INDUSTRY STRUCTURE AND DEVELOPMENT
India is one of the fastest developing economies in the world. Electricity is considered to be one of the most critical components for the infrastructure development of any country affecting economic growth and well-being of the people at large. Power sector comprises generation, transmission and distribution utilities and is key enable for Indias economic growth. India has a total power generation capacity of 467885 MW as on March 31, 2025. The sources of such generation are from coal, lignite, natural gas, oil, hydro, nuclear power, wind, solar, agriculture and domestic waste. Out of the total generation of power of 467885 MW, renewable energy contributed to about 78.9%.
The government declared its efforts to increase investment in renewable energy. Under the governments 2023-2027 National Electricity Plan, India will not build any new fossil fuel power plants in the utility sector, aside from those currently under construction. It is expected that non-fossil fuel generation contribution is likely to reach around 44.7% of the total gross electricity generation by 2029-30.
Ministry of New and Renewable Energy has been vested with the responsibility of developing Small Hydro Power (SHP) projects up to 25 MW station capacities. The estimated potential for power generation in the country from such plants is about 21,000 MW. Most of the potential is in Himalayan States as river-based projects and in other States on irrigation canals. The SHP programme is now essentially private investment driven. Projects are generally economically viable and private sector is showing a lot of interest in investing in SHP projects. The viability of these projects improves with increase in the project capacity.
Hydro Power Project Classification
Hydro power projects are generally categorized in two segments i.e. small and large hydro. In India, hydro projects up to 25 MW station capacities have been categorized as small hydro power (SHP) projects. While Ministry of Power, Government of India is responsible for large hydro projects, the mandate for the subject small hydro power (up to 25 MW) is given to Ministry of New and Renewable Energy. Small hydro power projects are further classified as:
Class |
Station Capacity in kW |
Micro Hydro |
Up to 100 |
Mini Hydro |
101 to 2000 |
Small Hydro |
2001 to 25000 |
Source: https://mnre.gov.in/small-hydro/schemes ; https://www.makeinindia.com/ ; https://cea.nic.in/
SWOT ANALYSIS
i) Strengths:
Energy Development Company Limited ("EDCL") has wide experience and expertise in execution of Small Hydro Power projects which gives it a significant competitive advantage. The team of EDCL is supported by eminent in-house team & consultants. The Company is in the process of developing several hydro power projects (via subsidiaries & associate companies) with financial investment partners in remote areas of the country which comes with a range of challenges - logistical, climatic and technological. However, with its strong and efficient team of competent and experienced professionals, most of the hurdles have been mitigated.
Long term power purchase agreement for most of the projects with the State Utilities confirms the sale of generation of electricity, as a result most projects under operation so far have PPA with State Utilities except Harangi - I Project whose electricity is being traded under bilateral agreement through a licensee trader. The payments against each projects sale proceeds are received in due time.
ii) Opportunities:
The deteriorating hydro-thermal mix, increase in peak hour shortages and frequency variations have forced policymakers to turn their attention towards water resources and on developing hydropower. Besides Indias huge untapped hydro potential, especially in the hilly region, with the focus shifting to hydropower, EDCL plans to add to its capacity in the coming years.
iii) Threats / Weaknesses:
The management of the Company perceives the following as threats / risks / weaknesses in the construction of hydropower projects:
Time in clearances - Stringent norms and cumbersome procedures for getting environmental and forest clearances leads to delays in obtaining clearances for projects, which may affect the capacity addition programs, even though state governments are trying their best to adopt to single window clearance system, to mitigate this threat but the same is yet to be implemented.
Land acquisition - The process of land acquisition for infrastructure work as well as for the projects components including submergence is quite cumbersome and time consuming. The single window clearance system will probably also mitigate this threat to a great extent.
Geological uncertainties - In spite of extensive surveys and investigations, various components of hydro projects such as head race tunnels, power houses, pressure shafts and surge shafts face geological surprises which result in delays and increase in project cost.
Inter-state and International disputes - As water is a state subject in India, there are often inter-state river disputes due to which many hydro projects may get delayed or abandoned. Certain projects are situated in border areas which are affected by Indias international relations.
Natural calamities - As most of the hydro projects are located in hilly terrains, natural calamities like land slides, hill slope collapses and road blocks, floods and cloud bursts cause severe setbacks in construction schedules.
Unexpected complexities - Unexpected complexities and delays in clearances / execution due to reasons beyond ones control may cause variation / escalations in estimates.
iv) Risks and Concerns
Hydro power schemes are capital intensive, have long gestation period and require huge investments which are major constraints in the exploitation of the vast hydro power potential available in the country. Since water is a state subject, state governments are demanding a higher share of free power and other incentives, which lead to higher tariffs.
SEGMENT WISE OR PRODUCT WISE PERFORMANCE
The Company has three divisions namely generation division, contract division and trading division.
Generation Division:
During the financial year 2024-25, total revenue generated from this division is 1,149.71 Lakhs (Previous year 953.72 Lakhs).
The Company owns and operates the following power plants:
I. Hydro Electric Power Projects
i) 9 MW Harangi Hydro Electric Power Plant in the State of Karnataka and
ii) 6 MW Harangi Hydro Electric Power Plant in the State of Karnataka
II. Wind Mills
i) 1.5 MW Wind mill at Hassan District in the State of Karnataka and
ii) 1.5 MW Wind Mill at Chitradurga in the State of Karnataka
Saleable electricity generated from:
Hydro Power Plants: 23.10 million units (previous year 20.81 million units)
Wind Mills: 4.96 million units (previous year 5.17 million units)
The Company also owns and operate 7 MW Ullunkal Hydro Electric Project, through its subsidiary, EDCL Power Projects Limited. The project produced 20.38 million units during the year 2024-25 as compared to 16.54 million units in 2023-24.
The Company also owns and operates 15 MW Karikkayam Hydro Electric Project, through its subsidiary, Ayyappa Hydro Power Limited and produced 42.05 million units during the year 2024-25 as compared to 39.32 million units in 2023-24.
Contract Division
During the year under review, the division has not earned any revenue. (previous year : Nil).
Trading Division
During the year under review, the Company did not indulge in trading activities.
OUTLOOK
Your Companys main focus area is the generation of electricity, infrastructure development by way of contract or own projects & trading of renewable energy products. For further details, kindly refer to the Directors Report.
INTERNAL CONTROL SYSTEM
Companys internal control system have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.
The Internal Auditor carries out internal audit of the Company. The Internal Audit process is designed to review the adequacy of internal control and checks in the system and covers all significant areas of the Companys operations.
The Company has an Audit Committee, the details of which have been provided in the Report on Corporate Governance. The Audit Committee reviews audit reports submitted by the Internal Auditors.
FINANCIAL PERFORMANCE
The net profit / (loss) before tax stood at (5,889.99) Lakhs (previous year profit of (192.35) Lakhs. The detailed performance is given in the Financial Results of the Directors Report.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
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 are given below:
Sl. No. |
Particulars | 2024-25 | 2023-24 | Explanation |
i) |
Debtors Turnover | 1.61 | 0.25 | Decrease in receivable due to impairment. |
ii) |
Inventory Turnover | 20.50 | 17.90 | Not significant. |
iii) |
Interest Coverage Ratio | (0.40) | 0.78 | Due to increase in Turnover |
iv) |
Current Ratio | 1.01 | 1.35 | Decrease in current assets. |
v) |
Debt Equity Ratio | 0.26 | 0.18 | Decrease in equity. |
vi) |
Operating Profit Margin (%) | (5.10) | (11.52) | Due to increase in Turnover |
vii) |
Net Profit Margin (%) | 6.18 | (0.19) | Decrease in earnings. |
viii) |
Return on Net worth (%) | (77.95) | (1.09) | Due to exceptional items recognized during the year (refer note No.36 to standalone financial statements) |
HUMAN RESOURCES
As on March 31, 2025, there were 24 permanent employees on the rolls of the Company. The Company regards its human resources as the most valuable assets. The Company strives to provide a fair, empowered and merit-based workplace with scope for continuous learning, enriching competencies among employees and accelerating corporate growth. During the year under review, the Company did not witness any kind of adverse development on the human resource front. The Company has always aimed towards attracting and retaining talent in its various functions.
The Company also took initiatives to manage the human resource by including a regularized recruitment process, a fair and unbiased performance appraisal system along with an in-built feedback system.
CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis Report may be "forward looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important facts that could make a difference to the Companys operations include economic conditions affecting global and domestic demand-supply, raw-material costs and availability, changes in Government regulations, tax regimes, economic developments in India and other factors such as litigation and industrial relations, the Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent developments, information or events. The Company also does not assume any responsibility on the accuracy of statements relating to industry structure and development, as it has been sourced from various available websites.
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