Indowind Energy Ltd Management Discussions

i. INDUSTRY STRUCTURE AND DEVELOPMENTS:

During the current year, the machine availability has improved to 88% in Tamil Nadu and 95% in Karnataka ensuring optimum generation, still 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 40-45% for solar-wind hybrid projects; such projects are being successfully implemented and are performing well.

PLF (%) - INDOWIND

YE 31, March	2021	2022	2023
Tamil Nadu	9.9	11.55	12.26
Karnataka	12.95	10.75	18.99

ii. Opportunities and Threats:

Large Platform Turbines: The wind industry is seeing a strong movement toward larger turbines with foreign manufacturers now offering up to 10 MW to 15 MW platforms and Indian manufacturers up to 4 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 crore for onshore wind turbines.

Policy: The role of government policy in the growth of wind energy has been vital. Recently TANGEDCO has issued an order to phase out WEGs that are older than 20 years or sell the power generated only to TANGEDCO at a tariff determined by TNERC. This order if implemented will affect nearly 60% of the installed capacity of windmills in TN.

TANGEDCO has also proposed to stop the carryover of Banked units beyond one month which will affect the revenues of the IPPs due to the seasonal nature of the wind power generation. Both these intentions are being challenged by IWPA to protect the interest of IPPs.

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 in large measure 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 and 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 and TANGEDCO 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,the DISCOMS viz. GESCOM & HESCOM have not renewed the Wheeling & Banking agreement as per the KREDEL order hence the Generated units valued at INR 10.21 Mn during the year and 11.91 Mn during the previous year totalling INR 22.12 Mn have been kept in stock in hand to be realized. The company is following up with various departments to clear this bottleneck and is expected to realise the income during 2023-24.

<td ALIGN=RIGHT>2021-22

Revenue (INR)	2022-23
Tamil Nadu	19,50,57,610	13,01,08,219
Karnataka	9,83,48,064	4,63,05,932
Unrealised generation income in Karnataka	1,02,16,816	1,19,19,077
Karnataka Actual Total	10,85,64,880	5,82,25,009

iv. Outlook

1. Based on Board review & advise we plan adding capacities for growth by raising funds through Equity and Debt based instruments subject to valuation by adding 25 MW Wind and 25 MW Solar projects.

2. The company is pursuing legal measures to recover the delayed payments receivable from TANGEDCO and BESCOM and other recovery dues from Wes care, Wipro.

3. The company has complied payment of OTS with EXIM bank.

v. Risks and concerns

1. WEGs installed more than 25 years ago, may get affected if TANGEDCO stops machines installed above 20 years, as per their recent circular which is being disputed by all the WEG associations.

2. Reverse auction route in the wind sector, lack of financial incentives anc difficulties in finding land at windy sites and power evacuation infrastructure fo 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 o 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 early ‘90s were mostly of capacities less than 1 MW. Refraining from replacing old windmills Tamil Nadu should plan Investor attractive policy to repower older WEGs with new Higher capacity wind turbine models that use modern technology. Alone with suitable policy support and guidelines for the safe disposal and recycling of decommissioned machines, which 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 ano 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.

The performance in operations has increased the financial performance of the company.

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 therefore:

DETAILS OF KEY FINANCIAL RATIOS:

S.No. Details	FY 2022-23	FY 2021-22
1 Debtor Turnover Ratio	28.47%	45.35%
2 Inventory Turnover Ratio	10.49%	18.98%
3 Interest Coverage Ratio	1: 2.76	1: 1.16
4 Current Ratio	1: 0.92	1: 035
5 Debt Equity Ratio	1:13.49	1: 7.6
6 Operating Profit Margin	73.95%	55.52
7 Net Profit Margin	19.59%	0.73%
8 Return on Net worth	1: 024	1: 0006

The Return on Net Worth as compared to the immediately previous financial year has a significant change due to the Issue of shares on Rights Basis.