BF Utilities Ltd Management Discussions

International Scenario

COVID-19 pandemic is having an impact on developments and on new installations of wind power projects worldwide. There are many delays in different phases of project implementation. The delays are mainly caused by interruptions of international supply chains, non-availability of the workforce due to hygienic rules, permission procedures which is taking longer time than usual.

Another new development is the concept of direct marketing and self-consumption of wind power is becoming more popular in many parts of the world. While feed-in tariffs are under pressure and auctions lead to problems amongst investors, such new forms of direct marketing and self consumption may become major drivers for growth in near future.

The new installation of Wind Project in 2020 will be similar or slightly lower than 2019, but growth may return again in 2021.

Domestic Scenario

Wind power generation capacity in India has significantly increased in recent years. As of 2020, the total installed wind power capacity was 38.124 GW, the fourth largest installed wind power capacity in the world. Wind power capacity is mainly spread across the Southern, Western and Northern regions.

However, open access sellers face challenges of higher charges and lower tariffs.

COVID-19:

The outbreak of COVID-19 turned into global pandemic in March 2020 and held the world at its standstill. Consequent lockdown announced across India resulted in temporary closure of offices of the Company in line with the government/local authorities directions.

Your Company as a part of its safety policies ensured that its employees were working from home. As the restrictions were eased out, your Company while closely monitoring the situation and following safety guideline reopened its offices.

Companys Performance :

Company took all efforts to operationalize maximum wind turbines.

The Company proposes to operationalise additional wind turbines during the coming months.

6. COMPANY PERFORMANCE

During the Financial Year under review, your Company earned total income of Rs.23.76 Crores (previous years Rs.49.75 Crores). The net Profit after tax is Rs.2.52 Crores (previous years profit of Rs.27.17 Crores).

7. OPERATIONS OF THE COMPANY

The working conditions for wind mill continue to be difficult. Despite such problems, the Company was able to generate 20.70 Million (Net) Units of power. The Company is making all efforts to maximize power generation and reduce costs.

8. HUMAN RESOURCES

As on 31st March, 2020, the Company has 8 employees. The relations with Companys employees are cordial.

9. CONCERNS AND THREATS

• The Company operates in a highly regulated environment. Any change in Government Policies will adversely affect the operations of the Company.

• The Company depends on the service provider for operations and maintenance of Wind Turbines. Certain litigations against the service providers are pending before the judicial / quasi judicial authorities. Unfavourable outcome of these litigations will adversely affect our operations.

10. PROSPECTS FOR THE CURRENT YEAR

The Company is taking all efforts to improve the machine availability of the Wind Farm by undertaking regular maintenance and break down maintenance in a scheduled manner. The Company is also trying to operationalize some of the balance machines. The steep increase in open access charges being levied by the DISCOM year after year is putting huge pressure on the operating margins. The Company is taking measures for reduction of other operating costs to reduce the impact of increase in open access charges.

The current economic slowdown and COVID-19 pandemic in India and globally has posed new challenges to the Company. The Company is taking all efforts to mitigate these challenges.

11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal control systems to ensure operational efficiency and accuracy in financial reporting and compliance of various laws and regulations.

The internal control system is supported by the internal audit process. The internal audit is conducted by a Chartered Accountant in practice. The Audit Committee of the Board reviews the Internal Audit process and the adequacy and effectiveness of internal audit and controls periodically.

12.SAFETY, HEALTH AND ENVIRONMENT

The Company ensures safety of all its employees working at different places. Necessary safety gadgets are provided to the employees requiring the same.

13.CAUTIONARY STATEMENT

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.