Websol Energy System Ltd Management Discussions

Global economic review

The global economy proved resilient through 2025 and carried that steadiness into 2026, holding up despite geopolitical tensions, trade realignments and supply-chain disruptions. Emerging economies remained the main engine of growth, supported by infrastructure investment, manufacturing expansion and domestic consumption, while advanced economies expanded more modestly under tighter financial conditions.

However, the outbreak of conflict in the Middle East towards the close of the period shifted the global narrative from one of steady disinflation to an energy-led inflation shock, a transition reflected in the International Monetary Funds (IMF) April 2026 World Economic Outlook, titled Global

Economy in the Shadow of War. According to the IMF, global growth is estimated at around 3.4% in 2025 and projected to moderate to 3.1% in 2026 and 3.2% in 2027, remaining below pre-pandemic averages. The downward revision largely reflects higher energy costs, firmer inflation, and tighter financial conditions following the conflict. World trade volume growth is similarly expected to slow from 5.1% in 2025 to 2.8% in 2026, before recovering to 3.8% in 2027.

Global inflation, which had been on a steady declining trend, is now expected to rise once again. The IMF projects global headline inflation to increase from around 4.1% in 2025 to 4.4% in 2026, before easing to 3.7% in 2027. Inflationary pressures are expected to be more pronounced in commodity-importing emerging economies, where energy and food account for a larger share of the consumption basket. Crude oil prices are assumed at around US$82 per barrel in 2026, significantly higher than in 2025.

The balance of risks remains tilted to the downside. A prolonged or wider conflict, a reassessment of the productivity gains expected from renewed trade tensions, or financial market volatility could each weigh further on growth and add to inflationary pressures, with limited fiscal room available given elevated public debt levels.

World and regional growth (real GDP, % change)

Note: 2025 is an estimate; 2026 and 2027 are projections under the IMF reference scenario (limited conflict). Source: IMF, World Economic Outlook, April 2026.

Performance of major economies

Growth across major economies remained uneven during the period. The IMF expects the United States to grow 2.3% in 2026 and 2.1% in 2027, supported by domestic demand and fiscal measures even as trade barriers weigh on activity. The euro area is projected to remain subdued at 0.9% in 2026 and 1.0% in 2027, held back by weak industrial output and high sensitivity to energy prices, while the United Kingdom is expected to slow to 0.8% before recovering to 1.3% in 2027. Japan is expected to expand modestly, although its inflation eased below the 2% target in early 2026 for the first time in nearly four years. Advanced economies linked to the artificial intelligence investment cycle, including the United States and the semiconductor hubs of East Asia, continued to outperform, reflecting an increasingly divergent global landscape between economies benefiting from technology-led investment and those more exposed to energy and supply-chain disruptions.

Global renewable energy sector overview

The global energy transition gained further scale in 2025-26. Renewable energy now sits at the centre of how countries think about energy security, industrial competitiveness and long-term decarbonisation. Falling costs, steady technology gains and faster electrification have all reinforced that shift.

Renewable energy continued to gain scale during 2025-26, increasingly becoming central to global energy security, industrial competitiveness, and long-term decarbonisation. Amid renewed volatility in fossil-fuel markets, governments are increasingly relying on domestic renewable energy to reduce their exposure to imported energy shocks.

According to IRENAs Renewable Capacity Statistics 2026, global renewable power capacity reached 5,149 GW at the end of 2025, following a record addition of 692

GW and representing annual growth of 15.5%. Renewables accounted for approximately 49% of total global installed power capacity and 85.6% of all new capacity additions during the year. Solar energy retained the largest share, with installed capacity of 2,392 GW, while the approximately 510 GW of solar PV added in 2025 represented close to three-quarters of all renewable additions. Solar and wind together accounted for 96.8% of net renewable capacity additions.

Source: IRENA, Renewable Capacity Statistics 2026.

Capacity additions, however, remained concentrated. China, the United States, and the European Union together accounted for nearly 80% of new renewable capacity in 2025, with China alone holding close to half of the worlds operational solar capacity. At the same time, non-renewable additions rebounded during the year, with China adding around 100 GW of largely coal-based capacity, reflecting the uneven pace of the global energy transition.

A major structural shift in the global energy landscape has been the improving cost competitiveness of renewable energy relative to conventional power generation. Over the past decade, the levelised cost of electricity (LCOE) for utility-scale solar declined sharply, supported by improvements in module efficiency, manufacturing scale, and financing structures, and now stands below the cost of new coal-based power generation in several markets. Battery energy storage system (BESS) costs declined on a similar trajectory, improving the viability of round-the-clock renewable power and supporting wider adoption of integrated solar-plus-storage solutions.

Source: IRENA; BloombergNEF; Lazard. Figures are indicative.

The global solar PV market remains large and continues to expand. According to Grand View Research, the market was valued at approximately

US$369 billion in 2025 and is expected to reach around US$407 billion in 2026 and approximately US$832 billion by 2033, reflecting a compound annual growth rate of close to 11%. Asia Pacific continues to account for the largest share of both the market and global manufacturing capacity.

Source: Grand View Research, Solar PV Market (2026).

The sector is also witnessing a gradual shift beyond standalone generation toward integrated energy ecosystems comprising storage, smart grids, hybrid projects, and green hydrogen. Several large economies, including India, the United States, and the European Union, are increasingly pairing capacity deployment with localisation policies aimed at strengthening domestic supply chains and reducing import dependence.

Indian economic review

The Indian economy demonstrated resilient growth during FY26, remaining the fastest-growing major economy despite the global uncertainty that intensified towards the end of the year. Real GDP grew 7.6% under the new base-year series, its fastest pace in recent years, supported by strong private consumption and investment activity. The GST rate rationalisation undertaken in September 2025 provided a visible boost to demand, with quarterly growth at 7.8% in Q1 and a six-quarter high of 8.2% in Q2.

Source: MoSPI; RBI Monetary Policy Committee, April 2026. Figures are on the new base-year series; FY27 is the RBI projection.

Inflation remained benign for much of FY26, with full-year CPI inflation estimated at around 2.1%, comfortably below the RBIs 4% medium-term target and lower than 4.6% in FY25, supported by a sharp moderation in food prices. This created room for the Monetary Policy Committee to reduce the repo rate to 5.25% by December 2025. Conditions changed in the closing months, however, as the West Asia conflict pushed up crude oil and wholesale prices. The RBI held the repo rate unchanged at 5.25% in both February and April 2026 while maintaining a neutral stance, and for FY27 it has projected slower growth of 6.9% and higher inflation of 4.6%. External conditions tightened during the period. The Indian rupee weakened past 95 against the US dollar amid higher crude oil prices, foreign portfolio outflows, and a strong dollar environment, although foreign exchange reserves remained comfortable at close to US$690 billion. Domestic institutional participation continued to support the capital markets, partly offsetting the impact of foreign selling. A trade understanding with the United States, aimed at increasing bilateral trade towards US$500 billion, further supported the medium-term outlook.

Manufacturing and investment activity remained healthy. Both Private Final

Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) recorded above-7% growth during the year, while the governments continued focus on infrastructure development, domestic manufacturing, and the energy transition supported a robust investment pipeline. Resilient services growth, combined with improving manufacturing activity, continued to support a more balanced and diversified economic structure.

Indian renewable energy sector overview

FY2025-26 was a landmark year for Indias renewable energy sector. The country recorded its highest-ever annual solar capacity addition of 44.6 GW, an increase of approximately 87% over the previous year and well above the 24 GW target, taking cumulative solar capacity to 150.26 GW as of 31 March 2026. March 2026 alone saw a record single-month addition of 6.65

GW. Total non-fossil capacity additions reached a record 55.3 GW, with wind contributing 6.05 GW. Rajasthan, Gujarat, and Maharashtra led the capacity additions.

Note: FY26 figures as at 31 March 2026. Source: MNRE; Central Electricity Authority; IRENA Renewable Capacity Statistics 2026.

The year was marked by two significant milestones. India achieved 50% non-fossil installed power capacity, five years ahead of its 2030 target, and, according to IRENAs Renewable Capacity Statistics 2026, surpassed Brazil to become the worlds third-largest country in terms of installed renewable energy capacity. Non-fossil sources accounted for 29.2% of total electricity generation during the year.

The composition of capacity additions also evolved during the year. Ground-mounted solar additions more than doubled to approximately 34.8 GW, supported by the completion of projects under the 50 GW annual bidding trajectory and the inter-state transmission charge waiver deadline of 30 June 2025. Distributed solar additions rose to 16.31 GW, with rooftop installations increasing by around 69%, driven primarily by the PM Surya Ghar scheme. Indias renewable energy ecosystem is also witnessing a structural shift from pure capacity creation toward integrated energy infrastructure comprising solar manufacturing, battery energy storage systems (BESS), transmission, and green hydrogen.

India remains committed to achieving 500 GW of non-fossil fuel capacity by 2030 and net zero emissions by 2070. Meeting the 2030 target is expected to require investments of the order of US$200 billion in generation alone, along with comparable investments in transmission and storage infrastructure. Solar energy continues to maintain a strong competitive advantage within Indias renewable energy mix, supported by abundant solar irradiation, relatively lower operating costs, modular scalability, and alignment with daytime power demand.

Indian solar manufacturing ecosystem

Indias solar manufacturing ecosystem has expanded rapidly, supported by policy measures, tariff protection, and rising domestic demand. Module manufacturing capacity increased from around 3 GW a decade ago to approximately 172 GW, of which around 145 GW is enlisted under ALMM List-I, while solar module imports declined from US$4.35 billion in FY24 to US$2.15 billion in FY25. Solar cell manufacturing capacity, however, stands at only around 27 GW, reflecting a structural gap between downstream module capacity and upstream cell production.

Source: MNRE; Mercom India, State of Solar PV Manufacturing in India 2026.

The gap has become more relevant following the implementation of ALMM List-II from 1 June 2026. Government-linked solar projects are now required to use domestically manufactured solar cells, in addition to domestically manufactured modules. With enlisted cell capacity under List-II remaining significantly lower than module manufacturing capacity, the regulation has tightened the availability of compliant domestic cells.

Against this backdrop, the Company continues to execute its capacity expansion and technology upgradation roadmap, expanding cell capacity and transitioning to TOPCon technology to serve a market in which domestic cells are expected to be both mandated and in short supply.

Sectoral growth drivers

Sources: MNRE; Central Electricity Authority; IRENA; Mercom India.

Capacity expansion and technology roadmap

The Company continues to scale capacity in step with the shift towards domestic cell sourcing. It is upgrading one of its existing Mono PERC cell lines to TOPCon technology, which will increase cell capacity to approximately 1.35 GW and increase conversion efficiency above 24.5%, with commercial production targeted for early 2027. The first 2 GW integrated cell-and-module line is targeted for 2027, followed by a further 2 GW line in 2028. On completion, the

Risks and concerns

The Company operates a structured risk management framework, overseen by the Board and its committees, to identify, assess, and mitigate the principal risks to the business. The key risks relevant to the Company and the broader solar manufacturing sector are set out below.

Upstream supply-chain dependence remains a key risk, as Indias polysilicon and wafer requirements are still largely met through imports, exposing manufacturers to price volatility and to concentration among a small number

Companys manufacturing capacity is expected to reach approximately 5.35 GW of cells and 4.55 GW of modules, strengthening its position as an integrated, technologically advanced domestic manufacturer.

Commissioned a second solar cell line at Falta in September 2025, doubling cell capacity to approximately 1.2 GW, within the planned timeline and funded entirely through internal accruals.

of global suppliers. Global oversupply of cells and modules and aggressive pricing, particularly from established overseas manufacturers, can compress realisations and margins. The pace of technological change is rapid; the transition from Mono PERC to TOPCon and other N-type technologies can shorten product life cycles and requires continued capital investment to remain competitive. The Company is also exposed to the timing and implementation of policy measures such as the ALMM

Sustained solar cell line utilisation above 90% through the year, while module line utilisation was around 74%.

Initiated the upgrade of an existing Mono PERC cell line to TOPCon technology, and approved a phased expansion of 4 GW of solar cell and 4 GW of solar module capacity to be executed through a wholly-owned subsidiary.

Strengthened the balance sheet to a net cash surplus position, supporting the planned capacity expansion.

cell mandate, as well as to currency movements and input-cost inflation that can affect project economics. The Company seeks to manage these risks through phased and largely self-funded capacity expansion, an early transition to higher-efficiency technology, prudent financial management, and a focus on the domestic market, where demand visibility is strong and domestic-content requirements are tightening in favour of integrated manufacturers.

Internal control systems and their adequacy

The Company maintains internal control systems commensurate with the size, scale, and complexity of its operations. These controls are designed to safeguard assets, ensure the accuracy and reliability of accounting records and financial reporting, promote operational efficiency, and ensure compliance with applicable laws and regulations. The

Human resources

The Company regards its people as central to its performance and long-term growth. Manufacturing operations at the Falta facility are run by a skilled technical workforce operating highly automated solar cell and module lines, supported by structured training in process control,

Companys operations are supported by a documented framework of policies, authorisation matrices, and standard operating procedures, integrated with its enterprise resource planning (ERP) system to ensure reliable transaction processing. The adequacy and effectiveness of the internal control systems are reviewed

quality assurance, and equipment handling. As the Company transitions to TOPCon technology and scales capacity, continued investment in skill development and technical training remains a priority.

The Company places strong emphasis on workplace safety and maintains periodically by the Audit Committee of the Board, supported by the internal and statutory auditors. Audit observations and recommendations are reviewed and acted upon in a timely manner. Based on these reviews, the Board is of the view that the internal financial controls in place are adequate and operating effectively.

a safe and productive working environment across its operations. It also focuses on developing local talent and strengthening its vendor and supplier ecosystem in line with the broader push towards supply-chain localisation. Industrial relations remained cordial throughout the year.

Outlook

The outlook for the coming year remains more finely balanced than the year just concluded. At the global level, the trajectory of the West Asia conflict and energy prices will determine the pace at which inflation moderates and central banks resume monetary easing. For India, growth is expected to moderate from the elevated levels of FY26 as the energy shock feeds through, although the underlying fundamentals, including resilient domestic demand, a strong investment pipeline, and policy continuity, remain intact.

For the solar sector, the medium-term outlook remains structurally strong. Declining costs, the 500 GW non-fossil capacity target, and the growing emphasis on energy security continue to support sustained demand, while the ALMM cell mandate and the PLI scheme are reshaping the manufacturing landscape in favour of domestic, technologically advanced producers. The combination of a structural shortage of domestic cells and a policy framework that incentivises local cell production is expected to define both the opportunity and the competitive landscape for Indian manufacturers over the coming years.

Cautionary statement

This Management Discussion and Analysis contains forward-looking statements regarding the Companys objectives, expectations, estimates, and projections. These statements are based on certain assumptions and expectations of future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Important factors that could affect the Companys operations include changes in economic conditions, government policy and regulation, demand and supply dynamics, input-cost and currency movements, and technological developments in the solar industry.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are advised not to place undue reliance on these statements.