Indowind Energy Ltd Management Discussions

A.INDUSTRY STRUCTURE AND DEVELOPMENTS:

Indias power sector continues to shift decisively towards renewables, with the country now ranked third globally in installed renewable energy capacity and working towards its commitment of 500 GW of non-fossil fuel capacity by 2030. Wind energy remains a core pillar of this transition — India recorded its highest-ever annual wind capacity addition of 6.05 GW in FY 2025-26, taking cumulative installed wind capacity past 56 GW, with Tamil Nadu continuing to account for the largest share of the national wind fleet.

The industry remains structurally fragmented between large independent power producers, captive and group-captive consumers, and independent asset owners such as the Company, with revenues driven by the wind resource in a given season, the availability of the generating machines, and the evacuation capability of the State transmission and distribution utilities.During the year, the Government of Tamil Nadu amended its wind policy to ease repowering and life-extension norms for older wind farms, creating an opportunity for owners of ageing assets to enhance yield from existing sites and land holdings without fresh land acquisition. At the same time, grid curtailment, evacuation constraints and delays in realization of receivables from distribution licensees continue to be the principal structural challenges confronting wind asset owners in the State. The Companys assets are located in these wind-rich regions of South India, and its operating performance is therefore closely linked to these industry-wide developments.

B.OPPORTUNITIES AND THREATS:

Indias wind energy sector offers significant growth opportunities due to strong government support, increasing renewable energy obligations and Indias large wind potential. The growing demand for clean power, along with opportunities in wind-solar hybrid, repowering and captive/open-access projects, can support the expansion of companies. The sector is also benefiting from increasing domestic manufacturing capacity and technological improvements. However, land acquisition, transmission connectivity, project execution delays and availability of evacuation infrastructure remain key challenges. Competitive bidding and tariff pressure may affect project margins, while delays in payments from DISCOMs can create cash-flow constraints. Further, changes in grid regulations and increasing requirements for accurate power forecasting may increase operational and financial risks for wind power generators.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Power Sale

The Company offers Green Power® to its customers, which are mainly Corporates and State utilities to ensure higher revenue realization. The company has sold the power generated & evacuated to the grid to its captive, Group captive clients as per the contractual terms to maintain the revenues in TN, in spite of competitive pressure on pricing from other IPPs and an increase in charges by TANGEDCO. In Karnataka, power generated in sold to BESCOM and third parties.

D.OUTLOOK:

The outlook for Indowind Energy Limited remains positive, supported by Indias continued focus on renewable energy and the increasing role of wind power in the countrys energy mix. India had around 58.14 GW of installed wind power capacity as of July 2026, reflecting the sectors continued expansion. The Government has also prescribed an annual renewable energy bidding trajectory of 50 GW up to FY 2028, with at least 10 GW per year earmarked for wind projects, providing a favourable environment for future opportunities. With significant wind potential across states including Tamil Nadu, Karnataka, Gujarat and Rajasthan, the Company can explore opportunities in wind power generation, repowering, solar-wind hybrid projects and captive/open-access renewable energy solutions. The Companys future growth will depend on effective utilisation of its existing assets, successful development of new renewable projects, access to adequate funding and efficient project execution. Overall, the Company is well positioned to benefit from the long-term growth in Indias renewable energy sector, while closely managing regulatory, financing, transmission and project execution risks.

E. RISKS AND CONCERNS

• Grid and evacuation risk — the Companys assets depend entirely on the State network accepting generation; as the current years data shows, a single evacuation failure can extinguish the whole output of a site even when the machines are fully available.

• Equipment reliability and ageing assets — machine availability at several sites remains well short of industry norms, exposing the Company to lost generation, rising maintenance cost and lumpy major-component failure as the fleet ages.

• Counterparty and receivable risk — sales are made predominantly to State distribution licensees, and delays in realisation lengthen the working-capital cycle and may necessitate provisioning.

• Geographic and technology concentration — operations are confined to two States and to a single technology, so a weak wind season or an adverse State-level development can affect a disproportionate share of revenue, more so on a consolidated basis where the Tamil Nadu weighting is higher.

• Regulatory and tariff risk — realisation depends on tariff orders, banking, wheeling and open-access provisions that are periodically revised by State regulators, and changes favourable to new capacity are not always so for legacy assets.

• Declining subsidiary contribution — the contribution of subsidiary operations to consolidated revenue has fallen year on year, increasing the groups dependence on the parent entity and narrowing the diversification that consolidation provides.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has effective and adequate internal control systems in combination with delegation of powers. The control system is also supported by internal audits and management reviews with documented policies and procedures.

G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year under review, the Companys power sale revenue registered a healthy growth over the previous year on both a standalone and a consolidated basis, supported by improved generation across its operating locations. Financial performance in the wind energy business is a direct function of operational performance, since revenue accrues only on units generated, evacuated and billed; accordingly, wind availability during the season, the availability of the generating machines and the readiness of the grid to absorb generation together determine the topline.

During the year, generation at certain locations was affected by grid and evacuation constraints and by machine downtime, and to that extent the revenue recorded does not reflect the full generating potential of the installed capacity. Operating and maintenance costs continue to be broadly fixed in nature, so improvements in availability translate substantially into improved margins. The Company therefore continues to focus on maximizing availability and evacuation at its existing sites, as the most efficient means of improving financial performance without fresh capital outlay.

H.MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company continued to maintain cordial and harmonious industrial relations throughout the year under review, and there were no instances of labour unrest or disputes at any of its locations. Human resources are regarded as a key enabler of the Companys operations, and the Company follows a lean organisation structure appropriate to the nature and scale of its business, supplemented by specialised operation and maintenance support at site level.

The Company also commenced a new solar power project during the year, marking an extension of its generation portfolio beyond wind, and the necessary operational arrangements for the project are being put in place. The Company continues to invest in training and skill development so that its personnel remain equipped to manage its assets efficiently. As on 31 st March, 2026, the total number of people employed by the Company stood at 69.

I. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Sl. Key Financial Ratio	FY 2025-26	FY 2024-25	Change	Significant change
(i) Debtors Turnover Ratio (times)	5.81	3.42	69.82%	Yes
(ii) Inventory Turnover Ratio (times)	18.53	17.67	4.82%	No
(iii) Interest Coverage Ratio (times)	1.58	2.97	(46.80%)	Yes
(iv) Current Ratio (times)	18.34	1.61	1042.45%	Yes
(v) Debt-Equity Ratio (times)	0.03	0.05	(37.71%)	Yes
(vi) Operating Profit Margin (%)	12.36%	17.77%	(30.47%)	Yes
(vii) Net Profit Margin (%)	0.86%	8.92%	(90.41%)	Yes

(i) Debtors Turnover Ratio — The ratio improved from 3.42 times to 5.81 times, an increase of 69.82%. The improvement is on account of the increase in revenue from operations during the year, together with improved realisation of trade receivables, which reduced the average receivable balance relative to turnover. A higher ratio indicates a shorter collection cycle and improved liquidity from operations.

(ii) Inventory Turnover Ratio — The change of 4.82% is not a significant change within the meaning of this clause, and accordingly no explanation is called for.

(iii) Interest Coverage Ratio — The ratio declined from 2.97 times to 1.58 times, a reduction of 46.80%. The decline is attributable to both components of the ratio moving adversely: earnings before interest and tax reduced from Rs.577.23 lakhs to Rs.462.87 lakhs, while finance costs increased from Rs.194.52 lakhs to Rs.293.23 lakhs. Notwithstanding the reduction in the Debt-Equity Ratio as at the close of the year, the finance cost for the year as a whole was higher, the borrowings having been repaid out of the Rights Issue proceeds only during the course of the year. The Company expects the ratio to improve in the ensuing year as the full-year benefit of the reduced borrowings is realised.

(iv) Current Ratio — The ratio increased from 1.61 times to 18.34 times. The increase arises principally from the placement of the unutilised proceeds of the Rights Issue in fixed deposits, which substantially increased current assets, together with a reduction in current liabilities following repayment of borrowings out of the said proceeds. The ratio is therefore a reflection of funds raised and held pending deployment, and is expected to normalise as the proceeds are applied towards the Companys business objectives.

(v) Debt-Equity Ratio — The ratio improved from 0.05 to 0.03, a reduction of 37.71%. The improvement is on account of repayment of borrowings out of the Rights Issue proceeds during the year, coupled with the increase in shareholders funds consequent to the issue. The Companys leverage is accordingly at a low level as at the close of the year.

(vi) Net Profit Margin — The margin declined from 8.92% to 0.86%, a reduction of 90.41%. Notwithstanding the growth in revenue from operations, profit after tax for the year declined materially, resulting in compression of the margin. The same factor is reflected in the movement of the Return on Equity Ratio, which declined from 0.93% to 0.09%, and the Return on Capital Employed, which declined from 2.52% to 1.71%.

(vii) Operating Profit Margin — The margin declined from 17.77% to 12.36%, a reduction of 30.47%. Although revenue from operations increased by 19.08% during the year, operating expenses increased at a higher rate, principally on account of an increase in other expenses and in depreciation and amortisation, with the result that operating profit reduced from Rs.464.18 lakhs to Rs.384.31 lakhs notwithstanding the growth in revenue.

J. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof

The Return on Net Worth of the Company declined from 0.93% in the previous financial year to 0.09% in the year under review, a decrease of 0.84 percentage points, or 89.93% in relative terms. The decline is attributable to two independent factors operating in the same direction.

Reduction in profitability. Although revenue from operations increased during the year, profit after tax declined materially, with the net profit ratio falling from 8.92% to 0.86%. The reduction in the numerator of the ratio is therefore the principal reason for the fall in Return on Net Worth. The same factor is reflected in the corresponding movements in the Return on Capital Employed, which declined from 2.52% to 1.71%, and the Debt Service Coverage Ratio, which declined from 5.99 to 4.20.

Enlargement of the net worth base following the Rights Issue. During the year the Company augmented its net worth through a Rights Issue. A portion of the proceeds was applied towards repayment of borrowings, as a result of which the Debt-Equity Ratio improved from 0.05 to 0.03, and the balance was placed in fixed deposits pending deployment, which is reflected in the increase in the Current Ratio from 1.61 to 18.34. Since the enhanced capital was raised during the year and has not yet been deployed into revenue-generating assets, it has increased the denominator of the ratio without a commensurate contribution to earnings, thereby further reducing the Return on Net Worth for the year.

The Board is of the view that the present level of return does not reflect the earning capacity of the enlarged capital base, and that the ratio should improve as the Rights Issue proceeds are progressively deployed into operating assets and as profitability is restored through improved availability and generation at the Companys existing sites.

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has followed the Accounting Standards specified under Rule 3 and 4 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended) to the extent applicable, in the preparation of the financial statements.