Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Borosil Renewables Ltd (BOM:502219, Financial) reported a significant improvement in financial performance with total sales increasing to INR264.94 crores in Q2 FY25 from INR241.40 crores in the previous quarter.
- The company's EBITDA performance improved to INR52.88 crores, representing a 20% margin, up from 12.3% in the previous quarter.
- Export sales increased, accounting for 13% of turnover in Q2 FY25, up from 9.3% in the preceding quarter.
- The company achieved a profit after tax of INR12.62 crores in Q2 FY25, compared to a post-tax loss of INR3.64 crores in the previous quarter.
- The Director General of Trade Remedies recommended the imposition of provisional antidumping duty on solar glass imports from China and Vietnam, which could protect domestic production.
Negative Points
- The exemption from basic custom duty on solar tempered glass imports ended, leading to a surge in imports and excess inventory at customer ends.
- The German operations faced significant challenges due to reduced demand and higher costs, resulting in negative EBITDA of INR16.85 crores for Q2 FY25.
- The company is experiencing difficulties in securing orders due to excess inventory and reduced demand in the German market.
- The consolidated performance of overseas subsidiaries declined, with net revenue decreasing and negative EBITDA increasing compared to the previous quarter.
- The company faces challenges from Chinese exporters who have slashed FOB prices by 22%, impacting the domestic market.
Q & A Highlights
Q: Why are the costs for the German unit higher than the Indian business, and why not outsource manufacturing in Germany?
A: Ashok Jain, Whole-Time Director: The higher costs in Germany are due to it being a developed economy with higher manpower and energy costs. Initially, the revenue offset these costs, but demand has since decreased due to lack of protection for module manufacturers in the EU. We are exploring options to secure orders from other markets to improve capacity utilization and reduce costs.
Q: With a 65% market share in Germany, are you concerned about a decline due to dumping duties?
A: Ashok Jain, Whole-Time Director: The market share hasn't declined; rather, the market itself has shrunk. If demand returns, we can regain our share due to our local production advantages.
Q: Why can't Borosil Renewables use the same strategy as electronic manufacturers in India to combat Chinese dumping?
A: Ashok Jain, Whole-Time Director: Solar glass production is different from electronics, which involves assembly. Solar glass requires starting from raw materials like silica sand, making backward integration unfeasible.
Q: What is the status of the proposed 1,100 tonnes additional capacity, and what would be the CapEx?
A: Ashok Jain, Whole-Time Director: The expansion is on hold, pending a review in Q4 FY25. It could be a single 1,100 tonnes plant or two 550 tonnes plants. The estimated CapEx for 550 tonnes is INR750 crores.
Q: Can you explain the provisional antidumping duty on solar glass imports and its impact?
A: Ashok Jain, Whole-Time Director: The duty is based on a reference price, protecting against low import prices. For China, it's $673 per tonne, and for Vietnam, $565 per tonne. If imports are below these prices, the difference is paid as duty. This mechanism provides downside protection for domestic manufacturers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
