"At Websol it makes excellent sense for a company like ours toextend our focus from wholesale marketing to wholesale-cum-retail marketing."
Sohan Lal Agarwal Chairman and Managing Director
India is the possibly the most exciting global market for renewableenergy. I am pleased to report that the Central Government's priority in transformingthe country through the planned replacement of conventional energy sources with renewableenergy has translated into attractive on-ground realities.
India is adding more energy capacity through renewable energy capacitytoday than through conventional energy a reality that would have been unthinkable at theturn of this decade.
India added 11788 MW in renewable energy capacity in 2017-18 comparedwith 5400 MW from conventional energy (thermal & hydro) a trend I believe willsustain year on year.
The scenario is exciting and challenging. The sectoral excitement comesfrom the fact that the opportunity to market solar energy cells and modules products isvirtually unlimited which indicates that selling one's output based on marketappetite is likely to be the last of the challenges across the foreseeable future.
The scenario is challenging as well. Over the last few years some ofthe largest Chinese manufacturers commissioned some of the world's largest solar celland module capacities a competitive positioning that made it possible for them to sell atprogressively lower costs. As a result there has been a virtual meltdown in realizations.This decline has made it imperative for manufacturers like us and across the world forthat matter - to match Chinese prices.
Over the last few years
Websol took a number of initiatives to strengthen its competitiveness.The
Company graduated to a superior sweating of its technologies thatgenerated a higher energy throughput. The Company produced products that held their ownagainst the evolving standards of the day. The Company's products were certified inline with the most demanding global accreditations. The Company marketed its products tosome of the most demanding customers in the most stringent geographies. More thaneverything Websol continued to expand. A company that started out with an installedcapacity of a couple of megawatts per annum has today increased its solar cellmanufacturing capacity to 280 MW and increased its module manufacturing capacity fromscratch to an automated line of 250 MW. I am pleased to state that a combination ofrelatively low Indian operating costs coupled with the Company's culture ofausterity made it possible to expand at relatively low capital costs per megawatt. Duringthe year under review
Websol took this initiative a decisive step ahead. The Company expandedits solar cell manufacturing capacity from 200 MW to 280 MW and its automated modulemanufacturing capacity from scratch to 250 MW. The increase in the dual capacities was ascritical as it was timely: the integration made it possible for us to broaden our presencefrom a complete dependence on solar cells to solar modules. It empowered us to address achallenging market for solar cells by extending to value-added realizations for solarmodules. The fact that the Company finished the year under review with an EBITDA of H23crore is indicative of our competitiveness. As things stand Websol is possibly among onlya handful of Indian solar energy product manufacturing companies to be viable andprofitable.
At Websol we believe that competitiveness is essentially derived fromresponsiveness to evolving market realities. During the last year we recognized that ourlong standing B2B business model marked by competitive pricing would need to be adapted.The Company has responded with a change in its strategic priority that we like to describeas retailization'. Even as one end of our downstream market comprises largesolar farms that would need low cost solar cells and panels there is a new marketemerging right above our heads so to speak. As people like you and
I realize that at the affordable solar energy costs of today it makeseconomic sense to invest in solar panels generate power connect to the grid and sellthe power to the local discom or market on the Indian Energy
Exchange. The result is that solar energy infrastructure expenditure isnow being perceived as an investment with an attractive payback. At Websol it makesexcellent sense for a company like ours to extend our focus from wholesale marketing towholesale-cum-retail marketing. This implies that while our existing business model willcontinue we will adapt it to address a large number of relatively small and retaildownstream rooftop and miscellaneous applications. As things stand there are a number ofdownstream users seeking to replace their reliance on high cost conventional energy withlower cost alternatives. Our objective will be to address their downstream markets to theextent that our managerial bandwidth can directly address or enter into marketingalliances with large companies possessing extensive distribution networks. Thesearrangements will make it possible for companies like ours to manufacture and these largecompanies to promote distribute and market our products a win-win proposition. We alsoexpect to take our first decisive step towards independent EPC projects that do notstretch our Balance Sheet and management bandwidth which could widen the scope of ourbusiness and reinforce business sustainability.
What makes the Company's retailization' attractive isthat it is extensively asset-light. Our engagement with a large pan-India brand isexpected to kick-start our retail offtake in addition to agreeing to buy out a certainpre-agreed quantity of our offtake.
We believe that should these initiatives do even reasonably wellWebsol's expanded capacity should be fully consumed in a couple of years. We believethat the returns should be adequate to invest in our next round of growth strengtheningbusiness sustainability.