GE T&D India Ltd Management Discussions

Management Discussion and Analysis

GLOBAL ECONOMY

Overview

During the year 2023, the global economy presented a resilient scenario despite navigating unpredictable headwinds. While volatility in commodity prices triggered runaway inflation in both advanced and emerging economies worldwide, persistent geopolitical conflicts between Ukraine and Russia and more recently in the Middle East, further exacerbated the circumstances. Additionally, central banks resorted to calibrated interest rate hikes, which affected economic activity to a certain extent. The global growth rate declined from 3.5% in 2022 to 3.1% in 2023.

However, certain economies sustained through the headwinds. While advanced economies such as the US surpassed pre-pandemic growth, emerging market and developing economies such as India experienced significant growth and attracted foreign capital inflows. According to IMF, markets responded positively to the easing of tight monetary policies. With relatively improved financial conditions, certain low-income nations and frontier economies reclaimed their positions in the market.

Outlook

The global growth is estimated at 3.1 % in 2024, followed by a slight rise to 3.2 % in 2025. Amidst easing of supply chains disruptions and restrictive monetary policies, inflation is declining faster than expected across most regions. Global headline inflation is also anticipated to be 5.8% in 2025.

For advanced economies, growth is projected to decrease slightly from 1.6% in 2023 to 1.5 % in 2024 before rising to 1.8% in 2025. World trade is estimated to report growth of 3.3% in 2024 and 3.6% in 2025, however, the projections are below the historical average of 4.9%.

High frequency economic indicators suggest a positive momentum for most major economies. Going forward, it is expected that declining inflation and greater government spending will alleviate fiscal pressures and attract investments to support future growth.

INDIAN ECONOMY

Overview

Despite global headwinds, the Indian economy continues to move on a promising trajectory. In 2023-24, Indias GDP touched 7.6% with Current Account Deficit (CAD) at 1.9% of GDP. Strong domestic demand coupled with continuous government spending proved to be the primary drivers of GDP growth in the first half of the fiscal year. On the other hand, rising exports, substantial increase in private consumption, augmenting infrastructure development, created a positive environment for attracting investors. This further contributed to the growth of the Indian economy.

As one of the fastest growing major economies in the world, India has fortified its position as a lucrative investment destination. Moreover, the governments introduction of flagship programmes, such as ‘Make in India, ‘Aatmanirbhar Bharat, Smart City Mission, Digital India and the PLI scheme, has propelled growth across several sectors.

With the governments encouragement towards electric vehicle (EV) adoption, railway electrification and a dedicated focus on achieving energy independence by reducing imports, Indias power sector is expected to gain significant momentum. It is anticipated that governmental initiative will increase the manufacturing industrys contribution towards Indias GDP. Furthermore, Indias ambitious target of achieving 500 GW renewable capacity by 2030, facilitating the transition from fossil fuels, is expected to bolster industry growth. Abundant solar and wind resources position India as an attractive destination for renewable energy investment.

Outlook

Several high-performance indicators point towards sustained growth in the Indian economy. Along with the Governments increased capex deployment, coupled with strong tax revenue collections, increasing domestic firm demand and accelerating growth of the manufacturing, construction and food industry, India is expected to maintain robust economic activity. Moreover, stable repo rates, government bond yields and healthy foreign exchange reserves indicate towards macroeconomic stability in the near-term.

INDUSTRY OVERVIEW

Key Drivers for increasing Power Demand

Increase in Per Capita Power Consumption: Indias per capita electricity consumption has risen steadily in recent years. The gross electricity consumption per capita in FY2023 was 1,327 kWh indicating improved access to electricity across the country. One of the reasons for this growth is electrification of villages and households across the country.

Industrial and service (which also includes agriculture and forestry) sectors are the largest users of electricity in India, accounting for 74% of total consumption together. The residential sector is the third- largest consumer while the rest is used for rail transport.

Indias future electricity consumption will be driven by growing electricity access, ownership of appliances and economic growth. The countrys per capita electricity consumption is likely to double by 2030.

Electric Vehicles (EV) Sales Driving a Green Transition: India continues to see a surge in EV sales, with the market registering a significant increase, surpassing 1.7 million units in the fiscal year 2024. Indias passenger vehicle (PV) sales increased by 10% year over year in 2023-24, while EV sales more than doubled, accounting for 2 % of total PV sales.

Indias EV sales are expected to rise by 66 % in 2024, and its market share in the PV segment is projected to double from 2 % to 4 % in 2024. By 2030, EVs are expected to represent nearly one-third of Indias PV market, signalling a robust long-term growth trajectory.

Data Centre Energy Needs: The data centre market in India is poised for significant growth, driven by increasing digitalization, cloud adoption, and data localization requirements. This growth will lead to a substantial increase in power requirements, making energy management a critical factor for data centre operators. The focus on renewable energy and energy efficiency, supported by government policies, will play a vital role in meeting the future power demands of Indias burgeoning data centre industry. As the sector continues to expand, the integration of sustainable energy practices will be essential to ensure the environmental and economic sustainability of data centre operations in India. The rapid growth of data centres will significantly increase energy demand. According to industry estimates, the energy consumption of data centres in India is expected to grow by 20-25% annually over the next few years. The construction of large-scale data centres with capacities ranging from several megawatts (MW) to over 100 MW will drive a substantial increase in power consumption.

Saubhagya scheme- Demand Driver

As India progresses towards achieving 100% village electrification, the Government ensures every household in India has access to electricity. It was observed that a lack of awareness coupled with substantial costs for new connections and logistical challenges, hindered household electrification. Addressing these concerns, the Government of India systematically designed and launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana - Saubhagya in October FY18. The Saubhagya scheme ensures provision of electricity connectivity to all households that were previously unelectrified. The scheme stands as one of the worlds largest universal electrification initiatives, achieved through collaborative efforts between the central and state governments. It operates alongside the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY).

Boost to manufacturing - Demand Driver

The governments relentless encouragement to pursue renewable energy has increased the demand for domestic manufacturing and clean energy technology, including solar panels, wind turbines and other equipment. Moreover, companies receiving incentives to set up manufacturing facilities in India ensure the creation of a robust domestic supply chain and reduced reliance on foreign imports. Indias surging demand for power will facilitate the expansion of the power sector, generating opportunities for domestic manufacturers and developers building new power plants and grids.

Make in India policy (MII) - Investment Boosting

The Make in India initiative aims to foster development, manufacturing, and assembly of products within the countrys borders. It also further incentivises investments dedicated to manufacturing. The policy ensured the creation of a conducive environment for investments, developing a modern and efficient infrastructure and unlocking new sectors for foreign capital. The initiative focused on twenty-five economic sectors to stimulate job creation and skill enhancement, facilitating the transformation of India into a global design and manufacturing export hub.

National Green Hydrogen Mission

Launched in January 2024, Indias National Green Hydrogen Mission aims to make the country a leading producer of clean energy. With an initial investment of Rs.19744 Cr, the mission emphasizes on producing a minimum of 5 MMT of green hydrogen annually by FY31. The initiative will further require an additional 125GW of renewable energy capacity to power the process.

The mission aims to reduce dependence on fossil fuels, facilitating an annual reduction of 50 MT of greenhouse gas emissions. It also has the potential to attract significant investments, generate employment and create export opportunities for green hydrogen.

No environment clearance required for solar projects- Ease of Business

According to the Environment Impact Assessment (EIA) notification of 2006, the Ministry of Environment, Forest and Climate Change of the Government of India has announced that environmental clearance will no longer be necessary for solar PV (photovoltaic) power, solar thermal power projects and solar parks. This initiative streamlines the process and encourages the growth of solar energy infrastructure across the country. The decision also reflects the Governments commitment to promoting renewable energy sources and reducing bureaucratic hurdles for sustainable development initiatives.

ENERGY TRANSITION AND DRIVERS FOR POWER TRANSMISSION SECTOR

Transmission systems play a crucial role in transmitting power from various generation sources to the distribution network. The requirement for a robust transmission system remains constant regardless of the type of generation being added to the system, whether its renewable, thermal, hydro, nuclear, etc. India holds a leading position in the energy market as the worlds third-largest electricity producer, with a total installed power generating capacity of approximately 442 GW as of March 31, 2024.

Government Support: The Government of India has been proactive in enhancing the power transmission sector through substantial investments and policy measures. The launch of schemes such as the Green Energy Corridor aims to facilitate the integration of renewable energy sources into the national grid. This initiative involves the construction of new transmission lines and substations to handle the intermittent nature of renewable energy, thus ensuring a stable power supply.

Renewable Energy Integration: Indias commitment to expanding its renewable energy capacity is a major factor influencing the transmission sector. The government has set an ambitious target of achieving 500 GW of renewable energy capacity by 2030. A significant strides are expected in this direction, necessitating upgrades and expansions in transmission infrastructure to handle the increased load from renewable sources like solar and wind. To harness, Offshore Wind at Gujarat and the southern coastal states, the Government of India is committed to aligning schemes and funds in the coming year.

Green Energy Corridor

The Green Energy Corridor (GEC) has proven to be revolutionary for Indias renewable energy landscape. It is a comprehensive infrastructure project designed to address the crucial problem of integrating large-scale renewable energy sources such as solar and wind into the national grid. The GEC will be establish a dedicated transmission network for renewable energy. It comprises of two key components:

Inter-State Transmission System (ISTS): The network consists of high- voltage transmission lines and substations connecting renewable energy generation zones in one state to the national grid and load centres in other states.

Intra-State Transmission System (InSTS): The network focuses on strengthening the transmission infrastructure within states that are rich in renewable resources. It ensures efficient power evacuation from renewable energy plants to the nearest substations within the state grid.

Phase-I (2015-2020): This phase focused on eight states with high renewable energy potential, Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu. It involved establishing over 3200 kilometres of inter-state transmission lines and building substations with a total capacity of 17,000 MVA. Your Organisation contributed substantially in multiple projects and substations with their product and service expertise.

Phase-II (Ongoing): This phase covers seven states, Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu and Uttar Pradesh. The project aims to generate 20 GW of renewable energy. GEC Phase II involves constructing approximately 10,750 kilometres of new transmission lines and establishing substations with a capacity of 27.5 GVA.

Future phases of GEC : Government of India is committed to invest in future GEC to achieve the target of 500GW of renewable evacuation by 2030. The continuous development of the GEC HVAC/HVDC infrastructure will be imperative. As per CEA/MoP, the ISTS network is anticipated to gain around 4,33,500 MVA of transformation capacity and 51,000 ckm of transmission lines at a cost of roughly Rs. 2,44,000 Cr. Several high capacity 765 kV and 400 kV EHVAC transmission lines as well as ?800 kV & ?350 kV HVDC lines are included in these estimated transmission schemes.

Reforms-based and Result-linked Distribution Sector (RDSS) : The Indian government launched the Revamped Distribution Sector Scheme (RDSS) in July, FY22, aiming to transform the countrys electricity distribution sector. Backed by a total investment of Rs.3.05 lakh crores outlay over 5 years, the scheme seeks to address the persistent issues of the power distribution companies (DISCOMs), ultimately benefitting consumers in the long run.

The RDSS emphasizes upon improving operational efficiency and augmenting financial health of the DISCOMs. The scheme will deliver a more reliable, affordable and high-quality power supply to the consumers in India. This approach involves considering two key challenges, Aggregate Technical and Commercial (AT&C) losses and the Average Cost of Supply (ACS)-Average Revenue Realised (ARR) gap. AT&C losses refer to the difference between the electricity purchased by DISCOMs and the amount invoiced to the consumers. These losses can be technical, arising from inefficiencies in transmission or distribution, or commercial such as theft, meter tampering or billing issues. The RDSS aims to bring the nationwide loss down to a level of 12-15% by FY25.

Statistics reveal that the scheme is providing positive results. The DISCOMs have shown progress in cutting down AT&C losses and reducing the ACS-ARR gap within the first year of the implementation of the scheme. Timely subsidy payments from the state governments have also contributed to the progress.

RDSS addresses pending challenges and promotes financial sustainability, subsequently increasing the potential to deliver a more reliable and affordable power supply to the entire country. However, continued commitments from the DISCOMs, state governments and the central government are essential to achieve the ambitious goals set by the RDSS.

In FY 2023-24, multiple RDSS projects materialized on the Metering Infrastructure, Distribution Substations/ Lines augmentations, Distribution Infrastructure Improvements and SCADA / ADMS Projects. . Your Organization Electrification Software business benefits and contributed in the RDSS SACADA/ ADMS packages in FY 2023-24. The IT/OT nature of projects strengthens the reliability and helps in reduction of AT&C losses.

The Digital projects in RDSS continue to generate strong pipeline and market for our businesses for next few years.

State Transmission Asset Management Centres (STAMC):

In the year 2019, Power Grid corporation of India Limited commissioned the National Transmission Asset Management Control centre (NTAMC) for monitoring and controlling assets of more than 200 substations remotely. This project proved to be highly efficient on operational excellence and quick recovery on the ROIs. This project gave birth to STAMC projects in state transmission companies. Remotely operated (monitor & control) substations of State from State and Sub Regional control centers for improved situational awareness and visibility of the system are also helping to reduce downtime, thereby improving the networks reliability. STAMC Projects has led to a paradigm shift in asset management and operational philosophy- A true IT System Integration project in line with Organizations IT/OT digital mission like Deployment of Advance Automation system including SCADA, Automated Fault Analysis System, Remote Access of Protection Relay Data, Video Monitoring System at EHV Substations. This brings Enhanced operator safety and efficiency, Improved grid stability and reliability, Paperless & Unmanned Remotely operated Substations, Enhanced visibility and reduced response time via Analytic tools.

GE T&D India Ltd have contributed to Central and State Transmission utilities of Rajasthan and Odisha with its engineering expertise and technologies. Going forward these projects have proven to be strong market for Grid Electrification Software business.

Substation Modernization in T&D sector

Substations Modernizations by inducting Substation Automation and Control Relay panels is one of the most important contributors. Mandatory implementation of various Substation automation and protection schemes as per latest global standards is helping in integration of multiple technologies. With various renewable power sources and intermittent availability may bring instability to the Grids. Protection schemes play vital role and do the balancing act in grids. Going forward to improve on the capacity utilization factor of the transmission grids, transmission lines need to be flexible on carrying the power as per the availability of wind, solar and the weather conditions. This brings up the need for implementing Dynamic Line Rating(DLR) technology, that is the futuristic part of GRID Modernization drive.

GE T&D India Limited Grid Automation business brings huge value to the organization, with its cutting-edge technologies and niche play especially in transmission sector. The manufacturing facility within India brings value to the countries Make in India (MII) mission. The major dependency of business remains on the Printed Circuit Boards (PCB) and Integrated Chips (IC) components. Post-Covid worldwide PCB shortages were common due to disturbed supply chain of semiconductor and electronic components. GE T&D India Limited Grid Automation business also got impacted on the same and at the same time saw the opportunity to grow via the steady supply chain and availability of components via multiple global sourcing lines.

The governments semiconductor manufacturing policy will strengthen the business, support sustainability, and increase the contribution of Make in India, as many global manufacturers are choosing India as a conducive market for investment.

High Voltage Direct Current-HVDC

The development of transmission systems closely follows the growing demand on electrical energy. With the increasing size and complexity of transmission networks, problems related to load flow, power oscillations and voltage quality can significantly hinder the performance of power systems. However, flexible AC transmission systems (FACTS) and high-voltage direct current (HVDC) technologies can prove to be beneficial to meet the rising power demands.

HVDC enables in developing desired power conditions, transmitting large amounts of power over long distances. HVDC technologies can improve system reliability, offering independent frequency and control, reducing line cost and improving power voltage and stability control.

India has been actively developing and commissioning Extra High Voltage (EHV), High Voltage Direct Current (HVDC) transmission projects to enhance its power transmission capabilities. These projects are crucial for transmitting large amounts of electricity over long distances with minimal losses.

GE T&D India Limited has proven HVDC Technology and its mega project execution capacity with Champa-Kurukshetra Phase 1 & Phase 2 with 6000 MW HVDC carrying capacity. Continuous advancements in HVDC technology, such as the development of Voltage Source Converters (VSC), are expected to enhance the efficiency, reliability, and flexibility of HVDC systems. These advancements will play a crucial role in future projects.

The EHVDC sector in India has witnessed significant developments with several key projects already operational. These projects are not only crucial for meeting Indias growing energy demands but also for integrating renewable energy sources and ensuring grid stability. As India continues to progress towards its renewable energy targets and infrastructure goals, the HVDC transmission sector is set to play a pivotal role in the countrys energy landscape.

With its ambitious increase in renewable energy capacity and generation in remote areas, necessitates the development of robust HVDC transmission infrastructure to transmit large amount of power to long distance/other regions.

India is exploring cross-border HVDC transmission projects to enhance regional energy cooperation. Projects linking India with neighbouring countries like Sri Lanka and Bangladesh are under consideration, which will further boost the HVDC sector.

KEY TECHNOLOGIES & OFFERINGS IN FUTURE MARKETS

Asset Performance Management (APM)

Indias power sector is undergoing a huge transformation, with growing focus on reliability, efficiency, and sustainability. A paradigm shift towards proactive asset health and asset performance management (APM) services from reactive maintenance practices is being observed in the industry.

Asset health refers to the overall condition of a powerplants equipment, estimating functionality, efficiency, and the remaining useful life. APM combines data analytics and technologies to monitor asset health, predict potential failures and optimise maintenance strategies.

GE T&D India Ltds APM offering reduced downtime and improved reliability: The proactive maintenance based on real time data prevents unexpected failures, ensuring more efficient power supply. APM provides specific or targeted maintenance, reducing unnecessary repairs and replacements and improving cost savings significantly. Helps early detection of issues, especially in machinery, reduces the risks of big power failures. This also ensures enhanced safety of workers. Optimising asset performance facilitates better fuel utilisation, reducing energy losses and contributing towards a more sustainable power sector.

Digital and Software solutions

It is expected that adoption of advanced technology can mitigate the risk by enhancing capacity and optimising the current processes. Lack of cohesiveness, conventional mitigation strategies, financial and operational issues, customer needs and inefficiencies in metering, billing and collecting payments is driving utilities to adopt Digital technologies. The progressive utilities have started digital projects upon the governments prompting and need of hour. The companies are prioritising digital efforts and allocate resources wisely, reducing costs, improving efficiency, and enhancing customer service. Your organizations Electrification Software Business line is geared up with Top of the class Solution GRID Orchestration Software (GRIDOS) fulfilling the optimized need of Transmission as well as Distribution utilities on common platform with modular applications. GRIDOS covers the challenges of Cyber security threats with Zero Trust Secure models in the product. GRIDOS also helps to Integrate IT & OT platforms on multiple standards with its Data Fabric Layer. This gives customer smooth transition and flow of their multiple systems data and systems interactions.

STATCOM Technology and projects

Static Synchronous Compensators (STATCOMs) are critical components in modern power systems, providing dynamic reactive power support to stabilize voltage levels, improve power quality, and enhance the reliability of the grid. As Indias power sector continues to evolve, the deployment of STATCOM technology is becoming increasingly important. This discussion delves into the current market landscape, challenges, and future outlook for STATCOMs in India.

STATCOM projects and products play a major role in the integration of renewable energy. The rapid growth of renewable energy sources like solar and wind, which are inherently variable and intermittent, necessitates the use of STATCOMs to maintain grid stability and ensure smooth integration of these energy sources. Increasing urbanization and industrialization are driving the demand for stable and reliable power supply. STATCOMs play a crucial role in mitigating voltage fluctuations and improving power quality in densely populated and industrial areas.

Investments in the power sector

Power plays a crucial role in the economic growth and welfare of nations. Therefore, the development of adequate power infrastructure is essential for sustained growth of the Indian economy. India aims

to provide universal access to affordable power in a sustainable way. The Ministry of Power has made significant efforts in fortifying the distribution network and achieving universal household electrification.

The Indian power sector is growing in capacity across various segments and is expected to witness an investment of Rs. 17 lakh crore in the upcoming 5-7 years. The industry has also recorded Rs. 20 lakh crore investment over the last nine years. While about 85GW of thermal capacity is being added and 14GW hydro projects are under construction, another 14-15GW is under clearances. Furthermore, around two lakh km transmission lines have been added in the last decade, making it one of the largest integrated systems in the world. Green bonds, issued by the Government, Corporations or International Development Banks, are financial instruments used to raise capital for environmental or climate-related projects. Green bonds are specifically designated for financing or refinancing environmental projects. Green bonds play a pivotal role in promoting the transition of an economy towards a low-carbon and climate- resilient economy. Additionally, the bonds can be used to raise funds for renewable energy projects, clean transportation projects, ecofriendly farming projects and other environmental infrastructure projects. They also aid in encouraging Public-Private Partnerships (PPPs) as well as providing incentives to corporate entities to invest in green initiatives.

Increased private sector involvement is expected to play a significant role in the expansion and modernization of the transmission network. Public-Private Partnerships (PPPs) are being encouraged to leverage private sector efficiency and investment capacity. This collaborative approach is crucial for addressing the funding and technical challenges associated with large-scale transmission projects.

Opportunities

Indias power sector is undergoing a significant transformation, driven by a growing demand for electricity, ambitious renewable energy projects and a focus on grid moderation. This proves to be a lucrative opportunity for various companies and institutions across the world to enter the value chain. There are several key areas having enormous growth potential.

FY 2023-24 saw an addition of 25GW, thereby raising the installed base to 442GW (31 March 2024) from 417 GW (31 March 2023). Out of this 25GW, 18GW is contributed by renewable energy. 3GW of Wind and 15GW of Solar installed base is added in the year 2023-24.

Approximately 14,200 Ckt Kms of transmission lines are laid and ~70,000 MVA Transmission Substation Capacity has been added in FY 2023-24. Indias target is to double the installed base to ~900GW from its current capacity of ~442GW. Going forward most of the new power need will come from Renewable resources. The Interregional capacities to be increased on the same ratio since the generation centre and load centre geographies are different. This gives clear mandate and opportunities for your organization on growth of Transmission networks via Green Energy Corridors (EHVAC/EHVDC) & State TBCB for strengthening of Intrastate/Interstate networks.

In the year 2022-23, total electricity generations of 16,24,456 MU was observed, whereas in the year 2023-24, 17,38,828 MU are recorded, this is 7.04% growth. The demand growth is the result of increase in household per capita consumption and Industrial growth sector. To fulfill the need of the demand and growth robust infrastructure on transmission and distribution is required. This brings opportunities for your organization to contribute for coming years on each and every Business Line and products.

Indias ageing power grid infrastructure faced challenges with AT&C losses and inefficiencies. However, smart grid technologies offer the perfect solution by integrating automation, power flow software solutions, energy management solutions, data analytics , and twoway communication to optimise power flow transmission and distribution. The Governments initiative to revamp grid infrastructure presents a lucrative opportunity for companies specialising in smart grid technologies and solutions.

Cross-Border Electricity Trade (CBET) was initiated to broaden the reach of the Indian power market, aiming to establish an integrated South Asian Power Market. Countries with grid connections like Nepal, Bhutan and Bangladesh can also participate on the exchange platform. It is expected that the market will observe rapid growth as the grid connectivity expands to other South Asian nations. The integrated South Asian power market offers numerous benefits, including enhanced energy access and security, a unified power market, competitive pricing, transparent and efficient power procurement, and optimised resource utilisation.

With digital technology adoptions, opportunities are emerging in RDSS sector for SACDA/ADMS technology, STAMC Projects for SCADA/ Analytics technology, URTDSM project for WAMS Technology and requirements of cyber security enhancement solutions are emerging. Upgradations in Unified Load despatch Centres for 5 regions are due in FY 2024-25. This will result in credible market and opportunities for your organization.

Threats

Global conditions and conflicts like Israel-Palestine, Iran- Israel are looming a bigger threat on all economies. Another threat like Red Sea conflicts that emerged in the past may impact supply chain issues, ultimately impacting the overall businesses. These threats are beyond control.

Indias power sector is poised for growth, however, there are certain challenges that need to be addressed. Distribution companies (DISCOMs) are the backbone of the power delivery system, responsible for transmitting and selling electricity to consumers. Unfortunately, high AT&C losses, government subsidy burdens and tariff discomforts have resulted in poor financial state of several DISCOMs. This leads to inability to invest in grid modernization, leading to further inefficiencies and hindering reliable power supply.

India relies heavily on coal for power generation. However, domestic coal supplies are often inadequate, leading to increasing reliance on imports. Furthermore, this results in volatile global coal prices, consequently impacting production costs. Moreover, coal-based power generation negatively impacts the environment.

With the increasing rise of cybersecurity issues, infrastructure has become highly vulnerable to cyberattacks. Highly stringent security measures are required to mitigate such risks. Furthermore, climate change also plays a crucial role in transmission and distribution network as extremities in climate change can damage power infrastructure and disrupt fuel supplies.

Looking into same, your organization is keenly observing worlds situation and keeping track to take timely business actions to minimize and mitigate business impacts.

BUSINESS PROJECTIONS

India is accorded a positive outlook by all leading global and domestic agencies on future growth prospects. With 7.6% of GDP growth in year 2023-24, India aims to target growth of more than 7% of GDP in year 2024-25.

India fortified its position as an attractive destination for energy- transition related investments. India aims to bolster energy transition while simultaneously navigating energy security and affordability. Enhancing power sector reforms to enable the continued adoption of new and clean technologies by generating demand and improving infrastructure.

Your Company continues to have an order backlog of more than 62 billion INR as of March 31, 2024, which positions it well for future growth.

COMPANY OVERVIEW

With a rich legacy spanning over a century in the country, GE T&D India is the listed arm of GE Vernova Grid Solutions business in India. Recognised as a key player in the power transmission and distribution sector, GE T&D India offers a comprehensive suite of solutions. These solutions facilitate seamless connection and transmission of power from various sources to the grid, empowering utilities to effectively meet rising demand of electricity. The Companys product portfolio offers a broad spectrum spanning from medium to ultra-high voltage (up to 1200 kV), enables the company to cater to power generation, transmission and distribution segments.

With a strong foothold across the entire power supply value chain, GE T&D India provides a diverse array of products and services, including power transformers, circuit breakers, gas-insulated switchgears, instrument transformers, substation automation equipment, digital software solutions, turnkey solutions for substation engineering and construction, Flexible AC Transmission Systems (FACTS), High Voltage DC (HVDC) systems and maintenance support.

Operating from five manufacturing facilities, GE T&D India is poised to meet the increasing demand for grid equipment and services.

Moreover, GE is committed to delivering sustainable solutions aimed at building a healthier future for all.

SUPPORT FUNCTIONS

Human resources

The Companys human resources team aims to positively influence the lives of their employees. Playing a crucial role in the Companys daily operations, the team fosters exceptional talent, assists in achieving business goals and enhances overall efficiency. HR initiatives are directed towards cultivating a desired work environment while simultaneously upholding safety standards during all operations.

The permanent employee strength of the Company as on March 31, 2024 was 1,697.

Industrial relations

During the year under review, labour relations at Hosur, Padappai, Pallavaram, and Vadodara units remained cordial. This has helped your Company to increase the labour productivity and efficiency.

Diversity

The Company prioritises in providing a safe and secure workplace environment. The Company promotes gender diversity and has consistently maintained its stance during new talent recruitment. GE T&D ensures a diverse work culture and transparent practices are cultivated within the organisation.

Succession planning

The Company is committed to recognising and developing talent. It focuses on augmenting organisational efficiency and promoting accountability to enhance communication efficiency, providing prompt service to customers. Working closely with the Human

Resources team, the management places a strong emphasis on identifying future leaders and individuals with critical skill sets to ensure a smooth succession planning process.

Finance

The Companys finance department is dedicated to driving initiatives that propel performance, with a strong focus on risk management, internal controls and cost optimisation through rigorous operational and financial practices. In the fiscal year FY24, The Company achieved a profit before tax and exceptional items of Rs. 2,630.7 million, thanks to higher revenue, improved project execution, cost control measures and stabilization of commodity prices.

During the financial year, the Company not only became debt free but also was able to generate surplus cash and bank balance of INR 2,764.8 Million as of March 31, 2024. Improved cash performance is driven by Companys focus on improving working capital, through reducing inventory, improving receivables and enhancing retention collection. The management team is committed to pursuing strategic initiatives aimed at further improving financial performance, profitability and liquidity.

Ratio	Calculations	March24	March23	%Change
Current ratio	Current assets/Current liabilities1	1.2	1.1	8.2%
Debt-equity ratio	Borrowings/ shareholders equity2	0.0	0.2	99.8%
Inventory turnover ratio	Cost of goods sold/inventory	3.5	3.1	15.3%
Debtors turnover ratio	Revenue from operations/Trade receivables	2.2	1.8	23.2%
Interest coverage ratio	Earnings for debt service=Net profit before tax & exceptional items+WInterest on borrowings/Borrowings	633.5	0.3	Significant improvement
Net profit margin	Net profits before taxes/revenue from operations	8.3%	1.4%	503.9%
Operating profit margin (%)	Operating income/ Operating revenue	9.2%	2.9%	218.3%

1. No significant variance.

2. No net debt at the end of year, during the current year company generated positive cashflow resulting in repayment of borrowing.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Net worth of the company has increased to INR 12,429.4 million as on March 31, 2024 compared to INR 10,727.1 million as on March 31, 2023 primarily driven by total comprehensive income during the year of INR 1,702.3 million

Investor relations

The Company is deeply committed to prioritize its stakeholders and ensure transparency by promptly sharing relevant information with them. The Company values the input and suggestions of their stakeholders and takes action based on their feedback.

Regular engagement with stakeholders is fundamental for the Company, thereby it holds quarterly earnings conference calls with investors and analysts. These calls provide updates on the Transmission and Distribution (T&D) market, potential opportunities and the Companys operational and financial performance. Attendees have the opportunity to ask questions directly to the top management. Recordings and transcripts of these calls are also made available on the website and stock exchange platforms.

In addition to conference calls, the stakeholders are kept informed through press releases and communications.

Risk and internal controls

A strong internal control framework has been integral to the Companys operations and corporate governance. This framework ensures the reliability of financial information, compliance with laws and regulations, and optimisation of operations. It involves documenting and evaluating unit and entity level controls through established policies and procedures to identify significant gaps and define actions for improvement. Additionally, theres a formal system for periodic monitoring and reporting of internal control self-assessments.

In accordance with the Companies Act, 2013, a thorough evaluation of internal controls over financial reporting was conducted during the year. Management assessed their design and effectiveness, concluding that controls were operating effectively as of March 31, 2023. Furthermore, as part of the statutory audit, the statutory auditors confirmed that the Company has an adequate internal financial control system over financial reporting, with all controls operating effectively as of March 31, FY24.

OUTLOOK

The power sector in India witnessed a phenomenal rise in FY24, with companies in renewables, power equipment and smart metering experiencing robust profits. It is expected that the sector will observe further growth owing to the rising demand in India. Government initiatives promoting energy efficiency can help manage demand, while advancements in grid technologies can improve transmission and distribution efficiency. This is further expected to provide lucrative opportunities for the Company, further increasing business in supplying transmission and distribution equipment.

CAUTIONARY STATEMENT

This management discussion and analysis statement contains what could be regarded as forward-looking statements and information. These statements include forecasts and estimates as well as the assumptions on which they are based, statements related to projects, objectives, and expectations concerning future operations, products, and services or future performance. The readers are hereby cautioned and advised that these forward-looking statements are subject to numerous risks and uncertainties that are difficult to foresee, and actual outcomes might differ significantly.