The Board has pleasure in presenting the Eleventh Annual Report on business and operations of the Company for the year ended 31st March 2016.

1. FINANCIAL HIGHLIGHTS

(Rs. in lakhs)

PARTICULARS YEAR ENDED YEAR ENDED
31-03-2016 31-03-2015
Revenue from operations (A) 25,768.11 29,597.28
Other Income (B) 215.91 392.16
Operating expenditure (C) 24,933.18 24,824.68
Earnings before interest, tax, depreciation and amortisation (EBITDA) [D=A+B-C] 1,050.84 5,164.76
Finance Cost (E) 12,520.96 10,283.43
Depreciation and amortization expense (F) 2,657.08 2,698.34
Profit / ( Loss) before tax [G=D-E-F] (14,127.20) (7,817.01)
Provision for Taxation (incl. deferred income tax) (H) 0 0
Profit / ( Loss) after tax [I=G-H] (14,127.20) (7,817.01)

2. PERFORMANCE REVIEW

During the year under review, the performance of the Company continues to be severely impacted due to significant downturn in the Global Market. However, the Company achieved turnover of Rs. 25,768.11 lakhs and Earnings before interest, tax, depreciation and amortisation ("EBITDA") of Rs. 1,050.84 lakhs during the year.

Your Directors feel that the Company will be seeing a turnaround in the financial year 2016-17 keeping in view the certain measures taken or expected to be taken by the Government to support of the domestic manufacturers in India viz. domestic content requirement policy, viability gap funding policy etc.

3. RESERVES AND SURPLUS

During the year under review, the Company has not transferred any amount to reserves due to losses incurred.

4. DIVIDEND

Due to non availability of Profit, the Board does not recommend any dividend for the year ended 31st March 2016.

5. STATUS OF IMPLEMENTATION OF 250 MW PROJECT

The project is in the last stages of implementation and it is expected that it will get ready by end of the financial year 2016-17.

6. NUMBER OF MEETINGS OF THE BOARD

Five meetings of the board were held during the year. For details of the meetings of the board, please refer to the point no. 2 of the corporate governance report, which forms part of this report.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of section 149 of the Act, Mr. Gautam Singh Kuthari, Mr. Vidyut Manubhai Vora and Ms. Vinati Dev were appointed as independent directors at the annual general meeting of the Company held on September 30, 2014. They have submitted a declaration that each of them meets the criteria of independence as provided in section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year.

As per Section 152 of the Companies Act 2013, Mr. Hulas Rahul Gupta, Managing Director liable to retire by rotation in 11th AGM and being eligible has offered himself for the reappointment. The Board of Directors recommended the reappointment for the consideration for the shareholders in ensuring AGM.

Pursuant to the provision of Companies Act, 2013, the key managerial personnel of the Company are Mr. Hulas Rahul Gupta, Managing Director, Mr. Anand Kumar Agarwal, Chief Financial Officer and Mr. Manish Gupta, Company Secretary. During the year, Mr. Sandeep Kumar Chopra has resigned from the post of Company Secretary w.e.f. October 01, 2015 and Mr. Manish Gupta has been appointed as Company Secretary w.e.f. November 10, 2015.

8. BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations").

The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of the criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

9. POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company strives to maintain an appropriate combination of executive, non executive and independent Directors subject to Min of 3 and Maximum of 12 Directors including at least one Women Director.

The Nomination and Remuneration Committee of the Company leads the process for Board Appointment in accordance with the requirements of the Companies Act, 2013, SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015 and other applicable regulations or policy guidelines.

During the previous year under review the Company has adopted the Nomination and Remuneration Policy for Directors, KMPs and Other Employees. The policy is available on website of the Company i.e. www.indosolar.co.in.

10. EXTRACT OF THE ANNUAL RETURN

The extracts of the annual return in form MGT-9 for the Financial Year 2015-16 under the Companies Act 2013 is given in Annexure I to this report.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH THE RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013

None of the transactions with related parties falls under the scope of section 188(1) of the Companies Act, 2013. Information on transactions with related parties pursuant to section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure II in Form AOC-2 and the same forms part of this report.

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the financial year 2015-16, the Company has not given loans, guarantees/surety or investment as described under Section 186 of the Companies Act, 2013.

13. AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the point no. 3 of the Corporate Governance Report, which forms part of this report.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Due to the continued heavy losses incurred by the Company, the CSR provisions of Companies Act, 2013, are not applicable.

15. CHANGES IN CAPITAL STRUCTURE

There was no change in capital structuring during the period 2015-16 except change in terms of 95,00,000 zero coupon non cumulative non-convertible redeemable preference shares to 95,00,000 compulsorily convertible preference shares.

16. RISK MANAGEMENT

The Board of Directors is overall responsible for identifying, evaluating and managing all the significant risks faced by the Company. The Board has approved the Risk Management Policy, which acts as the guideline by which the key risks are managed across the organization.

In the opinion of the Board, none of the risk faced by the Company threaten its existence. However the following risks are considered to have the potential bearing on the performance of the Company:

(i) Low prices of the Chinese Suppliers of the Solar Voltaic Cells (ii) Liquidity Crunch is resulting in the delay of completion of line C.

(iii) Threat from new entrants in the Market.

(iv) Inability of the Company to get the Continuous Orders throughout the year.

The Risk Management Policy is available on the Company’s Website www.indosolar.co.in.

17. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

The details in respect of internal financial control and their adequacy are included in the point no. 5 of the management discussion & analysis report, which forms part of this report.

18. VIGIL MECHANISM

The Company has in place a Whistleblower policy, to support the Codes of Business Ethics. This policy documents the Company’s commitment to maintain an open work environment in which employees , consultants and contractors are able to report instances of unethical or undesirable conduct, actual or suspected frauds or any violation of Company’s Code of Business Ethics at a significantly Senior Level without fear of intimidation or retaliation. The Company’s Whistle Blower Policy has been posted on the Company’s website www.indosolar.co.in.

19. AUDITORS

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Company’s Act 2013 and the Rules framed there under M/s B S R & Co. LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company from the conclusion of 9th Annual General Meeting ("AGM") held on 30th Sep 2014 till the conclusion of 13th AGM to be held in the Year 2018 subject to ratification of their appointment by the shareholders of the Company in every AGM. The Board of Directors recommends their ratification by way of an ordinary resolution in the ensuing AGM.

COST AUDITOR

In terms of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records and get them audited for the Financial Year 2016-17. The Board has appointed M/s Kabra & Associates Cost Accountants as the Cost Auditors for the Company for the Financial Year 2016-17 for the fees of Rs. 50000/- (Rupees Fifty Thousand Only) plus applicable taxes and out of pocket expenses subject to the ratification of the said fees by the Shareholders at the ensuing AGM.

SECRETARIAL AUDITOR

Pursuant to the provisions of the Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration) Rules, 2014, the Company had appointed M/s Chandrasekaran Associates a firm of Company Secretaries in Practice to undertake the secretarial audit of the company for the Financial Year 2015-16. The report of secretarial audit is annexed to this report as Annexure III.

The Secretarial Auditor’s Report is self explanatory and does not require further comment.

20. STATUTORY AUDITORS’ REPORT

On the Auditors’ qualified opinion with regards to Going Concern Status of the Company, the reply from the management is as under:

1. Due to the adverse market conditions from last four years, the Company could not meet its liabilities of Rs 59,444.58 lakhs due on the first CDR and on Account of purchase of materials and capital goods for Rs. 6,452.78 lakhs as mentioned in para 4(a) of the Auditors’ Report.

In view to above, the Bankers are considering the transfer of loan liabilities to some ARCs and/or to invoke change in the management instead of considering our proposal for 2nd CDR scheme.

2. The Long Disputed cases namely the dispute regarding the Capital Subsidy under Special Incentive Package has been decided in the favour of the Company. Refer Delhi High Court Order WP(C) No. 3625/2013. However, the DIT

("Department") aggrieved with the said order and led writ petition with Delhi High Court to challenging the said order. The matter is yet not concluded.

3. The Dispute with MP Urja regarding the turnkey contract is in the final stages of getting settled.

4. In view of the numerous uncertainty and accumulated losses, Auditor’s shows inability to uncertain of quantum of impairment in respect of carrying value of fixed assets. However, the Company feels that in view of future market prospects such provision is not necessary.

21. DEPOSITS

The Company has not accepted any deposits from public during the financial year under review.

22. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required to be furnished under the provisions of section 134 (3) (m) given as Annexure IV to this report.

23. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act, 2013, the Directors confirm that:-

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit and loss of the Company for the period ended 31st March 2016;

c. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they had prepared the annual accounts on a going concern basis;

e. they had laid down Internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and

f. they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

24. PARTICULARS OF EMPLOYEES

The information required under section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

Name of Director Designation Ratio to Median Remuneration
Mr. Hulas Rahul Gupta Managing Director 42:1
Mr. Gautam Singh Kuthari Non-Executive Independent Director 0
Mr. Vidyut Manubhai Vora Non-Executive Independent Director 0
Ms. Vinati Dev Non-Executive Independent Director 0

b) The percentage increase in remuneration of each director, Chief Executive Officer, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year;

Name of Person Designation % Increase in remuneration
Mr. Hulas Rahul Gupta Managing Director 0
Mr. Gautam Singh Kuthari Non-Executive Independent Director 0
Mr. Vidyut Manubhai Vora Non-Executive Independent Director 0
Ms. Vinati Dev Non-Executive Independent Director 0
Mr. Anand Kumar Agarwal Chief Financial Officer 0
Mr. Manish Gupta Company Secretary 0

(c) The percentage increase in the median remuneration of employees in the financial year: 11%

(d) The number of permanent employees on the rolls of company as on 31st March 2016: 283

(e) The explanation on the relationship between average increase in remuneration and company performance:

On an average, employees received an increase of 7.60%. The increase in remuneration is in line with the market trends and is necessary to retain the employees.

(f) Comparison of the remuneration of the Key Managerial Personnel against the performance of the company:

Particulars Rs. (in lakhs)
Remuneration of Key Managerial Personnel (KMP) during financial year 2015- 16 (aggregated) 74.60
Revenue from operations 25,768.11
Remuneration of KMPs (as % of revenue) 0.29%
Profit before tax (PBT) (14,127.20)
Remuneration (as % of PBT) N.A. as PBT is negative

(g) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public:

Particulars Unit As at 31st Mar 16 As at 31st Mar 15 Variation
(%)
Closing Rate of Share at NSE Rs. 8.20 14.90 -44.97%
Closing Rate of Share at BSE Rs. 8.18 14.90 -45.10%
Earnings Per Share Rs. -3.94 -2.26 -74.34%
Market Capitalization Rs./lakhs 29,366.66 53,361.37 -44.97%
Price Earnings ratio Ratio N.A. as EPS is -ive N.A. as EPS is -ive

(h) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in salaries of employees other than managerial personnel in 2015-16 was 7.60%. Percentage increase in the managerial remuneration for the year was 0%. The Managerial Remuneration paid to directors recovered as per MCA order.

(i) Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company:

Particulars Hulas Rahul Gupta, Anand Kumar Agarwal, Manish Gupta/ Sandeep Chopra
Managing Director Chief Financial Officer Company Secretary
Remuneration in FY 16 (Rs. in lakhs) Nil 72.00 10.22
Revenue (Rs. in lakhs) 25,768.11
Remuneration (as % of revenue) Nil 0.28% 0.04%
Profits/ (loss) before tax (PBT) (Rs. in lakhs) (14,127.20)
Remuneration (as % of PBT) N.A.as PBT is negative

(j) The key parameters for any variable component of remuneration availed by the directors:

There is no variable component approved for the payment to any director.

(k) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year:

None.

(l) Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms remuneration is as per the remuneration policy of the Company.

(m)Information as per Rule 5(2) of Chapter XIII of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

During the year following employees received salary in excess of Rs. 60 lakhs p.a. or employed for the part of year with Average Salary above Rs. 5 Lakhs

S. No. Name & Des- ignation Age Qualifi- cation Expe- rience Date of Commence- ment of Employment Gross Salary per Year Previous Employ- ment Nature of Em- ploy- ment % of Equity Shares held
(in lakh)
1 B K Gupta, Chairman & Whole-time Director* 80 BA 51 years 15th Jan 2008 50.59 Phoenix lamps Limited Full Time Employ- ee 15.78%
2 H R Gupta, Managing Director* 56 BBA 31 years 15th Jan 2008 134.40 Phoenix lamps Limited Full Time Employ- ee 22.45%
3 A K Agarwal, Chief Finance Officer 66 B.Com 41 years 01st July 2008 72.00 Phoenix lamps Limited Full Time Employ- ee 0.11%
4 D N Singh, Chief Technical Officer 66 Ph.D Micro- elec- tronics 39 years 12th August 2008 69.18 Semi Conductor Complex Limited Full Time Employ- ee 0.00%

*The remuneration so paid during the year was recovered as per MCA order (please refer Note No. 34(c) of the Notes to the Financial Statement.

25. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, in terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 given as Annexure V forming integral part of the Annual Report

26. CORPORATE GOVERNANCE REPORT

Your Company strives to ensure that best Corporate Governance Practices are identified, adopted and consistently followed.

The Report on the Corporate Governance forms an integral part of this report and is set out as Annexure VI to this report. The Certificate from the practicing Company Secretary M/s Chandrasekaran Associates, Company Secretaries, certifying compliance with the conditions of the Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges up to November 30, 2015 and Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 effective from December 01, 2015 is annexed with the report on Corporate Governance.

27. LISTING OF SHARES

The Equity Shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. The listing fees for the financial year 2016-17 has been paid.

28. PREVENTION OF SEXUAL HARASSMENT

The Company is committed to provide a protective environment at workplace for all its women employees. To ensure that every woman employee is treated with dignity and respect and as mandate under "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" the Company has in place a formal policy for prevention of sexual harassment of its women employees.

The Company has an Anti Sexual Harassment Policy in line with the requirement of "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013". Further, the Company has constituted Internal Complaints Committee to redress Complaints received regarding sexual harassment during the period. The following is a summary of sexual harassment complaints received and disposed off during the period:

Number of Complaints received Nil
Number of Complaints disposed off Nil

29. APPRECIATION

Your Directors wish to place on record their sincere appreciation of the efforts and dedicated services of all the employees which have contribute by staying with the Company in the tough period .

30. ACKNOWLEDGEMENTS

The Board of Directors places on record its appreciation for the support, assistance and co-operation received from Government, Regulators and the bankers to the Company, i.e. Union Bank of India, Andhra Bank, Bank of Baroda, Corporation Bank and Indian Bank. The Board is thankful to the shareholders for their support to the Company.

The Board is also thankful to the employees of the Company for their co-operation and unstinted dedication to duty leading to cordial industrial relations during the year under review.

On behalf of the Board of Directors For INDOSOLAR LIMITED

H. R. GUPTA GAUTAM SINGH KUTHARI
Managing Director Director
DIN: 00297722 DIN: 00945195
Place : Greater Noida
Date : August 08, 2016