SOLAR GLASS MARKET –AN OVERVIEW GUJARAT BOROSIL LTD. September 2017
Disclaimer This presentation is strictly private and confidential. This presentation is prepared exclusively for the benefit and for the internal use of the recipient and/or its affiliates and does not carry any right of publication or disclosure to any other party. Neither this presentation nor any of its contents may be used for any other purpose without the prior consent of Gujarat Borosil Limited (GBL). The information in this presentation reflects prevailing conditions and our view as of this date, all of which are, accordingly, subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. The ideas expressed herein factor in the current regulatory framework and accordingly is subject to change. GBL and their directors, officers, employees and promoters expressly disclaim any responsibility or liability whatsoever in connection with the compilation of this presentation and the information contained herein. This presentation may include future expectations, projections, or forward looking statements. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual events to be materially different from future events expressed or implied by such forward looking statements Pg 1
List of Abbreviations GBL : Gujarat Borosil Limited ADB : Asian Development Bank PV : Photovoltaic KFW : KfW Development Bank, a German Government-owned development bank EVA : Ethylene Vinyl Acetate MAT : Minimum Alternate Tax ARC : Anti-Reflective Coating IP : Intellectual Property HSE GW : Health, Safety and Environment : Gigawatt PID : Potential Induced Degradation GWh : Gigawatt-hour PPM : Parts Per Million MT : Metric Tons NAPCC TPD : National Action Plan on Climate Change : Ton per Day COP : Conference of Parties KWh : Kilowatt Hour JNNSM : Jawaharlal Nehru National Solar Mission IPO : Initial Public Offering NSM : National Solar Mission EBITDA : Earnings before interest, tax, depreciation and amortization NTP : National Tariff Policy Return on capital employed- Calculated as (EBITDA - Taxes)/ Average ROCE : (Total Assets - C.L. + ST Debt + Current Maturities of LT Debt) CEA : Central Electricity Authority CAGR : Compounded Annual Growth Rate MNRE : Ministry of New and Renewable Energy Capex : Capital Expenditure SECI : Solar Energy Corporation of India Financial Year ending 31 st March FY : RPO : Renewable Power Obligation INR : Indian Rupee REC : Renewable Energy Certificate mm : Millimetre RGO : Renewable Generation Obligation Mn : Million VGF : Viability Gap Funding N.A. : Not Available FiT : Feed-in-Tariff PA : Per Annum PLF : Plant Load Factor PPA : Power Purchase Agreement Pg 2
Key Highlights –GBL Solar Glass Strong outlook for Solar � Strong Government impetus to solar energy, with targets of 100 GW installed capacity by 2022 under 1 Energy National Solar Mission (Added 7.5 GW in 2016-17. Government target of 15 GW in FY18) Leading Solar Glass � Market Leadership in Indian Solar Glass Market with cost competitiveness vis-à-vis low quality Chinese glass 2 manufacturer suppliers. Sole manufacturer of Solar Glass in India. State-of-the-art 3 � State-of-the-art manufacturing facility, with strong testing, innovation and R&D infrastructure manufacturing facility Marquee Client base 4 � Top-tier Solar Glass domestic and international clients � High-quality Solar Glass with lowest iron content, Anti-Reflective coating, highest glass efficiency value and High performance and 5 high resistance to Potentially Induced Degradation. Recently acquired capability to make fully tempered 2 durable anti-reflective coating mm solar glass Experienced Management 6 � Highly qualified management team with more than 5 decades of experience in the glass industry Team Expanded capacity to � Company looking to more than double its existing capacity. Solar glass demand growing exponentially and capitalise on strong demand 7 will get further boost with emphasis on domestic manufacturing of modules outlook 8 Robust Financials � Steady Sales growth with improved EBITDA margins led by improved productivity and cost savings Pg 3
The Gujarat Borosil Story: The Solar Company � Modi Government provides huge � The Solar Glass market worldwide impetus to the industry with the goes through upheavals as the revised National Solar Mission prices of modules and components Anti dumping � target of 100 GW of Solar Installed crash (Solar Glass prices crashed margin of 40% is Capacity by 2022 by almost 35% vs FY11) established against Chinese � The top 3 solar module markets imports in EU i.e. Germany, Italy and Spain continue with slow down � The overcapacity goes up as new 2017 facilities are commissioned in 2015 China 2012 � Solar PV market internationally seeing � GBL high growth � GBL secures its commissioned � Government launches market position most advanced � GBL benefits NAPCC in June 2008 through tempering line with 2008 in the exports which declares National diversification into capability for segment Solar Mission as one of the Extra-Clear � GBL moves to 2mm.Now aims to the core 8 national Architectural capitalize the expand its current missions patterned glass significant production capacity and starts focusing opportunity for of 1 GW per on the domestic Solar Glass annum to 2.25 GW market per annum Pg 4
Solar PV Module – Value Composition Raw Material Items Cost % 64% Cell Solar Glass 7% Polymer Encapsulate (EVA) 4% Solar Glass Back Sheet 5% Tinned Copper Wire 2 mm 3% Tinned Copper Wire 5 mm 1% Solar Cell AL Frames and Corners 7% Polymer Encapsulate (EVA) Junction Box 5% Sealant 1% Back Sheet Solder Wire, Flux, Packing & 4% Labels Total Material Cost 100% Solar Glass is the 2nd highest value item in the Solar PV Module, next only to the Solar Cell Note: EVA stands for Ethylene Vinyl Acetate Pg 5
Key Growth Drivers for Indian Solar Industry Strong Policy Initiatives 1. Indian Solar � National Solar Mission (NSM) sets out the target of 100 GW of grid-connected solar power by 2022 1 Mission � Solar Parks Policy: ― A scheme by MNRE to set up solar parks across the country, each with a capacity of Solar Projects generally above 500 MW, with an aggregate target of 40 GW ― The above target helps achieve the overall solar power target of 100 GW by 2022 3. Solar Cities � Aims to reduce the conventional energy consumption of 60 selected cities by a minimum of 10% through the adoption of a combination of 2 renewable energy alternatives (with a focus on solar energy) and energy efficiency measures 4. 3 Tax and � Viability gap funding (VGF) scheme, Bundling scheme, Domestic content requirement (DCR) Financial � Tax and Financial Incentives to support the rooftop solar market: Incentives ― Capital subsidy: 30% subsidy for residential and institutional consumers (INR 50 bn) ― Accelerated depreciation: 80% depreciation (40% from FY18) ― Tax holiday: 10 year tax holiday (MAT payable) ― Low cost funding: USD 1.5 bn funding from World Bank, ADB and KFW. 4 National Tariff � Amendments to National Tariff Policy (NTP), 2016 re-emphasizes a push for renewables, especially solar energy: Policy (NTP) ― Solar RPO target increased to 8% by 2022 ― Renewable Generation Obligation (RGO): Mandates coal and lignite based power plants established after a specified date to set up renewable capacity, or purchase renewable energy, as per the directions of central Government ― Allowing fully depreciated power plants whose PPAs have expired to bundle renewable power with power from plants ― Exempting renewable sources from inter-state transmission charges Source: MNRE, CEA, Industry Research Pg 6
Renewable Energy Targets Renewable Energy Targets - Overall As at end of Target Capacity Implied capacity Per Annum CAGR Capacity (GW) FY17 by FY22 addition Addition (FY18-22) Solar 12.2 100.0 87.8 17.5 50% Renewable Energy Targets - Solar (by 2022) SECTOR TARGETED TARGET CAPACITY ADDITION FRAMEWORK/INCENTIVE Net- metering, Feed-in Tariff, Capital Rooftop Solar PV Subsidy, Interest Subvention, Accelerated 20 GW Depreciation Residential Commercial Solar Parks Feed-in Tariff, Accelerated Depreciation, 40 GW Viability Gap Funding, Bundling of Power Industrial Institutional Entrepreneurial & Feed-in Tariff, Capital subsidy, Interest Unemployed Graduates Subvention, Accelerated Depreciation 20 GW Others Canal tops, CPSU, PSUs 20 GW Source: CEA, MNRE Pg 7
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