nishtha finance investment india ltd share price Management discussions

Annexure to Directors Report - Annexure I

Economy overview:

During the Financial Year 2017-18, India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF) and it is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. Indias GDP is estimated to have increased 6.6 per cent in 2017-18 and is expected to grow 7.3 per cent in 2018-19.

India has the fifth largest power generation capacity in the world. The country ranks third globally in terms of electricity production. In May 2018, India ranked 4th in the Asia Pacific region out of 25 nations on an index that measures their overall power. Electricity production in India reached 1,201.543 Billion Units (BU) during FY18.

Renewable energy is fast emerging as a major source of power in India. The Government of India has set a target to achieve 175 GW installed capacity of renewable energy by FY22. Wind energy is the largest source of renewable energy in India, accounting for 49.33 per cent of total installed capacity (69.02 GW). There are plans to double wind power generation capacity to 60 GW by 2022. India has also raised the solar power generation capacity addition target by five times to 100 GW by 2022.

The Union Government of India is preparing a rent a roof policy for supporting its target of generating 40 gigawatts (GW) of power through solar rooftop projects by 2022. All the states and union territories of India are on board to fulfil the Government of Indias vision of ensuring 24x7 affordable and quality power for all by March 2019. Over 280 million LED bulbs were distributed to consumers in India by Energy Efficiency Services Limited (EESL) under Unnati Jyoti by Affordable LEDs for All (UJALA).

The Government of India has been supportive to growth in the power sector. The Cabinet Committee on Economic Affairs (CCEA) has approved commercial coal mining for private sector and the methodology of allocating coal mines via auction and allotment, thereby prioritising transparency, ease of doing business and ensuring the use of natural resources for national development. The Government of India is planning to invite bids for the largest solar tender in the world, for installing 20 gigawatts (GW) of solar power capacity, to give a boost to manufacturing of solar power equipment in India.

Industry Structure:

- With electricity production of 1,201.543 BU in India in FY18, the country witnessed growth of around 55.72 per cent over the previous fiscal year.

- Over FY10-FY18, electricity production in India grew at a CAGR of 5.69 per cent.

- In March 2017, the Power Ministry has launched an application named - GARV-II, to provide real time data related to rural electrification regarding all un-electrified villages in India. A total of 17,164 villages out of 18,452 unelectrified villages in India have been electrified up to March 2018 as part of the target to electrify all villages by May 1, 2018.

Opportunity and Threats:

Opportunity:

1. Clearer political signals about the priorities and objectives can create transparent regulatory framework for efficient long-term energy supply.

2. Utilization of available energy saving potential will reduce the growth rate of energy demand and generating capacities;

3. Economically justified larger contribution of available indigenous and renewable energy resources will reduce dependence on imported fuel.

4. Existing infrastructure and experience are supportive for construction of new nuclear power plant.

5. Timely introduction of new energy sources and technologies.

6. Potential interest of market participants to develop and invest in the electricity market;

7. Improve distribution infrastructure through central schemes.

8. Renovation, modernization, up-rating and life extension of old thermal and hydro power plants.

Threats

1. Insufficient interconnection capacities with central and state electricity markets.

2. Insufficient technical quality of transmission and distribution systems.

3. Weak and non-transparent price signals for investments into new generation capacities.

4. Lack of optimum utilization of the existing generation capacity.

5. Inadequate inter-regional transmission links.

6. Huge T&D losses (theft) and skewed tariff structure, making SEBs unviable.

7. Inadequate and ageing sub-transmission & distribution network leading to power cuts and local failures/faults

8. Slow pace of rural electrification.

9. Lack of necessary infrastructure to transport and store fuel, high cost risk involved in transporting fuel

Segment / Product wise Performance:

Company has stepped in the Business of Power Projects. During the FY 2018 19, Company has initiated its activities by way of Power Project consulting and intermediation for consideration of Commission. Company has entered into Channel Partner Agreement with Addin Power Limited being emerging Power generation Company in the State of Gujarat.

Outlook

Addin Power Limited of which the Company is channel partner, is likely to set up a huge power plant in the state of Gujarat. The Power plant is likely to commence its operations by 2020. In such case, Company would have a big opportunity of generating revenue.

In the years to come, Management of the Company is also hopeful to shake the hands with other power generation companies also to expand its operations. Risks and concerns:

The present Business activity of the Company is based on power generation companies. The power generation projects are Capital intensive. Lack of capital investment or fund sources for power generation Company is the major concern especially when the country is passing through major economic downfall.

Company wish to expand power generation business. However blocked funds of the Company in the form of loans advanced by earlier management is a major concern. Company is awaiting recovery of such loans advanced earlier for expanding its business

Internal Control System and their adequacy:

The Companys Internal Control System is commensurate with its size and its nature of operations. It has well documented system of adequate Internal Controls aimed at achieving efficiency in operations, optimum utilisation of resources and compliance with all applicable laws and regulations. Independent firms of Chartered Accountants, out of big 4, are appointed as Internal Auditors of the Company. The key observations and recommendations following such internal audit and follow up actions for improvement of the business operations and their implementation are reviewed and monitored by the Audit and Risk Management Committee on a quarterly basis.

Financial performance with respect to perational performance.

Company has stepped in to the new line of business during 2017. As of now, Company has not invested any amount in the form investment. However, at the initial stage, Company has entered into Channel Partner Agreement with power generation Companies. During the year 2018 19, Company has received aggregate revenue of Rs. 15.04 lakhs in the form of channel partner remuneration. The Net Profit of the Company also increased by almost 25%.

Cautionary Statement:

Certain statements in the Management Discussion and Analysis describing the Companys analysis and interpretations are forward-looking. Actual results may vary from those expressed or implied. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.