KKV Agro Powers Ltd Management Discussions.

I. GLOBAL ECONOMY:

The global economy in Calendar Year (‘CY’) 2020 has seen one of the slowest growth rates since the 2008 financial crisis that the US faced, the global economy has faced a setback. The International Monetary Fund (‘IMF’) estimates that the global GDP (‘Gross Domestic Product’) may have registered 2.9% growth in CY 2019, significantly lower than 3.6% in CY 2018, and that there will be a negative growth of 3% in CY 2020. A slowdown had been anticipated early in the financial year, because of the US-China trade relations, concerns over Brexit and the consequent stress on the global manufacturing and trade.

The biggest calamity was the outbreak of Corona virus in the beginning of CY 2020, which grew from a local problem in China to a global pandemic in a matter of weeks in early CY 2020. Lockdowns in most of the affected countries saved lives but were a huge blow to economic activities and the impact will be felt for a long time to come. To counter the losses and prevent a complete economic breakdown, governments and central banks around the world have unleashed unprecedented amounts of fiscal and monetary support.

II.WORLD ECONOMIC OUTLOOK:

The global economy is likely to grow 6.0 percent in 2021 and 4.9 percent in 2022.The 2021 global forecast is unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia. By contrast, the forecast for advanced economies is revised up. These revisions reflect pandemic developments and changes in policy support. The 0.5 percentage-point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group. (Source: IMF World Economic

Outlook, August 2020)

III. INDIAN ECONOMY:

The Indian economy registered a growth of 4.2% in Financial Year (‘FY’) 2019-20, much lower than the 6.1% in FY 2018-19 (Source: IMF)and is expected to take a dip in FY 2021-21 due to the COVID pandemic. Wage stagnation, job losses, rising rural unemployment rates, stressed non-banking financial companies and decline in credit growth caused a sharp drop in domestic demand. On the supply side, excess idle production capacity and lower private investments further dragged down economic activity. The Government of India undertook initiatives such as liberalising sectors to attract foreign direct investments, upfront capital infusion in public sector banks to alleviate liquidity concerns and reducing corporate tax rates revive private investments. Following the Covid-19 outbreak, India implemented one of the strictest nationwide lockdowns in the world early on, in order to keep the infection numbers under control. This has resulted in mass unemployment in the lower income segment and staff downsizing across sectors. The restriction on free movement of goods and people disrupted supply chains and nearly wiped out the demand for non-essential goods and services.

The Government of India announced Rs. 1.7 Lakh Crore relief package to help India’s marginalised population tackle the challenges caused by the Covid-19 pandemic. This included direct cash transfer benefits to more than 8.7 Crore Indian farmer families, free food and gas distribution, social CORPORATE GOVERNANCE ALONGWITH REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS MANGEMENT DISCUSSION AND ANALYSIS REPORT and security measures for the organized sector and medical covers for health workers.

IV.INDUSTRY OVERVIEW:

India is the third largest producer and second largest consumer of electricity in the world and had an installed power capacity of 382.73 GW as of April 2021. Electricity production reached 1,252.61 billion units (BU) in FY20. India was ranked fifth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2019. India’s rank jumped to 22 in 2019 from 137 in 2014 on World Bank’s Ease of Doing Business - "Getting Electricity" rankings.

For 2020-21, electricity generation target from conventional sources was fixed at 1,330 BU, comprising 1138.533 BU of thermal energy; hydro energy (140.357 BU) and nuclear (43.880 BU); and 7.230 BU was imported from Bhutan. According to the Ministry of Power, Indias power consumption grew 41% at 119.27 billion units (BU) in April 2021, compared with 84.55 BU in April 2020.

As of January 2021, India’s gold and diamond trade contributed ~7.5% to India’s Gross Domestic Product (GDP) and 14% to India’s total merchandise exports. The gem and jewellery sector is likely to employ ~8.23 million persons by 2022, from ~5 million in 2020.

Based on its potential for growth and value addition, the Government declared gems and jewellery sector as a focus area for export promotion. The overnment has undertaken various measures recently to romote investment and upgrade technology and skills to promote ‘Brand India’ in the international market.

The Government has permitted 100% FDI in the sector under the automatic route, wherein the foreign investor or the Indian company do not require any prior approval from the Reserve Bank or Government of India.

V. COMPANY PROFILE:

We develop, build, own, operate and maintain utility scale grid connected solar and wind farm projects and generate revenue through the sale of electricity.

Leveraging our capabilities, we are expanding our project profile in multiple geographies all over India in solar sector.

We have a strong track record of developing, constructing and operating renewable power projects, driven by in-house teams across all stages of the process.

We have a strong project site development team which identifies and selects most suitable sites based on multiple objective criteria, for future project development. We have applied for connectivity at selected wind and solar resource rich sites and is in advance stage of land control and acquisition

VI.STRATEGIC FOCUS OF THE COMPANY:

Our Vision is to enhance our position as a leading independent renewable energy producer in India and executing the following:

Planned to install additional capacity of 2MW

in Solar plants.

Scrap Gold Aggregation

Enter into Gold investment products

Enter into joint ventures with the companies

for Gold related products

Scalable Green Energy Business

Bullion business

VII: RISKS AND CONCERNS

Functioning in a dynamic operating scenario, the Company is exposed to various business risks, which may be internal and external. It has put in place a comprehensive risk-management system, tailored to the specific requirements of the business, considering various factors such as size and nature of inherent risks and the Company’s regulatory environment. The risk management system recognises and analyses risks early and takes appropriate action. The Company’s senior management regularly reviews the risk management processes for regular effective risk management and mitigation.

VIII.INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate Internal Control System commensurate with its size and operations. Management has overall responsibility for the Company’s Internal Control System to safeguard the assets and to ensure reliability of financial records. Audit Committee reviews all financial statements and ensures adequacy of internal control systems.

IX. DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Income from Operations of the Company during the Financial Year 2020-21 experienced a rise from 39,28,25,688 to 3,19,62,15,970 and the Net Profits for the same period fell from 2,89,60,141 to 45,72,247.

X. SEGMENT REVIEW:

The Company operates under two broad segments viz Power Generation and Purification of Precious Metals. The Company has reported the details and performance under Segment Reporting in the Notes to Financial Statements (Note No. 2.38)

XI. 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:

There was no significant change in the key financial ratios during the financial year 2020-21.