BORORENEWNSEQ4 FY2022May 10, 2022

BOROSIL RENEWABLES LIMITED

8,052words

125turns

15analyst exchanges

5executives

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Management on call

Kevyn Kadakia

AXIS CAPITAL LIMITED

P K Kheruka

EXECUTIVE CHAIRMAN - BOROSIL RENEWABLES LIMITED

Ashok Jain

WHOLE TIME DIRECTOR - BOROSIL RENEWABLES LIMITED

Sunil Roongta

CHIEF FINANCIAL OFFICER - BOROSIL RENEWABLES LIMITED

Swapnil Walunj

HEAD OF MARKETING - BOROSIL RENEWABLES LIMITED

Key numbers — 40 extracted

Rs.644.2 Crore

een uploaded on the company's website. During the year gone by, the company recorded net sales of Rs.644.2 Crores, an increase of 28% over FY2021. Sales volumes on a quantitative basis grew by 11% over the year

28%

ite. During the year gone by, the company recorded net sales of Rs.644.2 Crores, an increase of 28% over FY2021. Sales volumes on a quantitative basis grew by 11% over the year. Net sales were also

11%

of Rs.644.2 Crores, an increase of 28% over FY2021. Sales volumes on a quantitative basis grew by 11% over the year. Net sales were also boosted by higher average ex-factory prices of tempered solar

Rs.133

factory prices of tempered solar glass during the year. Average prices during the year were about Rs.133 per millimeter per square meter as compared to Rs.119 per millimeter per square meter in FY2021, a

Rs.119

. Average prices during the year were about Rs.133 per millimeter per square meter as compared to Rs.119 per millimeter per square meter in FY2021, an increase of 12%. Export sales during FY2022 includin

12%

per square meter as compared to Rs.119 per millimeter per square meter in FY2021, an increase of 12%. Export sales during FY2022 including to customers in SEZ were Indian Rs.171 Crores comprising

Rs.171 Crore

FY2021, an increase of 12%. Export sales during FY2022 including to customers in SEZ were Indian Rs.171 Crores comprising 27% of the turnover, an increase of 55% over FY2021 while direct exports were Rs.12

27%

. Export sales during FY2022 including to customers in SEZ were Indian Rs.171 Crores comprising 27% of the turnover, an increase of 55% over FY2021 while direct exports were Rs.127 Crores up from R

55%

ding to customers in SEZ were Indian Rs.171 Crores comprising 27% of the turnover, an increase of 55% over FY2021 while direct exports were Rs.127 Crores up from Rs.67 Crores in FY2021. During the la

Rs.127 Crore

Crores comprising 27% of the turnover, an increase of 55% over FY2021 while direct exports were Rs.127 Crores up from Rs.67 Crores in FY2021. During the last quarter of FY2022 the company recorded net sales

Rs.67 Crore

% of the turnover, an increase of 55% over FY2021 while direct exports were Rs.127 Crores up from Rs.67 Crores in FY2021. During the last quarter of FY2022 the company recorded net sales of Rs.179.1 Crores.

Rs.179.1 Crore

from Rs.67 Crores in FY2021. During the last quarter of FY2022 the company recorded net sales of Rs.179.1 Crores. From a quantitative standpoint, sales volumes were 2% higher than for the same quarter in the l

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Guidance — 20 items

P K Kheruka

opening

“As many of you are aware, the company has undertaken a Brownfield expansion project SG3 to enhance the capacity by another 550 tons per day bringing the total production from this location up to 1000 tons per day during the second half of this year.”

P K Kheruka

opening

“We expect a significant jump in the demand for solar glass in Europe in view of the enhanced focus by the governments to reduce dependence on Russian gas and Chinese solar components.”

P K Kheruka

opening

“There is a plan to increase the capacity at the Interfloat plant from 300 to 500 tons per day in the next 18 months.”

Mohit Kumar

“The first question is on the GMB plus Interfloat, which you are acquiring, so what was the margin in FY2022 for the entity and how do you plan to improve it and is there any plan to increase the capacity for Interfloat and GMB over medium term?”

P K Kheruka

“We are renegotiating prices with our customers and after some time once the horizon becomes clear, we will be very happy to share the outlook with you.”

Ashok Jain

“The closing of the transaction is yet to take place, which will be two months plus down the line.”

Ashok Jain

“So, commissioning of our SG3 project by September is well-timed.”

Ashok Jain

“We believe that we will be able to conclude some of these contracts within this quarter.”

Keval Ashar

“First is related to your German acquisition, what is the annual solar PV addition in the European market that we expect and second is what percentage of total solar glass requirement in Europe is currently imported?”

Keval Ashar

“Got it Sir and the second is in India as you see many module manufacturers are aggressively expanding the capacity post the BCD and also by CY2025 we will be able to cater to 15 gigawatts of solar modules in India, so what is the possibility of us signing annual contracts with all these large model manufacturers?”

Risks & concerns — 6 flagged

This is a decline of 31% as compared to Q4 of FY21 which was an exceptionally higher base quarter driven by the then prevailing high prices of solar glass.

— P K Kheruka

The issue with Interfloat is that during the current year, the prices of inputs like natural gas, electricity and soda ash, had gone up like for everybody else and therefore that has brought margins under some pressure.

— P K Kheruka

Sale of the extra production will not be a challenge.

— Ashok Jain

That is why you see that there has been a decline in the last quarter, but as we speak the prices have again started to go up from the level prevailing in the last completed quarter.

— Ashok Jain

Okay, so you feel that margin pressure would continue even in Q1?

— Dhiral

Second thing our production is at one site only, so are you going for any multi locations to dealing from the single site risk?

— Samir Gandhi

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Q&A — 15 exchanges

Good afternoon, Sir and congratulations on a very good quarter especially the fiscal year. The first question is on the GMB plus Interfloat, which you are acquiring, so what was the margin in FY2022 for the entity and how do you plan to improve it and is there any plan to increase the capacity for Interfloat and GMB over medium term?

P K Kheruka

We have not shared the margin with anybody yet. I can just say it was very good. Once we take a call to share this information, we would certainly share it. The issue with Interfloat is that during the current year, the prices of inputs like natural gas, electricity and soda ash, had gone up like for everybody else and therefore that has brought margins under some pressure. It is still profitable, but the margins have reduced somewhat. We are renegotiating prices with our customers and after some time once the horizon becomes clear, we will be very happy to share the outlook with you. We must

Thanks for the opportunity, Sir. I have two questions. First is related to your German acquisition, what is the annual solar PV addition in the European market that we expect and second is what percentage of total solar glass requirement in Europe is currently imported?

Ashok Jain

Annual addition in Europe is close to 20 gigawatts, but local manufacturing is quite limited as of now. It is less than 3 gigawatts. Similar to the Indian program of “Atmanirbhar Bharat”, they also have “Solar Accelerator Program” where local module manufacturing and local solar cell manufacturing are being promoted. We believe that the local manufacturing of solar modules will go up to 8 to 10 gigawatts in the next two to three years’ time and this will propel the demand for solar glass in Europe. This is one of the reasons why we have taken this step of getting into this acquisition and are

Thanks for the opportunity, Sir. You mentioned about the average expected price of tempered solar glass for the entire year as a 133. Could you just quantify it for the quarter and for the corresponding quarter of previous year as well?

Ashok Jain

We already mentioned that the Q4 FY2022 realization has been lower by 14% compared to the corresponding quarter in the previous year. In terms of the number for this quarter, it was about the same as the average of the full year. 133 around. Rs.134 actually. Okay, but this is slightly lesser than what we saw during the Q3. Q3 saw the number rising slightly above 140 and factoring the thing that the input cost has already gone up, any reason why the realization was down by 4% on a Q-On-Q basis whereas it has been much higher? As we have been explaining in all our investor calls, the prices larg

Sachin· Birla Mutual Fund only

I am Sachin from Birla Mutual Fund only. I just want to ask the question, last quarter margin got impacted because of increase in the input cost mainly the fuel cost, soda ash and gas prices, so considering the fact that the Borosil Renewable is the only manufacturer in India, is it not possible to pass the price onto the end user? That’s it from my side.

Ashok Jain

This question is to be answered in the same way as we indicated earlier. Import prices are the governing factor for the prices which we can get from our customers in India. All said and done, we tried to pass on the post increases, but again we are restricted by the landed cost because the customers have a choice to import. We also have to assume that there is a certain time lag between the cost increases and the time to adjust any selling prices because you have to convince the customers to absorb a certain portion of the cost increases. We are in continuous dialogue with our customers to do

Sellers are actually not from a glass manufacturing background and they are basically financial investors. They are not a glass manufacturer and were looking at the capex plan, which was in front of them. They also looked at what Borosil Renewables had been doing in the same space and they were quite comfortable in talking to us on the particular transaction and they also saw that we have been doing quite well in terms of our production, our profitability. They cross checked our background and everything and the transaction got finally negotiated and concluded. In terms of their thought proces

Management

Good afternoon, Sir. Thanks for the opportunity. How are we looking to fund the expansion that we are planning for Europe as well as for our SG4 and SG5?

Ashok Jain

For the European expansion, we are still calculating the capex requirement. The existing team has worked out some numbers which we are evaluating. We are looking at the project design itself and there could be certain changes there. In terms of the financing of the overall project cost there, we will be taking certain amount of loan in the target company. There is also some government subsidy from the state government over there, which will be utilized for the project and some amount of funds will be provided from internal accruals which have been accumulated in the company. This is the likely

Thank you very much for the opportunity. A couple of questions from my side. One, this 1000 TPD capacity would be equivalent to, how many megawatts if we were to compare to that?

Ashok Jain

It will be close to 6 gigawatts plus. Second question is on this again, Interfloat in the last question you mentioned that it is about the market share of Interfloat is about two-third, if I got the numbers correctly you said total the size of European market is about 20 gigawatts of which domestic production is about three gigawatts and of that three gigawatts, Interfloat is about two-thirds? Yes, so total manufacturing is about 2.5 to 3 gigawatts and whatever the Interfloat production is taking place, the entire production is getting sold in Europe and that would be equal to about 65%, 66% o

Thanks for taking my question. Sir I wanted to understand regarding this Interfloat acquisition like in India, the pricing power we have is based on the landed cost of imports, so in Europe how is the pricing power like you did mention that their local manufacturing is favored by the local population, so can you throw some light on that?

P K Kheruka

In Europe, the domesticity of the source of supply is very important and therefore in the case of many consumers who are large volume consumers they do not compare the prices with imported prices. That is done mainly by the smaller producers. There is a system of pricing, system of buying there is a little bit different. Particularly in Germany and other parts, there are annual contracts done by the Interfloat Group with its customers. The customers want a dependable supply source and also a consistent volume coming to their factories because solar glass after all is about 11%, 12% of the cost

Good afternoon. Thank you for the opportunity. Most of the questions have been answered. I just wanted to understand; I will repeat my questions. I wanted to probably get some color on the normalized EBITDA margins of Interfloat if you could share like is it better than Borosil or similar to Borosil I can understand the current challenges that are depressing the margins, you could probably share some color on that and second thing Sir, we made an acquisition at the time when the gas supplies are really challenging for the glass manufacturers in Europe, so is it getting better or do we see some

P K Kheruka

The production is not unutilized; all the glasses being made are sold. There is no shortage of demand for the glass, so that is to answer your last question first. Giving you any sense of the normalized margin is premature at this time because we really need to be in control of the company before we can share this information. Regarding your question, which was regarding the prices of gas in Europe, the answer is that the government is very acutely seized of this problem. They recognize that the price of gas is very high and something has to be done to protect the industries, which are depende

Thanks for the opportunity. Sir, my question was on the exports market so what we read and understand is that post this imposition of duties in US specifically on the Chinese and other South Asian countries the import of panels as well as glass, there has been a very good demand that we have seen from the US market for the local players, but when we look at our revenue, our exports are like 20% of sales and that is also predominantly to Europe is what I understand, so is there a mismatch in terms of our growth from US versus domestic cell and model players the kind of growth that they are seei

Ashok Jain

In US actually, there is no bar on imports as of now because the program which they had announced to promote the local manufacturing of modules by giving incentives has not been finally approved by the senate yet. So, they do not have any support system for local manufacturing of module as of now. There is some disconnect in the thought process I think and since a large extent the modules are getting imported, the local manufacturing is very limited in USA as of now. To our understanding, it is about two to three gigawatts only whereas they install more than 20 gigawatts annually. It is simila

Good afternoon. Thanks for giving me an opportunity. Sir, I am director of this manufacturer association of Maharashtra also for the solar. I have a few questions. Sir, first thing is after BCD is imposed 40% even DCR panels, which do not have any import contents they have also gone up, so whether Borosil has any opportunity to get a better price realization in a way whether this 40% BCD is positive for us or negative for us?

P K Kheruka

It is definitely positive for the nation as such because this means that it will become prohibitive for anyone to import modules going forward. As such, the demand for modules produced in India is going to expand exponentially, so in that sense it is good for the solar manufacturing industry. However, the 40% duty on modules does not have anything to do with the import of glass. Glass can continue to be imported by anybody from anywhere subject to payment of whatever is the applicable duty if there is any. If there is no applicable duty, then glass can be imported without payment of duty. So,

Thanks for the opportunity once again. Do we need to raise external money to expand the capacity to till 2000 TPD?

Ashok Jain

Yes, as I had mentioned, the board will actually consider the SG4 expansion at an appropriate time and we will surely be looking at financing by way of debt and equity both. At that point in time we may probably decide to raise some equity, but as of now that is not there. From the point of view of funding the acquisition also, there is a discussion about raising equity to pay the money in a couple of months or maybe sometime later, but these are still to be finalized. We will surely be needing some capital to complete our expansions in Europe as well as here. Secondly Sir, the drawn debt amou

Thanks for taking it back in the queue. Just one small question, so what is the price differential between us and Chinese solar glass manufacturers currently?

Ashok Jain

The FOB prices are different, but in terms of their local pricing we have to look at the landed cost. We sell to most of the large buyers in India at the comparative landed cost plus something and to other customers who are smaller ones, we have slightly higher pricing for them, which is about 5% to 10% depending on case-to-case basis. Okay sir, is it 5% to 10% of price differential between Chinese players I did not get the exact number? For the smaller customers yes, but for the larger customers it will be 2% to 5% may be. Thanks a lot. All the best for the coming quarters.

My questions have been answered. Thank you.

Management

Thank you very much for the interest shown in the performance of our company and we appreciate all the good wishes, which have been given and it is with the support of the investor community that we can continue to grow and flourish. We appreciate your support. Thank you very much.

Management

Speaking time

Ashok Jain

Moderator

P K Kheruka

Mohit Kumar

Kashyap Javeri

Keval Ashar

Anuj Upadhyay

Dhiral

Levin Shah

Akshay Kothari

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Opening remarks

Kevyn Kadakia

Thank you Faizan, Good afternoon, everyone. I am Kevyn Kadakia part of research for capital goods and logistics sectors of Axis Capital. On behalf of Axis, I am pleased to welcome you all for the Borosil Renewables Limited quarter and full year ended March 2022 earnings conference call. We have with us the management team today from Borosil Renewables which is represented by Mr. P K Kheruka, Executive Chairman, Mr. Ashok Jain, Whole Time Director, Mr. Sunil Roongta, CFO and Mr. Swapnil Walunj, Head of Marketing. We will begin with the opening remarks from Mr. Kheruka followed by Q&A session. Thank you and over to you Sir.

P K Kheruka

Good afternoon and welcome to the Borosil Renewables FY2022 investor call. It is a pleasure to be interacting with you once again. The board of the company approved the company's financial results for fourth quarter for the year 2022 and for the whole year ended March 2022 as well on May 5, 2022. Our results and an updated presentation have been sent to the stock exchanges and have also been uploaded on the company's website. During the year gone by, the company recorded net sales of Rs.644.2 Crores, an increase of 28% over FY2021. Sales volumes on a quantitative basis grew by 11% over the year. Net sales were also boosted by higher average ex-factory prices of tempered solar glass during the year. Average prices during the year were about Rs.133 per millimeter per square meter as compared to Rs.119 per millimeter per square meter in FY2021, an increase of 12%. Export sales during FY2022 including to customers in SEZ were Indian Rs.171 Crores comprising 27% of the turnover, an increase

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