Surana Telecom and Power Ltd Management Discussions.

Surana Telecom and Power Limited was incorporated as a Private Limited Company on 14.08.1989 as Surana Petro Products Private Limited and was engaged in the business of manufacturing of Petro Products such as Petroleum Jelly and Telecom products such as Jointing Kits. Thereafter, the Company was converted into a Public Limited Company on 09.07.1993. In 1994, the Company ventured into the Telecom sector with the production of Optic Fibre Cables and consequently, name of the Company was changed to Surana Telecom Limited on 05.08.1994. In 2007 the Company diversified into the power sector with the manufacturing of low tension and high tension power cables. In order to reflect the diversity, the name of the Company was again changed to “Surana Telecom and Power Limited” on 11.10.2007.

SOLAR ENERGY

INTRODUCTION

Solar PV leads the way in power generating capacity and is considered a cost-competitive source of new generation in many emerging markets across the world. Solar energy is the cleanest and most abundant renewable energy source available. Solar energy is lauded as an inexhaustible fuel source that is pollution- and often noise-free. India has some of the richest solar resources in the world. Modern technology can harness this energy for a variety of uses, including generating electricity, providing light or a comfortable interior environment, and heating water for domestic, commercial, or industrial use. India receives solar energy equivalent to over 5000 trillion kWh/year, which is far more than the total energy consumption of the country. If the means to make efficient use of solar energy could be found, it would reduce our dependence on non-renewable sources of energy and make our environment cleaner.

GLOBAL SCENARIO:

Worldwide growth of photovoltaics is extremely dynamic and varies strongly by country. New installations totalling more than 97 GW in 2017 took global solar PV power generating capacity to nearly 400 GW by year-end, a 32% increase versus the end of 2016. Capacity has nearly quadrupled in the past five years. It shows renewables, excluding hydro, made up three-fifths of net power capacity growth in 2017 and supplied a record 12% share of global electricity generation. Renewable capacity expansion continues to be driven mostly by new installations of solar and wind energy, which together accounted for 85% of all new capacity installed in 2017. Asia accounted for 64% of new capacity in 2017 (up from 58% last year), resulting in a total of 919 GW or 42% of global capacity. According to IHS Markit, new PV installations in 2018 are expected to hit 108 GW globally. China, India and the US are expected to hold their top positions as leading 3 global PV markets in 2018. The top 3 are forecast to contribute two-thirds of the total 108 GW of new PV installations in 2018. However, impending trade cases in India and import tariffs in the US may impact the balance of global supply and demand.

The renewable industry is experiencing a level of policy uncertainty that may be unprecedented even for an industry accustomed to the shifting sands of federal and state policy. But despite short-term uncertainty, renewable energy is well- entrenched and growing wind and solar markets are finally reaching the scale and scope to expand exploration of new technologies that show potential to further reduce costs and spark growth. The pace of growth will likely moderate as markets mature, and US policy uncertainty may cause additional challenges along the way. But longer term, powerful enablers such as robust customer demand across multiple business segments and global regions, declining prices, decarbonization, digitalization, and the drive to boost resiliency will likely underpin continued strong growth.

INDIAN INDUSTRY ANALYSIS

Solar power plants in India had a combined output of 25.9 billion kWh in the fiscal year through March 2018, marking a 92% year-on-year jump, according to the Central Electricity Authority (CEA). In spite of the increase and the expansion of installed photovoltaic (PV) capacity, solar accounted for only 1.98% of the countrys total power generation. At the same time, thermal power generation had a 79.28% share of the overall electricity generation mix, indicating Indias “huge dependence” on coal power.

At the end of fiscal 2017/18, India had 345 GW of installed power capacity, of which 70 GW came from renewables. This represents a share of 20.32% of its total power generation mix, which rose by 2.8 percentage points from the previous fiscal year. Indias cumulative solar power capacity at the end of March, 2018 totalled 22 GW. Solar tariffs reached a record low of 2.44 per unit at an auction held by Solar Energy Corporation of India (SECI) for 500 MW of projects at the Bhadla Solar Park in Rajasthan in May 2017, but have been rising slowly since then. Even so, solar tariffs compare favourably with the cost of thermal power. There is also the fear of safeguard duty being imposed on imported solar equipment.

“The Governments revised solar installation target of 100 GW by 2022 has recently clashed with Prime Minister Modis Make in India initiative to promote domestic manufacturing. The recently announced 70 per cent preliminary safeguard duty recommendation, the ongoing anti-dumping case and a 7.85 per cent port duty on imported modules have created an atmosphere of regulatory uncertainty that is taking a toll on the industry and slowing down installation activity.

Indias rooftop solar sector also witnessed steady growth last year, alongside a rise in grid-connected utility-scale solar. Rooftop solar accounts for about 1.6 GW of the 20 GW of capacity installed so far. As in previous years, rooftop solar installations have been lagging. Total rooftop capacity stood at 2.4GW as of March 2018, with around 1GW having been added in 2017-18, against a target of 40GW by 2022. Growth in rooftop solar slowed down marginally in the year due to GST and safeguard related uncertainty. The new

Ministry of New and Renewable Energy (MNRE) policy designed to further its growth. MNRE recently announced a new programme that would provide distribution companies incentives for commissioning rooftop solar projects.

BUSINESS OUTLOOK:

The company is consolidating its Solar Power Generation portfolio. It is presently operating 20 MW of Solar Power capacity under the ownership of the company/its subsidiary and a further capacity of 3 MW is expected to be operational by the end of July, 2018. On account of consolidation of Solar Portfolio the business outlook looks bright.

WIND POWER GENERATION:

Indias wind energy sector has just capped a rough year. Amid a major overhaul of the wind energy tariff-determination mechanism, multiple policy issues, and flat power demand, capacity addition took a big hit in the last financial year. New windmill installations fell to a five-year low between April 2017 and March 2018, according to data from the Indian Wind Turbine Manufacturers Association (IWTMA). The country saw an addition of just 1,762 megawatts (MW) of capacity, a sharp fall from the record high of 5,400 MW in the preceding year. Indias total wind energy capacity now stands at 34,042 MW, a little over half the Narendra Modi governments target of 60,000 MW by 2022.

The fall was largely due to faulty implementation of a major policy change by the government. Starting June 2016, it let firms bid for projects at competitive prices rather than have a regulator fix the tariffs. Yet, there werent as many auctions for projects, resulting in muted capacity addition. Subsequently, wind power producers faced the threat of various state electricity utilities backtracking on power purchase agreements. The governments obsession with solar power, too, played a role, as policymakers focused away from wind. Meanwhile, wind power tariffs crashed to record lows of 2.43 per unit in December 2017, casting doubts over long-term project viability. However, the worst may now have passed. For one, the policy uncertainties have been cleared. States like Maharashtra and Gujarat have already come out with auctions and more are in the offing, both at the state and central levels. The ministry of new and renewable energy has committed to auctioning10,000 MW of projects in 2018 and another 10,000 MW in 2019.

OUTLOOK:

The Indian government has committed to a target of 175 GW of renewable energy by 2022, including 100 GW of solar capacity and 60 GW of cumulative wind power capacity. The government has also indicated its support for rapidly growing the power sector, renewables being a core part of this strategy. The outlook remains stable.

RISKS AND CONCERNS:

The Companys businesses and operations are subject to a variety of risks and uncertainties which are no different from any other company in general and our competitors in particular. Such risks are the result of both the business environment within which the Company operates and other

factors over which there is little or no control. These risks can be categorised as operational, financial, environmental, health and safety, political, market-related and strategic risks. 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.

INTERNAL CONTROL SYSTEM AND ITS 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 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. Periodic reports of Internal Auditors are reviewed in the meeting of the Audit Committee of the Board. 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.

FINANCIAL PERFORMANCE & OPERATIONAL PERFORMANCE:

FINANCIAL PERFORMANCE:

Capital Structure:

The Equity Share Capital of the Company as on 31st March 2018 is 135,759,963 comprising of 135,759,963 Equity Shares of 1 each fully paid.

Other Equity:

The Other Equity of the Company for the current year is 765,267,866 .and in the previous year was 710,159,806.

Property, Plant and Equipment:

During the year, the Company has added Property, Plant and Equipment amounting to 26,080,444 as against 23,429,470 in the previous year. The total net block of assets as on 31.03.2018 is 596,880,100

Inventories:

Inventories, as on 31st March, 2018 amounted to 28,025,284 and in the previous year is 100,173,909

Trade Receivables:

Trade Receivables amounting to 21,198,956.as on 31st March, 2018 and 52,787,047 in the previous year.

Cash and Bank Balances:

Cash and Bank balances with Scheduled Banks, as on 31st March, 2018 amounting to 3,560,271 which includes amounts deposited with banks as Security and margin Money Deposit and accrued interest.

Loans (Noncurrent):

Loans and Advances amounting to 280,686,671 as on 31st March, 2018 as against 239,494,096/ in the previous year.

Other Current Assets:

Short Term Loans and Advances amounting to 6,652,559 as on 31st March, 2018 as against 27,458,260 in the previous year.

Current Liabilities:

Current Liabilities amounting to 49,542,604 as on 31st March, 2018 as against 90,426,706 in the previous year.

OPERATIONAL PERFORMANCE:

Turnover:

During the year 2017-18, the Net turnover of the Company was 235,345,624 and 266,532,956 in the previous year.

Other Income as on 31st March, 2018 is 20,581,897 as against 8,589,218 in the previous year.

Depreciation and Amortization:

The Company has incurred a sum of 71,867,146 towards depreciation and amortization for the year and 74,127,977 in the previous year.

Net Profit:

The Net Profit of the Company after tax is 23,059,602 and 17,614,048 in the previous year.

Earnings per Share:

Basic Earnings Per Share for the year ended 31.03.2018 is 0.17 for Face Value of 1 and 0.13 per share for the year ended 31.03.2017.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

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.

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
MANAGING DIRECTOR DIRECTOR
(DIN-00075086) (DIN-00077296)
Place: Secunderabad
Date: 06.08.2018