Indosolar Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION & ANALYSIS REPORT FOR THE YEAR ENDED MARCH 31, 2025 </dhhead>

1. INDUSTRY AND COMPANY OVERVIEW AND CONTEXT

The global solar PV module manufacturing industry is experiencing significant growth and shifts in geographic distribution. China continues to dominate production, but other regions like the US, Europe, and India are expanding their manufacturing capacities. This expansion is driven by government policies, increasing demand for renewable energy, and technological advancements. Indias economy is experiencing a surge in solar module manufacturing, driven by government policies like the Production Linked Incentive (PLI) scheme and a growing focus on self-reliance. This has led to a significant increase in domestic manufacturing capacity, a decrease in imports, and a burgeoning export market. Indias solar module manufacturing capacity has dramatically increased, jumping from 38 GW in March 2024 to 74 GW in March 2025. PV cell manufacturing capacity has also tripled, rising from 9 GW to

25 GW. This growth is supported by government initiatives like the PLI scheme, which has attracted substantial investments and created numerous jobs.

India has made significant progress in strengthening its energy sector in recent years. The country is successfully balancing the twin goals of meeting rising electricity demand and promoting sustainability. According to the International Energy Agency (IEA), 85% of the increase in global electricity demand over the next three years will come from emerging and developing economies. As one of the fastest-growing major economies, India plays a central role in the global energy transition. Its energy demand is expected to grow at the fastest rate among major economies, driven by sustained economic growth. Consequently, Indias share in global primary energy consumption is projected to double by 2035. India is becoming a significant player in the global solar supply chain, with exports of PV modules tripling in 2024 compared to the previous year. Indian manufacturers are increasingly targeting the export market.

Indosolar Limited (referred to as ‘Indosolar,’ ‘We,’ or ‘the Company’) is the subsidiary of M/s Waaree Energies Limited (referred to as "Waaree") india’s largest solar module manufacturer and exporter positioned at the forefront of the global energy transition forming a part of Waaree Group. Diverse portfolio of Waaree Group includes solar panel manufacturing, EPC services, project development, rooftop solutions, solar water pumps, and independent power production. Indosolar has registered office in Delhi and manufacturing unit at Noida. Leadership of Waaree Group in the solar PV industry is driven by the worldwide shift towards renewable energy. Committed to sustainable development and innovation, Waaree Group provide cutting-edge solar solutions that power a greener future, aligning with our mission to accelerate this transition. With a nationwide footprint, Waaree Group also hold the distinction of being India’s largest exporter of solar panels, spearheading the renewable energy revolution.

We produce and supply monocrystalline silicon cell based modules with latest N-type TopCon technology Bifacial modules featuring SMBB, negligible LID and excellent PID and low light performance with improved degradation, higher efficiency and yield, higher ROI and smaller payback period.

The operating and financial review pertains to the management’s perspective on the financial condition as well as the operating performance of the Company for the FY2024-2025. The following discussion of the Company’s financial performance result and operating results should be read in conjunction with the Company’s Financial Statements and Notes thereto and other information included elsewhere in the Annual Report. The Company’s Financial Statements were prepared in compliance with the requirements of the Companies Act, 2013.

During the year under review the Company commenced commercial operations of 1.3 GW of module manufacturing.

2. OPPORTUNITIES AND THREATS. (a) Opportunities

For module manufacturers, key trends include the growing demand for solar PV modules, particularly in the residential and rooftop segments, driven by government initiatives and environmental concerns. However, uncertainties exist around fluctuating raw material costs (especially metals), logistics challenges, and potential shifts in government policies. Additionally, competition from other technologies and regions, as well as the pace of technological advancements, add to the complexities.

? Growing Market Size:

The global solar PV module market is experiencing significant growth, with an estimated value of USD 55.4 billion in 2025, projected to reach USD 97.56 billion by 2032, exhibiting a CAGR of 8.4%.

? Rooftop Solar Focus:

Rooftop solar installations, particularly in the residential sector, are projected to be a major driver of growth, with the rooftop segment holding 56.8% of the market share by the end of 2025.

? Indias Growth:

The Indian solar PV module market is also experiencing rapid expansion, with the market size reaching USD 7.94 billion in 2024 and an expected CAGR of 10.60% between 2025-2033.

? Cost Declines:

While some input costs are rising, other factors like declining glass and encapsulant prices are expected to contribute to cost reductions for module manufacturers in the long term.

(b) Threats:

? Raw Material Price Fluctuations:

Cells (raw materials for module manufacturing) prices, a crucial input for module manufacturing, are susceptible to fluctuations due to increased demand and other market factors, impacting profitability.

? Logistics Challenges:

Uncertainties surrounding logistics and shipping costs can disrupt supply chains and increase expenses for module manufacturers.

? Government Policy Changes:

Changes in government regulations, incentives, and renewable energy targets can significantly impact the demand for solar PV modules.

? Technological Advancements:

The rapid pace of technological advancements in solar cell efficiency and module design requires manufacturers to continuously adapt and innovate to remain competitive.

? Geopolitical Factors:

Global economic conditions and geopolitical events can influence the demand for solar energy and the overall market landscape.

? Competition:

Increased competition from other manufacturers and the rise of alternative energy technologies can put pressure on pricing and market share.

3. SEGMENT OR PRODUCT-WISE PERFORMANCE

We commenced our module manufacturing facility with 1.3 GW capacity in July 2024. We have secured contract with Waaree Energies Limited, our holding company for supply of modules. The Company is also securing orders from developers of power projects. We rigorously, ensure impeccable quality and safety and compliance underscore our unwavering commitment to excellence.

4. OUTLOOK a. Managements Plans and Strategies

Following are the managements Plans and Strategies i. Strategic Sourcing and Supply Chain Management:

? Raw Material Procurement: Secure high-quality raw materials like silicon wafers and glass at competitive prices. This involves building strong relationships with suppliers and exploring both domestic and international sources. ? Inventory Management: Implement efficient inventory control systems to minimize waste, optimize storage space, and ensure timely availability of materials for production. ? Diversified Supplier Base: Reduce reliance on single suppliers by establishing a network of reliable vendors to mitigate supply chain disruptions.

b. Optimized Manufacturing Processes

? Lean Manufacturing Principles: Adopt lean manufacturing principles to streamline production, minimize waste, and improve overall efficiency. 62

? Standard Operating Procedures (SOPs): Develop and implement clear SOPs for all manufacturing processes to ensure consistency, repeatability, and adherence to quality standards. c. Stringent Quality Control

? Quality Assurance: Establish a robust quality assurance system at every stage of the manufacturing process, from raw material inspection to final product testing. ? Certifications and Standards: Ensure compliance with relevant international and national quality standards (e.g., IEC, BIS) to build customer confidence and facilitate market access. i. Financial Management and Funding

? Cost Optimization: Identify and implement strategies to reduce production costs, optimize resource utilization, and minimize overhead expenses.

? Working Capital Management: Implement effective working capital management practices to ensure sufficient cash flow for daily operations, timely payment of suppliers, and debt servicing. d. Human Resources and Workforce Development:

? Talent Acquisition: Recruit and hire skilled professionals in areas such as engineering, production, quality control, and management. ? Training and Development: Invest in training programs to equip employees with the latest technical skills and knowledge related to solar panel manufacturing and quality control. ? Employee Retention: Implement strategies to retain skilled employees, including competitive compensation packages, career development opportunities, and a positive work environment.

5. RISKS AND CONCERNS.

At Indosolar, we place the utmost importance on proactive risk management through regular assessments, strategic contingency planning, and robust mitigation measures. By vigilantly monitoring market trends, regulatory changes, technological advancements, and operational vulnerabilities, we are committed to safeguarding the interests of stakeholders. Our commitment to risk management enables us to navigate challenges adeptly and maintain a resilient business environment. We have identified and implemented effective strategies to mitigate various risks, ensuring the stability and sustainability of our operations. Here are some of the risks we mitigate and our corresponding strategies:

Risk Category	Description	Mitigation
Raw Material	Rising costs of raw materials	Despite the volatility in prices of key raw materials like
Risk	could potentially dampen solar	polysilicon, aluminium, and copper in recent quarters, our
	photovoltaic products and impact	operating margin has strengthened due to increased order
	future prospects.	flow. We mitigate these risks through pass-through clauses
		in most orders and order-backed procurement strategies,
		ensuring that any raw material price hikes are effectively
		transferred to customers. This approach safeguards the
		Company from potential negative impacts.
Competition Risk	Increasing competition poses a	We have secured product certifications and established
	significant threat to profitability.	strong relationships, bolstering our competitiveness. With
		an extensive channel presence and robust service
		capabilities, we are well positioned in the market. As one of
		India’s largest and most innovative solar photovoltaic
		manufacturers, we maintain one of the lowest production
		costs among domestic PV manufacturers. This strengthens
		our market position and enhance.
Liquidity Risk	The liquidity risk for a solar PV	We maintain sufficient cash and cash equivalents. Looking
	company could arise from abrupt	forward, anticipated cash accruals over the next two fiscal
	changes in demand, prices, or	years are expected to adequately cover our debt obligations,
	dependence on short term	strengthened by customer advances against orders to further
	financing.	GN=RIGHT>enhance liquidity. Expenditure will be funded through a
		combination of existing cash reserves, internal accruals, and
		sanctioned debt facilities.
Working Capital	A prolonged working capital	We have enacted strategies such as streamlining inventory
Risk	cycle may necessitate increased	and enhancing accounts receivable management to reduce
	reliance on borrowing to fund	the duration of the working capital cycle. We are also
	operational needs.	exploring alternative financing avenues such as factoring or
		supply chain financing to mitigate our reliance on
		borrowing. Furthermore, we have implemented robust cash
		flow management policies and leveraged technology
		solutions for automation and efficiency enhancements to
		further alleviate this risk.
Policy Risk	Shifts in government policies	We take a proactive stance by vigilantly monitoring and
	and regulations related to the	adapting to evolving policies, Being a part of Waaree Group
	renewable energy sector, such as	who is concurrently diversifying product offerings and
	subsidies, tax incentives, or	exploring new markets. This readiness empowers us as a
	import/export restrictions, may	group to preempt challenges, navigate fluid business
	influence the demand for solar	landscapes and strengthen our standing as an industry leader
	products and Indosolar’s ability	as a Group with a strong and diversified portfolio.
	to expand our market presence.
Skilled Labour	The availability of skilled	We are committed to nurturing a skilled workforce through
Risk	employees and dependable	robust training Programmes, ensuring our teams are
	contractors is crucial for	equipped for excellence. The Company also priorities
	ensuring operational efficiency	maintaining strong relationships with reputable contractors
	and seamless supply order	and suppliers to guarantee reliable service delivery.
	execution.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY.

The Company has adequate internal control systems which ensure protection against misuse or loss of the Company’s assets. The Company deploys a robust system of internal control that facilitates the accurate and timely compilation of financial statements and management reports; ensures regulatory and statutory compliance and safeguards investor’s interests by ensuring the highest level of governance and periodical communication with investors. The Audit Committee also reviews the effectiveness of the Company’s internal control system which provides adequate safeguards & effective monitoring of its transactions.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the period under review total revenue of the Company for the year was Rs. 32,474.56 lakhs as against Rs. 85.01 lakhs in the previous year. During the period under review the Company earned profit before tax of Rs. 5,477.74 lakhs against the loss before tax of Rs. (1,544.37) lakhs in the previous year. The profit after tax for the year is Rs. 5,478.19 lakhs against the loss after tax of Rs. (1,544.37) lakhs in the previous year.

For an Indian solar manufacturer, liquidity and capital resources are crucial for sustaining operations and growth. Key aspects include readily available cash, access to working capital, and the ability to manage debt obligations. Strong liquidity ensures the company can meet short-term liabilities, while robust capital resources support long-term investments in expansion and technology upgrades. We aim to maintain sufficient cash and cash equivalents and may explore arrangements for loans for its working capital requirements.

8. INTERNAL CONTROL SYSTEMS

The Company has adequate internal control systems which ensure protection against misuse or loss of the Company’s assets. The Company deploys a robust system of internal control that facilitates the accurate and timely compilation of financial statements and management reports; ensures regulatory and statutory compliance and safeguards investor’s interests by ensuring the highest level of governance and periodical communication with investors. The Audit Committee also reviews the effectiveness of the Company’s internal control system which provides adequate safeguards & effective monitoring of its transactions.

9. HUMAN RESOURCE DEVELOPMENT

Human Resource Development is paramount in every organization. The management continues to lay emphasis on identifying, developing the talent in the organization with a view to retain them and further training those who are capable of handling additional responsibilities. Developing people and harnessing their ideas is high priority for the Company.

As of March 31, 2025, Indosolar employed 666 full-time personnel. In addition, we strategically partner with third party workforce and service providers to engage contract labourers, numbering 600 individuals as of the same date. The deployment of contract labour fluctuates based on the specific scope and nature of outsourced projects.

10. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE

IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING:

Ratios	F.Y 2024-25	F.Y 2023-24	Reason if change is more than 25%
Debtor Turnover Ratio	139.15	NA	No operations were undertaken in the previous year;
			hence, the current year ratios are not comparable
Inventory Turnover Ratio	5.29	NA	No operations were undertaken in the previous year;
			hence, the current year ratios are not comparable
Current Ratio	0.81	0.29	Increase in the ratio is due company started
			operation during the year.
Debt Equity Ratio	1.24	(7.08)	Increase in the ratio is due to loan repayment and
			increase in net worth from current year profits.
Operating Profit Margin (%)	16.65	NA	No operations were undertaken in the previous year;
			hence, the current year ratios are not comparable
Net profit Margin (%)	17.00	NA	No operations were undertaken in the previous
			year; hence, the current year ratios are not
			comparable
Return on net worth	0.76	0.09	Increase in the ratio is due to loan repayment and
			increase in net worth from current year profits.

11. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of the applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.