The Management Discussion Analysis ("MDA") is a report containing a review
and analysis of Industry Structure and Developments, Opportunities and Threats,
Performance of the Company, Internal Control Systems and their Adequacy, Key financial
aspects and the Overall Risks and Concerns during the financial year and till date of this
report.
GLOBAL ECONOMY
From the beginning of this millennium several events can be recollected that have had a
mixed impact on the global economy. In the first decade it started with the technology
bust, followed several years later by the global financial crisis. The second decade, was
relatively better than the first decade, which recorded the constant growth without having
any bigger problem for the most of its time. Before the third decade of the new millennium
commenced, incidents of global economic turbulence were generally spaced out, allowing
economies breathing time to recover before preparing for the next challenge.
The Covid-19 pandemic notified by the WHO in January 2020 was the first challenge of
the third decade that hit global growth. Two years later, as the global economy was
recovering from the pandemic-induced output contraction, the Russia-Ukraine conflict broke
out in February 2022, triggering multiple issues simultaneously. Global economic recovery
was well on track until the Russia-Ukraine conflict broke out in February 2022. The
conflict has now continued for more than one year, disrupting the restoration of the
supply chains disrupted earlier by lockdowns and causing many more issues.
Global growth is projected to fall from 3.5 percent in 2022 to 3.0 percent in both 2023
and 2024 on an annual average basis. The forecast for 2023-24 remains well below the
historical annual average of 3.8 percent.
INDIAN ECONOMY
The impact of the pandemic on India was seen in a significant GDP contraction in
Financial year 2020-21. The following year, i.e., Financial Year 2021-22, the Indian
economy started to recover despite the Omicron wave of January 2022. Country also noticed
the constant growth during the current financial year. The effects of the Covid-19 seems
to be recovered in full. The GDP in India has expanded with 7.2% in the financial year
2022-23. For the 2023-24 financial year, the central bank projects GDP growth at 6.5%.
Also our country has managed the inflation relatively better than other developing and
developed countries of the world specially for the years after Covid-19.
FORWARD-LOOKING STATEMENT
The forward-looking statements which may be identified by their use of words like
plans, anticipate, believe, estimate, expect, intend, will, projects or
other words of similar expressions as they relate to the Company or its business are
intended to identity such forward-looking statements. All statements that address
expectations or projections about the future, including, but not limited to statements
about the Companys strategy for growth, development, market position, expenditures, and
financial results are forward looking statements. These are based on certain assumptions
and expectations of future events. The Company cannot guarantee that these assumptions and
expectations are accurate or will be realized. The Company undertakes no obligations to
publicly update or revise forward looking statements, whether as a result of new
information, future event or otherwise. Actual results, performances or achievements could
differ materially from those expressed or implied in such statements. Therefore, as a
matter of caution, undue reliance on the forward-looking statements should not be made as
they speak only of their dates. The above discussion and analysis should be read in
conjunction with the Companys financial statements included herein and the notes thereto.
Unless otherwise specified or the context otherwise requires, all references herein to
"we", "us", "our", "the Company", or "SRM
Energy" are to SRM Energy Limited and/or its subsidiary company.
INDIAN POWER SECTOR OUTLOOK
The Indian power sector has undergone a significant transformation in the past decade.
In 2012, the energy deficit was nearly 4.2%. Over 175 GW of generation capacity has been
added since 2014 transforming the country to a power surplus. The whole country has been
connected to one grid by adding 173,459 circuit kilometres of transmission lines in the
last 8 years and the power transmission capacity in Inter-State Transmission Systems
(ISTS) is now 112,250 MW in different directions resulting in "One Nation - One Grid
- One Frequency". The Indian grid has now emerged as the largest integrated grid in
the world.
In past few years The country had pledged that by 2030 more than 40% of the installed
electricity generation capacity will be from non-fossil fuel sources. This target has been
achieved 9 years ahead of schedule - in November, 2021. Indias non-fossil fuel capacity
is already 42 percent. The country is currently on the path to honour the pledge in COP26
at Glasgow that 50% of the electricity generation installed capacity will be met from
non-fossil fuel sources by 2030.
India is the third-largest producer and consumer of electricity worldwide, with an
installed power capacity of 416.59 GW as of April 30, 2023.
As of April 30, 2023, Indias installed renewable energy capacity (including hydro)
stood at 172.54 GW, representing 41.4% of the overall installed power capacity. Solar
energy contributed 67.07 GW, followed by 42.86 GW from wind power, 10.24 GW from biomass,
4.94 GW from small hydropower, 0.55 GW from waste to energy, and 46.85 GW from hydropower.
The non-hydro renewable energy capacity addition stood at 4.2 GW for the first three
months of Financial 2022-23 against 2.6 GW for the first three months of Financial
2021-22.
Indias power generation witnessed its highest growth rate in over 30 years in
financial years 2022-23. Power generation in India increased by 8.87% to 1,624.15 billion
kilowatt-hours (kWh) in financial years 2022-23. According to data from the Ministry of
Power, Indias power consumption stood at 130.57 BU in April, 2023.
INDUSTRY STRUCTURE AND DEVELOPMENTS
Indias power sector has undergone a remarkable transformation, aimed at providing
reliable, affordable, and sustainable energy to its people. Over the last 9 years,
significant efforts have been made in enhancing power generation capacity, expanding
access to electricity, promoting renewable energy, and implementing innovative policies.
The country explores the inspiring achievements and transformative initiatives that have
propelled Indias power sector to the new heights.
Indias journey towards a greener future has gained global recognition. With the
addition of over 175 GW of generation capacity in the past nine years, India has
transitioned from a power deficit to a power surplus nation.
With achievements like universal electrification, the rapid expansion of renewable
energy, improved distribution, and enhanced energy efficiency, India has set an inspiring
example for the world. The commitment of the Government of India, coupled with the
participation of stakeholders, has propelled the nation towards a future powered by
sustainable, affordable, and reliable energy.
Generation
The total electricity generation including generation from renewable sources in the
country during the current year 2022-23 (Upto December 2022) was 1223.135 BU as against
the generation of 1113.712 BU during the corresponding period last year, showing a growth
of 9.83%.
The electricity generation from Fossil Fuel Power Plants (Thermal) during 2022-23 (Upto
December 2022) has increased by 9.2% over same period last year. The electricity
generation from Non-Fossil Fuel Power Plants during 2022- 23 (Upto December 2022) has
increased by 11.5% over corresponding period last year. Share of generation from
Non-Fossil Fuel in total generation has been 27.1% during the current year 2022-23 (Upto
December 2022).
The electricity generation in the country increased from 878.30 Billion Unit (BU)
during 2014-15 to 1223.10 BU during the year 2022-23 (Upto December 2022).
Fuel
Coal remains the predominant indigenous energy source in the country. The energy
security of the country and its prosperity are integrally linked to efficient and
effective use of this abundant, affordable and dependent fuel, coal. The dependability on
coal may be gauged by the fact that about 49.3% of Indias installed power capacity is
coal (excluding lignite) based.
Today, India is the 2nd largest producer of coal in the world producing about 893.08
Million tonne of coal in 2022-23.
Transmission
The transmission system has expanded over the years for evacuation of power from
generating stations to load centre through Intra State and Inter State Transmission
System. The progressive integration of regional grids started in 1992, and on 31st
December 2013, our country achieved ONE NATION-ONE GRID-ONE FREQUENCY with
synchronous interconnection of Southern Region Grid with rest of the Indian Grid with the
commissioning of 765 kV Raichur-Solapur Transmission line.
India has become one of the largest synchronous interconnected electricity grids in the
world with 4,71,817 ckm of transmission line and 11,85,058 MVA of transformation capacity
(as on April 23). Besides, our inter-regional capacity increased by 212% to 1,12,250 MW
since 2014.
Distribution
Distribution is the key link in realizing the Government of Indias vision of supplying
reliable 24x7 Power for all. In this regard, the financial health of distribution
companies is of prime importance, enabling them to efficiently discharge their functions
and responsibilities. However, their poor financial health has remained a matter of
concern. To reverse this trend, reduction of AT&C losses and ACS (Average Cost of
Supply) - ARR (Average Revenue Realization) gap are critical factors. With these
intentions, Revamped Distribution Sector Scheme (RDSS) has been launched to reinvigorate
the DISCOMs
Under this scheme Action Plans for 46 DISCOMs (28 States/UTs) have been approved where
~20.46 crore pre-paid smart consumer meters, ~54 Lakh smart DT meters and ~1.98 Lakh smart
feeder meters have been sanctioned.
OPERATIONAL PERFORMANCE
The Company had plan to set up a power project at Tamilnadu with a capacity of 3X660 MW
i.e. 1980 MW. The said plan was proposed to be set up through the Wholly Owned Subsidiary
SRM Energy Tamilnadu Pvt. Ltd. The Company is not having any operations at present.
Management has been regularly informing you that the project could not take off due to
various factors inter-alia including the unfavourable industrial scenario, change in the
Govt. Policies over the period of time, status of the land acquisition, and overall
investment being low.
The companys position remained unchanged since last year, the accumulated loss of the
Company has increased from Rs. 120.31 Millions in financial year 2021-22 to Rs. 123.89
Millions in the reporting year. Also the net worth of the Company has fallen to Rs. 33.29
Millions in negative in the reporting year from Rs. 29.71 Millions in negative in the
previous financial year.
As informed in the earlier annual reports the company initiated the process for sale of
land of subsidiary company and utilized the sale proceeds towards settling of loan as
extended to its subsidiary. Further, as per the circumstances, an arrangement is made
where the sale proceeds of the land are being utilised to carry out statutory,
administrative, other day to day expenses and also to settle the existing liabilities of
the WOS and our Company over and above the existing arrangements. The Company obtained
shareholders approval for the same on 15th April, 2021.
Till the end of financial year 2023, out of 215.140 Acres of Land, the WOS had sold
191.68 Acres of Land for Rs. 437.29 Lakhs. Further, during current financial year
(2023-24) the remaining land admeasuring 23.46 Acres has also been sold. At present
Company is having no land in its account for further selling. The sale price of the land
has adversely affected the realisation of the sale proceeds post pandemic.
PROJECT AT CUDDALORE
As reported earlier, in this year too status of the Company has remain unchanged in
terms of implementation of the project, its overall operation. We had apprised you about
the current status of the Company and the various reasons due to which the project could
not took off and is abundant.
HUMAN RESOURCES
Your Company has laid high emphasis on driving an effective and transparent Performance
Culture and an open mindset.
Your Company is committed to create an environment of learning and development,
promoting internal talent and developing cross functional expertise. The human resource
strategy is focused on creating a performance-driven environment in the company, where
innovations is encouraged, performance is recognized and employees are motivated to
realize their potential.
INTERNAL CONTROL SYSTEMS
Your Companys internal control systems are commensurate with the nature, size and
complexity of its business and ensure proper safeguarding of assets, maintaining proper
accounting records and providing reliable financial information. The Board and Audit
Committee regularly evaluates the functioning and quality of internal controls and
provides assurance of its adequacy and effectiveness through periodic reporting.
RISKS AND CONCERNS
The Company recognizes that every business has its inherent risks and it is required to
possess a proactive approach to identify and mitigate them. Your Company has embedded an
efficient organizational risk management framework, which regularly scans all possible
internal and external environments to identify risks and decide on possible mitigation
plans.
CAUTIONARY STATEMENT
Certain statements in the Management Discussion and Analysis may be forward-looking.
Actual outcomes may vary from those expressed or implied. The Company assumes no
responsibility to publicly amend, modify, update or revise any such statements on the
basis of subsequent developments, information or events.
+91-9892691696
