Globus Power Generation Ltd Management Discussions

ECONOMIC GROWTH AND POWER SECTOR

India is one of the worlds largest and fastest-growing economies, with a rapidly expanding population and increasing energy needs. However, the country also faces significant environmental challenges, including air and water pollution, deforestation, and climate change. To address these challenges, India has begun to shift towards renewable energy sources, such as solar, wind, and hydropower. The adoption of renewable energy sources has the potential to reduce greenhouse gas emissions, promote energy security, and create jobs.

Renewable energy sources have been gaining momentum in India as the country seeks to diversify its energy mix and reduce its dependence on fossil fuels. The impact of renewable energy sources on ecology, environment, and tourism in modern India is significant.

The power sector industry in India has evolved significantly to provide a wide range of opportunities across the value chain, in both, regulated as well as deregulated businesses. Indias power market is the worlds third-largest in terms of generation capacity and in terms of network. The growing demand, network extension and upgradation, reduction in energy intensity, unbundling of supply services and growth of cross-border trade present various opportunities for this industry. In order to meet the increasing demand for electricity in the country, a massive addition to the installed generating capacity is required.

India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 426.13 GW as of November 30, 2023. The peak power demand in the country stood at 243.27 GW in November 2023 and with the support of 100% FDI allowance in the power sector, total FDI inflows in the power sector reached US$ 17.00 billion between April 2000 and September 2023.

Indias power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 8.87% to 1,624.15 billion kilowatt-hours (kWh) in FY23. According to data from the Ministry of Power, Indias power consumption stood at 130.57 BU in April, 2023.

OPPORTUNITIES IN THE POWER SECTOR

The Government of India has identified the power sector as a key factor and in the Union Budget 2023-24, the Government allocated US$885 million (Rs.7327 crore) for the solar power sector including grid, off-grid, and PM KUSUM projects and to meet Indias 500 GW renewable energy target and tackle the annual issue of coal demand-supply mismatch, the Ministry of Power has identified 81 thermal units which will replace coal with renewable energy generation by 2026. Also, other projects came into force during previous years like SAUBHAGYA was launched by the Government of India with the aim of achieving universal household electrification and many other alike projects.

Electrification in the country is increasing with support from schemes like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS). India has also launched the Mission Innovation CleanTech Exchange, a global initiative that will create a whole network of incubators across member countries to accelerate clean energy innovation.

India is set to become a global manufacturing hub with investment across the value chain. The Central Electricity Authority (CEA) estimates Indias power requirement to grow to reach 817 GW by 2030. The government plans to establish renewable energy capacity of 500 GW by 2030. (Sources; IBEF)

VISION:

Your companys priority is to support the pace of economic development by providing accessible, affordable, and reliable power to consumers and to be one of the leading companies across the Globe that produces Clean & Smart Energy and with the aim to be environment friendly.

MISSION:

a) To reduce societys total reliance on limited Fossil Fuels and change perspective to look at clever alternative sources that are unlimited; b) To contribute to lessen the phenomena of Global Warming and gain the maximum from the abundant Clean Energy sources of India and c) To protect the needs of our future generation and safeguard the current renewable resources.

The Growth Sector

The 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. Although power generation has grown more than 100-fold since independence, growth in demand has been even higher due to accelerating economic activity.

Keeping major problems in mind, like the rising levels of pollution leading to the universal crisis of Global Warming is not only dangerous for our surroundings but also life-threatening. Our consistent strive to substitute conventional and harmful sources of energy like Fossil Fuels with renewable and smart sources like Solar Power is assured to protect and safeguard the needs of our nation and of the world. We follow the philosophy of the clever use of the unlimited bounty of nature and have to be utilized judiciously so as to gain the maximum from them. We do this by strategically planning and extracting these resources from various sites from across the country that are chosen keeping many factors in mind.

Our Management and Promoters use all possible technological advances and mechanical techniques to extract these resources in the best possible way so that they are also economically viable and serve even at the grass root levels by providing them steady electricity and a source of employment.

RISK AND CONCERNS

The Power Sector, directly or indirectly, impacts almost all the sectors contributing to the growth of the nation. Setting up a power project requires huge capital investments and takes years of concentrated efforts for successful completion and commissioning. Hence, any slowdown in the power sector has a domino effect on the overall economic growth of the country.

Some of the critical issues impacting the performance of the sector are mentioned below:

The following potential environmental and social risks associated with power generation Industry are:

1. Fuel: Securing fuel is the top priority in responding to short-term challenges while implementing reforms is on the long-term transition agenda. Also, the volatility in fuel prices can affect the cost of power generation and impact profit margins.

2. Global Warming and Climate Change - One of the biggest contributors to the "greenhouse effect" causing global warming is fossil fuel emission - of which, 80 percent of the worlds energy comes from.

3. Environment Hazards - The environmental impact of conventional sources is hazardous and has to be eradicated to establish a healthy milieu, for us and for our future as country.

4. Restrictions on Energy Sources - In India we have limited coal reserves and the potential of increased dependence on imported fuel is increasing.

5. Solid waste (production and disposal) - ash residues (from combustion process) and sludge (from cooling process).

6. Atmospheric emissions:

• Pollutants (VOC, NOX, SOX, PM10, CO, CO2, etc)

• Greenhouse gas production

• Dust and noise Employee Health and Safety - operational noise, odour, nuisance, Landscape scarring and visual impact

7. Cybersecurity Threats: Cyberattacks targeting power infrastructure can disrupt operations and compromise data security.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

To ensure regulatory and statutory compliance as well as to provide the highest level of corporate governance, your Company has robust internal systems and processes in place for the smooth and efficient conduct of business and complies with relevant laws and regulations. The system involves a compliance management team with established policies, norms and practices as well as the applicable statutes, rules and regulations. A comprehensive delegation of power exists for smooth decision making which is periodically reviewed to align it with changing business environment and for speedier decision-making.

A well-defined internal control framework has been developed identifying key controls. The supervision of operational efficiency of designed key controls is done by Internal Audit. Gap tracking report for operating efficiency of controls is reviewed by the management regularly and action is taken to further strengthen the Internal Control System by further standardizing systems & procedures and implementing process changes, wherever required, keeping in view the dynamic environment in which the Company is operating.

HUMAN RESOURCES

Your Company has a highly talented team of committed professionals and has been able to induct, develop and retain the best talent. Competence building, Commitment building, Culture building and Systems building are the four pillars on which the HR Systems of your Company are based. The commitment of the employees is also reflected in the consistent improvement of business operations.

Your Company is deeply passionate about ensuring the holistic development of all its employees as distinct individuals and good citizens. Your Company respects each employee and motivates them by offering opportunities based on their skill sets, and in the process, builds mutually benefiting relations between the Company and its employees.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. The Board diligently monitors and acknowledges their efficacy in periodic meetings.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The details of the financial performance of your Company are reflected in the Balance Sheet, Profit & Loss Account and notes to accounts thereon, appearing separately in the Financial Statements for the financial year ended March 31, 2024. Highlights of the said Financial Statements are provided below:

During the financial year ended March 31, 2024, the Company recorded revenue of Rs. 4,31,000/-, a significant increase from Rs. 43,000/- in the previous financial year. Additionally, the Company achieved a profit of Rs. 6,75,13,000/- during the year under review, marking a turnaround from the loss of Rs. 12,44,92,000/- in the previous financial year.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AS COMPARED TO THE PREVIOUS YEAR

DISCLOSURE OF ACCOUNTING TREATMENT

The Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) and Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 and other relevant provisions of the Act. Further, the Financial Statements have been prepared on a going concern basis under the historical cost convention on an accrual basis.

The Company continues to follow the period of 1st day of April to 31st day of March, each year as its financial year for the purpose of preparation of financial statements under the provisions of Section 2(41) of the Act.