Borosil Renewables Limited (502219) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Borosil Renewables Limited Q1 FY '26 Results Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this call is being recorded. With this, I now hand the conference over to Mr. Rohan Gheewala. Thank you, and over to you, sir.

Thank you, Samya. Good evening, everyone. On behalf of Axis Capital, I'm pleased to welcome you all for the Q1 FY '26 Earnings Conference Call of Borosil Renewables Limited. We have with us the management represented by Mr. P.K. Kheruka, Executive Chairman; Mr. Shreevar Kheruka, Vice Chairman; Mr. Ashok Jain, Whole-Time Director; Mr. Sunil Roongta, Whole-Time Director and Chief Financial Officer; and Mr. Balesh Talapari, VP, Investor Relations. We will begin with the opening remarks from the management, followed by an interactive Q&A session. Thank you, and over to you, sir.

Okay. Well, good afternoon, everyone. I'm Shreevar Kheruka here, and I welcome you all to the Borosil Renewables Q1 FY '26 Investor Call. The stand-alone financial results for the quarter ended 30th June 2025 were approved by the Board of BRL on Wednesday, 23rd July. Our results and an updated presentation have been sent to the stock exchange and have also been uploaded to the company's website. We will now discuss the operations of our company on a stand-alone basis. But first, I would like to update you on some important events which have happened recently. The Board has approved a preferential issue of 70,93,874 equity shares of the company for INR 379.52 crores to eligible investors who have given expression of interest and whose documents were found compliant. The share issue is subject to the approval of members at the EOGM to be held on 14th August 2025 as well as the stock exchanges. You will recall that the company had done an issuance of warrants of INR 600 crores to part finance the 500 TPD expansion of INR 675 crores in February 2025, against this -- against which it has received applications for INR 417 crores. The project size and cost were later revised to 600 TPD and the CapEx was increased to INR 950 crores. The additional issuance will be utilized for the CapEx and other objects as per the objects of the issue. The revised means of finance would include INR 650 crores from equity and internal accruals and INR 300 crores of debt. The other important development relates to the filing of bankruptcy by the German step-down subsidiary of BRL on 4 July 2025 due to the absence of clear indications of demand recovery in the near future in Europe as well as possible liquidity issues. We had in the previous calls indicated that the furnace at GMB had to be cooled down due to the paucity of demand and depleted market conditions across the European Union. This was with the aim to reduce losses. Since then, even despite our best expectations, there was no material improvements in the European markets, which would allow GMB to resume the operations of its furnace. The company and GMB approached concerned authorities to get some quick measures in place to support local industry. Unfortunately, nothing has been forthcoming, although policy level announcement have been made in Europe in order to support domestic manufacturing. However, these announcements have not yet materialized into any specific policy action. Moreover, any policy action, if and when announced, will take considerable time to show any results in terms of resumption of production of our customers as the closed solar module plants will take some time to restart. For the company, this would mean that we would need to have heavy continued losses without much hope of substantial recovery. In the past few months, GMB also attempted to resume cold-end operations by sourcing [indiscernible] glass with an idea to provide tempered glass locally. However, this too could not work out for many different reasons. As such, the company did not feel it prudent to continue funding the standing charges to the tune of INR 9 crores per month through its wholly owned subsidiary, Geosphere. For our company, this filing of insolvency of the subsidiary would arrest recurring losses and permit reallocation of capital and managerial focus towards the India operations where we see a long-term potential and policy support. I would like to further inform you that Geosphere Glassworks GmbH, a wholly owned subsidiary of the company, intimated that it is yet to receive the financial results of the second quarter from GMB, whose application for insolvency is currently in process in Germany as previously disclosed via our letter dated July 5, 2025. The affairs of GMB are now being managed by an administrator appointed by the insolvency court who works as per prevailing German laws. Keeping in view that the administrator has been appointed recently preparing financial results of GMB for the quarter ended 30 June 2025, is expected to take time as communicated by GMB. Until these results are received by Geoosphere, it cannot consolidate GMB's financials into its own financial results and in turn, would not be able to provide consolidated financial results to the company. Due to uncertainty and reasons as explained above, the company will be able to approve and submit its consolidated financial results for the quarter ended June 30, 2025, at a later date. So therefore, we are presently only discussing stand-alone results. Coming now to the performance. The company achieved sales of INR 332.26 crores versus INR 327.23 crores in the trailing quarter and INR 241.82 crores in the same quarter last year. The company registered an absolute EBITDA of INR 92.53 crores, which corresponds to an EBITDA of 27.8%. This shows a quantum leap of 211% from INR 29.71 crores in the corresponding quarter, whereas the EBITDA stood at INR 77.03 crores in the preceding quarter. Sales rose by 37% during this period compared to the corresponding quarter last year, and the major increase has come from the increase of selling prices as the average selling prices during the quarter increased to INR 138 per millimeter as compared to INR 105 per millimeter. This has led to an improvement in margins. The imposition of antidumping duty on imports of solar tempered glass from China and Vietnam in December 2024 has provided us great relief on the prices, which have now reverted back to where they were a few years ago. Exports amounted to INR 35.67 crores accounting for 10.7% of the turnover compared to INR 18.9 crores in the preceding quarter when exports made 5.8% of the turnover. In view of the filing of insolvency by the step-down subsidiary, GMB, it was considered necessary to estimate the value of net assets to ascertain whether and how much provision needs to be made against the exposure in GMB and Geosphere, although the outcome of insolvency proceedings will only be known after a few quarters. Accordingly, based on the valuation confirmed by a valuer, GMP is not likely to leave any surplus available for the company after paying off the outside liabilities. Hence, a provision for the entire exposure of INR 325.91 crores in the German subsidiary has been made in the accounts as a onetime loss. However, this onetime provision will ensure that there's no continued drag on the consolidated results and performance and the ROCE and EPS will substantially improve. The company is confident to achieve good improvement both in sales and EBITDA numbers for the year on the back of better performance of the Indian operations as the selling prices maintain an upward bias in addition to cost-saving measures and the stoppage of the drag of losses from the German operations. Our work on the expansion project is in progress, and we expect the project to be commissioned by the third quarter of financial year '26-'27. The domestic demand continues to be robust. Manufacturing capacity for solar modules has already reached 90-plus gigawatts and is expected to rise to 150 gigawatts by March 2027. The country has also seen its highest ever solar installations at 25 gigawatts in 2024-'25 as against 15 gigawatts during the previous year, which corresponds to a 60% increase. We estimate the domestic demand to be about 50 gigawatts in the current year. Use of locally produced modules has risen sharply after the implementation of ALMM mechanism from April 2024, which is leading to increased demand for all components, including solar glass. The present solar glass capacity in the country is 2,300 tonnes per day, that is 15 gigawatts. Another 12 gigawatt capacity is getting commissioned by the end of FY '26. With the expected current demand of about 50 gigawatts of domestic installation, imports are occupying about 70% share of the consumption, leaving huge scope for capacity addition and import substitution. That is the area we are planning to play when our new project comes on stream. Therefore, we see good prospects for the company over the next few years, looking at the growth in the sector, robust demand and stable selling prices of solar glass. Just to round up the sectoral outlook, renewables are poised to transform the global power landscape by 2030. India is driving this evolution. According to the International Energy Agency, over 5,500 gigawatts of new renewable energy capacity shall be added worldwide by 2030, equivalent to the current power capacity of China, the EU, India and the U.S. combined. Solar PV will dominate this accounting for 80% of global renewable capacity growth. This surge will come from both large-scale utility projects and rapidly rising rooftop installations. Therefore, we see the future of solar is very bright and India's place in the whole solar ecosystem as strong and with a very positive outlook. So with that, I thank you for your patience and listening to me. I would now like to open the floor to any questions that you have.

[Operator Instructions] The first question comes from the line of Jayshree Bajaj from Trinetra Asset Managers.

And my question is the Board has approved for the setting up of new furnaces, adding 600 TPD for the -- with the current capacity. So can you provide a more detailed project time line and specific milestone for this expansion and especially regarding land acquisition and all?

Yes. So as far as the project is concerned, this is happening at the current location. It's a brownfield expansion. And whatever land acquisition needed to happen has already happened. And therefore, there is no risk of that being a delaying factor. The project itself, as I already mentioned, is likely to be commissioned in the October to December quarter of 2026. And at the moment, we don't see any reason for delaying beyond that. So that's -- I think -- I hope that answers your question.

Okay. And as you stated that the Germany plant will remain unfeasible for -- in the longer term. So what is the strategic vision for its European presence, particularly for the GMB plant?

So that plant has been declared insolvent or rather the company has been declared insolvent. So now there's an insolvency process, which is managed by a third party, which is an administrator under German law. And frankly, they will follow their own process, and even though we are shareholders, we have a very limited say in this process. And we are -- it totally depends on what they do, and we are out of this whole equation. As far as our customers are concerned, we are still continuing to sell our customers in Europe from our Indian operations, and that will continue.

Okay, sir. And my last question is like the stand-alone EBITDA margin has improved for this quarter. And so is there any revised EBITDA margin for the FY '26?

I think there will be some -- as I mentioned, pricing will be improving somewhat. Every month, there's a slight increase. So on the margins, there will be somewhat a little bit better margins than what we had in this quarter, but we already at 28%. So it's a reasonably good margin and maybe a couple of percent more we can expect.

The next question comes from the line of [ Swan Mittal from MRF ].

I have 3 questions lined up. The first question being in the last con call, we had guided for approximately the prices of [indiscernible] price being approximately INR 135 per mm, but we have exceeded it by touching INR 138 per mm. So if you could give any color that as for the industry in the coming financial year, are we expecting any further price increase like as to in what range? And if there is any price increase, how will it impact the EBITDA margins for the FY? And lastly, as a third question, basis above EBITDA margins, like can we guide that at least the cash flow conversion for that should be upwards of 75% to 80% on a quarterly basis?

See, as far as pricing is concerned, it's only an estimate, and there may be plus/minus 5% on the pricing, which may differ than whatever is projected. So if we had guided INR 135 and come out at INR 138, then I don't think that there's a material difference there. And it depends on product mix. It depends on value addition sometimes that we do for our customers. So there are many reasons. Broadly, yes, there may be somewhat an improvement in pricing, but I think it's not going to be dramatic. And therefore, any increase in pricing will definitely add to EBITDA because that's clear. So -- and I have already guided on margins. So I think that should take care of that question. And all of that EBITDA basically comes into cash conversion, I mean [indiscernible] I think 75%, 80% is absolutely a fair number.

[indiscernible].

Yes.

The next question comes from the line of Raman from Sequent Investments.

Sir, what is the current average selling price? And how will the selling price improve post AD imposed on Vietnam by India comes into place?

So we already indicated the current average selling price, which has been achieved during the quarter and also indicated that a couple of basis points, it can still go up in the coming quarters. And antidumping duties are varied for 5 years. So we should see stable pricing.

Okay. And how much upside are you expecting post this probably after a year of implementation?

So this is already -- duties are already implemented and the prices are already up. So I mean, the increase has already taken place in prices.

Okay, sir. Sir, and my second question is what is the domestic market size with respect to solar glass? And I also wanted to understand the unit economics. I mean from the presentation, can we say that 150 tonnes of solar glass is required per gigawatt?

Yes, your estimate is right. It is almost around that 150 tonnes per day from the perspective of gigawatt conversion.

And sir, what's the entire domestic market size of the solar glass manufacturing?

Market size was mentioned in the opening remarks to be around 50 gigawatts of module production, which is the market. And India is currently supplying about 15 gigawatts from the domestic production of glass. So the gap is about 35 gigawatts in terms of the availability of glass domestically.

The next question comes from the line of [ Vivek Gupta ], an investor.

So congratulations for good set of numbers. So I have some basic questions. So this GMB acquisition, which was done, so it has proved to be a blunder. So what precautions and what learning management has taken from this wrong acquisition? That's the first question.

You want to take the second question also or we reply to this?

The second question is, so management has proposed for additional capacity of 600 tonnes per day. So I was going through the presentation, and I understand that that capacity is to be on stream by December 2026. So is that the understanding that both the furnaces would be up in one go or we can expect some like 300 tonnes per day on stream before December '26 also?

Yes. So taking the second question first, we are planning to start the 2 furnaces one by one, which may have some gap of 1 or 2 months. But both the furnaces should be commissioned by end of December '26. That is the target. And in the case of first question regarding GMB, when the decision is made, it is based on certain situations and certain parameters. When we started to look at this opportunity in 2022 beginning, the EBITDA and the turnover was very good for this company. The brand and the quality was absolutely fantastic. And we were all hoping that this acquisition will pave our way for our growth in the European and overseas markets. But things have not always worked out as per your plans and designs, and that's what happened with us as well. In June '23, just immediately after 6 to 7 months of our takeover of the company, the imported Chinese modules started to be dumped in European markets, almost 80 gigawatts of modules were dumped in a couple of months' time over there, which destroyed the local manufacturing. Now this is a very abnormal situation, which we had to face. And with the result that the customers started to disappear. And the glass -- the solar glass is made as per the sizes and thicknesses and various parameters of the requirement by the customer, each customer. So these are very tailor-made items. And unless you have a customer in a demand, it is not easy to produce and keep in stock. So we were trying to tide over this situation by diverting our goods to other markets like Turkey, U.S.A. and even to sell in European markets at a cheaper price. But finally, the demand was not up to the mark, and we were not able to sell beyond 50% of the production. In blast furnaces, if you keep operating at a lower percentage, it doesn't work out. So ultimately, we had to cool down the furnace in January '25. And finally, when the hopes of German policy intervention were dashed and there was nothing coming forward, then we had taken a call. So ultimately you would see that the management and the business is able to take call as per the necessity of the situation and move decisively in the direction in which the growth can be achieved and value addition for the stakeholders can be still ensured despite facing this rough time line.

The next question comes from the line of [ Sunny from IAS ].

Sir, I have 1 question -- sorry, 2 questions. First one is on GMB side. Sir, can we use the GMB equipment to do our CapEx in India?

Yes. Some of the equipment, which are post glass production equipment like processing lines are possible to use in India because they are doing the similar jobs. These were purchased recently in 2023 only. So it is quite possible to buy and start using here, but we have to do evaluation based on the alternate costing and alternate, say, equipment available from other sources. So possibility, yes, possibility is there to use, but we will have to eventually evaluate what is good for the company in India to buy in terms of the next equipment. And if you have to buy the German equipment, it will be under insolvency proceedings now, which is quite uncertain as of now. So we can't depend whether we can get some equipment from there and then budget it in our CapEx plan.

Okay. And the next question is, sir, can we see further EBITDA margin increase on a stand-alone basis?

Yes. So that was already said by our Vice Chairman in the opening remarks that a couple of percentage points can still go up because there are continuous efforts to improve the efficiencies and also the price increase by a few basis points is still possible to get. So yes, EBITDA can still go up beyond this level slightly.

Sir, any guidance for EBITDA margin?

We have not been giving any specific guidance, but this should be enough for you to understand how much it could be.

The next question comes from the line of [ Nidhi Saha ] from ICICI Securities.

So firstly, the depreciation this quarter on a quarter-to-quarter basis is slightly low, is there any reason -- from the stand-alone basis. Is there any reason why the depreciation...

Yes. So actually, the initial furnace, which we had set up long back in 2010, that is completely depreciated now. And the depreciation of that first unit has started to come in the accounts, so which is why the depreciation has gone down, not for any other reasons.

All right. And secondly, sir, you mentioned that you realized INR 138 per square meter in the quarter. Now post the duties, what is the landing price of the Chinese glass in the market? Is it at similar levels? Or is it higher?

Well, landed price from China is close to INR 145 per square meter, and our prices are close to that number only.

The next question comes from the line of Akshay Malhotra from HSBC.

Congratulations on a good set of numbers. I had a couple of questions. Starting from the first one on the European subsidiary. I see that while you provided a provision in the books of accounts, we wanted to understand what's the monthly cash burn with respect to this closure of the subsidiary. Secondly, what do you -- when do you expect this to close? And do we have any additional liabilities there in that subsidiary? That's the [ first thing ].

This insolvency has been filed by the Managing Director of the unit over there and which is after the assessment of the cash flow situation, the order situation and business scenario of the company. And under the provisions of German law, he is the person who is responsible to report to the court that if the liquidity is not available, then he should go and file for the insolvency. So he has gone and done it because there were no -- no more funding was available from the shareholders and the business was not looking to start again in terms of the cash flow generation. So after having filed for the insolvency, the shareholders are actually not in control of the unit or company, and they are outsiders from the perspective of court proceedings. So we do not have any control. And since we do not have any control, we do not have any liability to incur further expenses on the company. All the expenses are to be managed by the administrator who is appointed by the court. He will be taking necessary steps and he will be submitting necessary plans to the court as to what can be done about the company, whether a sale of the business is possible or sale of assets is possible or whatever steps he suggests the court will be able to decide after he submits his report. So from the perspective of Borosil, there will not be any additional expenses on the -- or any additional losses on account of German operations going forward. And there are no additional liabilities as such on us because what we feel is that -- or what we are told by the -- our lawyers over there is that all the liabilities will fall to the company. And in the sense, there are no outside creditors except for the employees who are largely paid up to the date, but the severance pay has to be paid to them and government grant, which is outstanding in the books of company, which is to be settled if they claim. So these are the major liabilities, which needs to be settled under the insolvency proceedings now.

Very clear, sir. Do you have -- can you put a broad number to what these external liabilities could be, the 2 that you mentioned, the employees [indiscernible]?

So based on whatever estimate we have, it could be close to INR 120 crores, INR 125 crores.

But this is not something that we -- that is not something that we will be liable for.

This will not be coming on to Borosil because the assets -- there are assets available in the company. And once the liquidator or the court decides to deal with the assets and realize money, they will settle those liabilities. In case they are able to realize less amount, then less amount will be paid to them. Liability will not travel to us.

Okay. Okay. Got it. So secondly, I think you've mentioned a couple of times about the EBITDA margin improvement on a couple of percentage points. Just wanted to understand similarly on what kind of movement on the raw material prices are you seeing. And is there any more room to generate more efficiencies in the business?

So raw material prices are for last few -- 1 or 2 quarters are stable except for 1 item which has been -- which has risen in the past, but now it is under control, imported item. In terms of the other cost optimization, which we are attempting, we are -- we have done some work on the coatings and also we are doing some -- we have invested money into our own solar wind hybrid project, which will give further savings. So these 2 together should kick in about 1.5% to 2% savings in the percentage terms of the EBITDA, [ you can see ].

Got it, sir. Very clear. Also, are you evaluating more export opportunities from here in light of more tariffs on the Chinese guys?

I think the major area, which is becoming addressable right now is the U.S.A. market because some customers who were not willing to buy earlier because of the price reasons have started to place orders or send their inquiries. So that is where a slight increase is possible, but it's not material enough and the domestic prices are fairly decent now. So there is no real urge to increase exports because the prices in exports in U.S. markets could be as much as prevailing in India only and nothing better, whereas European prices are a little better compared to India.

Got it, sir. And my last question is on the capacity addition front. If I understand correctly, the initial plan earlier was to add about 1,000 TPD capacity. Just wanted to understand [indiscernible] if you've lowered it down to 600 TPD. And on the commissioning front, as you've mentioned that December '26 is where these 2 furnaces will commission, but what is the time it will take to stabilize these fully?

So initially, the project was approved for 1,100 tonnes, I think, long back. But after the antidumping duty was discontinued in August '22, we had to scale it down because the cash generation had reduced by the time. And we then brought it to 500-tonne project. Now once we discounted for the equipment and we started inquiry with the various suppliers, and then we figured out that even 600 can be achieved in the similar equipment and similar furnace, then we've gone ahead and increased the size to 600 tonnes per day because the market is available. And when we did the revised estimate, the figure came to INR 950 crores, which included certain items of expenses, which we had not budgeted earlier. So now it is 600-tonne project at INR 950 crores. In terms of the commissioning, we have targeted December '26, which is what we want to maintain. If we can do it better, then we'll see.

Okay. So just wanted to understand when we can fully stabilize the -- or do you think December '26 is the full stabilized time point?

So December is commissioning, stabilizing may take another 1 or 2 months. So that's how -- we may say by at least March, we should have the stable production, commercial production.

The next question comes from the line of [ Nikhil Gara ] from Abakkus AMC.

Sir, my first question is with regards to our volumes. So I understand that we are more or less maxing out our plant. So what kind of volume growth do we envisage at least for FY '26 and maybe first half of FY '27, say, for -- post which our new plants [ are coming ]?

So in the current quarter, we had about 6% volume growth compared to the corresponding quarter last year. And I think for the year as a whole, we should be able to maintain 6% to 8% growth compared to last completed financial year. 6% to 8% is something what is possible in the current financial, although we are trying for higher number, but this much realistically, we can take.

And safe to say that post that first half of FY '27, we should see a flattish sort of volume?

Sorry, can you repeat your question?

Sir, I'm saying then post that, first half FY '27, we should expect volume to be flattish because we will not have enough capacity.

Well, we will keep on optimizing the process yields and certain equipment adjustments, but there will not be any material opportunity to increase the volume by a significant number, maybe 2%, 3%, 4% at the most.

Understood, sir. Sir, secondly, how is the current import scenario? Are we still seeing a decent amount of imports of solar glass or we have seen a very sharp correction now?

Imports are quite high, as we mentioned in the call initially, the imports are close to 70% of the domestic demand as of now. And since the domestic production is limited, ultimately, the demand has to be met by somebody else. So it is the imports [ who ] are right now being offered in the market. But as the domestic production grows, there should not be any difficulty in substituting with domestic production this import. Also the market itself is growing. So there is a continuous increase in the demand as such.

Got it, sir. And just one last question on the -- just on the depreciation front, you sort of explained why the cost was lower. But should we expect this run rate to continue for the coming quarters for depreciation?

Yes, of course, that should continue because that effect of 1 plant being fully depreciated is already set in and the next impact will only come after a few years. So this is pretty much you can expect this number.

Got it, sir. And just sir, one last question. Is there any export mix that we have in mind considering that we are seeing better prices in European market?

See, it is more opportunistic play as of now, although strategically, we want to be there in the export market to some extent. So 10%, 15% is something what we would always like to do. And currently, we should expect between this range only, 10% to 15% only because the domestic demand is so strong that we have to face the customers every day, that they are after us for material and we can't just keep on diverting for exports and refusing the orders here.

Understood. And the working capital cycle is similar to what we see in the exports market, right, as domestic market?

Well, it's about -- about 60 days credit is there generally. So in domestic, you may get a little earlier, maybe 35, 40 days, but domestic people are flush with funds, you may say, because of the very high profitability in the module business right now. So many of them may make advanced payments or they may put, I guess, cash discount like that, which is not the case in export markets.

The next question comes from the line of Arvind Kothari from Niveshaay.

My only question was, sir, that the scale down that we did of the CapEx, given the situation that we are seeing that all the module players are flush with funds and they are all increasing capacity, wouldn't it warrant that now we go ahead for 1 CapEx at least of 500, 600 tonnes or you would take maybe 2, 3 quarters to figure that out?

Yes, I think we'll figure that out. We are evaluating it. Maybe in the next 1 or 2 quarters, we'll have answer for you.

Okay. But the valuation would be based on the internal accruals that we are currently maybe or there will be a debt-equity mix that you have?

I think there will be some debt, but I don't think [indiscernible] for the equity raise [indiscernible] internal accruals.

Got it. And sorry, I missed the first half of the -- why was there a 6% decline in the volumes this quarter?

No, no, there is an increase by 6%, I said, not decline.

Okay. Okay. This quarter -- but it was not at optimum capacity, right?

This quarter increase is to the corresponding quarter. But from the trailing quarter, the volume has declined slightly. That is because we have gone to produce some value-added products, which are specific requirement in the European market like greenhouse glasshouses and some very specific demand of the BIPV sector and all where yield is low. Although we can run the furnaces to the full, the net production is low, but that is more than offset by the higher prices. So as you will see that the average prices have gone up substantially, although the volume slightly declined. So all in all, we have got higher EBITDA compared to even the last quarter, also suggests that the lower volumes were not very much responsible in terms of any decline in the profitability or something like that. Volumes were low because of choice, not because of any other reason from the market like decline or any other demand problem or anything there.

Perfect. Got it, sir. And sir, in case if we go for another CapEx, are the numbers going to be similar or we will be having some advantages in terms of the -- maybe the CapEx being slightly lower this time for the furnaces because of the equipment that will be at spare capacity or no?

We don't foresee any further advantage in terms of the CapEx now because the entire brownfield advantage is broadly covered now, except for the location part of it and the administrative part of it, which will still be some economics of scale because of the location if we decide to do it on the same location. Otherwise, from the CapEx point of view, there will not be [indiscernible].

The next question comes from the line of Kaushal Sharma from Equinox Capital Ventures Private Limited.

So can you please tell me that we are currently having 1,000 TPD as of now. So what kind of capacity utilization level? And my second question...

Yes, we operate close to 95% of the furnace capacity. And in some quarters, it could be slightly here and there, but on an average, 95% is there.

And sir, as you said that you can see the better margin going forward, so can we assume -- fair enough to assume that we will get around 30% to 32% on sustainable [ business ] per financial year because of the current development that is going on like regulatory -- [ manufacturing ] going on the [indiscernible]?

I think we have given enough indication. So you may assess how much it should be, but a couple of percentage if you add to 28%, it would come to 30% only.

Okay. So 28% to 30% is the sustainable margin, right?

Yes, yes.

The next question comes from the line of Manik Bansal from Master Capital Services Limited.

So congratulations for a good set of numbers. So my first question is how much capacity can be attributed to, say, 3-mm or 2-mm glass based on the current capacity of 1,000 tonnes per day or incremental capacity of 600 tonnes per day, if you can number that?

So the market has been moving very swiftly to 2-millimeter glass. In India also now major consumption is 2-millimeter glass. So of course, the production of 2-millimeter glass has to go up eventually. As of now, we are close to 55% in 2-millimeter glass and 45% in 3.2-millimeter glass. But in the longer term, I think we should be about 80% in 2 millimeter and 20% in 3.2 millimeter. As the demand will move, we will keep adjusting our ratio because the equipment are capable of producing alternatively 3.2 or 2 millimeter. So based on the demand market requirement, we'll have to keep changing our production thicknesses.

Okay. Okay. So incremental CapEx of 600 is coming at 2 mm, right?

Yes. This INR 950 crores, which is being spent will be completely for -- capable of converting entire glass into 2 millimeters with full capacity available for grid printing back glass and drilling of the back glass. So this is for 2 millimeter [indiscernible].

Okay. So as you said, they correspondingly can be used for 3 mm and 2 mm, the production line, right? So how it is possible? And what is the CapEx required and whether the same is priced in the incremental CapEx [Foreign Language] that we have announced? And within what time it will be converted?

See, if you have to produce only 3.2-millimeter glass and you don't have to have the equipment which are additionally required, the CapEx would be lower to that extent. Say, for in this project cost, you might say almost INR 75 crores might have been included because of 2-millimeter requirement. So barring that, there will not be much difference.

Okay. So the existing capacity of 1,000 tonnes per day can be fully converted to 2 millimeters on INR 75 crores of CapEx, right? This is what you mentioned, right?

Yes. Of course, the entire design, entire CapEx is planned to give a product like 2 millimeter, all the furnace pyrometers, everything is to be achieved basis that. And then the additional processing lines will be only about this grinding line and all.

Okay. So my last question is on quality. So I did some research, like the XYZ solar glass quality is currently the highest or you can say the benchmark. So what are the specific steps Borosil is taking to match or exceed that product quality?

So product quality is roughly about the same only for all the large companies, including Borosil. And customers are happy to use any products alternatively. In fact, the availability of glass from domestic source is a major advantage for the local consumers because if the quality is same and the glass is available locally, it becomes all the more reason for them to source it locally. So we have an advantage in terms of offering the glass to our customers in India. And even the grid printing or 2-millimeter glass or other, any value addition which are required are also available from Borosil. So it's absolutely matching the quality.

Okay. Okay. So just a follow-up on this. Like do Vari source glass from you, from Borosil?

So Vari is a very big company now and their requirement is quite huge. And we have a limited capacity, and we need to cater to almost 75, 80 customers. So to provide a reasonable [ decent ] quantity of glass to Vari is difficult now. In the past, we have been supplying significant volume to them. They were one of the top 3 buyers for us for many years. But now we are occasionally supplying very marginal quantities to them because it's always difficult to keep changing the BOM item on one single running line. If you have to get highest efficiency from the module production line, you have to maintain the same parameter, same BOM, which becomes easy for the operators and plant people to get better efficiencies because now module business is on very thin wastages and very tight control on the operating expenses. So they don't want to lose on the changes and other things. So it is difficult for us to provide a significant volume to Vari. That's why we are -- our supplies are very limited to them.

The next question comes from the line of [ Jag Mohan ], an investor.

My first question is, what is the current capacity utilization on tonnage basis? And is there any scope of growth on the current capacity? Or do we need to wait for the upcoming CapEx for volume growth?

Yes. This question has been answered earlier also. This is -- we are operating at 95%. And this financial year, we are expecting 6% to 8% increase in the numbers, quantity. And the next set of increase will come after the CapEx, after the expansion.

Okay. Got it, sir. And sir, what is the current glass manufacturing capacity in India on TPD basis? And what is the expected capacity to come on and by what time?

2,300 tonnes is the current capacity of domestic players currently. Another 2,000 tonnes should be operational in next 8 months' time or, say, by March, April '26. And thereafter, about 1,800 tonnes will come by December '26. So this is the current visibility of the capacities. In addition, other players like Avaada and many have also announced their plan to set up glass manufacturing, but their exact details are not available right now. These plants might come up in 2027.

The next question comes from the line of [ Deepak from Swan Investment ].

Congratulations for a good set of numbers. Sir, my question is related to the realization. Just trying to get the sense, if I'm looking into the solar industry as a whole, on the module and cell front, there is a differentiation between DCR and non-DCR market, where the realization are completely different for the market. So in terms of the solar glass market, how we are placed in terms of the local and whether the pricing for the domestic manufacturer for the DCR market for the glass also are the same? Or is there any difference between DCR and non-DCR market? And is there any further scope beyond 148 square meter kind of realization which we are looking at out?

So for glass, there is no such market like DCR-related market or non-DCR-related market, unlike solar cells for solar modules. So that is one question. In terms of the realization, we already have given you the indication that imported landed cost is about INR 145, and we are close to that number only. So this is what we should take into consideration for our understanding and projections.

And sir, in terms of the broader demand and supply situation, which is looking like -- I mean, it looks like broadly the supply is a little constrained than the demand we have. So would it be further possible that realization to improve from here beyond what we used to see earlier the Chinese player used to dump or what is the reference price which has been set now? Is there further scope to improve from there?

I think we already said many times this regarding the pricing. So we will like to maintain our pricing close to the landed cost of imports because that is what customer is willing to pay. And based on the situation, we might have some higher price from some customers. But on an average, the landed cost should be the criteria for you to take into account what realization company can get or any domestic glass producer can get.

The next question comes from the line of Aashish from InvesQ PMS.

Most of the questions have been answered. Sir, the only one thing I wanted to understand is given the situation on the tightness of demand-supply, is there a possibility for us to squeeze the working capital further given customers are ready to give advances and all that you said? So do you see that happening?

Yes. So we are attempting to do that already in terms of squeezing the working capital cycle and trying to tighten on the debtors as well as on the other current assets. And also in terms of the credit also, we are trying to expand our, say, credit period. So we will squeeze the average credit number of days as we go along in this financial year.

Okay. And regarding the previous question on the realizations, so will it be safe to assume that maybe 5%, 7% of increase in realization is still possible from what we reported in this quarter, I think INR 138 you mentioned, so for FY '26, is it a fair assumption to take that way? Or it's not worth taking [indiscernible] that?

I think this question is the reason to that. I think we already answered this question. [indiscernible], we obviously want to improve our realization, but not to do any [indiscernible].

Sir, you said INR 145 is the import landed price...

That is the landed price when -- when we are saying INR 138 price, that is the expected price. And to that, we have to add average freight. So delivered price for us is about INR 144, INR 145 only, which is same as the landed cost of Chinese glass.

The next question comes from the line of [ Rikin ] from the Boring AMC.

Congratulations on a good set of numbers. So I just wanted to check in terms of GMB and the insolvency proceeding, is there any scope of recovering anything because we've taken the write-off of our exposure, but can we recover anything?

So we have conducted a valuation report. First of all, we did internal assessment. We also got it checked with the GMB management who are people in the driving seat over there. And then we also had appointed a valuer who is doing this exercise over there in -- for many customers. So he has also submitted his report. As per him, the value of -- sales value of the asset, which GMB possesses is slightly lower than what liabilities it may be required to meet in terms of, say, insolvency proceedings. So there is -- current indications are that nothing is recoverable from the perspective of Borosil. Now in case something better happens, like the sale of business or any insignificant amount they receive because somebody is willing to pay and the amount is exceeding the liabilities, in that event, we will stand to receive something, but that chance is quite minimal as far as we can see right now, which is the reason why we have provided for the entire amount. Should there be any receipt, we will account for as a receipt and report it back to the shareholders.

All right, sir. And sir, we've had Mr. Ayub's resignation in a very short period of time. So are we looking to hire and fill that position quickly?

Yes. So we -- it was unfortunate that he had to leave in a short time, but we will be having some person in that position.

Ladies and gentlemen, we'll take this as the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you for a very involved audience with lots of questions. Really appreciate it. I hope we've been able to represent our company and the current situation as accurately as possible, and we look forward to interacting with you in the next quarter. Thank you.

Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.