Nominal contracted payments increased from September 30, 2015 to September 30, 2016 as a result of entering into additional PPAs. Over time, the Company has seen a trend towards a decline in the Central Electricity Regulatory Commission benchmark tariff for solar power procurement.

For fiscal year 2011, the Central Electricity Regulatory Commission benchmark tariff for solar power procurement was INR 17.91 per kilowatt hour. It was reduced to INR 10.39 per kilowatt hour for fiscal year 2013, which was further reduced to INR 7.72 per kilowatt hour for fiscal year 2015 and INR 5.68 per kilowatt hour for fiscal year 2016.

The overall trend of solar power tariffs is that the tariffs are declining in line with the solar module prices.

• Portfolio Run-Rate Portfolio run-rate equals annualized payments from customers extrapolated based on the operating and committed capacity as of the reporting date. In estimating the portfolio run-rate, the Company multiplies the PPA contract price per kilowatt hour by the estimated annual energy output for all operating and committed solar projects as of the reporting date.

The estimated annual energy output of the Company’ s solar projects is calculated using power generation simulation software and validated by independent engineering firms. The main assumption used in the calculation is the project location, which enables the software to derive the estimated annual energy output from certain meteorological data, including the temperature, wind speed and solar radiation based on the project location.

The following table sets forth, with respect to the

Company’ s PPAs, the aggregate portfolio run-rate and estimated annual energy output as of the reporting dates. The portfolio run-rate has not been discounted to arrive at the present value.

Second Quarter Period ended September 30, 2016 Consolidated Financial Results:

• Operating Revenue

Operating revenue grew to INR 894.9 million( US $ 13.4 million) in the second quarter period ended September 30, 2016 from INR 640.9 million in the second quarter period ended September 30, 2015, an increase of 40 % over the same period in the previous year. The increase in revenue was driven by the commissioning of new projects.

• Cost of Operations

Cost of operations increased to INR 75.4 million( US $ 1.1 million) in the second quarter period ended September 30, 2016, from INR 43.0 million in the second quarter period ended September 30, 2015, an increase of 75 % over the same period previous year. The increase was primarily due to increase in plant maintenance cost related to new commissioned projects.

• General and Administrative Expenses

General and administrative expenses during the second quarter period ended September 30, 2016 increased by INR 51.2 million( US $ 0.8 million), or 24.7 %, to INR 258.4 million( US $ 3.9 million) compared to the same period in 2015. This was primarily due to legal expenses incurred on projects and lease rent expense incurred on under-construction projects during the three months ended September 30, 2016.

• Depreciation and Amortization

Depreciation and amortization expenses during the second quarter period ended September 30, 2016 increased by INR 71.3 million( US $ 1.1 million), or 41 %, to INR 246.5 million( US $ 3.7 million) compared to the same period in period ended September 30, 2015. The principal reason for the increase in depreciation was due to new projects which were capitalized during the period from September 30, 2015 to September 30, 2016.

• Interest Expense, Net

Net interest expense during the second quarter period ended September 30, 2016 increased by INR 64.3 million( US $ 1.0 million), or 12 %, to INR 583.3 million( US $ 8.7 million) compared to the same period in period ended September 30, 2015. Interest expense increased primarily as a result of borrowings for new solar power projects operating during the three months period ended September 30, 2016.

• Loss on Foreign Currency Exchange

Foreign exchange loss during the second quarter period ended September 30, 2016 decreased by INR 246.4 million or 145 % to INR 76.1 million( US $ 1.1 million) compared to the same period in the prior year. The closing exchange rate of Indian rupees as of September 30, 2015 depreciated against the U. S. dollar by INR 1.9 to US $ 1.00 over the closing exchange rate as of June 30, 2015 while the closing exchange rate of Indian rupees as of September 30, 2016 appreciated against the U. S. dollar by INR 0.9 to US $ 1.00 over the closing exchange rate as of June 30, 2016,

www. EQMagPro. com EQ December 2016 73