Epic Energy Ltd Management Discussions.

Industry Structure and Developments Energy Overview

India has an installed power generating capacity of 3,30,273.65 MW (as on 30.6.2017) of which the total thermal power stations share is 2,20,575.88 MW (66.79%). Total installed power generating capacity is increased by 25,512.90 MW than last year and also thermal power stations share is increased by 8720.48 MW.

Total Installed Capacityi

Sector MW %age
State Sector 103868.27 31.45
Central Sector 81622.25 24.71
Private Sector 144783.13 43.84
Total 330273.65 100.00
Fuel MW
Coal 194552.88
Total Thermal Gas 25185,38
Diesel 837.63
Total Thermal 220575.88
Hydro (Renewable) 44614.42
Nuclear 6780.00
RES**(MNRE) 58303.35
Total 330273.65

**Renewable Energy Sources(RES) include SHP, BG, BP, U&I and Wind Energy SHP= Small Hydro Project ,BG= Biomass Gasifier ,BP= Biomass Power,

U & I=Urban & Industrial Waste Power, RES=Renewable Energy Sources http://www.cea.nic.in/reports/monthly/instaNedcapacity/2017/instaNed_capacity-06.pdf

Power Sector in India

Power is one of the most critical components of infrastructure crucial for the economic growth and welfare of nations. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy.

Indias power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

2 India ranks third among 40 countries in EYs Renewable Energy Country Attractiveness Index , on back of strong focus by the government on promoting renewable energy and implementation of projects in a time bound manner.

• With Production of 1278.91 TWh in 2015, India was the 3rd largest producer and 4th largest consumer of electricity in the world,^with the installed power capacity 326.84 GW by March 2017. The country also has the 5 largest capacity in the world.

• The Government targets capacity addition of 88.5 GW under the 12five year plan (2012-17) and around 100 GW under the 13th five year plan (2017-22)

• Investments around USD 250 billion are planned for the power sector during the 12five year plan.

• In June 2017 the government announced intentions to set up an asset reconstruction company for handling the stressed assets in power sector.

Robust growth in Renewable:

• Wind Energy is estimated to contribute 60 GW, followed by solar power at 100 GW by Favorable Policy Environment:

• 100% FDI is allowed under the automatic route in the power segment and renewable energy.

Indian Power Sector: Market with enormous growth Potential

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of Indias focus on attaining Power for all has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower).

The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BUs higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 per cent and 18 per cent for conventional energy.

The Government has added 8.5 GW of conventional generation capacity during the April 2016- January 2017 period. Under the 12th Five Year Plan, the Government has added 93.5 GW of power generation capacity, thereby surpassing its target of 88.5 GW during the period.

Investment Scenario

Around 293 global and domestic companies have committed to generate 266 GW of solar, wind, mini-hydel and biomass-based power in India over the next 5-10 years. The initiative would entail an investment of about US$ 310-350 billion.

Between April 2000 and December 2016, the industry attracted US$ 11.4 billion in Foreign Direct Investment (FDI).

Government Initiatives

The Government of India has identified power sector as a key sector of focus so as to promote sustained industrial growth. Some initiatives by the Government of India to boost the Indian power sector:

• The Union Cabinet, Government of India has given its ex-post facto approval for signing of a Memorandum of Understanding (MoU) on Renewable Energy between India and Portugal, which will help strengthen the bilateral cooperation between the two countries.

• The Ministry of New and Renewable Energy plans to introduce a fixed-cost component to the tariff for electricity generated from renewable energy sources like solar or wind, in a bid to promote a green economy.

• The Union Cabinet has approved the ratification of International Solar Alliances (ISA) framework agreement by India, which will provide India a platform to showcase its solar programmes, and put it in a leadership role in climate and renewable energy issues globally.

• The Government of India plans to introduce a scheme to encourage setting up of biomass plants across the country, which will generate electricity and also help dispose of agricultural waste in a carbon-neutral manner to help tackle growing pollution.

• The Government of India plans to rationalise various categories of electricity consumers across states, which is expected to bring transparency and efficiency in billing, improve tariff collection and improve the health of distribution companies in the country.

• The Government of India plans to set up a US$ 400 million fund, sourced from The World Bank, which would be used to protect renewable energy producers from payment delays by power distribution firms, while at the same time protecting the distribution firms from the shrinking market for conventional grid-connected power, caused by wider adoption of roof-top solar power generation.

• The Ministry of Power plans to set up two funds of US$ 1 billion each, which would give investment support for stressed power assets and renewable energy projects in the country.

• Minister of State with Independent Charge for Power, Coal, New and Renewable Energy and Mines, launched an online portal for star rating of mines, which will bring all mines to adopt sustainable practices, and thereby ensure compliance of environmental protection and social responsibility by the mining sector.

• The Ministry of New and Renewable Energy (MNRE), which provides 30 per cent subsidy to most solar powered items such as solar lamps and solar heating systems, has further extended its subsidy scheme to solar-powered refrigeration units with a view to boost the use of solar-powered cold storages.

• Minister of State with Independent Charge for Power, Coal, New and Renewable Energy and Mines, inaugurated the Tarang (Transmission App for Real Time Monitoring & Growth) mobile app and web portal for electronic bidding for transmission projects, which is expected to enhance ease, accountability, transparency, and boost investor confidence in power transmission sector.

• The Ministry of Shipping plans to install 160.64 MW of solar and wind based power systems at all the major ports across the country by 2017, thereby promoting the use of renewable energy sources and giving a fillip to governments Green Port Initiative.

• The Government of India and the Government of the United Kingdom have signed an agreement to work together in the fields of Solar Energy and Nano Material Research, which is expected to yield high quality and high impact research outputs having industrial relevance, targeted towards addressing societal needs.

• The Ministry of Petroleum and Natural Gas is seeking to enhance Indias crude oil refining capacity through 2040 by setting up a high-level panel, which will work towards aligning Indias energy portfolio with changing trends and transition towards cleaner sources of energy generation.

• The Government of India plans to start as many as 10,000 solar, wind and biomass power projects in next five years, with an average capacity of 50 kilowatt per project, thereby adding 500 megawatt to the total installed capacity.

• Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy outlined Government of Indias goal to provide electricity to every home in India by 2020, while also focusing on ensuring the cost of power is affordable to everyone.

• Government of India has asked states to prepare action plans with year-wise targets to introduce renewable energy technologies and install solar rooftop panels so that the states complement governments works to achieve 175 GW of renewable power by 2022.

• The Government of India announced a massive renewable power production target of 175.000 MW by 2022; this comprises generation of 100,000 MW from solar power, 60.000 MW from wind energy, 10,000 MW from biomass, and 5,000 MW from small hydro power projects.

The Road Ahead

The Indian power sector has an investment potential of Rs 15 trillion (US$ 225 billion) in the next 4-5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment.

The governments immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24x7 electricity for residential, industrial, commercial and agriculture use.

The Government of India is taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc., in order to achieve Indias ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022. The government has also sought to restart the stalled hydro power projects and increase the wind energy production target to 60 GW by 2022 from the current 20 GW.

Renewable Energy potential and growth in India

Renewable energy has been an important component of Indias energy planning. The importance of renewable energy sources in the transition to a sustainable energy base was recognized in the early 1970s. Modern renewable energy is being used increasingly in four distinct markets: power generation, heating and cooling, transport, and rural/off grid energy services. The Ministry of New and Renewable Energy (MNRE) in India has been facilitating the implementation of broad spectrum programs including harnessing renewable power, renewable energy for rural areas for lighting, cooking and motive power, use of renewable energy in urban, industrial and commercial applications and development of alternate fuels and applications. Renewable energy plays an important role in the long term energy supply security, diversification of energy mix, energy access, environmental security and sustainability. Renewable energy is bound to play an increasing role in future energy systems.

India is making giant leaps in the renewable energy sector. In 2016-17 financial year, renewable power projects output rose by 26% , which makes Indias renewable energy sector as the fastest growing in the world. Indian is expected to be the third biggest solar market from 2018 onwards after China and United States of America. Being the 5th largest power generation portfolio in the world, Indias renewable energy contribution stands at 44.8 GW, which includes 27.4 GW of wind power and 8.06 GW of solar power installed capacity. Our target for renewable energy generation is 175 gigawatts by 2022. Of the target capacity, 100 GW would be from solar power, 60 GW from wind, 10 GW from biomass and 5 GW from small hydro power.

Solar Energy

5 Indias solar energy capacity has expanded by a record 5,525.98 MW in 2016-17 , according to the latest figures provided by the ministry of new and renewable energy (MNRE).

In comparison, India had added 3,010 MW of solar capacity in 2015-16, which shows that growth nearly doubled over the past year. Cumulative solar capacity currently stands at 12,288.83 MW, against 6,762.85 MW at the end of March 2016. By the end of next year, our cumulative target will be 20,000 MW as per MNRE. It will add another 7,750 MW in 2017-18. Among the states, Andhra Pradesh added the maximum solar capacity in 2016-17 (1,294.26 MW), followed by Karnataka (882.38 MW) and Telangana (759.13 MW). Other major additions were in Rajasthan (543 MW), Tamil Nadu (630.01 MW), Punjab (388 MW), Uttar Pradesh (193.24 MW) and Uttarakhand (192.35 MW).

Solar Market in India

6 With 8.8 GW of projected capacity addition (growth of 76 per cent over 2016) in 2017 , India is set to become the third largest solar PV market, overtaking Japan. By the end of 2017, Indias solar power capacity is expected to touch 18.7 GW, which will be about five per cent of global solar capacity, growing by 89 per cent over last year. As of March 2017, India had installed 12.2 GW of utility scale solar capacity. "Indian solar market has grown by an average 72 per cent in the last three years and is now worth about 8-9 GW per annum.

International Solar Market

Total global solar PV installed capacity surpassed 300 GW by the end of 20167. 77 GW was added in 2016, a year-on-year growth rate of 34%. China led with 34.5 GW, followed by the USA (14.5 GW), Japan (10.2 GW) and India (5 GW) in fourth place.

In 2017, about 79 GW capacity is expected to be added globally, registering marginal growth over 2016. The stagnation is mainly due to policy pullbacks across major markets including China, Japan, the USA and most parts of Europe.

Key trends shaping the global solar industry

Asia continues to dominate the solar industry while Europe continues to fall in rankings. Auctions are gaining universal acceptance - number of countries using auctions to allocate solar capacity has increased from 14 in 2014 to 22 in 2016. Solar module prices continue to fall faster than most experts had anticipated. Prices in India fell to 32 0/Wp in Q1 2017 (- 29% over last year). Such a rapid fall has made solar PV the cheapest new source of power in most countries and provided demand boost in emerging economies. Developed countries are slowly shifting towards utility scale projects whereas in emerging markets, governments are trying to encourage more rooftop solar growth.

8 Wind operational capacity in India till June 2017 is 32509 MW. India had a record year and was the fourth largest market globally both in terms of cumulative capacity and annual additions last year. The total renewable energy capacity installed in the country crossed the 50 GW mark at the end of 2016. Among renewable, wind power accounted for over 57 percent of the installed capacity. Indias wind power installations accounted for a 6.6 percent share of the global market in 2016. Wind power capacity accounted for over 9.1 percent of total domestic installed capacity . In February 2015, India committed to installing 60 GW of wind and 100 GW of solar by 2022. Further, India made a commitment at COP21 to raise the share of non-fossil-fuel power capacity in the countrys power mix to 40% by 20309.

Wind Market in 2016

2016 was a record breaking year for wind power in India. During 2016 wind power development grew at an unprecedented pace and the majority of wind farms have come up in the States of Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh and Rajasthan.

Biomass

Biomass based power generation has been increasing in India with the installation of megawatt scale plants processing a variety of biomass residues such as shells, husks, de-oiled cakes, and wood. According to the MNRE, 500 million tonnes (MT) of agricultural and agro industrial residues are generated annually in the country, of which about 120-150 MT per year could be surplus for power generation. 7 Biomass power generation from agriculture and agro -industrial residues is estimated at about 17 000 MW.

LED Lighting Market in India

LED lights are becoming the major source of energy efficient lighting in India. Though, prices of LED lights are higher than incandescent or CFL bulbs, but LED bulbs are becoming the part of mainstream of the market owing to government initiatives and increasing public awareness about benefits of using LED lights.

Rising government initiatives, increasing awareness among customers regarding lower power consumption of LED lighting products, and innovative product offerings to drive LED lighting sales through 2021.

Being the second most populous country and fifth major electricity consumer11, India has been witnessing widening electricity demand-supply gap. Consequently, usage of energy efficient products such as LED lighting products is expected to grow in the coming years. Moreover, rising government support and introduction of innovative LED lighting products by manufacturers has resulted in reduction in prices of these products, thereby offering consumers with more options to choose from, according to their needs and preferences.

12 The LED lighting market in India is projected to register a CAGR of over 26% , during 20172023, on account of rising personal disposable income, growing government initiatives encouraging use of LED lights and increasing focus on smart city projects. The Government of India launched an initiative in 2016 to replace conventional lights by LED lights by deploying 770 million bulbs and 35 million street lights by 2019. Favorable government initiatives and policies such as state specific and national level programs that offer LED lighting products at subsidized rates is contributing in a huge way towards boosting LED adoption in the country. Additionally, with increasing consumer awareness, demand for LED lights from the residential as well as commercial sectors in the country is growing at a fast pace. Rising adoption of LED lighting in the residential sector can be attributed to low power consumption and long product lifecycle of these lighting solutions. Outdoor lighting applications garnered a revenue share of over 60% in India LED lighting market in 2015 and the trend is expected to continue through 2021. The adoption of LED lighting products has been recorded highest from Southern and Northern states due to higher literacy rate, rising disposable income levels and rising awareness about the benefits of LED lighting products. Rising urban population of the country, which stood at 31% of the total population in 2011, and rose to over 33% in 2015, is expected to further drive demand for LED lighting in India during next five years.

Smart LED Streetlights market in India

The "smart" street lighting market in India is expected to grow at an annual rate of 42.2 per cent to reach USD 1,868.9 million by 2022 as adoption of LED and solar powered systems rises in the country, As a result, a major share of revenues is expected to be realised from urban zones, which are expected to aggregate USD 1,304.8 million in smart street-lighting spending by CY2022. Network components is expected to be about USD 674.6 million, while connectivity technologies and lighting lamps are estimated to touch USD 412.6 million and USD 127.3 million, respectively. Smart cities and smart homes are expected to drive the smart street-lighting market and also ensure the penetration of cloud-based smart street-lighting in the near future. Due to long gestation RoI estimates, more and more smart street-lighting projects are likely to be implemented via the PPP model.

Potential Drivers to boost LED lighting

14 Indian LED lighting market will grow with a CAGR of 42% in next five years. Street lighting application accounts for majority of market revenues in the Indian LED lighting market.

It is the initiatives taken by government of India that is bringing in revolution in the lighting industry. GOI is spending on energy efficiency through streetlights projects. The street lighting segment has highest growth as per ESCO model, which enables energy efficiency savings in India. There is immense scope for the growth of infrastructure wherein the government is taking initiative in building housing societies, connecting cities by building more highways, improving and extending the metro services along with better facilities from the municipalities. This has enabled mass consumption of LED through awareness.

Global LED Market

15 The global LED lighting market accounted for USD 26.09 billion in 2016 and is expected to reach USD 54.28 Billion by 2022, growing at a CAGR of around 13% between 2017 and 2022. A couple of years ago, application of LED was limited to certain specific lighting needs and had not entered the mainstream general lighting applications. Entrance of LED in applications such as general lightings has given a strong thrust to the market. A variety of technologies are implemented in manufacturing of LED products. Chips and components are the basic materials assembled to manufacture the final lamp product. Companies dealing in this market are strategically diverse as they deal with different steps of the LED value chain.

The Global LED market is in its developing phase. The rise in the usage of LEDs16 in different sectors such as automobiles and mobile phones backlighting applications has given the necessary boost to the LED markets growth. In the prevailing business scenario, environmental awareness is growing amongst the people. Increasing green construction is one of the major factors for the growth of the LED market in various regions. Moreover, the growing display market and the reducing costs of the LED lamps are the contributing factors towards the growth of the LED market. On the other hand, the high investment cost in the replacement of the conventional lighting would hinder the pace of the market.

With increasing environmental awareness, the adoption of LEDs is expected to increase in buildings. General lighting industry would witness tremendous growth in demand for LED lights in coming years. Most of the lighting companies have started manufacturing LED lights and certain Chinese manufacturers are entering the market with cheaper LED products. Unlike fluorescent lamps, LEDs do not contain mercury, which is a hazardous element. However, LED does contain some poisonous substances such as gallium arsenide, but the quantity of this substance is very small and thus, it can be considered as a greener alternative to fluorescent lamps.

COMPANY STRATEGY, BUSINESS FOCUS and ACQUISITIONS

Demand Side Management - Energy Efficiency

Your company/has clearly defined Energy Efficiency, or Demand Side Management, as one of its main business segments.

Energy Saving Equipment

Over the last few years, your company has developed core competencies in the Technology Development, technology assimilation and commercial exploitation of Energy Saving Equipment. The companys products have consistently shown an Energy Savings performance of more than thirty percent in lighting loads and between ten and eighteen percent in mixed loads, which is considered to be very satisfactory. Pictorial depictions and technical specifications are available on your companys website www.epicenergy.biz.

Remote Energy Management Systems (REMS)

Your company constantly strives to improve its technological edge over its competition by offering advanced features on its equipment. Your company offers equipment with. GSM and GPRS capabilities which make Remote Energy Management simple and effective to use. This GSM and GPRS capability has given a cutting edge to the Energy Efficiency efforts of your companys customers, making it one of a select handful of companies capable of offering this in India.

Your company is shortlisted as an approved ESCO (Energy Services Company) by the BEE (www.beeindia.nic.in). In 2017, your company was also granted Grade 3 by CRISIL indicating "Good" ability to deliver and execute Energy Saving Project.

Renewable Energy - Solar Cities

Your company is also recognized by the MNRE to act as Consultants for preparing Master Plans and implementation thereof under the Solar Cities Program of the MNRE.

LED Luminaries Retrofitting

Your company has entered the market for Replacement of existing streetlights with LED Luminaries and replacement of existing streetlight switching points with GPRS /GSM based switching points in various municipalities on Pay from Savings (ESCO) basis and with recovery and maintenance period of maximum 10 years. It has made a successful beginning with one Nagar Palika in the State of Gujarat, where it replaced 6,200 conventional luminaries with LED Luminaries on a ten year ESCO basis. Your company expects to implement more such projects in the State of Gujarat and other States in India.

Energy Audits

Your company has successfully implemented various extremely prestigious Audit Assignments granted by Government Agencies. Your company expects to continue to play a major role in this segment also.

FINANCIAL CONDITION

1. Share Capital

At present we have only one class of Shares: Equity shares of par value Rs. 10/- each. Our authorized capital is Rs. Twelve Crores divided into One Crore Twenty Lakh shares of Rs. 10/- each.

During the year under report, the Company issued 5,00,000 Equity Shares on a preferential allotment basis at a premium of Rs 5/- per Equity Share. The proceeds of the issue were utilized to part finance the LED ESCO project implemented by the Company in one Nagar Palika in the State of Gujarat.

2. Reserves and Surplus

a. General Reserves

There was no change in the General Reserves during the year.

b. Share Premium Account

During the year under report, there was an addition of Rs. 25 Lakh in the Share Premium of the Company, being the premium of Rs. 5/- per share received on 5,00,000 shares issued during the year on preferential basis.

c. Profit and Loss Account

The company reported an Operating loss of Rs. (6,419,648) (previous year Operation profit of Rs.1,482,147) before Extra-Ordinary and non-recurring items. After providing for non-recurring items, the loss after Tax was Rs. (29,378,295). The book value per share as on 31st March, 2017, was Rs.11.50 compared to Rs.24.55 as of the previous year end.

d. Special Reserve

During the year under report, the Company conducted an impairment study on its ESCO assets. Changes in technology and advances in the lighting technology field had made a substantial part of the ESCO assets technologically obsolete. Based on the impairment study, the Company wrote down its ESCO Fixed Assets to the extent of Rs 600 lacs by utilizing the Special Reserve created for this purpose. As such, the Reserves of the Company reduced by Rs. 600 lacs.

3. Fixed Assets

Your company added capital assets of Rs 164.55 lacs during the year under review, on account of the LED ESCO project implemented in one Nagar Palika in Gujarat. Capital work-in-progress at the end of the year was Rs. NIL.

4. Inventories

The inventories of finished goods comprise of Epic Power Saver 1090 and Solar Products assembled/purchased by the company. The inventories of stores and spare parts are the maintenance spares which the company keeps to ensure uninterrupted functioning of its equipment.

5. Sundry Debtors

Sundry Debtors are the receivables arising mainly from the Energy Saving Business of the company. During the year, the Company made a provision of Rs. 12,921,647for Bad and Doubtful Debts, based on the Companys assessment of the recoverability of such debts.

E. RESULTS OF OPERATIONS

1. Income

Your companys main income is from the sales of Energy Efficiency Products & installation of such equipment on BOOT basis. The sales of Solar Products amounted to Rs. 2,627,488 (Previous Year Rs. 31,44,112/-)

2. Expenditure

Purchases represent the cost of inputs for assembling the Energy Products of your company. Maintenance Costs represent cost of spares consumed to keep the equipment & solar products in running condition. Employee / Manpower Expenses consist mainly of outsourcing Expenses, since the Company outsources all of its production and maintenance functions.

3. Net Profit

The company reported a Net Loss after tax of Rs. 2,93,78,295 (Previous Year Net loss of Rs. 2,82,74,853).

4. Provision for Tax

The provision for tax of Rs. NIL (Previous Year Rs. 1,38,000) has been made on the basis of extant Rules and Regulations and the reported Loss for the year.

OPPORTUNITIES AND THREATS

We have identified Energy Efficiency on the Demand Side as one of the main focus areas of our business. Substantial progress has been made in the last few years by implementing prestigious projects with marquee customers to establish the company as a leading implementer of Energy Efficiency Solutions.

Technological Evolution which gives the cutting edge advantage to your companys equipment has been a key factor of your companys R & D efforts. The company offers equipment with GSM and GPRS capabilities.

Solar Products are also expected to play a major role in providing power to energy deficient areas where sunshine is plentiful. In the Institutional Markets, your company is focused on Solar Street Lights, Solar Hoarding Lights, Solar Road Studs, whereas in the Commercial Segment, the focus is on the Home Products Market and the Solar Retail Market. Your company has a range of Solar products for Home Use.

Availability and Prices of Photo Voltaic Solar Panels largely depend on the supply and price of Silicon. Shortage of Silicon affects the cost and availability of Solar Panels.

The technology used in Energy Saving Equipment is continually evolving. Obsolescence is a major threat. Your company is constantly researching and studying the application of various technologies around the world to protect its business interests.

Competition is limited to the few players who have the technology to assemble, test and maintain the type of products dealt with by your company.

INTERNAL CONTROLS AND THEIR ADEQUACY

Your company has in place adequate systems of internal control procedures covering all financial and operating functions. The Audit Committee periodically reviews the adequacy of these procedures. Your company renewed its ISO 9001:2008 certification during the year and is committed to maintaining the highest standards of quality control at all levels of operations.

RISK CONCERNS AND RISK MANAGEMENT

The Risk Management Function is overseen by the Audit Committee. Risk Management Policies are designed after discussions with various constituents and experts. The following Risk Concerns have been identified and are being dealt with as explained against each concern:

a. Technology Risk:

The Technology used in Energy Saving Devices is constantly evolving. The introduction of newer and better techniques could render our products obsolete. To address this risk, your company is constantly researching and studying the application of various technologies across the world and has a separate team of people upgrading the technologies that we use. Technological Evolution which gives the cutting edge advantage to your companys equipment has been a key factor of your companys R&D efforts.

b. Concentration Risk:

Your company has a reasonable spread in terms of the various segments of Demand Side Management. The company also has its business spread over a few States in India. None of the customers have more than a ten percent share in the revenues of the company.

c. Human Resources:

Your company depends to a large extent on trained engineers, both electronic and electrical. Whilst availability of manpower is not a concern, training and retention is a challenge. Your company has instituted various Employee T raining and Retention schemes to mitigate this Risk.

d. General Risk

Your company has adequate insurance policies in place for its equipment and inventories. Medical and Accident Insurance Policies for its employees have also been taken where required.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forward looking" statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions, affecting demand, supply and price conditions in the markets in which the company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.