Indowind Energy Ltd Management Discussions.

To

The Members

Your Directors are pleased to present this 24th Annual Report of the Company together with the Audited Accounts for the year ended 31st March 2019.

FINANCIAL HIGHLIGHTS AND PERFORMANCE

INR In Million
PARTICULARS 2018-19 2017-18
Total Income 210.00 279.47
Total Expenses 109.15 110.40
EBIDTA 100.85 169.07
Finance cost 69.98 76.64
Depreciation 93.18 95.00
Provision for Mark to Market cost 33.73 (4.91)
Profit Before Exceptional Item (96.04) 2.34
Exceptional Item - 238.99
Profit/Loss Before Tax (96.04) (236.65)
Tax Provision 26.59 (26.59)
Profit/Loss After Tax (122.63) (210.06)

The Companys total income has fallen from Rs. 279.47 Mn. to Rs. 210 Mn. during the financial year 2018-19 due to the delay in the onset of South West and North East wind season, coupled with increase in O & M charges levied by TANGEDCO. The company also has to provide mark-to-market loss of Rs.33.73 Mn. These factors made the company to incur Rs.96.04 Mn. loss during the financial year 2018-19. The company is hopeful of improving the generation and profits in the current financial year 2019-20. In view of inadequacy of profit your company is not in a position to recommend dividend forthe year under review..

MACHINE AVAILABILITY GRID AVAILABILITY AND PLANT LOAD FACTOR (PLR %):

Year States Machine Availability Grid Availability Plant Load Factor (PLF)
2018-19 Tamil Nadu 92.76 95.57 11.11
2017-18 Tamil Nadu 93.91 95.14 12.03
2018-19 Karnataka 87.23 97.90 18.58
2017-18 Karnataka 85.67 98.80 19.00

For the Financial Year 2018-19 Machine availability for TN is 92.76% and KA is 87.23% as compared to 93.91 % and 85.67% respectively for the previous year 2017-18. Machine availability in TN is dropped down because of gear box failure of one machine of 750kw Wind Energy Generator. However, machine availability in KA has increased by improving the efficiency of existing machines.

For the Financial Year 2018-19 Grid availability for TN is 95.57% and KAis 97.90% as compared to 95.14% and 98.80% respectively for the previous year 2017-18.

For the Financial Year 2018-19 Plant Load Factor (PLF) for TN is 11.11% and KA is 18.58% as compared to 12.03% and 19.00% respectively for the previous year 2017-18. PLF was on the lower side due to poor north east monsoon.

RE potential and growth in India

The renewable energy sector in India had nominal growth in the financial year 2018-19.

Ministry of New and Renewable Energy (MNRE) has increased their wind power capacity by adding over 1480.97 MW in 2018-19.

The leading States in the wind power capacity addition during 2018-19 are Tamil Nadu 771.82 MW, followed by Gujarat 459.65 MW and Andhra Pradesh 123.50 MW. In addition, Karnataka, Telangana, Maharashtra and Rajasthan have reported 86.50 MW, 27.30 MW, 10.20 MW and 2 MW wind power capacity addition respectively during 2018-19.

OPERATIONAL REVIEW ON TNERC & TANGEDCO NORMS

1. From 1s1 January, 2019 Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has introduced Automated Meter Reading (AMR). This mechanism will help in instant availability of generation data, service connection helping in allotment of energy generated to our clients.

2. Tamil Nadu Electricity Regulatory Commission (TNERC) has mandated Forecasting & Scheduling and Deviation Settlement Mechanism (DSM) with effect from June 2019 which will help in scheduling evacuation of power generated and also minimize the cost for deviating from the forecasted energy through appointing a Qualified Coordinating Agency (QCA) from TANGEDCO panel.

PENDING CLAIMS

The company had to face challenges due to non receipt of claims from Dena Bank (which is merged with Bankof Baroda w.e.f 1stApril, 2019), interest on delayed payments from TANGEDCO and claim against performance guarantee from Suzlon Energy Limited. The total pending claims as on date works out to Rs.62.91 cr. The company is pursuing the case and putting efforts to recover the claims at the earliest to reduce the liabilities. The company is also facing challenges from the bankers viz., Exim Bank who has levied exorbitant interest and also converted the debts from USD to INR. The company has initiated legal proceedings on the bank to stick to its sanctioned interest rates and to release the balance loan amount. The company is looking at various options to restructure the debt and raise loan at low interest rates to overcome the challenges.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The Inventory Turnover ratio is less by 91% as compared to the previous financial year. The negative variance is on account of poor monsoon season due to which there was no closing inventory.

The Operating Profit is less by 61% as compared to the previous financial year. The negative variance is on account of decrease in sale due to shortage of inventory.

The Net Profit was better by 59% as compared to previous financial year. As in previous year the profit before exceptional item was taken into account.

DETAILS OF CHANGE IN RETURN ON NET WORTH

Return on Net worth was 8% for 2017-18 and 6% for 2018-19.

RISKS AND CONCERNS

1. TANGEDCO policy on removal of banked units for future projects may also take up for old projects which will affect the revenue.

2. Deviation Settlement Mechanism (DSM) through Forecasting & Scheduling by TNERC

3. Expected revision in levy of O&M charges by TANGEDCO will affect the net revenue realization of the company if implemented.

4. The continued delay in realization of recoveries of debts is affecting re-deploying in other projects.

OPPORTUNITIES

1. Introduction of Automated Meter Reading (AMR) by TANGEDCO will help the company to have instant generation data through online portal.

2. The long term fund availability is now at a cheaper rate.

FUTURE PLANS

1. The company is trying to find early solution for existing recovery of dues and claims to reduce the debts during the current year. The company is also exploring options to raise bond issue or new re-financing of the existing loan with repayment obligations in line with the generation income and life of the assets. The company is also exploring options for adding 10 MW capacity after completing the make change.

2. The company could not complete make change and repowering of some of the projects viz., 2.5 MW in 2018-19 due to the non-availability of approvals. The company has to evaluate the viability of the policy changes by TANGEDCO to analyze the new guidelines on repowering, manage cash flow problems due to the revenue decline from the current projects. However, the total amount required to complete these projects are only around Rs. 3 crores and the company is confident of completing it during the current financial year.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The company has provided contributions to support local festivals and cultural activities in the site areas to encourage participation of local population and encourage the local cultural heritage.

NUMBER OF MEETINGS OF THE BOARD

Indowind Energy Limited held 6 Board Meetings during the year ended 31st March 2019. These were on 30lhMay2018,8"1 June 2018 (Adjourned Meeting), 13"August2018,271" September 2018, 8th November 2018, and 12" February 2019.

DIRECTORS

Ms. Alice Chhikara is retiring in the forthcoming 24th AGM of the company and being eligible offers herself for re-appointment.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149 (6) OF COMPANIES ACT 2013

The Company has obtained declaration from the Independent Directors that they meet the criteria of Independence as provided in section 149 (6) of the Companies Act 2013.

DIRECTORSRESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors hereby state that;

1. In the presentation of the Annual accounts, applicable standards have been followed and there are no material departures.

2. The Directors have selected such accounting policies and apply them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 "‘March 2019 and profit / loss for the Company forthe year ended 31st March 2019.

3. The Directors have taken proper and sufficient care in the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and

6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDIT COMMITTEE

The details are furnished under the Corporate Governance Report (CGR) annexed to this Report. All the recommendations of the Committee were accepted by the Board.

POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION

The details are available in the website of the Company atwww.indowind.com

PREVENTION OF INSIDERTRADING

The Company has adopted a Code of Conduct as per the Guidelines issued by the Securities and Exchange Board of India for prevention of insider trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed.

The Board of Directors and the designated employees have confirmed compliance with the Code.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

Mr.S.Diraviam has resigned from the post of Company Secretary on 6th April, 2018 and Ms. Harsha J has been appointed as Company Secretary of the Company with effect from 6th April, 2018 during the financial year 2018-19.

Mr. N.K.Haribabu has been appointed as Chief Financial Officer with effect from 30th May, 2019 of the company.

PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS

There is no loan / Guarantee is outstanding as on 31.03.2019. With respect to investments, details are provided under Note No.6 of Notes on accounts under non-current investments.

BUSINESS RISK MANAGEMENT

The details are available in the website of the Companyatwww.indowind.com BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and LODR Regulations, 2015 the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. A separate exercise was carried out to evaluate the performance of Individual Directors including the Chairman of the Board. The evaluation was on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its mandatory shareholders etc. The performance evaluation of the independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non independent Directors was carried out by the Independent Directors and vice versa. The Directors expressed their satisfaction with the evaluation process.

DEPOSITS

During the year under review the company has not accepted any deposits from the public within the ambit of section 73 of The Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

VIGIL MECHANISM

As required under Section 177 of Companies Act, 2013 (the Act) and Regulation 22 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the Company has established a vigil mechanism for directors and employees to report genuine concerns through the whistle blower policy of the Company as published in the website of the Company. As prescribed under the Act and the Listing Regulations, provision has been made for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases.

FINANCIAL STATEMENTS OF THE SUBSIDIARY COMPANY - Indowind Power Pvt. Ltd. (IPPL)

I PPL has substantially contributed to the turnover of your company for the year under review. The Authorized Capital of the Company is Rs. 1,50,00,000/- comprises of 15,00,000 equity shares of Rs. 10/- each. The issued and Paid up capital of the company is Rs. 1,33,69,600/- comprises of 13,36,960 equity shares of Rs. 10/-each, out of which Indowind Energy Ltd holds 682,560 equity shares of Rs. 10/- each amounting to 51.05% of the total paid up capital.

FINANCIAL HIGHLIGHTS AND PERFORMANCE

INR. In Million
PARTICULARS 2018-19 2017-18
Total Income 14.14 19.20
Total Expenses 14.10 19.03
Profit before Tax 0.04 0.17
Tax 0.01 0.05
Profit After Tax 0.03 0.12

INDUSTRIAL RELATIONS AND PARTICULARS OF EMPLOYEES

As of 31st March 2019, Your Company has 68 employees on its rolls at different locations including Senior Management Personnel, Engineers, Technicians and Trainees. The employees will be inducted in to permanent services of the Company after training, to fill up vacancies as when arises. Your company has not issued any shares under Employees Stock option Scheme during the year under review.

VARIATIONS IN THE MARKET CAPITALISATION OF THE COMPANY. PRICE EARNINGS RATIO AS AT THE CLOSING DATE OF THE CURRENT FINANCIAL YEAR AND PREVIOUS FINANCIAL YEAR

Particulars March 31,2019 March 31,2018 % Change
Market Capitalization (Rs.) 50,16,54,907 Rs. 65,87,02,507 -23.84
Price earnings ratio 4.08 3.14 +29.94

PERCENTAGE OF INCREASE OR DECREASE IN THE MARKET QUOTATION OF THE SHARES IN COMPARISON TO THE RATE AT WHICH THE COMPANY CAME OUT WITH THE LAST PUBLIC OFFER

Price of public offer Rs. 65/- Market price as on 31.03.2019, Rs. 5.59/- difference (Rs. 59.41/-) (91.4%)

CORPORATE GOVERNANCE

Your Company has complied with the requirements regarding Corporate Governance as required under SEBI (Listing Obligation and Disclosures Requirements) Regulations 2015 entered in to with the Stock exchanges where the Companys shares are listed. A Report on the Corporate Governance in this regard is made as a part of this Annual Report and a certificate from the Auditors of your Company regarding compliance of the conditions of the Corporate Governance is attached to this report.

LISTING OF EQUITY SHARES

Your Companys equity shares are continued to be listed on the BSE Ltd, Mumbai and National Stock Exchange of India Ltd., Mumbai.

AUDITORS

M/s.Sanjiv Shah & Associates, Chartered Accountants, Chennai retires at the conclusion of this Annual General Meeting and are eligible for reappointment.

RESPONSE TO THE AUDITORS BASIS OF QUALIFIED OPINION:

As regards Auditors basis of qualified opinion mentioned in para 3(i) to (iv) of their report dt SO41 May, 2019 your directors wish to state as under:

Exim Bank sanctioned a Term loan of Euro 18 Mn. equivalent to USD 25 Mn. during June 2010 in accordance with which, the company was to raise USD 3.7 Mn. from consortium of banks additionally, for setting up of 25 MW project with equity margin of 20% from internal accruals.

The exchange rate as per the projected cost and means of finance was Rs.45.20 / USD. Subsequently, the company had also executed a Trust and Retention Account (TRA) with Exim Bank determining the order of priority of apportionment of project collections as, Trust bank charges, Asset management expenses, Charges to lenders, Principal to lenders, Topping up of DSRM and Surplus to borrower.

There was delay in release of loan amount by the bank. This impacted the timely commencement of the project. The bank released USD 10 Mn. only in May 2011. The company could complete 6 MW assets and had to meet huge interest cost to bank due to delay in release of further funds. Subsequently, the bank also modified the terms of sanction in accordance with which, the company provided additional deposit and third party security byway of 40 lakh shares of the company on the condition that entire sanctioned loan would be released. Thereafter, the bank released only USD 1.84 Mn. for completing additional 2 MW project. The bank had also debited USD 0.18 Mn. towards penalty and also created a deposit in lieu of charging the lands of the project, to the tune of USD 0.61 Mn. Bank did not release the balance loan sanctioned to the company. The bank also increased the interest rate on the loan while giving very less interest on the funds withheld by the bank in the form of deposits. The company objected to all this as this could affect the long term viability of the project. Combination of all these complications resulted in completion of only 8 MW and also jeopardized the advances made by the company for the whole project. The wind mill project can service the INR loan only at around 8 to 9% and USD loan only @ 3 to 4% based on the tariff policy of the GOI. Due to High rate of interest coupled with non-revision of tariff by the Electricity Board, the company represented to the bank by placing plea to reduce the interest rate to a lower level and increase the repayment tenure and rectify the effect of excess fee, penalty, deposit along with cumulative interest effect on the cash flow for the sustainability of the project in line with earnings of the project. As there was no definite action for relief from the bank for releasing the balance sanctioned amount and rectification of the cumulative effect of the above, the company approached the Honble High Court of Bombay for the above reliefs. The 8 MW project put up with the banks assistance earns on an average Rs. 5.50 crores p.a. and so far, the project has repaid to the bank to the tune of Rs. 32.95 crores to the bank for the project. The project is expected to work for more than 20 years and expected to earn more than Rs.110 crores at current tariff levels. The management believes the tariff will go up in future to yield more revenue from the project. Hence the project is considered to be financially sound to service the debts on its own to the bank.

As regards the basis of their qualified opinion mentioned in para (v) and (vi) of their report dt. mentioned herein above your directors wish to state as under:

The project supplied by Suzlon is backed by Performance Guarantee. The companys claim for shortfall in generation from the suppliers was not honoured by the supplier. The company initiated legal proceedings and won the Arbitration award which determined compensation of Rs. 20.73 crores for the shortfall in generation till March 15 and with further interest @ 18% till the date of payment. The total amount of the award along with interest is approx Rs. 28 crores which is classified as Capital Advances. The company has to utilize the amounts to complete the pending project due to non release of funds by Exim Bank or for closure of the loans. The company has also initiated legal proceedings for realizing shortfall dues afterOI .04.2015 to-date totalling about Rs. 30 crores.

The company has to complete the repowering of about 2.5 MW by obtaining necessary approval from TANGEDCO which was getting delayed due to the pending repowering policy guideline. The company is confident of getting necessary approval for the repowering and complete the same during the current financial year.

EXTRACT OF ANNUAL RETURN

As provided in Sec 92 (3) of the Act the extract of annual return is given in Annexure (1) of this report in the format Form MGT-9, which forms part of this report.

TRANSACTIONS WITH RELATED PARTIES

Detailed information is provided with respect to the list of Related Parties under Note No.37 of the Notes on accounts and with respect to transactions with related parties are given in detailed under Note No.37 of the notes on accounts in the format Form AOC-2, which forms part of this report in Annexure (3).

SECRETARIAL AUDIT REPORT

Mr. R. Kannan PCS is the Secretarial Auditor of the company for the year under review and his report is attached with this in the format Form MR-3, which forms part of this report in Annexure (4). With respect to the observation of Secretarial Auditor in his report we wish to state that the company has appointed CFO in the Board Meeting held on 30th May, 2019.

ADEQUACY OF INTERNAL CONTROL

Your Company has effective and adequate internal control system 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. S. Vasudevan & Associates are the Internal Auditors to continuously monitor and strengthen the financial control procedures in line with the growth operations of the Company.

PARTICULARS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT. 2013 AND ITS COMPANIES (ACCOUNTS) RULES 2014

The particulars required to be given in terms of section 134 of the Companies Act, 2013 and its Companies (Accounts) Rules, 2014, regarding conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Foreign Exchange outgo are not applicable to your Company. ACKNOWLEDGEMENT

The Directors wish to place on record their sincere thanks and gratitude to all its Shareholders, Bond holders, Bankers, State Governments, Central Government and its agencies, statutory bodies, suppliers, and customers, for their continued co-operation and excellent support extended to the Company from time to time.

Your Directors place on record their utmost appreciation for the sincere and devoted services rendered by the employees at all levels.

DISCLAIMER

The management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Companys performance is dependent. It may materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.

For and on behalf of
BOARD OF DIRECTORS OF
INDOWIND ENERGY LIMITED
Place: Chennai - 600 034 Bala V Kutti
Date: 30" May 2019. Chairman