Vikram Solar Limited (VIKRAMSOLR) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Vikram Solar Q1 FY27 Earnings Conference Call. As a reminder, all participant lights will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing start, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Nishital Khanduja from Go India Advisors. Over to you, ma'am.

Thank you, Ananya. Good afternoon, everyone, and welcome to Vikram Solar Earnings Call to discuss Q1 F527 results. We have the senior management with us on the call. We are joined by Mr. Sameer Nadpal, Chief Executive Officer, Mr. Anjan Jindal, Chief Financial Officer, Mr. Arun Mittal, CEO of VSL Power High Private Limited, fairheading the company's battery energy storage system business, and Ms. Reenal Shah, General Manager, Corporate Finance. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. May I now request Mr. Spaniel Nagpal to take us through the company's business outlook and financial highlights, subsequent to which we can open the floor for Q&A. Thank you and over to you, sir.

Thank you, Sheetal. Good afternoon, everyone. As we gather in this auspicious month of Shabbat, I extend a warm welcome to all our stakeholders, seeking Lord Shiva's blessing for his wisdom, strength, and sustained prosperity in our journey ahead. Before delving into the details with respect to the performance of the company, I would like to give a context to the quarter we've gone by. Three things shaped this quarter. First, ALMM-2 enforcement stayed unclear for most of the quarter before the mandate was implemented and then deferred to December 2026. That uncertainty held back buying decisions and it showed up in our order flow. Second, the ongoing bulk conflict pushed up the costs of metal, group linked raw materials, and trade. Third, being the sheer volume of new module capacity that came on stream in the CY, which made competition intense and did not allow a full path-through of these costs, the impact of which you see in our numbers. The most important story is what we have accomplished, because underneath the margin optics, this was a quarter of building and depositioning. This quarter, we clocked our highest-ever quarterly volume of 1006 MW, up 32% on the same quarter last year. Revenue grew 38% year-on-year. Let me now talk about our commercial engine, where the repositioning is really happening. Our order book closed at 7.9 gigawatt. And its composition is shifting towards a diversified customer base, which helps us improve price realizations. The large accounts non-DCR order book that includes utilities, IPPs, large CNIs, customers, still constitutes a lion's share of our artwork. On account of the ALMM2 development on July 18, these that have been sitting in limbo now are going to move forward. And the 50 gigawatt-a-year C&I demand that was waiting for policy clarity has resumed conversation. To serve the DCR side, the priority has been locking up cell supply. We have now multiple procurement partners for domestic cells and the same reflects in our revenue mix starting this quarter. We have sold 76 MW of DCR modules this quarter, which exceeds the full year number for the last fiscal. In the subsequent quarters, we expect the numbers to increase many folds. Increasingly, that volume reaches the market through distribution, a channel that used to be supplementary for us and is now becoming strategic. Our monthly run rate has doubled in distribution from roughly 40 MW last year. And we now have a network of 119-plus distributors and over 757 dealers across the country. That reach lets us tap into policy-driven installations under the PM Suri Graf and PM Khosun Yojdan. And our presence across 24 states and 500 districts gives us a real structural advantage in getting to those customers. And alongside distribution, we have been reshaping who we sell to, moving deliberately into the mid-market, where we have doubled our sales team this year. Vikram Solar has historically been a large account company, the right shape for a market with fewer larger customers. But the market has broadened. Mid-size EPCs and mid-size C&I clients are a growing share of the demand boom. And we are building the sales force to match. Where the customers are now. It carries margin benefit too. We expect a roughly 50 paisa per watt peak higher price realization from this customer base. Taken together, the DCR supply, the July deferment, unlocking decisions, the distribution ramp-up, and the mid-market build-out. That is why we are confident about Q2, H2, and H2. We are restructuring how this business goes to market, and the shifts we are making now are what will carry us through in the next few quarters. This is the domestic picture. Alongside it, we are widening the aperture internationally. We are accelerating our global expansion to the dedicated international team. Global buyers are diversifying their sourcing and tightening supply chain visibility, and a credible manufacturer with verifiable India-built provenance is exactly what that ship calls for. Having talked about the commercial engine, now let me move to project execution. We have stayed the course on our project expansion commitments. On June 29, the first module rolled out from our Gungaikodan facility. On the date, we had promised it could happen. On the cell 9, Gangai Koton is on schedule. Civil and PEB works are advanced. Clean room and MEP plans are on track. The first centimeters targeted for Q4 FY27, taking us to roughly 70% into backward integration. And the cell plant is really one piece of a larger design. We are building all three plants, ingot, wafer, cell, and module, inside a single fence at Gangai Kodan, because the design itself is an advantage. The capacity here is modular. Ingot and wafer scale simply with the number of pullers and slicers we install. That lets us phase capital precisely to demand and to policy, and add capacity quickly once the enabling infrastructure is in place. That's the upstream story. Downstream, at the module end, the technology has moved through. We have transitioned our module portfolio from M10R to G12R across the platform. Higher watt peak per module, lower conversion costs per unit, and it flows through to per watt economics. Both Vannam and Kui Kui Proton are built on substantially more automated lines than our legacy capacity. And the operating metrics already wear that out. Manpower deployment has come down by around 40% with a comparable improvement in line cycle time. Taken together, we expect substantial conversion cost optimization at these facilities relative to our older lines. So the same volume that today carries a ramp up penalty will, at full utilization, be produced at a structurally lower cost per watt. Before I close, I will share one recognition from the quarter that means a great deal to us. Because in our industry trust compounds, Vikram Solar received the EcoVadish platinum rating second time in a row, placing us in the top 1% of the 200,000 companies assessed worldwide. It strengthens our standing with global buyers, lenders, and its... Supports the premium position we are building in the market in India, in EU, and in the US. Let me close. Stepping back from the quarter optics, here is what actually happened in a soft market. We built our first module rolled out of the make-go-done on the day we promised. Our DCI supply is secure through the ramp-up. Weaver incurred breaks down shortly. The cell plant is on track, and our Go to market engine, distribution with market and DCR, and now international is being rebuilt for where demand is heading. With this, I will hand over the mic now to Mr. Arun Mittal for an update on our best business.

Thank you, Sameer. Let me share the update on VSL PowerHive plan on BESS. So, VSL PowerHive has made a master plan of setting up 15 gigawatt of integrated cell manufacturing and BESS assembly in two phases of 7.5 gigawatt hours each. The update on phase one is our 7.5 gigawatt hour BESS assembly plant is getting ready in Chennai. We ordered all the equipments around three months back, and the delivery of the equipments is planned in November 26. The utilities are under installation. We expect the plant to get installed in the month of January 27, and the target date for commercial operations is from March 27. This is the update on the base assembly plant. We have also made significant progress on the Phase 1, 7.5 LFP cell manufacturing plant. So we have shortlisted the land options in two states, and we are in active discussion with both the state governments on optimizing the incentive package. We are confident of finalizing the land and the incentives by September 26. We have also finalized the technology and manufacturing partner who will help us in setting up this seven and a half gigawatt LFP cell manufacturing plant. We are looking at LFP Gen 2 large format cells and not the Gen 1 format. And the tentative commercial operation date we are targeting is quarter four of financially at 29. While all this is happening, I'm also happy to share that we have launched the PowerHive brand for the CMI and the utility scale solutions, and we have also executed our first order of 20 megawatt hour utility scale solution. This is the update on the battery business of VSL PowerHive. I will now hand over to Mr. Ranjan Jinder. Thank you, Arunji.

And thank you, Sameer. So, good morning, everyone, again, and thank you for joining us. I am accompanied by Ines Shah from our Investor Relations team and our advisors, Grow India. Our QR earnings presentation is available on the exchanges and is also available on our website. Before the numbers, a quick word on the backdrop. The market around us kept expanding. India roughly added 12 gigawatts of solar in the quarter, with a record rooftop contribution under PM Sulia Gharojana. and storage building in parallel. The quarter also shaped with two big policy steps. The ALMM2 cell mandate took effect on 1st of June, and on 18th of July, the ministry issued the operating memorandum on ALMM2, giving the CNA segment a calibrated relief. Much of the industry spent the quarter absorbing the change, and customer decision-making moved accordingly. Revenue from the quarter, Revenue of consumers is about 50-60 crores. Up its 8% sequentially and close to 38% year on year. We dispatched 1.06 gigawatts broadly flat in line with Q4 and up nearly 32% on the same quarter last year, which is a scale our expanded capacity is now delivering. EBITDA for the quarter was at 126 cores at a margin of 8.06% and PAT was at 19.78 cores. EBITDA is down on the quarter, and I want to be clear about the shape of it, because it is not what the sector headlines would lead us to assume. This was not a broad margin squeeze. Two things actually went in our favor. Our relation improved, and every cost line below the gross margin improved. The entire movement sits in a single line, which is the cost of goods sold. Let me now take a turn of it. Let us start with the relation again, because it is a standout for the quarter. Our per watt-pick realization rose to 15.02 rupees per watt-pick, up 8% sequentially. The driver here is the mix, not the price. As Samit mentioned, we got about 76 megawatts of DCR modules in the quarter, and because DCR product carries a mentally higher realization, that lifted our overall bandwidth number. With several domestic self-procurement agreements now in place, we expect the DCR mix to rise further in the quarters to come. It helps us to see the revenue led. Our IPP and utility business is the base load of the book. Large, steady volumes, but item margins. The foundation, everything else fits on. Mid-market and the C&I sit above that. Smaller orders that price better and lift the blended margin. And the distribution segment is the fastest moving segment of the three and the richest on the gross margin. It was also our fast growing channel this quarter. As the mix tilts more towards the high margin layers and towards this year product, the blended realization rises, and that is what came through the 15.02 rupees per watt peak realization. Against that, our unit cost for the goods rose by 1.86 rupees per watt peak in the quarter, and that single line is effective in the whole of the gross margin movement. Let me take you through what drove it, because the conclusion matters a great as to how this is unwinded. The last part of it was war-related inflation in base metals. Aluminium and copper prices ran up sharply, and those feed directly into our aluminum frames, our bus ribbon, and our interconnect ribbon, constituting about 35% of the balance of raw materials. With those metals moved, a third of our input basket moves with them. On top of that, the spike in that crude oil fed into the EVA, a critical encapsulate, which is about 200% of our balance of raw materials, also through an inflation. Then there is cell cost, which hit us in two ways. Chinese cell prices spiked in the previous quarter, and because that closed for inventory, it was this quarter that took the one of it. Taken together, the great majority of this cost increase is either input price driven, and will ease as metals, crude, and cell prices normalize, and as older high-cost stock works too. We are not leaving that to utilization alone. We have a deliberate program underway to bring conversion costs down. Value engineering across the bill of materials, an alternate vendor procurement strategy to broaden sourcing and lower input cost, rationalizing logistics by aligning inbound and outbound moments to the production plan, moderating decisionary overheads, tightening the inventory cycle to release working capital, and cut the carrying cost. Cale is what makes this program powerful. Each of these levers is a per-watt saving, and with our volumes growing at pace, as the new lines come in, every looping takes out per-watt multiples across a larger base. So the absolute saving this initiative delivers will be substantial and will build water and water. Some of this is already visible in the quarter numbers. Other expenses per watt came down to 6% and the finance cost per watt fell over 11%. Employees' costs stepped up modestly and deliberately as we staff the new lines ahead of the volume they will carry that absorbs a utilization pension. These are early reads. The fuller benefit of the program will show through over the coming quarters as initiatives mature and the two ramping facilities fill out. Our value sheet remains a genuine source of strength for us. We continue to carry no long-term debt, even today. Working capital utilization came down over the quarter, and the net debt to equity is almost negligible. We have not drawn on the sanctioned CAPEX facilities as a drawdown if sequenced to project milestones. On the bill itself, we deployed approximately 500 quarts of CAPEX this quarter, 80% towards the model facility, and the balance towards the self-plant, with both programs on their committed timelines. Let me now put the capital plan in a single frame, because it is the heart of the overall investment case. We are building a fully integrated platform at Gandai Kondal in three stages. A 6 gigawatt module facility, which is fully funded, a 9 gigawatt cell plant currently inbuilt, and a 9 gigawatt wafer and ingot facility, which received the board approval for increase from 6 gigawatt to 9 gigawatt yesterday. We anticipate to deploy roughly 4,700 cores of rest of the capex in this year. By 2030, the Gangai Kundal site will be live end-to-end, a policy-aligned, margin-accretive, made-in-India supply chain from unit to module. And because of all three stages, stick inside a single fence, core location lets us take a large part of the fixed overhead out, one utility base, one shared infra, no transport, and no handling stages. All of it stays inside our capital discipline framework. The committed capital does not breach our leverage guardrails at peak drawdown. Growth will not come at a cost of balance sheet, let us be rest assured. The integrated site is a compounding asset. Each stage we bring in captures margin that currently fits with an external supplier and lowers the delivered cost of the stage below it. That is why we are investing now in the energy infra, land, power, water, evacuation, ahead of the capacity that fits on it. When the wafer and ingot content made under ALMM burns up and are staggered, wafer-backed PCR demand comes into the mainstream, we intend to be ready to deploy capital on augmenting wafer and ingot capacity quickly at lower incremental cost and in step with the policy. In effect, we are buying that opportunity now and buying it cheaply. We shared a formal outlook for FI27 on our 8th May call. Given the shape of this quarter and the ramp ahead of us, we will revisit that outlook at our H1 results again. Let me leave with you four things to take away. One, pricing power in the non-decker market is under pressure, and our answer to that is the mix. We are steadily shifting revenue towards the higher margin mid-market and the distribution channels, and towards this year product. The cost pressure is real, but it is identified, concentrated in one line, and largely transitory. The balance sheet is effectively debt-free and the integrated platform we are funding is what converts this year's investment into a structurally lower cost base and compounding returns in the years ahead. We have moved through those cycles earlier and we know the discipline they require. With that, we will now be happy to take your questions.

Thank you.

Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The next question is from the line of Deepak Perswani from Swan Investments. Please go ahead.

Yes. Hi. Good afternoon. Thank you for the opportunity. So firstly, I wanted to confirm what was the spread for what during this quarter? And secondly, just wanted to understand, if I understand correctly, from the cost inflation point of view, 88% of our order book had a cost escalation gloss with the clients. So what led to, I mean, what was the reason this was not passed on to the customers? And if you can help us understand this, then along with this. So, ALMC has postponed to the December. With this, are we seeing stabilizing in the price now, and what is the current rate at this point of time?

Yeah. Hi, Deepak, and thanks for the question.

We shall answer the second part first, which is a critical concern for all of us to think about. Yes, our MSAs do have the benefit of pass-through, but as we have told earlier and just clarified using our adir calls, this pass-through is only for the cell and not for the bomb. And Mark, as I mentioned, with the transportation and the cost of EVA and the cost of metals going up, The impact of increase in cost has also come in the warm part, which was not being able to pass, that is one. And even on the front, with a lot of poor supply, it was not fairly easy for us to get fully accommodated with the selling prices with the customers. So the increase in cost was not fully compensated by the corresponding increase in selling price, hence the falling margin. Now, if I come back to your question one, it's a plain match to show that the EBITDA of 125 crores over a volume of 1 gigawatt effectively delivered with 1.25 per watt peak.

So, with the stabilized, I mean, since ALMC has been deferred to December, we understand that now the non-DCR demand is again back into the system. So, in this context, where we are at current juncture on this spread part, have we seen any hike in the spread?

So, as I mentioned, with the policy, policy decisions to get fully streamlined, because the decision of the government on 18th of July to defer the date until 31st of August was marked fully in place. So, let us wait for one more quarter to see as to how the overall margins on the DCR Supermortis Abil panel, which will then help us formulate the yearly guidance better.

Okay. And second part of the question is on the order book front. Our current order book is somewhere close to, I think, 8 gigawatts. How much of this is executable in this year? And if you can also help us understand in terms of the volume for this year, how we are looking at the current juncture now.

So, Deepak, again, from the production point of view, as we told, on the end of June, we have commissioned the GK module plant. So, from capacity point of view, we are fully equipped to deliver 15.5, which effectively can deliver 9 to 9.5 of the whole year. But it will all depend on how the overall market pans out. Obviously, we will not be picking up orders which will have negative margins. So, we will be conscious to see as to what the overall volume hits the top line.

Okay, and how much is the order executable in this year? Can you please help us understanding, out of this 8 gigawatt order book, how much is executable in this year and the remaining 9 months?

So, it depends. Based on the plan, we did have some clarity, but now there are some changes in the plans of the customers as well. Allow us one more water to have a better clarity on the year as a whole, both on volumes on the pricing front.

Okay. And certainly, since we started for the DCR market and there has been some contribution on the DCR market this time, if you can help us whether the spread for our DCR is similar to the non-DCR, it is lower than the DCR at this point of time for us.

Sure. So, this quarter, as Samir mentioned, we delivered 76 megawatts. So, it's only the ramp-up we have now started doing, adding more of volume to the ECR supplies. Yes, the ECR obviously delivers more than work in non-ECR production.

Okay. And since we had some 2 gigawatt kind of external arrangement with some third party, in that context, whether this 2 gigawatt would be entirely executable in this year and spread would be better than what we have seen at this point of time?

Yes.

Okay. And finally, if you can also help us on the cell line point of view, I mean, if you can just update us on the project point of view, are we on track to start the cell line at the end of Q4?

Yes, Samir, yes, we are on track for Q4 for sellout and commissioning and then thereafter.

And this entire 9 gigawatt would come on stream during Q4?

No, entire 90 kW may not come during the Q4. It may spread over to the next Q1.

Okay, and during Q4, what would be the kind of capacity which could come on stream?

So, the 9 gigawatt capacity will get commissioned during Q4, but the ramping up may...

Yeah, yeah, ramping up, but from the commissioning point of view, we are on track, right?

Yes, yes, yes, we are on track.

Okay, okay. I have follow-up. I will come in the queue. Thanks for clearing there. Thank you.

Thank you. The next question is from the line of Praveen Sahai from PL Capital. Please go ahead.

Yeah, hi. Thank you for taking my questions. So some more color on the spread. Because in this quarter, we had seen a contraction in this spread as well as we had seen a DCR numbers as a contribution also has increased. Also, you highlighted DCR has a better spread for you compared to the non-DCR. So can you give some more color on that? Because for this year also, you are buying from the outside market, the sell, and those sell, we are looking at the companies and they are reporting they are a very high margin. How differentiating internal spread, DCR, non-DCR for you? Is that big delta is there or just a few percentage points?

So, Praveen, as you rightly mentioned, yes, the cell manufacturers do retain most of the margins, but for us, the presence in the DCR market is always important, and maybe I'll repeat, but the DCR will deliver and does deliver margins more than what the non-DCR would be. Why we are refraining from giving you an annual number or a guidance for the next quarter of the quarters to come is that Q1 has just seen 75 megawatts of DCR. So, serious volumes will now flow in, which will help us stabilize our EBITDA per war peak in a better form on the DCR front, and even on the non-DCR, as Amir mentioned, that the spillover of the previous quarter's inventory hit the non-DCR EBITDA for the current quarter, and with the war, things now getting settled. Even on the non-DCR front, we expect some rationalization and clarity on the margins, better than what we saw in Q1, at least. So allow me to continue with this for the time being. Maybe in the next quarter, we will be more than keen to help you with better numbers.

Right, sir. One on the volume, like last two quarters, Q4 and now Q1, we had done nearly one gigawatt. So also we heard one of the another player call and they highlighted about the influx of a non-DCR module in the Q1 because of all regulation change. So is that any element to that as well reflected in your number, which is expected to normalize in the coming quarters?

For us, anyway, the split in the revenue mix was skewed towards the end DCR for this year. Having a CNI, which is 15 gigawatt a year kind of a market, most of their volumes now shifting to non-DCR compared to the earlier estimate of DCR would reduce the overall country's consumption of DCR for the year. Earlier estimate was somewhere close to about 2025. Now that number will look closer to about 70. This is our estimate.

So, I'm just, you know, I'm just clarifying on the volume side more that there is a rush or the influx of a non-DCAD and that's led to the very high volume of a 1 gigawatt. Is there any element to that? Will this volume to continue or you expect to, you know, coming quarters with the normalization will come down?

So, again, our volume per quarter are a function of the backlog, order backlog that we have, and our module plans are ramping up. So, we do not anticipate any slowdown in that. I mean, the ZNI effect is yet to come and yet to be seen in the coming quarters. The country's consumption remains on point. We did 12 gigawatt in the last quarter, so it is not a one-off.

Okay. Nice to hear that. Second question is related to order book. Definitely like 7.1 gigawatt is from the large accounts, and it's a mix of a DCR and non-DCR. So how you are, you know, anticipating, especially the spread in these particular large accounts? Because if there is some big element to that, which is non, you know, cost is as, you know, sir has already mentioned that only for the cell cost, there is a cost escalation clause, not for the other things. So, how you are looking at the spread, especially in the 7.1 gigawatt, because the cost is still on the higher side for, you know, the related X of the cell as well.

So, Praveen, before I start, one factual correction. The 7.1 gigawatt does not include any of the DCR business, and as we mentioned, distribution is not part of our order book, and the DCR today is mainly to our distribution. So, the 7.1 is entirely non-DCR from the order book point of view. On margin holding point of view, again, as we saw that even if we anticipate or believe, some margin will be restored there. It will all depend on how we are able to seriously get the cost pass-through implemented. As you rightly told that, yes, the country is flooded with 210 gigawatts, and there is a lot of oversupply. So, that is hitting us on the margins to some extent. And again, at the cost of repetition, allow us one more quarter to have better clarity on the margins, both on DXL and non DXFRA.

Okay. Lastly, on the CAPEX side, that is, you know, you highlighted about the 7,000 or 4,700 odd crore for integrated facility. Can you give a, you know, timeline like this year, next year, how much is the CAPEX plan for you?

So what we can do, Praveen, as we discussed that the year as a whole, we'll be delivering the 9 gigawatt L9. The six gigawatt module is fully funded. We will kickstart with lower commitment on the RAPER and EGOS project to cash the commissioning deadline somewhere in FI29. And as Mr. Mitchell explained, we will commission the 7.5 gigawatt module assembly, plus some contribution going towards the 7.5 gigawatt cell plant also. All going well. This year, we looked at an investment of about 5,000 crores, of which 500 has already gone. Of which we have not taken any debt until now, we will start our investments somewhere in the end of this month. Major money is coming in from the head to fund the project.

Okay, so 500 crore you had already.

Sorry to interrupt. Sorry to interrupt, Mr. Praveen. Could you please rejoin the queue for any follow-ups? Thank you. The next question is from the line of Sahil Sheikh from Anand Rathi, Institutional Equities. Please go ahead.

Hello, sir. So, sir, just a follow-up to the previous question where you said our entire order book is based on a non-DCR order book. I just had a question that since we are tying up to procure external domestic cells, is that those DCR models only servicing to your distribution network?

The DCI sales will primarily service distribution network, but some of it will also go towards mid-market in the months going forward. So currently, once our cell line is commissioned or is closer to commissioning, we will start building order books for the large accounts.

Okay, sir. And, sir, on the distribution side, in terms of realization, those DCR modules would be booked on the spot price. Am I correct in understanding that?

Yes, that's right.

And, sir, what would be the difference in margin between your distribution segment versus your large account or mid-market segment?

Yeah, but price realization ranges between a rupee to 1.5 rupees better over key accounts or large accounts. That's all I can say right now.

Okay, sir. Thank you. That was helpful.

Thank you. The next question is from the line of Bala Murali Krishna from Onam Investment Advisors. Please go ahead.

Hi, Grafnam. So, from the conversation, the margins were hit this quarter, but from the conversation, I think in the next quarter in Q2 also, it's unlikely to get the margin back to the 16% range. Is it true? Could it be?

Sorry to interrupt. Mr. Balaf Murali, could you please come closer to the mic or if you're using a handset, could you please fix it? You're not audible.

Yes. Is it okay now?

A little louder.

Yeah, and from margin point of view, from the conversation, I think getting the previous margin 16% is very unlikely in the Q2 also. Is it the way to look at this one, or do you have any thoughts on this one?

So, Bala, that will not be a direct conclusion, but yes, even Q2, we will have some sense of this impact of the prices not getting involved. But as Amir explained that the focus towards the channel market with more of VCR coming in will help us garner better margins in Q2. So let's wait for 90 more days and hopefully we'll be having a healthy discussion on that day.

Yeah, I understand that the LMM2 extension could have caused some issue to the players who are very much strong in the DPR segment. But as we are not in the DPR segment till now, and we are mostly purely supplying to non-DPR category, so how this would have impacted us very badly as compared to other players where they have reported only 1 or 2% dropping margins, and our margins are almost hit by 50%.

The deferment has made the CNI segment active again on non-DCR procured nets, and that will help us increase the volumes in terms of order book and also get a little better price realization on the non-DCR segment.

That will be the positive for us.

Yeah, I understand that. That's what I also thought. So it would be helpful for our organization as we don't have self-faculty as of now. It could improve the non-brain share market. But this margin front, how it impacted this margin front badly to us as compared to other people? That's my question.

So, Bala, if I've understood you properly, you want us to get compared with the peers on the EBITDA margin front. This is nothing but an outcome of the captive cells coming in. So, with more of, so our focus presently is towards shifting towards the retail channels, which helps us garner more profits. Anyway, we won't have the cell till the end of this year.

Thank you.

Thank you. Reminder for all participants, please press star and 1 to ask a question. Participants who wish to ask a question may press star and 1. The next question is from the line of Vishant Shah from Adani Properties, Private Limited. Please go ahead.

Hello, am I audible?

So, my question is that when can we expect the normal range of EBITDA margin in the upcoming quarters and as compared to the peers, what is our future visibility?

Once our cell line is commissioned, I think the two clear comparisons will play out only then. Different players are in different stages of their cell line commissioning, and there are also a lot of current model manufacturers who do not have plans to go into cell line. So any clear comparison at this point of time is very difficult to do.

Okay, and what about the red-a-margin normalcy?

Till our cell line comes up, our EBITDA margins will be determined by the non-DCR business, and once the cell line commissions, and as we, you know, get into the DCR order book, the margins will show expansion, because then it will capture the cell margins also.

Okay, thank you.

Thank you. The next question is from the line of Karan Gupta from Asset CMEHTA Investment. Please go ahead.

Hello. Am I audible?

Yes, Karan, you're audible. Okay.

So, my question is on the LLM side. How much is the, you know, eligible book size in the industry, which is allowing NDCR? Basically, it's your CI and rooftop thing.

See, if you look at the grandfather projects which were allowed for non-DCR, the estimate was around 80 gigawatt. But now, with the extension of the ALMM2, the current C&I requirement will also shift to non-DCR, so the eligible volume will get topped out.

Ok, ok. So, you know overall solar industry projects, what is the percentage of this CNI and your rooftop. So, that is something that I want to know. The order book which is coming from the CNI and your rooftop you know overall project.

C&I as a whole, and that includes the rooftop as well, rooftop C&I as well, is 15 gigawatt a year in price per market, of which roughly 6 to 7, a couple of rooftops, and the rest is through open access ground mountain food. This compared to your overall country's consumption on an AC level of 45 to 50 gigawatt, that's the proportion of C&I as a factor of the entire consumption in the country.

Uh, so, um...

On the cell side, if you work down the numbers that what is the cost of cell production and doing backward integration, it will, you know, ultimately, your margins will move up in the comparable with your peers. But looking at the peers,

consuming

the self in-house, So, whatever the margins right now they have, right, and as and when the production of the cell or the fatalities or the capacity is increasing, the margin benefit is not coming into the numbers. So, what's your analysis on that? And also, what is the, you know, cell price that you are putting from China? Right now, after the rebate they've, you know, reworked on their products or their export, what is the sell price right now, imported sell price, and what is the domestic sell price?

Let me answer the first part. See, our sales are one of the most modern lines which have been put up. So, our cost of manufacturing of sell will be one of the best in India. So, to that extent, we will get the benefit of margins based on that sell cost. The DCR module pricing is very different from non-DCR, and their margin comes into play because of the pricing impact as well as sell cost, in addition to the sell cost. So, that's on the DCR side.

And on the Chinese sell, if I correct, these numbers today are at 4 cents on London prices.

Sorry.

I mentioned the spot price for the Chinese imported sales is 4 cents, and over that, there is, of course, the BCD is bringing 7.5%, so that is the procurement cost as of today.

Okay. Okay. Thank you.

Thank you. The next question is from the line of Siddharth from Nafa Capital Advisors. Please go ahead.

Ah, hello there. So, my set of questions is regarding the whole oversupply scenario that's being, you know, popped out. There's one set of argument that's being said where, you know, the most backward integrated players will be the ones who stand out and there'll be a supply shortage wherein, you know, the only the most backward integrated player right from, you know, the silicon wafer is who's going to contribute to the, you know, future supply. So I just want some light of, you know, you on the whole industry scenario that's going on, how it's going to pan out. And second thing, what is your plans on your backward integration? Do you plan to integrate all the way till polysilicons where the industry leaders like Wari and Premier are planning to? Just want to get some light on it. It will be really helpful.

See, the whole backward integration and make in India is driven by policy. As policy progresses, we will keep pace with it. At this point of time, our cell line will get commissioned in Q4, as we have said. We will announce next month groundbreaking for our wafer and insert capacity, for which board has already given us approval. This will be 9 gigawatt. So, 9 gigawatt cell, 9 gigawatt wafer insert. And 15.5 gigawatt of module is where we are at this point of time. As the policy evolves, we will keep pace with the policy. And I agree with this, with what you said. Given the way the policy is taking, manufacturing in India, those who are not able to backward integrate, that capacity will get consolidated or rationalized. And as we go forward, we expect a much smaller capacity to serve. Indian market. By smaller, I mean adequate enough to serve Indian market, but not have very, very significant overcapacity as we are experiencing today. It's a transition which should get settled over next few quarters.

Understood. So, that's pretty much, and I wish you all the best. Thank you. Thank you.

Thank you. The next question is from the line of Bhagwad from Prosperity Wealth Management Private Limited. Please go ahead.

Thank you for the opportunity. You mentioned about the raw materials, what things you used in terms of medical margins. So, your outlook on margin for the remaining quarters of the year, are we expecting regular margin of 8% approximately giving this Q1 to continue for next three quarters of the year, till the time our sale line would only come in C4, and also in line with that, if you could comment on the FY27 EBITDA guidance of 16-1600, that was earlier given.

To, uh, So, as I mentioned, And then getting deferred because the reality of...

But if the current situation continues, so then can we expect a similar sort of margin 8% or do we expect the margin to go further down also?

I think this quarter has been impacted, as we said, both by forex, by Middle East war, cost escalations, etc. Some of these factors are continuing, some are moving. So we will have to, if there is no change in any of the environment, and competitive intensity remains where it is, we expect it to go down, by the way, because of the extension. So margins should broadly trend in this space, but could we get better?

Okay. Okay. Thank you so much.

Thank you. The next question is from the line of Mohamed Tahansari from Taha Capital Management. Please go ahead.

Hi. Good afternoon. I'm glad for the opportunity. So, my very first question goes to, in Q1 FI 27, our total saleable module stands to around 1 gigawatt. In Q4 FY26, management has given a guidance for the production of module to reach around 7 to 8 gigawatts in FY27 end. So, do we still follow that guidance only, or if management would like to slightly change the guidance as per the current scenarios? So, that's the very first question, Afmari.

Yes, see this, as we have explained, this K112 policy changes have made our customers little tentative in terms of when they want to procure the modules. As I said, there is a grandfather list of projects which we will procure non-DCI. They have two issues. One issue is around this policy changes. Make the prices in the market a little more volatile. So, they wait and watch. Second is, they are facing their own challenges around the infrastructure, clarity, land, evacuation, etc., which is making the procurement a little slow. They are all working towards making it as fast as it can go. We are also watching to see how that pans out. So... Combination of these two factors, we are not updating any guidance at this point of time. We are waiting for clarity to emerge.

Okay, got excellent. The second one from my side is part of what sales realization as I see in Q1 FY27 stands to around, I think, 15 rupees per watt, north to 15 rupees per watt. That's really good when you compare to the whole financial year 26. So, what's the reason for this good sales realization, as well as in FY27, if you'd like to give any revenue or sales realization for what electric, which kind of stabilize what end of FY27.

So, Mr. Dharic, this is a relation of 15 per watt peak for the quarter is a blend of DCR and non-DCR both, wherein DCR, as you know, has stretched about 21-22 class. Going forward, it will all be as to how the penetration into the distribution market will work out to be to see as to what the overall blended ASP for Q2 and the quarters to come would be.

And I would like to add that we expect our TCR business to grow 2 to 2.5x every quarter. So that's the frame we have put together.

Yeah, absolutely good. Sir, the next one is on the EBITDA side. As we see that EQ and FY27, EBITDA for what decreased significantly, and you told the reasons for the sale, and it's really fine. But if you can give some light on to what EBITDA for what we can achieve at the end of FY27 before the cell plant comes and accordingly with the capacities we have as of now.

Hello. So, yeah, I'm sorry.

As you mentioned, you'll have to bear with us for another 90 days for this. So, let us have a clarity on overall business.

Okay. So, for Abikna Parvot, by the end of FY27, maybe in the next quarter, we can get a better idea for this one. I hope. And, sir, the very last question from my side is about the cell plant. As you already said, the cell plant might be coming by the end of FY37. So, let's see if the cell plant gets commissioned on time. So, what can be the capacity utilization in FY28 for the cell plant, if you thank you?

Yeah, so assuming a six-month ramp, which is the standard industry practice, for the full year, the entire nine years are what are available to us. The utilization that we are targeting is about 40 to 50 percent for the first year, where six months will be spent in ramping up the line.

Okay, great. So 40 to 50 percent we can expect for self-reportation. For the full year, thank you. The very next thing is, let's say we have a DCR order book of around 2 gigawatt as of now, and for the sale, we have partnered with one of our domestic players to supply, sell to us for the completion of that order book. So I need to understand that if you can tell what cost per what order, at what cost... Sorry to interrupt.

Sorry to interrupt. Could you please? Hello, yes. Could you please get in the queue for any follow-up questions?

Thank you.

Thank you. The next question is from the line of Ritesh Appi from Kingsman Wealth Fund. Please go ahead.

Good afternoon, everybody. My first question was obviously on the margins, which have already been answered by the management. I just want to understand, you know, what distinguishes Ritram Chola from peers that may struggle through this downturn, and why are you confident that the company will emerge in a stronger competitive position?

Sure. So, as we know, the first thing is that the policy framework will guide which companies are successful in terms of which companies are able to adapt to the policy emerging policy framework. But if I have to share what are Vikram Solar's key pillars, which we believe will help us succeed in a competitive environment, I will say there are four. One is best-in-class products. I mean, we have been in this business for 20 years. We have always been ahead in technology compared to the industry, and we plan to continue that way. Second is the integrated world-class manufacturing. We have already shared our integration, backward integration plan. The module lines we have recently commissioned are all latest and India's best. And most efficient and same will be followed through in cell and paper and income. Third, I will say is cost efficient structure. We are very cost sensitive company and we are making sure that as we expand, the cost efficiencies are kept in mind the way we grow. Fourth, I will say, is diversified customer base. We have spoken about it during this call. We want to work across spectrum of customer base on large accounts, mid-market, and distribution. And I think that mix will help us both with stable volumes base and better realization. So, a combination of these four will set Vikram Solar apart from rest of the players.

Thank you.

Thank you.

Thank you. The next question is from the line of Rishabh Modi from Ajay Agarwal Family Office. Please go ahead.

Good afternoon, sir. I have only one question. What was the volume of modules we have produced in Q1 FA-2-7? I'm asking, what was the volume of modules that we have produced in Cuban FY27?

The volume for this quarter also has been around 1 gigawatt, 1,085 megawatt to be exact.

Okay, so like we have sold it 100% of it.

Yeah, we sold, yeah. Very close to that, yeah.

Thank you. The next question is from the line of Sipha Kurswani from Swan Investments. Please go ahead.

Yeah, thank you for the follow-up opportunity. So, I just wanted to confirm from the ramp-up point of view, as you mentioned, our cell line will start from Q4 onwards. If you can also help us understand, have we started taking the orders for this BCR, or we will take it at a later stage as we progress near to the commissioning of the plan?

So, at this point of time, we are not taking orders for the TCR modules with cells made in our own plants. That process will start, you know, maybe a couple of months from now, depending how the progress on the cell line execution is. So, closer to once the cell lines are shipped, and post that, we will start taking orders.

And how does the pricing mechanism work in this BCR market there?

The DCR market pricing, depending on the customer segment, is varying. Distribution, which is the highest margin, highest price, and large accounts, which are talking in large volumes, their pricing is different. It's an evolving situation, depending on the policy and the sell capacities coming on stream in India. So, we will, that's the reason why we are not taking orders at this point of time. We will take a few months from now.

And from the price escalation, raw material escalation point of view, how does this clause entails here?

Since we are not taking the DCR orders yet, I cannot answer that question. Maybe in the next quarter, I will be able to say something on this topic.

Okay. And finally, if you can also help us understanding overall demand environment across the category, that is utility and then CNS segment as a whole. And then on the retail side, on the PM Kusum, and PM Sule, across the category for how, I mean, in the utility, whether the tendering has started picking up or not, what is the kind of annual absorption we are looking at out. If you can just give a broad background about each of these categories, that would be really helpful.

I'm sorry, I'm sorry, I'm sorry. All the fresh tendering that has happened after the threshold date of August 25th. It has been to the tune-off for 35 to 40 gigawatts. They are in different stages. Some tenders have already been submitted. These are tariff tenders that I'm talking about, which will come up for execution 24 months hence, 18 to 24 months hence. So the procurement decision for these large tendered quantities will happen in possibly H1 and H2 of fiscal 28. So, that's the utility. So, utility, we are very confident as a mix of the order backlog, the grandfather backlog of non-DCR plus the DCR that comes up for execution is a 30 to 35 gigawatt AC kind of a market as of this year. The CNI, like I mentioned, would be 15 gigawatts that, you know, crosses across.

Okay. Actually, from the growth perspective, where do we see this retail segment that is PM Kusum and Surya Ghar Rojin are shaping up over the next two, three years perspective?

We are still hearing chatter of PM Surya Ghar 2.0. PM Kusum 2.0. So we will have to see how that plays out. So policy-driven institutions are directly linked to what the government outlay is going to be. However, on the other side, on the utility side, there are not many levels that have panned out. A lot of states have announced data center policies, UP, Gujarat, Rajasthan, and AP, to name a few. Which is going to lead to setting up of data centers to the tune of 25 to 26 gigawatt in the next five years. Thank you. So, from the consumption point of view, I don't think we should view Indian market purely basis or the tendering activity that is happening. CNI data center plus green hydrogen combined is going to now anchor Indian demand in the next step.

Thank you. Thank you for answering the question. Wish you all the best.

The next question is from the line of Akshay Mane from Nuwama Wealth Management. Please go ahead.

Hey, I thank you for the opportunity. I just needed one small clarity. We have enhanced our

wafer input capacity from 6 gigawatts to 9 gigawatts, and previously we were talking about 12 gigawatts.

So, right now, if we are increasing

the 6 gigawatt capacity to 9, so is it part of the same 12 gigawatt or are we actually increasing the capacity

to like 9 plus 6 to 15 gigawatt, so just wanted that case.

No, it is part of the same 12. We have just changed the phasing and we resized it for the network.

Okay, and what will be the total capex for the total 12 gigawatt capacity capacity?

Sorry to interrupt. Mr. Akshay, could you be a little louder?

Yeah, so can you just tell me what is the capex, the total capex that would be required for 12 gigawatt capacity?

Now, as Sandeer explained, we have trimmed down the wafer ringgat plan originally of 12 to 9. We have also kept the cell at 9. So for the 9 gigawatt wafer ringgat, the project cost would be about 5,600 crores.

Oh, okay.

Okay. Thank you.

Thank you. The next question is from the Lion of Sahil Sheikh from Anandrathi Institutional Equities. Please go ahead.

Oh, yeah, thank you, sir. So, sir, I just wanted some clarity on our CAPEX plan. Earlier, we were going to commission a 9 gigawatt cell plan by December and 3 gigawatts by March 2027. But now we are commissioning a 9 gigawatt cell line in March 2027. And if you can give clarity on when the next phase of the 3 gigawatt cell plan would be commissioned.

So, our plan was for the 3 gigahertz was always in FY28, not on FY27. So, that's things.

So, the 3 GHz would be commissioned in FY28.

Thank you. 3 gigawatt, we have kept for upgraded technology. Once we have settled down this 9 gigawatt, that is the time when we will start to work on the next phase of 3 gigawatt, which will be at next level of technology, and not the same time.

Okay, sir. And, sir, if you can also share how the CAPEX phasing would be across for our cells, modules, and best, combined over FI27, FI28, and flow over FI29, if any.

So, as I said, for FY27, we'll be spending about 5,000 cores. We'll see similar numbers in FY28 as well. And majorly, this will be backed with debt coming in, financial closure of which is in process. Okay, sir.

And how much level of debt are we expecting to fund this CAPEX?

So, the plans going forward would be at 75-25, but with the data scheme to be in place, we will end up with a debt equity of 70-30.

Got it, sir. Thank you.

Thank you. The last question is from the line of Vishan Shah from Adani Properties, Private Limited. Please go ahead.

All right. Good results so far.

Just wanted to check one thing. Regarding your, if you can just give a wider margin in terms of the DCR versus non-DCR states in terms of EBITDA margin.

Good morning, everyone. It was only 75 megawatt out of one gigawatt. We'll see more of BCR coming in in Q2 and the quarters to come. With more of volumes coming in, that will help us understand the clear segregation of margin for both these products separately.

So, if you can just guide, yeah, sorry.

No, the DCR obviously will deliver more than what the non-DCR model would.

Okay. Sorry to

interrupt, Mr. Vishant, could you please adjust your handset or mic? Your voice is coming out with a lot of disturbance.

Yeah. Is it audible now?

Yes, please.

So, just provide a very wide sort of volume where you feel that the margins can stabilize for both this segment.

Please repeat the question.

At what volume you foresee that this margin, the margins can stabilize for these two segments in terms of your expectations?

It's not about the volumes, it is about once our cell capacity comes in. Then only, see the industry is going from non-DCR to DCR over next couple of years. So there is no stable volume of non-DCR and DCR we can predict at this point of time.

This is a policy-driven matter.

Thank you.

Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks. Over to you.

I would like to thank everyone for joining us for today's call.

We look forward to talking to you again next quarter. Thank you.

On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.