Waaree Energies Limited ($WAAREEENER)

Ladies and gentlemen, good day, and welcome to the Waaree Energies Limited Conference Call hosted by MUFG Intime India Private Limited. [Operator Instructions] I now hand the conference over to Mr. Nikunj Jain from MUFG Intime India Private Limited. Thank you, and over to you, Mr. Jain.

Thank you, Manisha. Good afternoon, ladies and gentlemen. I welcome you to the Q4 and FY '26 Earnings Conference Call of Waaree Energies Limited. To discuss this quarter and full year performance, we have from the management Mr. Jignesh Rathod, Whole-Time Director and CEO; Mr. Abhishek Pareek, Chief Financial Officer; Mr. Varun Goenka, President, Growth and Strategy; and Mr. Neeraj Vinayak, Vice President, Investor Relations. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more detailed disclaimer, kindly refer to the investor presentation and other filings that can be found on the company's website and stock exchanges. Without further ado, I would like to hand over the call to the management for their opening remarks, and then we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Nikunj. Good afternoon, ladies and gentlemen. This is Jignesh. Thank you for joining us for the Q4 and full year financial year '26 earnings call of Waaree Energies Limited. I shall be referring to the investor presentation that has been uploaded yesterday on stock exchange. If you have the presentation handy, it will be great to follow the conversation. Let's start with the Slide #3. I'm delighted to share that Waaree Energies Limited has delivered yet another year of record-breaking performance. This time across the full fiscal year, our revenue from operations in this year has recorded a growth of approximately 84% year-on-year, reaching INR 26,537 crores. Operating EBITDA grew 117% to INR 5,909 crores with an operating EBITDA margin of 22.7%. And our PAT for the year doubled growing over 101% to INR 3,884 crores. I want to highlight that our reported total EBITDA of INR 6,617 crores has surpassed our guidance range, which has given earlier INR 5,500 crores to INR 6,000 crores for the financial year '26, which reflects the strength and consistency of our execution. Moving to Slide #4, which highlights our capacity leadership and the scale we have achieved. Our total module manufacturing capacity now stands at approximately 26 gigawatts, making Waaree the largest non-Chinese module manufacturer in the world. Our cell manufacturing capacity continues to be fully operational at 5.4 gigawatts, the largest cell manufacturing facility in India. Our order book continued to remain robust to approximately INR 53,000 crores. We have planned a CapEx of approximately INR 30,000 crores across verticals to fuel the next phase of our growth. And I'm pleased to share that we continue to maintain a very healthy ROCE and ROE for 32.4% and 29%, respectively. On Slide #5, we show the strong production ramp-up that has powered our results. Our module manufacturing for the year -- full year has reached a record 12.6 gigawatts. It's approximately INR 2 crores module, that is 56,000 modules every single day we have produced. This is a growth of 77% over the financial year '25. We sold approximately 12 gigawatts of modules during the year. Our revenue mix remains healthy and well diversified. Utility, IPP, C&I contributed 34.7%, overseas at 33%, retail at 20.8% and EPC at 11.6%. I want to particularly call out our retail segment, which delivered revenue of INR 5,515 crores in financial year '26, a growth of 84% year-on-year. The traction in our B2C business continues to be very strong, and this is a segment we are very excited going forward. On Slide #6, we look at the Q4 more closely. Module production stood at 4.2 gigawatts, a 104% increase year-on-year. Cell production for the quarter was 0.7 gigawatts, and we sold 4.1 gigawatt of modules in this quarter. Our order book, as I mentioned, stands at approximately INR 53,000 crores, up from INR 47,000 crores at the end of Q4 financial year '25. The current order book does not reflect the retail portion, which is nearly represents approximately 20% of our revenue contribution. Our record pipeline remains robust at 100-plus gigawatts. Moving to Slide #7. I'm pleased to walk you through some of the key strategic initiatives we have undertaken during the quarter. On the growth and investment front, we completed the acquisition of a strategic stake in United Polysilicon, Oman-based company, securing a long-term fully addressable non-Chinese supply of polysilicon. This is a very important step for us from a supply chain derisking standpoint. Our subsidiary, WRTL has announced the acquisition of approximately 55% stake in Associated Power Structures Limited for approximately INR 1,225 crores. This marks our entry into the transmission and distribution segment, which is natural adjacency for us. Our Board has approved a CapEx of INR 3,900 crores PV glass manufacturing for capacity of 2,500 TPD. Glass accounts approximately 23% of module cost and 75% of module weight. So, this backward integration will significantly strengthen our cost competitiveness and supply chain independence. On the capacity side, we have commenced construction of our 10 gigawatt ingot-wafer facility at Nagpur, which is with a CapEx of INR 6,200 crores. We have commissioned an additional 3-gigawatt module manufacturing capacity in Samakhiali, Kutch. A large part of our module manufacturing capacity has now moved to G12 and G12R technology. Of course, it's TOPCon, which is the latest generation of the cell and module formats. And all our plant capacity expansion in batteries, solar cell, ingot, wafers, inverters and green hydrogen electrolyser are progressing as per schedule. We are very much on track on all the projects. On Slide #8, we talk about what makes Waaree different. The winning gauge. Our integrated business model provides full stack vertical integration, starting right from polysilicon to ingot-wafer, cell, module and all the way to EPC and O&M. We are also pursuing horizontal integration across energy storage, inverters, transformers, green hydrogen electrolyzers and many more. Our speed of execution remains a key differentiator. We've expanded our module manufacturing capacity multifold to 25.8 gigawatts within seven years. We built 1.6-gigawatt greenfield module manufacturing capacity in the U.S. in just 12 months, amongst the fastest of its kind. We are also on track to expand our U.S. manufacturing capacity to 4.2 gigawatts over next six months, ensuring local supplies in U.S. Our financial discipline is well established. We have maintained a debt-to-equity ratio of less than one despite heavy CapEx cycles for nearly a decade. Our capital allocation follows a simple principle, book and build, which means every rupee we deploy is backed by confirmed demand and a clear path to returns. That's our commitment, growth with discipline. We continue to derisk our business by ensuring no single customer market or segment define us. Today, our retail service and overseas segments contribute 60% to 70% of revenue, a testament to this approach. And we are taking it further throughout online sales, market expansion and strategic technology tie-ups, continuously broadening our revenue base and reducing concentration risk. If you see Slide #10, that is where I want to spend a moment to talk about a bigger picture of where Waaree is heading. We are emerging as India's only fully integrated energy transition player. We call it this our journey from Waaree 1.0 to Waaree 2.0. With approximately INR 3.5 billion of committed CapEx, we are building our capabilities across the entire energy value chain. Post completion of all the committed CapEx, Waaree 2.0 will have approximately 28 gigawatt of module, 15.4-gigawatt cell, 10 gigawatt ingot-wafer, 20 gigawatt hour of battery, which includes the cell pack containers, 4 gigawatt of inverters, 1 gigawatt of green hydrogen electrolyzer, 20,000 MVA of transformers, 2,500 TPD glass plus smart meters and T&D capabilities. Our integration across the entire energy value chain, along with structural demand is expected to expand total addressable market by 4x from approximately $1 trillion today to approximately $4 trillion by 2035. Our end-to-end integration unmatched scale and ability to deepen client wallet share position us uniquely to lead India's green revolution and serve as a comprehensive solution provider to our customers globally. All in all, last year has been a landmark year for Waaree. The results are exceptional. Our execution is on track across all the projects and runway ahead of us continues to expand. We look forward to a very exciting financial '27 all beyond. With that, I would like to hand over to our CFO, Mr. Abhishek, for his remarks.

Thank you, Jignesh, sir. Good afternoon, everyone, on the call. I will now take you through the next set of slides, which cover our adjacent businesses, demand outlook, quality credentials and retail engine, all of which together are building the foundation of Waaree 2.0. Let me begin with Slide #10, which our CEO has briefly introduced. This slide captures the full picture of our transition. Today, Waaree is not just a solar module company. We are systematically building out every critical component of the new energy value chain. From entire solar value chain to BESS, electrolyzers, inverters, transformers, solar glass, smart meters and T&D, we are constructing an energy transition ecosystem that no other company in India offers today. We are deploying $3.5 billion of CapEx over the next two years to scale core capacity, expand into adjacent value pools. This positions us to capture a TAM that is expected to expand roughly 4x from approximately $1 trillion today to $4 trillion by 2035, a decade-long journey with a clear runway, translating into a multiyear runway of compounding revenue growth. The strategic logic is very simple. Every new capability we add deepens our wallet share with existing customers and also opens up new customer segments. Let me now walk you through each of these adjacencies in detail. Slide #11, which covers our inverter business. Inverters are the brain of any solar installation. They control power flows, capture critical user data and are increasingly becoming central to energy management. The global solar inverter market is currently approximately $16 billion annually and is expected to grow at roughly 11% CAGR over the next decade, reaching approximately $46 billion by 2035. In India, this market stands at approximately $1 billion today and expected to reach $1.6 billion by 2035. What is important to note here is that India is emerging as a reliable alternative to China for U.S. and EU buyers, driven by geopolitical stability and free market compliance. Energy security and data localization are becoming key drivers and under the Digital Personal Data Protection Act, having India hosted data builds significantly stronger customer trust. Our positioning in this segment is strong. We have planned capacity of 4 gigawatts at our Sarodhi facility in Gujarat with a CapEx outlay of approximately INR 180-odd crores. Phase 1 of 3 gigawatt has already commissioned, remaining 1 gigawatt shall be operational in current financial year. What makes this particularly exciting for us is that we are capitalizing on our existing retail outreach to provide a one-stop solution, modules, inverters and certainly going ahead storage all under one brand. There's no incremental go-to-market build required for this. The channel is already in place. Moving to Slide #12, we talk about transformers. Transformers are backbone of grid expansion and with the massive buildup of renewable energy capacity, the demand for transformers is only going to accelerate. The global transformer market is currently approximately $68 billion annually, growing at roughly 7% CAGR, expected to reach around $130 billion by 2035. In India, this market is approximately $3 billion today and projected to reach $6.5 billion annually by 2035. Under the revamped distribution sector scheme alone, the total outlay is approximately $33 billion. There's a huge gas supply gap, approximately 5.9 lakh distribution transformers have been sanctioned versus only 1.7 lakh installed, which tells us the scale of this opportunity. At Waaree we are current transformer capacity of around 4,000 MVA and we are adding another 16,000 MVA of capacity, taking total to 20,000 MVA in current financial year with a CapEx outlay of around INR 192 crores at our Alwar facility in Rajasthan. We are expanding the product portfolio to include distribution transformers, inverter duty transformers, extra high-voltage transformers all under one roof. We continue to build out order book in this segment and have already secured orders from global MNCs, which validates our quality benchmarks and global aspirations. Slide #13. It covers what I believe is one of the most important growth segments for us, battery energy storage system. BESS is emerging as core enabler of grid stability and renewable integration and the numbers that are here are truly compelling. Global annual BESS addition is expected to reach 1 terawatt hour by 2035. Right now, the number is 247 gigawatts in 2025, almost 4x growth. India's BESS installed capacity is expected to increase from around 1 gigawatt in '25 to 236 gigawatts by FY '32. That means India is expected to add around 80 gigawatt hours annually between '27 to '35. This is primarily driven by BESS and the EV segment with stability concerns and containment issues are accelerating this demand. With the mandatory requirement of minimum two hours by the Government of India for PV tenders, this policy framework is now firmly in place to support large-scale adoption. Our BESS capabilities are being built out with a plant capacity of 20 gigawatt hours. Out of that Phase 1, 3.5 gigawatt is expected in the current financial year and Phase 2 of 16.5 gigawatts by next financial year. The total CapEx outlay is approx INR 10,000 crores. This facility will emerge as India's largest integrated advanced cell chemistry cell and pack manufacturing hubs. Our offering will include LFP cells, battery packs and containers, and we are also pursuing further backward integration to indigenize a large part of the value chain. We are targeting data centers, utilities, C&I customers and the residential segment altogether. Moving on to Slide #14. Middle East Crisis have only highlighted the importance of energy security by alternate means with hydrogen blending offering a derisked infrastructure, infinite entry into the green molecule economy with predictable demand visibility and government added incentives. All of this positions early in electrolyzers, blending station and hydrogen turbines and pipeline retrofits to capture the outsized returns as energy transition shift from voluntary to existential. At Waaree, we are targeting a capacity of 1 gigawatt at our Dungri facility in Gujarat in current financial year and a planned CapEx of INR 676 crore. We secured the electrolyzer PLI for INR 444 crores and hydrogen PLI for INR 510 crores. Our strategy is very clear. We are starting with electrolyzer manufacturing, moving to build and operate projects and then transition to green derivatives. Our target segments include refineries, fertilizers, chemicals, steel plants, specialty chemicals and mobility. On Slide #15, we are playing our part to solve land and connectivity related issues that at times slow down the renewable power adoption in the country. In the last 12 to 15 months of time, we have signed PPA for 713 megawatts with credible utilities and global C&I customers. We also secured connectivity for developing 8 gigawatts of projects comprising solar, wind and BESS across central and state transmission networks. Our total commitment in this segment stands at INR 3,250-odd crores, and we are building a derisk value-driven portfolio for our marquee clients, which creates long-term order visibility across all the manufacturing segments within the group. Moving to Slide 16, we talk about PV glass. This is again an exciting story. Glass accounts approximately 20% plus of our module cost and one of the most critical components ensuring the module quality, efficiency, durability and [indiscernible] cost. India's PV glass supply has a gap of approx 5,500 tonnes TPD as of now. And over the next five years, this is going to increase. At Waaree, our Board has approved 2,500 TPD capacity, which is enough to produce 15, 17 gigawatts of modules per annum at a planned CapEx of INR 3,900 crores. Captive demand for FEOC compliant PV glass, it secures offtake from day one because of our U.S. presence and U.S. facility. And at target yields, our landed cost undercuts by Chinese supply, building a structural margin cushion into the current pricing. We are converting a dependency into a pricing power, and that is opportunity which we are excited about. Slide 17. Our EPC business, which is fully integrated already from concept to commissioning to long-term O&M, all under one roof. The model is already proven to the ground. We have executed more than 5 gigawatts worth of projects and under execution around 3 gigawatts. And currently, our acquisition of APS is ongoing, with which we will be extending the same discipline into transmission and distribution EPC as well. This gives us nearly 3x revenue visibility ahead of us in a market that gen lacks reliable large-scale EPC partners. Now moving to Slide 18. This is where our long-term confidence truly stems from the demand outlook. Globally, solar capacity reached approximately 2.5 terawatts in 2025 and expected to reach 8 terawatt hours by 2025, making solar the single largest contributor to the renewable power growth. Globally, solar additions are expected to grow from around 700-gigawatt in 2025 to 860 gigawatt in 2030 around 1 terawatt by 2035, again a large opportunity. On domestic front, India adds 44.6 gigawatt of solar capacity in FY '26, taking cumulative solar capacity to around 150-odd gigawatts. India solar additions are expected to grow from 38 gigawatt in '25, 44 gigawatts in '26 around 72 gigawatts by 2030. And our estimate is to grow 100-gigawatt capacity deployment in 2035. The evolving geopolitical landscape has only censored deep energy transition imperative and Waaree is at the centre of it. Moving to Slide #19. At Waaree, solar is the core. And from the core, we are building the entire energy value chain. Upstream, we are integrating all the way back to polysilicon. And on downstream, we are extending into storage, electrolyzer, inverter transmission, transformers, T&D, et cetera. One integrated platform owned end-to-end built to capture value wherever the transition flows. On Slide 20, we talk about something that is not always visible in the financial numbers, but absolutely critical for sustained competitiveness. Our quality and bankability leadership. These are not just onetime certifications, but reflect a continuous multiyear journey of product performance, process optimization, field validation and financial strength. With over 50-plus global and domestic certifications, we have built entry barriers that are hard for others to replicate. Moving to Slide #21. Again, something that I'm really proud of India's deepest solar retail engine. We have built a scalable unified distribution engine that covers today 27 states, 200 districts and more than 600 franchise over 2,500 authorized service partners, huge number. We have deep presence across solar demand clusters in India. Our strong last mile access through our installers and franchise network gives us the ability to influence customer decisions at the point of sale. And the channel leverage is enormous. The same distribution engine that sells modules today can enable rapid rollout of grids, belts, inverters and future products with no incremental go-to-market build-out. Every additional product we push through this channel, it reduces our customer acquisition cost further. This is why I feel that we are building something large. And finally, on Slide #22, the result speaks for themselves. Waaree is India's #1 retail brand with highest national share in calendar year 2025. Around one in every six installations in the country carries Waaree name. Our persistent actions in brand building from recent advertising to partnership with teams on ground awareness and digital marketing that are translating direct entry into the market penetration and brand visibility. That engine has been built and moat is establishing. Now I will quickly brief upon financial numbers. For the full year, our consolidated revenue from operations stood at INR 26,536 crores, reflecting a healthy growth of 83.7% year-on-year. Operating EBITDA came in at INR 5,998 crores, registering a growth of 117% with margins improving to 22.27% versus 18.84% in the previous financial year. Profit after tax was INR 3,884 crores, improving by 110% compared to last year. ROE for the year was 29%, while ROCE was 32%. Turning to Q4. We closed the quarter with revenue from operations of INR 8,480-odd crores, marking year-on-year increase of 111%. Operating EBITDA for the quarter stood at INR 1,576 crores, up by 70% margins. Profit after tax for the quarter was INR 1,126 crores compared to INR 644 crores in Q4 FY '25. I now hand over the call back to our CEO.

Thank you, Abhishek. Looking ahead, our priorities are very clear: continue scaling capacity in line with the demand, deepen integration to improve the cost competitiveness, expand across markets and keep investing in technology and innovation. To sum up, financial year '26 has been a year of strong progress. We have delivered on growth, strengthened our position and built a solid platform for future. With strong industry tailwinds and a clear strategy, we remain focused on consistent execution and long-term value creation. We continue to remain upbeat on our growth prospects and guiding for operating EBITDA of INR 7,000 crores to INR 7,700 crores for financial year '27. Thank you for your continued trust and for being with us on this journey. With that, I would now like to request the operator to open the floor for questions.

[Operator Instructions] The first question is from the line of Arun Kailasan from Geojit Investment Limited.

Congratulations on the numbers. So, I just wanted to know why there was a very steep decline in the operating EBITDA margins in this quarter versus in previous quarter? And that would be my first question. And if you could also give us some color on the realizations of the -- current run rate of realizations for the DCR and non-DCR modules as well.

Thank you for the question, Mr. Arun. So question about the margins this quarter compared to last quarter. Over the last quarter, we have seen two things which [indiscernible] us the war in the Middle East and the crisis of commodity prices. Over the last quarter, the biggest impact, which has taken up was the impact of silver pricing and copper pricing, which has, in a way, turned up, taken some bit of our margins. Also more important to note here because last quarter, there was also some impact on logistics cost. There was limited movement of ships inbound as well as outbound. Out of that, the cost of freight has gone to the roof like never before. And the mix of the sales again adds up to this. If you look at our mix of sales of last quarter compared to the quarter previous to that, you will realize that our revenue from the overall overseas operations has come down compared to Q3. So three put together has impacted the margin. But one thing I would like to add here, Arun, since market has normalized already now, we have started tracking -- customers have started tracking the increased price in the new commodity levels already. So, we really foresee the implication that price have adjusted for the higher commodity prices already as we speak. The another question of DCR, non-DCR market. Like currently, if you look at the non-DCR market for us, there are two segments in non-DCR. One is utility and another is our retail segment. Utility segment the price ranges between INR 15 to INR 16 with the, I would say, addition of the higher commodity price and now the retail prices go within the incremental rupees for what feels premium to us. The DCR pricing ranges in the range -- this is [indiscernible] TOPCon between INR 21 to INR 22. Hope that answers.

Okay. Also, I just wanted to know like granted that Waaree is considerably shielded from the impact of any of the antidumping duties per se in the U.S. market. But do you think that -- I mean, do you see any sort of panic negotiation with regard to it like changes in pricing or even deferred deliveries in that particular market especially?

So thankfully ahead of time, we were able to start production in U.S. itself. The 1.6-gigawatt facility started last year has already ramped up and another 2.6 gigawatt worth of new facilities are going to go live over the next six months of time. So, we will have 4.2 gigawatts of U.S. local capacity for distributing in the local U.S. markets. So that insulates us from the impact of import duties on balance. At the same point in time, if you look at the export market also from India, since we have already established our supply chains ahead of time to all markets, including the markets from Africa and Europe where we are sourcing our cells from that again insulates us from the duty on solar cells originating from India. So that's how we have been able to sail through the entire duty scenario. And I think we are in best position today with local 4.2-gigawatt capacity with the next six months of time.

[Operator Instructions] The next question is from the line of Abhishek Nigam from Motilal Oswal.

I want to check on the G12R transition which you were doing in the last quarter. So, my understanding is there was a bit of a shutdown on some of the lines in the last quarter. So is that complete? Or there could be some spillover in the first quarter as well?

Yes. So we have converted three lines to G12R. So currently, 11 lines are working, three lines are MonoPERC, three lines we have converted to G12R. It is in ramp-up phase and five lines is continue running into the M10R TOPcon.

Okay. So these five will probably get converted in the first quarter, right?

Yes. Yes. Phase manner. Once the three lines will get stabilized, runs fully, slowly we are ramping.

So I mean it could be 1Q, it could be 2Q depending on when this goes through.

Yes, so in quarter.

At the end of the day, Abhishek, for you to take note of one thing which is very important here is we are expecting to go back to that we have achieved in the month of Jan, 330 megawatts of monthly number in next two years -- in two months' time. In fact, since we are shifting to G12R, we will have the upside of higher efficiency and higher realizable value from the same set of cells. So, you can expect in terms of megawatt and in terms of realization, higher number by 10% to 12% out of the current transmission which has happened. Hope that clarifies.

The next question is from the line of Ravi Dharamshi from ValueQuest.

Just want to understand why was the export mix so low in this particular quarter? And would that still be the case going forward? And also on the -- a little bit on the outlook for order book accretion on the export front?

Ravi Ji, so on the question of export being lower this quarter. So last quarter, between Jan to Feb, we are seeing a lot of impact on the logistics delays all across. So ships are getting delayed. The stack to load material on ships are also getting lower because of the congestion of these large ships in the Middle East markets. So because of that, what has happened is a lot of ships which have been manufactured and prepared for the export market could not be shipped. If you look at our balance sheet also, you will realize that the inventory overall has gone up largely because of the logistics issues. And the same is going to get converted within current quarter. So that has not allowed us to do as much exports as we generally do every quarter and changed our revenue mix as well. In terms of the order book question, like we have mentioned that we have got INR 53,000 crores worth of total order book already. In terms of the order book remaining how much is export. So for us, it is not export it is overseas revenue because we have around 1.6 gigawatt capacity in U.S., which will be 4.2 gigawatt in six months of time wherein we are delivering -- and manufacturing delivering growth in U.S. will continue as exports from India. In the total order book of INR 53,000 crores, around 65% to 70% is from the overseas long [indiscernible] order book to be delivered over the next three to four years. And what is not accounted in this INR 53,000 crores order book is the retail business, which is approx 20% of our total revenues.

Just one follow-up question. What is the fund raise -- purpose of the fund raise?

So we have taken the enabling resolution to raise up to INR 10,000-odd crores. We will soon also be laying out the request for approval from the shareholders for raising this capital up to INR 10,000-odd crores. That request will also cover all the objectives of the fundraiser.

Yes. Ravi, this is Varun here. I just want to clarify on this fund raise. I think the Waaree 2.0 transition that Abhishek and Jignesh Bhai spoke about essentially means a much bigger opportunity both in terms of the core module and the adjacencies that is opening up, both in terms of India demand and global demand. Now for us to both in terms of increase the customer wallet share derisk our supply chain, localize our BOM, our entire materials and the support of government in terms of policies. For example, the glass manufacturing is essentially an outcome of the duty protection now that the government has introduced that you would be aware of. So, the margins earlier were much lower, but now the margins are very high and ROCEs are very healthy, which essentially has encouraged us to take that CapEx. So, this fund raise is to deepen our entire platform journey, both horizontal and vertical and also to embark on the entire materials backward integration. This will lengthen our growth curve, protect our margins and ROCE over a much longer period.

We'll take the next question from the line of Aritra Banerjee from Nomura.

Hope I'm audible.

Yes, sir. Please proceed.

My first question is on the glass manufacturing side. So just wanted to understand like what benefits we can expect from the glass manufacturing side in terms of manufacturing cost and will it help in any sort of boost on the margin front?

Thanks for the question, Mr. Banerjee. I think before I jump off on the commercial benefit, the more important element here is, first is that for our entire supplies in the state market, we require FEOC compliant material. This glass manufacturing will ensure that we have continuous supply under control environment from India, which will enable the EU's glass feed for the factory. Secondly, for our India factory also, since we have PLI benefits from the government, the localization of glass is going to ensure that we start getting our PLIs soon. And thirdly, the current ROCE and ROE in glass because of the cost curves and local manufacturing benefits, including the protection by the government through duties of long term is making a lot of sense. Glass is around 20% plus of the total cost that we have. And if we are able to in-house the glass and ensure that we, apart from cell, also control the cost curve of the second biggest component in the bill of material, it will ensure that we are completely independent of these movements of the glass. Like in recent example, last quarter, glass was one of the case where prices rise sharply because of some problem or some trouble in the Middle East in China. So that we are going to leverage on our capabilities to consume the entire glass that we manufacture. In fact, the capacities announced are much lower -- are lower than what we will be requiring for our own feed in stock. So, we will continue to even buy out from markets and also have in-house sourcing of glass on the cell production. Hope that helps.

We'll take the next question from the line of Shweta Jain from Anand Rathi Shares and Stock Brokers Limited.

Sir, just wanted to understand two things. One is how would the cost metrics change if you're importing cells from Ethiopia or any other African market versus Indonesia?

Yes. So, on the day of announcement of duties by U.S. government, my Chairman has addressed this question, although I'm repeating here. So, it depends on the U.S. duties on to the -- each country. So, in U.S., key solar module is based on the solar cells where it produces. Where the junction has been produced, that country can be -- will be considered as the origin of the solar modules. So, Ethiopia cells will have a 10% duty on U.S, wherein Indonesia is having 34% plus 10% like 44%.

For you understand in a way, Sweta, I think I'll try to make a little easier for you. For example, if you are importing from Ethiopia versus, let's say, from Indonesia, you will end up paying duty on the entire product if you can use the product from Indonesia. Similar is the case currently with Indian cells also. If you can use Indian cell for manufacturing in U.S. or either export from Indian market, we will have to pay up the recent announced duty of 120-odd percent of India, while Ethiopia cell will not have those duties.

Why I'm asking this question is in the recent ADD order, the antidumping duty, apart from the CVD that came in earlier, the ADD specifically mentioned India and Indonesia. So, with that into perspective, this cost dynamics would have really changed the last, I think what we call is the import was majorly from Ethiopia and then Indonesia. So are we looking at new markets considering this qua would have increased like 10% or 40%, but Indonesia is now more than 100% with ADA at least?

Indonesian cells, we are not using for modules shipping to U.S.A. that we are using for India. Ethiopia cells we are using for the U.S. market.

Understood.

In fact, Sweta, to add up to the context, if you look at the current build-out of capacity, you will see that there are some bit of capacities which are building out in the Middle East also. Wherein the new cell capacity -- for example, in Oman, we have acquired the United Polysilicon company stake, right, strategically. Therein also in Oman also we see some capacity that are coming up for cell. So, there are cell available from Oman, we import in India, we have manufactured module and export to U.S. The duty will be applicable is what duty would have been applicable from Oman, which is 10%. So that way, as we go deeper in the supply chain, we keep on diversifying our source of cell for the exports in U.S. manufacture, keep ensuring that our supply chain pocket is expanding, and we have been doing this all through day and night.

The next question is from the line of Sabri Hazarika from Emkay Global Financial Services.

So just wanted to get some more color on the guidance that you have given, INR 7,000 crores to INR 7,700 crores. So looking at what you have mentioned that the cell will take probably one or two quarters to convert fully to G12R. And I think module capacity also, we are like close to 26 gigawatt, which will probably go up by another 2 gigawatt. So how does -- I mean, how does we -- how do we achieve this 20%, 30% growth breakup between how the revenue would be, how the production volumes would be, what kind of margins? Some color on that.

So, Sabri, thanks for the question. I think for someone to understand how it works FY '26, our operating EBITDA was INR 5,908 crores. The guidance is INR 7,000 crores to INR 7,700 crores, so a range of around 20% to 25% of growth on the absolute level of EBITDA numbers. In terms of the cell production, the current -- as our CEO just mentioned over the call that in a quarter's time, the cell production will not just normalize to what it was a quarter back, it will actually have an effect of upside of 10%, 15% as well. Additionally, in H2, our 10 gigawatt cell is also going live, which means in second half of this year, our capacity, which will be giving in cell for our own model production is not 5.5 anymore. It is 15.5 gigawatts, more than sufficient for every module that we manufacture and sell in this country. Which means the impact of margin expansion because of the regulatory and DCR reasons will start coming in big way in H2. H1, we will see a transition from 5 gigawatt to 15 gigawatt. And that's how the number will also play out.

Okay. So you're expecting cell to be adding. And ingot wafer would be in FY '28, right?

Yes, ingot wafer will be in FY '28. Also to further clarify here, since we are given the consolidated guidance of EBITDA, this number also factor in the pre-startup cost of many of the projects which are under construction and going live this financial year. For example, we are starting our 3.5-gigawatt battery energy solution plant, which includes the cell manufacturing, [indiscernible] manufacturing and container in Gujarat this year. We have deployed majority of manpower, white collar as well as already on the shop floor. So, the manpower, which is not on the construction side, largely on the business development side is already on the go and is a cost to us. Similarly, the case is there for all other businesses which are going to go live. So currently, the existing revenue is also taking care of the businesses where the assets are going to sweat starting from H2 this financial year. And hence, you will really start seeing the Waaree 2.0 results from H2 this year and going to a different level in FY '28 when every asset is ready, is functional, is delivering result and going at full throttle. Hope that clarifies.

Just to add what Abhishek is saying, what essentially what we're saying is the core solar module stack, which is module manufacturing and cell, the entire CapEx will get completed in the FY '27 financial year. The ingot wafer and part of battery will get completed in FY '28. So this '27 and '28 will complete a large part of the CapEx. And '29, you will actually see the entire Waaree 2.0, the benefits of all operating businesses now getting seeded starting to reflect in the financials.

The next question is from the line of Prakhar Podwal from AMBIT Capital.

Just one question on margins. I wanted to understand like you have mentioned 4.1 gigawatt of modules sold. I understand exports mix have gone down to 21% from last quarter at 32%. Is the margin moderation also a reason -- another reason maybe that your DCR mix has gone down in India because your cell production, if I see which is 700 megawatt. So largely, is it safe to assume that, that would be your DCR mix? Or would you also be buying a lot of cells from outside to cater to that segment from basically other cell manufacturers in India?

I think you have hit the nail right at the center. The understanding is very clear that at the higher module portion level, the cell -- DCR cell or local cell production has not gone up. And hence, there is some moderation because of this mix as well. Yes, there are customers for which we had to buy out cells from the local markets just to ensure that we are delivering to our customers on time. But when you do that, you are giving -- putting the money on the table to the other side where you are procuring the cells from.

The next question is from the line of Deep Sanghvi from Dalal & Broacha Stock Broking Private Limited.

Am I audible?

Yes, sir please proceed.

Congrats on a great set of numbers for the quarter as well as the year. My first question was regarding the gap between the EBITDA and the cash flow from operations with the CFO conversation declining, I think, around 100-plus percentage to about 27.5% I guess, around that number. So, could you help me understand the key factors behind this diversion?

Sure. So, if you look at our cash flow statement also, you are pointing out very right that the cash flow operations percentage has significantly come down. As I mentioned in my earlier reply as well that because the inventory build has happened in Q4 largely because of a lot of material has kept on the shores, could not be shipped out because of the logistics issue. Had that been the case, we would have realized -- or we could have realized the cash into our balance sheet. That would have changed the number altogether. The inventory levels in the balance sheet also reflects the same. If you keep the levels of inventory at normalized levels, the same number will go back to the normalized level of 70% to 100% conversion of cash from current 27%.

We'll take the next question from the line of Kunal Shah from DAM Capital.

Sir, just could you give some color on this entity, Waaree Semicon and how are we thinking of this business? And what would be the status of this entity in terms of like the talent acquisition, government PLI, CapEx timing and also the rationale to get into this segment?

I think I would really want to take this opportunity to clarify to all. The company that you saw yesterday, Waaree Semicon is a company which is going to only manufacture [indiscernible] component which we are consuming in the inverter manufacturing at our facility in Sarodhi, Gujarat. We are manufacturing inverter at our facility wherein we are getting the complete lockdown and we are building the inverters in factory. We require diodes for the same. This company is going to build out diodes, recruit diodes globally and get the localization of diodes within the umbrella of Waaree Power. And hence, the corporate structure has been kept in a way that this company is a wholly owned subsidiary of Waaree Power Private Limited, which is the electronic manufacturing arm or Waaree Energies.

But sorry, just to clarify, there would be like an OSAT business in this entity, right?

This is a recently incorporated entity with the tie-ups which are underway already. We believe that it is most critical for the electronic manufacturing arm to have this business or this backward integration under its own corporate structure and hence, this decision.

We'll take the next question from the line of Praveen Sahay from PL Capital.

My question is related to the order book. Sequentially, if I look at, there is a INR 7,000 crores of order decline. So, can you give some color? Is that some order domestically because of challenges related to the procurement or as you had highlighted, you had domestically also cell procure. There is some depletion in the order book domestically?

The order book around INR 53,000-odd crores we have delivered more than INR 8,400 crores of revenue already. So on a quarter-on-quarter basis, the intake of orders, but in the ship out of orders is much higher than the buildout. So last quarter, largely because of the disruption in the Middle East, the new order from the overseas market have deferred from maybe a quarter or two quarter's time. Similarly, there's a lot of dispatches which are happening in the local market. And in the local market, if you see there is [indiscernible] which is coming up. So many decisions in the C&I sector largely are held up because of the -- a few people are fighting that maybe there could be some extension, et cetera. So, decisions are getting deferred. I think government has clarified a day before that at this point in time, they will be able to use the earlier shipped out panel under category to the site so that they can actually use even after that date. I think that clarification is already under progress by the government. So because of that, many decisions were pushed out to next quarter. And hence, the net offtake from the rural market also was slowed down.

The next question is from the line of Nidhi Shah from ICICI Securities.

So my question mainly pertains to our supply in the U.S. So we already know that because of the restriction on Chinese cells, we cannot use that in the U.S. But my question mainly remains on other components of the solar module as well, which is the solar glass, the junction box, the wafer and any other components in order to satisfy the U.S. LPA guidelines, do we have to also procure those from non-China sources?

Except, cells no need.

Okay. Do you think that this could come in the future?

No, we don't think so. But as a matter of principle and policy, we are not using Chinese polysilicon wafers for U.S.A. And this is all from India to U.S. wherein U.S. manufacturing, we have to procure all the material from the non-FEOC countries.

So what that means for you Nidhi, is that if you are going to supply components to U.S. market, let's say, for manufacturing in U.S. also, be it glass, cell is already restricted. So apart from glass, junction box EV, be it everything and anything, it has to come from a non-FEOC source starting this April 26, so which ensures that our build-out of, let's say, glass will have its market from day one as non-FEOC country. This non-FEOC clause, if I would take one minute just to clarify further, is an enabling factor for non-Chinese players to build out capacity outside of China and Russia and create the entire value chain for shipment to U.S., either for distribution in U.S. or manufacture in India and then ship to U.S. Both the ways are open. But FEOC is ensuring the non-Chinese supply chain get a great traction in the U.S. starting this April 2026. That's how you also see a lot of new orders coming in U.S. -- from U.S. to us because of the FEOC requirements as well. And this is bound to increase only.

So while there is no way for us to quantify the ex-China market, which is very, very large today, but it's safe to say that it's growing in a very high growth. U.S. has already become local sourcing or FEOC compliant. Domestic market in India is already becoming completely dependent on local manufacturing. But even Europe has announced its intent to become an ex-China sourcing market. So needless to say, it's difficult to quantify, but the ex-China market is a very high growth trajectory for several years now.

The next question is from the line of Akshay Gattani from UBS.

So my question is related to wafers and ingot. There has been some revision both in revision to the cost of CapEx and time lines also like CapEx has been moved up to INR 62 billion versus INR 51 billion earlier and time lines are now FY '28 versus FY '27. So why the change like some technology-related change or there's any other reason to this change in both CapEx and time lines?

So if you look at the plan now, we were originally putting up 6 gigawatt worth of facility versus now setting up 10 gigawatts of facility. Because of that and other reasons, we also shifted our locations as well from earlier mentioned locations in Odisha to now Gujarat and Nagpur. So that's how some delay in the overall time line. But this revised time line is for the 10 gigawatt facility altogether, including the earlier 6 gigawatt and the additional 4 gigawatts. Hope that helps.

Got it. And what will be your time line for glass manufacturing plant?

So we have mentioned in our disclosure also that we are expecting the glass production over the next 24 months of time.

The next question is from the line of Amitosh from 360 One Capital. Questions.

First, on the copper and silver commodity pricing. I think the silver and copper pricing has been on an upward trend since the past year, but the margin impact has been very severe this quarter, 590 bps decline. So is there any other factor? Now of course you mentioned that we have been also procuring DCR sales from other third parties domestically to cater to our DCR order book. So that could be the main reason for our EBITDA margin decline? Or is this more structural and we should see EBITDA margins at 20% levels compared to 25% seen in the previous quarters?

So as we have said, one thing you already covered that since the overall production or the cell dispatch to be precise, has been in line with last quarter, but overall production of modules was way higher. Hence, the percentage-wise the number was lower. And in fact, in that as well, since we had to procure some sales and supply to our customers, that also diluted the number. This is over and above the addition of the impact of commodity price. At the same time, I mentioned in my earlier reply as well that the change in overall sales mix from the overseas revenue to more of utility also had an impact and some dilution in the margin overall.

Okay. So should we see this as a structural trend or the margins are expected to bounce back from Q1 onwards?

As I mentioned, like H2 onwards, since our 10 gigawatt cell is going to go live, our full throttle cell execution 15.4 gigawatt production and dispatches shall start. So that will lead to a point wherein our entire requirement of cell for the Indian market be manufactured and sourced in-house. And that will give a to the overall margin profile that we have today.

The next question is from the line of Raman KV from Sequent Investments.

One is more or less like a clarifications with respective to margins. We are guided EBITDA level to be around 7000-7400 for the FY'27. Can you just let us know are you sticking to your guidance of EBITDA margin of 20%. indOne is that. And the follow up is, there is increase in commodity sizes, have you taken any price hike during this quarter or are you planning to take any price hike in future quarters?

I think again I'll reemphasize on our earlier calls and as mentioned by you that we have been guiding over that on a long-range basis, if you wish to see what is there for the next 5 to 10 years assume 19%, 20% margin consistent for a decade at least. Secondly, because of the effect of sales in H2 and more sales coming up in the quarter beyond that, the margin profile compared to this quarter could be different because there will be more sales manufactured and sourced in-house. So that completely uplift the overall margin profile. So certainly, there could be quarters where the margin could be much higher because of the change in mix of DC-DC. Same point in time, relevant play also comes from the export and export revenue. In a particular quarter, if the overall overseas revenues are higher, that also gives to the overall margin profile of the quarter. So 2 to 3 KPIs to monitor will be how much DCR manufactured and shipped out in-house. Second, how much overseas revenue is there in the quarter. Thirdly, how much revenue are we generating from because these 3 put together takes care of 70%, 75% of market. And if you also look at the EPC business, which is doing phenomenally well, that also help us to work out on our overall margin profile.

I'm sorry, I would request you to kindly rejoin the queue for questions. We'll take the next question from the line of Divya Pati from NBS Brokerage.

So firstly, congratulations on the great set of numbers. Could you explain the current margins in your module and cell business and how we expect them going forward? And also there is concerns about the overcapacity in the module segment. So how do you see the demand versus supply shaping up? And are the government policies like ALMM and PLI supporting in demand and pricing?

Let me take up the second question first to answer. The definition of supplies in the country is changing. With LMM coming in place, the real available supply for the sector asking for DCR is not, let's say, 160 gigawatt of LM approved module. It is rather L2 approved solar cell capacities module capacity. So relevant capacity to note is 30 gigawatt today for new regulations kicking in from June '26. While the demand like in last financial year, you have seen 5, 5 gigawatt of modules were consumed to install 44.6 gigawatt worth of AC of solar installs. going ahead as well, there's another regulation 116 is kicking in from 2028, which means that the cell manufacturers will have to integrate further with backward ingot and wafer manufacturing over the next 2 years, 3 years of time lines. So at that point in time, again, definition of supply will change over of integrated ingot wafer cell and module capacity as a total capacity. So we really don't foresee any scenario anytime next 5, 10 years of time will be the supply is going to be much higher than demand. Yes, we foresee a balance between supply and demand. Anything that you export will be over and above. But the demand and supply largely equates with the regulations coming in at the right point in time, aligning with the CapEx by the serious players in the industry.

Okay. Let me some interpretation to this capacity numbers. There are multiple numbers out there with respect to module capacity. It could be 160 gigawatt, it could be 200 gigawatt. There is no way to a certain clearly, but I'll just offer my bit. One is capacity, which is nameplate, but one has to adjust for the wafer input adjustment. So there is a 17% adjustment factor there. The other is utilization, not the theoretical utilization could be for everybody different, but the industry operates from the smaller players are much lower utilization. The more efficient players are at 75%, 80% utilization. So there is that utilization factor. The other is the efficiency factor, which is the cell efficiency. So what Abhishek is trying to say is let's say, for utilities who are looking for high-efficiency modules, which have to perform for 25, 30 years, the supply is not in excess, right? There could be oversupply in the low efficiency modules, but that's not where B plays, right? Another interpretation of the EBITDA margin, and I think a lot of you have these questions around EBITDA margin. One, EBITDA margin is a function of the proportion of module and sell and every company will have different proportions. So B's module volume and value is much larger being an industry leader. And that's why in module by design is higher value and margins look lower. To give you an example, a company with no module sales and only cell will seem very high margins, but the value of sales will be much lower, right? What we emphasize from H2, the entire cell manufacturing will also be complete and operational, then Vari will have the right proportion of module to sell, and that's why margins are poised to rise. There is a transition period. So please be aware of these two factors, one with respect to industry capacity and the other is the module to sell mix, margins are an outcome. Just one more last point on EBITDA per watt peak is the right way to look at it rather than percentage EBITDA margin. And maybe Abhishek, you can explain one bit on that. Why percentage margins actually change.

So I would further take this on from where just left as if you look at the pricing, so there are different pricing for different markets, let's say, if you're shipping out an export product, the pricing in the range of, let's say, $0.25, $0.26 per watt FOB basis, while the domestic utility product will be around $0.16, $0.17, so there's a price delta. In the export, let's say, if you're earning around $0.04 to $0.05 peratak, your margin will be in the range of around 18%, 20%. In domestic utility, even if you're earning $0.025, you are still good to earn 15%, 16% margin, while the EBITDA per watt profile is completely different from same panel, which is manufactured. So more important to follow is how well is your sales mix coming out? Is it only going to one particular market, which takes care of the overall revenue and margin mix? Or is it segregated to various pockets where you can really play out on the margin and also derisk your customer segments? If there's a disruption in one market, you have alternates to deal with and supply. Hope that helps.

We'll move on to the next question, which is from the line of Parth Shah, an individual investor.

I wanted to know what are the time line of fundraise? And what are your plans for Indosolar.

So as we have mentioned that we are going to come out with the objects in the notice for the shareholders. Same point in time, we would also want to clarify on the time lines. However, right now, we are taking the enabling resolution to do this fund raise over the next couple of months. We'll be soon coming out with the clarification on the amount, et cetera. Second question on the Indo solar, I want to clarify since this is a call for WaareeEnergies Limited. I think we can take up Indosolar questions separately through the IR.

The next question is from the line of Donatella from BT Energy.

I'm talking on behalf of Mr. Vope. We are speaking as an early investor who has believed in War since 2009. First of all, congratulations to Mr. Doshi and the entire Board on closing a phenomenal financial year, achieving nearly INR 6,000 crores in EBITDA and reaching almost 26 gigawatts of capacity is an evidence of your execution. But today, our primary reason for speaking is to give a very warm and official welcome to Mr. Jignesh -- rather in his new role as CEO. Having known Jignesh since his days leading the production division, we know as long-term shareholders, first of all, his technical brilliance and his dedication to this company. The transition from Phase 1.0 to Wry.2.0 couldn't be in better or more capable hands. We see the market reaction today, but as partners since 2009, we look at the fundamentals, the vertical integration into Glass and the T&D acquisition are the right strategic moves according to us. So congratulations again, Mr. Doshi and Mr. Jignesh Rathod. We remain proudly by your side for this next chapter of growth. And now the question is, as you may know, the Italian government is trying to limit the usage of PV modules made in China. In Italy, 11 gigawatts of photovoltaic projects have been approved to be built with known Chinese photovoltaic modules and known Chinese cells. These projects could use worry modules made in India, which would certainly lead to an increase in Waree's order book. Have you considered the Italian and European markets in your development plans?

Nice to hear you a long time. Yes, Italy is always close to Mr. Doshi's heart and entire Waaree from where we have started. Our first line is from Italy with a capacity of 30 megawatts way back in 2007 and below Italy. So yes, it is in our growth plan. We have built an export team dedicated to Italy with 3 people and 2 more are joining. We are addressing our supply chain from Southeast Asia and India for Italian market. And we are very much ready to restart the Italian market, which has been stopped since 2016 onwards. And we're absolutely ready for entire Europe as well.

The next question is from the line of Pallavi from Samiksha.

I just wanted to know what would be the efficiency of the GR line right now? And what is expected in second half when we...

25.4% is the normal efficiency cells.

And you mentioned about the savings, right, 10% to 12% savings. Is that the primary right now coming from the efficiency of the savings?

No, it is from GR, we can make 650 watt modules. MTR was 580-watt modules. So increase of the voltage resulting into the savings, the realization of the profit.

The next question is from the line of Karan Gupta.

My question is the revenue mix. Just wanted to understand what is the revenue mix geographically? And the question is related to how much we exported to U.S. and Europe countries and then related to cell production, why the cell production is so low as compared to the peers, which is something close to double basically the production of cell. So these two things are coated. So first is your geographical mix in terms of revenue and the sales production...

So in terms of the mix geographical terms in OR overseas revenue. In terms of attracting any U.S [indiscernible]. So, our overall revenue from overseas more than 90% from U.S. The remaining is from markets we have started to explore and also started to ship materials. However, over next few months, we see a great amount of opportunity coming from European markets and African markets -- in fact in the Middle East market, we have started to receive the inquiries for buildout of large farms over there for renewals. So, that means not just U.S., there are 3 markets which have U.S. equivalent potential to consume overall renewables, be it Africa together, European markets or Middle East. So we really foresee a very diversified overseas market as well going ahead. Answer to your question around lower production on DC, as we have explained in the earlier questions as well that since we have been transitioning now from 1 of cells, there have been some in the production of cell, this will benefit starting from a quarter down the line where we see 10%, 12% of production from the same resulting into higher realizations for the long term.

Utility in the EPC or a domestic.

Sorry, I couldn't get that question.

Utility in the EPC, our domestic revenue mix.

Yes, yes. In the revenue mix, Yes, you're right.

We'll take the next question from the line of Abhishek Nigam from Motilal Oswal.

Just I know this question was, I think it came up a little earlier in the call. But just on the cash conversion cycle and the working capital days, if I look at numbers in the last year FY '25, overall working capital cycle was around 45-odd days, which is now closer to 90-odd. So is this what we should sort of build in go ahead? And do you think that it's a sign that there is more sort of capacity in the industry and so the working capital is getting a little favourable in terms of the customers? Or how should we think about it now?

So there are two areas to look at to understand this better. First is the effect of inventory, higher inventory, which I had also explained in my earlier reply that in the March ending quarter, the overall inventory has gone to the roof because of lower shipments for the overseas market. Number two, the advance from customers has remained steady and strong, even the levels are also similar. But because the overall run rate of production has almost doubled in a year's time, while the absolute number of advances were same, hence, the effect on the working capital cycle. So despite the high advance from customers even today, but because of higher sales numbers, the dilution in terms of working capital days. I hope these 2 put together explains the effect of cash conversion. in the cash flow.

Sure. Just one clarification on that. So the percentage of advance, let's just say, assume you were asking for, say, a 5% advance earlier. Is it still 5% -- or has it gone down to say, 2.5% or something?

In fact, not 5%. We have seen when we have been getting advances to the tune of 10% to 20% also in a few cases and other few cases, 5% also. So the trend is the same. However, because of geopolitical reasons, the tendency to be higher upfront advances for long-term contracts to the same set of customers has moved towards more advance at time when you start the production or start the raw material procurement. So you won't get that much of higher advance on the day of signing off, but certainly, we continue to receive advances before we start the dispatch of the production also. So our overall cash remains in the same environment of no credit policy. But yes, this will have an effect in the number of days of advance from customers.

Abhishek, just to add to while you're right on asking about the working capital, but we shouldn't take our eyes off the main true is ROCE. And if you see despite the rise in working capital, our ROCE remains truly top quartile...

The next question is from the line of Nitesh Mehta from Investment Group.

Congratulations for a great set of numbers. Most of my questions have been taken up, but I'm keen to know how company is planning for non-U.S. and non-Indian market.

That's what we said Europe is our next big destination, Africa and Middle East. Everything.

Okay. So we can expect, say, some 15%, 20% revenue 3 years down the line from non-U.S. and non-Indian market?

3% down the line, yes, but it is...

Down the line.

The next question is from the line of Arija Bannerjee from Nomura.

Just wanted to understand regarding the BSS business, what are the kind of unit economics and margins that we can expect? And what will the contribution from FY '29 of BSS business to revenue and EBITDA?

For someone to understand this business, I think I'll fall short of time if I start trying explaining the economics. But what I can do for you is a little easier business, the basic conversion plus the raw material that we will require for manufacturing of plus the cost, our ROC and ROE are falling in the current range of delivered ROCs and ROEs over the historical numbers. To explain further, you expect the business to generate around 18% to 20% margins without any support from the policy perspective, any of regulatory inc. If at all, there are policies which are more conducive for global manufacturing, which we are certainly hopeful as we keep hearing from the government as well that they are going to support Make in India for the entire value chain. I think the numbers could change -- but the basic business economics considering the ample demand coming from state market and now from Middle East market also wherein customers are asking for alternate supply solution for energy storage. I think this is the time to do the manufacturing deployment so that we have enough capacity available.

Understood. And any sort of revenue color for FY '29 or any time line that you have in mind for revenue contribution from BES.

I think it is too early to comment on any guidance around the revenue in FY '29 for BES. But if you wish to calculate anything, you can take up the total capacity that we are setting up 20 gigawatt hours. You can also take an assumption for market around the average price per megawatt hour for the BES in India and U.S. The average would come around $110 to $120. I think you'll get some sense of the numbers that can come out from this business. But right now, too early to comment.

I think we'll all agree that BES is one of the biggest enablers of the entire energy transition. It is the most critical component for even solar to accelerate during the non-solar hour because whatever surplus energy that was created during solar hours can now be stored and that gives new wings to solar manufacturing. With respect to revenues and all, obviously, we can't put a number, but the industry number is that India would need anywhere close to 60 to 80 gigawatt hour of BES annually. And the cumulative number that is put out by APIO and MNRE is that India needs to get to 300 gigawatt hour of BES over the next 5 to 7 years. 20 gigawatt hour is just the beginning. I think the runway of growth and capacity is multi-decade in this segment. So let's be patient about how best segment plays out that has the potential to create a new war in itself. It would take a few years to get there.

The next question is from the line of Sushil Choksey from Indus Equity.

Sir, congratulations for very stable numbers. When do you -- what do you forecast as your cell production in second half for the year and next year on established capacity, which you have highlighted?

So if you wish to get a sense of -- difficult to give exact number, but I can give you a range like on the existing capacity of 5.4 gigawatts, you can expect in the H2 because there are 6 months, I cut down the capacity from 5.4 to 2.7 effectively, you expect at least 90%, 95% of production in second half itself. For the new build-out 10 gigawatt capacity in H2 since the ramp-up will happen over 3 to 6 months of time, we can expect some bit of number from that capacity as well.

Can you just give an indicative number for -- let's assume for FY '28 for '27? And secondly, what is the total production increase you are estimating from existing capacity line, which you converting...

All right, so FY28, we have entire 15.4 gigawatt cell capacity available for complete 12 or months. The safe assumption could be to assume 85% utilization on the full year scale for FY '28 on the cell capacity.

How much will be used for DCR and schemes like Kusum and Suryalar out of that?

Cell that we are going to manufacture largely is right now planned for the domestic market only. So that means not majority. In fact, almost 90%, 95% or 98% for the local -- unless there are we keeping now from Italy market, from French markets that the requirement of non-Chinese supply chains are coming in a big way. If at all that also opens up, we may use something in those markets, but too early to comment.

Entire Europe market is open for replacement, which has implemented between 2005 to '10. So is Europe market likely to a better price or domestic DCR? And second thing, the top price and mono PEC price, what is the price differential as on today?

So for us to see a comparison between European market and DC market right now, the pricing in DC market are fairly priced. In the European market, the orders are even coming for the full stack solution, not just the panel. So good news for us, a player like us wherein we not just supply the panel, we give the entire EPC solution, transform CN the number is very exciting. Let's say, if we are constructing a solar farm in India with T&D, if the cost is coming around INR 3.5 crores to INR 4 crores per megawatt, same set of plant in Europe would cost around 20% to 30% higher. So for us, the realizable value for same set of megawatts on an overall system basis is very high when we go outside of India, be it U.S. markets or be it European markets. That's why 2.2 is very essential for us if you really wish to take out larger pie of the cake, which is there for next decade. And hence, all the segments which are going to stir assets starting H2 this year and big way in FY '28, we will really see numbers moving capacities and sweating of those capacities.

Can I assume that in FY '28 first half will be lower number at 50%, 60% of the new capacity and second half would be at 80%, 90 -- on a blended basis, it would be at 80...

I think difficult to comment exact percentage, but we can reasonably expect that 15 gigawatt capacity will be reasonably the next financial FY '28. 28 gigawatt of module capacity, global capacity, including 4.2 U.S. and another 24 gigawatt in Indian markets will be used at full throttle. Some best capacity which is coming this year, 3.5 gigawatt will be used for entire next financial year. 20,000 MGAs of transformer capacity will be consumed throughout next financial year. Electrolyzer capacity of 1 gigawatt, yes, available for entire year. 4 gigawatt inverter capacity, yes, available for entire year. In fact, on top of it, the EPSL company, with an acquisition of transmission and distribution arm, EPSL, will be also available to capture good amount of share in the market of EPC in India and overseas as well. So the answer to you will be next year, FR 28, Wari 2.0 will start showing its results, the compounding of assets that we are trying to create over years and the impact of large scale deep integration and penetration all working together to build a new Wari.

The next question is from the line of Abhishek Kansara from Asset Management Private Limited.

Sir, my question was how much would be the production from our U.S. And how much will be the IRA rebate that we have received this quarter whether this whether this IRA rate is included in the revenue number or our other income number.

So for in the US markets, the overall revenue in last financial year was 1 gigawatt plus, wherein around 85 to 90% was manufactured locally from our own SETC. We have been getting IRA $0.07 per watt peak against per watt peak of panel sold. There are some cost to incur when you convert that into cash. So we factor around 87%, 88% of the eligible IRA. So last financial year, roughly around $40 million cumulative benefit from IRA. However, this year when we start another 2.6 kilowatt facility in US and the earlier line also runs at full throttle, the overall effect in IRA will be multifold naturally.

The next question is from the line of Rahul Rohit from Ambit Wealth.

So it would be really helpful if you could throw some light on ALMM 2. There's a lot of ambiguity in terms of when will the ALMM 2 demand actually kick in, in India. So if you could give some on-ground reality on this, it would be really good.

Very difficult to answer with government also not able to answer. So speculations are going on, but I think within a week, we will have a clarity from government.

I think the intent is absolutely clear that the government wants to transition to as much local manufacturing of cell, eventually ingot wafer, power electronics, everything. The question is about 3 months here and there and the time line. If you see ALMM1, ALMM1 now is successfully and fully implemented, adopted by the industry. So cell manufacturing related ALM 2 is just about almost formalization. 1st June, it comes into effect.

The next question is from the line of Sweta Jain from Anand Rathi Shares and Stock Brokers Limited.

Just wanted to understand in you mentioned that the higher commodity prices have now been started reflecting in our realizations as well. I wanted to know the current order book, obviously, is at the last quarter numbers or reflecting the price hike that we've taken to factor in these commodity prices?

Thanks for asking this question, Sweta. I think I've tried to clarify in my earlier answer as well that the effect have started to see on the ground in terms of pricing conversion. However, there were not many intake of orders because of decisions on policy and clarity. Also in the overseas market because of the global tension, the intake was comparatively lower. So yes, we can rightly assume that now all the existing pipeline, all the current orders that are going to intake are going to factor in the price naturally.

[Technical difficulty]

Shweta, just to acknowledge the report that you released had very good industry insights, especially clarifying on the overcapacity issue, nuancing this high efficiency and areas. I think that was very well covered in your industry report.

The next question is from the line of Rajesh Kapadia from Raj Investments.

Congrats on good set of numbers. Sir, this is a question regarding our subsidiary, IndoSolar. Will you answer that question?

So we would request that we can get that question to the IR team of Indosolar. We shall get back to you over there.

The next question is from the line of Harshit Jain from POJC.

Currently with the large CapEx announce you have done the new verticals, are expected to deliver high ROC and ROE with the current level? Or should we expect some dilution at the company level as they scale up?

In fact, in the earlier calls in our presentation, we have tried to communicate this that the decision making for allocating capital by the Board is largely driven by the decision of return on the capital, which is a very essential matter for us. So, historically, we have seen the projects of ROC and ROE to the tune of 20% to 25% have been approved. Same is the case with current projects -- so you can reasonably expect to get delivery of similar set of return on capital from the investments that we are making. Hope that answers...

The next question is from the line of Sarang Joglekar from Vimana Capital.

I just want to understand the demand supply scenario in the non-DCR market. I mean you addressed this before, but just a clarification because now that ACM is also there are some speculations on that getting deferred. Do you see any pressure in this non-DCR market now?

As covered in the earlier question that yes, because of some speculations, some decisions, especially on the C&I and mid-markets are being deferred, basing the assumption that there could be some change in the time lines. But I think we should wait and see -- wait for the developments, regulatory.

Understood. But do you see any supply pressure because of that, any pricing competition?

So I think we're not clear about your question, but the mood provides is that the entire market will move to DCR as soon as ALM is instituted. Right. And with respect to supply -- cell supply, do you mean about that there's a shortage of...

No, I mean that if that ALCM is deferred and there's already a lot of module supply, do you see a scenario where the smaller module players would be much more aggressive in pricing to take advantage of that deferred period?

So you may expect some cases wherein the players who are in the mode of survival may even get down to any point of price that can be ignored. But fact here is the buyers, the C&I one are looking for suppliers who are able to demonstrate warranty servicing over the next 30 years. So someone struggling for survival supplying at the cheapest price, majority of C&Is are always take this precaution. In fact, the banking institution also now has started to acknowledge the fact that they are funding those projects wherein the visibility of the OEM to continue catering the warranty for next 25 and 30 years is reasonably -- going ahead, the maturity of financial markets, the banking, acknowledging more for large-scale quality suppliers who have ground performance track record, very minimum certifications, all in line of what has happened in the Western market is something that we are waiting to watch for. And this is -- I think this is going to reward those players who are continuing to perform supply and are also now able to do backward integration in line with the government's expectations of 2, 3 and maybe many more to come.

The next question is from the line of Akash Sherwas, an individual investor.

Sir, actually, I want to know your view regarding green hydrogen. Sir, just want to know that when green hydrogen can become commercially viable on a large scale? And What scope do you see for the green hydrogen and its derivatives such as green ammonia and green methanol in coming years.

Thank you for asking this very relevant question in context where the entire Middle market and the market dependent for gas supplies on particular chunk are waiting to see an alternate form. The Indian market has started to see traction towards green hydrogen and ammonia and other derivatives out of it already. We are in discussion with many clients and customers who are asking us to commit supply of long-term contracts for hydrogen for their manufacturing capacities, those who are in the chemical sector, those who are in the steel plant manufacturing and many more players. Similarly, there are discussions where in the blending of hydrogen could be allowed in the gas systems as well. So once the decisions by the regulators come in for blending of hydrogen and other localization of green ammonia in the urea, et cetera, I think there will be a gold rush towards getting hydrogen and green ammonia in-house in the country.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Jignesh Rathore for his closing comments.

One point that Vari has pivoted to multiple areas of growth consistently over the years. It was primarily a domestic company 4 or 5 years back or before and then came the exports opportunity. And today, we are talking about retail being such a large part of revenue and being a new additional growth lever. We're talking about global manufacturing out of U.S. being additional growth lever. We're talking about new business segments emerging. So I think given the challenges, which could be geopolitical, which could be supply chain, which could be domestic regulations, Vari has always found its way through scaling and finding new areas of growth. I think what Abhishek and Jignesh Bhai alluded right in the beginning, no single channel, no single market, no single customer or business segment will dominate. And over time, it will derisk both horizontally and vertically. Thank you.

Thank you all, ladies and gentlemen, for your time, your patient hearing and your continuous trust in Vari. It has been a pleasure to share with you yet another robust performance, and we remain confident in the growth opportunities that lies ahead. We're also excited to invite you to our Investor Day, an exclusive event where our leadership team will showcase our strategy in action across multiple business segments. The event is intended to provide deeper insights into our strategic priorities and the next phase of our growth journey. You can get in touch with our Investor Relations team for registration process. Thank you once again, and we look forward to speaking with you again next quarter. Thank you.

Thank you, members of the management team. Ladies and gentlemen, on behalf of Vari Energies Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.