Opening of private mines, road sector to drive growth: Nilesh Panpaliya

Q&A with CFO, Solar Industries India

Nagpur-based Solar group is India’s largest manufacturer of industrial explosives and explosives initiating systems. It is the largest supplier to Coal India, the state-owned mining behemoth. It counts among major clients major clients Tata Steels, Hindustan Zinc and Singareni Collieries Limited. The group has recently forayed into defence by signing a Rs 1,550 crore memorandum of understanding (MoU) with the Maharashtra government.

Under this project, Solar will install facilities to produce bi-modular charge systems (BMCS) -- a vital artillery requirement that propels shells to distances of over 30 km, fully integrated rockets and new generation of hand grenades. In an interview,    Nilesh Panpaliya, chief financial officer, Solar Industries India talks to N Sundaresha Subramanian about the company’s growth plans and the recent controversy around its exports:

 What are your plans under Make in India? What is the timeline for these investments to materialise?

Our company has recently signed an MoU with the Maharashtra government in the recently held “Make in India” program. Through this, our company will start the said project only after it gets all the clearances from the various statutory authorities. After that it will take 24 months to install the facilities and thereafter another one year for various tests. However, the capex will happen over a period of time and in phasewise manner. This may typically take another 3-4 years before BMCS project starts contributing to the revenue.  

Do you have any plans to raise capital from the market for this project? 

No, we do not have any plans to raise capital from the market. 

What are the key growth areas for the group in the future?

The key growth areas for the group in future is domestic explosives market arising from increase in production of Coal India Limited, opening of private sector mines, growth in road construction and housing sector. We have a new plant to be commissioned in South Africa.The company is also seeing revenue inflows from the defence sector.

What is the contribution of exports to the revenues of Solar group?

The export contribution to the revenues of Solar Group is six per cent of the gross sales.

What is your reaction to the findings of the Conflict Armament Research (CAR) report, which said some of your exports to countries like Lebanon had found their way to Islamic State?

We have nothing to react on the findings of the CAR report as it clearly mentions --Under Indian Law, transfer of material requires a license. “All components documented by CAR were legally exported under government issued licenses from India to entities in Lebanon and Turkey.” We would like to clarify that our Company is in strict compliance with various laws governing the explosive production, sales and exports. The same is done under licenses issued by The Chief Controller of Explosives, Government of India (CCE). We also confirm that our group has not exported to Iraq and Syria.

Following queries from controller of explosives in this regard, has there been any change in  exports?

We fail to understand why the queries from controller of explosives will have change in the exports. If there has to be any judgment to be drawn then our exports for the year has grown compared to last year.