Saturday, February 09, 2013

“Funding is the major roadblock!”

He sold his well set up business in 2007, that made him once the market leader and decided to venture into a sector that was only talked about and not explored. Today with Indosolar, he is the largest manufacturer of solar photovoltaic cells in India, ahead of firms like Moserbaer and Tata BP Solar. Set to hit the market with his maiden public issue, Hulas Rahul Gupta, MD, Indosolar, discusses his future plans to B&E’s Deepak Ranjan Patra

B&E: You were the market leader in the compact fluorescent lamps and halogen lamps category when you decided to make an exit from the particular business. Why did you take such a decision?
HRG:
By the end of 2006, there were a lot of activities going on in the PE arena, especially in the automotive segment in the Asia-Pacific region. Most of the offers were for growth capital and we were not in the growth capital space. So, it was all a matter of valuation. We analysed it very professionally and the valuation was really good. The share price was around Rs. 85 and the selling was Rs 200 a share. We also believed that the sharehoders were getting a good amount and it was a win-win situation. So we decided to move out from the sphere.

B&E: Just two years back, you entered the photovoltaic cell-making business and now you are the leader with controlling 40% of the country’s annual cell-making capacity. How has been the journey so far and what was the strategy that worked for you so well?
HRG:
After Phoenix, one of the areas where we started looking business opportunities, was global warming and climate change. In thge mean time, we came across solar technology. The more we looked at it more we liked it. It was seriously a capital intensive business. But at the same time, we decided that we must bring in concurrent technology to India, so that it has a higher domestic demand in future. From that point of view, we entered into solar technology. From the beginning itself, we wanted to go for scale. So, at a time when 10 MW unit was considered big, we opted for a plant with 200 MW capacity.

B&E: You are planning to launch a public issue shortly. Does it aim at scaling up your capacity alone?
HRG:
After looking at the governments’ incentive policy, which allows a capital subsidy of 25% on capex of Rs. 1,000 crore, we thought we must apply for the same. Thus, we decided to increase our footprint to 360 MW at a total cost of Rs. 1,545 crore. With this IPO, we are planning to accomplish the second phase of our expansion by adding 100 MW capacity.

B&E: Efficiency of the cells is a major factor when it comes to judging quality of the cells. Do you also value efficiency while moving ahead with scale?
HRG:
A lot! The efficiency level that we maintain is one of the best. Certainly, the efficiency curve has moved dramatically in the recent times. Before two or three years, it was around 12% to 14%. But in the past 18 months or so, the average efficiency level has moved up to 15-17%. We have bought a line, which was contracted guranteed 15.9%, now we are averaging 16.2% and have a roadmap for 16.5%.


Source : IIPM Editorial, 2012.
An Initiative of IIPMMalay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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