Good afternoon, ladies and gentlemen. I'm Kritika, moderator for the conference call. Welcome to Borosil Renewables Limited Q1 FY 2023 earnings call hosted by Axis Capital. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note this conference is recorded. I would now like to hand over the floor to Mr. Sumit Kishore of Axis Capital. Thank you, and over to you, sir. Thank you, Kritika. Good afternoon. On behalf of Axis Capital, I'm pleased to welcome you all for the Borosil Renewables Q1 FY 2023 earnings conference call. We have with us the management team of Borosil Renewables, which is represented by Mr. P. K. Kheruka, Executive Chairman, Mr. Ashok Jain, Whole-time Director, Mr. Sunil Roongta, Chief Financial Officer, and Mr. Swapnil Walunj, Head of Marketing. We will begin with the opening remarks from Mr. Kheruka, followed by an interactive Q&A session. Over to you, sir. Good afternoon and welcome to the Borosil Renewables quarter 1 financial year 2023 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 quarter 1 on August 9. Our results and an updated presentation have been sent to the stock exchanges and have also been uploaded on the company's website. During quarter 1 financial year 2023, the company recorded net revenue from operations of INR 170 crore, a growth of 25% over the same quarter in the last year. Sales volumes on a quantitative basis also grew by 23%. Solar glass in the domestic market has been strong, has seen strong demand as the manufacturing of domestic modules has picked up ever since the customs duty on import of modules came into force from April 2022, which is also evident from the surge in imports of solar glass in this quarter due to limited availability domestically. Export sales during quarter one financial year 2023, including to customers in SEZ, were INR 39.5 crores, comprising 23.3% of the turnover. Here again, the demand is extremely robust. Average prices of solar tempered glass during the current quarter were INR 140.8 per millimeter, which is around the same level as in quarter one financial year 2022. However, as you are aware, prices do vary based on the global demand and supply equation. The average selling prices have shown some improvement, and the same were higher as compared to the immediately preceding quarter, which is quarter 4 financial year 2022, by about 4.5%. I've been mentioning about rise in input costs, mainly the soda ash and natural gas costs, over the past 2 quarters in view of global situation. We have seen a partial impact in the immediately preceding quarter, and now a significantly higher impact in the current quarter. On the other hand, the increase in selling prices has covered only a part of the increase in costs. The company has been making efforts to reduce the impact in costs by increasing production and achieving cost savings in raw materials and electricity to some extent. We believe such decline in margins have been faced by our competitors as well. During quarter one financial year 2023, the company earned an EBITDA of INR 51.3 crore. The EBITDA margin at 30.2% has suffered a decline of 2,000 basis points owing to cost inflation in raw materials and energy as above. We believe that the EBITDA margin during quarter one financial year 2022 at 51.1% was abnormally high. A more sustainable level of EBITDA margin would be lower as mentioned in my earnings call. The company has existing contracts in some inputs such as soda ash and natural gas till December 2022 at prices that are favorable as compared to current market prices. The company continues to actively work on various cost optimization and efficiency improvement initiatives. However, margins would also depend on how unit selling prices of imports behave, as the country is importing almost 75% of the requirement of solar glass as per latest data. This will of course have a bearing on global demand supply situation of solar glass. The anti-dumping duty on import of solar glass from China is due to expire on 17th August 2022. We expect a new notification for continuation of the duty for another two years. During quarter 1 financial year 2023, company earned a profit before tax of INR 40.3 crores. The profit after tax was INR 30.1 crores as compared to INR 39.6 crores during the corresponding quarter in the previous year, a decline of 24%. The demand for solar glass remains high in both the domestic and export markets. As I mentioned in the last quarter, the current geopolitical climate has heightened the need for energy security for each country by enhancing solar capacities available from domestic production. Policy and fiscal measures undertaken by the government in the recent past are encouraging a rise in solar installations in the country, which is evident from the order pipeline for solar installations. We believe the domestic manufacturing of solar modules will rise to a significantly higher percentage of installation, which augurs well for the demand for solar glass. Ministry of Power published a Green Energy Open Access policy as Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 in June 2022. This policy also likely to benefit the domestic solar module manufacturers, OEMs. Since the open access and net metering rooftop solar projects will need to source solar modules from the vendors listed in ALMM, Approved List of Models and Manufacturers, starting first October 2022. Presently, only domestic OEMs are approved under ALMM. This is expected to increase domestic manufacturing and demand for solar glass. During financial year 2022, the average pull of glass from our furnaces was 449 tons per day on a capacity of 450 tons per day. This would mean 100% of capacity was being drawn on an average basis. We have been producing at capacity and selling out the entire production. We are therefore keenly looking forward to the commissioning of our greenfield expansion project, SG3, that will enhance the capacity by another 550 tons per day. Global supply chain bottlenecks have delayed the commissioning by three months. We now anticipate that the project can be commissioned by October 2022. We expect to take up the next expansion by way of SG4 of 1,100 tons per day in the immediate future. An approval of shareholders has been sought for raising equity up to INR 1,100 crores by issuing new shares. Last quarter, we had announced the acquisition of 100% stake in Interfloat Group, the largest solar glass manufacturer in Europe. The closing of transaction has been held back due to leakage in the furnace of GMB in the last week until we assess the impact of the same on the transaction. Accordingly, the resolution for issue of shares to sellers on a preferential basis has been withdrawn from the ensuing meeting of the shareholders being held on 11 August. In the meantime, we continue to believe that the demand for solar glass in Europe is on the rise and has good potential. In the meanwhile, we are trying to integrate the teams to achieve expected efficiencies in the operations at GMB and BRL. We have acquired or floated two wholly owned subsidiaries in Europe, which will act as SPVs for this transaction. BRL is conscious of the need to make its operations further more environment friendly. We are setting up a 10-megawatt captive power plant of solar plus wind energy through an SPV, in which BRL will have 31.2 shareholding, 31.2% shareholding. This project is expected to be commissioned by December 2022, and BRL will be able to use this green power besides reducing the cost. We are also looking at further opportunities to tap the potential to use solar plus wind power. The overall demand situation for solar glass is looking to be extremely robust, both in India as well as in other important markets like Europe, USA and Turkey. We see growth opportunities for meeting this requirement. Most nations are trying to raise domestic production of solar cells and modules, and also trying to reduce dependence on Southeast Asia, which places India in an advantageous position for exports as well, particularly due to the fact that there are no serious capacities in other markets to produce solar glass. Our step of having manufacturing in Europe through Interfloat GmbH fits in well. All in all, we remain bullish on the growth. With that, I would now like to open the floor to questions that you may have. Thank you, sir. Ladies and gentlemen, we will now begin the question- and- answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask a question. If you would like to withdraw your request, you may do so by pressing star and one again. I repeat, if you have a question, please press star and one on your telephone keypad. First question comes from Mohit Kumar from DAM Capital. Please go ahead. Three questions on my side, sir. What is the duty structure at this point of time? Is there no duty as an import duty? Is that the right understanding? There is no basic customs duty on the import of solar glass. Having said that, there is an anti-dumping duty on imports of solar glass from China, which is at the very least about 10%-11%. It goes up to 60% for different manufacturers. There's a countervailing duty on import of solar glass from Malaysia, which is just under 10% at about 9.71%. There is no import duty on import of solar glass from Vietnam. Understood, sir. Second is around the 10 megawatt second capacity or SG3 is about to commission. How do you intend to tie up for gas? Is it mostly spot or you can add other alternative to the gas? I'm sorry, I couldn't quite follow your question. No, no, sir. Do you intend, so given the fact that SG3 will be up and running in some time? Yes. Do we need to plan for the gas requirement for medium-term or long-term, or do you intend to continue buying on the spot basis? Or is there any other alternative to fire up furnaces? All our furnaces have dual fuel capacity. Dual fuel capacity means that we can use at the minimum two types of fuels, which is the gas and which is a fossil fuel. Within the group of fossil fuels, we can use furnace oil, we can use light diesel oil. At this moment, the SG3, we might be using furnace oil to fire that simply because that could be more economical. Lastly on this Interfloat acquisition, it seems like it's on hold. Is that the understanding? Is my understanding is right? I'm sorry, I didn't get your question. Yeah. Okay. Just to answer that, we are keeping the transition running as of now. The decision to understand the impact of the situation of the GMB furnace leakage and what it will have impact on the transition is under discussion. Once we have a clarity around these aspects, there may be certain renegotiation, but transition is very much there as of now. One more question from Askub. The CapEx expenditure for the new SG4 is seen to be on the higher side compared to SG3. Because I think, remember correctly, on 550 ton per day, we are spending around INR 500 crore. Is that the right number? You are just spending for the 300 ton per day, we are spending up to INR 1,400 crore. No. On 550 ton per day furnace, our revised estimate is INR 688 crore, which has been approved recently by the board and informed to the exchanges. It is actually in line with the SG4-SG3 CapEx only, which is INR 1,400 crore our estimate for SG4. It is almost double. All the SG one, SG two, SG three, SG four in the same campus. Is it right? Please repeat. Your voice is not very clear. My question is, all these SG one, SG two, SG three and SG four are in the same campus, right? Absolutely. They are in the same. The same location. Yes. Understood, sir. sir. Thank you, sir. Thank you. Okay. Thank you, sir. Next question comes from Amit Loya at Individual Investor. Please go ahead. Hi. Good afternoon, sir. My question is, like, what's the main impact in declining revenue by 5% Q on Q? Is it because of any volume decline? The volume has in fact gone up. The reason is, the price, selling price, which has caused that to happen. What was the average selling price in Q1 as compared to Q4? Like in Q4 you mentioned plus one forty-one or I guess one thirty-four, sorry, for like square meter per millimeter and this time it is one forty. Am I right? Yeah. Q4 was 135 thereabout, and Q1 is about 140 thereabout. Which is what was mentioned in the opening remarks, that there is an increase of 4.5% compared to Q4. It is not enough to cover all the costs. Okay. Understood, sir. Thank you. Thank you, sir. Next question comes from Daria Trivedi from DJT Investments. Please go ahead. Yeah. Hi. Thanks for taking my question. So by calendar year 2024 we are going to increase our capacity to 2,100 tons per day, which equals to about 12.5 GW worth of module manufacturing. Now, given the fact that about 37 GW of module manufacturing capacity is to be added over the next 2 or 3 years, don't you think that even at 2,100 tons per day, we'll be able to cater to only 1/3 of the incremental demand? In light of this, do we have plans to further increase the capacity from 2,100 tons per day? Actually, there are announcements by many other people about their increase in capacities and many of them have already started work in right earnest. I believe that we might see a lot of extra capacity coming up. I think capacity on the annual is nearly 6 gigawatts now. We need to see what actually comes up and what is the fate of the people who are bringing it up and how good the glass is and how well it is selling. All these things need to be examined. That's why right now talking about further increases after SG4 seems to me to be a bit premature. Though having said that, I would say that the demand for solar modules there seems to be no end in sight for that. If you have no end in sight for solar modules, then there's no end to the demand for glass as well. As far as we are concerned, we are not talking beyond SG 4 for the time being. Just to also clarify here, the module manufacturer's capacity utilization is rather low as compared to solar glass manufacturer, which is a continuous process plant. In module industry, we have seen that typical utilization on an average for the industry is 50%-60%. Though there may be a capacity of, say about 50 gigawatts going forward. If you really look at the actual capacity utilization of about, say 50%-60%, the manufacturing may be 25-30 gigawatts. That requirement of glass will be only corresponding to the actual utilization. Understood. These new players who are setting up capacity, that is for solar module manufacturing, right? That is not necessarily for solar glass. Is my understanding correct? Yeah. The 37 gigawatts which you said is for module manufacturing. There is also. The 6 GW which Mr. Kheruka said is regarding solar glass production lines, which will be equal to 6 GW. 12.5 of ours and 6 of this will already make it 18.5. Okay. Is there somebody else apart from us who's also setting up capacity in the glass space, solar glass space? Yes. These 6 gigawatt capacities, which you mentioned is coming from other players other than Borosil. Okay. Understood. Just one last question on the bookkeeping front. What is the likely interest cost going to be for this financial year? Actually it is very minuscule as of now because we are hardly using any working capital. Once the full utilization starts happening, maybe in Q4 of this calendar year, then there will be interest cost. Today it is difficult to confirm what it would be. Okay. Most likely it will be negligible, right, during the course of the financial year? It will start getting utilized, yes. Also there will be interest on the term loan which we have taken for the SG3. Okay. What is the quantum of that term loan, please? We will have about INR 250 crores overall. Okay. The interest from that will start accruing from next year. Is that understanding correct? It will start, I mean, on commercial production startup, because currently the interest is getting capitalized because of the construction period. Once the commissioning happens in, say October, the interest will get accounted in the profit loss amount. Okay. All right. Understood. Thank you so much. All the best. Thank you. Thank you, sir. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. I repeat, if you have a question, please press star and one on your telephone keypad. We are having a question from Dhruv Kashyap, an individual investor. Please go ahead. Yeah. Hi. Good afternoon, sir. My first question was on the anti-dumping duty, which is getting over on the seventeenth of August. My understanding is that a very strong case had been presented to DGTR and DGTR in turn to the Commerce Ministry and then the Finance Ministry. That I think the case was presented sometime in the month of May by the DGTR to the Commerce Ministry. Now we are sitting on the tenth of August with six days to go before the current duty expires. Do we have any view or, I mean, do we have any signaling from the government that it is actually coming? Well, it's been recommended by the Ministry of Commerce, by the designated authority, and typically the Ministry of Finance does not issue the notification until the end. We have no signal at all that it's not coming. Okay, great. The second question, sir, was on the Interfloat GmbH acquisition. Now, my understanding is it's a very recent development about the gas leak, et cetera. Obviously the buyer should be doing their own check to see what's the level of damage, et cetera. But how are you or the board reading it that is this like a pause or is this a full stop? Have teams already been dispatched to assess. I mean, what's the kind of timeline you are looking at to say yes, no, maybe? That's a difficult question to answer. The second question, but the first question, whether we are looking at it as a stop button or a pause button, I would definitely say it's a pause button. It's not at all a stop button. Also the leakage is actually in the furnace. It's not a gas leakage, it's a glass leakage. After certain years there could be wear and tear in the glass furnaces like this, and typically it can be repaired. The team of experts is already working on it. We will hear soon that what will be the outcome, how it will proceed going forward, and what will be the time horizon within which the factory can come back to production. Just to conclude this point, sir, that what you're saying is that there's already some sort of assessment being done, and if you believe that it's worth going ahead with the investment, then you will come back at some time in the future, even though if it might be at a changed cost or changed terms and conditions, et cetera. At that time you'll come back and then you'll put in that point about taking approval for or issuing the preference share. The way I hear you say it is that it's not as if this deal is off. No, no, not at all. You're right. The deal is not lost at all. Okay. This is a pause, like you said, more than anything else. Absolutely. My third and final question is that, now that you have decided to combine the 550 plus 550 into an 1,100-ton furnace SG4. Basically SG4 and SG5 has been collapsed into SG4, and which makes immense sense in terms of scale and economies and CapEx and so on and so forth. Would you have any idea by when do you want to? Because see the thing is that while you are saying that in 2024, say the same time, October or something, you'll have it up and about, this is the experience of a 550-ton furnace that you've just been trying to put up, which became delayed because of various reasons. Would you not think that you would want to have some timeline on when you want to take it to the market and raise funds and so that this time, there is no delays on the SG4 in 2024? I really want to make a point clear that our design, meaning our plant layout, the selection of equipment and the engineering from our side was correctly done even for SG3. Everything was ordered on time correctly and there's been no change from our side. What the change which has happened is that because of this COVID business, you see a lot of our suppliers have suffered great shortfalls in availability of labor, and therefore, there simply have not been enough people at the suppliers' plants to manufacture the equipment that we needed. That is one point. The second point is there's been a global disruption on ocean freight. Some people who are supplying equipment to us are depending in turn for part of their in-inputs to come from other countries by sea. When they don't receive those inputs in time, their supplies to us get delayed. The third thing is that there has been a huge shortage of computer chips. Almost all machines that we buy, they are governed by PLCs, which are process logic controllers, which are sort of a term used to denote an industrial computer chip. There has been a shortage of these industrial computer chips. Even if the machine has been ready, the computer chip has not been, and therefore there has been a delay in supply. Even for the 1,100 ton plant, we have our design ready. It's a question of when the time is right to go to the suppliers and take prices and open letters of credit and do, you know, negotiate the prices and then arrange the shipment. We feel that by the end of 2024, the plant should be up and running. On the front side, we already moved a resolution to the shareholders to approve equity raise of INR 1,100 crores and the balance will fund us either internally or take some loans. On the front side, we are getting ready already. In SG3 also there was no problem of funds being available or like that. As has been explained by Mr. Kheruka, all the delays were actually happening at the other side, the supplier side, because of situation out of control. We are taking enough control and measures from our side that the project is executed in time. In fact, SG2 project, which we did earlier, was executed in a record time of 14 months. Our team is fully capable to handle this new project as well, and we hope that they will be able to deliver 1,100-ton furnace also in a record time. Right, sir. Thank you so much for the clarifications and all the very best. Cheers. Thank you. Thank you, sir. Next question comes from Avnish Kara from BT Capital. Please go ahead. Hello. My first question is on the 1,100 tons per day that you are going to be setting up. Because of combining two furnaces together, how much extra production incrementally do you expect to happen? Can you repeat your question? I think you said that we are shutting off or something. No, no. My question is on the SG4 that is going to come online, how much more production will we be able to do simply because the furnace is much larger than having two separate 550 tons per day furnaces? The production output will be 1,100 tons only, but there'll be efficiencies in the cost of melting. There'll be a reduction in the consumption of fuel. That we definitely foresee. Do you expect margins to be significantly different once we have a much larger furnace? Well, I can only say that the consumptions will be reduced. The question of margins all depends on the cost of the input, you see, and the availability of the input. We are today foreseeing a shortage of gas, and that is only because of artificial reasons, as we all know, that there's Russia stopped supply of gas to Europe, and then Europe is buying gas from everywhere. And therefore, the prices that are being driven up are not really by any sensible reason. We don't know how long this is going to go on. Finally, Russia has to sell its gas also. At the end of the day, it's not as if the world demand for gas or consumption of gas has gone up that much more. If... I mean, the current prices should see a decline from the standpoint of common sense. I'm not an expert in the gas futures. I cannot really say. Coming to the natural gas scenario, in case that, you know, there are more supply chain issues in the future, then do you think it's possible that, being a solar glass manufacturer, we'll get priority when it comes to APM or the supply that comes through GAIL? No, unfortunately, no, because the APM gas is almost fully earmarked for the public sector and the priority sector, which is like CGD and all. Our industry has very little quota under the APM. We have to buy all our requirement either from market or we can alternatively use like furnace oil, which at the moment is cheaper than the export price of gas. Eventually we have to choose between the two, what it works out finally. We believe that the prices of oil and gas would moderate in the course of time and then we'll be able to select what to do. Okay, understood. The green captive plant that you have that is being set up, the 10 MW one, is going to be only for consumption of power for the office, I'm assuming, right? That can't be used for the furnace oil. How much of, you know, apart from the furnace, how much are you spending in absolute terms on the rest of the power in your entire facility? Actually most of the electricity usage happens post-production of glass, after furnace. Until furnace production, there is a little amount of electricity. In processing the glass, which is like tempering or, say, grinding, all the power is used. Most use of power is in after processing, after producing the glass, and which is where we will be using this power. It can be used for anywhere in the plant. It's not like that you generate in pre-production or post-production. Against the overall consumption it will get adjusted. Yeah, the overall consumption is very much higher than 10 megawatts. The 100% of this will get utilized by us. Right. Also, is it possible to quantify how much our overall consumption in megawatts is? We have a contract demand of 25 megawatts. MVA. Our consumption would be roughly around, say, 15 or so. That is for the existing. Okay. Just if I could squeeze in one last question. The furnace in Europe is quite old, as you said, right? That's why the glass leakage happened. Does that mean that since it's an old furnace, maybe the utilization level over there will be a little lower than what we are running right now in India? That's a different furnace design with completely different from us. When we said we have to evaluate everything, that's something that we don't know about how and what the immediate future looks. You see, we have to give them some time for them to make an assessment and give us a report. Once they give us a report and make a statement, we go and meet them and try to make an evaluation of what's going on, what they wish to do. It's something on those lines. Okay. It's a little. Sure. Premature to give any projections on that. Right. Right. Understood. Thank you so much and all the best. Thank you. Thank you, sir. Next question comes from Jimmy Sandhi from Star Union. Please go ahead. Yeah, hi, sir. A couple of things. Sir, if you can kind of let us know what are the contract prices for soda ash and natural gas that we have contracted into and how are the current prices higher in terms of percentage or anything if you can share. By what percentage are they higher compared to the contract prices? In terms of soda ash, we have contract for supply up to December 2022, and that sets a price which was prevailing in January, February 2022. We had entered a full year contract. The current prices are higher by about 30% over the contracted price. In terms of the gas, we have many different type of contracts. Our average cost is roughly about 35 INR per SCM. The export prices are much higher. It is more than 2 times, 2.5 times of the average price at what we are getting the gas. But this, we are buying hardly anything in, or rather nothing in the export contracts, because for the requirement to get, we are using furnace oil at the moment. As we said, for complete requirement of SG3, we are trying to use furnace oil. We are not going to buy under export as long as the same is costed in furnace oil. Okay. Secondly, sir, I just a clarification on the realizations side you said the realizations were higher by around 5% quarter-on-quarter, wherein the volumes were flat. Is that the statement that you made or probably the volumes were down on a sequential basis? Yeah. Volumes were flat for Q-on-Q basis, but on Y-on-Y basis, the volumes were about 23% high. In terms of the prices, the price level was roughly 4%-5% higher from Q-on-Q basis, but the prices were slightly lower compared to Y-on-Y basis. There's a different thing. Basically if I have to look at on a revenue front, it has declined by around 5% sequentially. When you are saying that there is a 5% increase in realization, that the volumes were flat on a sequential basis, what is it that makes this realization drop, or sorry, revenue drop on a sequential basis? It is precisely the raw material input cost, energy and raw material cost. No, no, sir. I'm purely talking on the turnover part. The turnover is down 5%, wherein you are seeing a realization increase of around 5%. There seems to be. Yeah. Yeah. Realization is. Were there any yield losses or something, so actual volumes were lower than what? Yeah. Yeah. Yeah. Volume was a little lower. Yes, you are right. Can you share it was down by what? Around 8%-10% or something of that sort? Because the realizations were up around 5%. I'll just come back on that point in a minute. Sure. Sir, lastly, if you can also share how easy it will be to ramp up the new furnace. Like, will it be like, since you have been currently operating the smaller size furnaces, how easy it will be to ramp up the new furnaces and bringing it up to the optimal utilization? Do you have any technical challenges which you could face while ramping that up? If you can share your thoughts on that as well. Excuse me. I can't hear you. Can you repeat your question, please? The new furnaces, like the 1100 which we are targeting and the 500 which will be starting beginning October, they are the- Yeah. larger furnaces compared to the 200 TPD furnaces that we are currently operating. Yes. Do you see any technical challenges in ramping up those furnaces and how easy it will be to bring it to full utilization? No, we don't see any challenges. Can we see it ramping up immediately to in the next six months to full utilization or it will be a slow and a gradual process over a given time? In my opinion, six months is a long time. Okay. Okay. Yeah, on the volume front, I checked the data, there was a decline of about 9% in sales compared on Q-on-Q, yeah. The production was higher. Sorry, miss you. Can't hear you, sir. No, no. There, there was a decline of 9% in the quantity terms, yeah. Yeah. You said production was higher. No, no. No, it wasn't. Okay. Okay. Fine, sir. You also said in your opening comments that there were some imports which were there and which affected the market, so can you just throw a little bit more light on that? Well, the imports are increasing because of the availability from us. We are the only domestic supplier as of now, so our ability to supply remains constant because of capacity, but requirement is going up. The import share is rising in the overall consumption of solar glass in the country. This of course is hampering us because of the prices, because the prices are not moving up. On the price front it is hurting us as of now, not because of the volumes. Since the cost is going up and prices are not going up proportionately, it is hurting the margins. That is the concern. There is a disturbance coming in from sir's end. Welcome back from Jimish's line. Better now. Can I move on to the next question, sir? Yeah. Thank you. Yes, please. We are having a question from Anuj from HDFC. Please go ahead. Yeah. Hi sir. Thanks for the opportunity. Hi. Just one clarity on SG3, which is expected to come up. You mentioned that for soda ash and gas we have a contract till December 2022. This is for the existing capacity. For SG3, would it be operational under the same contract or we are planning to have something on a spot basis to run those plants for the time being? Yeah. This we have discussed already that for SG3 requirement, we need to have fresh contract. Since the spot prices are very high, it will be imprudent on our part to enter into any long-term or medium-term contract for gas supply at the current prices. We are taking a call to use furnace oil instead of using natural gas for the time being. Once the prices moderate to a level where we are comfortable to enter into medium-term or long-term contract for gas, we will do so as we go along. In terms of soda ash, both our plant requirements are covered until December. From December, that is from January, we'll have to enter into new contracts at the prevailing price. Currently, the prices are higher than before. This for SG3 as well, you are saying? I mean, till December, the contract- Yes, yes. For the entire requirement we have. Okay. For the entire 1,000 TPD, we have contract for soda ash. In your initial remarks, you mentioned that the company is working on few of the measures to bring down that cost so that the margin can be improved from here on. Could you just elaborate what are those measures? Because, considering the raw material costs or the power costs, which are in the near term unlikely to taper down, how we are planning to raise our margin going ahead or provide some kind of cushion to it? We are working on various fronts. For example, finding a better economical base cost of raw materials where we can save some money. Then, to use a coating liquid which is cheaper. We have developed some liquid which is giving equal or better performance. We have started to use that. These are a couple of things on the raw material side. On the side of electricity, we have mentioned about using our renewable power under our captive consumption route through renewable sources like solar and wind. All those efforts will lead to certain saving in the cost of production. We are trying to increase the production quantity and efficiencies in generating the sellable output, which will lead to higher production and thereby reduce the cost of production. This largely would get reflected from next fiscal on, right, sir? Because you have already contracted in December for the current year. Is my assessment correct or, we could see some kind of benefit flowing in the current fiscal as well? It will flow in from the current. It is already started to flow in some measure already from the current quarter, July to September quarter. We will see. It will gradually come actually. It cannot be done overnight, so it will gradually reflect. Oh, fine, sir. On the European plant, as you clearly mentioned that, the current status is as on hold basis and not on stop basis. But anyway, this plant was old and it was like supposed to get replaced by a new 500 TPD over the next 1.5-year kind of a period. The current status hold has largely to do with on the consideration part, the one which we have already entered into or it has to do more with the process design which we need to work on something? See, we have to understand that the furnace is not very old. In fact, this kind of furnaces keep running for 8-9 years. We ourselves ran the furnace for 9 years in solar glass. The furnace supplier had said that it will run for another 1 or 2 years at least, and there's a minimum time which we can expect this furnace run to happen. In glass furnaces, typically these kind of leakages can happen. This is not like completely a no-no thing that this cannot be resumed or like that. We are making all our efforts, along with the GMB team, with the furnace supplier to check what are the possibilities, how it can be put to effective use quickly and then proper repair can be done at a later date. All those things are getting discussed between the three teams and we will find some resolution to the problem and then we will have an assessment of how much of the impact it has on the transition and whether the transition needs to be relooked at in terms of the way it is structured today or even the cost of the transition overall from that perspective. All those things will be discussed with the current sellers and owners and thereafter a call will be taken how this will be proceeded with. Fair point, sir. As on date, we haven't paid anything to the company, right, sir? Absolutely. Fine, sir. Lastly, sir, on the customer perspective, I mean, customer point of view. We have been seeing that a rise in module prices, duty imposition, rupee depreciation, all has now impacted, even the GIB case has impacted the execution of solar projects across the country. What kind of impact are we seeing on that front, sir? Even our projects are, you know, getting impacted because of these issues, or we have some kind of contract with our existing customers, based on which our volumes are not that highly impacted. On the side of glass demand, as I had mentioned, as you were mentioning in the call before, the demand for glass has gone up. The domestic module manufacturing is much higher than before. From the current data available, we see that almost 11-12 gigawatt per annum of manufacturing is taking place in the country as against 6-7 gigawatt in the year gone by. The demand for glass and components in India for local manufacturing is quite high as compared to past, and there is no dearth of orders for that from that perspective for the solar glass. The challenge is around the prices because the cost is going up so fast and so much, it is difficult to, you know, get it realized in the prices because of the competition strategy to not go for full coverage of the cost increase. Well, fair point, sir. That's understandable. Thanks for the opportunity. Okay. Thank you, sir. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. I repeat, if you have a question, please press star and one on your telephone keypad. We are having a question from Vishal Mahajan, an individual investor. Please go ahead. Good afternoon, sir. I have a very basic question. I was listening to you. You mentioned, you know, some of the great points that this company has. You know, you mentioned about very strong demand, no end in sight. You mentioned about duties favoring us. You know, no serious capacities available and quality of our glass is very excellent. Yet we are struggling with, you know, pricing power out there. Could you please explain to me exactly how does this play out? Why don't we have so much of pricing power? You did spell out that, you know, competition is trying to keep prices low. At the same time we have great quality of glass and we have really differentiators out there. Any particular reason why we are not able to push prices up? This industry one is to understand that is working mainly for grid connected solar farms. All these are by way of bids and tenders, where lowest price bidder gets the tenders. The challenge with him is to minimize his cost of procurement somehow, which is where the challenge is actually. If you are to keep quoting INR 2.42, INR 2.43 when the cost of everything has gone up so much, like the module prices have gone up by almost 30% in last, say, 6 months. Similarly, the glass cost has gone up like this. There is a sort of a tug-of-war between the, say, procurement people and the module suppliers, where the cost is high, but the developers are not willing to pay a higher cost because they have quoted at a lower price. They have PPA, they have signed PPA to supply the power and all those things. This is a catch-22 situation, which is where we are in today, and which is why there is a certain amount of pressure. Now, in terms of the ability to price our product higher compared to the imports, we have to understand that we are sort of a marginal supplier as of now. Being only producer also we are a marginal supplier. At 25% of the market share, 75% coming from the world's largest players who are more than, say, 20 times of our capacity, it becomes difficult to project ourselves as the price leader. All along the industry worked on the basis of matching the imported landed cost in last so many years. This is how it has been. When the prices were very high and our costs were not so high, we got better prices. Around this time we have to also suffer on the same front that our costs are rising, but the selling price is not able to increase. It's a strategy which the company has taken along with the customers, and we have to live by it because this is how it has worked. Understood, sir. Thank you so much. Thank you, sir. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. I repeat, if you have a question, please press star and one on your telephone keypad. We are having a follow-up question from Mr. Trivedi from DJT Investments. Please go ahead. Hi, sir. Thanks for taking my follow-up. I heard you saying that, you know, a new player is setting up capacity worth 6 gigawatts of module manufacturing. Does that mean they will also have 1,000 tons per day capacity when, you know, that does come online? Yeah. There are a couple of players who are bundled into this 6 gigawatts actually, and there are at least three players. The largest capacity is coming up through an associate of Mundra Solar, that is Adani Group's associate, which is setting up a plant for 600 tons. We believe that almost 70%-80% of their production is going to be consumed internally by Mundra Solar, and rest they'll be able to sell in the market. Besides them, there are two, three, two more players who are setting up plants of about say 150-200 tons per day. All put together, it is going to be about 1,000 tons per day, which will be about 6 gigawatts. Now, the progress of these plants is also delayed somewhat, and we believe that in calendar year 2023 and sometime in early 2024, these production capacity might come on stream. Okay. Sir, is it safe to assume that, you know, I mean, since so far you are the sole manufacturer of solar glass in India, but now with these additional players setting up capacity, there is a high possibility of us, you know, conceding some market share to them? It does not translate into that exactly because there is enough market available already, plus the market is going up very fast. As you would know, it's a 12 GW annually manufacturing in India as compared to 6 GW. So demand is already quite high. Yes, they will take the certain market share and they might take share from import, they might take share from the growth in the demand, whichever way it happens, but we are sure to sell our volumes. Okay. Thus far, if I'm not mistaken, we had a 35% market share in the Indian market, and currently I heard you saying that the share has come down to 25%. Does that mean, you know, that the Chinese players are capturing a larger share of the market? It's not a question of them capturing. Actually, there is no production available in India other than us, and our capacity is already fully utilized. From where the balance demand will get covered? Naturally, the consumers have to import. It's not their question of capturing or supplying or whatever it is. It's the question of meeting the demand. Okay. Our market share has reduced from 35% to 25%, right? Because in the previous financial year. That's because the demand has gone up and our quantity remains the same. There is no change in our supply. Our supply remains unchanged. If the demand goes up, then the fellow will buy from somewhere, which is what is happening. Right. Understood. Got it, sir. Thank you. Thank you, sir. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. We are having a question from Bhavya from Crisp PMS. Please go ahead. Hi. Good evening, sir. I just had a question regarding, like, what is the reason for the fall in volumes for this particular quarter? Can you repeat, please? Your voice is not very clear. Am I audible now? Yes. Yeah. What was the reason for the fall in the volumes on a sequential basis? On a sequential basis, yes, there was some fall because in April and May, our production levels, net production levels were rather lower compared to what they were in Q4. However, we have recovered. I mean, we have gone back to the previous levels from June 2022, and we are trying to have even better numbers as we go along. We are confident that in the rest of the month, we will be able to recover that difference or lost volume by way of increasing production. Okay. Thank you. That's all for my part. Thank you, sir. Next question comes from Pankaj Kumar, an individual investor. Please go ahead. Hi. Hello, sir. My question is around you just mentioned that Chinese they are having 75% market share. My understanding was there is already a import duty in place. How much is that? How much is the import duty in place from China? Chinese supply? This has been replied before. Against China, there is anti-dumping duty and there is a countervailing duty against Malaysia. Against Vietnam, there is no duty. Imports are coming from all three locations. What we have seen is that the maximum amount of imports from China are coming at the lowest amount of anti-dumping duty. Because the duty structure is on a vendor-wise basis in the case of anti-dumping duty, the lowest amount is about 10, 11%, and the highest would be about 20%-30%. Most imports are coming at the lower end of the duty. Roughly you can say about 10, 11% duty is being paid on the imports coming from China and Malaysia, but there is no import duty or any kind of duty against Vietnam. Despite of 10%-11% duty, there is a large market share that Chinese supplier have captured. Yeah, because the capacity in India is limited and the demand is high, so ultimately the demand has to be fulfilled from somewhere. Right. Okay. Thank you. Thank you. Thank you so much. When we have more production in India, the chances that local production will have a larger share are very much bright. Right. Thank you. Thank you, sir. There are no further questions. I would now hand over the floor to the management for the closing comments. Yeah. Thank you all the investors for participating in this call. We are very pleased to answer your questions and shall connect with you again at the time of next quarter. Thank you very much. Goodbye. Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Chorus Call Service. You may disconnect your lines now. Thank you, and have a pleasant day.