Sangam Renewables Ltd Management Discussions.

Company Structure and Development

In the renewables energy sector, the Company focused continue in niche area viz. roof-top and agri-feeder. Besides prime focus on renewable sector, the Company provides advisory services in solar specific vertical. During the year under review, the Company commissioned 1.66 MW rooftop project, inked 10.7 MW roof-top projects to be executed over 6 to 9 months and also signed PPA for 154 agri-feeder projects in Maharashtra. The Companys business is carried out from its registered office in Mumbai.

Industry Overview:

2017 was best year for India having added 13 GW of renewable capacity. Indias 2022 vision is to build 100 GW of solar power plants which is a part of 175 GW renewable energy goal. This 100 GW is split into 3 parts i.e. 40 GW of utility scale power plants, 40 GW of rooftop Power plants and the other 20GW to be deployed by public sector companies owned by GOI.

Installation of renewable energy projects will be higher than fossils fuel technologies for the first time in 2017 and in the years thereafter. The country added 13 GW of renewable energy plants in FY2017 (April 2016 to March 2017) - a 66% year- on-year growth over FY2016. The energy transition is all about the transition from fossil energy sources to sustainable and renewable sources such as wind and solar energy, about people who produce, use, and store their own energy. Given the large role that government plays in the energy transition, the Company sees a huge potential in the industry and is tapping these opportunities.

A compound annual growth rate (CAGR) of 117% in annual installations between FY2013 and FY2017 makes rooftop PV the fastest growing renewable energy sub-segment in India. This growth is mainly driven by savings in electricity bills and increasing consumer acceptance along with fierce competition in the market.

Operational Performance

During the current year, your Companys revenue on consolidated basis was 203.37 lakhs as against Rs. 25.86 lakhs in previous year and profit of Rs.37.90 Lakhs as against loss of Rs.3.28 in previous FY 2016-17.

Global Outlook

Solar technologies have improved by leaps and bounds over the last decade, and technological breakthroughs have positioned the industry for huge growth. Invention of thin film panels, efficient solar cells and light-sensitive nanoparticles have triggered improved efficiency, better reliability and excellent cost-effectiveness. Global solar PV continues on a period of exceptional growth; its annual installed capacity in 2017 was 101.6 GW, almost double the 51.4 GW installed in 2015. With 11 GW, India is set to become the second largest solar PV market in 2018, usurping the U.S., as global demand reaches 113 GW. The global market outlook for solar power is bright. Never before, was solar power as competitive as it is today.

Opportunities and Challenges

For our Company huge opportunities exist in solar PV Rooftop market, in public and private sector, and specifically in C&I market segment. The average installation size of C&I rooftop PV installations by the 20 largest companies has increased from 250kW in FY2015 to 855kW in FY2018. This has been made possible by better utilization of rooftop space and the willingness of consumers to meet a higher share of demand through onsite sources. More than 1GW rooftop PV projects were auctioned by various government bodies in the first nine months of 2017 due to a strong policy push by national and local governments.

CAPEX and RESCO are two models the company would focus in this year. The opportunity is tremendous in this field. The upfront capital payment model (‘capex) made up three quarters of the market in 2017, whereas the RESCO model accounted for 22%. Large corporates with the ability to make upfront investments had previously preferred capex model but are now increasingly opting for RESCO projects to reduce performance risks. The tilt towards the RESCO model is driven by an increase in the number of companies offering projects under this model, government procurement, acceptance by large C&I consumers of long term contracts and lower performance risks. Lack of financing for RESCO companies however continues to be a dampener. RESCO adoption has been limited to C&I and government clients so far.

Other policies & Government initiatives:

Net Metering policy, subsidies for residential, institutional & government consumers provides robust business opportunities for Company like us. 29 states and 7 union territories have notified grid connectivity of solar PV plants under Net metering policy and regulations. However, net/gross metering on-the-ground implementation remains patchy. Besides this, the Government of India has recommended mandatory rooftop solar installations for buildings exceeding specified size and/or power consumption thresholds under the model. Four states and union territories - Uttar Pradesh, Haryana, Chandigarh and Chhattisgarh - have adopted these regulations so far by amending the Building Bye Laws that mandates any new buildings to incorporate Renewable energy in their rooftops.

Ministry of New and Renewable Energy has sanctioned subsidy of INR 50 billion ($ 750 million) accounting for 30% capital subsidy for rooftop solar for residential and institutional consumer segments. In addition, up to 30% subsidy is also available for government projects.

Boost in government demand, on the other hand, is very encouraging with Government is expected to become a major demand source for rooftop solar in the coming years. All building facilities under different central government departments are being urged to adopt rooftop solar and a potential of 6 GW capacity has been identified so far. SECI has already announced over 1000 MW of tenders for such buildings.

Financing is a major backbone for solar PV segment expansion. The Government of India, with assistance from multilateral financial institutions such as Asian Development Bank, The World Bank and New Development Bank, has earmarked US $ 1,470 millions of concessional credit lines for the rooftop solar market.

Thus, in coming years, Company has a larger market size play available to explore with right mix of financing, end user segment as target and execution capabilities to deliver.

Risk & Concerns

The Company is exposed to various business risks such as un-anticipated labour costs, interest rates, financing appetite of lenders, execution challenges such as less experienced installers, strength of roof, rental property, government regulatory policy changes, likely imposition of anti-dumping and/or safe guard duty, delay in subsidies payments, lack of third party insurance products, future construction risk and above all biggest risk of tariff re-negotiation by power off-taker in light of dropping tariffs, global sourcing, forex and solar plant cost. The Company is also exposed to the fluctuations of economy and industry cycles / downturns.

Adequacy of Internal Control System

The Companys has adequate internal control systems for the business processes in respect of all operations, financial reporting, compliance with laws and regulations, etc. The Management information system forms an effective and sound tool in monitoring and controlling all operating parameters. Regular internal audits ensure that responsibilities are executed effectively. The Audit Committee reviews the adequacy of internal controls on regular basis.

Human Resource Development

The company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Company is committed to nurturing, enhancing and retaining all its employees through superior Learning and Organizational development. The company recognises that its employees are critical pillar to support the organizations growth and its sustainability in the long run.

Cautionary Statement

Statement made in the Management Discussion and Analysis Report, as describing the Companys outlook, projections, estimates, expectations and predictions may be "Forward Looking Statements" within the meaning of applicable securities Laws and Regulations. Actual performance may be could differ materially from those expressed or implied.

By Order of the Board of Directors

sd/- sd/-
Mayank Shah Ankit Hitesh Doshi
(Managing Director) (CFO & Director)
DIN:00076380 DIN:07605202
Place: Mumbai
Dated: June 22, 2018