MANAGEMENT DISCUSSION & ANALYSIS

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 and setting up of 1.25 MW wind power generation plant. 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

There has been a rising awareness worldwide that renewable energy and energy efficiency are critical not only for addressing climate change, but also for creating new economic opportunities and for providing energy access to the billions of people still living without modern energy services. Over the past decade, and particularly in recent years, advances in renewable energy technologies, global increases in capacity, and rapid cost reductions have been due largely to policy support, which has attracted significant investment and has further driven down costs through economies of scale. As per Global Status Report - REN 21, India's global position in renewable energy capacity installation is 5th in the world. Renewable energy continued to grow in 2014 against the backdrop of increasing global energy consumption and a dramatic decline in oil prices during the second half of the year. In 2014, renewable energy expanded significantly in terms of capacity installed and energy produced, with renewable energy investments in the power sector outpacing net investments in fossil fuel power plants. The most rapid growth and the largest increase in renewable capacity occurred in the power sector and was dominated by three technologies: wind, solar photovoltaic (PV), and hydropower.

India is the fourth largest primary energy consumer, after China, USA and Russia. It accounts for more than 4.5% of the total global annual energy consumption. In India 818 million people or around two-thirds of the population, rely on traditional biomass-almost twice as many as in China, which is ranked second in world. As per India Energy Congress (IEC)-2013 on Securing Tomorrow's Energy Today-Policy & Regulations, if India grows at the rate of 8% or more, higher than average demand for energy will persist.

INDUSTRY ANALYSIS

India is perhaps the most exciting solar market in the world helped by rapidly improving commercial viability of solar PV technology, its huge need for power and of course, its social  and environmental imperatives. Solar technology has many unique attributes which make it one of the most brferred sources of power particularly in India, a densely populated country with high energy deficit - it can be rapidly deployed across most parts of the country, it is modular in nature and it is environmentally friendly. The demand for electricity in the country has been growing at a rapid rate and is expected to grow further in the years to come. In order to meet the increasing requirement of electricity, massive addition to the installed generating capacity in the country is required. The energy deficit in India has reduced from 9.5 per cent to 4.5 per cent. The Government of India's focus to attain 'Power For All' has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing on both market side as well as supply side (fuel, logistics, finances and manpower).

Generation of Power:

The installed generating capacity in the country as on 31st March 2015, was 272 GW (and an additional 43 GW of captive power). Grid capacity addition during the financial year for the country was 25 GW as compared to capacity addition of 20 GW during the brvious financial year.

India generation mix (in GW) and share by generation source, as of 31st March 2015

The Government has set a mammoth new goal to build a solar power capacity of 100 GW in an energy-starved-but-hungry country, permitting 100% foreign investment and offering a series of tax breaks for the fledgling sector. Further it is considering to bring long term policies and scheme for installing solar power plants with 1 lakh MW capacity in the  country. It has announced revision of the target of renewable energy capacity of the MNRE to 1,75,000 MW by 2022. The revised target of 1,75,000 MW comprises of capacity addition of 1,00,000 MW Solar, 60,000 MW Wind, 10,000 MW Biomass and 5,000 MW Small Hydro Power. The Government has rolled out a scheme for setting up and development of at least 25 Solar Parks and Ultra Mega Solar Power Projects targeting over 20,000 MW of solar power installed capacity within a span of 5 years starting from 2014-15 at various locations in the country with a view to create required infrastructure for setting up of Solar Power Projects besides CFA and grants concessional customs duty/ excise duty exemption for setting up of solar power plants, Accelerated Debrciation and Tax Holidays.

A Green Energy Corridor project is under implementation for evacuation of renewable energy from generation points to the load centres by creating intra-state and inter-state transmission infrastructure RE-INVEST 2015 Concludes with 2,66,000 MW Commitments of Green Energy. The Government has launched various schemes to set up grid-connected solar power plants. The Reserve Bank of India (RBI) added renewable energy under priority lending but with a cap of INR150 million (US$2.5 million) for renewable energy generators and INR1 million (US$16,393) per borrower for residential customers.

The Indian power sector has an investment potential of X 15 trillion (US$ 237.35 billion) in the next 4-5 years, providing immense opportunities in power generation, distribution, transmission and equipment. With an installed capacity of about 3000 MW solar power, the share of solar energy is about 2% in the power sector of the country. MNRE has proposed to scale up Grid Connected Solar Power targets from 20,000 MW to 1,00,000 MW by 2022. The target includes 40,000 MW roof-top solar photovoltaics, 57,000 MW large solar projects and 3,000 MW already installed. The Government has approved an outlay of X 33,003 crore for MNRE for promotion of new and renewable energy during 12th Plan period. The Reserve Bank of India (RBI) added renewable energy under priority lending but with a cap of INR150 million (US$2.5 million) for renewable energy generators and INR1 million (US$16,393) per borrower for residential customers.

In 2015, IHS brdicts that installation demand will grow at a double-digit rate of 16 to 25 percent and installations in the range of 53 to 57 GW. The drivers of growth will remain largely unchanged from 2014. Geographically, the largest markets again will be China, Japan and the United States, while the largest contributors in terms of absolute growth will be China, the U.S. and India.

BUSINESS OUTLOOK:

The main focus of the company will be on the installation of Solar Power Projects in different parts of the country depending upon the Solar Policies of different State Governments, JNNSM and under REC Mechanism.

WIND POWER GENERATION:

Introduction:

Wind energy is the fastest growing renewable energy sector in India. With the capacity of 23,444 MW as on April 30,

2015, it accounts for nearly 65% of the installed capacity in the renewable energy sector in the Country. Tamil Nadu is at leading position in terms of installed wind capacity but attention is quickly shifting to states such as Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Rajasthan where the gap between the available potential and installed capacities are much higher than those for Tamil Nadu. The sector is growing rapidly and thus brsents substantial opportunities for both the international and domestic players. In 2014, the Indian wind sector experienced moderate annual growth, with 2.21 GW of new installations. India ranks fifth in terms of global installed capacity and third in annual capacity growth. However, the Challenges for India mainly are 79 million households yet to be electrified, Per capita consumption is % of world average, Estimated demand of India 900 GW by 2032 i.e., 4X that of now. To address the above challenges, the Indian power system is expected to grow 8-10% p.a for next several decades Developing countries like India need to invest in both strengthening the electrical network as well as adding communications, IT and automation systems to build a strong and smart grid.

INDUSTRY ANALYSIS:

With an ambitious target of 60 GW by 2022 set by Government of India, the wind energy sector is poised to achieve 6 GW per annum installation in the next 5 years. The wind power industry is confident of achieving this ambitious target on the back of Hon'ble Prime Minister's "Make in India" campaign. The confidence was evident throughout the first renewable energy global investors meet and Expo organised by the MNRE - "RE INVEST 2015". The Government has also given assurance in helping to sorting out the issues and challenges the sector is grappling with. The Central government has informed it has already started interactions with the State Governments to facilitate the fulfilment of the commitments received in the RE-INVEST 2015. The deliberation during 4th International Conference on Wind Energy (WE 20 by 2020) brsents an opportunity and platform to build consensus on several policies, regulatory, technological, implementation aspects that would influence the future growth of the wind sector in India. The Government has put in place fiscal and promotional incentives like GBI, concessional import duty, AD, Excise duty relief, cheaper loans through IREDA, etc. Incentives could make India an attractive location for manufacturers both for the Indian markets as well as for exports.

A robust grid infrastructure is one of the key important factors in ensuring off-take of wind energy generated. Most of the wind farms in India are located in remote areas that are located far away from load centres. Due to inadequate or weak grid infrastructure, it is difficult to transmit the power from wind farms to the load centres. Grid constraint has emerged as the biggest impediment for scaling-up RE capacity in India. Wind projects are forced to back down for want of evacuation infrastructure. Inadequate management of variable generation, ambiguity surrounding responsibility of sharing for forecasting of RE generation remains a concern. Addressing these issues assumes immense significance in the brsent scenario wherein the grid penetration level is expected to grow exponentially. Further, the targeted capacity of 60 GW by 2022 translates to annual wind power capacity addition target of 6GW to 8 GW every year from now on. Wind energy market of India is expected to attract about X 20,000 crore (US$ 3.16 billion) of investments next year, as companies across sectors plan to add 3,000 MW of capacity powered by wind energy.

BUSINESS OUTLOOK:

The renewable energy sector in India is full of opportunities and merits careful consideration by market participants. The Indian renewable energy market is highly attractive as it has the potential to reduce India's rising demand supply gap, hence becoming a key cog in the wheel for India's energy security strategy. The government in India has placed and encouraging policy & regulatory framework with a combination of feed-in tariffs, renewable procurement obligations, and Renewable Energy Certificates. The most dominant asset classes, wind and solar, have attracted considerable supplier interest and hence equipment and EPC is available at increasing competitive rates thus boosting margins. The Jawahar Lal Nehru National Solar Mission (JNNSM) and several state-level solar policies are helping develop solar energy market. Recent budgetary allocation for generation based incentives and reintroduction for accelerated debrciation for wind power will spur investments in wind energy. The size of the renewable energy market will see further growth as the application of Renewable Purchase Obligation expands to cover open access and captive consumers.

The Company currently has an installed capacity 1.25 MW at Kapatguda in the state of Karnataka. The outlook remains stable.

RISKS AND CONCERNS:

The Company's 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 Luharuka & Associates, 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 2015 is Rs. 10,40,22,000/- comprising of 10,40,22,000 Equity Shares of Rs. 1/- each fully paid. (during the year, the Equity shares of Rs. 5/- each were sub-divided into 5 Equity Shares of Re. 1/- each, due to which, there is an increase in number of shares).

Reserves and Surplus:

The Reserves and Surplus of the Company for the current year is Rs. 494,118,536 and in the brvious year was Rs. 497,339,466.

Fixed Assets:

During the year, the Company has added Fixed Assets amounting to Rs. 4,340,256 making the gross fixed assets as on 31.03.2015 to Rs. 1,136,457,255.

Inventories:

Inventories, as on 31st March, 2015 amounted to Rs. 189,302,432 and in the brvious year is Rs.37,170,237.

Sundry Debtors:

Sundry Debtors amounted to Rs. 30,437,218 as on 31st March, 2015 and Rs. 29,715,585 in the brvious year.

Cash and Bank Balances:

Cash and Bank balances with Scheduled Banks, as on 31st March, 2015 amounted to Rs. 11,284,808 which includes amounts deposited with banks as Security and margin Money Deposit and accrued interest.

Long Term Loans and Advances:

Loans and Advances amounted to Rs. 61,359,355 as on 31st March, 2015 as against Rs. 126,633,388 in the brvious year.

Short Term Loans and Advances:

Short Term Loans and Advances amounted to Rs. 1,987,033 as on 31st March, 2015 as against 8,363,234 in the brvious year.

Current Liabilities:

Current Liabilities amounted to Rs. 196,904,083 as on 31st March, 2015 as against Rs. 156,597,050 in the brvious year.

6.2. Operational Performance:

Turnover:

During the year 2014-15, the gross turnover of the Company was Rs. 174,623,085 and Rs. 290,278,338 in the brvious year.

Other Income as on 31st March, 2015 is Rs.15,669,006 and Rs. 22,157,029 in the brvious year.

Debrciation:

The Company has incurred a sum of Rs. 77,103,617 towards debrciation and amortisation for the year and Rs.84,308,231 in the brvious year.

Net Profit:

The Net Profit of the Company after tax is Rs. 19,870,740 and Rs. 7,290,559 in the brvious year.

Earnings per Share:

Basic Earnings Per Share for the year ended 31.03.2015 is Rs. 0.19 for Face Value of Rs. 1/- and Rs. 0.07 per share for the year ended 31.03.2014.

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 Company's Objectives and Expectations may be "Forward-Looking Statements" within the meaning of applicable Securities Laws and Regulations. Actual results could differ materially from those exbrssed 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, technological obsolescence, changes in the Government Regulations and Policies, Tax Laws and other Statutes and other incidental factors.