Premier Energies (NSE:PREMIERENE) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Premier Energies Limited q two FY twenty seven earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to mister Mohit Kumar from ICICI Securities. Thank you, and over to you, sir. Thank you, Larry. Good morning. On behalf of ICICI Securities, I welcome you all to Premier Energies Q2 FY 'twenty seven earnings conference call.

0:54 Today, we have with us from the management Mr. Chiranjusin Saluja, Managing Director Mr. Nankishore Kandilwal, Chief Financial Officer Mr. Vinay Rostagi, Chief Business Officer and Mr. Sudhir Mula, Chief Strategy Officer. Now I would like to hand over the floor to the management for the opening remarks, post which we'll open the floor for Q and A. Thank you, and over to you, sir. Thank you, Mohit. Am I audible? Yes, sir. You are. Please go ahead. Yeah. Okay. So... Yeah. So good morning, everyone. Thank you for joining us today for our q two earnings call.

1:41 I am managing director at PREMIERENEERENEERGIES, and I'm joined today by my colleagues, mister N. K. Khandelwal, group CFO, Sudhir Reddy, director, and Vinay Rustaghi, chief business officer. The company has reported another sterling quarter with total revenue increasing by 38.2% y o y to rupees $26.56 crores on a console basis. EBITDA impact have grown by 17.830.8% Y o Y to rupees $7.60 crores and $4.62 crores respectively. EBITDA impact margins in the solar manufacturing business came in at 29.317.9% respectively.

2:35 The PAT margin has moderated slightly because of increase in depreciation and reduction in other income. Transcon, our subsidiary, has reported another good quarter with revenue and PAT of $1.22 crores and 18 crores respectively. EBITDA and PAT margins came in at 158%. Amongst key business update, our seven gigawatt top one cell line has been commissioned. Trial runs are currently underway, and commercial production is expected to start later this month. Our operational cell brands delivered a record capacity utilization in the quarter, showcasing our all round operational excellence. The highlight of the quarter was new order wins totaling rupees 4,001 crores for cells and modules in a highly competitive market, taking our total order book to rupees 16,260 crores.

3:38 The transformer business also saw a healthy intake reflecting higher capacities, taking the total order book in the transformer company to 330 crores. I'm happy to update that all our expansion initiatives, including battery energy storage, are on track. Solar capacity addition has been steady throughout this year with growth in PM Surya Kharyojana compensating for slight weakness in the utility scale segment. We expect project commissioning progress to accelerate over the next six months, taking the annual capacity addition to around 50 gigawatt AC territory surpassing last year's numbers. More importantly, the long term outlook for the sector remains compelling with the government looking to reduce dependence on fossil fuel imports and fighting climate change.

4:32 Recent policy announcements on bolstering transmission and storage capacity additions are expected to unlock the next cycle of growth for the solar sector. Commodity price inflation in wake of in wake of The Middle East War has hit the solar sector with material increases in prices of key raw materials and delay in delivery time lines. However, I'm pleased to say that we are navigating this period successfully with careful supply chain management and investments in scale and technology. As new capacity ramp up over the next few quarters, we expect a major step up in financial performance of the company. At the same time, we are also evaluating several new primary and secondary growth opportunities.

5:20 Our balance sheet strength as reflected in low cost of capital and a a plus credit rating is a key pillar of our business competitiveness. We remain focused on disciplined growth, leveraging our key operational strength alongside prudent risk allocation. Thank you. We are now open for questions. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. 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.

6:12 The first question comes from the line of Shubham Boradi with ICICI Securities. Please go ahead. Yeah. Hi. Thank you for the opportunity, and congratulations on a good set of numbers. So I have two questions. First being, where are we in factory manufacturing and what we will be able to localize in the near term to achieve the 40% DCI requirement? And second would be, what is the status of of our approval of new seven gigawatt capacity from MNRE and have it stabilized? Sorry, Shivam. We can't hear you. Can you please repeat the second question again? Yeah. The first question was clear. Just repeat the second question.

7:00 Yeah. Sure. What is the status of our approval of new seven gigawatt capacity from MNRE and has it stabilized? I hope I was already Sure. Okay. I'll let Sudhir ready answer the first question on our battery manufacturing plans and localization plans. And the second question, I will take it after him. Sudhir. Thank you. On the on the battery energy storage system, we expect to operationalize the battery energy storage system in q two twenty twenty seven. And with respect to localization, we are working out on localizing the container manufacturing. We'll try to localize some of the fire suppression systems inside it to achieve the 40% localization that is being asked by the government for the various subsidy programs.

7:53 And, also, on the on the software part also, we have tied up for providing Indian made EMS for the back end of the storage systems. So that's our plan on the back end of the storage. I hope that's clear. Yeah. So plan is to do cell to pack and pack to container. This is what the manufacturing plant is what we're setting up. On your second question on seven gigawatt cell line at Naidu Beta, we have already made our application to the National Institute of Solar Energy for the inspection of our plant and to get it enrolled in the ELCM. We are expecting the inspection to happen anytime in in the third week of November. And the plant is, as we already said, is already commissioned and trial runs are going on.

8:46 I hope that answers your question. Yes, sir. Yes. Thank you. And just if I can squeeze in one more. What is status of wafer and in both the manufacturing? And have you placed orders for equipment? And what would be total cost for this project? So Vir will answer this question. Yeah. We have started working on the Inger Vipa plant. In fact, it's... The land has been already procured quite some time back. And also, the license and permitting for that place, which is in Nairobiqa, very very next to our seven gigawatt plant, have been in position for that plant. Water allocation has been done.

9:32 Electricity power approval also has been done, and we have laid the power lines to the plant in one sixty nine acres. We hope to commission the phase one by December 2027 and phase two, which is additional five gigawatts, taking the total capacity of 10 gigawatt. By June 2028, which is to more align with the three, and we'll look for guidance from government on that if there is any timing changes. Sure, sir. Thank you. That was very good. Thank you. The next question comes from the line of with IIFL Capital. Please go ahead.

10:19 Hi, sir. Thank you for the opportunity. Sir, on on this battery manufacturing, I just wanted to double click a little bit more, especially on our partnership with RCT. So it would be very helpful if you can explain, like, what what would RCT bring to the table. Do we... Do... Does the JV have access to its proprietary tech from? So we will take this question. I mean, just to give give a background. Right? Our city is a German company, and they have been in the battery energy storage business quite quite some time, and they have placed a lot of their battery energy storage solutions both in Europe and in in US as well. So they have both CE and UL certified products in their thing.

11:10 But that said, our partnership with RCT is going to give us this reach for us into those markets with the battery storage solutions going to be manufactured in India. It also gives us access to some of their EMS solutions that they already have and have been using it for their European and US customers as well. So it gives us both the product access to their product portfolio as well as their customer base that they're currently serving in these two markets. We hope to replicate some of their learnings from their already established products in the market into the Indian market. Okay. And and also, sir, the LFP cell imports for these plants, have we tied up for those? Which vendor? And which geography from...

12:06 Who from China, basically? Yeah. So, Apoorva, we have not... We have... We've been working with the, you know, tier one manufacturers of Shell in China. We have not have a firm tie up as of date. But as the plan progresses, we will enter into a firm supply arrangement. Understood, sir. Very helpful. So secondly, also wanted to know your thoughts on the inventory buildup and sort of the depletion in cash conversion that we are seeing in over the last couple of months. How does it resolve? I understand that because we are building new capacity, so we would be needing some of the materials. But I think there's a buildup in finished good inventory as well. So would would love to know your thoughts on this.

12:55 Yeah. Yeah. Hi,. This is. So, actually, the buildup is largely on the raw material side. There is no major change in the finished goods inventory. But the buildup is mainly because of two reasons. You know, one, of course, you know, there is ramp up happening in Cheetah Rampur, and now with Nairo Pita plant also getting commissioned. There is expected to be a big scale up in operations of the company, both on the cell and the module side. We have to... In advance of this ramp up, we have to have the... All the inventory position and the and the stocks, you know, kept up with the company. So when you look at the inventory position and compare it with the historic revenue performance, the number seems artificially higher.

13:42 The second thing which has happened in the quarter is that, you know, particularly with the war situation, some of the delivery timelines have been impacted shipping lines. There is some congestion in some of the ports. So we have basically also been maintaining some extra buffer on the raw material inventory, which has led to this slightly inflated position. But I would say this is temporary in nature. As these new plants stabilize, revenue starts coming into the numbers, you will see the numbers fall back to the normal scenario. So we should expect this by March quarter or do we expect a little bit more time? I would say latest by March quarter. Yes.

14:30 Okay. Okay. And lastly, sir, if you can also share the the latest DCR, ALMM two price trends now, I believe that the C and I demand is also around the corner. It's around the corner. Yeah. I can take this question. So in the DCR segment, we have got, you know, three markets which we address. One is the retail market where we have the, you know, the highest selling point. There, the price prevailing in the market is anywhere between 23 to 24 rupees per watt on a DCR module. And then the next segment is the Cusumc and the CMI market that we expect to be around 21 and a half. At the bottom, maybe 21. And then you have the IPP segment, which is coming in, which is a large IPP.

15:20 There, we see prices going to as low as about 20.5 or even 20 rupees if you're up to March 27. Now when you average out all these prices, you get an average of around close to 21.5 to 22 rupees on the DCR module. When you talk of sales, know, it's basically between 12 to 14¢, which is monopurk around $12.12.5 cents, and top corner about $14.14.5 cents. And if you talk of non DCR module, we are seeing a lot of aggressive pricing there. But as a company, you know, with our high quality BOM and highly automated manufacturing lines, we are able to get a price premium there. So there, we are looking at prices anywhere between 12.75 to 13 rupees.

16:12 Thank you, sir. Just just one more thing on this. I think on the DCR price, you said up till March 27. So for these for these larger projects, maybe for CNR and IPP, the delivery time lines could be further beyond that. So is there a difference in pricing, say, year end '20 Yeah. '20 So for the pricing for IPP, which I which I stated is all for next year because the IPP would not want modules immediately. Their planning is well in advance. So there, are looking at, you know, around 20 rupees for IPP and not CNI. But but then there is a mix. You have retail, you have and you have IPP. Correct. So when you add those out, you know, we are getting the betterization. And the demand that you can level is quite strong. Understood. Thanks a lot. All the best.

17:00 The next question comes from the line of Sumit Kishore with Axis Capital. Please go ahead. Good morning. Thanks for the opportunity. My first question is, it's still early days on China's proposed technology export controls. But do you see this or how do you comment on the perceived risk of delay or deferment in implementation of ALCM for C and I and ALMM three later by June 2028? Sure. Good morning, Sumit. I'll I'll ask Sudhir to take this question. Yeah. Sorry. Vinay is taking it. Let me just step in. Yeah. Hi hi, Sumit. So I think on the China policy front, you know, this is obviously a draft announcement right now. It is going through a consultation process, and we will know the final outcome, I would say, in the the next three to four weeks. So we kind of showed the reserve, you know, in terms of comments on, you know, what is going to really happen there.

18:05 Obviously, we are anticipating some kind of controls, and we are kind of working with our technology and vendor partners as to finding the best way around some of these restrictions. Bear in mind also that if you look at the Chinese machinery suppliers, for them, you know, the domestic business is almost completely shut down given that China is now trying to reduce capacity instead of increasing capacity. And all the business for these machinery suppliers is basically coming from the export market and India being the largest of these export markets. So these machinery suppliers are working very closely with the government to try and get some relaxations in terms of the technologies, in terms of orders which have been placed already and other possible areas.

18:57 So I think we are very hopeful that not withstanding these restrictions, we will be able to find a way around. But like I said, let's wait for the final policy announcement before we can make any conclusive judgment on this. Yeah. Just to add what Vinay said is that even the policy is not clear as of now. He's talking about some high end, high technology or new technology equipment. Luckily for Premier, we have imported those new age and high technology equipment for our magnified cell lines. So we added a advantageous situation where those machines are already in our manufacturing line, which have been, you know, kind of proposed for a ban. So on semen, we are fully covered. On import paper, we will we will be waiting to hear from the, you know, Chinese government after the November 15, but we are quite hopeful that there would be a solution and that we would be able to get our equipment to the run time.

19:55 Sure. My second question is, you know, you commented on realizations across DCR, non DCR. Could you also sort of give your give some color on the EBITDA spread in rupees per watt fee that you are making on cell module and non DCR module? And how has that moved, say, on a quarter on quarter or year on year basis? Yes, Sumit. Hi. So, you know, unfortunately, we don't give out the spread information on a product by product basis. But, of course, we have given you, you know, indication of the prices. Pricing, if I look at... If you look at just the pricing, the selling module pricing has been largely stable on the DCR side.

20:46 Non DCR pricing obviously has come down quite sharply from about, you know, 14 rupees plus, $14.15 rupees last year to about 12.5 rupees right now. So that has obviously impacted NDCR margin. And equally, you know, the the bond cost in terms of the cell remains largely stable with the vapor pricing from China going up and down a little bit. But on the end... But then the silver prices again have kind of softened after they went up about three to six months ago. And then we have seen some changes, recent increases in cost of commodities like aluminum, copper, polymer films, etcetera, which has impacted profitability again on the module assembly business.

21:38 Beyond that, you know, I can't give you unfortunately any specific numbers. Sure. Sure. Just one clarification. When you said that, how do the localization rules on BEST really work? So with your existing CapEx earmarked for BEST assembly, would that be enough to meet the 40% localization guideline? Or would you have to do more CapEx on the manufacturing side? No. I think.... Yeah. I I I think to achieve the 40% localization, certain components have to be localized within India. We'll work with those other component manufacturers to localize it. It's not necessary that we have to go ahead and manufacture all these components within India. And some of these are... There are manufacturers in India. We just have to qualify their product to our designs.

22:32 But but on on an overall basis, you know, the sale to pack and pack to container will qualify for the 40% easily. Okay. Got it. Thank you. Thank you so much for the. Need to do any... Yeah. We would not need to do any any of manufacturing. Is not required at this level. For 40% localization, we can manage with other components aside to the BMS and the cells. Okay. Thank you, and wish you all the best. The next question comes from the line of with Dan Capital. Please go ahead. Yeah. Hi, sir. So first of all, like, the seven year line now in place, how do you see the ramp up schedule over here for the second half of F 'twenty seven?

23:18 Basically, any guidance on the quantum of production that we can do here on the seven gig line? I... Thank you. I'll take this question. I think our plan is considering that we will be getting our m m and r inspection. We have applied for it, and we should be getting our ALMM, ALCM inspection done and the approval soon. We expect to do about 25 to 30% COF ramp up on... In December on the NIDERA plant and gradually move towards about 70% CUF by end of March. Okay. 70% by end of March. So that's the exit rate that you're guiding for. Right?

24:07 Yes. Understood. Secondly, sir, on the total order book now, what proportion here would be the DCRPs? Because in the module mix shown in the PPT, there would be some component of DCR models as well. Right? So out of the 16,500... Order book, what is the DCR proportion here? So... Yeah. Vinay, you can take this. Yeah. Hi, Konal. So we've given you the breakup between the selling module business, which is about 48% each of the total order book. And then within the module business, very roughly, I would say about about 20% is also for the DCR business. So in total, I would say about 68% to 70% of the total order book is for the domestic manufacturing business, the DCR business.

25:01 Got it. And sir, do we sort of retain the guidance of maintaining stable margins when we execute this current order backlog? So I'll take this question,. So the orders have been won at the prevailing current price environment. And we are hopeful that we'll be able to maintain margins subject to cost environment volatility. But as of as of today, while we speak, all the orders are at current pricing environment. Understood. And lastly, sir, having acquired the Transform piece for a couple of quarters now, could you provide some concrete guidance on the scale up or any any sort of milestones here? Like, how do we sort of see this business scaling up and sort of adding to the overall consult piece?

25:58 Sure. Vinay will take this question. Kunal, hi. So so I think we have said that the four GBA part of the new travel capacity is already being commissioned. The company has completed all the type testing for all the full range of power transformers except for the EHV segment. Now for the larger transformer category, customer acceptance and type testing usually take some time. I would say about anything between eight to twelve months depending on different product sizes. And then the conversion to export orders also usually is a long drawn process. So I would say that we, in addition to this new travel expansion, we're expecting a gradual ramp up over the next three years to about 80%, 90% of the total capacity with the current capacity and other 4.5 GBA capacity on the IGT and the other range of power transformers ramping up, I would say, over the next one year or so.

27:06 So in general, you know, we are expecting the business to, like we said last time, more than treble in revenues over a period of three years. Understood. This is very helpful sir. Thank you so much. Thank you. The next question comes from the line of Varani with Aventis Park. Please go ahead. Yes. Good morning. Can I get to the proportion of I'm sorry to interrupt, Barani? You're not quite audible. I would request you to use your phone on the handset mode in case if you are using a hands free device. Is it better now? Oh, yes. Go ahead. Yes, Barani. We can hear you. Okay. Yeah. Yeah. Sorry for that.

27:52 Wanted to check the proportion of sales done in the DTR market in the second quarter in the modules. Bernie, I could not hear you, but I think the question was about the percentage of DCR sales in the quarter. Correct. We don't give out any mix between DCR and non DCR business on a quarterly basis, unfortunately, Barrene. Sure. My second question is in the opening remarks, there was mention of growth prospects both organically and inorganically.

28:38 So would like to have some color on what are these inorganic area segments that we are looking at? So I I think in general, you know, what I really want to say is that the sector is placed... The fundamentals of the sector are extremely attractive with several growth opportunities present both in the solar technology space as well as all the other joining areas, whether you look at battery technologies, inverters, green hydrogen, electrolyzers, etcetera. So largely, the focus of the company going forward is going to be, you know, leveraging our core strength in solar manufacturing and trying to focus on organic growth.

29:32 Having said that, we will look at acquisitions very selectively wherever we feel that, you know, we can be... Use these acquisitions to cut our time to market, particularly when the valuations are also very attractive. So I think in general, we are looking at a multiple... A lot of these opportunities both in India and even internationally. But our focus is on organic growth and closely linked to the solar sector. Okay. When you're telling internationally, does it does it involve the STOIL plan we had to have capacities in USA? Or is it outside USA, like in Europe or other geographies?

30:23 Sorry, Barani. There's a lot of disturbance in the call. We can't hear you. Oh, sorry. Sorry. Operator, is there... Operator, is there disturbance only in one line, or is it still on the line? No, sir. It is it is his line. He's speaking a little from... You know, a little distant from the microphone and probably not Sorry. Is it better now? Yes. Please go ahead. Can you please try now? No. So I was just checking when you said the international geographies. Is it The US plan we had had earlier that we are restarting or is it a completely new geography like in Europe or some other area? So I think we have been pretty open that US and Europe remain geographies of interest to us.

31:09 Both these markets, there is a very strong policy push towards domestic manufacturing, and we are focusing... We are looking at both these markets and evaluating several opportunities. So I think that those are the two main international areas of interest to us. So one last question. You had mentioned that we had already placed placed orders for the... And got the high-tech equipment for the cell line. How about for the ingress and wafers? For ingress and ingress, we still haven't placed the orders for the ingress and wafer. Only for the wafers, we had earlier tied up with a vendor, and we had put in a small deposit with them.

31:55 Those agreements are being registered with the Chinese government under the export control so that these are considered as pre existing agreements. Okay. Thank you so much and all the best. The next question comes from the line of Konal Shah with TAM Capital. Please go ahead. Yes. Hi, sir. So just one thing, just recently, right now, there is a news flash about a potential block of GEF at a 7% to 10% discount to the current price. Could you, like, clarify the stance over here? Because one of the investor complaints typically have been around the noise around these liquidity events, etcetera, and fundraising, etcetera. So could you just could you just provide some thought over here?

32:47 Yeah. So, Kumar, we have also seen some messaging going on. These are all rumors. There is no block, nothing from the promoters. And there is also a rumor, I think, going on that GEF, the private equity player, was invested in us as appointed Citi as the banker, is also a false information. I think these rumors just create confusion. There is no block from the promoters. There is no block planned even in the next couple of quarters or even a couple of years. So from promoter side, we are very clear. No block. And from GM also, we verified with them. They have not appointed to be, and there is no block. Understood, sir. This is very helpful. And, sir, on the potential, the QIP also, like, could you just provide some clarity there whether it's just, like, an enabling resolution or we are sort of actively looking there as well?

33:41 Yes. We have time and again stated that that it was just an enabling this resolution. We have enough cash flow from operations to fund our CapEx plans, which we have announced. There is no QIV planned in the near future. Understood. This is very helpful, sir. Thank you so much for the clarity. The next question comes from the line of Praveen Sahai with PL Capital. Please go ahead. Yes. Thank you for opportunity. Sir, related to the DCR pricing, there is some order from the SECI for the next year as a very discounted rate. So where do you see this 20, you know, 20 rupees realization by the next year?

34:30 Will it going to go down to the the order which we are seeing and the pricing happen? I think you're talking about the orders which one of the companies, one of the. Right? Yes, sir. Yeah. So this this, I think, was clarified earlier also. Let me clarify again. That cannot be treated as a, you know, a base to arrive at the market pricing because this company is setting up their cell line, which is... Which would be getting commission, I think, this quarter... Next quarter. They had participated in this bid almost a year ago, and the debate got finalized about, I think, three months ago. And they are given this interrupt repricing to get credentials in the market.

35:15 So SECI tender, I would say, was to be treated as an IPP tender. And I said IP prices in the market for next year are around 20 rupees, and I think they have taken this order at about 17 or 18 rupees, which was at a discount to be able to get credentials, and that is not reflecting of the market prices. It was more as an introductory offer to fill up about 10 to 15% of the line capacity. So my question related to the inventory, sir, because the inventory increase, you had well explained. So... And my question is whether this inventory buildup also depends on the order book. So we will not see an impact of this high order inventory buildup in the future margin profile.

36:04 Yes. I mean, our production, both cell and module is linked to orders. We make we produce goods in the factories based on firm orders from customers. So inventory buildup is definitely against expected orders from our customers based on the exact delivery and production timelines. So as these orders, know, as the factories ramp up and production starts, you know, coming through the the gates, the inventory position in relation to sales will normalize. Sir, last question related to the CapEx. Can you give the FY 2027, what would be the number we are looking for?

36:57 So, you know, in the the bulk of our CapEx for the selling module expansion has already been completed. Now we are mainly looking at some marginal leftover payments for the Nagapita cell plant and then the battery and the aluminum plant, plus we are undertaking, you know, open access captive projects. So I think on the whole, the CapEx for the next two quarters should be moderated, I would say, to about 700 crore rupee territory, which means the total CapEx for the financial year should be around 2,400 crore rupees. Thank you, sir, and all the best. Thank you.

37:44 The next question comes from the line of Sahil Seth with Anandarati. Please go ahead. Hi, sir. Congratulations on a good setup numbers. So my first question is on our sell order book. If I see on a quarter on quarter, the order book has declined by about $8,000,000,000 While our execution on the revenue side, we have booked revenue of around $4,700,000,000 Just wanted to know why is the decline in order book greater than what revenue we have booked for the quarter? Sorry, Sahil. Are you talking specifically about the sale order book? Yes, sir. Yeah. So I think the the difference is mainly coming because, you know, in the last quarter, for example, if you see, we did not take any new sell orders.

38:37 All the orders were for DCR or non DCR modules. So, obviously, as more production and dispatches were made, the total outstanding sell order number has come down. Yeah. Also because our model line is in... Capacity has increased. So Sir, you were not audible. Could you repeat? Sir, sir. Yeah. Yeah. I'm here. I was just clarifying that our cell order book has decreased and DCR model has gone up because we commissioned our new 5.6 gigawatt module line. Right? With more module capacity coming in house, we would prefer to use the cells for our own captive consumption and gradually reduce our solar cell sales. Okay. So, sir, apart from any executed cell orders, is there a moment where the orders are moved from your sell order book to a model order book? Or are there any order cancellations for the merchant sales sales?

39:33 No. No. There are no order cancellations at all. On The US side, with the changing political scenario there in the MI pricing, do you expect exports from India to revive to US, or are we looking of setting a local manufacturing facility in US itself? There are two ways to look at it. One is with the changing environment there, it's a big, big positive for the renewable side. And then if you talk of MIP, we are clear that making America is the answer. And hence, we are at advanced stages to finalize our factory location in The U. S. We already have a JV partner. So we are progressing well on that side. And we would set up cell manufacturing as announced earlier in The U. S.

40:21 So, sir, by when are we looking to finalize this? Is there any timeline you have in mind? Yeah. About about twelve to eighteen months is what we're looking at. Okay. Got it, sir. And last question would be on the transformers business. In the previous quarter, we recorded margins of around 22%, while in the current quarter, came down to 12%. So what is the normalized level of margins we can expect going on in this business? So yes. So I think we have been clear on this that the normalized margins on this business is about 15%. Last quarter, we had a higher number because the steel and the copper cost went up. So we got a variable increase in those orders, whereas we had enough inventory, which we had hedged for. So that gave us a little bit of an edge in terms of the margins. But on a normal basis, we expect this to be a 15% margin business going forward.

41:22 Okay. Got it, sir. That was very helpful and honest. Thank you. The next question comes from the line of Mayur Patel with three sixty one Capital. Please go ahead. Three sixty one, I said. Thanks for the opportunity. Sir, just two things. Given the mix, I think this quarter, the margin of around 28% is also a function of more modules like you explained. But going forward, as the Naidu Petta facility is ramped up over the next six months' time to 70%, you say. And demand, obviously, after December, C and I picking up in a big way because of the that BCR regulation kicking in.

42:13 And the VSS big thrust from the government side, IPP hopefully should also pick up. And Qusum, you are seeing reading some news around from the ministry, there's a final leg of finalization of Qusum two. So do you think, again, the mix will start favoring us from the blended margins point of view going forward? Number one, and the 10 gigawatt order book which you have, that will be executed over next twelve months' time, I assume? Yes, about twelve to fourteen months. This is Benahir. So on the government policy and the demand front, I think the government is completely seized of the matter in terms of trying to diversify the energy mix and grow the share of renewable energy.

43:09 I think we are going to see a lot of initiatives that even in the last one or two months, we have seen a very large green energy corridor scheme. And now you have seen the best initiative with the VGS scheme and Kusum and Surya Gariojna, the second version of both these schemes is also due for announcement, I would say over the next one or two months. So I think we do expect the overall macro for the demand side is very, very attractive and we do expect a lot of favorable policy announcements from the government. And that should obviously tilt the business focus and the mix of product towards the DCR modules and that will help us to maintain and increase our margins.

44:04 Just to add what Vinay said, Mayur, that government is is quite positive. You look at the indications from them on Sudhakar two point o and Kusum two point o, both these projects, you know, give us a better margin in terms of realization. So we are quite confident that as Sudhiragar 2.0, Khusum 2.0 comes in, the mix what we have today will only get better. Got it. Just last question, J and J, sir. For the wafer ingot upcoming facility, if I recollect correctly, we have a technology tie up with Taiwan based Sino American assets, which is a very renowned company.

44:50 But given the technology tie up, still how can we deal with this uncertainty around sourcing plant and machinery from China? Having this tie up with SAS, does it help in some form? So, this uncertainty is still not clear. In November 15, we get more details on this. There are there's fine print in the draft, which has been shared that a certain kind of ultra thin wafers manufacturing equipment would not be allowed, but maybe normal ingot wafer machines will be allowed. We'll get more clarity. But if you look at the Chinese equipment manufacturers, most of them have set up shop also in Southeast Asia, where they are assembling the equipment. So we don't see this as a big risk in terms of our ingot wafer equipment sourcing.

45:38 Coming to our partnership with SAS in Taiwan, that's more of a technology partnership. They have got deep knowledge and tech know how on semiconductor wafers, and that will help us in choosing the right equipment, ramping up the line and being able to produce world class wafers. Sure. And just one last thing, So beyond next five years growth journey, does this SAS tie up helps us, say, going forward once we are fully operating at, including the wafer in that everything is running steadily? After that, can we look at entering semiconductor wafers also given your relationship and partnership with SAS? Future, I'm not saying your... That's on our wish list, but it's too early to say or commit anything there.

46:29 We as a company would want to grow in the semiconductor space. When we would do this, with whom we would partner is something which we don't have an answer today. But we first want to set our CapEx plans, which we already announced, the execution timelines, everything to be completed on as per what we had committed, and we would be looking at various opportunities. Sure. Thank you so much. All the best, Shiv and Shiv and the team. Thank you. Thank you, Maher. The next question comes from the line of Amit with UBS. Please go ahead. Yes. Hi, sir. Congratulations on the stable set of results despite current headwinds. Sir, I think I have one question, which somebody in previous questions tried to ask. On BEST now, China, Chinese companies, most of them are in the office. They are not able to lift prices, the regulation in China.

47:24 Even the BEST side in the entire solar value chain, we have a point where the China government is very clear that U. S. And India can't be shared a lot of technologies. This 40% threshold for indigenization, right, I think I'm sure there's a lot of thinking that has gone behind. Do you think this is enough for us and the sourcing of best capabilities beyond the current dynamics will help us because the operating cash flow assumptions in the next say two to three years when we expand capacities, looking at the profitability pressure, do you think it has a serious risk of slowing down the entire renewable capacity framework in India? So I just wondered your thoughts on this current deadlock in BEST framework because minus BEST, the renewable growth is going to be a challenge.

48:31 So let me take this question, Amit. See on BEST, we are doing is sell to pack and pack to container And there is no, you know, problem with China in terms of supplying equipment for sell to pack and pack to container lines. It's more on the cell manufacturing on the BEST side, and that is the reason why we are being cautious in not announcing large investments into cell manufacturing on the battery storage side. To answer your question on the 40% value addition, we will comfortably achieve that with cell to pack, pack to container and the software bit of the battery storage system. And there is enough support from China for setting up these lines. There is is nothing which is banned on that front. On prices in China and best companies and solar companies making a loss there, That's because of huge overcapacity, which we are aware of, and there is an anti evolution policy which is being implemented to try and stabilize prices. We are seeing polysilicon prices, wafer prices on the upward trend because of that.

49:31 I think we will see that also a stabilization on the battery cell side, I think, going forward. But as soon as we are concerned, we feel that the time to invest in best business, what we're doing is is the right time. And we having our reputation and the brand, which we carry in the market with our customers and the history of thirty two years with Premier has, we will be able to win best business from our IPB customers and C and I customers, and we will qualify for the 40% local content. Sure, sure. Ma'am, sure. So second and quick question is on the ongoing so the current demand in India and the capacities that are going to be activated now. You think the consolidation here where a lot of marginal players go out of business or stop impacting the incumbents on P and L, it's going to be a longer drawn race and hence the incremental returns on incremental investments, whether it's in got wafer, best, is materially lower for us in the next, say, particularly after, say, one and a half, two years. Do you have any sense on that?

50:37 I know it's still wait and watch, but still your insights on this. Thank you. You're talking about like people who have just module business compared to backward integration. Is that your question? No. Even cell capacities, module energy business are passing. Even with cell capacities by CY27 and CY28, India will have more than 100 gigawatts, right, or at least 80, 90. Yes, I just I wanted to Sure. So pure play module business, it's a very difficult time. Right? So I do see problems coming up on pure play module manufacturers in terms of stand alone manufacturing for modules. That's going to be really, really difficult.

51:22 Backward integration is required. Your question on cell manufacturing, even if we reach a 100 gigawatt with an average industry output about 70 gigawatt per annum, we are still looking at demand being quite strong. As we speak, the demand is almost about 50, 60 gigawatt. And with with the growth rate we... Which we're expecting every year, we see this demand to mostly equal or surpass the supply at least for another twelve to eighteen months, whereas the cell manufacturing reaches about a 100 gigawatt. Then again, between the cell manufacturers, you need to carve out manufacturers who have scale and who are getting into ingot waveform. So somebody setting up a one or two gigawatt cell line competing with somebody who's got a large cell line five times the size is is is gonna be a different game.

52:11 So we feel that players which are gonna be at scale, who have the financial bandwidth and execution skill to set up Ingot Vapor that is backward integration will be the ones which will be the difference between men and boys. Okay, sir. Thank you and good luck to you. Thanks, Amit. The next question comes from the line of Amit Binde with Axis Capital. Please go ahead. Oh, yeah. Amit, please go ahead with your question and kindly unmute your line. Yeah. In case if you can Can hear me? Am I audible? Yes. Yes. Yes. So, yeah, so my first question is on the mix that you have in retail C and I and utilities in the order book currently.

53:02 And related to that, now some of the developers are talking about they're getting quotes for DCR module at close to around INR 18, which has been set as a precedence by one of your competitors. So how far are we in seeing the orders coming at 18 rupees? I mean, I'll... We'll... Let's say a quarter or two down the line. Sir, to answer your question, even in non BCR business today, people are accepting orders at sub 12 rupees, but we at Premier are not. We are at 12.75 and above. We do command a we do command a premium because of the high quality automated lines which we have and the experience which we hold. So I don't think the 18 rupees is a benchmark which we taken if somebody has quoted because of new lines or new business they're entering into. That would not be a benchmark for us.

53:52 Right. Right. So it doesn't then we are down risk that we should think about is what you're saying on the pricing front. Yes. Yeah. And if you can also help me with the mix that you have in terms of retail c and I and utilities scale in the order book currently. Yeah. So as we said, you know, with these two point o and two point o, we announced, we see the mix may become better than what it is today, if not remain the same. Right. Right. But, approximately, if you can help with the ballpark indicative numbers, if at all. Yeah. No. No. We can take one more. Sorry? If you can help with some ballpark indicative numbers on that. So it's very difficult to yeah. It's it's very difficult to give that number on, you know, on a quarter on quarter basis, but but roughly, retail is about retail is about 35 to 40%.

54:45 Okay. Right. And... Okay. And one more question that I had is that now, what are the CapEx plans that you have, like, would get over in the next year. So how should we look at the next leg of growth for Premier? One of the things that was discussed was on was on the semiconductor side. There was spoke in one of the questions. Any other areas of business where you would deploy your cash flows? As as I said, that's our wish list. We don't have a firm plan now. Once we have a firm plan, we will, of course, share with the markets. Sure. Very good. We take one more question. Yeah. We can take one more question, please. Sure, sir. The next question comes from the line of Bhaskar Chakravarty with Jefferies Group. Please go ahead. Thank you very much.

55:31 Can you give us some color on the nondescript order book that you have? What the kind of margins on what basis that you are realizing currently? So in our INR 16,000 odd crore order book about as Vinay said about 25% to 30% is non DCR. And when you talk of non DCR business, it's of course in the single digit kind of EBITDA margins. And in terms of pricing, generally it is upwards of 12.75 And in your balance sheet as of September 30, there's almost INR 2,900 crores of SeaWhip.

56:17 Is that the cell line which has not yet been commercialized and you will commercialize that in the second half? That's right. So some of the interest and depreciation expensing for that line will come in the next two quarters? Yes. I think Vinay had given a number that in this quarter, are expecting the depreciation number to be around INR 600 crores. The year? For the year, Right, not for the right. Yes. Sure. Thanks very much and all the best. Thank you. Thank you, Prajash. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing remarks. Thank you, everyone. Thank you for your time on the call.

57:05 Overall, I think we discussed the whole range of demand, pricing, technology and expansion initiative related questions. I just have to say in the end that we are very pleased with another quarter of steady performance. The macro environment obviously has been challenging, but we've been able to kind of navigate that very successfully. Next few quarters, we are expecting a significant step up in the performance of the company with the Nagupada plant ramping up, Sitharampur volumes also picking up because of the increased cell production. Transformer volumes also will pick up quarter on quarter over the two to three years. And then mid to longer term, I believe that the macro for the renewables is very, very compelling.

57:58 The government is working on a number of initiatives. And with these new schemes, Surya Ghar, Yojna and Khusum around the corner, the demand outlook is extremely positive. So, we are very, very, I would say, encouraged by the growth prospects of the business and look forward to working with you. Thank you so much. Thank you, sir. Ladies and gentlemen, on behalf of ICIC Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.