Surana Solar Management Discussions


Surana Solar Limited (Formerly known as Surana Ventures Limited) was incorporated in the year 2006, a flagship Company of Surana Group. During the year 2008, the Company entered into the business of manufacture of solar energy systems with focus on solar PV Modules. Pursuant to Scheme of Arrangement the "Solar Undertaking" of Surana Telecom and Power Limited, a Group Company was merged with the Company. The shares of the Company were listed on Stock Exchanges w.e.f 7th January, 2011. The Company has steadily grown over the years with a continued focus on customer satisfaction, evolving itself into countrys one of the most promising mid cap Companies.

The Company has manufacturing facilities at Cherlapally and FAB City in Hyderabad which have ISO 9001: 2008 certification accredited by AQA International LLC, Dubai.

The Companys products and systems have been accorded approvals by various test agencies such as EURO TEST Laboratories, TUV INTER CERT and many more. The Company possesses excellent skills and capabilities in providing complete EPC solutions for large, commercial solar power plants of megawatt scale.

A) INDUSTRY STRUCTURE AND DEVELOPMENTS: Solar Photovoltaic (PV): Rooftop solar capacity addition was at an all-time high at 2.2 GW (up 68% over last year). The increase was predominantly driven by the residential solar segment, which saw 746 MW of new installations. The total project capacity (allocated by the government and public agencies) in the pipeline stood at 67 GW (54 GW of solar and 13 GW wind), with SECI having the highest offtake share of 60% (40 GW), followed by Discoms (22%, 15 GW). Module prices surged by 34% in the first half (the April-September period) due to supply-side constraints in China but eased slightly in the second half. Year-end imported and domestic module prices at $0.26/watt and $0.32/watt, respectively, were still about 25% up over the previous year.

The Company has manufacturing units at Fabcity, SEZ, Hyderabad and Cherlapally, Hyderabad. The manufacturing unit at Cherlapally has installed capacity of 40 MW and the manufacturing unit at Fabcity has installed capacity of 20 MW for manufacture of ‘Solar Photovoltaic Modules". The Companys products are sold under the brand ‘Surana Solar (formerly ‘Surana Ventures) in the domestic market. It has system-driven processes for manufacturing products and operations, following quality process at every stage to ensure delivery of high quality products and services. The Company is manufacturing / assembling the Solar Photovoltaic Modules and installation of rooftop solar for commercial establishments, domestic and industrial units.

Wind Power: The Company had wind power with an installed capacity of 1.65 MW in the State of Maharashtra, which has been disposed off on Slump Sale after the end of the said Financial Year.

B) OPPORTUNITIES AND THREATS:

India has tremendous potential in renewable energy. As part of Paris Climate Agreement, India has committed to achieve forty percent of its installed electricity capacity from non-fossil fuels by 2030. For achieving this goal, India has set an ambitious target of 175 GW of installed renewable energy (RE) capacity, including 100 GW of solar power, by 2023. India has also set a target of 450 GW installed RE capacity by 2030. As per the Central Electricity Authoritys Optimum Energy Mix report, the electricity requirement of the country by 2029-30 will be 817 GW, including the 450 GW from renewable energy sources, out of which 280 GW would come from solar energy. To achieve the target of 280 GW, around 25 GW of solar energy capacity is needed to be installed every year, till 2030.

The Government is committed to increased use of clean energy sources and is already undertaking various large-scale sustainable power projects and promoting green energy heavily with a target to reduce the emissions intensity of GDP by 33% - 35% below the 2005 levels and increase share of non-fossil fuel in total capacity to 40% by 2030. The governments goal of installing 175 GW of renewable energy, 100 GW of which is solar capacity, by 2023 looks achievable with the right policies and participation of the industry. Indias solar sector is heavily reliant on imports of solar equipment. Certain countries dumping solar cells and modules to kill the nascent domestic industry, because of which Government had to impose Safeguard Duties. Considering Indias huge solar targets and that electricity is a strategic sector of the economy, India needs to develop domestic solar manufacturing capacities and reduce its dependence on imports to avoid disruption in future, Government has announced to impose 40% Basic Customs Duty (BCD) on Solar Modules and 25% BCD on Solar Cells from 1st April, 2023. The customs duty will replace a 15% safeguard duty currently imposed on imports from China and Malaysia. Further, the Government has announced Production-Linked Incentive (PLI) Scheme for Highly Efficiency Solar PV Modules for Enhancing Indias Manufacturing Capabilities and Enhancing Exports over a five-year period.

C) SEGMENT-WISE OR PRODUCT WISE PERFORMANCE: During the year under review, the Company has recorded revenue of Rs. 4696.36 Lakhs and made a net profit of Rs. 228.49 Lakhs against revenue of Rs. 2570.57 Lakhs and net profit of Rs. 84.58 Lakhs in the previous financial year 2021-22.

The following segment wise turnover in percentage wise during the financial year 31.03.2023:

Solar Energy - 99.43 %
Renewable Energy - 0.57 %
Trading - NIL

D) BUSINESS OUTLOOK:

Solar power in India at current levels is already cheaper than electricity generated through coal, natural gas or other fossil fuel options. Support from various central and states government for solar power industry is continuously increasing. The Government of India has set an ambitious target of achieving 175 GW of renewable energy capacity by 2023. With this the market players in India now have enough incentive to move to clean sources of energy. In view of the huge demand for solar product, sufficient government support, encouraging polices and Company having considerable market in this line of activity, the company expects to benefits by the same.

E) RISKS AND CONCERNS:

Your company being manufacturer of solar modules is having risks with levy of import duty and low tariff rates and the government policies. The Company has sufficient risk management policies in place that act as an effective tool in minimising the various risks that the businesses are exposed to during the course of their day-to-day operations as well as in their strategic actions.

F) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has adequate Internal Control Systems and Procedures with regard to purchase of Stores, Raw Materials including Components, Plant and Machinery, equipment, sale of goods and other assets. The company has clearly defined roles and responsibilities for all managerial positions and all operating parameters are monitored and controlled. The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing financial statements and maintaining accountability for assets.

The Company has an Internal Audit System commensurate with its size and nature of business.

M/s Sekhar & Co., a firm of Chartered Accountants, are acting as Internal Auditors of the Company. Planned periodic reviews are carried out by Internal Audit.

The findings of Internal Audit are reviewed by the top management and by the Audit Committee of the Board of Directors. Compliance with laws and regulations is also ensured and confirmed by the Internal Auditors of the Company. Standard operating procedures and guidelines are issued from time to time to support best practices for internal control.

G) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

i) FINANCIAL PERFORMANCE:

Capital Structure: The Equity Share Capital of the Company as on 31st March 2023 is Rs. 24,60,33,000 comprising of 4,92,06,600 Equity Shares of Rs. 5 each fully paid

Other Equity: The Other Equity of the Company for the 31.03.2023 year is Rs. 3282.32 lakhs as compared to Rs.3053.83 lakhs in the previous year.

Property, Plant and Equipment:

During the year, the Company has added Fixed Assets amounting to Rs. 19.77 lakhs making the gross fixed assets as on 31.03.2023 to Rs. 5180.45 lakhs.

Inventories:

Inventories amounted to Rs. 1320.95 lakhs as on 31st March, 2023 and in the previous year was Rs. 2069.95 lakhs.

Trade Receivables:

Trade receivables amounted to Rs. 33.67 lakhs as on 31st March, 2023 as against Rs. 354.75 lakhs in the previous year.

Cash and Bank Balances:

Cash and Bank balances with Scheduled Banks amounted to Rs. 18.48 lakhs as on 31st March, 2023 which includes amounts deposited with banks as Security and margin Money Deposit as against Rs.55.42 lakhs in the previous year.

Financial Assets – Loans (Non-Current):

Loans amounted to Rs 1001.01 lakhs as on 31st March, 2023 as against Rs 1123.41 lakhs in the previous year.

Financial Assets – (Current): The amount of Loans amounted as on 31st March, 2023 is 22.45 lakhs as against Rs. 0.79 lakhs in the previous year.

Other Current Assets:

Other Current Assets amounted to Rs. 1004.92 lakhs as on 31st March, 2023 as against Rs. 854.06 lakhs in the previous year.

Current Liabilities:

Current Liabilities amounted to Rs. 151.03 lakhs as on 31st March, 2023 as against Rs. 1269.19 lakhs in the previous year.

ii) OPERATIONAL PERFORMANCE: Turnover: During the year 2022-23 the turnover of the Company (Net of GST) is Rs. 4218.33 lakhs and Rs. 2483.14 lakhs in the previous year.

Other Income is Rs. 478.04 lakhs as on 31st March, 2023 and Rs. 87.43 lakhs in the previous year.

Depreciation:

The Company has provided a sum of Rs. 262.99 lakhs towards depreciation and amortisation for the year and Rs 307.86 lakhs in the previous year.

Net Profit:

The Net Profit of the Company after tax is Rs. 228.49 lakhs and the profit for the previous year is Rs. 84.58 lakhs.

Earnings per Share:

Basic Earnings per Share for the year ended 31st March, 2023 is Rs 0.46 per share for Face Value of Rs.5 and Rs 0.17 per share for the previous year.

H MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The Company believes that the quality of its employees is the key to its success in the long run and is committed to provide necessary human resource development and training opportunities to equip them with skills, which would enable them to adapt to contemporary technological advancements. Industrial Relations during the year continues to be cordial and the Company is committed to maintain good industrial relations through negotiations, meetings etc.

I) DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Ratios 2023 2022 Change (%) Notes
Debtors Turnover Ratio 0.01 0.14 (94.41) Note (a)
Inventory Turnover Ratio 12.00 25.49 (52.92) Note (b)
Interest Coverage Ratio 0.58 9.01 -93.56 Note ?
Current Ratio 19.61 2.63 645.27 Note (d)
Operating Profit Margin 0.76 0.38 (99.90) Note (e)
Ratios 2023 2022 Change (%) Notes
Net Profit Margin 0.05 0.03 59.02 Note (f)
Return on Net Worth 0.04 0.02 100 Note (g)
Debt-Equity Ratio - 0.19 (100) Note (h)
Trade Payables Turn- over Ratio 42.2 39.06 8.03 --
Net Capital Turnover Ratio 1.7 1.2 34.66 Note (i)
Return on investment 0.68 0.0047 14328 Note (j)

Note:

a) Change in the ratio is due to increase in turnover and decrease in trade receivables.

b) Change in the ratio is due to decrease in turnover.

c) Change in the ratio is due to increase in net profit and principal repayment of total debt.

d) Change in the ratio is due to decrease in the current liabilities and temporary investment in Liquid Funds

e) Change in the ratio is due to increase in net profit before tax and total repayment of total debt

f) Change in the ratio is due to increase in net profit after tax

g) Change in the ratio is due to increase in net profit after tax

h) Change in ratio is due to decrease in the debt

i) Change in the ratio is due to increase in turnover and decrease in current liabilities

j) Change in the ratio is due to increase in gain on investment

J) CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys Objectives and Expectations may be "Forward-Looking Statements" within the meaning of applicable Securities Laws and Regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys Operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, technological obsolescence, changes in the Government Regulations and Policies, Tax Laws and other Statutes and other incidental factors.

For and on behalf of the Board of Directors
NARENDER SURANA DEVENDRA SURANA
DIRECTOR DIRECTOR
DIN-00075086 DIN-00077296
Place: Secunderabad
Date: 02.08.2023