50% Growth Should Imply A 50% Increase In Revenue Potential: Borosil Renewables | CNBC TV18

Summary

Borosil Renewables plans a 50% increase in solar glass manufacturing capacity, aiming to expand from 1,000 tons to 1,500 tons per day. Executive Chairman Pradip Koka discusses the potential revenue increase, expected to rise by 50%, despite current price challenges due to dumping. The company is funding the expansion through a combination of internal accruals and a preferential share allotment. The new capacity is expected to be operational in 18-21 months, with gradual revenue growth. Koka also hints at the possibility of further expansion and benefits from global market changes, especially the reduction of excess capacity in China.

Takeaways

• 😀 Borosil Renewables announced a 50% expansion in solar glass manufacturing capacity, increasing its capacity from 1,000 tons to 1,500 tons per day.
• 😀 The company expects a 50% increase in revenue from the expanded capacity, although lower selling prices in the market may impact the exact revenue increase.
• 😀 The company's revenue potential may improve as solar glass prices recover, but it’s uncertain if prices will fully reach the minimum import price level.
• 😀 The 50% capacity increase is backed by support from the Indian government, ensuring a level playing field for the Indian solar industry.
• 😀 The expansion will require a capital expenditure (capex) of approximately ₹675 crores, based on pricing from over two years ago.
• 😀 Borosil Renewables plans to fund the expansion primarily through a combination of internal accruals and a preferential allotment of shares, raising ₹700 crores.
• 😀 The company expects the expanded capacity to come on stream in 18 to 21 months, with production likely ramping up quickly due to the efficiency of the new furnace.
• 😀 Profitability from the new capacity is anticipated to be achieved swiftly due to low setup costs and an efficient design, though specific profit estimates remain uncertain.
• 😀 The expansion is expected to result in approximately ₹600 crores in additional annual revenue once the increased capacity is fully utilized, with gradual ramp-up starting in 18 to 21 months.
• 😀 Borosil is considering a further expansion of another 500 tons, which could require less capex compared to the current expansion, offering better return on capital employed.
• 😀 Global solar glass capacity, especially in China, is being reduced due to oversupply, which could help improve prices in the market and benefit Indian manufacturers like Borosil.

Q & A

What is Borosil Renewables' expansion plan for solar glass manufacturing?

Borosil Renewables plans to increase its solar glass manufacturing capacity by 50%, raising its production from 1,000 tons per day to 1,500 tons per day.

How much additional revenue does Borosil expect from the expanded capacity?

With a 50% increase in capacity, Borosil expects a corresponding 50% rise in revenue, though market conditions, including low prices, may affect the total revenue.

What are the current challenges impacting Borosil's revenue?

The main challenge is the low prices due to dumped solar glass, which have led to reduced turnover despite the increased capacity.

What is the estimated cost for the capacity expansion and how will it be funded?

The expansion is estimated to cost ₹675 crores, which will be funded through a combination of internal accruals and a preferential allotment of shares raising ₹700 crores.

When does Borosil expect the new manufacturing capacity to come online?

Borosil expects the new manufacturing capacity to come online within 18 to 21 months.

Will the expanded capacity be profitable immediately?

It is uncertain whether the expanded capacity will be immediately profitable, as the company anticipates gradual price recovery, but the initial production ramp-up should be efficient.

How does Borosil view profitability based on their expansion plan?

Borosil is cautiously optimistic about profitability. The company expects to achieve rated production promptly due to their efficient furnace design, though the market dynamics remain a significant factor.

What is the total revenue that Borosil expects from the increased capacity on an annualized basis?

Borosil anticipates an additional ₹600 crores in annual revenue, with around ₹130 crores of additional revenue on a quarterly basis once the new capacity is fully ramped up.

What does Borosil plan for future growth beyond the current expansion?

Borosil has indicated that there is additional space for another 500 tons of production in their existing facilities, but the decision for further expansion will depend on future market conditions.

How is the solar glass market expected to evolve in the coming years?

Borosil expects that the global solar glass market will see some price relief due to the winding down of excessive production capacity in China, which has led to a price correction in the solar value chain.