Indosolar Ltd Management Discussions.

1. International Market Overview

Key trends shaping the global Solar Industry Include:

• Asia continues to dominate the solar industry while Europe continues to fall in rankings.

• Developed countries are slowly shifting towards utility scale projects whereas in emerging markets, governments are trying to encourage more rooftop solar growth.

2. Indian Solar Market

A number of federal policies are being proposed to spur domestic demand for solar PV products. More clarity is expected on domestic content, Feed-in-Tariffs, imposition of anti-dumping duty etc.

3. Opportunities and Threats Opportunities

a) Development of Solar Parks: The Government of India has sanctioned development of solar park infrastructure.

b) Boost in government demand: Government is expected to become a major demand source for rooftop solar in the coming years. All building facilities under different central government departments are being urged to adopt rooftop solar.

c) Building bye-laws: The Government of India has recommended mandatory rooftop solar installations for buildings exceeding specified size and/or power consumption thresholds under the model Building Bye Laws.

Threats

a) Delay in tendering process of the government.

b) Non-utilization of our available manufacturing capacity.

c) Non-availability of full or part of any financial incentives which we have applied for.

d) Delays and cost overruns in expansion of our manufacturing facilities as a result of factors beyond our control.

e) The solar market is growing and competition is resulting decline in market share and margins.

f) 60% of raw material cost is silicon wafer and its manufacturing is dominated by large/ limited players in China, Taiwan and Korea.

g) The shortage of Wafer is artificially escalating their price.

h) Fear of poor quality equipment being dumped in India.

4. Future Outlook

India will be an attractive destination for the Global Investments in the coming years. Under the domestic solar market is slated to explode with projects scheduled to be implemented. Indosolar, with the proposed up-gradation, the Company would move into top tier of the market segment, which not only provides insulation from the Chinese competition but also augments the pricing premiums.

Solar power in India at current levels is already cheaper than electricity generated through diesel. Support from various Central and States Government for solar power industry is continuously increasing.

5. Risks and Concerns

About 88% of all module requirement in India is met through imports Imports have risen in line with growth in capacity addition but exports have seen a significant downward trend.

The Company has implemented a Risk Management Policy to have a systematic process to assist in the identification, assessment, treatment and monitoring of risks which provides effective tools to manage the identified risks.

6. Internal Control Systems and its Adequacy

The Company has a proper and adequate system of internal controls commensurate with its size to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.

Our management assessed the effectiveness of the Companys internal control over financial reporting (as defined in Clause 17 of SEBI Regulations 2015) as of March 31, 2018. The assessment involved self review, peer review and external audit.

M/s Arun K Gupta & Associates, Chartered Accountants, the statutory auditors of the Company had audited the financial statements included in this annual report and had issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act 2013).

7. Financial Performance viz-a-viz Operational Performance

During the year under review, the Companys Net Sales were Rs. 31,412.37 lakhs as against Rs. 44,231.09 lakhs last year. EBITDA was Rs. (1,707.72) lakhs as against Rs. 7,748.62 lakhs last year. The Company produced photovoltaic solar cells of 169.85 MWp as against 195 MWp last year.

8. Human Resource

The overall employee relations were peaceful and harmonious throughout the year. Your Company continued to create a productive, learning and caring environment by implementing robust and comprehensive HR processes.

9. Cautionary Statement

Certain statements made in the management discussion and analysis report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations whether expressed or implied. Several factors could make significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, natural calamities over which the Company does not have any direct control.