Two years ago when I had visited the unit and I came back with very fond memories as to what kind of great work you are doing, I am sure it is a great feeling for any entrepreneur when you are going public.
Hitesh Doshi: Definitely. It is something like you are going to the next level. So, naturally we are quite excited and very happy also.
But you know the downside also, more media scrutiny, more quarterly interviews, more studio visits. So, you are ready for that also.
Hitesh Doshi: Yes, we will follow what comes on the way in this journey.
First, let us talk about the area which you represent. You are India’s biggest solar manufacturer and the biggest solar panel exporter to the world. How big is this industry and where do you fit in within that?
Hitesh Doshi: Thank you for asking the global picture. If we look at last year’s number, 400 gigawatts plus globally, this is the installed solar capacity and it is growing by at least 30% year on year. Obvious reasons, solar is a quick source of energy, cheap, clean, fast, for so many reasons. It is easy to install, we can put it anywhere we want where the sun is coming and all that. This will grow further because we are seeing the energy demand increasing globally, not only because of their self-consumption but energy security.
Every country wants to reduce their imports and there are so many other geopolitical issues. Coming back to the Indian story, our honourable Prime Minister has given a vision of 500 gigawatt by 2030. We have done 150. So, there is a 350 gigawatt where solar will have the major stake and that we have to do in the next five years. When we look back to the tenders and other things also, we are seeing 70-80 gigawatt tenders. This gives a clear picture that there is a clear market till 2030.
You are talking about the domestic market?
Hitesh Doshi: Domestic market. But is that only the market now? First of all, whatever gigawatt, megawatt we are speaking, it is on the AC side. When we use the solar panels, normally to optimise it, we increase the 30% to 40% solar panels. Then, whatever the 150 gigawatt or 90 gigawatt is already on the ground. But if you look at that, maybe the real panels are maybe 120 or something like this. Another thing, the hydrogen and whatever the energy consumption is due to the data uses, due to vehicles, are with the batteries and all that. So the energy from solar will continue till we search for something that is cheaper, faster, and environmentally better than solar. I think not only 2030, this will keep on growing in the coming years.Let us look at the numbers again. What is the current installed solar capacity?
Hitesh Doshi: 90 by 30th September. Again, this is called AC side. So, when it is converted to the DC, it is at least 30% more. So, close to 120 DC side.
Close to 120. And what would be the installed capacity according to you as per the government blueprint in the next five years?
Hitesh Doshi: If I take a 70% share of the solar in the balance 350 GW, I am not talking about hydrogen or batteries or data centre usage. Just a minimum number. Of 350 GW, at least 70% comes from solar, it will be close to 240 gigawatt in next five years.
So, it could double.
Hitesh Doshi: This is the AC side. So, we have to increase at least 30% on this. So, close to 300, 310 gigawatt.
This is the domestic capacity?
Hitesh Doshi: Absolutely domestic capacity.
I will just like to get into specifics of where Waaree fits in here. In the last three years, which is from COVID, this is a declared number in your DRHP, your profits have gone up by nearly 15 times, your top line has gone up by nearly four times approximately. What has changed? I mean this entire solar opportunity existed earlier also. What has changed post COVID for Waaree that the growth has been exponential?
Sonal Shrivastava: Basically on the top line, you will see there is demand in the domestic market as well as demand in our big market which is the US. And it is really also driven post COVID what we hear as China plus one strategy. So, there is a diversification of the supply chain and we are gearing up for that at Waaree.
We have been exporting earlier also and that export has taken a fillip in the last two-three years, number one. And looking at this, we are also venturing now into the US market with our own facility which is going to come up in this fiscal year. So, clearly very focused on volume growth which is coming in these two main markets. But at the same time, like you mentioned, we are very conscious that we want to grow with profitable numbers and make it sustainable as well.
Your margins have gone up with similar zones. The average margins which were less than 5%, are north of 10%. Will this current run rate continue both in terms of growth as well as margins?
Hitesh Doshi: Margin came up after 15-16 years of learning and a lot of things which we have done. There are various barriers of quality, certification, and approvals. It is not like they came suddenly. For example, to get on a whitelist or approved list of large customer in the United States, it takes two to three years. So, we are investing for two to three years. We are spending the money. The margins are coming down. And then once we start getting the orders and delivering it, the margin improves.
So, the investment done earlier has come back. As a company, we started solar when nobody was talking about solar in 2008. As a company, the mindset is innovative and the growth mindset and going something extra mile in terms of the approvals, quality, products, technology. That will definitely help the company continue to grow in all respects.
Waaree started as a pure PV manufacturer where nothing was in-house, only assembly was in-house. Now, you are doing backward integration. So, three years out, what could Waaree be? It is right now called a solar manufacturer or PV manufacturer. Could it become an energy solution company in three years from now?
Hitesh Doshi: Absolutely.
How? Why?
Hitesh Doshi: The world is changing and we have to change ourselves continuously. We started with the solar panels to export in Europe. At that time, the Indian market was opening up. At that time, the government of Gujarat under the leadership of our honourable Prime Minister came up with the Gujarat solar mission. And suddenly the demand came for large installations in the country. So, the EPC started coming in. And we were the first on those days to start the EPC projects. And today it is under the name of Waaree Renewable Technologies.
So, the mindset is what we do more to meet the customer’s demand. Now customer’s demands are shifting to storage. So, we are working on batteries. Customers are talking about hydrogen and we had applied for PLI for hydrogen. We own 300 megawatt and our electrolyser factory is coming up.
This is backward. Can you just break it for us?
Hitesh Doshi: This is the solutions side. Now, to make the solar panels, we were dependent on China. The customer wants this to be outside China or Made in India with government policies. So, to make the solar panels, we have to make the solar cells. They started work on solar cells even before the PLI schemes came. A 5.4 gigawatt solar cell factory is getting ready. In this fiscal year, this factory will be completely operational.
What happens when all these expansions kick in? Will the margins of 12-13% crawl up or will they leap up?
Hitesh Doshi: They will grow, number one. But most importantly, we will be able to satisfy the customer’s requirement. For example, Pradhan Mantri Surya Ghar Yojana or Pradhan Mantri Kusum Yojana, are very large projects. With one crore roofs, we are talking about 30 gigawatt additional rooftop market.
Kusum is much more above 30. So, here in both the projects, we need cells made in India. So, margins will definitely be helping us there. But most importantly, we will be able to satisfy the customer demands. The next thing now, some customers who are looking for the entire supply chain from India, they need even ingot and wafers from India. So, the new PLI which we have owned for the 6 gigawatt, this is in addition to the 5.4 gigawatt and 13.3 gigawatt, the module lines that we have today. The new 6 gigawatt PLI will further help us to offer the customer a solution from made in India ingot to the module. And with the help of our suppliers with whom we are working, everything is made in India in that solar panel.
How much is made in India for the world for Waaree as percentage of your turnover and when you export, are margins higher than India?
Sonal Shrivastava: So, in FY24, roughly about 58% to 60% of our products were exported.
This is where you compete with China, this is where you compete with the world.
Sonal Shrivastava: We do compete with the world, but obviously we are also creating our new supply chains because there is a non-China demand even in the US. So, there is an alternative supply chain also which we are building even as we speak now. Like I said, 40% is domestic. And as we integrate further, today we are about 13.3s gigawatts, we will with the PLI and our new factory we will go up to 21. We will also have a cell capacity of 11 gigawatts and ingot wafer of 6. So, this gives us a lot of flexibility to not only cater to make in India but also to look at the US export markets and of course the other markets as they develop. So, I think we retain the flexibility to go either way.
Why should investors subscribe to Waaree Energies? The big picture is great. The size of opportunity or the size of the pond is great. Now, let us look at the risk. Any investment comes with risk. The obvious risk is over dependence on China plus one. What if the policy changes, both locally and globally? Then what happens?
Hitesh Doshi: As a company, we have been working on all kinds of risks. Are we developing a product enough? Today we have the largest product range. So, somebody comes for the application, he wants a solar panel like this carpet. We say it is available.
What is the smallest solar panel you have? Usable on a mobile phone too?
Hitesh Doshi: Yes.
Mobile phone can work on solar panel?
Hitesh Doshi: Absolutely. We are running auto rickshaws on solar panelalso. So, number one, the de-risking of the company is how much we are working on the new products, new solutions development and in the entire energy transition how much we are increasing our space into that. The second thing comes how geographically we are diversifying ourselves. For example, in the United States, our new factory will be operational in the next quarter. Machines are in and the work is going on there. The third thing is, how much differentiation we are offering between the products. The DNA of the company will continue and our performance speaks today.
So, it is not only this policy benefit which you have? Even if China plus one policy changes globally, you will continue to grow?
Hitesh Doshi: Right.
Then there is competition. Tatas, Ambanis, Adanis have gone on record saying that they are moving into the solar solution business. So, we are looking at giants coming in. When large corporate groups come into any business, there could be either a price war or a margin war, like the Jio moment. Is that a reasonable concern for your business?
Hitesh Doshi: I think the difference here is the global market like we discussed. We also spoke about the Indian market. The market is very big. Even if we are talking about a Rs 2 lakh crore annual market, this competition was always there. So, nothing new is coming.
Till March last year, 90% of the solar panels in India were imported from outside and they were coming from the world’s giants. We as a company have been in the business for 16 years. For fifteen-and-a-half years, we were competing with the global giants. Competition was always there but we navigated ourselves by differentiated products, geography, technology, solutions and that DNA will continue. Competition was there, is there and will be there. How we make ourselves stronger for all the time and that company is working on that all the time.
What are those levers which will ensure that when you migrate from being a solar manufacturer or solar panel manufacturer to energy solution provider, and when will that migration be visible, FY26, FY27, FY28?
Sonal Shrivastava: Our Odisha factory, for which we are raising Rs 9,000 crore via IPO, is going to come in two years. The capex is going to be spread over two years and after two years we will have at least part of the chain fully integrated and of course we are looking at all active other spaces like sir said to diversify into solutions but that will develop and we will talk about it more in the coming months.
But clearly what is important for Waaree is that we are diversifying geographically even into our customer base and so far we have done really without the Indian benefits of PLI or even the IRA benefits of the US. It is based on a global supply chain which we are very conscious of. Further, we will get a fillip, but of course we are looking at how much flexibility in the business we can bring through all these elements.
But you do not see the fear of disruption in the business which you represent because of the way disruption is moving, the way battery costs are coming down, isn’t that a real fear?
Hitesh Doshi: Just to add on your earlier question, the cell production will start in this financial year, 5.4 gigawatt. They are used in solar panels. We use the cells which we are importing today and we will start the production here.
So, panel, then cell and then what is after that?
Hitesh Doshi: Then, the wafer and the ingot.
And everything should be ready in three years?
Hitesh Doshi: Two years, yes.
Two years. So, Waaree is getting ready for a giant leap in margins.
Hitesh Doshi: I will not say that, but I will say that we are working in that direction as our numbers speak.
I will share some data with you. The cost of one unit of solar energy 10 years ago was Rs 15 per unit. When we spoke to you last, it was Rs 4. Now, it has come to Rs 3.5. It could go to Re 1. You are in an industry where the cost of production keeps on coming down. How would you be able to sell the cells which you will be making?
Hitesh Doshi: When I started the solar business, customers were talking about kilowatts. In other words, we are talking about grams in the common language. After that, people have started speaking in kilos. Why? The price when we started was Rs 400. Then it came to Rs 250 a watt of the solar panel. Now, with the price at Rs 15 a watt, down from Rs 250, normal discussion starts with our requirement is a 1 gigawatt, 2 gigawatt. In common language grams, kilos, quintals and now….
It is like a floppy disk. You are buying a floppy disk. I remember in my school, one GB was for Rs 100 and today the cloud is Rs 70 for 1TGB.
Hitesh Doshi: I think during your school days it should be the MB. There was no GB. I do not think so, it was GB in those days. The density is increasing and the same thing is happening in solar panels. So, if the prices are coming down, the market will open up further. When we are seeing the roofs in this country and even if 5% they are not covered, that means there is a space of 95% to cover it again.
Tell us about yourself. You come from very humble beginnings. Waaree is a small town in Maharashtra. So, tell us a bit about your background.
Hitesh Doshi: I am born in a Tunki which is very close to the Wari where in that area famous Hanuman ji temple is here and of course on those days there was no school in the village, so you have to go to another village. Completed the 10th there and came to Mumbai and stayed in a hostel. I have done my graduation in commerce. But after 12th, there was need to earn some money for a day-to-day living. So. I started some trading and then moved to instrumentation trading. From instrumentation trading to manufacturing, expansion, new technologies and in 2007, came into solar. So, in short, it was always doing something new, better.
But you dedicated your career in your life to solar as a….
Hitesh Doshi: From 2007 onwards you can say that this became a passion.
Are you ready to be a billionaire if the calculations are to be right?
Hitesh Doshi: I think it is not important for us. For us it is how ahead we are in technology, customer service and how fast we bring each and every electron of the energy we are using, how fast we make it green, that should be the dream not becoming billionaires.
