MANAGEMENT DISCUSSION & ANALYSIS

Surana Solar Limited (Formerly known as Surana Ventures Limited) was incorporated in the year 2006, a flagship Company of Surana Group. During the year 2009-2010, a Scheme of arrangement was entered by the Company with M/s Surana Telecom and Power Limited which was sanctioned by Hon'ble High Court of A.P. on 28.06.2010 and became effective on 28.07.2010, pursuant to which the "Solar Undertaking" of Surana Telecom and Power Limited was merged with the Company. The shares of the Company were listed on Stock Exchanges w.e.f 7th January, 2011. The Company has steadily grown over the years with a continued focus on customer satisfaction, evolving itself into country's one of the most promising mid cap Companies.

1. SOLAR PV MODULES:

1.1 INTRODUCTION:

Solar Photovoltaics power generation has long been seen as a clean energy technology which draws upon the planet's most plentiful and widely distributed renewable energy source - the Sun. Solar photovoltaics is growing rapidly. By the end of 2014, total installed capacity Solar PV globally amount to at least 177 GW, upfrom nearly 140 GW in 2013, according to International Energy Ageny. The total power output of the world's PV capacity in a calendar year is now beyond 200 billion kWh of electricity. This rebrsents 1% of worldwide electricity demand. More than 100 countries use solar PV. China, followed by Japan and the United States is now the fastest growing market, while Germany remains the world's largest producer. Photovoltaics is now, after hydro and wind power, the third most important renewable energy source in terms of globally installed capacity.

Solar Photovoltaic (PV) electricity continued its remarkable growth trend in 2015, even in the midst of a financial and economic crisis and even as the PV industry was enduring a period of consolidation. As they have for the past decade, PV markets again grew faster than anyone had expected both in Europe and around the world. The spectacular global growth of solar PV is one of the big energy stories of today and it may well become the energy story of the 21st Century. The International Energy Agency (IEA) issued a report claiming that solar PV could be the biggest single source of electricity in 2050 and it believes the price of solar PV could become as low as 4 dollar cents per kWh. Worldwide, the market for solar PV (including modules, system components, and installations) expanded from $2.5 billion in 2000 to $91.3 billion in 2014.

1.2 INDUSTRY ANALYSIS:

In more ways than one, 2014-15 has been a decisive leap forward for renewable energy in India. The cumulative global market for solar PV is expected to triple by 2020 to almost 700 Gigawatts, with annual demand eclipsing 100 gigawatts in 2019. Global Solar PV Capacity to Reach Nearly 500 GW in 2019, IHS Says. Total global solar photovoltaic (PV) capacity is forecast to reach 498 Gigawatts (GW) in 2019, which is 177 percent higher than 2014. While total global solar PV demand is projected to grow steadily, the large number of discrete country markets at the Gigawatt-level will help reduce demand volatility. With abundant sunshine in India such that most part received 4 - 7 kWh per sq. m per day, the vast solar potential is evident. The Govt of India has set a target of generating 1,75,000 MW of Renewable energy ( RE) by 2022 should be taken as a mission for ensuring energy security of the country and 100,000 MW grid connected Solar Power in the country and out of this 40,000 MW has to come from Solar Rooftop systems.

The fast evolving solar PV industry in India brsents significant opportunities. But it needs a powerful guide that will help benefit from this opportunity. The launch of the National Solar Mission has given a big impetus to solar energy in India. The highlights of the mission are given below:

• Installed capacity of 20000 MW by 2022

• Establishment of a single window investor friendly mechanism

• Envisages an investment of X 90,000 crores over the next 30 years

• Initial investment of X 4,337 crores provided by the Government of India

It is expected that solar PV based power plants will become an exciting business opportunity. While power production through solar energy is possible using both solar thermal (using the heat in the sunlight) and solar photovoltaic (using the light energy), electricity generation worldwide is more prominent through solar PV than through solar thermal. This trend is expected to continue in India as well. According to the experts by 2050, about 69% of the electricity produced in India will come from renewable energy sources. The top five states in India for solar PV potential are respectively Gujarat, Rajasthan, Maharashtra, Tamil Nadu, Telangana and Andhra Pradesh. Under the Jawaharlal Nehru National Solar Mission (JNNSM), India is expected to reach a total solar installed capacity (both PV and CSP) of 20,000 MW and a total electricity generation of 25-30 TWh per year by 2022. Cumulative solar PV capacity in India reached 2.1 GW by end of CY 2013 (Bridge to India).

1.3 BUSINESS OUTLOOK:

The Government's vision of providing power 24x7 to each household has ignited new optimism in the power industry, especially with the exploration of renewable energy sources which offer excellent opportunities amid challenges for the industry and it has launched a massive RE initiative of adding 175 GW till 2022. This includes Solar 100 GW, Wind 50 GW, Biomass 10 GW, and Small Hydro 5 GW. The Government encourages setting up of solar power projects by offering various incentives, such as GBIs and tax holidays to the Clean Energy. In view of the huge demand for solar product and Company having considerable market in this line of activity, the company expects to benefits by the same.

2. NON CONVENTIONAL ENERGY:

2.1 INTRODUCTION:

India is endowed with vast solar energy potential. About 5,000 trillion kWh per year energy is incident over India's land area with most parts receiving 4-7 kWh per sq. m per day. Hence both technology routes for conversion of solar radiation into heat and electricity, namely, solar thermal and solar photovoltaics, can effectively be harnessed providing huge scalability for solar in India. Solar also provides the ability to generate power on a distributed basis and enables rapid capacity addition with short lead times. Off-grid decentralized and low-temperature applications will be advantageous from a rural electrification perspective and meeting other energy needs for power and heating and cooling in both rural and urban areas. From an energy security perspective, solar is the most secure of all sources, since it is abundantly available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can meet the entire country's power requirements. It is also clear that given the large proportion of poor and energy un-served population in the country, every effort needs to be made to exploit the relatively abundant sources of energy available to the country. While, today, domestic coal based power generation is the cheapest electricity source, future scenarios suggest that this could well change.

2.2 INDUSTRY ANALYSIS:

To make India a hub for renewable energy manufacturing, Ministry of New and Renewable Energy (MNRE) has been promoting private investment in renewable energy through an attractive mix of fiscal and financial incentives. 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. Government 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 X 150 million (US$2.5 million) for renewable energy generators and INR1 million (US$16,393) per borrower for residential customers.

China and Japan now make up 50 percent of the world solar PV market, according to Bloomberg New Energy Finance. China has a declared target of 35 GW of installed solar by 2015, driven by the need to reduce air pollution from fossil generation as well as meeting its ever-growing energy demand, and appears on track for meeting or exceeding that goal. 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.

2.3 BUSINESS OUTLOOK:

Sustained economic growth continues to drive power demand in India. The Government of India's focus to attain 'Power For All' has accelerated capacity addition in the country and it has identified the power sector as a key sector of focus to promote sustained industrial growth. The RE-INVEST 2015 concluded that the green energy commitments worth 2,66,000 MW. GoI has announced a massive renewable power production target of 175,000 MW by 2022, comprising 100,000 MW from solar power, 60,000 MW from wind energy, 10,000 MW from biomass and 5,000 MW from small hydro power projects.

Your company has great opportunities as the power sector is seen as a key driver supporting the growth of the nation at large, the new Government at the Centre has been pursuing reforms which is expected to ease some of the known constraints.

3. 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.

4. 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.

5. FINANCIAL PERFORMANCE & OPERATIONAL

PERFORMANCE:

The financial performance of the Company for the year ended 31.03.2015 is summarized below:

5.1 Financial Performance:

Capital Structure:

The Equity Share Capital of the Company as on 31st March 2015 is Rs.  24,60,33,000/- comprising of 4,92,06,600 Equity Shares of Rs. 5/- each fully paid (during the year, the Equity Shares of Rs.  10 each were sub-divided into Equity Shares of Rs.  5/- each we.f. 26.11.2014).

Reserves and Surplus:

The Reserves and Surplus of the Company for the current year is Rs. 232,481,230 as compared to Rs.  177,754,895 in the brvious year.

Fixed Assets:

During the year, the Company has added Fixed Assets amounting to Rs.  50,035,919 making the gross fixed assets as on 31.03.2015 to Rs.  408,809,730.

Inventories:

Inventories amounted to Rs. 599,809,078 as on 31st March, 2015 and in the brvious year was Rs.  352,740,841.

Sundry Debtors:

Sundry Debtors amounted to Rs.  105,123,818 as on 31st March, 2015 as against Rs.  130,952,348 in the brvious year.

Cash and Bank Balances:

Cash and Bank balances with Scheduled Banks amounted to Rs.  74,069,058 as on 31st March, 2015 which includes amounts deposited with banks as Security and margin Money Deposit.

Long Term Loans and Advances:

Long Term Loans and Advances amounted to Rs.  5,997,443 as on 31st March, 2015 as against Rs.  1,904,845 in the brvious year.

Short Term Loans and Advances:

Short Term Loans and Advances amounted to Rs.  59,217,481 as on 31st March, 2015 as against Rs.  38,888,171 in the brvious year.

Current Liabilities:

Current Liabilities amounted to Rs. 765,258,104 as on 31st March, 2015 as against Rs.  431,965,794 in the brvious year.

5.2. Operational Performance: Turnover:

During the year 2014-15, the gross turnover of the Company is Rs.  1,253,863,534 and Rs.  1,263,965,973 in the brvious year.

Other Income is Rs.  7,324,817 as on 31st March, 2015 and Rs. 14,403,277 in the brvious year.

Debrciation:

The Company has provided a sum of Rs.  27,897,288 towards debrciation for the year and Rs. 32,183,628 in the brvious year.

Net Profit:

The Net Profit of the Company after tax is Rs.  84,356,136 and the profit for the brvious year is Rs.  30,349,680.

Earnings per Share:

Basic Earnings per Share for the year ended 31.03.2015 is Rs.  1.71 per share for Face Value of Rs.  5/- and Rs.  0.62 per share for the brvious year.

6. 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.

7. 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.