Swelect Energy Management Discussions


INDUSTRY STRUCTURE AND DEVELOPMENTS KEY HIGHLIGHTS

India, a global leader in deployment of solar and wind assets with over 109 GW of installed capacity accounts for ~ 5 % of the Global total solar and wind assets. India is a forerunner in the renewable race right behind the global majors like China, USA and Germany. It is estimated that India will add 49 GW of solar and wind by 2024-2025. Your company makes use of its three major strengths i.e. a High-quality solar panel & Balance of System (BOS) Manufacturer, a very strong turnkey EPC and IPP player especially in the Commercial & Industrial segment. SWELECT group has made significant through its strong channel partner network has made great strides in sales of Solar Panels and Balance of System (BOS).

SOLAR POWER GENERATION AND SYSTEMS INTEGRATION (NEW ADDITIONS)

1. SWELECT has successfully designed, engineered and commissioned more than 42 MW of Projects for its various clients under its project sales vertical.

2. SWELECT and its group have been successful in adding more than 6.5 MW of Solar Projects in its Energy sales portfolio totaling it to 140 MW of cumulative capacity under the IPP vertical.

3. SWELECT is proud to announce that its installed 217 kWhr ESS (Energy Storage System) is under extensive testing and evaluation.

BUSINESS DEVELOPMENT IN NEW MARKETS

SWELECT is happy to announce that one of its step down subsidiary SWELECT HHV Solar Photovoltaics Private Limited has successfully completed the construction of fully Automated State-of-the-Art with new 500 MW production capacity of Solar PV Module Manufacturing plant at Coimbatore. The trial production started during February 2023 and this will make

SWELECT as one of the leading Solar modules manufacturers in India, with a capacity to cater both Domestic and International markets. The facility is equipped to manufacture high-performance, high-quality modules backed by Tier 1 rating by Bloomberg

New Energy Finance (BNEF). The solar modules are certifiedfor IEC, UL and later PVEL, which are industry leading quality standards ensuring best in class quality and product reliability. The solar modules will undergo more than 40 plus stringent quality checks and tests promising the highest quality and on field performance.

IRON AND STEEL FOUNDRY PRODUCTS

AMEX Alloys Pvt. Limited, a Wholly Owned Subsidiary (WOS) of SWELECT Energy Systems Ltd, is an ISO 9001- 2015 certified Foundry located in Coimbatore sub urban area. AMEX is also qualifiedwith the following Accreditation / Qualification to stay as a strong producer of Quality Castings for the Global markets.

Accreditation / Certification ISO 9001:2015 / PED / AD W0 by TUV NORD / Indian Boiler Regulation (IBR)

AMEX Alloys Pvt Ltd is engaged strongly with customers in Germany, Italy, Spain, Poland, and USA besides many Indian Industries. During the year AMEX added new customers namely Farries and Dynaflow USA, Samson AG from Germany, RBR

Italy and Zetkama from Poland.

The overall Global and Domestic Market / Application areas where High Quality castings are being supplied are: - Oil & Gas - Transportation - Marine - Pharmaceuticals - Infrastructure - Agriculture - Water Distribution - Hydro Power and many Flow Control applications

AMEX has three divisions of foundry units viz.,

Alloys Division: Manufacturing, Machining & Export of a wide range of Steel Castings (using CO2 sand Process, cake moulds and a range of intricate core assembly based complex moulds). The range of castings cover Carbon Steel/ Alloy Steel / Stainless Steel / Duplex and Special alloy steel. The division is making weight range of a single Casting from 10 Kg to 3520 Kg.

Certified ISO 45001 : 2018 By TUV Nord and PESR certificate by TUV U K

Iron Foundry Division: Manufacturing, Machining & Sales in domestic markets and Export of a wide range of Iron Castings in Grey Iron and Spheroidal Graphite Iron (using CO2 and Green Sand Process) metallurgy.

The division is making weight range of a single Casting from 1 Kg to 800 Kg.

Investment Casting Division: Design, Manufacturing, Machining & Export of a wide range of Investment Castings (using lost Wax process and advanced Machinery).

The division is making the weight range of a single Casting from 100 grams to 73 Kg.

Certified ISO 45001: 2018 By TUV Nord and PESR certificate by TUV UK

The above capabilities make AMEX Brand as India?€™s first Foundry Group offering all the above under one roof and a One- Stop- Solution provider.

AMEX - Green Initiatives

The foundry uses very low quantum of new sand by adapting to sand reclamation process thus reducing use of natural resources. Also majority of its Energy consumption is from Green Energy sources (Solar and Wind Power) i.e. from AMEX?€™s own Solar plant and from SWELECT Group. As a WOS of SWELECT, AMEX Foundries have the distinction of running the foundry production with more than 85% of the Energy from Renewable Energy Sources and this is yet another special status.

Foundry with latest state of art facilities

AMEX has been deploying the most advanced casting design tool (MAGMA Simulation Software). The design team has been trained in MAGMA and this has enhanced AMEX to secure new orders from the existing customers and new customers from Europe. During this Financial Year, AMEX also exhibited its special skills and produced a range of intricate castings like Diverter valves, Flame Arrestor Bodies and Special Castings of higher weight range for German customers.

The Company has earned foreign exchange of over Rs. 8,074.53 Lakhs in Euros and US Dollars during the financial year 2022-2023 from the Exports to Europe, and USA despite Russia and Ukraine war.

AWARDS / CREDENTIALS

Performance Excellence Awards, 2022

Excellence in Performance

Ground Mounted Solar Category (10MW SWELECT AAI PH-II)

Soft disk Solar Awards 2022

Soft Disks No. 1 Indian Rooftop Solution Company of the Year.

Soft Disks No. 1 Indian Grid-Sharing Solar Power Solution Provider of the Year

Soft Disks No. 1 Indian Off-Grid Sharing Solar Power Solution Provider of theYear

Soft Disks No. 2 Indian SPCU Manufacturer of the Year

Soft disk Solar Awards 2022

No. 1 company for having completed a large number of Roof Top Installations in the country - 2022

Best Project of the Year 2022

Awarded by First view media ventures private limited

7 MW Solar PV Plant on a Turnkey basis for Milky Mist Dairy Food Private Limited.

State Market Leader Award: EPC - 2022

Awarded by First view media ventures private limited

Winner of the State Market Leader Award: EPC at the STATE BUSINESS MEET AWARDS 2022- TAMIL NADU

Rooftop EPC Company of Year 2023

Won the Rooftop EPC Company of Year: Under Bronze Category in the event SuryaCon Coimbatore Conference.

OPPORTUNITIES

With growing awareness in terms of Environment Social and Governance (ESG), stricter industrial decarbonisation especially in

Commercial & Industrial segment has significantly increased the adoption of clean energy by participating entities.

Government policy support in domestic manufacturing in terms of import barriers and subsidy for local manufacturing has opened up more opportunities for clean tech companies. The Government run Approved List of Models and Manufacturers (ALMM) program is also an added incentive for more Indian entities participating in manufacturing in solar energy space.

THREATS

Increasing volatilities in the input raw material prices owing to the geo political situation has caused a momentary set back in deployment of renewable energy. Uncertain Government policies, land acquisition challenges and Grid interconnection issues are some of the constant threats which the renewable industry has to overcome. However, these challenges can be overcome gradually by careful planning and diligence.

SEGMENT–WISE OR PRODUCT-WISE PERFORMANCE (STANDALONE)

The Business of the Company falls under a single primary segment i.e., "Solar and other related activities" for the purpose of

IND AS 108.

The Product-wise performance of the Company for the financial years 2021-2022 and 2022-2023 are provided below:

(Rs. in Lakhs)

Revenue
Product Name
31.3.2023 31.3.2022
Solar Photovoltaic Panels 4,644.77 6,742.19
Solar Power Generating Systems and accessories 10,062.37 11,584.75
Traded Goods 912.31 268.60
Solar Power 3,879.61 3,772.26
Wind Power 93.84 98.70
Sale of Services 4,038.52 4,070.02
Grand Total 23,631.42 26,536.52

OUTLOOK

The future for renewables looks very promising with all the participating countries rapidly pushing for decarbonisation of the industrial process and getting very mindful of carbon leakage which will play a very crucial role in clean energy transition.

With increasing interest in green hydrogen, carbon capture projects, energy storage and in electrification of industrial process will drive the clean energy deployment. Combined with increasing grid tariff and attractive price discovery in the competitive bidding of renewable energy procurement, the future and the business outlook looks very promising.

RISKS AND CONCERNS

There are no notable risks or concerns as SWELECT and its management are constantly monitoring the market dynamics both domestic and international. The leadership team has taken all the major factors in consideration and are proactively working to mitigate any risks which may arise.

RISK MANAGEMENT COMMITTEE

The Company is not falling under the category as specified in Regulation 21(5) of SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015. However, the Company constituted a Risk Management Committee to continuously monitor business and operations risk through an efficient risk management system.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined by the management.

The internal audit report for every quarter ended are being submitted to the Audit Committee of the Board by the Internal Auditors.

The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal auditors, the Audit Committee/Management of the Company undertakes corrective action in the respective areas and thereby strengthens the controls.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE Standalone

During the year, the Company registered a turnover of Rs. 24,983.57 Lakhs against the previous year turnover of

Rs. 28,572.86 Lakhs. The Company has reported a Net Profit after tax for the current year Rs. 934.42 Lakhs against the previous year Net Profit ofRs. 3,379.07 Lakhs.

The Earnings per Share (Basic and Diluted) for the year 2022-2023 stood at Rs. 6.16.

Consolidated

During the year, the Company registered a turnover of Rs. 38,418.12 Lakhs against the previous year turnover of Rs. 39,111.10

Lakhs.

The Company has reported a Net Profit after tax for the current year Rs. 642.11 Lakhs against the previous year Net Profit of Rs. 3,241.74 Lakhs.

The Earnings per Share (Basic and Diluted) for the year 2022-2023 stood at Rs. 4.24.

The reason for reduction in Profit (standalone and consolidated) of the Company for the year ended 31.3.2023 as against previous year is described in the Note No.40 and 45 of the Financial Statement annexed in this report.

THE FINANCIAL HIGHLIGHTS OF THE COMPANY FOR TEN YEARS (Standalone). (Rs. In Lakhs)

S.No Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
1 Revenue from operations 5,240.30 4,887.50 16,315.86 17,006.97 17,382.92 11,984.43 14,204.04 18,453.22 28,572.86 24,983.57
2 Other Income 2,936.00 2,478.58 3,339.12 4,615.85 3,807.93 3,494.58 3,170.98 3,279.04 3,059.14 3,226.97
3 Total income from operations 8,176.30 7,366.08 19,654.98 21,622.82 21,190.85 15,479.01 17,375.02 21,732.26 31,632.00 28,210.54
4 Employee Cost 597.69 665.75 1,112.23 1,151.30 1,140.03 1,264.19 1,194.66 1,217.53 1,410.73 1,488.47
5 Excise Duty 158.17 54.49 61.34 44.97 8.50 - - - - -
6 Other Operating Expenditure 4,363.61 4,216.20 14,232.86 14,941.83 15,031.85 10,544.70 12,484.42 14,595.67 23,087.27 20,839.81
7 Profit Before Finance cost, Depreciation and Amortisation and Tax 3,056.83 2,429.64 4,248.55 5,484.72 5,010.47 3,670.12 3,695.94 5,919.06 7,134.00 5,882.26
8 Finance cost 116.09 1,059.90 960.96 529.55 580.58 744.63 981.15 1,249.12 2,063.49 2,538.06
9 Depreciation and amortization 446.23 871.71 1,251.04 1,114.44 1,343.04 1,415.41 1,659.43 1,547.79 1,691.44 2,371.02
10 Profit before tax 2,494.51 294.91 2,118.22 3,840.73 3,086.85 1,540.08 1,055.36 3,122.15 3,379.07 973.18
11 Profit/(Loss) 2,494.51 132.94 1,201.07 2,937.85 2,346.93 1,105.35 (1,673.16) 2,431.15 3,379.07 #934.42
after tax
12 EPS (Rs.) 24.68 1.32 11.88 29.07 23.22 7.29 (11.04) 16.04 22.29 6.16
13 Interim Dividend paid (Rs. per share) - - 3.00 - - - 1.25 - - -
14 Dividend paid / proposed (Rs. per share) 9.00 2.50 1.00 4.00 4.00 2.50 0.75 3.00 3.00 *1.20

# Net Profit after tax is post adjustment of loss on discontinued operations (due to technology obsolescence) as per Note no.40 of the

Financial Statements.

* Proposed

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Details of significant changes in key financial ratios along with detailed explanations are given in the Note No.43 of the Financial

Statements.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH

Details of change in Return on Net Worth is given in the Note No.43 of the Financial Statements.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PERMANENT EMPLOYEES

Human Resources

Employees are vital and most valuable assets. The Company has a favourable work environment that encourages innovation and motivation. The Management continues to invest in people through various Learning & Development initiatives and believes in nurturing leaders among them as far as possible and provide opportunities for growth across all levels. The total number of permanent employees as on 31.3.2023 was 268.

Welfare / Social Activities:

The Company sponsors several team building, sports and social welfare activities to derive internal team building. SWEES

EMPLOYEES WELFARE TRUST is a welfare trust with its main object of working towards the welfare of its employees. The

Company continuously focuses on Corporate Social Responsibility (CSR) activities as prescribed by the Companies Act, 2013.

CAUTIONARY STATEMENT

Certain statements in this Management Discussion and Analysis Report describing the Company may be ‘Forward Looking Statements?€™ within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company?€™s operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the company operates, changes in the Government regulations, tax laws, statutes and other incidental factors.

For and on behalf of the Board of Directors

Sd/- Sd/-
R. CHELLAPPAN A. BALAN
Managing Director Joint Managing Director

Place: Chennai Date: 29th May 2023