Insolation Energy Ltd Management Discussions

The Management of Insolation Energy Limited presents the Management Discussion and Analysis Report covering the operational and financial performance of the company for the year 2024-25.

GLOBAL ECONOMY

The global economic expansion steadily continued in CY2024, although growth was inconsistent due to geopolitical tensions, geoeconomic fragmentation, increased trade disputes, and high public debt. Global in ation eased in CY2024, supported by declining commodity prices, improved supply conditions, and the delayed effects of monetary tightening in Cy2022. Global GDP growth is projected to remain at 3.3% for both CY2025 and CY2026, which is below the historical average of 3.7% from CY2000 to CY2019. In ation is expected to decrease to 4.2% in CY2025 and further to 3.5% in CY2026, with advanced economies likely returning to target in ation levels sooner than their emerging market and developing counterparts.

Despite ongoing global disin ation, some countries are facing persistent elevated in ation, suggesting that progress may be stalling. While core goods price in ation has returned to or fallen below trend levels, services price in ation remains above pre-COVID-19 averages in many economies, particularly in the U.S. and the euro area. In response to stubborn in ation, central banks are adopting a cautious approach to monetary policy, with some even raising interest rates, indicating a divergence in monetary policy across different countries.

The IMF projections assume that current policies will persist amid temporary trade policy uncertainties. Energy commodity prices are forecasted to decline by 2.6% in CY2025 due to weak demand from China and strong supply from non-OPEC+ countries, while nonfuel commodity prices are expected to rise by 2.5% due to adverse weather affecting food and beverage production. World trade volume estimates have been slightly revised downward for CY2025 and CY2026 due to increased trade policy uncertainty, although the impact is expected to be temporary, with some trade flows accelerating in anticipation of tighter restrictions.

Source: IMF, World Bank

INDIAN ECONOMY

The Indian economy grew at 6.5% year-on-year in FY2024-25, is expected to be constant in FY2025-26, with risks being evenly balanced. While moderating, growth reflects structural strengths in rural demand, services, and exports, though global uncertainties and domestic challenges persist.

Rural consumption remained robust, supported by 4.6% agricultural growth - a ve-quarter high - amid good monsoons. Declining MGNREGA demand and rising FMCG sales indicate strengthening rural demand, likely to accelerate during festive seasons. The services sector expanded by 7.5%, driven by public administration, defence (8.8%) and financial services (7.2%), with net services exports jumping 12.9% to $135 billion (April-December 2024). Manufacturing exports, particularly electronics and chemicals, now account for 31% of merchandise exports, showcasing Indias growing global integration.

However, in ation above RBIs target prompted maintained policy rates, with core in ation creeping upward, potentially impacting consumption. Geopolitical tensions and shifting trade policies threaten export demand, while domestic investment slowed due to election-related capex delays and private sector caution.

Going forward, policy should prioritize infrastructure spending to stimulate private investment, leveraging the improved scal position of reduced scal de cit. Addressing in ation through supply-side measures, skill development, and ntech adoption will be crucial. While near-term growth faces headwinds, Indias strong fundamentals position it well for sustained 7%+ expansion, contingent on effective reforms and global stability.

Deloitte has adjusted Indias GDP growth forecast to 6.5%-6.8% for the current scal year and 6.7%-7.3% for the next, citing a subdued global growth outlook and delayed recovery in industrial economies. To achieve sustainable growth, India must adapt to changing global conditions and leverage its domestic strengths.

Source: IMF, India economic outlook : Deloitte Insights

Global electricity demand grew by 4.3% in 2024, significantly outpacing GDP growth (3.2%) and marking the largest annual increase excluding post-recession recovery periods. This surge was driven by record temperatures, industrial electri cation, and data center expansion, with total consumption rising by 1,100 TWh more than double the decades average. China accounted for over half of the increase, while other emerging economies saw 4% growth, and advanced economies reached new demand highs. Buildings contributed nearly 60% of the rise, reflecting heightened cooling needs, while data center capacity expanded by ~20% i.e. by 15 GW, led by the U.S. and China. Additionally, electric vehicle adoption accelerated, with global sales exceeding 17 million units making ~20% of total car sales, further boosting power demand.

Renewables and nuclear supplied 80% of new electricity generation in 2024, collectively reaching 40% of global output a historic milestone. Solar PV and wind generation rose by a record 670 TWh, with 700 GW of new renewable capacity added of which 80% was solar energy. The EU saw renewables surpass fossil fuels for the first time, while the U.S. renewable energy contribution reached 16% share of total energy. Nuclear power rebounded, adding 7 GW (up 33% YoY), with construction starts jumping 50%. Despite this progress, coal and gas met 25% of demand growth, as extreme heat in several geographies and hydropower shortfalls necessitated fossil fuel use. Energy related carbon emissions rose 0.8% globally, however, the decoupling from GDP growth continued, with clean energy technologies preventing 2.6 billion tonnes of CO annually. Advanced economies reduced emissions by 1.1%, returning to 1970s levels despite much higher GDP. Source: IEA Global Energy Review 2025, Key findings Global Energy Review 2025 Analysis - IEA

The power sectors transition accelerated in 2024, with renewables and nuclear playing an expanding role. However, grid resilience, fossil fuel reliance in emerging markets, and slowing ecien cy gains remain key challenges. Sustained investment in clean energy, grid modernization, and storage will be critical to meet rising demand while advancing decarbonization. Within clean energy, solar energy adoption is seeing increased adoption globally as it can be channelized easily. The global renewable energy market size is expected to increase from $1.1 trillion in CY2024 to $2.1 trillion by CY2032, driven by increase in policies promoting the adoption of clean energy sources, coupled with decrease in cost of renewable energy production.

Source - IEA

The Indian power sector remains a key driver of economic growth, with the country ranking as the third-largest producer and consumer of electricity globally. As of January 2025, the installed power capacity stood at 470 GW, reflecting sustained expansion. Power consumption continues to grow, driven by rising electri cation, urbanization, and industrial demand. To meet future needs, India has committed to increasing its non-fossil fuel capacity to over 500 GW by FY2030, reinforcing its focus on sustainable energy transition.

Signi cant opportunities exist across renewable energy and transmission infrastructure, with the sector offering an investment potential of Rs. 40 lakh crores over the next decade. The Government increased its budget allocation by 143% to Rs. 19,100 crores in the 2024-25 budget for renewable projects, including solar power, green hydrogen, and energy corridors. Initiatives like the PM-Surya Ghar scheme, targeting rooftop solar installations in one crore households, will further accelerate clean energy adoption. Additionally, the Ministry of Power has identified 81 thermal units for coal-to-renewable transition by 2026, addressing both environmental concerns and coal supply challenges. The Government has ambitious plans to strengthen the national grid and improving energy security. Investments in transmission are critical, for grid expansion to integrate renewable energy. The National Electricity Plan estimates that Indias power sector will require an investment of Rs. 33 lakh crores in power generation infrastructure and 3.78 million skilled professionals by 2032, highlighting the sectors significant employment generation potential. Under the National Infrastructure Pipeline (2019-2025), energy sector projects account for 24% of the total expected capital expenditure of Rs. 111 lakh crores, underscoring their strategic importance in Indias infrastructure development.

Despite growth prospects, challenges like discom financial health and grid stability need addressing. Continued focus on energy storage, smart grids, and policy reforms will be crucial for long-term sustainability. With strong investments, policy backing, and technological advancements, Indias power sector is well-positioned to meet rising demand while advancing its renewable energy goals.

Source Power Sector at a Glance (Ministry of Power), IBEF

The global solar photovoltaic (PV) sector experienced exceptional growth in 2024, with annual capacity additions rising by nearly 30% year-over-year to reach approximately 550 GW. This expansion brought total installed global solar PV capacity to an estimated 2.2 terawatts (TW), reinforcing solars position as the dominant technology in renewable energy development. Solar PV alone accounted for over three-quarters of all renewable capacity additions globally, driven by continued policy support, technological advancements, and rising energy demand due to urbanization and industrialization.

Technological innovation and cost competitiveness continued to drive market expansion. Advances in materials, including perovskite cells, and integration with energy storage and smart grids are enhancing system ecien cy and creating new deployment opportunities. Nevertheless, challenges persist. High upfront costs, regulatory barriers in some markets, and grid integration issues remain significant constraints.

The global solar PV market was valued at USD 51.46 billion in 2024 and is projected to reach USD 53.43 billion by 2033, reflecting a CAGR of 1.9%. Overall, the long-term outlook for the global solar sector remains robust, underpinned by rising energy demand, supportive policy frameworks, and continued innovation.

Source IEA, Research Reports

India achieved a landmark milestone in 2024 by surpassing 100 GW of installed solar power capacity, rmly positioning itself among the global leaders in renewable energy. This achievement reflects the countrys unwavering commitment to a sustainable energy transition and marks a critical step toward its ambitious goal of 500 GW of non-fossil fuel-based capacity by 2030, as envisioned by Prime Minister Shri Narendra Modi.

The Indian solar sector has seen exponential growth over the past decade, with installed capacity rising by over 3,450% from just 2.82 GW in 2014 to 100.33 GW as of January 31, 2025. In 2024 alone, India added a record-breaking 24.5 GW of solar capacity more than double the installations of 2023. This surge included 18.5 GW from utility-scale projects, led by high-performing states such as Rajasthan, Gujarat, Tamil Nadu, Maharashtra, and Madhya Pradesh. Solar now accounts for 47% of Indias total renewable energy capacity, highlighting its central role in the nations green energy roadmap.

The rooftop solar segment also witnessed unprecedented expansion in 2024, with 4.59 GW of new capacity added a 53% year-on-year increase. The launch of the PM Surya Ghar: Muft Bli Y ojana was a key driver, nearing 9 lakh installations and empowering households to adopt clean energy. These developments underline a major shift toward decentralized, consumer-driven energy generation. On the manufacturing front, India has rapidly built-up domestic capacity, growing from just 2 GW in 2014 to 60 GW in 2024. With supportive policies and incentives, the country is well on track to reach 100 GW of solar module manufacturing capacity by 2030, enhancing self-reliance and reducing dependence on imports.

The Ministry of New and Renewable Energy (MNRE) has played a pivotal role in enabling this transformation through initiatives like solar parks, hybrid tenders, and RTC projects. With 84.10 GW of solar capacity under implementation and another 47.49 GW in the pipeline, India is set to maintain strong growth momentum, reinforcing its status as a global renewable energy powerhouse.

Source Government Database

There are several tailwinds for renewable energy in India. First of these is climate change. The government is focused on improving by reducing environmental impact of fossil fuels. To achieve this, the government is targeting greater power addition and carbon emission reduction. Second is increased energy allocation in the Union Budget and the third is the increasing foreign investment in the sector.

Solar energy itself is seeing several trends. These include increase in domestic rooftop installation and continuous decrease in solar components cost, both of which are fuelling greater consumer demand. On the government initiatives, it is implementing schemes for developing multiple ultra mega power projects; and has set an additional renewable energy purchase obligation of 11% by 2030. All these trends are positive on the sector and create a virtuous cycle of growth for the nation.

The current geopolitical situation is creating disruptions in supply chain. This warrants establishment of localised manufacturing to cater to domestic demand. To boost domestic solar manufacturing, the government has imposed tariffs on imported modules and introduced scal incentives. It has mandated the use of modules listed under the Approved List of Models and Manufacturers (ALMM) for central and state PSU projects. From June 1, 2026, a similar mandate will apply for solar cell usage under the Approved List of Cell Manufacturers (ALCM). These measures aim to strengthen the local supply chain, drive innovation, cut carbon emissions, and enhance energy security.

The PM KUSUM Yojana is a agship initiative by the Government of India aimed at promoting solar energy in the agriculture sector. Its objectives include ensuring energy and water security for farmers, increasing their income, reducing reliance on diesel and conventional energy sources, and mitigating environmental pollution.

The PM Surya Ghar Yojana is a forward-looking initiative by the Government of India aimed at installing rooftop solar systems in one crore households by FY26 FY27, providing up to 300 units of free electricity per month to each bene ciary. In addition, emerging sectors such as data centers, EV charging infrastructure, and the growing green hydrogen market are poised to be transformative for the solar industry. These industry drivers are expected to drive Indias renewable energy market from $23.9 billion in 2024 to $46.7 billion by 2030, with solar energy alone projected to grow from $11.8 billion to $25.1 billion during the same period. Amid this momentum, Insolation has emerged as a trusted player in Indias solar manufacturing landscape.

Insolation Energy Limiteds journey began in 2017 when two ambitious entrepreneurs set out to manufacture top-quality solar modules in India. Over the years, the Company has experienced significant growth, driven by an increase in manufacturing capacity, the expansion of our distribution network, and the addition of EPC and IPP capabilities.

Insolation Energy Limited (“INA” or “the Company”) is a leading manufacturer of high-ecien cy solar photovoltaic modules, offering advanced technologies including Mono PERC and N-Type TOPCon. Insolation Energy operates its 3 fully automated manufacturing facilities, with an installed capacity of 4 GW TopCon and PERC both plus 1.5GW module G12R line in transit which would be operational by October all located in Rajasthan. These state-of-the-art facilities are equipped with advanced technology and machinery, enabling the production of high-quality solar panels and modules that meet international standards. The company has developed a robust distribution network, with over 100 distributors and more than 300 dealers spread across 100+ districts in India. As dealers stock only 2-3 brands, this extensive network ensures that the Companys products are well entrenched in the customers minds, facilitating the widespread adoption of solar energy solutions.

INAs modules are BIS and IEC certified, ensuring the highest standards of performance and reliability. INA maintains a strong emphasis on R&D, supported by advanced equipment to develop cutting-edge solar solutions.

To maintain top-of-mind recall, INA has partnered with the Lucknow Super Giants IPL team as their ocial solar partner. Additionally, the Company collaborates with EPC contractors for independent power producer

(IPP) projects, enhancing its credibility as a dependable solar component supplier. INAs government channel sales are executed through empaneled EPC contractors, enabling it to serve multiple market segments through a diversi ed distribution strategy.

Currently, INAs reach spans over 100 districts, serving more than 15,000 customers with the support of 800+ channel partners and 300+ dealers.

In FY25, the Company reported consolidated revenue of Rs. 1,333.76 crore, marking an 80.93% year-on-year growth. This performance was driven by robust results across all business verticals, including an expanded footprint in Central and Southern India, positioning INA as a pan-India player in the solar industry.

The Companys subsidiary, Insolation Green Infra Private Limited, focuses on the execution of solar EPC projects including KUSUM Components A and C, solar parks, O&M services, and rooftop installations. The Company has a healthy pipeline of KUSUM projects, with completion expected by Q4 FY26. INA is actively bidding for an additional 700+ megawatts under KUSUM Component A and based on its strong bid-to-win ratio, it is con dent of securing a substantial portion.

INAs rooftop solar vertical is gaining traction with an execution pipeline exceeding 100 megawatts for FY26, driven by corporate and state government tenders. This vertical continues to scale and is expected to deliver consistent performance going forward.

Continuing the Companys strategic focus on backward integration, an integrated manufacturing complex in Narmada Puram, Madhya Pradesh is being developed. The company has successfully performed the bhoomi pujan ceremony for construction of new state - of - art manufacturing facility for 4.5 GW Solar Cell manufacturing and 18,000 MTA Aluminum framing in phase - I. This facility further increased by 4.5 GW PV Module, 4.5 GW Solar Cell, 36,000 MTA Aluminum framing in phase - II. Operations of the solar cell line are expected to begin in H1 FY27.

In support of the Companys long-term vision, an MoU has been signed worth Rs. 10,000 crore with the Government of Rajasthan. This covers rooftop solar deployment, solar component manufacturing, solar park development, and execution of KUSUM A and C projects, rearming our p osition as a key player in the renewable energy sector.

Looking ahead, the Company plans to diversify into Battery Energy Storage Systems (BESS) manufacturing and enter solar wafer manufacturing upon the announcement of an enabling policy framework. These initiatives align with our comprehensive forward and backward integration strategy aimed at capturing the entire solar manufacturing value chain.

INAs business model is built on scalability, and strong financial discipline. Backed by an experienced leadership team with a consistent track record of execution, Insolation Energy remains committed to enabling Indias clean energy transition through a well-structured growth strategy and an unwavering focus on quality and delivery excellence.

Consolidated Pro t & Loss Statement Rs. Crore

The Companys Total Income increased by 81.16% to Rs. 1343.0 crores due to strong demand for solar panels and volume increase. The EBITDA increased by 102.35% to INR 170.32 crores in FY25 due to improved business mix and strategic cost optimization measures. PAT increased by 127.49% to Rs. 126.19 crores due to operating leverage.

Raw Material Risk

A rise in raw material costs could negatively affect the demand for solar photovoltaic products and hinder market prospects. To address the risk of price fluctuations in raw materials, particularly solar silicon wafers which constitute 70% of the Companys total manufacturing expenses - the Company has established in ation-protected back-to-back sales agreements.

Customer Concentration Risk

Revenue concentration from a single customer can impact profit margins. However, the Indian governments emphasis on sourcing domestic renewable energy has led to an increase in the number of Indian customers. This growing utilization of solar energy positions India as one of the most attractive markets, thereby reducing the risks associated with customer concentration. Insolation is well diversi ed in terms of revenue from multiple customer channels.

Competition Risk

Growing competition may adversely affect pro tability. The Company is recognized as one of Indias leading and most dynamic solar photovoltaic manufacturers, boasting some of the lowest production costs in the country. Its products are certified and backed by strong ecosystem relationships, which enhance its competitive edge.

Demand Risk

A decline in demand could reduce returns on investment. Nevertheless, India is projected to be one of the fastest-growing countries in renewable energy. This growth is likely to establish India as a global leader in affordable power costs, driven by the expansion of the renewable energy market and rising demand.

Technology Risk

Technological obsolescence is a potential concern. To mitigate this risk, the Company has implemented a comprehensive internal audit system that undergoes regular reviews and updates to protect assets, ensure compliance with regulations, and promptly address any issues. The audit committee consistently monitors reports from internal auditors, noting observations and taking corrective actions as needed. Effective communication is maintained with both statutory and internal auditors to ensure the ecient op eration of internal control systems.

Internal Control System and Adequacy

The Company maintains appropriate and effective internal control systems in proportion to the business size and complexity. In our opinion, these systems offer, among other things, a fair guarantee that transactions are carried out with management authorization. These have been implemented at every level and are meant to ensure compliance with statutory and regulatory requirements for internal controls, as well as the accurate recording of financial and operational data. The permissible compilation of financial accounts in accordance with generally accepted accounting standards is also ensured, as is the sucient pr otection of the Companys assets from major misappropriation or loss. A crucial component of the Companys internal control system is an independent internal audit function. In addition to this, the Company also has a robust internal audit programme and regular reviews by Management and the Boards Audit Committee.

Human Resource

Human resources remains a valuable asset of our business. The Company continues to lay emphasis on attracting and retaining talent. Personnel developmental initiatives including training, both technical and managerial, are regularly conducted to enhance human potential. As on 31st March, 2025, the Company has a total human resources are 421 including its Subsidiaries. The Company recognizes that its employees are its principal assets and that its continued growth is dependent upon the ability to attract and retain quality people. The company has established a full- edged Human Resources Department, which is entrusted with the responsibility of retaining and developing the skills of all its employees. The Company also recognizes the importance of providing training and development opportunities to its people to enhance their skills and experiences, which in turn enables the Company to achieve its business objectives. The industrial relations in all units of the Company continue to be cordial.

Cautionary statement

This section contains statements regarding the Companys objectives, projections, expectations, and estimates, which may be considered forward-looking statements as defined by relevant securities laws and regulations. Actual outcomes may vary significantly from those expressed or implied. Key factors that could impact the Companys operations include, but are not limited to, economic conditions in uencing demand, supply, and pricing, fluctuations in raw material costs, changes in government regulations, tax policies, economic developments, and other related factors.