Fujiyama Power Systems Ltd Management Discussions

Industry structure and developments

Indian Power Sector

Indias power sector continues to expand steadily, with installed capacity rising from 371 GW in FY20 to 475 GW in FY25. Growth is expected to accelerate between FY25 and FY32P, taking capacity to 610 GW by FY27P and 900 GW by FY32P.

Several broader factors are typically understood to be driving this rising power demand in India:

• Rapid urbanization, with a growing share of the population moving to cities and adopting more powerintensive lifestyles, appliances, and housing

• Industrial and manufacturing growth, including initiatives like Make in India and PLI schemes, which are expanding energy-intensive sectors such as electronics, EVs, and manufacturing

• Rising per-capita electricity consumption, as incomes grow and access to appliances like air conditioners, refrigerators, and electronics increases

• Growing electrification of transport, with EV adoption adding incremental load to the grid

• Digital and data infrastructure growth, including expanding data centres and IT infrastructure

• Agricultural power demand, particularly for irrigation pumps in rural areas

• Improved rural electrification, bringing more households onto the grid and increasing overall consumption

Together, these structural shifts, spanning urban, industrial, and rural demand — are reinforcing the steady capacity build-out visible in Indias installed power capacity trend, positioning the sector for sustained expansion through FY32P and beyond.

Within this broader capacity expansion, demand for residential rooftop solar and power-backup solutions has remained particularly strong, driven by:

• Increasing adoption across Tier-2 and Tier-3 cities

• Favourable government policies

• Rising consumer preference for reliable power solutions

Indian Solar Energy Market

Indias solar energy market has expanded rapidly over the past several years, evolving from a relatively nascent segment of the power sector into one of its fastest-growing components. According to CARE Report data (on a CY basis, MNRE), the solar energy market size in India has grown as follows

This trajectory reflects a CAGR of 25% between 2019 and 2025, with growth expected to continue, albeit at a moderated pace of 17% CAGR, between 2025 and 2030P, as the market advances towards the 300 GW mark.

This solar-specific expansion sits within the broader context of Indias overall power sector, which is itself on a strong growth path. Installed power capacity in India has moved from 371 GW in FY20 to 475 GW in FY25 and is projected to reach 610 GW by FY27P and 900 GW by FY32P. This corresponds to a 5% CAGR for the FY20-FY21 period, accelerating to a 10% CAGR for the FY22-FY32P period, underscoring the increasing weight that solar and other non-fossil sources are expected to carry within Indias total energy mix going forward.

Several structural factors underpin this growth:

• Policy continuity and government support, including schemes such as the PM Surya Ghar Muft Bijli Yojana, which are driving residential and rooftop adoption

• Backward integration by domestic manufacturers, with companies increasingly moving upstream into solar cell, panel and battery manufacturing to reduce import dependence

• Favourable demand-side dynamics, including rising consumer preference for reliable power solutions and increasing adoption across Tier-2 and Tier-3 cities

At the same time, the broader power electronics and storage ecosystem that supports solar deployment, including solar inverters, lithium-ion batteries and Battery Management Systems (BMS), remains significantly import- dependent, with a substantial portion of supplies still sourced from China and other countries. In response, the Government of India is considering extending the ALMM (Approved List of Models and Manufacturers) framework to solar inverters, lithium-ion batteries and key components such as BMS.

This is intended to promote domestic manufacturing, enhance supply-chain security and reduce import dependence. Complementing this, new proposals are also under consideration for enhanced cybersecurity and communication protocols for rooftop solar inverters, aimed at addressing data security, remote access and malware risks associated with imported equipment.

Taken together, these initiatives are aligned with Indias broader goals of energy security, data sovereignty and supply-chain resilience and are expected to benefit compliant domestic manufacturers by fostering a more secure and self-reliant solar industry, creating a supportive backdrop for companies with in-house manufacturing capabilities across the solar value chain.

Indian Rooftop Solar Market

The rooftop solar segment represents one of the most dynamic pockets of growth within Indias broader solar energy landscape, expanding at a considerably faster pace than the overall solar market. According to a report by the Council on Energy, Environment and Water (CEEW), over 25 crore households across India have the potential to deploy 637 GW of solar energy capacity on rooftops. Data drawn from the CARE Report traces the following growth in Indias rooftop solar market (in GW):

This represents a CAGR of 46% for the FY19-FY26 period, with continued strong growth of 40% CAGR projected for the FY26- FY30P period as the market advances towards the 90-100 GW range by FY30.

Within Indias overall solar build-out, ground-mounted and utility-scale projects still account for the largest share of installed capacity, though rooftop is growing faster and steadily increasing its share of annual additions.

Within rooftop itself, the mix spans off-grid systems for areas with limited grid access and grid-connected systems in on-grid and hybrid configurations — both eligible for support under the PM Surya Ghar Muft Bijli Yojana. Hybrid systems, combining grid supply with battery backup, are particularly relevant in Tier-2, Tier-3 and rural markets where grid reliability remains variable.

The scale of this segments growth is closely tied to enabling factors, including improving product economics, wider distribution reach into Tier-2 and Tier-3 cities and supportive government policy. Companies operating in this space have also highlighted the importance of building an extensive on-ground channel network, comprising distributors, dealers and retail "Shoppes", to support the trust, service reliability and accessibility considered critical to rooftop solar adoption.

The rooftop segments growth trajectory, rising from under 2 GW in FY19 to nearly 26 GW by FY26 and heading towards the 100 GW mark by FY30, illustrates how residential and small-scale commercial solar adoption is emerging as a key pillar of Indias overall solar capacity build-out, complementing utility-scale and ground-mounted solar deployment happening in parallel across the broader energy sector.

PM Surya Ghar as a Major Growth Driver

The PM Surya Ghar Muft Bijli Yojana has emerged as a central catalyst for residential rooftop solar adoption in India and continues to scale meaningfully as a policy-driven demand engine for the sector. With over 5 million households still uncovered, the scheme represents over 15 GW of incremental opportunity, highlighting substantial headroom for continued growth even as adoption accelerates.

On execution progress to date, the scheme has delivered the following outcomes:

• C2,90,000 million as on June 2026 in subsidy released directly to end customers

• 5 Million+ households covered under the scheme

• ~15 GW of capacity installed as a result of the scheme

• Eligibility for subsidy support under PMSGY is anchored to two main conditions:

• A DCR-compliant solar panel (i.e., panels manufactured under the Domestic Content Requirement framework)

• An on-grid or hybrid solar inverter

These two conditions are having a direct and significant influence on manufacturing strategy across the industry. Companies are responding by expanding into DCR-compliant solar cell manufacturing specifically to capture this growing, subsidy-driven on-grid rooftop solar demand. This includes commissioning dedicated DCR-compliant solar cell facilities, announcing additional DCR-compliant cell capacity to further improve product competitiveness and transitioning from import dependence towards inhouse manufacturing to ensure supply reliability and cost control.

The strategic rationale extends beyond simply meeting eligibility criteria. By strengthening end-to-end integration across the solar value chain, from cells through to panels, inverters and batteries, manufacturers are positioning themselves to improve cost control, margins and execution capabilities, while also being better placed to participate more effectively in the growing opportunity created by Direct Benefit Transfer (DBT) subsidy-linked residential installations under the scheme.

In effect, PM Surya Ghar is functioning as more than a demand-side subsidy

program: it is actively reshaping supply- side strategy across the domestic solar manufacturing ecosystem, incentivizing backward integration and DCR compliance as key competitive levers. With 5 million household still uncovered against the 15 GW of incremental opportunity this represents and with over 5 million households already covered by more than C2,90,000 million of disbursed subsidy, the scheme is positioned to remain a primary structural growth driver for Indias residential and rooftop solar segment over the coming years.

Other Key Policy Initiatives Driving Growth

Furthermore, Fujiyama is also closely following the proposed next phase of the scheme, being referred to as PM Surya Ghar 2.0. While the framework is still under discussion and has not yet been formally notified, proposals reportedly include support for battery storage, incentives linked to actual power generation and wider access through community solar and other models. If implemented, these measures could further expand the addressable market and increase the relevance of integrated solar and storage solutions

Opportunities & Threats

Opportunities: Fujiyama Power Systems is well positioned to capitalise on the fast-expanding on-grid residential solar segment, particularly through the PM Surya Ghar Muft Bijli Yojana, where 5 million untapped installations represent over 15 GW of incremental opportunity. Its backward integration strategy, including the commissioned 1 GW Mono-PERC DCR solar cell facility and the upcoming 1.2 GW TOPCon cell plant at Ratlam, strengthens end-to-end value chain control, improving cost, margins, and supply reliability. With a strong B2C base of 1.4 million+ customers, an expanding channel network of

10,100 as on june 2026 partners across 25 states, and a proposed ALMM extension favouring compliant domestic manufacturers, the company stands to benefit meaningfully from Indias broader shift towards self-reliant, subsidy-linked rooftop solar adoption.

Threats: Execution risk remains a key concern for companies in this space, given the complexity of commissioning new manufacturing capacities across power electronics, batteries, and solar cells, with delays possible due to evolving technology standards or external supply-chain disruptions.

Facility-level incidents, such as fire or operational disruptions, pose risks to existing production capacity and continuity of supply. Continued industrywide import dependence on countries like China for critical components of inverters, lithium batteries, and BMS exposes manufacturers to global supply- chain vulnerabilities and potential cost or availability shocks. Additionally, rising working capital requirements, elevated inventory levels, and pressure on receivables and payables cycles can strain operating efficiency and cash flow, particularly during periods of rapid capacity expansion and scale-up.

Outlook

Indias solar journey demonstrates how cohesive policy support, technological advancement and strategic partnerships can fundamentally reshape a nations energy landscape. Solar energy has emerged as the cornerstone of Indias renewable mix, driving energy security, sustainable economic growth and climate leadership. Through large-scale deployment and global collaboration, particularly via platforms like the International Solar Alliance and initiatives such as OSOWOG, India is positioning solar not only as a domestic solution but also as a key enabler of global clean energy transition.

As the country continues to scale capacity, deepen innovation and expand inclusive access, India is building a resilient, low-carbon energy ecosystem. This trajectory reinforces its role as a global benchmark, underscoring that solar energy will remain central to achieving both national priorities and international climate commitments.

Fujiyama Power Systems operates as a one-stop shop in Indias rooftop solar market, offering integrated solutions across solar panels, inverters and batteries. It is strengthening its position through backward integration and capacity expansion, including a 1 GW DCR solar cell facility (Dadri, 2026) and a 2 GW/GWh integrated project in Ratlam, aimed at doubling capacity. The company focuses on the B2C residential segment (90%+ revenue), supported by a pan-India network of 10,100+ channel partners and 1,200+ shoppe. Aligned with schemes like PM Surya Ghar and PM-KUSUM, Fujiyama has enabled 2+ GW rooftop installations and drives innovation through AI integration and patented technologies.

Company Overview

Fujiyama Power Systems Limited is a fully integrated power electronics and energy solutions company with over 30 years of industry presence, operating under brands like UTL Solar and Fujiyama Solar. The company follows a one-stop shop model for rooftop solar, offering complete systems comprising solar panels, inverters and batteries, supported by a portfolio of wide range of SKUs including hybrid solutions and EV chargers. With a strong B2C focus (approx 90% of revenue), it targets Tier-2, Tier-3 and rural markets where power reliability is critical. Its competitive edge lies in deep backward integration and robust manufacturing across multiple facilities, including a 1 GW DCR solar cell plant commissioned in 2026 and an upcoming 2 GW/ GWh integrated facility in Ratlam to double capacity. A wide distribution network of over 10,100+ channel partner, 1,200+ shoppes and 900+ service engineers as on 30 june 2026 ensures strong last-mile reach and after-sales support.

Business Performance

Operational Overview

• Entered a new growth phase marked by successful public listing, capacity scale-up and deeper backward integration.

• Commissioned a 1 GW Mono-PERC DCR solar cell line (Jan 2026, Dadri) in a record six months, at ~C3,000 million (vs C4,000 million budget), enabling 100% captive consumption and reduced import dependence.

• Our manufacturing capacities after Ratlam expansion: -

1. Solar Panel over 3.6 GW

2. Power Electronics - 4.2 GW

3. Lithium-ion Batteries - 3.5 GW

• Strengthened market positioning by targeting PM Surya Ghar Yojana (DCR- compliant cells), maintaining 90%+ B2C revenue share and sustaining growth in the off-grid solar segment.

• Expanded distribution network as on June 2026 to 10,100+ channel partner with breakup - Ditributors - 1000+, Shoppes - 1200+, Dealers - 7900+

• Advanced the Ratlam integrated project (MP), which will add 2 GW/ GWh capacity across panels, inverters and batteries, effectively doubling total production capacity.

• Delivered strong financial results in Q4 FY26, with Revenue from Operations reaching C9,008 million, marking an 87.5% year-on-year increase. Profitability also surged, with EBITDA growing by 116.9% to C1,715 millions and Profit After Tax (PAT) increasing by 107.5% to C1,063 million.

• Successfully commissioned a 1 GW Mono-PERC DCR solar cell manufacturing line at its Dadri facility. This state-of-the-art facility was completed in a record time of just six months with an investment of C3,000 million and its entire capacity is dedicated to in-house captive consumption.

Financial Overview

Particulars	FY26	FY25	YoY Change (%)
Revenue from Operations	26,545.1	15,406.8	72.3
EBITDA	4,903	2,485.2	97.3
Profit for the Year	3,041.3	1,563.4	94.5

Key Financial Ratios

Particulars	FY2025-26	FY2024-25
EBITDA Margin	18.5	16.1
Debt Equity Ratio (x)	0.3	0.9
Net Profit Margin (%)	11.5	10.2
Return on Capital Employed (%)	29.3	41.0
Return on Equity (%)	23.9	39.4

Risk Management

Governance & Oversight	Risk Management Committee (RMC)	Board-level committee (formed Nov 2024) overseeing enterprise-wide risk framework
	Policy Formulation	Framework covering financial, operational, sectoral and ESG risks
	System Evaluation	Continuous monitoring and assessment of risk management systems
	Business Continuity Planning	Preparedness for unforeseen disruptions
	Periodic Review	Risk policy reviewed at least once every two years
Key Risk Categories	Operational Risks	Manufacturing disruptions, equipment failures, geographic concentration
	Supply Chain Risk	High dependence on imports (China for solar & lithium-ion cells)
	Financial & Market Risks	Raw material price volatility and forex exposure (USD, CNY)
	Regulatory Risks	Policy changes (ALMM, duties, subsidies like PM Surya Ghar Yojana)
Mitigation Strategies	Backward Integration	1 GW Dadri solar cell plant to reduce import dependency
	CAPA Approach	Continuous improvement via corrective and preventive actions
	Technology Adoption	AI integration to enhance sales efficiency and margins
	Internal Audit & Insurance	Strong internal controls; insurance coverage for >97% of assets
	R&D and Quality Control	Dedicated R&D team; BIS & IEC certified products to reduce tech risks
Monitoring Mechanisms	Audit Committee Oversight	Ensures governance and control effectiveness
	External Monitoring	CARE Ratings as monitoring agency for IPO proceeds
	Information System Audits	Periodic audits (at least every 2 years) for cybersecurity risk management

Human Resources

Fujiyama Power Systems Limited has established a robust human resources framework aligned with its high-tech manufacturing operations and pan-India distribution network, focusing on specialised talent acquisition, continuous skill development and workforce stability. As of March 31, 2026, the Company employed 3,768 permanent staff and 1,632 contract workers, supported by a dedicated R&D team of over 60+ engineers and a strong field service network of 650+ service engineers across 23 states. Its HR strategy emphasises rigorous operational training in areas such as machine utilisation, manufacturing processes, quality management and workplace safety, complemented by regular workshops that foster teamwork and individual development. The Company also invests in building a future talent pipeline through apprenticeship programs under the National Apprenticeship Promotion Scheme (NAPS).

Internal Control Systems and Their Adequacy

Fujiyama Power Systems Limited maintains a strong internal control and risk management framework designed to support operational efficiency, financial discipline and governance across its expanding solar manufacturing business. The Company has an independent internal audit function that reports directly to the Audit Committee, ensuring objectivity in evaluating internal controls, identifying potential risks and recommending corrective actions. The Audit Committee actively reviews the effectiveness of these systems and drives continuous improvements to strengthen the overall control environment. Additionally, Fujiyama leverages structured monitoring systems and technology-driven processes to enable timely, accurate and data-backed decision-making across functions. Through a combination of independent audits, proactive board-level oversight and robust internal systems, the Company ensures a resilient risk management framework aligned with its growth strategy in the solar energy sector.

Cautionary Statement

The Management Discussion and Analysis Report may contain Forward-Looking Statements, describing the Companys outlook, projections, estimates, expectations and predictions, within the meaning of applicable securities laws and regulations. Actual performance may materially differ from that expressed or implied.