Websol Energy System Ltd

Your Directors are pleased to present the Twentieth Annual Report and the AuditedAccounts for the financial year ended 30th June, 2010.

Business and Performance

India, an emerging economy, has witnessed unprecedented levels of economic expansion,along with countries like China, Russia, Mexico and Brazil. India, being a cost effectiveand labor intensive economy, has benefited immensely from a strong manufacturing andexport oriented industrial framework. With the economic pace picking up, global commodityprices have also staged a comeback from their lows.

In the past few years, solar power has taken centre-stage globally as an alternateenergy source. The past few months, however, have been a dampener in terms of investmentflows into the sector because of the global recession. But with China and India, the twomost attractive markets for solar capacity build-outs, setting ambitious targets for thenext decade, the sector is definitely poised for a fresh beginning.

Your company being a pioneer in the industry of manufacturing of photovoltaic cells andmodules, strives to transcend all hurdles for noting down remarkable growth. The lastfinancial year of your Company, which was of fifteen months and ended on 30th June’2010, saw many events, the major amongst them being the start of state of the artmanufacturing facility at Falta SEZ, West Bengal. The turnover of your company for thelast financial year was Rs.14961.87 lacs as against Rs.13911.51 lacs in 2008-09. Despitethe increase in the quantitative terms, the turnover was low mainly because of thedecrease in the selling prices of finished goods in absolute terms. However, your companyposted a loss in the last financial year, which can be viewed as a temporary phase, andwas mainly due to fall in the prices of SPV cells and modules globally, weakening of eurovisa-vis dollar and higher depreciation and interest costs.

Solar power, which is counted among one of the major environment-friendly sources ofenergy, has a number of positives and negatives. One of the most prominent advantages ofsolar power is that it can be renewed. With government support to boost the growth ofsolar industry the revival of smooth market conditions is warranted. The announcement ofJawaharlal Nehru mission by the Govt. of India with a target of setting up of 20 GW ofsolar PV plants by 2020 has given a further boost to the industry and domestic demand isalso expected to pick – up.

Expansion Capacity

With the solar industry attracting business majors and neck cut competition, companiesare on the tread for capacity expansion. In the present business scenario, volume basedbusiness has become a necessity to survive. During the last year your Company successfullycommenced the commercial production of 30 MW SPV Cells and Modules at its new state of theart manufacturing facility at Falta SEZ, West Bengal. Your company is further adding tothe existing capacities in order to be economical in terms of cost given the fact thatyour company already has adequate infrastructure and facilities for expanding theinstalled capacity upto 90 – 120 MW.

Qualified Institutional Placement (QIP) and Preferential Allotments

During the year under review your Company has raised capital of Rs.45.40 cr. by way ofQIP and further Preferential Warrants, convertible into equity shares, was also issued tothe Promoter and Strategic Investor, amounting to Rs.30.00 cr. These funds were raised toaugment the Working Capital requirements of the Company as well as to repay its debtobligations and strengthen the capital base.

Dividend

Considering the performance of your Company in the period under review and the ongoingexpansion process, the Board of Directors of your company have not recommended anydividend for the last financial year.

Directors

According to provisions of the Companies Act, 1956 and Articles of Association of theCompany, Mr. S.K. Pal and Mr. S.P. Bangur retire by rotation and being eligible offerthemselves for re-appointment. The Board considered that their re-appointment will be mostbeneficial to the Company and hence recommends adoption of the resolutions.

Mr. Sameer Agarwal was appointed as an Additional Director and he will hold office assuch till the ensuing Annual General Meeting. The Company has received a Notice underSection 257 of the Companies Act, 1956 from a shareholder proposing the candidature of thesaid Additional Director for the office of Director of the Company.

Auditors

M/s. Agarwal Sanganeria & Co., Chartered Accountants, the Auditors of the Companyretire pursuant to section 224 of the Companies Act, 1956 and being eligible offerthemselves for reappointment. Necessary certificate under Section 224(1B) of the CompaniesAct, 1956 has been received from the retiring Auditors confirming their eligibility andthat they are not disqualified for reappointment within the meaning of Section 226 of thesaid Act.

Auditors’ Report

The notes to the Accounts referred to the Auditors Report are self explanatory andtherefore, do not call for any further comments.

Directors’ Responsibility Statement

We, the Directors of the Company, hereby confirm, pursuant to provisions of section 217(2AA) of the Companies Act, 1956, in respect of financial year under review:

i) that in the preparation of the Annual Accounts for the financial year ended 30thJune 2010, the applicable accounting standards have been followed and there are nomaterial departures from the same;

ii) that we have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year as at 30thJune 2010 and of the Loss of the Company for that period;

iii) that we have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing, and detecting fraud and otherirregularities.

iv) that we have prepared the annual accounts on a "going concern" basis.

Listing of Securities in Stock Exchanges

The shares of the Company are listed on Bombay and National Stock Exchange.

Corporate Governance

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a reporton Corporate Governance along with a certificate from Auditors of the Company regardingCompliance of Conditions of Corporate Governance, certification by CEO and the ManagementDiscussion & Analysis Report and are given in the enclosed Annexure - B, which formspart of this Report.

Industrial Relations

The industrial relation during the last financial year had been cordial. The Directorstake on record the dedicated services and significant efforts made by the Officers, Staffand Workers towards the progress of the Company.

Energy, Technology & Foreign Exchange

Information in accordance with the provisions of Section 217(1) (e) of the CompaniesAct, 1956 read with the Companies (Disclosure of Particulars in the report of Board ofDirectors) Rules , 1988 regarding conservation of energy, technology absorption, foreignexchange earnings and outgo are given in the Annexure –A, which forms part of thisreport.

Particulars of Employees

During the year under review none of the employees was in receipt of remuneration inexcess of the amount prescribed under Section 217(2A) of The Companies Act, 1956.

Acknowledgement

Your Directors would like to express their grateful appreciation for the assistance andco-operation received from the Financial Institutions, Banks, Government Authorities andShareholders during the year under review. Your Directors wish to place on record theirdeep sense of appreciation to all the employees for their commendable teamwork, exemplaryprofessionalism and enthusiastic contribution during the year under review.

ANNEXURE – "A" TO THE DIRECTOR’S REPORT

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules 1988 and formingpart of the Directors’ Report for the year ended 31st March 2008.

A. Conservation of Energy

The Company has taken adequate steps to ensure comparatively low energy consumption.Constant studies and reference are being made to improve the efficiency in consumption ofenergy.

B. Technology Absorption.

1. Research and Development (R&D)

Research and Development is spread across the business of our company. Though nospecific expenditure is made under the head R & D, constant development efforts aremade to increase the efficiency and for cost reduction.

2. Technology Absorption, Adoption & Innovation.

The Company has fully absorbed the technology to manufacture Solar Photovoltaic Cells,Modules and Systems.

3. Information regarding Imported Technology

(C) Foreign Exchange Earnings and Outgo