A. INDUSTRY STRUCTURE AND DEVELOPMENTS

1. GLOBAL ECONOMY OVERVIEW

In the financial year 2015-16, global economic activity continued to remain subdued. The emerging markets and developing economies, which account for around 70 percent of the global growth, declined for the fifth consecutive year, while the advanced economies continued to recover slowly. There were few key influencing factors to the global economy.

China’s economy witnessed a faster than expected slowdown due to rebalancing economic activities moving away from investment and manufacturing towards consumption and service related activities.

Energy and various commodity prices witnessed a decline. Lower oil prices strain the fiscal positions of fuel exporters and weigh on their growth prospects, while supporting household demand and lowering business energy costs in importers. However, strain due to oil shock and its impact on investment climate and weak pick-up in oil-consuming economies due to limited pass-on of lower prices has resulted in global growth stalling.

The United States has been going through a gradual monetary policy tightening scenario where the U.S. Federal Reserve lifted the federal funds rate from the zero lower bound, while monetary easing continued in the euro area and Japan. Prospects of a gradual increase in policy interest rates in the United States as well as bouts of financial volatility amid concerns about emerging market growth prospects have contributed to tighter external financial conditions, declining capital flows, and further currency depreciations in many emerging market economies.

According to IMF, Growth in advanced economies is projected to rise by 0.2 percentage points in 2016 to 2.1 percent, and hold steady in 2017. Growth in emerging market and developing economies is projected to increase from 4 percent in 2015 the lowest since the 2008 09 financial crisis to 4.3 and 4.7 percent in 2016 and 2017, respectively.

2. INDIAN ECONOMY OVERVIEW

India remained a relatively bright spot in the global economy with its growth story continuing to bloom. One of the contributors to the strong growth experienced by the Indian economy was the sharp decline in crude oil prices. According to Asian Development Bank estimates, the Indian economy grew at 7.6% in FY2015 (ending 31 March 2016). Despite a weak monsoon for a second consecutive year, agriculture grew by 1.1% in FY2015. While the industry and private consumption accelerated to a growth of 7.3% and 7.6% respectively, the services growth moderated to 9.2%.

India continued to remain at the top of Nielsen's global consumer confidence index for the sixth quarter in a row. The Foreign Direct Investment (FDI) inflows increased 40 per cent during April-December 2015 to reach USD 29.44 billion, compared to same period last year. Also, India's foreign exchange reserves remained comfortable at USD 356 billion in the week up to March 25, 2016.

The regulatory regime witnessed easing and the Reserve Bank of India (RBI) cut interest rates four times as inflation eased sharply. Rate cuts had been widely called for by the industry to reduce the cost of borrowing and help stimulate growth. The government’s strong focus on reviving growth was evident from the Union budget, where the Finance Minister gave relief to small tax payers, nudged the affluent to shell out more while focusing on the rural economy with much higher fiscal outlays. The Finance minister also reaffirmed that the government would continue the reform agenda to usher in the long awaited GST by passing the Constitutional Amendment Bill in the Parliament.

On the government initiative front, the "Make in India scheme", ‘Smart cities plan", "Jan-Dhan Yojna", Digital India plan", "Skill Development & Start-up India initiatives", "Power for All’’, "UDAY’’, "Housing for All", ‘’Scheme to revitalise public sector banks’’, "Ease of Doing Business (EoDB) initiative’’ and other ambitious infrastructure programmes present significant opportunities for investors to be part of one of the largest development programmes in the world. These programmes are expected to transform not only the cities and the country as a whole, but also the way business is done in India.

As per the World Economic outlook released by the IMF, India will be the fastest growing major economy in 2016-17 growing at 7.5%, ahead of China, at a time when global growth is facing increasing downside risks. India’s growth is expected to continue to be driven by private consumption, which has benefited from lower energy prices and higher real incomes. With the revival of sentiment and pickup in industrial activity, a recovery of private investment is expected to further strengthen growth.

3. GLOBAL RENEWABLE OVERVIEW

2015 is the year when global policy came together at The Paris Climate Change Conference, COP 21, and signalled that they intend to support aggressive de-carbonizing initiatives on a global scale. What this means for the power sector is that public financing and market reforms will support the growth of advanced energy technologies all over the world.

According to Bloomberg New Energy Finance, Investment into renewable energy in 2015 hit a record breaking $329 billion. Irrespective of policy changes, 60% of the $12 trillion of investment forecasted to meet electricity demand in the next 25 years comes from renewable energy.

At the end of 2015, global renewable generation capacity amounted to 1,985 GW. Hydro accounted for the largest share of the global total, with an installed capacity of 1,209 GW.

Three-quarters of this was in large-scale plants of over 10 MW.

Wind and solar energy accounted for most of the remainder, with an installed capacity of 432 GW and 227 GW respectively. Other renewables included 104 GW of bioenergy, 13 GW of geothermal energy and about 500 MW of marine energy (tide, wave and ocean).

Renewable generation capacity increased by 152 GW or 8.3% during 2015, making this the sixth consecutive year that renewable capacity has grown by about 8% or more. Wind energy capacity increased by 63 GW (17%) followed by solar energy, with an increase of 47 GW (26%). Hydropower capacity increased by 35 GW, while both bioenergy and geothermal energy increased by 5% (5 GW and 1 GW respectively). Overall, capacity has increased by about one-third over the last five years, with most of this growth coming from new installations of wind and solar energy.

Over 80% of the world’s renewable capacity is in Asia, Europe and

North America. Asia accounted for 58% of new capacity in 2015, bringing its total to almost 800 GW or 40% of global capacity. Asia was also one of the fastest growing regions, with a 12.4% increase in renewable capacity. Capacity increased by 24 GW (5.2%) in Europe and 20 GW (6.3%) in North America.

With the exception of South America, the other global regions account for a smaller share of global renewable capacity, but capacity increased by about 5% or more in all of these regions. Particularly noticeable was the increase of 14.5% in Central America and the Caribbean, where a number of major solar plants were commissioned in 2015. However, the expansion of renewables remains mostly focused on a few countries, with only 19 countries installing over one gigawatt during 2015 and these countries accounting for over 90%.

4. INDIAN RENEWABLE OVERVIEW

Despite fossil fuels still accounting for 75 percent of its energy mix, India is a major renewable energy market (with the sixth largest renewable energy capacity). Renewable energy projects in India are being developed and commissioned at a much higher pace, as the market responds to fillips by the government to encourage investment in the sector. In particular, new financing mechanisms announced by India should facilitate increased investment and installed capacity, and help India get closer to meeting its installation goals for both wind and solar.

The Ministry of New and Renewable Energy reported that India added 6,937 MW of grid-connected renewable energy capacity during FY2015 16. This is one and a half times more than the target of 4,460 MW set at the start of the financial year. Additionally, 176 MW of distributed renewable energy capacity was also added.

Capacity additions in solar and wind energy beat the targets comprehensively in the grid-connected segment. A total of 3.3 GW of wind capacity was added against a target of 2.4 GW. Rush by project developers to commission projects before the reduction of feed-in-tariffs was one of the reasons for a high quantity of capacity addition. For now, wind energy remains the most attractive renewable energy technology in terms of capacity addition. At the end of the last financial year, grid-connected wind energy capacity in India stood at 26.7 GW, representing a share of 62.5% of the total grid-connected renewable energy capacity installed in the country.

Over 3 GW of grid-connected solar power capacity was added in

India against the target capacity addition of 1.4 GW making grid-connected solar power capacity additions more than twice the target. Further, this was the largest solar power capacity addition in a financial year. The high capacity addition was the result of multiple solar power auctions at the central and state government levels.

Capacity additions in off-grid bioenergy projects also beat the target, but the off-grid solar power sector saw a sharp jump in capacity addition against the target. A total of 50 MW of distributed solar power capacity was targeted for addition, against which 87.7 MW capacity was added, taking the total off-grid solar power capacity operation in the country to 314 MW.

The total power generation capacity installed in India on 31 March 2016 was 298 GW, of which renewable energy projects represent just over 14% at 43 GW capacity.

Source: MNRE

5. INDIAN SOLAR OVERVIEW

In June 2015, the government revised its target of 20GW solar capacity addition by 2022, under the Jawaharlal Nehru National Solar Mission (JNNSM), to 100GW 5x, over the same period. 60GW out of the targeted 100GW will be set up on utility scale while the remaining 40GW will be in the form of rooftop and other small grid-connected projects. India is all set to become the fourth largest solar market globally in 2016 behind only China, USA and Japan with 5.4 GW of expected capacity addition during the year. The tailwinds are exceptionally strong with rapidly falling costs and greater environmental agenda in the post COP21 world along with the Ministry of New and Renewable Energy’s (MNRE) target of 12 GW of utility scale solar projects for FY 2016-17.

The most buzzing topic for the sector right now is the intense competition with tariffs coming down sharply to INR 4.34-5.00/unit ($0.07-0.08) levels. The company, however, has chosen not to participate in the developer business and continues to remain asset-light. On the policy front, the Solar Parks Policy and UDAY scheme have been hailed largely as a successes but the broader sector policy reform through amendments in the Electricity Act 2003 is still awaiting parliamentary approval.

A. OPPORTUNITIES AND THREATS

i. Solar RPO Regulations

On the regulatory front, solar RPO norms (including draft orders which are yet to be finalised by SERC) have been amended in three states namely Tamil Nadu, Maharashtra and Jharkhand in the last four months. The SERC in Tamil Nadu has significantly increased solar RPO norm from 0.5% in FY2016 to 5% in FY2018. The SERC in Maharashtra has extended the solar RPO trajectory till FY2020 while gradually increasing the solar RPO norm from 0.5% in FY2016 to 3.5% in FY2020. The SERC in Jharkhand in its draft order has extended RPO trajectory till FY2020 and also gradually increased solar RPO from 1% in FY2016 to 4.5% in FY2020. Thus extension in RPO trajectory coupled with upward revision in solar RPO norms as seen in these states are positive developments for the domestic solar energy sector.

Nonetheless, the overall solar RPO norms still show wide divergence across the states and are, by and large, below national RPO targets laid down in National Action Plan on Climate Change (NAPCC). SERCs in 24 of the 30 states have declared solar RPO targets for FY2017 which vary from 0.2% to 2.5% for the obligated entities. Significantly, two states with large solar potential, viz. Rajasthan and Gujarat are yet to announce the solar RPO targets beyond FY2017. Thus, the timely revision of the state solar RPO norms to bring them in line with the solar RPO target of 8% for FY2022 as per National Tariff Policy (NTP), 2016, and the compliance of the solar RPO targets by the DISCOMs remains a key monitorable.

Source: ICRA

A few key enforcement highlights with regard to Renewable

Purchase Obligation (RPO) are as follows:

- The Appellate Tribunal for Electricity (APTEL) order dated April 28, 2016 which is favourable for the solar sector has stated that "there is no justification for the State Commission for imposing such S meagre penalty of Rs.25,000/-. Such meagre penalty will defeat the object behind RPO obligation and REC mechanism. Imposition of such meagre penalty may become a precedent and that may not be in the interest of stated object of promotion of generation of electricity from renewable energy sources." APTEL has also directed the SERC to hear the parties on the quantum of penalty and pass appropriate order.

- Ministry of New and Renewable Energy (MNRE), Government of th

India (GoI) in its advt. dated 17 March 2016 informed all obligated entities to make best use of the REC trading session in order to comply with RPO targets specified by respective SERC / Jt. ERC.

- The Appellate Tribunal of Electricity order against all State Electricity Regulatory Commissions directing them to monitor and enforce RPO of obligated entities

- The Supreme Court judgement directing obligated entities to fulfil their renewable purchase obligation or face penalties.

- Various State Electricity Regulatory Commissions have passed strict orders against obligating entities to meet their RPO.

Further, one of the features of the Ujwal DISCOM Assurance Yojana Scheme is that State DISCOMs will comply with their outstanding RPO. The management is confident that the above enforcement measures by the regulatory authorities will give a boost to the sector.

ii. Solar REC Trading

Ever since the Central Electricity Regulatory Commission (CERC) lowered the band of prices within which ‘renewable energy certificates’ issued to eligible solar power producers could be traded in the market, 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 table below. Increase in trading volumes can also be attributed to increasing RPO enforcement.

iii. Transmission Infrastructure

Lack of adequate transmission infrastructure is another major hurdle that India faces, in improving solar power penetration. The creation of solar parks in remote areas requires additional transmission infrastructure. The government is aiming to address this through Green Energy Corridor initiative to ensure creation of power evacuation infrastructure for upcoming renewable capacity.

iv. Change in Accelerated Depreciation

The renewable sector has enjoyed accelerated depreciation (AD) of 80 per cent under the Income Tax Act however with the recent Budget capping the accelerated depreciation tax benefit at a maximum of 40 per cent from April 2018, it is expected to impact projects being set up for the tax benefit. Since the revised AD rates are effective from April 2018, the management expects the coming financial year may see a renewed interest in new project installation. Further, based on internal workings, the returns of a client investing in Ujaas Parks remain the same due to falling solar project costs. v. EPC business

With over 35 years in the power sector and having commissioned more than 140 MW, the company decided to venture into the EPC business due to the significant opportunities available, while following the company’s motto of being asset-light. We are proud to announce that during the year under review, the company has successfully won bids of more than 20 MW of solar power and commissioned 9.9 MW.

B. SEGMENT WISE OR PRODUCT-WISE PERFORMANCE

Your company have three segments of business wise Transformer, Solar Power Plant Operation and Manufacturing & Sale of Solar Power Systems. In Fiscal 2014, 2015 and 2016, revenue from solar power plant operation was INR 2,321.52 lakhs, INR 2,177.63 lakhs and INR 2,995.27 lakhs. Further, in Fiscal 2014, 2015 and 2016, revenue from manufacturing and sale of solar power system was INR 48,063.35 lakhs, INR 8,476.89 lakhs and INR 24,341.90 lakhs respectively. Further, in Fiscal 2014, 2015 and 2016, our Company's revenue from the transformer business was INR 2,169.16 lakhs, INR 455.15 lakhs and INR 374.55 lakhs respectively.

C. OUTLOOK

As guided last year, this year has the seen the company install more than triple the capacity than that achieved in FY15. Similarly, the country itself has achieved more than 3 GW of solar power installations in FY16. With the MNRE targeting 12 GW of installations in FY17, the management believes it is on the same growth trajectory during FY13 and Fy14.

Being a market leader in the solar sector and having won orders from respected customers such as Oil India Ltd, Rashtriya Ispat Nigam Limited and Airport Authority of India, we expect to continue excelling and winning significant tenders in the future. The management’s vision is to erect and maintain 5 GW of solar power for our clients out of the 100 GW target by 2022.

D. RISKS 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.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Company’s Internal Control System is commensurate with its size , scale and complexity of its operations . The internal audit was Entrusted to M/S Atishay & Associates, Chartered Accountants. The internal Audit team reviews the internal financial control and reports the same to the audit committee of the board. The internal auditors submits the internal audit report comprising of internal financial control adequacy and findings together with other audit findings to the audit committee on quarterly basis .The said Internal audit report is reviewed and evaluated by the audit committee . Thereafter it is kept at the board meeting for perusal of the Board . The audit committee of the Board suggest measures and steps for strengthening the internal audit framework and internal financial control.

F. QUALITY MANAGEMENT SYSTEMS

Your company have successfully implemented SAP Business solution as accounting software. Company installed different modules of SAP like FI(Finance), MM(Material Management,), SD (Sales & Distribution), PS (Project System), QC (Quality Control), and HR (Human Resource). 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.

G. 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.

H. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT

TO OPERATIONAL PERFORMANCE

Particulars (INR. Mn) FY11 FY12 FY13 FY14 FY15 FY16
Total Income 339 370 2,480 5,332 1,133 2,795
Operating Expenses 305 336 1,972 4,341 688 2,146
EBITDA 34 34 508 991 445 649
EBITDA Margin (%) 10.03% 9.19% 20.48% 18.58% 39.28% 23.22%
Finance Cost 19 10 50 91 180 155
Depreciation 3 4 19 47 81 80
Profit Before Tax 12 20 439 853 184 414
Taxation 4 11 169 479 67 205
Profit After Tax 8 9 270 374 117 209
PAT Margin (%) 2.36% 2.43% 10.89% 7.01% 10.33% 7.48%
Diluted EPS (INR) 0.04 0.05 1.35 1.87 0.59 1.04

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

Your Company has a very strong Board comprising of experts from the field of renewable energy , finance and business administration. Mr. Manish Agarwal , holding position of COO ( Chief Operating officer) is an IIT and IIM alumnus. Along with various qualified and experienced professionals holding positions of business heads, vice presidents and general managers . Below them we have an efficient team of managers and executives. The total no. of employees as on March 2016 were 273.

For & On Behalf of the Board
Place: Indore S.S. Mundra
Dated: 06.08.2016 Chairman & Managing Director
DIN : 00113199