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“Funding is the major roadblock!”
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 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.
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 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%.
B&E: Indian climatic conditions are more suitable for power generation compared with Germany and Spain. But these countries produce around 70% of the world’s total solar power production of around 10 GW, India produces only 400 MW. Why is India lagging behind? Any specific reason for the same?
HRG: Solar production in India is really negligible compared with global production. One of the major reasons in those countries is the tarriff system that they are operating with. It attracts entrprenuers to jump into the business. But India has just recently introduced that enabling policy under the Jawaharlal Nehru National Solar Mission.
B&E: Do you think that the Jawaharlal Nehru National Solar Mission can actually give a boost to the solar power production in India?
HRG: Yes, of course. Funding is the only roadblock. If it can be taken care of, then we might soon see the sector growing in leaps and bounds.
B&E: You are mainly an export-oriented revenue model. Do you think that the success of the National Solar Mission may change your revenue composition?
HRG: Of course. At the moment, about 90% of our revenue comes from exports and 10% from domestic level. But with the National Solar Mission has begun, we hope it may go for a substantial change to 50-50 by 2011-2012.
B&E: Do you think the competition in the solar power sector will intensify in the near future?
HRG: Well, I don’t thinks so. I belive domestic as well as global demand is strong enough. The market is large and in many promising countries like the US, India and China, the demand is yet to enter to the mainstream.
B&E: You are part of a value chain. In the future, would you like to consider the options for any sort of vertical integration? What is your long-term plan?
HRG: Well, first we are looking at optimising our cell-making capacity. The real roadmap for us is to first grow up to a GW capacity within the next 4-5 years. We have to stay prepared for the global cost benchmarks of China and Taiwan, and for that, we definitely need scale.
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