of renewable energy generators proposed penalty is INR 10 Lakh.

• Creation of a separate National Renewable Energy Policy for the promotion of Renewable Energy Generation through tax rebates, generation linked incentives and creation of national renewable energy fund.

B. OPPORTUNITIES AND THREATS

With solar becoming attractive for investors of all sizes, the sector is poised to grow in leaps and bounds and is expected to become one of the largest globally in the next three years. India is already on track to add more solar capacity than Germany in 2015 and enter the top five solar markets globally. By changing the solar specific Renewable Purchase Obligation (RPO) target for 2022 from 3% to 10.5% of all power consumption in the country - yet to be ratified under the Electricity Act 2003 - India plans to increase its solar capacity from 20 GW by 2020 to 100 GW by 2022.

The 100 GW target is split between 60 GW of utility scale projects and 40 GW of rooftop and other small grid-connected projects. Both central and state governments have announced a number of schemes and policies to accelerate solar project development. The central government has taken the lead with the National Solar Mission (15 GW of projects by 2019) and initiatives such as the solar parks policy and an interest rate subvention scheme. Many states, including Andhra Pradesh (5 GW), Telangana (5 GW), Maharashtra (7.5 GW), Tamil Nadu (3 GW) and Karnataka (2 GW) have followed with huge targets.

As your company is already a market leader in the solar industry today by commissioning more than 115 MW of solar projects, we have decided to leverage our expertise by participating in the engineering, procurement and construction segment.

Source: Solar Rooftop Opportunities - CARE, Indian Solar Handbook 2015

There are several challenges for the company going forward, including land acquisition, transmission and financing. But the biggest challenge will be the enforcement of RPOs and the poor bankability of India's distribution companies (DISCOMs). As electricity is a concurrent subject, i.e., the centre and the states both legislate on it, the states have the option to disregard the central government directives.

Non-compliance of RPO by obligated entities is the key challenge for your company and your company is taking all the efforts to educate and sensitize all the stake holders towards the importance of REC- RPO regulations. The Supreme Court judgement and Appellate Tribunal of Electricity Ruling are landmark rulings in favour of the renewable energy industry and we believe there will be considerable improvement in the enforcement scenario in current fiscal.

Growth of rooftop solar capacity is largely dependent on its financial competitiveness vis-a-vis grid power but is extremely attractive in states where the cost of power and cross subsidy rates is high. High upfront cost is involved in putting up a rooftop solar system and may not be a viable option for residential consumers. Rooftop solar is also dependent on state boards issuing net-metering policies else customers would require additional cost (upto 30% of the project) for installing batteries. There is also a general lack of awareness among consumers regarding the benefits/viability of solar projects and apathy with regard to thermal power.

In the renewable energy segment, bank loans of up to Rs. 15 crore for solar-based power generators, biomass-based power generators, wind mills, micro-hydel plants, etc, will be considered part of Priority Sector Lending. For individual households, the loan limit will be Rs 10 lakh a borrower. This is especially beneficial to your company's clients as it ensure more attractive financing options for investing in a solar project.

Given that the solar sector is currently booming in India, the company anticipates lots of new entrants in the market. However, as the solar targets are huge, the company does not expect any loss of revenue due to such players. Further, the company is poised to gain from the revised targets due to having a first mover advantage and commissioning a large number of projects.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your company have three segments of business wise T ransformer, Solar Power Plant Operation and Manufacturing & Sale of Solar Power Systems. In Fiscal 2013, 2014 and 2015, revenue from solar power plant operation was INR 461.77 lakhs, INR 2,321.52 lakhs and INR 2,177.63 lakhs. Further, in Fiscal 2013, 2014 and 2015, revenue from manufacturing and sale of solar power system was INR 20,852.23 lakhs, INR 48,063.35 lakhs and INR 8476.89 lakhs respectively. Further, in Fiscal 2013, 2014 and 2015, our Company's revenue from the transformer business was Rs 2,963.94 lakhs, Rs 2,169.16 and 455.15 lakhs respectively.

D. OUTLOOK

This year has been a remarkable year for the solar industry. The Government of India has taken dramatic actions to demonstrate its seriousness with regard to increasing the share of renewables in the energy mix. As your company's core business is dependent on its order book size from investors, the proposal to impose anti-dumping duty on solar modules made the investment thesis slightly less attractive for potential clients. However, the Government's decision to remove the proposal in line with their focus on renewable energy promotion is a huge boost to our business model. Further, the decision of the CERC to reduce the prices of RECs which has led to a massive spike in trading of RECs is another major trigger for business going forward. As these were the two major risks affecting our company, we expect the financial year 2015-16 to be much better than the current fiscal year.

Being a market leader in the solar sector and having commissioned a large number of projects, with the increasing interest in solar projects both at the Centre and State level, we expect significant tenders to come out in the future and the company to have a good portion of them.

The company expects rooftop solar to be the fastest growing segment once net metering policies are implemented in each state. With the potential target set to be revised to 40 GW for rooftop and off-grid solar projects, the pie has grown significantly and company has already developed their brand ‘Ujaas Home' and ‘Ujaas My Site' to capture a significant chunk.

E. RISK AND CONCERNS

While the company faces traditional business risks such as un-anticipated labour costs, market risks such as interest rates, operational risks such as been supplier/distributor problems and execution challenges and changes in government regulation, no major risks are foreseen.

Additionally, the company continuously monitors business and operations risks through an efficient risk management system. All Key functions and divisions are independently responsible to monitor risks associated within their respective areas of operations such as production, insurance, legal and other issues like health, safety and environment.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has robust internal control system. On recommendation of Audit Committee, company has appointed Mr. S.K.Malani & Co., Chartered Accountants as internal auditor. Internal auditor covers all the department of the company as per the agreed plan with the company. Periodically, company is being presented with key control issues and actions.

Evaluation of business risk is an on going process to evaluate risk and strategies to mitigate the same. Regular review is been done to evaluate the risk, control procedures and compliance with company's policies.

G. QUALITY MANAGEMENT SYSTEMS

Your company is successfully running on SAP Business solution as accounting software. Different modules of SAP like FI(Finance), MM(Material Management,), SD (Sales & Distribution), PS (Project System), QC (Quality Control), and HR (Human Resource). Company is been proactive in adopting best business practice. Further company continued to be certified under ISO: 9001:2008 by International Organization for Standardization. The Quality Management System in the Company is well defined and is well in place. This will enable your company to meet the challenges related with Information systems, Controls, Planning and Quality.

H. CAUTIONARY STATEMENT

Statement made in the management discussion and analysis report as regards the expectations or predictions are forward looking statements within the meaning of applicable Laws and Regulations. Actual performance may deviate from the explicit or implicit expectations.

I. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Particulars (INR. Mn) FY11 FY12 FY13 FY14 FY15
Total Income * 339 370 2,480 5,332 1,133
Operating Expenses 305 336 1,972 4,341 688
EBITDA 34 34 508 991 445
EBITDA Margin (%) 10.03% 9.19% 20.48% 18.58% 39.28%
Finance Cost 19 10 50 91 180
Depreciation 3 4 19 47 81
Profit Before Tax 12 20 439 853 184
Taxation 4 11 169 479 67
Profit After Tax 8 9 270 374 117
PAT Margin (%) 2.36% 2.43% 10.89% 7.01% 10.33%
Diluted EPS (INR) 0.04 0.05 1.35 1.87 0.59

J. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Your company has very strong board, first line management and 2nd line management, comprising of various Business Heads, GM and Vice Presidents and below them we have effective teams of managers. Your company will have huge openings in the coming years as the company is expecting enormous growth and will need supporting hands for proper management.

For & On Behalf of the Board
Place: Indore S.S. Mundra
Dated: 13.08. 2015 Chairman & Managing Director
DIN : 00113199