Sterling Powergensys Ltd Management Discussions

Your Directors have pleasure in presenting the management discussion and analysis report of the year ended on 31^st March, 2025.

1. Overall & Business Review:

Sterling Powergensys Limited, engaged in the business of solar power plants, demonstrated significant growth in sales for the financial year ended March 31, 2025. Despite challenges, the company achieved a notable increase in revenue compared to previous periods, reflecting its commitment to expanding operations and leveraging opportunities in the renewable energy sector. However, profitability was impacted, with losses reported due to higher operational costs and other financial adjustments. The management remains optimistic about future prospects, focusing on innovation and efficiency to strengthen its position in the solar energy market while addressing financial performance concerns.

The Indian government has taken significant steps to promote solar power through various initiatives. Indias Solar Initiative 2025 aims to expand solar energy capacity to 300 GW by 2030, focusing on large- scale solar parks, rooftop installations, and integrating solar power with smart grids. The Union Budget 2025 has allocated substantial funds for solar infrastructure development, extended the Production- Linked Incentive (PLI) scheme for domestic solar panel manufacturing, and reduced customs duties on critical components. Additionally, schemes like PM Surya Ghar: Muft Bijli Yojana offer subsidies for rooftop solar installations, targeting 1 crore households and promoting decentralized energy systems. These initiatives are designed to enhance Indias renewable energy landscape, reduce carbon emissions, and ensure energy security.

Some of the initiatives taken by the Government of India to boost Indias renewable energy sector is as follows -

• The Government of Indias Union Budget 2025 has introduced several initiatives to boost the renewable energy sector, particularly focusing on solar power. The budget allocates ^48,396 crore to the energy sector, with ^26,549 crore dedicated to the Ministry of New and Renewable Energy (MNRE) and ^21,847 crore to the Ministry of Power. This significant investment aims to accelerate Indias transition to clean energy, aligning with the goal of achieving 500 GW of nonfossil fuel capacity by 2030.

• The solar sector has received a substantial boost with a dedicated allocation of ^242.24 billion (approximately $2.79 billion) for solar energy projects. Additionally, a ^10,000 crore (approximately $1.16 billion) fund has been announced for developing solar infrastructure, including large-scale solar parks and rooftop installations.

• The Production-Linked Incentive (PLI) scheme for solar module manufacturing has been extended with an enhanced outlay of ^24,000 crore (approximately $2.78 billion), aiming to reduce dependence on imported solar panels and promote domestic manufacturing. Customs duties on solar cells and modules have been reduced from 25% and 40% to 20%, respectively, to make solar projects more cost-effective.

• One of the key initiatives is the PM Surya Ghar: Muft Bijli Yojana, which has been enhanced with an allocation of ^20,000 crore to promote rooftop solar installations across one crore households. This initiative not only empowers households with clean energy but also boosts job creation in the solar installation sector. Additionally, the budget includes a reduction in customs duties on

solar cells and modules from 25% to 20% and from 40% to 20%, respectively, to enhance domestic solar manufacturing competitiveness.

• To support the integration of renewable energy into the grid, the budget allocates ^1,450 crore for transmission infrastructure, including ^600 crore for Green Energy Corridors (GECs). These corridors are crucial for transmitting power from large solar and wind farms to the national grid, ensuring efficient energy evacuation and supporting Indias goal of achieving 500 GW of nonfossil fuel capacity by 2030. Furthermore, the budget includes ^10,000 crore for expanding solar power infrastructure, which will be instrumental in developing solar parks and rooftop installations.

• As of December 2024, Indias total installed non-fossil fuel capacity surpassed 200 GW, with solar capacity nearing the 100 GW milestone. Maharashtra, with its strong industrial base and favorable policies, is poised to play a crucial role in achieving Indias renewable energy targets. The states solar installations have been increasing steadily, and with the new budget allocations, it is expected to see a significant rise in solar power generation capacity. For instance, the allocation for the solar sector has increased from ^150.61 billion to ^242.24 billion, reflecting a growth of over 60%. This surge in funding will likely attract more private investment and bolster investor confidence in Maharashtras renewable energy sector.

• Statistically, Indias total installed non-fossil fuel capacity has surpassed 200 GW, with solar power contributing significantly to this growth. As of December 2024, India had 97.9 GW of solar capacity, and the country is poised to reach the 100 GW milestone soon. The budgets emphasis on solar energy and renewable infrastructure is expected to drive further growth in these sectors, positioning India as a leader in the global renewable energy landscape

Further note trading of commodity from Dubai branch is also much cost saving and revenue generating segment for the Company as branch situated in free zone and opens the avenues for global trading.

2. Industry Structure & Development:

Indias renewable energy sector has undergone significant transformation, positioning the country as a global leader in clean energy. As of November 2024, Indias installed non-fossil fuel capacity reached 205.52 GW, accounting for 42% of its total power capacity, with solar energy witnessing remarkable growth. Solar power capacity surged from 2.5 GW in 2014 to approximately 94.16 GW in 2024, reflecting a 30-fold increase. The government aims to achieve 500 GW of non-fossil fuel-based capacity by 2030, supported by annual bids of 50 GW for renewable energy projects from FY 2023-24 to FY 2027-28, including at least 10 GW of wind power annually. Indias National Solar Mission and initiatives like the International Solar Alliance have bolstered solar adoption, leveraging the countrys estimated solar potential of 750 GW. Furthermore, clean energy investments reached USD 68 billion in 2023, nearly doubling since 2016-2020. With forward-looking policies and technological advancements, India is rapidly transitioning towards sustainability while addressing challenges like grid infrastructure and financing gaps.

In addition, the government has also implemented key schemes such as PM-KUSUM, Green Energy Corridors, and the Production Linked Incentive (PLI) Scheme for High-Efficiency Solar PV Modules, which is expected to generate over 1 lakh jobs and attract significant investments. These initiatives are complemented by efforts to strengthen transmission infrastructure and promote domestic manufacturing, positioning India as a global leader in renewable energy while addressing climate change and energy security goals.

3. Opportunities & Threats:

Opportunities - The renewable energy sector in India, particularly solar power, presents numerous opportunities for growth and development. As of now, India is the third-largest producer of solar power globally, with an installed capacity of 102.57 GW as of February 2025. The government aims to achieve 500 GW of renewable energy by 2030, with at least 250 GW coming from solar power, aligning with its commitment to reduce carbon emissions and achieve net-zero by 2070. This ambitious target is expected to generate significant business opportunities, potentially creating around 3.4 million jobs by installing new solar and wind capacities by 2030. Additionally, the sector has attracted substantial foreign investment, with nearly $20.7 billion invested in solar projects from 2010 to 2019, and $3.76 billion in FY2023-24 alone. The cost-effectiveness of solar energy, coupled with government initiatives like the National Solar Mission and the Production Linked Incentive (PLI) scheme for solar modules, further enhances its economic viability and job creation potential. Overall, Indias renewable energy transition, led by solar power, offers substantial opportunities for economic growth, employment, and environmental sustainability.

Threats: In Indias renewable energy sector, particularly in solar power, are multifaceted and significant. Land acquisition issues remain a major hurdle, with a 1 GW solar plant requiring about 2,000 hectares, leading to conflicts over grazing lands, as seen in Rajasthans Jaisalmer district. Grid integration and stability are also critical challenges, with the variable nature of solar energy necessitating large-scale storage solutions?India needs 38 GW of four-hour battery storage by 2030 to ensure reliable integration. Additionally, climate change impacts pose risks to infrastructure, with increased extreme weather events threatening solar installations. Supply chain vulnerabilities due to geopolitical tensions and reliance on imported components, such as those from China, further complicate the sector. As of May 2024, India has an installed renewable energy capacity of 191 GW, including 85 GW of solar power, but achieving the ambitious goal of 500 GW by 2030 requires addressing these practical threats.

4. Product wise performance:

The research and development undertaken by the Company for expansion of Companies business in the Green Hydrogen projects for which Company is planning to raise the funds. Along with that commodity trading and solar segment is performed very well in the financial year 2024-25 and expecting to grow in the current financial year.

5. Outlook:

As of now, the solar sector in India is experiencing rapid growth, driven by technological advancements and supportive government policies. The country has surpassed 100 GW of installed solar capacity, with ambitious targets to reach 250 GW by 2030 as part of its broader goal of achieving 500 GW of non-fossil power capacity. The governments Production Linked Incentive (PLI) scheme and import duties are encouraging domestic manufacturing, with plans to increase solar cell and module production significantly by 2025. Additionally, innovations like PERC+ and N-type cells are enhancing module efficiencies, making solar power more cost-effective and space-efficient.

In contrast, the hydrogen sector in India is at an early stage but holds immense potential, particularly for green hydrogen production. The government aims for 5 million tonnes of green hydrogen by 2030, aligning with broader decarbonization goals. However, significant infrastructure development is needed to support large-scale production and transportation of hydrogen. As renewable energy costs continue to decline, green hydrogen is becoming more viable for sectors like industry and transport. The integration of solar energy with hydrogen production will be crucial for achieving these targets, leveraging Indias growing solar capacity to power electrolyzers and produce green hydrogen efficiently.

6. Risk and concern:

Besides the supply chain dynamics for hydrogen and solar power equipments as was discussed in the previous report, the management has also identified certain issues like grid management with unpredictable environments, continuously evolving energy policy and regulations, Increased cyber security risk from expanded infrastructure as the major threats looming over the renewable energy sector however, with increased technological advancements in the distribution sector these threats can be easily overcome in near future. Even though the Company has no control over external factors which may adversely affect the Companys operation. These risk factors are continuously monitored by the management and necessary steps are taken to mitigate them.

7. Internal Control System and their adequacy:

The company involved in the renewable energy sector, has an internal control system that is commensurate with its size, scale, and complexity of operations. The companys internal control system is designed to ensure compliance with operating systems, accounting procedures, and policies. The Board of Directors actively monitors and evaluates the efficacy and adequacy of these internal controls, using reports from the internal audit function to identify areas for improvement and implement corrective actions. This approach helps strengthen the companys controls and maintain robust financial reporting practices.

8. Financial Performance:

During the year under review, the Company has recorded total revenue of Rs.1390.02 Lakhs including the other income against the total revenue in the previous year of Rs.1061.16 Lakhs. Company has generated a Profit of Rs.18.89 Lakhs for the year ended 31st March, 2025 as against loss in the previous year of Rs.283.52 Lakhs.

9. Material Development in Human Resources / Industrial Relations:

Company recognizes the importance of motivated and empowered employees and has a clear employee value proposition focused on employee development, a satisfying work environment, performance appraisal, and appropriate empowerment. Further the Company believes motivated and empowered employees are the cornerstone of competitive advantage. The company has been focusing on building a robust team to support its strategic growth, including its pioneering green hydrogen project. As of recent years, Sterling Powergensys Ltd. has emphasized the importance of human resource management, although specific details on new initiatives or developments in this area are limited. The companys leadership, such as Mr. Navinchandra Joshi, brings extensive experience in managing global operations and driving strategic growth, which is crucial for navigating the complex landscape of renewable energy and hydrogen sectors.

10. Key financial Ratios:

Following are the key financial ratios computed on Standalone basis:

There is significant change (i.e. 25% or more as compared to the immediate preceding financial year) in the above key financial ratios due to financial distress of the Company.

11. Cautionary Statement:

Statement in this report on Management Discussion & Analysis describing the Companys projections and estimates may be forward looking and are based on certain assumptions and expectations of future events. Actual results may differ from projections due to demand-supply condition, prices of finished goods and raw material, changes in Government regulations, tax structure and other factors. The Company assumes no responsibility in respect of forward-looking statements which may undergo change on the basis of subsequent development events.