Fortune Scrip     

Published: January 31, 2024
Updated: January 31, 2024

Borosil Renewables

Indian shogun of solar glass

Industry segments stealing the limelight today include renewable energy, and the solar sector is the most prominent – with Borosil Renewables a clear market leader in this field. As the company belongs to the sunrise sector in more than one product, we have picked it as the Fortune Scrip for this fortnight.

A part of the Borosil group, well-known for the popular brand ‘Borosil’, it was merged with another group company, Borosil Glass Works, and renamed Borosil Renewables. The company is engaged in the manufacture of low-iron-textured solar glass, used for photovoltaic panels, at its modern plant at Bharuch in Gujarat.

BRL is in expansion mode, and recently more than doubled its manufacturing capacity to 450 metric tonnes per day (mtpd), which is equivalent to 2.8 GW of solar modules. Subsequently, the capacity was raised to 1450 tpd and will be raised further to 1950 tpd (equivalent to 10 GW) in the current calendar year ending December 2024. Recently, it acquired Interfloat of Europe, which has a capacity of 350 tpd.

NOVEL PRODUCTS

The company’s products include Selenean anti-glare solar glass suitable for PV installations near airports, and ‘Shakti’ – a very high-efficiency solar glass in matt finish with anti-soiling coating.

The company has a strong focus on innovation and is known for its pioneering achievements, like development of the world’s first fully tempered 2 mm thick solar glass with the lowest iron content, giving the highest glass efficiency, and the first company in the world to successfully remove the hazardous substance ‘antimony’ from its solar glass. Today, India imports 60-70 per cent of its solar glass, primarily from China, Malaysia and Vietnam, with the remaining requirements met by Borosil Renewables. At home, around 50 per cent of MSME units are BRL clients, as the company has long-standing relations with them. The company’s clients also include large units like Vikram Solar, Adani Solar, ReNew Power and Waaree Engineers. Of late, it has started exporting its products and during the last three years, exports have grown at a CAGR of 33 per cent.

With continuous expansion of its capacities, the company has made rapid strides on the financial front. In the last 10 years, its sales turnover has expanded more than 5 times from Rs 146 crore in fiscal year 2014 to Rs 891 crore in fiscal 2023, with operating profit shooting up more than 15 times from Rs 9 crore to Rs 143 crore, and the profit at net level almost doubling from Rs 39 crore to Rs 73 crore.

GOVT THRUST

But we have not picked BRL as the Fortune Scrip this fortnight on account of its past laurels; we strongly feel that its future prospects are all the more promising. Consider:

• Realising the limitations of thermal energy and its adverse impact on the environment and human life, the world has stated moving towards renewable energy. The Indian government’s thrust on renewable energy – with solar gaining an increasing share within renewables — with plans to achieve 300 GW of solar power generation by 2030 (a 67 per cent share of total renewables), will go a long way to benefit the company. BRL also enjoys the first-mover advantage in the industry. It is the lowest-cost producer in the world, and with the government’s anti-dumping duty likely to be reimposed soon, the only competitor for BRL is imports. As a result, the replacement of solar glass in 24 hours in case of any issues, as compared to imports, goes in favour of BRL.
• Manufacturing solar glass requires low working capital as compared to downstream products like solar modules, as inventory management is less since solar glass is made specifically to order.
• The company is known for its innovations, like development of the world’s first fully tempered 2 mm-thick solar glass, the lowest iron content in solar glass giving the highest glass efficiency, and successfully removing hazardous substance antimony from solar glass. Recently, it launched products like Selene and Shakti which have been well-received in the market. Now, it is going to launch solar glass with anti-soiling coating.

EYES EXPORTS

• Besides expanding its marketing network in the domestic arena, the company is striving to expand its export footprint. During the last 3 years, its exports have grown at a CAGR of 33 per cent. Today, its major customer base is Europe, where it has started supplying its newly developed products. With the acquisition of Interflo of Germany, BRL is expected to gain new customers in Europe. At the same time, it is exploring possibilities to increase its footprint in the Americas.
• At home, as the only manufacturer of solar glass, it enjoys a dominant market position. No doubt, Borosil’s monopoly will not last long as 3-4 leading manufacturers of glass have announced plans to manufacture solar glass. However, with its long experience, BRL has the technical knowhow, scale size and customer relationships, all of which will act as a huge entry barrier. It will not be easy for new entrants to break in as glass production is a continuous process and requires a stable sales channel before the building of new capacities.

IMPORT IMPOST

• As far as imports of solar glass are concerned, China, the largest manufacturer of solar glass in the world, and Malaysia used to dump their products in the Indian market. The Indian government had imposed an anti-dumping duty, but in August 2022 this impost was removed, affecting BRL’s profit margins adversely. The company made a representation to the government, and the Union Commerce Ministry supported its plea for reimposing the anti-dumping duty. It is now widely hoped that the ADD will be reimposed from April 2024. This will ensure a level playing field for Indian manufacturers, particularly BRL.

P.L.I. BOOST

• Just four months ago, the government, with a view to promoting high-efficiency solar PV modules and prioitising fully integrated manufacturing units for solar PV modules, approved a PLI (production linked incentive) scheme for solar PV modules. The government has sanctioned a grant of Rs 19, 500 crore for this scheme. Borosil Renewables will be one of the major beneficiaries of this scheme. "The government's decision to include solar module manufacturers in the PLI scheme will give a big boost to Borosil Renewables," maintains an expert on the solar power sector.

Borosil Renewables stocks with a face value of Re 1 have shot up this year from Rs 380 to Rs 622, with the expected benefits from the introduction of the PLI scheme fuelling the bullish fervour. This is a very good investment idea for discerning investors with a long-term perspective. It would be better to accumulate these shares at every decline.