Indowind Energy Ltd Management Discussions

i. INDUSTRY STRUCTURE AND DEVELOPMENTS:

During the current year, the machine availability has improved to 90% in Tamil Nadu and 89.61% in Karnataka Grid availability is a hurdle in evacuation. Automation Programme implemented by the company is working smoothly providing MIS for operational and executive decision making.

PLF (%) - INDIA

Currently the typical PLF numbers for RE projects are 20%-25% for solar, 30%-38% for wind and 4045% for solar-wind hybrid projects; such projects are being successfully implemented and are performing well.

ii. Opportunities and Threats:

Large Platform Turbines:

The wind industry is seeing a strong movement towards larger turbines with foreign manufacturers now offering up to 10 MW to 15 MW platforms and Indian manufacturers up to 4MW to 5 MW. Indias first offshore turbines will be set up at Arichalmunai near Dhanush Kodi by MNRE in Tamil Nadu. The cost of installing offshore wind turbines, substations, and transmission lines per MW is Rs 25 crore compared to Rs 6 crores for onshore wind turbines.

INDIAN POWER SECTOR:

• Power is one of the most important infrastructure elements, essential to national wellbeing and economic development. For the Indian economy to grow steadily, enough electrical infrastructure must exist and be developed.

• Indias power generation sources range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of Indias focus on attaining ‘Power for all has accelerated capacity addition in the country. Although power generation has grown more than 100-fold since independence, growth in demand has been even higher due to accelerating economic activity.

ROAD AHEAD:

• In the current decade (2020-29), the Indian electricity sector is likely to witness a major transformation with respect to demand growth, energy mix and market operations. India wants to ensure that everyone has reliable access to sufficient electricity at all times, while also accelerating the clean energy transition by lowering its reliance on polluting fossil fuels and moving toward more environmentally friendly, renewable sources of energy. Future investments will benefit from strong demand fundamentals, policy support and increasing government focus on infrastructure.

• The Government of India has pared a rent a roof policy for supporting its target of generating 40 GW of power through solar rooftop projects by 2022. It also plans to set up 21 new nuclear power reactors with a total installed capacity of 15,700 MW by 2031.

• The Company being a wind energy-based renewable power generation and selling company focused on owning, operating and maintaining windmills. We have been involved in the renewable energy industry concentrating on wind energy for over twenty-nine years. Our windmills are located in the states of Tamil Nadu and Karnataka, which are one of the highest wind potential Indian states.

• We commenced our journey in the year 1995 with setting up of our first windmill in the state of Tamil Nadu having a capacity of 225 KW. We have grown our business by acquiring and operating brownfield windmills from third parties and also by developing greenfield projects.

• Our total capacity of wind energy-based renewable power generation is of 47.995 MW with 125 windmills spread across the States of Tamil Nadu and Karnataka. Out of the total capacity of 47.995 MW, a windmill constituting a capacity of 30.90 MW is located in the State of Tamil Nadu and 17.095 MW is located in State of Karnataka.

• The powers generated from our windmills are sold under the group captive scheme and under third party sales to corporates and to State Electricity Board BESCOM pursuant to Power Purchase Agreements ("PPAs").

Our Strategies:

We have enhanced our position by pursuing and executing the following strategies;

• We have acquired 100% of the equity share capital of Ind Eco Ventures Limited ("Ind Eco") which is an unlisted public company engaged in the business of generation of electricity and has wind-mills operating in Tamil Nadu & Karnataka, under the Group captive and third-party sales scheme during the fiscal year 2024-25 and thereby increased the capacity of the wind Mills by 9.675 MW;

• We intend to install new brown field projects with a minimum of 5 to 6 years payback and also acquire operating assets with 3 to 5 years payback;

• We have reduced our debt portfolio to improve our financial efficiency;

• Improving cost efficiency to improve competitive positioning;

• Improving profitability by enhancing operational efficiency;

• Maintain our on-going association with customers and continue to be the preferred suppliers for them;

• Attract and retain talented employee.

Policy:

Transmission: One of the greatest limiters on the expansion of wind and renewable energy expansion is the availability of transmission and power delivery systems. Its an ongoing need for utilities to continually build capacity to keep up with the volume of renewable energy projects coming online in remote locations.

Energy Storage: The nations energy infrastructure will continue to undergo a significant transformation over the next five years due to the emergence of larger, less costly and more efficient battery energy storage. Battery storage is a disruptive technology that is helping transform how electrical power is generated, distributed, and consumed. With regulatory permitting changes underway, battery storage will benefit the electrical grid by supporting dynamic generation and demand, which in turn supports increased levels of wind and solar power evacuation.

Utilize the renewable sources in best way - Because the batteries are connected to the system to store the energy, there is no waste of the excess energy generated on bright Sunny or Windy days. So, these systems make use of the renewable energy in best way, storing energy on a good day and utilize the stored power on a bad day. The balance is maintained.

iii. 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.

iv. Outlook

1. We plan to add new capacities by raising funds through Equity and Debt based instruments by adding 25 MW Wind and 25 MW Solar projects as indicated during the previous year

2. The process of setting up of balance additional capacities is under process.

v. Risks and concerns

1. WEGs that have been in operation for over 20/25 years may be impacted as renewal of PPAs are executed by TANGEDCO only for five years for machines that have crossed 20 years of operation, a move currently being contested by all WEG associations.

2. Reverse auction route in the wind sector, lack of financial incentives and difficulties in finding land at windy sites and power evacuation infrastructure for the projects exists as a bottleneck. Acquiring large area of land is a slow process as small land holdings and poor land records lead to delays and disputes. In addition, IPPs also need to ensure that the project location is close to a transmission substation with sufficient capacity to avoid Curtailment of their project output.

3. The main hurdle in this sector is ageing and low-capacity turbines which occupy the best wind sites. The wind turbines installed in the ‘90s were mostly of capacities of less than 1 MW. Refraining from replacing old windmills, Tamil Nadu should plan Investor attractive policy to repower older WEGs or replace them with new higher capacity wind turbine models that use modern technology. Along with suitable policy support and guidelines for the safe disposal and recycling of decommissioned machines, would help the state to add much more wind power capacity to the energy mix.

vi. 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.

M/s. Kailash Jain & Associates are the Internal Auditors to continuously monitor and strengthen the financial control procedures in line with the growth operations of the Company.

vii. Discussion on financial performance with respect to operational performance.

During the year 2024-25, the Company recorded a total revenue of ^2236 Lakhs as against ^2733 Lakhs in 2023-24, registering a decline of around 18% year-on-year.

Tamil Nadu Operations:

Revenue from Tamil Nadu operations stood at ^1169 Lakhs in 2024-25 compared to ^1725 Lakhs in the previous year, reflecting a significant drop. This decline was primarily due to lower wind availability, coupled with seasonal variations that adversely impacted power generation.

Karnataka Operations:

Karnataka operations, on the other hand, showed an improvement, with revenue increasing from ^1007 Lakhs in 2023-24 to ^1066 Lakhs in 2024-25, representing a steady growth. This reflects better operational efficiency and consistent generation from wind assets in the region.

Overall Operational Perspective:

The business continues to be highly seasonal in nature, being largely dependent on wind flow patterns. While Tamil Nadu experienced subdued wind conditions during the year, Karnataka operations

cushioned the overall performance by delivering stable output. Despite this, the aggregate performance was impacted due to the sharp fall in Tamil Nadu generation.

In summary, while the operational efficiency in Karnataka supported the business, the overall financial performance was subdued in 2024-25 due to weaker generation in Tamil Nadu, underscoring the seasonal and regional dependence of wind energy operations.

viii. Material developments in Human Resources / Industrial Relations front, including number of people employed.

It remains the same as previous financial year.

ix. Details of significant changes in key financial ratios, along with detailed explanations therefor:

On account of reducing in the borrowings there is significant change in the following ratios

X. 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 capital employed during the year 31.03.2025 is 1.42% as against 2.95% for the previous year ended 31.03.2024 is on account of increased earnings before interest and taxes.

The business operations of the Company are highly seasonal in nature, as they are directly dependent on the availability of wind velocity. During the financial year 2024-25, wind generation remained substantially lower than anticipated, leading to reduced power output and thereby affecting the overall revenue and profitability of the Company. This decline in generation, coupled with the inherent unpredictability of seasonal wind patterns, posed significant challenges in achieving the desired operational efficiency. The Company continues to adopt various strategic and operational measures to mitigate the impact of such seasonal fluctuations and ensure sustainable performance in the long term.

XI. 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.