MPF Systems Ltd Management Discussions

Annexure- IV

1. Industry Structure and Developments

The global energy landscape is undergoing a paradigm shift with a strong push towards decarbonisation, energy transition, and sustainability. India has set an ambitious target of achieving 500 GW of non-fossil fuel-based power capacity by 2030 and achieving net zero by 2070.

The renewable energy sector, particularly solar and wind, continues to remain the largest contributor towards the transition. Parallelly, Green Hydrogen and Green Ammonia are emerging as critical fuels of the future, with multiple policy initiatives such as the National Green Hydrogen Mission, Production-Linked Incentive (PLI) schemes, and fiscal incentives to promote their adoption.

The Company operates in this high-growth sector, focusing on generation, accumulation, distribution, installation, and supply of clean energy solutions, spanning across solar, wind, and green fuels.

• Policy Support: Government initiatives including Renewable Purchase Obligations (RPOs), Hydrogen Mission, and carbon pricing mechanisms.

• Technological Advancements: Declining cost of solar PV modules, energy storage, electrolysers, and wind turbines improving project viability.

• Green Financing: Availability of ESG-focused funds, green bonds, and concessional financing.

• Export Potential: Rising global demand for green hydrogen and green ammonia offers opportunities for India as a low-cost producer.

• Corporate Demand: Increasing adoption of renewable energy by industries to meet ESG and net-zero commitments.

• Regulatory Changes: Tariff fluctuations, changes in safeguard duties or import restrictions on solar modules/equipment.

• Grid & Transmission Constraints: Evacuation bottlenecks and delays in infrastructure readiness.

• Technology Risks: Need for rapid adaptation to newer, more efficient technologies.

• Global Competition: Growing competition in electrolyser and hydrogen production from global players.

• Climate and Resource Dependency: Variability in solar irradiance and wind patterns.

The Companys are of operations are broadly classified into the following business verticals:

1. Solar Energy - Development, installation, and supply of solar power plants, rooftop systems, and distributed solar solutions.

2. Wind Energy - Generation and distribution of wind power projects in high potential corridors.

3. Green Hydrogen - Setting up electrolyser-based projects for industrial decarbonisation, mobility, and export markets.

4. Green Ammonia - Integrated projects for ammonia production catering to fertilizers, marine fuel, and export demand.

The Company will initiate projects in solar and wind energy while progressing towards pilot- scale green hydrogen and green ammonia facilities.

The medium to long-term outlook remains highly promising given:

• Rising energy demand and focus on sustainable alternatives.

• Indias commitment to reduce carbon intensity of GDP by 45% by 2030.

• Strategic global shift towards hydrogen-based fuels for energy security.

• Increasing participation of corporates and state utilities in renewable adoption.

The Company is well-positioned to leverage its expertise, partnerships, and project pipeline to capture emerging opportunities in both domestic and international markets.

• Execution Risks: Delays in project commissioning due to supply chain constraints.

• Financing Risks: Volatility in interest rates impacting project IRR.

• Technology Obsolescence: Rapid innovation necessitating continuous upgradation.

• Policy Dependency: Over-reliance on government incentives and subsidies.

• Operational Risks: Grid curtailment, equipment failure, and resource variability.

The Company has a robust risk management framework to identify, mitigate, and monitor such risks on a regular basis.

The Company has established adequate internal control systems commensurate with the size and nature of its business. These controls are designed to ensure:

• Accuracy and reliability of financial reporting.

• Safeguarding of assets.

• Compliance with applicable laws, regulations, and internal policies.

• Efficiency of operations.

The Audit Committee periodically reviews the adequacy and effectiveness of internal controls, supported by internal and external audits.

7. Financial Performance (with respect to Operational Performance)

The Company will have growth in revenue from solar and wind projects, supported by longterm Power Purchase Agreements (PPAs) and supply contracts, when the lucrative opportunities will arise. Investments will be made in green hydrogen and green ammonia projects, with expected commercial viability in the next few years on coming the suitable opportunity.

The Company recognises human capital as its key strength. Training and skill development programmes are conducted regularly, with special focus on green energy technologies, safety, and digital integration. The industrial relations climate remained cordial during the year.

Statements made in this report relating to the Companys objectives, projections, outlook, expectations, etc. may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied, depending on economic conditions, global energy trends, government policies, regulatory environment, and other incidental factors.