power & instrumentation gujarat ltd share price Management discussions

ECONOMIC OVERVIEW

Global Economic Overview

The global economicgrowthtrajectory al reserves with targeted assistance, andfisc anticipatedtoshift from around 3.5% in 2022 to approximately 3.0% in both 2023 and 2024. This adjustment is influenced by decisions made by central banks regarding policy rates, which have a significant impact on economic dynamics. In terms of inflation, projections indicate a decrease from 8.7% in 2022 to 6.8% in 2023, further declining to 5.2% in 2024. Its important to note that core inflation is expected to make a gradual adaptation.

Recent successful resolutions pertaining to the US debt ceiling and measures taken to ensure banking stability have effectivelymitigatedimmediatefinancialrisks. However, there are lingering concerns regarding potential negative influences on growth. Factors such as elevated inflation levels and the potential occurrence of unexpected events like conflicts and extreme weather could prompt adjustments in monetary policies. The recovery of Chinas economy may also experience a slowdown due to challenges within the real estate sector, which could subsequently impact other inflation levels global economies. On the flip side, there exists the possibility of positive outcomes if inflation subsides more rapidly and domestic demand remains resilient.

Across various economies, key priorities encompass maintaining a sustained trend of disinflation and ensuring financial stability. Central banks are advised to maintain their focus on upholding price stability and effectively overseeing financial systems. Countries are encouraged to provide adequate liquidity during periods of market strain, establish economic capacities to facilitate more effective management of inflation. ection of the manifold

Outlook

The current global economic forecast indicates a gradual deceleration in the recovery process, influenced by the combined effects of the COVID-19 pandemic and geopolitical developments related to Russias actions in Ukraine. While supply chains have shown signs of improvement, persistent challenges such as heightened inflation, cautious approaches by central banks, and restricted access to credit continue to be prevalent.

In the first quarter of 2023, the services sector demonstrated its resilience, whereas the manufacturing sector experienced a weakening trend. This divergence underscores existing uncertainties and highlights the limited pace of productivity growth.Theinteractionbetweenincreased and the responses of central banks play a pivotal role in shaping the economic landscape. As a result, the globalinflation loom growth trajectory is anticipated to shift from 3.5% in 2022 to a slightly lower 3.0% in both 2023 and 2024. This adjustment is primarily led by advanced economies, while emerging markets maintain a certain degree of stability, albeit with variations among different regions.

Source: https://www.imf.org/en/Publications/WEO/Issues/2023/07/10/world-economic-outlook-update-july-2023

Indian Economic Overview

The Economic Survey of 2022-23 has delineated Indias economic prospects, envisaging a GDP expansion of 6.0-6.8% during the upcoming fiscal year, 2023-24. Notably, the economy is on track to attain a commendable 7% growth by March 2023, building upon an impressive 8.7% upswing witnessed in the preceding year. This positive trajectory owes much to the robust augmentation in credit accessibility for

Micro, Small, and Medium Enterprises (MSMEs), coupled with heightened government capital outlays.

Although there might be a marginal overshooting of inflation targets, there is a silver lining as improvements have been recorded in the housing market inventory. The impetus for this growth has been further propelled by a surge in exports, effectively stimulating production. One of the pivotal drivers has been the noteworthy surge in private consumption, which now accounts for 58.4% of the GDP. This surge has been underpinned by the revival of contact-intensive services that have witnessed a resurgence.

Its important to acknowledge that the realm of global trade is poised for a deceleration, transitioning from a 3.5% growth rate observed in 2022 to a more moderate 1.0% in 2023, a the global economic landscape.

Outlook

The Economic Surveys projection for the 2023-24 outlook emphasizes Indias impressive rebound after the pandemic.

This resurgence is driven by robust domestic demand and increased capital investment, fostering a new cycle of private sector capital formation. The synergy between this trend and substantial government capital spending bodes well for the economy. Structural reforms like the Goods and

Services Tax and the Insolvency and Bankruptcy Code have bolstered efficiency and transparency. Despite the IMF and World Trade Organizations predictions of a global economic slowdown, Indias growth trajectory remains positive. Nevertheless, risks such as fluctuating commodity prices, exportdynamics,and affecting the nations current account equilibrium and currency valuation. The prospect of elevated borrowing costs could contribute to a subdued global economic landscape. Encouragingly, India enjoys

In both 2023 and 2024, Indias projected growth rates (6.1% and 6.3%) are significantly higher than those of advanced economies (1.5% and 1.4%). This indicates that Indias economy is expected to continue growing at a much faster pace compared to the more mature economies of advanced nations.

Source: https://www.imf.org/en/Publications/WEO/Issues/2023/07/10/world-economic-outlook-update-july-2023

INDUSTRY OVERVIEW:

Power Industry Overview

India holds the distinction of being the worlds third-largest generator and consumer of electricity, boasting an impressive installed capacity of 416.59 GW by April 30, 2023. In the realms of wind and solar power, India secured the fourth spot globally for both capacities, while also standing fourth in total renewable energy installations as of 2021. The nation has been steadfastly advancing towards achieving complete electrification forth by the Saubhagya scheme. As of March 2023, over 2.86 crore households have been successfully electrified through this initiative. Impressively, India has harnessed a cumulative capacity of 179.32 GW from non-fossil fuel sources by April -triggered 30, 2023.

The expansion of industrial activities promises to bolster favorable factors including reduced oil prices and an improved current account perspective, enhancing overall external stability.

Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1894932 the demand for electricity. This momentum will be st further propelled by a burgeoning population, escalating electrification efforts, and an increase in per-consumption. Notably, power consumption in India witnessed a robust growth of 9.5% in FY23, surging to 1,503.65 billion units (BU) from 1,374.02 BU in FY22.

On the global stage of clean energy investments, India made its mark by securing the sixth position. The country allocated a substantial sum of $90 billion between 2010 and the latter half of 2019, signifying its dedication to sustainable energy endeavors.

"India is worlds third-largest electricity generator and consumer With an installed capacity of 416.59 GW."

According to estimates provided by the Central Electricity Authority (CEA), Indias renewable energy generation is projected to see substantial growth by 2029-30. The share of renewable energy in the total energy mix is anticipated to rise from 18% to 44%, while the contribution of thermal energy is expected to decrease from 78% to 52%. Solar power emerges as the leading contributor among renewable sources, constituting a significant 53.36% (equivalent to 67.07 GW) of the total installed renewable capacity (excluding large hydro), which currently stands at 125.69 GW as of April 30, 2023.

Wind energy secures its place as the second-largest renewable energy source in India, making up 34.09% (equivalent to 42.86 GW) of the total installed renewable capacity (excluding large hydro) of 125.69 GW. The period between 2020 and 2025 is expected to witness the installation of approximately 15 GW of wind-solar hybrid capacity, further diversifying the renewable energy landscape.

Inanoteworthyachievement,Indias and Solar Power based initiative, named ‘Suryagram-Modhera, was inaugurated in Gujarat during October 2022. This collaborative effort between the Ministry of New and Renewable Energy (MNRE) and the Gujarat government has resulted in a system providing uninterrupted renewable power supply around the clock.

Source: https://www.ibef.org/industry/power-sector-india

Revamped Distribution Sector Scheme (RDSS)

The Government of India has introduced the Revamped Distribution Sector Scheme (RDSS) as part of its efforts to significantly reduce Aggregate Technical & Commercial (AT&C) losses across the country. This initiative involves the deployment of advanced technology, including 20.46 crore pre-paid smart consumer meters, 54 lakh smart distribution transformer (DT) meters, and 1.98 lakh smart feeder meters. In the context of the Union Budget for 2023, the Ministry of Power has proposed an increased budget allocation for the flagshipRDSS. This expansion aims to extend the coverage of households with prepaid smart meters, ultimately leading to a reduction in AT&C losses throughout the nation. The core purpose of the RDSS is to enhance the operational efficiency of power distribution companies (discoms), resulting in reduced losses and improved financial viability. The overarching goal of the scheme is to bring down technical and commercial losses to a range of 12-15 percent nationwide by the fiscal year 2024-25, and to eliminate the gap between costs and revenues by the same timeline. The Union Minister for Power and New & Renewable Energy has communicated to the Lok Sabha that the RDSS was initiated in July 2021 with the primary objective of enhancing the dependability and quality of power supply to consumers. This is achieved by promoting financial sustainability and operational efficiency within the distribution sector. Over a span of five years, from FY 2021-22 to FY 2025-26, the scheme has been allocated a total budget of Rs 3.03 lakh crore. This financial provision includes an Government Budgetary Support (GBS) of Rs 97,631 crore.

"With a comprehensive budget of Rs 3.03 lakh crore spanning from FY 2021-22 to FY 2025-26, the RDSS signifies Indias commitment, encompassing a projected Government

Budgetary Support of Rs 97,631 crore."

Source: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1947709 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1897764

"The Central government aims to install 25 crore smart meters by the end of 2025."

Source: https://www.cnbctv18.com/business/smart-meters-tata-power-genus-power-hpl-electric-installatio-rdss-status-eligibility-rec-pfc-17165341.htm

Electric Vehicle Charging Infrastructure

The rapid expansion of electric vehicles (EVs) has naturally led to an increased demand for essential supporting estimated infrastructure, specifically EV charging stations.

As of January 23, 2023, India had established 5,254 public EV charging stations to serve a growing fleet of 20.65 lakh EVs, resulting in a ratio of approximately one station for every 393 vehicles. This data, drawn from the Vahan dashboard, underscores the need for further progress. In contrast, the global benchmark for an optimal EV-to-charger ratio ranges from 6 to 20 EVs per charger. This comparison highlights that Indias ratio in 2022 was substantially higher at 135.

State	Smart Meter Sanctioned	Smart Meter Installed
Uttar Pradesh	3.09 Crore	12 Lakh
Tamil Nadu	3.00 Crore	1.26 Lakhs
Maharashtra	2.35 Crore	0
West Bengal	2.12 Crore	15,164
Bihar	1.72 Crore	16.54 Lakh
Kerla	1.32 Crore	805
Haryana	84.00 Lakh	7.00 Lakh
Assam	67.00 Lakh	7.00 Lakh

National Smart Grid Mission (NSGM)

A smart meter is an advanced digital device designed to measure and record energy usage. What sets it apart from traditional meters is its capability to communicate remotely with utility companies. This technology enables the smart meter to transmit consumption data to the utility at intervals ranging from 15 minutes to an hour. As a result, the need for manual meter reading is eliminated.

As of June 30th, the National Smart Grid Mission has approved a significant number of smart consumer meters across India. The total count stands at 230 million (23 crore) sanctioned meters. Among these, contracts have been awarded for the installation of 36.5 million (3.65 crore) meters. Presently, around 6.6 million (66 lakh) smart meters have been successfully installed and put into operation.

Recognizing this disparity, the Indian government has taken proactive steps to address the situation. Under the FAME India Scheme Phase-II, a significant allocation of 800 Crore has been made to Oil Marketing Companies. The goal of this funding is to establish 7,432 fast charging stations across the country. This initiative will contribute to the advancement of EV infrastructure by alleviating a substantial portion of the initial expenses related to upstream infrastructure. Notably, the Ministrys support will cover up to 80% of these upfront costs.

The target completion date for this project is set for March

2024. The new charging facilities will be strategically positioned in major urban centers and along highways. These stations will be equipped with CCS-II type chargers, boasting a capacity of 50KW or higher. This choice of technology varietyensuresefficient of electric vehicles.

"Centre has sanctioned Rs. 800 crores under FAME Scheme Phase-II for about 7,432 public fast charging stations"

Public Charging Station	No of Stations	Public Charging Station	No of Stations
Andaman & Nicobar	3	Madhya Pradesh	267
Andhra Pradesh	232	Meghalaya	19
Arunachal Pradesh	9	Maharashtra	2,531
Assam	53	Manipur	17
Bihar	106	Nagaland	7
Chandigarh	10	Odisha	164
Chhattisgarh	111	Puducherry	5
Delhi	1,815	Punjab	129
Goa	58	Rajasthan	405
Gujarat	326	Sikkim	2
Haryana	319	Tamil Nadu	465
Himachal Pradesh	44	Telangana	413
Jammu & Kashmir	38	Tripura	18
Jharkhand	114	Uttar Pradesh	486
Karnataka	813	Uttarakhand	56
Kerala	704	West Bangal	264
Lakshadweep	1	Total	10,004

Source: https://www.thehindubusinessline.com/data-stories/data-focus/ indias-ev-charging-infrastructure-falls-woefully-short/article66484999.ece https://www.ibef.org/news/centre-has-sanctioned-us-96-9-million-rs-800-crore-under-fame-scheme-phase-ii-for-about-7-432-public-fast-charging-stations https://evyatra.beeindia.gov.in/public-charge-stations/

India Solar Energy Market

The world is rapidly switching to renewable energy. As climate change is causing huge shifts in the industry, countries are trying to decarbonise the energy sector by

2050.

In India, with about 300 sunny days a year, the solar incidence can reach up to 5 EWh/year. It is also estimated that the solar energy available in a single year exceeds the possible energy output of all of the fossil fuel energy reserves in India. The country added 13.9 GW of solar capacity in 2022, which is as much solar capacity as UKs entire solar fleet in 2021. With this, the total solar capacity in India stood at ~62 GW. Rajasthan and Gujarat, the top two states in solar deployments, together added 8.6 GW in 2022, slightly more than Turkeys entire solar fleet in 2021.

Rising Demand And Growth In Indian Solar Market

In recent years, the growth trajectory of Indias solar energy sector has been nothing short of remarkable. With an impressive installation of 62 gigawatts (GW) of solar capacity in a relatively short span, Indias commitment to solar power is evident. Whats even more remarkable is that there remains a robust pipeline of approximately 58

GW of utility-scale solar projects, highlighting the sectors continuous expansion and steadfast evolution. This progress underscores solar energys competitiveness as a viable and attractive alternative for the nations energy needs.

Forecasts indicate a compelling future for Indias energy landscape. By 2040, projections suggest that Indias share of the global primary energy demand will experience an extraordinary fourfold increase, reaching approximately 11%. In tandem with this substantial rise in demand, India has set a resolute target to reduce its carbon emissions by 35% from

2005 levels. Achieving this dual ambition necessitates a significant transformation in the countrys energy generation capabilities.

To navigate this juncture successfully, India faces the formidable task of tripling its power generation capacity by 2030. This ambitious undertaking is essential to accommodate the imminent surge in energy demand while maintaining its environmental commitments. The convergence of these goals signifies Indias resolute dedication to sustainable development and underscores the critical role that solar energy, with its exceptional growth trajectory, will play in propelling the nation toward a cleaner and more energy-diverse future.

The Indian Solar EPC Market

The Green Open Access Policy implemented in 2022 marked a significant triumph for the solar Engineering, Procurement, and Construction (EPC) market. This led to a surge of new entrants, underscoring a dynamic solar industry ripe with abundant prospects. The fiscal year 2022-23s Union Budget allocated 3,365 crore to the solar power sector, particularly for off-grid solar initiatives.

In the initial half of the calendar year 2022, India accomplished the installation of roughly 7.2 GW of solar projects, signifying a remarkable year-on-year increase of over 50%. This growth underscores the thriving solar sector with a multitude of opportunities. By year-end, India ascended to the 4th position globally in solar deployment, bolstered by the addition of 61.97 GW to its total installed solar capacity. Notably, around 85% of this capacity surge stemmed from utility-scale projects, indicating substantial expansion as top EPC players initiated and executed projects. Thisachievementholdsgreat ambitious goal is to establish 500 GW of renewable energy capacity by 2030. The enhancement of rooftop solar infrastructure is also underway to facilitate the realization of this 2030 target. The country also observed the establishment of various floating solar power projects within the same year.

Anticipated within the EPC sector is the emergence of a novel technological trend characterized by innovative solutions aimed at enhancing efficiency. driven approach is poised to revolutionize EPC practices and bolster overall sector effectiveness.

"Indias solar EPC market shines with innovation, propelling the nation towards its ambitious 500 GW renewable energy target by 2030."

Source: https://ember-climate.org/insights/research/india-data-story-2023/ https://www.saurenergy.com/solar-energy-news/solar-epc-after-strong-2022-industry-looks-ahead-to-continuity-in2023#:~:text=The%20EPC%20 market%20reported%20good,50%25%20increase%20year%20on%20year

In FY23, the company experienced significant growth, with revenues increasing to 9,426 Lakhs from 9,128 Lakhs in FY22. Profitability also improved, with PAT reaching 361 Lakhs compared to 288 Lakhs in FY22, resulting in a higher PAT margin of 3.82%. The companys financial health showed remarkable progress, as Net Worth increased to 4,530 Lakhs .

Ratio Analysis

Needed along with auditors comments

Segment Wise Performance

The company only operates in one segment Electric Contractor and Manufacturer

COMPANY OVERVIEW

Founded in 1983, Power & Instrumentation (Guj.) Limited is a prominent contracting firm specializing in Electrical, Mechanical, and Instrumentation Engineering services. With a strong focus on quality, the company provides end-to-end solutions encompassing design, procurement, installation, testing, commissioning, and maintenance.

This comprehensive approach has earned the company

ISO 9001 : 2015 certification and a loyal client base, often resulting in repeat orders. The company offer a diverse range of services, including transformers, power distribution panels, SCADA systems, lighting solutions, and more, tailored to meet individual project requirements.

Financial Highlights

Particulars	FY2021-22	FY2022-23
Revenues	9,128	9,426
EBITDA	730	856
EBITDA Margin (%)	8	9
PAT	288	361
PAT Margin (%)	3	4
Net Worth	3,643	4,530
Cash from Operations	-262	126
Cash from Investments	53	-475
innovation-
Cash from financial Activities	208	366

RISK AND CONCERNS:

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives.

Key business risks and mitigation strategy are highlighted below.

Business Risk

To mitigate the risk of high dependence on any one business for revenues, the Company has adopted a strategy of launching new products/services, globalising its operations and diversifying into different business segments. The strategy has yielded good results and the Company therefore has a diversified stream of revenues. To address the risk of dependence on a few large clients, the Company has also actively sought to diversify its client base.

The Company strives to add value to its clients by providing services of a superior quality and maintaining a robust franchise with investors and end-users, to mitigate the risk arising from price competition.

Legal & Statutory Risk

The Company has no material litigation in relation to contractual obligations pending against it in any court in

India or abroad. The Company Secretary, compliance and legal functions advice the Company on issues relating to compliance with law and to pre-empt violations of the same. The Company Secretary submits a quarterly report to the Board on the Companys initiatives to comply with the laws of various jurisdictions. The Company also seeks independent legal advice wherever necessary.

Human Resource Attrition Risk

Power And Instrumentation (Gujarat) Limiteds key assets are its employees. In a highly competitive market, it is a challenge to address the attrition. Power And Instrumentation (Gujarat)

Limited continues to accord top priority to manage employee attrition by talent retention efforts and offering a competitive salary and growth path for talented individuals.

Macroeconomic Risks

Companys business may be affected by changes in

Government policy, taxation, intensifying competition and uncertainty around economic developments in Indian and overseas market in which the Company operates.

Mitigation Strategy

The Company has well defined conservative internal norms for its Business. The Company ensures a favourable debt/ equity ratio, moderate liquidity, strong clientele with timely payment track record, appropriate due diligence before bidding and focus on expanding presence in newer markets to minimize the impact in adverse conditions. The Company has geographically and operationally diversified into multiple countries and business segments thereby reducing its dependency on one country or market.

Operational Risks

The Companys operations and financial condition adversely affected if it is unable to successfully implement its growth strategies. Competition from others, or changes in the products or processes of the Companys customers, should reduce market prices and demanding for the Companys products, thereby reducing its cash Product liabilities claims may adversely affect the Companys operations and finance.

Mitigation Strategy

The Company does strict monitoring of prices and adopts appropriate strategies to tackle such adverse situations. The

Company also adopts technological innovations to bring about operational efficiency in continuous basis to remain competitive.

Others of TheCompanyisexposedtorisks& foreign exchange rates, raw-material prices and overseas investments exposures.

AUDIT AND INTERNAL CONTROL SYSTEM:

One of the key requirements of the Companies Act, 2013 is that companies should have adequate Internal Financial

Controls (IFC) and that such controls should operate effectively. Internal Financial Controls means the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. Your Company process of assessment ensures that not only does adequate controls exist, but it can also be evidenced by unambiguous documentation. The process involves scoping and planning to identify and map significant accounts and processes based on materiality. Thereafter, risk is identified and their associated controls are mapped, else remediation is implemented. These controls are tested to assess operating effectiveness. The auditor performs independent testing of

FINANCIAL PERFORMANCE:

During the year under review, the Company has generated total revenue of Rs. 9174.90 lakh (Previous Year Rs. 8625.22 lakh). The net profit before exceptional items and taxes is Rs. 496.03 lakh (Previous Year Rs. 464.78 lakh). The net profit after taxes resulted into the profit lakh (Previous Year Rs. 345.83 lakh).

MATERIAL DEVELOPMENTS IN HR / INDUSTRIAL RELATION / NUMBER OF PERSON EMPLOYED:

Our Company believes that the human capital is key to bring in progress. The Company believes in maintaining cordial relation with its employees, which is one of the key pillars controls. The Auditors Report is required to comment on whether the Company has adequate IFC system in place and such controls are operating effectively. Your Companys Internal Control System is robust and well established. It includes documented rules and guidelines for conducting business. The environment and controls are periodically monitored through procedures/ processes set by the management, covering critical and important areas. These controls are periodically reviewed and updated to reflect the could be changes in the business and environment. The audit committee met 4 (four) times during the year. The committee reviewed the adequacy and results of the testing of Internal Financial Controls and Internal Audit actions. and

RAW MATERIAL PRICES:

The prices of basic major raw materials used in our manufacturing process viz. stainless steel scrap /flats of various grades doesnt affect much, as we are working in open market scenario.

of the Companys business. The Companys HR policies and practices are built on core values of Integrity, Passion, Speed, and Commitment. The Companys focus is on recruitment of good talent and retention of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value for our shareholders. As on 31st March, 2022, the total employees on the Companys rolls stood at 87.

ACCOUNTING POLICIES:

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements have been prepared under the historical cost convention on an accrual basis.

The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgment used therein.

DISCLOSURE OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS:

There is no change of 25% or more as compared to the immediately previous financial year.

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENT:

The Company has followed all relevant Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) while preparing Financial Statements.

CAUTIONARY STATEMENT:

Statements in the management Discussion and Analysis describing the Companys expectations or predictions may forward looking within the meaning of applicable securities, law and regulations. Actual results may differ materially those expressed in the statement. Important factors that could influence the Companys operations include global domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, in government regulations, tax laws economic developments within the country and other factors such as litigation and industrial relations.