Veer Energy & Infrastructure Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Developments

Wind energy is harnessed by wind turbines, which convert the energy of the wind into electricity. Wind energy is one of the largest sources of renewable energy. Wind power, as an alternative to burning fossil fuels, is plentiful, renewable, widely distributed, clean, produces no greenhouse gas emissions during operation, consumes no water, and uses little land. The net effects on the environment are far less problematic than those of non-renewable power sources. 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.

During recent years, the amount of energy produced by wind-driven turbines has increased rapidly due to considerable advancement in turbine technologies, making wind power economically compatible with conventional sources of energy. The use of wind power in India has been gaining importance with rapid installation in the last few years.

Outlook

India has been continuously putting efforts in terms of exploiting its given renewable energy sources potential over more than a decade, but a serious turnaround in its development has been observed since 2014, courtesy the due attention given by the government and certain bold initiatives taken on the policies front, which gave more heed to the already existing pro-renewable sentiments in the country. With rapid urbanization and the anticipated northbound trends in the industrial sector growth, power demand in India is projected to climb a new high in coming years. To support this likely jump there arises an urgent need for a backup in order to avoid any fallout in the desired power requirement.

SWOT Analysis

Strengths

• Free sources of wind energy

• Independent from fuel and water for the generation of electricity.

• Minimum land area requirements.

• Separate state nodal agencies at state level to support at state level.

• Wind projects under stable policy frameworks are less affected by the credit crunch than higher risk investments.

• Low O&M costs compared with other power plants.

• Quick and simultaneous installation of turbines.

• Buy-back laws exist for the purchase of wind power at reasonable rates.

• Dedicated Ministry (MNRE) at Central Level.

Weaknesses

• Wind power plants are developed only in specific wind tunnels and therefore, at times additional transmission cost should be considered.

• Policy of the market may be affected by political changes.

• The possibility does not reside in wind farms to build high rise installations.

• Inadequate Grid Infrastructure.

• Higher Capex compared to thermal power plants that have the highest share of generation of electricity.

• Absence of single window clearance system, due to which there is delay in getting the necessary approvals.

Opportunities

• Reduction of O&M costs through direct drive wind turbines.

• Government promoting this sector and providing incentives.

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

• The potential that resides within large groups to finance wind farm projects is a unique opportunity for the financing and development of wind farms.

• Large companies engaged in the power generation industry have built confidence in the suppliers of technology, consumers, contractors and government bodies.

Threats

• Wind power plants require procurement of expensive equipment and as a result huge financing and private companies are still not prepared to accept the relevant risks.

• Possibility of Technology becoming obsolete.

• Public loses concern about carbon emissions, making it more difficult to maintain supportive policies and incentives.

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

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.