Inox Wind Ltd

Dear Shareholders,

At INOXGFL Group, we firmly believe in the value of sustainable growth. All our group companies, in their respective journeys, have strived to be value-accretive for all the stakeholders, be it our shareholders, creditors, vendors, employees or the communities in our areas of operations. Moving towards larger scales, our companies will remain steadfast in their growth strategies, and mindful of our stakeholders' expectations.

I am pleased to present the Annual Report of Inox Wind Limited for the financial year 2022-23. The current macro-environment has created several opportunities, while at the same time posing its own sets of challenges.

Countries around the world have adopted a stronger stance towards climate action plans. With dedicated policies and greater emphasis on minimising the carbon footprint, renewable energy is currently the primary means for leading energy transition efforts. India has been among the forefront when it comes to embracing renewable energy, ranking fourth globally with >125 GW of installed renewables capacity. It also has the fourth largest installed wind capacity globally, with a plan to add >100 GW over the next decade.

India's wind sector is poised for a decadal growth journey. Almost all of the policy issues which plagued the sector over the past few years have been resolved and is evident in the radical changes which the macro environment has witnessed over the past year. Wind power in India has several benefits, including but not limited to – 1) among the cheapest sources of clean power (lower than India's APPC), 2) large onshore potential, 3) fixed tariffs for 25 years, 4) domestic manufacturing capacity with limited forex outgo, 5) no subsidy support except for ISTS charges waiver applicable up to Jun'25.

At INOXGFL Group, we realise the immense potential of wind energy in India, given the medium-term 500 GW non-fossil fuel capacity target by 2030 and long-term Net Zero target for 2070, which the Government has declared. The 250 GW renewables bidding trajectory announced by the government over FY24-28, which includes at least 50GW of wind bids and 50 GW of hybrid/RTC bids, provides a clear mandate and the pathway towards the 500GW RE target for 2030. It further affirms the opportunities which the wind sector in India presents to participants. We believe that Inox Wind, on the back of the immense upcoming opportunities, will continue to be a key contributor providing sustainable and affordable energy solutions for the country.

IWL is ready for its next leg of growth with the Type Certificate for its new 3.3 MW WTG in place. IWL expects to start the supplies of the revolutionary new product shortly, and I believe this will result in substantial upscaling of execution leading to profitability for the company.

Over the past year, we've taken several strategic decisions in order to strengthen IWL's position and ready it to benefit from the macro tailwinds which are now in action. IWL's balance sheet has been significantly strengthened and deleveraged through capital infusion at various points of time by promoters as well as other long-term investors. Further, IWL's promoters were able to successfully raise ~ Rs 500 crores by way of equity share sale of IWL through block deals with long-term investors on the stock exchanges in August 2023, which was subsequently infused into IWL.

November 2022 saw the successful listing of Inox Green Energy Services Ltd., India's only pureplay O&M services company, on both the stock exchanges. The company, which is a stable annuity growth platform having long-term cash flow visibility, is positioned strongly to benefit from both organic growth opportunities through its synergistic relationship with IWL, and inorganic growth opportunities as well.

The approval of merger of IWEL with IWL was another key strategic announcement made over the past year.

Once completed, the merger will aid in simplifying the structure of INOXGFL group's renewables business segment and bringing about operational and administrative efficiencies.

Looking ahead, I believe Inox Wind is on course to witness substantial growth and deliver profitability, a much welcome change made possible due to all-round efforts of all our stakeholders.

I would like to express my sincere appreciation to the Board of Directors for their continued guidance. I would also commend our team's dedication and commitment to excellence. The invaluable trust of our shareholders as well as numerous stakeholders continues to be the guiding light in the journey of Inox Wind.

Thank you all for your continuous support.

Dear Shareholders,

It gives me immense pleasure to present to you the FY2022-23 annual report of Inox Wind. Your company stands today as one of the leading players in the Indian wind energy sector. Having faced several challenges over the past few years, I believe Inox Wind today is a substantially stronger and more resilient company, ready for a multi-year growth journey.

The accelerated deployment of renewable energy in India continues to uncover new opportunities for us on a large scale. The Indian government remains focused on ramping up renewable capacity in India to 500 GW by 2030. Honourable Prime Minister Shri Narendra Modi has been a strong advocate for sustainable growth through clean energy at all the global platforms. At COP26 of the UNFCCC held in Glasgow, United Kingdom in February 2022, India presented the following five nectar elements (Panchamrit) of India's climate action: 1) Reach 500 GW non-fossil energy capacity by 2030, 2) 50 per cent of its energy requirements from renewable energy by 2030, 3) reduction of total projected carbon emissions by one billion tonnes from now to 2030, 4) reduction of the carbon intensity of the economy by 45 per cent by 2030, over 2005 levels and, 5) achieving the target of net zero emissions by 2070. I believe this will form the base around which all our policies and strategies will be formulated over the course of the next decade and beyond.

In addition to the aforementioned targets, another major factor aiding the growth of the renewable energy industry in India is the power demand growth itself. Post-covid, India's power demand has witnessed tremendous growth. From the lows of around 120 GW during the covid period in 2020, India's peak power demand has almost doubled in 2023. Given the strong growth outlook for India over the next decade, affirmed by most global agencies, low per capita power consumption base, rapid urbanisation, electrification of the economy and other favourable factors, I believe that India will continue to witness robust growth in the demand for power over the next several years. Majority of this demand will be met through renewable capacity addition.

India's commitment towards its renewable energy targets have resulted in several policy and regulatory changes being implemented over the recent past. To facilitate faster capacity addition in the country's journey towards achieving 500 GW of RE capacity, the MNRE has already set a trajectory for the auction of 250 GW of capacity – 50 GW annually – from FY23-24 to FY27-28. This includes 10 GW plain vanilla wind power bids, and 10GW of hybrid/RTC bids, annually. Together with the state bids, C&I, retail demand and green hydrogen initiatives, it is anticipated that approximately 100 GW wind power capacity may be commissioned by the end of 2030. With the current wind capacity at 43 GW, this addition will take the total installed capacity of wind energy to >140 GW by 2030. Recently, the MNRE has also revised its auction process for wind energy projects to move from reverse auctions to closed bidding. However, irrespective of the bidding modalities, wind tariffs being discovered in the latest auctions are favourable for all the stakeholders – discoms, developers and OEMs.

The conducive macro environment provides a remarkable opportunity for existing players within the wind energy sector. At Inox Wind, we stand at the forefront to capitalise on these opportunities. We are witnessing increased interest for our WTGs, particularly from Public Sector Units (PSUs), Independent Power Producers (IPPs), Retail, and Commercial & Industrial (C&I) segments of the market, for both turnkey projects and equipment supply orders. This has helped us to significantly build our order book. As of 30th June 2023, our net order book stood at 1327 MW, aided by the addition of a 150MW follow-up order from NTPC and a 100MW order from ABEnergia Renewables in Q1FY24. The execution of these orders will result in substantial revenue growth for our company over the next few quarters, reinforcing our position in the wind OEM market.

Our newest product offering – 3.3 MW WTG – has received type certificate from TUV SUD, a global certification body based out of Germany. We are preparing to commence serial shipments of the WTG within FY24. Our 3.3MW WTG has been developed with globally renowned AMSC as the technology partner and features a 100 m tubular tower and 145 m rotor diameter. The turbine is built for Indian wind conditions. We already have orders in place for the new product and are in discussion with several customers for future orders as well. I believe this state-of-the-art new product offering will be the growth and profitability engine for IWL for the next several years.

One of the major focuses for the company over the past year has been to strengthen and deleverage its balance sheet. Through strategic infusion of capital at various points of time by promoters as well as other long-term investors, the company now stands at a much healthier position. Further, IWL's promoters were able to successfully raise ~ Rs 500 crores by way of equity share sale of IWL through block deals with long-term investors on the stock exchanges in August 2023, which was subsequently infused into IWL and utilized towards deleveraging.

I would also like to add here about another remarkable achievement during the year related to one of our subsidiaries, Inox Green Energy Services Limited (IGESL). In November 2022, we successfully listed our O&M subsidiary, a significant step towards monetising our O&M business, on the stock exchanges through IPO. The proceeds from the IPO were strategically utilised to reduce IWL's debt. Further, IGESL acquired 51% stake in I-Fox Windtechnik India Private Limited, an independent O&M service provider, resulting in IGESL acquiring third-party O&M servicing capabilities and enhancing its business scope beyond IWL's WTGs. IGESL's cumulative O&M portfolio stood at > 3.1 GW as of FY23-end. The company has robust plans for growth through both organic and inorganic means.

We have successfully commissioned the 50 MW Nani Virani SPV, which now presents a valuable opportunity to monetise the asset, leading to deleveraging and optimising the financial health of our wind business.

As a fully integrated player in the wind energy sector, we are driven by our robust manufacturing capabilities, common infrastructure ownership and development expertise, as well as our EPC and O&M service offerings. To deliver cutting-edge wind energy solutions, we are constantly focusing on technology adoption to live up to our commitment of offering best-in-class wind energy solutions to our customers.

To achieve our objectives and strengthen our position in the industry, we strive to foster an enabling working environment in our company. By offering multiple opportunities for professional growth and development, we intend to nurture a motivated and engaged workforce which plays a pivotal role in supporting our endeavours and shaping our future. I remain extremely thankful to each one of our employees for their resilience and determination to fulfil organisational objectives.

In closing, I would like to express my sincere gratitude to all our shareholders, clients and other stakeholders for their steadfast belief in our capabilities. Your trust and support inspire us to aim higher and accomplish new milestones.