Ujaas Energy Ltd Management Discussions.

Global Economic Overview

The global economy is expected to grow by approximately 2.7% in 2020, As per the World Bank, growth among emerging and developing economy is forecasted to fall to a 4 year low of 4% in 2019. The growth is constrained by sluggish investment and risks including rising trade barriers, renewed financial stress, and sharper than expected slowdowns in several major economies. Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential. With growth in advanced economies projected to gradually decline to about 1.7% once economic slack is eliminated, the further pickup in global activity will entirely be driven by emerging markets and developing economies.

The ongoing US-China trade war is snowballing fears about damage to global economic growth. The repercussions can be more volatile in both commodity prices and currencies. However, India is amongst few economies that stand to benefit from the trade tensions as it can tap export opportunities for sectors like chemicals, textiles, agriculture, and overall manufacturing sector.

Indian Economic Overview

The Indian GDP has grown to 6,8% in the financial year 2019. The decline in GDP growth is on account of multiple factors like, fallout of NBFCs, low credit growth, tight liquidity conditions, dismal growth in wages and flat exports owing to a global slowdown. Indian manufacturing continued its downtrend growing at 3.1%. However, GDP growth rate is expected to bottom out in the coming quarters. RBI has cut key policy rates for the third time in a row this calendar year, for improving liquidity scenario. With the government continuing to roll out policies focusing on rural population, there could be some relief to the ongoing distress and signs of recovery should be visible in the second half of the financial year.

Global Renewable Overview

The global renewable energy capacity added 167 GW in 2017, thereby witnessing robust growth of 8,3% as compared to previous year and till date, it continues to grow every year on an average by 8-9%. The net additional power generation capacity of renewable sources exceeded to that of conventional sources of energy for sixth consecutive year. The costs of solar PV and wind are on continuous downfall trend. These declining costs along with emerging technologies have made wind projects affordable without requiring any sort of subsidies in many places. The concentrated solar power including thermal storage was offered at less than 10 US cents per kilowatt-hour.

Keeping the power sector aside, progress is lagging to a great extent. Electricity accounts for 20% of the total final energy consumption for transport, heat and other energy services. Around 80% is obtained from other sources, notably fossil fuels and direct use of renewable thermal energy or fuels. Moreover, increasing the share of electricity, and the share of renewables in electricity supply, will raise the share of renewables in end-use sectors. https://www.irena.Org/-/media/Files/IRENA/Agencv/Publication/2018/Apr/IRENA Report GET 2018.pdf

India Renewable Overview

The Indian Government has committed to amplify the usage of clean energy sources and undertaken several sustainable green energy power projects which encouraging the nation toward green energy. Furthermore, renewable energy has the potential to create new job opportunities at all levels, especially in rural areas. The Ministry of New and Renewable Energy (MNRE) has set an ambitious objective to set up renewable energy capacities to the tune of 175 GW by 2022 of which about 100 GW is planned for solar, 60 for wind and other for hydro, bio among other. Indias renewable energy sector is estimated to attract investments of up to USD 80 billion in the next four years. New investments in clean energy in the country reached US$ 11.1 billion in 2018.

It is estimated that by the year 2040! approximately 49 per cent of the total electricity will be generated by the renewable energy, as more efficient batteries will be used to. store electricity which will further cut the solar energy cost by 66 per cent as compared to the current cost. https ://www.ibef.org/industrv/renewable-energy.aspx Overview of the Global Solar Sector

The global solar market in 2018 has taken a slightpause from the enormous growth rates compared to the previous years. Even though the solar market grew modestly by 4%, it was enough to again outdo any other power generation technology last year. More solar PV was installed than all fossil fuels and nuclear together. Solar energy added more capacity than all renewables combined including large hydro and had twice as much installed than wind power.

Tod 5 global solar markets 2018:China has taken the first position in the terms of global solar market. China installed 44.4 GW capacity which is a year-on-year decrease of 16% from the record additions of 52.8 GW. The United States solar market remained stable at 10.6 GW. That made the country the worlds second largest solar market again in 2018.

India would move up to second place in 2018 after it secured rank 3 in 2017. But that did not materialise. After installing only 8.3 GW, down 16% from 9.6 GW in 2017.Japan installed less than the year before, adding 6.6 GW in 2018, down 8% from the 7.2 GW installed in the previous year. The worlds fifth largest market in 2018 was Australia. The country and continent accelerated its stellar growth pace in 2018, adding 5.3 GW, up 295% from 1.3 GW in 2017.

The PV market in Asia-Pacific shortened by 4% to 71.4 GW in 2018, Asias top three countries China, India and Japan all has disappointed. However, Korea has exceeded the 2 GW level for the first time. The main driver is the Korean Renewable Portfolio Standards scheme, which was launched to replace the feed-in tariff and requires utility companies exceeding 500 MW generation capacity to supply 6% and 10% of their electricity from new and renewable power sources by 2019 and 2024.

The total corporate funding in the global solar sector saw an 11% increase year-on-year at USD 6 billion in the first half of 2019, as against USD 5.4 billion in the same period last year. This refers to venture capital (VC) funding, public market, and debt financing for the sector.(Source: http://www.soIarpowereurope.org/wp-content/uploads/2019/05/SolarPower-Europe-Global-Market-Qutlook- 2019-2023.pdf https://www.livemint.cotn/companies/news/global-solar-sector-raises-6-billion-in-the-first-half-of-2019- 1563078908726.html

Overview of Indian Solar Sector

India overtook United States in first half of 2018 to become worlds 2nd largest solar power market in terms of deployment. In 2018, China added more than 24 GW of solar energy capacity while India added approximately 7 GW. The country saw tremendous slowdown in terms of project installation after the first quarter of 2018, several reports and data shows that about 35 GW of solar projects were tendered in 2018 out of which only 13 GW of projects reached auctioning stage leading to about 65% decline in tender activity in Q3-2018. In Q2 2018, Indian solar installation rate stood at 1.6 GW and in Q3 it even fell further to 1.5 GW, highlighting 30% y-o-y decline in solar growth from 2017 to 2018.

Government initiatives

Expectations from 2019 India is expected to add about 10-15 GW capacity for renewal energy in 2019 out of which most of it is expected to come from Solar. Several initiatives are taken by government to focus on solar power like rooftop solar power projects, increasing floating solar projects, solar parks getting operational and leading states in India promising to increasing their solar adoption levels. These indicate that solar power in India has a bright future. The Ministry of New and Renewable Energy (MNRE) has decided to provide custom and excise duty benefits to the solar rooftop sector, which in turn will lower the cost of setting up as well as generate power, thereby boosting growth. Also, government has announced plans to implement US$ 238 million national mission on advanced ultra-supercritical technologies for cleaner coal utilisation. http ://www.solarpowereurope.org/ wp-content/uploads/2018/09/Global-Market-Outlook-2018-2022 .pdf httos://www. ibef.org/industrv/renewable-energy, aspx Rooftop Business

At the end of FY19, the installed rooftop solar power generation capacity stood at 4,375 Mw, showing robust growth of about 72% over FY18, showed a report by Bridge to India. The fresh capacity additions came across commercial, industrial, public sector, and residential projects. With an installed capacity of 2,140 Mw, the industrial segment is the biggest contributor to the solar rooftop power portfolio.

Maharashtra (618 Mw), Rajasthan (393 Mw), Tamil Nadu (365 Mw), Gujarat (314 Mw) and Karnataka (298 Mw) are the top robftop solar power generating states. The market is split between inverter suppliers and EPC (engineering, procurement and construction) contractors, each producing 1,836 Mw of rooftop solar power. Project developers make up the rest. 688 Mw, with 15 Mw generated by stand-alone corporate establishments. https://www.business-standard.com/article/economv-Dolicv/india-added-record-l-836-mw-of-roQftop-solar-power-in-last- fiscal-rcport-119070901032 1 .html

Solar Park Scheme in India

The ministry of new and renewable energy (MNRE) extended the timeline for implementation of solar parks and ultra- mega solar power projects having total capacity of 40 GW by two years. The initial deadline of implementing it by FY2020 is now pushed to FY2022. This new order will provide more time to all parties in the development of solar parks and ultra-mega parks, including agencies responsible for tendering the projects such as SECI and NTPC and private developers facing challenges with land acquisition and securing power evacuation from the plants. Solar park scheme which is approved by government in March 2017 was aimed at enhancing solar park capacity from existing 20,000 MW to 40,000 MW by setting up of new 50 parks having capacity of 500 MW each and above. For this initiative, government sanctioned INR 8,100 Cr.https://www.thehindubusinessline.f;nm/news/govt-extends-timeline-for-imp1ementation-of-solar- parks/article24332963.

Challenges & Opportunities 2018 witnessed a slowdown triggered by financial difficulties being faced by distribution companies, import tariffs, and subsequent tariff increases.

Challenges:

• Discoms are under-performing; the most recent attempt to reform them, the UjjwalaDiscom Assurance Yojana, has not provided theanticipated results. The financial stress that discomsare in has meant payment delays for developers, cancellation of auctions,and lack of enforcement of contracts.

• Solar rooftop has failed to make any headway in the current market which is skewed towards large-scale renewable energy. The country is aiming for a 40 GW capacity by 2022, but till November 2018, only 1,334 megawatt (MW) of grid-connectedsolar rooftop systems had been installed. Also, the preference has been for commercial and industrial installations - residential consumers, who hold immense potential, account for less than 20 per cent of the total installed capacity.

• Distributed energy has been pushed to the back-bumer. Almost all the schemes that have been floated for ensuring access to energy for the people, such as SAUBAGHYA, are tied to extending the grid and connecting un-electrified households to centralised distribution and transmission networks.

Opportunities:

• Demand for electricity is expected to increase at a CAGR of 7 per cent to 1,894.7 TWh over FY07-22.

• Various reforms being undertaken by the government are positively impacting Indias power sector. In wake of the surging domestic coal production, the countrys power sector is becoming increasingly stable.

• Non-coking coal consumption is forecasted to grow at a CAGR of 5.4 per cent to reach 1,076 MT in FY23 from 826 MT in FY18 and domestic supply is forecasted to reach 931 MT in FY23 from 664 MT in FY19, at a CAGR of 7 per cent.

• Wind energy is the largest source of renewable energy in India and India ranks 4 globally; it accounts for 47.44 per cent (35.14 GW)* of total installed renewable capacity (74.08 GW)*, There are plans to double wind power generation capacity to 60 GW by 2022.

• The Government of India and Ministry of Power aims to achieve 175 GW and 225 GW, respectively of installed renewable energy capacity by 2022.

https://www.cseindia.org/cse-releases-new-anaIvsis-on-the-state-of-the-renswable-energv-sector-in-india--9239

https://w ww. ibef. org/download/Po wer-Mav-2019. pdf Transmission

The government of India has prolonged the waiver of interstate power transmission charges and losses for the solar and wind power projects commissioned till March 31, 2022, with a view to giving a boost to clean energy sources. Earlier, the waiver was available to solar and wind power projects commissioned till December 31, 2019, and March 31, 2019, respectively. The waiver was available for a period of 25 years from the date commissioning of the project. https://www.business-standard.com/article/economv-policv/govt-ex.tends-transrnission-charge-waiver-for-solar-wind- power-till-2022-118021900789 l.html

EPC BUSINESS

In the EPC segment the company leverages extensive 36 year experience it has in the solar and the power sector and effective and efficient EPC solutions to potential solar power generator. Realizing huge opportunity available on a pan India basis in the EPC segment the company has executed more than 67M Win the EPC till date while staying focused in its asset light model.

a. SEGMENTAL PERFORMANCE

Ujaas Energy has two segments of business wise Solar Power Plant Operation and Manufacturing & Sale of Solar Power Systems. In fiscal 2016, 2017, 2018 & 2019 revenue from solar power plant operation was INR 2,995.27 lakhs, INR 4,285.67 lakhs, INR 3,155.84 lakhs & TNR4,507.401akhs respectively. Further, inFiscal 2016, 2017, 2018 & 2019 revenue from manufacturing and sale of solar power system was INR 24,716.45 lakhs, INR 44,349.11 lakhs, INR 30,261.47 lakhs & INR 11,353.39 Lakhs respectively.

b. OUTLOOK

The Solar and wind projects are seen constituting 440 gigawatts of capacity out of the projected 831 gigawatts in more than a decade according to the Central Electricity Board. All non-fossil fuel sources will form 65 per cent of the total installed capacity and contribute around 48 per cent of gross electricity generation.The Government of India has released its roadmap to achieve 175 GW capacity in renewable energy by 2022, which includes 100 GW of solar power and 60 GW of wind power. The Union Government of India is preparing a rent a roof policy for supporting its target of generating 40 gigawatts (GW) of power through solar rooftop projects by 2022.

Coal-based power generation-capacity in India, which currently stands at 191.09 GW is expected to reach 330441 GW by 2040.India could become the worlds first country to use LEDs for all lighting needs by 2019.All the states and union territories of India are on board to fulfil the Government of Indias vision of ensuring 24x7 affordable and quality power for as per the Ministry of Power and New & Renewable Energy, Government of India. https://www.thehindubusmessline.com/economv/green-energv-to-constitute-over-half-of-indias-capacitv- addition-bv-2030-report/article28258253 .ece https://www.ibef.org/industrv/power-sector-india.aspx

c. RISK AND CONCERNS

While the company faces traditional business risks such as un-anticipated labour costs, market risks such as interest rates, operational risks such as supplier/distributor problems and execution challenges and changes in government regulations, no major risks are foreseen. Butin FY19 the company has faced difficulty due to ambiguity of tax rates applicable to Engineering procurement & construction (EPC) Contacts for Solar Power plants under GST Act, many retrospective changes in charges of Open Access, change in Net metering laws in Rooftop projects and many more.

The company is at the forefront over seeking clarity from various ministers and tribunals both at the centre and the state level. Another risk that the company and the overall sector faces is the fear of anti-dumping duty and safeguard duties on solar imports.

Additionally, the company continuously monitors business and operational risks through an efficient risk management system. All key functions and divisions are independently responsible to monitor risks associated within their respective areas of operations such as production, insurance, legal and other issues like health, safety and environment.

d. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an effective internal control and risk mitigation system, which is constantly assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal audit is entrusted to Messrs S.K. Malani & Co. (FRN: 159090W), a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integralpart of the control mechanism. The Audit. Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. To maintain its objectivity and independence, the Internal Audit function reports to the Chairperson of the Audit Committee.

e. QUALITY MANAGEMENT SYSTEMS

Your company has successfully implemented SAP Business solution as an accounting software. Company has installed different modules of SAP like FI (Finance), MM (Material Management,), SD (Sales & Distribution), PS (Project System), QC (Quality Control), and HR (Human Resource). Further the company continued to be certified under ISO: 9001:2008 by International Organization for Standardization. The Quality Management System in the Company is well defined and is well in place. This will enable your company to meet the challenges related with Information systems, Controls, Planning and Quality. .

f. CAUTIONARY STATEMENT

Statement made in the management discussion and analysis report as regards the expectations or predictions are forward looking statements within the meaning of applicable Laws and Regulations. Actualperformance may deviate from the explicit or implicit expectations.

g. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Particulars FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Total Income* 370 2,480 5,332 1,133 2,795 4,907 3,374 1,617
Operating Expenses 336 1,972 4,341 688 2,146 4,156 2,938 1357
EBITDA 34 508 991 445 649 751 436 260
EBITDA Margins (%) 9.19% 20.48% 18.58% 39.28% 23.22% 15.30% 12.92% 16.08%
Finance Cost 10 50 91 180 155 184 169 165
Depreciation 4 19 47 81 80 81 82 83
Profit Before tax 20 439 853 184 414 486 185 12
Taxation 11 169 479 67 205 121 15 (54)
Profit After tax 9 270 374 117 209 365 170 66
PAT Margins (%) 2.43% 10.89% 7.01% 10.33% 7.48% 7.44% 5.04% 4.08%
Diluted EPS 0.53 1.35 1.87 0.59 1.04 1.82 0.85 0.33

h) Material developments in Human Resources / Industrial Relations front, including number of people employed:Ujaas Energy has a very strong board, first line management and second line management, comprising of various Business Heads, GM and Vice Presidents and below them we have an effective team of managers. The company will have huge openings in the coming years as the company is expecting enormous growth and will need supporting hands for proper management. The total number of people employed in our Company are 213 as on 31st March, 2019.