bright solar ltd share price Management discussions


GLOBAL ECONOMIC OVERVIEW

As per the latest estimates by the International Monetary Fund, global growth slowed down and is estimated to grow by 3.4% in CY23 compared to 6.2% in CY22. "As per the Global Economic Outlook, Global Growth is to fall from 3.4% in F-22 to 2.8% in F-23 before settling at 3.0% in 2024". With the exception of the global financial crisis and the peak of the COVID-19 crisis, it is the weakest growth estimate since 2001. Global inflation is further expected to rise from 4.7% in 2021 to 8.8% in 2022, before softening to 6.5% in 2023 and 4.1% in 2024. Dwindling private sector savings will test the emerging markets ability to withstand continued tightening in global financial conditions and weaker global growth. Geopolitical stresses remain unresolved and represent two-sided risks for emerging markets in 2023.

Flexible exchange rates are insufficient to absorb external shocks and policymakers will need to implement foreign exchange interventions or capital flow management measures to emerge from the present scenario.

Indian Economy:

The Indian economy demonstrated resilient growth in FY 2022-23, manifesting strong indications of macroeconomic stability. The country has recovered from a series of shocks such as the pandemic induced disruption in economic activity, and the sudden rise in commodity prices fuelling inflation owing to the prolonged Russia- Ukraine conflict. According to the first advance estimates by National Statistical Office (NSO), the Indian economy is estimated to have recorded a growth of 7% in FY 202223, thus reiterating its position as one of the fastest-growing major economies.4 According to a recent valuation in terms of size by the International Monetary Fund (IMF), the Indian economy has overtaken the United Kingdoms economy and become the worlds fifth-largest economy. This is the outcome of prudent fiscal and monetary policies of the Government of India and the RBI, proactive vaccination coverage and the sustained capital expenditure of the government.

A revival in private investment after the pandemic and bank credit growth are likely to restore momentum of the economy against the background of global recession. Inflation continues to be a major challenge for growth. According to the RBI, headline inflation is estimated to be at 6.5% for FY 2022-23. The RBI has estimated the inflation for the October- December 2022 quarter to be 6.6% and for the January-March 2023 quarter at 5.9%. It is projected to further decrease to 5% in the April-June 2023 quarter. However, it is not high enough to deter private consumption and also not so low as to weaken the inducement to invest...

Outlook

Indias recovery from the pandemic was relatively quick compared to other developing economies, and growth in the coming year will be supported by robust domestic demand and a pickup in capital investment. Even as Indias outlook remains bright, global economic prospects for the near term have been weighed down by various challenges, which are expected to impart a few spill-over effects for the Indian economy.

Against this backdrop, the Economic Survey projects a baseline GDP growth of 6.5% in real terms in FY 2023-24. The projection is broadly in line with estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI.

[Source: Economic Survey 2022-23].

SWOT Analysis

Introduction:

Solar energy is one of the best options as it is a clean renewable energy source, and found abundantly in most places. In 90 minutes, the earth receives an amount of energy that is sufficient to meet the energy demand of the planet for one year from the sun. Although the solar energy is abundant to this extent, the energy taped from this source is a tiny fraction of the worlds current energy mix. However, this is changing rapidly and is being driven by global action to improve energy access and supply security, and to mitigate climate change.

Countries and companies all over the world are currently investing huge amount of money on solar energy. As a consequence, the technologies are advancing and cost of operating the solar energy is reducing from time to time.

A. Strength

* Limitless: Solar energy originates from the sun, and it is one of the main sources of unlimited free energy available on Earth. Theoretically solar energy has the capacity to fulfil the energy demand of the world. Despite this huge potential and increase in awareness, the contribution of solar energy to the global energy supply is still insignificant. Theoretically the amount of solar energy that touches the earth is 4200 times the energy that human population would consume in the year 2035. In few hours the earth can get the amount of solar energy that covers the annual energy consumption. Hence, developing an efficient and effective capacity of collecting solar energy could potentially solve the energy demand of the world without requiring additional sources of energies. The amount of solar energy that can be collected depends on the location. For example, India receives 4 to 7 KW/hr of solar radiation per square meter per day for more than 250 days per year.

* Environmentally Friendly: The energy from the sun is collected and stored to generate electricity. This method is considered as a renewable alternative to non-renewable technologies. Thus, the usage of solar energy greatly reduces the negative impact of carbon emissions. In California USA, an average of 696,544 metric tons of carbon emission was reduced through the installation of solar system onto 113,533households. In addition, solar energy does not release other harmful gases that could harm the environment. The solar panels used on household can be recycled. It can then be concluded that solar energy is a nonpolluting, reliable and clean source of energy.

* Ease of usage/harvest: Solar energy is collected mostly using solar panels that generate electricity by using photovoltaic technology. Installation of solar energy system can be done anywhere. For instance, solar panels are now easily placed on the rooftops of houses and commercial buildings. However, one could say that it would be impossible to install solar system on their homes especially if they are not the sole owner or due to lack of space or shade requirement by others. In countries like America with the introduction of shared solar energy there is no more problem with space unavailability. Homeowners can obtain electricity from the community solar garden without having solar panels on rooftop.

* Less overall cost: At first the investment of solar system seems expensive. Once solar system is installed the running cost is very low. Hence, in the long-run the cost benefit of using solar energy would be better than other sources of energy. Solar panels have low maintenance cost and can serve for 10 to 15 years with minor service. In addition, solar power benefits us in various ways such as tax incentives and added property values. Particularly when solar energy is used for specific purpose such as in draying of different products, the benefit obtained will be significant. In certain countries like USA, Germany, Denmark, UK and France drying of food products consumes 7-15% of industrial energy which can be done simply by solar energy [9]. Thus, for such processes solar energy is being used as an alternative source to reduce the high cost associated with drying.

* Versatile: Solar power is utilized either directly or indirectly in numerous applications that are not limited to industry purposes but also applicable on day-to-day usage such as, drying of agricultural and industrial products, solar powered refrigerator, water heating, solar cooking, etc. Using solar radiation for drying or removal of excess moisture from a product is a widely used method to meet the specification required for industrial processes. For instance, in the gasification process of biomass the moisture content of the feedstock should not exceed 20%, and this can be achieved by removing the moisture using solar driers. Solar energy is also widely used in cooking particularly in areas when the solar radiation intensity is high and no electricity. In solar cooking, radiation from the sun is concentrated at one point with the help of reflectors. Various type of solar cookers has already been invented such as box cooker, parabolic cooker, panel cooker and so on.

Government Support: Solar Industries get immense support from the government of India because the industry deals in the manufacturing of products for Indias defence sector and to keep the sector top of the line, the government has to finance such industries all the time.

B. Weakness

* Solar Power is Available Only in Day Time: As solar radiation is available only in day time, photovoltaic panels and other collectors are able to convert solar energy into other forms of energy only when there is sunlight. For this reason, solar power needs to have energy storage system to get uninterrupted power supply. The solar system is also installed with other power supplement to replace when the available solar radiation is not enough or the energy storage is not enough to supply for the rest of the day when solar radiation is not available. The backup system is also an additional cost that makes solar system more expensive.

* Solar Panels are inefficient: The conversion efficiency of solar panels is very low compared to other energy conversion system. The achievable conversation efficiency of the solar energy into usable energy by solar panels are not exceeding 20% in general. Because of the inefficiency of the panels, a large space is required to collect solar energy which is just enough for an average household.

* The Space Required for PV: Many photovoltaic cells are needed to absorb enough energy for larger applications. The efficiency of photovoltaic panel drops dramatically due to overheating of the panel and as a result large quantity of solar panel is required. Since the space required for the solar collectors are large, identifying a space where it is not used for other purposes is frequently a challenging task.

* High Initial Cost: Although installation of solar system brings immense benefits, the initial investment cost is expensive. Quantifying the total cost is also difficult without the assistance of the manufacturing company. However, as most of the governments are concerned with the global warming that is caused by burning of fossil fuels, a subsidy and tax exemptions are provided for users of solar energy which helps to reduce the burden of overall installation cost of solar energy.

C. Opportunities

* Create New Business Opportunities: Every new innovation opens business opportunities. Currently, Tesla and Panasonic are orchestrating a huge solar panel manufacturing plant in Buffalo, New York. The power wall produced by Tesla has increased dramatically in the recent years. The demand of solar panels by real states are growing in recent years. Landowners have got opportunities to rent their unused land for new solar farms and get income. In countries like US, Germany, Italy, China, India, Japan and the UK, the market for solar products are growing very fast. Worldwide the demand for utilization of solar energy increases by more than9% every year.

* Availability of Subsidy and Support: In most countries governmental and non-governmental organizations have subsidy and income tax exemptions schemes. The Indian Government is giving subsidy for installation of solar rooftop system for household sector. The various state government in India giving subsidy for installation of solar in the Household sector.

* Cost Reduction: Solar energy technologies are developing quickly and the computation in the market on the technologies are increasing. The competition in the technology leads to an improved efficiency and cost reduction. The Price of Silicon cell is globally going to reduce day by day. Hence, overall cost of solar technology is getting down which is good thing for us.

* Government Contracts: Solar Industries should try seeking more government contracts as they deal in products and services that are mostly demanded by the government for the defence sector and industrial development. Hiring contracts will open new revenue streams for Solar Industries.

D. Threats

* Health risks: A new investigation by Environmental Progress (EP) reported that lethal waste from the used solar panels presents a worldwide environmental danger. The disposal of solar panels, which contain unsafe components such as lead, chromium, and cadmium are running over the world, but effort to minimize the adverse effect is very minimal. According to EP research, developing nations like India and China frequently burn the e-waste to reclaim the copper wires which is profitable for resale. Since this procedure requires burning off plastic, the resulting smoke contains poison that may cause cancer and teratogenic (birth deformity)when its being inhaled. It is approximated that per quadrillion joules of energy produced, 11 and 21 deaths have been identified in conjunction with the solar energy health threats.

* High carbon footprint: A carbon footprint is characterized as the total amount of greenhouse gases produced to either directly or indirectly in the process of realization of a product. It is usually specified in equal tons of carbon dioxide (CO2). The fact is that even solar power plants have an environmental footprint on a lifecycle basis. The main components of solar PV panels are made from crystalline silicon. Manufacturing these components is an energy-intensive process that represents ahigh percentage of the total energy used to make solar panels. The exact carbon footprint of any solar panel relies upon numerous variables, including the materials source, the transported distance, and the energy used by the plants.

- Changes in the Prices of Raw Materials & End Products: The products in which Solar Industries deal necessitates the use of fuel, oxidizer nitroglycerin and black powder. All of these resources are limited, and obtaining them is tough. Because it is often difficult to mine in particular places, the prices of raw resources continue to rise, and even the prices of final products fluctuate; this is a threat to Solar Industries.

SWOT ANALYSIS OF THE COMPANY OUTLOOK

The Renewable energy industry is well-established, viewing bright future in this sector. India is very ambitious in its targets for promoting renewable energy. In India, renewable energy has started playing an increasingly important role in the augmentation of grid power, providing energy access, reducing the consumption of fossil fuels and helping India pursue its low carbon development path. India submitted its Intended Nationally Determined Contribution (INDC) to the UNFCCC, outlining the countrys post-2020 climate actions. Indias INDC builds on its goal of installing 175 gigawatts (GW) of renewable power capacity by 2022 by setting a new target to increase the countrys share of nonfossil-based installed electric capacity to 40 percent by 2030.

The launch of the International Solar Alliance (ISA) was announced by Mr. Narendra Modi, the Honble Prime Minister of India and Mr. Francois Hollande, former Honble President of France on 30th November 2015, at the 21stsession of United Nations Climate Change Conference of the Parties (COP- 21) in Paris, France. Former UN Secretary-General Ban Ki-moon attended the launch, alongside the Heads of about 120 nations who affirmed their participation in the Alliance to dedicate efforts for promotion of solar energy.

SCHEMES OF MINISTRY OF NEW AND RENEWABLE ENERGY (MNRE)

1) Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyaan (PM KUSUM)

PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) Scheme is aimed at ensuring energy security for farmers in India, along with honouring Indias commitment to increase the share of installed capacity of electric power from non-fossil-fuel sources to 40% by 2030 as part of Intended Nationally Determined Contributions (INDCs).

The Scheme consists of three components:

Component A: 10,000 MW of Decentralized Ground Mounted Grid Connected Renewable Power Plants of individual plant size up to 2 MW will be setup by individual farmers/ group of farmers/ cooperatives/ panchayats/ Farmer Producer Organisations (FPO)/Water User associations (WUA) on barren/fallow land. Discom would be eligible to get PBI @ Rs. 0.40 per unit purchased or Rs.6.6 lakhs per MW of Capacity installed, whichever is less, for a period of five years from the Commercial Operations date.

Component B: Installation of 20 lakh standalone Solar Powered Agriculture Pumps of individual pump capacity up to 7.5 HP for replacement of existing diesel Agriculture pumps / irrigation systems in off- grid areas, where grid supply is not available. The State Government will give atleast a Subsidy of 30% and Remaining at most 40% will be Provided by the farmer.

Component C: Solarisation of 15 Lakh Grid-connected Agriculture Pumps. Under this Component, individual farmers having grid connected agriculture pump will be supported to solarise pumps. Solar PV Capacity up to two times of pump capacity in KW is allowed under the Scheme.

2) Atm a Nirbhar Bharat- Production Linked Incentive Scheme (PLI)

Accordingly, PLI schemes to create manufacturing global champions for an Atma Nirbhar Bharat have been announced for 13 sectors including manufacturing of High Efficiency Solar PV Modules. The government has committed nearly Rs. 1.97 lakh crores, over 5 years starting FY 2021-22 including Rs. 4500 crore for High Efficiency Solar PV Modules which will be will be implemented by Ministry of New & Renewable Energy (MNRE). It will help bring scale and size in Solar PV manufacturing, create and nurture global champions and provide jobs to youth. The PLI schemes will incentivize new Gigawatt (GW) scale solar PV manufacturing facilities in India. The EFC meeting for formulating a scheme in this regard has already been held. It will now be taken to the Cabinet for final approval. The scheme will reward efficiency of solar modules as well as local value addition.

Solar capacity addition presently depends largely upon imported solar PV cells and modules as the domestic manufacturing industry has limited annual capacity of around 2,500 MW for solar PV cells and operational annual capacity of 9,000-10,000 MW for solar PV modules.

Under the PLI Scheme 10,000 MW capacity of integrated solar PV manufacturing plants (from manufacturing of wafer-ingot to high efficiency modules) will be set up by Q4 of 2022-23 with the direct investment for around Rs. 14,000 crore. Due to inbuilt incentive for higher efficiency module and local value addition, it is expected that the successful manufacturers will invest in R&D for achieving more efficiency and source their input material locally for more PLI benefits. The scheme will additionally create further demand of Rs 17,500 crore over a period of 5 years for locally produced balance of materials like EVA, Solar glass, Backsheet, Junction box etc, which will help in the development and augmentation of entire ecosystem associated with Solar PV manufacturing.

3) Development of Solar Parks and Ultra Mega Solar Power projects

Solar power projects can be set up anywhere in the country, however the scattering of solar power projects leads to higher project cost per MW and higher transmission losses. Individual projects of smaller capacity incur significant expenses in site development, drawing separate transmission lines to nearest substation, procuring water and in creation of other necessary infrastructure. It also takes a long time for project developers to acquire land, get change of land use and various permissions, etc. which delays the project. To overcome these challenges, the scheme for "Development of Solar Parks and Ultra-Mega Solar Power Projects" was rolled out in December, 2014 with an objective to facilitate the solar project developers to set up projects in a plug and play model.

4) Har Ghar Jal- Jal Jeevan Mission

(Functional Household Tap Connection (FHTC) to every household by 2024)

In his address to the nation on Independence Day-2019, Honble Prime Minister of India announced Jal Jeevan Mission (JJM) to be implemented in partnership with States, to provide functional household tap connection to every household by 2024. Prime Minister has given a call to make water everyones business - a Jan Andolan.

On 15th August, 2019, piped water supply covered about 17% of rural households, when the Prime Minister had announced potable tap water supply to every household by 2024 under Jal Jeevan

Mission. The mission emerged from a realization that reliable access to potable water is the cornerstone of sustainable rural development. It has been 22 months since the announcement of the mission, and tap water supply has increased from 3.23 Crore (17%) to 7.63 Crore (39.7%), Covid-19 pandemic limitations notwithstanding. In spite of this good progress made so far, still about 11.56 Crore rural households to be provided with tap water supply in next 3 years, a gigantic task by any measure.

In the first quarter of 2021-22, about 28 lakh households have been provided with tap water connections. At present, 7,82,41,464 lakh households provided with tap connections; Now daily 1 lakh families are being given tap connections.

Out of 6.04 lakh villages in the country, as of now, more than 95 thousand villages (16%) have already achieved 100% tap water supply to rural households. In another 1.25 lakh villages, water supply works are at different stages of completion. Similarly, out of 19.20 Crore rural households, now more than 7.63 Crore households have tap water supply. In these 22 months, despite CoVid -19, the coverage has increased from 17% to 39.78% by providing tap water connections to 4.39 Crore households.

5) Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects:

The Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects was rolled out on 1212-2014 with aggregate capacity 20,000 MW. Further, the capacity of the Solar Park Scheme was enhanced from 20,000 MW to 40,000 MW on 21-03-2017 to set up at least 50 Solar Parks by 2021-22.

Solar Park is a large chunk of land developed with all necessary infrastructure and clearances for setting up of Solar projects. The capacity of the Solar Parks is generally 500 MW and above. However, smaller parks (up to 20 MW) are also considered in States or UTs where there is shortage of nonagricultural land. Approximately 4 to 5 acres per MW of land is required for setting up Solar Parks. The total Central Grants approved under the Scheme is Rs. 8,100 crore.

Under the scheme, the Ministry provides Central Financial Assistance (CFA) of up to _ 25 lakh per solar park for preparation of Detailed Project Report (DPR). Beside this, CFA of up to _ 20.00 lakh per MW (12 Lakh/MW for development of internal infrastructure of solar park and _ 8 Lakh/MW for development of external power evacuation infrastructure of solar park) or 30% of the project cost, including Grid-connectivity cost, whichever is lower, is also provided on achieving the milestones prescribed in the scheme. The approved grant is released by Solar Energy Corporation of India Ltd. (SECI) as per milestones.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance for the year ended March 31, 2023 is summarized below:

R in Lakhs)

STANDALONE
PARTICULARS YEAR ENDED 31.03.2023 YEAR ENDED 31.03.2022
I. Net Sales/Income from Operations 2357.71 718.68
II. Other Income 44.60 30.44
III. Total Income (I+II) 2402.31 749.12
IV. Earnings Before Interest, Taxes, Depreciation and Amortization Expense 42.85 (691.18)
V. Finance Cost 3.99 6.27
VI. Depreciation and Amortization Expense 32.44 40.08
VII. Profit Before Tax (IV-V-VI) 6.42 (737.53)
VIII. Tax Expense:
i Current Tax Expense 2.23 0.00
ii MAT Credit 0 0.00
iii MAT Credit Relating to prior years 0 0.00
ivTax Expense Relating to prior years 0 0.00
v Deferred Tax (Asset)/Liabilities (1.20) (0.09)
IX. Profit After Tax (VII-VIII) 5.39 (737.44)

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Ratios 2022-23 2021-22 Change in % Remarks
Debtors Turnover Ratio 2.49 0.93 167% Debtors Turnover Ratio has increased due to the increase in the Revenue from Operation as well as improvement in collection period
Inventory Turnover 6.31 2.23 184% Inventory Turnover Ratio has increased due to increase in revenue from operations
Interest Coverage Ratio (EBIT/Interest) 13.22 -143.68 -109% Interest Coverage Ratio has turned positive as per the profits earned in the current year
Current Asset Ratio 2.26 2.36 -4% -
Debt Equity Ratio 0.06 0.12 -50% Decrease in the Debt Equity Ratio is due to the repayment of short-term borrowing to related in current year
Operating Profit Margin (%) 0.02 -104.65 -100% Operating Profit Margin has turned positive as per the profits earned in the current year
Net Profit Margin (%) 0.23 -102.61 -100% Net Profit Ratio has turned positive due to improvement in gross margin as well as increase in revenue from operations
Return on Net Worth 0.18% -21.62% -101% Return on Net Worth has turned positive as per the profits earned in the current year

CAUTIONARY STATEMENT

Statement in this report describing the Companys objectives projections estimates and expectation may constitute "forward looking statement" within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumption and expectations of future events. These Statements are subject to certain risk and uncertainties. The Company cannot guarantee that these assumption and expectations are accurate or will be realized. The actual results may different from those expressed or implied since the Companys operations are affected by many external and internal factors which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments information or events.

For and on behalf of the Board of Directors
Sd/-
Place: Ahmedabad Piyushkumar Babubhai Thumar Chairman & Managing Director
Date: September 05, 2023 (DIN:02785269)