Veer Energy & Infrastructure Ltd Management Discussions.

MANAGEMENT DISCUSSION & ANALYSIS

Industry Structure and Developments

Wind power is a sustainable and renewable source of power that has a much smaller impact on the environment compared to burning fossil fuels. Wind energy doesnt pollute the air like power plants that rely on combustion of fossil fuels, such as coal or natural gas, which emit particulate matter, nitrogen oxides, and sulphur dioxide —causing human health problems and economic damages. Wind power gives variable power, which is very consistent from year to year but has significant variation over shorter time scales. It is therefore used in conjunction with other electric power sources to give a reliable supply.

Wind power consulting companies offer consulting services to the wind power industry, including wind turbine design and certification, technical due diligence, wind resource maps, wind resource assessments, wind power forecasting, and wind turbine power performance testing. The wind power industry is currently undergoing a period of rapid globalization and consolidation, with much of the recent wind farm development occurring outside the older established markets. To meet a global wind turbine supply shortage, start-up wind turbine manufacturers are still appearing and ramping up the production of their new wind turbine models as quickly as possible.

Outlook

Due to rapid modernization and urbanization, power demand in India has been expected to rise up very high in near future. India had constantly been putting efforts to utilise the renewable energy sources over more than a decade, but a major turning point came to notice in the year 2014. The government gave due attention and certain reforms and initiatives were taken leading to favourable factors for the renewable energy source in India.

SWOT Analysis

Strengths

• A sustainable and environment friendly source of energy.

• Wind, along with being sustainable is also a domestic source of energy.

• Fuel cost is zero and there are no inputs required.

• Dedicated Ministry (MNRE) at Central Level.

• Wind turbine can be built on existing farms or ranches. Thus framers and ranchers can continue to work on the land as a wind turbine occupies only a fraction of the land.

• It has the lowest gestation period as compared to conventional energy.

• Fast track power project, with low gestation period and a modular concept.

Weaknesses

• Inadequate Grid Infrastructure.

• Efficiency level is low compared to fuels.

• Political changes may affect the policy of the market.

• Initial cost is higher as compared to fossil fuel based power generation.

• Single window clearance system is absent, due to which there is delay in getting the necessary approvals.

• Good land-based wind sites are often located in remote locations, far from cities where the electricity is needed.

Opportunities

• India is located on the seasonal wind belt. This has facilitated development of numerous wind farms here.

• Government providing incentives and promoting the sector.

• Demand for wind energy worldwide has been increasing.

• Unique storage techniques and technologies.

• Direct drive wind turbines reduces the O&M costs.

Threats

• Cut throat competition from existing and new industries.

• Market demand and supply may get affected due to change in regulations and policies.

• Offshore wind deemed too expensive.

• A Possibility of Technology becoming obsolete always exists.

• Land cost may shoot up.

Risks

Company classifies the risks broadly into two categories, viz., External Risks and Internal Risks. The external risks mainly comprises of business risks on various fronts. The identified business risks and opportunities are deliberated in detail and thereafter considered in the business plan of the Company along with the mitigation plan. The internal risks identified by the Board are systematically addressed on a continuous basis across the locations.

Internal control systems and their adequacy

Our governance and compliance processes, which include the review of internal control over financial reporting ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized, recorded and reported. It also conducts regular internal audits to test compliance with the statutory requirements. Audits are led by professional audit managers and supported by experienced personnel drawn from across the organization. Audit results are used by management to create detailed action plans where the businesses have not yet achieved full compliance with the requirements. Key findings are reported to senior management and summary reports are considered by the Audit Committee of the Board. The nature of the industries in which the company operates means that many of its activities are highly regulated by health, safety and environmental norms while maintaining operational integrity.

Financial Performance

Veer Energy has been a consistent value creator for all its stakeholders. Details regarding financial performance are published in the Annual Report.

Human Resources

The positive and motivating work environment of the company advances innovation, encourages growth and inculcates a positive spirit among the workforce. Employees are nurtured within the company, which increases their potential and growth in various matters. Working in the company has always made it an enriching experience for the multi-generational, diversified and mobile workforce.

Cautionary Statement

The statements made above may be construed as forward looking statements within the meaning of the applicable laws and regulations. Actual performance of the Company may vary substantially depending upon the business structure and model from time to time.